Deepak Dahiya, Gurgaon vs Assessee

BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. No.5214 /Del/2013 Assessment year : 2009-10 Shri Deepak Dahiya, Vs. ITO, Ward 1(1), A-219, G.F. Today's Blossoms, New Delhi Sector 47, Gurgaon GIR / PAN:AGKPD2390Q (Appellant) (Respondent)

Appellant by : Shri Salil Aggarwal, Shri Shailesh Gupta, Adv. Respondent by : Smt. Parwinder Kaur, Sr. DR

ORDER

PER T.S. KAPOOR, AM:

This is an assessee's appeal filed against the order of Ld. CIT(A) dated 21.06.2013. The assessee has taken 3 grounds of appeal but the crux of grievance of assessee is confirmation of addition made by Ld. CIT(A) amounting to Rs.30,32,150/- on account of cash deposited in saving bank accounts of the assessee and confirmation of addition amounting to Rs,7,19,274/- on account of credit card expenses.

2. The brief facts of the case are that during assessment proceedings, the A.O. observed that assessee had made cash deposits in two accounts belonging to assessee. The assessee was show caused to explain the sources for deposit of same. However, the assessee did not appear before A.O. and also did not furnish any evidence in support of source of cash deposits. Therefore, A.O. made addition of Rs.30,32,150/-. The A.O. further observed that the assessee had made payment 2 ITA No.5214/Del/2013

against credit card for which also no explanation was submitted, therefore, he made addition of Rs.14,23,474/- on account of credit card payment. Aggrieved, the assessee filed appeal; before Ld . CIT(A) and also filed additional evidence under Rule46A of the act. Ld. CIT(A) after obtaining remand report from the A.O., was not satisfied with the explanation of assessee and therefore, he upheld the addition made by A.O. on account of cash deposits. However, regarding credit card payments, he reduced the addition on account of fact that A.O. during remand proceedings had admitted certain mistakes in calculation of additions. The findings of Ld. CIT(A) as contained in para 6.2, to 7.1 are reproduced below:

"6.2 I have considered the Impugned the assessment order, the de ailed submissions of the appellant and gone through the remand report of the AO together with the rejoinder filed by the appellant. The AO made an add1tlon of Rs,30,32,150/- being cash deposits In the bank account of the appellant, which were found un-explained at the time of assessment proceedings. During the course' of appellate proceedings, the additional evidence was submitted by the appellant, which was sent to the AO for examination. On a perusal of the AO's report together with the rejoinder filed by the appellant, It is found that the explanation given by the appellant has three limbs:

(i) Cash gift of Rs.2,00,000/- from Smt. H.No. 35D, Pltampura, New Delhi, appellant. Kamla Devi, r/o AP Block, being the mother of the appellant.

(ii) Appellant's income from rent and business amounting to Rs.8,00,000/-

(iii) Gift of Rs.l0,00,000/- received from Shri Azad Singh, the father of the appellant. Let us consider all these three evidences one by one:

6.3 As regards the cash gift from Smt. Kamla Devi, the appellant has stated that he had received Rs.2,00,000/- from her. As per the report of the AO, the appellant could not bring any Gift Deed on record. The copy of Income tax return of Smt. Kamla Devl was also not produced. The only, evidence provided by the appellant was the Bank passbook of Smt. Kamla Devi as per which she had withdrawn Rs.l,80,000/- on 05.11.2008 out of which Rs.48,000/- each was deposited In cash In the Bank account of the appellant on two occasions I.e. on 25.02.2009 and 05.03.2009 totaling Rs.96,000/-. In addition, various amounts were given by Smt. Kamla Devi to the appellant through cheques on 05.05.2008, 05.06.2008, 05.05.2009 and 06.04.2010.

The entries given in the passbook do not offer much by way of explanation 3 ITA No.5214/Del/2013

with regard to the source of cash deposit of Rs.2,00,000/- In the bank account of the appellant. Hence, In view of the evidences provided by the appellant, particularly the lack of any Gift Deed and failure to provide copy of IT Return of the donor, this explanation regarding source of cash deposit is not accepted.

6.4 As regards explanation of the appellant that he had derived an Income of Rs.8,00,000/- during the year from rent and business, the AO submitted In his report that the total Income from these sources was only Rs.5,12,399/- and not Rs.8,00,000/-. Out of this, a deduction of Rs.l,00,000/- was claimed under Chapter VI-A. This means that the total Income reported by the appellant, which was available to him for making household expenses was only Rs.4,12,399/-. Considering the high cost of living and the necessity to maintain a certain standard of living, it can easily be inferred that hardly anything could have been left over after making necessary expenses. Hence, the question of saving some surplus income from these two sources and then depositing the same into the bank account is ruled out.

6.5 The appellant has stated that the AO has taken his taxable Income into consideration rather than the gross income which was Rs.8,00,000/- and not Rs 5,12,399/- during the year. Even if we accept this explanation, we have to exclude Rs,l,00,000/- out of the total gross Income on account of Investment In various tax saving resulting In a taxable income of Rs.7,00,000/- on which tax will have to be paid to arrive at the disposable income, and to say that the appellant could save Rs.5,00,000/- out of this disposable amount Is bereft of any sound logic and reasoning. Hence, the explanation given by the appellant that he could save Rs.5,00,000/- out of his income, which was put Into his bank account by way of cash, lacks any sound reasoning and thus deserves to be rejected.

6.6 As regards, gift of Rs.10,00,000/- from his father, the appellant could not produce any Gift Deed as per which this gift as given by his father. The appellant neither produced the copy of Income tax return of the donor. It is extremely surprising to note that a person giving gift as high as Rs.10,00,000/- did not have any taxable Income. The appellant did not provide any explanation as to why he could not produce h income tax return of Shri Azad Singh. The appellant could merely produce an affidavit given by his father along with bank records as retirement papers. On a perusal of bank passbooks, It Is observed that Shri Azad Singh had given an amount of 4 ITA No.5214/Del/2013

Rs.34,000/- to Shri Deepak Dahlya on 22.11.2008 by cheque. Nowhere In the passbook of Shri Azad Singh, the entry of cash withdrawal of Rs.10,00,000/- is found. Since the evidence by ay of passbook hardly provides an explanation In respect of cash deposits made into the bank account of the appellant and the fact that the appellant could not produce any Gift Deed and/or copy of income tax return of the donor, it follows that the explanation by way of a gift of Rs.l0,00,000/- received from his father lacks any force/logic and sound evidence and thus deserves to be rejected.

6.7 Hence, after a careful consideration of the facts of the case, the impugned assessment' order, the detailed submissions of the appellant and the remand report of the AO coupled with the appellant's rejoinder, I uphold the action of the AO In making an addition of Rs.30,32,150/- on account of unexplained cash deposits into the bank account of the appellant. The addition Is m de under section 69 of the IT Act. This ground of appeal is thus dismissed.

7. Ground No. 4 is against the action of the AO in making an addition of Rs.14,73,474/- on account of credit entries, whereas the total of such credit entries amounts to Rs.7,19,274/-. Though the appellant did not furnish any additional evidence on this Issue, the AO recalculated the total credit card expenses and found that the total addition should have been Rs.7,19,274/- Instead of Rs.14,73,474/- and attributed the difference to a clerical error made by him at the time of passing assessment order u/s 143(3).

7.1 After considering the appellant's submissions along with the remand report of the AO, the appellant gets a relief of Rs.7,54,200/- on this Issue. This ground of appeal is thus allowed."

3. Aggrieved, the assessee is in appeal before us.

4. At the outset, the Ld. A.R. submitted that the assessee had explained the sources of cash deposit as part of it was received as gifts from his parents but the A.O. without examining the donor, rejected the contention of the assessee. Ld. A.R. submitted that for accepting gifts from parents, no occasion was required and natural love and affection was sufficient to receive the gifts. Reliance in this respect was placed on the case law of Shri Suresh Kumar Kakkar, 324 ITR 231. It 5 ITA No.5214/Del/2013

was submitted that the mother had gifted an amount of Rs.2 lacs after withdrawal from her bank account and father had gifted amount of Rs.10 lacs out of funds received by him on his retirement and in this respect our attention was invited to paper book page 37. It was submitted that Ld. CIT(A) rejected the contention of assessee despite evidence of retirement funds as per paper book page 37, was brought to his knowledge. It was further submitted that the fact of mother having drawn amount of Rs.1.80 lacs from bank account was noted by Ld. CIT(A) and even after redeposit of Rs.0.96 lacs in her bank account still there was balance of Rs.0.84 lacs but Ld. CIT(A) did not allow relief for the left amount even. Ld. A.R. submitted that as part of additional evidence, the assessee had filed necessary explanations along with affidavits of parents along with retirement papers of father and therefore, primary onus was discharged and therefore, onus was on A.O. to dislodge the claim of assessee as he had not examined the donors. It was further submitted that the assessee was engaged in retail trading and had declared income u/s 44AF and a part of cash sales was also utilized for making deposits in his bank account. It was submitted that assessee had earned about Rs.8 lacs from business and rent but Ld. CIT(A) did not consider it and outrightly rejected the same. In view of the above, it was submitted that at least Rs.20 lacs stood explained. As regards credit card payments, Ld. A.R. argued that credit card payments were made out of cash deposits only, therefore, addition on this account amounted to double addition.

5. Ld. D.R. on the other hand submitted that the assessee was not able to prove genuineness and creditworthiness of donor, therefore, the Ld. CIT(A) had rightly confirmed the addition. In this respect reliance was placed on the following case laws:

i) 2923 ITR 552 CIT Vs Anil Kumar 6 ITA No.5214/Del/2013

ii) 262 ITR 434 Sajan Dass and Sons Vs CIT

6. We have heard rival parties and have gone through the material placed on record. We find that assessee's mother had withdrawn Rs.1.80 lacs on 05.11.2008 and had redeposited in bank account Rs.96,000/- in two installments of Rs.48,000/- each as noted by Ld. CIT(A)'s in his order para 6.3. However, Ld. CIT(A) has not accepted the contention of assessment for balance amount even. Similarly, we find that assessee's father had retired and had got retirement benefits amounting to Rs.9,74,023/- as per copy of letter of Dy. Controller of Accounts as placed on paper book page 37. The Ld. CIT(A) has held that donor father's income tax return was not filed and he had no taxable income. He further held that there was no entry of withdrawal of Rs.10 lacs in his bank account. Ld. CIT(A) has not given any finding regarding retirement funds as to where it was deposited and whether it was withdrawn for making gift to his son. From the records also, we do not find any bank account of father where this amount was credited but the fact remains that his father had retired and had received this amount as is apparent from paper book page 37 and in his affidavit he has confirmed that gift was made out of retirement funds. Therefore, facts hve not been examined thoroughly. Further, we find that Ld. CIT(A) has not accepted the contention of assessee regarding savings from his earning from his business and rental income as per computation sheet placed at paper book page 1. The assessee has earned income of Rs.8 lacs consisting of Rs. 5 lacs from rent and Rs.3 lacs as business income out of which, Rs.1.50 lacs was used for making payment of interest and Rs.1 lac for making repayment of housing loan. Therefore, assessee was having a cash surplus of Rs.5.5 lac. At least a part of this can be said to have been used for making deposits in the bank. The Ld. CIT(A) could have reduced house hold expenses from this savings on the basis of earlier year household expenses but he has held that entire 7 ITA No.5214/Del/2013

savings must have been spent. In view of the above facts and circumstances, we are of the view that the explanations of assessee require fresh examination. Since, these explanations were not there before A.O. in original proceedings, therefore, we deem it appropriate to remit this issue to the office of A.O. for readjudication. To ascertain the fact of the gift from parents, A.O. should also examine the parents of assessee.

7. Similarly, we find that addition on account of credit card payments has been confirmed by Ld. CIT(A) but it is not known that whether payments for credit card expenses was made from the same bank accounts where cash was deposited as in that case, this addition would amount to double addition. However, this fact is not coming out from the records neither Ld. A.R. brought to our notice anything regarding this to substantiate that credit card payments were made from the same bank account where cash was deposited. Since, this fact is not coming out from records, therefore, in the interest of justice, we are of the view that this point should also be relooked by A.O. who should pass order after examination of these facts. Needless to say that assessee will be provided sufficient opportunity of being heard.

7. In view of above, the appeal of assessee is allowed for statistical purposes.

8. Order pronounced in the open court on 30th Jan., 2015.

Sd./- Sd./- ( DIVA SINGH) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER Date: 30th Jan., 2015

Sp

Copy forwarded to:- 8 ITA No.5214/Del/2013

1. The appellant 2. The respondent 3. The CIT 4. The CIT (A)-, New Delhi.

5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi.

True copy.

By Order (ITAT, New Delhi).

S.No. Details Date Initials Designation 1 Draft dictated on 29/1 Sr. PS/PS 2 Draft placed before author 29, Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS 30/1/15 Sr. PS/PS 6 Kept for pronouncement 30/1 Sr. PS/PS 7 File sent to Bench Clerk 30/1 Sr. PS/PS Date on which the file goes to Head 8 Clerk 9 Date on which file goes to A.R. 10 Date of Dispatch of order