Pramod Ram Nagpal, Mumbai vs Department Of Income Tax
- CitationITA No. : 5443/Mum/2012
Ratio decidendi
The rule this decision rests on
The Tribunal holds that where the payee is a resident bank covered by the Banking Regulation Act, 1949, and holding a PAN and TAN and assessed to tax in India, the payment of interest to it does not fall within section 195 (deduction at source on payments to non-residents), and accordingly the disallowance under section 40(a)(ia) cannot stand; the payee being outside the TDS regime, no tax was required to be deducted under section 194A. Where cash deposits into a bank account are shown, from the assessee's cash book and the reconciliation of cash-in-hand, to have been funded out of cash withdrawn from other banks and cash already held in hand, such deposits are explained and cannot be added as unexplained income under section 69; an addition resting merely on AIR information, without rebutting that explanation, is not sustainable. Where a coordinate bench of the Tribunal has decided the same issue on identical facts in the assessee's own case for another assessment year, the Tribunal will not deviate from that view absent a reason to do so.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
ITA No. : 5443/Mum/2012 (Assessment year: 2008-09) Income Tax Officer -1(1)-(1), Vs Shri Pramod Ram Nagpal, Room no. 534/579, Meghji Bhavan, Ground Floor, Aayakar Bhavan, M K Road, Metro Cinema Road, Mumbai -400 020 Dhobi Talao, Mumbai -400 020 ःथयी लेखा सं.:PAN: AAHPN 2577 Q अपीलाथȸ (Appellant) ू×यथȸ (Respondent) Appellant by : Shri Permanand J Respondent by : Shri Baldev Idnani
सुनवाई कȧ तारȣख /Date of Hearing : 08-12-2014 घोषणा कȧ तारȣख /Date of Pronouncement : 21-01-2015
आदेश ORDER ᮰ी िववेक वमाᭅ, ᭠या स: स: PER VIVEK VARMA, JM:
The appeal is filed by the department against the order of CIT(A) -1, Mumbai, dated 20.06.2012m wherein the following grounds have been raised:
"1. Whether on the facts and circumstances of the case and in law, the Ld. CIT is right in deleting the disallowance of Rs. 1,61,064/- made u/s 40(a)(ia) of the I.T. Act?
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT is right in deleting the addition of Rs. 12,88,000/- made u/s 69 of the I.T. Act towards unaccounted cash deposits? The appellant craves leave to add, amend or withdraw the aforesaid grounds of appeal".
2 Shri Pramod Ram Nagpal ITA 5443/M/2012
2. Ground no. 1 pertains to disallowance of Rs. 1,61,064/- u/s 40(a)(ia).
3. The AO disallowed the payment made to City Bank, holding that, Citi Bank is a foreign bank operating in India through its Indian entity and thus any payment made to Citi Bank shall attract section 195 and therefore, tax should have been deducted at source.
4. The assessee approached the CIT(A), before whom he reiterated his submissions made before the AO.
5. The CIT(A) while adjudicating the issue held, "In appeal it is submitted that appellant vide Letter dt. 03-12-2010, has explained that City Bank is assessed to tax in Chennai, India, and has been allotted PAN and TAN Number and therefore it is outside the ambit of TDS provisions.
5.3 I have carefully considered the submission of the appellant, assessment order and facts of the case. It is an admitted fact that the interest of Rs.1,61,064/- was paid by the appellant to City Bank. The appellant being an individual and the payee being banking company covered by Baking Regulation Act, 1949, in terms of section 194A it was not required to deduct TDS on interest paid and is thus outside the purview of section 40(a)(ia). Ground No.3 is allowed/
6. The CIT(A), therefore, deleted the disallowance.
7. Against this disallowance, the department is in appeal before the ITAT.
8. Before us, the DR supported the order of the revenue authorities, whereas the AR supported the order of the CIT(A).
9. We have heard the arguments and have pursued the orders of the revenue authorities. In our opinion, there is no infirmity in the order of the CIT(A), because, the CIT(A) has categorically held that since the Citi Bank is covered by Banking 3 Shri Pramod Ram Nagpal ITA 5443/M/2012
Regulations Act, 1949, the payment of interest shall be treated as payment to any Bank, which is covered by the Banking Regulation Act, 1949. The fact that the said bank has been allotted PAN, TAN and being assessed under the India Income Tax Act, 1961 at Chennai, there is no scope of taking any other view. In any case, section 195 talks about the payment made "to a non-resident, not being a company or to a foreign company, and interest ...".
10. In provision itself excludes the payee here, i.e. Citi Bank, which is a resident as per the Indian Tax regime.
11. We, therefore, sustain the order of the CIT(A) and reject the ground as taken by the department.
12. Ground no. 1 is therefore, rejected.
13. Ground no. 2 pertains to addition of Rs. 12,88,000/- u/s
69.
14. In the assessment proceedings, the AO noted that there are deposits in a current account maintained with OBC, which aggregated to Rs. 12,88,000/-. The assessee explained that in the conduct of shares trading business, he had sufficient cash balance, withdrawn from other banks and deposited in OBC. The AO rejected the explanation of the assessee and held that since no books of account had been produced and over that the assessee could not explain the reason for having to withdraw cash and depositing it, even if cash was available. He, therefore, added Rs. 12,88,000/- to the income of the assessee.
15. The assessee approached the CIT(A) before whom, the assessee reiterated his submissions and which he has reproduced in his order. The CIT(A), after considering the submissions of the assessee, held, 4 Shri Pramod Ram Nagpal ITA 5443/M/2012
"I have carefully considered the submission of the appellant, assessment order and facts of the case. It is noted from the bank account of the Oriental Bank of Commerce and also from the cash book that the cash deposits of Rs. 12,88,000/- on various dates in Oriental Bank of Commerce has arisen out of withdrawals from City Bank ICICI Bank, the opening cash in hand on various dates. This fact is also evident from the detailed chart prepared and included at page 5 & 6 of the assessment order. I am not in agreement with the A.O. that in spite of excess cash available in hand, the appellant has withdrawn cash from one bank or the other and therefore deposits in OBC Bank are unexplained. The appellant has shown that there are multiple transactions of deposits and withdrawals and that sources of these transactions are explained. The addition by A.O. merely on the basis of AIR information is not well founded and the same is directed to be deleted".
16. Against this order, the department is now before the ITAT.
17. At the time of hearing, the AR submitted that similar ground was taken by the department in assessee's own case in ITA No. 1196/Mum/2013, in assessment year 2009-10, wherein, the ITAT held, "We have heard the rival submissions and also per used the finding given in the impugned order. The assessee admittedly is engaged in the business of share trading. During the course of such business, the assessee has been depositing the money in the bank account and also making regular withdrawals. The Ld. CIT(A) has verified the books of account and also the cash book maintained by the assessee. In the cash book the assessee has recorded availability of cash -in-hand on day to day basis and also the deposits made in the bank account, from time to time. The reconciliation of cash-in-hand and deposits made in the bank account as submitted before the Ld.CIT(A) are as under:
Sr. Date Amt. Remark Cash No. deposited Balance C/f in Rs. 1 01.04.07 Opening cash in hand "CIH" 7,52,175/- 2 07.04.07 5,000 Out of CIH of Rs.8,82,175/- Bal C/f 8,81,675/- 3 17.04.07 2,00,000 Out of CIH of Rs.8,81,675/- Bal C/f 6,81,675/- 4 18.04.07 35,000 Out of CIH of Rs.6,81,675/- Bal C/f 6,46,675/- 5 12.06.07 6,000 Out of CIH of Rs.10,12,306/- Bal C/f 10,06,306/- 6 23.06.07 3,000 Out of CIH of Rs.10,11,306/- Bal C/f 10,08,306/- 7 10.10.07 2,50,000 Out of CIH of Rs.10,00,806/- Bal C/f 5 Shri Pramod Ram Nagpal ITA 5443/M/2012
7,50,806/- 8 11.10.07 3,00,000 Out of CIH of Rs.7,50,806/- Bal C/f 4,50,806/-
9 09.01.08 2,50,000 Out of CIH of Rs.4, 84,806/- Bal C/f 2,34,806/- 10 07.03.08 1,50,000 Out of CIH of Rs.2,89,231/- Bal C/f 1,39,231/- 11 14.03.08 20,000 Out of CIH of Rs. 1,69,231/- Bal C/f. 1,49,231/- 12 25.03.08 64,000 Out of CIH of Rs.1,47,231/- Bal C/f 83,231/- 12 28.03.08 10,000 Out of CIH of Rs.1,13,231/- Bal C/f 1,03,231/- Total 12,88,500
From the above, it is quite evident that the source of deposits in the bank account is out of cash-in-hand as reflected in the cash book of the assessee. Thus we do not find any reason to deviate from the findings recorded by the Ld.CIT(A), and accordingly the same are affirmed. In the result the Ground No. 1 as raised by the Revenue stand dismissed".
18. The AR, therefore, submitted that since the issue is covered in the assessee's own case, no different view should be taken.
19. The DR placed reliance on the order of the AO.
20. We have heard the parties and have pursued the material on record and the orders of the revenue authorities and the order of the ITAT.
21. Since, the coordinate Bench has taken a view on the identical facts, we do not find any reason to deviate ourselves either from the order of the ITAT or the order of the CIT(A) on the issue, as impugned before us.
22. We, therefore, sustain the order of the CIT(A), consequentially rejecting the ground as raised by the department.
23. Ground no. 2 is therefore, rejected.
6 Shri Pramod Ram Nagpal ITA 5443/M/2012
24. In the result, the appeal as filed by the department is dismissed.
Order pronounced in the open Court on 21st January, 2015.
(आर.
आर. सी.
सी. शमाᭅ) (िववेक वमाᭅ) Sd/- Sd/-
लेखा सद᭭य ᭠याईक सद᭭य (R C SHARMA) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Date: 21st January, 2015
ूित/Copy to:-
1) अपीलाथȸ /The Appellant.
2) ू×यथȸ /The Respondent.
3) The CIT(A) -1, Mumbai.
4) The CIT-1, Mumbai/CIT - 1, Mumbai.
5) ǒवभागीय ूितिनिध "िस", आयकर अपीलीय अिधकरण, मुब ं ई/ The D.R. "C" Bench, Mumbai.
6) गाड[ फाईल Copy to Guard File.
आदे शानुसार/By Order / / True Copy / /
उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, मुबं ई Dy./Asstt. Registrar I.T.A.T., Mumbai
*च᭪हान व.िन.स *Chavan, Sr.PS
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