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Income Tax Appellate Tribunal, INDORE SMC BENCH, INDORE
Before: SHRI KUL BHARAT
This appeal is filed by the assessee against the order of ld.
CIT(A)-Ujjain dated 01.11.2017.
Facts giving rise to the grounds of appeal are that the assessee is an individual deriving income from service and share
2 SMC – Kusum Bhargav ITA 82 of 2018 trading. The return of income declaring total income of Rs.2,81,610/- was filed on 28.7.2005. The revised return of income was filed on 08.8.2005 declaring further income of Rs.4,826/-. The Assessing Officer framed assessment and made additions and the ld. CIT(A) also partly confirmed the additions, against which the assessee is before this Tribunal.
Through first ground, the assessee has challenged the confirmation of the addition of Rs.1,11,203/- on account of credits in bank account. The Assessing Officer made additions holding that the assessee failed to discharge the burden of proof by not establishing the genuineness of credits in the bank account.
However, ld. CIT(A) deleted the addition of Rs.50,000/- considering the past savings. Therefore, remaining addition of Rs.1,11,203/- has been challenged by the assessee before this Tribunal.
Before me, learned counsel for the assessee submitted that the assessee has been receiving salary and interest income as he
3 SMC – Kusum Bhargav ITA 82 of 2018 was working in the Government Health Department since 02.9.1997 as an Assistant Surgeon. Therefore, the credits are from the rotational fund. Further, the assessee was doing share trading and due to cancellation of DD purchased for share trading, the credit of Rs.37,734/- is appearing in the bank account. Credit entry of Rs.74,000/- is towards clearing of cheque no.143176.
Credit entry of Rs.27,200/- is towards IDBI Infrastructure Bonds purchased by the assessee in earlier years. Therefore, the assessee had duly discharged the burden of proof by explaining the credit entries. But, the Assessing Officer did not consider the same and ld. CIT(A) only granted part relief on account of past savings, which is not justified. The addition should have not been made. On the other hand, ld. Sr. DR relied on the orders of the Revenue Authorities but could not controvert the submission of the assessee by bringing any contrary material on record.
I have considered the rival submissions of both the parties and gone through the material available on the file. On 4 SMC – Kusum Bhargav ITA 82 of 2018 consideration of above facts, I find that ld. CIT(A) considered the past savings but did not appreciate the explanation of the assessee that he was working in the Government Health Department since 02.9.1997 as an Assistant Surgeon and the credits are from the rotational fund. Further, credit entries regarding the cancellation of DD purchased for share trading, clearing of cheque no.143176 and IDBI Infrastructure Bonds purchased by the assessee in earlier years have not been considered by the ld. CIT(A), which is not justified because the assessee has explained the nature of credit entries. Therefore, I direct the Assessing Officer to delete the addition on account of cash credits in bank account. Accordingly, ground no.1 raised by the assessee is allowed.
So far as ground no.2 with regard to addition of Rs.1,97,545/- on account of interest on FDR is concerned, the Assessing Officer noted that the entries of Rs.2,12,600/-, 82,432/- , 83,209/- 1,26,316/-, 1,25,387/-, 1,26,051/- made on 01.9.04,
5 SMC – Kusum Bhargav ITA 82 of 2018 27.11.04, 27.11.04, 28.1.05, 28.1.05, 03.2.05 relate to maturity value of FDRs made in earlier year and the interest earned on these FDRs comes to Rs.1,97,545/-. The Assessing Officer, therefore, added Rs.1,97,545/- to the total income of the assessee. The ld. CIT(A) also confirmed the action of the Assessing Officer.
Before me, learned counsel for the assessee submitted that major part of interest income relates to previous years, therefore, in the year under consideration, the same cannot be added. On the other hand, ld. Sr. DR relied on the orders of the authorities below.
On consideration of above facts, I find that the Assessing Officer himself noted in the assessment order that FDRs relate to earlier years, therefore, I find force in the contention of the assessee that the major part of interest earned on maturity value of FDRs pertains to previous years, which should not be added in the present year. Looking to these facts, I direct the Assessing
6 SMC – Kusum Bhargav ITA 82 of 2018 Officer to delete the addition in respect of interest earned on previous years and restrict the addition to the year under consideration if the same is not part of return of income for the present year. Accordingly, ground no.2 raised by the assessee is partly allowed.
Through the ground no.3, the assessee has challenged the confirmation of addition of Rs.50,000/- on account of private practice. The Assessing Officer made addition noting that the assessee could not prove the credit entry of Rs.50,000/- made in the bank account. The ld. CIT(A) confirmed the same on the ground that the assessee is a Surgeon and receiving fees from private practice.
Learned counsel for the assessee submitted that on presumption, this addition has been sustained by the ld. CIT(A) as no evidence has been brought on record regarding private practice done by assessee. On the other hand, ld. Sr. DR relied on the orders of the authorities below.
7 SMC – Kusum Bhargav ITA 82 of 2018 11. On consideration of above facts, I find that ld. CIT(A) noted in the order that the assessee is a Surgeon and receiving fees from private practice. However, perusal of assessment order and impugned orders shows that no corroborative evidence was brought on record by the Revenue Authorities in this regard.
Therefore, the ld. CIT(A) on presumptive basis sustained the addition, which is not justified. Thus, I direct the Assessing Officer to delete the addition of Rs.50,000/-.
The last ground raised by the assessee is with regard to confirmation of addition of Rs.7,68,844/- on account of unexplained investment in shares and mutual fund. Facts giving rise to ground of appeal are that the Assessing Officer noted that the assessee has invested in the shares and as per balance sheet enclosed with return of income of wife of the assessee, the value of stock of shares has been shown at Rs.6,18,844/- including investment in mutual fund and also investment of Rs.1,50,000/- in Tax free bonds. The Assessing Officer was of the 8 SMC – Kusum Bhargav ITA 82 of 2018 view that these investments totaling to Rs.7,68,844/- related to assessee. The ld. CIT(A) confirmed the same on the ground that the initial burden was not discharged by the assessee establishing the genuineness of transaction.
13. Before me, learned counsel for the assessee submitted that the amount was shown in the return of income of the wife of the assessee and as such the addition in the hands of the assessee is unjustified. Therefore, it is sufficient proof of discharging the initial burden of explaining the addition. But, the Assessing Officer did not consider the same and ld. CIT(A) however deleted the addition of Rs.1,37,528/- on account of profit on share trading holding that the same pertains to wife of the assessee but investment of Rs.7,68,844/- was not deleted on the ground that the initial burden was not discharged by the assessee establishing the genuineness of transaction, which is not justified.
On the other hand, ld. Sr. DR relied on the orders of the Revenue
9 SMC – Kusum Bhargav ITA 82 of 2018 Authorities but could not controvert the submission of the assessee by bringing any contrary material on record.
I have considered the rival submissions of both the parties and gone through the material available on the file. On consideration of above facts, I find that in para 5.6, the ld. CIT(A) held that the Assessing Officer was not justified in making the addition of the income of Rs.1,37,528 on account of profit on share trading pertaining to wife of the assessee. However, investment of Rs.7,68,844 was not deleted on the ground that the initial burden was not discharged by the assessee. I find that ld. CIT(A) himself has considered the fact that the wife of the assessee has profit on share trading and accordingly deleted the addition, therefore, the initial burden had been discharged by the assessee. Thus, the ld. CIT(A) should also have deleted the addition on account of investment of Rs.7,68,844. Therefore, I direct the Assessing Officer to delete the addition of Rs.7,68,844.
10 SMC – Kusum Bhargav ITA 82 of 2018 Accordingly, ground no.4 raised in the assessee’s appeal is allowed.
In result, the appeal of the assessee is partly allowed.
Order was pronounced in the open court on 14.1.2020.