H.S. Sidhu, J.M.:— The Assessee has filed the present appeal against the impugned order dated 20/11/2012 passed by the Commissioner of Income Tax (Appeals)-Rohtak on the following grounds:—

“I. That the learned Commissioner of Income Tax (Appeals) Rohtak has erred both in law and on facts in denying the claim of deduction of Rs. 1,88,100/- representing the expenditure incurred for leveling the land and construction of boundary walls.

1.1 That the learned Commissioner of lncome Tax (Appeals) has failed to appreciate that expenditure incurred was duly recorded in the books of accounts in the preceding assessment years and books of account for the instant assessment year had duly been examined and accepted and as such there is no justification to deny the claim of deduction by holding that no evidence was furnished in support of claim of expenditure.

2. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding the addition of Rs. 4,00,000/- representing unsecured loan received by the appellant from husband of the appellant Shri Manoj Kumar who is an independent assessee.

2.1 That mere fact there were cash deposits in the bank account of Sh. Manoj Kumar could not be a ground to conclude that creditworthiness of the creditor was not proved and hence the addition made is sustained is not tenable.

3. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the addition of Rs. 5,50,000/- representing advances made in earlier years and received in the instant year and as such addition made in disregard of the facts and evidence on record is wholly untenable and unsustainable.

It is therefore, prayed that the disallowance/additions so made by the Income Tax Officer and sustained by the learned Commissioner of Income Tax (Appeals) may kindly be deleted and appeal of the appellant be allowed.”

2. Brief facts of the case are that the Return declaring an income of Rs. 1,79,470/- was filed on 30.10.2010 and the same was processed u/s. 143(1) as such. Later on, the case was selected for scrutiny through CASS. Notice u/s. 143(2) was issued on 24.8.2001 which was served upon the assessee by speed post on 29.8.2011 fixing the case for 5.9.2011. Again notice u/s. 143(2) and 142(1) alongwith questionnaire dated 13.9.2011 were issued to the assessee. Information and details as called for have been furnished and placed on record. Books of accounts produced and examined by test check. Thereafter, completed the assessment vide his assessment order dated 24.10.2011 passed u/s. 143(3) of the I.T. Act, 1961 and made various additions.

3. Against the order of the AO dated 24/10/2011 assessee filed an appeal before the ld. First Appellate Authority, who vide impugned order dated 20/11/2012 dismissed the appeal of the assessee. Now the Assessee is aggrieved against the impugned order and filed the present appeal before the Tribunal.

4. Ld. Counsel of the assessee has filed the synopsis in order to support his contentions. For the sake convenience, we reproduce the same as under:—

1. The present appeal is arising from the order of CIT(A) dated 20.11.2012. And pertains to AY 2009–2010. The assessee in order to assist this Hon'ble Bench has prepared this synopsis.

2. It is submitted that assessee is an individual and filed her return of Income declaring an income of Rs. 1,79,740/- for the impugned year.

3. It is submitted that assessee has taken three grounds of appeal ground number one and two have two parts and ground number three is singularly raised.

4. The first issue embodied in ground number 1 and 1.1 is the addition of Rs. 1,88,100/-. The facts which are relevant in respect of this ground are as under:—

5. It is submitted that in AY 2007–2008 assessee had purchased one plot for an amount of Rs. 5,66,000/-. In AY 2008–2009 the assessee incurred cost towards the improvement of this plot, assessee has incurred expenses of Rs. 1,88,000/- on leveling and erecting of boundary wall of this plot. Which means assessee had made investment of Rs. 7,54,100/- in this plot. It is pertinent to note that assessment for AY 2008–2009 has attained finality and the expenses claimed vis-a-vis improvement of land has been accepted.

6. It is submitted that in the impugned year when the assessee has sold out this plot she had claimed the deduction of Rs. 7,54,100/- (Cost of Improvement). However, during the course of assessment proceedings the AO, without referring to any material, disallowed the amount of expenses incurred by assessee on leveling and erection of boundary wall.

7. Finding of AO in this regard are at Page No. 1-Para-2

8. CIT(A) affirmed the order of the AO without appreciating the fact that cost of improvement was incurred and allowed in immediately previous assessment year and the AO was not justified in questioning the genuineness of these expenses in the impugned year particularly when there is no material on record to prove otherwise.

9. Finding of CIT(A) are at Page No. 2 Para 4 Submissions of the assessee are as under:—

10. The expenses were incurred and allowed in AY 2008–2009, this explanation was given to the AO by the assessee See Page No. 3 of file PS. And relevant Page No. 21-22 of PS.

11. It is submitted that once it is accepted position of fact that the expenses were incurred and allowed in previous assessment year then the AO and CIT(A) cannot disallow these expenses in the impugned year, in other words the AO ought to have reopened the previous assessment year for examining the genuineness of these expenses.

12. It is settled position of law that there has to be some consistency in the approach of the revenue and it cannot do those things which it can not do directly. It is submitted that till today no action either under section 263 or 147 has been taken for that year.

13. Recently Hon'ble Apex Court in the case of Excel Industries reported in 358 ITR 295 and Hon'ble Delhi High Court in the case of Crain U.K., 359 ITR 268 have held that there has to be consistency in the approach of the revenue. And if there is no change in facts and circumstance revenue cannot plead that principle of res-judicata are not applicable in tax proceedings. Therefore, having regard to the fact that the financial result after allowing these expenses have been accepted in AY 2008–2009 the revenue cannot disallowed any thing in the impugned assessment year

14. It is submitted that the AO and CIT(A) have accepted the fact of incurring of expenses as is evident from the fact that quantum of expenses has been accepted in toto, neither there is any addition nor any subtraction in this figure as claimed by assessee. Therefore without touching the assessment of previous year the AO and CIT(A) were not justified in disallowing the amount of Rs. 1,88,100/-

15. The issue raised in ground number 2 and 2.1 pertained to the addition of Rs. 4,00 Lakhs received by the assessee from her husband on account of unsecured loan. The fact in this regard is that assessee has received an amount of Rs. 4 Lakhs from her husband and the AO added this amount under section 68 on the ground that husband of the assessee failed to prove the source of these funds. The CIT(A) also affirmed the finding of the AO

16. The Finding of AO in this regard are at page No. 2 Para 2 of the order and CIT(A) are at Page No. 5 Para 7 of the order.

Submissions of the assessee before this Hon'ble Bench are as under:—

17. It is submitted that it is not a case where some amount has been received from any entry operator in as much as the sum was received from the husband therefore there is no question of any dubious methods involved

18. The husband of the assessee was regularly assessed to tax and all the documents such as Income Tax details and other were duly filed with AO-See Submission of the assessee before AO at PG No. 6 of PS regarding loan confirmation-Pg No. 10 the confirmation of the husband

19. The financial results and ROI of husband are at Page 23-25, a perusal of these documents would prove beyond doubt that the capital of the husband was enough to meet out the advance portion given to wife as unsecured loan.

20. It is submitted that CIT(A) has grossly erred in overlooking the presence of adequate capital and alleging that husband of the assessee failed to prove the source of funds, it is settled position of law that revenue cannot question the source of source. A reference in this regard can be made to the judgment of Delhi High Court in the CIT v. Diamond products reported in 177 Taxman 331 (Del) copy of the judgment is annexed in decision paper book

21. It is further pertinent to mention here that husband has appeared before the AO and has confirmed the advancement of loan. However, his statement is also discarded with out taking any action in the case of husband.

22. It is next submitted that in ground no. 3 the assessee has disputed the addition of Rs. 5,50,000/-. In respect of this ground the facts are that the assessee has deposited an amount of Rs. 17 Lakhs in cash in her bank account. The AO while examining the source of this cash has doubted the quantum of Rs. 5,50,000/-.

23. The assessee vide his reply dated 19-10-2011 filed before the AO explained that out of this amount an amount of Rs. 2 Lakh was received from Mahender Singh Yadav and Rs. 3 Lakhs were received from Rajpal Yadav and amount of Rs. 30440/- was recovered from debtors.

24. The assessee explained that amounts given to Sh Mahender and Rajpal were given as advance towards purchase of land in previous assessment year and because the deal was not materialized the funds were received back. Assessee has also filed the confirmation of these parties wherein they have duly confirmed the transaction See Page No. 8-9 of PB

25. The AO overlooking the confirmation of third parties and overlooking the return of income of assessee for AY 2008–2009, wherein these funds were duly reflected added the amount under section 68 of the Act.

26. The finding of the AO are at Pg No. 3 Para 4 and CIT(A) are at 7 Para 10 of the order.

Submissions of the assessee before this Hon'ble Bench are as under:—

27. Advances were given in previous year and the copy of the return of income and Balance sheet were filed before the AO.

28. It is settled position of law that no third party would come forward with false evidence to oblige an assessee

29. It is submitted that AO disallowed the amounts on the ground that assessee failed to produce the witness before him. In this regard it is submitted that it is settled position of law that opening balances cannot be added under section 68 See Delhi High Court Usha Studs case reported in 301 ITR 384 (Del)-Copy of the decision is attached in PB

30. Without prejudice to the above it is submitted that by providing the confirmation of the third parties and hence discharged her burden. However the AO without issuing any summon under section 131 to the concerned persons has added the amount arbitrary. It is settled position of law that no adverse inference can be drawn against assessee without issuing summons under section 131 of the Act-Orrisa Cement 159 ITR 78 (SC). And 297 ITR 441 (SC)

31. Once again the assessee placed reliance on the principle of consistency and submits that having accepted the advancement of money in previous years the AO cannot make any addition of such money when the same is returned to assessee.

32. As far as the amount of Rs. 30440/- is concerned it is submitted that this amount represent the income of the assessee already offered for taxation in earlier year. And hence the addition of the same would amount to double taxation.

33. As per the observation of the CIT(A) that only 3% cases are selected for scrutiny the assessee seeks to rely on the judgment of Hon'ble Delhi High court in the case of Orient Craft reported in 354 ITR 536 (Del) AR of the assessee.

5. Ld. DR on the other hand relied upon the orders of the revenue authorities and stated that the assessee has not filed any documentary evidence supporting her claim before the AO as well as Ld. CIT(A), in spite of the various opportunities given to the assessee, therefore, he stated that the revenue authorities have rightly passed the orders. As regards the addition of Rs. 4 lacs towards unsecured loan received by the assessee from her husband Sh. Manoj Kumar, Ld. DR has submitted that assessee has not established the creditworthiness of her husband and genuineness of the transactions, therefore, he stated that the impugned order passed by the Ld. CIT(A) may be upheld.

6. We have heard both the parties and perused the records, especially the orders of the revenue authorities; Synopsis filed by the assessee and Paper Book.

6.1 As regards the issue involved in Ground No. 1 regarding the denial of claim of deduction of Rs. 1,88,100/- and expenditure incurring for leveling the land and construction of boundary wall. We have perused the relevant documentary evidence filed by the assessee in the Paper Book containing pages 1 to 37 as well as the order passed by the Revenue Authorities, we are of the view that in the interest of justice, the issue requires re-examination at the level of the AO, because some relevant evidence assessee has produced before the Revenue Authority, has not been appreciated by them. In the interest of justice, we set aside the issue to the file of the AO, with the direction to decide the same afresh under the law, after adequate opportunity of being heard to the assessee.

6.2 As regards the issue of addition of Rs. 4 lacs representing unsecured loan received by the assessee from her husband Sh. Manoj Kumar, we are of the view that assessee has produced necessary evidence before the AO to prove the genuineness and creditworthiness of Sh. Manoj Kumar who had advanced the loan of Rs. 4 lacs to her wife i.e. assessee. Assessee has filed the return of income of her husband Sh. Manoj Kumar and copy of the bank account in which her husband has deposited money on 5.12.2008, 10.12.2008 and 16.12.2008 and advanced the same to the assessee on 16.12.2008 through cheque. The important basis of evidence is the statement of Sh. Manoj Kumar, husband of the assessee has also been recorded by the AO on 19.10.2011 and he stated that he is doing Kiryana business and he has deposited the amount in the Bank and advanced the amount in dispute to her wife from her Kiryana business. The assessee has discharged her onus to prove the genuineness and creditworthiness of her husband who has given the loan to the unsecured loan to her wife i.e. assessee. In our considered opinion, the AO has wrongly made the addition of Rs. 4 lacs to the income of the assessee representing as unsecured loan received by the assessee from her husband and the Ld. CIT(A) has also wrongly upheld the same without appreciating the evidence filed before him. Keeping in view of the above facts and circumstances as explained above, we are of the view that the amount of Rs. 4 lacs has been fully explained by the assessee, therefore, the addition in dispute is hereby cancelled.

6.3 As regards the issue involved in Ground No. 3 regarding the upholding the addition of Rs. 5,50,000/- representing advances made in earlier years and received in the instant year and as such addition made. At the time of hearing, Ld. Counsel of the assessee filed the documentary evidence and draw our attention towards the relevant evidence which support the claim of the assessee qua the addition of Rs. 5,50,000/-. We are of the view that relevant evidence produced by the assessee, has not been appreciated by the revenue authorities which requires examination at the level of AO. In the interest of justice, we set aside the issue to the file of the AO, with the direction to decide the same afresh under the law, after adequate opportunity of being heard to the assessee.

7. In the result, the appeal of the Assessee is partly allowed for statistical purpose.