Amit Kaushal, United Kingdom V. DCIT, (Intl. Taxation), Circle, Chandigarh

ITA 896/CHANDI/2019

AI Insights

The case involves an appeal by Shri Amit Kaushal against the order of the CIT(A)-43, New Delhi, which sustained the addition of Rs. 1,08,91,311 to the assessee's income for the Assessment Year 2015-16. The addition was initially made by the Assessing Officer (AO) under Section 69A of the Income Tax Act, 1961, treating the cash deposits in the assessee's bank account as undisclosed income. The assessee, an NRI, claimed that the deposits were from his family's funds and proceeds from a tyre trading business managed by an employee in India. However, both the AO and CIT(A) found the explanations and lack of supporting documentation insufficient to substantiate these claims. The Tribunal agreed with the lower authorities, emphasizing the absence of tangible evidence linking the deposits to legitimate business activities or family contributions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127616 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 05-06-2019
• Other Referred Cases: Sumati Dayal Vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Deemed to accrue or arise in india
• Section: 44AD; 142(1); 143(2); 69A

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “ए” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, 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. 896/Chd/2019 Assessment Year : 2015-16 Shri Amit Kaushal 10, Pearcy Close, Harold Hill, Romford, RM3 8PW, United Kingdom The DCIT (Intl Taxation) Circle-Chandigarh PAN NO: BYUPK6514J Appellant Respondent ! " Assessee by : None # ! " Revenue by : Smt. Amanpreet Kaur, Sr. DR $ % ! & Date of Hearing : 09/08/2023 '()* ! & 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. 12/02/2019 for the Assessment Year 2015-16. 2. At the outset, it is noted that the appeal was filed way back in the year 2019 and thereafter the matter has been adjourned from time to time and even today when the matter was called, none appeared on behalf of the assessee nor any adjournment application was filed. It is therefore decided to hear the matter basis the material available on the record and after hearing the Ld. DR. 3. In the present appeal, the assessee has raised the following grounds: 1. That the order of Ld. AO and Ld. C1T(A) is bad in Law and against the facts and circumstances of the case. 2 2. That the Ld. CIT(A) erred in sustaining the addition made by the Ld. AO amounting Rs. 1,08,91,311/- u/s 69A of the Income Tax Act. 3. That the Ld. CIT(A) erred in confirming the addition made by the Ld. AO amounting Rs. 1,08,91,311/- by treating the cash deposit in the bank account as undisclosed income of the assessee. 4. That the Ld. CIT(A) and Ld. AO erred in not allowing any expenditure to earn the income. 5. That Ld. AO and Ld. CIT(A) also erred in not following various judgments of jurisdictional High Court and ITAT. 6. That the appellant carves leave to add, alter, modify or delete any of the ground of appeal. 4. Brief facts of the case are that the assessee filed his return of income on 31/03/2017 which was selected under CASS for limited scrutiny to examine the cash deposit whether made from disclosed sources or not. Thereafter, notice under section 143(2) and 142(1) were issued, however there was no compliance on the part of the assessee. Thereafter, the AO issued a show cause on 15/12/2017 and in response, the assessee submitted that the cash amounting to Rs. 20,38,000/- was deposited by his family members from their own funds or from the money which the assessee himself had given from time to time during his earlier visits. As regard the amount of Rs. 88,53,311/- , it was submitted that same is sale proceeds from business of trading in tyres with the assessee used to do in the relevant Financial Year. 5. The reply so filed by the assessee was considered but not found acceptable to the AO. The AO referred to the return of income filed by the assessee for the impugned assessment year wherein the assessee has shown gross receipt of Rs. 1,76,100/- as against the cash deposit of Rs. 1,08,91,311/- which are claimed to be received from trading business of tyres. Beside this discrepancy in the total receipt shown in the return of income as against the deposits in the bank account, the AO further observed that there are no fixed 3 assets shown in the return of income which demonstrates that the assessee was carrying on the trading business of tyres. Further it was held by the AO that the assessee being a NRI, it is not clear as to how he was managing his business from outside during the Financial Year relevant to the impugned assessment year and therefore, the submissions regarding receipts from trading business in absence of any supportive documentation was not accepted. It was further held by the AO that the assessee failed to file any document in support of the loan / gifts from the family members and therefore the whole of the amount of Rs. 1,08,91,311/- was brought to tax as deemed income and invoking the provision of Section 69A of the Act for the reason that the assessee failed to discharge the primary onus cast on him in terms of explaining the nature and source of deposit in the bank account maintained by him and as against the returned income of Rs. 82,430/-, the assessed income was determined at Rs. 1,09,73,741/-. 6. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) and reiterated the submissions made before the AO. It was submitted that the AO has made the addition amounting to Rs. 88,53,311/- without considering the fact that the amount deposited was from sale proceeds of tyres which the assessee has received from his customers from time to time and which were also withdrawn for utilization in his business. It was submitted that the assessee being an NRI, his business was managed by his employee Shri Aman Verma and due to differences with him, the business was discontinued and even documents in terms of sale / purchase/ expense/payment vouchers were maintained by said employee and since the said employee is not traceable, the assessee is not able to file the documentary evidence at the time of assessment proceedings. It was submitted that the AO has ignored the fact that purchases and other expenses made by him were made through cheques and were also reflected in the bank statement of the assessee. It was submitted that the AO during the assessment proceedings had simply taken the total transactions on 4 the credit side of the bank account and ignoring the debit side of the bank account and whole of the deposit has been treated as unexplained investment under section 69A of the Act on the basis of assumption and presumption only. Further reliance was placed on the various Coordinate Bench decisions wherein in respect of undisclosed bank credit, it was held that the whole of the credit cannot be brought to tax and only a reasonable profit in terms of undisclosed turnover can only be brought to tax in the hands of the assessee. It was submitted that following the said decisions, the total credit in the bank account may be treated as undisclosed turnover and net profit @ 8% may be applied by AO in absence of necessary vouchers and bills of expenses and the AO should have taken guidance from the provisions of Section 44AD of the Act. 7. Regarding amount of Rs. 20,38,000/- received from the relatives and family members as gift, it was submitted that the amount were deposited directly by the relatives on various occasions out from their own savings and certain details in terms of nine relatives in terms of their name, address and occupation and the amount received and the PAN number of five persons were also submitted. 8. The submissions so filed by the assessee were considered but not found acceptable to the Ld. CIT(A) and against the said findings and the direction of the Ld. CIT(A), the assessee is in appeal before us. 9. During the course of hearing, the Ld. DR is heard who has relied on the findings of the lower authorities and our reference was drawn to the findings of the Ld. CIT(A) at para 5 of the impugned order and the relevant operative part of the decision at para 5.3 which read as under: “The assessing officer went on to make an addition after noting that there was no documentary evidence supporting the claims of the appellant. Moreover, the appellant was a non resident and there were no fixed assets etc. to substantiate the claim of the recipients being from a Tyre Trading business. Consequently an addition of Rs. 1,08,91,311 was made. During the course of appeal, a singular 5 ground raised was related to addition made under section 69A of Rs. 1,08,91,311. While furnishing submissions in appeal proceedings also, the appellant has not furnished any evidence- documentary or otherwise to substantiate his claim that the receipts were from loans taken from family members and partly from business of trading in tyres. The explanation furnished for the amounts deposited in the bank accounts is not reasonable and unacceptable. It cannot be presumed to be bonafide since it is self serving. In the absence of any supporting proof, the appellant cannot take recourse to a plain statement which is self serving in nature to explain the credit in the bank account of cash. The appellant himself is a non-resident and the credits in the bank accounts are clearly not explained. If the twin tests of looking into surrounding circumstances and applying the test of human probabilities as enunciated by the Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT as reported in 214 ITR 801 are applied to the facts of the case, it is absolutely clear that cash deposits shown to be made into the bank accounts held by the appellant is nothing but his own money from unexplained sources. The provisions of section 69A are very clear and state that in the absence of the appellant being able to furnish the explanation of the credits or the monies or the cash, the same shall be assessed as unexplained income. In the appellant's case, there is no reasonable explanation and therefore the addition made is hereby confirmed.” 10. We have heard the rival contentions and purused the material available on record. There is nothing on record to substantiate the claim of the assessee that the deposits in the bank account are from the trading business of tyres. There are huge inconsistency in the gross receipts shown in the return of income as compared to cash deposits, there are no fixed or tangible assets, there are no employees and no business set up in India and there are no documentation on record which provides any remote nexus with business of trading in tyres. The assessee had talked about the bank withdrawals, however, how such withdrawals are connected with assessee’s business are again not borne out of records. In absence of nexus been established between the deposits and business of trading in tyres, the nature and source of such deposits has rightly been denied as from business of trading in tyres. Similarly, merely given the names and particulars of family members are not sufficient to discharge the onus cast on the assessee in establishing the theory of receipt of gifts from relatives and family members. In the entirety of facts and circumstances of the case, we therefore donot find any justifiable basis to interfere in the findings of 6 the ld CIT(A) who has rightly sustained the addition so made by the AO invoking the deeming provisions of section 69A and the conditions therein are clearly satisfied in the instant case as the assessee has failed to provide any reasonable explanation in support of nature and source of cash deposit so made in his bank account. 11. In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 14/08/2023. Sd/- Sd/- (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