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Shish Ram, Vill. & PO Teekli Distt. Gurgaon (Haryana) Vs. Income-tax Officer, Ward 43(2), New Delhi.
October, 23rd 2015
                  DELHI BENCH "G" NEW DELHI

                           ITA no1658 /Del/2011
                           Asstt. Yrs: 2006-07
Shish Ram,                        Vs. Income-tax Officer,
Vill. & PO Teekli                       Ward 43(2), New Delhi.
Distt. Gurgaon (Haryana)

( Appellant )                          (Respondent)

      Appellant by         :     Shri R.S. Singhvi CA
      Respondent by        :     Shri Sujit Kumar Sr. DR

                  Date of hearing      :     24/08/2015.
                  Date of order        :     21/10/2015.



      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.
                                                                            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

      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.

2.    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).
                                                                          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/-.

4.    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
                                                                          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/-.

5.    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.

6.    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.

7.    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.

8.    In his rival submissions, ld. DR supported the orders of the authorities

                                                                           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
                                                                                 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.

10.        In the result, appeal of the assessee is allowed for statistical purposes.

Order pronounced in open court on 21/10/2015.

      Sd/-                                                Sd/-
(KULDIP SINGH)                                      (N.K. SAINI)
JUDICIAL MEMBER                                     ACCOUNTANT MEMBER
Dated: 21/10/2015.
Copy of order to:
      1.   Assessee
      2.   AO
      3.   CIT
      4.   CIT(A)
      5.   DR, ITAT, New Delhi.
                                                                                     ITA 1658/Del/11

-+                                                      Date

1.    Draft dictated on                               21-10.2015             PS
2.    Draft placed before author                      21.10.2015             PS
3.    Draft proposed & placed before the second                              JM/AM
4.    Draft     discussed/approved     by    Second                          JM/AM
5.    Approved Draft comes to the Sr.PS/PS                                   PS/PS
6.    Kept for pronouncement on                                              PS
7.    File sent to the Bench Clerk                                           PS
8.    Date on which file goes to the AR
9.    Date on which file goes to the Head Clerk.
10.   Date of dispatch of Order.
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