Income Tax Appellate Tribunal - Chennai
P Ramanathan, Erode vs Ito, Ward-2(1), , Erode on 25 February, 2019
आयकर अपील य अ धकरण, 'बी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
' B' BENCH : CHENNAI
[BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER]
आयकर अपील सं./I.T.A. No.3322/CHNY/2018
नधा रण वष /Assessment year : 2012-2013.
P. Ramanathan, Vs. The Income Tax Officer,
27, Sivam Complex, Ward 2(1)
Thangam Nagra Part -1, Erode.
Kathirampatti Post,
Erode 638 107.
[PAN ACJPR 7775E]
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओर से/ Appellant by : Shri. S. Sridhar, Advocate
यथ क ओर से /Respondent by : Shri. Sridhar Dora, JCIT.
सन
ु वाई क तार ख/Date of Hearing : 05-02-2019
घोषणा क तार ख /Date of Pronouncement : 25-02-2019
आदे श / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
In this appeal filed by the assessee, which is directed against an order dated 31.10.2018 of ld. CIT(A)-3, Coimbatore, it is aggrieved on an addition of Rs.58,00,000/- considered as unaccounted cash deposits in the bank account of the assessee.
:- 2 -: ITA No.3322/CHNY/2018.
2. Facts apropos are that assessee an individual had not filed any return for the impugned assessment year. Ld. AO was having information regarding deposits made by the assessee in a bank account bearing No.10958695363 maintained by the assessee with State Bank of India, Pallipalayam and in another account bearing No.20044779461 with ICICI Bank, Erode. There was an aggregate cash deposit of Rs.70,00,000/- in these bank accounts. In a statement recorded on 04.12.2012, it seems assessee could explain only the source for Rs.12,00,000/-, out of the aggregate deposits of Rs.70,00,000/-, and stated that the balance amount could be considered as income earned from disclosed sources. Thereafter notice u/s.148 of the Income Tax Act, 1961 (in short ''the Act'') was issued to the assesseee on 07.04.2015. Assessee had filed a return on 20.10.2014 admitting income of Rs.2,59,120/- and agricultural income of Rs.3,00,000/-. Thereafter, it seems there was no response from the assessee on the hearing notices issued by the ld. AO. Relying on the statement recorded from the assessee on 04.12.2012, ld. AO proposed to make an addition of Rs.58,00,000/-. This was intimated to the assessee through a letter dated 21.12.2016. Even for this, there was no reply from the assessee. Ld. AO, thereafter completed the assessment making an addition of Rs.58,00,000/-.
:- 3 -: ITA No.3322/CHNY/2018.
3. Aggrieved, assessee moved in appeal before ld. CIT(A). Before ld. CIT(A), assessee sought to produce additional evidence for justifying the source for the cash deposits in the bank accounts. Additional evidence were in the nature of confirmations from one Shri. N. Ramasamy, father of the daughter -in-law of the assessee, Smt. S. Renuga, daughter-in-law of the assessee, Dr. P.R. Senthil Raja, son of the assessee and Smt. Palaniammal wife of the assessee. Ld. CIT(A) sought a remand report from the ld. AO on the additional evidence and explanation for the source given by the assessee. Ld. AO in the remand report dated 31.07.2018 stated that assessee had in his deposition, specifically admitted Rs.58,00,000/- as unexplained income. According to him, this was reconfirmed by the assessee vide a letter dated 24.12.2012. As per the ld. AO, assessee was a well qualified person who worked as a Deputy Director of Agriculture in State Government service and could not say that he did not understand the consequence of the admission made in the deposition. According to him, cash flow statements filed by the assessee for his wife, son, daughter-in-law and father of daughter-in-law disclosed the following discrepancies.
''1. Smt. R. Palaniammal had claimed receipt of loans from relatives aggregating to Rs.15,85,000/- during the period 01.07.2011 :- 4 -: ITA No.3322/CHNY/2018.
to 15.08.2011 from 106 persons on different date and all these loans were below Rs.20,000/-.
2. Dr. P.R. Senthilraja claimed receipt of loan from friends and relatives aggregating to Rs.15,67,000/- during 01.07.2011 to 15.08.2011 from 110 persons and return of loan of Rs.6,76,000/- to 45 persons during the period 01.05.2011 to 15.06.2011 on different dates and all the loans were below Rs.20,000/-.
3. Dr. S. Renuga claimed receipt of loan from relatives aggregating to Rs.11,90,000/- during the period 01.07.2011 to 15.08.2011 from 81 persons on different dates and all the loans were below Rs.20, 000/-.
As per the ld. AO all these persons claimed the amounts to have been given to the asssessee for paying back their housing loan but there was no evidence filed. According to the ld. AO additional evidence filed by the assessee were cooked up and could not be accepted.
4. After considering the submissions of the assesse and the remand report of the ld. AO, ld. CIT(A) held that addition of Rs.58,00,000/- was justified. Conclusions drawn by the ld. CIT(A) were as under:-
:- 5 -: ITA No.3322/CHNY/2018.
i. The returns of in come for A.Y. 2012-2013 of Smt. S. Renuga and Dr. P.R. Senthil Raja had been filed on 21.12.2013 and 21.11.2014; with the express purpose of creating a paper trail to deflect the tax burden from the appellant.
II. The putative lenders of Dr.5.Renuga , Dr.P.R. Senthil Raja and Smt.Palaniammal are small time villagers, agriculturists, etc., The amounts lent have remained outstanding till date that is, nearly seven years from the time they are supposed to have advanced these sums. Moreover, the alleged loans are free of Interest.
III. The alleged lenders do not have PANs.
IV. The alleged gift is not supported by even a shred of evidence.
V. It is rather bizarre and difficult to accept that the amount supposed to have been given by Dr.S.Renuga, Dr.P.R.Senthil Raja and Smt.Palaniammal are odd figures Rs.24,61,654/-, Rs. 17,05,704/- and Rs. 28,03,944/- respectively. It cannot be a mere confidence that these sums exactly match the repayment of interest and principal of the housing loan in the name of Shri.N.Ramasamy, Dr.S.Renuga, Dr.P.R.Senthil raja and Smt.Palaniammal.
VI.It is also difficult to accept that these persons would first give odd amounts to the appellant who would then deposit the same in his bank account and subsequently use the funds to square off the housing loan. The alleged lenders could have deposited the amounts directly in their respective bank accounts and utilized the same to discharge their housing loan liability.
5. Now before us, ld. Authorized Representative strongly assailing the orders of the lower authorities submitted that Shri. N. Ramasamy in answer to question No.11, had confirmed payment of Rs.67,000/- in cash to the assessee. Placing reliance on the sworn :- 6 -: ITA No.3322/CHNY/2018.
statement of Smt. S. Renuga, daughter-in-law of the assessee, ld. AR submitted that in answer to question No.18, she had confirmed paying Rs.24,61,564/- to the assessee in cash. Relying on the statement of assessee's wife Smt. R. Palaniammal, ld. AR submitted that in answer to question No.17, she had confirmed paying Rs.28,03,944/- to the assessee. As for the assessee's son Dr. P.R. Senthil Raja, ld. AR submitted that latter had filed an affidavit confirming payment of Rs.17,05,704/- to the assessee, According to him, contents of this affidavit were never found to be wrong. Further, according to the ld. AR, each of the persons had filed their returns of income and the loans given to the assessee were clearly shown therein. Contention of the ld. AR was that assessee had used the money for repayment of interest and principal of a housing loan jointly taken by Shri. N. Ramasamy, Smt. S. Renuga, Dr.P.R. Senthilraja and Smt. Palaniammal. In any case, according to him, assessee was not bound to prove the source of the sources. An addition, as per the ld. AR, if at all made could have been only in the hands of the concerned creditors and not in the hands of the assessee.
6. Per contra, ld. Departmental Representative strongly supporting the orders of the lower authorities submitted that ld. CIT(A) had given clear reasons for confirming the addition at para 5.6 :- 7 -: ITA No.3322/CHNY/2018.
of his order. According to him, it was a make believe story given by the assessee and could not be considered as proper source for cash deposits of Rs.58,00,000/- in its bank accounts.
7. We have considered the rival contentions and perused the orders of the authorities below. It is not disputed that Shri. N. Ramasamy, Smt. S. Renuga and Dr.P.R. Senthilraja had filed their returns for the impugned assessment year. Shri. N. Ramasamy, father of daughter-in-law of the assessee in the statement recorded from him on 02.05.20018, while answering Q.No.9, stated that ''my contribution towards repayment of loan is Rs.67,000/- only'' and to Q. No.10, he answered that 'we are a joint family and that the remaining three persons have paid for me to close the housing loan''. He reiterated the same while answering Q. No.11 also, stating interalia that he had given Rs.67,000/- to the appellant for settlement of housing loan. He had also filed a return of income for assessment year 2012-2013 on 31.08.2012. As for Smt. S. Renuga, daughter-in- law of the assessee had stated as under to question No.18.
"Q. No:18. During the F.Y. 2011-12, how much cash given by you to Sri P. Ramanathan?
I have given an amount of Rs.24,61,564/- by way of cash in r/o. repayment of loan to SBI, Pallipalayam Branch, Namakkal on behalf of me.'' :- 8 -: ITA No.3322/CHNY/2018.
She also mentioned in the very same statement that she had received loan of Rs.11,90,000/- from various persons and Rs.5,00,000/- as gift from her mother. The list of the persons from whom loans were availed were also provided. She had also filed her return of income on 21.12.2013 and a cash flow statement was filed by her alongwith the return. Smt. Palaniammal, wife of the assessee had answered as under with regard to the amount of Rs.28,03,944/- given by her.
Q.No.17 During Fy.2011-12 how much cash given by you to Sri.P.Ramanathan and others?
Ans.
I have given an amount of Rs.28,03,944/- by way of cash in respect of others . I will submit the details before 18/06/2018.
O.No.I8 Please provide the evidence for cash transaction of Rs.28,03,944/-?
Ans.
Rs.12,OO,000/- paid out of agricultural land sales. Balance a list of balance loan from friends and relatives from 01/07/2011 to 15/08/2011 for an amount ofRs.15,67,000/- has been submitted.
Q.No.19 Can you able to further any evidence regarding the loan receipts for Rs.15,85,000/- and cash paid to Sri.P.Ramanathan for repayment of housing loan on behalf you to the extent of Rs.28,03,944/-
Ans.
I will give the evidence before 18/0612018.
:- 9 -: ITA No.3322/CHNY/2018.
In so far as Dr. P.R. Senthilraja, son of the assessee is concerned, the said person had filed an affidavit on 16.07.2018 for giving a sum of Rs.17,05,704/- to the assessee. He had also filed his return of income on 21.10.2014 wherein he had disclosed the amount given to his father. Thus all the persons had confirmed the amounts given to the assessee and also stated that these were for repayment of housing loan and interest. In our opinion, this explains the odd figure the assessee had received from Shri. N. Ramasamy, Smt. S. Renuga, Dr.P.R. Senthilraja and Smt. Palaniammal. Just because they filed their respective returns subsequent to the recording of the statement from the assesseee on 04.12.2012, would not be sufficient reason for ignoring their confirmations. Shri. N. Ramasamy Smt. S. Renuga, and Smt. Palaniammal had appeared before the ld. AO and confirmed the factum of money given to the assessee. As for Dr.P.R. Senthilraja, he had filed an affidavit, contents of which was not found to be incorrect. It might be true that the creditors had in turn claimed large number of loans to have been taken from various persons who were not having PAN. The Revenue is free to proceed against the creditors, if the source for the money shown by them was found to be not genuine. However, in our opinion assessee before us had produced sufficient evidence for supporting the source of the deposit of Rs.58,00,000/- in his bank account. The addition was in our :- 10 -: ITA No.3322/CHNY/2018.
opinion was not warranted and its stands deleted. Grounds 6 & 7 are allowed.
8. We also find that assessee has taken grounds numbers 3 to 5 assailing the issue of notice u/s.148. However, ld. Counsel for the assessee submitted that he was not pressing these grounds. Accordingly, grounds 3 to 5 of the assessee are dismissed as not pressed. Grounds 1 and 2 are general in nature needing no specific adjudication.
9. In the result, the appeal of the assessee is partly allowed. Order pronounced on Monday, the 25th day of February, 2019, at Chennai.
Sd/ Sd/-
(N.R.S. GANESAN) (ABRAHAM P. GEORGE)
या यक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER
चे"नई/Chennai
#दनांक/Dated:25th February, 2019.
KV
आदे श क त'ल(प अ)े(षत/Copy to:
1. अपीलाथ /Appellant 3. आयकर आय*
ु त (अपील)/CIT(A) 5. (वभागीय त न/ध/DR
2. यथ /Respondent 4. आयकर आयु*त/CIT 6. गाड फाईल/GF
:- 11 -: ITA No.3322/CHNY/2018.