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Income Tax Appellate Tribunal, DELHI BENCH ‘B’ : NEW DELHI
Before: SHRI AMIT SHUKLA & DR. B.R.R. KUMAR
Aforesaid appeal has been filed by the assessee against the impugned order dated 26.03.2019 passed by the ld. CIT(A)-XXV, New Delhi for the quantum of assessment passed under section 147/144 of the Income-tax Act, 1961 (for short ‘the Act’) for the assessment year 2009-10.
The assessee has raised the following grounds of appeal :-
1. That the CIT(A) has erred on facts and in law in confirming the action of the assessing officer in making an addition of Rs.8,98,620, ./2019 being cash deposited by the appellant in his bank account during the relevant assessment year, alleging the same to be in the nature of unexplained deposits in terms of section 69Aofthe Income Tax Act, 1961.
1.1 That the CIT(A) has erred on facts and in law in holding as above without appreciating that the aforesaid cash deposits were made out of cash withdrawn by the appellant during the relevant assessment year from the same bank account and, therefore, no addition can be made in the hands of the appellant in terms of section 69A of the Act alleging the same to be unexplained money deposits.
2. The CIT(A) has erred on facts and in law in confirming the action of the assessing officer in making an addition of Rs.4,20,000 towards alleged difference between the return and Form 26AS in the amount of rental income earned by the appellant during the relevant assessment year.
2.1. That the CIT(A) has erred on facts and in law in holding as above without taking cognizance of the fact that Rs. 6,00,000 out of the rental income reflected in Form 26AS of the appellant represents the share of M/s. Vallabha Investment Pvt. Ltd. which has been duly offered to tax by that assessee in the return for the relevant assessment year.”
The assessee had filed return of income under section 139(1) on 30.07.2009 declaring income of Rs.6,69,790/- from rent and other sources. Later on, the assessee’s case was reopened by issuance of notice u/s 148 of the Act on 31.03.2016 and the following reasons were recorded :- “The information have been received from ITO - Ward-4 Phagwara, who conducted enquiries on the basis of AIR information received by him from the office of the DIT(I&CI) Chandigarh. Verification of financial transaction reveals that cash of Rs.53,91,284/- deposited in account no.0185000103306320 maintained with Punjab National Bank, G. T. Road Goraya during the F. Y. 2008-09. From the account opening form, Bank Statement and reply of Punjab National Bank dated 09/03/2012, in respect of the said account, it was observed that the account belongs to Sh. B K Gupta S/o Sh. D. P. Gupta and the nominee of the account was Smt. Kalpana Gupta W/o Sh. B K Gupta. It was further gathered by ITO Ward-4, Phagwara that address of the assessee was "Near
Badal Toka, G. T. Road, Goraua". Verification letter dated 19.10.2015 was issued at this address and on being enquired from Sh Jaskaran Singh, Manager/ Supervisor of the concern! it was gathered that the firm M/ s Badal Taka, Goraya was acquired by Sh. B K Dewan (Bal Krishan Dewan) who was also the director of M/ s Neha Toka Put Ltd. Further enquiries revealed that other directors of the company were Sh. Vaibhav Dewan and Smt. Kalpana Dewan. From the PAN database, the PAN of Sh. B. K. Dewan was found to be AAAPK8077H and the address was A-9, Arya Nagar Society, Plot No. 91, I P Extension, Delhi-92.
On receipt of information details of Sh. B K Dewan and Smt. Kalpana Dewan has been gathered from PAN database which are given hereunder :-
PAN Full Name Father Date of Birth Address Name ABWPD0277B Kalpana Jai 20/10/1952 C/o Steel Dewan Prakash Prakash Bird Gupta India, 111, Model Town, Dewan Palace Narwana, Jind,Haryana AAAPK8077H Dewan Dewan 27/08/1948 A-9, Arya Bal Bal Nagar Society, Krishan Krishna Plot No.91, I.P. Extension, Delhi-92.
From the above details it has been observed that age of Smt. Kalpana Dewan as on 10/ 12/2007 (account opening date) was 55 years and 2 months i.e. approximately 56 years and the same is mentioned in the account opening form for Smt Kalpana Gupta who' was declared nominee-in that account. Further it has been observed the initials of the name of Sh. B.K. Gupta, Smt. Kalpana Gupta and Sh. D P Gupta are the same as that of Sh. Bal Krishari Dewan, Smt. Kalpana Dewan and Sh. Devi Pershon Dewan except the surname. It cannot be a coincidence that the two different families have same initials of names of father, son and son's wife and also it cannot be a sheer coincidence that the age of the wife of both sons is same. Further, both Shri B. K. Gupta and Sh. Bal Krishan Dewan belong to Goraya, Punjab. Therefore, I have reason to believe that Sh. Bal Krishari Dewan is none other than Shri B.K. Gupta, who opened the bank account no.0185000103306320 with Punjab National Bank, Goraya and the cash deposit in the said account belongs to Sh. Bal Krishan Dewan. A perusal of Income Tax Return for A. Y. 2008-09 reveals that the assessee had declared bank account no.
Further, the deposit in bank account no. 0185000103306320 with Punjab National Bank, Goraya of more than Rs.53 lakhs is not commensurate with the income declared in the ITR. Therefore, I have reasons to believe that the Rs.53,91,284/- being cash deposit in the impugned saving bank account was the income of the assessee and the same has escaped assessment. The assessment proceedings for the assessment year 2009-10 relevant to F. Y. 2008-09 are liable to be reopened in accordance with the provisions of section 147. If approved, notice u/ s 148 of the Income Tax Act, may be issued in this case.”
Thereafter, the AO noted that none attended in the proceedings nor any written submissions or documents were filed in response to various notices. Accordingly, he issued final show-cause notice which has been reproduced in the impugned assessment order and finally proceeded to pass ex-parte assessment u/s 144 and completed the assessment at Rs.94,71,300/-. The additions comprised of difference between the rent shown by the assessee and as reflected in Form 26AS of Rs.4,20,000/- and secondly, cash deposit in the bank account for which no explanation was filed of Rs.60,34,410/- and Rs.23,47,102/- on account of section 69A; and finally, the assessment was completed at an income of Rs.94,71,300/-.
Before the ld. CIT (A) the assessee had filed various documents on which ld. CIT (A) had called for the remand report. Insofar as the document relating to addition of Rs.4,20,000/-, the assessee had filed following documents :- “(i) Copy of purchase deed dated 20.11.2002 purchased by Sh. Dewan Bal Krishan and copy of purchase deed dated 13.11.1997 purchased by M/s Sri Vallabha Investment (P) Ltd which collectively has given it on rent. Same appears at page 1 to 21 of the paper book.
(ii) Copy of complete ITR along with acknowledgement reflecting rental income of Rs.6 lacs of M/s Sri Vallabha Investment (P) Ltd having PAN: AAACS3775R for A.Y 2009-10. Copy of same appears at page 25 to 27 of the paper book.
(iv) Copy of TDS certificate issued by M/s HPL Socomec Pvt Ltd appears at 32 of the paper book.
2.3 The total rent received during the relevant assessment year as per 26AS form is Rs.15,56,136/- out of which a sum of Rs.6,00,000/- was paid to M/s Sri Vallabha Investment (P) Ltd which is duly reflected in its books of accounts, ITR and balance rent of Rs.9,56,136/- is reflected by the appellant in his return of income.”
Regarding credit entries also, the assessee had submitted cash flow chart to submit that the assessee had cash available and cash withdrawal from time to time to show the cash credit. After calling for the remand report and rejoinder submissions of the assessee, ld. CIT (A) held that assessee could not explain the cash deposits of Rs.8,98,620/- on various dates, therefore, it was confirmed u/s 68. Insofar addition of Rs.4,20,000/- ld. CIT (A) has confirmed the addition in the following manner :- “ii. The appellant submitted copies of purported purchase deeds attempting to explain that the property was jointly purchased by the appellant and Mis Sri Vallabha Investment (P)Ltd and that the difference in rental income of Rs.6,00,000/- has duly been reflected in the return of income of M/s Sri Vallabha Investment (P) Ltd during the relevant assessment year. But, this was not explained with documentary backing. This ground is hence dismissed. The action of the AO is upheld.”
Before us, ld. counsel submitted that the property on which rent has been received from M/s HPL Socomec Pvt. Ltd., same was purchased in the name of assessee as well as M/s. Vallabha Investment Ltd. He also drew our attention to copy of sale deed dated 20.11.2002. Thus, the rent of Rs.15,56,136/- which was received by the assessee was declared by the two co-owners, viz., the assessee had declared rental income of Rs.9,56,136/- and Rs.6,00,000/- was paid to Sri Vallabha Investment Pvt. Ltd. which has been shown in its return of income & balance sheet as rental income. In ./2019 support, he drew our attention to computation of total income of Sri Vallabha Investment Pvt. Ltd., available at page 26 of the paper book, wherein the said party has shown rent of Rs.6,00,000/-. Thus, no addition could have been made in the hands of the assessee on the ground that the assessee had not shown the entire rent receipt in its own hand.
Insofar as the cash deposits of Rs.8.98.620/-, he drew our attention to cash flow chart available at pages 52 to 53 of the paper book and pointed out that there were earlier withdrawal of cash for which he filed copy of bank statement of the assessee and thus, submitted that in view of said cash withdrawal, there was availability of cash and, therefore, source of cash was proved.
Ld. DR for the Revenue strongly relied upon the order of the ld. CIT (A).
After considering the aforesaid submissions and on perusal of the relevant findings in the impugned order as well as relevant material referred to before us, we find that insofar as addition of Rs.4,20,000/-, the same has been made on account of difference in the rent receipt as appearing in the form 26AS received from M/s. HPL Socomec Pvt. Ltd. and as declared by the assessee in its return of income. Before the ld. CIT (A), the assessee had clearly given the documentary evidences that the property was jointly owned and the rent income which has been received by the assessee for a sum aggregating to Rs.15,56,136/-, out of which Rs.6,00,000/- has been paid to other owner, Sri Vallabha Investment Ltd.. It is undisputed fact that the said party had shown it as a rental income in its return of income which is evident from its computation of income. The assessee might have received the rent entirely for the said assessment year but has paid the part of the rent to other co-owner who has also declared it as its income; therefore, we do not find any reason for sustaining the addition on account of difference of rent; firstly, the assessee had shown rental income of Rs.9,56,136/- and
Now, coming to the addition of Rs.8,98,620/- on account of cash deposit, we find that AO had initially made addition of Rs.23,47,102/- on account of credits appearing in the bank account. Ld. CIT (A) has deleted the credits for which the source was explained. However, the other cash deposits are concerned the same has been confirmed. Before us, ld. counsel had given the cash flow statement duly supported by the bank statement wherein he has shown that assessee had huge withdrawals during the year itself and day-to-day cash flow chart have also been filed which is appearing at pages 56 to 63 of the paper book. From bare perusal of the same, it cannot be disputed that assessee had availability of cash in the form of withdrawals and the same is shown in the cash flow statement filed before the ld. CIT (A). Thus we do not find any reason to sustain the addition. Accordingly, the same is also deleted.
In the result, the appeal of the assessee is allowed. Order was pronounced on 11th day of April, 2022.