ITO, New Delhi V. Sh. Vinod Garg, New Delhi

ITA 2307/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3513 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2003-2004
• Appeal Filed On: 17-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: N O N E
• Keywords: Unexplained investment; Assessment record
• Section: 142(1); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL ITA NO.2307(DEL)/2010 ASSESSMENT YEAR: 2003-04 INCOME-TAX OFFICER, SHRI VINOD GARG, WARD 19(3), NEW DELHI. VS. WZ-430 , MADIPUR VILLAGE, NEW DELHI.( PAN-AAPPG3274R) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K. CHAND, SR. DR RESPONDENT BY: NO NE ORDER PER K.G. BANSAL : AM THIS APPEAL OF THE REVENUE EMANATES FROM THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-XXII, NEW DELH I, ON 08.03.2010 IN APPEAL NO. 257/07-08, PERTAINING TO ASSESSMENT YE AR 2003-04. THE CORRESPONDING ASSESSMENT ORDER WAS FRAMED BY TH E INCOME-TAX OFFICER, WARD 19(3), NEW DELHI, ON 26.12.2007 UNDER S ECTION 144 READ WITH SECTION 147 OF THE INCOME-TAX ACT, 1961. THE REVE NUE HAS TAKEN THE FOLLOWING SUBSTANTIVE GROUNDS IN THE APPEAL:- (I) THE LD. CIT(A) ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS. 60,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE FORM OF FDR. ITA NO. 2307(DEL)/2010 2 (II) THE LD. CIT(A) ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS. 60,00,000/- STATING THAT THE ADD ITION WAS MADE WITHOUT COGENT REASON, EVIDENCES AND IS BASED O N CONJECTURES AND SURMISES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO APPEAR OR FILE ANY SUBMISSION ALTHOUG H NOTICES WERE SENT TO THE ADDRESS OF THE ASSESSEE AVAILABLE I N THE ASSESSMENT RECORDS AS WELL AS THE ADDRESS OF THE ASSESSEE COMMUNICATED BY THE LD. CIT(A). 2. THE FACTS OF THE CASE ARE THAT INFORMATION WAS RECEIVED THAT THE ASSESSEE HAS INVESTED A SUM OF RS. 40.00 LAKH ON 25.3.2003 IN FIXED DEPOSIT WITH BANK OF RAJASTHAN LTD., NEW ROHTAK R OAD. BASED UPON THIS INFORMATION REASONS WERE RECORDED AND NOTICE U /S 148 WAS ISSUED ON 13.3.2007. NO RETURN WAS FILED IN RESPONSE TO THIS NOTICE. THEREAFTER, A NOTICE U/S 142(1) WAS SERVED BY AFFIXTURE, BU T THERE WAS NO RESPONSE TO THIS NOTICE ALSO. THE AO COMPUTED THE TOTAL I NCOME AT RS. 60.00 LAKH COMPRISING OF THE VALUE OF THE FIXED DEPOSIT O F RS. 40.00 LAKH AND ESTIMATED INCOME OF RS. 20.00 LAKH. BEFORE THE LD . CIT(APPEALS), THE ASSESSEE FURNISHED EXPLANATION REGARDING INVEST MENT IN THE FIXED DEPOSIT. IN VIEW THEREOF, HE REFERRED THE MATTER TO THE AO FOR FURNISHING A REMAND REPORT. THEREAFTER, HE DELETED THE AD DITION OF RS. 40.00 LAKH BY RETURNING A FINDING THAT THE INVESTMENT STANDS EXPLAINED. THE ADDITION ITA NO. 2307(DEL)/2010 3 OF RS. 20.00 LAKH WAS ALSO DELETED AS IT WAS NOT BASED ON ANY FACT OR SOUND LOGIC. THUS, THE APPEAL OF THE ASSESSEE W AS ALLOWED. THE RELEVANT PORTION OF THE LD. CIT(A) IS CONTAINED IN PARAGRA PH 7.3 OF THE IMPUGNED ORDER, WHICH IS REPRODUCED BELOW:- 7.3 REGARDING GROUND 3(II) ON ADDITION OF RS. 60,00,000/-, IT HAS BEEN OBSERVED FROM THE PERUSAL OF THE BANK STATEMENT OF THE APPELLANT THAT ON 11.02.2003, THERE WAS CRE DIT BALANCE OF RS. 7,320/-. FURTHER, THERE IS NO DISPUTE TO THE FACT THAT ON 25.3.2003 A CHEQUE BEARING NUMBER 696073 WAS I SSUED IN FAVOUR OF BANK FOR RS. 40,00,000/- AND THERE IS N EGATIVE BALANCE OF RS. 39,92,680/-. THE BALANCE AS ON 31.03.2003 WAS ALSO NEGATIVE I.E., RS. 35,98,020/-. THE D EBIT BALANCE IS DUE TO BANK OVERDRAFT. IT IS APPARENT FROM TH E FACTS THAT THE FDR WAS A MAKESHIFT ARRANGEMENT OF THE BANK TO ENABLE THE APPELLANT, ELIGIBLE TO AVAIL OVERDRAFT FACILITY FROM THE BANK. IT MAY BE SAFELY CONCLUDED THAT INVOLVEMENT OF OTHER PARTY, INFLOW OF MONEY IN CASH AND ANY SUCH TRANSACTI ON INDICATING NON-GENUINE TRANSACTION HAS NOT BEEN PROVED BY T HE AO. FURTHER, ADDITION OF RS. 20,00,000/- IN ADDITI ON TO RS. 40,00,000/- IS ALSO NOT BACKED BY ANY SUBSTANTI AL EVIDENCE AND HAS BEEN ADDED ONLY ON THE ESTIMATION AND ASSUMPTION BASIS. THE ONLY GROUND WHICH PERHAPS CAN BE T HOUGHT OF IS THAT THE BANK STATEMENT OF THE APPELLANT SHOWS C REDIT ENTRIES OF RS. 99,37,827/- AND DEBIT ENTRIES OF RS. 59,38 ,272/-. THE ITA NO. 2307(DEL)/2010 4 AO NEITHER EXAMINED THE DETAILS OF CREDIT AND DEBIT AT THE TIME OF ASSESSMENT NOR AT THE TIME WHEN A R EMAND REPORT WAS CALLED FOR. MY PREDECESSOR ASKED FOR TH E REPORT GIVING CLEAR DIRECTION TO EXAMINE CREDIT AND DEBIT ENTRI ES VIDE HIS LETTER DATED 14.7.2009 BUT THIS EXTENDED OPPORTUN ITY WAS NOT AVAILED BY THE AO EVEN AFTER LAPSE OF FOUR AND HALF MONTH. THE TOTAL ADDITION OF RS. 60.00 LAKH MADE BY TH E AO IS WITHOUT ANY COGENT REASON, EVIDENCES AND IS BAS ED ON CONJECTURES AND SURMISES. THERE IS A DISCONNECT BETWEEN THE REASONS RECORDED AND THE ASSESSMENT MADE IN SO FAR THE INCOME ESCAPING ASSESSMENT IS CONCERNED. THUS, ADDITION CANNOT SUSTAIN THE LOGIC AND JUDICIAL SCRUTIN Y. IN VIEW OF THIS, THE ADDITION OF RS. 60,00,000/- IS DELETE D. 3. BEFORE US, THE LD. SENIOR DR RELIED ON THE ORD ER OF THE AO. NONE APPEARED ON BEHALF OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BEFORE US. FROM THE ORDER OF THE CIT(APPEALS), I T BECOMES CLEAR THAT THE ASSESSEE HAD A CREDIT BALANCE OF RS. 7,320/- WIT H THE BANK. HE ISSUED A CHEQUE OF RS. 40.00 LAKH FOR THE PURPOSE OF INVESTM ENT IN FIXED DEPOSIT, LEADING TO A DEBIT BALANCE OF RS. 39,92,680/-. THIS DEBIT BALANCE CONTINUED UP TO 31.3.2003. THEREFORE, IT IS CLE AR THAT THE SOURCE OF ITA NO. 2307(DEL)/2010 5 INVESTMENT IN THE FIXED DEPOSIT WAS OVERDRAFT F ACILITY ENJOYED BY THE ASSESSEE WITH THE BANK. IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE INVESTMENT WAS MADE OUT OF ANY UNACCOUNTED MONEY OWNED BY THE ASSESSEE. THE OTHER ADDITION OF RS. 20.00 LAKH W AS MADE MERELY ON ESTIMATE BASIS AND THERE IS NO FACT ON RECORD T O SUSTAIN THIS ADDITION. THE LD. SENIOR DR ALSO COULD NOT FURNISH ANY ARGU MENT IN SUPPORT OF THE ORDER OF THE AO. HE COULD ALSO NOT REBUT THE ORD ER OF THE LD. CIT(APPEALS) IN THIS MATTER. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(APPEALS) IN THIS MATTER. 5. IN THE RESULT, THE APPEAL IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 23 JULY, 2010. SD/- SD/- (C.L. SETHI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 23RD JULY,2010. SP SATIA COPY OF THE ORDER FORWARDED TO:- SHRI VINOD GARG, MADIPUR VILLAGE, NEW DELHI. ITO, WARD 19(3), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.