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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘A’
Before: SHRI RAJPAL YADAV & SHRI PRADIPKUMAR KEDIA
आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER:
Assessee is in appeal before the Tribunal against order of the ld.CIT(A) dated 16.2.2017 passed for the Asstt.Year 2011-12.
In response to the notice of hearing, Shri Chhajed, CA appeared before the Tribunal. However, hearing was adjourned on his request. Thereafter, Shri Chhajed pleaded that he has no instruction from the assessee. A fresh notice was issued to the assessee, which has been duly served, but none has come present
2 on behalf of the assessee. With the assistance of the ld.DR, we have gone through the record.
Ground no.1 of the appeal is general, which does not require recording any adjudication.
In the second ground of appeal, the grievance of the assessee is that the ld.CIT(A) has erred in upholding re-opening of the assessment.
Brief facts of the case are that the AO had received an information that the assessee has deposited a sum of Rs.1,04,00,000/- in his bank account. On the basis of information, he reopened the assessment. The assessee did not appear before the AO and hence an ex parte assessment order was passed. He determined taxable income at Rs.1,04,00,000/- by an assessment order dated 11.3.2015 under sections 144/147 of the Income Tax Act. On appeal, the ld.CIT(A) has upheld the reopening by observing as under:
“6.3 I have considered the facts and the circumstances of the case, the observations of the Assessing Officer, the submissions of the assessee, material available on the records and relevant judicial pronouncements on the subject. It is not in dispute that the assessee had not filed his Return of Income. It is also not in dispute that the assessee had deposited cash of Rs. 1,04,00,000/- in his " savings bank account no. 086910025010 with Dena Bank, Subhanpura, Baroda. Since the assessee had not filed the required Return of Income and since the Assessing Officer had reason to believe that income within the meaning of section 147 had escaped assessment, the Aassessing Officer was perfectly justified in reopening the assessment by issue of notice u/s 148 of the Act. Explanation 2(a) to section 147 reads as under-
3 "Explanation 2.—For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:—
(a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax;..."
6.4 Hon'ble Bombay High Court has, in the case of Ingram Micro (India) Exports (P.) Ltd. vs DCIT [2017] 78 taxmann.com 140 (Bombay), held that For Explanation 2(a) to section 147 to apply, there must be (i) non-filing of return of income and (ii) satisfaction of Assessing Officer that income chargeable to tax had escaped assessment. In the present case, both the ingredients to invoke Explanation 2(a) are available. In view of the above discussion and keeping in view the decision of Hon'ble Bombay High Court has, in the case of Ingram Micro (India) Exports (P.) Ltd. (supra), the action of the Assessing Officer in reopening the case by issue of notice u/s 148, dated 06.02.2014 is upheld. The assessee fails on this ground of appeal.”
The assessee has not filed return of income. He deposited a sum of Rs.1,04,00,000/- in the Saving Bank account with Dena Bank. No doubt money deposited in the bank account cannot be per se escaped income. It can be from the explained source of income. But in the present case, the assessee has not filed return of income, therefore, there is no mechanism with the AO to verify whether it is an escaped income or deposits from explained source of income. In the above facts and circumstances, and after going through the finding of the ld.CIT(A) we do not find any error in reopening the assessment. This ground of appeal is rejected.
4 7. In ground no.3, the assessee has pleaded that the ld.CIT(A) has erred in upholding the order of the ld.AO passed under section 144 of the Act.
Before us, the assessee has not demonstrated as to how he remained absent before the AO during the assessment proceedings. Therefore, the ld.CIT(A) has rightly uphold the assessment order passed ex parte.
In ground no.4, the assessee has pleaded that the ld.CIT(A) has erred in upholding the addition to the extent of Rs.57,01,000/-.
As observed earlier, the assessee has made deposit of Rs,1,04,00,000/- in his saving bank account with Dena bank. He did not appear before the AO for explaining the source of such deposits. Some explanation was given before the ld.CIT(A) by way of written submissions which has been considered by the ld.CIT(A). The ld.CIT(A) thereafter confirmed the addition partly by recording the following finding:
“I have considered the facts and the circumstances of the case, the observations of the Assessing Officer, the submissions of the assessee, material available on the records and relevant judicial pronouncements on the subject. The assessee had produced certain additional evidence in the form of affidavit from Shri Jayantibhai Harmanbhai Patel, regarding cash receipt of Rs. 38,00,000/- by the assessee and his bank statement. The assessee has not submitted any application to accept the additional evidence under Rule 46A of Income-tax Rules. He has also not specified the conditions fulfilled under Rule 46A of Income-tax Rules, which were fulfilled by him, to enable me to accept the additional evidence. Rule 46A prescribes certain conditions, which should be fulfilled before admitting any additional evidence
5 by the appellate authorities, viz. where the Assessing Officer had refused to admit evidence which ought to have been admitted, where the appellant was prevented by sufficient cause to produce any evidence before the Assessing Officer, which he was called upon to produce or was relevant to any ground of appeal or the assessee was not afforded sufficient opportunity to adduce evidence relevant to any ground of appeal. A careful perusal of the case reveals that none of the above conditions are fulfilled by the assessee. It is a matter of record that the Assessing Officer never refused to admit evidence- in fact evidence was never produced before him. The Assessing Officer has noted in the assessment order that the assessee refused to appear for the hearings, even though he had time available from 06.02.2014 (the date of issue of notice u/s 148 of the Act) to 11.03.2015 (the date of assessment order u/s 144 of the Act). The assessee had sufficient time to obtain and furnish the said affidavit or other material before the Assessing Officer during this period, which was not done. In view of this, the assessee has not been able to establish that it was prevented by sufficient cause to produce any evidence before the Assessing Officer, which he was called upon to produce or was relevant to any ground of appeal.
7.4 Hon'ble Gujarat High Court in the case of Fairdeal Filaments Ltd. vs CIT [2008] 302 ITR 173 (Guj.), has held that, " So far as admitting additional evidence under Rule 29 of the Income-tax Appellate Tribunal Rules was concerned, the Tribunal had come to the conclusion that the benefit under the said rule was not available to a person who was negligent, non-cooperative and recalcitrant: and the Tribunal was not required to give another chance or opportunity to a person to cover up its own lapses. Applying the tests mentioned above to the facts of the case, it was to be held that the Tribunal had approached the matter correctly...."
7.5 Hon'ble I TAT, Chandigarh, in the case of Rishi Sagar vs C1T [2013] 36 taxmann.com 508 (Chandigarh-Trib.) held that where assessee had failed to produce documents during assessment and failed to establish reasonable cause therefor and, further, did not comply with notices of Assessing Officer, additional evidence could not be accepted in appeal. In view of the above discussion, the assessee has failed to satisfy me that he fulfills any of the preconditions prescribed
6 in Rule 46A of IT.Rules for admission of additional evidence. Therefore, additional evidence in the form of affidavit of Shri Jayantibhai Harmanbhai Patel and his bank statement, is rejected.
7.6 The assessee has submitted that out of the total cash deposit of Rs. 1,04,00,000/-, addition of Rs. 2,00,000/- on account of cash deposit on 02.12.2010 was not corrects, as the entry was wrongly made and the same was reversed on the same day. This statement is found to be factually correct from the verification of the bank statement of the relevant account and the corresponding addition of Rs. 2,00,000/- is directed to be deleted.
7.7 The assessee has also claimed that he had advanced a sum of Rs. 46,00,000/- through banking channels to one Shri Jayantilal Harmanbhai Patel, vide his submission dated Nil, received in this office on 08.02.2017. He has also submitted that the same was received back from the said Shri Jayantilal Harmanbhai Patel in cash on various dates, which was re-depodited in assessee's bank account on various dates. In support of his submissions, the assessee has submitted an affidavit dated 06.02.2017 from Shri Jayantilal Harmanbhai Patel, stating that he had received a sum of Rs. 38,00,000/- from the assessee through cheque on 27.10.2010 (the assessee had claimed that he had advanced a sum of Rs. 46,00,000/- to Shri Jayantilal Harmanbhai Patel) and had repaid him in cash. As discussed in para 7.3 to 7.6 above, the additional evidence in the form of Shri Jayantilal Harmanbhai Patel's affidavit dated 06.02.2017 was rejected, being in violation of Rule 46A of the Income-tax Rules. It is not denied that the assessee had advanced a sum of Rs. 38,00,000/- to Shri Jayantilal Harmanbhai Patel through banking channels, but it is not explained why Shri Jayantilal Harmanbhai Patel chose to return back the sum to the assessee in cash in violation of the provisions of section 269T of the Act, if assessee's version is believed, even though, the amount was advanced using banking channels and both the parties had an active bank account during the period, through which daily transactions in lakhs of rupees were being carried out. Further, the assessee has failed to furnish evidence to explain as to how various cheques issued in the name of various other persons like Jethabhai, Arun, D.J.Patel etc. are 7 claimed to be cash withdrawals by the assessee. There is no evidence on record to establish that these persons withdrew sums in cash on behalf of the assessee. The assessee has further failed to establish creditworthiness of Shri Jayantilal Harmanbhai Patel. Even the genuineness of the claimed cash transactions with Shri Jayantilal Harmanbhai Patel is not established by the assessee. In the circumstances, the gift deeds appear to be an afterthought and their genuineness is doubtful and the same are untrustworthy. From the surrounding circumstances of this case, it is clear that the said four gift deeds by both the parents of the assessee are an after-thought and no credence could be given to the same. In CIT vs Durga Prasad More, 82 ITR 540 [SC], Hon'ble Supreme Court has held that where a party relies on self-serving recitals in a document, it is for that party to establish the truth of these recitals. Hon'ble Court further held that the tax authorities are entitled to look in to the surrounding circumstances to find out the reality of such recitals. Considering the above discussion, assessee's explanation regarding availability of Rs. 38,00,000/- in cash as repayment of loan from Shri Jayantilal Harmanbhai Patel is rejected and addition on this account is upheld.
7.8 The assessee has further submitted that the balance cash deposits in his bank account were sourced from his withdrawals. However, it is noted that the cash of Rs. 1,02,00,000/- was deposited in assessee's account on 02.12.02010 and before that, he had cash withdrawals of Rs. 41,99,000/- on 16.10.2010 and Rs. 3,00,000/-on 19.10.2010. Therefore, total cash withdrawals available with the assessee were Rs. 44,99,000/-, which could have been used to redeposit cash in his bank account. Availability of cash on account of withdrawals by the assessee cannot be disputed, as the same are withdrawn from the bank. Hon'ble ITAT, Ahmedabad in Sori Nandakumar Sodhan Vs. ITO in held that the entries in the bank should not be doubted. Those entries in the banks were in the nature of deposits and withdrawals, which were incorporated in the cash flow statements. The Tribunal held that if the revenue department has not established that the cash available with the assessee was not utilized elsewhere, then on the basis of preponderance of probabilities, it can be assumed that the very cash available with the assessee was re-deposited in the bank. Hon'ble ITAT, Ahmedabad, in the 8 case of ITO vs Murlidhar Ice-cream & Sweet Parlour, has held that "where there are deposit and withdrawal entries into the bank account, it would be presumed that the amount withdrawn was available with the assessee for depositing the same. Therefore, it cannot be concluded that the entire deposits were from unexplained source." In view of this, it is clear that the cash withdrawals from the bank account cannot be ignored, while assessing unexplained cash deposits in the bank account. The evidence of withdrawal from the bank account has to be accepted as genuine and once the withdrawal is accepted, in view of the decision of Hon'ble Gujarat High Court in the case of CIT vs Shailesh Rasiklal Mehta [2009] 176 TAXMAN 270 (GUJ), there was no question to treat deposit, to the extent of withdrawal of cash, as unexplained. Hon'ble ITAT, Ahmedabad has, in the case of Shivji Manji Amba vs DCIT [1995] 51 TTJ 61 (AHD.), held that while considering unexplained investment, availability of money from bank withdrawals cannot and should not be ignored. Hon'ble Ahmedabad bench of ITAT in Sori Nandakumar Sodhan Vs. ITO in ITA No. 2075/Ahd/2012, has held that the entries in the bank should not be doubted. The court held that if the revenue department has not established that the cash available with the assessee was not utilized elsewhere, then on the basis of preponderance of probabilities, it can be assumed that the very cash available with the assessee was re-deposited in the bank. In view of this, assessee's explanation regarding cash deposits to the extent of available cash on account of cash withdrawals from Bank i.e. Rs. 44,99,000/- is accepted and the same is treated as explained.
7.9 In view of the above discussion, cash deposit to the extent of Rs. 46,99,000/- (Rs. 44,99,000/-, para 7.8 plus Rs. 2,00,0007-, para 7.6) is treated as explained and the balance of Rs. 57,01,000/- is treated as unexplained. It is the assessee who has shown credits by way of cash deposits in his bank account and the onus is on him to prove the creditworthiness of the creditors and also establish the genuineness of the transaction. In Rosahn Di Hutti vs CIT [1977] 107 ITR 938 (SC) and Kale Khan Mohammad Hanif vs CIT [1963] 50 ITR 1 (SC), it was held that the onus of proving the source of a sum of money found to have been 9 received by an assessee is on him. Where the nature and source of a receipt, whether it be of money or other property, cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is the income of the assessee and no further burden lies on the revenue to show that the income is from any particular source. In Sumati Dayal vs CIT [1995] 214 ITR 801 (SC), it was held that if the explanation offered by the assessee about the nature and source of the credits in his books of accounts is not satisfactory, the amount can be treated as income of the assessee. In C.Kant & Co. vs CIT [1980] 126 ITR 63 (Cal), it was held that in case of cash credit entry, it is necessary for the assessee to prove not only the identity of the creditor but also to prove capacity of the creditor to advance the money and genuineness of the transaction. Hon'ble Calcutta High Court, in the case of S.K. Bothra & Sons, HUF vs ITO [2011] 203 Taxman 436 (Kol), it was held that while considering whether the alleged loan taken by the assessee was genuine transaction, the initial onus is always on the assessee and if no explanation is given or the explanation given by the assessee is not satisfactory, the Assessing Officer can disbelieve the alleged transaction of loan.
7.10 In view of the above discussion, it is clear that the assessee has failed to discharge the burden of primary onus cast on him to establish creditworthiness of the alleged creditors and has also failed to prove the genuineness of the transaction in respect of the balance cash credits of Rs. 57,01,000/- in his bank account. Therefore, the cash deposit of Rs. 57,01,000/- in his bank account is held to be unexplained and the same is upheld. The balance addition of Rs. 46,99,000/- is treated as explained and is directed to be deleted. The assessee partially succeeds on this ground of appeal.”
With the assistance of the ld.DR, we have gone through the record. The assessee has not filed any paper book nor submitted any details for disputing the above finding. Therefore, we do not have any hesitation in concurring with the order of the ld.CIT(A). This ground of appeal is rejected.
10 12. In the result, appeal of the assessee is dismissed.
Order pronounced in the Court on 17th July, 2019.