Syed Abdul Jameel, Bengaluru V. The Deputy Commissioner Of Income Tax, International Taxation Circle-1(2), Bangalore

ITITA 574/BANG/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9596 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 27-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-10-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 19-07-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect; Set aside
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER IT(IT)A No.574/Bang/2022 Assessment Year : 2017-18 Shri Syed Abdul Jameel, No.19/1, S-1, KCD Complex, CSI Compound, Behind Unity Building, Mission Road, Bengaluru – 560 027. PAN : AMFPJ 9371 E Vs.DCIT, Intl Taxation, Circle – 1(2), Bengaluru. APPELLANTRESPONDENT Assessee by:None Revenue by :Shri.K. R. Narayan, Addl. CIT(DR)(ITAT), Bengaluru. Date of hearing:26.10.2022 Date of Pronouncement:27.10.2022 O R D E R Per N. V. Vasudevan, Vice President: This is an appeal filed by the assessee against the order dated 14.06.2022 of CIT(A)-12, Bengaluru, relating to Assessment Year 2017- 18. 2. The assessee is an individual. He derives income from house property and income from other sources. The assessee filed his return of income for Assessment Year 2017-18 declaring income of Rs.74,46,160/-. In the course of assessment proceedings, the AO noticed that the assessee had deposited a sum of Rs.48,46,000/- in his bank account. The AO called upon the assessee to furnish evidence of source of cash deposited in the bank account. A notice under section 142(2) dated 04.12.2019 was issued IT(IT)A No.574/Bang/2022 Page 2 of 7 by the AO. In response, the assessee field a 2 page submission dated 9.12.2019 giving details of cash withdrawals since 30.04.019. It was submitted by the assessee that the source of cash deposits was cash withdrawals made over a period of time. The AO issued another notice dated 13.12.2019 calling upon the assessee to furnish evidence of cash withdrawals made vide assesse’s submissions dated 09.12.2019. The AO found that the assessee filed reply to the second notice reiterating the same stand that was taken in his letter dated 09.12.2019. The AO treated the sum of Rs.48,46,000/- as unexplained cash deposit under section 69 of the Act for the following reasons: “5.In response to the notice. the assessee filed another submission. reiterating his earlier explanations. He also submitted some details requested. Various submissions made by the assessee were verified and examined. The only explanation for sources of cash deposited was that it was out of cash withdrawals and small amount of rental income received in cash. What has not been explained is why was the assessee sitting on such large amount of cash? If the assessee was in possession of large amount of cash, why would he continue to withdraw cash from the bank? The assessee has been depositing certain amounts of cash in bank over the years too. There has not been provided any evidence of having deposited such large sum of cash as has been deposited during demonetization. The assessee keeps repeating in all his submission that he had cash in hand as on March 31, 2016 a sum of Rs. 2,14,21.776 and it is interesting to note that the assessee in his submission has given details that post March 31, 2016, he has further withdrawn Rs. 24,44,000 till Nov, 2016. It belies all reason and logic that someone sitting on cash of Rs. 2,14,21,776 continues to withdraw cash in large sums. Considering the circumstances which does not show any uniform pattern in order to consider explanations given by the assessee consistent and therefore acceptable. It is rather clear from the unusual behavior of cash movement, which has not been satisfactorily explained by the assessee that the assessee has sources to generate cash other than that has been brought before this office.” IT(IT)A No.574/Bang/2022 Page 3 of 7 3. Before CIT(A), the assessee filed cash flow statement explaining the source of cash. The CIT(A) considered the cash flow statement but did not agree with the submission of the assessee for the reason that the cash flow statements were not supported by evidence. Following were the relevant observations of the CIT(A): “6. The submissions made by the assessee are examined. During the course of hearing before the undersigned, the assessee had been asked to submit cash flow statement for AY 2016-17 and AY 2017-18 This is now submitted by the assessee as under Cash Flow Statement for AY 2016-17 ParticularsAmountAmount Opening balance as on 01.04.2015 Cash deposit to Karnataka Bank 102 Rental income Cash deposit to ICICI Bank Cash deposit to State Bank of Mysore 690 16,64,000 2,16,000 2,00,000 6,49,220 1,98.67,621 27,29, 220 2,25,96,841 Cash withdrawn Karnataka Bank 102 Cash withdrawn from State Bank of Mysore 690 7,25,065 4,50,000 11,75,065 Closing Balance as on 31.03.2016 2,14,21,776 Cash Flow Statement for AY 2017-18 Opening balance as on 01.04.2016 Add. Cash deposit to Karnataka Bank 102 Rental income Cash deposit to State Bank of Mysore 690 13,98,065 2,16,000 18,88,000 2,14,21,776 35,02,065 2,49,23,841 Less: Cash withdrawn Karnataka Bank 102 Cash withdrawn from State 18,46,000 1,44,00019,90,000 IT(IT)A No.574/Bang/2022 Page 4 of 7 Bank of Mysore 690 Closing Balance as on 31.03.2017 2,29,33,841 7. As above it is seen that assessee has claimed cash deposit of Rs.27.29.220 in AY 2016-17, whereas cash withdrawn during the year was only Rs.11,75,065. Similarly, as per statement submitted, cash deposit during AY 2017-18 was Rs.35,02,065 whereas cash withdrawn from bank was only Rs.19,90,000 Moreover, corresponding bank account ledger extracts have also not been given. As above, as per assessee's own statement, the cash deposit in bank account was much more than the cash withdrawals. Assessee claims an opening cash balance of Rs.1,98,67,621 as on 1.4.2015. The assessee is not able to explain the source of said opening cash balance. No further details are submitted. As above it is seen that assessee is making a frivolous and unsubstantiated claim to explain cash deposits during AY 2017- 18. The assessee has not given details of any cash withdrawals prior to 01.04.2015. It appears that the cash in hand claimed by the assessee goes back many years preventing it from being verified. As such, it is held that the assessee has failed to explain the unaccounted cash deposit of Rs.48,46,000. The addition of this amount in the assessment order is upheld 8. The appeal is dismissed.” 4. Aggrieved by the Order of the CIT(A), the assessee has filed the present appeal before the Tribunal. Notice of hearing was duly served on the assessee but none appeared on behalf of the assessee. In the circumstances, we proceed to decide the appeal of the assessee on the basis of the material available on record. The grounds of appeal raised by the assessee reads as follows: 1.The impugned order passed by the Learned CIT(A) and Assessing Officer, to the extent prejudicial to the Appellant, is not justified in law and on facts and circumstances of the case; 2.The assessment order and the order of CIT(A) confirming the same, is bad in law as the same is passed without considering IT(IT)A No.574/Bang/2022 Page 5 of 7 documents furnished during the course of proceedings; therefore liable to be set aside in the view of the rulings of the Hon'ble HC in the case of Salem Sree Ramavilas Chit Company (P.) Ltd. Vs. DCIT w.p. no. 1732 of 2020 and w.m.p. nos. 2006 and 2007 of 2020; 3.The Learned CIT(A) and AO have erred in law and on facts in making addition of Rs.48,46,000/- under section 69 of the Act; 4.The Learned CIT(A) and AO failed to appreciate that the provisions of section 69 are inapplicable on the facts and circumstances of the case; 5.The addition under section 69 is liable to be deleted as the Appellant has discharged initial burden cast upon him under the said provisions of the Act; 6.The Learned CIT(A) and AO has erred in law and on facts in not appreciating that deposits have been made out of previous withdrawals as clearly evidenced by bank statements and other documents; 7.The Learned CIT(A) and AO has erred in law and on facts in not appreciating the source of cash deposits as was duly evident considering the documents available on record during the course of proceedings; 8.The impugned adjustments being merely based on presumption and surmises, is to be deleted; 9.The actions of the Learned CIT(A) and AO are contrary to the provisions of the Act, facts of the case, arbitrary and without any application of mind; 10.The Learned CIT(A) and AO has erred in not appreciating that the case of the Appellant is favourably covered by the ruling of the Honourable Karnataka High Court in the case of PCIT vs. Basetteppa B Badami[2018] 93 taxmann.com 66 (Karnataka) and thereby erred in not following judicial discipline; 11.In applying the test of human probabilities, the Learned CIT(A) and AO has erred in law and on facts in ignoring the facts of the case which does not call for such presumptions; 12.The Learned CIT(A) and AO has erred in compelling the Appellant to not withdraw sum from bank and the Learned AO IT(IT)A No.574/Bang/2022 Page 6 of 7 has erred in not appreciating that there is no law preventing Appellant from withdrawing sum from his bank account; 13.The Learned CIT(A) and AO have not appreciated that deposits have been made prior to 15.12.2016 (The Taxation Laws (Second Amendment) , 2016) , i.e prior to introduction of 115BBE of the Act. And therefore, such amended provisions are not applicable to the facts in the present case. 14.The Learned CIT(A) and AO has erred in raising demand vide issue of notice under section 156 of the Act; 15.The Learned CIT(A) and AO has erred in levying interest under section 234A/B/C of the Act; 16.The Learned CIT(A) and AO has erred in initiating penalty proceedings by issue of notice under section 271AAC and other provisions of the Act; (Total tax effect: Rs.37,43,535/ -) 5. The sum and substance of the grounds of appeal is that the assessee has duly explained the source of cash deposited in the bank account as previous withdrawals made from the bank. Perusal of the order of the CIT(A) however shows that the cash deposited in Assessment Year 2016- 17 into the bank account was Rs.27,29,220/- whereas the cash withdrawals made during that year was Rs.11,75,065/-. In Assessment Year 2017-18, cash deposits in the bank were Rs.35,02,065/- and cash withdrawal was only Rs.19,90,000/-. The assessee did not give any bank statement to show withdrawal from the bank account. The assessee also claimed an opening balance of Rs.1,98,67,621/- as on 01.04.2015 which was not substantiated with any evidence. In this state of affairs, the CIT(A), in our view, has come to the right conclusion that the assessee failed to prove the source of cash out of which deposits were made in the bank account. Consequently, we confirm the order of the CIT(A) and dismiss the appeal of the assessee. IT(IT)A No.574/Bang/2022 Page 7 of 7 6. In the result, appeal of the assessee is dismissed. Pronounced in the open court on the date mentioned on the caption page. Sd/- (CHANDRA POOJARI) Sd/- (N.V. VASUDEVAN) Accountant Member Vice President Bangalore, Dated: 27.10.2022. /NS/* Copy to: 1.Appellants2.Respondent 3.CIT4.CIT(A) 5.DR 6. Guard file By order Assistant Registrar, ITAT, Bangalore.