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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
O R D E R
Per Sanjay Arora, AM
This is an Appeal directed against the Order dated 13.05.2022 by the Commissioner of Income Tax (Appeals)-12, Bangalore [CIT(A)], dismissing the assessee’s appeal contesting his appeal against order under section 144 of the Income Tax Act, 1961 (‘the Act’) dated 28.12.2019 for Assessment Year (AY) 2017-18.
At the outset, it is observed that the appeal is delayed by 27 days. As explained in the condonation petition, submitted along with, in the form of an affidavit by Shri Tony V.J., the assessee’s, a resident of Canada, constituted attorney, the impugned order was received by the assessee in Canada only on 17.6.2022, whereupon the power of attorney was executed and the papers sent to India, entailing time, and which led to the delay in preparation of appeal papers and filing them. The same is found reasonable, and fairly not objected to by Smt. Devi, the learned Sr. D.R. Hearing in the matter was accordingly proceeded with.
ITANo. 892/Coch/ 2022 (AY 2017-18) James Kochappu Kolenchery vs. Asst. CIT 3. The brief facts of the case are that the assessee was found to have made cash deposits of Rs.45 lakhs and Rs.2.18 lakhs in his bank account with the South Indian Bank, Mangpra, in June 2016. After several opportunities, the assessee joined the assessment proceedings, explaining, vide reply dated 25.11.2019, the deposits with reference to the sale of a Rubber estate, purchased by him and his wife in 1994, for Rs.23.70 lakhs. The balance Rs.23.48 lakhs was stated as accrued agricultural income from the said farm (i.e., up to June, 2016), accumulated over the years (brought to India during their visits thereto), as well as borrowing from relatives (non-residents). The amount of Rs. 2 lakhs was out of cash withdrawal from the bank account made earlier. The Assessing Officer (AO) accepted the explanation for Rs.23.70 lakhs; date of cash deposit agreeing with the date of sale of agricultural land, deemed the balance Rs.23.48 lakhs as unexplained income u/s. 69A of the Act. In appeal, the assessee furnished confirmations from the non-resident creditors. The same did not find favour with the ld. CIT(A) who, finding the assessee’s case as without merit, held as: “8. Assessee had to explain the balance amount of Rs.25.48 lakhs. The AO had accepted the explanation to the extent of Rs.2 lakh on account of earlier withdrawals and agricultural income. For the balance Rs.23,48,000, the assessee had claimed the amount to have been borrowed from friends. However, the names and addresses of these six persons from whom alleged cash was received had not been given. The AO had held this amount as unexplained cash credit and brought the same for taxation. During the course of hearing before the undersigned, the assessee has changed his explanation. He now claims that it was accumulated agricultural income as well as amount brought into India over past years. To this extent assessee has now changed his stance. The assessee has also claimed that he has received some cash loans from known persons in Canada, Italy, and other places. As above, the assessee has clearly changed his stand and now claims a bunch of unbelievable sources for the cash. This whimsical and unverifiable claim of the assessee cannot now be accepted. The addition of Rs.23.48 lakhs is sustained. The grounds are rejected.” Aggrieved, assessee is in second appeal.
Before us, the assessee’s case was for a set aside to the file of the AO inasmuch as the confirmations from the creditors, which could not be furnished before him, and though had been before the ld. CIT(A), he did not admit the same as additional Page 2
ITANo. 892/Coch/ 2022 (AY 2017-18) James Kochappu Kolenchery vs. Asst. CIT evidence, so that the same remained to be considered. The Revenue’s case, on the other hand, was that the assessee’s explanation is vague and unsubstantiated. The confirmations would not by itself prove the genuineness of the credits, which could not therefore be regarded as discharge of the burden of proof cast on the assessee for establishing the same.
We have heard the parties, and perused the material on record. The assessee is incorrect in claiming non-admission of the confirmations by the ld. CIT(A). As apparent from his findings, he has admitted and considered the same. His, however, stating that the names and addresses of the six persons had not been provided, cannot be agreed to. This is as the bank statements of the lenders, furnished before the AO, would identify them completely. Rather, as the bank statements have not been made a part of our record, it is not clear whether they are from the same persons whose confirmations, four in number(for an aggregate of Rs.10.73 lakhs), stand filed at first appellate stage. Does not, one wonders, the assessee know from all of whom he has borrowed? This becomes pertinent also considering that the confirmations are dated February 20-25, 2022, even as the assessee, on 21/12/2019, sought time from the AO for one week for furnishing the same! Further, none of the confirmations state of the creditor being the assessee’s relative, i.e., as stated before the AO (vide reply dated 25/11/2019), corroborated by the changed statement before the ld. CIT(A) of the borrowings being from friends. Was it then that the assessee was all this while searching from whom confirmations are to be sought! They are, further, not attested, in the absence of which they cannot even otherwise be given credence to. Continuing further, the deposit is in sum of Rs.47.18 lakhs, and not for Rs.49.18 lakhs, which the assessee seeks to explain. The assessee, thus, renders an explanation for a sum which he has ostensibly been not deposited in June, 2016!The assessee’s explanation is of accumulation of agricultural income and borrowing from friends, in unspecified sums though, at an aggregate of Rs. 23.48 lacs. Be that as it may, the assessee wants one to believe that the agricultural income realized over the Page 3
ITANo. 892/Coch/ 2022 (AY 2017-18) James Kochappu Kolenchery vs. Asst. CIT years was not spent by his father, who is stated to be managing the estate, for personal/household purposes, nor indeed banked, in whole or in part, but accumulated over 22 years, to be deposited in his bank account by the assessee along with the sale proceeds of the agricultural land and monies brought into India. Incredulous indeed. Bank statement of his and his father’s account for the past years is not enclosed to exhibit the same. Why, it is also not spent on levelling, fencing and developing the land, on which considerable sums are stated as having beenby the assessee over the years, for which therefore the assessee presumably brought in funds from outside India, of which there is no proof. Not only that, the money was not accumulated by his father, i.e., in Kerala, India, but carried abroad, to be brought back during their several visits to India by the assessee and his wife, again, without proof. Why? Indian currency is not convertible on capital account and, therefore, its transfer abroad could only be clandestinely. Could it, besides being wholly unsubstantiated, get more bizarre than that? The bringing-in of funds itself disproves the story of accumulation. Further, funds brought from abroad would be in foreign exchange, to be declared at the time of entry into India and, further, its conversion into INR duly evidenced. Like-wise, for the cash stated to be received from friends and brought into India. When asked about the purpose for the same, it was explained by Ms. Divya, the ld. counsel for the assessee, that, it was for purchase of land, which though did not materialize. The assessee, however, did not carry back the same, as he had done for his income over the years, and as one would presume under the circumstances; it being repayable, but deposited in his bank account, something he had not done for years, and ostensibly forgotten to be given back. Quizzical indeed. Further, if money had indeed been given for helping the assessee for acquiring property, not stated in the confirmations, nor indeed in his explanation, the normal course of human conduct would be to return it, with thanks, on the said purpose being not realized, proving, through conduct, the genuineness of the transaction/s. Needless to add, there is no explanation as to why the monies were not remitted through the Page 4
ITANo. 892/Coch/ 2022 (AY 2017-18) James Kochappu Kolenchery vs. Asst. CIT banking channel which, besides demonstrating the transaction, would be in sync with the probabilities of human conduct. Clearly, then, there is no obligation to repay, also attracting s. 56(2)(vii) of the Act. Why, even the dates of the assessee’s and his wife’s coming to, and going out of India, are not stated, much less shown. The AO has considered the bank statements of the creditors to find them as not in any manner explaining the source of the cash deposit by the assessee in his bank account in June, 2016, a finding not disputed at any stage. We are, in the conspectus of the case, in complete agreement with the Revenue; it’s objection, in substance, being of the assessee’s case being wholly unproved.
In sum, the explanation is completely unproved; inconsistent, both internally and with the normal course of human and business conduct; rather, which-ever way one may look at it, incredulous; a make-believe. No wonder, the ld. CIT(A) states it as unbelievable. The same cannot be in law regarded as explaining, much less satisfactorily, as the law requires, the nature and source of the cash deposits by the assessee in his bank. We, therefore, for the reasons stated, find no infirmity in the findings by the Revenue authorities, and decline interference. We decide accordingly.