SMT KRISHNA OJHA,KOLKATA vs. ITO,WD-26(4), KOLKATA, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH: KOLKATA [Before Shri S. S. Viswanethra Ravi, JM & Dr. A. L. Saini, AM] I.T.A No.658/Kol/2015 Assessment Year: 2009-10 Smt. Krishna Ojha (PAN: AACPO9425B) Vs. Income-tax Officer, Wd-26(4), Kolkata (Appellant) (Respondent)

Date of hearing: 03.01.2017 Date of pronouncement: 13.01.2017 For the Appellant: Shri Subash Agarwal, Advocate For the Respondent: Shri Arindam Bhattacharya, JCIT ORDER Per Dr. A. L. Saini, AM: The captioned appeal filed by the Assessee pertaining to Assessment Year 2009-10, is directed against the order passed by the Ld. CIT(A)-7, Kolkata in appeal no. 29/CIT(A)- 7/W-26(4)/14-15, dated 25.03.2015, which in turn arises out of assessment order passed by the ITO, Wd-53(4), Kolkata u/s.143(3)/154 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 28.12.2011.

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“I found that the appellant deposited cash of Rs.15,75,000/- in saving bank account with HDFC Bank. The A/R of the appellant given the explain that part of the deposits were by cash of Rs.11,00,000/- received from the executer of the Will of Late Shyam Sunder Ojha and the balance was by return of various loans advanced by the appellant in earlier years. This explanation rejected by the AO and made the addition of Rs.15,75,000/- as unexplained cash deposit in HDFC Bank Account. The appellant failed to prove the claim of having received Rs.11,00,000/- in cash from the son of her brother-in-Law who further made an absurd claim of holding it in cash as per the Will of late father. The brother in law's son has confirmed that his father was never an Income Tax payee, which also prove that he had no capacity to be the owner of such a large amount of Rs.11,00,000/-. He has also no explanation as to why being the so called Executor of the alleged Will of his father which is purportedly made on a stamp paper purchased by an advocate and not by his legator. The appellant also failed to file the detail of loan and advances, Bank Account etc. The stamp paper also purchased by an advocate on 23.03.2004 which was used on 22.01.2007. The appellant's brother in law's son kept the money with himself in cash from January 2007 to 27th September 2008 when he allegedly handed it over to appellant and the same was deposited in appellant's Bank Account. The Executor could not produce any documents to confirm the signature of the alleged testator on the plea that a fire took place in his office in the Month of January, 2008 and all the documents were lost in fire. If the event of the fire is correct then the alleged Will should have also got burnt in the fire. Considering the above observation, I am of the view that the action of the A.O. that the copy of Will provided by the appellant is not a valid Will and source of Rs.11,00,000/- is not genuine. The next issue is loan and advances earlier given to the various persons and received back of Rs.4,75,000/- is also not genuine because the appellant is house wife with no genuine source of income. She only shown the tuition income. The appellant is not having the balance sheet from that it observed that she had given the loan and advances. The so called person who repaid the advanced are not attended during the remand proceedings. Therefore, the identity, genuineness of the transaction and creditworthiness of the person is not proved. The A/R of the appellant in submission dated 05.08.3013 stated "the balance amount was received by her from different parties as loan". The A/R of the appellant taken argument one side that there are repayment of loan given in earlier years and submission dated 05.08.2013 he stated that the appellant taken loan. These two things are contradictory to each other. Therefore, it proved that the appellant made the story to explain the cash deposit in bank. The appellant also relied case laws which are related to the trade creditors. In this case the matter is not related to the trade creditor but related the cash credits which is totally different. Therefore, the case law cited by the A/R of the appellant is not applicable in this case. Considering the above observation, I am of the view that the A.O. rightly made the addition of Rs.15,75,000/ - as unexplained cash deposit in the HDFC Bank Account. Therefore, I confirm the addition made by the A.O. of Rs.15,75,000/ - on undisclosed deposit in HDFC Bank Account. The next issue the appellant made the cash deposit of Rs.2,99,000/- in Bank of Baroda but the A.O. not made the addition on the amountof Rs.2,99,000/-. Therefore, I issue a enhancement notice u/s.251(2) of the I.T. Act which is as under :-

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"In the assessment order an addition of Rs.15, 75,000/ - has been made on account of unexplained cash deposit aggregating to Rs.15,75,000/ - in your bank account with HDFC Bank. The explanations given to the effect that part of the deposits were explained by cash of Rs.11,00, 000/- received from the executor of the will of Late ShyamSundarOjha and the balance was explained by refunds of various loans advanced by the appellant in earlier years were rejected by the Assessing Officer. Similar explanations were also given in respect of total cash deposits of Rs.2,99,000/ - in your account with Bank of Baroda. No addition has been made in respect of these deposits aggregating to Rs.2,99,000/ - in your account with Bank of Baroda although the explanations were similar to those in respect of the deposits in bank account with HDFC Bank and were, prima facie, not satisfactory. After considering your explanations given during the assessment proceedings and the appellate proceedings, I find that the aforesaid explanations given to explain the source of cash deposits in HDFC Bank as well as Bank of Baroda are not satisfactory. As an addition of Rs.15,75,000/ - only has been made in the assessment order, you are requested to show cause as to why the assessed income should not be enhanced by Rs.2,99,000/- by applying the provision of section 251(2) of the 1. T. Act. Your reply in this regard should befurnished in person or through an authorized representative along with supporting details on or before 29.12.2014. Your case has been re-fixed for hearing on 29.12.2014 at 11-30 AM." The A/R of the appellant not filed any submission against the enhancement notice issue u/s. 251 (2) of the I.T. Act. The appellant failed to explain the source of cash deposit in Baroda Bank Account of the appellant at the time of appellate proceedings. The explanation given at the time of assessment proceedings is not found correct because the copy of Will is not treated as valid Will and the appellant failed to prove the identity, genuineness and creditworthiness of the so called persons from loan shown as return back. Considering the above observation and facts of the case, I enhanced the income of the appellant by applying the provision u/s.251(2) of the I.T. Act by Rs.2,99,000/- as unexplained cash deposit in Bank of Baroda. I confirm the addition made by the A.O. of Rs.15,75,000/- as unexplained deposit in HDFC Bank and I also enhanced the income by Rs.2,99,000/ - as unexplained cash deposit in Bank of Baroda. This ground is dismissed with enhancement. The appellant concealed the income of Rs.2,99,000/ - with intention to evade the tax on concealed income. Therefore, I direct the AO to consider Rs.2,99,000/- as concealed income at the time of imposition of penalty u/s. 271(1)(c) of the I. T. Act.” 4. Not being satisfied with the order of the Ld. CIT(A), the assessee preferred appeal before us and has taken the following grounds of appeal: “01. That the order of the learned Commissioner of Income Tax (Appeals) - 7, Kolkata confirming the additions and for disallowance made by learned assessing officer is contrary to the law and facts of the case. 02. That on the facts brought on record, order of the Learned Commissioner of Income Tax (Appeals)-7, Kolkata confirming the addition made by the learned assessing officer by treating cash deposited into savings bank account to the tune of Rs.15,75,000/- as undisclosed income from Other sources is bad in law as well as in the facts of the case. 03. That the Learned Commissioner of Income Tax (Appeals) - 7, Kolkata, erred in law as well as in facts by treating cash deposited in to savings bank account to the tune of Rs.2,99,000/- as

4 ITA No. 658/Kol/2015 Krishna Ojha, AY. 2009-10 unexplained cash deposit and enhancing the income of the appellant under the provisions of section 251(2) of the Income Tax Act, 1961. 04. That the appellant craves leave to add/or amend any ground of this appeal.”

5.1 The Ld. AR for the assessee has submitted that the assessee got the amount by way of a ‘Will’ and the copy of the will has been produced before the Ld. CIT(A) as well as before the Assessing Officer. It is not necessary to register the Will. A ‘WILL’ may be written on a simple piece of paper. The Ld. CIT(A) pointed out that the assessee filed the return of income in wrong ITR form, this happened because the assessee is not well conversant with the income tax law and happened because of mistake done by the Ld. Counsel for the assessee. The Ld. AR for the assessee submitted that in sum and substance, the purpose of the Income Tax Act is to levy the tax on the genuine income and not to go into technicalities. The contentions of the Ld. CIT(A) that WILL is not probated, is also wrong because it is not written in the Succession Act that will should be probated. Regarding the loan confirmation, it is submitted by the Ld. AR for the assessee that loan was taken in previous year and only opening balance was stated in the books of the assessee. In order to prove the identity, genuineness and creditworthiness of the transaction the assessee has submitted the WILL on the stamp paper. The assessee also submitted the confirmation. However, the assessee being a female could not appear one or two occasions before the AO and that does not mean that the assessee is not cooperative. The assessee also submitted a cash flow statement before the AO which contains information about both the bank accounts but the AO failed to make enquiry. In addition to this theLd. AR relied on the following judgments:

(1) CIT Vs. Smt. P. K. Noorjahan (1999) 103 Taxman 382 (SC):“The revenue's submission that the word 'may' in section 69 should be read as 'shall' is not acceptable. As

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pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in the Parliament, the word 'shall' had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word 'may'. This clearly indicates that the intention of Parliament in enacting section 69 was to confer a discretion on the Assessing Officer in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. A discretion has been conferred on the ITO under section 69 to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case. In the instant case, the Tribunal had held that the discretion had not been properly exercised by the ITO and the AAC in taking into account the circumstances in which the assessee was placed and the Tribunal had found that the sources of investments could not be treated as income of the assessee. The High Court had agreed with the said view of the Tribunal. There was no error in the said finding recorded by the Tribunal.The appeal was, accordingly, dismissed.” (2). Addl. CIT Vs. Jay Engineering Works Ltd. (1978) 113 ITR 389 (Del.): “Under section 34 of the Indian Evidence Act, account books maintained in the regular course of business are evidence after the relevant entries are proved by oral evidence or are admitted. The ITO, however, have to deal with such numerous cases of assessment that they can accept as correct books of account maintained in regular course of business without such a formal proof In the instant case, the relevant books of account in which detailed information as to the expenses which were claimed as deductions for the assessment years 1962-63 and 1963-64 were destroyed by fire. Under the Indian Evidence Act secondary evidence of the contents of these account books would have to be adduced if they were to be used to prove any fact. The external auditors of the assessee-companies had, however, made their annual reports under section 227(2) of the Companies Act, 1956, to the members of the company on the accounts examined by them and on the balance-sheets and profit and loss accounts for those two years. Those reports did not doubt the correctness of the expenses, deductions of which were claimed by the assessees. Unlike the proof required of such reports as also of the account books under the Indian Evidence Act, it is quite competent for the income-tax authorities not only to accept the auditors' report, but also to draw the proper inference from the same. The income-tax authorities could, therefore, come to the conclusion that since the auditors were required by the statute to find out if the deductions claimed by the assessees in their balance-sheets and profit and loss accounts were supported by the relevant entries in their account books, the auditors must have done so and must have found that the account books supported the claims for deductions, when the deductions were disallowed, by the ITO on the ground that detailed information regarding them was not available, justice was not done to the assessees. It was not possible for the assessees to produce the original account books, which were destroyed in fire. There was, however, other material mainly consisting of the auditors' reports from which it could be inferred that the deductions were properly supported by the relevant entries in the account books. In a sense it may be a question of law as to what the meaning of "material" is and whether the auditors' reports were material. But the question of law is well settled and is not capable of being disputed and does not, therefore, call for reference. The Tribunal had stated that, though, ordinarily, the adjustments relating to expenses should have been made by the assessees in the accounts of the year to which the adjustments relate and not in a subsequent year, it is often inevitable that such adjustments relating to earlier years have to be made in subsequent years. This is specially so, when the business, as of the assessees, is of giant proportions and the branches are furflung. The Tribunal had also very properly relied upon the auditors' reports to draw the proper inference from the same. Since the evidence in income-tax proceedings need not consist necessarily of

6 ITA No. 658/Kol/2015 Krishna Ojha, AY. 2009-10 evidence admissible under the Evidence Act but may consist of other material which has a probative value, the Tribunal was justified in taking such material into account. It could not, therefore, be said that the decision of the Tribunal was not based on any evidence. On the contrary, it was based on evidence meaning thereby that it was based on relevant material which can be considered in the income-tax proceedings. The application was dismissed, accordingly.” 6. On the other hand, the Ld. DR for the revenue has primarily reiterated the stand taken before the Ld. CIT(A), which we have already noted in earlier para and is not being repeated again for the sake of brevity.

The Ld AR pointed out that it is not necessary to register the Will. A ‘WILL’ may be written on a simple piece of paper. The contentions of the Ld. CIT(A) that WILL is not probated, is also wrong because it is not written in the Succession Act that will should be probated. The ld AR also pointed out that in the Income Tax Act, strict evidence is not required and only secondary evidence is sufficient to prove the genuineness of the claim as has been held in the Addl. CIT Vs. Jay Engineering Works Ltd. (1978) 113 ITR 389 (Del.), cited (supra).

The discretion has to be exercised by the AO, keeping in view the facts and circumstances of the particular case as has been pointed out in CIT Vs. Smt. P. K. Noorjahan (1999) 103 Taxman 382 (SC) (supra). Loan confirmations were also filed and the assessee has disclosed both the bank accounts by way of cash flow statement before the AO. The Ld. AR for the assessee also pointed out that in the Income-tax Act strict evidence is not required and only surrounding documents are enough to prove the genuineness of the transactions. Both the amounts of Rs.15,75,000/- and Rs.2,99,000/- have been explained by the assessee before the AO by way of filing the cash flow statement. Considering the factual position and the

7 ITA No. 658/Kol/2015 Krishna Ojha, AY. 2009-10 precedents cited by the Ld. AR for the assessee, we are of the view that the addition made by the AO and confirmed by the Ld. CIT(A) needs to be deleted. Accordingly, we delete both the additions.

Order pronounced in the open court on 13.01.2017.

Sd/- Sd/- (S.S. Vishwanethra Ravi) (Dr. A. L. Saini) Judicial Member Accountant Member 13th January, 2017 Dated : Jd. Sr. P.S

Copy of the order forwarded to: 1. Appellant – Smt. Krishna Ojha, Flat No. 2C, Block-A, 10 Motilal Gupta Road, James Court, Kolkata-700 008. 2. Respondent – ITO, Wd-26(4), Kolkata. 3. CIT(A), Kolkata 4. CIT, Kolkata 5. DR, Kolkata Benches, Kolkata /True Copy, By order, Asstt. Registrar.