TMI Blog2016 (1) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... report which has been reproduced (supra in para 5.6 of the CIT (A)’s order) wherein, the AO had stated that the said Smt. Padma Bhandari has passed away on 18.04.2008 and the legal heirs of the assessee are not aware of this particular specific information. The AO’s suspicion is only based on the fact that on the day the lady has given cheques to the assessee, similar amount was received by the lady on the same day through cheques for which no possible explanation was filed by the assessee. Other than the said observation of the AO, there was nothing to challenge the identity of the lender. The ld. CIT (A) has stated that the assessment of late Smt. Padma Bhandari was completed for AY 2005-06 u/s 143 (3) of the Act and has stated that credits appearing in the bank account of Smt. Padma Bhandari were from the sale consideration of an immovable property, therefore, just because confirmation was not given in respect to lending of this amount which has been repaid during the year, cannot be said to be undisclosed income of the assessee and, therefore, rightly deleted by the ld. CIT (A) which does not require any interference from our side. - Decided in favour of assessee Addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the AO should not have brushed aside the fact that grand-parents giving a gift to the grand-daughters is not unusual fact. On the other hand, the ld. DR questioned the creditworthiness of the donors, which according to him, has not been proved by the assessee, so the addition was made. We have heard both the parties and we find that this issue of gift, which is being contended by the assessee, as obtained as a gift to grand-daughters from grand-parents, who in turn has transferred the same to the father (assessee) needs to be de novo considered by the AO. Therefore, we set aside the order of the CIT (A) on this issue and remand the matter back to the file of the AO for de novo consideration of this issue. - Decided in favour of assessee for statistical purposes. Addition on account of unexplained cash peak credit - CIT(A) deleted the addition - Held that:- The CIT (A) took note that the purchases of DG set and air-conditioners were through cheques whereas the sale of the said goods were by cash. The ld. CIT (A) took note of the fact that since the sales had taken place on 19.01.2005 and these goods/assets are not reflected in the statement of affairs of the assessee as on 31.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 lakhs from the sale of DG set and air-conditioners, ₹ 8 lakhs from sale of property and rent of ₹ 1,44,490/-, sale of roof rights of ₹ 2,50,000/-, thus amounting to ₹ 31,94,490/-. Therefore, once he has accepted the cash of ₹ 31,94,490/- which has come into the bank accounts of the assessee, then maximum sustenance that can be made to the difference of ₹ 36,77,000/- minus ₹ 31,94,490 i.e. ₹ 4,82,510/-. The total expenses/ withdrawals of March as per the cash flow statement submitted by the assessee is only ₹ 1,94,765/- for marriage expenses of his daughter, which, according to us, is also abysmal low figure when considering the assessee’s income, status and business which he undertakes. Therefore, the amount of ₹ 4,82,510/- would be a reasonable amount to be sustained - Decided in favour of assessee in part Addition u/s 68 - Held that:- if the assessee has not made any entry in his cash book does not mean that the amount deposited in the bank account can be termed as unexplained income of the assessee. Since the matter is being set aside and sent back to the AO for fresh adjudication for the sole ground of the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing credits in Bank Account of the assessee received through account payee cheques from assessee s daughters. 2. That the Ld. CIT (A)-XXIV, New Delhi, erred on facts and in law in not accepting cash deposit of ₹ 10,00,000/- in Bank Account of the assessee from Cash available as per Cash Flow Statement being allegedly taken as marriage expenses incurred on assessee s daughter marriage purely on estimated basis over and above the amount of ₹ 1,94,765/- shown by assessee as actually spent on marriage expenses. 4. Brief facts of the case are as follows : The return of income was filed on 31.10.2005 at an income of ₹ 4,04,020/-. The return was processed u/s 143(1) of the Income-tax Act, 1961 (hereinafter the Act ) and notice u/s 143 (2)/ 142(1) along with questionnaire was issued to the assessee. During the course of assessment proceedings, the AO took note of the fact that the assessee purchased property at front portion of Ground Floor Flat of left side Building E 23, Poorvi Marg, Vasant Vihar, New Dehli and his wife also purchased property at Rear portion of Ground Floor Flat of left side Building E 23, Poorvi Marg, Vasant Vihar, New Delhi from Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The AO asked the information from Punjab National Bank and found that the assessee was maintaining Home Loan account in his name and another account in his wife s name and one joint account also which were not declared by the assessee. The AO, after going through the details of the banks and other relevant material, made the following additions :- (i) The AO held that keeping in the view the deposit/withdrawal of cash in the Dena Bank A/c 1546, the peak credit of ₹ 12,42,000/- (as per cash flow statement given in AO s order) was found unexplained and added to the income of the assessee; (ii) Further, the AO added the unexplained credit entries with Dena Bank of ₹ 88,94,226/- and the details of the same were given vide a chart in his order; (iii) The AO also asked the assessee to submit source of cash deposit of ₹ 9,15,000/- on different intervals in HSBC account but the assessee had not filed any explanation in this regard and accordingly, made the addition to his income u/s 68 of the Act; (iv) Further, the AO observed that there were cash credit entries of ₹ 9 lakhs on 04.02.2005, ₹ 5 lakhs on 05.02.2005 and ₹ 1,20,000/- on 08.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO vs. Sahebjadi Devi 205 Taxation 184 (Cal ITAT) (2007), 4. Shahrukh Khan vs DCIT 2007 13 SOT 61 (Mumbai ITAT), 5. CIT vs Poddar Swadesh Udyog (P) Ltd 295 ITR 252, 6. Badri Krishnamurthy and ACIT 208 Taxation 64 (Delhi ITAT), 7. Smt. Prabhavati S. Shah v. CIT, [(1998) 231 ITR 1, 9 (BOM)]. 5.1 I have carefully considered the submissions made by the AR and the objections of the AO regarding admission of the additional evidence. I have gone through the above mentioned judgments. The AR has contended that the assessee was prevented by sufficient cause owing to illness of his relative. This fact was informed to the AO during the assessment proceedings. The appellant was representing his case before the AO as he has not engaged any tax expert/advisor/chartered accountant. Further, he has not done compliance in the December 2007 as he was required to go out of station due to illness of his close relative/brother as evident from the case records. For an appellate authority, it is implicit in coming to a proper conclusion. It is for this reason that though the rules require new evidence to be admitted only where there is reason for the assessee for not being able to present s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no comments. 4. SH. SHEEL MEHTA O.P. MEHTA In this regard notice u/s 133(6) issued to the property dealer namely M/s Perfect Properties, 47, Community Centre, Naraina Industrial Area, Phese-I, New Delhi who vide their reply dated 07.01.2010 (authorized signatory of M/s Perfect Properties) has stated that I had arranged to lease the property No. B- 2, LSC, DDA Market, 1st Floor, Ring Road, Naraina Vihar, New Delhi belonging to S. N. Premi. The tenant Sh. Sheel Mehta had given advance of ₹ 90 Lacs only to Sh. S.N. Pretni. However on enquiry Sh. S.N. Premi did not find the tenant suitable and therefore the amount of ₹ 5.50 Lacs was refunded to the tenant. I have charged ₹ 40,000/- by cash as my commission as per details given below:- 1. ₹ 15,000/- on 07.03.2005 2. ₹ 15,000/- on 10.03.2005 3. ₹ 10,000/- on 15.03.2005 TOTAL ₹ 40,000/- It is verified that the amount of ₹ 5.50 Lacs was returned to Sh. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amounts (Rs.) 25/08/2004 1546 TRF 400000 28/08/2004 1589 TRF 250000 13/11/2004 123248 cheque 900000 13/11/2004 537873 cheque 5000 17/11/2004 1589 TRF 50000 04/12/2004 28470 cheque 2550000 16/12/2004 371127 cheque 2550000 08/02/2005 12188 TRF 300000 08/02/2005 1589 TRF 600000 08/02/2005 9980 TRF 700000 05/03/2005 493120 cheque 590000 07/03/2005 127223 cheque 49226 88,94,226 5.5 Total deposits through cheques and bank transfer in Dena Bank, Hari Nagar, account treated as unexplain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details in this regard during the assessment proceedings, but failed to file the confirmation from the lender. The assessment of Late Smt. Padma Bhandari for AY 2005-06 was completed u/s 143(3) of the Act. Therefore, it can not be ruled out that the bank accounts have not been examined the loan has been squared up/repaid during the year. Considering all facts and circumstances and various judicial pronouncements, I am of the considered view that this credit treated unexplained by the AO is not justified as all conditions of the section 68 get fulfilled. The addition on this score is therefore, deleted. Accordingly, the appellant gets relief of ₹ 50,50,000/-. 5.7 The sum of ₹ 13.00 lakhs credited in Dena bank is nothing but bank transfers from the accounts of Smt. Manjusha, w/o Shri S. N. Premi, the appellant. The AO has verified it during the remand proceedings. The relevant portion of the report is extracted as under: It is submitted by the lady that Mr. S.N. Premi is my husband and having joint account in PNB and jointly held housing loan accounts. Repayment of housing loan is generally made by my husband and I only reimburse the amount to him. In general all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts. Thus the loans were not out of any earlier savings and or deposits. Hence, the credit worthiness to the extent of cash deposits is not out of salary savings, FDRs, etc. Basically, it is from the gifts of ₹ 7.00 lakhs received by Ms. Silky and Ms. Sweta from Shri Pawan Kumar Jain and Smt. Pushpa Devi Jain w/o Shri Pawan Kumar Jain r/o 76/577, Kuli Bazar, Kanpur, UP (the donors have given ₹ 3.50 lakhs to each donee). In support of this the AR filed gift deeds, which are placed on the record. These gift deeds were dated 21.01.2005. These are not notarized documents but attested by the notary. These are not on stamp papers. The gifts are in cash. It is surprising to note that why the appellant has not submitted the copy of gift deeds before the AO when the AO has specifically asked to explain these credits. This raises doubts. Theses gift deeds show no acceptance of gifts by donees. The credit worthiness of donees was not filed to substantiate the genuineness of transactions as these two donors are not assessed to income tax and wealth tax. In case they are rich and not having taxable income then the huge cash along with other assets, viz: jewellary, cars, etc. might ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditioners were purchased from M/s Sukhbir Properties Private Limited on 19.01.2005 as evident from Purchase receipts placed at page 56 of the Paper Book (PB). The payments were done vide Ch. No. 165994 dated 15.11.2004 for ₹ 10 lakhs and Ch.No.179655 dated 19- 1-2005 for ₹ 10 lakhs drawn on Dena Bank Hari Nagar (PB 11 12 - Dena Bank Statement). Out of this, 7 ACs were sold for ₹ 7.00 lakhs in cash to Satyam Furnishers on 01.02.2005. The cash receipt of the same duly confirmed by the buyer was filed at PB 57 with PAN of Sat yam Furnishers, proprietor: Shri Narander : ADRPN8017E. The DG set was sold for ₹ 13.00 lakhs in cash to Shivam Enterprises on 31st January 2005. The cash receipt of the same was filed at PB 58 duly confirmed by the Shivam Enterprises: proprietor: Shri Mahender Kumar with his PAN: ADZPK0960B. The purchase of generator set and air conditioners are through cheques where as sale are in cash. The acquisition of these assets by the assessee gets established by the sale bill of the seller, M/s Sukhbir Properties Private Limited on 19.01.2005. Since these assets are not reflected in the statement of affairs of the assessee as on 31.03.2005, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. Cash received from Smt. Manjusha w/o the appellant: Rs.4,87,500/- iii. Cash received from Shri S H H Naqvi: ₹ 50,000/- iv. Bank withdrawals from various bank accounts: Rs.38,43,500/- 6.6.1 The appropriation of these incoming cash as explained in the cash flow statement is purely mechanical when the house holds expenses and marriage expenses of the daughter of the appellant are considered during the relevant year. The total expenses/withdrawal for marriage i.e. ₹ 1,94,765/-. The house hold expenses have to be subdivided into following sub-heads for proper estimation per annum in the case of the appellant: house tax, water tax, electricity, telephone including mobiles, domestic help, food including milk, washing and washer man, common society security guard and sweeper, clothes, medical, charity, conveyance, entertainment including cable charges, news papers and magazines, miscellaneous not grouped above, etc, etc. After analyzing the house hold expenses in entirety and the cash savings/cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another property. The alleged sale of above property is treated as income from undisclosed sources. 7.1 The AR's submission in this regard is reproduced as under: The assessee duly filed the receipt during the course of assessment at PN 44 of the assessment record in respect of sale of property bearing No. CB-133, Ring Road, Naraina, New Delhi sold to Sh. Mangtu Ram Gujjar for a consideration of ₹ 8 lacs. The addition was made as the assessee failed to provide documentary evidence of his ownership prior to alleged sale ignoring the fact that the said property was duly been disclosed by the assessee in his statement of affairs of the last year i. e. A Y 2003-2004 AY 2004-2005, copies of the same are at PB 72 73 showing the cost of the Property at ₹ 7,86,600/-. The other documentary evidences could not be produced during the course of assessment as the assessee was not able to locate the same. These evidences of Purchase and Sale of this property are at PB 63-86 of the Paper Book. Property No. CB-133 Naraina was shown in the assessee's Income Tax return for last several years at ₹ 7,86,000/- (PB 70-75) and. The said property was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee and which was provided by the bank authorities. We find that the AO has added the unexplained credit entries with the Dena Bank to the tune of ₹ 88,94,266/- as addition to the total income of the assessee. The first appellate authority has observed that AO s inference regarding the assessee filing fabricated bank statement is correct. On merits, the AO took note that all the credits from 25.08.2004 to 07.03.2005 are through cheques/transfer entries. He also took note of the fact that an amount of ₹ 23 lakhs are transfer entries from the bank accounts of the family members of the assessee who were his wife and daughters who were having account in the same branch of the Dena Bank. The remaining credits were through cheques from Smt. Padma Bhandari of ₹ 50,50,000/- , Shri S.S.H. Naqwi of ₹ 9 lakhs, rent of the property ₹ 5,000/-, Shri Sheel Mehta of ₹ 5,90,000/- and income-tax refund of ₹ 49,226/-. 7.1 In respect to the credit of ₹ 50,50,000/-, we find that the CIT (A) has called for the remand report which has been reproduced (supra in para 5.6 of the CIT (A) s order) wherein, the AO had stated that the said Smt. Padm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein the AO has said in respect to Shri S.S.H. Naqwi that the said person had transacted an amount of ₹ 10,51,000/- to the assessee as interest free transaction and the assessee had returned the amount of ₹ 10,51,000/- during the relevant assessment year itself, so the AO had no other adverse comments about the said issue. In the light of the said remand report, the ld. CIT (A) has found that the said amount has been an interest free loan by Shri S.S.H. Naqwi to the assessee and the said amount borrowed has been repaid by the assessee also during the year under consideration, therefore, the transactions are genuine and so he directed to delete the same. Likewise, in the case of Shri Sheel Mehta too, an amount of ₹ 5,90,000/- was said to have been given as an advance and the said Shri Sheel Mehta was the tenant of the assessee and has given an advance for the said property. The AO took note of the fact that the said Shri Sheel Mehta later on changed his mind and did not want the property, so the amount of ₹ 40,000/- was taken as commission and the balance amount of ₹ 5,50,000/- was paid back to Shri Sheel Mehta during the same year. In the remand report, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ughters from grand-parents, who in turn has transferred the same to the father (assessee) needs to be de novo considered by the AO. Therefore, we set aside the order of the CIT (A) on this issue and remand the matter back to the file of the AO for de novo consideration of this issue. 8. Ground No.4 of the revenue s appeal is against the deletion of addition of ₹ 12,42,000/- on account of addition of unexplained cash peak credit in Saving Bank account from Dena Bank, ₹ 9,15,000/- in HSBC Bank account and ₹ 15,20,000/- as unexplained cash deposit in PNB Bank account (i.e. total ₹ 36,77,000/-) and ground no.5 is against deletion of ₹ 8 lakhs on account of sale of property and ground no.2 of assessee s appeal is against the sustenance of addition of ₹ 10 lacs. 9. The ld. CIT (A) has taken note that the AO has taken the peak of deposits in Dena Bank and cash deposits in PNB HSBC Bank as unexplained and added to the income of the assessee. Before the ld. CIT (A), in order to substantiate the source of the cash which was deposited in assessee s various accounts, the following was furnished before him :- i. Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners were through cheques whereas the sale of the said goods were by cash. The ld. CIT (A) took note of the fact that since the sales had taken place on 19.01.2005 and these goods/assets are not reflected in the statement of affairs of the assessee as on 31.03.2005, therefore, he does not doubt the sales and mode of receipt as claimed by the assessee and so he held that there was no justification to hold that the said entries in the account are unexplained and he believed that by the said transaction, an amount of ₹ 20 lakhs of cash was deposited in assessee s account. Ld. DR could not furnish any material before us to controvert the said finding of the ld. CIT (A). In the absence of any other material to contradict the said transactions made by the assessee, we are inclined to uphold the finding of the CIT (A) that ₹ 20 lakhs cash deposited in the assessee s account stands explained and cannot be termed as undisclosed income from unknown sources. 9.1 The AO has not accepted the source of ₹ 8 lakhs which the assessee claimed to have earned by sale of property which he had shown in his return of income. The AO has stated that the property bearing no.CB- 133, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have earned by sale of roof rights in respect of property at Jail Road, New Delhi. Though the copy of the agreement of sale was furnished along with the PAN of the vendee, Shri Ganpat Sharma and the cash receipt of ₹ 2,50,000/- which was made in advance for sale of the roof rights of G-176, Hari Nagar was not accepted by the AO. The assessee brought before the notice of the first appellate authority that the assessee had received ₹ 2,50,000/- in assessment year 2006-07 which has been accepted by the AO in the assessment order passed u/s 143 (3) of the Act. The ld. CIT (A) taking note of the fact that when the AO has accepted the source of ₹ 2,50,000/- in the subsequent year as advance for the roof rights of the property at Jail Road, New Delhi and there was no justification in not accepting the source of this ₹ 2,50,000/- from the sale of the roof rights of the aforesaid property which he had sold in the relevant A.Y. Taking this fact into consideration, the ld. CIT (A) had deleted the said addition. We find that the ld. DR could not controvert this factual aspect that has been brought out in the impugned order. In such a scenario, we have no other opti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gagement, ring ceremony, jewellery, cloth, fooding, reception, photography, videography, music, mehandi rasm, vehicle/conveyance, marriage venue place expenses, decoration and lights, barat accommodation, gifts, etc, etc, was of the view that the total expenditure on this account can not be less than ₹ 10 lakhs in addition to withdrawals for house hold and marriage expenses, which had been met out of the above incoming cash. Therefore, he held that the cash of ₹ 10 lakhs shown to have been deposited out of above incoming cash to be unexplained. Accordingly, the ld. CIT (A) made the bank deposit of ₹ 10 lakhs in aggregate out of the total addition under the head peak of deposits in Dena bank, cash deposits in PNB and HSBC bank accounts and the assessee got a relief of ₹ 26,77,000/- from the impugned order. 9.5 From the aforesaid order of the ld. CIT (A) of sustenance of ₹ 10 lacs, we find that he has given a relief of ₹ 26,77,000/- out of ₹ 36,77,000/- of peak credit added from bank accounts of Dena Bank, HSBC and PNB. However, we find that the ld. CIT (A) has accepted the claim of the assessee that he had received ₹ 20 lakhs from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee by deleting the addition to the tune of ₹ 72,50,000/-. Against the same, the revenue is in appeal before us. 14. The ld. CIT (A) has sustained the addition of ₹ 1 lakh as unexplained cash deposit and against the same, the assessee is in cross appeal before us. 15. The revenue is aggrieved by the order of the ld. CIT (A) because he has admitted certain documents for the first time before the appellate authority and the ld. CIT (A) has not followed the Rules prescribed under Rule 46A of the Act i.e. he did not give an opportunity to the AO to make his observations on the documents filed before the ld.CIT (A) which action according to revenue has vitiated the impugned order; and the ld. DR took our attention to page no.2 of the impugned order of the CIT (A) wherein the CIT (A) has taken note that the appellant/assessee has submitted copy of the following documents in support of his claim :- (i) Copy of balance sheet as on 31.03.2006. (ii) Copy of sale deed in respect of sale of above noted property. (iii) Copy of PAN of Mr. Vivek Titus (iv) Copy of cash flow HSBC Bank Account in assessee s books (v) Copy of the bank statement reflecting the amount d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 15.06.2005, cash in hand as per cash book was more than ₹ 1 lakh between 07.06.2005 and 18.06.2005. In that case, if the assessee has not made any entry in his cash book does not mean that the amount deposited in the bank account can be termed as unexplained income of the assessee. Since the matter is being set aside and sent back to the AO for fresh adjudication for the sole ground of the revenue, we are of the opinion that this matter also be remitted back to the file of the AO for fresh adjudication. Therefore, we set aside the order of the CIT (A) and remand the matter back to the AO for de novo assessment. Needless to say, an opportunity of being heard should be provided to the assessee. 17. In the result, the appeal of the revenue and the cross objection of the assessee for the assessment year 2006-07 are allowed for statistical purposes. 18. To sum up : the appeal of the revenue for the assessment year 2005- 06 is dismissed and the appeal of the assessee for the assessment year 2005-06 is partly allowed for statistical purposes; and the appeal of the revenue and the cross objection of the assessee for the assessment year 2006-07 are allowed for statistical pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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