KRISHNARAJ SINGH HUF ,JAIPUR vs. ITO-WD-6(2), JAIPUR

Under the facts and circumstances, the Hon'ble CIT (Appeals) erred in confirming the order dated 30.12.2019, whereby the Learned A.O. has made an addition u/s 69A r.w.s. 115BBE of Rs. 21,39,000/- despite the fact that the 2

Without prejudice to the GOA No. 1, under the facts and circumstances, the Hon'ble CIT (Appeals) erred in confirming the addition u/s 69A r.w.s. 115BBE of Rs. 21,39,000/-, as in the case of the assessee sec. 69A r.w.s. 115BBE is not applicable. The action of the Ld. A.O. was arbitrary, illegal and therefore deserves to be quashed or set aside.

Without prejudice to the GOA No. 1-3, under the facts and circumstances, the Hon'ble CIT (Appeals) erred in confirming the addition u/s 69A r.w.s. 115BBE of Rs. 21,39,000/- in the hands of HUF. The income belongs to HUF and family members only. The action of the Ld. A.O. was arbitrary, illegal and therefore deserves to be quashed or set aside.

The appellant reserves his right to add, alter, modify, or delete any grounds of appeal.

The brief facts of the case are that the assessee individual filed his return of income at Rs. 18,820/- u/s. 139(4) of the Act on 23.01.2018. The case of the assessee was selected for limited scrutiny for the reasons i). PAN Applied after the date of announcement of demonetization and large cash deposit during the demonetization period. The case was assessed after making addition of Rs. 21,39,000/- (Being amount of cash deposits in various accounts) u/s. 69A of the Act r.w.s. 115BBE of the Act. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT (A), who in turn confirmed the order of the AO by dismissing the appeal of the assessee. The assessee being further aggrieved preferred the present appeal before us.

We have gone through the order of the AO, order of the Ld. CIT(A) and submissions of the assessee alongwith grounds taken before us. The outcome of the matter depends on its facts, which are observed as under: A). The assessee deposited Rs. 18.99 Lacs in Karur Vysya Bank and Rs. 7.4 Lacs in ICICI Bank; B). The assessee H.U.F represents his joint family and the members of this joint family has agricultural land in their names, like the assessee’s individual has inherited land at District Hanumangarh, Tehsil Nohar to the tune of 31 bighas, the younger brother of the assessee also has same size of land at District Hanumangarh, Tehsil Nohar; C). The assessee has submitted the list of cultivators on his land and year wise receipt of rental from the same as per para 3 of the order. In para 3.1 of the order the AO himself has agreed that “The assessee produced seven persons and their statements were recorded on oath vide summon u/s. 131 of the Act dated: 11.11.2019. On perusal of the reply and documents of the land verifications of the farmers, it is proved that the assessee has agriculture land and the assessee has received rental income from agriculture land.”

Now, in view of the above facts, which are not under challenge by either of the party, it can be firmly relied upon that the assessee HUF has adequate land holding and rental income from the land is also there. The identity of the cultivators is also not under challenge. The only ground which the AO has taken while making the addition was as held by him in para 4.4 of the order as under:

In view of the above findings of the AO, it is observed that the HUF is a creation of law and the HUF of the assessee was already in existence in view of the property being acquired by the forefathers of the assessee and not his individually acquired one. The argument that the HUF never took PAN No. and never filed and declared his agricultural income also in the period/years prior to demonetization period is also not tenable, as the primary income being rent from agricultural land is not liable to tax [This fact has already been accepted by the AO as mentioned (supra)] and the assessee HUF does not have any other income liable to tax. 6. Although, an issue w.r.t. keeping the sum of HUF with his grandfather has relevance, but the same has to be examined w.r.t. back ground of the assessee, his profession/vocation, source of income, age factor, literacy and generation to which he belongs. The total amount as shown by the assessee from various tenants was Rs. 35,30,480/- and the amount under dispute is Rs. 26.39 Lacs, meaning thereby a difference of Rs. Around 10 Lacs and which is sufficient to meet the needs of old person/couple in a village to meet his day-to-day needs. The provisions contained in section 68 To 69D of the Act are deeming provisions and as per the established jurisprudence; to make an assessee liable under this section there must be a strong evidence and logic should be there with the revenue, simply on presumptions and surmises levy under these sections can’t be sustained. Under the Income-tax Act, there are certain deeming provisions, providing for deemed income in certain circumstances. As the Legislature felt that the Assessing Officer cannot rope in each and every type of income and an assessee may conceal by making a cover or creating a facade, it inserted certain provisions whereby failure to explain to the entire satisfaction the nature and source of money, bullion, jewellery or other valuable articles, expenditure, etc., are deemed as income.

As per section 69A of the Income-tax Act, 1961, in any financial year if the assessee is found to be the owner of any money, bullion, jewelry or other valuable article and such money, bullion, jewelry or other valuable article is not recorded in the books of account, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of such money, bullion, jewellery or other valuable article, or the explanation offered is not satisfactory in the opinion of the Assessing Officer, then the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee of such financial year.In Ms. Reena H. Mirchandani v. Asstt. CIT [2000] 66 TTJ (Delhi)(TM) 91, it has been held that the presumption under section 69Aof the Act is a rebuttable presumption and the same is to be applied where the assessee offers no explanation about the nature and source of money. It has been held that in order to invoke section 69A it is necessary to prove that the assessee’s conviction under sections 132 and 135 of the Customs Act cannot be made the basis for presumption of ownership against the assessee contemplated under section 69A of the Actfor making addition under that section. 8. The burden to prove that the assessee is the owner of assets so found is on the revenue. The mere fact that on a search certain assets are found in the possession of a person cannot be said to attract provisions of this section, unless it is established by the revenue that the person in whose possession articles were found is the owner thereof.Once an assessee is found to be the owner of any money, bullion, jewellery or other valuable articles, the burden to explain its nature and source shall be on the assessee. Section 69A of the Act brings to tax the value of specified articles in the financial year in which he is found to be the 7