VENKATAPATHI RAJU DHANTULURI,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE-9, HYDERABAD

The assessee has raised six grounds and four additional grounds in his appeal. However, the cruxes of the issues are that, i) ld. CIT(A) has failed to note that the entire reassessment proceedings of a completed assessment u/s 143(3) of the Act within the period of 4 years was without jurisdiction and unreasonable and ii) ld. CIT(A) has erred in upholding the order of ld. AO, who has made addition of Rs. 2,66,000/- u/s 68 of the Act.

Brief facts of the case are that assessee is an individual filed his return of income for the relevant AY 2003-04 on 26/09/2003 admitting his total income of Rs. 4,98,644/-. Since the assessee was a trusted employee of Sri B. Ramalinga

During the course of scrutiny assessment proceedings, it was observed by the ld. AO that the assessee had deposited cash in his ICICI Bank account and BNP Paribas bank account aggregating to Rs. 12,39,788/-. On a query, the assessee in his reply dated 08/08/2011, had intimated that he was in judicial custody and, therefore, sought time for furnishing the details called for. However, since the assessment was getting time barred, ld. AO added the entire amount of Rs. 12,39,788/- in the hands of the assessee as unexplained cash credits u/s 68 of the Act.

On appeal, ld. CIT(A) after considering the explanation tendered by the assessee deleted certain additions. However, with respect to the addition made for Rs. 2,66,000/-, the Ld.CIT(A) confirmed the same, though the assessee has submitted confirmation letter from Mr. M. Satyanarayana Raju, from whom the assessee has obtained loan.

Aggrieved by the order of CIT(A), the assessee is in appeal before the Tribunal.

Before me, ld. AR submitted that, when the assessee had furnished the confirmation statement from the person who advanced loan to the assessee along with his address, it would have been appropriate on the part of the revenue to examine Mr. M. Satyanarayana Raju before coming to the conclusion that loan obtained by the assessee is bogus transaction. It was, therefore, pleaded that since the revenue authorities had not carried out their obligation in the appropriate manner, the addition made in the hands of the assessee for Rs. 2,66,000/- is not sustainable and the same may be deleted.

Ld. DR, on the other hand, vehemently opposed to the submission of the ld. AR and further relying on the remand report of the Ld.AO pleaded for confirming the order of ld. CIT(A).

I have heard the rival submissions and carefully perused the material on record. From the facts of the case, it is crystal clear that, the assessee had furnished before the ld. CIT(A) in the appellate proceedings, the confirmation statement from Mr. M. Satyanarayana Raju, with respect to the loan obtained from him. Moreover, it also appears from the remand report of the Ld.AO that, in the remand proceedings the Ld.AO had neither cross examined Mr. M. Satyanarayana Raju nor examined/verified the loan transaction though the address of Mr. M. Satyanarayana Raju was very much available before him. Further from the Order of the Ld.CIT(A) it is apparent that, he had sustained the addition of Rs. 2,66,000/- without making any further enquiry/examination, which is not

Since I have decided the appeal of the assessee on merits in favour of the assessee, I do not find it necessary to address the issue with respect to jurisdiction as it would be only academic.

In the result, appeal of the assessee is allowed.