MR . RAKESH MAHESH MANIAR,USA vs. CIT ( A ) - 16, CHENNAI

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ITA 824/CHNY/2022Status: DisposedITAT Chennai08 March 2023AY 2017-20185 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found the assessee's explanation regarding the source of cash withdrawals not entirely credible. It estimated that Rs. 6.00 lakhs could be explained as savings by the parents, while the remaining Rs. 6.50 lakhs was treated as unexplained.

What were the facts?

The assessee, a non-resident, deposited Rs. 12.50 lakhs in cash into his Indian bank account during the demonetization period. He claimed the cash was withdrawn by his father over several years for his parents' medical expenses and personal use.

What were the issues?

Whether the cash deposited in the bank account during demonetization was adequately explained by the assessee's claim of prior cash withdrawals for family expenses.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ /SMC BENCH, CHENNAI

Before: SHRI MAHAVIR SINGH, VICE-

Hearing: 08.03.2023

: Mr. V.Balaji, Advocate अपीलाथ�क�ओरसे/ Appellant by : Mr. S.Chandrasekaran, JCIT ��यथ�क�ओरसे/Respondent by : 08.03.2023 सुनवाईक�तार�ख/Date of hearing 08.03.2023 घोषणाक�तार�ख /Date of Pronouncement : आदेश / O R D E R

This appeal filed by the assessee is arising out of order of the Commissioner of Income Tax (Appeals)-16, Chennai dated 28.07.2022. The assessment was completed by the Income Tax Officer, International Taxation Ward, Coimbatore for the relevant assessment year 2017-18 u/s.143(3) of the Income Tax Act, 1961 (hereinafter “the Act”) vide order dated 17.10.2019.

2.

The only issue in this appeal of the assessee is as regards to order of the CIT(A) confirming action of the Assessing Officer in making addition of Rs.12.50 lakhs cash deposited in NRO bank account No.034201075848 maintained by the assessee with ICICI bank, R.S.Puram, Coimbatore during demonetization period in specified bank notes. For this issue, the assessee has raised various grounds which are argumentative and factual, hence, need not be reproduced.

3.

The brief facts are that the assessee is a non-resident individual and employed in reputed organization Novartis and since November, 2020 at Merck Sharp and Dhome (MSD) in USA. The assessee filed his return of income for relevant assessment year 2017-18 on 26.03.2018 admitting total income at Rs.18,225/- being income from house property. The assessee’s case was selected in CASS for scrutiny assessment for the reason that the assessee has made cash deposit to the tune of Rs.12,50,000/- in his bank account No.034201075848 maintained with ICICI bank, R.S.Puram, Coimbatore. The Assessing Officer required source of cash and the assessee explained in his reply as under:-

“4. Source for cash deposit: I would like to state that the US earned income had been transferred in smaller denominations to my India account. I authorized my parent and wife to operate these accounts. My father always for security/safety reasons withdrew cash in smaller denominations within a shorter period of time regularly and kept in our house for emergency use such as medical ailments for which we had to be prepared financially to intervene. As you will note in the enclosed attachment that my parents had chronic medical ailments requiring periodic medical interventions. During the last 6 years, a sum of Rs 34,61,500/- of cash withdrawn from my account by my father (table enclosed) out of which Rs 12,15,000/- were credit back to my account during the demonetization period."

6. The assessee is claiming that his father had been withdrawing cash for security/safety reasons. In this connection, it is to be noted that any prudent person will not withdraw and accumulate cash in hand to the extent of Rs 12,50,000-.”

4.

The Assessing Officer noted that cash withdrawal started from 2011 till 11.07.2016 claimed to have been Rs.34,61,500/- in cash for last six years, out of which cash of Rs.12,50,000/- was deposited. According to the Assessing Officer, the money was utilized for personal expenditure i.e. withdrawal and hence, source of cash deposits made on 22.11.2016 during demonetization period in specified bank notes cannot be accepted and hence, the Assessing Officer added this cash deposit of Rs.12.50 lakhs as unexplained money u/s.69A r.w.s 115BBE of the Act. Aggrieved the assessee preferred an appeal before the CIT(A).

5.

The CIT(A) confirmed action of the Assessing Officer by observing in para 4.3 as under:- “4.3 I have carefully considered the matter. In the ground of appeal, assessee stated that he had transferred Rs.1.5 crore to his Indian account from which there was withdrawal of Rs.34,00,000. That sum was stated to be the source of cash deposited during demonetisation. But as stated by the AO, the assessee has not shown any cash withdrawals from bank account within short period before announcement of demonetisation. Assessee also stated that his father had chronic health issue for which money was withdrawn for meeting medical expenses. If that was the fact, it is unlikely that nearly 50% of cash stated to have been withdrawn remained unspent. There should be evidence to. show that substantial amount of cash was withdrawn within reasonable period before demonetization was announced. The claim of assessee is not supported by human probability. In absence of any plausible explanation regarding the source of cash deposited, there is no option but to reject ground taken.”

Aggrieved, now the assessee is in appeal before the Tribunal

6.

I have heard rival contentions and gone through facts and circumstances of the case. The assessee in his paper book has tabulated withdrawals made in cash, which started from 01.04.2010 and ending on 31.03.2016 total withdrawals of Rs.34,61,500/- that means, withdrawal made by the assessee is in last six years and withdrawals ranging from Rs.3,000/- to 15,000/- i.e., Rs.10,000/-, 5,000/-, 15000/-, 7000/- like that.

Now, can we presume or accept explanation of the assessee that the assessee has not spent the amount for his parents personal withdrawals, because the assessee is unable to show that his parents has made any withdrawal or they have any source of income from where they have met with personal expenses. Going by nature of withdrawals and taking human probabilities into consideration, I am of the view that these withdrawals cannot be treated as explained in entirety. There may be some element of savings and accordingly, I estimate that both assessee’s father and mother might have saved Rs.3.00 lakhs each. Accordingly, I treat explained cash at Rs.6.00 lakhs and balance amount of Rs.6.50 lakhs is to be treated as unexplained. In term of above, I partly allow appeal of the assessee.

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