M. Natarajan Vs ITO (ITAT Chennai)
ITAT Chennai held that addition under section 69 of the Income Tax Act sustained as no corroborative evidence produced to prove the source for the cash deposits during demonetization period.
Facts- The case was selected for scrutiny for verification of cash deposits made during demonetization period and thus, consequent notice u/s. 143(2) of the Income-tax Act, 1961 was issued and duly served on the assessee. During the course of assessment proceedings, the AO noticed that the assessee has made cash deposits of Rs. 48,59,000/- between 15.11.2016 and 01.12.2016 to his savings bank account. The AO, has called upon the assessee to explain source for cash deposits made during demonetization period.
In response, the assessee submitted that source for cash deposits was out of sale proceeds of ancestral property (agricultural land). He further, submitted that initially receipts from sale of property was deposited into joint account of assessee and my sister-in-law and later my sister-in-law has withdrawn money from her bank account on 29.01.2013 and gave a gift to the assessee. The source for cash deposit is out of gift received from my sister-in-law. Therefore, he submitted that question of making additions does not arise.
However, rejected arguments of the assessee and made additions towards cash deposits in Axis bank as unexplained money of the assessee. CIT(A) rejected the arguments of the assessee and sustained the additions. Accordingly, being aggrieved, the present appeal is filed.
Conclusion- In absence of corroborative evidence to support the arguments taken by the assessee, it is difficult to accept the evidences filed by the assessee to prove the source for cash deposits during demonetization period. Therefore, we are of the considered view that there is no error in the reasons given by the AO and CIT(A) to sustain additions made towards cash deposits made during demonetization period and thus, we are inclined to uphold the findings of the CIT(A) and dismiss appeal filed by the assessee.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 07.06.2022 and pertains to assessment year 2017-18.
2. At the outset, we find that there is a delay of 177 days in filing of appeal before the Tribunal, for which a petition for condonation of delay along with affidavit explaining said delay has been filed. The ld. Counsel for the assessee, referring to petition filed by the assessee submitted that the assessee could not file appeal before the Tribunal within time allowed under the Act due to sudden demise of auditor Shri. Muralidharan, who was handling tax matters.Later, the assessee could able to identify another Counsel who can handle tax matters and in the process there is a delay of 177 days. The said delay is neither intentional nor for want of any undue benefit. Therefore, in the interests of justice, delay in filing of appeal may be condoned.
3. The ld. DR, on the other hand opposing petition filed by the assessee submitted that reasons given by the assessee neither comes under bonafide reasons nor reasonable cause as provided under the Act, for condonation of delay and thus, petition filed by the assessee should be dismissed.
4. We have heard both the parties and considered relevant contents of petition filed by the assessee for condonation of delay. We find that the assessee could not file appeal within time allowed under the Act due to sudden demise of his auditor Shri. Muralidharan. It was further noticed that the assessee was able to identify another counsel who can handle tax matters and represent his case and this process took considerable time. The delay of 177 days in filing of appeal is neither intentional nor to derive any undue benefit. Thus, we condone the delay in filing of appeal and admit appeal filed by the assessee for adjudication.
5. The assessee has raised the following grounds of appeal:
“A. For that the order of the Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [“CIT(A)”] and Assessing Officer (“AO”), is erroneous, bad in law, and was passed ignoring the facts and merits of the case, disregarding the evidences and the case laws relied on by the appellant.
B. For that the Ld. CIT(A) failed to appreciate that the Ld. Assessing Officer (AO) while acknowledging in page 4 [para 1(1)] of his assessment order that Rs.70 lakhs was withdrawn by the appellant’s sister-in-law (Smt. Pakkiriammal) during the financial year (FY) 2012-13 and there is a doubt whether the withdrawal was given to the assessee, the Ld. AO could have examined Smt. Pakkiriammal by virtue of the powers vested in him under section 133(6) / 131 of the Income-Tax Act, 1961 (“Act”).
C. For that the Ld. CIT(A) ought to have noted that his powers being coterminous with that of the Ld. AO, the Ld. CIT(A) could have examined or caused the Ld. AO to examine Smt. Pakkiriammal about the factum of gift given by her to the appellant.
D. For that the Ld. CIT(A) and the Ld. AO failed to consider the notarized confirmation letter of appellant’s sister-in-law (Smt. Pakkiriammal – brother’s wife) that she had withdrawn Rs.50,00,000/- from her bank account with Axis Bank (Customer ID: 841300393) on 29.01.2013 and gave it to the assessee as gift out of love and affection and for being supportive to her, at every stage, particularly, at the time of her husband’s bone marrow cancer treatment.
E. For that the Ld. CIT(A) ought to have noted that where there is a doubt in the mind of the AO as to whether the cash withdrawal by the appellant’s sister-in-law was given to the appellant or not, the benefit of doubt should be in favour of the appellant, particularly, when there was nothing on record to disprove the notarized affidavit of Smt. Pakkiriammal.
F. For that the Ld. CIT(A) failed to note that the cash received by the appellant was kept for his brother’s bone-marrow cancer treatment which requires cash to meet his brother’s medical expenses, then and there, and which was subsequently paid back by his sister-in-law (Smt. Pakkiriammal).
G. For that the Ld. CIT(A) ought to have seen that only on account of demonetization of Specified Bank Notes (SBNs), the appellant deposited the cash available with him in his Axis Bank account (Customer ID: 832843234).
H. For that in the absence of any finding recorded by the Ld. AO or by Ld. CIT(A) that apart from depositing the cash into bank as explained by the assessee, there was any other user by the assessee of the amount of Rs.48,59,000/- and in the absence of that, simply because there was a time gap, the explanation of the assessee cannot be rejected.
I. For that the Ld. CIT(A) failed to appreciate that the appellant is a Central Government servant (Office Superintendent in O/o. Chief Labour Commissioner, Shastri Bhavan) having no source of income other than salary and in this backdrop, the preponderance of probability of the factum of gift from his sister-in-law of Rs. 50 lakhs is in favour of the appellant.
J. For these and other additional grounds that may be adduced before or at the time of hearing, the appellant prays that the appeal be allowed.”
6. The brief facts of the case are that, the assessee employed with Chief Labour Commissioner deriving salary income had filed his return of income for the assessment year 2017-18 on 29.03.2018, admitting a total income of Rs. 2,31,840/-. The case was selected for scrutiny for verification of cash deposits made during demonetization period and thus, consequent notice u/s. 143(2) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) dated 13.08.2018 was issued and duly served on the assessee. During the course of assessment proceedings, the AO noticed that the assessee has made cash deposits of Rs. 48,59,000/- between 15.11.2016 and 01.12.2016 to his savings bank account maintained with Axis Bank, Medavakkam Branch. The AO, has called upon the assessee to explain source for cash deposits made during demonetization period. In response, the assessee submitted that source for cash deposits was out of sale proceeds of ancestral property (agricultural land). He further, submitted that initially receipts from sale of property was deposited into joint account of assessee and my sister-in-law and later my sister-in-law Smt. Pakkiriammal has withdrawn money from her bank account on 29.01.2013 and gave a gift to the assessee. The source for cash deposit is out of gift received from my sister-in-law. Therefore, he submitted that question of making additions does not arise.
7. The AO, however was not convinced with explanation furnished by the assessee and according to the AO, the claim of the assessee that he had received gift from his sister-in-law, out of sale proceeds of agricultural land in the year 2013 is unsubstantiated and further, to make believe story to circumvent cash deposits made during demonetization period. Therefore, rejected arguments of the assessee and made additions towards cash deposits in Axis bank as unexplained money of the assessee. The relevant findings of the AO are as under:
“3.3 Submission made by the assessee was taken into account Documents furnished by the assessee were verified and the observations were noted as under. Assessee’s submissions made is devoid of merit for the following reasons:-3.3.1 The documents furnished by the assessee were verified and it IS ODS that a Sale deed dt. 21.02.2012 has been executed between Smt. Pakkiriammal, W/o. Balakrishnan and Mr. Jones. The total sale consideration received is KS. 1,80,00,000/-, The details of receipt of Rs.1.80.00,000/- is enumerated below:
