Priyank Ketanbhai Shah, Vadodara V. The DCIT, Central Circle-2, Vadodara

ITSSA 115/AHD/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4600 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-12-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 02-07-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 132; 153A; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .( SS ) A . N o . 1 1 5/ A h d/ 2 0 23 ( A s se ss m e nt Y e a r : 20 17- 1 8 ) Pr i ya nk K e t an bh a i Sh a h, 1 0, S a i mi S o c ie t y, N e w Ell or a Pa r k , S ub han pu r a , V a d o da r a- 39 00 2 3 V s .De pu t y C o m mi s s io ne r o f I nc o me Ta x , C e ntr a l C ir c le - 2 , Va do dar a [ P A N N o . B V FP S 53 1 9 K ] (Appellant) .. (Respondent) Appellant by : Shri Jigar Adhyaru, C.A. Respondent by: Shri Sudhendu Das, CIT D.R. D at e of H ea r i ng 13.12.2023 D at e of P r o no u n ce me nt 20.12.2023 O R D E R PER SIDDHARTHA NAUTIYAL, JM: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-12, (in short “Ld. CIT(A)”), Ahmedabad in Appeal No./Ack. No. CIT(A), Ahmedabad- 12/10127/2019-20 vide order dated 20.02.2023 passed for the Assessment Year 2017-18. 2. The assessee has raised the following grounds of appeal:- “1. Because the ld. CIT(A) erred in law as well as on facts in confirming the addition of Rs. 7,00,000/-, being cash deposited in the bank account by holding the same to be unexplained investment of the appellant under Section 69A of the Act. 2. Because the ld. CIT(A) erred in law as well as on facts in not considering the explanation and justification by the appellant. 3. The appellant craves leave to add/alter any of the grounds of appeal before or at the time of hearing.” IT(SS)A No. 115/Ahd/2023 Priyank Ketanbhai Shah vs. DCIT Asst. Year –2017-18 - 2 - 3. At the outset, we observe that the appeal is time barred by 74 days. Before us, the Counsel for the assessee submitted that the appeal could not be filed due to reason beyond the control of the assessee. A search action was conducted in K-10 Group of cases which also included the case of the assessee. The assessee handed over his matter to the renowned legal Counsel Shri Mukund Bakshi from Mukund & Rohit, Chartered Accountants for the purpose of filing an appeal before ITAT, since he was dealing with all income tax proceedings of the assessee and his group cases, for the past many years. However, in the month of March 2023, Shri Mukund Bakshi got brain stroke and got severely paralyzed. He is completely bed ridden and is not even in a position to move. Accordingly, due to the above reason, the appeal of the assessee could not be filed within due prescribed date. Thereafter, the assessee engaged another Counsel Mr. Ketan Singh for purpose of filing appeal before ITAT and accordingly, it was for the aforesaid reasons that there was delay in filing of the present appeal. Therefore, assessee requested that delay in filing of present appeal may be condoned. 4. We have perused the application for condonation of delay filed by the assessee. We are of the considered view that the appeal could not be filed by the assessee due to bona fide reasons which were beyond the control of the assessee. Accordingly, in the interest of justice, the delay in filing of the present appeal is hereby condoned. On merits 5. The brief facts of the case are that a search action under Section 132 of the Act was initiated/conducted on 22.08.2017 in the K-10 group of cases which also include the case of the appellant. In response to notice issued under IT(SS)A No. 115/Ahd/2023 Priyank Ketanbhai Shah vs. DCIT Asst. Year –2017-18 - 3 - Section 153A of the Act on 08.10.2018, the assessee furnished return of income on 24.11.2018 declaring total income at Rs. 602790/-. During the course of assessment proceedings, it was observed that the appellant has deposited cash of Rs. 7,00,000/- in bank account maintained with Punjab National Bank, Sayajigunj, Vadodara (Account No. 06202191004391). Vide show cause notice dated 06.12.2019 the assessee was asked as to why the cash deposit of Rs. 7,00,000/- on 12.11.2016 should not be treated as unexplained income of the assessee and added to his total income in F.Y. 2016-17 relevant to A.Y. 2017-18. In response, the assessee vide letter dated 10.12.2019, explained that he has re-deposited the cash of Rs. 7,00,000/- on 12.11.2016 out of cash withdrawal made in the month of April 2016 amounting to Rs. 8.87 Lakh. In support, the assessee produced copy of cash book for entire year. It was further explained by the assessee that he has made withdrawal of Rs. 7.04 Lakh on 18.04.2016 & 21.04.2016 with the intention to make some investments, however, the deal could not be materialized and the same cash was re-deposited in the bank account on 12.11.2016. The Ld. Assessing Officer however did not agree with the contention of the assessee and made addition of the aforesaid amount, with the following observations: “The reply of the assessee has been considered but the same is not acceptable on following reasons 1. The assessee has made withdrawal of cash from OBC bank of Rs.3,04,600/- on 18.04.2016 and Rs.4,00,000/- on 21.04.2016. As per assessee's explanation, this amount is re-deposited again on 12.11.2016, as the property transaction could not be finalized. This explanation is nothing but after thought of the assessee. No credible evidence about the property transaction has been given by the assessee in support of the same. There is a gap of seven months in re-deposit of the cash withdrawal made on 18.04.2016 and 21.042016. The assessee has submitted cash book only for the month of April'2016 and not for the entire year and therefore the pattern for utilization of withdrawal of cash in the month of April 2016 cannot be verified. On verification of Bank statement with OBC, bearing account NO. 06202191004391, it is noticed that the assessee is having Auto Sweep facility in this account and is keeping minimum balance and rest is being invested in fixed deposit to earn higher interest. IT(SS)A No. 115/Ahd/2023 Priyank Ketanbhai Shah vs. DCIT Asst. Year –2017-18 - 4 - Therefore, the argument that the assessee was holding cash of Rs.7,00,000/- for seven months is nothing but eyewash. Therefore, the assessee argument on this ground fails miserably. 2. The assessee has also put forth second explanation that the cash of Rs.7,00,000/- has been deposited on 12.11.2015 out of unaccounted income rece.ved by Shri Ketan Shah who is a partner of M/s. Ketan Realities &. Co from sale of office premises of project k-10 grand and it is offered for taxation in its application filed before Hon'ble ITSC. First of all it is not verifiable whether Shri Ketan Shah has specifically shown this transaction of handing over of Cash of Rs.7,00,000/- to Shri Priyank Shah for deposit in his bank account on 12.11.2016 in Statement of Facts filed before Hon'ble ITSC as the copy is not yet available with AO. The assessee has not submitted any confirmation of Shri Ketan Shah to substantiate his claim. Therefore, the assessee's explanation is not acceptable on this ground. In view of above facts, I am satisfied that the assessee has not convincingly explained the source of cash deposit. Therefore, the cash of Rs,7,00,000/- deposited on 12.11.2016 i.e during demonetization period in Savings bank account with Oriental Bank of Commerce is treated as unexplained under Section69A of the Act and added to the total income of the assessee. The penalty proceedings under Section271AAC of the Act are initiated separately for addition made to the income of the assessee under Section69A of the Act to the tune of Rs.7,00,000/-.” 6. In appeal, Ld. CIT(Appeals) dismissed the assessee’s appeal with the following observations: “7. During the appeal proceedings the appellant has offered the same explanation but added some documents in support that were not produced before the AO. The appellant stated that the amount was out of the cash withdrawals in the month of April 2016 which was for investment in real estate which did not materialize. But no evidence was furnished regarding such claim. The AO's objection to such an argument is acceptable as the gap of purported withdrawals and deposit during demonetization is very long. Further the alternate argument taken by the appellant also shows that the appellant is not sure about this plea himself and that he knows that the same in on weak footing. 7.1 As the alternate argument the appellant says that it is part of money earned in cash by Shri Kctan Shah, partner (95%) in firm Ketan Realities & Co which is part of disclosure before ITSC in the firm's application. However, the appellant is not a partner in that firm to be given benefit of telescoping. However, no evidence was produced before the AO. The appellant has now furnished a copy of a letter from Shri Ketan Shah as confirmation which states as under: The documents found and seized include receipt of On-Money and its utilization towards expenses and for personal use. From the unaccounted IT(SS)A No. 115/Ahd/2023 Priyank Ketanbhai Shah vs. DCIT Asst. Year –2017-18 - 5 - receipt of the firm, sums were given to my sons for their personal purposes and utilization. During the Financial Year 2016-17, large amounts were given to Shri Priyank Shah from time to time. In absence of detailed particulars maintained, the same is not possible to quantify. However, I confirm that any amount found from his possession or utilized by him in cash represents the amount given by me from the sources of the firm as discussed above. 7.2 The father himself has not given any detail of tiny quantification. How much money was given and when was it given. Further the statement before ITSC also does not give any detail/evidence about the money being given in cash as admitted in the application by M/s Ketan Realities and its main partner Shri Ketan Shah to any other person including his son, the appellant. The confirmation now filed during appeal proceedings is nothing but an afterthought. The onus is on the appellant to provide a nexus between the money so earned to the source of the money deposited. The appellant has not produced an iota of evidence in support of averments made therein. Therefore, the finding of the AO cannot be upset based on such uncorroborated argument. In view of the same. I am inclined to confirm the addition of Rs 7,00,000/- as undisclosed investment u/s 69A of the Act by the appellant. Ground of appeal 1 is dismissed. 8. Ground of appeal No. 2 is against initiation of penalty proceedings u/s 271AAC. This ground of appeal is premature at this stage and therefore dismissed. 9. Ground of appeal 3 is residual and does not require any adjudication, hence dismissed for statistical purposes. 10. In the result, the appeal is DISMISSED.” 7. Before us, the assessee submitted that the Ld. CIT(Appeals) has completely disregarded the explanation and justification of the appellant and made the additions under Section 69A of the Act treating cash deposited into the bank account as unexplained income solely on presumptions and surmises. While confirming the additions, the Ld. CIT(Appeals) has simply stated that due to the long gap between the date of withdrawal of cash from the bank account and the subsequent deposit in the bank account, it has to be presumed that the aforesaid amount of Rs. 7 lakhs represents unexplained income of the assessee. It was submitted that no contrary evidences have been produced by the Department and the additions have been made on mere presumptions & IT(SS)A No. 115/Ahd/2023 Priyank Ketanbhai Shah vs. DCIT Asst. Year –2017-18 - 6 - conjectures. The assessee has specifically explained the source of cash, being cash withdrawals. It is the role of the Department to rebut the contentions of the assessee with plausible evidences. Since the inception of the proceedings, the appellant has taken the stand that he has withdrawn cash in the month of April 2016 (which is apparent from the bank statement) for making some investments and re-deposited the same cash during the period of demonetization. The AO did not have tangible material on record that could have persuaded him to form a belief that the cash deposits are unexplained. During assessment proceedings and even at appellate stage before Ld. CIT(Appeals), the assessee has produced bank statement and explained the source of cash deposits on 12.11.2023. Bank statement itself speaks that cash were withdrawn in April 2016 which were re-deposited into the bank account. 8. In response, the Ld. DR submitted that in this case there was a substantial time gap between the date of withdrawal of money from the bank account of the assessee and the re-deposit of the said amount in the assessee’s bank account. Therefore, a natural presumption arises that the aforesaid amount of cash so withdrawn earlier would have been utilised for certain household purposes since no person would be keeping such substantial amount of cash idle in the house. 9. We have heard the rival contentions and perused the material on record. In the instant facts, we observe that the assessee has all along been maintaining that the aforesaid deposits made in the bank account amounting to Rs. 7 lakhs, which have been added as unexplained income in the hands of the assessee, were out of cash withdrawals made by the assessee from his bank account from the very same bank account in the month of April 2016. Further, the assessee has also produced bank statement for the period under consideration in support IT(SS)A No. 115/Ahd/2023 Priyank Ketanbhai Shah vs. DCIT Asst. Year –2017-18 - 7 - of the fact that the cash withdrawals as well as the cash deposits were made from the same bank account. Further, we observe that the Department has not been able to bring forth any cogent evidence to demonstrate that the aforesaid withdrawals made by the assessee in the month of April 2016 had been invested by the assessee or utilised elsewhere. In the case of Sudhirbhai Pravinkant Thaker88 taxmann.com 382 (Ahmedabad - Trib.), the ITAT held that when assessee had demonstrated that he had withdrawn cash from bank and there was no finding by authorities below that this cash available with assessee was invested or utilized for any other purpose, it was not open to authority to make addition on basis that assessee failed to explain source of deposits. In the case of Ajit Bapu Satam 147 taxmann.com 222 (Mumbai - Trib.), Assessing Officer treated cash deposited by assessee during demonetisation period in its bank account as an unexplained money under Section 69A. The assessee contended that cash which was withdrawn by assessee from bank was deposited in very same bank account and he provided details of cash withdrawal from bank account and cash so withdrawn was lying with him and was not used anywhere else. The ITAT held that when both cash withdrawal and deposit were duly substantiated from bank statement of very same branch of bank and there was no findings by lower authorities that cash available with assessee was invested or utilised for any other purpose, cash so deposited could not be treated as unexplained money under Section 69A. In the case of Jaspal Singh Sehgal 83 taxmann.com 246 (Mumbai - Trib.), the ITAT held that where assessee submitted detailed cash summary showing inflow and outflow of cash for relevant year, in absence of any materials to show that cash withdrawn was utilised elsewhere by assessee, benefit of cash withdrawn by assessee from bank account against amount of cash deposit into bank should be given. In the case of Om Parkash Nahar 135 taxmann.com IT(SS)A No. 115/Ahd/2023 Priyank Ketanbhai Shah vs. DCIT Asst. Year –2017-18 - 8 - 377 (Delhi - Trib.) where assessee had no source of income apart from rental or pension income and some interest amount and same income had been withdrawn regularly from his bank account owing to his old age and various ailments and even after household withdrawal, there was a huge amount available with assessee in form of cash which he had deposited during demonetization, therefore, without any adverse material it could not be presumed that cash deposited by assessee was out of some undisclosed source and thus, additions made to income of assessee were to be deleted. In view of the above judicial precedents directly on the issue before us and the facts placed on record before us, we are of the considered view that this is a fit case where the additions made under Section 69A of the Act are liable to be deleted. The Department has not disputed the fact that the assessee had made withdrawals in the month of April 2016, which were adequate to cover the amount of deposits made by the assessee during the demonetisation period in the month of November, 2016. Further, the Department has not placed on record any cogent evidence to demonstrate that the amount to withdrawn by the assessee in the month of April, 2016 had been utilised by the assessee elsewhere by way of investments or otherwise. Accordingly, in the light of the above facts and the judicial precedents on the subject, we are of the considered view that the addition is liable to be deleted. 10. In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 20/12/2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 20/12/2023 TANMAY, Sr. PS TRUE COPY IT(SS)A No. 115/Ahd/2023 Priyank Ketanbhai Shah vs. DCIT Asst. Year –2017-18 - 9 - आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 18.12.2023 (Dictation given by Hon’ble Member on his Dragon Software) 2. Date on which the typed draft is placed before the Dictating Member 19.12.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 19.12.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .12.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 20.12.2023 7. Date on which the file goes to the Bench Clerk 20 .12.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................