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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH
आदेश /O R D E R Per Bench :
These appeals are filed by the assessee against the order of the Commissioner of Income Tax(Appeals) [CIT(A)]-3, Visakhapatnam vide ITA No.318/2015-16/CIT(A)-3/VSP/2016-17 dated 10.03.2017 for the Assessment Year (AY) 2008-09 to 2011-12. Since the grounds raised in the
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appeals are common, these appeals are clubbed, heard together and a common order is being disposed of for the sake of convenience as under.
The assessee raised the following grounds of appeal for the Assessment Year (A.Y) 2008-09 which are common for all the appeals for the A.Y. 2008-09 to 2011-12: 1. The CIT(A) as well as the Assessing Officer ought to have appreciated the fact that your Appellant was provided with the copies of the seized material without sufficient time to analyse and file return under section 153C, therefore assessment u1s 144 is bad in law. 2. The CIT(A) erred in law and facts of the case in confirming the addition of Ps, 9,36,500/- made in assessment. 3. The CIT(A) and the Assessing Officer have erred in law and facts of the case adding Rs. 9,36,500/- being cash deposited in Bank on mere suspicion and presumption that it belongs Your Appellant ignoring the deposition of Smt. U Rajyalakshmi. 4. The CIT(A) having called for the records and assessment orders of Suit. U Rajyalakshmi ought to have given an opportunity to verify the same and explain the facts, after considering the same ought to have deleted the addition. 5. Your Appellant submits that the addition is not based on any seized material but based on cash deposited in bank account, the addition is bad in law and may be deleted.
Ground No.1 is related to the issue of not providing the seized material to the assessee well in advance to analyze and file the return of
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income. This ground is common to all the appeals for the Assessment Years of 2008-09 to 2011-12. A search u/s 132 was conducted in the case of D.Sampath on 13.07.2011 in connection with the cases of Smt. U Rajya Lakshmi and others. During the course of search, incriminating material was found and seized indicating undisclosed income in the case of the assessee from the premises of searched person. Consequently a notice u/s 153C was issued by the Assessing officer (AO) on 02.11.2012. In response thereto, the assessee filed the return of income on 06.06.2013. Subsequently, the AO had issued the notice u/s 143(2) dated 14.11.2013 which was served on the assessee on 30.11.2013 but there was no response from the assessee. Therefore, the AO issued a letter to the assessee on 03.03.2014 giving final opportunity to submit the information for which the assessee has not responded except submitting the copies of bank statements. Final show cause notice was issued to the assessee on 19.03.2014 for which the assessee filed reply and the same was received by the AO on 27.03.2014. From the perusal of the assessment order, there is no mention with regard to the date of requesting the seized material and supply of the seized material by the AO. The Ld.AR did not furnish the date of requisition of the copies of the seized material and the date of supply of copies of the seized
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material to the assessee. Having received the copies of the seized material from the AO during the assessment proceedings, at the time appeal also the assessee did not make any effort to analyse the seized material and to present his case before the Ld.CIT(A). Therefore, from the perusal of the assessment order and the Ld.CIT(A) order, we observe that it is the assessee who has not cooperated with the department and failed to furnish the required information in spite of several notices and opportunities provided by the AO as well as the CIT(A). This ground was not raised by the assessee before the CIT(A) and during the appeal hearing, the Ld.AR did not make any argument to support the ground. Therefore, we do not find any merit in the ground raised by the assessee and this ground is dismissed. This ground is involved for the A.Ys 2008-09 to 2011-12 and the assessee’s appeals on this ground for all the assessment years are dismissed.
