KATTULA VENKATESWARA RAO,GUNTUR vs. INCOME TAX OFFICER, WARD 2(1), GUNTUR

PER DUVVURU RL REDDY, Judicial Member :

This appeal is filed by the assessee against the order of the Ld. CIT(A)-NFAC, Delhi in DIN & Order No. ITBA/NFAC/S/250/2022-23/1048019187(1), dated 15/12/2022 arising out of the order passed U/s. 143(3) of the Income Tax Act, 1961 [the Act] for the AY 2014-15.

2 2. Briefly stated the facts of the case are that the assessee is

an individual, e-filed his return of income for the AY 2014-15 on

4/7/2014 declaring total income of Rs. 6,60,230/-. The return

was processed U/s. 143(1) of the Act. Subsequently, the case

was selected for scrutiny under CASS and notice U/s. 143(2) was

issued on 28/8/2015 and served on the assessee. Due to change

of incumbent as the case was transferred from the ITO, Ward-4,

Panvel, a notice U/s. 143(2) was issued on 24/09/2015. Further,

notice U/s. 142(1) was also issued to the assessee on

27/06/2016 along with a questionnaire. As there was no

response from the assessee, notice U/s. 274 r.w.s 271(1)(b) of the

Act was issued to the assessee along with notice U/s. 142(1) on

12/08/2016. Considering the assessee’s no response, the Ld. AO

before proceeding to complete the assessment ex-parte, a final

opportunity was given to the assessee by issuing notice U/s.

142(1) of the Act and in response, the assessee’s Representative

appeared and furnished the information as called for in the

questionnaire. As per the information submitted by the

assessee’s Representative as well as the information available on

record, the Ld. AO noted that the assessee, being a salaried

person and having declared the income from salary of Rs.

7,64,143/-, made huge cash deposits in his saving bank

3 accounts aggregating to Rs.21,51,500/-. On being asked, the

assessee submitted his explanation before the Ld. AO by stating

that on sale of flats the assessee received Rs. 9,71,000/-

however, the assessee could substantiate his claim for cash

deposits and produce any documentary evidence to the extent of

Rs. 11,50,500/-. In the absence of any cogent evidence in

support of the assessee’s claim, the Ld. AO made an addition of

Rs. 11,50,500/- towards income from undisclosed sources and

determined the total income of Rs.18,10,230/- [income as per

return – Rs. 6,60,230 + undisclosed income of Rs. 11,50,500].

Aggrieved by the order of the Ld. AO, the assessee filed an appeal

before the Ld. CIT(A)-NFAC. On appeal, the Ld. CIT(A)-NFAC

dismissed the assessee’s appeal by holding that even before First

Appellate Authority, the assessee has not filed any evidence in

respect of the addition made by the Ld. AO except statements in

his written submissions. Aggrieved by the order of the Ld. CIT(A)-

NFAC, the assessee is in further appeal before the Tribunal by

raising the following grounds of appeal:

“1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case. 2. The Ld. CIT(A) is not justified in sustaining the addition of Rs. 11,50,500/- made by the AO towards unexplained cash deposits in bank account.

4 3. Any other grounds may be urged at the time of hearing.” 3. At the outset, the Ld. Authorized Representative submitted

additional evidence before me to state that the alleged amount of

Rs.11,50,500/- was received by the assessee from his family

members to meet the domestic expenses / children education as

well as gifts received on various occasions from the family

members. The Ld. AR further also submitted that the donors of

the gifts are having agricultural lands and therefore the source of

the source is also explained and substantiated by producing their

Adangal copies of land holdings along with the confirmation

letters drawn in favour of the assessee to state that the amounts

were given to the assessee. Therefore, the Ld. AR pleaded that

since the assessee has produced the documentary evidence to

substantiate the cash deposits made during the year, the

addition made by the Ld. AO and confirmed by the Ld. CIT(A)-

NFAC may be deleted.

relied on the orders of the Ld. Revenue Authorities and argued in

support of the same.

5 5. I have heard both the sides and perused the material

available on record as well as the orders of the Ld. Revenue

Authorities. It is a fact that assessee made cash deposits in his

bank accounts during the year aggregating to Rs. 21,51,500/-.

During the assessment proceedings, the assessee could not

satisfactorily explain the source for cash deposits to the tune of

Rs. 11,50,500/- out of Rs. 21,51,500/- and therefore, the Ld. AO

made an addition of Rs. 11,50,500/- as income from undisclosed

sources. Even before the Ld. CIT(A)-NFAC, the assessee failed to

furnish the documentary evidence with respect to the alleged

cash deposits to the extent of Rs.11,50,500/-. Before the

Tribunal, in the form of additional evidence the assessee

produced the confirmation letters from the family members who

advanced the cash to the assessee during various occasions along

with their bank account statements, copies of Pahanis to

demonstrate the land holdings. On perusal of these documents

and evidences, I find that the assessee has received gifts from the

family members only to the extent of Rs.7 lakhs based on the

confirmation letters and bank accounts submitted by way of

additional evidence. Therefore, in my opinion the assessee has

established the source only to the extent of Rs. 7 lakhs out of the

disputed amount of Rs. 11,50,500/-. For the remaining amount

6 of Rs. 4,50,500/- [Rs. 11,50,500 – Rs. 7,00,000] the assessee could not produced any cogent documentary evidence to state that this amount is also received from the family members as gifts. Therefore, based on the above facts and circumstances of the assessee, I hereby grant relief to the assessee to the extent of Rs. 7 lakhs based on the satisfactory evidence produced before me and confirm the balance amount of Rs. 4,50,500/- as income in the hands of the assessee from unexplained sources. It is ordered accordingly.

Pronounced in the open Court on 30th January, 2024.

Sd/- (दु�वू� आर.एल रे�डी) (DUVVURU RL REDDY) �या�यकसद�य/JUDICIAL MEMBER Dated : 30/01/2024 OKK - SPS आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- 1. �नधा�रती/ The Assessee – Kattula Venkateswara Rao, Flat No. 101, Sri Vallabha Grand Apartment, 4/2, SVN Colony, Guntur, Andhra Pradesh – 522006.

7 2. राज�व/The Revenue – Income Tax Officer, Ward-2(1), O/o. ITO, Lakshmipuram Main Road, Guntur, Andhra Pradesh – 522007. 3. The Principal Commissioner of Income Tax, 4.आयकर आयु�त (अपील)/ The Commissioner of Income Tax (Appeals), 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, �वशाखापटणम/ DR, ITAT, Visakhapatnam 6.गाड� फ़ाईल / Guard file

आदेशानुसार / BY ORDER

Sr. Private Secretary ITAT, Visakhapatnam