THE INCOME TAX OFFICER, WARD-1(1),, VISAKHAPATNAM vs. TATIPARTI SATYANARAYANA, VISAKHAPATNAM

Brief facts of the case are that the assessee is an individual engaged in the business of civil construction and jewellery. The assessee filed his return of income for the A.Y.2017-18 on 07.11.2017 admitting total income of Rs.13,62,040/-. The case was taken up for scrutiny and statutory notices were issued to the assessee. In response to the notice, the assessee has not responded properly and in the absence of detailed reply, the AO assessed the total income of the assessee at Rs.1,51,26,623/-.

Aggrieved by the order of the AO, the assessee filed appeal before the CIT(A). The Ld.CIT(A) considering the evidences produced by the assessee deleted the additions made by the AO.

Aggrieved by the order of the Ld.CIT(A), the revenue is in appeal before us. The Ld.DR referred to page No.5, para No.6.1.2 of the order of the Ld.CIT(A) stating that the documents were not submitted by the assessee and the AO has not verified the authenticity of the claim made by the assessee. The Ld.DR also referred to para No.6.3. in page No.6 of the CIT(A) order and stated that the Ld.CIT(A) relied on the details submitted by the assessee with respect of sale during demonetisation period. The

On the contrary, the Ld.AR stated that unexplained investment cannot be invoked u/s 69 of the Act. The Ld.AR also argued that section 69 can be invoked only when the investments which are not recorded in the books of accounts. The Ld.AR demonstrated that the investment was captured in the books of accounts and disclosed in the balance sheet of the assessee. The Ld.AR also stated that the income has been disclosed in the computation of income and the necessary taxes have been discharged by the assessee.

With respect to Ground No.2, we have heard both the parties and perused the material placed on record. We find force in the argument of the Ld.AR that section 69 cannot be invoked when the assessee has disclosed investment in the books of accounts and in the computation of income which was offered for taxation. In this aspect, we concur with the findings of the Ld.CIT(A) and uphold the same.

With respect to Ground No.3 and 4, the Ld.DR argued that the assessee has shown cash sales subsequent to the demonetisation date, wherein, specified bank notes are treated as illegal. The Ld.DR argued that

On the other hand, the Ld.AR argued that since the assessee had cash balance as on the date of demonetisation i.e. on 10.11.2016, provisions of section 69A cannot be applied.

We have heard both the parties and perused all the documents on record. We find that there was sufficient cash balance with the assessee as detailed in page No.30 of the paper book. The Specified Bank Notes (Cessation of Liabilities) Act, 2017, defines “appointed day” vide Section 2(1)(a). As per Section 2(1)(a), “appointed day” means the 31st Day of December 2016. Section 5 of the Specified Bank Notes (Cessation of Liabilities) Act, 2017 also deals with prohibition on holding, transferring or receiving specified bank notes. Section 5 states that “On and from the appointed day, no person shall knowingly or voluntarily, hold, transfer or receive any specified bank note”. We therefore, find that the specified bank notes can be measured in monetary terms since the guarantee of the Central Government and the liability of Reserve Bank of India does not cease to exist till 31.12.2016. In view of the above, the contention of the Ld.DR, treating the receipt of SBNs from cash sales as illegal and thereby

With respect to Ground No.5, 6 and 7, the Ld.DR cited the provisions of Rule 46A of I.T.Rules and argued that the Ld.CIT(A) erred in allowing additional evidence filed by the assessee which was not produced before the AO and no opportunity was being provided to the AO to examine the same. The Ld.DR also relied on the following case laws :

Per contra the Ld.AR argued that the income was disclosed in the return of income. The assessee has produced before the Ld.CIT(A) only documents to substantiate the claim of assessee. The Ld.AR also argued that no additional evidence were adduced before the Ld.CIT(A).

We find from the Assessment Order that the AO has provided various opportunities to the assessee to explain the details of share transactions and provide documents in support of his claim, wherein, the

In the present case, it is noted that the Ld.CIT(A) has only verified the authenticity of the claim made by the assessee in the return of income, and we find that there is no requirement by the Ld.CIT(A) to remit the matter back to AO for examination. In view of the above findings, the grounds raised by the Revenue are dismissed.

The assessee filed cross objections which are supportive in nature. Since the appeal of the revenue is dismissed, the cross objections of the assessee becomes infructuous.

In the result, the appeal of the revenue and the cross objections of the assessee are dismissed.