Sh. Harvinder Singh Legal Heir of Sh. Chamkaur Singh , Ludhiana V. ITO, W-1, Jagraon

ITA 163/CHANDI/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8903 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 05-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Peak credit; Additional evidence; Tangible material; Reason to believe
• Section: 147; 68; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A , CHANDIGARH , ! ' # $ % & ' , ' BEFORE SMT.DIVA SINGH, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.163/CHD/2019 / ASSESSMENT YEAR : 2010-11 SH.CHAMKAUR SINGH S/O SH.JASWANT SINGH (DECEASED), THE LEGAL HEIR SH.HARVINDER SINGH S/O SH.CHAMKAUR SINGH, H.NO.31, VPO BHAROWAL KALAN, TEHSIL JAGRAON, DISTRICT LUDHIANA. THE INCOME TAX OFFICER, WARD-1, JAGRAON. ./PAN NO: CLXPS2366B /APPELLANT /RESPONDENT /ASSESSEE BY: NONE ! / REVENUE BY : SMT.CHANDERKANTA, SR.DR ' # $ /DATE OF HEARING : 03.07.2019 %&'( $ /DATE OF PRONOUNCEMENT: 09.07.2019 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-3, LUDHIANA [(IN SHORT CIT(A)] DATED 5.11.2018, PASS ED U/S ITA NO163/CHD/2019 A.Y.2010-11 2 250(6) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS ACT), RELATING TO ASSESSMENT YEAR 2010-11. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. DUE NOTICE OF HEARING WAS ISSUED ON 29.5.2019 AND SERVE D ON THE ASSESSEE. NO APPLICATION SEEKING ADJOURNMENT WAS FILED. IT APPEARS THAT THE ASSESSEE IS NOT INTERESTED IN PROSECUTING THE APPEAL. THEREFORE, TH E APPEAL WAS PROCEEDED TO BE HEARD WITH AND ADJUDICATED EX-PARTE ON MERITS. 3. FROM THE ORDERS OF THE AUTHORITIES BELOW, THE FACTS EMANATING ARE THAT PROCEEDINGS U/S 147 OF THE ACT WERE INITIATED ON THE ASSESSEE ON THE INFORMATI ON RECEIVED FROM DDIT(INVESTIGATION)-3, LUDHIANA THAT THE ASSESSEE HAD DEPOSITED CASH OF RS.40.70 LACS IN HIS BANK ACCOUNT MAINTAINED WITH ORIENTAL BANK OF COMMERCE, JAGRAON AND RS.29,45,500/- IN THE BANK OF INDIA, LUDHIANA. THE ASSESSEE WAS ASKED TO EXPLA IN THE SOURCE OF THE SAME. BUT THE PROCEEDINGS REMAINE D UNATTENDED. THEREFORE, IN THE ABSENCE OF ANY EXPLANATION WITH RESPECT TO THE CASH DEPOSITS, THE ENTIRE DEPOSITS IN THE TWO BANK ACCOUNTS AMOUNTING TO RS.64,15,500/- WERE TREATED AS UNDISCLOSED INCOME O F ITA NO163/CHD/2019 A.Y.2010-11 3 THE ASSESSEE AND ADDED BACK TO THE RETURNED INCOME AS UNEXPLAINED CASH DEPOSITS U/S 68 OF THE ACT. 4. THE ASSESSEE WENT IN APPEAL BEFORE THE LD.CIT(A) AND FILED EVIDENCES BEFORE HIM ALONGWITH APPLICATIO N SEEKING ADMISSION OF THE SAME STATING THAT IN VIEW OF THE SUDDEN DEMISE OF HIS FATHER DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT CONCENTRATE AND FURNISH REPLY AND, THEREFORE, ADDITIONAL EVIDENCES BE ADMITTED AT THE APPELLATE STAGE. THE LD.CIT(A) ON CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE FOU ND MERIT IN THE APPLICATION FILED BY THE ASSESSEE AND ADMITTED THE ADDITIONAL EVIDENCE FILED. THEREAFTER ON CONSIDERING THE ADDITIONAL EVIDENCES, THE LD.CIT(A) FOUND THAT THE DEPOSITS WITH THE BANK TO THE EXTENT OF RS.43,40,000/- STOOD EXPLAINED BY THE ASSESSEE AS HAVING BEEN MADE OUT OF CONSIDERATION RECEIVED FROM SALE OF FOUR PROPERTIES OWNED BY HIM. THE LD.CIT(A) FOUND THAT THE ASSESSEE HAD SUBSTANTIATED THE EXPLANATION ALSO BY FILING SALE DEED PERTAINING TO THE FOUR PROPERTIES. HE, THEREFORE, DELETED THE ADDITIO N MADE TO THE EXTENT OF RS.43,40,000/-. THE ADDITION MADE ON ACCOUNT OF REMAINING CASH DEPOSITS WERE ITA NO163/CHD/2019 A.Y.2010-11 4 UPHELD BY HIM AS UNEXPLAINED IN THE ABSENCE OF RELEVANT EVIDENCE. 5. AGGRIEVED BY THIS ORDER OF THE CIT(A), THE ASSESSEE HAS COME UP IN APPEAL BEFORE US, RAISING T HE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED BOTH ON FACTS AND LAW WHILE PASSING THIS ORDER. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS), LUDHIANA HAS ERRED IN LAW AND FACTS IN SUSTAINING THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER WITHOUT ANY BASIS AND ON THE BASIS OF CONJECTURES AND SURMISES. 3. THAT THERE WAS NO REASON TO BELIEVE OR ANY TANGIBLE MATERIAL WITH REGARD TO REOPENING OF THE CASE UNDER SECTION 148 AND THEREFORE THE WHOLE PROCEEDINGS ARE VOID AB INITIO. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT, 1961 AND THEREBY MAKING ADDITION OF RS.19,90,000/- IN RESPECT OF CASH DEPOSIT IN BANK ACCOUNT. 5. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THE PROVISIONS OF SECTION 68 ARE NOT AT ALL APPLICABLE IN THIS CASE, AS THE ASSESSEE ADMITTEDLY IS NOT MAINTAINING ANY BOOKS OF ACCOUNTS. AS SUCH, THE PROVISIONS OF SECTION 68 ARE NOT AT ALL APPLICABLE AND THE VERY BASIS ON WHICH THE ADDITION WAS MADE IS LIABLE TO BE DELETED. 6. THAT THE LD. COMMISSIONER OF INCOME TAX. (APPEALS) HAS CONCLUDED THE ASSESSMENT WITHOUT FOLLOWING THE PRINCIPLE OF NATURAL JUSTICE ITA NO163/CHD/2019 A.Y.2010-11 5 IS BAD IN LAW AND THE ADDITION IN RESPECT OF CASH DEPOSIT IN BANK ACCOUNT IS NOT GIVING THE CREDIT OF PEAK THEORY. THE BASIC IDEA BEHIND THE PEAK CREDIT THEORY IS TO AVOID DOUBLE ADDITION AND TO BRING ONLY THE ACTUAL INCOME OF THE ASSESSEE TO SUFFER TAX. 7. THAT THE LD. AO HAS FAILED TO CONSIDER THAT THE APPELLANT DEPOSITED THE CASH IN THE BANK AGAINST THE SELF-WITHDRAWAL FROM THE BANK ACCOUNT AND SALE OF AGRICULTURE LAND. BANK STATEMENT OF THE ASSESSEE SHOWS THAT THE CASH WAS DEPOSITED AGAINST THE CORRESPONDING WITHDRAWALS OF THE AMOUNT. 8. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) MADE THE ADDITION MERELY ON ESTIMATE BASIS AND THE LD. ASSESSING OFFICER WITHOUT BRINGING ON RECORD ANY MATERIAL TO SHOW THAT THE ASSESSEE HAS EARNED ANY INCOME IN EXCESS OF THE AMOUNT DISCLOSED IN THE RETURN. 9. THAT THE APPELLANT CRAVES TO ALLOW TO ADD OR TO AMEND ANY GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. 10. THAT IT IS PRAYED THAT THE ADDITION MAY KINDLY BE DELETED. 6. ON GOING THROUGH THE GROUNDS ABOVE, WE FIND THAT THE ASSESSEE HAS RAISED A LEGAL GROUND IN GROUND NO .3 CHALLENGING THE VALIDITY OF THE ASSESSMENT FRAMED U /S 148 OF THE ACT. BEFORE THE LD.CIT(A), WE FIND THAT NO SUCH GROUND HAD BEEN RAISED BY THE ASSESSEE AND, THEREFORE, THE LD.CIT(A) HAD NO OCCASION TO ADJUDIC ATE THE SAME. SINCE IT IS A LEGAL GROUND CHALLENGING TH E VALIDITY OF THE ASSESSMENT FRAMED ITSELF, THE SAME ITA NO163/CHD/2019 A.Y.2010-11 6 NEEDS TO BE ADJUDICATED FIRST BEFORE DEALING WITH T HE MERITS OF THE CASE. FURTHER SINCE THE ASSESSEE IS UNREPRESENTED BEFORE US, WE CONSIDER IT FIT TO RES TORE THE ISSUE TO THE LD.CIT(A), TO ADJUDICATE THE SAME AFTER CONSIDERING THE SPECIFIC SUBMISSIONS OF THE ASSESSEE ,GIVING HIM DUE OPPORTUNITY OF HEARING. 7. FURTHER ON MERITS, WE HAVE NOTED FROM THE ORDER OF THE CIT(A) THAT HE HAS SUSTAINED THE BALANCE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT I N BANK OF RS.19,90,000/-,BY STATING THAT THOUGH THE ASSESSEE HAD EXPLAINED THE SOURCE OF THE SAME AS FROM WITHDRAWALS FROM OTHER ACCOUNTS OR FROM THE SAME BANK ACCOUNT, BUT IN THE ABSENCE OF RELEVANT EVIDENCE, BENEFIT CANNOT BE GIVEN TO THE ASSESSEE. 8. WE ARE OF THE VIEW THAT THESE FINDINGS OF THE CIT(A) ARE NEITHER HERE NOR THERE. WHERE THE ASSESS EE HAS ADMITTEDLY EXPLAINED THE SOURCE OF THE CASH DEPOSITS AS BEING FROM WITHDRAWALS, THE CIT(A) IS REQUIRED TO GIVE A SPECIFIC FINDING AS TO HOW THE S AME REMAINED UNEXPLAINED AND UNSUBSTANTIATED. ITA NO163/CHD/2019 A.Y.2010-11 7 9. FOR THE SAID REASON ALSO, THE APPEAL NEEDS TO BE ADJUDICATED AFRESH BY THE LD.CIT(A). WE, THEREFORE, RESTORE THE ENTIRE APPEAL BACK TO THE LD.CIT(A) TO DECIDE BOTH THE LEGAL ISSUE AND THE ISSUE RAISED ON MERITS AFRESH AFTER GIVEN DUE OPPORTUNITY OF HEARIN G TO THE ASSESSEE. WE DIRECT THE LD.CIT(A) TO PASS A SPEAKING ORDER DECIDING THE ISSUES IN ACCORDANCE WI TH LAW. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/ # $ % & ' (DIVA SINGH ) (ANNAPURNA GUPTA) ! ' /JUDICIAL MEMBER () ' /ACCOUNTANT MEMBER # /DATED: 09 TH JULY, 2019 * * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35# / GUARD FILE &) ' / BY ORDER, / ASSISTANT REGISTRAR