THANGZAMUAN HANGSHING, GAUTAM BUDDHA NAGAR V. WARD-72(4), Delhi

ITA 758/DEL/2022

AI Insights

The case revolves around an appeal by Thangzamuan Hangshing against the order of the Commissioner of Income-tax (Appeals), which sustained an addition of Rs. 5,48,500 to his income for the assessment year 2017-18. The addition was initially made by the Assessing Officer, suspecting unexplained cash deposits during the demonetization period. The assessee argued that these deposits were from savings of cash withdrawals made over several years, intended for purchasing a house. The Tribunal, after considering the submissions and evidence provided, including documents related to the purchase of a house, concluded that the addition was unjustified and directed its deletion.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 112809 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-12-2022
• Assessment Year: misc
• Appeal Filed On: 21-07-2022
• Other Referred Cases: Govindaraju Madaliar v. CIT, Kale Khan Mohomammad Hanif v. CIT, CIT v. S. Nelliapan, CIT v. Devi Prasad Vishwanath Prasad, Anantharam Veerasinghaiah & Co v. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Reasonable cause; Condonation of delay
• Section: 143(3); 69A; 72

Judgement Text

1 ITA no. 758/Del/2022 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No. 758/DEL/2022 Assessment Year: 2017-18 Thangzamuan Hangshing, G-1001, Galaxy Vega, Tech Zone IV, Greater Noida West, Gautam budh Nagar -201301 PAN- ADBPH5756N Vs Income-tax Officer, Ward-72(4), New Delhi APPELLANT RESPONDENT Assessee represented by Shri Thangzamuan Hangshing Department represented by: Shri Sumesh Swani, Sr. DR Date of hearing 07.12.2022 Date of pronouncement 13.12.2022 O R D E R PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 18.11.2021, pertaining to the assessment year 2017-18. The assessee has raised following grounds of appeal: “1. That the appellant denies its liability to be assessed u/s 143(3) at an income of Rs.11,26,494/- and accordingly denies its liability to pay tax, interest demanded thereon. 2. In any view of the matter and in any case opening of the impugned assessment and framing of impugned assessment order are bad in law and 2 ITA no. 758/Del/2022 principle of natural justice is denied and against the fact and circumstances of the case. 3. That having regard to the facts and circumstances of the case, Ld. A.O. has erred in law and on facts in making addition of Rs. 11,26,494/- on account Unexplained money u/s 69A of the Income Tax Act, without considering the material available and that too by recording incorrect and inadequate facts and findings. 4. That in any view of the matter and in any case the action of Ld. A.O. making an addition Rs. 11,26,494/- is bad in law and against the facts and circumstances of the case. 5. That in any view of the matter and in any case the additions made in the order are bad in law and principle of natural justice is denied and against the facts and circumstances of the case. 6. That in any view of the matter and in any case, assessment order passed is bad in law as well as principle of natural justice not followed and against the facts and circumstances of the case. 7. That having regard to the facts and circumstances of the case, Ld. A.O. has erred in law and on facts in framing the impugned assessment without giving adequate opportunity of being heard and without confronting the material, if any, to the appellant. 8. That having regard to the facts and circumstances of the case, Ld. A.O. has erred in law for not considering duly filed response of show cause notice and documentary evidence of house property purchased. 9. That having regard to the facts and circumstances of the case, Ld. A.O. has erred in law and on facts in charging interest u/s 234B. 10. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 3 ITA no. 758/Del/2022 2. This appeal is barred by 70 days. An application for condonation of delay in filing the appeal, supported by affidavit, has been filed by the assessee stating that the assessee was infected with Covid-19 and was quarantined for 14 days. Therefore, the appeal could not be filed in time. 3. Learned DR stated that there is no reasonable cause for condoning the delay. 4. I have heard rival contentions. The reason for delaying in filing the present appeal is stated that the assessee and his wife were infected with Covid-19. Therefore, looking to the facts and the condition prevalent at that point of time, I am of the considered view that there was a reasonable cause for delay in filing the appeal before the Tribunal. The delay is, therefore, condoned and the appeal is taken up for hearing. 5. Facts giving rise to the present appeal are that in this case the assessee had filed his return of income through electronic mode on 20.6.2017 declaring income of Rs. 8,30,180/-. The case of the assessee was picked up for limited scrutiny under CASS to verify the cash deposit during the demonetization period. In response to the query raised by the Assessing Officer, the assessee submitted that cash was deposited out of cash withdrawals of Rs. 16,44,000/- from the past 3-4 years and it was kept for buying a house. The Assessing Officer did not accept the explanation offered by the assessee and made addition of the entire amount. Aggrieved against this the assessee carried the matter before the learned CIT(Appeals), who after 4 ITA no. 758/Del/2022 considering the submissions, partly allowed the appeal. Thereby the learned CIT(Appeals0 deleted the addition to the extent of 1/3 rd out of the withdrawals and rest of the addition was sustained. Aggrieved against this the assessee is in appeal before this Tribunal. 6. The assessee appeared in person and stated that he had deposited a sum of Rs. 10,96,500/- in his bank account out of the withdrawals made on earlier occasions. The assessee stated that the money was withdrawn for the purpose of making investment in house property. However, that could not be materialized. He contended that both the authorities have accepted that the sum of Rs. 16,44,000/- was withdrawn. The learned CIT(Appeals) has treated 1/3 rd of such sum being available for redeposit. He submitted that the authorities below failed to appreciate the fact in right perspective and prayed that the impugned addition may be deleted. 7. Learned DR opposed the submissions and contended that the assessee has failed to prove that out of the withdrawal amount he had not invested the same elsewhere. He, therefore, submitted that there is no infirmity into the order of the learned CIT(Appeals) and the same should be affirmed. 8. I have heard rival contentions, perused the material available on record and gone through the orders of the authorities below. I find that the learned CIT(Appeals) has given the finding by observing as under: 5 ITA no. 758/Del/2022 “5.3. The Assessment Order and the submissions of the appellant have been examined. The appellant has deposited a total cash amount of Rs. 10,96,500/- in the month of November, 2016 in the following banks - (i) HDFC Bank Rs. 2,45,000/- (ii) Axis Bank Rs. 2,45,000/- (iii) State Bank of India Rs. 2,45,000/- (iv) Kotak Mahindra Bank Rs. 3,61,000/- The source of the above cash deposits has been explained to be cash withdrawals from bank accounts. The appellant submitted that he and his wife Mrs. Chingbiaklian have withdrawn cash of Rs. 16,44,000/- from the various bank accounts in the past 3-4 years for the purpose of savings for purchasing a house property and for household expenses. The total savings out of the cash withdrawals in old currency of Rs. 10,96,500/-was deposited in banks due to demonetization. The appellant has submitted the details of cash withdrawals in the last 3-4 years of Rs. 16,44,000/- as below – (i) HDFC Bank Rs. 4,18,000/- (ii) Axis Bank Rs. 40,000/- (iii) State Bank of India Rs. – (iv) Kotak Mahindra Bank Rs. 11,86,000/- Total: Rs. 16,44,000 The Assessing Officer concluded that no documentary evidence to prove the claim of purchase of house or any payment/expenses incurred related to purchase transaction was furnished by the appellant. The Assessing Officer has not satisfied with the explanation of the Assessee and the amount of Rs. 16,44,000/- was added back to the total income of the Assessee. The appellant, during the course of the appellate proceedings, has reiterated the same submissions made before the AO. The appellant has submitted that out of the withdrawals of Rs. 16,44,000/-, after expending certain amounts for household expenses, an amount of Rs. 10,96,500/- was saved for purchase of house property. This amount in old currency was deposited in the bank accounts after demonetization. The appellant submitted various documents regarding the purchase of house property in the following year and attached soft copies of cheques, receipts, application of booking, demand letter, letter of possession, Loan Sanction letter and some invoices for interior works. 5.4 Having considered the submissions of the appellant, it is noted that the appellant has withdrawn an amount of Rs. 16,44,000/- in the last 3-4 years from his bank accounts. After demonetisation, the appellant deposited a total amount of Rs. 10,96,500/- in old currency in his bank accounts. The deposited amount has been claimed by the appellant as savings out of the cash withdrawals from banks for the purpose of purchase of house property. The appellant also submitted various documents relating to the purchase of 6 ITA no. 758/Del/2022 house property in the following year. The appellant is a salaried employee and is not maintaining books of accounts. The appellant has apparently been filing his income tax returns in earlier years. The honourable Supreme Court in the cases of GovindarajuMadaliar v. CIT (1958) 34 ITR 807 (SC), Kale Khan Mohomammad Hanif v. CIT (1963) 50 ITR 1 (SC), CIT v. S. Nelliapan (1967) 66 ITR 722 (SC), CIT v. Devi Prasad Vishwanath Prasad (1969) 72 ITR 194 (SC) and AnantharamVeerasinghaiah& Co v. CIT (1980) 123 ITR 457 (SC) has applied the theory of telescoping keeping in view of the well-established canon of taxation that the same income cannot be taxed twice. Since the appellant is not required to maintain books of accounts, it is also not possible to prove, by way of matching each amount, that the total cash deposits of Rs. 10,96,500/- were savings out of the earlier cash withdrawals of Rs. 16,44,000/-. Considering the facts and circumstances of the case, by applying the theory of probability and also that no other sources of income which remain unreported has been found by the AO, it may be inferred that certain amount of the cash deposits may be part of the earlier cash withdrawals by the appellant from the banks. To meet the ends of justice, I consider it appropriate to estimate that 1/3 rd of the cash withdrawals from banks (16,44,000) amounting to Rs. 5,48,000/- to be available as personal savings from his earlier withdrawals. The Assessing Officer is directed to allow an amount of Rs. 5,48,000/- and the addition of the remaining amount of Rs. 5,48,500/- is confirmed.” 9. From the above finding of the learned CIT(Appeals) it is clear that undisputedly the assessee had withdrawn out of his bank account a sum of Rs. 16,44,000/-. Out of this amount the assessee has claimed that he had deposited a sum of Rs. 10,96,500/-. Therefore, the authorities below were not justified in confirming the addition to the extent of Rs. 5,48,500/-. The Revenue has not brought any material to suggest that the money as withdrawn by the assessee was utilized for any other purpose. Even if it is presumed that 1/3 rd of such amount was utilized for house-hold expenses, still the assessee had 2/3 rd of such amount. 7 ITA no. 758/Del/2022 Therefore, in my considered view the Assessing officer was not justified in making the addition of the entire amount and the learned CIT(Appeals) was not justified in restricting the relief to the extent of 1/3 rd of the total amount. That comes to Rs. 10,96,000/- far above the amount deposited by the assessee. Therefore, I hereby direct the Assessing Officer to delete the addition. 10. Assessee’s appeal is allowed. Order pronounced in open on 13 th December, 2022. Sd/- (KUL BHARAT) JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Draft dictated 09.12.2022 Draft placed before author 09.12.2022 Approved Draft comes to the Sr. PS/PS Order signed and pronounced on File comes to P.S. File sent to the Bench Clerk Date on which file goes to the AR Date on which file goes to the Head Clerk Date of dispatch of Order Date of uploading on the website 8 ITA no. 758/Del/2022