GOVARDHAN NAIDU GUMMALLA,HYDERABAD vs. ACIT, CENTRAL CIRCLE-2(2), HYDERABAD

– A.Y 2018-19 2. The brief facts of the case are that the assessee has filed his original return of income for the A.Y 2018-19 on Page 1 of 8 02/08/2018 declaring total income of Rs.35,99,600/- and the same has been processed and intimation u/s 143(1) of the I.T. Act, 1961 was issued on 12/10/2018. A search & seizure operation u/s 132 of the I.T. Act, 1961 was conducted in the Rithwik group cases on 12/10/2018 and as part of the search & seizure operation, the case of the assessee was also covered. Consequent to search notice u/s 153A of the I.T. Act, 1961, dated 23/09/2019 was issued. In response,. the assessee filed return of income on 07/12/2019 admitting total income at Rs.35,99,600/- which is the same income returned in the return of income filed u/s 139(1) of the I.T. Act, 1961. The assessment has been completed u/s 143(3) r.w.s. 153A of the I.T. Act, 1961 on 17/06/2021 and determined the total income at Rs.43,79,600/- by making additions towards exemption claimed u/s 10 of the I.T. Act, 1961 to the tune of Rs.2,40,000/- against the income from salary and addition of Rs.5,40,000/- towards the gifts received from relatives.

The assessee carried the matter in appeal before the first appellate authority and challenged the additions made by the Assessing Officer towards exemption claimed u/s 10 of the I.T. Act, 1961 and also addition towards gifts received from relatives. The learned CIT (A) after considering the relevant submission of the assessee and also taken note of various facts, rejected the explanation furnished by the assessee and sustained the additions made by the Assessing Officer towards disallowance u/s 10 and addition towards gifts received from relatives.

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

The first issue that came up for our consideration from the additional ground filed by the assessee is on the legality of additions made in the assessment order passed u/s 153A of the I.T. Act, 1961, in absence of incriminating material. The learned Counsel for the assessee referring to the decision of the Hon'ble Supreme Court in the case of PCIT vs. Abhisar Buildwell (P) Ltd reported in (2023) 454 ITR 212 submitted that in absence of incriminating material found during the search, no addition can be made in unabated assessment. Since the assessment herein, in question, is unabated as on the date of search, the addition made by the Assessing Officer should be deleted.

The learned DR, on the other hand, supporting the order of the learned CIT (A) submitted that the assessment in question is abated as on the date of search which is evident from the date of search, in the present case i.e. on 12/10/2018 and the time limit for issuance of notice u/s 143(2) of the I.T. Act, 1961 would expire on 30/09/2019. Therefore, there is no merit in the ground of appeal taken by the assessee and same needs to be dismissed.

We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the assessment herein, in question, is abated as on the date of search

The next issue that came up for our consideration from Ground No.3 of assessee’s appeal is addition of Rs.2,40,000/- towards denial of exemption u/s 10 of the I.T. Act, 1961. The appellant has claimed exemption u/s 10 for Rs.2,40,000/- against the income from salary received from Rithwik Projects (P) Ltd. The appellant claims that the income exempt u/s 10 has been certified by the employer and therefore, the Assessing Officer is erred in disallowing the claim of the exemption. The Assessing Officer made addition towards exemption claimed u/s 10 of the I.T. Act, 1961 on the ground that the assessee could not furnish supporting evidences.

We have hard both parties and considered the relevant reasons given by the Assessing Officer towards addition of Rs.2,40,000/- for disallowance u/s 10 of the I.T. Act, 1961 in light of various evidences filed by the assessee. We find that the assessee except furnishing certificate from the employer i.e. Rithwik Projects (P) Ltd to support his contention for claiming

The next issue that came up for our consideration from Ground No.4 of assessee’s appeal is addition towards gifts claimed to have been received from sons of the assessee. The Assessing Officer has made addition of Rs.5,40,000/- towards gift claims to have been received from Mr. G. Jaswant & Mr. G. Praneeth, both are sons of the appellant on the ground that no evidence has been filed. It is the claim of the assessee that he has filed relevant confirmation letters from the donors along with their PAN Nos. and further, both donors are income-tax assessees and they have enough source of income to explain gifts received by the appellant.

We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. First of all, the addition made by the Assessing Officer towards gift is Rs.4,40,000/- and not Rs.5,40,000/- and the same has been clarified by the learned Counsel for the assessee and also accepted by the learned DR present for the Revenue. The Page 5 of 8 appellant has received Rs.2,20,000/- gifts from Shri G Jaswant, son of the assessee who is also an income-tax assessee with PAN BEPKJ8935C. The appellant has filed confirmation letter from the donor and the donor has confirmed gift given to his father for an amount of Rs.2,20,000/-. Similarly, the appellant received another gift of Rs.2,20,000/- from his son Mr. G. Praneet who is also an income-tax assessee and files his return of income under PAN No.DDDPP4582H. The donor has also filed confirmation letter and confirmed gift given to the appellant. From the details filed by the assessee including confirmation letters from the donors, it appears that the appellant has explained the gifts received from relatives with relevant evidences. Therefore, we are of the considered view that the Assessing Officer is erred in making addition towards gifts received from relatives. The learned CIT (A) without considering the relevant facts simply sustained the addition made by the Assessing Officer. Thus, we set aside the findings of the learned CIT (A) on this issue and direct the Assessing Officer to delete the additions made towards gifts received from relatives.

In the result, appeal filed by the assessee is partly allowed.

In the result, appeal filed by the assessee for the A.Y 2019-20 is partly allowed.

To sum up, both the appeals filed by the assessee for A.Ys 2018-19 & 2019-20 are partly allowed.