TMI Blog2023 (3) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of any valid evidence substantiating such conversion. CIT (A) deleted the addition stating that the assessee has already paid taxes in Nepal. The Ld. CIT(A) has failed to consider that Rs. 500/- and Rs. 1000/- (higher denomination notes) should not be brought from Nepal which is a violation under FEMA regulations. CIT(A) has erred in deleting the additions made by the Ld. AO. We are therefore of the considered view that the Ld. AO has rightly considered Rs. 2.16 Crs as income of the assessee under income from other sources and we therefore uphold the order of the Ld. AO on this Ground and set-aside the order passed by the Ld. CIT(A) on this issue.- Decided against assessee. Unexplained cheque deposits made in the bank account of the assessee - DR submitted that these cheque deposits were not explained before the Ld. AO and hence the Ld. AO has rightly treated the same as unexplained income of the assessee - AR has demonstrated before us regarding the cheque deposits made into the assessee s accounts from the joint account of the assessee along with his wife Smt. N. Sridevi - CIT-A deleted the addition - HELD THAT:- We find from the submissions made by the Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year - HELD THAT:- From the submissions of the AR we find that the assessee has taken a SOD facility from Andhra Bank, Tirupati for the purpose of construction of a house. SOD account is like a running current account of the assessee where the amounts credited into the SOD is adjusted against the interest in the overdraft account. We also find merit in the argument of the AR that whenever the amount exceeds the credit balance available in the account, it becomes an overdraft account for a short period until credits into the accounts are made by the assessee to regularize the overdraft facility - CIT(A) has rightly considered the interest payment and we do not find any infirmity in the order of the Ld. CIT(A) on this ground - Decided against revenue. Interest income treated as income from other sources - HELD THAT:- Interest earned by the assessee from the SB Account maintained by the assessee. This interest income was not disclosed while filing the return of income by the assessee for the impugned assessment year. CIT(A) has erred in considering the interest income as set off against the interest expenditure thereby giving benefit of double deduction to the assessee. We are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequently a revised return of income was filed on 24/1/2016 declaring a total income of Rs. 64,69,210/-. Subsequently, the case was selected for scrutiny and a notice U/s. 143(2) was issued to the assessee on 26/7/2016 by ACIT, Circle-2(1), Tirupati. Subsequently the case was transferred from ACIT, Circle-2(1), Tirupati to DCIT, International Taxation, Visakhapatnam. A notice U/s. 142(1) was issued on 8/9/2016 posting the case on 15/9/2016. The assessee s Authorized Representative Sri C.P. Rambabu, Income Tax Practitioner appeared on 15/9/2016 and furnished the information as required by the Ld. AO. Subsequently, the assessee along with the Authorized Representative appeared and furnished the information called for by the Ld. AO from time to time. On verification of the return of income and the information furnished by the assessee, the Ld. AO noticed that the assessee is working as an Assistant Professor, International Society Medical Education Pvt Ltd., Nepal. The Ld. AO required the assessee to furnish proof in support of interest on housing loan, interest on Secured Overdraft (SOD) and confirmation letter from Smt. Nallamilli Sri Devi towards loan given by the assessee. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same to the assessee s total income. Further, the Ld. AO on verification of the Balance Sheet furnished by the assessee treated the amount of Rs. 40,568/-, the difference between the actual amount received from the students and the amount disclosed in the balance sheet, as income of the assessee which was not disputed by the assessee. Further, the Ld. AO also made addition of Rs. 1,49,68,154/- since the assessee failed to explain the sources for the excess amount of unexplained deposits in the bank account of the assessee. aggrieved by the above additions, the assessee filed an appeal before the Ld. CIT(A)-10, Hyderabad. 4. Before the Ld. CIT(A), the assessee raised the issue of jurisdiction for the issue of notice U/s. 143(2) of the Act which was dismissed by the Ld. CIT(A). On merits, the Ld. CIT(A) partly allowed the appeal by confirming the additions made by the Ld. AO for Rs. 40,568/- and by deleting the additions of Rs. 2.16 Crs; Rs. 33,60,000/- and Rs. 1,49,68,154/-. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. 5. The raised has raised 11 grounds in its appeal however, Grounds No. 2, 3, 4 5 relate to deletion of additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end out of India to Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India notes (other than notes of denominations of above Rs. 100 in either case); ii) Bring into India from Nepal or Bhutan, Currency notes of Government of India and Reserve Bank of India notes other than notes of denominations of above Rs. 100 in either case: iii) Take out of India to Nepal or Bhutan, or bring into India from Nepal to Bhutan, currency notes being the currency of Nepal or Bhutan. 9. The Ld. AO also in his order called for the copies of the bank vouchers of cash deposited by the assessee and found that the cash been deposited in high denominations of Rs. 500 and Rs. 1000. Considering the restrictions in bringing high denomination currency from Nepal has rightly concluded that these cash deposits are unexplained and has rightly added to the income of the assessee. The argument of the Ld. AR was that it was converted into low denomination currency at the boarders of India and Nepal could not be accepted in the absence of any valid evidence substantiating such conversion. But the Ld. CIT (A) deleted the addition stating that the assessee has already paid taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,83,979/- in the bank account on behalf of the Medical College in Nepal. However, the assessee has transferred only Rs. 13,85,15,825/- to the Medical College in Nepal. Therefore, the Ld. DR submitted that the assessee has rightly treated the difference of Rs. 1,49,68,154/- as unexplained cash deposits and added the same to the total income of the assessee. Therefore, the Ld. DR pleaded that the order of the Ld. AO be upheld. Per contra, the Ld. AR submitted that this account is like a running account and the balance amount payable to the Medical College in Nepal has been paid in the subsequent Asst. Year. The Ld. AR further pleaded that the above amount included cash deposits of Rs. 15,34,83,979/- which includes the salary income earned by the assessee and deposited it to the Indian account by the assessee and hence the telescoping benefit shall be granted to the assessee. The Ld. AR further submitted that the benefit of telescoping for Rs. 2.16 Crs should have been granted to the assessee as the assessee has transferred an excess amount of Rs. 66,30,846/- to the Medical College, Nepal. He therefore pleaded that the order of the Ld. CIT(A) be upheld. 13. We have heard both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) The Ld. CIT(A) failed to appreciate that the notice U/s. 143(2) of the Act, issued by the ACIT, Circle-2(1), Tirupati is bad in law as the Ld. ACIT Circle 2(1), Tirupati had no jurisdiction over the respondent / cross objector, under the facts and circumstances of the case. iii) The Ld. CIT(A) failed to appreciate that the Ld. DCIT(IT), Visakhapatnam is not justified in proceeding on the basis of notice issued U/s. 143(2) of the Act, issued by the Ld. ACIT, Circle 2(1), Tirupati without issuing mandatory notice U/s. 143(2) of the Act within the time limit prescribed under the Act, under the facts and circumstances of the case. iv) The Ld. CIT(A) failed to appreciate that no valid notice U/s. 143(2) of the Act was issued within the limitation period prescribed under the Act, by the DCIT (IT), Visakhapatnam and the assessment framed thereby is ab initio void and fit to be quashed, under the facts and circumstances of the case. v) The Ld. CIT(A) failed to appreciate that the Ld. AO is not justified in law in expanding the limited scrutiny assessment beyond its scope, under the facts and circumstances of the case. 5. The respondent / cross objector craves to ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed U/s. 143(3) of the Act is invalid in law and shall be quashed. The Ld. AR relied on the decision of the Hon ble ITAT, Visakhapatnam Bench in ITA No. 602/Viz/2019 in the case of D. Ushareddy vs. ITO. Per contra, the Ld. DR submitted that the assessee s return of income can be treated as modified return and not as a revised return. Further, the Ld. DR submitted that the assessee s case was selected for complete scrutiny and not for limited scrutiny as per the screen shot submitted before the Bench. The Ld. DR further submitted that as per section 143(2) of the act, any return furnished U/s. 139 or in response to a notice U/s. 142(1) can be taken up for scrutiny. The Ld. DR further submitted that the assessee has not raised any objection before the Ld.AO and has participated in the assessment proceedings. 20. We have heard both the parties and perused the material available on record and the orders of the Ld. Revenue Authorities. We find from the screen sheet submitted by the Ld. DR that it is a complete scrutiny and not a limited scrutiny. Merely, by mentioning a heading limited scrutiny in the issuance of notice U/s. 143(2) of the Act does not convert the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supportive in nature and therefore they need not be adjudicated. 23. In the result, Cross Objection filed by the assessee is dismissed. ITA No. 01/Viz/2021 (AY: 2015-16) (By Revenue) 24. This appeal filed by the Revenue against the order of the Ld. CIT(A)- 10, Hyderabad in DIN Order No. ITBA/APL/S/250/2020- 21/102815937, dated 07/10/2020 arising out of the order passed U/s. 143(3) of the Act dated 31/3/2017 for the AY 2015-16. 25. The Revenue has raised 11 grounds in its appeal. However, Grounds No.2, 3, 4, 5 are with respect to deletion of addition towards cash deposits in bank accounts of Rs. 2,16,00,000/-. Grounds No. 6, 7 8 with respect to deletion of addition towards interest expenditure of Rs. 27,23,730/-. Grounds No.9, 10 11 relate to deletion of addition towards interest income from savings bank accounts of Rs. 11,65,279/-. Ground No.12 is a general ground. 26. The Grounds No. 2, 3, 4 5 are identical to that of the grounds raised by the Revenue in its appeal ITA No. 247/Viz/2020 for the AY 2014-15. While adjudicating the Revenue s appeal ITA No.247/Viz/2020 in the above paragraphs of this order, we have discussed the issue at length and held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, the amount which is out of the books of accounts or from the undisclosed sources, the amount which is debited to the account is accounted in the bank statement, the addition made by the AO only on the basis that the amount is not reflected in the books of accounts. As rightly pleaded by the appellant, the AO has not brought on record any evidence that the amount is paid out of undisclosed income. The recording of these transactions in the books of accounts is more a matter of form, rather than substance. The addition does not stand on merits and hence the Ground of appeal raised by the appellant is allowed. 29. We find that the Ld. CIT(A) has rightly considered the interest payment and we do not find any infirmity in the order of the Ld. CIT(A) on this ground and hence the grounds raised by the Revenue on this issue are dismissed. 30. With respect to Grounds No. 9, 10 11 where an addition made by the Ld. AO for Rs. 11,65,279/-, the Ld. AR submitted that the assessee has suo motto accepted the addition of interest received by the assessee from SB Account which was not considered while filing the return of income. Per contra, the Ld. DR relied on the order of the Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of Rs. 28,77,080/-. Subsequently, the assessee filed a revised return on 24/1/2016 declaring a total income of Rs. 29,02,330/-. The assessee s case was selected for scrutiny under CASS with a direction to the Assessing Officer to examine certain issues viz., (i) Interest expenses; (ii) purchase of property reported in Form 26QB; (iii) substantial increase in capita in a year and (iv) sale consideration of the property reported in ITR is less than the sale consideration of property reported in AIR and to verify the cash deposits. Accordingly, a notice U/s. 143(2) was issued to the assessee on 25/7/2016 by the ITO (IT), Nellore and later the case was transferred to Asst. CIT (IT), Visakhapatnam. A notice U/s. 142(1) calling for information was issued to the assessee on 12/8/2016 and the in response the assessee along with her representative appeared from time to time and furnished the information called for. The assessee has also been asked to furnish the proof in support of interest on housing loan, interest on SOD, interest on LIC loan and also confirmation letter from Sri V. Nataraj Prasad towards loan taken by the assessee, sources for cash deposits, sources for capital i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing asked to submit the reconciliation statement the assessee admitted that there is a deficit cash of Rs. 17,60,024/- and agreed to voluntarily offer the same as additional income for the FY 2013-14. Considering the assessee s explanation, the Ld.AO added the amount of Rs. 17,60,024/- as unexplained cash deposits. Further, the Ld. AO in the absence of any cogent evidence for the cash deposits in various banks, treated the amount of Rs. 55,00,000/- as unexplained cash deposits and added the same to the total income of the assessee. Thus, the Ld.AO computed the assessee s income and determined the assessed income at Rs. 2,81,62,354/- against the returned income of Rs. 29,02,330/-. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). 38. Before the Ld. CIT(A), the assessee raised the issue of jurisdiction for the issue of notice U/s. 143(2) of the Act which was dismissed by the Ld. CIT(A). On merits, the Ld. CIT(A) partly allowed the appeal by confirming the additions made by the Ld. AO. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. 39. Before the Tribunal, the Revenue has raised 07 grounds howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that no bank statement was provided before the Ld. AO and the assessee has furnished only before the Ld. CIT(A). The Ld. DR further submitted that such additional evidence should have been remanded back to the Ld. AO for his remand report after examining the same. The Ld. DR relied on the order of the Ld. AO. 43. We have heard both the parties and perused the material available on record and the orders of the Ld. Revenue Authorities. Admittedly it is noticed that the assessee has made cheque deposit in the bank accounts the details are as under: Sl no Deposited in Account No. Cheque No. Date Amount (Rs.) 1. Andhra Bank SOD A/c. 003331100000742 464052 29/1/2014 9,00,000 2. Andhra Bank SOD A/c. 003331100000742 464055 3/2/2014 9,00,000 3. Andhra Bank SOD A/c. 003331100000742 464057 4/2/2014 9,00,000 4. HDFC A/c. 5200000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue regarding providing an opportunity to the Ld. AO as per Rule 46A of the IT Rules, 1962 for the additional evidence submitted before him, we are of the view that the Ld. CIT(A) has powers U/s. 250(4) of the Act in case if any further enquiry is required which the Ld. CIT(A) may thought fit, he may direct the Assessing Officer to make further enquiry and request for a remand report . In the instant case, these bank transfers are either from the assessee s own account or from the joint account with her husband or from the assessee s husband s account. Therefore, it does not require any further enquiry by the Ld. AO and the Ld. CIT(A) has exercised his powers u/s. 250(4) of the Act and has rightly disposed off the additional evidence submitted before him. We therefore do not find any infirmity in the order of the Ld. CIT(A) on this issue also. Accordingly, the relevant ground raised by the Revenue on this issue is dismissed. 47. Ground No. 7 is general in nature and need not be adjudicated. 48. In the result, appeal filed by the Revenue is partly allowed. C.O. No.16/Viz/2021 (AY: 2014-15) (By Assessee: Nallamilli Sridevi) 49. This cross objection is raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue are allowed. 54. Grounds No. 5, 6 7 are with respect to deletion of addition towards interest expenditure of Rs. 48,17,402/-. This issue is identical to that of the issue raised by the Revenue in its appeal No.01/Viz/2021, AY: 2015-16 (Grounds No. 6, 7 8) in the case of Sri Vittalam Nataraj Prasad (husband of the present assessee). Since the facts and circumstances of the present case and the issue on hand are identical to that of the issue decided by this Bench in ITA No. 01/Viz/2021, AY: 2015-16 in the case of Sri Vittalam Nataraj Prasad (supra), our decision given therein mutatis mutandis applies to the instant issue also. Accordingly, we find that the Ld. CIT(A) has rightly considered the interest payment and adjudicated the issue on hand and granted relief to the assessee after discussing the issues at length vide paragraphs 13 to 13.4 of his order. Thus, we do not find any infirmity in the order of the Ld. CIT(A) on this ground and hence the grounds raised by the Revenue on this issue are dismissed. 55. With regard to the deletion of addition towards unaccounted closing bank balance of Rs. 3,67,544/- (Grounds No.8, 9 10), we find from Form 35 filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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