TaxTMI 
TaxTMI 
2020 (11) TMI 812
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....staining an addition of Rs. 5,11,000/- by treating the advance taken against sale of property from Shri Ram Swaroop Mali the source of which was truck sold by his son as bogus. 4. That on the facts and circumstances of the case and in law, the ld. CIT(A) grossly erred in not quashing the invocation of the provisions of Section 115BBE of the Income Tax Act, 1961 to the additions sustained. 5. That the appellant craves leave to add, amend, alter, modify, substitute or delete any ground or grounds of appeal on or before the hearing of the appeal." 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. Briefly stated facts of the case are that the assessee filed her return of income in response to notice issued U/s 148 of the Income Tax Act, 1961 (in short, the Act) on 29/06/2018 declaring income from business and profession U/s 44AE of the Act. Income from house property and income from other sources at the same income declared initially u/s 139 of the Act. The assessment in the present case was reopened U/s 147 of the Act on the ground that the assessee had purchased an immovable property and the source ....
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....Valji Shah (2006) 283 ITR 453 (Bom), wherein Hon'ble Bombay High Court held that AO cannot reopen assessment u/s 147 for verification of source of purchase of flat by the assessee as there is no reason to believe that any income has escaped assessment. Copy of the judgment is submitted herewith at paper book page no. 36 to 38, relevant para no. 8 at page no. 38, which is also reproduced hereunder :- "8. Having heard Shri Desai, the learned senior counsel for the Appellant, as well as Shri Bhujale, the learned counsel for the Respondents, it is an admitted position that the assessee had invested a sum of Rs. 2,50,000/- for the purpose of purchasing the flat and what was sought to be investigated was the source of income. A bare perusal of the aforesaid notice dated 10.10.1991, clearly indicates that the Officer was wanting to know the details with regard to the source of funds with regard to purchase of the said flat for a sum of Rs. 2,50,000/-. Obviously in the above, there is no question of the assessing officer having any basis to reasonably entertain the belief that any part of the income of the assessee had escaped the assessment and that such escapement was by reason of omis....
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.... purchased by the assessee, it does not at all lead to an inference that the income has escaped assessment. It was submitted that there must be 'reasons to believe' and not 'reason to suspect' that income chargeable to tax has escaped assessment. In this regard, the ld AR has relied upon the decision of Hon'ble Bombay High Court in the case of CIT Vs Maniben Valji Shah (2006) 283 ITR 453 (Bom) and also the decision rendered by the Hon'ble Supreme Court in the case of Sheo Nath Singh Vs AAC (1971) 82 ITR 147 (SC). However, after considering the decisions relied upon the assessee, we found that the facts of the cited cases are distinguishable from the facts of the present case, therefore, the judgments relied upon by the assessee are not applicable to the facts of the present case. As far as the present case of the assessee is concerned, we are of the view that the material before the A.O. was relevant and affords a live link or nexus to the formation of a prima facie belief that income chargeable to tax has escaped assessment in the hands of the assessee. In our view, the sufficiency and correctness of material need not be looked at the initial stage at the time of reopening of the ....
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....aken(Rs.) Additions made by ld. AO (Rs.) 1 Sh. Harish Gyanani 75,000 0 2 Sh. Naresh Gyanani 50,000 0 3 Sh. Diksha Gyanani 2,50,000 2,50,000 Deleted by CIT(A) 4 Sh. Kamala Tahaliyani 5,00,000 5,00,000 Under this Appeal 5 Sh. Lal Chand Parchani 4,00,000 4,00,000 Deleted by CIT(A) Total 12,75,000 11,50,000 Following documents are furnished herewith in support of the loan transactions :- S.No. PARTICULARS PAGE NOS. 1 Confirmation of Kamla Tahaliyani 6 2 Bank statement of Kamla Tahaliyani 7 to 11 3 Purchase Deed dated 12.07.2012 12 to 19 4 Copy of Bank Account Pass book of Meera Devi Reply letters by the Assessee to The A.O during 20 to 22 5 Assesment proceedings 23 to 25 From the documents submitted as above, it is amply evident that the loan is genuine & the creditor had capacity to advance the loans. Moreover, merely because cash is deposited in the bank accounts of the creditors before issue of cheque, it does not necessarily imply either that the cash does not belong to the creditor or the creditor does not have capacity to deposit such amount in his bank account. In case of Kamla Tahilyani, cash was deposited in bank account bu....
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....ence, the finding of the ld. CIT(A) that immediate source of advancing money is unverifiable is perverse. 6 7 to 11 10, 11, 25 1.1 IDENITITY, CAPACITY OF CREDITORS AND GENUINENESS OF TRANSACTION STANDS ESTABLISHED APPELLANT HAS DISCHARGED ITS ONUS. It is humbly submitted that the appellant has established the identity and capacity of the loan creditors as well as the capacity & genuineness of the transactions. This is evident from the following :- a) The identity of the loan creditors has been established by filing confirmations, bank pass books, etc. b) The capacity of the loan creditors is proved through bank pass books wherein they had sufficient balance to advance loans to the appellant. c) For purchase of immovable property, the appellant took loans from her relatives, hence the genuineness of the transaction is established. d) The alleged loans were taken through banking channels as is evident from the bank statement of the appellant as well as the bank pass books of the creditors. The appellant had discharged its onus of establishing the identity, capacity and genuineness. The ....
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....199, wherein it was held that once the existence of the creditors is proved and such persons own the credits which are found in the books of the assessee, the assessee's onus stands discharged and the latter is not further required to proves the source from which the creditors could have acquired the money deposited with him either in terms of section 68 or on general principle. Merely because the depositor's explanation about the sources of money was not acceptable to the AO, it cannot be presumed that the deposit made by the creditors is money belonging to the assessee itself. Hence, it is now a well established law that in case of loan transactions, source of source need not be proved. Once the identity, capacity and genuineness of a loan transaction is proved by the assessee, the primary onus which lay upon him is discharged and is shifted on the revenue. The assessee need not to prove the source of source of the loan transaction. Reliance is also being placed on the following judgments in this regard :- S.No. Particulars Citation Hon'ble Court/Tribunal 1 CIT Vs. First Point Finance Ltd. 286 ITR 477 Raj. High Court 2 ACIT Vs. Rajasthan Asbestos Cement Co. XLI Tax....
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....ve seen that the bank statement of the said creditor wherein it has been shown that the cash of Rs. 6.00 lacs were withdrawn by the loan creditor from her own bank account on 18/05/2012 and 19/05/2012 which was subsequently deposited back in the bank account on 31/05/2012 before advancing a sum of Rs. 5.00 lacs to the assessee. Therefore, in such circumstances, we are of the view that the cash deposited in the bank account is totally sourced by the cash withdrawals made earlier. Hence, adverse inference drawn by the revenue authorities under these peculiar facts and circumstances is unwarranted. Therefore, in our view, the ld. CIT(A) erred in sustaining the addition without considering this fact that the cash deposited in the bank account was fully sourced from the earlier cash withdrawals from the same bank account, therefore, the findings of the ld. CIT(A) that immediate source of advancing money is unverifiable, are factually incorrect and are perverse. Therefore, keeping in view our above discussion, we direct the A.O. to delete the addition of Rs. 5,00,000/- made U/s 68 of the Act. 12. Ground No. 3 of the appeal relates to challenging the order of the ld. CIT(A) in sustaining....
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....amswaroop Mali and not by Ramswaroop Mali. There is no evidence that the son gave the amount to Shri Ramswaroop Mali. Therefore, the source to the extent of Rs. 5,11,000/- cannot be accepted and is correctly added by the Assessing Officer. The balance amount of Rs. 4,89,000/- is deleted. This ground of appeal is partly allowed." It is most respectfully submitted that Shri Ramswaroop Mali has accepted the payment of money to the appellant before the ld. A.O. by way of his statements recorded during the assessment proceedings and also by way of affidavits and other documents as mentioned in the table above. The ld. CIT(A) held that there was no evidence to show that Shri Ramswaroop Mali received the sale proceeds of truck from his son thereby ignoring that they are not outsiders but father and son and when the father has admitted to have received an amount from his son for purchasing a house, there is no reason to disbelieve particularly in absence of any evidence to the contrary. Moreover, at this juncture, it is pertinent to draw kind attention of the Hon'ble Bench towards the provisions of the Prohibition of Benami Property Transactions Act, 1988, wherein a property acquired....
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....nt and Shri Ramswaroop Mali are not actual/genuine. Hence, treating of advance payment as bogus brushing aside all the material evidences on record by the ld. A.O. is illegal, unjustified and deserves to be deleted. 13. On the other hand, the ld DR has relied on the order passed by the ld. CIT(A). 14. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. During the course of argument, the assessee had also placed on record an application dated 21/09/2020 to accept an affidavit as additional evidence under the provisions of Income Tax Appellate Rules, 1963 (in short, the Rules). In the said application, the assessee wants to place on record an affidavit of Shri Chhitar Mali, S/o- Shri Ramswaroop Mali as additional evidence, however, the ld AR has failed to demonstrate as to how the present application filed by the assessee is meeting with the ingredients contained in Rule 29 of the Rules. Therefore, in our view, the present application for a....