Kamal Rahil, Jalandhar V. The Income Tax Officer, Jalandhar

ITA 168/ASR/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7653 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Set aside
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 168/Asr/2017 Assessment Year: 2009-10 Sh. Kamal Rahil, S/o Sh. Gulzari Lal Vill. Wariana, P.O. Nagra, Distt. Jalandhar [PAN: AJZPR 7453A] Vs. Income Tax Officer, Jalandhar (Appellant) (Respondent) Appellant by : None Respondent by: Sh. Trilochan Singh PS Khalsa, Sr DR Date of Hearing: 14.02.2022 Date of Pronouncement: 28.02.2022 ORDER Per Anikesh Banerjee, JM: The appeal was filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar {in brevity CIT(A)} dated 09.01.2017 in respect of Assessment Year 2009-10. 2. The assessee has raised the following grounds of appeal:- “1. That the Order of the Hon'ble CIT (Appeals) sustaining the addition of Rs. 2,85,000/- is against facts of the case and law on the point. 2. That the CIT (Appeals) gravely erred in sustaining the addition of Rs. 2,85,000/- in absolute defiance of principle of natural justice by relying upon the Statement of Ashu ITA No. 168/Asr/2017 Kamal Rahil v. ITO 2 Walia arbitrarily recorded at the back of the Assessee without confronting the Appellant with the said statement. 3. That the addition of Rs. 2,85,000/- sustained by the CIT (Appeals) is unjustified, illegal & based on suspicion, conjectures & surmises in view of the nature of business of the Appellant. Thus the addition on this account is liable to be set aside. 3. Accordingly, the ld. Income tax officer, Ward IV(2), Jalandhar (in brevity ITO) made following observation in its assessment order which is as follows: “2. During the course of assessment proceedings, the assessee was asked to explain the source of cash deposits amounting to Rs. 57,18,700/- and Rs. 24,66,200/- deposited in Standard Chartered Bank and ICICI Bank respectively. The assessee vide his reply dated 27.10.2011 explained with supporting documents that he is an agent and during the period under reference, he was providing services for getting students admission in foreign institutions for which lum sum payments in cash were received from them which was recorded in the books of accounts and deposited by him (assessee) in his bank account and when tution fee of the said students was to be paid to the foreign institutions, then drafts favouring the foreign institutions were drawn on behalf of the students out of his bank account. The assessee supported his submission on basis of documents in form of respective files of students containing copies of passport, copies of certificate of enrolment, copies of the bank accounts of the assessee reflecting the demand drafts drawn in favour of foreign universities/schools on behalf of the students. The assessee produced books of account i.e. ledger, cash book, vouchers, files of the students which were verified. The perusal of the accounts books and other documents reveals that the contention of the assessee about his business getting admission of students in foreign institutes appears to be correct. However, for further clarity and verifications summons were issued to some of the students u/s 131 of the Income tax Act, 1961. In response thereto in certain cases parents of the students appeared and stated that their children had gone to Australia for further studies. As regard spurce of fund and the services utilized the reply of the parents mainly was that the money was managed by their children and as regards the services utilized they stated that it is in the knowledge of their children who had gone to-Australia. 2(a) However, during the course of assessment proceedings statement of one student who happens to be in India i.e. Shri Ashu Walia S/o Shri Vinod Kumar Walia Mohalla ITA No. 168/Asr/2017 Kamal Rahil v. ITO 3 Palahi Gate, Phagwara stated in his statement that he did not know the assessee. Demand draft in favour of the foreign school AIFE was drawn out of his father’s account No. 3855 maintained with HDFC on 12.09.2008 for Rs. 2,10,000/-. When confronted the assessee vide his written submission dated 25.11.2011 submitted that the amount of Rs. 2,46,085/- was paid on behalf of fee of the said Shri Ashu Walia to foreign institution AIFE, out of total payment of Rs. 2,85,000/- received from the said student. As regards statement of Shri Ashu Walia that he did not know the assessee, it was submitted by the assessee that on verifying from record, it was found that the case of the said student was given to him by a sub Agent Shri Ashwani Gupta. However, as a trade practice providing Sub agent never introduced to him face to face, it was the reason that he was not personally known to him. The assessee further stated in his reply that total fees of Shri Ashu Walia was Rs. 20,000/- AUS and the payment said to have been made by the student out of his father account was only by way of part payment while the payment made by him (assessee ) on his behalf was towards balance part payment and demand draft drawn own his bank account was dated 27.10.2008. After carefully considering the submission of the assessee as discussed above, I treat that entire amount of Rs. 2,85,000/- as unexplained u/s 68 of the Income tax Act, 1961 and is added back to the returned income of the assessee. Penalty proceedings u/s 271(1)© for furnishing inaccurate particulars of income are initiated.” 4. Being aggrieved, against the order of the Ld. ITO, the assessee filed appeal before the ld CIT(A). 5. The Departmental Representative (in brevity DR) of the Revenue vehemently argued and he relied on the order of the ld. CIT(A) on paragraph 4.3 which reads as follows: “4.3. I have gone through the assessment order passed by the AO, submissions made in this regard and material brought on record by the appellant and find that an addition of Rs. 2,85,000 has been made by the AO u/s 68 of the IT Act on account of unexplained deposits. During the course of assessment proceedings, while examining the sources of cash deposits made in the Standard Chartered Bank and in the ICICI Bank, it was found by the AO that cash deposits of Rs. 2,85,000 have not been explained as one of the students denied having given any funds to the appellant. 4.4 The appellant has in the course of present proceedings stated that the said student was brought to him by a sub-agent and therefore was not known to him directly. It is also ITA No. 168/Asr/2017 Kamal Rahil v. ITO 4 submitted that no opportunity to cross examine the said student was given to the appellant by the AO. The addition has been made by the AO on the basis of surmises and conjectures. 4.5 Having considered the submissions made in this regard, I find that appellant has failed to furnish any evidence to support its contentions and the findings given by the AO have not been controverted. The appellant could not bring on record any positive evidence in the course of present proceedings to substantiate the sources of deposits. It is observed that primary onus lies upon the appellant to prove the sources of cash deposits by furnishing the best possible evidence, which in this case the appellant has failed to do so either before the AO or in the course of present proceedings. The appellant has merely reiterated the findings given by the AO without making an effort to bring on record evidence to support its contentions. In view of these facts, I hold that AO was justified in treating the said deposit of Rs. 2,85,000 as unexplained income of the appellant u/s 68 of the IT Act. Accordingly, I confirm the addition of Rs. 2,85,000 made by the AO on this account.” We therefore, by considering the totality of the facts as discussed herein above that the assessee received the money at Rs.2,85,000/- in his bank account and accordingly the amount was paid to the respective institutions. Amount was received through sub-agent for payment of college fees in foreign. There is no confusion that the assessee was doing this business of an agency and the amount was paid to the foreign institution on behalf of students. The transactions were related with his regular business activities. The amount of Rs.2,85,000/- was received by the assessee through sub-agent on behalf of the student for payment of college fees. The explanation of the assessee related cash deposit is stand explained under section 68 of the Act. 6. Accordingly, we hold that no disallowance should be made an amount of Rs.2,85,000/- for the assessment year 2009-10. 7. In the result, the appeal of the assessee is allowed. ITA No. 168/Asr/2017 Kamal Rahil v. ITO 5 Order pronounced in the open court on 28.02.2022 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member Date: 28.02.2022 *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order