INCOME TAX OFFICE, WARD-2(3), VIJAYAWADA vs. HARINADH ANANTHANENI, VIJAYAWADA

सुनवाई क" तार"ख / Date of Hearing : 21/02/2024 घोषणा क" तार"ख/Date of : 29/02/2024 Pronouncement O R D E R PER S. BALAKRISHNAN, Accountant Member :

The captioned appeal is filed by the Revenue against the order of the Ld. Commissioner of Income Tax vide DIN & Order No. 2 ITBA/NFAC/S/250/2022-23/1051575314(1), dated 29/03/2023 arising out of the orders passed U/s. 143(3) of the Income Tax Act, 1961 [the Act] for the AY 2017-18.

Simultaneously, information has been obtained from the Bank Authorities U/s. 133(6) of the Act and on verification of the same, it was noticed that the assessee has made cash deposits to the tune of Rs. 4,92,64,897/- during the entire year and has deposited an amount of Rs. 60,71,390/- during the demonetization period. The assessee was asked to furnish the sources for these cash deposits and other requisite information. It was observed that out of Rs. 3 60,71,390/- cash deposited during the demonetization period, an amount of Rs. 27,96,810/- was deposited in the new notes and the balance amount of Rs. 32,74,580/- was deposited in the form of specified bank notes [SBNs]. It was also observed that the assessee did not respond to the notices issued and thereafter summons U/s. 131 of the Act were issued on 25/11/2019 to appear before the Ld. AO on 27/11/2019. In response, the assessee appeared and his statement was recorded wherein the assessee was requested to show cause as to why the cash deposits made for Rs. 60,71,390/- during the demonetization period should not be treated as investment from other sources. The assessee was requested to submit the information by 29/11/2019. Since the assessee did not file any information on or before 29/11/2019, the Ld. AO concluded that the assessee is not interested in adducing any evidence to explain his case. The Ld. AO therefore made an addition of Rs. 32,74,580/- U/s. 69A of the Act. Further, the Ld.AO also observed that the assessee has made total cash deposits of Rs.4,92,64,897/- whereas the assessee has shown the turnover of Rs. 4,37,20,920/- while filing the return of income. Therefore, the Ld. AO treated the difference amount of Rs. 55,43,977/- has not explained by the assessee and taxed it U/s. 69A of the Act under “other sources”.

Aggrieved by the additions made by the Ld.AO, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) on appeal observed that once the cash deposit is treated as turnover, the same shall not be treated as unexplained money within the provisions of section 69A of the Act and therefore deleted the additions made by the Ld. AO by allowing the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal by raising the following Grounds of Appeal:

“1. The Ld. CIT(A) erred in admitting the new / additional evidence ignoring the provisions of Rule 46A(2) of the Income Tax Rules, 1962.

2. The Ld.CIT(A) erred in taking into account the new / additional evidence, without providing any opportunity to the AO to examine / refute the said additional evidence, ignoring the provisions of Rule 46A(3) of the Income Tax Rules, 1962.

3. The only contention of the Revenue emanating from the grounds raised

is with respect to admission of additional evidence by the Ld. CIT(A) ignoring the provisions of Rule 46A(2) and 46A(3) of the Income Tax Rules, 1962. At the outset, the Ld.

5. DR fully supported the order of the Ld. AO and pleaded that the order of the Ld. AO be upheld.

Further, it is noticed that the sister concern by way of an affidavit has confirmed the cash deposits in the assessee’s bank account stating their inability to obtain Demand Draft from their bank account. The details with the dates of cash deposits are also made in the affidavit and it corresponds to the bank statements provided by the assessee. In the light of the peculiar circumstances as 7 stated above, on merits, we are of the considered view that these cash deposits do not belong to the assessee but for only to accommodate the sister concern to obtain the Demand Draft favouring Andhra Pradesh Beverages Corporation for procuring stock for their entity and therefore it cannot be treated as income in the hands of the assessee.

Sec. 250(4): The [Joint Commissioner (Appeals) or the] Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the [Joint Commissioner (Appeals) or the] Commissioner (Appeals).

8 From the plain reading of the above, the Act confers powers U/s. 250(4) of the Act to the Ld. CIT(A) to dispose of the appeal by making further enquiry as he thinks fit and if the Ld. CIT (A) thinks fit, he may direct the Ld. AO to make further enquiry and report the same to the Ld. CIT(A). In the instant case, the Ld. CIT(A) has exercised his powers U/s. 250(4) of the Act. In the light of the facts and circumstances of the case as discussed above, we find no infirmity in the order of the Ld.CIT(A) and hence the Grounds raised by the Revenue on the issue are dismissed.