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Rakesh Gupta, C-3/28-29, Sector-15, Rohini, New Dlehi-110085. Vs. ACIT, Central Circle-10, New Delhi
August, 13th 2015
                      DELHI BENCH: `SMC' NEW DELHI


                      I.T.A .No.-1598/Del/2014
                   (ASSESSMENT YEAR-2005-06)
            Rakesh Gupta,                   vs ACIT,
            C-3/28-29, Sector-15, Rohini,      Central Circle-10,
            New Dlehi-110085.                  New Delhi
            (APPELLANT)                        (RESPONDENT)

            Appellant by         Sh.S.K.Gupta, CA
            Respondent by        Sh.Gagan Sood, Sr.DR

               Date of Hearing             02.07.2015
            Date of Pronouncement          12.08.2015

      The present appeal has been filed by the assessee assailing the
correctness of the order dated 11.12.2013 of              CIT(A)-XXXII, New Delhi
pertaining to 2005-06 assessment year on the following grounds:-
      1.     "The Ld. CIT(A has erred both in law and on facts in confirming
      the addition of Rs.6,00,000/- on account of payment made by the
      appellant to the tenant for vacation of the property.
      2.     The appellant craves leave to add, delete, modify/amend the
      above grounds of appeal with the permission of the Hon'ble Bench."

2.    The relevant facts of the case are that the search and seizure operation
u/s 132 of the Income Tax Act, 1961 was conducted by the Investigation Wing
wherein of the department on 26.04.2010 in Sh.Vishesh Gupta and Rakesh
Gupta group of cases. In the said search the assessee's business premises at C-
3/28-29, Sector-15, Rohini, Delhi were also covered. The case was centralized
by an order u/s 127 of the Income Tax Act, 1961 vide F.No.CIT-XIII/127/2010-
11/756 dated 11.08.2010 in central circle-10, New Delhi accordingly notice u/s
153A of the Act was issued to the assessee on 11.04.2011 requiring the
assessee to file its return.    The assessee enclosed a copy of the return u/s
139(1) declaring an income of Rs.1,49,960/- and requested vide letter dated
30.05.2012 that it may be treated as having been filed u/s 153A. Accordingly
after issuance of notice u/s 142(1) and 143(2) etc. the assessee was required to
                                                                I.T.A .No.-1598/Del/2014

explain the contents of the seized document at page 35 of Annexure A-6 partly
E-1, which disclosed that an agreement had been made by the assessee with
Smt. Rajia Bagem, W/o-Late Shree Abdul Haffiz, S/o-Chota Khan dated
09.02.2005 to vacate the property No.-3838, Gorund Floor, New Delhi for a
payment of Rs. 6 lacs.       Referring to the statement recorded under oath of
04.08.2010 wherein the Rakesh Gupta has stated that the said payment was
made by cash. The said question and answer was confronted to the assessee.
The same is reproduced hereunder:-
      Q.16. "I am showing you page 35 of Annexure A-6 party E-1. Please
      explain the contents of this documents?
      Ans: I have paid Rs.6 lacs in cash for vacate my shop out of my
      regular income"

3.    After confronting the above question and the answer the AO required the
assessee to explain the same. The assessee 's explanation dated 18.03.2013 that
he alongwith his wife Mrs. Manju Gupta had paid this money from their past
savings and regular income disclosed earlier in their income tax returns was not
accepted by the AO. The assessee is found to have explained that since the
property which was stuck with some mischievous persons                     necessitated
payment in cash available in the hands of the assessee and his wife and from
the disclosed income and savings in order to get rid of the mischievous persons
was not accepted considering the fact that the declared return of the assessee
was Rs.1,49,960/-, the source of payment of Rs.6 lacs was considered to be
from unexplained sources.
4.    In appeal before the First Appellate Authority, the submissions made
before the AO were again re-iterated. For ready-reference, these are extracted
from para 6.3 of the impugned order:-
      GROUND NO. 2
      "The learned A.O. has added Rs. 6,00,000/- as income from
      unexplained sources for the payment made to tenant In this regard it is
      submitted that the Mr. Rakesh Gupta aged around 54 years and his
      wife Mrs. Manju Gupta aged around 53 years are a regular income tax
      assessee since more then 20 years.
      Assessee and his wife Mrs. Manju Gupta have paid this money from
      their past savings and regular income disclosed earlier in income tax
      return. Mr. Rakesh Gupta and his wife paid this money from the cash
      in hand available with them. These cash was from their disclosed
      income and savings only. But due to their property stuck-up with some
      mischievous person and they have to pay their hard earned money to
      them for get rid of him from his property. These all facts were duly

                                                                                Page 2 of 5
                                                                   I.T.A .No.-1598/Del/2014

       submitted and explained to the learned AO. during the course of
       It is further submitted that in case of an assessee and his spouse filing
       their taxable return from last 20 -22 years and living in a very
       reasonable lifestyle with in their house accumulation of above-said
       amount is justifiable and reasonable.

       GROUND NO. 3
       The learned A.O. while making addition of Rs. 6 lacs as income from
       undisclosed sources for the A/Y 2005-06 ignored the fact that the
       above cash was out of income and saving of the assessee brought
       forward from previous years which were beyond the 6 assessment
       years covered under 153A of the income tax act, l961. The assessee
       has also submitted during the course of assessment detailed chart
       of year-wise cash retained by him and his wife to the learned AO.
       The A.O did not drawn any adverse inference for the year-wise cash
       detail submitted and not rejected the same. Copy of chart is enclosed.
       Hence addition made by the learned AO. beyond the period mentioned
       in Section 153 A i.e. 6 A/Y is against the provisions of law and may be
       Hence, it is hereby prayed that the order of the learned Assessing
       Officer being arbitrary, erroneous and against the law, the appeal of
       the assessee may kindly be allowed."

4.1.   These submissions were also not accepted by the CIT(A) who considered
the detailed chart as being filed motivated by the desire to explain the
availability of cash of Rs. 6 lacs.
5.     Aggrieved by this, the assessee is in appeal before the Tribunal. Both the
parties were heard. Considering the fact that the CIT(A) has merely dismissed,
the "detailed year-wise chart" of availability of cash with him and his wife as
being motivated without considering the correctness of the claim biased and
makes the conclusion unsustainable in law. The Ld.AR in the circumstances
was required to address whether he would want to go back to the CIT(A) for a
specific finding as the finding arrived at in para 7 is vague and general and
cannot be sustained. It is seen that the assessee on being questioned sought to
explain the availability of the cash over the years with him by bring on record
that both the husband and wife being income tax assessee's for almost 20-22
years and had       retained year-wise cash with him and his wife.                 Thus the
Ld.CIT(A was only required to address the correctness of the claim and not cast
as persons on the motivation of the claim as the motive stood explained by the
fact that the AO had required to explain the availability of cash. However, the
Ld.AR in the facts of the present case submitted that he would be satisfied if a
part relief is granted to the assessee at this stage as considering the smallness

                                                                                   Page 3 of 5
                                                                   I.T.A .No.-1598/Del/2014

of the amounts, the litigation cost to the assessee itself would be detrimental.
In these circumstances, it was his submission he would be satisfied that the
relief to the extent of Rs.4 lacs may be allowed.            In order to establish the
reasonableness of his claim and the finding being biased, the following finding of
the CIT(A) was read out by the Ld.AR:-
      7. "I have considered the facts of the case and the written submissions
      of the appellant. I have also perused the assessment record for the
      assessment year under consideration. Considering the facts of the
      case I find that the Assessing Officer was justified in making the
      impugned addition as the appellant had failed to explain the
      availability of cash with any documentary evidence. The chart of
      availability of year wise cash filed in the course of assessment
      proceedings was motivatedly filed in order to explain the cash of
      Rs.6,00,000/- paid for getting property vacated. It was a mere
      afterthought. It is also unbelievable fact that the appellant and his wife
      would keep such huge cash at home year after year i.e. since 1996-
      1997. Therefore, considering the facts of the case I find that there is no
      reason to interfere and interfere in the order passed by the Assessing
      Officer. Accordingly, the addition of RS.6,00,000/- made by the
      Assessing Officer as income from unexplained sources is confirmed."

6.    Referring to the above finding of the Ld. CIT(A), the Ld. Sr.DR was
required to address on what basis the claim supported by a detailed chart year-
wise explaining cash retained by the assessee and his wife has been rejected
and advance arguments on part relief sought by the assessee. The Ld.Sr.DR in
reply stated that in the circumstances part relief may be considered however not
to the full extent as suggested by the Ld. AR.
7.    Having heard the rival submissions of the parties and considered the
peculiar facts and circumstances of the case on record, I am of the view that the
finding under challenge cannot be sustained as instead of addressing the
correctness of the claim the Ld.CIT(A) has instead digressed to doubting the
motive to explain. The logic applied is self-defeating as when an assessee is
called upon to explain the claim the explanation offered necessarily is motivated
to support the claim and cannot be used as a reason to not look into the same.
In these peculiar facts and circumstances, after considering the submissions of
the parties on the limited plea before the Bench. Considering the undisputed
fact that the assessee and his wife have been income tax assessee for a period of
20-22 years.    It is deemed appropriate to allow the claim of the assessee to the
extent of Rs.3.5 lacs. The estimate at Rs.3.5 lacs was arrived at after hearing
both the parting and was not objected to by the Ld. Sr.DR who infact agreed to

                                                                                   Page 4 of 5
                                                             I.T.A .No.-1598/Del/2014

the said estimate. The Ld AR on the other hand stated that the assessee also
would not contest the issue further and would be satisfied with the relief
granted. In the afore-mentioned peculiar facts and circumstances of the case,
the availability of cash amounting to Rs.3.5 lacs in the hands of the assessee
from his own savings and that of his wife over the years is accepted. Accordingly
in terms of the above, the appeal of the assessee is allowed for statistical
purposes. The said order was pronounced at the time of hearing itself.
8.    In the result, the appeal of the assessee is allowed for statistical purposes.
      The order is pronounced in the open court on 12th of August, 2015.


                                                                  (DIVA SINGH)
                                                             JUDICIAL MEMBER
Dated: 12/08/2015
*Amit Kumar*

Copy forwarded to:

1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(Appeals)
5.    DR: ITAT
                                                         ASSISTANT REGISTRAR
                                                               ITAT NEW DELHI

                                                                           Page 5 of 5
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