Monica Bibbly Sood, Panchkula V. ITO, Ward -1(5), Chandigarh

ITA 48/CHANDI/2023

AI Insights

The case revolves around an appeal by Monica Bibbly Sood against the order of the CIT(A), which upheld the addition of Rs. 30,00,000 to her income as unexplained cash credit under section 68 and as income from undisclosed sources under section 56(1) of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer (AO) following the reopening of her assessment under section 148 due to cash deposits in her bank account. The assessee contended that the amount represented an advance received from Smt. Mohinder Kaur for the sale of her property, which was later refunded. The Tribunal, after examining the evidence and submissions, found merit in the assessee's arguments and deleted the additions made by the lower authorities.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135500 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-08-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 07-02-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DENYING AN OPPORTUNITY BEFORE
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Principle of natural justice; Additional evidence; Corroborative evidences
• Section: 68; 148; 142(1); 143(2)

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. 48/Chd/2023 िनधाᭅरण वषᭅ / Assessment Year : 2012-13 Monica Bibbly Sood House No. 131, Sector-4 Panchkula, Haryana बनाम The ITO Ward 1(5), Chandigarh ᭭थायी लेखा सं./PAN NO: ALSPS4022P अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरती कᳱ ओर से/Assessee by : Shri Harry Rikhy, Advocate राज᭭व कᳱ ओर से/ Revenue by : Shri Dharam Vir, JCIT, Sr. DR सुनवाई कᳱ तारीख/Date of Hearing : 24/08/2023 उदघोषणा कᳱ तारीख/Date of Pronouncement : 05/09/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A), NFAC, Delhi dt. 20/12/2022 pertaining to Assessment Year 2012-13. 2. In the present appeal, the assessee has raised the following grounds of appeal: “1. That the order of the Learned Commissioner of Income Tax (Appeals), NFAC is defective both in law and facts of the case. 2. That the Learned Commissioner of Income Tax (Appeals), NFAC is unjustified in upholding the order of the Ld. Assessing Officer on account of addition of Rs. 30,00,000/- regarding cash introduced in cash book on 23/12/2011 as the appellant had duly submitted the supporting evidence regarding the same which was basically advance money received from late Smt. Mohinder Kaur against the sale of her plot no. 366, Phase 2, Panchkula and subsequently returned being a genuine transaction. This addition made is uncalled for and deserves to be deleted. 3. That any other ground may kindly be allowed to be taken at the time of appeal with due permission.” 3. Briefly facts of the case are that the case of the assessee was reopened by the issuance of notice under section 148 for the reason that there were cash deposits in the bank account maintained with HSBC Bank. Thereafter in response to notice under section 148, the assessee filed her return of income declaring total income of Rs. 2 4,68,770/- on 31/03/2015. Thereafter notice under section 143(2) and 142(1) were issued and necessary information, documentation were called for and assessment was completed at an assessed income of Rs. 35,18,710/- wherein the AO made an addition of Rs. 30,00,000/- under section 68 of the Act towards unexplained cash deposits. 4. Against the said findings of the AO, the assessee went in appeal before the Ld. CIT(A) and the addition so made by the AO were deleted by the Ld. CIT(A) holding that the same cannot be brought to tax under section 68 of the Act. However the Ld. CIT(A) brought the said amount to tax as income from undisclosed sources under section 56(1) of the Act. 5. Against the said findings and directions of the Ld. CIT(A), the assessee is in appeal before us. 6. During the course of hearing, the Ld. AR submitted that the assessee is proprietor of M/s Navjeevan Health Services engaged in the business of trading of Herbal and Ayurvedic Medicines. The assessee maintains complete books of accounts including cash book and has filed the Balance Sheet and the Profit and Loss Account along with the Income Tax Return for the AY 2012-13 under consideration. It was submitted that the case of the assessee has been assessed u/s 148 of the I.T. Act, 1961 on the reasons of cash deposits in her HSBC account. The assessee has submitted from the beginning of the assessment proceedings that the source of cash deposited in the bank is from her cash in hand as per cash book in which she has received a sum of Rs.30,00.000/- in cash from Smt. Mohinder Kaur R/o House No. 1698, Phase 3B-2, Mohali, Punjab against sale of her Industrial Plot No. 366, Phase 2, Panchkula on 23-12-2011. 7. It was submitted that the assessee had entered into an Agreement to Sell dated 23-12-2011 with Smt. Mohinder Kaur R/o House No. 1698, Phase 3B-2, Mohali, Punjab to sell her Industrial Plot No. 366, Phase 2, Panchkula for a total sales consideration of Rs.4,60,00,000/- and had taken earnest money of Rs.30,00,000/- in cash on the same date 23-12-2011 as per clause no. 2 of the agreement to sell and the receipt submitted herewith. The Agreement to Sell dated 23-12-2011 was not traceable at the time of assessment as it was an old transaction which was cancelled and was found subsequently from her old records. Hence, the same has been submitted as an 3 additional evidence under Rule 46A before the Ld. CIT(A), NFAC in the interest of Equity and Natural Justice which was accepted. 8. It was submitted that the aforesaid property deal could not be matured with Smt. Mohinder Kaur and was cancelled as the assessee got a better deal for a total sales consideration of Rs.4,80,00,000/- for the same property subsequently which was Rs. 20,00,000/- higher than the earlier one with Smt. Mohinder Kaur. So the assessee returned the cash advance/earnest money of Rs. 30,00,000/- on 28-05-2012 to Smt. Mohinder Kaur as per the receipt submitted herewith. 9. It was submitted that the source of cash refund of the above mentioned Rs. 30,00,000/- to Smt. Mohinder Kaur was from the cash advance/earnest money received from the subsequent buyer M/s Modern Agro Foods, House No. 1196, Sector 11, Panchkula on 10-05-2012 against the sale of the same property. The copy of sale deed dated 22-05-2012 is submitted herewith. It is mentioned in the last line at page no. 3 of the sale deed that - "(ix) Rs.30,00,000/- (Rupees Thirty Lacs Only) in cash in the shape of Indian currency notes on 10-05-2012". So the assessee returned the earnest money of Rs.30,00,000/- to the earlier buyer Smt. Mohinder Kaur from the cash advance received from the subsequent and final buyer. 10. It was submitted that the assessee duly maintains complete books of accounts including cash book in which all the above said entries have been accounted for which was duly produced during assessment proceedings and the relevant part is submitted herewith wherein the entry of Rs.30,00,000/- received in cash as advance against the sale of property is showing at page no. 4 of the paper book. 11. It was submitted that the AO had sent summons to Smt. Mohinder Kaur on 09-02- 2016 who had unfortunately expired on 29-01-2016 as per death certificate dated 08- 02-2016 submitted herewith and could not response to the notice. However, the Ld. AO without making any further efforts made the addition which is unjustified. It was submitted that the observations of the AO in para no. 4 and 5 at page no. 2 and 3 of the assessment order are merely on surmises and conjectures without any strong basis or evidence and without pointing out any defects in the books of accounts of the assessee. The documentary evidences submitted by the assessee are totally genuine as 4 the agreement to sell along with the receipts were made as per the mutual understanding between the transacting parties as per their comfort level and there are no statutory requirements under any law for the formalities alleged by the AO. The point wise rebuttal to the Ld. AO's doubtful observations are part of the written submissions made before the Ld. CIT(A) NFAC. It was submitted that the assessee has duly discharged her onus to prove the genuineness of the transaction along with the documentary evidence including the refund of the earnest money. Moreover, the source of source is not to be proved. It was further submitted that the order of Ld. CIT(A), NFAC is a non-speaking order without giving any observation or pointing out any defect in the detailed submissions made by the assessee along with the supporting evidence and has merely reiterated the Ld. AO's order. Moreover, the issue of Rs.2,90,50,000/- shown as 'Advance' by the assessee in her balance sheet in the last para of appellate order was never an issue raised by the Ld. AO in the assessment order and was duly scrutinized as part of the books of accounts produced during the assessment proceedings. 12. It was submitted that the assessee is a divorcee single lady and was in fact going through a bad phase of her divorce during the years under consideration. It is, therefore, humbly prayed that the addition of Rs.30,00,000/- made Ld. Assessing Officer u/s 68 of the I.T. Act, 1961 and upheld by Ld. CIT(A) regarding cash introduced in cash book on 23-12-2011 may kindly be deleted which is basically advance money received from Late Smt. Mohinder Kaur against the sale of property and subsequently returned being a genuine transaction as explained above along with the supporting evidence. 13. Per contra, the Ld. DR relied on the order and the findings of the lower authorities and in this regard, our reference was drawn to the findings of the AO which are contained at para 4 of the assessment order which read as under: “4. Vide reply received on 25.02.2016, assessee furnished death certificate of Smt. Mohinder Kaur as-per which she expired on 29.01.2016. Assessee also furnished receipt dated 28.05.2012 regarding return of advance or Rs. 30,00,000/-. This amount is stated to have been returned in cash on 28.05.2012 out of sale proceeds of property Plot No. 366, Phase-2, Panchkula. I have gone through the reply as well as documents produced by the assessee. Plea of the assessee regarding introduction of cash of Rs. 30,00,000/- in the cash book on 23.12.2011 is not acceptable for the following reasons:- 5 i) Receipt regarding advance of Rs. 30,00,000/- taken for sale of property is on plain paper. ii) No witness has signed the receipts dated 23.12.2011 and 28.05.2012. Since documents are not signed by any witness and are not notarized, therefore, not sustainable in the eyes of law. iii) Receipt was produced on 08.02.2016 after the death of Smt. Mohinder Kaur. Death certificate was issued on 08.02.2016 itself, therefore, genuineness of transaction is very much doubtful. IV) Assessee has stated to have received Rs. 30,00,000/- in cash on 23.12.2011 but cash deposits in bank were made on different dates. v) No evidence regarding source of advance of Rs. 30,00,000/- in cash was furnished from Smt. Mohinder Kaur or the legal heirs of the deceased. Therefore, creditworthiness is not established. vi) Property against which advance of Rs. 30,00,000/- in cash was stated to have been received from Smt. Mohinder Kaur, was sold on 22.02.2015 to third party and not to Smt. Mohinder Kaur. vii) Advance is stated to be received on 23.12.2011 and repaid on 28.05.2012. There is no point in retaining the token money by the assessee upto 28.05.2012 when advance from other purchaser against the said property to the tune of Rs. 2,30,00,000/- was received on 12.03.2012 i.e. well before repayment of advance taken from Smt. Mohinder Kaur. 5. There was no reference anywhere of Smt. Mohinder kaur earlier by the assessee and receipt was produced on 08.02.2016 much later after issue of notice u/s 142(1) requiring the assessee to explain source of cash deposit in the bank accounts. It may not be a mere coincidence that death certificate has also been issued on 08.02.2016. Therefore, it is nothing but a concocted story to explain the cash deposits.” 14. We have heard the rival contentions and purused the material available on record. The case of the assessee was reopened for examining source of cash deposit of Rs 11,18,000/- in bank account maintained with HSBC Bank. The source of the cash deposit has been explained by the assessee as out of advance of Rs 30,00,000/- towards sale of property received from Smt Mohinder Kaur which was shown duly entered in the cash book maintained by the assessee which was produced during the course of assessment proceedings besides copy of initial receipt and subsequent refund receipt due to non-materialization of the sale transaction. Smt Mohinder Kaur couldn’t be produced during the assessment proceedings to confirm the transaction as she had expired by that time. The AO didn’t accept the explanation so submitted by the assessee and made an addition of Rs 30,00,000/- u/s 68 as unexplained cash credit as the assessee couldn’t establish genuineness and creditworthiness of Smt Mohinder Kaur. During the appellate proceedings, the assessee reiterated the submissions made 6 before the AO and also submitted additional evidence by way of agreement to sell dated 23.12.2011 entered into with Smt Mohinder Kaur and the additional evidence so submitted by the assessee was accepted and taken on record by the ld CIT(A). 15. In para 4 of the impugned order, the ld CIT(A) refers to the AO findings and written submissions filed by the assessee and holds that there is no merit and force in the written submissions and the action of the AO in treating the amount of Rs 30 lacs as assessee’s own undisclosed income was held to be justified and thereafter, in para 5, holds that cash introduced in the cash book cannot be added u/s 68 of the Act being a debit entry and thereafter, goes ahead and confirms the addition u/s 56(1) of the Act for the reason that there is no break up of amount of advance shown as received against sale of industrial plot in the balance sheet of the proprietary concern of the assessee. 16. We therefore find that there are contradictions in the findings of the ld CIT(A) where in para 4, he confirms the findings of the AO in context of section 68 and thereafter, in para 5 he deletes the additions so made by the AO u/s 68 of the Act. Thereafter, the ld CIT(A) has again brought the amount to tax under section 56(1) for non-availability of information on face of the balance sheet. We however couldn’t find any show-cause issued on record or information sought from the assessee in this regard which has again prejudiced the case of the assessee by denying an opportunity before any adverse view is taken against her. 17. In our analysis of the explanation so submitted by the assessee and material available on record in terms of entries in the cash book dated 23.12.2011, the agreement to sell dated 23.12.2011 which talks about Rs 30,00,000/- being the earnest money out of total sale consideration of Rs 4.60 Cr, and the receipt dated 23.12.2011 issued by the assessee acknowledging receipt of Rs 30,00,000/- in presence of witness, Mrs Balwinder Kaur, we find that the assessee has reasonably explained the nature and source of cash deposit of Rs 30 lacs, being the advance towards the sale of the property owned by her. The property ownership and the agreement to sell has not been doubted by the Revenue. Mere non-appearance of the buyer who has since expired couldn’t be held against the assessee. 7 18. Further, the assessee has also explained the refund of the said amount to the buyer due to non-materialization of the sale transaction and subsequently getting a better deal at a higher sale consideration with another buyer, namely M/s Modern Agro Foods vide registered agreement dated 22.05.2012 for a total consideration of Rs 4.80 Cr and out of which, an amount of Rs 30 lacs was refunded to the original buyer. The breakup of total consideration of Rs 4.80 Cr has been duly given in the registered sale deed dated 22.05.2012 and has been duly recorded in the books of accounts. The ld AR has stated at the Bar that the sale consideration of Rs 4.80 Cr has been duly offered to tax in the subsequent assessment year. It is also not the case of the Revenue that there is any on-money received by the assessee over and above the declared sale consideration of Rs 4.80 Cr which also forms the basis for paying the stamp duty. In our overall analysis, we find that there is no basis for making the addition of Rs 30 lacs either under section 68 or under section 56(1) of the Act and the same is hereby directed to be deleted. 19. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 05/09/2023 Sd/- Sd/- आकाश दीप जैन िवᮓम ᳲसह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा᭟यᭃ / VICE PRESIDENT लेखा सद᭭य/ ACCOUNTANT MEMBER AG Date: 05/09/2023 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