Ponna Shiva Prasad, Hyderabad, Hyderabad V. ITO, Ward-12(4), Hyderabad, Hyderabad

ITA 341/HYD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2482 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-08-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S ARVINDHAKSHAN
• Assessee Lawyers: P N MURTHY
• Keywords: Unexplained cash credit; Salary income
• Section: 80C; 143(3); 68; 69; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 341/HYD/2017 ASSESSMENT YEAR:2010 - 11 PONNA SHIVA PRASAD, HYDERABAD. PAN: APWPP 3881 M VS. ITO, WARD - 12(4), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P.N. MURTHY REVENUE BY: SHRI R.S. ARVINDHAKSHAN, DR DATE OF HEARING: 20.08.2018 DATE OF PRONOUNCEMENT: 29 .08.2018 ORDER PER INTURI RAMA RAO, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 08.11.2016 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 1. HYDERABAD FOR THE ASSESSMENT YEAR 2010 - 11. APPELLANT RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT( APPEALS) IS ERRONEOUS IN SUSTAINING THE ADDITION OF RS. 19, 46,700/CONSIDERING THE AMOUNT AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE IT. ACT,1961, IN THE HANDS OF THE APPELLANT, THOUGH IT IS NOT EMANATING FROM THE BOOKS MAINTAINED BY TH E APPELLANT. THE AMOUNT WAS FOUND ONLY FROM THE APPELLANTS BANK STATEMENT WHICH ARE MAINTAINED BY HIS BANKER AND WHICH DOES NOT BELONG TO THE APPELLANT PER SE. 2. THAT THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED FOR MAKING AN ADDITION OF RS. 2,32,900/ - OU T OF RS. 19,46,700/ - , WHICH WERE IN THE NATURE OF TRANSFER ENTRIES THROUGH INTERNET BANKING MADE BY BANALA JAGADISH TO THE APPELLANT'S BANK ACCOUNT. 3. THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED BY MAKING AN ADDITION OF RS. SO RS. 2,03,500/ - , WHICH WERE CASH DEPOSITS MADE ON VARIOUS DATES, THE 2 AMOUNTS GIVEN BY HIS FATHER TO ENABLE TO PAY FOR THE APPELLANTS CREDIT CARDS PAYMENTS, WHICH WAS CLEARLY GIVEN IN THE WRITTEN SUBMISSION BY THE A.R ON 1 - 6 - 2016 BEFORE THE CIT(APPEALS). 4. THAT THE LEARNED CIT(APP EALS) IS ERRONEOUS IN COMING TO THE CONCLUSION THAT THE CASH DEPOSITS REFLECTED IN THE BANK ACCOUNT OF THE APPELLANT DOES NOT CORROBORATE WITH THAT OF THE MALAYSIAN BANK ACCOUNT OF SRI. B.JAGADISH , WHICH IS IN MALAYSIAN RINGGITS, EVEN THOUGH SRI. B.JAGADI SH ACCEPTED THAT CASH DEPOSITS BELONG TO HIM . HE HAS GIVEN A CONFIRMATION LETTER AT THE ASSESSMENT STAGE ITSELF. ALSO DURING THE APPEAL STAGE, HE HAS GIVEN HIS BANK ACCOUNT, MALAYSIAN BANKING BERHARD, WISMA,GENTING BRANCH, MALAYSIA IN SUPPORT TO HIS CONFI RMATION LETTER. OUT OF RS. 17, 43,200/ - A SUM OF RS. 2,32,900/ - WERE TRANSFERRED THROUGH INTERNET BANKING AND THEY ARE NOT CASH DEPOSITS. 5. THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED IN MAKING THE ADDITION DESPITE THE FACT THAT B.JAGADISH TRANSFERRED FU NDS TO THE TUNE OF RS. 15,10,300/ - TO THE ACCOUNT OF P.VENUGOPAL , WHO IS THE COMMON FRIEND OF THE APPELLANT AND B.JAGADISH. MR. P.VENUGOPAL IN TURN WITHDREW THE AMOUNT FROM HIS BANK ACCOUNT AND MADE CASH DEPOSITS IN THE ACCOUNT OF THE APPELLANT ON THE INS TRUCTIONS OF B.JAGADISH. EVEN THOUGH THE ICICI BANK ACCOUNT NUMBER 024301000614 OF P.VENUGOPAL WAS GIVEN TO HER JUST BECAUSE THE BANK ACCOUNT COPY WAS NOT PRODUCED BEFORE HER AT THE TIME OF APPEAL STAGE,SHE DID NOT ACCEPT THE CONTENTION, EVEN THOUGH THE AP PELLANT PUT HIS BEST EFFORTS FOR PROCURING THE BANK STATEMENT OF P.VENUGOPAL. 6. THE LEARNED CIT(APPEALS) DESPITE BEING GIVEN A CLEAR WRITTEN SUBMISSION, THAT THE APPELLANT WAS ONLY A SMALL TECHNOCRAT, WHOSE GROSS ANNUAL INCOME WAS RS. 3,61,672 FOR THE A.Y: 2010 - 2011. AFTER TAKING INTO ACCOUNT THE DEDUCTIONS' UNDER CHAPTER VIA - 80C, RS.98758/ - , HIS NET TAXABLE INCOME WAS RS. 2, 62,914/ - . THE APPELLANT HAS ACTED ONLY AS A CONDUIT FOR MR. B.JAGADISH AND MR. P.VENUGOPAL . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM SALARY. THE RETURN OF INCOME FOR THE A.Y. 2010 - 11 WAS FILED ON 02.06.2010 DECLARING A TOTAL INCOME OF RS. 2,62,914/ - . AGAINST THE SAID RETURN OF INCOME THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER, WARD - 12(4), HYDERABAD VIDE ORDER DATED 25.03.2015 PASSED U/S 143(3) OF THE ACT AT A TOTAL INCOME OF RS. 22,44,561/ - . WHILE DOING SO, THE ASSESSING OFFICER MADE ADDITION OF RS. 19,46,700/ - BEING THE CASH DEPOSITS IN THE SAVINGS BANK ACCOUNT HELD BY HIM IN THE ICICI BANK BY STATING THAT THE APPELLANT FAILED TO EXPLAIN THE SOURCES IN SUPPORT OF THE CASH DEPOSITS APART FROM DISALLOWANCE CLAIMED U/S 80C TO THE EXTENT OF RS. 3,145/ - FOR WANT OF EVIDENCE IN SUPPORT OF THE PAYME NT IN LIC PREMIUMS AND ALSO DISALLOWED HOUSE RENT ALLOWANCE (HRA) CLAIMED U/S 10 OF THE ACT TO THE EXTENT OF RS. 31,812/ - . 3 3. BEING AGGRIEVED, THE APPELLANT HAD FILED AN APPEAL BEFORE THE CIT(A), CHALLENGING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS AND DISALLOWANCE OF EXEMPTION OF HRA, WHO VIDE THE IMPUGNED ORDER DISMISSED THE APPEAL. IT WAS CONTENDED BEFORE THE LEARNED CIT(A) THAT OUT OF THE CASH DEPOSITS OF RS. 19,46,700/ - AN AMOUNT OF RS. 17,43,200/ - BELONGS TO ONE MR. BANALA JAGADISH, WHO WAS FRIEND OF THE APPELLANT WORKING IN MALAYSIA. FURTHER, A CONFIRMATION LETTER DATED 15.02.2013 FROM THE SAID B. JAGADISH WAS ALSO FURNISHED STATING THAT THE MONEY WAS DEPOSITED IN THE ACCOUNT OF THE APPELLANT FOR THE PURPOSE OF SEND ING THE SAME TO HIS PARENTS FOR CONSTRUCTION OF A HOUSE AT HIS NATIVE VILLAGE AND TO CLEAR THE DEBTS BORROWED AT THE TIME OF HIS SISTERS MARRIAGE. AS REGARDS THE BALANCE AMOUNT OF RS. 2,03,500/ - , THIS AMOUNT WAS DEPOSITED BY THE FATHER OF THE APPELLANT I N ORDER TO MAKE CREDIT CARD PAYMENTS OF THE APPELLANT. BUT THE LD. CIT(A) DISMISSED THE APPEAL ON THE GROUND THAT THE SAID EXPLANATION LACKS THE GENUINENESS AND THERE WAS NO EXPLANATION AS TO HOW THE CASH CAME TO BE D EPOSIT ED IN THE APPELLANTS ACCOUNT BY SOMEONE WHO IS NOT A RESIDENT IN INDIA , AND AS REGARDS THE ADDITION OF RS. 2,03,500/ - , THE CIT(A) CONFIRMED THE ADDITION ON THE GROUND THAT NO CONFIRMATION LETTER FROM THE FATHER OF THE APPELLANT WAS FURNISHED. THE GROUND RELATING TO THE DISALLOWANCE OF HRA WAS NOT PRESSED BEFORE THE CIT(A). THUS, THE APPEAL OF ASSESSEE CAME TO BE DISMISSED. 4. BEING AGGRIEVED, THE APPELLANT IS BEFORE US IN THE PRESENT APPEAL CHALLENGING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT OF RS. 19,46,700/ - . 5. LEARNED C OUNSEL FOR THE ASSESSEE ARGUED THAT THE CIT(A) OUGHT NOT TO HAVE CONFIRMED THE ADDITION OF RS. 19,46,700/ - AS A SUM OF RS. 2,32,900/ - WAS TRANSFERRED BY ONE MR. B. JAGADISH TO THE APPELLANTS ACCOUNT BY THE MODE OF ELECTRONIC TRANSFER THROUGH INTERNET BANK ING. IT IS FURTHER SUBMITTED THAT THE OUT OF THE CASH DEPOSITS MADE BY MR. B. JAGADISH AN AMOUNT OF RS. 15,10,300/ - WAS TRANSFERRED TO THE ACCOUNT OF MR. P. VENUGOPAL, WHO IN TURN DEPOSITED IN TO THE ACCOUNT OF THE APPELLANT , THAT EXPLAINS AS TO HOW