SH. NARENDRA KUMAR SHARMA,GHAZIABAD vs. ITO, GHAZIABAD

Date of Hearing : 20-07-2016 Date of Order : 08-08-2016 ORDER PER H.S. SIDHU, JM Assessee has filed the appeal against the Order dated 31.10.2014 passed by the Ld. Commissioner of Income Tax (Appeals)-Ghaziabad pertaining to assessment year 2008-09 on the following ground:-

1. The order of the Ld. CIT(A) is bad both in law and on facts of the case.

2. The CIT(A) has erred in confirming levy of penalty u/s. 271(1)(c) of Rs. 10,14,376/-.

3. The CIT(A) erred in arbitrarily not considering the application filed under Rule 46A.

4. The CIT(A) erred in not individually dealing with the various contentions raised before him. 5. The CIT(A) erred in invoking explanation 1 to section 271(1)(c) when the AO had not invoked the same and moreover the explanation was invoked by the CIT(A) behind the assessee appellants back without opportunity of rebuttal to the assessee. In any case the assessee’s case does not fall within the ambit of explanation 1 and moreover the assessee offered valid rebuttal. 6. The order passed by the CIT(A) is arbitrary, mechanical, non-reasoned and based on irrelevant considerations while ignoring relevant material, evidences and considerations and is contrary to law and procedure and principles of natural justice and fair play and was visibly made in a hurried and biased manner with a premediated mind and without affording a full and sufficient opportunity of being heard. 7. The assessee appellant craves leave to add/ amend / delete any ground taken hereinabove. 8. The appeal is within time the order of the CIT(A) having been received on 19.11.2014. 2. The facts narrated by the Revenue Authorities are not disputed by both the parties, therefore, the same are not repeated here for the sake of convenience.

3. At the time of hearing, Ld. Counsel of the Assessee, Sh. Rajan Bhatia, stated that the quantum on which the penalty has been imposed, has already been deleted by the ITAT in (AY 2008-09) vide order dated 05.2.2016. He has also filed the copy of the order dated 05.2.2016 passed by the ITAT, Delhi Bench ‘E’ in ITA No. 6383/Del/2012 (AY 2008-09) in assessee’s own case.

We find that in assessee’s own case in for A.Y. 2008-09 vide order dated 05.2.2016, the Tribunal had adjudicated the issue vide para no. 10 to 11.2 at pages 5 to 7 and deleted the quantum addition in this regard. The Tribunal has held as under:-

“10. We first take up the issue on merits. The A.O. accepted as genuine the gift received by the assessee from his wife Smt.Kaushal Sharma to theextent of Rs.9,10,000/-. Amount received as gift from the mother and father of the assessee were disbelieved and addition made. On perusal of the evidences, we are of the considered opinion that the assessee has lead sufficient evidence to prove the genuineness of these gifts. Both the mother and father have confirmed having given the gifs and have filed affidavits in support of the same. Gift deeds were executed by both of them. As the mother was not keeping well, she could not be produced before the A.O. Nevertheless, the assessee had vide letter dt. 5.7.2011 requested the A.O. to depute a Departmental Officer to the residence, so that the statement of Smt.Chandervati could be recorded. This was not done. Thus, to make an addition on the ground that she was not produced is wrong. Smt. Chandervati Devi filed various documents to substantiate the sources from where she had given a gift to her son. The A.O. has not conducted any independent investigation nor brought any evidence on record, to lead us to a conclusion that the evidence produced by the assessee is not reliable. Smt .Chandervati Devi had filed a return of income for the A.Y. 2008-09. There is no basis to doubt the will written by Smt.Ramkali who is the mother of Smt.Chandravati Devi.

Registration of will is not mandatory. The will was notarised will and has two witnesses. If the A.O. chose to dispute the will, he could have examined the witnesses. He failed to do. The affidavits from various persons filed by the assessee have wrongly been dismissed as fabrications. No inquiry was made by the A.O. nor was any material gathered to come to such a conclusion. The evidence was dismissed based on surmises and conjectures. Hence for all these reasons, we are of the considered opinion that the gift of Rs.15 lakhs given by the assessee’s mother Smt.Chandravati Devi is a genuine gift and cannot be added u/s 68 of the Act.

The A.O. rejected the evidence filed by the assessee based on surmises and conjectures. If the source of funds cannot be proved by the father or by Mr.Ram Kumar Sharma, the course of action should have been to make an addition in their hands. Sh.Sharma has filed his return of income for the A.Y. 2008-09. Thus in our view, the assessee discharged the burden of proof that lay on him and had proved the genuineness of these gifts.

11.1. Even otherwise the assessee being an engine driver in the Railways does not maintain books of accounts. Thus technically the addition cannot be made u/s 68 of the Act and entries in bank pass book cannot be considered as entry in the books of accounts. The Hon’ble Bombay High Court in the case of CIT, Pune vs. Bhaichand H Gandhi 141 ITR 67, held as follows.

“Income-Cash Credit-Bank Pass book is not a book maintained by assessee or under his instructions – cash credit for previous year shown in assessee’s bank pass book – not shown in cash book of assessee for that year – cannot be treated as income of that previous year – I.T. Act, 1961 Sec.68.

When moneys are deposited in a bank the relationship that is constituted between the banker and the customer is one of debtor and creditor and not of trustee and beneficiary. The pass book supplied by the bank to its constituent is only a copy of the constituent’s account in the books maintained by the bank. It is not as if the pass book is maintained by the bank as the agent of the constituent nor can it be said that the pass book is maintained by the bank under the instructions of the constituent. Hence, the pass book supplied by the bank to the assessee cannot be regarded as the book of the assessee, that is, a book maintained by the assessee or under his instructions. Therefore, a cash credit for the previous year shown in the assessee’s bank pass book but not shown in the cash book maintained by the assessee for that year, does not fall within the ambit of S.68 of the Act and as such the sum so credited is not chargeable to tax as income of the assessee of that previous year.”

11.2. In view of the above discussion, both in law and on merits, the addition in question is bad in law and hence deleted. These grounds of the assessee are allowed.”

5.1 Keeping in view of the facts and circumstances of the case, we find that the addition on which the penalty in dispute was levied, has already been deleted by the ITAT vide order dated 05.2.2016 in (2008-09), as aforesaid, hence, the penalty in dispute will not survive.

Accordingly, we set aside the orders of the authorities below and delete the penalty in dispute and allow the Appeal filed by the Assessee.

Order pronounced in the Open Court on 08/08/2016.