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Income Tax Appellate Tribunal, Delhi Bench “SMC”, New Delhi
Before: SHRI N.K. SAINI
Assessee by: Sh. Ravindra Bhattra, CA Respondent by: Smt. Athiya Ved, Sr. D.R. Date of Hearing: 07 06 2018 Date of Pronouncement: 13 08 2018 O R D E R
This is an appeal by the assessee against the order dated 10.11.2017 of CIT(A), Faridabad. Following grounds have been raised in this appeal:- i. That the appellant denies his liability to be assessed at income of Rs. 12,11,160/- and accordingly denies his liability to pay tax, surcharge and interest demanded thereon. ii. That on the facts as well as on law, Ld. AO erred in making addition of Rs. 2,68,000/- being cash paid for purchase of new car by treating it as undisclosed investment u/s 69 of the Income Tax Act, 1961. iii. That having regard to the facts and circumstances of the case, Ld. AO has erred in law and on facts in charging interest u/s 234B and 234C of the Income Tax Act, 1961.
Vide ground nos. 1 and 2, the grievance of the assessee relates to the confirmation of addition of Rs. 2,68,000/- made by the AO u/s 69 of the Income Tax Act, 1961 (hereinafter referred as to the Act). Facts of the case in brief are that the assessee filed the return of income on 24.3.2015 declaring an income of Rs. 9,43,160/-. Later on the case was selected for scrutiny. During the course of assessment proceedings, the AO noticed that the assessee purchased a new car from M/s Vardhman Cars Pvt. Ltd., and paid an amount of Rs. 10,8000/-. He asked the assessee to explain the total expenditure made on purchase of car and source thereof. The assessee submitted that he had paid the following amounts for purchase of car.
Dated Mode of Payment Amount 03.11.2013 Cash Payment to Vardhman Cars Pvt. 5,43,000/- Ltd. 03.11.2013 Credit Card to Vardhman Cars Pvt. 15,000/- Ltd. 18.11.2013 Loan from SBI to Vardhman Car Pvt. 4,50,000/- Ltd.
The assessee also furnished the copies of cash receipts issued by M/s Vardhman Cars Pvt. Ltd for Rs. 5,43,000/-. The AO thereafter issued a letter to M/s Vardhman Cars Pvt. Ltd (formerly known as Vardhman Cars Pvt. Ltd) with the request to furnish the complete details of payment made to the company by the assessee for the purchase of car on 3.11.2013. In response, the said company submitted that the car was sold on 11.3.2013 and also furnished the copy of ledger account which read as under:-
S. Date of Payment Mode of Payment Amount (Dr.) Amount (Cr.) No. 1. 27.10.2013 Cash for booking 50,000/- of duster car 2. 03.11.2013 Cash Paid 5,43,000/- 3. 03.11.2013 Sale of car 9,39,454/- 4. 03.11.2013 Credit Car 15,000/- 5. 03.11.2013 Regn. Charges 64,080/- 6. 03.11.2013 Insurance 32,966/- Charges 7. 03.11.2013 Logistics Charges 8,500/- 8. 03.11.2013 Loan from SBI 4,50,000/- 9. 03.11.2013 Accessories 13,000/- Charges Total 10,58,000/- 10,58,000/-
The AO observed that the information received from the company revealed that the assessee had paid a sum of Rs. 5,93,000/- while the assessee explained the total cash payment of Rs. 5,43,000/-. He, therefore, made the addition of Rs. 50,000/-. The AO also observed that the source of investment furnished by the assessee was as under;-
Loan taken from SBI Rs. 4,50,000/- Through Credit Card Rs. 15,000/- Sale of old car to Shri Vijay Singh Rs. 2,25,000/- Cash Payment Rs. 5,43,000/- The AO asked the assessee to furnish complete address of the old car purchaser and after getting the address, he sent a letter through speed post which returned back unserved with the postal remarks i.e. “incomplete address without part”. He, therefore, added a sum of Rs. 2,25,000/-.
The AO also asked the assessee to furnish the source of cash payment of Rs. 5,43,000/-. The assessee submitted that a sum of Rs. 1,49,800/- was withdrawn from Standard Chartered bank account no. 52610819255 and sum of Rs. 3,95,000/- was withdrawn from HDFC Bank Account No. 07071000030663. The AO on perusing bank statement of Standard Chartered Bank observed that the assessee had made withdrawals from ATM throughout the year for his household expenses therefore, those may not be considered for the purchase of car. He also observed that the bank statement of HDFC revealed that the payments were transferred through NEFT to other account in the Axis Bank, there were no cash withdrawals for a sum of Rs. 1,80,000/- and that the another withdrawals were throughout the year for day to day household expenses. However, he accepted the withdrawals of Rs. 50,000/- on 21.11.2013 for the purposes of purchase of car and was of the view that the assessee could not establish the cash payment made to M/s Vardhman Cars Pvt. Ltd for Rs. 2,68,000/- (5,43,000/- minus Rs. 2,25,000/- minus Rs. 50,000/-) and accordingly the addition of Rs.2,68,000/- was also made.
Being aggrieved the assessee carried the matter to the learned CIT(A) who deleted the additions of Rs. 50,000/- and Rs. 2,25,000/- by observing that the assessee had withdrawn Rs. 50,000/- from his bank account on 27.10.2013 and that the assessee could explain the amount of Rs. 2,25,000/- received from sale of old car.
As regards to the addition of Rs. 2,68,000/-, the submissions of the assessee were as under:- 6.1 That Ld. Assessing Officer has made an addition of Rs. 268000/- to the income of the appellant being an investment for purchase of Duster Car from undisclosed source of the appellant. The appellant has given detail of cash withdrawal from his bank accounts on various dates. But the Ld. Assessing Officer has refused to accept the contention of the assessee that such withdrawals were for the purchase of car. The disallowance was made only on the assumptions that the cash withdrawal from two bank accounts on different dates was to meet day to day house hold expenses of the appellant, but not for purchase of car. The Ld. Assessing Officer has not given any reasonable evidence for his assumption.
4.11 Assessee being salaried person employed with M/s Panasonic India Pvt. Ltd. had declared total income of Rs. 9,43,160/- for the assessment year under consideration. His spouse Smt. Garima Sharma is also a salaried person and is an income tax assessee having PAN - ASCPM5888Q. Copy of ITR of both the appellant and his spouse are enclosed at Page no. 48-49 of the paper book. 4.l2 During the year under consideration both assessee and his spouse withdraw substantial cash from their bank accounts for purchase of Duster car. Copy of bank statements of appellant Sh. Vineet Sharma and his spouse Smt. Garima Sharma is enclosed at page no. 23-47 of the paper book. Summary of cash withdrawing during that period is as under: Period Amount of cash withdrawal by Sh. Amount of cash withdrawal by Smt. Vineet Sharma from: Garima Sharma from: HDFC Bank Standard Citi Bank HDFC Bank Chartered Bank From Rs. 53,900/- Rs. 72,000/- 68,000/- Rs. 78,800/- 01.04.2013 to 31.07.2013 From Rs. Rs. 81,500/- Rs. 94,200/- Rs. 1,51,500/- 01.08.2013 to 1,72,000/- 03.11.2013 Total Rs. Rs. 1,53,500/- Rs. 1,62,200/- Rs. 2,30,300/- 2,25,900/- Total Rs. 7,71,900/- withdrawal from both of them
4.13 Your Honour, we respectfully submit that cash withdrawal of Rs. 7,71,900/- as explained above, from the appellant's and his spouse's account was not merely for day to day house hold expenses. It also Includes the cash withdrawal Which was drawn for purchase of car.
4.14 Further, it is clearly evident that appellant has done much household expenditure through his credit and debit cards also. The total of that payments is of Rs. 1,75,000/- approx. for the period from 01.04.2013 to 03.11.2013 which can also be evident from the Standard Chartered Bank statement. Please refer page no. 25-39 Of Paper Book.
4.15 In this instant case, the cash expended by the appellant of Rs. 268000/- is self explained from accumulated cash probably generated and available from surplus (Income declared in past Return of Income minus reasonable household withdrawals) emerging from income declared in past ITRs. The various withdrawals from appellant's and his spouse's bank account till the date of purchase of car further strengthen assessee's case for probable availability of such above-said cash from part and current year savings so as to make investment in present year. 4.16 Importantly, we respectfully submit before Your Honour that there is no legal bar in keeping cash at home and keeping cash at home before purchasing a new car is not unusual. 4.17 Your honour, in facts of the case, there is only a time gap between the appellant's withdrawals from their respective bank accounts and purchase of new car. Importantly, to mention here that there is no finding recorded by the Ld. Assessing Officer that apart from using such cash for purchase of car as explained by the appellant, there was no other use by the assessee for these cash withdrawals and in the absence of that, simply because there was a time gap, the explanation of the appellant cannot be rejected and hence addition of Rs. 268000/- made by the Ld. Assessing Officer is not correct. 4.18 In case of Baldev Charla 121 TTJ 366 ITAT Delhi has held that the explanation of the assessee cannot be rejected simply because there was a time gap, and hence addition confirmed by the Ld. Assessing Officer is not correct. 6.10. Is noteworthy to mention here that the investment for purchase of new car have been duly explained from bank withdrawals as discussed above and the same is genuine in view of facts that no prudent man will withdraw accounted cash from his bank account and convert it Into unaccounted/unexplalned/black money and simultaneously made investment from this unaccounted/unexplained/black money. To sum up 6.11 In case of P. K. Noorjahan the Honourable Supreme Court of India has held that, “Section 69 of the Income Tax Act, 1961conferred only a discretion on the Income Tax Officer to deal with the investment as income of the assessee and that it did not make it mandatory on hii part to deal with the investment as income of the assessee as soon as the tatter's explanation happened to be rejected. The said discretion has to be exercised keeping in view the facts and circumstances of the particular case. 6.12 In this instant case also, the Ld. A.0 has not brought any material on record to establish the fact that the cash withdrawal has been utilized for any other purpose, other than the purpose specified bv the appellant. There was no material with the Ld. Assessing Officer that above-said cash was not available with the appellant Further, it is apparent that cash withdrawal bv the appellant and his spouse were far in excess of reasonable requirement of household expenses. Ld. Assessing Officer has no material before him to support his contention that the entire cash withdrawals must have been spent bv the appellant. Keeping in view the facts and circumstances in totality and also judicial pronouncement. Your Honour is requested to kindly delete the addition ofRs. 2.68.000/- as made bv the Ld. A.0 being unexplained investment for purchase of car u/s 69 of the Income Tax Act. 1961.”
The learned CIT(A) after considering the submissions of the assessee observed that the submissions of the assessee had been considered by the AO in para 4 of the assessment order, therefore, there was no reason to interfere with the order of the AO.
Now the assessee is in appeal.
The learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the payments in cash were made out of withdrawals from the bank accounts, therefore, the learned CIT(A) was not justified in confirming the additions made by the AO. The reliance was placed on the decision of the ITAT Delhi Bench ‘SMC-2’ Bench, New Delhi in the case of Gordhan vs. ITO in ITA No. 811/Del/2015. In his rival submissions, the learned Sr. DR strongly supported the orders of the authorities below and further submitted that the assessee had made small withdrawals for household expenses and the AO had already allowed the credit of the amount utilized for purchase of car therefore, the learned CIT(A) was fully justified in confirming the addition made by the AO. 11. I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it appears that the small withdrawals made by the assessee were considered by the AO towards household expenses. However, the explanation of the assessee before the learned CIT(A) was that his spouse Smt. Garima Sharma also withdrew from the bank and total withdrawals by both of them were of Rs. 7,71,900/- which included the withdrawals for purchase of car. The said explanation of the assessee although mentioned at para 4.12 of the impugned order but had not been appreciated by the learned CIT(A) in right perspective. Therefore, considering the totality of facts, I am of the view that when the assessee and his wife had withdrew a sum of Rs. 7,71,900/- from the various banks account from 1.4.2013 to 3.11.2013. The said withdrawal was sufficient to explain a payment of Rs. 2,68,000/- for the purchase of the car, particularly when it is not brought on record that the said amount was used elsewhere. In that view of the matter, the addition made by the AO and sustained by the learned CIT(A) is deleted. 12. In the result, the appeal of the assessee is allowed. (Order pronounced in the open court on 13.08.2018.)