JAYAPRAKASH VARMA MANTENA, HYDERABAD,HYDERABAD vs. ITO, WARD-12(3), HYDERABAD, HYDERABAD

The assessee has raised 5 grounds in this appeal however, the crux of the issue is that the Ld. CIT (A) has erred in confirming the order

Brief facts of the case are that the assessee is an individual employed in TCS, Hyderabad as a Software Engineer earning salary income, filed his return of income on 26/7/2007 declaring income of Rs. 4,88,215/-. Initially the return was processed U/s. 143(1) of the Act and subsequently the case was taken up for scrutiny under CASS. Thereafter, the assessment was completed U/s. 143 (3) of the Act wherein the Ld. AO made addition of Rs. 10 lakhs and Rs. 5 lakhs as the undisclosed source of income.

During the course of scrutiny assessment proceedings, it was observed by the Ld. AO that the assessee had deposited cash in his bank account amounting to Rs. 10 lakhs on 29/07/2006. On query it was explained by the assessee that amount of Rs. 10,37,282/- was received by him on the occasion of his marriage from close relatives, friends and others. The assessee has further clarified that he belongs to a respectable family which owns agricultural land. The Ld. AO on further examining the issue observed that the assessee had issued a cheque in the name of M/s. Sai Ram Imports and Exports for Rs. 9,95,000/- on the very same day he deposited cash in his back account. Therefore, the Ld. AO opined that the assessee had introduced his undisclosed income in his bank account and rejected the explanation

On appeal, the Ld. CIT (A) agreed with the view of the Ld. AO and confirmed the addition, aggrieved by which the assessee is now on appeal before the Tribunal.

The Ld. AR vehemently argued before me stating that the assessee is a software engineer employed in TCS drawing salary of approximately Rs. 5 lakhs per annum. He further submitted that the assessee belongs to a well reputed family and it is a common practice in his community for being bestowed with gifts at the time of marriage. He further argued stating that the entire gift was deposited in his bank account and utilised. It was further explained that predominantly the gifts were received from his close relatives and friends at the time of his marriage and hence exempt from tax as per the provision of section 56(1)(v) of the Act. Hence, it was pleaded that the addition made by the Ld. AO which was further confirmed by the Ld. CIT (A) may be deleted. The Ld. DR on the other hand vehemently argued in support of the orders of the Ld. Revenue Authorities and pleaded for confirming the same.

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 hails from a well reputed family owning agricultural land which is not in dispute. The assessee is also well educated and employed in software company viz., TCS drawing a hefty salary. It is also a common practice in his community to be bestowed with gifts in cash at the time of marriage which cannot be disputed. In this situation, the explanation offered by the assessee that the amount of Rs. 15 lakhs of gift received by him on the occasion of his marriage cannot be simply rejected. From the order of the Ld. AO and the Ld. CIT (A) also it appears that they have not made further enquiries from the assessee in order to furnish the names and addresses of the persons who had extended gifts to the assessee. From the facts of the case it is also apparent that a suspicion is created in the minds of the Ld. Revenue Authorities because the assessee had issued cheque in the name of M/s. Sai Ram Imports and Exports for a sum of Rs. 9,95,000/- on the very same day the cash was deposited in the bank account of the assessee. In such circumstances, it is also very much possible that the money deposited by the assessee in his bank account might have been the undisclosed income of M/s. Sai Ram Imports and Exports which is now reverted back as accounted money. The Ld. Revenue Authorities have failed to examine these aspects of the case also. Therefore, there is every possibility that the innocent assessee is brought to tax while as an

In the result, appeal of the assessee is allowed.