Ancha Shanker Rao, New Delhi V. ITO, Ward- 65(1), New Delhi

ITA 4680/DEL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3843 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 25-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Keywords: Reopening of assessment; Borrowed satisfaction
• Section: 69C; 153C; 147; 148

Judgement Text

N THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.4680/DEL/2018 ASSESSMENT YEAR 2008-09 ANCHA SHANKER RAO, C/O VINOD KUMAR BINDAL & CO., CAS, D-219, VIVEK BIHAR PHASE-I, NEW DELHI. V. ITO, WARD-65(1), NEW DELHI. TAN/PAN: AEDPR9531C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VINOD KUMAR BINDAL, CA AND SMT. RINKY SHARMA, ADV. RESPONDENT BY: SHRI SARAS KUMAR, SR.D.R. DATE OF HEARING: 10 12 2020 DATE OF PRONOUNCEMENT: 27 02 2020 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 23.05.2018, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXI, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.147/144 FOR THE ASSESSMENT YEAR 2008-09. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REOPENING TH E ASSESSMENT U/S. 148 OF THE ACT ON THE BASIS OF INCRIMINATING M ATERIAL FOUND DURING THE COURSE OF SEARCH OF A THIRD PARTY WHEREAS THE PROVISIONS OF SECTION 153C OF THE ACT COULD ONLY HE APPLIED TO THE EXCLUSION OF THE SECTIONS 147 AND 148 OF THE AC T. THUS THE I.T.A. NO.4680/DEL/2018 2 ASSESSMENT SHOULD BE ANNULLED. 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN R EOPENING THE ASSESSMENT U/S 148 OF THE ACT FOR THE FOLLOWING REA SONS: A) IN THE ABSENCE OF ANY LIVE LINK ESTABLISHED BET WEEN THE ALLEGED INFORMATION REGARDING CASH PAYMENT BY THE A PPELLANT AND HIS ESCAPED INCOME AND B) WITHOUT ASCERTAINING THE FACT AS TO WHO HAD ACT UALLY MADE THE CASH PAYMENT AND C) PRESUMING THAT THE APPELLANT MUST HAVE PAID THE CASH FOR THE EDUCATION OF HIS DAUGHTER TO SANTOSH MEDICA L COLLEGE. THUS THE ASSESSMENT SO MADE SHOULD BE ANNULLED. 3. THE LEARNED CIT (APPEALS) ERRED IN LAW AND ON F ACTS IN CONFIRMING AN ADDITION OF RS. 3,96,000/- AS UNEXPLA INED EXPENDITURE U/S 69C OF THE ACT WITHOUT CONSIDERING THE LAWFUL SUBMISSIONS AND DOCUMENTARY EVIDENCES PLACED ON REC ORD. THUS, THE SAID ADDITION MUST BE DELETED. 2. THE FACTS IN BRIEF ARE THAT ASSESSEE IS AN INDIV IDUAL AND IS WORKED WITH NCB DELHI UNIT, MHA AS ZONAL DIRECTO R AND ONLY SOURCE OF INCOME IS SALARY. AN INFORMATION WAS RECEIVED FROM DIT (INV.), NEW DELHI THAT THE ASSESSEE HAS PA ID REGULAR FEE AMOUNTING TO RS.9,33,000/- BY DEMAND DRAFT AND RS.7,27,000/- IN CASH TOWARDS REGULAR FEE MADE TO S ANTOSH MEDICAL COLLEGE, GHAZIABAD FOR HIS DAUGHTERS MEDIC AL EDUCATION. BASED ON SUCH INFORMATION, ASSESSEES CA SE WAS PICKED UP FOR SCRUTINY U/S.148 VIDE NOTICE DATED 18 .03.2014. THE REASONS RECORDED FOR TAKING ACTION U/S.148 WERE AS I.T.A. NO.4680/DEL/2018 3 UNDER: THE DOCUMENTS IN POSSESSION OF THE UNDERSIGNED ASS ESSING OFFICER, PLACED CONTRA, REVEALED THAT THE ASSESSEE SH. ANCHA SHANKAR RAO, R/O SECTOR-C, POCKET-6, FLAT NO.6504, VASANT KUNJ, NEW DELHI-110070, HAS PAID REGULAR FEE FOR HI S DAUGHTER MS. AMULYA AMOUNTING TO RS.9,33,000/- BY DEMAND DRAFT AND RS. 7,27,000/- IN CASH IN F.Y. 2007-08 PERTAINING TO A.Y.2008- 09 AFTER VERIFYING ITD RECORDS, IT IS SEEN THAT NO ITR FOR A.Y.2008-09 HAS BEEN FILED BY THE ASSESSEE. HENCE, FOR THE A.Y.2008-09, THE INCOME CHARGEABLE T O TAX WHICH HAS ESCAPED ASSESSMENT AMOUNT TO OR IS LIKELY TO AM OUNT RS.1LAKH OR MORE. FOR THE REASONS STATED ABOVE, I HAVE REASON TO BELI EVE THAT THE INCOME OF THE ABOVE MENTIONED ASSESSMENT YEAR HAS E SCAPED ASSESSMENT AND AS SUCH, I AM SATISFIED TO ISSUE NOT ICE U/S 148 FOR RE-OPENING OF ASSESSMENT U/S 147 R.W.S 148, 149 AND 151 OF INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2008-09 FOR A.Y. 2008-09 , THE APPROVAL OF THE ADDITIONAL CIT, RANGE-64, NEW DELHI, HAS BEEN TAKEN SEPARATELY. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE TO SUBMIT T HE SOURCE OF PAYMENTS MADE TOWARDS REGULAR FEE MADE TO SANTOSH MEDICAL COLLEGE IN RESPECT OF HIS DAUGHTER FOR MBBS COURSE, THE ASSESSEE SUBMITTED THAT HE HAS INCURRED EXPENDITURE OF RS.16,60,000/- IN A SPAN OF SIX YEAR AS REGULAR FEE AND DURING THE YEAR ONLY RS.3,81,000/- HAS BEEN PAID TOWARDS REGULAR FEE AND THAT TOO HAS BEEN PAID BY H IS WIFE I.T.A. NO.4680/DEL/2018 4 MRS. ANCHA KAVITHA. THE LD. ASSESSING OFFICER ON TH E BASIS OF INFORMATION, OBSERVED THAT DURING THE FINANCIAL YEA R 2007-08 THE TOTAL FEE IN CASH PAID WAS RS.3,96,000/-; AND T O VERIFY THE SAME THE ASSESSING OFFICER ASKED FOR FURTHER DOCUME NTARY EVIDENCES REGARDING FEE PAYMENT BY ASSESSEES WIFE. IN RESPONSE, THE ASSESSEE SUBMITTED HER INCOME TAX RET URN, BANK STATEMENT, CASH FLOW STATEMENT, ETC.. IT WAS F URTHER SUBMITTED THAT SHE HAS RENTAL INCOME AND AGRICULTUR AL INCOME OUT OF WHICH SHE HAD PAID THE FEES. HOWEVER, THE LD . ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION BY THE ASSES SEE AND ADDED THE ENTIRE AMOUNT OF RS.3,96,000/-. 4. LD. CIT (A) HAS CONFIRMED THE SAID ADDITION AFTE R OBSERVING AND HOLDING AS UNDER: ON MERIT, THE APPELLANT HAS CLAIMED THAT THE FEE O F THE WARD OF THE APPELLANT WAS PAID BY HIS WIFE MRS. ANCHA KAVIT HA AND IN SUPPORT OF THIS, THE COPY OF RETURN, CAPITAL ACCOUN T, CASH FLOW STATEMENT AND HER BANK STATEMENT WAS FILED. THE SUB MISSION OF THE APPELLANT THAT THIS AMOUNT HAS BEEN DECLARED IN THE RETURN OF INCOME OF THE WIFE OF THE APPELLANT HAS ALSO BEE N CONSIDERED AND IT IS GATHERED THAT RETURN OF INCOME OF THE WIF E OF THE APPELLANT WAS FILED IN ITR-4 SHOWING THE RENTAL INC OME, INTEREST INCOME, LOSS FROM BUSINESS AND AGRICULTURE INCOME. HOWEVER, NO COPY OF RETURN WAS FILED BY THE APPELLANT EXCEPT TH E ACKNOWLEDGMENT. BESIDES THIS, THE COPY OF RETURN OF THE WIFE FOR A.Y. 2004-05, 2005-06 AND 2006-07 WAS FILED WHICH W AS IN FORM SARAL WHICH DOES NOT REQUIRE TO FILE CAPITAL A CCOUNT AND BALANCE SHEET. BESIDE THIS, FOR A.Y. 2007-08 AND A. Y.2008-09 THE APPELLANT HAS ONLY FILED THE ACKNOWLEDGMENT OF FILING OF I.T.A. NO.4680/DEL/2018 5 RETURN OF INCOME WITHOUT THE COPY OF RETURN AND THI S SHOWS THAT BALANCE SHEET AND CAPITAL ACCOUNT AND CAPITAL ACCOU NT WHICH IS NOW FILED HAS NEVER BEEN FILED ALONG WITH THE RETUR N OF INCOME. IN THE CASH FLOW STATEMENT SUBMITTED BY THE APPELLA NT IN THE PAPER BOOK THE ACCUMULATION OF CASH IN THE ACCOUNT OF AGRICULTURE INCOME WHICH IS SHOWN OF RS. 2,40,000/- ON 21.05.20 017 ON ONE SINGLE DAY. FURTHER, THE BALANCE ACCUMULATION OF CA SH WAS SHOWN OF RENTAL INCOME AND SURPRISINGLY THE HOUSE H OLD EXPENSES WAS SHOWN ONLY OF RS. 2500/- PER MONTH ON FIRST DAY OF EVERY MONTH TILL AUGUST, 2007. THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER HAS MENTIONED THAT DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE APPELLANT COULD NOT PRO DUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLAIM THAT T HERE WAS ANY AGRICULTURAL INCOME OUT OF WHICH THE WIFE HAS PAID THE FEE. FURTHER, THE VITAL FACT IS THE NEITHER THIS AMOUNT HAS BEEN SHOWN AS WITHDRAWAL IN THE BANK ACCOUNT NOR IN THE CAPITA L ACCOUNT. FURTHER, THIS WAS ALSO NOT FILED IN RESPONSE TO SHO W CAUSE NOTICE DATED 24.02.2016 HENCE THE TOTAL FEE PAID IN CASH O F RS. 3,96,000/- WAS TREATED BY THE AO AS UNEXPLAINED, NO W, DURING THE COURSE OF APPELLATE PROCEEDINGS ALSO THE APPELL ANT COULD NOT PRODUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLAIM THAT THE FEE WAS PAID BY THE WIFE OF THE APPELLANT. 6.11 THE APPELLANT HIMSELF IS AN ADDITIONAL SECRE TARY RANK OFFICER IN THE GOVERNMENT OF INDIA AND WHEN THIS MO NEY IS PAID IN CASH THE APPELLANT HAS DIALED TO SUBSTANTIATE BE FORE THE ASSESSING OFFICER THAT THIS MONEY HAS BEEN PAID BY THE WIFE OF THE APPELLANT. FURTHER, THE APPELLANT HAS ALSO ACCE PTED THE FACT THAT RS. 15,000/- WAS PAID FOR THE FEE OF THE DAUGH TER DURING THE YEAR AND IN SUBSEQUENT YEAR ALSO. APPARENTLY, WHEN THE I.T.A. NO.4680/DEL/2018 6 APPELLANT AND HIS WIFE HAS GOOD BANKING HABIT AND H AD SO MANY BANK ACCOUNTS WHY THIS MONEY WAS KEPT IN CASH AT HO USE AND WHY THE PAYMENT OF FEE WAS MADE IN CASH TO THE COLL EGE COULD NOT BE SUBSTANTIATED BY THE APPELLANT WHO IS A SENI OR GOVERNMENT SERVANT AND KNOWS THE IMPLICATION OF REC EIVING CASH AND GIVING CASH. THE PLEA OF THE AGRICULTURAL INCOM E WHICH SHOWN THE AGRICULTURAL INCOME IN ASSESSMENT YEAR 20 07-08 OF RS. 3,60,000/- IN THE CASE OF THE WIFE OF THE APPEL LANT WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE EITHER DURING THE COURSE OF ASSESSMENT PROCEEDING OR DURING THE COURSE OF AP PELLANT PROCEEDINGS. THE CASH FLOW STATEMENT, BALANCE SHEET AND CAPITAL ACCOUNT OF THE WIFE OF THE APPELLANT ARE ONLY SELF SERVING DOCUMENTS AND AFTER THOUGHT AND DESERVES TO BE REJE CTED. 5. ON VALIDITY OF REOPENING U/S.147/148, THE LD. CI T (A) HAS REJECTED THE SAME AFTER DETAILED DISCUSSION. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT HERE IN THIS CASE NOTICE U/S.148 WAS ISSUED ON 18.0 3.2015, WHEREAS THE INFORMATION AND MATERIAL WAS RECEIVED O N 29.04.2015, WHICH IS EVIDENT FROM THE RECORD. APART FROM THAT, FROM THE PERUSAL OF THE ANNEXURES SUPPLIED WI TH THE INFORMATION GOES TO SHOW THAT THERE IS NO REFERENCE OF THE ENTIRE AMOUNT PAID DURING THE YEAR AS IT IS SPREAD OVER THE PERIOD OF FIVE YEARS AND EVEN THE INFORMATION ITSEL F IS VAGUE. THIS GOES TO PROVE THAT ASSESSING OFFICER HAS NOT A PPLIED HIS MIND AND THE ENTIRE REASONS IS BASED ON BORROWED SATISFACTION. 7. ON MERITS, HE SUBMITTED THAT BEFORE THE ASSESS ING OFFICER, I.T.A. NO.4680/DEL/2018 7 THE ASSESSEE HAS FILED NOT ONLY THE COPY OF RETURNS OF INCOME OF HIS WIFE, BUT ALSO CASH FLOW STATEMENT, STATEMEN T OF COMPUTATION OF INCOME FILED ALONG WITH RETURN OF IN COME, BALANCE SHEET, STATEMENT OF AFFAIRS, ETC. TO PROVE THAT, ASSESSEES WIFE WAS A REGULAR INCOME TAX ASSESSEE A ND HAS HUGE AGRICULTURAL INCOME AND RENTAL INCOME. FROM TH E PERUSAL OF THE BANK STATEMENT AND CASH FLOW, HE POI NTED OUT THAT THERE WERE REGULAR WITHDRAWALS FROM THE BANK A CCOUNT AND THE SOURCE OF THE DEPOSITS WAS MOSTLY FROM RENT AL INCOME AND SOME AGRICULTURAL INCOME. HE DREW OUR ATTENTION TO PAGE 23 OF THE PAPER BOOK WHICH IS A STATEMENT OF CASH F LOW AND COPY OF BANK STATEMENT FROM PAGES 24 TO 31. ONCE TH E DEPOSIT OF FEE AND THE RECEIPT THEREON IS IN THE NAME OF TH E WIFE AND SHE HAS GIVEN FEES OUT OF HER OWN INCOME, THEN THER E IS NO REASON AS TO WHY ANY ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE. 7. ON THE OTHER HAND, LD. DR ON THE VALIDITY OF TH E REOPENING HAS RELIED UPON THE ORDER OF THE LD. CIT( A) AND ALSO ON MERITS THE OBSERVATION AND THE FINDING GIVEN BY THE LD. CIT(A) AS INCORPORATED ABOVE. 8. BEFORE GOING ON THE VALIDITY OF THE REOPENING , I FIND THAT ON MERITS ITSELF BEFORE THE AUTHORITIES BELOW, THE ASSESSEE HAS EXPLAINED THAT THE CASH FEES OF PETTY SUMS DURING T HE RELEVANT FINANCIAL YEAR WAS PAID BY ASSESSEES WIFE MRS. ANC HA KAVITHA. NOT ONLY SHE IS A REGULAR INCOME TAX ASSES SEE BUT FROM THE PERUSAL OF THE COMPUTATION OF INCOME FOR T HE RELEVANT I.T.A. NO.4680/DEL/2018 8 ASSESSMENT YEAR, IT IS SEEN THAT SHE HAS GROSS RENT AL INCOME OF RS.3,56,822/-, INCOME FROM OTHER SOURCES OF RS.6 ,14,198/- ON ACCOUNT OF INTEREST AND AGRICULTURAL INCOME AT RS.2,40,000/-. SHE HAS A LAND HOLDING OF MORE THAN 18 ACRES WHICH IS EVIDENT FROM THE STATEMENT OF AFFAIRS FILE D BEFORE THE AUTHORITIES BELOW ALONG WITH HER RETURN OF INCOME. FURTHER THE CAPITAL ACCOUNT AS ON 31.03.2008 SHOWS CHILDREN EDU CATION FEES OF RS.4,09,220/- THUS, THE PAYMENT OF FEES FOR DAUGHTERS MEDICAL EDUCATION HAS BEEN DULY DISCLOSED BY HER IN HER INCOME TAX RETURNS. APART FROM THAT, THE SOURCE OF PAYMENT IS DULY EVIDENCED BY CASH FLOW STATEMENT WHEREIN THE A SSESSEE HAS SHOWN RENTAL INCOME AS WELL AS AGRICULTURE INCO ME AND THERE ARE REGULAR WITHDRAWALS NOT ONLY FOR THE HOUS E HOLD BUT ALSO FOR THE FEES. THUS, THE ENTIRE SOURCE FOR THE PAYMENT OF FEES STANDS PROVED FROM THE RECORDS OF THE ASSESSEE S WIFE AND EVEN THE PAYMENT OF FEES ACKNOWLEDGES THE RECEIPTS ON THE NAME OF THE ASSESSEES WIFE, MRS. ANCHA KAVITHA. UN DER THESE CIRCUMSTANCES, IT IS VERY DIFFICULT TO PRESUME THAT ASSESSEE BEING A SALARIED EMPLOYEE MUST HAVE PAID CASH OUT O F HIS UNDISCLOSED SOURCE WITHOUT ANY MATERIAL ON RECORD T O INDICATE THAT ASSESSEE HAS PAID THE FEES ON HIS OWN ACCOUNT OR THERE IS ANY MENTION OF ASSESSEE HAS PAID CASH IN ANY OF THE INVESTIGATION REPORT. THUS, THE ADDITION MADE BY TH E ASSESSING OFFICER IS DELETED FROM THE HANDS OF THE ASSESSEE. 9. SINCE, I HAVE DELETED THE ADDITION ON MERITS; THEREFORE, THE VALIDITY OF REOPENING AND OTHER ISSUES CHALLENGED B EFORE US HAS BECOME PURELY ACADEMIC AND HENCE ARE INFRUCTUOU S. I.T.A. NO.4680/DEL/2018 9 ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH FEBRUARY, 2020. SD/- [AMIT SHUKLA] JUDICIAL MEMBER DATED: 27 TH FEBRUARY, 2020 PKK: