Shri Devinder Singh, Ludhiana V. ITO-Ward-6(5), Mohali

ITA 108/CHANDI/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3699 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-03-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 29-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Additional evidence; Non compliance; Set aside
• Section: 271(1)(c); 142(1); 148; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A, CHANDIGARH (VIRTUAL COURT) .., .. , BEFORE: SHRI. N.K.SAINI, VP & SHRI , R.L. NEGI, JM ./ ITA NO. 108/CHD/2020 [ [ / ASSESSMENT YEAR : 2010-11 SHRI DEVINDER SINGH, VILL: RAIPUR KHURD MANAULI MOHALI THE ITO WARD 6 (5), MOHALI ./ PAN NO: CLJPS8086C / APPELLANT / RESPONDENT [ / ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE / REVENUE BY : SMT. MEENAKSHI VOHRA, ADDL. CIT / DATE OF HEARING : 25/03/2021 / DATE OF PRONOUNCEMENT : 07/06/2021 / ORDER PER R.L. NEGI, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE APPELLANT/ASSESSEE AGAINST THE ORDER DATED 04/10/2019, PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2 CHANDIGARH (FOR SHORT CIT(A), FOR THE ASSESSMENT YEAR 2010-11, WHEREBY THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED UNDER SECTION 144 R.W.S 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT ON THE BASIS OF INFORMATION AVAILABLE WITH THE INCOME TAX DEPARTMENT THAT DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE HAD DEPOSITED RS. 14,00,500 IN HIS BANK ACCOUNT MAINTAINED WITH HDFC BANK, A.O. INITIATED PROCEEDINGS UNDER SECTION 147 OF THE ACT, AFTER RECORDING REASONS AND OBTAINING APPROVAL FROM THE PR. CIT. AND ISSUED NOTICES UNDER SECTION 148 & 142(1) OF THE ACT. HOWEVER, THE A.O. DID NOT RECEIVE ANY RESPONSE FROM THE ASSESSEE. SECOND NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED ALONG WITH FINAL 2 SHOW CAUSE NOTICE FOR NON COMPLIANCE AND THE SAME WERE SERVED THROUGH AFFIXTURE. THIS TIME ALSO THE ASSESSEE DID NOT RESPOND. ACCORDINGLY, THE A.O. PASSED THE ASSESSMENT ORDER UNDER SECTION 144 R.W.S 147 OF THE ACT AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT 17,60,980/- I.E., RS. 14,00,500/- AS UNEXPLAINED CASH DEPOSIT IN THE BANK ACCOUNT, RS. 3,60,000/- AS UNEXPLAINED CASH CREDIT THROUGH CHEQUE / RTGS AND RS. 475/- ON ACCOUNT OF BANK INTEREST. 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER PASSED BY THE A.O. BEFORE THE LD. CIT(A). DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE FURNISHED ADDITIONAL EVIDENCE. LD. THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION ADDITIONAL EVIDENCE SUBMITTED BEFORE HIM AND HEARING THE ASSESSEE, PARTLY ALLOWED THE APPEAL AND DELETED THE ADDITION ON ACCOUNT OF CREDIT ENTRIES AMOUNTING TO 1,60,000/- AND 2,00,000/- AND FURTHER REDUCED THE ADDITION MADE AS UNEXPLAINED DEPOSIT AMOUNTING TO RS. 14,00,500/- TO 50%. STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 4. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) ON THE FOLLOWING GROUNDS: 1. THE WORTHY CIT (A)'S ORDERS ARE CONTRARY TO LAW AND FACTS OF THE CASE AND ADDITIONS ARE WITHOUT ANY BASIS OR PROPER JUSTIFICATION. 2. THE WORTHY CIT(A) HAS COMPLETELY IGNORED THE TRADITIONAL BACKGROUND OF THE AGRICULTURAL FAMILY SETUP THAT PREVAILS IN THE STATE OF PUNJAB, WHEREIN THE ENTIRE BUSINESS IS CARRIED ON IN THE NAME OF THE HEAD OF THE FAMILY, I.E. FATHER OF THE ASSESSEE IN THIS CASE. HOWEVER, SINCE THE LAND HOLDINGS STOOD IN THE NAME OF THE ASSESSEE'S FATHER, AND NO SALARY IS DRAWN FOR HIS SERVICES BY THE ASSESSEE THE GIFT FROM ASSESSEE'S FATHER COULD NOT BE REASONED AS UNGENUINE. 3. THE WORTHY CIT (A) WHILE IGNORING THE CLAIM OF THE ASSESSEE FOR CASH GIFT HAS FAILED TO APPRECIATE THE FACT THAT AGRICULTURISTS RELY ON CASH RATHER THAN BANKING CHANNELS FOR THEIR TRANSACTIONS. 4. THE WORTHY CIT (A) WHILE IGNORING THE CLAIM OF THE ASSESSEE FOR CASH GIFT HAS ERRED IN ESTIMATING THAT AN AMOUNT OF RS 25000/- PER ACRE RETURN. THE WORTHY CIT(A) HAS FAILED TO ACKNOWLEDGE THE FACT THAT RS 25000/- PER ACRE PER ANNUM WAS RATE FOR LEASE OF LAND FOR AGRICULTURAL PURPOSES IN THE YEAR UNDER CONSIDERATION. THEREFORE, IT CANNOT BE REASONED THAT A PERSON WOULD DO FARMING HIMSELF WHEN HE COULD HAVE EARNED THE SAME AMOUNT BY LEASING THE LAND. 5. THE WORTHY CIT (A) WHILE STATING THAT THE POSSIBILITY OF PAST SAVINGS CANNOT BE IGNORED HAS ERRED IN REJECTING THE CLAIM OF THE ASSESSEE FOR CASH GIFT FROM HIS 3 FATHER WHO HAS LAND HOLDING OF 16 ACRES. HOWEVER, THE BENEFIT OF THE SAME HAS NOT BEEN GIVEN IN THE ORDER. 6. THE WORTHY CIT (A) WHILE REJECTING THE CLAIM OF THE ASSESSEE HAS ACCEPTED THE FACT THAT THE ASSESSEE HAS NO OTHER SOURCE OF INCOME EXCEPT THE AGRICULTURE. THEREFORE, THE NATURE OF THE ENTIRE DISPUTED INCOME IS AGRICULTURAL IN NATURE AND IS EXEMPT FROM TAX. 7. INITIATION OF PENALTY U/S 271(1)(C) IS ALSO NOT WARRANTED DUE TO THE FACT THAT NOTHING HAS BEEN CONCEALED. THEREFORE, IT IS PRAYED THAT VERY INITIATION OF THIS PENALTY PROCEEDINGS BE ORDERED TO BE DROPPED. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER PASSED BY THE LD. CIT(A) IS CONTRARY TO THE SETTLED PRINCIPLE OF LAW. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE RECEIVED AN AMOUNT OF RS. 17,60,000/- BY WAY OF GIFT FROM HIS FATHER (RS. 3,60,000/- BY TRANSFER FROM BANK ACCOUNT AND RS. 14,00.000/- IN CASH) THE SOURCE OF GIFT WAS THE AGRICULTURAL INCOME OF THE FATHER OF THE ASSESSEE WHO HAD HOLDING 16 ACRE OF AGRICULTURAL LAND. THE ASSESSEE HAS SUBMITTED AN AFFIDAVIT SWORN BY HIS FATHER IN SUPPORT OF HIS CLAIM. HOWEVER, THE LD. CIT(A) HAS SUSTAINED THE ADDITION OF 50% OF THE AMOUNT DEPOSITED IN THE BANK WITHOUT ANY BASIS IGNORING THE ORAL AND DOCUMENTARY EVIDENCE ADDUCED BY THE ASSESSEE. THE LD. COUNSEL FURTHER CONTENDED THAT THE LD. CIT(A) HAS ESTIMATED THE AGRICULTURE INCOME OF THE FATHER OF THE ASSESSEE @ 25,000/- PER ACRE WITHOUT ANY BASIS. THE LD. CIT(A) HAS ESTIMATING THE AGRICULTURAL INCOME @ RS. 25,000/- PER ACRE WITHOUT TAKING INTO CONSIDERATION THE FACT THAT RS. 25,000/- PER ACRE WAS RATE OF LEASE OF LAND FOR AGRICULTURE PURPOSE IN THE YEAR UNDER CONSIDERATION. THE DEPARTMENT HAS NOT DISPUTED THE FACT THAT THE FATHER OF THE ASSESSEE WAS HOLDING 16 ACRES OF AGRICULTURAL LAND. HOWEVER, THE LD. CIT(A) HAS SUSTAINED THE ADDITION TO THE EXTENT OF 50% OF THE AMOUNT RECEIVED IN CASH BY UNDER ESTIMATING THE INCOME OF THE FATHER OF THE ASSESSEE. THE LD. COUNSEL PLACING RELIANCE ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MEHTA PARIKH AND CO VS. CIT 30 ITR 181 SUBMITTED THAT SINCE THE FINDINGS OF THE LD. CIT(A) ARE NOT IN ACCORDANCE WITH THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE SAID CASE, THE SAME IS LIABLE TO BE SET ASIDE., 6. ON THE OTHER HAND, THE LD. DR SUPPORTING THE ORDER PASSED BY THE LD. CIT(A), SUBMITTED THAT THE ASSESSEE FAILED TO EXPLAIN THE CASH CREDIT IN QUESTION TO THE 4 SATISFACTION OF THE AO, THEREFORE THE AO TREATED THE TOTAL AMOUNT DEPOSED IN THE BANK ACCOUNT OF THE ASSESSEE AS UNEXPLAINED INCOME OF THE ASSESSEE. HOWEVER, SINCE THE LD. CIT(A) HAS DELETED THE ADDITION TO THE EXTENT OF THE AMOUNT TRANSFERRED FROM THE BANK ACCOUNT AND FURTHER RESTRICTED THE ADDITION TO 50% OF THE TOTAL AMOUNT OF CASH DEPOSITED, THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE. THEREFORE, NO FURTHER ACTION IS REQUIRED IN THIS CASE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS WRONGLY SUSTAINED THE ADDITION TO 50% OF THE CASH DEPOSITS IN BANK ACCOUNT AMOUNTING TO RS. 14,00,500/-. IN THIS CASE, THE AO DETERMINED THE INCOME OF THE ASSESSEE AT RS. 17,60,980/- TREATING THE TOTAL CASH DEPOSIT AND CREDITS IN THE BANK ACCOUNT OF THE ASSESSEE, VIDE ASSESSMENT ORDER PASSED U/S 144 R.W.S. 147 OF THE ACT. THE LD. CIT(A) IN THE FIRST APPEAL DELETED THE CREDIT THROUGH CHEQUES AND RTGS ETC. AMOUNTING TO RS. 3,60,000/- AND FURTHER RESTRICTED THE CASH DEPOSITED TO 50% BY ESTIMATING THE INCOME OF THE FATHER FROM WHOM THE ASSESSEE HAS RECEIVED GIFT IN CASH. THE LD. CIT(A) HAS ESTIMATED THE AGRICULTURAL INCOME OF THE FATHER OF THE ASSESSEE @ 25,000/- PER ACRE ON THE BASIS OF GIRDAWARI DETAILS AVAILABLE ON RECORD. THE CONTENTION OF THE LD. COUNSEL IS THAT THE LD. CIT(A) HAS UNDER ESTIMATED THE INCOME OF THE FATHER OF THE ASSESSEE AND WRONGLY SUSTAINED 50% OF THE SAID AMOUNT. 8 ADMITTEDLY, DURING THE RELEVANT PERIOD, THE FATHER OF THE ASSESSEE WAS HOLDING 16 ACRES OF CULTIVABLE LAND. THE DEPARTMENT HAS ALSO NOT DENIED OR REJECTED THE PLEA OF THE ASSESSEE THAT THE ASSESSEE RECEIVED GIFT IN CASH AND THROUGH CHEQUES AND RTGS ETC. FROM HIS FATHER. ACCORDINGLY, THE LD. CIT(A) DELETED THE ADDITION TO THE EXTENT OF AMOUNT RECEIVED THROUGH CHEQUES AND TRANSFERS. HOWEVER, RESTRICTED THE CASH TRANSACTION TO 50% ESTIMATING THE INCOME @ 25,000/- PER ANNUM PER ACRE OF THE FATHER OF THE ASSESSEE FROM AGRICULTURAL ACTIVITIES. IN OUR CONSIDERED VIEW, ACTUAL INCOME PER ACRE CANNOT BE DETERMINED ON THE BASIS OF ONLY GIRDAWARI DETAILS. FURTHER, THE LD. CIT(A) HAS NOT REBUTTED THE CONTENTION OF THE ASSESSEE THAT ESTIMATED INCOME OF RS. 25,000/- PER ACRE RATE WAS THE RATE OF LEASE OF LAND FOR AGRICULTURE PURPOSES IN THE YEAR UNDER CONSIDERATION. MOREOVER, THE LD. CIT(A) HAS OBSERVED THAT THE DEPARTMENT HAS NOT 5 BEEN ABLE TO ESTABLISH THE POSSIBLE SOURCE OF CASH GENERATED. WE FURTHER NOTICE THAT THE ESTIMATION OF INCOME @ 25,000/- PER ACRE BY THE LD. CIT(A) IS NOT BASED ON EVIDENCE ON RECORD OR REPORT OF THE AUTHORITY CONCERNED. THE LD. CIT(A) NOT POINTED OUT ANY REASON FOR REJECTING THE CONTENTS OF THE AFFIDAVIT OF THE FATHER OF THE ASSESSEE SUBMITTED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM. THE LD. CIT(A) HAS NOT POINTED OUT ANY CLINCHING EVIDENCE ON RECORD TO JUSTIFY HIS ACTION. IN OUR CONSIDERED VIEW, THE ADDITION OF 50% OF THE CASH DEPOSITED BASED ON ASSUMPTION AND PRESUMPTION IS NOT SUSTAINABLE IN LAW. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND DIRECT THE AO TO DELETED THE ADDITION SUSTAINED BY THE LD. CIT(A). IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 07/06/2021. SD/- SD/- .., .. ( N.K. SAINI) (R.L. NEGI ) / VICE PRESIDENT / JUDICIAL MEMBER AG DATE: 07/06/2021 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ()/ THE CIT(A) 5. , , / DR, ITAT, CHANDIGARH 6. [ / GUARD FILE