SH. AKHIL SINGLA,NEW DELHI vs. ITO, NEW DELHI

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ITA 2997/DEL/2016Status: DisposedITAT Delhi07 December 2016AY 2011-125 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that relevant facts were not properly examined by the tax authorities. The assessee's claim of repayment of the advance and the source of funds from Suresh Chand Yadav's father's agricultural activity needed verification.

What were the facts?

The assessee received cash deposits of Rs. 32,33,700/- in his bank account, claimed to be advance for a property sale from Suresh Chand Yadav. The Assessing Officer made an addition under Section 68 as Suresh Chand Yadav's financial capacity was doubted and he could not appear for deposition.

What were the issues?

Whether the assessee discharged the onus under Section 68 for the cash deposits, and if the source of funds from the prospective buyer was adequately explained and verified.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-3’ NEW DELHI

Before: SMT DIVA SINGH

Hearing: 29.09.2016Pronounced: 07.12.2016

ORDER The present appeal has been filed by the assessee assailing the correctness of the order dated 28.03.2016 of CIT(A)-7, New Delhi pertaining to 2011–12 assessment year on the following grounds:-

1. “That the order passed by the CIT (Appeals)-7 confirming the addition made by the Assessing Officer, is arbitrary, biased and bad in law and in facts of the case.

2. That the Learned CIT (Appeals) has grossly erred in confirming the addition of Rs.32,33,700/- under section 68 of the Act made by the Assessing Officer without appreciating the fact that the appellant had discharged his onus envisaged under section 68 of the Act for receipt of advance against proposed sale of property. 3. That the Learned CIT (Appeals) has grossly erred in confirming the addition made by the Assessing Officer under section 68 of the Act ignoring the fact that the appellant could not be expected to prove the source of source. 4. That the Learned CIT (Appeals) has grossly erred in confirming the addition made under section 68 by the Assessing Officer ignoring the fact that the prospective buyer of land from whom advance in cash had been received was returned the advance through bank in the same financial year. 5. The appellant craves leave to add, alter, amend or delete the above grounds of appeal at the time of hearing.”

2.

The relevant facts of the case are that the assessee who is showing income from salary; house property and other sources, returned an income of Rs.5,59220/-. The said case was picked up for scrutiny as an amount of Rs.32,33,700/- was found to have been deposited in the assessee’s bank account. The assessee was required to explain the same.

3.

A perusal of the assessment order page 2 shows that the assessee claimed that these were from Sh. Suresh Chander Yadav as part payments in regard to a specific plot which he owned along with his brother. The relevant explanation is extracted hereunder for ready reference:- I.T.A .No.-2997/Del/2016 Akhil Singla vs ITO

Regarding source of cash deposit of Rs.32,33,700/- “Mr.Akhil SIngla and Mr.Atul SIngla, both are brothers are S/o-Sh.Vinod Singla, R/o-22, Sainik VIhar, New Delhi aged 30 years are the joint owners with equal shares of the property situated at Khetoni No.28, Khasra No.-965, Gram Patti Sewai, Nai Wala Road, Branala (Punjab) since 1996-1997 (copy of sale agreement enclosed) During the year under assessment, the aforesaid property was under the negotiation for sale and the agreement to sell was executed on dated 10.06.2010 between Mr. AKhil SIngla and Mr. Suresh Chand Yadav, who is farmer S/o.Sh.Balwant Singh, R/o-Flat No.E-360, Face-1, RHCO Industrial Area, Bhiwadi for Rs.65,00,000/- out of which the assessee received partial amount in cash as follows:- S.No. DATED AMOUNT 1. 10.06.2010 16,00,000/- 2. 25.07.2010 16,00,000/- Total 32,00,000/- 4. The Assessing Officer, accordingly issued summons under section 131 on 03.03.2014 for compliance on 10.03.2014 requiring Sh. Suresh Chand Yadav to be present for his personal deposition, along with copy of his income tax returns for 2009–10, 2010–11 and 2011–12 assessment years and copy of bank statement with narrations etc which reflected the transaction with the assessee along with proof and documentary evidence of source of cash. In response to the said notice, Sh. Suresh Chand Yadav as per record has replied on 10.03.2014 stating that due to his family problems he was unable to come. However, the Assessing Officer considering the fact that the assessee failed to explain the deposits in Canara Bank, Barnala (Punjab) A/c No.00000024222 and procuring copy of returns of Sh.Suresh Chand yadav, PAN-ACJPY8421E from the Jurisdictional Assessing Officer, Ward-1, Aayakar Bhawan, Sector-14, Hisar, Haryana, noted that on the basis of the following income chart of Sh. Suresh Chand Yadav, it could not be concluded that he was in a position to fund the “huge” amount of Rs.32,00,000/-. The relevant chart is extracted from the assessment order:-

S.No. A.Y. Date of filing Income Income from Deduction Agriculture Total from other source income income Salary 1. 2009-10 31.07.2010 1,26,000 9,360 NIL 1,16,640 2. 2010-11 31.07.2010 1,04,400 1,66,948 37,324 NIL 2,34,014 3. 2011-12 14.05.2011 76,400 1,39,149 59,534 NIL 2,56,015 I.T.A .No.-2997/Del/2016 Akhil Singla vs ITO

Page 3 of 5 4.1. As a result thereof, the addition of the said amount was made in the hands of the assessee.

5.

The issue was challenged in appeal before the CIT(A). The assessee submitted that the deposits made in his bank account was supported by a copy of the Sale Agreement which had been produced during the assessment proceedings. It was further submitted that the identity of Sh. Suresh Chand Yadav was proved since a direct communication was made to the Assessing Officer. The fact that he was filing income tax returns which were directly procured by the Assessing Officer from the other AO i.e. the AO of Sh.Suresh Chand Yadav.

This fact it was submitted further proved his identity. The amounts were stated to have been repaid back as per the submission recorded at page 3 para of the CIT(A) on the following dates:-

S.No. Dated Amount (In Rs.) 1. 19.10.2010 7,00,000/- 2. 21.10.2010 5,00,000/- 3. 01.11.2010 10,00,000/- 4. 02.11.2010 10,00,000/- Total 32,00,000/-

6.

A perusal of the submissions recorded in the impugned order and Paras 6 and 7 at page 3 of the impugned order, it is noticed that the assessee stated that on becoming aware of the fact that the addition has been made in the hands of the assessee because the capacity of Sh. Surech Chand Yadav was doubted. In the circumstances as per arguments recorded in the impugned order, the assessee enquired from Sh. Suresh Chand Yadav as to how he had acquired the said money. Sh. Suresh Chand Yadav as per assessee’s submission extracted in the order is supposed to have stated that it was a gift from his father.

Sh. Suresh Chand Yadav’s father and uncle, it has been stated were agriculturist in joint family ancestral land holdings. The affidavit of Sh. Yadav stating that he was an agriculturist it was submitted was in fact referring to the agricultural activity being carried out by his father and uncles. As to the source of the funds advanced, it was stated reliance is placed upon copy of Khasra and Khatouni of lands held by Sh. Suresh Chand Yadav’s father Mr Balwan I.T.A .No.-2997/Del/2016 Akhil Singla vs ITO

Page 4 of 5 Singh and uncle Mr Jaidev, Mr. Harisingh evidencing substantial agricultural land holding of approximately 24 acres between them. However, the explanation offered was not accepted as the assessee was considered to have been changing his stance as to the source of the money coming from the agricultural activity carried out by Sh. Suresh Chand Yadav and thereafter as a gift from his father who instead was engaged in the agricultural activity along with his brothers. 6.1. The Ld.AR reiterated the submissions advanced before the CIT(A). It was further stated that since the transaction did not go through the amounts were returned. 6.2. The Ld.Sr.DR relied upon the impugned order stating that the assessee’s stand is vacillating.

7.

On considering the above-mentioned overall factual matrix, it is seen that the return for the year under consideration as per the assessment order was filed on 28.03.2012 and notice under section 143(2) was issued on 08.08.2012. As per the submissions extracted at page 3 para 4 of the impugned order, the assessee has claimed that the advances received have been repaid back in the months of October and November 2010 as the transaction did not go through. On a consideration of the facts, I am of the view that relevant facts have not been thrashed out by the tax authorities. Evidently there was a specific piece of land belonging to the assessee and there was an Agreement to Sell entered into by the assessee with Sh.Suresh Chand Yadav. If his signature is found therein and the entering into of the transaction is supported by an affidavit of the Sh.Suresh Chand Yadav, then there was no reason for the Revenue not to address the availability of funds in the hands of the Sh.Suresh Chand Yadav from his father’s agricultural activity. How the assessee can be held responsible for the financial affairs and the explanation offered by Sh.Suresh Chand Yadav is not brought out in the orders. As per the facts on record, the ownership of a specific land/plot in the hands of the assessee is not doubted. The other party signatory of the Agreement to Sell Sh.Suresh Chand Yadav is identified who explains the source but does not appear on the only one opportunity provided to him. The parties are not related the amounts are stated I.T.A .No.-2997/Del/2016 Akhil Singla vs ITO

Page 5 of 5 to be repaid back on specific dates prior to the filing of the return itself. The return as per record was filed on 20.03.2012 and the amounts are claimed to be repaid by cheques on specific dates in October and November in 2010. Accordingly, in the peculiar facts and circumstances of the case, I find that subject to verification that the amounts have been repaid on specific dates back to Sh. Suresh Chand Yadav the addition per se cannot be sustained. The Ld.AR on query was also unable to state whether the said specific plot continues to be held by the assessee or has it been sold. Accordingly, the impugned order is set aside and the issues are restored to the AO to verify the above claims. 8. In the result, the appeal of the assessee is allowed for statistical purposes. The order is pronounced in the open court on 07th of December, 2016.

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