Delhi High Court

Shashi Garg vs Principal Commissioner Of Income ... on 2 November, 2018

$~73

* IN THE HIGH COURT OF DELHI AT NEW DELHI

+ INCOME TAX APPEAL No.1235/2018 and CM No. 46157/2018

Date of decision: 2nd November, 2018

SHASHI GARG ..... Appellant

Through Mr. S. Krishnan, Advocate.

versus

PRINCIPAL COMMISSIONER OF INCOME TAX..... Respondent

Through: Mr. Asheesh Jain, Sr. Standing Counsel
for the Income Tax Department.

CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI

SANJIV KHANNA, J. (ORAL):

This appeal by Shashi Garg the (appellant-assessee, for short) under
Section 260A of the Income Tax Act, 1961 (the Act, for short) pertains to
the Assessment Year ('AY' for short) 2011-12 and arises from the order of
the Income Tax Appellate Tribunal ('Tribunal' for short) dated 26 th March,
2018.

2. The appeal being belated and delayed by 59 days, an application C.M.
No. 46157/2018 has been preferred by the appellant-assessee for
condonation of delay. However, before issuing notice on this application, we
have deemed it appropriate to examine the appeal on merits.

ITA No. 1235/2018 Page 1 of 9
3. Findings in the impugned order of the Tribunal affirming addition of
Rs.26,25,000/- sustained by the Commissioner of Income Tax (Appeals) are
entirely factual.

4. Learned counsel for the appellant-assessee challenging the findings
submits that they are perverse. The appellant-assessee had made
withdrawals of more than Rs.75,50,000/- from her bank account in cash
between 3rd June, 2009 to 3rd March, 2010. Hence, the source of cash
deposit of Rs. 35,25,000/- in the bank account between 5thApril, 2010 to 18th
November, 2010, it is submitted, stood explained.

5. Aforesaid arguments fail to take into account compelling findings
recorded by the Assessing Officer, who had queried and cross checked the
submission by asking the appellant-assessee to explain the reason for said
cash deposits for the AY 2011-12 (FY 2010-11). The appellant-assessee in
response had asserted that cash was withdrawn for purchasing disputed
property in Hargovind Enclave, Delhi-92, for consideration of Rs.
85,00,000/-. This deal was being negotiated through a real estate agent who
had asked the appellant-assessee to be ready with 50% of the total price in
cash. This explanation was rejected by the Assessing Officer for the
following reasons:-

"3.1.7 Now, the assessee submits that a real estate
agent advised her to keep the cash ready to the
amount of at least 50% of the total price of the
property (total consideration of Rs.85,00,000/-).
Accordingly assessee withdrew the cash from her
savings account and maintained balance in her
hand.

ITA No. 1235/2018 Page 2 of 9
Following has been observed form the bank
statement of PNB for the F.Y. 2009-10:

S.No. Date Withdrawals Deposits
1 02.04.2009 6,75,000/-
2 06.04.2009 5,00,000/-
3 16.04.2009 5,00,000/-
4 24.04.2009 3,00,000/-
5 25.05.2009 2,00,000/-
6 26.05.2009 4,00,000/-
7 03.06.2009 9,00,000/-
8 06.06.2009 1,00,000/-
9 09.06.2009 8,00,000/-
10 25.06.2009
11 07.07.2009 9,00,000/-
12 08.07.2009 9,00,000/-
13 10.07.2009 9,00,000/-
14 30.07.2009 2,00,000/-
15 14.08.2009 9,00,000/-
16 18.08.2009 7,50,000/-
17 08.09.2009 9,00,000/-
18 12.11.2009 4,00,000/-
19 14.11.2009 3,50,000/-
20 05.02.2010 8,00,000/-
21 16.02.2010 1,00,000/-
22 03.03.2010 9,00,000/-
TOTAL 99,25,000 32,50,000

,
3.1.8 Now, if the assessee was already advised by
the real estate agent to keep ready 50 % of the total
consideration which comes out to be approx. Rs.
42,50,000/- , why she withdrew the cash totaling to
Rs. 99,25,000/- ? It is also quite surprising that
assessee first withdraws the cash and then to
maintain the balance in her hand equivalent to the

ITA No. 1235/2018 Page 3 of 9
50 % of the total price of the property, she deposits
back some amount. Had she been already advised
to keep ready 50 % of the total consideration
which comes out to be approx. Rs.42,50,000/-, she
would have withdrawn only that much amount.
First of all why would she withdraw the cash
approx. morethan double the amount she was
advised to keep ready in hand? Secondly, any
prudent person would never withdraw the huge
cash without any need just to keep it at home. It is
also worth mentioning here that if we closely
observe the pattern of withdrawals & deposits, on
the date 10/07/2009 assessee was already having
cash balance of Rs. 50,75.000/- in her hand which
was any way more than the 50 % of total price of
the property that she was advised to maintain in
her hand, then why would she withdraw more cash
to the tune of Rs. 99,25,000/- without any purpose
or use?? AR of the assessee was countered with
these questions during the proceedings but no
explanation was offered in this regard.

3.1.9 Assessee was also asked, can she produce
the real estate agent with supporting proofs
regarding property deal? AR responded they can
produce him but he will not be able to verify and
establish the facts of property deal. Since
assessee herself submits that the agent will not be
able to prove anything in this regard, exercise
would have been futile only.

3.1.10 Thus, it's quite apparent & logical to draw
the conclusion that all these withdrawals were not
meant for any property transaction. But these

ITA No. 1235/2018 Page 4 of 9
withdrawals were for some other purpose which
assessee does not want to reveal for the obvious
reasons. Hence, the consequent cash deposits are
not the same cash which assessee is saying that
she has accumulated during the year, but this is
unaccounted income of the assessee, source of
which again the assessee does not want to reveal
for the obvious reasons.

3.1.11Now if we observe the cash deposits as
reported in AIR information during the
relevant financial year 2010-11 (A.Y. 2011-
12), following pattern emerges: (Scanned
copy of savings account in Panjab National
Bank showing cash deposits during the F.Y.
2010-11)

05-04- Less Deposit At: 9,00,000.00 9,16,20847
2010 DELHI, RADHEY Cr
PURI

05-04- Paid to : TD PKG 746119 9,00,000.00 16,20847
2010 MKT P LTD Cr

17-04- Transfer from A/c 10,800.00 27,008.47
2010 1504008700002092 Cr
VIDKRTS Retails
Store Pvt. Ltd
20.04.2010 Transfer from Ale 10,800.00 37,808.47
1504008700002092 Cr
VIDKRTS Retails
Store Pvt. Ltd
25.04.2010 NEFT From 3,188.00 40,996.47
RELIANCE Lfie Cr
Insura
01.05.2010 PKG 35,000.00 5,996.47 Cr

04.05.2010 Cash Deposit at : 8,50,000.00 8,55,996.47
Delhi, RadheyPuri Cr
04.05.2010 PKG 8,50,000.00 5,996.47 Cr
07.05.2010 Cash Deposit at: 4,75,000.00 4,80,996.47
Delhi, RadheyPuri Cr
07.05.2010 Paid To : To PKG 746120 4,75,000.00 5,996.47 Cr

ITA No. 1235/2018 Page 5 of 9
Mkt. P. Ltd.
19.05.2010 Cash Deposit at: 5,00,000.00 5,05,996.47
Delhi RadheyPuri Cr

19.05.2010 PKGMkt 5,00,000.00 5,996.47 Cr

***********************************************************

Cummulative Totals: 19,73,65,317.0019, 73,71,323.47 5,996.47 Cr

***********************************************************

23.10.2010 By CLEARING 04-11-2010 By CLEARING 08-11-2010 By CLEARING 18·11·2010 Cash deposit at DELHI RADHEY PURI 18-11- CPR 2010 19-11- Cash Handling 2010 Chrg 10-11-2010 At Br. DELHI, RADHEY PURI 22-11- By CLEARING 2010 23-11- TFDVIDKRIS 2010 23-11- CPR 2010 25-11- ECS/POWER 2010 GRID CORPI1103950549 (MUMBAI COPe) 01-12- CPR CAPITAL 2010 01-12- ADVANCE 2010 INDIA 01-12- NEFT FROM 2010 RELIANCE LIFE INSURA 02-12- ISO TRANSFER- 2010 01-12-2010 07-12- By CLEARING 2010 714 200.00 7,090.41 Cr 535125 120.00 7,210.41 Cr 120420 1,525.00 8,735.41 Cr 8,00,000.00 8,08,735.41 Cr 8,00,000.00 8,735.41 Cr 200.00 8,455.41 Cr 128737 1,360.00 9,815.41 Cr 40,000.00 49,815.41 Cr 30,000.00 19,815.41 Cr 74,142.00 93,957.41 Cr 70,000.00 23,957.41 Cr 15,000.00 8,957.41 Cr 30,222.33 39,179.74 Cr 5.00 39,174.74 Cr 514248 471.00 39,645.74 Cr

*********************************************************

Cumulative Totals: 20,44,70,602.00 20,45,10,247.74 39,645.74 Cr

*********************************************************

3.1.12 On perusal of above bank statement it was observed that assessee has deposited cash of Rs. 9,00,000/- in the month of April, Rs. 18,25,000/- in the month of May and Rs. 8,00,000/- in the month of November. Now for time being if we accept the explanation of the assessee that she had accumulated cash for purchase of property. Following questions still remains:

i. The question remains when the deal was not materialized why did she deposit the cash first in the month of April, then in May & then in almost end of the year i.e. in the month of November? Why not in one or two lots in the month ofApril?

ii. Why the accumulated cash was deposited in very specific amounts like, Rs.9,00,000/- in April, Rs. 8,50,000/-, Rs.4,75,000/- & Rs. 5,00,000/- in the month of May and then, Rs. 8,00,000/- in the fag end of the year, in the month of November ?

iii. On 31.03.2010 assessee was having total cash deposits of Rs.66,75,000/-in hand (Rs.99,25,000-Rs. 32,50,000), then why assessee deposited back only Rs.35,25,000/- ? Where did the remaining amount go?

3.1.13 Hence, it's quite apparent & logical to draw the conclusion that all the cash deposits are unaccounted income of the assessee, sources of which assessee does not want to reveal for the very obvious reasons. Moreover when countered with the above discussed queries/questions, assessee did not give any explanation. Submission of the assessee is only an afterthought and that too to

avoid incidence of tax, which clearly indicate involvement of component of mens-rea. Submissions of the assessee are not at all tenable and rejected straight away. Hence, in view of the facts under consideration, sequence of events and above discussion, cash deposits of Rs.35,25,000/- has been considered unexplained cash credits within the mandate of section 68 of the I.T.Act,1961 and added back to the taxable income of the assessee. Penalty proceedings u/s 271(1)(c) of the I.T. Act are initiated separately for filing inaccurate particulars of income/concealment of income.

(Addition of Rs.35,25,000/-)"

6. Withdrawal in excess of Rs. 75,50,000/- pertains to the period relevant to the financial year ('FY' for short) 2009-10 whereas the cash deposits of Rs. 35,25,000/- which the appellant-assessee has to explain pertains to the period relevant to the FY 2010-11.

7. The Commissioner of Income Tax (Appeals) upheld the addition to the extent of Rs. 26,25,000/-. Addition to the extent of Rs. 9,00,000/- was deleted noticing the small time gap between the withdrawal of Rs. 9,00,000/- on 3rd March, 2010 and deposit of Rs. 9,00,000/- in cash on 5th April, 2010. Explanation of the appellant-assessee connecting the other cash withdrawals to cash deposits was rejected noticing the time difference between the withdrawals and deposits. The dates of withdrawal and deposits in cash, we observe, are not disputed and challenged. This reasoning has merit in view of rather illusionary explanation given by the appellant- assessee for making withdrawal of more than Rs.99,00,000/- in cash during

12 months from April, 2009 to March, 2010. Pertinently, the alleged deal did not materialize. Reasoning of the assessing officer was for additional reason confirmed by the Commissioner of Income Tax (Appeals).

8. Aforesaid factual findings have been upheld by the Tribunal, which is the final fact finding authority.

9. Burden to explain the source of cash deposit was on the appellant- assessee, who as per the finding has not been able to discharge this burden. The evidence on record is undisputed, and the inference and factual findings recorded we would observe are supported by cogent and weighty reasoning. Explanation of the appellant-assessee has been duly considered and not ignored. Implausible and lame justification for making cash withdrawals has exposed and dented the concocted explanation regarding source of the cash deposit. Factual findings are based on cumulative effect of all facts covering all essential points. We would not interfere with factual findings unless they are irrational and absurd, which no person acting judicially and properly instructed in the field of law of taxation would have passed.

10. In view of the aforesaid position, we are not inclined to issue notice in the present application for condonation of delay. Accordingly, the application for condonation of delay and the appeal are dismissed.

SANJIV KHANNA, J.

ANUP JAIRAM BHAMBHANI, J.

NOVEMBER 02, 2018 MR