Sh. Balkar Singh, Nawanshahr V. The Income Tax Officer, Nawanshahr

ITA 521/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8729 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 20-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BHAGAT; RAJINDER CHOPRA
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: (CIRCUIT BENCH AT JALANDHAR) BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.521/ASR/2016 (ASSESSMENT YEAR-2008-09) BALKAR SINGH, V. REHPA, P.O. HAKIMPURA, NAWANSHAR. PAN NO.AYDPS4482M (ASSESSEE) VS .. ITO, NAWANSHAR. (REVENUE) ASSESSEE BY SHRI . M. R. BHAGAT & RAJINDER CHOPRA, AR. REVENUE BY SMT. BALVINDER KAUR, DR. ORDER PER, A. D. JAIN, JUDICIAL MEMBER: THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2008- 09, CONTENDING THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO MAKE TH E ADDITION OF RS.5,00,000/- WITHOUT ISSUING NOTICE FOR ENHANCEMENT IN INCOME OF THE ASSESSEE, REFUSING TO RECTIFY THE MISTAKE. 2. THE AO, IN THE ASSESSMENT ORDER, MADE ADDITION O F RS.17,45,000/- REPRESENTING CASH DEPOSITS IN BANK. THE LD. CIT(A), VIDE ORDER DATED 14.07.2014, DELETED THE ADDITION TO THE EXTENT OF RS.17,00,000/ -. THE ASSESSEE HAD, BEFORE THE DATE OF HEARING 23.01.2017 DATE OF PRONOUNCEMENT 16.03.2017 I.T.A NO.521/ASR/2016 2 AO, OFFERED ADDITIONAL INCOME OF RS.5,00,000/- AS C OMMISSION INCOME FROM SALE AND PURCHASE OF PLOTS. THE AO, HOWEVER, HAD NOT MAD E ANY ADDITION IN THIS REGARD. THE LD. CIT(A) DIRECTED THE AO TO MAKE ADDITION OF THIS AMOUNT OF RS.5,00,000/-. THE ASSESSEE FILED AN APPLICATION DATED 09.02.2016 U/S 154 OF THE IT ACT BEFORE THE LD. CIT(A), REQUESTING THAT SINCE NO NOTICE AS PER SECTION 251(2) OF THE ACT HAD BEEN ISSUED BY THE LD. CIT(A) BEFORE SUCH ENHANCEME NT OF INCOME, THE DIRECTION TO THE AO BE CANCELLED. THE LD. CIT(A), VIDE THE IMPUG NED ORDER, REJECTED THE ASSESSEES APPLICATION. THIS HAS LED TO THE FILING OF THE PRESENT APPEAL BY THE ASSESSEE BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT THE ISSUANCE OF SHOW CAUSE NOTICE WAS MANDATORY BEFORE ENHANCEMENT OF AS SESSMENT, AS PER SECTION 251(2) OF THE ACT, WHICH POSITION HAS WRONGLY NOT B EEN CONSIDERED BY THE LD. CIT(A). 4. THE LD. DR HAS RELIED ON THE IMPUGNED ORDER. 5. IN THE IMPUGNED ORDER, THE LD. CIT(A) HAS OBSERV ED, INTER ALIA, AS FOLLOWS: 5.3 ON CAREFUL CONSIDERATION OF THE RIVAL CONTENTI ONS, I AM OF THE OPINION THAT THE SOURCE OF CASH DEPOSITS TO THE EXT ENT OF RS.17,00,000/- AND RS.4,99,800/- HAS SATISFACTORILY BEEN EXPLAINED BY THE ASSESSEE AND THAT ALSO WITH THE HE LP OF DOCUMENTARY EVIDENCE. NOT ONLY THIS, THE SOURCE OF SOURCE HAS ALSO BEEN EXPLAINED BY THE ASSESSEE SATISFACTORILY. I AM ALSO OF I.T.A NO.521/ASR/2016 3 THE OPINION THAT THE ASSESSING OFFICER HAS MADE THE ADDITION JUST FOR THE SAKE OF MAKING ADDITION. THE ASSESSING OFFICER HAS NOT REBUTTED THE CONTENTION OF THE ASSESSEE WITH RE GARD TO RECEIPT OF CASH FROM FATHER WITH ANY POSITIVE MATER IAL. IN FACT, THE ADDITION APPEARS TO HAVE BEEN MADE ONLY ON THE BASIS OF CONJECTURES AND SURMISES I.E. WITHOUT ANY BASIS. 5.4 IN VIEW OF THE ABOVE STATED FACTS AND IN THE CI RCUMSTANCES OF THE CASE. I AM OF THE CONSIDERED OPINION THAT THE ASSES SING OFFICER IS NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITION IN RESPECT OF CASH DEPOSITS TO THE EXTENT OF RS.17,00,000/- AS TH E SOURCES OF THE CASH DEPOSITS TO THIS EXTENT HAVE SATISFACTORIL Y BEEN EXPLAINED BY THE ASSESSEE BEING THE CASH RECEIVED F ROM FATHER/HOWEVER, THE REMAINING CASH DEPOSIT OF RS.45 ,000/- REMAINED UNEXPLAINED AS THE ASSESSEE COULD NOT LEAD 'ANY EVIDENCE TO EXPLAIN THE SOURCE OF CASH DEPOSIT TO T HIS EXTENT. HOWEVER, THE SAME CAN SAFELY BE CONSIDERED TO HAVE BEEN MADE OUT OF ADDITIONAL INCOME SURRENDERED BY THE ASSESSE E WHICH HAS BEEN DISCLOSED BY WAY OF FILING A SWORN AFFIDAVIT. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS SUR RENDERED AN ADDITIONAL UNDISCLOSED INCOME OF RS. 5,00,000/-, THE ADDITION TO THE EXTENT OF RS.5,00,000/- IS REQUIRED TO BE MA DE SEPARATELY AS THIS HAS NO CONNECTION WITH THE CASH DEPOSITS IN THE BANK ACCOUNT. THE ASSESSING OFFICER IS, THEREFORE, DIREC TED TO MAKE AN ADDITION OF RS. 5,00,000/- SEPARATELY TO THE RET URNED INCOME OF THE ASSESSEE BUT DELETE THE ADDITION OF RS. 17,4 5,000/- AS THE SOURCES OF DEPOSIT ARE SATISFACTORILY EXPLAINED AS DISCUSSED I.T.A NO.521/ASR/2016 4 ABOVE. IN NUTSHELL, THE ASSESSEE WILL GET NET RELIE F OF RS,12,45,000/- ONLY OUT OF TOTAL ADDITION OF RS.L7 ,45,000/- [RS.L7,00,000/- (-) INCOME SURRENDERED RS.5,00,000/ -]. IN THE RESULT, GROUND NO.1 OF APPEAL TAKEN BY THE ASSESSEE IS, THEREFORE, TREATED AS PARTLY ALLOWED. 6. THUS, THE QUESTION IS WHETHER THERE HAS BEEN AN ENHANCEMENT BY THE CIT(A), ATTRACTING THE ISSUANCE OF A SHOW CAUSE NOTICE AS A PRE-REQUISITE BEFORE SUCH ENHANCEMENT. 7. IT REMAINS UNDISPUTED THAT THE AO MADE NO ADDITI ON OF THE AMOUNT OF RS.5,00,000/-OFFERED BY THE ASSESSEE BEFORE HIM AS ADDITIONAL INCOME. THE AO WAS ALIVE OF THE OFFER MADE BY THE ASSESSEE. HOWEVER, H E CONSCIOUSLY DID NOT MAKE ANY ADDITION OF THIS AMOUNT OF RS.5,00,000/-. THE ADDIT ION OF RS.17,45,000/- MADE BY THE AO WAS SCALED DOWN TO RS.45,000/- BY THE LD. CI T(A). THEREFORE, BY DIRECTING THE AO TO MAKE ADDITION OF RS.5,00,000/-, THE LD. C IT(A) INTRODUCED A NEW SOURCE WHICH HAD CONSCIOUSLY NOT BEEN ADDED BY THE AO. IN EFFECT, THUS, THE LD. CIT(A) DID ENHANCE THE ASSESSED INCOME OF THE ASSESSEE. THE LD . CIT(A)S OBSERVATION THAT NO ADDITION HAS BEEN DIRECTED TO BE MADE, SINCE THE ASSESSEE HAD HIMSELF OFFERED IT AS ADDITIONAL INCOME, IS INCORRECT. THE FACT REMAIN S THAT DESPITE THE OFFER MADE, THE AO CHOSE NOT TO ADD THE ADDITIONAL INCOME OFFERED. THE ASSESSEES OFFER WAS NOT ACCEPTED BY THE AO AND SO, THE LD. CIT(A) IS ALSO W RONG IN OBSERVING THAT THE DIRECTION TO THE AO WAS MERELY TO BRING TO TAX WHAT THE ASSESSEE HAD HIMSELF I.T.A NO.521/ASR/2016 5 OFFERED AS INCOME. THIS OBSERVATION IS FACTUALLY IN CORRECT, AS THE LD. CIT(A), IN THE BEGINNING OF PARA 3 OF THE IMPUGNED ORDER, HAS STAT ED THAT LD. CIT(A) DIRECTED THE AO TO ADD RS.5,00,000/- TO THE INCOME OF THE ASSESSEE.. MOREOVER, IN THIS PARA, THE LD. CIT(A) HAS REPRODUC ED THE ORDER OF HER PREDECESSOR, THE RELEVANT PORTION OF WHICH READS THUS: ..THE AO IS, THEREFORE, DIRECTED TO MAKE ADDITION OF RS.5,00,000/-, SEPARATELY TO THE RETURNED INCOME OF THE ASSESSEE .. ( EMPHASIS BY WAY ITALICS SUPPLIED ). 8. THUS, THERE REMAINS NO DOUBT THAT WHAT WAS DIREC TED WAS FOR AN ADDITION OF RS.5,00,000/- TO BE MADE. 9. SECTION 251(2) OF THE ACT SPECIFICALLY PROVIDES THAT THE LD. CIT(A) SHALL NOT ENHANCE AN ASSESSMENT UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST SUCH ENHANCEMENT. 10. AS DISCUSSED, ADMITTEDLY, NO NOTICE U/S 251(2) OF THE ACT WAS SERVED ON THE ASSESSEE BY THE LD. CIT(A) BEFORE MAKING ENHANCEMEN T TO THE INCOME OF THE ASSESSEE. THE GRIEVANCE OF THE ASSESSEE IN THIS REG ARD IS FOUND TO BE CORRECT. IT IS ACCEPTED AS SUCH. 11. HOWEVER, NON-ISSUANCE OF NOTICE U/S 251(2) OF T HE ACT IS AN IRREGULARITY WHICH IS CURABLE. IT HAS NOT BEEN SHOWN TO BE OTHER WISE. THAT BEING SO, WE REMIT THIS MATTER TO THE FILE OF THE LD. CIT(A) TO ISSUE A NOTICE U/S 251(2) OF THE IT ACT, IN I.T.A NO.521/ASR/2016 6 ACCORDANCE WITH THE LAW OF LIMITATION AS APPLICABLE , AND THEREAFTER REDECIDE THE MATTER, ON AFFORDING DUE AND ADEQUATE OPPORTUNITY O F HEARING TO THE ASSESSEE. NO DOUBT, THE ASSESSEE SHALL CO-OPERATE IN THE FRESH P ROCEEDINGS BEFORE THE LD. CIT(A). 12. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/03/ 2017. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUTANT MEMBER JUDICIAL MEMBER DATED 16/03/2017 *AKV* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT BY ORDER AR/SR.P.S./P.S.