CHEENATH DEVASSY SAJI, DURG V. INCOME TAX OFFICER, WARD- 1(1), BHILAI

ITA 120/RPR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3188 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure
• Section: 143(3)

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 120/RPR/2019 Ǔनधा[रण वष[ / Assessment Year : 2010-11 Cheenath Devassy Saji Qtr. No. 3, Street-3, Panchsheel Housing Board, Durg-491 001 (C.G.) PAN : BHXPS0314Q .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer-1(1), Bhilai (C.G.) ......Ĥ×यथȸ / Respondent Assessee by : Shri Nilesh Jain, AR Revenue by : Shri G.N Singh, DR स ु नवाई कȧ तारȣख / Date of Hearing : 10.06.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 26.07.2022 2 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT (Appeals)-II, Raipur dated 31.01.2019, which in turn arises from the order passed by the A.O under Sec. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (for short ‘the Act’) dated 21.11.2017 for assessment year 2010- 11. Before us the assessee has assailed the impugned order on the following grounds of appeal: “1. In the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in confirming addition of Rs.16,00,000/- made by ld. Assessing Officer as undisclosed income of the appellant without any basis. 2. The impugned order is bad in law and in facts. 3. The appellant reserves the right to add, alter, amend, omit all or any of the grounds of appeal.” 2. On the basis of information received by the A.O that though the assessee had made cash deposits of Rs.16 lac in his bank 3 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 account during the year under consideration but had not filed his return of income, the A.O reopened his case u/s.147 of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee during the year under consideration had received an amount aggregating to Rs.26 lac from M/s. Bhagya Nidhi Exports Ltd. It was noticed by the A.O that the assessee had made cash deposits aggregating to Rs.16 lakhs in his saving bank account No.910010005272944 with Axis bank, Branch: Bhilai. Also, it was noticed by the A.O that the assessee during the year under consideration had through his aforesaid bank account made a payment of Rs.16.90 lac to M/s. Bhagya Nidhi Exports Ltd. On being queried as regards the source of the cash deposits of Rs.16 lacs in his bank account, it was submitted by the assessee that the same were sourced out of the cash withdrawals made by him from the very same bank account i.e out of the amount of Rs.26 lac that was received by him from M/s. Bhagya Nidhi Exports Ltd. Elaborating on his aforesaid contention, it was submitted by the assessee that being 4 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 in need of funds to purchase a residential house he had raised a loan of Rs. 26 lac from M/s. Bhagya Nidhi Exports Ltd. It was the claim of the assessee that as the purchase transaction of a residential house did not fructify therefore, the aforesaid loan was during the year under consideration partly repaid to M/s. Bhagya Nidhi Exports Ltd. However, the A.O was not persuaded to subscribe to the aforesaid claim of the assessee. It was observed by the AO that piecemeal withdrawal of money by the assessee did not inspire any confidence as regards the genuineness of his claim of having redeposited the same in his bank account. Holding a conviction that the amount of cash withdrawn by the assessee had no nexus with the cash deposited by him in his bank account, the AO held the entire amount of cash deposits of Rs.16 lac as the undisclosed money of the assessee. 4. The assessee being aggrieved with the assessment order carried the matter in appeal before the CIT(Appeals). However, the CIT(Appeals) did not find favor with the contentions advanced by the assessee qua the source of the cash deposits of Rs.16 lac 5 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 (supra) in his bank account and upheld the addition made by the A.O. 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record. Controversy involved in the present appeal lies in a narrow compass, i.e., sustainability of the claim of the assessee of having made cash deposits aggregating to Rs.16 lacs in two tranches of Rs. 8 lac each on 09.03.2010 and 10.03.2010 out of cash withdrawals aggregating to Rs.24.90 lacs made by him in 3 tranches, viz. (i) Rs.8.90 lac on 20.10.2010; (ii) Rs.8 lac on 22.02.2010; and (iii) Rs.8 lac on 26.02.2010. On a perusal of the assessment order, we find that the claim of the assessee of having redeposited the aforesaid cash withdrawals made from his bank account was rejected by the A.O, primarily for the reason that there was no justification in making cash withdrawals in a piecemeal fashion for repaying in tranches the 