TaxTMI 
TaxTMI 
2020 (2) TMI 886
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.... fact and ;n law in confirming the action of the Income Tax Officer, Ward -1, Bharuch ("the AO") in making an addition of Rs. 5,36,556/- u/s 41(1) of the Income Tax Act, 1961 ("the Act"). 2. The learned CIT(A) erred in fact and in law confirming the action of AO in making an addition of Rs. 75.00,000/- received as advance towards sale of house property purely on the basis of assumptions, surmises and conjectures. 3. The learned CIT(A) erred in fact and in law in confirming the action of AO in charging interest u/s 234B of the Act. 4. The learned CIT(A.) erred in fact and in law in confirming the action of AO in initiating penalty proceedings u/s 274 r.w.s 271(l)(c) of the Act." Ground No. 1 4. This ground raised by the assessee relates to challenging the order of ld. CIT(A) in confirming the action of ITO in making additions of Rs. 5,36,556/- u/s. 41(1) of the Income Tax Act, 1961. 5. Ld. A.R. appearing on behalf of the assessee reiterated the same arguments as were raised by him before the ld. CIT(A). It was submitted that the present case is not a case of cessation of liability or remission of liability as Matrinagar Co-operative Housing Societ....
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....en the creditor voluntarily gives up the claim. The cession of liability arises when it ceases to exist in the eyes of law for all purposes. We draw strength from the decision of J.K. Synthetics Ltd. vs. ITO 105 ITR 864, CCIT vs. Kesari Tea Company Ltd. 254 ITR 434 (SC) and CIT Vs. Abdul Adhal 247 ITR 710. Since as far as the facts of the present case, the assessee has still shown the creditors as payable, therefore, there is no cessation of liability. In this context, we rely upon the following decisions:- "a. Eicher Mother Ltd. v. Dy. CIT 82 TTJ 61(Ind) Subsisting liability-Since the amounts were payable and had not been waived off by the creditors, the provisions of s. 41(1) were not applicable to the facts of the case. b. New Commercial Mills Co. Ltd. v. Dy. CIT 73 TTJ 893 (Ahd 'C') In the absence of any cogent reason and material to come to conclusion that the liabilities outstanding for 10 to 15 years have ceased in the year under consideration same could not be charged to tax u/s 41(1). c. CIT v.Tamilnadu Warehousing Corpn. 292 ITR 310 (Mad) Remission of liability - Amount shown as liability in balance -sheet - No evidence of cessa....
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....ng Co. (90 ITR 0396) (Bom. H.C.), 2. CIT Vs. Metachem Industries (245 ITR 0160) (MP) (HC), 3.Oriential Trading Co. Ltd. Vs. CIT (49 ITR 0723) (Bom. H.C), 4. Sarogi Credit Corporation Vs. CIT (103 ITR 0344) (Pat HC), 5, ITO Vs. Thakorbhai Chhotubhai Patel (ITO 880/Ahd/2012) 6. Balwinder Kumar Sharma V. ACIT (77 ITR 380) (Chandigarh Trib) and 7. Kalubhai Dhameliya Vs. ITO (88/Srt/2018 (Srt Trib). 9. On the other hand, the ld.Departmental Representative(DR) relied upon the orders passed by the Revenue Authorities. 10. We have heard the counsels for both the parties and we have also perused the material on record and judgments cited by the parties as well as orders passed by the revenue authorities. From the facts of the present case, we noticed that assessee during the year under consideration had received Rs. 75 lacs as advance towards agreement to sell his residential bungalow. The said advance was received from 3 persons each Rs. 25 lacs. In this respect assessee has entered into a valid agreement to sell with three persons however during the course of assessment, the assessing officer directed the assessee to file the confirmation of these persons and accordingly the assesse....
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.... A8: I cultivate bananas on 2.5 acres producing about 80 tonnes of bananas sold to local merchants at Rs. 7/kg fetching approx. Rs. 5,50,000. 1 also cultivate roses and sell to local merchants fetching Rs. 1,50,000/- per annum. For the 1st time this year I have cultivated sugarcane on 3 acres of land which will fetch around 120 tonnes of sugarcane. The sale proceeds are around Rs. 1900/- per tonne would be Rs. 2,28,000/-. Q10: During FY 2008-09 did you have any financial transactions with ShriFarsuram R Bhamwala? If yes, give details? A10: Yes, during FY 2008-09 I had entered into an agreement (banakhat) with ShriFarsuram R Bhamwala - along with my cousin brother named Sh. KishorUpendra Joshi & cousin sister named Kum. JyotibenRashmikantPandya for purchase of house property located at Bunglow no. 3 Pritamnager - 1 society, Maktampur, Bharuch for a total consideration Rs. 1.5 crores out of which Rs. 75 lacs were paid in FY 2008-09 (Rs. 25 lacs each). Q11: What is the source of your payment of Rs. 25 lacs during FY 2008-09 to ShriFarsuram R Bhamwala? A11: I have paid Rs. 25 lacs in cash in 3 instalments of Rs. 10 lacs, 10 lacs& 5 lacson 1/9/....
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....31 dated 1-12-2011 before the AO confirmed to have given the money to the Appellant. Copy of the statement is attached in Index - II at page nos. 68 to 71. » Some of the important facts as stated in the statement u/s. 131 is reproduced hereinbelow: > In reply to question 4 ShriKishor has stated that he has approximately 10 acres of agricultural land. The yearly income from agricultural activities is Rs. 5 to 6 lacs. Main crops are banana, cotton, papaiya. The land is owned by his father but as he is the only son he handles the entire activity. > In reply to question no. 5 ShriKishor has given the details of movable and immovable properties owned by him and has also stated that the age of his father is 66 years and therefore his father cannot work. > In reply to question no. 7 ShriKishor has stated that in 3 acres of land banana is grown. The details as to how and from whom the banana tissues are purchased is also mentioned in the reply. It has also been stated that papaiya is grown, cotton is grown and also sugarcane is grown. Details of each items the time taken and also how the seeds / tissues are procured is also stated. The method of se....
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....30). Smt. Jyotiben in her statement U/s. 131 dated 1-12-2011 before the AO confirmed to have given the money to the Appellant. Copy of the statement is attached in Index - II at page nos. 72 to 73. Some of the important facts as stated in the statement u/s. 131 is reproduced hereinbelow: > In reply to question 4 Smt. Jyoti has stated that she has approximately 5 acres of agricultural land. The land is owned by her mother and her maternal auntie. Her maternal auntie being blind cannot do any activity and her mother being 79 years old no agricultural activities can be carried out by her. In view of the same Smt. Jyoti looks after the entire agricultural activities and takes care of the land. > In reply to question 7 she has confirmed to have grown banana and sugarcane. The method of procuring the tissue and also the method of sale is mentioned in this reply. > In reply to question 8 she has confirmed to have given an amount of Rs. 25.00 lacs on different dates to the Appellant. > The AO in the assessment order while dealing with the statement of Smt. Jyoti has stated that the land is not owned by her. The AO has repeated ....
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....by those persons are very fertile and the early income for the year under consideration was between 8 to 9 lacs for these individuals. Apart from that they have also specifically stated before the assessing officer that the amount was advanced from accumulated savings of past years. In this respect, we rely upon the decision in the case of Sarogi Credit Co-operative Society Vs. CIT 103 ITR 0344 (Patna High Court) wherein it was held as under:- "Cash credit-Burden of proof-Creditors appearing before the ITO and stating that > amount of Rs. 20,000 was in fact advanced by them-ITO disbelieving them and making addition-Tribunal accepting the deposit to be genuine to the extent of Rs. 5,000 making addition of Rs. 15,000-Not justified-Once the identity or the third party creditors established before the ITO and the creditors have pledged their oath that they has advanced the amounts in question to the assessee, the burden immediately shifts on to the Department to show as to why the assessee's case could not be accepted and as to why must be held that the entry, though purporting to be in the name of a third party, si represented the income of the assessee from a suppressed ....
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....ed heavy expenses on account of household expenses and marriage in the family. v. ITO vs. Padmanabh Investment Co. Ltd. 38 TTJ 55 (Bom) Section 68 does not provide that in all cases where explanation of assessee is not there or is not satisfactory according to standards of ITO, amount has got to be charged to income tax as income of the assessee company. vi. MeghajiNarain & Co. v. ITO 37 TTJ 624 (Indore) Evidence as to genuineness of cash credit must be weighted on probabilities of case and not strict evidence, as being beyond reasonable doubts, should be expected." We also gone through the decisions cited by the assessee which are as below:- 1. CIT Vs. U.M. Shah, Prop. Shrenik Trading Co. (90 ITR 0396) (Bom. H.C.), 2. CIT Vs. Metachem Industries (245 ITR 0160) (MP) (HC), 3.Oriential Trading Co. Ltd. Vs. CIT (49 ITR 0723) (Bom. H.C), 4. Sarogi Credit Corporation Vs. CIT (103 ITR 0344) (Pat HC), 5, ITO Vs. Thakorbhai Chhotubhai Patel (ITO 880/Ahd/2012) 6. Balwinder Kumar Sharma V. ACIT (77 ITR 380) (Chandigarh Trib) and 7. Kalubhai Dhameliya Vs. ITO (88/Srt/2018 (Srt Trib) After ....