No addition for cash payment for property out of cash withdrawals by family members

Gurmeet Kaur Khurana Vs ITO (ITAT Chandigarh)

The relevant facts of the case are that the assessee had invested an amount of Rs.6 lacs for immovable property with M/s Bajwa Developers Ltd. The investment was made vide cash payments. The transaction was flagged. It was noticed that no tax return was filed by the assessee. Accordingly, notices etc. were issued to the assessee.

In response thereto, a return declaring income of Rs.6,15,659/- was filed by the assessee. The Assessing Officer in the order passed u/s 143(3)/147 held that the assessee failed to explain the same. Accordingly, addition of Rs.6 lacs was made.

On merits, it is seen that the deposit of Rs.6 lacs made by the assessee from the sources of funds stand fully addressed. Copies of the statement of the bank accounts of the assessee are at pages 1 & 2 from 01.04.2011 to 02.12.2011 of Account No.55080023582 in SBI; at page 3 copy of assessee’s husband’s Account No.10883085576, Branch Code : 628 is available from 01.04.2011 to 06.04.2011 and at page 4 copy of Account No.55062933389 of Shri Kanwaldeep Singh (son of the assessee ) evidencing withdrawals from State Bank of India account for the specific period i.e. 04.04.2011 to 06.04.2011 are seen. On a consideration thereof, I find no good reason let alone a reason why the explanation offered duly supported by facts should not have been accepted. Satisfied by the evidence on record of the First Appellate Authority also relied upon before the ITAT setting aside the order, the addition sustained is directed to be deleted.

FULL TEXT OF THE ORDER OF ITAT CHANDIGARH

The present appeal has been filed by the assessee wherein the correctness of the order dated 09.09.2021 of CIT(A) (NFAC i.e. National Faceless Appeal Centre) Delhi pertaining to 2012-13 assessment year is assailed on the following grounds :

1. On the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the assessment order not in violation of the principles of natural justice whereby no opportunity was provided to the assessee to present evidence and explanation during assessment proceedings due to service of the notices on wrong address. The Appellant prays that the order so passed be held as bad in law.

2. On the facts and in the circumstances of the case and in law, Ld. Commissioner of Income Tax Appeals erred in upholding the addition of Rs. 6.00.000.00 u/s 69A of the Income Tax Act. 1961 (the Act), when the assessee has provided evidence of the source of the payments. Appellant prays that the addition may be deleted and the tax levied be withdrawn.

3. The appellant craves leave to add, amend or delete any of the ground of appeal before the same in taken up for final disposal.

2. Both the parties were heard.

3. The relevant facts of the case are that the assessee had invested an amount of Rs.6 lacs for immovable property with M/s Bajwa Developers Ltd. The investment was made vide cash payments. The transaction was flagged. It was noticed that no tax return was filed by the assessee. Accordingly, notices etc. were issued to the assessee.

3.1 In response thereto, a return declaring income of Rs.6,15,659/- was filed by the assessee. The Assessing Officer in the order passed u/s 143(3)/147 held that the assessee failed to explain the same. Accordingly, addition of Rs.6 lacs was made. The table of Chart of payments extracted in the assessment order for the sake of completeness is reproduced hereunder:

3. As per the information received from the Deputy Director of Income Tax (Inv.), Mohali, the assessee has made following payments:

4. The assessee aggrieved with the addition carried this issue in appeal before the First Appellate Authority.

4.1 Written submissions of the assessee are extracted in the impugned order. As per the reply on record, it is seen that it was claimed that the assessee had shifted her residence hence did not receive the notices etc. It has been pleaded that though in her reply to the notice dated 15.10.2019 and 29.10.2019 made to the AO when ultimately she did receive the notice requiring that she file her return. Referring to the said replies and the consequent filing of the return, it was pleaded that despite the availability of correct address of the assessee, no further notices for a hearing had been received at the correct address of the assessee. It has been pleaded that notices presumably kept being sent to the old incorrect address by the AO. Accordingly, lack of opportunity before the AO was pleaded.

4.2 It was also pleaded that the assessee is “an old retired lady, is not very technologically proficient and hence did not see the final notice sent via WhatsApp.

4.3 Apart from that, on merits, the following arguments incorporated in the order are also seen to have been advanced :

9. On merits, the total addition is on account of payments made to M/s Bajwa Developers Ltd on account of purchase of immovable property. The total amount paid is Rs. 6,00,000.00 and the same are from accounted for sources of the assessee.

10. The assessee has made a payment of Rs. 3,00,000/- on 06.04.2011 (being two receipts of Rs. 6500/- and Rs. 2,93,500/-). The assessee has received a gift of Rs. 1,55,000.00 from her husband, Sh. Jatinder Pal Singh who had withdrawn the amount from his bank account on 03/04/2011, 04/04/2011, 05/04/2011 and 06/04/2011. A further gift of Rs. 1,20,000.00, was received by the assessee from her son Sh. Kanwaldeep Singh, who has withdrawn the amount from his bank account on 04/04/2011, 05/04/2011 and 06/04/2011. The copies of both these bank account are enclosed for reference. The balance amount of Rs. 25,000/- was paid by the assessee out of her personal savings.

11. The second payment of Rs. 1,25,000/- was paid by the assessee on 21.07.2011. The amount was paid out of cash withdrawn by the assessee amounting to Rs. 3,50,000/- from her bank account on 20.07.2011. The copy of the bank loan account is enclosed herewith.

12. The third payment of Rs. 1.75,000/- was paid by the assessee on 26.11 2011 The amount was paid out of cash withdrawn by the assessee amounting to Rs 2.02.000/- from her bank account on 26 11.2011 The copy of the bank loan account is enclosed herewith.

13. That the assessee had sufficient cash in hand on all dates on which the payments for the purchase of the property were made and the source of the cash is fully explainable.

5. However, the First Appellate Authority not convinced with the explanation offered confirmed the addition in appeal. The First Appellate Authority held that the AO on the basis of material available on record was justified to make the addition. Addressing the issue on facts, the CIT(A) concluded the issue as under :

“….. The appellant during the course of appellate proceedings has filed certain details in the form of bank statements of SBI in her case as well as in the case of her husband Shri Jatinder Pal Singh. With these submissions in the form of bank statement the appellant is trying to justify the payments of Rs. 6,00,000/- as from accounted sources of the appellant. The entire payments of Rs. 6,00,000/- has been justifying as gift from husband Shri Jatinder Pal Singh amounting of Rs. 1,55,000/-, a gift of Rs. 1,20,000/- from her son Shri Kanwaldeep Singh, personal savings of Rs. 25,000/- and Rs. 3,00,000/- on two occasions out of withdrawal from her bank account maintained at SBI.-I do not agree with any of these submissions made by the appellant for the reason that these are mere bank statements submitted by the appellant without any corroborative evidence as to the existence of such cash either with the appellant or her husband/son. A basic question which arises in this transaction is that when the amount was entirely available in the bank accounts of the appellant and her son and husband’s account then what prevented her to get the amount transferred by cheque to her accounts. The nexus of withdrawals from the bank accounts from all the 3 persons as well as payment to M/s Bajwa Developers is nowhere established by the appellant during the assessment proceedings and even during the appellate proceedings. The linking of withdrawal and payment is not established by the appellant when the appellant was not prevented from sufficient cause to produce of such evidences before the assessing authority or the appellate authority still she chose to remain silent for such crucial evidences which could have helped her cause. In my considered opinion the appellant has failed to discharge the onus of establishing the^; genuineness of source effecting the payment to a third party. I, therefore, have no hesitation in holding that the appellant has failed to explain source of such cash payments and AO has rightly made the additions u/s. 69A of the Act. The ground of appeal No. 5 is, therefore, dismissed.

6. Aggrieved the assessee is before the Tribunal.

7. The ld. AR relying upon the written submissions extracted in the order submitted that the entire family had pooled in their funds and withdrawn the money from their bank accounts for making the booking. The bank statement in support are available on record. He made a statement at Bar that the assessee shown to be ‘Shri Gurmeet Khurana’ is actually Mrs. Gurmeet Khurana’ and is retired as a Manager of State Bank of India, Sector-8 and Shri Jatinder Pal Singh is her husband. It was his statement at Bar that Shri Jatinder Pal Singh, the assessee’s husband has also retired as Chief Manager from the Zonal Office, State Bank of India, Chandigarh Branch. The son of the assessee, it was submitted, was working as an Engineer in a private firm. The investment, it was submitted, has been made after withdrawing the funds in cash from the respective bank accounts of these family members. It was his submission that the sources of funds in the hands of the assessee have been explained. Documents establishing that the payments were from withdrawals made on the stated dates from the bank accounts maintained by the assessee, her son and husband, it was submitted, had been filed before the CIT(A). The copies of the same, it was submitted, again filed were available. These were referred to. Highlighting the evidence on record, it was submitted that the son of the assessee has made the withdrawals in cash on 4th, 5^th and 6t h April by using his Debit Card wherein there was a limit of Rs.20,000/- on each withdrawal. As a result of this, it was submitted, multiple withdrawals on the same date have been made on each of these dates. Similarly, the husband of the assessee has also made various withdrawals by using his Debit Card on 4th 5th _and 6th April by making multiple withdrawals. Similarly, the assessee herself also has made withdrawal on 20^th July,2011 and 26.11.2011. These specific dates coincide with the payments. The withdrawals, it was submitted, have not been doubted. The assessee, it was submitted, agrees that the payments were made to M/s Bajwa Developers. Accordingly, ignoring these evidences, the addition sustained is contrary to fact, the addition, it has been pleaded may be deleted.

8. The ld. Sr.DR relies upon the impugned order.

9. I have heard the submissions and perused the material on record. In the facts of the present case qua the opportunity of being heard, it is seen that there have been lapses on both the ends. However, on merits, it is seen that the deposit of Rs.6 lacs made by the assessee from the sources of funds stand fully addressed. Copies of the statement of the bank accounts of the assessee are at pages 1 & 2 from 01.04.2011 to 02.12.2011 of Account No.55080023582 in SBI; at page 3 copy of assessee’s husband’s Account No.10883085576, Branch Code : 628 is available from 01.04.2011 to 06.04.2011 and at page 4 copy of Account No.55062933389 of Shri Kanwaldeep Singh (son of the assessee ) evidencing withdrawals from State Bank of India account for the specific period i.e. 04.04.2011 to 06.04.2011 are seen. On a consideration thereof, I find no good reason let alone a reason why the explanation offered duly supported by facts should not have been accepted. Satisfied by the evidence on record of the First Appellate Authority also relied upon before the ITAT setting aside the order, the addition sustained is directed to be deleted. Said order was pronounced in the Open Court at the time of hearing itself.

9. In the result, the appeal of the assessee is allowed.

Order pronounced in the Open Court on 29^th June, 2 02 2.