MADHAVAPEDDY SUDHAKAR,HYDERABAD vs. INCOME TAX OFFICER, WARD-13(3), HYDERABAD

The brief facts of the case are that in this case, the Assessing Officer upon verifying individual transaction details against the PAN of the assessee for the financial year 2012-13,

Page 1 of 8 relevant to A.Y 2013-14, noticed that the assessee has made cash deposits of Rs.53,31,630/- in his Savings Bank Account held with Punjab National Bank. Upon verification, it was seen that the assessee has not filed the return of income for the A.Y 2011-12. Therefore, the assessment has been reopened u/s 147 of the I.T. Act, 1961 and notice u/s 148 of the Act dated 27/03/2018 has been issued by the Income Tax Officer Ward 12(2) Hyderabad. In response to the 148 notice, there was no compliance from the assessee. Subsequently, notice u/s 142(1) dated 1/11/2018 was issued and posted the case for hearing on 9/11/2018. The assessee appeared before the Assessing Officer and filed letter stating that his wife is into business and he has to file his return of income for himself and for his wife and therefore, requested to transfer the case to Income Tax Officer Ward 13(3) Hyderabad. Accordingly, the assessment records has been transferred to Income Tax Officer Ward 13(3) Hyderabad.

The case was taken up for scrutiny and during the course of assessement proceedings, the Assessing Officer noticed that there is a total credits in his bank account including cash deposits to the tune of Rs.79,65,164/-. The Assessing Officer called upon the assessee to explain credits found in his bank account. In response, the assessee submitted that the bank account held with Punjab National Bank is jointly operated by himself and his wife and credits found in the bank account amounting to Rs.54,57,050/- pertains to business receipts of his

Page 2 of 8 wife for the relevant financial year. In this regard, the appellant has also filed return of income filed by his wife for the A.Y 2013- 14 admitting gross receipts of Rs.54,57,050/- and net profit of Rs.4,36,800/-. For the balance cash deposits, the appellant explained the source out of previous bank withdrawal from very same bank and the amount transferred from his cash credit account. The Assessing Officer however, was not convinced with the explanation furnished by the assessee and according to the Assessing Officer, the assessee could not explain the relevant credits appearing in his bank account and thus,, rejected the explanation of the assessee and made addition of Rs.79,65,164/- as unexplained money taxable u/s 69A of the I.T. Act, 1961.

Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT (A). Before the learned CIT (A), the assessee challenged the additions made by the Assessing Officer toward credits found in his bank account and argued that part of the credits is his wife’s business receipts and the same has been accepted by the Assessing Officer in her assessment. The balance cash deposit of Rs.25,05,164/- has been explained out of known source of income with relevant evidences. Therefore, the assessee submitted that the addition made by the Assessing Officer should be deleted. The learned CIT (A) after considering the relevant facts and also reasons given by the Assessing Officer, rejected the explanation furnished by the assessee and sustained the additions made by the Assessing

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

The learned Counsel for the assessee referring to the ground No.2 of assessee’s appeal, submitted that although notice u/s 148 of the Act has been issued to the assessee, but the said notice has been issued by non-jurisdictional Assessing Officer who is not having jurisdiction on the assessee which is evident from the subsequent transfer of case to another officer by the Assessing Officer who issued notice. Therefore, he submitted that the reopening of the assessment in absence of notice u/s 148 by the jurisdictional Assessing Officer is void, ab initio and liable to be quashed.

The learned Counsel for the assessee further submitted that admittedly the bank account held with Punjab National Bank is a joint bank account of the assessee and his wife. The assessee’s wife is into business and filed her return of income for the A.Y 2013-14 by admitting gross receipts from her business at Rs.54,57,050/- and the same has been assessed as such by the Assessing Officer vide order passed u/s 143(3) r.w.s. 147 of the I.T. Act, 1961 on 29.01.2022. Further, the Assessing Officer has made addition towards balance credits of Page 4 of 8 Rs.25,05,164/- in the hands of assessee’s wife as unexplained money. Further, the Assessing Officer had also made addition towards total credits found in the bank account in the hands of the assessee as unexplained money. Therefore, once the addition is already made in the hands of the assessee’s wife, no addition can be made towards very same credits in the hands of the assessee. Therefore, he submitted that the addition made by the Assessing Officer, in the hands of the assessee should be deleted.

The learned DR, on the other hand, supporting the orders of the learned CIT (A) submitted that the reopening of the assessment u/s 148 is valid, because the assessee is a non-filer and therefore, based on PAN data basis, the Assessing Officer has issued notice u/s 148 of the I.T. Act, 1961. Therefore, the grounds taken by the assessee should be rejected. In respect of cash deposits in bank account, although the appellant claims that his wife had admitted part of credit in her return, but no proper evidence has been filed. Therefore, he submitted that the addition made by the Assessing Officer should be sustained.

We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. As regards reopening of the assessment u/s 147 of the I.T. Act, 1961 is concerned, since the assessee is a non-filer of return of income and also notice has been issued by the Assessing

In so far as the balance addition of Rs.25,05,164/- is concerned, admittedly, the same has been added in the hands of the appellant’s wife u/s 69A of the Act and also in the hands of the appellant u/s 68 of the I.T. Act, 1961. Once there is no dispute with regard to the fact that the Bank Account held with Punjab National Bank is joint account of the appellant and his wife and credits found in the said bank account has been assessed in the hands of appellant’s wife, the very same credits cannot be assessed in the hands of the appellant because it amounts to taxing the income twice. Further, the appellant has also claimed to have explained the balance credit of Rs.25,05,164/- out of known source of income including proceeds of gold loan, transfer from salary OD Account etc. Further, the appeal filed by the appellant wife against her assessment is also pending before the learned CIT (A) for adjudication as claimed by the learned Counsel for the assessee. Since bank account held by the appellant and his wife is joint account and credits found in said bank account are partly assessed in the hands of the assessee’s wife and fully in the hands of the assessee, in our considered view, the issue needs to be re-examined by the learned CIT (A) in light of explanation of the assessee with regard to the source for said credits. Further, it is advisable to decide this issue along with the appeal filed by the appellant’s wife. Therefore, we

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