AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 31
X X X X Extracts X X X X
X X X X Extracts X X X X
....e notice u/s 263, the Assessing Officer has raised specific queries, during the course of assessment proceedings and which were replied with numerous details and thus the Assessing Officer had duly applied his mind, to all such details, copies of accounts and other voluminous details furnished to the Assessing Officer and had taken a conscious decision in respect of all the information and framed the assessment on the basis of the details furnished by the Assessee. 3. That the Ld. PCIT(Central), Ludhiana had not considered the detailed reply of the Assessee properly, furnished during the course of proceedings u/s 263 and had mislead himself, while giving a finding on various issues, particularly ignoring the fact that the payment for the purchase of the land has been paid by taking unsecured loan amounting to Rs. 1,25,00,000/- from Sh. Iqbal Singh and Rs.25,00,000/- in cash in regards to which the detailed reply has already been submitted to the PCIT and thus has erred in holding that the assessment as framed by the Assessing Officer is erroneous and prejudicial to the interest of the revenue. 4. Notwithstanding, the above said grounds of appeal, the Ld. PCIT(Central), Ludhia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2017 has stated that out of the said advance, the assessee's share was Rs. 1.50 Crores and which has been paid by way of cheque of Rs. 1.25 Crores and the remaining amount of Rs. 25,00,000/- has been paid in cash. 4.2 It has been further stated by the Ld. Pr. CIT that regarding the payment of Rs. 1.25 Crores, the assessee during the assessment proceedings has submitted that this amount was taken by way of unsecured loan from Shri Iqbal Singh and on perusal of the bank account statement of Shri Iqbal Singh maintained with Punjab National Bank, it reveals that the amount of Rs. 2.00 Crores was credited in the bank account of Shri Iqbal Singh on 18/02/2013 and on the same date, an amount of Rs. 1.25 Crores was transferred to the bank account of the assessee maintained with Bank of Maharashtra. 4.3 It has been further stated by the Ld. Pr. CIT that with regard to the genuineness and credit worthiness of Shri Iqbal Singh for giving unsecured loan of Rs. 1.25 Crores to the assessee, the assessee has only submitted PAN and Bank Account Statement of Shri Iqbal Singh and no Income Tax Return has been submitted by the assessee. Further, no inquiry / verification has been conducted by the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... based on material evidence and facts available on the record. Thereafter, the Ld. Pr. CIT has referred to the order sheet entry dt. 13/12/2019 wherein the specific query have been raised to the assessee regarding receipt of Rs. 1.25 Crores from Shri Iqbal Singh and cash payment of Rs. 25,00,000/- and thereafter the Ld. Pr. CIT has also examined the reply of the assessee dt. 16/12/2019 and taking the same into consideration has recorded the following findings which are stated at para 5.5 and 5.6 of the impugned order which read as under: "5.5 In so far as issue regarding unsecured loan from Sh. Iqbal Singh Rs.1,25,00,000/- is concerned, it is clear that AO asked for confirmation of Sh. Iqbal Singh and copy of Income tax Return of Iqbal Singh from the assessee. These details and explanation was called for vide order sheet entry dated 13.12.2019. From a perusal of the reply of the assessee dated 16.12.2019 as above point 2 & 4), it is clear that assessee or his AR never submitted copy of the ITR or confirmation from Sh. Iqbal Singh. Further during the 263 proceedings, nothing has been submitted by the assessee. The issue to be decided is whether the part explanation furnished by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s prejudicial to the interest of the revenue. Needless to say that there are many Courts ruling that section 68 requires satisfaction of three conditions cumulatively. Therefore, the decision of the AO accepting assessee's version is not in accordance with the law, rendering the assessment erroneous as well as prejudicial to the interest of revenue. The assessment on this issue is set aside with the direction to the AO to decide the issue afresh after giving sufficient opportunity of being heard. 5.6 As regards, the issue of cash payment of Rs.25,00,000/- raised in the show cause notice u/s 263, the reply of the assessee is not acceptable. The cash/funds flow statements has been perused. The statement shows the funds flow on a very broad basis, which does not have day to day cash flow. In the absence of day to day cash flow, it would be difficult to hold that the cash payment of Rs.25,00,000/- is duly accounted for in the books of accounts. The reply of the assessee dated 16.12.2019 has been gone through which is found to be rather casual. It has already been discussed above that decision of the Ld.CIT(A) for A.Y.2014-15 holing that the transaction pertain to A.Y.2013-14 and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....duly submitted copy of the date wise cash book as maintained by the assessee for the period 01/04/2012 to 31/03/2013 and on perusal thereof, it is evident that the assessee had sufficient funds in hand which were earned by him in the normal course of his business. 