Income Tax Appellate Tribunal - Delhi
Smt. Kanika Rathi, New Delhi vs Ito, New Delhi on 22 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "D", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 6628/DEL/2013
AY. 2007-08
KANIKA RATHI, ITO, WARD 23(1),
27, SADHNA ENCLAVE, VS. NEW DELHI
NEW DELHI
(PAN: AFWPR7242A)
(APPELLANT) (RESPONDENT)
Assessee by : Sh. Ved Jain, Adv. & Sh.
Ashish Chadha, CA
Department by : Sh. Sharavan Gotru, Sr. DR
ORDER
PER H.S. SIDHU, JM
Assessee has filed the Appeal against the Order dated 25.9.2013 passed by the Ld. Commissioner of Income Tax (Appeals)--XI, New Delhi pertaining to assessment year 2007-
08.
2. The grounds raised by the assessee read as under:-
1. That on the facts and circumstances of the case and in the law, Ld.CIT(A) has erred upholding the additions of Rs. 10.00 lacs U/s Income Tax Act,1961 in as much as he did not bring any material on record against assessee in respect of cash transactions of Rs.l 0.00 lacs which was deposited by appellant assessee in her bank account from the sales proceeds. The upholding the additions of Rs.10.OO lacs in the garb irrelevant discussions as per impugned order is not sustainable in the eye of law.
2. That on the facts and circumstances of the case and in the law, Ld.CIT(A) did not examine the complete materials and records available before him in respect of sale, purchase, cash transactions and bank transactions relating to the appellant/ assessee's business as is evident by the observation and findings recorded in this impugned order.
The finding recorded as per impugned order are wrong and contrary to the facts available as per documents (i.e. for example the sale of SARIA was done to an identical party 2 whose name and address is appearing on the Invoice itself whereas Ld.CIT(A) wrongly observed that the buyer of the SARlA was not identifiable. The finding given by Ld.CIT(A) are perverse and factually incorrect which render the Order passed by Ld.CIT (A) erroneous and illegal.
3. That on the facts and circumstances of the case and in the law, Ld.CIT(A) has erred observing wrong findings which were neither relevant nor supporting upholding the additions of Rs. 1O.OO lacs.U/s 69A of the Income Tax Act, 1961.
4. That on the facts and circumstances of the case and in the law, the impugned order passed by the Ld. CIT(A) is illegal, arbitrary and bad in law in as much as the basis of additions of Rs. 10 lacs which was taken by Ld. Assessing Officer was neither discussed nor deliberated upon by Ld.CIT(A) correctly. The observation made by Ld.CIT(A) are wholly irrelevant and beyond the correct facts which render the impugned order illegal & had in law.
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5. That on the facts and circumstances of the case and in the law, both the authorities below Ld.CIT(A) and Assessing 'officer have erred making the addition of Rs.10.OO lacs by invoking the provisions of Section 69A of the Income Tax Act, 1961.
6. Because the transactions of cash in respect of Rs.10.00 lacs was found duly recorded in the books of accounts which were examined by the Assessing Officer, hence, the provisions of Section 69A were erroneously invoked.
7. Because the assessing officer accepted the records and books of account as per assessment order and he has admitted that the assessee has declared income from business or profession having done the detailed examination of these books of accounts wherein the transaction in question were found duly recorded. Hence the allegation that the genuineness of the cash Rs.1O.OO lacs remained unexplained is prima facie contrary and factually incorrect. Moreover, Ld.CIT(A) failed to appreciate the same. 4
8. That on the facts and circumstances of the case and in the law, Ld.CIT(A) also failed to examine the said additions in light of the materials available on records. He ought to have recorded his finding on the violation/application of the provisions of Section 69A when he went to confirm the addition of Rs. 1O.OO lacs.
9. That on the facts and circumstances of the case and in the law, the assessee has substantiated her source of deposit Rs. 10 lacs but the Assessing officer without bringing any material contrary on records made the additions Rs.1O.OO lacs which was illegal and unwarranted and liable to be deleted. However, Ld.CIT(A) also failed to give definite observation in this regard .
10. The appellant craves leave to add, alter, amend or to modify any of the grounds either before or at the time of hearing of this appeal."
3. The brief facts of the case are that the assessee filed her return of income of Rs. 2,65,950/- on 30.7.2007. The case of the 5 assessee was selected for the scrutiny under AIR and statutory notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred as the Act) was issued and served upon the assessee. Subsequently detailed questionnaires alonwith notice u/s. 142(1) of the Act were issued to the assessee. In response to these notices, the A.R. of the assessee attended the proceedings from time to time and requisite details have been filed. The source of income declared is under the head "income from salary" "income from business or profession" and "income from other sources". In this case, an AIR information was received that the assessee has deposited cash amounting to Rs. 19,00,000/- in the bank accounts. The assessee was required to prove the genuineness of these cash deposits. The assessee has explained that the cash of Rs. 9 lacs have been received from the purchase on sale of property. The credit of the same was allowed. Keeping in view of these facts, he completed the assessment proceedings as per the information/details available on record. The assessee has shown short term capital gain of Rs. 6,76,000/-. The assessee purchased a property for 6.24 lacs and sold it at Rs. 13 lacs 6 thereby showing a short term capital gain of Rs. 6.76 lacs. In view of these facts, short term capital gain declared by the assessee was allowed and amount of Rs. 10 lacs was disallowed within the meaning of section 69A of the I.T. Act and added to the total income of the assessee, as no details / evidence in upport has been furnished. Accordingly, the AO completed the assessment at Rs. 17,41,950/- u/s. 143(3) of the I.T. Act, 1961 and added the sum of Rs. 10 lacs towards unexplained cash deposits and Rs. 6.76 lacs as capital gain.
4. Against the assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 25.9.2013 has partly allowed the appeal of the assessee by deleting the addition of Rs. 6.76 lacs on account of short term capital gain and upheld the addition of Rs. 10 lacs on account of unexplained cash deposit in the bank account.
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5. Aggrieved with the aforesaid order of the Ld. CIT(A), assessee is in appeal before the Tribunal.
6. Ld. Counsel of the assessee has stated that Ld. CIT(A) erred in upholding the additions of Rs. 10.00 lacs U/s Income Tax Act,1961 in as much as he did not bring any material on record against assessee in respect of cash transactions of Rs.l0.00 lacs which was deposited by assessee in her bank account from the sales proceeds. He further stated that Ld.CIT(A) did not examine the complete materials and records available before him in respect of sale, purchase, cash transactions and bank transactions relating to the appellant/ assessee's business as is evident by the observation and findings recorded in this impugned order. The finding recorded as per impugned order are wrong and contrary to the facts available as per documents (i.e. for example the sale of SARIA was done to an identical party whose name and address is appearing on the Invoice itself whereas Ld.CIT(A) wrongly observed that the buyer of the SARlA was not identifiable. The finding given by Ld.CIT(A) are perverse and factually incorrect which render the Order passed by Ld.CIT 8 (A) erroneous and illegal. It was the further contention that the additions of Rs. 10 lacs which was taken by Assessing Officer was neither discussed nor deliberated upon by the Ld. CIT(A) correctly. The observation made by Ld.CIT(A) are wholly irrelevant and beyond the correct facts which render the impugned order illegal & had in law. Hence, he stated that Assessing officer has erred making the addition of Rs.10.OO lacs by invoking the provisions of Section 69A of the Income Tax Act, 1961, because the transactions of cash in respect of Rs.10.00 lacs was found duly recorded in the books of accounts which were examined by the Assessing Officer, hence, the provisions of Section 69A were erroneously invoked. He further stated that assessing officer accepted the records and books of account as per assessment order and he has admitted that the assessee has declared income from business or profession having done the detailed examination of these books of accounts wherein the transaction in question were found duly recorded. Hence the allegation that the genuineness of the cash Rs.1O.OO lacs remained unexplained is prima facie contrary and factually 9 incorrect. Moreover, Ld.CIT(A) failed to appreciate the same. It was further submitted that Ld.CIT(A) also failed to examine the said additions in light of the materials available on records. He ought to have recorded his finding on the violation/application of the provisions of Section 69A when he went to confirm the addition of Rs. 1O.OO lacs. In support of his contention, he filed a set of Paper Book containing pages 1 to 57 in which he has attached the copy of acknowledgement of return of income alongwith computation of income for AY 2007-08; copy of reply dated 16.12.2009 submitted by the assessee before the AO; copy of profit and loss account for the year ended on 31.3.2007; copy of cash flow statement for the period 1.4.2006 to 31.3.2007; copy of purchase bills of M/s Rathi Re Rollers (India) Ltd.; copy of purchase bills of M/s Rathi Steel Trading Co.; Copy of list showing cash purchases with corresponding sales; copy of confirmation of account of Kanika Rathi for the year 2006-07 from Rathi Re- Rollers (India) Ltd.; copy of statement of account of Sh. Rohit Sharma for AY 2008-09; Copy of statement of account of Sh. Pawan Mittal for AY 2007-08; coy of statement of Account of Sh. 10 Vaibhav Rathi for AY 2007-08; copy of Statement of account of Sh. Vikas Rathi for AY 2007-08; copy of statement of account of Sh. Kush Kumar for AY 2007-08; copy of confirmation from Jagdamba Marbles Ltd. in respect of the agreement of sale entered into for the sale of plot in Haryana alongwith relevant documents copy of bank statement as on 30.9.2006, 31.12.2006 and 31.3.2007 of Kanika Rathi; copy of letter filed before CIT(A) dated 14.3.2012; copy of remand report dated 16.4.2012 issued by AO; copy of rejoinder dated 21.5.2012 submitted by the Assessee before the Ld. CIT(A) on 31.5.2012; copy of remand report dated 22.11.2012 issued by the AO. In view of the above, he requested that the addition sustained by the Ld. CIT(A) may be deleted and the appeal of the assessee may be allowed.
7. On the other hand Ld. DR relied upon the order of the Ld. CIT(A) and stated that he has passed a well reasoned order which does not need any interference.
8. We have heard both the parties and perused the relevant records available with us, especially the orders passed by the 11 revenue authorities and the Paper Book filed by the ld. Counsel of the assessee containing the pages 1 to 57 in which he has attached the copy of acknowledgement of return of income alongwith computation of income for AY 2007-08; copy of reply dated 16.12.2009 submitted by the assessee before the AO; copy of profit and loss account for the year ended on 31.3.2007; copy of cash flow statement for the period 1.4.2006 to 31.3.2007; copy of purchase bills of M/s Rathi Re Rollers (India) Ltd.; copy of purchase bills of M/s Rathi Steel Trading Co.; Copy of list showing cash purchases with corresponding sales; copy of confirmation of account of Kanika Rathi for the year 2006-07 from Rathi Re- Rollers (India) Ltd.; copy of statement of account of Sh. Rohit Sharma for AY 2008-09; Copy of statement of account of Sh. Pawan Mittal for AY 2007-08; coy of statement of Account of Sh. Vaibhav Rathi for AY 2007-08; copy of Statement of account of Sh. Vikas Rathi for AY 2007-08; copy of statement of account of Sh. Kush Kumar for AY 2007-08; copy of confirmation from Jagdamba Marbles Ltd. in respect of the agreement of sale entered into for the sale of plot in Haryana alongiwth relevant 12 documents copy of bank statement as on 30.9.2006, 31.12.2006 and 31.3.2007 of Kanika Rathi; copy of letter filed before CIT(A) dated 14.3.2012; copy of remand report dated 16.4.2012 issued by AO; copy of rejoinder dated 21.5.2012 submitted by the Assessee before the Ld. CIT(A) on 31.5.2012; copy of remand report dated 22.11.2012 issued by the AO. We find that in this case assessee filed its return of income for the year under consideration on 30.07.2007, declaring an income of Rs.2,65,950/-. Subsequently, the case of assessee was selected for scrutiny as an information was received from the AIR of the assessee that the assessee has deposited cash amounting to Rs.19,00,000/- in the bank accounts. Out of the above amount, the AO made the addition of Rs.10,00,000/- u/s 69A of the Act, alleging that the said amount deposited in the bank account remained unexplained. The AO has discussed this issue in Para 2
- 3 of the assessment order. The Ld. CIT(A) has sustained the addition made by the AO holding that the explanations and documentary evidences provided by the assessee are sham and have been created just to explain the source of cash deposits. It 13 was the submissions of the assessee's counsel that during the course of assessment proceedings the assessee was asked to explain the source of cash deposited in the bank account amounting to Rs.19,00,000/-. The assessee submitted that an amount of Rs.9,00,000/- was received by the assessee on account of sale of property. The credit of the said amount was allowed by the AO, however, the balance amount of Rs.10,00,000/- was added to the income of the assessee. We find that as regards the amount of Rs.10,00,000/- is concerned, the assessee has filed the complete details with regard to the same before the AO. The cash was received by the assessee on account of her business of trading in steel, as explained in reply dated 16.12.2009 (PB 4-5). The assessee also submitted complete cash flow statement for the year under consideration (PB 7-8), which proves the fact that the assessee had sufficient cash in her hand throughout the year, which was deposited in the bank account. The assessee further submitted copies of invoices issued by M/s Rathi Re-Rollers (India) Ltd. and MIs Rathi Steel Trading Co. (PB 9 - 40) in respect of the purchases made during 14 the year. In order to prove the genuineness of the sales made, the assessee also submitted a list snowing the cash purchases along with the corresponding cash sales made (PB 41). Also, the assessee duly submitted the confirmations (PB 42 - 48) from various parties from whom the assessee has received cash during the year under consideration. We further note that Ld. CIT(A) called for a remand report from the AO, which was sent by the AO vide its letter dated 16.04.2012, enclosed at PB 54. The AO, however, in the said remand report, has not given any findings with regard to the submissions of assessee and has only relied upon the assessment order passed. In reply to the remand report, assessee submitted its rejoinder dated 21.05.2012 (PB 55
- 56), wherein it was again reiterated that it has been wrongly alleged by the AO in the remand report that the above details were not filed by the assessee before him. This fact has further been appreciated by the AO in the remand report dated 21.11.2012 (PB 57), wherein the AO has stated as under:
"The assessee had filed some copies of invoices issued by M/s Rathi Re-Rollers (India) Ltd. and M/s Rathi Steel 15 Trading Co. But since the assessee failed to file the complete details, the A 0 allowed the cash deposits of Rs. 9,00,000/- Rupees Nine lakhs only and the balance amount of Rs. 10 lakhs was added to the income uls 69A of the Income Tax Act, 1961. Hence, the AO was correct in disallowing the amount of Rs. 10,00,000/- in absence of complete submissions of supporting evidence in this regard."
8.1 Therefore, it is clear that all the above details were filed before the AO, which clearly show that the assessee had sufficient cash-in-hand generated out of her trading business, which was further deposited in the bank account. 8.2 We further note that d. CIT(A) has upheld the impugned addition made by the AO by completely disregarding the submissions and explanations of the assessee, and by further alleging that the documentary evidences submitted by the assessee are sham and have been created just to prove the source of cash deposit. We further observe that Ld. CIT(A) has 16 sustained the addition by completely deviating from the issue under consideration and by indulging into mere surmises and conjectures. The allegation of the Ld. CIT(A) that if the business of the assessee would have been genuine, there would have been some purchase or sale transactions through banking channels as well is completely misplaced, so much so that the business income of the assessee has been duly accepted by the AO as well which is evident from the fact that the addition has been made to the returned income of the assessee.
8.4 Keeping in view of the facts and circumstances of the case as explained above, we are of the considered view that since the assessee has duly explained the source of complete cash deposit made during the year, the addition made by the AO and sustained by the Ld. CIT(A) is bad in law and liable to be deleted. Therefore, we delete the addition in dispute and allow the ground raised by the assessee.
9. In the result, the Appeal filed by the Assessee stands allowed.
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Order pronounced in the Open Court on 22/08/2017.
Sd/- Sd/-
[PRASHANT MAHARISHI] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date:22/08/2017
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT TRUE COPY By Order,
Assistant Registrar,
ITAT, Delhi Benches
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