AI Insights
The case revolves around an appeal by Shri Surinder Kumar Sharma against the order of the CIT(A)-43, New Delhi, which confirmed an addition of Rs. 10,00,000 as unexplained money under section 69A of the Income Tax Act, 1961. The addition was initially made by the AO following the reopening of the assessee's case, based on information that he had deposited a sum of Rs. 10,00,000 in cash in his bank account during the financial year 2011-12. The assessee, a non-resident Indian who had recently retired from the Animal Husbandry Department, Government of Punjab, argued that the deposit was from accounted sources, specifically his retirement benefits. The Tribunal, after considering the submissions and evidence, including bank statements and retirement benefit documents, concluded that the assessee had established a clear nexus between the source of the funds and the cash deposit, leading to the decision to allow the appeal and delete the addition.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 127765 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
10 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-08-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
01-08-2023
Assessment Year
2012-2013
Appeal Filed On
13-10-2022
Judgement Text
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “बी” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH ी आकाश द प जैन, उपा य एवं ी $व%म 'संह यादव, लेखा सद,य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM ITA NO. 656/Chd/ 2022 Assessment Year : 2012-13 Shri Surinder Kumar Sharma C/O CA Amitoz Singh Kamboj Plot No. 181/33, Industrial Area, Phase 1, Chandigarh-160002 The ITO, Circle-1, Income Tax, Chandigarh PAN NO: ALMPS9160Q Appellant Respondent ! " Assessee by : Shri Amitoz Singh Kamboj, CA # ! " Revenue by : Shri Dharamvir, JCIT, Sr. DR $ % ! & Date of Hearing : 02/08/2023 '()* ! & Date of Pronouncement : 14/08/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-43, New Delhi dt. 24/08/2022 pertaining to the Assessment Year 2012-13. 2. In the present appeal, the assessee has raised the following grounds of appeal: “1. That the Ld. CIT (A) has erred in law by confirming an addition of Rs. 10,00,000 on account of unexplained money under section 69A of the Income tax Act, 1961 and treating the same as the income of the assessee ignoring the fact that the money deposited was from accounted sources. 2. The Ld. CIT (A) is unjustified in not accepting the additional evidence served under Rule 46A of the Income Tax Rules by not considering the principles of natural justice and ignoring the fact that the assessment proceedings and the assessee being Non-resident was not aware of the ongoing assessment proceedings. 2 3. That the appellant seeks to leave to add, amend, alter, abandon or substitute any of the above grounds during the hearing of the appeal.” 3. Briefly, the facts of the case are that the assessment in this case was completed under section 143(3) r.w.s 147 vide order dt. 09/12/2019. The case of the assessee was reopened basis information that the assessee had deposited a sum of Rs. 10,00,000/- in cash in his bank account maintained with HDFC Bank during the F.Y. 2011-12 relevant to the impugned assessment year and in view of the fact that the assessee has not filed his return of income for the impugned assessment year, income of Rs. 10,00,000/- has escaped assessment. In response to the notice, there was no return of income filed by the assessee. Thereafter, notice under section 142(1) was issued and a show cause dt. 22/10/2019 was also issued and as per the AO, since there was no compliance on the part of the AO, the whole of the amount of Rs. 10,00,000/- was brought to tax as unexplained investment under section 69 / 69A of the Act from unknown sources as the assessee has failed to discharge the onus cast on him to prove the source of cash deposits made in his bank account. 4. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) and has filed his written submission and the contents thereof read as under: “1. In respect to ground no. and 2, our collective submissions are that the Id. AO had erred in law and on the facts of the case and have denied the assessee benefit of explanation / information / documentation shared during the assessment proceedings and have made the addition of Rs. 10,00,000/- purely on the basis of surmises, conjectures and presumptions and without appreciating the facts and circumstances of the case that the said deposits were made out of genuine and duly explained sources. Your Honor, before we submit the relevant documentation and put forth our submissions, chronology of events relating to the said cash transaction of Rs. 10,00,000/-, needs to be understand in order to come to a proper conclusion. • That during the FY 2010-11, the assessee had retired from Animal Husbandry Department Punjab and had received the retirement benefits i.e. commuted pension and gratuity amounting to Rs. 9,89,917/- and Rs. 10,00,000/- respectively during the relevant year under consideration. Gratuity of Rs. 10,00,000/- was received in assessee's SBOP account on 19 fh April, 2011 whereas Commuted pension of Rs. 9,88,917/- was received in assessee's PNB account on 9th July, 2011 3 • That during the relevant year under consideration, the assessee came to India on 1 st July 2011 and went back to Canada on 4 th August 2011. • That the assessee intended to transfer his retirement proceeds to his Canadian bank account and for this very purpose he contacted both SBOP and PNB Bank to transfer the amount in his Canadian account as he was a permanent resident at that time in Canada and his wife and children too were also PR in Canada. However, both the bank showed their inability to transfer the funds immediately to assessee's Canadian bank Account. • During this time, the assessee contacted HDFC branch in Suttanpur Lodhi and they told the assessee that they can transfer the amount in Canadian $ in his bank account in Canada provided if he had bank account with HDFC. It is pertinent to mention here that the assessee opened the bank account with HDFC on 21/07/2011 only by making a cash deposit of Rs. 10.00,000/-. • That the assessee withdrew cash of Rs. 10,00,000/- from his SBOP Account no. 55054214988 on 21/07/2011 by Chq No. 929255 Token 34 and the very same day opened account in HDFC Bank, Sultanpur Lodhi branch and deposited the cash amount of Rs. 10.00.0001- drawn from SBOP account in his new tfDFC account on the same day Le. 21/07/2011. This transaction was done in cash due to shortage of time and moreover both SBOP and HDFC branches were in the same city. • That thereafter, the assessee had deposited Rs. 10,00,000/ - by cheque/draft to his HDFC account from his PNB account on 22/07/2011. • That out of these two deposits, Rs. 15,00,261/- was transferred to assessee's Canadian Bank account. * That the TDS of Rs. 25,378,00 for FY 2011-12 was deducted by PNB on March 01,2012 and Rs. 23,485.00 for the FY 2011-12 was deducted by Deputy Director Animal Husbandry Kapurfhola on May 30,2011 * It is pertinent to mention here that other than this, the assessee had no other source of Income from India. 1.1 Taking into consideration the above chronology of events, it is hereby submitted that the assessee had deposited cash in his HDFC Bank accounf out of his legitimate income i.e. Gratuity which he duty received on 19/04/2011 in his SBOP account and as the assessee being a government employee, the same was exempted from tax. The assessee had withdrawn cash of Rs. 10,00,000/- from his SBOP account on 21/07/20] 1 and opened a new account in HDFC bank on same date and deposited cash ofRs, 10,00,000/- on said date i.e. 21/07/2011. This transaction was done in cash due to shortage of time and moreover both SBOP and HDFC branches were in the same city. Relevant documents in order to substantiate our claim in this respect is as under: Annexure 1 - Gratuity Letter 4 Annexure 2 - SBOP Account statement reflecting the gratuity amount of Rs. 10,00,000/- and cash withdrawal of Rs. 10,00,000/- Annexure 2.1 - Certificate from SBOP stating that Rs, 10,00,000/- was cash withdrawn on 21/07/2011 Annexure 3- HDFC Bank Account Statement Thus, it is hereby submitted that said cash deposits were very much explainable considering the documentary evidence being produced above. In addition to this, Copy of Commuted pension tetter, PNB Bank statement are also enclosed for your kind reference to further substantiate assessee's claim that all these transactions are genuine transactions and assessee did not had any income from undisclosed sources. Annexure 4 - Commuted Pension letter Annexure 5- PNB Account statement reflecting the commuted pension amount of Rs. 9,88,917j- and further transfer to HDFC account of Rs. 10,00,000/-. It is pertinent to mention here that all these documents were duly submitted by the assessee during the assessment proceedings and the assessee had inadvertently raised ground no. 1 stating that it’s an ex-parte order where the order is passed u/s 143(3). To substantiate assessee's claim, e-mail communication of assessee dated 5th Sept, 2019 and 22nd October, 2019 with DCIT(lntl. Taxation) Chandigarh on his official Email id chandigarh.dcit.tt@incometax.gov.in is enclosed herewith for your kind reference at Annexure 6. With your permission we would like to draw your kind attention on this Email communication and we would like to state that in this email the assessee had duly submitted all the relevant documents alongwith requisite reply (reply copy enclosed with Ann 6). Alongwith this the assessee in this mail had narrated that "Please accept my reply. I am hospitalized at this time due to heart disease, pancreatitis and liver problem." The Id. AO had duly ignored this mail and duly ignored this email for the best reason know to him and gone ahead with the additions, whereas on the facts and circumstances of the case that such cash deposit was out of legitimate source of assessee. Even prior to issuance of notice u/s 148, verification letter was issued to assessee for the said issue of cash deposit of Rs. 10,00,000/- which was also duly replied by the assessee, however, stilt the Id. AO went ahead with issuance of notice of u/s 148 and made additions of Rs. 10,00,000/-. Copy of notice and reply is enclosed herewith at Ann 7 respectively for your kind reference. Reliance is placed on the decision of Atul Gupta vs. Income Tax Officer in ITAT Delhi Bench SMC (142 Taxmann 36), it was held that where the assessee had explained sources of availability of cash with him on dated when those were deposited in bank account there is no reason to doubt correctness of claim and no addition on that account could be made to assessee's income. 5 Considering the above provisions of law and judgments, it can be seen that there was nothing on record from the facts and circumstances of the case that such cash deposits were unexplained cash credits out of unexplained sources. These are merely the cash deposited by the assessee from genuine sources and thus the said additions are requested to be deleted. Your honor, it is prayed that if in this respect any other documentation is required from assessee to further substantiate his claim of cash deposit of Rs. 10,00,000/- in HDFC Bank, we pray to your good self to kindly do provide us with an opportunity to produce such relevant document or an independent enquiry at your end with bank will be highly appreciated as assessee being an NRI, documentation from bank may take considerable time at his end.” 4.1 The submission so filed by the assessee were considered but not found acceptable to the Ld. CIT(A) and the relevant findings of the Ld. CIT(A) are contained at para 5 which read as under: “5.1 This appeal has been filed against this assessment order dated 09.12,2019 passed under section 143(3) r.w.s 147 of Income tax act by the ACIT, International taxation, Chandigarh determining total income of Rs.10,00,000/- by making an addition of Rs. 10,00,000/-. 5.2 Appellant is a non-resident for the year under consideration. The information regarding depositing cash of Rs.10 lakhs in the bank account number 13631930004561 in the HDFC bank Sultanpur Lodhi in Financial year 2011-12 was received by the income tax department. Therefore the case was the reopen under section 147 of the income tax act by issuing notice under section 148 for the assessment year 2012-13, As no return of income for assessment year 2012-13 was filed earlier but reply was filed in response to notice under section 148 of the act. Thereafter notice under section 142(1] of the act dated 22,07.2019 was issued to the appellant calling for information. No relevant explanation was provided by the appellant in respect to the cash deposit amounting to Rs.10 lakhs therefore, further notice under section 142(1) was issued to the appellant on 17.10.2019 but no response was received therefore further show cause notice was issued to the appellant. The assessing officer concluded based on the material available on record that the assessee failed to file return of income and also failed to avail the opportunity of natural justice provided in the course of assessment proceedings. As the appellant could not explain the source of investment of Rs.10 lakhs so the amount of Rs.10 lakhs has been treated as Investment in the section 69/69A of the act from unknown sources as assessee could not furnish any source of investment. 5.3 In the course of Appellate proceedings additional evidences were submitted by the appellant. The same was forwarded to the assessing officer for its comments on admissibility as well as on merits. The relevant portion of remand report .3.06.2022 is reproduced here as under: 6 'The Assessing officer is of the view that the case of the appellant does not fa/I in any of the four circumstances mentioned in rule 46(1). The AO has not refused to admit any evidences during the assessment proceedings. That assessee was not prevented by any sufficient cause/reason for producing the requisite details. That's in sufficient opportunity in the form of multiple notices and questionnaire to which the assessee has just not complied. In view of the fact if is requested that Additional documents produced by the applicant before CIT(A) may kindly not be admifted. Further the assessee has tried to explain the source of cash deposits in his additional evidences but has failed to establish a nexus between the funds utilized, cash deposits and cash withdrawn. So it is requested the addition of Rs. 10 lakhs may kindly be confirmed in accordance with assessment order." 5.4 I agree with the views expressed by the assessing officer in the remand report dated 03.06.2022. Therefore, the addition of Rs. 10,00,000/- made by the assessing officer is confirmed. So the appeal is dismissed.” 5. Against the said findings and directions of the ld CIT(A), the assessee is in appeal before us. 6. During the course of hearing, the Ld. AR submitted that the assessee is an NRI and residing in Canada since past many years and during the F.Y. 2011-12 relevant to the impugned assessment year, the assessee retired from Animal Husbandry Department, Government of Punjab and received his retirement benefits in terms of gratuity and pension. It was submitted that the gratuity amount of Rs. 10,00,000/- was deposited in assessee’s bank account maintained with State Bank of Patiala (now SBI) on 19/04/2011 and the commuted pension of Rs. 9,88,917/- was deposited in assessee’s bank account maintained with Punjab National Bank. Since assessee intended to transfer his retirement proceeds to his Canada Bank Account, he reached out to both the banks however they shown their inability to transfer the funds immediately to assessee’s bank account in Canada. Thereafter, the assessee contacted HDFC Bank in Sultanpur Lodhi and they agreed to provide the fund transfer facility to the assessee where the assessee open his bank account with HDFC Bank. Thereafter the assessee opened his bank account with HDFC Bank on 21/07/2011 and the deposited a sum of Rs. 10,00,000/- by way of cash deposit . It was submitted that this cash deposit of Rs. 10,00,000/- is a subject matter of addition made by the AO and which has been disputed by the assessee. 7 6.1 In this regard, it was submitted that the said amount of Rs. 10,00,000/- was withdrawn by the assessee from his bank account maintained with SBOP on the same day i.e; 21/07/2011 by self cheque no. 929255 and thereafter the said amount was deposited in his new HDFC bank account on the same day. It was submitted that the reasons why the cash was withdrawn was due to shortage of time and the fact that the assessee was in urgent need of funds in Canada and which the HDFC allowed to transfer on deposit of funds as can be seen from the bank statement with HDFC Bank. 6.2 It was accordingly submitted that there was clear nexus which has been established by the assessee in terms of withdrawal of Rs. 10,00,000/- from his bank account maintained with SBOP on 21/07/2011 and cash deposit of Rs. 10,00,000/- on the same day with HDFC Bank. It was submitted that both the lower authorities have not appreciated this fact and the AO has made the addition which is wrongly been confirmed by the Ld. CIT(A). It was submitted that all the necessary documents in terms of Gratuity and pension orders, bank statements, etc. have been duly filed during the course of assessment proceedings and the same have not been considered by the AO and he has wrongly held that the assessee has not filed any documentation in support of cash deposit in his bank account. It was further submitted that even the Ld. CIT(A) has failed to consider these documents which were very much part of the assessment record and infact, he has called for the report from the AO wherein again, the AO miserably failed in the considering the documentation and the explanation so submitted by the assessee. It was accordingly submitted that the addition of Rs. 10,00,000/- so made by the AO and confirmed by the Ld. CIT(A) be directed to be deleted. 7. The Ld. DR is heard who has relied on the orders of the lower authorities. 8. We have heard the rival contentions and purused the material available on record. We find that the assessee has sufficiently explained with supportive documentation that the source of cash deposit of Rs 10 lacs in his bank account maintained with HDFC bank is from withdrawal of cash made on the same date from his another account maintained with SBOP. Further, the assessee has explained the source of deposit of Rs 10 lacs in bank account maintained with SBOP being the 8 gratuity amount which was received on his retirement. Both the bank accounts are in name of the assessee and the source thereof has been explained. We therefore agree with the contention of the ld AR that necessary nexus has been established by the assessee in terms of withdrawal of Rs. 10,00,000/- from his bank account maintained with SBOP on 21/07/2011 and cash deposit of Rs. 10,00,000/- on the same day with HDFC Bank and the nature and ultimate source thereof is gratuity amount received on his retirement. In view of the same, we are of the considered view that there is no legal and justifiable basis to sustain the addition so made by the AO and the same is hereby directed to be deleted. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 14/08/2023. Sd/- Sd/- आकाश द प जैन $व%म 'संह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा य / VICE PRESIDENT लेखा सद,य/ ACCOUNTANT MEMBER AG Date: 14/08/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 678 ग9 DR, ITAT, CHANDIGARH 6. ग 8 : % Guard File ( + $ By order, ; # Assistant Registrar
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