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TMI Blog2020 (12) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... se inference is merely on the basis of presumption and surmises particularly when part of sale proceedings was duly accepted. 2. That the CIT(A) was also not justified in not accepting the claim of exemption u/s 54F even though the claim was in conformity with provisions of sec. 54F." 2. We have heard Ld. Representatives of both the parties through Video Conferencing and perused the material on record. 3. The facts of the case are that assessee filed return of income declaring income of Rs. 12,20,170/-. AO issued statutory notices for completion of the assessment. The assessee had shown income from consultancy of old cars and income from other sources. The AO was in possession of AIR information with regard to deposit of cash in various bank accounts. The AO called for bank statements from various banks, wherein assessee was maintaining bank accounts. During the course of assessment proceedings, the AO after affording the opportunity to the assessee, asked to explain the source of deposits made in the various bank accounts. 3.1 In respect of bank account no. xxxxxx480 maintained with Union Bank of India, Sundar Nagar Branch, there were total deposits of Rs. 32,10,000/-. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentary evidence the source of other deposits of Rs. 1,63,87,867/- and was also required to furnish the details of sale/purchase of investments. The AO asked the assessee to furnish copy of ledger account as appearing in the books of account of the entity in respect of which trading account was drawn and was further asked to produce any other evidence/confirmation from the respective entity to substantiate the other transactions. The AO noted that assessee has not filed the complete details, therefore, considering the submission of the assessee and details filed, AO held that out of the total deposits of Rs. 1,63,87,867/-, assessee failed to explain the source of the deposits of Rs. 98,01,587/- which was added to the income of the assessee as income from undisclosed sources. 3.5 In respect of bank account no. xxxxx6289 in the name of assessee maintained with Standard Chartered Bank, New Friends Colony, there was cash deposit of Rs. 95,76,576/-. The assessee was asked to explain the source of the above deposits with documentary evidences. The AO considering the explanation of the assessee and evidences on record considered deposit to tune of Rs. 6,61,576/- out of the above deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnish such information. The AO also submitted para-wise comments on merits and noted that assessee has not submitted any extra proof and also stated in the remand report the only proof submitted by assessee is regarding addition made of Rs. 98,01,587/-. Out of this also Rs. 8 lakhs for which assessee has filed confirmation of Shri Sarbeshwar Khal is not accepted as the assessee has failed to submit copy of the account of this party. 6. The Ld. CIT(A) provided the copy of the remand report to the Counsel for assessee. The Counsel for assessee filed the comments to the remand report which is reproduced in the appellate order. The assessee in the comments against remand report submitted that as regards addition of Rs. 98,01,587/- AO has accepted correctness of his claim and there is also no basis to make any addition of Rs. 8 lakhs. In respect of addition of Rs. 65,000/-, it was submitted that these are two credits of Rs. 25,000/- and Rs. 40,000/- which were received through account payee cheques which were recovery of the old outstanding dues. Other submissions were also filed to explain that there was no basis to make any addition on merits. In respect of addition of Rs. 2,82,87, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of the assessee. The AO has not rebutted the explanation of the assessee. 8. It may be noted here that Ld. CIT(A) considering the detailed explanation of the assessee and material on record, remand report of the AO and rejoinder of the assessee found that nothing adverse has been brought on record by the AO at the appellate stage. The AO has drawn adverse inference merely on the basis of cash deposits. The Ld. CIT(A) admitted the additional evidences filed by assessee and deleted the substantial addition on merits. The Ld. CIT(A) while deleting the substantial addition held that the AO failed to controvert with evidence that the amount deposited in cash in the bank accounts of the assessee was not received from sale of paintings. Unless AO controvert the contents of affidavits filed by assessee before him in the remand proceedings, same cannot be ignored. The Ld. CIT(A), however, confirmed the addition of Rs. 1,73,27,000/- in respect of the sale of paintings to Shri Parveen Goyal and Shri Rakesh. The relevant findings of the Ld. CIT(A) in this regard in paras 4.5.13 to 4.6.13 are reproduced as under: "4.5.13 The moot question involved with regard to addition of Rs. 2,82,87,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any reply on the above issue controverting the availability of paintings with the assessee which have been claimed to have sold by the assessee during the period relevant to assessment under consideration. It is also a fact that assessee has filed an affidavit dt. 11.05.2015 wherein he confirmed that amount deposited in cash in the bank account in question relates to sale of paintings owned by him in earlier years and he has not sold any property during the year under consideration. However, AO failed to controvert the affidavit filed by the assessee before him in the remand proceedings. In the above backdrop, I am of the considered view that AO failed to bring on record any adverse finding with regard to the claim of the assessee made before him subsequent to the completion of the assessment proceedings and during the appellate proceedings before my Ld. Predecessor and me that assessee has not owned/sold the paintings. Hence, considering the documentary evidences filed by the Ld. AR during the appellate proceedings with regard to the possession of the paintings, confirmations filed by the parties who have purchased the paintings from the assessee, the claim of the assessee canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the assessee. 9. It may also be noted here that as against deletion of the substantial addition by the Ld. CIT(A), Revenue preferred appeal before ITAT 'C' Bench in ITA No. 3390/Del/2016 which have been dismissed vide order dated 14.10.2019 on account of low tax effect. The assessee is in appeal on the aforesaid grounds for maintaining the addition of Rs. 1,73,27,000/- in respect of sale of paintings to Shri Parveen Goyal & Shri Rakesh. 10. Ld. Counsel for assessee reiterated the submissions made before authorities below. He has submitted that on the identical reasons and identical evidences on record Ld. CIT(A) deleted the similar addition to the extent of Rs. 1,09,60,000/- in respect of sale of paintings to Mohd. Laiq Ahmed and Shri Ishrafil and Departmental appeal has been dismissed in their cases vide order dated 14.10.2019. Copy of the order of the Tribunal is placed on record. He has, therefore, submitted that there was no justification for Ld. CIT(A) to maintain the addition of similar nature in respect of the other two purchasers Shri Parveen Goyal (Rs. 1,52,80,000/-) and Shri Rakesh (Rs. 36,95,000/-) totaling to Rs. 1,89,75,000/-. He has submitted that though the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. It is not in dispute that assessee filed additional evidences at the appellate stage on which remand report from the AO was called for. The Ld. CIT(A) also considered rejoinder of the assessee and ultimately admitted the additional evidences filed by assessee at appellate stage. The Ld. CIT(A) deleted the substantial addition against which Revenue preferred an appeal before the Tribunal but it was dismissed on account of low tax effect vide order dated 14.10.2019. Thus, there are following undisputed facts available on record: - 1) The deposits related to sale proceeds of paintings; 2) The fact of ownership of paintings with assessee which were sold to four persons is not in dispute, which fact is also verifiable from copy of the order u/s 132(5) of the IT Act which were found during the course of search operation at the residence of the assessee; 3) The assessee proved the fact of sale of these paintings to the four persons which is supported by the confirmations of the parties, their affidavits and bank statements and copy of the PAN number of the purchasers and in two cases copy of the ITR is filed; 4) It is not in dispute that all the four parties who have p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entary evidences when Ld. CIT(A) deleted the substantial addition in respect of two parties for sale of paintings to them, there were no justifiable reason for Ld. CIT(A) to sustain part addition against the assessee. The documentary evidences brought on record and examined by the AO at appellate stage and not controverted by the AO would lead to the conclusion that assessee received the impugned amount on account of sale of paintings from the above two purchasers and the evidences brought on record have not been controverted by the AO through any evidence or material on record. Therefore, for sale of paintings by assessee, strictly the provisions of section 68 may not apply in the case of the assessee. The onus upon assessee to explain the source of the cash deposit in the bank account is duly discharged and, as such, there was no justification to make or sustain even part addition against the assessee. In view of the above discussion, we set aside the orders of the authorities below and delete the entire addition. AO is also directed to grant benefit of section 54F to the assessee on account of deletion of this addition as per law. 13. In the result, the appeal of assessee is al ..... 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