RAJ KUMAR SACHDEVA,GURUGRAM vs. DCIT, CIRCLE-3, GURUGRAM

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ITA 88/DEL/2019Status: DisposedITAT Delhi06 February 2020AY 2010-114 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A)'s order did not sufficiently discuss how the funds were available to the assessee from his known sources. Therefore, the matter was set aside and remanded back to the CIT(A) for fresh adjudication.

What were the facts?

The assessee, a salaried employee, filed a return only after a notice under Section 148 was issued. The Assessing Officer (AO) made an addition of Rs. 4,20,000/- for a demand draft paid in cash, as the assessee's explanation was not accepted.

What were the issues?

Whether the assessee provided sufficient explanation for the source of cash used for the demand draft, and if the CIT(A) properly adjudicated this issue.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI

Before: MRS. DIVA SINGH

Hearing: 03.02.2020

The present appeal has been filed by the assessee wherein the correctness of the order dated 08.10.2018 of CIT(A)-1, Gurgaon pertaining to 2010-11 assessment year is assailed on the grounds that addition of Rs.4,20,000/- made by the Assessing Officer has been wrongly sustained in appeal.

2.

The grounds raised by the assessee appeal to be argumentative and considering these to be arguments are taken into consideration for the passing of the order. The relevant facts of the case are that no return for the year under consideration had been filed by the assessee. It is only in response to notice u/s 148 that a return was filed by the assessee.

3.

The AO required the assessee in terms of the reasons recorded to explain the demand draft amounting to Rs.4,20,000/- for which payment has been made in cash. The assessee’s explanation was not accepted leading him to make the addition of Page 1 of 5 the said amount. The issues was challenged in appeal before the CIT(A) wherein the following arguments were advanced, these are extracted at para 3.2 of page-2 of the impugned order and are reproduced for ready reference.

“3.2 A.R of the appellant filed written submission dated 05.10.2018, received in this office on 08.10.2018. Relevant part of submission reads as under:-

“The Appellant, Sh. Raj Kumar Sachcleva vide PAN AUJPS9782N was a salaried employee in the company Woods Publicity Pvt. Ltd. in the A.Y 2010-11. His case was selected for scrutiny by the Ld. Dy. Commissioner of income Tax Sh. Virendra Kumar Singh and the assessment has been completed u/s 143(3)/147 of the IT Act, 1961 on 26/12/2017 at assessed income of Rs.9,09.290/- against the returned income of Rs.4,89,292/- (copy of ITR along with computation of income for the said AY is attached herewith as Annuexure "A "). While doing so assessing officer has made addition of Rs. 4,20,000/- as unexplained cash deposit. During the period under consideration appellant had made a demand draft amounting to Rs.4,20,000 in cash. The appellant was asked to furnish the details of source of cash amounting to Rs. 4,00,000/- used to make the draft, in this regard we would like to furnish that the assessee opened an account for trading in commodities (MCX) account and incurred heavy losses. The account was opened with a Franchise of Unicorn Securities Ltd. The entire amount invested has been lost. The assessee could have claimed that as carried forward business loss but in the absence of statements (as the Franchise has closed business and phone number is not working as well) nothing could be claimed in the ITR. Appellant is having his source of income by way of salary. Salary of appellant was duly credited in the bank statement. Cash deposited in the bank out of cash withdrawals during the year and is out of the tax paid income of the past years. Out of the total cash deposited an amount of Rs.4,20,000/- was utilized towards making demand draft for Unicorn securities Ltd. (Commodities amount with MCX, as mentioned above). Hence, Total cash deposited was from the above mentioned sources. Copy of bank statements verifying the said facts is attached herewith as Annexure “B” for your verification and record. ” 3.1 Considering the explanation of the assessee the addition was sustained by the ld. CIT(A) holding as under:

3.3 I have carefully considered the appellant’s submission. The appellant has contended that the cash amounting to Rs.4,20,000/- was from cash withdrawals made from the same bank account. I have perused the copy of bank account statement filed by the appellant. It is evident from the copy of bank account that the cash withdrawals are hardly sufficient to explain even the cash deposits and household expenditure. There is no possibility of any cash being available with the appellant out of cash withdrawals for making a draft of Rs.4,20,000/-. The addition made by the A.O is accordingly confirmed. The ground of appeal is dismissed.

4.

The ld. Sr. DR heavily relied upon the impugned order.

5.

At the time of hearing, no one was present on behalf of the assessee, however on a consideration of the material available on record it was deemed appropriate to proceed with the appeal ex-parte qua assessee appellant after hearing the ld. SR. DR. On a perusal of the explanation offered it is seen that the assessee appears to have explained the necessity for making the demand draft. It is seen that the assessee is a salaried employee in the company of Woods Publicity Pvt. Ltd. The assessee is required to show that from his known sources of income the funds were available. It is seen that there is no discussion in the order as to how the stated money was available to him from his salary etc. It is seen that the withdrawals from the bank account are held to be not sufficient. Accordingly, in the interest of substantial justice, the impugned order is set aside back to the file of the ld. CIT(A). The assessee in its own interest is directed to place all supporting facts and evidences to justify the availability of the stated amount of Rs.4,20,000/- with him. It is made clear that in the eventuality of abuse of the trust the ld. CIT(A) would be at liberty to pass an order on the basis of material available on record. The assessee to place relevant facts and post earning and available funds in good faith before the ld. CIT(A). Said order was pronounced in the open court at the time of hearing itself. 6. In the result, the appeal of the assessee is allowed for statistical purposes.

The order is pronounced in the open court at the time of hearing itself on 06th February, 2020.

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