COMMISSIONER OF INCOME TAX-II CHD. vs. PARNEETA GOYAL

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ITA/278/2010HC Punjab & HaryanaPHHC01093195201007 February 2011Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose for consideration. The Tribunal had deleted the addition of Rs. 13,50,000/- made by the Assessing Officer. The Tribunal found that the assessee had discharged the onus of proving the source of cash deposits by producing relevant records, including bank statements and cash book entries. The Tribunal noted that the Assessing Officer had not pointed out any specific defect in the information provided by the assessee and that the additions appeared to be based on suspicion. The Tribunal relied on the Supreme Court decision in Lal Chand Bhagat Ambika Ram Vs. CIT (37 ITR 288) and other High Court decisions. The Tribunal observed that once the assessee furnished necessary details, the onus shifted to the Revenue to explain why the assessee's explanation was not acceptable. The Revenue's counsel could not demonstrate that the Tribunal's findings holding the cash deposits to be genuine were liable to be interfered with. Therefore, the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue has appealed against an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 2005-06. The assessee had declared an income of Rs. 87,747/-. The Assessing Officer (AO) noted cash deposits of Rs. 10,97,300/- and Rs. 32,84,000/-. The assessee explained these as withdrawals from the bank and proceeds from the sale of a house (her 50% share being Rs. 24,70,000/-). The AO, not finding the explanation satisfactory, made an addition of Rs. 13,50,000/- under Sections 68 and 69 of the Income Tax Act, 1961. The Commissioner of Income-tax (Appeals) upheld the AO's order. The ITAT, however, deleted the addition.

What were the issues?

1. Whether on the facts and in the circumstances of the case and in law, the order of the ITAT is correct in deleting the addition made by the Assessing Officer, holding that the cash credits were out of sale of property where the assessee failed to prove the nexus between the cash deposits and withdrawals from bank/sale proceeds of the house. Assessee's Contentions: - The assessee explained each and every entry with its narration and produced a complete cash book. - The assessee furnished copies of bank statements, cash book, and other required details. - The ITAT relied on the decision in Lal Chand Bhagat Ambika Ram Vs. Commissioner of Income Tax, 37 ITR 288 (SC). - The ITAT relied on the decision in Narendra G. Goradia (HUF) Vs. CIT (234 ITR 571) (Bom) for the proposition that bulky information itself cannot be the basis of addition. - The ITAT relied on the decision in CIT Vs. Daya Chand Jain Vaidhya 98 ITR 280 (All.) to support the view that once necessary details are furnished, the onus shifts to the Revenue. - The additions were based on suspicion, conjecture, and surmises. Revenue's Contentions: - The assessee failed to prove the nexus between the cash deposits and withdrawals from the bank/sale proceeds of the house. - The assessee made frequent withdrawals/deposits in the respective accounts.

Which sections of the Income-tax Act were involved?

Section 260A,Section 68,Section 69,Section 142(1),Section 143(2)

AI-generated summary — verify with the full judgment below

Income Tax Appeal No. 278 of 2010 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 278 of 2010 Date of decision: 7.2.2011 Commissioner of Income Tax-II, Chandigarh --- Appellant Versus Parneeta Goyal --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Ms. Urvashi Dhugga, Senior Standing Counsel for the appellant-Revenue. Mr. Ravi Shankar, Advocate for the respondent-assessee. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the Revenue against the order dated 28.7.2009, passed by the Income Tax Appellate Tribunal Chandigarh Bench ‘B’ Chandigarh (in short “the Tribunal”) in ITA No. 353/Chandi/2009, relating to the assessment year 2005-06. The following substantial question of law has been claimed for determination by this Court:

Income Tax Appeal No. 278 of 2010 2 “Whether on the facts and in the circumstances of the case and in law the order of the Hon’ble ITAT is correct in deleting the addition made by the Assessing Officer, holding that the cash credits were out of sale of property where the assessee failed to prove the nexus between the cash deposits and withdrawals from bank/sale proceeds of the house.” The facts, in brief, necessary for adjudication as narrated in the appeal, are that the assessee filed her return of income on 26.9.2005 for the assessment year 2005-06 declaring income of Rs. 87,747/-. The assessing officer having come to know of cash deposits of Rs.10,97,300/- and Rs.32,84,000/- made by the assessee asked from her the source of such deposits. The assessee explained to the assessing officer vide written reply dated 15.11.2007 that the said amounts were those which she withdrew from the bank on different dates. It was further claimed by her that she had sold a house for a sum of Rs. 24,70,000/- in which she had 50% share whereas remaining 50% share belonged to her husband. The reply so furnished by the assessee did not find favour with the assessing officer who accordingly, vide order dated 26.12.2007, made an addition of Rs. 13,50,000/- under Sections 68 and 69 of the Act. The Commissioner of Income-tax (Appeals) {in short “the CIT(A)”} upheld the order of the assessing officer and dismissed assessee’s appeal by order dated 19.3.2009. whether the amounts of Rs. 13,50,000/- and Rs.6,15,300/- deposited by the assessee in her bank account on various dates was her undisclosed income or the cash deposits had been duly explained by the assessee. The Tribunal while holding the aforesaid deposits to be genuine recorded the following finding: “It is seen that the impugned additions were made by the Assessing Officer on the plea that the assessee has furnished bulky information simply to escape from the situation. We are not in agreement with such a finding because unless and until any specific defect is pointed out, such a finding cannot be sustained and second, if the Assessing Officer was not satisfied, nothing prevented him to ask the assessee to explain the source of the amounts where he was having any doubt. Undisputedly, the assessee furnished the copies of bank statements, cash book and other details as required by him. The claim of the assessee is further fortified from the fact that even the Assessing Officer himself has mentioned at page 1 of the assessment order that the assessee attended the proceedings from time to time and filed details/information

Income Tax Appeal No. 278 of 2010 4 as asked for. The relevant portion of the order is reproduced herewith:- “Questionnaire dated 10.8.2006 along with statutory notices under Section 142(1) and 143(2) were issued and served on 14.8.2006. Shri Annet Goyal, C.A. attended the proceedings from time to time. Filed details/information asked for. Case has been discussed.”

4.

During hearing of this appeal, it was pleaded by the learned counsel for the assessee that each and every entry was duly explained to the Assessing Officer by giving its narration and complete cash book was produced. This factual matrix was not controverted by the Revenue. Even the assessee vide her letter dated 24.12.2007 explained her position. As far as the contention of the learned DR that the assessee made frequent withdrawals/ deposits in the respective accounts, we are of the view that there is no bar in depositing or withdrawing the amounts unless and until some foul play is brought on record. Even if, the argument of the assessee that the amounts were deposited/withdrawn, as the assessee wanted to purchase a residential property is not accepted, still there is no bar. Even in the impugned order, the stand of the assessee was not found convincing in the light of the decision in the case of Sumiti Dayal, we are of the view that the ratio of preponderance of human probability is applicable to both

Income Tax Appeal No. 278 of 2010 5 sides. The paper book filed by the assessee (running into 59 pages) contains cash book for financial year 2004-05, account, the information/books of account filed by the assessee simply cannot be brushed aside. The additions seem to be on the basis of suspicion, conjecture and surmises, therefore, such additions cannot be sustained. Our view is fortified by the decision from the Hon’ble Apex (All.) fortifies our view.” The deposits made by the assessee were held to be genuine by the Tribunal after appraisal of bank statements of Indus Ind Bank and Vijaya Bank in which she had the account and also after perusal of copy of entries of withdrawals and deposits in the accounts being operated by her. Learned counsel for the Revenue could not show that the findings recorded by the Tribunal holding the cash deposits to be genuine were liable to be interfered with. In view of this, no substantial question of law arises for consideration by this Court. In view of the above, finding no merit in the appeal, the same is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) February 7, 2011

JUDGE *rkmalik*

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