ITO, New Delhi V. Smt. Sonia Sabhnani, New Delhi

ITA 920/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81644 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 17-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 14-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M M BHASIN
• Keywords: Unexplained cash credit; Additional evidence
• Section: 143(3); 68; 6

Judgement Text

ITA NO. 920/DEL/2013 ASSTT.YEAR: 2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.920/DEL/2013 ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER, VS SONIA SABHNANI, WARD 33(3), 13/10, EAST PATEL NAGAR, NEW DELHI. NEW DELHI. (PAN: BGCPS0097N) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH KUMAR, SR.DR RESPONDENT BY : SHRI M.M. BHASIN, ADV . O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF THE CIT(A)-XXVI, NEW DELHI DATED 26.11.2012 IN APPEAL N O. 214/2009-10 FOR AY 2007-08. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL:- 1. THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.17,94,540/- MADE BY THE AO U/S 68 OF THE INCOME TAX ACT ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN BANK ACCOUNT. 2. THE CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EV IDENCES WHICH WERE NOT SUBMITTED BEFORE THE AO IN VIOLATION OF RULE 46A OF THE IT RULES 1962. ITA NO. 920/DEL/2013 ASSTT.YEAR: 2007-08 2 3. THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FA CT THAT WITHOUT THE CONFIRMATIONS FROM SO CALLED CLIENTS, T HE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. 3. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APPEAL ARE THAT THE ASSESSEE FILED HER RETURN ON 31.3.2008 DECLARING A TOTAL INC OME OF RS.1,24,860 AS INCOME DERIVED FROM BROKERAGE AND OTHER SOURCES. T HE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S 143(2) OF THE IN COME TAX ACT, 1961 (FOR SHORT THE ACT) WAS SERVED ON THE ASSESSEE. ON THE BASIS OF AIR INFORMATION, THE AO NOTICED THAT DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEE DEPOSITED CASH OF RS.17,94,540 IN HER SB ACCOUNT WI TH CENTURION BANK OF PUNJAB AND ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF THIS CASH DEPOSIT. FROM THE SUBMISSIONS OF THE ASSESSEE DATED 8.12.200 9, THE AO OBSERVED THAT THAT THE ASSESSEE DID NOT GIVE ANY EXPLANATION ABOU T THE CASH DEPOSIT BUT SUBMITTED ONLY THE DETAILS OF CASH WITHDRAWALS AND CASH DEPOSITS MADE BY THE HUSBAND OF THE ASSESSEE SHRI H.S. GAUTAM WHO WA S STATED TO BE DEALING IN SHARES. THE AO REJECTED THE EXPLANATION OF THE ASSESSEE AND HELD THAT TO SAFEGUARD THE INTEREST OF THE REVENUE, PROTECTIVE A DDITION IN THE HANDS OF ASSESSEE WAS MADE AMOUNTING TO RS.17,94,540 U/S 68 OF THE ACT COMPETING THE ASSESSMENT U/S 143(3) OF THE ACT. 4. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A), WHICH WAS ALLOWED BY PASSING IMPUGNED ORDER AND THE CIT(A ) HELD THAT THE ITA NO. 920/DEL/2013 ASSTT.YEAR: 2007-08 3 AMOUNT RECEIVED FROM THE CLIENTS FOR FURTHER DEPOSI TS INTO THEIR RESPECTIVE ACCOUNTS DOES NOT FORM PART OF TURNOVER OF THE ASSE SSEE OR HER HUSBAND, AS THEY ONLY GET COMMISSION INCOME PROPORTIONATE TO TH E BUSINESS COLLECTED BY THEM AND THE CIT(A) DELETED THE ADDITION MADE BY TH E AO ON PROTECTIVE BASIS. NOW, THE AGGRIEVED REVENUE IS BEFORE THIS T RIBUNAL WITH THE GROUNDS AS REPRODUCED HEREINABOVE. GROUND NO.2 5. APROPOS GROUND NO.2, LD. DR SUBMITTED THAT THE C IT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDENCES WHICH WERE NOT SUBMI TTED BEFORE THE AO IN VIOLATION OF RULE 46A OF THE IT RULES 1962. LD. CO UNSEL OF THE ASSESSEE REPLIED THAT THE CIT(A) HAS NOT CONTRAVENED PROVISI ONS OF RULE 46A OF THE RULES AS IT IS APPARENT FROM THE IMPUGNED ORDER THA T THE CIT(A) CALLED REMAND REPORT OF THE AO AND THE AO WAS DULY CONFRON TED WITH THE ADDITIONAL EVIDENCE AND COMMENTS OF THE AO WERE ALR EADY CONSIDERED BY THE CIT(A) WHILE ADMITTING AND CONSIDERING THE ADDITION AL EVIDENCE. 6. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS AN D PERUSAL OF THE IMPUGNED ORDER, SPECIALLY FROM PARA 4 TO 5, WE OBSE RVE THAT THE CIT(A) HAS GIVEN AN OPPORTUNITY TO THE AO TO SUBMIT HIS REMAND REPORT AND COMMENTS ON THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSE E DURING THE FIRST APPELLATE PROCEEDINGS. THE CIT(A) HAS ALSO CONSIDE RED REMAND REPORT AND ITA NO. 920/DEL/2013 ASSTT.YEAR: 2007-08 4 REJOINDER FILED BY THE ASSESSEE WHILE ADJUDICATING THE ISSUE AND WE COME TO A CONCLUSION THAT THE CIT(A) HAS ADMITTED AND CONSI DERED ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE BY FOLLOWING DUE PROCEDURE AS STIPULATED IN RULE 46A OF THE RULES. ACCORDINGLY, GROUND NO. 2 OF THE REVENUE BEING DEVOID OF MERITS IS DISMISSED. GROUND NO. 1 & 3 7. APROPOS GROUND NO. 1 & 3, LD. DR SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE IMPUGNED ADDITION MADE BY THE AO U/ S 68 OF THE ACT ON PROTECTIVE BASIS ON ACCOUNT OF UNEXPLAINED CASH CRE DIT FOUND IN THE BANK ACCOUNT OF THE ASSESSEE. THE DR FURTHER CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED IN NOT APPRECIATING THE FACT THAT WITHOUT THE CONFIRMATION FROM SO CALLED CLIENTS, THE CONTENTION OF THE ASSESSEE CANN OT BE CONSIDERED AND ACCEPTED. THE DR SUBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 8. LD. COUNSEL OF THE ASSESSEE REPLIED THAT THE AO IGNORED THE VERY FACTUAL MATRIX THAT THE TOTAL AMOUNT RECEIVED FROM THE CLIENTS IN CASH WAS RS.16,22,140 AND THE SAME WAS FURTHER DEPOSITED INT O THE RESPECTIVE ACCOUNTS OF THE CLIENTS WHICH DOES NOT FORM PART OF THE TURNOVER OF THE ASSESSEE AND HER HUSBAND AS THEY ONLY GOT COMMISSIO N PROPORTIONATE TO THE BUSINESS WHICH THEY HAVE GIVEN TO THEIR FINANCIAL A GENCY. LD. AR ITA NO. 920/DEL/2013 ASSTT.YEAR: 2007-08 5 VEHEMENTLY CONTENDED THAT THE AO MADE ADDITION U/S 68 OF THE ACT ON PROTECTIVE BASIS ON THEIR OWN WHIMS AND FANCIES WHI CH WAS NOT SUSTAINABLE IN THE LIGHT OF DETAILS OF CASH DEPOSITS AND WITHDR AWALS MADE BY THE ASSESSEE FOR AND ON BEHALF OF HER CLIENTS. LD. COUNSEL SUPP ORTED THE IMPUGNED ORDER AND HAS DRAWN OUR ATTENTION TOWARDS OPERATIVE PART OF THE IMPUGNED ORDER. 9. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS AN D CAREFUL PERUSAL OF THE IMPUGNED ORDER, WE OBSERVE THAT THE CIT(A) HAS CONSIDERED REMAND REPORT AS WELL AS REJOINDER OF THE ASSESSEE COUPLED WITH ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE AND THE ADDITIONAL EVIDEN CE ADMITTED BY THE CIT(A) BY RIGHTLY FOLLOWING THE PROCEDURE AS LAID D OWN UNDER RULE 46A OF THE RULES. THE RELEVANT OBSERVATIONS AND FINDINGS OF THE CIT(A) IN PARA 7.1 OF THE IMPUGNED ORDER READ AS UNDER:- 7.1 IN VIEW OF THE ABOVE STATEMENT, I FIND THAT TH E DEPOSITS AGGREGATING TO RS.19,47,667/- STANDS EXPLA INED AND THERE IS NO JUSTIFICATION FOR ANY ADDITION ON A CCOUNT OF UNEXPLAINED CASH DEPOSITS. THE ASSESSING OFFICER HAS MADE AN OBSERVATION IN HIS REMAND REPORT THAT THE T OTAL AMOUNT RECEIVED FROM THE CLIENT IN CASH IS RS.16,22 , 140/- AND WHEREAS THE APPELLANT HAS SHOWN GROSS RECEIPT RS.5,60,400/-. THE ASSESSING OFFICER DID NOT APPREC IATE THAT THE AMOUNT OF RS.16,22,140/- WAS RECEIVED FROM THE CLIENT FOR FURTHER DEPOSITS INTO THEIR ACCOUNT AND IT DOES NOT FORM A PART OF TURNOVER OF THE APPELLANT OR HER HUSBAND. THEY ONLY GET COMMISSION PROPORTIONATE TO THE BUSINESS THEY HAVE GIVEN TO THE ABOVE AGENCY. THERE FORE, THIS OBSERVATION OF THE ASSESSING OFFICER IS OF NO MERIT IN VIEW OF ALL THESE FACTS THE ADDITION OF RS.19,47,66 7/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH DEPOS ITS ITA NO. 920/DEL/2013 ASSTT.YEAR: 2007-08 6 U/S 68 IN THE HANDS OF THE APPELLANT ON PROTECTIVE BASIS IS DELETED. 10. IN VIEW OF ABOVE, WE ARE INCLINED TO HOLD THAT THE AO IGNORED THIS VERY FACT THAT THE AMOUNT OF RS.16,22,140 RECEIVED BY THE ASSESSEE FROM HER CLIENTS WAS FURTHER DEPOSITED INTO RESPECTIVE SAVIN G ACCOUNTS OF HER CLIENTS AND THIS AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE, HENCE PROTECTIVE ADDITION U/S 68 OF THE ACT IS NOT SUSTAI NABLE. FROM ABOVE CONCLUSION AND OBSERVATION OF CIT(A), WE CLEARLY OB SERVE THAT THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AND REMAND REPORT WERE MADE IGNORING THE ENTIRE MODUS OPERANDI AND WORKING OF THE ASSESSEE AND HER HUSBAND AS AMOUNT RECEIVED FROM THEIR CLIENTS F OR FURTHER DEPOSITION CANNOT BE SAID TO BE INCOME IN THE HANDS OF ASSESSE E AND PROTECTIVE ADDITION U/S 68 OF THE ACT IS NOT JUSTIFIED UNDER THESE CIRC UMSTANCES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) WAS RIGH T IN DELETING THE ADDITION MADE U/S 68 OF THE ACT ON PROTECTIVE BASIS AND WE A RE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE SAME. ACCORDINGLY, IM PUGNED ORDER IS UPHELD AND GROUND NO. 1 AND 3 OF THE REVENUE ARE ALSO DISM ISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ITA NO. 920/DEL/2013 ASSTT.YEAR: 2007-08 7 ORDER PRONOUNCED IN THE OPEN COURT ON 22/08/2014. SD/- SD/- (S.V. MEHROTRA) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 22 ND AUGUST 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. COMMISSIONER OF INCOME TAX(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR