ITO vs. SRI. NAGARAJAGUPTHA SREEKANTH,

O R D E R Per Shri Jason P. Boaz, A.M. : This appeal by Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-II, Bangalore dt.14.10.2013 for Assessment Year 2009-10. When the case was called for hearing on 21.1.2005 none appeared for the assessee and therefore this appeal is being disposed off with the assistance of the learned Departmental Representative for Revenue.

2. The CIT (Appeals) erred in deleting the addition of Rs.17,33,000 made by the Assessing Officer under Section 69A of the IT Act.

3. The CIT (Appeals) has failed to appreciate the fact that the assessee's father himself had several cash deposits which were undisclosed and the assessment in his case was completed by making an addition of Rs.5 lakhs.

4. The CIT (Appeals) has failed to see whether the assessee's father has really given the gift of Rs.17,33,000 to the assessee.”

4. Cash Deposits and Investment in shares : Rs.17,33,000. 4.1 The only issue of dispute in this appeal by revenue, as raised in the grounds at S.Nos.1 to 4 (supra), is with respect to the action of the learned CIT(A) in deleting the addition of Rs.17,33,000 made by the Assessing Officer under Section 69A of the Act in respect of unexplained cash deposits / investment in shares. The learned Departmental Representative was heard in support of the grounds raised. 4.2.1 We have heard the learned Departmental Representative for revenue and perused and carefully considered the material on record. On an appreciation of the facts on record, it is seen that in the course of assessment proceedings, the Assessing Officer noticed that the assessee had made cash deposits, on various dates between 11.8.2008 and 10.1.2009, amounting to Rs.17,33,000 in his bank account maintained at Karur Vysya Bank, Tumkur Branch which had been utilised for investment in shares. On being queried about the source of these cash deposits amounting to Rs.17,33,000, the assessee submitted that this cash deposited in his bank account was received by him as gifts from his father Nagaraja Guptha and was used for purchasing shares. An Affidavit from the assessee's father was also filed before the Assessing Officer, stating therein that he had given the gift to his son out of the cash balance available with him. The Assessing Officer, on verification of the return of income of the assessee's father for Assessment Year 2009-10, found that while the cash balance as on 31.3.2009 was Rs.31,57,764, the gift of Rs.17,33,000 made to the assessee was not reflected in the statement of affairs filed at the initial stages of scrutiny. According to the Assessing Officer the assessee's father then filed a revised statement of affairs only to show that the gift of Rs.17,33,000 had been made to the assessee. The Assessing Officer observed from the assessee's return of income in Form ITR – III, that the assessee has not furnished the required information, as required in Sl.No.9, (Schedule AIR) reporting cash deposits in his bank account in excess of Rs.10 lakhs and investment in shares in excess of Rs.1 lakh as required by law and that the relevant entries in these two codes was reported at ‘ NIL’ by the assessee. In these circumstances, the Assessing Officer was not convinced with the averments of the assessee; Observing that while the assessee's father had disclosed in his return of income a loan of Rs.6 lakhs given by cheque to the assessee deposited in the same bank account, it was not likely that he would have omitted an amount as large as Rs.17,33,000 in his return of income. The Assessing Officer also observed that the assessee could not have omitted to report both the cash deposits of Rs.17,33,000 in his bank accounts, which were in excess of Rs.10 lakhs, and also the investment in shares in excess of Rs.1 lakh, while reporting NIL in both columns of ‘ Schedule AIR’ in his return of income for the relevant period, unless it was deliberate and in order to avoid payment of due taxes thereon. In this view of the matter, the Assessing Officer held that the amount of Rs.17,33,000 represented the assessee's undisclosed income of the assessee for the relevant period and brought the same to tax as unexplained cash deposit / investment under Section 69 of the Act. 4.2.2 On appeal, the learned CIT(A) after considering the assessee's submissions and the order of assessment for Assessment Year 2009-10 deleted the addition of Rs.17,33,000 made by the Assessing Officer under Section 69A of the Act by holding as under at para 3.4 of the impugned order :-

“3.4 I have carefully considered the appellant’s submissions and also perused the assessment order. The appellant has furnished copies of his capital account for the years ended 31.3.2008 and 31.3.2009. From the capital account for the year ended 31.3.2009, it is seen that the appellant has shown an amount of Rs.17,33,000 as gift from his father. The Assessing Officer’s observation is that, a perusal of the appellant’s father’s return of income for the relevant assessment year, did not reflect gift as having been given by him. Besides, the appellant has given an extract of his father’s bank account with Karur Vysya Bank indicating gifts made on different dates (vide appellant’s written submissions) aggregating Rs.17,33,000. The schedule to the balance sheet of the appellant’s father as on 31.3.2009 shows the large area of agricultural lands owned by him from which he has substantial agricultural income. The appellant’s submission that his father had enough resources to have fund to the extent of Rs.17,33,000 to make the gift as indicated in the written submissions is reasonable and acceptable. Therefore, I delete the addition of Rs.17,33,000 made by the A.O.” 4.2.3 From a perusal of the impugned order of the learned CIT(A), we find that the learned CIT(A) has come to the finding she did after examining the capital accounts of the assessee for the years ended 31.3.2008 and 31.3.2009 and found that the assessee has in fact shown an amount of Rs.17,33,000 as gift received by him from his father, Sri Nagaraja Guptha. The learned CIT(A) has also examined the bank account of the assessee's father with Karur Vysya Bank and found entries therein indicating that gifts were made on various dates between 11.8.2008 and 10.1.2009 in different amounts, as had been submitted by the assessee in written submissions made in appellate proceedings before her. The learned CIT(A) also examined the Balance Sheet as on 31.3.2009 of the assessee's father and found that he owned large areas of agricultural land, from which he earned substantial income and had sufficient cash balances to make the gifts amounting to Rs.17,33,000 to the assessee, his son; in the period relevant to Assessment Year 2009-10. We find that except for raising the grounds in this appeal challenging the impugned order of the learned CIT(A) in granting the assessee relief by deleting the addition of Rs.17,33,000 under Section 69A of the Act, revenue has failed to controvert the CIT(A) with any cogent material evidence. In this view of the factual matrix of the case, we find no good reason for us to interfere with the finding of the learned CIT(A) in deleting the addition of Rs.17,33,000 made by the Assessing Officer under Section 69A of the Act and therefore uphold the impugned order of the learned CIT(A). Consequently, revenue’s grounds raised at S.Nos. 1 to 4 in this appeal are dismissed.

5. In the result, revenue’s appeal for Assessment Year 2009-10 is dismissed. Order pronounced in the open court on 4th March, 2015.