Sh. Joginder Paul, Patiala vs Department Of Income Tax

The AC IT, Central Circle, vs Shri Joginder Paul, Patiala C/o M/s Jay Industies, Mandi Gobindgarh

PAN No.ACWPP2974A

(Appellant) (Respondent)

Appellant By : Shri Manjit Singh Respondent By : S/Shri Sudhir Sehgal & Ashok Goyal

Date of hearing : 22.12.2104 Date of Pronouncement : 12/1/2015

ORDER

PER T.R.SOOD, A.M.

The appeal filed by the Revenue directed against the order dated 7.5.2015

of C IT(A)-I, Ludhiana

2. In this appeal the Revenue has raised the following effective ground:-

1. That the Ld. CIT(A) erred both in law and on facts while deleting the addition of Rs. 94,40,180/- without appreciating the facts and detailed reasons recorded by the Assessing Officer in the assessment order that the assessee has filed to prove the source of these deposits.

3. After hearing both the parties we find that during assessment proceedings

the Assessing Officer noticed that assessee has deposited total sum of Rs.

94,40,180/- in cash in Saving Bank Account No. 05332010006640. The details

of deposits are as under:-

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Date Particulars Deposit Credit / withdrawal 25.08.2009 Cash deposited 90,180/- 22.12.2009 Cash withdrawal - 3,00,000/- 26.12.2009 Cash deposited 3,00,000/- 12.01.2010 Cash withdrawal - 3,50,000/- 15.01.2010 Cash deposited 2,00,000/- 18.01.2010 Cash withdrawal 4,00,000/- 18.01.2010 Cash deposited 3,00,000/- - 19.01.2010 Cash deposited 4,40,000/- - 23.01.2010 Cash deposited 1,10,000/- - 26.02.2010 Cash deposited 2,00,000/- - 17.03.2010 Cash deposited 20,00,000/- - 18.03.2010 Cash deposited 20,00,000/- - 18.03.2010 Cash deposited 10,00,000/- - 19.03.2010 Cash deposited 10,00,000/- - 19.03.2010 Cash deposited 12,00,000/- - 20.03.2010 Cash deposited 6,00,000/- - Total 94,40,180/-

4. On further being asked to give the source, the assessee filed a Cash Flow

Statement in which a sum of Rs. 80 lakhs was shown available with the assessee

as on 1.4.2009 on account of income surrendered u/s 132(4) of the Act in

assessment years 2007-08 and 2008-09. A copy of the Cash flow Statement had

been reproduced by the Assessing Officer which is as under:-

CASH FLOW STATEMENT F.Y. 2008-09

Date Particulars Receipts Payments 01.04.2008 Opening Cash in 8000000.00 -

Hand on account of Income surrendered u/s 132(4) for the A.Y. 07-08 & 08-09 28.03.2009 By Cash from 170000.00 -

Bansal Ice & Cold Storage, Khanna 28.03.2009 To Capital for - 170000.00 marriage exp.

8170000.00 170000.00 3

31.03.2009 By Balance - 8000000.00 TOTAL 8170000.00 8170000.00

CASH FLOW STATEMENT F.Y. 2009-10

Date Particulars Receipts Payments 01.04.2009 Opening Cash in hand 8000000.00 - on account of income surrendered u/s 132(4) for the A.Y. 07.08 & 08- 09 20.08.2009 By Rent Received C.Ex 90180.00 - 25.08.2009 To Cash Deposited OBC - 90180.00 22.12.2009 By Ch. 352397 Self 300000.00 - OBC 28.12.2009 To Cash Deposited OBC - 300000.00 08.01.2010 By CH. Self OBC 300000.00 - 12.01.2010 By CH. Self OBC 350000.00 - 15.01.2010 To Cash Deposited OBC - 200000.00 18.01.2010 By CH. Self OBC 400000.00 - 18.01.2010 To Cash Deposited OBC - 300000.00 19.01.2010 To Cash Deposited OBC - 440000.00 23.01.2010 To Cash Deposited OBC - 110000.00 26.02.2010 To Cash Deposited OBC - 200000.00 17.03.2010 To Cash Deposited OBC - 2000000.00 18.03.2010 To Cash Deposited OBC - 2000000.00 18.03.2010 To Cash Deposited OBC - 1000000.00 19.03.2010 To Cash Deposited OBC - 1000000.00 19.03.2010 To Cash Deposited OBC - 1200000.00 20.03.2010 To Cash Deposited OBC - 600000.00 TOTAL 9440180.00 9440180.00

5. It was further explained that cash was dul y reflected even in the Wealth

Tax Return and copy of the Wealth Tax Return was also enclosed. The

Assessing Officer after examining these submission observed that the amount

which was available at the time of search was related to the search conducted in

April 2007 i.e about three years back, and therefore, cash could not be still

available. He further observed that in the meantime marriage of the son of the

assessee was also solemnized and may be cash was spent in that. Further, a cash

of Rs. 80 lakhs was available then why certain amounts have been withdrawn

from the bank. In view of this observation, a sum of Rs. 94,40,180/- was added

to the income of the assessee.

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6. On appeal, it was mainl y submitted that cash of Rs. 80 lakhs was

available out of the surrender made during the search and cash was dul y

reflected in the Wealth Tax Return and, therefore, there is no justification in the

addition.

7. The Ld. C IT(A) found force in these submissions and decided the issue in

favour of the assessee.

8. Before us Ld. DR strongl y supported the order of Assessing Officer and

further submitted that how the amount surrendered in 2007 could be available

and assessee has not shown any justification in keeping such a huge amount with

him.

9. On the other hand Ld. Counsel of the assessee referred to the Wealth Tax

Return in the paper book and showed that amount of Rs. 80 lakhs was dul y

reflected in the Wealth Tax Return and this return has been accepted by the

Department. He further filed coy of the return and assessment order for

assessment year 2007-08, through which income of Rs. 1 crore 3 lakhs was

surrendered in the form of receivable. He submitted that this return has also

been accepted by the Department. The amount surrendered was on account of

recoverable which has been received over a period of time which was available

with the assessee. In this background he strongl y supported the impugned order.

10. After considering the rival submissions we find that this issue has been

decided by Ld. C IT(A) vide para 9 which is under :-

"9. I have considered the facts of the case, the basis of addition made by the Assessing Officer and the arguments of the AR on the issue during assessment as well as appellate proceedings. The following incontrovertible facts regarding availability of cash in 5

hand with the appellant have been admitted by the Assessing Officer in the assessment order:-

i) The assessee had admitted income under section 132(4)in the form of "Receivables" to the tune of Rs. 80,00,000/- during the course of search operation and had paid the taxes on such income accordingly for assessment year 2007-08 and 2008-09. The said disclosure was duly accepted by and assessed by the Assessing Officer without any variation thereof.

ii) The appellant had shown these "receivables" as having received as on 31.03.2008 in the form of cash in hand in his wealth tax return for Assessment year 2008-09. The said assessment had been framed under section 16(3) after due scrutiny without any variation on the issue.

iii) The wealth tax return for assessment year 2009-10 had also been filed by the assessee disclosing the impugned cash in hand to the tune of Rs. 80,00,000/- as on 30.03.2009 and the due wealth tax on the same had been paid. This return of wealth tax had also been assessed under section 16(1) and no adverse cognizance thereof was taken. The amounts deposited in financial year 2009-10 by the appellant have been claimed to be from the available cash in hand which has been duly accepted by the department as detailed above both in the income tax as well as wealth tax returns.

In the circumstances, there is no logical basis for the Assessing Officer to reject the contention of the appellant on the issue merely on the ground that it could be improbable for the assessee to keep cash to the tune of Rs. 80,00,000/- in cash for two year or so. The discretion of not depositing the said cash in hand anytime earlier than these had been actually deposited in bank was with the appellant and mere suspicion on this account could not obliterate the fact of assessee having such cash in hand as on 31.03.2009. In the circumstances, there is no reason to hold that the said cash deposits were from some other accounted income of the appellant and not from available cash in hand. The addition made is merely on suspicion ignoring all factual evidence in this regard and is therefore directed to be deleted."

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11. In our opinion Ld. CIT(A) has correctl y decided the issue because

admittedl y the assessee had disclosed a sum of Rs. 1.03 crores in assessment

year 2007-08, and a sum of Rs. 10 lakhs in assessment year 2008-09. This

amount was surrendered during the search and tax have been dul y paid and the

assessed income includes this amount of surrender. Further, cash is dul y

reflected in the Wealth Tax Return. Once the fact of having cash deposited by

the Revenue during wealth tax assessment proceedings, then later on Revenue

cannot challenge the existence of cash, therefore, we find nothing wrong with

the order of Ld. C IT(A) and we confirm the same.

12. In the result, appeal of the Revenue is dismissed.

Order pronounced in the Open Court on 12.01.2015

Sd/- Sd/-

(BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 12 t h Jan 2015 rkk

Copy to: The Appellant, The Respondent, The C IT, The CIT(A), The DR