Registration of car was in the name of the Assessee: Addition on account of Unexplained cash in bank account when it was submitted that it is Cash received on sale of car

short overview : Where assessee explained cash deposit in bank account was from sale of car, the purchaser of which had given affidavit but RC was still in name of assessee and AO did not summon purchaser and record his statement to verify facts, addition made by him was not sustainable.

Assessee had claimed part of cash deposit in bank account being made out of sale of car. Affidavit of purchaser of car was filed by assessee along with his bank statement to show withdrawal made by him from his Bank account for purchase of car. AO observed affidavit of purchaser of car was neither signed by witness or Oath Commissioner and R.C. was still in  name of assessee. Since no satisfactory evidence was furnished, addition was made by AO for same.

it is held that Assessee sold his car in cash to a person who had executed an affidavit in favour of assessee, confirming purchase of car. AO did not examine deponent of Affidavit. However, AO doubted explanation of assessee because Affidavit was not attested by Oath Commissioner and that registration of car was still in name of assessee. If AO was having any doubt over the transaction, he could have summon purchaser of car and record his statement to verify facts. However, no inquiry was done in the matter. Therefore, there was no justification to disbelieve explanation of assessee. AO also did not make any effort to verify whether car was still in possession of the assessee. Therefore, addition made on this account was deleted.

Decision: In assessee’s favour.

IN THE ITAT, DELHI BENCH

BHAVNESH SAINI, J.M.

Satyender Yadav v. ITO

ITA.No. 245/Del./2019

4 June, 2019

Assessee by: Rano Jain, Advocate & Mansi Jain, C.A.

Revenue by: S.L. Anuragi, Sr. Departmental Representative

This appeal by Assessee has been directed against the Order of the learned Commissioner (Appeals)-1, Gurgaon, Dated 19-11-2018, for the assessment year 2010-2011.

2. Briefly the facts of the case are that assessee filed return of income declaring income of Rs. 1,85,000. In the first round of appeal, the matter travelled up-to ITAT who have restored back the matter to the file of assessing officer In the background of these facts, I decide the appeal of assessee as under.

3. I have heard the learned Representatives of both the parties and perused the findings of the authorities below.

4. Learned Counsel for the Assessee submitted that Ground Nos. 1, 2 and 5 are general in nature and need no adjudication. Therefore, these grounds are dismissed.

5. On Ground No. 3, assessee challenged the addition of Rs. 2 lakhs. The assessing officer made addition of Rs. 3,91,600. The assessing officer noted from the computation of income furnished during the course of assessment proceedings that assessee had shown income from consultancy in a sum of Rs. 1,35,000 and salary income of Rs. 1,14,000, totaling to Rs. 2,49,000. The assessing officer observed that as against income of Rs. 2,49,000, the assessee had shown cash deposits of Rs. 3,91,600 from consultancy and salary. The assessing officer also noted that there was no separate withdrawals from the Bank for house hold expenses. The assessing officer observed that in these circumstances, income of Rs. 2,49,000 was utilised by the assessee against house hold expenses, therefore, the source of cash deposit of Rs. 3,91,600 remained unexplained. The assessee submitted before assessing officer that the total transactions conducted by assessee is of Rs. 35,28,500, out of this, his total deposit in Bank is Rs. 30,78,500 and his expenses for doing consultancy is Rs. 1,09,000 out of this mobile expenses is paid through his Bank account of Rs. 20,071 and balance Rs. 88,893 is cash expenses so balance of Rs. 3,61,107 is for house expenses. It was also submitted that his wife is also taking tuition and she is also an earning person in his family and some household expenses is also done from her income. The assessing officer did not accept the contention of assessee because earlier assessee claimed that his wife is getting salary income, but, now it is claimed that she has tuition income. The assessing officer, therefore, treated the source of cash deposit to the tune of Rs. 3,91,600 unexplained, addition of the same was made.

6. The assessee challenged the addition before the learned Commissioner (Appeals) and same submissions were reiterated. It was explained that source of the fund of Rs. 3,91,600 comprise of Rs. 1,47,600 from salary and Rs. 2,44,000 out of income from consultancy. The learned Commissioner (Appeals) considering the explanation of assessee, restricted the addition to Rs. 2 lakhs.

7. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and referred to copy of the acknowledgment of filing of the return of income for assessment year under appeal and PB-22 which is computation of income in which assessee has shown net salary income of Rs. 1,14,000 and Rs. 2,44,000 as income from other sources out of consultancy. Learned Counsel for the Assessee, therefore, submitted that since this amount is shown as income in the return of income, therefore, no addition could have been made by the learned Commissioner (Appeals). PB-27 is cash flow statement which includes salary of Rs. 1,47,600 and income from consultancy of Rs. 2,44,000.

8. On the other hand, learned Departmental Representative relied upon the Orders of the authorities below.

9. I have considered the rival submissions. The assessee has given an explanation regarding total cash deposit in the Bank Account. The assessee also explained that out of the total transactions and total cash deposit in the Bank account, there is still amount left for house hold expenses. The explanation of assessee was not found to be incorrect. The assessee further explained that he has salary and consultancy income which have been shown in the return of income. Whatever income have been shown in the return of income is available to the assessee to explain the cash deposited in the Bank account, therefore, there was no justification to restrict the addition to Rs. 2 lakhs on this issue. I, accordingly, set aside the Orders of the authorities below and delete the addition of Rs. 2 lakhs. Ground No. 3 of the appeal of assessee is allowed.

10. On Ground No. 4, assessee challenged the addition of Rs. 3,21,900. The assessing officer noted that assessee had claimed part of the cash deposit being made out of sale of car for an amount of Rs. 3,21,900. The assessing officer observed that no satisfactory evidence has been furnished, therefore, addition of the same was made. The assessing officer observed that assessee filed affidavit of the purchaser of the car which has neither been signed by the witness or Oath Commissioner and the R.C. is still in the name of the assessee showing the ownership. The assessing officer did not accept the contention of assessee. The assessee explained before the learned Commissioner (Appeals) that amount is available to assessee on sale of car. Affidavit of purchaser of Car Shri Parvender Singh is filed along with his bank statement to show withdrawal made by him from his Bank account for purchase of the Car. The learned Commissioner (Appeals) did not accept the contention of assessee because car is not transferred in the name of the purchaser. This ground was dismissed.

11. Learned Counsel for the Assessee reiterated the submissions made before the authorities below. She has referred to PB-24 which is affidavit of Shri Parvender Singh, purchaser of the car which was filed before the authorities below in which he has confirmed to have purchased the car of assessee on cash payment of Rs. 3,21,900. Pb-25 is Bank account of the purchaser to show that on the date of purchase of the car, he has withdrawn cash of Rs. 1,12,500 and Rs. 3 lakhs respectively. Learned Counsel for the Assessee, therefore, submitted that addition is wholly unjustified.

12. On the other hand, learned Departmental Representative relied upon the Orders of the authorities below.

13. I have considered the rival submissions. It is not in dispute that assessee is owner of the Car. The assessee explained that car is sold for cash of Rs. 3,21,900 to Shri Parvender Singh who has executed an affidavit in favour of the assessee, confirming the purchase of the Car. The assessing officer did not examine the deponent of the Affidavit. The assessing officer did not dispute the amount withdrawn by him from his Bank account. Thus, sufficient cash is available with the purchaser to purchase the car. However, the assessing officer doubted the explanation of assessee because Affidavit is not attested by the Oath Commissioner and that registration of the Car is still in the name of the assessee. It generally happens in case of purchaser of motor vehicle, purchaser did not get the vehicle transferred in their name for a longer time. If assessing officer was having any doubt over the transaction, he could have summon the purchaser of the car and record his statement to verify the facts. However, no inquiry have been done in the matter. Therefore, there was no justification to disbelieve the explanation of assessee. Assessing officer did not make any effort to verify whether car was still in possession of the assessee. In this view of the matter, I set aside the Orders of the authorities below and delete the addition. Ground No. 4 of the appeal of Assessee is allowed.

14. In the result, appeal of Assessee partly allowed.