Income Tax Appellate Tribunal - Jaipur
Sh. Asgar Ali, Pratapgarh vs Dcit, Circle (Intl.Tax), Jaipur on 26 May, 2023
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,"B" JAIPUR
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BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM
vk;dj vihy la-@IT(IT)A No. 21/JP/2022
fu/kZkj.k o"kZ@Assessment Years : 2015-16
Sh. Asgar Ali cuke DCIT
Husain Vila Gali No. 6, Area Pati Vs. Circle (Int. Tax), Jaipur
Road, Pratapgarh
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ARCPA 5302 Q
vihykFkhZ@Appellant izR;FkhZ@Respondent
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s Assessee by : Sh. Sandeep Jhanwar (CA)
jktLo dh vksj ls@ Revenue by : Smt. Runi Pal (Addl. CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 18/05/2023
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 26/05/2023
vkns'k@ ORDER
PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by assessee and is arising out of the order of the Commissioner of Income Tax (Appeals), Delhi-42 dated 17/08/2022 [here in after (CIT(A))] for assessment year 2015-16 which in turn arise from the order dated 26/11/2021 passed under section 147 r.w.s 144 of the Income Tax Act, by the DCIT, Circle, International Taxation, Jaipur.
2. In this appeal, the assessee has raised following grounds: -
2IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT "1. Under the facts & circumstances of the case the ld. CIT(A), Delhi has erred in confirming the addition of Rs. 64,87,800/- made by the Assessing Officer, Circle (INTL.
Tax), Jaipur by treating the cash deposits made in bank accounts of the assessee as unexplained money u/s 69A and thereby considering the same as income from other sources.
2. Under the facts & circumstances of the case the ld. CIT(A), Delhi has erred in confirming the addition of Rs. 10,00,000/- being the remittance through Habib Exchange Company towards purchase of immovable property by considering it unexplained investment u/s 69.
3. Under the facts & circumstances of the case the ld. CIT(A), Delhi has erred in confirming the addition of Rs. 6,53,310/- being payment towards stamp duty and registration charges made out of cash withdrawals from the bank accounts of the assessee for purchase of immovable property by treating it unexplained investment u/s
69.
4. The assessee craves right to add, alter or amend any of the grounds of appeal."
3. Succinctly, the fact as culled out from the records is that on the basis of information available on record, it is gathered that during the F.Y 2014- 15, the assessee has deposited cash of Rs. 54,72,000/- in bank account No. 153501075029 maintained with ICICI Bank, Pratapgarh (Raj.) and deposited cash of Rs. 10,07,000/- in bank account No. 123401000015578 maintained with Bank of Baroda, Pratapgarh (Raj.). It is also noticed that during the year under consideration, the assessee earned interest of Rs.
79,571/- from bank account No. 153501000052 maintained with ICICI Bank Ltd., Pratapgarh. Apart from the above, it is also gathered that during the year under consideration that the assessee purchased immovable residential property amounting to Rs. 43,56,000/-.
3IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT 3.1 As per ITD details, the assessee has not filed his return of income for the year under consideration. In order to verify the transaction, notice for filing of Income Tax Return was issued to the assessee. However, the assessee did not file the ROI for the relevant A. Y. 2015-16. Since, the assessee has not filed his return of income for the year under consideration, therefore the source of cash deposits of Rs. 64,79,000/-, investment in purchase of immovable property of Rs. 43,56,000/- and interest earned from bank of Rs. 79,571/- remained unexplained and untaxed. As the assessee has not filed return of income for the year under consideration although the total income of assessee had exceeded the maximum amount which is not chargeable to tax as discussed above, therefore, this case prima facie appears to be a case where income chargeable to tax has escaped assessment. As such, the income of the assessee to the tune of Rs. 1,09,14,571/- has escaped from assessment for the relevant A. Y. 2015-16. Accordingly, the Assessing Officer i.e. ITO, Ward- Pratapgarh after recording reasons for reopening of case and after taking prior approval of Addl. Commissioner of Income Tax, Range Chittorgarh on dated 30.01.2020, issued notice u/s 148 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 27.02.2020 through ITBA portal. In response to the notice u/s 148 of the Act the assessee did 4 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT not file return of income. Subsequently, the file was transferred to Circle, International Taxation, Jaipur on 02.06.2021.
3.2 The assessing officer has observed that during the year under consideration the assessee the assessee had made investment of Rs.
1,27,40,310/- (12087000+ 653310) for purchase of two immovable properties from Shri Jeetendra Kumar Palviya in his name and in the name of his wife. During the assessment proceedings, the assessee has explained source of investment to the extent of Rs. 68,79,000/- only.
However, the assessee could not explain the source of remaining investment of Rs. 58,61,310/- (12740310-6879000). The onus is on the assessee to establish the genuineness of his claim and to substantiate his claim with credible corroborative documentary evidences. But, the assessee failed to discharge his onus in spite of being availing sufficient opportunities. Since, the assessee could not explain the source of investment to the extent Rs. 58,61,310/-, therefore, the source of investment of Rs. 58,61,310/- for purchase of immovable property is remained unexplained and thus added to the total income of the assessee on account of unexplained investment under section 69 of the Act.
5IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT 3.3 During the course of assessment proceedings, on the basis of information available on record, reference u/s 133(6) of the Act was made to the Bank of Baroda and ICICI Bank and account statements of the assessee for the F.Y 2014-15 have been obtained. On perusal of bank account statements of the aforesaid banks, it is gathered that cash amounting to Rs. 64,87,800/- was found deposited by the assessee on various dates during the FY 2014-15 relevant to Assessment Year 2015-16.
The assessee was provided ample opportunity to explain the source of aforementioned cash deposits with the corroborative documentary evidence. But the assessee neither submitted any reply/explanation nor furnished any supporting documentary evidence which implies that the assessee has nothing to say or produce in the matter. Accordingly, during the assessment proceedings, a final show cause notice was issued to the assessee as to why cash deposits totaling of Rs. 64,87,800/- should not be added to your total income for the A.Y 2015-16 considering the same as unexplained money. In response, the assessee only submitted that the cash deposited during the F.Y 2014-15 was out of the accumulated funds withdrawn in preceding year from bank accounts. In support of his contention, the assessee has submitted list of past withdrawals. The AO noted that the assessee has not furnished any documentary evidence viz.
6IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT account statement, cash book, bank book etc. to substantiate his claim.
Further, on perusal of record, it is noticed that the assessee has never filed his ITR to verify his past income. Therefore, the source of cash deposits of Rs. 64,87,800/- remained undisclosed and unexplained. The assessee has failed to give any explanation about the nature and source of cash deposits, hence the value of Cash deposits amounting to Rs. 64,87,800/- is deemed as unexplained money u/s 69A of the Income Tax Act, 1961 and added to the total income of the assessee.
3.4 On perusal of bank statement of the assessee it is gathered that during the year under consideration, interest income of Rs. 20,467/- was credited in the Bank of Baroda A/c No. 123401000015578 & interest income of Rs. 57,245/- was credited in ICICI Bank A/c No. 153501075029 of the assessee. Thus, an amount of Rs. 77,712/- was credited in the bank account the assessee. On enquiry from ITD system, it is noticed that the assessee has not filed ROI for the relevant A.Y 2015-16. As such, it appears that the assessee has not disclosed interest income of Rs.
77,712/- and it remains unexplained.
7IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT
4. Being aggrieved, from the order of the assessing officer the assessee carried the matter in appeal before the ld. CIT(A). A propose to the grounds of raised by the assessee the relevant findings of the ld. CIT(A) is reiterated here in below:
"7. Ground no. 1 challenges the assessment as bad in law.
7.1 It has been contended that the AO proceeded to re-open the case without application of mind and merely on the basis of information available to him and the information available with the AO did not constitute a 'reason to believe'.
7:2 It is undisputed that the AO had information in his possession that during the FY 2014-15 the appellant had deposited cash of Rs. 54,72,000/- in bank account maintained with ICICI Bank, Pratapgarh (Raj.) and deposited cash of Rs. 10,07,000/-in bank account with Bank of Baroda, Pratapgarh (Raj.). The AO had also information that the appellant had received substantial interest in the bank accounts and had purchased immovable residential property amounting to Rs. 43,56,000/-. It is observed that undisputedlyno regular retum of income had been filed by the appellant. In the circumstances, the AO had sufficient material to draw a prima faciereason to believe that substantial income chargeable to tax had escaped assessment. Further, it is observed, that the notice u/s 148 was issued after recording of proper reasons and obtaining necessary approval of the competent authority. Thus, before issue of notice us 148, the AO duly completed requisite statutory procedure.
7.3 The law is settled on this issue by 236 ITR 34 (SC) wherein it was held that in Raymond Woollen Mills Ltd. v. ITO [1999] 236 the Hon'ble Supreme Court in the case of determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage.
7.4. Hon'ble Supreme Court has in Phool Chand Bajrang Lal vs. ITO (1993) 203 ITR 456 (SC)held that while there must exist reasons for holding a belief of escapement of income, the question whether the reasons were adequate or sufficient is not for the courts to decide. Since the belief is that of an Income-tax Officer, sufficiency of the reasons for forming the belief is not for the court to judge.
7.5 Hon'ble Gujrat High Court has held Praful Chunilal Patel-Vasant Chunilal Patel V. Asstt. CIT (1999) 236 ITR 832, 840-41 (Guj.) that at the initiation stage, formation of reasonable belief is needed and not a conclusive finding on the facts.8
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT 7.6 In view of the settled legal position, it is concluded that the instant case was reopened based on proper information based on material available on records which clearly indicated that certain taxable income had escaped assessment. The AO had valit reason to initiate reassessment in this case. Moreover, before issuing notice u/s 148, the AO had recorded proper reasons and had duly obtained the statutory sanction of the Pr CIT. No infirmity is found in the notice issued u/s 148. Subsequently the assessment has been completed by the AO duly observing the principles of natural justice. Repeated notices u/s142(1) were issued to the appellant, show cause notice was issued and replies of the appellant were duly considered. Therefore, the assessment is found to be procedurally in order. The contentions of the appellant are without any legal merit. The same are rejected. This ground is dismissed.
8. In ground no. 3, the addition of Rs. 64,87,800/- u/s 69A being unexplained cash deposits in the bank account is challenged.
8.1 The AO has observed that the appellant had madeaggregate cash deposit of Rs. 64,87,800/- in ICICI Bank A/c no. 153501075029 and Bank of Baroda Ale no 12340100015578 during the FY 2014-15 on different dates. The appellant was asked to explain the source of the deposits with documentary evidence. As per AO. in response the appellant only submitted that the cash deposit was out of the accumulated cash in hand out of the withdrawals made from bank accounts in earlier years. However, as the appellant had failed to submit any documentary evidence viz. account statement, cash book, bank book etc. in support of the claim, the aggregate cash deposit of Rs. 64,87,800/- was treated as unexplained and added u/s 69A of the Act.
