ITO International Taxation-I, Hyderabad V. Swetha Borra, Hyderabad

ITA 716/Hyd/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4191 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2021
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 26-08-2021
• Assessment Year: 2017-2018
• Appeal Filed On: 24-11-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 69A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA-IT. NO. 716/HYD/2020 ASSESSMENT YEAR: 2017-18 INCOME TAX OFFICER, (INTERNATIONAL TAXATION)-1, HYDERABAD VS SMT.SWETHA BORRA, HYDERABAD [PAN: BZGPB3005A] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI ROHIT MUJUMDAR, DR FOR ASSESSEE : SHRI RAVI BHARADWAJ, AR DATE OF HEARING : 26-08-2021 DATE OF PRONOUNCEMENT : 05-10-2021 O R D E R PER S.S.GODARA, J.M. : THIS REVENUES APPEAL FOR AY.2017-18 ARISES FROM THE CIT(A)-10, HYDERABADS ORDER DATED 08-10-2020 PASSED IN APPEAL NO.CIT(A), HYDERABAD-10 / 10171 / 2019-20, I N PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961 [I N SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. COMING TO THE REVENUES SOLE SUBSTANTIVE GRIEVANCE TH AT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING S ECTION 69 R.W.S.115BBE ADDITION OF RS.86 LAKHS MADE DURING THE COURSE OF ASSESSMENT FRAMED ON 24-12-2019, WE NOTE THAT THE LOW ER APPELLATE DISCUSSION TO THIS EFFECT READS AS UNDER: 9.THE ONLY SUBSTANTIAL GROUNDS OF APPEAL IN THIS C ARE ARE GROUND OF APPEAL NO.2 AND GROUND OF APPEAL NO.3, WHICH ARE AD JUDICATED AS UNDER: ITA-IT NO. 716/HYD/2020 :- 2 -: 9.1 IN THIS CASE, THE APPELLANT OR RATHER HER GENER AL POWER OF ATTORNEY HOLDER, WHO IS THE APPELLANTS FATHER HAS DEPOSITED THE FOLLOWING CASH INTO THE APPELLANTS NRO ACCOUNT NO.112210100073702 WITH ANDHRA BANK, FILM NAGAR BRANCH AS UNDER: 9.3 THUS, THE TOTAL TRANSFER OF AMOUNTS IS RS.1,50, 66,679/- FROM 28-03-2016 TO 11-04-2016, AGAINST WHICH ON 16-04-20 16, THE APPELLANTS FATHER HAS WITHDRAWN AN AMOUNT OF RS.1, 00,00,000/- ON CASH. 9.4 THE APPELLANT, WHO HAS WORKED IN USA AS A SOFTW ARE ENGINEER FOR MORE THAN A DECADE WAS NON-RESIDENT INDIAN IN T HAT PARTICULAR YEAR BUT IS ALSO A US CITIZEN. 9.5 THE APPELLANT CLAIMED BEFORE ME THAT THE ABOVE AMOUNTS ARE WITHDRAWN IN CASH AND ARE PUT SEPARATELY IN A BANK LOCKER, JOINTLY OWNED BY HER AND HER MOTHER SMT. B.VIJAYALAKSHMI. S HE STATED BEFORE THE AO AS WELL AS BEFORE ME THAT, THE ABOVE AMOUNT IS ITA-IT NO. 716/HYD/2020 :- 3 -: SPECIFICALLY EARMARKED ONLY FOR DEVELOPMENT OF ANCE STRAL PROPERTY OWNED BY HER FATHER AT AMMUPALLI VILLAGE. CHEVELLA TALUQ, RANGA REDDY DISTRICT. 9.6 IT WAS ALSO STATED DURING THE ASSESSMENT AS WEL L AS APPELLATE PROCEEDINGS, THAT DUE TO A LEGAL DISPUTE PENDING RE GARDING THE OWNERSHIP OF THE SAID LAND, ONLY RS.14,00,000/- WAS EXPENDED FOR VARIOUS FARM DEVELOPMENT ACTIVITIES SUCH AS TOTAL F ENCING OF THE FARM, LEVELING OF THE FARM, BUILDING RESIDENTIAL SHEDS TO THE FARM WORKERS, CONSTRUCTION OF ROOMS FOR STAY AND OTHER FARM DEVEL OPMENT EXPENDITURE. THE AR FURTHER STATED THAT THE PAYMENT FOR THE ABOVE WAS PAID IN CASH TO THE LABOUR INVOLVED. THIS WAS S UPPORTED BY PHOTOGRAPHIC EVIDENCE ALSO WHICH IS PLACED ON RECOR D. 9.7 THE APPELLANT PRODUCED THE LOCKER LEDGER-CUM AT TENDANCE REGISTER BEFORE ME. THE REGISTER DO NOT SHOW THE OPERATION O F THE LOCKER IN THE MONTH OF APRIL, MAY AND JUNE, BUT SHOW CONSTANT ATT ENDANCE IN THE MONTHS OF JULY, AUGUST, NOVEMBER AND DECEMBER MONTH S OF 2016. THE APPELLANT CLAIMED THAT THE CASH WITHDRAWN WAS P UT IN THE LOCKER AND TAKEN OUT WHENEVER NECESSARY EXPENDITURE AROSE. 9.8 THE AO HAS DISCUSSED IN DETAIL WITH SEVERAL ILL USTRATIONS, STATING AS TO WHY THIS CASH DEPOSITED DURING DEMONETIZATION CAN BE AN ACCOMMODATION ENTRY, AND DISBELIEVED ALL THE EVIDEN CES FILED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. 9.9 THE AO'S TREATMENT OF RS.86,00,000/- BASED ON M ANY REASONS APPEARS CREDIBLE. 'CASH HAS NO TRAIL' AND THAT IS W HY THIS INEXPLICABLE FINANCIAL EXPERIMENT CALLED 'DEMONETIZATION' TOOK P LACE. IT WAS LAUDED AND APPLAUDED. BUT, IT WAS A SUDDEN BLOW, TO MANY PEOPLE WHO HAD SAVED AND SAVED IT IN HARD CASH. 9.10 THE PROBLEM IS TO FIND OUT EVIDENCE THAT THE C ASH WAS WITHDRAWN AND WAS SPENT FOR SOME OTHER PURPOSE AND THE CASH WITHDRAWN ON 16-04-2016 WAS CONSUMED IN FULL. IS TH ERE ANY DEMONSTRABLE EVIDENCE SHOWING THAT THIS CASH WAS AP PLIED AGAINST SOME INVESTMENT/EXPENDITURE BETWEEN THIS TIME PERIO D OF APPROXIMATELY 5 MONTHS. 9.11 THE FACT THAT, THE APPELLANT HAS SHOWN EXPENDI TURE ON OTHER COUNTS AND HAS WITHDRAWN AMOUNTS FROM ATM OR MADE C REDIT CARDS PURCHASES, WORK IN BOTH WAYS. THIS ARGUMENT CAN BE USED TO SAY THAT THE APPELLANT HAS EAR-MARKED THIS CASH FOR DEV ELOPMENT OF FARM HOUSE ONLY AND HENCE DO NOT WANT TO TOUCH IT, OR TH E APPELLANT HAS CONSUMED THE CASH COMPLETELY AND HENCE HAS TO DIP H ER HANDS VIA BANKING CHANNELS. IT CAN BE A SUPPORTING FACTOR, TO THE APPELLANT AS WELL AS THE DEPARTMENT. 9.12 THE CASE OF THE AO THAT THE APPELLANT IS IN TH E HABIT OF GIVING HAND LOANS TO VARIOUS RELATIVES OF HER IN INDIA, AL SO DEFEATS THE PURPOSE OF ASSESSMENT, WHICH REANS LOANS HAVE BEEN GIVEN BY THE ITA-IT NO. 716/HYD/2020 :- 4 -: APPELLANT IN CASH AND THE SAME MIGHT HAVE BEEN REPA ID IN CASH WHICH IS AGAIN SELF-DEFEATING, BECAUSE, ON AN ASSUM PTION LIKE THIS, THE APPLICATION OF NOTIONAL INCOME ULS 69A DOES NOT WORK AS THE WHOLE AMOUNT CANNOT BE TAXED, BUT ONLY THE INTEREST INCOM E EARNED ON THE SAME CAN BE TAXED. OF COURSE, OTHER PENAL SECTIONS WOULD APPLY, IF THE ACT STANDS PROVED. 9.13 THE VERY BASIS FOR SCRUTINY SELECTION IN THIS CASE IS ON TWO REASONS. TO EXAMINE LARGE CASH DEPOSITS AS WELL AS TO EXAMINE LARGE CASH WITHDRAWALS. ON RECORD, IT IS NOT ESTABLISHED THAT THE CASH WITHDRAWN WAS CONSUMED BY THE APPELLANT FROM THE DA TE OF WITHDRAWAL TO THE DATE OF DEPOSIT AND WAS ALSO NOT CONSUMED BY THE APPELLANT AFTER THE PERIOD OF DEMONETIZATION. THE C ASH REMAINED IN THE BANK ACCOUNT OF THE APPELLANT FOR A SUBSTANTIVE PERIOD OF TIME IN 2017 ALSO. 9.14 ASSUMING THAT THE APPELLANT HAS CONSUMED THE C ASH WITHDRAWN, AND HAS ACCOMMODATED SOME OTHER PERSONS, AS 'SOURCE ' IS AVAILABLE FOR HER FROM INCOME EARNED BY HER IN USA, THE FUNDS WILL TRAVEL LATER TO THIS DESTINATION/MULTIPLE DESTINATIONS. THE FACT , THAT THIS DID NOT HAPPEN IN THE SUBSEQUENT MONTHS, GOES TO PROVE THAT THE CASH BELONGS TO THE APPELLANT AND THE APPLICATION OF SEC TION 115BBE FAILS. 9.15 NO DOUBT, THE CASH WITHDRAWN AFTER 16-04-2016 LOSES ITS VISIBLE TRAIL TILL ITS RE-DEPOSIT OF THE SAME INTO THE NRO BANK ACCOUNT ON 10.11.2016, 21.11.2016 AND 03.12.2016, AFTER WHICH IT REMAINS VISIBLY TRAILABLE AND WAS APPLIED BY THE APPELLANT HERSELF, MUCH LATER IN 2017. 9.16 ALL THESE FACTORS ADD TO THE ARGUMENT OF THE A PPELLANT AND LACK OF ANY EVIDENCE ON RECORD THAT THE CASH WITHDRAWN W AS CONSUMED BY THE APPELLANT SUBSEQUENT TO ITS WITHDRAWAL, THE APP LICATION OF SEC. 69A AND SEC. 115BBE FAILS AND THE ADDITION OF RS. 8 6,00,000/- STANDS DELETED. HENCE, THE GROUNDS OF APPEAL NOS.2 AND 3 ARE ALLOWED. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL PLEADINGS AGAINST AND IN SUPPORT OF THE CIT(A)S FOREG OING LOWER APPELLATE CONCLUSION DELETING THE IMPUGNED ADDITION. WE FIND THAT NEITHER PARTYS SUBMISSIONS HEREIN DESERVE TO BE A CCEPTED IN ENTIRETY. THIS IS PRIMARILY BECAUSE OF THE REASON THAT THE REVENUES CONTENTIONS GO AGAINST THE ASSESSEES OVER WHELMING EVIDENCE; AND MAINLY HER BANK RECORDS INDICATING HER TO HAVE WITHDRAWN RS.1 CRORE BETWEEN 28-03-2016 TO 11-04-201 6 FOLLOWED BY ALLEGED CASH RE-DEPOSIT THEREOF FROM 10- 11-2016 TO ITA-IT NO. 716/HYD/2020 :- 5 -: 03-12-2016 (SUPRA). THE ASSESSEE ADMITTEDLY IS AN NRI WHO DOES NOT STAY IN INDIA. THERE IS ALSO NO INDICATION A BOUT HER TO HAVE UTILISED THE IMPUGNED CASH WITHDRAWALS BETWEEN THE INTERVENING TIME PERIOD RUNNING TO ALMOST EIGHT TO NI NE MONTHS. FACED WITH THIS SITUATION, WE CONCLUDE THAT THE ASSESSEES FOREIGN WITHDRAWALS PRIMA-FACIE FORMED SOURCE OF HER CASH DEPOSITS OF RS.86 LAKHS DURING THE DE-MONETI ZATION PERIOD. THE FACT ALSO REMAINS THAT ALTHOUGH SHE HAS F ILED HER BANK LOCKER, BANK STATEMENT ETC, THE SAME ITSELF WOULD NO T FORM CONCLUSIVE PROOF OF HER HAVING RE-DEPOSITED THE ENTIRE AMOUNT WITHDRAWN EARLIER. FACED WITH THIS SITUATION, W E DEEM IT APPROPRIATE THAT A LUMPSUM ADDITION OF RS.10 LAKHS O UT OF THAT IN ISSUE OF RS.86 LAKHS WOULD BE JUST AND PROPER TO COVER ALL THE ASSESSEES SHORTFALLS IN HER EXPLANATION, PROV ING THE RECONCILIATION BETWEEN HER AMOUNTS WITHDRAWN WITH TH OSE RE- DEPOSITED; AS THE CASE MAY BE. WE THEREFORE PARTLY AC CEPT THE RIVAL PLEADINGS HEREIN AND REVIVE THE ASSESSING OFFI CERS ACTION MAKING THE IMPUGNED ADDITION OF RS.86 LAKHS TO THE EXTE NT OF RS.10 LAKHS ONLY. NECESSARY COMPUTATION SHALL FOLLOW AS PER LAW. 4. THIS REVENUES APPEAL IS PARTLY ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH OCTOBER, 2021 SD/- S D/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 05-10-2021 TNMM ITA-IT NO. 716/HYD/2020 :- 6 -: COPY TO : 1.INCOME TAX OFFICER (INTERNATIONAL TAXATION)-1, HY DERABAD. 2.SMT.SWETHA BORRA, H.NO.301, JYOTHYI BLOOM, ROAD N O.3, BANJARA HILLS, HYDERABAD. 3.CIT(APPEALS)-10, HYDERABAD. 4.CIT(IT & TP)-HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.