VIMALA DEVI SARIPALLI,VISAKHAPATNAM vs. THE INCOME TAX OFFICER, WARD - 3(3), , VISAKHAPATNAM

These appeals are filed by the assessee against the orders of the Commissioner of Income Tax (Appeals) [CIT(A)]-1, Visakhapatnam vide 10469/2016-17/CIT(A)-1/VSP/2019-20 dated19.12.2019. Since the facts are identical, these appeals are clubbed, heard together and disposed of in a common order for the sake of convenience as under:

All the grounds in both the appeals are related to the addition made by the Assessing Officer (AO) representing the advances recovered by the assessee. In this case, assessment was originally completed u/s 143(3) r.w.s. 147 by an order dated 17.03.2014 for both the assessment years i.e.

3 S.A.No.44/Viz/2020, 45/Viz/2020 , 49/Viz/2020 A.Y.2007-08 and 2008-09 Vimala Devi Saripalli, Visakhapatnam 2007-08 and 2008-09. Subsequently, the Ld.Principal Commissioner of Income Tax (Pr.CIT)-1, Visakhapatnam has taken up the case for revision and set aside the assessment orders passed by the AO with a direction to redo the assessment denova after giving opportunity to the assessee. Accordingly, the AO passed the orders u/s 143(3) r.w.s. 263 by an order dated 30.12.2016 for both the assessment years. For the A.Y.2007-08, the AO made the addition of Rs.10,50,800/- and for the A.Y.2008-09 made the addition of Rs.74,50,000/- representing advances recovered by the assessee from the opening balances. The AO during the assessment proceedings, called for the details of the debtors claimed to have been realized by the assessee and the assessee failed to furnish the same, hence, disbelieved the claim of the assessee with regard to realization of the debtors, and brought to tax the sums of realization of debtors as unexplained and added back to the income.

Against which the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the order of the AO holding that, since the assessee was not in a position to furnish the details , Ld.CIT(A) did not find any 4 S.A.No.44/Viz/2020, 45/Viz/2020 , 49/Viz/2020 A.Y.2007-08 and 2008-09 Vimala Devi Saripalli, Visakhapatnam reason to interfere with the order of the AO, hence, upheld the order of the AO.

Against which the assessee is in appeal before us. During the appeal hearing, the Ld.AR submitted that the assessee furnished the cash flow statements before the AO and taken the realization of debtors of Rs.10,50,000/- as sources of funds for the A.Y.2007-08 and Rs.74,50,000/- for the A.Y.2008-09. The Ld.Pr.CIT during the 263 proceedings has called for the details of the debtors, which the assessee could not furnish, due to the fact that the entire business activity of the assessee was looked after by her husband, who had expired on 29.06.2010 and she had no idea with regard to the details of the debtors. The same explanation was furnished before the AO as well as the Ld.Pr.CIT. The assessee further submitted that the details were maintained by her husband as well as the auditor, but the auditor has withdrawn the case and did not cooperate with her. The assessee was unable to trace the old accounts as the accountant also left the job due to discontinuation of the business. It was further submitted that the building, where the records were maintained was also sold away and the records were destroyed. All the above facts made her helpless to 5 S.A.No.44/Viz/2020, 45/Viz/2020 , 49/Viz/2020 A.Y.2007-08 and 2008-09 Vimala Devi Saripalli, Visakhapatnam furnish the details. Therefore, submitted that due to the above reasons, the assessee could not furnish the details of the list of debtors. However, the Ld.AR submitted that the debtors are opening balances and was disclosed in the balance sheets filed along with the returns of income, hence, requested to consider the information available in the financial statements and allow the appeals.

On the other hand, the Ld.DR argued that the assessee failed to furnish the details of the list of debtors either before the Ld.Pr.CIT or the AO. Therefore, the assessee failed to prove the genuineness of realization of debtors, hence, argued that the AO has rightly made the addition and no interference is called for in the order of the Ld.CIT(A).

We have heard both the parties and perused the material placed on record. In the instant case, the assessment was related to 2007-08 and 2008-09 and the assessee’s husband had expired on 29.6.2010. After the lapse of more than two years of completion of the assessment year, the AO has taken up the proceedings u/s 143(3) r.w.s. 147, where the assessee has furnished the cash flow statement, explaining the sources of funds and completed the assessment u/s 143(3) r.w.s. 147 of the Act. The AO did not 6 S.A.No.44/Viz/2020, 45/Viz/2020 , 49/Viz/2020 A.Y.2007-08 and 2008-09 Vimala Devi Saripalli, Visakhapatnam doubt the genuineness of realization of debtors in the assessment proceedings. However, the Ld.Pr.CIT, doubted the realization of debtors and directed the AO to redo the assessment de novo. In the instant case, the claim of the assessee was that the sources of funds was realization of debtors. The Ld.AR has explained that the 263 proceedings were taken up in 2016 vide notice dated 01.03.2016 i.e. after more than seven years from the end of the relevant assessment year and by that time all the time limits were expired except for 263 proceedings. It was also submitted by the Ld.AR that the assessee could not furnish the required details due to sad demise of her husband who looked after the business and the entire financial transactions. Normally, in India, it is an accepted practice that husband looks after the business and financial transactions of the wife. The AO also has not disputed this fact. Further though the assessee has stated that the information was also available with the auditor, the auditor has withdrawn the case from representation and the business was discontinued and the accountant also has left the job. Apart from the above, the building where the records were stated to be maintained was sold away and records were destroyed. All the above reasons appear to be convincing reasons for non-submission of the details. In the instant case,

In the result, stay applications of the assessee are dismissed and the appeals of the assessee are allowed for both the assessment years.