TaxTMI 
TaxTMI 
2021 (2) TMI 529
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.... Delhi erred in law and in fact in making addition of Rs. 49,50,000/-(Forty Nine Laces Fifty Thousand Only)by treating ""^Cash Deposit as Unexplained Cash Credits U/s.68^of The Income Tax, 1961 although all pertinent evidence regarding Source and arrangements of funds were duly explained and placed on record to the satisfaction of the Ld. Assessing Officer which was wrongly and injudiciously affirmed/upheld by the Ld. CIT(Appeal)l 1, New Delhi. 3. That the Addition of Rs. 49,50,000/- (Forty Nine Laces Fifty Thousand Only) made by the Ld. Assessing Officer is required to be deleted for being illegal, unjustified ,arbitrary, exorbitant and without any basis or justification which was fairly and correctly appraised/examined by Ld. CIT(Appeal-ll), New Delhi while passing order dated 04-10-2017. 4. That the learned Assessing Officer , Ward 31(4), New Delhi has erred in law and in fact in charging interest under section 234A/B/C and D of the Income Tax Act, 1961. 5. That the learned Assessing Officer erred in law and in fact in initiating penalty proceedings under section 271(l)(c) of the Income Tax Act, 1961. 6. That the Appellant craves leave to add,....
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....failed (i) to prove the legal channel of transferring of funds in India,, (ii) to produced any villains of carriage, conversion/exchange and/or details of checkpoints where the aforesaid amount was checked and (iii) source of cash deposits in his bank accounts. Therefore, the provisions of Section 68 of the income tax act are clearly attracted in this case. The onus lies upon the assessee to prove the channel, source and genuineness of cash deposits in his bank accounts. The facts of the case clearly establish that the assessee has unexplained credit in his bank account in the shape of cash deposits. Since the assessee has failed to prove the genuineness of cash deposit of Rs. 50 lakhs mentioned above, the sum of Rs. 49.50 lakhs (in a sense of exempt it of Rs. 50,000/- as per CBDT circular number 73A/2169 - 90 (A - 11) dated 20/2/1969) is assessed to tax as unexplained cash credit u/s 68 of the income tax act." 6. Consequently the assessment order was passed u/s 143 (3) read with Section 144 of the income tax act on 19 December 2016 determining the total income of the assessee at Rs. 5,216,074/-. 7. The assessee aggrieved with the order of the learned assessing officer prefer....
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....freely admitted up to the limit of Rs. 50,000 in each case provided the following conditions are satisfied: 1. The assessee migrated to India on or after the dates mentioned below from the countries shown against each and had no source of income in India: a. 30-7-1962 Mozambique [vide Ministry of Finance Press Note, dated 22-5-1967 (Circular No. 8, dated 22-5-1967printed as Annex I)). b. 1-1-1963 Zanzibar, Kenya, Tanzania and Uganda [vide Ministry of Finance Press Note, dated 22-5-1967 (Circular No. 8, dated 22-5-1967 printed as Annex I)]. c, 1-1-1964 East Pakistan and Burma [vide Ministry of Finance Press Note dated 15-6- 1964/22-5-1965 (Circular Nos. 16D, dated 15-6-1964 and 11, dated 22-5- 1965printed as Annex 11 and Annex III respectively)}. d. 1-10-1965 West Pakistan [vide Ministry of Finance Press Note, dated 3-2-1969). 2. He had sufficient resources in the foreign country. 3. He had no source of income either in India or in any foreign country, other than the country from which he migrated, prior to migration and he was not assessed as *resident"in India either for the assessment year preceding the year in which ....
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....y evidence during assessment proceeding in support of his claim and linking the same with such transfer of Cash and Jewellary vide reply /letter dated 08-07-2016 which the Ld. Assessing Officer, Ward 31(4)did not accept and made arbitrary and illegal addition of Rs. 49,50,000/This is further humbly submitted and reiterated that Cash Deposits in two Saving Bank Accounts (ie. ICICI Bank Ltd. (SB. 072201507152) and United Bank of India-SB-A/ C No. 1481010132145) were made out of Cash of Rs. 50 Laces brought from Pakistan after arrival on 17th March,2013. The details and particulars of the Cash Deposits into Saving Bank Accounts are summarised as under:- Name of Bank Mode Date of Deposit Amount (Rs.) United Bank of India Cash 17-04-2013 9,90,000/- United Bank of India Cash 22-04-2013 4,00,000/- United Bank of India Cash 23-04-2013 7,00,000/- Total 20,90,000/- Name of Bank Mode Date of Deposit Amount(Rs.) ICICI bank Ltd. Cash 06-05-2013 5,00,000 /- ICICI bank Ltd. Cash 06-05-2013 4,50,000/- ICICI bank Ltd. Cash 07-05-2013 9,50,000/- ICICI bank Ltd. Ca....
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.... in was deposited as early as possible into Saving Account on different time and occasion/as per convenience and subsequently was withdrawn as per requirements . This is further submitted that the assessee had also made payment of Rs. 21 Laces on 11-05-2013 to the vendor of commercial property bearing No.5989, Gali Sikligran, Nabi , New Delh.i-55 for Sale Deed executed on 30-05-2013. This is further submitted/clarified that out of Cash withdrawal some amount was re-deposited on 27-06-2013 with ICICI Bank Limited and some amount was also spent in the renovation/reconstruction of the purchased commercial property." 4.3 I have gone through the facts of the case and the written submissions made by the AR. It is seen that the main contentions of the appellant are as under: i. It is contended that the source of cash deposit was duly explained at the time of assessment and it was also shown that the appellant had intimated ITO, Ward-23(3), New Delhi on 09.05.2013 about the cash and gold jewellery brought from Pakistan. ii. The appellant had migrated to India on 17.03.2013 and had brought cash of Rs. 50 lakhs with him, which was deposited in the two bank....
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....and also failed to provide any evidence in respect of the conversion of Pakistani currency to Indian Rupees. The contention of the appellant that the money was brought to India through unofficial channels cannot be accepted blindly by the Department in the absence of any evidence in this regard. Moreover, the declaration has been made by the appellant before the Department only after the cash was deposited in the bank accounts. It has been stated that the appellant wanted to buy a property in India and that is the reason of depositing cash in the bank accounts. It appears that the declaration filed with the Department by the appellant is an afterthought to justify the cash deposits. In actual, no evidence has been produced by the appellant either at the time of assessment proceedings or appellate proceedings to show any nexus between the money brought from Pakistan (if any) and the cash deposited in the bank accounts. It is also contended that the appellant had sold his property in Pakistan by way of which the appellant has tried to explain the source of money brought from Pakistan. A perusal of the copy of the agreement to sell a property in Pakistan shows that it is just an agree....
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....as to the origin of the money or assets brought in. It is only in cases where the money is claimed to have been brought from outside otherwise than through banking channels and there is no evidence regarding the transfer of money, that the department has to make inquiries about the source thereof. Even in these cases, having regard to the difficulties experienced by persons migrating from Pakistan, Burma and East African countries, instructions have been issued to the Income-tax Officers that such claims should be freely admitted up to the limit of Rs. 50,000 in each case provided the following conditions are satisfied:- (a) The assessee migrated to India on or after the dates mentioned below from the countries shown against each and had no source of income in India: (i) 30-07-1962 Mozambique (vide Min. of Finance Press Note dated 22-5-1967). (ii) 1-11-1963 (Sic.) Zanzibar, Kenya, Tanzania and Uganda (vide Min. of Finance Press Note dated 22- 05- 1967). (iii) 1-1-1964 East Pakistan and Burma (vide Min. of Finance Press Note dated 25-6-1964 /22-5-1965). (iv) 1-10-1965 West Pakistan (vide Min. of Finance Press Note dated 3-2-1969). ....
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....hich was relied upon by both the parties. It is seen that this Circular talks of two situations: one, where the fact, that money or assets were brought from abroad, is conclusively proved, and two, where the fact, that money or assets were brought from abroad, cannot be conclusively proved by the non-resident In paragraph 2 and in first part of paragraph 3, it talks about the first situation. 15.1 In paragraph 2 it says, "Money brought into India by non-residents for investment or other purposes is not liable to Indian income-tax. Therefore, there is no question of a remittance into the country being subjected to income-tax. The question of assessment of tax arises only when there is no evidence to show no in that the amount, in question, in fact represents such remittance. *. We see no ambiguity in what the circular says in paragraph (2). The obvious logic is that in the case of remittances by banking channel the onus on the assessee u/s 69 stands discharged, and therefore section 5(2)(b) does not apply. The above clarification given in the Circular is obvious from a plain reading of the provisions of the Act. 15.2 And in the first part of paragraph 3 th....
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....se play an important role in understanding the real nature of the transactions. In my view, it will be appropriate here to discuss the position of law propounded by the Apex Court in the case of Sumati Dayal vs. CIT, 214 ITR 801(SC), in which the Hon'ble Supreme Court has held as under: ' "that the true nature of transaction have to be ascertained in the light of surrounding circumstances. It needs to be emphasized that standard of proof beyond reasonable doubt has no applicability in determination of matters under taxing statutes. It is also well settled that tax authorities are entitled to look into surrounding circumstances to find out the reality of the transaction by applying the test of human probability. This was the principle laid down by the Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More 82 ITR 540 (SC) ." In the case of CIT v. Durga Prasad More [19711 82 ITR 540, the Hon'ble Supreme Court has made a reference to the test of human probabilities in the following situation as under: - It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is....
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....gh Court has taken a superficial view of the onus that lay on the Department..,. ...Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the courts and tribunals have to judge the evidence before them by applying the test of human probabilities. Human minds may differ as to the reliability of a piece of evidence. But, in that sphere, the decision of the final fact-finding authority is made conclusive by law" In the present case, the circumstances enumerated above relating to the deposit of cash in various installments in two bank accounts, furnishing of no evidence to establish the link between money brought from Pakistan and that deposited in bank accounts does not accord with human probabilities. Further, the appellant has failed miserably to discharge his onus to furnish any neutral and independent evidence to prove the nexus between money brought from Pakistan and that deposited in bank accounts. The declaration made by the appellant before the ITO is nothing but self-serving document. From this, it is quite apparent that the cash deposits in the bank accounts have been made from the ....
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.... mentioned, it would not make any difference so long as the report is regarding cost of construction, as such power vests under another provision. 22. In view of the decisions referred to in this judgment and in the discussion held above, we are of the view that the assessing authority would be quite competent to call for the report on the valuation of the cost of construction from the Valuation Officer in view of the provisions under Sections 131, 133(6) and 142(2} of the Income-tax Act. These are the enabling machinery provisions which vest ample powers in the assessing authority, any wrong mention of provision on the requisition memo will not be material. " Similarly, Hon'ble AP High Court has held in the case of Action for Welfare & Awakening vs Dy. CIT on 28 March, 2003 that:- "Thus, mere mentioning of a wrong provision itself would not be fatal to the assessment proceedings when the assessing officer was justified in his action under some other provisions of the Act. The jurisdictional facts should attract the provisions of law. The assessing officer observed that the assessee violated the provisions of section 13(l)(c)(ii) read with sections 13(2)(....
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....er passed thereon would be a nullity. It is a well settled principle of law that mentioning of a wrong provision or non- mentioning of a provision does not invalidate an order if the court and/or statutory authority had the requisite jurisdiction therefore. Also, in Ram Sunder Ram v. Union of India & Ors. [2007 (9) SCALB 197], it was held: ".....It appears that the competent authority has wrongly quoted Section 20 in the order of discharge whereas, in fact, the order of discharge has to be read having been passed under Section 22 of the Army Act It is well settled that if an authority has a power under the law merely because while exercising that power the source of power is not specifically referred to or a reference is made to a wrong provision of law, that by itself does not vitiate the exercise of power so long as the power does exist and can be traced to a source available in law [see N. Mani v. Sangeetha Theatre and Ors. (2004) 22 SCC 278). Thus, quoting of wrong provision of Section 20 in the order of discharge of the appellant by the competent authority does not take away the jurisdiction of the authority under Section 22 of the Army Act. Therefor....
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....Accounts one maintained with ICICI Bank having S.B. A/ c. no. 072201507152 and another at United Bank of India having S.B.Ajc. No. 1481010132145),which were duly explained for thoughtfulness of Ld. Assessing Officer & Ld. CIT(Appeal) .This was submitted before the Ld. Assessing Officer and also reiterated before the Ld. CIT(Appeal) that the Appellant arrived in India on 17th March, 2013 and brought Cash of Rs. 50 Laces and Gold Jewellary weighing 105.10 Gms. which was subsequently declared before ITO, Ward 23(3), New Delhi on 09-05-2013 in terms of Board Circular F.No.73/16/68-IT(A-II), dated 03.02.1969 (within 2 months of arrival in India) and in this regard a Copy of Declaration filed on 09-05- 2013 with ITO Ward -23(3), New Delhi with all Annexure was also filed. It was specifically asserted before Ld. Assessing Officer and Ld. CIT(Appeal) - 11, New Delhi that the Source of Cash Deposits pertained to preceding the previous year's i.e. Assessment Year 2013-14 and thus the query of Source of Cash Deposits into Saving Bank Accounts is unrelated to the year under consideration i.e. A.Y. 2014-15 which was altogether rejected/ discarded by Ld. CIT(Appeal)-11, New Delhi Ld. CIT (Appeal....
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.... /realizing money/funds from moveable and immoveable properties, Realization from Business transactions in Pakistan for which necessary documents were also placed on records. This is humbly submitted that in view of Board Circular F.No.73/16/68- IT(A-II), dated 03.02.1969 no enquiries could be made from such migrant Appellant/ Assessees and they were not required to produce any documentary evidence for their claim of transfer of monies, etc. This is humbly submitted that that there were no banking channels between India and Pakistan and thus, there was no way in which migrants could transfer and bring their monies and personal belongings to India. It was humbly submitted before both Ld. AO and Ld. CIT (A) that Hindus in Pakistan were suppressed class and were under the tremendous religious compulsions and inhuman treatment was given to them by the Pakistanis. In the circumstances, the Hindus do not disclose their migration to India, because they fear for their life, safety and security of their families. It was further pointed out that safe passage was allowed to them neither by the civilians nor by the Pakistan authorities. Further, there was no rule of law so far as income tax an....
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.... 01.05.1999 addressed to the Asst. Director, (FERA) with reference to letter dated 09.07.2009, wherein it is stated that it would be rather unjust to invoke the provisions of FERA against Indian repatriates from Pakistan after demolition of Babri Masjid for exchange of currency. The Board's Circular dated 03.02.1969 divides migrant assessees into two categories viz. (i) those who bring into India cash/ jewellery up to Rs. 5O,OOO /- and (ii) those who bring into India cash/ jewellery exceeding Rs. 5O,OOO /-. Further in view of Board's instruction that there was no requirement for migrant assessee to produce documentary evidence in support of their claim for transfer of money and jewellery brought by them subject to two conditions; (a) that she/ he had sufficient resources in West Pakistan to which the money I jewellery brought into India could be reasonably attributed and (b)she/he gives intimation about the money I jewellery brought by him/her and all his/her family members and its introduction in the books of account, within two months from his/ her arrival. The truthfully all relevant documents/ details to establish existence of sufficient resources in West Pakistan, t....
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....nt circumstances and which was also barred in view of Board Circular dated No.73/16/68-IT(A-II) dt.:03/02/1969. Both Ld. AO and Ld. CIT (Appeal) suspected the conduct and manner of depositing of Cash into Saving Bank Account and miserably failed to appraise that a person arriving in India only on 17.03.2013, how can generate unaccounted money within short span of period of 40 to 50 odd days and has deposited the same funds into his Saving Bank Account. Both Ld. AO and Ld. CIT (Appeal) miserably failed to envisage the facts and circumstance of the case that it took some time for the Appellant to obtain PAN Card (issued on 03.04.2013) and thereafter to open Saving Bank Account and then deposited money brought into India from Pakistan. Ld. CIT (Appeal) while passing Appeal Order suspected and presumed that the declaration has been made by the appellant before the Department only after the cash was deposited in the bank accounts. This is pertinent to mention here that the declaration filed with concerned ITO was accompanied by all the pertinent details I evidence and therefore it is incorrect to assume that there was any malafide intention on the part of the Appellant to mis-declare or....
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....rds. LD. CIT (Appeal) while passing order further suspected as to why the whole money was not deposited in one go. This is humbly submitted that the Appellant/ Assessee had deposited the money as per convenience and availability because part funds had to be retained for constriction and purchased of property. Evidently Ld.CIT(Appeal) while passing Appeal Order suspected about the Source deposited into Saving Bank Account without any basis or justification and completely discarded the instruction of Board Circular dated 03.02. 1969. Considering the above submission, this is humbly submitted that the Assessment Order passed by the Ld. Assessing Officer which was subsequently affirmed by Ld. CIT (Appeal) may kindly be set aside/quashed/ suitably modified or alternatively the additions made may kindly be deleted as the same were made in haste and in negligently manner and also without giving adequate opportunity to the Appellant/ Assessee to prove & establish his contention. 12. Coming to the second ground of appeal that That the Ld. Assessing Officer, Ward 31(4), New Delhi erred in law and in fact in making addition of Rs. 49,50,000/-(Forty Nine Laces Fifty Thousand Only)by t....
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....of the assessee, if assessees explanation is found to be not satisfactory, the said discretion has to be exercised keeping in view the facts and circumstances of the particular case.It was observed by Appex Court in case of *Dhakeshwari Cotton Mills; SC in 87 ITR 349 *that Addition cannot be made merely on the basis of conjectures and surmises. The department cannot draw inferences and assume that there has been some illegality in the assessee's transaction in the absence of any material in its possession Refer Mad HC in 34 ITR 328 & Ker HC in 117 ITR 371. Mere suspicion however strong cannot take the place of evidence as was held in case of Shaw and Bros. vs. CIT ( 1959) 37 ITR 271 (SC). In case of *CIT vs Kamdhenu Steel and Alloys Ltd., Vijay Foils (P) Ltd.,* JH Finvest (P) Ltd., North Delhi Construction and Investment (P) Ltd.,Laxman Industrial Resources Ltd. and Ors.Gupta Citi Shelters Ltd., Infomediary India (P) Ltd. and Ors. Vs CIT Citation 206 Taxman 254 it was held that to make the assessee responsible, there has to be proper evidence. It is equally important that an innocent person cannot be fastened with liability without cogent evidence. Considering the above submiss....
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....arned assessing officer. He further stated that the learned assessing officer and learned CIT - A has already granted him the relief as provided under the circular of Rs. 50,000. Therefore the sums of Rs. 50 lakhs are deposited in the bank account, the assessee has been granted deduction of Rs. 50,000. He therefore submitted that whether the assessee comes from Pakistan or remains in India does not matter, if the amount is deposited in his bank account and for which the source in the nature of such receipts are not explained by the assessee, the addition has rightly been made. He further referred to the assessment order and stated that assessee is a resident assessee and therefore the provisions of Section 68/69A applies. He submitted that there is no infirmity in the order of the lower authorities. 17. We have carefully considered the rival contentions and perused the orders of the lower authorities. The simple facts stated in this appeal is that assessee has migrated from Pakistan to India on 17th of March 2013. On migration he submitted a declaration of money and the jewelry brought from that country as per notification number 73/16/68/IT?A-II dated 3 February 1969 stating th....
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....d by the assessee of Pakistani Rs. 1.10 crores and how much money was converted into Indian currency. Therefore it is apparent that the source of fund is required to be established by the assessee 18. Further assessee has produced the copies of the bank statement from the banks in Pakistan where assessee was holding his account. The above sum deposited by the assessee in the Indian bank is also cannot be linked with the transaction of the assessee in Pakistani banks as there was no withdrawal of the sum from the banks in Pakistan. 19. Further assessee has produced the bank account where the above sum is deposited. We have perused the bank account number 7152 with the ICICI bank Ltd wherein the assessee has deposited cash in the month of may 2013 of Rs. 2,750,000. However immediately assessee has withdrawn cash of Rs. 6 lakhs on 10th of May 2013 subsequently further cash was deposited of Rs. 9 lakhs in the month of December 2013 which was immediately withdrawn in the month of February 2013. Similarly in the case of savings bank account number 2145 assessee has deposited cash in the month of April 2013 and similarly cash was withdrawn subsequently. Therefore the bank account su....