Income Tax Appellate Tribunal - Delhi
Late Sh. Dinesh Kumar Jain, Delhi vs Ito, New Delhi on 16 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "B": DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA.No.3612/Del./2016
Assessment Year 2011-2012
Late Shri Dinesh Kumar Jain,
Through Legal Heir Ankit The Income Tax Officer,
Jain, 497/498 Katra Asharfi, vs., Ward-29(4), Delhi.
Ch. Chowk, Delhi-110 006.
PAN AAAPJ2826K
(Appellant) (Respondent)
For Assessee : Shri C.S. Anand, Advocate
For Revenue : Shri Subhash Verma, Sr. D.R.
Date of Hearing : 09.10.2017
Date of Pronouncement : 16.10.2017
ORDER
PER BHAVNESH SAINI, J.M.
This appeal by assessee has been directed against the order of the Ld. CIT(A)-16, New Delhi, dated 1st April, 2016, for the A.Y. 2011-2012.
2. We have heard Learned Representatives of both the parties and perused the material available on record.
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3. In all the revised grounds of appeal, assessee raised two issues i.e., addition of Rs.82 lakhs under section 68/69A of the I.T. Act and addition of Rs.60,000.
3.1. As regards addition of Rs.82 lakhs, the A.O. noted that assessee is a partner of M/s. Srimander Dass & Sons. During the year, the assessee has income from house property, remuneration, share of profit and interest from the firm and income from other sources. The assessee has not carried any business activity during the year in his individual capacity. During the year, assessee has made cash deposits of Rs.82,14,000 in the savings account maintained with Jammu & Kashmir Bank. During the assessment proceedings, the assessee was given an opportunity to explain source of the cash deposits in the bank account. The assessee submitted that he along with Shri Naresh Kumar Jain and Shri Samit Jain have applied for housing loan from Jammu & Kashmir Bank Ltd., The Bank has allowed housing loan. The amount of the loan was disbursed through transfer in the joint savings account No.xxxxx12709 standing in the joint name of assessee along with Shri Naresh Kumar Jain and Shri Samit Jain. The assessee and 3 ITA.No.3612/Del./2016 late Shri Dinesh Kumar Jain Through Legal Heir Ankit Jain, Delhi.
others constructed house under their personal supervision by engaging petty contractors for various jobs for construction and purchase of building material themselves. No single contractor of any standing was given the contract. The maximum payment for material and labour was made in cash as no petty contractor and material supplier would accept cheques for payment. The Bank disbursed the loan amount in phased manner and according to the progress of the construction work. The assessee and others on receiving instalment of loan withdrew the entire amount from the joint S.B. account and after payment to contractor/supplier whatever amount was left was re-deposited in the same joint bank account. It may be mentioned that amount re-deposited was always part of the amount withdrawn earlier. At no time, the re-deposited amount exceeded the amount withdrawn earlier. Further, no cash other than withdrawn from the joint bank S.B. account were deposited in the said bank account. The other deposits were by cheque by joint co-owners were from their personal and saving bank accounts. The A.O. however, did not found the explanation of assessee to be satisfactory and issued note to the assessee to show cause as to why the entire cash deposits of 4 ITA.No.3612/Del./2016 late Shri Dinesh Kumar Jain Through Legal Heir Ankit Jain, Delhi.
Rs.82,41,000 should not be treated as his income from undisclosed sources. The assessee again reiterated the same submissions before A.O. It was similarly explained that amounts were withdrawn from the same bank account which were re-deposited.
3.2. The A.O. after considering the explanation of assessee noted that no single instance was occurred where the assessee could establish the genuineness of the cash deposits in the S.B. account. Further, the submissions of the assessee that cash deposits were out of cash withdrawn made earlier through the same account after meeting the expenditure of construction is also not sustainable. In spite of giving sufficient opportunity during the entire assessment period, the assessee was not able to submit any documentary evidence to prove that out of cash withdrawn, some payment has been made to the contractors/suppliers and balance cash in hand has been deposited subsequently. The assessee admitted that cash was used for construction of house and valuation of construction was submitted for Rs.1.84 crores. The A.O. noted that it is not possible that entire expenditure in respect of construction of property was incurred in cash and no bills in respect of purchase of materials or 5 ITA.No.3612/Del./2016 late Shri Dinesh Kumar Jain Through Legal Heir Ankit Jain, Delhi.
services were available with the assessee and even no single payment having been made in cheque. The assessee was asked to file copy of the project report submitted to the Jammu & Kashmir Bank for availing housing loan, details of expenditure incurred on construction and payment and progress report of construction on the basis of which bank disbursed subsequent instalments of loan. However, no details have been furnished. The assessee did not file details of progress report of construction phase-wise as submitted by assessee. The A.O. therefore, noted that it is proved beyond doubt that assessee has routed his undisclosed cash which he has received from some other source and not accounted for in the books of account for construction of property/investment in property. The A.O. noted that assessee has not filed any documentary evidence to support the source of the cash deposited, which proves that cash withdrawn from the bank was utilized for expenditure of construction of property at Noida or subsequent deposit in the bank account. The A.O. therefore, treated the cash deposited of Rs.82 lakhs in S.B. account as unexplained and made the addition.
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3.3. The assessee reiterated the same submissions before the Ld. CIT(A). The Ld. CIT(A), in principle, confirmed the finding of fact recorded by the A.O. that cash deposited in the bank account has not been explained by the assessee. The Ld. CIT(A) however, found that the bank account in which cash have been deposited is owned by three persons including the assessee. Therefore, the whole amount of Rs.82 lakhs should not be taxed in the hands of the assessee. The assessee is liable to be taxed for 1/3rd of the amount deposited therein. The Ld. CIT(A) accordingly, directed the A.O. to make addition of 1/3rd of the amount in the hands of the assessee under section 69A of the I.T. Act.
4. The Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that cash flow statement was filed before Ld. CIT(A) (PB10) along with bank statements, copies of which are filed in the paper book to show that amount withdrawn from the bank were re-deposited in the same bank account of the assessee and others. The bank loan was taken for construction and in assessment year under appeal Rs.1 crore was used for investment in the property. He has submitted that since 7 ITA.No.3612/Del./2016 late Shri Dinesh Kumar Jain Through Legal Heir Ankit Jain, Delhi.
assessee did not maintain books of account, therefore, addition under section 68 cannot be made and relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs. Bhai Chand Gandhi 141 ITR 67 and Order of ITAT, Lucknow Bench in the case of ITO vs. Kamal Kumar Mishra (ITA.No.398/Lkw/2012 dated 25th April, 2013. Learned Counsel for the Assessee also submitted that since amounts have been withdrawn from the bank account and re-deposited, therefore, even 1/3rd addition should not be made in the hands of the assessee and relied upon the unreported decisions of ITAT, Delhi, Hyderabad and Ahmedabad Benches, copies of which are filed in the paper book.
5. The Ld. D.R. on the other hand relied upon the orders of the authorities below and submitted that Ld. CIT(A) has rightly applied Section 69A of the I.T. Act. Since no bills of construction have been produced, no payment is made by cheque, no details of construction expenses have been prepared or filed, no details of the expenses shown in the cash have been filed, therefore, cash flow statement is doubtful. The assessee did not prove the nexus of the amount withdrawn from the bank account with the re-deposited 8 ITA.No.3612/Del./2016 late Shri Dinesh Kumar Jain Through Legal Heir Ankit Jain, Delhi.
amount in the S.B. account. The cash flow statement is not reliable and supported by any evidence.
6. We have considered the rival contentions and do not find any merit in this ground of appeal of assessee. It is well settled law that Ld. CIT(A) being the First Appellate Authority has co-terminus powers to that of A.O. Merely because wrong section is mentioned in the assessment order, is no ground to delete the addition. There is a cash deposit in the joint bank account maintained by assessee and others, the source of which is not explained. Therefore, provisions of Section 69/69A are clearly attracted in this case. The Ld. CIT(A) has already taken care of this issue and applied Section 69A of the I.T. Act while confirming the addition on merit. The Hon'ble Allahabad High Court in the case of Jauhari Mal Goel 201 CTR 54 (All.) held that deposit in the bank account would amount to investment under section 69 of the I.T. Act. Therefore, there is no merit in the contention of the Learned Counsel for the Assessee that no addition could be made on account of cash deposited in the bank account of assessee and others. The contention of the Learned Counsel for the Assessee is, therefore, rejected.
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7. As regards addition on merit, the A.O. has specifically noted that assessee could not proved at the assessment stage that out of cash withdrawn, some payments have been made to the contractors/suppliers and balance cash in hand has been deposited subsequently. The assessee did not make any cheque payment for construction. The A.O. asked for the details of project report and details furnished to the bank for utilizing the bank loan. However, no details have been filed before A.O. as to how the cash amount have been used in phased manner for construction in the property. The assessee also failed to provide any details of cost of construction incurred by the assessee and others in the property. Even no bills of purchase of material or any payment to contractor have been produced before A.O. It, therefore, clearly proved that assessee has no evidence at all to explain as to how much amount has been incurred in construction of the property. These facts prove that assessee has no evidence of any amount invested in construction of property in assessment year under appeal because no bills of material purchased have been filed before the authorities below. The assessee did not incur any construction expenditure through 10 ITA.No.3612/Del./2016 late Shri Dinesh Kumar Jain Through Legal Heir Ankit Jain, Delhi.
banking channel. No details of construction expenses were prepared or filed before A.O. No details of expenses shown in cash supported by any evidence were filed before the authorities below. Assessee later on prepared a cash flow statement and filed (copy of which is filed at page-10 of the paper book) before the Ld. CIT(A) to show the amount of withdrawal, re-deposited and amount used for construction. It would show that from 5th May, 2010 to 20th May, 2010 assessee has withdrawn Rs.46 lakhs in cash and on 24th May, 2010 assessee made re-deposited to Rs. 1 lakh only and used Rs.5 lakhs for construction only. Similarly, on 11th June, 2010 assessee has withdrawn Rs.10 lakhs from the bank but it was not used either for redeposit or for construction purpose up to 30th June, 2010 because on 30th June, 2010 assessee claimed deposit of Rs.1 lakh only. Similarly, on 29th July, 2010 and 30th July, 2010, no amount have been withdrawn from the bank but assessee claimed redeposit of Rs.5 lakhs and Rs.2,50,000 on both the days as well as claimed Rs.5 lakhs spent for construction. Similarly, from 2nd August, 2010 to 5th August, 2010 assessee has withdrawn Rs.30 lakhs from the bank but claimed construction expenses of Rs.5 lakhs only on 5th August, 2010. 11
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Thereafter, from 7th August, 2010 to 18th August, 2010 there is no withdrawal from the bank but assessee made deposits of Rs.34,50,000 in cash in the bank account. This position is going on for the entire year. The assessee has not filed any explanation about the discrepancy in the cash flow statement. It is not explained when huge cash amount have been withdrawn, why only part amount have been used for construction and if sufficient cash was available to assessee on prior dates, why there is again huge cash withdrawal on subsequent dates without incurring any expenditure on construction. Ld. D.R. therefore, rightly contended that cash flow statement is wholly unreliable and full of doubts. The cash flow statement would not prove any nexus between the withdrawals of the cash account from the bank and redeposit as claimed by the assessee. The totality of the facts and circumstances clearly prove that assessee failed to explain deposit of huge cash in the joint bank account to the satisfaction of the authorities below. The authorities below therefore, rightly rejected the contention of the assessee that amount is redeposited after making withdrawal from the same bank account. The Ld. CIT(A) on proper appreciation of the facts and 12 ITA.No.3612/Del./2016 late Shri Dinesh Kumar Jain Through Legal Heir Ankit Jain, Delhi.
material on record, correctly sustained the addition of 1/3rd amount in question under section 69A of the I.T. Act. Considering the findings of the authorities below in the light of above discussion, the decisions of various Benches of the Tribunal relied upon by the Learned Counsel for the Assessee, would not support the case of the assessee. This ground of appeal is accordingly dismissed.
8. On the second issue, the assessee submitted before A.O. that he has also earned income from other sources like Commission, Discount etc., by dealing with various parties amounting to Rs.1,80,000 which was utilized for house hold expenses. However, on perusal of the return filed by the assessee, it was found that assessee has shown an amount of Rs.1,20,000 only under the head "Income from other sources". The A.O. therefore, added Rs.60,000. The assessee explained before the Ld. CIT(A) that assessee declared an amount of Rs.1,50,000 instead of Rs.1,20,000. The Ld. CIT(A) gave such benefit to the assessee with a direction to the A.O. to verify this discrepancy and take remedial action. Since Ld. CIT(A) has already granted sufficient relief to the assessee and directed the A.O. to verify 13 ITA.No.3612/Del./2016 late Shri Dinesh Kumar Jain Through Legal Heir Ankit Jain, Delhi.
the claim of assessee, therefore, no further interference is required in the matter. This ground of appeal of assessee is dismissed.
9. In the result, appeal of assessee stands dismissed.
Order pronounced in the open Court.
Sd/- Sd/-
(PRASHANT MAHARISHI) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated 16th October, 2017
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT "B" Bench
6. Guard File
//By Order//
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DELHI BENCHES : DELHI.