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Income Tax Appellate Tribunal, CHANDIGARH
Before: SMT. DIVA SINGH, JM
आदेश/ORDER
The present appeal has been filed by the assessee wherein the correctness of the order dated 31.07.2018 of CIT(A)-2, Chandigarh is assailed on various grounds.
Howeve r, at the time of hearing, the ld. AR submitted that he has been instructed not to press ground Nos. 1 and 3 raised by the assessee. Accordingly, he would be arguing only ground No. 2. Noting to the said effect has been given by the ld. AR in the Memo of the Appeal filed. Accordingly, the
ITA 1080/CHD/2018 A.Y. 2010-11 Page 2 of 19
only ground which remains for adjudication is extracted
he reunder :
“2. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the addition of Rs.43,70,000/- made on account for cash deposits in Bank account in utter disregard of the explanations rendered which is arbitrary and unjustified.”
Addressing the said ground, ld. AR drew attention to the
facts as noticed and encapsulate by the CIT(A) in para 7 and
7.1 of the order. Inviting attention to the arguments advanced
on behalf of the assessee, which have been extracted in para
7.2, the ld. AR placing heavy reliance thereupon submitted
that these arguments are relied upon in the present
proceedings also. Referring to the relevant pages of the Paper
Book available on record which we re relied upon before the
CIT(A) also, it was submitted that these have been discarded
by the tax authorities merely on presumptions and
suspicions.
3.1 In the said background, inviting attention to the findings
arrived at by the CIT(A) in para 7.3 of the order, it was his
submission that the said conclusion based on suspicions is
even otherwise contrary to facts and law. Carrying the Bench
through the relevant submissions, findings and the
conclusions, ld. AR submitted that the only issue which was
required to be addressed by the assessee was the source of
the deposits found reflected in his account. The assessee, it
ITA 1080/CHD/2018 A.Y. 2010-11 Page 3 of 19
was submitted, had successfully explained deposits from Shri
Jarnail Singh a close friend of his father. This claim was
demonstrated by supporting evidences which had been
accepted in part. By placing the evidences it was submitted
the onus place d on the assessee stood discharged.
Addressing the facts, it was argued that there is no dispute
that the funds to the said extent were available with Shri
Jarnail Singh as a re sult of his land acquired on 09.10.2009.
The source was stated to be not doubted. It was also his
submission that the fact that cash withdrawals were made to
the tune of Rs. 75 lacs by Shri Jarnail Singh on 12.10.2009
was also not doubted. Paper Book page 20 was referred to
which fact, it was submitted, has not been disputed by the
Revenue and is also an admitted fact on record. Referring to the
consistent arguments advanced, it was submitted, the assessee
has also explained that his father was a close friend of Shri
Jarnail Singh. By the time the assessee was being questioned on
it, Shri Jarnail Singh had expired. Evidence to this effect, it was
stated, is available on record. The fact of advance of amounts by
Shri Jarnail Singh has been admitted by Shri Jarnail Singh’s
daughter on an Affidavit. The money was advanced to the
assessee for investment and insurance purposes to a friend’s
son who was engaged in Banking and investment related
activities. It was submitted Shri Jarnail Singh on account of
ITA 1080/CHD/2018 A.Y. 2010-11 Page 4 of 19
the health related problems needed life insurance cover. The
assessee has explained that from the stated withdrawal in
cash by Shri Jarnail Singh an amount of Rs. 31 lacs was
advanced in cash and it was deposited on 27.10.2009 by the
assessee in the name of Shri Jarnail Singh. It was submitted
that the life insurance cover is person specific on account of
which fact, it was deposited in the name of Shri Jarnail Singh
and the flow of money from the same source has been
accepted by the department.
3.2 Referring to the record, it was submitted that Shri
Jarnail Singh and his father Mr. Gurdeep Singh Virk had very
close cordial family relations over the years. This fact has
consistently been argued before the tax authorities and has
not been upset by the Revenue. The assessee be ing son of a
close friend of Shri Jarnail Singh and was also engaged in the
banking sector was entrusted with the funds to be partly
deposited for Life Insurance cover and the remaining amount
of Rs. 43,70,000/- was to be invested in the share market. It
was his submission that it is a matter of fact that during this
period, share market was performing well and as and whe n
there were any profits, the amounts were handed over to Shri
Jarnail Singh. This fact, it was submitted, has been accepted
by the sole surviving child of Shri Jarnail Singh Smt. Tejinder
Kaur. It was submitted that though the assessee is only
ITA 1080/CHD/2018 A.Y. 2010-11 Page 5 of 19
required to address the source which stands established, the
assessee, it was argued on the basis of the Affidavit of the
sole surviving child of Shri Jarnail Singh could also establish
that profits as and when due were paid to Shri Jarnail Singh.
It had also been explained though not required under law that
ultimately, there was a loss of about Rs. 39 lacs odd. The
assessee's father being a close friend and feeling morally
bound, returned part of the funds during the life time of Shri
Jarnail Singh. Evidence to the said effect, it was submitted,
has been placed on record by the assessee. Referring to Paper
Book page 26 it was his submission that an amount of Rs. 3
lacs odd was returned after withdrawal on 08.06.2012 and an
amount of Rs. 7 lacs odd was returned from the cash
available at hand with Shri G.S.Virk who was a pension
holder having his own independent income. It was his
submission that it is not a case whether there were any
counter claims of Shri Jarnail Singh pending with the
assessee. The only issue for consideration was the
source /availability of funds amounting to Rs. 43,70,000/-
with the assessee.
3.3 It was his submission that this money like Rs. 31 lakh
deposited in Insurance in the name of Shri Jarnail Singh was
also received in cash from Shri Jarnail Singh. The assessee
acting in good faith due to the close family relations
ITA 1080/CHD/2018 A.Y. 2010-11 Page 6 of 19
deposited the funds in his India Bulls account for
transactions in Mutual Funds etc. This act of good faith was
ne ver questioned by Shri Jarnail Singh or his sole surviving
daughter Ms. Te jinder Kaur. It was his submission that when
the department questioned the assessee on 25.03.2017, Shri
Jarnail Singh was no longer alive. This fact, it was
submitted, is evident from Paper Book page 35 which contains
the Death Certificate of Shri Jarnail Singh who expired on
31.08.2012. In these circumstances, it was argued the only
evidence which the assessee could rely upon was the Affidavit
of the sole surviving child of Shri Jarnail Singh i.e. Ms.
Tejinder Kaur, copy of which is available at page 9 of the
Paper Book. It was his submission that the affidavit of Ms.
Tejinder Kaur, daughter of Shri Jarnail Singh is dated
21.08.2015 and is a document which is much before the
issuance of notice by the AO on 25.03.2017. In these
circumstances, it was his submission that it cannot be said to
be specifically created for this purpose and cannot be set
aside without assigning any reasons. The contents of the
affidavit, it was submitted, have not been upset. No effort, it
was submitted, to even examine the said deponent was made
by the tax authorities. It was submitted that the marriage of
the lady was infact fixed by the efforts of Shri G.S.Virk. The
close family relations between the two families is consistently
ITA 1080/CHD/2018 A.Y. 2010-11 Page 7 of 19
argued. In the facts which have not been upset, it was his
submission that no addition was warranted either on facts or
law.
The ld. CIT-Dr Mr. M.Singh vehemently relying upon the
impugned order drew specific attention to para 7.3 of the
order. Relying on the same it was submitted that the addition
deserves to be maintained. Alternately, it was his prayer that
in case the affidavit of Shri Jarnail Singh’s daughter Smt.
Tejinder Kaur is to be considered, then the AO may be
directed to carry out an enquiry. The affidavit, it was
submitted at this stage may not be accepted.
The ld. AR in reply submitted that the affidavit is
available on record. It has been available to the tax
authorities all along. The affidavit is dated 21.08.2015. The
assessment proceedings after the issuance of notice u/s 148
for the transactions pertaining to 2012 commenced on
25.03.2017. Since the affidavit was available to the AO as
well as the CIT(A), the tax authorities had ample opportunity
to either call for the said lady or rebut the evidences filed.
Thus, merely because it was argued that without assailing or
examining the contents of the affidavit, the assessee should
not be forced to go through the entire process. Some fact
should be on record to justify such a prayer. It was re-
iterated that the sole issue for consideration is the deposit of
ITA 1080/CHD/2018 A.Y. 2010-11 Page 8 of 19
Rs. 43,70,000/- in India Bulls account of the assessee. The
assessee has consistently argued that these were funds
available to the assessee from Shri Jarnail Singh a close
family friend. The availability of funds with Shri Jarnail
Singh has been demonstrated before the AO. It is not
doubted by the de partment. Since by the said time , Shri
Jarnail Singh was no longer alive, the evidence of part
payment back to Shri Jarnail Singh during his life time was a
fact argued before the AO. Affidavit of Shri Jarnail Singh’s
daughter accepting the fact that the profit as and when
required and due were received by her father was a statement
on an Affidavit available before the AO. In these
circumstances, it was his submission that remand back to the
AO for considering the very same evidences which the
assessee all along has placed before the AO in the original
round would be an act of harassment for the assessee. It was
his submission that none of the relevant facts i.e. Shri
Jarnail Singh was about 85 years old at the relevant point of
time; that he was a close friend of his father; that on account
of the trust and proximity of relationships, the fund in the
insurance was invested through the assessee. The investment
made in the India Bulls account was also on behalf of the
Shri Jarnail Singh from the funds made available to him and
the profit as and when was sought by Shri Jarnail Singh was
ITA 1080/CHD/2018 A.Y. 2010-11 Page 9 of 19
shared by the assessee. These facts were affirmed by Shri
Jarnail Singh’s daughter. In the circumstances it was his
submission that the assessee making investment for Shri
Jarnail Singh through his bank account alongwith all the
supportive evidences already available in the first round
before the AO should not be re manded back to the AO as
apart from these evidences the assessee can place no further
evidence. The evidence filed and already available on record,
it was submitted, was sufficient to explain the deposits and
the relief, it was argued has been denied purely on
suspicions.
I have heard the submissions and perused the material
on record. The facts in the present case have been summed up
in the impugned order by the ld. CIT(A) in the following
manner :
Ground of appeal no 2 is challenging the addition of Rs. 43,70,000/- on account of unexplained investment u/s 69 of the I.T Act. 7.1 Brief facts of the case are that the assessee had deposited cash of Rs. 74,70,000/- in his bank account maintained with ING VYSYA BANK, Chandigarh. In response to the query by t he department to explain the source of this cash deposit, the assessee stated that one Sh. Jarnail Singh advanced him the impugned cash of Rs 43,70,000/- and Rs. 31,00,000/-totaling to Rs 74,70,000/-for making investment in share market and in Life Insurance respectively on his behalf. The assessee further stated that he invested Rs. 31,00,416/- in Kotak Life Insurance in the name of Sh. Jarnail Singh and an investment of Rs.40,00,000/- was made in India Bulls Securities in his own name (on behalf of Jarnail Singh), in which there was a loss of Rs 39,50,000/- while trading of shares of different companies hence, the amount was never returned. The assessee was asked to furnish documentary evidence regarding having received the advance of Rs 43,70,000/- from Sh. Jarnail Singh but the assessee failed to adduce any evidence in this regard except saying that Sh. Jarnail Singh
ITA 1080/CHD/2018 A.Y. 2010-11 Page 10 of 19 had verbally asked him to invest in shares on his behalf. The AO was of the opinion that the amount of Rs 43,70,000/- deposited in this bank account by the assessee in cash is his own income earned by him from some undisclosed sources and out of which the amount of Rs 40,00,000/- was invested by him in India Bulls Securities in his name. The amount has never been returned to Sh. Jarnail Singh. Had the amount of Rs 43,70,000/- received in cash from Sh. Jarnail Singh the investment in India Bulls Securities would have been made in the name of Sh. Jarnail Singh. . In view of these facts the amount of Rs 43,70,000/- was added to the income of the assessee on account of unexplained cash deposit in the bank account.”
6.1. The assessee's explanation on which heavy reliance has
been placed by the ld. AR which has been extracted by the ld.
Commissioner (Appeals) in para 7.2 is also extracted
he reunder for the sake of completeness :
7.2 On this issue AR of the assessee made written submission, which is reproduced below:
"While completing the assessment, the AO has observed that Mr Kamaldeep Singh deposited an amount of Rs.74,70,000 in Shares and Insurance. This fact was not denied before AO. However, AO has not appreciated the fact that this amount belonged to Mr Jarnail Singh aged 85 years. Mr. Gurdeep Singh Virk father of Mr. Kamaldeep Singh, a family friend of Mr Jarnail Singh and have very cordial relations with him. Since Mr Jarnail Singh was bed ridden and unable to move, he passed an amount of Rs. 74,70,000 after withdrawing Rs. 75 Lakh from his bank account. He received an amount of Rs. 1,07,92,968/- on account of acquisition of agricultural land owned by him. He deposited this amount of Rs.1,07,92,968/- in his bank account and paid an amount of Rs.74,70,000 to Mr Kamal Deep who was in banking employment and paid to him after withdrawing an amount of Rs. 75 lakh from his bank account. The entire amount was paid by Mr Jarnail Singh to Kamaldeep Singh in cash. Mr Kamaldeep deposited an amount of Rs.31 lakh in the name of Mr Jarnail Singh in Insurance and balance in shares. The motive of Mr Jarnail Singh in these deposits through Mr Kamaldeep was that he will get profit in Insurance and shares. Mr Jarnail Singh during the course of assessment proceeding accepted that he paid this amount to Mr Kamaldeep Singh and also received back by cheque an amount of Rs.31 lakh on account of Insurance. A copy of his confirmation is enclosed. This confirmation was duly filed with AO during the course of assessment. This receipt was witnessed by his daughter Tejinder Kaur and one Mr Baldev Singh.
ITA 1080/CHD/2018 A.Y. 2010-11 Page 11 of 19 Mr Kamaldeep deposited an amount of Rs.31 Lakh in his bank account and invested the same in the name of Mr Jarnail Singh in Kotak Life Insurance and balance Rs.43,70,000 in India Bulls for investment in shares. He was of the opinion that share market would increase his investment. Share market was at peak at that time. Mr Jarnail Singh was very old (85 years) and was unable to participate actively in the share market. Unfortunately, there was a loss in share market and Mr Jarnail Singh has to bear this loss. Mr Kamaldeep Singh was only an agent of Jarnail Singh acting on his behalf. As such this amount belonged to Mr Jarnail Singh. Mr.Kamaldeep Singh has nothing to own this amount or got any profit.However, Mr Gurdeep Singh Virk father of Mr Kamaldeep Singh on moral responsibility of his friend paid him an amount ofRs.10 lakh out of his pension account on 8.6.2012. After getting this amount and also Rs.31 lakh by cheque on account of Insurance, Mr Jarnail Singh issued receipt having cleared full and final amount due. The Assessing Officer has accepted having paid by Mr Jarnail Singh an amount of Rs.31 lakh on account of insurance which he received back by cheque from company. As this amount of Rs.31 lakh has been accepted by AO is included in the total amount of Rs.74,70,000 paid to Mr Kamaldeep in cash after withdrawing it from bank out ofRs.75 Lakh. Partial acceptance is without any basis. In other words he has accepted that Mr Jarnail Singh has paid the amount of Rs.74,70,000 which included Rs.31 Lakh as well.Kindly accept our plea as during assessment as well as before your goodself have done its duty to prove source. The assessee was required to satisfy AO: 1. Receiver to prove the identity of the giver. 2. Source and nature of amount so advanced. 3. Genuineness of the transaction We have satisfied and proved it with documentary evidence whereas AO has failed to prove any adverse point in our submission except that only 31 lakh was returned and other amount was not returned. In other words he has accepted having received the amount from Jarnail Singh and it has not been disputed. It is not required to verify whether amount returned or not. In our case we have returned Rs.10 lakh out of pension account to Mr jarnail Singh as full and final settlement besides Rs.31 lakh paid back by Insurance Company as Draft. An explanation prima facie reasonable cannot be rejected on caporicious or arbitrary grounds(RBN J Naidu Vs CIT29IYTR 194(Nag). The assessee is entitled to have evidence produced to be considered and an inference to be drawn there from. By merely rejecting a good explanation ignoring explanation is an error of5 law. (Bhagwati Prasad Misra Vs CIT 35 ITR 97."
6.2 Considering the facts, submissions and the evidences,
the addition made by the AO have been sustained by the ld.
ITA 1080/CHD/2018 A.Y. 2010-11 Page 12 of 19
Commissioner (Appeals) which finding is under challenge in
the present proceedings. For the sake of completeness, the
said finding is extracted hereunder :
7.3 I have considered the submissions of the assessee and perused the assessment order. It is undisputed the assessee had deposited cash of Rs. 74,70,000/- in his bank account. Thus the primary onus was on the assessee to explain the source of this cash deposit. The source of this cash deposit is explained to be amounts received from Sh. Jarnail Singh. It is further stated that Sh. Jarnail Singh advanced him the impugned cash of Rs 43,70,000/- on 16.10.2009 and Rs. 31,00,000/- on 27.10.2009 which were deposited by him in his bank account on .the said dates. The copy of the bank account of Sh. Jarnail Singh showing a withdrawal of Rs 74,70,000/- on 12.10.2009 has been furnished. It is further noticed that the assessee has purchased the insurance policy in the name of Sh. Jarnail Singh of Rs 31,00,000/- and therefore the AO has accepted the source of this deposit of Rs 31,00,000/- on 27.10.2009 has explained. The cash deposit of Rs 43,70,000/- on 16.10.2009 was used to invest Rs 40,00,000/- in India Bulls Securities in the name of the assessee himself. It has been claimed by the assessee that this investment was made on behalf of Sh. Jarnail Singh but no evidence in this regard has been provided. It is also claimed that subsequently there was a loss of Rs 39,50,000/- in trading of shares but no evidence in this regard has also been provided. It is further stated that in view of the Rs 43,70,000/-received from Sh. Jarnail Singh the father of the assessee Sh. Gurdeep Singh Virk paid Rs 10,00,000/- to Sh Jarnail Singh on 08.06.2012. No evidence in this regard to show that any money was returned to Sh. Jarnail Singh and the said money was in lieu of the Rs. 43,70,000/- received from him by his son was provided. The affidavit of daughter of Shri Jarnail Singh, Smt. Tejinder Kaur has been provided which states that the said money was provided by her father to the assessee. It is further stated in the said affidavit that Sh. Kuldeep Singh regularly gave the earning of the share market to her father. None of the contentions in this affidavit are corroborate by any supporting evidence. Nothing has been placed on record to show that the assessee was returning to Sh. Tejinder Singh, the earnings from the stock market. Thus the veracity of this affidavit is not established. Under these circumstances the only evidence provided by the assessee to support the contention that the money was given by Sh. Tejinder Singh is the bank account of Sh. Tejinder Singh showing a withdrawal of Rs 75,00,000/- on 12.10.2009. This evidence cannot taken as satisfactory evidence to explain the source of cash deposit of Rs 43,70,000/- on 16.10.2009. The assessee deposited Rs 31,00,000/- on 27.10.2009 and purchased the insurance in the name Sh. Tejinder Singh out of this money. The AO has correctly taken the source of money as explained. However it has not been explained why the amount of RS 75,00,000/- withdrawn on 12.10.2009 by Sh. Jarnail Singh and claimed to have been given to the assessee was deposited on two different dates. Nothing has been brought on record to show that the investment in the shares through India Bulls Securities made in the name of assessee was on behalf of Sh. Jarnail Singh. The trading in shares would have resulted in profits and loss from time to time but no subsequent financial transaction between the
ITA 1080/CHD/2018 A.Y. 2010-11 Page 13 of 19 assessee and Sh Jarnail Singh is visible in the bank account which could indicate but the share transactions were being done on behalf of Sh. Jarnail Singh. The claim of payment of Rs 10,00,000/- by the father of the assessee to Sh. Jarnail Singh for settlement of account is unsubstantiated. The affidavit of Smt. Tejinder Kaur is also not reliable as being unsubstantiated. Thus in the facts and the circumstance of the case the assessee has failed to explain the source of cash deposit of Rs 43,70,000/-.in his bank account on 16.10.2009. The AO has correctly treated this amount as unexplained and added to the income of the assessee. Ground of appeal no. 2 is dismissed.”
6.3 When the argument as advanced before the CIT(A) in the
light of the finding of the AO is considered, it is seen that
before the AO also, the assessee has pleaded that there were
close family relations of the assessee’s father with Shri
Jarnail Singh, 85 years old gentle man. The availability of the
stated funds from unimpeachable sources, it is seen is a fact
available in the assessment order itself. These are evidenced
from un-numbered page 2 from the assessment order and are
reproduced hereunder again for the sake of completeness:
“2. During the year under consideration the assessee has made cash deposit of Rs. 43,70,000/- on 16.10.2009 and Rs. 31,00,000/- on 27.10.2009 in his bank account No. 56501 0037399 maintained with Kotak Mahindra Bank, Sector 8 Chandigarh. The assessee was required to explain the sources of the said cash deposit. In reply, it has been stated that one Sh Jarnail Singh advance him the impugned cash of Rs 43,70,000/- and Rs. 31,00,000/-totaling Rs 74,70,000/- for making investment in share market and in Life Insurance respectively on his behalf. It has been stated that the assessee invested Rs 31,00,416/- in Kotak Life Insurance in the name of Sh. Jarnail Singh and investment of Rs 40,00,000/- was made in India Bulls Securities in the name of the assessee himself. In order to confirm and verify the cash receipt of Rs 74,70,000/- from Sh. Jarnail Singh and the sources of cash with him. (Jarnail Singh), statement of the assessee Sh. Kamaldeep Singh Virk, was recorded on 05.09.2017. 2.1 In the statement recorded, it has been deposed that Sh. Jarnail Singh was assessee's family friend. Sh. Jarnail Singh received Rs 1.07,92,968/- on 09.10.2009 in lieu of his land acquired by The Collector Land Acquisition Urban Development. Punjab. Assessee stated that Sh. Jarnail Singh had given Rs 74,70,000/- to him for investment in Kotak Life Insurance in the name of Sh. Jarnail Singh and investment
ITA 1080/CHD/2018 A.Y. 2010-11 Page 14 of 19 in India Bulls Securities. Accordingly, he invested the amount received from Sh. Jarnail Singh in Kotak Life Insurance at Rs 31,00,416/- and India Bulls Securities 40,00,000/-. It has also been admitted that the amount of Rs 31,00,000/- invested in Kotak Life Insurance was returned to Sh. Jarnail Singh in December, 2011 through cheque. However, the investment of Rs 40,00,000/- made by him in India Bulls Security, in his own name (assessee) there was a loss of Rs. 39,50,000/- in trading of shares of different companies hence, the amount was never returned. The assessee was asked to furnish documentary evidence regarding having received the advance of Rs 43,70,000/- from Sh. Jarnail Sinyh. But the assessee failed to adduce any evidence in this regard except saying that Sh. Jarnail Singh had verbally asked him to invest in shares on his behalf. The submission made by the assessee is not acceptable on the facts of the case. No person, who-so-ever may be, will allow to make investment of his hard earned money in the name of another person and not in his name as well as allow to retain the same by another person. 2.2 The fact is that the amount of Rs 43,70,000/- deposited in his bank account by the assessee in cash is his own income earned by him from some undisclosed sources best known to him and out of which the amount of Rs.40,00,000/- was invested by him in India Bulls Securities in his name. The amount has never been returned to Sh. Jarnail Singh. Had the amount of Rs 43,70,000/- received in cash from Sh. Jarnail Singh, the investment in India Bulls Securities would have been made in the name of Sh. Jarnail Singh. In the circumstances, an addition of Rs 43,70,000/- is made to the income returned by the assessee on account of unexplained cash deposit in the bank account. Penalty proceedings u/s 271(l)(c) of the Income Tax Act, are being initiated separately for concealment of income.”
6.4 On a reading of the above, it is seen that consistently
the assessee has argued that the funds were sourced from the
funds available with Shri Jarnail Singh. The source of the
funds with Shri Jarnail Singh admittedly is impeccable as
these were received on 09.10.2009 from the Collector, Land
Acquisition, Urban Development, Punjab totaling to Rs.
1,07,92,968/-. It is a fact that the proceedings be fore the AO
started as a result of notice issue d u/s 148 dated 25.03.2017.
It is seen that for this purpose when the assessee was
required to justify the receipt of cash amounting to Rs.
74,70,000/- from Shri Jarnail Singh, the AO as per para 2 of
ITA 1080/CHD/2018 A.Y. 2010-11 Page 15 of 19
his order, as extracted herein above, is found to have
recorded the statement of Shri Kamal Deep Singh Virk i.e. the
assessee. It is seen that nothing adverse or contrary was
noticed by the AO. The AO after having recorded his
statement considering the further supporting evidences relied
upon before him, held in para 2.1 that in response to the
require ment of furnishing documentary evidences
demonstrating advance of Rs. 43,70,000/- from Shri Jarnail
Singh, “……… the assessee failed to adduce any evidence in this regard
except saying that Sh. Jarnail Singh had verbally asked him to invest in shares on his behalf. The submission made by the assessee is not acceptable on the facts of the case. No person, who-so-ever may be, will allow to make investment of his hard earned money in the name of another person and not in his name as well as allow to retain the same by another person. The said assertion and presumption is
contrary to record. The assessee has been entrusted with
even Rs. 31 lakh in cash which the assessee as required
acting on the oral direction of Shri Jarnail Singh purchased
an Insurance Policy. This transaction has been accepted and
not questioned. Thus, there was sufficient evidence on record
to show that the assessee and Shri Jarnail Singh did have
close relations so much so that Rs. 31 lakh was handed over
in cash without any collateral with oral instruction to the
assessee. Thus, the occasion to doubt the similar oral
ITA 1080/CHD/2018 A.Y. 2010-11 Page 16 of 19
direction of Shri Jarnail Singh confirmed by Shri Jarnail
Singh’s daughter on Affidavit, it appears has been discarded
on mere suspicion.
6.5 On a reading of the impugned order, it is seen that the
assessee again reiterated the facts in greater detail namely
that the amount of Rs. 31 lacs as well as Rs. 43 lacs were
received in cash. The ld. CIT(A) in para 7.3 has taken note of
the fact that there was an evidence of withdrawal of Rs.
74,70,000/- on 2.10.2009 from the copy of the bank account
of Shri Jarnail Singh. This finding is corroborated from Paper
Book page 20 of the compilation filed before the Bench which
has been shown to be available before the AO as well as the
CIT(A). In the facts of the present case, the tax authorities
were required to be addressed on the deposit of Rs.
43,70,000/- found deposited in assessee's bank account.
Close proximity with Shri Jarnail Singh stands established.
Oral instructions qua the investment of Rs. 31 lacs handed
over in cash stands accepted out of the cash withdrawal of
Rs. 74,70,000/- made by Shri Jarnail Singh on 12.10.2009.
Rs. 31 lakhs as per oral instructions stood deposited by
assessee in Insurance policy on 27.10.2009. The assessee as
it is not noticed, erred in depositing the Rs. 43,70,000/-
considering it to be convenient in his India Bulls Securities
where he maintained a D-MAT account, in the circumstances
ITA 1080/CHD/2018 A.Y. 2010-11 Page 17 of 19
stands adequately explained and addressed. These claims
have not been upset by any counter evidence or argument
except suspicions. Shri Jarnail Singh’s daughter Ms. T.Kaur
confirms it on Affidavit. In the facts of the present case,
admittedly the evidence of Shri Jarnail Singh cannot be taken
on record as he has expired much before the issuance of
notice as per copy of the Death Certificate available on
record. It is seen that Shri Jarnail Singh expired on
31.08.2012. In this background the affidavit of Ms. Tejinder
Kaur, daughter of Shri Jarnail Singh is available on record.
The contents of the affidavit are reproduced hereunder for the
sake of convenience :
AFFIDAVIT I, Tejinder Kaur D/o Late S. Jarnail Singh, W/o Capt. Harveer Singh, R/o House No. 41, Phase 3B-1, SAS Nagar Mohali, do hereby solemnly affirm and declare as under: - 1. That I am the only living child of my parents. 2. That PUDA had acquired the agricultural land of my father Late S. Jarnail Singh and given him a cheque No. 262243 dated 6.10.2009 amounting to Rs. 1,07,92,968/-. 3. He deposited this cheque in his S.B. A/c No. 27800100000840 in the Bank of Baroda, Phase-IX, Mohali. 4. That my father was a lever patient and under treatment at Fortis Hospital Mohali. Later on it was declared Lever Cancer. 5. That he withdrawn Rs. 75 Lakhs from his this S.B. A/c on 12/10/2009 through cheque No. 964972 and planned for his life Insurance. 6. That my father given Rs. 43,70,000/- on 16.1Q.2009 to Kamaldeep Singh son of S. Gurdeep Singh Virk R/o House No. 3091, Phase-VII, Mohali, being our close family friend. My father given Rs. 31.00 lakh on 27.10.2009 for the first premium of life insurance. 7. That my father advised Kamaldeep Singh to invest Rs. 43,70,000/- in the share market and do the business on his behalf.
ITA 1080/CHD/2018 A.Y. 2010-11 Page 18 of 19 8. That Kamaldeep Singh regularly and honestly gave the earning of share market to my father whenever required by my father. 9. Unfortunately share market decline. Hence the Kamaldeep Singh had returned the remaining all amount to my father. Now nothing is due towards Kamaldeep Singh S/o Gurdeep Singh Virk R/o House No. 3091, Phase-VII, Mohali. Sd/- DEPONENT TEJINDER KAUR
6.6 A perusal of the above shows that the said lady
reiterates the availability of funds in para 2 of the above
affidavit and in paras 5, 6 and 7 of the same, the assessee’s
explanation stands supported. The said affidavit has not been
upset by way of any argument, evidence or material. In these
circumstances, I find on a careful reading of the consistent
findings of the tax authorities that instead of addressing
evidences available on record, the tax authorities have made
the addition and sustained the addition on the grounds that
the consistent submission that Shri Jarnail Singh verbally
asked the assessee to invest is a fact supported only by the
assessee and not corroborated by Shri Jarnail Singh. The
fact that Shri Jarnail Singh who had been suffering from liver
cancer etc. was no longer alive, stands ignored. The sole
surviving child does not plead ignorance on facts and infact
corroborates the assessee's version by an affidavit dated
21.08.2015. The said Affidavit is not even attempted to be
upset by the Revenue. For reasons best known to the tax
authorities, it has been left unaddressed. In the facts as they
ITA 1080/CHD/2018 A.Y. 2010-11 Page 19 of 19
stand, I am of the view that the onus placed upon by the
assessee to explain the deposits in his bank account stands
satisfactorily discharged. The orders of the AO ignoring the
evidences on whims cannot be upheld. The insistence of the
tax authorities without upsetting the evidences available on
record cannot be accepted. I find that in the facts of the
present case without any effort on the part of the Revenue to
assail the contents of the affidavits, prayer for remand back
to the AO has no meaning. Accepting the explanation of the
assessee the addition for the reasons set out hereinabove in
detail is directed to be deleted.
In the result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 26th Sept.,2019.
Sd/-
(�दवा �संह ) (DIVA SINGH) �या�यक सद�य/Judicial Member “Poonam” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��यथ�/ The Respondent 2. आयकर आयु�त/ CIT 3. आयकर आयु�त (अपील)/ The CIT(A) 4. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File 6. आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar