JAYAKANTHAN MAILSAMY, AUSTRALIA V. ITO, INTNL TAXATIO WARD-1(2), CHENNAI

ITA 940/CHNY/2022

AI Insights

Mr. Jayakanthan Mailsamy, a non-resident Indian residing in Australia, appealed against the order of the Commissioner of Income Tax (Appeals)-16, Chennai, which confirmed an addition of Rs. 57,50,500 as unexplained investment under Section 69 of the Income Tax Act, 1961, for the assessment year 2017-18. The addition was based on substantial cash deposits made in his Indian bank account during the demonetization period, which the AO deemed unexplained due to lack of sufficient documentary evidence from the assessee. The ITAT considered the remittances and withdrawals documented by the assessee but upheld the addition to some extent, reducing the unexplained amount to Rs. 5,00,000.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127957 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 13-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 06-11-2022
• Other Referred Cases: ITO Vs Mrs.Deepali Sehgal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 69

Judgement Text

आयकर अपील सं./ITA No.940/Chny/2022 िनधा रण वष /Assessment Year: 2017-18 Mr.Jayakanthan Mailsamy, No.84 A, Yanko Road, West Pymble, New South Wales, Australia-207 300. v. The Income Tax Officer (International Taxation Ward)-1(2), Chennai. [PAN: AVFPM 1863 R] (अपीलाथ /Appellant) ( थ /Respondent) अपीलाथ की ओर से/ Appellant by : Mr.R.Vijayaraghavan, Adv. थ की ओर से /Respondent by : Mr.P.Sajit Kumar, JCIT सुनवाई की तारीख/Date of Hearing : 14.03.2023 घोषणा की तारीख /Date of Pronouncement : 16.03.2023 आदेश / O R D E R PER ARUN KHODPIA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-16, Chennai, dated 07.09.2022 and pertains to assessment year 2017-18. 2. The assessee has raised the following grounds of appeal: (1) The learned ClT(A) has failed to appreciate that the appellant was a nonresident and not having any income chargeable to tax in India nor was he involved in any income-earning activities in India to hold that the cash re-deposited in the appellant's Bank account to the extent of Rs.57,50,500/- was in the nature of आयकर अपीलीय अिधकरण, ’सी’ !ायपीठ, चे$ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI ी महावीर िसंह, माननीय उपा , एवं 'ी अ ण खोडिपया, माननीय लेखा सद) के सम BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI ARUN KHODPIA, HON’BLE ACCOUNTANT MEMBER ITA No.940/Chny/2022 :: 2 :: unexplained investment contemplated u/s 69 of the I.T.Act, 1961, in the facts and circumstances of the case. (2) The learned CIT(A) has erred in rejecting the explanations offered by the appellant with proper documentary evidence, holding that Preponderance of possibility does not support the claim of the appellant, in the facts and circumstances of the case, even though the AO has not established that the cash withdrawn earlier from SB account was used for other purposes anywhere else. (3) The learned CIT(A), in the facts and circumstances of the case, has erred in holding that the explanations with documentary evidences provided by the appellant does not sound credible or plausible, even when he appreciated the fact that the appellant is well employed outside India and has remitted money from such income derived outside India and that his Bank account in India is being maintained by his parents, who are agriculturalists, (4) The learned CIT(A) has failed to appreciate that the AO has not found that cash withdrawn earlier had been used up elsewhere and it was not available for household to keep cash at home, independent of how much it is and ought to have appreciated that in the appellant's case, the cash kept at home and re-deposited in the Bank is from an explained source and is not an unexplained investment, in the facts and circumstances of the case. (5) The Hon'ble ITAT (Delhi), in ITA No.5660/Del/2012 relating to ITO Vs Mrs.Deepali Sehgal, has held that lapse of substantial time after which cash withdrawn was redeposited in the SB account, does not give rise to unexplained money, unless the AO has other evidence to disprove the argument. (6) For these and other additional grounds of appeal that may be adduced at the time of hearing, the order of the Commissioner of Income Tax (Appeals)-16, Chennai, is opposed to law and unsustainable in the facts and the circumstances of the case. 3. The brief facts of the case are that the assessee is an individual filed his return of income for the AY 2017-18 on 31.03.2018 showing total income of Rs.48,185/-. Subsequently, the return was selected for limited scrutiny under CASS. During the course of assessment proceedings, it was revealed by the AO that the assessee has made cash deposits of Rs.57,50,500/- in ICICI Bank a/c. Details of cash deposits were called for by the AO, but were not submitted by the assessee. A show cause notice was issued on 01.05.2019. In response to the show cause notice, the assessee has replied that in India he has received agricultural income, he has also remitted his income from Australia, but no supporting documents ITA No.940/Chny/2022 :: 3 :: were submitted. The AO was further called the assessee to provide relevant documentary proof for the cash deposits. Against which, the assessee has stated that the source for cash deposits were past savings by his salary in Australia which was remitted to India on various dates starting from July, 2011 to September, 2013. Again as per AO, the assessee was failed to submit any details of cash withdrawals from his bank account and in the absence of the same, the contentions of the assessee were not accepted by the AO and the AO has made an addition of Rs.57,50,500/- by invoking provisions of Sec.69 of the Act. 4. Against the action of Ld AO, the assessee preferred an appeal with the Ld.CIT(A). Before Ld.CIT(A), the assessee has reiterated its submissions and tried to substantiate that the he has sufficient withdrawals to deposit cash of Rs.57,50,500/-. However, the Ld.CIT(A) has not find merits in the contentions of the assesseee, has decided the appeal by giving a part relief of Rs.3 lakhs to the assessee and remaining addition was confirmed. Now, the assessee is before the ITAT to challenge the decision of the Ld.CIT(A). 5. Before us, the Ld.AR of the assessee reiterated the submissions made by the assessee before the Ld.CIT(A), submitted that the assessee is a Non- Resident Indian residing in Australia since last 25 years filing his tax return in Australia for the income derived therein. The assessee has no source of income in India except income from ancestral agricultural land. The assessee has maintained his NRI savings with ICICI Bank having A/c ITA No.940/Chny/2022 :: 4 :: No.000901081242. The assessee has transferred 6400 AUD (Australian Dollars) to his ICICI Bank from his account maintained with Australia Bank on 26.07.2011, which is equivalent to INR of Rs.30,52,856/-. On 29.07.2011, a sum of Rs.15,52,857/- and Rs.15 lakhs totaling to Rs.30,52,857/- were transferred to Mr.K.K. Mailsamy A/c and deposited to Dindigul Central Co-operative Bank (in short “DCCB"). Against above deposits were availed for Rs.24,00,000/- on 01.08.2011. The Above loan account and deposit account was closed on 02.07.2013 and the net amount withdrawn in the cash were Rs.31,11,888/-. It was further submitted that on 06.09.2013 & 09.09.2013, the assessee has transferred from his Australia Bank account a sum of Rs.20 lakhs and deposited a sum of Rs.20 lakhs was made in DCCB. A loan of Rs.15 lakhs was obtained on this deposit. This loan was also closed on 12.11.2015 and total amount of Rs.20,44,994/- was withdrawn. Therefore, it was the submission that total Rs.51,56,882/- were withdrawn by the assessee in the earlier years and there was also a receipt from agricultural income for Rs.5,63,618/- which were utilized to deposit the cash of Rs.57,20,500/-. The Ld.AR of the assessee has also submitted a copy of certificate showing confirmation of cash withdrawals from savings account of the assessee for Rs.48,55,000/- in three parts on 01.08.2011 Rs.24 lakhs, on 12.11.2013 Rs.15 lakhs and on 29.05.2017 Rs.9,55,000/- with the submissions of the facts, the Ld.AR of the assessee has prayed that the Ld.CIT(A) has erred in deciding the issue without appreciating the facts of the case, thus, the order of the ITA No.940/Chny/2022 :: 5 :: Ld.CIT(A) is liable to be set aside. It is further submitted that since sufficient cash withdrawals were available with the assessee which were deposited during the demonetization period, nothing should be considered as unexplained under the provisions of Sec.69 of the Act. The decision of the Ld.CIT(A) is thus arbitrary, unjustified and unsustainable and deserves to be reversed by deleting the entire addition made by the AO. 6. On the other hand, the Ld.DR submitted that the assessee has deposited a huge amount of Rs.57,50,500/- during the demonetization period and was unable to substantiate its claim by producing the evidences that he was having this much of amount in hand which can be deposited into bank. The assessee was provided with ample opportunities to submit the details and evidences for cash withdrawals from the bank account, but was failed to submit such details before the Revenue authorities. Therefore, the AO has rightly imposed the addition under the provisions of Sec.69 of the Act, considering the amount as unexplained on the part of the assessee. The Ld.CIT(A) has also deliberated the matter at length and have concluded that the assessee could not substantiate where such huge amount of money was kept by him in cash for these years. It was the observation of the Ld.CIT(A) that it is humanly improbable that such hefty amounts were kept by the assessee and his family and in case at whom and under the preponderance of probability. The contentions of the assessee cannot be accepted. The Ld.CIT(A) has very generously allowed the relief of Rs.3 lakhs to the assessee looking to the financial status of the ITA No.940/Chny/2022 :: 6 :: family otherwise the assessee was even unable to satisfy with evidences that the amount of Rs.3 lakhs were lying with him or his family. Therefore, it is the prayer that the order of the Ld.CIT(A) deserves to be sustained and appeal filed by the assessee may please be dismissed. 7. We have considered the rival contentions and submissions made by the assessee. On perusal of the order of the AO & the Ld.CIT(A), it is clear that the assessee has made certain remittances from Australia to India which were supported by certain bank statements as observed by the Ld.CIT(A). The assessee has also provided a copy of certificate from DCCB showing jewelry of cash of Rs.24 lakhs in 2011 and Rs.15 lakhs in 2013. The assessee has tried to substantiate that such withdrawals and also the agricultural income receipts by the assessee were kept as cash by him or his family which were deposited back into the bank when the demonetization was announced. On the part of the assessee, it was not substantiated by any evidence that such cash was lying with him or his family. At the same time, no facts could be brought on the records that if some withdrawals were taking place in the earlier years whether the same were used by the assessee for any other purpose or not. Considering to the facts and circumstances of the case, we see no merits in the contentions of the assessee, however, the relief granted by the Ld.CIT(A) cannot be considered as adequate in terms of the financial status of the assessee and his family. We, therefore, of the view that it would be appropriate that the relief granted by the Ld.CIT(A) for Rs.3 lakhs should be increased by further ITA No.940/Chny/2022 :: 7 :: Rs.2.00 lakhs. Consequently, the addition to the extent of Rs.5 lakhs is hereby deleted. 8. In the result, appeal filed by the assessee is partly allowed. Order pronounced on the 16 th day of March, 2023, in Chennai. Sd/- ( महावीर िसंह) (MAHAVIR SINGH) उपा /VICE PRESIDENT Sd/- (अ ण खोडिपया) (ARUN KHODPIA) लेखा सद)/ACCOUNTANT MEMBER चे$ई/Chennai, िदनांक/Dated: 16 th March, 2023. TLN आदेश की ितिलिप अ*ेिषत/Copy to: 1. अपीलाथ /Appellant 4. आयकर आयु+/CIT 2. थ /Respondent 5. िवभागीय ितिनिध/DR 3. आयकर आयु+ (अपील)/CIT(A) 6. गाड फाईल/GF