Sri Sampathraj Rakesh Kumar , Bangalore V. The Income Tax Officer Ward-5(2)(2), Bangalore

ITA 1451/BANG/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0697 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 07-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO. 1451/BANG/2018 ASSESSMENT YEAR : 2014 - 15 SHRI SAMPATHRAJ RAKESH KUMAR, 2 ND FLOOR, MDP MARKET, C T STREET, BETTAPPA LANE, C T STREET CROSS, BANGALORE 560 002. PAN: AGYPK 6358F VS. THE INCOME TAX OFFICER, WARD 5(2)(2), BANGALORE. APP ELLANT RESPONDENT APP ELLANT BY : SHRI RAVISHANKAR, ADVOCATE RESPONDENT BY : SHRI RAJENDRA CHANDEKAR, JT.CIT(DR)(ITAT), BENGALUR U. DATE OF HEARING : 21 .0 8 .2018 DATE OF PRONOUNCEMENT : 03.10 . 2018 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 26.2.2018 OF THE CIT(APPEALS) - 5, BENGALURU RELATI NG TO ASSESSMENT YEAR 2014-15. 2. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL IS WITH REGARD TO THE CORRECTNESS OF ADDITION OF RS.25 LAKH S MADE BY THE AO TO THE TOTAL INCOME OF ASSESSEE AS UNEXPLAINED CASH DEPOSI TS IN THE BANK ACCOUNT U/S. 69 OF THE INCOME-TAX ACT, 1961 [THE ACT] WHI CH WAS CONFIRMED BY THE CIT(APPEALS). ITA NO.1451/BANG/2018 PAGE 2 OF 7 3. THE ASSESSEE IS AN INDIVIDUAL. HIS SOURCE OF IN COME IS COMMISSION FROM ACTING AS INSURANCE AGENT. FOR THE AY 2014-15 , THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3,95, 620. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY FOR THE REASON T HAT AS PER AIR REPORT OBTAINED, THERE WERE CASH DEPOSITS IN SB ACCOUNT. THE ASSESSEE DID NOT PARTICIPATE IN THE ASSESSMENT PROCEEDINGS AND THERE FORE ASSESSMENT WAS COMPLETED BY THE AO TO THE BEST OF HIS JUDGMENT. AS PER AIR REPORT, THE FOLLOWING WERE THE CASH DEPOSITS IN THE BANK ACCOUN T:- SL. NO. TRANSACTION AMOUNT TRANSACTION DATE ACTUAL AIR LINE NO. RRR NUMBER RRR DATE 1. 25,05,050 09.10.2013 5300 21744100000070 30.08.2014 2. 25,05,50 09.10.2013 5345 21744100000070 30. 08.2014 4. THE AO TREATED THE ENTIRE CASH DEPOSITS AS UNEXP LAINED CASH OF ASSESSEE AND ADDED THE SAME TO THE TOTAL INCOME. O N APPEAL, THE CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSE E THAT THE SAME DEPOSIT OF RS.25,05,050 OF CASH IN THE BANK ACCOUNT HAD BEEN REFLECTED TWICE IN THE AIR OBTAINED BY THE AO AND THEREFORE T HE AMOUNT OF CASH DEPOSITS IN THE BANK ACCOUNT WHICH THE ASSESSEE HAS TO EXPLAIN THE SOURCE IS ONLY RS.25,05,050. 5. AS FAR AS CASH DEPOSITS OF RS.25,05,050 IS CONCE RNED, THE PLEA OF THE ASSESSEE WAS WITHDRAWALS FROM THE BANK ACCOUNT OF ASSESSEE AND ALSO LOAN OF RS.5 LAKHS WHICH WAS AVAILED BY THE ASSESSE E FROM LIC OF INDIA WHICH WAS SUBSEQUENTLY WITHDRAWN IN CASH BY THE ASS ESSEE. 6. BEFORE THE CIT(APPEALS), THE ASSESSEE FILED STAT EMENT SHOWING WITHDRAWALS FROM APRIL, 2009 TILL MAY 2013 AS A SOU RCE FOR LUMPSUM DEPOSIT OF RS.20 LAKHS AND RS.5 LAKHS ON 25.5.2013 AND 30.5 .2013. THIS WAS REJECTED BY THE CIT(A) FOR THE REASON THAT HAVING R EGARD TO THE HUMAN PROBABILITY AND THE NORMAL COURSE OF HUMAN CONDUCT, IT CANNOT BE BELIEVED THAT THE PAST WITHDRAWALS I.E., WITHDRAWALS OF TWO YEARS EARLIER TO THE DATE OF ITA NO.1451/BANG/2018 PAGE 3 OF 7 DEPOSIT WOULD HAVE BEEN KEPT IN CASH BY THE ASSESSE E. FOR THE ABOVE REASON, THE CIT(APPEALS) REJECTED THE PLEA OF ASSES SEE. 7. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASSE SSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 8. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE PLEA AS WAS PUT FORTH BEFORE THE CIT(A) AND FURTHER RELIED ON THE DECISIO N OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF SMT P. PADMAVATHI V. ITO, ITA NO.414 OF 2009, ORDER DATED 6.10.2010 . IN THE AFORESAID DECISION, THE SOURCE OF RETURN OF LOAN WAS EXPLAINED BY THE ASSESSEE AS OUT OF PAST W ITHDRAWALS FROM THE BANK ACCOUNT. THE EXPLANATION OF ASSESSEE WAS REJE CTED BY THE REVENUE AUTHORITIES AS WELL AS BY THE TRIBUNAL. ON FURTHER APPEAL BY ASSESSEE TO THE HONBLE KARNATAKA HIGH COURT, ON THE QUESTION OF L AW, VIZ., WHETHER THE FINDING OF AUTHORITIES THAT THE SOURCE OF CASH DEPO SITS IN THE LOAN ACCOUNT IS NOT PROPERLY EXPLAINED, THE HONBLE HIGH COURT FOUN D THAT THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF 'S.R.VENKATARAM AN V. COMMISSIONER OF INCOME-TAX, KARNATAKA-1 AND ANOTHER REPORTED IN ITR (127) 1981 PAGE 807, HELD AS UNDER : ONCE THE PETITIONER-ASSESSEE DISCLOSED THE SOURCE AS HAVING COME FROM THE WITHDRAWAL MADE ON A GIVEN DAT E FROM A GIVEN BANK, IT WAS NOT FOR RESPONDENTS NOS.1 AND 2 TO CONCERN THEMSELVES WITH WHAT THE ASSESSES DID WI TH THAT MONEY, I.E., WHETHER HE HAD KEPT THE SAME IN I NS HOUSE OR UTILISED THE SERVICES OF A BANK BY DEPOSIT ING THE SAME. THE ITO HAD ONLY TWO CHOICES BEFORE HIM. ON E WAS TO REJECT THE EXPLANATION AS NOT BELIEVABLE FOR THE REASON THAT ON HIS INVESTIGATION NO SUCH PIGMY DEPOSIT WAS EVER MADE IN THE BANK. IN THE ALTERNATIVE HE OUGHT TO H AVE CALLED UPON THE ASSESSEE-PETITIONER TO SUBSTANTIATE HIS CLAIM BY DOCUMENTARY EVIDENCE. HAVING EXERCISED NE ITHER OF THE CHOICES, IT WAS NOT OPEN TO THE ITO TO MEREL Y SURMISE THAT IT WOULD NOT BE PROBABLE FOR THE ASSES SEE TO KEEP RS.15,000/- UNUTILISED FOR A PERIOD OF TWO YEA RS. THE ITO SHOULD HAVE GIVEN AN OPPORTUNITY TO THE ASSESSE E TO ITA NO.1451/BANG/2018 PAGE 4 OF 7 SUBSTANTIATE HIS ASSERTION AS TO THE SOURCE OF HIS CAPITAL OUTLAY. 9. FOLLOWING THE AFORESAID VIEW, THE HONBLE HIGH C OURT HELD THAT IT WAS NOT IN DISPUTE THAT THE ASSESSEE WITHDREW A SUM OF RS.5,00,000/- ON 18.8.2003 AND RS.2,00,000/- ON 20.8.2003 FROM HER S AVINGS ACCOUNT. SHE IS AN AGRICULTURIST AND SHE HAD AGRICULTURAL INCOME . ONCE SHE DEMONSTRATED THAT SHE WAS IN POSSESSION OF RS.7,00, 000/- CASH PLUS AGRICULTURAL INCOME ON HER HANDS, IF AFTER 40 DAYS, A CASH DEPOSIT IS MADE TO THE EXTENT OF ABOUT RS.5,20,000/- TOWARDS LOAN A CCOUNT, IT CANNOT BE SAID THAT THE SOURCE OF THE SAID DEPOSIT IS NOT PROPERLY EXPLAINED. MERELY BECAUSE THERE IS A DELAY OF 40 DAYS FROM THE DATE O F WITHDRAWAL OF THE MONEY FROM THE BANK ACCOUNT TO THE DATE OF DEPOSIT IN THE LOAN ACCOUNT. ONCE MONEY IS SHOWN TO BE IN THE ACCOUNT AND WITHDR AWN, WHAT THE ASSESSEE DID WITH THAT MONEY TILL IT WAS ACTUALLY D EPOSITED, IS NOT THE CONCERN OF THE DEPARTMENT. AS LONG AS THE SOURCE I S EXPLAINED AND ESTABLISHED AND WHEN THE MONEY IS WITHDRAWN FROM A SAVINGS BANK ACCOUNT AND PAID TO DISCHARGE LOAN BY DEPOSIT INTO A LOAN ACCOUNT, IT IS NOT POSSIBLE TO HOLD THAT THE SOURCE IS NOT EXPL AINED. IN THAT INTERREGNUM PERIOD, IF THE VERY SAME MONEY IS UNTIL ISED FOR OTHER PURPOSE AND THEREAFTER, IT IS APPROPRIATED TOWARDS DISCHARGE OF A LOAN THAT CANNOT BE HELD AGAINST THE ASSESSEE. 10. THE LD. DR RELIED ON THE ORDER OF CIT(APPEALS). 11. I HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIV AL SUBMISSIONS. THE ASSESSEE MAINTAINS BANK ACCOUNT WITH CORPORATION BA NK AND IT IS FROM THIS BANK THAT CASH WAS WITHDRAWN AND DEPOSITED BY THE A SSESSEE. THE ASSESSEE HAS TO EXPLAIN THE SOURCE OF RS.20 LAKHS D EPOSIT IN CASH ON 25.5.2013 AND RS.5 LAKHS IN CASH ON 30.5.2013. TH E ASSESSEE HAS AVAILED A LOAN OF RS.5 LAKHS FROM LIC OF INDIA AND THE SAME WAS RECEIVED BY THE ASSESSEE BY WAY OF CREDIT IN HIS BANK ACCOUN T ON 14.02.2013. THE ITA NO.1451/BANG/2018 PAGE 5 OF 7 FOLLOWING ARE THE WITHDRAWALS BY THE ASSESSEE FROM THE AFORESAID BANK ACCOUNT FROM APRIL, 2011 TILL MAY, 2013:- MONTH CASH WITHDRAWALS SELF CHEQUE CASH CASH DEPOSITS CLOSING CASH BALANCE APRIL 2011 38,500 50,000 - 88,500 MAY 2011 106,500 - - 195,000 JUNE 2011 62,000 - - 257,000 JULY 2011 69,000 - - 326,000 AU GUST 2011 113,000 20,500 - 459,500 SEPTEMBER 2011 75,000 - - 459,500 OCTOBER 2011 51,000 - - 596,000 NOVEMBER 2011 34,000 - - 630,000 DECEMBER 2011 45,000 - - 681,500 JANUARY 2012 95,000 - - 776,500 FEBRUARY 2012 151,500 - - 928,000 MARCH 2012 140,4 00 155,000 - 1,223,400 TOTAL 980,900 242,500 - MONTH CASH WITHDRAWALS SELF CHEQUE CASH CASH DEPOSITS CLOSING CASH BALANCE APRIL 2012 77,000 - - 1,300,400 MAY 2012 90,000 11,000 - 1,401,400 JUNE 2012 103,000 - - 1,504,400 JULY 2012 61,000 - - 1,56 5,400 AUGUST 2012 38,000 53,300 - 1,656,700 SEPTEMBER 2012 73,300 - - 1,730,000 OCTOBER 2012 91,500 62,000 - 1,883,500 NOVEMBER 2012 41,500 73,000 - 1,998,000 DECEMBER 2012 52,500 - - 2,050,500 JANUARY 2013 47,800 - - 2,098,300 FEBRUARY 2013 97,000 380,000 - 2,575,300 MARCH 2013 135,000 950,000 900,000 2,760,300 TOTAL 907,600 1,529,300 900,000 MONTH CASH WITHDRAWALS SELF CHEQUE CASH CASH DEPOSITS CLOSING CASH BALANCE APRIL 2013 140,000 - - 2900,300 MAY 2013 63,000 - - 2,963,300 TOTAL 203,000 ITA NO.1451/BANG/2018 PAGE 6 OF 7 12. THUS, THE TOTAL CASH WITHDRAWN FROM THE BANK AC COUNT BY THE ASSESSEE WAS RS.20,91,500 + 17,71,800 WHICH WAS WIT HDRAWN BY HIS SELF- CHEQUE. THERE WAS ALSO A DEPOSIT OF RS.9 LAKHS IN THE BANK ACCOUNT IN MARCH, 2013. AFTER EXCLUDING THE CASH DEPOSIT, NE T CASH AVAILABLE WITH ASSESSEE FROM THE WITHDRAWALS WAS A SUM OF RS.29,63 ,000. THE AVAILABILITY OF CASH AS A SOURCE OF DEPOSIT IN THE BANK ACCOUNT WAS DISBELIEVED BY THE AO FOR THE ONLY REASON THAT IT W AS HIGHLY IMPROBABLE FOR A PERSON TO KEEP WITHDRAWALS IN THE BANK ACCOUNT FO R A PERIOD OF TWO YEARS. IN THIS REGARD, WE FIND THAT THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF S.R. VENKATARAMAN (SUPRA) HAD TAKEN A VIEW THAT WITHDRAWALS OF CASH IN THE PAST AS A SOURCE OF DEPOSIT AT A LATER POINT OF TIME IN THE BANK ACCOUNT CANNOT BE DISBELIEVED MERELY ON THE SURMISE THAT IT WAS IMPROBABLE FOR AN ASSESSEE TO KEEP CASH WITHDRAWN FOR TWO YEARS. TH E HONBLE HIGH COURT HELD THAT REVENUE AUTHORITIES WERE NOT COMPETENT TO DICTATE AS TO WHAT THE ASSESSEE SHOULD DO WITH THE MONEY WITHDRAWN FROM T HE BANK. THE COURT HELD THAT AS LONG AS THE SOURCE IS EXPLAINED AND ES TABLISHED AND IF MONEY IS WITHDRAWN FROM SB ACCOUNT AND PAID TO DISCHARGE LOAN BY DEPOSIT INTO A LOAN ACCOUNT, IT IS NOT POSSIBLE TO HOLD THAT THE S OURCE IS NOT EXPLAINED. THE COURT ALSO HELD THAT MONEY MIGHT HAVE BEEN UTILISED IN THE INTERREGNUM PERIOD FOR SOME PURPOSE AND THEREAFTER APPROPRIATED TOWARDS DISCHARGE OF LOAN. BUT THAT FACT CANNOT BE HELD AGAINST THE ASS ESSEE. THE AFORESAID DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE SUPPORTS THE PLE A OF THE ASSESSEE. I ACCORDINGLY HOLD THAT THE REVENUE AUTHORITIES WER E NOT JUSTIFIED IN REJECTING THE EXPLANATION OF ASSESSEE WITH REGARD TO SOURCE OF DEPOSIT OF CASH IN THE BANK ACCOUNT. THE CONSEQUENT ADDITION MADE IS DIRE CTED TO BE DELETED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.1451/BANG/2018 PAGE 7 OF 7 13. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF OCTOBER, 2018. SD/- ( N.V. VASUDEVAN ) JUDICIAL MEMBER BANGALORE, DATED, THE 3 RD OCTOBER, 2018. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.