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Income Tax Appellate Tribunal, HYDERABAD BENCH “A-SMC”, HYDERABAD
Before: SHRI A. MOHAN ALANKAMONY
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “A-SMC”, HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER Assessment Year:2007-08 K. Narayana Reddy, Vs. Income Tax Officer, Hyderabad. Ward-4(3), PAN: ABCPK 8102 C Hyderabad. (Appellant) (Respondent) Assessee by: Sri A.V. Raghuram Revenue by: Sri Nilanjan Dey, DR Date of hearing: 04/02/2020 Date of pronouncement: 30/06/2020 ORDER
This appeal is filed by the assessee against the order of the Ld. CIT(A)-3, Hyderabad in appeal No. 0282/CIT(A)-3/16-17, dated 07/02/2017 passed U/s. 143(3) r.w.s. 147 & U/s. 250(6) of the Act for the AY 2007-08.
The assessee has raised several grounds in his appeal however, the cruxes of the issues are as follows: -
(i) The Ld. CIT (A) has erred in upholding the validity of the proceedings-initiated u/s. 147 of the Act.
(ii) The ld. CIT (A) has erred in upholding the order of the Ld. AO who had made addition of Rs. 10,43,352/- by treating the cash deposited in the bank account as income from unexplained source.
The brief facts of the case are that the assessee is an individual engaged in the profession as Advocate filed his return of income on 24/09/2007 declaring total income of Rs. 1,04,850/-. The return was processed U/s. 143(3) of the Act on 22/5/2009 and the income was assessed at Rs. 1,24,850/-. Subsequently, the case of the assessee was reopened U/s. 147 of the Act and assessment was completed U/s. 143(3) r.w.s 147 of the Act on 30/01/2013 wherein the Ld. AO made addition of Rs. 10,43,352/- being the cash deposited in Savings Bank Account No.774 maintained with Corporation Bank against which source was not explained. On appeal, the Ld. CIT (A) confirmed the addition by observing as under: -
“4.2. As far as the cash deposits of Rs. 10,43,350/- is concerned the appellant submitted that these deposits belongs to HUF. To this effect the appellant also produced a copy of certificate issued by Corporation Bank stating that “ this is certify that Sri K. Narayan Reddy S/o. K. Chandra Reddy resident of H.No.2-2-18/41/A/5, DD Colony, Baghamberpet, Hyderabad- 13 is our SB account holder with bearing No. 774 which is of HUF type”. However the bank Manager did not give any reasons as to how he concluded that the account is HUF type. Admittedly the appellant did not maintain any books of accounts. The basis of filing his return of income is also not clear. There is no correlation between amounts shown in the return of income and the huge transactions reflected in his bank accounts. The appellant claims that the cash belongs to HUF and HUF does not have any other income other than agricultural income, therefore no return was filed. However the SB A/o. 774 reflects huge transactions both in check as well as ini cash which can not be explained with agricultural income alone. If this account belongs to HUF it needs to explain / own up all the transactions both in cheque and also in cash. It was further explained that the appellant received amounts as under on sale of lands which were used as sources for explaining cash deposits of Rs. 10,43,350/-. Date Amount 15/11/2003 Rs. 14,95,000 15/07/2004 Rs. 16,44,500 However, the appellant did not produce any sale deeds, did not produce any bank accounts evidencing such deposits, did not produce any evidence as to how amounts received in 2003 & 2004 can explain the cash deposit in 2006-07. However from verification of assessment record it is noticed that the appellant produced pattedar pass books that he owned 35 Acres of agricultural land, out of which 4 acres is irrigated land and the balance 31 Acres is dry land. The agricultural income shown in the return of income was Rs. 40,000/-. Even this income of Rs. 40,000/- was considered by Assessing Officer towards explaining deposit of Rs. 24,74,724/- in account No. 1579. All the known sources of income of the appellant, professional income rental income, agricultural income were all considered by AO for explaining cash deposits of Rs. 24,74,724/-. There is nothing on assessment record or in appeal record to suggest that the HUF status exists. Therefore, I decline to interfere with the addition made by the AO of Rs. 10,43,352/-“.
Before me, the Ld. AR submitted that the assessee’s family is a joint Hindu Undivided Family. He further submitted that the family owned 35 Acres of Agricultural Land and substantial agricultural derived from the same was routed through the assessee’s bank account. The Ld. AR further submitted the amount that was deposited in the bank account was occasionally withdrawn and when not utilised the same was re-deposited in the bank account. The Ld. AR also furnished the bank statement of A/c No. 774 for the period 03/04/2006 to 30/3/2007 to justify his stand. The Ld. AR also pointed out that the assessee’s family had negotiated the sale of some of their agricultural land and advance amount of Rs. 15,25,000/- was received and the same was disclosed to the Revenue in the return filed which partially explained the source for the cash deposit of Rs. 24,74,724/- in the other bank account maintained by the assessee. The Ld.AR further argued by stating that the assesse’s HUF also derives substantial agricultural income from the agricultural land owned. It was therefore pleaded that the addition made by the Ld. AO which was further confirmed by the Ld. CIT (A) is not justified. The Ld. AR also vehemently argued by stating that the assessment in the case of the assessee was completed U/s. 143(3) of the Act on the previous occasion on 22/05/2009 and therefore reopening of the assessment once again is not justifiable. It was therefore prayed that the order of the Ld. AO may be quashed.
Ld. DR on the other hand relied on the orders of the Ld. Revenue Authorities and vehemently argued in support of the same. Accordingly, he requested for upholding the orders of the Ld. Revenue Authorities.
I have heard the rival submissions and carefully perused the materials on record. For the better understanding of the facts of the case I have extracted herein below the details of the cash deposits and withdrawals in the assessee’s bank account No.774 maintained in Corporation Bank (paper book page No. 18 to 25) which is the main issue in the appeal:-
A B C D E F G Sl Date Cash Cash cash in Remarks No. deposit withdrawals hand (Rs.) (Rs.) from bank (Rs.) 1 06/04/2006 Self 2,00,000 2 17/04/2006 Self 10,000 3 17/04/2006 Self 50,000 4 19/04/2006 Self 40,000 5 25/04/2006 Self 50,000 6 27/04/2006 Self 50,000 7 28/04/2006 2,00,000 2,00,000 (∑1E to 6E – 7D) 8 10/05/2006 Self 10,000 9 16/05/2006 Self 1,50,000 3,60,000 (∑8E & 9E + F7) 10 18/05/2006 70,000 11 20/05/2006 50,158 2,39,842 F9-(∑10D +11D) 12 27/05/2006 Self 1,00,000 3,39,842 (F11 + E12) 13 30/05/2006 7,000 3,32,842 (F12 - D13) 14 31/05/2006 Self 10,000 15 08/06/2006 Self 40,000 16 14/06/2006 Self 25,000 17 20/06/2006 Self 50,000 18 29/06/2006 Self 2,00,000 19 06/07/2006 Self 1,00,000 20 11/07/2006 Self 2,50,000 21 12/07/2006 Self 40,000 10,47,842 (F13 + E14 to E21) 22 13/07/2005 35,000 23 14/07/2006 1,62,294 24 17/07/2006 50,000 8,00,548 F21-(∑D22 to D 24) 25 18/07/2006 Self 1,20,000 26 29/07/2006 Self 1,61,000 10,81,548 F24 + E25 to E26) 27 4/08/2006 25,000 10,56,548 (F26 -D27) 28 7/08/2006 75,000 29 7/08/2006 Self 25,000 30 29/08/2006 Self 20,000 31 31/08/2006 Self 60,000 32 28/09/2006 Self 5,000 33 29/09/2006 Self 15,000 34 03/10/2006 Self 25,000 35 12/10/2006 Self 30,000 36 12/10/2006 Self 50,000 37 17/10/2006 Self 20,000 13,81,548 F27 + (∑D28 to D37) 38 19/10/2006 1,07,400 12,74,148 F37 – D38 39 24/10/2006 Self 50,000 13,24,148 F38 + E39 40 31/10/2006 44,000 12,80,148 F39 – D40
41 08/11/2006 Self 50,000 13,30,148 F40 + E41 42 15/11/2006 1,20,000 43 02/01/2007 2,500 44 07/02/2007 70,000 45 22/02/2007 1,00,000 10,37,648 F41 –(∑D42 to D45) 46 Total 10,43,352 20,81,000
From the above table it is apparent that the assessee’s cash balance in hand (Column F) is always surplus which explains the source for the bank deposit. Further it cannot be presumed that whatever amount the assessee withdrew from the Bank is fully utilised during the course of his profession or with respect to his agricultural activities. Moreover, it is very clear from the table above that out of aggregate cash withdrawal of Rs. 20,81,000/- the assessee has re-deposited cash aggregating to only Rs. 10,43,352/-. Therefore, it is clear that out of the entire cash withdrawal from the bank the assessee had utilized almost fifty percent of the same and re-deposited the balance in the same bank account. It is also not disputed that assessee’s family is in possession of vast extent of agricultural land earning agricultural income. Moreover, the substantial amount credited to the bank account of the assessee are other than the cash transactions i.e., mainly through clearing and bank transfers. These transactions appear to be duly accounted because the revenue has not raised any queries regarding the same. The Ld. CIT (A)’s contention that the Ld. AO has taken into consideration of agricultural income earned by the assessee with respect to the amount deposited in the assessee’s another bank account No. 1579 amounting to Rs. 24,74,724/- is not appreciable because it was well explained by the assessee that the assessee’s HUF had received advance as a result of sale negotiation of some of their agricultural land which itself works out to Rs. 15,25,000/. The assessee has also submitted the return of income wherein such facts were furnished to the Revenue (paper Book page No. 10 to 12). It also appears that the assessee has submitted the particulars from whom the advance was received but, the Ld. AO has simply brushed it aside by stating that the advance received by the assessee was during the earlier years and the same could not have been retained by the assessee for so long without effecting the sale of the land. When the particulars of the buyers who had advanced cash to the assessee for purchase of their HUF property was furnished, it would have proper on the part of the Ld. AO to examine them and thereafter arrived at the conclusion. It also appears that the Ld. CIT (A) has simply endorsed the order of the Ld. AO. The Revenue has also failed to examine the agricultural income earned by the assessee from the thirty five acres of agricultural owned by the assessee’s HUF before arriving at their decisions that the bank deposit made by the assessee are from undisclosed income. Further, it is also apparent that the assessee is also engaged in the profession as an Advocate earning income from his profession which is disclosed in his return of income year after year. Considering all the above facts and circumstances of the case of the assessee, I am of the considered view that the addition made for Rs. 10,43,352/- in the hands of the assessee which is further sustained by the Ld. CIT (A) is not warranted. Therefore, I hereby direct the Ld. AO to delete the addition made for Rs. 10,43,352/- in the case of the assessee towards unexplained source of bank deposit during the relevant assessment year. Since I have decided the appeal on merits, I have restrained from addressing the ground on reopening of the assessment as it is infructuous.
Before parting, it is worthwhile to mention that this order is pronounced after 90 days of hearing the appeal, which is though against the usual norms, we find it appropriate, taking into consideration of the extra-ordinary situation in the light of the lock-down due to Covid-19 pandemic. While doing so, we have relied in the decision of Mumbai Bench of the Tribunal in the case of DCIT vs. JSW Ltd. In and 6103/M/2018 for AY 2013-14 order dated 14th May 2020.
In the result appeal of the assessee is allowed.
Pronounced in the open Court on 30th June, 2020.