Rakesh, New Delhi vs Department Of Income Tax

ITO, Rakesh, Ward 26(4), House No. 838, Room No. 1810, 18th Floor Vs. Dichaon Kalan, E-2, Block, Civic Centre, Najafgarh, New Delhi. New Delhi. AHIPR4446C

(Appellant) (Respondent)

Appellant by: Sh. Vikram Sahay, Sr. DR Respondent by: Sh. Sanjeev Bajaj, CA

ORDER PER S.V. MEHROTRA, A.M.

This appeal filed by the Revenue is directed against the order of ld. CIT(A)-XXIV, New Delhi dated 24/05/2013 for A.Y. 2009-10.

2. The assessee had filed return of income declaring total income at Rs. 2,64,363/- from sale of bricks, badarpur cement and iron. An AIR information was received by Assessing Officer that the assessee had deposited cash totaling to Rs. 1,11,79,988/- in account with Axis Bank Ltd. and credit card payments of Rs. 4,76,780/- were made with ICICI Bank Ltd. In course of assessment proceedings the assessee filed copy of profit and loss account and balance sheet and affidavit from Shri Randhir Singh that he had gifted amount of Rs. 24 lakhs to assessee.

2.1 The AO observed that the affidavit was vague as it did not refer to identity, capacity, relevancy and genuineness was not proved. The affidavit also did not mention the mode as to whether in cash or by draft the gift was made. He further observed that father could give the amount through ITA No. 4537/D/ 2013 2

cheque not in cash as there was no urgency. He further observed that the copy of bank account as well as sale purchase deed of land was also incomplete. He, accordingly, made an addition of Rs. 1,11,79,988/- u/s 68 and also made a disallowance of Rs. 2 lakhs on account of unverifiable nature of expenses. Before ld. CIT(A) the assessee filed application under Rule 46A and requested for admission of additional evidence as well as an additional ground of appeal on the ground that sufficient opportunity to produce these evidences was not provided to the assessee by the AO during assessment proceedings. Ld. CIT(A) forwarded these evidences and paper book to AO on 26/02/2013. The AO gave his comments vide letter dated 18/03/2013 in which he objected to the admittance of additional evidence on the ground that the accounts statement of Axis Bank mentioned Mr. Rakesh as the exclusive owner of the bank account, whereas the assessee had claimed that account no. 079010100265389 in Axis Bank was a joint account in the name of Sh. Rakesh and Sh. Devinder, and the cash deposited in this account amounted to Rs. 67,16,100/- which pertained to partnership firm. The AO stated that since the bank statement only had the name of the assessee Sh. Rakesh, the cash deposited in the bank account was to be considered in the hands of the assessee only. As regards the affidavit of Sh. Randhir Singh, he relied on the assessment order.

2.2 Ld. CIT(A) again wrote a letter dated 18/04/2013 which has been referred to in para 4.2 of his order and reproduced hereunder for ready reference:

"4.2 It was pointed to the AO vide this office letter of even number dated 18.04.2013 that a proper rebuttal of the affidavit of Sh. Randhir Singh had not been given by the AO during assessment proceedings. Sh. Randhir Singh was never examined under oath with reference to his affidavit, as mandated by the CBDT in its Instruction No. 1271 dt. 08.01.1979. Further, it was also pointed out to the AO that a copy of the Partnership Deed dt. 01.01.207 along with PAN application between the appellant Sh. Rakesh and his brother Sh. Devinder had a direct bearing on the ground of appeal no. 4, whereby the appellant had impugned the addition of the cash deposits in his Axis Bank account which was being held by ITA No. 4537/D/ 2013 3

him jointly with his brother Sh. Devinder. Moreover, the appellant had also placed on record a certificate dt. 21.02.2013 signed by the Axis Bank, Vikaspuri Branch, stating that the appellant Sh. Rakesh was having a saving bank account no. 079010100235389 in their branch since 23.01.2007 along with Sh. Devinder. In the light of the above, and after careful consideration of the reasons given by the ld. AR and the submissions made by the appellant in his Rejoinder, and after finding that the additional evidence submitted by the appellant had a close nexus and direct bearing on the grounds of appeal taken by the appellant, it was decided to admit the additional evidence. Accordingly, the AO was given directions u/s 250(4) of the Income Tax Act to go through the additional evidence, carry out necessary requisite enquiries and to submit his Remand Report thereafter."

2.3 The remand report of the AO dated 9th May, 2013 has been reproduced in para 4.3 which was as under:

"4.3 The Remand Report of the AO was received vide his letter dated 09.05.2013, in which the Assessing Officer stated that:

a) After examining Sh. Randhir, father of the appellant, who had filed an affidavit to the effect that he had made a gift of Rs. 24 lacs to his son and after recording his statement on 08.05.2013, wherein Sh. Randhir confirmed that the gift was made in cash out of withdrawals made from his bank account, wherein the sale proceeds of agricultural land had been deposited, it is submitted that the contents of the affidavit can be relied upon.

b) As regards the cash deposits in Saving Bank Account in Axis Bank, Vikas Puri Branch, the assessee claimed that the account pertained to partnership firm under the name and style of M/s Rakesh Kumar Devinder Kumar. In support of the claim, a photocopy of the partnership deed dt. 01.01.2007 was filed as additional evidence along with a certificate dt. 21.02.2013 from Axis Bank Manager that this account was a joint account of Sh. Rakesh and Sh. Devinder. Thus, it can be concluded that the firm is a separate entity and the cash deposits in the bank account to the tune of Rs. 67,16,100/-, as reported in the AIR, cannot be treated as assessee's income."

3. After considering the remand report, ld. CIT(A) deleted the total addition of Rs. 1,11,79,988/-. Further ld. CIT(A) also deleted the addition of Rs. 2 lakhs taking note of the fact that the return was filed u/s 44AD (which should have been 44AFas submitted by ld. Counsel).

ITA No. 4537/D/ 2013 4 4. Being aggrieved with the order of ld. CIT(A) the Department is in appeal before us and has taken following grounds of appeal:

1. "Deleting the addition of Rs. 20,63,088/- even though the same remained unexplained. Out of total addition of Rs. 1,11,79,988/- only Rs. 91,16,900/- was explained.

2. Deleting the expenses of Rs. 2,00,000/- on account of disallowance of expenses by holding the business of assessee to be covered u/s 44AD whereas facts state that the assessee deals in trading of Building Material."

5. Apropos ground no. 1 ld. CIT(DR) submitted that CIT(A) has not given any comments on Rs. 20,63,088/- and deleted the same. He submitted that there was nothing in the remand report on this amount.

6. Ld. Counsel for the assessee referred to page 23 of the paper book, wherein the written submissions made before ld. CIT(A) are contained in which it was, inter-alia, pointed out that there were three bank accounts the details of which was as under:

a) "Axis Bank having account No. 360010100007535 16,00,000.00 In the name of Sh. Rakesh Personal Account

b) Axis Bank having account No. 079010100295246 28,63,888.00 In the name of Sh. Rakesh - Business Account

c) Axis Bank having account No. 079010100235389 67,16,100.00 In the name of Sh. Rakesh and Devendra (Joint A/c) Type (Partnership firm Business Account) Total 111,79,988.00 6.1 He submitted that the business turnover in respect of personal business was routed through bank account No. 079010100295246 and the difference as mentioned in the Department's ground of appeal relates to deposits of this bank account.

7. We have considered the submissions of both the parties.

8. Admittedly, ld. CIT(A) has not recorded any finding in regard to the sum of Rs. 20,63,088/- and the AO in his remand report also has not commented on this amount. Therefore, we restore this ground to the file of AO for considering the assessee's submissions and then decide the issue with respect to the addition of Rs. 20,63,088/-.

9. In the result, this ground is allowed for statistical purposes.

ITA No. 4537/D/ 2013 5 10. Apropos ground no. 2, we do not find any reason to interfere with the order of ld. CIT(A) because it is not disputed that the assessee had filed its return of income u/s 44AF showing taxable income of Rs. 2,64,363/- which was in excess of 8% presumptive tax. We, therefore, confirm the order of ld.

CIT(A) on this ground.

11. In the result, the Department's appeal is partly allowed for statistical purposes.

Order pronounced in the open court on 23/01/2015 Sd/- Sd/-

(H.S. SIDHU) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 23/01/2015 *Kavita

Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, New Delhi. TRUE COPY By Order

ASSISTANT REGISTRAR