S.Sakunthala, Salem V. ITO, Salem

ITA 2724/CHNY/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5421 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 21-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R ANITA
• Assessee Lawyers: T VASUDEVAN
• Keywords: Unexplained investment; Gift; Business income; Set aside
• Section: 44AD; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO.: 2724/CHNY/2016 / ASSESSMENT YEAR : 2011-12 MS . S. SAKUNTHALA SIVAM, NO. 42, HARI PALACE, SUNDARAM COLONY, PALLAPATTI, SALEM 636 005. [PAN: BDLPS 8621L] VS. INCOME TAX OFFICER, WARD I(3), SALEM. ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI. T. VASUDEVAN, ADVOCATE / RESPONDENT BY : MS. R. ANITA, ADDL. CIT /DATE OF HEARING : 07.09.2021 /DATE OF PRONOUNCEMENT : 16.09.2021 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 7, SALEM IN ITA NO. 72/2014-15 DATED 23.06.2016 FOR THE ASSESSMENT YEAR 2011-12. :-2-: ITA NO: 2724/CHNY/2016 2. THIS CASE WAS HEARD THROUGH VIDEO CONFERENCING. THE LD. AR SUBMITTED THAT THIS APPEAL SHOULD HAVE BEEN FILED ON OR BEFORE 11.09.2016, HOWEVER, WAS FILED ON 22.09.2016 WITH A DELAY OF 11 DAYS. THE LD. AR SUBMITTED THAT THE APPEAL PAPERS WERE PREPARED AND HANDED OVER TO THE ASSESSEE FOR SIGNATURE BEFORE THE DUE DATE FOR FILING THE APPEAL. AT THAT POINT OF TIME, SINCE THE ASSESSEE WAS AWAY FROM THE STATION ON A PILGRIMAGE AND RETURNED TO SALEM ON 20.09.2016, THIS APPEAL COULD BE FILED ONLY ON 22.09.2016. SINCE, THIS DELAY IS NEITHER WILLFUL NOR WANTON BUT DUE TO THE CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE, IT WAS PLEADED THAT THE DELAY IN FILING THE APPEAL BE CONDONED AND THE APPEAL BE DECIDED ON MERITS. 3. WE HEARD THE RIVAL SUBMISSIONS AND CONDONE THE DELAY. 4. THE ASSESSEE FILED THIS APPEAL WITH THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DISMISSING THE APPEAL IS CONTRARY TO LAW, ERRONEOUS AND UNSUSTAINABLE ON THE FACTS OF THE CASE. 2. THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 25 LACS AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT. 3. THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAS FULLY EXPLAINED THE SOURCES OF CASH DEPOSIT OF RS. 25 LACS IN THE BANK ACCOUNT AND THERE WAS NO RHYME OR REASON TO DISBELIEVE THE EXPLANATION AND CONFIRM THE ADDITION TO THE RETURNED INCOME. :-3-: ITA NO: 2724/CHNY/2016 4. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE ASSESSEE HAD RETURNED HER INCOME FROM REAL ESTATE BUSINESS U/S. 44AD OF THE ACT AND HENCE THERE WAS NO MANDATE TO DRAW P&L ACCOUNT EXHIBITING THE BUSINESS INCOME OF RS. 25 LACS, THAT WAS DEPOSITED IN THE BANK ACCOUNT AND THIS CANNOT BE A BASIS TO MAKE THE ADDITION AS UNEXPLAINED INVESTMENT. 5. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE ENTIRE AMOUNT OF RS. 25 LACS IS PART OF THE TOTAL OF CREDITS IN THE BANK ACCOUNT, CONSIDERED FOR GROSS TURNOVER IN ARRIVING AT THE BUSINESS INCOME UNDER SEC. 44AD AND HENCE CONFIRMING THE ADDITION WITHOUT DUE REGARD TO THIS FACTUAL ASPECT IS UNWARRANTED AND UNJUSTIFIED ON THE FACTS OF THE CASE. 6. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE ASSESSEE HAVING DISCHARGED HER ONUS OF PROVING THE CASH DEPOSITS, THE MERE DENIAL OF THE EXPLANATION BY THE OFFICER WITHOUT ANY CORROBORATIVE MATERIAL WAS UNJUST AND UNSUSTAINABLE. 7. THE CIT(A), IN ANY VIEW OF THE MATTER, OUGHT TO HAVE CONSIDERED THE EXPLANATIONS OF THE ASSESSEE IN THE PROPER PERSPECTIVE AND THUS DELETED THE ENTIRE ADDITION MADE BY THE OFFICER U/S. 69 OF THE ACT. 5. THE LD. AR SUBMITTED THAT THE ASSESSEE FILED THE RETURN OF INCOME U/S. 44AD AND PAID THE TAXES @ 8% ON THE GROSS TURNOVER OF RS. 55,25,200/-. HER TOTAL TURNOVER DID NOT EXCEED RS. 60 LAKHS. SINCE, THE ENTIRE CASH DEPOSITS OF RS. 54,97,000/- IN THE IOB ACCOUNT IS FULLY COVERED IN THE TOTAL TURNOVER, THE ASSESSEE IS NOT REQUIRED TO EXPLAIN THE INDIVIDUAL DEPOSITS IN THE BANK ACCOUNT AS HER RETURN IS FULLY COVERED U/S. 44AD OF THE ACT. NEITHER THE AO NOR THE LD. CIT(A) APPRECIATED THIS FACT AND HENCE THE LD. AR SUBMITTED THAT THE ASSESSEES :-4-: ITA NO: 2724/CHNY/2016 EXPLANATION MAY BE ACCEPTED ON THE LINES OF GROUNDS OF APPEAL, SUPRA, AND THE ORDERS PASSED BY THE LOWER AUTHORITIES BE SET ASIDE. 6. PER CONTRA, THE LD DR SUBMITTED THAT THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY FOR EXAMINING THE CASH DEPOSITS MADE IN THE BANK ACCOUNT BASED ON THE AIR INFORMATION. TAKING THROUGH THE ASSESSMENT ORDER AND THE APPEAL ORDER, THE LD. DR SUBMITTED THAT THERE WERE TWO MAJOR CREDITS OF RS. 25 LAKHS EACH, ON 18.10.2010 AND 22.10.2010 IN THE BANK ACCOUNT . WHEN THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCES OF THESE DEPOSITS, THE ASSESSEE BY HER LETTER DATED NIL RECEIVED BY THE AO ON 06.03.2013 STATED THAT HER NATURE OF BUSINESS IS SPOKEN ENGLISH COACHING CLASS PROFESSION AND IN HER LETTER DATED 22.10.2013, SHE MENTIONED THAT THE CASH DEPOSIT OF RS. 25 LAKHS MADE AS ON 18.10.2010 COMPRISED HER OWN ACCOUNTED MONEY (AS SHOWN IN SUNDRY DEBTORS) OF RS. 12,45,000/- AND THE CASH GIFT RECEIVED FROM HER NRI SON AND HER HUSBAND FROM THEIR PRIOR SAVINGS AT RS. 12,55,000/-. THE ASSESSEEE EXPLAINED THAT THE DEPOSITS MADE AS ON 18.10.2010 WAS SUBSEQUENTLY WITHDRAWN, WHICH WAS RE-DEPOSITED ON 21.10.2010. THE AO CAUSED AN ENQUIRY THROUGH HIS INSPECTOR FROM ONE SHRI. S. RAMESH (WHO WORKS IN THE SCHOOL RUNNING BY THE TRUST IN WHICH THE ASSESSEE IS A TRUSTEE) AND HE HAD CONFIRMED THAT HE USED TO HAND OVER THE CASH WITHDRAWN FROM THE ASSESSEES SB ACCOUNT TO THE ASSESSEE IMMEDIATELY. THEREFORE, THE AO ACCEPTED THE SOURCES OF CASH DEPOSITED ON :-5-: ITA NO: 2724/CHNY/2016 21.10.2010 AS EXPLAINED. HOWEVER, WITH REGARD TO THE SOURCES OF CASH DEPOSIT MADE ON 18.10.2010, THE AO BY A LETTER DATED 12.03.2014 REQUIRED THE ASSESSEE TO FILE THE DETAILS AND THE RELEVANT EVIDENCES . THEREAFTER, THE ASSESSEE SUBMITTED THAT THE INCOME ADMITTED BY HER IS U/S. 44AD ON THE TURNOVER OF RS. 55,25,000/-. SHE ALSO STATED THAT SHE IS ENGAGED IN THE REAL ESTATE BUSINESS AND ONCE THE PROVISIONS OF SECTION 44AD IS COVERED , SHE IS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNT AND SHE WAS NOT UNDER ANY OBLIGATION TO EXPLAIN INDIVIDUAL CASH DEPOSITS IN THE BANK ACCOUNT. THEREFORE, THE LD. AO CONCLUDED, INTER ALIA, THAT THE ASSESSEES CLAIM IS RIDDLED WITH INCONSISTENCIES FOR THE FOLLOWING REASONS. 1. IF THE CASH DEPOSITS REPRESENTED THE ASSESSEES TURNOVER OF RS. 55,25,000/-, WHICH IS ADMITTED U/S. 44AD AND HER PLEA THAT THE CASH WITHDRAWN ON 18.10.2010 WAS RE-DEPOSITED ON 21.10.2010 IS CONSIDERED AS CORRECT , THEN THE TOTAL TURNOVER COMES ONLY AT RS. 30,25,000/-. THEREFORE, THE ASSESSEES CLAIM THAT THE CASH DEPOSITS IN HER ACCOUNT REPRESENTS HER TURNOVER OF RS. 55,25,000/- IS INCORRECT. 2. WITH REGARD TO THE REALIZATION FROM THE SUNDRY DEBTORS, THE ASSESSEE DID NOT FILE THE NAMES AND ADDRESS OF THE PURPORTED SUNDRY DEBTORS. IT WAS SEEN FROM THE RETURN FILED BY HER FOR THE ASSESSMENT YEAR 2010-11, THAT THE CLOSING BALANCE OF SUNDRY DEBTORS AS ON 31.03.2010 WAS RS 8,00,500/- ONLY. UNDER SUCH CIRCUMSTANCES , HOW AND WHEN A SUM OF RS. :-6-: ITA NO: 2724/CHNY/2016 12,45,000/- WAS REALIZED FROM THEM AND HOW IT WAS UTILIZED FOR MAKING THE DEPOSITS INTO THE SB ACCOUNT IS UNCLEAR. FURTHER, THE CLOSING BALANCE OF SUNDRY DEBTORS AS ON 31.03.2011 IS SHOWN AT RS. 12,41,500/-. IF THIS BE THE CASE, THEN THE REALIZATION FROM DEBTORS DURING THE FINANCIAL YEAR 2010- 11 WORKED OUT AT RS 1000/- ONLY AS UNDER : OPENING BALANCE OF SUNDRY DEBTORS - RS. 8,00,500 ADD : GROSS RECEIPTS DURING 2010-11 - RS. 55,25,000 TOTAL - RS. 63,25,000 LESS : PAYMENT TOWARDS EXPENSES - RS. 50,83,000 TOTAL - RS. 12,42,500 LESS: CLOSING BALANCE OF DEBTORS - RS. 12,41,500 NET REALIZATION FROM DEBTORS - RS. 1,000 3. WITH REGARD TO THE CLAIM OF CASH GIFT OF RS. 12,55,000/- FROM ASSESSEES NRI SON ETC, IT WAS NOT SUPPORTED WITH ANY EVIDENCES. IT WAS NOT KNOWN HOW THE FUNDS FROM ABROAD WERE RECEIVED IN INDIA AND HOW THE CASH WAS DEPOSITED INTO HER SB ACCOUNT. IN ORDER TO SUBSTANTIATE HER CLAIM, SHE WAS ASKED TO PROVE THE FLOW OF FUNDS FROM HER NRI SON FROM ABROAD INTO SOME BANK ACCOUNT IN INDIA AND THE SUBSEQUENT WITHDRAWAL OF CASH FROM SUCH ACCOUNT. 6.1 THUS, SINCE THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION ON THE ABOVE POINTS, AND WHEN SHE WAS CONFRONTED WITH THE POSSIBILITY OF HER SOURCES BEING :-7-: ITA NO: 2724/CHNY/2016 DISCREDITED IN VIEW OF THE ABOVE FACTS AND PROPOSITIONS, THE ASSESSEE BY HER LETTER DATED 17.03.2014 HAS RESORTED TO A NEW THEORY AS AN AFTERTHOUGHT THAT SHE WAS ENGAGED IN REAL ESTATE . SO, THE ASSESSING OFFICER HELD THAT IF THE ASSESSEE WAS CARRYING ON SPOKEN ENGLISH COACHING CLASS PROFESSION , SHE IS NOT ELIGIBLE TO ADMIT THE INCOME U/S. 44AD AS THIS WOULD BE IN THE NATURE OF PROFESSION. IF ON THE OTHER HAND, IF THE ASSESSEE IS ENGAGED IN THE REAL ESTATE BUSINESS, THERE SHOULD BE RECORDS FOR THE PURCHASE AND SALE OF IMMOVEABLE PROPERTY WHICH WOULD INEVITABLY HAVE TO BE MAINTAINED. SINCE, THE ASSESSEE HAS TAKEN DIVERGING STANDS , THERE IS NO WAY TO ASCERTAIN THE ACTUAL NATURE OF BUSINESS AND HER ELIGIBILITY U/S. 44AD. THEREFORE, THE AO HELD THAT THE CASH DEPOSITS MADE IN THE SB ACCOUNT MADE ON 18.10.2010 AT RS. 25,00,000/- DID NOT REPRESENT THE BUSINESS RECEIPTS AND THE ASSESSEE COULD NOT PROVE THE SOURCES FOR THESE CREDITS. THEREFORE, HE ASSESSED RS. 25,00,000/- AS AN UNEXPLAINED INCOME AS THE ASSESSEE FAILED TO PROVE THE SOURCES OF THESE DEPOSITS. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) ALSO, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCES IN SUPPORT HER CLAIM. THEREFORE, THE LD. CIT(A) HELD THAT SINCE THE ASSESSEE HAS BEEN GIVING DIFFERENT EXPLANATION AT DIFFERENT TIMES REGARDING THE SOURCES OF RS. 25 LAKHS TOWARDS WHICH SHE IS UNABLE TO PRODUCE ANY EVIDENCE IN SUPPORT OF HER CLAIM AT THE APPELLATE PROCEEDING STAGE ALSO. THEREFORE, THE LD. CIT(A) DID NOT FIND ANY REASON TO INTERFERE WITH THE ASSESSMENT ORDER. THEREAFTER, THE ASSESSEE :-8-: ITA NO: 2724/CHNY/2016 FILED THIS APPEAL. EVEN BEFORE THIS HONBLE TRIBUNAL ALSO, THE ASSESSEE HAS NOT FILED ANY MATERIAL TO ESTABLISH THAT THE STAND TAKEN BY HER BEFORE THE AO AND BEFORE THE LD. CIT(A) IS CORRECT. THEREFORE, THE LD DR PLEADED THAT THE ORDERS OF THE LOWER AUTHORITIES BE SUSTAINED. 7. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. THOUGH, THE ASSESSEE ADMITTED THE INCOME U/S. 44AD, WITH REGARD TO THE SOURCES OF CASH DEPOSITS MADE IN THE BANK ACCOUNT , INITIALLY, SHE SUBMITTED THAT HER NATURE OF BUSINESS OF SPOKEN ENGLISH COACHING CLASS PROFESSION AND GAVE CERTAIN SOURCES FOR THE CASH DEPOSITS MADE ON 18.10.2010 AND EXPLAINED THE SOURCES FOR THE CASH DEPOSITS MADE ON 21.10.2010 AS EXTRACTED , SUPRA. WHEN THE AO ACCEPTED PART OF HER EXPLANATION AND REQUIRED THE ASSESSEE TO PROVE THE SOURCES OF THE REMAINING DEPOSITS, THE ASSESSEE TOOK A DIFFERENT STAND AND CANVASSED THAT HER INCOME IS FROM REAL ESTATE BUSINESS AND IT IS COVERED U/S44AD ETC. HOWEVER, SHE HAS NOT LET ANY MATERIAL/ EVIDENCES BEFORE THE LOWER AUTHORITIES TO PROVE THAT SHE WAS IN THE REAL ESTATE BUSINESS. IT IS CLEAR THAT THE ASSESSEE HAS BEEN INCONSISTENT ABOUT THE NATURE OF SOURCES OF THE IMPUGNED CASH CREDITS. SHE HAS NOT LET IN ANY MATERIAL/ EVIDENCE EITHER BEFORE THE LOWER AUTHORITIES OR BEFORE US TO ESTABLISH THAT THE NATURE OF HER ACTIVITIES ARE FALLING WITHIN THE REALM OF BUSINESS ETC AND THE IMPUGNED TRANSACTIONS ARE PART AND PARCEL OF HER TURNOVER ETC BUT FOR A FACT THAT SHE WAS A TRUSTEE IN A :-9-: ITA NO: 2724/CHNY/2016 SCHOOL WHICH WAS BROUGHT ON RECORD THROUGH AN ENQUIRY . THEREFORE, THE SOURCES OF THE IMPUGNED DEPOSITS WERE NOT EXPLAINED BY THE ASSESSEE . FURTHER, THE ASSESSEE HAS NOT DISLODGED THE FINDINGS RECORDED BY THE AO ON THE INCONSISTENCIES IN HER STAND , SUPRA. IN THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES AND HENCE THE ASSESSEES APPEAL IS DISMISSED. 8. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED ON 16 TH SEPTEMBER, 2021 AT CHENNAI. SD/- ( . ) (DUVVURU RL REDDY) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 16 TH SEPTEMBER, 2021 JPV /COPY TO: 1. / APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. [ /GF