Case Law Details
Kishan Kothwal Vs ITO (Telangana High Court)
HC held that The parameters for making addition under Section 68 of the Act and under Section 69A of the Act, though may appear to be similar, however, is not so; therefore, addition of cash credit under Section 68 of the Act would stand on a different pedestal. The principles governing cash credit under Section 68 of the Act cannot be extended to unexplained investments under Section 69A of the Act.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Mr.Vijay Kumar Punna, learned counsel for the appellant.
2. This appeal has been preferred by the assessee, as the appellant, under Section 260A of the Income Tax Act, 1961 (briefly ‘the Act’ hereinafter) against the order dated 28.06.2021 passed by the Income Tax Appellate Tribunal, Hyderabad Bench ‘B’, Hyderabad (Tribunal) in I.T.A.No.289/H/2020 for the assessment year 2017-18.
3. The issue involved in the present appeal is confirmation of the addition made by the Assessing Officer to the income of the assessee under Section 69-A of the Act.
4. In the proceedings for the assessment year 2017-18, the Assessing Officer found cash deposits in the bank account of the assessee aggregating to Rs.13,16,304.00. Assessee submitted that he has deposited only Rs.10 lakhs during the demonetization period and not Rs.13,16,304.00. Verification of the bank account statement showed the deposit of cash of Rs.10 lakhs on 12.11.2016 in addition to certain other deposits in tranches. Regarding cash deposit of Rs.10 lakhs, according to the assessee, the same was out of 1/3rd salary savings from his salary since 2006 and also 1/3rd savings of his son since 2011. This explanation was not accepted by the Assessing Officer on the ground that it was difficult to believe that such savings were kept at home over so many years. In addition, a further sum of Rs.2.75 lakhs was also found to be unexplained. Therefore, the Assessing Officer added a sum of Rs.12,75,000.00 to the returned income of the assessee as unexplained deposits in bank account, considering the same as income under Section 69A of the Act.
5. In appeal before the Commissioner of Income Tax (Appeals)-7, Hyderabad (for short, ‘CIT (A)’ hereinafter), the Appellate Authority recorded the statement of the assessee under Section 131 of the Act in the presence of his authorized representative. It was noted that assesssee is a State Government employee and he was required to inform the State Government in the event of making any investment in speculative transaction. While granting relief to the extent of Rs.2.75 lakhs, which was stated to be on account of withdrawal from his GPF, the first Appellate Authority confirmed the addition of Rs.10 lakhs made by the Assessing Officer.
6. In further appeal before the Tribunal, Tribunal held as follows:
“We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The CIT(A) demonstrated in his order that the assessee does not have sufficient money to pay monthly chit installments by way of recording his statement u/s 131 of the Act and examining the bank statements, further observed that no documentary evidence was filed by the assessee to establish genuineness of the chit fund claim. Further, the CIT (A) observed that being govt. employee, the assessee is not permitted to enter in chit fund. Even before us, the ld. AR of the assessee failed to establish that the amount of Rs.10,00,000/- received from chit fund and the submissions in the written submissions are general and vogue which are not supported to the case of the assessee. The CIT (A) examined the bank statement of the assessee and after observing the monthly expenditure of the assessee and nature of transactions carried out by the assessee, he has rightly sustained the addition made by the AO. Therefore, we do not find any infirmity in the order of the CIT (A) in confirming the addition of Rs.10,00,000/- made by the AO u/s 69A of the Act and therefore, upholding the order of the CIT(A), we dismiss the ground raised by the assessee on this issue”.
7. On due consideration, we do not find any error or infirmity in the view taken by the Tribunal. Besides, there is concurrent finding of fact. No question of law arises from the said order of the Tribunal, not to speak of any substantial question of law.
8. Learned counsel for the appellant relied upon the following decisions:
(i) COMMISSIONER of INCOME TAX, HYDERABAD v. TILAK RAJ KUMAR (2015) 56 Taxmann.com 36 (Andhra Pradesh and Telangana).
(ii) HAWKINS v. POWELLS TILLERY STEAM COAL COMPANY LIMITED (988 KING’ S BENCH DIVISION 1911).
9. Insofar the decision of this court in Tilak Raj Kumar (supra) is concerned, we find that it was a case of sale transaction of diamonds under Section 68 of the Act. The parameters for making addition under Section 68 of the Act and under Section 69A of the Act, though may appear to be similar, however, is not so; therefore, addition of cash credit under Section 68 of the Act would stand on a different pedestal. The principles governing cash credit under Section 68 of the Act cannot be extended to unexplained investments under Section 69A of the Act.
10. Insofar the English decision is concerned, the facts are totally different, the same arising out of benefits received under the Workmen’s Compensation Act. The said decision is not at all applicable to the facts and circumstances of the present case.
11. Consequently, the appeal is dismissed.
12. Miscellaneous applications, if any pending, shall stand closed.
13. No costs.
