SHRI MANNA LAL VERMA, KOTA V. INCOME TAX OFFICER, BUNDI

ITA 164/JPR/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5580 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 12-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: KUSHAL SONI
• Keywords: Income from undisclosed sources; Search and seizure; Principle of natural justice; Deemed to accrue or arise in india
• Section: 69; 142(1); 143(2); 20

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH SMC, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE : SHRI VIJAY PAL RAO, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO.164/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16 SHRI MANNAL LAL VERMA HOUSE NO. 10, SHRI KAMLA UDHYAN KUNHARI, KOTA CUKE VS. THE ITO BUNDI LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AMYPV 5496 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY :SHRI KUSHAL SONI, CA JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA, JCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23/07/2019 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 24/07/2019 VKNS'K@ ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 17-12-2018 OF LD. CIT(A), KOTA FOR THE ASSESSMENT YEAR 2015-16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN AFFIRMING THAT REASONABLE OPPOR TUNITY OF BEING HEARD PROVIDED TO ASSESSEE DURING ASSESSMENT PROCEE DING. 2 ITA NO. 164/JP/2019 SHRI MANNA LAL VERMA VS ITO, BUNDI 2. THE LD. CIT(A) ERRED IN AFFIRMING THAT CASE WAS VALIDLY CONVERTED FROM LIMITED SCRUTINY TO COMPLETE SCRUTIN Y. 3. THE LD. CIT(A) ERRED ON FACTS AND LAW IN CONFIRM ING THE ADDITION OF RS. 12,10,000/- U/S 69 OF THE I.T. ACT, 1961. 2.1 THE GROUND NOS. 1 AND 2 OF THE ASSESSEE ARE REG ARDING VIOLATION OF PRINCIPLES OF NATURAL JUSTICE DUE TO NOT AFFORDING OF REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 2.2 RIVAL SUBMISSIONS OF THE LD.AR AS WELL AS LD. D R HAVE BEEN CONSIDERED. ON PERUSAL OF THE RECORD, IT IS NOTED T HAT SAID OBJECTION RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) HAS BEEN DEAL T WITH AT PAGE 9 AND 10 OF IMPUGNED ORDER AS UNDER:- I HAVE GONE THROUGH ASSESSEE'S SUBMISSIONS AND AOS FINDINGS. AFTER A PERUSAL OF THE SUBMISSIONS MADE IN RESPECT OF GROUNDS NO. 1 & 2 AND HE ASSESSMENT ORDER, IT IS CLEAR THAT THE ARG UMENTS ADVANCED BY THE APPELLANT ARE WITHOUT BASIS. THE AO HAS ULTIMAT ELY MADE ADDITION ONLY ON THE ISSUE OF CASH DEPOSITS. THE FIRST NOTIC E U/S 143(2) WAS SERVED ON 22-09-2017 FOR HEARING ON 10-10-2017. ON 7-11-2017 NOTICE U/S 142 (1) & QUESTIONNAIRE WERE ISSUED FOR 14-11-2 017 WHEN ANOTHER A/R REPRESENTED THE ASSESSEE. HEARING WITH RESPE4CT TO THE BANK DEPOSIT OF RS. 12 ,10,000/- WERE NOTED ON 14-11-2017, 23-11-2017 & 22-11-2017 WHICH IS CONTRARY TO THE SUBMISSION MADE BY THE A/R IN THE APPELLATE PRO CEEDINGS. AS REGARDS THE ISSUE OF CONVERSION OF MATTER FROM LI MITED TO COMPLETE SCRUTINY, IT IS NOT A CASE THAT SEVERA L OTHER INFORMATION WAS ASKED BASED ON WHICH ADDITIONS HAVE BEEN MADE & THE ASSESSEE DID NOT HAVE SUFFICIENT COMPLIANCE TIME FOR THE SAME. THE I SSUE TILL END WAS 3 ITA NO. 164/JP/2019 SHRI MANNA LAL VERMA VS ITO, BUNDI RELATED TO UNVERIFIABLE CASH DEPOSITS ONLY IN THE B ANK ACCOUNT. FURTHER, THIS WAS AN ADMINISTRATIVE DECISION, THE DETAILS OF WHICH ARE NOTED IN THE ASSESSMENT ORDER AND THE SATISFACTION OF PR.CIT IS ALSO AVAILABLE ON RECORD. AT THE STAGE WITH THE ASSESSEE NOT COOPERATING IN H IS RESPONSE, THE AO WAS RIGHT IN REACHING A CONCLUSION THAT THERE COULD BE OTHER ASPECTS IN THE ISSUE AND PROPOSED CONVERSION TO COMPLETE SCRUT INY AS PER THE CBDT CIRCULAR. HENCE, ON THESE TWO GROUNDS, THE ASSESSEE'S ARGUMEN TS ARE NOT FOUND ACCEPTABLE AND ARE NOT ENTERTAINED IN THE APPEAL. THESE GROUNDS OF APPEAL ARE DISMISSED. THUS IT IS CLEAR THAT THE ONLY OBJECTION RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) AS WELL BEFORE THE TRIBUNAL IS THAT AFTE R THE LIMITED SCRUTINY WAS CONVERTED INTO FULL SCRUTINY, THE AO DID NOT GR ANT THE EFFECTIVE OPPORTUNITY OF HEARING TO THE ASSESSEE. HOWEVER, IT IS NOTED FROM THE RECORD THAT THIS LIMITED SCRUTINY WAS INITIATED REG ARDING THE CASH DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE FOR WHICH THE A O ISSUED NOTICES U/S 142(1) OF THE ACT WELL IN TIME AND WERE DULY ATTEND ED AND RESPONDED BY THE ASSESSEE BEFORE THE CASE WAS CONVERTED INTO COM PLETE SCRUTINY. THE AO FINALLY MADE THE ADDITION ONLY ON ACCOUNT OF CAS H DEPOSITED IN THE BANK ACCOUNT AND THEREFORE, NO ADDITION OR ASSESSME NT WAS MADE BY THE AO OTHER THAN THE ISSUE WHICH WAS TAKEN UP IN THE L IMITED SCRUTINY. 4 ITA NO. 164/JP/2019 SHRI MANNA LAL VERMA VS ITO, BUNDI HENCE, THE TRIBUNAL DOES NOT FIND ANY MERIT OR SUBS TANCE IN THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS UPHELD QUA THIS ISSUE. THUS GROUND NO. 1 AND 2 OF THE ASSESSEE ARE DISMISSED. 3.1 THE GROUND NO. 3 OF THE ASSESSEE IS REGARDING T HE ADDITION MADE BY THE AO OF RS. 12.10 LACS ON ACCOUNT OF CASH DEPO SITED IN THE BANK ACCOUNT WHICH WAS CONFIRMED BY THE LD. CIT(A). 3.2 THE LD.AR OF THE ASSESSEE HAS POINTED OUT THAT THE ASSESSEE EXPLAINED THE SOURCE OF CASH BY GIVING THE DETAILS OF WITHDRAWALS MADE FROM THE BANK ACCOUNT OF THE ASSESSEE AND THEREFORE , WITHDRAWALS OF THE ASSESSEE FROM THE BANK ACCOUNT ITSELF ARE SOURCE O F DEPOSITS MADE IN THE BANK ACCOUNT DURING THE YEAR UNDER CONSIDERATION. H E HAS FURTHER CONTENDED THAT THE ASSESSEE IS A RETIRED GOVT. TEAC HER AND RECEIVING ONLY PENSION INCOME. THEREFORE, WHEN THERE IS NO OTHER S OURCE OF INCOME EXCEPT PENSION INCOME THEN THE DEPOSITS ARE ONLY TH E PAST SAVINGS OF THE ASSESSEE. THE LD.AR HAS REFERRED TO THE DETAILS OF WITHDRAWALS MADE BY THE ASSESSEE FROM HIS BANK ACCOUNT AND SUBMITTED TH AT THE AO AS WELL AS THE LD. CIT(A) REFUSED TO CONSIDER THE WITHDRAWALS MADE BY THE ASSESSEE. 5 ITA NO. 164/JP/2019 SHRI MANNA LAL VERMA VS ITO, BUNDI THUS HE HAS PLEADED THAT WHEN THE WITHDRAWALS OF TH E AMOUNT FROM THE BANK ITSELF IS SUFFICIENT TO EXPLAIN THE DEPOSITS M ADE IN THE BANK ACCOUNT THEN NO ADDITION IS CALLED FOR ON THIS ACCOUNT. FUR THER, EVEN IF THERE IS A SHORT FALL OF SOME SMALL AMOUNT BETWEEN THE WITHDRA WALS AND DEPOSITS, THE SAME IS ONLY ACCUMULATION OF PAST SAVINGS OF TH E ASSESSEE. 3.3 ON THE OTHER HAND, THE LD. DR HAS RELIED ON THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT(A) HAS DULY CONSIDERED T HIS ISSUE. HE SUBMITTED THAT DUE TO GAP BETWEEN THE WITHDRAWALS AND DEPOSIT S, THERE IS NO DIRECT NEXUS BETWEEN THE WITHDRAWALS AND DEPOSITS. THUS TH E EXPLANATION OF THE ASSESSEE WAS NOT FOUND TO BE SATISFACTORY AND ACCEP TABLE. 3.4 AFTER CONSIDERING THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, IT IS NOTED THAT THE FACT REGAR DING THE WITHDRAWALS OF CERTAIN AMOUNT BY THE ASSESSEE DURING THE FINANCIAL YEAR 2013 AND FINANCIAL YEAR 2014 ARE NOT IN DISPUTE. THE LD. CIT (A) HAS RECORDED THESE DETAILS IN HIS FINDINGS AT PAGE 10 AND 11 OF HIS O RDER AS UNDER:- AS REGARDS GROUND NO. 3, WHILE THE AO HAS NOTED THE FACT OF CERTAIN WITHDRAWALS FROM THE ACCOUNT, BUT HE HAS RI GHTLY NOT GIVEN ANY CONSIDERATION FOR THE SAME TO THE ASSESS EE AS THERE IS NO DIRECT LINKAGE WITH THE RE-DEPOSITS CONSIDERING VARIOUS GAPS AS DISCUSSED BELOW. THE BANK ACCOUNT SHOWS THAT THE RE WAS A 6 ITA NO. 164/JP/2019 SHRI MANNA LAL VERMA VS ITO, BUNDI CREDIT TRANSFER OF RS. 5 LAKHS ON26-09-2013 AND A W ITHDRAWAL OF RS. 4,90,000/- ON 08-10-2013 IN THE IMMEDIATELY PRE CEDING YEAR. THERE IS ANOTHER DEPOSIT OF RS. 56,000/- ON 1 8-11-2013 BY CASH. THUS EVEN IF THE ABOVE AMOUNT OF RS. 4,90,000 /-IS CONSIDERED AS AVAILABLE , IT IS TO BE REDUCED BY RS . 56,000/- WHICH MEANS AROUND RS. 4,34,000/- WAS AT BEST AVAIL ABLE TO THE ASSESSEE IN CASH AS ON 01-04-2014 IF THE ENTIRE ABO VE SUM WAS WITH HIM, WHICH ALSO APPEARS IMPROBABLE AFTER 5 MON THS. SECONDLY, AS ON 22-07-2014 (9 MONTHS LATER) THE ASS ESSEE HAS AGAIN DEPOSITED RS. 5,00,000/- IN CASH & THE NEXT D AY AGAIN RS. 4,50,000/- IN CASH & RS. 60,000/- ON 31-07-2014 & R S. 50,000/- ON 14-08-2014. THESE AMOUNTS ARE NOT LINKA BLE TO THE EARLIER SAVINGS OR WITHDRAWALS BY ANY EVIDENCES OF HOLDING CASH AS SAVING SINCE DEPOSITS ARE MORE THAN WITHDRAWALS AVAILABLE EVEN UPTO 9 MONTHS AGO. FURTHER, AS REGARDS THE OTHER WITHDRAWALS OF RS. 2, 80,000/- ON25-08-2014 SEEKING TO SET OFF DEPOSITS OF RS. 1 L AKH ON 01- 12-2014 AND RS. 50,000/- ON 30-12-2014, THE SOURCE OF THAT AMOUNT OF RS. 2.80 LAKHS ITSELF WAS A CLEARING CHEQ UE OF RS. 3 LAKHS RECEIVED ON 23-08-2014 WHICH SOURCE WAS ALSO UNEXPLAINED BEFORE THE AO AS WELL AS IN THE APPELLA TE PROCEEDINGS. HIGH COURT OF CALCUTTA IN SUSHIL MODI VS COMMISSION ER OF INCOME TAX, CENTRAL II,59 TAXMANN.COM 63 (CALCUTTA ) HELD. SECTION 69 OF THE INCOME TAX ACT, 1961 UNEXPLAINE D INVESTMENT (DEPOSITS) BLOCK PERIOD 1-4-1986 TO 20 -9-1996 DURING SEARCH AND SEIZURE OPERATION, ASSESSEE'S SAV ING BANK ACCOUNT SHOWED CERTAIN SUM DEPOSITED IN SAID BANK A CCOUNT ASSESSEE CONTENDED THAT SAID DEPOSITS WERE MADE OUT OF CASH BALANCE AVAILABLE IN ABSENCE OF ANY PROOF WITH RE GARD TO SUCH AVAILABILITY OF FUNDS, ASSESSING OFFICER TREATED SA ID DEPOSITS AS INCOME FROM UNDISCLOSED SOURCES WHETHER, ON FACTS , ASSESSING OFFICER WAS JUSTIFIED IN INVOKING PROVISI ONS OF SECTION 69 HELD, YES. THE BURDEN REGARDING THE DEPOSITS WOULD BE UPON THE ASSESSEE TO EXPLAIN AND THE ASSESSING OFFICER HAS TO CONSIDE R THE 7 ITA NO. 164/JP/2019 SHRI MANNA LAL VERMA VS ITO, BUNDI EXPLANATION REASONABLY, WHICH BURDEN THE ASSESSEE H AS FAILED TO DISCHARGE SATISFACTORILY. HENCE, IN MY VIEW, THE ASSESSEE APPELLANT WAS NOT A BLE TO EXPLAIN THE SOURCE OF CASH DEPOSITED TOTALING TO RS . 12,10,000/- IN HIS SAVINGS WITH BANK OF BARODA, KUNHARI AND ONC E THE EXPLANATION IS NOT FOUND TO BE SATISFACTORY AND THE FINDING IS RECORDED , AS PER THE PROVISIONS OF THE SECTION 69 OF THE ACT, IT WOULD BE THE DEEMED INCOME OF THE ASSESSEE. THE AO IS FOUND TO BE AT FAULT IN ASSESSING THE AMOUNT AS UNDISCLOS ED INVESTMENT U/S 69 OF THE I.T. ACT, 1961. THIS GROUND OF APPEAL IS DISMISSED. THUS THOUGH THE WITHDRAWALS MADE BY THE ASSESSEE WE RE NOT DISPUTED BY THE AUTHORITIES BELOW YET THE SAME WAS NOT ACCEPTED AS THE SOURCE OF DEPOSIT DUE TO TIME GAP AND ON THE GROUND OF DIRECT NEXUS. IT IS PERTINENT TO NOTE THAT WHEN NO OTHER SOURCE OF INCOME WAS FOU ND AND THE ASSESSEE HAS EXPLAINED THE SOURCE OF DEPOSITS MADE IN THE BA NK ACCOUNT AS EARLIER WITHDRAWALS THEN EVEN AFTER CONSIDERING ALL THESE D EPOSITS MADE IN THE BANK ACCOUNT ONLY A SMALL AMOUNT OF RS. 56,000/- IS FOUND TO BE FALLING SHORT OF THE DEPOSITS IN COMPARISON TO THE WITHDRAW ALS MADE BY THE ASSESSEE. HAVING CONSIDERED THE FACTS AND CIRCUMSTA NCES OF THE CASE WHEN THE ASSESSEE IS A RETIRED GOVT. TEACHER AND HAVING PENSION INCOME, THE SOURCE EXPLAINED BY THE ASSESSEE CANNOT BE REJECTED MERELY ON THE GROUND THAT THERE IS A TIME GAP BETWEEN THE WITHDRAWALS AN D THE DEPOSITS. 8 ITA NO. 164/JP/2019 SHRI MANNA LAL VERMA VS ITO, BUNDI ACCORDINGLY, THE TRIBUNAL IS SATISFIED ABOUT THE SO URCE EXPLAINED BY THE ASSESSEE AND CONSEQUENTLY THE ADDITION MADE BY THE AO ON ACCOUNT OF DEPOSITS IN THE BANK IS DELETED. THUS GROUND NO. 3 OF THE ASSESSEE IS ALLOWED. 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 /07/20 19. FOT; IKY JKO (VIJAY PAL RAO) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24 /07/ 2019 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI MANNA LAL VERMA, KOTA 2. IZR;FKHZ@ THE RESPONDENT- THE ITO , BUNDI 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.164/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR