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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
O R D E R
Per Mahavir Singh, Vice President :
This appeal and stay application by the assessee are arising out of the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [CIT(A)] in Appeal No.CIT(A), Chennai-5/10381/2019-20 dated 04-03-2021. The Assessment was framed by Income Tax Officer, Non Corporate Ward- 17(5), Chennai for the relevant A.Y. 2017-18 vide order dated
SA No.15/Chny/2021 :- 2 -: 03.12.2019 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. At the outset, it is noticed that the appeal filed by assessee is barred by limitation by 28 days. The assessee has filed condonation petition along with affidavit stating that the orders of CIT(A) dated 04.03.2021, were received by assessee on 04.03.2021 but the appeals were filed only on 10.06.2021 due to Covid-19 pandemic. It means that there is a delay of 28 days. The ld. AR before us stated that this delay is due to pandemic period of Covid-19 and subsequent events and the Hon’ble Supreme Court in Miscellaneous Application No.665 of 2021 vide order dated 23.03.2020 has given directions that the delay are to be condoned during this period 15.03.2020 to 14.03.2021 and they have condoned the delay up to 28.02.2022 in Miscellaneous Application No.21 of 2022 vide order dated 10.01.2022.
Since the Hon’ble Supreme Court has condoned the delay during the said period, respectfully following the same we condone the delay and admit the appeals.
3. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the addition made by A.O of cash deposit of Rs. 35 Lakh during demonetization period deposited on 28.11.2016.
SA No.15/Chny/2021 :- 3 -: The assessee has raised various grounds and the same reads as under:
“1. The Order of the CIT(A) is contrary to the law, facts and circumstances of the case and in any case violative of the principles of equity and natural justice.
There have been consistent cash withdrawals from the appellant's bank accounts, there are no other material to suggest that there could not be any accumulation of cash withdrawn from the banks. In such circumstances, the CIT(A) could not have ignored these aspects by placing reliance on assumptions and presumptions.
The assessing officer erred in presuming that Rs.35,00,000/- was held for too long a period. It is not holding of Rs, 35,00,000/- for a long period. It is accumulation of cash over that period. This wrong presumption would invalidate the conclusion of the assessing officer. The CIT(A) also did not notice this aspect and thus committed grave error.”
The brief facts of the case are that the assessee is an individual and filed return of income for the relevant A.Y 2017-18 on 31.03.2018 declaring taxable income at Rs. 5,12,880/-. The assessee’s case was selected for limited scrutiny under CASS for the reason that the cash deposits during demonetization period. According to A.O, as per information available, the assessee made cash deposit of Rs. 35 Lakh in SBI, Thirumangalam Branch during demonetization period and hence, the assessee was asked to explain the cash deposits made along with sources. The assessee filed letter explaining the source which reads as under:
“The cash deposits was my earnings from January 2012 to June 2015 which I earned I was working in U S. The cash deposit was used to close my home loan before marriage. I have already attached the income statement which I received in US.”
Subsequently, the A.O also issued show cause notice dated 27.11.2019 requiring the assessee to explain the cash deposits made at Rs. 35 Lakhs and as to why the same should not be treated as unexplained investment u/s. 69 of the Act. The assessee in response to the show case notice stated that cash withdrawn from bank from May, 2012 to November, 2016 was the source for the above cash deposit made during demonetization period. The A.O was not convinced with the explanation of assessee and he added the cash deposit made during demonetization period amounting to Rs. 35 Lakh as unexplained investment added u/s. 69 of the Act. Aggrieved, the assessee preferred an appeal before the CIT(A).
The CIT(A) after considering the submissions of the assessee upheld the addition made by A.O by giving reasoning that human probabilities does not adhere to the action of the assessee that he was withdrawing the amounts systematically and accumulating and keeping cash to the extent of Rs. 35 Lakh for 3 to 4 years. According to CIT(A), the cash withdrawn was periodically and systematically which shows a pattern for regular monthly drawing and household expenses. Hence, he confirmed the addition by observing in para 8.1 to 8.2 as under:
SA No.15/Chny/2021 :- 5 -: “8. I have carefully considered the facts mentioned in the assessment order and the submissions of the appellant. During the assessment proceedings, it was seen that the assessee had made cash deposits of Rs.35,00,000/- in SBI, Thirumangalam Branch during the demonetization period. The assessee explained that the cash deposits represent her earnings from January 2012 to June 2015 which she earned while working in USA. She had attached the income statement to substantiate her earnings in USA. It was also submitted that cash deposit was made to close her home Ioan before marriage. The assessee also filed details of cash withdrawal from bank from May 2014 to November 2016 as source of the cash deposits before the AO. The AO did not accept the submissions made by the assessee and held that she is not having any evidence to show source of cash deposited in her bank account. As per AO, no prudent person would hold cash in hand for too long a period which is against the human probabilities and hence the AO added Rs.35,00,000/- deposited during the demonetization period u/s.69 of the Income-tax Act.
8.1 During the appellate proceedings, more or less the same explanation as submitted before the AO was filed by the appellant. The appellant has claimed that she was working in USA with Tata Consultancy Services from 2012 to 2015 and her father withdrew cash out of remittances made by the appellant from USA to India and accumulated it for her marriage expenses and for purchasing a small piece of land over the period from 2012 to 2016.After demonetization was announced, appellant had to deposit Rs.35,00,000/- in her bank account. The appellant further stated that she had filed bank statements during the assessment proceedings from the year 2014 onwards. Subsequently, she obtained bank statements for the year 2012 and 2013. As per appellant, there was periodical and systematical cash withdrawal from the appellant's bank account over the period 2012 to 2016. The cash withdrawals are commensurate to cash deposits during demonetization period and would also cover the monthly household expenses of appellant's parents. There was no material credits in the said bank account other than salary and remittances from US and savings of Rs.35,00,000/- could not be said to be against the human probabilities Considering the age of the appellant, her sister both due to marriage and it was also for the purchase of small land which was proved by ultimate end use of cash deposited into the bank account. The appellant had submitted a table narrating supporting documents which are related to various aspects of the explanation given by the appellant. The assessee has also filed elaborate submission on rate of tax u/s.115BBE and claimed that the same can be applied to transactions post 15.12.2016 and submitted that if for any reason addition made by the AO u/s.69 is Sustained .then the rate of tax can be only 30%o and not 60% as per amended section 115BBE. Considering the entirety of facts as mentioned above, I am of the view that the AO is justified in holding that the appellant had no evidence or plausible reasons /
SA No.15/Chny/2021 :- 6 -: explanations to explain and prove the source of cash deposited in the bank account. It is a matter of common knowledge that keeping money in the bank account is a safer mode than withdrawing and accumulating and keeping cash and that too huge money to the extent of Rs.35,00,000/- in the residence/house. Further cash withdrawn periodically and systematically show a pattern of requirement of cash for regular monthly drawings and household expenses. There is no denial that she was working in USA and she had remittances. however, once cash in withdrawn from the bank account periodically and systematically, it will be presumed to have been consumed towards monthly household expenses or some other personal uses. The appellant is unable to prove the accumulation out of cash withdrawal. She has not demonstrated the quantum/requirement of monthly drawings and household expenses for the family and how that was sourced/financed in the period 2012 to 2016. Neither the total drawings of the parents or the family members are known to the undersigned. The appellant has not submitted any evidence or documents during the appellant proceedings other than making claims as narrated above.”
Further, the assessee before CIT(A) also raised the issue of taxability @60% and non applicability of the provisions of Sec.
115BBE of the Act. The CIT(A) stated that the amended section is made applicable w.e.f 01.04.2017 and hence, he was rightly charged tax u/s 115BBE of the Act for the relevant A.Y 2017-18. The CIT(A) observed in para 8.3 as under:
“So far tax rates u/s. 115BBE is concerned, it is found that the amended section was applicable with effect from 01.04.2017 and the case of the appellant relates to assessment year 2017-18 itself. Therefore, the A.O had rightly invoked tax rates as per section 115BBE.”
Aggrieved on both the counts, the assessee came in appeal before the Tribunal.
We have heard rival contentions and gone through the facts and circumstances of the case. We noted from the arguments of the SA No.15/Chny/2021 :- 7 -: assessee, who filed written submissions and summary of cash withdrawal to explain cash deposits of Rs. 35 Lakhs. According to assessee, it maintains saving bank account with SBI bearing A/c.
No.22075862195 which was submitted before A.O as well as before CIT(A) for the period from June, 2012 to December, 2016. The assessee tabulated the cash withdrawal at Rs. 38.99 Lakh as under:
Year Cash withdrawn 2012 12,44,800.00 2013 8,45,900.00 2014 11,08,500.00 2015 4,61,400.00 2016 2,39,300.000 Total 38,99,900.00
It was stated by Ld. counsel that the assessee has joint bank account with her father Mr. Anbumani C.R bearing A/c.
No.10313742633 maintaining with SBI. This was also filed before the A.O and now in his paper book. From the details filed regarding cash withdrawal from assessee’s bank account, it seems that there is a systematic cash withdrawal, the details are attached in assessee’s written submissions and paper book at Page Nos.3 to 6 and statement of bank account also enclosed at Page Nos.7 to 16. The assessee also enclosed cash withdrawals from joint bank account at Page Nos.
17-19. The Ld. counsel for the assessee claimed that the total
SA No.15/Chny/2021 :- 8 -: withdrawal from both the accounts during the period 2012 to 2016 is at Rs. 56,44,100/-. The assessee tabulated the same in written submission as under:
Cash withdrawn from SBI A/c No.22075862195 Rs. 38,99,900 Cash withdrawn from SBI A/c No.10313742633 (Joint Rs. 17,44,200 Account) Total Rs. 56,44,100
The Ld. Sr. D.R vehemently supported the order of the A.O and that of the CIT(A).
After hearing rival contentions, we noted that the main plank of the assessee is that the amounts were withdrawn from the bank accounts i.e., the assessee’s bank account and also joint bank account out of which this Rs. 35 Lakh was deposited during demonetization period. The simple explanation of the assessee is that she through her father withdrew cash out of the remittances made by assessee from USA to India and accumulated it for her marriage expenses as well as for purchasing a small piece of land over the period from 2012-2016. The Ld. counsel for the assessee now before us could not contradict and controvert the findings given by CIT(A) that the cash withdrawn periodically and systemically shows a pattern of requirements of cash of regular monthly drawings and household expenses. In view of the decision of Hon’ble Supreme Court in the case of CIT v. Durga Prasad More [1971] 82 ITR 540, 545, 547 (SC),
SA No.15/Chny/2021 :- 9 -: wherein it was held that apparent must be considered real until it is shown that there are reasons to disbelieve that the apparent is not the real and that the taxing authorities are entitled to look Into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. Similarly, the Hon’ble Supreme Court in the case of Sumati Dayal v. CIT (1995)
214 ITR 801, 806, 808-09 (SC) held that certain amounts were credited in the capital account of the assessee in her books of account for the assessment years 1971-72 and 1972-73. The assessee offered her explanation about the said receipts being her winnings from races.
The dispute was whether the receipts were really the winnings of the assessee from the races. This raises the question whether the apparent can be considered as real.
In the present case before us also, as laid down by the Hon’ble Supreme Court in above two cases, we are of the view that the assessee is unable to prove that the cash withdrawal was not utilized for the purpose of regular household withdrawal, whereas actual entry shows that cash withdrawn periodically and systematically, which clearly shows a pattern of requirement of cash for regular monthly drawings and household expenses. Hence, we affirm the order of CIT(A) and dismiss this issue of assessee’s appeal.
Coming to plea of the assessee that the provisions of Sec.115BBE of the Act will not apply to the case of the assessee, because it was inserted by the Taxation Laws (Second Amendment)
Act, 2016, which received the assent of the President only 15.12.2016 and therefore, it will apply only from A.Y 2018-19 and not for A.Y 2017-
For this, the assessee has raised following Ground No.4:
“4. It is pertinent to note that tax at 60% was inserted in Section Sec.115BBE by Taxation Laws (Second Amendment) Act, 2016, which received the assent of the President only 15.12.2016 and therefore, it will apply only from Asst. Year 2018-19 and in any case, it will not apply to transactions happened before 15/12/2016.”
We noted that substitution by the Taxation Laws (Second Amendment) Act, 2016 w.e.f 01.04.2017 is made applicable far and from A.Y 2017-18 and assessee’s case hence, squarely falls under the amended provision. Hence, CIT(A) has rightly held that this provision will apply to the assessee for the relevant A.Y 2017-18. We find no infirmity in the order of CIT(A) and this issue of assessee’s appeal is also dismissed. Hence, this appeal of assessee is dismissed.
S.A No.15/Chny/2021: 15. Since we have heard the appeal and decided, the stay application of the assessee becomes infructuous and hence dismissed.
16 In the result, the appeal of the assessee is dismissed and the Stay Application of the assessee is also dismissed as infructuous.
Order pronounced on 24th February, 2023.