SANIKOMMU SRINIVASA REDDY,GUNTUR vs. THE INCOME TAX OFFICER, WARD-1(3), VISAKHAPATNAM, VISAKHAPATNAM

The Assessee has raised the following grounds of appeal:

Brief facts of the case are that, Assessee is an individual, filed return of income for the A.Y.2017-18, declaring income of Rs.12,33,010/-. Subsequently, the case of the assessee was selected for scrutiny under CASS, under the category of limited scrutiny, in order to verify the large value of cash deposits during the demonetization period as compared to returned income. Accordingly, statutory notice under section 143(2) of Income Tax Act, 1961 [hereinafter in short “the Act”] was issued through ITBA portal and same was duly served on the assessee. Further, notice under Section 142(1) of the Act was also issued to the assessee calling for certain information along with the details of bank account mentioned by the assessee with regard to the cash deposits and sources of cash deposits with supporting evidences. Notices were duly served upon the assessee. In response to the said notices, assessee responded and filed submissions through e-portal. After examination of the relevant information filed by the assessee, a show-cause notice was also issued to the assessee. The Assessing Officer, after considering all the submissions made by the assessee and careful consideration of the documents filed by the assessee, he found that assessee sold two properties amounting to Rs.19,44,000/- on 12.09.2016 and another property for Rs.17,71,000/- on 28.03.2016, out of which the cash component received from the sale of property, he deposited the cash in his bank account. Further, Assessing Officer disbelieved the same, and certain portion has been allowed and Rs.10,41,000/- added to the income of the assessee and treated as unexplained money under Section 69A of the Act and by invoking provisions of Section 115BBE of the Act.

Aggrieved by the above order, assessee went in appeal before Ld.CIT(A), where the appeal of the assessee was dismissed by sustaining the order of the Assessing Officer. He still aggrieved by the above order of Ld.CIT(A); assessee is in appeal before this Tribunal.

At the time of hearing, Authorised Representative stated that, the entire trail of cash deposits has been furnished before the assessing officer during the assessment proceedings and also filed before the Ld.CIT(A). However, those were never properly considered. He therefore prayed that the instant addition may be set-aside by allowing relief to the assessee. He alternatively submitted that, assessee in order to buy mental peace, is ready to offer Rs.5,00,000/- as the income and ready to pay tax on normal rate instead of 115BBE of the Act.

On the other hand, Ld.DR supported the decision of the authorities below.

We, after hearing the rival submissions of the parties and perusing the material available on record, from the record we notice that assessee has sold two properties, one from the assessment year in question and the other in the immediately preceding assessment year, out of which assessee has received certain component of cash, which was stated to be deposited in bank, which was not disputed. The assessing officer, while passing order, viewed that assessee has kept this amount for 7 ½ months with him, which raised doubt in the mind of the assessing officer and added the amount of Rs.10,41,000/- in the hands of the assessee, stating to be unexplained cash deposits. Since assessee ready to offer Rs.5,00,000/- as his income under normal rates in order to buy mental peace, therefore considering this alternative submission, we sustain the addition of Rs.5,00,000/- in the hands of the assessee. We direct the Assessing Officer to apply the normal rates of income tax upon the assessee on the disclosed income of Rs. 5,00,000 instead of applying Section 115BBE of the Act. Accordingly, appeal of the assessee is partly allowed, in terms of the above direction.

In the result, appeal filed by the Assessee is partly allowed.