TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 642
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....his friends and relatives had given him cash for making investment in commodity exchange. It was also explained by the assessee that the said cash was deposited by him in his bank account and was subsequently transferred to the account of R.K. Global Shares and Securities Ltd. A list of fsixteen persons who had given such cash was also filed by the assessee. Out of these sixteen persons, six persons were summoned by the A.O. and their statements under section 131 were recorded. Although all these six persons established their identity and also owned up the transactions of giving cash to the assessee, the A.O. found that they were not assessed to tax. He also found that no books of accounts were maintained by them. He, therefore, held that the financial capacity of the concerned sixteen creditors was not established by the assessee and accordingly the entire cash claimed to be received by the assessee from them aggregating to Rs. 40,26,000/- was added by the A.O. to the total income of the assessee under section 68 by treating the same as unexplained cash credit. 4. The addition made by the A.O. u/s 68 was challenged by the assessee in the appeal filed before the Ld. CIT(A). During....
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.... submitted in your office was not submitted during the course of assessment proceedings" The appellant has filed his submission that "The Assessing Officer has sent notice U/S 131 of Income Tax act, 1961, and summoned six persons out of fifteen from the list namely Sri Subrata Kabiraj, Sri Utpal Saha, Sri Santu Sarkar, Sri Bipul Biswas, Sri Sudip Halder and Sri Pranab Saha. All of them appeared before the Assessing Officer and admitted that they have invested through Mr. Bapi Sadhukhan by depositing cash in Mr. Sadhukhan's bank account. Now the assessing Officer could not get satisfied with the source of those six persons income and creditworthiness and imposed the provisions of Section 68 of the Income Tax Act and termed the said cash deposit of Rs. 40,26,000/- as unexplained cash credit which is totally draconian in mindset. In this regard the case of Aravali Trading Co. vs ITO, 187 Taxman 338 (Rajasthan) can be referred to where the Ld. High Court of Rajasthan on 25/01/2007 has ordered that "The fact that the depositors' explanation about the sources wherefrom they acquired the money is not acceptable to the Assessing Officer, it cannot be presumed that the deposits m....
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....cuments before the Assessing Officer, however he could not submit all the documents available with him as the Assessing Officer was in a hurry to complete the order before 31.03.2015 after which the case would become time barred. It is evident from the order that the officer was in a hurry to complete the order before 31.03.2015 since it was passed on 30.03.2015 aid lacks definition why he has applied provisions of section 68 of Income tax act, 1961.The assessee now produces the documentary evidence which he could not submit before the Assessing Officer due to lack of scope. In the present case the deeming section 68 cannot be in invoked as the existence of depositors of such credits is established and such deposits/advance/loan is owned by such existing person. On such proof the assessee's onus is discharged. The capacity of lender to advance money to the assesses is not a matter which the assessee himself is required to established as that would amount to calling upon him to establish the source of source as observed in the case of Labh Chand Bohra vs ITO (2008) 219 CTR RAJ 57 and also in the case of ITO WARD 38, Kolkata -vs- Jamuna Das Gupta I.T.A. No 692/Kolkata/2010 dated ....
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.... sums found credited in the books maintained by the assessee. It is true the opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record, Application of mind is the sine qua non for forming the opinion, It seems that the AO did not accept the explanation offered by the appellant and creditors since all of them were from the poorest section and did not maintain any accounts nor did they file returns of income as they were below the taxable limit. I find force in the contention of the appellant that "in the present case the deeming section 68 cannot be in invoked as the existence of depositors of such credits is established and such deposits/advance/loan is owned by such existing person. On such proof the assessee's onus is discharged. The capacity of lender to advance money to the assessee is not a matter which the assessee himself is required to established as that would amount to calling upon ....
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....ish the financial capacity of the concerned creditors, the matter may be sent back to the A.O. for giving an opportunity to do so. 7. I have considered the rival submissions and also perused the relevant material available on record. It is observed that the source of cash deposits found to be made in his bank account was explained by the assessee as the amounts advanced by his friends and relatives in cash. A list of such sixteen creditors was also filed by the assessee and although six of the said creditors summoned by the A.O. appeared before him and also confirmed the transactions with the assessee involving payments made in cash, their financial capacity could not be established. As noted by the A.O. in this regard, the said creditors were not assessed to tax and no books of accounts were maintained by them in respect of the business claimed to be carried on. There was nothing brought on record to show that they had any regular source of income or they had maintained any bank account. As rightly contended by the learned DR, the Ld. CIT(A) however overlooked this vital aspect and deleted the addition made by the A.O. under section 68 by holding that once the identity of the cre....
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....cord, the Ld. CIT(A) deleted the said addition for the following reasons given in his impugned order: "The A.O. has also added back an amount of Rs. 3,63,300/- as unexplained investment and the relevant portion in the assessment order states 'during the F.Y. 2011-12 the assessee purchased a plot of land of Rs. 2,60,000/- and stamp duty paid Rs. 1,03,300/- on 22.11.2011, total expenditure incurred Rs. 3,63,300/- but in his cash book the assessee shown land purchase expenditure Rs. 3,15,500/- on 31.03.2013 and the assessee could not explain why the said purchase amount was not shown on the date of purchase on 22.11.2011. Therefore, Rs. 3,63,300/- was added as unexplained investment. The appellant has submitted that again during the financial year 2011-12 the assessee has purchased a piece of land for Rs. 3,63,300/-. The date of purchase as per the deed of registry is 22.11.2011, however the assessee has shown the asset in his books on 31.03.2012 and amount of cost of land has been shown Rs. 3,15,500/- excluding of ancillary expenses like stamp duty fee, registry fee, advocate's fee etc. Now the Assessing Officer is of the opinion that since the date of booking of asset was not 22.1....