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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SH. C.M. GARG & SH. O.P. KANT
ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 27/12/2012 passed by the Ld. Commissioner of Income-tax (Appeals), Rohtak for assessment year 2009-10 raising following grounds: “
On the facts and in the circumstances of the case and in law the following actions of the Authorities below are erroneous, arbitrary and uncalled for must be quashed with direction for relief:
1. Adding opening cash in hand of Rs.2,39,000/- to the declared income;
2. In enhancing the assessment by additing gifts from grandmother in a sum of Rs.11,30,000/-
In adding to the income a sum of Rs.70,500/- on account of expenses incurred for earning commission income.”
The facts in brief of the case are that the assessee filed return of income on 29/03/2010, declaring income of Rs.1,49,553/- which consisted of salary income of Rs.1,20,000/- income under the head ‘profit and gains of business’ at Rs.59,500/- and income from other sources of Rs.6,040/-. The case of the assessee was selected for scrutiny and notice under section 143(2) of the Income- tax Act, 1961 (for short ‘the Act’) was issued and complied with. During assessment proceeding, the Assessing Officer observed deposits in cash, exceeding Rs.10 lakhs in saving bank account maintained the state bank of India. The deposits were made throughout the year from 10th April, 2008 to 14th March, 2009 of various amounts, which have been reproduced by the Assessing Officer in the assessment order. The assessee submitted cash flow statement. On perusal of the cash flow statement, the Assessing Officer was of the view that entire deposits have been explained from opening cash in hand as on 01/04/2006 of Rs.4,19,000/- and cash gifts of Rs.11,30,000/- received from grandmother. After considering the submission of the assessee in support of the source of deposits, the Assessing Officer found part of amounts of deposit as unexplained and made following additions: 1. Rs. 2, 39,000 out of opening cash in hand 2. Rs. 2, 80,000 out of the gift from grandmother 2.1 The Assessing Officer also estimated the income under the head ‘profit and gains of the business’ at Rs.1,30,000/- as against Rs.59,500/, thus, making addition of Rs.70,500/-.
2.2 Aggrieved, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals) who upheld the addition of Rs.2.39 lakhs as unexplained opening cash in hand and addition of Rs.70,500/- under the head ‘profit and gains of business’ and enhanced the addition against the gift received from grandmother from Rs.2.80 lacs to 11.30 lakhs. 2.3 Aggrieved, the assessee in appeal before the Tribunal raising the grounds as reproduced above.
3. In ground No. 1, the assessee has challenged sustaining of addition of Rs.2,39,000/- by the learned Commissioner of Income-tax (Appeals) for opening cash in hand. 3.1 Facts in respect of issue in dispute are that before the Assessing Officer, the assessee explained salary from M/s Bharat Boot House and gifts from friends and relatives as source of the opening capital as on 01/04/2006. The Assessing Officer recorded the statement of the assessee and concluded that the explanation offered by the assessee was not acceptable due to the reasons, which have been summarized by the learned Commissioner of Income Tax (Appeals) in para-2.4 of the impugned order as under : “(i) The contention of the assessee that he was employed with M / s Bharat Boot House since 2000 has not been proved and cannot be accepted particularly when he did his graduation in 2001. (ii) If it is taken that he was employed since 2000 and getting salary of Rs 72,000/- per year even then the assessee is not able to save this huge amount of Rs 4,19,000/- after meeting the house hold, educational and other expenses. In the reply filed on 17.11.2011, the assessee has admitted house-hold expenses during the year under consideration at Rs 1,17,554/- and keeping in view the expenses shown this year, the expenses in earlier cannot be less than Rs 72,000/- per year and hence the assessee was not able t save such a huge amount shown as opening cash-in-hand. Even in AY 2007-08, the withdrawals for house-hold expenses are shown at Rs 72,500/-.
(iii) From the cash book, it is seen that opening cash-in-hand as on 01.04.2006 has been shown at Rs 4,19,000/- and upto 02.10.2006, there was no addition in this cash balance. On 03.10.2006, a sum of Rs 2,00,000/- was withdrawn from PNB (which was a loan raised from Bharat Boot House) and purchased a property for Rs 3,80,000/- on 06.10.2006. Had the assessee was having cash of Rs 4,19,000/- there was no need or reason with the assessee to raise a loan of Rs 2,00,000/-. Keeping in view these facts, the explanation offered is not acceptable. (iv) In the reply filed on 17.11.2011, reproduced above, the assessee also contended that he also got some gifts from his friends and relatives in earlier years but this contention was not raised in the statement recorded. Moreover, no evidence in this regard has been furnished by the assessee. (v) The contention of the assessee that he kept this cash-in-hand at home i.e. alleged savings since 2000 idle at home is not believable and cannot be accepted particularly because of the fact that the assessee was having bank a/c and no prudent man will kept this amount idle.”
3.2 The learned Assessing Officer, however, observed that on 06/10/2006, the assessee purchased a property for Rs.3,80,000/- and source of which was Rs.2,00,000/- as loan from M/s. Bharat Boot House and Rs.1,80,000/- was out of out of opening capital in hand of Rs.4,19,000/- as on 01/04/2006. The Assessing Officer proposed addition for unexplained cash of Rs.1,80,000/-in assessment year 2007- 08 i.e corresponding to the date of purchase of the property. The balance amount of Rs.2,39,000/- out of the opening cash in hand of Rs.4,19,000/- was held by the Assessing Officer as unexplained and made addition accordingly. Before learned Commissioner of Income-tax (Appeals), the assessee also explained an amount of Rs.80,000/- on sale of a piece of land on 21/01/1999 and Rs.30,000/- on sale of another piece of land on 30/07/1999, to support the source of opening cash in hand as on 01-04- 2006. The learned Commissioner of Income-tax (Appeals), however did not accept the contention of the assessee and dismissed the ground of the appeal with following observations: “4. I have considered the issue and the submissions made by the AR. No regular books of accounts have been maintained by the assessee. It is seen from the records that M/s Bharat Boot House is nothing but proprietary of HUF of the assessee’s father Sh. Ranbir Singh. Before the AO and also before me, the argument of receiving some gifts from friends/relatives in the earlier years has been made. However, no details whatsoever along with evidence has been filed. It is evident from this that it is a hallow argument made just to cover up to justify the cash balance of Rs 4,19,000/- as on 01.04/2006. Regarding the sale of properties to one Sh. Roshan Lai in the year 1999, it is seen that no such averments along with evidence were filed before the AO. Further, they were not sought to be admitted as additional evidence u/r 46A of IT rules and as such no credence can be given. In any case, alleged receipt of Rs 1,10,000/- on sale of land long back in the year 1999 cannot be admitted as source for the opening cash balance as on 01.04.2006. With regard to the withdrawal of Rs 2.00 lacs (approx.) from PNB, it is seen that it was utilized for the purchase of house from his grandmother Smt. Sheela Devi, and therefore cannot be taken as explainable source. In view of the above and the detailed reasoning and analysis made by the AO in the assessment order, as reproduced in para 2.3 above, the addition made by the Assessing Officer is upheld and the ground of appeal is dismissed.”
3.3 The learned Authorized Representative referred to the cash flow statement available on pages 55 to 65 of the assessee’s paper book and submitted that the assessee explained the source of opening cash in hand of Rs.4,19,000/- as on 01/04/2006. The learned Authorized Representative reiterated the submission made before the learned Commissioner of Income-tax (Appeals) on the issue in dispute and explained the source of opening cash in hand of Rs.4,19,000/- as on 01/04/2006 as under : (i) salary from M/s Bharat boot house, Hisar since 2000 . (ii) gifts from his friends and relatives in earlier years (iii) sale of a shop for Rs. 80,000 on 21.9.1999 (iv) sale of another shop for Rs. 30,000 on 30.7.1999 (v) withdrawal of Rs. 2 Lacs from Punjab national bank 3.4 The learned Authorised Representative further explained that the the assessee wanted to purchase some property but due to unfavourable conditions, the deal could not be matured and the money remained with the assessee. According to the Ld. authorised representative the source of entire sum of Rs. 4 19,000/- was duly explained and no addition was warranted in this respect. 3.5 On the other hand, the learned Senior Departmental Representative (Sr.DR) relied on the order of the lower authorities and submitted that the addition sustained by the learned Commissioner of Income-tax (Appeals) might be upheld. 3.6 We have heard the rival submissions and perused the relevant material on record including the paper book of the assessee. The learned Authorized Representative has referred to the cash flow statement for the period from 01/04/1998 to 01/04/2006 on page 55 of the paper book. In this cash flow statement, the source of receipt of cash during the period was shown as sale of land, salary income, receipt from Bharat Boot house, receipt from Sh. Ranbir. However, no evidence in support of the receipts except sale of land have been produced either before the lower authorities or before us. Further, on perusal of page 56 of the paper book, it is found that the withdrawal of Rs.2 Lacs stated in support of cash in hand as on 01/04/2006 was withdrawn subsequent to 01/04/2006 and that too for purchase of a immovable property and, therefore, in our view, the said withdrawal cannot explain the opening cash in hand as on 01/04/2006. Regarding the receipt from sale of land, the learned Commissioner of Income-tax (Appeals) has observed that 1999, could not be admitted as source for opening cash balance as on 01/04/2006. We also agree with the above finding of the learned Commissioner of Income-tax (Appeals). In view of our of discussion, we find that the order of the learned Commissioner of Income-tax (Appeals) on the issue in dispute is comprehensive and reasoned one and no interference on our part is required, accordingly we uphold the same. The ground of appeal is dismissed.
4. In ground No. 2, the assessee has challenged the addition of Rs.11.30 lakhs, which is enhanced by the learned Commissioner of Income Tax (Appeals) from Rs. 2.80 Lacs made by the Assessing Officer. 4.1 Before us, the learned Authorized Representative of the assessee submitted that the assessee could not get sufficient time to gather certain documentary evidences to substantiate the source of Rs.11.30 lakhs before the learned Commissioner of Income-tax (Appeals), and thus the issue in dispute may be restored back for considering afresh. 4.2 The learned Sr. DR, on the other hand, opposed for restoring the issue back to the learned Commissioner of Income Tax (Appeals). 4.3 We have heard the rival submissions and perused the relevant material on record. The assessee has shown gift of Rs.11.30 lakhs on 10/04/2008 from his grandmother, Smt. Sheela Devi. The Assessing Officer recorded her statement regarding the source of gift wherein she stated as under: (i) sale of half portion of plot to the assessee on 06/10/2006 for Rs.3,50,000/- (ii) sale of half portion of plot to brother of the assessee, Sh. Kanal Kumar on 04/10/2006 for Rs. 4 lakh (iii) sale of Malba of old house to Sh Sukhdev contactor for Rs. 3 ,80,000 .
4.4 The Assessing Officer made addition of Rs.2.80 Lacs out of the source of Rs. 11.30 crores explained by the assessee, but the learned Commissioner of Income-tax (Appeals), enhanced the addition to Rs.11,30,000/- with his finding as under: “7.2 In response to the enhancement notice, the AR submitted that the replies along with supporting documents regarding gift from Smt. Sheela Devi have already been submitted. Further, she has confirmed the gift before the AO. 7.3 As mentioned in the enhancement notice, the explanation of the assessee that his grandmother Smt. Sheela Devi sold her property to him and his brother in the year 2006 and gifted the amount to him in the year 2008, is fantastic and unbelievable. It is interesting to note that the entire sale of property by Smt. Sheela Devi is in cash and the alleged gift to the assessee is also in cash. It is evident that this explanation was taken up only for the purpose of explaining the source of cash deposits in the bank a/c by preparation of purported cash book. It is seen from the statement of the assessee recorded by the AO that, the assessee started construction of commercial property (70 shops) in May 2009 and completed in Sept. 2011 jointly with his brother Sh. Kunal Chaudhary and sold about 30 shops. It is obvious that the deposits in the bank a/c were utilized for the construction purpose and the deposits have been tried to be explained from out of the gift from grandmother. 7.4 Regarding the agreement for sale of Malba with Sukhdev contractor, produced before me, it is seen that it was not submitted to the AO during the assessment proceedings. No application has been made by the AR before me for admitting the said evidence u/r 46A and as such no cognizance is taken. 7.5 In view of the above, the addition made by the AO on account of gift from grandmother of Rs 2,80,000/- is enhanced to Rs 11,30,000/- and the ground of appeal is dismissed.”
4.5 Before us, the learned Authorized Representative submitted that agreements in respect of sale of property by grandmother to the assessee and his brother could not be produced and also the agreement Malba with contactor though was produced but no application for admitting the said evidence under Rule 40(6A) was filed. 4.6 In view of above fact and circumstances, in the interest of natural Justice, we feel it appropriate to restore the issue to the learned Commissioner of Income-tax( Appeals) for deciding afresh in accordance with law. The assessee shall be provided sufficient opportunity of hearing and advance the necessary documents in support of claims. Accordingly, the ground of the appeal is allowed for statistical purpose.
In ground No. 3, the assessee has challenged addition of Rs.70,500/- to the commission income. 5.1 The facts in respect of issue in dispute are that the assessee shown income of Rs.59,500/- from property dealing. The Assessing Officer recorded the statement of the assessee, during which the assessee stated that he worked as commission agent for purchase and sale of properties through Sh. Akash Agrawal and Sh. Vijay Kumar and a total commission of Rs.3,52,400/- was earned. Both these persons kept their share and the assessee was given a sum of Rs.59,500/-. But when the Assessing Officer asked the addresses of Sh. Akash Agrawal and Sh. Vijay Kumar and also the name of the persons whose properties were sold and to whom were sold, however, the assessee could not furnish any evidence in this regard before the Assessing Officer, hence he made the addition. The learned Commissioner of Income-tax (Appeals) also upheld the addition. 5.2 Before us, the learned Authorized Representative of the assessee relying on the submission made before the learned Commissioner of Income-tax (Appeals), submitted that out of the gross commission of Rs.3,52,400/- earned, expenses were incurred on rent, office expenses etc. and balance share of income has already been offered by the assessee, and, therefore, no further addition is required against the commission. 5.3 The learned Sr. Departmental Representative, on the other hand, relied on the finding of the lower authorities. 5.4 We have heard the rival submission and perused the relevant material on record. We find that the assessee failed to provide addresses of Sh. Akash Agrawal and Sh. Vijay Kumar, along with whom, he stated to have worked for earning the commission income. The assessee has also not furnished any details or basis in respect of the gross income of Rs.3,52,400/-. The learned Commissioner of Income-tax (Appeals), has reported that the Assessing Officer made local enquiries and based on the facts, which came to his knowledge, he estimated the income from property dealings at Rs.1,30,000/-. In view of above, we find the addition sustained by the learned Commissioner of Income Tax (Appeals) as reasonable and justified and accordingly, we uphold the same. The ground of the appeal is dismissed.
In the result, the appeal is allowed partly for statistical purpose. The decision is pronounced in the open court on 30th Nov., 2016.