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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: SHRI N. K. SAINI & SHRI KULDIP SINGH
Respondent by : Smt. Sunita Kejriwal, CIT DR Date of hearing: 26.11.2015. Date of Pronouncement: 06.01.2016 ORDER PER KULDIP SINGH, JM:
The appellant Shri Shravan Gupta (hereinafter referred to as 'the assessee'), by filing the present appeal, sought to set aside the impugned order dated 11.07.2011 passed by Ld. CIT(A), New Delhi qua the Assessment Year 2008-09 on the grounds inter alia that: "Ground No.1: General 1.1 On the facts and circumstances of the case and in law, the learned Cl'T (A), erred in passing the 250 order by misconceiving the facts and making unfounded assumptions and based on that arriving at the conclusion that the appellant is liable to pay taxes on 2 I.T.A.No.4133/Del/2011 the cash found during search. Based on facts and circumstances of the case and in law, the order passed by the learned CIT (A) is bad in law, void-ab-initio and needs to be quashed. Ground No.2:
Cash found during the search does not belong to the appellant, hence is not liable to be taxed in the hands of the appellant. 2.1 The learned CIT (A) erred on facts and in law in not appreciating that cash found during the search does not belong to the appellant and the said cash belongs to M/s MGF Developments Limited. 2.2 The learned CIT (A) erred on facts and in law in not appreciating the fact that the appellant has' offered complete explanation of the cash found and submitted various documents substantiating that the cash found belongs to M/s MGF Development Limited. 2.3 The order of learned CIT (A) is contrary to the facts, law and principles of natural justice. . Ground No.3:
Non acceptance of additional documents under Rule 46A of the Income Tax Rule 1962 3.1. The learned CIT (A) erred on facts and in law in not accepting the additional documents filed by the appellant 3.2. The order of learned CIT (A) is contrary to the facts, law and principles of natural justice. "
Briefly stated the facts of this case are: after search and seizure operation conducted u/s 132 of the Act on 12.09.2007, a notice U/S 42(1) of the Act was served upon the assessee and in response thereto, the assessee has filed return of income for the Assessment Year 2008-09 declaring an income of Rs.2,13,88,860/- showing income from salary income, capital gain and other sources. Thereafter, in response to the notice served upon the assessee along with the questionnaire u/s 143(2)
3 I.T.A.No.4133/Del/2011 and 142(1), Shri Pankaj Gupta, Shri Aditya Purwar and Shri Rupesh Choudhary, CA/AR attended the proceedings.
During the course of search, a cash amount of Rs.62,21,000/- was seized from the residence of the assessee and in the panchnama, it is recorded that Rs.37,38,000/- was found from the IInd floor of the residence, out of which Rs.37,00,000/- was seized and deemed that the said money belonged to Shravan Gupta who has failed to furnish any explanation of the source of the aforesaid cash amount which has been added to his income.
From the details filed by the assessee, it was transpired that interest on deposited amount of Rs.1,16,000/- (including Rs.66,000/- accrued interest with M/s. MGF India Ltd.) has not been shown in the return filed during the relevant year. On failure of the assessee to file any reply, interest @ 12% amounting to Rs.13,9201- has been added to the income of the assessee for the Assessment Year 2008-09 and total income of Rs.2,51,02,780/- has been assessed as the income of the assessee.
The assessee carried the matter before Ld. CIT(A) who has dismissed the appeal vide impugned order. Feeling aggrieved, the assessee has come up before the Tribunal by filing the present appeal.
Undisputedly, the cash amount of Rs.37,00,000/- was seized from the assessee during the search operation conducted U/S 132.
We have head Ld. Authorized Representatives of both the, gone through the material placed on record in the light of facts and circumstances of the case and orders of tax authorities below.
Ld. A.R. contended that the seized amount does not belong to the assessee for which he has furnished complete explanation which has not 4 I.T.A.No.4133/Del/2011 been considered by the Assessing Officer as well as Ld. CIT(A) whereas on the other hand, Ld. D.R. relied upon the order passed by Ld. CIT(A).
Since all the ground being interlinked, the same are being taken up together to avoid repetition of discussion. The assessee vide letter dated 14.1 0.2009 come up with the specific defense before the Assessing Officer that the seized amount for Rs.37,00,000/- does not belong to him and the said cash belong to M/s. MGF Developments Ltd. and this letter does not find mention in the assessment order. However, a perusal of para 5.3 of the impugned order passed by Ld. CIT(A), there is specific mention that the assessee claimed to be in possession of the seized amount given to him as imprest by M/s. MGF Developments Ltd.
Ld. CIT(A) declined to entertain the documents sought to be furnished by the assessee as additional evidence detailed in para 5 .3, by making following observation: "6. I have gone through the submission filed by the appellant as well as copy of the affidavit filed by the appellant under rule 46A. While furnishing the reason for producing in the form of an affidavit the appellant has merely stated that it was prevented by sufficient cause from producing the evidence before the Assessing Officer. This is no ground to accept the affidavit as an additional evidence because the appellant has to justify and explain what was that cause which prevented it from filing the affidavit before the Assessing Officer, thus, the additional evidence produced by the appellant is not accepted under rule 46A. Even otherwise the Allahabad High Court in the case of Sri Krishna Vs. CIT 142 ITR 618 has observed that affidavit need not always be accepted as correct 'and the acceptance or denial in it is not conclusive. A self serving document in the form of an affidavit cannot be regarded to have any evidentiary value. 6.1 The contention of the appellant that it had received this sum as an imprest amount from M/s MGF Development Ltd cannot be accepted for the appellant has failed to explain why it had taken 5 I.T.A.No.4133/Del/2011 imprest from M/s MGF Development Ltd. An imprest account is like a petty cash amount where the person receiving it spends the same on behalf of the owner and the same may be replenished after it is spent. The Income Tax Act prohibits the expenditure in cash of over Rs 20,000/- U/S 0A (3). Therefore, the appellant should have explained as to why it has taken in cash a huge amount totaling to Rs 37,38,000/-. The books of account of M/s MGF Development Ltd were not found during the search operation and hence the possibility of manipulation cannot be ruled out. The appellant has filed copy of accounts of M/s MGF Development Ltd but they are not signed by any Charted Accountant nor do the accounts specified the dates on which the Profit and Loss Ale and the balance sheet of M/s MGF Development Ltd were prepared. Further, before the Assessing Officer the appellant did not give any explanation regarding the source of cash which is evident from paragraph 4 of the assessment order.
6.2 The Hon'ble High Court in the case of Briendra Singh Vs. CIT [2002J 256 ITR 696 (Karn) following the principle in Parimisetti Seetharamamma Vs. CIT [1965J 57 ITR 532 (SC) observed that "It is for the assessee to prove the source of cash found in his residence. Where this amount as well as the amount found in son's locker were attributed to a firm, in which he was a partner, it was for the assessee to establish the claim. One cannot avoid the burden of proof by attributing the source to another assessee, when the assets were found in his custody and possession. " The appellant has completely failed to co-relate the possession of this cash with the alleged advance received from M/s MGF Development Ltd, thereby attracting the provisions of sec. 132 (4A) which raises the presumption that in the absence of any evidence as to date of acquisition, it has to be presumed that it was acquired on the date of search and that it also belongs to such person in whose possession it was found. Therefore, the addition of Rs. 37,00,000/- made by the Assessing Officer is upheld considering the facts of the case. "
Bare perusal of the order passed by Ld. CIT(A) goes to prove that the additional evidence furnished by the assessee have not been 6 I.T.A.No.4133/Del/2011 entertained on flimsy grounds, because when the assessee has disclosed the complete source of seized amount of Rs.37,00,000/-, the veracity of the same was to be decided by making investigation by the Assessing Officer only. Subsequently, Assessing Officer has arbitrarily declined to investigate the source of seized amount vide letter dated 14.10.2009 and thereafter, Ld. CIT(A) has declined to entertain the additional evidence sought to be brought on record by the assessee. Both the Assessing Officer as well as Ld. CIT(A) being quasi judicial authorities are required to provide the complete opportunity of being head to the assessee before passing the impugned order. Ld. CIT(A), instead of getting the matter investigated in the light of the additional evidence, sought to be brought on record by the assessee, as well as in the light of letter dated 14.10.2009 filed before the Assessing Officer, proceeded to dismiss the appeal summarily on the basis of conjectures and surmises.
So, without entering into the merits of this case, we are of the considered view that the matter is required to be restored to the Assessing Officer to decide the same afresh by considering the letter dated 14.10.2009 filed by the assessee during assessment proceedings. Needless to say that adequate opportunity of being heard is required to be given to both the parties before passing afresh order. So, we hereby accept the present appeal of the assessee for statistical purpose. Order pronounced in the open court on 06th Jan., 2016. 13.