AI Insights
The case revolves around an appeal by Sanjeev Kumar against the order of the Commissioner of Income Tax (Appeals) which upheld an addition of Rs.18,75,000 to his income for the assessment year 2011-12. The addition was made under section 69 of the Income Tax Act, which deals with unexplained investments, for cash deposits made towards the repayment of a home loan. The Tribunal found that the addition was incorrectly made under section 69, as the deposits were not unexplained investments but repayments of a loan. The Tribunal also noted procedural lapses in the handling of the case by the lower authorities, including the incorrect application of the charging section and failure to properly address the assessee's explanations and evidence.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 113362 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
7 month(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-10-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Next Hearing Date
28-08-2023
Assessment Year
2017-2018
Appeal Filed On
12-03-2023
Judgement Text
I.T.A.No.658/Del/2023 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC” NEW DELHI SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER आ .अ.स ं /.I.T.A No.658/Del/2023 /Assessment Year: 2017-18 Sanjeev Kumar C/o M/s Raj Kumar & Associates, L-7A (LGF), South Extension, Part-II, New Delhi. ब म Vs. ITO Ward 2(3)(2) Bulandshahr. PAN No. AATPK4646E अ Appellant /Respondent िनधा रतीक ओरसे /Assessee by Shri Raj Kumar Gupta, CA राज वक ओरसे /Revenue by Shri Om Prakash, Sr. DR स ु नवाईक तारीख/ Date of hearing: 29.08.2023 उ ोषणाक तारीख/Pronouncement on 18.10.2023 आदेश /O R D E R This appeal has been filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals)-NFAC dated 20.02.2013 for AY 2011-12. Grounds raised by the appellant are as follows: - 1. “That the addition of Rs.18,75,000/- made u/s 69 for cash deposit in home loan account, deposited towards repayment of home loan cannot be made u/s 69, hence the addition made u/s 69 is out-rightly illegal and unwarranted. I.T.A.No.658/Del/2023 2 2. That under the facts and circumstances, in law as well as on merits, the addition of Rs.18,75,000/- being 75% of demonetized currency deposited in joint home loan bank account maintained with wife for payment of flat loan, which is owned in equal ratios by assessee and his wife is illegal and unwarranted, in view of explanation and evidences furnished during assessment. 3. Without prejudice, under the facts and circumstances, the AO erred in law in assuming such cash deposited at Rs.25,00,000/- against correctly Rs.12,91,884/-.” Application of assessee seeking condonation of delay: - 2. I have heard arguments of both the sides on the application of assessee seeking condonation of delay of 295 days in filing appeal before the Tribunal. 3. The Ld. AR submitted that the case was fully taken care of by Shri Gaurav Goel, Bulandshahr and in Form No.35 the e-mail address of said representative was mentioned for communication. He further submitted that after filing appeal before the Ld.CIT(A) no communication was received by Shri Gaurav Goel and the assessee was not aware of passing impugned first appellate order and its communication. The Ld. AR submitted that when the assessee received penalty notice dated 22.02.2023 then he contacted to Shri Gaurav Goel but he refused to handle the matter for the reasons best known to him. Under such circumstances present AR was engaged to handle the penalty case. The Ld. AR further submitted I.T.A.No.658/Del/2023 3 that while preparing the penalty appeal the AR on examination of ITBA portal of assessee came to know that the quantum appeal of the assessee has been dismissed on 23.03.2022. The Ld. AR further submitted that thereafter the assessee came to know about the dismissal of the first quantum appeal by the Ld.CIT(A) on 22.02.2023 and immediately filed appeal before the Tribunal on 13.03.2023. Therefore, delay caused in filing the appeal before the Tribunal is bona fide delay which may kindly be condoned. 4. Replying to the above, the Ld. Sr. DR strongly opposed to the condonation of delay. He vehemently submitted that the affidavit of assessee has been deposed on 18.04.2023. There is no evidence showing non-receipt of first appellate order, the assessee is required to be diligent, vigilant but he proved to be a negligent, litigant and, therefore, there is no sufficient cause explaining the delay. Application seeking condonation may kindly be dismissed. However, he did not controvert that as per Form 35 the e-mail address of communication has been given as charteredaccountantgauravgoelbcr@gmail.com. 5. On careful consideration of above submission, I am of the view that the delay caused in filing appeal before the Tribunal is bona fide delay due to the reasons stated above and beyond control of I.T.A.No.658/Del/2023 4 assessee. The assessee never gets any benefit in filing delayed appeal before the Tribunal except enlargement of controversy and litigation in the present case. Therefore, I find it appropriate to condone the delay in filing appeal before the Tribunal due to the reasons noted above which have not been controverted by the Ld. Sr. DR. Accordingly, delay of 295 days in filing appeal before the Tribunal is condoned and appeal is admitted for consideration and adjudication. 6. On merits, the Ld. Counsel submitted that the Assessing Officer made an addition of Rs.18,75,000/- u/s 69 of the Act on account of cash deposited towards repayment of home loan being 75% of total cash deposit of Rs.24,96,274/- which was incorrectly noted by the Assessing Officer as 25 lakhs. 7. The Ld. AR submitted that the Ld.CIT(A) uphold the addition by merely mentioning that what has been stated by the Assessing Officer in the assessment order and simply by accepting the same in 2-3 lines. Therefore, the first appellate order is not sustainable being cryptic and untenable. 7.1 The Ld. AR submitted that in fact Rs.24,96,274/- were deposited to the joint home loan account of assessee with his wife I.T.A.No.658/Del/2023 5 and 50% EMI of said home loan was contributed by the assessee and his wife equally. The Ld. AR also submitted that out of total deposit of Rs.24,96,274/- the assessee deposited Rs.12,91,883/- and remaining amount of Rs.12,08,116/- was deposited by his wife Smt. Shalini. The Ld. AR submitted that the cash pertaining to wife of assessee amounting to Rs.12,48,137/- was first taken into cash book of assessee on 08.11.2016 and thereafter, the same was deposited to the home loan account in two installments viz. first of Rs.14,46,274/- on 10.11.2016 and second on 12.10.2016 of Rs.10,50,000/-. The Ld. AR submitted that the assessee during the assessment and first appellate proceedings submitted all relevant documentary evidences establishing the source of cash deposits by submitting complete cash book of assessee, affidavit dated 19.12.2019 of father of assessee Shri Kalu Mal stating Rs.20,000/- per month given by father to the assessee, ITR acknowledgement of father Shri Kalu Mal showing returned income of Rs.5,82,894/- for AY 2017-18, confirmation of wife showing returned income of Rs.4,68,820/- for AY 2017-18, joint home loan account and home loan repayment schedule shows that assessee, his father and his wife has sufficient income dividend funds which were accumulated and used for deposit to their joint home loan account. The Ld.AR I.T.A.No.658/Del/2023 6 also submitted that the AO has made addition u/s 69 of the Act which pertains to unexplained investment whereas in the present case the assessee has not made any unexplained investment but he made repayment of loan. Therefore, the view of judgment of Hon’ble ......................the addition made and confirmed under irrelevant and incorrect charging section is not sustainable and part addition sustained by the Ld.CIT(A) cannot be held as valid being bad in law. 8. The Ld. AR further drawing our attention towards PB-II of assessee spread over 42 pages submitted that the assessee has filed confirm ledger account of partnership firms M/s Umang Beverages and M/s Mohan Oil & Cattle Feed and Bihar Milk Foods Pvt. Ltd. showing cash withdrawal of capital and salary in cash and copies of the returns of income for AY 2017-18 of all three said entities showing that their Income Tax payee entities and confirming payment of salary as well as cash withdrawal of capital from both the said partnership firms. The Ld. AR submitted that in view of said confirmations when the computation of income filed by the assessee along with return of income for AY 2017-18 and cash flow statement placed at pages 2 to 4 of assessee’s paper book 1 is seen together then it is amply clear that the assessee has successfully I.T.A.No.658/Del/2023 7 explained the source of cash deposits to the joint home loan account with his wife Smt. Shalini. Therefore, no addition could have been made in the hands of the assessee. 9. The Ld. Counsel submitted that the grievance of assessee may kindly be allowed on both the counts that on merits as well as on the legal position that the Assessing Officer has adopted incorrect charging section of 69 of the Act which pertains to the issue of unexplained investment by the assessee, whereas the assessee has not made any investment by way of depositing cash to his joint home loan bank account with his wife. 10. Replying to the above, the Ld. Sr. DR supported the orders of the authorities below and submitted that merely because the AO has mentioned incorrect charging section of 69 of the Act instead of section 68 of the Act the entire assessment as well as first appellate proceedings do not vitiate. The Ld. Sr. DR further submitted that it is highly unbelievable that the assessee is receiving cash salary and cash capital withdrawal from partnership firm in this era of banking transaction. However, on being asked by the Bench the Ld. Sr. DR did not dispute that the correct figure of cash deposit to the joint home loan account was Rs.24,96,274/- out of which Rs.12,91,883/- were deposited by the assessee out of cash in hand as per cash book I.T.A.No.658/Del/2023 8 and remaining amount of Rs.12,08,116/- was deposited by Smt. Shalini which was explained to the AO during assessment proceedings vide letter dated 28.11.2019 which has also been extracted and reproduced in the assessment order. 11. In the present case, the assessee, his wife Smt. Shalini and his father Kalu Mal are Income tax payee and continuously filing return of income showing sufficient income. The affidavit of Shri Kalu Mal copy of which is available at page 24 of assessee’s PB 1 shows that Shri Kalu Mal had given cash gift of Rs.20,000/- per month during FY 2016-17 totaling to Rs.2,40,000/-. From copy of his return of income available at page 25 shows that his returned income for the relevant year was Rs.5,82,894/- whereas the total cash gift was only Rs.2,40,000/- for the relevant period. Therefore, the authorities below were not correct in dismissing the explanation of the assessee in this regard. Copy of confirmation certificate issued by Smt. Shalini i.e. wife of assessee shows that she has categorically stated that out of total cash deposit Rs.12,08,116/- was given to the assessee by her for deposit to the joint home loan account no.xxx889938. The copy of return of income available at page 27 shows that her returned income was Rs.4,69,820/- which is also not in dispute. I.T.A.No.658/Del/2023 9 12. In my considered opinion, undisputedly the impugned cash deposit was made by the assessee on her own and on behalf of her wife to their joint home loan account as repayment of home loan. Thus, I safely presumed that assessee has not made any investment for acquiring any movable or immovable property. Therefore, the allegation of unexplained investment cannot be made against the assessee invoking the charging section u/s 69 of the Act. From the relevant part of assessment order, I note that the AO has made addition by mentioning charging section as 69 of the Act and Ld.CIT(A) has also upheld the same without any change or without addressing the grievance of the assessee in this regard. 13. In view of judgment of Hon’ble Jurisdictional High Court of Allahabad in the case of Smt. Sarika Jain Vs. CIT in ITA No.435/2008 and order of ITAT Chennai Bench in the case of Smt. Sekar Jayalakshmi Vs. ITO in ITA No.20/Chny/2021 which has been considered and referred by ITAT Delhi Bench in the case of M/s Toffee Agricultural Farms Pvt. Ltd. Vs. ITO dated 18.04.2022 in ITA NO.4903/Del/2019 for AY 2006-07. The coordinate bench of Tribunal held as follows: “3. Learned counsel for the assessee submitted that the orders of the authorities below are unjust, arbitrary and against the principles of law. He submitted that in I.T.A.No.658/Del/2023 10 the present case the Assessing Officer had made assessment u/s 69C of the Act and he had referred the matter to DVO U/s 142A of the Act. He contended that the reference u/s 142A can be made for the purpose of ascertaining the correct value of investment referred to in section 69 or 69B. However, Section 69C is not mentioned in the proviso. He placed reliance on the judgment of Hon’ble Delhi High Court rendered in the case of CIT Vs. Aar Pee Apartments (P) Ltd. 319 ITR 276 to buttress the contention that reference is bad in law. Learned counsel further submitted that even otherwise also the Assessing Officer did not make any inquiry regarding the correct fair market value of the land. In support of the contention that if inquiry is not made by the assessing authority the assessment is vitiated, learned counsel for the assessee has placed reliance on the judgment of the Hon’ble Delhi High Court rendered in the case of CIT Vs. Lubtech India Ltd. (2009) 311 ITR 175 (Del). Further reliance was placed on the judgment of the Hon’ble Allahabad High Court rendered in the case of Dinesh Kumar Mittal Vs. ITO (1992) 193 ITR 770 (All). He further submitted that the learned CIT(Appeals) to fill the legal lacuna, regarding assessment made u/s 69C, arbitrarily replaced Section 69B in place of Section 69C, as mentioned in the assessment order. Therefore, he submitted that the action of the learned CIT(Appeals) tantamount to assess a new source of income not forming part of the assessment order. Learned counsel for the assessee placed reliance on the judgment of the Hon’ble Delhi High Court rendered in the case of CIT Vs. Sardari Lal & Co. (2001) 251 ITR 864. Further reliance was placed on the decision of Hon’ble Delhi High Court in the case of CIT Vs. Union Tyres (1999) 240 ITR 556 (Del). Further reliance was placed on the judgment of the Hon’ble Delhi High Court in the case of CIT Vs. Naresh Khattar (HUF) 261 ITR 664. He further placed reliance on the decision of Hon’ble Allahabad High Court rendered in the case of Smt. Sarika Jain Vs. CIT (2017) 84 Taxmann.com 64 (All) to buttress the contention that the learned CIT(Appeals) was not justified in invoking the provisions of Section 69B when the Assessing Officer I.T.A.No.658/Del/2023 11 had invoked the provisions of Section 69C of the Act. Learned counsel also placed reliance on the decision of the Tribunal rendered in the case of Hari Mohan Sharma rendered in ITA No. 2953/Del/2018 to buttress the contention that the words “enhance the assessment” are confined to the assessment reached through a particular process. 4. The learned DR opposed the submissions and supported the orders of the authorities below. He submitted that merely because there was an error in writing Section 69C by the Assessing Officer, would not vitiate the entire proceedings. The Assessing Officer was dealing in substance with the subject matter relating to the investment made by the assessee in immovable property. He submitted that by mistake the Assessing Officer has stated Section 69C, that has been correctly construed to be Section 69B by the learned CIT(Appeals). He submitted that the case laws relied by the learned counsel for the assessee, are distinguishable on facts and circumstances of the present case. 5. I have heard rival submissions, perused the material available on record and gone through the orders of authorities below. The objection of the assessee regarding erroneous reference to the DVO, it was submitted that the Assessing Officer was not empowered to refer the matter to DVO, where the assessment was being made u/s 69C of the Act. In support of this contention, learned counsel for the assessee has placed reliance on various case laws. There is no dispute with regard to the fact that the Assessing Officer in the assessment order has stated addition regarding unexplained expenditure u/s 69C of the Act. The Revenue has not brought on record that mentioning of Section 69C was on account of any typographical error. It is also clear from the assessment order that the Assessing Officer had referred the issue of market value of the property in question u/s 142A of the Act. However, as per Section 142A such reference can be made to ascertain the value of any investment referred to in Section 69 or Section 69B or the value of any bullion, jewellery or any other valuable article referred I.T.A.No.658/Del/2023 12 to in section 69A or Section 69B of the Act. There is conspicuous exclusion of Section 69C. In the present case, reference u/s 142A was not made regarding ascertaining the correct market value of the investment in property. But, it was in fact for the purpose of ascertaining expenditure which the assessee made on the purchases. I find merit into the contention of the assessee that the reference to DVO u/s 142A for the purpose of Section 69C is not valid. 6. Now coming to the question regarding action of the learned CIT(Appeals) to treat the reference u/s 142 for the purpose of Section 69B, I find merit into the contention of the assessee that there is no power conferred upon the learned CIT(Appeals) to assess a particular item under different provision of the Act what the Assessing Officer had done without giving a specific notice to the assessee regarding such action. The Revenue has not brought any material to suggest that the assessee was put to notice by the learned CIT(Appeals) before taking such action. I am of the considered view that law does not permit for such change of provision of law. As per Section 250 of the Act, the learned CIT(Appeals) is empowered to make further inquiry as he thinks fit or may direct the Assessing Officer to make further inquiry and report to the learned CIT(Appeals). As per Section 251(1)(a), in appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment, but there is no such power provided by the law that learned CIT(Appeals) could change the provision of law qua the item of which assessment was made. Therefore, in the absence of such power, learned CIT(Appeals) could not have treated the addition made u/s 69C as the addition made u/s 69B and the same is contrary to the spirit of the Act. Reliance placed by the learned counsel for the assessee on the judgment of the Hon’ble Delhi high Court, rendered in the case of CIT Vs. Aar Pee Apartments (P) Ltd. (supra), has held that from the reading of sub-section (1) of Section 142A, it is clear that legislature referred to the provisions of Section 69, 69A and 69B but specifically excluded 69C. The principle of casus omissus becomes applicable in a situation like I.T.A.No.658/Del/2023 13 this. What is not included by legislature and rather specifically excluded, cannot be interpreted by the Court through the process of interpretation. The only remedy is to amend the provision. It is not the function of the Court to legislate or to plug the loopholes in the law. In the light of the above binding precedent the action of the learned CIT(Appeals) in treating the addition made by the Assessing Officer u/s 69C as have been made u/s 69B is contrary to the law laid down by the Hon’ble Jurisdictional High Court. I, therefore, respectfully following the decision of the Hon’ble Jurisdictional High Court in the case of CIT Vs. Aar Pee Apartments (P) Ltd. (supra), the impugned order is therefore set aside. The addition made u/s 69C on the basis of the report of the DVO by the Assessing Officer deserves to be deleted. Hence, impugned addition is hereby deleted. Grounds of appeal taken by the assessee are allowed accordingly.” 14. In view of foregoing discussion, I reach to a logical conclusion that the complete cash book statement clearly explains the source of cash deposit to the bank account of assessee, wherein the assessee has not only included cash receipts as salary and capital withdrawal from two partnership firms M/s Umang Beverages and M/s Mohan Oil & Cattle Feed and a cash salary from Bihar Milk Foods Pvt. Ltd. and has also reduced the amount of drawings for household expenses. The copy of return of income of wife of assessee Smt. Shalini and father of assessee Shri Kalu Mal co-jointly established that the other family members of assessee are also earning and contributing towards household expenses. Therefore, in my humble understanding the source of cash deposit during I.T.A.No.658/Del/2023 14 demonetization to the bank account of assessee is properly explained by the assessee by way of self speaking documentary evidence and explanation. Secondly, the AO has made addition u/s 69 of the Act which pertains to unexplained investments, whereas the assessee has not made any investment either in movable or any immovable property during the relevant period by way of using cash amount. The Ld.CIT(A) though has given credit of 25% of impugned cash deposit confirming the remaining part of addition but there is no logic of this segregation. From the relevant operative part of first appellate order, I also note that the Ld.CIT(A) has upheld the part addition without mentioning any charging section and impliedly adopting section 69 of the Act in the line of assessment order. Therefore, respectfully following the proposition rendered by the Hon’ble Jurisdictional High Court of Allahabad in the case of Sarika Jain (supra). I have no hesitation to hold that the addition made by the AO by mentioning incorrect and irrelevant charging section is not sustainable and valid being bad in law. Accordingly, grounds of assessee are allowed and AO is directed to delete the entire addition. I.T.A.No.658/Del/2023 15 15. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 18/10/2023 Sd/- (C.M. GARG) JUDICIAL MEMBER Dated: 18.10.2023 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi
Other Referred Cases
Smt. Sarika Jain Vs. CIT, Smt. Sekar Jayalakshmi Vs. ITO, M/s Toffee Agricultural Farms Pvt. Ltd. Vs. ITO, CIT Vs. Aar Pee Apartments (P) Ltd., CIT Vs. Lubtech India Ltd., CIT Vs. Union Tyres, CIT Vs. Naresh Khattar (HUF), Dinesh Kumar Mittal Vs. ITO, Hari Mohan Sharma
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