BALRAJ SINGH,MEERUT vs. ITO, WARD- 1(2), MEERUT

The facts in brief are that an AIR information was received from CIB, Kanpur that the assessee had deposited cash of Rs.40,65,117/- in his Savings Bank Account with Union Bank of India during Financial Year 2009-10. Since source of cash deposits was not explained in response to the query letter dated 04.01.2017 and the PAN and ITR of the assessee was also not available, therefore, prima facie believe was entertained u/s 147 that cash deposited by the assessee was out of income from undisclosed sources. Accordingly, notice u/s.148 was issued on 21.03.2017. However, as per the assessment order, in response to such notice no compliance was made neither any of the other statutory notices was complied with. Finally, notice issued u/s.144 for passing the best judgment assessment not complied with. Accordingly, Assessing Officer added the entire amount of Rs.40,65,117/- u/s.68.

Before the Ld. CIT(A), the assessee had filed additional evidences in the form of PAN, address of the assessee, copy of agricultural holdings, copy of affidavits of brothers of the assessee, Shri Balraj Singh and Shri Raghuraj Singh along with copy of tax audit report, ITR V and computation of income of Shri Raghuraj Singh, stating that these were the Toll receipts from the business of his brother, Shri Raghuraj Singh, copy of security deposit of Executive Engineer, National Highway, PWD, Ghaziabad and catena of precedence were also filed to prove that the money deposited belonged to his brother out of toll collection business. All these evidences were forwarded to the Assessing Officer along with application under Rule 46A. Ld. Assessing Officer has given his remand report which has been incorporated in the impugned appellate order at pages 3 to 5. In response to the said remand report, assessee has also filed his rebuttal.

Ld. CIT (A) though admitted the additional evidences but disbelieved the contention that younger brother of the assessee had deposited the cash in his Savings Bank Account earned out of his business from operating a toll collection of point of PWD on National Highway Division after observing and holding as under:

Before us, ld. counsel for the assessee on merits of the case submitted that the assessee’s brother was given a contract for toll collection from National Highway Division, PWD, Ghaziabad. Total toll collection disclosed in the P&L account and balance-sheet of Shri Raghuraj Singh was Rs.1,41,83,370/- from which Rs.1,48,394/- was declared as income. All these figures are appearing in the audited P&L account. The receipt of Rs.40,65,117/- were deposited in the bank account wherein all the brothers of the assessee and his nephew were the joint holders which was opened as Savings Bank Account in early 1990. The total Toll charges deposited, other expenses including security deposited and adjusted have been merged with the Toll received and paid. The Savings Bank Account has been merged with the Union Bank operated later on. He also drew our attention to the day to day cash deposits of Rs.40,65,117/- which are appearing at pages 29 to 30 of the appellate order. He pointed out that the details of cash deposits also includes the copy of bank account in which cash was deposited and all these are duly verifiable on the entries in the books of account. Thus, all these facts have not been properly appreciated, and therefore, matter needs to be re-examined. Accordingly, this issue should be remanded back to the file of the Assessing Officer to examine the issue of cash deposits on the basis of material evidence produced during the course of appellate proceedings including the books of account and bank details of Shri Raghuraj Singh, brother of the assessee.

On the other hand, ld. DR referred to the various observations made by the Ld. CIT (A) in his orders as well as the remand report submitted by the Assessing Officer.

After considering the rival submissions and on perusal of the relevant findings given in the impugned orders, we find that it is an undisputed fact that the only source of income which assessee is having is from agricultural operations. The bank account in which amount has been found to be deposited has been stated to be opened by the assessee along with younger brothers and his nephew. Further, before the Ld. CIT (A) assessee has filed various additional evidences to demonstrate that his younger brother, Shri Raghuraj Singh was awarded a contract from NHAI, PWD, Ghaziabad for the area. Since, the entire Toll was received in cash, therefore, same were deposited in the common Savings Bank Account. These Toll receipts have been stated to be declared by Shri Raghuraj Singh in his audited account and income tax return wherein the entire Toll receipts have been declared along with Toll receipts deposited to the Government Account and various other expenses. The Toll charges received have been stated to be Rs.1,41,83,370/- and after deducting various expenses, the Toll charges paid was Rs.1,27,53,000/-. The net profit derives from such business by Shri Raghuraj Singh was Rs.1,48,394/-. Once assessee had no other source of income other than agriculture income and the bank account does not belong alone to the assessee, then the explanation given that the cash deposit could be out of the Toll received business of the assessee brother, Shri Raghuraj Singh cannot be simply brushed aside. The reasons cited by the Ld. CIT(A) for rejecting the assessee’s explanation is not based on correct appreciation of facts put up before him nor he has tried to analyze day to day cash deposits in the bank account, vis-a- vis the books of account maintained by Shri Raghuraj Singh which was subject to audit also. Under these facts and circumstances of the case and in the interest of justice, we are remanding this matter to the file of the Assessing Officer to examine all the evidences and to verify the cash deposits from the assessment records and the books of account of Shri Raghuraj Singh. The ld. Assessing Officer shall provide due and effective opportunity of hearing to the assessee to substantiate his case and assessee is also directed to co- operate with the Assessing Officer.

In the result, the appeal of the assessee is allowed for statistical purposes.