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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI DUVVURU RL REDDY, & SHRI D.S.SUNDER SINGH
आदेश / O R D E R
PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the Order dated 02.06.2016 of Commissioner of Income Tax (Appeals)-Puducherry, Chennai, in for the AY 2010–11.
ITA No.396/Mds/2017 :- 2 -:
2.0 Delay:
There was a delay of 163 days for which the assessee has filed Affidavit requesting for condotionation of delay. During the appeal proceedings, the Ld.AR of the assessee submitted that due to ill-health of the assessee and his father the appeal could not be filed within the time allowed. The assessee also enclosed the Medical Certificate and medical prescriptions. The Ld.DR did not object for condonation of the delay. The issue has been heard and after considering the submissions made by the Ld.AR the delay is condoned.
3.0 All the grounds of the appeal are related to the addition of Rs.17,81,000/- as unexplained cash credits. The assessee is an employee in Annamalai University filed the return of income declaring total income of Rs.2,40,550/-. During the assessment proceedings, the AO found that there were cash credits in the bank account of the assessee in ICICI Bank A/c No.61501502396 to the extent of Rs.17,81,000/-. The AO issued notices and posted the case for several times but the assessee has not explained the source and nature of credit. Therefore, the AO made the addition of Rs.17,81,000/- as unexplained cash credits and completed the assessment. The assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition made by the AO. The Ld.CIT(A) confirmed the addition observing that the assessee has failed to explain the nature and source of the cash credit u/s 68 of I.T.Act. The relevant
ITA No.396/Mds/2017 :- 3 -: part of the CIT(A) order is extracted as under for the sake of convenience and clarity:
Decision and the Reasons: The assessee has not responded to various statutory notices issued by the AO. Despite reasonable opportunities given, the assessee was not willing to explain the nature and source for the cash deposits made into the bank account. The AO has examined the bank account of ICICI Bank only and found the cash deposits. It seems that the assessee was maintaining bank accounts with other banks like Karur Vysya and Indian Bank. The chit - amount from Janapriya Chit funds Ltd. of Rs.9,00,000/- was received by the assessee by cheque. The assessee had not furnished the details of bank in which the said cheque was deposited. The AO has also not considered the other bank accounts maintained by the assessee to see whether any cash deposits were made in the said bank accounts also. Though the assessee claims that he is having agricultural lands, no agricultural income was offered for tax. Further, it is seen from the chit statement furnished by M/s.Jaya Priya Chit Funds, the sum of Rs.9,00,000/- received comprises of Rs.6,00,000/- as chit dividend and the balance represent chit contribution of Rs.30,000/- p.m. The assessee has not admitted the chit, dividend of Rs.6,00,000/- as his income at all. Further, it is also not clear as to why the assessee should take jewel loans and mortgage loans only to deposit into the bank account when there are no immediate withdrawals of the loan amount taken. As rightly stated by the AO, the creditworthiness of the mortgagee who has claimed to have advanced the amount was not veriified and the mortgage deed was also not registered. The jewel loan availed during the period from 1/4/2009 to 31/3/2010 was only Rs.6,56,100/- whereas the repayment of such jewel loan exceeds the loan availed and hence the jewel loan cannot be considered as a source for making the cash deposits into the bank account. The assessee should have given explanation for each and every one of the cash deposits made and explained the sources which he failed to do. All things considered, it is clear that the assessee had not discharged his burden of proving the nature and source for the cash deposits made into the bank account and the AO was quite justified in making the addition of Rs.17,81,000/- as unexplained credit in the bank account. I therefore confirm the addition of Rs.17,81,000/- made in the assessment.
3.1 Appearing for the assessee, the Ld.AR argued that the assessee is an employee of Annamalai University and receiving the salary and did not have any other source of income. The Ld.CIT(A) has mistaken that the assessee has received the amount of Rs.9.00 lakhs which was adjusted repay the loan taken against the mortgage deed. But the same was not taken as the source for the credits made in the bank account of the ICICI bank. During the appeal proceedings, the assessee has submitted evidence in respect of the following cash loans taken from the various persons, which were credited as cash deposits in the bank accounts of ICICI:
ITA No.396/Mds/2017 :- 4 -:
(i) On 22.04.2009 – cash loan of Rs.10.00 lakhs from M/s.Janapriya Chit Funds Ltd. (ii) On 03.09.2009 – cash loan of Rs.3.00 lakhs from M/s.Janapriya Chit Funds Ltd. (iii) Rs.4.00 lakhs towards rent advance from his property (Page No.21-23 of Paper Book) (iv) Rs.7.00 lakhs as a loan from equitable mortgage by deposit of title deeds On 01.06.2009 (in Page No.24-26 of Paper Book)
The Ld.AR submitted that the above loans were taken from M/s.Janapriya Chit Funds Ltd., advance for rent against letting out of his property and equitable mortgage loans and the same were credited in the bank accounts on various dates and the withdrawals made from the bank account were used for re-depositing the cash. In a nutshell the AR explained that the source for the cash deposits in Bank account was the loans and the circulation of cash withdrawals. The AR further submitted taht the above evidences were furnished before the Ld.CIT(A),but he has not examined the details. Without examining the details, the Ld.CIT(A) has confirmed the addition. The Ld.AR argued that an opportunity may be given to the assessee to prove the genuineness of the credits.
3.2 On the other hand, the Ld.DR argued that the AO has given number of opportunities but the assessee has not utilized opportunities given by the AO. Therefore, the AO has completed the assessment u/s.144 of IT Act. Before the Ld.CIT(A) the assessee has explained the sources as gold loans and circulation of withdrawals from the deposits and also agricultural income apart from the sources from the friends stayed in Abroad. Further, the Ld.DR further submitted that the AO has made the addition in respect of the credits made in the ICICI bank
ITA No.396/Mds/2017 :- 5 -: account, whereas the assessee stated that he is having bank account in Karur Vysya Bank, Indian Bank also. Though the assessee stated that the assessee has received the rent advance, the same has not been admitted by the assessee in the Income Tax returns, for year under consideration or for the earlier years. The Ld.DR further argued that the cash loans are not permitted as per Sec.269SS of IT Act. Therefore, the Ld.DR vehemently argued that the AO has rightly made the addition which required to be confirmed.
4.0 We heard the rival submissions and perused the material placed before us.
The assessee has furnished the evidence before us for taking the following cash loans: • Rs.10.00 lakhs from Jaipria finance on 21.04.2009 • Rs.3.00 lakhs from Jaipria Finance on 03.09.2009 • Rs.4.00 lakhs rent advance for let out of his property • Rs.9.00 lakhs cash loan on equitable mortgage
The assessee also explained that the above cash loans were used for making cash deposits in the bank account. The Ld.AR for query from the bench replied that the cash loans taken by the assessee were not deposited in the bank account on the same day and cannot be reconciled on transaction to transaction basis. The assessee submitted that rental income was admitted by the assessee in the returns of income. Therefore, all these issues required further verification at the level of AO. Though non submission of reply and not explaining the source of deposit before the AO is not an appreciable action on the part of the assessee merely
ITA No.396/Mds/2017 :- 6 -: because the assessee has taken the cash loans which is a subject matter of penalty u/s 269SS cannot be a reason for making the addition. In the instant case the genuineness of the source of the cash deposits and its application of funds required examination before treating the deposits as unexplained income u/s 69 of IT Act. The Ld.DR further argued that the assessee was having other bank account in Karur Vysya Bank and Indian Bank which was not brought on record by the assessee. Considering all the facts and merits of the assessee, we set-aside the orders of lower authorities and remit the matter back to the file of the AO to examine the entire assessment and re-compute the income afresh in accordance with law. Accordingly, we set-aside the assessment de novo to re-do the same.
In the result, the appeal of the assessee is allowed for statistical purposes.