Ramu Veeravalli,, Hyderabad vs Assessee

Ramu Veeravalli, Hyderabad vs. The Income-tax Officer, Ward - 3(1), Hyderabad PAN - ACNPV 5313 L (Appellant) (Respondent)

Assessee by : Shri T. Chaitanya Kumar Revenue by : Shri Ramakrishna Bandi

Date of hearing 15-04-2015 Date of pronouncement 15-04-2015

O RDE R

PER P.M. JAGTAP, A.M.:

This appeal filed by assessee is directed against the order of ld. CIT(A)-IV, Hyderabad dated 06/12/2013 and the solitary issue involved therein relating to the addition of Rs. 32,49,000 made by AO and confirmed by ld. CIT(A) on account of unexplained cash credits u/s 68 of the Act, is raised by the assessee by way of following grounds:

"1. The order of Hon'ble CIT(A) is erroneous in law as well as the facts of the case.

2. The Hon'ble CIT(A) ought to have admitted the additional evidence furnished while deciding the appeal.

3. The Hon'ble CIT(A) erred in upholding action of the AO in treating the amounts deposited through cheques on par with cash deposits and treated all the deposits as unexplained in spite of the fact that section 68 of the IT Act covers only cash deposits and not cheque deposits.

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4. The Hon'ble CIT(A) ought to have observed that the AO without taking into consideration the explanation of the assessee with regard to cash as well as cheque deposits in the bank account and ought not to have confirmed the addition.

5. The Hon'ble CIT(A) ought to have held that the addition of Rs. 32,49,000 as unexplained cash credit by the AO is without any proper basis and therefore the same is liable to be deleted."

2. The assessee in the present case is an individual who is a working director of M/s Saideep Agritech Pvt. Ltd. Return of income for the AY under consideration was filed by him on 19/01/2010 declaring total income of Rs. Nil. During the course of assessment proceedings, it was noticed by the AO that assessee has maintained savings bank accounts in Axis Bank, State Bank of Hyderabad and Bank of Baroda. It was also noticed by AO that total deposits in cash and by way of cheques aggregating to Rs. 23,96,439 and Rs. 12,72,561 respectively were made in the said accounts of assessee. When assessee was called upon by AO to explain the said deposits/credits appearing in his bank accounts, he furnished 'summary cash flow' giving the details of receipts and payments. With the help of the said cash flow, assessee also made an attempt to explain the source of deposits found to be made in his bank accounts. In the absence of any cash book maintained by assessee as well as other evidences produced in support, AO, however, found the explanation offered by assessee to be not acceptable/verifiable, except in case of two deposits of Rs. 4,20,000 found to be made in the bank accounts of assessee by way of amounts transferred by two companies. He, accordingly, treated the balance deposits of Rs. 32,49,000 found to be made in the bank accounts of assessee as unexplained and added the said amount to the total income of assessee u/s 68 in the assessment completed u/s 143(3) vide an order dated 05/12/2011.

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3. Against the order passed by AO u/s 143(3), an appeal was preferred by assessee before ld. CIT(A). During the course of appellate proceedings before ld. CIT(A), additional evidence was filed by the assessee in the form of constructed cash book for the period 01/04/2008 to 31/03/2008 and extracts of his diary showing financial transactions. A request was also made by assessee to ld. CIT(A) to admit the said additional evidence on the ground that he was regularly on business tours for canvassing the business activities and booking orders, etc during the relevant period, as a result of which, he could not provide the required assistance to his Authorised Representative for the purpose of completing his assessments. Ld. CIT(A) did not accede to the request of assessee as he found from the remand report submitted by AO that sufficient opportunity was already given to assessee during the course of assessment proceedings to explain the credits appearing in his bank accounts. He, therefore, rejected the application of assessee for admission of additional evidence and confirmed the addition made by AO u/s 68 observing that the additional evidence, even if it were to be admitted, was not going to help assessee's cause in any way. Aggrieved by the order of ld. CIT(A), assessee has preferred this appeal before the Tribunal.

4. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that additional evidence sought to be filed by assessee before ld. CIT(A) in the form of constructed cash book for the relevant period as well as extract of assessee's diary showing financial transactions was very much relevant to the issue involved in the case of assessee relating to addition made on account of unexplained deposits found to be made in his bank acocunts. It appears that, ld. CIT(A), however, overlooked this vital aspect while rejecting the application of assessee for admission of the said additional evidence. In our opinion, ld. CIT(A) having regard to all the facts of the case including 4 ITA No. 653/Hyd/2014 Ramu Veeravalli

the relevance of documents filed by assessee as additional evidence, ought to have admitted the same in the interest of justice. We, therefore, set aside the impugned order of ld. CIT(A), and remit the matter relating to the addition of Rs. 32,49,000 made to the total income of assessee u/s 68 back to him with a direction to decide the same afresh in the light of additional evidence filed by assessee. Needless to observe that ld. CIT(A) shall afford proper and sufficient opportunity of being heard to assessee on this issue.

5. In the result, assessee's appeal is treated as allowed for statistical purposes.

Pronounced in the open court on 15 th April, 2015 upon conclusion of hearing.

Sd/- Sd/- (SAKTIJIT DEY) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated: 15 th April, 2015 kv

Copy to:-

1) Ramu Veeravalli,C/o B. Narsing Rao & Co., CAs., Plot No. 554, Road No. 92, Jubilee Hills, Hyderabad - 500 096

2) ITO, Ward - 3(1), Hyderabad.

3 CIT(A)-IV, Hyderabad

4)CIT-III, Hyderabad

5) The Departmental Representative, I.T.A.T., Hyderabad.