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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI O.P. KANT
PER H.S. SIDHU, JUDICIAL MEMBER
This is an appeal filed by the Department for Assessment Year 2009-10 against the order dated 26.12.2011 passed by the CIT (A)-I, Dehradun. The only ground raised is that the Ld. CIT(A) is not empowered to set aside the assessment passed by the Assessing Officer after 01.06.2001.
The brief facts of the case are that the assessee furnished return of income showing total income of Rs. 5,01,099/- against gross receipt of Rs. 39,50,000/- in contract work. The Assessing Officer noted that the total of the credit side in the assessee’s bank account was of Rs. 1,94,18,100/-. The Assessing Officer was of the opinion that this represented the assessee’s gross turnover of business and it should have maintained regular books of account and got them audited. He required the assessee to explain the source of the cash deposit. The assessee explained that the cash deposits were made out of the various cash withdrawals which were made from time to time, as available with the assessee in the form of cash in hand. Rejecting this explanation of the assessee, the Assessing Officer treated the entire cash deposits of Rs. 33,60,000/- as unexplained. By virtue of the impugned order, the Ld. CIT (A) partly allowed the assessee’s appeal, observing as follows:-
“1.3 The submission has been considered. Unless the A.O. is able to show that the cash withdrawn by the assessee from its bank account or received by it from any other verifiable source was spent by it elsewhere, the assessee’s contention that it was available with it as cash at hand cannot be rejected. The assessee’s contention that, considering its turnover, it was entitled to presumptive determination of its income u/s 44AD and 44AE of the IT Act, has not been controverted or found as false by the A.O. Therefore, no adverse inference should be drawn if the assessee did not maintain regular books of account.
1.4 In such cases, accretion to assets in course of the previous year is a good guide to estimate the assessee’s income. The assessee has furnished its statement of affairs as on 31.03.2008 as well as 31.03.2009, showing that the accretion to its capital account and assets during the previous year was explainable with reference to the income shown by it in the return of income. This suggests prima facie that the A.O’s allegation of the cash deposit in the bank accounts and the firm being unexplained is not sustainable. Nevertheless, in order to satisfy himself, he may examine the details submitted by the assessee and cause such inquiry as he deems fit in this regard. If he is able to reach any positive finding about cash withdrawn from the bank going elsewhere or for any other reason, the cash available on a particular date being less than the cash deposited in the account on that day, he will be entitled to hold such deposit as unexplained and addition to that extent will be sustained.
1.5 With this end in view, the assessee is directed to produce its cash statement and explain the availability of cash as the source of the deposit in question. The A.O. is entitled to cause such inquiry as he thinks fit to verify the correctness of the same. He would be entitled to hold a cash deposit or part thereof as unexplained if he is able to establish that: i) The cash shown as received by the assessee had no explained source, or ii) The cash withdrawn from bank or received by the assessee from any other verifiable source which is claimed to be available as a source of subsequent cash deposit was actually spent by the assessee and was not available for the deposit, or iii) The cash applied (by way of impugned deposit or otherwise) on any occasion exceeded the cash available on that date.
It is clarified that the finding is based on the premise that, considering its turnover, the assessee was entitled to presumptive determination of its income. If, in course of his examination, the A.O. is able to give a positive finding that the assessee’s turnover exceeded what is claimed by it or that the assessee has capitalized profit in excess of what has been offered to tax by it, he will be entitled to deny the benefit of presumptive determination of income and/or assessee the excess income thus capitalized by it.”
Aggrieved with the aforesaid finding of the Ld. CIT(A), the Department preferred an appeal before the Tribunal. The Tribunal vide order dated 18.1.2013 has adjudicated the issue vide para no. 5 to 10 as under:-
“5. Before us, the Ld. DR has contended that the Ld.
CIT (A) has erred in setting aside the assessment and restoring it to the Assessing Officer, since after
01.06.2001, the CIT (A) is not empowered to do so.
On the other hand, the ld. counsel for the assessee
has strongly supported the impugned order, contending that the Ld. CIT (A) has, in fact, accepted the contention of the assessee and has deleted the addition made by the Assessing Officer; that the Ld.
CIT (A) has, in fact, enabled the Assessing Officer to make such inquiry as he deems fit to verify the cash statement to be produced by the assessee; and that as such, there being no merit therein, the appeal filed by the Department be dismissed.
7. We have heard the parties and have perused the material on record. We find that indeed, the Ld. CIT
(A) has deleted the addition made by the Assessing
Officer and it is not a case of setting aside the assessment and remitting the matter to the Assessing Officer. It is seen that the directions given by the Ld. CIT (A) were not required to be given and the same are liable to be expunged.
In view of the above, the direction given by the Ld.
CIT (A) is expunged. There is no other grievance raised before us by the department against the order under appeal.
In view of the above, we uphold the order passed
by the Ld. CIT (A). However, the direction given by the Ld. CIT (A) is expunged.
10. In the result, the appeal filed by the department
is dismissed.”
Against the Tribunal’s order dated 18.1.2013, the Revenue filed an Appeal being Income Tax Appeal No. 17 of 2013 before the Hon’ble High Court of Uttarakhand at Nainital and the Hon’ble High Court Of Uttarakhand at Nainital vide its order dated 25.10.2013, has set aside the order of the Tribunal by observing as under:-
“The matter is remitted back to the Tribunal for the purpose of determination, whether, in view of the provisions contained in Section 251 of the Income Tax
Act, 1961, the Appellate Authority had the power of remanding the matter for reassessment of the increase / addition, as was appealed against the order of the Assessing Officer?”
Pursuant to the order dated 25.10.2013, as aforesaid of the Hon’ble High Court of Uttarakhand at Nainital, the Revenue’s Appeal came up for hearing before us.
6. Ld. DR relied upon the order of the AO and on the other hand Ld. Counsel of the Assessee has stated that Ld. CIT(A) order may be upheld and appeal of the Revenue may be dismissed.
We have heard both the parties and perused the records, especially the orders of the revenue authorities as well as the order of the Tribunal and the Hon’ble High Court of Uttarakhand, as aforesaid. For the sake of clarity, we are reproducing the provisions of section 251(1)(a) as under:-
Powers of the Commissioner of (Appeals)
“251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers –
(a) In an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment.”
8. A perusal of CIT(A)'s order reveals that on one hand the ld. CIT(A) has held that by furnishing statements of affairs, the assessee had been able to explain the accretion to its capital account and assets with reference to the income shown by it in the return of income and therefore the AO's allegation of unexplained cash deposit was not sustainable.
However, instead of coming to a definite conclusion in the light of his finding, he restored the matter to the file of AO to examine the matter with certain conditions.
9. We have gone through the order passed by the Ld. CIT(A) alongwith the provisions of section 251(1)(a) of the I.T. Act, 1961 as reproduced above and we are of the considered view that Ld. CIT(A) have no powers to set aside the matter to the AO which he has done in the impugned order. We find that Ld. CIT(A) has set aside the issue in dispute to the AO, is contrary to the provisions of law and not sustainable in the eyes of law and, therefore, we cancel the impugned order with the directions to the Ld. CIT(A) to decide the issue in dispute on merits, as per law, after giving adequate opportunity of being heard to the assessee.
In the result, Appeal filed by the Revenue Stands allowed for statistical purposes. Order pronounced in the Open Court on 03/10/2016.