Pramila Naveen Trikha, Surat, Surat V. Income Tax Officer (Jurisdictional A. O.) Ward-1(3)(4), Surat

ITA 28/SRT/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5371 (ITAT-SURAT)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 03-07-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 11-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained investment; Gift; Earning of tax free income
• Section: 147; 69; 148; 271(1)(c); 143(3); 250; 201; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JIDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.28/SRT/2024 Assessment Year: (2012-13) (Physical Court Hearing) Pramila Naveen Trikha D-9 Gateway Commune Bungalows, Nr. L.P. Savani School Vesu, Surat- 395007 Vs. Income Tax Officer, Ward-1(3)(4), Surat, Room No.206, 2 nd Floor, Income Tax Office, Anavil Business Center, Adajan Hazira Road, Adajan, Surat-395009 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AIGPT 7776 A (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) िनधाŊįरती की ओर से /Assessee by Shri Sapnesh R Sheth, CA िनधाŊįरती की ओर से /Revenue by Shri Vinod Kumar, Sr. DR अपील पंजीकरण/Appeal instituted on 12.01.2024 सुनवाई की तारीख /Date of Hearing 04.07.2024 घोषणा की तारीख /Date of Pronouncement 31.07.2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order of the Learned Commissioner of Income Tax(Appeals) / National Faceless Appeal Centre, Delhi (NFAC) [in short, “CIT(A)”] u/s 250 of the Income- tax Act, 1961 (in short, “the Act”) dated 27.12.2023 for assessment year (AY) 2012-13. The grounds of appeal raised by the assessee are as under:- 2 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha “1. On facts and circumstances of the case aa well a law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of Assessing Officer in reopening assessment by issuing notice u/s 148 of the I.T. Act 1961. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of assessing Officer in making addition of Rs.31,67,000/- as unexplained money u/s 69A of I.T. Act, 1961. 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of Assessing Officer in making addition of Rs.3,54,871/- as unexplained investments u/s 69 of I.T. Act, 1961. 4. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of the Assessing Office in making addition of Rs.81,900/- as income from house property under I.T. Act, 1961. 5. It is therefore prayed that that above addition made by Assessing Office and confirmed by Commissioner of Income-tax (Appeals), NFAC may please be deleted. 6. Appellant craves leave to alter, amend and/or withdraw any ground(s) either before or in the course of hearing of the appeal.” 2. Facts of the case in brief are that assessee has not filed her return of income (ROI) for AY 2012-13. As per CIB and 26AS data, it was found that assessee made cash deposit of Rs.26,51,000/- in her bank account with the Oriental Bank of Commerce during the year under consideration. The assessee did not furnish any reply in response to the system generated letter and subsequent reminder. In absence of explanation, the source of cash deposit remained unexplained which lead to a definite conclusion of escapement of income u/s 147 of the Act. Accordingly, notice u/s 148 was issued on 29.03.2019 to the assessee. In response thereto, assessee filed her return of income on 3 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha 20.04.2019 declaring total income at Rs.1,31,223/-. Thereafter, assessee was supplied reasons for reopening, which was objected to by the assessee. The objection was duly disposed of vide order dated 22.08.2019. It was found during assessment proceedings that assesses had deposited Rs.26,51,000/-, Rs.2,99,000/- and Rs.2,17,000/- in Oriental Bank of Commerce (A/c No.9334 and 3264) and ICICI Bank respectively. In reply to notice of AO, assessee stated that cash was withdrawn from the account of her husband and same deposited in her bank account. In response to the final show-cause notice, the assessee filed reply which was not found satisfactory by AO. The assessee had claimed that her income was below the taxable limit and hence, she did not file her return of income. She also stated that cash deposit cannot be the reason for reopening because she has explained the source of cash deposit. The contention of assessee was not accepted because she had deposited huge amount of cash but had not filed her ROI and source of cash deposit was not available in the record. The explanation that sources of cash deposits were from the past withdrawals by assessee and her husband was not accepted by AO. Hence, he added Rs.26,51,000/-, Rs.2,99,000/- and Rs.2,17,000/- totaling to Rs.31,67,000/- as unexplained money u/s 69A of the Act. The AO also added Rs.3,50,000/- claimed as gift from father-in-law, 4 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha Rs.1,925/- and Rs.1,946/- being interest from the bank as unexplained investment u/s 69 of the Act. He also estimated income from the house property at Rs.1,26,000/- in place of Rs.44,100/- declared by the assessee as rent from ABG Shipyard Co. Accordingly, he added the difference of Rs.81,900/-. The total income was assessed at Rs.37,33,990/-. The AO also initiated penalty proceedings u/s 271(1)(c) and 271F of the Act. Aggrieved by the order of AO passed u/s 143(3) r.w.s. 147 of the Act, assessee filed appeal before Ld.CIT(A). 3. Before Ld.CIT(A), assessee filed written submission and contested the order of AO and additions made therein by raising grounds on validity of reopening as well as merits of various additions. Regarding reopening, the CIT(A) relied on the decision of Hon’ble jurisdictional High Court in case of PCIT vs. Gopal Heritage Pvt. Ltd. wherein the Hon’ble Court held that where AO issued reopening notice against appellant on ground that an information was received that the appellant had received cash deposits of certain amount in a bank account but had not disclosed same in its return of income, since the assessee had failed to submit supporting evidence and source of income with regard to said cash deposits, impugned reopening notice was justified. Therefore, Ld.CIT(A) confirmed the reopening u/s 147 of the Act. The CIT(A) also confirmed the addition of Rs.31,67,000/- u/s 5 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha 69A of the Act by observing that though the assessee has received huge cash gifts from her husband, she has not filed ROI for the year under consideration to show that the same was exempt income. The CIT(A) also confirmed the addition of Rs.3,53,871/- by stating that assessee has not furnished any documentary evidence to substantiate the claim of gift received by her from her father. The CIT(A) also confirmed the addition of house property income of Rs.81,000/- by stating that appellant has not furnished any documentary evidence regarding the rent from ABG Shipyard Co.Ltd. Aggrieved by the order of Ld. CIT(A) assessee has filed present appeal before the Tribunal. 4. First ground pertains to the decision of CIT(A) in confirming the reopening of assessment by issuance of notice u/s 147 of the Act. Before us, Ld.AR for the assessee has not pressed this ground and hence, the same is “dismissed as not pressed”. 5. Next ground pertains to addition of Rs.31,67,000/- on account of cash deposits in bank accounts of the assessee. The Ld.AR of the assessee has filed paper book containing 42 pages including the written submissions before AO and CIT(A). He has also submitted a chart showing source of cash deposit of Rs.26,51,000/-, Rs.2,99,000/- and Rs.2,17,000/- in Oriental Bank of Commerce (SB A/c 1009334), Rs.2,99,000/- in Oriental Bank of Commerce (SB A/c. 1003264) and 6 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha Rs.2,17,000/- in ICICI Bank (SB A/c No.1000903). Ld.AR of the assessee has also submitted bank statement and copy of gift declaration of assessee’s husband to support the claim of cash deposit in the bank accounts. The chart showing source of deposit and source of assessee’s husband is enclosed in pages 10 to 12 of the paper book. The Ld.AR of the assessee submitted that assessee made cash deposit in the impugned bank accounts out of cash withdrawals from her bank account in recent past and also out of cash received from her husband, who had withdrawn substantial cash from his bank account. Thus, the assessee has not only explained the source of the cash deposit but also source of the source. The assessee also submitted a cash flow statement which was compiled from the above three bank statements which makes it clear that prior to cash deposits there were substantial cash withdrawals. He submitted that assessee’s husband made the withdrawals out of proceeds received on sale of shares, closure of post office MIS, salary etc., He has submitted declaration of gift from the husband of the assessee. Copies of the bank accounts are also submitted in support the claim of the assessee. The Ld.AR of the assessee also stated that husband of the assessee was a salaried employee who was working in Reliance Industries Ltd. Further, assessee was not doing any business and she was not capable of 7 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha earning such huge amount on her own. Therefore, all deposits were from withdrawal of her husband from his bank account. The Ld.AR of the assessee relied on the decisions of in cases of (i) CIT vs. P.K.Noorjahan 237 ITR 570 (SC) (ii) Shri Imran Sherkhan vs. ITO (ITA No.1303/Ind/2016) (iii) Baljit Singh vs. ITO (ITA No.986/Chd/2018 (iv) CIT vs. Veena Awasthi (IT Appeal No.215 (Lucknow) of 2016 dated 30.11.2018 (v) ITO vs. Baburao K. Paisal (IT Appeal No.6091 (MuM) of 2012 dtd 22.12.2014 (vi) CIT vs. K. Sreedharan (1993) 201 ITR 1010 (Ker.) (vii) Rajiv Chandran vs. ITO [2019-TIOL-231-ITAT-DEL] and (viii) CIT vs. Klwant Rai 291 ITR 26 (Del). 6. On the other hand, Ld.Sr-DR of the Revenue has supported the orders of lower authorities. He wondered as to why the salary and withdrawals will be kept in house for six months. He also submitted that there is no one-to-one nexus between the withdrawals and the deposits. The documents submitted by the appellant were stated to be self-serving documents. On the whole, the explanation of the appellant was not satisfactory and therefore the addition may be sustained. 7. We have heard both the parties and perused the record carefully. We have also deliberated on the decisions relied upon by the Ld.AR of the assessee. The Ld.AR of the assessee mainly relied on the submissions made before the AO and CIT(A). On the other hand, the 8 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha Ld.Sr-DR for the Revenue supported the findings of AO and the CIT(A). We find that the assessee is a housewife and does not have any independent source of income. The family of assessee is also small consisting of the assessee, her husband and two children. The period under consideration is FY 2011-12 (AY 2012-13) and not the demonetization period (AY 2017-18). Regarding the cash deposit in the above three bank accounts maintained with Oriental Bank of Commerce and ICICI Bank, the Ld AR submitted that assessee made cash deposits in the impugned bank accounts out of cash withdrawals made from her account in recent past and also out of the cash receipt from her husband. We have carefully examined the bank accounts and the explanation given in this regard by Ld.AR of the assessee. The Ld.AR of the assessee has given a cash-flow statement which may be reproduced below for reference and appreciation: CASH FLOW STATEMENT Date Cash withdrawal Cash deposit Balance Bank a/c No. A/c of 11-03-11 400000 0 400000 5201542722 Husband 14-03-11 600000 0 1000000 5201000903 Joint 15-03-11 600000 0 1600000 5201542722 Husband 02-04-11 70000 0 1670000 5201000903 Joint 11-04-11 150000 0 1820000 5201000903 Joint 11-04-11 150000 0 1970000 4201542722 Husband 13-05-11 250000 0 2220000 5201000903 Joint 19-05-11 250000 0 2470000 5201542722 Husband 31-05-11 100000 0 2570000 5201542722 Husband 14-06-11 0 49500 2520500 5201000903 Joint 17-06-11 475000 2995500 5201000903 Joint 24-06-11 0 20000 29775500 5201000903 Joint 05-09-11 1000 0 2976500 05-09-11 0 1000 297500 8282191009334 Self 06-09-11 0 500000 2475500 8282191009334 Self 06-09-11 0 49000 2426500 5201000903 Joint 07-09-11 0 500000 1926500 8282191009334 Self 07-09-11 0 150000 1776500 8282191009334 Self 16-09-11 0 500000 1276500 8282191009334 Self 9 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha 19-09-11 0 500000 776500 8282191009334 Self 19-09-11 300000 0 1076500 5201000903 Joint 24-09-11 1000 0 1077500 24-09-11 0 1000 1076500 26-09-11 250000 0 1326500 9192191003264 Self 26-09-11 240000 0 1566500 9192191003264 Self 01-12-11 0 250000 1316500 8282191009334 Self 20-12-11 10000 1326500 02-12-11 0 250000 1076500 8282191009334 Self 13-12-11 0 49500 1027000 5201000903 Joint 16-12-11 0 49000 978000 9102191003264 Self 16-12-11 0 49000 929000 5201000903 Joint 27-12-11 0 49000 880000 9102191003264 Self 28-12-11 0 100000 780000 9102191003264 Self 09-01-12 0 100000 680000 9102191003264 Self 3847000 3167000 7.1 It is seen from the above table that the total cash withdrawal was Rs.38,47,000/- whereas the total cash deposits was Rs.31,67,000/-. It is also seen that there is no negative cash balance on any date which means that the cash deposit is prima facie out of the prior cash withdrawals. The lowest cash balance on any date was Rs.6,80,000/-. Hence, it may be stated that even after meeting the household expenses etc. (excluding payment by credit cards), there was enough cash balance to explain the cash deposit. There is no evidence on record to show that the withdrawals were used for any other purposes such as purchase of assets etc. The AO has also not observed anywhere in the assessment order that the evidence and the documents submitted by the assessee are not genuine and are fabricated. He has not properly rebutted the explanation and evidence submitted by the assessee and made the addition by stating that they are not acceptable. The reason why they were not accepted has not been 10 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha elaborated in the assessment order. The CIT(A) has also simply endorsed the finding of the AO without any further discussion. A speaking order on merits with reasons and findings is to be passed by CIT(A) on the basis of ground raised in assessee’s appeal. He cannot disposed assessee’s appeal merely by holding that AO’s order is self- speaking order which requires no interference, as held by Hon’ble Madras High Court in case of Ajji Basha vs. CIT 267 Taxman 545 (Mad). The husband of assessee was an employee of Reliance Industries Ltd. and was drawing salary from the said company. It is evident from the chat submitted by the appellant that main source of cash withdrawal by husband of assessee was out of the proceeds received on sale of shares, closure of Post Office MIS, salary etc. Moreover, the family of assessee is also very small consisting of four persons i.e., the assessee, her husband and two children. Hence, the expenses of the family cannot be very high. Therefore, the submission that the withdrawal from husband’s account was deposited in the wife’s account (assessee) cannot be rejected without any evidence to the contrary. As stated earlier, the period covered in the instant appeal is not the demonetization period. Therefore, explanation of assessee cannot be rejected without establishing that there was some other source of income of assessee. The documents and evidences submitted by the 11 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha assessee prove availability of cash-in-hand which has not been rebutted by the lower authorities or the Ld.Sr-DR for the Revenue. The decision relied upon by Ld.AR of the assessee in case of P.K.Noorjahan (supra) is also applicable to the facts of the present case because the assessee is not capable of earning such huge income on her own and the AO has failed to detect any unaccounted source of the assessee. Therefore, explanation by assessee that the amount deposited were out of withdrawals of money by her husband need to be accepted in absence of finding of any unaccounted source of earning by assessee. The other decisions also support claim of the assessee. Hence, the addition made by the AO and sustained by CIT(A) is deleted. This ground of assessee is allowed. 8. Next ground pertains to addition of Rs.3,57,871/- being credit entry of Rs.3,50,000/- and bank interest of Rs.1,925/- and Rs.1,946/-. The explanation of assessee that Rs.3,50,000/- was gifted to her husband by Shri Lakshmi Narayan Sharma, father of assessee was not accepted by AO. The assessee has submitted gift declaration of her father before AO. The PAN of her father was also given to AO. The Ld.AR of the assessee stated that the identity of the donor cannot be doubted because donor is her father and the money has been 12 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha transferred through banking channel and deposited in the joint account of the assessee and her husband. 9. On the other hand, Ld.Sr-DR supported the order of lower authorities. 10. We have considered the submission of both the parties. We find that the amount has been credited to the joint account of assessee and her husband maintained with ICICI Bank (SB a/c No.1000903) where the 1 st holder is husband of the assessee, Shri Navin Trikha and 2 nd holder is the assessee. The amount has been paid through banking channel and is not a cash deposit. The assessee has submitted gift declaration and given the PAN of the donor, Shri Lakshmi Narayan Sharma, father of the assessee. Therefore, assessee has duly proved the identity of the donor and genuineness of the transaction. If the AO was having any further doubt relating to the above credit, he could have asked assessee to file further evidence. The CIT(A) has also simply confirmed the addition without causing any further enquiry to come to a definite conclusion that the impugned credit falls under the mischief of Section 69 of the Act. It has been held in a number of cases that power of CIT(A) is coterminous with that of the AO and the competence of CIT(A) ranges over the whole assessment and it is open to him to correct the AO not only with regard to a matter raised by the 13 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha assessee but also with regard to a matter which has been considered by AO and determined in course of assessment. The Hon’ble Supreme Court in the case of CIT vs. Kanpur Coal Syndicate, 53 ITR 225 (SC) held that the CIT(A) can do what the AO can do and also direct him to do what he has failed to do. Instead of exercising the power given to him to correct the assessment order, he has simply upheld the addition made by AO. Since the primary duty has been discharged by the assessee, it was for the AO to rebut the claim to make the impugned addition. In absence of such action by the lower authorities, the addition is liable to be deleted. Accordingly, the ground raised by the assessee is allowed. 11. Next ground pertains to addition of Rs.81,900/- on presumptive basis to the income from house property. The assessee and her husband had rented their house to M/s ABG Shipyard Co. Ltd. for which rental payment was received through cheque. Since the assessee could not provide the rental agreement with above company, the AO estimated rent income at Rs.20,000/- per month and made addition of the differential amount. The Ld.AR submitted that assessee and her husband rented property to M/s ABG Shipyard Co.Ltd. on monthly rent of Rs.10,500/- (Rs.5,250/- each). In support the assessee has filed bank statement during assessment proceedings. A copy of the bank 14 ITA No.28/SRT/2024 AY.12-13 Pramila N Trikha statement has been enclosed in the paper book. There is no other evidence to prove that assessee received any other amount apart from the rent reflected in the bank statement from the said company. Hence, the addition made by AO on presumptive basis without any supporting evidence cannot be sustained. Accordingly, the ground raised by assessee is allowed. 12. In the result, appeal filed by the assessee is partly allowed. Order is pronounced on 31/07/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER स ू रत/Surat Ǒदनांक/ Date: 31/07/2024 DKP Outsourcing Sr.P.S Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat