SHRI TARSEM SINGH , HOSHIARPUR V. INCOME TAX OFFICER WARD -4, HOSHIARPUR

ITA 210/ASR/2023

AI Insights

The case involves Tarsem Singh, the appellant, who contested the order of the CIT(A) which confirmed the assessment made by the ITO regarding unexplained cash deposits and bank credits in his accounts for the assessment year 2011-12. The ITO had reopened the assessee's case under section 148 of the Income Tax Act, 1961, and added a total of Rs. 3,57,29,625 as unexplained investments, which included cash deposits and bank credits. The CIT(A) upheld this assessment, leading to the appeal before the Tribunal. The Tribunal found that the assessee had provided sufficient evidence to explain the sources of the cash deposits and bank credits, thus quashing the addition made under section 69 of the Act. However, the addition of bank interest was not contested and remained.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114808 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 13-07-2023
• Other Referred Cases: Gurdev Singh v ITO I.T.A. No. 30/Asr/2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA BHAURAOJI NINAWE
• Keywords: Unexplained investment; Principle of natural justice
• Section: 148; 143(3); 250; 274; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 Tarsem Singh, Village Rampur, Tehsil Garhshankar, Disst. Hoshiarpur. [PAN:-BJJPS5417A] (Appellant) Vs. Income Tax Officer, Ward- 4, Hoshiarpur, Punjab. (Respondent) Appellant by None Respondent by Sh.Hitendra Bhauraoji Ninawe, CIT.DR. Date of Hearing 28.08.2023 Date of Pronouncement 13.09.2023 ORDER Per: Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. NFAC, Delhi, (in brevity ‘the CIT (A)’) order passed u/s 250 of the Income-tax Act, 1961 (in brevity the Act) for assessment year 2011-12. The impugned order was emanated from the order of the ld. ITO, Ward-4, Hoshiarpur, (in brevity the ld. AO) order passed u/s 143(3) r.w.s. 147 of the Act. 2. The assessee has taken the following grounds: I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 2 “1. That the order passed by the Hon’ble CIT(A) dated 05.06.2023 is against the' law and facts of the case. 2. That having regard to the facts and circumstances of the case. Hon'ble C1T(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 143(3) r.w.s. 147 of the Act and without complying with the mandatory conditions u/s 143/147/151/149/148 as envisaged under the Income Tax Act. 1961. 3. That having regard to the lads and circumstances of the case. Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an addition of Rs.3,57,29,625/-, u/s 69 of the Act on account of cash/credits in bank accounts, by treating the same as unexplained investment, without considering the facts of the case and without observing the principles of natural justice. 4. That having regard to the facts and circumstances of the case. Hon’ble CIT(A) has erred in taw and or facts in confirming the action of Ld. AO in making an addition of Rs. 1,35,383/-, without considering the facts of the case and without observing the principles of natural justice 5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 3. Brief fact of the case is that the assessee’s case was reopened u/s 148 for depositing cash in the bank account. During assessment proceeding the assessee I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 3 filed the details bank account and explanation of cash transaction and credit transaction in the bank accounts. The assessee maintaining 5 (five) bank accounts out of that 3 (three)accounts with Vijaya Bank and 2 (two) accounts with HDFC Bank. Without proper verification of the transaction the ld. AO added back the total cash deposit amount of Rs.1,72,32,000/- and credit deposit amount to Rs.1,84,97,625/-, after excluding the saving bank interest Rs.1,35,383/- which works out total amount to Rs.3,57,29,625/- which was added back with the total income of the assessee. Further the interest was separately added which was received from bank amount to Rs.1,35,383/-. The assessee challenged both legal i.e. jurisdiction of issuance of notice 148 of the Act and merit before the ld. CIT(A) against the order of the ld. AO. The ld. CIT(A) had passed ex parte order without considering the submission of the assessee. Accordingly, the ld. CIT(A) upheld the order of the ld. AO. Being aggrieved assessee filed an appeal before us. 4. When the matter was called for hearing, none was present on behalf of the assessee. On perusal of the record, we find that the ld.AR requested to dispose of the appeal considering the written submission, submitted before the bench. Accordingly, we proceed to dispose of the matter on basis of written submission and after hearing the ld. DR. I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 4 5. The ld. DR fully relied on order of revenue authorities. The ld. DR invited our attention in assessment order paragraph 2.9. The relevant paragraph is reproduced as below: “2.9 I have carefully perused tire record of this office, written submissions of the assessee dated 07.12.2010 & 13.12.2010, Bank account Statements of the assessee in respect of Account No. 751801011001066 and No. 14101000044203, maintained with Vijaya Bank, and HDFC Bank, Garhshankar, for the period of 01.04.2010 to 31.03.2011 and it was found that during the F. Y. 2010-11, relevant to the A.Y. 2011-12, the assessee made .cash deposit of Rs, 1,71,57,000/-and Rs. 75,000/- in his bank accounts maintained with Vijaya Bank, and HDFC Bank, Garhshankar, aggregating to Rs. 1,72,32,000/- Beside this, there were credit entries to the lime of Rs.1,84,97,625/- (excluding Saving Interest of Rs. 1,35,383) in the above- mentioned bank accounts of the assessee. It was also noticed that the assessee failed to submit any valid explanation with regard to Cash deposits and the credits made in these bank accounts, except stated that all the deposits in those banks were from known sources (i.e. from sale proceeds of agricultural produce including chaff green fodder, trees, fruits, milk and advance in cash received from proposed purchasers of agricultural land, cash lying in home chest of the current year and earlier years and withdrawals from bank accounts in the currents year and earlier years). The assessee further submitted vide written submission dated 13,12.2018 that he could not produce the land holding I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 5 documents as the Patwari was on leave due to performance of last rites of his mother-in-law. He further stated that he would submit copy of Gardawari along with the copy of account with Commission Agents/Arhtitas on next day of hearing. However, till the finalization of assessment proceedings, the assessee had not furnished any evidence to support his contention, despite of the fact that ample opportunities of being heard were provided to him. 2.10 Considering the facts and circumstances of the ease, Cash Deposits of Rs. 1,72,32,000/-and Credits to the tune of Rs.1,84,97,625/- (excluding Saving Interest of Rs. 1,35,383), as per statement of bank accounts of the assessee, maintained with Vijaya Bank and HDFC Bank Garhshankar, it stands established that the assessee had made unexplained investment during the year under consideration totalling to Rs. 3,57,29,625/- through his above-mentioned bank accounts and the explanation offered by the assessee with regard to the source of above mentioned Cash deposits and Credits was found unsatisfactory, therefore, an addition of Ms, 3,57,29,625/- on this account is hereby made, in view of provisions of section 69 of the act and the same is added to the returned income of the assessee. 3. Since, the assessee failed to substantiate with documentary evidence the source of cash deposits to the tune of Rs. 1,72,32,000/- and Credits amounting to Rs.1,84,97,625/- aggregating to Rs. 3,57,29, 625/- made in his bank accounts maintained with Vijaya Bank and HDFC Bank Ltd., Garhshankar District Hoshiarpur, therefore, Penalty I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 6 proceedings u/s 271(l)(c) r.w.s 274 of the Income Tax Act, 1961 for concealment of income are being initiated separately.” 6. We heard the submission of revenue, considered the documents available in the record and considered the orders of both the revenue authorities. Perusal of written submission of the assessee it is found the details cash flow statement related transaction with bank which isdepicted details of cash withdrawn from bank total amount of Rs.2,18,25,750/-. The details of assessee’s submission are reproduced as below: “The assessee also time to time made cash withdrawals which were also deposited in the bank but Ld. AO had not given any benefit of the cash withdrawals made from bank accounts. The details of cash withdrawals from Vijaya Bank, bearing account no. 751801011001066 is as under: DATE AMOUNT 02.04.2010 60,000/- 07.04.2010 2,60,000/- 13.04.2010 1,80,000/- 15.04.2010 2,00,000/- 03.05.2010 20,000/- 25.05.2010 1,50,000/- 28.05.2010 10,000/- 03.06.2010 70,000/- 07.06.2010 50,000/- 14.06.2010 50,000/- 14.06.2010 2,00,000/- 19.06.2010 10,000/- 22.06.2010 7,30,000/- 23.06.2010 7,00,000/- 24.06.2010 5,50,000/- 28.06.2010 10,000/- 14.07.2010 20,000/- I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 7 05.08.2010 2,00,000/- 23.08.2010 20,000/- 20.09.2010 1,00,000/- 25.09.2010 2,00,000/- 28.09.2010 20,00,000/- 04.10.2010 2,00,000/- 13.10.2010 5,00,000/- 03.11.2010 9,00,000/- 12.11.2010 5,00,000/- 25.11.2010 4,00,000/- 29.11.2010 50,000/- 29.11.2010 2,00,000/- 06.12.2010 2,50,000/- 07.12.2010 3,00,000/- 20.12.2010 50,000/- 20.12.2010 1,00,000/- 03.01.2011 10,000/- 06.01.2011 2,50,000/- 19.01.2011 30,250/- 28.01.2011 32,000/- 05.02.2011 26,000/- 21.02.2011 10,000/- 22.02.2011 1,00,000/- 22.02.2011 2,50,000/- 24.02.2011 20,000/- 03.03.2011 10,00,000/- 07.03.2011 4000/- 10.03.2011 50,000/- 28.03.2011 1,50,000/- 31.03.2011 20,000/- TOTAL 1,11,92,250/- The details of cash withdrawals from HDFC Bank-OD Limit bearing account no.1410100004145 is as under: DATE AMOUNT 23.07.2010 7500/- 26.07.2010 50,000/- 29.07.2010 65,00,000/- 05.08.2010 26,00,000/- 06.08.2010 6,50,000/- 14.09.2010 5,00,000/- I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 8 22.09.2010 6000/- 15.12.2010 40,000/- 10.02.2011 2,80,000/- TOTAL 1,06,33,500/- Sir, the total withdrawals made by the assessee from these banks amount to Rs.2,18,25,750/-, which are sufficient enough to make cash deposits of Rs. 1,72,32,000/-, so no adverse inference may kindly be drawn against the assessee. The copies of both these bank statements are uploaded herewith. Ld. AO has not given any benefit of the cash withdrawals, thus the addition is totally against the principles of natural justice, thus addition made in the hands of assessee may kindly be deleted.” 