Sh. Karan Aggarwal, Patiala V. The DCIT, Central Circle, Patiala

ITA 327/CHANDI/2022

AI Insights

This case involves a series of appeals by various assessees against the orders of the CIT(A)-5, Ludhiana, concerning additions made under section 69A of the Income Tax Act, 1961, following a search operation under section 132. The primary issue revolved around the addition of unexplained cash deposits and the rejection of cash gifts among family members. The Tribunal consolidated the appeals due to common issues and heard them together. The lead case involved the assessee, Smt. Renu Aggarwal, who contested the addition of Rs. 2,11,505 as peak cash shortage. The Tribunal found merit in allowing the assessee an opportunity to demonstrate the availability of savings in the form of cash and bank deposits at the beginning of the year, which could substantiate the cash deposits made during the year under consideration.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127707 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-02-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 30-03-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Business income
• Section: 132; 143(3); 142(1); 153A; 143(2); 69A

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “ए” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH ीमती दवा संह, या"यक सद#य एवं ी $व%म संह यादव, लेखा सद#य BEFORE: SMT. DIVA SINGH, JM & SHRI. VIKRAM SINGH YADAV, AM ITA NO. 297 TO 299/Chd/2022 Assessment Year : 2012-13, 2013-14 & 2016-17 Sh. Harjinder Paul Aggarwal, R/o H. No. 23, Shaheed Bhagat Singh Colony, Rajpura, Patiala-140401 The DCIT Central Circle Patiala PAN NO: ABNPA6443R Appellant Respondent ITA NO. 321 TO 323 /Chd/2022 Assessment Year : 2012-13, 2014-15, 2015-16 Smt. Renu Aggarwal R/o H.No. 23, Shaheed Bhagat Singh Colony, Rajpura, Patiala-140401 The DCIT Central Circle Patiala PAN NO: ACDPA4341H Appellant Respondent ITA NO. 326 /Chd/2022 Assessment Year : 2018-19 Shri Pankul Aggarwal R/o H.No. 23, Shaheed Bhagat Singh Colony, Rajpura, Patiala-140401 The DCIT Central Circle Patiala PAN NO: ADQPA4811Q Appellant Respondent ITA NO. 327 /Chd/2022 Assessment Year : 2018-19 Shri Karan Aggarwal, R/o H.No. 23, Shaheed Bhagat Singh Colony, Rajpura, Patiala-140401 The DCIT Central Circle Patiala PAN NO: AFHPA1619R Appellant Respondent ITA NO. 328 TO 330 /Chd/2022 Assessment Year : 2012-13 TO 2014-15 2 Shri Deepal Aggarwal R/o H.No. 23, Shaheed Bhagat Singh Colony, Rajpura, Patiala-140401 The DCIT Central Circle Patiala PAN NO: AKHPA5306L Appellant Respondent ITA NO. 331 TO 336 /Chd/2022 Assessment Year : 2012-13 TO 2017-18 Shri Ramesh Kumar Aggarwal R/o H.No. 23, Shaheed Bhagat Singh Colony, Rajpura, Patiala-140401 The DCIT Central Circle Patiala PAN NO: ACDPA4340G Appellant Respondent ! " Assessee by : Shri Deepak Aggarwal, Advocate # ! " Revenue by : Shri Vivek Nangia, CIT DR $ % ! & Date of Hearing : 08/02/2023 '()* ! & Date of Pronouncement : 09/02/2023 आदेश/Order PER BENCH: These are bunch of 17 appeals filed by respective assessees against the order of Ld. CIT(A)-5, as per following details: Sl.No. Appeal No. Name of Case CIT(Appeal / s ) Order dt. A.Y. 1 ITA No. 297/Chd/2022 Shri Harjinder Paul Aggarwal CIT(A)-5, Ludhiana 20/01/2022 2012-13 2 ITA No. 298/Chd/2022 Shri Harjinder Paul Aggarwal CIT(A)-5, Ludhiana 20/01/2022 2013-14 3 ITA No. 299/Chd/2022 Shri Harjinder Paul Aggarwal CIT(A)-5, Ludhiana 20/01/2022 2016-17 4 ITA No. 321/Chd/2022 Smt. Renu Aggarwal CIT(A)-5, Ludhiana 31/12/2021 2012-13 5 ITA No. 322/Chd/2022 Smt. Renu Aggarwal CIT(A)-5, Ludhiana 31/12/2021 2014-15 6 ITA No. 323/Chd/2022 Smt. Renu Aggarwal CIT(A)-5, Ludhiana 31/12/2021 2015-16 7 ITA No. 326/Chd/2022 Shri Pankul Aggarwal CIT(A)-5, Ludhiana 20/01/2022 2018-19 3 8 ITA No. 327/Chd/2022 Shri Karan Aggarwal CIT(A)-5, Ludhiana 12/01/2022 2018-19 9 ITA No. 328/Chd/2022 Shri Deepal Aggarwal CIT(A)-5, Ludhiana 10/01/2022 2012-13 10 ITA No. 329/Chd/2022 Shri Deepal Aggarwal CIT(A)-5, Ludhiana 10/01/2022 2013-14 11 ITA No. 330/Chd/2022 Shri Deepal Aggarwal CIT(A)-5, Ludhiana 10/01/2022 2014-15 12 ITA No. 331/Chd/2022 Shri Ramesh Kumar Aggarwal CIT(A)-5, Ludhiana 20/01/2022 2012-13 13 ITA No. 332/Chd/2022 Shri Ramesh Kumar Aggarwal CIT(A)-5, Ludhiana 20/01/2022 2013-14 14 ITA No. 333/Chd/2022 Shri Ramesh Kumar Aggarwal CIT(A)-5, Ludhiana 20/01/2022 2014-15 15 ITA No. 334/Chd/2022 Shri Ramesh Kumar Aggarwal CIT(A)-5, Ludhiana 20/01/2022 2015-16 16 ITA No. 335/Chd/2022 Shri Ramesh Kumar Aggarwal CIT(A)-5, Ludhiana 20/01/2022 2016-17 17 ITA No. 336/Chd/2022 Shri Ramesh Kumar Aggarwal CIT(A)-5, Ludhiana 20/01/2022 2017-18 2. Since the issues involved are common in all the above appeals, the appeals were heard together and are being disposed off by this consolidated order. 3. With the consent of both the parties, the case of the assessee in ITA No. 321/Chd/2022 pertaining to A.Y. 2012-13 was taken as lead case wherein assessee has raised the following grounds of appeal: 1. The Ld. CIT(A) has erred making addition of Rs. 2,11,505/- on account of peak cash shortage without allowing the benefit of amount received from family members and opening cash in hand. 2. The Ld. CIT(A) has erred in not allowing the opening cash in hand as on 01.04.2011 to be adjusted in calculation peak shortfall of cash. 3. The CIT(A) has erred in confirming the action of the Ld. Assessing Officer to make addition on the basis of completed assessment and there was no material found in seized material to make such addition. 4. The assessee craves leave to add or delete any ground(s) before the appeal is finally heard for disposal. 4. Briefly the facts of the case are that a search operation under section 132 of the Act was conducted at the premises of Aggarwal group on 12/04/2017 4 and warrant under section 132 was also executed in the case of the assessee. Thereafter notice under section 153A was issued to the assessee. In response, the assessee filed her return of income declaring total income of Rs. 2,34,570/- thereafter notice under section 143(2) and 142(1) were issued alongwith questionnaire and after taking the same into consideration the submissions/explanation of the assessee, an addition of Rs. 2,88,000/- as unexplained money under section 69A of the Act was made by the AO vide assessment order passed u/s 143(3) r/w 153A dated 26/12/2019. 4.1 As per the AO, the assessee has given certain cash gifts to various family members and in this regard, the assessee was asked to furnish documentary evidence and in response, the assessee filed the cash flow statement. The cash flow statement so submitted by the assessee was not accepted by the AO, in absence of any documentary evidence regarding availability of cash. It was further held by the AO that the cash gift given by the assessee will be considered in the respective hands accordingly as far as the cash gifts were considered no addition was made in the hands of the assessee. 4.2 Further, the AO observed that the assessee has deposited a sum of Rs. 4,00,000/- in her saving bank account and car loan account and as per return of income, the assessee has only received Rs. 1,12,000/- in cash as business income and in absence of any documentary evidence to substantiate cash deposited in her bank account, the addition of Rs. 2,88,000/- (4,00,000-1,12,000) after giving credit for business income was made under section 69A of the Act. 5. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). 6. As per the findings recorded by the Ld. CIT(A), the claim of gift received / taken in cash between and among different family members during different years is rejected and consequently the effect of such cash receipts / payments 5 is ignored i.e, neither credit is given for cash gifts received nor any addition on account of alleged cash gifts given or taken was sustained. 6.1 Further regarding the addition made by the AO, the ld CIT(A) has stated that during the course of appellate proceedings, the assessee was asked to file a revised cash flow statement by taking the opening cash balance as NIL and ignoring the cash gift given or taken because the gifts given or taken during the different years among the family members were doubted and rejected by the AO. The assessee was asked to take into consideration the only cash withdrawal and cash deposits as appearing in her bank account and income in cash, if any, while drawing the revised cash flow statement. In response the assessee filed a revised cash flow statement by taking the opening cash in hand as on 01/04/2011 as NIL and as per that revised cash flow statement, there was negative peak cash balance of Rs. 2,11,505/- as on 31/03/2012. 6.2 As per Ld. CIT(A), the ld AR was confronted with this fact during the appellate proceedings and after discussion, he conceded that this amount needs to be added to the income of the assessee for the year under consideration. Accordingly, the addition to the extent of Rs. 2,11,505/- was confirmed and the remaining addition was directed to be deleted. 7. Against the said findings and directions of the ld CIT(A), the assessee is in appeal before us. 8. During the course of hearing, the Ld. AR submitted that the limited issue for consideration before the Bench is the addition sustained by the Ld. CIT(A) to the extent of Rs. 2,11,505/-. It was submitted that while drawing the revised cash flow statement, the benefit of opening cash in hand has not been given to the assessee therefore the limited prayer of the assessee is that the assessee be allowed to demonstrate the availability of opening cash in hand and the cash in hand so determined be allowed to be taken into consideration while 6 determining the peak cash balance in the hands of the assessee. It was submitted that assessee is a regular Income Tax assessee and has been regularly filing her return of income and therefore she shall be able to demonstrate through appropriate documentation regarding the availability of opening cash in hand, therefore an opportunity may be allowed to the assessee in this regard. 9. Per contra the Ld. CIT/DR submitted that during the course of appellate proceedings, the assessee has conceded this fact and has accepted the methodology and working of the revised cash flow statement and therefore the assessee cannot agitate the same issue again before the Tribunal. 10. In his rejoinder the Ld. AR draw our reference to the submissions made before the Ld. CIT(A) wherein the assessee has submitted the revised cash flow statement without considering the gift received and given and therein it was submitted that there is a short fall of cash of Rs. 2,11,505/- on 31/03/2012 which can easily be met from past savings otherwise there is no shortfall of cash in the case of the assessee at any point in time. It was accordingly submitted that there is no concession which has been made by the Ld. AR on behalf of the assessee and therefore the limited prayer of the assessee in terms of allowing an opportunity to demonstrate opening cash in hand may be allowed. 11. We have heard the rival contentions and purused the material available on record. During the course of assessment proceedings, the AO observed that the assessee has deposited a sum of Rs. 4,00,000/- in her saving bank account and car loan account and as per return of income, the assessee has only received Rs. 1,12,000/- in cash as business income and in absence of any other documentary evidence to substantiate cash deposited in her bank account, the addition of Rs. 2,88,000/- after giving credit for business income was made under section 69A of the Act. During the appellate proceedings, the ld CIT(A) has restricted the addition to Rs 2,11,505/- relaying on the cash flow statement 7 submitted by the assessee and remaining addition has been directed to be deleted. Where the assessee being a regular income tax assessee in the earlier years has disclosed sources of income and where there are savings from the earlier years and which are available at the beginning of the year, we find merit in the contention of the ld AR that the assessee be allowed an opportunity to demonstrate the availability of savings in form of cash and bank deposits at the beginning of the year through appropriate documentation in support of cash deposits made during the year under consideration. Such availability of cash in hand at the beginning of the year should be from assessee’s own past income and savings and should not include any transactions with the relatives and family members. Where there are deposits in her bank account, the onus is on the assessee to provide explanation and substantiate the same through appropriate documentation. Where the assessee claims that the deposits during the year are out of opening cash in hand from her past savings and income, the assessee cannot be denied an opportunity to put forth her explanation. It is only the real income in the hands of the assessee which can be brought to tax and it is incumbent on part of the Revenue to allow such an opportunity to the assessee and let’s the explanation so submitted and documentation in support so furnished be tested and examined and basis such examination, the AO can take an appropriate view in the matter as per law. In light of aforesaid, the contention of the ld DR regarding concession made by the ld AR on behalf of the assessee during the appellate proceedings cannot be accepted and the prayer of the assessee is allowed. The matter is accordingly set-aside to the file of the AO for the limited purposes of examination the quantum and availability of opening cash-in-hand in the assessee and to consider the same for the purposes of drawing the cash flow statement and determining the peak cash balance in the hands of the assessee and decide the matter as per law after providing reasonable opportunity to the assessee. In the result, ground no. 1 and 2 are allowed for statistical purposes 8 12. Ground no. 3 is dismissed as infructious in absence of any arguments during the course of hearing. 13. In the result, the appeal of the assessee is disposed off in light of aforesaid directions. 14. Now, coming to the separate ground of appeal in ITA Nos. 326/Chd/2022 relating to disallowance of exemption claimed u/s 10(14)(i) in respect of conveyance allowance, we refer to the relevant facts and findings of the Ld. CIT(A) which read as under: “4.3 Ground of Appeal No. 6 relate to addition of Rs. 7,00,000/- on account of disallowance of conveyance allowance. The AO has mentioned that the assessee has shown to have received Rs. 7,00,000/- as conveyance allowance which has been claimed exempt u/s 10(14)(i) of the Income Tax Act, 1961. The AO has further mentioned that on perusal of assessee's bank account and assessee's account in the books of M/s. Pancham Jewellers Pvt. Ltd., no corresponding expenses have been shown in the performance of duties of Director. Therefore, as per the AO, in the absence of evidence of Rs. 7,00,000/- incurred in the performance of duties, the deduction of Conveyance allowance cannot be allowed because as per the AO, this is allowable only when the assessee has spent equivalent amount in the performance of duties. Accordingly, the deduction claimed by the assessee u/s 10(14)(i) was disallowed and addition of Rs. 7,00,000/- was made. The facts of the case, basis of addition by the AO and the arguments of the AR during the course of appellate proceedings have been considered. The AR has submitted that the disallowance was made by the AO for want of documentary evidence regarding actual incurrence of expenses. As per the AR, the Conveyance is integral part of assessee's duties and it is confirmed by the employer that the expenses was incurred for official purposes. The AR has filed some document claiming as proof of payment for fuel and driver salary without any application under Rule 46A. Further, a perusal of the cash flow statement filed by the AR shows that no such expense on fuel or salary to driver are appearing anywhere during the Financial Year 2017-18 (i.e. 01.04.2017 to 31.03.2018). The AO has disallowed the Conveyance Allowance for want of documentary evidence regarding actual incurrence of expenses and even during the appellate proceedings, no such documents/evidence have been filed. The AR has mentioned that the appellant was looking after marketing operations, meeting with the customer, visiting bank and government offices. It is also mentioned that the assessee had to travel to places like Delhi, Jaipur, Ludhiana, Uttar Pradesh etc. The AR referred to ITAT Judgment and argued that no disallowance should be made on mere non-production of evidence. It is however relevant to note that the source of incurring the expense has not been filed neither any withdrawal has been shown for making the alleged payment. 9 Also, the detail of the duties performed including the dates on which visits were made, the places which were visited on a particular day or date, the activities carried out at those places during the alleged visits, the persons contacted and the offices visited during the visits, works done etc. have not been filed. Thus, the reply of the assessee is completely silent about the activities performed as part of alleged official duties. Hence, keeping in view the above facts & discussion, the claim of the lessee for deduction u/s 10(14)(i) is not found acceptable and the disallowance made by the AO is upheld. Accordingly, this ground of appeal is dismissed.” 15. During the course of hearing, the ld AR submitted that during the appellate proceedings, the assessee has filed certain documents as proof of payment for fuel and driver salary which has not been considered by the ld CIT(A) and it was submitted that the assessee may be allowed one more opportunity to place these documents and which can be examined by the AO. The ld DR didn’t raise any specific objection where the matter is set-aside to the file of the AO. 16. In view of the submissions made before us, the matter is set-aside to the file of the AO to examine the matter afresh after taking into consideration the submissions and documentation in support of claim of expenditure by the assessee and decide the matter as per law after providing reasonable opportunity to the assessee. In the result, the ground no. 01 of assessee’s appeal is allowed for statistical purposes. 17. In rest all appeals, both the parties fairly submitted that similar grounds of appeal have been raised by the respective assessees in respect of which addition has been sustained by the ld CIT(A) u/s 69A and the facts and circumstances of the cases are exactly identical except for the difference in the amount involved. It has been further submitted that in ITA Nos. 327/Chd/2022, similar to ITA No. 326/Chd/2022, there is an additional ground of appeal relating to disallowance of exemption claimed u/s 10(14)(i) in respect of conveyance allowance. Therefore, our findings and directions contained in ITA No. 10 321/Chd/2022 and 326/Chd/2022 shall apply mutatis mutandis to other appeals and these appeals are disposed off accordingly. 18. In the result, all the appeals are disposed off in light of aforesaid directions. Order pronounced in the open Court on 09/02/2023. Sd/- Sd/- दवा संह $व%म संह यादव (DIVA SINGH) ( VIKRAM SINGH YADAV) या"यक सद#य / JUDICIAL MEMBER लेखा सद#य/ ACCOUNTANT MEMBER AG Date: 09/02/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 678 ग9 DR, ITAT, CHANDIGARH 6. ग 8 : % Guard File ( + $ By order, ; # Assistant Registrar