TaxTMI 
TaxTMI 
2016 (2) TMI 1031
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of unsecured loans. 3. That the worthy Commissioner of Income-tax (Appeals), Ludhiana, has not considered the fact that the assessee is the existing asses see of Income-tax for the past many years and besides business income, he has also agricultural income and he was in position to invest a sum of Rs. 8,53,150 out of the past savings. 4. That the worthy Commissioner of Income-tax (Appeals), Ludhiana, has also not considered the fact that the assessee has taken a loan from friends and relatives for the purchase of agricultural land especially when their statements were recorded by the Assessing Officer as per the direction of the predecessor of the worthy Commissioner of Income-tax (Appeals) and all the creditors have confirmed having advanced the loan and considering the fact and the entirety of circumstances, his worthy predecessor has deleted whole of the addition of Rs. 27,53,150. 5. That the worthy Commissioner of Income-tax (Appeals), Ludhiana, has confirmed the addition against the facts and in the circumstances of the case and by not considering our submission properly and, in fact, the addition was confirmed on imagination and guess work without....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of land Rs. 24,25,000 Stamp duty Rs. 3,03,150 Miscellaneous expenses Rs. 2,50,000 Total Rs. 27,53,150 Sources of the above investment was claimed as under : Unsecured loans Rs. 19,00,000 Self-savings Rs. 8,53,150 The assessee has filed a list of unsecured loans of Rs. 19 lakhs. The assessee has also claimed that he sold immovable property amounting to Rs. 3,06,000 as under : Date Item Total value Share value 19.1.88 Shop at Chomkkor Sahib 45,000 45,000 26.9.88 House at Bewholpur 27,000 27,000 8.9.89 Plot 20,000 20,000 20,000 1.06.90 Plot at Beholpur 36,000 36,000 7.1.91 Shop at Beholpur 11,000 11,000 7.5.91 House at Beholpur 20,000 20,000 1.10.91 Agricultural land at village Beholpur 1,98,000 1/3rd 66,000 9.10.91 -do- 1,98,000 1/3rd 66,000 2.12.91 -do- 75,000 1/3rd 25,000 The source of the balance investment of Rs. 5,47,150 was stated to be out of his past saving, which fact was not mentioned in assessee's letter dated December 4, 1997. The assessee has filed a letter dated December 15, 1997, and letter dated December ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng Officer and, hence, the assessee is in appeal before the Tribunal. 6. We have heard Shri Sudhir Sehgal, the learned counsel for the assessee and Shri Sushil Kumar, the learned Departmental representative at length. During the course of survey under section 133A of the Act, statement of Shri Gurbachan Singh was recorded on oath by the Additional Director of Income-tax on August 8, 1996, which reads as under : "Statement of Shri Gurbachan Singh, S/o. Sh. Rattan Singh, C/o. M/s. Khalsa Cloth Store, Chandigarh Road, Samrala, recorded during the survey proceedings under section 133A(1) of the Income-tax Act, 1961, on August 8, 1996, at about 6 p.m. Stated on oath that I shall speak the truth, only truth and nothing but truth. Question During survey operations, one diary marked 'Gero' Coca Cola Colour was found and whose photo copies have been taken, you are requested to explain to whom this diary relates, to whom all the entries relate, by whom the diary has been written, whether all the recorded entries relating to different years have been reflected in the regular books of account of any business concern of your or of any family members busines....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uestion What are the sources of your income ? Answer The source of income is agriculture since 1959. I along with my two brothers purchased land measuring of nine kilas. My uncle was also shareholder of this land. Share ratio of the land was as under : 1/3 Uncle Sh. Suhel Singh 2/3 of three brothers namely 1. Myself, i.e., Sh. Gurbachan Singh 2. Sh. Harnam Singh 3. Sh. Kulwant Singh This land was situated at village Beholelpur District Ferzepur. Ten acres of land was taken on lease from the Government at Village Villon adjoining to the village Beholepur. Later on the land measuring ten kilas was purchased/allotted to one at the rate of Rs. 200 per kila by the Government within year 1961-62. Till then, we were doing agriculture on this land. I have shifted to Samrala in the year 1951. The land at the village Villon was sold 25 to 26 years back at the rate of Rs. 3,600 per kila, (three thousand six hundred per kila). The total consideration was Rs. 31,200. The land at Behalelpur was sold about five to six years back at the rate of Rs. 15,03,000 per kila but the registry of the land was made at lower rate. I received my share value of Rs. 2&frac1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in this agreement, it has been recorded that Rs. 40,000 has been given as advance. Please explain about this agreement deed and source of payment of advance amount ? Answer One Parminder Singh Namberdar of the village Palmajra was to make some advance to Sh. Som Nath. Since, Sh. Parminder was not sure that whether Som Nath will execute any agreement with him, therefore, he requested me to get this paper executed in my name. Whereas the said payment of Rs. 40,000 has been made by Sh. Parminder only. This agreement of sale is a mere security on behalf of said Parminder Singh. Question You had stated earlier that you had raised loans from different friends and relatives, please, state whether any written agreement has been executed by you with them ? Answer No written agreements have been executed. Question Please give details of the persons to whom you had advanced loans and interest received from them ? Answer I had advanced loan of Rs. 1½ lakhs through draft and I used to receive monthly interest at the rate of 2 per cent. The interest is received through cheques. The above statement is true and correct to the best of my ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ge 158) : "Whether, on the facts and in the circumstances of the case, the Income-tax Tribunal is right in law in holding that the statement made during survey under section 133A of the Act has not evidentiary value ?" The hon'ble High Court has answered the above question in the affirmative, observing as under (page 166) : "From the foregoing discussion, the following principles can be culled out : '(i) An admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of account do not correctly disclose the correct state of facts, vide decision of the apex court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) ; (ii) In contradistinction to the power under section 133A, section132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever stat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt referred to above, we have no hesitation in holding that the addition cannot be made on the basis of statement recorded on oath at the time of survey under section 133 of the Act, which has no evidentiary value. Even the Central Board of Direct Taxes (CBDT) has issued instructions to the Income-tax authorities that no efforts should be made to extract the surrender without corroborative evidence. From the facts of the present case, and the statement of the assessee, it is crystal clear that the amount was surrendered only on the basis of apprehension that the assessee may not be able to lead the evidence to the extent of Rs. 15 lakhs of the remaining amount and being an old man, he had stated that I do not have any evidence at this moment, we have already observed hereinabove, the Commissioner of Income-tax (Appeals) held that the retraction was made after long time. In my opinion, the observation of the Commissioner of Income-tax (Appeals) is not correct because it is well settled that retraction is permissible only in those circumstances where it is shown by the assessee that it was contrary to the real facts and the assessee is able to lead the evidence in that regard. In our....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of Income-tax (Appeals) called for a remand report from the Assessing Officer, i.e., Income-tax Officer, Ward-II(1), Khanna, and the Assessing Officer submitted a report on March 15, 2002, stating that about 13 persons have stated that the loans were given to the assessee. Out of 13 persons, three have stated that the amount given have since been returned back. The Assessing Officer has also mentioned the details of these three persons. As regards, six persons mentioned in the report, the Assessing Officer has observed that some of them are residing abroad and some have died as per the report of the notice server of his office and the details have been given in the report. It is relevant to reproduce the report, which reads as under : "No. Office of the Income tax Officer. Ward-I, Khanna, Dated Khanna 15-3-2002 The Commissioner of Income-tax, (Appeals), Ludhiana. Sir, Sub : Appellate proceedings in the case of the late Gurbachan Singh, Samrala report submission of- Kindly refer to appellate proceedings in the abovementioned case. The main issue contested in appeal relates to investment of Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Singh, Vill. Bondli Rs. 30,000 12 acres of land (viii) Sh. Gurdip Singh s/o Sh. Labh Singh, Vill. Bondlv Rs. 50,000 20 acres of land (ix) Sh. Bagga Singh s/o Albel Singh, Vill. Pataudi Rs. 50,000 26 acres of land (x) Sh. Harbans Singh s/o Bhagwan Singh, Vill. Khatran Rs. 75,000 23 acres of land (xi) Sh. Harpal Singh s/o Uayal Singh, Vill. Ladhran Rs. 80,000 Teacher (xii) Sh. Ram Pal Singh s/o Joginder Singh, Vill. Parodi Rs. 30,000 12 acres of land (xiii) Smt. Balbir Kaur w/o late Bhajan Singh, Harbanpura Rs. 1,50,000 8 acres of land In their statements the above persons have stated that the loan was given to the assessee. Though all these persons are maintaining their bank account from the last 18 to 22 years but the fact remains that the amounts in question were deposited by them just before issuing cheques to the appellant as is clear from their bank accounts available on file. However, the fact remains that the source of the deposit in the banks is not convincing. It is further to be mentioned that in the case of Sh. Jasbir, S/o Sh. Nachattar Singh, Samrala (listed at Sr . . No. iv) above, it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ngh for the purpose of land and their sources are as under : List of unsecured loans Taken by Shri Gurbachan Singh for the purchase of land and their sources Sl. No. Name Amount under consideration Mode of receipt cheque/cash Affidavit Statement recorded or not Other evidences Page 1. Harpal Singh, Village Ladhra 80,000 Cheque (p-18) Yes Yes (confirms) - 17-19 2. Balbir Kaur, Bhadla 1,50,000 Cheque (P-22) Yes Yes (with Deptt.) - 20-22 3. Harpal Singh, Chehlan 25,000 Cheque (P-23) Yes - - 23-25 4. Balbir Singh, Chehlan 1,00,000 Cheque (P-26) Yes - - 26-27 5. Parminder Singh Pal, Majra Balbir Singh 40,000 Cheque (P-29) Yes Yes (con firms) Form "J" (Pg. 31-35) 28-35 6. Ram Dass, Jodhewal 50,000 - Yes Yes (confirms) - 36-37 7. Kashmira Singh, Diwala 25,000 Cheque (P-43) Yes Yes (confirms) Form "J"/Jamabandi 38-64 8. Harbans Singh, Khalra 75,000 Cheque (P-66) Yes Yes (confirms) - 65-67 9. Ram Singh, Village Behlolpur 75,000 Cheque (P-69) Yes Yes (conf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rma (Sl. No. 19). We may observe here that the assessee had produced the affidavit of Shri Darbara Singh dated September 2, 1997, who died on October 7, 1998. The said person was never produced before the Assessing Officer. The assessee could not prove the creditworthiness of the deceased, Shri Darbara Singh. In the affidavit, he has stated that he was having 25 acres of land but the assessee has failed to produce the supporting evidence to show that Shri Darbara Singh was the owner of 25 acres of agricultural land. We are of the opinion that the affidavit tendered by the assessee can be treated merely as self-serving document which is not supported by any evidence. Accordingly, we confirm this addition. As regards Sh. Ujjagar Singh, Jatana (Sl. No. 23), the assessee has submitted only the death certificate which is available at page 105 of the paper book. As per the said certificate Sh. Ujjagar Singh died on May 16, 1997. There is no evidence on record to prove the creditworthiness of the creditor and the genuineness of the transaction and, hence, we confirm the same. Further, the assessee claimed to have taken unsecured loan of Rs. 20,000 from one Shri Hari Singh Jharsahib (Sl. N....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l. No. 21). The assessee has submitted affidavit of Shri Amarjit Singh wherein it is claimed that the amount in question was given out of sale proceeds of agricultural produce. There is no supporting evidence on record. The assessee has failed to prove the creditworthiness of the creditor and the genuineness of the transaction. Accordingly, we confirm the addition of Rs. 25,000. The assessee had also claimed to have received an amount of Rs. 1 lakh from one Sh. Balbir Singh, Chetan (Sl. No. 4) S/o. Shri Ajaib Singh resident of the village Chetan (Tehsil Samrala). The assessee has filed copy of the bank statement and affidavit of Shri Balbir Singh. In his affidavit, Shri Balbir Singh has stated that he has given a sum of Rs. 1 lakh to Shri Gurbachan Singh out of sale proceeds of agricultural produce. In this case also, the assessee failed to prove the creditworthiness of the creditor and genuineness of the trans action. Further, the assessee claimed an amount of Rs. 25,000 as a loan received from one Shri Harpal Singh, Chehlan, (Sl. No. 3). In his affidavit, Shri Harpal Singh has stated that the said loan was given out of sale proceeds of agricultural produce. The affidavits of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....money ; and (iii) the genuineness of transaction. The burden of proving the source of cash credits is on the assessee. In the above transactions, the assessee credited the amount by cheques. In our opinion, mere payment by account payee cheques is not sacrosanct nor can it make non-genuine transaction as genuine. In view of the above, we confirm the addition of Rs. 7,55,000. We may also observe here that the assessee has furnished a list of unsecured loans referred to above, totalling to Rs. 18,80,000. However, the assessee claimed that he had received unsecured loans of Rs. 19 lakhs. Thus, there is a difference of Rs. 20,000 (Rs.19,00,000 - Rs. 18,80,000) for which no explanation has been given. Accordingly, the total addition comes to Rs. 7,75,000 (Rs. 7,55,000 + Rs. 20,000). Accordingly, we confirm the addition to the above extent. 13. As regards the balance amount of Rs. 11,25,000, it is clear that the Assessing Officer himself has stated in the remand report dated March 15, 2002, that the 13 persons mentioned therein have stated that the loan was given to the assessee. The Assessing Officer has recorded the statements of the creditors mentioned at page 2 of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....had also explained the sources of deposits and the transactions were through banking channels. We, therefore, hold that there was no justification in making the addition of Rs. 11,25,000 (Rs.19,00,000 - Rs. 7,75,000). Accordingly, we allow a relief of Rs. 11,25,000 to the assessee. 14. It is observed that the total investment for the purchase of agricultural land is as under : (1) Cost of land Rs. 24,25,000 (2) Stamp duty Rs. 3,03,150 (3) Miscellaneous expenses Rs. 2,50,000 Total Rs. 27,53,150 Sources of the above investment was claimed as under : 1) Unsecured loans Rs. 19,00,000 2) Self savings Rs. 8,53,150 During the course of assessment proceedings the assessee claimed that he had sold immovable property at Rs. 3,06,000 as under : Date Item Total value Share value 19-1-1988 Shop at Chomkkor Sahib 45,000 45,000 26-9-1988 House at Bewholpur 27,000 27,000 8-9-1989 Plot 20,000 20,000 1-6-1990 Plot at Beholpur 36,000 36,000 7-1-1991 Shop at Beholpur 11,000 11,000 7-5-1991 House at Beholpur 20,000 20,000 1-10-1991 Agri. land at vill Behlolpur 1,98,0....