SHRI INDER PAL SINGH ARORA,NEW DELHI vs. DCIT, DEHRADUN

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ITA 6389/DEL/2015Status: DisposedITAT Delhi02 February 2017AY 2011-125 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee and his wife are earning and filing returns regularly, and cash accrual from the beginning of the financial year until the search date cannot be denied. The matter was remanded to the AO for verification of cash generation.

What were the facts?

During a search, cash of Rs. 1,94,650 was found at the assessee's residence. The assessee provided cash balance details for himself and his wife for previous financial years. The CIT(A) allowed a portion of the cash as explained and sustained the addition of the remaining amount.

What were the issues?

Whether the entire cash found at the residence should be added to the assessee's income, or if the cash available with the wife should also be considered. The issue is about substantiating the source of cash found during a search.

Which sections of the Income-tax Act were involved?

Section 132,Section 242(1),Section 143(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘B’ NEW DELHI

Before: SHRI H.S. SIDHU & SHRI L.P. SAHU

For Appellant: Shri K.K. Juneja, Advocate
For Respondent: Ms. Rachna Singh, CIT/DR
Hearing: 30.01.2017Pronounced: 02.02.2017

Per L.P. Sahu, Accountant Member:

1.

This is an appeal filed by the assessee against the order of ld. CIT(A), Dehradun dated 29.09.2015 for the assessment year 2011-12 on the following grounds :

“1. That in facts and circumstance of the case, the Learned CIT has erred wrongly in sustaining the addition of Rs. 80,329/- is wrong and unjustified.

2. That in facts and circumstance of the case, the cash of Rs. 1,94,650/- belonging to Smt. Gurpreet Kaur (wife) and appellant was found from their residence, CIT(A) has only taken into account the cash available with the appellant and ignored the cash available with the wife is superfluous and unfair.

3. That in facts and circumstances of the case, CIT(A) has not given any cognizance of the amount available with the wife Smt. Gurpreet Kaur who resides with the appellant. The addition is arbitrary and illegal.

4. That in facts and circumstances of the case, the CIT(A) has ignored the case available with the wife and said cash has been accepted by the AO in her case is arbitrary and bad at law.

5. That the addition to the returned income as sustained by the ld. CIT (A) may please be deleted.

2.

The brief facts of the case are that a search was conducted u/s. 132 of the IT Act, 1961 in the business and residential premises of the assessee.

Accordingly, notice was issued u/s. 242(1) on 07.09.2012 for the assessment year 2011-12 which was duly served upon the assessee requiring him to file his return of income. The assessee submitted his return declaring income of Rs.6,96,312/-. The AO issued notice u/s. 143(2) and completed the assessment. During the search operation, a sum of Rs.1,94,650/- was found from the assessee’s residential premises and Rs.4,94,000/- from a locker No. 633 with Punjab & Sind Bank, Shalimar Bagh New Delhi in the name his wife Smt. Gurpreet Kaur and his mother-in-law, Smt. Harminder Kaur. In the assessment proceedings, the assessee could not submit any proof with respect to the source of cash found. Therefore, the Assessing Officer after taking into account Rs.50,000/- as cash in hand of the assessee, added the balance amount to the total income of the assessee. Aggrieved by the order of the Assessing Officer, the assessee appealed before the first appellate authority.

The assessee submitted the details of cash in hand with him and his wife Gurpreet Kaur for the F.Y. 31.03.2009, 31.02.2010 and 31.03.2011 as under :

Particulars Cash as on Cash as on Cash as on 31.03.2009 31.03.2010 31.03.2011 Inder Pal Singh Rs. 1,53,005/- Rs. 1,1 4,32 1/- Rs. 79,32/7- Gurpreet Kaur Rs. 3,63,2977- Rs. 3,58,5607- Rs. 7,79,8667- Total Rs. Rs. 5,76,3027- Rs. 4, 72, 881 /- Rs. 2,59, 187/- He also submitted balance sheet of Inderpal Singh, Gurpreet Kaur and Harminder Kaur for the years 2010-11 & 2011-12. The ld. CIT(A) after being satisfied from the submissions of the details, allowed the cash of Rs.114321/- as explained out of Rs.1,94,650/- found on search from the residence, considering that the assessee had closing cash balance on 31.03.2010 of Rs.1,14,321/- and sustained the addition of remaining cash of Rs.80,329/-.

The ld. CIT(A) further deleted the addition of Rs.4,94,000/- which was found from the locker belonging to Smt. Gurpreet Kaur and Smt. Harminder Kaur.

Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before the Tribunal.

3.

The ld. AR submitted that Smt. Gurpreet Kaur is separately assessed to tax since long and she is filing return of income regularly declaring handsome amount. The assessee is living jointly with his wife and his mother-in-law.

Therefore, the ld. Assessing Officer is not justified to hold that the cash found at the residence only belongs to the assessee. Smt. Gurpreet Kaur and Smt.

Harminder Kaur have sufficient cash balance as on 31.03.2010. He also produced appellate order of Smt. Harminder Kaur in appeal No. 416/CIT(A)DDN/2013-14. He drew our attention to para 6 of the above order, in which cash in hand of Rs.6,00,000/- has been accepted. It was further submitted that the Assessing Officer has accepted the cash balance appearing in the balance sheet for the assessment year 2010-11 and 2011-12 which is on paper book which shows sufficient cash in hand.

4.

On the other hand, the ld. DR relied on the order of the lower authorities and he submitted that the assessee could not substantiate before the Assessing Officer the cash found at the premises of the assessee. Therefore, the AO has rightly added Rs.1,94,650/- to the total income of the assessee.

5.

After hearing both the parties and perusing the material available on record and the balance sheet of the assessee, we find that the assessee has liquidated to the advance in the assessment year 2011-12 which stood in the assessment year 2010-11 and liability of Kohli Realtors appearing in assessment year 2010-11 was also discharged by the assessee in the assessment year 2011-12. He has also taken deposit of Rs.6 lacs from Gurpreet Kaur & Rs.2 lacs from Harminder Kaur. The search was conducted on 21.10.2010 which is almost middle of the year. The assessee and Smt.

Gurpreet Kaur are earning income and filing returns regularly. Therefore, from the beginning of the financial year and upto the date of search, the cash accrual cannot be denied. In view of this, the matter is sent back to the file of AO for verification of cash generation from the beginning of the year upto the date of search in the case of assessee and his wife. The assessee is directed to establish the cash accrual in his hands and his wife. Reasonable opportunity of being heard shall be given to the assessee. Accordingly, the appeal of the assessee is allowed for statistical purposes.

6.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 02.02.2017.

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