TaxTMI 
TaxTMI 
2023 (1) TMI 709
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....by the DCIT, Circle-1, Trichy. 2. The first common issue in ITA No.170 & 172/Chny/2022 for the assessment year 2010-11 & 2011-12 as regards to the order of CIT(A) confirming the action of AO in upholding the addition made by AO on account of unexplained cash credit u/s.68 of the Act for an amount of Rs.7,56,74,000/- for assessment year 2010-11 and Rs.1,98,00,000/- for the assessment year 2011-12. The relevant grounds raised by assessee in assessment year 10-11 read as under:- "2.1 The CIT(A) erred in upholding the addition of Rs.7,56,74,000/- as unexplained Cash Credits u/s.68 of the Income Tax Act. 2.2 The applicant having provided proper explanation and proof regarding the credits, the CIT(A) went wrong in confirming the addition made. 2.3 The appellant having submitted that the credits were loans received back, advanced earlier by him, the CIT(A) erred in rejecting the same based on assumptions and surmises. This makes the addition liable to be deleted in full." The relevant ground raised by assessee in assessment year 2011-12 read as under:- 2.1. The CIT(A) erred in upholding the addition of Rs.1,98,00,000/- as unexplained Cash Credits ....
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.... though the assessee has given sufficient opportunity to prove the sources for claim of cash credits introduced in the current account of the assessee in the books of accounts of Dhanalakshni Mini Bus business, the assessee's A/R could not submit any proof/supporting documents in support of cash credits of Rs. 7,56,74,000/- Hence, in the absence of proper documentary evidences/proof, the balance unexplained cash credits of Rs. 7,56,74,000/- are treated as income of the assessee u/s 68 of the Income-tax Act, 1961 for the financial year 2009-10 relating to the assessment year 2010-11, After discussion with the assessee's A/R, the assessment is completed as under: 3.1 Similarly in assessment year 2011-12, the AO noticed that there are cash deposits in current account maintained in the books of Dhanalakshmi Agencies amounting to Rs.1,14,00,000/- on various dates and another cash deposit in current account maintained with Dhanalakshmi Mini Bus to the extent of Rs.1,91,00,000/- crores during the financial year 2010-11. After considering the explanation of the assessee, accepted the explanation of the assessee to the extent of Rs.1,07,00,000/- and added the balance sum of Rs.1,....
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....,00,000/- is not accepted and added back to the income returned u/s 68. Therefore total addition u/s 68 comes to Rs.1,98,00,000/-. Aggrieved, in both the years, the assessee came in appeal before the CIT(A). 4. The CIT(A) after considering the submissions of the assessee, remand report submitted by the assessee, paper book and other evidences filed by the assessee confirmed the action of the AO by observing in para 6.1 to 6.3 of his order for assessment year 2010- 11 as under:- 6.1 While going through the affidavit and confirmation letters submitted by the appellant, I am of the view that all the papers were meticulously prepared in a mechanical way just as a evidence rather than bringing the true affairs of the event. No prudent person will believe that such loans were advanced without any guarantee or mortgage of any property. It may be appreciated that the lands at Perambulur District are not so fertile as in the case of Tanjore delta. If the contention of the appellant is acceptable, all the land owners who are doing agricultural activity at Perambulur District must be millionaire by this point of time. It is beyond imagination the debtors have repaid the loan by....
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....ulur District is only a few thousands rupees. In view of this, the contention of the appellant that the amount represents being the recovery of earlier debts is not acceptable. 5.9 The AO has brought out clearly that the persons said to have been received the loan from the appellant are persons of meagre means. It is considered that the report of the AO is crystal clear about the transactions upon which the loan amount was received is only a bogus claim and it is the method adopted by the appellant to bring his own unaccounted cash into main stream. 5.10 In this background, the grounds raised by the appellant upon this issue are hereby dismissed and the addition made u/s.68 of Rs.1,98,00,000/- are sustained. Aggrieved, in both the years, the assessee came in appeal before the Tribunal. 5. We have heard rival contentions and gone through facts and circumstances of the case. We have also perused the paper-book filed by assessee consisting of 1 to 345 pages and another paperbook consisting of pages 1 to 68. The assessee is an individual and deriving income from various business as enumerated by us in para 3 of this order like running petrol bunk, agricultural i....
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.... have been borrowed and repaid to Karthiravan Remarks of the A.O 1. C. Karunanidhi(9) 1.21 80,000 1,00,000 1,80,000 3,00,000/- Average annual income is onyRs. 1,80,000/-. In the statement before the Thasildar, he has submitted that he has repaid the loan out of savings from the above income after meeting the family expenses, The size of the family, the average monthly expenses of the family, the expenses for untoward happenings in the family would definitely be bound to be there, which should have been met from this income only. Also expenses for maintenance of the cows like fodder expenses, medical expenses also would have been met from this income is only Rs. 15000/- Out of this income hand to mouth existence would have been difficult, leave alone paying back the debt in lump sum amounting to Rs. 3,00,000/- Also, in the letter addressed to the Assessing Officer, this person has claimed to have obtained land in 2001 from Mr.Kathiravan whereas in the statement before the Thasildar, he has deposed that the loan has been obtained in 2002. There is contradiction in the statement of this person. 2. P. Senthilkumar/(12) 0.43 50,000/- 1,250,00....
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....odder expenses, medical expenses also would have been met from this income only. Before the A.O., the year of obtaining loan has been stated as 2004 in the letter submitted by this person, whereas before the Thasildar, the year of obtaining loan has been given as 2002. 6. N. Ambekar (27) - 50,000 1,00,000 1,50,000 4,00,000 There is no land holding. The labour charges claimed to have been earned by him is of course without any evidence and so also for earning from cow breeding. This person claims to have repaid Rs. 4,00,000/- out of his savings, after meeting his household expenses, medical expenses and other incidental expenses. Also expenses for maintenance of the cows like fodder expenses, medical expenses also would have been met from this income only. 7. D. Venkatesan (59) 0.60 40,000 1,00,000 1,40,000 3,50,000 From the meagre land holding and cow breeding, this person claims to have earnedRs. 1,40,000/- per annum which means a monthly Income of Rs.11,600/-. From this petty amount, he claims to have taken care of his family expenses and other expenses and over and above that has claimed to have made savings and repaid a sum of ....
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....bour charges of Rs. 50,000/- also there is no proof. This person claims to have earned Rs. 1,50,000/- per annum which means a monthly income of Rs. 12,500/-. From this petty amount, he claims to have taken care of his family expenses and other expenses and over and above that has made savings and repaid a sum of Rs. 4,00,000/-. Also expenses for maintenance of the cows like fodder expenses, medical expenses also would have been met from this income only. 12. A.Selvakumar - - 1,70,000 1,70,000 4,00,000 There is no land holding. The earning from cow The quantum of Rs. 4,00,000/-claimed to have been repaid in 2009 out of this meagre earnings of Rs. 1,70,000/- has to be examined. 13. M. Kulandayi (80) - - 1,00,000 1,00,000 2,00,000 There is absolutely no income from agriculture. For cow breeding, there is no evidence. under the circumstances, out of Rs. 1,00,000/- average annual income, which means monthly income of less than Rs.9,000/- this person claims to have repaid Rs. 2,00,000/- out of her savings after meeting all her expenses for livelihood and other incidental expenses. Also expenses for maintenance of the cows like fodder expens....
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....claims to have taken care of his family expenses and other expenses and over and above that has made savings and repaid a sum of Rs. 4,00,000/-. Also expenses for maintenance of the cows like fodder expenses, medical expenses also would have been met from this income only. 18. R. Manoharan(111) - 70,000 1,00,000 1,70,000 4,00,000 There is no land holding. The labour charges claimed to have been earned by him is of course without any evidence and so also for earning from cow breeding. From this petty amount, he claims to have taken care of his family expenses and other expenses and over and above that has made savings and repaid a sum of Rs. 4,00,000/-. Also expenses for maintenance of the cows like fodder expenses, medical expenses also would have been met from this income only. 19. R. Vijayakumar (114) 1.21 90,000 1,00,000 1,90,000 4,00,000 From the meagre land holding and cow breeding, this person claims to have earned Rs. 1,90,000/- per annum which means a monthly income of Rs. 15,830/-. From this petty amount, he claims to have taken care of his family expenses and other expenses and over and above that has made savings and repaid....
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....medical expenses also would have been met from this income only. 24 P. Duraisamy (151) 1.96 3,00,000 5,00,000 8,00,000 40,00,000 Out of earning of Rs.8 lakhs per annum, this person has submitted that he has repaid Rs.40,00,000/- in one go in the year 2009. From 39 M.Chitra (91) 60,000 1,10,000 1,70,000 4,00,000 There is land holding. The labour charges claimed to have been earned by him is ofcourse without any evidence and so also for earning from cow breeding. From this petty earnings of Rs. 1,70,000/-, he claims to have taken care of his family expenses and other expenses and over and above that has claimed to have made savings and repaid a sum of Rs.4,00,000/-. Also, expenses for maintenance of the cows like fodder expenses, medical expenses also would have been met from this income only. 40 K. Karthik(137) ---- 1,20,000 1,20,000 2,00,000 There is no land holding. This person earns from a Private Company and has no connection with agriculture. From this petty earnings of Rs.1,20,000/-, he claims to have taken care of his family expenses and other expenses and over and above that has claimed to ....
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....so, expenses for maintenance of the cows like fodder expenses, medical expenses also would have been met from this income only. 46 P.Lakshmi(5) 1.57 60,000 1,00,000 1,60,000 4,00,000 From the meagre land holding and cow breeding, this person claims to have earned Rs.1,60,000/- per annum which means a monthly income of Rs.14,000/-. From this petty amount, he claims to have taken care of his family expenses and other expenses and over and above that has claimed to have made savings and repaid a sum of Rs.4,00,000/-. Also, expenses for maintenance of the cows like fodder expenses, medical expenses also would have been met from this income only. 47 K.Kathavarayan(51) 0.23 60,000 1,10,000 1,70,000 4,00,000 From the meagre land holding and cow breeding, this person claims to have earned Rs.1,70,000/- per annum which means a monthly income of Rs.14,000/-. From this petty amount, he claims to have taken care of his family expenses and other expenses and over and above that has claimed to have made savings and repaid a sum of Rs.4,00,000/-. Also, expenses for maintenance of the cows like fodder expenses, medical expenses also would have been m....
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....er expenses, medical expenses also would have been met from this income only. 53. T. Muthukannu (4) - - - - - The person has not source of earning. The person has deposed before the Thasildar that he has neither received any money nor returned any money from and to Mr.Kathiravan The Person has n source of earning. The person has deposed before the Thasildar that he has neither received any money nor returned any money from and to Mr.Kathiravan. 54. V. Devi(113) - 60,000 90,000 1,50,000 4,00,000 There is no land holding. Whatever income given is only labour charges received. There is no evidence to prove the same. The quantum of Rs. 4,00,000/- is claimed to have been repaid in 2009 out of this meagre earnings, after meeting regular expenses of the family, medical expenses and any other untoward expenses, Further expenses for maintaining the cows like fodder expenses, medical expenses also would have been met from this income only. 5.1 Even, both the remand reports of the AO supported by the Tahsildar i.e., Revenue District Collector, Perambalur dated 19.06.2017 and 30.06.2017 verifying the details of all the persons to whom the asse....
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....55,000 (Agricultural Wages) 1,00,000 1,55,000 6. Mr. N. Ambedkar (27) S/o. Nallusamy Pudhunaduvalur Village Perambalur Circle. - 50,000 (Agricultural Wages) 1,00,000 1,55,000 7. Mr.D. Venkatesan (59) S/o. Durairaj Pudhunaduvalur Village Perambalur Circle. 0.60.0 40,000 1,00,000 1,40,000 8. Mr. S. Jeysankar (60) S/o. Solaimuthu Mettur Village Pudhunaduvalur Perambur Circle. 0.99.0 60,000 1,00,000 1,60,000 9. Mrs.R.Dhanalakshmi (65) D/o. Rajangam Alambadi Village Perambalur Circle. - - 1,50,000 1,50,000 10. Mr. R. Selvaraj (67) S/o. Ramasamy Pudhunaduvalur Village Perambalur Circle. 1.71.5 50,000 1,00,000 1,50,000 11. Mr. A. Kanagaraj (72) S/o. Appavu Pudhunaduvalur Village Perambalur Circle - 50,000 (Agricultural Wages) 1,00,000 1,50,000 12. Mr. A. Selvakumar (75) S/o. Appavu Pudhunaduvalur Village Perambalur Circle. - - 1,70,000 1,70,000 13. Mrs. M. Kulundhayi (80) W/o. Mamundi Mettur Pudhunaduvalur Village Perambalur Circle. - - 1,00,000 1,00,000 14. Mr. C. Jeyraman (87) S/o. Chikkakavundar Mettur Pudhunaduvalur Village Peramba....
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....Collector, Perambalur. Copy is submitted for the information of the District Collector, Perambalur. Copy is submitted for the information of the Revenue Commissioner, Perambalur. From Mr. S. Balakrishnan, M.A, Revenue District Collector, Perambalur. To Assistant Commissioner of Income Tax, Williams Road, Cantonement, Tiruchirapalli 620 001. N.K.A1/2032/2017 Date: 30.06.2017 Sir, Subject: Income Tax - Perambalur District, Perambalur Circle, Perambalur (South) Village, report on income of Mr. S.Kathiravan - regarding. Reference: 1. Summons dated 11.05.2017 issued by the Assistant Commissioner of Income Tax, Tiruchirapalli. 2. Letter No. N.K.A1/2032/2017 dated 15.05.2017 issued by the District Collector, Perambalur. 3. Summons dated 11.05.2017 issued by the Assistant Commissioner of Income Tax, Tiruchirapall....
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.... --- 1,50,000 (Private Company) 1,50,000 11. Mr.R.Nagaraj, S/o. Mr.Ramanathan, Pudunaduvalur village, Perambalur District --- 60,000 1,00,000 1,60,000 12. Mrs.M.Chitra (91), W/o. Manoharan,Pudunaduvalur village, Perambalur District --- 60,000 1,10,000 1,70,000 13. Mr.K.Karthik (137), S/o. Mr.Kannusamy, Perambalur (North) village, Perambalur District --- --- 1,20,000 (Private Company) 1,20,000 14. Mr.D.Karthikeyan (122), S/o.Mr.Devarajan, Ammapalayam Village, Perambalur District --- --- 1,40,000 (Private Company) 1,40,000 15. Mrs.K.Rajamani (17), W/o. Mr.Mookan, Pudunaduvalur village, Perambalur District --- 1,50,000 --- 1,50,000 16. Mr.I.Dayalan (150), S/o.Mr.IlangovanPerambalur (North) village, Perambalur District --- --- 1,50,000 (Private Company) 1,40,000 17. Mr.P.Appuli (54), S/o. Mr.Periyasamy, Vellanur, Pudunaduvalur village, Perambalur District --- 60,000 (Agricultura l wages) 1,40,000 2,00,000 18. Mr.R.Ramalingam, (38) S/o.Mr.Ramasamy, Mettur Village, Pudunaduvalur village, Perambalur District 0.56.0 60,000 1,10,000 1,70,000 ....
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.... District Collector, Perambalur. 7. Summons dated 11.05.2017 issued by the Assistant Commissioner of Income Tax, Tiruchirapalli. 8. Letter No. N.K.A1/2032/2017 dated 19.05.2017, 04.06.2017 and 19.06.2017 issued by the District Collector, Perambalur. Based on the submissions made by Mr. Kathiravan, S/o.Mr.Srinivasan, residing in Perambalur District, Perambalur (South) Village, during the income tax proceedings, the land holding and income details of 159 persons were called for by the Assistant Commissioner of Income Tax by way of communication under reference no.1. Based on the same, the details of income of people residing in Perambalur District for the period from 2002 to 2010 were investigated and the details are as below; S. No. Name and Address Land held (in hectare) Annual Income from land (inRs.) Income from Dairy Cow (in Rs.) Gross Income (in Rs.) 1. Mr.M.Maruthamuthu, S/o.Mr.Mahalingam, Pudunaduvalur village, Perambalur District 0.61.0 50,000 1,00,000 1,50,000 2. Mrs.T.Muthukannu, W/o.Mr.Thangavelu,Pudunaduvalur village, Perambalur District --- --- --- --- 3. Mrs.C.Latchmi, W/o.Mr.Chinnas....
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....adopted by assessee to bring his own unaccounted cash into main stream. Nothing beyond this was examined despite the fact that the assessee specifically filed affidavits, confirmations, details of land holding and source of income of these debtors from whom the assessee has received back the money. The assessee has filed all the details in regard to debtors from whom the assessee has received back the money. The assessee has filed all the details before the AO in regard to receipt of this money, which has been loaned out to these above stated persons. According to us, the assessee realized the sum of loan amounts from the villagers as per the submitted affidavit, confirmations, source of income and details of land holding filed, the assessee has discharged his onus of proving the sundry debtors. We noted that all these details were referred by CIT(A) back to the AO to verify the veracity and in turn, the AO referred the matter to the Revenue Officer, i.e, Tahsildar on communication from the Income-tax Department, all confirmed the transaction. It is pertinent to note that all the persons admitted have returned the money. 5.4 Now the question arises, to what extent the onus is on....
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....d all these loan amounts in their books of accounts, which were never rejected by the Department and accepted in earlier years, now they cannot go back until that the source are not proved. In such circumstances, in the given facts of the case and case laws relied above, we hold as under:- (i) First of all, we are of the view that the debtors cannot be added u/s.68 of the Act. (ii) Moreover, the assessee has discharged the onus laid u/s.68 of the Act by filing overwhelming evidences which were examined by the AO as well as by the Revenue officials of the TamilNadu Government and hence, we delete the addition and allow this issue of assessee's appeal in ITA No.170/Chny/2022. Similarly, the addition of unexplained cash credit u/s.68 of the Act for the assessment year 2011-12 in ITA No.172/Chny/2022 is deleted. 6. The next issue in ITA No.171 & 172/Chny/2022 for assessment years 2010-11 & 2011-12 is as regards to the orders of CIT(A) confirming the action of the AO in treating the surplus on sale of agricultural land as business income amounting to Rs.63,02,000/- & Rs.81,10,384/-. For this, assessee has raised following grounds AY 2010-11 2.1 The....
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...., now assessee is in appeal before the Tribunal for both the years. 8. Before us the ld.counsel for the assessee filed copy of sale deeds executed in regard to these agricultural lands which are filed at pages 15 to 48 of assessee's paper-book and certificate from Village Administrative Officer of Nochiam Village along with Adangal extracts and Aranai (South) Village along with Adangal extracts at pages 49 to 60 of the assessee's paper-book and stated that the VAO certificate clearly proves that these are purely agricultural land and assessee is cultivating these lands as per chitta and adangal. The ld.counsel for the assessee also drew our attention for return of income filed for assessment year 2007-08, 2008-09 & 2009-10 wherein agricultural income was returned by the assessee for a sum of Rs.2.95 lakhs, Rs.2.65 lakhs & Rs.3.75 lakhs respectively. For assessment year 2010-11, the assessee has declared agricultural income at Rs.4.25 lakhs and for assessment year 2011-12 also agricultural income returned was Rs.4.25 lakhs. The ld.counsel for the assessee stated that when these lands were agricultural lands as certified by the Revenue authorities and assessee is continuously cult....
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....ion of this Rs.3 crores as unexplained cash credit u/s.68 of the Act. Aggrieved, assessee preferred appeal before CIT(A). 13. The CIT(A) also confirmed the action of the AO by holding that the assessee is unable to prove the genuineness of transaction or the creditworthiness of the payer. The assessee before CIT(A) stated that there is no actual cash flow between the assessee and Murugan Traders but credit for a sum of Rs.3 crores in two parts was given on 31.03.2011 by a transfer entry in the Indian Overseas Bank account of Dhanalakhsmi Agencies. It was repaid on 15.04.2011 again through the same bank. The assessee filed confirmation before CIT(A) and the relevant ledger extracts. The CIT(A) noted that although the amount has been confirmed, paid and received through banking channel but he has not accepted the claim of the assessee. But the CIT(A) noted this fact in para 5.17 as under:- "5.17 While going through the above submissions and details furnished, it can be seen that the appellant has proved only genuineness of the transaction but not the creditworthiness of payer. For any transaction to be valid, the genuineness, creditworthiness and identity should be proved....