The Income Tax Officer, International Taxation, , Vijayawada V. Ravi Suryadevara, , Guntur

ITA 136/VIZ/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0276 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 23-08-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3); 143(2); 69A; 113

Judgement Text

आयकर अपीऱीयअधिकरण, विशाखापटणम पीठ, विशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्ि ू रु आर एऱ रेड्डी, न्याययक सदस्य एिं श्री एस बाऱाक ृ ष्णन, ऱेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अऩीऱ सं./ I.T.A. No.136/VIZ/2021 (ननधधारण वषा / Assessment Year: 2017-18) Income Tax Officer (International Taxation), Vijayawada-520007. PAN: AXJPR 4461 N Vs. Sri Ravi Suryadevara, Guntur. (अऩीऱधथी/ Appellant) (प्रत्यथी/ Respondent) अऩीऱधथी की ओर से/ Assessee by : Sri M. Chandramouleswara Rao, CA प्रत्यधथी की ओर से / Revenue by : Sri SPG Mudaliar, Sr. AR स ु नवधई की तधरीख / Date of Hearing : 15/06/2022 घोषणध की तधरीख/Date of Pronouncement : 15/07/2022 O R D E R PER S. BALAKRISHNAN, Accountant Member : This appeal is filed by the revenue against the order of the Ld. CIT(A), Hyderabad-10 in DIN & Order No. ITBA/APL/S/250/2020-21/1031135284(1), dated 02/03/2021 passed U/s. 143(3) r.w.s 250(6) of the Act for the AY 2017-18. 2 2. Brief facts of the case are that the assessee is a non- resident Indian filed his return of income for AY 2017-18 declaring a total income of Rs. 8,06,850/- in addition to agricultural income of Rs. 3,16,500/-. The case was selected for scrutiny under CASS and statutory notices U/s. 143(2) and 142(1) of the Act were issued and served on the assessee. The assessee through his representative, filed details as required by the AO. Based on the submissions made by the assessee’s representative, the Ld. AO concluded that the assessee has received excess cash of Rs. 92,47,500/- and has deposited the same into the bank account which is a joint account along with his daughter. The Ld. AO treated these cash credits as unexplained money in terms of provisions of section 69A of the Act and accordingly proposed to assessee the same U/s. 115BBE of the Act. The Ld. AO also noticed that cash deposits of Rs. 1.65 Crores during the period of demonetization in the bank account of the assessee and concluded that since the assessee failed to establish the sources of cash deposits, the same was treated as unexplained money as per the provisions of section 69A and accordingly assessed to tax U/s. 115BBE of the Act. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-10, Hyderabad. The assessee has raised certain 3 additional grounds also before the Ld. CIT(A) which are interlinked with the original grounds and admitted by the Ld. CIT(A). Before the Ld.CIT(A), the assessee’s representative made various submissions and explained that there is no other source for the assessee to earn huge amount of Rs. 92,47,500/- and it is only the on money received from the sale of rural agricultural lands. Similarly, the Ld. AR also submitted before the Ld. CIT(A) that the cash deposit of Rs. 1.65 Crs is out of the withdrawal from the assessee’s bank account during the month of September and October and the same was deposited consequent to announcement of demonetization by the Government of India. Considering these submissions the Ld. CIT(A) partly allowed the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us. 3. The Revenue raised the following revised grounds of Appeal: “1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in observing that the assessee being a non-resident has only certain passive income and no attempt was made by the AO to establish that the assessee has actually restored to an activity in India which has given rise to generation of certain active unexplained/undisclosed income India without appreciating the fact that the nature and source of cash deposit of Rs. 92,47,500 was not satisf actorily explained by the assessee and therefore no further burden lies on the Assessing Officer to show that the cash deposit of Rs. 92,47,500 is from any particular source. 4 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the cash deposits of Rs. 92,47,500 has a direct nexus with the sale of agricultural land and hence do not partake the character of taxable income and does not call for application of section 69A of Income Tax Act, 1961 without appreciating the fact that no evidence was furnished by the assessee to show that extra / additional consideration of Rs. 92,47,500 has been received in cash over and above the amount mentioned in the registered sale deeds of agricultural lands sold and therefore the source of the said amount of cash deposit in bank account remained unexplained. 3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in observing that the source of cash deposit of Rs. 1,65,00,000 in bank account of the assessee post demonetization emanate from the withdrawals earlier made by the assessee or his relatives from his bank accounts without appreciating the fact that no evidence was produced by the assessee to the satisfaction of the Assessing Officer in support of his contention that cash withdrawals were made for the intended purchase of property and since it did not materialize the cash was redeposited in the bank account. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in accepting the contention of the assessee that cash withdrawals made were made for the purpose of investment in lands as probability without appreciating the fact that the assessee has been indulging in cash withdrawals even though there was no utilization of the cash withdrawn earlier and therefore the cash flow statement furnished by the assessee to explain the source of cash deposit of Rs. 1,65,00,000 post demonetization was wholly unreliable.” 4. The Ld. DR argued that there is a delay of 184 days and it is covered by COVID period and hence pleaded for condonation of delay. As per the decision of the Hon’ble Supreme Court in SMW(A) No.3 of 2020, the period of limitation for filing the appeals under general laws and all special laws falling between 5 15/3/2020 and 28/02/2022 shall be excluded for calculating the delay. Considering the same, we hereby condone the delay of 184 days in filing the present appeal before the Tribunal and proceed to adjudicate the cases on merits. 5. The Ld. DR submitted that the sale deed executed for the sale rural agricultural lands was for Rs. 92.47 lakhs only. He further submitted that purchaser Sri Kanagala Harshitha Chowdary has informed that no cash has been paid other than the amounts mentioned in the sale deed, and entire sale consideration was paid through RTGS to the assessee and his daughter. The Ld. DR also invited our attention to the date of registration of the lands sold by the assessee is 20/09/2016 and pointed out that these cash deposits were made during the period from 10/04/2016 onwards. Similarly, the Ld. DR further submitted that the sale of land pertaining to the daughter of the assessee was registered during the month of February, 2017 and hence the cash deposits and receipts shown as deposits by the assessee are not arising out of the sale proceeds of agricultural land. The Ld. DR pointed out that no person will wait for more than eight months after making payments for registration of sale deed in his favour. 6 6. On the second issue, Ld. DR also questioned the necessity of withdrawing the huge sum of Rs. 1.70 Crores from the bank without identifying the seller of the rural agricultural land. The Ld. DR also pointed out that consequent to demonetization the assessee had deposited in three different installments and not in the single installment. The Ld. DR relied on the following judgments. 1. Supreme Court judgment in the case of Roshan Di Hatti vs. CIT reported in 107 ITR 938 (SC) 2. Hon’ble Allahabad High Court decision in the case of Nanak Chandra laxman Das vs. CIT reported in 9 Taxmann 252 (All) 3. Decision of ITAT, Chandigarh in the case of ACIT, Circle, Patiala vs. Mohinder Singh dated 18/1/2018 4. Supreme Court judgment in the case of Shashi Garg vs. Pr. CIT reported in 113 taxmann.com 93. 5. Delhi High Court decision in the case of Dinesh Kumar Jain vs. Pr. CIT reported in 97 taxmann.com 113. The Ld. DR heavily relied on the Hon’ble Supreme court judgment in the case of Shashi Garg (supra). 7. Per contra, the Ld. AR argued that the Ld. AO has not found any material evidence apart from the declared income of the assessee while filing the return of income. In the absence of any of the finding by AO, apart from the declared income there is no source for the assessee to earn a huge amount in his brief stay in India which is for the purpose of the registration of the sale deed. 7 The Ld. AR therefore vehemently argued that the amount of Rs. Rs. 92,47,500/- is on money transaction for the sale of agricultural land only and hence section 69A cannot be invoked. The Ld. AR referred to the case CIT vs. Intezar Ali [2015] 372 ITR 651 (All) . The Ld. AR also relied on various decisions of the Coordinate Benches of the Tribunal as detailed in the paper book. 8. The Ld. AR on the issue of depositing cash of Rs.1.65 Crs into the bank account of the assessee submitted that the assessee had withdrawn this amount from his NRO account maintained with SBH and Kotak Mahindra Bank for the purpose of acquiring agricultural land in Amaravathi area. Since the land could not be identified and consequent to announcement of demonetization the assessee had no option but to deposit the amount withdrawn into the same bank account of the assessee. The Ld. AR also pleaded that there was a practical difficulty in depositing the cash in one instance and hence the assessee had deposited in three instances. The Ld. AR also submitted that cash book was maintained by the assessee and sufficient cash balance was available in the books of account and hence section 69A could not be applied. The Ld. AR also placed heavy reliance 8 on the Hon’ble Supreme court judgment in the case of Shashi Garg (supra). 9. We have heard both the sides and perused the materials available on record and the orders of the Authorities below. Admitted facts are that the assessee being a Non-Resident Indian sold along with his daughter agricultural lands during the AY 2017-18 for a recorded consideration of Rs. 92,47,500/-. The contention of the Ld. AR that it was only 50% of the sale consideration and the remaining 50% of the sale consideration was received by way of cash could not be properly substantiated by the Ld. AR. We find merit in the argument of the Ld. DR as the cash deposits against the sale of the impugned agricultural land was made as follows: Sl no Date of receipt Amount (Rs.) 1. 10/4/2016 19,00,000 2. 18/5/2016 2,03,150 3. 7/7/2016 1,86,000 4. 20/7/2016 2,00,000 5. 8/8/2016 64,00,000 6. 20/09/2016 1,10,350 7. 6/10/2016 2,48,000 Total 92,47,500 9 10. Even though the buyer has disclosed lower sale consideration for the purpose of saving stamp duty, it could not be believed that the sale consideration flows from April 2016 onwards whereas the registration of the sale deed was executed on 20/09/2016 for the agricultural land held by the assessee and on February 2017 for the agricultural land held by the assessee’s daughter Smt Sudevera Sindura. The reliance placed by the Ld. AR in the case of Intezar Ali (supra) is distinguishable because the witnesses to the sale deed have deposed before the AO and Bank Manager of the assessee has confirmed that the cash was received by him against the sale made by the assessee. Since the Ld. AR could not provide any cogent evidences with respect to receipt of on money the same cannot be accepted. The argument of the Ld. DR that the purchaser has denied any payment of cash confirms that no on money was paid for the sale of agricultural land. In view of the above discussions, we find that the Ld. AO has rightly disallowed the same and we uphold the order of the Ld.AO on this ground. 11. With reference to the cash deposits during the demonetization period amounting to Rs. 1.65 Crs, we find from para 10.2 of the order of the Ld. AO that the assessee has 10 withdrawn from his NRO account a sum of Rs. 1.70 Crores as detailed below: “10.2. The sources for the above deposits were claimed to have been out of the cash in hand available as on the date of deposits which got accumulated from cash withdrawals made from NRE account (740010192533) held with Kotak Mahendra and SB Account (62140567829) held with SBH during the period from 1/9/2016 to 17/10/2016. SBH Account No. 62140567829 Date of withdrawal Amount (Rs.) 1/9/2016 9,00,000 1/9/2016 9,00,000 1/9/2016 7,00,000 Total 25,00,000 Kotak Mahindra Bank Account 740010192533 Date of withdrawal Amount (Rs.) Account type 1/9/2016 70,00,000 NRO 20/9/2016 25,00,000 NRO 17/10/2016 50,00,000 NRE 12. Similarly, we note that the cash deposits of Rs. 1.65 Crs was made during the demonetization period as detailed in para 10.1 of the AO order which is reproduced below: “10.1. The assessee has made cash deposits of Rs. 1,65,00,000 during the period of demonetization