SHRI GURBINDER SINGH MAHAL,AMRITSAR vs. INCOME TAX OFFICER WARD-IV ( 2), AMRITSAR

Per: Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. Commissioner of Income Tax (Appeals), NFAC, Delhi,[in brevity the ‘CIT (A)’] order passed u/s 250of the Income Tax Act 1961, for A.Y. 2014-15.The impugned order was emanated from the order of the Income Tax Officer Ward -4(2), Amritsar order passed u/s 144of the Act date of order 27.12.2016. The assessee has taken the following grounds:- “

1. That the Ld. CIT(A) has erred in dismissing the appeal by passing an ex-parte order u/s 250(6) and sustaining the addition made by the AO.

2. That the ex-parte order passed u/s 250(6) of the Income Tax Act, is bad in law as the same has been disposed off without examining the merits of the case. That the order passed by the CIT(A) is bad in law as the same has been made without taking into account the remand report submitted by the jurisdictional assessing officer to the CIT(A) dated 08.10.2018. That the order u/s 250(6) has been passed in summary manner without considering the submissions made by the assessee during appellate proceedings.

3. That the CIT(A) has erred in confirming the addition of Rs. 19547959/- on account of cash to the tune of Rs. 7490000/- deposited in Punjab & Sind Bank and Rs. 12368499/-deposited in HDFC Bank without giving the benefit of agriculture income earned by the assessee, rotation of funds and funds credited in the bank account on account of sale of property made on behalf of the father through registered POA dated 17.02.2012.

4. That the CIT(A) has erred in confirming the addition of Rs. 19547959/- on account of cash deposited ignoring the fact that the assessee's father was the owner of agriculture land and the said cash was deposited partly out proceeds from sale of agriculture land belonging to father. That the order has been passed without taking into consideration the affidavits filed by the father of the assessee before the CIT(A).

2. The case was called for hearing, first, the ld. DR filed an adjournment petition before the bench. But after the detailed discussion the ld. DR is ready for the hearing and withdraw the application. Both the parties Mr. Rohit Kapoor, CA for the assessee and Smt. Rajinder Kaur, CIT-DR for the respondent argued before the bench. The matter is taken for adjudication.

Further, the source of the cash deposit was from sale of the immovable properties, loan from the father of the assessee. The assessee ispower of attorney holder of the property (land) which was owned by his father. So, the entire amount related to sale of land would not be taxed in the hands of the assessee. Aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) upheld the order of the ld. AO. Being aggrieved assessee filed an appeal before us.

“6. That the appellant filed an appeal before the Hon’ble CIT(A) on 10.03.2017 against the said order of AO. The appellant has made submission before the CIT(A) explaining the source of cash deposited in bank and it was also highlighted that the total cash deposited was to the tune of Rs. 14842999/- and not Rs. 19858499/- as per the AO. It was explained that the cash was deposited out of sale proceeds of property belonging to father and also furnished all the sale deeds belonging to father along with the affidavit of father Sh. Harjit Singh and copy of power of attorney. The summary of documents submitted by way of additional evidence before the CIT(A) is as under: -

S. Particular Enclosures No 1. Copy of letter filed before CIT Appeal 14-15

account of son and later on, remitted back to him 32. Copy of Bank statements maintained with ICICI Bank 0477 40-42

SINGH 234 (1)SHAMSHER SINGH S/O SULAKHAN SINGH 674000.00 ARJINDER KAUR W/O MANOHAR SINGH 660000.00 224 226 BALWINDERJIT KAUR W/O GURBAKSH SINGH 577500.00 224 BEANT KAUR W/O BALDEV SINGH S/O DIWAN S 578500.00 BHUPINDER KAUR W/O HARDEV SINGH 535500.00 224 226 HARJINDER SINGH S/O JAGIR SINGH 556500.00 224 HARPAL KAUR W/O HARBHEJ SINGH 578000.00 INDERJIT KAUR W/O KANWALJIT SINGH 600000.00 226 225 INDERJIT KAUR W/O SURJIT SINGH 78500.00 500000.00 JASBIR KAUR W/O KASHMIR SINGH 784000.00 226 225 KOMALDEEP KAUR W/O MANINDER SINGH 578500.00 224 MANDEEP KAUR W/O NARINDER SINGH 578500.00 NARINDERJIT KAUR W/O KULWARAN 226 SINGH S/O 642500.00 225 NIDHI ARORA D/O SUBHAS CHANDER S/O KOTUM 578500.00 224 RAJWANT KAUR W/O RAJINDER SINGH 535500.00 224 SANGITA SADHAR W/O DALBIR SINGH 578500.00 230 SATNAM SINGH S/O SUKHDEV SINGH 795000.00 SHISHMA BALA KANDA W/O GURBACHAN 1976000.00 231 SINGH 748000.00 225 SONAM W/O KAMALDEEP SINGH S/O GURBACHAN 578500.00 225 SONIA W/O SANJEEV KUMAR S/O KHARETI LAL 578500.00 SUKHJEET KAUR 557000.00 226 226 TEJINDER KAUR W/O HARDIP SINGH 417500.00 225000.00

13911500.00 2701000.00

Cash Realized Total Remarks from sale of Cash property held as deposited POA in bank 16612500 14842999 In this regard we are enclosing herewith the cash book from which your Honor will find that there is no negative cash and the same has also been submitted before the AO for which no adverse inference has been pointed out in the remand report. d) That the Ld. AO and the CIT(A) has failed to provide the benefit of agriculture income realized in cash against the cash deposit. The Ld. AO while making the addition has not provided the agriculture income of Rs. 248150/- separately. From the above, your honor will find that the appellant was having ample cash in hand and the source of cash deposit duly stands explained out of funds received from father, rotation of funds in the form of cash withdrawal and returned income of the appellant. The summary of cash available after taking into account all the incomes and receipts from father is as under: -

Particulars Notation Amount Opening cash in hand A 120000 Returned Business Income 310540 Agriculture Income 248150 Total Cash in hand as per return of income 678690 678690 Net Received from father in cash [Total B 6911500 amount received in cash 13911500- Amount returned7000000] Amount withdrawn from P&S Bank 13620 C 3075000 Amount withdrawn from P&S Bank 01881 2701000 Amount withdrawn from ICICI Bank 224000 Amount withdrawn from HDFC Bank 5074900 11074900 11074900 TOTAL FUNDS AVAILABLE WITH THE D=A+B+C 18665090 APPELLANT (A)

Less: Cash Deposited in HDFC Bank E -3932900 Less: Cash Deposited in ICICI Bank -1389999 Less: Cash Deposited in P&S Bank 13620 -7490000 Less: Cash Deposited in P&S Bank 01881 -2030000

TOTAL CASH DEPOSITED IN BANK (A) 14842899 14842899 e) Alternatively, that the assessing officer has failed to provide benefit of cash withdrawal made by the appellant during the year. That the amount deposited in bank was partly out of cash withdrawn from the bank and partly out of amount received on behalf of father as stated above. In this regard we are enclosing herewith affidavit from father placed at page no 20-23 of paper book. If the benefit of same is given, then there is no peak or negative cash. In this regard, the reliance is being placed on the following case laws in which it has been held that the benefit of cash withdrawals can’t be denied to the assessee. It is a matter of record that the appellant has withdrawn a sum of Rs. 11074900/- in cash from bank account and the said cash was withdrawn out of opening bank balance available with the appellant. It is a matter of record that the total cash deposit was to the tune of Rs. 1482889/- as confirmed in remand report by the AO placed at page no 10-12 and not Rs. 19547959/- as confirmed by the AO in assessment order.”

6.3 In the remand report the AO consider that the assessee is a ‘deemed owner’ in relation to sale of property of his father. But in the hearing the ld. AR explained that as per the section 159 of the Act, the assessee is not considered as deemed assessee. The details are submitted in the Submission which is extracted as below:

“c) Therefore, it is very much important to understand where the assessee is deemed an assessee as per the provisions of income tax act. The definition of assessee is given under section 2(7) of the income tax act which is being reproduced hereunder: - Section Remarks 2(7) " assessee" means a person by whom any tax] or any other sum of money is payable under this Act, and includes- (a) every person in respect of 1. In the present case, the appellant is not assessable for the income of his whom any proceeding under this father Sh. Harjit Singh. That Sh. Harjit Singh is a separate assessee having Act has been taken for the PAN FPHPS8530E and the complete details were duly submitted before the assessment of his income or of the CIT(A). Your Honor’s kind attention is also drawn towards remand report in income of any other person in which the AO has admitted the said fact at para no 5 which is reproduced respect of which he is assessable, for your ready reference: - or of the loss sustained by him or ‘The counsel of the assessee Sh. Daljit Marwaha, CA has stated in by such other person, or of the his submissions before your goodself that if there is any capital amount of refund due to him or to gain on account of sale of properties, his father Sh. Harjit Singh such other person; (PAN: FPHPS8530E) is ready to pay taxes on the same.’ (b) every person who is deemed to The appellant is not deemed to the assessee on behalf of the father Sh. be an assessee under any Harjit Singh. The provisions of deemed assessee are only applicable in a provision of this Act; case where the assessee is acting as a ‘representative assessee’ as per section 160 or ‘legal representative’ as per section 159. The text of section 159 is reproduced hereunder: - 159. (1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. (2) For the purpose of making an assessment (including an assessment, reassessment or recomputation under section 147) of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1),— (a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased; (b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and (c) all the provisions of this Act shall apply accordingly. (3) The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee.

That section159 is not applicable in the case of the appellant as the appellant’s father Sh. Harjit Singh is alive. Furthermore, the provisions of section 160 are only applicable on agent of non-resident, minor, lunatic or idiot, the guardian or manager, Administrator- General, the Official Trustee or any receiver or manager or trustee appointed under a trust.

(c) every person who is deemed to The clause ‘c’ refers to assessee in default which is not applicable in the be an assessee in default under case of the appellant. any provision of this Act;

7.1) ShivcharanDassvs. CIT 126 ITR 263 [1980] (Punj. & Har.) "Income from undisclosed sources—Unexplained investment—Amount disclosed by HUF under Voluntary Disclosure Scheme— Thereafter kept lying in assessee's house with his wife till her death— ITO questioning its source after the same had subsequently been deposited with a bank in the names of assessee's then major daughters—In the absence of any evidence to the effect that the said sum was utilized by the assessee in any other manner, the Department was not justified in unreasonably rejecting a good explanation and adding the amount as income from undisclosed sources.”

7.2) Late Sh. Parveen Kochhar, Legalheir Kamini Choudhary vs ITO, Wd-5 (4), Amritsar.2022 (9) TMI 924 - Itat Amritsar “Unexplained Cash withdrawn out of bank account - Gap between withdrawal and deposit of the cash - withdrawn and deposit of cash with a gap of 70 days - HELD THAT:- The withdrawn and deposit of cash with a gap of 70 days which was considered by the ld. AO as seven months. The ld. Counsel clearly stated that the sufficient cash was withdrawn in same bank account and after part utilization of the same; the amount was deposited in same HDFC Bank account. Appellate authority without considering the proper fact and submission of the assessee had passed the order ex parte. CIT(A) was failed to dispose the appeal on merits and has not contended the explanation of the assessee. As stated in the submission that the assessee was not able to present before the CIT(A) due to the fact that the appellant expired on 23.10.2020 thereafter her husband also expired on 03.11.2020. The copy of the death-certificate of the assessee and her husband are being enclosed - In these circumstances here the genuine cause for non-appearance before the CIT(A). We are in opinion that the assessee has sufficient cause during the depositing of cash in her bank account. The hefty amount was withdrawn 70 days ago for utilising the same for the business of her son. Unused amount was deposited in the same bank account of the assessee. The source of deposit of cash was well explained before the revenue authorities by the assessee. Therefore, AO was indeed in error in adopting a wrong fact in his order. The grievance raised by the ld. Sr. Dr. in this appeal, is, therefore, devoid of any legally sustainable merits. We reject the addition amount of made by the ld. AO..”

7.3) PrincipalCIT, Belagavi vs Basetteppa B Badami, [2018] 93 taxmann.com 66 (Karnataka)

“Section 69A of the Income-tax Act, 1961 - Unexplained money (Cash deposits) - Assessment years 2006-07, 2008-09, 2010-11 and 2011-12 - For preceding assessment year, sufficient amount of cash in hand to be brought forward had reached finality - During current year, on basis of cash deposits in assessee's bank accounts, Assessing Authority made addition of unexplained money - Whether since brought forward cash in hand of preceding assessment year was sufficient, addition on account of unexplained cash deposit in bank account of assessee was unjustified ”

7.4) J'Jaspal Singh Sehgal v. ITO WD 21(2)(1), Mumbai, [2017] 83 taxmann.com 246 (Mumbai - Trib.)

“Section 68 of the Income-tax Act, 1961 - Cash credit (Cash) - Assessment year 2009-10 - Where assessee submitted detailed cash summary showing inflow and outflow of cash for relevant year, in absence of any materials to show that cash withdrawn was utilized elsewhere by assessee, benefit of cash withdrawn by assessee from bank account against amount of cashdeposit into bank should be given”

7.5) IN THE HIGH COURT OF DELHI JAYA AGGARWAL VS ITO “Addition u/s 68 for cash withdrawn and cash deposited - Assessee withdrew Rs.2 lakhs to buy immovable property in cash from bank account and re-deposited cash of Rs. 1,60,000/- from the amount withdrawn after more than 7 months as the deal could not be finalized. HC held that addition u/s 68 of amount re-deposited was unjustified, noting that one should not consider and reject an explanation as concocted and contrived by applying the prudent man's behavior test; Principle of preponderance of probability as a test is to be applied and is sufficient to discharge the onus. Probability here means likelihood of anything to be true.”

7.6) CIT vsVeena Awasthi, TS-10298-ITAT-2018(LUCKNOW)

“ITAT: there is no law in the country which prevents citizens from frequently withdrawing and depositing his own money – ITAT dismisses revenue’s appeal, notes that entire transaction of withdrawals and deposits are duly reflected in the assessee’s bank account and even documentary evidences furnished before the Revenue clearly clarify that on each occasion at the time of deposit in her bank account, assessee had sufficient availability of cash, which is also not disputed by the Revenue; ITAT upholds Ld. CIT(A)’s order that the AO was not justified in treating the deposits as unexplained deposits, and the AO’s addition is unjustified and contrary to the provisions of the IT Act and was liable to be deleted.”

8.1 In argument the ld. AR invited our attention in APB pages14 to 15related to the assessee’s submission which were placed before the ld. CIT(A) and copy of the forwarding letter is annexed herewith.