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Facts
A search operation against a hospital group revealed cash deposits totaling Rs.12,91,970 in the assessee's bank accounts. The assessee explained these as gifts from his wife, sister, brother, and a friend, along with past cash withdrawals. The AO added the entire amount under Section 69A, and the CIT(A) sustained an addition of Rs.5,60,000 related to gifts from the sister, brother, and friend, finding the source unsatisfactory.
Held
The Tribunal found that the assessee had provided sufficient documentary evidence, including declarations, bank statements, and gold loan certificates, to explain the source of gifts from his sister (Rs.1,50,000), brother (Rs.3,60,000), and friend (Rs.50,000). It held that the AO and CIT(A) erred in rejecting these explanations based on mere suspicion or human probability without presenting any contrary evidence. Consequently, the Tribunal directed the deletion of the entire sustained addition of Rs.5,60,000.
Key Issues
Whether the cash deposits received by the assessee as gifts from his sister, brother, and a friend constitute unexplained money under Section 69A of the Income Tax Act, and if the assessee has discharged the burden of proving their identity, creditworthiness, and genuineness.
Sections Cited
132, 69A, 143(3), 115BBE, 271AAB(1A)(b)
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
This appeal has been preferred by the Assessee against the order dated 23.02.2024, passed by the ld. Commissioner of Income Tax (Appeal), Kanpur – 4 (ld. CIT(A) for Assessment Year 2019-20.
2.0 The brief facts of the case are that a search and seizure operation under section 132 of the Income Tax Act, 1961 (hereinafter called “the Act’) was carried out on 17.01.2019 in DR. M.C. Sharma, S.P.M. Hospital and Trauma Centre Group of cases. The assessee derives income from salary from M/s Tyco Hospital Pvt. Ltd., pension from Army, and also from other sources in the form of interest and commission from Aviva Insurance Company. The assessee had filed his return of income for the year under consideration on 25.07.2019, declaring a total income of Rs.2,23,360/-. During the course of assessment proceedings, the Assessing Officer (AO), from the perusal of bank statement/bank passbook of Account No.30022006050 maintained with the State Bank of India and Account No.31600100006041 maintained with Bank of Baroda, noticed that the assessee had made cash deposits of Rs.1,57,500/- with State Bank of India during the period 21.04.2018 to 18.12.2018 and Rs.11,34,470/- with Bank of Baorda during the period 07.04.2018 to 24.02.2019, totaling to Rs.12,91,970/-. The assessee, vide show cause notice dated 03.03.2021, was required to explain the source of cash deposits in his Bank Accounts. The assessee furnished reply dated 08.03.2021, stating the source of cash deposits were gifts from his wife, sister, brother and a friend. Rejecting the claim of the assessee with regard to the source of deposits in the bank, although supported by declarations and copy of passbooks, the AO held that the assessee had failed to furnish PAN as well as copy of ITRs of the alleged donors and, therefore, had failed to prove the identity and creditworthiness of the donors. The AO, accordingly, added the amount of Rs.12,91,970/- to the income of the assessee under section 69A of the Act and completed the assessment under section 143(3) of the Act, assessing the total income of the assessee at Rs.15,15,330/-.
2.1 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under section 271AAB(1A)(b) of the Act.
3.0 Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority, who deleted the addition of Rs.7,31,970 and sustained the addition of Rs.5,60,000/- out of the total addition of Rs.12,91,970/-.
4.0 Now, the assessee has approached this Tribunal challenging the sustenance of addition of Rs.5,60,000/- by the Ld. First Appellate Authority by raising the following grounds of appeal:
1. That the Ld. CIT(A) has erred in confirming the addition of Rs.5,60,000/- out of total addition of Rs.12,91,970/- made by the Assessing Officer on account of unexplained money u/s 69A of the Act on the ground that the source of deposit in the bank explained by the appellant were not satisfactory.
2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the documentary evidences and detailed explanations submitted during the course of first appeal proceedings and assessment proceeding u/s 143(3) of the Act.
3. That the appellant reserve the right to add to, alter or modify the above grounds before or during the hearing before the Hon'ble Tribunal so as to enable the Hon'ble Tribunal to decide on the grounds raised by the appellant as per Law.
4. Any other relief which Hon'ble Tribunal may deem fit in the case. 5.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that in this case, a search had taken place in the Hospital where the assessee was a Clerk and in fact no incriminating material was found with respect to the assessee himself. It was also submitted that the captioned year is the year of search in the Hospital. The Ld. A.R. further submitted that during the year under consideration, the assessee had deposited cash aggregating to Rs.12,91,970/- on various dates in his Saving Bank accounts and the AO had required the assessee to explain the source of cash deposits and further that it was the assessee’s submission before the AO that the assessee was in dire need for the funds for education of his son, Shri Vishal Plato, who had got admission in Melbourne Institute of Technology, Melbourne, Australia for Masters in Professional Accounting and, therefore, the assessee had approached Bank of Baroda to provide Education Loan of Rs.26 lakhs, but since the assessee was already having a housing loan, which was having an outstanding amount of Rs.11.33 lakhs, the assessee was further required to first liquidate the housing loan and, therefore, for this purpose, the assessee had approached his relatives and friends to assist him with funds in the hour of need. The Ld. A.R. further submitted that in such circumstances, the assessee received Rs.5,14,500/- from his wife, Smt. Saly Plato as gift, Rs.1,50,000/- from his sister, Smt. Petty Benny as gift, Rs.3,60,000/- from his brother, Shri Pinson Peter as gift, Rs.50,000/- from his friend, Shri Nand Lal Gupta as gift and Rs.2,17,470/- was deposited out of earlier cash withdrawals from Saving Bank account. It was further submitted although that the AO had not accepted assessee’s submissions, during the appellate proceedings, the assessee was allowed part relief, but the amount of Rs.1,50,000/- received from his sister, Smt. Petty Benny, an amount of Rs.3,60,000/- received from his brother, Shri Pinson Peter and Rs.50,000/- received from his friend, Shri Nand Lal Gupta was not accepted by the ld. CIT(A) and, accordingly, addition of Rs.5,60,000/- was confirmed, against which the assessee was in appeal before this Tribunal.
5.1 The Ld. A.R. submitted that most of these cash amounts were deposited in the bank prior to the date of search on the Hospital where the assessee was employed and no document was found or seized during such search which would indicate that the assessee had any undisclosed source of income in cash. The Ld. A.R. submitted that as far as gift of Rs.1,50,000/- from his sister, Smt. Petty Benny was concerned, the same was received in November, 2017 on the occasion of his Marriage Anniversary and to establish the same, the assessee had submitted a declaration to this effect from his sister as well as copy of bank statement to prove that the aforesaid amount was provided by her out of withdrawals from her bank account and this amount had been kept at home by the assessee and the same was deposited for the purpose of liquidating the housing loan. It was submitted that the AO had doubted the source only on the ground that such gift was not given through banking channel, but was given in cash and further for the reason that the assessee had not submitted the ITR of the sister to prove her financial capacity. It was argued that the AO had failed to appreciate that the sister of the assessee had duly confirmed the transaction and had also ignored the fact that it was customary to give gifts on such occasions and that gifts are generally given in cash and not through banking channels. It was also submitted that the creditworthiness of the sister of the assessee was well established by withdrawals from the bank account and, therefore, the AO had wrongly added back this amount and the ld. CIT(A) had also erred in sustaining the same.
5.2 With respect to the amount of Rs.3.60 lakhs received as gift from assessee’s brother, Shri Pinson Peter, the Ld. A.R. submitted that on being approached by the assessee for financial help, the brother of the assessee had advanced an amount of Rs.3.60 lakhs in March, 2018 in cash and the same was deposited in the bank account on 16.04.2018 and for providing this amount, the assessee’s brother had taken gold loan of Rs.2.52 lakhs from M/s KGB by pledging the gold jewellery with him and the balance amount was provided out of his past savings. It was further pointed out that in this case also, the brother of the assessee had filed a declaration, wherein, all these facts had been affirmed and the evidence of having taken gold loan was also provided along with copy of bank account statement of the brother. It was submitted that on these facts and circumstances, the AO should have accepted the fact of assessee’s brother advancing the impugned amount. However, the AO did not accept the contentions of the assessee and not did the ld. CIT(A).
5.3 Similarly, with respect to the third amount of Rs.50,000/- received from assessee’s friend, Shri Nand Lal Gupta, the Ld. A.R. submitted that in this case also, the assessee had sought financial help from his friend and Shri Gupta had provided a sum of Rs.50,000/- to the assessee on 16.04.2018 in cash which was deposited in the bank account on the same day. It was further submitted that this gift was provided by Shri Gupta out of cash withdrawals of Rs.1 lakh from his bank account and further that the assessee had filed a declaration from Shri Nand Lal Gupta affirming that he had provided cash of Rs.50,000/- to the assessee from such withdrawals and that copy of bank account statement of Shri Nand Lal Gupta had also been provided to establish the fact of transaction having taken place. It was submitted that under such facts and circumstances, this addition also deserved to be deleted.
6.0 Per contra, the Ld. Sr. D.R. placed reliance on the findings of the AO as well as the observations of the ld. CIT(A) while confirming the impugned additions.
7.0 I have heard the rival submissions and have also perused the material on record. The facts are not in dispute.
7.1 As far as the gift of Rs.1.50 lakhs from the assessee’s sister, Smt. Petty Benny is concerned, it is seen that the declaration of Smt. Petty Benny dated 05.03.2021 is on record, wherein, it has been affirmed by her that she has given an amount of Rs.1.50 lakhs as gift during the period of November, 2017 to her younger brother, Shri Plato Peter which were out of cash withdrawals from Thiruvambadi Co-operative Bank on 20.10.2017. A copy of passbook of the Bank bearing S.B Account No.5870 is also enclosed and the withdrawal of Rs.2 lakhs is evidenced by entry dated 20.10.2017. On such facts, I find no reason for the AO or the ld. CIT(A) to have disbelieved the contention of the assessee in this regard and since there is no evidence to the contrary, I set aside the order of the ld. CIT(A) on this issue and direct deletion of this addition.
7.2 Coming to the amount of Rs.3.60 lakhs advanced to the assessee by assessee’s brother, Shri Pinson Peter, it is seen that there is a declaration of Shri Pinson Peter on record that he had given the amount of Rs.3.60 lakhs to his elder brother, Shri Plato Peter as gift during March, 2018, the source of which was through gold loan of Rs.1,44,000/- taken on 20.02.2018, gold loan of Rs.1,08,000/- taken on 26.02.2018 and further amounts of withdrawals from State Bank of India and a further amount of Rs.7,678/- out of his past savings. The copy of bank passbook has also been enclosed to evidence the movement of funds and Certificates of gold loans having been taken are also on record. Further, the AO, while making the addition on this account, observed that it was against human probability that a person who would take loan in order to make gift to someone and that too by making cash withdrawals from his bank account. Thus, the action of the AO seems to have been guided under suspicion and is entirely based on assumption and presumption. There is no evidence brought on record to the contrary by the AO and I am of the considered view that in view of the documentary evidences filed by the assessee in this regard, the AO could not have proceeded to add back the amount by rejecting the contention of the assessee merely on the basis of some human probability. Therefore, I am unable to sustain this addition also and I set aside the order of the ld. CIT(A) on this issue and direct deletion of addition of this amount of Rs.3.60 lakhs.
7.3 Coming to the amount of Rs.50,000/- received as gift from assessee’s friend, Shri Nand Lal Gupta, it is seen that in this regard also, the assessee had filed Certificate of Shri Nand Lal Gupta evidencing the amount of Rs.50,000/- being given by Shri Gupta to the assessee and copy of bank passbook evidencing withdrawal of Rs.1 lakh on 16.04.2018 is also placed on record. The AO did not accept the contention of the assessee by noting that it was strange that although Shri Nand Lal Gupta was maintaining bank account, he did not give the gift through cheque, but rather in cash which was apparently a cooked up story. Here again, I am of the considered view that the AO could not have proceeded to reject the contention of the assessee without bringing some strong evidence to the contrary on record and he could not have merely proceeded on some assumption in this regard. Accordingly, I set aside the order of the ld. CIT(A) on this also and direct deletion of the addition of Rs.50,000/- also.