Surender Mohan Aggarwal, Delhi V. ITO, New Delhi

ITA 5355/DEL/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8050 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 30-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 31-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Keywords: Unexplained cash credit; Business income; Opportunity of being heard; Principle of natural justice; Competent authority
• Section: 142(1); 68; 148

Judgement Text

ITA NO.5355/DEL/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 5355/DEL/2015 A.Y. : 2006-07 SURENDER MOHAN AGGARWAL C/O VED JAIN & ASSOCIATES CHARTERED ACCOUNTANTS 100, BABAR ROAD, OPP. HOTEL LALIT NEW DELHI 110 001 (PAN:AAEPA6635P) VS. INCOME TAX OFFICER, WARD 38(3), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VED JAIN, CA DEPARTMENT BY : SH. V.R. SONBHADRA, SR. DR DATE OF HEARING : 22-03-2016 DATE OF ORDER : 27-04-2016 ORDER PER H.S. SIDHU : JM ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPUGNE D ORDER DATED 27.7.2015 PASSED BY THE LD. CIT(A)-20, NEW DELHI R ELEVANT TO ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORD ER PASSED BY THE LD. CIT(A) IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. ITA NO.5355/DEL/2015 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN MAKING ASSESSMENT WITHOUT GIVING ASSESSEE AN OPPORTUNITY OF BEING HEARD IN C LEAR VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. 3(I). ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN SUSTAINING ADDITI ON OF RS. 12,00,000/- ON ACCOUNT OF CASH DEPOSITS IN BANK IN VOKING THE PROVISION OF SECTION 68 OF THE ACT. (II) THAT THE SAID ADDITION HAS BEEN CONFIRMED BY A RBITRARILY REJECTING THE EXPLANATION AND EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE. 4. WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTERN ATIVE THE CIT(A) HAS ERRED IN IGNORING THE CONTENTION OF THE ASSESSEE THAT THE ADDITION U/S. 68 CAN BE MADE ONLY UP TO THE PEA K AMOUNT CREDITED IN THE BANK ACCOUT. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT IN THIS CAS E ASSESSEE FILED RETURN OF INCOME ON 22.5.2006 DECLARING INCOME OF RS. 1,42,26 0/-. INFORMATION HAD BEEN RECEIVED FROM THE INCOME TAX OFFICER, WARD 36(3), N EW DELHI VIDE LETTER DATED ITA NO.5355/DEL/2015 3 25.3.2013 THAT THE ASSESSEE HAD DEPOSITED CASH AMOU NTING TO RS. 12 LACS IN HDFC BANK ACCOUNT AND THE INFORMATION WAS TRANSFERR ED TO WARD 38(3) AS THE ASSESSEE HAD FILED HIS RETURN OF INCOME IN THIS WA RD. THEREAFTER, AFTER RECORDING REASONS FOR REOPENING THE ASSESSMENT OF THE ASSESSE E FOR AY 2006-07, AND AFTER OBTAINING THE APPROVAL FROM THE COMPETENT AUTHORITY , NOTICE U/S. 148 OF THE I.T. ACT ON 30.8.2013. IN RESPONSE TO THE SAME, ASS ESSEE REPLIED VIDE HIS LETTER DATED 26.12.2013, THAT IT HAD ALREADY FILED HIS R ETURN INCOME FOR AY 2006-07. SUBSEQUENTLY NOTICES U/S 143(2) AND 142(1) WERE ISS UED ON 16.1.2016 AND IN RESPONSE TO THE SAME ASSESSEES AUTHORISED REPRESEN TATIVE ATTENDED THE PROCEEDINGS. THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS REGARDING THE SOURCE OF CASH DEPOSIT OF RS. 12 LACS ON 5.7.2005 IN HIS S AVING BANK ACCOUNT WITH HDFC BANK AND IN RESPONSE THERETO THE ASSESSEE HAS FULLY EXPLAINED THE SOURCE OF CASH DEPOSIT OF RS. 12 LACS IN HIS BANK ACCOUNT. BUT, AO WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND MADE T HE ADDITION OF RS. 12 LACS VIDE ORDER DATED 03.03.2014 PASSED U/S. 143(3)/147 OF THE I.T. ACT, 1961 AND ASSESSED THE INCOME AT RS.13,42,260/-. 3. AGGRIEVED WITH THE ASSESSMENT ORDER DATED 03.3.2 014, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 27.7.2015 DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGAINST THE IMPUGNED ORDER DATED 27.7.2015, AS SESSEE HAS FILED THE APPEAL BEFORE THE TRIBUNAL. ITA NO.5355/DEL/2015 4 5. AT THE TIME OF HEARING, LD. AUTHORISED REPRESENT ATIVE OF THE ASSESSEE HAS FILED A PAPER BOOK CONTAINING PAGERS 1 TO 44 HAVING THE COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN ALONGWITH COMP UTATION; COPY OF INTIMATION U/S. 143(1) OF THE I.T. ACT; COPY OF PUR CHASE DEED AND SALE DEED DATED 4.7.2005 WITH ENGLISH TRANSLATION; COPY OF REPLY, D ATED 13.2.2014 FILED BEFORE THE AO ALONGWITH COPY OF STATEMENT OF BANK ACCOUNT OF THE ASSESSEE WITH PNB; COPY OF STATEMENT OF BANK ACCOUNT OF THE ASSESSEE A ND KIRAN AGGARWAL WITH PNB; COPY OF STATEMENT OF BANK ACCOUNT OF THE ASSES SEE WITH HDFC BANK; COPY OF REPY, DATED 3.3.2014 FILED BEFORE THE AO; COPY O F WRITTEN SUBMISSIONS BEFORE THE CIT(A); AND COPY OF CONTINUED WRITTEN SUBMISSIO N FILED BEFORE THE CIT(A). HE STATED THAT DURING YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DEPOSITED A SUM OF RS. 12 LACS ON 05.7.2005 IN HIS SAVING BANK ACCO UNT WITH HDFC BANKAND THE MAIN SOURCE OF DEPOSITS WAS THE CASH RECEIPT OF RS. 4,15,000/- FROM THE SALE OF A RESIDENTIAL HOUSE PROPERTY AT BHATINDA, PUNJAB. APA RT FROM THIS, THE ASSESSEE HAD MADE CASH WITHDRAWALS FROM OUT OF HIS OWN SAVINGS BANK ACCOUNT, I.E., AN AMOUNT OF RS. 5,10,000/- AND RS. 1,58,000/- RESPEC TIVELY AND FROM OUT OF HIS TWO A/CS WITH PNB, MADHUBAN, DELHI AND AN AMOUNT O F RS. 1,23,800/- FROM OUT OF ANOTHER A/C WITH HDFC BANK, LAXMI NAGAR, DELHI T HUS TOTALING TO RS. 12,06,800/-. HE SUBMITTED THAT DESPITE SUBMITTING THE SOURCE OF THE DEPOSITS BY THE ASSESSEE, THE AO WRONGLY COMPLETED THE ASSESSM ENT AND ADDED BACK THE AMOUNT OF RS. 12 LACS TO THE RETURN INCOME AS UNEXP LAINED CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE ON SURMISES AND WITHOU T MAKING ANY ENQUIRY AND ITA NO.5355/DEL/2015 5 WITHOUT BRINGING ANY ADVERSE MATERIAL ON RECORD AND ALSO SIMILARLY LD. CIT(A) CONFIRMED THE ORDER OF THE AO AND HELD THAT THER E IS TIME GAP INVOLVED IN THE DATE OF WITHDRAWAL AND DATE OF DEPOSIT AND THEREFOR E EXPLANATIONS GIVEN BY THE ASSESSEE IS NOT CONVINCING AND CONFIRMED THE ENTIRE ADDITION OF RS. 12 LACS MADE BY THE AO WHICH MAY BE DELETED. 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER S OF THE AUTHORITIES BELOW AND REQUESTED THE SAME MAY BE UPHELD. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES, ALONGWITH THE PA PER BOOK FILED BY THE ASSESSEE AND THE WRITTEN SUBMISSIONS. AFTER GOING THROUGH THE RECORDS, WE FIND THAT THE ASSESSEE HAD DECLARED BUSINESS INCOME OF RS. 1.42 LACS U/S. 44 AD OF THE I.T. ACT AND TOTAL INCOME OF THE SAME AMOUNT FO R THE ASSESSMENT YEAR 2006- 07. A PERUSAL OF THE STATEMENT OF THE CONCERNED H ANK ACCOUNT OF THE ASSESSEE REVEALED THAT THE ASSESSEE HAD DEPOSITED A CASH OF RS 12 LAKHS IN THE ACCOUNT ON 5.7.2005. THE ASSESSEE WAS ASKED TO EXPLAIN THE NAT URE AND SOURCE OF THE CASH DEPOSITS AND WAS INFORMED THAT IN THE EVENT OF FAIL URE ON THE PART OF THE ASSESSEE TO OFFER PROPER EXPLANATION, THE SAME WOULD BE TREA TED AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE I.T. ACT. THE ASSESSEE FILED HIS REPLY VIDE LETTER DATED 13.2.2014. THE ASSESSEE FURNISHED A COPY OF THE SAV INGS BANK ACCOUNT IN HDFC BANK IN WHICH A CASH DEPOSIT OF RS 12 LAKHS WAS FOU ND TO BE MADE ON 5.7.2005. THE ASSESSEE SUBMITTED THAT IT MAINTAINED ANOTHER B ANK ACCOUNT WITH PNB ITA NO.5355/DEL/2015 6 MADHUBAN, NEW DELHI AND THAT THE WITHDRAWALS FROM B OTH THE ACCOUNTS AS WELL AS THE CASH SALE PROCEED RECEIVED AGAINST THE SALE OF A PROPERTY IN BHATINDA ON 14.7.2005 EXPLAINED THE SOURCE OF THE CASH DEPOSIT. SINCE THE ASSESSEE HAD NOT DISCLOSED ANY CAPITAL GAIN, THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF THE CAPITAL GAINS EARNED DURING THE YEAR UNDER CONSIDE RATION AND AO ISSUED SHOW CAUSE TO THE ASSESSEE AS TO WHY THE SAME NOT BE TRE ATED AS UNEXPLAINED CASH CREDIT ULS 68 OF I T ACT. THE ASSESSEE FURNISHED RE PLY OFFERING CAPITAL GAINS OF RS 44,000/- FOR TAXATION. IT WAS STATED THAT THE PR OPERTY SOLD ON 4.7.2005 HAD BEEN PURCHASED ON 24.9.2004 FOR A CASH CONSIDERATI ON OF RS 3,71,000/-, THEREBY RESULTING IN SHORT TERM CAPITAL GAINS OF RS 44,000/ -. THE EXPLANATION OF THE ASSESSEE REGARDING THE SOURCE OF CASH OF RS. 12 LAC S DEPOSITED IN THE SAVINGS BANK ACCOUNT FROM THE CASH WITHDRAWALS AND RECEIPT OF CASH AGAINST THE SALE OF A PROPERTY OWNED BY HIM HAS BEEN FULLY EXPLAINED, BU T THE AO AS WELL AS LD. CIT(A) HAS WRONGLY MADE THIS ADDITION ON SURMISES A ND WITHOUT MAKING ANY ENQUIRY AND WITHOUT BRINGING ANY ADVERSE MATERIAL O N RECORD. ON GOING THROUGH THE RECORDS, WE FIND THAT THE DEPOSIT IN TH E BANK ACCOUNT OF RS. 12 LACS WAS MADE ON 5.7.2005 OUT OF THE FOLLOWING SOURCES : - 1. SALE PROCEEDS OF THE PROPERTY IN BHATINDA SOLD ON 4.7.2005. RS. 4,15,000/- 2. CASH WITHDRAWALS FROM PNB, MADHUBAN DELHI SB A/C NO. 18858. DATE AMOUNT 6.4.2005 RS. 2,50,000/- 6.4.2005 RS. 2,10,000/- 2.5.2005 RS. 50,000/- RS. 5,10,000/- ITA NO.5355/DEL/2015 7 3. CASH WITHDRAWAL FROM PNB, MADHUBAN, DELHI JOINT ACCOUNT WITH HIS WIFE, S/B ACCOUNT NO. 2063. RS. 1,58,000/- 4. CASH WITHDRAWAL BY ATM BETWEEN 10.4.2005 TO 15.6.2005 RS. 1,23,800/- TOTAL RS. 12,06,800/- FROM THE ABOVE, IT IS CRYSTAL CLEAR THAT THE ASSE SSEE HAS FULLY EXPLAINED THE SOURCE OF CASH DEPOSITS OF RS. 12 LACS ON 5.7.2 005 IN HIS SAVINGS BANK ACCOUNT WITH HDFC BANK. WE ALSO FIND THAT THE LD. C IT(A) HAS CONFIRMED THE ACTION OF THE AO BY HOLDING THAT THERE IS TIME GAP IGNORING THE FACT THAT FIRSTLY THERE IS NOT SUCH MUCH TIME GAP. FURTHER SUCH TIME GAP ITSELF CANNOT BE A GROUND FOR REJECTING THE ASSESSEES EXPLANATION WI THOUT BRINGING ANY FURTHER MATERIAL OR REASONS TO IGNORE THE SOURCE OF DEPOSI T. IN THIS REGARD, WE FIND THAT HONBLE KARNATAKA HIGH COURT IN THE CASE OF S.R. V ENKATA RATNAM VS. CIT 127 ITR 807 (KARN) HAS HELD AS UNDER:- THERE IS SOME FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE PETITIONER AND THE ARGUMENT ADVANCED BY THE REV ENUE IS, THEREFORE, WITHOUT ANY FORCE. ONCE THE PETITIONER/ ASSESSEE DISCLOSED THE SORUCE AS HAVING COME FROM THE WITHDR AWAL MADE ON A GIVEN DATE FROM A GIVEN BANK, IT WAS NOT FOR THE RESPONDENT NOS. 1 AND 2 TO CONCERN THEMSELVES WITH WHAT THE ASSESS EE DID WITH THAT ITA NO.5355/DEL/2015 8 MONEY, I.E. WHETHER HE HAD KEPT THE SAME IN HIS HOU SE OR UTILIZED THE SERVICES OF A BANK BY DEPOSITING THE SAME. 7.1 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENT AS AFORESAID, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FULLY EXPLAINED THE CASH OF SOURCE, HOWEVER, NO CONTRARY EVIDENCE WAS SHOWN BY THE AO WHICH WILL PROVE THAT THE TRANSACTIONS WERE NOT GENUINE, THEREFORE, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CI T(A) IS TOTALLY UNWARRANTED AND THE SAME NEEDS TO BE DELETED. ACCO RDINGLY, WE DELETE THE ADDITION IN DISPUTE AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/04/2016. SD/- SD/- [N.K. SAINI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 27/04/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT ASSISTANT REGISTRAR, ITAT, DELHI BENCHES