Mahesh Chittubhai Patel, Athwalines V. Income Tax Officer (International Taxation), Adajan - Hazira Road

ITA 651/SRT/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3918 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-02-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 28-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences
• Section: 147; 148; 143(3); 142(1); 143(2); 69A; 113

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 651/Srt/2023 (Assessment Year 2012-13) (Physical hearing) Mahesh Chittubhai Patel, No. 5, Maitry Society, Behind Sarjan Society, Athwalines, Surat-395007 (Gujarat) PAN No. AOLPP 2317 Q Vs. I.T.O. (International Taxation), Adajan, Hazira Road, Surat. Appellant/ Assessee Respondent/ Revenue Assessee represented by Shri Mehul Shah, C.A. Department represented by Shri Vinod Kumar, Sr.DR Appeal instituted on 29/09/2023 Date of hearing 02/02/2024 Date of pronouncement 09/02/2024 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), Ahmedabad-13 [in short, the ld. CIT(A)] dated 10/08/2023 for the Assessment Year (AY) 2012-13. The assessee has raised following grounds of appeal: “1. On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in re-opening assessment u/s 147 by issuing notice u/s 148 of the I.T. Act, 1961 without recording any proper reasons. 2. On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in not issuing notice u/s. 143(2) even when the assessee has filed return of income in response to notice u/s. 148 and therefore assessment order is void-ab initio. 3. On the facts and circumstances of the case as well as law on the subject, the ITO Ward 1 (3)(3) has erred in issuing notice u/s. 148 when it was actually required to be issued by the Jurisdictional assessing officer i.e. ITO (International Taxation) and therefore assessment order is void-ab initio. ITA No. 651/Srt/2023 Mahesh Chittubhai Patel Vs ITO(IT) 2 4. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in making addition of Rs. 27,50,000/- u/s. 69A of the Act on account of alleged unexplained cash deposits. 5. It is therefore prayed that assessment framed u/s 143(3) r.w.s. 147 of the Act may kindly be quashed and/or addition made by assessing officer may please be deleted. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. 2. Brief facts of the case are that the assessee is a Non-Resident Indian (NRI) as recorded by Assessing Officer in para 1 of the assessment order itself. No return of income was filed by assessee for A.Y. 2011-12. The assessee was identified as non-filer in the system of Income Tax Department. On the basis of information in the system, the Assessing Officer was having information that the assessee made investment in mutual fund of Rs. 81.00 lacs and also made deposit of cash of Rs. 32.00 lacs in Royal Bank of Scotland Ghod Dhod Road Surat. As no return of income was filed by assessee, the Assessing Officer was of the view that the source of investment and credit/ deposit in bank aggregating of Rs. 1.13 crore remained unexplained. The Assessing Officer after recording reasons of reopening and obtaining approval under Section 151 of the Income Tax Act, 1961 (in short, the Act) issued notice under Section 148 of the Act on 30/03/2019. In response to notice under Section 148 of the Act, the assessee filed return of income on 05/06/2019 declaring total income of Rs. 14,350/-. Copy of reasons recorded were provided to the assessee on 07/06/2019. The Assessing Officer on serving show cause notice under Section 142(1) of the Act, proceeded for assessment. During the ITA No. 651/Srt/2023 Mahesh Chittubhai Patel Vs ITO(IT) 3 assessment, the Assessing Officer noted that the assessee provided details as called for. Such details were kept on record. The Assessing Officer further noted that no explanation in respect of cash deposit of Rs. 27.50 lacs in NRO Savings Bank with Royal Bank of Scotland, Surat was furnished by assessee. The Assessing Officer further noted that the explanation of assessee that source of cash deposit from cash in hand out of previous withdrawals kept for emergency requirement of his old and sick mother. The Assessing Officer also noted that the assessee was using cash for making demand draft and not furnished the details of investment of utilization of such money. The Assessing Officer treated the deposit of Rs. 27.50 lacs in NRO account as income from undisclosed sources while passing the assessment order on 26/12/2019 under Section 143(3) r.w.s. 147 of the Act. 3. Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee raised several objections on various factual aspects that no proper opportunity was given. The Assessing Officer not considered the withdrawal and deposit from his own bank account. No specific ground of challenging the validity of reopening under section 147 or issuance of notice under section 148 as well as against non-issuance of notice under section 143(2) was raised before ld CIT(A). The assessee also furnished statement of fact before the ld. CIT(A). In the statement of fact, the assessee stated that he is an NRI. He made various submissions during assessment and furnished all details as called ITA No. 651/Srt/2023 Mahesh Chittubhai Patel Vs ITO(IT) 4 for. The Assessing Officer passed the assessment order in a hurry and mentioned the fact which are contradictory. The source of cash deposit were satisfactorily explained in submission dated 19/11/2019. The Assessing Officer in the assessment order mentioned that the assessee has not furnished the details in respect of cash deposit. The additions were made without any reason. Treated the cash deposit as unexplained which were withdrawn from own bank account to meet the emergency requirement for his ailing mother. His mother was living alone in Surat -India with helper. There was no reason to doubt the genuineness of cash deposit. 4. In addition to, the assessee also filed written submission as recoded in para 8.3.1 of order of ld. CIT(A). In the submission, the assessee stated that he has also filed reply before assessing officer on 08/11/2019 and 19/11/2019, which were not considered. The assessee further stated that he is an NRI and furnished the details of NRE savings account and detail of NRO savings bank account. He was not maintaining balance sheet and books of account, so it could not be provided. No immovable property was sold or purchased during the year. The assessee made transaction of capital gain. The deposit in the bank account was out of cash in hand from previous withdrawals which was submitted during the assessment. The assessee also furnished the details of his other family members, who were living abroad except mother of assessee. His father died in 2008 and his mother used to live alone in Surat as his mother was living alone, the family members deiced to keep around Rs. 35.00 lacs as cash in hand. The assessee also furnished ITA No. 651/Srt/2023 Mahesh Chittubhai Patel Vs ITO(IT) 5 withdrawal from NRE account from 2009 as recorded on page No. 8 of order of ld. CIT(A). The assessee has shown total withdrawal of Rs. 35.80 lacs. Further, the NRO account, the assessee has shown deposit of Rs. 27.50 lacs on different dates in F.Y. 2011-12 and explained that remaining Rs. 7.50 lacs was utilized for the care of his mother. The assessee also furnished copy of bank statement of NRE account and cash deposit in NRO account which was already given to Assessing Officer. On the objection of Assessing Officer that the assessee was using cash deposit for demand draft and not furnished such details of investment, the assessee explained that the Assessing Officer erred in appreciating the facts and ignored his submission dated 29/06/2019 wherein he has furnished details of fresh investment and his bank statement. The assessee also furnished the period of his stay in India in F.Y. 2009-10 to 2011-12 and submitted that during his visit, he used to regularly withdraw the cash from ATM for his personal expenditure. 5. The ld. CIT(A) on considering the submission of assessee held that the facts available on record suggest that the assessee could not bring anything on record to support his claim that the mother was mentally unstable and medically depressed and during the period from 2009 to 2011 it is hard to believe that the assessee get the cash idle and not deposited in bank. No prudent man would deposit the idle cash on a single date. The ld. CIT(A) referred the decision of Delhi Tribunal in the case of Sashi Garg dated 26/03/2018 in ITA No. 6472/Del/2014 which was upheld by the Hon'ble Delhi High Court in order dated 02/11/2018 passed in Tax Appeal No. ITA No. 651/Srt/2023 Mahesh Chittubhai Patel Vs ITO(IT) 6 1235/2018 reported viz; 113 taxmann.com 92 (Delhi). The ld. CIT(A) further held that the cash was withdrawn in 2009 and deposited in 2011-12 and in absence of no relation between the cash withdrawal and cash deposit, the explanation of assessee was not acceptable. On the basis of such observation, the ld. CIT(A) upheld the action of Assessing Officer. Further aggrieved, the assessee has filed present appeal before this Tribunal. 6. We have heard the submissions of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue and have gone through the orders of the lower authorities carefully. We find that the assessee has raised several legal and technical objections objecting the validity of reopening under Section 147 and issuance of notice under Section 148 of the Act. The assessee has also raised grounds of appeal that notice under Section 143(2) of the Act was not issued. Further that notice under Section 148 of the Act was issued by ITO, Ward 1(3)(3) and jurisdiction of assessee was with ITO (International Taxation). The notice under section 148 was required to be served by jurisdictional assessing officer. On all such issue, the ld. AR of the assessee made very exhaustive and detail submission and also relied on number of decisions. All such factual and legal submissions of assessee were strongly objected by revenue on the ground that no such issues were raised before ld CIT(A). We may discuss all such contentions at later stage. 7. On merit of addition of Rs. 27.50 lacs, the ld. AR of the assessee submits that during the assessment, the assessee in response to show cause notice ITA No. 651/Srt/2023 Mahesh Chittubhai Patel Vs ITO(IT) 7 dated 07/06/2019, filed detailed reply vide reply dated 29/06/2019. In the reply, the assessee specifically explained that the assessee was having three bank accounts in F.Y. 2011-12 wherein he has made total deposit of Rs. 27.50 lacs. Account wise cash deposit and details were furnished. In two NRE account NO. 916783 and 922025, no amount was deposited, only Rs. 27.50 lacs was deposited in NRO account No. 1220106. As per initial show cause notice which mentioned that Rs. 32.00 lacs was deposited in bank accounts during the year under consideration, however, the assessee made only deposit of Rs. 27.50 lacs, the figure of Rs. 32.00 lacs was incorrect. The assessee also explained that during the year under consideration, the assessee redeemed the mutual fund an also invested in mutual fund. The assessee provided details of investment in mutual fund from 09/05/2011 to 27/06/2011 aggregating of Rs. 13,13,303/-. The assessee also furnished bifurcation of details of fresh investment during the relevant financial year from 25/04/2011 to 21/06/2011 aggregating of Rs. 79.50 lacs. All required supporting evidence, name of mutual fund and name of bank account was furnished. In the initial show cause notice, the investment was shown as of Rs. 81.00 lacs however, the assessee made investment of Rs. 79.50 lacs, thus, the figure of Rs. 81.00 lacs was incorrect. In response to fresh show cause notice dated 04/11/2019, the assessee again filed reply dated 19/11/2019 and furnished complete details about his arrival in India and departure from India, details of NRE account and NRO account, type of account including mode of operation. The assessee also furnished the ITA No. 651/Srt/2023 Mahesh Chittubhai Patel Vs ITO(IT) 8 details of capital gain with supporting evidence and statement of exempted long term capital gain. The assessee made deposit from various withdrawals which was made on account of redemption of various mutual funds. All details were furnished to the Assessing officer. All such details are available at page No. 42 of paper book. The bank statement of assessee also shown issuance of demand draft on various dates. Such bank details and withdrawals clearly proved that the assessee has made total withdrawals of R. 35.80 lacs and deposited in NRO account of Rs. 27.50 lacs. The assessee fully substantiated entire deposits of Rs. 27.50 lacs. The lower authorities instead of appreciating the facts in a proper prospective, made addition on whimsical basis without actual appreciation of fact. 8. On the other hand, the ld. Sr. DR for the revenue supported the orders of lower authorities. The ld. Sr. DR for the revenue submits that the amount was withdrawn somewhere in the beginning of April, 2009 to October, 2009 and was deposited on different dates in April 2011 to February,2012. The assessee failed to substantiate the mute question raised by the lower authorities as to why such cash amount was kept idle for depositing after such a long period. The lower authorities while making addition/confirming, considered all such facts and not accepted the story/explanation furnished by assessee 9. We have considered the submissions of both the parties and have perused the orders of the lower authorities carefully. We find that the case of assessee was reopened on recording reasons that the assessee had made ITA No. 651/Srt/2023 Mahesh Chittubhai Patel Vs ITO(IT) 9 investment of Rs. 81.00 lacs and also deposited Rs. 32.00 lacs with Royal Scotland Bank. However, on filing reply by the assessee and explaining the facts that the assessee has made investment of Rs. 79.50 lacs and deposited Rs. 27.50 lacs vide reply dated 29.06.2019, the assessing officer accepted the explanation with regard to investment, but made the addition of deposits of Rs. 27.50 lacs in bank. The assessing officer while making additions of cash deposits held that the assessee explained that the source of cash deposits was from previous withdrawals and was kept for emergency requirement of his mother but failed to furnish cash book or fund flow statement or any documentary evidence to substantiate his submission and that assessee was using cash deposit for making demand draft. We find before ld. CIT(A), assessee again furnished the detail of cash withdrawal from NRE account No. 922025 of Rs. 17.00 lacs and from other NRE account No. 916783 of Rs. 18.80 lacs. The assessee further explained that out of total cash withdrawal of Rs. 35.80 lacs, Rs. 35.00 lacs were kept with her sister Usha Patel for emergency need of their mother. The assessee further explained that out of which Rs. 7.50 lacs were used/spent for the need of mother and remaining Rs. 27.50 lacs were deposited in NRO bank account No. 1220106. We find that the assessee has shown cash withdrawal on redemption of mutual fund on various dates in F.Y. 2009-10, otherwise cash withdrawal was not disputed by assessing Officer. First objection of assessing officer is that the assessee failed to file cash flow statement and other objection of assessing officer was that assessee was using cash ITA No. 651/Srt/2023 Mahesh Chittubhai Patel Vs ITO(IT) 10 deposit for making demand draft. The assessee before the ld. CIT(A), explained that in submission dated 29/06/2019, the assessee already furnished details of all investments worth Rs. 79.50 lacs. We find that all details are available on page No. 24 and 25 of paper book and all investments are made from NRE account No. 922025 or NRO account No. 1220106 and other NRE account No. 916783 which are duly reflected in the bank accounts and no such cash deposit was used for making demand draft. We find that cash withdrawal of Rs. 35.50 lacs are not otherwise in dispute. The Assessing Officer has not brought any material on record that assessee spent/incurred such amount elsewhere. The dispute is of only time period between the withdrawal and the cash deposit. There is no dispute that mother of assessee was living in Surat. The assessee and his other family members are residing abroad. The status of assessee is accepted by Assessing Officer as NRI. The assessee has not done any business activity during the said period and stayed in India for a very few days. During stay in India, the assessee claimed that for personal need, he made withdrawal from ATM between the period 01/04/2009 to 31/03/2012. No adverse material was brought by ld. CIT(A) against such contention nor any remand report to disregard such fact was brought on record. In our view, the Assessing Officer has treated the cash deposit merely on the basis of human probability without bringing any adverse evidence on record that such cash deposit was unexplained money of assessee when the assessee was having sufficient money in his two NRE and one NRO account and explained the ITA No. 651/Srt/2023 Mahesh Chittubhai Patel Vs ITO(IT) 11 investment during the relevant period. In view of aforesaid observation, the addition of Rs. 27.50 lacs are not justified. In the result, ground No. 4 of the appeal is allowed. 10. Considering the fact that, we have allowed the substantive ground of appeal in deleting the addition of unexplained cash deposit, therefore, all other grounds of appeal raised by assessee have become academic. 11. In the result, appeal of assessee is allowed. Order announced in open court on 09 th February, 2024. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 09/02/2024 *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Surat