2023 (8) TMI 760 - AT - Income Tax

Unexplained credit/cash deposit - assessee sold five piece of agricultural land and assessee received sale consideration in cash, which is duly reflected in the sale deeds but AO added entire amount for the want of reply from assessee - CIT(A) confirmed the addition only reason for treating the cash deposit is the delay in deposit of such sale proceed in her bank account - HELD THAT - It is a matter of fact that the assessee is residing in USA for more than 40 years. The revenue authorities have not brought on record that the assessee is having multiple bank accounts in India. There is no dispute that the sale consideration was received in cash. Considering all assessee does not maintain any other account except the account where the sale proceed was deposited. The assessee has also filed affidavit of Rameshbhai Ahir to corroborate the fact that such amount was kept with him and he deposited in the account of assessee. AO was not justified in making the addition. Loan amount from repayment from relatives - As assessee failed to disclose the name of relative who have allegedly repaid the loan amount to assessee by way of cheque. In absence of discharge of primary onus in disclosing the identity and genuineness of transaction, the assessee has not eligible for deleting the addition, accordingly, we uphold the same. In the result, ground related to the credit entry are confirmed. Levy of penalty u/s 271(1)(c) on various additions made in the assessment order - Considering the fact that substantial addition is deleted, therefore, penalty is also deleted. In the result, the grounds of appeal raised in this appeal are allowed. In the result, this appeal of assessee is allowed.

Summary

Issues Involved:
1. Addition of Rs. 25,23,500/- without providing reasonable opportunity of being heard.
2. Addition of cash deposit of Rs. 21,43,000/- without appreciating the source.
3. Addition of Rs. 3,38,000/- credit entries without proper consideration of submissions.
4. Jurisdictional challenge by the assessee being a Non-Resident.
5. Penalty under Section 271(1)(c) of the Income Tax Act, 1961.

Summary:

1. Addition of Rs. 25,23,500/- without providing reasonable opportunity of being heard:
The assessee argued that the learned CIT(A) erred in confirming the addition without providing a reasonable opportunity to be heard. The Tribunal noted that the assessee is a 77-year-old Non-Resident Indian residing in the USA, and the assessment was initiated without proper service of notice. The Tribunal found that the assessee was not aware of the income tax proceedings due to the non-receipt of notices.

2. Addition of cash deposit of Rs. 21,43,000/- without appreciating the source:
The assessee contended that the cash deposits were from the sale proceeds of immovable property. The Tribunal observed that the sale consideration of Rs. 27,75,200/- was received in cash and deposited in the bank account. The Tribunal found that the delay in depositing the sale proceeds in the bank account was explained by the affidavit of Rameshbhai Ahir, who deposited the cash on behalf of the assessee. The Tribunal held that the Assessing Officer was not justified in making the addition of Rs. 21,43,000/-.

3. Addition of Rs. 3,38,000/- credit entries without proper consideration of submissions:
The assessee claimed that the amount represented the repayment of a loan from relatives. The Tribunal noted that the assessee failed to provide details such as the identity of the person, year of transaction, and timing of the loan. The Tribunal upheld the addition of Rs. 3,38,000/- due to the failure to discharge the primary onus of proving the identity and genuineness of the transaction.

4. Jurisdictional challenge by the assessee being a Non-Resident:
The assessee argued that the AO had no jurisdiction over the case as the assessee was a Non-Resident. The Tribunal did not find merit in this argument and confirmed the jurisdiction of the AO.

5. Penalty under Section 271(1)(c) of the Income Tax Act, 1961:
The Tribunal considered that the substantial part of the addition had been deleted, leaving only the addition of Rs. 3,38,000/-. Consequently, the penalty under Section 271(1)(c) was also deleted.

Outcome:
The appeal related to the quantum assessment was partly allowed, and the appeal related to the penalty was fully allowed. The order was pronounced in the open court on 27th March 2023.