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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MANJUNATHA. G & SHRI MANOMOHAN DAS
आदेश / O R D E R
PER MANOMOHAN DAS, J.M: This appeal by the assessee is directed against the order of the learned Commissioner of Income-Tax (Appeals) – 16, Chennai [hereinafter “CIT(A)”] dated 10-10-2022 and pertains to the Assessment Year [AY] 2012-13. The grounds of the assessee are as under: “1. The order of the Commissioner of Income Tax, (Appeals) dismissing the appeal is contrary to law, erroneous and unsustainable to the facts of the case.
:- 2 -: 2. The CIT(A) erred in confirming the addition of Rs. 31,81,594/- to the long term capital gain (LTCG) returned by the assessee.
3. The CIT(A) was not justified in confirming the denial of improvement expenses incurred on the property and the consequential indexation benefit to the to the assessee.
The CIT(A) failed to appreciate that the check the erosion, the assessee had to construct retaining was on the land in F.Y. 2007-08 and had to rebuild it in the F.Y. 2008-09 and this constituted incurring of improvement expenses entitling the assessee for indexation for the same.
5 The CIT(A) further failed to appreciate that the inability of the assessee to file any evidence for constructing the compound wall at this point of time would not render the genuine expense incurred on improvement as not available for indexation purposes and hence the claim of the assessee ought to be accepted.
The CIT(A) further failed to appreciate that the factum of sea erosion on the land is also recorded in the sale deed of the property purchased by the assessee and hence the claim on cost of improvement is genuine and needs to be deleted.
7. The CIT(A) erred in confirming the addition of Rs. 82,86,700 u/s 69A of the Act as unexplained money.
The CIT(A) failed to appreciate that the source for the cash deposited in the bank account from 05-04-2011 to 15-07-2011 was from and out of the cash withdrawn from the earlier years and the rejection of the explanation was on surmises and hence needs to be deleted.
9. The CIT(A) further failed to appreciate that the assessee was employed in IBM at senior level and the cash withdrawn in previous years for house construction was redeposited after deciding to move to USA and therefore source for the cash deposit was properly explained by the assessee and there was no justification in confirming the addition u/s 69A of the Act.
10. The CIT(A) further failed to appreciate that the sources of income comprised only of salary income and interest income from bank deposits and there being no other source of income, the explanation given is bona-fide and hence the addition is unsustainable in facts of the case.”
The brief facts of the case are that the assessee is an individual and an NRI. The Department had information from their available :- 3 -: record that the assessee made huge cash deposits into his SB Account No.620010100000639 at Axis Bank during the Financial Year [FY] 2011-12 relevant to the AY 2012-13. The assessee filed his return of income for the A.Y 2012-13 belatedly. In the return of income, the assessee admitted income from salary, income from long term capital gains and income from other sources which did not commensurate with the amounts deposited. The ld. Assessing Officer [AO] believed that income for more than Rs. One lakh has escaped assessment and accordingly, the case of the assessee was reopened u/s 147 of the Act by taking prior approval of the competent authority. Notice u/s 148 dated 29-03-2019 issued and served upon the assessee.
The assessee, in response to that notice filed his return of income for the AY 2012-13 on 13-04-2019 admitting income from salary amounting to Rs. 2,43,854/-, income from other sources amounting to Rs. 7,92,465/- and income from long term capital gains amounting to Rs. 58,84,617/- aggregating to Rs. 69,06,920/-. Notice u/s 143(2) of the Act dated 29-05-2019 served upon the assessee and the assessee in compliance attended and filed the details such as copy of purchase deed, copy of sale deed, copy of bank account. The ld. AO noticed that, during the FY 2011-12, the assessee sold an immovable property situated at No. 52, Mamallpuram Village, :- 4 -: Thirukalikundram Taluk, Kancheepuram for a consideration of Rs.1,32,73,000/- and the entire sale consideration was received by way of DD dated 06-04-2011. The assessee claimed cost of acquisition at Rs. 29,53,282/- and Rs. 23,58,838/- respectively. The ld. AO also noticed that the assessee made cash deposits of Rs.82,96,700/- subsequent to the sale of immovable property. The ld. AO framed two issues for completing the reassessment as (a) Cash deposits, and (b) Excess claim of cost of acquisition. Notice u/s 142(1) of the Act dated 06-12-2019 issued asking the assessee to explain about the cash deposits made to the tune of Rs. 82,86,700/- and reason for claiming two cost of acquisition. In response, the assessee made submissions which were find not acceptable by the ld. AO. The ld. AO vide order dated 27-12-2019 disallowed the claim of the assessee and added the amount of Rs.31,81,594/- on account of capital gains and Rs. 82,86,700/- as unexplained money under section 69A of the Act towards the total income of the assessee.
Being aggrieved, the assessee filed 1st appeal before the ld. 4.
CIT(A). The ld. CIT(A) vide order dated 10.10.2022 dismissed the appeal of the assessee.
Being aggrieved, the assessee filed the present appeal before the Tribunal. :- 5 -: 6. Heard the representatives of both the parties and perused the materials available on record. We observe that the assessee failed to prove the expenditure incurred by him in improving the land. No evidence regarding how much amount the assessee had incurred in improving the land could be filed by the assessee before the lower authorities. The ld. CIT(A) in this context observed as under:
6.3. I have considered the matter. Appellant claimed to have expenses of Rs. 29,53,282/- in F.Y. 2007-08 and Rs. 23, 58,838/- in F.Y. 2008-09 as cost of improvement. The AO had refused to accept the indexed cost on Rs. 23,58,838/- which came to Rs. 31,81,594/-. The assessee had claimed to have rebuilt the rock compound in 2008-09. In this regard, the appellant had not furnished any iota of having incurred the said cost of rebuilding the boundary wall. The appellant had not discharged the onus of proving the claim. A sum of Rs. 23,58,838/- is not a small amount of money in 2008-09. If such expense was incurred, some evidences ought to be there. In view of dearth of evidences regarding incurring of expenses, the ground taken is dismissed. Addition of Rs. 31,81,594/- is confirmed
On the above observation of the ld. CIT(A) our considered opinion is that the assessee had to furnish evidences in support of his claim regarding the expenditure incurred by him on improvement of his land. The assessee totally failed to produce any evidence except making submissions about such expenditures. Mere submissions will not help the assessee. Assessee must produce evidences before the concerned authorities upon his claim if sought relief. In absence of evidences on the part of the assessee relief is not possible. Therefore, we uphold the observations of the ld. CIT(A). Accordingly, we decide this ground of appeal against the assessee which is related to the :- 6 -: addition of Rs. 31,81,594/- to the total income of the assessee by the ld. AO.
8. Regarding the addition of Rs. 82,86,700/- as unexplained money under section 69A of the Act by the ld. AO, the observations made by the ld. CIT(A) are not acceptable to us. The ld. CIT(A) upheld the addition by mere suspicion. The ld. CIT (A) observed as under:
7.3. I have considered the matter. According to the appellant, cash was withdrawn for construction of a house at a land purchased in Mamalllapuram. Substantial cash withdrawal started from March 2006. In that month itself, there was withdrawal of Rs. 27 lakh. There was substantial withdrawal till the month of November, 2006. After that withdrawals were of nominal sums, mainly through ATM. Now, the question a begging answer is the plausibility of cash withdrawn several years earlier being still in possession of assessee in the same forms of cash. It is not understood as to how cash withdrawn before December, 2006 was still available as such in 2011. This claim of appellant is not in conformity with human nature and especially for a person who has banking habit. Appellant heavily argued that he was a salaried person and that he had no other sources of earning the cash deposited by him. This is a self-serving argument because the Department is not privy to many possible income earning activities with which the assessee might have been engaging. In the year in which cash was deposited, assessee had sold property of substantial size. The Department had no occasion of knowing what actually transpired in course of the property transaction. Presently, it is the duty of appellant to give reasonable, credible and plausible explanation regarding the sources of cash deposited by him. The explanation given is too far-fetched to be true. Therefore, the claim does not appeal to my sense of reason as well as preponderance of possibility. The ground is accordingly dismissed.
As per our observation, the assessee explained the sources of the cash deposited by him in his bank account. The assessee explained that he had withdrawn amount for construction of house but to redeposit in his bank account as he had to abandon the plan for :- 7 -: construction of house. The assessee further explained that he was an employee of IBM and received salary. He also sold immovable property, house hold property etc. Hence, there was explanation from the assessee but the same was not accepted by the lower authorities.
Merely, because, the assessee had kept the withdrawn money in his custody for a long time and thereafter redeposited in the bank account is not a ground to reject the claim of the assessee. The assessee as an owner of his money had kept that money with him for a specific object/purpose. The Department simply suspected that the assessee could have any other business. Again, the Department’s view that most of the people kept their money in bank at most of the times. But that view of the Department, as per our observation may not apply equally in every case. The owner of the money takes their own decision when they will keep the same in their own custody and when it will be profitable / fruitful by keeping the money in bank accounts.
When certain purpose is there, money may not be kept in the bank accounts so as to accomplish that purpose/object. This is not unusual.
The owner of the money takes his own decision in this regard. Money may be needed in one’s own custody for a specific purpose and for this purpose money can be withdrawn from his /her bank account.
People keep money in bank account for a purpose so that the same can be withdrawn as convenient to the owner of the money so as to :- 8 -: fulfill that specific purpose. This is possible. The observation of the ld. CIT(A) that the assessee might have engaged in any other activity is not proved. Therefore, we delete the addition of Rs. 82,86,700/- to the total income of the assessee. Accordingly, we set aside the order of the ld. CIT(A) dated 10-10-2022 as well as the assessment order dated 27-12-2019 so far as it relates to the addition of Rs. 82,86,700/-. Thus, this ground of appeal of the assessee on cash deposit is allowed.
In the result, the appeal of the assessee is partly allowed. Order pronounced on 29th December, 2023.