ITO, HARYANA vs SH. SHISHAN KUMAR AGGARWAL, HARYANA

Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI

Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI

For Appellant: Shri Salil Aggarwal, Adv, Shri Shailesh Gupta, CA, Shri Madhur Aggarwal, Adv

For Respondent: Shri Kaushlendra Tiwari, Sr. DR, Shri Salil Aggarwal, Adv, Shri Shailesh Gupta, CA, Shri Madhur Aggarwal, Adv

Hearing: 15/03/2018Pronounced: 12/06/2018

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the revenue against the order of the ld CIT(A), Rohtak dated 23.07.2012 for the Assessment Year 2009-10. 2. The revenue has raised the following grounds of appeal:- “1. On the facts and in the circumstances of the case, the CIT(A) has erred in law and in facts in not treating the certified copies of return of income and other documents obtained during course of enquiry u/s 133(6) of the act as genuine and authentic documents and deleting the addition of Rs. 10,29,920/'- made by A.O. on account of the difference in income declared in the actual return filed in the Income Tax office at Rs. 3,01,450/- and in the return filed in the bank at Rs. 13,31,370/-

2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and in facts in not treating the certified copies of return of income and other documents obtained during enquiry u/s 133(6) of the act as genuine and authentic documents and deleting the addition of Rs. 75,98,883/- made by A.O, on account of unsecured loan u/s 68 of the Act.

3. On the facts and in the circumstances of the case, the CIT(A) has erred in law and in facts in giving the direction to the A.O. to accept Page | 1 ITO Vs. Shishan Kumar Aggarwal (Assessment Year: 2009-10) the source of cash deposits prior to the verification thereof by the A.O. in respect of source of cash deposits in bank and deleting the addition of Rs. 15,08,000/- made by A.O. on account of unexplained source of cash deposits.

4. On the facts and in the circumstances of the case, the CIT(A) has erred in law and in facts in not treating the certified copies of return of income and other documents obtained during enquiry u/s 133(6) of the act as genuine and authentic documents and deleting the addition of Rs. 6.41,408/- made by A.O. on account of unverified and unverifiable expenses.”

Brief facts of the case is that the assessee is an individual who filed its return of income on 29.09.2009 declaring income of Rs. 301450/-. The return was filed based on the audit report u/s 44AB of the Income Tax Act, 1961. The assessee is engaged in the business of manufacturing of food products in the name of M/s. Mangla Trading Corporation. During the course of assessment proceedings the ld AO noted that State Bank of Patiala vide letter dated 13.09.2011 sent copy of the acknowledgement of ITR-4 for the year ended on 31.03.2010 on which stamp of the Income Tax Office, Narnaul was affixed. It also contains the signature of the assessee. The bank requested for verification of the same. Therefore, the ld AO obtained the above information from the bank u/s 133(6) of the Act. Based on the information submitted he found that the assessee has shown one return to the bank, wherein, the total income declared is Rs. 1331370/- and other return which is before the ld AO showing income of Rs. 301450/- . He therefore, held that these are the two different income shown by the assessee in two returns for the same assessment year and the assessee has failed to produce the books of accounts, so, he applied section 145(1) of the Act and made the addition of Rs. 10,29,920/- as the difference of income. Further, the addition of Rs. 7598883/- was also made on account of four loans from private parties outstanding in the balance sheet shown to the bank. A further addition of Rs. 1508000/- was made on account of cash deposit in HDFC Bank, Sadar Bazar for which sources were not explained. A further addition of Rs. 641408/- was made on account of Page | 2 ITO Vs. Shishan Kumar Aggarwal (Assessment Year: 2009-10) various expenditure claimed by the assessee as assessee failed to produce the adequate details thereof. Consequently, the assessment u/s 143(3) was passed on 19.12.2011 at Rs. 11079661/-. 4. On appeal before the ld CIT(A), most of the additions were deleted. Therefore, the revenue is in appeal before us. 5. Heard the rival parties. 6. The first ground of appeal

is with respect to addition of Rs. 1029920/- deleted by the CIT(A). The second ground of appeal is against the deletion of the addition of Rs. 7598883/- u/s 68 of the Act. The third ground of appeal is against the deletion of the addition of Rs. 1508000/- on account of unexplained source of cash deposits in the bank account.

7. Ground No. 4 is against the deletion of the addition of various expenditure of Rs. 641408/- except the addition of Rs. 1508000/- which is on account of unexplained source of cash deposits of other three additions have been made by the ld AO based on the information obtained u/s 133(6) of the Act from the bank. The ld CIT(A) noted that the assessee has never filed the return of income which was produced by the bank before the ld AO in respect to notice u/s 133(6) of the Act. The whole facts have been dealt by the ld CIT(A) at pages 6 to 6.7 as under:- “6. I have carefully considered the issues, the assessment record and the submissions made by the AR. As per the assessment order, the AO stated that the assessee filed return of income on 29.09.2009 declaring total income of Rs 3,01,450/- which was processed u/s 143 (1) on 08.08.2010 and it was selected for scrutiny through CASS. During assessment proceedings, the AO received verification letter from SBOP, Gurgaon regarding the authenticity of return of income for the AY 2009-10 supposed to have been filed by the appellant in the IT office Narnaul on 14.09.2009. The AO obtained copy of return filed by the appellant before Dena Bank, New Delhi for obtaining loan. As per this return for the AY 2009-10 dated 14.09.2009, the income returned was Rs 13,31,370/- as against the income returned by the appellant in the e-return dated 29.09.2009. 6.1 Both the returns cannot be genuine. It is seen that the AO has not obtained the original return from Dena Bank for coming to the conclusion that the return available with Dena Bank is authentic. The appellant time and again by way of written submissions and affidavits Page | 3 ITO Vs. Shishan Kumar Aggarwal (Assessment Year: 2009-10) stated of income or documents in support thereof, as available w prepared by the appellant. 6.2 The acknowledgement of return of income in form no. ITR-4 supposed to have been filed on 14.09.2009 with IT office Narnaul, as obtained from Dena Bank (PB page 97), should first have been verified by the AO before coming to even preliminary conclusion. Though the return was supposed to have been filed on 14.09.2009 in the same office as that of the AO, the AO appears to have not made even this preliminary enquiry. The tax audit was supposed to have been conducted by one Sh. Harpal Singh, H.S. & Associates, Chartered Accountants, 109, Azad Singh Chowk, Narnaul-123001, Ph. 231616 on 11.12.2009 (PB page 92). No membership no. was mentioned for the CA. Non mention of membership no. of the CA should have raised preliminary doubt in the mind of the AO about the genuineness of the tax audit report, especially when the appellant vehemently denied the genuineness of the balance sheet and P&L a/c (PB page 93-95, 98-111) along with tax audit report obtained from Dena Bank. Even before this, the AO should have verified/examined Sh. Harpal Singh, H.S. & Associates, Chartered Accountants, as the given address was that of Narnaul only. Further, it is surprising to note that return of income was filed on 14.09.2009 when the books of accounts were audited on 11.12.2009, as certified by Harpal Singh. 6.3 The return of income stated to have been filed by the appellant has been e-filed on 29.09.2009 (acknowledgement of form ITR-V in PB page 21). The tax audit was conducted by one Sh. Anil Kumar, C.A. proprietor of M/s Anil Radhe Shyam 85 Co. CAs, 116-R, near Guru Chowk, Model Town, Rewari-123001 with membership no. 509671 on 20.08.2009 (PB page 7-20). The AO should have examined atleast Sh. Anil Kumar, CA who was supposed to have conducted tax audit, as claimed by the appellant, before coming to any adverse conclusion. 6.4 Though the AO stated in the assessment order that the books of accounts have not been produced, it is seen that the appellant furnished details of all expenses debited in the P&L a/c before the AO (PB page 57-89), which are nothing but part of the books of accounts. As pointed by the AR, it is seen that the AO, vide order sheet entry dated 13.12.2011 on one hand states that books of accounts have not been produced and on the other hand concluded that the books of accounts are not reliable (PB page 1-6). It is not known as to how the AO came to the conclusion that the books of accounts are not reliable without examination upon production of the same by the appellant before him. The AO rejected the contention and affidavit filed by the appellant that the return of income and other documents obtained from Dena Bank have not been prepared Page | 4 ITO Vs. Shishan Kumar Aggarwal (Assessment Year: 2009-10) by him, on presumption without any enquiry to ascertain the genuineness of the two sets of returns and documents available with him. 6.5 It would be pertinent here to go to the affidavit dated 19.12.2011 filed by the appellant before the AO in this regard, which is reproduced hereunder: (1) That I have submitted e-return on 29.09.2009 declaring income of Rs 3,01,450/- and deposited tax accordingly, where there is no unsecured loan taken by me which only is a genuine. (2) That the information and documents supplied by Dena Bank were never prepared by me nor filed by me at anywhere in income tax department and. it cannot be treated as return of income. (3) The information and document supplied by Dena Bank where an amount of Rs 13,31,370/- of is stated to have been shown and department treated as income shown by assessee cannot take place as return of income because there are only photo state papers filed by the bank agent in the bank and nowhere else. Hence this figure of Rs 13,31,370/- cannot be treated as income. (4) That no unsecured loan were ever taken from any person during financial year 1.4.2008 to 31.3.2009 hence the amount shown in document supplied by Dena bank, which were only photo state, copy, as unsecured loan cannot take place of regular genuine loan and when no loan were ever raised taken the question of proving the same does not arise, these are only imaginary figure quoted on photo state paper which can never be taken place of a good evidence. Thus the amount of Rs 75,98,883/- cannot treated as income. (5) These documents being not genuine are not liable to be treated as proof of having been submitted by the assessee and not at all dependable evidence for the purpose of assessment (which are supplied by Dena bank). (6) That the amount deposited in saving bank account Rs 1,50,000/- during financial year 1.4.2008 to 31.3.2009 is of HDFC Bank, Sadar Bazar, Gurgaon a/c no. 0583133000081 is fully recorded in regular books of accounts a copy of bank account is being enclosed for ITO Vs. Shishan Kumar Aggarwal (Assessment Year: 2009-10) ready reference and records. All the deposits were made after making withdrawals from regular books of accounts. From the affidavit it is evident that the appellant denied in clear terms that the return of income and other documents obtained from Dena Bank were prepared by him. The AO could not have discarded the affidavit without examining the appellant and bringing adverse material on record. 6.6 From the assessment record it is seen that in response to letter of SBOP, Gurgaon dated 13.09.2011 for verification of the ITRs for the AY 2009-10 & 2010-11 of the appellant filed with the bank, the AO vide letter dated 16.09.2011 stated that the acknowledgements in respect of the above returns of the appellant have not been issued by this office. Letter written by the AO is reproduced hereunder for ready reference: “F.No. ITO/ W-l/NNL/2010-11/1055 Office of the Income Tax Officer Ward-1, Namaul Dated: 16/09/2011 To The Manager State Bank of Patiala SME Branch (Code-50693) New Railway Road, Branch, Gurgaon-122001. Sir, Subject:- Verification of ITR year ending 31/03/09 to 31/03/2010 of Sh. Sishan Kumar Aqgarwal Prop Mangla Trading Corporation, PAN AAUPA5235D- Reg. Please refer to your office letter dated 13/09/2011 on this above cited subject. In this connection it is intimated that the acknowledgements of return of income for the asstt. Years 2009-10 and 2010-11, in respect of above mentioned assessee, has not been issued by this office. It is for your information. Yours faithfully, Sd/- (DRS Yadav) Income tax Officer, Ward-1, Narnaul.” [Emphasis supplied] Page | 6 ITO Vs. Shishan Kumar Aggarwal (Assessment Year: 2009-10) The AO has himself clarified to the bank that the acknowledgements of the returns purported to have been filed by the appellant have not been issued by his office, meaning thereby that the copies of acknowledgements and retums'Tir income available with the bank are not genuine. When the AO himself has issued such clarification to the bank, it is noFknown as to why he relied upon the very same bogus/fake documents for making the impugned additions. Even if it is presumed that the appellant filed fake IT return with the bank for obtaining loan, it is for the bank to take appropriate action as per the communication sent by the AO. 6.7 It is well settled law, as contended by the AR with the support of case laws, that the AO has to bring to tax the real income of the assessee and not hypothetical and unreal income. In the present case, the AO jumped to misconceived and misdirected conclusion that the return of income and other documents obtained from Dena Bank/ SBOP are the genuine and real documents and they reflect the real state of affairs of the appellant while on the other hand clarified from the records to SBOP that the acknowledgement for the returns were not issued by his office. The additions/disallowance made by the AO on the basis of unreliable and unauthenticated return of income and other documents are therefore not sustainable and thus they are deleted. The grounds no. 3, 4 & 6 of appeal are allowed.”

8. The ld DR could not point out any infirmity in the order of the ld CIT(A). we also find that when the assessee has denied having filed any such return and apparently when such return is also not found on the record of revenue, there cannot be any reason to uphold an addition based on such unverified documents. In view of this we dismiss ground No. 1, 2 and 4 of appeal of the revenue.

9. With respect to addition of cash deposited in the bank account of assessee, it was found that same is deposited from regular cash book of the assessee. Assessee produced regular cashbook as well as bank statement of the bank in which cash is deposited.

10. The ld CIT(A) noted that the above sum is on account of cash deposits in the HDFC bank for which the assessee has submitted the complete details of cash withdrawal from the regular books of accounts. The above cash deposits is also shown as withdrawal from the book of the assessee. The cash deposits is also disclosed in the bank account in the books of accounts and same tallied with the bank statement. In view of this we do not find Page | 7

ITO, HARYANA vs. SH. SHISHAN KUMAR AGGARWAL, HARYANA