TaxTMI 
TaxTMI 
2016 (10) TMI 1276
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....of the case the learned Commissioner of Income tax (Appeals) has erred in confirming the addition of Rs. 20, 00,000/- as unexplained investment u/s. 69 in purchase agreement. 2.Succinctly, facts of the case are that the assessee is individual engaged in the construction business and director of M/s. Kunjika Construction Pvt. Ltd. The assessee has not filed his return within the time allowed under section 139(1) of the Act. Hence, a notice under section 148 of the Act was issued on 29.12.2008 and served upon the assessee on 05.01.2009. In response to which, the assessee has filed return of income on 16.01.2009 declaring total income at Rs. 96,000/- and showing income from business and profession under the provisions of section 44AD of the Act. While completing assessment in the case of M/s. Kunjika Construction Pvt. Ltd., a statement u/s. 131 of the Act was recorded from the assessee Shri Vijay Jain, director of the company. Wherein it was admitted that he has purchased shares of Rs. 35,000/- of M/s. Kunjika Construction Pvt. Ltd. and also invested in share application money at Rs. 44,28,000/-. The source of investment was claimed as under: From own capital/savings Rs. 1....
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.... addition of Rs. 10, 28,000/- was confirmed by holding that the assessee has failed to establish creditworthiness and genuineness of transactions of the creditors. The ld. CIT (A) also supported his view by placing reliance on number of case laws discussed in the appellate order at para 3.1.7 to 3.1.12 including CIT vs. P. Mohanakala (2007) 291 ITR 278 (SC) wherein it was held "In cases where the explanation offered by the assessee about the nature and source of the sum found credited in the books of account is not satisfactory, there is prima facie evidence against the assessee with viz the receipt of income. The burden is on the assessee to rebut the same and if he fails to do so, it can be held against the assessee that it was a receipt of an income nature. The money came through cheque and was paid through banking channels was by itself not of consequence." The ld. CIT (A) further relied in the case of Sumati Dayal vs. CIT (1995) 214 ITR 801(SC) wherein it was held " Any sum credited in the books of account may be added under section 68 ,if explanation offered about nature and source thereof is , in the opinion of the A.O. not satisfactory." In CIT vs. Durga Prasad More (1969) ....
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....ssessee had opening capital balance at Rs. 8,08,718/- as on 31.03.2005. Out of which previously mentioned amount has been invested with the company. The Ld. Senior (DR) has also not rebutted this contention that the assessee has filed his return of income for assessment year 2005-06 0n 13.01.2006 that full amount of the opening capital balance of Rs. 8,08,718/- was shown as on 31.03.2005. However, we noticed that out of this opening balance , the assessee has applied funds of Rs. 43,500/- as investment in vehicle, Rs. 75,600/- towards jewellery and Rs. 15,780/- towards house hold equipment's and Rs. 1,21,481/- is cash and bank balance. This leaves the only amount of Rs. 3,65,450/- being opening capital balance, Rs. 36,840/- capital in business on account of closure of business, and Rs. 1,50,000/- being loan and advance, aggregating to Rs. 5,52,290/-(365450+36840+150000). Therefore, this amount can be treated as explained as against the source of cash deposits out of Rs. 7,38,000 claimed at Rs. I.e. (175710+552290) leaving the balance of Rs. 1,75,710/- as unexplained investment. As regards loans from friends and relatives of Rs. 3,00,000/- is concerned , we find that the assessee ha....
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....ed that an amount of Rs. 20,00,000/- was paid by Shri Vijay Jain and Shri Ajay Singh Kushwaha to Shri Devidas and others as token of purchase of land; situated at Gram- Nanakheda, Hari Phatak Road, Ujjain, survey No. 329, Rakhwa 0.067 and consequently, on that basis he had executed an agreement for purchase of land and paid Rs. 8,50,000/- to Shri Vijay Jain . It was observed that the land so intended to be purchased from Shri Devidas and others , the assessee has made agreement of sale of around 1/3rd of land to Shri Santosh Kumar Lalwani for Rs. 43,27,4000/- and received advance of Rs. 8,00,000/- on 15.08.2005. The assessee has claimed that the amount of Rs. 7,85,000/- was deposited on 21.11.2005 with M/s. Kunjika Construction Pvt. Ltd. out of the amount received on 15.08.2005. The AO also noted that the assessee has not denied the contention of the statement of Shri Santosh Kumar Lalwani. The AO further observed that the assessee intentionally not produced the agreement executed between Shri Devidas and others and Shri Vijay Jain & Shri Ajay Singh Kushwaha, because only agreement can took the truth open. The assessee has not produced source of amount advanced to Shri Devidas & ot....
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....part or in full. The ld. CIT (A) observed that there is clear mention in the agreement dtd. 15.08.2005, that there had been a written agreement between the appellant and the owners of the property Shri Devidas S/o Nather Mal, Shri Ashok S/o Neman das and Shri Lal Chand S/o Ram Chandra, which duly authorised the appellant to register the property in the name of self or others in part or in full . Therefore, the contention of the appellant that this was only agreement cannot be accepted, because such authorization can`t be given by the seller only based on oral agreement. Further, no one would pay such huge amount of Rs. 8 lakh based on oral agreement, which cannot be displayed to anyone. Moreover, the amount claimed to be Rs. 51,000/- only towards oral agreement can`t form the basis for passing Rs. 8,00,000/- for one third of the land. The ld. CIT (A) further observed that affidavits submitted are self-serving evidence documents and given as after thought cannot be accepted. Accordingly, the ld. CIT (A) confirmed the addition by holding that as the appellant had received Rs. 8, 00,000/- as advance against agreement to sell 1/3rd of the said property from Shri Santosh Kumar Lalwani. ....
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....on record. We find from the orders of lower authorities that the assessee in his statement recorded on 19.12.2008 by the AO has claimed that the amount deposited as advance from directors at Rs. 19,01,550/- in M/s. Kunjika Construction Pvt. Ltd. relates to him. The source of this advance is claimed to be Rs. 8,00,000/- received from Shri Santosh Kumar Lalwani as advance towards agreement to sale of land to vide agreement executed on 15.08.2005. To verify this contention of the assessee, the AO examined Shri Santosh Kumar Lalwani and recorded his statement on oath on 01.12.2009 u/s. 131 of the Act. We find that Shri Santosh Kumar Lalwani has accepted that he had entered into an agreement to purchase land situated at Gram Nanakheda, Ujjain on 15.08.2005 and paid an amount of Rs. 8 lakh as advance because of Bayana being advance for land intended to be purchased by him. It is also noticed that the assessee along with Shri Ajay Singh Kushwaha have purchased the said land from Shri Devidas & others by paying Rs. 51,000/- as Bryana amount. The assessee further stated that they have entered into an agreement for sale of 1/3rd land to Shri Santosh Kumar Lalwani on 15.08.2005 and received R....
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....ee. We have seen the agreement for purchase of land dtd. 15.08.2005 between Shri Vijay Jain along with Shri Ajay Singh Kushwaha and Shri Devidas & others. The perusal of para 1 of the said agreement placed at paper book page 36 of the assessee, which find place at page 5 of assessment order also and same is referred in question 14 of statement of Shri Santosh Kumar Lalwani, which clearly shows that the there is a written agreement with the assessee from the owner of land and as written in the said agreement, they have right to sell the property and register the property in the name of self or others in part or in full. Further, in reply to question 14 of his statement (Shri Santosh Kumar Lalwani) , has clearly stated that he has entered into this agreement and paid a sum of Rs. 8 lakhs after seeing the executors of said agreement for purchase of 1/3rd part of land had an agreement with original owner of the land in which it was clearly mentioned that they have right to sell the said property and so far as he remember they have paid Rs. 20 towards Bayana for the purchase of said land. We also find that Shri Santosh Kumar Lalwani had agreed to purchased 1/3rd of land for Rs. 43,27,40....