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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI ARUN KHODPIA
आदेश / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the Pr. Commissioner of Income Tax, Raipur-1 (for short ‘Pr. CIT’) u/s.263 of the Income Tax Act, 1961 (for short ‘Act’) dated 02.03.2022, which in turn arises from the order passed by the A.O. u/s.143(3) of the Income-tax Act, 1961 (for short ‘Act’), dated 30.11.2019 for A.Y. 2017-18. The assessee has assailed the impugned order on the following grounds of appeal before us:
“1. Ld. Pr. CIT erred in invoking the provisions of Section 263 and in setting aside the assessment order for fresh enquiry. Order passed u/s.263 is unsustainable and is passed without properly appreciating the facts and evidences on record. The assessment order is neither erroneous nor prejudicial to the interest of revenue. 2. The appellant reserves the right to add, amend or alter any of the ground/s of appeal.”
Succinctly stated, the case of the assessee was selected for scrutiny assessment under CASS in order to verify substantial cash deposits made in her bank account during the demonetization period.
During the course of assessment proceedings, it was observed by the A.O that the assessee was working as a bank employee since 1991 with Chhattisgarh Rajya Gramin Bank. On perusal of the records, it was observed by the A.O that the assessee had on 19.04.2012 obtained a decree of divorce
3 Sarita Konda Vs. Pr. CIT, Raipur- from the Family Court, Rajnandgaon. It was observed by the A.O that the assessee had received deposits from her ex-husband in her bank account No.770036065852 during the year under consideration. On being called upon to put forth an explanation as regards the source of the aforesaid deposits, it was submitted by the assessee that the said amount was received during the year under consideration in her bank account from her ex-husband in consequence of her divorce. The A.O holding a conviction that the amount of receipt could not be held as alimony, as the same would have otherwise either been a periodic receipt or a combination of both thus concluded that the amount being in the nature of a revenue receipt was liable to be brought to tax in her hands. Apart from that, it was observed by the A.O that the assessee had received a sum of Rs.15,02,867/- on various dates during the year in her bank account No.7033910433 with Chattisgarh Rajya Gramin Bank, Branch: Poliyakala, Durg on account of death claim of her husband who had demised on 09.01.2017. Although it was claim of the assessee that the aforesaid amount being in the nature of a death claim of her ex-husband, viz. Shri K Lalit Kumar was not liable to be taxed but the A.O did not find favour with the same and held it as her income outside the regular source and brought it to tax in her hands. Accordingly, the A.O after making the aforesaid additions, viz. (i) addition of amount received by the assessee over the year in consequence to divorce from her ex-husband : Rs.16,31,000/- ; and (ii) amount received towards death claim of her ex-
4 Sarita Konda Vs. Pr. CIT, Raipur- husband : Rs.15,02,867/-, assessed the total income of the assessee at Rs.38,40,797/-.
The Pr. CIT after culmination of the assessment proceedings that was framed by the A.O vide his order passed u/s.143(3) dated 30.11.2019 called for the records of the assessee. On a perusal of the record, the Pr. CIT was of the view that the A.O had erred in not treating both the aforesaid additions, viz. (i) addition of the amount received by the assessee over the year in consequence of divorce from her ex-husband: Rs.16,31,000/-; and (ii) amount received towards death claim of her ex-husband : Rs.15,02,867/- , as unexplained credits u/s 68 of the Act, and subjecting the same to tax in her hands under Section 115BBE of the Act. Accordingly, the Pr. CIT vide his order passed u/s.263 of the Act held the order passed by the A.O as erroneous in so far it was prejudicial to the interest of the revenue and directed the A.O to frame a fresh assessment after affording a reasonable opportunity of being heard to the assessee.
The assessee being aggrieved with the order passed by the Pr. CIT u/s.263 of the Act dated 02.03.2022 has carried the matter in appeal before us.
We have heard the Ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on 5 Sarita Konda Vs. Pr. CIT, Raipur- record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
At the very outset, it was submitted by the Ld. Authorized Representative (for short ‘AR’) of the assessee that the issue before the A.O was as to whether or not the aforesaid receipts were liable to be taxed in the hands of the assessee. It was submitted by the Ld. AR that there was no dispute as regards the nature or source of the either of the aforesaid receipts. It was the claim of the Ld. AR that as both the nature and source of the aforesaid receipts were clearly established, therefore, there was no occasion for the A.O in holding the same as unexplained cash credits within the meaning of Section 68 of the Act. The ld. A.R in order to buttress his aforesaid contention had taken us through the provisions of Section 68 of the Act. It was the claim of the Ld. AR that as the A.O had after due application of mind arrived at a possible and a plausible view that the receipts under consideration whose nature and source stood duly established were liable to be taxed as income of the assessee u/s.56(2)(v) of the Act, therefore, there was no justification for the Pr. CIT to have triggered the provisions of Section 263 of the Act for dislodging the said view and substituting the same by that arrived by him. On the basis of his aforesaid contention, it was submitted by the Ld. AR that the order passed by the Pr.
6 Sarita Konda Vs. Pr. CIT, Raipur- CIT being clearly in transgression of the scope of jurisdiction so vested with him could not be sustained and was liable to be set-aside.
Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. It was submitted by the Ld. DR that as the A.O had summarily accepted the claim of the assessee who had failed to substantiate the nature and source of the bank deposits, therefore, the Pr. CIT had rightly stepped in and set-aside the order passed by the A.O in exercise of jurisdiction vested with him u/s.263 of the Act.
Controversy involved in the present appeal hinges around the aspect that as to whether or not the A.O had arrived at a palpably incorrect view that the aforesaid amounts received by the assessee, viz. (i) amount received over the year in consequence of divorce from her ex-husband : Rs.16,31,000/- ; and (ii) amount received towards death claim of her ex- husband : Rs.15,02,867/-, were liable to be brought to tax in her hands u/s.56(2)(v) of the Act. As observed by us hereinabove, the Pr. CIT was of the view that now when the A.O had observed that the explanation of the assessee about the nature and source of the aforesaid receipts was not found to be satisfactory, therefore, the same were liable to be assessed as unexplained cash credits in her hands and brought to tax as per the mandate of Section 115BBE (1) of the Act.
7 Sarita Konda Vs. Pr. CIT, Raipur-
We have given a thoughtful consideration to the aforesaid observations of the Pr. CIT and are unable to find favour with the same. As stated by the Ld. AR and, rightly so, the provisions of Section 68 of the Act can be triggered only where either the assessee fails to come forth with any explanation as regards the nature and source of the cash credit; or the explanation so offered is not found to be satisfactory. For the sake of clarity the provisions of Section 68 of the Act are culled out as under (relevant extract):
“68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.”
It is only where the addition is, inter alia, made in the hands of the assessee u/s.68 of the Act that the provisions of Section 115BBE of the Act would come into play. In so far the receipts in question are concerned, we are unable to comprehend as to on what basis the same could be brought within
8 Sarita Konda Vs. Pr. CIT, Raipur- the realm of receipts whose nature and source is found to be unexplained. We, say so, for the reason that in so far the receipt of Rs.16,31,000/- (supra) by the assessee is concerned, the same had been claimed by the assessee to be an amount that was received by her in consequence of her divorce from her ex-husband, viz. Shri. K. Lalit Kumar. It was the claim of the assessee that as the aforesaid amount was received by her as alimony from her ex- husband pursuant to her marriage going to rocks, therefore, the same was not liable to be taxed. However, the A.O holding a view to the contrary had held the aforesaid receipt as income of the assessee from other sources u/s. 56(2)(v) of the Act and brought the same to tax in her hands. On the basis of our aforesaid observations, we are of the considered view that as there was no dispute as regards the nature and source of the aforesaid amount of Rs.16,31,000/- that was received by the assessee over the year in her bank account, therefore, there could have been no justification in bringing the same to tax as an unexplained cash credit u/s. 68 of the Act. As a corollary flowing thereto, in absence of the aforesaid amount of Rs.16,31,000/- being brought within the meaning of Section 68 of the Act, the provisions of section 115BBE could not have been triggered for taxing the same. At the same time, we cannot remain oblivion of the fact that there is substance in the observation of the Pr. CIT that the A.O had without carrying out any verification accepted the claim of the assessee that the amount of Rs.16.31 lac received in her bank account was in consequence of her divorce from her
9 Sarita Konda Vs. Pr. CIT, Raipur- ex-husband, viz. Shri. K. Lalit Kumar. On a perusal of the orders of the lower authorities, it transpires that the A.O had summarily accepted the aforesaid claim of the assessee and held the amount of Rs.16.31 lac as an amount received by her in consequence of her divorce from her ex-husband. Considering the aforesaid facts, we though concur with the Ld. AR that the aforesaid amount received by the assessee in consequence of her divorce from her ex-husband could not have been held as an unexplained cash credit u/s.68 of the Act, and thus, brought to tax u/s.115BBE of the Act, but at the same time approve the view taken by the Pr. CIT that the summarily acceptance by the A.O of the aforesaid claim of the assessee by the A.O of the nature and source of the aforesaid receipt as was claimed by the assessee i.e. without carrying out any necessary verifications, had rendered the order so passed by him as erroneous in so far it was prejudicial to the interest of the revenue as per “Explanation 2” to Section 263 of the Act. We, thus, in terms of our aforesaid observations, approve the view taken by the Pr. CIT to the limited extent that the summarily acceptance of the aforesaid claim of the assessee by the A.O had rendered his order as erroneous in so far as it was prejudicial to the interest of the revenue u/s. 263 of the Act. Accordingly, the setting aside by the Pr. CIT of the order passed by the A.O u/s.143(3) of the Act dated 30.11.2019 is approved on our part, though for the limited purpose of verifying the veracity of the claim
10 Sarita Konda Vs. Pr. CIT, Raipur- of the assessee as regards the nature and source of the aforesaid receipt of Rs.16.31 lac.
Apropos the receipt by the assessee of an amount of Rs.15,02,867/- (supra) during the year under consideration in her bank account No.7033910433 with Chhatisgarh Rajya Gramin Bank, Branch: Potiyakala, Durg, it is the claim of the assessee that the same was an amount that was received by her as a death claim from the employer of her ex-husband who had demised on 09.01.2017. As is discernible from the record, the controversy in the course of the assessment proceedings was as to whether or not the aforesaid receipt was liable to be brought to tax. On the one hand, it was the claim of the assessee that as the aforementioned amount was the death claim of her ex-spouse and not liable to be taxed, but the A.O on the other hand was of the view that the said receipt being in the nature of her income was liable to be brought to tax.
Considering the aforesaid facts, we find substance in the claim of the Ld. AR that now when the nature and source of the aforesaid receipt of Rs.15,02,867/- by the assessee was duly explained and was not doubted by the A.O, therefore, the same by no means could have been brought within the realm of an unexplained cash credit u/s. 68 of the Act. As a corollary flowing therefrom, the aforementioned amount could not have been subjected to tax as per the provisions of Section 115BBE of the Act. At the 11 Sarita Konda Vs. Pr. CIT, Raipur- same time, we cannot remain oblivion of the fact that the A.O had without carrying out necessary verifications summarily accepted the claim of the assessee as regards the nature and source of the aforesaid receipt of Rs.15,02,867/-. On the basis of the aforesaid facts, we find substance in the observation of the Pr. CIT that the summarily acceptance by the A.O of the assessee’s claim that the receipt in question was the death claim that was received by her from the employer of her ex-husband who had demised on 09.01.2017, had thus, rendered his order as erroneous in so far it was prejudicial to the interest of the revenue within the meaning of “Explanation 2” of Section 263 of the Act. On the basis of our aforesaid observations, we approve the order passed by the Pr. CIT u/s.263 of the Act dated 30.11.2019, to the limited extent that the A.O without carrying out necessary verifications had erroneously accepted the claim of the assessee that the amount of Rs.15,02,867/- was the death claim that was received by her from the employer of her ex-husband who had demised on 09.01.2017.
We, thus, in terms of our aforesaid deliberations modify the order passed by the Pr. CIT u/s. 263 of the Act dated 02.03.2022, and therein restrict the setting aside of the order passed by the A.O u/s. 143(3) dated 30.11.2019 by him for the limited purpose of verifying the veracity as regards the nature and source of the respective receipts by the assessee. In case the A.O finds the claim of the assessee as regards the nature and source
12 Sarita Konda Vs. Pr. CIT, Raipur- of the aforesaid receipts in order, then no modification of the order passed by him u/s.143(3) dated 30.11.2019 shall be carried out. At the same time, in case the explanation of the assessee as regards the nature and source of the aforesaid receipts is found to be incorrect, then the aforementioned receipts shall be held as unexplained cash credits u/s.68 of the Act and brought to tax by triggering the provisions of Section 115BBE of the Act. Thus, the Ground of appeal No.1 raised by the assessee is allowed for statistical purposes in terms of our aforesaid observations.
The Ground of appeal No.2 being general in nature is dismissed as 14. not pressed.
In the result, appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in open court on 28th day of April, 2023.