Case Law Details
Smt. Sarabjit Kaur Vs ITO (ITAT Chandigarh)
In both the years under consideration, the assessee has declared income from tuition fee in her return of income and in both the years there were cash deposits in the bank account being maintained by the assessee. The Assessing officer added the cash deposits to the income of the assessee u/s 69 of the Act on the reasoning that the assessee could not explain the source of deposits. The assessee’s contention regarding the tuition fee having been received was also disbelieved and the same was also added to the income of the assessee u/s 69A as ‘income from undisclosed sources’. In both the years, these additions were made subsequent to the reopening of the case based on information received from Investigation Wing of the Department which, in turn, had received the information from the Enforcement Directorate. It was the assessee’s contention before the Assessing officer as well as the Ld. CIT(A) that the source of cash deposits was the balance of cash brought forward from earlier assessment years and that the same was duly reflected in the balance sheet which had been filed by the assessee along return of income. The assessee has filed paper books for both the years under consideration and we note that for assessment year 2010-11, the assessee had filed copy of the balance sheet for the years ending 31.3.2010 and 31.3.2011. The balance sheet as at 31.03.2010 shows the closing cash balance in hand amounting to Rs. 12,61,473.32 and during this year i.e. 2011-12, the assessee had made deposits in bank account amounting to Rs. 13,40,000/-. During this year, the assessee had also made cash withdrawals of Rs. 3 lacs of which the Assessing officer had given due credit and had proceeded to add the remaining amount of Rs. 10,40,000/- only to the income of the assessee. It is not in doubt that these balance sheets were filed before the Assessing officer during the course of assessment proceedings as well as the before the Ld. CIT(A) but the same were not considered by them while deciding on the merits of the case. Apparently, the explanation given by the assessee has been rejected without assigning any reason. To our mind, if the assessee’s explanation of having the opening cash in hand was to be disbelieved, there should have been cogent reasoning behind the same. Therefore, we accept the assessee’s contention that as on 3 1.3.2010 the assessee had a closing balance of cash in hand of Rs. 12,61,473.32 which ought to have been considered for the purposes of explaining the source of cash deposits in the bank accounts.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
ITA No. 1144/Chd/2019 is assessee’s appeal challenging the order dated 01.05.2019 passed by the. Ld. Commissioner of Income Tax-3, Ludhiana [hereinafter referred to as ‘CIT(A)’] for assessment year 2011- 12. ITA No. 1145/Chd/2019 is also assessee’s appeal and pertains to assessment year 2013-14 and is against the order dated 01.05.2019 passed by the Ld. CIT(A), Ludhiana. Since both the appeals had identical issues, they were heard together and they are being disposed off through this common order for the sake of convenience.
2.0 Brief facts of the case in ITA No. 1144/Chd/2019 for assessment year 2011-12 are that during the year, assessee earned income from tuition as well as rent and interest from bank and other parties. For the said assessment year, the return of income was filed declaring an income of Rs. 2,44,780/-. An information was received from the Investigation Wing of the Income Tax Department vide letter 15.3.20 17, who in turn had received information from the Enforcement Directorate that the assessee had deposited cash of Rs. 8,00,000/- in her bank account maintained with Axis Bank, Jagraon and another Rs. 5,40,000/- in her bank account with HDFC bank, thus, totaling to a deposit of Rs. 13,40,000/-. In view of this information, notice u/s 148 of the Income Tax Act, 1961 (hereinafter called ‘the Act’) was issued and in response to the said notice the assessee stated that the return originally filed may be treated as the return filed in response to the notice u/s 148 of the Act.
2.1 During the course of re-assessment proceedings, the assessee was required to explain the source of cash deposit of Rs. 13,40,000/- and in response, the assessee stated before the Assessing officer (AO) that deposit was from the closing balance of cash-in hand in the immediately preceding assessment year amounting to Rs. 12,61,473/- and was also partly out of cash withdrawals of Rs. 3 lacs from Axis bank. The assessee was asked to furnish cash book / cash flow statement but the same were not furnished. The Assessing officer gave benefit of cash withdrawal of Rs. 3 lacs from the Axis Bank and counted such withdrawal towards availability of cash for the purpose of cash deposit but proceeded to treat the remaining amount of Rs. 10,40,000/- as unexplained and added the same to the income of the assessee u/s 69 of the Act. The Assessing officer also proceeded to add the tuition fee of Rs. 2,03,600/- as income from undisclosed sources. The assessment was completed at an income of Rs. 12,84,780/-.
2.2 The assessee preferred an appeal before the Ld. First Appellate Authority challenging the order of the Assessing officer on the legal issue of validity of re-assessment proceedings as well as on merits of the additions. However, the appeal of the assessee was dismissed by the Ld. CIT(A) and now the assessee has approached this Tribunal challenging the dismissal of appeal by the Ld. First Appellate Authority by raising the following grounds of appeal:-
1144/Chd/2019:
1. That the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer for reopening of the case u/s 148 as there was no reason to believe that income of the assessee had escaped assessment and also wrong reasons have been recorded for the purposes of reopening of the case and, therefore, the assessment deserves to be quashed.
2. Notwithstanding the above said ground of appeal, the confirmation of addition of Rs. 10,40,000/- u/s 69 by the CIT(A) is against the facts and circumstances of the case.
3. That the treatment of tuition Income of 2,07,200/-, which have been accepted by the department in the earlier and later years as deemed income u/s 69 A is bad in law.
4. That the addition as already made and confirmed by the CIT(A) has wrongly been taxed u/s 115BBE and which is against the facts and circumstances of the case.
2.3 For ITA No. 1145/Chd/2019 pertaining to assessment year 2013- 14, the facts in brief are that in this year the return was filed declaring total income of Rs. 5,13,120/- consisting of tuition fee, rental income as well as interest income from third parties. In this year, the assessee had deposited cash of Rs. 10,40,000/- in her bank account maintained with HDFC Bank, Jagraon and acting on the information received from the Investigation Wing vide letter 15.03.2017, the assessee’s case was reopened by issuing notice u/s 148 of the Act. In response to the notice, the assessee submitted before the Assessing officer that the original return filed may be treated as return filed in response to notice u/s 148 of the Act. In this year also, the assessee was asked to explain the cash deposit in the bank account and the response of the assessee was that the amount was deposited from the brought forward cash balance of the immediately preceding assessment year i.e. year ending 31.03.2012 amounting to Rs. 12,58,949/-. However, the assessee could not produce any books of account or cash flow statement in support of her claim.
As in assessment year 2011-12, this year also the re-assessment was completed by treating the cash deposit of Rs. 10,40,000/- as unexplained income u/s 69 of the Act and tuition income of Rs. 2,03,600/- as unexplained income u/s 69A of the Act. The re-assessment proceedings was completed at a total income of Rs. 12,43,600/-.
2.4 Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority which was dismissed and now the assessee has approached this Tribunal challenging the dismissal of appeal by raising following grounds of appeal:-
1145/Chd/2019
1. That the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer for reopening of the case u/s 148 as there was no reason to believe that income of the assessee had escaped assessment and also wrong reasons have been recorded for the purposes of reopening of the case and, therefore, the assessment deserves to be quashed.
2. Notwithstanding the above said ground of appeal, the confirmation of addition of Rs. 10,40,000/- u/s 69 by the CIT(A) is against the facts and circumstances of the case.
3. That the treatment of tuition Income of Rs.2,03,600/- which have been accepted by the department in the earlier and later years as deemed income u/s 69 A is bad in law.
4. That the addition as already made and confirmed by the CIT(A) has wrongly been taxed u/s 115BBE and which is against the facts and circumstances of the case
3.0 At the outset, the Ld. AR submitted that in assessment year 2011- 12, the assessee was not pressing ground No. 1 challenging the reassessment proceedings on legal ground.
3.1 With respect to the remaining grounds i.e. Ground Nos. 2, 3 & 4, the Ld. AR submitted that the assessee has been regularly filing the balance sheet / statement of affairs for every assessment year along with the income and expenditure account and that the captioned assessment year also was not any exception in this regard. He drew our attention to page 25 of the paper book, wherein, the assessment order passed u/s 143(3) r.w.s. 147 of the Act for assessment year 2010-11 was placed and it was brought to our notice that in this year the return of income was accepted and so was the cash deposit. It was also submitted that even the tuition income had been accepted in earlier assessment years as well as in subsequent assessment years and, therefore, there was no reason for not having accepted the tuition income for assessment year 2011-12 and having treated it as income from unexplained sources. Our attention was also drawn to the assessment order passed u/s 143(3) r.w.s. 147 of the Act for assessment year 2012-13, wherein also the returned income of the assessee was accepted, which included cash deposits as well as tuition income. It was submitted that the availability of opening cash in hand had been duly justified by filing of balance sheet for the immediately preceding assessment year which had already been accepted by the Department and, therefore, there was no reason to not accept the same for the purpose of making cash deposit in assessment year 2011-12. It was also submitted that the observation of the Assessing officer that the assessee would not have kept huge cash balance at home was just a conjecture and surmise and had no basis. It was submitted that once the closing cash balance has been accepted by the Assessing officer in the immediately preceding assessment year, then casting a doubt on the same cash balance in the subsequent assessment year was totally incorrect. It was submitted that the Assessing officer has not brought any evidence on record to establish that the assessee had spent the amount of cash withdrawals somewhere else, and, therefore, in the absence of any adverse material against the assessee on record, the explanation of the assessee could not have been rejected.
3.2 With regard to the tuition income, it was submitted that the assessee is a qualified B.Ed. and she lives in a small town i.e. Jagraon and imparts tuition for the past many years and this source of income had been regularly accepted in previous assessment years and as well as in subsequent assessment years. It was also submitted that this is an unorganised sector and the assessee does not issue any tuition fee receipt as the same is never asked for by the students. However, the assessee does file income and expenditure account and the balance sheet which have always been regularly filed before the Income Tax Department along with the return of income and, therefore, without pointing out any defect in such documents, the source of income from tuition fee could not have been legally rejected.
3.3 With respect to the assessee’s appeal for assessment year 2013-14 bearing ITA No. 1145/Chd/2019, the Ld. AR submitted that the issues were identical in this year and, therefore, the arguments would also be the same on merits of the addition.
3.4 It was further submitted that, however, in this year the assessee was pressing Ground No.1 which was pertaining to the validity of reassessment proceedings. The Ld. AR submitted that the Ld. CIT(A) had erred in confirming the action of the Assessing officer of reopening of the case u/s 148 of the Act as he had no reason to believe that the income of the assessee had escaped assessment. It was submitted that the Assessing officer, based on wrong reasoning had reached the conclusion that the assessee’s case was fit for reopening. In this regard, our attention was drawn to the copy of the reasons recorded which was placed as page 26 of the paper book filed by the assessee. The Ld. AR placed reliance on the order of ITAT Camp Bench at Jalandhar in ITA No. 181/Asr/2017 to contend that completed assessment cannot be reopened u/s 148 of the Act on the basis of information received from the Investigation Wing. It was submitted that in this case, the Assessing officer had simply acted upon the information received from Investigation Wing and did not apply his own mind and, therefore, in view of the settled judicial precedents, the reopening was not valid in the eyes of law.
4.0 Per contra, the Ld. DR submitted that, although, the assessee might have been showing income from tuition fee in different assessment years, which would have earlier been accepted by the Department, each year is a separate assessment year and has to be decided on the facts of that particular year. While supporting the orders of the Ld. CIT(A), the Ld. DR submitted that in both the years the tuition fee declared by the assessee was of meager amount, whereas, the cash deposits were of larger amounts and the assessee had not been able to explain the source of deposits satisfactorily. It was also submitted that the assessee did not maintain any record of students which would help in cross checking and verifying the claim of the assessee. The Ld. DR submitted that the Ld. CIT(A) had rightly dismissed the assessee’s appeal and that the present appeals of the assessee deserved to be dismissed.
5.0 We have heard the rival submissions and have also perused the material on record. The facts in both the years under appeal are not in dispute. In both the years under consideration, the assessee has declared income from tuition fee in her return of income and in both the years there were cash deposits in the bank account being maintained by the assessee. The Assessing officer added the cash deposits to the income of the assessee u/s 69 of the Act on the reasoning that the assessee could not explain the source of deposits. The assessee’s contention regarding the tuition fee having been received was also disbelieved and the same was also added to the income of the assessee u/s 69A as ‘income from undisclosed sources’. In both the years, these additions were made subsequent to the reopening of the case based on information received from Investigation Wing of the Department which, in turn, had received the information from the Enforcement Directorate. It was the assessee’s contention before the Assessing officer as well as the Ld. CIT(A) that the source of cash deposits was the balance of cash brought forward from earlier assessment years and that the same was duly reflected in the balance sheet which had been filed by the assessee along return of income. The assessee has filed paper books for both the years under consideration and we note that for assessment year 2010-11, the assessee had filed copy of the balance sheet for the years ending 31.3.2010 and 31.3.2011. The balance sheet as at 31.03.2010 shows the closing cash balance in hand amounting to Rs. 12,61,473.32 and during this year i.e. 2011-12, the assessee had made deposits in bank account amounting to Rs. 13,40,000/-. During this year, the assessee had also made cash withdrawals of Rs. 3 lacs of which the Assessing officer had given due credit and had proceeded to add the remaining amount of Rs. 10,40,000/- only to the income of the assessee. It is not in doubt that these balance sheets were filed before the Assessing officer during the course of assessment proceedings as well as the before the Ld. CIT(A) but the same were not considered by them while deciding on the merits of the case. Apparently, the explanation given by the assessee has been rejected without assigning any reason. To our mind, if the assessee’s explanation of having the opening cash in hand was to be disbelieved, there should have been cogent reasoning behind the same. Therefore, we accept the assessee’s contention that as on 3 1.3.2010 the assessee had a closing balance of cash in hand of Rs. 12,61,473.32 which ought to have been considered for the purposes of explaining the source of cash deposits in the bank accounts.
5.1 As far as the issue of disbelieving the assessee’s contention having earned tuition income is concerned, again it remains undisputed that the Department has accepted that the assessee had earned tuition fee in preceding assessment years, as is evident from the copies of the assessment order passed u/s 143(3) of the Act read with section 147 of the Act for assessment year 2010-11. Not only this, the assessee’s returned income was also accepted in assessment year 2012-13 also in order passed u/s 143 read with section 147 of the Act. Therefore, in our considered opinion, the lower authorities had no reason to disbelieve the assessee’s claim of having earned tuition income in this assessment year as well for the simple reason of rule of consistency. As has been held by the Hon’ble Apex Court the case of M/s Radhasoami Satsang Vs. CIT reported in 193 ITR 321 (SC), the conclusion reached in earlier years is binding on subsequent years and should be followed unless there is a material shift in the facts of the case. Therefore, we do not concur with the findings of the authorities below on the issue of not accepting the assessee’s of having received income from tuition fee. Thus, in assessment year 2011-12, on merits, we hold that the lower authorities had no justifiable reason to make the impugned additions. Therefore, the assessee succeeds on ground Nos. 2, 3 and 4 and the since the assessee has not pressed ground No.1 challenging the assumption of jurisdiction u/s 148 of the Act, the same stands dismissed.
6.0 In the result, the assesses appeal bearing No. 1144/Chd/2019 stands partly allowed.
7.0 Coming to the assessee’s appeal bearing No. 1145/Chd/2022 for assessment year 2013-14, here again, we note that the assessee had filed the copy of the balance sheets for the years ending 3 1.03.2012 and 31.3.2013 before the lower authorities and the closing balance of cash in hand as on 31.3.2012 was Rs. 12,58,949.39, whereas, the assessee’s cash deposit during the year under consideration amounted to Rs. 10,40,000/-. Here again, the lower authorities have not accepted the assessee’s claim of opening cash in hand as being the source of cash deposit in bank. The lower authorities have disbelieved the claim without assigning any reason for disbelieving the claim of the assessee. In this year also, it is not in dispute that the balance sheets were duly filed before the Assessing officer as well as before the Ld. CIT(A) and, it is a matter of record that the same were accepted by the Assessing officer. It is also worth mentioning that the assessee’s return of income for assessment year 2012-13 was accepted and the assessment was completed u/s 143(3) read with section 147 of the Act and the balance sheet for the year ending 31.03.2012 pertains to that assessment year for which the assessment had been completed at the returned income. Therefore, the assessee without any valid reason, cannot be denied the benefit of this closing cash balance in hand for the purpose of explaining the source of deposits in bank. Similarly, addition of the tuition fee of Rs. 2,03,600/- also cannot be upheld on the basis of principle of consistency as has been held by us in the preceding para No. 5.1. Therefore, on merits of the case, the assessee succeeds in assessment year 20 13-14 also.
7.1 Although, the assessee has argued against the assumption of jurisdiction u/s 148 of the Act in this year (i.e on legal ground), since we have already granted relief to the assessee on the merits of the case, we are not inclined to go into the issue of validity of assumption of jurisdiction u/s 148 of the Act in this year.
8.0 In the result, the appeal of the assessee for assessment year 2013- 14 also stands partly allowed.
9.0 In the final result, both the appeals of the assessee stand partly allowed.
