Satinder Singh Sethi v. ITO, Ward-1(1), Visakhapatnam
[Citation -2016-LL-1007-100]

Citation 2016-LL-1007-100
Appellant Name Satinder Singh Sethi
Respondent Name ITO, Ward-1(1), Visakhapatnam
Court ITAT-Visakhapatnam
Relevant Act Income-tax
Date of Order 07/10/2016
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags income from house property • confirmation letter • unexplained income • rental income • savings bank • tax effect
Bot Summary: The Ld. A.R. for the assessee submitted that the CIT(A) is not justified in confirming addition of 5,22,500/- found credit in the bank account of Karnataka Bank Ltd., when the assessee has explained the source and nature of deposit with substantial evidences. On perusal of the bank statement filed by the assessee, we find that the assessee has withdrawn an amount of 3,90,000/- on 7.6.2010 and made deposit of 2,90,000/- on 19.6.2010. ITR-2 facilitate the assessee to disclose one of the bank account to facilitate issue of refunds, if any payable to the assessee. The assessee filed bank accounts of the creditors and her income tax returns and explained the transfer of amount from creditor account to assessee s account. We do not find any merits in the findings of the CIT(A), for the reason that on perusal of the bank statements filed by the assessee, we noticed that the said amount of 8,20,000/- has been transferred from Smt. Puneet Kaur Sethi s account to the assessee s account on two occasions. We further noticed that the assessee has received an amount of 1,55,000/- on 18.8.2010 by way of transfer to assessee s bank account maintained at Karnataka Bank Ltd. Similarly, the assessee has received another credit of 6,65,000/- on 15.3.2011 from Savings bank account of Smt. Puneet Kaur Sethi to the assessee bank account at Karnataka Bank Ltd. The assessee also filed the income tax return copy of the creditor. On perusal of the details filed by the assessee, we noticed that on 20.8.2010, the assessee has purchased 29000 US dollars in the name of his daughter Smt. Puneet Kaur Sethi.


ITA No.375/Vizag/2015 & ITA No.411/Vizag/2015 Satinder Singh Sethi, Visakhapatnam IN INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER I.T.A.No.375/Vizag/2015 ( Assessment Year: 2011-12) Satinder Singh Sethi, ITO, Ward-1(1), Visakhapatnam Vs. Visakhapatnam [PAN: ABNPS6379L] ( Appellant) (Respondent) I.T.A.No.411/Vizag/2015 (Assessment Year: 2011-12) ITO, Ward-1(1), Satinder Singh Sethi, Visakhapatnam Visakhapatnam Vs. ( Appellant) ( Respondent) Appellant by : Shri C. Subrahmanyam, AR Respondent by : Shri T. Satyanandam, DR Date of hearing : 05.10.2016 Date of Pronouncement : 07.10.2016 1 ITA No.375/Vizag/2015 & ITA No.411/Vizag/2015 Satinder Singh Sethi, Visakhapatnam O R D E R PER G. MANJUNATHA, Accountant Member: These cross appeals filed by assessee, as well as revenue are directed against order of CIT(A)-1, Visakhapatnam dated 29.9.2015 and it pertains to assessment year 2011-12. Since, facts are identical and issues are common, they are clubbed, heard together and disposed-off, by way of this common order for sake of convenience. 2. brief facts of case are that assessee is individual deriving income from house property filed her return of income for assessment year 2011-12 on 30.7.2011 declaring total income of ` 4,70,430/-. case has been selected for scrutiny under CASS and accordingly, notice u/s 143(2) of Income Tax Act, 1961 (hereinafter called as 'the Act') was issued. In response to notice, authorized representative of assessee appeared from time to time and filed information called for. During course of assessment proceedings, A.O. noticed that assessee is maintaining two bank accounts at Indus Ind Bank, Seethammadhara branch, Visakhapatnam and Karnataka Bank Ltd., Jagadamba Junction, Visakhapatnam. On perusal of account statements of above two accounts, it was noticed that there are huge credits in bank accounts aggregating to 2 ITA No.375/Vizag/2015 & ITA No.411/Vizag/2015 Satinder Singh Sethi, Visakhapatnam ` 62,22,661/-. As assessee has not disclosed above bank accounts either in return of income or during course of hearing, A.O. issued notice and asked to explain nature and source of credits in bank accounts. Since, assessee neither appeared before A.O. nor furnished any details, A.O. made additions of ` 62,22,661/- as unexplained income of assessee and brought to tax. 3. Aggrieved by assessment order, assessee preferred appeal before CIT(A). Before CIT(A), assessee has filed additional evidences to explain credits in bank accounts. CIT(A), during course of appellate proceedings, forwarded additional evidences filed by assessee to A.O. for his comments. A.O. vide his remand report dated 12.12.2014 has examined additional evidences filed by assessee and commented on each and every additions made towards credits in bank accounts. CIT(A) after considering explanations furnished by assessee and also taken note of remand report issued by A.O., partly allowed appeal filed by assessee. CIT(A) for reasons recorded in his order, has confirmed additions to extent of ` 26,97,500/- out of total additions of ` 62,22,661/- and remaining amount has been deleted. Aggrieved by CIT(A) order, assessee as well as revenue are in appeal before us. 3 ITA No.375/Vizag/2015 & ITA No.411/Vizag/2015 Satinder Singh Sethi, Visakhapatnam 4. Ld. A.R. for assessee submitted that CIT(A) is not justified in confirming addition of ` 5,22,500/- found credit in bank account of Karnataka Bank Ltd., when assessee has explained source and nature of deposit with substantial evidences. A.R. further submitted that assessee has explained sources of deposits found in Karnataka Bank Ltd. out of money withdrawn from same bank account on 7.6.2010, therefore, CIT(A) without finding anything contrary that cash withdrawal in earlier occasions has been utilized or deployed in other assets, sources available cannot be ignored. A.R. further submitted that CIT(A) is not correct in confirming bank deposit of ` 8,20,000/- in casual manner, when assessee explained source with credible evidence. Ld. CIT(A) failed to take cognizance of fact that said amount has been transferred from assessee s daughter and creditor has confirmed transactions by filing confirmation letters along with her income tax return copies. It was further submitted that CIT(A) grossly erred in confirming deposit of ` 13,50,000/- in Indus Ind Bank as unexplained. CIT(A) fails to take note of fact that said deposit amount is from out of withdrawals made from another bank account i.e. Karnataka Bank Ltd. and assessee has filed details of both bank accounts. A.R. further submitted that CIT(A) 4 ITA No.375/Vizag/2015 & ITA No.411/Vizag/2015 Satinder Singh Sethi, Visakhapatnam grossly erred in confirming additions without pointing out that said amount has been utilized or deployed in another assets. When sources are available in form of withdrawals in earlier occasions, unless revenue proves that said amount has been expended by assessee, sources available cannot be ignored. Therefore, requested to delete additions made by A.O. 5. On other hand, Ld. D.R. supported order passed by CIT(A). D.R. further submitted that as regards amount deleted by CIT(A), CIT(A) failed to appreciate fact that assessee neither appeared before A.O. nor furnished any details with regard to credits in bank accounts. In absence of necessary details, A.O. has made additions and also these bank accounts were not disclosed in income tax return filed by assessee. It was further submitted that when assessee was asked to explain sources for credits, assessee not chosen to explain sources with necessary evidences. Therefore, A.O. has made additions and his order should be upheld. 6. We have heard both parties, perused materials available on record and gone through orders of authorities below. A.O. made additions towards credits in bank accounts for reason that assessee has failed to explain nature and source of credits 5 ITA No.375/Vizag/2015 & ITA No.411/Vizag/2015 Satinder Singh Sethi, Visakhapatnam in bank account. A.O. was of opinion that though assessee filed confirmation letters from creditors to prove sources of credits, creditors does not have creditworthiness to substantiate amount given to assessee. It is contention of assessee that source for credits in bank account has been explained with necessary evidences. assessee further contended that all credits have been explained with necessary evidences and CIT(A) has failed to take cognizance of evidences filed in form of bank statements and income tax returns of creditors. 7. Having heard both sides, we find force in arguments of assessee, for reason that assessee has filed details of credits in bank account with necessary evidences. As regards addition of ` 5,22,000/-, assessee claims to have explained source out of withdrawals from same bank account in earlier occasions. On perusal of bank statement filed by assessee, we find that assessee has withdrawn amount of ` 3,90,000/- on 7.6.2010 and made deposit of ` 2,90,000/- on 19.6.2010. When these facts were filed before CIT(A), CIT(A) ignored evidences filed and confirmed addition by stating that assessee failed to explain why these two bank accounts were not disclosed in income tax returns filed for year. We do not find any merits in findings of CIT(A), for 6 ITA No.375/Vizag/2015 & ITA No.411/Vizag/2015 Satinder Singh Sethi, Visakhapatnam reason that assessee is deriving income from house property and filed income tax returns in form no.ITR-2, wherein there is no scope for assessee to disclose all bank accounts. form no.ITR-2 facilitate assessee to disclose one of bank account to facilitate issue of refunds, if any payable to assessee. Therefore, CIT(A) was not correct in holding that these two bank accounts were not disclosed in income tax returns filed for relevant assessment years. We further noticed that as regards sources of credits, assessee has explained source of ` 2,90,000/- out of total deposit of ` 5,22,500/-. Therefore, we are of view that A.O. is not correct in making additions of ` 2,90,000/- when assessee has explained source with necessary bank entries. Hence, we direct A.O. to delete addition of ` 2,90,000/-out of total additions of ` 5,22,500/- and balance is confirmed. 8. As regards credits of ` 8,20,000/- found in Karnataka Bank Ltd., assessee sought to explain sources for credits of ` 8,20,000/- by way of amount received from his daughter Smt. Puneet Kaur Sethi. assessee filed bank accounts of creditors and her income tax returns and explained transfer of amount from creditor account to assessee s account. assessee also filed confirmation letter from creditors, wherein creditor has confirmed that she had given 7 ITA No.375/Vizag/2015 & ITA No.411/Vizag/2015 Satinder Singh Sethi, Visakhapatnam amount of ` 8,20,000/- to assessee. CIT(A) having accepted fact that creditor has furnished confirmation letters, rejected explanations offered by assessee by stating that assessee has failed to prove creditworthiness of creditor. We do not find any merits in findings of CIT(A), for reason that on perusal of bank statements filed by assessee, we noticed that said amount of ` 8,20,000/- has been transferred from Smt. Puneet Kaur Sethi s account to assessee s account on two occasions. We further noticed that assessee has received amount of ` 1,55,000/- on 18.8.2010 by way of transfer to assessee s bank account maintained at Karnataka Bank Ltd. Similarly, assessee has received another credit of ` 6,65,000/- on 15.3.2011 from Savings bank account of Smt. Puneet Kaur Sethi to assessee bank account at Karnataka Bank Ltd. assessee also filed income tax return copy of creditor. On perusal of income tax return, we find that creditor is having rental income of ` 6,70,000/- per annum. We further noticed that credits are transferred by way of bank transfers. Therefore, we are of view that assessee has discharged creditworthiness of creditor. CIT(A) without appreciating facts simply confirmed additions made by A.O. Hence, we direct A.O. to delete additions of ` 8,20,000/-. 8 ITA No.375/Vizag/2015 & ITA No.411/Vizag/2015 Satinder Singh Sethi, Visakhapatnam 9. Coming to credits found in Indus Ind Bank Ltd. A.O. made additions of ` 13,50,000/- towards credits in Indus Ind Bank Ltd. A.O. was of opinion that assessee has failed to explain sources for credits found in bank account. It is contention of assessee that he had explained sources for credits in bank account by filing necessary evidences. assessee further contended that he had withdrawn amount of ` 13,45,000/- on 20.8.2010 from Karnataka Bank Ltd. and deposited ` 13,50,000/- on 20.8.2010. assessee explained reasons for withdrawal of amount from Karnataka Bank Ltd. and deposited same in Indus Ind Bank Ltd. assessee explained that he need to buy dollars for her daughter and found that exchange rate in Indus Ind Bank Ltd. is higher than Karnataka Bank Ltd. Therefore, to meet immediate necessity of cash in Indus Ind Bank Ltd., he had withdrawn amount from Karnataka Bank and deposited in Indus Ind Bank Ltd. We find force in arguments of assessee, for reason that on perusal of bank statement filed by assessee, we find that assessee had withdrawn amount of ` 13,45,000/- on 20.8.2010 from Karnataka Bank Ltd. and deposited amount of ` 13,50,000/- into Indus Ind Bank Ltd. assessee also filed certificate from bankers, wherein bankers have certified that assessee has withdrawn cash on 9 ITA No.375/Vizag/2015 & ITA No.411/Vizag/2015 Satinder Singh Sethi, Visakhapatnam same day from Karnataka Bank Ltd. assessee also filed copy of voucher issued by Indus Ind Bank Ltd. for purchase of dollars. On perusal of details filed by assessee, we noticed that on 20.8.2010, assessee has purchased 29000 US dollars in name of his daughter Smt. Puneet Kaur Sethi. All these documents were filed before CIT(A). CIT(A) without appreciating fact ignored evidences filed by assessee and confirmed additions. Therefore, we direct A.O. to delete addition of ` 13,50,000/- towards credits in Indus Ind Bank Ltd. 10. In result, appeal filed by assessee is partly allowed. ITA No.411/Vizag/2015: 11. When this appeal is taken up for hearing, Ld. Counsel for assessee has submitted that tax effect involved in this appeal is below Rs.10 lakhs. As per latest circular no.21/2015 dated 10.12.2015 of CBDT being retrospective in nature, appeal filed by revenue is not maintainable. Ld. D.R. has not raised any objection. In view of above, appeal filed by revenue is not maintainable. Hence, same is dismissed. 10 ITA No.375/Vizag/2015 & ITA No.411/Vizag/2015 Satinder Singh Sethi, Visakhapatnam 12. In result, appeal filed by revenue is dismissed. above order was pronounced in open court on 7th Oct 16. Sd/- Sd/- (V. DURGA RAO) (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER # Visakhapatnam: Dated : 7th Oct 16 VG/SPS Copy of order forwarded to:- 1. Appellant Satinder Singh Sethi, D.No.26-1-7/A, Ishar Krupa Complex, Visakhapatnam 2. Respondent ITO, Ward-1(1), Visakhapatnam 3. CIT, Visakhapatnam 4. CIT (A)-1, Visakhapatnam 5. DR, ITAT, Visakhapatnam 6. Guard file BY ORDER // True Copy // 1 2 . (Sr.Private Secretary) ITAT, VISAKHAPATNAM 11 Satinder Singh Sethi v. ITO, Ward-1(1), Visakhapatnam
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