Mr. Sunny Kulathakal , Bangalore V. Income Tax Officer, (International Taxation) Ward-1(2), Bangaalore

ITA 302/BANG/2023

AI Insights

The case involves Shri Sunny Kulathakal, a non-resident, who appealed against the order of the CIT(A) which upheld the addition of Rs. 63,74,500 as unexplained money under section 69A of the Income Tax Act. The assessee had declared a total income of Rs.12,57,190 for the assessment year 2017-18, which included income from bank interest. The Income Tax Officer (ITO) had made additions to the assessee's income based on unexplained cash deposits and discrepancies in reported interest income. The CIT(A) upheld these additions, leading to the current appeal. The Tribunal noted that the issue of cash deposits needed to be reconsidered in light of the CBDT Circular regarding demonetisation and directed a remand for further verification.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124286 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 12-04-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VEERA RAGHAVAN
• Keywords: Additional evidence; TDS
• Section: 142(1); 143(2); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA No. 302/Bang/2023 Assessment Year : 2017-18 Shri Sunny Kulathakal, 3424, 3 rd Cross, 10 th Main, Indiranagar 2 nd stage, Bangalore – 560 038. PAN: BOJPK9434C Vs. The Income Tax Officer [International Taxation], Ward – 1[2], Bangalore. APPELLANT RESPONDENT Assessee by : Shri Balram R Rao, Advocate Revenue by : Shri Veera Raghavan, JCIT DR Date of Hearing : 26-07-2023 Date of Pronouncement : 09-08-2023 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal arises out of order dated 20.02.2023 passed by the Ld.CIT(A)-12, Bengaluru for A.Y. 2017-18 on following grounds of appeal: “1. On the facts and in the circumstances of the case, Ld. CIT (A), erred in upholding the order of the Assessing Officer (AO) in the manner in which he did. 2. Ld. CIT(A) erred in upholding the addition of Rs. 63,74,500/- as unexplained money under section 69A of the Act without appreciating the facts of the appellant's case. Page 2 of 11 ITA No. 302/Bang/2023 3. The Ld. CIT(A) failed to appreciate the evidences filed by the Appellant during the course of hearing in proper perspective. 4. The Ld. CIT(A) erred in not applying the peak cash credit theory on the cash deposits made during the course of Assessment and has failed to consider the revised submissions filed by the Authorised representative of the Appellant by stating that it was an afterthought. 5. For these and such other grounds that may be urged at the time of hearing of the Appeal the Appellant prays that the appeal may be allowed.” 2. Brief facts of the case are as under: 2.1 The assessee is a non-resident and derives its income from other sources i.e. Bank interest. For the year under consideration, the assessee filed its return of income on 31.03.2018 declaring total income of Rs.12,57,190/-. The case was selected for limited scrutiny to examine the following issues: a) Cash deposits during the year b) Winning from lottery / crossword puzzles/ horse Statutory notices u/s. 143(2) of the act along with notice u/s. 142(1) was issued to the assessee on e-portal. 2.2 Subsequently there was a change in the incumbent officer and notice u/s. 142(1) r.w.s 129 was issued through e-portal providing an opportunity to the assessee by calling for the source of cash deposited to the bank during the year and also to explain as to why, the interest income received from the bank as per 26AS amounting to Rs. 19,09,110/- should not be brought to tax as against the return of income declared at Rs.12,66,498/-. 2.3 In response to the statutory notices, assessee furnished bank statements of Central Bank of India and State Bank of India for the relevant financial year under consideration. The Ld.AO after Page 3 of 11 ITA No. 302/Bang/2023 analysing the bank statements noted that the assessee has two separate accounts with Central Bank of India and an account with State Bank of India. It was noted that the assessee deposited total cash of Rs.63,74,500/- during the financial year relevant to assessment year under consideration. 2.4 The Ld.AO also noticed that as per 26AS, the assessee received income of Rs.19,09,110/- against which TDS of Rs.1,92,870/- was claimed. The Ld.AO noted that, there is a difference of Rs.6,42,612/- that was not brought to tax as “income from other sources”. 2.5 Notices were issued to the assessee to explain the discrepancy and the details of the cash deposited in the accounts held by the assessee. The assessee did not respond to the notices issued and therefore the Ld.AO made addition in the hands of the assessee of Rs.82,74,302/-. 2.6 Aggrieved by the order of the Ld.AO, the assessee filed appeal before the Ld.CIT(A). 2.7 Assessee furnished various details before the Ld.CIT(A) as additional evidence, which was remanded to the Ld.AO calling for a remand report. 2.8 The Ld.AO filed the remand report dated 09.11.2022 which has been extracted in the order of Ld.CIT(A) and a copy of the same was shared to the assessee. 2.9 In the rejoinder, the assessee submitted that, the source of the cash deposits was from the cash withdrawals made earlier and from the cash received from sale of agricultural produce. It was also submitted that the cash deposits were from the loan obtained from his brother and his brother-in-law and few close Page 4 of 11 ITA No. 302/Bang/2023 friends. The assessee also submitted that, the assessee received certain loan repayment from a few other people, the details of whom have been mentioned by the Ld.CIT(A) in para 5.3.3 of its order. The assessee filed cash book for financial year under consideration and copies of assessee’s bank statements in support. 2.10 The Ld.CIT(A) considered the remand report and the evidences filed by the assessee and observed as under: Page 5 of 11 ITA No. 302/Bang/2023 Page 6 of 11 ITA No. 302/Bang/2023 Page 7 of 11 ITA No. 302/Bang/2023 Page 8 of 11 ITA No. 302/Bang/2023 2.11 The Ld.CIT(A) thus did not allow the claim of the assessee in respect of the cash deposited to the bank accounts. Aggrieved by the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. 3. Before us the Ld.AR submitted that the assessee do not wish to contest the issue of difference in the interest income between the 26AS, and as declared by assessee in the return of income. The written submission filed by assessee in para 2.4 supports the above observation. Page 9 of 11 ITA No. 302/Bang/2023 4. In respect of the addition of cash deposited into the bank account u/s. 69A of the act, it is submitted that the assessee wish to file an application Rule 46A wherein the source of cash deposits along with supporting documents are placed to be considered for advancement of substantial justice. It is the submission of the Ld.AR that upon consideration of these documents it could be made out that the cash deposits are all from known and explainable sources. He thus prayed for the evidences to be admitted. The Ld.AR submitted that these details were filed before the Ld.CIT(A) however the same has not been considered. He thus prayed for the issue to be remanded for these documents to be verifiable in the interest of justice. 5. The Ld.DR submitted that, all these documents were filed before the Ld.CIT(A) on which a remand report has been filed by the Ld.AO. It is also submitted that the cash deposits into the accounts of the assessee also pertains to the period when demonetisation was declared. He submitted that as the assessee could not satisfactorily explain the source of cash deposited, the addition deserves to be confirmed. We have perused the submissions advanced by both sides in the light of records placed before us. 6. We note that assessee filed various confirmation of parties from whom cash said to have been received by assessee in respect of which no enquiries were made. Also in respect of sale of agricultural produce, there has been no further verification by the authorities in order to ascertain the correctness of the crops grown. The assessee has also not filed the RTC copies in respect of the alleged land which was never declared in the return of Page 10 of 11 ITA No. 302/Bang/2023 income by the assessee in any of the preceding assessment years. It is further submitted by the assessee that, the manager one Shri Shyju Kurian confirmed the cash sales made amounting to Rs.8,74,500/- that was handed over to the assessee. 7. In our considered opinion, the entire issue in respect of the cash deposits need to be considered in the light of the CBDT Circular issued for verifying the demonetisation cash deposited. The Ld.CIT(A) shall consider the relevant part of the circular for verifying the details pertaining to the facts of the present case and then consider the claim of assessee in accordance with law. We accordingly, remand this issue to the Ld.CIT(A) to carry out necessary verification as per the demonetisation circular issued by the CBDT having regards to the facts of the present case. Needless to say that proper opportunity of being heard must be granted to the assessee. Accordingly, the grounds raised by the assessee stands allowed for statistical purposes. In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on 09 th August, 2023. Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 09 th August, 2023. /MS / Page 11 of 11 ITA No. 302/Bang/2023 Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file By order Assistant Registrar, ITAT, Bangalore