TaxTMI 
TaxTMI 
2022 (4) TMI 332
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....ns from under section 68 of the Act to Section 69 of the Act. This action of Ld. CIT(A) is illegal and without jurisdiction firstly because the same has been done without issuance of any notice and secondly the same has been done mechanically without any application of mind. 3. The Ld. CIT (A), has erred in law and on the facts by confirming the action of AO in making addition of Rs. 46,24,400/- u/s 69 of the Act on account of alleged unexplained investment in purchase of agriculture land at Block/Survey No. 125 Prantij Sabarkantha. 4. The Ld. CIT (A), has erred in law and on the facts by confirming the action of AO in making addition of Rs. 23,91,488/- u/s 69 of the Act on account of alleged unexplained investment in purchase of agriculture land at Block/Survey No. 124 Prantij Sabarkantha. 5. The Ld. CIT (A), has erred in law and on the facts by confirming the action of AO in making addition of Rs. 9,17,900/- u/s 69 of the Act on account of alleged unexplained investment in purchase of agriculture land at Block/Survey No. 143 Dhandhuka. 6. The Id. CIT (A), has erred in law and on the facts by confirming the action of AO in making addition of Rs.....
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....assessment proceeding he has explained the sources of money received by it in the bank account by furnishing necessary detail. The assessee with respect to amount received from Shri Mithilesh Kumar P. Patel, Shri Parshottambhai Mohanbhai Patel and Kamleshkumar Parshotttambhai Patel submitted that he has received loan amount of Rs. 2 Lacs, Rs. 4.85 Lacs and Rs. 31.3 Lacs respectively through banking channel. These 3 parties are his relatives and engaged in agricultural activity and they have provided loan to him out of personal saving kept in the form of fixed deposit with Banks which were matured during the year. The assessee in support of his claim with respect to these parties furnished copy of PAN, Copy bank statement of parties, copy of maturity of fixed deposit and copy of 7/12 for having agricultural land. Accordingly the assessee prayed that it has discharged the onus cast under section 68 of the Act. 6. The learned CIT-A after considering the fact in totality has deleted the addition in part and enhanced the addition made by the AO for Rs. 1.85 Lacs with respect to the loan party namely Shri Parshottambhai Mohanbhai Patel. The amount of addition deleted, confirmed and en....
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.... 8. The learned AR before us submitted that the AO in his assessment order has made the addition of Rs. 3 Lacs with respect to Shri Parshottambhai Mohanbhaia Patel which was deleted by the learned CIT-A after making the enhancement of Rs. 1.85 lacs. As per the learned AR, the amount of addition was enhanced by the learned CIT-A without giving any opportunity to the assessee which is in violation of the provisions of section 251(2) of the Act. Accordingly, the learned AR contended that there cannot be any addition to the tune of Rs. 1.85 lacs in the hands of the assessee. Likewise, the learned AR on merits submitted that the assessee has filed confirmation along with the PAN of the party, bank statement of the lender to justify the source of money. Accordingly, as per the learned AR, the assessee is not answerable to justify the source of source in the hands of the lender. 8.1 The learned AR made the similar submissions on merit with respect to loan from Shri Kalpeshkumar Parshottambhai Patel. 9. On the other hand, the learned DR vehemently supported the order of the authorities below. 10. We have heard the rival contentions of both the parties and perused the materials ava....
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....Mohanbhai Patel, we note that the AO has made the addition of Rs. 3 Lacs only. However the assessee before the learned CIT-A submitted that the actual amount of loan taken from such party stands at Rs. 4.85 Lacs whereas the loan from the party namely Shir Kalpeshkumr Parshottambhai Patel stands at Rs. 31.3 Lacs only against the addition made by the AO at Rs. 33.15 Lacs. 10.4 Based on the above submission of the assessee, the learned CIT-A confirmed the addition made by the AO to the tune of Rs. 1.85 Lacs with respect to the loan shown from the party namely Shri Parshottambhai Mohanbhai Patel. As such, the learned CIT-A was pleased to delete the addition of Rs. 3 Lacs from the said party which is not in dispute before us. 10.5 The learned AR with respect to the addition of Rs. 1.85 lacs has made two fold contentions. Firstly, the learned CIT-A have enhanced the addition by Rs. 1.85 lacs without following the procedures specified under the provisions of section 251(2) of the Act. Secondly, the assessee has discharged the onus by furnishing the necessary details in support of genuineness of such loan. Furthermore, the assessee was not under the obligation to explain the source o....
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....sessee can be asked to prove source of credit in books but cannot be asked to prove source of source. 10.9 With respect to the part addition made by the learned CIT-A for Rs. 15.8 Lacs for the loan received from the party namely Shir Kalpeshkumar Parshottambhai Patel, we note that, the addition made by the learned CIT-A is uncalled for the identical reasoning as discussed above in the case of the loan taken from Shri Parshottambhai Mohanbhai Patel Rs. 1.85 lacs. Thus, we set aside the addition made by the AO with the direction to the AO to delete the addition made by him. In view of the above and after considering the facts totality, the additions made by the AO for Rs. 1.85 Lacs and Rs. 15.8 Lacs for the loan received from the parties namely Shri Parshottambhai Mohanbhia Patel and Shri Kalpeshkumar Parshottambhai Patel is hereby deleted and the addition on account of loan from the other parties for the amount of Rs. 15,42,640/- is hereby confirmed. Hence the ground of appeal of the assessee is partly allowed. 11. The 2nd issue raised by the assessee in ground Nos. 2 to 5 is common and interconnected. Therefore, we have clubbed all of them together for the purpose of adjudica....
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..... The assessee, also submitted that the sum of Rs. 2 lacs was directly deposited from his bank account. 12.3 However, the AO during the assessment proceedings found that the assessee failed to furnish the necessary details about the availability of funds in the hands of the parties who have made payments on behalf of the assessee to vender. Likewise, the assessee has not furnished any information whether the loan parties have filed the income tax return. Accordingly, the AO doubted on the creditworthiness of the parties. Thus the AO treated the impugned amount of loan entries shown by the assessee as unexplained cash credit under section 68 of the Act except the sum of Rs. 2 lacs and added the remaining amount of Rs. 46,24,400/- to the total income of the assessee. Survey No. 124 12.4 The assessee has purchased the impugned survey number at a price of Rs. 2,11,90,400/-. As per the assessee, the payment against the purchase of survey number was made directly by different persons from their respective bank accounts as detailed below: Sr. No Name of the party Bank Name Cheque No/ date Amount 1 Narendra B. Pate! Axis Bank. Himatnagar 166567 1/3/2011 ....
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....rty. Accordingly the AO treated the investment as unexplained in pursuance to the provisions of section 69A of the Act and added to the total income of the assessee. 13. Aggrieved assessee preferred an appeal to the learned CIT-A. Submission with respect to Survey Nos. 125 and 124 14. The assessee before the learned CIT-A submitted that he has furnished all the details of the parties who have made payment for purchase of land on his behalf. Such details include the copy of PAN, confirmation letter, bank statement, copy of sale/purchase deed where cheque numbers were mentioned which is sufficient enough to prove the identity, genuineness of transaction and creditworthiness of the parties and to establish the source of money paid for the investment in the property bearing survey No. 125 and 124. But the AO without pointing any defect in the document submitted and without requiring any other document for his satisfaction treated the part of investment in property in above mentioned survey numbers as unexplained investment under section 69 for Rs. 46,24,400 and Rs. 23,91,488/- respectively. 14.1 With respect to the purchase of property at taluka Dhanduka bearing survey numb....
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....ubsequently the cheques \ have been issued in favour of Jayanti Distributors Private Limited on behalf of the appellant. The details available on record to show that the depositor b not filing any return of income ever though it has a PAN. The source of money in the bank account of this non-resident person is not clear. The money has been transferred from some other bank account for which no further details are available. The funds have not been received in foreign exchange. In view of these tacts, The appellant has not fully discharged its onus of giving suitable explanation regarding the amount given on his behalf to the other party for purchase of property. The addition made responding to this payment is therefore, upheld. iii. The appellant has claimed that a payment of Rs. 5 lakh has been made by one Deepali Bhadresh Modi, as per the details mentioned at serial number five of the above table, to Jayanfi Distributors Private Limited on behalf of the appellant. It is noted that the appellant has not been able to file any confirmation from the above person nor any source of deposit from that person has been given by the appellant. Mere mention of cheque in the sale deed ....
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....ng filing of return of income have been given. In view of these facts, the appellant has not discharged its onus of proving the payment. The sources of funds which have been given to the appellant for purchase of property are not clear. The addition under section 69 in this respect is therefore, upheld. The AO is Q!SO directed to pass the information to the assessing officer of this person for taking necessary act'on for verification of the source of deposit in the bank account. vi. The appellant has claimed that another payment of Rs. 9744QO/-has been made by one Mr Deepak Ganpatlal Sharma as per the details given at serial number 11 of the above table. The appeiiant has given confirmation from the above person. It is also given a copy of the PAN and driving licence of the person. The payments have been issued through cheque drawn on a bank account in ICICI bank. Further examination of the bank account No. 002401C76917, which is with ICICI Bank, Parima! Garaen, Ahmedabad branch, show that the money has been credited in the bank account in US dollars and the cheques have been issued out of that credit available with the person. However, it is noted that there are sever....
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....lant has given confirmation from the above person. It is also given a copy of the PAN and driving license of the person. The payments have been issued through cheque drawn on a bank account in Bank of India . Further examination of the bank account show that the cheques have been issued out of the credit available with ins person. However there are several entries of cash deposit and withdrawal from that bank account. The credit which has been used for issuing the check in the case of the appellant is on account of cash deposit of Rs. 3.2 lakh and transfer of funds from other bank account. The sources of these funds are not clear and the appellant has MOT given any information regarding these funds. Though the person holds a PAN no details regarding filing of returns are available on record. The depositor is apparently not filing his return of income, if appears that the depositor is utilising this account for the purpose of issuing accommodation entry. In view of these facts, I am of the considered opinion, the appellant HOS not discharged its onus of proving the source of payment from that person. The addition made by the AO is therefore, upheld. To sum up the addition o....
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....e details of the parties during the proceedings before the authorities below. As per the learned AR the assessee has furnished the confirmation, PAN, license, bank statement of the lender, the cheque number as appearing in the conveyance deed and confirmation, light bill, banks statements etc. with respect to certain parties as detailed below: S. No. Name of persons Amount of loan (Rs.) Invested in survey no 1. Prakrut Bhavsar 10,00,000/- 125 2. Maunik Ishwarbhai Bhavsar 15,00,000/- 125 3. Aroon Mafatla Opatani 6,00,000/- 125 4. Deepak Ganpatlal Sharma 6,24,400/- 125 5. Deepak Ganpatlal Sharma 3,50,000/- 124 6. Devbhai Patel 10,41,488/- 124 7. Total 51,58,888/- 17.1 The learned AR further submitted that the assessee has received a gift of Rs. 2,04,20,000/- which has been accepted as genuine. The amount utilized for the impugned investments out of such gift is of Rs. 1.4 crores only leaving a surplus balance of Rs.64,20,000/- which can be treated as source of investments against the loan of following parties/investments: S. No. Name of persons Amount of loan (Rs.) In....
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.... XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX For applying Section 69. the Assessing Officer must first come to a finding that the assessee made investments which are not recorded in the books of account and thereafter call for an explanation from the assessee about the nature and source of the investments and if he finds that no such explanation was furnished by the assessee-firm or the explanation I offered by the assessee was not satisfactory, he could treat the value of \ the investments to be the income of the assessee-firm of the financial year in which it has made the investments. 19.2 From the above submission, it is transpired that it was the assessee who has change the stand before the learned CIT-A. Meaning thereby, the assessee was aware of the proceedings before the learned CIT-A. It is not a case that the assessee made the submissions considering the provisions of section 68 of the Act rather it is a case where the assessee has made the submissions in accordance with the provisions of section 69 of the Act. Therefore, we find it difficult to convince ourselves with the contention of the learned AR for the assessee. Accordingly, we r....
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....f the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such could arise. 19.5 Therefore, in view of the above discussion and case law we hereby held that the assessee has discharged his onus casts for explanation of investment to the extent of Rs. 51,58,888/- in property bearing survey numbers 125 and 124. Hence the addition of Rs. 51,58,888/- cannot be sustained. 19.6 Before parting, it is important to note that the assessee has claimed to have made investments in the properties bearing survey numbers 125 and 124 out of the money received from three other p....
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....The assessee in support of his contention has filed form 7/12 extract to the AO. As per the AO, the furnishing of 7/12 extract is not sufficient enough to infer that the assessee has earned agriculture income for an amount of Rs. 7,00,120/- only. Likewise, the assessee has not furnished any other supporting details such as the crop produced, quantity of crop produce and sales of crop. However, the AO considering the fact for the possession of agricultural land with the assessee and after taking a note of production chart report of Sabarkantha district was of the view that the assessee was in a position to produce the crop of Rs. 1 lacs per hectare aggregating to Rs. 3 Lacs. Thus, the AO treated the balance amount of Rs. 4 Lacs as income from other sources. 22. Aggrieved assessee preferred an appeal to the learned CIT-A. 23. The assessee before the learned CIT-A contended that the agricultural land available with him is 6.67 hectare but inadvertently failed to bring to the notice of the AO during the assessment proceedings. Accordingly, the assessee before the learned CIT-A filed the additional evidences in support of his claim. As such it was the contention of the assessee th....
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....griculture income of Rs. 1 lakh per hectare, therefore we are of the view that the assessee should not be deprived of the benefit available to him merely on the reasoning that the assessee failed to furnish the correct information during the proceedings. Accordingly, we hold that income earned by the assessee is for Rs.7,00,120/- from the agricultural activity. Hence ground of appeal of the assessee is allowed. 28. The last issue raised by the assessee is that if any addition is sustained under the provisions of section 68 of the Act, then the same should be treated as used for the investments under section 69 of the Act if any confirmed. 29. The learned AR before us submitted that if any addition is sustained under the provisions of section 68 of the Act, then there cannot be any addition to the extent of such amount invested in the unexplained properties in the manner provided under section 69 of the Act, otherwise, it would lead to the double addition. As such, the learned AR before us prayed to grant the benefit of telescoping if any. 30. On the other hand, the learned DR opposed to give the benefit of telescoping on the reasoning that the assessee failed to establish ....