Income Tax Appellate Tribunal - Jaipur
Surendra Pal Singh Sahni, Kota vs Department Of Income Tax on 23 June, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI T.R.MEENA, AM
vk;dj vihy la-@ITA No. 673/JP/2014
fu/kZkj.k o"kZ@Assessment Year : 2005-06
Assistant Commissioner of cuke Surendra Pal Singh Sahni,
Income Tax, Vs. 4, New Cloth Market,
Circle-2, Kota. Kota.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AFFPS 0776 M
vihykFkhZ@Appellant izR;FkhZ@Respondent
izR;k{[email protected]. No. 35/JP/2014
(Arising out of vk;dj vihy la-@ITA No. 673/JP/2014)
fu/kZkj.k o"kZ@Assessment Year : 2005-06
Surendra Pal Singh Sahni, cuke Assistant Commissioner of
4, New Cloth Market, Vs. Income Tax,
Kota. Circle-2, Kota.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AFFPS 0776 M
izR;k{ksid@Objector izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Shri R.S. Dangur (Addl.CIT)
fu/kZkfjrh dh vksj ls@ Assessee by : Shri C.M. Birla (C.A.)
lquokbZ dh rkjh[k@ Date of Hearing : 21/06/2016.
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 23/06/2016.
2 ITA No. 673/JP/2014 & CO 35/JP/2014
ACIT Vs. Surendra Pal Singh Sahni
vkns'k@ ORDER
PER T.R. MEENA, A.M.
The appeal filed by the revenue and cross objection filed by the assessee arise against the order dated 25/7/2014 passed by the ld. CIT(A), Kota for the assessment year 2005-06 wherein the Revenue as well as the assessee raised following grounds:-
Ground of ITA No. 673/JP/2014 Revenue's appeal "On the facts and in the circumstances of the case, the ld CIT(A) has erred in:-
(i) deleting the addition of Rs. 50,29,106/- on account of unexplained cash at Bank and cash in hand U/s 68 of the Act;
(ii) deleting the addition of Rs. 72,000/- on account of undisclosed rental income."
Ground of Assessee's C.O. No. 35/JP/2014 "1. That the ld CIT(A) while allowing GOA 3 of the appellant erred in ignoring appellants' submission that he has disclosed rental income what he actually received which has necessitated him more payment of tax on undisclosed income Rs. 8,71,000/- which could have been otherwise less by Rs. 21,600/- being 30% of Rs. 72,000/-."
2. The assessee filed his return for the A.Y. 2005-06 on 31/7/2005 declaring total income at Rs. 1,28,940/-. The assessee has income from 3 ITA No. 673/JP/2014 & CO 35/JP/2014 ACIT Vs. Surendra Pal Singh Sahni house property and other sources. The ld Assessing Officer observed that the assessee had filed revised return of income on 28/4/2011 declaring total income of Rs. 16,73,352/- in the status of individual. This return was non est and had not filed after the time available U/s 139(4) and 139(5) of the Income Tax Act, 1961 (in short the Act) The ld Assessing Officer issued notice U/s 148 of the Act on 22/3/2012. The assessee was having Benami accounts in SBI, Ladpura Branch, Kota, for which no explanation has been given by the assessee. As per doctrine of estoppels was applicable against the assessee as he cannot now take the plea of his coming forward to offer his income voluntary for tax. In fact he was continuing evader of tax, who had now filed return of income to regularize his undisclosed income. Thereafter the ld Assessing Officer issued notice U/s 143(2) and 142(1) of the Act alongwith questionnaire dated 29/11/2012. The assessee had shown undisclosed income in revised capital account, which is as under:-
Rent from L-113, Kirti Nagar New Delhi Flat Rs. 132000/- Rent from Bal Mandir School Road, Kota House Rs. 612000/-
Bank Interest Rs. 164612/-
Income from undisclosed sources Rs. 871000/-
Total Rs. 1779612/-
The A.O. gave reasonable opportunity of being heard on income disclosed, should not be taxed U/s 69 of the Act. The assessee had 4 ITA No. 673/JP/2014 & CO 35/JP/2014 ACIT Vs. Surendra Pal Singh Sahni admitted that he had concealed the income which has not been disclosed. Accordingly, the ld Assessing Officer made addition of Rs. 17,79,612/-. The ld Assessing Officer further observed that the assessee had not shown rent from L-113, Kirti Nagar, New Delhi Flat at Rs. 1,32,000/- for which no rent agreement had been produced and rent was received in cash. In absence of any written rent agreement, the mere explanation of the assessee cannot be accepted. It has to be something more, accordingly, he proposed rental income at Rs. 17000/- per month. The assessee had also given the reply and claimed that the assessee would have got standard deduction @ 30%, if he would have shown higher rental income, which was in his own benefit. The assessee's argument was that the assessee was getting fixed rent for past many years. The ld Assessing Officer considered Section 23(1)(a) of the act for annual value of any property, which the property might reasonably be expected to let from year to year. The assessee had failed to prove that only Rs. 11,000/- the rent of his house in Kirti Nagar, Delhi, which was suddenly jumped up at Rs. 21,000/- in A.Y. 2010-11. In absence of any details submitted by the assessee, he estimated the rental income on the basis of Rs. 17,000/- per month for the property situated at Kirti Nagar, New Delhi and difference of Rs. 72,000/- was added in the income of the 5 ITA No. 673/JP/2014 & CO 35/JP/2014 ACIT Vs. Surendra Pal Singh Sahni assessee. The ld Assessing Officer further observed that as per revised balance sheet, cash at bank was Rs. 50,29,106/- and cash in hand was Rs. 21,01,548/-. The assessee stated that these were the balances of Benami account and cash in hand from his cash books. The assessee had filed an affidavit dated 18/3/2013 affirming on oath that these four Benami accounts belonged to him. The copies of bank accounts had been furnished by the assessee where balances were shown at Rs.50,29,106/-. This cash balance had been cross verified by the ld Assessing Officer from the cash book produced by the assessee. The ld Assessing Officer found that these amounts were nothing but undisclosed/unaccounted income of the assessee. He could not explain or bring any evidence which can establish that the above money could be attributable to which particular or source of income in respect of cash deposited in the bank. The only contention being these balances were getting carried over from the cash book/bank account balances for the previous years. After considering the assessee's reply, the ld Assessing Officer held that the cash deposited in the bank accounts are undisclosed income of the assessee. The assessee claimed that the amounts deposited in the bank were out of house rent, bank interest and other related undisclosed sources not found acceptable to the ld Assessing Officer. There was no 6 ITA No. 673/JP/2014 & CO 35/JP/2014 ACIT Vs. Surendra Pal Singh Sahni satisfactory explanation before the ld Assessing Officer of the assessee. In absence of any documentary evidence, he treated Rs. 50,29,106/- as undisclosed income of the assessee.
3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal by considering the assessee's reply that the bank balance was result of opening balance + income during the year - withdrawals during the year. The assessee claimed that the income was separately added by the Assessing Officer and the opening balance cannot be taxed in the current year, therefore, no addition on the basis of closing balance of bank account can be made. Four benami accounts firstly disclosed in the F.Y. 2011-12 and before that these were not known to the department, therefore, benefit of these years U/s 148 was not available to the assessee as these accounts were disclosed in the first time in A.Y. 2005- 06, the same was taxed in A.Y. 2005-06. As the assessee owned these accounts for the first time in A.Y. 2005-06, the same were taxable in A.Y. 2005-06. The assessee claimed before the ld CIT(A) that out of four Benami accounts, two accounts were in the name of "Kaka" and "S.P. Sahani", one being assessee's nick name and other was assessee's short 7 ITA No. 673/JP/2014 & CO 35/JP/2014 ACIT Vs. Surendra Pal Singh Sahni name. He relied on the decision of Hon'ble Rajasthan High Court judgment reported in (2008) CTR 208, the same cannot be taxed. All four accounts belonged to the assessee, thus the Assessing Officer should have proceeded as if these accounts were assessee's accounts. Once these accounts were treated as assessee's account, opening balance of these accounts could not be taxed in the hands of assessee in the light of Hon'ble Rajasthan High Court decision in the case of CIT Vs Parmeshwar Bohra (2007) 208 CTR 218 (Raj). Accordingly, he allowed the appeal. Similarly, he also deleted the addition made under the head rental income by holding that if the rental income is increased then undisclosed income decreases by Rs. 72,000/- being telescopic impact thereby could have saved tax on Rs. 21,600/- being a standard deduction @ 30%.
4. Now the revenue is in appeal and the assessee is in C.O. before us. The revenue is against deleting the addition and the assessee in C.O. against the observation made by the ld CIT(A) on undisclosed income under the head rental income. The ld DR has vehemently supported the order of the ld Assessing Officer and further argued that the ld CIT(A) has allowed the appeal without providing any opportunity to the Assessing Officer on evidences submitted during the course of appellate 8 ITA No. 673/JP/2014 & CO 35/JP/2014 ACIT Vs. Surendra Pal Singh Sahni proceedings. The belated return was not voluntary but these bank accounts were first time disclosed in the F.Y. 2011-12 on 18/4/2011 and before that these were not known to the department. Accordingly, opening balance is also undisclosed income of the assessee and liable to be taxed in the hands of the assessee. The assessee also had given any particulars of the tenant who was occupying the flat at Kirti Nagar, New Delhi. Therefore, the ld Assessing Officer has rightly estimated the annual value of that flat, which is also reasonable. Accordingly, he prayed to confirm the order of the ld Assessing Officer.
5. At the outset, the AR of the assessee has submitted that the assessee was in low income bracket less than Rs. 2.00 lacs throughout his life. He suo moto revised his return from A.Y. 2005-06 to A.Y. 2010- 11 on `18/4/2011 and paid tax of Rs. 42,50,280/-. The assessee also enclosed revised capital account and revised balance sheet alongwith the return and also financial statement for the A.Y. 2005-06 and followings additional opening balances were taken as on 01/4/2004:-
(i) Kirti Nagar New Delhi Flat which was purchased in F.Y. 1997-98 Rs. 810000/-
(ii) Bal Mandir Kota House which was purchased
in F.Y. 2001-02 Rs. 1584830/-
(iii) SB A/c in name of Self and Wife (Nick name)
(Bal. as on 01/4/2004) Rs. 2000551/-
9 ITA No. 673/JP/2014 & CO 35/JP/2014
ACIT Vs. Surendra Pal Singh Sahni
(iv) SB A/c in name of brother (bal as on 01/4/04) Rs. 32700/-
(v) SB A/c in name of Self (bal. as on 01/4/04) Rs. 3317791/-
Rs. 7745872/-
He further submitted that the assessee had rental income of Rs. 62,000/-
per month and no cash in hand had been shown in the opening balance. The assessee had shown income for A.Y. 2005-06 at Rs. 70,79,612/-. All bank entries are routed through cash book, which is cross verified by the ld Assessing Officer, if there was insufficient fund for bank deposit, it is taken as undisclosed income. Total of such income during the A.Y. 2004- 05 was Rs. 8,71,000/-. After claiming standard deduction, additional income of Rs. 15,44,610/- was disclosed by the assessee. The ld Assessing Officer had verified all entries of the bank accounts as well as cash book, which has not been disputed by him. The closing balance in all the bank accounts were Rs. 50,29,106/-. However, the ld Assessing Officer had added the same, which has been deleted by the ld CIT(A) and assessee's submission was found acceptable. The ld CIT(A) has decided the issue after considering the Hon'ble Jurisdictional High Court decision in the case of CIT Vs Parmeshwar Bohra (supra). The addition made under the head rental income was also deleted by the ld CIT(A), therefore, he prayed to uphold the order of the ld CIT(A). 10 ITA No. 673/JP/2014 & CO 35/JP/2014
ACIT Vs. Surendra Pal Singh Sahni
6. We have heard the rival contentions of both the parties and perused the material available on the record. The assessee had submitted that additional income after claiming of standard deduction had been shown at Rs. 15,44,410/- whereas total income disclosed in the belated revised return at Rs. 16,73,352/-. The assessee considered the rental income from the Kirti Nagar, New Delhi flat, Bal Mandir House, Kota, interest from bank and on account of insufficient fund at Rs. 8,71,000/-. It is undisputed fact that four Benami accounts were undisclosed and disclosed first time on 18/4/2011. It is also a fact that the assessee had deposited unaccounted cash. It is accounting principle that in case of undisclosed bank accounts, in which cash has been deposited, the ld Assessing Officer has to calculate the peak by merging all undisclosed bank accounts for the year under consideration to calculate the maximum income generated by the assessee during the year under consideration. The ld Assessing Officer had made addition on the basis of closing balance, the assessee also not submitted the details of credit and debit entries of all the bank accounts for the year under consideration, therefore, the assessee was also not came with clean hands after evading tax from F.Y. 1997-98 by acquiring Kirti Nagar, New Delhi flat. Thereafter Bal Mandir house, Kota in A.Y. 2001-02. The assessee disclosed shortage 11 ITA No. 673/JP/2014 & CO 35/JP/2014 ACIT Vs. Surendra Pal Singh Sahni of cash as income at Rs. 8,71,000/- but it is not clear where this amount has gone, which is statutory obligation on the part of the assessee to disclose the true and full particulars of income and investment made during the year under consideration. The assessee has not disclosed the name and address of the tenant who had occupied the flat situated at Kirti Nagar, New Delhi. It is not acceptable that without any deed, he had allowed the property on rent. Even the assessee had not disclosed full particulars of income from where he earned the undisclosed income. This question was asked by the Bench at the time of hearing but no positive reply was given by the ld AR of the assessee. Therefore, in absence of full details, the ld Assessing Officer has to decide the assessee's case on estimated basis. Further the ld CIT(A) also had not passed reasoned order, so that we can conclude that he was justified in deleting the addition made by the ld Assessing Officer. Accordingly, we set aside the order of the ld CIT(A) to the Assessing Officer. The assessee is directed to cooperate with the Assessing Officer and produce all the evidences of ownership of the properties acquired in F.Y. 1997-98, 2001-02 and also during the year under consideration, so that the Assessing Officer can assess the correct income on the basis of peak theory of the bank account as discussed above. Accordingly, the revenue's appeal is set 12 ITA No. 673/JP/2014 & CO 35/JP/2014 ACIT Vs. Surendra Pal Singh Sahni aside to the Assessing Officer and the appeal is allowed for statistical purposes only. We do not find any merit when CIT(A) has deleted the addition on account of rental account, therefore, C.O. of the assessee is dismissed.
7. In the result, appeal of revenue is allowed for statistical purposes only and assessee's C.O. is not maintainable.
Order pronounced in the open court on 23/06/2016.
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(Kul Bharat) (T.R. Meena)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 23rd June, 2016
Ranjan*
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- The ACIT Circle-2, Kota.
2. izR;FkhZ@ The Respondent- Shri Surendra Pal Singh Sahni, Kota.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 673/JP/2014 & CO 35/JP/2014) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar