If any amount of wife deposited in the assesses account with the support of affidavit from her that can not be treated unexplained

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI ‘G’ BENCH

BEFORE SMT. DIVA SINGH, JM & SHRI A.N. PAHUJA, AM

ITA No.5482/Del/2010

Assessment year: 2000-01

Sh. Sanjay Srivastava

SI , Shastr i Nagar,

Ghaziabad (U.P.)

(Appellant)

V/s.

 Income Tax Of f icer ,

Ward 40(4),

New Delhi

(Respondent)

[PAN: ARCPS 7780 C]

Date of hearing 12-03-2012

Date of pronouncement 12-03-2012

O R D E R

A.N.Pahuja:- This appeal filed on 06.12.2010 by the assessee against an order dated 20th July, 2010 of the learned CIT(A)-XXVII, New Delhi, raises the following grounds:-

1. That on the facts and in circumstances of the case, the initiation of proceedings u/s 147 and consequently issue of notice u/s 148 is wrong and illegal as against the provisions of law contained u/s 149(1) of the Act.

2. That Assessing Officer and CIT(A) has failed to appreciate that out of the alleged cash deposits of ```1,36,500/- in his bank account. It includes the deposits also out of his salary income received in cash which was of about ``7,500/- p.m. during the period, which comes to ``90,000/-.

3. That the Assessing Officer and CIT(A) further failed to appreciate that the entire investment Assessee by Shri V.K. Sabharwal,AR Revenue by Ms/ Mamta Kochar , DR in the house was out of his accumulated funds available in his SB A/c, from declared and explained sources of himself and for his wife.

4. That the learned CIT(A) was furthr not justified and had erred in law to upheld the major portion of additions made by the Assessing Officer, without appreciating that the additional evidence failed under rule 46A, has not been adjudicated.

5. That the Assessing Officer and CIT(A) has further not appreciated that the Assessing Officer has charged the tax on the same  receipts thrice a time, while finalizing the assessment proceedings, without adjudicating the information and documents filed and available with him.

6. That the interest charged u/s 234B and 234C is further illegal as against the law and to the facts of the case, as such, not tenable.

7. The assessee assails his right to amend, alter or change any grounds of appeal at any time, even during the course of hearing of this instant appeal.

2. Facts, in brief, as per relevant orders are that on the basis of information received from the office of Addl.DIT (Investigation), Ghaziabad that the assessee deposited cash in his bank account No.785 in Punjab National Bank, BB Nagar, Ghaziabad during the period April, 1998 to March, 2000 while he did not file his returns for the relevant assessment years, a notice u/s 148 of the Income-tax Act, 1961 (hereinafter referred to as the Act) was issued to the assessee on 24th August, 2005 for the AYs 1999-2000 to 2000-2001, after recording reasons in writing. The assessee did not furnish any return even in response to the said notice nor responded to the said notice. Accordingly, a notice dated 27.03.2006 was issued u/s 142(1) of the Act. None responded to \this notice also. Later, the ld. AR on behalf of the assessee appeared before the Assessing Officer[AO in short] on 19th April, 2006 when he was again requested to file the return of income and explain the source of cash deposited in the bank account during the year under consideration. However, on the adjourned date of hearing, none appeared. Subsequently, in response to summons issued u/s 131 of the Act on 19.10.2006, the assessee appeared and his statement was recorded on oath on 30.10.2006,wherein he admitted,inter alia, having purchased house no. SI-23,Shastri Nagar,Ghaziabad in the FY 1999-2000. The assessee also stated that his only source was salary income from the service in Railways and that his household expenditure was ``5,000/- to ``6,000/- pm. In the FYs 1998-99 & 1999-2000. Since the assessee did not explain the source of  cash deposited in his bank account in the year under consideration with any cogent evidence despite sufficient opportunity allowed as detailed in the assessment order nor explained sources of investment in house purchased for ``3,00,700/- , the AO added amount of ` 1,36,500/- on account of cash credited in bank and `3,00,000 on account of unexplained investment in house.

3. On appeal, the ld. CIT(A) upheld the aforesaid additions in the following terms:-

“10. Two main issues arise out of the additions made in the assessment.

Issue no.1: Addition of ``1,36,500/- on account of cash credits into the bank account.

I have considered the findings of the Assessing Officer as well as submissions made by the Assessing Officer. The Assessing Officer at the time of survey had contacted the DDO of the assessee. The Assessing Officer observed as under:

 “As the assessee informed that he has no information in his possession about the total salary received in financial year 1998-99 and 1999-2000 and he had not been issued salary details by his employer despite his request, therefore, a summon u/s 131 was issued to his DDO on 10.11.2006 and he was requested to furnish monthly payment of salary and other payment made to the assessee during the financial year 1998-99 to 1999-2000. The pay office of the assessee furnished salary statement of Shri Sanjay Srivastava on 20.11.2006, financial year 1998-99 and 1999-2000. As per the statement, the gross salary of the assessee for the assessment year 1998-99 was ``79,504/- and after deduction of PF and insurance contributions, net salary paid to the assessee during the financial year 1998-99 was ``75,148/-. Similarly, the gross salary for the financial year 1999-2000 was `92,996/- and after deduction of ``4,520/- on account of PF and insurance net salary was ``88,476/-.”

10.1 This being the case, in his statement (vide question-13) the assessee was asked to explain the source of cash deposits in his bank account No. 785 amounting to `1,36,500/- for the present Financial Year. The assessee replied that "he has seen the copy of bank statement and he accepts there are cash deposits on various dates during the Financial Year 1998-99 and 1999-2000. He had stated that he might have some small amounts saving deposited in his said account. However, he further admitted that he was not above to substantiate any deposit having been made out of savings of his salary income and he also admitted that he could not explain the sources of deposits of `.1,30,000/-. Similarly, he could not explain the sources of deposits of`.1,36,500/- in the said bank account and could not substantiate the same for the financial year

1999-2000 as well.”

10.2 In view of the above facts, the Assessing Officer assessed the sum of `.1,36,500/- as income from unaccounted sources & out of undisclosed income. The onus was on the appellant to prove that such cash deposits made over & above his salary income is properly sourced. The appellant failed to establish this fact either during the course of assessment or during the course of appellate proceedings. I, therefore, find merit in the addition made by the Assessing Officer & accordingly the addition of a sum of `.1,36,500/- is sustained.

Issue -2 : Addition of `3,00,000/- on account of unaccounted & undisclosed expenditure/investment of purchase of house.

11. The assessee made an investment of `.3 lakhs in the purchase of house which was attributed to be out of loans from father & father-in- law. However, the appellant was unable to substantiate the same by way of evidence except merely filing certain self-serving affidavit to show that the appellant had sources for the investment made in the house.

11.1. The various submissions made by the appellant can be summarized as below:

"on the basis of information received from the office of Additional Director of Income Tax (Investigation), Ghaziabad, that the appellant has made cash deposits amounting to `.1,30,000/- only on different dates in his saving bank alc no.785 maintained in Punjab National Bank, B.B. Nagar, Ghaziabad, during the year 1998-1999 (relevant to assessment year 1999-2000) and `.1,36,500/- found to be deposited in the same bank account during the financial year 1999-2000 (relevant to assessment year 2000- 2001).

During the course of preliminary enquiries, the ADIT after having found not been satisfied with the information and explanation given, documents produced, referred the matter to the concerned Assessing Officer having territorial jurisdiction of this case, therefore, on the basis of said information, the Assessing Officer issued notice u/s. 148 to the assessee for the Assessment Year 1999-2000 and 2000-2001 respectively. Thereafter, the notices u/s. 142(1) followed, coupled with the summon u/s 131 of the Income Tax Act for 30.10.2006 and for 24.11.2006 respectively, which were complied by the assessee. During the course of his investigation, he explained that the funds deposited to the tune of `.1,30,000/- during the year 1998-1999 and `1,36,500/- during the year 1999-2000 (Assessment Year 2000-01) in his saving bank a/c no.785 maintained with PNB, B.B. Nagar Branch, Ghaziabad were either from his past personal accumulated savings, re-deposits from the cash withdrawn earlier from the same bank a/c or from the contributions from his wife, who was having the tuition income at that time and from other family members (father and father in law). The appellant has further explained and elucidated with the evidence that being a Govt. servant, he was not having any other income except the salary income, which was not presumed to be escaped to charge any tax thereupon. The Assessing Officer without suggesting him to file further evidence in support thereto of his statement given and facts explained, he rather mis-interpreted and twisted the facts in order to make further additions in the hands of the appellant. The Assessing Officer has further not appreciated, that out of the said deposits, the appellant has further made investment for the purchase of property after withdrawing the funds from his said account for `.3,00,700/-, as such the amount could not be added twice in the hands the appellant to charge tax thereupon, which interalia confirm that the assessment order passed were laconic and ironic in nature, as such suffers from infirmity, therefore, not sustainable in the eyes of law. The orders passed are further frivolous and vexatious having no sanctity under the law, because no notice, if any, has ever been issued by the Assessing Officer u/s. 143(2) of the Act prior to complete the proceedings u/s. 147/144 of the Act. The Assessing Officer while passing the orders, no deductions allowable under the law have further been allowed towards the PF and GPS to the appellant, which proves the infirmity about the orders passed by the Assessing Officer. This apart, the deductions have further not been allowed to the appellant for the HRA drawn and spent for the said years. Therefore, the additions made in the declared income are frivolous and vexatious.

With regard to the deposits of a sum of `.1,36,500/- on different dates in his SB Alc No. 785 maintained with PNB, B.B. Nagar Branch, Ghaziabad, during the year, the assessee has prepared a cash flow statement on the basis of debit/credit entries reflecting in his said Bank account on date-wise from the perusal of which, it is clear that the mode of deposits pertains either to the receipt of monthly salary, amount received from his wife Mrs. Sarita Srivastava, who was not maintaining any separate bank etc at that time, or from the redeposit of cash in the same bank alc, which withdrawn earlie., Since the cash flow statement prepared for the period from 01.04.1999 to 31.03.2000 was a fresh evidence, therefore, the same was filed along with the Petition under Rule. 46A of the Income Tax Rules, 1962, with the request to afford an opportunity to the Assessing Officer for its examination and to submit his report immediately, but though a considerable period has been elapsed, and he has been contacted telephonically number of times but the same has not so far been sent, as such, an adverse inference may please be drawn against him and accept the documents filed by the appellant in view of the judgments decided on the identical issue in the case of: CIT Vs. Motor General Finance Ltd. Reported in 254ITR 449 Basically the orders passed by the Assessing Officer are wrong on facts and erroneous on the point of law, because the Assessing Officer was having information, only to the extent, that a sum of ` 1,36,500/- has been credited by the assessee on different dates in his SB Alc for which he is having not any proper explanation thereof.

Though the assessee was having proper explanation with regard to the deposit of cash of `1,36,500/- during the year in his SB A/c, out of his salary income, amount received from his wifeMrs. Sarita Srivastava, to be deposited in the bank because of not maintaining any separate bank account of her own, out of which the assessee has spent a sum of `.3,00,000/- for the purchase of house during the year, but the Assessing Officer has made double additions while finalizing the Assessment proceedings, one for the received of an amount of `.1,36,500/- and secondly the amount withdrawn from his said bank account and utilized for the purchase of property during the year of `.3,00,000/-, therefore, the order passed could not be sustained at all in the eyes of law. Besides the above, the officer failed to allow deductions of HRA, Contribution to the GP Fund etc. while finalizing the Assessment proceedings, which is also against the law and to the facts of the case. The Petition filed uls Rule 46A was also supported with the Affidavits of the wife of the appellant that she has handed over certain amounts out of her annual income to the appellant for depositing the same in his said SB A/c, as she was not maintaining any separate bank a/c of her own at that time. From the submissions made hereinabove, it is clear that the order passed by the Assessing Officer is against the law and to the natural justice, as such the additions made are frivolous and vexatious and liable to be deleted and may please be deleted accordingly.

The copy of Petition filed under Rule 46A coupled with cash flow statement prepared for the period 01.04.1999 to 2000 with copies affidavits filed by Mrs. Sarita Srivastava wife of the appellant along with the said Petition are again enclosed herewith for your honour's perusal and records.”

12. Determination:

I have carefully gone through the submissions made by the appellant as well as the findings of the Assessing Officer. In the absence of evidence to the effect that the investment in the house purchase, a sum of `3,00,000/- was brought to tax by the Assessing Officer. However, the Assessing Officer has not appreciated the fact that a sum of ``1,36,500/- has already been taxed by him as unexplained deposits. It is the contention of the appellant that the investment in the house is partly out of such cash deposited and withdrawn. In the light of the submissions made by the appellant and facts and circumstances of the case, I find merit in the argument of the appellant that a reasonable part of such cash deposits has been invested in the purchase of house. Accordingly, the telescoping of such investment of a sum of ``1 lac can be reasonably be accorded to the assessee having been made for investment in purchase of house. Therefore, the appellant is to be assessed at a sum of ``2 lakhs instead of ``3 lakhs added by the Assessing Officer.”

4. The assessee is now in appeal before us against the aforesaid findings of the ld. CIT(A). At the outset, the ld. AR on behalf of the assessee while inviting our attention to an order dated 18th January, 2010 in assessee’s own case in I.T.A. no.933/D/2009 for assessment year 1999-2000 contended that since similar issues in the preceding assessment year have been restored to the file of the AO , accordingly, the matter in the year under consideration may also be restored to his file for allowing sufficient opportunity to the assessee to explain his case. The ld. DR did not oppose these submissions of the ld. AR.

5. We have heard both the parties and gone through the facts of the case. We find that a co ordinate Bench while adjudicating a similar issue in the preceding assessment year 1999-2000 concluded in their order dated 18^th January, 2010 as under:-

“3.5 We have carefully considered the submissions and perused the records. Rules of natural justice and fair play demand that the assessee should be given an opportunity to rebut the adverse inference drawn against him. In our considered opinion, in the interest of justice, it will be appropriate to remit the issue to the files of the Assessing Officer to consider the same afresh. Accordingly, we remit the issue on merits in this case to the files of Assessing Officer to examine the same afresh. Needless to add that the assessee should be given adequate opportunity of being heard.”

6. Since facts and circumstances prevailing in the year under consideration are ,indisputably, similar to the facts and circumstances in the preceding year, following the view taken by a co-ordinate Bench in the preceding year , we consider it fair and appropriate to restore the issues raised in ground nos. 1 to 5 before us to the file of the AO for readjudication in accordance with law after allowing sufficient opportunity to the assessee. With these observations ground nos. 1to 5 in the appeal are disposed of.

7.  Ground no.6 relates to levy of interest U/s 234B and 234C of the Act. The ld. AR on behalf of the assessee did not make any submissions on this ground. The levy of interest u/s 234B & 234C of the Act being mandatory [Commissioner Of Income Tax.vs Anjum M. H. Ghaswala And Others,252 ITR 1(SC), affirmed by Hon'ble Apex Court in the case of CIT v. Hindustan Bulk Carriers [2003] 259 ITR 449(SC) and in the case of CIT v. Sant Ram Mangat Ram Jewellers [2003] 264 ITR 564(SC)], this ground is dismissed. However, the AO shall allow consequential relief ,if any, while giving effect to our aforesaid directions. With these directions ,ground no.6 is disposed of.

8. No additional ground having been raised before us in term of residuary ground no. 7 in the appeal , accordingly, this ground is dismissed.

9. No other plea or argument was made before us.

10. In the result, appeal is partly allowed but for statistical purposes.

Order pronounced in open Court

                                                         Sd/-                        Sd/-

                                             (DIVA SINGH)      (A.N. PAHUJA)

                                            (Judicial Member)  (Accountant Member)

NS

Copy of the Order forwarded to:-

1. Sh. Sanjay Sr ivastava,S1, Shastr i Nagar, Ghaziabad, U.P.

2. Income Tax Of f icer, Ward 40(4), New Delhi.

3. CIT Concerned

4. CIT(A)-XXVII, New Delhi

5. DR, ITAT,’G’ Bench, New Delhi

6. Guard File.

BY ORDER,

Deputy/Asstt.Registrar

ITAT, Delhi