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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Shri Rajpal Yadav & Shri Amarjit Singh
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member ITA No. 1716/Ahd/2013 Assessment Year 2008-09
Shri Chikesh Jayantibhai The ITO, Patel, Ward-9(2), Prop. Hitesh Builders, Vs Ahmedabad Chaloda Char Bhag, (Respondent) Dholka, Dist. Ahmedabad PAN: ABYPP8122F (Appellant)
Revenue by: Shri Vilas Shinde, Sr. D.R. Assessee by: Shri S.N. Divetia, A.R. Date of hearing : 22-02-2018 Date of pronouncement : 27-04-2018 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2008-09, arises from order of the CIT(A)- XV, Ahmedabad dated 05-03-2013, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.
The assessee has raised following grounds of appeal:- “1.1 The order passed u/s.250 on 5.3.2011 for AY2008-09 by the CIT(A)-XV, Abad, upholding the addition of Rs. 16,75,860 made u/s.69 of the IT Act by the AO is wholly illegal, unlawral and against the principle of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned addition.
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2.1 The Ld. CIT(A) has grievious erred in law and or on facts in confirming the addition of Rs.12,42,500 made by AO as unexplained investment u/s.69 of the Act in SB A/c. No.4626 with Dena Bank, Chaloda Branch held jointly with his parents. 2.2 That in the facts and circumstances of the case, the Ld. CIT(A) ought not to have upheld the addition of Rs. 12,42,500 made by AO as unexplained investment in SB A/c. No.4626 with Dena Bank, Chaloda Branch held jointly with his parents. 3.1 The Ld. CIT(A) has failed to appreciate that the appellant had fully discharged the burden cast upon him to prove the genuineness source of deposits in the said bank account and the purpose for such deposits. 4.1 The Ld. CIT(A) has grievously erred in law and or on facts in confirming the disallowance of Rs. 1,42,875 made by AO u/s.40A(3). 4.2 That in the facts and circumstances of the case, the Ld. CIT(A) ought not to have confirmed the disallowance of Rs. 1,42,875.”
In this case, return of income declaring income of Rs. 2,90,482/- was filed on 25th Sep, 2008. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 19th August, 2009. During the course of appellate proceedings, the assessing officer has noticed that assessee has made cash payment to M/s. Deep Traders, one of the suppliers as under:- 07.03.2008 Cash Rs. 45,000/- 10.03.2008 Cash Rs. 33,750/- 19.03.2008 Cash Rs. 30,375/- 22.03.2008 Cash Rs. 33,750/- Rs. 1,42,875/-
On scrutiny, the assessing officer has noticed that assessee has made this cash payment in contravention to the provision of section 40A(3) of the act. Therefore, the same was disallowed being the amount paid in excess of Rs. 20,000/- under the provision of section 40A(3) of the act. The Ld. CIT(A) has dismissed this grounds of appeal of the assessee on the ground that no detail was furnished and the AR has also not pressed this grounds. During the course of appellate proceedings before us, the assessee has failed to controvert the disallowance with any relevant material, therefore, this ground of appeal of the assessee is dismissed.
Addition u/s. 69 of the act
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On scrutiny, the assessing officer noticed that as per the AIR information there was cash deposit of Rs. 11,42,500/- in a Saving Bank A/c No. 4626 maintained with Dena Bank A/c by the assessee. Assessee was asked to explain the source of investment made in the deposit appearing in the aforesaid bank a/c. The assessee explained that his late father had maintained this bank balance in order to sponsor the foreign study for one of his cousins. The cash deposit was made by his late father from unsecured loan obtained from his various friends and relatives. He also stated that his father Shri Jayantilal Patel was expired on 5th Sep, 2008. The assesse has also furnished copy of notarized affidavit and sponsorship signed by his father declaring that he had sponsored the study of Shri Brijesh Patel including expenses towards fees, books etc. The assessing officer observed that the affidavit does not show the source of amount received as late Shri Jayantilal Patel was a retired teacher. Therefore, the assessee was to furnish confirmation from the parties/persons from whom the amount was received. In response, the assessee furnished singed confirmation from all the persons along with 7/12 extract of agricultural land held by all the depositors to prove the genuineness and creditworthiness of the depositors. The assesse has produced 8 out of 12 depositors who were examined on oath and their statements were recorded u/s. 131(1A) of the act by the assessing officer . Analysis of the examination of the various depositors is as under:-
(i) Late Shri Bipinbhai Yashbhai Patel He was holding 40 bighas of agricultural land claiming agricultural income approximately 4.5 to 5 lacs per annum and he has provided cash loan of Rs. 1.5 lacs and Rs. 95,000/- respectively to the father of the assessee late Jayantilal Patel. The assessing officer has not accepted this on the ground that latter was not holding any bank a/c and was not assessed to income tax. (ii)Shri Deepakbhai Baldevbhaii Trivedi Patel He was holding 12 bighas of agricultural land and 15 bighas of land on lease totaling to 27 bighas of land and his annual agricultural income was Rs. 4 lacs.
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He claimed that he was capable of giving cash loan of Rs. 1,01,000/- to the assessee’s father. The assessing officer has not accepted his explanation on the ground that he is not assessed to tax. (iii)Shri Jayesh Ramanbhai Amin Hee was holding 100 bighas of agricultural land and his annual income was Rs. 10 lacs. The assessing officer has not accepted his explanation because he has no bank a/c and has not assessed to tax. (iv)Shri Kanubhai Ravishankar Bhatt He was holding 15 bighas of agricultural land and his annual agricultural income was Rs. 2.5 lacs. He has given loan of Rs. 49,000/-. The assessing officer stated that he is not assessed to tax and did not maintain any bank a/c. (v) Shri Shailesh PramodKumar Amin He was having 25 bighas of agricultural land from which his annual income was Rs. 4.5 lacs. He has given cash loan of Rs. 1 lacs to the assessee. The assessing officer stated that he is not assessed to tax and he did not maintain any bank a/c etc. (vi)Rajnikant Ashabhai Patel He was holding 20 bighas of agricultural land and further taken 15 bighas of land on lease totaling of 35 bighas of land, his annual income was Rs. 3 lacs. The assessing officer has stated he was not assessed to tax and was not maintaining a bank a/c. (vii)Shri Prafulbhai Laxmiprasad Amin He was holding 30 bighas of agricultural land having annual income of Rs. 5 lacs. The assessing officer has stated that he was not assessed to tax and not maintaining any bank a/c. (viii) Shri Nitian Ravishankar Bhat He was holding 15 bighas of agricultural land having annual income of Rs. 2.5 lacs and provided loan of Rs. 47,500/-.The assessing officer stated that he is not assessed to tax and not maintained bank a/c. (ix)Shri Kaushikbhai Chandrakant Patel
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The land holding was 50.80 bighas and produced 7/12 extracts.He has provided loan of Rs. 50000 . The assessing officer stated there was 8 co-owners because of which it is not possible for the lender to provide loan to the assessee. (x) Shri Ketanbhai Mohanbhai Patel. The land holding was 19.40 bighas and produced 7/12 extracts. He was not having bank account. (xi) Shri Sanjay Vasudev Patel. He was holding 25 bighas of agricultural land having annual income of Rs. 3 lacs. He has provided loan of Rs. 47500/- to the assessee. The assessing officer stated he is not assessed to tax. (xii)Shaileshbhai Ratibhai Patel He was holding 10 bighas of agricultural land and taken 10 bighas of agricultural land on lease having annual income was Rs. 4 lacs. The assessing officer stated that he was not satisfied with the explanation of the lender of providing loan of Rs. 1 lacs to the assessee on the ground that he is not assessed to tax and did not hold any bank a/c.
4.1 After analysis of the above facts, the assessing officer was not satisfied that cash was deposited by his father out of the cash loan obtained from various friends and relatives. Thereafter, he has made addition of Rs. 12,42,500/- u/s. 69 of the act.
Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has sustained the addition by observing as under :- “5. I have perused the facts of the case as enumerated by A.-©, and as submitted by appellant. I have perused the case laws relied on by A.O. as well as appellant. After careful consideration of facts, submission and contention of both A.O. as well as of appellant, ground wise . adjudication is as follows: 5.1. Ground No.(i) is general in nature. The same is against the order u/s.143(3) of the Act and assessing the total income at Rs.16,75,680 as against returned income of Rs.2,90,482. This issue will be dealt in specific ground. 5.2.(a) Ground No.(ii) with its sub-ground is against the addition u/s.69 of the Act of Rs.12,42,500 being aggregate of several cash amount deposited in a saving bank account at Dena Bank treating the same as unexplained deposits. The appellant contended that A.O. failed to appreciate that the said deposit was made by his late father and should not be considered in appellant's total income. It was also contended that A.O. failed to appreciate that all the persons from whom amounts were borrowed confirmed the fact that they had advanced the money to appellant's father in cash and received back such cash from him hence the same cannot be treated as unexplained.
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(b) It is an undisputed fact that cash deposit aggregating to Rs.11,42,500 was made in S.B. account No.4626 with Dena Bank Chandola branch jointly hold by appellant with his parents. It is also undisputed that Shri Brijesh Patel for whose visa purpose such cash deposit was contended to be made is presently studying at ICON College of technology and Management, London for which the MBA course commences from 19.9.2006 i.e. he got the visa before 19.9.2006 while the deposit in cash lathe bank Is after 01.04.2007 i.e. after Shri Brijesh Patel left India, the A.O. examined various parties from whom cash deposit were claimed to be accepted and there is no dispute in reference to identity of those parties. It is also undisputed that these deposits were accepted in cash exceeding the limit of Rs.20,000 as stipulated in section 269SS of the Act and repaid also in cash against the provisions of section 269T of the Act. In some of the depositors viz. Shri Jayesh R Amin, Shri Kanu R Bhatt, Shri Rajnikant A Patel.Shri Prafulbhai L. Amin, Shri SanjayV.Patel and Shri Shailesh R Patel, though they are having bank accounts, such deposits were accepted in cash and also repaid in cash in contravention of provisions of section 269SS and 269T of the Act. Even if, the emergency (not admitting otherwise by A.O. and also by myself) is believed for acceptance of such deposit in cash but the repayment in cash to these parties in spite of they are having bank accounts clearly reflect the non-genuinity of such transactions though during the course of recording of their statement, various depositors admitted the transaction of loan/deposit given by them as well as received back by them. The appellant contended that he had already discharged the burden as casted upon him u/s.69 of the Act by producing the parties, who in their statement affirmed that loans/deposit were given and they received back such deposits. It was contended against the A.O.'s contention that these parties does not have credit worthiness and all parties failed to substantiate the source of their agricultural income from sales bills of agriculture produce with expenditure on seeds, labour, manure, pesticides etc. that appellant is not required to prove source of the same. Further A.O. has not called from them such evidences. The appellant in reference to A.O.'s contention that even though the Agricultural land holding and agricultural income is quite sufficient but considering the co-owners, the. credit worthiness is not evidenced, contended that AO failed to substantiate the same. The appellant relied on ' Hon'ble Punjab & Haryana High Court decision in the case of Ramneet Sing and Hon'ble Gujarat High Court in the case of Micro Melt P. Ltd. (supra) to support that once the depositors in their respective statement admitted about such deposits, no addition u/s.68 of the Act can be made. As against the A.O.'s contention that appellant failed through documentary evidences that money was in fact deposited by father of appellant, it is contended by appellant that when all depositors in their statement on oath affirmed that money was given to his father, then there remains nothing to substantiate that the money was deposited by appellant's father. In reference to lack of credit worthiness, appellant relied on Hon'ble ITAT Ahmedabad recent order in the case of Amantran v.lTO (ITA No.2318A/2010 dated 1.2.2013) where holding of 13 bigha land, extract of 7/12 and sale bill of agri.produce were held sufficient evidences to reflect credit worthiness. (c) The appellant vide letter dated 26.02.2013 further clarified with copy of bank account (S.B.) No.4626 Dena bank for the period 01.04.2006 to 31.03.2009 that after Shri Brjjesh Patel went to U.K. for further study but "University rejected his admission and he applied in other University and for visa extension he needed such balance. The appellant submitted that his father was reputed teacher having his PAN ATSPP 0664 but not having income above the minimum limit for taxation hence not filed the return of income. (d) I am inclined with the contention of the A.O. that the purpose of accepting the deposits in cash from various persons does not commensurate with the facts and contention of the appellant. In this regard following observations are important: (i) As per e-mail confirmation of Shri Brijesh Patel (mrbapatel@.yahoo.com dtd.27.09.2010(3.46 AM) as available at page 17 of the details dated 11.02,2013, he affirmed that the balance of S.B.A/C.N0.4526 was utilized by him in seeking VISA of UK in Sept.2006 which he got and he went in April 2007 to UK. He also affirmed that copy of
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pass book with notarized affidavit of his grandfather Shri Jayantibhai Dahyabhai Patel was utilized for his visa purpose. He also affirmed that after he took admission he wish to apply in other university and for that as well as for continuation of his visa he requested Shri Jayantibhai to maintain considerable balance in said bank account and therefore such balance in said bank account was maintained for long time after he left India. (ii) As against the above discussed confirmation of Shri Brijesh Patel, it is evidenced that appellant submitted a copy of such affidavit dated 01.09.2006 before A.O. The copy of Bank account S.B. A/c.No.4626 at Dena bank from 04.10.2004 to 17.3.2009 as submitted by appellant vide letter dated 26.2.2013 (reflecting Shri Jayantibhai Dahyabhai Patel and appellant as joint holder) reflect that on and around 02.09.06 the balance in this account was only Rs.3,70,660 for which there are entries of cash deposit from 30.08.2006 to 02.09.06 of about Rs.3,70,000. However, this balance was reduced and on 01.04.07 (1st day of previous year) the balance was of Rs.2,50,156 only. Interestingly it was contented by appellant that he joined this bank account on 31.08.2006 i.e. before 01.04.07. Shri Jayantibhai expired on 05.09.08 and after the affidavit by him dated 01.09.2006 he has not made another affidavit as well as there is no detail available about once Shri Brijesh Patel left in Spt.2006 to UK, what happened to his visa proceedings i.e. whether any need arise after Sept 2006, whether any certificate or such balance during previous year (F.Y. 07-08) was ever utilized. (iii) The details of bank account reflect that there is periodic deposit of substantial cash as follows during previous year: Date Cash deposit Withdrawal 01.05.07 50,000 04.05.07 49,000 10.05.07 2,00,000 11.05.07 1,00,000 24.05.07 1,50,000 25.05.07 49,000 04.06.07 1,00,000 12.06.07 50,000 18.06.07 1,01,000
18.06.07 1,36,000 18.06.07 1,500 19.06.07 47,500 22.06.07 1,00,000 1,00,000 16.07.07 1,00,000
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18.07.07 95,000
The maximum balance in this account was of Rs. 14,42,556 on 18.07.2007. Thereafter this balance was not maintained but periodically reduced to around .3 to-4 lacs. Substantial cash withdrawals though self cheques in the name of appellant were made on different dates in the month of Feb.2008. (e) It is therefore, neither substantial deposit as well as balance in April 2007 was made and maintained nor it is justified with evidences for such huge deposits in the month of May and June 2007. Further, as discussed in earlier paras, despite various depositors having bank account, cash deposit of varied denominations on various dates in May 2007 and Jun 2007 was accepted and thereafter claimed to be repaid in cash. (f) In my view, as far as income tax provisions are concerned, the purpose of accepting deposit is not that much important but source of such fund and genuinity of such transactions are important. The appellant has not disclosed this bank account in his books of account though he was joint holder of this account and various transactions are reflected in his name. It is because of Annual Information Return (AIR) such information was gathered by department and utilized in the case of appellant. Coming to other aspect, all such depositors do admitted that they extended the deposit in cash to appellant's father but all such depositors were appellant's witness and analysis of their statement clearly reflect that even though all of them has substantial land holding but considering the size of family / co-ownership of land and detail of their household expenditure such cash as claimed to be given to appellant's father remained unexplained. The appellant relied on various case laws. The A.O. also relied on various case laws. With due regards, facts of each case has to be considered before applying the ratio of any of such case law. As per settled legal proposition the A.O. is not required to put blinkers in his eyes but he should go behind the smoke screen to find out the substance out of the form of the transaction. As discussed in details, from the facts of appellant's case, the substance is that appellant failed to discharge its burden as casted u/s.69 of the Act. I am therefore inclined with the A.O. that such cash deposit in the bank account is unexplained and addition so made u/s.69 of the Act is therefore upheld and confirmed. This ground of appellant is dismissed. 5.3. Ground No.(iii) is against disallowance and addition of Rs.1,42,875 u/s.40(A)(3) of the Act being aggregate of amount of some of the bills of supplier Deep Traders paid in cash. The A.O. at para 3 discussed this issue with details of all such cash payment exceeding Rs.20,000 on various dates. The appellant has not submitted any detail or explanation.^ During the course of hearing on 12.2.2013, Shri Nitin D.Thakkar, Advocate and A.R. of the assessee submitted that this ground is not pressed. In view of no explanation / detail submitted by appellant and also request of A.R. of the appellant for not pressing the ground, this is dismissed.” 6. During the course of appellate proceedings before us, the ld. counsel has submitted paper book containing information pertaining to the submissions made before the assessing officer and CIT(A). He has also furnished translation of document pertaining to affidavit of Shri Bipen J Patel and copies of statements of depositors recorded u/s. 131 of the act . On the other hand, ld. departmental representative has supported the order of ld. CIT(A). Ld. counsel has also
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placed reliance on the decision of hon’ble high court of Punjab and Haryana vide IT appeal No. 515 of 2007 in the case of CIT vs. Ramneet dated 13th Feb, 2008.
We have heard both the sides and perused the material on record carefully. During the course of appellate proceedings, the assessing officer has made addition of Rs. 12,42,500/- u/s. 69 of the act on the ground that the assessee had failed to explain the sources of the deposit made in the saving bank account no. 4626 with Dena Bank. The assessee had explained that the aforesaid cash deposit was made by his deceased father to sponsor the foreign studies of his Brijesh Patel who was his guardian. It was explained that the source of cash deposit was cash loan/deposit taken from friends and relatives. In this connection, the assessee had filed confirmation letters along with extracts of 7/12 records from the 12 depositors. Shri Brijesh Patel had secured admission in Con College of Technology and Management, Londan for the course of MBA. To verify the genuineness and creditworthiness of the depositors, the assessing officer has directed the assessee to produce the depositors. The ld. counsel had also referred the judicial pronouncement in the case of CIT vs. Ramneet Singh vide ITA no. 515 of 2007 of High Court of Punjab and Haryana in which it is held that the assesse had produced sufficient documents during the appellate proceedings to show that the loan in the name of the two parties had been recieved by them, there was no justification to make addition. In the case of the assessee also we observe that the assessee had produced sufficient materials as elaborated supra in this order which the assessing officer has failed to disprove. The assessee had produced 9 out of the 12 depositors who were examined on oath and their statements were recorded u/s. 131 of the act. We have gone through the statements recorded u/s. 131 of the depositors provided in the paper book. In their statements the depositors have provided the detail of source of income alongwith supporting material in the form of land holdings and earning as per the size of land holdings. The depositors have admitted in their statements their relationships with the late father of the assessee.They have
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admitted that they have provided the impugned amount of loan to late Shri Jayantibhai Dahyabhai Patel with the date of giving the amount and the date of returning back the amount to them. They have also provided complete information of the late father of the asssessee along with nature of relationship etc. The assessee has also filed confirmation letter by E-mail from Sh. Brijesh A. Patel for whose visa/study the impugned amount was arranged by the late father of the assesse. Shri Arbindbhai Patel adopted son of the late father of the assessee has also admitted that the aforesaid saving bank a/c with Dena Bank was mentioned in the application for the purpose of visa to U.K Embassy. The assessing officer has failed to disprove these facts. The assessing officer has also failed to controvert the explanation of the assessee that maintenance of the bank balance depends upon the requirement of country it may be a few days before or after the visa . We further observe that assessing officer failed to disprove the creditworthiness of the depositors supported with material demonstrating sufficient land holdings of 40 bighas, 12 bighas, 100 bighas, 15 bighas, 25 bighas, 20 bigas, 30 bighas, 15 bighas, 50.80 bighas 19.40 bighas, 25 bighas, 10 bighas of the 12 related persons.
7.1 In view of the above facts and circumstances, we are not inclined with the decision of the ld. CIT(A), therefore, the appeal of the assessee is allowed on this issue.
In the result, the appeal of the assessee is partly allowed.
Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 27/04/2018 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT
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CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद