Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, COCHIN “SMC” BENCH, COCHIN
Before: Shri George George K
This appeal at the instance of the assessee is directed against the Commissioner of Income-tax (Appeals)’s order dated 09.08.2017. The relevant assessment year is 1996- 1997.
The grounds raised read as follows:-
“1. The Officers below were not justified in ignoring the VDIS declared cash available with the appellant from the year 1993-94 to 1996-97 and should have given a set off to the deficiency.
The Officers below should not have brushed aside the drawings of Rs.4,00,000/- (2,00,000 +
ITA No.590/Coch/2017. 2 Smt.Anna Alexander. 1,00,000 + 1,00,000) from the firm Muthoot M.George Financiers, Faridabad.
The Officers below were not justified in not considering the Cash Flow Statement & Certificates filed during the course of hearing from 2 firms totaling to Rs.5,00,000/-.”
Brief facts of the case are as follow:-
3.1 The assessee, an individual, had filed return of income on 31.10.1996 declaring total income of Rs.2,64,660 comprising of income under the head `capital gains’ and `other sources’. The assessment u/s 143(3) of the Income-tax Act, 1961 was completed vide order dated 12.03.1999. The Assessing Officer had made an addition of Rs.5,50,360 being deficit of cash deposits made with a firm M/s.Muthoot M.George Financiers, Faridabad, wherein assessee is a partner.
Aggrieved by the assessment u/s 143(3) of the I.T.Act, making addition of Rs.5,50,360, the assessee preferred an appeal to the first appellate authority. The CIT(A) confirmed the addition made by the Assessing Officer. The relevant finding of the CIT(A) reads as follow:-
“4. I carefully examined the facts of the case and also considered the rival contentions. The first argument of the appellant that the appellant has availed VDIS for the AYs 1993-94 to 1996-97 and disclosed under the scheme a sum of Rs.3,14,950/- which in turn was available with her to explain the
ITA No.590/Coch/2017. 3 Smt.Anna Alexander. deficiencies, cannot simply be accepted in the absence of year wise disclosure details made available for verification. Availability of cash on a particular day on which it was credited into her account is the must without which no claim from the known source could be made. Stating in general that the fund available against the VDIS availed, would not come for appellant's rescue unless it is proved that she has had fund which in turn has already been suffered to tax under VDIS. In the absence of credible evidences of any sort forthcoming in this regard at any point of given time, this argument has no relevance to the facts of the case and therefore deserved to be kept aside. Another argument of the appellant that she had withdrawn 4,00,000/- from the particular firm on three different dates for the construction purpose, also cannot be accepted since she has not proved that the amount she had withdrawn had not all been spent for the construction purpose. Further, as mentioned in para 6 of the assessment order, the current account of the firm, M/S Muthoot M George Financiers shows that the appellant deposited her loan from Canfin of Rs. 3 lakhs and Rs. 2 lakhs on 14.8.1995 and 14.12.1995 respectively. But, it is clear that she could not have deposited the cash from this source as she had received a clearing cheque which was deposited by her in her bank account only after she deposited the cash allegedly received from Canfin. Moreover, she never withdrawn cash but issued cheque to some other party who deposited it in their bank account, Therefore, addition of Rs.5 lakhs is necessarily called for. Similarly, a sum of Rs.52,OOO/- allegedly received as loan from LIC, was withdrawn from the bank only on 16.9.1995 but the appellant has shown the same as deposited on 5.9.1995 in the said firm. Addition of Rs.52,000/- is also called for. Considering all the above, I have no other option but to agree with the Assessing Officer for the addition made since none of the argument of the appellant is supported by credible and acceptable evidences.”
ITA No.590/Coch/2017. 4 Smt.Anna Alexander.
Aggrieved by the order of the CIT(A), the assessee has preferred the present appeal before the Tribunal. The assessee had filed a paper book comprising of 14 pages including therein written submission, cash flow statement, confirmation of Muthoot Bankers, VDIS certificate, ledger account copy of the assessee with the firm M/s.Muthoot M.George Financiers, Faridabad, etc. In the written submission, it was contended that assessee had declared a sum of Rs.3,14,950 by way of cash under VDIS pertaining to A.Y. 1993-94 to A.Y. 1996-97. It was stated in the written submission that this amount has been credited in assessee’s current account with the firm M/s.Muthoot M.George Financiers, Edapally on 01.04.1997, and therefore, the amount of Rs.3,14,950 was available with the assessee to explain the deficit, if any, as worked out in the cash flow statement. Further, it is contended that assessee had withdrawn cash of Rs.2,00,000 on 10.04.1995, Rs.1,00,000 on 10.05.1995 and Rs.1,00,000 on 15.09.1995 from the firm M/s.Muthoot M.George Financiers. It was submitted that though the narration given for withdrawal was `building construction’, the entire amount was not spent on the very same day for the purpose of building construction, and the cash balance is also available with the assessee to explain the short fall that is pointed out by the Assessing Officer in the cash flow statement prepared by her.
ITA No.590/Coch/2017. 5 Smt.Anna Alexander. 6. The learned Departmental Representative, on the other hand, supported the assessment order and the order of CIT(A).
I have heard the rival submissions and perused the relevant material on record. The deficit of cash deposits with the firm, which are subject matter of adjudication before me are as follow:-
Date Amount 25.04.1995 Rs. 47,800 14.08.1995 Rs.2,36,280 29.08.1995 Rs. 2,475 05.09.1995 Rs. 52,000 04.09.1995 Rs. 39,000 14.12.1995 Rs.1,50,897 31.01.1996 Rs. 5,049 06.02.1996 Rs. 10,060 30.03.1996 Rs. 4,799 30.03.1996 Rs. 2,000 --------------- Total Rs.5,50,360 ==========
7.1 The Assessing Officer has determined the short fall in cash at page five of the impugned assessment order. The major cash deposits made by the assessee with the firm is a sum of Rs.3,00,000 on 14.08.1995 for which the deficiency has been worked out by the Assessing Officer to the extent of Rs.2,36,280. Similarly, a sum of Rs.2,00,000 was deposited by the assessee with the firm on 14.12.1995 and the addition made on such cash deposit by the Assessing Officer is to the
ITA No.590/Coch/2017. 6 Smt.Anna Alexander. extent of Rs.1,50,897. The assessee had sought to explain these cash deposits with firm out of the loans received by the assessee from Canfin Homes and deposit in her bank account with Bank of Baroda. On perusal of the assessee’s bank account, it is clear that these amounts received from Canfin Homes were deposited in her Bank account only subsequent to her cash deposit with the firm (assessee had withdrawn Rs.3 lakh and Rs.2 lakh from her bank account only on 18.08.1995 and 18.12.1995). Hence, the withdrawals by the assessee from her bank account on 18.08.1995 and 18.12.1995 cannot be claimed as a withdrawal for cash deposits in firm on 14.08.1995 and 18.12.1995. Therefore, the addition made by the Assessing Officer after determining the shortfall / deficit in cash deposits with the firm has to be sustained.
7.2 However, I noticed that the assessee had declared a sum of Rs.3,14,950 by way of cash under the VDIS pertaining to assessment years 1993-94 to 1996-97. In the absence of the year-wise bifurcation of the declaration under the VDIS, it is not possible to give entire credit of Rs.3,14,950 to the deficit cash deposit worked out by the Assessing Officer. Further, I noticed that there had been cash withdrawals by the assessee from the firm on various dates totaling to Rs.4,00,000. Though the narration for such withdrawals is given as building construction, the entire amount withdrawn on the same day would not have been utilized for the purpose of building construction. The cash withdrawals are on dates
ITA No.590/Coch/2017. 7 Smt.Anna Alexander. which are more or less near to the dates of cash deposits made by the assessee in the firm M/s.Muthoot M.George Financiers. Therefore, taking into account the declaration of VDIS and cash withdrawals by the assessee from the firm, I am of the view that the assessee should be granted credit for a sum of Rs.2,00,000. Therefore, I confirm the addition of Rs.3,50,360 and delete Rs.2 lakh out of the total addition of Rs.5,50,360 made by the Income-tax authorities. It is ordered accordingly.
In the result, this appeal filed by the assessee is partly allowed.
Order pronounced on this 23rd day of February, 2018.
Sd/- (George George K.) JUDICIAL MEMBER
Cochin ; Dated : 23rd February, 2018. Devdas*
Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The Pr.CIT, Kottayam. 4. The CIT(A), Kottayam. 5. The DR, ITAT, Cochin 6. Guard file. True copy
BY ORDER,
(Asstt. Registrar) ITAT, Cochin