8.2 The appellant has submitted that the ICICI bank account no. 15350075029 in which cash has been deposited is a NRO account jointly held by himself and his wife. It is claimed that out of the total sum deposited, a sum of Rs.27,52,000/- has been deposited by the wife out of amountsreceived as gift by the appellant's wife from the family members, i.e.brother's wife. No documentary evidence in support of this claim has been submitted. The appellant has also claimed that cash deposits of Rs.51,26,656/ belong to him and have been made outofwithdrawals made from thebank accounts in the preceding years and alsoout of certain withdrawals made during the year.
8.3 There is no evidence whatsoever that the cash deposit aggregating to Rs.27,52,000/- belongs to the wife of the appellant. The appellant is the first joint holder of the bank account. There is nothing on record that the wife has any independent source of income. The claim that the deposits represent amounts received as gift by the appellant's wife from the family members, i.e. brother's wife is vague and general. The appellant has not submitted any evidence whatsoever in support of this claim during the assessment or appeal. Such unsubstantiated claims, particularly made to explain cash deposits where there is no trail to verify the claim, can never be accepted.9
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT The date of the purported gifts: the capacity of such relative and the purpose of purported gifts has never been explained. The appellant has failed to even submit the name of address of the relative who gifted such huge amount to the wife. In such circumstances this claim is rejected 8.4 Regarding the claim that cash deposits aggregating toRs.51,26,656/- have been made out of withdrawals made in the preceding years and also current year, the appellant has submitted details of withdrawals made from the bank accounts in FY 2011-12, 2012- 13, 2013-14 and 2014-15. It is observed that the withdrawals have been made on different dates. Most of the withdrawals are of small amounts. The appellant has shown no purpose for which the cash was withdrawn each time. No NRI would continue to withdraw cash in India, without any specific need, just to pile up the same. If the appellant was withdrawing money from bank account on multiple occasions, it is not plausible that the next withdrawal would be made when there is already huge cash in hand lying with a person. The appellant has made a very small withdrawal of Rs. 15,000/-on 17.09.2014 from BOB. Similarly, the appellant has withdrawn from BOB Rs. 40,000 on 08.10.2014; Rs. 25,000/- on 09.10.2014, Rs. 27,000/- on 09.10.2014 and Rs: 23,200 on 31.01.2015. The appellant has also withdrawn Rs. 18,000/- on 01.10.2014; Rs. 25,000/- on 22.12.2014, and, Rs. 15,000/- on 05.01.2015. In FY 2012- 13 and 2013-14, the appellant has made many times meagre withdrawals such as Rs. 169/- Rs. 375/- Rs. 2100/; and Rs. 5000/- etc. If the appellant was having huge cash in hand available in India from earlier withdrawals, it is highly improbable that he would be making such a small withdrawal from the bank account. As no specific details regarding purpose of withdrawal has been given, it is reasonable to infer that no cash in hand was available and must have been utilized before the next withdrawal as a need had arisen to make further withdrawal. (The chain of withdrawals show that the withdrawals made earlier were utilized for some undisclosed purpose leading to the need for further withdrawal of small amounts. No rational person would continuously withdraw cash from the bank account for no reason or purpose just to pile up the cash with herself just to deposit the same in the bank account after 2-3 years. If the appellant was not in need of cash, there was no reason to withdraw further cash from the bank account when he already had huge unutilized cash available with him. In the fact and circumstances the whole argument is a make-believe story, after thought and completely implausible. The argument is rejected.
8.5 Further, the appellant has not made deposit in one go but has made a number of deposit of huge amounts throughout the FY 2014-15. If the appellant was withdrawing cash over a period of time for some specific purpose and was in the habit of piling up such cash as cash in hand, he would have deposited the entire unutilized amount in one go and not on multiple dates.
8.6 Failure in submitting satisfactory explanation in this regard before the AC and again not submitting any explanation during the appellate stage despite having repeated opportunities, clearly shows that the appellant is not in a position to 10 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT explain the source of these huge cash deposits. The only inference which can be drawn out of these facts and circumstances is that the appellant has deposited his unaccounted money in the bank account.
8.7 Hon'ble Supreme Court in Krishan Kumar vs.ITO [2019 107 taxmann.com 464 (SC) has upheld the addition made by AO under section 69A where the assessee had failed to satisfactorily explain the source of cash deposit 8.8 Hon'ble Supreme Court in the case of Sreelekha Banerjee v. Commissioner of Income-tax [1963] 49 ITR (SC) 112; [1964] 2 SCR 552 (SC) has held that where the explanation of assessee was unconvincing and one which deserves to be rejected, the department can reject the explanation and draw the inference that the amount represents income either from the sources already disclosed by the assessee or from some undisclosed source.
The Court observed:
"Where the assessee was unable to prove that in his normal business or otherwise, he was possessed of so much cash, it was held that the assessee started under a cloud and must dispel that cloud to the reasonable satisfaction of the assessing authorities, and that if he did not, then, the department was free to reject his explanation and to hold that the amount represented income from some undisclosed source"
8.9 In the facts and circumstances of the case, it is concluded that the appellant's claims are unsubstantiated, without any tenable evidence, self-serving and a make- believe story. Clearly, the appellant has deposited his own undisclosed money in the bank account during the FY 2014-15. The appellant has failed to explain the source of the same, the addition of Rs. 64,87,800/- u/s 69A of the Act made by the AD is confirmed. This ground of appeal is dismissed.
9. In ground no. 4, the addition of Rs.77,712/- being interest credited in bank accounts has been challenged.
9.1 The AO has observed that the interest credited BOB account was Rs. 20,467 and the interest credited in ICICI bank account was Rs.57,245/-. Thus, total interest of Rs. 77,712/- was added by the AO as undisclosed interest income.
9.2 The appellant has contended that the interest credited BOB account is Rs.11.0711- and the interest credited in ICICI bank account is Rs.57,245/-. Thus, total interest of Rs. 68,316/- is credited as against Rs. 77,712/- added by the AO.
9.2 The AO is directed to verify the actual interest credited in the relevant bank accounts, in particular the BOB account, and assess the correct aggregate interest as undisclosed interest income. This ground is partly allowed.
11IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT
10. Ground no. 2 is against addition of Rs.58,61,310/- being the payment towards purchase of immovable property u/s 69 as unexplained investment.
10.1 The AO observed that the appellant had purchased two properties in Pratapgarh, one in his own name and another in the joint name of himself and his wife. The total consideration of the two properties was Rs. 1,20,87,000/-. Out of this, total payment of Rs. 68,79,000/- was made from ICICI bank account no. 5029 which was NRE account. The AO treated this amount as explained and remaining amount of Rs. 52,08,000/- as unexplained. Further, the amount of Rs. 2,73,140/- Rs. 3,80,170/- incurred in cash towards stamp duty and registration charges of the two properties was also treated as unaccounted payment. Thus, the AO made total addition of Rs. 58.61,310/- u/s 69A of the Act.
10.2 The appellant has submitted that the AO has wrongly treated the payments] made through Joint NRO account of himself and his wife aggregating to Rs. 42,08,000/- as the AO has made addition in respect of cash deposit of Rs. 55,22,800/- in ICICI Bank a/c no. 153501075029 and Rs.9,65,000/-in Bank of Baroda a/c no. 12341000015578 as unexplained money u/s 69Aand, therefore, the addition to this extent is double addition. The appellant has submitted that payment of Rs. 10,00,000/- was out of remittance received in the seller's account by the assessed from outside India. The remittance has been made through Habib Exchange Company and a copy of remittance slip has been filed. Cash payment of Rs. 6,53,310/- made for Registration charges is claimed to be out of cash withdrawals made from the bank account.
10.3 The AO is directed to verify the claim that the payments for the property have been made from ICICI Bank a/c no. 153501075029 and Bank of Baroda a/c no. 12341000015578. The addition in respect of cash deposit in these two bank accounts aggregating to Rs. 64,87,800/- has already been confirmed by me as unexplained cash deposit u/s 69A of the Act. Therefore, prima facie, the addition of Rs. 42,08,000/- appears to be a double addition as the payments for purchase of property have been made from the bank accounts and, the cash deposits in the bank accounts from which the payments have been made have already been treated as unexplained. The AO is therefore, directed to delete the double addition of Rs. 42,08,000/- after verification.
10.4 The payment of Rs. 10,00,000/- made directly to the seller's account out of foreign remittance does not appear to be a normal and clean transaction. The payment has not been made through normal banking channels. The appellant has not remitted this amount in normal course to his bank account but directly to the seller's account, Further, the payment to the exchange has been made in cash. In these facts and circumstances, the payment cannot be treated as explained. The addition of Rs. 10,00,000/- is confirmed.
10.5 The aggregate cash payment of Rs. 6,53,310/- made for registration charges is claimed to be out of cash withdrawals made from the bank account. However, it 12 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT is pertinent to note that it has already been held in earlier paragraphs that the appellant has failed to prove the availability of cash in hand out of the withdrawals made from bank account. It is therefore, concluded that the appellant has failed to explain the source of such cash payments. The addition made by the AO is confirmed."
5. As the assessee did not find favor fully from the order of the ld CIT(A).
The assessee has carried this appeal on the grounds raised and reiterated in para 2 above. To support the various grounds so raised the ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below;
"Facts giving rise to present appeal
1. The assessee is a non-resident Indian during the year under consideration and since his income during the year is below the maximum amount not chargeable to tax, he did not file his return of income for the relevant A.Y. 2015-16.
2. The Assessee has four bank accounts and detail of such bank accounts shown as under:
Name of Bank Account no. Type of account Ownership Bank of Baroda 12340100007067 NRE Individual Bank of Baroda 12340100015578 NRO Individual ICICI Bank 153501000052 NRE Joint with his wife ICICI Bank 153501075029 NRO Joint with his wife
3. Detail of transactions during the year in these bank accounts are as under :
Detail of deposits during the year in various bank accounts :13
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT Particulars Bank of Bank of ICICI Bank ICICI Bank Total Amount Baroda a/c Baroda a/c a/c no. a/c no.
no. no. 153501000 153500750
123401000 123401000 52(NRE) 29(NRO)
15578 07067
(NRO) (NRE)
Opening 2,93,837 19,950 41,29,528 13,52,165 57,95,480
balance
Cash Deposit 9,65,000 Nil Nil 54,72,000 64,37,000
(total 4 (total 12
entries) entries)
Interest 11,071 8,73 1,68,054 57,245 2,37,243
Other deposit 85,000 Nil 77,00,448 12,55,800 90,41,248
Total 10,61,071 8,73 78,68,502 67,85,045 1,57,15,491
Deposits
Detail of withdrawals during the year:
Particulars Bank of Bank of ICICI Bank ICICI Bank Total Amount
Baroda a/c Baroda a/c a/c no. a/c no.
no. no. 153501000 153501075
123401000 123401000 052 029
15578 07067 (NRE) (NRO)
(NRO) (NRE)
Payment to
Sh. J.K. Nil Nil 29,00,000 14,56,000 43,56,000
Palviya for
purchase of
immovable
property in
his name
Payment to
Sh. J.K. Nil Nil 39,79,000 27,52,000 67,31,000
Palviya for
purchase of
immovable
property in
his wife
14
IT(IT) A No. 21/JP/2022
Sh. Asgar Ali vs. DCIT
name Mrs.
Maleka Bai
Cash 11,52,200 Nil Nil 6,51,000 18,03,200
withdrawal
Other 1,11,960 112 1,459 26,15,433 27,28,964
withdrawal
Total 12,64,160 112 68,80,459 74,74,433 1,56,19,144
Withdrawal
Closing 90,748 20,711 51,17,571 6,62,777 58,91,807
Balance
Copy of statement of all bank accounts maintained by assessee during the F.Y. 2014-15 are enclosed for your ready reference. (Paper Book on Page no. 23 to 37)
4. As per table shown above, the assessee has cash deposit of Rs.54,72,000/-
in ICICI Bank a/c no.153501075029 and Rs.9,65,000/- in Bank of Baroda a/c no. 12340100015578. Copy of statement of such cash deposits in various accounts on various dates during the F.Y. 2014-15 are enclosed for your ready.(Paper Book on Page no. 38)
5. On the basis of information received by the Assessing Officer, he has observed the followings:
i) Deposits in Bank Account:
During the F.Y. 2014-15 the assessee has deposited cash of
- Rs.54,72,000/- in bank account No. 153501075029 maintained with ICICI Bank, Pratapgarh; and
- Rs.10,07,000/- in bank account No. 12340100015578 maintained with Bank of Baroda, Pratapgarh;
ii) the assessee earned interest of Rs.79,571/- from bank account no.
153501000052 maintained with ICICI Bank, Pratapgarh; and
iii) the assessee purchased immovable residential property of Rs.43,56,000/- during the year under consideration.
6. On the basis of above, the Assessing Officer observed that since the assessee has not filed return of income for the relevant A.Y. 2015-16, therefore source of investment, deposits and earned interest remained unexplained and untaxed. Accordingly, notice u/s 148 was issued on 27.02.2020.
15IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT
7. Since assessee was Non-Resident, after verification of passport and other documents submitted by assessee, the case was transferred to Jurisdictional Assessing Officer and later on, to ACIT, Circle- International Taxation, Jaipur on 17.05.2021. On receipt of the case ACIT issued notice u/s 142(1) asking for details and documents with respect to above transactions and reason for difference of Rs.18,44,000/- in payment made to Sh. J.K. Palviya as per Form 26AS and as per registered deed for purchase of immovable property and detail of purchase & sale of immovable property during the year under consideration.
8. Later on, ld.AO sought bank statement u/s 133(6) from respective banks. After examining bank statement, ld.AO issued notices u/s 142(1) on12.07.2021 & 17.08.2021 to furnish necessary documents, as called for, vide notices issued. In response to aforesaid notices assessee filed his reply and submitted various detail and documents i.e. detailed statement of all such bank accounts maintained by assessee, computation of income, details of cash deposits during the F.Y.2014-15, copy of Form 26AS and explained the difference amount of Rs.18,44,000/- reflected in Form 26AS was paid on behalf of his wife as she is also co-owner of the respective property etc. along with detailed reply dated 24.06.2014.
9. After considering reply/submission as well as documentary evidence filed by assessee, further notice u/s 142(1) was issued to furnish required details and documents. The assessee in reply to said notice furnished requisite documents and submitted that there was no sale of capital asset during the year under consideration, hence question of long-term capital gain does not arise.
10. A show cause notice dated 17.09.2021 was issued to assessee as to why payment made to Sh. J.K. Palviya of Rs.95,87,000/- on various dates should not be consider as unexplained investment and cash deposits of Rs.66,79,800/- should not be added to total income of assessee. No reply could be furnished in response to this and thereafter, a final show cause notice dated 21.09.2021 was issued to the assessee for seeking explanation as to why the addition should not be made on the following issues:
i) The difference of Rs.18,44,000/- as per Form 26AS and as per registered purchase deed as the buyer also deduct TDS @ 1%.16
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT
ii) The payment made Rs.1,10,87,000/- to Sh. J.K. Palviya on various dates by considering them as unexplained investment for the relevant A.Y. 2015-16.
iii) Payment of Rs.2,73,140/- towards stamp duty & registration charges paid for purchase of property by considering it as unexplained investment.
iv) Cash deposits of Rs.64,87,800/- deposited in ICICI Bank A/c no.
153501075029(NRO account) and Bank of Baroda A/c no. 123401000015578 (NRO account) by considering it to be unexplained money.
v) Interest earned on deposits in bank accounts of Rs.77,712/- by considering it to be undisclosed interest income for A.Y. 2015-16. The assessee submitted detailed reply on 22.09.2021 in response to above show cause notice (Paper Book on Page no. 93) and filed return of income u/s 148 for the relevant A.Y. 2015-16 on 23.08.2021 vide Acknowledgement no. 337587620230821 considering the interest income credited in his all bank accounts. Copy of Return of Income and Computation are enclosed for your ready reference. (Paper Book on Page no. 94 to 96)
11. Out of the total investments of Rs.1,27,40,310/- (1,20,87,000/- towards purchase of immovable properties and Rs.6,53,310 towards stamp duty & registration charges) in the Immovable Properties purchased from Mr. J. K. Palviya, ld. AO considered a sum of Rs.68,79,000/- which was paid out of NRE account maintained with ICICI Bank. He however, considered the payments made from NRO accounts of Rs.42,08,000/- and payments made through currency transfer of Rs.10,00,000/- and further, payment made for Stamp Duty & registration charges of Rs.6,53,310/- as unexplained and accordingly made addition of Rs.58,61,310/- on this account. He further made addition of the entire amount of cash deposited of Rs.64,87,800/- in Bank Accounts and Interest income of Rs.77,712/-.
12. Accordingly, ld.AO made total additions of Rs.1,24,26,820/- for want of further detail and sources of such amount and passed an order u/s 147 r.w.s. 144.
13. Aggrieved, the assessee preferred an appeal before CIT(A) dated 25.12.2021, First Appellate authority against the order of the assessing officer on following grounds and furnished written submission dated 25.05.2022.
17IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT Copy of written submission is enclosed for your ready reference. (Paper Book on Page no. 1to 21) Ground 1 Under the facts and circumstances of the case, the order passed by ld. AO u/s 148/144 is bad in law and deserves to be quashed.
Ground 2 Under the facts and circumstances of the case, the ld. AO has erred in making addition of Rs. 58,61,310/-, being the payment towards purchase of immovable property, by considering it to be unexplained investment by applying the provision of section 69.
Ground 3 Under the facts and circumstances of the case, the ld. AO has erred in making addition of Rs.64,87,800/- towards cash deposit in bank accounts by applying the provision of section 69A.
Ground 4 Under the facts and circumstances of the case, the ld. AO has erred in making addition of Rs.77,712/- towards interest credited in bank accounts. Ground 5 The appellant reserves the right to add, amend, alter the ground of appeal before or during the course of hearing.
14. However, the ld. CIT(A) passed an order dated 17.08.2022 and partly allowed Ground 2 and 4. The summary of order dated 17.08.2022 is as under :
i) In Ground no.1 challenges the assessment as bad in law:-
• It is unpisputed that the AO had information in his possession that during the FY 2014-15 the appellant had deposited cash of Rs.54,72,000/- in bank account maintained with ICICI Bank, Pratapgarh (Raj.) and deposited cash of Rs. 10,07,000/-in bank account with Bank of Baroda, Pratapgarh (Raj.). The AO had also information that the appellant had received substantial interest in the bank accounts and had purchased immovable residential property amounting to Rs.43,56,000/-. It is observed that undisputedly no regular return of income had been filed by the appellant. In the circumstances, the AO had sufficient material to 18 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT draw a prima facie reason to believe that substantial income chargeable to tax had escaped assessment. Further, it is observed, that the notice u/s 148 was issued after recording of proper reasons and obtaining necessary approval of the competent authority. Thus, before issue of notice u/s 148, the AO duly completed requisite statutory procedure.
• The law is settled on this issue by the Hon'ble Supreme Court in the case of Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC) wherein it was held that in determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage.
• Hon'ble Supreme Court has in Phool Chand Bajrang Lal vs. ITO (1993) 203 ITR 456 (SC)held that while there must exist reasons for holding a belief of escapement of income, the question whether the reasons were adequate or sufficient is not for the courts to decide. Since the belief is that of an Income-tax Officer, sufficiency of the reasons for forming the belief is not for the court to judge.
• Hon'ble Gujrat High Court has held Praful Chunilal Patel-Vasant Chunilal Patel V. Asstt. CIT (1999) 236 ITR 832, 840-41 (Guj.) that at the initiation stage, formation of reasonable belief is needed and not a conclusive finding on the facts.
• In view of the settled legal position, it is concluded that the instant case was reopened based on proper information based on material available on records which clearly indicated that certain taxable income had escaped assessment. The AO had valid reason to initiate reassessment in this case. Moreover, before issuing notice u/s 148, the AO had recorded proper reasons and had duly obtained the statutory sanction of the Pr. CIT. No infirmity is found in the notice issued u/s 148. Subsequently the assessment has been completed by the AO duly observing the principles of natural justice. Repeated notices u/s142(1) were issued to the appellant, show cause notice was issued and replies of the appellant were duly considered. Therefore, the assessment is found to be procedurally in order. The contentions of the appellant are without 19 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT any legal merit. The same are rejected. This ground is dismissed. (Para 7 on page no.25)
ii) In Ground 3, the addition of Rs.64,87,000/- u/s 69 being unexplained cash deposit in the bank account is challenged:-
• The AO has observed that the appellant had madeaggregate cash deposit of Rs. 64,87,800/- in ICICI Bank A/c no. 153501075029 and Bank of Baroda A/c no. 12340100015578 during the FY 2014-15 on different dates. The appellant was asked to explain the source of the deposits with documentary evidence. As per AO, in response the appellant only submitted that the cash deposit was out of the accumulated cash in hand out of the withdrawals made from bank accounts in earlier years. However, as the appellant had failed to submit any documentary evidence viz. account statement, cash book, bank book etc. in support of the claim, the aggregate cash deposit of Rs. 64,87,800/- was treated as unexplained and added u/s 69A of the Act.
• The appellant has submitted that the ICICI bank account no. 15350075029 in which cash has been deposited is a NRO account jointly held by himself and his wife. It is claimed that out of the total sum deposited, a sum of Rs.27,52,000/- has been deposited by the wife out of amounts received as gift by the appellant's wife from the family members, i.e. brother's wife. No documentary evidence in support of this claim has been submitted. The appellant has also claimed that cash deposits of Rs.51,26,656/- belong to him and have been made out of withdrawals made from the bank accounts in the preceding years and also out of certain withdrawals made during the year.
• There is no evidence whatsoever that the cash deposit aggregating to Rs.27,52,000/- belongs to the wife of the appellant. he claim that the deposits represent amounts received as gift by the appellant's wife from the family members, i.e. brother's wife is vague and general. Such unsubstantiated claims, particularly made to explain cash deposits where there is no trail to verify the claim, can never be accepted .The appellant has failed to even submit the name of address of the relative who gifted such huge amount to the wife. In such circumstances this claim is rejected.20
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT • Regarding the claim that cash deposits aggregating toRs.51,26,656/- have been made out of withdrawals made in the preceding years and also current year, the appellant has submitted details of withdrawals made from the bank accounts in FY 2011-12, 2012- 13, 2013-14 and 2014-15. The appellant has shown no purpose for which the cash was withdrawn each time. No NRI would continue to withdraw cash in India, without any specific need, just to pile up the same. If the appellant was withdrawing money from bank account on multiple occasions, it is not plausible that the next withdrawal would be made when there is already huge cash in hand lying with a person. it is reasonable to infer that no cash in hand was available and must have been utilized before the next withdrawal as a need had arisen to make further withdrawal. The chain of withdrawals show that the withdrawals made earlier were utilized for some undisclosed purpose leading to the need for further withdrawal of small amounts. it is reasonable to infer that no cash in hand was available and must have been utilized before the next withdrawal as a need had arisen to make further withdrawal. The chain of withdrawals show that the withdrawals made earlier were utilized for some undisclosed purpose leading to the need for further withdrawal of small amounts.
• Further If the appellant was withdrawing cash over a period of time for some specific purpose and was in the habit of piling up such cash as cash in hand, he would have deposited the entire unutilized amount in one go and not on multiple dates.
• Failure in submitting satisfactory explanation in this regard before the AO and again not submitting any explanation during the appellate stage despite having repeated opportunities, clearly shows that the appellant is not in a position to explain the source of these huge cash deposits.
• Hon'ble Supreme Court in Krishan Kumar vs. ITO[2019] 107 taxmann.com 464 (SC) has upheld the addition made by AO under section 69A where the assessee had failed to satisfactorily explain the source of cash deposit • Hon'ble Supreme Court in the case of Sreelekha Banerjee v. Commissioner of Income-tax [1963] 49 ITR (SC) 112; [1964] 2 SCR 21 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT 552 (SC) has held that where the explanation of assessee was unconvincing and one which deserves to be rejected, the department can reject the explanation and draw the inference that the amount represents income either from the sources already disclosed by the assessee or from some undisclosed source.
• In the facts and circumstances of the case, it is concluded that the appellant's claims are unsubstantiated, without any tenable evidence, self-serving and a makebelieve story. Clearly, the appellant has deposited his own undisclosed money in the bank account during the FY 2014-15. The appellant has failed to explain the source of the same, the addition of Rs.64,87,800/- u/s 69A of the Act made by the AO is confirmed. This ground of appeal is dismissed. (Para 8 on page no.26)
iii) Ground 2 is against addition of Rs.58,61,310/- being the payment towards purchase of immovable property u/s 69 as unexplained investment:-
• The AO observed that the appellant had purchased two properties in Pratapgarh, one in his own name and another in the joint name of himself and his wife. The total consideration of the two properties was Rs.1,20,87,000/-. Out of this, total payment of Rs.68,79,000/- was made from ICICI bank account no. 5029 which was NRE account. The AO treated this amount as explained and remaining amount of Rs. 52,08,000/- as unexplained. Further, the amount of Rs. 2,73,140/- + Rs. 3,80,170/- incurred in cash towards stamp duty and registration charges of the two properties was also treated as unaccounted payment. Thus, the AO made total addition of Rs. 58,61,310/- u/s 69A of the Act.
• The appellant has submitted that the AO has wrongly treated the payments made through Joint NRO account of himself and his wife aggregating to Rs.42,08,000/- as the AO has made addition in respect of cash deposit of Rs.55,22,800/- in ICICI Bank a/c no. 153501075029 and Rs.9,65,000/-in Bank of Baroda a/c no. 12341000015578 as unexplained money u/s 69Aand, therefore, the addition to this extent is double addition. The appellant has submitted that payment of Rs. 10,00,000/- was out of remittance received in the seller's account by the assessed from outside India.22
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT The remittance has been made through Habib Exchange Company and a copy of remittance slip has been filed. Cash payment of Rs.6,53,310/- made for Registration charges is claimed to be out of cash withdrawals made from the bank account.
• The AO is directed to verify the claim that the payments for the property have been made from ICICI Bank a/c no. 153501075029 and Bank of Baroda a/c no. 12341000015578. The addition in respect of cash deposit in these two bank accounts aggregating to Rs.64,87,800/- has already been confirmed by me as unexplained cash deposit u/s 69A of the Act. Therefore, prima facie, the addition of Rs.42,08,000/- appears to be a double addition as the payments for purchase of property have been made from the bank accounts and, the cash deposits in the bank accounts from which the payments have been made have already been treated as unexplained. The AO is therefore, directed to delete the double addition of Rs. 42,08,000/- after verification. (para 10.3 on page no.29) • The payment of Rs.10,00,000/- made directly to the seller's account out of foreign remittance does not appear to be a normal and clean transaction. The payment has not been made through normal banking channels. The appellant has not remitted this amount in normal course to his bank account but directly to the seller's account. Further, the payment to the exchange has been made in cash. In these facts and circumstances, the payment cannot be treated as explained. The addition of Rs.10,00,000/- is confirmed. (Para 10.4 on page no. 30) • The aggregate cash payment of Rs.6,53,310/- made for registration charges is claimed to be out of cash withdrawals made from the bank account. However, it is pertinent to note that it has already been held in earlier paragraphs that the appellant has failed to prove the availability of cash in hand out of the withdrawals made from bank account. It is therefore, concluded that the appellant has failed to explain the source of such cash payments. The addition made by the AO is confirmed. (Para 10.5 on page no. 30)
iv) Ground 4 the addition of Rs.77,712/- being interest credited in bank accounts has been challenged:-23
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT • The AO has observed that the interest credited BOB account was Rs.20,467/- and the interest credited in ICICI bank account wasRs.57,245/-. Thus, total interest of Rs.77,712/- was added by the AO as undisclosed interest income.
• The appellant has contended that the interest credited BOB account is Rs.11,071/- and the interest credited in ICICI bank account is Rs.57,245/-. Thus, total interest of Rs.68,316/- is credited as against Rs. 77,712/- added by the AO.
• The AO is directed to verify the actual interest credited in the relevant bank accounts, in particular the BOB account, and assess the correct aggregate interest as undisclosed interest income. (Para 9 on page no. 28)
15. We are submitting herewith a summary showing addition made by ld. AO in assessment order and additions sustained/deleted by ld. CIT(A) as follows:-
Particulars Addition made CIT(A)
by AO
Sustained Deleted
Investment Payment made from 42,08,000 - 42,08,000
made in NRO account (after
immovable two verification)
properties for Payments made 10,00,000 10,00,000 -
through currency
transfer
Payment towards 6,53,310 6,53,310 -
stamp duty &
registration charges
58,61,310 16,53,310 42,08,000
Cash Deposit ICICI Bank 55,22,800 55,22,800 -
(NRO a/c)
BOB (NRO a/c) 9,65,000 9,65,000 -
64,87,800 64,87,800 -
Bank Interest ICICI Bank 57,245 - 57,245
(NRO a/c)
BOB (NRO a/c) 20,467 - 20,467
77,712 - 77,712
(after
verification)
Total 1,24,26,820 81,41,110
Assessed
24
IT(IT) A No. 21/JP/2022
Sh. Asgar Ali vs. DCIT
Income
Assessee has challenged all the additions sustained by the CIT(A) in appeal before Hon,ble Bench. Our submissions in that respect are as follows :
SUMISSIONS BEFORE HON'BLE ITAT Our ground wise submission in this regard is as follow:
Ground 1 Under the facts & circumstances of the case the ld. CIT(A), Delhi has erred in confirming the addition of Rs.64,87,800/- made by the assessing officer, Circle(INTL Tax), Jaipur by treating the cash deposits made in bank accounts of the assessee as unexplained money u/s 69A and thereby considering the same as income from other sources.
Submissions:
1. On the basis of information the AO observed that during the F.Y. 2014-15 the assessee deposited a sum of Rs.9,65,000/- in BOB a/c no. 12340100015578 and a sum of Rs.55,22,800/- in ICICI a/c no. 153501075029. During the course of assessment proceedings, the assessee was required to explain the source of total cash deposit of Rs.64,87,800/-(9,65,000 in BOB account + 55,22,800/- in ICICI Bank) and in response, the assessee stated before the AO that cash deposits were out of accumulated cash in hand out of withdrawals made from bank accounts in earlier years and during the F.Y. 2014-15. However, the ld. AO did not consider explanation given by him, accordingly treated entire cash deposits as unexplained u/s 69A. Aggrieved by this, the assessee preferred an appeal before CIT(A) and explain the above facts in his written submission before CIT(A).
2. In this regard the assessee's submissions before the CIT(A) were as under :
2.1 The assessee and his wife are non-resident but keeps on coming to India and he has a large family consisting of father, brother, Bhabhi, brother-in law, sister-in law etc. in India. As stated in the facts above :
i) During the year under consideration, the assessee deposited a sum of Rs.9,65,000/- in his NRO bank account maintained with Bank of Baroda a/c no.12340100015578 25 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT
ii) Further, the assessee and his wife deposited a sum of Rs.54,72,000/- in their joint NRO bank account maintained with ICICI Bank /ac no. 153501075029
iii) Further, Rs.50,800/- is received from Rashida Jawadwala on 03.09.2014 in their joint NRO bank account maintained with ICICI Bank /ac no. 153501075029 Accordingly, a total sum of Rs.64,37,000/- is deposited by the assessee and his wife in various bank accounts maintained by them.
2.2 At the outset, we may submit that ld. AO has wrongly considered the entire cash deposits of Rs.54,72,000/- in the joint bank account of assessee and his wife in the assessee's case. Out of the total sum deposited, a sum of Rs.27,52,000/- has been deposited by the wife and used by her for purchase of her property. The AO has wrongly taken a presumption that entire sum has been deposited by the assessee in this bank account. It is therefore, requested to kindly delete the addition to this extent.
2.3 We may submit that the AO has wrongly made addition of entire cash deposit without considering the following sources of deposits available in the hands of the assessee :
i) Rs.51,26,656/- out of withdrawals made from the bank accounts:-
We may submit that the assessee has been withdrawing cash from his bank account during the preceding years and also made certain withdrawals during the year. Out of the said amounts, the following were available for making the cash deposits in the accounts during the year:
Particulars Bank of ICICI Bank ICICI Bank Enclosure
Baroda a/c a/c no. a/c no. Total Amount Details
no. 153501000 1535007502
1234010001 52 (NRE) 9 (NRO)
5578
(NRO)
Cash 82,544 29,67,000 5,47,052 35,96,596
Withdrawal in
preceding year
Cash 11,52,200 Nil 6,51,000 18,03,200 PB on
26
IT(IT) A No. 21/JP/2022
Sh. Asgar Ali vs. DCIT
Withdrawal in Page no.
during the year 39 to 41
Total Amount 12,34,744 29,67,000 11,98,052 53,99,796
Less : Used for payment of Registration charges 2,73,140
Balance Available for Cash Deposits 51,26,656
We may submit that the entire details were furnished before the assessing officer, who, without giving any specific reason as to why these amounts are not considered as to source for the deposits made during the year, did not accept the assessee's submissions. For rejecting the assessee's submissions, the assessing officer should have shown that since the assessee has used this fund for some other purpose, it cannot be considered to have been deposited in the subsequent year. The ld. Assessing Officer has not pointed out any application of the withdrawals so made in the previous years. In such circumstances, the addition made to this extent is unjustified and deserves to be deleted.
Reliance is placed on the following judgement:
• Hon'ble ITAT Jaipur Bench in case of Shri Sunil Mathur vs ITO in ITA No. 660/JP/2019 ( Date of order 01.11.2021) wherein it has been held that the cash balance available from the withdrawal/transaction of preceding year have been accepted on the basis of Cash Book prepared by the assessee. We may submit that in the present case the assessee has given the detail of all the cash withdrawals which have been claimed source of deposits. Since there are no cash transaction other than bank withdrawals and deposits and payment of stamp duty & registration charges there is no relevance of preparation of Cash Book. The cash balance can be easily worked out on the basis of bank statements itself. Therefore, the finding given Hon'ble ITAT in the said case are squarely applicable in the present case.27
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT
ii) The balance amount is received as gift by the assessee's wife from the family members, i.e. Brother's wife. Since the assessee is in joint family, funds are mutually used for the purpose of buying property in the family. The assessee will furnish the entire details.
We may submit that the withdrawals made by the assessee in preceding years and during the year under consideration covers the entire deposits of Rs.36,85,000/- (Rs.64,37,000-27,52,000/- being deposits by wife) made by the assessee in the bank accounts. Accordingly, since the source of entire deposits are available, it is not justified to make an addition in this respect.
3. However, the ld. CIT(A) did not consider assessee's submission satisfactorily by stating that "there is no documentary evidence in support of claim that a sum of Rs.27,52,000/- has been deposited by his wife out of amount received as gift and the appellant has shown no purpose for which the cash was withdrawn. The chain of withdrawals show that the withdrawals made earlier were utilised for some undisclosed purpose leading to the need for further withdrawal of small amounts."
4. At this outset we may submit that the detail of cash deposits in various bank accounts made by asseessee and his wife during the year under consideration are as follows:-
Bank account Ownership Amount Remarks
Bank of Baroda a/c Individual 9,65,000 Entire amount deposited by
no. assessee.
12340100015578
(NRO account)
27,20,000 A sum of Rs.27,20,000/-
(54,72,000-27,52,000)
ICICI bank a/c no. Joint with his
deposited by assessee.
153501075029 wife i.e. Mrs.
(NRO account) Maleka Bai
27,52,000 A sum of Rs.27,52,000/-
deposited by assessee's wife
i.e Mrs. Maleka Bai
(PAN:AVZPB6082F)
50,800 Received from Rashida
28
IT(IT) A No. 21/JP/2022
Sh. Asgar Ali vs. DCIT
Jawadwala on 03.09.2014.
64,87,800
5. The assessee prays that the additions so made are incorrect and deserves to be deleted for the following reasons :
(i) Addition of Rs.50,800/- in respect of cash deposit in ICICI bank a/c no.153501075029:-
In this regard we may submit that Rs.50,800/- deposited by Rashida Jawadwala in their joint NRO account maintained with ICICI bank a/c no.153501075029 on 03.09.2014 as shown in bank statement (Paper Book on Page no. 33). This amount neither deposited by assessee nor his wife during the year under consideration. So it is not a cash deposit, it is just a normal banking transaction. Therefore, the addition to this extent so made in the assessee's case is not justified and deserve to be deleted.
(ii) Addition of Rs.27,52,000/- in respect of cash deposit made by assesse and his wife in joint ICICI Bank :-
1. At this outset, we may submit that CIT(A) has wrongly considered the entire cash deposits of Rs.54,72,000/-(27,20,000+27,52,000) in the joint bank account of assessee and his wife in the assessee's case. Out of the total sum deposited, a sum of Rs.27,52,000/- has been deposited by the his wife as under:-
S. no. Date ICICI Bank a/c no Remarks
155301075029
(Deposited by
assessee's wife i.e.
Mrs. Maleka Bai)
1 19-08-2014 2,50,000 1. Out of total deposit of 2 20-08-2014 2,00,000 Rs.7,00,000 on 26-09- 3 23-08-2014 2,07,000 2014, a sum of 4 15-09-2014 6,00,000 Rs.6,95,000 belongs to 5 24-09-2015 8,00,000 Mrs. Maleka Bai.
6 26-09-2014 6,95,000 2. Such cash deposits used 27,52,000 by her for purchase of 29 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT immovable property in her name from Sh. J.K. Palviya.
2. We may submit that during the year under consideration the assessee's wife i.e. Mrs. Maleka Bai (PAN: AVZPB6028F) purchased an immovable property for a consideration of Rs.77,31,000/- through a registered sale deed executed on 24.12.2014 from Sh. J.K. Palviya. Out of total purchase consideration, Rs.27,52,000/- have been paid from a Joint Bank account of assessee and his wife. Thus his wife used the cash deposited by her during the year under consideration for purchase of property in her name from Sh. J.K. Palviya. When the cash deposit of Rs.27,52,000/- is related to assessee's wife i.e. Mrs. Maleka Bai who holds separate Permanent Account Number (PAN: AVZPB6082F), the additon made in assessee's case without pointing out any reason for holding it to be assessee's cash deposits is wrong. In such circumstances, it is incorrect to make addition in this respect in the name of assessee. The ld.
CIT(A) and ld. AO has wrongly taken a presumption that entire sum has been deposited by the assessee in his bank account.
3. We may submit that Mrs. Maleka Bai, had in her hand, the followings :
a. The balance amount of excess funds withdrawn from the saving bank accounts of Rs. 14,41,565 i.e. 51,26,656 - 36,85,000.
b. Balance 13,10,435/- out of past savings, maternal side & certain common funds of joint family members contributed/gifted to Mrs. Maleka Bai.
Further, we may submit that in case of assessee's wife i.e. Mrs. Maleka Bai (PAN: AVZPB6082F) and separate assessment proceeding were initiated u/s 148A and order has been passed after considering various documentary evidence in relation to purchase consideration of Rs.77,31,000/- for purchase of immovable property from Sh. J. K. Palviya. We are submitting 30 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT herewith the copy of the assessment order. In such proceedings, the CIT(A) order in the case of present assessee (Asgar Ali) was on record wherein the assessee has claimed that part of the money belonged to Mrs. Maleka Bai (page 19 of the CIT(A) order, para 2 of the submissions under the heading 'Ground 3'.
In view of above, the addition to the extent of cash deposit of Rs.27,52,000/- is not justified and deserve to be deleted.
(iii) Addition of Rs.36,85,000/-(9,65,000 in BOB +27,20,000 in ICICI bank) in respect of cash deposits in various bank accounts:-
1. Accordingly, during the year under consideration the assessee deposited a total sum of Rs.36,85,000/-, a sum of Rs.9,65,000/-
on various dates in NRO account maintained with Bank of Baroda and a sum of Rs.27,20,000/- on various dates in NRO account maintained with ICICI Bank, jointly held by assessee with his wife as under:
Date Bank of Baroda ICICI Bank a/c no. Remark
a/c no. 153501075029
12340100015578
23-04-2014 - 1,00,000 1. Out of total deposit of 25-04-2014 - 5,80,000 Rs.7,00,000 on 26-09-
19-08-2014 2,00,000 2014, a sum of
20-08-2014 1,75,000 Rs.5,000 belongs to
22-08-2014 1,00,000 - assessee.
15-09-2014 4,90,000
26-09-2014 5,000 2. Such cash deposit used
17-11-2014 -- 5,00,000 by assessee for
18-11-2014 - 8,00,000 purchase of Immovable
19-11-2014 7,00,000 property in his name
24-02-2015 35,000 from Sh. J.K. Palviya
9,65,000 27,20,000
2. We may submit that the assessee is a non resident Indian but keeps on coming to India and he has a large family consisting of father, brother, bhabhi, brother-in law, sister-in law etc. in India. The aeesssee has business setup overseas (UAE). The assessee, had a plan to buy residential immovable property in India. For that 31 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT purpose he might need money at any time. Therefore, he started withdrawing the cash at regular interval from the various bank account to pay for the expected transaction, whenever it happens. Moreover, as the assessee resides outside India, he keeps his money with parents rather than keeping in bank so that can be used whenever required. Therefore, the amount of Rs.35,96,596/- was withdrawn in preceding year and further withdrawals were made during the year in cash from the bank accounts as detailed on PB Page 40-41 supported with copies of bank accounts on PB Pages 23-37 (with index on page 22). So far as, keeping the cash unutilized or keeping the same in bank is purely the decision of the assessee. Since, no deal could materialize, therefore, the cash withdrawn from the bank accounts was re-deposited during the F.Y. 2014-15.
3. We may submit that a notice u/s 250 dated 08.07.2022 was issued to assessee for submitting relevant documentary evidence in support of his contention made in his written submission dated 25.05.2022 and explaining the reason of cash withdrawals made earlier and during the year. The assessee furnished his reply dated 19.07.2022 along with documentary evidence as mentioned in notice and explaining the cash withdrawals made by him. Copy of such acknowledgment and copy reply dated 19.07.2022 are attached herewith for your ready reference. (on Paper Book page no.97-101) We are submitting herewith a detail of cash deposits made by assessee out of withdrawals made by him in preceding years and during the F.Y. 2014-15 as under:
Date Particulars Cash withdrawn Deposits made by assessee Balance in by assessee during the F.Y.2014-15 Hand during the F.Y. 2014-15 ICICI Bank a/c BOB a/c no.
no. 1234010001
153501075029 5578
01-04-2014 Opening 35,96,596
balance in
hand (PB
Page 40-41)
23-04-2014 - 1,00,000 - 34,96,596
32
IT(IT) A No. 21/JP/2022
Sh. Asgar Ali vs. DCIT
25-04-2014 - 5,80,000 29,16,596
19-08-2014 - - 2,00,000 27,16,596
20-08-2014 - - 1,75,000 25,41,596
22-08-2014 - - 1,00,000 24,41,596
15-09-2014 - - 4,90,000 19,51,596
17-09-2014 BOB (NRO 15,000 - - 19,66,596
5578)
26-09-2014 5,000 19,61,596
29-09-2014 ICICI Bank 40,000 - - 20,01,596
(NRO 5029)
30-09-2014 BOB (NRO 5,00,000 - - 25,01,596
5578)
01-10-2014 ICICI Bank a/c 18,000 - - 25,19,596
no.
153501075029
08-10-2014 BOB (NRO 40,000 - - 25,59,596
5578)
09-10-2014 BOB (NRO 25,000 - - 25,84,596
5578)
09-10-2014 BOB (NRO 27,000 - - 26,11,596
5578)
17-10-2014 BOB (NRO 75,000 - - 26,86,596
5578)
17-11-2014 - 5,00,000 - 21,86,596
18-11-2014 - 8,00,000 - 13,86,596
19-11-2014 - 7,00,000 - 6,86,596
22-12-2014 ICICI Bank 4,00,000 - - 10,86,596
(NRO 5029)
22-12-2014 ICICI Bank 25,000 - - 11,11,596
(NRO 5029)
22-12-2014 ICICI Bank 33,000 - - 11,44,596
(NRO 5029)
05-01-2015 ICICI Bank 15,000 - - 11,59,596
(NRO 5029)
31-01-2015 BOB (NRO 23,200 - - 11,82,796
5578)
31-01-2015 ICICI Bank 1,20,000 - - 13,02,796
(NRO 5029)
18-02-2015 BOB (NRO 4,47,000 - - 17,49,796
5578)
24-02-2015 - 35,000 - 17,14,796
As far as cash deposits of Rs.36,85,000/-made by assessee during the year under consideration, it is worth noting here that the 33 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT source of cash deposits in these bank accounts are cash withdrawals in preceding years and during the F.Y. 2014-15.
Further, we may submit that, as soon as assessee found an immovable property at Pratapgarh, he purchased such property from Sh. J.K. Palviyya through a registered sale deed 0n 22.12.2014 and since the requirement of the seller was to make the payment through cheque, the cash was deposited in bank for making payment of purchase consideration to Sh. J.K. palviya.
4. We may submit that ld. CIT(A) rejected the submissions of assessee without giving any specific reason as to why these amounts withdrawn should not be considered as source of these deposits. While rejecting the assessee's submissions, the ld.
CIT(A) should have shown that since the assessee has used this fund for some other purpose, it cannot be considered to have been deposited in the subsequent year. We may submit that neither the CIT(A) not AO have pointed out any application of the withdrawals so made in the previous years. No evidence has been brought on record by assessing officer and CIT(A) that the assesse in fact used the cash for any other purpose.
In such circumstances, the addition made to this extent is unjustified and deserves to be deleted.
Reliance is placed on following judgements:-
• Hon'ble ITAT Chandigarh Bench in case of Smt. Sarabjit Kaur vs. Income-tax Officer [2022] 142 taxmann.com 454 (Chandigarh - Trib.) held that "Where assessee stated that source of cash deposit seen in its bank accounts was balance of cash in hand brought forward from earlier assessment years, however, Assessing Officer treated same as unexplained investment without assigning any reason, impugned additions made under section 69 was not justified."34
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT • Hon'ble High Court Of Karnataka in case of Principal Commissioner of Income-tax, Belagavi vs. Basetteppa B Badami [2018] 93 taxmann.com 66 (Karnataka) held that "While adjudicating a case, particularly, with a specific closing cash in hand of the preceding year, it is obvious that the said amount would be the opening cash in the subsequent assessment year. If that is to be considered, adjudication on the opening cash in the subsequent assessment year would not arise. The issue which has reached finality cannot be reopened in the guise of the arguments now advanced by the revenue. In view of the same, the Tribunal rejected the appeals filed by the revenue. There is no infirmity or irregularity in the order of the Tribunal."
• Hon'ble ITAT Bench 'C' Mumbai Asstt Commissioner Of Income Tax vs. Chirag Jayant Mehta 2017-TIOL-971-ITAT- MUM held that "cash amount was withdrawn by the assessee but for some other purpose no disclosed to the Department. The assessee claimed that the amount was withdrawn for purchasing some land, which finally could not materialize and the same amount was redeposited. The earlier year returns of the assessee were with the Department on the basis of which it could have been established that the unutilized cash was used in earlier years. No such evidence was mentioned by the Department while presuming so. In such a situation, it was noted that presumption cannot take the shape of evidence, however strong it may be. The AO has presumed that the cash was, though withdrawn, but might have used for other purposes, which had not been established by the Revenue, appeal of the assessee was allowed."
• Hon'ble ITAT Chandigarh in case of Income Tax Officer vs. Smt. Karamjeet Kaur ITA No.1/CHD/2014 held that "It is an admitted fact that there has been cash withdrawal and cash deposit in the bank account of the assessee and on the basis of such cash withdrawal and cash deposit, the Commissioner of Income Tax (Appeals) has worked out the 35 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT peak cash credit in the hands of assessee at Rs.4,45,000/- In the entirety of the facts and circumstances, we are in conformity with the order of Commissioner of Income Tax (Appeals) and upholding the same, we dismiss the ground of appeal raised by the revenue."
• Hon'ble ITAT Ahmedabad in case of Kalubhai Ranchhodbhai vs ITO ITA No. 1121/Ahd/2019 held that "we hold that the impugned addition of Rs.6,34,000/- on account of cash deposited in the bank account of the assessee remaining unexplained, has been made without any basis at all, while the assessee had duly substantiated the said deposits from his cash book . We therefore direct the deletion of the addition made of cash deposits of Rs. 6,34,000/-."
• Hon'ble ITAT Lucknow in case of Dy.C.I.T vs. Shri Sudhir Shankar Halwasiya held that "the assessee needs not to supposed to keep track of the number of respective notes which were received by him when the cash was withdrawn by him and get it tallied with the cash deposit which he is making in the same bank account whether there was sufficient cash available with the assessee and the source of said cash availability which stands duly explained by the assessee himself."
In view of above, the addition sustained is unjustified and deserves to be deleted.
Ground 2 Under the facts & circumstances of the case the ld. CIT(A), Delhi has erred in confirming the addition of Rs.10,00,000/- being the remittance through Habib Exchange Company towards purchase of immovable property by considering it unexplained investment u/s 69.
Submission
1. During the year under consideration, the assessee's wife Mr. Maleka Bai purchased an immovable property for a consideration of Rs.77,31,000/- from Sh.J.K. palviya. Out of total consideration, a sum of Rs.10,00,000/- is paid by asseesee directly through foreign remittance. However, the ld. AO made an 36 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT addition of Rs.10,00,000/- by treating as unexplained investment. Aggrieved by this, the assessee preferred an appeal before CIT(A) and explained the facts before CIT(A) in his written submission as under:-
We may submit that the assessee is a NRI and earning income outside India. The fact is well established and ld. AO has not raised any objection regarding any remittances received in the assessee's NRI account. The said payment of Rs.10,00,000/- is also remitted to the seller's account by the assessee from outside India. The related remittance slip which bears the number referred in the registered sale deed is enclosed herewith for your ready reference. The remittance is made through Habib Exchange Company. The said money is out of the income earned by the assessee abroad and therefore not taxable. The addition made is therefore not justified and deserves to be deleted.
2. However, the ld. CIT(A) did not consider above explanation by stating that "The payment of RS.10,00,00/- made directly to seller's account out of foreign remittance does not appear to be normal and clean transaction. The payment has not been made through normal banking channels."(in Para 10.4 on page no.30)
3. In this regard we may submit that the assesse keeps sending money in India through Habib Exchage Company in his NRE account maintained with ICICI bank a/c no.153501000052, joint with his wife as he sent Rs.15,00,000/- on 17.12.2104 during the year under consideration. Therefore, sending money directly to seller's account through Habib Exchange Company is a normal and genuine transaction.
4. We may also submit that the assessee is non resident Indian and earned income outside India. The assessee made payment of Rs.10,00,000/- to Sh.
J.K. Palviya for purchase of immovable property in his wife name, from the income earned in abroad i.e. UAE. Therefore, such income not taxable in India. In view of above the addition made by ld. CIT(A) is not justified and deserve to be deleted.
Ground 3 Under the facts & circumstances of the case the ld. CIT(A), Delhi has erred in confirming the addition of Rs.6,53,310/- being payment towards stamp duty and registration charges made out of cash withdrawals from the bank accounts of the assesse for purchase of immovable properties by treating it unexplained investment u/s
69. 37 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT Submission
1. The assessee paid stamp duty and registration charges for purchase of immovable properties as under:
• The assessee purchased an immovable property in his own name through a registered sale deed executed on 22.12.2014 for a purchase consideration of Rs.43,56,000/- from Sh. J.K. Plaviya. The assessee paid of Rs.2,73,140/- in cash towards stamp duty and registration charges as per registered sale deed. Copy of sale deed of Asgar Ali is enclosed herewith for your ready reference (Paper Book on Page no. 43 to 66) • Further, the assessee's wife i.e. Mrs. Maleka Bai purchased an immovable property in her name through a registered sale deed executed on 24.12.2014 for a purchase consideration of Rs.77,31,000/- from Sh. J.K. Plaviya. The assessee paid of Rs.3,80,170/- in cash towards stamp duty and registration charges as per registered sale deed. Copy of sale deed of Mrs. Maleka Bai is enclosed herewith for your ready reference (Paper Book on Page no. 67 to 92)
2. In this regard we may submit that the assessee explained the payment of stamp duty and registration charges in his written submission as under:
"The ld. Assessing Officer has alleged that the assessee could not explain the source of cash amount paid for registration of the two properties. The amount incurred is Rs.6,53,310/-. We may submit that the ld. AO has ignored the cash withdrawals from the bank accounts. The registration charges are paid on 22.12.2014 & 24.12.2014 and there are following cash withdrawals before making such payment of stamp duty & registration charges :
Account Date Amount Remarks
22.12.2014 25,000 Withdrawn just before the date of
registration for this purpose only.
Form ICICI Looking at the balance in hand
bank a/c no. 22.12.2014 4,00,000 out of previous withdrawals, 1535010750 29 22.12.2014 33,000 whatever was short was 38 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT 01.10.2014 18,000 withdrawn just before registration date.
17.10.2014 75,000
Form BOB
A/C NO: 09.10.2014 25,000
1234010001
5578 09.10.2014 27,000
08.10.2014 40,000
30.09.2014 5,00,000
11,43,000
In view of above the additions made are not justified and deserves to be deleted."
3. However, the ld. CIT(A) did not consider such explanation satisfactorily and confirmed the addition of Rs.6,53,310/- alleged that the assessee could not explain the source of cash amount of paid for registration of the two immovable properties.
4. At this outset, we may submit that the assessee made certain cash withdrawals from his bank accounts during the year under consideration before registration of immovable properties. The said payment of Rs.6,53,310/- is paid by assessee in cash out of left over cash in hand of Rs.6,86,596/- after making deposits and cash withdrawals made by him during the year under consideration. The registration charges are paid on 22.12.2014 for property purchase in his own name & 24.12.2014 for property purchase in his wife name and there are following cash available in hand before making such payment of stamp duty & registration charges as under:
Particulars Date Amount Remark
Cash in hand after 19.11.2014 6,86,596 Withdrawn just before the
depositing cash date of registration for this
Cash withdrawal from 22.12.2014 25,000 purpose only. Looking at the
Form ICICI bank a/c 22.12.2014 4,00,000 balance in hand out of
no. 15350107 5029 22.12.2014 33,000 previous withdrawals,
11,44,596 whatever was short was
withdrawn just before
registration date.
39
IT(IT) A No. 21/JP/2022
Sh. Asgar Ali vs. DCIT
In view of above the assessee has sufficient cash in hand for making payment of stamp duty and registration charges in cash and the source of payment of all amount of stamp duty and registration charges are cash withdrawals. In view of above the additions made are not justified and deserves to be deleted.
6. In addition to the written submission the ld AR of the assessee submitted that as regards the addition of Rs. 64,87,800/- the amount deposited is the joint account with the wife of the assessee. Out of the money so deposited in the said account Rs. 27,52,000/- ( CIT(A) order page 26 para 8.3) was used by the wife of the assessee in purchase of property and her assessment was also re-opened to verify the source of investment. For this contention the ld. AR of the assessee relied upon the purchase document and linked the payment which was debited from the same bank account and therefore, he said that the money so used by the wife cannot be taxed in the hands of the assessee. In support of this contention he has relied upon the purchase of property document of the assessee's wife and bank statement. So far as the balance amount deposited into the bank account for which the ld. AR of the assessee has relied upon a chart (APB-19)showing the cumulative withdrawals available with the assessee showing cash balance of Rs. 53,99,796/- after considering the use of Rs. 2,73,140/- for payment of stamp duty charges for 40 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT the purchase of property the balance amount in support of the cash deposit available to the assessee amounts to Rs. 51,26,656/-. The ld. AR of the assessee also submitted the date wise chart of cash balance available with the assessee vide paper book page 39 to 41. The source of the withdrawal made by the assessee was accepted by the ld. AO based on that he prayed that his grounds needs to be considered based on the above facts and written submission made. As regards the ground no. 2 of the assessee ld.
AR of the assessee submitted that assessee has received in the bank account available with the assessee (APB-26) accepted a sum of Rs. 15 lac received from the same Habib Exchange then in that case why the same is not accepted as directly paid for purchase of property. The assessee submitted that he has not paid the money to the Habib exchange in India but has been paid out of India when the payment of Rs. 15 lac accepted why the sum of Rs. 10 lac cannot be accepted. As regards the payment of Rs. 6,53,310/- the ld. AR of the assessee submitted that so far as regards the payment of the stamp duty paid by the wife for purchase of her property cannot be added in the case of the assessee and for purchase his property, he has sufficient cash balance available with him as explained by him vide page 19 of the submission made by the assessee.
41IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT
7. The ld DR is heard who has relied on the findings of the lower authorities and also relied upon the comments of the ld. AO submitted on 15.05.2023. The contentions of the revenue as per the report of the AO is reiterated here in below:
"Kindly take reference to your letter no. "Addl. CIT (DR)/ITAT/JPR/2022-23/529, 535 & 542 dated 19.01.2025, 24.01.2023 & 25.01.2023 respectively, regarding the appellate proceedings in the case of Asgar Ali, Pratapgarh, PAN: ARCPA5302Q.
The assessee has submitted exact same paper book before Hon'ble ITAT as he did before Ld. CIT(A). The case laws on which reliance is placed are also same. The Ld. CIT(A) has already considered these case laws and contention made by the assessee and sustained the addition made by the assessee. However, the Ld. CIT(A) also directed the AO to delete the double addition of Rs. 42,08,000/- as the same was considered in cash deposit issue which was sustained by the Ld. CIT(A).
The Ld. CIT(A) also placed reliance on the below mentioned case laws:-
(i) Sh. Sunil Mathur vs ITO in ITA no. 660/JP/2019 (Date of order 01.11.2021).
(ii) Hon'ble Supreme Court's order in the case of Raymond Woolen Mills Ltd. Vs. ITO [1996] 236 ITR 34(SC).
(iii) Hon'ble Supreme Court's order in the case of Phool Chad Bajrang Lal vs. ITO[1993] 203 ITR 456 (SC).
(iv) Hon'ble Gujarat High Court's order in the case of Praful Chunilal Patel-Vasant Chunilal Patel vs. Asstt. CIT (1000) 230 ITR 832, 840- 41 (Guj.)
(v) Hon'ble Supreme Court's Order in the case of Krishan Kumar va ITO [2010] 107 taxmamm.com 40 (SC)
(vi) Hon'ble Supreme Court's order in the case of Sreelekha Banarjee v Commissioner of Income-Tax [1968] 19 ITR (SC) 112 [1964] 2 SCR 552 (SC) 42 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT Relying on these verdicts, the Ld. CIT(A) upheld the additions made by the However, in connection to the grounds of appeal raised by the assessee, the para wise comments are as below. -
Comments on Ground 1:-
(Regarding addition of Rs. 64,87,500/-)
1. It may please also be noted that assessee's wife's (Mrs. Maleka Bai) case pertaining to AY 2015-16 was also assessed in this office and assessment order in this case was passed on 14.03.2023. The assessment of this case was opened on the same grounds as of Mr. Asgar Ali for AY 2015-16. This case was assessed at NIL income as the amounts under consideration were already added in the income of Mr. Asgar Ali for AY 2015-16 and adding the same in assessee's wife's income would make it a double addition for non-disclosure of same income.
2. The assesssee did not submit any documentary evidence whatsoever that the cash deposit aggregating to Rs. 27,52,000/- belongs to the wife of the appellant. The appellant is the first joint holder of the bank account. There is nothing on record that the wife has any independent source of income. The same claim is made by the assessee's wife during the assessment proceeding in her case for AY 2015-16, considering which her case was assessed at a total income of Rs. NIL. Therefore, the amount under consideration, no-doubt, belongs to the assessee only.
3. The Ld. CIT(A) in his order, relying upon various case laws, has clearly stated that "...In the facts and circumstances of the case, it is concluded that the appellant's claims are unsubstantiated, without any tenable evidence, self-serving and a make-believe story. Clearly, the appellant has deposited his own undisclosed money in the bank account during the FY 2014-15. The appellant has failed to explain the source of the same, the addition of Rx. 64,87,800/- / 69d of the Act made by the 40 is confirmed."
In view of the above, the contention of the assessee does not stand any ground and is not allowable.
Comments on Ground:-
(Regarding addition of Its 10,00,000/- made u/s do of the Act) During the assessment proceeding it was also noted that, other than the payments made from NRE & NRO bank a/c, the assessee also made payment of Rs. 10,00,000/-43
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT which is in the nature of Direct Forex transfer to the seller's account from outside India. This remittance was made through Habib Exchange Company.
Regarding this payment, the assessee has contended that this payment was made out of income earned outside India, however, the assessee failed in submitting any documentary evidence, despite providing ample of opportunities, substantiating the fact that this income was generated outside India As the assessee failed to establish the source of this payment, therefore, addition of Rs. 10,00,000/- was made to the total income of the assessee for the year under consideration.
The Ld. CIT(A) also confirmed this addition stating that "The payment of Rs. 10,00,000/- made directly to the seller's account out of foreign remittance does not appear to be a normal and clean transaction. The payment has not been made through normal banking channels. The appellant has not remitted this amount in normal course to his bank account but directly to the seller's account. Further, the payment to the exchange has been made in cash. In these facts and circumstances, the payment cannot be treated as explained. The addition of Rs. 10,00,000/- is confirmed."
In view of the above discussion, the ground raised by the assessee is not allowable.
Comments on Ground 3:-
(Regarding addition of Rs. 0,53,310/- made a/s eo of the Act on account of payment of stamp duty and registration charges) i. During the course of assessment, the assessee neither produced any justification nor any documentary evidence regarding income capacity of his wife and capacity of making deposits into the joint NRO bank a/c held with the assessee. As the payments are made from the joint a/c therefore it cannot be said that the payments so made pertains to Mrs. Maleka Bai only. Therefore the claim of the assessee that the payment so made and funds so deposited pertains to his wife only does not stand any ground and is void in totality.
ii. The assessee has himself admitted that the source of payment of all the amounts are cash deposits, As the assessee failed in producing documentary evidence regarding the source of these deposits, therefore the addition was made and the same was sustained by the Ld. CIT(A) also.
iii. As per the Ld. CIT(A)'s order's para 10.4 "The payment of Rs. 10,00,000/- made directly to the seller's account out of foreign remittance does not appear to be a normal 44 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT and clean transaction. The payment has not been made through normal banking channels. The appellant has not remitted this amount in normal course to his bank account but directly to the seller's account. Further, the payment to the exchange has been made in cash. In these facts and circumstances, the payment cannot be treated as explained. The addition of Rs. 10,00,000/- is confirmed."
In view of the above, the contention of the assessee does not stand ground and is not allowable.
iv. As per the Ld. CIT(A)'s order's para 10.5 "The aggregate cash payment of Rs. 6,53,310/- made for registration charges is claimed to be out of cash withdrawals made from the bank account. However, it is pertinent to note that it has already been held in earlier paragraphs that the appellant has failed to prove the availability of cash in hand out of the withdrawals made from bank account. It is therefore, concluded that the appellant has failed to explain the source of such cash payments. The addition made by the AO is confirmed."
In view of the above, the contention of the assessee does not stand any ground and is not allowable.
Comments on other issues raised by the assessee before CIT(A):
i. Comments on difference in amount of interest income received from bank:-
On perusal of the interest report for accounts submitted by the Bank of Baroda on 18.09.2021 (copy enclosed), it is noted that the assessee had earned interest of Rs. 20,167.15/- in the bank a/c bearing no. 12340100015578 from 01.04.2014 to 31.03.2015. The assessee has received interest of Rs. 57,245/- in the bank a/c held in ICICI bank, as admitted by the assessee. Therefore, the total taxable interest income amounts to Rs. 77,712/- for the year under consideration.
ii. Comments regarding assessee's objection on reopening of assessment u/s 147/148 of the Act:-
a. The assessment order u/s 147 r.ws. 144 of the 1.T. Act, 1961 was passed as per the due procedure given in the IT Act, 1961 and after taking prior approval of appropriate authorities.
b. The reasons recorded are as per the information available on the ITBA/INSIGHT/AIR data and the notice u/s 148 was issued for verification of the incriminating information reflected on the system. The information so reflected were uploaded by the office of Sub- Registrar and relevant Banks. Therefore, it is clear that 45 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT the reasons recorded were on the basis of the information passed on by various govt. and non-govt. institutions.
(1) On perusal of the assessee's written submission's page 3 & 4, it may clearly be seen that the assessee has himself admitted a payment of Rs. 43,56,000/- (29,00,000/- from NRE and 14,56,000/- from NRO) made to Sh. J.K. Palviya for purchase of immovable property in assessee's name. On the contrary the assessee is also claiming in para 1(iii) that..."the reasons recorded that the assessee has invested sum of Rs. 49,66,000/-
during the year are incorrect. As clear from this discussion that the assessee is making two totally contradicting claims of making investment for purchase of the property.
(iv) The assessee failed in producing documentary evidence regarding source of funds used to make payments for purchase of immovable property from NRO account. Therefore, it falls under the purview of unexplained investment.
(v) The contention of the assessee does not stand any ground, keeping in view that the AO made total addition of Rs. 1,24,26,820/- during the course of assessment. Also, the Ld. CIT(A)-12, New Delhi also sustained the additions made by the AO. Therefore, the assessee has taxable income which is way above the maximum amount not chargeable to tax. The reason of reopening of assessment is not only non-filing of ITR. The reasons of reopening of the assessment are reiterated as below:-
"On the basis of information available on record, it is gathered that during the F. Y. 2014-15, the assessee has deposited cash of Rs. 54,72,000/- in bank account No. 153501075029 maintained with ICICI Bank, Pratapgarh (Raj) and deposited cash of Rs. 10,07,000/- in bank account No. 12340100015578 maintained with Bank of Baroda, Pratapgarh (Raj.). It is also noticed that during the year under consideration, the assessee earned interest of Rs. 79,571/- from bank account No. 153501000052 maintained with ICICI Bank Ltd., Pratapgarh. Apart from the above, it is also gathered that during the year under consideration, the assessee purchased immovable residential property amounting to Rs. 43,56,000/-.
As per ITD detalls, the assessee has not filed his return of income for the year under consideration. In order to verify the transaction, notice for filing of Income Tax Return was issued to the assessee. However, the assessee did not file the ROI for the relevant A. Y. 2015-16. Since, the assessee has not filed his return of income for the year under consideration, therefore the source of cash deposits of Rs. 64,79,000/-, Investment in purchase of immovable property of Rs. 43,56,000/- and interest earned from bank of Rs. 79,571/-remained unexplained and untaxed. As the assessee has not filed return of income for the year under consideration although the total income of assessee had 46 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT exceeded the maximum amount which is not chargeable to tax as discussed above, therefore, this case prima facie appears to be a case where income chargeable to tax has escaped assessment. As such, the income of the assessee to the tune of Rs. 1,09,14,571/- has escaped from assessment for the relevant A. Y. 2015-16,"
As discussed above, Non-filing of ITR is just a part of reasons recorded for reopening of assessment and not the whole reason of the same.
2. The information relied upon was furnished by the govt. and non-govt. organisations and the case was reopened for verification of the information submitted and to curtail the possible tax evasion made by the assessee by non-filing the ITR. As per the assessment order and order of the Ld. CIT(A), it is clear that the assessee had evaded tax and did not disclose taxable income, hence, additions were made and were sustained by the Ld. CIT(A).
The ld. DR also submitted that the issue for selection of the cash is to see the source of the cash deposited by the assessee and purchase of property. The facts of the case law relied upon by the ld. AR of the assessee has different facts. As regards the addition of Rs. 10 lac the assessee failed to explain the source of the cash so deposited. Based on the above submission the ld. DR supported the orders of the lower authorities.
8. We have heard the rival contentions and perused the material placed on record and gone through the judicial decisions relied upon. The bench noted the ld. AO has made the addition in the case of the assessee for deposit of cash as well as of the amount invested in the purchase of property. The ld. AO added a sum of Rs. 58,61,310/- as unexplained 47 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT investment for purchase of property out of that amount Rs. 42,08,000 was deleted by the ld. CIT(A) (page 29 of his order) and sustained the addition for Rs. 10,00,000/- paid by the assessee directly from foreign remittance from Habib Exchange and Rs. 6,53,310/- being the amount used for paying the stamp duty considering the same as unexplained for these two sustained additions the assessee has raised ground no. 2 & 3. The bench further noted that the ld. CIT(A) has sustained the addition of Rs.
64,87,800/- for which the ld. AR of the assessee has raised the ground no.
1.
9. As regards the ground no 2 the facts before us is that the assessee has paid a sum of Rs. 10,00,000/- directly to the seller from foreign source.
The relevant finding of the ld. CIT(A) on this issue is as under:
"10.4 The payment of Rs. 10,00,000/- made directly to the seller's account out of foreign remittance does not appear to be a normal and clean transaction. The payment has not been made through normal banking channels. The appellant has not remitted this amount in normal course to his bank account but directly to the seller's account. Further, the payment to the exchange has been made in cash. In these facts and circumstances, the payment cannot be treated as explained. The addition of Rs. 10,00,000/- is confirmed."
As it is evident from the above facts, that it is not disputed that the amount of Rs. 10,00,000 was paid from the sources out of India. It is also not disputed that the assessee is a nonresident. Thus, merely the assessee 48 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT has paid the money from out of India the investment so made from the sources out of India automatically cannot be charged to tax India. We are also convinced from the arguments of the ld. AR of the assessee that in the same way the ld. AR of the assessee transferred a sum of Rs. 15 lacs in the bank account of the assessee and the same is accepted by the revenue and no question is raised for the source of such money when the same is paid to purchaser cannot be considered as unexplained money. The relevant extract from where the transaction of Rs. 15 lac appearing in the bank account of the assessee is extracted here in below:
49IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT The ld. AR of the assessee also produced the copy of remittance voucher of the bank the remittance made from the Sharjah Bank (Page42) as reproduced here in below:50
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT From the stated facts we are not in agreement of the lower authority that the sum of Rs. 10,00,000/- directly paid by the assessee remained as unexplained and therefore, we vacate the disallowance and thus the grounds no. 2 raised by the assessee is allowed.
10. As regards the ground no. 1 & 2 is concerned since the same relates to the addition made on account of deposit of cash and availability of cash with the assessee the same is dealt together. The ld. AR has made an addition of Rs. 64,87,800/- being the amount deposited into the bank account maintained by the assessee along with the wife. To understand the issue we have analyze the facts placed before us for the amount of Rs.
64,87,800/- deposited into the bank account here in below:
51IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT Amount added in the bank account of the assessee Rs. 64,87,800/-
Amount used by the wife of the assessee for purchase of Rs. 27,52,000/-
property for which the separate proceeding were initiated Balance amount remained to be explained by the assessee Rs. 37,35,800/-
To explain this amount the ld. AR of the assessee submitted that the assessee for the year under consideration made withdrawal of Rs.
18,03,200/-(page 39) and Rs. 35,96,596/- in 2011-12, 2012-13 & 2013-14 (page 40-41) so total cash available with the assessee amounts to Rs.
53,99,796/- out of which he has used and deposited a sum of Rs.
37,35,800/- for buying the property. The relevant details were already placed on record. The revenue has not doubted the source of withdrawal made by the assessee and also has not placed anything contrary to prove that the said cash has been used by the assessee. These contentions were raised before the ld. CIT(A) but the same was not considered on the reason that the assessee has not made deposit in one go but has made a number of deposits of huge amount thought out the F. Y. 2014-15. He further noted that if the assessee was withdrawing cash over a period of time for some specific purpose and was in the habit of pilling up such cash as cash in hand, he would have deposited the entire unutilized amount in one to and 52 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT not on the multiple dates. Based on that finding and relying on the decision of apex court in the case of Krishna Kumar Vs. ITO and in the case of Sreelekha Banerjee Vs. CIT wherein the first case the apex court held that where the assessee had failed to satisfactory explain the source of cash deposit and in the another case the apex court held that " where the assessee was unable to prove that in his normal business or otherwise, he was possessed of so much cash, it was held that the assessee started under a cloud and must dispel that cloud to the reasonable satisfaction of the assessing authorities, and that if he did not, then, the department was free to reject his explanation and to hold that the amount represented income from some undisclosed source." The fact of that case and the fact of this case is totally different as in this case it is evidently clear that the source of the cash deposit is covered from the withdrawal so made by the assessee and the revenue has neither proved that the assessee has no source of this money which has been withdrawal and has also not proved that the assessee has used this cash for other purpose. Thus, the case law relied upon by the ld. CIT(A) are not applicable to the facts of this case. On the contrary to support the facts of the assessee the ld. AR of the assessee has relied upon the various judgement in his written submission of the various co ordinate bench decision. Out of the judgement so relied the 53 IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT relevant finding recorded by the ITAT Chandigarh Bench in case of Smt. Sarabjit Kaur vs. Income-tax Officer [2022] 142 taxmann.com 454 (Chandigarh - Trib.) where in the bench held that "Where assessee stated that source of cash deposit seen in its bank accounts was balance of cash in hand brought forward from earlier assessment years, however, Assessing Officer treated same as unexplained investment without assigning any reason, impugned additions made under section 69 was not justified."
On being consistent to the finding of the co-ordinate bench we are also of the view that considering the discussion recorded by us here in above we vacate the addition of Rs. 64,87,800/-. In the result ground no. 1 raised by the assessee is allowed. As regards the disallowance of Rs. 6,53,310/-
raised by the assessee in ground no. 3 is also allowed considering the finding recorded by us that sum of Rs. 2,73,140/ is used by the assessee from the cash balance available with him (page 19 of written submission) and Rs. 3,80,170/- cannot be considered in the cash of the assessee as the same has been invested by the wife of the assessee where in the separate proceeding were initiated by the revenue in the case of wife of the assessee (page 102-108) based on that the ground no. 3 raised by the assessee is allowed.
In the result, appeal of the assessee is allowed.54
IT(IT) A No. 21/JP/2022 Sh. Asgar Ali vs. DCIT Order pronounced in the open court on 26/05/2023.
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(Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai)
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*Ganesh Kumar
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1. The Appellant- Sh. Asgar Ali, Pratapgarh
2. izR;FkhZ@ The Respondent- DCIT, Circle (Int. Tax), Jaipur
3. vk;dj vk;qDr@ The ld CIT
4. vk;dj vk;qDr¼vihy½@The ld CIT(A)
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6. xkMZ QkbZy@ Guard File (IT(IT)A No. 21/JP/2022) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar