AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (9) TMI 1114
X X X X Extracts X X X X
X X X X Extracts X X X X
....f as unsecured loan and thereby upholding the addition made by the Assessing Officer amounting to Rs. 99,84,046/- as unexplained investment. 3. The assessee craves leave to add/alter any of the ground of appeal on or before the date of hearing of appeal. From the aforesaid grounds it is gathered that the only grievance of the assessee relates to the sustenance of addition of Rs. 99,84,046/- made by the A.O. under section 69A of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). 3. Facts of the case in brief are that the assessee electronically filed the return of income on 29/11/2014 declaring an income of Rs. 8,87,340/- which was processed under section 143(1) of the Act, later on the case was selected for scrutiny. 3.1 During the course of assessment proceedings the A.O. noticed that there was a substantial increase in the capital account of the assessee amounting to Rs. 1,19,44,047/-. The A.O. asked the assessee to furnish the source of increase in the capital account with supporting evidence. The assessee submitted that he had introduced capital from the funds received from Shri Hardev Singh Sahi in Indian rupees and Canadian Dollar and also furnished the copy ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... identity, creditworthiness and genuineness. The nature of the above said transactions/payments received, sources of their income, relationship with you and confirmation of the lenders on or before 06.12.2016. Please also state whether these are interest free loan or give the details of interest paid on these loans". 3.3 The assessee submitted that Shri Hardev Singh S/o Shri Joginder Singh was his maternal cousin. In respect of his creditworthiness and genuineness of the transactions, it was stated that he (Shri Hardev Singh) was a retired officer from a Government Organization and at the relevant time was residing in Canada, he transferred Rs. 19,00,000/- interest free out of his personal savings and retirement fund. It was further stated that the balance amount was transferred by him through his son's account. It was also stated that Shri Maninder Singh Sahi S/o Shri Hardev Singh Sahi, had well established set up of his own. The assessee also furnished copies of self declaration of Shri Hardev Singh and Shri Maninder Singh Sahi. 3.4 The Assessee submitted before the A.O that advance money was given to him with motive of making some property investment in India, but since no de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....laration submitted by you on 06.12.2016 on a simple plain paper was not proper and you were again asked to furnish an authentic confirmation to prove its genuineness. But on 14.12.2016 you have again submitted the same copy of declaration. The photocopy of declaration by Sh. Maninder Sahi submitted after cutting in it. The declarations are photocopies on the plain paper thus the authenticity and genuineness is not established. Sh. Hardev Singh, who was retired from his service in April, 2012 and has received pension of Rs. 11,050/- only but he has given Rs. 19,00,000/- to you on 09.05.2013. This document does not prove that the amount received as pension benefits is the sources of loan given to you as no such supporting bank statement placed on record. This is not confirming the genuineness of the transaction. d) Vide notice u/s 142(1) dated 29.04.2016, you were asked to furnish the sources of increase in capital during the year with supporting evidence. Since then, you are time and again asked the sources of increase in capital but you are unable to prove the genuineness and authenticity of the same. You are repeatedly affording opportunities to prove the increase in capital bu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted in respect of Sh. Maninder Sahi is a photocopy and on a simple plain piece of paper. The letter head of a concern must have the details of its head office e.g. contact No., e-mail ID, Fax No. its PAN or TAN number to facilitate its customer. But no details are printed on it. The document is not a registered document with any authority of Canada and not witnessed. v) No documentary evidence regarding his being a 'tax payer' is furnished to show that he had sufficient sources of income to give this amount. vi) The bank statement submitted is also not acceptable as it has neither the name of the account holder nor name of bank/branch. As per the assessee's statement Sh. Maninder Sahi has given loan of Rs. 37,55,262/- on 14.05.2013 and Rs. 62,28,784/- on 22.11.2013 from Canada in Indian Rupees. But from perusal of the bank statement, there is no debit or credit entry in the month of May, 2013 then how money of Rs. 37,55,262/- was given by him to the assessee. Further, it is noticed that on 18.11.2013, there was a credit entry of 1,04,975 Canadian dollar in this account and on the same day 1,05,000 Canadian dollar was transferred to the assessee. The credit entry o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to rebut the erroneous reasons based on which the Ld. AO framed the assessment order and made an impugned addition of Rs. 99,84,046/- u/s 69A of the Income Tax Act, 1961. The reasons stated by the Ld. AO for not accepting the submissions of the assessee in respect to the funds received from Sh. Maninder Singh Sahi are well covered and rebutted by the merits of the case in favour of the assessee which are taken up in ground No. 3 of the submissions. 3. Submissions based on Ground No. 3 of appeal, which states as under that: 'The learned AO, as per as assessment order is believed to be convinced based on the evidence submitted by the assessee on the genuineness of the claim of transaction of unsecured loan received by the assessee and identity of the said lender, Sh. Maninder Singh Sahi. But, somehow has ambiguously rejected the creditworthiness of the same, lender, Sh. Maninder Singh Sahi, without any reasonable cause or explanation.' In regards to above stated ground, we would like to humbly submit that: The assessee on enquiry made by the Ld. AO regarding the increase in capital duly explained that the assessee had taken an advance money from Sh. Hardev Singh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of Rs. 19,00,000/- from Mr. Hardev Singh whereas quashing/ disapproving the submissions made by the assessee to prove the creditworthiness of Mr. Maninder Singh Sahi. In respect to the same is hereby humbly submitted that the Ld. AO had accepted the submission of the assessee that 'the funds used in capital introduction amounting to Rs. 1,18,84,046/- was received from Sh. Hardev Singh through his regular bank account (Rs. 19,00,000) and the balance (amounting to Rs. 99,84,046/-) was transferred by him from his son Mr. Maninder Singh Sahi's bank account without asking any further questions or making any enquiries regarding the same. Therefore, it is clear from the aforementioned submission that though there were two lenders as per the records, the total funds transferred were clearly belonging to Mr. Hardev Singh and a part of them were merely wired through his son's bank account. Therefore, in this case the creditworthiness of Mr. Hardev Singh is required to be established since the funds belonged to him and the creditworthiness of Mr. Maninder Singh Sahi is not relevant. In assessment order, the Ld. AO has already accepted the credit worthiness of Mr. Harde....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of remaining funds amounting to Rs. 99,84,046/-. 3. The Ld. AO erroneously rejected part of the assessee's claim based on mere presumptions without offering the assessee an opportunity of being heard to rebut these erroneous and ambiguous presumptions of Ld. AO before pronouncing the impugned order. 4. The Ld. AO has erroneously rejected all the possible evidence submitted on record, by assessee, to substantiate the credit worthiness of the lender. The assessee has also further failed to call for the substantial information under the provisions of section 131 of the Income Tax Act, 1961 and therefore failed to carry out his onus to disprove the submitted documentary evidence The reasons stated by the Ld, AO for not accepting the submissions of the assessee in respect to the funds received from Sh. Maninder Singh Sahi are rebutted point wise as under: i) The assessee was changing his explanations frequently and without any basis with regard to addition in capital forRs. 99,84,046/- In regards to the same it is hereby humbly submitted that the assessee had from the initiation of the proceedings kept same stand in regards to both the capital introductions amounting....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d due to poor market conditions. Therefore the funds extended were not for any particular property already signed for but for the purpose of prospective investments and Ld. AO refusing to accept the explanation given by the assessee merely on presumptions and baseless grounds acted in bad faith. iv) The letter head 'Sahi Construction' submitted in respect of Sh. Maninder Singh Sahi is a photocopy and on a simile plain piece of paper. The letter head of a concern must have the details of its head office e.g. contact no, e-mail ID, Fac No. its PAN or TAN number to facilitate its customer. But no details are printed on it. The document is not a registered document with any authority of Canada and not witnessed. The assessee had duly submitted all the requisite documents/ information as desired by the Ld. AO. The aforementioned assertion of the Ld. AO is on