G. Mallikarjuna Reddy vs Income Tax Officer

Dr.Vineet Kothari,J

The Assessee has filed this Appeal raising the following purported questions of law arising from the order of the learned Tribunal dated 9.4.2018 whereby the Assessee's Appeal came to be dismissed by the learned Tribunal upholding the order passed by the learned Commissioner of Income Tax (Appeals) for the Assessment Year 2014-2015.

"i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming the addition when the Assessee had discharged its onus of proving the genuineness of the transactions by producing the bank statements of both parties?

ii) Whether the order of the Tribunal is based on a perverse finding of fact that the whereabouts of the appellant's brother in law are not known, when the Revenue has neither summoned the brother in law under Section 131 of the Act nor called for any confirmation letter from him?

iii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in treating the amounts transferred to the appellant as unexplained cash credit merely because the bank account of the transferor was not designated as an NRI Account?"

The ground on which the Assessee lost before the two Appellate Authorities is that the Assessee could not prove the Cash Credit in the name of Bhuma Ramakrishna Reddy, the brother in law of the Assesssee, who was engaged in the construction business and who is said to be a Software Engineer and an NRI, who maintained a Bank Account with ICICI Bank and it is from such Bank Account only the advances were made to the Assessee, but, since the Assessee could not produce the said Bhuma Ramakrishna Reddy, an adverse inference was drawn by the Commissioner of Income Tax (Appeals) and additions made by the Assessing Officer were confirmed.

Mrs.J.Sreevidya, the learned counsel appearing for the Assessee has urged before us that the said person could not be produced as he was travelling out of India most of the times and though the Bank Account details were submitted before the Commissioner of Income Tax (Appeals) for the first time, the Assessee may be given one more opportunity to produce the said person himself so that the credit entries can be verified by the by the learned Commissioner of Income Tax (Appeals), before whom the Bank Account details were submitted.

The learned Senior Standing Counsel Mr.T.Ravikumar appearing for the Revenue opposed the said submission and supported the impugned orders.

A bare perusal of the order of the Commissioner of Income Tax (Appeals) in para 7.4, which is quoted below, would reveal that the Assessee was put to questions about the said Cash Credit in the name of Mr.Bhuma Ramakrishna Reddy, but, the Authorised Representative appearing for the Assessee could not explain the same and answer the said questions and no confirmation letter of the said person was filed before the Commissioner of Income Tax (Appeals).

Para 7.4 of the order passed by the Commissioner of Income Tax (Appeals) is quoted below for ready reference:-

"7.4. On verification of the ICICI Bank Statement it is noticed that it is not NRI Account. The A.R. was asked to explain --

(i) In which country Mr.Bhuma Ramakrishna Reddy is living?

(ii) What is he doing there? (iii) What is his source of income? (iv) Is he assessed to tax in India (v) What is the source for the deposits in the ICICI Bank Account? (vi) How the money from abroad was deposited in the savings bank account in India with ICICI Bank?

The Authorised Representative did not give any explanation to the above questions.

Moreover the A.R. did not file any confirmation letter from Mr.Bhuma Ramakrishna Reddy."

The Tribunal also confirmed the said findings with the following observation:-

"12. We have considered the rival contentions and perused the orders of the authorities below. Learned Commissioner of Income Tax (Appeals) had given a clearly finding that bank account Shri.Bhuma Ramakrishna Reddy with ICICI was not an NRI account. Assessee had failed to file any confirmation from Shri.Bhuma Ramakrishna Reddy. Assessee also could not give any details on the whereabouts of Shri.Bhuma Ramakrishna Reddy. In such circumstances, we are of the opinion that the addition was rightly made by the learned Assessing Officer and confirmed by learned Commissioner of Income Tax (Appeals). We do not find any reason to interfere with the orders of the lower authorities. Grounds 4 & 5 stand dismissed."

Though we do not find any substantial question of law arising in the present matter, we are of the opinion that the Assessee can be accorded one more opportunity to prove the said Cash Credit in the name of his close relative Mr.Bhuma Ramakrishna Reddy, who could not be produced before the learned Commissioner of Income Tax (Appeals) though the copies of the Bank Account details were furnished by the Assessee. The mere production of the Bank Account copies was not sufficient and the entires made therein were required to be proved by the Assessee by production of the said witness Mr.Bhuma Ramakrishna Reddy.

In order to allow verification of entries in Bank Statement in this regard, we are of the considered opinion that it would be appropriate and in the interest of justice to remit the matter back to the learned Commissioner of Income Tax (Appeals), who may examine the said witness at his own level and return the findings in this regard. Since a considerable time has already passed and the matter pertains to the Assessment Year 2014-2015, we direct the Assessee to appear before the said Authority viz., Commissioner of Income Tax (Appeals) at the first instance on 25.3.2019 and direct the CIT (A) to pass appropriate orders after the said person is produced before him and pass appropriate orders within a period of 3 months thereafter.

With the above observation, the Appeal is disposed of. No orders as to costs.