SH. JINDU RAM ARORA,NEW DELHI vs. ITO, NEW DELHI

Fact in brief are that the assessee is an individual who is more than 80 year old and had taken a VRS from Ministry of Agriculture, where he was working as UDC in the year 1989 to look over his handicapped son. After retirement, he opened a confectionary shop for his son. However due to old age and illness he has sold the entire business and stock during the relevant financial year, i.e., Assessment Year 2008-09. An information was received through AIR and assessee’s case was scrutinized under CASS on the ground that assessee had debited cash of Rs.27,04,500/- in his bank account with the Syndicate Bank. During the course of the assessment proceedings, the assessee was summoned and his statement was recorded. In response to question asked by the Assessing Officer, he submitted that the deposit of cash in his bank account was mostly from the sale proceed of his closure of business which was deposited in the bank account. Assessing Officer noted that there was a debit entry of Rs.18,42,500/- and when confronted to the assessee it was submitted that he had invested for purchase of shop no.7 & 8 at Essel Tower, M.B. Road, Gurgaon in the name of his son. However shop no.7 was cancelled and only one shop no.8 which was given on rent of Rs.25,000/-. It was also submitted that he has booked a plot for which he has made certain payments.

The learned Assessing Officer after giving the benefit of the cash withdrawn from the same bank account and again deposited, gave certain benefit and finally added of Rs.19,47,000/- as unexplained income.

Before ld. CIT (A), it was submitted that assessee has sold the land in the year 2000 for which assessee has received a sale consideration of Rs.18 lacs which was deposited in the bank account and the same was withdrawn for the purpose of business and from time to time the same was also deposited and later on his business was closed, the entire receipt has been deposited in the bank account. Ld. CIT (A) noted that the cash has been deposited in his bank account and thereafter, cheques have been issued for purchase of certain properties. Looking to the fact that assessee belongs to a lower income group and was a very senior citizen and after giving benefit to the fact that he could have saved some money out of land sale consideration of Rs.18 lacs sold in the year 2004. He held that deposit of Rs.10 lacs made on 03.02.2007 which has been treated as unexplained and balance amount of Rs.9,47,000/- was deleted.

On the date of hearing, the assessee appeared in person and presented his case. He submitted that since he was doing a very small business of confectionary which he could not carry out, the same was sold during the year and he has also sold a land in the year 2004 for which he has received an amount of Rs. 18 lacs. The cash deposits were being regularly withdrawn and were deposited and he has no other source of income except for pension and whatever little cash he had generated on the sale of his business during the year has been deposited. Thus, he pleaded that nothing should be treated as unexplained in his hand.

On the other hand, learned DR strongly relied upon the order of the ld. CIT (A) and submitted that already ld. CIT(A) has given huge benefit to the assessee after treating sum of Rs.9,47,000/- as explained and it is only when assessee could not gave proper explanation regarding deposit of Rs.10 lac, same has been added which too is based on peak credit theory.

After considering the submission made by the parties and on perusal of the relevant observations and findings given in the impugned orders, we find that assessee is a very old man of more than 83 years old who has retired as a low grade government employee way back in 1989. Thereafter, he has started small business of confectionary and has been showing income on estimate basis u/s.44AF regularly from Assessment Year 2000-01 onwards. Regarding the source of cash deposited in the bank account, he has submitted that during the year under consideration he has sold the entire business because due to his old age and illness he could not carry out the business and accordingly entire business proceed and stock sold was deposited in his bank account. Apart from that, he has also submitted that he has sold an agricultural land in 2004 for Rs. 18 lac which was deposited in the bank account and this amount was used for the business purpose and the sale receipts were deposited in the same bank account. It has been noted that in the assessment order as well as in the appellate order that assessee has also make certain investments for purchase of certain properties which have been stated to be out of cash deposit from earlier deposits and sale of the business. Ld. CIT(A) have given some benefit of such an explanation of the assessee and has treated the deposit of Rs.10 lac on the basis of peak credit theory appearing as on 10.03.2007 as unexplained and has confirmed the said amount. We find that the assessee has no other source of income and when it has been stated that the cash deposited is out of his past savings and withdrawals and from the sale of the business of confectionary during the relevant Assessment Year, then without any adverse material on record, it cannot be held that assessee’s explanation is not bona fide especially when he has no other source of income at all. Even if one goes by concept of preponderance of probability while examining the explanation of the assessee with regard to the cash deposited in the bank account, one has to see various factors going in favour of the assessee, which are; firstly, he is a very old senior citizen of more than 83 years old having no other source of income; secondly, he has sold his business during the year in which he might have received certain amount which has been explained before the Assessing Officer at the first instance and same has been deposited in his bank account; and lastly, he has received amount of Rs. 18 lacs from sale of land which was being rotated regularly. These probable factors, appears to be a genuine explanation for the cash deposits in the bank account and accordingly, we do not find any reason to sustain the addition of Rs.10 lacs. Accordingly, same is directed to be deleted. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 26th June, 2018. Sd/- Sd/- [G.D. AGRAWAL] [AMIT SHUKLA] PRESIDENT JUDICIAL MEMBER DATED: 26th June, 2018