6.1 Related to the transaction of credit entries in bank, the assessee has submitted that all the credits are interchanging among the assessee’s bank accounts. Accordingly, the details were submitted by the ld. AR which is reproduced as below: “Addition Of Rs.1,84,97,625/- On Account Of Credit Entries: Sir, as regards credit entries in the bank account of the assessee, it is submitted that most of the entries are transfer entries from one bank account of the assessee to another, while some credits are on account of funds received back from the family friends of the assessee, which have been given to them in the year under consideration only. I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 9 Sir, the AO failed to reconcile the cash and credit entries from respective bank accounts already placed on record. Sir, all the bank accounts were already placed on record before the Ld. AO but the Ld. AO has not considered the same and failed to appreciate the fact that were stated by the assesses during the course of assessment. These facts were available before the Hon’ble C1T(A) also but he has passed the ex-parte order without appreciating the facts of the assessee. The credits in the bank accounts are self-explanatory and are not unexplained, so the credits may kindly be considered as explained and no addition, should be made in the hands of assessee. Further, all the cash I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 10 deposits have been on account of sale proceeds of agricultural produce and credit entries are on account of transfers from one account of the assessee to another and from funds received back from family friends. All these facts were brought on record before the lower authorities, but these facts have been ignored and the addition made in the hands of the assessee is not correct and hence, be deleted. Thus considering the submissions of assessee and facts of the case and evidences filed by assessee and following the case laws cited above, it is requested that addition made in the hands of assessee may kindly be deleted.” 6.2 The submission of the ld. AR is well explained and annexed in APB pages 1 to 20 including bank statement and documents related proof of agricultural land. In factual matrix all the entries are well covered in the written submission supported with bank account. The ld. DR has not made any objection about the submission of the assessee. The ld. AR relied on the order of ITAT-Amritsar Bench in the case of Gurdev Singh v ITO I.T.A. No. 30/Asr/2023 date of pronouncement 04/08/2023. “8. We heard the rival submission and considered the documents available in the record. The assessee placed the bank account, cash flow statement and source of cash was duly explained. The document was duly submitted before the Id. CIT(A). But in absence of cash flow the cash deposit in bank was remained unexplained before the Id. CIT(A). The assessee had opening cash in hand Rs. 1,20,000/-, received cash money gram amount to Rs. 3,00,00/- and I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 11 withdrawn cash from bank amount to Rs.30,26,000/- which was explained before the revenue. The monthwise cash flow of the assessee is duly reproduced as below. SUMMARY OF MONTH WISE CASH WITHDRAWALS & CASH AVAILABILITY DURING FY 2009-10. PARTICULARS WITHDRAWALS BALANCE Opening balance 1,20,000/- 1,20,000/- April - 1,20,000/- May 60,000/- 1,80,000/- June 1,16,798/- 2,96,798/- July 2,75,000/- 5,71,798/- August 5000/- 5,76,798/- September 7,40,000/- 13,16,798/- October 3,39,050/- 16,55,848/- November 1,00,000/- 17,55,848/- December 4,67,000/- 22,22,848/- January 10,18,465/- 32,41,313/- February 1,81,000/- 34,22,313/- March 26,000/- 34,48,313/- Without considering the bank account of the assessee the entire cash deposit in the bank account was added back u/s 69A of the Act. On perusal of record by verifying the day-wise cash flow, the assessee had sufficient cash balance to deposit cash in bank account. The summary of cash flow was submitted by the assessee before the Id. CIT(A) but it was ignored. So, the addition of cash deposit amount to Rs. 31,97,500/- is quashed." I.T.A. No. 210/Asr/2023 Assessment Year: 2011-12 12 Considering the ld. AR’s submission, the cash & credit entries are not unexplained U/s 69A. We are setting aside the impugned appeal order of the revenue. The addition amount of Rs. 3,57,29,625/- is quashed. The ld. AR had not made any submission about the addition of bank interest amount of Rs. 1,35,383/-. So the addition of bank interest is remained not-pressed. As the quantum of appeal is adjudicated in favour of assessee, then the legal grounds of the assessee is only remained for academic purposes. 7. Accordingly, appeal of the assessee Ground nos-1 & 2 are remained for academic purpose, the Ground no-3 is allowed, the Ground no-4 is dismissed as not pressed, and Ground no-5 is general in nature. 8. In the result, the appeal of the assessee bearing ITA No. 210/Asr/2023 is partly allowed. Order pronounced in the open court on 13.09.2023 (Dr. M. L. Meena) (ANIKESH BANERJEE ) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order