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Income Tax Appellate Tribunal, “SMC-C” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA
O R D E R
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee and the same is directed against the order of ld. CIT (A), Hubballi dated 25.09.2018 for Assessment Year 2015-16.
The grounds raised
by the assessee are as under. “1. The learned Assessing Officer had erred in passing the order in the manner passed by him and the learned Commissioner of Income tax (Appeals) has erred confirming the same. The impugned order confirming the addition by the CIT (A) being bad in law is required to be quashed. 2.1 In any case, the assessing officer has erred in adding a sum of Rs. 4, 00,000/- u/s 69A as unexplained investment-deposit in bank and the learned CIT (A) has erred in confirming the same. On the facts and circumstances of the case and the law applicable, the addition as made/confirmed is to be deleted. 2.2 In any case, the additions are made confirmed are without taking into consideration the facts
1. That money was received from the appellant's sons who reside at Canada
2. That she is married for the last 30 years and could have her own savings from the amounts received from her husband, relatives etc, over a period of time.
3. The appellant demies the liability to pay interest u/s 234 B. The interest having been levied erroneously is to be deleted.
In view of the above and other grounds to be adduced at the time of hearing it is requested that the impugned order be quashed or at least the addition as made/confirmed by treating the creditors as fictitious liability be deleted and interest levied be also deleted.” 3. At the very outset, it was submitted by ld. AR of assessee that ground nos. 1 and 4 are general. Ground no. 3 is consequential and the only issue involved in the present case is as per ground no. 2 in respect of addition of Rs. 4 Lakhs made by the AO u/s. 69A of IT Act confirmed by CIT(A). She reiterated the same submissions which were made before CIT(A) and copy of which is available on pages 45 and 46 of the paper book. She also placed reliance on declarations of the two sons of assessee both dated 17.10.2018 regarding gift of Rs. 3 Lakhs by each of them during the period from 01.04.2006 to 31.03.2013. She also submitted that on page no. 17 of paper book is the detail of year-wise income declared by the assessee during the Financial Years 2010-11 to 2014-15. She also pointed out that on page no. 35 of paper book is copy of e mail sent by one of the sons of the assessee Mr. Shravan Ramaraya Pai directly to the AO in which it is confirmed by him to the AO directly on email that whenever he has visited his parents in India, he used to give money to his mother i.e. present assessee. The ld. DR of revenue supported the orders of authorities below. 4. I have considered the rival submissions. First of all, I reproduce Para nos. 3 to 5 from the order of CIT (A) because full facts are discussed by CIT (A) in these paras and his decision is also contained in these paras. “3. In the course of appellate proceedings, the assessee submitted that the source of investment of Rs. 4,00,000/-, paid to the builder was gifts fromher sons and husband. During the course of assessment proceedings, theassessee was unable to establish the genuineness of gifts received by herfrom her sons and husband, as sources of income of donors, mode ofremittance of cash gift, etc., could not be submitted and the AO added anamount of Rs. 4,00,000/- as undisclosed money U/s.69A of I.T. Act, 1961.
4.1 The assessee's Authorised Representative(AR) appeared on Dt. 09.05.2018, and requested time till Dt.23.05.2018, to submit proof of giftreceived of Rs. 4,00,000/-, including, proof of credit worthiness, mode ofpayment, confirmation of payment, details of withdrawal of Page 3 of 7 cash used to givecash gift, bank account from where cash was withdrawn, etc. 4.2 As the assessee failed to appear or respond, the assessee was givenanother opportunity to appear on Dt. 16.07.2018, but he did not appear orrespond. The assessee was contacted and his AR appeared onDt. 21.08.2018, wherein he submitted that the proof of cash withdrawalused to give gift to the assessee was not available, nor was there any otherevidence to support his claim apart from the proof already submitted duringthe course ofassessment proceedings. The assessee's placed reliance upon the two paged written submission submitted during appeal proceedings.
Thus, the assessee, Mrs. Jyothi Ramaraya Pai, was unable to provethe source of gifts and the mode of remittance of such gifts during thecourse of assessment proceedings and appellate proceedings. The assesseehas relied purely on circumstantial evidence, including the submission thather husband and sons were gainfully employed. However, the assessee failedto establish the direct source and mode of payment of such amount.Therefore, the appeal of the assessee against the addition made by the AO ofunexplained and undisclosed money of Rs. 4,00,000/- is dismissed.” 5. I also feel it proper to reproduce the relevant Paras from page nos. 3 and 4 of the assessment order because in these Paras, the AO has discussed the facts and his decision. These Paras read as under. “The assessee’s representative on the amount of Rs. 10,00,000/- replied that the assessee is a home maker and the assessee has mentioned that the both of her sons are in Canada and whenever they visited India they use to give money to her and the same was invested for the purchase of flat at Hubballi. The said amount of Rs. 10,00,000/- was gifted by the sons of the assessee whenever they came to India inforeign currencies. The authorised representative of the assessee submitted copy ofthe passport and as the transaction could not be verifiable with passport stampingsthe assessee AR was requested to submit details of the amounts paid by the sons andalso to submit any supporting documents and explain the transaction, the AR of assessee explained that the transaction amount was the amount deposited by the M/s. ZNK constructions, Hubli as repayment on cancellation of agreement for purchase of flat and submitted a copy of the Bank challan for depositing the amount of Rs. 10,00,000/- in the bank by the developer on 26.02.2015, and on further enquiry about the source for payment to developer the AR replied that the transactions took place in the financial year 2013-14 and assessee has paid Rs. 2,00,000/- each on 01.09.2013, 15.12.2013, 25.02.2014, 05.04.2014 & 16.05.2014 which amounted to Rs. 10,00,000/- on various dates during financial year 2013-14 and 2014-15. The Page 4 of 7 cancellation agreement of the ZNK constructions were verified and it was found that only Rs. 6,00,000/- was paid during the financial year 2013-14 but an amount of Rs. 4,00,000/- has been paid on 05.04.2014 and 16.05.2017 during the financial year 2014-15 the same is paid in Asst year 2015-16. During the course scrutiny proceedings the authorised representative of the assessee explain the same to be gifts from sons. The genuineness of the gifts cannot be verifiable in the absence of proof for sources of the donors with details of profession and employment, foreign remittances in NRE account, etc. Hence it cannot be said to be a genuine gift and needs to be taxed u/s. 56(2) read with section 2(24) of the IT Act, 1961 as income of the assessee. Hence, the amount of Rs. 4,00,000/- paid by the assessee is treated as undisclosed income in hands of the assessee and added to the Returned income of the assessee. In view of the above the assessment is completed adding the above income ofRs. 4,00,000/- as unexplained income in the hands of the assessee and the same isadded to the total income of the assessee U/s.69A as undisclosed money in the handsof the assessee and added to the Income returned by the assessee. Bank account deposits: unexplained deposits in Bank account of the assessee, added to the total income of the assessee U/s.69A as undisclosed money.”
I have gone through these paras reproduced from the order of CIT (A) and assessment order. I find that in the Para reproduced from the assessment order, it is noted by the AO that an amount of Rs. 10 Lakhs was deposited in cash in the bank account of the assessee out of which Rs. 6 Lakhs was deposited in Financial Year 2013-14 and Rs. 4 Lakhs was deposited in Financial Year 2014-15 relevant to present Assessment Year i.e. Assessment Year 2015-16. The AO has made addition in respect of the deposit of Rs. 4 Lakhs made by the assessee in her bank account in the present year i.e. Financial Year 2014-15. This was the main argument of ld. AR of assessee before the Tribunal that the assessee is married for the past 30 years and it is quite common that Indian housewives have a tendency of saving money and that to save about Rs. 2 to 3 Lakhs in 30 years is not unbelievable. When I examine this argument in the light of facts noted above, I find that before deposit of Rs. 4 Lakhs in the present year, the assessee has deposited Rs. 6 Lakhs in her bank account in the preceding year i.e. Assessment Year 2014-15 and it is not shown that such deposit of Rs. 6 lacs has some specific source other than past savings. Therefore,
Page 5 of 7 even if assessee was having any savings, it should be accepted that the same was utilized in the bank deposit in Assessment Year 2014-15 and it cannot be said that any saving was available with the assessee to deposit Rs. 4 Lakhs in the present year. The second explanation of the assessee is this that her two sons who are residing in Canada and who are working there have gifted the money to her whenever they visited India. I also find that in the relevant Para of assessment order reproduced above, it is noted by AO that it was explained before the AO that whenever the sons of the assessee were visiting India, they gifted money to the assessee in foreign currencies. This is not disputed that both sons of the assessee are residing in Canada and earning there. Hence if they are remitting any money to the assessee by way of gift by way of money transfer or whenever they are visiting India or when the assessee is visiting Canada, there should be some evidence available of conversion of Canadian dollars to Indian Rupees whether by assessee’s town sons if they converted the money and then given to assessee in Indian Rupees or if they gifted in the Canadian dollars and the present assessee got it converted into Indian Rupees. But no evidence has been brought on record regarding such conversion of Canadian Dollars to Indian Rupees. Conversion of foreign currencies to Indian Rupees can be through authorized exchange dealer only and the evidence for the same is easily available if this is the fact that conversion was done by the assessee or her sons. A categorical finding has been given by CIT(A) in Para 4.2 of his order as reproduced above that the proof of cash withdrawal used to give gift to the assessee was not available, nor was there any other evidence to support this claim apart from the proof already submitted during the course of assessment proceedings. In the assessment order also, a categorical finding has been given by the AO that during the course of scrutiny assessment proceedings, the authorized representative of the assessee explained the same to be gifts from sons, but the genuineness of the gifts cannot be verifiable in the absence of proof for sources of the donors with details of profession and employment, foreign remittances in NRE account, etc. and hence, it cannot be said to be a genuine gift. In spite of this categorical finding of AO and CIT(A) in their Page 6 of 7 respective orders, no evidence has been brought on record before the Tribunal in support of the contention that gift was received by assessee from her sons who were residing in Canada. In the written submissions filed by the assessee before CIT (A), copy available on pages 45 and 46 of paper book also, it is seen that a general contention has been raised that whenever the assessee’s two sons were visiting India, they used to gift money or whenever she visited Canada she would bring money while returning. In the absence of any evidence regarding conversion of Canadian dollars to Indian Rupees, these general claims have no merit. Regarding the gift declarations on pages 47 and 48 of paper book, it is seen that there are also very vague and general in which it is stated that during the period between 01.04.2006 and 31.03.2013, they have given Rs. 3 Lakhs each to the present assessee without any date and without any detail in respect of conversion of Canadian dollars to Indian Rupees. In the e mail of one of the sons Shri Shravan Ramaraya Pai available on page no. 35 of paper book also, it is seen that only general contention was raised that whenever he visited India, he used to give some money to his mother without any detail of date and conversion of Canadian dollars to Indian Rupees. Regarding this contention that the assessee was also having some savings because the assessee has also shown gross total income of around Rs. 2 Lakhs in Financial Year 2010-11 and around Rs. 3 Lakhs in Financial Year 2011-12 and Rs. 2.92 Lakhs in Financial Year 2012-13, around Rs. 2.74 Lakhs in Financial Year 2013-14 and Rs. 4.78 Lakhs in Financial Year 2014-15, I would like to observe that out of this income during these five years, the assessee has made investment also for claiming deduction under Chapter VIA in each of these years and assessee must be having some drawings also during this period and this detail is not made avails=able as to how much income is received by way of cheque and retained in the bank account and how much income is received in cash. These details are not available and it cannot be ascertained from the available details and moreover, in respect of assessee’s claim that there must be some savings as already noted, the assessee has also deposited Rs. 6 Lakhs in the immediate preceding year by way of cash in her bank
Page 7 of 7 account and any such savings even if there must have been used for such cash deposit in preceding year and therefore, this claim is not acceptable that this saving is available for cash deposit in the present year also. In view of above discussion, I find that no reason to interfere in the order of CIT (A). 7. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on the date mentioned on the caption page.