DCIT Vs Sukhbir Shokeen (ITAT Delhi)
ITAT Delhi held that addition u/s 69 of the Income Tax Act towards unexplained investment untenable as source of investment made by the appellant stands sufficiently explained.
Facts- AO noted that during the year under consideration, the appellant has been engaged in plotting and sale of this land to different parties. During the A.Y. 2016-17, AO noted that there were substantial credits including the cash deposits in his different bank accounts and that the assessee has not been able to explain how the income figure for different assessment years has been worked out.
The income declared by the appellant in the A.Y. 2016-17 was not accepted and AO concluded that the assessee being a broker in real estate business and having no other substantial source of income than the real estate business, the credits in the bank accounts represent the gross receipts of the assessee. Thus, the income of the appellant has been computed by AO @8% of the total receipts/credits of Rs.11,08,41,059/-, u/s 44AD of the Act at Rs.88,67,284/-.
Notably, the explanation in this regard filed by the appellant was not acceptable and added the amount of Rs. 4,59,50,000/- on account of unexplained investment u/s 69 of the Act.
Aggrieved by the order of the AO, the assessee filed appeal before the ld. CIT(A) who deleted the addition which led to filing of the appeal before us by the revenue.
Conclusion- Held that during the course of search, no incriminating evidence was discovered or seized to show that the credits of the appellant’s bank statements were in the nature of income or that he was engaged in any other line of work. In this regard, it is noteworthy that the appellant was required to explain the source of funds utilized for purchasing the said properties, which has been duly discharged by the appellant. A mere suspicion has been raised by the Assessing Officer on such other credits of equivalent amounts, without seeking explanation of such other credits from the appellant. All credits appearing in his bank statement are duly explained, and the documentary evidence placed on record has been duly perused and examined. The source of investment made by the appellant during the year stands sufficiently explained. Hence, we decline to interfere with the reasoned order of the ld. CIT(A).
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal has been filed by the Revenue against the order of ld. CIT(A)-30, New Delhi dated 09.03.2020.
2. The Revenue has raised the following grounds of appeal:
“1. On the facts and in the circumstances of the case, the Ld.CIT(A) has not appreciated the facts and erred in law that the assessee did not cooperate during the assessment proceedings for which he was asked specifically to provide details of all his bank accounts but he failed to do so. When enquiry letters were sent on the bank accounts disclosed by the Investigation Wing, many other bank accounts came to the notice.
2. On the facts and in the circumstances of the case, the Ld.CIT(A) has not appreciated the facts and erred in law that inspite of being provided sufficient opportunities, the assessee did not explain the debit/credit entries appearing in his bank account.
3. On the facts and in the circumstances of the case, the Ld.CIT(A) has not appreciated the facts and erred in law that the assessee was asked to submitted the details of debit/credit entries of his bank account from the very beginning through detailed questionnaires.
4. On the facts and in the circumstances of the case, the assessee himself accepted that he does not maintain regular books of accounts.
5. On the facts and in the circumstances of the case, the Ld.CIT(A) has not provided opportunity to the AO and no remand report u/s 46A of the Act has been called for from the AO in this case so as to counter the new evidences, if any filed by the assessee before the Ld. CIT(A).
6. On the facts and circumstances of the case, the Ld. CIT(A) has not appreciated the facts and erred in law that on the issue of addition of Rs. 4,59,50,000/-on account of unexplained investment no evidence was filed before the AO during the assessment proceedings in the form of identity, creditworthiness of the lender.”
3. The brief facts of the case are that the assessee filed return of income declaring income at Rs. 10,65,080/-. A search and seizure action u/s 132 of the Act, was carried out on 13.12.2016 at the premises of the appellant. The assessee is engaged in sale and purchase of properties as a broker and deals in real estate and agricultural land. While explaining the substantial cash credits in his bank accounts, the appellant has submitted that he mostly acted as a broker for trading in agricultural land. The appellant also traded in agricultural land and submitted that his family owns ancestral agricultural land approximately 20 acres in Village Chhawla.
4. The A.O. has noted that during the year under consideration, the appellant has been engaged in plotting and sale of this land to different parties. During the A.Y. 2016-17, the A.O. noted that there were substantial credits including the cash deposits in his different bank accounts and that the assessee has not been able to explain how the income figure for different assessment years has been worked out.
5. The income declared by the appellant in the A.Y. 2016-17 was not accepted and the A.O. concluded that the assessee being a broker in real estate business and having no other substantial source of income than the real estate business, the credits in the bank accounts represent the gross receipts of the assessee.
6. Thus, the income of the appellant has been computed by the A.O. at the rate of 8% of the total receipts/credits of Rs.11,08,41,059/-, u/s 44AD of the Act at Rs.88,67,284/-. Since, the appellant has already declared his return of income at Rs.10,65,080/-, for the year under consideration, the difference of Rs.78,02,204/- (188,67,284 – 10,65,080) is added by the Assessing Officer in the returned income of the appellant.
7. Further, during the assessment proceedings, the AO sought explanation regarding purchase of property by the appellant. The appellant was asked to submit all the documentary evidences with regard to the investment in property amounting to Rs. 4,59,50,000/-. The AO noted that the explanation in this regard filed by the appellant was not acceptable and added the amount of Rs. 4,59,50,000/- on account of unexplained investment u/s 69 of the Act.
8. Aggrieved by the order of the AO, the assessee filed appeal before the ld. CIT(A) who deleted the addition which led to filing of the appeal before us by the revenue.
9. Excerpts from the Assessment Order:
“2. Information was received in this case about huge amount of cash in possession of Sh. Sukhbir Shokeen at his residence A-71, Pachhiya Mohalla, Chawla, Delhi 71. Accordingly, warrant u/s 132 of the Act as issued in respect of the above premise. During the course of search proceedings u/s 132 of the Act on 13.12.2016, cash seizure of Rs. 64,84,000/- (including new currency of Rs. 11.32 lacs) was made. Sh. Sukhbir Shokeen in his statement stated that the above mentioned cash was his unaccounted income of commission/brokerage received from the real estate business during the F. Y. 2016-17. He further stated that this unaccounted income has been generated in the form of commission received from the sale/purchase, mutation, lease deed, rent agreements and this was received by him from different parties in the form of cash. He further stated that he does not remember names of those parties from whom he has received the commission income in cash and does not keep any record of sale/purchase, mutation, lease deed and rent agreements. His statements were recorded u/s 132(4) of the Act on 13.12.2016 & 11.02.2017 and on 31.05.2017 u/s 131(1A) of the Act. Statement of the assessee was also recorded before the undersigned during assessment proceedings on 24.12.2018. The above statements recorded during the search and post search proceedings were confronted to the assessee.
3. A notice u/s 153A of the Act was issued on 14-12-2017 and served on the assessee requesting to file his return of income within 15 days of the receipt of notice. In response to the statutory notice u/s 153A of the Act, the assessee filed his return of the income on 29-11-2018 declaring total taxable income of Rs. 10,65,080/-. Notice u/s 143(2) of the Act was issued on 07-12- 2018 fixing the case for hearing on 13-122018, which was duly served upon the assessee through speed post. Notices u/s 142(1) of the Act alongwith detailed questionnaires was issued on 24-07-2018, 16-10-2018, and 26.12.2- 018 which were duly served on the assessee through speed post and AR of the assessee. In response thereto, Sh. Karan Kumra, of Kumra Bhatia & Co. represented the case before this office as authorized by the assessee and filed necessary details/information/documents, etc. as required.
4. During the year under consideration, the assessee is engaged in the sale and purchase of properties as a broker and deals in real estate and agricultural land. On perusal of the findings of the Investigation Wing, submission/details filed by the assessee and enquiries conducted u/s 133(6) of the Act, the following issues have emerged.
5. Enquiries u/s 133(6) of the Act and information relating to the bank accounts in assessee’s name/joint name.
5.1 During the post search as well as assessment proceedings, the assessee has admitted that he has not been maintaining regular books of accounts. Enquiries in the form of issuance of notices u/s 133(6) of the I.T. Act to the concerned bank branches were conducted and information relating to the bank statements of the assessee in his name/joint name were obtained. On perusal of these bank statements, it has been observed that there are substantial credit and debit entries in these bank accounts.
5.2 During assessment proceedings, vide this office questionnaire dated 26.12.2018, the assessee has been asked to explain these entries and provide narration of these entries. The AR of the assessee submitted that since regular books of accounts have not been maintained by the assessee over the years under consideration, it is not possible for the assessee to recall these entries.
5.3 The assessee is engaged in the sale and purchase of properties as a broker and deals in real estate and agricultural land. While explaining the substantial cash credits in his above mentioned bank accounts, he has submitted that the assessee mostly acts as a broker for trading in agricultural land. The assessee also trades in agricultural land himself and submitted that his family owns ancestral agricultural land approximately 20 acres in Village Chhawla. On perusal of the documents submitted by the assessee, it is seen that during the years under consideration, the assessee has been actively engaged in plotting and sale of this land to different parties. During A.Y. 2016-17, there are substantial credits (including the cash deposits) in his different bank accounts and the assessee has not been able to explain how the income figure for different assessment years has been worked out in absence of any regular books of accounts maintained by him.
6. Special provision for computing profits and gains of business on presumptive basis.
6.1 44AD of the Act states as under:
(1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”:
Provided that this sub-section shall have effect as if for the words “eight per cent”, the words “six per cent” had been substituted, in respect of the amount of total turnover or gross receipts which is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account during the previous year or before the due date specified in sub-section (1) of section 139 in respect of that previous year.]
(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed.
(3) The written down value of any asset of an eligible business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.”
A search and seizure operation u/s 132 of the Act was carried out on the assessee on 13.12.2016 and cash of Rs. 64.84 lacs was found at his residence. The assessee during the course of statement recorded on oath u/s 132(4) of the Act admitted this amount to be his unaccounted income from real estate business. Later, he declared 100% of this amount for taxation u/s 44AD in his return of income filed for A.Y. 2017-18.
6.3 The above discussion implies that consequent upon the search on the assessee and seizure of unaccounted cash of Rs. 64.84 lacs, the assessee declared income from business or profession amounting to Rs. 71,73,450/- u/s 44AD. This amount of Rs. 71,73,450/- includes 100% of the cash seized during search and offered the same as his unaccounted income while filing his return of income for A.Y. 2017-18. In the preceding years as well as the instant A.Y. 2016-17, the income declared are low as compared to the income declared in A.Y. 2017-18 consequent to the search. Thus, it is apparent that the assessee was having substantially higher income over the different assessment years under consideration. Therefore, income declared by assessee w.e.f. A.Y. 2011-12 to 2016-17 are not acceptable and are re-worked out. The following credits have been observed in different bank accounts of the assessee in his name/joint name during the years under consideration.
