Income Tax Appellate Tribunal - Delhi
Sh. Neeraj Kumar Jain,, New Delhi vs Ito, New Delhi on 16 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "SMC", NEW DELHI
BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER
ITA Nos.6220 & 6221/Del/2016
Assessment Years : 2005-06 & 2006-07
Neeraj Kumar Jain, ITO, Ward- 47(2),
L-46, Third Floor, Kalkaji, New Delhi.
Vs.
New Delhi.
PAN : AEXPJ4491D
(Appellant) (Respondent)
Assessee by : Shri Rohit Jain, Adv.
Department by : Shri B. R. Mishra, Sr.DR
Date of hearing : 12-02-2018
Date of pronouncement : 16-03-2018
ORDER
PER R. K. PANDA, AM :
The above two appeals filed by the assessee are directed against the separate orders dated 26.09.2016 of the CIT(A)- 28, New Delhi relating to assessment years 2005-06 and 2006-07 respectively. For the sake of convenience, both the above appeals were heard together and are being disposed of by this common order.
ITA No.6220/Del/2016 (A.Y. 2005-06) :
2. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 29.07.2005 declaring total income of Rs.1,22,028/-. Subsequently, the assessment was reopened by recording the following reasons :-
2
ITA Nos.6220 & 6221/Del/2016 "In this case, during the course of scrutiny assessment u/s 143(2) made for AY 2009- 10, it has been noticed that the assessee submitted an agreement to sell made on 05- 01-2005 in respect of property transaction from Shri Raj Kumar Jain, son of Late Shri Ram Vilas Jain, resident of 79, Khandek Bazar, Meerut, UP. The description of the property is situated at village Manakpur Paragna, Ujjani Tehsil and District Badau, UP.
On perusal of the same, it was seen that the total sale consideration for this property was made at Rs. 51,81,920/- out of which Rs. 10,00,000/- (Ten Lac) in cash paid by the assessee (Shri Neeraj Kumar Jain, Purchaser) to the seller upon signing of this agreement as mentioned at serial no. 1 on page 2. The said agreement made on 05- 01-2005. It appears that cash of Rs. 10,00,000/- was given to the seller in the financial year 2004-05 (05-01-2005) pertaining to assessment year 2005-06. Summon u/s 131 of the I T Act, 1961 was issued to Shri Raj Kumar Jain (Seller) who received advance cash of Rs. 10,00,000/- on 05-01-2005 as per agreement to sell from the assessee on account of consideration of the above mentioned property. In response to that the assessee submitted death certificate of seller Shri Raj Kumar Jain who expired on 01-06-2009. Therefore, genuineness of the transaction could not be verified. Hence to prove the onus of the genuineness of transaction lies on the assessee. The details of advance cash received from the assessee is Rs. 10,00,000/- as per agreement to sell on 05-01-2005. The same is required to verify the source of cash paid to Shri Raj Kumar Jain (Seller).
In view of the above it appears that the assessee paid cash of Rs. 10,00,000/- on 05- 01-2005, source of which is required to be verified of the genuineness of transaction as it appears that the assessee was not in position to give advance cash of Rs. 10,00,000/- on the respective date. However, seller of property Shri Raj Kumar Jain was summoned u/s 131 of the I T Act, 1961 to verify genuineness of the transaction of the property but the same could not be explained due to the death on 01.06.2009. Hence, an amount of Rs.10,00,000/- on 05.01.2005 remained unexplained. In view of the above facts, I therefore, have reasons to believe that an income of Rs.10,00,000/- on 05.01.2005 financial year 2004-05 pertaining to AY 2005-06 has escaped assessment. Therefore, this case is fit for issuing notice u/s 148 of the I T Act, 1961."
3. In response to notice u/s 148, it was submitted that the return already filed u/s 139 may be treated as return in response to notice u/s 148 of the I.T. Act. Despite repeated opportunity given to the assessee to explain the source of Rs.10,00,000/- invested by him on 05.01.2005 in cash as per agreement to sell in respect of property situated at village Manakpur Paragna, Ujjani Tehsil, Distt. Badau, UP, the assessee could not explain the source of the same. Therefore, the Assessing Officer made addition of Rs.10,00,000/- to the total income of the 3 ITA Nos.6220 & 6221/Del/2016 assessee u/s 69 of the I.T. Act. Similarly, in absence of any proper explanation given by the assessee to explain the deposit of cash in the bank account on different dates, the Assessing Officer made addition of Rs.6,38,608/- to the total income of the assessee as unexplained cash credit u/s 68 of the I.T. Act.
4. In appeal, the ld. CIT(A) upheld the addition of Rs.10,00,000/- made by the Assessing Officer by observing as under :-
"4.1 I have carefully considered the fact of the case, finding of the assessing officer and the submission of the Ld. AR. The brief fact of the case is that during the assessment proceeding for A.Y. 2009-10 it was noted by the A.O. that property transaction has been carried out by the appellant in financial year 2004-05 (A.Y. 2005-06). The assessee had entered agreement to purchase a property with Shri Raj Kumar Jain, at village, Manakpur Paragna, Ujjain Tehsil for total consideration of Rs.51,81,920/-. Out of total agreed purchase price (Rs.5181920/-) (Rs.10,00,000/- was paid in financial year 2004-05 in cash by the assessee as per agreement to sell. Accordingly the case was reopened under section 147 of the Act vide notice dated 20.03.2012.
4.2 During the course of the assessment proceeding even after being given sufficient opportunity no supporting evidence for the source of the investment of Rs.10,00,000/- made in cash on 05.01.2005 on account of part payment for the purchase of the immovable property was filed. Accordingly as per detail reason mentioned in the assessment order the same was treated as investment from undisclosed source and was added under section 69 of the Income Tax Act 1961. During the course of the appellate proceeding submission made before the A.O. was repeated. It was stated by the Ld. AR that some family division took place in the appellant spouse family and the appellant got his share on such division of income. Thereafter, assessee take such money from his spouse and made investment in above mention property. However, no supporting evidence in support of the same was filed, hence the explanation cannot be accepted. Considering the above and since the appellant has failed to explain the source of the cash payment made against the purchase of the property, the addition of Rs.10,00,000/- made by the A.O. is confirmed."
5. So far as deposit of cash in the bank account is concerned, he allowed a credit of Rs.38,608/- and sustained the balance amount of Rs.6,00,000/- by observing as under :-
4
ITA Nos.6220 & 6221/Del/2016 "5.1 I have carefully considered the fact of the case, finding of the assessing officer and the submission of the Ld. AR. During the course of the assessment proceeding even after being given sufficient opportunity no explanation for the source of the cash deposit was furnished. Now the assessee has submitted that the source of the cash deposits are gift amounting to Rs.4,50,000/- received from her mother in law, and reimbursement of expenses incurred by assessee on behalf of our employer company amount to Rs.167608/- in cash. The appellant has also filed a certificate in this regard from her mother in law and the company regarding the reimbursement of expenses in cash. The explanation of the appellant regarding the cash gift cannot be accepted in absence of the credit worthiness of the donor. It is noted Smt. Malti Jain is having nominal yearly income of only Rs.1,09,022/- which is less than 25% of the amount stated to have been received as gift. Further the source of the cash has also not been explained. Further, even if it is accepted that the certain amount was received by the employer as reimbursement, then apparently the same had to be incurred by the appellant. However, no supporting cash withdrawal is apparent from his bank account. Hence the same has to be incurred either by advance received or from the earlier reimbursement. Taking all the facts into consideration, the source of the cash deposit remained unexplained. However taking all the facts into consideration, past saving, earlier withdrawal, ceremonial gifts etc, the addition made by the A.O. on account of unaccounted cash deposit is restricted to Rs.6,00,000/-. The appellant will get relief of Rs.38,608/- accordingly."
6. Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal :-
"1. That the Commissioner of Income Tax (Appeals) ['CIT(A)'] erred on facts and in law in not holding that the assessment order passed by the assessing officer under section 147/144 of the Income Tax Act, 1961 ('the Act') is beyond jurisdiction, illegal, bad in law and void-ab-initio.
1.1. That the CIT(A) erred on facts and in law in not appreciating that the re- assessment proceedings initiated without there being 'reason to believe' that income of the appellant had escaped assessment, was illegal and bad in law. 1.2. That the CIT(A) erred on facts and in law in not appreciating that the reassessment proceedings under section 147 of the Act having being initiated for the purpose of scrutinizing/ investigating the details of the appellant, is illegal and bad in law.
1.3. That the CIT(A) erred on facts and in law in not appreciating that the impugned proceedings having been initiated without obtaining requisite sanction in terms of section 151 of the Act was beyond jurisdiction and bad in law. Without Prejudice
2. That the CIT(A) erred on facts and in law in upholding the assessment completed under sections 147/144 of the Act at an income of Rs.17,57,881 as against income of Rs.1,22,028 returned by the appellant.
3. That the CIT(A) erred on facts and in law in upholding the denial of exemption to the extent of Rs.35,166 claimed by the appellant under section 10(13A) of the Act.5
ITA Nos.6220 & 6221/Del/2016
4. That the CIT(A) erred on facts and in law in confirming the addition of Rs.10,00,000 made by the assessing officer under section 69 of the Act on account of alleged unexplained investment in purchase of property. 4.1. That the CIT(A) erred on facts and in law in not appreciating that the investment in property was made out of amount(s) legated by the mother-in-law of the appellant.
4.2. That the CIT(A) erred on facts and in law in disregarding the documentary evidence furnished by the appellant during the course of appellate proceedings and holding that the appellant had failed to explain the source of cash payment made towards purchase of property.
4.3. Without prejudice, that the CIT(A) erred in not appreciating that the provisions of section 69 of the Act had no application in the case of the appellant in so far as there was no requirement to maintain 'books of accounts'.
5. That the CIT(A) erred on facts and in law in confirming various additions /disallowances made by the assessing officer de-hors the grounds/issues on which reassessment proceedings were initiated under section 147/148 of the Act.
6. That the CIT(A) erred on facts and in law in confirming addition to the extent of Rs.6,00,000 made by the assessing officer under section 68 of the Act.
6.1. That the assessing officer erred on facts and in law in alleging that the appellant was not able to establish the source of amounts credited in the bank account, in total disregard of the contemporaneous evidences and explanations provided by the appellant.
6.2. Without prejudice, that the CIT(A) erred in not appreciating that the provisions of section 68 of the Act had no application in the case of the appellant in so far as there was no requirement to maintain 'books of accounts'. The appellant craves leave to add, amend, alter or vary the above grounds of appeal at or before the time of hearing."
7. Ld. counsel for the assessee at the outset filed an application requesting for admission of following additional evidences under Rule 29 of the Income- tax (Appellate Tribunal) Rules, 1963 :-
(i) Copy of Will dated 10.10.2003 executed by Late Mrs. Malti Jain.
(ii) Copy of statement of net worth of Late Mrs. Malti Jain as on 31.07.2005 and 06.08.2006.
(iii) Copy of Death certificate of Late Mrs. Malti Jain. 6
ITA Nos.6220 & 6221/Del/2016
8. He submitted that these additional evidences go to the root of the matter and, therefore, these should be admitted for proper adjudication of the appeal. He submitted that the assessment has not been done properly since the additional evidences which were given during the first appellate authority were not properly considered. Despite repeated reminder by the ld. CIT(A), the Assessing Officer has not given any comment on the additional documents for which the ld. CIT(A) decided the appeal without considering the additional evidences. He submitted that under the facts and circumstances of the case if the additional evidences filed now and the other evidences filed earlier before the ld. CIT(A) are properly considered then no addition can be made. He accordingly submitted that the matter should be restored to the file of the Assessing Officer or the ld. CIT(A) as the case may be.
9. Ld. DR on the other hand heavily relied on the order of the ld. CIT(A).
10. I have considered the rival arguments made by both the sides and perused the material available on record. As mentioned earlier, due to inability of the assessee to explain the source of payment of Rs.10,00,000/- in respect of payment in cash on 05.01.2005 as per agreement to sell, the Assessing Officer made addition of Rs.10,00,000/- u/s 69 of the I.T. Act. Similarly, on account of inability of the assessee to explain the source of deposit in the bank account, the Assessing Officer made addition of Rs.6,38,608/- to the total income of the assessee u/s 68 of the I.T. Act. I find ld. CIT(A) gave part relief of Rs.38,608/- 7
ITA Nos.6220 & 6221/Del/2016 out of amount deposited in the bank account and sustained an amount of Rs.16,00,000/- (i.e. Rs.10,00,000/- plus Rs.6,00,000/-). The reason for sustaining the addition by the ld. CIT(A) has already been reproduced in the proceeding paragraphs. It is the submission of the ld. counsel for the assessee that if the additional evidences being filed now as per Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 and the evidence filed earlier before the ld. CIT(A) are properly considered then no addition can be sustained. Considering the totality of the facts and circumstances of the case and in the interest of justice, I admit the additional evidences filed under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 and restore the matter to the file of the Assessing Officer with a direction to adjudicate the issue afresh and in accordance with law after considering the various evidences including the additional evidences which were now filed before the Tribunal. Needless to say, the Assessing Officer shall give due opportunity of being heard to the assessee and decide the issue as per law. The grounds raised by the assessee are accordingly allowed for statistical purposes.
ITA No.6221/Del/2016 (A.Y. 2006-07) :
11. After hearing both the sides, I find the grounds raised by the assessee in this appeal are identical to the grounds raised in ITA No.6220/Del/2016. I have already decided the issue and after admitting the additional evidences filed for that year have restored the issue to the file of the Assessing Officer with 8 ITA Nos.6220 & 6221/Del/2016 direction to adjudicate the issue afresh and in accordance with law. Since in the impugned assessment year also the assessee has basically relied on the said additional evidences, therefore, considering the totality of facts of the case and following the direction for assessment year 2005-06, I restore the matte to the file of the Assessing Officer with a direction to adjudicate the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee in the light of my direction for assessment year 2005-06.
12. In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open Court on this 16th March, 2018.
Sd/-
(R. K. PANDA) ACCOUNTANT MEMBER Dated: 16-03-2018.
Sujeet Copy of order to: -
1) The Appellant
2) The Respondent
3) The CIT
4) The CIT(A)
5) The DR, I.T.A.T., New Delhi
By Order
//True Copy//
Assistant Registrar
ITAT, New Delhi