TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 1402
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.... by the CIT(A), can be controverted u/s 69A by the Tribunal while sustaining the addition of Rs. 12,50 lacs, irrespective of the fact that the appellant is not maintaining books of accounts and source of income is pension and interest only, such conclusion is proper?" 4. The Tribunal in its order dated 2.3.2012 has observed as under:- "2. The facts of the case are that at the very outset, it was observed by the Bench that Revenue's appeal is delayed by a period of 28 days, having been filed on 01-08-2011 as against the communication date (of the order appealed against) of 02-05-2011. However, the Commissioner of Income-tax, Ajmer (`CIT') vide order dated 27-07-2011, issued in response to the defect notice issued by the Registry of the Tribunal, clarified that the appellate order by the ld. CIT(A) was in fact communicated to his office only on 03- 06-2011, so that limitation expires on 01-08-2011. Our 2 attention was drawn thereto by the ld. DR, in view which we condone the delay. Not only are we are inclined to give due credence to the statement by a responsible officer, the reason stated is only understandable inasmuch as the impugned order is itself dated 02/5/2011, so that th....
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....he sale proceeds by the said date, the assessee entered into an agreement for purchase of a residential property at Bhagchand Soni Nagar, Foy Sagar Road, Ajmer for a sum of Rs. 11.01 lacs on 21-05-2007, paying a token amount of Rs. 21,101/-, again, by cheque drawn on his bank account with ICICI Bank. The balance payment of Rs. 10.80 lacs was to be made on or before 21-07-2007. As the sale proceeds for the Sri Nagar Road property were not forthcoming, the assessee resorted to cash borrowings, lest the purchase agreement for the house property (at Bhagchand Soni Nagar, Ajmer) be cancelled. It is claimed that a sum of Rs. 8.00 lacs, collected from various persons at Ahmedabad, was received by him at Ajmer on 10-06-2007 and, accordingly, deposited in his newly opened bank account with Union Bank of India, Sri Nagar Road, Ajmer Branch on 11-06-2007 (Rs. 6.00 lacs) and 12-06-2007 (Rs. 2.00 lacs). So however, the assessee did not draw upon the said funds; his conscious not allowing him to do so, and raised bank loans against FDRs of self and wife. The registry of the Bhagchand Soni Nagar property was executed on 13-07-2007 by availing bank loan for the requisite sum of Rs. 10.80 lacs, i.e....
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....on 10-06-2007 and Rs. 3.50 lacs on 02-08-2007, the assessee had submitted the necessary documents, including the income-tax returns as well as balance-sheets of the creditors. As such, the onus casts on the assessee had been met. The assessee could not possibly be required to establish the source of the source, i.e., the source of the funds with the creditors. Reliance was placed on decision by the hon'ble jurisdictional High Court in the case of Kanhaiya Lal Jangid vs ACIT, 217 CTR 354. The AO could not draw an adverse inference out of non-production of the creditors, and which he (AO) could do on his own, drawing strength from the decision in the case of CIT vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC). Aggrieved, the Revenue is in appeal." 5. The Tribunal while considering the matter in para 5.1 to 5.8, observed as under:- "5.1 The first thing that we observe is that the addition sustained by the ld. CIT(A), i.e., Rs. 81,000/-, includes Rs. 1,000/- deposited cash for the opening of the new (savings bank) account with Union Bank of India on 04-06-2007. The ld. CIT(A) having deleted two additions, for a total of Rs. 97,800/-, on the basis that the assessee could ....
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....balance Rs. 36 lacs (45 lacs - 9 lacs) against the contracted sale of the Sri Nagar Road residence; rather would not have at all arisen if the said sale transaction had matured in time, i.e., as originally envisaged (end April, 2007). Further, this is assuming that no extension of time for the purchase was possible, and for which no evidence has been led; the assessee's own house having been sold to the same persons and at the same price as agreed for even though the transaction came to be completed much later (16/8/2007). In other words, the need to raise funds (Rs. 11.50 lacs), and particularly in the manner done (from as many as 63 outstation parties), is completely incomprehensible in view of: a). the need for funds actually required for the stated purpose (at a maximum of Rs. 2.84 lacs); b). the access to funds in the form of near liquidity admittedly available in the form of bank FDRs; c). the fact that the necessary funds could be easily tapped from the buyers of his residential house, who were allowed excess time by the assessee for completing the real estate transaction (wherein the time lines are to be, as a general rule, strictly honoured, even as the assessee seek....
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....heir apparently explained sources by the creditors, who are largely incometax assessees 8 and, two, that there was no immediate need for funds; the first instalment arriving at Ajmer on 10/6/2007, i.e., much prior to the limitation date of 21/7/2007, and would have in fact been accepted only prior to its transmission, while the second tranche of Rs. 3.50 lacs (received in Ajmer on 03/8/2007) was admittedly not even required to be accepted; the purchase transaction having been already concluded on 13/7/2007. Rather, even if accepted, was not required to be transmitted to Ajmer, and could have easily been returned back to the creditors at Ahmedabad itself. Further, the transmission, even if the loans came to be accepted in cash, could easily be effected through deposit of cash in the assessee's bank account (with Union Bank of India - assuming the deposit to be necessarily made in that account - or ICICI Bank) at Ahmedabad; the bank accounts, even though maintained by the home branch, are not strictly branch-specific, so that they could be operated and accessed from any station where the bank has a branch. Now, it is certainly not the case that either Union Bank of India or ICICI....
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....ipt or an endorsement on the pronote while discharging his obligation under a loan agreement/arrangement, which becomes the primary document evidencing the transaction. There is no explanation, again, for the admitted absence of such a basic and primary document. The assessee claims to have repaid the loans during the financial year of receipt itself, i.e., f.y. 2007-08, the relevant previous year. Clearly, such receipts, if maintained, could have been produced in the first instance itself. Also, why did not, as also noted by the AO, then, the confirmations by the creditors contain information on this vital aspect, i.e., of the liability having been since discharged. Further still, in the admitted absence of a basic document as a receipt or a pronote, what is the basis for the issue of such incomplete confirmations? 5.5 The next aspect which is the vital to the validity and, thus, the acceptance of the assessee's explanation, is the non-production of the creditors before the AO for his examination, as specifically called for by him. This is for the simple reason that many a query, as some posed by us hereinbefore while discussing the assessee's case, as well as that may similarly....
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....or production of the creditors for verification on 24-10-2010, the assessee chooses to remain silent, not even indicating of any hardship or noncooperation in its respect from the creditors, if so, being faced by him and, as if surreptiously, vide letter dated 23-12-2010, i.e., two months later and barely a few days prior to the setting in of the time limitation for assessment (31/12/2010), given not directly to the AO but only in the Dak, claims that it was not possible to produce the creditors, being inhabitants of Ahmedabad, at such a short notice. Further, that the creditors were cooperating with the assessee is apparent from the fact that they furnished not only their confirmations but also income-tax returns and financial statements, which would only be at assessee's behest, to whom they lend monies ostensibly to bail him out of a difficult situation. Also, there was no request before the AO to call for, at his choice, some of the large number (63) of creditors, facilitating the process of validation without presumably compromising on the 11 quality of the verification, even as admittedly each credit constitutes a separate case, warranting a specific adjudication. In fact, ....
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....which has burdened him for so long, would hardly be bothered to meet the part payment to Ahemdabad on the eve of and on the verge of closing the purchase transaction. The same, rather, points to the amount having 12 been withdrawn for or toward the said purchase or for some other purpose. Yes, there could exceptions to this, as (say) where some reliable person is proceeding to Ahemdabad on that date itself (12- 07-2007), and has agreed to carry cash (up to that amount) with him, or where (say) one more creditors are urgently pressing for funds, so that arrangements were made to transmit the amount borrowed from him/them. But, then, we cannot proceed on any hypothesis, and it is for the assessee to supply the facts, as well as substantiate the same, being only a part of his explanation. Not only is the cash not transmitted on that date (12-07-2007), the assessee `realizes' that he had to remit Rs. 20,000/- more, and which he withdraws from the bank only on 14-07-2007. This is a perplexing. Nobody would keep the remission pending - which clearly shows that there was no urgency for the same - for want of Rs. 20,000/-, for which again which no basis has been disclosed. If at all, it ....
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....ssed at paras 5.1 to 5.6 above) rings untrue and concocted, is beyond comprehension and bounds of reasonability, inconsistent with normal human conduct and behaviour, apart from being totally unsubstantiated. It is these reasons that persuaded us to state at the beginning of our narrative that the explanation furnished is fantastic and non-acceptable. We, accordingly, have no hesitation in approving the AO's action for being not satisfied with the assessee's explanation. The law in the matter is trite, and for which we may refer to case laws by the hon'ble apex court, which has time and again explained that the receipt of money of which the assessee is a beneficiary is itself a prima facie evidence against him, who has to satisfactorily explain the same, i.e., render an explanation as to its nature and source, which is proper, reasonable and acceptable, even as a finding as to non- satisfaction therewith is to be rendered on the basis of proper appreciation of the material and other attending circumstances available on record; application of mind being a sine qua non for forming an opinion. Also, that it is the cumulative effect of all the facts in their setting as a whole that has....