TaxTMI 
TaxTMI 
2016 (1) TMI 112
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.... bank account of Dena Bank; 2. deleting the addition of Rs. 13,00,000/- on account of undisclosed credit entry with saving bank account of Dena Bank; 3. deleting the addition of Rs. 9,00,000/- being credit in the name of Shri S.S.H. Naqvi and Rs. 5.90 lacs being credit entry in the name of Sheel Mehta on account of undisclosed credit entry with savings bank account of Dena Bank; 4. deleting the addition of Rs. 12,42,000/- on account of addition of unexplained cash peak credit, Rs. 12,42,000/- cash deposit in savings bank account, Rs. 9,15,000/- in HSBC bank and Rs. 15,20,000/- unexplained cash deposits in PNB bank account; 5. deleting the addition of Rs. 8,00,000/- on account of sale of property." The appeal of the assessee raises the following effective grounds in the instant year :- "1. That the Ld. CIT (A)-xxiv, New Delhi, erred on facts and in law in sustaining the addition of amount of Rs. 10,00,000/- being credits in Bank Account of the assessee received through account payee cheques from assessee's daughters. 2. That the Ld. CIT (A)-XXIV, New Delhi, erred on facts and in law in not accepting cash deposit of Rs. 10,00,000/- in Bank Account of the assessee from Cash....
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....h the notice dated 06.12.2007 which remained uncomplied with. The AO observed that the assessee was maintaining a saving bank account with HSBC which he had not declared. The AO also called for the information u/s 133 (6) vide letter dated 06.12.2007 from HSBC regarding the home loan account maintained by the assessee and his wife jointly. The AO observed that assessee had made cash deposits of Rs. 9,15,000/- (on different dates) in the HSBC saving bank account and the AO show-caused the assessee to explain the said cash deposits and as to why the same should not be added back to the income u/s 68 of the Act, but the said notice also remained uncomplied with. The AO also observed from the information of HSBC that the assessee and his wife, Ms/ Manjusha were maintaining Punjab National Bank loan account to which an amount of Rs. 27 lakhs and Rs. 28 lakhs were released. The AO asked the information from Punjab National Bank and found that the assessee was maintaining Home Loan account in his name and another account in his wife's name and one joint account also which were not declared by the assessee. The AO, after going through the details of the banks and other relevant material, m....
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....of additional evidence contending that the assessee was prevented by sufficient cause in not filing the same before the AO and the evidence go to the very root of the matter and have a direct and substantial bearing in determining the correct income and tax liability of the assessee for the year under consideration. The paper book containing various documents/submissions was forwarded to the AO for submissions of his comments. The AO objected admission of additional evidence vide his letter 11.11.2008 and 12.1l.2008 by stating various facts already mentioned in the assessment order. The AR placed reliance on the following judgments for admission of the additional evidence :- 1. Tara Devi Goenka v. CIT [(1980) 122 ITR 14(Cal)], 2. the facts of CIT vs. Babu Lal Jain [1989) 176 ITR 411, 413(MP)], 3. ITO vs. Sahebjadi Devi 205 Taxation 184 (Cal ITAT) (2007), 4. Shahrukh Khan vs DCIT 2007 13 SOT 61 (Mumbai ITAT), 5. CIT vs Poddar Swadesh Udyog (P) Ltd 295 ITR 252, 6. Badri Krishnamurthy and ACIT 208 Taxation 64 (Delhi ITAT), 7. Smt. Prabhavati S. Shah v. CIT, [(1998) 231 ITR 1, 9 (BOM)]. 5.1 I have carefully considered the submissions made by the AR and the objections of t....
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....ame very date i.e. 08/2/2005 for which no satisfactory explanation tendered. 2. SVETA Sveta is a daughter of the assessee who gave interest free loan of Rs. 7 Lacs from her bank account through transfer entry on 08.02.2005. On perusal of bank of said lady there was cash deposit of Rs. 10 Lacs on 02.02.2005 and Rs. 2 Lacs on 08.02.2005 for which no satisfactory explanation tendered. 3. S.S.H. NAQWI Only the confirmed copy of account in the books of assessee was filed, no bank statement has been filed. Sh. S.S.H. Naqwi has stated that the transaction amounting to Rs. 10,51,000/- carried with Sh. Sukhnandan Premi were totally interest free transactions. It is seen that the assessee returned the amount of Rs. 10,51,000/- to Sh. Naqwi during the year itself. Hence no comments. 4. SH. SHEEL MEHTA & O.P. MEHTA In this regard notice u/s 133(6) issued to the property dealer namely M/s Perfect Properties, 47, Community Centre, Naraina Industrial Area, Phese-I, New Delhi who vide their reply dated 07.01.2010 (authorized signatory of M/s Perfect Properties) has stated that "I had arranged to lease the property No. B- 2, LSC, DDA Market, 1st Floor, Ring Road, Naraina Vihar, New Delh....
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....sion has never been brought before the AO during the assessment proceeding and or there after though the AO has referred it in his show cause notices. Hence, the AO's inference regarding submission of fabricated bank statement by the assessee has substance because why an assessing officer will put such documents on the record and call the explanation of the assessee. 5.4 The chart in respect of unexplained credit entries with Dena Bank Hari Nagar is as under:- Date Details Amounts (Rs.) 25/08/2004 1546 TRF 400000 28/08/2004 1589 TRF 250000 13/11/2004 123248 cheque 900000 13/11/2004 537873 cheque 5000 17/11/2004 1589 TRF 50000 04/12/2004 28470 cheque 2550000 16/12/2004 371127 cheque 2550000 08/02/2005 12188 TRF 300000 08/02/2005 1589 TRF 600000 08/02/2005 9980 TRF 700000 05/03/2005 493120 cheque 590000 07/03/2005 127223 cheque 49226 88,94,226 5.5 Total deposits through cheques and bank transfer in Dena Bank, Hari Nagar, account treated as unexplained deposits and thus income during the relevant: assessment year (AY) is Rs. 88,94,226/- as mentioned in para 7 of the assessment order. All these credits are th....
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..... Therefore, it can not be ruled out that the bank accounts have not been examined the loan has been squared up/repaid during the year. Considering all facts and circumstances and various judicial pronouncements, I am of the considered view that this credit treated unexplained by the AO is not justified as all conditions of the section 68 get fulfilled. The addition on this score is therefore, deleted. Accordingly, the appellant gets relief of Rs. 50,50,000/-. 5.7 The sum of Rs. 13.00 lakhs credited in Dena bank is nothing but bank transfers from the accounts of Smt. Manjusha, w/o Shri S. N. Premi, the appellant. The AO has verified it during the remand proceedings. The relevant portion of the report is extracted as under: "It is submitted by the lady that Mr. S.N. Premi is my husband and having joint account in PNB and jointly held housing loan accounts. Repayment of housing loan is generally made by my husband and I only reimburse the amount to him. In general all transactions in the accounts are related to housing loan. This fact has been verified from the bank a/c of Ms. Manjusha." 5.7.1 The page numbered 205-209 and 222 of the.9ssessment record show that the appellant ha....
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....i Pawan Kumar Jain and Smt. Pushpa Devi Jain w/o Shri Pawan Kumar Jain r/o 76/577, Kuli Bazar, Kanpur, UP (the donors have given Rs. 3.50 lakhs to each donee). In support of this the AR filed gift deeds, which are placed on the record. These gift deeds were dated 21.01.2005. These are not notarized documents but attested by the notary. These are not on stamp papers. The gifts are in cash. It is surprising to note that why the appellant has not submitted the copy of gift deeds before the AO when the AO has specifically asked to explain these credits. This raises doubts. Theses gift deeds show no acceptance of gifts by donees. The credit worthiness of donees was not filed to substantiate the genuineness of transactions as these two donors are not assessed to income tax and wealth tax. In case they are rich and not having taxable income then the huge cash along with other assets, viz: jewellary, cars, etc. might be chargeable to wealth tax. 5.9.1 I have carefully considered the observation of the AO, written submissions of the AR. The gift is nothing but credit in the lender's case. So the appellant has to establish the credit worthiness of lenders vis-a-vis the genuineness of t....
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....cash receipt of the same was filed at PB 58 duly confirmed by the Shivam Enterprises: proprietor: Shri Mahender Kumar with his PAN: ADZPK0960B. The purchase of generator set and air conditioners are through cheques where as sale are in cash. The acquisition of these assets by the assessee gets established by the sale bill of the seller, M/s Sukhbir Properties Private Limited on 19.01.2005. Since these assets are not reflected in the statement of affairs of the assessee as on 31.03.2005, therefore, its sales can not be doubted as the appellant has shown all movable and immovable assets in his statement of affairs filed over the period including the relevant year. Therefore, the mode of receipt can also not be doubted unless proved other wise. The cash, received from the sale of the DG set and air conditioners, therefore, is held justified and explained. However, the AO may pass on this information to the concerned AOs of Shri Mahender Kumar PAN: ADZPK0960B and Shri Narander PAN: ADRPN8017E for taking remedial action in their hands in accordance with the provisions of section 40A(3)/69C/69/69B of the Act as the case may be. 6.3 The cash received from the sale of the property at Nar....
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....urity guard and sweeper, clothes, medical, charity, conveyance, entertainment including cable charges, news papers and magazines, miscellaneous not grouped above, etc, etc. After analyzing the house hold expenses in entirety and the cash savings/cash in hand with each individual, non uniformity of withdrawals and marriage expenses: engagement, ring ceremony, jewellery, cloth, food ing, reception, photography, videography, music, mehandi rasm, vehicle/conveyance, marriage venue place expenses, decoration and lights, barat accommodation, gifts, etc, etc, I am of the considered view that the total expenditure on this account can not be less than Rs. 10.00 lakhs in addition to withdrawals for house hold and marriage expenses, which have been met out of the above incoming cash. Therefore, the cash of Rs. 10.00 lakhs shown to have been deposited out of above incoming cash is held unexplained. The bank deposit of Rs. 10.00 lakhs therefore, in aggregate out of the total addition made under the head peak of deposits in Dena bank, cash deposits in PNB and HSBC bank accounts, is upheld. Accordingly, the appellant gets relief of Rs. 26,77,000/-. 7. Vide ground no. 7 the assessee has challeng....
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.... PB 63-86 of the Paper Book. * Property No. CB-133 Naraina was shown in the assessee's Income Tax return for last several years at Rs. 7,86,000/- (PB 70-75) and. The said property was purchased by the assessee in 1980 at Rs. 48000/- (PB 63-69) and with subsequent improvements the cost in assessee's Statement of Affairs as on 31.3.2004 was Rs. 7,86,000/- as duly filed with his ITR for AY 2004-2005 (PB 70-75). Copy of documents regarding Purchase of said property is at PB 63-69. Copy of sale documents regarding the sale of said Property are at PB 76- 82. Computation of Long Term Capital Loss on sale of said Property is at PB 115. The said Property is sold to Mr. Mangtu Ram Gujjar at Rs. 8,00,000/- in cash. 7.2 I have carefully considered the facts of the case and the submission of the appellant in this regard. The property under reference has been shown transferred out in the details annexed with the return. This property found mentioned in the statement of affairs of earlier years but not in the statement of affairs filed along with the return of the relevant year. The buyer of the property was the tenet of the assessee. After the sale, this property was acquired by the ....
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....as been reproduced (supra in para 5.6 of the CIT (A)'s order) wherein, the AO had stated that the said Smt. Padma Bhandari has passed away on 18.04.2008 and the legal heirs of the assessee are not aware of this particular specific information. The AO's suspicion is only based on the fact that on the day the lady has given cheques to the assessee, similar amount was received by the lady on the same day through cheques for which no possible explanation was filed by the assessee. Other than the said observation of the AO, there was nothing to challenge the identity of the lender. The ld. CIT (A) has stated that the assessment of late Smt. Padma Bhandari was completed for AY 2005-06 u/s 143 (3) of the Act and has stated that credits appearing in the bank account of Smt. Padma Bhandari were from the sale consideration of an immovable property, therefore, just because confirmation was not given in respect to lending of this amount which has been repaid during the year, cannot be said to be undisclosed income of the assessee and, therefore, rightly deleted by the ld. CIT (A) which does not require any interference from our side. Therefore, the revenue's ground no.1 stands dismissed. 7.2 ....
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....as paid back to Shri Sheel Mehta during the same year. In the remand report, the AO had expressed his satisfaction about the repayment of the said advance taken from Shri Sheel Mehta. In the light of the said facts, the CIT (A) has held that the transactions of both the persons were genuine and, therefore, the amount which was credited in assessee's account cannot be termed as income from undisclosed sources and therefore, rightly deleted the said addition. Accordingly, we confirm the action of the ld. CIT (A) and dismiss the ground no.3 of the revenue's appeal. 7.4 Ground No.1 of the assessee's appeal is relating to sustenance of addition of an amount of Rs. 10 lakhs which was credited to the assessee's account by account payee cheques from the assessee's daughters. We find that an amount of Rs. 3 lakhs was deposited by Ms. Silky Tayal and an amount of Rs. 7 lakhs was deposited by Ms. Sveta who were account holders of the same branch of Dena Bank. The ld. CIT (A) has called for the remand report wherein the AO has taken note of the fact that in Silky's case, the interest free loan was given by transfer entry on 08.02.2005. However, he takes note that there was a cash deposit of R....
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....or set and air conditioners : Rs.20,00,000/- ii. Sale of property situated at CB-133, Naraina for Rs.8,00,000/- iii. Rent receipts in cash : Rs.1,44,490/- iv. Receipt from Shri Ganpat Sharma : Rs.2,50,000/- v. Opening cash in hand : Rs.31,500/- vi. Cash received from Smt. Manjusha w/o the appellant: Rs.4,87,500/- vii. Cash received from Shri S H H Naqvi : Rs. 50,000/- viii. Bank withdrawals from various bank accounts: Rs.38,43,500/- The CIT (A) took note of the fact that the assessee had submitted the cash book and cash flow statement which has been prepared on the basis of various cash transactions and was placed on record. Before the CIT (A), the assessee had contended that opening cash in hand and cash receipts during the year have been claimed to explain the cash deposits in the bank account. The ld. CIT (A) has taken note of the fact that the assessee had purchased a generator and seven air conditioners from M/s. Sukhbir Properties Private Limited on 19.01.2005 (purchase receipts placed at page 56 of the PB) as noted by the CIT (A). The ld. CIT (A) took note of the fact that the said transaction was by cheque no.165994 dated 15.11.2004 fo....
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....tu Ram Gujjar (purchaser) had come with postal remark that "the recipient is not there" and also on the ground that the assessee had failed to produce any documentary evidence of his ownership prior to the alleged sale of the said property for the cash receipt of Rs. 8 lakhs. During the appellate proceedings before the CIT (A), the assessee brought to the notice of the ld. CIT (A) that this property was purchased by the assessee in the year 1980 at Rs. 48,000/- ( paper book 63 - 69) and the same was reflected in the income-tax returns for the last several years at Rs. 7,86,000/- after subsequent improvements made on the said property dated 31.03.2004. Taking note of the said facts, the ld. CIT (A) has found that the property in question was bought by the tenant of the assessee and the said property has now been acquired by the Defence. The ld. CIT (A) rightly noted that total cost of the property cannot be taxed at the hands of the assessee in the relevant assessment year and in case, investment in the property is unexplained should be taxed in the year of purchase which is not the relevant assessment year. The ld. CIT (A) wondered as to how the sale consideration in cash, claimed ....
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....ts and rent of Rs. 1,44,490/- also found explained, and sale of property of Rs. 8 lacs, therefore the assessee's cash of Rs. 31,94,490/-stands explained by the assessee. 9.4 However, we find that the ld. CIT (A) had, in para 6.6 of his impugned order, taken note of the statement of affairs as on 31.03.2004 of the assessee, the AO's remand report, bank withdrawals and other evidences brought to his notice and accepted the incoming cash as not questionable in respect of the following :- (i) Opening cash in hand : Rs.31,500/- (ii) Cash received from Smt. Manjusha w/o the appellant: Rs.4,87,500/- (iii) Cash received from Shri S H H Naqvi : Rs.50,000/- (iv) Bank withdrawals from various bank accounts : Rs.38,43,500/- The ld. CIT (A) was not satisfied with the appropriation of this incoming cash as explained in the cash flow statement. He pointed out that the assessee has appropriated an amount of Rs. 1,94,765/- as total expenses for the marriage of his daughter which has not been found to be palatable to him. The ld. CIT (A) observed that the house hold expenses have to be subdivided into sub-heads i.e. house tax, water tax, electricity, telephone....
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.... Rs. 4,82,510/- would be a reasonable amount to be sustained. Thus, the assessee's ground no.2 is partly allowed. 10. In the result, the appeal of the revenue for the assessment year 2005- 06 is dismissed and the appeal of the assessee for the assessment year 2005-06 is partly allowed for statistical purposes. 11. Now, we take up revenue's appeal (ITA No.3114/Del/2010) and cross objection of the assessee (CO No.347/Del/2010) for assessment year 2006-07. 12. The ground of the revenue's appeal is against the deletion of addition of Rs. 72,50,000/- without invoking the provisions of Rule 46A of the Income-tax Rules, 1962 (hereinafter 'the Act') and the assessee in the cross appeal has challenged the sustenance of addition of Rs. 1 lakh. 13. Brief facts of the case are that the assessee returned the income of Rs. 3,04,172/-. The matter was taken up in scrutiny. The AO found that the assessee derived income mainly from house property. During the relevant assessment year, the AO found that some credits/debits in his bank accounts and the AO was not satisfied with the explanation given by the assessee and added Rs. 1 lakh on cash deposits in the bank account and Rs. 72,50,000/- claime....
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....ted above. So we find force in the submission of the ld. DR that these documents should have been sent to the AO for seeking the remand report as prescribed under Rule 46A of the Rules. The ld. AR does not have any objection if we send the matter back to the file of the AO for verification. In the light of the above, we are inclined to set aside the order of the CIT (A) and remit the matter back to the AO for fresh consideration taking the evidences which had been submitted before the CIT (A) after providing assessee an opportunity of being heard. It is ordered accordingly. 16. As regards the addition of Rs. 1 lakh u/s 68 of the Act, the AO observed that the assessee had deposited cash of Rs. 1 lakh on 15.06.2005 in his saving bank account maintained with HSBC. The ld. CIT (A) have stated in the impugned order that he has perused the bank account and found that there is such deposit in the bank account and he has gone through the cash book submitted by the assessee during the course of the appellate proceedings. The ld. CIT (A) took note of the fact that the assessee had cash in hand amounting to Rs. 1,83,338/- on 07.06.2005 (Rs.1,98,338/- - Rs. 15,000/-). After the same, next ent....