LAKSHMAIAH GUNUPUTI,BHIMAVARAM vs. ACIT CENTRAL CIRCLE-2, RAJAHMUNDARY

PER S. BALAKRISHNAN, Accountant Member :

This appeal filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-3, Visakhapatnam [Ld. CIT(A)] in DIN & Order No. ITBA/APL/S/250/2021-

2 22/1039669126(1), dated 11/2/2022 arising out of the order

passed U/s. 153A r.w.s 143(3) of the Act for the AY 2018-19.

individual engaged in the business of Prawn commission and Fish

culture and is a partner in M/s. Dhanlakshmi Rice & Flour Mill

and M/s. Yerrayya Raw and Boiled Rice Mill. The assessee filed

his return of his return of income admitted a total income of Rs.

3,10,000/- for the AY 2018-19 on 22/10/2018. Initially, the

return was processed U/s. 143(1) of the Act. A search and seizure

operation u/s. 132 of the Act was conducted on 2/11/2017 in

the case of the assessee at his residential premises. A search

warrant was executed in the name of the assessee and various

incriminating material was found and seized. Subsequently, an

order U/s. 127 of the Act for centralization of the case was

passed by the Principal Commissioner of Income Tax,

Rajahmundry vide order in F.No. 62,Juris/Pr.CIT/RJY/2017-18,

dated 13/3/2018 and notified the assessee’s case to Central

Circle-2, Rajahmundry. Accordingly, notice U/s. 143(2) of the Act

was issued on 29/9/2018 and served on the assessee on

02/11/2018. Further, a detailed questionnaire u/s. 142(1) of the

Act was issued on 11/6/2019 and was served on the assessee on

3 13/6/2019 and the assessee submitted its reply on 14/11/2019.

Thereafter, certain questionnaire calling for the information were

issued on 11/6/2019; 9/9/2019; 18/10/2019; 2/12/2019 and

16/12/2019 and duly served on the assessee. In reply the

assessee’s representative appeared before the Ld. AO and

furnished the relevant information. After duly considering and

examining the various information furnished by the assessee’s

representative, the Ld. AO completed the assessment U/s. 143(3)

of the Act on 27/12/2019 and passed the assessment order

wherein the Ld. AO made certain additions viz., (i) Unexplained

investment in personal jewellery (Gold jewellery Rs.23,55,600 +

Rs. 1,66,400/- Silver Jewellery) aggregating to Rs. 25,22,000/-

(ii) Deficit cash balance at Residence of the assessee Rs. 78,163/-

and made addition U/s. 69 r.w.s 115BBE of the Act and (iii)

Disallowance U/s. 40A(3) of the Act Rs.58,26,321/- and

determined the assessed income at Rs. 87,36,584/- against the

returned income of Rs. 3,10,000/-. In the assessment the Ld.AO

also determined the agricultural income of the assessee at Rs.

4,47,592/- and brought to tax. Aggrieved by the order of the Ld.

AO, the assessee preferred an appeal before the Ld.CIT (A). Before

the Ld. CIT(A), the assessee has filed written submissions

through online. On appeal, the Ld. CIT(A) considered the written

4 submissions made by the assessee and granted part relief to the

assessee with respect to the addition of Rs. 25,22,000/- on

account of unexplained investments in personal jewellery and

confirmed the addition of deficit cash amounting to Rs. 78,163/-

made U/s. 69 r.w.s 115BBE of the Act as well as the addition of

Rs. 58,26,321/- made towards disallowance of cash expenditure

beyond the specified limit made u/s. 40A(3) of the Act. Thus, the

Ld. CIT(A) partly allowed the appeal of the assessee. Aggrieved

by the order of the Ld. CIT (A), the assessee filed an appeal before

the Tribunal. On assessee’s appeal, the Tribunal partly allowed

the assessee’s appeal vide its order dated 28/02/2023.

Thereafter, the assessee filed Miscellaneous Application seeking

rectification of an inadvertent error crept in the original order of

the Tribunal dated 28/02/2023. Accordingly, the Tribunal partly

allowed the MA filed by the assessee vide its order dated

15/02/2024 and recalled the order of the Tribunal dated

28/02/2024.

dated 28/02/2023 that there is an inadvertent error in the order of

the Tribunal dated 28/02/2023 with respect to Ground No.3 of the

original grounds of appeal while considering the amount of Rs. 78,163/-

5 as unexplained investment U/s. 69 r.w.s 115BBE of the Act. It is the

case of the assessee that since this amount has been recorded in the

books of account as detailed in para-2 of the Assessment Order, no

addition can be made U/s. 69 of the Act. It was also the submission of

the assessee that the Ld. AO has erroneously made an addition U/s. 69

which deserves to be deleted.

the assessee. However, considering the miniscule rectification issue

involved in this appeal we proceed to adjudicate the appeal to the extent

of the issue recalled.

record as well as the order of the Tribunal. We find from the assessment

order vide para 2 the Ld. AO has mentioned the availability of cash

balance as per the books of account as on 2/11/2017 amounting to Rs.

1,02,886/- whereas the physical cash balance was Rs. 24,723/-. Since

this amount has been recorded in the books of account, no addition can

be made U/s. 69 of the Act. Therefore, we are of the view that no

addition can be made U/s. 69 of the Act when the amount have been

recorded in the books of account of the assessee which was also not

disputed by the Ld. Revenue Authorities. We therefore direct the Ld. AO

6 to delete the addition of Rs. 78,163/- made U/s. 69 of the Act. Accordingly, this ground raised by the assessee is allowed. 6. In the result, the appeal of the assessee is partly allowed. Pronounced in the open court on 28th February, 2024. Sd/- Sd/- (दु�वू� आर.एल रे�डी) (एस बालाकृ�णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) �या�यकसद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER Dated :28.02.2024 OKK - SPS आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee – Lakshmaiah Gnuputi, 19-9-3/3, Bank Colony, 1. Near Water Tank, Bhimavaram-534201, WG Dist, Andhra Pradesh – 534201. राज�व/The Revenue – Asst. Commissioner of Income Tax, Central Circle- 2. 2, Aayakar Bhavan, Rajahmundry, EG Dist., Andhra Pradwesh-533101. 3. The Principal Commissioner of Income Tax (Central), Visakhapatnam. आयकर आयु�त (अपील)/ The Commissioner of Income Tax (Appeals)- 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, �वशाखापटणम/ DR, ITAT, 5. Visakhapatnam गाड� फ़ाईल / Guard file 6. आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam