Loading judgment…
No AI summary yet for this case.
Order
PER VIKRAM SINGH YADAV, AM
This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 21/09/2023 pertaining to Assessment Year 2018-19 wherein the assessee has challenged the sustenance of addition of Rs. 14,52,343/- under section 69A of the Act.
Briefly the facts of the case are that a search action was carried out in the case of M/s Angel Immigration and Educational Consultants Pvt. Ltd. under section 132(1) on 30/08/2018. During the course of search, it was found that the assessee has paid a sum of Rs. 20,00,000/- in cash for obtaining VISA to M/s Angel Immigration and Educational Consultants Pvt. Ltd. during the F.Y. 2017-18 relevant to A.Y. 2018-19 and a show cause under section 148A(b) of the Act was issued to the assessee as to why notice under section 148 may not be issued for escapement of income of Rs. 20,00,000/- on account of fee paid out of unexplained sources during the year under consideration. There was however no response from the assessee and basis the information available on the record, the AO passed the order under section 148A(d) of the Act stating that income of Rs. 20,00,000/- has escaped assessment within the meaning of Section 147 of the Act and it is a fit case for issue of notice under section 148 of the Act. Thereafter notice under section 148 dt. 30/03/2022 was issued to the assessee. In response to the notice, the assessee filed his return of income on 10/11/2022 and thereafter notice under section 143(2) and 142(1) were issued and information was called for from the assessee seeking explanation regarding the source of payment of the VISA fee as well as the credits in the bank account maintained by the assessee. 3. After considering the submissions of the assessee, it was stated by the AO that the assessee has infact paid total VISA fee of Rs. 18,75,000/ to M/s Angel Immigration and Educational Consultants Pvt. Ltd. as against the initial figure of Rs. 20,00,000/- as found during the course of search action. However the explanation regarding the source of the payment of the VISA fee was not fully accepted by the AO and further referring to the cash deposited and credit entries in the bank account of the assessee, an amount of Rs. 14,52,343/- was brought to tax in the hands of the assessee and the relevant findings are contained at para 4.5 and 4.6 of the assessment order and the contents thereof read as under: “4.5 Point wise rebuttal of reply of the assessee including analysis of any case law relied upon: On analysis of replies of the assessee and facts of the case it is gathered that the assessee has paid total VISA fees of Rs. 18,75,000/- to M/s. Angel Immigration and Educational Consultants Pvt. Ltd. as against Rs. 20,00,000/- as per the findings during the course of Search action. Further the details of payment of said VISA fees as given by assessee and findings thereof is tabled as under:
Date Account Amount INR(Rs.) Remarks 06/04/2017 5,00,000/- As explained in para Paid by (mother in law) Shiksha Devi W/o Multan 2.2.5 above, the credit Singh VPO Shahpur Distt. worthiness of Smt. Karnal A/c No. Shiksha Devi is not 000334001002866. The found established by Central co-op. Bank, the assessee. Charao Distt. Karnal 06/04/2017 3,75,000/- As explained in 2.2.6 Paid in cash to Angel Immigration above, no confirmation and proof of credit worthiness of friends and relatives from whom funds were borrowed has not been submitted by assessee. Even the identity of said friends and relatives is not submitted. 24/08/2017 5,00,000/- The Paid through State bank assessee had of India to Essel Finance received VISA refund VKC forex limited as per as his application was instruction of Angel rejected earlier. Found Immigration explained. 24/08/2017 5,00,000/-' Source Paid through State bank of credits in of India to Angel bank account is not Immigration and found explained as Educational Consultants discussed in para 2.2.6. 18,75,000/- Total
4.5.2 On perusal of reply to the show cause notice, it is noticed that the assessee has again repeated his earlier submission that the family's agricultural income has been utilized to make Fixed deposit investment and payment of Visa fees to M/s. Angel Immigration and Educational Consultants Pvt. Ltd. and there is no other source of income of the family. This repeated submission is not supported with any evidences of agricultural income derived in the past, Copies of ROI declaring exempt agricultural income, Copy of sale bills etc. Regarding cash deposits in his bank account, the assessee has earlier submitted that cash deposits to the tune of Rs. 2,94,870/- were made out of unsecured loans from friends and relatives. Accordingly the assessee was specifically requested to file the confirmations and proof of credit worthiness of said friends and relatives, from whom cash loans were received. However, the assessee is silent on this issue and has not given any confirmation or proof of credit worthiness of so called friends and relatives /loan parties. It means that the assessee is filing casual replies without any base or evidences of such cash deposits/credits in bank account.
On perusal of cash/credit entries in his bank account maintained with SBI, it is gathered that unexplained cash deposits of Rs. 84,000/- and credit transfers of Rs. 13,68,343/- have been routed through following three persons/sources : (i) Smt. Shiksha Devi (mother in law of assessee : Rs. 5,00000/- (ii) FDR matured which was invested from cash received from one Sh Satnam Singh : Rs. 6,00,000/- (iii) So called unsecured loans from friends and relatives (no evidences given) : Rs. 2,94,870/- The above said source of cash/credits in his bank account which is clearly not established to be genuine looking to the meagre salary income of the asessee during the year. The assessee has tried to give color of genuineness/to the transaction of payment of his VISA fees from the different sources of cash receipts/bogus loans from unnamed friends and relatives, which is nothing but last minute thought to save him from the assessment of unaccounted income gathered through above channel. 4.6 Conclusion drawn : In view of discussion above inference is clearly drawn that the assessee has not produced any evidences of his salary income/other income in the absence of any returns of income filed, till date. Further no evidences of agricultural income of family have been given either which support the payment of Visa fees to M/s. Angel Immigration and Educational Consultants Pvt. Ltd. Further as per detailed discussion in para 4.2 above, the assessee has tried to cover his unaccounted income with last minute thought of submission of bank accounts of his mother in law, Smt Shiksha Devi, wherein her total income of Rs. 2,99,000/- declared in ROI filed for A Y 2018-19 does not support the advance of Rs. 5,00,000/- given to the assesse. The pattern of transactions in her bank account in a very short time of 3 days raises suspicion and clearly establishes that these transactions have been facilitated specifically to make payment of VISA fees of the assessee. The modus operandi adopted by the assessee for unexplained cash/credit deposits in his bank account is explained in para 2.2.8 above. In view of above , the unexplained cash deposits in bank account of Rs. 84,000/- and credit entries made from undisclosed sources of Rs.13,68,343/-are treated as unaccounted and undisclosed income of the assessee u/s 69A of the Act to be taxed u/s 115BBE of the Act and added to the total income of the assessee. Penalty proceedings u/s 271AAC of the Act are initiated for this addition. Reference is separately made for initiation of penalty proceedings u/s 269SS of the Act to the jurisdiction Range Head for accepting cash loans of Rs. 6,00,000/- from one Shri Satnam Singh during the F.Y. 2016-17 relevant to A.Y. 2017-18.”
Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has since sustained the order of the AO and the relevant findings of the ld CIT(A) are contained at para 4.6 of the impugned order and the contents thereof read as under:
“In view of discussion above inference is clearly drawn that the assessee has not produced any evidences of his salary income/other income in the absence of any returns of income filed, till date. Further no evidences of agricultural income of family have been given either which support the payment of Visa fees to M/s. Angel Immigration and Educational Consultants Pvt. Ltd. Further as per detailed discussion in para 4.2 above, the assessee has tried to cover his unaccounted income with last minute thought of submission of bank accounts of his mother in law, Smt Shiksha Devi, wherein her total income of Rs. 2,99,000/- declared in ROI filed for A.Y 2018-19 does not support the advance of Rs. 5,00,000/- given to the assesse. The pattern of transactions in her bank account in a very short time of 3 days raises suspicion and clearly establishes that these transactions have been facilitated specifically to make payment of VISA fees of the assessee. The modus operandi adopted by the assessee for unexplained cash/credit deposits in his bank account is explained in para 2.2.8 above. In view of above , the unexplained cash deposits in bank account of Rs. 84,0001- and credit entries made from undisclosed sources of Rs.13,68,343/- are treated as unaccounted and undisclosed income of the assessee u/s 69A of the Act to be taxed u/s 115BBE of the Act and added to the total income of the assessee. Before me, the appellant has relied on documents and submissions filed before the AO. He has referred to judicial decisions in his favour. The AO has handled all the objections raised by the appellant, and since nothing new has been brought before me by the appellant, I am constrained to rely on the order of the AO in this aspect. As regards the judicial decisions brought in by the appellant, it may be said that there are a plethora of case laws in favour of Revenue. I am thus of the opinion that no interference with the order of the AO is called for.”
Against the said findings and the directions of the Ld. CIT(A), the assessee is in appeal before us.
During the course of hearing, Ground No. 1 to 3 taken by the assessee were not pressed by the ld AR, hence, the same are dismissed as not pressed.
Regarding Ground No. 4 & 5, it was submitted that the assessee has challenged the addition of Rs. 14,52,343/- being the alleged amount of cash and credit entries in the bank account of the assessee by alleging the same to be unaccounted and unexplained under section 69A of the Act. In this regard, it was submitted that the assessee is an individual belonging to the farmer community and during the F.Y. relevant to impugned A.Y., there were certain cash deposits and credit entries in the bank account of the assessee and which has been duly substantiated before the AO as well as before the Ld. CIT(A) which however has not been properly appreciated and addition has been made in the hands of the assessee.
Firstly, regarding the amount of Rs. 5,00,000/- paid by Smt. Shiksha Devi, Mother in law of the assessee as VISA fee on behalf of the assessee, it was submitted that there is no credit in the bank account of the assessee from his mother in law and this amount does not represent any credit entries in the bank account of the assessee. It was submitted that the amount was directly transferred by mother in law from her bank account to M/s Angel Immigration and Educational Consultants Pvt. Ltd. towards VISA Fee for the assessee and therefore the same cannot be brought to tax under section 69A of the Act. It was further submitted that the assessee has fully established her credit worthiness, identity and genuineness of the transaction and has submitted substantial evidence in the form of her bank account statement, affidavit, aadhar Card, PAN Number and acknowledgement of ITR. It was further submitted that even the source in the hands of the mother in law has been duly explained by the assessee. It was accordingly submitted that the assessee has not only established the source of Rs. 5,00,000/- received from his mother in law but also the source of source in the hands of the mother in law and therefore the addition so made be directed to be deleted. 9. Regarding the alleged credit of Rs. 6,00,000/-, it was submitted that there is no such credit of Rs. 6,00,000/- in the bank account of the assessee during the F.Y. relevant to impugned assessment year. It was submitted that the said amount represents the funds received from Shri Satnam Singh in the previous F.Y.
out of which a term deposit of Rs. 5,30,000/- was made in the earlier year and which has since matured during the year under consideration. It was submitted that the AO has alleged that the source of Rs. 6,00,000/- received in the earlier year has not been established therefore credit on account of FDR matured during the year made out of the unexplained credits in the earlier y ears also remained unexplained. It was submitted that no addition can be made in the impugned assessment year for the reason that no amount has been received during the year under consideration and the amount has only been received in the earlier year and therefore there is no basis for making the addition in the year under consideration. In this regard our reference was drawn to the copy of the bank statement of Shri Satnam Singh, copy of the bank statement of the assessee of the earlier years as well as for the year under consideration and copy of the FDR receipt. It was accordingly submitted that since there is no credit of Rs. 6,00,000/- in the year under consideration, the same could not have been added to the income of the year under consideration and in any case the source of credit of Rs. 5,30,000/- has been duly established by the assessee and therefore no addition could be made in the hands of the assessee for the year under consideration.
Regarding cash deposit of Rs. 84,000/-, it was submitted that Rs. 50,000/- was deposited on 30/08/2017 and Rs. 34,000/- was deposited on 31/08/2017 and the same are out of the withdrawals made earlier by the assessee and further the cash flow statement has also been submitted by the assessee which has been clearly ignored by the AO as well as by the Ld. CIT(A).
Regarding the amount of Rs. 2,94,870/-, it was submitted that the same include the cash deposit of Rs. 84,000/- and which has already been brought to tax earlier and therefore the same will result in double addition which is bad in law and same be directed to be deleted. Regarding the balance amount of Rs. 2,44,870/-, it was submitted that the assessee has received unsecured loan from friends and relatives from time to time and the details thereof have been duly provided during the course of assessment proceedings and it was accordingly submitted that since the source of the credit entries in the bank account have been duly established by the assessee, the addition so made by the AO be directed to be deleted.
Regarding certain observations of the Ld. AO as well as the Ld. CIT(A) it was submitted as under:
i) Ld. AO in para 2.2.5 at page 4-5 and 4.6 at page 16 of the assessment order ' has mentioned that Smt. Shiksha Devi has declared total income for Rs. 299.000/- from stitching work and interest income which does not support the advance of Rs. 500,000/-. Further, the pattern of credit in the bank account in very short time of 3 days reveals that these transactions have been facilitated specifically to make payment for VISA fees of the assessee. In reply, it is respectfully submitted that assessee has duly established the source in the hands of Smt. Shiksha Devi as explained by in the submissions made hereinabove which duly shows that enough funds were available in her hands to advance the funds the assessee. In any case, the assessee has submitted voluminous evidences establishing the identity, creditworthiness of Smt. Shiksha Devi and genuineness of the transaction with her and that should be the end of the matter. The source in hands of Smt. Shiksha Devi cannot be questioned by Ld. AO in the case of assessee, however, in any case assessee has filed substantial evidences even to established the source in the hands of Smt. Shiksha Devi as submitted above. Further, as far as the observation of Ld. AO that these transactions have been facilitated by Smt. Shiksha Devi specifically to make payment for VISA fees of the assessee. In this regard, it is submitted there is nothing adverse in mother-in-law arranging funds as per her financial capabilities for funding the higher education of her son-in-law. Therefore, this observation of Ld. AO is without any basis, evidence or material and may please be ignored.
Per contra, the Ld. DR relied on the order of the lower authorities and our reference was drawn to the findings of the AO and the ld CIT(A) which we have already take note of and not being reiterated for the sake of brevity.
I have heard the rival contentions and purused the material available on record. Firstly, regarding payment of Rs 5,00,000/- towards the visa fee, it is evident from the record that the same has been paid by the mother-in-law of the assessee through RTGS from her bank account directly to the bank account of M/s Angel Immigration and Educational Consultants Pvt Ltd. She has confirmed the said transaction through her affidavit submitted during the course of assessment proceedings and the contents thereof have not been rebutted. Therefore, as far as source of visa fee to the extent of Rs 5,00,000/- is concerned, the assessee has duly discharged his burden and the said expenditure cannot be held as unexplained expenditure as source thereof has been duly explained and substantiated by the assessee in terms of funds received from his mother-in- law. Further, copy of her bank statements, two persons from whom she has, in turn received the funds and their respective affidavits and copy of her return of income has been placed on record. In view of the same, even source of fund in the hands of the mother-in-law has been duly explained and substantiated and thus, no addition can be made in the hands of the assessee either in terms of unexplained expenditure or in terms of unexplained receipt of funds.
Regarding credit of Rs 6,00,000/- in the bank account of the assessee, it is evident from the record that the same is the maturity proceeds of a fixed deposit placed by the assessee with a bank in the previous financial year and which has matured during the year and thus, the said credit stand duly explained and no adverse view can be taken. 16. Regarding cash deposit of Rs 84,000/- in the bank account of the assessee, it has been explained that the same is out of earlier withdrawals during the year and in this regard, cash flow statement has been submitted during the course of assessment proceedings and thus, the explanation so submitted duly stand substantiated. 17. Regarding credit of Rs 2,44,870/- in the bank account of the assessee, we find that Rs 1,50,000/- has been received from M/s Rajat Enterprises on 5/06/2017 and out of which, Rs 1,00,000/- has been returned on 13/06/2017 and Rs 50,000/- on 17/06/2017 which proves that it was a case of short term borrowing where the amount has been returned within a few days and the identity of the lender and genuineness of the transaction stand established and thus, no adverse view can be taken.
In respect of remaining amount of Rs 94,870/-, the assessee has claimed to have received the said amount from time to time from friends and relatives, however, no details have been submitted to corroborate the same either before the lower authorities or before us, therefore, to this extent, the said deposits remain unexplained and addition to that extent is sustained.
In light of aforesaid discussions and in the entirety of facts and circumstances of the case, the addition to the extent of Rs 94,870/- is sustained and the remaining addition is directed to be deleted.
In the result, the appeal of the assessee is partly allowed.