Krishnika Asawa, Jabalpur V. Income Tax Officer WArd 2(3) , Jabalpur

ITA 45/JAB/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0127 (ITAT-JABALPUR)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 13-10-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Business income
• Section: 68; 143(3); 69A

Judgement Text

ITA No. 45/Jab/2021(AY 2017-18) Krishnika Asawa v. ITO 1 IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BENCH, JABALPUR (SMC) (through Virtual Hearing) BEFORE SH. SANJAY ARORA, HON'BLE ACCOUNTANT MEMBER ITA No.45/JAB/2021 Assessment Year: 2017-18 Krishnika Asawa, Jabalpur (M.P.) [PAN: AWAPA 3567C] vs. Income Tax Officer Ward-2(3), Jabalpur (Appellant) (Respondent) Appellant by Sh. Rahul Bardia, FCA Respondent by Sh. S.K. Halder, Sr. DR Date of hearing 22/12/2021 Date of pronouncement 17/01/2022 ORDER Per Sanjay Arora, AM This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (‘CIT(A)’ for short) dated 14/9/2021, dismissing the assessee’s appeal contesting her assessment under section 143(3) of the Income Tax Act, 1961 (‘the Act’ hereinafter) for the Assessment Year (AY) 2017-18 vide order dated 31/10/2019. 2. The appeal raises a single issue, i.e., the maintainability or otherwise in law of an addition in the sum of rs.2,47,000, being the cash deposited by the assessee in her bank account during the relevant previous year, on account of unsatisfactory explanation as to the nature and source thereof, i.e., in the facts and circumstances of the case. ITA No. 45/Jab/2021(AY 2017-18) Krishnika Asawa v. ITO 2 The Law 3. An explanation being a statement of fact/s and circumstance/s, the satisfactory or otherwise nature thereof is principally a matter of inference qua the truth of the explanation, drawn on a conspectus of the case, comprising the factual back ground of the case, i.e., the primary and secondary facts, admitted or proved. The same is to be, as per the law settled by the Apex Court, on the three parameters of identity and capacity (of the creditor or the source) and the genuineness of the transaction. The respective cases 4.1 In the facts of the case, the assessee, admittedly a student till a year ago, explained the cash deposit to be out of the cash available with her as at the beginning of the year (rs.1,97,500); that drawn from bank (rs.66,000) since, i.e., up to 08.11.2016, the date immediately before the demonetization period; and rs.98,830, stated as earned by way of tuition income, aggregating to rs.3,62,330 (as on 08.11.2016/PB pgs. 39-41), of which rs.2.47 lacs was deposited with bank on 19.12.2016. Though there is no explanation as to why, where so, the balance cash admittedly available with her, i.e., rs.1,15,330, was not similarly deposited, on record, Shri Bardia, the ld. counsel for the assessee, would, on asking, explain the same as held in smaller denomination notes (being for rs.5, 10, 20, 50 and 100), which were not demonetized and, thus, continued to be legal tender, so that there was no need to deposit the same with the bank. The explanation for the cash retention (i.e., at rs. 3.62 lacs) was stated to be for incurring expenditure on her impending marriage, which was to be and, accordingly, solemnized on 08.12.2016. In fact, the assessee belonging to a reputed and established business family of Jabalpur, a total of rs.11.29 lacs was received cash by way of gifts on her marriage, and which explains the balance cash deposit of rs.8 lacs on 19.12.2016, all in new (or un-demonetized) currency, being with PNB (rs.6.00 lacs) and Axis Bank (rs.2.00 lacs), ITA No. 45/Jab/2021(AY 2017-18) Krishnika Asawa v. ITO 3 information of which had been duly submitted on the e-portal (of the Department) on 07.02.2017, i.e., much before the commencement of the assessment proceedings for the current year. There has been thus no misstatement or suppression of facts by the assessee at any stage. This sums up the assessee’s case on the merits of her explanation. 4.2 The Revenue, which has not questioned the deposit of cash in new currency, i.e., rs.8.00 lacs, admittedly out of cash gifts received in marriage (rs.11.29 lacs), has not regarded the assessee’s explanation qua the balance cash deposited rs.2.47 lacs as acceptable in view of the non-satisfactory explanation for the cash generation and, further, a complete absence of any cash deposit with the bank, either before or after the demonetization period (from 8.11.2016 to 31.12.2016). All the incomes arising to the assessee, stated to be an assessee for long, for the preceding years as well as the current year, are through the banking channel, with no cash implication, save the tuition income, returned for the first time for the current year, which is again wholly un-evidenced. There was thus no reason to hold cash. Why, the assessee’s first explanation, on being show caused in the matter, was that she cannot be questioned as the Government had itself declared that cash deposit/s up to rs.2.50 lacs (during the demonization period) would be accepted without question. The explanation being now furnished is only on it being subsequently clarified that she was not covered by the said pronouncement as she had business income and, further, her total cash deposits during the demonetization period, at rs. 10.47 lacs, exceeded rs.2.50 lacs. Her entire case, thus, is an after-thought and, no wonder, unsubstantiated, based on self-serving statements. This sums up the Revenue’s case. Discussion/Findings 5.1 My first observation in the matter is that the period 08.11.2016 to 31.12.2016, typically termed as ‘the demonetization period’, was a period of ITA No. 45/Jab/2021(AY 2017-18) Krishnika Asawa v. ITO 4 great anxiety in the society, particularly for the business community, as people were anxious to deposit their money (demonetized currency notes), now no longer legal tender, with the banks, which had been authorized to accept the same (as well as release new currency). This was as not so doing – for which the period up to 31.12.2016 had been specified, would imply a total loss of their money represented by old currency. Furthermore, assessees running businesses required cash in new currency to run the same, as indeed did people at large for their households. The banks, deluged with depositors as well as withdrawers, had laid limits to both the cash deposit (of old currency) and withdrawal (of new currency). It is amid such tumultuous and uncertain times, marked by frantic attempts by all – assessees and non-assessees, to somehow protect their wealth (represented by currency notes), devising ways and means for the same as well as to manage their affairs, that the assessee receives as much as rs.11.29 lacs in new currency notes! Incredulous indeed. Equally perplexingly, there is no whisper of the expenditure incurred on marriage – explained to be by the assessee’s parents, inasmuch as the same could only be in new currency notes, i.e., other than of course through the banking channel, not shown. Though the said cash, stated as received as gift in marriage, being in new currency, is not hit by demonetization, that is of no consequence as far as the nature and source thereof with the assessee is concerned, who is therefore bound to satisfactorily explain it u/ss. 69/69A. As explained in Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), the genuineness of a credit transaction, signifying the receipt of money, a prima facie evidence as to income, is to be viewed considering the surrounding circumstances and the test of human probabilities. It is therefore extremely surprising that the Revenue chose not to question the stated source of cash, i.e., rs.8 lacs (deposited in bank during the demonetization period); rs. 3 lacs (deposited thereafter), as well as that stated held as at the year-end (rs. 1.20 lacs/PB pg. 42), not to account for that accounted elsewhere, all being sourced to the cash gifts in marriage. Though, sure, of no particular significance as far as ITA No. 45/Jab/2021(AY 2017-18) Krishnika Asawa v. ITO 5 the impugned addition is concerned, when juxtaposed with her first explanation, i.e., that she could not be legally questioned qua old currency deposited in bank as the same is below rs.2.50 lacs, it puts things in perspective, lending credence to the Revenue’s inference of the assessee’s case being only an afterthought. The same gets also corroborated by the fact that the cash deposited in old currency is within touching distance of rs.2.50 lacs, i.e., the monetary limit stated to not attract any enquiry and, thus, perceived as safe. The holding of the balance cash, admittedly available in old currency notes (of lower denomination) as on 08/11/2016, i.e., rs.1.15 lacs, is again not comprehensible. One can understand a cash holding therein at rs. 10,000-15,000, particularly considering the non-spending or non-utilization thereof at any stage, so that the same gets explained only in relation to the quantum of the cash deposited, i.e., provides the reason for the same being kept just below the safe limit of rs. 2.50 lacs. Further still, the reason for cash accumulation by the assessee has been stated as for incurring expenditure on her impending wedding. The same again lacks credibility. Firstly, the same would at best explain the non-deposit of cash generated during the year (01.4.2016 onwards), and not of that available before that date (rs. 2 lacs), as she could not be attributed with prescience to know her wedding date at that time. What, one may ask, in any case prevented the assessee to deposit cash in bank, withdrawing it as and when, and to the extent, required. The same is also inconsistent with the withdrawal of cash during the year, even as no cash, either stated as held as on 01/4/2016 or withdrawn thereafter, has been shown spent by her on her marriage on 08/12/2016. 5.2 I may next proceed to examine the assessee’s explanation on merits, i.e., from the stand point of the stated source of the cash claimed as available as on 08.11.2016. There is firstly nothing on record to substantiate the source of the cash stated as available on 31.3.2016. As afore-noted, all the incomes arising to the assessee in the past were through the banking channel. Though Shri Bardia ITA No. 45/Jab/2021(AY 2017-18) Krishnika Asawa v. ITO 6 would during hearing explain the same to be, therefore, withdrawn from bank, there is nothing on record to exhibit the same. That is, while that may well be true, the fact of the matter is that there is nothing on record to evidence the same, and which cannot be a matter of presumption. All that the assessee was required to do was to produce bank passbook for the earlier year/s or even the cash book for that period, as the same would have presumably correctly recorded the source (of cash-in-hand), producing the bank pass-book on being required to do so by the Revenue. Further, the cash withdrawn from bank could not possibly be for the sake of it, and would only be for meeting expenses in cash. A nominal retention of ten to twenty thousand could be regarded as reasonable in the given facts and circumstances, i.e., no cash utilization, or need therefor, with all her needs being, as stated, met by her parents. A cash book records the source of cash, and is by itself not an evidence of its source, so that the very fact that it’s reflects cash-in-hand, is by itself no proof of its source. Rather, the assessee maintaining cash-book, ought to be able to, with reference thereto, state the source, as well as exhibit it. This, it may be noted, becomes all the more pertinent as, admittedly, none of the incomes returned for the preceding years were received in cash, even as observed by the AO. Bank pass-book for the preceding year/s or even the cash book for the same has been, as afore-noted, not produced at any stage. No credit in its respect could therefore be allowed, i.e., in the absence of any evidence. Further, even so, the question that remains to be answered is why should cash be kept on being withdrawn? This is as nobody would normally withdraw cash only for accumulating it. No amount whatsoever has been spent in cash, i.e., either for personal or business purposes, so that there is no cash consumption at all. Despite this, she nevertheless keep withdrawing cash, accumulating rs.2 lacs (approx.) up to 31.3.2016, and rs.3.62 lacs by 08.11.2016. This is bizarre. Why would one withdraw cash without any reason to do so, as evident from the fact of non-expenditure of any sum, leave alone in ITA No. 45/Jab/2021(AY 2017-18) Krishnika Asawa v. ITO 7 cash, during the last three years (PB pgs. 42 - 47). This becomes all the more quizzical considering that all her needs are being met – as explained by Sh. Bardia during hearing, by her parents and, further, withdrawing cash from bank, in which she maintains a tidy balance, is now a matter of minutes, as indeed has been the case in the instant case, with the assessee withdrawing through ATMs. The only explanation for the cash withdrawal during the current year could be for its utilization or anticipated utilization. The second stated source for cash is the tuition income, explained to be received from six students preparing for their CS December, 2016 exams, @ rs.20,000/- each. The assessee is stated to be a qualified Company Secretary. However, when asked about when she graduated – there being nothing on record which states so, met with no definite answer. That apart, no details, viz. the subjects she taught; the period, etc. stand furnished at any stage. Even as much as the names of the students taught are conspicuous by their absence. There is, thus, nothing to evidence the cash available with the assessee on 08.11.2016 other than that withdrawn from bank during the relevant year prior to that date (PB pgs. 25 – 31). Even the date of cash deposit in bank is also very relevant, being forty days after start of the demonetization period. If she indeed had cash, she would have not waited for till after her wedding, for which cash was explained to be accumulated, to deposit the same. The other reason to disbelieve the assessee’s statement is the extent of balance cash not deposited. This is if she indeed had the stated cash, she would have deposited the entire of it. It is incredulous to say that rs. 1.15 lacs was held in lower denomination notes, particularly considering that the stated source thereof is withdrawal from bank. This, it may be though clarified, is of no moment as the addition made is only in respect of the cash deposited, which is in demonetized currency. 5.3(a) Viewed from any angle, thus, the assessee’s explanation is phony. Not only there is no evidence as to source (other than withdrawal from bank during ITA No. 45/Jab/2021(AY 2017-18) Krishnika Asawa v. ITO 8 the current year), there is also no explanation for holding the same. Equally discrediting of her explanation is the time of deposit; it being also doubtful if she was in Jabalpur on 19.12.2016, the date of deposit inasmuch as she is stated to have left Jabalpur immediately after her marriage on 08.12.2016, which is also cited as the reason for an affidavit qua cash deposit having been furnished by her father (also see sub-para (b) below). The cash withdrawal of rs. 66,000 during the year (prior to 09/11/2016) is undisputed. No part of it; the last withdrawal being at rs. 10,000 on 30/7/2016, however, can be regarded as held on 08/11/2016, considering her forthcoming marriage for which cash is stated to be withdrawn. In fact, the entire withdrawal is from April to July, 2016, at Mumbai – to which place there is no reference in the assessee’s explanation, from her accounts with PNB & Axis Bank, making it clear that the full facts in relation to the same have not been stated/clarified. No credit in its respect could thus be allowed. The assessee’s explanation for the impugned cash deposit has in my view been therefore rightly regarded as unsatisfactory by the Revenue, finding her case as wholly unevidenced. (b) The assessee has also raised two legal pleas, for the first time before the Tribunal, which are accordingly being considered. It is contended that the affidavit of the assessee’s father (dated 10.10.2019), stating that no cash had been deposited (on 19.12.2016) in old currency, found false, could not be held against the assessee as he was not cross-examined. In fact, the said affidavit stood retracted on 14.10.2019, stating that some of it may have been in old currency. In this regard, even as observed during hearing, what value the said affidavit when it is an undisputed fact that cash (in old currency) at rs.2.47 lacs was deposited in bank on 19.12.2016, and toward which the assessee had in fact also furnished a disclosure on 07.02.2017 (PB pgs. 36-38). Nothing, thus, turns on the said affidavit, apart from speaking very poorly of the assessee’s father, ITA No. 45/Jab/2021(AY 2017-18) Krishnika Asawa v. ITO 9 who issued the statement without confirming the facts. In fact, the affidavit being admittedly and materially incorrect, the argument is also without merit. (c) The second legal argument raised is that as the cash deposited with bank stands duly recorded in the assessee’s books of account, no addition u/s. 69A could be made. The contention is untenable on two counts. First, where recorded in account books, it is the truth of those entries that section 68 requires the assessee to prove. And, where not, section 69/69A, likewise, requires an assesssee to prove the nature and source of an asset found, as against the sum credited, signifying receipt, that he is required to explain u/s. 68. The two sections are thus in pari materia, and it would therefore matter little whether the books of account are maintained or not as either way an assessee is required to explain the nature and source of the sum under reference. Though that represents trite law, reference in this regard be usefully made to CIT v. Jauharimal Goel [2005] 147 Taxmann 448 (All). As explained in CIT v. Kamaraja Pandian [1984] 150 ITR 703 (Mad), the genuineness of a credit transaction is to be, in view of section 68, established by the assessee inspite of entries to that effect in his books of account. The second reason, which may not be required to be dilated upon in view of the first, is if a compilation of bank entries, in any case available in the form of bank account statement, could by itself, i.e., without any supporting documents, be regarded as valid books of account in law. The accounts, as noted, do not reveal the activity being pursued by the assessee, much less of it being at Mumbai, or the purpose for which cash is/was being withdrawn (in installments of rs. 4,000 to rs. 10,000) and accumulated, much less thereat. In the context of the case, it rather also raises the question if the cash withdrawn during earlier years, assuming so, was also at Mumbai and, where so, its relevance. ITA No. 45/Jab/2021(AY 2017-18) Krishnika Asawa v. ITO 10 6. In the result, the assessee’s appeal is dismissed. Order pronounced in the Open Court on January 17, 2022 Sd/- (Sanjay Arora) Accountant Member Dated: 17/01/2022 * Aks Copy of the Order forwarded to: 1. The Appellant: Krishnika Asawa, 1200, Nagpur Road, Madan Mahal, Jabalpur – 482001, MP. 2. The Respondent: Income Tax Officer, Ward-2(3), Annexe Building, Mission Chowk, Jabalpur - 482001 3. The Pr. CIT-1, Jabalpur 4. The CIT(Appeals), National Faceless Appeal Centre, Delhi 5. The Sr. DR, ITAT, Jabalpur 6. Guard File // True Copy //