Valike Venkatesham, R.R.Dist, ... vs Assessee

This is an assessee's appeal filed against the order of the Commissioner of Income Tax(Appeals)-2, Hyderabad, dated 22-12-2014 for the Assessment Year (AY) 2005-06 raising the following grounds of appeal:

" 1. The order of the learned CIT(A) confirming the order of the Assessing Officer is not only erroneous both on fact and in law but is without application of mind, in so far as it is prejudicial to the assessee.

2. The learned CIT(A) erred in observing that the assessee has not given any specific details about the sources of funds for depositing in bank while confirming the addition made contrary to facts and thereby erred in confirming the addition of Rs. 7,50,000/-.

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3. The learned CIT(A) has not considered the submissions made with supporting evidence of an agreement of sale and a confirmation letter from assessee's father to explain sources for deposit and further erred in not considering the submission that the assessee has no sources of income except agriculture and thereby erred in confirming the addition of Rs. 7,50,000/-.

4. Any other ground that may be urged at the time of hearing".

2. The brief facts of the case are that the assessee is an individual. For the AY. 2005-06, the assessee had not filed any return of income. However, Ld. ITO, Ward-8(2), Hyderabad issued notice u/s. 148 of the Income Tax Act, 1961 [Act] on 30-09-2008. No return of income was filed in response to notice u/s. 148. Subsequently, notice u/s. 143(2) was issued for which there was no response from the appellant, consequent to this, a show cause notice u/s. 144 was issued to the appellant on 06-12-2007. In response to the said show cause notice, the appellant submitted that cash deposit of Rs. 9,80,000/- was made out of the gift received from his father. The affidavit of his father duly notarized stating that the amount of Rs. 9,80,000/- was gifted to the appellant was filed. This amount was stated to have been given out of the sale proceeds of the agricultural land. Not being satisfied with this explanation, the cash deposits of Rs. 9,80,000/- as reduced by Rs. 2,39,100/- being the income available on account of agricultural income was brought to tax by the Assessing Officer (AO). Being aggrieved, the appellant preferred an appeal before the CIT(A), who vide order dt. 22- 12-2014, dismissed the appeal filed by the appellant. The CIT(A) confirmed the addition by holding that father did not have enough sources to give cash gift of Rs. 9,80,000/- to the appellant. Being aggrieved, the appellant had come up before this Tribunal.

3. Before us, it was contended on behalf of the appellant that the cash deposits were made out of the cash gift received from appellant's :- 3 -: I.T.A.No. 270/Hyd/2015 Sri Valike Venkatesham

father namely Shri Volike Sathaiah. He also brought our attention to the affidavit signed by his father contained in page No. 15 & 16 of the Paper Book wherein the appellant's father Shri Volike Sathaiah had confirmed on oath having made gift of Rs. 9,80,000/- on 26th April, 2004 to the appellant. It was further averred that the donor i.e., appellant's father had sufficient means to make gift of Rs. 9,80,000/- in cash in as much as the sale proceeds of the agriculture land were available with him. It was submitted that though the consideration shown in the sale deed was only Rs. 36,000/-, the actual sale proceeds were Rs. 9,80,000/-. Therefore, the appellant submits that the cash deposits made in SB A/c should be treated as 'explained'.

4. On the other hand, Ld. DR submitted that when the sale consideration mentioned in the registered sale deed was only Rs. 36,000/-. Therefore, the theory of gift cannot be believed, as creditworthiness of donor is doubtful.

5. We heard the rival parties and perused the orders of lower authorities as well as the Paper Book placed on record. We find that the contents of the affidavit cannot be rejected outright without cross- examination as held by the Hon'ble Supreme Court in the case of Mehta Parik & Co., Vs. CIT [30 ITR 181]. In the present case, the AO had not chosen to probe further into the matter. He simply doubted the contents of the affidavit. Therefore, the contents of the affidavit remain un- controverted. Having held that the contents of the affidavit to be accepted, then the explanation tendered by the appellant explaining the sources for cash deposit in the bank account cannot be rejected. Addition in the case of un-explained cash deposits in the bank account can be made only under the provisions of Section 69 of the Act. The provisions of Section 69 only confers discretionary power to make :- 4 -: I.T.A.No. 270/Hyd/2015 Sri Valike Venkatesham

addition in case the explanation tendered by the assessee found to be un-acceptable. Therefore, in the given facts of the case, we are of the considered opinion that no addition is required having regard to the explanation tendered by the appeal. Hence, the ground of appeal filed by the appellant are allowed.

6. In the result, the appeal is allowed.

Order pronounced in open Court on 29th May, 2015

Sd/- Sd/-

(ASHA VIJAYARAGHAVAN) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 29th May, 2015

TNMM

Copy to :

1. Sri Valike Venkatesham, Appreddyguda, Moinabad Mandal, Ranga Reddy District. C/o. K. Vasantkumar & A.V. Raghu Ram, Advocates, 610, 6th Floor, Babhukhan Estate, Basheerbagh, Hyderabad.

2. The Income Tax Officer, Ward-8(2), I.T. Towers, A.C.Guards, Hyderabad.

3. CIT(Appeals)-2, Hyderabad.

4. CIT-2, Hyderabad.

5. D.R. ITAT, Hyderabad

6. Guard File