Ground No.2 and 3 are related to the cash deposits made in the bank account. During the search and seizure operations in the premises of Shri D.Sampath, the AO found the bank accounts relating to the assessee. It is found from the bank accounts that the assessee has made huge cash deposits in the bank accounts for the A.Y. 2008-09 to 2011-12 as under :
I.T.A. No.421-424/Viz/2017 Shri Dharipalli Srinivas, Warangal
Name of the Name of the Bank Account No. Deposits A/c holder (In Rs.) (Sri/Smt.) Financial Year 2007-08 relevant to A.Y. 2008-09 D. Srinivas Axis Bank, Kukatpally, 193010100081449 9,36,500 Hyderabad Total 9,36,500 Financial Year 2008-09 relevant to A.Y. 2009-10 D. Srinivas Axis Bank, Kukatpally, 193010100081449 4,35,000 Hyderabad D. Srinivas Axis Bank, Kukatpally, 193010100127189 1,13,400 Hyderabad Total 5,48,400 Financial Year 2009-10 relevant to A.Y. 2010-11 D. Srinivas Axis Bank, Kukatpally, 193010100127189 10,99,000 Hyderabad Total 10,99,000
Financial Year 2010-11 relevant to A.Y. 2011-12 D. Srinivas Axis Bank, Kukatpally, 193010100127189 17,63,000 Hyderabad D.Padmalath Axis Bank, Kukatpally, 910010042334221 7,65,000 Hyderabad Total 25,28,000 Total Deposits for the F.Ys. 2005-06 to 2011-12 relevant to A.Ys. 2006-07 51,11,900 to 2012-13
The AO issued notices to the assessee to explain the sources of cash deposits made in the bank account. Since there was no compliance from the assessee, the AO issued the final show cause notice for which the assessee filed reply stating that the cash deposits made in his bank account and in his wife’s account pertains to Smt.U Rajya Lakshmi and Shri D.Sampath. Shri D.Sampath happens to be brother of the assessee and the deposits
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were claimed to be made in his bank account by his brother to make the payments to the landlords for purchase of lands on behalf of Smt.U.Rajya Lakshmi. However, the assessee did not furnish any evidence to support his claim that the cash deposits does not pertain to him but belonged to Sri D.Sampath or Smt. U Rajya Lakshmi. Not even the confirmation letter was filed from Smt. U Rajya Lakshmi and Sri D.Sampath explaining the sources. In fact, there was no response to the notice issued by the AO. Therefore, the AO treated the cash deposits as an undisclosed income in the hands of the assessee for the A.Y.2008-09 to 2011-12 as under :
Asst.Year Undisclosed Income 2008-09 9,60,500 2009-10 5,48,400 2010-11 10,99,000 2011-12 25,28,000
Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) but did not furnish any fresh material to support his argument that the money does not belong to him. Therefore, the Ld.CIT(A) confirmed the addition made by the AO. For ready reference, we extract relevant part of the order of the Ld.CIT(A) which reads as under : “I have carefully considered the facts of the case, grounds of appeal and the submissions made by the appellant. In this case, it appears that the appellant
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seems to have been non-cooperative and evasive in providing information to the department. The undisputable fact about the case is that the appellant owns bank account in Axis Bank, Hyderabad. There is no contravening fact on the file to conclude that the cash deposits in the bank account do not belong to the appellant. The appellant's assertion that the money deposited in the bank account does not belong to him is also not supported with any corroborative evidence. Even during the appellate proceedings, the appellant has not made any attempt to explain his stand instead he took the route which is more convenient to say that the bank account do not belong to him and that they belong to Smt. Uppu Rajyalakhnii and his brother, Sri D. Sampath. The appellant has further contested that the said cash deposits are made for making payments to the landlords from whom Smt. Uppu Rajyalakshmi has purchased Lands. No credible evidence in support of his claim was produced in this regard. 4.2. In the instant case, the Assessing Officer has made the assessment on the issue of cash deposits and there was no evidence that either Smt.Uppu Rajyalakshmi or Sri D. Sampath has owned up the bank account of the appellant as claimed by him before the Assessing Officer. Therefore, the arguments of the appellant that the deposits in his bank account belong to Smt. Uppu Rajyalakshmi and his brother is prima facie not correct and hence rejected. There is no deviation from the facts and circumstances of the present case as that of Sri D. Sampath wherein I have held the similar view. Following the rule of consistency, I uphold the order of the Assessing Officer in this case. In view of the facts discussed above, I am constrained to confirms the addition of Rs.9,36,500/- made by the Assessing Officer as there are no emerging in support of the claim of the appellant.”
Aggrieved by the order of the Ld.CIT(A), the assessee filed appeal before this Tribunal. During the appeal hearing, the Ld.AR requested for making the addition of peak deposits instead of the entire cash deposits. The Ld.A.R argued that the AO made the entire deposits as addition, though there were frequent cash deposits and withdrawals in the account and the same against the normal practice of computing the undisclosed income. The Ld.A.R argued that the cash deposits and withdrawals are nothing but circulation of money in the same account, therefore, requested to consider
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the peak deposits as income instead of the entire cash deposits. The Ld.AR further submitted that the entire cash deposits were related to Shri D.Sampath which was received on behalf of Smt. U Rajya Lakshmi and Shri D.Sampath. Since his brother handled the monetary transactions of Rajya Lakshmi and due to search conducted in the premises of Smt.Rajya Lakshmi, his brother was in deep trouble and had life threat. Since the transactions have to be explained by his brother and he was running for hideout to save his life, the assessee could not comply with the notices issued by the department. The Ld.AR requested that the matter may be remitted back to the file of the AO to consider the peak credits as income and assured of full cooperation with the department to submit the necessary evidences for completion of the assessment.
