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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI V. DURGA RAO, HON’BLE & SHRI MANJUNATHA. G, HON’BLE
आदेश /O R D E R
PER MANJUNATHA. G, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-16, Chennai, dated 28.07.2022 and pertains to assessment year 2017-18.
:-2-: ITA. No: 671/Chny/2022 &SP No: 10/Chny/2023 2. The assessee has raised the following grounds of appeal: “1. The order of the Asst. Commissioner of Income-tax, INT TAXN Circle, Madurai is opposed to law and contrary to the fact of the case. 2. The Assessing Officer has erred in making addition of Rs. 56,10,000/- as unexplained money u/s. 69A of the I.T. Act even though the sources for the same are well explained and proved beyond doubt. For these grounds and such other grounds that might be adduced at the time of appeal hearing, Your appellant prays for deletion of the addition of Rs. 56,10,000/- made u/s. 69A of the I.T. Act and thus justice be rendered.”
The brief facts of the case are that, the assessee Smt. Kochi Kishore Kumar Aarthy, is a non-resident and has filed her return of income for the assessment year 2017-18 on 06.12.2017 admitting total income of Rs. 3,48,943/-. The case was selected for scrutiny under CASS and notice u/s. 143(2) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) dated 20.08.2018 was issued to the assessee. During the course of assessment proceedings, the Assessing Officer noticed that during the financial year 2016-17, the assessee has made cash deposit of Rs. 56,10,000/- to her bank account maintained with Karur Vysya Bank, State Bank of India and Vijaya Bank as narrated by the AO in Para 3 of their order. The assessee was asked to submit all the evidences and source for cash deposit. The assessee has submitted cash flow statement for the period from financial
:-3-: ITA. No: 671/Chny/2022 &SP No: 10/Chny/2023 year 2010-11 to 24.11.2016 and explained source for cash deposits and cash flow statement filed by the assessee has been reproduced at Para 3 of page 3 & 4 of assessment order. The assessee, further explained that source for cash deposit is out of withdrawal from her NRO account in the financial year 2010 amounting to Rs. 43 lakhs and also various other withdrawals in previous financial years. The assessee had also explained source out of sum of Rs. 20 lakhs advance received for sale of property. The AO, however was not satisfied with explanation furnished by the assessee and according to the Assessing Officer, the assessee could not explain source for cash deposits, although she claims to have withdrawn cash from her NRO bank account in financial year 2010-11. The AO, further noticed that the assessee could not furnish any evidences to prove that she had received a sum of Rs. 20 lakhs in cash towards advances for sale of property on 10.05.2015. Therefore, rejected arguments of the assessee and made additions towards cash deposits amounting to Rs. 56,10,000/- u/s. 69A of the Act as unexplained money.
Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the ld. CIT(A),
:-4-: ITA. No: 671/Chny/2022 &SP No: 10/Chny/2023 the assessee has reiterated her submissions made before the AO and argued that when source for cash deposit has been explained out of known source of income, the AO ought to have accepted explanation furnished by the assessee, unless the AO proved otherwise. The assessee has filed a detailed written submission on the issue along with cash flow statement to prove that she had sufficient source for cash deposits during demonetization period. The ld. CIT(A), after considering relevant submissions of the assessee and also taken note of relevant fact opined that out of total cash deposits of Rs. 56,10,000/- the assessee has made cash deposit of Rs. 13 lakhs in her bank account prior to demonetization period. The balance amount has been deposited during demonetization period. The assessee could not explain source for cash deposits during demonetization period and before demonetization period. Although, she claims to have received sale advance of Rs. 20 lakhs on 10.05.2015, but no evidences has been filed to justify her claim except filing affidavit from Shri. P.K. Amarnath. Therefore, the CIT(A) opined that the arguments of the assessee that source for cash deposit is out of withdrawal from her NRO account in the year 2010 and sale advance received
:-5-: ITA. No: 671/Chny/2022 &SP No: 10/Chny/2023 at Rs. 20 lakhs on 10.05.2015 is contradictory and thus, rejected arguments of the assessee and sustained additions made by the AO towards cash deposits u/s. 69A of the Act. Being aggrieved by the assessment order, the assessee preferred an appeal before the Tribunal.
The ld. Counsel for the assessee, submitted that the Ld. CIT(A) erred in confirming addition of Rs. 56,10,000/- u/s. 69A of the Act, without appreciating fact that source for entire cash deposits made in the bank account has been fully explained by the assessee with necessary evidences. The ld. Counsel for the assessee, referring to cash flow statement filed by the assessee and corresponding bank statements submitted that the assessee being an NRI operating NRO account and out of funds available in NRO bank account, she had withdrawn a sum of Rs. 40 lakhs for the purpose of construction of house property. In the mean time, she had given her property for joint development and thus, amount withdrawn for construction of house property was fully available with the assessee and the same has been deposited into bank account. The assessee had also received a sum of Rs. 20 lakhs towards sale advance for sale of property and in this regard filed
:-6-: ITA. No: 671/Chny/2022 &SP No: 10/Chny/2023 necessary evidences. If you consider above two sources, then she had sufficient source of income to explain cash deposits made during the financial year. The AO ignored all evidences filed by the assessee and made additions. The ld. CIT(A) without appreciating relevant facts simply confirmed additions made by the AO.
The ld. DR, on the other hand supporting the order of the CIT(A) submitted that, although the assessee claims to have withdrawn a sum of Rs. 40 lakhs from her NRO account in the financial year 2010-11, but could not file any evidence including relevant bank statement. The assessee claims to have received Rs. 20 lakhs as sale advance for sale of property, but no evidence has been filed. The assessee never filed her return of income and she had filed return for the assessment year 2017-18 after demonetization period. Therefore, cash balance shown in return of income cannot be considered, because it is after thought to cover up cash deposits made during demonetization period. The ld. CIT(A), after considering relevant facts has rightly sustained additions made by the AO and their order should be upheld.
:-7-: ITA. No: 671/Chny/2022 &SP No: 10/Chny/2023 7. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The fact with regard to cash deposits during demonetization period and before demonetization period is not disputed by the assessee. The assessee has deposited a sum of Rs. 56,10,000/- during the financial year 2016-17 relevant to assessment year 2017-18. Out of said cash deposits, a sum of Rs. 13 lakhs has been deposited before demonetization period as accepted by the AO. The balance amount of Rs. 43,10,000/- has been deposited during demonetization period to bank account maintained with State Bank of India and Vijaya Bank. The assessee has filed a detailed cash flow statement right from financial year 2010-11 and up to the date of cash deposit i.e., 24.11.2016, along with opening cash balance as on 01.04.2010 was at Rs. 1,62,550/-. If you go through cash flow statement filed by the assessee, the assessee had shown various cash withdrawals from bank account right from 03.07.2010 to 21.07.2016. In cash receipts, two major sources has been considered. The first source claimed by the assessee is cash withdrawal of Rs. 43 lakhs on 03.07.2010 from her NRO bank account. The assessee has explained reasons for cash withdrawal and as per
:-8-: ITA. No: 671/Chny/2022 &SP No: 10/Chny/2023 which, she want to purchase a property and construct a house thereon. As claimed by the assessee, she had purchased a property for an amount of Rs. 18 lakhs, the balance amount of Rs. 25 lakhs claims to have been kept for construction of property. In the mean time, she had entered into a joint development agreement with builder on very same property and claimed that amount kept for construction of house property was available with her. If you consider cash balance of Rs. 25 lakhs available with the assessee, then she need to explain Rs. 31,10,000/-. The assessee claims to have received a sum of Rs. 20 lakhs towards advance for sale of property, and for this she has filed certain evidences including amount received by way of cheques and credited to her bank account. The assessee had also filed income tax return for the relevant assessment year to prove that she had declared full value of consideration including cash received for sale of property. If you consider above sale advances at Rs. 20 lakhs, she need to explain balance amount of Rs. 11,10,000/-. The assessee has filed a cash flow statement as per which she had cash withdrawal on various dates. If you consider cash withdrawals on 14.02.2012, 14.08.2013, the total cash withdrawal comes to Rs. 13 lakhs which is sufficient to cover balance amount of
:-9-: ITA. No: 671/Chny/2022 &SP No: 10/Chny/2023 Rs. 11,10,000/-. From the above, it is very clear that the assessee has sufficient cash balance in hand out of known source of income which is supported by necessary evidences. The AO and CIT(A) simply rejected explanation furnished by the assessee and cash flow filed for this purpose without assigning any reasons as to how the assessee has deployed cash in hand. In absence of any findings as to utilization of available cash balance, cash in hand cannot be rejected. Therefore, we are of the considered view that the assessee has explained source for cash deposits made during demonetization period and before demonetization period, out of her known source of income and thus, we direct the AO to delete additions made towards cash deposits during financial year 2016-17.
Since, the appeal filed by the assessee is disposed off, Stay petition filed by the assessee becomes infructuous and dismissed.
:-10-: ITA. No: 671/Chny/2022 &SP No: 10/Chny/2023 9. In the result, appeal filed by the assessee is allowed and Stay petition filed by the assessee is dismissed as infructuous. Order pronounced in the court on 12th April, 2023 at Chennai.
Sd/- Sd/- (वी दुगा� राव) (मंजुनाथ. जी) (V. DURGA RAO) (MANJUNATHA. G) �याियकसद�य/Judicial Member लेखासद�य/Accountant Member चे�ई/Chennai, �दनांक/Dated: 12th April, 2023 JPV आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु� (अपील)/CIT(A) 4. आयकर आयु�/CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF