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Income Tax Appellate Tribunal, DELHI ‘SMC’ BENCH, NEW DELHI
Before: SHRI H.S. SIDHU
This appeal is filed by the Assessee against the order of the Ld. Commissioner of Income Tax [Appeals]-16, New Delhi dated 08.03.2017 pertaining to assessment year 2009-10 on the following grounds:-
1. That on facts and circumstances of the case, the order passed by Ld. CIT(A) is bad both in the eyes of law and on facts.
2. That the Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs. 6,48,067/- (being the peak balance in the cash flow statement) out of the opening cash in hand.
3. That the Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs. 6,48,067/- despite the fact that the appellant has produced all relevant details and documents before the AO as well as Ld. CIT(A) including producing the other party, who has also confirmed the transaction.
4. That the Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs. 92,487/- (being 20% of the agricultural income) which is wholly arbitrary as the appellant has received only his share of sale proceeds and all the expenses have been incurred and borne by the farmers cultivating the land.
That the impugned appellate order is arbitrary, illegal, bad in law and violation of rudimentary principles of contemporary jurisprudence. 6. That the appellant craves leave to add/ alter / all grounds of appeal
before or at the time of hearing of the appeal.
2. I have heard both the parties and perused the orders passed by the revenue authorities especially the impugned order alongwith the documentary evidences filed by the assessee to substantiate the claim of the assessee. I have also perused the Paper Book containing pages 1-41 in which the assessee has attached various documentary evidences including the reply dated 01.12.2016 to notice u/s. 250 of the I.T. Act, 1961; reply dated 13.11.2016 to notice u/s. 250 of the I.T. Act, 1961 alongwith copy of bank statement of South Indian Bank Ltd. For the FY 01.04.2008 to 31.3.2009 and copy of order issued u/s. 263 I.T. Act, 1961 dated 28.3.2014; reply dated 18.10.2016 to notice u/s. 250 of the Act dated 21.4.2014; notice u/s. 274 read with section 271 of the Act dated 28.3.2015; notice of demand u/s. 156 of the Act dated 28.3.2015; assessment order dated 27.3.2015 alongwith Annexure-A; reply dated 20.2.2015 to the notice u/s. 263 of the Act; agreement to sell dated 30.3.2008 and reply to notice u/s. 143(2) of the Act dated 24.11.2014. Ld. Counsel for the assessee also certified that these aforesaid documents filed by the assessee in the shape of Paper Book has already been filed before the revenue authorities. Ld. Counsel for the assessee also filed the Synopsis supporting the issue raised in the grounds of appeal and alognwith some cases laws to support the issue in dispute.
Ld. DR relied upon the orders passed by the revenue authorities.
In this case the assessee filed return of income on 21.12.2009 at a total income of Rs. 22,45,740/-. Agricultural income of Rs. 4,62,435/- was also shown. The AO completed the assessment u/s. 143(3) of the Act on 21.12.2011 at a total of Rs. 22,45,740/-. Subsequently, the Ld. CIT-X, New Delhi set aside the assessment order dated 21.12.2009. The AO again issued the notice u/s. 142(1) of the Act alongwith other notices as required as per law. In response to the same, assessee filed the written submissions and supporting documentary evidences. But the AO asked the assesee to explain the deposit of cash amounting to Rs.24,12,500/- in South Indian Bank Ltd. Assessee filed the documentary evidences for depositing and withdrawing the cash in the bank. Assessee was also asked to explain the opening cash of Rs. 7 lacs. Assessee replied to the same that assesee has received the same from the sale of agricultural land and stated that the amount of Rs. 6.50 lacs was forfeited as Mr. Sunil Kumar was unable to pay the balance consideration. In support of his contention, he has filed the documentary evidences before the AO. The AO added the cash peak credit of Rs. 6,48,076/- to the income of the assessee as unexplained cash u/s. 68 of the Act. Similarly, the AO also estimated the agricultural income of Rs. 1 lakh and Rs. 42,773/- on account of interest and added to the income of the assessee thereby completing the assessment u/s. 143(3)/263 in compliance of the order u/s. 263 of the Act of the Ld. CIT, who vide his impugned order partly allowed the appeal of the assessee and directed the AO to give 100% benefit of section 24(b) to the assessee and also give benefit of 20% on account of agricultural income and directed the AO to recompute the same. 5. I have also gone through the orders passed by the revenue authorities alognwith documentary evidences filed by the assessee in the shape of Paper Book containing pages 1-41 in which the assessee has attached various documentary evidences including the reply dated 01.12.2016 to notice u/s. 250 of the I.T. Act, 1961; reply dated 13.11.2016 to notice u/s. 250 of the I.T. Act, 1961 alongwith copy of bank statement of South Indian Bank Ltd. For the FY 01.04.2008 to 31.3.2009 and copy of order issued u/s. 263 I.T. Act, 1961 dated 28.3.2014; reply dated 18.10.2016 to notice u/s. 250 of the Act dated 21.4.2014; notice u/s. 274 read with section 271 of the Act dated 28.3.2015; notice of demand u/s. 156 of the Act dated 28.3.2015; assessment order dated 27.3.2015 alongwith Annexure-A; reply dated 20.2.2015 to the notice u/s. 263 of the Act; agreement to sell dated 30.3.2008 and reply to notice u/s. 143(2) of the Act dated 24.11.2014. I am of the considered view that assessee is an individual and deriving income from salary and from house property and other sources and filed his return of income at Rs. 22,45,740/- by showing the agricultural income of Rs. 4,62,435/-. As regards the addition of Rs. 6,48,067/- being opening balance of the current year u/s. 68 of the Act and reduction of agricultural income by Rs. 1 lakh on the ground that assessee must have explained on the agricultural income.
Keeping in view of the above facts and circumstances of the case, I am of the view that AO has made the addition u/s. 68 of the Act in the case of the assessee. For the sake of convenience, Section 68 of the Act is reproduced as under:-
Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless—
(a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB)of section 10.
I find that the AO has not appreciated the settled position of law that previous year credits cannot be added under section 68 of the I.T. Act. Therefore, the order of the revenue authorities are not sustainable in the eyes of law. My aforesaid view is fortified by the following decisions:- - ACIT vs. ATS Promotes 90 CCH 0172 All. HC and - Rajhans Towers vs. ACIT-Del.ITAT.
Keeping in view of the legal position as stated above, the addition in dispute is not tenable, hence, the same is deleted thereby allowing the appeal of the assessee. 9. In the result, the Appeal of the Assessee is allowed. The order pronounced on 16.01.2020. Sd/- [H.S. SIDHU] JUDICIAL MEMBER Dated:16-01-2020 SRB