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Income Tax Appellate Tribunal, “SMC’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by the assessee is directed against the order of CIT(A), NFAC, Delhi dated 3.8.2021 for the AY 2017-18. The grounds of appeal raised by the assessee are reproduced as under: 1) Because the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi erred in law as well as on facts while upholding the following additions to the returned income.
Shambanna Jattappa Hadimani, Hubli
Page 2 of 8` Fin Totar Cash Cash used for Cash Saved and Savings Addition made Year withdrawals Household/ kept in house out of by the AO and from Bank personal used for redeposit cash confirmed by A/c purposes in Bank A/c as drawn the CIT(A) per the Appellant estimated - by the AO 2015-16 9,75,000 5,75,000 4,00,000 2,50,000 3,96,000 2016-17 3,97,500 1,51,500 2,46,000 (646000-250000) Total 13,72,500 7,26,500 6,46,000 2,50,000 3,96,000 2) Because the following observations of the learned CIT(A) NFAC, Delhi in the order U/s 250 of the IT Act, are arbitrary, baseless and misleading: i) No person in his right mind will keep on continuously withdrawing cash from his Bank Account only for the purpose of keeping it at home, and thereafter re-depositing the same back into his Savings Bank Accounts. ii) If a person withdraws Rs. 1,00,000/- cash and the same cannot be used for whatever reason why should any reasonable person withdraws the next Rs. 1,00,000/- just to keep it lying idle in his house?? iii) The appellant, therefore, comprehensively fails on the "Theory of the Test of Human probabilities and surrounding circumstances" as laid down by the Hon'ble Supreme Court in the case of CIT vs Durga Prasad More (1971) 82 ITR 540 and in the case of Sumati Dayal vs CIT (1995) 214 ITR 801 (Please vide last para on Page 6 of the Appellate order dated 03/08/2021).
3) Because the learned CIT(A) NFAC Delhi erred in overlooking the submissions of the Appellant while accepting the lopsided and incorrect version of the learned Assessing officer and in ultimately upholding the action of the learned AO. 4) The appellant craves leave to add/alter any of the grounds of appeal before 'or at the time of appeal hearing.
Brief facts of the case are that, the assessee, Shambanna Jattappa Hadimani (hereinafter referred to as assessee), an individual, is a salaried employee. He had filed his return of income on 3.7.2017 declaring total income at Rs.4,36,160/-. During the course of assessment proceedings, the Assessing Officer (hereinafter referred to as A.O.) found that an amount
Shambanna Jattappa Hadimani, Hubli
Page 3 of 8` of Rs. 11,46,000/- had been deposited in cash by the assessee in his bank account during the demonetization period. During the course of assessment proceedings, the assessee explained these cash deposits as follows
Return of cash loan by his brother-in-law Rs. 5,00,000/- (i)
Cash deposited out of his personal savings arising from Rs. 6,46,000/- (ii) the salary income during the F.Y. 2015-16 and 2016-17
Total Rs. 11,46,000/- 2.1 The A.O. accepted the assessee's contention regarding the cash loan returned by his brother-in-law amounting to Rs. 5,00,000/-. However, regarding the balance amount of Rs. 6.46.000/-, the assessee's explanation was as follows :
S.No. F.Y. amount utilised Gross Salary (Rs.) Total Amount cash total withdrawn in out of the from Bank Account for cash drawn (Rs.) depositing during demonetization priod. (Rs.)
1 2015-16 11,10,734/- 9,75,000/- 4,00,000/-
2 2016-17 7,48,533/- 3.97,500/- 2,46,000/-
Total 18,59,267/- 13,72,500/- 6,46,000/- 2.2 The A.O. accepted the assessee's contention only partially holding that the possibility of cash in hand out of Shambanna Jattappa Hadimani, Hubli
Page 4 of 8` withdrawal cannot be ruled out. As per the assessee's own contention these frequent cash withdrawals were being made to meet the household expenses / miscellaneous day to day expenses over F.Y. 201516 and 2016-17. The A.O. observed that the assessee had been making frequent cash withdrawals from ATMs of HDFC Bank and other banks throughout F.Y. 201516 and 2016-17. The assessee’s contention was that he has withdrawn an amount of Rs. 13,72,500/- in cash from his salary bank account during the F.Y. 2015-16 and 2016-17 and utilised around 53% of these for his daily necessity and re-deposited Rs.6,46,000/- in cash during the demonetization period. However, the A.O. held this as unreasonable that almost 50% of the total cash withdrawal over the last two years was being accumulated by the assessee and was re-deposited in the demonetization period. He therefore held that "the assessee's contention that the out of total cash withdrawal of Rs. 13,72.500/- amount of Rs. 6,46,000/- was the cash in hand appears to be not correct. This is in view of the fact the assessee has drawn the amount frequently which means the amounts are utilised for the purpose for which it was drawn. On the other hand, possibility of cash in hand out of the withdrawals cannot be ruled out. Therefore, looking at the profile of the assessee in terms of salary drawn, cash drawn from Bank account, online payments made for drawing and other expenses, it can be concluded that the assessee might have been left with a cash of Rs. 2.50,000/- out of the withdrawals from the Bank accounts. Thus, it is clear that the assessee has failed to explain the source and nature for the cash deposited to the extent of Rs. 3,96,000/- (Rs. 6,46,000/- minus Rs. 2.50,000/).". Accordingly, the AO added Rs. 3,96,000/- as unexplained money in assessee's total income and assessed the income at Rs. 8,32,160/-.
Shambanna Jattappa Hadimani, Hubli Page 5 of 8` 3. Against this assessee went in appeal before ld. CIT(A). The ld. CIT(A) confirmed the disallowance made by AO at Rs.3.96 lakhs.
There was a delay of 282 days in filing the appeal before this Tribunal. The assessee explained that out of 282 days, 238 days delay was due to Covid period i.e. from 15.3.2020 to 28.02.2022 and extended further period of 90 days from 1.3.2022 by the judgement of Hon’ble Supreme Court in MA No.29 of 2023 in MA 665 of 2021 in suo moto WP(C) No.3 of 2020 dated 10.1.2022, Thus, the delay was only 44 days. This delay of 44 days is required to be explained by the assessee and it was submitted that the assessee has given the appeal papers to one Mr. Adinavar, Chartered Accountant that the option to file the appeal before the Tribunal was not yet enabled in the e- filing portal of I.T. Department where the impugned order was uploaded under the mistaken belief and notion that even the second appeal before the Tribunal would have to be filed on the e-filing portal like first appeal before the ld. CIT(A) instead of filing the same before the ITAT portal and this wrong advice resulted in delay of filing the appeal by the assessee and the assessee came to know about the requirement of filing the appeal before the Tribunal only when the assessee received the call from I.T. Department to pay the outstanding demand immediately. Therefore, after taking the remedial measures, assessee taking the steps to file the present appeal before the Tribunal.
The ld. DR strongly objected the admission of appeal by the Tribunal since there was inordinate delay of 282 days.
Shambanna Jattappa Hadimani, Hubli
Page 6 of 8` 6. I heard the rival submissions and perused the materials available on record. This past-Covid period delay need not be explained in view of the judgement of Hon’ble Supreme Court in MA No.29 of 2022 in MA 665 of 2021 in suo moto WP(C) No.3 of 2020 dated 10.1.2022, wherein held that “in computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.3.2020 till 28.2.2022 shall stand excluded”. Further, extended upto 90 days from 1.3.2022. There was a delay in this case for 282 days whereas 238 days was due to Covid period, wherein the Hon’ble Supreme Court suspended the Limitation Act during this period up to 28.2.2022. Being so, only there was delay of 44 days. The assessee explained the delay due to wrong advise of assessee’s Chartered Accountant namely Mr. Adinavar. The department is not disputing this fact and no filed any counter affidavit denying this fact. In my opinion, there is a good and sufficient reason in filing the appeal belatedly due to wrong advice of the assessee’s CA. Accordingly, in the interest of justice, I condone this delay and admit the appeal for adjudication.
6.1 The short question before me is with regard to addition of Rs.3,96,000/- deposited into bank account. According to the AO, the assessee has not explained the source of deposit of this amount to the assessee’s bank account. The assessee explained before us that assessee has placed necessary evidence before the lower authorities that assessee having salary income which has been regularly deposited into bank account and also withdrawn from SB account from HDFC & Canara banks. The total cash withdrawn by assessee was Rs.13,72,500/- during the financial years 2015-16 & 2016-17. Out of which the assessee explained that Rs.6.46 lakhs was used to redeposit only bank account during the demonetization period. However, the AO considered only Rs.2.5 lakhs available to assessee
Shambanna Jattappa Hadimani, Hubli
Page 7 of 8` to redeposit to bank accounts and this is not based on any material evidence. There was no evidence brought on evidence by the AO that the assessee is left with only Rs.2.5 lakhs out of Rs.13,72,500/- withdrawn by assessee from various bank accounts. Unless and until the AO brought on record any material that assessee has spent balance amount of Rs.11,22,500/-, which has been withdrawn in earlier financial year 2015-16 & 2016-17, it is not possible to hold that the said amount is not available to assessee to redeposit into bank account. Considering the quantum of withdrawals made by the assessee in earlier financial years, I am of the opinion that the amount of Rs.3.96 lakhs addition sustained by the AO has been sourced by the earlier withdrawals and due credit to be given. Accordingly, considering the meagre amount of Rs.3.96 lakhs, which addition is made by the AO, the amount withdrawn by assessee on earlier occasion has been unutilized and available to the assessee to redeposit to the bank account and according to me the source has been explained by the assessee by earlier withdrawals and the addition sustained by the ld. CIT(A) is deleted.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 28th Dec, 2022