JANARDAN NATH,DHENKANAL vs. ITO, DHENKANAL WARD, DHENKANAL

That the order passed by the learned CIT(A) is arbitrary, excessive, contrary to facts and bad in law.

That the learned Assessing Officer has wrongly made an addition of ? 1,08,48,749 to the total income on account of unexplained opening capital stated in balance sheet, without considering the facts/details/documents/explanation provided at the time of assessement proceedings and the Ld. CIT (A) has also wrongly upheld the addition made by the Ld.A.O to the extent of Rs.90,00,000. 3. Any other grounds that will be urged at the time of hearing.

Brief facts of the case are that the assessee is an individual and derives income from contract work and plying of vehicle and filed return

Feeling aggrieved by the order of AO, the assessee appealed

Further feeling aggrieved, the assessee is now in appeal before the Income Tax Appellate Tribunal.

Ld. AR reiterated the submissions made before the lower authorities and he also relied on the paper books filed in two sets, one containing page Nos.1 to 34 and another containing page Nos.1 to 22 and also relied on the following case laws :- i) CIT Vs. Prameshwar Bohra, [2008] 301 ITR 404 (Raj); and ii) Shri Abhaya Charan Biswal Vs. ITO, ITA No.259/CTK/2017, order dated 20.09.2017 Further, the ld. AR submitted that the assessee to substantiate his claim has submitted copies of income tax returns for A.Y.2004-2005 to 2008- 2009 and 2011-2012 to 2013-2014 along with a capital account starting as on 31.03.1999 to 31.03.2013 for the sources of opening balance of capital as on 01.04.2013 amounting to Rs.1,08,48,749/- during the course of assessment proceedings. Even on the query of AO with regard to nature of gifts as mentioned in the capital account, the assessee stated that the gifts were in the form of cash. Therefore, the ld. AR submitted that the AO has not taken into account the income declared by the assessee for the preceding years starting from F.Y.1998-1999. Ld. AR further submitted that during the scrutiny assessment proceedings, the AO has not asked to furnish the details of the donors of gifts and their creditworthiness.

On the other hand, ld.DR relied on the order of lower authorities and submitted that the assessee was unable to prove the source of gifts which has shown in earlier from the capital accumulated the entire gifts has been received in cash, therefore, there is no genuineness of the gifts shown by the assessee. The assessee could not produce any iota of 5 evidence regarding the source of gifts and from whom it has been received, therefore, the order of the CIT(A) should be restored.

After hearing both the sides, perusing the entire materials available on record and the orders of authorities below, we notice that there is dispute regarding only to the extent of Rs.90,00,000/- shown by the assessee as gift received in earlier different years. It is not disputed that the scrutiny assessment is being carried out for the impugned assessment year 2014-2015, the AO should have allowed or disallowed only the transactions which has been incurred/received during the assessment year or debited and credited in his books of accounts. We notice that the entire gifts of Rs.90,00,000/- have been received in different years. The AO in the scrutiny assessment proceedings cannot travel beyond the relevant assessment years for making additions. The opening capital is brought forward from the previous years. We further noticed that the Assessing Officer has accepted the entire credits of the assessee shown in the balance sheet. The AO has added the entire opening capital which has been subsequently reduced by the ld. CIT(A) to the extent of gifts received which is part of the opening capital also. The case laws relied on by the assessee is squarely applicable in the present case in hand. We have also gone through the order of this bench of the Tribunal, wherein the Tribunal following the judgment of the Hon’ble Rajasthan High Court in the case of Prameshwar Bohra, 301 ITR 404 (Raj.), observed as under:- “7. I have heard the rival submissions, perused the orders of lower authorities and materials available on record. In the instant

On appeal, the CIT(A) restricted the disallowance to Rs. 10,00,000/-.

Before me Id A.R. has relied on the decision of Hon'ble Rajasthan High Court in the case of Prameswar Borha (supra), wherein, it has been held as under: “The carried forward amount of the previous year did not become an investment or cash credit generated during the previous relevant year. This alone was sufficient to sustain the order of the Tribunal in deleting the addition."

I find that the facts of the assessee's case are squarely covered by the decision of Hon'ble Rajasthan High Court in the case of Prameswar Bohra (supra). Hence, respectfully following the same, I set aside the order of the CIT(A) and delete the addition of Rs. 10,00,000/- sustained by the CIT(A) and allow the ground of appeal of the assessee.”

Respectfully following the above order of the coordinate bench of the Tribunal as well as the fact that both the authorities below have not taken into consideration the preceding year capital account details which were in the form of bank deposits, investments and cash in hand, we set aside the order of the CIT(A) and direct the AO to delete the addition of Rs.90,00,000/- sustained by the CIT(A). Accordingly, the sole ground raised by the assessee is allowed.

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 19/08/2019. (C.M.GARG) (L.P.SAHU) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनांक Dated 19/08/2019 प्र.कु.मम/PKM, Sr.P.S.