9911796707
TMI Blog2017 (9) TMI 1914X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore CIT(A)-2 has erred in treating it as a mere "venial breach" when it is a jurisdictional issue in law; 3. On the facts and in the circumstances of the case the CIT(A)-2 Aurangabad has erred in accepting the assessee's say that she had brought huge cash to India because there are no banking channel between India and Pakistan when the assessee has failed to produce any evidence whatsoever in support of the huge cash was brought to India; 4. On the facts and in the circumstances of the case the CIT(A)-2 Aurangabad has erred in accepting the assessee's say that she had substantial cash out of sale proceeds of property ignoring the fact that the instrument executed shall be liable for payment of stamp duty which is not the case in such sale agreements and sale has been effected merely on a stamp paper of Rs. 100/- only by simply notarising with no schedule of payments mentioned in such sale agreement. 5. The order of the AO be restored and that of the CIT(A) be vacated. 3. The issue raised in the present appeal filed by the Revenue is against deletion of addition made on account of unexplained cash credit under section 68 of the Act at Rs. 2,71,00,000/-. All t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not required to produce any documentary evidence for their claim of transfer of monies, etc. The assessee also explained 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. The assessee explained about her family status and pointed out that she came from a traditionally rich family and her husband and other family members were in a very sound financial position and were still residing in Pakistan. The sources of cash brought in India were explained to be the amount received on sale of property in Sukkur being 40% share of assessee at Rs. 2 crores and the amount received from her husband on sale of another property in Dist. Sukkur being his 40% share in two acres i.e. Rs. 1,50,00,000/- and amount received from the husband on sale of his flat in Karachi for Rs. 1,10,00,000/-, totaling Rs. 4.60 crores. The assessee also explained that she had cash credit account with Muslim Commercial Bank Ltd., wherein she had balance of Rs. 4.39 crores as on 25.07.2009 and also a joint account with Bank Alplah Ltd., wherein she had balance of Rs. 2.60 crors as on 25.07.2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing as to how the migrant assessee had remitted the money and would not be necessary to establish that the remittances were made only through bank. The ITO could only make enquiries with regard to ascertaining the quantum and satisfying himself with available resources in the country, although same were brought to India through irregular channels. Where resources were established to have been available in the migrant's country, then the manner in which those resources are repatriated to India though not by recognized channel, same would not be questioned but, would be accepted. The Hon'ble High Court of Madras in S.R. Lakshmanan Vs. CIT (1990) 186 ITR 453 (Mad) after going through Circular of the Board dated 05.08.1971 issued in respect of repatriates from Ceylon had held that the predominant idea of issuing the Circular was to avoid resulting into inconvenience to repatriates. 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 assessee further made refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had started depositing cash in bank accounts in Aurangabad from 04.09.2009 and resides with her brother ever since she migrated to India. The assessee had admitted all her five children in different educational institutions of Aurangabad. She had purchased commercial property in November, 2009. The assessee's PAN was from Aurangabad. The Assessing Officer in these circumstances, was of the view that where the assessee did not comply with conditions stipulated in para 1 of Circular i.e. declaration and certificate issued by the ITO, Mumbai could not be relied upon to decide the issue of availability of resources. The documentary evidence filed by the assessee was found to be false in the absence of complete details. In respect of availability of sources, where the assessee had only produced copies of sale agreement in respect of properties concerned, was not accepted, in view of reasons, one by one mentioned in paras 3.1 to 3.4 of assessment order. Further, the Assessing Officer perused the joint bank account of assessee under para 14 and noted that the assessee had not withdrawn any cash from both these bank accounts prior to migration to India; in fact both the accounts sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot required to produce documentary evidence in support of their claim for transfer of money and personal jewellery brought by them and their family from Pakistan subject to the following conditions: i) The person had resources in Pakistan to which the money/jewellery brought into India could reasonably attributed. ii) The intimation should be given to the concerned ITO within a period of two months of the date of his or her arrival in India and; iii) In the case of persons who have already migrated to India by 31/03/1969, the aggregate value of cash and personal jewellery brought by the migrants and his family members does not exceeds Rs. 50,000/-. iv) Where the amount of money/value or jewellery brought into India exceeds Rs. 50,000/- he or she will be required to produce adequate evidence to reasonably justify the ITO that he or she had sufficient resources in Pakistan to cover such money/personal jewellery. The circular is very clear. As per the Circular, the ITO/AO is barred from enquiring as to how the migrant assessee has remitted his money's and it would not be necessary to establish his remittance are made only through banks. However, the ITO/AO can make enquiries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations were working and producing good revenue. Before the CIT(A), the assessee filed various documents in respect of sale and transfer of property to the prospective buyer; the running of petrol pump by the assessee in partnership and her family members and CNG stations run by her husband and business carried on by her and family members to establish her financial position. The CIT(A) has elaborately referred to the said documents starting from para 11 and has discussed each source of availability of cash in the hands of assessee in paras 13 to 16. The conclusion of the CIT(A) thus, was that the evidences were proof of the fact that all the properties for which sale deeds were entered into either by the assessee or by her husband, stood transferred in the names of buyers. The first property i.e. GNS CNG has been transferred in the name of purchaser as per registered sale deed dated 11.11.2009 and mutation had been effected in the revenue records. The second property i.e. BNS CNG Station was transferred in the name of purchaser by registered sale deed dated 15.12.2009 and the mutation was effected in the revenue records. The third property i.e. flat of husband was transferred in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted by the CIT(A) was the income tax returns filed by the husband of assessee and it was held that the assessee and her family were financially sound and had sufficient resources to cover the amount of Rs. 2.71 crores brought into India by unauthorized channels. He further held that the fact that there were no banking channels between Pakistan and India had forced the assessee to transfer the money through unauthorized channels. It is evident that the assessee had sufficient resources in Pakistan to which money brought into India can be reasonably attributed. Reference was made to various decisions on this issue and the CIT(A) held that the assessee had sufficient resources in Pakistan to cover the amount of Rs. 2.71 crores brought into India and consequently, the addition made was deleted. 9. The Revenue is in appeal against the order of CIT(A) and has strongly objected to the deletion of aforesaid addition. 10. The first objection is against the order of CIT(A) in deleting the aforesaid addition made under section 68 of the Act on the ground that the assessee had filed declaration with ITO, Mumbai regarding cash brought into India and deposited in various bank accounts in Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Authorized Representative for the assessee referring to the Circular stated that it requires making a declaration before the Assessing Officer and proving the availability of resources in Pakistan, wherein the main limb was to prove the resources. He further states that where the assessee could prove the resources, no addition was warranted in the hands of assessee. He stressed that basic source of resources was the bank statement of assessee, wherein the bank balance was about Rs. 4.34 crores. Our attention was drawn to bank statement placed at page 383 of the Paper Book. He stated that the word used was 'resource'. Referring to the bank statement, the learned Authorized Representative for the assessee pointed out that the Assessing Officer had not accepted the resources in the hands of assessee because of transaction being 'internal transfer'. The learned Authorized Representative for the assessee in this regard referred to the certificate issued by the said bank, which is placed at page 363 of the Paper Book, which clearly certified that it was cash withdrawal. He further pointed out that even if money was brought through clandestine means but the assessee had the resou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has not proved how she had brought the money into India was irrelevant in view of the decision of Hon'ble High Court of Madras in S.R. Lakshmanan Vs. CIT (supra). 13. The learned Departmental Representative for the Revenue in rejoinder pointed out that no extra corroborative evidence was brought on record in respect of decision of Tribunal in ITO Vs. Udhavdas T. Lakhiani (supra). The learned Departmental Representative for the Revenue pointed out that it was a case of withdrawal from bank account. In respect of decision of Hon'ble High Court of Madras, the learned Departmental Representative for the Revenue pointed out that Circular relied upon was different from the Circular referred to by the assessee. 14. We have heard the rival contentions and perused the record. The issue which is raised for adjudication before us is the addition made on account of cash available in the hands of assessee and whether such cash could be held to be unexplained warranting the addition under section 68 of the Act. The assessee is an individual and had migrated into India on 30.07.2009 i.e. during the year under consideration. The assessee has placed on record the copy of passport whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial property after withdrawing the same from some of the bank accounts. The explanation of assessee that in view of Circular dated 03.02.1969, the assessee had to only explain the resources of cash available in Pakistan, no further questions were to be asked by the Assessing Officer with regard to mode of transfer of said amount to India, was not accepted by the Assessing Officer. The first objection to the same was the declaration made by the Assessing Officer before an officer who was not the jurisdictional officer. The assessee had opened bank accounts in Aurangabad and had deposited the cash in Aurangabad. She had five children and they were admitted to educational institutions in Aurangabad and hence, the jurisdiction was with the Assessing Officer at Aurangabad, before him the said declaration should have been made. 16. The Board vide Circular dated 03.02.1969 had given certain instructions on concessional treatment to migrants from Pakistan. It was put to the learned Departmental Representative for the Revenue during the course of hearing whether the said Circular has been withdrawn or not. However, no such details are filed by the Revenue. Accordingly, the Circular iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money or personal jewellery brought over by the persons and his family members is to be given to the concerned ITO within two months of the date of his / her arrival in India, where the aggregate value of the cash or jewellery does not exceed Rs. 50,000/-. It was further provided in the said Circular itself that where the amount of money / value of jewellery exceeds Rs. 50,000/-, then the person was required to produce adequate evidence to reasonably satisfy the ITO that he / she had sufficient resources in West Pakistan to cover such money / personal jewellery. It is reiterated herein that the said Circular is still in force, which is further proved by the fact that the assessee made a declaration before the ITO at Mumbai, which not only was accepted but certificate has been issued by the said ITO to assessee having made declaration of her cash and jewellery. 18. On this issue, reference was made by the CIT(A) to another letter on the subject issued by the Reserve Bank of India, which is referred in para 9 of appellate order and the same reads as under:- "Indian currency brought in by Migrants... Pakistan during Babri Masjid Demolition Please refer to your letter No.T-3/977/B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO in Mumbai. The assessee migrated in July, 2009 and the intimation was filed on 15.09.2009. Admittedly, at that juncture, the assessee was not being assessed to tax. However, the assessee had opened bank accounts in Aurangabad. The case of Revenue in this regard is that where the jurisdiction of assessee fell within the Zone of Aurangabad why such a declaration was made before the ITO in Mumbai. It may be clarified herein itself that the said ITO had accepted the declaration in line with the Circular and had issued certificate to the assessee both for cash and the jewellery declared. The first aspect of the issue is whether the declaration so made before the ITO, Mumbai affects his jurisdiction and such declaration cannot be accepted. We find merit in the order of CIT(A) in this regard in holding that the Income Tax Officer at Mumbai is a functionary of the Income Tax Department. We hold that he is competent to receive the said declaration and to issue certificate in this regard. Even if there is default in filing the said declaration before the ITO in Mumbai but the default is of venial breach in nature and does not affect the declaration so made by the assessee and the subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of assessee's husband was not financially sound. It may be pointed out herein that the CIT(A) has not only considered the said evidence filed by the assessee but had forwarded the same to the Assessing Officer, who has not offered any comments in this regard. The CIT(A) vide paras 13, 14 and 15 had elaborately discussed the transactions entered into by the assessee vis-à-vis sale of her gas stations and gas stations sold by her husband, wherein both the assessee and her husband had 40% share each. The assessee had claimed that it had received Rs. 2 crores being her share in the said gas station and her husband had received Rs. 1.50 crores being 40% share in sale of said gas station. Vide para 15, the CIT(A) has further relied on the documentation of sale of property for Rs. 1.10 crores by the husband of assessee. In respect of all these transactions, the CIT(A) had also taken note of mutations in the name of purchasers as per registered sale deeds and vide second part of para 16 held as under:- "16...... These evidences are proof of the fact that all the properties, for which sales deed were entered into either by the appellant or by her husband, stood transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .70 crores cannot be brushed aside. 22. It may also be pointed out that the bank statement of the bank account held by the assessee in Pakistan clearly shows a credit in her name of Rs. 4.38 crores, which is the evidence of resources held by the assessee and the same cannot be brushed aside. The manner in which the money was transferred and brought into India cannot be looked into by the Assessing Officer, in view of clear-cut guidelines issued by the CBDT and once the assessee is holding requisite amount of cash balance in her bank account, out of which the assessee claims that she had brought the money into India in cash, then the availability of such cash stands explained and does not warrant any addition under section 68 of the Act. 23. The next question which arises is whether the said amount has been brought into by hawala transaction or hawala means or not. Admittedly, the transactions through hawala are not to be accepted as such but in the absence of any direct banking facilities between India and Pakistan, modes other than the banking channels are used for the transfer of funds by the migrants from Pakistan to India. The assessee had sought her migration to India becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 25. Another issue which was raised by the learned Authorized Representative for the assessee was the theory of probability, wherein the assessee had declared cash of Rs. 2.71 crores and jewellery weighing 1387.50 grms. worth Rs. 22,01,500/- in the declaration made before the ITO, Mumbai as having been brought from Pakistan. The Assessing Officer has accepted the declaration of jewellery and has not made any addition in this regard. The said jewellery was also brought by the assessee on her migration from Pakistan to India and was declared in the same declaration before the same ITO, Mumbai. No adverse comments have been raised in respect of said jewellery declaration nor the same has been added as income of the assessee, consequently, the declaration of cash made by the assessee in the same declaration merits to be accepted. We find no merit in the plea of learned Departmental Representative for the Revenue that no extra corroborative evidence has been brought on record. The assessee has very clearly establishes its case of having transferred the properties in the name of persons to whom it claims to have sold the same and it cannot be the case of Revenue that the said transfers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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