CH.CHANDRASEKHAR NAIDU ,PRODDATUR vs. DY. COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE-(2), HYDERABAD

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ITA 834/HYD/2019Status: DisposedITAT Hyderabad24 March 2025AY 2011-1227 pages
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What did the Tribunal hold?

The Tribunal decided on the issue of unexplained cash deposits in the bank account (Rs. 11.33 lacs). The assessee claimed the deposits were from petty creditors, including agricultural laborers, and cited a decision from the preceding year. However, the Tribunal found that the assessee had not provided confirmation letters for these creditors in the current year, unlike in the preceding year. The Tribunal agreed with the AO that the creditworthiness of the parties was not substantiated and that it was far-fetched for agricultural laborers to lend money to the assessee. Therefore, the Tribunal found no infirmity in the orders of the lower authorities and dismissed the ground of appeal related to this issue. The Tribunal also noted that grounds of appeal 1, 9, and 10 were general and dismissed as not pressed. The Tribunal admitted additional grounds of appeal concerning the validity of the AO's jurisdiction and the non-consideration of the revised return, as these legal issues could be decided based on available facts, following the Supreme Court's decision in National Thermal Power Co. Ltd. vs. CIT. The Tribunal's specific findings on other grounds of appeal are not fully detailed in the provided excerpt.

What were the facts?

The assessee, Sri Ch. Chandrasekhar Naidu, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Hyderabad 'A' Bench, against the order of the Commissioner of Income Tax (Appeals)-1, Hyderabad. This order arose from the assessment order passed by the Assessing Officer (AO) under Section 143(3) of the Income-tax Act, 1961, for the assessment year 2011-12. The AO had made several additions and disallowances, determining the assessee's income at Rs. 60,09,624/-. These included additions for Long Term Capital Gains (LTCG), unexplained cash credit, disallowance of interest expenditure, unexplained cash found during search, unexplained investment in jewellery, and unexplained cash deposits in a savings bank account. The assessee's appeal to the CIT(A) was unsuccessful in having these additions deleted. The ITAT admitted additional grounds of appeal concerning the AO's jurisdiction and the non-consideration of a revised return.

What were the issues?

1. Whether the CIT(A) erred in partly upholding the addition made by the AO in respect of Long Term Capital Gains of Rs. 6,86,651/-, and whether the cost of acquisition adopted in AY 2008-09 should have resulted in no LTCG? - Assessee's Contention: The CIT(A) should have deleted the addition entirely, as adopting the cost of acquisition from AY 2008-09 would mean no LTCG arises. - Revenue's Contention: Not recorded. 2. Whether the CIT(A) erred in not adjudicating Ground No. 11 taken before him? - Assessee's Contention: The CIT(A) failed to address this ground. - Revenue's Contention: Not recorded. 3. Whether the CIT(A) erred in sustaining the addition of Rs. 10,00,000/- towards unexplained credit? - Assessee's Contention: The assessee proved the identity, genuineness, and creditworthiness of the party from whom the loan was taken. - Revenue's Contention: Not recorded. 4. Whether the CIT(A) erred in confirming the addition of Rs. 2,35,000/- in respect of cash found during the search, without analyzing submissions, and whether this cash represents day-to-day collections entered regularly in books of account? - Assessee's Contention: The cash represents day-to-day collections entered regularly in the books of account and tallies with book entries. - Revenue's Contention: Not recorded. 5. Whether the CIT(A) erred in confirming the addition of Rs. 24,34,486/- towards unexplained investment in jewellery, made on presumption without evidence, and whether the jewellery belongs to family members as gifts? - Assessee's Contention: The jewellery belongs to family members and was received as gifts on various occasions. - Revenue's Contention: Not recorded. 6. Whether the CIT(A) erred in sustaining the addition of Rs. 11,33,000/- towards cash deposits in a savings bank account without properly examining evidence and explanations? - Assessee's Contention: The cash deposits were sourced from temporary loans from petty creditors, agricultural laborers, and were used to repay a loan. The issue is covered by the Tribunal's decision in the preceding year. - Revenue's Contention: Not recorded. 7. Whether the AO erred in disallowing interest expenditure of Rs. 2,34,547/- without appreciating facts, and whether the expenditure is allowable under Section 37? - Assessee's Contention: The interest expenditure was incurred wholly and exclusively for business purposes and is allowable under Section 37. - Revenue's Contention: Not recorded. 8. Whether the AO erred in assessing income without considering the revised return filed electronically on 07.01.2013, and whether notice under Section 143(2) was issued in accordance with the revised return?

Which sections of the Income-tax Act were involved?

Section 132,Section 143(3),Section 69,Section 68,Section 37,Section 131,Section 139

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Income Tax Appellate Tribunal, Hyderabad A Bench, Hyderabad

आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:-

1. 1. निर्धाररती/The Assessee : Sri Ch. Chandrasekhar Naidu C/o. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, Somajiguda, Hyderabad-500082. 2. रधजस्व/ The Revenue : Deputy Commissioner of Income Tax, Central Circle- 2, Hyderabad.

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