Shri Anil Gupta, New Delhi V. ITO, New Delhi

ITA 5645/DEL/2013

• Counselvise Citation: 564520114 RSA 2013
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 06-01-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Business income; Depreciation; Business expenditure; Opportunity of being heard; Additional evidence
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A: NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI I. C. SUDHIR, JUDICIAL MEMBER ITA NO. 5645/DEL/2013 ASSESSMENT YEAR: 2010 - 2011 SHRI ANIL GUPTA, VS. I.T.O WARD 37 (1), A-1/74, JANAKPURI, NEW DELHI. NEW DELHI-110 058 PAN AADPG6837E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. SAMPATH, ADVOCATE & SHRI RAJA KUMAR, ADVOCATE RESPONDENT BY: MISS Y. KAKKAR, DR ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED IN UPHOLDING TH E FOLLOWING ADDITION/DISALLOWANCE IN THE PRESENT CA SE : (I) CLAIM FOR DEDUCTION OF A SUM OF RS. 11,59,309 INCURRED AS BUSINESS EXPENSES ON RUNNING, MAI NTENANCE AND DEPRECIATION ON MOTOR CAR FOR EARNING THE INCO ME FROM PROFESSION; (II) ADDITION OF RS. 52,60,000 FOR ALL EGED UNEXPLAINED CASH DEPOSIT OUT OF CASH EARLIER WITHDRAWN. ITA NO. 5645/DEL/2013 2 2. THE VIEW TAKEN AND THE REASONS RELIED UP ON BY THE LEARNED CIT(A) IN CONFIRMING THE ABOVE DISALLOWANCE AN D ADDITION ARE VITIATED, ERRONEOUS AND BASED ON HIS FAILURE TO C ORRECTLY CONSIDER AND APPRECIATE THE FACTS AND THE LEGAL POSI TION THERETO. 3. THE AFORESAID SUM OF RS. 11,59,309 WAS DULY INCURRED BY THE APPELLANT IN EARNING ARRANGEMENT WITH T HE FIRM, AND AS SUCH SHOULD HAVE BEEN ALLOWED AS ADMISSIBLE DEDUCTI ON IN THE PRESENT CASE. 4. ON FACTS , MATERIAL AND EVIDENCE ON RECO RD AND / OR ADMITTED AND CONFIRMED BY THE BANK, IT IS APPARENT TH AT THE CASH DEPOSITS WERE MADE OUT OF THE CASH WITHDRAWN EARLIER A ND AS SUCH, THE SOURCE OF DEPOSIT WAS DULY ESTABLISHED. 2. TWO ISSUES ARE INVOLVED IN THE ABOVE GROUNDS WHICH ARE AS UNDER:- I) AS TO WHETHER AUTHORITIES BELOW WERE JUSTIFIED IN DISALLOWING THE CLAIMED DEDUCTION OF RS. 11,59,309/- ON ACCO UNT OF BUSINESS EXPENSES ON RUNNING, MAINTAINING AND ON ACCOUNT OF DEPRECIATION ON MOTOR CAR FOR EARNING THE INCOME FROM PROFESSION ? ; A ND II) AS TO WHETHER THE AUTHORITIES BELOW ARE JUSTIFIED IN MAKING AND SUSTAINING THE ADDITION OF RS. 52,60,000/- F OR ALLEGED UNEXPLAINED CASH DEPOSITS OUT OF CASH EARLIER WITHDRAWN. ISSUE NO. 1 3. THE RELEVANT FACTS ARE THAT DURING THE YEAR T HE ASSESSEE A QUALIFIED CHARTERED ACCOUNTANT WAS A PARTNER IN TWO FIRMS. IN THIS YEAR, THE YEAR THE ASSESSEE HAD INCOME FROM PROFESSION AS PARTNERS RE MUNERATION AND ALSO HAD CAPITAL GAINS AND TAXABLE INTEREST INCOME. THE AO DISALLOWED THE CLAIMED BUSINESS EXPENSES OF RS. 11,59,309/- AGAINS T TAXABLE PARTNERS REMUNERATION ON THE BASIS THAT THE EXPENSE AND DEPR ECIATION DID NOT PERTAIN TO THE ASSESSEE AS AN INDIVIDUAL BUT TO THE PARTNERSHIP FIRM. IT IS PERTINENT TO MENTION OVER HERE THAT THE ASSESSEE HA D CLAIMED THE EXPENSES ITA NO. 5645/DEL/2013 3 IN QUESTION INCURRED ON THE VEHICLE OWNED BY HIM US ED FOR THE BUSINESS OF THE FIRM. THE LD. CIT(A) HAS UPHELD THIS ACTION OF THE AO, WHICH HAS BEEN QUESTIONED AGAIN BY THE ASSESSEE BEFORE THE TRIBUNA L. 4. IN SUPPORT OF THE GROUND THE LD. AR REIT ERATED THE SUBMISSION MADE ON THE ISSUE BEFORE THE AUTHORITIES BELOW. HE SUBMITTED DURING THE YEAR THE ASSESSSEE WAS A PARTNER WITH A FIRM WHICH PROVIDES PROFESSIONAL SERVICES TO ITS CLIENTS. THE ASSESSEE WAS DRAWING A MONTHLY REMUNERATION OF RS. 2 LACS DURING THE YEAR. NO VEHICLE WAS PROVIDED TO HIM FOR ATTENDING TO THE FIRMS WORK. THERE WAS AN UNDERSTANDING WITH THE FIRM THAT THE ASSESEE WILL USE HIS OWN VEHICLE FOR THE SAME AND THE EXPEN SES THEREOF WOULD BE MET OUT OF THE REMUNERATION ALLOWED TO HIM. HE INC URRED A TOTAL AMOUNT OF RS. 11,59,309/- (RS. 596960 ON ACCOUNT OF CAR RUNNI NG AND MAINTENANCE + RS. 120500/- ON ACCOUNT OF DRIVERS SALARY + RS. 39 2495/- ON ACCOUNT OF DEPRECIATION ON CAR + RS. 4742/- ON ACCOUNT OF DEP RECIATION ON COMPUTER + RS. 4974/- ON ACCOUNT OF DEPRECIATION ON CELL PHONE + RS, 39638/- ON ACCOUNT OF CAR INSURANCE EXPENSES) ON THE RUNNING A ND MAINTENANCE OF VEHICLE OUT OF THE REMUNERATION ALLOWED TO HIM. LD. AR SUBMITTED THAT THE REMUNERATION BEING DRAWN FROM A PARTNERSHIP FIRM IS TAXABLE UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION U/S 28 O F THE ACT. EXPENSES INCURRED IN RELATION OF EARNING BUSINESS INCOME AR E ALLOWABLE AS BUSINESS EXPENSES UNDER RELEVANT PROVISIONS OF THE ACT. THE ASSESSEE FOR DISCHARGE OF HIS PROFESSIONAL DUTIES AS A PARTNER COMMUTES BE TWEEN HIS RESIDENCE IN ITA NO. 5645/DEL/2013 4 JANAK PURI, NEW DELHI AND GURGAON ON A DAILY BASIS WHICH DISTANCE IS ABOUT 100 KMS PER DAY. BESIDES, THE ASSESSEE IS ALSO REQU IRED TO GO TO THE OFFICES OF THE CLIENTS AT VARIOUS LOCATIONS IN DELHI AND NC R REGION. ON AN APPROXIMATE BASIS, THE CARS USED BY THE ASSESSEE CO VERS AROUND 45,000 TO 50,000 ANNUALLY. NAMES AND LOCATIONS OF SOME OF THE CLIENTS WERE GIVEN IN A STATEMENT, COPY OF WHICH HAS BEEN MADE AVAILABLE AT PAGE 19 OF THE PAPER BOOK FILED BEFORE THE TRIBUNAL. HE SUBMITTED FURTHE R THAT AS A POLICY THE FIRM DOES NOT REIMBURSE THE EXPENSES INCURRED BY PARTNE RS ON CAR RUNNING AND MAINTENANCE , INSURANCE , DRIVERS SALARY ETC. THER EFORE THE EXPENSES INCURRED BY THE ASSESSEE BEING DIRECTLY IN RELATION TO EARNING TAXABLE BUSINESS INCOME, ARE CLEARLY ALLOWABLE AS A BUSINES S EXPENSES. HE POINTED OUT THAT CERTIFICATES FROM BOTH THE FIRMS IN SUPPOR T OF THIS STATEMENT WERE FURNISHED, A COPY OF WHICH HAS ALSO BEEN MADE AVAIL ABLE BEFORE THE TRIBUNAL AT PAGE NO. 20 TO 21 OF THE PAPER BOOK. THE LD. AR SUBMITTED FURTHER THAT DURING THE YEAR THE ASSESSEE OWNED TWO CARS. OUT OF THESE CARS ONE CAR WAS EXCLUSIVELY USED BY HIM FOR HIS PROFESSIONAL PU RPOSES AND THE OTHER CAR WAS GENERALLY USED FOR PERSONAL PURPOSES AND SOMETI MES FOR PROFESSIONAL PURPOSES. THE EXPENSES CLAIMED IN THE PRESENT CASE ARE ONLY THE EXPENSES INCURRED ON THE CAR WAS USED EXCLUSIVELY FOR PROFES SIONAL PURPOSES, SUBMITTED THE LD. AR . HE ALSO POINTED OUT THAT TH IS VERY ISSUE WAS EXAMINED IN THE CASE OF ASSESSEE ITSELF FOR THE ASS ESSMENT YEARS 2006-07 AND 2007-08, IN THE ASSESSMENT FRAMED U/S 143 (3) O F THE ACT, WHEREIN NO ITA NO. 5645/DEL/2013 5 SUCH DISALLOWANCE WAS MADE. IN SUPPORT THE LD. AR R EFERRED PAGE NOS. 22 TO 29 OF THE PAPER BOOK WHICH ARE THE COPIES OF TH OSE ASSESSMENT ORDERS FOR THE ASSESSMENT YEAR 2006-07 AND 2007-08. THE L D. AR ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS ON THE ISSUE :- 1. CIT VS. RAMNIK LAL KOTHARI 74 ITR 5 7 (SC) 2. CIT VS. S.B. GHOSE, 124 ITR 674 (CA L) 3. PHIROZE H. KUDIANAVALA VS. CIT 113 I TR 873 (BOMBAY) 4. CIT VS. ATMA RAM MODI 71 ITR 199 (PA TNA) 5. LD. SR. DR ON THE OTHER HAND TRIED TO JUST IFY THE ORDERS OF THE AUTHORITIES BELOW. SHE SUBMITTED THAT NO EVIDENCE T O SUPPORT THE CLAIM OF THE ASSESEE THAT EXPENSES IN QUESTION WERE INCURRED ON CAR USED FOR THE CLAIMED BUSINESS PURPOSES WAS FURNISHED TO JUSTIFY THE CLAIM. THE ASSESSEE WAS ALSO NOT MAINTAINING LOG BOOK TO SUPPORT ITS CL AIM. SHE ALSO REFERRED CONTENTS OF PARA NO. 3 OF THE PARTNERSHIP DEED AND CLAUSE 10 THEREOF, A COPY OF WHICH HAS BEEN MADE AVAILABLE AT PAGE NO. 8 5 TO 93 OF THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. SHE SUBMITTED FURTHER THAT THE DECISIONS CITED ARE BEFORE THE AMENDMENT MADE IN TH E PROVISIONS OF SECTION 143 OF THE ACT, W.E.F. 1.4.93. IT IS REGARDING THE ASSESSMENT AS A FIRM. SHE ALSO REFERRED EXPLANATION III TO SECTION 40(B) OF TH E ACT WHEREIN FOR THE PURPOSE OF A ASSESSABLE FIRM MEANING OF BOOK PRO FIT HAS BEEN SHOWN AS NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR COMPUTED IN THE MANNER LAID DOWN IN CHAPTER IV D AS INCURRED BY ITA NO. 5645/DEL/2013 6 THE AGGREGATE AMOUNT OF THE REMUNERATION PAID OR PA YABLE TO ALL THE PARTNERS OF THE FIRM, IF SUCH AMOUNT HAS BEEN DEDUC TED WHILE COMPUTING THE NET PROFIT. CONCLUDING HER ARGUMENT, SHE SUBMIT TED FURTHER THAT IF IN EARLIER ASSESSMENT YEARS AO HAS COMMITTED SOME MIST AKE THE SAME CANNOT BE REPEATED IN SUBSEQUENT YEARS AFTER KNOWING FULLY THAT THE ACTION OF THE AO IN THIS REGARD WAS A MISTAKE. SHE HAS CITED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF DISTRIBUTORS (BARODA) P. LTD. V UNION OF INDIA (1985) 155 ITR 120 (SC) HOLDING THAT THERE IS NO H EROISM IN REPEATING THE ERROR. IN REJOINDER LD. AR SUBMITTED THAT THE LD. D EPARTMENTAL REPRESENTATIVE CANNOT BE ALLOWED TO TRAVEL BEYOND A SSESSMENT ORDER. SHE HAS NOT APPRECIATED THAT THE ADDITIONAL EVIDENCE FU RNISHED BEFORE THE LD. CIT(A) WAS SUBJECTED TO REMAND REPORT OF THE AO. HE SUBMITTED FURTHER THAT AFTER AMENDMENT IN SECTION 184 OF THE ACT THE PROVISIONS THEREUNDER HAVE REMAINED THE SAME REGARDING NATURE OF INCOME I N THE HANDS OF A PARTNER. HE SUBMITTED FURTHER THAT IT IS NOW AN EST ABLISHED PREPOSITION OF LAW THAT CONSISTENCY IN THE APPROACH OF THE REVENUE IS TO BE MAINTAINED WHEN THERE IS NO CHANGE OF FACTS ON THE ISSUE. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PART IES AND HAVE GONE THROUGH THE MATERIAL PLACED BEFORE US. IN SUPPORT OF HIS CONTENTION, THE LEARNED AR HAS RELIED UPON THE DECISIONS OF HONBLE SUPREME COURT, CALCUTTA HIGH COURT, BOMBAY HIGH COURT AND PATNA HI GH COURT. THEREFORE, ITA NO. 5645/DEL/2013 7 IT WOULD BE PROPER TO FIRST SEE THE RATIO LAID DOWN IN THE CASES RELIED UPON BY THE LEARNED AR. IN THE CASE OF RAMNIKLAL KOTHARI, THE ASSESSEE WAS PARTNER IN THE PARTNERSHIP FIRM. THE ASSESSEE SPENT THE AMOUNT FO R EARNING OF SHARE INCOME FROM THE FIRM WHICH WAS DISALLOWED BY THE LO WER AUTHORITIES. WHEN THE MATTER REACHED TO THE HONBLE APEX COURT, IT WA S HELD AS UNDER:- HELD, ACCORDINGLY, THAT THE RESPONDENT, WHO WAS A PARTNER IN FOUR FIRMS BUT DID NOT CARRY ON ANY INDEPENDENT BUS INESS, WAS ENTITLED TO DEDUCT FROM HIS SHARE OF THE PROFITS FR OM THE FIRMS AMOUNTS PAID AS SALARY AND BONUS TO STAFF, EXPENSES FOR MAINTENANCE AND DEPRECIATION OF MOTOR CARS AND TRAV ELING EXPENSES EXPENDED BY HIM IN EARNING THE INCOME FROM THE FIRMS. IN THE CASE OF S.B. GHOSE, HONBLE CALCUT TA HIGH COURT HELD AS UNDER:- HELD, ON THE FACTS OF THE CASE, THAT THE ASSESSEE, WHO WAS A PARTNER IN A FIRM, WAS ENTITLED TO THE DEDUCTION OF RS.700 UNDER S. 38(1) OF THE I.T.ACT, 1961, FOR USE OF A P ART OF THE DWELLING HOUSE AS EXPENSE INCURRED FOR THE PURPOSE OF EARNING HIS SHARE INCOME FROM THE FIRM. IN THE CASE OF PHIROZE H. KUDIANAVALA, HON'BLE BOMB AY HIGH COURT HELD AS UNDER:- THE ASSESSEE, AN ARCHITECT, WAS A PARTNER IN A FIR M OF ARCHITECTS. IT WAS FOUND THAT THE PARTNERS HAD AGR EED AMONGST THEMSELVES TO INCUR EXPENDITURE THE AMOUNTS OF WHICH WERE AGREED TO BE BORNE BY THE PARTNERS THEMS ELVES. SUCH EXPENDITURE COULD NOT BE DISALLOWED MERELY BEC AUSE IT HAD NOT BEEN BROUGHT TO THE ACCOUNTS OF THE PARTNER SHIP OR ITA NO. 5645/DEL/2013 8 THAT IT COULD NOT BE PROPERLY REGARDED AS PROFITS O F THE FIRM. WHATEVER IS EXPENDED TO ENHANCE THE PROFITS OF THE PARTNERSHIP MUST GO TO ENHANCE ULTIMATELY THE PARTN ERS SHARE OF PROFITS FROM THAT FIRM. BY RUNNING HIS MOTOR CAR FOR THE BUSINESS OF THE FI RM, BY ENTERTAINING CLIENTS IN CONNECTION WITH THE BUSINES S OF THE FIRM AND BY INCURRING OTHER EXPENSES FOR STUDIO AND JOUR NALS WHICH MUST HAVE A DIRECT EFFECT ON THE BUSINESS OF THE FI RM, THE ASSESSEE SOUGHT TO INCREASE THE PROFITS OF THE FIRM AND, THEREFORE, UNDER SECTION 10(2)(XV) OF THE INDIAN IN COME-TAX ACT, 1922, IN RESPECT OF THE ASSESSMENT YEAR 1961-6 2, AND UNDER THE GENERAL PRINCIPLES OF COMMERCIAL ACCOUNTI NG WHICH WOULD APPLY IN REJECTING THE CLAIM OF THE ASSESSEE TO DEDUCT SUCH EXPENSES AND DEPRECIATION ON MOTOR CAR, IN COM PUTING HIS SHARE OF INCOME FROM THE FIRM IN WHICH HE WAS A PARTNER. IN THE CASE OF ATMA RAM MODI, IT WAS HELD BY HONBL E PATNA HIGH COURT AS UNDER:- THE VIEW THAT IN CALCULATING THE PROFITS OF A PART NERSHIP FIRM THE EXPENSES NECESSARILY INCURRED FOR EARNING THE P ROFITS HAVE TO BE DEDUCTED AND THAT, CONSEQUENTLY, WHEN THE PAR TNERS SHARE IN THE PROFITS IS ULTIMATELY GIVEN TO HIM THE RE CAN BE NO FURTHER DEDUCTION FROM THAT SUM IN RESPECT OF THE E XPENSES INCURRED BY HIM FOR HIS BUSINESS, IS NOT CORRECT. THE RATIO OF ALL THE ABOVE DECISIONS WOULD BE SQUAR ELY APPLICABLE TO THE CASE OF THE ASSESSEE BECAUSE THE ASSESSEE HA S ALSO CLAIMED THAT THE EXPENDITURE ON MAINTENANCE AND RUNNING OF CAR WAS I NCURRED BY HIM FOR THE PURPOSE OF DISCHARGING HIS PROFESSIONAL DUTIES AS A PARTNER OF THE FIRM. THE ASSESSEE HAS CONTENDED THAT HE IS REQUIRED TO COMMU TE FROM HIS RESIDENCE IN JANAK PURI TO GURGAON ON DAILY BASIS. BESIDES, THE ASSESSEE IS ALSO REQUIRED TO GO TO THE OFFICES OF THE CLIENTS OF THE FIRM AT VARIOUS LOCATIONS IN ITA NO. 5645/DEL/2013 9 DELHI AND NCR REGION. BEING THE PARTNER OF THE FIR M AND FOR DISCHARGING HIS PROFESSIONAL DUTIES, THE ASSESSEE IS RECEIVING SHAR E INCOME AS WELL AS REMUNERATION FROM THE FIRM. THEREFORE, THE EXPENDI TURE ON RUNNING AND MAINTENANCE OF THE CAR WAS INCURRED BY THE ASSESSEE FOR THE PURPOSE OF EARNING SHARE INCOME AND REMUNERATION FROM THE FIRM . ACCORDINGLY, THE RATIO OF THE ABOVE DECISIONS RELIED UPON BY THE LEA RNED COUNSEL WOULD BE SQUARELY APPLICABLE TO THE EXTENT THAT EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING OF SHARE INCOME AND REMUNERATION IS TO BE ALLOWED AGAINST THESE INCOME. BUT, IN THE CASE UNDER APPEAL BEFORE US, THE ASSESSEE HAS CLAIMED THE ENTIRE EXPENDITURE AGAINST THE REMUNERA TION RECEIVED FROM THE FIRM AND HAS NOT ALLOCATED ANY PART OF THE EXPENDIT URE AGAINST THE SHARE INCOME FROM THE FIRM. OBVIOUSLY, IT IS DONE BY THE ASSESSEE BECAUSE IN THE YEAR UNDER CONSIDERATION, SHARE INCOME FROM THE FIR M IS EXEMPT UNDER SECTION 10(2A). THAT MERELY BECAUSE IN THIS YEAR T HE SHARE INCOME IS EXEMPT, THE RATIO OF THE ABOVE DECISION OF HONBLE APEX COURT AND OTHER HIGH COURTS WOULD NOT CHANGE. THE RATIO OF THE ABO VE DECISION OF HONBLE SUPRERME COURT IN THE CASE OF RAMNIKLAL KOTHARI IS THAT THE PARTNER OF THE FIRM IS ENTITLED TO DEDUCT FROM HIS SHARE INCOME TH E AMOUNT PAID AS SALARY AND BONUS TO STAFF, EXPENSES FOR MAINTENANCE AND DE PRECIATION OF MOTOR CARS ETC. SINCE IN THE CASE UNDER APPEAL BEFORE US THE ASSESSEE HAS RECEIVED REMUNERATION IN ADDITION TO THE SHARE OF P ROFIT FROM THE FIRMS, THE EXPENDITURE INCURRED BY THE ASSESSEE FOR RUNNING AN D MAINTENANCE OF MOTOR ITA NO. 5645/DEL/2013 10 CAR IS TO BE ALLOCATED BETWEEN THE SHARE OF PROFIT FROM THE FIRMS AND REMUNERATION FROM THE FIRM. THIS ALLOCATION HAS TO BE MADE ON THE PROPORTIONATE BASIS I.E. THE EXPENDITURE ON RUNNING AND MAINTENANCE OF MOTOR CAR, DEPRECIATION ETC. IS TO BE ALLOCATED IN PROPORTION OF SHARE OF PROFIT FROM THE FIRMS AND THE REMUNERATION RECEIVED FROM T HE FIRMS. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE PROPOR TIONATE DEDUCTION IN RESPECT OF RUNNING AND MAINTENANCE OF MOTOR CAR AND DEPRECIATION AGAINST THE REMUNERATION RECEIVED FROM THE FIRM. THE GROUND NO. 1 IS THUS PARTLY ALLOWED. ISSUE NO. 2 7. ON THE BASIS OF AIR INFORMATION RECEIVED FROM HDFC BANK REGARDING DEPOSIT OF RS. 52,60,000/- IN THE SAVING BANK ACCOU NT OF THE ASSESSEE, THE AO ASKED THE ASSESSEE FOR DETAILS OF THE DEPOSITS. THE AO HOWEVER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND ADDED THE AMOUNT IN THE INCOME OF THE ASSESSEE. THE ASSESSEE COULD NOT SUCC EED EVEN BEFORE THE FIRST APPELLATE AUTHORITY HENCE IN APPEAL BEFORE TH E TRIBUNAL. 8. IN SUPPORT OF THE GROUND THE LD. AR SUBMI TTED THAT IT WAS EXPLAINED TO THE AUTHORITIES BELOW THAT THE ASSESSEE HAD PERS ONALLY APPEARED BEFORE THE AO ON 18.2.2013 AND EXPLAINED THAT HE HAD WITHD RAWN RS. 54,65,000/- IN CASH FROM HIS BANK ACCOUNT ON VARIOUS DATES AS H E WAS IN ADVANCE NEGOTIATIONS FOR PURCHASE OF THREE DIFFERENT PIECES OF AGRICULTURAL LAND. HOWEVER AS THE DEALS FOR THE THREE PIECES OF AGRIC ULTURAL LAND FAILED TO ITA NO. 5645/DEL/2013 11 MATERIALISE THE ASSESSEE DEPOSITED BACK RS. 52,60,0 00/- OUT OF THE AFORESAID WITHDRAWALS OF RS. 54,65,000/-. UNDER THE SE FACTS AND CIRCUMSTANCES THE ADDITION MADE BY THE AO WAS TOTAL LY UNCALLED FOR. THE LD. AR SUBMITTED THAT AO HAS WRONGLY MENTIONED THAT NO EXPLANATION WAS SUBMITTED BY THE ASSESEE AS FAR AS THE WITHDRAWALS OF THE CASH WAS CONCERNED. IT IS ALSO INCORRECT TO SAY ON THE PART OF THE AO THAT THE CHART OF WITHDRAWALS / DEPOSITS FURNISHED BY THE ASSESSEE DO ES NOT EXPLICITLY INDICATE THE PURPOSE / USE OF MONEY AFTER WITHDRAWAL. THE LD . AR SUBMITTED THAT THE EXPLANATION MADE BEFORE THE AO HAS NOW BEEN REITERA TED IN THE AFFIDAVIT OF THE ASSESSEE MADE AVAILABLE ON RECORD. HE SUBMITTED THAT IT IS TRITE ESTABLISHED LAW THAT ADDITION CANNOT BE MADE BY AO ON THE BASIS OF MERE DOUBT / SUSPICION. THE REASON FOR THE CASH WITHDRAW AL FOLLOWED BY DEPOSITING THE MONEY IN HIS BANK ACCOUNT WAS PERSON ALLY KNOWN TO THE ASSESSEE AND THE EXPLANATION WAS ACCORDINGLY MADE B EFORE THE AO. HE SUBMITTED THAT THE CASH BOOK FURNISHED BEFORE THE L D. CIT(A) ON WHICH REMAND REPORT OF THE AO WAS CALLED FOR CLEARLY SHOW S THAT WITHDRAWALS AND THE DEPOSITS MENTIONED IN ANNEXURE ARE ALL ACCOUNTE D FOR IN THE SAID CASH BOOK. IT WAS FURTHER EXPLAINED THAT THE ENTRIES IN ANNEXURE A ARE EXCLUSIVE OF HOUSE HOLD WITHDRAWAL AND IN SUPPORT OF THIS THE ASSESSEE HAD ENCLOSED STATEMENTS IN ANNEXURE B GIVING THE DETAILS OF HOUS E HOLD EXPENDITURE. THE LD. AR REFERRED PAGE NOS. 51 AND 52 , 130 AND 131, 135 AND 136 AND 41 AND 42 OF THE PAPER BOOK FILED ON BEHALF OF THE ASS ESSEE. THESE ARE COPIES ITA NO. 5645/DEL/2013 12 OF AFFIDAVIT OF THE ASSESSEE EXPLAINING DEPOSITS AN D WITHDRAWALS BEFORE THE AO, REMAND REPORT, HOUSE HOLD WITHDRAWALS ETC. REFE RRED ABOVE. 9. LD. AR SUBMITTED FURTHER THAT MONEY IN C ASH KEPT WITH ASSESSEE FOR A LONG TIME IS NOT THE CONCERN OF THE AO. IN SU PPORT, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS :- 1. S. R. VENKATA RATNAM. V. COMMISSI ONER OF INCOME TAX (1981)127 ITR 807 (KARNATAKA) 127 ITR 807 2. COMMISSIONER OF INCOME-TAX V. KULWANT RAI [2007] 291 ITR 36 (DEL) 291 ITR 36 (DEL) 10. LD. DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. SHE SUBMITTED THAT THERE IS NO E VIDENCE ON RECORD TO SUPPORT THE EXPLANATION OF THE ASSESSEE AS FOR WHIC H DEAL AND WHICH LAND MONEY WAS KEPT BY THE ASSESSEE AT RESIDENCE AND ULT IMATELY RE DEPOSITED IN HIS BANK ACCOUNT AS THE DEALINGS COULD NOT BE MATER IALIZED. SHE SUBMITTED THAT NO NEXUS HAS BEEN ESTABLISHED BETWEEN THE WITH DRAWALS OF DEPOSIT AND LAND DEAL. THUS EXPLANATION OF THE ASSESSEE IN TH IS REGARD HAS NO SUBSTANCE. SHE PLACED RELIANCE ON THE FOLLOWING DEC ISIONS :- 1. COMMISSIONER OF INCOME-TAX V. MANICK SONS (1969) 74 ITR 1 (SC) 2. ACIT VS GURSHAUT ROTARY COMPRESSORS LTD. (2009) 315 ITR 337 (AT) 3. CIT VS. TAJINDER SINGH HUF (2012) 342 ITR 295 (P & H) ITA NO. 5645/DEL/2013 13 11. SHE SUBMITTED FURTHER THAT THE DECISIONS REL IED UPON BY THE LD. AR HAVING DISTINGUISHABLE FACTS ARE NOT RELEVANT IN TH E PRESENT CASE. 12. IN THE REJOINDER THE LD. AR SUBMITTED THAT THE DECISIONS RELIED UPON BY THE LD. DR HAVING DISTINGUISHABLE FACTS AND AS S UCH ARE NOT HELPFUL TO THE REVENUE. 13. CONSIDERING THE ABOVE SUBMISSION WE FIND TH AT THE AUTHORITIES BELOW HAVE DISBELIEVED THE EXPLANATION OF THE ASSESSEE AB OUT THE DEPOSITS OF RS. 52,60,000/- IN HIS BANK ACCOUNT WITH HDFC BANK, JA NAK PURI, NEW DELHI DURING THE YEAR ON THE BASIS THAT THE ASSESSEE IN S UPPORT OF HIS EXPLANATION IN THIS REGARD COULD NEITHER EXPLAIN WHERE WAS THE CASH PARKED DURING THE PERIOD BETWEEN WITHDRAWALS OF THE AMOUNT AND RE DEP OSITING THE SAME NOR COULD FILE ANY EVIDENCE OF HIS CLAIM THAT THE CASH WAS WITHDRAWN FOR AN IMPENDING PURCHASE OF AGRICULTURAL LAND. THE EXPLAN ATION OF THE ASSESSEE AS DISCUSSED ABOVE REMAINED THAT HE HAD WITHDRAWN RS. 55,65,000/- IN CASH FROM HIS BANK ACCOUNT ON VARIOUS DATES AS HE WAS IN ADVANCE NEGOTIATIONS FOR PURCHASE OF THREE DIFFERENT PIECES OF AGRICULTU RAL LAND, HOWEVER AS THE DEALS FOR THREE PIECES OF AGRICULTURAL LAND FAILED TO MATERIALIZE HE DEPOSITED BACK RS. 52,60,000/- OUT OF THE AFORESAID WITHDRAWA LS OF RS. 54,65,000/-. THERE WAS PERIOD RANGING FROM 123 DAYS TO 8 DAYS FO R PARKING THE MONEY WITH ASSESSEE AFTER WITHDRAWAL. FURTHER EXPLANATION OF THE ASSESSEE REMAINED THAT THE WITHDRAWALS AND THE DEPOSITS MENT IONED ARE ALL ACCOUNTED FOR IN THE CASH BOOK FURNISHED BEFORE THE LD. CIT(A) WHICH WAS ITA NO. 5645/DEL/2013 14 SUBJECTED TO REMAND REPORT OF THE AO. IT WAS ALSO EXPLAINED THAT THE ENTRIES WERE EXCLUSIVE OF HOUSE HOLD WITHDRAWALS. W E FIND THAT THERE WAS CASH DEPOSITS IN THE BANK ACCOUNT ON 17.11.2009, 19 .2.2010, 23.3.2010 AND 25.3.2010 AGGREGATING TO RS. 52,60,000/- WHICH ARE CLEARLY COVERED BY EARLIER WITHDRAWALS OF RS. 54,65,000/-. THUS THERE IS NO REASON TO DOUBT THE EXPLANATION OF THE ASSESSEE THAT THE DEPOSITS WERE FROM THE EARLIER WITHDRAWALS . THE PERIOD OF PARING THE MONEY WITHDR AWN RANGING FROM 123 DAYS TO 8 DAYS IS ALSO NOT SO LONG TO DOUBT THE EXP LANATION OF THE ASSESSEE THAT THE MONEY WAS KEPT FOR THE PURCHASE OF LAND FO R WHICH DEALING WAS GOING ON BUT ULTIMATELY COULD NOT BE MATERIALIZED. IT IS PREROGATIVE OF THE ASSESSEE TO KEEP THE MONEY WITH HIM OR IN HIS SAVIN G BANK ACCOUNT AND WHEN THE SOURCE OF DEPOSIT HAS BEEN EXPLAINED BY WA Y OF WITHDRAWAL FROM HIS OWN BANK ACCOUNT THE SAID PREROGATIVE OF THE AS SESSEE CANNOT BE QUESTIONED. THERE IS HOWEVER A NEED TO VERIFY THE C LAIM OF THE ASSESSEE THAT THESE WITHDRAWALS FROM THE BANK WERE KEPT INTA CT AND WERE NOT USED FOR HOUSE HOLD EXPENDITURE AS THE ENTRIES ACCOUNTED FOR IN THE CASH BOOK MAINTAINED IN THIS REGARD FURNISHED BY THE ASSESSEE WERE EXCLUSIVE OF HOUSE HOLD WITHDRAWALS. WE THUS SET ASIDE THIS ASPECT OF THE EXPLANATION FOR VERIFICATION TO THE FILE OF THE AO AND IF THE AO FI NDS THAT HOUSE HOLD WITHDRAWALS WERE SEPARATELY MAINTAINED BY THE ASSES SEE, HE WILL ACCEPT THE EXPLANATION OF THE ASSESSEE REGARDING THE SOURCE OF THE DEPOSITS OF RS. 52,60,000/- AND DELETE THE ADDITION IN QUESTION. IT IS NEEDLESS TO MENTION ITA NO. 5645/DEL/2013 15 OVER HERE THAT WHILE VERIFYING THE ABOVE CLAIM OF T HE ASSESSEE REGARDING MAINTENANCE OF HOUSE HOLD EXPENDITURE SEPARATELY TH E AO WILL AFFORD ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 14. IN THE RESULT GROUND NO. 2 IS ALLOWED FO R STATISTICAL PURPOSES. CONSEQUENTLY APPEAL IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN CO URT ON 31 ST JANUARY, 2014. SD/- SD/- (G.D. AGRAWAL) ( I.C. SUDHIR ) VICE PRESIDENT JUDICIAL MEMBER DATED 31 ST JANUARY, 2014 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR, ITAT