IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘F’ BENCH,
NEW DELHI [THROUGH VIDEO CONFERENCE]
BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND
SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
ITA No. 9434/DEL/2019 [A.Y 2011-12]
Shri Ravinder Singh Vs. The I.T.O
10, Birbal Road
Jangpura, New Delhi Ward – 54(2)
New Delhi
PAN: AIOPS 8010 N [Respondent]
[Appellant]
Assessee by : Shri Hiren Mehta Adv
Revenue by : Shri Atigu Ahmed, Sr. DR
Date of Hearing : 01.12.2020
Date of Pronouncement : 04.12.2020
ORDER
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the assessee is preferred against the order of the
CIT(A)–35, Delhi dated 20.11.2019 pertaining to A.Y 2011–12.
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2. The grievances of the assessee read as under:
“1. That on the facts and circumstances of the case and in law,
the order passes by the ld. CIT(A) – 35 New Delhi is contrary
to facts and bad in law.
2. That on the facts and circumstances of the case and in law, the
CIT (A) was not justified in not admitting the additional evidence
22.1 That having forwarded the additional evidence to assessing
officer for comments/ remand report, the action of CIT(A) in
refusing to admit additional evidence is not as per settled law.
3. That on the facts and circumstances of the case and in law, the
CIT (A) was not justified in upholding the action of AO in sustaining
addition of Rs. 1,49,95,369/- on account of un explained credit
entries in the bank account as the bank statements were not
available with the assessee during assessment proceedings and
further refusing to admit the additional evidence submitted along
with application for additional evidence under rule 46A.
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44. That on the facts and circumstances of the case and in law the
CIT (A) was not justified in sustaining addition of Rs. 23,93,637/-
being expenses remaining unexplained during the assessment
proceedings u/s 68 of the Income Tax Act and further rejecting the
application filed under rule 46A of the Income Tax Rules.
55. That on the facts and circumstances of the case and in law, the
CIT (A) was not justified and has erred in sustaining addition of Rs
97,00,000/- u/s 69 of the Income Tax Act as unexplained investment
based on cash deposited by the seller in his bank account by relying
upon the statement of the seller without providing any opportunity to
the appellant for rebuttal.
6. That on the facts and circumstances of the case and in law, the ld.
CIT(A) erred in sustaining addition of Rs 22,828/- being difference in
the interest earned in the bank account and interest shown in the
return of income.
3. Representatives of both the sides were heard at length. Case
records carefully perused.
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4. Briefly stated the facts of the case are that the assessee is an
individual, engaged in the business of civil contracting and during the
year under consideration, has started the activity of a builder. Return
was filed declaring taxable income of Rs.11.02 lakhs. Assessment was
completed under section 143(3) of the Income tax Act, 1961
[hereinafter referred to as 'The Act' for short] vide order dated
29.03.2014 by making the following additions:
(1) undisclosed/unexplained credits – Rs. 1,49,95,369/-
in the bank account – Rs. 23,93,637/-
– Rs. 97,00,000/-
(2) income from undisclosed sources – Rs. 22,828/-
used for incurring expenses
(3) unexplained investment in
immovable property
(4) undisclosed interest under the
head income from other sources
5. During the course of scrutiny assessment proceedings, the
Assessing Officer examined the bank account with HDFC bank. On
examining the bank statements, the Assessing Officer found that the
same has been credited by an amount of Rs.3.05 crores. The Assessing
Officer, on the basis of TDS certificates, came to the conclusion that
the contract receipts were to the tune of Rs.95,66,489/- and the
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assessee has shown gross receipts at Rs.98,24,795/-. The assessee was
asked to explain the excess deposits found in the HDFC bank.
6. In its reply, the assessee explained that he has received
unsecured loans from five persons totalling to Rs. 62.10 lakhs. The
Assessing Officer was of the opinion that the assessee was able to
explain credits of Rs.1.55 crores in the bank account out of Rs.3.05
crores and according to the Assessing Officer, the balance amount of
Rs.1.49 crores remained unexplained. Accordingly, he made addition of
Rs.1.49 crores credited in the bank account with HDFC bank.
7. Proceeding further, the Assessing Officer found that the assessee
has debited expenses amounting to Rs. 96,29,565/-. The assessee was
asked to furnish ledger account, vouchers, bills of expenses claimed in
the profit and loss account. Requisites details were furnished. The
Assessing Officer was of the opinion that Rs.72 lakhs had been incurred
in cash. The assessee was asked to furnish cashbook but instead, the
assessee furnished certificate from HDFC bank certifying that the cash
of Rs.48 lakhs has been withdrawn from the bank during the year under
consideration.
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8. The Assessing Officer was of the opinion that the assessee has not
furnished any details in respect of difference of Rs. 23,93,637/- and
accordingly, made addition of the same as income from other sources.
9. Proceeding further, the Assessing Officer noticed that the
assessee has purchased property from one Shri Ram Babu for an
amount of Rs.1.05 crores. However, during the assessment proceedings
of Shri Ram Babu the counsel of Shri Ram Babu stated that the cash
amounting to 97 lakhs, which was found to be deposited in the bank
account of Shri Ram Babu, was given by the assessee as ‘On Money’ for
purchase of property.
10. Believing on the statement of the counsel of Shri Ram Babu,
Assessing Officer made addition of Rs.97 lakhs as investment from
undisclosed sources.
11. The Assessing Officer further noticed that the assessee has
earned interest of Rs.55,360/- in the SBI account with HDFC bank
whereas the assessee has shown interest of Rs.32,532/- only and
accordingly, added the same as income from other sources.
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12. We have carefully perused the order of the CIT(A).We find that
the assessee furnished some evidences in support of his claim and all
the evidences were rejected by the CIT(A) holding that the conditions
stipulated in Rule 46A are not satisfied. Without going into the merits
of the additions, the CITA dismissed the appeal of the assessee.
13. In so far as the addition on account of credit in the bank account
is concerned, we find that the assessee has taken loans from several
persons, which was partly repaid during the year under consideration
and again the loans were taken from the same persons. The Assessing
Officer has simply seen credits in the bank account without realising
that the same amount is recycled. We find that detailed explanation
alongwith re-conciliation has been furnished by the assessee before the
CIT(A) but the same was dismissed out-rightly.
14. Similar is the fate of expenditure treated by the Assessing Officer
as paid in cash in excess of cash withdrawals. We find that out of the
alleged difference, most of the payments have been made by account
payee cheques on account of salaries and wages, tyre purchases and
diesel expenses, which totalled to Rs.24.65 lakhs. These details were
also furnished before the CIT(A) but such details received the same
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fate. We are of the considered view that when the assessee has
explained everything with evidences, the CITA should not have
rubbished those evidences without recording any specific findings.
15. However, in the interest of justice and fair play, we remit both
these issues to the file of the Assessing Officer. The assessee is
directed to furnish all necessary evidences which were furnished
before the CIT(A) and the Assessing Officer is directed to examine each
and every evidence/explanation and decide these two issues afresh
after affording reasonable opportunity of being heard to the assessee.
16. Ground Nos.1 to 4 are treated as allowed for statistical purposes.
17. Facts relating to addition of Rs.97 lakhs have been explained
hereinabove. The entire addition has been made only on the admission
of the ld. counsel of Shri Ram Babu that the assessee has paid Rs.97
lakhs to Shri Ram Babu in cash for purchase of the impugned property.
In our considered view, the AO has grossly erred in simply believing the
contention of the counsel of Shri Ram Babu. It appears that Rs.97 lakhs
was deposited in cash in the bank account of Shri Ram Babu and to
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explain the source, the ld. counsel simply stated that Shri Ram Babu
has received the same from the assessee.
18. Interestingly, Shri Ram Babu died in on 14.11.2013 as per the
death certificate exhibited at page 18 of the paper book. Assessment
proceedings of Shri Ram Babu took place subsequent to his death. A
pertinent question arises as to how the counsel of Shri Ram Babu knew
that Rs. 97 lakhs were received by Shri Ram Babu from the assessee
when he has left for heavenly abode on 14.11.2013. Order sheet
entries are placed at pages 1 to 3 of the paper book. Assessment
proceedings are dated February 2014, which means that the
assessment proceedings in the case of the assessee were much after
the date of death of Shri Ram Babu.
19. In our considered view, the entire addition has been made on
assumptions and surmises and on the statement of counsel of Shri Ram
Babu which do not have any evidentiary value keeping in mind that Shri
Ram Babu died in 2013. Considering these facts in totality, addition of
Rs.97 lakhs is directed to be deleted. Ground No. 5 is accordingly
allowed.
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20. Ground No. 6 relates to the addition on account of difference of
interest as per bank statement and as per books of account. The
assessee is directed to reconcile the same and explain the difference,
if any, and the Assessing Officer is directed to examine the issue afresh
and decide the same after giving opportunity of being heard to the
assessee. This ground is, accordingly, treated as allowed for statistical
purposes.
21. In the result the appeal of the assessee in ITA No.
9434/DEL/2019is allowed in part for statistical purposes.
The order is pronounced in the open court on 04.12.2020.
Sd/- Sd/-
[SUDHANSHU SRIVASTAVA]
[N.K. BILLAIYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 04th December, 2020
VL/
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Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi
Date of dictation 01.12.2020
Date on which the typed draft is placed before 03.12.2020
Date on which the typed draft is placed before 03.12.2020
Date on which the approved draft comes to03.12.2020
Date on which the fair order is placed before03.12.2020
Date on which the fair order comes back to 03.12.2020
Date on which the final order is uploaded on 03.12.2020
Date on which the file goes to the Bench Clerk 03.12.2020
Date on which the file goes to the Head Clerk
The date on which the file goes to the
Date of dispatch of the Order
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