Income Tax Appellate Tribunal - Bangalore
Kedarnath Sriramulu Kaveripatnam, ... vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH : BANGALORE
BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER
AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
ITA No. 961/Bang/2009
Assessment year : 2005-06
Kedarnath Sriramulu Kaveri-
patnam,
No.292/A, 34th Cross,
9th Main Road, Jayanagar,
Bangalore. : APPELLANT
Vs.
The Income-tax Officer,
Ward-11(2),
Bangalore. : RESPONDENT
Appellant by : Shri H.N Khincha
Respondent by : Smt V.S Sreelekha
ORDER
Per A. Mohan Alankamony, Accountant Member
This appeal of the assessee - an individual - is directed against the order of the Ld.CIT (A)-I, Bangalore, for the assessment year 2005-06.
2. The assessee has raised seven grounds of appeal, out of which, ground Nos.1 and 7 are general and, therefore, in our considered view, do not survive for adjudication. On a perusal of the remaining grounds, the cruxes of the issues involved are two-folds which are reformulated concisely as under:
ITANo.961/Bang/2009 Page 2 of 8(i) the AO had erred in making an addition of Rs.11.50 lakhs which was erroneously confirmed by the CIT(A); &
(ii) the assessee denies liability to pay interest u/s 234A, 234B and 234C of the Act.
3. Subsequently, the assessee, vide his application dated 29.10.2009, sought the permission of this Bench to amend the ground No.2 originally raised on the ground that a clerical mistake had crept in while mentioning the amounts of addition sought to be deleted as Rs.11.5 lakhs instead of Rs.83.10 lakhs.
3.1. After due consideration of the assessee's application, the assessee was permitted to amend the ground No.2 accordingly.
4. The facts of the issue, in brief, are that the assessee - M.D. of Jewels Garden Pvt. Ltd. - furnished his ROI, admitting a total income of Rs.2.70 lakhs for the assessment year under dispute. On the basis of AIR information that the assessee had made a cash deposit to the tune of Rs.11.5 lakhs on 15.10.04 in his bank account, the assessee was required to furnish his bank statement. On scrutiny of the Bank statement, the AO stumbled upon a fact that during the FY 04-05, the assessee had made cash deposits on various dates to the extent of whopping Rs.83.10 lakhs. As there was no proper compliance to the repeated notices/letters periodically issued by the AO, the assessment was concluded on 31.12.2007 (being barred by limitation on 31.12.07), bringing to tax net - in the absence of any details - the entire cash deposits, aggregating to Rs.83.10 lakhs u/s 68 of the Act.
5. Aggrieved, the assessee had approached the CIT(A) for relief. After due consideration of the submission of the assessee and also the remand report of the AO, the Ld. CIT(A) had, indeed, deliberated the issue exhaustively and, thus, observed as under:
"10. Even treating the sale agreement genuine not accepting it, the source still remains unexplained. The AO has rightly pointed out that the deposits are of ITANo.961/Bang/2009 Page 3 of 8 around 50000/- to 1 lakh or more on more than 50 occasions on different dates. It is not expected that the alleged buyer was giving such money at regular intervals in sums of Rs.50000/- or more. Besides, the agreement upon which much reliance is placed by the appellant does not reflect the mode of payment of balance of Rs.2.15 crores. Besides, the normal human conduct does not permit that each of 50 times the buyer carried cash from Kolkatta to pay to the vendor in Bangalore. If the amount is paid in lump sum, it is against the human nature to keep the same at home and not deposit in Bank a/c or deposit in sums of Rs.50000/- or Rs.1 lakhs almost every week because that involved the danger of robbery/dacoity and even murder. Thus circumstantial evidences are strongly against the appellant.
11. Here a question remains to be answered. The deposits have been admittedly made. The source explained is found not satisfactory. Then what may be a probable source. Probably it is now known to the Department and also not accounted for in regular books. Apparently the appellant's known source is salary as M.D. or a Pvt. Company - M/s Jewels Garden Pvt. Limited. Probably, the unaccounted money of the company is being diverted to the personal savings bank a/c of the M.D. who is also the untitled owner of that company. But, this is only a presumption as a probable explanation to a question raised above.
6. Disenchanted with the finding of the Ld.CIT(A), the assessee has come up with the present appeal. The reiteration of the Ld.A R was centred around what was contested before the Ld.CIT(A). To strengthen his orchestrated arguments, the Ld.A.R had furnished a paper book containing 1 - 98 pages which consist of among others, copies of (i) Bank sheets, (ii) agreement of sale dated 15.12.03, (iii) correspondence of the buyer, (iv) correspondence with the AO etc., 6.1. On her part, the ld. D.R was of the firm view that in spite of several opportunities afforded to the assessee to explain the sources, the assessee had failed to do so and that with the available materials on record, the AO had concluded on fact and circumstance. Even before the first appellate authority too, no tangible proof was put-forth to justify the ill- conceived claim of the assessee. Drawing strength from the ruling of the Hon'ble Apex Court in the case of Sumati Dayal v. CIT reported in 214 ITR 801, it was pleaded that the stand of the lower authorities requires to be sustained.
ITANo.961/Bang/2009 Page 4 of 87. We have carefully considered the rival submissions, perused the relevant records and also the documentary evidences including the paper books containing 1- 17 pages advanced by either party.
7.1. It is an undisputed fact that the assessee had deposited cash to his bank account maintained with the Vijaya Bank on several occasions. As a matter of fact, the assessee furnished his ROI way back in February, 2006 whereas the same was processed only during March 2007 and during the course of assessment proceedings u/s 143(3) of the Act, very strangely the assessee was asked to furnish certain details in the month of November, 2007. Of course, the assessee had promised to furnish the required details by 31/12/2007, but, for the reasons best known only to him, he had not kept his promise in tact. On the other hand, the AO was constrained to conclude the assessment by 31.12.2007 itself to out beat the limitation. While concluding, the AO considered the entire cash deposits of Rs.83.1 lakhs as unexplained cash credits u/s 68 of the Act.
7.2. Before the CIT(A), the assessee brought out the entire sequence of events in his written submissions and enclosed a copy of the alleged sale agreement entered into with Hamper Vincom Pvt. Ltd. Kolkatta and subsequent termination of the deal etc. [Pages 6 -27 of PB]. For the reasons set-out in the impugned order, the CIT(A) had followed suit the foot-step of the AO and confirmed the addition in toto.
7.3. The crux of the issue before us is: Whether the alleged sale transaction entered into and the assessee had received the advance in cash from the said buyer was genuine?
7.3.1. As per the Agreement of Sale deed dt: 15.12.2003, the assessee said to have entered into a deal with Hamper Vincom Pvt. Ltd. for the sale of his residential property situated at Jayanagar 4th Block. Here, it is pertinent to mention that the CIT(A) had doubted the very bona-fide of the execution of the sale agreement itself on the ground that the stamp paper was alleged to have been purchased on 29.3.2003 whereas the ITANo.961/Bang/2009 Page 5 of 8 execution of Agreement of Sale dated: 15.12.2003, say after nearly nine months of the date of purchase of the stamp paper, which according to him was an improbable act. However, the Hon'ble Supreme Court in its wisdom, in the case of Thiruvengade Pillai v. Navaneedhammal & Another in a writ petition (Civil) 290 of 2001 [2008 MLJ 1115], had ruled that the Indian Stamp Act, 1899, no where prescribed any expiry date for use of a stamp paper. Thus, the observation of the CIT(A) is contrary to the ratio of the Hon'ble Supreme Court.
7.3.2. The assessee had entered into the above said agreement with Hamper Vincom Pvt. Ltd. for sale of his residential property for a consideration of Rs.2.3 crores and claimed to have received the cash payments:
Rs.15 lakhs on 15.12.03 - on the date of execution of sale Agreement; Rs.50 lakhs on 1. 4.04 - letter of the purchaser - page 34 of PB; Rs.50 lakhs on 29.9.04 - letter of the purchase - page 35 of PB 7.3.3. The plea of the assessee that, out of these advances received, he had deposited the cash to his Bank account on various occasions, depending upon his business expediency to retain a part of cash received with him instead of making the deposit in one 'go'. The business expediency could have prevailed on the assessee to retain the cash on hand for which the Revenue had not brought on record any tangible evidence to refute the assessee's claim. Further, the Ld. Counsel submitted that the assessee was undergoing matrimonial dispute which was leading to divorce his wife and, therefore, the assessee was advised not to maintain large bank balance. As a result, the assessee had to deposit the cash into the bank in piece meal. To substantiate the claim, the Ld. Counsel had furnished the following documents pertaining to the dispute between the assessee and his wife before this Bench:
(i) Compliant lodged on 30.12.2003 with the All Women Police Station, Basavanagudi, Bangalore by the assessee's wife against the assessee - attempt to murder and causing harassment etc., - copy of FIR of the Police;ITANo.961/Bang/2009 Page 6 of 8
(ii)Police complaint lodged on 22.1.2004 with the Circle Inspector of Police, Jayanagar Police Station by the assessee's wife against the assessee - theft/stolen of her Car/forgery; &
(iii) Copy of suit filed before the IV Addl. Chief Metropolitan Magistrate, Bangalore in PCR NO.1610/2004 dt: 27.1.2004 by the assessee's wife against the assessee Moreover, it is prerogative on the part of a person or an assessee, as the case may be, to handle the cash at his possession in best possible way as the circumstance so warrants.
7.3.4. Reverting back to the issue, the buyers, for the reasons revealed in their communication to the assessee [page 27 of PB] intended to terminate the deal with the assessee on the said property and demanded back the advances made to the assessee.
7.3.5. During the course of remand report proceedings, the assessee vide his letter dated 5.6.2009 [Pages 33 - 40 of PB] informed the AO that due to the termination of the sale agreement, he had refunded the advance so received through cheques drawn on ICICI Bank on 30/5/08, 25/6/08, 10/7/08, 4/8/08 and again on 12.11.08 aggregating to Rs.1.15 crores. With regard to cash deposits made for the period 1.4.03 to 31.3.04 amounting to Rs.13.01 lakhs along with the sources thereof also furnished vide his letter dated: 25.6.09 with its enclosures (Bank sheets, ledger accounts ) vide his letter dt.25.6.09 [P 41 - 54 of PB] which was duly acknowledged by the O/o Addl.CIT, R-II on 1.7.09.
7.3.6. In our considered view, the assessee had thus discharged his onus in a best possible way - the name and postal address of the buyers, PAN No. and also copies of ICICI Bank sheets wherein the advance amounts have been returned through cheques etc., When all the required vital particulars have been placed at the door step of the AO, what prevented the AO to verify and cross check the veracity of the assessee's claim through her counter-part at Kolkatta, is rather intriguing. Even the buyers at Kolkatta could have been contacted over telephone (the ITANo.961/Bang/2009 Page 7 of 8 telephone numbers of the buyers were available in their letter-head - P.34, 35 of PB which was submitted to the AO vide assessee's letter dt:5.6.09) whether they have in fact entered into any sort of agreement with the assessee or otherwise. This has not precisely been done by the Revenue.
8. In an overall consideration of the facts and circumstances of the issue, we are of the unanimous view that there was an agreement of sale on 15.12.2003 with Hamper Vincom Pvt.Ltd. Kolkatta for the sale of the assessee's residential property for Rs.2.3 crores, out of which, the assessee had received advances of Rs.1.15 crores as discussed above. Since there was a breach of agreement entered into on the part of the assessee, the purchasers vide their letter dt.15.9.07 have terminated the sale agreement and the assessee was required to refund the advances. The assessee had refunded the advances to the purchasers through ICICI Bank cheques [Jewels Garden]. When all the relevant particulars were in the possession of the AO, the AO should have ascertained the genuineness or otherwise of the claim of the assessee by making an attempt to sound her counter-part at Kolkotta to find out the authenticity of the assessee's claim. Thus, the assessee had discharged his onus in disclosing the name and postal address of the buyers, their telephone numbers etc. to the Department. The AO should have procured the presence of the purchaser - Pankaj Shah - by issuance of summons and recorded his statement by herself. In a nut-shell, the Department has miserably failed to encash the vital information/particulars at its possession.
8.1. In view of the above, we are of the view that the Revenue had not brought on record with any documentary evidence to substantiate that the so called cash credits of Rs.83.10 lakhs were originated from the assessee's unexplained source which attracted the provisions of s.68 of the Act. The addition of Rs.83.10 lakhs u/s 68 of the Act is NOT justified. It is ordered accordingly.
8.2. Before parting with, with respects we have duly perused the case law referred supra on which the Revenue has placed strong reliance.
ITANo.961/Bang/2009 Page 8 of 8In that case, the highest judiciary of the land, in its wisdom, had ruled that "if explanation of the assessee is not found satisfactory by the assessing officer, acting reasonably, there is a prima facie evidence against assessee and if assessee fails to rebut the same, such un-rebutted evidence can be used against him...."
8.3. With due respects, we would like to point out that in the present case (i) the AO had not brought on record to substantiate that there was a prima facie evidence against the assessee; and (ii) the assessee had discharged his onus in furnishing all relevant information and documentary evidence in his possession and that the Revenue had failed to refute the claim of the assessee with tangible evidence. Thus, in our considered view, the ruling of the Hon'ble Apex Court doesn't come to the rescue of the Revenue.
9. Levy of interest u/s 234A, 234B and 234C of the Act are mandatory and consequential in nature. Therefore, this ground is dismissed as not maintainable.
10. In the result, the assessee's appeal is partly allowed.
Pronounced in the open court on this 30th day of December, 2009.
Sd/- Sd/-
(SHAILENDRA KUMAR YADAV ) (A. MOHAN ALANKAMONY )
Judicial Member Accountant Member
Bangalore,
Dated, the 30th December, 2009.
Ds/-
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, Bangalore.
6. Guard file (1+1)
By order
Assistant Registrar, ITAT, Bangalore.