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Assessee represented by Shri Darshit J Naik, CA & Shri Jairaj M Naik, CA Department represented by Shri Vinod Kumar, Sr. DR Date of hearing 23/03/2023 Date of pronouncement 27/03/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by the assessee are directed against the separate orders of learned Commissioner of Income Tax (Appeals)-13, Ahmedabad, (in short, the ld. CIT(A)) dated 23/06/2022 and 16/12/2022 for the Assessment Year (AY) 2012-13. In the assessee has challenged the additions in the quantum assessment. However, in Section 271(1)(c) of the Income Tax Act, 1961 (in short, the Act) for the A.Y.2012-13. Both the appeals are interconnected, thus, both the appeals were clubbed, heard together and are decided by consolidated ITA No.337/Srt/2022 & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO order. In quantum assessment appeal in ITA No. 337/Srt/2020 the assessee has raised following grounds of appeal:
“1. On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the addition of Rs.25,23,500/- without providing reasonable opportunity of being heard.
On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the addition of cash deposit of Rs.21,43,000/- without appreciating the fact that cash was deposited out of well explained sources of sale proceeds of immovable property.
On the facts and in the circumstances of the case as well as law on the subject, the learned CIT( A) has erred in confirming the .addition of cash deposit of Rs.21,43,000/- by alleging that cash deposited in bank was out of unexplained sources and not from sale proceeds of immovable property merely on presumption basis without providing any evidence to assume the contrary.
On the facts and in the circumstances of the case as well as law on the subject, the learned C1T(A) has erred in not accepting the claim of the Appellant and confirming the addition on presumptions, without providing any opportunity for rebuttal of allegations made and without providing any evidence to support the allegation that income was earned from unexplained sources.
On the facts and in the circumstances of the case as well as law on the subject, the learned Pr.CIT has erred in confirming the addition of other credit entries of Rs.3,38,000/-, without appreciating the submission made during the appellate proceedings.
On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. CIT has erred in not accepting the plea of the Appellant that Appellant being a Non-Resident the AO (ITO, Ward-2, Navsari) had no jurisdiction over the case.
For various reasons and on different grounds, the appellate order passed by the Pr.CIT is bad in facts of the case and law on the subject matter and requires to be cancelled. & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO 8. The above Grounds of Appeal
are without prejudice to and are independent of each other.
9. Your Appellant craves, lave to amend, alter, delete and/or add to foregoing grounds of appeal any time before the appeal is decided.”
2. Brief facts of the case are that case of assessee was reopened under section 147 of the Act on the basis of information that the assessee has made a cash deposit in her savings bank account during the Financial Year (FY) 2011-12 pertaining to A.Y. 2012-13. As no return of income was filed by the assessee for the A.Y. 2012-13, the Assessing Officer issued a query letter dated 31/01/2017 to furnish explanation regarding cash deposit. The Assessing Officer recorded that no response was made by the assessee. The Assessing Officer recorded the reasons of re-opening and formed his belief that he has reason to believe that income of assessee has escaped assessment within the meaning of Section 147 of the Act. Notice under Section 148 was issued to the assessee on 30/03/2017. The Assessing Officer recorded that no response was filed by assessee nor any return of income in response to notice under Section 148 was filed. The Assessing Officer issued final show cause notice dated 22/09/2017, to the assesse to submit explanation on or before 28/09/2017 with regard to cash deposit of Rs. 21,43,000/- and other credit of Rs. 3,38,000/- through cheque/clearing and interest income of Rs. 4,24,497/-. The Assessing Officer noted that in response to said show cause notice, the assessee neither attended nor filed any reply. The Assessing Officer added entire credit including interest to the total income of assessee thereby making 3 & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO addition of Rs. 25,23,497/- which was rounded of Rs. 25,23,500/- in the assessment order dated 04/10/2017 passed under Section 144 r.w.s. 147 of the Act.
3. The assessment order was passed on 04/10/2017, however, the assessee filed appeal before the ld. CIT(A) on 02/12/2019. The assessee also filed application for condonation of delay in filing appeal before the ld. CIT(A). The delay was condoned on the ground that the assessee is a non- resident, residing in USA and reason for delay was explained by the assessee that she occasionally comes to India, was accepted and delay was condoned and the appeal was admitted for adjudication on merit.
4. Before the ld. CIT(A), the assessee filed detailed written submissions before the ld. CIT(A). The submission of assesse is recorded in para four of order of ld. CIT(A). The assessee in her submission submitted that the assessee is 77 years old, Non-resident senior citizen, residing in USA from last 40 years. The assessee occasionally visits India only for 30-40 days in a year or some time once in three years. The assessment was initiated in case of assessee, the assessee was neither served any notice nor any communication was made. The assessee was unaware about the income tax proceedings as notice under Section 148 as well as other notices were served. The Assessing Officer passed the ex parte assessment order. On obtaining the copy of assessment order, it was found that her maternal address at 16, Shree Nikunj, Ashabaug, Navsari was mentioned. No one & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO resides on such address. The assessee married long ago and was staying with her husband in USA. The address mentioned in the assessment order at 401, Radhe Co-op Housing Society, Chhapra Road, Navsari. This address was also closed as the assessee was out of India. No one was there to collect the assessment order and to inform the assessee. One day, watchman of the society noted that a number of notices and papers were stuck in the door and then informed the some of the assessees relative Shri Hitendrabhai who is caretaker of assessee. Hitendrabhai collected the assessment order and demand notice, who immediately informed the assessee, the assessee then took necessary step to filed. The assessee further explained that the cash deposit in her bank account in Axis bank were actually received as a sale proceed from buyers of five plots of rural agricultural land belonging to her at Sandalpore, Tehsil- Jalalpore, Navsari. The sale consideration of these agricultural lands were paid in cash. Such fact is mentioned in the sale deeds. The ex parte order was passed by the Assessing officer, therefore, the assessee was not in a position to explain such fact before the Assessing officer. The assessee explained that her case is opened second time again vide notice dated 30/03/2019. On the allegation that “rural farm lands” does not fall within the definition of “capital asset”. In such proceedings, the assessee made exhaustive written submission and furnished necessary evidence. The Assessing Officer accepted this plea and passed the assessment order & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO dated 28/12/2021 and held that the land was not liable to capital gain tax.
5. The assessee further explained that during the period under consideration, the assessee sold five plots of rural agricultural land, details of which are recorded on page No. 7 of order of ld. CIT(A). The assessee received total sale consideration of Rs. 27,75,200/- in cash. Such cash was deposited in the bank account. On the submission of assessee, a remand report was called from the Assessing officer. The Assessing Officer furnished his remand report, the contents of which are recorded in para 2.1 at page No. 6 of order of ld. CIT(A). The Assessing Officer reported that in absence of reply of the notices, the assessment was finalised by making aggregate addition of Rs. 25,23,500/-.
6. The ld. CIT(A) after considering the submissions of assessee noted that the assessee claimed to have sold five plots of agricultural land for a total sale consideration of Rs. 27,75,200/- in cash out of which Rs. 21,43,000/- was deposited in her savings bank account. The ld. CIT(A) further noted that the Assessing Officer accepted the contention regarding non-taxation of sale proceed received on 27/07/2021. However, the bank deposits are bone of contention and added by Assessing Officer in assessment order dated 04/10/2017. The ld. CIT(A) by referring relevant clause of sale deed, noted that the entire sale consideration was received on or before 26/07/2011 as mentioned in the sale deed. Cash was deposited in 17 & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO transactions spread over for a period of three months. The ld. CIT(A) prepaid of summary of such cash deposits as well as credit entry of Rs. 3,38,000/- received from relatives. The ld. CIT(A) further noted that out of 17 cash deposit transactions, 11 transactions are of Rs. 49,000 per day, which is peculiar and common seen in a case where the depositor’s intention is to escape the tax authorities’ radar. The cash started/deposited in the bank account after a gap of three months. The assessee has not explained the reason for such delay and dispersed deposit of this cash. Such amount would have been easily deposited in one go and that too just after execution of sale deed. The assessee visited India on two occasions i.e. 21/07/2011 to 15/08/2011 and from 01/11/2011 to 12/11/2011. No cash deposit in her bank account during her first visit. Only Rs. 3,92,000/- was deposited during her second visit in eight transactions of Rs. 49,000/- each. The assessee was unable to explain such event. Even after leaving India, cash was continued to be deposited. On the basis of such observation, the ld. CIT(A) held that the assessee failed to prove beyond doubt the nexus between the cash deposits and the sale proceed of agricultural land. No evidence is filed to suggest that sale consideration received in July is the same cash amount deposited in bank account after a long period. It is inexplicable that the assessee had cash amount in her hand and left for USA without securing & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO the safety of that amount by depositing in the bank and confirmed the addition of cash deposit.
7. On the addition of Rs. 3,38,000/-, the ld. CIT(A) recorded that as per contention of assessee, it was repayment of loan given to relative. The ld. CIT(A) recorded that no details of persons like identity of person, year of transaction, timing of loan are provided by the assessee. The name of person is not reflected in the bank statement which does not support the explanation of assessee. It was the primary onus on assessee to explain the source. It was a loan repayment, the onus was on assessee to prove the identity of the person. The assessee failed to explain the source, therefore, the addition was confirmed. On the remaining addition of interest income, the ld. CIT(A) recorded that the contention of assessee that the assessee earned interest of Rs. 17,631/- on fund in her savings bank account and Rs. 24,866/- as interest on FDRs, total of Rs. 42,497/- . The assessee claimed that TDS was made on interest income and the same cannot be considered as undisclosed income as no return of income was filed as the income was below the taxable income. The ld. CIT(A) held that the addition of cash deposit has been sustained and income chargeable to tax about the basic limit of exemption, therefore, the ld. CIT(A) declined to interfere with the findings of Assessing Officer. Further aggrieved, the assessee has filed the present appeal before this Tribunal. & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO
8. I have heard the submissions of the learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue and have gone through the orders of the lower authorities carefully. The ld. AR of the assessee made his submission by repeating all the submissions which was made before the ld. CIT(A). The ld. AR further submits that during the relevant period, the assessee visited India between 21/07/2011 to 15/08/2011 i.e. for 25 days. Thereafter on 01/11/2011 to 12/11/2011 for 11 days. The assessee owned five plots of rural agricultural land in Sandalpore, Tehsil- Jalalpore, Navsari. All five plots were sold for an aggregate of consideration of Rs. 27,75,000/-. The sale deed of all the lands was executed on 26/07/2011. Copies of sale deeds are filed from page No. 17 to 129. The assessee received entire sale consideration in cash. The assessee furnished the bifurcation of sale consideration of all piece of land in the following manner: Sr. No Details of Agricultural land at Date of sale Sale consideration Sandalpore, Ta. Jalalpore, Navsari actually received Dsit.-396445. in cash. Rs.000
1. Agricultural land at Khata No. 82, 26/07/2011 9,84,200 Block No. 128 2. Agricultural land at Khata No. 242, 26/07/2011 2,36,500 Block No. 119 3. Agricultural land at Khata No. 395, 26/07/2011 10,23,500 Block No. 117 4. Agricultural land at Khata No. 125, 26/07/2011 3,92,000 Block No. 111
5. Agricultural land at Khata No. 410, 26/07/2011 1,39,000 Block No. 63 Total 27,75,200 & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO
9. Before the Assessing Officer, the assessee could not explain the fact as no reopening notice or any other notice was served upon the assessee. The assessee came to know about passing of assessment order from his care taker who was informed by the security guard where the assessee owned some residential unit where certain notices were found stuck under the door. Before the ld. CIT(A), the assessee explained the entire facts and circumstances leading to deposits of cash in her bank account. The ld. CIT(A) doubted the transaction of cash deposit on her observation that the sale consideration was deposited after 3-4 months. The ld. AR submits that the assessee and her husband are residing outside India. The agricultural land was leased to Ramesh Bhai Ahir, who used to take care of land. The assessee handed over a cash of Rs. 21.43 lacs out of total sale proceed of Rs. 27,75,200/- to Ramesh Bhai Ahir with the instruction to deposit in her Axis bank account. Rameshbhai Ahir not deposited the cash amount in her bank account. When the assessee again visited India in November, 2011 and inquired about the details of deposit, Rameshbhai Ahir started depositing such amount in her bank account. The said amount was deposited by Rameshbhai Ahir in 11 instalments of Rs. 49,000/- each on various dates from 03/11/201 to 18/11/2011, again Rs. 2.61 lacs was deposited on 18/11/2011, Rs. 2.11 lacs on 21/11/2011, Rs. 2.54 lacs on 02/1/2012, Rs. 1.30 lacs on 10/01/2012, Rs. 5.05 lacs on 27/01/2012 and Rs. 2.35 lacs was deposited on 01/02/2012. Rameshbhai Ahir has also & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO confirmed this fact by giving his affidavit that part of sale consideration of various agricultural lands was handed over to him and he deposited the said amount in a piecemeal in the bank account of assessee.
10. The ld. AR submits that the remaining part of Rs. 3.38 lacs represent the loan amount from repayment from relatives. The assessee could not file confirmation of such relative. The assessee has no other income in India except the sale consideration, credit of Rs. 3.38 lacs which was repayment of loan and interest income. The lower authorities could not bring any adverse material against the submission and evidences furnished by assessee. The ld. AR of the assessee reported that Rs. 3.38 lacs is also not unexplained money rather the same was added for want of confirmation from relative. The assessee was unable to file confirmation, though, it is clearly reflected in the bank statement as clearings. No effort was made by the Assessing Officer by issuing notice to the banker of the assessee to prove it otherwise. The ld. AR of the assessee prayed for deleting the entire addition.
11. On the other hand, the ld. Sr. DR for the revenue supported the orders of the lower authorities. The ld. Sr. DR submits that no evidence was adduced by the assessee that the sale consideration received in July, 2011 was deposited after a long period of time in the month of November to February, 2011. In absence of credible explanation, the contention of assessee is not acceptable. On the addition of Rs. 3.38 lacs, the ld. Sr. DR & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO submits that the assessee had failed to discharge her onus in providing identity of the persons, mode of transactions and time of loan given by assessee. Unless, the assessee discharged he primary onus, the assessee cannot take a plea that no adverse evidence was brought on record. The onus to prove the identity of person was on the assessee, the assessee failed to discharge such onus.
12. I have considered the submissions of both the parties and have gone through the orders of the lower authorities carefully. There is no dispute that during the relevant financial year, the assessee sold five piece of agricultural land. The sale consideration is also not in dispute. Admittedly, the assessee received Rs. 27,75,200/- on account of such sale consideration. The entire sale consideration was received in cash, which is duly reflected in the sale deeds. The assessing officer added entire amount for the want of reply from assessee. As recorded above that before ld CIT(A), explained all the facts, including the circumstances that the assessee is Non-Resident India (NRI), residing in USA from more than 40 years and no notice under section 147 or other notices were not received by her. The submissions of the assessee was remanded to the assessing officer. The assessing officer furnished his remand report. In the remand report the assessing officer reported that he made additions in absence of reply from the assessee. The ld CIT(A) confirmed the ITA No.337/Srt/2022 & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO addition only reason for treating the cash deposit is the delay in deposit of such sale proceed in her bank account.
During the hearing of the submissions, the contents of all the sale deeds were seen and find that consideration in all five sale deeds was received in cash. The credit/cash deposit in the bank account of assessee is only of Rs. 21.43 lacs. The plea of assessee throughout the proceedings is that the case deposit is out of sale consideration received by assessee. The ld CIT(A) confirmed the addition only reason for treating the cash deposit is the delay in deposit of such sale proceed in her bank account. It is a matter of fact that the assessee is residing in USA for more than 40 years. The revenue authorities have not brought on record that the assessee is having multiple bank accounts in India. There is no dispute that the sale consideration was received in cash. Considering the entirety of facts and circumstances of the case that the assessee does not maintain any other account except the account where the sale proceed was deposited. The assessee has also filed affidavit of Rameshbhai Ahir to corroborate the fact that such amount was kept with him and he deposited in the account of assessee. Considering the totality of facts and circumstances of the case, I am of the view that the Assessing Officer was not justified in making the addition of Rs. 21.43 lacs.
So far as addition of Rs. 3.38 lacs is concerned, I find that the assessee failed to disclose the name of relative who have allegedly repaid the loan & 69/Srt/2023 Dinaben Dilipkumar Patel Vs ITO amount to assessee by way of cheque. In absence of discharge of primary onus in disclosing the identity and genuineness of transaction, the assessee has not eligible for deleting the addition of Rs. 3.38 lacs, accordingly, we uphold the same. In the result, ground related to the credit entry of Rs. 3.38 lacs are confirmed.
In the result, this appeal of the assessee is partly allowed. A.Y. 2012-13 16. This appeal relates to levy of penalty under Section 271(1)(c) on various additions made in the assessment order. Considering the fact that substantial part of addition has been deleted by me on which the penalty was levied, the only addition which is sustained is of Rs. 3.38 lacs, which was sustained for want of evidence. Considering the fact that such substantial addition is deleted, therefore, penalty is also delated. In the result, the grounds of appeal
raised in this appeal are allowed. In the result, this appeal of assessee is allowed.
17. Copy Order pronounced in the open court on 27th March, 2023.