TaxTMI 
TaxTMI 
2018 (12) TMI 622
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....ey introduced his own unaccounted money. 2. That, on the facts and the circumstances of the case, the ld. CIT(A) has erred in law in deleting the addition of Rs. 15 lacs made by the A.O. u/s. 69 of the I.T. Act, 1961, being unexplained investment made for the purchase of land. 3. That, on the facts and circumstances of the case, the ld. CIT(A) has erred in law in deleting the addition of Rs. 2,50,000/- made by the A.O. as income from undisclosed sources by disallowing the excessive agriculture income claimed by the assessee in the absence of any evidence for the sale of agricultural produce.' 3. The first ground is in respect of an addition for Rs. 10 lacs made u/s. 68 of the Act. The assessee, an agriculturist and colonizer, was during the relevant year engaged in development of a colony by the name 'Kartar Estates', at Phagwara. Earnest money (at Rs. 101.77 lacs) was stated as received from various persons toward booking of plots in the said colony. On examination, during the course of the assessment proceedings, it was found that of the same, Rs. 32.55 lacs was received in cash, which was explained to have been either adjusted against the plot registered ....
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....h the ld. CIT(A) on the basis that the assessee had discharged the initial onus on him by furnishing affidavits from the concerned persons as well as producing them before the AO, and who had confirmed having received back their deposits through Sh. Raj Sher Singh. The assessee was not in the business of raising money, but of selling plots; as such, enquiry into the creditworthiness of the ostensible buyers was outside the purview of the assessee and, thus, the AO (para 5 of the impugned order). [ 4. We have heard the parties, and perused the material on record. 4.1 Our first observation in the matter is that the issue involved is principally factual, with the primary fact of receipt of money by the assessee being not in dispute. It is therefore on account of a variance in the inferences drawn, i.e., the inferential findings, which are again findings of fact, that the difference obtains between the findings issued by the AO and the ld. CIT(A). While, one, the latter, regards the cash credits as proved, the other considers them as not, i.e., on the parameters of section 68, (also) stated before us as not applicable to a trade credit - and which is what the earnest money essent....
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....assessee being in receipt of a sum of money, the onus is on him to show that the same was not in the nature of income, or, even so, is outside the ambit of taxation under the provisions of the Act. In the absence of such proof, the Assessing Officer is entitled to treat it as the assessee's taxable income (refer para 4 of the decision in Kale Khan Mohammad Hanif v. CIT (supra), reproduced in Lachhman Dass Oswal (supra) (at pg. 448)). Whether the credit is, or can be said to be so proved, or not, is the question, and which is principally a question of fact, as again emphasized time and again by the Apex Court, as recently in Vijay Kumar Talwar v. CIT [2011] 330 ITR 1 (SC); P. Mohankala (supra) (also refer Balbir Singh v. CIT [2011] 334 ITR 287 (P&H)). 4.3 Coming to the facts of the case, we are unable to persuade ourselves to be satisfied with the credits under the reference as proved, or that the AO, in rejecting the assessee's explanation qua the nature and source thereof, was not acting reasonably, and ought to have been satisfied therewith. To begin with, no confirmation has been produced from the first two creditors, stated to have advanced Rs. 1 lakh. It is difficult, there....
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....h. The amount is then stated to be paid back. Surprisingly, this is again without any documentary evidence. It is not to these persons, but to another. There is no contemporaneous material to show that Sh. Raj Sher Singh (RSS) is the person through whom the 'booking transaction' was made. Why, he is also not shown to be, as claimed before us, a broker, soliciting customers for a fee (commission). Why, one of the depositors, Shri Sanjay Mehta, states the assessee to be his friend (PB pgs. 46-47). Why would he, then, approach another person, a solicitor, and why, again, would the assessee not refund him the booking amount on cancellation, rather than to another. The reason for the cancellation of the 'booking' is stated to be the litigation in which the colonizer was embroiled. Does that imply that the assessee did not disclose his friend about the ongoing litigation and its status, for him to have invested/caused investment, and canceling soon thereafter, citing litigation as the reason? Rather, any prudent businessman would not only repay the depositors directly, but also obtain the signature of the broker, where so, as a confirming party, as well as a declaration to the effect tha....
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....the assessee's argument that section 68 is not applicable to a trade credit. As afore-discussed, that the impugned credits represent trade credits is not proved. That the amount represents a trade credit is itself an explanation as to the nature of the credit, which the provision (s.68) obliges an assessee to furnish to the satisfaction of the AO. Further still, we do not find any such ratio emanating from the cited decisions, which we have carefully perused. In each decision, the verdict turned on the facts and circumstances the case, with the ld. third Member in ITO v. Lachhman Das Makhija (supra) clarifying that where there is a cash credit, creditworthiness of the creditor, genuineness of the transaction, the identity of the creditor, the source of money, is required to be examined and proved (para 12 of the order). The only decision that can, if at all, be said to be issuing a statement of law is CIT v. Pancham Dass Jain (supra) in-asmuch as the Hon'ble Court states that section 68 is not applicable to a purchase transaction. Purchase of goods/services, it may be appreciated, cannot be equated with receipt of money, which obtains in the present case, for the said decision to b....
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.... are, apart from constituting substantive law inasmuch as they deem an unexplained receipt (besides others, being an asset, expenditure, etc, representing a manifestation of the income), as the assessee's undisclosed income, are also rules of evidence, incorporating the principles of common law jurisprudence and, therefore, stood applied by the courts of law even when the said provisions were not on the statute book, as a reading of some of the decisions referred to earlier, rendered under the 1922 Act, shall show. Reference in this context may also be made to some of the recent decisions by the Amritsar Bench of the tribunal, as in the case of Abdul Hafiz v. Dy. CIT (in ITA No. 465/Asr/2017, dated19/3/2018; Harmanpreet Kaur v. ITO (in ITA No. 15/Asr/2017, dtd. 29/6/2018). It is principally for these reasons that a decision qua these provisions, as found by us in the context of the decisions cited supra by the assessee, turns on its facts. Why, the apex court in Vijay Kumar Talwar (supra) did not find the assessee's claim, made vehemently, that the sum of money was received from a trade debtor, as proved, so that the application of section 68 was, in the facts and circumstances cas....
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....terial on record. Without doubt, no evidence was produced by the assessee in the assessment proceedings toward the withdrawals from the AOP. The assessee, however, has furnished substantial material toward the same in the appellate proceedings. The same was objected to by the AO. Without doubt, questions arise in the matter. Why, for example, were the details of the AOP and its books of account, exhibiting the source from where the funds are stated to have been withdrawn, not produced before the AO, settling the matter; the onus of which is on the assessee. Rather, this, despite being specifically called for by the AO, as vide order sheet entry dated 8.12.2009, which though remained unavailed, with the assessee seeking further time, also granted. Why, the assessee's account with AOP, as produced, shows a withdrawal of Rs. 22.30 lacs for the purchase of agricultural land during the relevant year (PB pg.159). If that was so, where was, one may ask, the need for the assessee to state of Rs. 9 lacs as sourced from agricultural income, as he does in the assessment proceedings. The said accounts, produced at the first appellate stage, were clearly not existent at the time of assess....