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Facts
The assessee, a proprietor of a petrol bunk, made cash deposits. Initially, the Assessing Officer (AO) accepted most deposits as sale proceeds but added ₹15,50,000 under Section 68 as unexplained, stated to be from salary savings. Before the CIT(A), the assessee changed his stand, claiming the amounts were gifts from his father, father-in-law, and mother-in-law, supported by documents. The AO, in a remand report, rejected this new explanation as a change of opinion, and the CIT(A) upheld the addition.
Held
The Tribunal found that the assessee provided adequate "source of source" documentation for the gifts from family members, including details of jewel loans and land sale advances, which were not rebutted by the Revenue. The Tribunal also determined that the remaining unexplained amount of ₹4,38,000 was justified by the assessee's salary and his wife's tuition fee income, which the AO had rejected without proper examination. Therefore, the Tribunal concluded that no additions were maintainable.
Key Issues
Whether the CIT(A) was justified in confirming the addition under Section 68, rejecting the assessee's explanation of gifts from family members and other savings, and refusing to consider new evidence presented during the appellate proceedings.
Sections Cited
68, 147, 148, 144B
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Before: Shri S.S. Viswanethra Ravi & Shri Jagadish
Year: 2018-19 Gnanamoorthy Suresh,, Vs. The Income Tax Officer, No. 210, Phase 1, TNHB, Vellore, Ward 2, Tirupattur, Tirupattur H.O. Vellore. Tamil Nadu 635 601. [PAN:BPCPS7016G] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri P. Ranga Ramanujam, C.A. ��थ� की ओर से/Respondent by : Ms. R. Anita, Addl. CIT सुनवाई की तारीख/ Date of hearing : 27.01.2025 घोषणा की तारीख /Date of Pronouncement : 07.02.2025 आदेश /O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 23.09.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2018-19.
The assessee raised 8 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the addition made by the Assessing Officer under section 68 of the Income Tax Act, 1961 [“Act” in short].
The Assessing Officer observed that the assessee made cash deposits amounting to ₹.1,42,53,790/- and no return of income filed. A notice under section 148 of the Act issued and in response to which, the assessee filed return of income declaring total income at ₹.9,71,838/-. The Assessing Officer accepted the contentions of the assessee about details of cash deposit are out of sale proceeds with the support of cash book. However, the Assessing Officer did not accept the contention of the assessee for an amount of ₹.15,50,000/-, which was stated to be out of salary savings and accordingly added the said amount under section 68 of the Act to the total income of the assessee vide his order dated 09.02.2023 passed under section 147 r.w.s. 144B of the Act.
The assessee challenged the same before the ld. CIT(A), wherein, it was contended that the said cash deposits were received from assessee’s father, father-in-law and mother-in-law. Since it is a new contention, the ld. CIT(A) sought remand report from the Assessing Officer. The assessee filed all the details of gifts and the Assessing Officer has held that the assessee changed his stand and not accepted the submissions of the assessee. The ld. CIT(A) considered the remand report and for not filing an application seeking permission for filing additional evidence, confirmed the addition made by the Assessing Officer. On being aggrieved, the assessee is in appeal before the Tribunal.
The ld. AR Shri P. Ranga Ramanujam, C.A. submits that the Assessing Officer did not give any consideration to the details as submitted during the remand proceedings like confirmation letter, gold loan account statement, UNI SB account statement, agreement for sale of property relating to assessee’s father. Likewise, assessee has given details of his father-in-law and mother-in-law. The ld. AR drew our attention to page 2 to 31 of the paper book and argued that the assessee furnished the details of confirmation letters, gold loan account statement and agreement for sale of property, which clearly shows the source of source for cash deposits in assessee’s account. The ld. AR vehemently argued that there is no requirement of showing source of source for the cash deposits for the year under consideration, but, however, the assessee shown source of source for the cash deposit as found by the Assessing Officer. The Assessing Officer did not consider the same in right perspective, but, however, simply held that the assessee changed his stand by adopting a new stand of argument made during the course of remand proceedings. The ld. CIT(A), though without considering the contentions, simply reiterated the findings of the Assessing Officer without examining the details of source of source furnished by the assessee. Further, the ld. AR submits that the ld. CIT(A) erred in holding that there was no proper application seeking permission for filing new evidences. The ld. AR drew our attention to the Form 35. The ld. AR argued that this finding of the ld. CIT(A) has no significance as the ld. CIT(A) himself sought remand report from the Assessing Officer, which clearly shows that the new details as stated to have been filed during first appellate proceedings got admitted and remand report sought for. He prayed to allow the grounds of appeal and to delete the addition made by the Assessing Officer.
The ld. DR Ms. R. Anita, Addl. CIT submits that the assessee clearly changed his version of contention before the ld. CIT(A). She drew our attention to the assessment order and argued that the assessee all along stated that the said cash deposit was out of his salary savings. The Assessing Officer examined the details of salary of assessee and observed that there was no substantial withdrawal and the Assessing Officer rightly made the addition under section 68 of the Act as there was no explanation to the cash deposits. The ld. CIT(A) clearly held that there was no proper reason stated by the assessee for submission of new evidence, which clearly supports the view of the Assessing Officer, in not accepting the new details by holding the assessee changed his stand of argument from salary savings to gift from family members. She supported the order of the ld. CIT(A) and prayed to dismiss the ground of appeal.
7. Heard both the parties and perused the material available on record. We note that the assessee is a BE, Computer Science graduate and worked as an employee in Temenos India Private Limited, a banking software company. The assessee was deriving salary income and filing returns of income upto AY 2017-18. During the financial year 2017-18, the assessee was allotted a Petrol Bunk of M/s. Essar group and commenced sole proprietor business. The assessee was carrying on his business under the name and style of K.G.S. Agency from October, 2017 onwards. We note that during the course of assessment proceedings, the assessee furnished copy of cash book in support of the cash deposit in Canara Bank regarding savings bank account, current account and OCC account. The Assessing Officer, having examined, accepted the cash deposits and held the said cash deposits were out of sale proceeds of petrol/diesel and oil except an amount of ₹.15,50,000/-. The assessee contended that the said cash deposit was capital introduction out of assessee’s salary savings, savings of his wife, etc., who derives income from tuition fees. The Assessing Officer did not accept the said contention, which is clear from para 4 in page 6 of the assessment order. The assessee, no doubt, has taken a new stand before the ld. CIT(A), which is reflecting in page 6 of the impugned order. The ld. CIT(A), having felt the same as new evidence, having accepted, sought remand report from the Assessing Officer. The said remand report is filed at page 38 & 39 of the paper book. On perusal of the same, we note that the Assessing Officer simply held that the gifts received from family members supported with bank statements, confirmation letters, etc. were not acceptable as it shows the change of opinion from the assessee. We note that the Assessing Officer did not give any consideration like examining the details as furnished by the assessee. The ld. CIT(A) accepted the new evidences furnished by the assessee and in order to afford an opportunity to the Assessing Officer, the ld. CIT(A) called for remand report and the Assessing Officer without considering the same, proceeded to hold the change of opinion, in our opinion, should have examined the new evidences furnished by the assessee, which was not done so. Hence, we proceed to decide the issue on merits in accordance with law after analysing the evidences furnished by the assessee.
8. We note that the assessee shown source of cash deposit of ₹.8,00,000/- from his father. We find confirmation letter, gold loan account statement, UBI savings bank account statement and agreement for sale of property from page 12 to 22 of the paper book. On perusal of the same, we note that the assessee’s father has taken jewel loan of ₹.3,00,000/- vide No. 371358900508 from SBI Jolarpet branch. The said statement is placed at page 13 of paper book, which clearly shows that the said ₹.3,00,000/- credited to his SBI savings bank account on 04.09.2017, has given confirmation letter regarding the said amount was given as gift to assessee to start his new venture. Further, the assessee’s father received ₹.5,00,000/- towards sale advance in respect of proposed sale of land at Kurusilapattu village, Vaniyambadi. We note that the same is not in dispute as reflected in registered sale agreement dated 15.04.2016, which is placed age page 16 of the paper book. We note that the assessee’s father has given a statement through his confirmation letter that the amount derived from gold loan as well sale advance of sale of land was given to assessee in cash as gift in support of his business venture. The Assessing Officer and the ld. CIT(A) did not examine the said details in right perspective as rightly mentioned by the ld. AR. Further, we are of the opinion that the assessee as required to give source of cash deposit, but, however, we find the assessee has given source of source to cash deposits as found in his bank account. Having considered the submissions of the ld. AR along with supporting document as placed at page 12 to 22 relating to assessee’s father, we hold that the assessee rendered proper explanation and the order of the ld. CIT(A) is not justified in this regard in upholding the view of the Assessing Officer.
9. Regarding the receipt of an amount of ₹.1,92,000/- from assessee’s father-in-law as gift, we note that the details of assessee’s father-in-law are placed at page 23 to 26 of the paper book. On perusal of confirmation letter which is paced at page 23, we note that assessee’s father-in-law has taken jewel loan of ₹.94,000/- from United Bank of India, which is credited to his savings bank account on 04.09.2017. On the same day itself, assessee’s father-in-law has taken another jewel loan of ₹.99,000/- from UBI, which is credited to his savings bank account on 04.09.2017 and offered ₹.1,92,000/- as gift to the assessee for his new business activities by withdrawing the same from his UBI savings bank account on 04.09.2017, as could be evidenced on perusal of his bank statement placed at page 26 of the paper book. There is no rebuttal of evidence brought on record by the ld. DR in this regard.
10. With regard to the receipt of ₹.1,20,000/- from assessee’s mother- in-law Smt. J. Shanthi, the details are placed from page 27 to 31 of the paper book. Page 28 of the paper book clearly shows that the assessee’s mother-in-law has availed agricultural loan on 04.09.2017 for an amount of ₹.1,00,000/-, which was credited to her SB account in page 31 of the paper book. Further on 05.09.2017, an amount of ₹.71,000/- was also taken from UNI as agricultural loan and the details are placed at page 29 of the paper book, which were credited to her SBI account and placed at page 31 of the paper book. Further, she confirmed the said transaction by way of confirmation letter, which is at page 27 of the paper book. We find no rebuttal was brought on record by the ld. DR in this regard. Therefore, we find the explanation offered by the assessee in respect of gifts received from his father, father-in-law and mother-in-law are genuine and in our opinion, no addition is maintainable.
11. With regard to the balance amount of ₹.4,38,000/-, the Assessing Officer held that the assessee’s contentions are not acceptable with regard to the source of cash deposits from his savings as well as his wife’s income, out of tuition fee receipts. The Assessing Officer and the ld. CIT(A) did not point out any adverse reference. We note that the details of assessee’s salary and his wife’s tuition fee income were before the Assessing Officer, but, however, without examining the same, the Assessing Officer held that it is not acceptable. We note that the assessee is a BE graduate and worked for 10 years in Temenos India Pvt. Ltd. from 2008 to 2018, we find the reasoning of Assessing Officer in stating that the assessee’s submissions are not acceptable and justified, without there being any substantial reasons. Therefore, we find an amount of ₹.4,38,000/- is explained. Therefore, the order of the ld. CIT(A) is not justified and set aside. Thus, the grounds raised by the assessee are allowed.
In the result, the appeal filed by the assessee is allowed. Order pronounced on 07th February, 2025 at Chennai.