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Judgment
PER ANUBHAV SHARMA, JM:
These appeals preferred by the Assessee against the orders of the Ld. Commissioner of Income-tax (Appeals) (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in appeals filed before him against the orders of the ld. Assessing Officer (hereinafter referred to as the Ld. AO, for short) passed u/s 143(3)/153Aof the Income-tax Act, 1961 (hereafter referred to as ‘the Act’). Further details of the orders of the lower authorities are as under:-
| ITA No. &AY | Ld. FAA who passed the appellate order | Appeal No. & Date of order of the Ld. FAA | AO who passed the assessment order & Date of order |
| 2689/D/25 2018-19 | CIT(A)-27, New Delhi | DIN & Order No : ITBA/APL/M/250/2023-24/1057763583(1) Dated 07.11.2023 | ACIT, Central Circle-20 Dated 27.08.2021 |
| 2690/D/25 2019-20 | CIT(A)-27, New Delhi | DIN & Order No : ITBA/APL/M/250/2023-24/1057763350(1) Dated 07.11.2023 | ACIT, Central Circle -20 Dated 27.08.2021 |
At the outset we find that there is a delay of 448 days in filing of the two appeals. To explain the same an application has been filed along with an affidavit of the wife of the assessee deposing that subsequent to the income tax department proceedings the assessee is suffering from depression and a prescription showing his treatment had been filed.The delay is for a substantial period, however, considering the affidavit filed by the wife of the assessee, we consider it an appropriate case to condone the delay and admit the appeals for hearing.
The assessee is an individual a search and seizure operation was conducted in Faquir Chand Lockers and Vaults Pvt. Ltd. group of cases. Assessee’s locker No. 246 at 6704A, Khari Baoli, Delhi was also covered in the search and assessee’s case was reopened by notice u/ 153A of the Act. During the relevant financial years involved assessee was the partner in the Firm named M/s Kesharwani Brothers and the firm was engaged in the business of trading of Foxnut (Makhana). The assessee during the AY 2018-19, had earned income under the head ‘profit and gains’ from business or profession Rs.4,44,852/- and income from other sources Rs.2,660/-. Based on the alleged incriminating found during the search and a statement u/s 132(4) recorded on 13.12.2018 assessee allegedly admitted that the sheet Exhibit A found form the locker contains entries of cash kept in the locker from the cash sales of his firm M/s Kesharwani Brothers and assessing officer observed that assesseewas unable to provide documentary evidence regarding cash deposit and withdrawn from the locker to the extent of Rs.64,00,000/-, in AY 2017-18,by the firm and addition on that account was made which has been sustained by the Ld. CIT(A) with following findings in para 4.4.2:
4.4.2 Observation and findings:
i.In his submission, the appellant has not stated anything specific about any substantial and concrete documentary evidence to explain nature and source of cash deposited in locker no. 246. The points regarding source and nature of cash, stated by the appellant in his submissions are general in nature.
ii.The appellant has simply stated that cash deposited of Rs. 64,00,000/- in locker no. 246 pertains to partnership business of the appellant. Also, in statement dated 13.12.2018, the appellant stated that cash entries in Exhibit-A found from locker no. 246 are cash sales of M/s Kesharwani Brothers. But, no details and supporting documentary evidence to sustain his contention has been filed neither at assessment stage nor at appeal stage.
Details of cash sales made, how/when/to whom made and bills/ invoices of cash sales;
Details of corresponding cash purchases made, how/when/from whom made and bills/ invoices of cash purchases;
Transportation receipts in respect of cash sales and cash purchases made; has not been furnished. There is no documentary evidence on record, which sustains the appellant's contention of cash sales made. Merely stating that cash deposited in locker no. 246 is out of cash sales made by partnership firm does not discharge onus of the appellant laid down in section 69A of the Act.
iii.The appellant stated that cash in hand of the partnership firm is duly recorded in books of accounts. However, in assessment order, in para 4.2, the AO has pointed out that entries in the cash book of M/s Kesharwani Brothers do not match with the entries found in Exhibit-A. During appeal stage also, the appellant could not produce any document to rebut the view taken by the AO.
iv.In view of above discussion and facts of the case, it is held that the appellant has failed to establish his contention that cash deposited in locker no. 246 is out of his business activities from partnership firm M/s Kesharwani Brothers.”
Assessee is in appeal has raised following grounds:
1(i). That the learned CIT (Appeal) was not justified in confirming an addition of Rs.64,00,000/- which was held by the learned A.O. from the paper forming "Exhibit A in Asstt. order from the Locker No.246 maintained with M/s. Faqir Chand Locker & Vaults Pvt. Ltd., Khari Baoli, Delhi. (ii) The learned A.O. as well as CIT (Appeal) were not justified in not accepting the appellant's submission that the entire datewise deposits locked out in the Locker pertains to accumulated cash out of"cash sales" made by the firm.
2(i). That an amount was locked only for the safety purpose time to time out of the cash sales held by the firm. (ii) There could have deposits from the personal and friendly sources engaged in the business in same area for sometimes, however, it were used to be withdrawn to have purchase or to meet-up other contingency of the business. or to discharge the obligation of other accommodated parties.
3.The learned A.O. was legally and morally wrong to take the aggregated amount of date to date deposits as income and absolutely ignored date to date withdrawals which were also appearing in the same paper recorded as "Exhibit A", the law does not permits to frame the assessment in this manner.
4(i). The cash sales appearing in the books of accounts and the audited financial statements are also on the record and whereas the books of accounts have also not been rejected, thus, to reject the submission of the appellant, day to day deposits were out of cash sales was not justified. (ii) Whereas the withdrawals are also there in Exhibit A, that deserves to be considered, thus, such impugned order ceases its validity and deserves to be quashed.
5.That subsequently order passed u/s 154 for enhancement to demand was unjustified, unlawful and against the natural law of justice.
6.That the appellant craves his right to amend, delete or add any grounds of appeal at or before the time of hearing.”
The primary contention of assessee is that it was not the locker of assessee but of the firm. The Ld. DR has relied the impugned order, however, the matter of fact is that assessee had produced cash book, purchase and sale ledger and bank statement of the firm during the assessment proceedings which have been considered in the assessment proceedings and mentioned in the assessment order.
Admittedly, the agreement with M/s Faquir Chand Lockers and Vaults Pvt. Ltd. was executed by the firm. Assessee was deriving only business income as salary and interest from the firm. Assessee has taken consistent plea that the account was operated for the cash of firm. Thus, admittedly, in the absence of any inquiry being conducted separately with the firm addition of the alleged cash sales made by the AO in the hands of present assessee, as an individual, is not sustainable under law.
These findings are applicable Mutatis Mutandis to AY 2018-19, where there was addition of Rs. 51,00,000/- on account of cash found in the said locker and Rs. 1,79,00,000/- on account of Exhibit A, a page found in the locker, allegedly containing details of cash deposited in locker. Thus, grounds raised by the assessee on merits of addition thus are sustained in both the appeals. The appeals of assessee are allowed and the impugned addition are deleted in the hands of assessee.