Pankaj Mahajan, New Delhi vs Department Of Income Tax

ITO, Vs. Pankaj Mahajan, Ward-37(1), C/o A.C. Gupta & Associates, New Delhi. 104-105, M.M. House, Raja Iron Factory Building, 59, Rani Jhansi Road, New Delhi - 110 055. PAN: AAFPM2880F

(Appellant) (Respondent)

Assessee By : Shri Anil Gupta, CA Department By : Shri Vikram Sahay, Sr. DR

Date of Hearing : 17.06.2015 Date of Pronouncement : 18.06.2015

ORDER PER R.S. SYAL, AM:

This appeal by the Revenue is directed against the order passed by

the CIT(A) on 31.5.2012 in relation to the assessment year 2008-09. ITA No.4085/Del/2012

2. The only issue raised here in the appeal through different grounds

is against the deletion of addition of Rs.13,01,000/- made by the

Assessing Officer (AO).

3. Briefly stated, the facts of the case are that an AIR information was

received about the assessee having deposited cash of Rs.13,01,000/- in

Oriental Bank of Commerce (OBC), Connaught Place, New Delhi. On

being called upon to explain the source of this cash deposit, the assessee

stated that he inherited more than Rs.13 lac from his mother Smt. Saroj

Gupta, who died on 14.8.2006. He claimed that Smt. Saroj Gupta was a

regular income-tax assessee and used to file her income-tax returns. In

support of this contention, he filed a copy of her return for the AY 2006-

07; a copy of Will dated 28.2.2006; and a copy of death certificate. On

perusal of the Will of Smt. Saroj Gupta, the AO observed that she

claimed through this Will to have possessed Moveable assets including

Saving bank account in OBC, FDRs in OBC, National Saving

Certificate, Shares of limited companies, Cash as 'Istridhan', Gold and

diamond jewellery received at the time of her marriage and further as

2 ITA No.4085/Del/2012

purchased from 'Istridhan.' As per this Will, cash (not quantified) was

to be given to the assessee and Gold and diamond jewellery to Smt.

Shefali Mahajan, wife of the assessee. The AO observed that there was

no mention about the amount of cash available with her. On being

called upon to furnish evidence of her filing income-tax returns along

with Balance sheets and Statement of affairs as on 31.3.2005, 31.3.2006

and 14.8.2006 (date of death), the assessee did not file any Statement of

affairs as on 31.3.2005 and 31.3.2006. Copies of Balance sheet of her

Proprietorship concerns, namely, M/s Satyam Investments and M/s

Mahajan Investments and Financial Services as on 31.3.2005 were filed,

which depicted cash balance of Rs.16,706/- and Rs.7,754/-, respectively.

Statement of affairs of Smt. Saroj Gupta as on 14.8.2006 filed by the

assessee showed that there was no cash in hand as on that date. The AO

noticed from the records of Smt. Saroj Gupta submitted by the assessee

that there was no mention of any cash balance, whether as 'Istridhan' or

otherwise which could have been reflected in the alance sheets of the

proprietorship concerns or in the Statement of affairs. The AO noticed

that the availability of such cash in hand and other moveable assets with 3 ITA No.4085/Del/2012

Smt. Saroj Gupta attracted the levy of wealth tax as the value of cash

and jewellery as claimed by the assessee exceeded Rs.15 lac. Since no

Wealth-tax return was filed and there was nothing to show the

availability of cash to the extent of Rs.13.01 lac, the AO made addition

for this sum as 'Income from undisclosed sources.' The ld. CIT(A)

concurred with the submissions advanced on behalf of the assessee and

deleted the addition. The Revenue is aggrieved against such deletion of

addition.

4. We have heard the rival submissions and have perused the relevant

material available on record. The entire controversy rotates around the

source of cash of Rs.13.01 lac deposited by the assessee in his bank

account, which was claimd to have been received from the estate of Smt.

Saroj Gupta, his mother, who passed away on 14.8.2006. From the

discussion made above, it is patent that there is no direct evidence of the

availability of cash to this extent in her hands. The assessee has claimed

it as `Istridhan', which was not reflected anywhere. Now the question

arises as to whether the existence of cash to the above extent as

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`Istridhan' can be accepted as genuine in the extant facts. It can be

observed from the assessment order that she was proprietor of two

concerns, namely, M/s Satyam Investments and M/s Mahajan

Investments and Financial Services. She filed her return for the AY

2005-06 declaring total income of Rs.1,42,710/- with the amount of tax

liability at Rs.1,242/-, a copy of which is available on page 5 of the

paper book. In this return, she claimed to have earned income from the

above referred two proprietorship concerns. A perusal of the Profit &

Loss Account of M/s Mahajan Investments and Financial Services, a

copy of which is available on page 9 of the paper book, indicates gross

revenue from operations at Rs.5,050/-. Her capital balance in this

concern as on 31.3.2005 stands at Rs.1,14,243/-. Now, we turn to the

Profit & Loss Account of M/s Satyam Investments, in which gross

income from operations has been shown at Rs.1.73 lac. Balance sheet of

this proprietorship concern indicates capital of Smt. Saroj Gupta at

Rs.3.56 lac. Here, it is interesting to mention that she has made

withdrawals to the tune of Rs.1.52 lac from this concern. Her

computation of income for the AY 2006-07 indicates earning of interest 5 ITA No.4085/Del/2012

from bank on saving bank account, on tax saving bonds, on FDRs and

on NSCs. It is further important to note that Smt. Saroj Gupta was

having some amounts parked in saving bank accounts, FDRs and

National Saving Certificates and hence regularly earning interest income

therefrom. We fail to comprehend as to how such a wise person, being

fully aware of and actually earning interest income by investing funds,

can be expected to keep huge cash of Rs.15.06 lac in her almirah for

years together.

5. The assessee tried to prove the availability of cash with her to the

tune of Rs.13.01 lac by submitting before the ld. CIT(A) that Shri

A.C.Gupta, executor of the will of his mother, opened the locker of

Almirah kept at the residence in the presence of three witnesses and cash

of Rs.15.06 lac was found on such opening of almirah. It is relevant to

note that Shri A.C. Gupta, claimed to be the executor of the will of Smt.

Saroj Gupta, is none other than father of the assessee and husband of the

deceased. Further, what has been claimed to have been opened by him

is not a bank locker, but, simply an almirah in the house. Smt. Saroj

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Gupta died on 14.8.2006 and this almirah at the assessee's own home

was claimed to have been opened on 12.2.2007, roughly at a gap of

around six months and that too in the presence of three witnesses. It is

undisputed that the only beneficiaries of the will of Smt. Saroj Gupta

happened to be the assessee and his wife. Admittedly, there is no

conflicting claim on the will of Smt. Saroj Gupta. In such a situation,

we fail to understand the necessity of any so-called executor of the Will,

being father of the assessee and the circumstances leading to the

opening the almirah at the residence after a gap of around six months

from the death of death and that too in the presence of three witnesses.

When there were no conflicting claims on the Will of the deceased and

the beneficiaries were only the assessee and his wife, it is not

understandable as to what prompted the family of the deceased to

allegedly open the almirah after six months and that too in the presence

of three witnesses. What was the need of witnesses in the absence of any

dispute, is beyond our understanding. We find that this is nothing but

camouflage. The entire exercise appears to have been shown to have

7 ITA No.4085/Del/2012

been carried out for giving a colour of genuineness to the availability of

cash of Rs.15.06 lac from the almirah of the deceased.

6. There is another interesting aspect of the matter. When the AO

pointed out the obligation of Smt. Saroj Gupta of filing wealth-tax

return in case she had cash and jewellery etc. exceeding Rs.15 lac, the

assessee came out with a fantastic explanation that out of Rs.15.06 lac

found at the time of death, only a sum of Rs.13.01 lac was available up

to the end of the year, that is, 31.3.2006 and the remaining amount was

received during the period 1.4.2006 to 14.8.2006, being the date of her

death. This was just a futile attempt to thwart the obligation of filing

wealth tax return and bearing the consequences for its non-filing.

7. It is further pertinent to mention that Smt. Saroj Gupta, was

proprietor of two concerns and we have noticed negligible cash balance

in the balance sheets of these two proprietorship concerns which have

been placed on record. If she really had lacs of cash in hand, here

business would not have been run on such negligible cash balance.

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8. All the above circumstances prove it beyond any shadow of doubt

that there was no cash in hand available as 'Istridhan' on the death of

Smt. Saroj Gupta that was bequeathed by the assessee to the tune of

Rs.13.01 lac. Except for a bald claim of finding cash of Rs.15.06 lac on

the sudden opening of the almirah on the death of Smt. Saroj Gupta,

there is no evidence about the source of the availability of cash to such a

huge extent in her hands. In our considered opinion, the assessee just

concocted a story of inheriting cash from his mother after her death.

9. We are reminded of the judgment of the Hon'ble Supreme Court in

the case of CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC). In this

case, it has been held that self serving recitals cannot be accepted as true

unless the assessee proves it. The Hon'ble Supreme Court has held that

the AO is entitled to look into surrounding circumstances for finding out

reality. Similar view has been reiterated by the Hon'ble Supreme Court

in the case of Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC). In this

case, the assessee tendered an explanation that she got the amounts from

horse races, which was not accepted by the ITO who came to hold that

9 ITA No.4085/Del/2012

the winning tickets were purchased by the assessee after the event.

Upholding the view taken by the AO, the Hon'ble Supreme Court held

that for considering whether the apparent is real, the matter should be

considered by applying the test of human probabilities. Viewed from

that angle, the Hon'ble Summit court upheld the view canvassed by the

AO that the explanation of the assessee was not genuine. In our

considered opinion, the entirety of facts and circumstances prevailing in

the instant case do lead to an irresistible conclusion that there was no

cash available with Smt. Saroj Gupta at the time of her death and the

assessee was not justified in claiming that a sum of Rs.13.01 lac was

bequeathed from his mother. We, therefore, overturn the impugned

order on this score and restore the opinion of the AO.

10. In the result, the appeal is allowed.

The order pronounced in the open court on 18.06.2015.

Sd/- Sd/-

[A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated, 18th June, 2015. 10 ITA No.4085/Del/2012

dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

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