TEJPAL SINGH,BAHADURGARH vs. ITO WARD - 5, ROHTAK

At the outset, learned Counsel appearing for the assessee, on instructions, submitted that she would be restricting her arguments on the merits of the addition sustained of Rs. 7,50,000/- by learned Commissioner (Appeals). In view of the aforesaid submission of learned Counsel for the assessee, I am proceeding to decide the issue on merits.

Briefly the facts are, the assessee is a resident individual. Based on AIR information available on record, the Assessing Officer found that in the year under consideration, the assessee had deposited cash amounting to Rs. 10,50,000/- in his saving bank account with State Bank of India. Being of the view that the assessee had not offered the aforesaid income to tax resulting in escapement of income, the Assessing Officer reopened the assessment under section 147 of the Act. In course of assessment proceedings, the Assessing Officer called upon the assessee to furnish necessary evidence to explain the nature and source of the cash deposits in the bank account. As alleged by the Assessing Officer, the assessee did not respond to the notices issued under section 148 and 142(1) of the Act. Therefore, he proceeded to complete the assessment ex parte to the best of his judgment by invoking the provisions of section 144 of the Act. While doing so, he added back the amount of Rs. 10,50,000/- as income from undisclosed sources. Contesting the aforesaid addition assessee preferred an appeal before learned Commissioner (Appeals). In course of proceeding before the first appellate authority, assessee furnished explanation and supporting evidence to explain the source of the cash deposits. Partly accepting assessee’s explanation, learned Commissioner (Appeals) granted relief to the extent of Rs. 3,00,000/- and sustained addition for the balance amount of Rs. 7,50,000/-.

I have considered rival submissions and perused materials on record. Before the first appellate authority, the assessee while explaining the source of cash deposits had submitted that an amount of Rs. 4,50,000/- was received towards sale consideration of the old car sold to one Shri Satish Kumar. Further, it was submitted by the assessee that an amount of Rs. 2,00,000/- was received as gift from his brother and balance amount was out of earlier withdrawals. As regards assessee’s claim of receipt of consideration towards sale of car, learned Commissioner (Appeals) rejected the claim on the reason that the assessee failed to furnish any evidence to demonstrate that he was the owner of the car. As regards claim of receipt of gift from brother, learned Commissioner (Appeals) allowed gift to the extent of Rs. 50,000/-. In so far as claim of deposits out of earlier withdrawals, learned Commissioner (Appeals) allowed benefit to the extent of Rs. 2.5 lacs. On a perusal of material placed on record, it is noticed that the assessee supposed to have sold his old car to Shri Satish Kumar for a consideration of Rs. 4,50,000/-. In this regard, the assessee has furnished copy of the registration certificate of the vehicle in the name of Shri Satish Kumar, his Adhar Card and delivery receipt wherein he has confirmed that the vehicle was purchased from the assessee. Even, a cash receipt evidencing payment of sale consideration of Rs. 4,50,000/- has been furnished. These evidences, prima facie, establish assessee’s claim of receipt of Rs. 4,50,000/- towards sale consideration of the old car. Further, on going through the cash flow statement of the assessee furnished in the paper book, it is observed that in the year under consideration the assessee had received gift of Rs. 2,00,000/- from his brother and has also made regular withdrawals from the bank account. It is a fact on record that learned Commissioner (Appeals) has not entirely disbelieved assessee’s explanation regarding receipt of gift from brother and source of deposits from earlier withdrawals. This is so because, learned Commissioner (Appeals) had granted partial relief to the assessee on both counts. However, I am unable to understand the reason for not accepting assessee’s explanation in entirety as learned Commissioner (Appeals) has not provided any reason while partly accepting assessee’s claim. On perusal of cash flow statement, I am convinced that assessee’s explanation regarding source of deposits in the bank account is believable. The part addition sustained by the learned Commissioner (Appeals) appears to be purely on conjecture and surmises.

In view of the aforesaid, I delete the addition of Rs. 7,50,000/- sustained by learned Commissioner (Appeals).

In the result, appeal is allowed to the extent indicated above.