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Facts
The appeal concerns Assessment Year 2011-12 and involves additions of Rs. 8 Lacs and Rs. 9 Lacs. This is the second round of appeal after the assessment was restored to the AO. The AO had initially assessed total income at Rs. 110.99 Lacs, which was reduced to Rs. 95.01 Lacs by the CIT(A) after partial relief. The addition of Rs. 9 Lacs stemmed from undisclosed receipts related to flooring and furnishing work, while the Rs. 8 Lacs addition was based on unexplained cash found during a search.
Held
The Tribunal held that the addition of Rs. 9 Lacs, related to additional payment for flooring and furnishing, was for work actually carried out by the assessee, and accordingly estimated income at 20% of the additional receipt. For the Rs. 8 Lacs addition, although the cash book was not updated, the Tribunal acknowledged that the assessee might have had cash-in-hand from apple trading and restricted the addition to Rs. 1 Lacs, deleting the remainder.
Key Issues
Whether the additions of Rs. 9 Lacs (for flooring/furnishing) and Rs. 8 Lacs (unexplained cash) made by the AO are justified, and if so, to what extent, considering the assessee's explanations and supporting evidence.
Sections Cited
143(3), 254, 131, 68
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Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH
Before: HON’BLE SHRI LALIET KUMAR & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रणवष� / Assessment Year: 2011-12) Shri Naresh Chauhan DCIT, Central Circle II, बनाम/ Anandam Villa,Near Sarkaik Niwas, Room No. G02, CR Building Horticulture Road, Navbhar Sector 17, Chandigarh. Vs. Shimla. 171006. �थायीलेखासं./जीआइआरसं./PAN/GIR No. ABPPC-2719-N (अपीलाथ�/Appellant) (��थ� / Respondent) : अपीलाथ�कीओरसे/ Appellant by : Sh. Vishal Mohan, (Sr. Adv) with Sh. Parveen Sharma(Adv.). – Ld. AR ��थ�कीओरसे/Respondent by : Smt. Kusum Bansal (CIT) – Ld. DR सुनवाईकीतारीख/Date of Hearing : 16-04-2025 घोषणाकीतारीख /Date of Pronouncement : 21-04-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2011-12 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 08-02-2019 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s.254 of the Act on 19-07-2017.
It is quite evident that this is second round of appeal since the assessment was restored back by Tribunal to Ld. AO vide common order & 348/Chd/2016 dated 03-08-2016 for fresh assessment in the light of additional evidences to be produced by the assessee. In the assessment order as framed by Ld. AO in the first round, Ld. AO made various additions out of which addition of Rs.8 Lacs and addition of Rs.9 Lacs is subject matter of present appeal before us. The Ld. AO assessed total income of Rs.110.99 Lacs. The Ld. CIT(A) granted partial relief but sustained these two additions which reduced the assessed income to Rs.95.01 Lacs. Upon further appeal, Tribunal restored the assessment back to the file of Ld. AO.
Pursuant to the directions of Tribunal, Ld. AO re-framed the assessment on 19-07-2017 wherein Ld. AO has retained both these additions and again assessed the income at Rs.95.01 Lacs only. The Ld. CIT(A) confirmed the addition of Rs.8 Lacs on the ground that the assessee did not file any additional evidence. The issue of addition of Rs.9 Lacs was not adjudicated on the ground that no such addition was made by Ld. AO in the assessment order. This observation is clearly erroneous one since this addition forms part of assessed income of Rs.95.01 Lacs. Aggrieved, the assessee is in further appeal before us.
Upon perusal of first assessment order dated 28-02-2013, it could be seen that the addition of Rs.9 Lacs stem from the fact that the assessee sold a flat to Sh. Neeraj Kapoor for Rs.20 Lacs. However, Shri Neeraj Kapoor, in statement recorded u/s 131 on 13-10-2010, admitted that self cheques of Rs.9 Lacs were also given to the assessee for flooring and furnishing to be done by the assessee. This was in addition to sale price of Rs.20 Lacs. Accordingly, Ld. AO added the same as undisclosed receipts in the hands of the assessee. This addition has been retained in the second round of assessment.
It is quite clear that the additional payment of Rs.9 Lacs has been given for certain flooring and furnishing work being done by the assessee. Apparently, this work has been carried out by the assessee. On these facts, we estimate income of 20% against additional receipt of Rs.9 Lacs. The assessee succeeds partially in its ground of appeal
6. The second addition of Rs.8 Lacs represents cash found from the premises of the assessee during search at his residence. The assessee stated that the source of the same was withdrawals from the bank and sale proceeds of apple fruits. The cash of Rs.2 Lacs was stated to be withdrawn for labour payments. The sale proceeds of apple as well as cash withdrawals were stated to be not accounted for in the books of accounts. During the course of assessment proceedings, the assessee stated that sale of apple was for Rs.7.48 Lacs and business cash-in-hand was for Rs.0.51 Lacs. In support, the assessee filed extract of cash book which had opening balance of Rs.1.36 Lacs. The Ld. AO rejected the same on the ground that books of the assessee was not updated at the time of search and therefore, the cash was treated as unexplained cash credit u/s 68 and added to the income of the assessee. As noted earlier, Ld. AO has repeated this addition in second round and Ld. CIT(A) has confirmed the same against which the assessee is in further appeal before us.
7. We find that the assessee’s cash book on the date of search was not updated. However, the said fact alone, would not justify confirmation of addition in the hands of the assessee. The assessee was well within his right to explain the sources thereof during the course of assessment proceedings. It would appear that the assessee was having certain cash-in-hand on the date of search and it has carried out trading of apples. Under these circumstances, we restrict the impugned addition to lump sum amount of Rs.1 Lacs and delete the remaining addition. The assessee partially succeeds in its corresponding grounds of appeal
8. The appeal stands partly allowed. Order pronounced on 21-04-2025.