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Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI
Before: HON’BLE, SHRI G.D. AGRAWAL & SHRI KULDIP SINGH
ASSESSEE BY : Shri Salil Aggarwal, Advocate REVENUE BY : Shri U.C. Dubey, Senior DR Date of Hearing : 09.11.2017 Date of Order : 07.12.2017
O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : The Appellant, Shri Narender Singh Nagar (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the impugned order dated 01.10.2014 passed by the Commissioner of Income-tax (Appeals)-II, New Delhi qua the assessment year 2011-12 on the grounds inter alia that :-
“1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both on facts and in law in confirming the assessment framed by the learned ACIT Circle 47(1), New Delhi at an income of Rs.71,54,395/- as against the declared income of Rs.67,04, 395/-.
That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in confirming the addition of Rs.4,50, 000/- on account of alleged unexplained cash found during the course of search proceedings, which is contrary to material available on record.
2.1 That the learned Commissioner of Income Tax (Appeals) has confirmed the addition by failing to appreciate that the said sum of cash of Rs.4,50,000/- was duly explained by the assessee - appellant, and, therefore the addition so sustained is totally illegal, untenable and unwarrantable.” 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : search and seizure operation was carried out in Paras Group of cases on 09.09.2010 by the Director of Income Tax (Investigation), New Delhi. During the search, a cash amount of Rs.4,50,000/- was seized from the residence of the assessee. On failure of the assessee to explain the source of Rs.4,50,000/-, the same was added back to the income of the assessee as undisclosed income.
Assessee carried the matter by way of filing appeal before the ld. CIT (A) who has confirmed the addition by dismissing the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by challenging the impugned order passed by ld. CIT (A).
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Assessee in order to explain the cash amount of Rs.4,50,000/- seized from his premises furnished the explanation before the ld. CIT (A) as under :-
1.3.3 Now we would like to draw your kind attention to the facts of the case. The assessee is one of the directors of the company VRS Foods Ltd. and is actively involved in the business operation (this fact have also been admitted by the Assessing officer while passing the order). The company VRS Foods Ltd is engaged in the business of the Manufacturing and Trading of Milk and Milk products. The company VRS Foods Ltd has given imprest of Rs.5,00,000 /- to Shri Narendra Nagar for day to day operation on 7/09/2010. Out of the Imprest received of Rs.5,00,000/-, imprest of Rs.50,000/- have been utilized by the assessee and balance amount have been kept by the assessee at their residence. However on 09/0912010 search operation was carried out by the Investigation wing and as such the cash of Rs.4,50,000/- have been found by the Investigation wing. The imprest or Rs.5,00,000 given by the company is part of books of accounts of the company VRS Foods Ltd. The copy of cash account of VRS foods Ltd as well as copy of the Balance sheet of VRS Foods Ltd is enclosed for your kind perusal.
Undisputedly, no such explanation has been furnished by the assessee before the AO nor at the time of search rather this explanation has seen the light of the day first time on 05.09.2014 during the appellate proceedings. Ld. CIT (A) rejected the explanation that the cash amount of Rs.5,00,000/- seized is out of the imprest money of VRS Foods Limited in the hands of Vaibhav Jaipuria as the entry in the cash book was made after the date of search and is not a reliable piece of evidence.
Ld. AR for the assessee contended that when the amount of Rs.5,00,000/- has been duly recorded in the cash book of M/s. VRS Foods Limited having been given to assessee as imprest money being Director of M/s. VRS Foods Limited, the meaningful enquiry is required to be conducted. But the CIT (A) has not called any evidence to decide submission made by the assessee.
Perusal of the cash account book, available at pages 6 & 7 of the paper book, the balance sheet, profit & loss account along with Schedules of M/s. VRS Foods Limited apparently shows that the assessee was given imprest of Rs.5,00,000/- on 07.09.2010 whereas date of search was 09.09.2010, the CIT (A) was required to conduct the discreet enquiry by calling upon evidence.
Particularly in the face of the fact that account books and balance sheet of M/s. VRS Foods Limited have been duly accepted in the assessment of M/s. VRS Foods Limited completed u/s 143 (3) of the Income-tax Act, 1961, available at pages 16 & 17 of the paper book.
Ld. CIT (A) being a quasi-judicial authority was required to decide the issue after complete appreciation of facts brought on record and not to decide the issue on the basis of surmises that the explanation has been filed after a period of four years and as such, is an after-thought only.
In view of what has been discussed above, we are of the considered view that the matter is required to be remitted back to the ld. CIT (A) to decide afresh after perusing the documents brought on record by the assessee as well as after providing an opportunity of being heard to the assessee. We order accordingly.
Resultantly, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in open court on this 7th day of December, 2017.