TaxTMI 
TaxTMI 
2017 (11) TMI 1201
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....be granted by deleting the said addition of Rs. 63,38,820. 2. In the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of the learned Assessing Officer in making the addition of Rs. 16,10,491 on account of the alleged unexplained cheques deposits in the bank account. The action of the learned Commissioner of Income-tax (Appeals) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 16,10,491. 3. In the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of the learned Assessing Officer in making the addition of Rs. 31,50,000 on account of the alleged income on sale of plot No.143 Swaroop Vihar, Jagatpura, Jaipur. The action of the learned Commissioner of Income-tax (Appeals) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 31,50,000. 4. In the facts and in the circumstances of the case and in law the learned Commissi....
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....of attorney and paid cash to the assessee from time to time in lieu of which the assessee has issued cheques to the land owner. The Assessing Officer did not find the affidavit as reliable piece of evidence for various reasons discussed in the assessment order. Some of the reasons given by the Assessing Officer are worth noting which are as follows : "1. He had not mentioned any details of cash paid by him i.e. dates and amounts when he had paid cash to Shree Narayan Meena. 2. Details of colony developed by him were not mentioned. 3. The land was purchased by him in October, 2006 and January, 2007 and payments were made in May 2008 onwards, making payments after 15th to 18 months and reasons for delayed payments were not given." 3. Thereafter, the assessee was asked to produce Shri Shravan Kumar but he avoided presenting him and in turn requested the Assessing Officer to issue summons under section 131 of the Act. However, in absence of complete address, the Assessing Officer could not issue the summons to Shri Shravan Kumar. 4. In the mean time, on December 12, 2011, the assessee filed written submission before the learned Assessing Officer which i....
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.... income of the assessee which was deposited in the bank account. The peak of cash deposited and withdrawn from all the three bank accounts is enclosed as annexure-A to this order. As per this annexure the total peak comes at Rs. 63,38,820. The same is held as unaccounted income of the assessee and added to his total income. Thus Rs. 63,38,820 is added to the total income of the assessee. Since the assessee is the beneficiary, hence the addition is made in the hands of assessee on substantive basis. The matter is referred to the Income-tax Officer, Ward-2(3), Jaipur for making addition on protective basis in the hands of Shri Sharwan Kumar." 7. Being aggrieved, the assessee carried the matter in appeal before the learned Commissioner of Income-tax (Appeals) wherein the following submissions were made and which were again reiterated during the course of hearing before us : "7. Briefly the facts of the case are that the assessee-appellant aged about 39 years completed his MA in Sociology in the year 1996 and belongs to a small village Bassi where his father is involved in farming and is currently residing at Jagatpura, Jaipur. After completing his education, he wa....
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....cal acquaintance to the land owners, the land owners executed power of attorney in favour of the assessee- appellant and the assessee-appellant, in turn, on the basis of that authority executed the sale deeds in favour of Shri Shravan Kumar. The land owners executed the following power of attorney in favour of the appellant : Name Date of execution of power attorney Smt. Ganga Devi 6th September, 2006 Shri Mool Chand 6th September, 2006 Shri Ramjilal 6th September, 2006 Shri Ramdhan 6th September, 2006 The land of the abovementioned land owners were sold by the assessee-appellant on the basis of power of attorney to Shri Shravan Kumar through the following sale deeds : Name Date of execution of sale deed Smt. Ganga Devi 11th January, 2007 Shri Mool Chand 11th January, 2007 Shri Ramjilal 28th October, 2006 Shri Ramdhan 28th October, 2006 7.5 In terms of the above understanding amongst the parties, the sale deeds were executed by the sellers through the power of attorneys wherein post dated cheques were issued. In sale deed, the cheque numbers were mentioned that were issued as consideration. These....
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....old, colony which were developed, he was assessed to tax or not etc. All these issues are not relevant. The learned Assessing Officer has not disputed the fact of the lands having been purchased by Shri Shravan Kumar. Once this fact is undisputed, details of subsequent sale by Shri Shravan Kumar can have no bearing on the earlier part of the deal. * The learned Assessing Officer has also taken a plea that if cash is paid by Shri Shravan Kumar then the same is disallowed in his hands under section 40A(3). This cannot be a reason for not believing the proof of cash having been received from Shri Shravan Kumar. * The other reasons like Shri Shravan Kumar being a checker in NBC, Jaipur and after retirement purchased mini bus and truck and sold the same at loss had no bearing on the issue before the learned Assessing Officer. * Another reasons mentioned by the learned Assessing Officer is that payments by Shri Shravan Kumar being made after a lapse of 15-18 months from the date of purchase of land cannot be believed. This is a fact not only confirmed by the assessee-appellant but also by Shri Shravan Kumar and is fully corroborated by the gap in execution if r....
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....7,44,000 671609 883893 56 19-12-2008 Shri Ramdhan 7,44,000 671608 883892 56 17-12-2008 Total 14,88,000 C. Following cheque was lost by the land owner and was replaced by the assessee-appellant which was cleared in favour of the land owner : Name Amount Old cheque No. New cheque No. P.B. Date of clearance of cheque Shri Mool Chand 11,00,000 183267 883894 56 23-12-2008 Total 11,00,000 D. Following cheques originally issued to Smt. Ganga Devi by assessee-appellant were misplaced by her and were replaced by Shri Shravan Kumar himself : Name Amount Old Cheque No. New Cheque No. P.B. Date of clearance of cheque Receipt Pass book Shri Ganga Devi 11,00,000 183270 008282 44 67 17-5-2012 11,00,000 183271 008281 45 67 9-5-2012 Total 22,00,000 The above two cheques were not cleared from the assessee-appellant's b....
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....ssion. The Assessing Officer made addition in respect of peak of substantial cash deposits in the appellant's bank account. Total Rs. 99 lakhs were deposited on various dates and after considering the cash withdrawals, the Assessing Officer made the addition in respect of peak cash deposited in the appellant's bank account. The appellant submitted that such huge cash was given to him by the prospective buyer of the property Shri Shravan Kumar. Why the appellant deposited the cash allegedly given by Shri Shravan Kumar in his bank account is not clearly explained. When money is deposited in the appellant's bank account, onus is on the appellant to explain the nature and source of such cash deposit. This burden can never be shifted to the Assessing Officer. The appellant only produced Shri Shravan Kumar before the Assessing Officer who recorded his statement and came to the conclusion that there were many missing links in the statement and there was no evidence of possession of such huge cash with Shri Shravan Kumar. Even in the statement recorded Shri Shravan Kumar could not provide the source of such huge cash particularly when he was in employment as very lowpaid employ....
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....te, in correct perspective, the vital evidences which beyond doubt prove that following persons namely Smt. Ganga Devi, Shri Moolchand, Shri Ramji Lal and Shri Ramdhan had sold their respective pieces of land to Shri Shravan Kumar and the appellant acted as a broker using his bank account for transferring the money from buyer to sellers. 10.1 The vital evidences before the learned Commissioner of Income- tax (Appeals) were as below : (i) Sale deeds : (a) Copy of the sale deed executed on October 28, 2006 between Shri Shravan Kumar and Shri Narayan Meena. (b) Copy of sale deed executed on January 11, 2007 between Shri Shravan Kumar and Shri Narayan Meena. (c) Copy of sale deed executed on January 11, 2007 between Shri Shravan Kumar and Shri Narayan Meena. (ii) Power of attorney : (a) Copy of power of attorney executed on September 6, 2006 between Smt. Ganga Devi and Shri Narayan Meena. (b) Copy of power of attorney executed on September 6, 2006 between Shri Moolchand, Shri Ramjilal and Shri Ramdhan with Shri Narayan Meena. (iii) Stale cheques replaced by original buyer Shri Shravan Kumar. (iv) Copy o....
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....cts were evident before the learned Commissioner of Income-tax (Appeals). 10.5 The learned Commissioner of Income-tax (Appeals) was inclined to accept the fact of cash being made available to the appellant by Shri Shravan Kumar, yet he denied the relief for the simple reason that source in the hands of Shri Shravan Kumar was not proved. Following the observation of the learned Commissioner of Income-tax (Appeals) at page 12 of his order is worth noticing : "Even if for the sake of argument it is accepted that the appellant was provided cash by Shri Shravan Kumar then the source of cash need to be proved in his case which was also not done. Protective assessment in his hand recommended by the Assessing Officer does not absolve the appellant from his onus." Once this is established that Shri Shravan Kumar made available the cash to the appellant as consideration of his purchasing the land for onward transfer of money to the sellers of the land, the appellant acting as broker, there cannot be any reason to invoke section 68 in the hands of the appellant. Section 68 is not applicable for receiving the sale consideration. Section 69 can be invoked in the hands of the paye....
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....ally but in depth having regard to the human probabilities and normal course of human conduct. It is only when the explanation and the material offered by the assessee at this stage passes this muster that the initial onus placed on it would shift leaving it to the Assessing Officer to start inquiring into the affairs of the third party. (d) Whilst it is true that the assessee cannot be called upon to adduce conclusive proof on all these three requirements, it is nonetheless legitimate expectation of the process that he would bring in sufficient proof, which is credible and at the same time verifiable, so as to discharge the initial burden placed on him. Whether initial onus stands discharged would depend upon facts and circumstances of each case. (e) The degree of burden of proof on the assessee will vary from assessee to assessee. Where amounts are borrowed from or shares are allotted through private placement, to persons generally known to directors or shareholders, directly or indirectly, burden of proof is on higher pedestal and the courts have laid down a strict approach in terms of satisfying such burden of proof. (f) The word "identity" means the ....
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.... (h) The entire evidence available on record has to be considered and a reasonable approach has to be adopted. The final conclusion must be pragmatic and practical, which takes into account holistic view of the entire evidence including the difficulties, which the assessee may face to unimpeachably establish identity, creditworthiness of the shareholders and the genuineness of the transaction. (i) Where the assessee has discharged the initial burden placed upon him under section 68 to prove and establish the identity and creditworthiness of the share applicant/lender and the genuineness of the transaction, the burden of proof shifts on the Assessing Officer. In such a case, the Assessing Officer cannot sit back with folded hands till the assessee exhausts all the evidence or material in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him. If the Assessing Officer harbours any doubts of the legitimacy of any subscription, he is empowered, nay duty-bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings or has no m....
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....van Kumar 5,00,000 11,16,500 16/9/2008 Shri Moolchand (183269) 11,00,000 16,500 19/9/2008 Smt. Richa Chaudhary 2,51,000 2,67,500 27/10/2008 Smt. Richa Chaudhary 28,99,000 31,66,500 31/10/2008 Smt. Ruby Srivastav (cash) 13,00,000 18,66,500 24/11/2008 Smt. Ruby Srivastav (cash) 7,00,000 11,66,500 17/12/2008 Shri Ramdhan (883892) 7,44,000 4,22,500 18/12/2008 Shri Shravan Kumar 8,00,000 12,22,500 19/12/2008 Shri Ramji Lal (883893) 7,44,000 4,78,500 20/12/2008 Shri Shravan Kumar 7,00,000 11,78,500 23/12/2008 Shri Moolchand (883894) 11,00,000 78,500 2/3/2009 Shri Shravan Kumar 6,00,000 6,78,500 3/3/2009 Shri Shravan Kumar 5,00,000 11,78,500 4/3/2009 &n....
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....plot holders to whom plots were sold and area of each plot and amount received against each plot. However, we find that there is nothing on record to support the said contention of the assessee regarding cash deposits by Shrawan Kumar. No verifiable evidence has been filed by the assessee either during the assessment or the appellate proceedings in this regard. If the assessee is aware of particulars of source of receipts in the hands of Shrawan Kumar and has claimed to have facilitated the whole transaction, we don't understand what stops the assessee in bringing on record the documentation in support of such receipts. It is not a question of determining the source of source but it is a question of determining the genuineness of the transaction and creditworthiness of Shrawan Kumar in respect of whom it has been claimed that the cash deposits belongs to him. 15. We know refer to the affidavit of Shrawan Kumar filed by the assessee and the statement of Shrawan Kumar recorded under section 131 by the Assessing Officer during the course of assessment proceedings. 16. The Assessing Officer however did not find the above affidavit and the statement of Shri Shrawan Kumar credi....
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....aware of his accountant's whereabouts and his full name and address. If a person is dealing in sale/purchase of land, however, illiterate he may be and who does not know the basics of accounting, at least he will know the specifics of the land, its location, the area, the number of plots, rate at which the plots have been sold to various buyers and the specifics of the amount paid to the assessee from time to time especially given the huge quantum involved. However, we find that Shri Shrawan Kumar has miserably failed in disclosing these basic facts and sharing the same with the Assessing Officer. Further, the details of cash paid to the assessee has been stated by him to be in thousands, which is vague without specifying the amount and date of payment and also inconsistent with the version of the assessee where the assessee says that he has received cash in lakhs from Shrawan Kumar as we have noted above while reviewing the bank statement of the assessee. Even if we take into consideration the theory of fading memory with the advancement of age given that Shri Shrawan Kumar is a retired person having retired in the year 1999 and the statement being recorded in the year 2011, a....
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....avelled from the assessee's bank account to the sellers. It is the assessee's contention that cash which has been received from Shri Shrawan Kumar has been deposited in his bank account and the cheques issued in favour of the sellers have been cleared therefrom. As we have held above, the statement and affidavit of Shri Shrawan Kumar is not reliable and there is nothing on record to suggest that cash found deposited in the assessee's bank account belong to Shri Shrawan Kumar. In the absence of the same, these sale deeds on a standalone basis do not support the case of the assessee. Rather the factual position which emerges from a perusal of such sale deeds is that given the fact that consideration has been paid by the assessee to the land owners though the land stood transferred in the name of Shrawan Kumar, Shri Shrawan Kumar was a mere name lender in these sale/purchase transactions and it is the assessee's undisclosed own money which has been deposited in his bank account and subsequently paid to the land owners. 19. Further, we are intrigued by the fact that there is huge time gap between the execution of the sale deed and realisation of sale consideration by....
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....ence of any surety or guarantee that Shrawan Kumar in whose name the land stood registered will honour his commitment. What would happen when the land owners present the cheques on due date and by that Shrawan Kumar has not returned the amount and the consequences of dishonour of cheques under the Negotiable Instruments Act. What are the timelines for receipt of such huge payments from Shrawan Kumar. These are some of the questions which come to our mind and which remain unanswered. To our mind, these are merely contentions and nothing more to support the theory of cash deposit as belonging to Shrawan Kumar which could not be substantiated by any credible piece of evidence. As we have stated above, the only conclusion which can be drawn is that Shrawan Kumar was a name lender and it is the assessee's own money which has been paid to the land owners and effectively, the beneficial ownership over the land so purchased is with the assessee. 20. As we have stated above, where any sum is found credited in the books maintained by the assessee, the primary requirements, which should be satisfied cumulatively by the assessee in such cases is identification of the person, creditworth....
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.... at all disputed by the learned Commissioner of Income-tax (Appeals). However, the learned Commissioner of Income-tax (Appeals) has denied the relief for the reason given by him, that the bank account of Shri Shra van Kumar was opened on April 6, 2012 and therefore, these cheques cleared on December 18, 2008 and December 20, 2008 cannot be given by Shri Shravan Kumar. The learned Commissioner of Income-tax (Appeals) has failed to appreciate that these cheques were made available and not issued by Shri Shravan Kumar. Since Shri Shravan Kumar was onward selling the land to other persons, he obtained two cheques of the above sums from those parties directly in the name of the appellant, so that his obligation of getting the cheques cleared in favour of sellers of land could be fulfilled. Shri Shravan Kumar had no bank account which is the reason he took the cheques directly in the name of the appellant. 21.3 The explanation has to be evaluated in the background of the total factual matrix of the case. Evaluating the transaction in isolation is not justified. In the instant case the buyer Shri Shravan Kumar has paid the purchase consideration to the sellers through following three m....
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....e cheque has been received from Shrawan Kumar and deposited in the assessee's bank account towards part consideration for sale of land. The learned Commissioner of Income-tax (Appeals) has given a finding that Shravan Kumar's bank account itself was opened on April 6, 2012 and therefore he could not have given cheques to the appellant in 2008. In response, the assessee has submitted that these cheques were made available and not issued by Shri Shravan Kumar. It was further contended that since Shravan Kumar was onward selling the land to other persons, he obtained two cheques of the above sums from those parties directly in the name of the appellant, so that his obligation of getting the cheques cleared in favour of sellers of land could be fulfilled. In our view, these are merely contentions and not supported by any credible evidence that cheques were issued by ultimate buyers directly in favour of the assessee. Further, in view of the detailed reasoning given in respect of ground No. 1 above, we affirm the order of the learned Commissioner of Income-tax (Appeals) to the extent of Rs. 15 lakhs. Regarding Rs. 1,10,491 which is claimed to be brokerage income and already offe....
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....-tax (Appeals) also did not allow the relief for the reason that the handing over the money to Smt. Ruby Shrivastav was not evidenced. The payment was made to Smt. Ruby Shrivastav by withdrawing the money from his bank and this was evident from the pass book. 25.3 The learned Commissioner of Income-tax (Appeals) also erred in law by not appreciating the legal position that if the appellant as a power of attorney holder is treated as real owner then the investment could be taxed in the assessment year 2008-09 (as power of attorney was executed on May 19, 2007) and not in the assessment year 2009-10. In assessment year 2009-10 only short-term capital gain on sale of land could be taxed and not the entire sale proceeds. The learned Commissioner of Income-tax (Appeals) and also the learned Assessing Officer were duty bound to accept this legal proposition. Both the lower authorities have not countered this legal proposition, yet have erred in not taxing the capital gain in the year of sale of property. The learned Assessing Officer in his remand report has mentioned that since the appellant did not disclose the amount invested and the source of investment, there was no other alterna....
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....in the assessment year 2008-09. The matter is accordingly set aside to the file of the Assessing Officer for determination of quantum of capital gains which can be brought to tax as per law. The ground of the assessee is disposed of accordingly. Ground No. 4 relating to addition of Rs. 2,00,000 28. Briefly the facts of the case are that the appellant received a sum of Rs. 2,00,000 which is claimed to be received as gift from Shri Babul Lal Meena, the elder brother of the assessee's wife. Copy of the gift deed has been claimed to be submitted during the assessment proceedings while the Assessing Officer stated that the affidavit has been submitted by Shri Babul Lal Meena which is signed much later on December 7, 2011 and even permanent account number details and source of income has not been mentioned. Hence, the Assessing Officer did not accept the explanation of the assessee. 29. On appeal, the learned Commissioner of Income-tax (Appeals) confirmed the Assessing Officer's order and his relevant findings which are under challenge before us are reproduced as under : "6.5 I have considered the facts of the case ; assessment order and the appellant's writ....