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Income Tax Appellate Tribunal, DELHI BENCH - ‘SMC’ NEW DELHI
Before: SHRI BHAVNESH SAINI
This appeal by revenue has been directed against the order of Ld. CIT(A) Faridabad dated 20th August, 2014 for assessment year 2009-10 on the following grounds :- i. “Whether Ld. CIT(A) is justified in admitting the additional evidences filed by the assessee completely ignoring the fact that the circumstances of the case are not covered in Rule 46A of the LT. Rules, 1962 where the conditions to accept additional evidence have been provided? ii. Whether Ld. CIT(A) is justified in deleting the addition of Rs. 25,00,000/- made on account of income from undisclosed sources without appreciating the fact that the sale deed submitted by the assessee showed that the flat sold by the assessee was negotiated upon at Rs.75,00,000/- and it did not mention any sale of furniture Page 1 of 19
& fixture as integral part of the flat for Rs.25,00,000/- as contended to by the assessee? iii. Whether Ld. CIT(A) is justified in deleting the addition of Rs.25,00,000/- made on account of income from undisclosed sources completely ignoring the fact that the purchase value of fixtures, fittings and amenities were 7 lacs only and the assets being depreciable assets, the Sale Price of the same was bound to decline with due passage of time whereas, the assessee has claimed to sell them for Rs.25 lacs, approximately 4 times their original value? iv. Whether Ld. CIT(A) is justified in providing a relief of Rs.4,16,300/- out of Rs.4,50,000/- on account of cash deposit in saving account completely ignoring the fact that no details of any advertisement placed for sale of household goods could be furnished by the assessee? v. Whether Ld. CIT(A) is justified in deleting the addition of Rs.18,20,544/- made on account of loan given to husband from undisclosed sources without appreciating the fact that no cash flow statement alongwith narration and other corroborative evidence could be furnished by the assessee?”
I have heard Ld. Representatives of both the parties and perused the material on record.
On ground No. 1 revenue challenged the order of Ld. CIT(A) in admitting additional evidences under rule 46A of the I.T. Rules.
Ld. CIT(A) noted that assessee furnished additional evidences before him which were sent to the AO for examination both with regard to admissibility of the additional evidence and the merits of additions made in the light of additional evidences. The assessee submitted affidavit contending that on submissions of various documents and information, the AO did not give adequate opportunity to present assessee’s case, since on the date fixed for hearing, Assessing Officer was telephonically requested to grant some more time as the details sought for were quite substantive. Despite agreeing on the day of visit to him alongwith requisite details, the AO after thoroughly pursuing the submissions declined to take on record the submissions citing closure of proceedings. The request of the counsel of assessee to mark his presence and take on record the submissions even with the remark on case file that the assessment proceedings have been closed was also not accepted by the AO. He, therefore, contended that assessre was prevented from furnishing appropriate information due to sufficient cause and hence requested to admit additional evidence under rule 46A in the matter. The AO submitted his remand report to Ld. CIT(A). Ld. CIT(A) noted from the remand report of the AO that AO denied to have refuse to accept any document. The assessee further submitted as per the affidavit dated 3rd March, 2012, his counsel attended the office of the AO on 21st December, 2011 and filed written submissions which were refused to accept by AO. The assessee’s counsel on next day i.e. 22nd December 2011 again requested to AO to take the written submissions on record which were not taken by Assessing Officer. Therefore written submissions dated 21st December 2011 were sent through speed post on 23rd December, 2011 which have received in Gurgaon office on 26th December 2011. The necessary evidence in this regard has also been furnished before Ld. CIT(A) along with telephonic records of Counsel for assessee as an evidence to bring out the telephone call logs of the telephone calls between the Counsel for assessee and AO on 16th December, 2011. Ld. CIT(A) accordingly allowed the additional evidence to be furnished by the assessee. He has relied upon decision of Bombay High Court in the case of Prabhavati S.
Shah vs. CIT 231 ITR 1 (Bombay) in which it was held that where additional evidence was necessary to decide the controversy in regard to genuineness of transaction, the appellate Commissioner should have considered this evidence in exercise of his powers u/s 250 (4) and (5) of the I.T. Act. In the case of Arjan Oass vs. CIT 112 ITR 480 (P & H) , the Hon’ble Punjab & Haryana High Court held that in all these cases where request for permission to produce additional evidence is based on bonafide ground and same is not with a view to causing undue delay, the appellate authority is bound to accept the same. In the case of CIT vs. Jind Cooperative Sugar Mills 335 ITR 43 (P & H), the Hon’ble Punjab & Haryana High Court held that the spirit of rule 46A is founded on the principle of natural justice which stand fulfilled by the fact that CIT(A) obtained and considered the remand report of the AO before adjudicating the issue before him. Ld. CIT(A) accordingly admitted the additional evidence which were relevant to the other additions on which revenue has raised grounds of appeal.
5. Ld. DR contended that Ld. CIT(A) violated rule 46A of I.T. Act copy of the order sheet of the AO filed to show non cooperative attitude of the assessee. Ld. DR relied upon order of ITAT Chandigarh bench in the case of Rishi Sagar vs ITO 36 taxmann. Com 508 in which it was held that assessee has failed to establish its case of reasonable cause in not being in possession of the said documents during the course of assessment proceedings and also the conduct of the assessee, during assessment proceedings of having not complied with various notices and put in appearance before AO does not merit admission of these additional evidence at appellate stage. On the other hand Ld. Counsel for assessee reiterated the submissions made before authorities below and submitted that the address of the assessee disclosed in return is 608-A, Hemilton Court, DLF City, Phase-IV, Gurgaon. The assessee made proper request for additional evidence. Since the AO refused to accept written submissions and documents on last date of hearing on 21st December 2011 therefore same was sent through speed post to the AO on 23rd December, 2011. Copy of the same is filed on page 158 of the paper book .He has referred to PB 201 to 203 which are notices dated 21/26th December, 2011 issued to the assessee, he therefore submitted that the same notice has been complied on the same day.
6. On consideration of the rival submissions, I am not inclined to allow the ground of the appeal of revenue. The assessee has given sufficient reasons to show that AO did not accept the written
ITO vs. Hema Bajaj submissions and documents on 21st December, 2011 and on the same day the AO passed the assessment order on 21st December, 2011. Even the last notice is issued on 21/26th December, 2011, therefore the AO should not have pass the assessment order on the same day on 21st December 2011 or he should have waited till 26th December, 2011. The assessee filed affidavit explaining therein that written submissions alongwith documents were presented to AO on 21st December, 2011 which have been refused to accept by the AO. The same was sent through speed post to the AO on 23rd December 2011. Therefore, assessee has made out a case that AO has refused to admit additional evidence and that assessee was prevented by sufficient cause for not producing the documents before AO. The decision cited by the Ld. CIT(A) supports the findings of the Ld. CIT(A) that assessee was prevented by sufficient cause in not producing documents before AO.
Even the telephone calls records between assessee’s counsel and AO also support the fact that assessee was regularly in touch with the AO. It is also admitted fact that AO filed the remand report before Ld. CIT(A) and did not raise objection to the additional evidences. Hon’ble Punjab & Haryana High Court in the case of Kuldeep Industrial Corporation vs CIT 209 CTR 400 held that when AO was present before Ld. CIT(A) and did not raise objection, Rule 46A is not violated. Further the explanation of assessee clearly prove that assessee wanted to produce the relevant material before AO on the last date of hearing but AO did not accept the same. It is also not denied that additional evidences were relevant and goes to the roots of the matter. Therefore, Ld. CIT(A) correctly exercised his jurisdiction in admitting additional evidence. No interference is called for in the matter. This ground of appeal of revenue is dismissed.
7. On ground No. 2 and 3, revenue challenged the deletion of addition of Rs. 25 lacs. During the assessment year, the assessee sold her residential plot No. 608A, Hamilton Court, DLF city, Phase IV at Gurgaon for a consideration of Rs. One crore used for residence. The said consideration of Rs. One crore was adopted while computing the long term capital gains u/s 48. The residential flat owned by assessee was sold to BP IT Infrasoft Pvt. Ltd. for a total consideration of Rs.one crore and for which agreement to sell dated 8th September , 2008 was executed between assessee and the purchaser. The sale deed was registered with Sub Registrar, Gurgaon on 9th September, 2008 vide No. 14118 for Rs. 75 lacs. To acknowledge the payment of consideration, the assessee also said to have issued two money receipts, one payment receipt of DD No. 008139 dated 8th September, 2008 of Axis Bank for Rs. 25 lacs towards the consideration of fittings and fixtures and another final payment of receipt of Rs. 75 lacs for which the sale deed has been registered. The assessee said to have made improvements in the flat by spending Rs. 7 .00 lacs during financial year 2005-06 and 2006-07. The AO disregarded the receipt of Rs. 25 lacs towards fixtures and fittings and did not consider the same for working out of long term capital gains, instead in the assessment order he has held part of consideration of Rs. 25 lacs as income from undisclosed sources.
8. The assessee challenged the addition before Ld. CIT(A). The submissions of the assessee are reproduced in the impugned order in which the assessee briefly explained that assessee filed complete details before AO which are agreement to sell, details of purchaser, their address and copies of filing of statement with the Registrar of Companies including purchasers balance sheet for year under consideration. The AO was required to produce the purchaser personally but the request of assessée was declined. The AO did not summon the purchaser for clarification. It was submitted that out of total consideration of Rs. 1 crore 25 lac was paid on account of fixtures and fittings in the flat. Therefore, even if agreement to sell is unregistered, it cannot be disregarded. The assessee filed confirmation of transaction from the purchaser which was admitted as additional evidence under rule 46A. the assessee therefore explained source of receipts of Rs. 25 lacs. No addition is justified.
9. Ld. CIT(A) noted that AO made the addition disregarding the agreement to sell which was not registered and that payment receipt is not signed by purchaser. Ld. CIT(A) however noted that assessee received Rs. 25 lacs through agreement to sell and receipt to the same is also executed. Purchaser has confirmed making payment of Rs. 25 lacs towards purchase of fixtures and fittings. The agreement is witnessed by the external parties. Therefore, it cannot be disregarded by AO merely because it was unregistered. The AO also did not accept the request of the assessee to summon the purchaser for examination.
The purchaser is company and filed complete details which were filed with the Registrar of the company in which in its schedule of its asset, the value of the flat has been shown at Rs. 1,08,30,500/- including Rs. 5.25 lacs as stamp duty. Ld. CIT(A) therefore noted that these details are in public domain and could have been looked into even by AO. Ld. CIT(A) also noted that purchasers have filed confirmation which were admitted as additional evidence to confirm payment of Rs. 25 lacs through banking channel. The AO has not contradicted the contents of the confirmation in the remand report. Ld. CIT(A), therefore ,agreed with submission of assessee that assessee received genuine amount of Rs. 25 lacs from the purchaser which is on account of superior fixtures, fittings in the residential flat sold by the assessee to the company. The addition of Rs. 25 lacs was accordingly deleted.
Ld. DR relied upon the order of the AO and submitted that in the sale deed lessor amount is shown as consideration. Therefore source of receipt of Rs. 25 lacs has not been explained. Ld. Counsel for assessee however, reiterated the submissions made before authorities below and referred to PB 59 which is confirmation filed by purchaser and PB 112 agreement to sell in which it is clearly mentioned that Rs. 25 lacs would be paid through banking channel for sale of fixtures and fittings in the plot.
On consideration of the rival submissions I am not inclined to interfere with the order of the Ld. CIT(A) in deleting the addition.
Assessee filed additional evidences before Ld. CIT(A) which have been admitted including the confirmation filed by the purchaser. In the confirmation (PB 59) , the purchaser company has clearly mentioned for making payment of Rs. 25 lacs against sale deed and payment of Rs. 25 lacs made through banking channel against fixture and fittings. The AO did not contradict the contents of the confirmation. In the agreement to sell also specific details are given for selling the plot in question for Rs. 1 crore including the sale of fixture and fittings. The assessee is therefore able to explain source of Rs. 25 lacs and as such addition was wholly unjustified. Even assessee requested the AO to summon the purchaser to clarify the above facts and get confirmation of the transaction.
However, the AO did not issue summons to the purchasers by invoking his powers u/s 131 of the I.T. Act. Therefore, when AO refused to summon the purchaser, no fault could be found with the assessee.
Further, the purchaser company in their fixed assets has shown the entire amount in their records submitted to the Registrar of the companies. Therefore, nothing left for the AO to make addition of Rs. 25 lacs considering the same to be assessee’s own income for undisclosed sources. The Ld. CIT(A) on proper appreciation of facts and material of record correctly deleted the additions. Both these grounds of the revenue are dismissed.
On ground No. 4 revenue challenged the deletion of addition of Rs. 4,16,300/- on account of sale of household items. After the sale of residential flat in Gurgaon , the assessee sold her household items for Rs. 4,16,300/- which the family accumulated over the years. The cash received on such sale alongwith the balance from household domestic savings, assesse deposited Rs. 4,50,000/- in her saving bank account on 19th July, 2008. In absence of explanation or evidence brought on record by the assessee, the AO treated the said deposit of cash as her income from undisclosed sources. It may be noted that AO asked assessee to furnish purchase bills/ vouchers for the items sold but no bills and vouchers have been produced. The assessee in her submissions before Ld. CIT(A) reiterated that she along with her husband stayed in Singapore and US between 1991 to December, 2002 during which time a large number of household items were acquired and brought to India when they returned in 2002. The household items were brought in via the professional logistic company, Air-Sea Logistics, Oakland, CA (USA).
The details of goods brought to India from Oakland, USA as evidenced by the packing list and endorsement of Madras Customs about the transfer of residence in the passport of the husband of the assessee were also submitted as additional evidence. In the remand report, the AO did not challenge the veracity of these documents. The assessee filed her affidavit confirming sale of household goods. The AO ignored the affidavit of the assessee. The assessee’s husband lost his job and they shifted to Combatore where he found a job at Chinmayia International School and was provided with a small accommodation in a quarter with basic furniture. There were no need to buy household stuff to replace the item sold. However, the household goods were purchased by the family in November or December 2009 upon their return to Gurgaon, since all the previous ones were disposed off. The details of such household purchases were prepared and present to the AO. The assessee as an additional evidence produced the bills of purchase of new household goods. Therefore issue is explained to the satisfaction of the AO.
The Ld. CIT(A) noted that the AO contends that as evidence of sale of household items purchase bill / vouchers for the items have not been furnished by assessee, therefore explanation of assessee was not accepted. The assessee also pleaded that household goods were brought from USA to India and there is an entry in passport of husband of the assessee supported by packing list. Ld. CIT(A) noted that the additional evidences were forwarded to the AO for his comments but nothing adverse have been commented by the AO.
Ld. CIT(A) considering these facts found explanation of the assessee as acceptable because assessee shifted from US to India and brought household items through Air-Sea Logisticfs, Oakland, USA as is evidenced by entry in passport . The existence of items sold proved. Ld. CIT(A) accepted the affidavit of assessee that she has sold household goods for Rs. 4,16,300/- and accordingly the addition to the extent of Rs. 4,16,300/- was deleted. This ground of appeal of assessee was partly allowed.
15. Ld. DR relied upon order of the AO and submitted that no bills etc. of sale of house hold items were produced before AO. Therefore affidavit of assessee should not have been believed. On the other hand Ld. Counsel for assessee reiterated the submissions made before authorities below and referred to affidavit of assessee filed at page 144 of the Paper Book, Paper Book 24 the copy of the passport of husband of the assessee and paper book 25 to 28 is the list of items brought from US to India.
16. We have considered rival submissions. Assessee made deposit of Rs. 4,50,000/- in the saving bank account on 19th July, 2008. The assessee however claimed that certain household articles were transferred and brought to India in the year 2002. List of all the articles brought in India are filed at pages 25 to 28 of the paper book and enclosed a copy of the passport of husband of the assessee and the affidavit of assessee has been filed at page 144 of the paper book in which assessee explained that he has sold household articles for Rs. 4,16,300/-. The details of household items mentioned in the affidavit do not exactly match with the list of items brought from US. Admittedly the assessee did not produce any bill, vouchers to support the sale of household items for a sum of Rs. 4,16,300/-. In the absence of any evidence of sale of household items even if they are accumulated by assessee, the Ld. CIT(A) should not have accepted the affidavit of assessee regarding sale of household items for a sum of Rs. 4,16,300/-.
No details of the persons who have purchased household items of assessee have been furnished to the authorities below as well as no details of the same are also explained in affidavit of the assessee.
Therefore, in the absence of any evidence of sale of household articles by assessee and in the absence of any details thereof, the Ld. CIT(A) should not have accepted affidavit of assessee for the purpose of deleting the addition of Rs. 4,16,300/-. The objections of the AO have not been appreciated by the Ld. CIT(A) that no evidence of sale of household items have been furnished before AO and same is the position that no evidence of sale of household items have been filed before Ld. CIT(A). Ld. CIT(A) merely relying upon affidavit of the assessee which was only self serving should not have deleted the impugned addition. I accordingly set aside the order of the Ld. CIT(A) and restore the order of the AO resultantly the addition of Rs. 4,16,300/- is restored. This ground of appeal of revenue is allowed.
17. On ground No. 5 revenue challenged the deletion of addition of Rs. 18,20,544/- on account of loan given to husband from undisclosed sources.
The facts on this issue are that there were certain transactions between assessee and her husband. At the end of the previous year these transactions were summarised and balance outstanding as on 31st March, 2009 for Rs. 21,89,360.71 towards husband was treated as loan payable by the assessee. Copy of the loan account was submitted by the assessee. Copy of the bank statement of home saver account with Stanadard Chartered Bank which was a joint account of husband and the assesee was not produced before AO while others including one with North Kanara GSB Cooperative Bank were filed by the assessee. The debit in the husband’s loan account aggregated Rs. 23,20,544/- that has been considered as loan given to husband by the AO. An amount of Rs. 5 lacs has been paid by the assessee to her husband by cheque drawn on North Kanara GSB Coop Bank on 15th November, 2008. In absence of further details, the AO considered Rs. 18,20,544/- after reducing Rs. 5 lac as income of the assessee from undisclosed sources and additions of the same were made to the total income of the assessee. The assessee made detailed submission before Ld. CIT(A) which is reproduced in the impugned order in which the assessee briefly explained that AO ignored all the entries of the amount received by the assessee on her husband’s account including the opening balance. The inter-se entries of transactions on account of husband and the assessee during the year are summarised at the year end and net balance at the year end is considered as loan to /from husband/wife. The assessee filed complete details and confirmation from the husband confirming the loan account as well as copy of Income Tax acknowledgement was filed before AO. The husband of the assessee is regular assessee and has sufficient income shown to the revenue department. The entries on account of intermittent transactions on behalf of each other between husband and the assesee have been done through home saver bank joint account by way of cheques or on online bank transfers only. The same statements are also filed as additional evidence under rule 46A.The AO in his remand report stated that no doubt there are deposit entries of Rs. 20,08,755/- despite of the fact that he accepts deposits entries in the loan account of husband. But he did not accept loan from/to the spouses inter-se. The AO failed to appreciate the entries in the bank account. The AO did not doubt the correctness of the transactions contained in the bank statement and affidavit by the assessee was also filed to explain the issue. The Ld. CIT(A) considered the material on record and remand report filed by the AO. Ld. CIT(A) found that home saver bank account is assessee’s account operated jointly by husband also. Most of the entries in the said loan account of the husband as appearing in the assesse’s records are routed through home saver account. The details are noted in the impugned order and copy of loan statement was submitted as additional evidence is reproduced at pages 40 to 43 of order of Ld. CIT(A). Ld. CIT(A) also noted that payments on account of husband made from this joint account have been considered as loan repaid to the assessee’s husband on different serial Nos. . At the same time the payment received by the assessee’s husband in the same joint account have been treated as loan received from the husband at different serial number. Similarly amount received by the husband on behalf of the assessee but deposited by him in his that account is considered as loan paid to him. Ld. CIT(A) also perused home saver account of bank statement and found that the AO in the remand report confirmed the deposit of Rs. 20,08,755/- in the said bank account and these credit entries have been explained. Ld. CIT(A) also reproduced the remand report of the AO in which the AO has explained that there are no doubt about the deposit entries of Rs. 20,08,755/- in the home saver account which are primarily in the name of husband of the assessee. However, cash flow statement is not filed.
Ld. CIT(A) after examining the details found that joint account is operated by her husband and the assessee and the money is deposited and utilised by both assessee and her husband which are fully explained. The source of Rs. 20,08,755/- deposited by husband of assessee is also explained and husband of the assessee filed confirmation and copy of his income tax return to explain all the entries in the bank account. Ld. CIT(A) therefore, noted that once the identity of the payer, capacity of the payer and genuineness of the transaction has been proved the onus upon us is discharged. Ld. CIT(A) accordingly deleted the entire addition.
Ld. DR relied upon the order of the AO and submitted that their joint bank account was not disclosed by assessee. No explanation was filed before AO. Additional evidence was filed before Ld. CIT(A) .
Therefore, additions should have been deleted by Ld. CIT(A). On the other hand, Ld. Counsel for assessee reiterated the submissions made before authorities below and submitted that all entries in the accounts are explained and confirmation of husband of the assessee is filed at page 96 of the paper book in which the husband of the assessee confirmed giving the loan to the assessee and the closing balance of the loan is on 31st March 2009 is Rs. 21,89,360/-.
After considering rival submissions we do not find merit in the ground of appeal of the revenue. Assessee explained the entries in the joint bank account as well as others. The explanation of assessee was forwarded to the AO for comments and the AO in his comments did not doubt the deposit entries of Rs. 20,08,755/- in the home saver account which is primarily in the name of husband of the assessee. The husband of the assessee filed confirmation in which he has confirmed outstanding balance on the year end. The explanation of assessee is supported by bank entries, income tax return and material produced as additional evidence. Therefore, in the absence of any challenge to the evidences filed by the assessee, I do not find any justification to interfere with the orders of the Ld. CIT(A) in deleting the addition. Ld. CIT(A) on proper appreciation of facts and by noting the loan statement and source thereto in the impugned order correctly deleted the addition. No interference is called for on this ground. This ground of the revenue is dismissed.
In the result appeal of the department is partly allowed.
Pronounced in the Open Court.