ITO, New Delhi V. Sh. Satish Kumar Sharma (HUF), New Delhi

ITA 806/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4027 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 24-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SINHA
• Assessee Lawyers: R B ARORA
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `G : NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.806/DEL./2010 (ASSESSMENT YEAR : 2005-06) ITO, WARD 33(4), VS. SHRI SATISH KUMAR SHARMA(HU F), NEW DELHI. 14A/57, 1 ST FLOOR, W.E.A., KAROL BAGH, NEW DELHI. (PAN/GIR NO.AAMHS8485F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.B. ARORA, CA REVENUE BY : SHRI A.K. SINHA, SR.DR ORDER PER K.D. RANJAN: AM THIS APPEAL BY THE ASSESSEE FOR AY 2005-0 6 ARISES OUT OF THE ORDER OF THE CIT(A)- XXVI, NEW DELHI. 2. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OF RS.14 LAKH BY HOLDING THAT THE DEPOSITS WERE MADE OUT OF AVAILABL E CASH BALANCE OF RS.11.49 LAKHS. THE RELEVANT GROUND OF APPEAL IS REPRODUCED AS UNDER: LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .14,00,000/- BY HOLDING THAT THE DEPOSITS WERE MADE OUT OF THE AVAILABLE CASH BA LANCE OF RS.11.49 LAKHS WITH THE APPELLANT AND THE AO HAD ACCEPTED THAT THIS CAS H BALANCE WAS AVAILABLE WITH THE APPELLANT WITHOUT CONSIDERING THE FACT THAT THE AO HAD NOT ACCEPTED THIS SUBMISSION OF THE ASSESSEE AND HAD ACTUALLY REJECTE D THE SAME. 2. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT T HE AO RECEIVED INFORMATION UNDER AIR THAT A SUM OF RS.14 LAKHS WAS DEPOSITED BY THE ASSESSEE IN HIS BANK ACCOUNT MAINTAINED WITH ALLAHABAD BANK, PAHAR GANJ, NEW DEL HI. THE AO INITIATED PROCEEDINGS U/S 147 BY ISSUE OF NOTICE U/S 148 OF THE I.T. ACT. IN RESPONSE THERETO, THE ASSESSEE SUBMITTED VIDE HIS LETTER DATED 11.2.2008 THAT THE RETURN OF INCOME FILED BY HIM ON 1.8.2005 MIGHT BE TREATED AS HAVING BEEN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. ITA NO.806/DEL./2010 (AY : 2005-06) 2 THE ASSESSEE IS ENGAGED IN BUSINESS OF COMMISSION I N AUTO MARKET AND DERIVES INCOME FROM COMMISSION AND BANK INTEREST. THE AO ASKED TH E ASSESSEE TO EXPLAIN THE SOURCE OF SUCH CASH DEPOSIT IN THE BANK ACCOUNT. THE ASSESSE E SUBMITTED VIDE HIS LETTER DATED 21.11.2008 THAT THE CASH DEPOSITED BY HIM ON VARIOU S DATES WAS OUT OF CASH AVAILABLE WITH HIM. THE ASSESSEE FILED STATEMENT OF AFFAIRS AS O N 31.3.2002 WHICH SHOWED CASH IN HAND AT RS.9,86,198/- AND BANK BALANCE AS NIL. THE AO E XAMINED THE STATEMENT OF AFFAIRS AS ON 31.3.2002, 31.3.2003, 31.3.2004 AND ALSO ON 31.3.20 05. HE WAS OF THE VIEW THAT THERE WAS NO BALANCE IN THE BANK OF THE ASSESSEE AS ON 3 1.3.2002, 31.3.2003 AND 31.3.2004. HE FURTHER NOTED THAT CASH IN HAND INCREASED FROM R S.63,230/- TO RS.11,49,879/- AS ON 31.3.2004. THE ASSESSEE DECLARED HIS NET INCOME OF RS.1,04,560/- FOR AY 2005-06 AND OUT OF WHICH HE HAD DEPOSITED RS.20,000/- IN PPF AN D AMOUNT OF RS.84,560/- WAS LEFT WITH HIM FOR MEETING HIS EXPENSES FOR RELEVANT ASSE SSMENT YEAR. THE ASSESSEE HAD DECLARED INCOME FOR AY 2004-05 AT RS.88,250/- OUT O F WHICH HE DEPOSITED RS.25,000/- IN PPF AND WAS LEFT WITH RS.63,250/-. SIMILARLY, FOR AY 2003-04, THE DECLARED INCOME WAS RS.76,290/- AND FOR AY 2002-03, IT WAS RS.48,550/-. FROM THESE DETAILS, THE AO CAME TO CONCLUSION THAT DEPOSIT IN THE BANK ACCOUNT WERE NO T EXPLAINABLE. THE CASH IN HAND HAD EXCEEDED THE DECLARED INCOME FOR RESPECTIVE YEARS. THIS LED TO BELIEVE HIM THAT THE ASSESSEE HAD COOKED UP STORY SO AS TO PROVE THE GEN UINENESS OF CASH DEPOSITS IN HIS SAVINGS BANK ACCOUNT. THE AO, THEREFORE, REJECTED THE CLAIM OF THE ASSESSEE AND TREATED THE AMOUNT OF RS.14,00,000/- AS UNEXPLAINED CASH CR EDIT. 3. BEFORE THE CIT(A), IT WAS PLEADED THAT ADDITION HAS BEEN MADE FOR THE AMOUNT DECLARED BY THE ASSESSEE IN THE BALANCE SHEETS FOR THE EARLIER YEARS WHICH WERE FILED/PLACED IN FILE OF AO ALONG WITH RETURN OF INC OME/WEALTH FOR VARIOUS YEARS. THE DOCUMENTS FILED BY THE ASSESSEE BEFORE AO HAVE NOT BEEN CONSIDERED. THE INFORMATION AVAILABLE ON RECORD WAS TWISTED AND MISINTERPRETED TO ASSESS THE FIGURE OF INCOME. HE ALSO SUBMITTED THAT ADDITION HAS BEEN MADE U/S 68. RELYING ON VARIOUS DECISIONS, IT WAS SUBMITTED THAT ADDITION U/S 68 CAN NOT BE MADE IN T HE CASE OF THE ASSESSEE AS ASSESSEE WAS NOT MAINTAINING BOOKS OF ACCOUNT. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE OBSERVED THAT THE AO HAD APPRECIATE D THAT CASH IN HAND OF RS.11,49,879/- WAS AVAILABLE WITH THE ASSESSEE. HE WAS OF THE O PINION THAT ONCE THE AO HAD ACCEPTED THE FACT THAT OPENING CASH BALANCE OF RS.11,49,000/ - WAS AVAILABLE AS ON 31.3.2004 WHICH ITA NO.806/DEL./2010 (AY : 2005-06) 3 WAS EXPLAINED BY THE STATEMENT OF AFFAIRS FILED WIT H THE DEPARTMENT OVER LAST MANY YEARS ALONG WITH RETURN OF INCOME/WEALTH, IT WAS NOT FAI R ON THE PART OF THE AO TO DISREGARD THE COMPUTATION OF EARLIER YEARS WITHOUT DRAWING ANY AD VERSE FINDING IN RESPECT THERETO. HE ACCORDINGLY DELETED THE ADDITION MADE BY AO. 4 BEFORE US, LD.SR.DR SUBMITTED THAT CIT(A) IS NOT CORRECT IN HOLDING THAT AO HAD APPRECIATED THAT CASH IN HAND OF RS.11,49,879 WAS A VAILABLE WITH THE ASSESSEE. THE AO HAD DOUBTED THE VERY EXISTENCE OF CASH WITH HIM. I N THE ASSESSMENT ORDER, HE HAS RECORDED FINDING THAT IT WAS DIFFICULT TO BELIEVE T HAT CASH IN HAND HAD INCREASED FROM ONE YEAR TO ANOTHER YEAR, DECLARED INCOME FOR RESPECTIV E ASSESSMENT YEAR. THEREFORE, THE CIT(A) HAD ALLOWED THE CLAIM OF THE ASSESSEE WITHOU T APPRECIATING THE FACTS BROUGHT ON RECORD BY THE AO. ON THE OTHER HAND, LD.AR SUPPORT ED THE ORDER OF THE CIT(A). HE SUBMITTED THAT CASH IN HAND HAS BEEN DECLARED IN TH E RETURN OF INCOME AND WEALTH TAX WHICH HAS NOT BEEN APPRECIATED BY THE AO. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM ABOVE FACTS, IT IS CLEAR THAT AO HAS HELD THA T IT WAS DIFFICULT TO ACCEPT THAT CASH OF RS.14 LAKHS HAS BEEN DEPOSITED OUT OF THE DECLARED INCOME. AT THE SAME TIME, THE CONTENTION OF THE ASSESSEE IS THAT AO HAS TOTALLY I GNORED THE RETURN OF INCOME FILED BY THE ASSESSEE. THE CIT(A), IN OUR CONSIDERED OPINION, H AS GONE WRONG IN SAYING THAT AO HAD APPRECIATED THE EXISTENCE OF CASH OF RS.11,49,000/- . THE AO NOWHERE IN THE ASSESSMENT ORDER HAD COME TO A CONCLUSION THAT ASSESSEE WAS HA VING CASH IN HAND OF RS.11,49,000 AS ON 31.3.2004. HOWEVER, THE CONTENTION OF THE ASSES SEE IS THAT AMOUNT IS EXPLAINABLE WITH REFERENCE TO THE STATEMENT OF AFFAIRS FILED ALONG W ITH THE RETURN OF INCOME. IN VIEW OF THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO WITH THE DIRECTIONS TO EXAMINE T HE CONTENTIONS OF THE ASSESSEE ABOUT THE AVAILABILITY OF CASH WITH REFERENCE TO THE INCOME ADMITTED AND THE EXPENDITURE THAT WOULD HAVE BEEN MADE BY HIM FOR MEETING HIS FAMILY EXPENS ES. HE WILL ALSO EXAMINE THE GENUINENESS OF CASH AVAILABLE WITH HIM AS SHOWN IN STATEMENT OF AFFAIRS. THE AO WILL PROVIDE THE ASSESSEE A REASONABLE OPPORTUNITY OF BE ING HEARD. WE ORDER ACCORDINGLY. ITA NO.806/DEL./2010 (AY : 2005-06) 4 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. ORDER PRONOUNCED IN OPEN COURT ON 30.04.2010. SD/- SD/- (R.P. TOLANI) (K.D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, APRIL 30, 2010. SKB COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVI, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR/ITAT