M Y JAHABAR SADIQUE,CHENNAI vs. ITO NON CORPORATE WARD 16 (5), CHENNAI

Aforesaid appeal by assessee for Assessment Year (AY) 2014-15 arises out of the order of learned Commissioner of Income Tax (Appeals)-4, Chennai [CIT(A)] dated 09-03-2018 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 30-12-2016. The grounds raised by the assessee are as under:

The assessee being non-resident was scrutinized u/s 143(3) for the year under consideration for the reason that it made cash deposit of Rs.63.03 Lacs which include deposit of Rs.29.42 Lacs in ICICI Bank and deposits of Rs.33.61 Lacs in Axis Bank. Accordingly, the assessee was required to establish the source of the same. The Ld. AO, after considering assessee’s reply, tabulated the addition as under: - No. Nature of sources Amount of cash Confirmed Amount 1. Business advances 15,00,000 13,00,000 2. Rental Advances 22,05,000 16,80,000 3. Gift received 6,00,000 0 4. Rental receipts as admitted 4,86,000 4,86,000 5. Other income as admitted 4,03,849 4,03,849 Total cash confirmed 38,69,849 Accordingly, the balance amount of Rs.24.33 Lacs was added to the income of the assessee.

Upon further appeal, Ld. CIT(A) not only confirmed the impugned addition but also made an enhancement. The same was upon perusal of various documents furnished by the assessee during the course of assessment proceedings. The assessee received rental advances of Rs.27.90 Lacs from various persons. However, upon perusal of receipt, it was noted that the same do not mention whether the amount was received in cash or otherwise. No other details were furnished by the assessee. The address of the creditor was that of the assessee only. Similar discrepancies were noted in all the rental advance receipts furnished by the assessee. Though Ld. AO issued letter seeing confirmation of the creditors, however, AO did not ask for source of such advance payments and the purpose of such advances. The proof of identity was not called for. The reply of the creditors did 4 - not mention the date of payment and no details of source of payment were furnished. Similar were the replied received from other creditors. Considering the same, notice u/s 133(6) was again issued to all the creditors which were the address of the assessee only. In the letter, detailed information was asked from the creditors. However, notice issued to two of the creditors returned back unserved and the assessee failed to provide the address of these creditors. One of the persons Sh. Mohammed Ismail was not filing Income Tax Returns and he could not establish the source of cash advance made to the assessee. Another two creditors Sh. S. Murugan and Sh. K. Devadas did not have PAN and drawing meagre incomes. On the basis of above analysis, the amount of Rs.27.90 Lacs was held to be unexplained cash credit.

The assessee could not substantiate the cash gift of Rs.6 Lacs stated to be received from Shri N. Mohamad Najib and the stand of Ld. AO, in that regard, was confirmed. The assessee received business advance of Rs.15 Lacs from JBS Ventures. In support, financial statements of that firm were produced. After examination, Ld. CIT(A) concurred that there was discrepancy only to the extent of Rs.2 Lacs and accordingly, the stand of Ld. AO, to that extent was confirmed.

Finally, the income of Rs.29.84 Lacs as determined by Ld. AO was enhanced to Rs.41.40 Lacs. Aggrieved, the assessee is in further appeal before us.

We are of the considered opinion that the onus to prove the source of cash deposit was on assessee. However, this onus could not be fully discharged by the assessee. So far as the conclusion that 5 - the gifts of Rs.6 Lacs and discrepancy in the business advance for Rs.2 Lacs is concerned, we find that no interference would be required in the impugned order since the factual findings remain undisturbed before us.

So far as the rental advances are concerned, we find that the assessee has received these advances from as many as five persons. Out of these five creditors, notice sent u/s 133(6) with respect to two of the creditors i.e., Shri Surendra Prasad and Shri Jithesh Nair have returned back unserved and the assessee could not furnish the addresses of these persons despite the fact that he received rental advances from these two persons. Therefore, no interference is required for these two creditors. Two of the creditors i.e., Sh. S. Murugan and Sh. K. Devadas confirmed the advances. However, these two persons were earning very meagre monthly salary of less than Rs.20,000/- per month. Both the persons did not have PAN or bank account. Therefore, the explanation of these two depositors have rightly been rejected. The last creditor i.e., Sh. Mohammed Ismail advanced sum of Rs.5.85 Lacs to the assessee. This creditor has confirmed the advances and also appeared during appellate proceedings. This creditor earned income of Rs.6.66 Lacs and is stated to be relative of the assessee. Considering the factual background, the explanation of this creditor has to be accepted. In other words, the impugned order stand confirmed except to the extent of addition of Rs.5.85 Lacs which stand deleted.

The Ld. AR made alternative plea that the assessee sold vehicles during the year and received cash against the same. This is altogether a new plea which we reject since this is nothing but a mere 6 - after-thought. This is particularly to be rejected since the assessee is a non-resident. In the additional ground, Ld. AR has submitted that no books of accounts were maintained and therefore the impugned additions are unsustainable. This plea is also to be rejected outrightly since the assessee is under an obligation to explain the credit in the bank accounts whether it is obligated to maintain books of accounts or not. The additional ground stand dismissed.

Resultantly, the appeal stands partly allowed in terms of our above order.