Surendra Nath Singh Vs ITO (ITAT Varanasi)
Held that estimating past savings as Rs. 6,00,000, without any basis, instead of Rs. 9,03,900 and also ignoring the evidences produced for the same. Addition of the same deleted.
Facts-
The assessee is an individual and derives income from the legal profession and agriculture. AO issued a notice u/s. 148 of the Income Tax Act on the basis of information received from Income Tax Officer regarding the cash deposit of Rs. 15,03,900/- in the saving bank account of his son.
The assessee explained the deposit in the bank account of his son to purchase an apartment in Lucknow and the source of deposit is to the extent of Rs. 8,03,900/- from past savings of the assessee from his professional income as well as agricultural income. The balance amount of Rs. 7,00,000/- was explained by the assessee as a loan taken from the relatives.
AO accepted the past savings of the assessee by estimating the same at Rs. 6,00,000/- instead of the claim of the assessee at Rs. 8,03,900/- and consequently addition of Rs. 2,03,900/- was made on account of unexplained and undisclosed income. Thus, total addition of Rs. 9,03,900/- was made by AO.
The addition was confirmed by CIT(A). Being aggrieved, the assessee preferred the present appeal.
Conclusion-
The Assessing Officer then observed that in the absence of any credible evidence, the past savings was accepted at Rs. 6,00,000/-. It is pertinent to note that the Assessing Officer has not given any basis for acceptance of past savings at Rs. 6,00,000/- when the assessee in in the legal profession for last more than 40 years as well as having the agricultural land holding and agricultural income. Therefore, the estimation of the Assessing Officer without any basis at Rs. 6,00,000/- as against the claim of Rs. 9,03,900/- is arbitrary and unjustified.
Held that ignoring the facts and circumstances of legal practice of the assessee for such a long period as well as evidence produced for agricultural land holding, the additions sustained by the CIT(A) on the ground that no evidence could be furnished, is not justified. Accordingly, the addition made by the AO and confirmed by the CIT(A) of Rs. 2,03,900/- is deleted.
Held that the assessee has given a plausible explanation by producing the details of the loan creditors who are non other than relatives of the assessee and the Assessing Officer could not conduct a proper enquiry due to the paucity of the time as the notice under section 133(6) were issued at the fag end and the same were not even served on the loan creditors before the assessment order was passed. Therefore, it is a case of no enquiry conducted by the Assessing Officer to contradict the explanation of the assessee. Even otherwise the assessee submitted the requisite information and evidence before the CIT(A) but instead of examining and verifying the correctness of the evidence produced by the assessee, the same was rejected out rightly. This conduct of the Assessing Officer as well as CIT(A) is not in accordance with the procedure ought to have been adopted by the quasi-judicial authority.
FULL TEXT OF THE ORDER OF ITAT VARANASI
This appeal by the assessee is directed against the order dated 07.08.2018 of CIT(A) for the assessment year 2010-11. The assessee has raised the following grounds:-
“1. Because the Order of the learned CIT(A) is erroneous in so far as it did not state point for determination, the decision thereon and the reason for decision.
2. Because the Order of learned CIT(A) is not a speaking Order and cannot be sustained being in violation of principles of natural justice.
3. Because the learned lower authorities are not justified in accepting past savings at Rs.6,00,000 only as against Rs. 8,03,900 and treating Rs.2,03,900 as unexplained / undisclosed income ignoring that the assessee had no bank account in the past and is a practicing advocate since 1976-77 and has also substantial income from agricultural land in support of which Khatauni of agricultural land at village Tanda and Bairakh were filed. The assessee had shown agricultural income at Rs.25,000 in the year under consideration which has been accepted by the A.O.
4. Because total deposit in the bank account of assessee son were 15,03,900 out of which Rs.7,00,000 were received as loan from relatives which has wrongly been treated by the learned A.O. as unexplained and also confirmed by learned CIT(A) ignoring evidence / documents filed before him.
5. Because the A.O. is grossly unjustified in stating in Para 4 of Assessment Order that the information called for u/s. 133(6) from all the six parties / relatives, who have given loan to assessee, no response were received from any one of them and in treating the loan amount of Rs. 70,000/- as unexplained and learned CIT(A) also erred in confirming the addition ignoring the facts and documents on record.
6. The observation of the learned A.O. in Para 4 of assessment Order dt.27.12.2017 is wrong and misleading that no reply was filed by any of the 6 parties, to whom notices u/s. 133(6) were issued, ignoring the vital fact that reply by Kalpnath Singh, Manish Singh and Samrath Singh admitting advance of loan to assessee were duly filed before the A.O on 27.12.2017, the date of Assessment Order. The learned CIT(A) also erred in not accepting the loan from these 3 parties relying upon the incorrect and misleading observation made by A.O. in Assessment Order – without verifying the fact on record that on 27.12.2017, the date of assessment order the replies filed in compliance to notice u/s. 133(6) by the aforesaid three parties were on assessment record the A.O.
7. Because the observation of the learned A.O. in Para 3 of the remand report that the assessee filed letter dated 17.11.2017 merely stating name of alleged lenders that too with incorrect address, is patiently not only wrong but also untrue as the notices issued under 133(6) by A.O. were duly complied with on 27.12.2017 by 3 parties and the other 3 parties alongwith aforesaid 3 parties also filed affidavit before the learned CIT(A) – on the basis of service of notice u/s. 133(6) on them, which prove that address given by assessee vide letter dt.17.11.2017 was complete and correct.
8. Because the allegation of A.O. in remand report that assessee failed to prove identity, genuineness of transaction and credit worthiness of the lenders and did not produce any evidence to prove ingredients of section 68 is wrong ignoring the document filed before the learned CIT(A) on which remand report was called for and the replies filed in compliance to notice u/s. 133(6) on 27.12.17 by three parties Kalanath, Manish, Samrath Singh before the A.O. The documents filed before learned CIT(A) are as under:-
(a) Surjeet Singh – Aadhaar Card, 3 Khatauni
(b) Samrath Singh – Aadhaar Card, 4 Khatauni
(c) Manish Singh – Voter ID
(d) Kalpnath Singh – Voter ID, 4 Khatauni
(e) Yogesh Singh -Aadhaar Card, 1 Khatauni
(f) Alok Singh – 1 Khatauni of father Jaiprakash
9. Because the learned CIT(A) has not adjudicated grounds of appeal as under:-
“Because regarding loan the appellant has filed the list containing name of six persons their address and borrowed amount but teamed A. O. has not given reasonable opportunity to the appellant to prove his version ignored the fact and passed the order in so hurry.
Because the version of learned A.O. explain in para 4 of the assessment order is totally against facts. The confirmation letter of three persons containing information as required by AO are already submitted.”
10. Because the time allowed u/s 133(6) to all the parties, who have given loan to assessee, was extremely short and it was not possible to furnish the information within the time allowed. The notices were send by registered post / speed post:
