DCIT, New Delhi V. Sh. Madhukar Sharma, Noida

ITA 2488/DEL/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6375 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 28-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Additional evidence; Non compliance
• Section: 133(6); 144; 69; 68

Judgement Text

1 ITA NO. 2488/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.- 2488/DEL/2013 (ASSESSMENT YEA R-2006-07) DCIT CIRCLE 41(1) NEW DELHI (APPELLANT) VS MADHUKAR SHARMA 1179, SECTOR-37 NOIDA AAMP11094A (RESPONDENT) APPELLANT BY SH. RAJESH KUMAR, SR. DR RESPONDENT BY NONE ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 16/1/2013 PASSED BY CIT(A)-XXVII-NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN:- 1. ADMITTING THE ADDITIONAL EVIDENCE IN CONTRAVENTI ONS OF RULE 46A IN SPITE OF THE FACT THAT A.O VIDE LETTER DATED 2/11/2 012 HAS CLEARLY STATED THAT ADDITIONAL EVIDENCE SHOULD NOT BE ACCEP TED AS NOTHING STOPPED THE ASSESSEE TO PRODUCE THE SAME BEFORE THE A.O. 2. DELETING THE ADDITION OF RS.37,00,000/- MADE U/S 69 OF THE INCOME TAX ACT, 1961 AND RS. 10,43,319/- MADE U/S 68 OF TH E INCOME TAX ACT, 1961. DATE OF HEARING 28.03.2017 DATE OF PRONOUNCEMENT 30.03.2017 2 ITA NO. 2488/DEL/2013 3. ASSESSEE FILED RETURN OF INCOME OF RS.4,86,547/- ON 30/3/2007. IN THE ASSESSMENT ORDER PASSED U/S 144 OF THE ACT, INCOME OF THE ASSESSEE WAS DETERMINED AT RS.53,93,066/- AFTER MAKING VARIOUS A DDITIONS I.E. RS. 37 LAKH U/S 69 OF THE INCOME TAX ACT BEING UNEXPLAINED INVE STMENTS IN MUTUAL FUNDS, RS.11,43,319/- U/S 68 OF THE ACT ON ACCOUNT OF UNEX PLAINED CREDITS APPEARING IN THE ASSESSEES BANK A/C AND RS. 56,000/- ON ACCO UNT OF UNEXPLAINED CASH DEPOSIT IN THE ASSESSEES BANK ACCOUNT WITH ICICI B ANK. THE ASSESSEE IS A RETIRED SENIOR CITIZEN WHO RETIRED FROM DEFENCE SER VICES IN 1991. HE DERIVES INCOME FROM PENSION, CAPITAL GAINS AND OTHER SOURCE S. AS PER INFORMATION RECEIVED IN THE ASSESSEES CASE HE HAD MADE LARGE I NVESTMENTS IN MUTUAL FUNDS. THE A.O CALLED FOR THE COPY OF THE MUTUAL F UNDS INVESTMENTS AS WELL AS THE ASSESSEES BANK ACCOUNTS U/S 133(6) OF THE ACT. THE A.O BASED ON INFORMATION ON VARIOUS ENTRIES IN THE BANK ACCOUNT WITH THE INVESTMENTS MADE BY THE ASSESSEE IN DIFFERENT MUTUAL FUNDS, HE ALLOW ED CORRESPONDING CREDIT TO THE ASSESSEE. AFTER ALLOWING SUCH CREDIT, THE CERT AIN INVESTMENT ENTRIES REMAINED UNEXPLAINED WHICH THE A.O ADDED TO THE ASS ESSEES INCOME U/S 69 OF THE ACT BEING UNEXPLAINED INVESTMENTS. 5. BEING AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. 6. THE REVENUE IS BEFORE US. THE LD. DR SUBMITTED T HAT THE ASSESSING OFFICER HAS RIGHTLY ADDED CERTAIN INVESTMENT ENTRIE S WHICH REMAINED UNEXPLAINED TO THE ASSESSEES INCOME UNDER SECTION 69 OF THE ACT. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSING OFFICER CORREC TLY OBSERVED THAT APART FROM VERIFICATION IN RESPECT OF ENTRY NO. 17 OF THE HIGH EST AMOUNT APPEARING TO BE INCORRECT, AN ATTEMPT WAS MADE TO CALL FOR COPY OF ASSESSEES BANK ACCOUNTS FROM THE BANKS MENTIONED IN THE COMPUTATION OF INCO ME. SINCE, ACCOUNTS NUMBERS WERE NOT MENTIONED, COPY OF ALL THE BANK AC COUNTS COULD NOT BE CALLED FOR/COLLECTED. ON THE BASIS OF BANK ACCOUNTS COLLE CTED, THE ASSESSEE CAN BE GIVEN BENEFIT OF SOME INVESTMENTS ONLY WHICH COULD BE SAID TO BE VERIFIABLE [EVEN THOUGH EXACT DATES DO NOT MATCH] FROM THE BAN K ACCOUNTS COPY AVAILABLE 3 ITA NO. 2488/DEL/2013 ON RECORD NOW. AFTER GIVING BENEFIT TO THESE INVES TMENTS AS REPORTED IN AIR INFORMATION WHICH COULD BE SAID TO BE MATCHING & AF TER EXCLUDING THE SUMS REPORTED IN THE AIR INFORMATION REPORTED AS OTHERS , THE FOLLOWING INVESTMENTS STILL REMAINED, THE SOURCE OF WHICH COULD NOT BE EX PLAINED AT ALL. THE LD. DR FURTHER SUBMITTED THAT SINCE THE SOURCE OF THESE CR EDITS IS NOT VERIFIABLE, AND THERE HAS BEEN NO COMPLIANCE FROM THE ASSESSEE THES E CREDITS AMOUNTING TO RS.11,43,319/- ARE ADDED TO THE TOTAL INCOME OF THE ASSESSEE BEING UNEXPLAINED AS PER SECTION 68 OF THE I.T ACT, 1961. THE CIT(A) HAS TOTALLY IGNORED THESE ASPECTS, THEREFORE, THE APPEAL OF THE REVENUE BE ALLOWED. 7. WE HAVE HEARD LD. DR AND PERUSED THE RECORDS AVA ILABLE BEFORE US. THE ASSESSEE IN RESPONSE TO THESE ADDITION SUBMITTED BE FORE THE CIT(A) THAT HE HAD RECEIVED RETIREMENT BENEFITS OF RS.20 LAKHS IN THE YEAR 1991 ON HIS RETIREMENT FROM THE DEFENCE SERVICES. THIS SUM WAS INVESTED I N FDRS WITH BANK FOR EARNING INTEREST INCOME. IN THE YEAR 2003-04 HE ST ARTED INVESTING IN MUTUAL FUNDS OUT OF THESE FDRS. AT THE CLOSE OF THE IMMED IATELY PRECEDING FINANCIAL YEAR I.E. ON 31/3/2005, THE ASSESSEE HAD INVESTMENT S AMOUNTING TO RS.30,00,799/- IN MUTUAL FUNDS. DETAILS OF THESE I NVESTMENTS AS ON 31/3/2005 WERE FILED IN THE FORM OF A BALANCE SHEET AS ON 31/3/2005. THESE INVESTMENTS WERE REDEEMED AND AGAIN REINVESTED THER EBY SWITCHING THE INVESTMENT FROM ONE MUTUAL FUND TO THE OTHER ON THE ADVICE OF SOME PORTFOLIO MANAGERS. AS A RESULT OF SWITCHING OF INVESTMENT T HERE WERE TOTAL REDEMPTIONS OF RS.58.67 LAKHS DURING THE YEAR UNDER CONSIDERATI ON. COPIES OF CORRESPONDING BANK ACCOUNTS AND MUTUAL FUND STATEMENTS SHOWING RE DEMPTIONS WHEREVER AVAILABLE WAS PLACED ON RECORD DURING THE ASSESSMEN T PROCEEDING. THEREFORE, ALL THE INVESTMENTS MADE IN MUTUAL FUNDS DURING THE YEAR UNDER CONSIDERATION WERE EXPLAINED. THE ASSESSEES SUBMISSIONS ALONG WI TH THE ADDITIONAL EVIDENCE FILED BY HIM BEFORE THE CIT(A) WAS FORWARDED TO THE A.O FOR HIS COMMENTS. THE A.O IN HIS REMAND REPORT DATED 2/11/2012 SIMPLY REP EATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER REGARDING THE ISSUANCE OF NOTICES AND NON COMPLIANCE ON THE PART OF THE ASSESSEE BUT DID NOT COMMENTED OR MADE ANY 4 ITA NO. 2488/DEL/2013 OBSERVATIONS ON MERITS. THE ONLY OBSERVATION MADE BY THE A.O IS THAT AS THE ASSESSEE HAD NOT FILED ANY SUBMISSIONS/REPLIES DURI NG THE COURSE OF THE ASSESSMENT PROCEEDINGS IN SPITE OF VARIOUS OPPORTUN ITIES, THE ADDITIONAL EVIDENCE FILED BY HIM AT THE APPEAL STAGEE SHOULD N OT BE ACCEPTED. THE ASSESSEES EXPLANATION IN THIS REGARD WAS THAT HE W AS UNDER JUDICIAL CUSTODY FOR THE PERIOD 20/11/2008 TO 2/1/2009. THE SAME DO CUMENTARY EVIDENCE IN THE FORM OF A COPY OF THE FIR FILED AGAINST HIM, A COPY OF HIS ARREST LETTER, COPY OF COURT PROCEEDINGS NOTICE AND A COPY OF BAIL LETT ER DATED 20/1/2009 WAS FILED IN SUPPORT OF THIS CONTENTION BEFORE THE CIT(A). 8. THUS, THE CIT(A) HAS TAKEN INTO COGNIZANCE ALL T HE DOCUMENTARY EVIDENCE. THE ABSENCE OF THE SAME DURING THE ASSESSMENT PROCE EDING WHICH PREVENTED BY SUFFICIENT CAUSE FROM FILING THIS DOCUMENTARY EVIDE NCE BEFORE THE A.O. WAS ALSO RIGHTLY CONSIDERED BY THE CIT(A). THUS ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WAS RIGHTLY ADMITTED BY THE CIT(A). THE ASSSESSEES BANK ACCOUNTS AND COPIES OF MUTUAL FUND REDEMPTION STATEMENTS PLACED IN THE PAPER BOOK, VARIOUS INVESTMENTS MADE IN MUTUAL FUNDS DURING THE YEAR UN DER CONSIDERATION ARE OUT OF EITHER REDEMPTION OF THE OLD INVESTMENTS IN MUTU AL FUNDS OR OUT OF AUTO SWEEP FDR MATURITY. THEREFORE, THESE INVESTMENTS A RE GENUINE AND WAS FULLY EXPLAINED BY THE ASSESSEE. IN SUPPORT OF THE LOAN O F RS.3,50,000/- FROM CITI BANK, THE ASSESSEE FILED A COPY OF THE SANCTIONED LETTER FROM THE CITI BANK. WITH REGARD TO LOAN AMOUNT OF RS. 75,000/- GIVEN BY THE ASSESSEE AND RECEIVED BACK ON 14/2/2006(RS. 25,000/-) AND ON 17/3/2006 (R S. 50,000/-) A CONFIRMATION FROM SH. S. MADHUSUDAN WAS FILED TO TH IS EFFECT GIVING HIS COMPLETE ADDRESS, PAN AND THE WARD WHERE HE ASSESSE D TO TAX. BOTH THESE AMOUNTS WERE RECEIVED IN THE HSBC ACCOUNT OF THE AS SESSEE THROUGH CHEQUES. HOWEVER, A PERUSAL OF THE ASSESSEES BANK ACCOUNT N O. 00301003348, WITH ICICI BANK REVEALED THAT THESE ARE FOLLOWING CASH D EPOSITS IN THIS ACCOUNT- 04.04.2005 - 40,000 05.04.2005 - 45,000 07.04.2005 - 15,000 5 ITA NO. 2488/DEL/2013 WHILE EXPLAINING THE SOURCE OF THESE CASH DEPOSITS THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT THESE CASH DEPOSITS HAD BEEN MADE OUT OF CASH IN HAND AVAILABLE AS ON 1/4/2005 AMOUNTING TO RS.2,50,000/- . THIS EXPLANATION OF THE ASSESSEE WAS RIGHTLY NOT ACCEPTED BY THE CIT(A) BEC AUSE THE ASSESSEE DID NOT MAINTAIN ANY BOOK OF ACCOUNT. NO CASH FLOW STATEME NT WAS AVAILABLE ON RECORD TO SHOW THAT THE ASSESSEE ACTUALLY HAD CASH IN HAND OF RS. 2,50,000/- AS ON 1/4/2005. THEREFORE, AMOUNT OF RS.1,00,000/- DEPOSI TED IN CASH ON DIFFERENT DATES IN ICICI BANK AS MENTIONED ABOVE WAS RIGHTLY ADDED TO THE ASSESSEES INCOME AS UNEXPLAINED CASH CREDITS IN THE ASSESSEE S BANK ACCOUNTS WAS RESTRICTED TO RS.1,00,000/-. THUS, THE CIT(A) HAS CORRECTLY ARRIVED AT THE FINDING AFTER VERIFYING ALL THE DOCUMENTS. THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE CIT(A). 9. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30TH DAY OF MARCH, 2017. SD/- SD/- (R.S. SYAL) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/03/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI 6 ITA NO. 2488/DEL/2013 DATE 1. DRAFT DICTATED ON 28.03.2017 PS 2. DRAFT PLACED BEFORE AUTHOR 29.03.2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 3 0 .03.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 30.03.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.