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Income Tax Appellate Tribunal, DELHI BENCH : C : NEW DELHI
Before: SHRI C.M. GARG & DR. B.R.R. KUMAR
BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER Assessment Year: 2013-14 Jitender Kumar Garg, Vs. DCIT, C/o RRA TaxIndia, Central Circle-II, D-28, South Extension, Part I, Faridabad. New Delhi. PAN: AAZPG9270F (Appellant) (Respondent) Assessee by : Dr. Rakesh Gupta, Advocate & Shri Deepesh Garg, Advocate Revenue by : Shri Mohd. Gayasuddin Ansari, CIT-DR Date of Hearing : 14.02.2023 Date of Pronouncement : 05.04.2023 ORDER
PER C.M. GARG, JM:
This appeal filed by the assessee is directed against the order dated 23.02.2018 of the CIT(A)-2, Gurgaon, relating to Assessment Year 2013-14.
The ld. Counsel of the assessee submitted that the assessee does not want to press grounds of appeal
No.1, 2, 7 and 8, hence, the same are dismissed as not pressed. The remaining effective grounds for adjudication, i.e., grounds No.3 to 6 read as follows:-
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. in making addition of Rs. 2,66,000/- as undisclosed income on account of allegedly cash payments as per pages 15 and 16 of Annexure A -1 found during the search and that too by alleging failure of the assessee to give any reply/explanation.
4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs. 2,66,000/- is bad in law and against the facts and circumstances of the case.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. in making addition of Rs. 2,00,000/- u/s 69A of the Income Tax Act, 1961 on account of cash found during the search.
6. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs.2,00,000/- is bad in law and against the facts and circumstances of the case.”
Grounds of Appeal No. 3 and 4 of theassessee:
Apropos grounds of appeal 3 and 4 of the assessee, the ld. Counsel of the assessee submitted that the assessee has filed return of income for AY 2013-14 declaring the total income at Rs.23,24,990/-, declaring income from salary, professional income and interest income. The ld. Counsel further submitted that during the course of search and seizure operation, two invoices of SRs Jewells dated 05.05.2012 amounting to Rs.14,000/- and Rs.2,52,000/- totaling to Rs.2,66,000/- were found and the AO made addition on the allegation that the assessee failed to substantiate the source of cash towards purchase of jewellery and made addition of the said amount. The ld. Counsel submitted that the cash payment of Rs.2,66,000/- towards purchase of jewellery was made out of cash withdrawals from the bank account of the assessee. Drawing our attention towards the assessee’s reply dated 26.12.2014 and 10.02.2015 available at pages 39 and 42 of the assessee’s paper book respectively, he submitted that the assessee consistently mentioned and expdlained that the cash found clearly was clearly explained in the cash flow statement submitted by the assessee and the payment of jewellery bills have been made out of 2
AO are incorrect. The ld. Counsel of the assessee submitted that ld.CIT(A) in para 7 at page 4 of the first appellate order, wrongly made the findings that during assessment and first appellate proceedings the assessee had not been able to substantiate his submissions with any supporting statements or cash flow statements. Therefore, the addition may kindly be deleted.
Replying to the above, the ld.CIT-DR strongly supported the orders of the authorities below and submitted that the assessee had miserably failed to substantiate the source of jewellery payment, therefore, the AO had no alternative, but, to make addition in the hands of the assessee which was rightly upheld by the ld.CIT(A).
On careful consideration of the above rival submissions, first of all, we note that a search and seizure operation was conducted on 09.05.2012 and the assessee filed his return of income for AY 2013-14 on 26.09.2013. The AO passed assessment order on 30.03.2015. From the copy of the reply submitted by the assessee before the AO, dated 26.12.2014 and 10.02.2015 available at pages 38-40 and 41-43, respectively, it is clear that during the assessment proceedings itself the assessee filed his reply by submitting that the payment of jewellery bills have been made out of cash withdrawn from the bank account of the assessee. From the copy of the cash flow statement submitted before the AO pertaining to the assessee and his wife, available at pages 51 and 52 of the assessee’s paper book, it is clear that during FY 2011-12 the assessee ha made cash withdrawals of Rs.8,50,000/- and his wife made drawings of Rs.91,440/. From the copy of bank statement of the assessee available at pages 45-50 of the assessee’s paper book, we clearly note that there are sufficient cash
FY 2012-13 and keeping in view the fact that the assessee has declared taxable income of Rs.23,24,990/- for present AY 2013-14, we are of the view that the source of jewellery bills payment amounting to Rs.2,66,000/- has been properly explained by the assessee by way of documentary evidence and the explanation was submitted before the AO as well as before the ld.CIT(A), but, the authorities below have ignored the sustainable explanation of the assessee which is not a reasonable and justified approach. Therefore, grounds No.3 and 4 of the assessee are allowed and the AO is directed to delete the addition.
Grounds No.5 and 6 of the assessee: 6. Apropos grouds No.5 and 6, the ld. Counsel of the assessee submitted that the cash amounting to Rs.2 lakh found during the course of search and seizure operation was also out of cash withdrawals from the bank and above savings of the assessee and his family members are clearly evident from the copy of bank statement placed in the paper book pages 45-49 and cash flow statement of the assessee and his wife available at pages 51 and 52 of the assessee’s paper book. The ld. Counsel submitted that the assessee being a person declaring the total income of Rs.23,24,990/- and consistently filing return of income and paying due tax thereon, the cash amount of Rs.2 lakh cannot be doubted in any manner especially when the assessee has successfully demonstrated by way of sustainable explanation and documentary evidence in the form of bank statement of the assessee that there was sufficient withdrawals from the bank account of the assessee and the assessee and his wife has shown sufficient drawings in their respective cash flow statement. Therefore, the AO may kindly be directed to delete the addition.
Replying to the above, the ld.CIT-DR strongly opposed the above submissions of the ld. Counsel and, supporting the orders of the authorities below submitted that the assessee could not substantiate and explain the source of cash found and seized during the course of search and seizure operation amounting to Rs.2 lakh. Therefore, the AO being right in making addition in the hands of the assessee the grounds No.5 and 6 of the assessee may kindly be dismissed.
On careful consideration of the rival submissions, first of all, we note that from the copy of cash flow statement of the assessee and his wife placed at pages 51-52 of the assessee’s paper book for FY 2011-12 pertaining to the immediately preceding AY 2012-13, we note that there was a closing balance of Rs.3,17,000/- and Rs.97,118.50 in the hands of the assessee and his wife respectively, which was brought forward as opening balance to AY 2012-13 as on 01.04.2012 and when the assessee is earning and declaring taxable income of Rs.23,24,990/- earned during FY 2012-13 pertaining to the present AY 2013-14, then the cash amount of Rs.2 lakh found during the course of search and seizure operation cannot be doubted in view of the fact of amount withdrawal discernible from the bank statement of the assessee available at pages 42-49 of the assessee’s paper book. Therefore, we are inclined to hold that the AO was not correct and justified in discarding the explanation of the assessee and the ld.CIT(A) was not correct in upholding the baseless addition made by the AO. Accordingly, grounds No.5 and 6 of the assessee are also allowed and the AO is directed to delete the addition.