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Facts
During a search, cash of Rs. 20,00,000/- and Rs. 3,64,000/- were found. The assessee explained Rs. 10,19,000/- from agricultural proceeds and Rs. 13,45,000/- from personal savings. The Assessing Officer treated the entire Rs. 23,64,000/- as unexplained income.
Held
The Tribunal held that the CIT(A) should have considered the assessee's returns of income for earlier years (2015-16 and 2019-20) and evidence related to agricultural land holdings of the assessee's father. The matter is remitted to the Assessing Officer for fresh consideration.
Key Issues
Whether the CIT(A) properly considered documentary evidence for the source of unexplained income, specifically agricultural proceeds and personal savings, and whether the matter should be remanded for further inquiry.
Sections Cited
132, 69A
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Income Tax Appellate Tribunal, HYDERABAD BENCHES “SMC-B”, HYDERABAD
Before: SHRI MANJUNATHA. G & SHRI K.NARASIMHA CHARY
आदेश / ORDER PER K. NARASIMHA CHARY, J.M: Aggrieved by the order dated 04/09/2024 passed by the learned Commissioner of Income Tax (Appeals)-11, Hyderabad (“Ld. CIT(A)”), in the case of Bangar Raju Penmetsa (“the assessee”), assessee preferred this appeal.
Brief facts of the case are that assessee, Mr. Bangar Raju Penmetsa, Managing Director of M/s. KVR Consultancy Pvt Ltd, filed his return of income for the AY 2019-20 on 29/08/2019 declaring a total income of Rs.2,45,000/-. A search & seizure opera�on U/s. 132 of the Income Tax Act, 1961 (“the Act”) was conducted in the case of M/s. Sumeru Infrastructure Park and group cases on 08/02/2019. During the search & seizure proceedings cash amoun�ng to Rs. 20,00,000/- was seized in the residen�al premises of Smt. Dasari Sandhya Sree, who stated that the said amount belongs to Mr. Bangar Raju Penmetsa, assessee in the present case. Assessee also confirmed the statement given by Smt Dasari Sandhya Sree vide le�er dated 1/3/2021. Further, during the course of search, an amount of Rs.3,64,000/- was also found at the residen�al remises of assessee.
On being asked, assessee stated before the learned Assessing Officer that cash of Rs. 10,19,000/- was received from proceeds of agricultural crop and the balance of Rs. 13,45,000/- is out of his personal savings. However, in the absence of any verifiable documentary evidence, the learned Assessing Officer made addi�on of Rs. 23,64,000/- as unexplained income U/s. 69A of the Act and assessed the total income at Rs. 26,09,000/-. Learned Assessing Officer also ini�ated the penalty proceedings while passing the assessment order.
Aggrieved, assessee preferred an appeal before the learned CIT(A) who sustained the addi�on of Rs. 10,19,000/-, which was stated to have been received by assessee from proceeds of agricultural corp. However, learned CIT(A) granted a part relief of Rs. 3,00,000/- out of addi�on of Rs. 13,45,000/- made on account of unsubstan�ated personal savings in previous years. Thus, learned CIT(A) partly allowed the appeal. Aggrieved, assessee is in appeal before the Tribunal.
Learned Authorized Representa�ve (“learned AR”) submi�ed that learned CIT(A) did not consider the returns of income for the earlier years ie., 2015-16 to 2018-19 as per which the assessee’s net income worked out to Rs. 31,56,802/-. He further submi�ed that the returns of income for the earlier years cons�tute documentary evidence to substan�ate the source of earlier year’s income. It was also submi�ed that Rs. 10,19,000/- is from sale proceeds of agricultural crops and the said amount was given to assessee by his father. However, the learned CIT(A) did not appreciate the documentary evidence submi�ed before him with respect to the sale proceeds of the agricultural crops as well as erred in not considering the returns of income files for the years as a proof of documentary evidence.
Learned Departmental Representa�ve (“learned DR”) vehemently argued in support of the decision taken by the lower authori�es.
We have gone through the record in the light of the submissions made on either side. The plea of the assessee is that the learned CIT(A) considered the returns of income filed for the years i.e., 2016-17 to 2018-19 and having accepted the returned income for those AYs, learned CIT(A) held that to the tune of such returned income, viz., Rs. 10,45,0000/- stood explained. On the same analogy the learned AR placed before us acknowledgment copies of assessee’s returns of income for the AYs 2015-16 and 2019-20as well and submits that the returned income is well substan�ated by the property held by the father of the assessee, and therefore, this amount may also be taken into considera�on for explana�on of the sources towards the amounts added. Further, to substan�ate assessee’s claim of agricultural income, learned AR also placed before us copies of Title Deeds and Pa�adar Passbooks which evidences the land holdings of assessee’s father. 8. On a perusal of the documentary evidence placed before us, we are of the opinion that learned CIT(A) ought to have consider these documentary
Page 3 of 5 evidence ie., returns of income filed for the years ie., 2015-16 and 2019-20 also on the same foo�ng as he considered the income returned for the AYs 2016-17 to 2018-19, having regard to the land record evidencing the agricultural land holdings of assessee’s father and appreciate the submissions of the assessee while adjudica�ng the assessee’s appeal which lacks in this case.
Therefore, we deem it fit to remit the ma�er to the file of learned Assessing Officer for considering the documentary evidence furnished by the assessee in the light of the returns of income for the AYs 2015-16 and 2019-20 also, a�er affording a reasonable opportunity of being heard to the assessee as per the principles of natural jus�ce. If the learned Assessing Officer finds source for the balance cash derivable from the agricultural lands of the father of the assessee, then he will delete the en�re addi�on. The grounds are answered accordingly.
In the result, appeal of the assessee is allowed as indicated herein above. Order pronounced in the open court on the 23rd January, 2025.