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2020 (2) TMI 415
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....d by the assessee with the prospective buyers in one hand and assessee has discharged his onus by producing the buyers who have advanced the money to the assessee against the purchase of his agricultural land as insisted by the Ld. Income Tax Officer. That during personal deposition of the buyers Mr. Jai Ram Nagar and Mr. Shri Chand, they have confirmed that they have paid the advance to the assessee against the purchase of his agricultural land and also explained the sources of their income. That Mr. Jai Ram Nagar has also shown his withdrawal from his bank account justifying the payment made to the assessee which was totally ignored by the Ld. Income Tax Officer on the pretext that the date of withdrawal by Mr. Jai Ram Nagar and date of deposit by the assessee does not match, whereas at no time during his personal deposition Mr. Jai Ram Nagar has stated he has paid the amount to the assessee immediately after withdrawal from his bank account to the assessee. 3. That the assessee has discharged his onus by producing the parties with whom he has entered into agreement for sale of his agricultural land and from whom he has received the advance and deposited the same in his ....
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....tain small amount of Rs. 1,00,000/-. 6. That the Ld. Income Tax Officer has erred in presuming that the assessee has intentionally not made the personal deposition of his real brother Mr. Brahma Nand Sharma and his real sister-in-law Mrs. Bhagwati. That it was explained that Mr. Brahma Nand Sharma, brother of the assessee was expired on 24.04.2009 and the copy of gift deed , affidavit of legal heir, identity proof of legal heir and the donor and sources of gift given to the assessee. That it was explained to the Ld. Income Tax Officer that the real sister in law of the assessee, Mrs. Jagwati Sharma wife of Mr. Likhiram Sharma, brother of the assessee was expired on 27.11.2011 and due to tradition in the family , elder lady Mrs. Bhagwati cannot be produced for personal deposition and requested to depute the official staff to record the statement, if necessary. That the Ld. Income Tax Officer has not taken any steps to record the statement of legal heir of late Mr. Brahmna Nand Sharma and Mrs. Bhagwati for the reasons better known to him and wrongly presumed that these persons have capacity of payment of gift of Rs. 25,000/- each, totally ignoring the age of the donors , the....
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.... 3792000/- in a savings bank account with Bank of Baroda, Indirapuram, Ghaziabad. The assessee was asked to explain the source of the cash deposit. Assessee tried to explain the cash deposit stating that on 19/04/2008, Rs. 1 lakh is the sum received against sale of agricultural land. Cash deposit of Rs. 1 lakh on 30/04/2008 is also an advance against the sale of agricultural land. Cash deposit of Rs. 3 lakhs on 30/4/2008 is also advanced against sale of agricultural land. Cash deposit of Rs. 5 lakhs on 5/5/2008 is also advanced against sale of agricultural land. All these advances were received from Shri Jairam Nagar. For the sum of Rs. 24,50,000/- deposited on 17/06/2008 assessee explained that Rs. 10 lakhs is out of cash withdrawn from bank on 02/06/2008 and further sum is received as advanced against sale of agricultural land, cash gift received from various persons. Other cash deposits were stated to be deposited out of the cash withdrawal made on earlier dates. The learned Assessing Officer asked the assessee to produce all those persons from whom advance against sale of agricultural land was received as well as the persons who have gifted sums to assessee. The learned Assessi....
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....ed at any point of time. He therefore submitted that same should be admitted. 8. The learned Departmental Representative vehemently objected the raising of the additional ground and submitted that such ground cannot be raised that it is neither a jurisdictional ground nor a ground which goes to the root of the matter. It is merely a challenge to the Assessing Officer's action of taxing the amount deposited in the bank account in cash under Section 68 of the Income Tax Act. 9. We have carefully considered the rival contention and find that assessee can raise any additional ground of appeal which is technical in nature. As the additional ground raised by the assessee goes to the root of the matter that whether any addition can be made under section 68 of the Act in case of the assessee was not maintaining the books of accounts when the money is deposited in his bank account. In view of the decision of the Hon'ble Supreme Court in National Thermal Power Co Ltd (supra), we admit the additional ground raised by the assessee. 10. As the additional ground raised by the assessee is required to be adjudicated first, as it goes to the root of the assessment made by the learned asses....
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....o the income of the assessee. It was further stated that even otherwise the enhancement made by the ld CIT(A) is illegal as neither there is a notice u/s 251(2) of the Act and nor any opportunity was given. 13. The ld Departmental Representative vehemently supported the order of the lower authorities. 14. We have carefully considered the rival contentions and also perused the orders of the lower authorities. Admittedly, assessee has deposited cash of Rs. 2450000/- in the bank account of the assessee in cash. Source of the cash as explained by the stating that he has received Rs. 1,000,000/- from Mr Jayaram Nagar as advance against the sale of land, out of which the learned assessing officer has accepted the genuineness to the extent of Rs. 300,000/- and made the addition of Rs. 700,000/- as unexplained cash credit. The learned CIT(A) enhance to Rs. 1,000,000/- thereby making an enhancement to the income of the assessee of Rs. 300,000/-. Further, the assessee also explained that Rs. 1,000,000/- have been received from Mr Sri Chand, out of which the learned Assessing Officer accepted the genuineness and creditworthiness of the party to the extent of Rs. 100,000/- and made an ad....
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....ce, the addition made u/s 68 of the income tax act stands vitiated and therefore it should be deleted. The first judicial precedent in this controversy is the decision of the honourable Bombay High Court in 141 ITR 67, wherein it has been held that that when monies are deposited in bank account, relationship that is constituted between the bank and the customer is of creditor and not the trustee and beneficiary. Therefore, it is not as if the bank passbook is maintained by the bank as an agent of the customer, nor can it be said that the passbook is maintained by the bank under the instructions of the customers. In view of this, the bank passbook supplied by the bank to the assessee cannot be regarded as a books maintained by the assessee under instructions. Accordingly, it was held that cash credit for the previous year shown in the assessee‟s bank passbook issued to him by the bank, but not shown in the cashbook maintained by him for that year, does not fall within the ambit of section 68 of the income tax act. The facts in that case are that assessee did maintain the books of accounts , certain sums were found in the bank account of the assessee but were not found in the r....
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....ot find any infirmity in the order of the learned CIT - A, in confirming an addition of INR 512000/- on account of unexplained bank deposits under section 68 of the income tax act. Accordingly, the additional ground raised by the assessee for assessment year 2004 - 05 is also dismissed." 16. In view of above facts and respectfully following the decision of the coordinate bench we hold that the cash deposited by the assessee in his bank account is also covered under section 68 of the income tax act. Thus the additional ground raised by the assessee is dismissed. 17. Coming to the merits of the case the learned Commissioner of income tax appeal has decided the above issue holding as under:- "4. During appeal proceedings the counsel of the appellant attended and made following written submission:- "Brief Facts The appellant has voluntarily filed his return of income declaring income of Rs. 90,200/- on 13.10.2009 The assessment has been framed by the Ld. Income Tax Officer, Ward 1(3), Ghaziabad after adding a sum of Rs. 19,97,650/- on account of unexplained cash credit and assessed at Rs. 20,87,570/-. That during the year under consideration, assessee h....
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.... That Mr. Jai Ram Nagar has also shown his withdrawal from his bank account justifying the payment made to the assessee which was totally ignored by the Ld. Income Tax Officer on the pretext that the date of withdrawal by Mr. Jai Ram Nagar and date of deposit by the assessee does not match, whereas at no time during his personal deposition Mr. Jai Ram Nagar has stated he has paid the amount to the assessee immediately after withdrawal from his bank account to the assessee but only explained that the amount has been paid to the assessee after withdrawal as Cash from Bank Account. That since the property under consideration was ancestral and No objection from all the family members were required to register the property in the buyers name, which was refused by the other family members and ultimately, assessee has returned back the amount advanced by Mr. Jai Ram Nagar partially in the current financial year and partially in the beginning of next financial year, which was confirmed by him during his personal deposition. That Mr. Shri Chand has also confirmed that he has paid the amount to the assessee during his personal deposition and also confirmed that the Original' papers....
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....ted the Ld. Income Tax Officer to depute some person to record her statement, whether she has given the amount or not to the assessee, which was also ignored by the Ld. Assessing Officer. That the Ld. Income Tax Officer has erred in presuming that the donors who are aged about 55 and 65 years does not have capacity to store and retain small amount of Rs. 1,00,000/- which was given to the assessee on his 25th Marriage anniversary. That on one hand Ld. Assessing Officer has accepted the fact that the assessee has received the amount as Gift on 25th Marriage anniversary but on another hand allowed only partial amount due the fact that the donors does not have capacity to pay such gifts whereas all the income and assets in form of agricultural land of the Donors was duly explained and the evidences were also submitted by the assessee and by the donors also during their personal deposition before the Ld. Income Tax Officer. That the assessee has discharged his onus by providing the identity, relationship with donors, Occasion of the Gift and Capacity of the Donors and also their confirmation in form of affidavit(s), Gift Deed and also during their personal deposition which was duly igno....
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....sment proceedings and even in his first submission, assessee has submitted and disclosed that he has earned Saving Bank Interest of Rs. 10,627/- and Auto Sweep Interest of Rs. 2,821/- but not included in his taxable income on the presumption that the same is not taxable as the assessee has also paid Interest of Rs. 49,534/- to Bank of Baroda Car Loan Account and offered the same for taxation. However the Ld. Income Tax Officer has not only included the same but also included the Bank Interest of Rs. 10,000/- earned by his wife, Mrs. Sunita Sharma, whose bank statement was asked by the Ld. Income Tax Officer. That the Ld. Income Tax Officer has erred in levying Interest U/s 234 A & U/s 234 B of the Income Tax Act, 1961. That at No instance the Ld. Income Tax Officer has pointed out any defect in the return filed by the assessee nor found any sources of income from which assessee -has generated cash which can be treated as unexplained. That the Ld. Income Tax Officer has also erred in not providing any opportunity nor any show cause notice has been issued by him before making the assessment, hence principal of natural justice has been overlooked by the Ld. Income Ta....
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.... 28. Jagadish Oil Mills v. ITO (1995) 52 TTJ (Ind-Trib) 102 29. CIT v. Shri Ram NarainGoel (1997) 224 ITR 180 (P&H) 30. Asstt. CIT v. Mahavir Metals & Alloys (2002) 75 TTJ (Asr-Trib) 256. 31. KanhaialalJangid v. Asstt. CIT (2008) 217 CTR (Raj) 354 32. CIT v. Laul Transport Corporation (2009) 28 (I) ITCL 423 (P&HHC) : (2009) 180 Taxman 185 (P&H) 33. CIT v. Kinetic Capital Finance Ltd. (2012) 44 (I) ITCL 511 (Del-HC) : (2011) 202 Taxman 548 (Del). 34. Heirs & ORs of Late Laxmanbhai S. Patel v. CIT (2008) 174 Taxman 206 (Guj) : (2009) 222 CTR (Guj) 138. 35. R.B.N.J. Naidu v. CIT (1956) 29 ITR 194 (Nag), Chunilal Tikamchand Coal Co. Ltd. v. CIT (1955) 27 ITR 602 (Pat), Mehta Parikh & Co. v. CIT (1956) 30 ITR 181 (SC), Lalchand BhagatAmbica Ram v. CIT (1959) 37 ITR 288 (SC), Sri Ram Tandon v. CIT (1961) 42 ITR 689 (All) and Kanpur Steel Co. Ltd. v. CIT (1957) 32 ITR 56 (All)]. 36. Mehta Parikh & Co. v. CIT (1956) 30 ITR 181 (SC) and Lalchand Bhagat Ambica Ram v. CIT (1959) 37 ITR 288 (SC)]. 37. ITO v. Suresh Kalmadi (1988) 32 TTJ (Pune-Trib)(TM) 300. 38. [DCIT v. Rohini Builders (2002) ....
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....recorded in the presence of assessee as well as his Counsel Sh. Sandeep Bhatnagar which is also evidenced from their signatures on the statements. It is a fact that the assessee applied for supply of copies of statement vide his letter dated 11.01.2012 but no required fee challan was furnished alongwith the application. He was required, to furnish the same which was never produced by him. It is only on 21.05.2013 written the assessee produced the required fee challan in compliance to letter dated 08.05.2013 issued from this office as per your kind directions. Accordingly, copies of the statements were supplied to the assessee on the very same date i.e. 21.05.2013. Therefore, the plea taken by the assessee in this regard has no force at all. During the course of assessment proceedings, it was noticed by the A.O that the; assessee during the year under consideration has deposited cash of Its. 37,92,000/- in his saving bank account no. 307501000000066 at Bank of Baroda, Indirapuram, Ghaziabad. On being asked to furnish the detail and justification for these cash deposits, the assessee submitted the detail as per chart given at pa'ge no. 2 of the assessment order. ....
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....ess than 1 (One) bigha. All these facts prove that this is a cooked-up story to justify the cash deposits only. Since Shri Jai Ram Nagar could not prove his creditworthiness and genuine-ness of transaction nor he is .assessed to tax with the Deptt. therefore, the A.O rightly rejected the claim of advance and rightly hold the cash credit as un-explained which the assessee tried to divert as advance for sale of land. Further, the assessee explained the source of cash deposit of Rs. 10,00,000/- as advance against sale of same agricultural land from Shri Sri Chand S/o Tek Chand R/o 15-Mahiuddinpur, Kanawani being co-purchaser. On production ctf Shri Sri Chand, his statement on oath was also recorded on 16.12.2011. He also stated to have advanced Rs. 10,00,000/- to the assessee in cash from the cash available with him at residence. However, he could not justify the availability of Rs. 10,0, 000/- with him on the date of advance. Regarding agreement for purchase/sale of agriculture land, Shri Sri Chand in his statement admitted that the agreement was executed on Stamp Paper but he could not give the names of the witnesses and the Advocate who got the agreement prepared. Further,....
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....entary evidences to prove legal rights in 890 Sq. meters Land and as stated to be negotiated as per agreement dated 17.06.2008 and latest copy of Khasra and Khatauni relating to land as owned by four brothers including you. What was total area of land belonged to family with reference to Bighas. II. Furnish authentic reason as to why terms/ conditions specified in agreement dated 17.06.2008 were violated and what was follow up by said parties with whom said agreement was entered into. Photocopy of agreement may also be filed which was admitted by Sh. Sri Chand on Stamp-paper in his statement recorded on 16.12.2011 at para 5. III. Furnish details of lands as admitted to be owned by your family members in their statements for earning income from whom gifts in cash were admitted to have received by you and from their depositions it appears that they were referring land as owned by you and three brothers family. IV. Furnish all details of sale of land as partly negotiated in agreement dated 17.06.2008 and there-after upto 31.03.2013 with copy of sale deeds/agreement etc. V. Prove ownership in land from which agriculture income had been shown in retur....
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....letter dated 11.01.2012 but no required fee challan was furnished along with the application. He was required to furnish the same which was never produced. Allegations levied by the Ld. Income Tax Officer is totally against the fact of the case and baseless. In fact Statement(s) of the persons were recorded by the Ld. Income Tax Officer during the assessment proceedings without presence of assessee and his counsel. This is the procedure when statement on oath were recorded, then no body other than the person whose statement was recorded can be present. Although signatures were taken after the recording of the statement(s), as assessee has produced them before the Ld. Income Tax Officer to spell out the truth of his case. It is also important to note that two copies of statement(s) were made during the assessment proceedings but no copies were supplied to the assessee or to his counsel and both the copies are still available in the file of the assessee. That after every statement, assessee has clearly asking the assessing officer in writing to provide him the opportunity, if any contrary has been observed by him, which is evident from the copies of reply filed during the as....
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....r is raising the fresh issues which was not gathered and determined by the assessing officer at the time of assessment proceedings. The Ld. Income Tax Officer has also raised the objection that the assessee has mentioned in his reply that No function was held during the year. Even today, assessee is stating the same facts, that No function was conducted for his 25th Anniversary of Marriage and his immediate relatives has made the voluntarily customary gifts to him and accepted the same at the time of recording the statement(s). The Ld. Income Tax Officer has also not brought any instances by which assessee could receive so much of cash other than facts and the truth explained by him, which was deposited in his bank account. The Ld. Income Tax Officer has also mentioned about the letter dated 27.05.2013 issued to the assessee to prove his case but no letter was ever received by the assessee. 3. That the Ld. Income Tax Officer has started the assessment proceedings again by issuing the Letter to the persons whose statements were recorded during the assessment proceedings to cover up the mistake which was committed during the assessment proceedings ....
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....tted during the assessment proceedings to use the statements recorded and used against the assessee for making additions without providing any opportunity to him to revert. 11. That the assessee again relied on the judicial pronouncement cited in earlier submission in which it was decided that the Principles of Natural justice are violated if an adverse order is made on an assessee on the'basis of the material not brought to his notice and that in making an assessment under section 143(3), the assessing officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 143(3). 12. That It is important to Note that as per the statements recorded during the assessment proceedings reveals the following observations :- a. Mr. Jai Ram Nagar As per Answer to Question No. 23 ,Mr Jai Ram Nagar has confirmed that he had entered into an agreement with the assessee for purchase of agricultural land and paid the amount to the assessee and as per Answer to Question No. 25, he has confirmed that he has received....
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....nd rejoinder to the remand report, the appeal is decided as under: 7.1 The main issue in this case relates to genuineness of source of deposit in the bank A/c of the appellant. The main contention of the appellant is that statements recorded by the Assessing Officer were not provided to him and providing such statement at appellate stage does not cover up the illegality committed during assessment proceedings. The contention of the appellant is not tenable because in the remand report stage, the Assessing Officer has provided copy of statement on 21.05.2013. Having obtained copy of statement on the basis of these statements, the appellant has claimed that the said persons have confirmed having advanced money to the appellant. The Assessing Officer has analyzed the statement recorded and established that creditworthiness of the persons is not proved despite statement that they advanced money. In his submission, the appellant has not commented anything about the findings of the Assessing Officer regarding creditworthiness of the said persons. On the other hand in the remand report, the Assessing Officer has highlighted various discrepancies in the statement recorded....
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....ow before analyzing the facts of the case further: (i) Where any sum is found credited in the book of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, th,e sum so credited may be charged to income-tax as the income of the assessee of that previous year (ii) The Assessing Officer when starts enquiry, specifically to' satisfy himself of the source of such credit, and if during the enquiry, he is satisfied that the entries are not genuine, then he has every right to add the said sum represented by such credit entry as income of the assessee. (iii) Under Section 68, the onus is on the assessee to offer explanation where any sum is found credited in the books of account and where the assessee fails to prove to the satisfaction of the Assessing Officer, the source and nature of the amount of cash credits, he is entitled to draw an inference that the credit entries represent income taxable in the hands of the assessee. It is not the duty of the Assessing Officer to locate the exact source o....
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....(2005) 273 ITR 206 (P & LI), it was found that the credits were received by account payee cheques and the creditors were income tax asscssccs. But the contention of the Assessing Officer was that the assessee did not respond to the requirements of the production of creditors before him for verification. The first appellate authority and the High Court felt that it was possible for the Assessing Officer to have accepted the same or make further enquiries with reference to the files of the creditors, since they were assessees. Even so, the High Court reversing the finding of the Tribunal observed as under \"the appellate authorities have failed to appreciate that in the present case the assessee had totally failed to respond to the notice of the Assessing Officer. Further, even if they were of the view that the Assessing Officer should have made cross verification with the records of the creditors available with him, they ought to have directed the Assessing Officer to do so instead of straight way accepting the assessee‟s version without affording any opportunity to the Assessing Officer to make the verification. In the alternative, the appellant authorities could have themsel....
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....ft wide-open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents. Now, coming to the question of onus, the law does not prescribe any quantitative test to find out whether the onus in a particular case has been discharged or not. It all depends on the facts and circumstances of each case. In some cases, the onus may be heavy whereas, in others, it may be nominal. There is nothing rigid about it. Herein the assessee was receiving some income. He says that it is not his income but his wife‟s income. His wife is supposed to have had two lakhs of rupees neither deposited in banks nor advanced to others but safely kept in her father‟s safe. Assessee is unable to say from what source she built-up that amount. Two lakhs before the year 1940 was undoubtedly a big sum. It was said that the said amount was just left in the hands of the father-in-law of the assessee. The ....
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....ing that income is subject to tax is on the revenue but, on the facts, to show that the transaction is genuine, burden is primarily on the assessee. As per the Court, the Assessing Officer is to apply the test of human probabilities for deciding genuineness or otherwise of a particular transaction. Mere leading of the evidence that the transaction was genuine, cannot be conclusive. Any such evidence is required to be assessed by the Assessing Officer in a reasonable way. Genuineness of the transaction can be rejected in case the assessee leads evidence which is not trustworthy, and the department does not lead any evidence on such an issue. (xiii) In CIT Vs independent Media P L (210 taxman 14) Hon‟ble Delhi HC has held that for making addition u/s 68, AO need not establish that the money has come from the assessee coffer. (xiv) Assessee failed to prove the genuineness of credit. Mere proof of identity of creditor or that transaction was by cheque, is notsufficient. Addition u/s 68 upheld. ( Mangilal Jain Vs ITO (Mad) 3151TR 105; CIT Vs Precision Finance P. Ltd. (Cal) 208ITR 465. (xv) In case of CIT v/s NR Portfolio Pvt Ltd (Delhi) ITA NOS.....
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....in material queries to the assessee during remand proceedings. The queries raised by AO are relevant to the issue at hand as discussed supra. This opportunity has not been availed by the appellant. The assessee has merely harped on the contention that the statements were not provided to him during assessment proceedings and providing the same now cannot undo the wrong. This claim of appellant is not tenable. The statements have been provided to appellant. The conclusions drawn from these statements are in knowledge of assessee through assessment order and despite that he has not come out clean with the facts about ownership of land and its sale whether really effected or not. The only inference that can be drawn is that the assessee has merely concocted a story to explain cash deposits in his bank account. Particularly when many creditors are relatives, not assessed to tax and agriculturists of low means and the transactions are entirely in cash, the onus is heavier on the assessee to prove genuineness of his claim. During remand proceedings also he has failed to avail of the opportunity to discharge this onus. Therefore, the additions of AO as regards the unprove....
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....lenient view adopted by AO is not justified. The whole of the amount purported to have been received as advance against sale of land is held to be not proved and therefore the addition is enhanced to Rs. 10 Lacs. (iv) Shri Chand: He is shown to have advanced Rs. 10 Lac to assessee for purchase of land from assessee. In the statement recorded neither did he remember the names of witnesses nor did he disclose the sources of the deposit. The agreement to sale was also on a plain piece of paper. The AO giving benefit of creditworthiness of Rs. 100000, made an addition of Rs. 9 Lacs on account of creditworthiness not having been proved. Here again the lenient view of the AO is not justified. The fact that the deponent did not remember names of the witnesses to the impugned sale agreement is material to the case. In remand proceedings the appellant has not responded to relevant queries by the AO. In facts and circumstances of the case the whole of the amount purported to have been received as advance against sale of land is held to be not proved and therefore the addition is enhanced to Rs. 10 Lacs. (v) Bal Kishan Sharma: The AO has observed that this person is of low m....
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....of showing that the order of the learned CIT(A) making an addition u/s 68 of the Income Tax Act should not be enhanced. On careful reading of the order of the learned CIT(A) we do not find that any such notice has been issued by the learned CIT(A) proposal enhancement of the income of the assessee. In view of this the enhancement made by the learned CIT(A) of the addition from Rs. 1,975,000/- to Rs. 24.50 Lacs is not sustainable in law on the principles of natural justice not followed by him. Therefore we direct the learned assessing officer to restricted the addition to the extent of Rs. 1975000/- u/s 68 of the Act and assessee is granted relief to that extent. Accordingly ground number 2 of the appeal of the assessee is allowed. 19. Coming to the merits of the case with respect to the addition made by the learned Assessing Officer, it is apparent that the assessee has failed to show the gifts of loans satisfactorily before the learned Assessing Officer. The assessee has also failed to show the genuineness of the transaction of receipt of the sale of land for the reason that there is no sale taken place of any agricultural land by the assessee against the above advance. Further....