PONNUSAMY PADMANABHAN,COIMBATORE vs. ITO, BANGALORE

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ITA 1022/BANG/2016Status: DisposedITAT Bangalore19 May 2017AY 2010-119 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the Assessing Officer did not adequately investigate the sellers' claims or provide the assessee an opportunity to cross-examine them. Therefore, the matter was remanded back to the CIT(A) for fresh adjudication.

What were the facts?

The assessee, a salaried employee, deposited a large sum of cash into his bank account. He claimed this amount was from the sale of ancestral property by his relatives, who then gave him the cash for safekeeping. However, the relatives denied receiving any cash from the sale or handing it over to the assessee.

What were the issues?

Whether the cash deposit in the assessee's bank account was adequately explained, and if the denial of relatives was properly investigated and cross-examined.

Which sections of the Income-tax Act were involved?

Section 69,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BENGALURU BENCH B, BENGALURU

Before: SHRI. INTURI RAMA RAO & SHRI. LALIT KUMAR, JUDICIAL

For Appellant: Shri. Sivashanmugham, Advocate

IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI. LALIT KUMAR, JUDICIAL, JUDICIAL MEMBER (Assessment Year : 2010-11) Shri. Ponnusamy Padmanabhan, 24-1, Dhanapal Layout, Street-2, Uppilipalayam Post, Singanallur, Coimbatore 641 015 .. Appellant PAN : AMMPP6635L v. Income-tax Officer, Ward – 14(5), Bengaluru .. Respondent Assessee by : Shri. Sivashanmugham, Advocate Revenue by : Shri. G. Kamaladar, Standing Counsel Heard on : 18.04.2017 Pronounced on : .05.2017 O R D E R PER LALIT KUMAR, JUDICIAL MEMBER:

This is an appeal filed by the assessee through the power of attorney holder Shri. Ponnusamy Padmanabhan, against the order of the CIT (A)-5, Bengaluru, dt.14.12.2015, for the assessment year 2010-11.

ITA.1022/Bang/2016 Page - 2

2.

Assessee has taken the following grounds of appeal before us :

ITA.1022/Bang/2016 Page - 3

3.

Brief facts of the case are that the assessee is a salaried employee of M/s. Zenith Software Ltd, for the period 01.04.2009 to 31.03.2010. The assessee’s case was selected for scrutiny, as per the AIR transaction details, assessee had made a cash deposit of Rs.49,20,000/- in State Bank of India, Singanallur Branch, Coimbatore. There was no response to the notices issued u/s.143(2) of the Act. Finally notice was sent to the assessee through e-mail, for which the assessee responded, wherein it was submitted by the assessee, as under :

“My father (Mr K. Ponnuswamy), his brother (late Mr. K. Palanisamy) and family and his sister (late Mrs. Dhanalakshmi) family together sold an ancestor property on 10/8/2009 to Mr. P. Ayyadurai, son of Mr. Parvathi Mutu Nadar under a registered sale deed dated 10/8/2009 and shared the fortune with three of them.. My father gave me a sum of Rs.49,20,000/- and I’ve deposited the same on 10/08/2009. The only evidence we have is that is available in the register office, Singanallur, Coimbatore, Tamilnadu..... I’m sending you this e-mail...... I request you to consider this mail....” The AO after receipt of the e-mail reply had asked the assessee to furnish the details of the questionnaire and affidavit stating that the amount was given to him by his father out of the sale proceeds of the ancestral property sold on 10.08.2009, but no response was submitted. Therefore the AO has held that the assessee was unable to furnish proof in respect of the source ITA.1022/Bang/2016 Page - 4 of cash deposit of Rs.49,20,000/-. Being aggrieved by the order of the AO, assessee filed an appeal before the CIT (A).

4.

The CIT (A) confirmed the addition made by the AO. In para 6 and 6.1 of his order, it was held as under :

6.

I have carefully considered the submissions made by the appellant, the remand report of the Assessing Officer and the rejoinder filed by the appellant's representative. It is seen from the facts of the case that out of the total cash deposits of Rs.49,20,000/- made with SBI Singanallur branch Coimbatore, only Rs.35 lacs have been withdrawn and was stated to be distributed to the six legal heirs of the sellers, and the balance Rs.14.20,000/- was utilized for the appellant's own purpose. Even though the appellant's submitted that for sentimental reasons the entire sale proceeds received in cash by Ponnusamy the only legal heir available at that time of Mr. Kandaswamy got deposited in the bank account of his son Mr. Padmanabhan, the appellant, has not been substantiated with any documentary evidence even before the appellate proceedings. 6.1 Further, out of the cash deposits of Rs.49,20,000/- Rs.35 lacs stated to be distributed among legal heirs/relatives of the sellers found to be not correct as those sellers have denied categorically having received such cash and also denied having given any cash to the appellant for the safe custody, in their replies filed before the Assessing Officer. The Assessing Officer in her report submitted that the relatives of the appellant since have denied for having given any cash for safe custody, the cash deposits made by the appellant in his bank account should not be treated as explained. Even during the appellate ITA.1022/Bang/2016 Page - 5

proceedings the appellant has not given proper explanation for the source of the cash deposits made with any cogent evidence. In this view of the matters the explanation for the source of the cash deposits given were found not genuine and action of the Assessing Officer by treating entire cash deposits as unexplained investment and brought to tax u/s.69 of the Income Tax Act is hereby upheld. Now, the assessee is before us challenging the order passed by the CIT(A), with the grounds mentioned herein above.

5.

The Ld. Counsel for the assessee has submitted that the copy of the sale deed and affidavit on behalf of Shri. A. Subramanian and Shri. G.

Vellingiri, to establish that the money deposited in the bank account was belonging to the relatives and not that of the assessee.

6. On the other hand the Ld. DR supported the order of the lower

authorities.

7.

We have heard the rival submissions and perused the materials on record. As a matter of fact, the assessee has also placed on record copies

of the sale deed dt.10.08.2009 in respect of the property with the sale amount of Rs.28,80,000/- each. The two sale deeds were executed by P.

Sulochana, S. Sakunthala, P. Senthilkumar, P. Sivaswamy and S.

Vijayakumar. It is the case of the assessee that the total sale consideration was received by the sellers from the purchaser at the time of registration ITA.1022/Bang/2016 Page - 6 of the document and Shri. Ponnusamy, S/o. Late Kandasamy and Sri.

Padmanabhan are the attesting witnesses to the sale deed. It is the case of the assessee before us that the sale consideration received by the said sellers were deposited by the assessee in his bank account and subsequently the said amount was withdrawn and given by the assessee to the sellers. Similar argument was raised before the CIT (A) and the CIT

(A) called for the remand report from the AO. The AO vide letter dt.07.04.2015 has submitted before the CIT (A) that the sellers (relatives of the assessee) had categorically denied having given any cash to the assessee for depositing in the bank. The CIT(A) in para 5.2 has recorded as under :

5.2 The assessee is a salaried employee of M/s Zenith Software Ltd has deposited cash of Rs.49.20 lacs in SBI Singanalur Branch Coimbatore and the sources for the same were explained to be the sale proceeds of the ancestral property of his father and the sellers of the property had given the cash for the safe custody to the appellant which was deposited in his bank account. Out of which an amount of Rs.3950025/- was withdrawn subsequently and stated to be returned to the relatives mentioned in the sale deed. The Assessing Officer has stated that there was no confirmation for having received by the relatives rather they have categorically denied off handing over the cash to the appellant for safe custody. The Assessing Officer in her remand report stated that the main issue in this case is the addition made on account of ITA.1022/Bang/2016 Page - 7 cash deposit in the SBI in the appellant's account the source of which is explained to be the amount of sale consideration received by the appellant's relatives, which was given to him for safe custody purpose. This fact has been denied by the relative of the appellant who are the seller of the residential property. On the facts and circumstances of the case the addition made by the Assessing Officer may be confirmed. The report of the Assessing Officer has been forwarded to the appellant for his objections if any. The appellant has submitted his rejoinder during the appellate proceedings.

7. It is an admitted position that the assessee is a salaried employee and it is not possible for him to earn or raise such a huge amount and deposit the said amount in his bank account. In fact, the assessee has given the explanation that the said amount was the amount of consideration received by the assessee from his relative who in turn had received this amount on sale of their land. Though the AO has submitted that the relatives have denied of having given the amount to the assessee, however, none-the-less, the AO has not enquired from the said sellers as to when they have received the amount and what they have done with the said amount and has also not given an opportunity to the assessee to cross-examine them on this issue. Since the assessee before us has filed the registered sale deed along with the translated copy and an affidavit to explain the source of cash deposit, it is therefore necessary in the peculiar facts and circumstances of ITA.1022/Bang/2016 Page - 8 the case to remand the matter to the file of the CIT (A) with a direction to take appropriate legal proceedings as contemplated under the law by summoning the sellers by issue of notice u/s.133(6) of the Act and decide the issue afresh.

8.

We may just mention that the coordinate bench in the case of S. Venkat Reddy v. ITO [TS-6716-ITAT-2016(Hyderabad)-O] in similar facts and circumstances after relying on the judgment of the Hon’ble Supreme Court in the case of P. K. Noorjahan [TS-5002-SC-1997-O], has held that merely the assessee’s failure to explain the source of cash will not automatically attract the addition of the cash deposit. Other attending circumstances are also to be considered like the capacity of the assessee to earn etc.,

9.

In the result, appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on the 19th day of May, 2017.

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