Inderjit Singh Sharma, Amritsar. vs Department Of Income Tax

Appellant by:Smt. Neeraj Sharma, DR Respondent by:Sh. Tej Mohan Singh, Advocate

Date of hearing:18/02/2015 Date of pronouncement:19/02/2015

ORDER

PER A.D.JAIN, AM:

This is department's appeal for the assessment year 2006-07 against

the order dated 16.07.2014 passed by the Ld. CIT(A), Amritsar. The

following grounds of appeal have been taken:

"1. The Ld. CIT(A) has erred in law and fact in deleting the additions of Rs.19.00 lacs which was made by the AO u/s 69 of the Income Tax Act, treating as unexplained investment of Rs.19.00 lacs in Mutual funds. The Ld. CIT(A) has failed to appreciate the facts that creditworthiness of his son could not be established and no explanation regarding deposits in the account of the assessee by his son was proved. The Ld. CIT(A) has failed to verify the source of cash deposits in the account of 2 ITA No.602(Asr)/2014

the son of the assessee which was invested in purchasing the units of Mutual Funds.

2. The Ld. CIT(A) has admitted and accepted additional evidences under Rule 46A of the Income Tax Rules without granting any opportunity to cross examine the assessee and authenticate the deposits in the bank account of his son which is against the true spirit of rule 46A of the Income Tax Rules."

2. As per ground No.2, the Ld. CIT(A) has erred in admitting additional

evidence under Rule 46A of the Income Tax Rules, without granting any

opportunity to the AO to cross-examine the assessee and to authenticate the

deposits in the bank account of his son. It is on the basis of this additional

evidence, that the ld. CIT(A) deleted the addition of Rs.19 lacs made by the

AO u/s 69 of the Income Tax Act, 1961, which deletion is the subject matter

of ground No.1 raised by the department before us.

3. In this regard, the ld. CIT(A) has observed as follows:

"It appears that AO has made addition as assessee was not able to furnish in time any concrete evidence during assessment proceedings regarding credit worthiness of Sh. Deepak Shama and it is also clear that assessee who is pensioner and a retired person was appearing before the AO and was not able to understand properly what certificate/documents are required for the purpose of proving credit worthiness. During appellate proceeding, counsel of the assessee has submitted return of income filed with tax authorities of Ireland of Sh. Deepak Sharma for the year 2002, 2003, 2004 & 2005 to prove his credit worthiness. He has also submitted letter from the Managing Director of the company M/s. Bioshell Teoranta stating that gross salary of Sh.Deepak Sharma was 50,000/- Euro per annum vide his letter dated 18 Aug, 2004. Sh. Deepak Sharma has shown in his return of income salary of E.18,274/-, E. 27,253/-, E. 38,784/- & E. 38,679/- salary for the year ended 2002, 2003, 2004 & 2005. These evidences 3 ITA No.602(Asr)/2014

have been taken on record considering that appellant was prevented by sufficient cause from producing the evidence before the AO which was relevant to prove his grounds of appeal as provided in rule 46A(1)(c). As these details were called by the undersigned for the verification of credit worthiness of Sh. Deepak Sharma in this regard as provided in section 250(4) of the Income Tax Act, 1961. It is clear from the bank account details submitted before the AO that mutual fund of Rs.19,00,000/- were purchased from the bank account of Sh. Deepak Sharma with HDFC Bank Account No.02131010000142 and immediate source of credit funds including origin of these funds have been verified from various bank accounts discussed above, I am of the opinion that assessee has discharged onus of proving source of investment alongwith genuineness of transaction and credit worthiness. In view of above, addition made of Rs.19,00,000/- is deleted and appeal is allowed."

4. From the above, it is evident that the ld. CIT(A) admitted the

additional evidence since according to him, the assessee was prevented by

sufficient cause from producing it before the AO and also because the ld.

CIT(A) had himself asked the assessee to produce this additional evidence

before him [the Ld.CIT(A)], as per section 250(4) of the Act. The Ld.

CIT(A) deleted the addition on the basis of this additional evidence.

5. While deleting the addition, it is seen, the Ld. CIT(A) observed that

the immediate source of the credit funds, including the origin of these funds

had been verified from various bank accounts and that he was of the opinion

that the assessee has discharged the onus of proving the source of investment

alongwith the genuineness of the transaction and the credit-worthiness. 4 ITA No.602(Asr)/2014

6. However, as rightly objected by the Ld. DR (as also stated in the

grounds of appeal), the impugned order nowhere shows that the AO was

afforded any opportunity to cross-examine the assessee and to authenticate

the deposits in the bank account of the assesse's son, Sh. Deepak Sharma.

The order under appeal also does not evince though he says so in the order,

as to inn what manner the ld. CIT(A) himself verified the source of the cash

deposits in the bank account of Sh.Deepak Sharma. It is well settled that

quasi-judicial order must be reasoned and speaking order. It remains

undisputed that the source of investment by way of purchase of units of

Mutual Funds was these cash deposits.

7. Thus, neither did the ld. CIT(A) make further enquiry into the matter,

nor did direction to the AO to do so, thereby violating the mandate of section

250(4) of the Act. Section 250(4) of the Act, reads as follows:

"Section 250(4): The Ld. CIT(A) may, before disposing of any appeal, make such further enquiry as he thinks fit, or may direct the AO to make further enquiry and report the result of the same to the CIT(A)."

8. In view of the above, in the interest of justice, we remit this matter to

the AO to be decided afresh in accordance with law, after verifying the

source of the cash deposits in the bank account of Sh.Deepak Sharma son of 5 ITA No.602(Asr)/2014

the assessee, by, inter-alia, cross-examining the assessee. The assessee, no

doubt, shall be granted due and adequate opportunity to support his case.

9. In the result, the appeal of the Revenue is treated as allowed for

statistical purposes.

Order pronounced in the open court on 19th February, 2015.

Sd/- Sd/- (B.P. JAIN) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 19th February, 2015 /SKR/ Copy of the order forwarded to:

1. The Assessee:Sh. Inderjit Sharma, Amritsar

2. The ITO Ward 4(2), Amritsr.

3. The CIT(A), Asr.

4. The CIT, Asr.

5. The SR DR, ITAT, Amritsar.

True copy By order

(Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.