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Income Tax Appellate Tribunal, DELHI BENCH, ‘G’: NEW DELHI
Before: SHRI SHAMIM YAHYA & SHRI ANUBHAV SHARMA
ORDER PER SHAMIM YAHYA, AM, This appeal by the assessee is directed against the order of the Ld. CIT(A) Karnal, dated 12.11.2018 pertaining to Assessment Year 2012-13
Grounds of appeal read as under “1. On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad, both in the eye of law and on the facts.
2. On the facts and circumstances of the case, Id. CIT(A) has erred both on facts and in law, in rejecting the contention of the assessee, that the initiation of the proceedings under Section 147, read with Section 148, made by A.O. is bad and liable to be quashed as the condition and procedure prescribed under the statute have not been satisfied and complied with.
3. On the facts and circumstances of the case, Id. CIT(A) has erred both on facts and in law, in rejecting the contention of the assessee, that the reassessment proceedings initiated by the learned A.O. are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts.
4. On the facts and circumstances of the case, Id. CIT(A) has erred both on facts and in law, in rejecting the contention of the assessee, that the order passed by the A.O. is bad in the eye of law and on facts, as the same is based on the reasons recorded without there being any independent application of mind.
5. On the facts and circumstances of the case, Id. CIT(A) has erred both on facts and in law, in rejecting the contention of the assessee, that the order passed by the A.O. is bad in the eye of law and on facts, ignoring the fact that mere bank deposits do not tentamount to escapement of income.”
Brief facts of the case are that in this case proceeding u/s 147 was initiated for the following reasons:-
This office has received STR No. 1000080626 from the DIT (Inv)., Chandigarh through Income-tax Officer, Ward-4, Panipat vide No.' 8806 dated 13.03.2015. STR contains details of cash deposit with State Bank of India, Gur Mandi, Sonepat in Saving Bank Account Number 30631567366. Perusal of the Saving Bank Account reveals that the assessee has deposited cash amounting to Rs.73,45,626/- including interest during the Financial Year 2011-12. During verification of STR, assessee has failed to furnish any evidence of source of cash deposited in the Saving Bank Account before the DDIT(!nv.), Panipat. It is also gathered from the records that the assessee has not filed Income-tax return for the year under consideration. Income on account of cash deposited in bank has escaped assessment and the escapement is on the part of the assessee. In these circumstances, I have reasons to believe that income chargeable to tax on account of cash deposited in Saving Bank Account has escaped assessment for the Assessment Year 2012-13.
To the notice of the Assessing Officer in this regard, the assessee responded as under:-
“ I Sarla Devi w/o Late Sh. Mehar Singh resident of VPO : Bandh, Tehsil Israna, Panipat, had sold the agriculture land in VPO Data, Tehl. Hansi, Distt. Hisar of Rs.1,30,75,000/- in the financial year 2011-12. The above registration effected on 13/12/2012 having registry No.6116 of an amount of Rs. 1,30,75,000/-. As per the definition of agricultural land as defined in section 2 of Income tax Act, 1961 that land situated 8 Kilometer away from local limits of any municipality. So our land is not a capital asset as per the above definition. Hence no question of capital gain on sale of aforesaid land. Hereby once again you are requested to drop all the proceeding initiated by your honorable office against me.”
The Assessing Officer asked the assessee to provide the details of income, land purchased and sold, etc. It was also enquired from the assessee to explain the source of the cash deposits of Rs.73,99,000/- in the saving bank account. Further, the Assessing Officer enquired about the complete copy of registration deed of the land sold and deposits in the saving bank account. The assessee’s response in this regard were noted by the Assessing Officer as under:
“I Sarla Devi w/o Late Sh. Mehar Singh hereby want to bring to your notice that I have given reply to all notice or letter whichever is received. I have copy of all of my submission either in Ward-5 or at the time of Investigation. Further I have submitted the relevant papers for your kind perusal. I have submitted to you the copy of certificate of sale of agricultural land at VPO - Data, Tehsil -Hansi, Distt-Hisar. I have submitted to your office copy of bank statement for the year under scrutiny. I have submitted to you the copy of FDR made in my name of Rs.60,00,000.00. The source of above FDR of 60 lacs is the advance money received from buyer of above mentioned agricultural land. Further out of this matured amount of this FDR we had purchased agricultural land at Vill. Puther, Distt. Panipat, at Village Bandh Distt. Panipat and a plot at Gohana Distt. Sonepat. Further last two entries of Rs.50 lacs and 11 lacs as mentioned in your notice the source of these two entries is the advance money received from the purchaser of agricultural land at Hansi.
Further I have sold the agricultural land and received the amount. I do not have the copy of sale deed. I have only sale certificate already submitted to you. As a widow I am unable to go to Hansi. So far-copy of sale deed you can write to Sub Registrar of Tehsil - Hansi (Hisar).” 6. The Assessing Officer obtained the sale deed and noted that the assessee has sold a land measuring 104 Karna 12 Marla Situated at villaged Shaladery, Tehsil Hansi for a consideration of Rs.1,30,75,000/- on 13.12.20212 from certain persons. He further noted that as per the sale deed payment of Rs.32,000/- was made through cheque and the remaining payment of Rs.98,75,000/- was paid in cash. The Assessing Officer tried to verify the date of cash from the purchasers but no reply was received. In absence thereof, the Assessing Officer proceeded to add the deposits as undisclosed income. Further, on perusal of bank statement, he noted that the bank has credited interest amounting to Rs.3,626/- which has not been offered to taxation, hence he added the said amount also.
Against the above order, the assessee in appeal before the Ld. CIT(A).
The Ld. CIT(A) referred the Assessing Officer’s order and upheld the action of the Assessing Officer.
Against the order of the Ld. CIT(A), the assessee is in appeal before us.
We have heard both the parties and perused the records. The Ld. Counsel for the assessee summarized her submissions with reference to the paper book submitted in the following synopsis:-
“The only issue in this case is an addition of Rs.73,99,000/- made by the Ld. Assessing Officer (AO) on account of cash deposited by the assessee in the bank account in the year under consideration. The explanation of the assessee before the Ld. AO was that an amount of Rs.61,00,000/- was deposited out of advance received in cash for sale of one of the agricultural lands. The remaining amount, it was explained that the deposit was made out of cash withdrawals and agricultural income. The Ld. AO misunderstanding the facts of the case did not accept the explanation of the assessee and made the addition. Before the Ld. Commissioner of Income Tax (Appeals) [CIT(A)] the assessee made detailed explanation regarding the cash deposits and also filed additional evidences to prove the source of cash deposit. The Ld. CIT(A) sent the matter before the Ld. AO in remand. The detailed remand report of the Ld. AO was received (PB Pg. 13). The Ld. CIT(A) without giving much independent findings, relying on the remand report filed by the Ld. AO, confirmed the addition made by him. Relevant findings of the Ld. CIT(A) are at PB Pg. 16 onwards of the order. The assessee had deposited during the year under consideration an amount of Rs.73,99,000/- on various dates, the details of which are at Para 3.2of the Ld. AO’s order. The assessee is not denying the fact of the cash deposit and the copies of bank statement are placed at PB Pg. 30 to 38. The explanation of the assessee with respect to the cash deposits can be explained from the cash flow statement placed at PB Pg.
39. The explanation given by the assessee was that the last two entries dated 02.03.2012 and 10.03.2012 of Rs.50,00,000/- and Rs.11,00,000/- respectively were out of advance received by her on account of sale of one of the agricultural lands. To prove the same the assessee had produced the copy of Agreement to Sell placed at PB Pg. 51 to 54. Copy of Receipt is also placed at PB Pg. 55 which shows that the assessee had received an amount of Rs.1,00,00,000/- in cash as advance for sale of property being Rs.50,00,000/- each from the two purchasers as on 1st March 2012. Out of this Rs.1,00,00,000/- the assessee had deposited Rs.61,00,000/- in the bank account. The affidavit of the assessee in this regard was also filed which is placed at PB Pg. 56 to 58. For the remaining amount of cash deposits, the explanation of the assessee was that this amount was deposited by her out of agricultural income received by her and on few occasions out the cash withdrawn from the bank itself. In order to prove that the assessee is an agriculturalist and she has earned huge agricultural income in the year under consideration, a certificate from the Tahsildar to prove that the land was agricultural land was also placed on record (PB Pg. 45 to 47). Copy of KhasraGirdawariwas also placed on record (PB Pg. 48 to 50) which evidences that in the year under consideration the land was cultivated by the assessee. There are withdrawals of cash by the assessee on various dates amounting to Rs.7,55,000/- out of which other deposits were made. This situation is too clear from the copy of cash flow statement placed at PB Pg.
The Ld. AO in the remand report had mainly raised the issue that there is a difference in the names and amount of sale consideration in agreement to sell and the sale deed. It is to be appreciated that the assessee’s husband used to take care of all financial matter, who later on died. Assessee was not aware of any of these affairs and could lay hands only on the agreement to sell with the copy of receipt of Rs. 1,00,00,000/-, which she duly filed with the Assessing Officer. She was even unable to file the sale deed, which the Assessing Officer got from the sub- registrar directly. Later on the assessee came to know that the deal with the persons from whom the advance of Rs. 1,00,00,000/- was received could not materialize and the property was ultimately sold to some other persons. In any case the source of cash deposit remains the receipt of advance only.”
Per contra, the Ld. DR relied upon the orders of the authorities below.
Upon careful consideration, we find that the first reason for the Assessing Officer to disbelieve the assessee’s explanation is that the final sale deed and Ekrarnama are in different name. We note that it is a common practice to make Ekrarnama and final sale deed in different names but in both sale deed and Ekrarnama, there is mention of cash given to the assessee which sufficiently covered the deposits. The sale deed duly mentioned that Rs.32,000/- was received by cheque on 11.12.2012.
Further, it also acknowledges the cash received at home of Rs.96,75,000/- . Thus, amount mentioned in the sale deed clearly covers the deposit. The Assessing Officer also accepted that there is mention of cash receipts but he has taken adverse inference as the purchasers did not respond to his notice u/s 133(6) of the Act for confirming the date of cash payment.
Further, the Assessing Officer took adverse inference that the assessee could not produce the person before the Assessing Officer.
Upon careful consideration, we find that the assessee had submitted the documents which adequately show the facts that the assessee had received cash advance for sale of land. The Ld. Counsel for the assessee has duly submitted following in paper book with due certificate that it was before the authorities below:-
PAGE No. S. No. PARTICULARS 1. Copy of letter from DDIT (Inv.), Panipat dated 08.07.2013 1 2. Copy of reply to DDIT (Inv.), Panipat 2 3. Copy of notice under Section 148A dated 29.04.2015 3 4. Copy of reasons recorded under Section 148 of the Act 4 5. Reply to the Ld. AO dated 04.06.2015 5 6. Copy of Notice under Section 142(1) of the Act 6 7. Copy of Notice under Section 142(1) dated 29.08.2015 with 7-9 questionnaire 8. Copy of reply dated 12.09.2015 10 9. Copy of submissions filed before the Ld. CIT(A) dated 11-12 22.11.2017 10. Copy of Remand Report dated 03.05.2018 13-19 11. Copy of Rejoinder filed by the assessee 20-29 12. Copy of Bank statement 30-38 13. Cash Flow Statement 39 14. Copy of Sale Deed of agricultural land dated 13.12.2012 40-47 evidencing the availability of agricultural income in the year under consideration 15. Copy of KhasraGirwari 48-50 16. Copy of Agreement to Sell of the property from whom an 51-54 advance of Rs.1,00,00,000/- was received in cash in the year under consideration 17. Copy of Receipt for Rs.1,00,00,000/- in cash 55 18. Copy of Affidavit of assessee 56-57
On going through the paper book and the documents, we find that the source of cash deposit has been duly explained and the authorities below have erred in not accepting the same. The Revenue has not disputed that any item in paper book is fresh document being filed for the first time before the ITAT. Hence, in the background and examination of the aforesaid document, perusing of the records and hearing the learned counsel, we are of the considered opinion that cash deposits in this case has been duly explained. Hence, we direct that the addition be deleted.
As regards, the addition of interest income, in absence of any explanation about them we confirm the order of the authorities below on this issue. Hence, the appeal of the assessee is partly allowed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 04th November, 2022.