Shri Kour Singh, Hanumangarh V. DCIT, International Taxation, Jaipur

ITITA 14/JPR/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0484 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 17-10-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 13-09-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 21-07-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Residential status; Opportunity of being heard; Reason to believe
• Section: 147; 69; 148; 6; 143(3); 250; 69A

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH,”SMC” JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ds le{k BEFORE: HON’BLE SHRI SANDEEP GOSAIN, JM vk;dj vihy la-@IT(IT)A No. 14/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2012-13. Shri Kour Singh, Dulmana, Hanumangarh. cuke Vs. DCIT, International Taxation, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. CTAPS 5423 C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj l s@ Assessee by : None jktLo dh vksj ls@ Revenue by : Ms Monisha Choudhary lquokbZ dh rkjh[k@ Date of Hearing : 14/09/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 18/10/2022 vkns'k@ ORDER PER: SANDEEP GOSAIN, J.M. This appeal by the assessee is directed against the order dated 24.05.2022 of ld. CIT (Appeals), National Faceless Appeal Centre (NFAC) passed under section 250 of the IT Act, 1961 for the assessment year 2012-13. The assessee has raised the following grounds :- 1. The ld. CIT (A) has erred in sustaining the action of ld. AO in initiating action u/s 148. The proceedings u/s 148 is bad in law and bad on facts. The ld. CIT (A) has erred in not accepting the contention of the appellant that the order passed by the ld. AO was bad in law and without proper jurisdiction. 2. The ld. CIT (A) has erred in sustaining the addition of Rs. 13,60,000/- u/s 69A for alleged unexplained deposit in bank account. 2 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. 3. The appellant crave liberty to add, amend, alter or modify any of the ground of appeal on or before its hearing before your honour. 2. Briefly stated the facts of the case are that as per the assessee appellant he is a non-resident settled in USA. The AO had received information through Annual Information Report (AIR) that the appellant had deposited cash aggregating to Rs. 13,60,000/- in his bank account with Rajasthan Marudhara Gramin Bank, Dulmana. As per record, the appellant had not filed any return of income for the relevant year. Notice was issued to the appellant for verifying the transaction. In response, the appellant informed that he was a farmer and owned approximately 70 bigha agriculture land and the source of cash deposits in the bank account was agricultural income. The AO was not satisfied with the reply as the same was not supported by documentary evidences. The AO accordingly concluded that he had a reason to believe that taxable income had escaped assessment in this case. He therefore, issued notice under section 148 after recording of reasons for re-opening of the case and taking necessary statutory approval of the ld. PCIT. Statutory notices were issued by the AO. The AO held that there was no evidence on record regarding the residential status of the appellant as a non-resident as per section 6 of the Act. He, therefore, considered the appellant as a resident for the assessment year under consideration. On being asked to explain the source of cash deposit, the ld. A/R submitted before the AO that the only source of income was from interest and agriculture income. The AO asked the appellant to furnish details of agriculture income, ownership of land, types of agriculture produce along with supporting documents etc. Even after affording repeated opportunities, the AO noted that the appellant failed to substantiate the claim of agriculture income from documentary 3 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. evidence. The AO observed that the ld. A/R only submitted downloaded copies of “Jamabandi” from the Rajasthan Government website for the calendar year 2017 to 2020. The AO also observed that the ld. A/R also submitted “Girdavari Report” for the year 2009 and 2010 but not for F.Y. 2011-12. It was also noticed by the AO that the said Girdavari Report contained details of various Khata / Khasra holders and it was not possible to ascertain share of agriculture produce of the assessee. No concrete evidence in support of the agriculture income such as sales bills, expense vouchers etc. were submitted. The AO also noted that the contentions of the appellant were not consistent in so far that he had earlier claim that he had been cultivating the agriculture land himself but subsequently, he claimed that the land was given for cultivation to one Shri Papu Meghwal. The agreement between them was not filed. The AO also observed that the appellant had never filed his return of income and if he was in receipt of any agriculture income, he would have filed ITR showing the same. Before the AO, the appellant also claimed that some deposits were made represent withdrawals from the bank account, however, the AO was not convinced as the appellant could not explain the reason of withdrawal and subsequent deposit of the same amount in the bank account. The AO concluded that the appellant had failed to explain the nature and source of cash deposit aggregating to Rs. 13,60,000/- in the bank account and therefore, the same was treated as unexplained money u/s 69A of the Act. The assessment was finalized at total income of Rs. 14,60,260/-. Being aggrieved by the order of the AO, the assessee preferred appeal before the ld. CIT (A). The ld. CIT (A) observed that the assessee has not produced any documentary evidence in support of his contentions, such as sales bills, expense vouchers etc. in regard to the claim of agriculture 4 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. income. The assessee has also not explained as to for what purpose the withdrawals were made and why the money so withdrawn was not utilized for the purpose for which it was withdrawn. The assessee has not even submitted proof of land holding specifying his land. Therefore, taking into consideration the above facts, the ld. CIT (A) sustained the addition. Now the assessee is in appeal before the Tribunal. Ground no. 1 relates to validity of proceedings u/s 148. 3. We have considered the rival submissions as well as the relevant material on record. As per record, the appellant had not filed any return of income for the year under consideration. The AO received information through Annual Information Report (AIR) that the appellant had deposited cash aggregating to Rs. 13,60,000/- in his bank account with Rajasthan Marudhara Gramin Bank, Dulmana. Since the appellant had not filed any return of income for the relevant year, notice was issued to the appellant for verifying the transaction. In response, the appellant informed that he was a farmer and owned approximately 70 bigha agriculture land and the source of cash deposits in the bank account was agricultural income. The AO was not satisfied with the reply as the same was not supported by documentary evidences. The AO accordingly concluded that he had a reason to believe that taxable income had escaped assessment in this case. He therefore, issued notice under section 148 after recording of reasons for re-opening of the case and taking necessary statutory approval of the ld. PCIT. Statutory notices were issued by the AO. The AO held that there was no evidence on record regarding the residential status of the appellant as a non-resident as per section 6 of the Act. He, therefore, considered the appellant as a resident for the assessment year under consideration. After appraisal of these materials on record, there is enough reason to believe that 5 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. the assessee has clearly failed to disclose all material facts for determination of income. This information along with the material on record constitutes a tangible material to form the belief that the income assessable to tax has escaped assessment. Since the assessee has not filed his return of income for the year under consideration, thus the information received through AIR constitutes a material on the basis of which the AO can reasonably form a belief that the income in the shape of unexplained cash deposit in bank has escaped assessment within the meaning of section 147 of the IT Act. At the stage of reopening of the assessment what is required is prima facie reason to believe that income assessable to tax has escaped assessment and the AO is not required to establish the fact by legal evidence or conclusion. Accordingly we do not find any error or illegality in the impugned order of ld. CIT (A) qua this issue. This ground of the assessee is dismissed. Ground No. 2 relates to addition under section 69A on account of unexplained cash deposit in bank. 4. We have heard rival contentions, perused the material available on record and gone through the orders of the lower authorities. Before us, the ld. Counsel for the assessee submitted as under :- “ 2.1. It is respectfully submitted that the addition made in the assessment order on account of deposit in the bank account is highly unjustified and in the fact and circumstances of case, is bad in law and bad on facts. The ld, CIT(A) has also not properly appreciate the submissions made and had erred in confirming the addition made. 2.2. The appellant was having only agriculture income in India and there was no other source of income. The agriculture land was ancestral land and 6 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. acquired by inheritance. During the year under consideration the appellant was residing in California (USA) and being an old person had no source of income, and was about 70 years old in the relevant year under consideration. He was wholly dependent in California on his two married daughters, who have also migrated to USA long back. 2.3. The appellant used to visit India once in a year or two years to collects his share of Agriculture Income emanating from his land given on sharing basis. In India, the appellant has never carried on any business, income from which is liable to Indian Income-tax. In the preceding year, action was initiated under I.T. Act, but later on income was determined at NIL as per copy of assessment order submitted herewith. 2.4. The appellant had submitted copies of land holding and the agriculture income and such income was also accepted in the past. The deposit in his account emanated from Agriculture income and out of withdrawals from same account in current year. 2.5. However if the details and information submitted are appreciated it will be seen that there was no justification of making any addition either on account of deposit in the bank account which was out of withdrawals made. 2.6. The perusal of the same would reveal that the following withdrawals were made from the bank account : Bank Deposits DATE Deposits in Bank Account I Withdrawal from bank account i 04/07/ 1 1 i 200000 -200000 04/25/11 25000 -225000 7 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. 04/25/ 1 1 i 25000 -250000 05/23/11 270000 20000 06/27/11 810000 -790000 10/05/11 j 8000 -798000 10/20/11 70000 -868000 10/24/11 15000 -883000 11/4/11 130000 -753000 11/19/11 60000 -813000 11/24/11 30000 -843000 12/08/11 35000 -878000 1/09/12 125000 -1003000 1/11/12 1 180000 -1183000 1/13/12 180000 l -1003000 1/18/12 50000 -1053000 1/27/12 230000 I -823000 1/28/12 550000 -273000 02/01/12 130000 -403000 02/0 3 / 1 2 20000 -423000 ' 02/04/12 150000 -573000 Total 1360000 1933000 -573000 2.70 From the above details it can be well appreciated that there are sufficient withdrawal form the bank account out of which and out of agriculture income of the assessee of the current year as well as the past years, the deposits were made in the bank account. Order for A.Y. 2011-12 made u/s 143(3) is also annexed in which agriculture income of Rs. 4,85,700/- has been accepted. 2.8. The Id. CIT(A) has erred in law in sustaining the above addition made by the Id. AO u/s 69A of the Act. Section 69A is not applicable in the present case, for making the addition on account of amount deposited in the bank account. For better appreciation of the provisions of law, the section 69A is reproduced hereunder : 8 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. 2.9. It is well settled law that section 69A of the Act can be applied only if the following conditions are satisfied a. The assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing, b. Such money, bullion etc. is not recorded in the books if any maintained by the assessee for any source of income, and c. The assessee offers no explanation about the nature and source of acquisition of such money etc. or the explanation offered by him is not satisfactory. 2.10 It is very humbly submitted that in the case of the appellant, none of the above conditions are satisfied. If it means that if on any given date there is any asset found in the possession of the assessee. The money received in the form of withdrawal from bank account and was a conversion from bank deposit into cash and being deposited back in the bank and all these transactions are fully verifiable from the bank 9 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. statement itself. It is changing form from one to another, There is no dispute with regard to the money lying in the bank, and that withdrawal has been made, The asset is already there and it is changing colour from one form to other, Disputing its conversion into cash without disputing other factors would not be justified in invoking this provision. 2.11. Coming to the second condition, that this is not recorded in the books of accounts, and is also not satisfied, as the entry of the same is duly reflected in the bank account. 2.12 Now, further coming to the third part of the section, the explanation had been duly submitted, and there is no taxable income in India, except the agriculture income. 2.13. The above section indicates that in order to be an income, there must be fulfillment of certain conditions since the word "and" has been used in the section. The assessee is the owner of the investments made in the current year must not be recorded in the books of accounts AND the explanation not offered or not satisfactorily offered, The provision which is deeming is always rebuttable. The use of the words if any' in the section indicates that it is not compulsory that the assessee must have maintained the books of accounts. He can prove the genuineness of the investments by some other evidence which proves investment out of disclosed source. 2.14. The word 'explanation' indicates that the opportunity of being heard must be given to the assessee to prove the nature and source of investments. The use of word 'may' and absence of the word 'shall' in the section indicates that the Assessing Officer has discretion to treat the particular investment as the income of the investor-assessee depending of the facts and circumstances of each case at a particular 10 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. situation of time. The AO is under obligation to give reasons for not accepting the explanations offered by the assessee. 2.15. Your kind attention is also invited towards the decision in the case of Hon’ble Kerala High Court in the Case of T.C.N. Menon V. ITO (1974) 96 ITR 14, Upasana Hospital and Nursing Home v. CIT (1997) 142 CTR 541, Hon'ble Orissa High Court in the case of Aurobindo Sanitary Stores v. CTC (2005) Reported in 276 ITR 549 (Ori) which is a unique judgment on Section 69, which has made the clarity of section 69 in a very ameliorated manner. The relevant abstract of the judgment is reproduced herewith. "For, applying Section 69, the Assessing Officer must first come to a finding that the assessee made investments which are not recorded in the books of account and thereafter call for an explanation from the assessee about the nature and source of the investments and if he finds that no such explanation was furnished by the assessee-firm or the explanation offered by the assessee was not satisfactory, he could treat the value of the investments to be the income of the assessee- firm of the financial year in which it has made the investments. The Assessing Officer had come to the conclusion that the assessee-firm had made investments during the financial year previous to the assessment year only on an analysis of different figures of assets and liabilities taken from the balance- sheet and the party ledgers and not on the basis of any material or information that the appellant had in fact made investments in some form or the other such as immovable and movable assets which were not recorded in the books of the assessee-firm, the source and nature of which the appellant had failed to explain to the satisfaction of the Assessing Officer. Therefore, section 69 could not be applied to treat the said sum as income. “ The ld. A/R further placed reliance on the following decisions :- 11 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. Kantilal Chandulal & Company vs. CIT 136 ITR 889 (Cal.) Smt. Sujata Graover vs. ACIT (2006) 99 TTJ (Del.) 837. The ld. A/R thus submitted that the entire addition so sustained by ld. CIT (A) may be deleted. 5. On the other hand, the ld. D/R supported the orders of the authorities below and contended that the explanation offered by the assessee is not worth believing as he has given different reasons as to the source of cash deposit in the bank account during assessment proceedings and at appellate proceedings. 6. I have heard the ld. Counsels for the assessee and revenue and have perused the material available on record as well as the judgments cited before me. From the facts of the present case, I find that the present appeal is against an addition of Rs. 13,60,000/- on account of unexplained cash deposit under section 69A of the IT Act, 1961. As per the case of the revenue, the assessee had deposited cash of Rs. 13,60,000/- in the bank account maintained with Rajasthan Marudhara Gramin Bank, Dulmana. However, as per assessee the said cash of Rs. 13,60,000/- was deposited out of sale of agricultural produce but this plea of the assessee was rejected by the revenue authorities by holding that in support of the sale of agricultural produce (agricultural income) the assessee has not furnished any documentary evidence. On the other hand, the ld. A/R of the assessee categorically submitted that the observations of the revenue authorities are without appreciating the facts available on record. The ld. A/R submitted that copies of land holding and the agriculture 12 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. income and such income was also accepted in the past. The deposit in his account emanated from agriculture income and out of withdrawals from same account in current year. It was submitted by the ld. A/R that in the assessment proceedings itself the assessee had clarified that the source of cash deposited in the bank account is out of sale proceeds of agricultural produce. In support of this contention, the ld. A/R submitted that the assessee placed on record the bank account statement indicating deposit of amount on various dates and withdrawals. The assessee further furnished copy of Affidavit of one Shri Papu Ram stating therein that he was doing cultivation of agricultural land of the assessee-appellant for the last several years. The assessee has also furnished documents evidencing holding of agricultural land. Thus considering the totality of facts and circumstances of the case, we allow this ground of appeal of the assessee and delete the addition. 7. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 18/10/2022 Sd/- ¼lanhi xkslkbZ½ (Sandeep Gosain) U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@ Dated:-18/10/2022. Das/ vkns'k dh izfrfyfi vxzsf’kr@ Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Shri Kour Singh, Hanumangarh. 2. izR;FkhZ@ The Respondent- The DCIT International Taxation, Jaipur. 13 ITA No. 14/JP/2022 Shri Kour Singh, Hanumangarh. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File {IT(IT)A No. 14/JP/2022} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar