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Facts
The Department filed appeals against the Commissioner of Income Tax (Appeals)'s orders for Assessment Years 2013-14, 2014-15, and 2015-16, which deleted various additions made by the Assessing Officer. The additions primarily concerned unaccounted receipts, unexplained investment in property, unexplained receipts from property sale, and unexplained cash deposits in bank accounts, with the assessee arguing lack of incriminating material or sufficient explanation of sources.
Held
For A.Y. 2013-14, the appeal was dismissed as additions were made without incriminating material found during search, relying on the Supreme Court's Abhisar Buildwell judgment. For A.Y. 2014-15, appeals regarding unexplained investment and property sale receipts were dismissed due to the primary recipient owning up to the transaction or the inapplicability of presumption under Section 132(4A)(ii) for third-party seized documents. The appeal concerning unexplained bank cash deposits for A.Y. 2014-15 and A.Y. 2015-16 were also dismissed, as the CIT(A) correctly considered cash withdrawals which exceeded deposits, and the AO failed to provide cogent material proving alternative use of withdrawals.
Key Issues
1. Whether additions made without incriminating material during search are sustainable, given the Supreme Court's Abhisar Buildwell judgment. 2. Whether protective additions are valid when the primary party has accepted the transaction and the AO has not fully relied on the material for protective addition. 3. Whether the presumption under Section 132(4A)(ii) applies to documents seized from a third party. 4. Whether unexplained cash deposit additions are justified when cash withdrawals from the same bank account exceed deposits, and there is no evidence of alternative use of funds.
Sections Cited
139, 143(2), 153C, 132(4A)(ii)
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Income Tax Appellate Tribunal, DELHI
Before: SHAMIM YAHYA & SH. YOGESH KUMAR U.S.
order.
The Grounds of Appeal are as under:- (A.Y 2014-15) The order of Ld. CIT(A) is not correct in law and facts.
1. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 63,64,000/- made by Assessing Officer on account of unaccounted receipts from Sh. Nagendra.
3. The appellant craves leave to add, amend any/all the ground of appeal before or during the course of hearing of the appeal.
ITA No. 6388/Del/2018 (A.Y 2014-15)
“The order of Ld. CIT(A) is not correct in law and facts.
2. The Ld. CIT(A) erred in law as well as facts & circumstances of the case in deleting the addition of Rs.80,00,000/- made by the AO on account of unexplained investment in property.
3. The Ld. CIT(A) erred in law as well as facts & circumstances of the case in deleting the addition of Rs. 1,00,00,000/- made by the AO on account of unexplained receipts from sale of property.
The Ld. CIT(A) erred in law as well as facts & circumstances of the case in deleting the addition of
5. The appellant craves leave to add, amend any/all the ground of appeal
before or during the course of hearing of the Appeal.” (A.Y 2015-16)
1. The order of Ld. CIT(A) is not correct in law and facts.
2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 36,96,000/- made by Assessing Officer on account of unexplained cash deposits.
3. The appellant craves leave to add, amend any/all the ground of appeal before or during the course of hearing of the appeal.
ITA No. 6387/Del/2018 (A.Y 2013-14)
The Ld. Counsel for the assessee at the outset submitted that the additions were made without incriminating material found during the search and the Appeal filed by the Revenue is squarely covered by the Judgment of the Hon'ble Supreme Court in the case of Pr. Commissioner of Income Tax Vs. Abhisar Buildwell in CIVIL Appeal No. 6580 of 2021 dated 24/04/2023 therefore, sought for dismissal of the Appeal. orders of the Lower Authorities.
Heard and perused the material. In the present case, the return of income field u/s 139 of the Act on 20/03/2014, no notice u/s 143(2) was issued and notice u/s 153C has been issued on 17/12/2015 and the status of the assessment is unabated, thus applying the ratio laid down by the Hon'ble Supreme Court in the case of Abhisar Buildwell (supra), we find no merit in the Grounds of Appeal of the Revenue. Accordingly the Appeal of the Revenue in for Assessment Year 2013-14 is dismissed.
ITA No. 6388/Del/2018 (A.Y 2014-15)
Ground No. 1 is general in nature which requires no adjudication. The Ground No 2 of the Revenue is against deletion of addition of Rs. 80,00,000/- made by the A.O. on account of unexplained investment in property. The Departmental Representative contended that the Ld. CIT(A) has committed error in deleting the above addition. premises of Sh. Karan Malhotra which include an unsigned receipt of Rs. 80,00,000/-which was in the joint names of Sh. Nagender and Sube Singh. The said amount has been added in the name of Sh. Nagender and protective addition has been made by the A.O. in the hands of the assessee. The Ld. Ld. CIT(A) while deleting the addition held as under:-
“ 25.6 It is noteworthy that on the basis of seized material (page no. 100 to 118 of Annexure A-1 seized from premises of Sh. Karan Luthra), the AO made assessment of Rs. 80,00,000/- (and not 1 crore) in the hands Sh. Nagendra who, on the contrary, owned up the transaction and explained sources of payment of Rs. 50,00,000/-. This issue has been dealt with in the appellate order dated 09.07.2018 passed by this office in Appeal no. 281/17-18. In the said appeal, it has been held that the sources of payment of Rs. 50,00,000/- (owned up by Sh. Nagendra) have been found to be explained. Once the AO has made addition in the hands of Sh. Nagendra who actually owned up the transaction and admitted to have paid a part of it, there is no basis for making the addition in the hands of the appellant, on protective basis. The only material to substantiate the involvement of the appellant is the statement of Sh. Sultan Singh. This statement has not 6 6388 & 6389/Del/2018 ACIT Vs. Krishan Kumar been believed by the AO because it (the statement) states that the deal was of Rs. 1 crore whereas the addition has been made to the extent of Rs. 80,00,000/- only. Also the seized material (page no. 100 to 118 of Annexure A-1 seized from premises of Sh. Karan Luthra) show that the property has been purchased in joint name of Sh. Nagendra and Sh. Sube Singh. There is no reference of Sh. Sube Singh in the statement of Sh. Sultan Singh. Also, the AO has not thrown any light on this aspect-as to how the property is also in name of Sh. Sube Singh. In conclusion, it can be held that 1) statement of Sh. Sultan Singh is the only material on the basis of which the AO has made this protective addition but AO has herself not believed this statement in toto, and 2) Sh. Nagendra has owned up this transaction and O has accepted the same. Therefore, this addition does not withstand the test of judicial scrutiny and hence this ground (no. 2) is allowed and as a consequence, the addition under consideration is deleted.
Since the said Sh. Nagender has owned up the said transaction and the A.O. has accepted the same, we find no error or infirmity in the order of the CIT(A) in deleting the addition.
Accordingly the Ground No. 2 of the Revenue is dismissed.
1,00,000/- from sale of the property. The Ld. Departmental Representative contended that the Ld. CIT(A) erred in deleting the addition made by the A.O. on account of unexplained receipts from sale of property.
Per contra, the Assessee's Representative relying on the order of the CIT(A), sought for dismissal of the Appeal.
The basis for the above addition is an undated and unsigned receipt which was seized from the preemies of Sh. Sultan Singh.
The said receipts states that the assessee had received Rs. 25,50,000/- out of one crore before the execution of the said seized receipt, the Assessee taken money against sale of thousand square yard piece of land at Aya Nagar, New Delhi, the document further states that balance amount of Rs. 74,50,000/- will be paid on or before one month. The Ld. A.O. made the addition of the entire Rs. 1 Crore in the hands of the assessee. It was the case of the assessee before the CIT(A) that no such transaction was actually during the year under consideration and no such receipt extended manners:-
“26.4 The reasoning of the AO cannot be accepted for the simple reason that the presumption of the clause (ii) of sub-section (4A) of section 132 of the I.T. Act, 1961 is available only against the person from whose premises a particular document is seized. In the present case the document has been seized from the premises of Sh. Sultan Singh (and not from the premises of the appellant).
26.5 It is also important to note that Sh. Sultan Singh was asked to explain content of this seized paper. In reply (to question no. 18), Sh. Sultan Singh did not give any specific answer and stated that this is related to some land and because Sh. Jasbir Jaiswal is partner of Sh. Krishan Kumar (appellant) and works from his (Sh. Sultan Singh's) office and therefore, this document has been recovered from his (Sh. Sultan Singh's) office. The relevant portion of the statement of Sh. Sultan Singh is reproduced below:
26.6. In view of the above discussion, it is held that the presumption of the clause (ii) of sub-Section (4A) of Section 10 6388 & 6389/Del/2018 ACIT Vs. Krishan Kumar 132 of the I.T Act, 1961, is not available against the appellant. Without this presumption, an undated and unsigned receipt, recovered from a third party, is not sufficient to make an addition, particularly when exact Khasra no. of the property is not known and there is nothing on record to suggest that the statement of the appellant that such deal did not take place, is incorrect. Therefore, this ground (no. 3) of appeal is allowed and consequently addition of Rs. 1 crore is deleted.”
Admittedly, the document has not been seized in Assessee’s premises. Thus, the presumption u/s 132(4A) (ii) of the Act is not available to the Department against the assessee. In the present case, documents have been seized from the premises of one Sultan Singh. Therefore, considering the fact that the receipt being undated, unsigned and seized from the third party, the Ld. CIT(A) found that, the same is not sufficient to make addition particularly when exact Khasara Number has not been mentioned in the Receipt, accordingly deleted the addition. In our opinion, the Ld. CIT(A) committed no error in doing so. Thus, the Ground No. 3 of the Revenue is dismissed.
CIT(A) committed error in deleting the addition of Rs. 38,91,450/- made by the A.O. on account of unexplained cash deposit in the bank. It is the case of the assessee before the CIT(A) that A.O. h as not considered the cash withdrawals shown in the statements of the same bank account and the assessee provided the date vise cash receipt and withdrawals from the same bank before the Ld. CIT(A), the Ld. CIT(A) while deleting the additions held as under:-
“27.3. It is a matter of fact that the details of cash withdrawals are also in the same bank statements which are having the entries of cash deposits which have been made the basis of the addition by the AO. Therefore, facts of cash withdrawal in considered. It can be seen that there is a total withdrawal of Re 98,35,000 which is much more than total deposit (of Rs. 39,41,500/-1. As far as, the running balance of cash (considering total withdrawal minus total cash deposits up to that point of time) is concerned, there is a negative cash balance of Rs. 50,000/- as on 03.06.2013. At no other point of time, the running balance of cash (considering total withdrawal minus total cash deposits up to that point of time) was less than the said figure of (minus) Rs. 50,000/-
27.4 A similar ground has already been discussed above (while adjusting Appeal no. 57/16-17). The facts and circumstances as well stand of the appellant are same as was in Appeal no. 257/16-17. Therefore, adopting the same line of reasoning, this and (no. 4) is partly allowed and consequently, addition is confirmed to the extent of Rs. 50,000/- and balance amount of addition (38,91,450/) is deleted.”
The ld. A.O. while making the above addition has not brought any material on record to show that cash withdrawal were consumed by the Assessee in form of certain payment to any third party. It is settled judicial principal that the addition can be made only on the basis of cogent material. It is not sufficient to simply assume that the cash withdrawal was used somewhere else and not available for deposit. The Ld. CIT(A) after considering the material on record as restricted the addition to the excess amount of the cash deposit over the amount of cash withdrawal which enquires no interference at the hands of the assessee. Thus, we accordingly, the Ground No. 4 of the Revenue is dismissed.
The only issue involved in the present Appeal filed by the Revenue is regarding cash deposit in the bank. In the present case, the Ld. CIT(A) has deleted the addition considering the chart of date vise cash deposit produced by the assessee and withdrawals from the bank account maintained by the assessee in following manners:-
“32.2. During the appellate proceedings, the AR contested that AO has not considered the cash withdrawals shown in the statement of the same bank account. The AR submitted a chart showing date-wise cash deposits and withdrawals from the bank accounts maintained by the appellant in UBI and PNB. The said chart is reproduced as under:
32.3 It is a matter of fact that the details of cash withdrawals are also in the same bank statements which are having the entries of cash deposits which have been made the basis of the addition by the AO. Therefore, facts of cash withdrawal are considered. It can be seen that there is a total withdrawal of Rs. 2,00,17,500/- which is much more than total deposit (of Rs. 44,48,000/- (Rs. 36,96,000/- in UBI and Rs. 7,52,000/- in PNB)}. As far as, the running balance of cash (considering total withdrawal minus total cash deposits up to that point of time) is 16 6388 & 6389/Del/2018 ACIT Vs. Krishan Kumar concerned, there is no negative running cash balance at any point of time (considering total withdrawal minus total cash deposits up to that point of time).
32.4 A similar ground his already been discussed above (while adjudicating Appeal no. 257/16-17). The facts and circumstances as well as stand of the appellant are same as was in Appeal no. 257/16-17. Therefore, adopting the same line of reasoning, this ground (no. 2) is allowed and consequently, addition is (of Rs. 36,96,000/-) is deleted.”
The similar issue has been already decided in favour of the assessee by dismissing the Ground No. 4 in (Supra), thus adopting the same line of reasoning, we find no merit in the Ground No. 2 in .
In the result Appeal filed by the Revenue in ITA Nos.