MR. SUNNY KULATHAKAL ,BANGALORE vs. INCOME TAX OFFICER, (INTERNATIONAL TAXATION) WARD-1(2), BANGAALORE

Date of Hearing : 26-07-2023 Date of Pronouncement : 09-08-2023 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal arises out of order dated 20.02.2023 passed by the Ld.CIT(A)-12, Bengaluru for A.Y. 2017-18 on following grounds of appeal: “1. On the facts and in the circumstances of the case, Ld. CIT (A), erred in upholding the order of the Assessing Officer (AO) in the manner in which he did.

2. Ld. CIT(A) erred in upholding the addition of Rs. 63,74,500/- as unexplained money under section 69A of the Act without appreciating the facts of the appellant's case.

4. The Ld. CIT(A) erred in not applying the peak cash credit theory on the cash deposits made during the course of Assessment and has failed to consider the revised submissions filed by the Authorised representative of the Appellant by stating that it was an afterthought. 5. For these and such other grounds that may be urged at the time of hearing of the Appeal the Appellant prays that the appeal may be allowed.” 2. Brief facts of the case are as under: 2.1 The assessee is a non-resident and derives its income from other sources i.e. Bank interest. For the year under consideration, the assessee filed its return of income on 31.03.2018 declaring total income of Rs.12,57,190/-. The case was selected for limited scrutiny to examine the following issues: a) Cash deposits during the year b) Winning from lottery / crossword puzzles/ horse Statutory notices u/s. 143(2) of the act along with notice u/s. 142(1) was issued to the assessee on e-portal. 2.2 Subsequently there was a change in the incumbent officer and notice u/s. 142(1) r.w.s 129 was issued through e-portal providing an opportunity to the assessee by calling for the source of cash deposited to the bank during the year and also to explain as to why, the interest income received from the bank as per 26AS amounting to Rs. 19,09,110/- should not be brought to tax as against the return of income declared at Rs.12,66,498/-. 2.3 In response to the statutory notices, assessee furnished bank statements of Central Bank of India and State Bank of India for the relevant financial year under consideration. The Ld.AO after Page 3 of Central Bank of India and an account with State Bank of India. It was noted that the assessee deposited total cash of Rs.63,74,500/- during the financial year relevant to assessment year under consideration. 2.4 The Ld.AO also noticed that as per 26AS, the assessee received income of Rs.19,09,110/- against which TDS of Rs.1,92,870/- was claimed. The Ld.AO noted that, there is a difference of Rs.6,42,612/- that was not brought to tax as “income from other sources”. 2.5 Notices were issued to the assessee to explain the discrepancy and the details of the cash deposited in the accounts held by the assessee. The assessee did not respond to the notices issued and therefore the Ld.AO made addition in the hands of the assessee of Rs.82,74,302/-. 2.6 Aggrieved by the order of the Ld.AO, the assessee filed appeal before the Ld.CIT(A). 2.7 Assessee furnished various details before the Ld.CIT(A) as additional evidence, which was remanded to the Ld.AO calling for a remand report. 2.8 The Ld.AO filed the remand report dated 09.11.2022 which has been extracted in the order of Ld.CIT(A) and a copy of the same was shared to the assessee. 2.9 In the rejoinder, the assessee submitted that, the source of the cash deposits was from the cash withdrawals made earlier and from the cash received from sale of agricultural produce. It was also submitted that the cash deposits were from the loan obtained from his brother and his brother-in-law and few close Page 4 of friends. The assessee also submitted that, the assessee received certain loan repayment from a few other people, the details of whom have been mentioned by the Ld.CIT(A) in para 5.3.3 of its order. The assessee filed cash book for financial year under consideration and copies of assessee’s bank statements in support. 2.10 The Ld.CIT(A) considered the remand report and the evidences filed by the assessee and observed as under:

2.11 The Ld.CIT(A) thus did not allow the claim of the assessee in respect of the cash deposited to the bank accounts. Aggrieved by the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. 3. Before us the Ld.AR submitted that the assessee do not wish to contest the issue of difference in the interest income between the 26AS, and as declared by assessee in the return of income. The written submission filed by assessee in para 2.4 supports the above observation.