Vasepalli Subba Reddy, R.R.Dist., ... vs Department Of Income Tax

This appeal of the department is directed against order dated 15/12/14 of ld. CIT(A) - 2, Hyderabad for the AY 2005-06.

2. The department is aggrieved with the decision of ld. CIT(A) in deleting the addition of Rs. 17,15,169 made by AO.

3. Briefly the facts relating to the issue in dispute are, assessee an individual is having a small dairy business with five animals. On the basis of information received on account of AIR data, AO found that assessee has made cash deposits to the tune of Rs. 17,15,169 in SB A/c held by him in Corporation Bank, Jubilee Hills Branch, Hyderabad during FY 2004-05 relevant to AY under dispute. As assessee had not filed any return of income, AO reopened the assessment u/s 147 of the Act and issued notice u/s 148 of the Act.

2 ITA No. 179 /Hyd/2015 Vasepalli Subba Reddy

Subsequently, a notice u/s 142(1) was also issued to assessee calling upon him to file return of income for the AY under consideration. During the assessment proceeding, when AO called upon assessee to explain the source of cash deposits made into bank account, assessee submitted an affidavit stating therein that the said amount was taken from one Sri S.N. Murthy, a manpower consultant for the purpose of obtaining visa for his son Sri V. Ramireddy, who wanted to pursue higher education in USA. He further stated that Sri S.N. Murthy had deposited the amount in his bank account and has immediately withdrawn the same after visa formalities. When AO called upon assessee to prove the aforesaid fact, as it appears, assessee stated that Sri S.N. Murthy has vacated his business premises and not available. When AO deputed an Inspector to find whereabouts of Sri S.N. Murthy, Inspector reported that no such person was residing in the given address. Therefore, disbelieving the explanation of assessee, AO treated the entire cash deposits made into the bank account as unexplained investment u/s 69 and added it to the income of assessee. Being aggrieved of such addition, assessee preferred appeal before ld. CIT(A).

4. Before ld. CIT(A) also, assessee reiterated what was stated before AO and also submitted a fresh affidavit reiterating the same facts. It was submitted by assessee that it was Sri S.N. Murthy who had deposited the entire amount of Rs. 17,15,169 in cash and immediately withdrew the entire amount, also in cash, on the very same day once the formalities for visa were completed. It was submitted that appellant being an illiterate person eking out livelihood by selling milk in Gopanpally area does not have the income or capacity to deposit such huge amount. Ld. CIT(A) after considering the submissions of assessee in the context of facts and materials on record, deleted the addition observing as under:

"6. The submissions of the appellant, the order of the AO and the facts and issues were carefully considered. An affidavit was 3 ITA No. 179 /Hyd/2015 Vasepalli Subba Reddy

filed by the appellant before the AO dated 18/12/2009 and the same was reiterated by similar affidavit in appeal. Keeping in view the gamut of facts, issues and circumstances of the case, the contentions of the appellant hold water and the appeal is allowed."

5. Ld. DR submitted before us, only on the basis of the affidavit filed by assessee, ld. CIT(A) has deleted the addition without considering the fact that assessee has failed to properly explain the source of cash deposits made into the bank account with supporting evidence. Ld. DR further submitted, though, AO has made addition u/s 69 of the Act, but, ingredients of section 68 such as, identity of the creditor, genuineness of the transaction and creditworthiness of the creditor are also required to be established in a transaction of this nature. Since the burden is on assessee to discharge the onus, which the assessee has failed to discharge addition made by AO has to be restored.

6. Ld. AR strongly supporting the order of ld. CIT(A) submitted before us, assessee's son an engineering graduate, wanted to prosecute higher studies in USA. It was submitted, for obtaining education visa, bank balance is required to be declared before immigration authorities. Therefore, on the advice of manpower consultant Sri S.N. Murthy. A savings bank account was opened in the name of assessee in Corporation Bank and an amount of Rs. 17,15,169 was deposited in cash by Sri S.N. Murthy himself and once visa formalities were completed, Sri S.N. Murthy withdrew the amount through self cheques obtained from assessee and tookaway his money. Thus, the deposits made cannot be treated as unexplained investment of assessee. Ld. AR referring to the bank statement, copy of which has been submitted in the paper book, submitted, apart from the cash deposits made on 21/06/14 amounting to Rs. 17,15,169 there is no other major deposit in the said bank account. He also referred to the Immigration Certificate and visa granted to assessee's son to emphasize the fact that deposits were made by Sri S.N. Murthy 4 ITA No. 179 /Hyd/2015 Vasepalli Subba Reddy

for the purpose of obtaining educational visa for assessee' son. Ld. AR submitted, only because assessee was not able to obtain any confirmation from Sri S.N. Murthy or Sri S.N. Murthy was not found in the address for whatever may be the reason, it will not lead to believe that the cash deposits were not made by Sri S.N. Murthy, but, by assessee. Ld. AR submitted, the statements made by assessee in affidavit are presumed to be correct unless evidence to the contrary is brought on record. Thus, he submitted, finding of ld. CIT(A) deserves to be upheld.

7. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other material on record. Undisputedly, there are cash deposits of Rs. 17,15,169 in the SB A/c of assessee. However, assessee has submitted an affidavit not only before AO but also before ld. CIT(A) explaining the source of such deposit by stating that cash deposits were made actually by Sri. S.N. Murthy, who is a manpower consultant for obtaining education visa for assessee's son, who wanted to pursue higher studies in USA. In fact AO has also acknowledged this fact in the assessment order. However, he has disbelieved the statement of assessee for the reason that Sri S.N. Murthy was not found in the given address or his whereabouts could not be ascertained to verify the correctness of assessee's statement. However, on perusal of the bank statement copy, it appears that the entire amount of Rs. 17,15,169 was deposited on 21/06/14 and the entire amount was also withdrawn on the very same day through self cheques. Apart from these deposits, there are no other deposits in the bank account. In fact the bank account copy reveals that virtually there is no other substantial transaction in the bank account apart from the deposits made on 21/06/14. It is also evident that assessee's son was granted visa on 17/12/04 for pursuing higher studies in USA. Though, it may be a fact that assessee's statement could not be cross verified by examining Sri S.N. Murthy as his whereabouts could not be found out, but, that 5 ITA No. 179 /Hyd/2015 Vasepalli Subba Reddy

itself will not lead to the conclusion that the statements made by assessee in the affidavit are false when circumstantial evidences as found from the bank account copy and visa granted to certain extent prove the fact that the statements made in the affidavit by assessee cannot be rejected outright and are believable. It further needs to be mentioned that AO has not found out any other ostensible source of income, apart from source of income disclosed by assessee, which could indicate earning of such huge income by assessee. In the aforesaid facts and circumstances, we are of the view that conclusion drawn by ld. CIT(A) in the peculiar facts and circumstances of the case deserves to be upheld.

8. In the result, appeal of the department is dismissed.

Pronounced in the open court on 27 th May, 2015.

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

Hyderabad, Dated: 27 th May, 2015 kv

Copy to:-

1) ITO, Ward - 8(1), 8 th Floor, D-Block, IT Towers, AC Guards, Hyderabad

2) Vasepalli Subba Reddy, 1-100/29/2/1, Gopanpalle Village, Serilingampally Mandal, RR District.

3 CIT(A)-2, Hyderabad

4) CIT-2, Hyderabad

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