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TMI Blog2021 (2) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... conversion rate at that prevail in time i.e. how many Pakistani rupees he paid for getting 50 lakhs Indian rupees for depositing in the bank account. The assessee is required to show the source of that some. As before the assessing officer assessee could not submit all the requisite details, the assessee submitted details according to his understanding before the CIT A, but without any enquiry, the evidence produced by the assessee were rejected. The assessee is not an Indian resident but has come from Pakistan as persecuted hindu community therefore naturally the assessee will not have the sufficient or foolproof evidences. This fact has also been considered in this notification number 5 dated 29/05 /1969 wherein it is provided that any claim by such migrants that the funds or the jewellery have been brought from the abovementioned countries, will be accepted only if the persons concerned produce adequate evidence to show that they had sufficient funds/wealth in those countries and that the transfer of the cash/jewellery to India can directly be linked with the said funds or wealth. These migrants will have to lead proper evidence like any other assessees, about the source o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 ₹ 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, modify, alter, delete or raise any other ground at the time of hearing of appeal. 7. That any other ground which may be raised with the permission of this Hon‟ble Court. 3. The facts of the case shows that assessee an individua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 50 lakhs mentioned above, the sum of ₹ 49.50 lakhs (in a sense of exempt it of ₹ 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 ₹ 5,216,074/ . 7. The assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned CIT A, who dealt with the whole issue as Under:- 4.2.1 The AR was asked vide order sheet entry dated 07.06.2017 to explain the source of funds and also to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hown 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 he mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ₹ 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 ₹ 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/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g thereof has been collected from illegal and dishonest methods. The Ld. Assessing Officer instead of apprising the facts and circumstances of the case suspected the amount deposited into Saving Bank Accounts to the tune of ₹ 49.50 Laces as undisclosed/ unverifiable income and added the same to the Returned income although all pertinent details and source were placed on record. This is further submitted that after arrival in India ,the assessee was desperate in buying some commercial property to start business activities therefore the amount brought 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to show that they had sufficient funds/wealth in that country and that the transfer of the cash or jewellery to India can directly be linked with the said funds or wealth. The AO has rightly questioned the link of money brought to India from Pakistan with the cash deposits made in the two bank accounts. The AO has also rightly observed that the appellant has failed to provide any such link as he has not been able to furnish the details of any declaration made at the check-post at the Indo-Pak Border at the time of arrival in India 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 afterthough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r words, in the absence of proper supporting evidence, the tax payers story that the money has been brought into India from outside may be disbelieved by the Income tax Officer who may then proceed to hold that the money had in fact been earned in India. 3. If the money has been brought into India through banking channels or in the form of assets like plant and machinery or stock-in-trade, for which the necessary import permits had been obtained, no questions at all are asked by the Income-tax Officers 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 ₹ 50,000 in each case provided the following conditions are satisfied:- (a) The assessee migrated to India on or after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before the Income-tax authorities in India their bank accounts in those countries as also copies of the assessment orders passed in their cases by the Income-tax authorities of those countries. The migrants would also then be required to prove that the amounts brought into India can directly be linked with the funds which they had possessed in those countries. ... 15. We now proceed to examine and discuss the CBDT Circular No.5 dated 20.02.1969 (supra) which 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed declaration after the deposit of cash and not soon after coming to India and has not declared the money brought by him even at the Indian side of the border at the time of arrival, shows that there is no link between the cash brought (if any) from Pakistan and the cash deposits made in the bank accounts. As per various judgments, the AO must look into human behaviour and human probabilities before arriving at a conclusion as these 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 do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the sale proceeded from the assessee and therefore it must be assumed to be his money. %s 13. It is surprising that the High Court has found fault with the Income-tax Officer for not examining the wife and the father-in-law of the assessee for proving the Department's case. All that we can say is that the High Court has ignored the facts of life. It is unfortunate that the High 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 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e two decisions relied upon by the assessee it is clear that the assessing authority has power to call for report about the cost of construction from the Valuation Officer and while doing so, if the provision of law has been wrongly mentioned, it would be wholly immaterial, e.g., while calling for the valuation report about the cost of construction Section 55A is 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the period specified therefore, it would have been possible to extend the same by the court in exercise of its power under Section 148 of the Code. Only because a wrong provision was mentioned by the appellant, the same, in our opinion, by itself would not be a ground to hold that the application was not maintainable or that the order 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the assessee. 10. Coming to the first ground of appeal, the learned authorised representative submitted that during the course of Assessment and Appellate proceedings, the Appellant/ Assesse placed on records the evidence documents pertaining to the Source of Cash Deposits of ₹ 49.50 Laces in two Saving Bank 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 ₹ 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Appellate proceedings and it was duly explicated that the Cash Deposit of ₹ 27,50,000/- into Saving Bank Account maintained at ICICI Bank (A/c. no. 072201507 152) and ₹ 20,90,000/- into SB Account maintained at United Bank of India (A/c. No. 1481010132145) pertains to money brought from Pakistan(Quetta) after disposing off /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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... triates. The Hon'ble High Court of Madras confirmed that if resources were established to have been available in migrant's country, then the manner in which those resources were repatriated to India, though not by recognized channel, same would not be questioned, but would be accepted. The Reserve Bank of India vide letter dated 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 ₹ 5O,OOO /- and (ii) those who bring into India cash/ jewellery exceeding ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia was specifically highlighted. Both the Ld. AO and Ld. CIT (Appeal) failed to analyze that it was impossible for the Appellant to declare money at the check-post at the Indo-Pak Border at the time of arrival in India and to produce the specification /details in respect of the conversion of Pakistani currency to Indian Rupees because of prevalent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no other source for Appellant to deposit money into his SB Account. Ld. CIT (Appeal) while passing Appeal misconstrued and misdirected himself in suspecting the Source of Cash deposited into Saving Bank Accounts although all pertinent details such as Agreement for Sale ,declaration filed with the concerned AO(with all annexures) were placed on records. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. - 248 CTR 33 (Del.) wherein is was held that where the assessee's explanation is prima facie reasonable then it cannot be rejected merely on suspicion. It has been held that the word may in section 69 cannot be interpreted to mean shall and that discretion is conferred on Income Tax Officer under section 69 to treat the source of investment as income 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartmental representative vehemently supported the order of the learned assessing officer and the learned CIT A stoppage was submitted that when the assessee has deposited cash into his bank account, he is supposed to explain the source of such deposit, the manner in which such money has been brought into India, and all other relevant queries raised by the learned 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 ₹ 50,000. Therefore the sums of ₹ 50 lakhs are deposited in the bank account, the assessee has been granted deduction of ₹ 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 hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property in Pakistan for Pakistan ₹ 1.10 Crores and from that some the amount is deposited to the extent of Rs ( INR) 50 lakhs in the banks in India. Assessee has submitted that paper is placed at page number 73 75 and onwards substantiates the source of the money. However those documents are neither in English nor in Hindi but in Urdu. These documents also does not show the flow of money received by the assessee of Pakistani ₹ 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 ₹ 2,750,000. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kistan as persecuted hindu community,,, therefore naturally the assessee will not have the sufficient or foolproof evidences. This fact has also been considered in this notification number 5 dated 29/05 /1969 wherein it is provided that any claim by such migrants that the funds or the jewellery have been brought from the abovementioned countries, will be accepted only if the persons concerned produce adequate evidence to show that they had sufficient funds/wealth in those countries and that the transfer of the cash/jewellery to India can directly be linked with the said funds or wealth. In other words, these migrants will have to lead proper evidence like any other assessees, about the source of the cash/jewellery alleged to have been brought by them from these countries. In support of the claim that they had sufficient funds in those countries, they might produce before the income-tax authorities in India their bank accounts in those countries as also copies of the assessment orders passed in their cases by the income-tax authorities of those countries. The migrants would also then be required to prove that the amounts brought into India can directly be linked with the funds which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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