SMT. PADMA DEVI MALIK,GURGAON vs. ITO, GURGAON

ORDER This is an appeal by the assessee against the order dated 17.02.2016 of ld. CIT(A)-2, Gurgaon.

2 Padma Devi malik b. That, admittedly, the directions given u/s 144A are without providing an opportunity to the Appellant, hence, the same are illegal and bad in law and the additions made on the basis of the said directions are also illegal and bad in law. Opportunity of being heard, being a foundational and a jurisdictional requirement, the additions made are liable to be deleted. c. That the directions issued by the Joint Commissioner, without providing any opportunity to the Appellant, are prejudicial to the interest of the Appellant, hence the same are covered by the proviso to Section 144A and Explanation to Section 144A is not applicable.

3. The AO/CIT(A) erred in not providing the Appellant a copy of the Draft Assessment Order a. That, the AO/CIT(A) has, in view of the facts and circumstances of the case, erred on facts and in law, in not providing the Appellant with a copy of the Draft Assessment Order. Admittedly, the additions were made in furtherance of directions of the Joint Commissioner u/s 144A and after the Draft Assessment Order had been prepared, wherein no addition was made.

4. The addition made, cannot sustain on the facts of the present case. a. That, in view of the facts and circumstances of the case, the AO/CIT(A) erred in not considering the evidence placed on record and the explanation provided by the Appellant. The Appellant has placed 3 Padma Devi malik on record evidence/ submissions/ documents to prove the source of the said cash deposits and has provided sufficient explanation in respect of the said cash deposits. The CIT(A) has illegally sustained the addition of Rs. 17,65,000/-. b. That the AO/CIT(A) erred in not appreciating that the Appellant has discharged the onus with respect to providing the explanation of the source of the cash. Hence, the orders passed are illegal, bad in law and without jurisdiction.

5. The observations made by the AO/CIT(A) are unjust, unlawful and based on mere surmises and conjunctures.

6. The explanation given in the evidence/submissions produced, material placed and material available on record has not been properly considered and has not been judicially interpreted. The addition made by the AO/CIT(A) is illegal, unjust and highly excessive.

5 Padma Devi malik ii) It has been stated vide para 1(a) of reply dated 07.10.2013 that Late Shri Thakur Dass Malik previously was partner in a partnership firm namely Needo Restaurant, 1936, Fountain Chowk, Delhi. This business was running well and all the partners who were 4 in numbers were having equal share in the business. Shri Thakur Dass Malik expired in 1988 and after this, his share was inherited to his wife Smt. Shanti Devi Malik who remained in partnership till the business of the firm was closed. On the closure of business, the capital involved in the firm by the partners was withdrawn by each of them. In support of his contention, the assessee has not submitted copies of returns of M/s Needo Restaurant alongwith copies of capital accounts of the partners. Furthermore, copies of partnership deed submitted alongwith reply dated 27.08.2013 is not signed by all the four partners, it is signed by two partners namely Sh. Thakur Das Malik and Smt. Padma Devi Malik. It is not signed by the witness(es) also. Therefore, it is not a valid partnership deed. Keeping in view the above facts, the genuineness of receipt of Rs. 9 lacs from Smt. Shanti Devi through will is not proved. iii) As regards, gifts received to the tune of Rs. 6,93,633/- on the occasion of marriage of her son Shri Vineet Malik, the plea taken by the assessee is not acceptable as his marriage was held on 14.04.2007 and it is not believable that why this amount was not been deposited in Bank at that time and why this was kept at home. Similarly, the assessee has also failed to furnish evidence of past savings of Rs. 3,25,000/-. iv) It is well established by the decisions of the Supreme Court and High Courts that the burden of proving that cash credit entry appearing in the assessee's account books does not represent the income of the assessee is on the assessee. Where any sum is found credited in the books of the 6 Padma Devi malik assessee, the initial onus is on the assessee to offer an explanation of the nature and source of the cash credit. If the explanation is not found satisfactory or reasonable, the assessing officer can treat such money as the income of the assessee from undisclosed sources. Section 68 of the I.T. Act, 1961 gives statutory recognition to the principle of cash credits, which are not satisfactorily explained, may be assessed as income. The provisions of section 68 of the I.T. Act, 1961 applies when the assessee's explanation regarding cash credit is rejected as being unsatisfactory or when the assessee does not render any explanation. v) In the present case, the assessee made cash deposits aggregating Rs. 30,65,000/-with ICICI Bank has failed to render explanation with documentary evidence. Keeping in view the facts of the case as well as written submissions, the explanation rendered by the assessee is not found satisfactory as the assessee has failed to substantiate her claim with supporting evidence. Therefore, the amount of cash deposits of Rs. 30,65,000/- is treated as unexplained cash deposits in saving Bank account No. 017701014510 & 017701525384 with ICICI Bank, and added to the income of the assessee.”

7. Now the assessee is in appeal. The ld. Counsel for the assessee submitted that during the monitoring of scrutiny assessment the ld. JCIT 7 Padma Devi malik gave the directions vide letter dated 10.03.2014 to the AO (copy of which is placed at page nos. 106 & 107 of the assessee’s paper book). He again gave certain directions after considering the draft assessment order passed by the AO vide letter dated 10.02.2014 (copy of which is placed at page nos. 109 & 110 of the assessee’s paper book). It was stated that the aforesaid directions were given by the JCIT on 10.03.2014 and the AO passed the assessment order on 12.03.2014 without giving any opportunity of being heard to the assessee. Therefore, the addition made by the AO without giving the opportunity of being heard was not justified and that the ld. CIT(A) without considering the facts in right perspective wrongly confirmed the addition made by the AO. It was stated that the addition has been made by the AO only on the directions given by the JCIT u/s 144A of the Act but the said additions were made without giving the opportunity of being heard to the assessee. Therefore, the addition sustained by the ld. CIT(A) deserves to be deleted.

8 Padma Devi malik 10. I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the ld. JCIT gave the direction to the AO u/s 144A of the Act which is evident from page nos. 106 & 107 and 109 & 110 of the assessee’s paper book. The provisions contained in Section 144A of the Act read as under: ““A Joint Commissioner may, on his own motion or on a reference being made to him by the Assessing Officer or on the application of an assessee, call for and examine the record of any proceeding in which an assessment is pending and, if he considers that, having regard to the nature of the case or the amount involved or for any other reason, it is necessary or expedient so to do, he may issue such directions as he thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment and such directions shall be binding on the Assessing Officer. Provided that no directions, which are prejudicial to the assessee shall be issued before an opportunity is given to the assessee to be heard. Explanation: For the purposes of this Section, no direction as to the lines on which an investigation connected with the assessment should be made, shall be deemed to be direction prejudicial to the assessee.”