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Income Tax Appellate Tribunal, DELHI BENCH : SMC : NEW DELHI
Before: SHRI C.M. GARG
BEFORE SHRI C.M. GARG, JUDICIAL MEMBER Assessment Year: 2010-11 Ashish Singhal, Vs. ITO, Plot No.54, Sector-6, Ward-1(1), Faridabad, Faridabad. Haryana. PAN: AWGPS8667K (Appellant) (Respondent) Assessee by : Shri Gautam Jain, Advocate & Shri Lalit Mohan, CA Revenue by : Shri Om Prakash, Sr. DR Date of Hearing : 04.05.2022 Date of Pronouncement : 19.05.2022 ORDER
This appeal has been filed by the assessee against the order of the CIT(A), Faridabad, dated 19.11.2019 for AY 2010-11.
As agreed by both the parties, first of all we heard arguments of both the sides on Grounds No.2 and 3 of the assessee which read as follows:- “2 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in confirming an addition of Rs. 7,57,450/- representing alleged unexplained cash deposits in the bank account of the appellant and brought to tax under section 69 A of the Act.
2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the cash deposited represented cash received against sale of old car by the appellant. 2.2 That mere fact that notice u/s 131 of the Act was not complied by Sh. Kartar Singh could not be a valid basis to sustain an addition and reject the explanation. 2.3 That furthermore addition sustained is untenable having regard to the fact that when search summons was received late by Sh. Kartar Singh and therefore who was unable to appear during the course of remand proceedings. 2.4 That even otherwise the conclusion is not based on any correct appreciation of facts on record and therefore unsustainable.
That the learned Commissioner of Income Tax (Appeals) has erred both in law erred both in law and on facts in upholding an addition of Rs.50,000/- on lump sum basis representing unexplained expenditure incurred on foreign travel by the appellant.”
Grounds No.2 to 2.4 3. The ld. Counsel for the assessee submitted that the ld.CIT(A) has erred both in law and on facts in confirming the addition of Rs.7,57,450/- representing alleged unexplained cash deposits in the bank account of the assessee and brought to tax u/s 69A of the Income Tax Act, 1961 (for short, the Act). The ld. Counsel also submitted that the mere fact that the notice u/s 131 of the Act was not complied with by Shri Kartar Singh could not be a valid reason to sustain the addition and reject the explanation of the assessee at the threshold without appreciating the same in the right perspective. The ld. Counsel strongly contended that the addition sustained by the ld.CIT(A) is untenable having regard to the fact that when search summon was received by late by Shri Kartar Singh 2 and, therefore, he was unable to appear during the remand proceedings on the date fixed for his appearance cannot empower the AO and CIT(A) to make addition in the hands of the assessee. The ld. Counsel submitted that Shri Kartar Singh submitted that in the rejoinder submissions filed before the CIT(A), the assessee filed the copy o confirmation of Shri Kartar Singh along with copy of his driving licence and affidavit placed at assessee’s paper book pages 26-30. The ld. Counsel submitted that in the affidavit dated 08.11.2019, Shri Kartar Singh categorically stated that he made payment of Rs.8,25,000/- on 12.05.2009 towards purchase of assessee’s car Ford Fiesta, Registration No.HR51AC0551 and later on he did not like the vehicle and returned the same to the assessee and received the amount back from the assessee. The ld. Counsel also submitted that in the same affidavit Shri Kartar Singh has categorically stated on 20.11.2018 that he submitted a declaration before the Income-tax authorities. In response to the same he received a summon dated 09.04.2019 for his appearance on 15.04.2019 which was delivered at his home in his absence as he was out of station during that period. The ld. Counsel also submitted that Shri Kartar Singh has categorically stated in the affidavit that when he returned to home the date of appearance was missed and when he reached to Income-tax Department, the concerned AO Shri Pramod Pal Singh, Ward No.1(1), Faridabad was on leave and on the next date he met the same AO and requested to record his statement and he denied to do so by stating that he has been transferred and new officer would join and issue a fresh summon for calling him, but, he did not receive any 3 other summon. This affidavit was submitted before the CIT(A) during first appellate proceedings wherein Shri Kartar Singh again requested that he is ready and willing to appear before any Revenue officer for personal hearing and recording of the statement. The ld. Counsel vehemently pointed out that no attention was paid by the ld. CIT(A) towards this affidavit of Shri Kartar Singh dated 08.11.2019 and without calling him the ld.CIT(A) passed the impugned order on 19.11.2019 confirming the addition made by the AO. The ld. Counsel submitted that there is no counter affidavit by the AO or any other Revenue authority to this affidavit of Shri Kartar Singh which narrates the entire story and efforts undertaken by the assessee to satisfy the Revenue authorities by the supporting evidence including personal appearance of Shri Kartar Singh for recording of the statement in support of explanation of the assessee towards source of deposit of cash in the bank account of the assessee.
The ld. Counsel for the assessee submitted that in the block of assets, the car has been mentioned by the assessee and depreciation has been claimed and allowed by the AO. Therefore, ownership of car has not been disputed by the authorities below. The ld. Counsel submitted that the AO has disbelieved the transaction on the basis of conjectures and surmises and the ld.CIT(A) has also gone far beyond to analyse the value of car and consideration stated by the assessee as he cannot step into the shoes of the seller and purchaser of assets/car, written down value of which had the opening was Rs.7,07,285/- and sale
consideration of second-hand car depends on the negotiation between seller and buyer and physical condition of car and not on the basis of written down value in the opening of the year. Therefore, the Revenue authorities having admitted that the assessee was owning a car, but, doubted the transaction on flimsy ground which is not a sustainable approach.
Replying to the above, ld. Sr. DR submitted that the affidavit of Shri Kartar Singh does not establish the genuineness of the transaction, capability and credit worthiness of Shri Kartar Singh to give Rs.8,25,000/- in cash to the assessee. Therefore, the AO as well as the ld.CIT(A) was right in disbelieving the transaction and denying to accept the source of impugned cash deposit in the bank account of the assessee on the strength of such afterthought imaginary transaction of sale and return of car.
On careful consideration of rival submissions, I am of the considered opinion that the onus was on the assessee to explain the source of impugned cash deposit in the bank account. The assessee successfully discharged the onus by way of submitting various documentary evidence contained in paper book I dated 04.05.2012 spread over 30 pages. Besides, other relevant documentary evidence, the assessee has also filed affidavit of Shri Kartar Singh which clearly reveals that the summons issued by the AO during remand proceedings was served in his absence as he was out of station and on return he received the summons and approached the AO as well as the ld.CIT(A) and made himself physically present 5
08.11.2019 before the CIT(A) explaining all facts and circumstances under which he could not appear before the AO during remand proceedings. Shri Kartar Singh also expressed his willingness before the CIT(A) that he is ready to give a statement and all relevant documents supporting the explanation of the assessee, but, his request was dismissed at the threshold and the ld.CIT(A) passed the order on 19.11.2019 confirming the addition in the hands of the assessee. In my humble understanding, there is no rebuttal by the AO or any other competent Revenue authority to the affidavit of Sh.Kartar Singh dated 08.11.2019 (supra). It is also not in dispute that despite the fact that Sh.Kartar Singh was present before the ld.CIT(A) he was denied to record his statement in support of the claim of the assessee that Sh. Kartar Singh gave him Rs.8,25,000/- in cash against purchase of car owned by the assessee. It is also not in dispute that in the block of assets the assessee has shown a car Ford Fiesta with Regn. No.HR51AC0551 and written down value of such car was Rs.7,07,285/- as on 01.04.2009. These facts have remained uncontroverted as the assessee claimed depreciation of Rs.1,06,092/- on the car and the same was allowed by the AO. On the basis of the foregoing discussion, I reach to a logical conclusion that the assessee submitted all possible evidence under his command to explain the source of cash deposit of Rs.7,57,450/- in his bank account as the amount received by the assessee against sale of car is much higher than the impugned amount, i.e., Rs.8,25,000/-.The AO as well as the CIT(A) without allowing recording of statement of Shri Kartar 6
Singh and without considering the aforementioned and other evidence submitted by the assessee in this regard have proceeded to make and confirm addition in the hands of the assessee which is not justified and reasonable and a right approach of tax officers. Therefore, I am compelled to hold that the addition made by the AO and confirmed by the CIT(A) has no legs to stand on the sound principles of tax jurisprudence. Therefore, I direct the AO to delete the same. Grounds No.2 to 2.4 of the assessee is allowed.
Ground No.3
The ld. Counsel for the assessee, during the hearing before me, submitted that the addition of Rs.50,000/- made by the AO and confirmed by the CIT(A) on lumpsum basis representing unexplained expenditure incurred on foreign travel by the assessee is not sustainable as the assessee has successfully demonstrated the source of such expenditure. Therefore, the same may kindly be deleted.
Replying to the above, the ld. Sr. DR strongly supported the assessment as well as the first appellate order and submitted that during the year under consideration, the assessee visited Dubai, but, no expenses were shown by the assessee in the ITR as well as during assessment proceedings. The ld. Sr. DR also submitted that when the assessee was asked to explain the source of expenses incurred towards foreign visit, the counsel merely stated that the expenses were incurred by his friends towards the said visit, but, no confirmation
or documentary evidence substantiating that the expenses were incurred or borne by his friend was submitted. Therefore, the AO was right in making the addition.
On careful consideration of the rival submissions, I am of the considered view that the onus lie on the shoulders of the person or entity who made the foreign visit. In the present case, in reply to the show cause notice issued by the AO, the assesseee explained that the expenses incurred towards his foreign travel to Dubai was incurred by his friend, but, no evidence, confirmation or documentary evidence was submitted before the authorities below to substantiate that the expenditure was incurred by the friend of the assessee. Even during the first appellate proceedings, the name of the friend was stated as Shri Munish Uppal but no supporting evidence in the form of confirmation, affidavit and purpose was explained. Therefore, the authorities below were right in making the addition in the hands of the assessee in this regard. Therefore, the addition made by the AO and confirmed by the CIT(A) amounting to Rs.50,000/- towards unexplained expenditure on foreign travel to Dubai is correct and sustainable. Accordingly, ground No.3 of the assessee is dismissed.
Since we have allowed major relief to the assessee on merits, the application of the assessee for admission of additional ground has become infructious and I am not adjudicating upon the same in absence of any submissions from the ld. Representatives of both the sides.