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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-orders passed by learned Commissioner of Income-Tax (Appeals)-II, Indore [“Ld. CIT(A)”], the assessee has filed these two appeals before us.
26.06.2018 passed by Ld. CIT(A) in Appeal No. IT-10/2018- 19/188, which in turn arises out of assessment-order passed by learned ITO, 5(2), Indore [“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”]. is a penalty-appeal directed against the appeal-order dated 26.06.2018 passed by Ld. CIT(A) in Appeal No. IT-10/2018-19/189,
Shri Shailendra Bansal & 710/Ind/2018 Assessment year 2008-09 which in turn arises out of penalty-order dated 27.04.2011 passed by Ld. AO u/s 271(1)(c) of the act. Both appeals relate to same Assessment-Year [“AY”] 2008-09. This is the second-round of litigation. In first-round, the appeals filed by assessee were remanded back to Ld. CIT(A) for a fresh adjudication. Ld. CIT(A) passed orders but the assessee still being aggrieved, has once again come in appeal before us.
The assessee is an individual, claiming to have studied upto 9th standard, residing in a small place called “Badwah” and earning income from a very small retail shop of packing material and interest on loans given to different persons.
First we deal with quantum-appeal and thereafter penalty-appeal.
The sole grievance of assessee is the addition of Rs. 9,50,000/- made by Ld. AO on account of unexplained cash-deposits in Bank A/c.
During scrutiny-assessment, Ld. AO observed that the assessee had deposited a sum of Rs. 6,50,000/- on 13.07.2007 and Rs. 3,00,000/- on 27.03.2008, both aggregating to Rs. 9,50,000/- in an account with SBI. When the Ld. AO confronted the assessee about source of these deposits, the assessee filed a reply dated 17.09.2010 (copy filed at Page No. 10 of the Paper-Book) wherein it was submitted that the assessee had given loans to various persons which were recovered alongwith interest and re-deposited in bank account. It is stated by Ld. AO in assessment-order “For the purpose of verification, notices u/s 133(6) was issued to persons as per list to establish their identity, creditworthiness, genuineness and nature of transactions.” However, the notices got returned. Thereafter, Ld. AO issued final show- cause notice to the assessee and completed assessment by making an addition of Rs. 9,50,000/-.
Aggrieved, assessee filed appeal to Ld. CIT(A). During appellate- proceeding, the assessee made a lengthy submission which is reproduced by Page 2 of 8
Shri Shailendra Bansal & 710/Ind/2018 Assessment year 2008-09 Ld. CIT(A) in Para No. 3 of the appeal-order. The crux of assessee’s submission can be summed as follows:
(i) That the Ld. AO made addition on the premise that the assessee had taken loans from various parties for making deposit in bank account and failed to prove identity, creditworthiness, genuineness and nature of transactions. But the fact is that the assessee had recovered principal + interest from different parties to whom loans were given in earlier year and the proceeds of recovery was re-deposited in the Bank A/c. Therefore, the Ld. AO proceeded with a wrong understanding of facts.
(ii) That assessee’s mother (Smt. Geetadevi Bansal) expired on 12.10.2006. Mother was having a deposit of Rs. 7,45,293/- with Smt. Meena Bai w/o Shri Ram Kishore for last 3 years before death. Bank Pass-Book and income-tax documents of mother were filed to Ld. CIT(A) (Page No. 11 to 27 of Paper-Book). It was submitted that after death of mother, the deposit of Rs. 7,45,293/- was recovered from Smt. Meena Bai. Copy of bank pass-book of mother was filed to Ld. CIT(A) (Page No. 17 of Paper-Book), which shows a credit entry of Rs. 7,45,293/- on 19.10.2006. Thereafter, a sum of Rs. 7,14,000/- was transferred from mother’s account to assessee’s account on 19.10.2006, which is evident from a debit-entry appearing in the same pass-book of mother. Copy of pass-book of assessee’s bank account was also filed to Ld. CIT(A) (Page No. 6 of Paper-Book) which shows a corresponding credit-entry of Rs. 7,14,000/- on 19.10.2006. Thereafter, the assessee withdrew a sum of Rs. 7,14,000/- in cash on 19.10.2006, which too is appearing in the same pass-book of assessee captioned as “19.10.2006 – Paid to SELF – Cheque No. 2070532 – Amount withdrawn Rs. 7,14,000/-”. In short, the assessee received a cash of Rs. 7,14,000/- on death of mother. Further, the assessee also made withdrawals of Rs. 14,000/- and Rs. 30,800/- from mother’s bank account, the debit-entries of withdrawals appearing in mother’s Page 3 of 8
Shri Shailendra Bansal & 710/Ind/2018 Assessment year 2008-09 bank pass-book at Page No. 17 of Paper-Book. This way, the assessee got a total sum of Rs. 7,14,000/- (+) Rs. 14,000/- (+) Rs. 30,800/- = Rs. 7,58,800/- on death of mother. The assessee gave this money to different agriculturists for earning interest income, from which the assessee earned interest income of Rs. 79,300/- and Rs. 13,800/- in financial year 2006-07 (AY 2007-08) and 2007-08 (AY 2008-09), the interest incomes are disclosed in the returns of respective years and assessed by department. During the year, the assessee received the principal + interest from those parties. Further, the assessee had a sum of Rs. 98,100/- by way of surplus out of past savings. This way, the assessee was having a total sum of Rs. 9,50,000/-, which he deposited into Bank A/c. The tally of Rs. 9,50,000/- is depicted in this chart submitted by assessee to Ld. CIT(A):
Cash Remark Bank Date withdrawal deposits 714000 19/10/2006 from Mother 650000 13.07.2007 14000 19/10/2006 from mother 300000 27.03.2008 30800 19/10/2006 from mother 758800 79300 Interest for A.Y.2007-08 13800 Interest for A.Y.2008-09 851900 98100 Out of savings 950000 Total 950000
Shri Shailendra Bansal & 710/Ind/2018 Assessment year 2008-09 8. With above submission, the assessee explained the source of Rs. 9,50,000/- deposited in Bank A/c. But the Ld. CIT(A) broadly emphasized the findings of Ld. AO, did not accept the submissions of assessee and upheld addition.
Before us, Ld. AR appearing on behalf of assessee made a detailed submission, broadly reiterating the same submissions as made before lower authorities. Ld. AR carried us to several pages in the Paper-Book, including those as narrated in foregoing paragraph, and argued that the lower authorities have wrongly proceeded as if the assessee had taken loans and not been able to prove the three ingredients, namely identity, creditworthiness and genuineness, which are basically of section 68. Ld. AR submitted that the factual position is totally different. The assessee has never claimed before lower authorities that he had taken loans. Drawing our attention to the letters submitted before Ld. AO, copies of which are placed at Page No. 8 and 10 of the Paper-Book, Ld. AR submitted that the assessee has clearly submitted that there was no unsecured loan taken and also submitted that he had made recoveries against the loans/outstandings/ receivables. Ld. AR explained that the revenue authorities have proceeded on mis-understanding of the facts and thereafter did not back on the correct facts of assessee. Then the Ld. AR made a detailed submission on the death of mother of assessee and the various sources of Rs. 9,50,000/-, which we have already narrated in the foregoing paragraph and we do not want to repeat for the sake of brevity. With these submissions at length, Ld. AR contested that the assessee was having sufficient sources for cash-deposit of Rs. 9,50,000/- in bank account and therefore no addition ought to have been made.
Before proceeding further, we would like to make a mention. On perusal of our Order-Sheet, it is observed that the Bench had directed on 04.02.2020 to the Ld. AR to file Bank A/c of Smt. Meena Agrawal, which the Ld. AR filed on 02.03.2020 under Rule 29 of Income-tax Appellate Tribunal Rules, 1963. Thereafter, on 16.06.2020, the Bench also accepted the Page 5 of 8
Shri Shailendra Bansal & 710/Ind/2018 Assessment year 2008-09 request of Ld. AR to file further evidence, whereupon the Ld. AR again invoked Rule 29 and filed a Certificate dated 21.07.2020 issued by State Bank of India, Sendwa branch confirming the fact a sum of Rs. 7,14,000/- was transferred on 19.10.2006 from the Bank A/c of assessee’s mother to the account of assessee. These evidences submitted by the assessee were required for a clear-cut verification of the transactions already submitted by assessee to the revenue authorities and meet the requirement of Rule 29. Hence they are admitted and taken on record.
We have considered rival submissions of both sides and perused the relevant material held on record. Since we have already narrated the facts in much detail, we do not wish to re-narrate the same. We only suffice to say that the assessee is having a small shop at a smaller village and earning income from a small-level business of packing material and interest on loans given to parties. These sources of income are clearly verifiable from copies of income-tax returns / computation of total income filed for AY 2007-08 and 2008-09 in the Paper-Book. These documents clearly indicate that the assessee has earned interest income of Rs. 79,300/- in AY 2007-08 and Rs. 13,800/- in AY 2008-09. The interest income had been assessed by the revenue too. Thus, the earning of interest income clearly proves the factum of giving loans to persons. We further observe that the Ld. AR has successfully proved that post-death of assessee’s mother on 12.10.2006, the assessee received funds in bank on 19.10.2006 and the cash was withdrawn from bank on 19.10.2006. The submission of assessee that this cash was utilized for giving loans to agriculturists so that interest could be earned, has credence for the reason that the assessee resides in a smaller village, with meagre sources of income and therefore putting money for earning interest income is something which people often do at smaller places. Needless to mention that the interest income declared by the assessee in the returns of different years, also supports the asessee’s stand directly. We also observe that the assessee received moneys from his mother on 19.10.2006 and the cash-deposits in bank account were made on 13.07.2007 / 27.03.2008. Thus, the time-gap between 19.10.2006 and 13.07.2007 / Page 6 of 8
Shri Shailendra Bansal & 710/Ind/2018 Assessment year 2008-09 27.03.2008 is also reasonable to accept that the assessee had sufficient cash-balance for making the impugned deposits. It is also not the case of revenue that the assessee had utilized the cash-withdrawals made from bank for some other purpose and hence left with no funds. Looking into these facts, we are of the firm view that the assessee had adequately explained the source of cash-deposits of Rs. 9,50,000/- and the revenue authorities were not justified in disbelieved his submissions. Hence, the addition of Rs. 9,50,000/- certainly deserves to be deleted. Accordingly, we order to delete the addition. With this quantum-appeal of assessee is allowed.
Penalty-Appeal / ITA No. 710/Ind/2018:
In this appeal, the assessee is aggrieved by the penalty of Rs. 3,02,980/- imposed by Ld. AO u/s 271(1)(c) of the act.
We observe that the said penalty has been imposed qua the aforesaid addition of Rs. 9,50,000/-. Since we have already allowed the quantum- appeal of assessee and deleted the addition of Rs. 9,50,000/-, the penalty u/s 271(1)(c) does not have any locus to stand. Therefore, the penalty is also deleted. Accordingly, penalty-appeal of assessee is also allowed.
In the result, both of the appeals of assessee are allowed.
Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 29/09/2022.