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सुनवाईक�तारीख/Date of Hearing : 19.01.2021 उदघोषणाक�तारीख/Date of Pronouncement : 30.03.2021 आदेश/Order आदेश आदेश आदेश Per R.L. Negi, Judicial Member:
The assessee has filed the present appeal against the order dated 29.11.2019 passed by the Commissioner of Income Tax (Appeals)-1, Chandigarh (for short ‘the CIT(A)], for the assessment year 2016-17 whereby, the Ld. CIT(A) has dismissed the appeal of the assessee filed against the assessment order passed u/s 143(3) of the Income Tax Act, 1961 (for short 'the Act').
The brief facts of the case are that the assessee filed its return of income for the assessment year under consideration declaring the total
102-chd-2020- Sh. Joginder Kumar Nagpal, Chandigarh income of Rs. 23,65,530/- The AO passed assessment order u/s 143(3) of the Act, determining the total income of the assessee at Rs.38,65,530/- after making addition of Rs. 15,00,000/-, deposited in assessee’s bank account, as income earned from undisclosed sources. In the first appeal, the ld. CIT(A) confirmed the addition made by the AO. The assessee is in appeal against the said findings of the ld. CIT(A).
The assessee has challenged the impugned order by raising the following grounds: -
1. That the Ld. Commissioner of Income Tax(Appeals) has erred in upholding the addition of Rs. 15,00,000/- made by the Assessing Officer treating the cash deposit to assessees own income earned from undisclosed sources in utter disregard of the explanations rendered which is arbitrary and unjustified.
2. That the Ld. Commissioner of Income Tax(Appeals) has simply brushed aside the evidence placed on record showing that the cash deposited in the bank account was given by Sh. Ravi Gulati who had admitted the same before the Assessing Officer and as such the order passed is arbitrary and unjustified.
3. That the Ld. Commissioner of Income Tax (Appeals) has without appreciating the facts as placed before him in the right perspective upheld the addition which is arbitrary and unjustified.
4. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
102-chd-2020- Sh. Joginder Kumar Nagpal, Chandigarh
That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.
The ld. Counsel for the assessee submitted before us that during the assessment proceedings, AO raised specific query about the cash deposit amounting to Rs.17,50,000/- in HDFC Bank and the assessee explained the source of the said deposit, however, the ld. CIT(A) confirmed the addition without taking into consideration the submissions made by the assessee duly supported by the documentary evidence. The ld. Counsel invited our attention to the written submissions made before the ld. CIT(A) and the documents produced during the assessment proceedings.
5. The ld. Counsel further submitted that since the assessee had explained the source of deposit in question and produced documentary evidence, during the assessment proceedings, the ld. CIT (A) has wrongly confirmed the addition made by the AO. The ld. Counsel accordingly submitted that the impugned order is bad in law therefore, liable to be set aside.
On the other hand, the ld. Departmental Representative (DR) supporting the findings of the Ld. CIT(A) submitted that since the assessee failed to substantiate its contention during the assessment
102-chd-2020- Sh. Joginder Kumar Nagpal, Chandigarh proceedings and during appellate proceedings, the ld. CIT(A) has rightly upheld the assessment order and sustained the addition.
We have heard the rival submissions of the parties and perused the material on records. The contention of the assessee is that in the year 2011, he along with Sh. Rattan Lal, entered into an agreement to purchase a House in sector 20A Chandigarh from Sh. Parminder Pal Walia for a total consideration of Rs. 2.34 Crore. The assessee paid Rs. 70,00,000/- in advance. Later on, the assessee came to know that Sh. Parminder Pal Walia had no clear title to sell the said house.
The assessee accordingly asked S. Parminder Pal Walia to cancel the deal and to return the advance payment made to him. Since the Mr. Walia did not return the same, the assessee made complaint with the Economic Offences Wing of Chandigarh Police. On the basis of the said complaint the Police registered FIR against the seller. When the case was registered, the seller agreed compromise and to pay the money. Thereafter, in terms of the compromise, Sh. Ravi Gulati, who was one of the witnesses to the said agreement made payment of Rs. 15,00,000/- (in six equal instalments of Rs. 2,50,000/- each) for withdrawing the said criminal case against him. The assessee deposited the said amount in his bank account.
102-chd-2020- Sh. Joginder Kumar Nagpal, Chandigarh
In order to substantiate his contention, the assessee submitted the copy of agreement and copy of FIR before the AO. The AO in order to verify the contention of the assessee examined Sh. Ravi Gulati and Sh. Navdeep Singh. During the appellate proceedings, the assessee furnished the copies of receipts issued by Sh. Ravi Gulati, copies of statement of Sh. Ravi Gulati and Sh. Navdeep Singh recorded during assessment proceedings, which are available on record. The Ld. CIT(A) has rejected the appeal of the assessee mainly on the ground that Sh. Ravi Gulati has failed to prove the source of payment made to the assessee. We notice that during the course of assessment proceedings AO examined Mr. Ravi Gulati and recorded his statement. Mr. Gulati in his statement has categorically stated that he had paid Rs. 15,00,000/-to the assessee in instalments.
He has further stated that he had taken the said amount from his employer Sh. Rahul Mehra. Sh. Ravi Gulati one of the accused in the FIR No 0382 dated 05.07.2013 registered with P.S. Manimajara, which prima facie shows his involvement in the said fraudulent deal.
Hence, the documents on record corroborate the contention of the assessee. The AO has not examined the in-charge of the concerned police station to verify the version of the assessee. Similarly, the AO
102-chd-2020- Sh. Joginder Kumar Nagpal, Chandigarh has not examined Sh. Rahul Mehra to ascertain as to whether he had paid money to Sh. Ravi Gulati.
As per the settled law AO cannot make addition on the basis of surmises and conjunctures. The AO could have placed on record some important facts by examining the concerned persons to falsify the contention of the assessee. Under these circumstances, we have no reason to disbelieve the contention of the assessee and to reject the documentary evidence on record. Hence, we are of the considered view that the findings of the ld. CIT(A) are contrary to the evidence on record and further not in accordance with the settled principles of the law. We, therefore set aside the impugned order passed by the ld. CIT(A) and direct the AO to delete the addition.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on 30.03.2021.