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Income Tax Appellate Tribunal, ‘C’ (SMC
Before: SHRI MAHAVIR SINGH
आदेश /O R D E R This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Appeal No.CIT(A), Coimbatore – 2/101140/2017-18 dated 18.08.2022. The assessment was framed by the Income Tax Officer, Non-Corporate Ward 2(2), Coimbatore
- 2 - for the assessment year 2015-16 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 28.12.2017.
At the outset it is noticed that this appeal is barred by limitation by 35 days. The impugned appellate order of CIT(A) was received by assessee on 13.08.2022 and appeal was to be filed within 60 days i.e., 16.10.2022 but actually the appeal was filed only on 21.11.2022 thereby there was a delay of 35 days. The assessee has filed affidavit for condonation of delay stating that the delay had occurred because mistake committed by the office of Chartered Accountant that the order was sent to the office of the counsel by the chartered accountant only in the middle of November,2022 and thereby the appeal was filed only on 21.11.2022. The before CA committed this mistake and affidavit states as under:- “I state that the mistake committed in the office of the Chartered Accountant had resulted in filing the appeal belatedly by 35 days and I state that the office of the Chartered Accountant had completely missed the time line prescribed under the Act for filing the appeal inasmuch as I state that the order was sent to the order of the counsel on record at Chennai during the middle of November 2022 and I state that the appeal papers were prepared and sent immediately on 16.11.2022 for getting my signature. However, I state the appeal was filed on 21.11.2022 belatedly by 35 days which was beyond my control”.
When the above reason was confronted to ld. Senior DR, he could not controvert the above fact situation. After going through the - 3 - reasons given in the affidavit stating the reasons for delay of 35 days, I feel the cause as reasonable and hence, condone the delay and admit the appeal.
The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the addition made by AO of unexplained cash deposit made by AO by invoking the provisions of section 68 of the Act, for an amount of Rs.24,00,000/-. For this, assessee has raised various grounds which are argumentative and factual and hence, need not be reproduced.
Briefly stated facts are that the AO during the course of assessment proceedings noticed that the assessee has made cash deposit to the tune of Rs.25,61,000/- in his savings bank account maintained with Canara Bank, Pasurr during the financial year 2014- 15 relevant to this assessment year 2015-16. The AO also noted that the assessee has deposited a sum of Rs.12,81,000/- during demonetization period. During the course of assessment proceedings, the assessee was asked to furnish details of source of cash deposits vide letter dated 01.04.2017. The assessee furnished copy of cash book for the financial year 2014-15 and stated that the assessee had received advance to the tune of Rs.24,00,000/- from - 4 - three persons i.e., Rs.8,00,000/- from each of Shri P. Karthikeyan, Shri P. Sakthivel and Shri M. Muthukar. The assessee explained that these three persons has entered into agreement on 11.09.2014 with the assessee for purchase of assessee’s agricultural land at Punjaikilambadi Village at Erode District. The assessee claimed before the AO that the source of cash deposit of Rs.24,00,000/- is out of advance received from these three persons. The AO noted that the sale agreement dated 11.09.2014 clearly reveals tht the document / agreement was not registered and it is valid only for 11 months from 11.09.2014 to 11.08.2015. The assessee before AO admitted that till date, the assessee is holding advance and no interest was paid. Hence, the AO required the assessee to produce these parties and these parties deposed before the AO admitting advancing the amount of Rs.8,00,000/- each. The AO examined these parties on 19.12.2017 during the course of assessment proceedings and he narrated the gist of the statement recorded, which reads as under:- (i) P. Karthikeyan,, a Senior citizen, indulged in agricultural activities, claimed to owner of 15 acres of land, stated that his average income per annum is around 2 to 3 lakhs after meeting all expenses. The savings is usually deposited in Co-operative credit society account. Said to have advanced Rs 6 lakhs out of savings, by way of cash, after withdrawal from credit society. Further, submitted that though there delay in finalising the sale, due to problem in getting encumbrance certificate, never opted to go against the assessee legally, no interest received from assessee Shri.V S
- 5 - Shanmughasundaram. Submitted that he will produce proof of agricultural land holdings, pass book, within four days.
P.Sakthivel : He is having only agricultural income. No PAN/Not: filed return. No land in his name. His grand father and mother said to be owner of 5 acres of land and deriving income 4 to 5 lakhs per annum. Not maintaining any bank accounts. He used to keep money at home and used to give hand loans to friends and relatives, He had advanced to Sri V S Shanmughasundaram, the assessee, Rs 8 lakhs out of his past savings which was repaid by his relatives who had taken hand loan from him. No evidences produced for land holdings, nor convincing evidences to prove that he enjoys the entire agricultural income said to have derived from his grand father's and mother's land. Further stated that his annual expenditure is only Rs. 48,000/-. He is said to have been residing with his parents, elder brother, brother's wife and his son. Also he had incurred Rs. 60,000/- towards meeting the expenditure in connection with an accident of his brother, which is a pointer to the fact that his brother is also a dependent/or a share holder in the agricultural earnings said to have made by him. It is not known, as to how he could meet the expenses of the entire family members with the meagre sum of Rs. 48, 000/annum. He submitted that he is not having any documentary evidences in support of the hand loan advanced to/returned by his relatives. He further, stated he intended to do agricultural activities in the proposed land to be purchased from Sri V S Shanmughasundaram, for Rs.30,40,000/-, which no prudent agricuiturist will venture into, with such a high investment. Further, as there was defect in parent document, the sale did not materialise. However, he neither took any interest for the amount advanced nor intended to go against Sri V S Shanmugasundaram for the delay in sale.
(iii) M.Muthukumar: Said to be owner of 3.2acres of land. He is deriving an average income per year around Rs. 1.5 lakhs from out of 10 acres of family agricultural land, inclusive of the land holdings in his name. He is staying with his father, wife and two children who are studying. His average annual expenses per annum is around Rs. 1 lakhs, including education of children fee of Rs. 30,000/p.a., LIC policy of Rs.18,000/p.a, maintenance and fuel expenses of alto car, and house hold expenses (For five members of his family) totaling to Rs. 42,000/p.a. and car insurance of Rs. 2,100/p.a.etc. He is said to be having an account with credit society account. Karumnandampalayam and also having an SB account in wife's name with minimum balance. He stated that out of proceeds of papaya amounting to Rs. 6 lakh, savings Rs. 1 lakh and loan amounting to Rs. 1 lakh, he had - 6 - advanced, for purchase of land, to Sri VS Shanmugasundaran and neither received any interest nor preferred to go against him legally during the last three years. He also planned to do agricultural activities after the proposed purchase of land. It is not known as to how he could advance this much amount, from mere balance of Rs. 50,000/- per annum (Rs. 1.5 lakhs agri income (minus) Rs. 1 lakhs expenses/annum) and also he planned to do agricultural activity in the new land proposed to be purchased from which he may derive a very meagre income as per the pattern on income he derived during the last four years from his agricultural activities. Further, it is not convincing, as to how an agriculturist who is deriving such a meagre income, could forgo an interest which Would have been a substantial sum. He had not produced the documents in Support of agricultural holdings, pass book, loan availed from bank, papaya sale receipts etc, though he had promised that it will be furnished within four days i.e 23/12/17, which itself lead to a conclusion that he is not in possession of any evidences to support his claims.
The AO has not accepted the explanation of the assessee and made addition of unexplained cash deposit in the bank account of Rs.24,00,000/- as unexplained cash credit u/s.68 of the Act. Aggrieved, assessee preferred appeal before CIT(A).
The CIT(A) also confirmed the action of the AO on the basis of findings recorded by AO as well as considering human probabilities. Aggrieved, assessee came in appeal before the Tribunal.
I have heard rival contentions and gone through facts and circumstances of the case. The assessee reiterated the same arguments that the parties were produced for examination who admitted to have advance a sum of Rs.8,00,000/- each of them on - 7 - the basis of agreement to sale for purchase of agricultural land of the assessee. The assessee also argued that the sale as per agreement i.e., sale of agricultural land did not take place due to certain pending issues and since, money has not been returned by the assessee to these three persons till date and no interest was paid to these parties, the AO simply on suspicion has added the amount advanced by these three persons as unexplained cash credit u/s.68 of the Act. Admittedly, all these three persons are farmers and agriculturists as Shri P. Karthikeyan is owner of 15 acres of agricultural land earning income per annum around Rs.2 to 3 lakhs. Similarly, Shri P. Sakthivel is also agriculturists and his grandfather and mother was owner of 5 acres of land and he is cultivating the same and deriving income to the tune of Rs.4 to 5 lakhs per annum. Similarly, Shri M. Muthukumar, is owner of 3.2 acres of land and arriving an average income per year around Rs.1.5 lakhs and also owns 10 acres of family agricultural land which includes the land owning in his name of 3.2 acres. These three persons admittedly have accepted having advanced a sum of Rs.8,00,000/- for purchase of agricultural land in lieu of purchase agreement dated 11.09.2014. All the three cash creditors admitted that still the advance is pending and sale has not become finalized. But the assessee has also not - 8 - backed out from this agreement with these three persons and he is ready to get this sale deed done for this agricultural land.
6.1 When these facts were confronted to ld. Senior DR, he only relied on the assessment order and the order of the CIT(A) and stated that this is a make belief story just to explain the source of cash deposit of Rs.24,00,000/-. According to ld. Senior DR, the alleged agreement which is unregistered was cancelled and it was valid only for 11 months from the period 11.09.2014 to 11.08.2015. Hence, he asked the Bench to confirm the orders of the lower authorities and addition be sustained.
After hearing both the sides, I have perused the assessment order, the order of CIT(A) and other case records. I noted in the case of Shri P. Karthikeyan who is holding agricultural land of 15 acres and stated to have agricultural income, admitted an oath before AO on 19.12.2017 that his average income per annum is around 2 to 3 lakhs. This way, he has saved six lakhs and after withdrawing from society as well as cash kept at home, he entered into purchase of agricultural land of the assessee and advanced a sum of Rs. 8 lakhs. The agricultural income was not denied and he has explained source as he is the owner of agricultural land of 15
- 9 - acres which was not controverted by AO in his assessment order or CIT(A) or now by the Senior DR before me, except creating some suspicion. I accept this credit as explained for the reason that the assessee has sources of earning i.e., agricultural income from 15 acres of land. Hence, addition of Rs.8,00,000/- of cash credit of Shri P. Karthikeyan is deleted hereby.
7.1 Coming to second cash credit from Shri P. Sakthivel, I noted that the assessee has no agricultural land but his grandfather and mother was owner of 5 acres of land and deriving income to the tune of Rs. 4 to 5 lakhs per annum. Similarly Shri M. Muthukumar is owner of 3.2 acres of land and both have admitted to have advanced a sum of Rs.8,00,000/- each to the assessee for purchase of his agricultural land vide agreement dated 11.09.2014. Going by the ownership of land that Shri P. Sakthivel’s grandfather and mother was the owner of 5 acres of land and Shri M. Muthukumar is owner of 3.2 acres of land, it is not possible to have accumulated Rs.8,00,000/- each for advancing this amount for purchase of land. However going by the status and holding of land, I estimate that both might have saved a sum of Rs.4,00,000/- each and advanced these for purchase of land to the assessee. I estimate the balance undisclosed income at Rs.8,00,000/-. Accordingly, I estimate the - 10 - explained money of these two cash credits namely Shri P. Sakthivel and Shri M. Muthukumar of Rs.8,00,000/- and balance Rs.8,00,000/- to be treated as unexplained. Therefore, I direct the AO to accept the sources of cash deposit of Rs.16,00,000/- out of Rs.24,00,000/- as discussed above and make addition of Rs.8,00,000/- as unexplained cash credit u/s.68 of the Act.
In the result, the appeal filed by the assessee is partly-allowed.
Order pronounced in the open court on 7th March, 2023 at Chennai.