IN INCOME TAX APPELLATE TRIBUNAL BENCH : CHENNAI [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER] .I.T.A.Nos.967 to 969/Mds/2016 Assessment years : 2009-10, 2010-11 and 2011-12 Dr. Akilan Ramanathan, Vs. Asstt. Commissioner of 9, State Bank Colony Income-tax Shastri Nagar Non-Corporate Circle 15(1) Adyar, Chennai 600 020 Chennai [PAN ACQPA 2957 G] (Appellant) (Respondent) Appellant by : Shri Philip George, Advocate & Shri M.P.Senthil Kumar, Advocate Respondent by : Shri Shiva Srinivas, JCIT /Date of Hearing : 17-08-2016 /Date of Pronouncement : 16-09-2016 ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER These appeals of assessee are directed against separate orders dated 11.03.2016 of Commissioner of Income-tax (Appeals)-15, Chennai, for assessment years 2009-10, 2010-11 and 2011-12. 2. First we take up I.T.A.No.967/Mds/2016 for assessment year 2009-10. :- 2 -: ITA No. 967 to 969/16 3. Ld. Counsel for assessee submitted that he was not pressing ground number 2 challenging reopening. Hence, Ground No.2 is dismissed as not pressed. 4. In its Ground No.3, assessee assails addition of `17,50,000/- made u/s.68 of Income Tax Act, 1961 ( in short Act ). 5. Facts apropos are that assessee, holding Doctorate degree from Anna University, Chennai, was in Civil Service since 1997. He resigned from such service in June 2005 and thereafter worked as Pro-Chancellor, Bharath University, Chennai from July 2005 to June 2009. After this tenure, he worked as Advisor to Mahatma Gandhi Medical College from August 2005 to November 2010. Thereafter he worked as consultant in one M/s Info Plus Pvt. Ltd from April 2010 to March, 2011. Assessee was receiving salary, consultancy fees on retainership services and income from other sources. 6. For impugned assessment year, assessee filed return of income declaring income of ` 26,34,200/-. Assessment was reopened by issuing notice u/s 148 of Act. In pursuance of notice, assessee requested Assessing Officer to treat return originally filed as one filed in response to that notice. During course of assessment, it was noticed by Assessing Officer that assessee :- 3 -: ITA No. 967 to 969/16 had deposits in Savings Bank account with Indian Overseas Bank (I.O.B), Adyar Branch totaling to `17,52,000/-. explanation of assessee was sought. submission of assessee was that deposits were made out of withdrawals totaling `28,02,918/- made from his account with Indian Bank M.G.Road, Pondicherry as well as account with Indian Overseas Bank. AO was of opinion that assessee had not maintained any cash book and there was considerable gap between date of withdrawals and date of deposits. As per AO, assessee could not show any evidence or reason keeping significant amount of cash with him for long period. addition of ` 17,50,000/- was made u/s 68 of Act. 7. Aggrieved, assessee moved in appeal before CIT(A). Apart from challenging reopening of assessment, on merits, it was submitted by assessee that deposits had come out of withdrawal from his own bank account in very same bank as well as account with I.O.B., Pondicherry Branch. Assessee also submitted before Ld.CIT(A) that he was not obliged to maintain any books of accounts since Sec.44AA was not applicable to him. As per assessee, he was only receiving income from salary and consultancy fees on retainer-ship basis. According to assessee, Rule 6F of Income Tax Rules, 1962 was not applicable to him. :- 4 -: ITA No. 967 to 969/16 8. CIT(A) sought remand report from Assessing Officer. In remand report Assessing Officer stated that evidence furnished by assessee was not satisfactory. Based on this report, addition was confirmed by CIT(A). 9. Now, before us, ld.AR, strongly assailing orders of lower authorities, submitted that copy of I.O.B bank account placed at page 30 of paper book reflected following deposits:- Date Amount deposited 03.04.2008 2,000/- 28.05.2008 3,00,000/- 02.06.2008 1,00,000/- 09.09.2008 1,00,000/- 29.09.2008 1,00,000/- 06.10.2008 5,00,000/- 07.10.2008 2,00,000/- 11.11.2008 50,000/- 02.12.2008 1,00,000/- 07.01.2009 50,000/- 09.01.2009 50,000/- 21.01.2009 5,000/- 09.02.2009 2,00,000/- Total 17,57,000/- :- 5 -: ITA No. 967 to 969/16 10. As per ld. AR, out of above deposits, following ones were explained by amounts withdrawn on earlier dates from various bank accounts held by assessee and opening cash balance held: Bank Date Amounts Amount Deposited Withdrawn in Rs. Opening Balance 01.04.2008 4,86,141/- IOB, Adyar 02.04.2008 3,20,000/- IOB, Adyar 03.04.2008 2,000/- Indian Bank 03.04.2008 1,80,000/- Puducherry Indian Bank 16.04.2008 1,80,000/- Puducherry IOB, Adyar 28.05.2008 3,00,000/- 14,64,343/- IOB, Adyar 02.06.2008 1,00,000/- Total 4,02,000/- 11,66,141/- Bank Date Amounts Amount Deposited Withdrawn in Rs. IOB, Adyar 09.06.2008 2,00,000/- IOB, Adyar 14.06.2008 1,00,000/- Indian Bank 02.07.2008 2,00,000/- Puducherry IOB, Adyar 16.07.2008 2,00,000/- IOB, Adyar 09.09.2008 1,00,000/- IOB, Adyar 29.09.2008 1,00,000/- IOB, Adyar 06.10.2008 5,00,000/- Total 7,00,000/- 7,00,000/- These according to ld.A.R, would explain deposits made by assessee during period 03.04.2008 to 06.10.2008. As per Ld.A.R, deposits of `2 lakhs on 07.10.2008 came out of gift of `2 lakhs received from assessee s co-brother Shri Sudamani. Ld.A.R submitted that Shri Sudamani was working as Engineer in multi-national :- 6 -: ITA No. 967 to 969/16 company and assessee had received sum of `2 lakhs as gift for taking care of parents of Shri Sudamani, when they had visited Chennai for medical treatment. 11. Continuing his arguments, ld.A.R submitted that following deposits were made out of agricultural income of `2.5 lakhs returned by assessee. Bank Date Amounts Deposited IOB, Adyar 11.11.2009 50,000/- IOB, Adyar 02.12.2009 1,00,000/- IOB, Adyar 07.01.2009 50,000/- IOB, Adyar 09.01.2009 50,000/-/- Total 2,50,000/- Ld.A.R submitted that deposits of ` 5,000/- on 21.01.2009 and `2 lakhs had come out of withdrawals of `3,05,000/- on 21.01.2009 from account with Indian Bank, Puducherry. As per ld.A.R, credits in assessee s account with Indian Bank, Puducherry was his salary. Thus, according to him, deposits in bank stood explained. 12. Per contra, ld.D.R submitted that assessee not being in any line of business had no reason to withdraw money and keep it with him as cash. According to him, it was not probable that salaried employee would keep substantial sums as cash in his house. Thus according to him, version given by assessee was unbelievable. :- 7 -: ITA No. 967 to 969/16 13. We have considered rival contentions and perused orders of authorities below. withdrawals claimed by assessee are from his accounts with IOB, Adyar branch and Indian Bank Puducherry. These withdrawals are clearly reflected in bank account statements, copy of which is filed at pages 2 to 12. look at dates of withdrawals and dates of deposits captured by us in para Nos.9 & 10 of this order would clearly show that time gap of between withdrawals and deposits were not more than four months at most. Assessee had stated that he was contemplating purchase of piece of land and on 19.05.2008, and assessee had indeed purchased property at Tiruvidannai village, Kancheepuram District. Just because assessee was salaried employee, we cannot say that assessee should not have kept money at his home, if he had intention to purchase land which he found suitable. Coming to cash deposit of `2 lakhs for which assessee has shown source as gift from co-brother, Sri Sudamani, confirmation from Mr.Sudamani is available at Page-13 of paper book. said confirmation gave Mr.Sudamani s PAN and also his address in Dubai. Copy of return of income filed by Mr.Sudamani for assessment year 2008-09 is available at page-14 of paper book and it reflects total income of `10,94,500/-. In our opinion, assessee had shown genuineness of gift and also credit worthiness of donor. :- 8 -: ITA No. 967 to 969/16 14. Coming to claim of deposits of `2.5 lakhs made out of agricultural income, AO himself has in assessment order accepted agricultural income of `3,13,800/-. deposits claimed by assessee out of agricultural income were only `2.5 lakhs. 15. Assessee in our opinion is not obliged to maintain books of accounts, since Sec.44AA is applicable only to persons carrying on business or profession. We are of opinion that assessee had done all what he was expected to do to prove source of deposits in bank accounts. addition stands deleted. Ground No.3 of assessee is allowed. 16. Vide its ground No.4, grievance raised by assessee is that gift of `2 lakhs received from Shri Sudamani was disbelieved and addition of said amount was made. 17. In relation to Ground No.3 of assessee wherein he assailed addition of `17,50,000/- u/s.68 of Act, we have already held at para No.13 of this order that assessee had substantiated claim of gift from Shri Sudamani. Accordingly, we delete addition of `2 lakhs. Ground No.4 of assessee stands allowed. :- 9 -: ITA No. 967 to 969/16 18. Vide its ground No.5, grievance raised by assessee is that unsecured loan of `15 lakhs obtained from one Balaji Educational Trust was disbelieved and added. 19. Ld.A.R submitted that for loan of `15 lakhs, assessee had produced confirmation letter from Balaji Education and Charitable Public Trust which gave its PAN and address. As per ld.A.R, ledger account of assessee in books of said trust signed by their authorizing signatory was also produced before lower authorities. Despite this, according to him, claim of assessee was disallowed. 20. Per contra, ld.D.R supported orders of lower authorities. 21. We have considered rival contentions and perused orders of authorities below. We have perused that evidence produced by assesse, which is confirmation from Balaji Educational Trust, copy of which is placed at page-20 of paper book. We have also seen ledger copy of assessee in books of said trust placed at page-21 of paper book. Ld.CIT(A) had sought remand report from AO on these. Ld.CIT(A) has himself stated that in remand report, AO has simply mentioned evidence to be not satisfactory. reason why evidence was not considered satisfactory was never spelt out by AO. Assessee had produced confirmation letter giving all details of creditor. Creditor being charitable trust would have been subject to assessment under :- 10 -: ITA No. 967 to 969/16 Income Tax Act,1961. In such situation, we are of opinion that to reject claim of loan was unjust. Assessee had produced what all was necessary to prove credit. addition of `15 lakhs stands deleted. Ground no.5 of assessee is allowed. 22. Vide its ground No.6, grievance raised by assessee is on addition of `2,26,600/- made by AO for difference in salary income. 23. ld.A.R assailing above addition submitted that professional fee received by assessee from M/s.Bharath University was `20 lakhs and returned income reflected said amount. However, according to him, TDS certificate issued by said university reflected sum of `2,26,600/-. As per ld.A.R, additions made by AO were based on cash flow statement wherein assessee had shown TDS as outflow. According to him, addition was not justified. 24. Per contra, ld.D.R supported orders of authorities below. 25. We have considered rival contentions and perused orders of authorities below. It is not disputed that remuneration received from Bharath University was ` 22,26,600/-. May be it is true that `2,26,600/- was TDS. However, assessee ought have returned gross amount as his income from salary and not net amount. :- 11 -: ITA No. 967 to 969/16 addition was therefore justified. We do not find any reason to interfere with order of Ld.CIT(A). Ground number 6 is dismissed. 26. Vide its ground No.7, grievance raised by assessee is on sustenance of addition of `8,11,500/- out of 13,30,877/- claimed as agricultural income. 27. Ld.A.R submitted that assessee was holding 20.92 acres of agricultural land, and had cultivated water melon, Korean Grass and Black Gram(Urid Dhal). According to him, gross agricultural income came to `13,30,877/-. ld.A.R submitted that agricultural activity was proved by detailed workings provided by assessee, which was unreasonably rejected. According to him, AO made estimate of `15,000/- as agricultural income per acre and for 20.92 acres had arrived at agricultural income of `3,13,800/-. As per ld.A.R, AO had made addition of `10,17,077/- unreasonably rejecting claim of assessee. Ld.A.R pointed out that CIT(A) had on assessee s appeal restricted addition to `8,11,500/-, since assessee had shown only said amount as inflow from agricultural operations in cash flow statement. According to him, claim of assessee ought to have been allowed in full, since he had substantial agricultural holding. :- 12 -: ITA No. 967 to 969/16 28. Per contra, ld.D.R strongly supporting orders of lower authorities submitted that assessee could not show any evidence for earning of agricultural income. Therefore, according to him, claim was correctly restricted by lower authorities. 29. We have considered rival contentions and perused orders of authorities below. net income estimated by AO from agricultural activity was `15,000/- per acre. As against this, assessee had shown net income of `63,575/- per acre. In our opinion, once it is accepted that assessee was doing agricultural operations, then estimate ought to have been made in reasonable manner. We are of opinion that assessee could have earned sum of `25,000/- per acre as agricultural income. At said rate, agricultural income of assessee from 20.92 acres would come to `5,23,000/-. Since assessee had shown only `8,11,500/- as inflow from agricultural operations in his cash flow statement, addition under this head has to be restricted to `2,88,500/-. Ordered accordingly. Ground No.7 is treated as partly allowed. 30. In result, appeal of assessee for assessment year 2009-10 is partly allowed. :- 13 -: ITA No. 967 to 969/16 31. In appeal for assessment year 2010-11 in I.T.A.No. 968/Mds/2016, assessee has taken altogether nine grounds of which Ground Nos.1,6,7,8 & 9 are general in nature, requiring no specific adjudication. 32. Vide its ground No.2, assessee is aggrieved on additions of `19 lakhs, disbelieving loans claimed to have been raised one from Mr.B.Nagarajan and M/s.Lloyds Pure Water technology (P) Ltd., which was confirmed by Ld.CIT(A). 33. Ld.A.R submitted that assessee had furnished confirmation letter dated 16.08.2013 from Mr.B.Nagarajan for having given loan of `10 lakhs to assessee. As per ld.A.R, Mr.B.Nagarajan, was Director of M/s.Lloyds Pure Water technology (P) Ltd., and had given above loan of `10 lakhs to assessee through account payee cheque. Assessee, as per ld.A.R, had submitted copy of account of Mr.B.Nagarajan with Corporation Bank. As per ld.A.R, loan was given by Mr.B.Nagarajan from his NRI account. Further, as per ld.A.R, lower authorities had these disbelieved evidence. In so far as sum of `9 lakhs claimed to have been received from M/s.Lloyds Pure Water technology (P) Ltd. ld.A.R submitted that this sum was also received through cheques issued by said company from its account with Corporation Bank, Nanganallur Branch,Chennai. Ld.A.R submitted that in confirmation filed by assessee, PAN of said :- 14 -: ITA No. 967 to 969/16 company was clearly mentioned. Despite this evidence, loans were disbelieved and addition of `19 lakhs was added to income of assessee. 34. Per contra, ld.D.R strongly supported orders of lower authorities. 35. We have considered rival contentions and perused orders of authorities below. Mr.B.Nagarajan had filed confirmation for himself as well as on behalf of M/s.Lloyds Pure Water technology (P) Ltd., for sum of `10 lakhs given by Mr.B.Nagarajan in his personal capacity and `9 lakhs given by company, M/s.Lloyds Pure Water technology (P) Ltd. Confirmation copy of which is placed at page No.2,3,5 & 6 of paper book gives addresses of creditors and PAN of Mr.B.Nagarajan. Mr.B.Nagarajan was NRI and loan of `10 lakhs was given from his NRE bank account. Statement of such account for period 11.07.2009 to 30.07.2009 has been placed at page No.4 of paper book. It is not disputed by lower authorities that loan was received by cheque. We also find that Ld.CIT(A) had sought remand report on details filed by assessee. In remand report, AO merely mentioned that evidence was not satisfactory without spelling out what deficiency he had found in such evidence, which compelled him to take view that loan was not believable. However, for loan of `9 lakhs claimed to have been :- 15 -: ITA No. 967 to 969/16 received M/s.Lloyds Pure Water technology (P) Ltd., assessee had not filed any supporting evidence except for confirmation given by Mr.B.Nagarajan. Neither bank account of M/s.Lloyds Pure Water technology (P) Ltd., nor address of its registered office nor PAN of said company is available on record. In our opinion, genuineness of claim of loan of `9 lakhs received from M/s.Lloyds Pure Water technology (P) Ltd., require fresh verification. Hence, claim of assessee with regard to loan of `9 lakhs from M/s.Lloyds Pure Water technology (P) Ltd., is remitted back to file of AO for consideration of afresh. Assessee shall produce whatever evidence he wants to prove said credit. However, insofar as credit of `10 lakhs from Mr.B.Nagarajan concerned, in our opinion, evidence furnished by assessee was satisfactory. In result, out of total addition of `19 lakhs, sum of `10 lakhs stands deleted whereas balance sum of `9 lakhs is remitted back to file of AO for consideration afresh. Ground No.2 of assessee stands partly allowed. 36. In its ground No.3, assessee assails additions of `4 lakhs made by AO disbelieving claim of refund of loan earlier given by assessee to one Mrs.Kadambari Pradmasree. 37. ld.A.R submitted that Mrs.Kadambari Pradmasree had confirmed refund of loan earlier given to her by assessee vide :- 16 -: ITA No. 967 to 969/16 confirmation placed at page No.7 of paper book. According to him, said person had given her PAN and address. As per ld.A.R, assessee had earlier given loan of `4 lakhs to Mrs.Kadambari Pradmasree in previous year relevant to assessment year 2007-08, which was returned by said person during relevant previous year. Only for reason that cash book was not maintained by assessee, claim was disbelieved. As per ld.A.R, there was no reason for addition. 38. Per contra, ld. DR supported orders of authorities below. 39. We have considered rival contentions and perused orders of authorities below. assessee had produced confirmation from Mrs.Kadambari Pradmasree for refund of `4 lakhs by Mrs.Kadambari Pradmasree through account payee cheque. None of authorities disputed claim of assessee that it was return of loan given by assessee to Mrs.Kadambari Pradmasree in earlier year. But, for stating that evidence filed by assessee was unsatisfactory, nothing specific has been mentioned by AO in his remand report. In our opinion, addition was not called for. Such addition stands deleted. Ground No.3 stands allowed. 40. Vide its ground No.4, grievance raised by assessee is that deposits totaling to `7 lakhs made by him in his bank account was :- 17 -: ITA No. 967 to 969/16 subjected to addition for want of source, which was confirmed by CIT(A) on appeal. 41. ld.A.R submitted that assessee had withdrawals of ` 12,71,000/- from his bank accounts. As per ld.A.R, deposit of `7 lakhs in bank account of I.O.B, Adyar Branch was out of such earlier withdrawals. Further, according to ld.A.R, assessee had substantial earnings from agricultural operations. Thus, as per ld.A.R, additions were made purely onsurmises. 42. Per contra, ld. DR supported orders of authorities below. 43. We have considered rival contentions and perused orders of authorities below. Assessee has furnished combined statement of his accounts with IOB and Indian Bank at page No.8 of paper book. statement reflects following transactions. Combined Statement of IOB, A/c & Indian Bank F.Y 2009-10 Bank Date Amounts Amount Deposited Withdrawn in Rs. IOB A/c 08.04.2009 1,20,000 Indian Bank 17.04.2009 50,000 IOB, A/c 06.05.2009 1,60,000 Indian Bank 18.05.2009 80,000 IOB, A/c 04.06.2009 2,50,000/- IOB, A/c 08.07.2009 2,00,000/- IOB, A/c 24.07.2009 2,26,000 IOB 07.09.2009 1,70,000 IOB 22.10.2009 50,000 Indian Bank 20.10.2009 3,80,000 Indian Bank 15.12.2009 1,25,000 Indian Bank 25.02.2010 1,00,000 Indian Bank 19.03.2010 60,000 7,00,000 12,71,000 :- 18 -: ITA No. 967 to 969/16 above combined statement was supported by bank account statements from respective banks placed at page Nos.9 to 17 of paper book. Withdrawals mentioned in combined statement do appear in bank account statements filed by assessee. only amount for which withdrawals were not there were `1,20,000/- on 08.04.2009 and `1,60,000/- deposited on 06.05.2009. Insofar as second amount is concerned, assessee had withdrawn `50,000/- on 17.04.2009 and hence, balance which remained to be explained come to `2,30,000/-. Assessee had declared agricultural income of `13,86,827/-for impugned assessment year. AO had himself accepted sum of `3,14,850/- in assessment. Thus, in our opinion assessee had sufficient funds with him to explain deposit. In such circumstances, we are of opinion that addition of `7 lakhs was not warranted. Such addition stands deleted. Hence, Ground No.4 of assessee is allowed. 44. Vide its ground No.5, assessee assails sustenance of `8,55,600/- out of total addition of `10,71,977/- made by AO disbelieving claim of agricultural income. 45. issue relating to agricultural income claimed by assessee has already been considered by us while adjudicating its ground No.7 for assessment year 2009-10 at Para No.28 of this order. :- 19 -: ITA No. 967 to 969/16 We have held that income of `25,000/- per acre would be fair. Ld. AO has mentioned that agricultural holding of assessee for relevant previous assessment year is 20.99 acres. Accordingly, assessee s agricultural income can be fixed at `5,24,750/- for impugned assessment year also. In cash flow statement, assessee had shown inflow from agricultural operations at `8,55,600/-. Hence, addition for excess agricultural income is restricted to `3,30,850/- and balance of addition is deleted. Accordingly, Ground No.5 of assessee is partly allowed. 46. In result, appeal of for assessment year 2010-11 is partly allowed. 47. Coming to assessment year 2011-12 in I.T.A.No. 969/Mds/2016, assessee has taken altogether eleven grounds of which Ground Nos.1,8,9,10 & 11 are general in nature, requiring no specific adjudication. 48. Vide its ground No.2, assessee is aggrieved on additions of `21,13,000/- as unexplained credit u/s.68 of Act, which was confirmed by Ld.CIT(A). 49. Ld.AR, strongly assailing orders of lower authorities submitted that copy of I.O.B bank account placed at page 48 of paper book reflected following deposits. :- 20 -: ITA No. 967 to 969/16 Bank Date Amount deposited IOB, Adyar 07.05.2010 55,000/- IOB, Adyar 08.06.2010 1,53,000/- IOB, Adyar 06.07.2010 2,20,000/- IOB, Adyar 13.07.2010 55,000 IOB, Adyar 17.08.2010 5,000/- IOB, Adyar 04.09.2010 80,000 IOB, Adyar 03.11.2010 3,00,000 IOB, Adyar 04.12.2010 80,000 IOB, Adyar 20.12.2010 15,000 IOB, Adyar 18.01.2011 50,000/- IOB, Adyar 31.01.2011 1,50,000 IOB, Adyar 12.02.2011 3,50,000 IOB, Adyar 21.02.2011 1,50,000 IOB, Adyar 24.02.2011 50,000 IOB, Adyar 11.03.2011 3,40,000 Total 21,13,000 As per ld.A.R, earlier withdrawals made by assessee from very same bank account and another account with Indian Bank, Pondicherry explained substantial part of these deposits. following withdrawals, as per ld.A.R more or less explained above deposits made by assessee. Date Bank Withdrawal/Opening Deposit balance 01.04.2010 Opening 1,65,339 balance 01.04.2010 IB 20,000 03.05.2010 IB 1,15,000 07.05.2010 IOB 55,000 Cash in hand Closing 2,45,339 balance Date Bank Withdrawal/Opening Deposit balance 07.06.2010 Opening 2,45,339 balance 08.06.2010 IOB 1,53,000 06.07.2010 IOB 2,80,000 :- 21 -: ITA No. 967 to 969/16 13.07.2010 IOB 55,000 17.08.2010 IOB 5,000 04.09.2010 IOB 80,000 Total 2,45,339 5,73,000 (-) 3,27,661 Contention of ld.A.R was that deficit of `3,27,661/- represented Agricultural income. 50. For deposits made on dates subsequent to 04th September, 2010, ld.A.R submitted following explanation. Date Bank Withdrawal/Opening Deposit balance 26.10.2010 IB 3,95,000 28.10.2010 IOB 8,00,000 30.10.2010 IOB 4,00,000 01.11.2010 IOB 2,00,000 3,00,000 03.11.2010 IOB 80,000 04.12.2010 IOB Total 17,95,000 3,80,000 Cash in hand Closing balance 14,15,000 Date Bank Withdrawal/Opening Deposit balance 19.12.2010 Opening balance 14,15,000 20.12.2010 IOB 125000 20.12.2010 IOB 15,000 Total 15,40,000 15,000 Closing balance 15,25,000 Date Bank Withdrawal/Opening Deposit balance 23.12.2010 Opening balance 15,25,000 24.12.2010 IB 65,000 18.01.2011 IOB 50,000 31.01.2011 IOB 1,50,000 12.02.2011 IOB 3,50,000 :- 22 -: ITA No. 967 to 969/16 21.02.2011 IOB 1,50,000 24.02.2011 IOB 50,000 11.03.2011 IOB 3,40,000 Total 15,90,000 10,90,000 Cash in hand 5,00,000 51. As per ld.A.R, just for reason that there was small time gap between withdrawals and deposits, lower authorities ought not have ignored source of deposits. Further, as per ld.A.R, assessee was not required to maintain books of accounts, since Rule 6F and Sec.44AA have no application. 52. Per contra, ld. DR supported orders of authorities below. 53. We have considered rival contentions and perused orders of authorities below. Copies of bank accounts of IOB and Indian Bank has been filed at page Nos. 5 to 8 of paper book. combined statement shows that deposits and withdrawals from these bank accounts were as under:- Combined Statement of IOB, A/c & Indian Bank F.Y 2009-10 Bank Date Deposit Withdrawal Rs. Indian Bank 01.04.2010 20,000 Indian Bank 03.05.2010 1,15,000 IOB A/c 07.05.2010 55,000 IOB A/c 08.06.2010 1,53,000 IOB A/c 06.07.2010 2,80,000 IOB A/c 13.07.2010 55,000 IOB A/c 17.08.2010 5,000 IOB A/c 04.09.2010 80,000 Indian Bank 26.10.2010 395000 IOB A/c 28.10.2010 800000 :- 23 -: ITA No. 967 to 969/16 IOB A/c 30.10.2010 4,00,000 IOB A/c 01.11.2010 2,00,000 IOB A/c 03.11.2010 3,00,000 IOB A/c 04.12.2010 80,000 IOB A/c 20.12.2010 1,25,000 IOB A/c 20.12.2010 15,000 Indian Bank 24.12.2010 65,000 IOB A/c 18.01.2011 50,000 IOB A/c 31.01.2011 1,50,000 IOB A/c 12.02.2011 3,50,000 IOB A/c 21.02.2011 1,50,000 IOB A/c 24.02.2011 50,000 IOB A/c 11.03.2011 3,40,000 2113000 2120000 Each of withdrawal & deposit shown in above table finds place in bank accounts of assessee. Thus, assessee had withdrawals totaling `21,20,000/- in cash, against which deposits, came to `21,13,000/- only. gap between withdrawals and deposits were not substantial enough to disbelieve version of assessee that deposits were made out of earlier cash withdrawals. Further, assessee had claimed agricultural income of `10,56,320/-, against which AO himself have assessed as sum of `3,14,850/-. In such situation, we are of opinion that assessee had explained source of deposits in his bank account. Addition of `21,13,000/- is deleted. Ground No.2 of assessee is deleted. 54. Vide its ground No.3, assessee is aggrieved on sustenance of addition of `3,65,000/- claimed by assessee as :- 24 -: ITA No. 967 to 969/16 unsecured loan from his father Mr.V.Ramanathan, which was disbelieved by AO. 55. ld.A.R submitted that assessee had filed confirmation for loan taken from his father Mr.V.Ramanthan. As per ld.A.R, Mr.V.Ramanathan had substantial agricultural holding. Ld.A.R submitted that out of sum of `3,65,000/-, sum of `80,000/- was received by assessee by cheque and balance was received in cash. Placing reliance on page No.21 of paper book, which is statement of account of Mr.V.Ramanathan with IOB. ld.A.R submitted that he had cash withdrawal exceeding `5,90,000/-. As per ld.A.R, confirmation filed by Mr.V.Ramanathan was disbelieved for no good reason. 56. Per contra, ld. DR supported orders of authorities below. 57. We have considered rival contentions and perused orders of authorities below. Admittedly, Mr.V.Ramanathan is father of assessee. In confirmation, Mr.V.Ramanathan has given his full address and PAN. AO in his remand report to Ld.CIT(A), has mentioned that evidence furnished by assessee was not satisfactory. However, AO did not point out any flaw in confirmation letter filed by Mr.V.Ramanathan nor spell out why he considered evidence as not satisfactory. If AO doubted :- 25 -: ITA No. 967 to 969/16 veracity of confirmation or doubted source of Mr.V.Ramanathan to give loan to assessee, he ought to have examined said person before rejecting claim of assessee. We are of opinion that assessee had done whatever was necessary for proving loan. Addition of `3,65,000/- stands deleted. Ground No.3 of assessee is allowed. 58. Vide its ground No.4, grievance of assessee is that addition of `6,66,,900/- made by AO for alleged difference in cash flow statement and return of income in respect of amount received from M/s.Info Plus Tech Pvt. Ltd. and Mahatma Gandhi Medical Research Centre was confirmed by Ld.CIT(A). 59. ld.A.R submitted that assessee had received `24 lakhs from M/s.Info Plus Tech Pvt. Ltd., and `6 lakhs from Mahatma Gandhi Medical Research Centre Mahatma Gandhi, which was duly reflected in cash flow statement. As per ld.A.R, in return of income assessee had shown `13,90,300/- as salary and `9,32,800/- as consultancy income. As per ld.A.R, AO has asked explanation for difference of `6,66,,900/-. As per ld.A.R, assessee had explained that only net amount of income was shown by him in return of income. Submission of ld.A.R was that assessee had incurred substantial expenditure for earning consultancy income. As per ld.A.R, assessee was appointed as Management Officer by M/s.Info Plus Tech :- 26 -: ITA No. 967 to 969/16 Pvt. Ltd. from 10th December onwards and paid salary thereafter. According to him, expenditure for earning consultancy fees was ignored by lower authorities. 60. Per contra, ld. DR supported orders of authorities below. 61. We have considered rival contentions and perused orders of authorities below. claim of assessee is that against consultancy fees, it had incurred expenditure of `6,67,,120/- and net consultancy income was `9,32,880/- only. In support, assessee has filed details of expenses which appear at pages 24 to 35 of paper book. details of expenses include cash voucher evidencing payments to Mr.R.Iyappan, Mr.D.Sudhakar & Dr. Sakthivel, Mr.R.Murali,driver, Ms.Jayalakshmi, and Ms.C.Devi for various services rendered by them. Assessee has also filed copies of his telephone bills. We are of opinion that lower authorities fell in error in taking view that whole of consultancy income would be income of assessee. In facts and circumstances, we are of opinion 20% of consultancy fees of `24 lakhs ought to have been allowed as expenditure incurred by assessee in connection with earning of such income. After deduction of 20% of net amount of consultancy income would come to `19,20,000/-. Along with salary of `6 lakhs received from Mahatma Gandhi Medical Research Centre, :- 27 -: ITA No. 967 to 969/16 total receipts would work out to `25,20,000/-. inflow shown by assessee against above items in his cash flow statement is `30 lakhs. In our opinion, difference of `4,80,000/- alone could be considered. Therefore, we restrict addition to `4,80,000/- as against addition of `6,66,,900/- considered by lower authorities. Ground No.4 of assessee is partly allowed. 62. Vide its Ground No.5, assessee aggrieved on addition of `6 lakhs disbelieving loan received from one Mr.R.Jayaganathan. 63. ld.A.R submitted that assessee had furnished confirmation letter dated 28.08.2013 from Mr.R.Jayaganathan, copy of which is placed at page-38 of paper book. As per ld.A.R, in confirmation letter received from Mr.R.Jayaganathan, identity of creditor and his PAN number were shown. According to him, assessee had discharged onus of proving identity of creditor and had also furnished their full address and PAN. As per ld.A.R, Mr.R.Jayaganathan owned 6.7 acres of agricultural land and supporting document in nature of copy of Adangal obtained from Principal Deputy Tahsildar, Pappireddipatti Taluk, Dharmapuri District was also produced. Contention of ld.A.R was that loans having been received by cheque, ought not to have been disbelieved. 64. Per contra, ld. DR supported orders of authorities below. :- 28 -: ITA No. 967 to 969/16 65. We have considered rival contentions and perused orders of authorities below. copy of confirmation letter dated 28.08.2013 received from Mr.R.Jayaganathan has been placed at page-38 of paper book. As mentioned by ld.A.R, said confirmation does show address of Mr.R.Jayaganathan. It is already stated therein that he was owning 6.7 acres of agricultural land. In support of copy of Adnagal has also been filed. In remand report, AO simply mentioned evidence filed by assessee was not satisfactory. He has not pointed out any flaw in evidence filed by assessee. We are of opinion that assessee having received money by account pay cheque and having filed proper confirmation, credit could not have been considered as bogus. addition stands deleted. Ground number 5 of assessee is allowed. 66. Vide its Ground No.6, grievance of assessee is that Ld.CIT(A) confirmed addition of `3 lakhs disbelieving receipt from one Mr.Raghupathy. 67. ld.A.R assailing orders of lower authorities submitted that confirmation from Mr.R. Raghupathy was filed by assessee. As per ld.A.R, money was received by cheque and PAN of Mr.R. Raghupathy was also available. Without bringing out any defect in confirmation letter and without making any further enquiries, :- 29 -: ITA No. 967 to 969/16 authorities below had disbelieved receipt. According to ld.A.R, addition was unfairly made. 68. Per contra, ld. DR supported orders of authorities below. 69. We have considered rival contentions and perused orders of authorities below. Confirmation letter filed by Mr.R. Raghupathy is reproduced as under:- To whomsoever it may concern This is to certify that I have received sum of amount of Rs.3,00,000/- (Trhee Lakhs only) on 01.11.2010 vide Cheque No.815002 from Dr.Akilan Ramanathan, PAN No.ACQPA 2957 G, presently residing at No.9 State Bank colony, Shastri Nagar, Adyar,Chennai-20. ame amount has been returned on 26.03.2011 vide cheque No.688101 sum of Rs.3 lakhs during FY 2010-11. Sd/- (R. Raghupathy) PAN NO.AIEPR 3986 J, L 541 24th Cross St,Thiruvalluvar Nagar, Thiruvanmiyar Chennai 600 041. It is mentioned by Mr.R. Raghupathy that money was being given as refund of earlier loan received from assessee by him. Mr.R. Raghupathy has also mentioned that he had received sum earlier from assessee on 01.11.2010. According to Mr.R. Raghupathy, amount given by him on 26.03.2011 was return of earlier loan :- 30 -: ITA No. 967 to 969/16 taken by him from assessee. Nothing was brought out by lower authorities as to why above confirmation was disbelieved. AO simply mentioned in his remand report that evidence was not satisfactory, without pointing out any flaw. We are of opinion that addition was made purely on surmise. Such addition stands deleted. Ground No.6 of assessee stands allowed. 70. Vide its Ground No.7, grievance of assessee is that Ld.CIT(A) restricted addition of agricultural income to ` 10,56,320/- instead of deleting it in toto. 71. This ground taken by assessee is similar to Ground No.7 for A.Y 2009-10 & Ground No.5 for A.Y 2010-11. 72. We had held that from 20.99 acres of agricultural land owned by assessee, he could have earned net agricultural income of `25,000/- per acre. Accordingly, agricultural income of assessee for impugned assessment year has to be taken at 5,24,750/-. amount shown by assessee in cash flow statement was 10,56,320/- as net agricultural income. Hence, addition under this head, in our opinion, has to be restricted to :- 31 -: ITA No. 967 to 969/16 `5,31,570/-. Relief to that extent is given to assessee. Ground No.7 is treated as partly allowed. 73. In result , appeal of assessee is partly allowed. 74. To summarize, all appeals of assessee are partly allowed. Order pronounced in open court on 16th September, 2016, at Chennai. Sd/- Sd/- (G. PAVAN KUMAR) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai Dated: 16th September, 2016 K s sundaram Copy to: 1. Appellant 4. CIT 2. Respondent 5. DR 3.CIT(A) 6. GF Akilan Ramanathan v. Asstt. Commissioner of Income-tax Non-Corporate Circle 15(1) Chennai