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Income Tax Appellate Tribunal, DELHI BENCH “SMC-II”, NEW DELHI
Before: SHRI H.S. SIDHU
ORDER The Revenue has filed the present appeal against the impugned order dated 22/6/2016 passed by the Ld. Commissioner of Income Tax (Appeals), Rohtak on the following grounds:-
Whether on the facts and circumstances of the 'case,
the CIT(A) is right in deleting the addition of Rs.
18,27,500/- made by the AO on account of unexplained cash deposits in the bank account. Though, the order of the CIT(A) is silent on this addition, but in the last para of the order, she allowed the appeal of the assessee.
2. Whether on the facts and circumstances of the case,
the CIT(A), is right in deleting the addition of Rs.
12,81,000/- made by the AO on account of unexplained deposits/credit entry in the bank account. The CIT(A) has factually erred in holding that the credit entry of Rs.
12,81,000/- was received from sale of agriculture land situated outside the city limit. Whereas, the AO has never stated in the remand report that the land is situated outside the city limit nor offered any comment over the taxability of this amount.
Whether on the facts and circumstances of the case,
the CIT(A) is right in deleting the addition of Rs.
4,83,000/- made by the AO on account of cheque deposited by the assessee which was received from his son.
4. Whether on the facts and circumstances of the case,
the CIT(A) is right in deleting the addition of Rs. 34,229/- made by the AO on account of interest credited by the bank in the account of the assessee treating the same as income belonging to HUF and not of individual account.
The facts in brief are that as per available information, the assessee had deposited Rs. 18,27,500/- on various dates during the period 1.4.2005 to 31.3.2006 with Haryana Gramin Bank. Assessee was specifically asked to explain the source of the deposits but no source of the amount was given by him. Therefore, notice u/s 148 of the I.T. Act was issued to the assessee on 28.3.2013 after duly recording the reasons for escapement and after getting the necessary satisfaction / approval of the Joint Commissioner of Income tax. Sonepat Range. Sonepat. The assessee was asked to file his Return of Income for the A. Y. 2006-07 vide the notice u/s 148 of the I.T. Act but no return of income for the aforesaid year was filed by him. Accordingly, Notice u/s 142. (1) was issued to the assessee on 06.08.2013. It was clearly stated to him to file his return of income for the A.Y. 2006-07 as asked for vide the notice u/s 148 and file the copies of statements of his bank accounts for the period 1.4.2005 to 31.3.2006 along with narration and source of deposits. No reply of this notice was received. A final opportunity notice u/s 142(1) was again issued on 06.09.2013. This notice also remained un-complied with. Finally, another notice u/s 142(1) was issued to the asssessee on 18.11.2013 This notice also remained un-complied with. Finally, another notice u/s 142(1) was issued to the assessee on 08/01/2014 and copy of reasons were also given to him. It was clearly mentioned as under:
"Please note that this is the final opportunity given to you and if return and complete reply along with documentary evidence is not furnished by due date, it shall be presumed that the amount given in the reasons enclosed is your undisclosed income and you do not have to say anything in this regard and the case shall be completed u/s 144 of the Income Tax Act, 1961."
2.1 Again, no reply of this notice was received. He was again show-caused by the notice u/s 142(1) dated 10.02.2014 to show cause as to why his case not be assessed u/s. 144 on the basis of material available. However, no reply was received in respect of this show cause also. Therefore, AO left with no option than to frame the assessment u/s 144 as best judgement assessment on the basis of the information available on record.
2.2 As per the bank statement received from Haryana Gram i n Bank, Nuna Majra, the assessee had made cash deposits of Rs. 18,27,500/- in his account. As per AO no explanation for the source of these deposits has been given by the assessee. No return of income for the AY 2006-07 has been filed. Hence, the AO treated this amount as his income from undisclosed sources.
2.3 AO also observed that as per the aforesaid bank statement the assessee has received an interest of Rs. 34,229/- from Haryana Gramin Bank, Nuna Majra. Besides this, credit entries amounting to Rs. 17,64,000/- are also there in the bank account during the year under consideration. Since the assesee has not filed his return of income for the AY 2006-07 and hence has neither shown these amounts at his income nor any explanation has been furnished, this amount totaling to Rs. 17,98,229/- was also treated as his income from undisclosed sources. Accordingly, the assessee’s income was computed at Rs. 36,25,730/- vide his order daed 28.2.2014 passed u/s. 144/147 of the I.T. Act, 1961.
3. Aggrieved with the aforesaid assessment order, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 22.6.2016 has deleted the additions and allowed the appeal of the assessee.
Now the Revenue is aggrieved against the impugned order and filed the present appeal before the Tribunal.
At the time of hearing Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in the grounds and requested that Appeal of the Revenue may be allowed.
On the contrary, Ld. Counsel of the Assessee has relied upon the order of the Ld. CIT(A) and stated that the ground no. 1, 2 & 3 are relating to addition representing unexplained cash deposits of Rs. 36,25,729/- in the assessee’s bank account and held as income from undisclosed sources. He stated that the addition made is untenable as bank account do not constitute books of account of the assessee. He further stated that in the instant case the assessee had sold his half share of ancestral agricultural land to Mittal Education and Technology Pvt. Ltd. on 20.6.2005 for a consideration of Rs. 25,62,000/- (assessee’s share being Rs. 12,81,000/-) as is evident from the copy of sale executed between the assessee and Mittal Education and Technology Pvt. Ltd. and copy of bank statement of the assessee during the FY 2005-06. It was further submitted that sale deed was executed at the value on which stamp duty was required to be paid as per circle rate; whereas actually the property was sold at market rate, which was higher than the stamp value. He further stated that the assessee being illiterate, in accordance with his good conscience and, his bonafide conduct, deposited the entire sale proceeds into his bank account. It was further stated that it was not possible for the assessee to earn a huge amount in cash, deposited into his bank account on the date of execution of sale deed. Further the assessee hastens to add that had there been any other source of income, the assessee would have made regular transaction in his bank account and not only on or around the date of transaction of sale of agricultural land. The cash deposits of Rs. 18,27,500/-, amount of Rs. 17,22,500/- were received against the sale of agricultural land over and above the stamp value of as considered and relied upon the decision of the Hon’ble Supreme Court of India in the case of CIT, Ernakulam vs. PK Noorjahan reported at 237 ITR 570. He further stated that no addition can be made on the basis of surmises, suspicion and conjectures, as has been held in the case of Uma Charan Shaw & Bros. Co. vs. CIT reported 37 ITR 271 (SC). With regard to cash withdrawals assessee’s counsel stated that a sum of Rs. 55,000/- deposited on 2.12.2005 and Rs. 50,000/- on 8.3.2006 were out of cash withdrawals of Rs. 3,50,000/- on 2911.2005 as is evident from copy of bank statement of the assessee. In this behalf, he stated that it is a settled law that once cash deposits are duly explained from the withdrawals of the bank account, no adverse inference can be validly drawn and placed reliance on various case laws including the following:-
i) 121 TTJ 366 (Del.) ACIT vs. Baldev Raj Charla
& Ors. ii) 291 ITR 36 (Del.) CIT vs. Kulwant Rai.
I have heard both the parties and perused the records, especially the impugned order passed by the Ld. CIT(A). I find that Ld. First Appellate Authority has elaborately discussed the issues in dispute by considering the submissions of the assessee and adjudicated the issues as under:-
“Regarding cash deposits of Rs. 18,27,500/- a sum of Rs. 55,000/- on 2.12.2005 and Rs. 50,000/- on 8.3.2006 were deposited out of withdrawal of Rs. 3,50,000/- on 29.11.2005. Thus, leaving the balance cash deposits of Rs. 17,22,500/- which were received against sale of agricultural land over and above the stamp value.
Regarding deposits of Rs. 17,98,229/- deposited into A/c through credit entries the sources of the same are as under:-
Rs. 12,81,000/- Received through cheques as sale consideration as per circle rate. (Photocopy of sale deed is placed at page 4-5 of the paper book) Rs. 4,83,000/- Tr. From A/c No. 4509 of son of the appellant. (photocopy of bank statement of Jasbir is placed at page 6 of the paper book) Rs. 34,229/- Interest credited by bank and discussed in ground no. 5 hereunder Rs. 17,98,229/- Total
Thus, from the above explanation the amount of Rs.
12,81,000/- and Rs. 4,83,000/- are credit entries and no addition was required to be made. The copies of sale deed and bank statements are additional evidences an application u/r 46A is separately filed.
In view of the fact that the AO in his remand report dated 5.4.2016 accepted the fact that the credit entry of Rs. 12,81,000/- was received from the sale of ancestral agricultural land situated outside the city limit and the cheque of Rs. 4,83,000/- was received from the appellant’s sons’ account, I delete the addition made on these grounds. This ground of appeal is allowed.
The 5th ground of appeal is against making the addition of Rs. 34,229/- on account of interest on above deposits. The bank had credited above interest on deposits made against sale of ancestral agricultural land which belongs to HUF. When, the amount on which 9 interest was earned belongs to HUF, then the same will also belongs to HUF and as such may kindly be deleted by your goodself.
This amount so added pertain to the HUF and cannot be added in the individual account. I delete the said addition. This ground of appeal is allowed.”
7.1 After going through the findings of the Ld. CIT(A), as aforesaid, I find that addition representing unexplained cash deposits of Rs. 36,25,729/- in the assessee’s bank account and held as income from undisclosed sources. I find that in the instant case the assessee had sold his half share of ancestral agricultural land to Mittal Education and Technology Pvt. Ltd. on 20.6.2005 for a consideration of Rs. 25,62,000/- (assessee’s share being Rs. 12,81,000/-) as is evident from the copy of sale executed between the assessee and Mittal Education and Technology Pvt. Ltd. and copy of bank statement of the assessee during the FY 2005-06. Also the amount of Rs. 12,81,000/- and Rs. 4,83,000/- are credit entries and no addition was required to be made. AO in his remand report dated 05.4.2016 accepted the fact that the credit entry of Rs.12,81,000/- was received from the sale of ancestral agricultural land situated outside the city limit and the cheque of Rs. 4,83,000/- was received from the assessee’s son’s account. Hence, the addition was rightly deleted by the Ld. CIT(A). As regards the addition of Rs. 34,229/- on account of interest on above deposits. The bank had credited above interest on deposits made against sale of ancestral agricultural land which belongs to HUF. When, the amount on which interest was earned belongs to HUF, then the same will also belongs to HUF and as such addition cannot be made in the individual account. I also find that with regard to cash withdrawals a sum of Rs. 55,000/- deposited on 2.12.2005 and Rs. 50,000/- on 8.3.2006 were out of cash withdrawals of Rs. 3,50,000/- on 29.11.2005 as is evident from copy of bank statement of the assessee. It is a settled law that once cash deposits are duly explained from the withdrawals of the bank account, no adverse inference can be validly drawn. In view of the above, I am of the considered view that Ld. CIT(A) has passed a well reasoned order which does not need any interference on our part, on the issues in dispute, hence, I uphold the same.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 03/1/2017.