SRI.DILIP GEORGE VARGHESE,TRIVANDRUM vs. THE ITO, TRIVANDRUM

Per GEORGE GEORGE K.,JUDICIAL MEMBER:

This appeal, at the instance of the assessee, is directed against the order of

the CIT(A), Trivandrum dated 08-02-2017. The relevant assessment year is

2009-10.

justified in confirming the assessment order with regard to the addition made

under section 69A of the I.T. Act.

2 I.T.A. No.130/Coch/2017

The assessee is an individual who is engaged in the business of rubber

manufacturing. For the assessment year 2009-10, the return of income was filed

on 30/11/2009, declaring loss of Rs.4,70,270/- and net agricultural income of

Rs.3,85,000/-. The assessment was taken up for scrutiny by issuance of notice

u/s. 143(2) of the Act. In the course of assessment proceedings, it was noticed

that the assessee had made cash deposits on various dates in the Axis Bank

account during the year under consideration, amounting to Rs.15,81,000/-. The

assessee was asked to explain the source of the cash deposits amounting to

Rs.15,81,000/-. It was submitted by the Authorized Representative of the

assessee that these deposits were mostly made from the withdrawals of the OD

A/c maintained by the assessee with Indian Overseas Bank (IOB) and also

margin money loan received from the Government. The Assessing Officer, after

examining the explanation of assessee, the books of account etc., held that the

withdrawals made from IOB were for other purposes and cannot be source for

cash deposits made in Axis Bank. The Assessing Officer was of the view that

except for a sum of Rs.1,25,000/- deposited with Axis Bank on 14/07/2008, there

is no co-relation with the withdrawals made from Indian Overseas Bank.

Therefore, the Assessing Officer, after giving credit of Rs.1,25,000/-, the balance

cash deposits amounting to Rs.14,56,000/- ( i.e., 15,81,000-1,25,000/-) was

treated as income assessable u/s. 69A of the I.T. Act.

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before the first appellate authority. The CIT(A) confirmed the order of the

Assessing Officer and dismissed the appeal of the assessee.

the Tribunal. The Ld. Counsel for the assessee has filed a detailed paper book

comprising of 36 pages, inter alia, enclosing I.T. return copies for AY 2009-10

and 2010-11, confirmation letter from M/s. A.N. Rubbers, for sale of latex and

scrap, Bank statement of Axis Bank, income and expenditure statement of rubber

estate for the assessment years 2006-07, 2007-08, 2008-09, the margin money

loan taken proceeding, Bank statement of the IOB for the period 01/01/2007 to

31/12/2015 etc. It was submitted that the assessee is having rubber estate and

had disclosed net agricultural income for the relevant assessment year

amounting to Rs.3,85,000/- which has not been disputed by the Assessing

Officer. Even in the earlier assessment years and in the subsequent assessment

years, the assessee had disclosed agricultural income and the finding of the

CIT(A) that no agricultural income was disclosed by the assessee in the past

years and subsequent years is false. To prove this, the Ld. Counsel for the

assessee has taken me through income and expenditure statement of the rubber

estate and the returns of income filed by assessee for the subsequent years to

show that agricultural income was disclosed in the subsequent AY’s. With regard

to the withdrawals from the Indian Overseas Bank and its redeposits with the

4 I.T.A. No.130/Coch/2017

Axis Bank, the assessee submitted that each of the cash deposits in the Axis

Bank could be co-related with the withdrawals from the Indian Overseas Bank

and other source of income available with assessee.. It was further submitted

that the assessee had received Rs.2,50,000/- from District Industries Centre,

Trivandrum as margin loan money for setting up an industry and this amount

was also withdrawn and deposited in the Axis Bank account of the assessee. It

was submitted that the addition made u/s. 69A of the I.T. Act is not warranted

and the same is to be deleted.

amounting to Rs.14,56,000/-, the assessee was not able to prove the source

and the Assessing Officer has rightly added the same u/s. 69A of the Act.

assessee had made cash deposits in Axis Bank aggregating to Rs.15,81,000/-.

The amount and the date on which the cash deposits were made and the source

for same, as claimed by the assessee are detailed below:

Date Amount Source of funds 03.04.2008 265000 Deposit out of cash on hand 09.04.2008 15000 Agricultural income 14.07.2008 125000 Deposit out of cash on hand 18.10.2008 101000 Agricultural income 06.11.2008 100000 Agricultural income 09.12.2008 100000 Agricultural income 05.01.2009 60000 Deposit out of cash on hand

5 I.T.A. No.130/Coch/2017

08.01.2009 230000 Margin money loan 09.02.2009 275000 Deposit out of cash on hand 26.02.2009 50000 Deposit out of cash on hand 26.02.2009 30000 Deposit out of cash on hand 04.03.2009 50000 Deposit out of cash on hand 16.03.2009 35000 Deposit out of cash on hand 25.03.2009 135000 Agricultural income 28.03.2009 10000 Deposit out of cash on hand Total 15,81,000

7.1 Out of the total deposits of Rs.15,81,000/-, the Assessing Officer had given

credit of Rs.1,25,000/- deposited on 14/07/2008 and balance Rs.14,56,000/- was

brought to tax u/s. 69A of the Act. Out of the above deposits made, the

assessee had claimed the following cash deposits were out of agricultural

income, which are detailed below:

Date Amount Source of funds 09.04.2008 15000 Agricultural income 18.10.2008 101000 Agricultural income 06.11.2008 100000 Agricultural income 09.12.2008 100000 Agricultural income 25.03.2009 135000 Agricultural income Total 4,51,000

7.2 The assessee had furnished income and expenditure statement of the

Rubber Estate owned by him for the current year as well as for the prior and

subsequent years. For the relevant assessment year, the assessee had also

furnished a confirmation letter from A.N. Rubbers who had purchased rubber

latex and scrap from the assessee. The confirmation letter is place at page 11 of

the paper book which reads as follows:

6 I.T.A. No.130/Coch/2017

“TO WHOMSOEVER IT MAY CONCERN

This is to confirm that we have made the following payments to Mr. Dilip George Varghese, Thalakkotte, Kuravankonam, Trivandrum-695 003 against purchase of ammoniated rubber latex and scrap rubber purchased from him during the year ended 31-03-2009:-

Sl. No. Date Amount 1. 8-Apr-2008 15,000 2. 4-Oct-2008 48,000 3. 17-Oct-2008 53,800 4. 28-Oct-2008 58,000 5. 5-Nov-2008 42,650 6. 26-Nov-2008 47,000 7. 8-Dec-2008 56,000 8. 15-Jan-2009 11,000 9. 2-Feb-2009 9,000 10. 3-Mar-2009 63,000 11. 12-Mar-2009 48,000 12. 23-Mar-2009 26,605 Total 4,78,055

For A.N. Rubbers sd/- Authorized Signatory

7.3 The above confirmation letter was rejected by the CIT(A) only for the

reason that the assessee was not disclosing any agricultural income in the past

as well as in the subsequent assessment years. This conclusion of the CIT(A) is

wrong. In the current year, the assessee had disclosed net agricultural income of

Rs.3,85,000/- . Even in the subsequent assessment year, a perusal of the return

of income shows that the assessee had declared net agricultural income of

7 I.T.A. No.130/Coch/2017

Rs.3,70,000/-. The payments made by M/s. A.N. Rubbers aggregating to

Rs.4,78,055/- match with the deposits made by the assessee in the Axis Bank.

Since the assessee had disclosed net agricultural income of Rs.3,85,000/- in the

current AY which has not been disputed by the Assessing Officer, I have no

hesitation to hold that the claim of the assessee that the deposits made on

09/04/2008, 18/10/2008, 06/11/2008, 09/12/2008 and 25/03/2009 amounting to

Rs.15,000/-, Rs.1,01,000/-, 1,00,000/-, Rs.1,00,000/- and Rs.1,35,000/-

respectively has been properly explained. Hence I delete the addition made

amounting to Rs.4,51,000/-. It is ordered accordingly.

7.4 As for the balance Rs.10,05,000/- added u/s. 69A, it is claimed that the

source of funds are deposits made out of withdrawals from the assessee’s OD

account and the margin loan money received from District Industries Centre,

Trivandrum. In the interest of justice and equity, I am of the view that one

more opportunity needs to be granted to the assessee to explain the source of

cash deposits with Axis Bank. If the assessee is in a position to co-relate the

cash withdrawals and deposits within a reasonable time in the Axis Bank

account, credit for the same shall be given. With these directions, I restore the

issue of addition of Rs.10,05,000/- to the Assessing Officer. The Assessing

Officer shall dispose of the matter after affording a reasonable opportunity of

hearing to the assessee. The assessee shall produce necessary evidence and

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shall co-operate with the Assessing Officer for expeditious disposal of the case. It

is ordered accordingly.

purposes. Pronounced in the open court on 26th-04-2017.

sd/- (GEORGE GEORGE K.) JUDICIAL MEMBER

Place: Kochi Dated: 26th April, 2017 GJ Copy to: 1. Dilip George Varghese, Thalakotte, Kuravankonam, Trivandrum-695 003. 2. The Income Tax Officer, Ward-1(1), Trivandrum 3. The Commissioner of Income-tax(Appeals), Trivandrum. 4. The Pr. Commissioner of Income-tax,Trivandrum. 5. D.R., I.T.A.T., Cochin Bench, Cochin. 6. Guard File. By Order

(ASSISTANT REGISTRAR) I.T.A.T., Cochin