CIT, CHANDIGARH V. B.R. MADAN

ITA/570/2009

AI Insights

The case involves an appeal by the Commissioner of Income-Tax-I, Chandigarh against Shri B.R. Madan concerning the deletion of an addition of Rs.46,46,798 made on account of unexplained cash deposits in bank accounts. The addition was initially made by the Assessing Officer following a search at the assessee's premises, but was later deleted by the CIT(A) and upheld by the Tribunal. The CIT(A) found that the additions were made without proper verification and consideration of the assessee's explanations, which included loans taken through banking channels and disclosures under the Voluntary Disclosure of Income Scheme (VDIS). The High Court, however, noted that the CIT(A) and the Tribunal failed to adequately address the explanations provided, leading to the remand of the case for a thorough re-examination.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 720615 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 28-10-2010
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RADHIKA SURI
• Assessee Lawyers: URVASHI DHUGGA
• Keywords: Income tax appellate tribunal; Mechanical addition; Unexplained Cash Deposits; Banking channel loans; VDIS disclosure
• Section: 260A

Judgement Text

"Income Tax Appeal No. 570 of 2009 -1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income Tax Appeal No. 570 of 2009 Date of decision: 28.10.2010 Commissioner of Income-Tax-I, Chandigarh ...Appellant Versus Shri B.R.Madan ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Ms. Urvashi Dhugga, Advocate for the appellant. Ms. Radhika Suri, Advocate for the assessee. **** ADARSH KUMAR GOEL, J. 1. This appeal has been preferred under Section 260A of Income Tax Act, 1961 (hereinafter referred to as “the Act”) proposing following substantial question of law arising out of order dated 6.11.2006 of the Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh (hereinafter referred to as “the Tribunal”) passed in IT(SS)A No32/Chandi/2003 and CO No.20/Chandi/2003:- “Whether in the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in confirming the deletion of Rs.46,46,798/- being the addition made on account of unexplained cash deposits in the bank accounts of the assessee and his family members, whereas the Assessing Officer was not even allowed a Income Tax Appeal No. 570 of 2009 -2- *** reasonable opportunity to examine the additional evidence furnished before the ld. CIT (Appeals) as required under Rule 46 A of the Income-tax Rules, 1962?” Search was conducted at the premises of the assessee on 20.11.1997 and during the assessment addition of Rs.46,46,798/- was made on account of unexplained income of the assessee. The addition was deleted by the CIT(A) and upheld by the Tribunal. The CIT(A) held that addition were made without proper verification and without due consideration of explanation of the assessee. Accordingly, the addition were deleted. The observations are reproduced below:- “I have gone through the submissions of the appellant and the observations of the Assessing Officer. It is seen that the Assessing Officer has not applied his mind to the issue while making the addition. The additions are being made in a mechanical way without examining the entries and verifying the amounts which have been reflected in the returns filed by different family members from time to time. The explanations have been filed regarding the entries and wherefrom loans were taken, the same have been reflected in the accounts and affidavits have been filed for the same. Almost all the loans have been taken through banking channel. The true state of affairs have been reflected in the returns filed by the appellant and the family members for earlier assessment years. Without looking into the details, the Assessing officer had Income Tax Appeal No. 570 of 2009 -3- *** made the addition by adding up the credits appearing in each bank account. It may further be noted that Smt. Shalley Lall, one of the daughters of the appellant was running a boutique since 1992 and was married in January, 1994. Smt. Priya Chohan, other daughter of the appellant was in service since 1993 and was married November, 1995. Their bank accounts were not seized from the residence of the appellant. At the time of search the were married and they had nothing to do with the appellant. The Assessing Officer should have examined the entries found in their bank accounts and should have come to a definite conclusion that the deposits in their accounts were made by Sh. B.R.Madan before adding them in the hands of the appellant. No such exercise has been done by the Assessing Officer. Further, it may be seen that under VDIS, Smt. Shalley Lal had disclosed Rs.2.00 lacs as cash and Sh. M.R. Madan, father of the appellant and Smt. Sangeeta Madan, wife of the appellant, have unclosed Rs.1,50,000/- cash towards capital gains. After examining the accounts and the past records of the appellant and his family members, I find no justification for the Assessing Officer to make the impugned addition totalling Rs.46,46,798/-, which is ordered to be deleted.” The above observations were reiterated by the Tribunal. We have heard learned counsel for the parties. Income Tax Appeal No. 570 of 2009 -4- *** Learned counsel for the Revenue submits that the view taken by the CIT(A) in deleting the addition made on account of unexplained income was perverse. After holding that addition by the Assessing Officer was without considering the explanation of the assesee, the CIT(A) deleted the addition without discussing the explanation. Even if the Assessing Officer had made addition without due consideration of explanation of the assessee at best said explanation could have been gone into by the CIT(A) which has not been done. The Tribunal also missed this aspect. Learned counsel for the assessee submitted that there was explanation duly furnished. In absence of finding having been recorded which may explain the finding about unexplained income, the CIT(A) could not have deleted the addition only on the ground that explanation of the assessee had not been properly considered. Accordingly, we are of the view that substantial question of law as to perversity of finding recorded by the CIT(A) as well as the Tribunal authorities arises and has to be answered in favour of appellant. Accordingly, we allow the appeal, set aside the impugned order and remand the matter to the CIT (A) for a fresh decision in accordance with law. The parties may appear before the CIT (A) for further proceedings on 20.12.2010. (Adarsh Kumar Goel) Judge October 28, 2010 (Ajay Kumar Mittal) Pka Judge "