RAJU JADA,KRISHNA DIST. vs. INCOME TAX OFFICER, WARD-1, MACHILIPATNAM

The assessee is an individual and filed his return of income for the A.Y.2021-22, where an income of Rs.4,10,000/- was offered. For the A.Y.2022-23, a total income of Rs.4,61,670/- was offered, while filing the return of income. The case was selected for scrutiny, basically to explain the cash deposits made into assessee’s bank account. During the A.Y.2021-22, the assessee was given five opportunities and also intimation for scheduling personal hearing through video conference was also given to the assessee. From the assessment order for A.Y.2021-22, it is observed that the assessee deposited an amount of Rs.1,05,94,210/- and the assessee could not explain the source of these cash deposits into his bank account. Since the assessee failed to bring on record the sources of deposits and the net winnings from Gameskraft Technologies Private Limited, the entire amount was added u/s 69A of the Act. The above information was shared by Gameskraft Technologies Private Limited. The Ld.AO has mentioned that the said earning /loss falls under the head “income from other sources” as having been earned by way of winnings from lotteries, crossword puzzles, races, games, gambling, betting etc. referred to in section 2(24)(ix) of the Act. Such winnings entitled the assessee to, no claim of expenses or loss set off and the gross amount is taxed as per the provisions of section 115BB of the Act. The Ld.AO has stated that the burden of proof to explain the source of the unexplained money, investment or expenditure wholly lies with the taxpayer and in the impugned case, the assessee has failed to discharge the primary onus cast upon him to furnish the details required to complete the proceedings. Since the assessee did not furnish the sources of deposits and did not cooperate in the proceedings, the Ld.AO completed the assessment by making addition, which represents primarily the deposits made into the company and the bank account.

Aggrieved by the addition made by the Ld.AO, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) has given five opportunities and also one show cause notice and required the assessee to establish the source of deposits and the amount paid to Gameskraft Technologies Private Limited. At the time of filing of appeal, the assessee has claimed that he had incurred loss of Rs.72.56 lakhs, hence, no addition can be made. But the assessee has not given any proof for incurring loss or investments made and hence, the Ld.CIT(A) has confirmed the additions.

Aggrieved by the order of the Ld.CIT(A), the assessee filed an appeal before ITAT. During the appeal proceedings, the Ld.AR of the assessee filed details of statement of transactions with Gameskraft Technologies Private Limited and stated that the assessee incurred huge losses and hence, there is no taxable income. The Ld.AR of the assessee has also mentioned that the entire amount was not deposited at once and the funds are being rotated. In other words, the amount, which was deposited during the week is withdrawn and subsequently re-deposited and hence, total credits cannot be added. But the fact remains that the assessee could not explain the sources with evidences before the lower authorities. Since the details furnished before the ITAT were not available with the lower authorities, the Ld.AR of the assessee requested for an opportunity to substantiate his case before the Ld.AO.

The Ld.DR relied on the orders of the Ld.AO and the Ld.CIT(A). It was argued that the assessee has not cooperated with the assessee. As the amount involved was quite huge and as there was no response from the side of the assessee, the Ld.DR requested the Bench to confirmed the additions made by the Revenue.

After hearing both sides, the Bench decided to remit the issue back to the file of the Ld.AO for the following reasons :

With the above direction, the issue is remitted to the file of the Ld.AO , where the assessee would give all the details and the Ld.AO is directed to take into consideration all the details and pass an order, after giving suitable opportunity to the assessee. The Ld.AO should verify the payment as above before taking up the assessment proceedings.

In the result, the appeals of the assessee are allowed for statistical purpose for both the assessment years.