Puttappa T.K , Bangalore V. Income Tax Officer Ward-2(3)(1), Bangalore

ITA 547/BANG/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6684 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 17-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift
• Section: 68; 69; 69B

Judgement Text

ITA No.547/Bang/2019 Puttappa T.K., Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “C’’BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA No.547/Bang/2019 Assessment Year: 2012-13 Puttappa T.K., No.4/2, No.6-68/2, Mahadeshwara Nilaya 6 th Cross Nagappa Street Guttahalli Bengaluru 560 003 PAN NO :BCJPP5990C Vs. ITO Ward-2(3)(1) Bangalore APPELLANT RESPONDENT Appellant by : Smt. M.R. Vanaja, A.R. Respondent by : Shri Sankar Ganesh K., D.R. Date of Hearing : 09.03.2022 Date of Pronouncement : 17.03.2022 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: The assessee has filed this appeal challenging the order dated 19.12.2018 passed by Ld. CIT(A)-2, Bengaluru and it relates to the assessment year 2012-13. All the grounds urged by the assessee are aggrieved by the decision of Ld. CIT(A) in confirming the various additions made by the A.O. 2. The facts relating to the case are stated in brief. The assessee is an advocate. He filed its return of income for the year under consideration on 5.1.2013 declaring total income of Rs.2,15,720/-. ITA No.547/Bang/2019 Puttappa T.K., Bangalore Page 2 of 9 The A.O. received AIR information to the effect that the assessee has deposited cash of Rs.36 lakhs into State Bank of Mysore, Bengaluru. The A.O., however, noticed that the assessee has made cash deposits aggregating to Rs.89,60,022/- in various bank accounts and has also made fixed deposit to the tune of Rs.19 lakhs during the financial year under consideration. Accordingly, during the course of assessment proceedings, the A.O. asked the assessee to explain the sources for making deposits. After considering the replies given by the assessee, the A.O. held that a sum of Rs.22 lakhs was not explained properly. With regard to the above said amount of Rs.22 lakhs, the assessee had stated that he had given loans to certain persons in the earlier years and the same has been repaid to the assessee during the year under consideration. The details of Rs.22 lakhs are given below:- Repayment of loan given earlier: a. B.P. Manjunath - Rs.2,50,000/- b. H.K. Chaitanya - Rs.2,48,400/- c. H.M. Mahesha - Rs.2,58,400/- Rs.7,56,800/- d. Venkataramana - Rs.4,50,000/- e. H. Nagaraja - Rs.3,43,200/- f. Ningamma - Rs.3,25,000/- g. K. Lakshmi - Rs.3,25,000/- Rs.14,43,200/- Rs.22,00,000/- Accordingly, the AO added the above said amount of Rs.22.00 lakhs to the total income of the assessee. 3. The A.O noticed that the assessee has filed the return of income for the assessment year 2011-12 & 2012-13 for the first time on 5.1.2013. The A.O. noticed that the assessee has shown huge amount as opening capital as on 1.4.2010. For the sake of ITA No.547/Bang/2019 Puttappa T.K., Bangalore Page 3 of 9 convenience, we extract below the capital account pertaining to AY 2011-12 and 2012-13:- Capital account F.Y. 2010-11* (A.Y. 2011-12) F.Y. 2011-12 (A.Y. 2012-13) Opening balance 45,45,151 48,44,051 (+) Net profit 2,24,900 2,82,059 (+) Agricultural income 2,75,000 2,75,000 50,45,051 54,01,110 (-) Drawings 2,01,000 2,03,600 48,44,051 51,97,510 (*) As per para 4 of assessment order in page 4) Hence the AO asked the assessee to prove sources of the capital balance introduced by him. The assessee submitted that he had accumulated balance of his past professional and agricultural income and furnished details. It was submitted that the agricultural operations were looked after by his father in law and brother in law, who handed over money to him every year. He also claimed to have received gifts from his father and during his wedding. Accordingly, the assessee gave break up details of opening balance of Rs.45,45,151/- as on 1.4.2010. The AO examined those details and did not accept the explanations given by the assessee. Accordingly, the AO added a sum of Rs.47,95,000/- out of the sources explained by the assessee. The details of addition made by the AO in this regard are tabulated below:- Amounts received from father of the assessee Rs.10,70,000 Amounts received from Shri T.S. Srinivasa Gowda father-in-law of the assessee Rs.18,00,000 Amounts received from Shri T.K. Satisha, brother-in-law of the assessee Rs.16,25,000 Wedding gifts received Rs.3,00,000 Rs.47,95,000 4. The Ld. CIT(A) dismissed the appeal of the assessee. We notice from the order passed by the Ld. CIT(A) that the first appellate authority has adjudicated the grounds relating to the ITA No.547/Bang/2019 Puttappa T.K., Bangalore Page 4 of 9 addition of Rs.22 lakhs only. He has not adjudicated the ground relating to the addition of Rs.47,95,000/-. 5. We heard the parties and perused the record. We shall first take up the issue of addition of Rs.47,95,000/- referred above. The A.O. has made this addition on the ground that the assessee was not able to explain the sources for the opening capital balance of Rs.45,45,151/- introduced by the assessee as on 1.4.2010. The present appeal pertains to the assessment year 2012-13 relevant to the financial year 1.4.2011 to 31.3.2012. We earlier noticed that the assessee has filed return of income for the immediately preceding year i.e for assessment year 2011-12, which pertains to the financial year 1.4.2010 to 31.3.2011. The closing balance as on 31.3.2011 disclosed in the return of income filed for assessment year 2011-12 has been carried forward to the current year as opening balance of capital. Hence, so far as the opening balance of capital of the current year i.e. opening balance as on 1.4.2011, the same would get support from the return of income filed by the assessee for assessment year 2011-12, i.e., the opening balance of capital as on 1.4.2011 stands proved by the return of income filed for the immediately preceding year. 6. We noticed earlier that the A.O. has asked for sources of opening capital as on 1.4.2010, which pertains to the assessment year 2011-12. There is no dispute that the assessee has filed return of income for assessment year 2011-12. Hence, the explanations called for the opening capital balance as on 1.4.2010 would pertain to assessment year 2011-12 and not to the year under consideration. In that case, if the A.O. was not satisfied with the explanations given with regard to sources of opening capital introduced on 1.4.2010, the cause of action, if any, shall arise only ITA No.547/Bang/2019 Puttappa T.K., Bangalore Page 5 of 9 in assessment year 2011-12 and not in AY 2012-13. Since each year is different, the deficiency, if any, pertaining to A.Y. 2011-12 cannot be made good in determining the total income for A.Y. 2012- 13. Hence, on this principle alone, the AO was not justified in making addition of Rs.47,95,000/- in A.Y. 2012-13. Accordingly, we direct the A.O. to delete the addition of Rs.47.95 lakhs, whose breakup detail is given in the paragraph no.3 above. We order accordingly. 7. We shall now take up the issue relating to the addition of Rs.22 lakhs. The assessee had explained before the A.O. that he had given hand loans to certain persons in the earlier years and they have returned back the money aggregating to Rs.22 lakhs during the year under consideration. In the absence of any evidence, A.O. made the addition and the same was confirmed by Ld. CIT(A). 8. We notice that the explanations given by the assessee with regard to the sources of cash deposits made into the bank accounts have been tabulated by the A.O. at page 2 of the assessment order. The AO has accepted certain explanations and made the addition aggregating to Rs.22 lakhs, the break-up details of which were given in an earlier paragraph. We notice that the assessee has offered following explanations with regard to the deposit of Rs.6,90,000/- made by him on 21.2.2012:- “Rs.6,90,000/-. The assessee had received Rs.5,43,200/- from the parties to whom advances were given as on 31.3.2011. He has also received Rs.9,00,000/- from parties who were grouped under other advances Rs.19,50,000/- as on 31.3.2011 and deposited Rs.6,90,000/- to bank.” ITA No.547/Bang/2019 Puttappa T.K., Bangalore Page 6 of 9 The assessee has given break-up details of loans received back to the tune of Rs.14,43,200/-, which were extracted earlier. At the cost of repetition, we extract the same below:- a. Venkataramana - Rs.4,50,000/- e. H. Nagaraja - Rs.3,43,200/- f. Ningamma - Rs.3,25,000/- g. K. Lakshmi - Rs.3,25,000/- -------------------- Rs.14,43,200/- We notice that the assessee has explained sources for the deposit of Rs.6,90,000/- by taking support of repayments from above said loans, but the AO has made addition of Rs.14,43,200/- rejecting the claim. In our considered view, if at all the AO was not satisfied with the explanations given by the assessee, he could not have made addition exceeding Rs.6,90,000/-. 9. With regard to the sources for making deposit of Rs.6,90,000/-, the assessee has stated that he has received a sum of Rs.9.00 lakhs from parties who were grouped under “Other Advances” of Rs.19,50,000/- as on 31.3.2011. This amount of Rs.9.00 lakhs is included in the above given break-up details of Rs.14,43,200/-. Thus the opening balance of “Other Advances” as on 1.4.2011 was Rs.19,50,000/- and after receipt of Rs.9.00 lakhs during the year under consideration, the closing balance of “Other Advances” as on 31.3.2012 stood at Rs.10,50,000/-. The assessee has filed Balance sheet as on 31.3.2012 along with the return of income filed for AY 2012-13. A perusal of the same would show that “Other Advances” balance stand at Rs.10,50,000/- in the Assets side of Balance Sheet. Since the return of income relating to AY 2011-12 has been filed by the assessee showing “Other advances” of Rs.19,50,000/-, the explanation with regard to collection of Rs.9.00 lakhs out of the ITA No.547/Bang/2019 Puttappa T.K., Bangalore Page 7 of 9 above said opening balance would stand proved, because the closing balance of “Other Advances” as on 31.3.2012 has been shown at Rs.10.50 lakhs, i.e., after reduction of collection amount of Rs.9.00 lakhs. Hence there is no reason to doubt the explanation of the assessee that the deposit of Rs.6,90,000/- made on 21.2.2012 was out of the above said collection amount of Rs.9.00 lakhs. 10. We have earlier noticed that the addition could not have been made more than the deposit amount of Rs.6.90 lakhs, while the AO has made the addition to the tune of Rs.14,43,200/-. With regard to the deposit of Rs.6.90 lakhs, we have noticed that the assessee has explained the sources. Accordingly, we are of the view that the AO was not justified in making the addition of Rs.14,43,200/-. Accordingly, we direct the AO to delete this disallowance. 11. With regard to the remaining amount of Rs.7,56,800/- (out of the addition of Rs.22.00 lakhs), we notice that the assessee could not furnish any evidence to substantiate his claim that the same represents collection of advances given by him earlier. Before us, the Ld A.R submitted details of agricultural lands held by the assessee and contended that the advances were given by the assessee in the earlier years out of his savings from professional and agricultural income. However, we notice that the assessing officer has already given credit for the same while examining the sources for the deposit of aggregate amount of Rs.89,60,022/-. Hence the claim for credit for past savings cannot be given again. Accordingly, we confirm the addition of Rs.7,56,800/- made by the AO and confirmed by Ld CIT(A). ITA No.547/Bang/2019 Puttappa T.K., Bangalore Page 8 of 9 12. The assessee has raised an additional ground, which is a legal ground that the provisions of sec.68 could not have been invoked, since there is no books of account. We notice that the Hon’ble Karnataka High Court, in the case of C K Ramakrishna vs. ITO (TS- 6703-HC-2021) has upheld the view of the Tribunal that unexplained bank deposits are liable to be sustained u/s 69 of the Act even though the assessing officer had made the addition u/s 68 of the Act. Hence mentioning of wrong section would not be fatal. The view expressed by Hon’ble Karnataka High Court would get support from the decision rendered by Hon’ble Supreme Court in the case of A Govindarajulu Mudaliar (34 ITR 807), which has been explained by the five member Special bench of ITAT in the case of Manoj Agarwal (113 ITD 377) as under:- “26. The argument advanced on behalf of the assessee before us was that the assessee was nut maintaining any books of account and the deposits were found only in the assessee's bank statement which cannot be considered as the books of account of the assessee and, therefore, Section 68 was not applicable. Our attention was drawn to the confirmation letters placed at pages 159 and 160 of the paperbook. We are however unable to accept the argument. Though Section 68 of the Act may not be strictly applicable since the assessee was not maintaining any books of accounts and the bank statement cannot be considered as the assessee's books of account on the basis of the judgment of the Supreme Court in the case of A. Govindrajulu Mudaliar 34 ITR 807, it is the onus of the assessee to explain the cash received by him and if there is no explanation or acceptable evidence to prove the nature and source of the receipt, the amount may be added as the assessee's income on general principles and it is not necessary to invoke Section 68, nor is it necessary for the income-tax authorities to point out the source of the monies received. Even if Section 68 is not applicable, the cash deposit in the bank can be asked to be explained by the assessee under Section 69 or Section 69B of the Act.” ITA No.547/Bang/2019 Puttappa T.K., Bangalore Page 9 of 9 Accordingly, this legal contention of the assessee is liable to be dismissed. 13. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 17 th Mar, 2022. Sd/- (N.V. Vasudevan) Vice President Sd/- (B.R. Baskaran) Accountant Member Bangalore, Dated 17 th Mar, 2022. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore.