In the case of ITO Vs. Sh. Mahender Singh, ITAT Delhi has held that addition cannot be made for Cash deposits in the bank account received against sale of land as undisclosed investment for mere failure of Assessee to Produce such Purchases before the Assessing Officer (AO) during the Course of Assessment. It was further held that Assessee cannot be faulted for non-appearance of Purchases despite issue of summons U/s. 133(6) by AO.
Brief Facts of the Case:
The revenue has questioned the Order of the Ld. CIT (Appeals) regarding the deletion of addition made by the Assessing Officer.
The assessing officer has inquired about the deposits made to the saving bank account. The assessee, both contractor and agriculturist, has explained that the deposits were made out of the cash withdrawal from his agricultural account maintained with Anaj Mandali and also out of the earnest money received in pursuance of an agreement to sale agricultural land. But the assessee despite opportunity, failed to personally produce the Purchaser of Land before the Assessing Officer.
The assessing officer did not agree with the assessee and treated the same as income from undisclosed sources.
Question of Law:
Whether the assessing officer was justified in making addition only because the assessee could not personally produce the Purchaser of Land from whom he received cash payment against sale of Land, while he has submitted copy of agreement, sale deed of the agricultural land and affidavits of the buyers?
Contention of the Assessee:
Asessee contended that the deposits in the said bank account were made out of cash withdrawal made from his agricultural account with Anaj Mandali and out of the earnest money received in pursuance of an agreement to sale an agricultural land.
Therefore, all the deposits to the saving bank account have been explained fully and addition should not be made.
Contention of the Revenue:
The revenue contended that the addition was made basically on the basis that as per the agreement to sell, the sale deed was to be executed by 15/05/2009 but the same was not executed till date and that the assessee despite opportunity failed to produce before the Assessing Officer the Purchaser of Land so the cash deposit in bank account of the Assessee remains unexplained and addition is justified.
Held by CIT (A)
Ld. CIT(Appeals) called for Remand Report and considering the same held that advance received against the sale of agricultural land are genuine as the appellant submitted the copy of agreement , sale deed of the agricultural land and affidavits of the buyers in support of the advances made by buyers to the Assessee. The claim of the assessee could not be rejected only on the ground that he could not produce the Purchaser of Land as the Purchaser of Land has received summons but did not appear, the assessee could not be blamed for all this as held by the Hon’ble Bombay High Court in the case of CIT V.s UM shah,Prop. Shrenik Trading Co.Ltd.(1973) 90 ITR 396 (Bom.) and by the Hon’ble Punjab and Haryana High Court in the case of CIT Vs. Ashok Arora (2009) 29(1) ITCL 40: (P & H- H.C) (2009) 24 DTR (P & H) 227 and by the Hon’ble ITAT Delhi in the case of CIT Vs. Surinder Nath Singla (1995) 51 TTJ (Del.Tribunal) 179.
The Ld.CIT (Appeals) also contended that the Assessing officer should examine each and every individual entry and not the totality of the credit entries which are to be allowed or disallowed. If no explanation is offered in respect of particular entry then addition can be made for that particular entry.
Held by ITAT (Delhi):
It is held by the Hon’ble ITAT (Delhi) that the First Appellate order on the issue is comprehensive and reasoned one as the assessee has been able to successfully explain the source of amount in question. And thus, the First Appellate order is upheld. In result, the appeal is disIncome Tax Officer Vs Sh. Mahender Singh (ITAT Delhi)missed.