Sri. Jayan Paleri, Bangalore V. ITO, Bangalore

ITA 150/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0225 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift
• Section: 69

Judgement Text

ITA.150/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.150/BANG/2015 (ASSESSMENT YEAR : 2011-12) SHRI. JAYAN PALERI, NO.202, NIPUN ENCLAVE, ANJANEYA TEMPLE ROAD, BYRASANDRA, C. B. RAMAN NAGAR, BENGALURU 560 093 .. APPELLANT PAN : AJWPJ3329A V. INCOME-TAX OFFICER, INTERNATIONAL TAXATION, WARD -1(2), BENGALURU .. RE SPONDENT ASSESSEE BY : SHRI.RAMASUBRAMANIYAN, CA REVENUE BY : SMT. SWAPNA DAS, JCIT HEARD ON : 22.02.2016 PRONOUNCED ON : 30.06.2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE HE ASSAILS AN ADD ITION OF RS.36,65,000/- MADE AS UNEXPLAINED CASH AND ADDITIO N OF RS.70,380/- AS UNDISCLOSED INTEREST INCOME WHICH WERE CONFIRMED BY THE CIT (A). ITA.150/BANG/2015 PAGE - 2 02. FACTS APROPOS ARE THAT ASSESSEE HAVING SALARY I NCOME AND INTEREST INCOME HAD FILED HIS RETURN OF INCOME FOR THE IMPUG NED ASSESSMENT YEAR DECLARING INCOME OF RS.11.85,400/-. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED BY THE AO THAT ASSESSEE HA D MADE CASH DEPOSITS TOTALLING TO RS.56,65,000/-, IN THREE DIFFERENT ACC OUNTS. DEPOSITS IN HIS A/C NO.38634 WITH CANARA BANK CAME TO RS.37,90,000/-, I N ACCOUNT NO.35662 CAME TO RS.16,00,000/- AND DEPOSIT IN HDFC BANK CAM E TO RS.1,75,000/-. ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCE OF ABOV E DEPOSITS. EXPLANATION OF THE ASSESSEE WAS THAT ALL THESE THRE E ACCOUNTS WERE NRO ACCOUNTS. AS PER THE ASSESSEE, HE WAS EMPLOYED FOR A LONG TIME IN SAUDI ARABIA AND DURING THE PERIOD WHEN HE WAS IN SAUDI A RABIA, HE USED TO SEND MONEY TO HIS MOTHER. CONTENTION OF ASSESSEE WAS TH AT OTHER FAMILY MEMBERS HAD ALSO GIVENMONEY TO HIS MOTHER WHO WAS L IVING IN HIS VILLAGE IN KERALA. AS PER THE ASSESSEE, SUCH AMOUNTS WERE ACCUMULATED BY HIS MOTHER WHO WAS VERY OLD AND WAS NOT HAVING INDIVIDU AL BANK ACCOUNT. THIS MONEY AS PER THE ASSESSEE, WAS DEPOSITED BY HI S MOTHER INTO THE ABOVE ACCOUNTS. ASSESSEE ALSO SUBMITTED THAT HIS MOTHER WAS OWNING 0.62 ACRES OF AGRICULTURAL LAND FROM WHICH SHE WAS EARNING AGR ICULTURAL INCOME. ITA.150/BANG/2015 PAGE - 3 03. AO AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE, WAS OF THE OPINION THAT EXCEPT FOR A SUM OF RS.20 LAKHS FOR WH ICH THESE WERE EARLIER WITHDRAWALS, BALANCE OF THE SUM DEPOSITED IN THE B ANK ACCOUNTS WERE NOT PROPERLY EXPLAINED. ACCORDING TO AO, ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO SHOW THAT HE OR OTHER FAMILY MEMBERS HA D GIFTED ANY MONEY TO HIS MOTHER, NOR ANY DETAILS REGARDING THE INCOME HI S MOTHER WAS EARNING FROM AGRICULTURAL OPERATIONS. HE THUS MADE AN ADDI TION OF RS.35,60,000/- AND COMPLETED THE ASSESSMENT. 04. AGGRIEVED ASSESSEE MOVED IN APPEAL BEFORE THE C IT (A). ARGUMENT OF ASSESSEE WAS THAT HIS MOTHER OWNED 0.62 ACRES OF AGRICULTURAL LAND, WHICH GAVE SUBSTANTIAL INCOME. FURTHER AS PER THE ASSESSEE, HE AS WELL AS THE FAMILY MEMBERS WERE REGULARLY GIFTING MONEY TO HIS MOTHER AND SUCH ACCUMULATED MONEY WAS DEPOSITED BY HER IN HIS BANK ACCOUNT WITH THE HELP OF THIRD PARTIES. HOWEVER, CIT (A) WAS NOT IMPRESS ED. ACCORDING TO HIM IT COULD NOT BE BELIEVED THAT ASSESSEES MOTHER WAS AC CUMULATING CASH OVER A NUMBER OF YEARS AND HAD DEPOSITED IN ASSESSEES BAN K ACCOUNT. AS PER THE CIT (A), THE CASH-FLOW STATEMENT PRODUCED BY ASSESS EE REFLECTED ACCUMULATION FROM THE YEAR 1995-96 TO 2010-11, AS A LSO ACCUMULATION OF AGRICULTURAL INCOME OVER SUCH YEARS. HE HELD THAT ASSESSEE COULD NOT ITA.150/BANG/2015 PAGE - 4 EXPLAIN HIS CASE AND CONFIRMED THE ADDITION MADE BY THE AO EXCEPT FOR GIVING A RELIEF OF RS.1,44,000/-, FOR THE AGRICULTU RAL EARNINGS OF HIS MOTHER. 05. NOW BEFORE US, LD. AR STRONGLY ASSAILING THE OR DERS OF LOWER AUTHORITIES SUBMITTED THAT ASSESSEE WAS A NON-RESID ENT INDIAN SINCE MANY YEARS AND HAD BECOME RESIDENT ONLY IN THE RELEVANT PREVIOUS YEAR. AS PER THE LD. AR, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO EARN SO MUCH MONEY IN INDIA WITHIN ONE YEAR. FURTHER AS PER THE LD. AR, PREPONDERANCE OF PROBABILITY WAS THAT ASSESSEE HAD EARLIER SENT SUBS TANTIAL AMOUNTS TO HIS MOTHER FROM SAUDI ARABIA WHICH SHE COULD HAVE USED USED FOR DEPOSITING IN ASSESSEES BANK ACCOUNT. AS PER THE LD. AR, ASS ESSEE HAD DISCHARGED HIS BURDEN AND THE EXPLANATION OFFERED BY HIM WAS REASO NABLE. THE CASH-FLOW STATEMENT AND THE AGRICULTURAL EARNINGS OF HIS MOTH ER WERE UNJUSTLY REJECTED BY THE LOWER AUTHORITIES. RELIANCE WAS PLACED ON T HE JUDGMENT OF GAUHATI HIGH COURT IN THE CASE OF NEMI CHAND KOTHARI V. CIT [264 ITR 254], THAT OF THE APEX COURT IN CIT V. SMT. P. K. NOORJAHAN [2 37 ITR 570] AND THAT OF COORDINATE BENCH IN MS. PANDURANGA BHARGAVI VAID YA V. DCIT [ITA NO.1215/BANG/2015, DT.13.04.2016]. 06. PER CONTRA, LD. DR SUBMITTED THAT AO HAD GIVEN CREDIT FOR RS.20 LAKHS FOR EARLIER WITHDRAWALS FROM BANK ACCOUNTS. AS PER LD. DR, EXCEPT ITA.150/BANG/2015 PAGE - 5 FOR SUBMISSIONS, ASSESSEE COULD NOT PRODUCE ANY EVI DENCE IN SUPPORT OF HIS CASE. 07. I HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. IT IS NOT DISPUTED BY THE REVENUE THAT ASSESSEE WAS EMPLOYED IN SAUDI ARABIA SINCE A NUMBER OF YEARS. AS PER THE LD. AR, ASSESSEE WAS IN SUCH EMPLOYMENT SINCE 15 YEARS. SINCE ASSESSEES CASE WAS WITH AO (INTERNATIONAL TAXATION), I AM INCLINED TO ACCEPT THE CONTENTIONS OF THE ASSESSEE. AO HIMSELF HAS MENTIONED IN PARA 2 THAT STATUS OF THE ASSESSEE WAS CLAIMED AS NRI, SINCE ASSESSEE STAYED IN INDIA ONLY FOR 68 DA YS. IN SUCH A SITUATION TO COME TO A CONCLUSION THAT ASSESSEE HAD EARNED HUGE SUM OF RS.35,65,000/- DURING A SINGLE YEAR, FOR MAKING THE DEPOSITS IN THE BANK ACCOUNT CANNOT BE BELIEVED. JUST LIKE ANY OTHER NRI, IT WAS VERY MUCH PROBABLE THAT ASSESSEE WOULD HAVE SENT SUBSTANTIAL AMOUNT TO HIS MOTHER LIVING IN A VILLAGE. THERE IS EVERY CHANCE THAT HIS MOTHER BEI NG AN AGED LADY WOULD HAVE KEPT THE MONEY WITH HERSELF WITHOUT SPENDING M UCH AND GAVE IT BACK TO HER SON THROUGH DEPOSITS IN HIS BANK ACCOUNTS. IN ANY CASE ASSESSEE HAD FILED A CASH-FLOW STATEMENT OF HIS MOTHER WHICH WAS NOT DISPUTED BY THE AUTHORITIES BELOW. ASSESSEE HAD ALSO SHOWN AGRICUL TURAL INCOME AND THE OWNERSHIP OF AGRICULTURAL PROPERTY BY HIS MOTHER AN D THIS HAS ALSO NOT BEEN ITA.150/BANG/2015 PAGE - 6 DISPUTED BY THE LOWER AUTHORITIES. IN THE CASE OF MS. PANDURANGA BHARGAVI VAIDYA (SUPRA), COORDINATE BENCH HAD HELD AS UNDER AT PARA 6.1 OF THE ORDER: 6.1 THE HON'BLE SUPREME COURT IN CATEGORICAL TERMS HAS HELD THAT EVEN IF AN EXPLANATION OFFERED BY AN ASSESSEE IS NOT ACCEPTABLE, STILL THE AO HAS DISCRETION NOT TO MAKE ADDITION KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF T HE CASE. IF BASED ON PARTICULAR SET OF FACTS IT IS HIGHLY UNLIK ELY THAT AN ASSESSEE COULD HAVE EARNED THAT KIND OF INCOME, THE AO CAN HOLD THAT NO ADDITION IS CALLED FOR, EVEN IF THE EXPLANA TION OFFERED BY THE ASSESSEE IS NOT SATISFACTORY. THE PRESENT CASE IS A FIT CASE WHERE THE AO OUGHT TO HAVE EXERCISED THE DISCRETION IN FAVOUR OF THE ASSESSEE. THERE IS NO DISPUTE THAT THE FATHER OF THE CASE APP EARED BEFORE THE AO AND STATED THAT THE CASH DEPOSITS AND WITHDRAWAL S IN KARNATAKA BANK ACCOUNT ARE PART OF HIS TRANSACTIONS. THE ITAT , A BENCH OF BANGALORE IN NUSRA IMRAN VS ITO AT PARA-8 HELD THAT WHEN THE PERSONS WHO LENT THE MONEY APPEARED BEFORE THE AO A ND CONFIRMED THE TRANSACTION, THE ADDITION U/S 69 IS N OT WARRANTED. ON SIMILAR REASONING WHEN FATHER OF THE ASSESSEE HAS STATED THAT HE HAD DEPOSITED CASH IN THE BANK ACCOU NT, IT IS NOT PERMISSIBLE FOR THE AO TO REJECT SUCH AN EXPLANATIO N AND DRAW AN ADVERSE INFERENCE. THE HON'BLE GUJARAT HIGH COURT I N THE CASE OF MURLIDHAR LOHORIMAL VS CIT 280 ITR 512, HEL D THAT WHEN THE CREDITOR/DONOR HAVING APPEARED BEFORE THE AO THE GE NUINENESS OF THE TRANSACTION IS ESTABLISHED. IN THE PRESENT CASE ASS ESSEE'S FATHER APPEARED AND EXPLAINED THE TRANSACTIONS AND IT IS U NDISPUTED THAT THE ASSESSEE COULD NOT HAVE EARNED SUCH HUGE UNACCO UNTED INCOME OF RS.24.00 LAKHS FOR MAKING DEPOSITS OF THE SAME IN HER BANK ACCOUNT. IN SUCH FATES AND CIRCUMSTANCES OF THE CAS E, THE ADDITION MADE BY THE AO IS NOT WARRANTED AND WE DEL ETE THE SAME. IT IS ORDERED ACCORDINGLY. 08. CASE OF ASSESSEE, IN MY OPINION, IS ALSO SUPPOR TED BY THE CASE OF SMT. P. K. NOORJAHAN (SUPRA), WHEREIN THEIR LORDSHI P HELD THAT IN EVERY ITA.150/BANG/2015 PAGE - 7 CASE IT IS NOT NECESSARY THAT SOURCE OF INVESTMENT SHOULD BE TREATED AS INCOME. A DISCRETION HAS TO BE EXERCISED BY THE IT O BEFORE TREATING THE SOURCE OF INVESTMENT AS INCOME. IN MY OPINION, EXP LANATION GIVEN BY THE ASSESSEE IN THE CASE WAS SATISFACTORY. ADDITION ST ANDS DELETED. 09. VIS-A-VIS THE ADDITION OF RS.70,380/- FOR INTER EST, WE FIND THAT CIT (A) HAD REMITTED THE ISSUE BACK TO THE FILE FOR REC TIFICATORY ACTION. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DIRECTION S GIVEN BY CIT (A) IN THIS REGARD. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF JUNE, 2016. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR