TaxTMI 
TaxTMI 
2023 (6) TMI 766
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....hip firms had been explained by merely furnishing copies of work orders obtained by the partnership firms. 2.3 The Ld. CIT(A) has erred in not appreciating the findings the AO that the financials of assessee's husband disproves the assessee's claim that source for Rs. 1.40 crores was out of loans taken from the firm in which assessee's husband is partner and that the said firm had also not filed its return of income for the AY 2013-14 2.4 The ld CIT(A) erred in not following the decision of the Hon'ble Apex Court's rulings in the case of CIT vs P Mohanakala 291 ITR 278 wherein it was held that the transactions though apparent were held to be not real one. 2.5 The ld CIT(A) ought to have noted that as per the mandate of section 69 of the I.T. Act, where an assessee has made investments in respect of which. the assessee is not able to explain the nature and source, the same is deemed to be the income of the assessee. 3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the.Ld. CIT(A) may be set aside and that of the Assessing Officer restored. 3. The brief facts of the case....
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....loan of Rs. 1.40 Crs. from her husband. The assessee could not file any evidences to justify amount received from partnership firm along with Income Tax return filed for the relevant assessment year by the said firms. Therefore, rejected arguments of the assessee and made additions towards source for purchase of property as unexplained investment u/s. 69 of the Act. The relevant findings of the AO are as under: 12. The submissions of the assessee is carefully examined and analyzed as under: a. On perusal of purchase deed dated 04.03.2013 furnished by the assessee, it is ascertained that the purchase consideration paid by the assessee is at Rs. 3,40,00,000/- and Stamp duty paid is at Rs. 55,85,400/- against the stamp duty value of Rs. 7,70,40,000/-. On perusal of bank statements furnished for the instant AY.2013-14, it is verified that the assessee had made cash deposits to the extent of Rs. 23,75,600/-. b. The assessee by furnishing copy of Form 16A issued by M/s.Indu Projects Ltd in respect of M/s.SVRC and M/s.VIP, had admitted that total gross receipts of the above firms stood at Rs. 19,24,94,882/- and Rs. 5,52,88,605/-respectively. However, the assesse....
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.... Crores had been made. 13. In view of the above foregoing, the reply of the assessee is not acceptable. The Act of assessee by furnishing copy of work orders of the partnership firms is clearly an afterthought with a motive to avoid payment of taxes which are lawfully due to the Government. Just because the transactions are made through banking channels, it could not be treated as genuine one. The Hon'ble Apex Court in the case of CIT vs P.Mohanakala 291 ITR 278 (2007) supports the case of revenue, wherein it is held that the transactions though apparent were held to be not real one. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence. Merely because the assessee has furnished bank statements does not mean that the assessee has discharged his burden of proving the money obtained from Shri.S.V.Ranga Reddy, M/s.SVR Construction and M/s.Vinayak Infra and that too without providing source from where the money was given by them towards purchase of property made by her during the instant assessment year. Creditworthiness of Donors is not proved by the assessee. Thus totality of facts c....
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....rtner amounting to Rs. 2 Crs. Therefore, opined that the assessee has satisfactorily discharged onus cast upon by filing various details to prove identity of the creditors, genuineness of the transactions, and their creditworthiness, and in that process, she had also proved source for purchase of property. Therefore, opined that the AO erred in making additions towards investment in property as unexplained investment u/s. 69 of the Act. The relevant findings of the Ld.CIT(A) are as under: 6. Now, I have carefully gone through the undisputed/uncontroverted facts marshalled and presented by the AO/AR as reflected, in essence, in the excerpts from the said assessment order and the submissions of the AR quoted supra bolstered by relevant and supporting evidence relied on by the rival parties but on a relative and comparative consideration of the same, I am however persuaded by the more substantive and meritorious reasoning substantiation adduced by the AR on the issue at hand. 7. During the appellant proceedings it was verified that the appellant had received cheque 451311/27.10.2010 for Rs. 50.00 lakhs, another cheque No. 466157/21.12.2010 for Rs. 50.00 lakhs and ano....
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.... Andhra Bank, Ramachandrapuram Branch for Rs. 900 lakhs each on the strength of the work orders and also on the security of land belonging to the assessee's mother and of her husband and both the firms had drawn cash from its OD account with Andhra Bank and the funds so brought in to the books of M/s. VIP were utilised by the assessee to pay towards part of the purchase consideration of the said property and in support of the above claim, the assessee furnished copies of the work order dated 26.09.2010 issued to M/s. VIP and 25.12.2010 issued to M/s. SVRC by M/s. Indu Projects Ltd. Copies of the loan sanction letters dated 22.03.2010, 28.05.2011, 05.06.2012 issued by Andhra Bank and copy of Form 16A issued by M/s. Indu Projects Ltd. to M/s. VIP and M/s. SVRC and copies of letter of balance confirmation dated issued by M/s. Indu Projects Ltd. and copies of Registration Certificates were also furnished during the appellate proceedings. 8. During the appeal proceedings appellant had been asked to provide details of the income tax returns filed by the following partnership firms in which the appellant is a partner: - M/s. SVR Construction company; - M/s. ....
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....to apply/invoke the same. No doubt, the particular facts are only in the intimate knowledge of the assessee, who for reasons best known to him, and perhaps for apparent reasons chooses not to divulge the same. However, that by itself would neither satisfy the mandate of the section nor entitle the AO to presume or consider the required conditions as having been satisfied or proved. In other words, the same, though not disproved, were, yet, not proved, i.e., remained unproved, so that the deeming provisions could not be invoked. It was incumbent on the AO, under the circumstances to apply the deeming provisions to bring on record material evidence which could be said to lead to the satisfaction of the AO as well, making requisite investigation or adopt such other means permissible in law at his command. The AO, thus, having not discharged the onus for proving the satisfaction of the precedent conditions for application of the deeming sections, the AO's conclusions in the case of the appellant, under consideration, in my considered view, could not merit judicial approval [Sai Construction v. ITO (2010) 127 TTJ (Ctk.) (UO) 15]. 10.1. The Hon'ble Supreme Court in CIT v....
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....nt and opposed to the facts obtaining from the record and the fate of the appellant could not be decided by the AO on mere surmises or probabilities which appears strongly in the instant case (Northern Bengal Jute Mills Trading Co. Ltd. v. CIT (1968) 70 ITR 407). 11. I am also in agreement with the AR's submission that in the context of the provisions of Section 69C one has to keep in mind the legal maxim -"lex non cojitadimpossibila" which means, that the law does not compel a person to do that which he cannot possibly perform. The burden of proof can seldom be discharged to the hilt by the assessee and if the AO harbours doubts of the legitimacy of the investment claimed she is empowered, nay, duty bound, to carry out thorough investigations as she could very well have done in the instant case but if the AO fails to unearth any wrong or illegal dealings as she clearly appears to have failed to do he cannot obdurately adhere to his suspicions and treat the supposedly unexplained investment as it is in the instant case, as the undisclosed income of the appellant. Rejection of the explanation of the assessee by ignoring to consider important pieces of evidence ....
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....m of Rs. 1.40 Crs. on various dates through proper banking channel to seller of the property. Further, the assessee had also filed necessary evidences to prove source for Mr.S.V.Ranga Reddy, to pay amount directly to seller, and as per which, Mr.S.V.Ranga Reddy, has received funds form M/s. Venkateswara Engineering Works (JV) and Mr.O.P.Kripalani.All evidences have been filed before the AO and the Ld.CIT(A), including confirmation letters received from the parties. The Ld.Counsel for the assessee further submitted that the assessee has received a sum of Rs. 2 Crs. drawing from M/s.SVR Construction Co., and M/s.Vinayak Infra Projects, where she was one of the partners. M/s.SVR Construction Co,. has availed Rs. 9 Crs. loans from Andhra Bank and out of loan, the partner has withdrawn a sum of Rs. 2 Crs. on various dates and given to seller of the property. Although, the firm has not filed ITR for the relevant assessment year, but, financial statements of the firm and their bank statements have been filed, which clearly shows that the firm has availed over draft facility of Rs. 9 Crs. and the same has been drawn on various dates. The cash withdrawn from partnership firm has been debite....
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.... condition is satisfied. In fact, the AO is not disputed the fact that the assessee has recorded investment made in purchase of property, in books. The only dispute with regard to his second condition i.e. explanation offered by the assessee for source for investment. The AO disputed explanation offered by the assessee with regard to source for purchase of property on the ground that although, the assessee claims to have been received a sum of Rs. 1.40 Crs. loan from her husband,Mr.S.V.Ranga Reddy, but could not explain loan with necessary evidences. The AO had also rejected explanation offered by the assessee with regard to drawings form two partnership firms amounting to Rs. 2 Crs. on the ground that the partnership firms did not file the return of income for the relevant assessment year. 8. We have given our thoughtful consideration to the reasons given by the AO in light of various evidences filed by the assessee and we ourselves do not subscribe to the reasons given by the AO to reject explanation offered by the assessee in respect of loan received from Mr.S.V.Ranga Reddy amounting to Rs. 1.40 Crs. for the simple reason that, the assessee has filed confirmation letters from....
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..... We do not agree with the reasons given by the AO to reject explanation furnished by the assessee in respect of source for cash payments of Rs. 2 crores for purchase of property, because, it is an admitted fact that from ledger copy of the assessee's account, in the books of accounts of M/s.SVR Construction Co., the assessee drawn a sum of Rs. 75 lakhs from M/s.SVR Construction Co., on 04.02.2013 and source for said withdrawal is cash withdrawal from Andhra Bank Ramachandra Puram Branch of M/s.SVR Construction Co. The assessee had also filed necessary evidences to prove that M/s.SVR Construction Co., has availed Rs. 9 Crs. loan from 'Working Capital Loan' from Andhra Bank on the basis of works contract awarded by M/s.InduProjects Ltd., and out of 'Working Capital Loan', the firm has withdrawn a sum of Rs. 1.90 Crs. cash from M/s.SVR Construction Co. All these evidences are part of Paper Book filed by the assessee. In fact, the AO is not disputing the fact that M/s.SVR Construction Co., has availed 'Working Capital Loan' from Andhra Bank and out of said loan, the firm has drawn cash from the bank account and treated it as drawing of the partner. However, rejected the claim of the a....