YUGANDER REDDY METHKU,WARANGAL vs. INCOME TAX OFFICER, WARD-1 , WARANGAL

Having noticed payment for credit card dues to the tune of Rs. 1.79 lakhs in cash by the assessee, learned Assessing Officer issued notice under section 143(1) of the Income Tax Act, 1961 (for short “the Act”), in response to which the assessee filed the return of income on 20/11/2009 declaring an income of Rs. 2,97,700/-. In respect of the payment of credit card the Jews in cash, assessee stated that he sent an amount of Rs. 3.15 lakhs to his mother’s account maintained a general on 3 different dates and such deposits constitute the source for these cash payments.

On verification of bank account of the mother of the assessee, learned Assessing Officer found that there were credits to the tune of Rs. 2,65,000/-, Rs. 67,000/- and Rs. 50,000/- on 30/04/2008, 09/05/2008, 13/05/2008 and 15/07/2008 respectively and out of such deposits there were substantial withdrawals also. Learned Assessing Officer, however, did not give credit to the plea taken by the assessee holding that during the months in which there were with Royals there will be heavy expenditure on account of education and agricultural operations and therefore such withdrawals could not be the source for cash payments towards credit card dues.

Apart from this learned Assessing Officer also noticed that there were cash deposit of Rs.1.08 lakhs in the account of the assessee with SBI, and Rs. 6,35,500/- in Citibank, whereas there were checked deposits of Rs. 4.9 lakhs in his account. Assessee pleaded that during the year assessee went to USA and the company paid some allowances which were directly connected to his account. Stating that no evidence is produced, learned Assessing Officer added these amounts also to the income of assessee and determined the income at Rs. 17,09,700/- by way of order dated 29/12/2016 under section 144 read with section 147 of the Act.

Assessee preferred appeal before the Ld. CIT(A). The impugned order shows that the Ld. CIT(A) agreed with the learned Assessing Officer on all the findings to make the additions, stating that no details were furnished. Accordingly dismissed the appeal

Hence this appeal is filed stating that the reasons furnished by the assessee are not believed by the authorities on the ground that no evidence is produced. Ld. AR submitted that for want of evidence all the receipts are treated as unexplained income, and brought to tax. He submitted that the employment of the assessee is not in dispute and the salary income offered by the assessee is accepted. He further submitted that the deposits and withdrawals from the account of the mother are also not in dispute. He therefore submits that adding the entire receipts to the income of the assessee on the ground of want of proof, as unexplained income is incorrect.

Learned AR vehemently supported the orders of the authorities and contended that in the absence of any evidence the impugned order cannot be interfered with.

I have gone through the record in the light of the submissions made on either side. Insofar as the cash payments towards credit card dues are concerned, the credits and withdrawals in the account of the mother of the assessee are not in dispute, and except the observations of the learned Assessing Officer that during the months of April and May there will be maximum expenditure, there is no material to contradict the plea taken by the assessee. Amount credited to the account of the mother of the assessee is not the only source of livelihood of the assessee. Assessee in his own right is earning his salary income. No addition could be made on suspicion. I hold that the credits and withdrawals from the account of the mother of the assessee could be believed as the source for cash payments towards credit card dues. I direct the learned Assessing Officer to delete the addition of Rs. 1.79 lakhs.

Coming to the deposits of Rs. 4.9 lakhs in the Citibank by way of cheque, and cash deposit of Rs. 6,35,500/- and in SBI of Rs. 1.08 lakhs, according to the assessee, the same represents the allowances paid by the company for his work in USA. The deposits by way of cheque are stated to be the allowances directly credited to his account, and non-taxable in India.

Learned AR submits that in respect of these deposits in SBI and Citi Bank, given an opportunity, the assessee would submit evidence before the learned Assessing Officer. Considering the same, I restore the issue to the file of the learned Assessing Officer to consider the evidence if any, is produced by the assessee in respect of these three amounts and decide the issue according to law. Grounds are accordingly treated as allowed for statistical purposes.