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Income Tax Appellate Tribunal, Hyderabad ‘B‘ Bench, Hyderabad
Before: Shri R.K. Panda & Shri K. Narasimha Chary
आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B‘ Bench, Hyderabad Before Shri R.K. Panda, Accountant Member AND Shri K. Narasimha Chary, Judicial Member Assessment Year: 2011-12 Shri Srinivasulu Naidu Vs. Income Tax Officer Anchuru, Ward 5 Nellore Nellore PAN:AGTPA5413A (Appellant) (Respondent) Assessee by: Shri V.V.S C Muralidhar Rao Revenue by: Shri Kumar Aditya, DR Date of hearing: 13/10/2022 Date of pronouncement: 18/10/2022 ORDER Per R.K. Panda, A.M This appeal filed by the assessee is directed against the order dated 4.9.2019 of the learned CIT (A)-Tirupati, relating to A.Y.2011-12.
Although a number of grounds have been raised by the assessee, however, these all relate to the order of the learned CIT (A) in confirming the addition of Rs.60,50,000/- made by the Assessing Officer as unexplained cash deposit u/s 143(3) of the I.T. Act.
Facts of the case, in brief, are that the assessee is an individual and derives commission income on purchase and sale Page 1 of 7
ITA 1667 of 2019 Srinivasulu Naidu Anchuru Nellore of plots. He filed his return of income for the A.Y 2011-12 on 24.22.2011declaring total income of Rs.1,96,540/- and agricultural income of Rs.90,500/-. The case was selected for scrutiny under CASS and statutory notices u/s 143(2) and 142(1) were issued and served on the assessee along with a questionnaire calling for certain information. The AR of the assessee appeared before the Assessing Officer from time to time and filed the requisite details as called for by the Assessing Officer. During the course of assessment proceedings, apart from other things, the Assessing Officer noted that the there are certain cash deposits made by the assessee in his Bank A/c. From the various details filed by the assessee, he noted that the assessee has paid amounts to certain persons through cash/cheque. He further noted that the cheque payments were mentioned in the ledger a/c maintained with different names. He issued cash/ cheques in the names of G.V.S. Srinivas, P. Ramesh, A.V. Kumar and Siva whereas as per the ledger the amounts were paid to Nalisetty Narayana, Kamma Kalyani, Vinjanam Venkapa Naidu, Kamma Penchala Chowdary, Nalisetty Rangamma, Nalisetty Narayana Rao, Anchuru Rangaiah and Ravuri Masthan Reddy. He, therefore, asked the assessee to explain the discrepancy. It was submitted by the assessee that some of the customers pay advance for purchase of land and after some time they decline to purchase for the reasons best known to them and demand repayment of advance. As the customers live in villages and are having no bank a/c, they demand payment in cash. Therefore, he has issued cheque in the name of broker who in turn has drawn the money from the Bank by way of cheque. It was submitted that since the amounts are paid to the parties, transaction was recorded in the ledger a/c. The assessee also filed affidavits from all the parties. Page 2 of 7
ITA 1667 of 2019 Srinivasulu Naidu Anchuru Nellore
However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. He noted from the affidavit that nowhere the amount advanced, description of property, reasons for non-finalization of deal are mentioned. He, therefore, proposed to treat the said amount as unexplained investment of the assessee. He further noted that the payments were made in instalments which is not the practice prevailing. Further, the customers paid advance to the assessee even after the assessee started repayment of advance as the deal was not materialized which is a very strange feature. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs.60,50,000/- being the amount of advances claimed by the assessee from the following persons by treating the same as assessee’s own cash: S.No Date Name of the person from whom the assessee Amount (Rs.) claimed to have received advances for purchase of sites 1 7.5.10 Sri. A. Rangaiah Naidu 4,50,000 2 8.6.10 Sri. K. Penchala Chowdary 3,50,000 3 29.6.10 Sri Pendala Ratnam 7,00,000 4 7.7.10 Sri V. Venkapa Naidu 8,00,000 5 13.7.10 Sri. K. Penchala Chowdary 5,00,000 6 13.8.10 Sri Nalisetty Narayana Rao 1,00,000 7 8.9.10 Smt. Kamma Kalyani 9,00,000 8 29.11.10 Sri Pendala Ratnam 3,50,000 9 23.12.10 Sri. K. Penchala Chowdary 5,00,000 10 27.12.10 Smt. Nalisetty Rangamma 50,000 11 11.01.11 Sri Nalisetty Narayana Rao 2,00,000 12 28.2.11 Sri A. Rangaiah Naidu 4,00,000 13 18.3.11 Smt. Nalisetty Rangamma 50,000 14 26.3.11 Sri R Masthan Reddy 7,00,000 Total 60,50,000
In appeal, the learned CIT (A) upheld the action of the Assessing Officer by observing as under: “Vide these grounds the appellant stated that he has maintained proper books of account and attended before the Assessing Officer from time to time. The turnover of the appellant was below Rs.40 lakhs and the return was filed without audit report. It was contended that the AO made addition without mentioning the charging section and also without conducing proper enquiries before making the addition. Further, it was also contended that advance paid by the customers were deposited in SBI and entries were made in the ledger books. The appellant contends that Page 3 of 7
ITA 1667 of 2019 Srinivasulu Naidu Anchuru Nellore affidavits from the customers were filed which was not further examined by the AO but made addition which is against the law. The appellant relied on certain decisions and contended that the AO erred in making addition without conducting proper enquiries. Hence, alternatively pleaded to consider the peak amount as, income of the appellant. I have carefully considered the grounds of appeal raised and found most of them are argumentative and does not reveal the grievance of the appellant However, the same are considered as grounds and disposed. The appellant stated that all the material facts were given to the AO and confirmed advance receipt and repayment to the customers by filing affidavits. However, the defects or peculiar facts of the case as pointed by the AO in the assessment order were not dealt/ answered by the appellant. The affidavit filed by the alleged customers if not bear the details then the same cannot be treated as confirmation of the fact. If any person wishes to withdraw from the agreement entered orally, then there is no way the said person advancing the money once again after receipt of a part of the advance from the appellant. The appellant stated that he has arranged the money through his brokers and no substantial evidence placed in this regard by the appellant either before the AO or before the Appellate Authority. The affidavits filed by the appellant are felt self-serving documents by the AO and hence no This cannot be a further enquiry was caused with the alleged customers. substantial grievance to say that the addition made by the AO is incorrect. The AO categorically mentioned in the assessment order person wise the receipt of advance in installments and repayment of the same in installments, thereby held that it is only the money belonging to the appellant and from the undisclosed sources. As the appellant failed in producing the evidence regarding genuineness of the transaction, the addition made by the Assessing Officer is hereby confirmed and the grounds raised by the appellant are dismissed”.
Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal.
The learned Counsel for the assessee strongly challenged the order of the learned CIT (A) in sustaining the addition of Rs.60,50,000/- made by the Assessing Officer. He submitted that the assessee has produced books of account and filed confirmation letters from the creditors to explain the source. However, the Assessing Officer without conducting any inquiry about the affidavits filed before him nor summoning the creditors and recording their statements or not asking the assessee to produce the customers who have advanced cash to the assessee before him made the addition which is not justified. Referring to the decision of the Hon'ble Guwahati High Court in the case of Page 4 of 7
ITA 1667 of 2019 Srinivasulu Naidu Anchuru Nellore Khandelwal Constructions vs. CIT reported in (1998) 227 ITR 900, he submitted that the Hon'ble High Court in the said decision has held that the Assessing Officer surely have the jurisdiction to look into the cash credit and make necessary inquiry and come to a finding on such an inquiry in a proper and fair manner. Since in that case the inquiry was not properly made, the Hon'ble High Court held that the Assessing Officer should not have come to a conclusion that the creditors were fictitious. He accordingly submitted that the addition made by the Assessing Officer and sustained by the learned CIT (A) being not in accordance with law should be deleted. In his alternative contention he submitted that given an opportunity the assessee is in a position to produce the creditors before the Assessing Officer.
The learned DR, on the other hand, heavily relied on the order of the lower authorities.
We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in the instant case made addition of Rs.60,50,000/- as unexplained cash deposit disbelieving the advances received by the assessee from 14 parties the details of which are given at Para 4 of this order. We find the learned CIT (A) upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the learned Counsel for the assessee that the Assessing Officer has not conducted any proper inquiry by not calling the concerned parties by issuing summons or asking the assessee to ITA 1667 of 2019 Srinivasulu Naidu Anchuru Nellore produce them before him. It is also his submission that given an opportunity, the assessee is in a position to substantiate his case by producing the above persons before the Assessing Officer for his examination and adjudicating the issue properly. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one more opportunity to the assessee to substantiate his case by producing the parties from whom he has received the advances. The assessee may also file any other evidence before the Assessing Officer to substantiate his case. He may also adduce evidence to show that he has completed the deals for purchase and sale of land from the above 14 parties by producing necessary evidence and where no deal was completed, the reasons thereof. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, appeal filed by the assessee is allowed for statistical purposes.