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ITO, Ward 26(4), Room No. 1810, 18th Floor E-2, Block, Civic Centre, New Delhi. Vs. Rakesh, House No. 838, Dichaon Kalan, Najafgarh, New Delhi.
January, 27th 2015
                    DELHI BENCH `F': NEW DELHI


                           ITA No. 4537/Del/2013
                         Assessment Year: 2009-10

      ITO,                                       Rakesh,
      Ward 26(4),                                House No. 838,
      Room No. 1810, 18th Floor         Vs.      Dichaon Kalan,
      E-2, Block, Civic Centre,                  Najafgarh, New Delhi.
      New Delhi.                                 AHIPR4446C

      (Appellant)                                (Respondent)

                    Appellant by: Sh. Vikram Sahay, Sr. DR
                    Respondent by: Sh. Sanjeev Bajaj, CA

    This appeal filed by the Revenue is directed against the order of ld.
CIT(A)-XXIV, New Delhi dated 24/05/2013 for A.Y. 2009-10.
2.    The assessee had filed return of income declaring total income at Rs.
2,64,363/- from sale of bricks, badarpur cement and iron.           An AIR
information was received by Assessing Officer that the assessee had
deposited cash totaling to Rs. 1,11,79,988/- in account with Axis Bank Ltd.
and credit card payments of Rs. 4,76,780/- were made with ICICI Bank Ltd.
In course of assessment proceedings the assessee filed copy of profit and
loss account and balance sheet and affidavit from Shri Randhir Singh that he
had gifted amount of Rs. 24 lakhs to assessee.
2.1   The AO observed that the affidavit was vague as it did not refer to
identity, capacity, relevancy and genuineness was not proved. The affidavit
also did not mention the mode as to whether in cash or by draft the gift was
made.    He further observed that father could give the amount through
                               ITA No. 4537/D/ 2013                       2

cheque not in cash as there was no urgency. He further observed that the
copy of bank account as well as sale purchase deed of land was also
incomplete. He, accordingly, made an addition of Rs. 1,11,79,988/- u/s 68
and also made a disallowance of Rs. 2 lakhs on account of unverifiable
nature of expenses. Before ld. CIT(A) the assessee filed application under
Rule 46A and requested for admission of additional evidence as well as an
additional ground of appeal on the ground that sufficient opportunity to
produce these evidences was not provided to the assessee by the AO during
assessment proceedings. Ld. CIT(A) forwarded these evidences and paper
book to AO on 26/02/2013. The AO gave his comments vide letter dated
18/03/2013 in which he objected to the admittance of additional evidence on
the ground that the accounts statement of Axis Bank mentioned Mr. Rakesh
as the exclusive owner of the bank account, whereas the assessee had
claimed that account no. 079010100265389 in Axis Bank was a joint account
in the name of Sh. Rakesh and Sh. Devinder, and the cash deposited in this
account amounted to Rs. 67,16,100/- which pertained to partnership firm.
The AO stated that since the bank statement only had the name of the
assessee Sh. Rakesh, the cash deposited in the bank account was to be
considered in the hands of the assessee only. As regards the affidavit of Sh.
Randhir Singh, he relied on the assessment order.
2.2   Ld. CIT(A) again wrote a letter dated 18/04/2013 which has been
referred to in para 4.2 of his order and reproduced hereunder for ready
       "4.2 It was pointed to the AO vide this office letter of even number
      dated 18.04.2013 that a proper rebuttal of the affidavit of Sh.
      Randhir Singh had not been given by the AO during assessment
      proceedings. Sh. Randhir Singh was never examined under oath
      with reference to his affidavit, as mandated by the CBDT in its
      Instruction No. 1271 dt. 08.01.1979. Further, it was also pointed
      out to the AO that a copy of the Partnership Deed dt. 01.01.207
      along with PAN application between the appellant Sh. Rakesh and
      his brother Sh. Devinder had a direct bearing on the ground of
      appeal no. 4, whereby the appellant had impugned the addition of
      the cash deposits in his Axis Bank account which was being held by
                             ITA No. 4537/D/ 2013                   3

      him jointly with his brother Sh. Devinder. Moreover, the appellant
      had also placed on record a certificate dt. 21.02.2013 signed by the
      Axis Bank, Vikaspuri Branch, stating that the appellant Sh. Rakesh
      was having a saving bank account no. 079010100235389 in their
      branch since 23.01.2007 along with Sh. Devinder. In the light of
      the above, and after careful consideration of the reasons given by
      the ld. AR and the submissions made by the appellant in his
      Rejoinder, and after finding that the additional evidence submitted
      by the appellant had a close nexus and direct bearing on the
      grounds of appeal taken by the appellant, it was decided to admit
      the additional evidence. Accordingly, the AO was given directions
      u/s 250(4) of the Income Tax Act to go through the additional
      evidence, carry out necessary requisite enquiries and to submit his
      Remand Report thereafter."
2.3   The remand report of the AO dated 9th May, 2013 has been
reproduced in para 4.3 which was as under:
      "4.3 The Remand Report of the AO was received vide his letter
      dated 09.05.2013, in which the Assessing Officer stated that:
         a) After examining Sh. Randhir, father of the appellant, who
            had filed an affidavit to the effect that he had made a gift of
            Rs. 24 lacs to his son and after recording his statement on
            08.05.2013, wherein Sh. Randhir confirmed that the gift was
            made in cash out of withdrawals made from his bank
            account, wherein the sale proceeds of agricultural land had
            been deposited, it is submitted that the contents of the
            affidavit can be relied upon.
         b) As regards the cash deposits in Saving Bank Account in Axis
            Bank, Vikas Puri Branch, the assessee claimed that the
            account pertained to partnership firm under the name and
            style of M/s Rakesh Kumar Devinder Kumar. In support of
            the claim, a photocopy of the partnership deed dt. 01.01.2007
            was filed as additional evidence along with a certificate dt.
            21.02.2013 from Axis Bank Manager that this account was a
            joint account of Sh. Rakesh and Sh. Devinder. Thus, it can
            be concluded that the firm is a separate entity and the cash
            deposits in the bank account to the tune of Rs. 67,16,100/-, as
            reported in the AIR, cannot be treated as assessee's income."
3.    After considering the remand report, ld. CIT(A) deleted the total
addition of Rs. 1,11,79,988/-. Further ld. CIT(A) also deleted the addition of
Rs. 2 lakhs taking note of the fact that the return was filed u/s 44AD (which
should have been 44AFas submitted by ld. Counsel).
                              ITA No. 4537/D/ 2013                      4

4.    Being aggrieved with the order of ld. CIT(A) the Department is in
appeal before us and has taken following grounds of appeal:
       1. "Deleting the addition of Rs. 20,63,088/- even though the same
          remained unexplained.        Out of total addition of Rs.
          1,11,79,988/- only Rs. 91,16,900/- was explained.
       2. Deleting the expenses of Rs. 2,00,000/- on account of
          disallowance of expenses by holding the business of assessee to
          be covered u/s 44AD whereas facts state that the assessee deals
          in trading of Building Material."
5.    Apropos ground no. 1 ld. CIT(DR) submitted that CIT(A) has not given
any comments on Rs. 20,63,088/- and deleted the same. He submitted that
there was nothing in the remand report on this amount.
6.    Ld. Counsel for the assessee referred to page 23 of the paper book,
wherein the written submissions made before ld. CIT(A) are contained in
which it was, inter-alia, pointed out that there were three bank accounts the
details of which was as under:
 a)    "Axis Bank having account No. 360010100007535
      In the name of Sh. Rakesh Personal Account
 b)   Axis Bank having account No. 079010100295246       28,63,888.00
      In the name of Sh. Rakesh ­ Business Account
 c)   Axis Bank having account No. 079010100235389       67,16,100.00
      In the name of Sh. Rakesh and Devendra (Joint A/c)
      Type (Partnership firm Business Account)
                                     Total               111,79,988.00
6.1   He submitted that the business turnover in respect of personal
business was routed through bank account No. 079010100295246 and the
difference as mentioned in the Department's ground of appeal relates to
deposits of this bank account.
7. We have considered the submissions of both the parties. 8. Admittedly, ld. CIT(A) has not recorded any finding in regard to the sum of Rs. 20,63,088/- and the AO in his remand report also has not commented on this amount. Therefore, we restore this ground to the file of AO for considering the assessee's submissions and then decide the issue with respect to the addition of Rs. 20,63,088/-. 9. In the result, this ground is allowed for statistical purposes. ITA No. 4537/D/ 2013 5 10. Apropos ground no. 2, we do not find any reason to interfere with the order of ld. CIT(A) because it is not disputed that the assessee had filed its return of income u/s 44AF showing taxable income of Rs. 2,64,363/- which was in excess of 8% presumptive tax. We, therefore, confirm the order of ld. CIT(A) on this ground. 11. In the result, the Department's appeal is partly allowed for statistical purposes. Order pronounced in the open court on 23/01/2015 Sd/- Sd/- (H.S. SIDHU) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 23/01/2015 *Kavita Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, New Delhi. TRUE COPY By Order ASSISTANT REGISTRAR
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