Income Tax Appellate Tribunal - Chandigarh
Sh. Gurpal Singh Brar, Mohali vs Assessee on 4 October, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'B', CHANDIGARH
BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER
AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER
ITA No. 1352/Chd/2010
Assessment Year:2006-07
Shri Gurpal Singh Brar, V ITO, Ward 5(4),
# 2100, Phase-X, Mohali.
Mohali.
PAN No. AAUPB-5362N
(Appellant) (Respondent)
Appellant By: None
Respondent By : Smt. Jaishree Sharma
Date of Hearing : 04.10.2011
Date of Pronouncement : 25.11.2011
ORDER
PER SUSHMA CHOWLA, JM
The assessee has filed the appeal against the order of CIT(A), dated 15.07.2010 relating to assessment year 2006-07 against the order passed under section 143(3) of the I.T. Act, 1961.
2. The appeal of the assessee was fixed for hearing on 3.10.2011 and both the learned A.R. for the assessee and learned D.R. for the Revenue moved applications for adjournment. The learned A.R. for the assessee Shri Ravinder Bindlish was present in the court and the appeal was adjourned to 4.10.2011 at the request of both the parties and the date was announced in the open court. On 4.10.2011 i.e. the appointed date of hearing an application for adjournment dated 1.10.2011 was moved on behalf of the M/s Ved Jain & Associates, Chartered Accountant. No Power of Attorney authorizing the said counsel was filed alongwith the application. In view thereof, the adjournment application moved on 4.10.2011 was rejected. None appeared on behalf of the counsel who had appeared on 3.10.2011 i.e. Shri Ravinder Bindlish. In view there, the appeal was taken up for hearing and the learned D.R. for the Revenue put forward his contention. The assessee has filed written submissions on record in respect of the grounds of appeal raised, which were considered.
3. The assessee has raised following Ground Nos. 1 and 2 of Appeal:
"1. That the impugned order is against facts and law and without jurisdiction.
2. That the worthy CIT(A) has erred in confirming the addition of Rs.21,53,000/- and Rs.20,00,000/- by wrongly treating the genuine deposit in the bank as an unexplained cash credit.
4. Ground No.1 raised by the assessee is general in nature and hence is dismissed.
5. The brief facts of the case are that during the course of assessment proceedings, the Assessing Officer noted various deposits in various bank accounts. Further information was received through AIR Data as per which cash of Rs.37,85,000/- was deposited in the saving account with Centurion Bank of Punjab, Phase-VII, Mohali. The assessee was asked to explain the source of deposits with evidence. In reply the assessee furnished details including agreement to sell in respect of House No.2100, Phase-X, Mohali entered into by the wife of the assessee and also the copy of sale deed in respect of House No.2059, Sector 71, Mohali. The statement of the assessee was recorded u/s 131 of the Income Tax Act on 23.12.2008 during the course of assessment proceedings. The assessee in his statement could not give proper reply/source in respect of deposits/investments and submitted that he would explain the sources. The submissions made by the assessee on 24.12.2008 and 26.12.2008 were found not acceptable by the Assessing Officer since the same were either repetition or contradiction of the earlier replies and deposition made in the statement. The assessee failed to appear on 26.12.2008 and also in response to further summon issued u/s 131 of the Act and the case was decided by the Assessing Officer on the basis of the information available on record. The Assessing Officer under para 6 at page 2 of the assessment order has tabulated the deposits in the bank account. In respect of the deposits of totaling Rs.20 lacs, the contention of the assessee was that the amount was received from one Shri Sukhminder Singh with whom agreement to sell was executed for sale of House in Mohali in the month of March, 2005. With regard to cash deposits totaling Rs.21,53,000/- from 25.7.2005 to 31.3.2006 the assessee in response to question No.20 had stated that the amount was received from Shri Major Singh for the sale of his house in Mohali in July, 2005. However, no evidence in respect of the sale transaction was furnished before the Assessing Officer and it was explained that once the first purchaser backed out another deal was struck with the second purchaser. The Assessing Officer vide question No.22 asked the assessee as to whether the amount received from both the persons had been forfeited as none of them came forward for execution of sale deed even after a period of more three years. In reply the assessee submitted that the negotiations were going on. The Assessing Officer in view of this observed that the assessee has made concocted story and this is merely an after thought to justify the source of above deposits on different dates according to his own whims. No evidence/documents, whatsoever, in respect of agreement to sell with Shri Sukhmander Singh in respect of sale of H.No.2100, Phase-X, Mohali has been furnished by the assessee. As stated in his statement the assessee has further sold this property through agreement to sell dated 20.07.05 to Shri Major Singh, Vill: Pandori Khatrian, The: Zira, Distt. Firozepur. It is worthwhile to mention here that the assessee has received the consideration on account of sale of the same property from two different persons, meaning thereby that he had forfeited these amounts as none of them has come forward for execution of sale deed though a period of more than 3 years has elapsed and still the assessee stated that the negotiations is going on. The Assessing Officer also found contradiction in the agreement to sell executed by Shri Major Singh and even enquiries were made though the Inspector. Even the copy of the documents furnished by the assessee was incomplete and page No.2 of the agreement relating to terms and conditions was missing and when questioned the copy of receipt of Rs.25 lacs was filed by the assessee. The Assessing Officer vide paras 9.2 to 9.7 at apges 4 to 6 has deliberated upon the transactions entered into by the assessee and the contents of the agreement to sell and in view of the discrepancies referred to, the Assessing Officer held the assessee to have made concocted story to justify the deposits amounting to Rs.20 lacs and Rs.21,53,000/-. The amounts had been depsited in cash on different dates and the same were treated as income from undisclosed sources.
6. Before the CIT (Appeals) the assessee furnished written submissions and pointed out that the sum of Rs.20 lacs was received from the purchaser through account payee cheque and the same was deposited with Centurion Bank of Punjab Ltd. by the assessee. The copy of the bank statement was also furnished on record. In respect of the addition of Rs.21,53,000/- it was pointed out that the amount was received in various installments and was deposited in the same bank account and the copy of the agreement was referred to. The CIT (Appeals) called for remand report from the Assessing Officer and the same is incorporated at para 9 at pages 7 and 8 of the appellate order. In the remand report the Assessing Officer contended that the assessee had failed to produce any evidence in respect of the sale agreement executed with Shri Sukhmander Singh to prove the source of deposit of Rs.20 lacs. In respect of the deposit of Rs.21,53,000/- it was noticed that incomplete copy of agreement to sell was filed wherein the total sale price of the house had been fixed at Rs.1.50 crores, whereas in clause 2 at page 3 it was mentioned that the purchaser had paid full and final payment of Rs.25 lacs against the sale of the house. As per clause 4 of the agreement to sell the seller had delivered the actual physical and vacant possession of the said kothi to the said purchaser w.e.f. 20.7.2005, on the other hand, the assessee denied to have sold the house and had stated to have to be in occupation of the said house. The assessee was living at first level of the said property and the ground floor was let out on the date of framing of the assessment proceedings. The Assessing Officer further pointed out that the ownership of the property was with the wife of the assessee even during the assessment proceedings. In view of the conflicting and contradictory statement and documents furnished by the assessee, the addition was made by the Assessing Officer.
7. The CIT (Appeals) vide para 10 held as under :
"10 I have carefully considered the rival submissions, the remand report and other relevant material on record. Looking at the facts and material on record, I am also of the view taken by the AO that everything has been worked backwards which means that in order to explain cash deposits, the story of two agreements has been narrated. In fact, there is nothing at all with the appellant to establish the authenticity of his tale and the transactions contained therein. Who would believe that one person gives Rs.20 lacs for purchase of a property and then backs out and simply forgets about this huge sum ? There is no evidence of any effort/negotiation between the parties before the appellant forfeits Rs.20 lacs. After that another person steps in, gives Rs.21,53,000/- and happily suffers the same fate. I have enquired from Estate Office, Mohali regarding the ownership of the said property and even today it vests with assessee's wife as is clear from the documents procured from the Estate Office clearly implying that there was neither any need nor occasion to sell this property or else it would have been sold by now. Points (i) to (vii) of AOs observations (supra) are very lucid & logical. Agreeing with the AO, I hold that the story narrated to explain the cash credits deserves to be rejected for lack of evidence. The addition of Rs.21,53,000/- and Rs.20,00,000/- is therefore confirmed, dismissing assessee's Ground of Appeal."
8. On the perusal of the record the evidence filed by the assessee and the orders of the authorities below we find that the issue raised vide ground No.2 is in respect of the deposits with Centurion Bank of Punjab. The assessee had deposited Rs.20 lacs through cheque on 17.5.2005. The onus was upon the assessee to explain the source of the said deposit in the bank account. The assessee claimed the same to be out of the sale agreement executed for sale of the property of his wife in Mohali. However the assessee failed to furnish any agreement to sell or any other documents evidencing the said transaction. In view thereof where the assessee has failed to explain the source of credit of the said amount the same is to be treated as income of the assessee. In the written submissions filed on record the assessee claimed that the said amount has been repaid out of withdrawals from the said bank account. We find that the assessee referred to cash withdrawals of Rs.27 lacs. However, we find that no such plea was raised before either of the authorities below and the in the statement recorded during the assessment proceedings when confronted about the receipt of amounts from two purchasers, the assessee had replied vide question No.21 that negotiations were going on in respect of the said refund/forfeiture of the amount received from the said purchasers. In his written submissions the assessee claimed to have refunded the said amount in 2005 and the assessment order in the case was passed on 30.12.2008. Further the assessee has failed to furnish on record any evidence to prove its contention. In the absence of the same we find no merit in the stand of the assessee and rejecting the same we uphold the order of CIT (Appeals) and confirm the addition of Rs.20 lacs. Similarly in respect of receipt of Rs.21,53,000/- the assessee has failed to establish its claim of receipt of money. The said amount was deposited in cash in the account of the assessee on various dates. Though the assessee has referred to an agreement to sell but the clauses of the said agreement were found to be at variance with the facts of the case. In the absence of any evidence being filed by the assessee, we confirm the addition of Rs.21,53,000/-. Ground No.2 raised by the assessee is thus dismissed.
9. Ground No.3 raised by the assessee is as under :
3. That the worthy CIT(A) has erred in confirming the addition of Rs.10,00,000/- deposited through account payee cheque in the bank without appreciating the facts of the case in correct perspective."
10. In respect of deposit of Rs.10 lacs in the bank account on 3.5.2005 the assessee claimed that the same was out of withdrawal from PNB, Dehradun during the period 6.12.2004 to 3.5.2005.
11. The CIT (Appeals) held has under
"13. Perusal of the bank accounts reveal that the amount stands credited to assessee's account No.22SB16023953 maintained with Centurion Bank of Punjab, Phase VII, Mohali through clearing with particulars "clg/PNB/434605 by C" on 13.05.2005. According to the assessee, this amount was transferred from Punjab National Bank, Dehradun Account vide cheque No.434605 but the perusal of account statement of that account (page 55 of assessment record) sent by the Punjab National Bank, Dehradun indicates no such transfer on 03.05.05. Even the assessee's account No.18050001000441100 with Punjab National Bank Sector 17, Chandigarh does not indicate any such transfer of Rs.10 lacs on 03.05.05."
12. The assessee has explained the source of deposit of Rs.10 lacs on 3.5.2005 in the saving account of Centurion Bank of Punjab as withdrawal from PNB, Dehradun. Copy of account of Centurion Bank of Punjab is placed at page 56 of the Paper Book, evidencing the said deposit. At page 66 of the Paper Book the assessee has annexed statement of account of PNB, Dehradun and the perusal of the same reflects no such withdrawal of Rs.10 lacs during the aforesaid period. In the written submissions filed before us, the assessee has referred to pages 112 and 113 of the Paper Book. At page 112 of the Paper Book is placed a certificate of HDFC Bank in which it certifies that a cheque was credited in its account of Rs.10 lacs on 3.5.2005 which was drawn on PNB, Dehradun. Further copy of account of M/s Unial Builders Pvt. Ltd. in assessee's books of account is placed at page 113 of the Paper Book. No such evidence was referred to before the authorities below. Further the assessee has failed to file any confirmation or any bank account in order to prove the source of credit entries in his bank account. The onus not being discharged by the assessee we find no merit in the claim of the assessee and hence the same is rejected. Ground No.3 raised by the assessee is thus dismissed.
13. Ground No.4 raised by the assessee is as under :
4. That the worthy CIT(A) has erred in confirming the addition of Rs.5,00,000/- from HDFC Bank and deposit of that amount with Centurion Bank in correct perspective."
14. The plea of the assessee in respect of the said Rs.5 lacs is stated to be out of withdrawals in cash of Rs.8,50,000/- from HDFC Bank. The Assessing Officer rejected the claim of the assessee observing that the sum of Rs.8,50,000/- was re-deposited on 18.5.2005.
15. The CIT (Appeals) held as under :
"Considering the rival contentions, I find the contention of the AO in order as per the material & evidence on record. The assessee's attempt at explaining this amount as withdrawal from HDFC Bank is not correct since withdrawals of Rs.8,50,000/- (Rs.5,00,000/- on 05.05.05; Rs.1,00,000/- on 12.05.05 and Rs.2,50,000/- on 17.05.05) from HDFC Bank have been transferred to this very account through some other Bank account No.11517000886 (not disclosed to the Department). The AO has rightly concluded that the source of this cash deposit remained unexplained. The addition of Rs.5 lacs so made is therefore confirmed, dismissing assessee's appeal on this ground."
16. The plea of the assessee is that the first cash totaling of Rs.8,50,000/- was withdrawn on various dates from HDFC bank out of which Rs.5 lacs was deposited in Centurion Bank of Punjab. The deposit of Rs.8,50,000/- in HDFC Bank account on 18.5.2005 is out of funds transferred from another account and has no relation with the cash withdrawals on the earlier dates. Copy of bank statement of HDFC bank is placed at page 71 of the Paper Book. Perusal of the said ban k statement reflects that there were earlier cash withdrawals totaling Rs.8,50,000/- and thereafter there is an entry of funds transferred totaling Rs.8,50,000/-. We find merit in the plea of the assessee. However, the same needs verification at the level of the Assessing Officer. Accordingly, we direct the Assessing Officer to readjudicate the claim of the assessee in respect of deposits of Rs.5 lacs. The issue is restored back to the file of the Assessing Officer with direction to decide the same after verifying the claim of the assessee. Reasonable opportunity of hearing shall be afforded to the assessee. Ground No.4 raised by the assessee is thus allowed for statistical purposes.
17. Ground NO.5 raised by the assessee is as under :
5. That the worthy CIT(A) has erred in confirming the addition of Rs.1,20,000/- given by the son of assessee through account aye cheque.
18. The plea of the assessee in respect of source of deposit of Rs.1,20,000/- is that the said amount was sent by his son Mr.Gurpreet Singh out of his two different accounts. As per para 13 of the assessment order, the Assessing Officer stated that regarding the deposits of Rs.20,000/- on 02.07.2005 the assessee stated that this amount was received from his son Shri Gurpreet Singh Brar through cheque No.25072 of Citi Bank. There is a further deposit of Rs.1,00,000/- on 15.02.2008 stated to have been transferred from UCO Bank vide cheque No.500183 given by Shri G.S.Brar, son of the assessee. In this statement recorded on 23.12.2008, the assessee had stated that he would explain these entries on the next date of hearing, but he failed to give confirmation or any other evidence with regard to these two deposits. Therefore, these deposits of Rs.20,000/- and Rs.1,00,000/- totaling Rs.1,20,000/- made in Centurion Bank of Punjab remained unexplained and were added back by the Assessing Officer.
19. Before the CIT (Appeals) the plea of the assessee was as under :
"19. During the appellate proceedings, the ld. Counsel submitted that assessee's son Mr.Gurpreet Singh gave Rs.1.20 lacs through account payee cheque of Rs.20,000/- vide cheque No.25072 drawn on Citi Bank and Rs.1 lac withdrawn from UCO Bank vide cheque No.500183."
20. The CIT (Appeals) held as under :
"20. From the material on record, I find that despite being given opportunity, the assessee did not reveal the Bank account of his son from where enquiries could be made. Since no confirmation has been given by the assessee, mere issuance of cheques neither lends legitimacy nor credibility to these transactions. The AO is correct in concluding that these deposits also remain unexplained. The addition so made is confirmed, dismissing assessee's appeal."
21. The assessee before the authorities below had failed to file any confirmation from his son in respect of the loans received of Rs.1,20,000/-. The assessee failed to furnish the bank account to establish the creditworthiness of son of the assessee. Merely because the amount has been received by way of cheque does not satisfy the provisions of the Statute in respect of the cash credits received by the assessee during the year. The onus not having been discharged by the assessee in respect of deposits in the bank account, the deeming provs sof section 68 are applicable. We find no merit in the ground of appeal raised by the assessee and hence the same is dismissed.
22. Ground No.6 raised by the assessee is as under :
"6. That the worthy CIT(A) has erred in confirming the addition of Rs.50,000/- to the total income without appreciating the facts and written-submissions made during the assessment proceedings."
23. The Assessing Officer observed as under :
"As regards deposit of Rs.50,000/- made in cash on 07.09.2005 as per details and information of investment with Centurion Bank of Punjab filed with reply dated 19.12.2008, it is stated to be out of sale proceeds of H.No. 2059 Sector 71, Mohali for which the assessee was GPA of his son as well as stated in the answer to Q.No.28 of the statement recorded. As per copy of sale deed whole the sale consideration has been received by Bankers' cheques No.232675 dated 12.09.2005 for Rs.18,70,000/- and 232680 dated 12.09.2005 for Rs.1,30,000/- payable at Citi Bank of India, Medical Institute Branch and PGI Branch, Chandigarh respectively. These bankers cheques were received by the assessee on 12.09.2005 whereas the cash of Rs.50,000/- was deposited on 07.09.2005. Therefore, this has no relevant with the sale proceeds of House No.2059 Sector 71 Mohali. Further, vide para 4 of the written reply dated 24.12.2008, the assessee has stated that this amount of Rs.50,000/- is part of earnest money received in respect of his residential house. Thus, the assessee's replies are self contradictory. Accordingly, the cash deposit of Rs.50,000/- made in Centurion Bank of Punjab remains unexplained."
24. The CIT (Appeals) upheld the order of the Assessing Officer as the assessee failed to furnish any evidence/confirmation regarding the said deposit.
25. Even before us the assessee had failed to furnish any evidence/confirmation in respect of its claim of having received earnest money. In the absence of the same, we uphold the order of the CIT (Appeals) and dismiss ground No.6 raised by the assessee.
26. Ground No.7 raised by the assessee is as under :
7. That the worthy CIT(A) has erred in confirming the addition of Rs.15,000/- and 14,000/- ignoring the submissions made before ld. AO.
27. In respect of the said issue, the Assessing Officer observed as under :
"Further, the deposit of Rs.14,000/- dated 10.12.2005 as per details and information of investment with Centurion Bank of Punjab filed with reply dated 19.12.2008 stated to be transferred from CITI Bank vide cheque No.181054 the assessee in his answer to question No.24 of his statement recorded on 23.12.2008 has stated that he does not remember and cannot explain. Accordingly, deposit of Rs.14000/- made in Centurion Bank of Punjab remains unexplained.
As regards, Rs.15000/- dated 10.11.2005 as per details and information of investment with Centurion Bank of Punjab filed with reply dated 19.12.2008 stated to be transferred from CITI bank vide cheque No.586451 dated 28.2.2006, the assessee in his answer to question No.25 of his statement recorded on 23.12.2008 has stated that he will explain the source on the net date of hearing, the assessee failed to furnish any evidence, whatsoever, in respect of this deposit. Accordingly, deposit of Rs.15000/- made in Centurion Bank of Punjab remains unexplained."
28. The CIT (Appeals) upheld the order of the Assessing Officer.
29. We are in agreement with the order of the CIT (Appeals) in the absence of the assessee having furnished any evidence and having failed to discharge its onus of establishing the identity, creditworthiness and genuineness of the transaction. The addition made is hereby upheld and ground No.7 raised by the assessee is thus dismissed.
30. Ground No.8 raised by the assessee is as under :
8. That the worthy CIT(A) has erred in confirming the addition of Rs.1,00,000/- ignoring the submissions made before ld. AO.
31. The aforesaid addition was made on account of non-disclosure of interest income from the bank accounts which was upheld by the CIT (Appeals). We are of the view that as the necessary information was not provided by the assessee and none-declaration of interest income in return of income, the Assessing Officer had no alternative but to estimate the interest income in the hands of the assessee. Even before us the assessee has failed to provide the requisite information. In the totality of facts and circumstances, upholding the order of the CIT (Appeals) we dismiss the ground No.8 raised by the assessee .
32. Ground Nos.9 to 11 raised by the assessee are as under :
9. That the ld. Worthy CIT(A) has erred in sustaining the assessed income at Rs.61,29,770/- as against the genuine returned income at Rs.1,77,770/-.
10. That the ld. AO without invoking to the provisions of any Section of Income-tax Act,1961 made the additions to the returned income and worthy CIT(A) has erred in sustaining such additions.
11. That worthy CIT(A) has erred in upholding the order of ld. AO without confronting any adverse evidence against the contentions raised by the assessee and against the evidence placed on record during the assessment proceedings.
33. The above said grounds raised by the assessee being general in nature are dismissed.
34. In the result, the appeal of the assessee is partly allowed.
Order Pronounced in the Open Court on this 25th day of November, 2011.
Sd/- Sd/-
(MEHAR SINGH) (SUSHMA CHOWLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 25th November, 2011
*Rati*
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
True Copy
By Order
Assistant Registrar, ITAT, Chandigarh
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