SATISH DHANESHAN KOLLARA,,RAIGAD vs. INCOME-TAX OFFICER,,

आदेश / ORDER

PER ANIL CHATURVEDI, AM :

This appeal filed by the assessee is emanating out of the order 1. of Commissioner of Income Tax (Appeals)-2, Thane dt.21.01.2015 for the assessment year 2011-12.

Assessee is an individual and stated to be engaged in the business of re-selling of computers and its peripherals under the name and style of M/s. Amsatcom Technics. Assessee electronically filed his return of income for A.Y. 2011-12 on 18.12.2011 declaring

total income of Rs.11,59,304/-. The case was selected for scrutiny

and thereafter assessment was framed u/s 143(3) of the Act vide

order dt.21.01.2014 and the total income was determined at

Rs.52,61,220/-. Aggrieved by the order of AO, assessee carried the

matter before Ld.CIT(A), who vide order dt.18.02.2014 (in appeal

No.495/THN/2013-14) granted partial relief to the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before

us and has raised the following grounds :

“1. The Appellate Authority erred by confirming the addition of cash deposit in the bank on various dates amounting to Rs.13, 61,000/- , as unexplained deposits. The cash deposit in the Bank are made out of cash in hand as per cash book maintained by the appellant, under mercantile system of accounting as same are contra entries. Therefore same can not be treated as unexplained deposits ignoring the fact of the case or without substantiating such addition. Further, cash book of the assessee was also provided to the Assessing officer as well as to the First Appellate Authority for their reference. Therefore the hypothetical addition to sales Rs.1361000/- needs to be set aside. 2. The Appellate Authority erred by adding Rs.20,72,543/- as long term capital gain on sales of land in place of Rs.7,88,877/- as per return of income filed by the Appellant. The legitimate expenses incurred by the appellant Rs.2,83,666/-(Indexed value of actual expenses Rs.250000/-) and Rs.1000000/- paid for vacating the land was disallowed even after providing documentary supporting. Therefore the original amount of capital gain Rs.7,88,877/- needs to be reinstated instead of the capital gain ofRs.20,72,543/-.”

was adjourned on the request of the assessee. It is seen that the

notice for the present hearing was issued to the assessee on

28.11.2017. On the date of present hearing none appeared. We,

therefore, proceed to dispose of the appeal ex-parte qua the assessee

on the basis of material on record and after hearing the Ld.D.R.

unexplained deposits.

4.1. During the course of assessment proceedings, AO noticed that

assessee had deposited cash aggregating to Rs.13,76,000/- in his

bank account (the details of which are listed at page 2 of the

assessment order). AO was not satisfied with the explanation of the

assessee that the deposits were made out of cash withdrawals from

the banks during the period from 19.04.2010 to 21.03.2011. He

thereafter treated Rs.13,76,000/- being the cash deposits in bank

as an unexplained investments and made its addition. Aggrieved by

the order of AO, assessee carried the matter before Ld.CIT(A), who

after considering the submissions of the assessee upheld the order

of AO by observing as under :

“4.2 During the course of appellate proceedings, the AIR of the appellant has submitted a detailed written submission vide letter dt. 16.12.2014. The relevant portion of the same is reproduced as under:-

"On the various dates as per details given below the appellant has withdrawn the cash from his Bank Accounts which has been re-deposited as and when necessary, in to the Bank. Therefore, the amount deposited or withdrawn from the Bank is in the nature of contra entry and does not substantiate or indicates any unaccounted sales or services payment. Therefore the Id. Officer has erred by adding the cash deposited in Bank as unaccounted sales. Details of cash withdrawn from Bank and deposited in the Bank are as under:-

Date on which Name of the Cheque Amount Amount cash is Bank No. Withdrawn deposited withdrawn/ (Rs.) in Bank deposited (Rs.) from/in Bank 19/04/2010 Bank of India 000105 62500/- - 26/04/2010 Bank of India ATM 10000/- - 12/05/2010 Bank of India ATM 5000/- - 03/06/2010 Punjab & 706034 192500/- - Sindh Bank 02/09/2010 Bank of India ATM 10000/- - 02/09/2010 Bank of India ATM 5000/- - 03/09/2010 Bank of India ATM 10000/- - 03/09/2010 Bank of India ATM 5000/- 06/09/2010 Bank of India - 06/09/2010 Bank of India ATM 10000/- 19/10/2010 Bank of India ATM 10000/- 02/11/2010 Drawings NA 50000/- 11/11/2010 Drawings NA 100000/- 100000/- 24/11/2010 Bank of India 000121 30000/- 02/12/2010 Punjab & 706035 25000/- Sindh Bank

21/1/2010 Bank of India NA - 11000/- 02/02/2011 Bank of India NA - 1000000/- Bank of India 04/02/2011 NA - 9000000/- Bank of India 14/02/2011 000132 285000/- - Bank of India 01/03/2011 Cash 5000/- - 01/03/2011 Bank of India Cash 5000/- - 21/03/2011 Drawings NA 2000000/- 2000000/- Total 1020000/- 1376000/-

4.3 I have carefully considered the submissions of the appellant, the observations of the AO in the assessment order and the facts of the case, therefore, I proceed to decide the appeal of the appellant.

From the above chart, it can be seen that the appellant has not explained the source of cash deposits vis-a-vis cash withdrawals from banks as claimed by the appellant and the reasons are as below:

i)The cash withdrawals and re-deposits in the bank as claimed by the appellant cannot be accepted as the time gap between withdrawals and deposits do not justify.

ii) During the appellate proceedings, the appellant was asked to explain the reasons and purpose for cash withdrawals as the withdrawals were made from 19.04.2010 to 21.03.2011. If the cash withdrawals are for business or for personal purposes, the appellant require to explain, but the appellant failed to do.

Therefore, out of total addition of Rs.13,76,000/-,an amount of Rs.13,61,000/- is added to the total income of the appellant as unexplained deposits whereas a sum of Rs.15,000/- deposited on 06.09.2010 is allowed to the appellant as explained as there were corresponding withdrawals. As a result, the appeal on this ground of the appellant is partly allowed”

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before

us.

the source of cash and therefore, AO was fully justified in making

the addition.

record. We find that Ld.CIT(A) has noted that assessee was asked to

explain the cash withdrawals and the re-deposits as claimed by the

assessee and the reasons and purpose for cash withdrawals. He

has noted that assessee has failed to satisfactorily explain the same.

Before us, no material has been placed by the assessee to controvert

the findings of Ld.CIT(A). In such a situation, we find no reason to

interfere with the order of Ld.CIT(A) and thus the ground of the

assessee is dismissed.

term capital gains.

7.1. During the course of assessment proceedings, AO noticed that

during the year assessee had sold two pieces of land at Plot Nos.7

and 8 at Village Katrang, Tal. Khalapur, District Raigad for a total

consideration of Rs.31 lakhs. It was also noticed that while

computing the capital gains, assessee has reduced Rs.10,27,745/-

towards acquisition index cost and Rs.12,83,666/- towards

improvement index cost and worked out net taxable capital gains at

Rs.7,88,877/-. The assessee was asked to furnish the details of

expenditure incurred and the improvements made. Assessee inter-

alia submitted that cost of improvement included commission paid

for getting buyer, charges paid for leveling the land, charges paid for

fencing the land and expenses incurred to remove the unauthorized

encroachments for which he had incurred Rs.12,50,000/- and the

indexed cost worked out to Rs.12,83,666/-. The assessee was asked

to produce the supporting documents for the aforesaid expenses. In

the absence of satisfactory explanation from assessee, AO disallowed

the expenses of Rs.10 lakhs paid for removing unauthorised

encroachment and Rs.2,50,000/- towards cost of improvement and

thereafter determined the net taxable capital gains at

Rs.20,72,543/- as against Rs.7,88,877/- worked out by the

assessee. Aggrieved by the order of AO assessee carried the matter

before Ld.CIT(A), who after considering the submissions of the

assessee upheld the order of AO by observing as under :

“6.4 I have carefully considered the submissions of 'the appellant, the observations of the AO in the assessment order and the facts of the case, therefore, I proceed to decide the appeal.

6.5 The AO has not allowed the deduction while computing the capital gains regarding payment of Rs.10,00,000/-- to Mrs.S.Manish Shah for removing unauthorized encroachment and handing peaceful possession of land at the time of sale and another amount of Rs.2,50,000/- towards cost of improvement, hence, the total addition works out to Rs.(10,00,000/- + 2,50,000)= Rs.12,50,000/-. (I) As far as payment of Rs.10,00,000/- is concerned the appellant has not produced any evidence whatsoever that the property on sale was in dispute neither police complaint was filed nor a case is filed in the court of law as the payment is more than 30% of the sale price (Rs.31,00,000/-), therefore, even though it was paid by cheques, the same cannot be allowed as the onus lies on the appellant to prove that he had incurred such expenses out of exigency. (ii) As per computation of capital gain is concerned, no illegal payment is an allowable deduction, and therefore, section 48 of the I. Tax Act has dearly laid down what expenses are deductible, therefore, illegal expenses without any supporting evidence is not allowable.

(iii) The amount spent of Rs.2,50,000/- on improvement of land is also not justifiable as the property was a landed property, which does not require any improvement in real practical sense, therefore, the allowance of these expenses is not justifiable. The assessing officer has dealt and discussed in the assessment order, which justify the disallowance.”

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before

us.

record. We find that Ld.CIT(A) while upholding the addition has

noted that with respect to the amount of Rs.10 lakh that is stated by

the assessee to have been spent to remove the unathorised

encroachments and handover the peaceful possession of land, no

evidence was produced by the assessee to demonstrate that

property on sale was on dispute or any other evidence. Similarly, with respect to Rs.2,50,000/- being the expenses incurred for improvement cost of land, he upheld the order of AO. Before us, no material has been placed by the assessee to controvert the findings of Ld.CIT(A). We therefore find no reason to interfere with the order of Ld.CIT(A). Thus, the ground of the assessee is dismissed.

Order pronounced on 06th day of July, 2018.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 06th July, 2018. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

आदेशानुसार/ BY ORDER

// True Copy //

व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.