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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI MAHAVIR PRASAD & SHRI B.M. BIYANI
1. This appeal by assessee is directed against the order dated 24.12.2019 of learned Commissioner of Income-Tax (Appeals)-1, Indore [“Ld. CIT(A)”] in Appeal No. IT-10155/2017-18, which in turn arises out of the order of assessment dated 29.12.2016 passed by the learned ITO- 3(4), Indore [“Ld. AO”] u/s 144 read with section 147(7) of the Income-tax Act, 1961 [“the Act”] for the Assessment-Year 2009-10.
The registry has informed that that the present appeal was required to be filed by 11.04.2020 but the same was actually filed on 14.10.2021, after a delay of 542 days. The Ld. AR prayed that the delay has occurred due to Covid-19 Pandemic. The Ld. AR further placed reliance on the order of Hon’ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of Shri Bhagirath Panchal A.Y. 2009-10 2020 read with Misc. Applications, by which suo motu extension of the limitation-period for filing of appeals w.e.f. 15.03.2020 under all laws has been granted and hence there is no delay in fact. We confronted the Ld. DR who agreed to the submission of Ld. AR. In view of this, the appeal is proceeded with for hearing, there being no delay.
The assessee is an individual who did not submit return of income for the relevant assessment year 2009-10. The Ld. AO received an information that the assessee had deposited a total sum of Rs. 17,00,000/- in cash in Saving Account with Bank of India. In order to assess taxable income of the assessee, the Ld. AO issued a notice u/s 148 on 16.03.2016 which was duly served upon the assessee on 19.03.2016 by Speed-Post. However, the assessee did not comply with this notice. Thereafter, the Ld. AO issued several notices u/s 142(1) of the Act on 05.05.2016, 06.06.2016, 11.07.2016, 09.08.2016 and 27.09.2016 and served through Speed-Post, the details of Speed-Post are also mentioned in the order of assessment, but the assessee did not respond. Finally, the Ld. AO issued notice dated 27.10.2016, served again by Speed-Post, with a proposal for making assessment u/s 144 of the Act but this notice too remained un-complied with. The Ld. AO issued a summon u/s 131 of the Act on 16.11.2016 fixing the date of hearing on 25.11.2016 but this was also not complied with by the assessee. In these circumstances, the Ld. AO finally completed assessment u/s 144 of the Act after making an addition of Rs. 17,00,000 by observing as under:
“3.1 Unexplained cash deposits in Saving bank a/c:
3.2 The assesse maintained his saving bank account with Bank of India Manglia Branch, Indore bearing account no. 881510110002341. As per the bank statement, the assessee along with the joint account holder had deposited cash aggregating to Rs. 17,00,000/- in his saving bank account.
3.3 In this context, the assessee was asked to explain the source of cash deposits in his saving bank accounts. However, the assesse has not filed any explanation in this regard as discussed in detail in foregoing paragraphs and thus has Shri Bhagirath Panchal A.Y. 2009-10 failed to explain the source of such deposit into his bank account.
It is therefore, amply clear that he has no explanation to offer as regards the source of cash deposited into his saving bank account amounting to Rs. 17,00,000/-. Penalty proceeding u/s 271(1)(c) also initiated for concealing the particulars of income. Addition Rs. 17,00,000/-”
Being aggrieved by the order of assessment, the assessee filed an appeal to Ld. CIT(A). During appellate proceeding, the assessee made following submissions to Ld. CIT(A).
“With referred to the above that the appellant has filed 1st appeal as on dated 28/01/2017 against the ex-parte order passed by Shri Viresh Tiwari, ITO-3(4), Indore. With respect we are submitting following fact and documents as under:- At the time of assessment the appellant was not presented before the assessing authority hence passed ex-parte order. The appellant is old age person and every time he is illness due to age factor also he is illiterate. The appellant has received various notice which was issued by department but he was aware the income tax act and income tax consultant hence he was not present before the assessing authority and other fact he is living separately from his son. That the appellant has deposited Rs. 17,00,000/- cash in his saving account during the assessment period. Such deposit made from an ancestral agriculture land sold out as on dated 19/08/2008 with amounting of Rs. 10064000/- along with family members. Such land situated at Village-Kailod Jhhala with respect we are furnishing copy of saving account and sale deed. That the appellant has 16.67% ratio in such ancestral agricultural land. That thus the appellant is liable tax on capital gain amount to Rs. 944197/-. With reference to the above we are submitting following fact in related to 1st appeal as under: 1. That during in the year the appellant has cash deposited amounting to Rs. 17,00,000/- in his saving account no. 881510110002341 of Bank of India, Mangliya Branch, we are giving details as under: Date Amount 05.04.2008 100000 05.04.2008 900000
Shri Bhagirath Panchal A.Y. 2009-10 05.01.2009 700000 1700000 Thus, the appellant has cash deposited total amounting to Rs. 17,00,000/- with respect we are furnishing copy of bank account.
That the source of above cash deposited is the appellant and his family members sold out ancestral agriculture land in Rs. 10064000/- on dated 19th August 2008. The 1/6 ratio of appellant in the said ancestral agriculture land thus the appellant has received amounting Rs. 1677333/- with respect we are furnishing copy of registry. That the appellant and his family members had received some amount before the registry it is also mentioned in the registry. Please therefore requested to you may accept above.”
The Ld. CIT(A) sought remand report from Ld. AO, whereupon the Ld. AO submitted following report dated 13/08/2019:
“Kindly refer to the above subject. In this connection it is submitted that the assessee/appellant’s submission before Ld. CIT(A)-I was forwarded to this office and report/comments was requisitioned in respect of the additional evidences. Desired compliance report is as under: 1. The assessee has not filed any return of income for the period under consideration i.e. AY 2009-10. The assessee has deposited cash to the tune of Rs.17,00,000/- in his saving bank account. Notice u/s 148 was issued on 16.3.2016 which was served upon the assessee on 19.03.2016. Notice u/s 142(1) was issued on 05.05.2016, which also remained non-complied. Further, several opportunities were given but assessee did not filed any submission. The income of the assessee was assessed at Rs.17,00,000/- vide order u/s 147 r.w.s 144 of the Income tax Act, 1961 dated 29.12.2016. In respect of written submission made by the assessee before Ld. CIT(A), it is to submit that the assessee was having sufficient time during the course of assessment proceedings to provide proper and reliable explanation with supporting details and evidences with regard to the queries raised by the Assessing Officer. The arguments of the assessee that the assessee is old age person, illiterate etc. do not have any base. When the assessee could understand assessment order and demand notice he could have also understand the various notices for compliance. Evidently, only after understanding the content and essence of Page 4 of 12 Shri Bhagirath Panchal A.Y. 2009-10 the assessment order and demand notice he filed an appeal before Hon’ble CIT(A)-I, Indore. Thus, first contention of the assessee is not acceptable. The assessee has submitted sale deed of the land sold jointly with other co-sellers, as the source of the cash deposited by him during the period under consideration. On the perusal of the copy of the sale deed is it found that the assessee has sold immovable property at Keloud, Teh.-Indore, along with 5 other co-owner at Rs. 10064000/-. The copy of sale deed does not mention any mode of payment or dates, as per registry the purchaser has paid Rs.100,64,000/- on different dates by different modes, nothing is specified in the registry which could show cash/fund availability in the hands of the assessee.
2. The assessee has also produced calculation of capital gains arising on the sale of said land before the Hon’ble CIT(A), it is reproduced as under: Total consideration received by the assessee family from ancestral property (10064000/-) Less: Cost of index Total Rakba 1.966 Hec. 1.966*4=7.864 Bigha Value of per Bigha in the year 1980-81 7.864*100000=786400 Cost of value 7864*582/100=4576848 Total Consideration 10064000 Less: Cost of sale 4576848 Total Gain for family 5487152 As per the submission the assessee has shown value of land per Bigha at Rs.100000/- which appear very high considering area in year 1980-81. Moreover, the assessee did not produce any evidence or base for considering such a high price. The assessee capital gain calculation does not have any justifiable base thus cannot be accepted. In light of the above facts and discussion, it is requested not to consider the additional evidence submitted by the assessee. Due and proper opportunity was provided to explain the issue raised but no Shri Bhagirath Panchal A.Y. 2009-10 reliable explanation was submitted by the assessee during the course of assessment proceedings.” 6. In response to the above remand-report, the assessee submitted following rejoinder to Ld. CIT(A):
“With reference to the above that we have received remand report which made by income tax authority ward 1(3), Indore. With respect we are submitting following facts as under:
1. 1. That the appellant is an old aged person he is every time illness and living separated from his sons. So he was not presented before the assessing authority at the time of assessment.
2. That the other family members has sold out ancestral agriculture land so the appellant not know the about transaction related to property.
3. That the 1/6 share ratio of the appellant in the ancestral agriculture land so he received Rs.17,00,000/- against sale of agriculture from other family member and same amount deposited in the saving account above received amount not shown in register because of this reason the property sold in the joint name of family member give the amount Rs. 17,00,000/- in cash to the appellant.
4. That the appellant has not produced the additional evidence at the time of hearing of appeal the documents which was produced related to the case of appellant.
5. Amount Rs. 100000/- taken for cost of index the said amount is correct because of this reason the ancestral agriculture land situated near Niranjanpur Dewas Naka, Indore is the prime location of Indore city. Please therefore request your to you may be accepted it above.”
7. Ld. CIT(A) considered the assessment-order, the remand-report of Ld. AO and the submission of assessee and finally dismissed the appeal of assessee by observing as under:
“5.2 During the course of appeal proceedings, the appellant has filed detailed written submission which is duly reproduced above. It has mainly been contended that cash deposits were out of sale of ancestral agricultural land. The appellant has also filed certain revenue documents related to the agricultural land. Since the assessment has completed u/s 144 of the Income Tax Act 1961, the submission along with the documents were forwarded to the Assessing Officer for inquiry and remand Page 6 of 12
Shri Bhagirath Panchal A.Y. 2009-10 report. The Assessing Officer has filed remand report vide letter dated 05.04.2019 which is also duly reproduced above. I have carefully gone through the assessment order, written submission, remand report and rejoinder in this regard. 5.3 During the appeal proceeding, the appellant has submitted certain documents like sale deed of property, bank statement etc which are in the form of additional evidences. But the appellant has not made out a case for reasonable cause for non-compliance of notices before Assessing Officer. During the appeal proceedings, it is found that statutory notices have been duly served upon the appellant on various dates. Despite a number of opportunities given by the Assessing Officer, the appellant has failed to explain the source of cash deposits and has also failed to submit documentary evidences before the Assessing Officer. The appellant was having sufficient time during the course of assessment proceedings to submit documentary evidences with regard to queries raised by the Assessing Officer. The arguments that the appellant is old person illiterate etc. do not have any basis. When the assessee could understand the various assessment order and demand notices for which he has filed appeal before the undersigned, he could have also understand the various statutory notices for compliance. The additional evidences filed at this stage are not admitted in the absence of reasonable cause. Therefore, the various grounds of appeal are dismissed. Without prejudice to above, the case of appellant was examined on merit also. 5.4 The appellant has stated that he had sold ancestral agricultural land jointly with other co-sellers and he had received cash of Rs.17,00,000/- and the same was deposited in the saving bank account. On perusal of sale deed as well as bank statement, it is observed that there is no co-relation of cash deposit in bank with source of funds as the appellant had sold land with 5 others on 19.08.2008 whereas he had made cash deposit of Rs. 10,00,000/- on 05.04.2008 which is much before the date of registry of agricultural land. It is also observed that there are no dates or any mode of payments mentioned in sale deed. The purchaser has stated to have paid Rs.1,00,64,000/- on different dates by different modes, nothing is specified in the registry which could show the availability of funds in the hands of appellant. The appellant during the course of appeal proceedings has failed to file confirmation from purchaser of land clearly specifying the dates and mode of payments received. The date of registry of agricultural land does not get corroborated with the impugned deposits found made in the account. Thus, in view of above stated facts, the Assessing Officer has been found justified in making addition of impugned amount of Rs.17,00,000/- on account of Shri Bhagirath Panchal A.Y. 2009-10 unexplained source. Thus, all the grounds of appeal are dismissed.”
8. Before us, the ld. AR contended that the assessee is an agriculturist earning income only from agriculture. Ld. AR submitted that the assessee is an old aged person and also illiterate. Ld. AR submitted that the various notices issued by the Ld. AO during assessment proceeding could not be complied with because of the age, illness and illiteracy of assessee. Ld. AR submitted that the assessee, alongwith joint owners, had sold an agricultural land on 19.08.2008 for a sum of Rs. 1,00,64,000/- which was a joint agricultural land and the assessee was having 1/6th share according to which the assessee received a sum of Rs. 16,77,333/-. Ld. AR submitted that the assessee utilised the said receipt of Rs. 16,77,333/- for making cash-deposits in bank account. Inviting our attention to the copy of registered-deed placed in the papers, the Ld. AR submitted that the transaction of sale of land and the receipt of the total consideration of Rs. 1,00,64,000/- is fully proved by the copy of registered sale-deed. Ld. AR submitted that although the assessee is having sufficient explanation and the documentary evidence in the form of registered sale-deed in support of cash-deposits made in the bank account, yet this explanation and documentary evidence could not be submitted before the Ld. AO because of the reason that the assessee happens to be an agriculturist, is an old aged person, is not aware of income tax provisions and therefore could not deal his case properly. Ld. AR submitted that the Ld. AO has however, finalised the assessment by treating the entire cash-deposit of Rs. 17,00,000/- as income of assessee, which is improper as the assessee has sufficient source to explain the impugned cash-deposits. Stucking to Ground No. 1, the Ld. AR submitted that the assessee has not been provided sufficient opportunity of being heard in the matter and therefore principle of natural justice has been denied.
Per contra, the Ld. DR relied upon the orders of lower authorities. Ld. DR submitted that the assessee has not complied with several notices issued by Ld. AO through Speed-Post which shows that the assessee did not want to make submissions to Ld. AO. Ld. DR submitted that when the Page 8 of 12
Shri Bhagirath Panchal A.Y. 2009-10 assessee did not make any submission, the source of cash-deposit remained unexplained. Therefore, there is nothing wrong on the part of Ld. AO in treating the cash-deposits as undisclosed income of assessee. Ld. DR further relied upon the order of Ld. CIT(A) and argued that the Ld. CIT(A) has already rejected the additional evidences submitted by assessee in the form of registered-deed because of the reason that the assessee had made non-compliances of several notices issued by Ld. AO and hence there was no reasonable cause available with the assessee. Ld. AR submitted that the Ld. CIT(A) has, however, shown utmost respect to the assessee and examined the case on merit too. But even on merit, the Ld. CIT(A) has found that the assessee has not been able to co-relate the source of cash-deposits with the sale-deed of the land. With these submissions, the Ld. DR prayed that the assessee does not deserve any relief at this stage and therefore, the addition of Rs.17,00,000/- must be upheld.
We have considered rival submission of both parties and perused the material held on record. At the outset we observe that the Ld. AO has not complied with a number of notices issued by Ld. AO through speed- post as well as summon issued u/s 131 through speed-post. The assessee has stated the reasons of non-compliances as being agriculturist, old aged, ill and illiterate. We agree, taking into account the submission all along before lower authorities which are not controverted by revenue, that the assessee is an agriculturist, is old aged and also having illness. However, we do not agree that the assessee is illiterate because the assessee has signed and not put thumb impression on Form No. 36 filed before us. In fact, when we see the registered sale-deed dated 19.08.2008 placed in the documents, we observe the same thing i.e. the assessee has signed the sale-deed and not put thumb impression, whereas one of the joint holders Smt. Tarabai has put her thumb impression on the sale- deed. This shows that the assessee is not an illiterate although he may be less educated or may not be aware of income-tax provisions. Be that as it may be, we observe that the assessee has placed on record, a copy of Shri Bhagirath Panchal A.Y. 2009-10 registered sale-deed dated 19.08.2008 of the land for Rs. 1,00,64,000/- in which the assessee’s is a one of the six sellers. It is also a submission of the assessee that he was having 1/6th share in the sale-proceed of Rs. 1,00,64,000/- which he received and utilised for making cash-deposit in the bank account. On perusal of para No. 5.4 of the order of Ld. CIT(A), we also observe that the Ld. CIT(A) has also considered the sale-deed submitted by the assessee, although he has observed that the registered- deed does not contain the dates or mode of payment and therefore co- relation of the sale-proceed with cash-deposit in bank is not verifiable. Thus, the Ld. CIT(A) was not satisfied about the co-relation of cash deposit in bank with the sale-proceed of the land in absence of the requisite details as to the mode and date of receipt of consideration in the sale- deed. Thus, we find merit in the submission of assessee that he received share in the sale-proceed of the land and this submission cannot be brushed aside because the assessee has submitted a copy of the registered-deed in support of this submission. However, the lacking information in the sale-deed are the date and mode of receipt of consideration by the assessee. Therefore, there is a need to make a full verification of the date of receipt of consideration so as to ascertain availability of the funds to the assessee to make the impugned deposits in bank account and this would entail a proper exercise at the level of Ld. AO. Further, on a careful consideration of the submission made by assessee before the Ld. CIT(A) as reproduced earlier in Paragraph No. 4, we observe that the assessee has accepted “That the appellant has 16.67% ratio in such ancestral agricultural land. That thus the appellant is liable tax on capital gain amount to Rs. 944197/-.” This also shows that even if the said cash-deposit of Rs. 17,00,000/- is found by Ld. AO as having sourced from the sale-proceed of agricultural land, there would be a need to assess capital gain as admitted by assessee himself. Thus, on an overall consideration of the matter, we are of the view that an opportunity must be given to assessee to explain the facts and figures more adequately before the Ld. AO. At the same time, the Ld. AO would also assessee the correct income of assessee after examining the Page 10 of 12
Shri Bhagirath Panchal A.Y. 2009-10 details put forward by the assessee. Therefore, we are inclined to refer this matter to the Ld. AO who will provide an opportunity to the assessee, consider the submissions of assessee and thereafter take a final view in accordance with law.
In the result, this appeal of assessee is allowed for statistical purpose.
Order pronounced as per Rule 34 of I.T.A.T. Rules 1963 on 28.07.2022.