Fehmida Kapdawala, Mandsaur V. The ITO (IT& TP), Bhopal

ITA 358/Ind/2022

AI Insights

The case involves appeals by Abedin Kapdawala and Fehmida Kapdawala against the orders of the CIT(A)-13, Ahmedabad, which sustained additions made by the ITO under Section 69A read with Section 115BBE of the Income Tax Act. The additions were made due to unexplained cash deposits of Rs. 25,09,297 and Rs. 24,75,860 respectively, noted during the demonetization period. The assessees, being Non-Resident Indians (NRIs), argued that the cash was withdrawn from their NRE accounts prior to demonetization and was kept for emergencies, which was later deposited. The Tribunal found the explanations insufficient and upheld the additions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122474 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-01-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 10-11-2022
• Other Referred Cases: ACIT vs. Siddhartha Bhargava, Pushpendra Singh vs. ITO, ITO vs. Vaneet Mittal
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 144; 2; 139; 142(1); 143(2); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE (CONDUCTED THROUGH VIRTUAL COURT) BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER & SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER I .T .A . N o s. 3 5 8 & 3 5 9 /I n d /2 0 2 2 ( A s se ss m e n t Y e a r : 2 0 1 7 - 1 8 ) A b e d i n K a p d a w a l a W a r d N o . 4 , A b h in a d a n C o lo n y, B u r h a n i N a g a r , M a n d sa u r , M a d h ya Pr a d e s h - 4 5 8 0 0 1 V s.I T O ( I T & T P) , B h o p a l, M a d h ya Pr a d e s h Fe h m id a K a p d a w a l a W a r d N o . 4 , A b h in a d a n C o lo n y, B u r h a n i N a g a r , M a n d sa u r , M a d h ya Pr a d e s h - 4 5 8 0 0 1 I T O ( I T & T P) , B h o p a l, M a d h ya Pr a d e s h PA N N o .B V Y P K 8 4 6 2 L / B U M P K 3 9 0 2 J (Appellant) .. (Respondent) Appellant by : Shri Vijay Bansal & Ms. Nisha Lahoti, C.A. Respondent by : Shri Ashish Porwal, Sr. D.R. D a t e o f H e a r i ng 04.01.2023 D a t e o f P r o no un c e m e nt 10.01.2023 O R D E R PER SUCHITRA KAMBLE - JM: Both the appeals are filed by the assessee against the order dated 31.08.2022 passed by the Ld. CIT(A)-13, Ahmedabad for A.Y. 2017-18. 2. The grounds of appeal raised by the assessee ITA No. 358/Ind/2022 read as under: “1. In the facts and in the circumstances of the case, Ld.CIT(A)-13, Ahmedabad erred in sustaining the order passed by Ld. ITO (IT&TP) passed u/s 144 which is contrary to the material on record and provisions of the Act, unjust and bad in law ITA Nos.358&359/Ind/2022 Abedin Kapdawala & Fehmida Kapdawala vs. ITO Asst.Year –2017-18 - 2 – 2. On the facts and circumstances of the case and applicable law, Ld. CIT(A)- 13, Ahmedabad erred in sustaining the addition made by Ld. ITO(IT&TP) u/s 69A rws 115BBE of Rs. 25,09,297 as unexplained money. 3. On the facts and circumstances of the case and applicable law, Ld. CIT(A)- 13, Ahmedabad erred in sustaining addition of Rs. 25,00,000 made u/s 69A rws 115BBE towards deposit of cash made in the NRO bank account of the assessee without considering the fact that assessee is a Non-Resident Indian having no source of income in India. 4. On the facts and circumstances of the case and applicable law, Ld. CIT(A)- 13, Ahmedabad erred in sustaining addition made u/s 69A r.w.s. 115BBE of Rs. 9,297 made on account of interest credited in the NRE bank account of the assessee. 5. On the facts and circumstances of the case and applicable law, Ld. CIT(A)- 13, Ahmedabad erred in sustaining addition u/s 69A rws 115BBE of RS. 9,297 made on account of interest NRE bank account of the assessee more particularly when the said interest income is exempt in view of the provisions of section 10(4)(ii). 6. On the facts and circumstances of the case and applicable law, Ld. CIT(A)- 13, Ahmedabad erred in sustaining the addition made u/s 69A rws 115BBE of Rs. 25,09,297 without considering the written submission and documentary evidences placed on record in proper perspective. 7. On the facts and circumstances of the case and applicable law, Ld. ITO(IT&TP) erred in applying the provisions of section 115BBE for computing the tax on the addition made u/s 69A of Rs. 25,09,297/-. 8. On the facts and circumstances of the case and applicable law, Ld. CIT(A)- 13, Ahmedabad erred in initiating assessment proceedings without issuing any notice u/s 143(2) which is without assuming jurisdiction. 9. The appellant craves leave to add, amend, alter or otherwise raise any other ground of appeal.” 3. The grounds of appeal raised by the assessee ITA No. 359/Ind/2022 read as under: “1. In the facts and in the circumstances of the case, Ld. CIT(A0-13, Ahmedabad erred in sustaining the order passed by Ld. ITO(IT&TP) passed u/s 144 which is contrary to the material on record and provisions of the Act, unjust and bad in law. 2. On the facts and circumstances of the case and applicable law, Ld. CIT9A)- 13, Ahmedabad erred in sustaining the addition made by Ld. ITO(IT&TP) u/s 69A rws 115BBE of Rs. 24,75,860/- as unexplained money. ITA Nos.358&359/Ind/2022 Abedin Kapdawala & Fehmida Kapdawala vs. ITO Asst.Year –2017-18 - 3 – 3. On the facts and circumstances of the case and applicable law, Ld. CIT(A)- 13, Ahmedabad erred in sustaining addition of Rs. 15,20,000/- made u/s 69A rws 115BBE towards deposit of cash made in the NRO bank account of the assessee without considering the fact that assessee is a Non-Resident Indian having no source of income in India. 4. On the facts and circumstances of the case and applicable law, Ld. CIT(A)- 13, Ahmedabad erred in sustaining addition made u/s 69A rws 115BBE of Rs. 9,55,864/- made on account of all credit entries appearing in the NRE bank account of the assessee during the relevant assessment year. 5. On the facts and circumstances of the case and applicable law, Ld. CIT(A)- 13, Ahmedabad erred in sustaining the addition made u/s 69A rws 115BBE of Rs. 24,75,860/- without considering the written submission and documentary evidences placed on record in proper perspective. 6. On the facts and circumstances of the case and applicable law, Ld. CITO(IT&TP) erred in applying the provisions of section 115BBE for computing the tax on the addition made u/s 69A of RS. 24,75,860/-. 7. On the facts and circumstances of the case and applicable law, Ld. CIT(A)- 13, Ahmedabad erred in initiating assessment proceedings without issuing any notice u/s 143(2) which is without assuming jurisdiction. 8. The appellant craves leave to add, amend, alter or otherwise raise any other ground of appeal.” 4. Notice under Section 142(1) was issued on 24.02.2018 but the assessee failed to furnish return of income for A.Y. 2017-18 either under Section 139 on or before 31.03.2018 and failed to furnish income tax return in response to notice issued under Section 142(1) of the Act. Further, show- cause notice under Section 144 was issued to the assessee but the same was not answered and thereafter questionnaire alongwith notice under Section 142(1) was issued for final hearing on 05.12.2019 which was also remained unanswered. The Assessing Officer observed that on the basis of data analytics and information gathered during the phase of online verification under ‘Operation Clean Money’, the Income Tax Department gathered a list of assessees who had deposited substantial cash in bank accounts during the ITA Nos.358&359/Ind/2022 Abedin Kapdawala & Fehmida Kapdawala vs. ITO Asst.Year –2017-18 - 4 – demonetization period i.e. 09.11.2016 to 30.12.2016. But the assessee did not file income tax return for A.Y. 2017-18. The data reveals that the assessee Smt. Fehmida Abedin Kapdawala and her husband Shri Abedin Kapdawala deposited cash of Rs. 15,20,000/- and 20,00,000/- respectively during the demonetization period in old currencies. Since the assessee has not responded the Assessing Officer made addition of Rs. 24,75,864/- under Section 69A of the Income Tax Act as unexplained money alongwith Rs. 25,09,297/- under Section 69A in the hands the husband of the assessee. 5. Being aggrieved by the assessment orders both the assessees filed respective appeals before the CIT(A). The CIT(A) observed that to justify that this cash withdrawals are source of deposit during the demonetization, the assessee have come out with an argument that this cash was kept with the daughters, but the purported withdrawals were made more than 4 years back and the explanation does not sound plausible as the assessee and her husband both are NRI and it does not show any exigency upon for which the assessee and her husband has withdrawn such huge amount prior to 4 years period of demonetization. Therefore the Ld. CIT(A) partly allowed the appeal of the assessee. 6. The Ld. A.R. submitted that the CIT(A) never considering the additional evidences filed before the CIT(A). The Ld. A.R. submitted that the assessee is NRI and he was not in India during the course of assessment proceedings. The notices and the communication of the Assessing Officer were mentioning the old address, moreover, the assessee visit India very occasionally once or twice in a year for very short duration of time and therefore, the assessee could not receive any communication of the ITA Nos.358&359/Ind/2022 Abedin Kapdawala & Fehmida Kapdawala vs. ITO Asst.Year –2017-18 - 5 – Assessing Officer and therefore, he could not reply to the notices of the Assessing Officer. The Ld. A.R. further submitted that the assessee and his wife are more than 70 years and are not conversant with the legal provisions of Income Tax Act. Since last 50 years the assessee and his wife are NRI. Therefore, could not take notices of emails and e-proceedings but it is the only occasion when the bank official informed that Assessing Officer had recovered Rs. 25,09,297/- from his NRO account only then he approached to the counsel and the appeal filed before the CIT(A). The Ld. A.R. submitted that the assessee explained the source of cash deposit during demonetization period the assessee has withdrawn Rs. 10,00,000/- on 08.04.2013 and Rs.40,00,000/- on 09.04.2013 from his NRE Account. The NRE account is an account that is used by person not resident in India, to transfer foreign earnings to India earned in foreign currency. Out of the total cash withdrawn only the assessee did not incur any major expenses or bought any property. At the time of withdrawal in 2013, the assessee was already 59 years of age, she removed the cash and kept it in safekeeping of her daughters for it to be utilized in case of any medical or other emergency. The assessee also kept this amount in India for the expenditure like religious and other social obligations and expenditure to be incurred at the time of visit in India. Since the assessee had sufficient money in her account for meeting business related expenditures in Dubai the appellant used to incur some expenditure out of this amount. At the same time the assessee used to bring some cash in hand by exchange of currency at immigration and unused cash accumulated therewith. The Ld. A.R. further submitted that the assessee deposited of Rs. 5,00,000/- on 26.10.2016 of the above cash in hand prior during his visit to India in his NRO account. However, ITA Nos.358&359/Ind/2022 Abedin Kapdawala & Fehmida Kapdawala vs. ITO Asst.Year –2017-18 - 6 – demonetization scheme was declared in India on 08.11.2016 and the assessee was in compulsion to deposit the unutilized cash amount in his bank account, otherwise the cash in hand would remain unutilized balance of cash in hand with the assessee. The source of cash deposited of Rs. 5,00,000/- on 26.10.2016 and Rs. 20,00,000/- on 10.11.2016 is out of earlier withdrawal from NRE account made in April 2013 and out of past savings. The Ld. A.R. submitted that there was no other source of cash deposited as the assessee has no other source of income in India. It would only be repatriated to NRE account from earning in Dubai. The Ld. A.R. pointed the summary of cash book. The Ld. A.R. relied upon the decision of Tribunal in case of ACIT vs. Siddhartha Bhargava in ITA No. 2508/Kol/2017 order dated 22.11.2019, Pushpendra Singh vs. ITO, ITAT Agra order dated 22.03.2019, ITO vs. Vaneet Mittal, ITAT Chandigarh order dated 22.10.2021. Thus, the Ld. A.R. submitted that the source of cash deposit during demonetization period and prior to demonetization period is fully explainable, and therefore, the addition under Section 69A is unjust and against the facts of the case. The Ld. A.R. further submitted that the Assessing Officer erred in assessing the said amount under Section 69A as the explanation was properly given by the assessee before the CIT(A). 7. The Ld. D.R. submitted that the explanation of withdrawal of cash in the year 2013 for medical exigencies or any religious purpose was not thoroughly explained by the assessee before the CIT(A) as well as before the Assessing Officer. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). ITA Nos.358&359/Ind/2022 Abedin Kapdawala & Fehmida Kapdawala vs. ITO Asst.Year –2017-18 - 7 – 8. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the explanation offered by the assessee before the CIT(A) was that the source of cash was that of his business and its NRE account but the said source was of 2013 which was explained and the reasons of those cash given to their daughter appears to be the explanation per se and not actual explanation. The assessee has not given any details regarding any past medical exigencies or any religious activities carried out by the assessee or their daughters who are living in India. Deposit the amount of Rs. 5,00,000/- on 18.10.2016 cannot be the sole criteria for allowing the said cash deposits. The source the genuinity the actual explanation was never before the Assessing Officer as well as before the CIT(A). Therefore, the CIT(A) after taking cognizance of all the aspects including the affidavit of the daughter has rightly made addition. There is no need to interfere with the findings of the CIT(A) in both the assessee’s cases. Hence, both the appeals are dismissed. 9. In the result, both the appeals are filed by the assessee are dismissed. This Order pronounced in Open Court on /01/2023 Sd/- Sd/- Sd/- Sd/- (BHAGIRATH MAL BIYANI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 10 /01/2023 TANMAY, Sr. PS TRUE COPY O r d e r p r o n o u n c e d o n 1 0/01/ 2 0 23 b y p l a c i n g t h e r e s u l t o n t h e N o t i c e B o a r d a s p e r R u l e 3 4 ( 4 ) o f t h e In c o m e T a x ( A p p e l l a t e T r i b u n a l ) R u l e , 1 9 6 3 . ITA Nos.358&359/Ind/2022 Abedin Kapdawala & Fehmida Kapdawala vs. ITO Asst.Year –2017-18 - 8 – आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Indore 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, (Sr. Private Secretary) ITAT, Indore 1. Date of dictation 05.01.2023 2. Date on which the typed draft is placed before the Dictating Member 06.01.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S .01.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .01.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S .01.2023 7. Date on which the file goes to the Bench Clerk .01.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................