TaxTMI 
TaxTMI 
2022 (4) TMI 1382
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....iled by the assessee, the Tribunal vide order dated 05.09.2016 restored the matter to the file of the AO for fresh adjudication of the issue by observing as under:- "5. We have heard the Ld. A.R. of the assessee and perused the records. In the interest of justice and the contention raised by the Assessee's counsel that additional evidence filed by the Assessee by way of Paper Book No. 2 from pages no. 80 to 158 i.e. Confirmation and Acknowledgement from seller of shares with their ITR etc. Provided by it of Suren Electronic & Electrical (P) Ltd. Etc....; Confirmation and Acknowledgement from seller of shares with their ITR etc. provided by it of Suren Electronic & Electrical (P) Ltd. Etc.... Confirmation and Acknowledgement from seller of shares with their ITR etc. Provided by it of Amardeep Const. (P) Ltd. Etc..... Balance sheet from seller of shares provided by Yansan Plastic (P) Ltd. Etc.; Confirmation and Acknowledgement from seller of shares with their ITR etc. provided by it of Sunstar Securities (P) Ltd. Etc. and Confirmation and Acknowledgement from seller of shares with their ITR etc. provided by it of Metro Fincap (P) Ltd., Kaziranga Garments, Ardent Consultancy ....
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....t on these capital in nature transactions nor was there any stock of these shares at the end of the year. Hence, when the WIP squared up position are there no need to reflect. In the light of the above facts it is respectfully submitted that the above details and explanations may kindly be taken on record and for remaining explanation the proceedings may kindly shortly be adjourned for 08.12.2017, since the matter is time barred, in the interest of justice." 4. However, the AO was not fully satisfied with the arguments advanced by the assessee. While he accepted the cheque deposits, however, he did not accept the cash deposit made by the assessee in the bank account. He noted that it is not the case where money is first withdrawn and then deposited. It is unique case where the assessee goes on depositing the money in his undisclosed bank account throughout the year. He further noted that the bank account maintained with Indusind Bank was closed on 01.04.2006 which shows that the assessee tried to erase the trace of his account with Induind Bank. According to him, the said bank account maintained with Indusind Bank was never disclosed to the Income Tax Department which i....
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....e broker, distinctive No. of shares, share certificates No, mode of consideration for purchases of shares paid and mode of consideration for sales received have also been field by the assessee company during the course of assessment proceedings despite adequate opportunities provided it for the purpose." 5. The AO accordingly accepted the cheque deposit of Rs. 44,78,400/- and made addition of Rs. 1,84,45,000/- being cash deposit in the bank account by invoking provisions of section 68 of the Act. 6. In appeal, the Ld. CIT(A) sustained addition of Rs. 2,29,23,400/- as unexplained cash credit u/s 68 of the Act by observing as under:- "3.3. The short issue to be decided in the present case is whether in the facts and in the circumstances of the case, the AO was justified in treating Rs. 2,29,23,400/- as unexplained cash credit u/s 68 in the hands of the appellant. 3.4. The AO has added the entire amount of cash as well as cheque u/s 68 of the Act. As per the appellant's own admission that it has deposited cash of Rs. 1,84,45,000/- in bank account. The appellant claims the deposit out of sale proceeds of the shares. But the details of the sale of the shares were....
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....ok into the surrounding circumstances to find out the reality of the recitals made in those documents." 3.7. According to section 3 of the Evidence Act, a fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. Section 114 of the Evidence Act provides that the court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct, and public and private business, in their relation to the facts of the particular case. The aforesaid provisions are nothing but recognition of broad principles of common law governing the issue under consideration. 3.8. In the case of Gordhandas Hargovandas & Another Vs. CIT (126 ITR 560) (Bom.) the Hon'ble High Court observed as under:- "Though in isolation each piece of evidence may appear to be of little weight, on an overall appreciation it would be permissible to consider their cumulative effect and decide one way or the other." ....
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....redients are to be proved to the satisfaction of the AO, all the three ingredients are to be established to make out a case that the assessee's case will not fall under the aforesaid criteria. Only when all these ingredients are established, prima facie the onus shifts on the Department. In the instant case not even the identity could be established, neither the creditworthiness nor the genuineness of the transaction could be established beyond any iota of doubt. This view was taken in the case of Shanker Industries Vs CIT (1978) 114 ITR 678 (Cat). The onus is stated to be shifted only when there is evidence to sufficiently establish a prima facie case in favour of the party on whom onus lies. 3.14. In the facts and circumstances of the appellants case, I am of the view that the appellant has failed to explain the reasons for concealing the bank account maintained with Indusind Bank from the Department. The appellant has also failed to explain the source of deposit in the above bank account. The story of deposit out of sale proceeds of shares is only a tell tale story and after thought as the appellant could not produce any convincing evidence in respect of purchase and sa....
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....that the main business of the appellant that is trading in cloth took place only in the month of January and March, 2006 and there was no business of cloth trading during the remaining period of year. It will be relevant to reproduce the transactions recorded in the undisclosed bank account of the appellant with the Indusind Bank as under:- 3.17. It is seen that the above bank account with the Indusind Bank was closed on 01.04.2006. This shows that the appellant tried to erase the trace of his account with Indusind Bank, it needs to be again mentioned that the above bank account with the Indusind Bank was nEUR?ver disclosed to the Income Tax Department. This itself shows a dishonest intention on the part of the appellant. 3.18. The Hon'ble Delhi High Court in CIT vs. Focus Exports Pvt. Ltd. (228 Taxman 88) while examining the provisions of section 68 has ruled that where the assessee failed to offer a reasonable and acceptable explanation regarding the source and nature of credit, the AO is entitled to draw inference that the receipt are that of an assessable nature. The High Court observed as under: "9. A bare reading of Section 68 of the Act s....
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....ee would stand discharged depends upon facts and circumstances of each case. In case of private limited companies, generally persons known to directors or shareholders, directly or indirectly, buy or subscribe to shares. Upon receipt of money, the share subscribers do not lose touch and become incommunicado. Call monies, dividends, warrants etc. have to be sent and the relationship is/was a continuing one. In such cases, therefore, the assessee cannot simply furnish details and remain quiet even when summons issued to shareholders under Section 131 return unserved and uncomplied. This approach would be unreasonable as a general proposition as the assessee cannot plead that they had received money, but could do nothing more and it was for the assessing officer to enforce share holders attendance. Some cases might require or justify visit by the Inspector to ascertain whether the shareholders/subscribers were functioning or available at the addresses, but it would be incorrect to state that the assessing officer should get the addresses from Registrar of Companies' website or search for the addresses of shareholders and communicate with them. Similarly, creditworthiness was not p....
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....herein the contention that the Assessing Officer should indicate the source of income before it was taxable, was described as an incorrect legal position. Thus when there is an unexplained cash credit, it is open to the Assessing Officer to hold that it was income of the assessee and no further burden lies on him to show the source. In Yadu Hari Dalmia vs. CIT [1980] 126 ITR 48, a Division Bench of Delhi High Court has observed'- "It is well known that the whole catena of sections starting from s. 68 have been introduced into the taxing enactments step by step in order to plug loopholes and in order to place certain situations beyond doubt even though there were judicial decisions covering some of the aspects. For example, even long prior to the introduction of s. 68 in the statute book, courts had held that where any amounts were found credited in the books of the assessee in the previous year and the assessee offered no explanation about the nature and source thereof or the explanation offered was, in the opinion of the ITO, not satisfactory, the sums so credited could be charged to income-tax as income of the assessee of a relevant previous year. Section 68 was inse....
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....iscussion and on being appearance Along with an alternate submissions before that the order has already been passed without discussions. 5. Whether the Ld. CIT (A) was justified to uphold the Ld. AO order, by arriving at a suo-motto conclusion solely based on various citations, by completely side tracking the evidence/explanations on record, which have nothing to do in the present matter which are totally contrary to law and a such the order suffers from patient illegality. 6. Whether the Ld. CIT (A) was justified by passing the order in mechanical manner just by deciding one ground instead as per GOA as per Memo of Appeal." 8. The ld. Counsel for the assessee strongly challenged the order of the Ld. CIT(A) in treating Rs. 2,29,23,400/- as unexplained cash credit u/s 68 of the Act in the hands of the assessee. He submitted that the AO in the original assessment order had made addition of Rs. 2,29,23,400/- being cash deposit of Rs. 1,84,45,000/- and cheque deposit of Rs. 44,78,400/-. After the matter was remanded back by the Tribunal to the file of the AO, the AO accepted the cheque deposit of Rs. 44,78,400/- but retained the addition of cash deposit of Rs. 1,84....
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....O and no defects were found. The assessee had filed vouchers in respect of each sale of investment and the AO had not found any defect in such vouchers. Further, the assessee had also filed confirmation for purchases Company wise. Those companies had also clarified that they had received consideration by cheque. Similarly, as regards sale of investment, the assessee had filed the vouchers to whom the shares were transferred and the consideration has been received in cash which were duly accepted by the parties concerned. Therefore, no addition is called for. In his alternate contention, he submitted that only some profit on estimate basis can be added treating the assessee as a broker/mediator and the entire cash deposit cannot be added u/s 68 of the Act. 10. The Ld. DR, on the other hand, heavily relied on the order of the AO and the ld. CIT(A). 11. We have considered the rival arguments made by both the sides, perused the orders of the A.O. and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the original assessment in this case was completed u/s 143(3) of the Act on 22.12.2008 determin....
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....of section 251(2) of the Income Tax Act, 1961. 13. We find the provisions of section 251 are as under:- "251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; (aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment; (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit. (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unles....
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....t. Therefore, we do not find merit in the arguments of the ld. Counsel for the assessee that no addition should be made on this account. However, at the same time, the entire addition of the cash deposit in the bank account cannot be made in the instant case especially when the purchases have been made through banking channel and sales have been made in cash and at the end of the year all the shares purchased have been sold leaving no balance. The assessee in the instant case in our opinion has typically acted as broker/mediator/commission agent. The various Coordinate Benches of the Tribunal under such type of bogus purchases/sales are estimating the profit ranging from 0.25% to 3% of the purchases/sales as the case may be. Considering the totality of the facts of the case and in the interest of justice, we are of the considered opinion that adoption of profit @ 2.5% of the total cash deposit of Rs. 1,84,45,000/- in the instant case as against entire addition of Rs. 1,84,45,000/- will meet the ends of justice. We hold and direct accordingly. The order of the Ld. CIT(A) is accordingly modified and the grounds raised by the assessee are partly allowed. 15. In the result, the appe....
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.....00 20.04.2005 Cheque Paid 760164 Jenco 400,000.00 211,135.00 20.04.2005 Cheque Paid 760165 to A/c No. 231734050 200,000.00 11,135.00 21.04.2005 Cash Deposit 400,000.00 411,135.00 23.04.2005 Transfer from 0031233319050 350,000.00 761,135.00 23.04.2005 Transfer from 0031233318050 350,000.00 1,111,135.00 23.04.2005 Transfer From 0031231232050 350,000.00 1,461,135.00 23.04.2005 Cash Deposit 450,000.00 1,911,135.00 23.04.2005 Cheque Deposit ABN/240597 50,000.00 1,961,135.00 25.04.2005 Cash Deposit 350,000.00 2,311,135.00 25.04.2005 Cheque Paid 760168 Vikas Paraffins 500,000.00 1,811,135.00 26.04.2005 Cheque Paid 760169 Indo Holland 600,000.00 1,211,135.00 26.04.2005 Cheque Paid 760170 Indo Holland 600,000.00 611,135.00 26.04.2005 Cheque Paid 760171 Indo Holland. 600,000.00 11,135.00 28.04.2005 Cash Deposit 200,000.00 211,135.00 29.04.2005 Cash Deposit 200,000.00 411,135.00 29.04.2005 Cash Deposit 100,000.00 511,135.00 29.04.2005 Cheque Paid 760166 to A/c No. 0031231230050 500,000.00 11,135.00 02.05.2005 Cash Deposit 400,000.00 411,135.00 02.05.....
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....ng Intl. 300,000.00 11,135.00 16.06.2005 Cash Deposit 250,000.00 261,135.00 17.06.2005 Cheque Paid 760191Jenco Overseas 250,000.00 11,135.00 18.06.2005 Cash Deposit 250,000.00 261,135.00 20.06.2005 Cash Deposit 400,000.00 661,135.00 20.06.2005 Cheque Paid 760192 Universal Elecrique Motors 250,000.00 411,135.00 20.06.2005 Cheque Paid 760193 Swetang Intl. 100,000.00 311,135.00 21.06.2005 Cheque Paid 760194 Universal Elecrique Motors 300,000.00 11,135.00 23.06.2005 Cash Deposit 400,000.00 411,135.00 24.06.2005 Cash Deposit 24.06.2005 Cheque Paid 760195 Universal Elecrique Motors 24.06.2005 Cheque Paid 760196 Alpine India P Ltd. 200,000.00 611,135.00 400,000.00 211,135.00 200,000.00 11,135.00 25.062005 Cash Deposit 27.06.2005 Cash Deposit 250,000.00 261,135.00 200,000.00 461,135.00 27.06.2005 Cheque Paid 760197 Intelligent Share Brokers P Ltd. 250,000.00 211,135.00 28.06.2005 Cash Deposit 400,000.00 611,135.00 28.06.2005 Cheque Paid 760198 Jenco Overseas 200,000.00 411,135.00 28.06.2005 Cheque Paid 760199 Millenium Agro Sys 400,000.00 11,135.00 29.06.2005 ....