erroneous grounds since the letterhead of the company or an entity is as per the discretion of governing body. It is erroneous on the part of the Ld. AO to reject the evidence provided on such invalid grounds. Furthermore, it has been already established that since the entire funds belonged to Mr. Hardev Singh, therefore,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. It is improbable that Sh. Maninder Singh Sahi had advanced such a huge interest free amount with small sources of income. Hence, the creditworthiness of Sh. Maninder Singh Sahi submitted by the assessee is not proved. In respect to the same it is hereby humbly submitted that in point no. 2 of our submission it is already established that entire funds transferred belonged to Sh.Hardev Singh and a part of them were wired to the assessee through Mr. Maninder Singh Sahi's (s/o Sh. Hardev Singh) bank account. Therefore the credit entry of 104975 Canadian dollar were transferred by Sh. Hardev Singh to Sh. Maninder Singh Sahi's bank a/c who in turn transferred the said funds to the assessee on behalf of Sh. Hardev Singh." 4.1 The Ld. CIT(A) after considering the submissions of the assessee observed that the A.O. had accepted the explanation of the assessee for Rs. 19,00,000/- received from Shri Hardev Singh as funds from pension funds being retired Government employee, but the advances received from his son could not be accepted for the following reasons : (i) In the balance sheet as on 31.03.2014 of M/s Bajwa Construction Company-proprietorship concern of the appellant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nveniently missing in the arguments of the appellant is that the this payment was made to the appellant for some property which property is only known the appellant or Sh. Hardev Singh and his son] and amount will be paid back if deal is not struck. On this issue both the parties are silent. Neither any deal has come to light till disposal of this appeal nor has money been paid back. This smokescreen has not been touched by the appellant. It is strange that more than One Crore rupees have just been thrown away by the father and son duo that too when father is retired government employee who must be knowing the value of his money. This act defies Human Probability. As laid down in CIT vs. Durga Prasad More [(1971)] 82 ITR 540], the apparent must be considered as real until it is shown that there are reasons to believe that the apparent is not the real and the tax authorities are entitled to look at the surrounding circumstances to find out the realities and the matter has to be considered by applying the test of human probabilities. Similar view has been held in the case of Sumati Dayal vs. Commissioner of Income-tax [1995] 80 TAXMAN 89 (SC). It is in these facts and circumstances t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6 describing the capacity and identity of Shri Hardev Singh. The Ld. Counsel drew our attention towards page nos. 30 to 32 which is the declaration of Shri Maninder Singh Sahi alongwith proof of the remittances, a reference was also made to page no. 33 to 34 which is the coy of letter wherein the sources of Shri Hardev Singh and Shri Maninder Singh Sahi had been shown in the bank statement, the ID address had been furnished and the purpose of sending the money by Father and son i.e Shri Harvinder Singh & Shri Maninder Singh Sahi had been mentioned which was to make some investment in property in India. It was stated that both of them were residing outside India, in Canada but had given complete address. It was stated that the assessee made a request that if the A.O. wanted some more information, he may write to them or may have issued summons, a reference was made to page no. 74 of the assessee's paper book. It was submitted that the deceased assessee furnished the duly attested affidavit before the A.O. copy of which is placed at page no. 36 to 37 wherein the details of amount received, purpose and then as to why the same could not be invested in the property because of poor sent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....claration from the depositors had also furnished evidences in the form of bank pass book of Shri Maninder Singh Sahi in Canada coupled with the remittance advices which were not doubted, therefore the reliance placed by the Ld. CIT(A) upon the Judgment of Human Probability did not hold good when documentary evidences in the form of remittance certificates, bank pass book, copy of passport were furnished by the assessee and also a request was made to issue summons under section 131 of the Act, if the A.O. had any doubt. The reliance was placed on the following case laws: * Daulat Ram Rawat Mal reported in 87 ITR 349 (SC) * Sarogi Credit Corporation Vs. CIT [1976] 103 ITR 344 (Patna) 6.5 It was further stated that the addition under section 69A of the Act could have been made if unexplained income which was not recorded in the books of account but in the present case amount had been recorded in the book of account and even the source had been explained, therefore the addition made by the A.O. and sustained by the Ld. CIT(A) was not justified. Reliance was placed on the following case laws : * DCIT Vs. M/s. Himland Agro Foods Ltd., & Others in ITA No. 743, 745 & 747/Chd/2013 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d from his son Shri Maninder Singh Sahi although both of them were residing in Canada, were related to the assessee and sent the amount through banking channel. 9.1 In the present case the A.O. invoked the provisions of Section 69A of the Act while making the impugned addition. The provisions contained in the said section read as under: "69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." 9.2 In the instant case the entries relating to the advances received from Shri Hardev Singh and his son Shri Maninder Singh Sahi from Canada were recorded in the books of accounts and the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he propriety concern of the assessee establishes the genuineness of transaction. In the totality of facts and circumstances of the case, the genuineness of transactions stands established. The maounts have been advanced through account payee cheques and we find no merit in the addition being made on this account. Their lordships of Hon'ble Supreme Court in CIT Vs. Chuni Lal [211 ITR (8T) 11] had held that cash credits received through bank account of wife, son and daughter in law could not be added unless it is proved that they were benamidars of the assessee. In the facts of present case, father of assessee has proved the availability of cash in hands. The requirement of law is not to prove the source of source of cash credit. Accordingly, we direct the Assessing officer to delete the addition of Rs. 35 lakhs credited to the books of the assessee, being on account of loan received from the father of the assessee. Thus the grounds No. 8 & 9 raised by the assessee are allowed." 9.4 In the present case also the assessee furnished the details relating to the source of advance received by him, the amount in question was received from Shri Maninder Singh Sahi S/o Shri Hardev Singh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ses and conjectures. There is an allegation that it is Assessee's money which went to Sneha International and that was deposited by Snehal International in a bank account and from that bank account funds were transferred to M/S.Sherwali Corporation and M/S.Venkata Industries, but there is no evidence to substantiate such allegation. 10. As far as the decision cited by the learned DR is concerned in the decision rendered in the case of Mohana Kala (supra), the Hon'ble Supreme Court has emphasized that the assessee did not contend with the material and circumstances available on record not justifying credit being treated as income. In the present case, I am of the view that the assessee has produced material evidence to show that the sum in question was received on account of sale of shares and no evidence has been brought on record to counter the plea of the assessee. In the case of Vikram Singh (supra), the Hon'ble Delhi Court held that the facts and circumstances of the case established that transactions were dubious. As already stated, no such evidence has been brought on record in the present case except to make an allegation that Sneha International was involved in rotating ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e mentioned father and son, namely Sh. Hardev Singh and Maninder Singh Sahi, to me, with the motive of making some investment in properties in India.But since, no deal could got materialized because of the poor market sentiments & conditions and hence, I shall be repaying back the above said advance of the total amount of Rs. 1,18,84,046/-to Sh. Hardev Singh and Maninder Singh Sahi, soon as per the availability of funds. 3. Further, the above said advance money was given to me by Sh. Hardev Singh and Maninder Singh Sahi, out of free-will and without any intention evade any kind of taxes. I have taken an advance money in form of interest tree unbt5oUlt,^ loan from father and son namely Sh. Hardev Singh s/o Sh. Joginder Singh Sahi, resident of village - Pambra, P.OBhunga, District-Hoshiarpur (PB), having present residence at #6792, 146B Street, Surrey, BC, Canada of Rs. 19,00,000 /- in my HDFC account no 05971000013800 on 9th May 2013 and from Sh. Maninder Singh Sahi s/o Sh. Hardev Singh, of Rs. 99,84,046/- via AXIS bank on following date and transaction ID's. Date Transaction ID Amount 14/05/2013 S84376008 37,55,262 22/11/2013 S86406704 62,28,784 Total ....