We have heard both the parties and perused the material placed on record. In this case, the AO made the addition of entire cash deposits in the bank account. The assessee contended that the deposits were made out of the withdrawals. Further, the assessee did not press his contention that the money does not belong to him, but belonged to Smt. U Rajya Lakshmi or Shri D.Sampath. The Ld.AR has only requested to consider deposits as well as the withdrawals and to assess the peak credit as income for the
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respective assessment years. As evident from the bank account, there are frequent cash deposits and withdrawals which required to be considered in totality of the facts but not the deposits alone. Since the assessee has assured that he would submit the entire information required for the purpose of completion of the assessment, we are of the considered opinion that in the interest of justice the issue should be remitted back to the file of the AO to arrive at the true and correct income. The assessee must submit the necessary information explaining the sources of deposits, and the application of withdrawals before the AO to consider the issue on merits. Accordingly we set aside the order of the lower authorities and remit the issue back to the file of the AO fresh consideration. Needless to say that the AO should give more opportunity to the assessee to explain the case. Accordingly. the appeals of the assessee for the A.Ys 2008-09 to 2011-12 on this ground are allowed for statistical purpose.
Ground No.4 is related to the contention of the assessee that the CIT(A) ought to have verified the records and the assessment order of Smt. U Rajya Lakshmi and given an opportunity to the assessee. During the appeal hearing this ground was withdrawn by the Ld.AR therefore, this ground is dismissed as withdrawn for the A.Ys.2008-09 to 2011-12.
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Ground No.5 is related to the assessment made on the basis of bank deposits instead of the seized material. During the appeal hearing, the Ld.AR submitted that the search u/s 132 was conducted in the case of Shri D.Sampath and notices u/s 153C was issued to the assessee and the assessment was made on the basis of deposits made in the bank accounts without having any seized material. Therefore, argued that the assessments made without the basis of the seized material in search assessments is unsustainable accordingly requested to delete the addition.
On the other hand, the Ld.DR supported the orders of the lower authorities.
We have heard both the parties and perused the material placed on record. The AO issued the notice u/s 153C stating that the incriminating material / documents pertaining to the assessee was found and seized during the course of search conducted u/s 132 in the case of Shri D.Sampath. The assessee is having the bank account and made huge cash deposits in the bank account. The fact that the assessee has made huge cash deposits in the bank account, for which the source was not explained has come to the notice of the department during the course of search and seizure operations conducted in the premises of Shri
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D.Sampath. In this case, the assessee has not filed the regular returns of income. During the appeal hearing the Ld.A.R did not furnish any evidence having filed the regular returns of income by the assessee. No assessments were made u/s 143(3)/143(1) in the hands of the assessee. Thus, the bank accounts found during the course of search are not declared by the assessee and constitute the incriminating material for the purpose of initiating the proceedings u/s 153C. Accordingly, we uphold the action of the AO in initiating the proceedings u/s 153C and the resultant actions of the AO and dismiss the appeals of the assessee on this ground. This ground is involved for the assessment years from 2008-09 to 2011-12 and the appeals of the assessee for the A.Y. 2008-09 to 2011-12 on this ground are dismissed. In the result, the appeals of the assessee from 2007-08 to 2011-12 are partly allowed.
Order pronounced in the open court on 26th October, 2018.
Sd/- Sd/- (धड.एस. सुन्दर ससह) (िी.दुगाा राि) (D.S. SUNDER SINGH) (V. DURGA RAO) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER धिशाखापटणम /Visakhapatnam ददिांक /Dated : 26.10.2018 L.Rama, SPS
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आदेश की प्रधिधलधप अग्रेधर्ि/Copy of the order forwarded to:- 1. निर्धाऩिती/ The Assessee- Sri Dharipalli Srinivas, H.No.5-33, Sumitranagar Kukatpally, Hyderabad 2. िधजस्व/ The Revenue – The ACIT, Central Circle-2, Visakhapatnam 3. The Pr.Commissioner of Income Tax (Central) Visakhapatnam 4. The Commissioner of Income-Tax (Appeals)-3, Visakhapatnam 5. धिभागीय प्रधिधिधि, आयकर अपीलीय अधिकरण, धिशाखापटणम /DR, ITAT, Visakhapatnam 6.गाडाफ़ाईल / Guard file आदेशािुसार / BY ORDER // True Copy //
Sr. Private Secretary ITAT, VISAKHAPATNAM