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2015 (9) TMI 439 - ITAT MUMBAI

2015 (9) TMI 439 - ITAT MUMBAI - TMI - Addition u/s 68 - assessee received a portion of cash through the will of his father who expired on 28.12.2002 and his aunty who expired on 14.6.2003 - Held that:- We notice that the assessee has a written a letter dated 10-12-2010 before the assessing officer, wherein he has pointed out that the assessing officer is asking for details of the income of the deceased person after expiry of about six years since the demise of the executor of the will. Though t .....

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tificate about availability of agricultural income in the hands of the executors of the will, which in a way substantiates the availability of income. Hence, in the peculiar facts of the case, we are of the view that the tax authorities have rejected the claim of receipt of cash through wills, only on the basis of surmises and conjectures and accordingly we are of the view that the said claim requires to be accepted.

we are of the view that the claim of availability of cash as on 31.3 .....

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Khandelwal For The Respondent : Shri Jeetendra Kumar ORDER PER B.R. BASKARAN (AM) The appeal filed by the assessee is directed against the order dated 02-01-2012 passed by Ld CIT(A)-30, Mumbai and it relates to the assessment year 2004-05. The assessee is assailing the decision of Ld CIT(A) in confirming the assessment of ₹ 40,68,404/- u/s 68 of the Act. 2. The assessee had challenged the validity of reopening of assessment, but the same was not pressed by Ld A.R at the time of hearing. He .....

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ment proceedings relevant to A.Y 2007-08, it was observed that the assessee had cash in hand of ₹ 40,68,404/- as on 31.3.2004. However no return of income or wealth tax return have been filed for AY 2004-05, explaining the source of cash in hand nor has the assessee maintained or filed balance sheet for the relevant assessment year. In view of the same I have reason to believe that the income amounting to ₹ 40,68,404/- has escaped assessment. The assessee filed return of income in re .....

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e examined the copy of wills furnished by the assessee. The AO observed that both the wills do not state the details of assets bequeathed. He further observed that the assets have been bequeathed through the will to the assessee in his personal capacity and not to the HUF. The AO further held that since the assessee as well as his relatives did not file return of income or return of wealth for AY 2004-05 under regular provisions of the Act, the claim of availability of cash was not proved. Even .....

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ment for the year under consideration. Cash in hand as on 1.4.2003 Less:- Drawings 31,67,664 25,470 31,42,194 Cash received from the estate of Ganga Tarachand Ahuja, aunty of the karta, who Expired on 14.6.2003 8,77,000 Cash generated from the business for the Year 2003-04 49,210 Cash in hand at the end of the year 31.3.2004 40,68,404 The assessee contended that the opening cash balance of ₹ 31,67,664/- could not have been assessed in AY 2004-05. It was also submitted that the income of th .....

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l income, from which they have accumulated the cash balance. It was also submitted that the wills executed by both the persons clearly state that available cash balance is being bequeathed. 5. The Ld CIT(A) also took the view that the will executed by both the relatives did not quantify the cash balance available with them and they have also not filed return of income. Accordingly he held that the quantum of the cash available with the relatives could not be verified. Further the Ld CIT(A) obser .....

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he assessee had prepared and submitted financial statements pertaining to FY 1997-1998 onwards. Though the assessing officer has accepted the financial statements filed for Financial Years 2004-05 to 2006-07 relating to assessment years 2005-06 to 2007-08 (i.e., succeeding assessment years), he ignored the financial statements filed for FY 1999-2000 to 2002-03 (preceding assessment years). The Ld A.R submitted that the assessee had declared opening cash balance of ₹ 31,67,664/- as on 31.3. .....

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tted that the assessee has produced copies of will executed by his father and aunty in support of the receipt of cash on their death. He submitted that both the wills have clearly stated that they possessed Cash and the same is bequeathed to the assessee and his family. He submitted that the cash balance is not a static figure and the same would keep changing. Further, the executors of will also do not know about their exact date of death and the exact amount that would be available with them at .....

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ut proper reasons. 8. The Ld D.R, on the contrary, submitted that the certificates obtained from Panchayat officer towards availability of agricultural income in the hands of the relatives of the assessee is an afterthought only. He further submitted that neither the assessee nor the relatives have filed returns of income for the year under consideration. Hence the claim put forth by the assessee could not be cross verified. Hence the Ld CIT(A) was justified in confirming the assessment of cash .....

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wards and accordingly substantiated the capital balance declared in AY 2007-08. It is pertinent to note that the assessing officer chose to re-open the assessment pertaining to AY 2004-05 for the reason that the assessee did not file return of income for that year. Even though the assessee did not file return of income for AY 2005-06 also, the AO did not prefer to re-open the said assessment year. 10. We have noticed earlier that the assessee has furnished return of income for the first time for .....

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tal account from assessment year 1998-99 onwards. The AO did not examine them and hence did not comment anything about those documents. However, the assessing officer chose to assess the entire cash balance shown as available on 31.3.2004 as income of the assessee for AY 2004-05 without assigning proper reasons. All these discussions would show the infirmity in the approach followed by the assessing officer. 11. Now coming to the financial statements filed for AY 2004-05, we notice that the asse .....

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n view of the fact that the assessing officer has accepted the financial statements filed for AY 2005-06, even though no return of income was filed by the assessee. Hence, in our considered view, due credence should be given to the financial statements filed for the preceding years and accordingly, we are of the view that the assessing officer was not justified in assessing the opening cash balance of ₹ 31,67,664/- available as on 1.4.2003 in assessment year 2004-05. The cash claimed to ha .....

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resulted in double assessment of ₹ 49,210/-. Hence the sum of ₹ 49,210/- should be treated as explained and the same is liable to be deducted from the closing cash balance. 13. Now we are left with the claim of receipt of cash of ₹ 8,77,000/- from the estate of Smt. Ganga Tarachand Ahuja. The assessee has produced the copy of will execute by the above said person. We have noticed that the said will has been rejected only for the reason that the deceased person did not file retu .....

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