Sh. Shiv Ram, Kurukshetra V. Pr.CIT, Karnal

ITA 262/CHANDI/2021

AI Insights

The case involves an appeal by Shri Shiv Ram against the order of the Pr. CIT, Karnal, which set aside the assessment made by the AO under section 143(3) r.w.s 147 of the Income Tax Act. The assessment was initially reopened to verify the source of substantial cash deposits in the assessee's bank account. The AO, after scrutiny and considering the explanations and documents provided by the assessee, including sales of agricultural produce and a refund from a cancelled land purchase agreement, accepted the assessee's explanation but made a minor addition to the income. The Pr. CIT, however, found the assessment order to be erroneous and prejudicial to the interest of the Revenue, leading to the revision which was contested by the assessee in the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135496 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-06-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 30-09-2021
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Opportunity of being heard; Audit objection; Period of limitation; Assessment record; Time period of passing order; Borrowed satisfaction; Set aside
• Section: 147; 148; 263; 143(3); 133(6)

Judgement Text

आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “बी” , च᭛डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH ᮰ी आकाश दीप जैन, उपा᭟यᭃ एवं ᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ ITA NO. 262/Chd/2021 िनधाᭅरण वषᭅ / Assessment Year : 2010-11 Shri Shiv Ram, S/o Shri Surja Ram, Village: Kishanpura, Kurukshetra Haryana, India बनाम The Pr. CIT, Karnal ᭭थायी लेखा सं./PAN NO: BDIPR6003G अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरती कᳱ ओर से/Assessee by : Shri B.M. Monga, Advocate Shri Rohit Kaura, Advocate राज᭭व कᳱ ओर से/ Revenue by : Shri Sandip Dahiya, CIT, DR सुनवाई कᳱ तारीख/Date of Hearing : 20/06/2023 उदघोषणा कᳱ तारीख/Date of Pronouncement : 13/09/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. Pr. CIT, Karnal dt. 27/02/2020. 2. At the outset, it is noted that there is a delay of 518 days in filing the appeal as pointed out by the Registry. During the course of hearing, the ld AR taken us through the condonation application along with affidavit filed by the assessee and submitted that due to Covid 19 pandemic, the appeal couldn’t be filed in time. It was further submitted that the Hon’ble Supreme Court has extended the limitation period on account of Covid 19 pandemic and in view of the same, where the said period is excluded, there wouldn’t be any delay in filing the present appeal. The ld DR is heard who has not raised any objection where the delay is condoned and the appeal is admitted. After taking into 2 consideration the submissions so made by both the parties and the material available on record, the delay is hereby condoned and the appeal of the assessee is admitted for adjudication. 3. In the present appeal, the assessee has taken the following grounds of appeal: 1. That in the facts and circumstances of the case, the Id. CIT is not justified in resorting to provisions of section 263 and thereby cancelling the assessment framed under section 143(3) rws 147. 2. That the learned CIT has grossly erred in invoking the provisions of section 263 particularly when the order passed u/s 143(3) rws 147 is not erroneous at all and was passed after detailed scrutiny, after conducting proper inquiries, recording of statements, taking all the material facts, documents and evidences on record, whereby judicious and plausible view was taken by the AO. 3. That in the facts and circumstances of the case, the Ld. CIT has erred in assuming jurisdiction under the provisions of section 263 of the Act, based on borrowed satisfaction of the audit objections raised by the audit Party, that too on incorrect facts, without independent application of his own mind. 4. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard and disposed off. 4. Briefly the facts of the case are that the case of the assessee was reopened under section 147 to verify the source of cash deposits made in his bank account. Thereafter, notices were issued and information was called for and the assessment was completed under section 143(3) r.w.s 147 dt. 20/06/2017 assessing income at Rs. 2,02,090/- as against the returned income of Rs. 2,010/- by making an addition of Rs. 2,00,000/-. 4.1 Subsequently, the assessment records were called for and examined by the Ld. Pr. CIT and a show cause under section 263 was issued to the assessee on 06/02/2020 and the contents thereof read as under: 3 “2. The case of the assessee was reopened u/s 147 of the I.T.Act 1961, to verify cash deposits of Rs.39,00,000/- in his bank account. From the perusal of- the relevant assessment record, it is noted that in response to the notice u/s 148 of the Act, issued by the AO, the assessee vide his letter dated 15.11.2013 claimed that being a pure agriculturist earning income from only sale proceeds of agricultural produce and sometime from the sale proceeds of agricultural land, he was not liable to file his ITR, however, he had already filed his return of income for the A.Y.2011-12 with acknowledgement No.6615. Again, vide latter dated 07.06.2017, the assessee stated that the return for the A.Y.2010-11 had been filed declaring income at Rs.2,090/- + 1,00,000/-(A.I.). The date of filing of said ITR is nowhere mentioned. However, neither the assessee submitted the copy of the ITR/acknowledgement nor the AO asked for the same. No ITR or copy thereof is found placed on record. Surprisingly, the AO accepted the version of the assessee of having filed his ITR with income at Rs.2,090/- + 1,00,000/-(A.I.) without verifying it from the records inspite of the fact that at one place, the assessee had replied that he was not liable for filing of ITR purely being an agriculturist. 3. It is further noted that the assessee had made cash deposit of Rs.39,00,000/- in his bank account and claimed that all the cash deposits are made out of sale of agricultural produce. As per reply of the assessee filed during assessment proceedings, the assessee belongs to a purely agriculturist joint family which jointly owns 25 acres of agricultural land & also takes agricultural land on lease. The cash deposits were claimed to have been made from the sale of agriculture produce. However from the perusal of bank statement, it is seen that cash of Rs 35,00,000/- was deposited on four occasions in a span of just two days, details of which is as under:- Sr. No. Date of deposits Amount of cash deposits 1. 04.02.2010 Rs. 10,25,000/- 2. 04.02.2010 Rs. 17,50,000/- 3. 05.02.2010 Rs. 5,25,000/- 4. 05.02.2010 Rs. 2,00,000/- Total Rs. 35,00,000/- Further, on 06.02.2010, the entire cash deposits of Rs.35,00,000/-was transferred to one, Sh. Shashi Pal Singh vide cheque No. 802858. During the course of assessment proceedings, the Assessing Officer failed to enquire which crop is ripen/sold in the month of February and why the deposits were made in two days only and then were transferred to another person. Besides above, it is found from the relevant records that a few Form J pertain to financial year 2008-09 i.e. prior to the period under consideration. Also, in response to the notices u/s 133(6) of the Act issued by the AO for confirmation of J forms, some firms had even denied having made any transaction with the assessee during the relevant period. The AO however did not cross question the same to the assessee. Also, the assessee's family was having only 25 acres of land and day-to-day household expenses were also met out of agricultural income as the assessee was not having any other source of income. In such circumstances, it is difficult to 4 accept that cash deposits were made from agriculture income. The AO did not bother to procure copy of lease deed, if any, as claimed by the assessee. The AO did not even bother to enquire why the earning of whole family was deposited in his account only. 4. In view of the discussion above, it is evident that the assessment order was passed by the AO in a casual and perfunctory manner without exercising due diligence and without conducting any worthwhile enquiries. The order passed by the AO thus appears to be erroneous in so far as it is prejudicial to the interest of the revenue in terms of section 263(1) of the Income Tax Act 1961. The assessee is accordingly required to show cause as to why the action should not be taken in his case in terms of section 263(1) of the Act. 5. The assessee is requested to furnish its reply alongwith the supporting documentary evidences, if any, on the above issues and to attend this office located at First Floor, Aayakar Bhawan, Sector-12, Karnal on 12.02.2020 at 11.20AAA personally / through his authorized representative.” 4.2 In response, the assessee submitted his written submissions and contents thereof read as under: “ 1. Assessee was not liable to file income tax return since he is pure agriculturist, earning income from Sale Proceeds of Agriculture produce and sometimes from the Sale proceeds of Agriculture land. In A.Y. 2010-11, assessee had not filed income tax return. Further, assessee had filed income tax return for A.Y. 2011-12 since assessee's interest income is increasing. 2.Source of Cash Deposit in Bank Accounts:- During the year under consideration, assessee was doing agriculture since may years in Kishanpui which is near the native place. Assessee jointly owns 52 Acres with Family Members. Assessee had sold agriculture produce in the_ month of April, October and November. Copy of All Form-J and Godavari are attached your kind reference. Further, Assessee had purchased agriculture land on 15.12.2008 for which Byana agreement had been constituted of Rs.20,00,000/-. On 08.05.2009, due to some unavoidable circumstances, Byana agreement had been cancelled and Rs.20,00,000/- had been refunded to assessee. Copy of Byana agreement are also enclosd for your kind reference. Further, on 15.09.2009, assessee had purchased agriculture, land amonting to Rs.51,64,000/- including Stamp Duty from the Shashi Pal Singh from the Sale Proceeds of Agriculture Produce and money received through cancellation of Byana Agreement for which Rs. 16,64,000/- paid immediately on the same day and the balance Rs.35,00,000/- will be paid on 06.02.2010 vide cheque No. 802858. Copy of the Registry of agriculture Land are enclosed for your good reference. 5 Assessee had cash deposited of Rs.39,00,000/- from the Sale proceeds of agriculture produce and money received through cancellation of Byana agreement. Cash flow statement also shows that Assessee has sufficient cash balance to meet all agriculture expenses and purchase of agriculture land. The Sale proceeds from Sale of Agriculture Produce of whole family is deposited in assessee's Bank account and the expenses of whole family had been accommodated by waste of agriculture produce, production of vegetables and some income from sale of milk of other family members. 3. Bank Account of the assessee:- The assessee is maintaining Saving Bank account No. 2949000100080391 with Punjab National Bank, Pipli Distt. Kurukshetra. Further, I attach the copy of the same for the year under consideration. Keeping in view the submission above, your honor is requested to please decide the case on merits and oblige." 5. The submissions so filed by the assessee were considered but not found acceptable to the Ld. Pr. CIT and the relevant findings which are under challenge before us are contained in para 4 & 5 of the impugned order which read as under: “4. The submissions made by the assessee have been carefully perused and duly considered. The same are discussed herewith alongwith the facts of the case on merits :- The assessee has submitted details and given versions which were not submitted at the time of the original assessment proceedings as the issue had not been duly examined by the Assessing Officer. The version of the assessee and the corresponding details and documents and plausibility of his explanations are required to be examined and verified. Some of the J Forms do not apparently pertain to the concerned financial year. The agreements for purchase and sale as well as the reconciliation of cash deposit and withdrawal from the bank account are required to be examined and verified to determine if the source of cash deposits stand duly explained. 5. In view of the above, it is clear that the AO has passed the order dated 20.06.2017 in an extremely careless, casual and perfunctory manner without caring to go through the details of the case and conducting any worthwhile enquiries on critical issues. The AO failed to exercise due diligence in respect of each and every issue involved in the assessee's case, and has passed a summary assessment order after simply obtaining a few documents from the assessee and 6 placing them on record. The order passed by the A.O. is, therefore, held to be erroneous in so far as it is prejudicial to the interest of Revenue. The same is accordingly set-aside with the directions to the A.O. to make the assessment afresh after inter-alia considering all the facts/issues discussed above, and after conducting comprehensive enquiries in respect of all the issues. The A.O. is also directed to allow reasonable opportunity of being heard to the assessee before passing the assessment order in this case.” 6. During the course of hearing, the Ld. AR taken us through the reasons recorded by the AO for reopening the case of the assessee under section 147. It was submitted that the AO was in receipt of information that the assessee had deposited a sum of Rs. 39,00,000/- in his Saving Bank Account during the F.Y. 2009-10 and given that the assessee had not filed his return of income, the AO had recorded his prima facie satisfaction that the cash deposited amounting to Rs. 39,00,000/- had escaped assessment and notice under section 148 was issued. 6.1 It was submitted that in response to the notice, the assessee appeared from time to time and filed necessary submission explaining the source of deposits out of sale of the agriculture produce, further notice under section 133(6) were also issued to various Commission Agents through whom the assessee has sold his agriculture produce and in response the Commission Agents have submitted account statement as well as copies of Form J which are available on record. 6.2 It was submitted that thereafter taking into consideration the explanation of the assessee that the cash was deposited out of the sale of the agriculture produce and carrying out necessary independent verification, the assessment proceedings were completed and our reference was drawn to the findings of the AO which are contained in para 2 & 3 of the assessment order which read as under: 7 “2. During the scrutiny process the assessee advocate Shri R.B. Manchanda was asked to submit proof of source of Rs. 39,00,000/- deposited in the said bank account along with documents and give detail. 3. Submission made by the assessee during the scrutiny process that the assessee is only an agriculturist. And they have joint family. The source of deposit in the joint bank account under scrutiny is the combined income of the family related to agriculture only. The assessee has 25 acres of agricultural land jointly with the family. On behalf of assessee this case was discussed in detail with his authorized R.B. Manchanda Advocate. Copy of account was obtained from various Commission Agents in respect of sale of crops of the assessee under section 133(6) which was put in the file after inspection. The alleged cash deposited in the bank was discussed in detail with the counsel for the assessee. After discussion, the counsel for the assessee gave his consent to add an additional income of Rs. 2,00,000/- for tax purpose to the income already declared in his return of assessment year 2010-11. Provided that it is not made the ground for penalty. Therefore, after discussion, an amount of Rs. 200000/- is hereby added to the income already declared in the return of the assessee. As per above the computation of the total income of the assessee is as follows:- (a) Income declared in the return - Rs. 2090/- + 100000 (Agriculture income) (b) Added as per detail given in para no. 2 - 200000/- (c) Total income (a + b) 202090/- + 100000 (Agriculture income) 6.3 It was further submitted that regarding the source of deposit of cash on 04/02/2010 and 05/02/2010, the same were out of the agriculture produce and cancellation of the Bayana agreement for purchase of land wherein the assessee received a refund of Rs. 20,00,000. Further, it was submitted that regarding withdrawal of Rs. 35,00,000/- through cheque issued to Shri Shashi Pal Singh, it was submitted that the assessee had purchased a piece of agriculture land for a sum of Rs. 51,64,000/-and a part of the consideration amounting to Rs. 35,00,000/- was paid on 06/02/2010 to Shri Shashi Pal Singh. 6.4 It was accordingly submitted that the matter has been duly examined by the AO and even during the course of revisionary proceeding before the Ld. Pr. CIT, the assessee has submitted his explanation and necessary documentation and the Ld. Pr. CIT has merely stated that the matter needs to be further examined by the AO and matter has been remanded to the file of the AO. It 8 was submitted that no specific findings has been recorded by the Ld Pr. CIT as to how the order so passed by the AO has been held to be erroneous in so far as prejudicial to the interest of the Revenue. It was accordingly submitted that the order so passed by the Ld. Pr. CIT be set aside and that of the AO be sustained. 7. Per contra the Ld. CIT DR taken us through the findings of the Ld. Pr. CIT which are contained in para 4 & 5 of the impugned order which we have also taken note on and hence not been repeated for the sake of brevity. 8. We have heard the rival contentions and purused the material available on record. We find that during the course of assessment proceedings, the matter relating to source of cash deposits in the assessee’s bank account maintained with Punjab National Bank was duly enquired into by the AO, the submissions and explanations along with documentation in terms of Gidavari reports, J forms, affidavits, cash flow statements and bank statements were called for and duly examined and cross- verified after calling for information u/s 133(6) from the Commissions agents and basis thereof, the explanation of the assessee, that he along with his family members own 25 acres of agriculture land and operates a joint bank account where the receipts from sale of agriculture produce was deposited, was accepted by the AO. The assessee had further submitted that during the year under consideration, Rs 20 lacs was received by way of refund on cancellation of agreement to sell which was also examined by the AO taking into consideration the copy of agreement to sell dated 9/06/2008 which was furnished during the course of assessment proceedings. We therefore find that the matter relating to source of cash deposits was duly examined by the AO as evident from the notings in the order sheet, the notices and submissions filed by the assessee as well as the contents of the assessment order where the AO has specifically recorded his findings regarding cash deposits. We further find that the AO has duly examined the entries in the cash flow statement and the bank statement and has not fully accepted the 9 assessee’s explanation and has made an addition of Rs 2 lacs while passing the assessment order. The same thus reflects due application of mind on part of the AO while analyzing the information and documentation so submitted by the assessee. We are therefore of the considered view that it is not a case of lack of enquiry on part of the AO to conduct necessary enquiries to examine the source of cash deposits during the course of assessment proceedings. 9. Now, coming to the findings of the ld PCIT, it is noted that the ld PCIT has stated that the assessee has submitted details and given versions which were not submitted at the time of the original assessment proceedings and the version of the assessee and the corresponding details and documents and plausibility of his explanations are required to be examined and verified. What fresh version or explanation has been submitted by the assessee during the revisionary proceedings and which is at variance with the explanation submitted during the assessment proceedings has however not been spelt out by the ld PCIT. On perusal of the explanation of the assessee, which also find mention in the impugned order, we find that the assessee has reiterated his explanation that source of cash deposit is out of sale of the agriculture produce as well as refund of amount on cancellation of agreement to sell. Therefore, the said findings of the ld PCIT are not borne out of records. 10. Regarding the findings of the ld PCIT that some of the J Forms do not apparently pertain to the concerned financial year, we find that where the information is called directly from the Commission agents, it is likely that some of the J forms pertain to different financial year, however, the fact remains that there are other J Forms which pertain to the relevant financial year as well and basis the same, the explanation of the assessee that source of whole of cash deposit remain unexplained cannot be negated. Being an agriculturist where the assessee has demonstrated the ownership of the land holding, growing of agriculture produce through the Gidavari reports and sale of the agriculture 10 produce through copies of J Forms, a realistic view has to be taken determining the proceeds from sale of agriculture produce and merely because certain J Forms doesn’t pertain to the relevant financial year cannot be held against the assessee rejecting the explanation of the assessee that he is involved in agriculture activities and deposits are out of sale of agriculture produce. Where the Revenue has to challenge the explanation of the assessee, it is essential to point out specific flaw in the said explanation and quantify the amount which as per the ld PCIT exceeds the nature and quantity of agriculture produce which apparently has not happened in the instant case. Further, as we have noted above, the AO has made an addition of Rs 2 lacs presumably for the same reason that certain J Forms doesn’t belong to the year under consideration and to that extent, the explanation of the assessee has not been accepted. The ld PCIT has failed to take note of said action on part of the AO. In absence of the same, where the matter has been duly examined by the AO, in absence any specific findings by the ld PCIT as to how the order so passed is erroneous and prejudicial to the interest of the Revenue, the order so passed cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. 11. Now, coming to withdrawal of amount of Rs 35 lacs from the bank account by way of cheque issued in name of Shri Shasi Pal Singh, we find that firstly, the same was not the subject matter of selection of case for scrutiny, and secondly, the assessee has explained that he has entered into a registered agreement dated 15/09/2009 where he has purchased a piece of agriculture land for a total consideration of Rs 51.64 lacs and a part of the said consideration was paid by issue of cheque for a sum of Rs 35 lacs. The explanation of the assessee is corroborated by the documentary evidence by way of registered sale deed and nothing has been stated as to how the explanation so submitted is not acceptable to the ld PCIT and merely remanding the matter to the file of the AO therefore cannot be justified. 11 12. In light of aforesaid discussions, we are of the view that the ld PCIT was not justified in exercise of his jurisdiction u/s 263 and setting aside the assessment order which has been passed after due examination and verification of source of cash deposits in the bank account maintained jointly by the assessee along with his family members. In the result, the order so passed by the ld PCIT is set- aside and that of the AO is sustained. 13. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 13/09/2023. Sd/- Sd/- आकाश दीप जैन िवᮓम ᳲसह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा᭟यᭃ / VICE PRESIDENT लेखा सद᭭य/ ACCOUNTANT MEMBER AG Date: 13/09/2023 आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. आयकर आयुᲦ (अपील)/ The CIT(A) 5. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 6. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar