SMT. SUMAN SHARMA,LUDHIANA vs. ITO, W-1(3), LUDHIANA

The captioned appeals have been preferred by the assessee against the separate orders each dated 14.10.2019 of the Commissioner of Income Tax (Appeals)-1, Ludhiana [hereinafter referred to as ‘CIT(A)’].

Both the appeals pertaining to the assessee having identical grounds of appeal

A perusal of the remaining grounds of appeal reveal that the assessee mainly has agitated the addition of Rs. 3,58,367/- on account of unexplained expenditure incurred on credit card bills. The assessee in this case has taken legal ground regarding validity of the reopening of the assessment stating that the Assessing officer did not have valid reasons to form the belief that the income of the assessee had escaped assessment.

The Assessing officer in this case noticed that as per AIR information, the assessee had received a salary of Rs. 2,21,250/- only and, whereas, her credit card bill expenses were at Rs. 3,58,367/-. He, & 1492-Chd-2019 Smt. Suman Sharma, Ludhiana 4 therefore, reopened the assessment u/s 147 read with section 148 of the Income Tax Act, 1961 (in short 'the Act'). Since no one appeared on behalf of the assessee during the assessment proceedings, therefore, the Assessing officer completed the assessment proceedings u/s 144 of the Act by making addition of entire credit card expenditure of Rs. 3,58,367/- treating the same as ‘expenditure from unexplained sources’.

Being aggrieved by the said order of the Assessing officer, the assessee preferred appeal before Ld. CIT(A) and contested the validity of the reopening of the assessment. The assessee also furnished additional evidences in the shape of the details of bank account, cash book etc. to explain the source of the credits in the bank account, from where the credit card payments were made. The Ld. CIT(A) called upon the remand report from the Assessing officer on the evidences furnished by the assessee. After considering the remand report, the Ld. CIT(A) did not get satisfied with the explanation of the assessee and upheld the addition, so made by the Assessing officer.

Being aggrieved by the above order of the Ld. CIT(A), the assessee has come in appeal before us.

We have heard the rival contentions and gone through the record.

The Ld. DR, on the other hand, has relied on the findings of the lower authorities and has submitted that since the credit card expenditure was not commensurate with the income of the assessee, therefore, the addition has been rightly made by the lower authorities.

We have heard the rival contentions of the Ld. Counsel of the parties and perused the material available on record. In this case, there was no tangible material available to the Assessing officer to form the belief that the income of the assessee had escaped assessment. The only material available to the Assessing officer through AIR information was that the assessee had incurred credit card expenditure of Rs. 3,58,367/- and, whereas, the assessee had salary income of Rs. 2,21,250/-. That itself, in our view, is not sufficient information to form the belief that the income of the assessee for the year under consideration had escaped assessment. As contended by the Ld. Counsel for the assessee, there may be past savings or other sources, gifts, loan, advance etc. which may not form the part of the taxable income from which one may incur & 1492-Chd-2019 Smt. Suman Sharma, Ludhiana 7 the credit card expenditure. The Assessing officer did not examine the accounts of the assessee to point out that there were any deposits of cash or any other information that the assessee had earned any income which has escaped assessment. Even the figure of the credit card expenditure has been wrongly noted by the Assessing officer.

Secondly, during the appellate proceedings, the assessee furnished additional evidences, such as, evidences of details of salary and receipts and expenditure including details of the cash deposited in the bank account and sources thereof. However, the Assessing officer did not point out any discrepancy in his remand report regarding the evidences furnished by the assessee. Even the Ld. CIT(A), as noted from para 9 of the impugned order, simply has brushed aside the evidences furnished by the assessee without pointing out as to what was the discrepancy regarding detailed account summary given by the assessee. In view of this, we conclude that the reopening of the assessment was bad in law because of the lack of the sufficient reasons to the Assessing officer to form the belief that the income of the assessee had escaped assessment and even on merits, the lower authorities did not consider the detailed evidences submitted by the assessee depicting the entire receipts and expenditure for the year under consideration. The impugned additions confirmed by the CIT(A) without appreciating of the evidences furnished by the assessee on record are not sustainable as per law. & 1492-Chd-2019 Smt. Suman Sharma, Ludhiana 8 In view of this, the impugned additions are ordered to be deleted.

At the outset, both the Ld. Representatives of the parties have submitted that the facts and issue involved in this appeal for the year under consideration are identical to that of the earlier assessment year i.e. 2011-12, dealt in ITA No. 1491/Chd/2019.