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Income Tax Appellate Tribunal, DELHI BENCH - ‘F’ NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI PRASHANT MAHARISHI
This order was disposed of both the appeals filed by different assesses on identical issues. ,2940/Del/2013 Late Shri Prem Singh vs. ITO and Smt. Reeta vs. ITO
We have heard Ld. Representatives of both the parties and perused the material on record. The appeals are decided as under :-
Assessment year – 2009-10
This appeal by assessee has been directed against the order of Ld. CIT(A) I Dehradun dated 27thFebruary, 2013 for asstt. year 2009- 10.
Ground No. 1 and 2 are general and need not adjudication. Ld. Counsel for assessee did not press ground No. 4 of the appeal. Same is dismissed as not pressed.
On ground No. 3 assessee challenged the addition of Rs. 80,000/- out of opening capital of Rs. 1,80,000/- carry forward from previous year i.e. asstt. Year 2008-09.
It is noted in the impugned order that assessee claimed to have made initial investment of Rs. 1,80,000/- out of his opening balance of capital. According to him, he had cash amount of Rs. 2,40,000/- representing his own capital accumulated over the years and out of that it invested Rs. 1,80,000/- for purposes of business. The AO rejected the explanation as the assessee did not have any documentary evidence to substantiate his contention and treated the sum as his unexplained investment. In appeal it was submitted by assessee that the assessee had furnished his return of income for asstt. year 2008-09 showing capital balance of Rs. 2,40,000/- and mentioned that out of the same ,2940/Del/2013 Late Shri Prem Singh vs. ITO and Smt. Reeta vs. ITO an amount of Rs. 1,80,000/- had been invested in asstt. Year 2009-10 for wine shop. A copy was also filed in support of the contention. Ld. CIT(A) noted that assessee was not assessed to tax regularly. The return of income for asstt. Year 2008-09 was furnished on 16th September, 2009 i.e almost simultaneously with the return for asstt. Year 2009-10.
In the former, he showed income of Rs. 95,000/- from brokerage and agricultural income of Rs. 1,05,000/-. He also claimed opening balance of cash of Rs. 1,00,000/- as on 1.4.2007. According to him if the AO was not satisfied with the explanation, he should have initiated action u/s 147 of the Act for asstt. Year 2008-09 and if he did not do so it was not proper for him to question the opening balance as on 1.4.2009. Ld. CIT (A) therefore noted that it is apparent that return for asstt., year 2008-09 had been furnished just to build capital as it showed opening balance of Rs. 1,00,000/- income of Rs. 2,00,000/- including agricultural income. No tax was paid because return was shown to be below taxable limit. The AO rejected the claim. The computation of income for that year would also be below taxable. The opening cash balance cannot be accepted simply because assessee has furnished return showing equivalent of closing balance of cash in hand . Ld. CIT(A) also noted that same is the policy in other cases of liquor contractors. Ld. CIT(A) after considering some savings of the assessee in past had given credit of Rs. 1,00,000/- and balance addition of Rs. 80,000/- was confirmed. ,2940/Del/2013 Late Shri Prem Singh vs. ITO and Smt. Reeta vs. ITO
After considering rival submissions we do not find merit in this ground of appeal of assessee. The assessee filed return of income for asstt. Year under appeal i.e 2009-10 on 11th September, 2009. However the Ld. CIT(A) noted that the return for preceding assessment year 2008-09 was furnished on 16th September , 2009 i.e after filing of the return for assessment year under appeal. It is also admitted facts that assessee was not regularly assessed to tax. Therefore, there was no evidence available with the assessee of having any opening balance with him in preceding assessment year 2008-09 as well as there were no evidence available to have accumulated amount of Rs. 2,40,000/- in earlier years. The assessee in the earlier year 2008-09 has shown withdrawals of Rs. 60,000/-. Ld. Counsel for assessee admitted that in that year assessee was having his wife and two sons. Therefore assessee deliberately shown petty withdrawals. Therefore, when the matter was taken up for assessment in assessment year under appeal i.e 2009-10 it was the duty of the assessee to explain the availabilities of the opening capital balance to the satisfaction of the AO. If no evidence or material was produced before the authorities below to show how assessee was having availability of any fund with him or to have any opening capital balance addition is justified. In the absence of any evidence, it is difficult to accept the explanation of the assessee. It is a clear case of building capital and to show opening capital balance. Ld. Counsel for assessee submitted that ITAT Delhi Bench in the case of ,2940/Del/2013 Late Shri Prem Singh vs. ITO and Smt. Reeta vs. ITO Vinod Kumar accepted the opening capital balance of earlier year.
However, the facts now considered by the Ld. CIT(A) have not been considered in the case of Vinod Kumar (supra). We may also note that suppose any assessee may declare any huge amount in cash flow statement in preceding year which was not subject to scrutiny assessment whether same could be extended benefit to the assessee, the answer would be that such attempt to build capital cannot be accepted unless there was some evidence of record to justify accumulative of funds or the availability of the opening capital balance.
This ground of appeal of assessee thus has no merit the same is accordingly dismissed.
8. On ground No. 5 assessee challenged the addition of Rs. 4,10,000/- on account of sale of trees to Shri Khalil. The Ld. CIT(A) noted that assessee claimed to have received a sum of Rs. 4,10,000/- by way of sale of trees from Mr. Khalil. Mr. Khalil appeared before the AO and confirmed the transaction. He also submitted that he had received money from a commission agent of timber. The AO was not satisfied with the explanation of the assessee as no documentary evidence relating to the transfer of money between the commission agent and Mr. Khali and between him and the assessee was produced. The AO therefore treated the said sum of assessee’s undisclosed income. In appeal, assessee submitted that he had discharged its onus by producing Mr. Khalil and that he was not required to explain the source ,2940/Del/2013 Late Shri Prem Singh vs. ITO and Smt. Reeta vs. ITO of money in the hands of the latter. Ld. CIT(A) found that merely because Mr. Khalil has confirmed giving money to the assessee, it would not mean that transaction was explained. The capacity of the buyer and the genuineness of the transaction are as important factor which should be established. The assessee has not proved anything. Therefore oral testimony of Mr. Khalil will not suffice. The addition was confirmed and this ground was dismissed.
After considering rival submissions, we do not find any merit in this ground of appeal of assessee. Ld. Counsel for assessee reiterated the submissions made before authorities below and refer to receipt executed by Mr. Khalil copy of which is filed at page 10 of the paper book in which Mr. Khalil has explained that he has given Rs. 4,10,000/- to the assessee on sale of popular trees. In his statement recorded by AO he has confirmed the same facts. However, Ld. Counsel for assessee was not able to produce any evidence if any actual amount was given to the assessee for sale of popular tree. No evidence in support of his claim of sale of trees has been filed. In the absence of any evidence to prove that assessee was owner of popular trees or he has actually sold the popular tree to Mr. Khali, no interference is called for in the matter.
Similarly production of receipt and statement recorded by AO orally is not sufficient to discharge onus upon assessee to prove genuineness of the transaction in the matter and actual sale transaction of popular tree . In the absence of any evidence or material on record no interference is ,2940/Del/2013 Late Shri Prem Singh vs. ITO and Smt. Reeta vs. ITO called for in the matter. This ground of appeal of assessee is accordingly dismissed.
In the result appeal of assessee is dismissed.
ITA 2940/DEL-2013 Assessment Year 2009-10
This appeal by assessee has been directed against order of Ld. CIT(A) Dehradun I dated 18th February, 2013 for assessment year 2009- 10.
Ld. Counsel for assessee did not press ground No. 4 of appeal of assessee. The same is dismissed as not pressed. Ground No. 1 and 2 are general which need no adjudication.
In Ground No. 3 assessee challenged the addition of Rs. 1,20,000/- out of opening capital of Rs. 2,20,000/-. Ld. Representative of both the parties submitted that this issue is same as has been considered on ground No. 3 of appeal of assessee Late Shri Prem Singh in ITA No. 2939/2013. Following the reason for decision in the case of Shri Prem Singh we dismiss this ground of appeal of assesse.
In the result appeal of assessee is dismissed.
In the result both the appeals of assessee are dismissed.
Pronounced in the Open Court.