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आदेश/Order
Per A.D. Jain, Vice President:
1. This is assessee’s appeal against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 25.10.2021, for the Assessment Year 2012-13, taking the following grounds of appeal:-
That the order of Ld. CIT (Appeal) in dismissing the appeal vide order dated 25.10.2021 is bad in law & against the facts of present case.
417-Chd-2021-– Bakshish Singh, Chandigarh 2 2. That the Ld. CIT (Appeal) has erred in upholding the order of Ld. Assessing Officer by confirming the addition of cash deposits of Rs. 14,39,600/- without considering the documentary evidence.
3. That the Ld. CIT (Appeal) has erred in rejecting the cash flow statement submitted by the assessee whereby the amount was withdrawn through cash & not through account transfer.
4. That the Ld. CIT (Appeal) has erred in upholding the addition, under Long term Capital Gain, made by Ld. Assessing officer while disallowing the expenses made by the appellant at the time of purchase of land purchased in FY 2006-2007 notwithstanding furnishing of documentary evidence in respect thereof without conducting any inquiry as envisaged under the provisions of Income Tax.
That both the authorities below have committed illegality in passing the impugned order in a hurried manner without scrutinizing the bank statements and overlook the relevant records and documentary evidence produced by the assessee.
The Assessee, an individual, had not filed the Return of Income for the A.Y. 2012-13, the year under consideration. Based on the information received regarding cash deposit by the Assessee in his bank account, a notice u/s 148 of the Income Tax Act, 1961 (in short 'the Act’) was issued. In response, the 417-Chd-2021-– Bakshish Singh, Chandigarh 3 Assessee filed ITR declaring income of Rs. 3,72,000/-. The Assessing Officer, vide order passed u/s 147 read with section 143(3) of the Act, made addition of Rs. 14,39,600/- towards unaccounted cash deposits made in the bank account and that of Rs. 1,76,434/- towards Long Term Capital Gain.
At the outset, the latter addition is not subject matter of the present appeal.
Before the ld. CIT(A), the Assessee submitted that the Assessing Officer had erred in considering the cash deposit of Rs. 14,39,600/- in the bank account as unaccounted income of the Assessee and in not considering the Assessee’s claim that the cash deposited in the bank was deposited out of withdrawals made in the previous and current years; that the Assessing Officer had erred in rejecting the Assessee’s claim with regard to the opening cash in hand, without controverting the cash flow statement submitted by the Assessee; that the Assessing Officer wrongly accepted only the sale proceeds of land amounting to Rs. 7,40,000/- as one of the sources of the cash deposits and had completely denied the benefit of other cash withdrawals made by 417-Chd-2021-– Bakshish Singh, Chandigarh 4 the Assessee during the period from 30.3.2011 to 31.3.2012, without assigning any reason.
5. The ld. CIT(A) observed that the Assessing Officer had found that the Assessee had actually not withdrawn cash, but had only made account transfers for the major portion of the amounts mentioned in the explanation for the opening cash in hand; that the Assessing Officer found that out of the amount of Rs. 26,25,000/-, the amount of Rs. 24,00,000/- was not actually cash withdrawal, but only account transfers; and that the Assessing Officer thus concluded that the Assessee’s explanation of opening cash in hand as on 1.4.2011 was false.
6. The ld. CIT(A) observed that whereas the Assessee had made only account transfers of Rs. 24,00,000/- from Karnataka Bank, this had wrongly been claimed as cash withdrawal forming the source of the opening cash in hand as on 1.4.2011; that even in the appellate proceedings, no explanation had been offered with regard thereto; that thus, only a balance of Rs. 2,25,000/- was left as explanation for the opening cash balance; that even this amount had been withdrawn in the earlier year and that even as per the Assessee’s own submission, he had to meet a lot
417-Chd-2021-– Bakshish Singh, Chandigarh 5 of expenditure with regard to the health issues of his daughter; that thus, even the amount of Rs. 2,25,000/- could not be considered as the explanation for the opening cash balance as on 1.4.2011; that in this backdrop, the Assessing Officer was entirely correct in rejecting the Assessee’s explanation for the cash deposit; that the Assessing Officer had correctly allowed the amount of Rs. 7.40,000/-, since the same was the sale proceeds for the sale of plot during the year under consideration; and that the balance amount of Rs. 14,39,600/- (Rs. 21,79,600 – 7,40,000 ) was rightly added as unaccounted cash deposits.
The grievance of the Assessee as raised before us is that the ld. CIT(A) has erred in upholding the addition made by the Assessing Officer, disallowing the expenses incurred by the Assessee at the time of purchase of land in F.Y. 2006-07, despite the documentary evidence furnished in this regard and without conducting any inquiry.
In this regard, it is seen that the Assessee had raised the following Ground Nos. 5 and 6 before the ld. CIT(A).
5. The Ld. Assessing officer has erred in recalculating the long term capital gain as Rs.1,76,434.00 on sale of plot at Pind Daad, 417-Chd-2021-– Bakshish Singh, Chandigarh 6 Colony Bhai Balaji ,Ludhiana after rejecting the part of the cost of acquisition amounting to Rs.3,63,400/- being the payments made to ranchers, washer man and for levelling of land at the time of purchase of property.
The Ld. Assessing officer has erred in considering the receipts as furnished by the assessee in support of claim of expenditure of Rs.3,63,400/- as self-serving receipts not backed by any evidence. Despite the fact that, the duly signed statements evidencing the receipt of such payment by the parties was duly produced before the Ld. Assessing officer. Whereas, the Ld. Assessing officer without scrutinizing the records so produced before him and by not allowing the reasonable opportunity of being heard to the assessee under the principles of natural justice denied the claim of the assessee.
Before the ld. CIT(A), the Assessee contended that the 9. land purchased by the Assessee was purchased in the F.Y. 2006- 07 relevant to A.Y. 2007-08; that this was a disputed land and was encumbered land; that the Assessee got the property at a hugely discounted price; that it was illegally inhabited by four families, out of which three families were those of ranchers and one was that of washer-man; that these families had been squatting on the said plot for the last 10 to 15 years and not only
417-Chd-2021-– Bakshish Singh, Chandigarh 7 were they living on the said land, the said land was also the sole reason for their subsistence and living; that in order to obtain a clear title of the land, the Assessee had to pay Rs. 75,000/ - each to the three families of ranchers and Rs. 73,400/- to the family of the washer-man totalling to Rs. 2,98,400/-; that as a proof, the Assessee had submitted signed receipts from the recipients of such payments, but the Assessing Officer had wrongly rejected the explanation; and that the payments so made as compensation be added to the cost of the acquisition and relief may be given.
The ld. CIT(A) noted that the Assessing Officer had observed that the Assessee had not furnished any proof for the payment made to the illegal occupants, for the leveling of the land and construction of boundary walls, amounting to Rs. 65,000/-, as claimed by the Assessee; that the Assessing Officer had observed that the receipts furnished by the Assessee were self-serving receipts not backed by any evidence, that the Assessing Officer had observed that no evidence for incurring the said expenditure of Rs. 3,63,400/- in F.Y. 2016-07 had been provided by the Assessee; that the Assessing Officer had also observed that the Assessee did not file any return of income for 417-Chd-2021-– Bakshish Singh, Chandigarh 8 A.Y. 2007-08 relevant to F.Y. 2006-07; that the Assessing Officer had given a clear finding that the receipts furnished by the Assessee were self-serving receipts and were not backed by any evidence; that the Assessee had not filed his return of income for A.Y. 2007-08, relevant to F.Y. 2006-07, in which, the plot had been purchased by the Assessee; that the Assessee had also not furnished PAN of any of the recipients of the alleged compensation paid; and that in the absence of any evidence, it was not possible to give credit to the Assessee’s explanation. In this manner, the ld. CIT(A) held that the Assessing Officer had rightly rejected the Assessee’s explanation with regard to the expenditure of Rs. 3,63,400/-.
The Assessee has contended before us that the disallowance of expenses made by the Assessing Officer was wrongly upheld by the ld. CIT(A) not withstanding the furnishing of the documentary evidence in respect thereof and without conducting any inquiry in the matter.
The ld. DR, on the other hand, has placed strong reliance on the impugned order.
417-Chd-2021-– Bakshish Singh, Chandigarh 9 13. The sole grievance raised by the Assessee before us is against the action of the Assessing Officer in not giving benefit of Rs. 2,25,000/-, which was accepted as having been left as the only amount as explanation for the opening cash balance. Attention in this regard has been drawn to the observation of the ld. CIT(A) in para 4.7 of the impugned order, wherein, the ld. CIT(A) has observed that only a balance of Rs. 2,25,000/- was left as explanation for opening cash balance. It is seen that the opening cash in hand was claimed at Rs. 26,25,000/-. Out of this, though claimed, Rs. 24,00,000/- was not actual cash withdrawal but only account transfers. Thus, the remaining Rs. 2,25,000/- was only the amount explained for the opening cash balance. The ld. CIT(A) has observed that even this amount was withdrawn in the earlier year. Therefore, it was held that even the amount of Rs. 2,2,5000/- could not be considered as an explanation for the opening cash balance as on 1.4.2011.
The Assessee has not been able to rebut the aforesaid observation of the ld. CIT(A). since the amount of Rs. 2,25,000/- stood withdrawn in the earlier year, it was not available to form part of the opening cash in hand. No material has been brought on record to the contrary. Therefore, finding no error therein, the 417-Chd-2021-– Bakshish Singh, Chandigarh 10 order of the ld. CIT(A) is confirmed. The grievance sought to the raised by the Assessee is shorn of merit and it is rejected as such.
In the result, the appeal is dismissed.
Order pronounced on 13.03.2024.