LATE SHRI JOGINDER SINGH, MOGA V. INCOME TAX OFFICER WARD-1, MOGA

ITA 50/ASR/2020

AI Insights

The case involves the late Sh. Joginder Singh, represented by his legal heir Smt. Balbir Kaur, who appealed against the order of the Commissioner of Income Tax (Appeals)-3, Ludhiana. The appeal was concerning the addition of Rs. 41,69,000 to the appellant's income, which was initially added by the Assessing Officer under section 69 of the Income Tax Act, 1961, treating it as undisclosed investment. The CIT(A) had partially upheld this addition after the appellant failed to satisfactorily explain the sources of substantial cash deposits in his bank account. The Tribunal found that the CIT(A) had not adequately addressed the appellant's explanations or the evidences provided, leading to a decision to remand the case for a more thorough examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114639 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-04-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 26-01-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 50/Asr/2020 Assessment Year: 2011-12 Late Sh. Joginder Singh through Legal Heir Smt. Balbir Kaur, House No. 147, VPO Chugwan Moga. [PAN: CZQPS 2983H] (Appellant) V. Income Tax Officer, Ward-1, Moga (Respondent) Appellant by (Written submission) Respondent by Smt. Rajinder Kaur, CIT- DR Date of Hearing : 12.04.2023 Date of Pronouncement : 25.04.2023 ORDER Per Dr. M. L. Meena, AM: This appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-3, Ludhiana dated 26.10.2018 in respect of Assessment Year: 2011-12. I.T.A. No. 50/Asr/2020 Late Sh. Joginder Singh v. ITO 2 2. The assessee has raised the following grounds of appeal: “1. That the learned CIT(A) erred in eyes of law and facts of the case by confirming addition of Rs.41,69,000/- out of total addition of Rs.48,59,600/- made by the Assessing Officer u/s 69 of the Income Tax Act, 1961. 2. That the CIT(A) erred in arbitrarily rejecting the explanation and submissions of the assessee in a summary manner, without finding any discrepancy in the same and upholding to the tune of Rs.41,69,600/- on account of cash deposits made by assessee in his bank account. 3. That the assessee craves to leave, amend, alter or take additional grounds of appeal before or at the time of hearing.” 3. The ld. DR has stated that she has no objection to the condonation of the short delay of 59 days in view of the peculiar facts and circumstances which caused the delay in filing the said appeal by the assessee. We, therefore, hereby admit the appeal on merits after condoning the short delay of 59 days for the reason stated in the application by the appellant as under: “This has reference to the captioned subject matter. It is hereby stated that appellate order u/s 250(6) in the case of captioned assessee was passed on 26/10/2018. The assessee expired during the appellate proceedings. Assessee's wife and children are living abroad. His wife left India on 16/03/2018 and returned to India on 19/09/2019. She had to collect the file from counsel and other relevant documents after returning to India and appeal has been delayed by about one year. Copy of her passport is attached alongwith death certificate of assessee. As assessee had no other local guardian and huge uncalled for demand has been created, it is requested that delay in filing appeal may please be condoned and appeal be admitted for the cause of justice.” I.T.A. No. 50/Asr/2020 Late Sh. Joginder Singh v. ITO 3 4. Briefly stated facts of the case are that based on an AIR information in case of the appellant, the AO stated that the appellant has made a cash deposit of Rs. 77,00,000/- in his saving bank account maintained with Allahabad Bank, Moga bearing the account no. 21594956029. The Assessing Officer vide his order sheet entry dated 17.06.2013 asked the appellant to explain the source of cash deposit made by him in his bank account. In response to which the appellant had only explained the source of Rs. 27,00,000/- which was accrued to him from sale of agricultural land and Rs. 1,40,400/- from agricultural income and failed to explain the source of remaining amount i.e. 48,59,600/-. Hence, the Assessing Officer made the addition of Rs. 48,59,600/- to the returned income of the appellant by invoking the provisions of section 69 of the Act treating the sum as undisclosed investment of the appellant in the bank deposit. 5. The assesse being aggrieved with the Assessment Order, went in appeal before the Ld. CIT(A) who has granted part relief to the assessee by observing as under: “I have carefully considered the submission of the assessee, remand report of the assessee and rejoinder filed by the assessee along with various case laws relied upon by him during the course of appellate proceedings. I am not in agreement with the contention of the assessee in this regard, as reiterated by the Assessing Officer also the assessee, in his remand report, that the agreement should have filed in original, along with this the assessee should I.T.A. No. 50/Asr/2020 Late Sh. Joginder Singh v. ITO 4 have produced Shri Vivek Verma and Shri Chetan Singh, before the assessing officer for verification of the claim of the assessee and to find the genuineness in the claim of the assessee of having received huge amount of cash as advance against sale of and. Accordingly this claim of assessee is found unsatisfactory, hence cannot be accepted at this juncture in absence of relevant verification at the time of remand proceedings. 4.5.2 As a part of the explanation of cash deposits, the assessee has contended that the Rs. 11,00,000/- were received from Sh. Baljit Singh . The assessee has explained, that this amount was given by the assessee to Shri Baljit Singh way back in financial year 2005-06. Sh. Baljit singh has returned the same amount in cash. The assessee has deposited this same amount in his bank account this year. The assessee in support of his contention, has filed copy of pronotes evidencing the money paid to Sh. Baljit singh, in F.Y.2005-2006. However the Assessing officer has not considered this evidence. During the course of assessment proceeding. The assessing officer had questioned the source of this huge amount given by appellant to Shri Baljit Singh. Further the assessee has stated that Shri Baljitt Singh could not be produced at the time of assessment proceedings; as he was away from India at that point of time therefore now an affidavit of his son Shri Malkeet Singh has been filed by assessee in support of his contention. The assessing officer has questioned the source of Shri Baljit Singh while returning this huge amount to the appellant at the time of assessment proceedings. The assessing officer at the time of remand report also, has reiterated its stand of not accepting this contention of assessee that the appellant has filed copies of pronotes hence in absence of original the veracity of claim of appellant could not be relied upon. Apart from this the assessing officer has reiterated, that enough time was provided to appellant, to produce Shri Baljit Singh however the assessee was not able to do so. I have carefully considered rival submission on this issue. I find myself in agreement with the contention of assessing officer as the assessee has not been produce necessary and satisfactory evidence in support of the contention that Rs. 11,00,000/- have been received from keeping Sh. Baljit Singh, which were given to him way back in F.Y. 2005-06. The assessee has stated that at the time of assessment proceedings Sh. Baljit Singh was out of India, therefore could not be produced. However under which circumstances now Sh. Baljit Singh could not be produced by the assessee has remained unexplained. Assessee has only filed affidavit of son of Sh. Baljit Singh when Sh. Baljit Singh, could have been produced at the time of assessment proceedings also in I.T.A. No. 50/Asr/2020 Late Sh. Joginder Singh v. ITO 5 support of its contention by the assessee. This plea of assessee is not satisfactory hence the explanation of deposit of Rs. 10 lakh on this account also cannot be accepted. 4.5.3 In continuation of its explanation of cash deposit in bank account the assessee has further stated that Rs.3,80,000/- were received from sale of tractor and other agricultural equipments. The assessee has claimed to receive Rs. 3,80,000/- as receipt of sale of tractor to Shri Mukhtiar Singh. The assessing officer was not satisfied upon this explanation of assessee during the course of assessment proceedings. However at the time of remand proceedings also, the assessing officer has mentioned that then AO had correctly pointed out that Sh. Mukhtiar Singh (Purchaser of the tractor) had no need to purchase the tractor and other agricultural equipments as he had only one acre of agricultural land. The AO was also right in asking for the source of Sh. Mukhtiar Singh for carrying out this purchase as it is very unlikely that a person with one acre agricultural land purchases agricultural equipment’s worth Rs. 3,80,000/-, the source couldn’t be explained during assessment proceedings. Also, the then AO correctly pointed out the c.fference in statement made before AO and the text of agreement as for Sh. Mukhtiar Singh, who owns only one acre of agricultural land, Rs. 3,80,000/- would have been a big amount and he should has remembered the details of payments with infallible accuracy. I have carefully considered rival submissions. In view of the detailed reasons discussed by assessing officer during the course of assessment proceedings and as well as in remand proceedings the assessee has completely failed to satisfactorily explain the source of Rs. 3,80,000/- stated to be received by assessee on sale of tractor to Shri Mukhtiar Singh. The assessee has also produced Shri Mukhtiar Singh, however being holder of the 1 acre land the source of purchase of tractor of the act Singh could not be satisfactorily explain by assessee. Accordingly explanation of the assessee could not be relied upon. 4.5.4 The assessee has further contended that he has received Rs. 3,90,000/- from sale of Buffalo to Sh. Harnek Singh. The assessing officer has contended in his remand report that this evidence cannot be relied upon as the assessee has filed a simple written agreement on a plain paper in support of his claim. The assessee has vehemently contested that the copy of receipt and affidavit of the buyer had been furnished by the assessee. During the course of remand proceedings the assessee produced Sh. Harnek Singh, before the assessing officer in the statement he admitted to purchase Buffalo in consideration of Rs. I.T.A. No. 50/Asr/2020 Late Sh. Joginder Singh v. ITO 6 3,90,000/-. The assessee has duly disclosed the identity of the buyer from where he received the said amount. I have carefully considered rival submissions. After carefully consideration of the facts and the fact that the buyer Sh. Harnek Singh attended the remand proceedings before the assessing officer, and in his statement has accepted to purchase Buffalo from assessee in consideration of Rs. 3,90,000/-. In my considered view the assessee has been able to discharge its onus and could satisfactorily explain the source of Rs. 3,90,000/- received as sale proceeds of Buffalo to Sh. Harnek Singh who in his statement before assessing officer has also confirmed the transaction. Accordingly the source of his Rs. 3,90,000/- in my view stands explained. 4.5.5 In order to explain cash deposit of Rs. 4,50,000/- and Rs. 95,000/-, the assessee has explained, that the assessee sold cows amounting to Rs. 4,50,000/- and Rs. 95,000/- have been received out of sale of old trolley. In support of his contention that assessee has filed affidavits of the buyer, wherein they have stated that they can give statement if needed. The AO vide his remand report, has stated that the then assessing officer has rightly treated the claim of assessee, as no substantial evidence was produced by the assessee during the course of assessment proceedings. After careful consideration of the facts as discussed above I am not satisfied with the explanation of the assessee with regard to cash deposit as explained by him due to receipt Rs. 4,50,000/- and Rs. 95,000/-, out of sale of cows and sale of old trolley. The assessee had a chance to produce the buyers at the time of remand proceedings, before assessing officer, however despite giving opportunity, the assessee has reiterated his old stand and has not shifted its onus to explain the receipt of cash deposit. The assessee could have produced the buyers before assessing officer, on his own in support of his contention and in order to prove the identity genuineness and creditworthiness of the buyers. However in absence of any such situation the explanation of assessee with regard to cash deposit of Rs. 4,50,000/- and Rs. 95,000/-, cannot be accepted. 4.5.5 The assessee has further explained the source of cash deposit in his bank account as receipt of Rs.3,00,000/- on account of past saving and Rs. 1,00,000/- on account of agriculture income, as a source of cash deposit. At the time of the remand proceedings, the assessing officer has stated, that the appellant can only be given part benefit of agricultural income during the assessment year. Since the assessee has not filed any documentary evidence in support of its claim of having past saving from agricultural activities I.T.A. No. 50/Asr/2020 Late Sh. Joginder Singh v. ITO 7 amounting to Rs.3,00,000/-. However the assessing officer stated that the benefit of Rs. 1 lakh received as part of its business income may partly be given to the assessee. After careful consideration of the facts as discussed above, in my considered opinion, since the assessee has been doing agricultural activities and dairy business, since so many years therefore the claim of assessee having past saving from agricultural activities to some extent can be accepted. Therefore source of deposits cash amounting to Rs. 2,00,000/- is being accepted, as past saving from agricutural activities/ dairy business of last years. Further the assessee's explanation of agricultural income of this year as reported by the assessing officer n his remand report, partial benefit of agriculture income to the tune of Rs. 1 58,350/- is accepted, assessing the agriculture income instead of Rs, 1,40,400/- as agricultural income reflected by the assessee and accepted by the assessing officer during assessment proceedings. After careful consideration of facts, as discussed in above paragraphs, It is held that the assessee could satisfactorily explain cash deposit of Rs. 3,90,000/- + Rs. 2,00,000/- + 1,00,000/- = Rs.6,90,000/-. The assessee’s claim of the source of cash deposit in his bank account on account of sale of Buffalo amounting to Rs.3,90,000/-, past savings from agriculture income and income from agricultural activities this year amounting to Rs. 2,00,000/- and Rs. 1,00,000/- is hereby accepted. Accordingly the addition of Rs. 48,59,600/- in respect of cash deposit in his bank account by treating the same as undisclosed investment u/s 69 of the Income Tax Act, 1961, is partly upheld as discussed above. The assessee gets relief of Rs.6,90,000/-. These grounds of appeal are accordingly partly allowed.” 6. The appellant vide written submission reiterated the submission made before the ld. CIT(A). He contended that the learned CIT(A) erred in eyes of law and facts of the case by confirming addition of Rs.41,69,000/- out of total addition of Rs.48,59,600/- made by the Assessing Officer u/s 69 of the Income Tax Act, 1961 in arbitrarily and summary manner by rejecting I.T.A. No. 50/Asr/2020 Late Sh. Joginder Singh v. ITO 8 the explanation and submissions of the assessee, without finding any discrepancy in the same and uphold addition to the tune of Rs.41,69,600/- on account of cash deposits made by assessee in his bank account. 7. Per contra, the Ld DR although supported the impugned order, however, he has not filed any rebuttal to the contention raised by the counsel in the written submission on the grounds that the appeal was rejected arbitrary in summary manner. 8. We have heard the Ld. DR, perused the written submission of the appellant, material on record, and the impugned order. Admittedly, the Ld. CIT(A) has passed the impugned order in arbitrary, mechanical and summary manner as evident from the fact that she has not assigned any specific reason for rejecting the explanation of the source of cash deposit in the bank account of the appellant furnished before her. In fact, the Ld. CIT(A) ought to have brought on record corroborative material evidence to disprove the claim of the appellant in rebuttal to the evidence furnished by the appellant before her. In our view, such a decision of an appellate authority is certainly against the principles of natural justice. Therefore, we consider it deem fit to remand the matter back to the file of the Ld. CIT(A) with the direction to pass a speaking order by addressing the evidences I.T.A. No. 50/Asr/2020 Late Sh. Joginder Singh v. ITO 9 filed by the assesse on record and to be filed in the fresh proceedings on the source of disputed cash deposit in its bank account. No doubt, the assesse, shall cooperate in the fresh proceedings before the CIT(A). 9. In the result, the appeals filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 25.04.2023 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr./P.S.* Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order