SASI KIRAN SUNKARA,HYDERABAD vs. DCIT., CENTRAL CIRCLE-3(1), HYDERABAD

Aggrieved by the order of assessment, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee explained the money trail by filing relevant bank account statements of the assessee, his father Dr. S. Adi Narayana Rao and his mother Dr. R. Sasi Prabha, and claimed that, he has received a sum of Rs. 1,00,00,000/- from his father on 03.04.2021, out of which he has made two fixed deposits of Rs. 50,00,000/- each on 11.06.2021. The assessee further explained 4 Sasi Kiran Sunkara that, he has received a sum of Rs. 1,00,00,000/- from his mother Dr. R. Sasi Prabha on 14.09.2021, and further a sum of Rs. 2,19,99,953/- on 15.09.2021, out of which he has made two fixed deposits of Rs. 1,60,00,000/- each on 10.10.2021 and 11.10.2021. The assessee further claimed that, in respect of the balance fixed deposits of Rs. 2,20,00,000/-, the said amount has been directly paid by Dr. R. Sasi Prabha, in the name of the assessee.

The Ld. CIT(A), after considering the relevant submissions of the assessee and also taking note of the relevant facts, observed that, although the assessee claimed to have received sum of Rs. 6,40,00,000/- from his parents, but on perusal of their income- tax returns, it is noticed that, they have declared very less income, which is not sufficient to explain the huge amount of funds transferred to the assessee. Further, the assessee claimed that, his mother Dr. R. Sashi Prabha had made fixed deposits in his name for an amount of Rs. 2,20,00,000/- and also deposited funds in his bank account to the extent of Rs.3,19,99,953/-, however, on examining the income-tax return of Dr. R. Sasi Prabha, it is noticed that, the total income for the impugned 5 Sasi Kiran Sunkara assessment year for A.Y. 2022-23 was Rs. 1,15,83,712/- and agricultural income of Rs. 4,43,400/-, which is not sufficient to explain the huge amount given to the assessee. Further, on perusal of the balance sheet of Dr. R. Shashi Prabha, it is noticed that, there was no interest relating to funds given to the assessee. Similarly, the assessee has claimed that, he has received Rs. 1,00,00,000/- from his father, which in turn was used for making fixed deposits, however, the income declared by his father is very meagre which is not supporting the huge amount given to the assessee. Therefore, it was observed that, the assessee has failed to explain the source of fixed deposits with relevant evidences. Accordingly, the Ld. CIT(A) rejected the explanation of the assessee and upheld the additions made by the A.O. towards the fixed deposits in the bank account as unexplained investment under Section 69 of the Income-tax Act, 1961.

Aggrieved by the order of Ld. CIT(A), the assessee is now in appeal before the Tribunal.

The learned counsel for the assessee, Dr. S. Rama Rao, Advocate, submitted that, the Ld. CIT(A) erred in sustaining the 6 Sasi Kiran Sunkara additions made by the A.O. towards fixed deposits in the bank account as unexplained investment under Section 69 of the Act, even though, the assessee has furnished details of the source, which include the amounts received from his father and mother. The learned counsel for the assessee, further referring to additional evidences filed by the assessee vide petition dated 15.12.2015, submitted that, the assessee has explained the money trail for each and every fixed deposit made in the Union Bank of India by filing bank account statements of his parents. Further, the assessee has also explained the source of his mother out of sale proceeds of agricultural land aggregating to Rs. 9,53,57,058/-, out of which she had transferred a sum of Rs. 5,40,00,000/- to the assessee on various dates. Further, the assessee has also filed the bank account statement of his father Dr. S. Adi Narayana Rao to prove the transfer of funds from his father’s bank account which is the source for making fixed deposits in the bank account. Although the assessee has furnished relevant details, but the A.O. and the Ld. CIT(A) have made additions towards unexplained investment under Section 69 7 Sasi Kiran Sunkara of the Act on suspicious grounds. Therefore, he submitted that, the additions made by the A.O. should be deleted.

The learned CIT-DR for the Revenue, Dr. Narendra Kumar Naik, on the other hand, supporting the order of the Ld. CIT(A), submitted that, the assessee has failed to prove the source for the fixed deposits from known and explained sources. Although the assessee claims to have received funds from his father and mother, however, on careful scrutiny of the bank accounts of his father and mother, it is proved that, there is a difference between the amounts received from the parents and the fixed deposits made in the bank accounts. Since the assessee has failed to prove the source with relevant details, the A.O. has rightly made the additions towards fixed deposits under Section 69 of the Income Tax Act, 1961. The Ld. CIT(A), after considering the relevant facts, has rightly sustained the additions made by the A.O. Therefore, he submitted that, the order of the Ld. CIT(A) should be upheld. In this regard, he relied upon the decision of Hon'ble Supreme Court in the case of Sadiq Sheikh Vs. CIT (2021) 124 Taxman.com 202 (SC).

We have heard both parties, perused the material available on record, and had gone through the orders of the authorities below. We have also carefully considered the relevant additional evidence filed by the assessee, including the bank account statements of his father Dr. S. Adi Narayana Rao and his mother Dr. R. Sasi Prabha. We find that, the assessee has explained the source for fixed deposits of Rs. 6,40,00,000/- out of funds received from his father Dr. S. Adi Narayana Rao and his mother Dr. R. Sasi Prabha. The assessee has received Rs. 1,00,00,000/- from his father Dr. S. Adi Narayana Rao on 03.04.2021, out of which he has made two fixed deposits of Rs. 50,00,000/- each on 11.06.2021. The above fund transfer from his father’s bank account to the assessee’s bank account is evidenced by relevant bank account statements. Similarly, the assessee has received Rs. 1,00,00,000/- on 14.09.2021 from his mother Dr. R. Sasi Prabha. He has also received a sum of Rs. 2,19,99,953/- on 15.09.2021 from his mother Dr. R. Sasi Prabha. Further, out of Rs.3,19,99,953/-, he has made two fixed deposits of Rs. 1,60,00,000/- each on 10.10.2021 and 11.10.2021 and the same is evidenced by relevant bank account statements of the assessee 9 Sasi Kiran Sunkara and his mother. The assessee has also made fixed deposits of Rs.2,20,00,000/- on 15.06.2021 and claimed that, this amount was deposited by his mother from her bank account with Union Bank of India on 15.06.2021. The assessee has also filed relevant bank account statements evidencing transfer of funds from his mother’s bank account to the fixed deposit account. Insofar as the source of income or money for his mother, the assessee has furnished various documents, including sale deed copies of lands during the financial year 2021-22, aggregating to Rs. 9,53,57,058/- out of which he has transferred funds to the assessee. These evidences are placed on record by the assessee by filing a paper book. Therefore, from the evidences furnished by the assessee, there is no dispute with regard to the fact that, the assessee has received funds from his father Dr. S. Adi Narayana Rao and mother Dr. R. Sasi Prabha, which is source for time deposits in Union Bank of India for Rs. 6,40,00,000/-. However, fact remains that, although the assessee has claimed to have explained the source, but has failed to furnish relevant bank account statements explaining the money trail with dates and events. Further, the assessee has now filed relevant bank account 10 Sasi Kiran Sunkara statements along with certain sale deed copies to explain source for his mother to pay the amount to the assessee. These evidences were not filed before the A.O. and the A.O. had not got an occasion to examine the evidence filed by the assessee explaining the source for fixed deposits. Since the assessee has completely explained the source for cash deposits out of the funds received from his parents and also filed additional evidence in the form of relevant bank account statements along with sale deed copies of lands in the hands of his mother to establish the source for cash deposits, in our considered view, these evidences need to be verified by the A.O. Thus, we set aside the order of the Ld. CIT(A) and restore the issue back to the file of the A.O. The A.O. is directed to verify the claim of the assessee in light of our discussion given hereinabove and decide the issue as per law. In case, the A.O. finds that the assessee is able to explain the source out of funds from his parents, then the A.O. is directed to delete the additions made towards fixed deposits u/s 69 of the Income Tax Act, 1961. 11 Sasi Kiran Sunkara

In the result, the appeal filed by the assessee is allowed for statistical purposes.