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Income Tax Appellate Tribunal, DELHI BENCH “E”: NEW DELHI
Before: SHRI G.S.PANNU, HON‟BLE & SHRI ANUBHAV SHARMA
O R D E R PER ANUBHAV SHARMA, J. M.:
1.
The appeal has been preferred by the Assessee against the order dated 02.11.2016 of Ld Commissioner of Income Tax (Appeals)-19, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. „FAA‟) in appeal No. 115/14-15 arising out of an appeal before it against the order dated 31.03.2014 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as „the Act‟) by the ld. Assessing Officer, Assistant Commissioner of Income Tax, Wad-34(3), New Delhi (hereinafter referred as the Ld. AO).
2. The facts in brief are that Assessee filed return of income of Rs. 10,32,460/- which was processed u/s 143(1) of the Act and later selected for scrutiny and notice u/s 143(2) of the Act was issued on Page | 1 25.09.2012. The Assessee is engaged in the business of monitoring and maintenance of advertising panels. It was found that there was deposit of cash of Rs. 62,09,900/- in Saving Account maintained with Citizen co-operative Bank Ltd, Noida and the Assessee failed to explain the source of cash deposit. The same was considered unexplained income from undisclosed source. The ld AO also found that the Assessee failed to substantiate the business activity with the information available in Form 26AS and the expenses totaling to Rs. 41,99,214/- to the extent of 10% i.e. Rs. 4,20,000/- were disallowed.
In appeal the ld CIT(A) found that of the total unexplained deposit of Rs. 62,09,900/-, the Assessee was able to explain the deposits received from certain persons who confirmed that they had paid money by way of cash to the Assessee who used to book the flats in their names. However, a sum of Rs. 11,01,317/- was found still unexplained and to that extent the addition was sustained. Further, the ld CIT(A) observed that if the Assessee was carrying full- fledged business of providing services to various customers for „laundering‟ their cash and making investment on their behalf, it is but natural that Assessee must have earned income for rendering such services. The ld CIT(A) observed that as the total turnover of the Assessee during the year amounted to Rs. 1,68,28,358/- and the Assessee has not maintained books of account. Income @10% of the total turnover to the extent of Rs. 16,82,836/- was added to the total income of the Assessee. The ld CIT(A) also sustained 10% expenses disallowed by the ld AO on account of being of unverifiable nature.
Now in appeal the Assessee has raised following grounds of appeal:-
1. The Ld. CIT (A) has erred in confirming the order of the assessing officer to the extent of Rs. 11,01,317/- out of the addition of Rs. 62,09,900/- made by the AO on account of unexplained cash deposit.
The Ld. CIT(A) has erred in making a further addition of Rs. 16,82,836/- without giving any show cause notice for the enhancement of income .
3. The Ld. CIT (A) has erred in confirming the addition of Rs.4,20,000/- made by assessing officer on account of disallowance of expenses being 10% of the total expenses of Rs. 41,99,214.. 4. The order of the Ld. CIT is against law and facts of the case. 5. Heard the perused the records. The finding ground-wise is as below. 6. Ground No. 1: in regard to this ground it was submitted on behalf of the Assessee that the ld CIT(A) has failed to appreciate that Rs. 11,01,371/- was also confirmed by the persons who had given the money to the Assessee to book the flats and only because the confirmations were not received from respective builders they were disallowed. It was submitted that when the persons who had given money had confirmed the amount, same cannot considered to be unexplained to part extent. However, the ld DR supported the finding of the ld CIT(A). 7. In regard to this ground it can be observed that in the remand report received from the ld AO it was confirmed by way of verification of transaction u/s 133(6) of the Act from the builders to whom the Assessee claimed to have given cheques totaling to Rs. 62,20,010/- on behalf of the four parties for purchase of properties in their names. Confirmations were received of Rs. 9,14,648/- of investor Shri Rajesh Kumar Sood, Rs. 26,74,919/- of investor Shri Atul Mittal, Rs. 9,50,746/- of investors Shri Ravinder Kumar and Ms. Sarika Devi to the extent of Rs. 16,44,700/-. So the ld CIT(A) has observed in para No. 13 of its order as under:- “13. It is an uncontroverted fact that there were cash deposits of Rs. 62,20,010/- in the bank account of the appellant. The bank account also shows the cheques were being issued to the various builders on a regular basis. The bank account also contains the name of the various persons which have been mentioned by the appellant as alleged investors in flat. The explanation of the appellant that money was received for are various discrepancies in the amount mentioned by the appellant and amount received by the builders. Therefore, the deposits can be treated to be explained only to the extent of amount confirmed by the builders i.e. Rs. 51,19,693/-. The confirmations have not been received from M/s. Gaursons Hi- Tech Infrastructure Pvt. Ltd. and Supertech Ltd. These facts & discrepancies have been confronted to the appellant but he has neither furnished the reconciliation nor made any efforts to obtain the confirmations from the builders or the buyers in respect of the payment of amount to these two builders.”
8 The Bench is of considered opinion that where the Assessee claims to be inter-mediatory between the investors and the builders and some part of the admitted payments made by these investors were confirmed, then remaining amounts not confirmed by builder, can be explained, by assessee, if these unconfirmed amounts totaling 11.01,371, were deposited by way of cheques to the respective builders M/s. Gaursons Hi-Tech Infrastructure Pvt. Ltd and Supertech Ltd failed to confirm. Thus, it will be appropriate to allow this ground with a direction to the ld CIT(A) to give opportunity to the Assessee to establish that amount paid to these two builders was by way of cheques or other banking mode and if assessee succeeds to establish the fact, the remaining addition of Rs. 11,01,317/- as sustained by the ld CIT(A) shall stand deleted.
Ground No. 2: It was submitted by the ld Counsel for the Assessee that the addition of Rs. 16,82,836/- has been made without giving any opportunity of hearing for enhancement of the income. The ld DR could not controvert this arguments.
In the light of the aforesaid irregularity and violation of mandate of law, the issue is restored to the files of Ld. CIT(A) to give opportunity of hearing to the Assessee.