The Chennai bench of the Income Tax Appellate Tribunal (ITAT) sustainedthe addition of partial amount of Rs. 1 crore as unexplained money under Section 69A of the Income Tax Act, 1961. The tribunal noted that the assessee failed to furnish material evidence regarding the gift received on marriage.
The assessee, a non-resident individual employed in USA and living outside India since 2004. According to assessee, he not having any source of income in India since 2004 did not filed any return of income for earlier assessment years. For the relevant assessment year 2017-18, the assessee filed his return of income on 31.03.2018 admitting total income at Rs.96,100/-.
The assessee’s case was selected for scrutiny assessment under CASS and notice under Section143(2) of the Income Tax Act was issued. The Assessing Officer (AO) noticed that during financial year 2016-17 relevant to assessment year 2017-18, the assessee has made cash deposit to the tune of Rs.2,00,000/- in his Account maintained with Allahabad Bank, Madurai Anna Nagar Branch and Rs.1,05,00,000/- in his Account with ICICI Bank
The AO issued show cause notice dated 04.07.2019 calling for explanation for cash deposit in above stated two bank accounts.Either there was adjournment request or no response and finally vide show cause notice dated 25.09.2019, the AO proposed to complete the assessment adding Rs.1.07 crores.
The assessee explained that this cash deposit of Rs.7 lakhs was cash given to his mother Smt. Malliga during his visits to India which was deposited and balance of Rs. 1 crore was gift received during marriage.
The assessee claimed before AO that the gift of Rs.1 crore received in connection with his marriage celebrated on 07.12.2015, was deposited in his bank accounts, as mentioned above and claimed the same as exempt being gifts received during marriage under the proviso to Section 56(1)(vii)(c) of the Income Tax Act. The AO noted, that, in the instant case, assessee has not furnished any material evidence to substantiate that he has received gift of Rs.1,00,00,000/- during his wedding in December, 2015.
The counsel for the assessee stated that the assessee has no source of income in India and hence, the decision of Supreme Court in the case of P.K. Noorjahan 237 ITR 570 is applicable to the facts of the case.
The AO accordingly made addition of Rs.1,00,00,000/-, being cash deposit in assessee’s bank accounts with Allahabad Bank, Madurai Anna Nagar Branch and ICICI Bank, Madurai K K Nagar Branch deposited during demonetisation period in financial year 2016-17 relevant to assessment year 2017-18, as unexplained money as per the provisions of section 69A of the Act.
Aggrieved, theassessee preferred appeal before Commissioner of Income Tax (Appeals)[CIT(A)]. The first appellate authority deleted addition of Rs.30,00,000/-. Further aggrieved, the assessee appealed before the tribunal.
After hearing both the parties, the tribunal estimated by looking into the fact that assessee might not have received cash gift of Rs.1,00,00,000/- and CIT(A) having already allowed relief of Rs.30,00,000/-, the tribunal went to make a further estimate and deleted the amount of Rs.20,00,000/- further. Thereby, the total deletion by the Tribunal of Rs.20,00,000/-, aggregate comes to Rs.50,00,000/- as unexplained money under Section69A of the Income Tax Act.
The two-member bench consisting of Manoj Kumar Aggarwal (Accountant member) and Mahavir Singh (Vice President) held that the provisions of Section 115BBE of the income Tax Act as amended by second amendment Act by the Taxation Laws Act, 2016 will apply w.e.f 01.04.2017 on enhanced rate of tax @60% instead of @30%.
The enhanced rates apply from the commencement of the assessment year relevant to previous financial year. Hence the case of the assessee was rejected
Thus, the appeal was partly allowed.
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