THE CA SH DEPOSITS CAME TO BE MADE IN THE APPELLANTS ACCOUNT THOUGH THE SAID B. JAGADISH WAS IN MALAYSIA. IT IS FURTHER SUBMITTED THAT THE APPELLANT IMMEDIATELY WITHDRAWN THIS MONEY AND 4 GIVEN TO THE PARENTS OF MR. B. JAGADISH AND HE ALSO TOOK US THROUGH THE BAN K STATEMENTS OF THE APPELLANT AND THE STATEMENT OF BANK ACCOUNT TO SHOW THAT THERE ARE CORRESPONDING WITHDRAWALS. THUS, IT WAS SUBMITTED THAT THE MONEY DOES NOT BELONGS TO THE APPELLANT AND HE ACTED AS A CONDUIT FOR OPERATIONAL CONVENIENCE OF MR. B. JAGADI SH TO TRANSFER HIS MONEY TO THE FAMILY MEMBERS. HE ALSO CONTESTED THAT WHEN THE BOOKS OF ACCOUNTS ARE NOT MAINTAINED, THE QUESTION OF MAKING ADDITION U/S 68 OF THE ACT DOES NOT ARISE. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION OF ITAT DELHI IN T HE CASE OF DANVEER SINGH S/O BHAGAL SINGH VS. ITO [ 162 ITR (A) 745 (DEL - TRIB] . 6. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN THE ABSENCE OF THE SOURCE FOR THE DEPOSITS MADE IN THE APPELLANTS ACCOUNT BY MR. B. JAGADISH , WHO WAS A NON - RESIDENT INDIAN (NRI), THE EXPLANATION CANNOT BE SAID TO BE REASONABLE AND THEREFORE CANNOT BE ACCEPTED AND EXPLANATION NOW OFFERED IS ONLY AN AFTER THOUGHT AND THE SUBMISSIONS MADE BY THE APPELLANT CANNOT BE ACCEPTED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE IN THIS APPEAL IS WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE SAVINGS BANK ACCOUNT WITH ICICI IS JUSTIFIED. IT IS A TRITE LAW THAT IN THE ABSENCE OF PROPER EXPLANATION IN SUPPORT OF THE SOURCES FOR CASH DEPOSITS IN THE SAVINGS BANK ACCOUNT, THE ASSESSING OFFICER IS EMPOWERED TO MAKE ADDITION IF NOT UNDER THE PROVISIONS OF SECTION 68, UNDER THE PROVISIONS OF SECTION 69 OF THE ACT. THEREFORE, THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT IN THE ABSENCE OF BOOKS OF ACCOUNT NO ADDITION CAN BE MADE U/S 68 OF THE ACT IS NOT ACCEPTABLE. THE ADDITION CAN ALWAYS BE MADE BY RESORTING TO THE PROVISIONS OF SECTION 69 OF T HE ACT. THEN THE QUESTION THAT COMES UP FOR CONSIDERATION IS WHETHER THE EXPLANATION OFFERED BY THE APPELLANT IN SUPPORT OF THE SOURCES FOR THE CASH DEPOSITS CAN SAID TO BE SATISFACTORY. THE APPELLANT HAD OFFERED EXPLANATION STATING THAT THE CASH DEPOSIT S WHICH ARE MADE IN HIS SAVINGS BANK ACCOUNT BELONGS TO ONE MR. B. JAGADISH, WHO IS A RESIDENT OF MALAYSIA. IT IS AN UNDISPUTED FACT THAT THE SAID MR. 5 B. JAGADISH IS A RESIDENT OF MALAYSIA. THE SECOND LIMB OF THE SUBMISSION THAT THE PAYMENTS WERE MADE IN TO THE APPELLANTS ACCOUNT THROUGH ONE MR. VENUGOPAL, WHO IS A RESIDENT AND COMMON FRIEND OF BOTH THE APPELLANT AND MR. B. JAGADISH REQUIRES TO BE VERIFIED. THE EXPLANATION THAT THE CASH DEPOSITS WERE WITHDRAWN AND PASSED ON TO THE PARENTS OF THE SAID B. JAGADISH ALSO REQUIRES TO BE VERIFIED . O N VERIFICATION , IF IT IS FOUND THAT THE MONEY WAS ACTUALLY PASSED ON TO THE B. JAGADISH PARENTS, NO ADDITION IS REALLY CALLED FOR. IN THESE CIRCUMSTANCES, WE REMAND TH E CASE TO THE FILE OF THE A.O. FOR THE PURPOSE OF VERIFICATION OF THE ISSUES O N THE ABOVE LINES. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COUR T ON 29 TH AUGUST, 2018 . SD/ - SD/ - (P. MADHAVI DEVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 29 TH AUGUST, 2018 OKK COPY TO: - 1) P.N. MOORTHY, 1 - 8 - 518/16, CHIKKADAPALLY, HYDERABAD - 20. 2) ITO, WARD - 12(4), RANGE - 12, HYDERABAD. 3) THE CIT(A) - 1 , HYDERABAD 4) THE PR. CIT - 1 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE