Mrs. Sarah Nusrath Khaleel, Mangaluru V. The Deputy 'Commissioner Of Income Tax, Central Circle-2, Mangaluru

ITA 715/BANG/2022

AI Insights

The case involves Mrs. Sarah Nusrath Kaleel, who appealed against the orders of the CIT(A)-2, Panaji, for the Assessment Years 2016-17 and 2018-19. The appeals arose from a search and seizure operation under section 132 of the Income Tax Act, 1961, conducted in the case of her husband, Shri Ibrahim Kaleel. The Assessing Officer (AO) initiated proceedings under section 153C of the Act based on materials found during the search. The AO questioned the source of cash deposits in the assessee's bank account, which led to additions to her income for both assessment years. The CIT(A) upheld these additions, leading to the appeals before the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299848 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-01-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 17-08-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 132; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC -A” BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT ITA Nos.714, 715/Bang/2022 Assessment Years: 2016-17,2018-19 Mrs. Sarah Nusrath Kaleel, 20-6-363/1, 2 nd Cross Road, Manaar, Badria Kandak, Mangaluru – 575 001. PAN : CEWPK 3782 F Vs.DCIT, Central Circle – 2, Mangaluru. APPELLANTRESPONDENT Assessee by:Smt.Sheethal Borkar, Advocate Revenue by :Shri. Ganesh R. Ghale,Standing Counsel Date of hearing:01.02.2023 Date of Pronouncement:06.02.2023 O R D E R These are 2 appeals by the assessee against 2 orders both dated 23.05.2022 passed by CIT(A)-2, Panaji, relating to Assessment Years 2016-17 and 2018-19. 2. The assessee is an individual. There was a search and seizeure operation conducted under section 132 of the Income Tax Act, 1961 (hereinafter called ‘the Act’), in the case of Shri.Ibrahim Kaleel, husband of the assessee. Proceedings under section 153C of the Act was initiated on the assessee based on the material found in the course of search in the case assessee’s husband. In the course of assessment proceedings under section 153C of the Act, the AO called upon the assessee to explain the source with regard to cash deposits made in SB A/c. No.10981069697 maintained by ITA Nos.714, 715/Bang/2022 Page 2 of 5 the assessee with SBI, Fort Road, Mangalore. In Assessment Year 2016- 17, the cash deposits were made during the months January to March, 2016, totaling Rs.18,70,000/-. The assessee explained the source of cash deposited in the bank account was earlier withdrawal of cash from the very same bank account to the tune of Rs.12,75,000/- and this explanation was accepted by the AO. With regard to the remaining sum of Rs.5,95,000/- assessee relied on the circumstances that she had income of Rs.5,58,511/- as per the return of income filed and that the source of income declared was from tuition and tailoring classes. The AO added a sum of Rs.4 lakhs accepting in part the explanation of the assessee, observing as follows: “4.2 It was further submitted that the income returned by the assessee may also be considered. As per the return of income, the assessee had shown the gross receipt of Rs. 8,98,650/- from tuition and tailoring and had estimated the net income @ 62.15% at Rs. 5,58,511/- and paid tax on the same. The assessee had obviously not maintained any books of accounts. Therefore, the monthly net income amounts roughly to Rs. 47,250/-. Even after assuming very liberally that about four month's net income was available with the assessee, there exists shortage of source to the tune of about Rs. 4,00,000/-. 4.3 The assessee was again opportunity to explain the source for the unexplained amount of Rs. 4,00,000/-. It was submitted that past years savings may also be available for the same. However, this explanation is not acceptable. No evidence is produced to prove that past years savings are kept as cash. In fact, while calculating the unexplained portion, four month's average income has already been given credit to without considering the personal expenditures or other outflows. Therefore, after considering the facts of the case, the assessment is completed as here under by making the additions of Rs. 4 lakhs, as the unexplained investment u/s. 69, to the total income returned u/s. 153C: - Total assessed income (5,58,510 + 4,00,000) = Rs. 9,58,510/-” ITA Nos.714, 715/Bang/2022 Page 3 of 5 3. In Assessment Year 2018-19, the assessee had deposited cash in the very same bank account a sum of Rs.3 lakhs on 04.08.2017. The source of funds was explained by the assessee as cash withdrawal from the same bank account earlier to the deposits. The AO, however, observed that there was no cash withdrawal during the previous year up to the date of cash deposit. The other explanation with regard to the income from tuition and tailoring was partly accepted by the AO and the AO made the addition of Rs.1,50,000/- observing as follows: “9.As per the return of income, the assessee had shown the gross receipt of Rs. 9,75,050/- from tuition and tailoring and had estimated the net income ai Rs. 4,45,111/- and paid tax on the same. The assessee had obviously not maintained any books of accounts. Therefore, the monthly net income amounts roughly to Rs. 37,090/-. Even after assuming very liberally that about four month's net income was available with the assessee, there exists shortage of source to the tune of about Rs. 1,50,000/-. 10. The assessee was again given an opportunity to explain the source for the unexplained amount of Rs. 1,50,000/-. It was submitted that past years savings may also be available for the same. However, this explanation is not acceptable. No evidence is produced to prove that past years savings are kept as cash. In fact, while calculating the unexplained portion, four month's average income has already been given credit to without considering the personal expenditures or other outflows. Therefore, after considering the facts of the case, the assessment is completed as here under by making the additions of Rs. 1.50 lakhs, as the unexplained investment u/s. 69, to the total income:- Total assessed income (4,45,111 + 1,50,000) = Rs. 5,95,111/-.” 4. On appeal by the assessee, the CIT(A) confirmed the additions made in both Assessment Years. The learned Counsel for the assessee submitted ITA Nos.714, 715/Bang/2022 Page 4 of 5 that the source of income in the form of conducting tuition classes and tailoring ought to have been accepted. In so far as Assessment Year 2018- 19 is concerned, the learned Counsel for the assessee pointed out that earlier to the previous year relevant to Assessment Year 2018-19, the assessee had withdrawn cash from the bank account and the availability of such cash withdrawals ought to have been considered by the Revenue authorities. 5. I have considered the rival submissions. In so far as the income derived from imparting tuition and tailoring is concerned, admittedly no evidence whatsoever has been filed by the assessee regarding availability of the said income for cash deposits and therefore the said plea raised by the assessee cannot be accepted. In so far as Assessment Year 2018-19 is concerned, there have been withdrawals from the very same bank account during the previous year relevant to Assessment Year 2017-18 and the availability of those withdrawals as source for cash deposits made in the previous year relevant to Assessment Year 2018-19 ought to have been considered by the Revenue authorities, if it has not been explained as a source for any other purpose. It is clear from the order of the AO that he has considered withdrawals only in the previous year relevant to Assessment Year 2018-19. I, therefore, deem it proper for consideration afresh after affording the assessee opportunity of being heard. Accordingly, the appeal of the assessee for Assessment Year 2016-17 in ITA No.714/Bang/2022 is dismissed while for Assessment Year 2018-19 in ITA No.715/Bang/2022 is treated as partly allowed for statistical purposes. ITA Nos.714, 715/Bang/2022 Page 5 of 5 6. In the result, appeals in ITA No.714/Bang/2022 is dismissed and ITA No.715/Bang/2022 is treated as allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page. Sd/- (CHANDRA POOJARI) Sd/- (N. V. VASUDEVAN) Accountant Member Vice President Bangalore, Dated: 06.02.2023. /NS/* Copy to: 1.Appellants2.Respondent 3.CIT4.CIT(A) 5.DR 6. Guard file By order Assistant Registrar, ITAT, Bangalore.