ITO, New Delhi V. Renu Maingi, New Delhi

ITA 4310/DEL/2010

• Counselvise Citation: 431020114 RSA 2010
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 19-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 20-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRISEILLA SINGEIT
• Assessee Lawyers: ASHWANI TANEJAF
• Keywords: Principle of natural justice; Peak credit; Additional evidence; Non compliance
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F NEW DELHI BEFORE SHRI RP TOLANI, JM AND SHRI J.SUDHAKAR REDDY, AM ITA NO. 1240/DEL/2009 ASSESSMENT YEAR : 2005-06 ITO, WARD 20(3) VS. MS.RENU MAINGI NEW DELHI A 328, DERAWAL NAGAR NEW DELHI PAN: AGRPM 1940J A N D ITA NO. 4310/DEL/2010 ASSESSMENT YEAR ITO, WARD 20(3) VS. MS.RENU MAINGI NEW DELHI A 328, DERAWAL NAGAR NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY:- MS.PRISEILLA SINGEIT, SR.D.R RESPONDENT BY:- . SH.ASHWANI TANEJA, F.C.A. O R D E R PER J.SUDHAKAR REDDY, AM THESE APPEALS ARE FILED BY THE REVENUE FOR ASSESSME NT YEAR 2005-06 AND 2006-07 AND ARE DIRECTED AGAINST SEPARATE ORDER S OF CIT(A)-XXII, NEW DELHI DT. 16.01.2009 AND 05.07.2010 RESPECTIVEL Y. 2. FACTS IN BRIEF :- THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOM E FROM SALARY. SHE IS ALSO HAVING HER OWN BUSINESS, WHERE SHE UNDERTAKES PRINTING JOB PACKING AND DRESS MATERIAL FOR PRE SCH OOL STUDENTS. THE RETURNS OF INCOME FILED BY THE ASSESSEE WERE SELECT ED FOR SCRUTINY ON THE BASIS OF INFORMATION OF AIR UNDER AST INSTRUCTIONS. THE AO NOTICED THAT ITA 1240/DEL/2009 PAGE 2 OF 6 ASSESSMENT YEAR 2005-06 & ITA 4310/DEL/2010 ASSESSMENT YEAR 2006-07 ITO VS.MS.RENU MAINGI THERE WERE NUMEROUS CASH DEPOSITS AS WELL AS CASH W ITHDRAWALS ON VARIOUS DATES OF VARIOUS AMOUNTS DURING THE YEAR IN HIS BANK ACCOUNT. THE ASSESSING OFFICER ASKED FOR EXPLANATION FROM T HE ASSESSEE. THE ASSESSEE FILED A LETTER EXPLAINING THAT THE ASSESSE E HAS RECEIVED CHIT FUND MONEY OF RS.3,84,000/-, 2,25,000/- AND 3.64,000/- A ND THAT SHE HAS ACHIEVED A TURNOVER OF RS.7.67 LAKHS IN HER BUSINES S, THE PROFIT OF WHICH SHE HAD DECLARED IN HER RETURN OF INCOME. THE AO R ECORDED THAT THE ASSESSEE IS NOT MAINTAINING PROPER BOOKS OF ACCOUNT S AND IS ROOTED HER BUSINESS TRANSACTIONS NAMELY FROM HER SAVINGS ACCOU NT. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE A ND ADDED THE TOTAL DEPOSITS OF RS.20,57,500/-, WITHOUT CONSIDERING WIT HDRAWALS. 3. ON APPEAL THE FIRST APPELLATE AUTHORITY DELETED THE ADDITION. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING EFFECTIVE GROUNDS. 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.20,57,400/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF UNDISCLOSED CASH DEPOSITS IN THE ASSESSEES BANK ACCOUNT. 2. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN HOLD ING THAT THERE IS NO EVIDENCE ON THE BASIS OF WHICH THE ASSESSING OFFICE R WOULD COME TO A FINDING THAT SUM CREDITED IN THE BANK ACCOUNT OF TH E ASSESSEE REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE. 4. MS.PRESCILLA SINGEIT, LD.SR.DR REPRESENTED THE R EVENUE AND SHRI ASHWANI TANEJA, FCA APPEARED ON BEHALF OF THE ASSES SEE. 5. THE LD.SR. DR SUBMITTED THAT:- A) THE ASSESSEE NEVER MAINTAINED HER BOOKS OF ACCOUNTS ; ITA 1240/DEL/2009 PAGE 3 OF 6 ASSESSMENT YEAR 2005-06 & ITA 4310/DEL/2010 ASSESSMENT YEAR 2006-07 ITO VS.MS.RENU MAINGI B) THE THREE CHIT FUNDS WERE ONLY WITHDRAWN IN MAY AND HENCE THE DEPOSITS IN APRIL ARE NOT EXPLAINED. FOR AY 2006-07 SHE SUBMITS THAT ADDITIONAL EVIDENCE WAS WRONGLY ADMITTED BY THE CIT(A). THE LD.COUNSEL FOR THE ASS ESSEE RELIED UPON THE ORDER OF THE CIT(A). ON ADMISSION OF ADDITIONAL EV IDENCE, HE POINTED OUT THAT THE CIT(A) HAS CLEARLY RECORDED THAT THE NOTI CES WERE NEVER SERVED ON THE ASSESSEE. HE FURTHER POINTED OUT THAT 3 REM AND REPORTS WERE CALLED BY THE CIT(A). 6. AFTER HEARING RIVAL CONTENTIONS FOR AY 2005-06 W E UPHOLD THE ORDER OF THE CIT(A) WITH THE FOLLOWING OBSERVATIONS:- THAT THE AO COULD HAVE EASILY WORKED OUT THE PEAK OF THE DEPOSITS. THE ASSESSEE FURTHER EXPLAINED THAT IN THE MONTH OF MAY ITSELF THE ASSESSEE RECEIVED HER THREE CHITS AGGREGATING TO RS.9,75,000 /- AND WHEN PEAK IS WORKED OUT, IT IS LESS THAN THE TOTAL FUND OF RS.9, 74,500/-. THE FACT THAT CHIT FUNDS WERE WITHDRAWN IS NOT IN DISPUTE. THE P EAK HAS BEEN EXPLAINED BY THE ASSESSEE. 7. THUS THIS APPEAL OF THE REVENUE FOR AY 2005-06 IS DISMISSED. 8. COMING TO THE AY 2006-07, WE FIND THAT THE NOTIC E WAS NOT SERVED ON THE ASSESSEE AND THE ORDER WAS PASSED U/S 144 OF THE ACT. IN THIS BACKGROUND THE ADMISSION OF ADDITIONAL EVIDENCE CAN NOT BE FAULTED WITH. REMAND REPORTS HAVE BEEN CALLED FOR BY THE CIT(A). COMING TO THE MERITS ITA 1240/DEL/2009 PAGE 4 OF 6 ASSESSMENT YEAR 2005-06 & ITA 4310/DEL/2010 ASSESSMENT YEAR 2006-07 ITO VS.MS.RENU MAINGI OF THE CASE WE AGREE WITH THE FINDINGS OF THE CIT(A ) AT PARA 7.1 AND 7.2 WHICH IS EXTRACTED FOR READY REFERENCE:- 7.1. I HAVE CAREFULLY CONSIDERED THE FACTS OF T HE CASE, PERUSED THE SSESSMENT ORDER AND THE MATERIAL PLACED BEFORE ME BY THE APPELLANT. IN THIS CASE THE AO COMPLETED THE ASSES SMENT PROCEEDINGS U/S 144 WITH THE HELP OF MATERIAL AVAIL ABLE ON RECORD AS THE APPELLANT EITHER DID NOT COMPLIED WITH THE S TATUTORY NOTICES OR FAILED TO FURNISH ANY 'EXPLANATION/SUBMISSION. THE INCOME WAS ASSESSED AT RS.15,84,226/- AS AGAINST THE DECLARED INCOME OF RS.1,22,736/- ON THE BASIS OF AIR INFORMATION THAT THE APPELLANT HAD DEPOSITED AN AMOUNT OF RS.14,61,490/- IN CENTUR ION BANK OF PUNJAB LTD., ROSHANARA ROAD, DELHI. THE APPELLANT P LEADED BEFORE ME THAT THE AO HAS REFERRED TO ONE SINGLE DEPOSIT O F RS.14,61,490/- WHEREAS THE FACT IS THAT THERE ARE N UMEROUS DEPOSITS WHICH AGGREGATES TO RS.14,61,490/-. AFTER CONDUCTING ENQUIRIES, THE AO IN THE 'REMAND REPORT MENTIONED THAT DETAILS OF BANK ACCOUNT OF THE APPELLANT WITH THE CENTURION BANK WERE GATHERED AND THE APPELLANT WAS ASKED TO EXPLAIN THE DEBIT AND CREDIT ENTRIES WHICH HE HAS FURNISHED. AFTER DISCOV ERING THAT THE AO CONDUCTED THE ENQUIRIES FOR CURRENT ACCOUNT WHER EAS THE ADDITIONS WERE MADE ON ACCOUNT OF CASH DEPOSITS IN THE SAVING BANK ACCOUNT, THE AO WAS AGAIN ASKED TO FURNISH A F RESH REPORT. THE BANK STATEMENT REFLECTS THAT THERE ARE 50 ENTRI ES SHOWING CASH DEPOSITS ON DIFFERENT DATES DURING THE YEAR UNDER C ONSIDERATION. IT IS ALSO OBSERVED THAT THERE ARE 70 ENTRIES REFLECTI NG THE WITHDRAWALS. AS THE COMPLETE DETAILS ARE AVAILABLE REGARDING THE SAID BANK ACCOUNT IN SO FAR AS DEPOSITS AND WITHDR AWALS ARE CONCERNED, PEAK CREDIT OR THE PEAK OF THE DEPOSITS CAN BE WORKED OUT. IT IS WELL ACCEPTED PRINCIPLE THAT THE DEPOSIT S CANNOT BE SEEN IN ISOLATION WHEN THE DETAILS OF WITHDRAWALS ARE ALSO AVAILABLE. ON EXAMINATION OF THE BANK STATEMENT THE MAIN AS WELL AS THE ALTERNATIVE ARGUMENT PUT FORWARD ON BEHALF OF THE A PPELLANT APPEARS TO BE LOGICAL AND REASONABLE. 7.2 SINCE THE ADDITION HAS BEEN MADE AS UNEXPLAINE D CASH CREDITS, IT IS CONSIDERED NECESSARY TO EXAMINE THE ISSUE IN THE LIGHT OF THE PROVISIONS OF SECTION 68 OF THE ACT. UNDER S ECTION 68 OF THE ACT, IF ANY SUM FOUND CREDITED IN THE BOOKS OF ACCO UNTS OF THE APPELLANT AND THE APPELLANT OFFERS NO EXPLANATION A BOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY TH E APPELLANT IS NOT SATISFACTORY IN THE OPINION OF THE AO, THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE APPEL LANT OF THE RELEVANT PREVIOUS YEAR. THEREFORE, WHAT HAS TO BE E NQUIRED INTO BY ITA 1240/DEL/2009 PAGE 5 OF 6 ASSESSMENT YEAR 2005-06 & ITA 4310/DEL/2010 ASSESSMENT YEAR 2006-07 ITO VS.MS.RENU MAINGI THE AO IS THE NATURE AND SOURCE OF THE SUM OR DEPOS IT. THE BURDEN IS ON THE DEPARTMENT TO SHOW THAT THE MONEY BELONGE D TO THE APPELLANT BY BRINGING PROPER EVIDENCE ON RECORD AN D THE APPELLANT COULD NOT BE EXPECTED TO PUT EVIDENCE TO HELP THE D EPARTMENT TO DISCHARGE THE BURDEN THAT LAY UPON IT. THE APPELLAN T HAS SUCCESSFULLY EXPLAINED EACH AND EVERY CREDIT ENTRIE S ROUND IN THE BANK ACCOUNT. THE AO HAS ALSO NOT BROUGHT ANYTHING CONTRARY IN THE REMAND REPORT. THERE IS NO EVIDENCE ON THE BASI S OF WHICH AO WOULD COME TO A FINDING THAT SUM CREDITED IN THE BA NK ACCOUNT THE APPELLANT REPRESENTED THE UNDISCLOSED INCOME OF THE APPELLANT. THE CONTENTION OF THE AO THAT THE ADDITIONAL EVIDENCES MAY NOT BE CONSIDERED IN VIEW OF THE NON COMPLIANCE OF THE STA TUTORY NOTICES DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NO FORCE AND IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. MOREOVER, THE AO UNDER RULE 46A WAS PROVIDED THE OPPORTUNITIES OF CONDUCTI NG ENQUIRIES AND TO BRING ON RECORD ANY MATERIAL ON THE BASIS OF WHICH THE ADDITION MIGHT HAVE BEEN SUSTAINED. IT IS ALSO BROU GHT TO MY NOTICE THAT NO SHOW CAUSE NOTICE WAS ISSUED BEFORE FRAMING THE ASSESSMENT U/S 144 WHICH IS MANDATORY AS PER THE PR OVISO OF SECTION 144. MOREOVER, IN THE PRECEDING YEAR (A.Y. 2005-06) AND ON SIMILAR FACTS MY PREDECESSOR HAS DELETED THE ADDITI ON OF RS.20,57,500/- MADE UNDER SECTION 68 OF THE ACT. U NDER THE CIRCUMSTANCES AND ALSO IN VIEW OF THE DISCUSSION MA DE ABOVE, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS DISCH ARGED HIS ONUS THAT LAY UPON HIM UNDER SECTION 68 OF THE INCOME TA X ACT, 1961. ACCORDINGLY, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OR RS.14,61,490/- UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 AND THE ADDITION MADE BY THE A SSESSING OFFICER IS NOT SUSTAINABLE IN LAW AND THUS DELETED. 9. IN THE RESULT BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER,2012. SD/- SD/- (R.P.TOLANI) (J.SUDHA KAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: THE 26 TH NOVEMBER, 2012 *MANGA ITA 1240/DEL/2009 PAGE 6 OF 6 ASSESSMENT YEAR 2005-06 & ITA 4310/DEL/2010 ASSESSMENT YEAR 2006-07 ITO VS.MS.RENU MAINGI COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :