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Pankaj Mahajan Versus Commissioner of Income Tax - XIII

2016 (5) TMI 270 - DELHI HIGH COURT

Additions u/s 68 - Cash available as Stridhan with Late Smt. Saroj Gupta on her demise - Held that:- It is not disputed that Late Smt. Saroj Gupta had not filed a wealth tax return in respect of her net wealth as on 31st March, 2006 which would be mandatory if she possessed cash to the extent as claimed by the AO. The Assessee had sought to explain non-filing of the wealth tax return by asserting that the cash available with Late Smt. Saroj Gupta on 31st March, 2006 was only ₹ 13,31,800/- .....

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We concur with the view that the aforesaid explanation is wholly unsustainable and was rightly rejected by the ITAT.

Admittedly, Late Smt. Saroj Gupta had also not disclosed any cash-in-hand other than under her proprietorship concerns. The Assessee's contention that Late Smt Saroj Gupta was not required to disclose her cashin- hand is difficult to accept. It is relevant to note that a proprietorship concern does not have a separate legal identity other than its sole proprietor and a .....

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,000/- and ₹ 8,51,500/- was in the denomination of ₹ 500/-. Clearly, such currency could not have been acquired by Late Smt. Saroj Gupta as her Stridhan during the time of her marriage as currency in such denomination was not available at that time.

We concur with the view of the ITAT that the entire explanation of bequest of Stridhan and discovery of currency is an elaborate subterfuge to attempt to explain the aggregate cash deposited by the Assessee in the subsequent fi .....

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e Income Tax Appellate Tribunal (hereafter ITAT ) in ITA No.4085/Del/2012 pertaining to the Assessment Year (AY) 2008-09. The said appeal, ITA No. 4085/Del/2012, was filed by the Revenue assailing an order dated 31st May, 2012 passed by the Commissioner of Income Tax (Appeals) [hereafter CIT(A) ] allowing the appeal of the Assessee and deleting an addition of ₹ 13,01,000/- made by the Assessing Officer (AO) as unexplained cash credit. 2. The controversy involved in the present appeal relat .....

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ed its return of income for the AY 2008-09 on 26th September, 2008 declaring an income of ₹ 1,33,240/-. The said return was picked up for scrutiny. On the basis of the information, the Assessee had made cash deposits in excess of ₹ 13,00,000/- in his bank account. During the course of the assessment proceedings, the Assessee was required to explain the source of the cash deposited in his bank account. The Assessee explained that source to be his inheritance of ₹ 15,06,800/- fro .....

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ys to a locker in the almirah and a small locker inside the main locker was found. On opening the lockers, the Will of Late Smt. Saroj Gupta was found and an inventory of the assets was made. The assets in the locker included cash amounting to ₹ 15,06,800 and jewellery. In terms of the Will, the jewellery was handed over to the Assessee s wife and the cash of ₹ 15,06,800/- was handed over to the Assessee. 5. The AO called upon the Assessee to file evidence of Income tax Returns, Bala .....

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respectively. The AO further noted that Late Smt. Saroj Gupta had not filed her wealth tax return which would be mandatory if her assets included specified assets and cash in excess of ₹ 15,00,000 as at the end of the relevant year. On the aforesaid facts, the AO did not find the Assessee s explanation to be satisfactory. 6. Aggrieved by the assessment order dated 2nd November, 2010, the Assessee preferred an appeal before the CIT(A) which was allowed. The CIT(A) held that the AO had not .....

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his bank account. 7. The Revenue successfully appealed against the aforesaid order of the CIT(A). While reversing the decision, the ITAT took note of several facts including the income tax returns filed by Late Smt. Saroj Gupta; the capital of the deceased in the proprietorship concerns; the fact that Late Smt. Saroj Gupta had been earning interest on saving bank account, bonds and other interest bearing instruments; the fact that the almirah where the cash was stated to have been found, was cl .....

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as no occasion for the executor to take six months to open the almirah located at his residence. Taking all the facts into consideration, the ITAT was of the view that the entire exercise was a subterfuge, only to show that cash was genuinely found in the almirah of the deceased. The ITAT also found the Assessee s explanation as to why Late Smt. Saroj Gupta had not filed her wealth tax return to be not acceptable. In the circumstances, the ITAT concluded that there was no cash available as Strid .....

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as the income of the assessee of that previous year." 9. A plain reading of the aforesaid Section indicates that where the Assessee offers no explanation as to the nature and the source of any sum found credited in its books or the explanation offered by him is not satisfactory in the opinion of the AO, the sum so credited may be charged to tax as an income of the Assessee. In the present case, the ITAT has not found the Assessee s explanation as to the source of the cash deposited in his b .....

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tent as claimed by the AO. The Assessee had sought to explain non-filing of the wealth tax return by asserting that the cash available with Late Smt. Saroj Gupta on 31st March, 2006 was only ₹ 13,31,800/- and the remaining amount of ₹ 1.75 lacs was received by her after 1st April, 2006 and before the date of her demise (that is, 14th August, 2006). Apart from the fact that the Assessee provided no material to substantiate the aforesaid contention, it is also relevant to note that the .....

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sits were made in tranches and that too much after the Assessee is stated to have come into possession of such cash. 12. Thirdly, Late Smt. Saroj Gupta had filed her return of income for AY 2005-06 declaring a total income of ₹ 1,42,710/- which included income from her two proprietorship concerns, namely, M/s Satyam Investments and M/s Mahajan Investments and Financial Services. The final accounts of M/s Mahajan Investments and Financial Services indicated gross revenue from operations at .....

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ncerns. The Assessee's contention that Late Smt Saroj Gupta was not required to disclose her cashin- hand is difficult to accept. It is relevant to note that a proprietorship concern does not have a separate legal identity other than its sole proprietor and an assessee carrying on business is required to maintain books of accounts necessary for his/her assessment. Be that as it may, the ITAT noted that there was no evidence of Late Smt. Saroj Gupta owning and possessing any cash-in-hand and .....

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