Assessing Officer as well as the CIT(A) doubted the genuineness of the Will in question without conducting any enquiry or examination of the genuineness. The assessee has produced the affidavit of one of the attesting witness of the Will to prove the Will executed by his father. Therefore, it is manifest from the record that the entire issue of addition is dependent on the existence and genuineness of the Will of the father of the assessee which was produced by the assessee during the appellate proceedings before the CIT(A) but the same was not accepted by the authorities below without conducting any verification or enquiry. To ascertain the genuineness of the Will, the Assessing Officer was required to verify the genuineness of the signatures of the father either from the undisputed record bearing his signature or otherwise by examination of the attesting witnesses or any other relevant material. Hence, in the facts and circumstances of the case, the matter is set aside to the record of the Assessing Officer to re-adjudicate the same after conducting a proper enquiry regarding the genuineness of the Will. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order.
FULL TEXT OF THE ORDER OF ITAT ALLAHABAD
This appeal by the assessee is directed against the order dated 02.07.2020 of CIT(A) for the assessment year 2011-12. The assessee has raised the following grounds:-
“1. BECAUSE ld. CIT(A) has erred in law and on facts in dismissing the appeal by upholding the validity of reassessment order dated 11.03.2016 as also the addition of Rs. 16,51,000/- made therein.
2. BECAUSE the reassessment proceedings were neither initiated nor concluded in accordance with provisions of law relating thereto, consequently the Id. CIT(A) should have quashed the reassessment order dated 02.07.2020 passed by the Income Tax Officer, Ambedkar Nagar.
3. BECAUSE reason to believe were recorded only with a view to verify the nature and source of cash deposits amounting to Rs. 19,01,000/- found in the savings bank account of the assessee which narration does not amount to requisite satisfaction for formation of belief of escapement of income within the meaning of section 147 and due to such a fundamental deficiency in recording of reason the assessment proceedings got wholly vitiated rendering the assessment order as null and void.
4. BECAUSE the information of cash deposits in the savings bank account of the assessee, as available in the AIR in possession of the Department, per se does not constitute ‘relevant material’ for the purpose of formation of belief for escapement of income and in the present case the reason to believe were recorded merely on the basis of cash deposits found in the bank account without independent application of mind by the assessing officer, consequently the reassessment order ought to have been held as null and void.
5. BECAUSE otherwise also there were inherent illegalities in the manner in which the enquiries were conducted by the assessing officer during the course of reassessment proceedings which has rendered the re-assessment order as bad in law and consequently the addition of Rs. 16,51,000/- made by the assessing officer and upheld by CIT(A) is not sustainable.
6. BECAUSE on a due consideration of the fact that the enquiry report dated 28.01.2016 obtained by the assessing officer from the Income Tax Inspector (ITI) was not confronted to the assessee before completion of assessment the ld. CIT(A) ought to have deleted the addition of Rs. 16,51,000/- made by the assessing officer by relying on the said ITI’s report.”
2. The only issue arises in this appeal of the assessee is regarding the addition made by the Assessing Officer on account of deposit of cash in the saving bank account of the assessee.
3. The assessee is an individual and did not file any return of income under section 139 of the Act. The Assessing Officer issued notice under section 148 on 26.9.2014 on the basis of the AIR information regarding cash deposit of Rs. 19,01,000/- in the saving bank account of the assessee with Punjab National Bank. Prior to issuing the notice u/s 148, the A.O. conducted an enquiry by issuing letter dated 3.9.2014 requiring the assessee to furnish PAN, filing of I.T. return etc., but there was no response on behalf of the assessee. The Assessing Officer collected the bank statement bank by issuing notice under section 136(6). Since, there was no response from the assessee, the Assessing Officer issued a show cause notice dated 3.11.2015 under section 144 of the Act and consequently the assessment was framed under section 144 r.w.s. 147 whereby the Assessing Officer made an addition of Rs. 16,51,000/- after giving the credit of Rs. 2,50,000/- as sale consideration of agricultural land sold by the assessee detected during the enquiry conducted through the Income Tax Inspector. The assessee challenged the assessment order before the CIT(A) and contended that the income of the assessee for the year under consideration was below the taxable limited therefore, no return of income was filed by the assessee. Further the assessee submitted additional evidence to explain the source of deposit in the shape of a Will executed by his father who died on 16.01.2011 leaving cash of Rs. 17,15,900/-. The assessee claimed that as per the Will dated 22.04.2004, his father left the said cash which was received only after his death and was deposited in the bank account. The CIT(A) called for a remand report and after considering the remand report has confirmed the addition made by the Assessing Officer.
4. Before the Tribunal, learned AR of the assessee has submitted that the assessee has produced the Will executed by his father and only after his death, the assessee found the said Will and cash of Rs. 17,50,900/-. The assessee explained the source of the cash in the hand of the assessee as well as in the hands of his father as the sale proceeds of his business at Mumbai. He has further contended that the CIT(A) has declined to accept the Will without conducting an enquiry and held the same as bogus or not genuine. He has referred to the affidavit of the attesting witness of the Will and submitted that when the witness in his affidavit stated to have certified the Will, then in the absence of any contrary facts or material, the same should be accepted. In support of his contention, he has relied upon the Judgment of Hon’ble Supreme Court in the case of Raj Kumari vs Surinder Pal Sharma, dated 17.12.2019 in Civil Appeal No. 9683/2019. The learned AR has pointed out that the Hon’ble Supreme Court has discussed the law relating to the execution and proof of Will under Indian Succession Act and Evidence Act. Section 63 of the Indian Succession Act is relevant in this context and clause ‘e’ of section 63 of Indian Succession Act prescribes the requirement of attestation of Will by two or more witnesses. Even if one of the attesting witness of Will can prove the Will. Hence, the ld. AR has submitted that in view of the affidavit of the attesting witness to the Will, the same cannot rejected. Further, the CIT(A) has doubted the Will in question and consequently confirmed the addition made by the Assessing Officer which is not justified.
5. On the other hand, the learned DR has submitted that the Assessing Officer conducted an enquiry through Inspector and as per the Inspector’s report dated 28.01.2016, the assessee himself revealed the fact that he sold the agriculture land for a consideration of Rs. 19,01,000/- which was deposited in his bank account. He has referred to the Inspector’s report at page No. 13 of the paper book. The assessee has took different stand before the CIT(A) and explained the source of deposit of Rs. 18,00,000/- as received from his deceased father who died on 06.01.2011 leaving behind the said cash alongwith the Will. Thus, on the facts and circumstances of the case, the alleged Will is an afterthought concocted story of the assessee to avoid tax liability. The learned DR has submitted that if the assessee would have explained the source of deposit as sale consideration of land which is an urban land, the assessee was liable to pay the capital gain. When the assessee during the enquiry conducted by the Income Tax Inspector has explained the source of cash as sale consideration of land then the Will cannot be accepted as genuine document. In support of his contention, he has relied upon the following decisions:-
i. Banarsi Prasad vs. Commissioner of Income-tax 304 ITR 239 (Alld)
ii. Sumati Dayal vs. Commissioner of Income-tax 214 ITR 801 (SC)
iii. Commissioner of Income-tax vs. Durga Prasad More 82 ITR 540 (SC)
6. Placing reliance on the above said judgments, the learned DR has submitted that the genuineness of the transaction is to be considered on the basis of surrounding circumstances, human probabilities and conduct of the connected parties. A transaction does not become genuine because a paper trail has been created. He has further contended that it was held by the Hon’ble Supreme Court that a party who relies on recital in a deed has to establish the truth of those recitals otherwise, it will be very easy to make self-serving statements in documents either executed or taken by the party and rely on those recitals. Thus, it all depends upon the facts and circumstances of the each case to test the reliability of the evidence. He has relied upon the orders of the authorities below.
7. I have considered the rival submissions as well as relevant material on record. The Assessing Officer has made the addition of Rs. 16,50,000/- on account of cash deposited in the bank account of the assessee of Rs. 19,01,000/- on 18.01.2011 and 19.01.2011. Since, the assessee has not participated in the assessment proceedings nor any explanation or documentary evidence was produced therefore, the Assessing Officer passed the ex parte order after conducting an enquiry through Income Tax Inspector who has filed the enquiry report revealing the fact that the assessee has sold the land for a consideration of Rs. 2,50,000/- but claimed by the assessee to have received the consideration of Rs. 19,00,000/-. The consideration shown in the sale deed was allowed by the Assessing Officer as source of deposit and balance Rs. 16,01,000/- was added.
8. Before the CIT(A), the assessee produced the Will dated 22.04.2004 executed by his father who died on 06.01.02011. The assessee filed death certificate of his father issued on 30.04.2016. The CIT(A) called for a remand report from the Assessing Officer, who doubted the Will as well as the time of the death of the father. The CIT(A) confirmed the order of the Assessing Officer in para 4 as under:-
“4. I have considered the submission of the appellant regarding the sources of cash deposits of Rs. 16,51,000/-. Remand Report submitted by the Assessing Officer and the rejoinder subsequently submitted by the appellant. The appellant’s case is that the source of above cash deposits is the WILL of his father who left cash of Rs. 18,00,000/- in a box which was subsequently opened after his death. The appellant has further submitted that as per the above WILL he gave Rs. 1,50,000/- to his sister and deposited the balance amount, i.e. Rs. 16,50,000/-, in his bank account. It is evident that the above explanation is an afterthought as during the assessment proceeding the appelalnt never mentioned about this WILL and had tried to explain the source of cash deposits of Rs. 19,01,000/- from the sale of agricultural land whereas as per the sale deed it is evident that the sale consideration was only Rs. 2,50,000/- which the A.O. accepted.”
9. Thus, it is clear that the Assessing Officer as well as the CIT(A) doubted the genuineness of the Will in question without conducting any enquiry or examination of the genuineness. The assessee has produced the affidavit of one of the attesting witness of the Will to prove the Will executed by his father. Therefore, it is manifest from the record that the entire issue of addition is dependent on the existence and genuineness of the Will of the father of the assessee which was produced by the assessee during the appellate proceedings before the CIT(A) but the same was not accepted by the authorities below without conducting any verification or enquiry. To ascertain the genuineness of the Will, the Assessing Officer was required to verify the genuineness of the signatures of the father either from the undisputed record bearing his signature or otherwise by examination of the attesting witnesses or any other relevant material. Hence, in the facts and circumstances of the case, the matter is set aside to the record of the Assessing Officer to re-adjudicate the same after conducting a proper enquiry regarding the genuineness of the Will. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order.
10. In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open Court on 05.08.2022 at Allahabad.