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2020 (12) TMI 48 - ITAT VISAKHAPATNAMAddition u/s 68 - availability of source and application of fund - AR argued that the assessee’s only source of income was house property, i.e. rents collected by the assessee, there was no other source of income - HELD THAT:- AO while making addition has not taken any support of Income Tax provisions i.e. either section 68 / 69 to make the additions. By not invoking the provisions itself, the additions made by the AO needs to be deleted. We find that the AO has taxed the sources and application of funds without giving any credit to the availability of sources. AO did not appreciate the information available before him properly. Though the assessee has furnished the evidence with regard to receipt of the money from late TMV Prasada Rao and got confirmed by the daughter of late TMV Prasada Rao, AO did not disprove the statement given by Y.Indira with proper evidence. In this case, the confirmation letter was given by Y.Indira. The assessee submitted that he has entered into agreement for sale of property consisting of 6000 sq.ft in Victory Complex, Peda Waltair, Visakhapatnam. Neither the sale agreement was disproved nor the existence of ownership of 6000 sq.ft at Victory Complex was disputed by the AO. Therefore, we do not find any reason to reject the contention of the assessee that he had received on money from late TMV Prasada Rao. Assessee is regularly assessed to wealth tax and as per the wealth tax returns, there was opening cash balance which was not disputed by the AO. The wealth tax returns are available with the AO, therefore, the availability of opening balance also was not disputed, hence the credit required to be given to the assessee, with regard to availability of opening balance. While taxing the deposits AO cannot ignore the withdrawals and opening cash balance available to the assessee and credit needs to be given to the source available from the application of funds. Though there was mismatch in dates with regard to deposits and withdrawals, the entire withdrawals cannot be brushed aside. AO ought to have made cash flow statement with opening cash balance, deposit and withdrawal and given due credit for the available sources. Instead, the AO chosen to tax the entire investments without giving credit for the available sources. No hesitation to agree with the view of the CIT(A) that the AO did not appreciate the issues properly. From the above discussion and the order of the CIT(A), it is clear that the assessee is having ₹ 2 crores of cash available to him and deposit made was ₹ 1,76,28,550/- and still there was some more cash balance which is available to the assessee to meet the investments or expenses. Therefore, we hold that the Ld.CIT(A) has rightly allowed the relief of ₹ 2,00,28,550/- comprising of opening balance and withdrawals from the bank account and confirmed the balance addition. Appeal of the revenue is dismissed.
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