6.3 It was further submitted that the assessee also submitted copy of the account of Shri Iqbal Singh in the books of the assessee and in this way, the assessee has submitted all the documents explaining the source of the funds and in case the AO had no doubt with respect to the genuineness of the transaction, he would have selected the case of Shri Iqbal singh for scrutiny and necessary details in form of PAN number of Shri Igbal Singh was duly submitted. It was submitted that Shri Igbal Singh was an agriculturist who needn't file his tax return as receipts from agriculture produce are not taxable and in any case, the assessee was not privy to his personal tax return and it was practically not possible to obtain his tax return. It was accordingly submitted that the AO considered the explanation of the assessee and has not made any addition on this issue which reflects that the AO was satisfied with the explanation as gi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso being enclosed herewith and the said payment was received through banking channels vide cheque, dated 16.05.2012 and which was credited to the account of Sh. Iqbal Singh at page 51 on 19.05.2012 as filed. 6.8 Since there was sufficient balance in the bank account and out of which, an amount of Rs. 2,43,60,000/- was transferred to Auto Sweep Account as per Pass book of Sh. Iqbal Singh dated 05.11.2012 and when the amount was advanced to Sh. Meet Pal Singh, the said amount of Rs. 2 crores was transferred from auto sweep account due to lower account balance, which has clearly been reflected in the bank statement of Sh. Iqbal Singh at page 50 of paper Book. 6.9 Thus, the source of amount of Rs. 1,25,00,000/- of Sh. Iqbal Singh and Sh. Meet Pal Singh is satisfactorily explained. It was also furnished and explained to the Assessing Officer and, therefore, the Assessing Officer had duly applied his mind to such bank statement. 6.10 Thus, the confirmation is in built in the bank statement of Sh. Iqbal Singh and Sh. Meet Pal Singh and being an agriculturist, Sh. Iqbal Singh is not assessed to tax and regarding entry of Rs. 2 crores as stated in the order of PCIT at page 11, the Ld. P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ailable on record. The undisputed facts which are emerging from the records are that certain documents were found and seized during the course of search at the premises of the assessee and as part of such documents, an agreement to purchase dated 14/01/2013 for purchase of certain land measuring 7433.32 Sq. Yards situated at Village Benhiwal G.T. Road, Amritsar was also found which was entered into by the assessee alongwith Shri Iqbal Singh with M/s K.G. Infrastructure Private Limited wherein an amount of Rs 3 crores was paid by assessee and Shri Igbal Singh as advance to M/s K.G. Infrastructure Private Limited. It was also found from the documents so seized that an amount of Rs 1.25 Crores was credited in the assessee's bank account on 18/02/2013 and on the next date, the same was transferred through RTGS to the bank account of M/s K G Infrastructure Private Limited. The assessee in his statement recorded on oath on 03/11/2017 has also confirmed that out of the said advance of Rs 3 Crores, the assessee's share was Rs. 1.50 Crores and which was paid by way of cheque of Rs. 1.25 Crores and the remaining amount of Rs. 25,00,000/- was paid in cash. 9. In order to examine the aforesai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing various details in respect of search conducted at the premises of the assessee. We have already submitted the reply to the queries raised by your honor. Further, yourself has show cause with regard to some of the proposed disallowances in this case, the submission of the same are being submitted as follows: 1. Copy of Cash Book for the F.Y. 2012-13 is enclosed herewith for your kind consideration. 2. As regards the unsecured loan from Sh. Iqbal Singh to the 'extent of Rs. 1.25 crores is concerned, it is hereby submitted that assesse has availed unsecured loan for purchase of an immovable property from M/s K.G, Infrastructure Pvt. Ltd. As regards the identity and creditworthiness of Sh. Iqbal Singh is concerned, the PAN number and the Bank statements Sh. Iqbal Singh showing the source in his hands is also enclosed herewith for your kind consideration. PAN: CPIPS1598Q Bank statement: enclosed , 3. During the year under consideration, assesse has also paid an advance amount of Rs. 1.5 crores in total to M/s K.G. Infrastructure Pvt. Ltd. It also includes cash payment to the extent of Rs. 25.00 lacs as advanced to M/ s K.G. Infrastructure and the same has also bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mitted that the cash was not deposited in one go but in various installments. Infact, the assessee was in the-possession of enough cash in hand in the beginning of the F.Y. 2012-13 i.e. Rs. 23,64,350/-. Further, amount totaling Rs. 37,00,000/- was received from the father of the assessee and the same has also been shown in the cash book enclosed herewith. Apart from this, there were the business receipts which was also deposited in the bank accounts to the extent of Rs. 7,25,800/-, Rental and agriculture income totaling Rs. 2,15,000/-. Further, out of the total withdrawal to the extent of Rs. 72,05,351/-, an amount of Rs. 21,14,000/- have been re-deposited into the bank account within a gap of 2 or 3 days. The remaining cash deposit to the extent of Rs. 2658,350 and advances to the extent of Rs. 32,55,278/- might not be taken into "account while calculating the taxable income of the assessee and was missed inadvertently. As the father of the assessee used to operate his personal account for some business purposes and therefore forego to take into account the income earned on this account. However, there was equivalent amount of withdrawals which were spent for sure by the father of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 72,05,351/- and amount of Rs. 21,14,000/- have been redeposited into the bank account within a gap of 2 or 3 days. The remaining cash deposit to the extent of Rs. 26,58,350 and advances to the extent of Rs. 32,55,278/- might not be taken into account while calculating the taxable income of the assessee and was missed inadvertently as the father of the assessee used to operate his personal account for some business purposes and therefore forego to take in to the account the income earned on this account. However, there was equivalent amount of withdrawal which were spent for sure by the father of the assessee. Thus, the assessee is offering to tax the remaining income as per the provisions of Section 44AD of the Act" 2.4 The above contention of the assessee is examined and not found acceptable as the assessee it trying to justify the source of deposits in bank in a very casual manner and without any documentary evidences. However, on merits the reply of the assessee is examined. It is seen that there are deposits of cheques of Rs. 1.25 Crores and other squared up entries. The balance amount remains unexplainable for cash deposit of Rs. 26,58,350/- and advances amounting to Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ingh which raises reasonable doubt regarding creditworthiness of Shri Igbal Singh and genuineness of the unsecured loan transaction. In this regard, the ld PCIT has referred to the bank statement of Shri Igbal Singh and has stated that immediately before the transfer of funds to the tune of Rs 1.25 crores to the assessee, there is a credit entry of Rs 2 Crores in the bank account of Shri Igbal Singh which require examination. It was stated by the ld PCIT that the AO did ask for copy of income tax return and confirmation from Shri Igbal Singh, however, inspite of the fact that the assessee didn't furnish these documentation, the AO proceeded ahead and completed the assessment and in a way accepted the version of the assessee without requisite documentation and verification thereof. 14. In this regard, the ld AR has submitted that Shri Igbal Singh was an agriculturist who needn't file his tax return as receipts from agriculture produce are not taxable and in any case, the assessee was not privy to his personal tax return and it was practically not possible to obtain his tax return and necessary details in form of PAN number of Shri Igbal Singh was duly submitted. It was submitted th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ar inflow/outflow of funds undertaken by Shri Igbal Singh and it is not a case where there are just two entries or for that matter, the account is dormant. We therefore find that the credits in the bank account of Shri Igbal Singh has been sufficiently explained which has arisen on account of receipt of compensation from Railways on acquisition of his land. Therefore, the apprehension and doubt raised by the ld PCIT regarding creditworthiness of Shri Igbal Singh is not borne out of the records. The bank statement of Shri Igbal Singh was submitted by the assessee during the course of assessment proceedings as well as revisionary proceedings and necessary explanation regarding credit of Rs 2 crores in the bank account was also submitted and in this regard, we refer to submission of the assessee before the ld PCIT available at APB page 85 where in response to the show-cause, necessary explanation was submitted by the assessee and the ld PCIT has not referred to the said submission as to why the same is not acceptable or for that matter, what further enquiry or verification is required to be undertaken. Further, regarding non-submission of tax return of Shri Igbal Singh, we find that w....