SOMAYAJULU ANNAPPA MANGIPUDI,HYDERABAD vs. ITO, (INT. TAX-1), HYDERABAD

Though the assessee has raised as many as twenty grounds but the solitary issue is with respect to the addition of Rs.15,00,000/- u/s 69A of the Act.

The brief facts of the case are that the assessee is an individual, who is non-resident of India, and has filed his return of income for A.Y. 2017-18 on 31.03.2018 admitting a total income of Nil. Subsequently, the case was selected for limited scrutiny under CASS. In response to the notices issued u/s 143(2) and 142(1) of the Act, the assessee furnished the information as called for. Based on the reply and material available on record, the Assessing Officer completed the assessment u/s 143(3) of the Act on 11.12.2019 by computing the total income of the assessee at Rs.15 lakhs by making an addition of Rs.15 lakhs as unexplained money u/s 69A of the Act.

Feeling aggrieved with the order of AO, assessee filed an appeal before the ld.CIT(A) who dismissed the appeal of assessee.

Feeling aggrieved with the order of ld.CIT(A), assessee is now in appeal before us.

Before us, the ld.AR for the assessee firstly submitted that the provisions of section 68 of the Act are not applicable in the present case as the assessee is a non-resident Indian, which is clear from the assessment order. For the above said purpose, ld. AR relied on the decision of Mumbai Tribunal in the case of ITO Vs. Rajeev Suresh Ghai reported in (2021) 132 taxmann.com 234. The second argument of the ld. AR for the assessee is that the assessee had withdrawn a sum of Rs.25 lakhs for the purpose of treatment to his parents, who are aged and are residing in India and as the assessee was not able to utilize the entire amount, therefore, the balance amount of Rs.15 lakhs was deposited in his bank account, for which the proceedings u/s 68 were initiated by the Assessing Officer. The third argument of the ld. AR before us is that as the assessee did not appear during the course of appellate proceedings before the ld.CIT(A), the matter may kindly be remitted back for afresh adjudication to the file of ld.CIT(A).

Per contra, the ld. DR for Revenue had submitted that the assessee had changed his version on three occasions. Firstly, it was the case of the assessee before the Assessing Officer that the amount deposited by the assessee was on account of accumulated cash savings of the parents of the assessee. Albeit the said stand was changed by the assessee and in subsequent stand, he stated that the cash sent to India was out of the cash withdrawal by him from his Mashreq Bank account. The details of which are mentioned by the Assessing Officer on Page 5 of his order. However, the Assessing Officer and the ld.CIT(A) were not convinced by the submissions of the assessee. He relied upon the order passed by the lower authorities.

I have heard the rival submissions and perused the material on record. Undoubtedly, it is the case of the assessee before the Assessing Officer that a sum of Rs.25 lakhs was withdrawn by him from his savings bank i.e. Oriental Bank of Commerce, Hyderabad on 26.10.2016, later on deposited in the Post Office Savings Account between 09.11.2016 to 31.12.2016t.This facts was duly accepted by the ld.CIT(A) in Para 5.5. of his order, which is to the following effect :

Despite accepting the availability of the cash and subsequent deposit in the bank account, the ld.CIT(A) had wrongly denied the claim to the assessee by observation mentioned in para 5.7 of his order. In my view, the said conclusion / observation of the ld.CIT(A) is not relevant and germane to the addition made by the Revenue. The point in issue which is required to be considered is whether the assessee is having the availability of cash or not from the explained sources or not. Once the assessee was able to demonstrate the availability of cash from the explained source, then no addition can be made u/s 69A of the Act.

In light of the above, once the Revenue accepts the withdrawal of Rs.25 lakhs from his bank account and thereafter depositing Rs.15 lakhs in the Post Office, the addition of Rs.15 lakhs in the hands of assessee is not warranted. In light of the above, the assessee was able to demonstrate the availability of cash with the assessee which was subsequently deposited in the Post Office Saving Account. Thus, assessee was able to explain the source of the availability of cash before depositing it in Post Office Savings Account. Hence, I am of the opinion that the assessee has able to meet the requirements of law and therefore, the addition made by the lower authorities are without any basis and accordingly, I delete the same. I have not decided on the other issue raised by the assessee as I am granting the relief on one of the reasons assailed before me. In the light of the above, the appeal of the assessee is allowed. 11. In the result, the appeal of the assessee is allowed.