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Income Tax Appellate Tribunal, DELHI BENCH “G” NEW DELHI
Before: SHRI N.K. SAINI: & SHRI KULDIP SINGH :
order : 21/10/2015. O R D E R PER N.K. SAINI, A.M.: This is an appeal by the assessee against the order dated 27-1-2011 of ld. CIT(Appeals)-XXVIII, New Delhi. Following grounds have been raised in this appeal:
1(i) That on the facts and circumstances of the case, the CIT(A) was not justified in sustaining addition of Rs. 9,39,000/- as income from undisclosed sources. (ii) That finding and conclusion of the lower authorities is merely based on presumption and surmises and whole basis of addition is illegal, arbitrary and misconceived.
2 ITA 1658/Del/11 (iii) That the cash flow statement along with bank statement was duly placed on record and observation and finding of CIT(A) is not in conformity with facts on record. (iv) That the CIT(A) is also not justified in not accepting the affidavit of his wife in support of sale of land and deposit of sale proceeds in the bank account. (v) That there being no proper and reasonable opportunity by Assessing Officer and affidavit was merely in support of sale of land and deposit in the bank account and CIT(A) should have admitted the same in terms of rule 46A and in the interest of justice. 2(i) That the lower authorities have erred in not accepting the claim of the assessee that there is no case of any chargeable capital gain on sale of agricultural land as per provisions of sec. 2(14) of the Income Tax Act, 1961. (ii) That finding and observation about agricultural activities is highly arbitrary and without proper appreciation of facts and legal provisions. (iii) That there is no justification for not accepting claim of exemption u/s. 54B as the case of the assessee is fully covered for such exemption.
At the first instance, the ld. counsel for the assessee argued ground no. 1(v), which relates to the proper and reasonable opportunity of being heard, not granted by the AO and the additional evidence not admitted by the ld. CIT(A) under Rule 46A of the Income-tax Rules, 1962 (hereinafter referred to as the ‘Rules’ in short).
3 ITA 1658/Del/11 3. Facts of the case, in brief, are that assessee filed his return of income on 25-7-2006 declaring income of Rs. 1,87,687/-, which was processed u/s 143(1) of the Act on 22-2-2007. Later on, the case was selected for scrutiny.
During the course of assessment proceedings, AO noticed that the assessee had deposited Rs. 31,76,500/- in Bank of India, Bhikaji Kama Place, New Delhi. The explanation of the assessee was that he had sold his agricultural land on 30-3-2006 for Rs. 22,37,500/-, which was deposited in the bank and Rs. 4,70,000/- was deposited out of sale proceeds of land of his wife and the balance amount was out of cash withdrawn on different dates. AO, however, did not find merit in the submissions of the assessee, but accepted the source of deposit from sale of agricultural land amounting to Rs. 22,37,500/- and the remaining amount of Rs. 9,39,000/- was considered as income from undisclosed source. The same was added to the income of the assessee. The AO also observed that the agricultural land sold by the assessee, was purchased in the year 1992 for Rs. 3,23,700/-. He, therefore, added Rs. 19,13,800/- (Rs. 22,37,500- Rs. 3,23,700), as long term capital gain.
Accordingly, income was assessed at Rs. 30,10,487/-.
Being aggrieved, the assessee carried the matter to the CIT(A) and furnished additional evidence to substantiate the claim that his wife Smt.
Sumitra Devi had sold the land for Rs. 4,70,000/- and the cash withdrawn on 4 ITA 1658/Del/11 various dates was amounting to Rs. 3,47,500/-. It was also claimed that the assessee was having opening cash balance of Rs. 1,30,000/-.
The ld. CIT(A), however, did not admit the additional evidences, by observing that those were not furnished to the AO, when he asked the assessee to explain the source of cash deposit in the bank account. Ld. CIT(A) confirmed the addition made by the AO.
Another claim of the assessee that the capital gain was partly exempt u/s 54B of the Act, was also not accepted by the ld. CIT(A) by observing that the assessee did not furnish documents to show that such a claim was made during assessment proceedings. Now the assessee is in appeal.
The ld. counsel for the assessee submitted that the AO had not given proper opportunity of being heard and had also not appreciated the contention of the assessee in right perspective. It was further stated that the assessee had produced all the evidences before the ld. CIT(A) in support of his claim relating to the deposit in bank account and moved an application under Rule 46A of the Income-tax Rules, but the ld. CIT(A) did not admit the additional evidence.
In his rival submissions, ld. DR supported the orders of the authorities below.
5 ITA 1658/Del/11 9. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that claim of the assessee from the very beginning was that he was having opening cash balance of Rs. 1,30,000/- and Rs. 4,70,000/- was deposited out of the sale proceeds of land of his wife and that the cash withdrawn on various dates was also re-deposited in the bank account. The assessee furnished documents and evidences before the ld. CIT(A) in support of his claim but those were not considered by the ld. CIT(A), who refused to admit the same under Rule 46A of the I.T. Rules, 1962, for the reasons that those were not produced during the course of assessment proceedings before the AO. However, he did not throw any light on the aspect that as to why the assessee could not produce the additional evidence at the assessment stage. In our opinion, the documents, which were relevant to decide this controversy, ought to have been admitted by the ld. CIT(A) under the provisions of Rule 46A of the I.T. Rules, particularly when the claim of the assessee was the same as was before the AO. In the present case the assessee had not made any new claim before the ld. CIT(A). We, therefore, keeping in view the principles of natural justice, are of the view that this issue requires fresh adjudication at the level of the AO. In that view of the matter, we set aside the impugned order and the matter is restored to 6 ITA 1658/Del/11 the file of AO to be decided afresh in accordance with law, after providing due and reasonable opportunity of being heard to the assessee.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in open court on 21/10/2015.