Income Tax Appellate Tribunal - Raipur
Kamal Verma, Raipur vs Income Tax Officer, Ward-4(1), Raipur, ... on 8 July, 2024
आयकर अपील य अ धकरण यायपीठ "एक-सद य" मामला रायपुर म
IN THE INCOME TAX APPELLATE TRIBUNAL
RAIPUR BENCH "SMC", RAIPUR
ी रवीश सूद, या यक सद य के सम
BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER
आयकर अपील सं. / ITA No. 69/RPR/2024
नधारण वष / Assessment Year : 2017-18
Smt. Kamal Verma
C/o. B.N. Naidu, Maharashtra Mandal Office,
Choubey Colony, Raipur-492 001 (C.G.)
PAN: ABJPV6683N
.......अपीलाथ / Appellant
बनाम / V/s.
The Income Tax Officer,
Ward-4(1), Raipur (C.G.)
...... यथ / Respondent
Assessee by : Shri R.B Doshi, CA
Revenue by : Shri Satya Prakash Sharma, Sr. DR
सुनवाई क तार ख / Date of Hearing : 23.04.2024
घोषणा क तार ख / Date of Pronouncement : 08.07.2024
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Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur
ITA No. 69/RPR/2024
आदे श / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the ADDL/JCIT(Appeals)-5, Mumbai, dated 29.11.2023, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short 'the Act') dated 05.12.2019 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal:
"1. In the facts and circumstances addition of Rs.10,00,000/- in the total income is not justified.
2. In the facts and circumstances the A.O has not found any money not recorded in the books of account to justify addition of Rs.10,00,000/- u/s. 69A and in attracting Section 115BBE.
3. The Appellate order was for the first time found on portal on 22/02/2024 and this is the date of service.
4. The assessee prays to allow to add, amend, or alter grounds of appeal at the time of hearing."
2. Shri R.B Doshi, Ld. Authorized Representative (for short 'AR') at the threshold of hearing submitted that the appeal is time-barred by 37 days. Elaborating on the reasons leading to the delay, the Ld. AR had drawn my attention to an application dated 09.04.2024 seeking condonation of delay a/w. an affidavit of the assessee dated 10.04.2024. It was submitted by the Ld. AR, viz. (i) that all the communications regarding income tax matter were sent to the e-mail address "[email protected]"; (ii) that when a show cause notice u/s.271AAC(1) of the Act was received from email address "donotreply @incometax.gov.in", the assessee remained under a bonafide belief that no further action was required from 3 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 her side against those emails as "do not reply" was mentioned in the sender's email address; (iii) the assessee being a septuagenarian was not computer savvy and her email account was created by an acquaintance; (iv) that the assessee had forgotten the password of her email address; (v) the assessee's husband expired in the year 1997 and thereafter within a short span of two years i.e 2002 & 2003, five of her close relatives expired and she was survived by only a daughter who was married.
(vi) the assessee has resided alone since last more than 20 years; (vii) the assessee had never faced any litigation all along her life and the appellate order could not be timely handed over to her counsel; (viii) the assessee is not well conversant with the various procedures of Income tax Act; and (ix) the assessee is suffering from vertigo and because of the medicines taken for such disease suffers from sedation. The Ld. AR submitted that unfortunately, the assessee, a septuagenarian, had over the years passed through certain unwarranted phases, i.e. death of her husband, the death of her two elder daughters and death of her two grandchildren. The Ld. AR further submitted that the assessee's sole surviving daughter too had suffered a serious medical complication and was left almost brain dead. For the sake of clarity, the relevant contents of the letter seeking condonation of delay are culled out as under:
" 2. Reason for delay in filing appeal The reason for delay in filing of appeal is mainly due to some confusion which occurred at the time of receipt of appellate order in the email ID of assessee. All the notices & appellate order were sent to email address "[email protected]" which belongs to assessee. The assessee was a Medical staff in Rajkumar College, Raipur (C.G.) & was residing there only. The notices forwarded to email address of the assessee were duly replied by her as she was committed to fulfilling her obligations promptly. Confusion occurred only at the time of receipt of appellate order because 2 mails were simultaneously received from Income Tax department in email 4 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 ID of assessee which includes the appellate order & show cause notice of penalty u/s 271AAC(1). The show cause notice was received by assessee from email address "[email protected]" and therefore, the assessee under genuine and bonafide belief thought that no further on was required from her side against these mails as "do not reply" was mentioned in sender's email address in one of such communication, which caused confusion.
The assessee is not computer and technology literate and follows the mails in her email id from her mobile. The assessee has been staying alone since last 20 years and her email account was created by an acquaintance and logged into it through the mope from which the assessee does not log out. This is for the reason that except for viewing the emails, the assessee is not in a position to do much in her email id. She even does not remember password of her email id and since the email account is never logged out from the mobile, the email id was being accessed.
The assessee's husband expired in the year 1997 and thereafter in the year 2002 & 2003, five of her close relatives expired. Thereafter, she was survived by only a daughter, who was also married. Because of these reasons, the assessee, presently of 76 years of age, resides alone since last more than 20 years. Because of advanced age, loneliness, helplessness and circumstances through which she has passed in the last few years, the assessee always felt insecure and is not able to maintain proper frame of mind also. For all the to compliances, she totally depended on her counsel who has been assisting her since a very very long time.
Under the above circumstances, due to confusion and the assessee never having faced any litigation all along in her life, the appellate order could not be landed over/ forwarded to her counsel timely because of which the appeal 'could not be filed timely.
The assessee does not understand various procedures under the Income Tax law and whatever emails bearing the sender's ID "Income Tax" were received, she simply forwarded it to her counsel. The particular mail containing the appellate order could not be forwarded because of the confusion in her mind prevailing due to mentioning of "do not reply" in one of the mails which were received just around the date/ time when the appellate order was received in the mail box.
On 22.02.2024, the counsel logged into Income Tax Portal of assessee in order to check the status of her case, when it was found that the appellate order was passed on 29.11.2023 & mailed to assessee on 30.11.2023. Thereafter, the counsel of the assessee informed her about the legal remedies available & advised her to file an appeal before Hon'ble ITAT against the appellate order passed.
The assessee is suffering from vertigo and because of the medicines taken for such disease, the assessee's brain at times becomes inactive. Because of advanced age and the circumstances through which the assessee has 5 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 passed in the last few years, which included death of her husband, death of her two elder daughters and youngest daughter also having landed in very serious condition, almost near to brain dead but fortunately survived, the assessee is suffering from forgetfulness and is also in a confused state of mind many times. Because of all these reasons also, proper attention could not be given to the mail which was received, containing the appellate order.
It may kindly be appreciated that the delay is thus unintentional & due to genuine confusion caused without any malice on the part of assessee. Therefore, there is a reasonable cause for delay in filing appeal. Affidavit of assesse regarding delay in filing of appeal is enclosed for your reference.
3. In view of above facts and submissions, it is most humbly requested that the delay in filing of appeal may kindly be condoned. Not condoning the delay would cause injustice to the appellant especially when the there is a reasonable cause. In this regard, we draw support from the following ratio laid down in the case of Collector, Land Acquisition vs. Mst. Katiji and Others (1987) 167 ITR 471 (SC): -
"The legislature has conferred the power to condone delay in order to enable the courts to do substantial justice to parties by disposing of matter on merits. The expression "sufficient cause" is adequately elastic to enable the courts to apply the law in a meaningful manner which sub-serves the ends of justice-that being the life-purpose of the existence of the institution of courts. A justifiably liberal approach has to be adopted on principal. Such liberal approach is adopted because ordinarily litigant does not stand to benefit by lodging an appeal late. Refusing to condone delay can result in meritorious matter being thrown out at very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. When substantial justice and technological consideration are pitted against each other, the cause of substantial justice deserves to be preferred. There is no presumption that delay is deliberate."
The above case has been followed/ referred in a number of decisions of different High Courts, including the ones reported in (2010) 325 ITR 243 (All.), (2015) 375 ITR 15 (Mad.).
4. The reason for delay in filing appeal is thus beyond control of assessee. The assessee was prevented by sufficient & reasonable cause in not filing the appeal within the prescribed time and the delay is not attributable to any intentional conduct of the assessee. Hence, it is most humbly and respectfully submitted that the delay in filing appeal may kindly be condoned and the appeal may kindly be admitted. For this act of kindness, the assessee shall ever remain grateful to your honours."
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Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 It was submitted by the Ld. AR that as the delay in filing the appeal had occasioned due to bonafide reasons and not because of any lackadaisical conduct of the assessee, therefore, the same in all fairness be condoned.
3. Per contra, the Ld. Departmental Representative (for short 'DR') did not seriously object to the seeking of condonation of the delay in filing of the present appeal by the assessee appellant.
4. I have thoughtfully considered the facts leading to the delay in filing of the present appeal by the assessee appellant. I find substance in the contentions advanced by the Ld. AR that the assessee was prevented by sufficient and reasonable cause in not filing the appeal within the prescribed period before the Tribunal. I, thus, considering the totality of the facts leading to the aforesaid delay of 37 days in filing of the present appeal, condone the same.
5. Succinctly stated, the assessee had e-filed her return of income for A.Y.2017- 18 on 28.07.2017 declaring an income of Rs.9,18,850/-. Subsequently, the case of the assessee was selected for scrutiny assessment under CASS and a notice u/s. 143(2) of the Act was issued on 20.09.2018.
6. During the course of the assessment proceedings, it was observed by the A.O that the assessee had during the demonetization period made cash deposits of Rs.10,00,000/- in her bank account No.10470172333 with State Bank of India, Branch: Kutchery, Raipur. The A.O. called upon the assessee to explain the source of the aforesaid cash deposits in her bank account. In reply, the assessee stated that 7 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 the subject cash deposits were sourced from the cash withdrawals made from her bank account during the year under consideration and the preceding years. Thereafter, the A.O. vide notice u/s.142(1) of the Act asked the assessee to furnish the reason for huge cash withdrawals from her bank during the year but she had failed to furnish any reply. The A.O observed that though the assessee had shown cash in hand as of 31.03.2016 at Rs.18,92,325/- and as of 08.11.2016 at Rs.22,62,325/-, but no evidence regarding the same was produced before him. As the assessee had failed to explain the source of cash deposits of Rs.10,00,000/-, the A.O. held the same as her unexplained money u/s.69A of the Act. Accordingly, the A.O. vide his order passed u/s.143(3) of the Act dated 05.12.2019 determined the income of the assessee at Rs.19,18,850/-.
7. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under:
"4.1 Ground No. 1 & 3: These grounds relate to the addition u/s. 69A of Rs.10 lakh made by the AO on account of unexplained cash deposit in bank account during demonetization period. The appellant has derived income from salary and other sources. During the course of assessment proceedings, the appellant explained the source of cash deposit as withdrawal from bank and cash in hand. The AO in the order observed that though the appellant has claimed huge cash in hand, no evidence in respect therefor was produced. Not being satisfied with submission of the appellant, the AO made an addition of Rs. 10 lakh u/s 69A.
The submission of the appellant has been perused, which has been reiterated thrice in ad verbatim manner. Her contention is that deposits were made from the cash in hand of Rs.18,92,325/- as on 31.03.2016 and Rs 22,62,325/- as on 8.11.2023. It is seen that the appellant has filed the ITR-1 for AY 2016-17, wherein there was no column for cash in hand. The claim of the appellant that she had cash in hand of Rs. 18,92,325/- as on 8 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 31.03.2016, thus, is not verifiable. Consequently, the opening cash in hand for the year is not verifiable. Therefore, the cash in hand as on 08.11.2026 too remains unverified.
The appellant has submitted that cash withdrawals were from her bank accounts. She has submitted that instead of keeping the money in her bank accounts, she had withdrawn and kept it at home to enable her to ward of advancing the money to her demanding relatives. She could then show these passbooks to her relatives to show that she did not had any money to advance it to them. This is again an unsubstantiated averment. In fact, if she is to be believed, then, showing these passbooks, having entries of large withdrawals, may prove counterproductive, since, then the very demanding relatives would see that money was available with her in cash form. The attempted averment, thus, lacks belief and merit. These passbook entries, if produced before the AO, in the alternative, may have helped her to substantiate her claim that the deposit of cash in hand of demonetized money was withdrawn from her bank accounts. She has also not done so in the appellate proceedings. It is very unlikely and against the principle of human probability that the appellant has withdrawn huge cash without any purpose and just keep it at his residence. Further, as the appellant has claimed that such cash withdrawn from his bank account was kept at his residence, the onus was on the appellant to substantiate his claim along with elaborate reasons and purpose of withdrawing cash from the bank account. The Hon'ble Punjab and Haryana High Court in the case of Kavita Chandra vs CIT [2017] 81 taxmann.com 317 has upheld the findings recorded by the Hon'ble ITAT that the assessee has failed to link the cash withdrawn from the bank with cash deposits made in her bank account. Finding strength from the said decision of the Hon'ble Punjab and Haryana High Court, it is clear that the onus lies with the assessee to establish that the cash withdrawn from the bank has been re-deposited which has not been discharged by the appellant. In this regard, the reliance is also placed on the decision of the Hon'ble ITAT Hon'ble ITAT Hyderabad Bench, while dealing the identical issue in the case of Mir Basheeruddin Ali Khan vs Income Tax Officer, Ward-6(3), Hyderabad [2014] 42 taxmann.com 69 has categorically held that the assessee has to demonstrate sufficient reasons to explain as to why such huge cash was kept when the assessee was in possession of bank accounts. The relevant portion of the said decision is reproduced herein as under:
"Section 69 of the Income Tax Act, 1961-Unexplained Investments [Cash Deposit) Assessment Year 2005-06- Assessee had made cash deposit of Rs.6.50 lakh in his saving bank account on 08/09/2004- He submitted that cash deposit was out of amount. withdrawn earlier from bank over a period from February, 2002 to September, 2003 and kept with him-Assessing Office rejected explanation and treated cash deposit of Rs. 6.50 lakhs as unexplained investments under section 69-Assessee had not shown any valid reason as to why he kept so much with him for over a period of one 9 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 year when he was holding a bank account- Whether Assessing Officer was justified in treating amount of Rs.6.50 lakhs as unexplained investments under section 69- Held, yes."
Thus, the appellant has not furnished any documentary evidence at any stage, so far, to show or indicate that the cash of demonetized money, so deposited during the AY, was from the opening cash in hand at the start of the year and to the withdrawals from her own bank accounts. during the year. The onus of explaining the source, thus, remains undischarged by the appellant. The appellant has filed ITR-1s in AY 2015-16 and 2016-17 also leading to non-verifiability of cash in her hand. Also, it is improbable that someone, in her advanced age, would withdraw the monies from her bank accounts and keep it as cash in hand at her home to increase security risk.
The appellant has also not explained her living and other expenses, which would also have been from the monies, so allegedly withdrawn. The appellant has submitted her capital account statement for the F.Y 2016-
17. The same is as under:
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Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 It is seen that there are no withdrawals for household expenses and personal drawing. In the capital account, the opening capital of which is not verifiable, an amount of Rs. 3,01,480/- has been shown as "To withdrawal". But, the mode and manner thereof is not clear. If this withdrawal was in cash from her bank account, whether same was used as source of cash deposit or was used as personal drawing, is not explained. Therefore, the appellant has not established this basic material fact with supported evidence. The appellant also did not offer any cogent explanation, during the appellate proceedings, despite being provided a number of opportunities by way of notices issued to her. The appellant has merely stuck with her averment without responding with supportive evidence. In the circumstances, it would have to be presumed that the appellant has no evidence to substantiate her averments made in her repeated responses. These averments have been made before the AO, who had, after considering the same, had rejected the same having lack of merit therein leading to addition thereof in the subject assessment order. The lack of merit travels to the instant appellate proceeding to enable a view, different than that of the AO on these issue. In this circumstance, | find no infirmity in the order of the AO. The decision of the AO is, consequently, upheld. The appeal of the appellant is, therefore, dismissed.
The appellant has placed reliance on the decision*of the Hon'ble ITAT in the case of M/s. Hirapanna Jewellers, ITA No. 253/Viz/2020. The said. case law has been considered but the same is found quite distinguishable from the factual matrix of the present case. In the said case, the main question before the Tribunal was whether the cash receipts found during the course of survey action represent sales or not. The Hon'ble ITAT after considering the financial statements held that there was sufficient stock to affect the sales and therefore, the cash receipts found during the course of survey action represent the sale which was already included in its financial statements. Therefore, no further addition is called for on account of such cash receipts. It is clear from the decision of the Hon'ble, ITAT that the tribunal on the basis of the financial statements. concluded that there was sufficient sale reported in return of income and stock which could have affected such huge cash Sales. However, in the instant case, there is no such basis which could have substantiated such huge cash generation/cash position.
Ground No. 4. : In this ground, the appellant has raised the issue that tax as per section 115BBE is computed as per tax rate substituted w.e.f.01.04.2017, and therefore, the tax has been erroneously charged @ 60% instead of 30%. It is seen that the provisions of Sec.115BBE has been amended by the Taxation Laws (Second Amendment) Act, 2016 with effect from 01.04.2017 applicable from assessment year 2017-18 onwards. This amendment has increased the rate of tax from 30% to 60%.
On 15.12.2016, post demonetization, this section was amended, with effect from01.04.2017 to increase the rate of tax to 60%. Reliance, in this regard, is also taken from the decision of Hon'ble ITAT in the case of 11 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 Chandan Garments Private Ltd. Vs PCIT (ITAT Indore) in ITA No. 125/Ind/2022 dated 2.12.2022 for AY 2017-18, wherein basing itself on the decision of Hon'ble Kerala HC in WA No. 984 of 2019 in Maruthi Babu Rao Jadav Vs. The ACIT (order dated 09.2020), the ITAT decided that the higher rate of tax would apply to whole Previous Year 2016-17 related to Assessment Year 2017-18.The relevant observations of Hon. Kerala High Court are reproduced as under:
"The writ petition sought for a declaration that the amendments made by the Taxation Laws (Second Amendment) Act, 2016, to Section 115BBE of the Income Tax Act, 196'1 enhancing the rate of income tax, for specified incomes which are unexplained, to 60% and the surcharge provided in the Finance Act, 2016 to 25% for income covered under Section 69A, to be prospective. The above referred enactments are herein after referred to as the '2nd Amendment Act , IT Act ' and the 'Finance Act'... The 2nd Amendment Act was dated 15.12.2016 and the amendment to Section 115BBE was specified to be effective from 01.04.20 17. The amendment enhancing the rate of tax was incorporated in the IT Act and that of surcharge in the Finance Act. On declaration, consequential relief is sought against Ext.P2 assessment order levying tax at the enhanced rate of 60% and surcharge @ 25% on the 'advance tax'. The learned Single Judge rejected the writ petition by a cryptic judgment relying on Commissioner of Income Tax v. SA Wahab. (1990) 182 /TR 464 (Ker).
2. The learned Counsel Sri Vishnu S Arikkattil appearing for the appellant would contend that even going by the decision in Karimtharuvi Tea Estate ltd. v. State of Kerala (AIR (1966) SC 1385), an amendment, made on the 1st day of April of any financial year, would apply to the assessments of that year. That is, if an amendment is brought into force on 01.04.2017, as is the case here, it can only apply to the assessment made in 2018- 2019 (Assessment Year) of the income accrued for the previous financial year; which is 2017-2018. The learned Counsel would seek to draw a distinction insofar as a modification of the rate as brought out in the Finance Act and a substantive provision altering accrued rights or creating new liabilities, on the 1st of April of a year. In the former, it could apply to the assessments of the previous year, made in that financial year, but a substantive amendment not relating to the rates, could only be applied to the assessments of that financial year and not of the previous year. Reliance is placed on the Constitution Bench decision of the Hon'ble Supreme Court in C.I.T Vs. Vatika Township Private Ltd. (2015) 1 SCC 1. The learned Counsel would also place before us a number of decisions of the Hon'ble Supreme Court in Kesoram Industries v. Commissioner of Wealth Tax, [AIR 1966 SC 13851, Guffic Chem P. Ltd v. C.I.T [2011(4) SCC 245/ C.I.T v. Sarkar Builders [(2015) 375 /TR 392 (SC)/, Shiv Raj Gupta v. C./. T [(2020) 425 ITR 420(SC) and State of Kera/a v. Alex Geor9-4.(2004) 271 /TR 290(SC), to further buttress his arguments. Reliance is also placed on the Full Bench decision of the Patna High Court in Loknath Goenka v.12
Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 C.l.T [2019 417 ITR 521(Patna)}. 11. Before we look at the amendments carried out, on facts, there were two seizures of cash made on 02.08.2016 and 03.11.2016 respectively of Rs.1,05,03,500/- and Rs.1,24,68,750/- both in the F.Y 2016-2017. The persons from whom the cash was seized as also the appellant herein admitted that it belonged to the appellant who carries on trading in gold bullion. The appellant not having produced any books of accounts or cash flow statements failed to establish the source of the money seized which was included in the total income under Section 69A of the IT Act. The writ petition or the appeal does not challenge such inclusion. On the said amounts tax was imposed @ 60% under Section 115BBE and surcharge @ 25%. The amendments to the Finance Act were by the 2nd Amendment Act dated 15.12.2016. The enhancement of tax under Section 115BBE was made effective only from 01.04.2017; the commencement of the assessment year 2017-2018, in which the assessments of the previous year are carried out. 12. The assessee contends that the seizures were made prior to the amendment. The affidavits admitting the ownership of amounts seized were also submitted prior to the amendment. The assessee was not aware of the enhanced tax liability when the admissions were made before the authorities. The assessee has also made an attempt to relate the amendments to the demonetization of the specified currencies announced on 08.11.2016, which contention we reject at the outset. The subject amendments which are relevant for our consideration have no direct link with the demonetization introduced or the taxation and investment regime of Pradhaan Mantri Garib Kalyan Yojana 2016 brought in under Chapter IX A of the 2nd amendment Act. The 2nd amendment Act as is clear from the Statements of Objects and Reasons, was to curb, evasion of tax and black money as also plug loopholes in the IT Act and to ensure that defaulting assessee are subjected to higher tax and stringent penalty provision. Both the measures spoken of herein were to further the said objects and there cannot be any nexus assumed nor is it discernible.
13. Section 115BBE was inserted by Finance Act 2012 w.e.f. 01.04.2013. As on 01.04.2016 the financial year in which the subject seizures occurred Section 155BBE provided for 30% 68, 69, 69B, 69C and 69D. The same was amended by the 2nd Amendment, w.e.f.01.04.2017, enhancing the rate to 60%. Hence there was no new liability created and the rate of tax merely stood enhanced which is applicable to the assessments carried on in that year. The enhanced rate applies from the commencement of the assessment year, which relates to the previous financial year.
14. Likewise it was by Chapter II with heading 'Rates of Income Tax, as provided in the Finance Act 2016, that a surcharge was introduced by way of the 3rd proviso of Section 2(9) of that Finance Act. This comes into effect from the Financial Year 2016-17; which is the year in which the subject seizures were occasioned. The proviso refers to various provisions where the advanced tax computed under er the fir first proviso stands increased by a surcharge for the purpose of the Union. Section 115BBE is one of the 13 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 provisions referred to in the 3rd proviso and in the case of individuals the surcharge was @ 15% where the total income exceeds one crore, as on 01.04.2016. By the 2nd Amendment Act Section 2 of the Finance Act, 2016 stood amended by which 115BBE was omitted from the 3rd proviso. After the 6th proviso yet another proviso was inserted which provided for the 'advance tax' computed under the first proviso, in respect of any income chargeable to tax under Section 115BBE(1)(i), to be increased by a surcharge for the purposes of the Union, calculated @ 25%. Hence there is no new liability of surcharge created and it is a mere enhancement of the rate of surcharge.
15. In the financial year 2016-17 itself the tax as provided under section 115BBE and the surcharge on advance tax was available as discernible from the IT Act and Finance Act, 2016 as it stood on 1.4.2016 itself. A major misdemeanour leading to assessment of income as accrued under Section 69A invites the consequences of Section 115BBE and surcharge provided under Section 2(9) of the Finance Act, 2016. When it stands enhanced from 01.04.2017, for every assessment carried out in that year, related to the previous year, the rates as applicable on 01.04.2017 has to be applied. There being no new liability created or obligation imposed, the arguments raised by the appellant's counsel fails. The appellant cannot have a contention that he committed the misconduct on the expectation that if he were caught, he would have to shell out only lesser amounts as tax and surcharge. There is no right accrued on the assessee to commit an offence on the expectation of a lesser penalty.
16. It was also argued that Income Tax at the rate or rates specified, as prescribed in any Central Act to be charged for any assessment year, shall be so charged in respect of the total income of the previous year as per Section 4 of the IT Act. However, there is no such provision to enable a surcharge to be so taxed, on the Finance Act prescribing an enhanced rate at the commencement of a year. The said contention, however, cannot be sustained especially looking at the decision of the Hon'ble Supreme Court in CIT Kerala v. K Srinivas. [(1972) 4 SCC 526]. The facts are not relevant to the issue raised here and we need only look at the declaration as to the nature of a surcharge imposed in the Finance Act. The legislative history with respect to the concept of surcharge was traced by the Court, which, for the first time was found to have been recommended, in the report of the Committee on Indian Constitutional Reforms Volume. [Part I]. The word surcharge was used compendiously for the special addition to taxes on income imposed in. September 1931. It was held so in paragraph 7 and 8 7. The above legislative history of the Finance Acts, as also the practice, would appear to indicate that the term "Income tax" as employed in Section 2 includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Article 271 of the Constitution. The phraseology employed in the Finance Acts of 1940 and 1941 showed that only the rates of income tax and super tax were to be increased by a surcharge for the purpose of the. Central Government. In the Finance Act of 1958, the language used showed that 14 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 income tax which was to be increased by a surcharge for the purpose of the Unio he word "surcharge" has thus been used to either increase the rates. of income tax and super tax or to increase these taxes. The scheme of the Finance Act of 1971 appears to leave no room for doubt that the term "Income Tax" as used in section 2 includes surcharge.
17. According to Article 271 notwithstanding anything in Article 269 and 270 Parliament may at any time increase any of the duties or taxes referred to in those Articles by a surcharge for the purpose of the Union and the whole proceeds of any such surcharge shall form part of the consolidated Fund of India. Article 270 provides for taxes levied and collected by the Union and distributed between the union and these states. Clause (1) says that tax on income other than agricultural income shall be levied and collected by the Government of India and distributed between the Union and the states in the manner provided in clause (2). Article 269 deals with taxes levied and collected by the Union but assigned to the States. The provisions of Articles 268 which is the First one under the heading distribution, of revenue between the union and the states relate to duties levied by the Union but collected and appropriated by the states. Thus, these Articles deal with the levy, collection and distribution of the proceeds of the taxes and duties mentioned therein between the Union and the state. The Legislative power of Parliament to levy taxes and duties is contained in Articles 245 and 246(1) read with the relevant entries in list I of the Seventh Schedule.
19. In the instant case surcharge was imposed by Finance Act, 2016 and the rate stood enhances by Finance Act 2017. The Income Tax even as per the Finance Act has to be at the rate specified in Part | of the 1st Schedule which shall be increased by surcharge for purposes of the Union. Surcharge hence partakes the character of Income tax and Article 271 itself empowers the Parliament, at any time to increase any of the duties or taxes by a surcharge for the purpose of the Union and it forms part of the consolidate fund. So, when a surcharge is imposed it is in effect an enhancement of the tax or duty. The provisions in the Finance Act also employs the words 'the income tax computed ... shall be increased by a surcharge. Section 4 of the IT Act squarely applied to the surcharge imposed. The judgement of the Learned Single judge is affirmed for the reasoning herein above and the writ appeal would stand dismissed without any order as to costs."
The ground raised by the appellant herein, is, thus, contra, to the decision of the ITAT and the Kerala High Court, and, consequently, dismissed on applicability thereof, to this issue."
8. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal.
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Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024
9. The assessee has filed an application for admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963. The Ld. AR had drawn my attention to the documents filed before me as additional evidence, which comprises of, viz. (i) a copy of the certificate dated 12.04.2024 issued by the bank;
(ii) copies of returns of income of the assessee for the past 5 years; (iii) copies of the acknowledgments of the income-tax returns; and (iv) copy of medical certificates. The Ld. A.R submitted that the aforesaid documents have a strong bearing for adjudication of the issue involved in the present appeal and were not there before the lower authorities, therefore, the same in all fairness be admitted U/rule 29 of the Appellate Tribunal Rules, 1963. The ld. A.R on being queried as to why the said documents were not produced before the lower authorities, submitted, that the assessee had obtained the same after passing of the assessment and appellate orders, therefore, the same could not be submitted before the AO/CIT(Appeals).
10. The Ld. DR objected to the admission of the additional evidence filed by the assessee at the stage of proceedings before the Tribunal.
11. I have given thoughtful consideration and concur with the ld. A.R that as the aforesaid documents were not there with the assessee up to the stage of the proceedings before the CIT(Appeals), and had been obtained by her passing of the order by the CIT(A), therefore, the same could not be filed before the lower authorities. Considering the aforesaid facts, I am of the view that the aforesaid documents that have a strong bearing on the adjudication of the issues involved in the present appeal, merit admission.
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Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024
12. Controversy involved in the present appeal lies in a narrow compass, i.e. sustainability of the view taken by the lower authorities who have held the cash deposits of Rs.10 lacs made by the assessee during the subject year in her bank account with State Bank of India, Branch: Kuchery, Raipur as her unexplained money u/s. 69A of the Act.
13. At the threshold, it would be pertinent to point out that the assessee who is a septuagenarian, aged 76 years during the subject year, and a qualified doctor by profession, had been practicing in the preceding years as a gynecologist. Her husband who was serving in the Indian Air Force had expired way back in the year 1997, which, thereafter, was followed by the unfortunate deaths of her four close relatives (including two married daughters and two grandchildren) within a short span of two years i.e. 2002 and 2003. The assessee was survived by only one daughter who was also married. The assessee for the aforesaid reasons had been residing alone for more than the last 20 years. During the subject year, the assessee was serving as a resident medical officer with Raj Kumar College, Raipur. Also, as is discernible from her return of income, during the year under consideration she had received income from salary, rent, pension of her husband, and interest income.
14. I find substance in the Ld. AR's claim that it is incomprehensible that the assessee, a septuagenarian, who had been practicing as a gynecologist for the last many decades would have no accumulated savings available with her to source the cash deposits during the year under consideration. My aforesaid conviction is all the more fortified after considering her income-tax returns of recent years, as under 17
Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 Assessment year Total Income (Rs.) 2012-13 10,81,730/-
2013-14 13,14,550/-
2014-15 15,74,140/-
2015-16 15,26,480/-
2016-17 9,23,010/-
Apart from that, the assessee's various streams of income during the subject year i.e. salary, rent, pension of her husband, and interest on deposits, considered in the backdrop of her old age and ill health, do not inspire any confidence in the A.O's observation that the cash deposit of Rs.10 lac in her bank account was sourced from her undisclosed sources. My aforesaid conviction is guided by the principle of preponderance of human probabilities as had been emphasized by the Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT 214 ITR 801 (SC).
15. Also, my aforesaid view is supported by the judgment of the Hon'ble Supreme Court in the case of CIT vs. Smt. P.K. Noorjahan (1999) 237 ITR 570 (SC). The facts before the Hon'ble Supreme Court were that a lady aged 20 years, had during the A.Y.1968-69 and A.Y.1969-70 purchased certain pieces of land on November 27, 1968, for Rs.25,902/- and on November 15, 1969, for Rs.34,628/-. The assessee on being queried about the source of the aforesaid investments, had stated before the A.O. that the same were sourced from savings from the income of the properties which were left by her mother's first husband. The A.O. rejected the 18 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 aforesaid explanation and held the respective investments as having been made by the assessee from her unexplained sources and made an addition of the same u/s. 69 of the Act.
16. On appeal, the Hon'ble Apex Court after deliberating on the term "may" used in Section 69 of the Act, observed that the same indicated that the legislature in all its wisdom had conferred a discretion on the Income-tax Officer in the matter of treating the source of an investment which has not been satisfactorily explained by the assessee as the income of the assessee. The Hon'ble Apex Court observed that the Income-tax Officer is not obliged to treat the source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. It was further observed that the question as to whether the source of the investment should be treated as income or not u/s.69 of the Act has to be considered in the light of the facts of each case. In other words, discretion has been conferred on the Income-tax Officer u/s. 69 of the Act to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case.
17. Based on the facts involved in the present case, it can safely be concluded that even if the A.O did not find the explanation of the assessee regarding the source of the cash deposits in her bank account to be satisfactory, then as per Section 69A of the Act, read in the backdrop of the analogy that can safely be drawn from the judgment of the Hon'ble Apex Court in the case of CIT vs. Smt. P.K. 19 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 Noorjahan (supra), he ought to have exercised his discretion keeping in view the peculiar facts and circumstances of the case.
18. I shall now deal with the explanation of the assessee as regards the "source" of the cash deposit of Rs.10 lacs made in her bank account during the demonetization period. As observed by me hereinabove, it is the claim of the assessee that the cash deposit in question was sourced from, viz. (i) cash withdrawals from her bank account; and (ii) accumulated cash savings of the past years that were available with her. At the threshold, I may hereinabove observe that the CBDT Instruction No.03/2017 dated 21.02.2017, which is binding on the revenue, had, inter alia, stated that in case of an individual taxpayer above 70 years of age not having any business income, no further verification is required to be made if the total cash deposit during the demonetization period is up to Rs.5 lacs. It is further stated in the instruction that the source of such amount can be either household savings/savings from past income or amounts claimed to have been received from any of the sources therein mentioned, i.e. exempt income, cash withdrawals from bank, cash received from identifiable persons (with PAN/without PAN), and amount received from un-identifiable persons. Instruction No.03/2017 (supra) further states that the cash deposits above the aforesaid cut-off amount, i.e. Rs.5 lacs may require verification to ascertain whether the same is explained or not. Also, it is stated in Instruction No. 03/2017 (supra) that the basis for verification can be income earned during past years and its source, filing of return of income and income therein shown, cash withdrawals from accounts, etc. For the sake of clarity, 20 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 the CBDT Instruction No.03/2017 dated 21.02.2017 is culled out as under (relevant extract) "1.1 In case of an individual (either than minors) not having any business income, no further verification required to be made if total cash deposit is up to Rs.2.5 lakh. In case of taxpayers above 70 years age, the limit is Rs.5 lakh per person. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 below. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. The basis for verification can be income earned during past years and its source, filing of ROI and income shown therein, cash withdrawals made from accounts etc."
(emphasis supplied by me) Accordingly, as per the CBDT Instruction No. 03/2017, dated 21.02.2017, it can safely be concluded that out of the cash deposit of Rs. 10 lac made during the demonetization period in the bank account by the assessee, a septuagenarian, having no business income during the subject year, no adverse inferences could have been drawn by the A.O as regards the cash deposits of Rs. 5 lac (out of total cash deposit of Rs. 10 lac) in the backdrop of the concession given by the CBDT. I, thus, in terms of the aforesaid CBDT Instruction No. 03/2017, dated 21.02.2017 confine my adjudication as regards the source of the balance cash deposits of Rs.5 lacs (supra) made by the assessee in her bank account during the subject year.
19. The assessee had made subject cash deposits of Rs.10 lacs on 16.11.2016 in her Savings bank account No.10470172333 with State Bank of India, Branch:
Kutchery, Raipur, Pages 102 to 104 of APB. Also, the assessee had placed on record copies of her other bank accounts, Pages 110-129 of APB a/w. "cash flow statement"21
Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 for the period 01.04.2016 to 31.12.2016 wherein cash movement inter-se the aforesaid bank accounts is revealed. Although the assessee in her "cash flow statement" had claimed that she had an "opening balance" of cash in hand of Rs.18.92 lacs (approx.) on 01.04.2016, I am afraid that the same in the absence of any corroborative material cannot be summarily accepted and, thus, had rightly been rejected by the lower authorities. At the same time, I am of a firm conviction, that now when the CBDT Instruction No.03/2017 dated 21.02.2017 in itself provides for a blanket acceptance of cash deposits up to Rs. 5 lac in case of any individual taxpayer above 70 years of age not having any business income, for the reason that the same can safely be held as having been sourced from the said persons household savings/savings from past income, then, it can be concluded that the assessee in the backdrop of substantial income that was returned by her in the preceding years would be having substantially higher accumulated past savings. The Ld. A.R on being queried about the cash deposits of Rs.10 lacs in the bank account with State Bank of India, Branch: Kutchery, submitted that the assessee due to certain family reasons was constrained to keep her accumulated cash savings in her locker with the said bank. Elaborating on the reason for keeping a substantial amount of cash in her bank locker, the Ld. AR submitted that the same was for the reason that as her youngest son-in-law was consistently pressing her hard for money, therefore, she had intentionally kept the money in her locker instead of bringing the said amount to his knowledge by depositing the same in her bank account. The Ld. AR had drawn my attention to the application filed by the assessee 22 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 for admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963, wherein she had stated the reasons for keeping the cash in her bank locker, which reads as under:
"However, since the assessee is herself a doctor, she also looked after her second youngest daughter during the time when she was hospitalized in the most critical condition and it was because of her special attention and the medical treatments given to her that the second youngest daughter survived and recovered. However, the assessee's second youngest son-in-law, who married assessee's daughter without the approval of the family, started demanding money from the assessee. The assessee was already passing through various adverse circumstances with nobody in his family surviving and she was also living alone. The assessee was running her nursing home in a rented premises, which was also dismantled by the municipal authorities, which resulted into stoppage of functioning of the nursing home. It was because of this that the assessee took employment with Rajkumar College as chief medical officer. When the second youngest son in law consistently demanded money from the assessee, the assessee started feeling insecure and in order to ensure her financial security, the assessee stopped keeping much money in her bank account and started withdrawing money from her bank accounts, as and when it was received either as salary or rental income etc. and such withdrawn cash was partly kept by her in her personal possession and partly kept safely in the bank locker, wherefrom it was subsequently withdrawn on 16.11.2016 and deposited in bank. The certificate in respect of operation of the bank locker enclosed herewith shows that there was frequent operation of the bank locker."
The Ld. AR stated that the assessee had operated her locker with State Bank of India, Branch: Kutchery on 16.11.2016 and on the same day deposited the amount therein kept a/w that as was available with her in the Savings bank account No.10470172333 held with the same bank. The Ld. AR to fortify his aforesaid contention had drawn my attention to the certificate of the Chief Manager, State Bank of India, Branch: Kutchery, dated 12.04.2024 wherein it was certified that the assessee had operated her bank locker no. 305 on 16.11.2016. 23
Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024
20. Considering the aforesaid facts, I find substance in the claim of the assessee that the cash deposit in her bank account during the demonetization period was sourced out of the past accumulated cash savings that were kept by her in the aforementioned bank locker, and also the cash-in-hand available with her out of the cash withdrawals made from her bank accounts during the year under consideration. The fact that the assessee had operated her bank locker no. 305 with State Bank of India, Branch: Kutchery on 16.11.2016 (as certified by the bank), i.e. the date of the subject cash deposit in her bank account further inspires confidence as regards the veracity of her claim that the same was, inter alia, sourced out of her accumulated cash savings. Also, the assessee's claim for having kept the aforesaid substantial amount of her past accumulated cash savings in the bank locker and not depositing the same in her bank account is supported in the backdrop of the reason given by her.
21. Apropos the assessee's claim that the cash deposit of Rs. 10 lac in her bank account on 16.11.2016 i.e during the demonetization period was, inter alia, sourced from the cash withdrawals made by her from her bank accounts, I find substance in the same. On a scrutiny of the bank accounts of the assessee, Pages 108 to 129 of APB read a/w her consolidated cash flow statement, Page, I07 of APB, I find that as per the assessee's version (ignoring the Op. balance of C.I.H of Rs. 18.92 lac) net of cash deposits/withdrawals of Rs. 4,11,000/- was available with her on 16.11.2016, i.e. the date on which cash was deposited by her in the bank account during the 24 Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024 demonetization period. Although part of the cash withdrawals made in tranches over the year would not be fully available with the assessee on the subject date of deposit i.e 16.11.2016, but in the absence of any material which would irrefutably evidence the utilization of the entire amount of cash withdrawals, it can safely be concluded that part of the same was available with the assessee on the relevant date of deposit during the demonetization period.
22. Be that as it may, I am of the considered view that in the backdrop of the facts before me, viz. (i) the assessee had been practicing as a gynecologist and was in past running a hospital; (ii) the assessee is regularly filing her returns of income for the last many decades; (iii) that the return of income of the assessee from A.Y.2012-13 onwards as are available on record reveals substantial income; (iv) that the assessee is a septuagenarian aged 76 years with no such source of income based on which it could be concluded that she had garnered unexplained money during the subject year; and (v) cash available with the assessee out of the withdrawals made her from her bank accounts during the subject year, which have not conclusively been proved to have been utilized for incurring any expenditure or making any investment, I am of the view that it can safely be concluded that in the totality of the facts of the case of the present assessee, no adverse inferences as regards the cash deposit of Rs.10 lacs made in her bank account on 16.11.2016, i.e. during the demonetization period could be drawn.
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Smt. Kamal Verma Vs. ITO, Ward-4(1), Raipur ITA No. 69/RPR/2024
23. I, thus, in terms of my aforesaid observations, not being able to persuade myself to sustain the addition of Rs.10 lacs made by the A.O. in the hands of the assessee u/s. 69A of the Act, vacate the same. Accordingly, I set aside the order of the CIT(Appeals) and vacate the addition of Rs.10 lacs made by the A.O.
24. In the result, the appeal of the assessee is allowed in terms of the aforesaid observations.
Order pronounced in open court on 08th day of July, 2024.
Sd/-
(रवीश सूद /RAVISH SOOD) या यक सद य/JUDICIAL MEMBER रायपुर/ RAIPUR ; दनांक / Dated : 08th July, 2024.
***SB
आदे श क त ल प अ े षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals)-1, Raipur (C.G)
4. The Pr. CIT-1, Raipur (C.G)
5. वभागीय त न ध, आयकर अपील य अ धकरण,रायपुर बच,
रायपुर / DR, ITAT, Raipur Bench, Raipur.
6. गाड फ़ाइल / Guard File.
आदे शानस
ु ार / BY ORDER,
// True Copy //
Senior Private Secretary
आयकर अपील य अ धकरण, रायपरु / ITAT, Raipur.