NAGA KAVITHA MUNDURU,HYDERABAD vs. INCOME TAX OFFICER, WARD-9(1), HYDERABAD

There is a delay of 3 days in filing the appeal. The assessee has filed an affidavit stating that the delay has occurred because the assessee was out of station and therefore, he was unable to sign the requisite documents. It was therefore pleaded that the delay of 3 days in filing the appeal may be condoned. Considering the fact that the delay is only for a few days in filing the appeal, I hereby condone the delay in filing the appeal and proceed to hear the appeal on merits.

The assessee has raised several grounds in her appeal however the crux of the issue is that the Ld. CIT(A) has erred in confirming the order of the Ld. AO who had treated the amount of Rs. 15,97,257/- (sic) Rs. 15,95,257/- as unexplained income of the assessee.

The brief facts of the case are that the assessee is the proprietrix of M/s. Sree Bio Fuels, engaged in the business of manufacturing bio- fuel products for generating power from processing of biodegradable waste. The assessee filed her return of income for the relevant AY 2013- 14 on 31/3/2014 admitting total income of Rs. 1,74,700/- after claiming deduction U/s. 80JJA for Rs. 10,23,051/-. Initially the return of income was processed U/s. 143(1) of the Act on 30/07/2014, and thereafter the case of the assessee was taken up for scrutiny and the assessment was completed U/s. 143(3) of the Act on 3/8/2015 wherein the Ld. AO treated the amount of Rs. 15,95,257/- as the unexplained income of the assessee being the unexplained amount embedded in the opening capital balance of the assessee. On appeal, the Ld. CIT (A) confirmed the order of the Ld. AO by agreeing with his view.

During the course of scrutiny assessment proceedings, the Ld. AO directed the assessee to furnish the source for the opening capital balance of Rs. 28,46,574/-. The assessee produced the details of her income as well as her husband’s income for the period 2002-03 to 2011- 12 which aggregates to Rs. 27,32,686/- in the case of her husband Mr. M. Srinivasa Rao and Rs. 15,43,233/- in her case. Thus, the aggregate of income with respect to both the parties works out to Rs. 42,75,919/- . After deducting the drawings, the assessee worked out the balance amount available for investment in her business as Rs. 30,79,204/-. On further verification of the details submitted by the assessee, the Ld. AO opined that the amount of Rs. 20,60,517/- can be held to be in the possession of the assessee as on 1/4/2012. The Ld. AO further granting a relief of Rs. 2,32,630/- and arrived at the unexplained opening capital balance of the assessee at Rs. 15,95,257/- {28,46,574/- [(Rs. 30,79,204 - Rs. 20,60,517) + Rs. 2,32,630]} and added the same as the unexplained income in the hands of the assessee.

On appeal the Ld. CIT (A) confirmed the order of the Ld. AO by observing as under:-

Before me the Ld. AR submitted that the assessee’s family is resourceful because both the assessee and her spouse are earning income against which the taxes are paid. Further, the Ld AR argued stating that the Ld. AO himself has accepted the assessee to be in possession of Rs. 20,60,517 as on 1/4/2012 based on the materials produced before him. It was further argued that the Ld AO has not considered the Gold Loan received by the assessee and the amount received from her in-laws on sale of property of Rs. 3 lakhs and Rs. 5 lakhs respectively. It was therefore pleaded that the addition made by the Ld. AO for Rs. 15,95,257/- may be deleted. The Ld. DR on the other hand vehemently argued in support of the orders of the Ld. Revenue Authorities.

I have heard the rival submissions and carefully perused the materials on record. From the facts of the case it is apparent that the assessee and her spouse are earning sufficient income against which tax is paid. The assessee has also reasonably worked out the details of the balance amount available with her for investment in the industry for Rs. 30,79,204/-. The Ld. AO as well as the Ld. CIT (A) is also convinced with the respect to the available fund with the assessee as on 1/4/2012 for Rs. 20,60,517/-. Keeping in view of the entire facts and circumstances of the case, I am of the considered view that the detailed computation furnished by the assessee justifying her available cash balance for investment in the industry for Rs. 30,79,204/- cannot be simply brushed aside. Therefore, in the interest of justice, and to avoid unnecessary protracted litigation, I hereby direct the Ld. AO to delete the addition of Rs. 15,95,257/- made in the hands of the assessee which was further sustained by the Ld. CIT (A).

Before parting, it is worthwhile to mention that this order is pronounced after 90 days of hearing the appeal, which is though against the usual norms, I find it appropriate, taking into consideration of the extra-ordinary situation in the light of the lock-down due to Covid-19 pandemic. While doing so, I have relied in the decision of Mumbai Bench of the Tribunal in the case of DCIT vs. JSW Ltd. In and 6103/M/2018 for AY 2013-14 order dated 14th May 2020.

In the result, appeal of the assessee is allowed.