VENKATA PAVAN KUMAR GUNUPUTI,BHIMAVARAM vs. ACIT CENTRAL CIRCLE -2, RAJAHMUNDARY

PER S. BALAKRISHNAN, Accountant Member :

This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-3, Visakhapatnam [CIT(A)] in appeal No. 560/2019-20/10787/CIT(A)-3/VSP/2021- 22, dated 24/09/2021 arising out of the order passed U/s. 143(3) r.w.s 153C of Income Tax Act, 1961 [the Act] for the AY 2016-17.

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

an individual engaged in the business of commission on IKP

Transportation filed his return of income admitting a total

income of Rs. 3,36,220/- for the AY 2015-16 on 17/2/2018.

Initially the return was processed U/s. 143(1) of the Act

accepting the return filed by the assessee. A search & seizure

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

the case of Sri Gunuputi Lakshmayya & Others group of cases

and found some incriminating material. Subsequently, an order

u/s. 127 of the Act for centralization of the cases 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

notifying the assessee’s case to Central Circle-2, Rajahmundry.

Considering the seized material found during the search, a notice

u/s. 153C r.w.s 153A was issued on 21/3/2019 and the same

was served on the assessee on 29/03/2019. In response the

assessee filed return of income on 11/5/2019 admitting a total

income of Rs. 3,36,220/-. A notice U/s. 143(2) was issued on

7/5/2019 and served on the assessee on 11/5/2019. A detailed

questionnaire u/s. 142(1) of the Act dated 11/6/2019 was issued

and served on the assessee on the same date. In response the

assessee filed reply on 14/11/2019. Thereafter, questionnaire

3 calling for certain information / show cause notice were issued

on 9/9/2019; 18/10/2019; 30/11/2019 and 13/12/2019 and

served on the assessee. In response, the assessee’s Authorized

Representative appeared before the Ld.AO and furnished the

relevant information called for by the Ld.AO. After duly

considering and examining the various information furnished by

the assessee, the Ld. AO completed the assessment on

27/12/2019 and passed assessment order U/s. 143(3) r.w.s

153C of the Act where in the Ld. AO made certain additions viz.,

(i) addition of Rs. 2,41,980/- U/s. 69 r.w.s 115BBE of the Act on

account of unexplained investment in immovable properties and

(ii) Addition of Rs. 5,95,596/- on account of income from

undisclosed receipts and determined the assessed income at Rs.

11,73,796/- against the returned income of Rs. 3,36,220/-.

Aggrieved by the order of the Ld. AO, the assessee went on appeal

before the Ld. CIT(A). On appeal, the Ld. CIT(A) considered the

submissions made by the assessee and granted part relief to the

extent of Rs.5,95,596/- on account of income from undisclosed

receipts and sustained the addition of Rs. 2,41,980/- made by

the Ld.AO on account of unexplained investment in immovable

properties. Aggrieved by the order of the Ld. CIT(A), the assessee

is in appeal before us.

4 3. The assessee has raised three grounds in its appeal

however, the crux of the issue is:

“The Ld. CIT(A) has erred in confirming the addition of Rs. 2,41,980/- made by the Ld. AO on account of unexplained investment in purchase of property.”

the assessment proceedings the assessee was asked to explain

the sources for acquisition of land of 25 cents at Gollakonderu

and the assessee has replied that the investment was made out of

the income derived from home tuitions in the relevant AY and

also the saving accumulated from the earlier years as well as the

income from transportation business with AP State Civil Supplies

Corporation. The Ld. AR further submitted that as per the IT Act,

there was no any mandatory provision to maintain money in the

bank account before purchase of property. The Ld. AR further

submitted that the assessee is regularly filing his return of

income disclosing around Rs. 2 lakhs to Rs. 5 lakhs. Without

considering these facts, the Ld. Revenue Authorities rejected the

explanation given by the assessee and made the addition.

Therefore, the Ld. AR pleaded that the addition made by the Ld.

AO and confirmed by the Ld. CIT(A) may be deleted. Per contra,

5 the Ld. DR relied on the orders of the Ld. Revenue Authorities

and supported the decision taken by them.

material available on record the orders of the Ld. Revenue

Authorities. It is a fact that the assessee is deriving income from

home tuitions and also engaged in the business of commission on

transport business. The assessee has filed the return of income

indicating the sources of income which was accepted by the

Department and not disputed by the Ld. AO. In these

circumstances, we cannot accept the Ld. Revenue Authorities

view that the assessee’s bank account does not show any credits

before the date of purchase of property and the assessee did not

maintain books of account. In our considered view, as explained

by the assessee there is every possibility of accumulation of

monies to the extent of disputed amount of Rs. 2,41,980/-

considering the assessee’s nature of business and his earnings

through home tuitions. Therefore, we find merit in the argument

of the Ld. AR and accordingly, we set-aside the orders of the Ld.

Revenue Authorities on this issue and delete the addition made

by the Ld. AO and confirmed by the Ld. CIT(A). Thus, the

grounds raised by the assessee are allowed.

6 6. In the result, appeal filed by the assessee is allowed. Pronounced in the open Court on the 28th February, 2023.

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 :28.02.2023 OKK - SPS

आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee – Venkata Pavan Kumar Gunuputi,19-9- 1. 3/3, Bank Colony, Near Water Tank, Bhimavaram -534201, W.G. District, Andhra Pradesh. राज�व/The Revenue – Asst. Commissioner of Income Tax, Central 2. Circle-2, Rajahmundry, EG District, Andhra Pradesh. 3. The Principal Commissioner of Income Tax (Central), Visakhapatnam. आयकर आयु�त (अपील)/ The Commissioner of Income Tax (Appeals)-3, 4. Visakhapatnam. �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