NATESAN SIVASANKARAN,CHENNAI vs. ACIT, NON CORPORATE CIRCLE

The brief facts of the case are that the assessee is an individual pensioner from State Bank of India. For the year under consideration, the assessee filed his return of income for the A.Y. 2017-18 on 07.06.2017 admitting a total income of Rs.20,78,480/-, which is inclusive of capital gain of Rs.16,17,238/-. The assessee, during the financial year 2016-17, sold a property to the tune of Rs.68,26,900/-, out of which a sum of Rs.63,26,900/- was recorded in sale deed and Rs.5,00,000/- was received later by the assessee. He was also in receipt of loan dues that was repaid by his brother- in-law, Mr.A.B.Jagadeesan, to whom he had lent a sum of Rs.16,00,000/- in 2009. The assessee made a cash deposit of Rs.12,00,000/- into his account (Rs.10,00,000/- on 22.04.2016 and Rs.2,00,000/- on 27.06.2016) being the cash from sale of property as well loan repaid by the assessee’s brother-in-law. The case of the assessee was selected for scrutiny under CASS and notices were issued upon the assessee who responded to the same from time to time. During the assessment proceedings, the assessee submitted the above captioned facts and filed various evidence and documentary evidence such as computation of income, bank statement, sale deed, confirmation letter for the loan advanced to Mr.A.B.Jadadeesan. However, the AO rejected the submissions of the assessee while stating that it is unrealistic that the assessee has advanced loan to his relative and has received back a sum of Rs.16,00,000/- the same without any interest. The Assessing Officer also notes that the sum recorded in the sale deed, being Rs.63,26,900/- differs from the amount admitted by the assessee in return, which is Rs.68,26,900/-. Consequently, the AO added a sum of Rs.19,44,000/- was added as unexplained investment u/s.69 of the Act and passed an assessment order u/s.143(3) of the Act on 28.12.2019 and consequently, a demand of Rs.15,03,014/- was raised against the assessee.

Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us.

Before us, the ld.AR for assessee reiterated the submissions made before the lower authorities. The ld.AR also argued that on 21.04.2016, the assessee received a sum of Rs.7,00,000/- from Mr.A.B. Jagadeesan, in cash and the promissory note was cancelled. Out of the said sum of Rs.7,00,000/-, the assessee deposited a sum of Rs.5,00,000 on 22.04.2016 along with sale proceeds of Rs.5,00,000/-. The remaining sum of Rs.2,00,000/- (from the

Per contra, the ld.DR argued that the since the loan was fully repaid the impugned addition sum of Rs.19,44,000/- is correct. He also submitted that it is not believable that a pensioner has enough funds to lend money and purchase property and thus prayed that the appeal may be dismissed.

We have heard rival submission perused the materials on record and gone through the orders of the authorities along with paper book filed. It is admitted fact that the assessee is an individual and filed his return of income for the A.Y. 2017-18 on 07.06.2017 admitting a total income of Rs.20,78,480/-, which is inclusive of capital gain of Rs.16,17,238/-. The assessee, during the financial year 2016-17, sold a property to the tune of Rs.68,26,900/-, out of which a sum of Rs.63,26,900/- was recorded in sale deed and Rs.5,00,000/- was received later by the assessee. Further, the actual cash deposits made by the assessee during the relevant financial year are only Rs.12,00,000/-, and there is no clear basis on record for arriving at the higher figure adopted in the assessment order of Rs.19,44,000/-. The bank statement attached by the assessee clearly states that the cash deposited is only Rs.12,00,000/- and not Rs.19,44,000/- as held by the Assessing Officer. Further, the Assessing Officer no where specifies how he has arrived at the figure of Rs.19,44,000/-.

The assessee has explained that these deposits came from the sale of property and repayment of loan by Mr.A.B.Jagadeesan. These explanations are supported by documents such as the sale deed, bank statements, confirmation letter and cancelled promissory note. Further, the assessee, at the time of offering the capital gains in the return of income had declared the sale consideration as Rs.68,26,900/-, thus including the cash consideration received to the tune of Rs.5,00,000/-. And in respect of the loans repaid by the assessee’s brother-in-law, sufficient evidence exists to show that loans were given originally by the assessee to his brother-in-law, as noted by the Assessing Officer in his assessment order. The fact of repayment, as seen from the documentary evidence, is also not disputed by the authorities below. It is acceptable that among the relatives there need not be any interest payments in respect of loans given. The authorities below have not brought any evidence to disprove these documents.

It is also relevant that the capital gains from the property transaction have already been declared in the return of income and there is a reasonable link between the amounts received and the amounts deposited in the bank.

The ld. CIT(A) has simply affirmed the findings of the Assessing Officer without properly addressing the explanations and evidence submitted by the assessee, which is not in accordance with the requirement of a reasoned order under Section 250 of the Act.

In the present facts and circumstances of the case, the source of the cash deposits stands satisfactorily explained. The addition made is based on incorrect facts and unsupported assumptions. In view of the above, we are of the considered opinion that the ld.CIT(A) has erred in confirming the additions

In the result, the appeal of the assessee is allowed.