Sri Chilukurthi Veeraiah Vs. ITO (ITAT Hyderabad)
I have considered the rival contentions and explanations on It is an admitted fact that assessee opened the bank account on 09-03-2009 only and subsequently deposited cash to issue cheque/DDs to the said company for investment. It is also true that assessee has agricultural lands and agricultural income including amounts received on sale of agricultural lands, which are verifiable from the returns of earlier years. Thus, the source of agricultural income cannot be denied, just because assessee had not deposited the same in bank account. Considering the small town from which assessee hails and the fact that he is from agricultural family, the objections of AO and CIT(A) that these moneys are not deposited in bank and there was a gap can be rejected. Thus, the explanation for agricultural income and sale proceeds being a source, as explained before the CIT(A), can be accepted. AO is directed accordingly.
Sources of gifts can be examined by AO by giving opportunity to assessee to produce the persons before AO or adducing evidence which can be verified/got verified by AO
Then the issue of gifts of Rs. 11 Lakhs. Assessee explained that an amount of Rs 11 lakhs was gifts from three persons. They could not be produced before AO for verification. Ld.CIT(A) could have got them examined before deciding the issue against assessee. I am of the view that the sources of gifts can be examined by AO by giving opportunity to assessee to produce the persons before AO or adducing evidence which can be verified/got verified by AO. Therefore, verification of source for gifts of Rs. 11 Lakhs is restored to the file of AO for fresh examination. Needless to say that assessee should be given due opportunity in the proceedings. To that extent, order of AO/CIT(A) is set aside and addition of Rs. 11 Lakhs is restored to the file of AO for necessary action. The grounds are allowed accordingly.
RELEVANT EXTRACT OF ITAT JUDGMENT
This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-VII, Hyderabad, dated 30-04-20 15, for the AY. 2010-11. The grounds raised by assessee are as under:
“2. The AO ought not have added an amount of Rs. 28,05,420/- as unexplained investments of the assessee, ignoring the explanation of sources for the same.
3. The Appellate Commissioner ought not to have confirmed the order of the AO on amount of addition of Rs. 28,05,420/- and ought not to have dismissed the appeal of the assessee”.
Ground Nos. 1 & 4 are general in nature.
2. Briefly stated, assessee is an individual deriving income from salary, house property and other sources. He filed his return of income on 14-10-2010 declaring total income of Rs. 3,89,000/-. The Assessing Officer (AO) completed the assessment u/s. 143(3) of the Income Tax Act [Act] by making the addition of Rs. 28,05,420/- towards unexplained investment, being peak deposits in bank account and determined the total income of Rs. 31,94,420/-.
3. Before the Ld.CIT(A), it was explained as under:
“5.1 During appeal proceedings, the appellant submitted that he has (i) opening balance of around Rs. 10 lakhs being his accumulated savings over past five years for which returns of income have been duly filed, (ii) past agricultural income of Rs. 6 lakhs earned in the HUF capacity, (iii) agricultural income of Rs. 2,40,000/- of his wife for the last five years, (iv) sale of agricultural land of Rs. 5,89,000/-, (v) gifts of Rs. 11 lakhs received from his relatives and (vi) Rs. 86,000/- from other sources, all aggregating to Rs. 36,17,834/-. From this aggregate figure, the appellant reduced Rs. 6.50 lakhs towards his house hold expenses for five years and claimed that he has explainable sources for the amount of Rs.29 lakhs treated as unexplained by the Assessing Officer. In support of the above, the appellant has filed (i) copies of statements of total income for the past five years, wherein the agricultural income of HUF was also shown separately, (ii) copies of two sale- deeds of agricultural lands and (iii) affidavits from three relative donors along with their pattadar passbooks. It is the claim of the appellant that he has explainable sources for the cash credits appearing in his bank account and consequently the investment made by him in M/s SMC”.
4. Ld.CIT(A) dismissed the contentions, stating as under:
“5.2 I have gone through the assessment order, written submissions and the material filed by the appellant in support of his claims. Before deciding the issue, it is in place to refer to the dates and amounts of cash credits appearing in the bank account of the appellant. The appellant opened an SB account with M/s. Axis Bank on 09.03.2009 and the major cash credits made during the year are as under:
