COMMISSIONER OF INCOME TAX-II CHD. V. PARNEETA GOYAL

ITA/278/2010

AI Insights

The case revolves around an appeal by the Commissioner of Income Tax-II, Chandigarh, challenging the Tribunal's decision that favored the respondent, Parneeta Goyal, regarding the assessment year 2005-06. The primary issue was the legitimacy of cash deposits amounting to Rs. 13,50,000 and Rs. 6,15,300 in the assessee's bank accounts, which the Assessing Officer initially deemed undisclosed income. The Tribunal, referencing the Supreme Court's decision in Lal Chand Bhagat Ambika Ram Vs. CIT, found that the assessee had adequately discharged her burden of proof by providing comprehensive documentation, including bank statements and a cash book, which the Assessing Officer failed to effectively counter.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 680105 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 07-02-2011
• Assessment Year: misc
• Other Referred Cases: Lal Chand Bhagat Ambika Ram Vs. Commissioner of Income Tax, Sumiti Dayal, Narndra G. Goradia (HUF) Vs. CIT, CIT Vs. Daya Chand Jain Vaidhya
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAVISHANKAR
• Assessee Lawyers: URVASHI DHUGGA
• Keywords: Burden of Proof; Cash Credits; Sale of property; Nexus between cash deposits and withdrawals; Genuine deposits
• Section: 142(1); 143(2); 68; 69; 260A

Judgement Text

" Income Tax Appeal No. 278 of 2010 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 278 of 2010 Date of decision: 7.2.2011 Commissioner of Income Tax-II, Chandigarh --- Appellant Versus Parneeta Goyal --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Ms. Urvashi Dhugga, Senior Standing Counsel for the appellant-Revenue. Mr. Ravi Shankar, Advocate for the respondent-assessee. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the Revenue against the order dated 28.7.2009, passed by the Income Tax Appellate Tribunal Chandigarh Bench ‘B’ Chandigarh (in short “the Tribunal”) in ITA No. 353/Chandi/2009, relating to the assessment year 2005-06. The following substantial question of law has been claimed for determination by this Court: Income Tax Appeal No. 278 of 2010 2 “Whether on the facts and in the circumstances of the case and in law the order of the Hon’ble ITA T is correct in deleting the addition made by the Assessing Officer, holding that the cash credits were out of sale of property where the assessee failed to prove the nexus between the cash deposits and withdrawals from bank/sale proceeds of the house.” The facts, in brief, necessary for adjudication as narrated in the appeal, are that the assessee filed her return of income on 26.9.2005 for the assessment year 2005-06 declaring income of Rs. 87,747/-. The assessing officer having come to know of cash deposits of Rs.10,97,300/- and Rs.32,84,000/- made by the assessee asked from her the source of such deposits. The assessee explained to the assessing officer vide written reply dated 15.11.2007 that the said amounts were those which she withdrew from the bank on different dates. It was further claimed by her that she had sold a house for a sum of Rs. 24,70,000/- in which she had 50% share whereas remaining 50% share belonged to her husband. The reply so furnished by the assessee did not find favour with the assessing officer who accordingly, vide order dated 26.12.2007, made an addition of Rs. 13,50,000/- under Sections 68 and 69 of the Act. The Commissioner of Income-tax (Appeals) {in short “the CIT(A)”} upheld the order of the assessing officer and dismissed assessee’s appeal by order dated 19.3.2009. The Tribunal, however, allowed the appeal of the assessee, vide the order under appeal by relying upon the decision of Income Tax Appeal No. 278 of 2010 3 the apex Court in Lal Chand Bhagat Ambika Ram Vs. Commissioner of Income Tax, 37 ITR 288 (SC). The Tribunal observed that burden to prove the source of cash deposits was on the assessee and such onus had been discharged by her by producing of relevant record. The issue that arises for consideration by this Court is, whether the amounts of Rs. 13,50,000/- and Rs.6,15,300/- deposited by the assessee in her bank account on various dates was her undisclosed income or the cash deposits had been duly explained by the assessee. The Tribunal while holding the aforesaid deposits to be genuine recorded the following finding: “It is seen that the impugned additions were made by the Assessing Officer on the plea that the assessee has furnished bulky information simply to escape from the situation. We are not in agreement with such a finding because unless and until any specific defect is pointed out, such a finding cannot be sustained and second, if the Assessing Officer was not satisfied, nothing prevented him to ask the assessee to explain the source of the amounts where he was having any doubt. Undisputedly, the assessee furnished the copies of bank statements, cash book and other details as required by him. The claim of the assessee is further fortified from the fact that even the Assessing Officer himself has mentioned at page 1 of the assessment order that the assessee attended the proceedings from time to time and filed details/information Income Tax Appeal No. 278 of 2010 4 as asked for. The relevant portion of the order is reproduced herewith:- “Questionnaire dated 10.8.2006 along with statutory notices under Section 142(1) and 143(2) were issued and served on 14.8.2006. Shri Annet Goyal, C.A. attended the proceedings from time to time. Filed details/information asked for. Case has been discussed.” 4. During hearing of this appeal, it was pleaded by the learned counsel for the assessee that each and every entry was duly explained to the Assessing Officer by giving its narration and complete cash book was produced. This factual matrix was not controverted by the Revenue. Even the assessee vide her letter dated 24.12.2007 explained her position. As far as the contention of the learned DR that the assessee made frequent withdrawals/ deposits in the respective accounts, we are of the view that there is no bar in depositing or withdrawing the amounts unless and until some foul play is brought on record. Even if, the argument of the assessee that the amounts were deposited/withdrawn, as the assessee wanted to purchase a residential property is not accepted, still there is no bar. Even in the impugned order, the stand of the assessee was not found convincing in the light of the decision in the case of Sumiti Dayal, we are of the view that the ratio of preponderance of human probability is applicable to both Income Tax Appeal No. 278 of 2010 5 sides. The paper book filed by the assessee (running into 59 pages) contains cash book for financial year 2004-05, bank statement of IndusInd Bank Account No. 782245 and 782828, bank statement of Vijaya Bank, copy of books of account along with relevant entries, various replies filed by the assessee clearly shows that the assessee furnished the necessary details. As far as the plea of the learned DR that bulky information was filed by the assessee itself cannot be the basis of addition and for this proposition, we are fortified by the decision in the case of Narndra G. Goradia (HUF) Vs. CIT (234 ITR 571) (Bom). In the absence of any specific defect or rejection of books of account, the information/books of account filed by the assessee simply cannot be brushed aside. The additions seem to be on the basis of suspicion, conjecture and surmises, therefore, such additions cannot be sustained. Our view is fortified by the decision from the Hon’ble Apex Court in the case of Lal Chand Bhagat Ambika Ram Vs. CIT (37 ITR 288) (SC), therefore, in the absence of any cogent reasoning and adverse material, such plea of the Revenue cannot be sustained. We are in agreement of the learned DR only to the extent that the assessee has to establish the nexus. Admittedly, the burden to prove the source of receipt is on the assessee but such an onus has been discharged by producing the relevant record. Under the aforesaid facts, we are of the view that when the Income Tax Appeal No. 278 of 2010 6 necessary details were furnished by the assessee, onus shifts to the Revenue to explain as to how the explanation of the assessee is not acceptable. The ratio laid down in the case of CIT Vs. Daya Chand Jain Vaidhya 98 ITR 280 (All.) fortifies our view.” The deposits made by the assessee were held to be genuine by the Tribunal after appraisal of bank statements of Indus Ind Bank and Vijaya Bank in which she had the account and also after perusal of copy of entries of withdrawals and deposits in the accounts being operated by her. Learned counsel for the Revenue could not show that the findings recorded by the Tribunal holding the cash deposits to be genuine were liable to be interfered with. In view of this, no substantial question of law arises for consideration by this Court. In view of the above, finding no merit in the appeal, the same is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) February 7, 2011 JUDGE *rkmalik* "