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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K. & SHRI LAXMI PRASAD SAHU
Per Laxmi Prasad Sahu, Accountant Member
This appeal is filed by the assessee against the DIN & Order No.ITBA/NFAC/S/250/2023-24/1055382658(1) dated 24.8.2023 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2017-18 on the following grounds:-
“1. That the order of the Commissioner of Income-tax (Appeals), National Faceless Appeals Centre (NFAC), ("CIT(A)" for short), to the extent challenged herein, is unjustified, unsustainable and opposed to the applicable laws and facts of the case.
The Learned CIT(A) erred in partly upholding the order under Section 143(3) passed by the Income Tax Officer, Ward 1 & TPS, Bellary ("AO" for short) which made an adjustment of Rs. 13,15,000/- made to the Appellant's returned income on the ground that the same constituted unexplained money under the provisions of Section 69A r.w Section 115BBE of the Income Tax Act, 1961 ("the Act" for short).
3. The Learned CIT(A) failed to appreciate that the AO did not apply his mind and provide concrete reasons to conclude that the cash deposited by the Appellant in his bank account is unexplained money. 4. That the Learned CIT(A) erred in partly upholding the assessment order of the AO which was passed without considering or examining the numerous documents submitted by the Appellant and not appreciating the detailed replies and explanations furnished by the Appellant. 5. That, in any event, the Learned CIT(A) failed to consider that the assessment proceedings were violative of the principles of natural justice, since the Appellant was afforded an unjustly short period of 6 days to reply to the show cause notice and hence, an effective opportunity of hearing was not provided to the Appellant. 6. That the Learned CIT(A) failed to appreciate that the Appellant was merely a salaried employee and the sum of Rs. 13,15,000 which was deposited by the Appellant into his bank account during the demonetization period was out of his savings. 7. That the Learned CIT(A) failed to appreciate that the salary drawn by the Appellant during the relevant financial years to AYs 2014-15 to 2017-18 was an average of Rs. 11 Lakhs per annum and received the said salary after the requisite TDS had been deducted and had already suffered tax during the relevant AYs. 8. That the Learned CIT(A) erred in partly upholding the order of passed by the AO to the extent that by taxing the amount deposited by the Appellant in his bank account amounted to double taxation, since the source of the said deposit, namely, his salary receipts, had already been subject to tax, and hence the addition was unsustainable in law and on facts.
9. That the Learned CIT(A) and the AO failed to appreciate that the Appellant withdrew the amount over a period of 31 months (between 01.04.2014-08.11.2016) for family and household expenses and has also provided relevant cash flow statement, bank account statement and Return of Income for the AY - 2017-18 in order to explain the source of the said amount.
10. That the Learned CIT (A) failed to appreciate that during the demonetization process introduced on 08.11.2016, the nation was gripped with panic and chaos as citizens rushed to the Banks to deposit and exchange the demonetized notes, and that the Appellant, in order to ensure that his family does not suffer from financial crises deposited a sum of Rs. 13,15,000 on 12.11.2016 in the bank account, which he had withdrawn out of his salary receipts.
That the Learned CIT(A) erred in holding that that Appellant did not discharge his burden under Section 69A and failed to appreciate that once the burden is discharged by an assessee, as has been done by the Appellant in the present case, no addition can be made under Section 69A, without bringing on record any material evidence contradicting the explanation offered by the assessee.
That the Learned CIT(A) himself has admitted that the only source of income of the Appellant was his salary receipts, and further that the deposit of Rs. 13,15,000 was out of the withdrawal made on the salary receipts, and not from any external source, and thus failed to appreciate that, prima facie, the source, creditworthiness and the nature of the transaction were proved to be legitimate, genuine and bona fide.
That the Learned CIT(A) and AO never alleged that the income nor the expenditure was excessive or disproportionate, and failed to consider the fact that the Appellant spent only about Rs. 7,71,600 out of the Rs. 20,86,600 withdrawn by him over the course of the three preceding AYs and it was only the balance that was deposited by him, and the said expenditure for household purposes over the course of three years is neither impractical nor high-pitched.
That the Learned CIT(A) failed to appreciate that the AO wrongly exercised his discretion in holding that the explanations offered by the Appellant were unsatisfactory and in thus, adding the amount into the total income of the Appellant as the Appellant has not only tendered reasonable explanation and provided documentations in support of his contentions, but has also submitted binding precedents of this Hon'ble Tribunal and other benches of this Hon'ble Tribunal, which the AO wholly ignored in passing the assessment order.
That the Learned CIT(A) ought to have taken a lenient view in the present cases as regards the reliance placed by him on the Press Release dated 18.11.2016 issued by the Central Board of Direct Taxes and ought to have noted that the Appellant is the principal earning member of the family, and thus, the benefit of the exemption upto Rs. 2.5 lakhs should have been extended to every member of the family, after which the addition, if any, ought to have been made.
That the reliance placed by the Learned CIT(A) on the decisions cited in the impugned order is wholly misplaced as the facts involved and the ratio emerging from the said decisions are not applicable to the facts of the instant case.
That since the very addition made by the AO vide the assessment order is unsustainable, the consequential interest levied under Section 234B is also unjustified and not maintainable.
That, therefore, the Learned CIT(A) erred in holding that there was no infirmity in the orders of the AO under Section 143(3) of the Act.
That, in any event, the assessment proceedings concluding in the order passed by the AO are barred by limitation as per the provisions of the Act.
That the order of the CIT(A), to the extent questioned herein, is otherwise unsustainable in law and on facts and is thus liable to be set aside by this Hon'ble Tribunal. The Appellant most humbly craves leave of this Hon'ble Tribunal to add to or alter, by deletion, substitution or otherwise, the above grounds of appeal
, at any time before or during the hearing of the appeal. The Appellant further submits that the above grounds are independent of and without prejudice to one another. PRAYER The Appellant most humbly prays that this Hon'ble Tribunal may be pleased to allow the above appeal and set aside the order of CIT(A) dated 24.08.2023, to the extent questioned herein, as well as the impugned assessment order dated 01.10.2019 passed by the AO, in the interests of justice and equity.”
2. The brief facts of the case are that the assessee is an individual and filed return of income on 02.08.2017 under the head salary, declaring total income of Rs.9,68,200. The return was processed u/s. 143(1) of the Act. Later on, the case was selected for scrutiny under CASS and statutory notices were issued to the assessee.
The AO noted that the assessee had deposited cash on 12.11.2016 of Rs.13,15,000 in bank account bearing No.17601000005477 and notices were issued to the assessee. The assessee submitted reply on 05.08.2019 filed on 27.08.2019 that the amount deposited in the bank account was earlier withdrawn by the assessee for household expenses and it is past savings out of cash withdrawals of his family members. This explanation was not accepted and the entire amount of Rs.13,15,000 was added u/s. 69A of the Act and taxed u/s. 115BBE of the Act.
On appeal, the CIT(Appeals) did not find any infirmity in the order of the AO. However, considering the reply dated 05.08.2019 filed on 27.08.2019 before the AO, he allowed relief of Rs.2,50,000 to the assessee and the balance of Rs.10,65,000 was confirmed. Aggrieved by the order of the CIT(Appeals), the assessee is in appeal before the ITAT.
The ld. AR reiterated submissions made before the lower authorities and filed PB of pages 1 to 149. The assessee has filed documents in pages 7 to 48 of PB in the form of additional evidence under Rule 29 of the ITAT Rules, 1963 which are evidences for employment of the assessee at Tata Teleservices Ltd., Ideal Cellular Ltd., letter from HDFC Bank dated 13.11.2016 regarding repayment of loan and Form 26AS for AYs 2014-15 to 2017-18. Since these additional evidence are very much relevant for deciding the case, the same is accepted.
The ld. AR further submitted that in the statement of total income during the 31 month period before demonetisation, the total cash withdrawal is Rs.20,86,000 and household/other expenses is Rs.7,71,000 upto 07.11.2016. Resultantly the cash available of Rs.13,15,000 was deposited in the HDFC Bank account. Being salaried employee, the assessee has no other source of income and copy of return is placed on record. Therefore, he prayed that the addition confirmed by the CIT(Appeals) should be deleted.
On the other hand, the ld. DR relied on the orders of lower authorities and submitted that the assessee has not explained the source of cash deposit before the AO as well as CIT(A) . He further submitted that the assessee is a salaried employee and getting House Rent Allowance, which clearly shows that the assessee is residing in rented house and as per Form 16 the assessee has also claimed exemption u/s. 10 (13A) towards HRA. The withdrawals frequently from the bank are in small amounts and it cannot be said that assessee had past savings of Rs.13,15,000. Further after the cash deposit, the assessee has immediately withdrawn the money and transferred to other account. If the assessee had cash in hand, then he should have deposited into his bank account. As per the Certificate issued by the HDFC Bank which is at page 31 of PB, the repayment of loan of Rs.8,33,101 carried high rate of interest. If the assessee had sufficient cash, he must have discharged the loan outstanding during the above period.
In the rejoinder, the ld. AR submitted that the amount withdrawn on 13.11.2016 was deposited into personal loan account outstanding and not given to anybody and referred to PB pg. 31. He further submitted that the assessee had no other source of income and the amount was lying with his family members as pin pocket money out of cash withdrawals in the past period.
After considering the rival contentions, we note that the assessee is a salaried employee and filed his return of income under the had income from salary. During the period of demonetisation, the assessee deposited cash into Saving Bank Account of Rs.13,15,000 on 12.11.2016. The AO noted that the assessee could not explain the cash deposit during the demonetisation period and therefore added it u/s 69A of the. On appeal, the CIT(Appeals) considering the submissions dated 05.08.2019 and filed on 27.08.2019 before the AO, allowed relief of Rs.2.5 lakhs out of the addition of Rs.13.15 lakhs. Before us, the ld. AR reiterated the submissions made before the lower authorities and could not place any cogent evidence of availability of cash for 31 months as submitted in the computation placed before us in the paperbook. We also note that the assessee has withdrawn money immediately on 13.11.2016 after cash deposit in his bank account on 12.11.2016. The ld. AR submitted that the amount was deposited in the assessee’s personal loan account No.30976777 maintained with HDFC Bank taken on 29/12/2014. However, we note that in the submissions vide letter dated 05.08.2019, the assessee submitted that the money was withdrawn for household expenses and it was savings of his wife and family members. We also note that the assessee on 14.11.2016 has given Rs.1 lakh through RTGS to his brother and on 15.11.2016 he has transferred money of Rs.2,69,000 to his brother and there is no explanation submitted by the assessee regarding this total payment of Rs.3,69,000. Accordingly, we find substance in the arguments of the ld. DR that if the assessee had taken loan from HDFC Bank which carries high rate of interest, the assessee might have discharged that loan earlier , if the amount was available with him out of family savings. However, considering the submissions of the assessee in the letter dated 05.08.2019, we grant further relief of Rs.2,50,000/- to the assessee and the rest of the addition is confirmed.
In the result, the appeal by the assessee is partly allowed.