SRI. MATHAI EAPEN VETTATH,KOTTAYAM vs. THE ITO, NON-CORPORATE, WD-1(3), KOCHI

Per CHANDRA POOJARI, AM:

This appeal filed by the assessee is directed against the order of the CIT(A),

Kottayam dated 02/05/2018 and pertains to the assessment year 2014-15.

I.T.A. No.422/Coch/2018 & S.P. No.33/Coch/2018

towards deposits in the SB accounts of Catholic Syrian Bank and SBI.

u/s. 133(6) from Catholic Syrian Bank and State Bank of India wherein the

assessee was maintaining banks accounts. The banks supplied the statements

and the Assessing Officer found that the assessee had deposited Rs.49,22,000/-

on 06/03/2014 and 07/03/2014 as under:

Sl. No. Date Amount Name of Nature of deposit Bank 1 06.03.2014 20,00,000/- CSB 2 06.03.2014 5,00,000/- CSB FD 3 06.03.2014 5,00,000/- CSB FD 4 06.03.2014 4,72,000/ - SBI FD 5 07.03.2014 14,50,000/- SBI Total 49,22,000/-

3.1 The Assessing Officer called for explanation for the source of the above

cash deposits. On 09.12.2016, the assessee submitted his explanation for

sources of funds as under:

A Rubber cultivation – 1.5 acre 90,000/- B Paddy – 43.32 acres 9,66,000/- C Rubber Plantation and Tapioca Plantation sold 30,22,000/- & 6,00,000/- D Motor accident claim received 89,175/- E Ground nut cultivation land sold on 25.02.2013 18,00,000/- F Agricultural loan taken 1,25,00,000/- G Loan taken from George Thomas (Dubai) 1,00,000/-

I.T.A. No.422/Coch/2018 & S.P. No.33/Coch/2018 H Loan taken from Tom K Varghese (Kuwait) 1,00,000/- I Loan taken from Mrs. Mary Sleeba (London) 1,00,000/- 3.2 The Assessing Officer did not accept the above explanation of the assessee.

The Assessing Officer found that the assessee had not explained the source of

cash deposits. The Assessing Officer observed that the assessee gave vague

replies without any supporting evidences and even though the assessee was

claiming to have agricultural income, he had not declared the same in his return

of income. The Assessing Officer found that the assessee had not furnished any

evidence of having generated income during the year even if it was not declared

in the return of income. The professional income was also not declared in the

return of income. Under these circumstances, the Assessing Officer treated the

cash deposit of Rs.49,22,000/- as unexplained cash credit and assessed the

same u/s. 68 of the Act.

which are reproduced below:

“Sir,

Sub : Regarding Source in case : ITU/W-1(3)NGAFTPV5949R/16-17 I had withdrawn the following amount from the Banks :

25.11.13 30,000 IDBI

30.11.13 50,000 IDBI

16.12.13 1,00,000 Federal Bank

23.12.13 1,00,000 IDBI

I.T.A. No.422/Coch/2018 & S.P. No.33/Coch/2018

30.12.14 60,000 IDBI 7.1.14 50,000 IDBI

7.1.14 7,00,000 IDBI

10.1.14 50,000 IDBI

16.1.14 5,000 IDBI

17.1.14 78,00,000 IDBI

30.1.14 90,000 IDBI

5.2.14 50,000 SIB

17.2.14 50,000 SIB

18.2.14 68,000 SIB

25.2.14 30,000 SIB

7.3.14 5 Lakhs SIB

7.3.14 5 Lakhs SIB

11.3.14 5 Lakhs SIB

7.3.14 30,22,000 (Check given to me by Cyril Varkey selling the property 11.3.14 4,72,000 Indian Bank

From the above proof it is proved the source".

4.1 The CIT(A) observed that apart from farming, the assessee also carries 0n

the profession of a lawyer occasionally. According to the CIT(A) in its various

submissions, the assessee had levelled allegations of bias and harassment

I.T.A. No.422/Coch/2018 & S.P. No.33/Coch/2018 against the Assessing Officer. However, on reading the assessment order, the

CIT(A) did not find any basis for these allegations and the Assessing Officer had

performed his duties as an Assessing Officer lawfully and had given sufficient

opportunities to the assessee for giving explanations to the show cause notices

issued by him. It was observed that the assessee was not well versed with the

processes of Income-tax assessment and therefore, the response of the assessee

was full of anomalies and contradictions which have been brought on record by

the Assessing Officer in the assessment order passed by him. According to the

CIT(A), the Assessing Officer had examined cash deposit of Rs.49,22,000/- and

not satisfied with the explanation of the assessee, treated the same as

unexplained cash credits and added the same to the total income of the assessee

u/s 68 of the I T Act. The entire cash was deposited on 06.3.2014 and 7.3.2014.

The CIT(A) gave the summary of assessee's explanation given at the time of

assessment which is as under:

i) The source of cash deposit is agricultural and professional income.

ii) He had sold land and sale consideration of the same were deposited

in the Bank.

iii) He has substantial rubber cultivation and paddy cultivation.

iv) He also had ground nut cultivation.

v) He had taken agricultural loan amounting to Rs. 1.25 crores from

Arakkunnam Branch of District Co-operative Bank Ltd.

vi) He had taken personal loans of Rs. 1 lakh each from 3 people.

I.T.A. No.422/Coch/2018 & S.P. No.33/Coch/2018 (v) The assessee had substantial cash withdrawals from his bank accounts,

which were re-deposited .

4.2 Before the CIT(A) , the assessee also contended that, his old father and

mother were not keeping well and therefore he had to maintain substantial cash

balance at home in case of any emergency arose. The assessee also explained

that he sold his property in Mararikulam North Panchayat, Alappuzha to Mrs.

Suvarna and Mr.Gopalakrishnan and received a cheque which was dishonoured

on presenting to the Bank for clearance and his legal notices were also not

replied. It was submitted that with the interference of Mr.Pratapkumar Swarny,

the deal was re-negotiated and he received Rs.14,50,000/- in cash, which he

deposited in his bank account. Before the CIT(A), it was also stated that he was

not aware of Income Tax proceedings and this was the first time he was

handling his own Income Tax matters and was appearing before the Income Tax

authorities. He claimed that he was basically a village farmer and was speaking

the truth. The Assessing Officer did not believe the assessee and rejected the

explanations furnished by him for mainly the following reasons.

i) No receipts or evidences of cash receipts and sale of agriculture products

and sale of land was produced before the Assessing Officer.

ii) The assessee did not disclose any agricultural income in the Return of

Income filed for the year under consideration.

I.T.A. No.422/Coch/2018 & S.P. No.33/Coch/2018 iii) As per the available information, only one land sale was undertaken by

the assessee and the amount of Rs.30,22,000/- was received by cheque

which was credited into the bank account of the assessee on 7.3.2014 and

the same were converted into Fixed Deposits and therefore source of cash

deposits cannot be explained through sale of this land.

iv) The explanations given by the assessee was vague and not supported

with evidences.

v) The assessee is a senior Advocate and it is presumed that he would be

well versed with legal proceedings and should have co-operated with the

assessment proceedings and should have co-operated with the assessment

proceedings.

4.3 After considering the contentions of both, the Assessing Officer and the

assessee, the CIT(A) found that the explanation had not been furnished

properly. On the other hand, the CIT(A) observed that the Assessing Officer

had concentrated on deposits made only on 06.3.2014 and 07.3.2014 and he

had chosen to ignore deposits and withdrawals made during rest of the

financial year 2013-14. The Assessing Officer had not disputed the fact that

the assessee is basically an agriculturist, having substantial holding of land,

and even though he had not declared any agricultural income in his Return of

I.T.A. No.422/Coch/2018 & S.P. No.33/Coch/2018 Income filed, he may be earning agricultural income. According to the CIT(A),

under the existing provisions of Income Tax Act, agricultural income becomes

significant for applying rate of Income Tax, though the agricultural income per

se, is exempt from the incidence of tax. It was also seen that the A.O. had not

made any efforts to find the source from which the assessee would have

earned such cash income. It was observed that the Assessing Officer also did

not make any efforts to investigate, whether the assessee was actually

earning any agricultural income. The Assessing Officer also did not give any

credit for earlier cash withdrawals made by the assessee and claimed to have

been re-deposited. The CIT(A) was of the view that the conduct of the

assessee in submitting the details and documents requisitioned by the

Assessing Officer was not satisfactory. Thus, the CIT(A) directed the

Assessing Officer to give credit for agricultural income, sale of land and past

withdrawals. The assessee had also not disclosed the professional income.

The assessee tried to prove source by way of personal loan from 3 people of

Rs. 1 lakh each, for which he had not furnished either the confirmation or the

PAN of the parties concerned. It was observed that no prudent person would

take loan, when he already has substantial money with him. Since the

assessee had also not expressly stated whether these were cash loans or not

to explain the source of the deposits, the CIT(A) doubted the genuineness of

transaction.

I.T.A. No.422/Coch/2018 & S.P. No.33/Coch/2018 4.4 Thus, taking an overall view of the matter, the CIT(A) treated the claim

of Rs.3 lakhs, which was obtained as personal loans as unexplained cash-

credits and confirmed the addition of Rs. 3 lakhs.

not been able to explain the sources for Rs.3 lakhs out of Rs.49,22,000/-

deposited in various Bank accounts. In view of the unsatisfactory explanation

offered by the assessee, we do not find any infirmity in the order of the

CIT(A) and confirm the addition made by the Assessing Officer.

that neither before the lower authorities nor before us, the assessee has not

furnished any details to claim deduction u/s. 80C of the Act. The assessee

stated that his one son, Shri Vettath Eapen Mathai was studying LLM in FCMS,

an institution for management studies, managed by Fathima Educational

Trust, ICO Junction, Perunnal, Changanacherry. The assessee has enclosed

the receipts of tuition fees dated 28/05/2011, 19/06/2012, 24/09/2012,

04/03/2013, 20/07/2013, 02/03/2014, 14/03/2014 and 2.3.2015. It was

I.T.A. No.422/Coch/2018 & S.P. No.33/Coch/2018 also stated that his another son, Shri Gregorious Thomas Vettath, was a

MBBS student of Pondicherry Institute of Medical Sciences. The assessee has

enclosed the details of tuition fees paid to the tune of Rs.2,96,000/- dated

15/01/2010. The assessee also submitted that he earned interest of

Rs.10,000/- on savings Bank account. As such, he was entitled for deduction

u/s. 80TTA of the Act. In our opinion, the deduction claimed u/s. 80C is to be

allowed u/s. 80C(2)(xvii) of the Act which states that tuition fee/education fee

paid by a parent towards education of his/her children is entitled for

deduction. The assessee is entitled for deduction to the tune of Rs.1.5 lakhs

under this provision subject to the provision of section 80C(4)(c) of the Act on

furnishing the requisite details. Regarding deduction u/s. 80C, the assessee

has not produced any details of payment of tuition fees for the year under

consideration before AO. As such, we remit this issue to the file of the

Assessing Officer with a direction to the assessee to furnish the details of

payment of tuition fees before the Assessing Officer and thereupon decide the

same.

8.1 With regard to deduction u/s. 80TTA, the assessee has also not

furnished the details of interest income earned on saving Bank account. As

such, we remit this issue to the file of the Assessing Officer with a direction to

the assessee to provide necessary details. These grounds of appeal of the

assessee are partly allowed for statistical purposes.

I.T.A. No.422/Coch/2018 & S.P. No.33/Coch/2018 9. Since we have decided the assessee’s appeal, the Stay Petition filed by the

assessee in SP No.33/Coch/2018 has become infructuous and the same is

dismissed as infructuous.

purposes and the Stay Petition filed by the assessee is dismissed . Order pronounced in the open Court on this 25th February, 2019

sd/- sd/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Place: Kochi Dated: 25th February, 2019 GJ

Copy to: 1. Shri Mathai Eapen Vettath, Vettath Swaroopam, Near Kaduthuruthy, Njeezhoor P.O. Kottayam-686 612. 2 The Income Tax Officer, Non-Corporate, Ward1(3), Kochi. 3. The Commissioner of Income-tax(Appeals)-II, Kochi. 4. The Pr. Commissioner of Income-tax, Kochi. 5. D.R., I.T.A.T., Cochin Bench, Cochin. 6. Guard File. By Order

(ASSISTANT REGISTRAR) I.T.A.T., Cochin

I.T.A. No.422/Coch/2018 & S.P. No.33/Coch/2018