Income Tax Appellate Tribunal - Cochin
Sri.Mathew Philip, Kochi vs The Ito, Wd-1(3), Kochi on 29 November, 2019
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IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
BEFORE S/SHRI CHANDRA POOJARI, AM & GEORGE GEORGE K., JM
ITA No.443/Coch/2019
Assessment Year:2015-16
Shri Mathew Philip, Vs. The Income Tax Officer,
Pulimoottil House, Non Corporate, Ward-1(3),
Plot No. 20, Kumaranasan Range-1, Kochi.
Nagar, Kadavanthra,
Kochi-682 017.
[PAN: AEVPP 1223R]
(Assessee -Appellant) (Revenue-Respondent)
Assessee by Shri Santhosh P. Abraham, Adv.
Revenue by Smt. A.S. Bindhu, Sr. DR
Date of hearing 27/11/2019
Date of pronouncement 29/11/2019
ORDER
Per CHANDRA POOJARI, AM:
This appeal filed by the assessee is directed against the order of the CIT(A)-II, Kochi dated 17/01/2019 and pertain to the assessment year 2015-16.
2. There was a delay of 59 days in filing the appeal before the Tribunal. The assessee has filed condonation petition accompanied by an affidavit stating that assessee is a cancer patient. The assessee has to undergo regular course of treatment alongwith continuous medication. During the relevant period, the assessee was under medical care and was undergoing traumatic experience for both body and mind. The treatment leaves the assessee exhausted because of the pain I.T.A. No. 443/Coch/2019 and suffering. He was unable to apply mind on any matter and it is because of the above reasons that the delay had occurred in filing the appeal. It was submitted that the delay was not willful and it was not deliberate and the delay has been caused beyond the control of the assessee. It was submitted that there was no omission, negligence or carelessness on the part of the assessee. 2.1 The Ld. DR has not raised serious objection to filing of the condonation petition by the assessee.
2.2 We have gone through the condonation petition. As seen from the records, the assessee is a cancer patient and has been on regular medical treatment and therefore, he was not able to attend to his tax matters. Hence, we find there is good and sufficient cause for filing the appeal belatedly before the Tribunal. Accordingly, we condone the delay of 59 days in filing the appeal and admit the appeal for adjudication.
3. The assessee has raised the following grounds of appeal:
1. The ld. Commissioner (Appeals) has grossly erred in sustaining the addition of Rs. 32,50,000/- made by the Assessing Authority u/s. 69 of the Income Tax Act, 1961.
2. The ld. Commissioner (Appeals) ought to have examined the insurmountable facts on record, in an independent and judicious manner, and fairly held that the appellant had sufficient cash balance with him so as to make a deposit of Rs. 50 lakhs in his bank account on 26/09/2014.
3. The ld. Commissioner (Appeals) ought to have accepted the contention of the appellant that the amount of Rs. 50 lakhs withdrawn from his bank 2 I.T.A. No. 443/Coch/2019 account on 31/12/2013 was substantially available to make a deposit of Rs. 50 lakhs in his bank account on 26/09/2014 .
4. The ld. Commissioner (Appeals) had erred in endorsing the presumption of the Assessing Authority that the entire amount of Rs. 50 lakhs deposited on 26/09/2014 was exactly the same in kind that consisted in the amount of Rs. 50 lakhs withdrawn on 31/12/2013, and the very same currency bundles were kept idle throughout the period. The ld. Commissioner (Appeals) has ignored the probable turnover of various cash transactions that the appellant might have engaged in the relevant period involving that amount which was withdrawn. The opening cash available for the financial year 2014-15 was ignored to the peril of the appellant.
5. The lower authorities have seriously erred in overlooking the gross cash inflow of Rs. 1,63,00,000/-(Rs. 1,55,000/- + Rs. 1,50,000/- + Rs.
6,50,000/-) during the period, against sale of property and transfer of partnership interest.
6. It may be true that a man of ordinary prudence may not hold stock of huge cash outside the bank accounts. This inference may be ordinarily true for a person sailing on reasonable circumstances in life. But, the ld. Commissioner(Appeals) failed to appreciate that the appellant has been sailing through unusual circumstances in life.
7. The ld. Commissioner (Appeals) has failed to take note that the appellant is a cancer patient undergoing painful and torturous protocol of medical treatment. The ld. Commissioner (Appeals) has failed to appreciate that the appellant is undergoing unexplainable agony and depression and his sense and sensibility cannot be measured to that of an ordinary man. The ld. Commissioner(Appeals) has failed to appreciate that the appellant is unsecure in his future and that was why he had liquidated all his properties and partnership interest in the relevant period of time.
8. The ld. Commissioner (Appeals) ought to have appreciated that, in the relevant circumstance of life, the appellant would have been justified in keeping large cash balance with him in an attempt to create a comfort zone against the haunting thought of pain and suffering. The ld. Commissioner (Appeals) ought to have appreciated the fact that the appellant would have kept in hand that much cash stock not for medical treatment alone; but might also be for settling any possible family and pious obligations.
9. For these and other grounds that may adduced at the time of hearing the Hon'ble Appellate Tribunal may be pleased to delete the addition of Rs. 32,50,000/-. The appeal may be allowed.
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4. The crux of the above grounds is that the CIT(A) erred in sustaining the addition of Rs.32.5 lakhs made by the Assessing Officer on the unexplained investments.
5. The facts of the case are that the assessee was an individual who is deriving income from partnership, having income from house property, long term capital gains and other sources. The assessee is having bank accounts in Union Bank of India, State Bank of India and Central Bank of India. The details of cash transactions from 31/12/2013 to 31/03/2015 is as follows:
Date Particulars Amount Amount
31/12/2013 Cash withdrawn from UBI SB 5000000
A/c No.396702010004711
12/02/2014 Cash deposited in UBI SB A/c 40000
No.3967020/0004711
02/04/2014 Cash deposited in UBI SB A/c 300000
No.396702010004711
26/08/2014 Cash received from sale of 150000
shop to Krishna Kumar
27/08/2014 Cash deposited in UBI SB A/c 150000
No.396702010004711
03/09/2014 Cash deposited in CBI SB A/c 49000
No.1745911769
25/09/2014 Cash received from sale of 6500000
shop to Vasantha Kumar
26/09/2014 Cash withdrawn from SBI A/c 1000000
No. 30622509825
26/09/2014 Cash deposited in SBI A/c No. 5000000
30622509825
02/01/2015 Cash deposited in CBI SB A/c 45000
No.1745911769
02/03/2015 Cash deposited in UBI SB A/c 900000
No.396702010004711
07/03/2015 Cash deposited in UBI SB A/c 45000
No.396702010004711
16/03/2015 Cash deposited in CBI SB A/c. 30000
No. 1745911769
31/03/2015 Cash deposited in CBI SB A/c. 45000
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No. 1745911769
31/03/2015 Cash spend for my family 800000
expenses & medical treatment
31/03/2015 Balance cash in hand 206000
Total 6800000 6800000
6. The assessee had made cash deposits of Rs.3 lakhs on 02/04/2014 into his Bank account with Union Bank of India. Before the Assessing Officer, the assessee submitted that he had withdrawn the sum of Rs.50,00,000/- on 31/12/2013 from his Bank account with Union Bank of India and re-deposited the same. The assessee explained the cash deposit of Rs.3 lakhs made on 02/04/2014 as the receipt of advance on sale of property. Since there was no proximity between the withdrawal of cash from the Bank account and deposit of cash in the Bank account, the Assessing Officer treated Rs. 3 lakhs as unexplained cash deposits.
7. Further, the assessee made cash deposit of Rs.1,50,000/- on 27/08/2014 which was explained by the assessee as consideration received on sale of property. There was a sale of property for Rs.6,50,000/- and the sale deed was registered on 26/08/2014. As per the agreement, the assessee received only Rs.50,000/- as advance and Rs.1,00,000/-was treated as unexplained income of the assessee. The assessee made cash deposit of Rs.50 lakhs on 26/09/2014 which was explained as redeposit of amount withdrawn on 31/12/2013 from Union Bank of India. The Assessing Officer observed that since the assessee had not filed the wealth tax return for the year ending 31/03/2014, it cannot be presumed that the assessee has kept the sum of Rs.50 lakhs in his hands for almost nine months. According to the 5 I.T.A. No. 443/Coch/2019 Assessing Officer, the assessee had received Rs.6,50,000/- on sale of Studio Apartment in DD Vyapar Bhavan, Kadavanthra vide sale deed bearing No. 4123/2014 executed on 25/09/2014 to Shri Vasantha Kumar S. In addition to this, the assessee had withdrawn an amount of Rs.10 lakhs on 26/09/2014 from the bank account of State Bank of India. Even though the assessee had not claimed these amounts as source of deposit of Rs.50,00,000/- to his Bank account in Union Bank of India, the Assessing Officer treated these two amounts as source for the deposit. Also an additional leverage of Rs. 5 lakhs of cash in hand for deposit was given to the assessee in view of the cancer treatment as cash kept with him and given credit for Rs.23,50,000/- and remaining Rs.28,50,000/- was treated as unexplained sources.
7.1 On appeal, the CIT(A) confirmed the addition made by the Assessing Officer.
8. Against this, the assessee is in appeal before us. The Ld. AR submitted that the Assessing Authority had no dispute regarding the cash deposits and cash withdrawals made in the previous year 2014-15 and the earlier credits and debits in assessee's bank accounts. Sale of interest in the partnership firm, M/s. Panamoottil Investments for a sum of Rs. 1,55,00,000/-was accepted. There was no dispute regarding the sale of one room apartment in DD Vyapar Bhavan for a consideration of Rs. 6,50,00/- each to M/s. Krishnakumar and Vasantha Kumar. 6
I.T.A. No. 443/Coch/2019 8.1 Regarding Cash deposit of Rs. 3,00,000/- on 01/04/2014, the assessee stated that the assessee had withdrawn an amount of Rs. 50,00,000/- on 31/12/2013. The deposit of Rs. 3,00,000/- was made on 02/04/2014, just after 3 months of withdrawal of Rs. 50,00,000/-. It was submitted that the Assessing Authority could not have a case that the entire amount of Rs. 50,00,000/-withdrawn on 31/12/2013 was entirely spent off within that short period of 3 months. It was submitted that there was a clear proximity for the withdrawal and the deposit. The addition of Rs. 3,00,000/- is arbitrary .
8.2 Regarding cash deposit of Rs. 1,50,000/- on 27/08/2014, it was submitted that the above explained fund withdrawn on 31/12/2013 was very much available and more specifically, the assessee had instant cash receipt from sale of property to S. Krishnakumar. The sale deed for Rs. 6,50,000/- was executed on 26/08/2014, well before the said date of above deposit. An amount of Rs. 50,000/- was received as advance and Rs. 1,00,000/- on the date of registration on 26/08/2014. It was submitted that the total sum of Rs. 1,50,000/- was received contemporaneously and available for the deposit of Rs. 1,50,000/- on 27/08/2014. In addition to the above, it was submitted that the cash balance already available with the assessee from the earlier withdrawals also need to be considered. The addition has no basis at all. 8.3 Regarding cash deposit of Rs.50,00,000/- withdrawn on 26/09/2014, it was submitted that the assessee and his spouse were having share in the partnership firm M/s. Panamoottil Investments, which runs a 3-Strar Hotel "Hotel Orchid" at 7 I.T.A. No. 443/Coch/2019 Kadavanthara, Ernakulam. It was submitted that those shares were transferred to one Mr. Basil M. Varghese by virtue of agreements dated 02/09/2013 and 22/09/2014 and the share was transferred for a consideration of Rs. 1,55,00,000/-. It was submitted that the entire consideration was received in assessee's bank account within the period of 02/09/2013 to 30/12/2013. The final payment of Rs. 50,00,000/- was received on 30/12/2013. It was submitted that the assessee had withdrawn an amount of Rs. 50,00,000/-on 31/12/2013 and the assessee had a substantial cash in stock from the above withdrawals to support the deposit of Rs. 50,00,000/- made on 26/09/2014. Apart from the specific amount of Rs. 50,00,000/-, the assessee had a cash inflow of Rs. 1,50,000/- from S. Krishnakumar on sale of apartment made on 26/08/2014. Similarly, it was submitted that he had received another consideration of Rs. 6,50,000/-from S. Vasatha Kumar on 25/09/2014 against sale of apartment. He had another cash withdrawal of Rs. 10,00,000/- from his SBI Account on 26/09/2014. Thus, he had an immediate cash inflow of Rs. 18,00,000/- in addition to the carry over cash balance available from the withdrawal of Rs. 50,00,0007- made on 31/12/2014.
8.4 It was submitted by the ld. AR that the lower authorities had grossly erred in concluding that the assessee had no cash available with him to make a deposit of Rs. 50,00,000/- on 26/09/2014. The assessee always explained that he was keeping sufficient cash with him to meet any medical emergencies especially when his two sons were away. It was contended that the thinking and reasoning of a serious cancer patient cannot be compared with the normal behavior of a prudent man and 8 I.T.A. No. 443/Coch/2019 in such an agonizing situation, a person may draw solace by thinking that at least, he had enough money in hand to meet any medical emergency. Adequate cash cushioning is definitely a source of comfort, in such extreme situations. Therefore, the lower authorities are not justified in making an inference that the assessee would not have kept huge balance of cash with him, for a long period of 9 months. 8.5. The Ld. AR submitted that the Assessing Authority had held in para 20 of his order that "..........on a preponderance of probability, it is not acceptable that the assessee had kept a huge sum of Rs. 50,00,000/- in his personal custody for almost nine months taking all the risks associated with it, when he has 3 personal bank accounts and people and means for his assistance to withdraw money from bank at the time of necessity or transfer money to a hospital at time to need...." The assessee can only submit that the probability presumed by the Assessing Authority is only an academic hypothesis, wherein he had ignored all the speaking facts of assessee's case. The Assessing Authority presumed that the conduct of the assessee would be similar to that of a prudent corporate body and the preponderance of probability drawn of the Assessing Authority has nothing to do with the real condition of life which the assessee is undergoing.
8.6 According to the Ld. AR, it was never the case of the assessee that the very same currency bundles of Rs.50,00,000/- withdrawn on 31/12/2013 were kept idle by the assessee throughout the nine months period from 31/12/2013 to 26/09/2014. It was submitted that the withdrawn cash had been rotated many 9 I.T.A. No. 443/Coch/2019 times for various purposes and ultimately had a cash stock to substantially support the deposit of Rs. 50,00,000/- made on 26/09/2014. It was explained that the assessee also had a proximate cash receipt amounting to Rs. 18,00,000/-. In addition to Rs. 50,00,000/- withdrawn by the assessee on 31/12/2013, he had already received a bank credit of Rs. 1,05,00,000/- by 10/09/2013 against the transfer of his interest in the partnership. Thus, it was submitted that he had sufficient source for huge cash turnovers to support each and every bank deposit made by him in the relevant previous year.
8.7 It was contended by the Ld. AR that the Assessing Authority had no case that the assessee had made any investment out of Rs. 50,00,000/- withdrawn on 31/12/2013 since it is highly improbable that the assessee could/would indulge in any investment activity during the period of pain and suffering and when there is no case of any huge out flow of cash out of the withdrawal made on 31/12/2013, the probability is that the assessee had a substantial support from the money withdrawn on 31/12/2013 so as to make a deposit of Rs. 50,00,000/- on 26/09/2014. In fact, the preponderance of probability has to be presumed in favour of the assessee. For this, the assessee relied on the Rule laid clown by the Supreme Court in CIT Vs. P.K. Noorjahan (237 ITR 570). In the above decision, the Supreme Court while interpreting the phraseology used in Sec. 69 had held that in creating the legal fiction, the phraseology employs the word "may" and not "shall". Thus, the unsatisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee. 10
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9. The Ld. DR relied on the order of the CIT(A).
10. We have heard the rival submissions and perused the material on record. In the present case, the dispute is with regard to cash deposit of Rs.32.5 lakhs into the various bank accounts of the assessee. The main plea of the assessee is that the assessee had withdrawn cash of Rs.50 lakhs on 26/09/2014. The assessee had withdrawn cash on various dates at Rs.68 lakhs as narrated in para 5 of this order. 10.1 These amounts were redeposited into Bank accounts on various dates as follows:
02/04/2014 Rs. 3,00,000/-
27/08/2014 Rs. 1,50,000/-
26/09/2014 Rs.50,00,000/-
11. The Assessing Officer has given credit of Rs.23.50 lakhs towards cash in hand for depositing it into Bank account of the assessee. The Assessing Officer treated Rs.28.5 lakhs as unexplained sources. Thus, he treated the following amounts as unexplained cash deposits of the assessee:
Rs. 3 lakhs Rs. 1 lakh Rs.28.5 lakhs Total:Rs.32.5 lakhs 11.1 The assessee explained that during the assessment year 2012-13, the assessee had an ailment of cancer and he could not attend to business and financial 11 I.T.A. No. 443/Coch/2019 matters and kept the cash withdrawn from Bank on 31/12/2013 for medical treatment and other expenses and deposited the amount in Bank only on 26/09/2014. In support of his claim, the assessee has produced discharge summary dated 06/11/2013 from Lourde Hospital, Ernakulam before AO. He has also produced CT Scan report dated 11/07/2013 which is not disputed by the lower authorities. The Assessing Officer has not accepted the contention of the assessee that he has kept the cash idly in his hands on the reason that he has not filed the wealth tax return showing the cash in hand. The Assessing Officer has not doubted the withdrawal of cash. However, the fact is that the assessee has withdrawn cash of Rs.50 lakhs on 31/12/2013. There is no evidence brought on record to show that these withdrawals have been used by the assessee or deposited by the assessee in any other Bank. It cannot be said that these withdrawals made from the Bank account were used for household expenses or any other investment. In such circumstances, it cannot be disputed that the withdrawals have been used for redeposit into the Bank account of the assessee. In other words, the Assessing Officer has not disputed the existence of Bank accounts and withdrawal from the same. The earlier withdrawal of Rs.50 lakhs from the Bank account on 31/12/2013 or withdrawal from various Bank accounts on different dates is not disputed. The assessee might have kept the cash withdrawals with him and redeposited into various Bank accounts on a later date. It is quite possible that the assessee might have withdrawn the cash for some purpose but the same remains to be utilized for one reason or the other and the cash continues to be remained with him.
Sometimes it may also happen that the cash withdrawals from Bank accounts 12 I.T.A. No. 443/Coch/2019 continues to remain as cash balance with the assessee even for many months and sometimes cash withdrawn is utilized on the same day. All these probable aspects of the matter cannot simply be ignored or brushed aside but the fact remains that the cash has been withdrawn from the Bank and that is not at all disputed. In view of this, the explanation of the assessee deserves to be accepted, unless contrary is brought on record which has not been done in this case. Considering the totality of the facts and circumstances of the case and in view of the discussions above, the cash deposits made by the assessee on various dates should be reasonably presumed that it is from earlier withdrawals made by the assessee on various dates. Accordingly, we delete the entire addition of Rs.32.5 lakhs made by the Assessing Officer.
12. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 29th November, 2019.
sd/- sd/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER Place: Kochi Dated: 29th November, 2019 GJ Copy to:
1. Shri Mathew Philip, Pulimoottil House, Plot No. 20, Kumaranasan Nagar, Kadavanthra, Kochi-682 017.
2. The Income Tax Officer, Non Corporate, Ward-1(3), Range 1, Kochi.
3. The Commissioner of Income-tax(Appeals)-II, Kochi 13 I.T.A. No. 443/Coch/2019
4. The Pr. Commissioner of Income-tax, Kochi.
5. D.R., I.T.A.T., Cochin Bench, Cochin.
6. Guard File.
By Order (ASSISTANT REGISTRAR) I.T.A.T., Cochin 14