SMT. DHARIPALLI RANGAMMA,,WRANGAL vs. ACIT, CENTRAL CIRCLE-2, , VISAKHAPATNAM

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 income. This ground is common for all the appeals for the Assessment Years of 2007-08 to 2011-12. A search u/s 132 was conducted in the case

Ground No.2 and 3 are related to the cash deposits made in the bank account of Late Shri D.Krishnamachary father of D.Sampath. During the search and seizure operations in the premises of D.Sampath, the AO found the bank accounts relating to Late Sri D.Krishnamachary father of D.Sampath. The assessee found to have made huge cash deposits in the bank accounts for the A.Ys. 2008-09 to 2011-12 as under : Name of the A/c Name of the Account No. Deposits Holder (Sri/ Smt. Bank (inRs.) Financial Year 2005-06 relevant to A.Y.2006-07 F.Y.2005-06 D.Krishnamachary State Bank of 52111317053 58,500 Hyderabad, Warangal Main Branch Total 58,500 Financial Year 2006-07 relevant to A.Y.2007-08 F.Y.2006-07 D.Krishnamachary State Bank of 52111317053 21,500 Hyderabad, Warangal Main Branch Total 21,500 Financial Year 2007-08 relevant to A.Y.2008-09 F.Y.2007-08 D.Krishnamachary State Bank of 52111317053 50,000 Hyderabad, Warangal Main Branch D.Krishnamachary Axis, Warangal 292010100062286 7,58,000 Total 8,08,000 Financial Year 2008-09 relevant to A.Y.2009-10 F.Y.2008-09 D.Krsinamachary Axis Bank, 292010100062286 3,67,500

The AO also observed that these deposits were made by her sons Shri D.Sriramulu and Shri D.Sampath. Since the assessee could not explain the sources for the deposits, the AO treated the same as undisclosed income of the assessee for A.Y. 2007-08 to 2011-12 as under : 2007-08 Unexplained income Rs.2,73,000 2008-09 Rs.8,08,000 2009-10 Rs.6,90,000 2010-11 Rs.3,67,000 2011-12 Rs.9,30,500 6. Aggrieved by the order of the AO the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition for want of evidence.

Against the order of the Ld.CIT(A), the assessee filed appeal before us. During the appeal hearing, the Ld.AR argued that the AO made the entire deposits as addition though there were frequent cash deposits and withdrawals. Cash deposits were made out of the withdrawals and both the cash deposits and withdrawals are nothing but circulation of money in the same account, therefore, requested to consider the peak deposits instead of the entire deposits. The Ld.AR further submitted that due to deep trouble and life threat to Sampath the son of the assessee, the entire family was scared of threats from Rajyalakshmi and others and could not comply with the notices issued by the department. The Ld.AR requested to remit the matter back to the file of the AO to consider the peak credits as income and assured of full cooperation with the department and 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 withdrawals. Further, the assessee did not press her contention that the money does not belong to Late Shri Krishnamachary. The Ld.AR has

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

Ground No.5 is related to cash deposit of Rs.21,500/- in the account of Late Shri D.Krishnamachary, This issue is involved for the A.Y. 2007-08 to 2009-10 as under : 2008-09 Rs.29,000/- 2009-10 Rs.42,900/- The assessee explained the sources for the deposit for the A.Y. 2007- 08 & 2008-09 as pension deposit and for the A.Y.2009-10 the source was stated to be out of pension and agricultural income. Since the cash deposits in ground No.2 and 3 are remitted back to the file of the AO, we are of the view that it is also required to be considered along with cash deposits discussed in ground No.2 and 3 of this order. Thus, we remit the matter back to the file of the AO for fresh consideration. Accordingly, the appeals of the assessee on this ground are allowed for statistical purpose.

Ground No. 6 is related to the additions based on bank deposits instead of seized material.

During the appeal hearing, the Ld.AR submitted that the search u/s 132 was conducted in the case of D.Sampath and notice 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 the seized material. Therefore, argued that the assessments made without the basis of the seized material required to be deleted.

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 were found and seized during the course of search conducted u/s 132 in the case of Shri D.Sampath. The assessee had a bank account and made huge cash deposits in the said 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 searched person. In this case, the assessee has not filed the regular return of income and no

The additional issue involved in this appeal for the A.Y.2009-10 is the expenditure incurred for construction of the house which is contested in this appeal as Ground No. 5 and 6. During the search proceedings the AO found that the assessee had renovated the house and incurred the expenditure of Rs.18,43,758/- for renovation. The source was stated to be the money received by her husband out of the amounts received from U Rajya Lakshmi. The AO has issued several notices but the assessee did not furnish the evidence for the source of the expenditure incurred. Therefore, the AO made the addition of Rs.18,43,758/- as unexplained expenditure.

Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A), but no fresh material was placed to support the claim made by the assessee to explain the source which was stated to be received from U Rajya Lakshmi, Shri D.Sampath or Shri D.Sriramulu. The source was also not explained by Shri D.Sriramulu and Shri D.Sampath in their returns of income. There was no confirmation or evidence having received the sums from U Rajya Lakshmi. Therefore, the Ld.CIT(A) confirmed the addition. For ready reference, we extract relevant part of the order of the Ld.CIT(A) which reads as under : “Regarding the expenditure made towards construction / renovation of house situated at Warangal, the Assessing Officer vide Annexure-A/DS/12, Page Nos. 198 to 200 has found that certain expenditure was incurred by the appellant's husband towards construction of house at Warangal to the tune of Rs.18,43,758/- and the same was confirmed by Sri D. Sriramulu, son of the appellant. As no satisfactory evidence was produced, the Assessing Officer has treated the same as unexplained/ unaccounted income in the hands of the appellant.

We have heard both the parties and perused the material placed on record. During the search and seizure operations conducted in the premises of Shri D.Sampath, the AO found the material marked as Annexure A/DS/12 at page Nos.198-200 and noticed that Late Shri D.Krishnamachary has made notings with regard to the house construction at Warangal. The same was confirmed by his son Shri D.Sampath in the statement recorded on 01.08.2011. However, neither Shri D.Sampath nor Shri D.Sriramulu has explained the source. The source was stated to be from the amounts received from U Rajya Lakshmi, but no evidence was furnished with regard to the receipt of money from U Rajya Lakshmi. During the appeal hearing, before the CIT(A) and before us, the assessee failed to furnish any evidence to explain the source of the expenditure for construction / renovation of the house. Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld.