Uday Bahadur, New Delhi V. DCIT, New Delhi

ITA 6076/DEL/2013

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3220 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 08-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHA KATYAL NARAN G
• Keywords: Business income; Salary income; Additional evidence
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 6076/DEL/2013 (ASSESSMENT YEAR: 2009-10) UDAY BAHADUR, C-424, GROUND FLOOR, DEFENCE COLONY, NEW DELHI VS. DCIT, CIRCLE 1 (1), NEW DELHI PAN NO. AAHPB4426A APPELLANT RESPONDENT ASSESSEE BY SH. RAHUL KHARE, ADVOCATE REVENUE BY MS. RADHA KATYAL NARANG, JR. DR DATE OF HEARING 03/11/2020 PRONOUNCEMENT ON 04 /11/2020 ORDER PER K. NARASIMHA CHARRY, JM CHALLENGING THE ORDER DATED 28.08.2013 PASSED BY LE ARNED COMMISSIONER OF INCOME-TAX (APPEALS)-IV, NEW DELHI (CIT(A)) FOR ASSESSMENT YEAR 2009-10, SHRI UDAY BAHADUR (ASSESS EE) FILED THIS APPEAL. 2. ASSESSEE IS AN INDIVIDUAL AND AN EMPLOYEE OF AMI REY GAN INDOREAL PVT. LTD. (A JOINT VENTURE COMPANY) (EARLIER KNOWN AS INDOREAL INFRASTRUCTURE PVT. LTD.) AND ALSO A COPARCENER IN SURAJ S.J. BAHADUR HUF 2 ORCHARDS. FOR THE AY 2009-10 HE HAS FILED THE RETUR N OF INCOME ON 29.03.2011 DECLARING INCOME OF RS. 1,08,00,000/-. AO RECEIVED INFORMATION THROUGH AIR, THAT THERE IS CASH DEPOSIT OF RS. 23,34,400/- IN THE BANK ACCOUNT OF THE ASSESSEE. ASSESSEE WAS ASKE D TO PROVIDE DETAILS OF CASH DEPOSIT OF RS.23,34,400/- IN HIS SAVING BAN K A/C FOR WHICH ANNUAL INFORMATION RETURN WAS RECEIVED. ASSESSEE, VIDE LET TER DATED 15.12.11, SUBMITTED COPIES OF HIS BANK STATEMENTS AND ALSO SU BMITTED THE DETAILS OF CASH RECEIPTS OF RS.25 LAKHS WHICH HE CLAIMED TO HAVE RECEIVED ON BEHALF OF SURAJ S.J. BAHADUR (HUF). ON BEING ASKED TO EXPLAIN THE NATURE OF TRANSACTION BETWEEN HIM AND HUF, ASSESSEE REPLIE D THAT HE HAS RECEIVED THIS AMOUNT ON BEHALF OF SURAJ S.J. BAHADU R (HUF) ON ACCOUNT OF SALE PROCEEDS OF TIMBER AND FOLIAGE TO SHRI KASHMIR A SINGH, THE CONTRACTOR, WITH WHOM HUF HAS UNDERTAKEN AN AGREEME NT, DURING THE PREVIOUS YEAR RELEVANT TO THIS ASSESSMENT YEAR. HE FURTHER STATED THAT HE HAS BEEN MANAGING THE AFFAIRS OF THE HUF AS A SOLE MALE COPARCENER. 3. AO NOTED THAT DURING THE SCRUTINY PROCEEDINGS, T HE ASSESSEE ALSO SUBMITTED FORM NO. 16 AND A BRIEF NOTE ON HIS INCOM E AND GAVE A DECLARATION THAT HE HAS ONLY SALARY INCOME FROM HIS EMPLOYER I.E. M/S AMIREY GAN INDOREAL PVT. LTD. ASSESSEE FURTHER SUB MITTED THAT HE HAS NO BUSINESS INCOME, THEREFORE, HE DOES NOT MAINTAIN AN Y BOOKS OF ACCOUNTS AND CONSEQUENTLY, NEITHER P&L A/C, BALANCE SHEET AN D TAX AUDIT REPORT NOR THE DETAILS OF REGISTERED OFFICE, CORPORATE OFF ICE, FACTORY GODOWNS, GUEST HOUSE ETC. COULD BE SUBMITTED. ASSESSEE WAS A SKED TO PROVIDE DETAILS LIKE TOTAL SALES OF THE ORCHARD DURING THE YEAR 2008-09, PARTY- WISE DETAILS OF THE SALES, WHEN THIS STAMP PAPER WA S PURCHASED AND EXECUTED, BANK STATEMENT OF SHRI SURAJ S.J. BAHADUR (HUF) FOR THE YEAR 2008-09, 2007-08 AND 2006-07 ETC. 3 4. IT APPEARS THAT THE ASSESSEE SUBMITTED THE DETAI L OF CASH RECEIPTS FROM SHRI KASHMIRA SINGH OF RS.25 LAKHS INTO THE AC COUNT OF SHRI UDAY BAHADUR, AND ALSO SUBMITTED THEREWITH A CONFIRMATIO N DATED 09.12.11 FROM SHRI SURAJ S.J. BAHADUR, KARTA OF HUF. IN THE CONFIRMATION, THE KARTA HAS STATED THAT THE RECEIPTS FROM THE SALE PROCEEDS OF TIMBER BY HUF I.E. SURAJ S.J. BAHADUR (HUF) HAS BEEN DEPOSITED IN HIS SONS ACCOUNT WHO IS THE COPARCENER IN HUF. AO, HOWEVER, OBSERVED THAT I N THIS CONFIRMATION LETTER KARTA OF HUF HAS NOWHERE STATED THAT SHRI UD AY BAHADUR WILL BE THE SOLE OWNER OF THIS AMOUNT I.E. RS.25 LAKHS AND CAN USE IT AS HE LIKE AND THAT HE HAS ONLY DECLARED ABOUT THE DEPOSIT OF THE SALE PROCEED IN SHRI UDAV BAHADURS ACCOUNT AND HAS NOT GIVEN ANY P OWER OF ATTORNEY TO SHRI UDAV BAHADUR TO MANAGE THE AFFAIRS OF HUF AS H AS BEEN CLAIMED BY SHRI UDAV BAHADUR IN HIS SUBMISSIONS. AO FURTHER O BSERVED THAT THE ASSESSEE ALSO SUBMITTED A COPY OF AGREEMENT VIDE LETTER DATED 15.12.11 FOR SALE OF TIMBER AND FOLIAGE BETWEEN SHRI KASHMIRA SINGH, THE CONTRACTOR, AND HUF, THE PERIOD OF AGREEMENT WAS FROM 29.06.08 TO 31.10.08, ON SCRUTINY OF THE AGREEMENT, IT WAS FOUND THAT THE AGREEMENT IS BETWEEN THE CONTRACTOR AND HUF, THEREFORE, THE TO TAL AMOUNT OF CONSIDERATION ON SALE OF TIMBER SHOULD HAVE BEEN DEPOSI TED INTO THE ACCOUNT OF HUF NOT IN THE PERSONAL SAVING ACCOUNT OF S HRI UDAY BAHADUR, T HE SAID CONTRACT IS NEITHER REGISTERED WITHANY NOTA RY NOR IS WITNESSED BY TWO WITNESSES AT THE TIME OF ITS EXECUTION, AND, THEREFORE, IT IS ONLY ANAFTERTHOUGHT OF THE ASSESSEE TO AVOID TAX. AO, HO WEVER, NOTED THAT THE ASSESSEE STATED VIDE LETTER DATED 19.12.11 THAT THIS STAMP PAPERWAS PURCHASED BEFORE THE EXECUTION OF THE AGREEMENT AND EXECUTED AND SIGNED ON THE DATE OF EXECUTION.ACCORDING TO AO,IN THAT CASE ALSO, IT MUST HAVE BEEN WITNESSED BY TWO PERSONS AND SHOULD HAVE BEEN GOT STAMPEDWITH NOTARY TO MAKE IT A LEGAL DOCUMENT. THE REFORE, THIS AGREEMENT IS NOT A LEGAL DOCUMENT AND IS NOTACCEPTA BLE. 4 5. AO RECORDED SEVERAL REASONS TO HOLD THAT THE REC EIPT OF RS. 25,00,000/- CANNOT BE AGRICULTURAL INCOME AND WHY I T COULD BE THE INCOME OF HUF BECAUSE IT WAS DEPOSITED IN THE ACCOU NT OF THE ASSESSEE, INSTEAD OF THE ACCOUNT OF HUF WITH CENTUR ION BANK OF PUNJAB. AO FURTHER DOUBTED THE CLAIM OF THE ASSESS EE THAT HE HAS BEEN MANAGING THE AFFAIRS OF HUF IN THE ABSENCE OF ANY SUPPORTING DOCUMENT. ON THIS SCORE, TOTAL SALE PROCEEDS OF TI MBER AND FOLIAGE OF RS.25,00,000/- WAS ADDED BACK TO THE INCOME OF T HE ASSESSEE. IT IS PERTINENT TO NOTE THAT IN THE LIGHT OF THE SUBMISSI ONS MADE AND MATERIAL PRODUCED BY THE ASSESSEE, IN SUPPORT OF HI S CONTENTION THAT THE RECEIPT BELONGS TO THE HUF, BUT TO HIM INDIVIDU ALLY, AO, IN HIS ORDER STATED THAT I N ORDER TO PROTECT THE INTEREST OF THE REVENUE, NOTICE U/S 142(1) OF THE INCOME TAX ACT, 1961, WAS ISSUED TO THE SURAJ S.J. BAHADUR (HUF) TO FILE ITS RETURN OF INCOME BEC AUSE THE HUF HAS NOT BEEN FILING ITS RETURN OF INCOME BY TREATING RE CEIPT OF RS.25 LAKHS AS AGRICULTURAL INCOME ANDPROTECTIVE ASSESSMENT IS MADE IN THIS CASE IN THE HANDS OF SHRI UDAY BAHADUR TO TAX NON-AGRICU LTURAL INCOME AS PER THE PROVISIONS OF THE ACT TILL A SUBSTANTIVE AS SESSMENT IS MADE IN THE HANDS OF HUF AFTER SUBMISSION OF RETURN OF INCO ME BY HUF.AO FURTHER MADE AN ADDITION OF RS.10,93,283/- TREATING THE INCOME AS DEEMED INTEREST INCOME OF SURAJ S.J. BAHADUR HUF. 6. WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND OFFERED TO PRODUCE CERTAIN DOCUMENTS, AO OBJECTED T HE SAME AND THE CIT(A) ALSO DECLINED TO RECEIVE THE SAME. THEN THE LD. CIT(A) PROCEEDED TO APPRECIATE THE FINDINGS OF THE AO AND CONFIRMED THE ADDITION OF RS. 25 LAKHS ON THE SIMILAR GROUNDS WHICH FORMED THE BASIS FOR THE AO TO MAKE 5 ADDITION. IN RESPECT OF THE ADDITION OF RS.10,93,2 83/- TREATING THE INCOME AS DEEMED INTEREST INCOME OF SURAJ S.J. BAHA DUR HUF, LD. CIT(A) OBSERVED THAT THE AO HAS MADE THE ADDITION ON ACCOU NT OF INTEREST INCOME BY PRESUMING THAT HAD HUF DEPOSITED THE AMOU NT IN THE BANK ACCOUNT, IT WOULD HAVE EARNED THE INTEREST INCOME, BUT AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO ESTABLISH THAT THE APPELLANT HAS EARNED ANY INTEREST INCOME AND, THEREFORE, THE ADDITION WA S MADE WITHOUT ANY BASIS AND SUCH TYPE OF ADDITIONS WHICH ARE BASED ON ASSUMPTION ARE NOT PERMISSIBLE UNDER THE LAW. ON THIS PREMISE, THE ADD ITION OF RS.10,93,283/- MADE ON ACCOUNT OF DEEMED INTEREST W AS DIRECTED TO BE DELETED. 7. ARGUMENT OF THE LD. AR IS TWOFOLD. FIRSTLY THAT HAVING OBSERVING THAT NOTICE U/S 142(1) OF THE INCOME TAX ACT, 1961, WAS ISSUED TO THE SURAJ S.J. BAHADUR (HUF) TO FILE ITS RETURN OF INCO ME BECAUSE THE HUF HAS NOT BEEN FILING ITS RETURN OF INCOME BY TREATING RE CEIPT OF RS.25 LAKHS AS AGRICULTURAL INCOME AND HAVING MADE THE PROTECTIVE ASSESSMENT IN THE HANDS OF ASSESSEE TO TAX NON-AGRICULTURAL INCOME AS PER THE PROVISIONS OF THE ACT TILL A SUBSTANTIVE ASSESSMENT IS MADE IN THE HANDS OF HUF AFTER SUBMISSION OF RETURN OF INCOME BY HUF, AO FAI LED TO TAKE THE ISSUE TO THE LOGICAL CONCLUSION BY TAKING STEPS AGAINST T HE HUF AND BECAUSE OF THE ABSENCE OF THE SUBSTANTIVE ASSESSMENT ANYWHERE, THE PROTECTIVE ASSESSMENT CANNOT BE SUSTAINED. SECONDLY THAT WHEN THE AO REALIZED THAT THERE WAS NEED OF ONLY PROTECTIVE ASSESSMENT I N THE HANDS OF ASSESSEE WHEREAS THE SUBSTANTIVE ASSESSMENT HAS TO BE MADE IN THE HANDS OF HUF, THE AUTHORITIES BELOW ARE NOT JUSTIFI ED IN PREVENTING THE ASSESSEE FROM PRODUCING THE EVIDENCE TO SHOW THAT T HE RECEIPT IN FACT PERTAINS TO THE HUF. 6 8. LD. DR, PER CONTRA, SUBMITTED THAT THE ASSESSEE FAILED TO EXPLAIN THE REASONS FOR NOT PRODUCING THE MATERIAL SOUGHT T O BE PRODUCED BY WAY OF ADDITIONAL EVIDENCE BEFORE THE AO AND ALSO T HE CIRCUMSTANCES DOUBTED BY THE AUTHORITIES BELOW AND, THEREFORE, TH E CIT(A) IS JUSTIFIED IN REFUSING TO ADMIT THE ADDITIONAL EVIDENCE AND CO NFIRMING THE ASSESSMENT ORDER. 9. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. IT IS AN ADMITTED FACT THAT I N THE ASSESSMENT ORDER, AO OBSERVED THAT NOTICE U/S 142(1) OF THE INCOME TA X ACT, 1961, WAS ISSUED TO THE SURAJ S.J. BAHADUR (HUF) TO FILE ITS RETURN OF INCOME BECAUSE THE HUF HAS NOT BEEN FILING ITS RETURN OF I NCOME BY TREATING RECEIPT OF RS.25 LAKHS AS AGRICULTURAL INCOME ANDPR OTECTIVE ASSESSMENT IS MADE IN THIS CASE IN THE HANDS OF SHRI UDAY BAHA DUR TO TAX NON- AGRICULTURAL INCOME AS PER THE PROVISIONS OF THE AC T TILL A SUBSTANTIVE ASSESSMENT IS MADE IN THE HANDS OF HUF AFTER SUBMIS SION OF RETURN OF INCOME BY HUF. IT ALSO GOES UNDISPUTED THAT THE LD . CIT(A), DURING THE APPELLATE PROCEEDINGS ASCERTAINED FROM THE AO AS TO WHETHER ANY NOTICE U/S 142(1) WAS ISSUED IN RESPECT OF S.J. BAH ADUR HUF AND THE AO VIDE HIS REMAND REPORT DATED 23.08.2013 HAS SUBMITT ED THAT NO NOTICE HAS BEEN ISSUED TO M/S SURAJ J. BAHADUR HUF, WHICH MEANS THAT NO ASSESSMENT HAS BEEN MADE IN THE HANDS OF THE SAID H UF. IT IS NOT KNOWN WHY NOTICE U/S 142(1) IN RESPECT OF S.J. BAHA DUR HUF WAS NOT ISSUED AND THE REASON WHY PROTECTIVE ASSESSMENT IS MADE IN THE HANDS OF THE ASSESSEE. 10. IT IS CLEAR FROM THE RECORD THAT HAVING CONSIDE RED THE PLEA OF THE ASSESSEE IN THE LIGHT OF THE MATERIAL PRODUCED BY HIM, LEARNED ASSESSING OFFICER THOUGHT IT FIT TO ISSUE NOTICE UN DER SECTION 142 (1) OF THE ACT IN RESPECT OF SJ BAHADUR HUF AND TILL SUCH TIME THE 7 SUBSTANTIVE ADDITION IS MADE IN THE HANDS OF THE HU F, LEARNED ASSESSING OFFICER MADE PROTECTIVE ADDITION IN THE H ANDS OF THE ASSESSEE. IN SUCH AN EVENT, THERE IS NO REASON AS T O WHY THE LEARNED ASSESSING OFFICER HAD NOT TAKEN THE THINGS TO THEIR LOGICAL CONCLUSION BY MAKING NECESSARY ENQUIRIES AS TO THE NATURE OF T HE RECEIPT VIS A VIS THE HUF AND ALSO WHY THE REQUEST OF THE ASSESSEE TO PERMIT HIM TO PRODUCE THE ADDITIONAL EVIDENCE ON THIS ASPECT WAS RESISTED. 11. WHEN IT HAS COME TO THE NOTICE OF THE LD. CIT(A ) THAT IT IS ONLY THE PROTECTIVE ASSESSMENT THAT IS MADE IN THE HANDS OF THE ASSESSEE IN VIEW OF THE PROPOSED PROCEEDINGS AGAINST THE HUF BY ISSUANCE OF NOTICE UNDER SECTION 142 (1) OF THE ACT TO MAKE SUB STANTIVE ADDITION IN THE HANDS OF THE HUF, AND NO SUCH NOTICE UNDER S ECTION 142 (1) OF THE ACT WAS ISSUED BY THE LEARNED ASSESSING OFFICER , AS ADMITTED BY THE ASSESSING OFFICER IN HIS REMAND REPORT, THE END EAVOUR OF THE LD. CIT(A) SHOULD BE TO ALLOW THE ASSESSEE TO PROVE HIS CONTENTION WITH REFERENCE TO THE DOCUMENT, INSTEAD OF PROCEEDING WI TH THE MATTER AND TO HOLD THAT THE RECEIPT IS TAXABLE IN THE HAND S OF THE ASSESSEE BASING ON CERTAIN CIRCUMSTANCES. WHEN THE ASSESSEE OFFERED THE DIRECT EVIDENCE, FINDINGS OF THE AUTHORITIES BELOW BASING ON THE CIRCUMSTANCES DOES NOT APPEAR TO BE PROPER, INASMUC H AS THE ENDEAVOUR OF THE AUTHORITIES UNDER THE INCOME TAX A CT SHALL BE TO ASSESS THE CORRECT TAX LIABILITY BY AFFORDING AN OP PORTUNITY TO THE ASSESSEE. 12. WITH THIS VIEW OF THE MATTER, WE ARE OF THE CON SIDERED OPINION THAT THE ADDITIONAL EVIDENCE TO BE PRODUCED BY THE ASSESSEE SHALL BE ADMITTED AND A VIEW HAS TO BE TAKEN BY THE LEARNED ASSESSING OFFICER BY PROPER APPRAISAL OF SUCH MATERIAL WITH REFERENCE TO THE SUBMISSIONS MADE BY THE ASSESSEE. WE, THEREFORE, ADMIT THE ADDI TIONAL EVIDENCE, SET 8 ASIDE THE FINDINGS OF THE LD. CIT(A) IN RESPECT OF THE ADDITION OF RS. 25 LACS WHICH THE ASSESSEE CONTENDS TO PERTAIN TO THE HUF, AND REMAND THE ISSUE TO THE FILE OF LEARNED ASSESSING OFFICER TO TAKE A VIEW AFTER APPRECIATING THE MATERIAL ON RECORD AND AFFORDING A N OPPORTUNITY TO THE ASSESSEE TO PUT FORTH HIS CASE ON THIS ASPECT. GROU NDS OF APPEAL OF THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSE. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 04/11/2020. SD/- SD/- (N.K. BILLAIYA) (K. NARSIMHA CHARRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04/11/2020 AKS/-