SRI. SUNIL BHATIA,BANGALORE vs. INCOME TAX OFFICER, WARD- 6(3)(1), BANGALORE

The Assessee is an individual. His source of income is rental income and from dealing in shares. The Assessee also earns income from investment in real estate. There was cash deposit of Rs.12 lacs made in Assessee’s bank account with HDFC Bank Ltd. The AO called upon the Assessee to explain the source of funds out of which the aforesaid cash deposit was made in the bank account. The Assessee submitted before the AO that he had paid a sum of Rs.12 lacs to one Mr.Devaraj as advance for purchase of land at Embrahalli Village, Kasaba Hobli, (a sum of Rs.6 lacs paid on 30.1.2011 and another sum of Rs.6 lacs was paid on 2.3.2011). The transaction did not materialise. Mr.Devaraj returned back advance of Rs.12 lacs in cash on 24.6.2011 and the same was deposited in Assessee’s bank account.

The AO issued notice u/s.133(6) of the Income Tax Act, 1961 (the Act) to Mr.Devaraj asking for the details of cash given to the Assessee along with date and mode of payment and produce copy of bank statement of the particular financial year in which the payment was made. The said notice was returned unserved. This fact was brought to the notice of the Assessee by the AO and the Assessee was called upon to explain the source of funds for deposit of cash in the bank account. The Assessee did not produce any evidence or explanation and therefore the AO added a sum of Rs.12 lacs as unexplained cash deposit u/s.69A of the Act.

Before CIT(Appeals), the Assessee filed copy of agreement between him and Mr.Devaraj (referred to as Aide Memorie). In the said Aide Memorie, Mr.Devaraj is referred to as Land aggregator and he agreed to organize purchase of 8.5 acres of land in Embarahalli Village, Kasaba Hobli, Devanahalli Taluk, in S.No.63, 64/1, 69/5, 78 and 105 with approach road of at least 40 feet for a price of Rs.23,50,000/- per acre. The Aide Memorie is not dated and evidences Rs.6 lacs payment to Mr.Devaraj and another Rs.6 lacs to Mr.Devaraj on 2.3.2011. A copy of the ledger account of Mr.Devaraj as appearing in the books of the Assessee was also filed. The above documents were filed as additional evidence under rule 46-A of the Income Tax Rules, 1962 (Rules).

The CIT(A) called for a remand report from the AO on the additional evidence filed by the Assessee before him. The AO in the remand report submitted that the additional evidence does not show how money was paid by Mr.Devaraj to the Assessee and therefore the additional evidence does not prove the case of the Assessee. The Assessee filed a rejoinder to remand report of the AO pointing out that the sum of Rs.12 lacs given to the Devaraj to the Assessee is duly reflected in the Balance Sheet as on 31.3.2011 filed along with the return of income for AY 2011-12.

The CIT(A) called upon the Assessee to produce Mr.Devaraj before him but the Assessee expressed his inability to do so. In the circumstances, the CIT(A) held that the Assessee failed to prove that the sum deposited in the bank account was money returned in cash by Mr.Devaraj to the Assessee. The CIT(A) confirmed the addition made by the AO. Hence this appeal by the Assessee before the Tribunal.

I have heard the submission of the learned counsel for the Assessee who reiterated the plea as was put forth by the Assessee before the CIT(A). The learned DR reiterated the stand of the revenue as reflected in the order of the CIT(A).

After considering the rival submissions, I am of the view that the addition made by the AO and confirmed by the CIT(A) deserves to be upheld. The source of funds for deposit in the bank account was claimed to be money received from Mr.Devaraj. Mr.Devaraj has neither confirmed this fact nor appeared before the AO or CIT(A) to confirm this fact. The other circumstance that there is a Aide Memoire and that amounts paid as advance to Mr.Devaraj is appearing in balance sheet of the Assessee as on 31.3.2011 and the fact that the Assessee had source to pay Mr.Devaraj a sum of RS.12 lacs are all not important. The receipt of Rs.12 lacs by the Assessee from Mr.Devaraj has to be established by the Assessee and the Assessee failed to do so. I am therefore of the view that there is no merit in this appeal by the Assessee and accordingly the same is dismissed.

In the result, appeal by the Assessee is dismissed.