Sri. A R Pradeep, Bangalore V. Income-Tax Officer, Bangalore

ITA 1888/BANG/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4365 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C RAMESH
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

ITA.1888/BANG/2016 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'A', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.1888/BANG/2016 (ASSESSMENT YEAR : 2008-09) SHRI. A. R. PRADEEP, NO.759, 8 TH CROSS, 5 TH MAIN, 2 ND BLOCK, R. T. NAGAR, BENGALURU 560 032 .. APPELLANT PAN : AIAPR2926E V. INCOME-TAX OFFICER, WARD 15(1), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. C. RAMESH, CA REVENUE BY : SHRI. VIKRAM SURYAVAMSHI, ACIT HEARD ON : 20.02.2019 PRONOUNCED ON : 22.03.2019 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THE PRESENT APPEAL IS FILED BY THE ASSESSEE, AGAIN ST THE ORDER OF THE CIT (A) -3, DT.19.10.2016, FOR THE ASSESSMEN T YEAR 2008-09. ITA.1888/BANG/2016 PAGE - 2 02. FOLLOWING GROUNDS ARE FILED BY THE ASSESSEE ARE AS UNDER : 1. THE CIT (APPEALS) WAS NOT CORRECT IN CONFIRMING THE ADDITIONS MADE BY A.O. TO THE EXTENT OF RS.18,70,00 0/- TOWARDS UN EXPLAINED CASH DEPOSIT AS THE APPELLANT HAS FULLY EXPLAINED THE SOURCES OF CASH DEPOSIT. 2. THE CIT (APPEALS) WAS NOT CORRECT IN NOT ACCEPTING THE EXPLANATION AND DOCUMENTS SUBMITTED BY THE APPELLAN T RELATING TO THE SOURCES OF APPELLANT FATHER'S AGRIC ULTURAL INCOME. 3. THE APPELLANT HAS ESTABLISHED THE GENUINENESS, IDENTITY AND CREDITWORTHINESS OF THE PERSON, WHO HA S GIVEN MONEY. HENCE THE AO/CIT (A) WERE WRONG IN NOT ACCEPTING THE CONTENTION OF APPELLANT. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AME ND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT T HE TIME OF HEARING OF THE APPEAL. 03. THE LD. AR HAD DRAWN OUR ATTENTION TO THE ADDIT IONAL GROUND RAISED BEFORE US, WHICH READS AS UNDER : 1. THE CIT (APPEALS) WAS NOT CORRECT IN NOT ADJUDIC ATING GROUND FILED BEFORE CIT (A), WHERE THE A. O ERRED I N TREATING THE AGRICULTURAL INCOME AS UNEXPLAINED CASH CREDIT IN T HE ABSENCE OF CREDIT ENTRY IN THE BOOKS OF ACCOUNT. THE EXISTENCE OF BOOKS OF ACCOUNTS IS A CONDITION PRECEDENT TO ATTRACT THE PR OVISIONS OF SECTION 68. 2. THE CIT (A) WAS NOT CORRECT IN CONFIRMING THE AD DITION MADE BY A. O. U/S.68, AS THE APPELLANT WAS NOT CARR YING THE BUSINESS ACTIVITIES AND NOT MAINTAINED ANY BOOKS OF ACCOUNTS AS CONTEMPLATED U/S.68. FOR THE REASON MENTIONED IN THE APPLICATION FOR ADM ISSION OF THE ADDITIONAL GROUND, WE ADMIT THE ADDITIONAL GROUND U RGED BEFORE US. ITA.1888/BANG/2016 PAGE - 3 04. ALL THE GROUNDS URGED BEFORE US INCLUDING THE A DDITIONAL GROUND ARE SUMMARISED IN ONE GROUND I.E., WHETHER T HE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF RS.18 ,70,000/- IS REQUIRED TO BE DELETED ? IN THIS REGARD THE ASSESS EE HAS SUBMITTED THAT THE ASSESSEE HAS A JOINT ACCOUNT ALONG WITH HI S FATHER IN THE KARNATAKA STATE COOPERATIVE APEX BANK LTD, WHERE TH E CASH OF RS.18,70,000/- WAS DEPOSITED ON 07.11.2007 AND RS.1 0 LAKHS WAS DEPOSITED INTO THE HOUSING LOAN AGAIN ON 07.01.2008 BY THE FATHER OF THE ASSESSEE. IT WAS THE CASE OF THE ASSESSEE THAT DURING THE ASSESSMENT PROCEEDINGS THE AO HAS WRONGLY RECORDED THAT THE ASSESSEE HAD FAILED TO PROVE THE ACCUMULATION OF CA SH OF RS.18,70,000/- AND HAS FAILED TO SUBSTANTIATE AND P ROVIDE THE DETAILS OF THE SOURCE OF EVIDENCE FOR THE SUM OF RS.18,70,0 00/-. 05. THE LD. AR HAD DRAWN OUR ATTENTION TO PAGE 15 O F THE PAPER BOOK WHERE A LETTER OF CONFIRMATION ISSUED BY THE F ATHER OF THE ASSESSEE IS PLACED. IT WAS ALSO SUBMITTED THAT THE AMOUNT RECEIVED BY THE ASSESSEE WAS FROM VARIOUS PERSONS WHO HAD AL SO GIVEN THE LETTER OF CONFIRMATION TO THE EFFECT THAT THE AMOUN T WAS PAID BY THEM IN CASH TO THE ASSESSEE. SUCH LETTERS ARE FOUND AT PAGES 31, 33, 35, 37, 39, 41 AND 43 OF THE PAPER BOOK. IT WAS SUBMIT TED BY THE LD. AR THAT BESIDES THE ABOVE, THE AO HAS WRONGLY INVOK ED THE PROVISION OF SECTION 68 AND TREATED THAT THE AMOUNT DEPOSITED IN THE BANK ACCOUNT IS AKIN TO UNEXPLAINED CASH DEPOSIT IN THE BANK ACCOUNT AND THEREFORE IT WAS SUBMITTED THAT THE PAS S BOOK IS NOT THE BOOKS OF ACCOUNT AND THEREFORE THE ADDITION CANNOT BE SUSTAINED U/S.68 OF THE ACT. ITA.1888/BANG/2016 PAGE - 4 06. PER CONTRA THE LD. DR HAD DRAWN OUR ATTENTION T O PARA 5.1 TO 5.4 OF THE ORDER OF THE CIT (A), WHICH IS AS UNDER : 5.1 IN HIS SUBMISSION DATED 22.09.2016; THE APPELLANT HAS STATED THAT THE AMOUNT RECEIVED BY HIM FROM HIS FATHER WAS OUT OF THE SALE PROCEEDS ACCUMULATED OVER A COUPLE OF YEARS FROM SALE OF COF FEE AND TOBACCO. IT WAS ALSO CLARIFIED THAT NORMALLY TH ESE PRODUCTS ARE SOLD IN THE AUCTION AT THE COFFEE BOAR D IN HASSAN AND TOBACCO BOARD AT RAMANATHAPURAM. HOWEVER, IN HIS SUBMISSIONS DATED 06.10.2016 THE APPELLANT HAS FURNISHED SPECIFIC DETAILS REGARDING SALE OF COCONUT, ARECA NUT, LEMON AND OTHER ITEMS, FROM WHICH THE MONEY WAS GENERATED BY HIS FATHER. THERE IS ABSOLUTELY NO REFERENCE TO THE INCOME ARISING FROM SALE OF TOBACCO AND COFFEE, AS CLAIMED IN HI EARLIER SUBMISSION. THE REASON FOR THIS CHANGE IN THE SOURC E OF INCOME IS VERY MUCH APPARENT. AS STATED BY THE APPE LLANT IN HIS EARLIER LETTER DATED 22.09.2016, THE COFFEE AND TOBACCO PRODUCED WERE SOLD THROUGH THE COFFEE BOARD AND TOBACCO BOARD, RESPECTIVELY. IT IS OBVIOUS THAT THE SALE PROCEEDS FROM THESE BOARDS WOULD BE RECEIVED THROUGH THE BANKING CHANNEL AND HENCE IT WOULD NOT BE POSSIBLE FOR THE APPELLANT TO MANIPULATE THE FIGURE S RELATING TO THE SALE OF TOBACCO AND COFFEE. ON THE OTHER HAND BY CLAIMING THAT HIS FATHER HAD SOLD AGRICULTU RAL PRODUCE SUCH AS COCONUT, ARECA NUT AND LEMON TO VARIOUS PERSONS, THE APPELLANT CAN EASILY CLAIM THA T THE AMOUNT WAS RECEIVED IN CASH AND IN SUCH CIRCUMSTANC ES IT WOULD BE EASY TO MANIPULATE THE QUANTUM OF AGRICULTURAL INCOME AND WOULD ALSO MAKE IT DIFFICUL T TO CROSS VERIFY THE FACTS 5.2 IN THIS REGARD THE APPELLANT HAS CLAIMED THAT HIS FATHER HAD APPARENTLY ACCUMULATED 1,51,500 COCONUTS AND AROUND 16 QUINTALS OF ARECA N UT, WHICH WERE SOLD TO VARIOUS PERSONS IN THE MONTH OF NOVEMB ER 2007. SIMILARLY THE APPELLANT CLAIMS THAT IN THE SA ME MONTH HIS FATHER HAD SOLD 125000 PIECES OF LEMON TO ONE V ENDOR. THE SHEER NUMBER AND QUANTITY OF THE AGRICULTURAL PRODU CE CLAIMED TO HAVE BEEN PRODUCED AND SOLD BY THE APPEL LANTS FATHER IN ONE MONTH MAKES THE WHOLE CLAIM FAR-FETCH ED AND IMPROBABLE. IT IS DIFFICULT TO ACCEPT THAT THE APPELLANT'S FATHER HAD ACCUMULATED MORE THAN 1.5 LA KH ITA.1888/BANG/2016 PAGE - 5 PIECES OF COCONUT, 1.6 TONS OF ARECA NUT AND 1.25 L AKH PIECES OF LEMON TO BE SOLD IN ONE MONTH AND TO HAVE EARNED MORE THAN RS.20 LAKHS FROM THE SAME DURING THE SAME PERIOD - NOVEMBER 2007. IT IS ALSO DIFFICULT TO ACCEPT THE C LAIM THAT ALL THE INCOME GENERATED FROM AGRICULTURAL ACTIVITIES WAS KEPT IN THE FORM OF CASH AND NOT DEP OSITED IN ANY BANK ACCOUNT OF THE APPELLANTS FATHER, EVEN THOUGH THE AMOUNT IS CLAIMED TO BE MORE THAN RS.20 TAKHS. 5.3 IT IS ALSO OBSERVED THAT THERE ARE OTHER MAJOR FACTUAL CONTRADICTIONS IN THE CLAIM MADE BY THE APPELLANT W ITH REGARD TO THE QUANTITY OF AGRICULTURAL PRODUCE AND THE AMOUNT OF AGRICULTURAL INCOME EARNED BY HIS FATHER. IN THIS REGARD IT IS RELEVANT TO NOTE THAT IN THE SUBMISSIO NS MADE BY THE APPELLANT IN HIS LETTER DATED 06.08.2016, THE A PPELLANT HAS ENCLOSED A CERTIFICATE FROM THE DEPUTY DIRECTOR (HORTICULTURE), ZILLA PANCHAYAT, REGARDING THE QUAN TITY OF THE AGRICULTURAL PRODUCE HARVESTED BY THE APPELLANT'S F ATHER AND THE ESTIMATED INCOME DERIVED BY HIM DURING THE FINA NCIAL YEAR 2005-06 TO 2008-09. IN THIS STATEMENT IT IS ST ATED THAT THE APPELLANT HAD 300 COCONUT TREES AND THE NET INCOME PER TREE IS ESTIMATED AT RS.411,60. ACCORDINGLY, THE IN COME OF THE APPELLANT FROM SALE OF COCONUT FOR THE YEAR IS ESTIMATED AT RS.91,080/-. THE INCOME RECEIVED FROM SALE OF CO CONUTS DURING THE EARLIER TWO YEARS AND THE SUBSEQUENT YEA R IS ALSO FOUND TO BE IN THE SAME RANGE, VARYING BETWEEN RS.9 1,080/- TO RS.1,00,740/-. HOWEVER, IN THE SUBMISSIONS MADE BY THE APPELLANT ON 06.10.2016, THE APPELLANT HAS CLAIMED THAT HIS FATH ER HAD SOLD APPROXIMATELY 151000 PIECES OF COCONUTS DURING THE MONTH OF NOVEMBER 2007 AND A FURTHER 20000 COCONUTS IN JANUARY 2008. IN THIS REGARD THE APPELLANT HAS CLAI MED THAT HE HAS RECEIVED RS.6.86 LAKHS FROM THE SALE OF COCONUTS ALONE DURING THESE TWO MONTHS. THIS AMOUNT IS FOUND TO BE ALMOST 600% HIGHER THAN THE INCOME OF RS.91,080/- ESTIMATED BY THE DEPUTY DIRECTOR (HORTICULTURE), ZILLA PANCHAYAT, WHICH WAS FURNISHE D AND RELIED UPON BY THE APPELLANT HIMSELF. THE APPELLANT HAS NOT BEEN ABLE TO FURNISH ANY EVIDENCE TO EXPLAIN THE SI X FOLD INCREASE IN THE AMOUNT OF INCOME RECEIVED FROM THE ALLEGED SALE OF COCONUTS. SIMILARLY, THE APPELLANT HAS CLAI MED THAT RS. 50,000/- WAS RECEIVED FROM THE SALE OF 125000 P IECES OF LEMON DURING THE MONTH OF NOVEMBER 2007. IN THE STA TEMENT ITA.1888/BANG/2016 PAGE - 6 FURNISHED BY THE DEPUTY DIRECTOR (HORTICULTURE), TH ERE IS NO REFERENCE TO ANY PRODUCTION OF LEMON FROM THE AND B ELONGING TO THE APPELLANT'S FATHER. THESE VARIATIONS CLEARLY INDICATE THAT THE DETAILS FURNISHED BY THE APPELLANT WITH REGARD TO THE QUANTUM OF AGRICULTURE PRODUCE HARVESTED BY THE APPELLANT'S FATHER AND THE AMOUNT OF INCOME GENERAT ED. FROM SUCH ACTIVITIES ARE COMPLETELY FALSE, FABRICAT ED AND FACTUALLY INCORRECT. THE FIGURES RELATING TO BOTH T HE QUANTUM OF PRODUCTION AND THE AMOUNT OF AGRICULTURA L INCOME HAVE BEEN GROSSLY EXAGGERATED AND HENCE CANN OT BE ACCEPTED. 5.4 IT IS ALSO RELEVANT TO NOTE THAT THE ENTIRE CLAIM OF HAVING RECEIVED AGRICULTURAL , INCOME IS SOUGHT TO BE ESTABLISHED BY THE APPELLANT ONLY ON T HE BASIS OF LETTERS AND CONFIRMATIONS FROM DIFFERENT P ERSONS, WHO CLAIM TO HAVE PURCHASE THE AGRICULTURAL PRODUCE . IT IS DIFFICULT TO ACCEPT SUCH EXPLANATION BECAUSE THE IDENTITIES OF THESE PERSONS HAVE NOT BEEN ESTABLISH ED AND ALL THE TRANSACTIONS MADE WITH SUCH PERSONS ARE CLAIMED TO BE IN CASH, IN IS ALSO DIFFICULT TO ACCE PT THAT THE APPELLANTS FATHER HAD ACCUMULATED MORE THAN 1.5 LAKH PIECES OF COCONUT AND 1.6 TONS OF ARECA NUT, T O BE SOLD DURING THE MONTH OF NOVEMBER 2007. SIMILARLY I T IS CLAIMED THAT 1.25 LAKH PIECES OF LEMON WAS SOLD ON 04/11/2007. PRIMA-FACIE, IT IS DIFFICULT TO ACCEPT THE APPELLANTS CLAIM MADE IN THIS REGARD. MOREOVER, THE APPELLANT HAS NOT FURNISHED ANY DEFINITE EVIDENCE I N REAL TERMS TO PROVE THE GENERATION OF AGRICULTURAL INCOME AS CLAIMED ABOVE. IT IS VERY SURPRISING THAT THE APPELLANTS FATHER HAVE CHOSEN NOT TO DEPOSIT ANY PA RT OF AGRICULTURAL INCOME IN HIS BANK ACCOUNTS AND KEEP I T ALL IN THE FORM OF CASH, NOTWITHSTANDING THE HIGH QUANT UM OF SUCH INCOME. ON THE BASIS OF THE ABOVE, IT WAS SUBMITTED THAT TH E ASSESSEE FAILED TO SUBSTANTIATE THE DEPOSITS MADE IN THE BANK ACCOU NT AND, IF THE GRIEVANCE OF THE ASSESSEE IS THAT WRONG INVOCATION OF SECTION 68, THAN THE CASE OF THE ASSESSEE CAN AT BEST TREATED U/S.69 OF THE ACT. ITA.1888/BANG/2016 PAGE - 11 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF MARCH, 2019. SD/- SD/- (A. K. GARODIA) ( LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BENGALURU DATED : 22.03.2019 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, ITAT, BENGALURU