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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI ANIL CHATURVEDI
आदेश / ORDER PER ANIL CHATURVEDI, AM :
This appeal filed by assessee is emanating out of the order of Commissioner of Income Tax (Appeals) – 2, Pune dated 09.07.2018 for A.Y. 2014-15.
The relevant facts as culled out from the material on record are as under :-
Assessee is an individual, who filed his return of income for A.Y. 2014-15 on 13.10.2015 declaring total income at Rs.2,91,250/-. The case was selected for scrutiny and thereafter assessment was framed u/s
143(3) of the Act vide order dt.20.09.2016 and the total income was
determined at Rs.37,27,215/-. Aggrieved by the order of AO, assessee
carried the matter before Ld.CIT(A), who vide order dt.09.07.2018 (in
appeal No.87/2017-18) dismissed the appeal of the assessee. Aggrieved
by the order of Ld.CIT(A), assessee is now in appeal and has raised the
following grounds :
“1. The learned CIT (A) erred in dismissing the appeal of the assessee without appreciating the facts of the case and failed to give adequate opportunities.
The Ld.CIT(A) erred in confirming the income assessed by the learned AO at Rs.37,27,215/-.
The appellant submits that before the CIT(A) as well as at the stage of assessment proceedings before the AO, the facts could not be appreciated by both the authorities that – a) The amount deposited in the bank account was not of the assessee alone or earned by the assessee during the relevant A.Y. 2014-15. b) The amount deposited in the bank account aggregating to Rs.34,36,000/- was raised by the assessee and other persons from Murud who contributed cash for depositing in bank account, with an intention to start new business. c) With the amount of cash deposited, the 'Parasailing Boat' was purchased in the name of assessee and was proposed for business In partnership by plying the same at sea beach in Murud.
The appellant humbly submits that the hardship is caused to him owing to absence of the proper representation and submission at the assessment as well as 1st appeal stage, although, the necessary documents and information were made available by the assessee at relevant time.
The appellant humbly submits that a) He never earned the income as assessed by the learned AO and confirmed by Hon’ble CIT(A). b) He is not a man of means as assessed especially after early retirement from the job. c) The appellant was trying to find out new source of income by doing business of Parasailing Boats at seashore Murud and for that purpose the contribution in common pool was raised and deposited in the bank account in order to make payment by cheque for purchase of Parasailing Boats and contributions confirmed the same.
The appellant humbly submits that the concerned persons who contributed the sum could not get sufficient time to explain the source for the contribution raised by each of them which in unwarranted addition of Rs.34,36,000/- in the hands of the appellant. 7. Without prejudice it is further submitted that although the concerned persons confirmed the contribution still the addition has been made, holding the failure to explain by the creditor, the source for the source, which was not justified as confirmed by the CIT(A). 8. The AO in the assessment proceedings sought an explanation about the source for cash deposited in bank account and after going through the explanation of the concerned creditors, made addition as unexplained cash deposited in bank, without going adequate opportunities to explain the return filed. 9. The CIT(A) and the learned AO failed to appreciate that – a) The assessee had past savings in the form of cash accumulation. b) The cash deposited came also out of business receipt. c) The assessee availed gold loan.”
Before me, at the outset, Ld.A.R. submitted that he does not wish
to press ground No.1 and the only effective ground is 3(b).
The ground No.3(b) is with respect to the cash deposits of
Rs.34,36,000/- in the saving bank account of assessee.
4.1. AO has noted that information was received about the huge cash
deposits in assessee’s bank account. During the course of assessment
proceedings, on perusing the bank account of assessee maintained with
State Bank of India, Murud Janjira Branch, it was noticed that assessee
has made aggregate cash deposits of Rs.34,36,000/-. The assessee was
asked to explain the nature and source of cash deposits. Assessee inter-
alia submitted that assessee along with five other persons intended to
buy parasailing water boat for business purpose and for which five other
persons contributed the cash which was deposited in assessee’s saving
bank account with S.B.I. The details of person-wise contribution and the
date of cash deposits are noted by the AO in Page 4 of the assessment
order. With respect to the source of the deposits by those persons
assessee submitted that the amount was received by them through hand
loans. AO noted that the details of hand loans, names and address of
the persons from whom hand loan was raised, whether the hand loan
was returned by them or not etc. was not proved by the assessee. AO
also noted that as per the bills issued by Aquarius Fibereglas Pvt. Ltd.,
the boat was purchased by the assessee along with Shri Umesh
Sakharam Kasar and Shri Bharat Dashrath Belose. AO noted that the
purchase was thus only in the name of these three persons and not other
persons who stated to have contributed for the purpose of the boat. AO
concluded that the persons who stated to have been contributed amount
for the purchase of boat for business purpose were having meager
income and their creditworthiness was not proved. AO accordingly
considered the aggregate cash deposits of Rs.34,36,000/- as unexplained
cash deposits and made its addition u/s 69 of the Act. Aggrieved by the
order of AO, assessee carried the matter before Ld.CIT(A), who upheld the
order of AO.
Aggrieved by the order of Ld.CIT(A), assessee is now in appeal.
Before me, Ld.A.R. reiterated the submissions made before AO and
Ld.CIT(A). He further submitted that out of the total cash deposits of
Rs.34,36,000/-, Rs.25 lakhs are received by the assessee from outsiders,
whose names are listed by AO in Page 5 of the assessment order and the
balance amount is from assessee and other family members. He
submitted that with respect to the loan from outsiders, AO had passed a
penalty order u/s 271D of the Act on 22.12.2016 wherein on the amount
of loan of Rs.13 lakhs, he has levied penalty u/s 271D of the Act. He
therefore submitted that to the extent when the persons have been
identified to have given loans, addition u/s 68 of the Act is not
warranted. With respect to the balance addition which is from the
assessee and his family members, he relied on the submissions made by
the assessee before AO and Ld.CIT(A). Ld. D.R. on the other hand,
submitted that the penalty proceedings are separate and merely because
penalty has been levied u/s 271D of the Act on certain deposits, it
cannot be said that no addition u/s 68 of the Act is warranted. He thus
supported the order of lower authorities.
I have heard the rival submission and perused the material on
record. The issue in the present ground is with respect to addition of
cash deposits aggregating to Rs.34,36,000/- in assessee’s saving Bank
account maintained with SBI. It is the case of the assessee that he had
received loans aggregating to Rs.25 lakhs from outsiders for purchasing
of shipping boat for business purpose. It is also a fact that on such
cash deposits which have been received by the assessee, AO vide order
dated 22.12.2016 passed u/s 271D of the Act had levied penalty on
Rs.13 lakhs which is the unsecured loan to have been received by the
assessee by cash from those persons. In such a situation, I find force in
the argument of the Ld.A.R. that to the extent of Rs.13 lakhs, the parties
have been identified and no addition is warranted to that extent. With
respect to the balance amount, no plausible information has been
furnished by the Ld.A.R. and nor was he in a position to controvert the
findings of AO and Ld.CIT(A). I therefore direct the deletion of addition to
the extent of Rs.16,50,000/- and the balance amount of addition is
confirmed. Thus, the ground of the assessee is partly allowed.
In the result, the appeal of assessee is partly allowed.
Order pronounced on 16th day of October, 2019.
/- Sd/- (ANIL CHATURVEDI) लेखा सद�य / ACCOUNTANT MEMBER
पुणे Pune; �दनांक Dated : 16th October, 2019. Yamini
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :
अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-2, Pune. 4. The Pr.CIT-2, Thane. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक सद�य” / DR, ITAT, “SMC” Pune; 6. गाड� फाईल / Guard file.
आदेशानुसार/ BY ORDER
// True Copy //
व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.