Income Tax Appellate Tribunal - Hyderabad
Chandra Sekhar Nangunuri, Hyderabad vs Assessee on 5 June, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD "B" BENCH, HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No.1699 /Hyd/2012
Assessment year 2009-10
Chandrasekhar Nangunuri, Vs Income-tax Officer,
Begumnpet,Hyderabad. Ward-10(4),
PAN:ACGPN 6472 M Hyderabad.
{Appellant) (Respondent)
Appellant by : Sri A.V. Raghuram
Respondent by: Shri Phani Raju
Date of hearing : 05-6-2013
Date of Pronouncement : 17-6-2013
ORDER
PER SAKTIJIT DEY, JUDICIAL MEMBER.
This appeal filed by the assessee is directed against the order dated 17-9-2012 of CIT (A)-VI, Hyderabad passed in appeal No.0666/2011-12/CIT(A) VI and it pertains to the assessment year 2009-10.
2. The only dispute in the present appeal is with regard to the addition of Rs.36,93,565/- as unexplained credits in the bank account. Briefly the facts are the assessee is an individual. For the year under dispute, the assessee filed his return of income on 8-12-2010 declaring a total income of Rs.4,38,820/-. In course of scrutiny assessment proceedings, the Assessing 2 ITA No.1699 of 2012 Chandrasekhar Nangunuri., Hyd.
================== Officer on examining the bank accounts of the assessee held in different banks such as Tirumala Cooperative Urban Bank Ltd., (TCUB), Bank of India, UCO Bank and Lakshmi Vilas Bank found credits of Rs.35,43,365/- for the period from 1-4-2008 to 31-3- 2009.When the Assessing Officer asked the assessee to furnish the details of amounts credited in the bank account with source of such deposits, the assessee in his rely submitted that the deposits were made out of the cash withdrawals made from all the bank accounts amounting to Rs.49,11,612/-during the financial year 2008-09. It was further submitted by the assessee that he had availed loan from different banks as well as from Reliance Capital Ltd., and the surplus cash available were deposited into the bank accounts on different dates. In support of his submissions, the assessee also submitted cash flow statement. The Assessing Officer opined that though the assessee was in receipt of loan of Rs.56 lakhs on mortgage of property with M/s Reliance Capital Ltd. towards acquisition of the property but in reality, the assessee has paid a further sum of Rs.30 lakhs in cash over and above Rs.26,66,000/-. Otherwise, there was no need to obtain loan of Rs.56 lakhs and withdraw an amount of Rs.30 lakhs in cash from the bank account. The Assessing Officer therefore held that the self withdrawals of Rs.30 lakhs were made by the assessee for specific purpose of acquiring the property and is not available with the assessee as surplus. The Assessing Officer further held that the assessee has also repaid loan of Rs.18,91,000/- taken from various persons. Therefore, the cash withdrawn from the bank were utilised for repayment of loan borrowed and as such the cash withdrawal made could not be available as surplus with the assessee to be deposited into the bank account. The Assessing Officer thus came to a conclusion that from the 3 ITA No.1699 of 2012 Chandrasekhar Nangunuri., Hyd.
================== withdrawals made from the bank account amounting to Rs.44,44,012/- the assessee has utilised Rs.30 lakhs for acquiring the property and an amount of Rs.18,91,000/- for repayment of loan. Therefore, no surplus cash was available with the assessee for depositing into the bank account. Accordingly, the Assessing Officer came to a conclusion that the amount of cash deposits into bank account amounting to Rs.35,43,565/- is the unexplained investment of the assessee u/s 69 of the Act. However, while computing the income, the Assessing Officer actually added an amount of Rs.36,93,565/-. The assessee being aggrieved of the addition made preferred an appeal before the CIT (A).
3. The CIT (A) after considering the submissions of the assessee was satisfied that the assessee had only paid an amount of Rs.26,66,000/- for acquisition of the property and not Rs.56 lakhs as held by the Assessing Officer. The observations made by the CIT (A) in this regard are reproduced below:-
"In the course of the appellate proceedings, the AR has submitted that the assessee had availed loan of Rs.56,00,000/- from Reliance Capital Ltd., against mortgage of property bearing No.1-11-252/31, Motilal Nehru Nagar, Begumpet, Hyderabad, that the property was jointly owned by the assessee along with his brother N. Amarnath, that the assessee had purchased his brother's half share by issuing post dated cheque for Rs.26,66,000/- and got the release deed executed on 27- 3-2008, and that on submission of the Release Deed and other relevant documents, Reliance Capital has disbursed the loan of Rs.56,00k000/- on 29-3-2008 which was used for honouring the cheque issued to his brother for Rs.26,66,000/-. The AR also filed copies of the sanction 4 ITA No.1699 of 2012 Chandrasekhar Nangunuri., Hyd.
================== letter from Reliance Capital Ld., and the release deed executed by N. Amarnath. I find from a perusal of these documents that the assessee was already a 50% owner of the property and that considering that the loan of Rs.56,00,000/- was sanctioned against the entire property, the payment of Rs.26,66,000/- for the 50% share of the brother appears to be logical. Since, the assessee was making a payment for acquiring only 50% of the share of the property, payment of the entire 56,00,000/- to the brother did not arise. Further, the assessee had merely taken a loan against mortgage of the property and there is no reason to presume that the loan was for acquisition of the property. The observation of the Assessing Officer that the withdrawal of Rs.30,00,000 was spent for acquiring the property is, therefore, merely a presumption which is not borne out by the facts."
4. The CIT (A) also accepted the fact that the withdrawals of Rs.44,44,412/- was not utilised for loan repayment of Rs.18,91,000/-. However, the CIT (A) taking into consideration the fact that the assessee had made withdrawals of Rs.19,300 and Rs.23,350/- immediately after cash withdrawals of Rs.30 lakhs, was of the view that since the assessee was having the cash available with him out of withdrawals made, there was no need for him to further withdraw the specific amounts of Rs.19,300/- and Rs.23,350/- which according to the CIT (A) were to meet specific requirements. The CIT (A) further taking note some of the withdrawals made by the assessee on different dates came to a conclusion that when the assessee was having cash balance in excess of 15 to 16 lakhs throughout the financial year it was inconceivable on his part to make such petty withdrawals. Accordingly, the CIT (A) holding that the 5 ITA No.1699 of 2012 Chandrasekhar Nangunuri., Hyd.
================== withdrawals of Rs.44,44,412/- by the assessee were utilised for specific purposes and were not available for making subsequent deposits sustained the addition made by the Assessing Officer. The finding of the CIT (A) in this regard is extracted for ready reference:-
"However, the assessee has not explained why it had made such huge withdrawals from the bank if not to meet specific requirements for expenses or investment. A perusal of the cash flow statement shows that despite the alleged cash balance of Rs.32,53,180/- after the cash withdrawal of Rs.30,00,000/- on 2-4-2008, the assessee chose to withdraw Rs.19,300/- and Rs.23,350/- immediately thereafter on 3-4-2008. It is against all norms of probable human behaviour that such minor withdrawals would be made when the assessee was allegedly sitting on a pile of cash of more than Rs.32,00,000/-. It is also relevant that the two withdrawals are of very precise amounts and not in round figures. It shows that the withdrawals were made because the assessee needed these precise amounts to meet specific requirements and the assessee obviously did not have the cash available for it. Similarly, the assessee continued to make similar withdrawals of specific amounts all through the year though his cash balance allegedly continued to be above Rs.10,00,000/- throughout the year. For example, withdrawals were made of Rs.13,575/- on 21-5-2008, Rs.5,100/- on 18-6- 2008, Rs.2,575/- on 6-9-2008, Rs.18,300 on 17-10-2008, Rs.2500/- on 6-11-2008, Rs.13,500/- on 24-12-2008, and Rs.11,342/- on 3-2-2009. It is inconceivable that a person having cash balances in excess of Rs.15-16 lakhs would need to make such petty withdrawals. I, therefore, hold that the withdrawals of Rs.44,44,412/- made by the assessee were utilised for specific purposes and were not available for making the subsequent deposits. The addition made by the Assessing Officer is, therefore, upheld.
5. The learned authorised representative for the assessee submitted before us that when the CIT (A) accepts the facts that Rs.30 lakhs was withdrawn by the assessee, was not utilised for acquiring the property, she was not justified in rejecting assessee's contention of deposits made into the bank account. The learned authorised representative for the assessee referring 6 ITA No.1699 of 2012 Chandrasekhar Nangunuri., Hyd.
================== to the language of section 69 of the Act submitted that when the assessee has explained the source of deposits, the onus lies on the department to prove that the amount available with the assessee from the withdrawals made from the bank account was otherwise utilised. The learned authorised representative for the assessee submitted that since the assessee was having adequate cash balance to make deposits to the bank accounts, no addition can be made rejecting such explanation. In support of such contention, the learned authorised representative for the assessee relied upon the following decisions:-
1) ACIT vs. Shahzad Lookman Qadir (3 ITR (Trib.) 177 (Mum.)
2) Anand Autoride Ltd. Vs. JCIT (99 ITD 227)
6. The learned Departmental Representative, on the other hand, supporting the orders of the CIT (A) submitted that since the assessee could not prove the source of the deposits into the bank account such deposits were rightly held as unexplained investment of the assessee. In support of such contention, the learned Departmental Representative relied upon the decisions of Hon'ble Supreme Court in case of Sumati Dayal vs. CIT( 214 ITR 801 (SC) and the decision in the case of CIT vs. Durga Prasad More (82 ITR 540) (SC).
7. We have considered rival submissions of the parties and perused the material on record. We have also applied our mind to the decisions cited by the parties. The sole issue in the present appeal is whether cash deposits made in different bank accounts of the assessee were out of the withdrawals made by the assessee as per the claim of the assessee or not. From the order of the CIT (A) reproduced above, it is quite evident that 7 ITA No.1699 of 2012 Chandrasekhar Nangunuri., Hyd.
================== the CIT (A) has accepted the fact that the assessee has paid Rs.26,66,000/- towards acquisition of the property and not Rs.56 lakhs as held by the Assessing Officer. Therefore, the self withdrawal of Rs.30 lakhs in cash was available with the assessee. Similarly, the CIT (A) has also accepted the fact that loan repayment of Rs.18,91,000/- to different persons was not out of the cash withdrawals of Rs.44,44,412/-. Therefore, the natural corollary would be the said amount of withdrawals made from the bank accounts were available with the assessee as per the explanation submitted by him. Only because the assessee had made some withdrawals from the bank account of specific amount, a conclusion cannot be drawn that no surplus cash was available with the assessee out of withdrawals made by him from bank account. Though the assessee has explained that the amount of Rs.44,44,412/- withdrawn from bank accounts were available with him which was re-deposited into the bank accounts again, the CIT (A) has not accepted such contention by observing that the assessee has utilised the amount for specific purposes. As it appears the inference drawn by the CIT (A) is based more on presumption and suspicion rather than any clinching material and evidence brought on record. Before coming to the conclusion that the assessee has utilised the withdrawn amount of Rs.44,44,412/- for some specific purpose, it was incumbent on the part of the revenue authorities to establish on record with supporting evidence what are the specific purposes for which the amount was utilised by the assessee. Without bringing any material on record, assessee's explanation regarding availability of cash cannot be rejected on presumption and surmises when there is no material on record to prove that the assessee had acquired any asset or utilised such funds for any purpose. Presumption and suspicion however 8 ITA No.1699 of 2012 Chandrasekhar Nangunuri., Hyd.
================== strong may be cannot take the place of evidence. Therefore, considering the totality of facts and circumstances of the case, we are of the view that, the explanation submitted by the assessee that the amounts withdrawn from the bank was again re-deposited in to the bank account has to be accepted when there is no other material brought on record to show that the assessee has utilised it for some other purpose. Accordingly, the addition made cannot be sustained and the Assessing Officer is directed to delete the same.
8. In the result, appeal filed by the assessee stands allowed.
Order was pronounced in the open Court on 17-06-2013.
Sd/- Sd/-
(CHANDRA POOJARI) (SAKTIJIT DEY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: the 17th June, 2013.
Copy forwarded to:
1. C/o S/Sri A.V. Raghuram & K. Vasantkumar, Advocates, 610, 6th Floor, Babukhan Estate, Basheerbagh, Hyderabad.
2. ITO, Ward- 10(4), Hyderabad.
3. CIT (A)-VI, Hyderabad.
4. CIT concerned, Hyderabad.
5. The DR, ITAT, Hyderabad Jmr* 9 ITA No.1699 of 2012 Chandrasekhar Nangunuri., Hyd.
================== 10 ITA No.1699 of 2012 Chandrasekhar Nangunuri., Hyd.
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