Aravind Reddy Devagiri Vs ITO (ITAT Visakhapatnam)
ITAT Visakhapatnam held that addition under section 68 r.w.s. 115BBE of the Income Tax Act deleted as the source for capital investment properly explained by the assessee. Accordingly, addition deleted.
Facts- Assessee is a Managing Partner in M/s. A. R. Constructions with 75% share in Profits. Assessee is also a partner in M/s. Lakshmi Cold Storage and M/s. Vigneswara Cold Storage. The assessee filed his return of income for the A.Y. 2017-18 admitting a total income of Rs.7,54,800/- on 08.03.2018. It was noticed that assessee has declared a capital balance of Rs.48,53,245/- in M/s. A.R. Constructions but did not disclose the capital introduced in M/s. Lakshmi Cold Storage and M/s. Vigneswara Cold Storage where the assessee invested amount of Rs.1,45,64,960/- and Rs. 86,64,883/- respectively towards his 40% share in the firms. The Assessing Officer therefore considered that there are reasons to believe that the income has escaped assessment within the meaning of section 147 of the Act. During assessment proceeding, AO made the various additions.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that capital investments made by the assessee are through book entries which is reflected in the books of M/s. A.R. Constructions and consequently in the assessee’s capital account in M/s.Lakshmi Cold Storage and M/s. Vigneswara Cold Storage. We therefore direct the Assessing Officer to delete the addition of Rs. 1,94,99,178/- made under section 68 r.w.s. 115BBE of the Act as the source for the capital investment has been properly explained by the assessee.