6 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 loan that was raised by him from M/s. Bhagya Nidhi Exports Ltd. On appeal, CIT(Appeal) had upheld the addition made by the A.O, for the reason that the assessee had failed to substantiate his claim of having raised a loan from M/s. Bhagya Nidhi Exports Ltd. It was observed by the CIT(Appeals) that the claim of the assessee of having raised a loan of Rs.26 lac from M/s. Bhagya Nidhi Exports Ltd. did not inspire much of confidence for the reasons, viz. (i) that the assessee had failed to establish his relation with M/s. Bhagya Nidhi Exports Ltd; (ii) that the assessee had failed to place on record the purpose of raising loan a/w. details as regards the security that was offered for the same; (iii) that sanction letter in respect of the loan in question was not filed by the assessee; (iv) that no details were filed by the assessee which would establish that lending of money or advancing of loans was one of the business activity of M/s. Bhagya Nidhi Exports Ltd.; and (v) that considering the financial credibility of the assessee it was beyond comprehension as to why M/s. Bhagya Nidhi Exports Ltd. would have provided an unsecured 7 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 loan to him. Accordingly, the CIT(Appeals) on the basis of his aforesaid observations coupled with the fact that no interest was charged by M/s. Bhagya Nidhi Exports Ltd. on the impugned loan that was claimed to have been advanced to the assessee upheld the addition of Rs.16 lac made by the AO. 7. We have given a thoughtful consideration to the aforesaid issue in hand in the backdrop of the contentions advanced by the ld. Authorized representatives of both the parties. On a perusal of the SB account No.910010005272944 with Axis bank, Branch : Bhilai, we find that the assessee had during the year under consideration made cash withdrawals of Rs.24.90 lakhs (out of amount of Rs.26 lac that was received from M/s. Bhagya Nidhi Exports Ltd.) in three tranches, as under: Date Particulars Amount 20.02.2010 Self withdrawal by cheque No.10651 8,90,000/- 22.02.2010 Self withdrawal by cheque No.10652 8,00,000/- 26.02.2010 Self withdrawal by cheque No.10653 8,00,000/- 8 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 On the other hand cash aggregating to Rs. 16 lac was deposited by the assessee in the aforesaid bank account in two tranches as under: Date Particulars Amount 09.03.2010 Cash deposit 8,00,000/- 10.03.2010 Cash deposit 8,00,000/- On a perusal of the aforesaid bank account, we find that it is a matter of fact borne from record that cash deposits of Rs.16 lac had found its way back to the coffers of M/s. Bhagya Nidhi Exports Ltd. on the very same date on which the same were made i.e. on 09.03.2010 and 10.03.2010, respectively. Also, an amount aggregating to Rs.90,000/- (Rs.50,000/- + Rs.40,000/-) was repaid by the assessee vide cheques on 09.03.2010 & 10.03.2010 to M/s. Bhagya Nidhi Exports Ltd. Careful perusal of the assessee’s SB account No.910010005272944 with Axis bank, Branch : Bhilai reveals that the balance outstanding amount of Rs.9.10 lac was repaid by the assessee through cheques to M/s. Bhagya Nidhi Exports Ltd. in the immediately succeeding year in 9 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 two tranches, viz. (i) on 23.10.2010 : Rs.8,90,000/-; and (ii) on 26.03.2011 : Rs. 20,000/-. 8. On a conjoint perusal of the aforesaid details, we find that the assessee had during the year under consideration received an amount of Rs. 26 lac from M/s. Bhagya Nidhi Exports Ltd. which was totally repaid by it over the period i.e 02.03.2010 to 26.03.2011, as under: Date Particulars Amount 02.03.2010 Vide cheque No.10654 Rs.50,000/- 03.03.2010 Vide cheque No.10655 Rs.40,000/- 09.03.2010 Vide cheque No.10656 Rs.8,00,000/- 10.03.2010 Vide cheque No.10657 Rs.8,00,000/- 23.03.2010 Vide cheque No.10658 Rs.8,90,000/- 26.03.2010 Vide cheque No.10659 Rs.20,000/- Total Rs. 26,00,000/- Apart from that, we find that the assessee had in the immediately succeeding year received an amount of Rs. 6 lac from M/s. Bhagya Nidhi Exports Ltd., which, thereafter, was repaid by him on 03.01.2012. On a perusal of the aforesaid details it stands 10 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 established beyond doubt that the amount of Rs.26 lac that was received by the assessee from M/s. Bhagya Nidhi Exports Ltd. was thereafter repaid by him in parts during the year under consideration and in the immediately succeeding year. 9. Controversy in the present appeal hinges around the maintainability of the explanation of the assessee as regards the nature and source of cash deposits of Rs. 16 lac in his bank account i.e SB account No.910010005272944 with Axis bank, Branch : Bhilai. As per the assessee the cash deposits of Rs. 16 lac (supra) were sourced out of the cash withdrawals that were made by him from the very same bank account i.e out of the amount of Rs.26 lac that was received in his aforesaid bank account from M/s. Bhagya Nidhi Exports Ltd. However, a perusal of the order of the CIT(Appeals) reveals, that he had upheld the addition of Rs. 16 lac (supra) made by the AO, for the reason that he was not inspired with the genuineness of the claim of the assessee of having raised a loan of Rs.26 lac from M/s. Bhagya Nidhi Exports Ltd. In our considered view the CIT(Appeals) by 11 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 misconceiving the issue involved in the present appeal had misdirected himself and had drawn adverse inferences on the basis of certain observations which were not at all relevant to the controversy in question. Fact that the assessee had received an amount of Rs.26 lac from M/s. Bhagya Nidhi Exports Ltd., which thereafter was repaid by him through his bank account is clearly established and is free from any doubt. In fact the controversy in question lies in a narrow compass i.e maintainability of the claim of the assesee of having made cash deposits of Rs.16 lacs in two tranches of Rs.8 lac each on 09.03.2010 and 10.03.2010 in his SB account No.910010005272944 with Axis bank, Branch: Bhilai. As claimed by the assessee, the aforesaid cash deposits in his bank account were sourced out of his bank withdrawals that were spread over the period i.e 20.02.2010 to 26.02.2010. In our considered view, as there is a clear proximity of time between the aforementioned cash withdrawals made by the assessee and the cash deposits in question, therefore, in the absence of any material proving to the contrary, his aforesaid explanation as 12 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 regards the source of the cash deposits could not have been summarily rejected. In fact, it is not even the case of the department that the cash withdrawals aggregating to Rs. 24.90 lakhs had been utilized by the assesee towards making of some other investment or incurring of any other expenditure. Considering the facts involved in the case before us, we are unable to concur with the lower authorities, who had without disproving the authenticity of the explanation of the assessee as regards the source of the cash deposits of Rs. 16 lac (supra) had most arbitrarily rejected the same and drawn adverse inferences in his hands. In our considered view, there is substance in the explanation of the assessee that the cash deposits of Rs.16 lac (supra) in question were sourced out of the cash withdrawals made by him about 20 days back. Although, we are in agreement with the CIT(Appeals) that the advancing of an unsecured loan of Rs. 26 lac (supra) by M/s. Bhagya Nidhi Exports Ltd. to the assessee, an unrelated party with limited financial means, would raise some doubts as regards the authenticity of the transaction 13 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 in question, but we are afraid that a doubt how so ever strong could not on a standalone basis justifiably dislodge the assesee’s explanation as regards the source of the cash deposits in his bank account. Be that as it may, as the lower authorities had failed to place on record any material which would prove to the hilt that the amount of Rs. 24.90 lac that was withdrawn by the assessee during the year under consideration in tranches from his SB account No.910010005272944 with Axis bank, Branch: Bhilai were utilized by him for some other purpose, therefore, the explanation of the assessee that the cash deposits of Rs.16 lac in his bank account were made out of the amounts that were withdrawn by him from his aforesaid bank account could not have been summarily rejected by the AO. We, thus, in terms of our aforesaid observations not being able to persuade ourselves to concur with the view taken by the lower authorities set-aside the order of the CIT(Appeals) and vacate the disallowance of Rs.16 lac (supra) made by the A.O. 14 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 10. In the result, appeal of the assessee is allowed in terms of our aforesaid observations. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. Sd/- Sd/- RATHOD KAMLESH JAYANTBHAI RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 26 th July, 2022 **SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-II, Raipur (C.G) 4. The Pr. CIT-II, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 15 Cheenath Devassy Saji Vs. ITO-1(1) ITA No. 120/RPR/2019 Date 1 Draft dictated on 10.06.2022 Sr.PS/PS 2 Draft placed before author 20.06.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order