Income Tax Appellate Tribunal - Pune
Dr. Gondkar Eknath Bhagchand,, vs Department Of Income Tax on 29 October, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER
AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER
ITA No.2177/PN/2012
(Assessment Year : 2007-08)
The Dy. Commissioner of Income Tax,
Ahmednagar Circle, Ahmednagar .... Appellant
Vs.
Dr. Gondkar Eknath Bhagchand
Pimpalwadi Road, Shirdi,
Tal. Rahata, Dist. Ahmednagar.
PAN: AFQPG1445N .... Respondent
Appellant by : Shri P.S. Naik
Respondent by : Smt. Deepa Khare
Date of hearing : 15-09-2014
Date of pronouncement : 29-10-2014
ORDER
PER G. S. PANNU, AM
The captioned appeal by the Revenue is directed against an order of the Commissioner of Income Tax (Appeals)-I, Pune dated 13.04.2012 which, in turn, has arisen from an order dated 23.12.2009 passed by the Assessing Officer u/s 143(3) of the Income-tax Act, 1961 (in short "the Act") pertaining to the assessment year 2007-08.
2. In this appeal, the Revenue has raised the following Grounds of Appeal.
1. The order of the learned Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case.
2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) grossly erred in deleting the addition of Rs. 18,00,000/- made by the Assessing Officer on account of un-explained cash credit u/s.68 of the Income-tax Act, 1961 instead of confirming the same.
3. The learned CIT(Appeals) grossly erred in deleting the above addition without appreciating the facts on record which clearly indicated that the deposits of Rs.18,00,000/- appearing in the cash book in cash are not matching and are pre-dated to the amounts and dates mentioned in the sale deed and also the assessee had no 2 ITA No.2177/PN/2012 Dr. Gondkar Eknath Bhagchand valid or bonafide explanation in support of the cash credits or in respect of the discrepancies.
4. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax(Appeals) failed to appreciate that the burden of proving the source of cash credits is on the assessee as held in the case of Shreelekha Banerji Vs.CIT reported at 1963(49) ITR SC 112, and, in the present case, the assessee had failed to discharge the same by adducing any evidences. In view of the fact that the burden of proof was on the assessee, which he had failed to discharge, the learned Commissioner of Income-tax(Appeals) erred in holding that there was no material available on record which could be considered as sufficient for making the addition.
5. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) grossly erred in deleting the addition made by the Assessing Officer on account of un- explained investment u/s.69 of the Income-tax Act, 1961 of Rs. 25,50,000/-, being the cash deposits in bank instead of confirming the said addition.
6. The learned Commissioner of Income-tax(Appeals) grossly erred in failing to appreciate that the assessee had no valid or bonafide explanation in support of the cash deposits of Rs.25,50,000/-.
7. The learned Commissioner of Income-tax(Appeals) grossly erred in deleting both the addition of Rs.18,00,000/- u/s.68 as well as the addition of Rs.25,50,000/- u/s.69 merely on the basis of general submissions, such as the total cash received on sale of agricultural land and the overall cash balance, without examining the specifics in any manner and without appreciating that it was for the assessee to prove each credit and each deposit separately with clinching evidences.
8. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax(Appeals) grossly erred in deleting the addition of RS.6,30,000/- made by the Assessing Officer on account of deduction claimed u/s.54F of the Income-fax Act, 1961 instead of confirming the same.
9. The learned Commissioner of Income-tax(Appeals) ought to have considered that the investment made by the assessee in the flat to claim deduction u/s.54F was purchased by him, jointly along with his son, on a plot which was leased by CIDCO for a period of 60 years.
10. The learned Commissioner of Income-tax(Appeals) failed to appreciate that the appellant is not the owner of the said property within the meaning of provision of "Transfer of Property Act", and hence the impugned investment is ineligible for deduction u/s.54F which can be availed only by the owner.
11. Without prejudice to the above, the learned Commissioner of Income- tax(Appeals) failed to take cognizance of the fact that the assessee is in any case not entitled to full deduction u/s.54F as he had only 50% share in the property.
3 ITA No.2177/PN/2012
Dr. Gondkar Eknath Bhagchand
12. For these and such other grounds as may be urged at the time of hearing, the order of the learned Commissioner of Income-tax (Appeals) may be vacated and that of the Assessing Officer be restored.
13. The appellant craves leave to add, alter or amend any or all the grounds of appeal.
3. Although, Revenue has raised 13 Grounds of Appeal in the Memo of appeal but the grievance against the order of CIT(A) is on three issues. The first grievance is with respect to an addition of Rs.18,00,000/- deleted by the CIT(A). In this context, brief facts are that assessee had sold an agricultural land situated at Village Shirdi, during the year under consideration for a sum of Rs.90,00,000/-. The entire consideration was received by the assessee in cash on various dates. The Assessing Officer observed that the dates of payments noted in the Sale Deed did not correspond to the dates of receipts appearing in the cash book maintained by the assessee. In respect to a payment shown to have been made in May, 2006, the amount in the Sale Deed was Rs.32,00,000/- whereas in the cash book an amount of Rs.50,00,000/- was shown as received in the month of May, 2006. For the said reason, the Assessing Officer treated the sum of Rs.18,00,000/- (Rs.50,00,000/- - Rs.32,00,000/-) as an unexplained credit appearing in the books of account by way of cash receipt and accordingly, taxed the same u/s 68 of the Act. The CIT(A) has deleted the addition after accepting the explanation furnished by the assessee. Pertinently, the CIT(A) noted that the discrepancy in respect of certain dates between the Sale Deed and the cash book maintained by the assessee does not lead to any inference that any excess amount has been received by the assessee over and above the amounts stated in the Sale Deed. Against the action of the CIT(A) in deleting the addition, the Revenue is in appeal before us.
4. At the time of hearing, the learned DR reiterated the stand of the Assessing Officer which is to the effect that the dates of deposits of 4 ITA No.2177/PN/2012 Dr. Gondkar Eknath Bhagchand Rs.18,00,000/- in the month of May, 2006 appearing in the cash book are not matching with the dates of payment mentioned in the Sale Deed. Therefore, the order of the CIT(A) is sought to be assailed.
5. On the other hand, the learned Representative for assessee has justified the action of the CIT(A) by pointing out that the assessee had also obtained a confirmation from the purchaser that the payments have indeed been made as per the dates noted in the cash book. On this basis, the order of the CIT(A) is sought to be defended.
6. We have carefully considered the rival submissions. Factually speaking, the total sale consideration accrued to the assessee as per the Sale Deed is Rs.90,00,000/-. It is also clear that the amount of cash received on various dates as recorded in the cash book with respect to the sale of land in question also amounts to Rs.90,00,000/-. The only difference is that the dates of payments noted in the Sale Deed do not fully match the dates of payments recorded in the cash book. In particular, with respect to the payments in the month of May, 2006, there is an excess amount of cash received in the cash book in comparison to the amount recorded in the Sale Deed. This difference of Rs.18,00,000/- has been treated as unexplained cash credit by the Assessing Officer by invoking the section 68 of the Act. The CIT(A) has noted the explanation of the assessee that the dates recorded in the Sale Deed were pre-decided and the actual schedule of payment differed. Whereas, at the time of execution of Sale Deed, the pre-decided dates remained un-altered in the Sale Deed and therefore, it resulted in a mis-match with the dates of actual payments recorded in the cash book. In support, assessee also furnished a letter from the purchaser that the payments have been made on the dates noted in the cash book, an assertion noted by the CIT(A) in para 4.2 of his order. Apart therefrom, we find no error on the part of CIT(A) in holding that 5 ITA No.2177/PN/2012 Dr. Gondkar Eknath Bhagchand the sum of Rs.18,00,000/- cannot be considered as unexplained deposits appearing in the cash book because the same constitutes the sum of Rs.90,00,000/- received by the assessee as part of sale consideration. In fact, in this context, the CIT(A) has noticed that though assessee recorded Rs.18,00,000/- in excess in the cash book in May, 2006, in the subsequent month of June, 2006, the amount of cash received recorded in cash book was lesser to that extent in comparison to the amount shown in the Sale Deed. Be that as it may, that there is no contravention to the finding of the CIT(A) that the total amount credited in the books of account as sale consideration is the same as recorded in the Sale Deed though the dates of cash receipts have varied. In our considered opinion, the ultimate conclusion of the CIT(A) to treat the impugned sum of Rs.18,00,000/- as explained on account of the sale of land is hereby affirmed. Therefore, on this aspect, Revenue fails.
7. The second Ground of Appeal of the Revenue is against the action of the CIT(A) in deleting an addition of Rs.25,50,000/- on account of unexplained investment by way of deposits in the bank accounts. The Assessing Officer noted that certain amounts of cash deposited in the bank accounts on various dates was not explained by the assessee, therefore, he treated the amount of said deposits of Rs.25,50,000/- as assessable u/s 69 of the Act. The CIT(A) has deleted the addition by noticing that the deposits appearing in the bank account are out of cash received on sale of land as well as cash available in the cash book maintained by the assessee on a monthly basis. Against the aforesaid decision of the CIT(A), Revenue is in appeal before us.
8. The learned Departmental Representative has relied on the order of Assessing Officer in support of the case of the Revenue. As per the learned Departmental Representative, the CIT(A) erred in deleting the addition by 6 ITA No.2177/PN/2012 Dr. Gondkar Eknath Bhagchand accepting the explanation furnished by the assessee with respect to the availability of cash for the deposit in the bank account.
9. On the other hand, the Counsel for the respondent assessee has relied upon the order of CIT(A) in support of the case of the assessee. The learned Counsel emphasized that the source of the deposits was mainly out of sale consideration of land and on the basis of cash book, such amount was available with the assessee to deposit in the bank account on various dates.
10. In this context, we have carefully considered the following finding of the CIT(A) in para 5.3 of his order.
"5.3 I have carefully considered the facts of the case and the law as are apparent from record. The Assessing Officer, in the assessment order noted above has found that the appellant has made cash deposits of Rs.25,50,000 on different dates as mentioned in para 5.1 above. The Assessing Officer has noted in the assessment order that the appellant was asked to explain the nature and source of this deposit vide show cause dated 11.12.2009 and the appellant vide their letter dated 23.12.2009 informed that the explanation about the same has already been given vide their letter dated 8.12.2009. However, the Assessing Officer formed his opinion that the said explanation was not sufficient and therefore, treated the aforesaid deposits of Rs.25,50,000 as unexplained u/s 69 of the IT. Act. The appellant in their submissions etc. made in appeal has contended that the finding of the Assessing Officer is not correct. All the material facts were available before him. Copy of letter dated 8.12.2009 has been placed on record to claim the same. It has further been stated that the deposits appearing in the bank account is out of the cash received on sale of land as well as the cash available in the cash book maintained on monthly basis. The appellant has enclosed the copy of the cash book maintained including the extract of balances as noted in para 5.2.1 above. Copy of the bank account wherein the deposits have been made has also been placed on record. I have carefully considered the same and found that the claim of the appellant is correct. It was first of all noted that the deposit of cash in the bank account in this assessment year is not of Rs.25,50,000 as noted by the Assessing Officer but is of Rs.40,50,000 as noted below :
Sr. No. Date Amount of cash deposit (Rs.) Whether considered in assessment order 1 26.06.2006 1000000 Yes 2 05.09.2006 450000 Yes 3 06.09.2006 1500000 No 4 22.09.2006 500000 Yes 7 ITA No.2177/PN/2012 Dr. Gondkar Eknath Bhagchand 5 03.10.2006 200000 Yes 6 28.03.2007 400000 Yes TOTAL 4050000 From the above, it can be noted that the Assessing Officer failed to notice the cash deposit made by the appellant of Rs.15,00,000 on 6.9.2006. However, even after taking into account all the deposits made by the appellant it is noted that cash of Rs.10,00,000 has been deposited in June 2006 (26.6.2006) and remaining sums have been deposited in Sept.2006, October 2006, and March 2007 as noted above. It is important to note that all the deposits are appearing after the final execution of sale deed and receipt of entire consideration of Rs.90,00,000 from time to time. Therefore, the claim of the appellant that the source of the deposit mainly lies in the sale consideration of the land cannot be negated. The appellant has shown that the sale consideration of Rs.40,00,000 was received in cash before June 2006 and therefore, the deposit of cash made in bank from June onwards of Rs.40,50,000 can be safely assumed to be arising from the same. The appellant had other sources of income also and was also carrying cash balances in the cash book as shown above and therefore, it will be difficult to hold that the deposits appearing in the bank cannot be treated as explained. The above finding further gets strength from the fact stated by the appellant that the sale consideration of land was invested in purchase of another agricultural land and a flat at Aurangabad, and the payments were made from time to time by depositing the amounts in the bank. The claim of the appellant that the cash received was not immediately deposited in the bank as he was looking for investment opportunities in the agricultural land and was not certain about its timing and other requirements, appears correct and logical in the facts of the case available on record. For the discussions made above, Ground No.2 is allowed"
11. The aforesaid findings, which are based on the relevant material, clearly suggest that the amounts deposited in the bank account are out of the cash available with the assessee on sale of land which was also found noted in the cash book maintained. The assessee had furnished before the CIT(A) a summary of cash book showing month-wise opening balance, receipts and payments to justify that enough cash was available in the respective months to support the deposits in the bank account. The aforesaid findings of the CIT(A), in our view require no interference from our side in as much as nothing credible has been brought out by the Revenue to negate the same. Therefore, we hereby affirm the order of CIT(A). On this aspect also, the Revenue fails.
8 ITA No.2177/PN/2012
Dr. Gondkar Eknath Bhagchand
12. The last issue in this appeal is with respect to a disallowance of Rs.6,30,000/- made by the Assessing Officer u/s 54F of the Act, which has since been deleted by the CIT(A).
13. In this context, the relevant facts are that with respect to the capital gain earned on the sale of agricultural land, assessee, inter-alia, claimed a deduction u/s 54F of the Act for investment in a flat at Aurangabad amounting to Rs.6,50,730/-. The Assessing Officer did not accept the aforesaid deduction u/s 54F on the ground that the land on which the flat has been constructed was acquired from CIDCO on lease. Secondly, as per the Assessing Officer, the said flat was in the joint name of assessee and his son and therefore, even if the deduction is to be allowed, the same is allowable only to the extent of 50%. The CIT(A) has allowed the claim of the assessee by making following discussion:-
"On the issue of investment in flat, it is noted that both the objections of the Assessing Officer are not correct. If he is satisfied that the investment has been made by the appellant and his name appears as the first holder, no fault can be found to deny this deduction. Similarly, the Courts are unanimous that the leasehold rights are capital asset and if the same is relating to the flat the condition prescribed u/s 54F cannot be said to be violated. However, it is noted that sec. 54F is allowable against the capital gains arising from the transfer of any long term capital asset. Capital asset is defined in sec. 2(14) which means property of any kind held by an assessee, whether or not connected with his business, but does not include stock-in-trade, personal effects, agricultural land except for those specified in the provision and certain other specified items. Since the appellant has offered capital gains and has claimed deduction u/s 54B and 54F, it appears that he claims that the agricultural land sold is a capital asset. If so, then the deduction u/s 54F will be allowable. The Assessing Officer is directed to verify this aspect while giving appeal effect in the manner described above."
14. After having considered the rival stands, we find no reasons to interfere with the aforesaid decision of the CIT(A) which is quite a fair and justified. Notably, assessee had stated before the CIT(A) that the entire investment in the said flat was made by him out of his own sources and the name of his son as joint holder was included only for personal reasons. Further, with regard to 9 ITA No.2177/PN/2012 Dr. Gondkar Eknath Bhagchand the lease of the land from CIDCO authority, assessee pointed out that he has purchased a residential flat on a property constructed on leasehold plot obtained from CIDCO. The assessee also asserted before the CIT(A) that the flat purchased by him has been constructed with the permission of CIDCO authority who gave the leasehold rights of land for construction and assessee was having proprietary rights which are transferable and therefore, such an investment qualifies for the benefits of section 54F of the Act. In the background of the aforesaid assertions of the assessee, we find that the CIT(A) made no mistake in accepting the stand of the assessee. There is no material brought by the Revenue to negate the finding of the CIT(A), which we hereby affirmed. Thus, on this aspect also, Revenue fails.
15. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open Court on 29 th October, 2014.
Sd/- Sd/-
(R.S. PADVEKAR) (G.S. PANNU)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Pune, Dated: 29 th October, 2014.
GCVSR
Copy of the order is forwarded to: -
1) The Department;
2) The Assessee;
3) The CIT(A)-I, Pune
4) The CIT-I, Pune
5) The DR "B" Bench, I.T.A.T., Pune;
6) Guard File.
By Order
//True Copy//
Assistant Registrar
I.T.A.T., Pune