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Facts
The assessee appealed against the order of the CIT(A)/NFAC confirming additions made by the AO. The additions were primarily for unexplained investments and credits in the assessee's bank account, including amounts allegedly received from her husband and son.
Held
The Tribunal found that the assessee had sufficiently explained the source of Rs. 30,00,000/- and Rs. 8,00,000/- with evidence, deleting the addition of Rs. 38,00,000/-. However, for the remaining addition of Rs. 25,00,000/-, it was remanded back to the AO for fresh adjudication.
Key Issues
Whether the assessee has sufficiently explained the source of unexplained credits and investments, and if not, whether the additions made by the AO are justified. The issue of reopening under Section 148 and mechanical approval under Section 151 were also raised.
Sections Cited
148, 151, 69, 131, 68, 69
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सुनवाई की तारीख/Date of Hearing : 04/03/2025 उदघोषणा की तारीख/Date of Pronouncement : 07/03/2025 आदेश/Order PER LALIET KUMAR, J.M: This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 26/04/2024 pertaining to Assessment Year 2012-13.
In the present appeal Assessee has raised the following grounds:
1. That the proceedings u/s 148 appears, to have been initiated on some misconception and as such there was no reason to believe that the income of the assessee has escaped assessment.
2. That there was no nexus between the reasons to believe viz.a.viz the addition made by the Ld. AO.
3. That the Worthy CIT(A), NFAC, Delhi has erred in not giving any finding to the ground of appeal challenging the reopening of the case u/s 148 of the Act.
4. That Worthy CIT(A), NFAC, Delhi has ignored the fact that the Ld. Competent Authority (PCIT/Addl. CIT) has erred in giving a 'mechanical approval' as accorded by him u/s 151. The same is bad in law as per binding judgments of jurisdictional Bench of the ITAT, Chandigarh Bench, Chandigarh, Amritsar Bench and Hon'ble 'Apex Court’ and, therefore, the proceedings as initiated by the Assessing Officer are in law.
5. Notwithstanding the above said grounds of appeal, the Worthy CIT(A). NFAC, Delhi has erred in confirming the additions as made by the Ld.AO.
6. That the Worthy CIT(A), NFAC, Delhi has erred in confirming the addition of 17,44,450/- as unexplained investment u/s 69 of the Act.
That no cognizance has been given to the submissions as well as Affidavits filed by the Assessee.
That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
3. The assessee has not pressed the legal ground filed before us, accordingly the same is dismissed.
4. With respect to the addition on merits the submission of the assessee are as under: (i) Assessee has submitted that the sum of Rs. 30,00,000/- was received by her from her Husband, Balkishan Deewan who was an agriculturist . The husband of the assessee had received the amount from one Mr Gaurav Sharma and Manoj Kumar with whom with he had entered into an agreement for sale of his residential house. As the deal was not materialised, the sum was returned back by the said purchasers to the assessee’s husband. (ii) Beside that it was submitted that Rs. 8,00,000/- was received by her from her Son Shri Vivek Diwan, who had directly made the payment to the account of Smt. Sulekha Garg through the banking channel. (iii) She has also submitted that Rs. 25,00,000/- were received back from Smt. Madan Lal and Shri Rakesh Kumar. The amount was given to them for purchase of property on 24.01.2006. The deal could not be metallised due to some legal hassles and on account of intervention of the Elders of the family and locality the amount was received back by the assessee from the in the year 2011.
The Ld. AR submitted that the assessee was examined by the AO alongwith her Husband and the Son under section 131 of the Act, and she had explained the source of deposits made by her in her bank account. The assessee has explain the source of deposit made in her account to the tune of Rs. 30,00,000/-. The assessee has also explained the source of deposit of Rs. 8,00,000/- in the account of MS Sulekha Garg by producing the bank
3 account details of her son. She had proved the identity genuineness and creditworthiness of the son. With respect to the addition of Rs. 25,00,000/-, it was submitted that the summons sent to two persons namely Shri Madan Lal and Shri Rakesh Kumar were returned unserved and therefore, the AO had made the addition. 5.1 It was submitted by the Ld AR that one of the person namely Rakesh Kumar had already died on 01/03/2018 and therefore there was no occasion of his compliance. Further it was submitted that the matter may be remitted back to the file of the AO for determining the validity, legality or the credit worthiness and genuineness of the Rs. 25,00,000/- to the file of the AO.
Per contra the Ld. DR has relied upon the orders of the authorities below.
7. We have heard the rival contention of both the parties and perused the material available on the record. In the present case the lower authorities confirmed the additions in the end of the assessee, by giving the following reasoning 6.3.3 The AO made exhaustive enquiry u/s. 131 of the Act but neither the appellant's husband nor her son could explain the source of funds advanced by them to the appellant. The husband is not having any independent source of funds and advance claimed to be received on account of alleged sale of property being currently resided is not explained satisfactorily. The concerned persons who allegedly advanced such funds failed to appear before the AO uls. 131 of the Act. Further, the appellant has tried to claim that she had given advance in F.Y.2006-07 to certain persons without any substantial proof or explanation of source details & claimed to have received it back during the relevant F.Y. after so many years. All such transactions were done in cash & not backed by any registered document or any document which has legal evidentiary value. The claim of agricultural income of husband is general in nature without any agricultural land holding details and sale of agricultural produce evidences submitted. The claim of son's income on account of some business activity is not sufficient to explain the source of substantial amount of Rs. 8 lakhs claimed to be advanced to her. Thus, all the claims made by the appellant are general claims only. The claim that no addition u/s.68 or u/s.69 can been made on account of unexplained cash deposits in the bank account of the appellant is not correct. It is clear that the appellant has received unexplained credits in her own bank account and is thus the owner of such unaccounted money. Further. she has not satisfactorily explained the source of unexplained investment in the property. The AO has made addition on account of unexplained investment in the property. The ownership of property is not doubted, onus was on the appellant to explain the source thereof. This amount is therefore liable to be treated as income of the appellant. The AO is not obliged to search for source of such income which is in exclusive knowledge of appellant, who has clearly failed to discharge her
4 onus in this regard. As per the provisions of section 69 of the Act, it is clear those investments which are not recorded in the books of accounts, if any Thus. there is no requirement that the addition can only be made if the appellant has maintained books of account as claimed by the appellant. The only inference that can be drawn in such circumstances is that the appellant does not possess any evidences in support of the various grounds of appeal being raised by her. Therefore, the provisions of section 69 of the Act is clearly applicable in this case with respect to unexplained investment in the purchase of property which has been claimed by the appellant without any details or evidences being submitted in support of such claims. It is noted that the provisions of section 69 are similar to that of Section 68 of the Act regarding the onus required to be discharged by the appellant to explain the source of investments made in impugned property
8. The reasoning given by the lower authorities, is factually incorrect as the assesse, her husband and son statements were recorded and in their statements they had explained the source of the money deposited in the account for purchase of the property. The assessee in reply to question No. 6 in her statement had explained the source of money deposited in the account of Smt. Sulekha Garg. Besides that in reply to the question No. 7 at page 3 of her statement, it was explained that Rs. 25,00,000/- were received by her from her husband. Her husband, in turn had received the amount from Shri Madan Lal and Shri Rakesh Kumar to whom the advances were given of Rs. 25,00,000/- were given in the year 2006. Despite the assessee making the above statement, no question was asked by the AO from the husband of the assessee in respect to the amount of Rs. 25,00,000/-.
8.1 In the examination of the husband, the husband in reply to Question no. 5 of the AO had submitted that he had received the advance of Rs. 30,00,000/- from Shri Gaurav Sharma and Shri Manoj Kumar for selling his house at Shaktinagar, Yamunanagar. He had also given the copy of the agreement wherein it was mentioned that a sum of Rs. 30,00,000/- Lacs was received by him from the said two persons. He relied upon the decision of the Tribunal in this regard with the preposition that even the unregistered document can be relied upon for the collateral purposes. 8.2 Similarly, in the statement of Shri Vivek Deewan Son of the Assessee, in reply to Question No. 4 & 5 the son had mentioned that he had given Rs. 8,00,000/- to Smt Sulekha Garg for purchasing the land on behalf of his mothed.
We found that the assessee had explained the source of Rs. 30,00,000/- and Rs. 8,00,000/- being received by her from her husband and son respectively. In fact the lower authorities had disbelieved the version of the assessee on the pretext that the assessee failed to give the substantial proof or explanation to the source of the money. We found that the above said findings of the Ld. CIT(A) /AO are without any basis as the assessee has provided the sufficient evidence and explanation thereby explaining the source of Rs. 30,00,000/- and Rs. 8,00,000/-. In fact the unregistered agreement relied upon by the assessee, was rejected by the lower authority on the pretext that the same cannot be accepted as a valid piece of evidence. The Ld. AR, has drawn our attention to the decision of the Tribunal in and other decisions whereby the Tribunal has held that even the unregistered documents can be relied upon for the collateral purposes. Relying upon these decisions of the Tribunal, we are of the opinion that through the agreement was unregistered documents, however the same can be relied upon for the purposes of ascertaining the genuineness of the amount transacted between the parties. In view thereof we are of the considered opinion once the assessee explained the source of the investment then no addition can be made under section 68 & 69 of the Act. In view thereof we delete the addition of Rs. 38,00,000/-.
9.1 In respect of the addition of remaining Rs. 25,00,000/- 9.2 In this regard, the AO at page 6 of his order mentioned that Shri Madan Lal from whom the advance were received by the husband, had not attended the hearing despite service of the summons under section 131 of the Act. Similarly, Shri Rakesh Kumar has also failed to appear before the AO. On account of failure of Shri Madan Lal and Shri Rakesh Kumar to appear before the AO, the AO has dismissed he explanation of the assessee that the advance were received back by her from them. Further, it was noted that merely filing of the affidavit in support of the return of advances is not sufficient. The Ld. CIT(A), had confirmed the addition. Before us, it was 6 submitted by the Ld. AR that this issue of addition of Rs. 25,00,000/- may kindly be remitted back to the file of the AO as the assessee has withdrawn the amount which is duly corroborated from the bank statement for the purposes of giving it to Shri Madan Lal and Shri Rakesh Kumar. Further it was submitted that one of the person Rakesh Kumar had already died on 01/03/2018 and was not available to answer the summons issued by the AO under section 131 of the Act, during the scrutiny assessment proceedings.
9.3 We have perused the record and in our considered opinion since the assesseee has produced the bank statement to show the withdrawal of amount for making the advances to Shri Madan Lal and Shri Rakesh therefore it will be in the interest of justice that the matter may be remanded back to the file of the Ld. AO for deciding the issue afresh after affording opportunity of hearing to the assessee.
In the result, appeal of the assessee is partly allowed.