Smt. Neetu Aggarwal, Rudrapur V. ITO, Rohtak

ITA 304/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2231 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 15-12-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 28-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDER K CHAND
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Opportunity of being heard; Additional evidence; Set aside

Judgement Text

ITA NO. 304/DEL/2009 A.Y. 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE THE HON'BLE PRESIDENT, SHRI VIMAL GANDHI AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 304/DEL/2009 A.Y. 2006-07 SMT. NEETU AGGARWAL, VS. INCOME TAX OFFI CER, PROP. UTSAV ENTERPRISES, WARD-2, ROHTAK SHOP NO. 2, MODEL COLONY, KASHPUR ROAD, RUDRAPUR (PAN : ABQPA8939H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AJAY WADHWA DEPARTMENT BY : SH. NARENDER K. CHAND, DR ORDER PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A) DATED 28.11.2007 FOR THE ASSESSMENT YEAR 2006-07. 2. THE FIRST ISSUE RAISED IS THAT LD. CIT(A) ERRED IN SUSTAINING THE ADDITION TO THE EXTENT OF RS. 13,53,000/- OUT OF TOTAL AD DITION OF RS. 40,03,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN ASSESSEES BANK ACCOUNT. ITA NO. 304/DEL/2009 A.Y. 2006-07 2 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSES SMENT THE ASSESSING OFFICER NOTED THAT AS PER THE INFORMATION IN POSSESSION OF DEPARTMENT THE ASSESSEE HAD DEPOSITED CASH OF RS. 40 ,03,000/- IN HER HDFC ACCOUNT. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE AND GENUINENESS OF THE ABOVE DEPOSITS. ASSESSEES RESPON SE WAS THAT AMOUNTS WERE WITHDRAWN FOR VEHICLE PURCHASE AND PURCH ASE OF IMMOVABLE PROPERTY ON VARIOUS DATES, BUT AS THE DEALS COULD NOT BE COMPLETED, THE SUMS WERE DEPOSITED BACK. THE AO DID NOT ACCEPT THE ASSESSEES EXPLANATION AND HELD THAT THE ABOVE DEPOSI TS OF 40,03,000/- REMAINED UNEXPLAINED EXPENDITURE AND ACCORDINGLY TRE ATED AS UNEXPLAINED INVESTMENT OF THE ASSESSEE. 4. BEFORE THE LD. CIT(A) ASSESSEE IN THE SUBMISSION S UBMITTED THE CASH BOOK ALSO FOR THE FIRST TIME WHICH WAS ADMITTED BY THE LD. CIT(A). THESE WERE REFERRED TO AO FOR HIS COMMENTS. AO AFTER EXAMINING THE SAID CASH BOOK POINTED OUT THAT ASSESSEE HAD INTRODUCED CASH CREDITORS AGGREGATING TO RS. 6,55,000/- AND THIS ASPECT WAS NOT AVAILABLE FOR HIM FOR EXAMINATION DURING ASSESSMENT PROCEEDINGS. LD. C IT(A) DIRECTED THE AO TO EXAMINE THE GENUINENESS OF THESE DEPOSITORS. SINCE THE ASSESSEE COULD NOT PRODUCE THE CREDITORS BEFORE THE A O, AO SUBMITTED TO THE LD. CIT(A) THAT THE SAME MAY BE TRE ATED AS UNEXPLAINED. LD. CIT(A) OBSERVED AS UNDER:- ITA NO. 304/DEL/2009 A.Y. 2006-07 3 ACCORDINGLY, THE APPELLANT WAS GIVEN AN OPPORTUNITY AS PER ITS OFFICE LETTER DATED 24.11.2008 TO EXPLAIN WHY ENHANCE MENT OF RS. 6,55,000/- INTRODUCED BY IT IN THE CASH BOOK IS NOT MA DE IN ITS CASE AND WHY THE PROVISIONS OF SECTION 269T ARE NOT INVOKED FOR THE AMOUNTS EXCEEDING RS. 20,000/- RECEIVED FROM 30 PERS ONS ON THE AFORESAID DATE. THE APPELLANT WAS REQUIRED TO GAV E ITS VERSION ON 27.11.2008; HOWEVER THE APPELLANT SOUGHT ADJOURNMENT, THE ADJOURNMENT HAS NOT BEEN GIVEN BECAUSE THE AO HAS ALR EADY GIVEN REASONABLE OPPORTUNITY TO THE APPELLANT IN THIS REGARDS ON THE DIRECTIONS OF THE UNDERSIGNED. THE GROUNDS OF APPE AL ARE DECIDED IN THE AFORESAID BACKGROUND IN THE FOLLOWING PA RAS. IN GROUND OF APPEAL NO. 2(I) THE APPELLANT HAS RAISED THE ISSUE THAT THE CASH WAS DEPOSITED OUT OF CASH IN HAND WITH THE A SSESSEE AND THAT NO ADDITION IS POSSIBLE ON THIS POINT. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE DETAILS OF THE CASH DE POSITS IN THE BANK HAS BEEN GIVEN BY THE AO IN DETAIL AND WHY THE ADDITIONS HAVE BEEN MADE HAVE ALSO BEEN DISCUSSED IN DETAIL. DURING APPEAL PROCEEDINGS THE AO WAS CONFRONTED AS TO WHY THE CREDIT SHOULD NOT BE GIVEN FOR THE CASH AVAILABLE WITH THE A PPELLANT ON THE DATES OF DEPOSITS, THE AO SUBMITTED AS UNDER:- A) THERE WAS CASH WITHDRAWAL OF RS. 7,00,000/- ON 14.7.2 005 BUT REDEPOSIT OF RS. 5,00,000/- ON 13.8.2005 WITH A GAP OF ONE MONTH, IT CAN NOT BE ACCEPTED THAT A PERSON OF THE APPE LLANTS BACK GROUND WOULD KEEP SO MUCH AMOUNT IN CASH FOR ONE MONTH WITH HER. B) THERE WAS CASH OF RS. 9,00,000/- AVAILABLE WITH THE APPELLANT ON 2.9.2005 AND IT WAS REDEPOSITED ON 3.9.2005, THIS M AY BE TREATED AS EXPLAINED, DEPOSIT. C) CASH DEPOSIT OF RS. 1,00,000/- ON 3.9.2005, IT INCLUDE S SOME OF RS. 96,000/- (RS. 20,000/- + RS. 18,000/- + RS. 20, 000/- + RS. ITA NO. 304/DEL/2009 A.Y. 2006-07 4 20,000/- + RS. 18,000/-). THIS ADDITION DESERVES TO BE CONFIRMED. D) DEPOSIT OF RS. 2,50,000/- ON 5.9.2005, IT INCLUDES CAS H DEPOSIT OF RS. 20,000/- + RS. 20,000/- X 5 = 1,20,000/-. CR EDIT CANNOT BE GIVEN FOR THIS AMOUNT BECAUSE THE APPELLANT WAS NOT HA VING ANY CASH AVAILABLE WITH IT. E) DEPOSIT OF RS. 50300/- ON 14.9.2005. CASH INTRODUCED R S. 20,000/- X 21 = RS. 4,20,000/- + RS. 19,000/- = RS. 4,39,000/-. IT IS FROM UNDISCLOSED INCOME OF THE ASSESSEE AND DESERVE S TO BE CONFIRMED. F) DEPOSITS OF RS. 2,00,000/- ON 25.1.2006 OUT OF CASH IN H AND AVAILABLE WITH THE ASSESSEE. G) DEPOSITS OF RS. 7,00,000/-, RS. 6,55,000/- AND RS. 2, 00,000/- ON 30.3.2006 AGGREGATING TO RS. 15,50,000/- MAY BE TREA TED AS OUT OF WITHDRAWAL OF RS. 17,88,000/- (RS. 14,40,000/- + RS. 3,48,000/-) ON 8.3.2006. THEREFORE, DEPOSIT OF RS. 15 ,50,000/- MAY BE TREATED AS EXPLAINED. AS PER THE AO THE ADDITION OF RS. 26,50,000/- [OF RS. 9,00,000/- NOTED AT (B), RS. 2,00,000/- NOTED AT (G) AND OF RS. 15,50,000/- NOTED AT (G)] ABOVE, MAY BE DELETED IN V IEW OF THE CONFRONTATION OF THE FACT TO HIM BY THE UNDERSIGNED THAT THERE WAS SUFFICIENT CASH AVAILABLE WITH THE APPELLANT ON VARIOUS DATES OF DEPOSITS AND ADDITION OF RS. 13,53,000/- MAY BE MAD E ON ACCOUNT OF UNEXPLAINED CASH DEPOSITED IN THE BANK ACC OUNT. IN VIEW OF THE ABOVE VERSION OF THE AO AND SUBMISSIONS OF THE APPELLANT AND ALSO THE ADDITIONAL EVIDENCE SUBMIT TED BY THE APPELLANT, ADDITION TO THE EXTENT OF RS. 13,53,000/- IS CONFIRMED AND THE BALANCE IS DELETED. THE GROUND OF APPEAL P ERTAINING TO THIS ITEM IS PARTLY ALLOWED. IT MAY ALSO BE MENTIONED THAT THE PROPOSED ENHANCEMENT AS NOTED ABOVE IS NOT BEING MADE BECAUSE THE ADDITION MADE BY THE AO OF RS. 503000/- IS ITA NO. 304/DEL/2009 A.Y. 2006-07 5 CONFIRMED AND IT INCLUDES THE CASH INTRODUCED BY THE APPELLANT FROM THE CASH CREDITORS BETWEEN THE PERIOD OF 1.9.2005 TO 14.9.2005. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFOR E US. 6. LD. COUNSEL OF THE ASSESSEE CONTENDED THAT THE ADD ITION CONFIRMED BY THE LD. CIT(A) INCLUDES THE ADDITIONS OF RS. 6,55,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDITS. LD. COUNSEL CO NTENDED THAT THIS ADDITION WAS NOT AT ALL MADE BY THE AO IN THE ORIGI NAL ASSESSMENT ORDER. IT WAS ONLY IN THE REMAND PROCEEDINGS THAT AO HAS MADE THE OBSERVATION WITH REGARD TO UNEXPLAINED CASH CREDIT. LD. COUNSEL CONTENDED THAT IT WAS NOT AT ALL PERMISSIBLE FOR THE A O TO MAKE OUT A FRESH ADDITION WHEN THE APPEAL HAS ALREADY BEEN MADE BEFORE THE LD. CIT(A) AND MATTER HAS BEEN REMANDED TO HIM ON THE ISS UE RAISED BEFORE THE LD. CIT(A). LD. COUNSEL ALSO CLAIMED THAT LD. CIT(A) HAS ALSO ERRED IN SUSTAINING THE ABOVE SAID ADDITION MADE BY THE AO. LD. COUNSEL FURTHER ARGUED AS REGARDS THE DEPOSITS IN HDFC BANK, THAT ASSESSEE HAS BASICALLY EXPLAINED THE CASH DEPOSITS IN THE BANK AC COUNT WITH REFERENCE TO THE WITHDRAWALS MADE FROM THE BANK. HE CLAIMED THAT WHILE LD. CIT(A) HAS ACCEPTED SOME OF THE CLAIM, HE HAS NOT ACCEPTED SOME OF THE OTHER WITHOUT ASSIGNING COGENT REASON. 6.1 LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE LD. CIT(A). ITA NO. 304/DEL/2009 A.Y. 2006-07 6 7. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RE CORDS. WE FIND THAT BEFORE THE AO THE ASSESSEE HAD NOT SUBMITTE D THE CASH BOOK AND HAD CLAIMED THAT DEPOSITS MADE IN THE BANK WERE OUT OF THE WITHDRAWALS MADE FROM THE BANK. BEFORE THE LD. CIT( A) ASSESSEE HAS FOR THE FIRST TIME SUBMITTED THE CASH BOOK AND EXPLAINED THAT DEPOSITS IN BANK ACCOUNT WERE OUT OF CASH AVAILABLE WITH ASSESSEE . NOW HERE WE FIND THAT ASSESSEE HERSELF IS STATING THAT CASH HA S BEEN DEPOSITED IN BANK OUT OF THE CASH AVAILABLE IN THE CASH BOOK. UND ER SUCH CIRCUMSTANCES, IT IS QUITE INCUMBENT UPON THE AUTHORI TIES TO VERIFY THE CLAIM. WHILE VERIFYING THIS CLAIM, AO FOUND THAT CAS H AVAILABLE IN THE CASH BOOK ALSO TAKES INTO ACCOUNT SUM OF RS. 6,55,000/- OBTAINED THROUGH CASH CREDITS FROM CERTAIN PERSONS. THIS CASH CREDITS WERE NOT EXPLAINED PROPERLY BY THE ASSESSEE. HENCE, ADVERSE I NFERENCE DRAWN IN THIS REGARD IS WITH REFERENCE TO THE SOURCE OF CASH D EPOSITS IN THE BANK. HENCE THE ASSESSEES PLEA THAT FRESH ADDITION IS BEI NG MADE IS NOT ACCEPTABLE. AFTER TAKING INTO ACCOUNT THE ASSESSEE S CASH BOOK AND EXPLANATION AO HAD OBSERVED THAT ADDITION OF RS. 13,53, 000/- MAY BE MADE ON ACCOUNT UNEXPLAINED CASH DEPOSITS IN BANK. HENCE THIS ADDITION IS DIRECTLY WITH RESPECT TO CASH DEPOSITS IN BANK. 8. NOW WE DEAL WITH THE LD. CIT(A)S ADJUDICATION ON T HIS ISSUE. WE FIND THAT LD. CIT(A) HAS NOT PASSED A SPEAKING ORDER . HE HAS PRIMARILY ITA NO. 304/DEL/2009 A.Y. 2006-07 7 REFERRED TO AOS OBSERVATION. THESE OBSERVATIONS ARE WI TH REFERENCE TO A LOT OF FIGURES AND IN THE ABSENCE OF NECESSARY FACTS ABOUT THEM THE SAME ARE NOT PROPERLY COMPREHENDIBLE. A PERUSAL OF TH E ORDER REVEALS THAT THE SAID APPELLATE ORDER NEEDS PROPER AND CLEAR APPRECIATION OF FACTS. WE FURTHER FIND THAT THERE IS NO DISCUSSION AS TO WHAT WAS THE PEAK DEPOSIT AND PEAK WITHDRAWAL IN THE SAID BANK AC COUNT. ACCORDINGLY, THIS ISSUE IS REMITTED TO THE FILES OF THE LD. CIT(A) FOR FRESH ADJUDICATION. BOTH THE COUNSELS FAIRLY AGREED TO T HIS PROPOSITION. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 9. NEXT ISSUE RAISED IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADHOC DISALLOWANCE OF RS. 5000/- MADE OF TELEPHONE AND V EHICLE MAINTENANCE EXPENSES. 9.1 ON THIS ISSUE AO NOTED THAT ASSESSEE HAS INCURRE D TELEPHONE EXPENSES OF RS. 7371/- AND VEHICLE MAINTENANCE EXP ENSES OF RS. 8450/-. THE ASSESSEE HAD SUBMITTED THE DETAILS OF ABOVE EXPENSES. AO NOTED THAT ASSESSEE DID NOT MAINTAIN ANY REGISTER /LOG BOOK WHICH COULD ESTABLISH THE USE OF VEHICLE /TELEPHONE FOR WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. HENCE, HE DISALLOWED AN ADHOC A MOUNT OF RS. 5000/-. 9.2 UPON ASSESSEES APPEAL THE LD. CIT(A) CONFIRMED T HE SAID ORDER. ITA NO. 304/DEL/2009 A.Y. 2006-07 8 9.3. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT THE DISALLOWANCE HAS BEEN MADE BY THE AO W ITHOUT ANY COGENT BASIS. IT IS NOT THE CASE THAT ASSESSEE HAS N OT ACTUALLY INCURRED THE EXPENDITURE OR THE DETAILS HAVE NOT BEEN PROVIDED BEFORE THE AO. AO IS ONLY DOING THE GUESS WORK THAT THE WHOLE OF THE E XPENDITURE COULD NOT HAVE BEEN WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. IN OUR OPINION, SUCH ADDITION ON SURMISES ARE NOT SUSTAINAB LE. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORITI ES BELOW ON THIS ISSUE AND DELETE THE ADDITION. 10. LAST ISSUE RAISED IS THAT THE LD. CIT(A) ERRED IN NOT ADJUDICATING THE GROUND RELATING TO LUMP SUMP ADDITION OF RS. 20,000/- M ADE ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOLD EXPENDITURE. 11. ON THIS ISSUE AO HAS ESTIMATED THAT HOUSEHOLDS EX PENDITURE SHOWN BY THE ASSESSEE RS. 36000/- ARE CONSIDERED LOW A ND IN HIS OPINION ADHOC ADDITION FO RS. 20,000/- WAS BEING MADE TO THE INCOME OF THE ASSESSEE TO MAKE OUT THE EXPENSES AND TO COVER AL L POSSIBLE LEAKAGE OF INCOME. THE AO INTER-ALIA HAS OBSERVED THAT THE ASSESSEE FAILED TO INTIMATE THE HEAD-WISE DETAIL OF KITCHEN EX PENSES LIKE ELECTRICITY, VEGETABLES, FRUITS, WHEAT, CLOTHES, MED ICINES ETC., WHICH IS THE BASIC REQUIREMENT OF EACH FAMILY. FURTHER EXPEN DITURE IS REQUIRED ON OUT DOOR JOURNEYS ON RELIGIOUS/ JOLLY TRIPS, MARRIAGE CE REMONIES ETC. ITA NO. 304/DEL/2009 A.Y. 2006-07 9 THE POSSIBILITY OF EXTRA MONEY IS ALSO REQUIRED TO BE IN CURRED ON FESTIVALS LIKE DIWALI, JANAMASTMI, TEEJ, RAKSHA BA NDHAN ETC. 11.1 UPON ASSESSEES APPEAL LD. CIT(A) HELD THAT DIS ALLOWANCE ON ACCOUNT OF HOUSEHOLDS EXPENSES WAS CONFIRMED. THIS WAS IN PARA 6 OF THE APPELLATE ORDER, AS UNDER:- AS REGARDS THE DISALLOWANCE OF RS. 5000/- OUT OF TELEP HONE AND VEHICLE MAINTENANCE EXPENSES AND ON ACCOUNT OF HOUSE HOL D EXPENSES, THE SAME ARE CONFIRMED IN VIEW OF THE DETAI LED DISCUSSION MADE BY THE AO IN THE ASSESSMENT ORDER. 11.2 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL B EFORE US. 11.3 WE AGREE WITH THE CONTENTION OF THE ASSESSEE THAT LD. CIT(A) HAS FAILED TO APPRECIATE AND ADJUDICATE THE ISSUE. WE FIND THAT HONBLE APEX COURT IN THE CASE OF KAPURCHAND SHRIMAL VS. CIT, 131 ITR 451 HAS HELD THAT THE APPELLATE AUTHORITY HAS JURISDICTION AS WELL AS THE DUTY TO CORRECT THE ERRORS IN THE PROCEEDINGS UNDER APPEAL. AC CORDINGLY, WE PROCEED TO ADJUDICATE UPON THE ISSUE. 12. WE FIND THAT THE ADDITION IN THIS REGARD HAS BEE N MADE BY THE AO ABSOLUTELY WITHOUT ANY COGENT BASIS. IT IS NOT THE CA SE THAT AO HAS ITA NO. 304/DEL/2009 A.Y. 2006-07 10 COME ACROSS ANY EXPENDITURE INCURRED BY THE ASSESSEE WHICH COULD NOT HAVE BEEN MADE OUT BY THE WITHDRAWALS MADE BY HIM. THE OBSERVATION OF THE AO AS MENTIONED IN HIS ASSESSMENT ORD ER CAN BE ATTRIBUTED ONLY TO IMAGINATION AND NOT AS COGENT BASIS FOR MAKING ANY DISALLOWANCE. IN OUR CONSIDERED OPINION SUCH ADDITION BA SED ON SURMISES ARE NOT PERMISSIBLE. ACCORDINGLY, WE SET A SIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION IN THIS REGARD. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15/12/2009 UPON CONCLUSION OF THE HEARING. SD/- SD/- [VIMAL GANDHI] [SHAMIM YAHYA] PRESIDENT ACCOUNTANT MEMBER DATED: 15/12/2009 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES