Commissioner Of Income-Tax-I, Chandigarh v. Shri B.r.madan

*** IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income Tax Appeal No. 570 of 2009Date of decision: 28.10.2010 Commissioner of Income-Tax-I, Chandigarh ...Appellant Versus Shri B.R.Madan ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Ms. Urvashi Dhugga, Advocate for the appellant. Ms. Radhika Suri, Advocate for the assessee. **** ADARSH KUMAR GOEL, J. 1.This appeal has been preferred under Section 260A ofIncome Tax Act, 1961 (hereinafter referred to as “the Act”)proposing following substantial question of law arising out of orderdated 6.11.2006 of the Income Tax Appellate Tribunal, ChandigarhBench 'B', Chandigarh (hereinafter referred to as “the Tribunal”)passed in IT(SS)A No32/Chandi/2003 and CO No.20/Chandi/2003:-“Whether in the facts and circumstances of the case andin law, the Hon'ble ITAT was justified in confirming thedeletion of Rs.46,46,798/- being the addition made onaccount of unexplained cash deposits in the bankaccounts of the assessee and his family members,whereas the Assessing Officer was not even allowed a *** reasonable opportunity to examine the additionalevidence furnished before the ld. CIT (Appeals) asrequired under Rule 46 A of the Income-tax Rules, 1962?”Search was conducted at the premises of the assesseeon 20.11.1997 and during the assessment addition of Rs.46,46,798/-was made on account of unexplained income of the assessee. Theaddition was deleted by the CIT(A) and upheld by the Tribunal. TheCIT(A) held that addition were made without proper verification andwithout due consideration of explanation of the assessee.Accordingly, the addition were deleted. The observations arereproduced below:- “I have gone through the submissions of the appellantand the observations of the Assessing Officer. It is seenthat the Assessing Officer has not applied his mind to theissue while making the addition. The additions are beingmade in a mechanical way without examining the entriesand verifying the amounts which have been reflected inthe returns filed by different family members from time totime. The explanations have been filed regarding theentries and wherefrom loans were taken, the same havebeen reflected in the accounts and affidavits have beenfiled for the same. Almost all the loans have been takenthrough banking channel. The true state of affairs havebeen reflected in the returns filed by the appellant andthe family members for earlier assessment years.Without looking into the details, the Assessing officer had *** made the addition by adding up the credits appearing ineach bank account. It may further be noted that Smt.Shalley Lall, one of the daughters of the appellant wasrunning a boutique since 1992 and was married inJanuary, 1994. Smt. Priya Chohan, other daughter of theappellant was in service since 1993 and was marriedNovember, 1995. Their bank accounts were not seizedfrom the residence of the appellant. At the time of searchthe were married and they had nothing to do with theappellant. The Assessing Officer should have examinedthe entries found in their bank accounts and should havecome to a definite conclusion that the deposits in theiraccounts were made by Sh. B.R.Madan before addingthem in the hands of the appellant. No such exercise hasbeen done by the Assessing Officer. Further, it may beseen that under VDIS, Smt. Shalley Lal had disclosedRs.2.00 lacs as cash and Sh. M.R. Madan, father of theappellant and Smt. Sangeeta Madan, wife of theappellant, have unclosed Rs.1,50,000/- cash towardscapital gains. After examining the accounts and the pastrecords of the appellant and his family members, I find nojustification for the Assessing Officer to make theimpugned addition totalling Rs.46,46,798/-, which isordered to be deleted.” The above observations were reiterated by the Tribunal.We have heard learned counsel for the parties. *** Learned counsel for the Revenue submits that the viewtaken by the CIT(A) in deleting the addition made on account ofunexplained income was perverse. After holding that addition by theAssessing Officer was without considering the explanation of theassesee, the CIT(A) deleted the addition without discussing theexplanation. Even if the Assessing Officer had made addition withoutdue consideration of explanation of the assessee at best saidexplanation could have been gone into by the CIT(A) which has notbeen done. The Tribunal also missed this aspect. Learned counsel for the assessee submitted that therewas explanation duly furnished. In absence of finding having beenrecorded which may explain the finding about unexplained income,the CIT(A) could not have deleted the addition only on the groundthat explanation of the assessee had not been properly considered.Accordingly, we are of the view that substantial question of law as toperversity of finding recorded by the CIT(A) as well as the Tribunalauthorities arises and has to be answered in favour of appellant. Accordingly, we allow the appeal, set aside the impugnedorder and remand the matter to the CIT (A) for a fresh decision inaccordance with law. The parties may appear before the CIT (A) for furtherproceedings on 20.12.2010. (Adarsh Kumar Goel) Judge October 28, 2010Pka (Ajay Kumar Mittal) Judge