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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI P.M. JAGTAP, VICE-
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT Assessment Year : 2014-15 Shri Ambalal Manilal Patel, The Income Tax Officer, 6, Mira Society, Opp. Nagar Vs Ward 2(2)(1), Chashma Ghar, Ankur Road, Ahmedabad Naranpura, Ahmedabad-380013 PAN : ABIPP 6681 K अपीलाथ�/ (Appellant) �� यथ�/ (Respondent) Assessee by : Shri Chirag Shah, CA Revenue by : Ms. M.M. Garg, Sr. DR सुनवाई क� तार�ख/Date of Hearing : 04/10/2022 घोषणा क� तार�ख /Date of Pronouncement: 14/10/2022 आदेश / O R D E R
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals), Ahmedabad-10 [“CIT(A)” in short] dated 05.03.2020 whereby he sustained the addition of Rs.20,03,649/- made by the Assessing Officer under Section 69 of the Income-tax Act, 1961 (“the Act” in short) on account of unexplained investment made by the assessee in purchase of properties to the extent of Rs.11,77,949/-.
At the outset, it is noted that there is a delay of 46 days on the part of the assessee in filing the appeal before the Tribunal. As submitted by the learned Counsel for the assessee, the said delay was due to the complete lockdown declared in the country to prevent the spread of Corona virus and keeping in view the same, we condone the said delay and proceed to dispose of this appeal on merit.
The assessee, in the present case, is an individual who filed his return of income for the year under consideration on 02.10.2014 declaring a total
Shri Ambalal Manilal Patel Vs. ITO AY : 2014-15 2 income of Rs.5,85,440/-. The case of the assessee was selected for scrutiny through CASS and a notice under Section 143(2) of the Act was issued by the Assessing Officer to the assessee on 01.09.2015. As per the ITS data, the assessee during the year under consideration had made large investment in properties along with other persons. Against purchase of his share in the said properties, cash amounting to Rs.20,03,649/- was found to be paid by the assessee. During the course of assessment proceedings, the assessee was called upon by the Assessing Officer to explain the source of the said cash. In reply, it was submitted by the assessee that he had opening cash on hand as on 01.04.2013 to the extent of Rs.15,09,454/- while the remaining cash of Rs.4,94,195/-was generated out of his current year income. The Assessing Officer, however, noted that neither the balance-sheet was filed by the assessee along with his return of income for AY 2013-14 wherein total income of Rs.3,53,910/- was declared nor the cash balance of Rs.15,09,454/- as claimed by the assessee was reflected in the said return. He also noted from the bank statements furnished by the assessee that there was no cash withdrawal made for the properties purchased in the year under consideration. The Assessing Officer, therefore, did not accept the explanation of the assessee as regards the source of cash utilized for purchase of properties and treating the investment made by the assessee in properties to the extent of Rs.20,03,649/- as unexplained, he made an addition to that extent to the total income of the assessee under Section 69 of the Act in the assessment completed under Section 143(3) of the Act vide an order dated 22.11.2016.
Addition of Rs.20,03,649/- made by the Assessing Officer on account of unexplained investment in properties under Section 69 of the Act was challenged by the assessee in an appeal filed before the learned CIT(A).
Shri Ambalal Manilal Patel Vs. ITO AY : 2014-15 3 During the course of appellate proceedings before the learned CIT(A), a cash book for the year under consideration was prepared and furnished by the assessee to explain the source of cash for purchase of properties as under:-
Date Particulars Vch Type Vch No, Debit Credit 1-4-2013 To Opening Balance 15,09,453.88 18-6-2013 To LAND ACCOUNT S.NO.782/2 Receipt 9 1,35,875.00 (Sq.3795.25) By Closing Balance 16,45,328.88 16,45,328.88
16,45,328.88 16,45,328,88 1-7-2013 To Opening Balance 16,45,328.88 16-7-2013 To LAND ACCOUNT S.NO.782/2 Receipt 12 25,725.00 (Sq.3795.25) By Closing Balance 16,71,053.88 16,71,053.88
16,71,053.88 16,71,053.88 1-9-2013 To Opening Balance 16,71,053.88 25-9-2013 To Other Income Receipt 37 25,900.00 30-9-2013 By Agriculture Motipipali Land Payment 1 70,893.00 By Purchase Su.No.45 Agriculture Payment 2 3,94,504.00 Motipipali Land Purchase Su.No.45 By Closing Balance 16,96,953.88 4,65.397.00 12,31,556.88 16,96,953.88 16,96,953.88 1-10-2013 To Opening Balance Payment 6 12,31,556.88 2,54,260.00 5-10-2013 By Agriculture Zanzansar Land Payment 7 55,237.00 By Purchase Su. No. 80/2 Agriculture Zanzansar Land Purchase Su. No. 80/2 15-10- To LAND ACCOUNT S.NO.782/2 Receipt 49 1,45,675.00 2013 (Sq.3795.25) 19-10- By Agriculture Sadapura Land Payment 11 17,733.00 2013 Purchase Su.No.78 By Closing Balance 13,77,231.88 3,27,230.00 10,50,001.88 13,77,231.88 13,77,231.88 1-11-2013 To Opening Balance 10,50,001.88 25-11-2013 To LAND ACCOUNT S.NO.782/2 Receipt 54 62,125.00 (Sq.3795.25)
Shri Ambalal Manilal Patel Vs. ITO AY : 2014-15 4
By Closing Balance 11,12.126.88 11,12,126.88
11,12,126.88 11,12,126.88 1-1-2014 To Opening Balance 11,12,126.88 7-1-2014 To LAND ACCOUNT S.NO.782/2 Receipt 60 1 ,06,300.00 (Sq.3795.25) 16-1-2014 By Agriculture Land Purchase 347- Payment 13 11,43,900.00 Memadpur 12,18,426.88 11,43,900.00 20-1-2014 By Agriculture Land Purchase 347- Payment 14 56,052.00 Memadpur By Closing Balance 12,18,426.88 11,99,952.00 18,474.88 12,18,426.88 12,18,426.88 1-2-2014 To Opening Balance Agriculture Land Payment 15 18,474.88 11,470.50 4-2-2014 By Purchase 347-Memadpur
By Closing Balance 18,474.88 11,470.50 7,004.38 18,474.88 18,474.88 1-3-2014 To Opening Balance Receipt 66 7,004.38 36.000.00 3-3-2014 To LAND ACCOUNT S.NO.782/2 Payment 20 37,450.00 31-3-2014 By (Sq.3795.25) AMBALAL MANILAL PATEL By Closing Balance 44,454.38 36,000.00 8,454.38 44,454.38 44,454.38
After considering the submissions made by the assessee as well as the material available on record including the cash book filed by the assessee, the learned CIT(A) decided the issue vide paragraph nos. 7 & 7.1 of his impugned order as under:-
“7. I have gone through the submission of the appellant and the various case laws relied upon by the appellant. The argument of appellant that he could not file balance sheet in ITR 3 is acceptable in the case of an individual. On the one hand it is fair that some credit of cash in hand has to be provided to the appellant, but on the other hand reasonableness is also to be seen as to for how long a person will keep on withdrawing cash from his bank account and keep on accumulating cash reserve. For example the appellant has withdrawn an amount of Rs.9,00,000/- from Kotak Bank Ltd on 1.02.2012 when his cash balance was Rs 5,87,836/-. There is no reason explained as to why he withdrew this amount when he was having sufficient cash balance with him.
Shri Ambalal Manilal Patel Vs. ITO AY : 2014-15 5 The withdrawals could have been made for any other purpose e.g. family function etc. There are no withdrawals for household expenses made by the appellant. 7.1 I find it reasonable to allow credit of following cash deposits shown in the cash book of appellant for investment in various properties : Date Description Amount 25.02.2013 Bank Of Baroda Account No. 5534 4,50,000 18-6-2013 Land Account S.No.782/2 (Sq.3795.25) 1,35,875 16-7-2013 Land Account S.No.782/2 (Sq.3795.25) 25,725 15-10-2013 Land Account S.No.782/2 (Sq.3795.25) 1,45,675 25-11-2013 Land Account S.No.782/2 (Sq.3795.25) 62,125 7-1-2014 Land Account S.No.782/2 (Sq.3795.25) 1,06,300 Less Amount Estimated For 1,00,000 Withdrawals for part period of the year Net Amount Allowed 8,25,700 Accordingly addition of Rs. 8,25,700/- made by the Assessing Officer for the purchase of property is deleted and rest of the addition of Rs. 11,77,949/- made for unexplained investment in purchase of property is deleted.”
The learned CIT(A) thus sustained the addition of Rs.20,03,649/- made by the Assessing Officer under Section 69 of the Act on account of unexplained investment made by the assessee in purchase of properties to the extent of Rs.11,77,949/- thereby giving relief of Rs.8,25,700/- to the assessee. Still aggrieved by the order of the learned CIT(A), the assessee has preferred this appeal before the Tribunal.
I have heard the arguments of both the sides and also perused the relevant material available on record. The main contention raised by the learned Counsel for the assessee is that the opening cash balance of Rs.15,09,453/- was duly supported by two cash withdrawals of Rs.9,00,000/- and Rs.4,50,000/- made by the assessee from his bank account with Kotak Mahindra Bank Ltd and Bank of Baroda respectively. He has Shri Ambalal Manilal Patel Vs. ITO AY : 2014-15 6 contended that the learned CIT(A), however, accepted only the cash withdrawal of Rs.4,50,000/- made by the assessee from Bank of Baroda but did not accept other cash withdrawal of Rs.9,00,000/- made by the assessee from Kotak Mahindra Bank Ltd. He has invited our attention to the cash book of the assessee for FY 2011-12, 2012-13 and 2013-14 placed at page Nos. 1 to 7 of the paper-book to show that the cash of Rs.9,00,000/- withdrawn by the assessee from Kotak Mahindra Bank Ltd was duly reflected in the said cash book and after taking into consideration the same as well as other cash transactions as reflected in the cash book, the opening cash balance of Rs.15,09,453/- was built up as on 01.04.2013. It is, however, observed that the cash withdrawal of Rs.4,50,000/- was made by the assessee from Bank of Baroda on 25.02.2013 i.e. at the fag end of the immediately preceding year and the same, therefore, was accepted by the learned CIT(A) as the source to explain the opening cash balance as on 01.04.2013. The cash of Rs.9,00,000/- from Kotak Mahindra Bank, however, was withdrawn by the assessee on 01.02.2012 and the same was not accepted by the learned CIT(A) keeping in view that the said cash withdrawal was made by the assessee when he was having substantial cash balance of about Rs.6,00,000/- as per the cash book. Since the properties in question were purchased by the assessee only in the FY 2013-14, the learned CIT(A) held that the withdrawal of Rs.9,00,000/- made by the assessee in cash from Kotak Mahindra Bank on 01.02.2012 was not for the purpose of making investment in the properties but the same could have been for some other purpose. It is also noted that a sum of Rs.4,00,000/- was deposited by the assessee in cash in Kotak Mahindra Bank immediately on 24.03.2012 and the assessee has not been able to explain either before the authorities below or even before the Tribunal the purpose of maintaining substantial cash balance of more than Rs. 8,00,000/- throughout the FY 2012-13 when the income declared by the assessee in his
Shri Ambalal Manilal Patel Vs. ITO AY : 2014-15 7 return of income for AY 2013-14 was only Rs.3,53,910/-. Moreover, there is hardly any withdrawal shown by the assessee for personal and household expenses in cash book prepared for three financial years i.e. FYs 2011-12, 2012-13 and 2013-14. Keeping in view all these facts of the case, I find myself in agreement with learned CIT(A) that the cash of Rs.9,00,000/- withdrawn by the assessee from his bank account with Kotak Mahindra Bank Ltd on 01.02.2012 cannot be said to be available for making investment in purchase of properties in FY 2013-14. I, therefore, uphold the impugned order of the learned CIT(A) sustaining the addition made by the Assessing Officer on account of unexplained investment made by the assessee in properties under Section 69 of the Act to the extent of Rs.11,77,949/- and dismiss the appeal of the assessee.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the open Court on 14th October, 2022 at Ahmedabad.