Tara Chand, New Delhi V. ITO, Ward- 62(4), New Delhi

ITA 1076/DEL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0902 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 11-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 1076/DEL/2019 ASSESSMENT YEAR: 2010-11 TARA CHAND, VS. ITO, WARD 62(4), HOUSE NO. F-163, NEW DELHI PRASHANT VIHAR, ROHINI, NEW DELHI 85 (PAN: AAFPC5913K) (ASSESSEE) (RESPONDENT) ASSESSEE BY : SH. VED JAIN, ADV. & SH. AKSHIT GOEL, CA REVENUE BY : SH. PRADEEP SINGH GAUTAM, SR. DR. ORDER THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER DATED 17.12.2018 PASSED BY THE LD. CIT(A)-20, NEW DELHI RELATING TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ACTION OF THE AO DESPITE THE FACT THAT THE REOPENIN G BY THE AO AND CONSEQUENT REASSESSMENT WITHOUT COMPLYING WITH THE STATUTORY CONDITIONS PRESCRIBED UNDER SECTION 147 R EAD WITH SECTION 147 OF THE ACT IS BAD IN LAW. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE 2 ACTION OF THE AO IGNORING THE FACT THAT THE AO HAS ERRED BOTH ON FACTS AND IN LAW IN MAKING REASSESSMENT UNDER SE CTION 147 OF THE ACT AS THE REASONS RECORDED FOR REOPENIN G THE ASSESSMENT DOES NOT MEET THE REQUIREMENTS OF SECTIO N 147 OF THE ACT. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ACTION OF THE AO DESPITE THE FACT THAT REOPENING AS WELL AS REASSESSMENT HAS BEEN MADE BY THE AO WITHOUT APPLIC ATION OF MIND. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECT ING THE CONTENTION OF THE ASSESSEE THAT THE THERE IS NO BAS IS IN THE REASONS RECORDED BY THE AO FOR DRAWING ASSUMPTION T HAT THE CASH DEPOSITED IN THE BANK ACCOUNT ARE THE UNDISCLO SED INCOME OF THE ASSESSEE. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ADDITION OF RS.10,00,000/- MADE BY A.O. ON ACCOUNT OF CASH DEPOSITS IN THE BANK ACCOUNT. 7. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ADDITION DESPITE THE ASSESSEE BRINGING EXPLANATION AND EVIDENCES ON RECORD TO PROVE THE SOURCE OF CASH DEPOSITS. (II) THAT THE ADDITION HAS BEEN CONFIRMED ARBITRAR ILY REJECTING THE EXPLANATION OF THE ASSESSEE. 8. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 3 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI LED HIS RETURN OF INCOME ON 25.9.2017 DECLARING AN INCOME OF RS. 1,53 ,760/-. THE ASSESSEE IS AN INDIVIDUAL WORKING AS A CONTRACTOR A ND COMPUTING ITS BUSINESS INCOME U/S. 44AF OF THE INCOME TAX ACT, 19 61 (IN SHORT ACT). BESIDES THIS, ASSESSEE IS ALSO EARNING INCOME UNDER THE HEAD HOUSE PROPERTY AND OTHER SOURCES. THE ASSESSMENT PROCEEDI NGS IN THIS CASE WAS REOPENED UNDER NPS CYCLE THAT THE ASSESSEE HAS NOT FILED HIS RETURN OF INCOME FOR THE AY 2010-11. HOWEVER, AS PER DETAILS APPEARED IN THE AIR REPORT, IT SHOWS THAT THE ASSESSEE HAS DEPOSITED TH E CASH DURING THE FINANCIAL YEAR AMOUNTING TO RS. 29 LACS IN THE BANK ACCOUNT. IN VIEW OF ABOVE, NOTICE U/S. 148 OF THE ACT DATED 29.3.2017 WAS ISSUED IN THE NAME OF THE ASSESSEE. THE AO DURING THE SCRUTINY FO UND THAT THERE WAS CASH DEPOSIT OF RS. 29 LACS IN THE BANK ACCOUNT OF THE ASSESSEE DURING THE YEAR. THE ASSESSEE SUBMITTED THAT THROUGH AN IKRAR NAMA HE HAS RECEIVED RS. 19 LACS IN CASH AS BAYANA FROM A BUYER ON THE D EAL OF AGRICULTURAL LAND. THE AO FOUND THAT NO SOURCE OF WITHDRAWALS O F RS. 19 LACS HAS BEEN SUBMITTED BY THE ASSESSEE. THE AO FURTHER FOUND TH AT THERE WAS CASH DEPOSIT OF RS. 10 LACS ON 15.12.2009, THE ASSESSEE STATED THAT THE CASH DEPOSITS WERE OUT OF CASH SALES DURING THE PERIOD. THE AO FOUND THAT ALL THE CASH FROM THE SUPPOSED CASH SALES WERE DEOSTIED IN ONE DAY IN THE BANK AND THE NEXT DAY PAID OUT THROUGH CHEQUES. TH E ASSESSEE DID NOT SHOW ANY EVIDENCE OF CASH SALES. UNDER THESE CIRC UMSTANCES, NOT BEING SATISFIED WITH THE SUBMISSION OF THE ASSESSEE THE A O TREATED THE AMOUNT OF CASH DEPOSIT OF RS. 29 LACS AS GATHERED FROM UND ISCLOSED SOURCES AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE U/S. 68 OF THE ACT BY COMPLETING THE ASSESSMENT AT RS. 30,53,760/- U/S. 1 43(3) OF THE ACT. VIDE ORDER DATED 01.12.2017. AGAINST THE ASSESSMENT ORDER DATED 01.12.2017, ASSESSEE APPEALED BEFORE THE LD. CIT(A) , WHO VIDE HIS IMPUGNED ORDER DATED 17.12.2018 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY CONFIRMING THE ADDITION OF RS. 10 LACS. AGGRIEVED WITH THE IMPUGNED ORDER DATED 17.12.2018, ASSESSEE IS IN APP EAL BEFORE THE TRIBUNAL. 4 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE STATED DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DEPOSITED RS. 10,00,000/- IN HIS SAVING BANK ACCOUNT MAINTAINED WITH STATE BANK OF INDIA. IN THIS REGARD IT WAS SUBMITTED BY THE ASSESSEE THAT THE AM OUNT DEPOSITED WAS ON ACCOUNT OF CASH SALES MADE DURING THE YEAR UNDER CONSIDERATION. IN ORDER TO FURTHER CLARIFY THE SAME, ASSESSEE VIDE RE PLY DATED 23.11.2017 SUBMITTED THAT IN ORDER TO DISCONTINUE ITS BUSINESS IN THE YEAR UNDER CONSIDERATION I.E. AY 2010-11, ASSESSEE SOLD ITS CL OSING STOCK AMOUNTING TO RS. 9,07,250/-APPEARING IN THE BOOKS OF ASSESSEE (MAINTAINED FOR HIS OWN UNDERSTANDING) AS ON 31.03.2009. ACCORDINGLY, T HE ABOVE CASH DEPOSITS TO THE EXTENT OF RS. 8,77,100/- WAS ON ACC OUNT OF SALE OF CLOSING STOCK. REGARDING THE BALANCE CASH DEPOSIT AMOUNTING TO RS. 1,22,900/-, IT WAS SUBMITTED BY THE ASSESSEE THAT THE SAID AMOUNT WAS DEPOSITED OUT OF THE CASH BALANCE OF RS. 2,30,127/- AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2009. IT WAS SUBMITTED THA T THE CASH DEPOSIT AMOUNTING TO RS. 10,00,000/- WAS PURELY ON ACCOUNT OF BUSINESS ACTIVITY AND ASSESSEE HAS DULY DISCHARGED ITS ONUS OF ESTABL ISHING THE SOURCE OF CASH DEPOSITS, AS REQUIRED BY THE PROVISIONS OF SEC TION 68. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS DULY DISCHARGED ITS ONUS AS SPECIFIED UNDER THE PROVISIONS OF SECTION 68, BY FURNISHING A LL THE DOCUMENTARY EVIDENCES AS AND WHEN CALLED UPON BY THE AO. ON THE CONTRARY AO HAS HIMSELF NOT BROUGHT ON RECORD ANY EVIDENCE WHICH MA Y PROVE THAT THE DOCUMENTS OR THE EXPLANATIONS FURNISHED BY THE ASSE SSEE ARE NOT RELIABLE, DESPITE OF THIS FACT AO IS STILL CONTENDING THAT AS SESSEE HAS COMPLETELY FAILED TO DISCHARGE ONUS CASTED UPON HIM BY THE LAW . UNDOUBTEDLY, THE ADDITION HAS BEEN MADE MERELY ON THE BASIS OF SUSPI CION AND DOUBT WITHOUT BRINGING ANY EVIDENCE ON RECORD BY THE AO W HICH IS BAD IN LAW AND LIABLE TO BE DELETED. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS P ASSED BY THE REVENUE AUTHORITIES AND STATED THAT LD. CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION OF RS. 10 LACS, WHICH DOES NOT NEED AN Y INTERFERENCE. THEREFORE, THE APPEAL FILED BY THE ASSESSEE MAY BE DISMISSED. 5 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES ALONGWITH THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AND THE PAPER BOOK CONTAINING PAGES 1-88. THE ASSESSEE HAS RAISED AS MANY AS 8 GROUNDS OF APPEAL. HOWEVER, THE GROUND NO. 1 TO 4 WERE NOT PRESSED, HENCE, THE SAME WERE DISMISSED AS SUCH. APROPOS GROUND NO.5 TO 7 IS CONCERNED, THE ON LY ISSUE IN THIS APPEAL IS THE ADDITION OF RS.10,00,000/- OUT OF THE ADDITI ON OF RS.29,00,000/-, CONFIRMED BY THE LD. CIT(A). I NOTE THAT THE AO HA S MADE THE ADDITION ON THE BASIS OF THE CREDITING THE BANK ACCOUNT. HOWEVE R, THE LD. CIT(A) HAS CONFIRMED THE SAME ON THE BASIS THAT THERE IS A CON TRADICTION IN THE EXPLANATION GIVEN BY THE ASSESSEE BEFORE THE AO AND THE EXPLANATION GIVEN BEFORE HIM. I FURTHER NOTE THAT IT IS MENTION ED IN PARA 6.2.4 OF THE LD. CIT(A) ORDER THAT THE ASSESSEE DURING THE APPEA L PROCEEDINGS SUBMITTED THAT THE DEPOSIT OF RS.10,00,000/- WAS MA DE OUT OF CASH OF RS.8,77,100/- PAID OUT OF THE SALE OF CLOSING STOCK AND CASH OF RS.1,22,900/- OUT OF THE PAST SAVINGS WHEREAS BEFOR E THE AO THE ASSESSEE HAS SUBMITTED THAT THE AMOUNT WAS PAID OUT OF THE C ASH SALES. THE LD. CIT(A) HAS CONSIDERED THIS TO BE A CONTRADICTORY ST AND OF THE ASSESSEE. ON GOING THROUGH THE LETTER DATED 23.11.2017 PLACED A T PAPER BOOK PAGE 24, I NOTE THAT ASSESSEE HAS SUBMITTED TO THE AO THAT R S.8,77,100/- IS THE SALE PROCEEDS OF THE STOCK BALANCE HE WAS HAVING AS ON 31.03.2009 AND BALANCE RS.1,22,900/- WAS DEPOSITED OUT OF THE CASH BALANCE AVAILABLE WITH HIM. IN THIS REGARD, THE ASSESSEE HAS ALSO FIL ED THE BALANCE SHEET WITH THE AO WHICH HE HAS FILED ALONG WITH THE RETUR N OF INCOME FOR PRECEDING ASSESSMENT YEAR. I FURTHER NOTE THAT AS P ER THE BALANCE SHEET AS ON 31.03.2009 THE ASSESSEE WAS HAVING CLOSING ST OCK OF RS.9,07,250/- AND CASH IN HAND OF RS.2,30,127/-. THUS, THE EXPLAN ATION OF THE ASSESSEE REGARDING THIS DEPOSIT OF CASH WAS CORRECT. THE LD. CIT(A) WAS NOT JUSTIFIED IN TREATING THIS EXPLANATION AS CONTRARY TO THE EXPLANATION GIVEN BEFORE HER. THE EXPLANATION GIVEN BEFORE AO AS STAT ED IN THE LETTER DATED 23.11.2017 AND THE EXPLANATION GIVEN TO THE LD. CIT (A) IN ITS SUBMISSIONS IS THE SAME. THE ASSESSEE HAVING DEPOSITED THE AMOU NT OUT OF THE SALE PROCEEDS OF THE CLOSING STOCK HELD BY HIM AS ON 31. 03.2009 AND OUT OF THE 6 CASH BALANCE AVAILABLE WITH HIM AS ON 31.03.2009, T HERE IS NO REASON FOR SUSTAINING THIS ADDITION. ACCORDINGLY, I DELETE TH IS ADDITION OF RS. 10 LACS AND ALLOW THE GROUND NO. 5 TO 7 ACCORDINGLY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED ON 20/12/2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 20/12/2019 SRB COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES