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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: SMT. DIVA SINGH & SH. R.K PANDA
This appeal filed by the assessee is directed against the 1. order dated 17.02.2016 of the CIT(A)-2, Gurgaon relating to A. Y. 2011-12.
Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 13.09.2011 declaring total income of Rs.2,02,220/-. During the course of assessment proceedings the Assessing Officer observed that assessee was not maintaining any books of accounts. However, from the bank statement furnished by the assessee the Assessing Officer observed that there are cash deposits on various dates amounting to Rs.32,92,540/-. He, therefore, asked the assessee to explain the source of such cash deposited in the bank account. The assessee furnished confirmation of unsecured loan from four persons namely (a) Smt. Kiran Kumar D/o Sh. Samay Singh and W/o assessee for outstanding amount of Rs.13,17,550/-in cheque (b) Smt. Priya Parthsarthy D/o Mr. Ravindra Kumar Swain, Moscow (Russia), in cash at Rs.10,00,000/- (c) Sh. Santosh Kumar S/o Sh. VP chaudhary, Moscow Russia in cash Rs.10,00,000/- (d) Sh. Ashok Jaiswal S/o Late Sh. J. P. Jaiswal Moscow, Russia in cash at Rs.1000000/-.
The Assessing Officer asked the assessee to explain the creditworthiness and identity of the above lenders and also prove the genuiness of the transactions. However, in absence of any proper reply to his satisfaction regarding the creditworthiness and genuiness of the transactions the Assessing Officer made addition of Rs.30,03,521/- to the total income of the assessee. While doing so he allowed credit of the gross receipt of Rs.2,89,019/- shown in the ITR as explained
Before the CIT(A), the assessee made elaborate arguments. However, the Ld. CIT(A) was also not satisfied with the arguments advanced by the assessee. After considering the remand report of the Assessing Officer and rejoinder of the assessee to such remand report, he sustained the addition by observing as under:-
i. “Cash deposits in the bank account As referred above, there was a total cash deposit of Rs.32,92,540/- in the bank account of the appellant. After 2 considering the appellant’s submissions on this issue, the Assessing Officer had held that cash deposits amounting to Rs.30.03.521/- were unexplained. From the facts recorded in the assessment order, these amounts can be linked to the appellant’s claim of amounts received from the following persons :- i. Dr. Priya Parthasarthi ii. Sh. Santosh Kumar iii. Sh. Ashok Jaiswal iv. Smt. Kiran Kumar W/o of the appellant. As regards the claim of amounts received from Sh. Ashok Jaiswal, Sh. Santosh Kumar and Dr. Priya Parthasarthi it is evident from the facts reported by the AO vide his report dated 08.09.2015 that during the course of assessment proceedings the appellant had claimed that these were unsecured loans received from each of the aforesaid 3 persons in cash for personal use. The appellant had furnished confirmations from all the aforesaid 3 person duly signed by each of them confirming that the amounts were given in the form of unsecured loans for personal use and the appellant had himself written on these confirmations letters that the above loan had been received by him in cash.
As reported by the AO vide his remand report discussed above, the appellant was asked by the AO to produce 3 persons for verification of genuineness of the claim. Out of the 3 persons, Sh. Santosh Kumar was not produced in spite of repeated opportunities. Regarding the other 2 persons it is evident from the statements recorded that Dr. Priya Parthasarthi has categorically stated that he did not know the appellant and did not make any investment with Sh. Vishal Kumar. In these circumstances the original confirmation filed by the appellant during the course of assessment proceedings that Dr. Priya Parthasarthi had given unsecured loans of Rs. 10,00,000/- to Sh. Vishal Kumar for personal use does not convey the correct facts. Further, while in the original confirmation the amount was stated to have been given for personal use of Sh. Vishal Kumar as unsecured loan, during the course of statement recorded by the AO, it is claimed that the amount was advance for investment in property. This submission during the remand proceedings is dearly an afterthought. It may be mentioned here that if the confirmations filed by the these 3 persons were held to be genuine confirmations showing genuine transactions then the appellant would have been liable to penalty u/s 3
27ID for not complying with the provisions of Section 269SS. As the appellant had claimed to have been received loans amounting to Rs. 30,00,000/- in cash from 3 persons he would have been liable to pay the penalty of Rs. 30,00,000/-, in case the loans were held to be genuine. Apparently to avoid such a situation the appellant, at the stage of remand proceedings, changed the claim and contended that the amounts were received as advance towards purchase of property. In any case Dr. Priya Parthasarthi has not produced any evidence with regard to the claim that the amount was given for purchase of property to the appellant. There was no agreement to purchase. In fact no property was finally purchased in this case by the person advancing the amounts. It is also evident from the facts recorded in the report of the AO that Dr. Parthasarthi had not made any effort to claim back the money which was supposedly given as advance to the appellant almost 5 years earlier. No person would give an amount of Rs. 10 lacs as loan/advance and then just forget about it. The AO has also clearly pointed out that it was almost impossible for any person to bring 20,000/- dollars in cash at one go from abroad as legally a person can carry not more than 5,000 dollars per trip. The appellant has not been able to controvert these facts recorded by the AO. Even in the case of Sh. Santosh Kumar, the facts of the transactions, the confirmations filed during the course of assessment proceedings and the subsequent claim made before the AO during the remand proceedings are almost similar except that Sh. Ashok Kumar Jaiswal claims to know the appellant.
Keeping in view the aforesaid facts and circumstances of the case it is evident that the submissions and the claims filed by the appellant regarding the amounts received from the aforesaid 3 persons is a mere self serving statement without any supporting evidence. The appellant had deposited cash in his bank account and the onus was on the appellant to explain the sources of cash deposits in the bank account. The appellant has failed to discharge the onus. The additions made to the extent of Rs. 30,00,000/- being cash deposits in the bank account is accordingly confirmed. It may be once again mentioned here that in case these loans were held to be genuine the appellant would have been liable to penalty proceedings u/s 27ID, keeping in view the original confirmations filed by the appellant at the time of assessment proceedings.
As regards the addition of remaining amount of Rs. 3,521/- being the balance cash deposit in the bank account the appellant has not 4 submitted any explanation or written submissions on this issue. The balance addition is also accordingly confirmed.”
Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising following grounds of appeal :-
1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an aggregate addition of Rs.30,03,521/- on account of cash deposit in bank account by treating it as alleged unexplained income of assessee and that too by recording incorrect facts and finding and without observing the principles of natural justice.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making an aggregate addition of Rs.30,03,521/- on account of cash deposit is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in rejecting the books of accounts of assessee and that too without any basis.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234A and 234B of Income Tax Act, 1961.
5. That the appellant craves to leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.
The Ld. Counsel for the assessee at the outset submitted that the Assessing Officer has initiated penalty proceedings u/s 271D of the IT Act and has levied penalty of Rs.30 lacs for accepting loan in cash in violation of provisions of section 269SS of the IT Act. Once the Assessing Officer has accepted the loans, therefore, there is no question of making any addition u/s 68 of the IT Act. He, however, submitted that assessee has challenged the penalty levied by the Assessing Officer u/s 271 D of the IT Act. for violation of provision of section 269SS of the IT Act, 1961 and the appeal is pending before the CIT(A) for disposal.
The Ld. DR on the other hand submitted that the matter should be restored to the file of the CIT(A) so that a consistent view can be taken on this issue.
We have considered the rival arguments made by both the sides and perused the orders of the authorities below. We find the Assessing Officer in the instant case has made addition of Rs.30,03,521/- to the total income of the assessee u/s 68 of the IT Act which has been confirmed by the CIT(A). However, it is also an admitted fact that the Assessing Officer has levied penalty of Rs.30 lacs u/s 271D of the IT Act for accepting the loan in cash in violation of the provisions of section 269SS of the IT Act. It is the submission of the Ld. counsel for the assessee that the assessee has preferred an appeal before the CIT(A). against levy of penalty u/s 271D of the IT Act 1961 which is pending before him. Therefore, in all fairness and in the interest of justice we deem it proper to restore the issue to the file of the CIT(A) to take a consistent approach on this issue i.e. as to whether the assessee 6 was able to explain the source of deposits or these are cash loans and if so whether there is violation of provision of section 269SS of the IT Act 1961. The Ld. CIT(A) shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 11.02.2019