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TMI Blog2010 (12) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act without verifying factual position of the case. 3. Lower authorities have grossly erred in/confirming addition of ₹ 439800 in returned income of the appellant on the basis of deposits made by appellant in the bank from confirmed/known/own sources." 2. The facts of the case are that the assessee had not filed the return of income u/s 139(1) of the Income-tax Act, 1961 ("the Act" for short). It came to the notice of the AO that the assessee contributed capital of ₹ 13.00 lakhs in the firm of M/s Dhankot Filling Station. In view thereof, reasons were recorded and notice was issued u/s 148 to assess the income of this year. In response to the notice, return of income was filed declaring total income of ₹ 9,630/-. 2.1 In the course of assessment proceedings, the assessee was required to explain the source of the capital introduced, as mentioned above. The assessee was also requested to produce the books of account. It was submitted that the assessee has not maintained any book of accounts. The transactions are reflected in the bank account, a copy of which was produced. Statements of S/Shri Suresh Kumar Chaudhary and Krishan Kumar were also recorded on oa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was argued that the money deposited in the bank account on various dates stands explained. 3.2 The ld. CIT(A) forwarded the additional evidence to the AO and obtained the remand report. It may be mentioned here that the assessee also challenged the validity of proceedings u/s 147. The AO, in his report, mentioned that the admitted position is that the assessee had not been filing the return of income. It is for this reason that notice u/s 148 was issued. Coming to the addition, it was mentioned that a large number of opportunities were given to the assessee to explain the source of ₹ 13.00 lakhs contributed as capital. The assessee did not furnish any explanation in regard thereto, but only submitted that she had no source of income and whatever money was received by way of cheques, the same was contributed as capital in the firm. Even now confirmation has been submitted only in respect of ₹ 1.00 lakh. This is an additional evidence which should not be taken into account. The assessee was required to submit its explanation in regard to the remand report. It was submitted that in case the AO was not satisfied with the source of contribution made by the assessee, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew our attention towards the reasons recorded on 27.4.2007 u/s 147, which read as under:- "During the course of assessment proceedings of M/s Dhankot Filling Station, village Dhankot for the assessment year 2005-06, it has been observed that assessee has introduced ₹ 13,00,000/- towards capital as partner in the firm M/s Dhankot Filling Station, Vill. Dhankot. Further, the saving bank account of the assessee with State Bank of India, New Colony, Gurgaon have a number of high value transactions. Assessee has not submitted any evidence in the course of assessment proceedings of firm in respect of source of funds invested in firm. In light of above, I have reasons to believe that an income amounting to ₹ 13,00,000/- has escaped assessment within the meaning of section 147 of the Incometax Act, 1961." 4.1 It is his case that these reasons are not in conformity with the statutory provision contained in section 147 to the effect that if the AO has reason to believe that any income chargeable to tax has escaped assessment, he may assess or re-assess such income. Our attention was drawn towards the decision of Hon'ble Delhi High Court in the case of CIT Vs. Kelvinator of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed in the hands of the firm. The reason is that the assessee is a partner, an identifiable person. It has been clearly held out that she contributed the capital and, therefore, the AO rightly proceeded to take action u/s 147 in the case of the assessee. Accordingly, ground nos. 1 and 2 are dismissed. 5. Coming to the merits, an addition of ₹ 1.00 lakh was made in respect of deposit in the bank account on 1.7.2005. This is explained to be the loan from Shri Satish Kumar. The case of the ld. counsel is that confirmation of the loan was filed before the ld. CIT(Appeals), who had obtained remand report of the AO in respect of this loan. However, the evidence was not admitted by the ld. CIT(A) as none of the conditions mentioned in rule 46A was said to have been satisfied. As the loan stands proved by way of confirmation by the person, who is assessed to tax, the addition made in this behalf is required to be deleted from the assessment. 5.1 In reply, the ld. DR submitted that no evidence was filed in respect of this loan before the AO. The ld. CIT(Appeals) did not admit this evidence as none of the conditions mentioned in rule 46A is satisfied. Therefore, the addition is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have assessable income and capital contribution of ` 13.00 lakhs has been made in this year. Other deposits stand explained by earlier withdrawals. Therefore, nothing further can be added to the total income in respect of such deposits. In this connection, we may refer to the decision of "C" Bench of Delhi Tribunal in the case of ACIT Vs. Baldev Raj Charla & others (2009) 121 TTJ 366. In paragraph no. 27, it is mentioned that there was no finding that the money withdrawn was used for any other purpose than re-deposit in the bank account. The existence of time gap cannot be a ground to reject the explanation of the assessee. Relying on this part of the decision, it is held that the addition of ₹ 70,000/- only could have been made on the facts and in the circumstances of the case. For the sake of ready reference, paragraph no. 27 of that order is reproduced below:- "27. We have heard the rival submissions and perused the material available on record and have gone through the orders of the authorities below. We find that this explanation of the assessee was found correct that against these five deposits on dt. 14th June, 1996, ₹ 31,000; 21st July, 1997, ₹ 1,27,000; ..... X X X X Extracts X X X X X X X X Extracts X X X X
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