in the following bank accounts. Sl No. Name of the Bank Bank Account No. Amount deposited Date of deposited Nature of account 1. Kotak 740010192533 1,00,00,000 21/11/2016 NRE 11 Mahindra Bank Account 2. Kotak Mahindra Bank 740010192533 40,00,000 8/12/2016 NRE Account 3. SBH 62140567829 25,00,000 16/11/2016 NRE/SB Total 1,65,00,000 13. We note that the AO has mentioned the nature of account as NRE instead of NRO account which was accepted by the Ld. Counsels. From para 10.3 of the AO order the AO has admitted that the cash withdrawals are from the respective bank accounts of the assessee. The AO rightly questioned the necessity of withdrawing huge cash without identifying the seller of the land as claimed by the assessee. The AO also noted that no documentary evidences could be furnished by the assessee to support his claim that these cash withdrawals were made with an intention to purchase of land in and around Amaravati region. The AO also noted that the assessee has withdrawn the cash without being insisted by any one for cash payment. The AO further observed that the payment of sale consideration would available only after conclusion of terms and conditions and the withdrawals by the assessee and his relatives and keeping huge accumulated cash on hand could not be accepted. It is observed from the order of the Ld.AO that the AO has admitted that the 12 cash has been withdrawn by the assessee from his own bank account and deposited the same into the same bank accounts. In such situation it can be said that the fact of withdrawals of cash was not disputed by the Revenue. Only what has to be considered is the purpose of withdrawal. The assessee from the assessment until its appeal before us has been consistently claiming that the amount was withdrawn for purchasing of some land and consequent to announcement of demonetization the amount was again redeposited in the bank account by the assessee. But no documentary evidences were produced by the assessee to substantiate the same. The AO as well as the Ld. DR speak about the human probabilities of holding such huge cash. We also observe from the assessment order that the Ld. AO has observed that the accumulated cash must have been used for some other specified purpose and would have exhausted. The reliance placed by the ld. AR and the Ld. DR on the decision of the Hon’ble Supreme Court in the case of Shashi Garg (supra) is distinguishable on the fact that assessee had habitually withdrawn and deposited and it is not during demonetization period and hence the ratio of the Hon’ble Supreme Court cannot be applied in the instant case. Further, the assessee being an NRI, these cash withdrawals and deposits were made by the 13 relatives of the assessee. The Ld. AR has also not clearly demonstrated with evidences that the withdrawals by assessee is for buying of agricultural lands. The Ld. AR also failed to furnish any explanation of withdrawals of Rs. 25 lakhs on 20/09/2016 & Rs. 50 lakhs on 17/10/2016 when already the assessee/relatives of the assessee are holding Rs. 95 lakhs cash on 1/9/2016. In view of the above, we are of the considered opinion that, in the absence of any cogent evidences, establishing the purpose of withdrawals, we allow a sum of Rs. 25 lakhs deposited on 16/11/2016 being the first deposit by the assessee consequent to demonetization. It is ordered accordingly. 14. In the result, appeal of the Revenue is partly allowed. Pronounced in the open Court on the 15 th July, 2022. Sd/- Sd/- (द ु व्ि ू रु आर.एऱ रेड्डी) (एस बाऱाक ृ ष्णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) न्याययकसदस्य/JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER Dated : 15.07.2022 OKK - SPS 14 आदेश की प्रतिलिपि अग्रेपिि/Copy of the order forwarded to:- 1. ननधधाररती/ The Assessee – Sri Ravi Suryadevara, Flat No.104, Yaganti Gem, 7 th Lane, Brundavan Gardens, Guntur-522066. 2. रधजस्व/The Revenue – Income Tax Officer (International Taxation), stalin Corporate Building, 4 th Floor, Near CGO Complex, Industrial Estate, Autonagar, Vijayawada-520007. 3. The Principal Commissioner of Income Tax 4. आयकर आय ु क्त (अऩीऱ)/ The Commissioner of Income Tax (Appeal), Hyderabad-10. 5. ववभधगीय प्रनतननधध, आयकर अऩीऱीय अधधकरण, ववशधखधऩटणम/ DR, ITAT, Visakhapatnam 6. गधर्ा फ़धईऱ / Guard file आदेशधन ु सधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam