9911796707
TMI Blog2020 (2) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... is return of income for the year under consideration on 25.08.2009 declaring therein an income of Rs. 1,98,390/-. During the course of assessment proceedings, the Assessing Officer has noticed that the assessee has made cash deposits of Rs. 18,16,500/- in his saving bank account bearing No. 3494001100000206 maintained by him with Punjab National Bank, Railway Road, Phagwara. The Assessing Officer made enquiries with regard to the source of cash deposits in the saving bank account. In response thereto, the assessee filed affidavits of Shri Baljit Singh S/o Shri Gurmail Singh, Shri Narinder Singh S/o Shri Tara Singh and Shri Mohinder Singh S/o Shri Chain Singh, all residents of village Hardaspur, wherein they have stated that they had advanced amounts of Rs. 5,64,000/-, Rs. 5,10,000/- and Rs. 7,05,000/- respectively on various dates to the assessee. However, the explanation furnished by the assessee has not been accepted by the Assessing Officer in view of the reasons mentioned in the assessment order. An addition of Rs. 18,16,500/- was, therefore, made to the returned income of the assessee. Apart from this, the Assessing Officer has also made the following additions on account of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer disbelieved the explanation of the assessee since the persons who had given affidavits were having regular business transactions with the assessee and the amount advanced by these persons was not reflected in their regular accounts. It was also stated that the balances stated by them as per the affidavits were different from those appearing in the books of accounts [3rd para at page no. 2 of the assessment order]. In this connection it was submitted before the CIT(A) that it was permissible for the assessee to keep the money received in personal capacity in his bank account which was not a part of the books of accounts of his proprietorship. Even if multiple bank accounts are maintained by an assessee who is a proprietor, some bank accounts may not be incorporated in the books of accounts and such a situation does not call for any adverse inference [5th to 10th line of 2nd para at page no. 2 of the paper book]. Regarding the difference in the balances as reflected in affidavits, the assessing officer did not make any query on this issue before completing assessment and thus came to a wrong conclusion. The balance as indicated in the affidavits given by the three persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of natural justice, the addition was deleted. Copy of the decision is enclosed at page no. 86 to 89. The action of the assessing officer in rejecting the contents of the affidavit was not justified and the addition made should have been deleted by the CIT(A). The CIT(A) to make good the fatal defect in the order, directed the assessing officer to record the statement of the persons who gave the affidavits. This action on the part of the ld. CIT(A) was not justified. The addition as sustained by the ld. CIT(A) deserves to be deleted on this score itself. Also, the initial onus of explaining the credits in the bank account had been discharged by the assessee and if no further inquiry was made by the assessing officer, the addition made was not justified [last two lines at page no. 3 and first para at page no. 4]. Reliance was placed on the decision of the Delhi High Court in the case of CIT vs. Kinetic Capital Finance Ltd reported at 202 Taxman 548. Copy of the decision is enclosed at page no. 17 to 21 of the paper book. This contention has also not been appreciated, by the ld. CIT(A). It may be submitted that addition was made after referring to various case laws [page no. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove explanation, the various case laws cited by the assessing officer also stand distinguished. It may also be submitted that the words used in section 68 are "may be charged to tax" which clearly indicates that it is not necessary to make an addition in every case and situation. We draw your attention to the decision of the Supreme Court in the case of CIT vs. Smt. P.K Noorjehan reported at 237 ITR 570 wherein it was held while dealing with section 69 that the ITO is not obliged to treat the unexplained investment as income in each and every case. Where the assessee was a young land and could not have earned the income in question, the deletion of addition by the IT A T was justified. In this case, the funds were deposited in the bank account during the year under consideration and the assessee's books which are the source of income have been accepted. This shows that the assessee has not earned income outside the books of accounts. The assessee was aged about 71 years could not have generated such huge amount as stands deposited in the bank account. The regular business income of the assessee [as per the last page of the assessment order] is itself an indicator of his fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 of the paper book]. With this evidence, it could not be held that the amounts received represented undisclosed income of the assessee. The ld. CIT(A) has discussed the issue at para no. 5.8 of his order. He was of the view that the assessee has failed to provide documentary evidence of the with regard to the land holding of the lender of money except for affidavits of Sh. Paramjit Singh who had given his land on lease to Sh. Narinder Singh [16 acre and 5 kanals] and Sh. Mohinder Singh [11 acre 6 kanals]. He has also observed that evidence of land holding of Sh. Paramjit Singh has not been provided and similarly evidence of land holding of the persons who gave money to the assessee has also not been provided. The affidavits of Sh. Paramjit Singh [page no. 75 & 76] have been held to be a self serving documents. On the basis of the above, the CIT(A) concluded that the assessee had failed to explain the source of cash deposits of Rs. 18,16,500 and the assessing officer had rightly treated these cash deposits from unexplained sources. He however allowed the benefit of peak which is being discussed below separately. It is worthwhile to mention that besides the documents referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court has in the case of CIT vs. Amar Chand & Sons held that the assessee cannot be asked to prove the credit worthiness of his creditor. Copy of the decision is at page no. 92 & 93 [please see page no. 93]. The above submissions and decisions adequately take care of the objection of the CIT(A) and show that he was not justified in sustaining the disallowance even to the extent of the peak balance. The ld. CIT(A) should have deleted the disallowance as the persons who had given the affidavits had not been cross-examined before rejecting the affidavits. Also the fact that the credits were in the bank account which was not a part of the books of accounts and thus no addition ii] s 68 was called for was also not appreciated. The credits stood confirmed by the persons concerned and supporting documents to show the creditworthiness were also filed even though not required by law. Necessary relief may please be allowed. Without prejudice to the above submissions, regarding the working of peak balance it is submitted that the working of peak balance was provided to the CIT(A) [please see page no. 26 of the paper book] and as per this working the peak works out to Rs. 712,500 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and similar is the position with regard to the consolidated entry. We would also like to draw your attention to the decision of the Delhi High Court in the case of CIT vs. Surinder Kumar reported at 221 ITR 713 wherein it was held that for the lady married in the year 1952, a sum of Rs. 15,OOO could have been saved by the assessment year 1962-63. Copy of the decision is enclosed at page no. 103 & 104. In view of the decision of the Delhi High Court if the lady married for about 10 years could have saved 15,000 by the assessment year 1962-63, the savings of the assessee, on conservative basis would be much more than Rs. 100,000 if the value of money in 2009-10 viz-z-viz 1962 is adjusted. This adjustment by itself for a period of about 47 years (between 1962 & 2009-10) should very well cover the sum of Rs. 200,000. In fact after demonetization, the prime minister had himself announced in November 2017 that a deposit of up to Rs. 250,000 in old currency would not be doubted as it would be accepted as past savings. Even if a backward adjustment from 2017 is made, benefit of opening cash of Rs. 200,000 should be allowed. Similarly benefit of the cash available in the books may be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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