TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 875
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...., the Ld CIT(A)-1, Amritsar was correct in deleting the addition of Rs. 1,75,00,000/- made by the Assessing Officer on account of unexplained cash credit without appreciating the facts that the assessee has failed to prove creditworthiness of creditors namely Shri Amandeep Singh and Shri Sukhdeep Singh and also failed to prove genuineness of the transaction. 3. Whether on the facts and circumstances of the case, the Ld CIT(A)-1, Amritsar was justified in deleting the addition of Rs. 1,75,00,000/- without appreciating the facts that in the course of assessment proceedings the creditors could not produce necessary documentary evidences to prove their creditworthiness and sources of huge cash deposits in their bank account just before advancing loan to the assessee. 4. Whether on the facts and circumstances of the case, the Ld CIT(A)-1, Amritsar was correct in deleting the addition of Rs. 1,75,00,000/- by admitting the cash flow statements of the loan submitted before the Assessing Officer; by recording the statements of the loan creditors during appellate proceedings and by estimating the agricultural income of the creditors suo-motto, without affording opportunity to the Assessi....
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....the assessee has failed to prove the genuineness of the transaction, and creditworthiness of the payee. The assessee only submitted the bank statement of the person without any sources of the deposits in the bank. The amount has been paid out of cash of Rs. 75,00,000/- was deposited immediately in the cash credit (KCC Premium) account no. 617044008339 and transferred the same to his saving account from where cheques were issued to the assessee. The cash of Rs. 50,00,000/- and Rs. 25,00,000/- was deposited in the KCC account on 28/06/2013 and 02/07/2013 respectively. Therefore, the AO concluded that the assessee was misusing the said account of KCC premium (cash credit limit) for money- laundering by depositing unexplained cash into the account and further issuing cheques from that account to the assessee whom he does not know. Accordingly, the AO held that the entire amounts of cash of Rs. 75,00,000/- deposited in the account and converted into loan is totally unexplained. 4.2 In compliance to show cause notice of the AO, the AR of the assessee replied that assessee had to raise loan as he needed funds to make payment to purchase parties for supply of Bardana. The loans were taken....
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....d back to the total income. After considering the assessment order, the written submissions of the appellant, the said unsecured loans are examined and the grounds of appeal are adjudicated here under:- (i) Unsecured loans of Rs. 1,00,00,000/- from Sh Amandeep Singh:- In the assessment order the AO observed that the amount has been paid out of ash deposited in the cash credit (KCC Premium) account no. 617044010848 of Rs. 98,00,000/- and transferring the same into his saving account from where cheques were issued to the assessee. The cash deposited in the KCC account was Rs. 50,00,000/- and Rs. 50,00,000/- deposited on 27/06/2013 and 29/06/2013 respectively. From his saving bank account Sh. Amandeep Singh issued cheques to the assessee of Rs. 40,00,000/-, Rs 30,00,000/- and Rs. 30,00,000/- on 28/06/2013, 04/07/2013 and-05/07/2013 respectively. It is observed by AO that cash of Rs. 1,00,00,000/- has been deposited within two days @ Rs 50,00,000/- each. Sh Amandeep Singh had filed return of income for AY 2014-15 at an income of Rs 4,79,520/- mainly on account of commission income of Aharatiya and interest income. No agriculture income was declared in his return of income. Like....
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.... land. Sh. Amandeep Singh was the owner of 25 acre agriculture land and had taken 25 acre on lease from Sh. Harpal Singh. Sh. Amandeep Singh deposited Rs. 50,00,000/- in his KCC premium cash credit account on 27.06.2013 and immediately transferred an amount of Rs. 50,00,000/- on 28.06.2013 to his saving bank account in Kota Mahindra Bank. Likewise while Sh. Amandeep Singh deposited Rs. 50,00,000/- in his KCC premium cash credit account in Kotak Mahindra Bank on 29.06.2013 and transferred Rs. 25,00,000/- and Rs. 25,00,000/- on 01.07.2013 and 02.07.2013 respectively therefrom to his savings bank account in the same bank. Sh. Amandeep Singh then transferred amounts of Rs. 40,00,000/-, Rs. 30,00,000/- and Rs. 30,00,000/- on 28.06.2013, 04.07.2013 and 05.07.2013 respectively to Smt. Raj Rani Arora from his said savings bank account in Kotak Mahindra Bank. The gross receipts of the Sh. Amandeep Singh from sale of agriculture produce during F.Y. 2013-14 in view of the above facts of the case and the statement of Sh. Amandeep Singh are recomputed as under- (a). Net agriculture income from own land from main crops wheat & paddy has been estimated @ Rs. 50,000/- per acre on the basis o....
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....ed amount back in the same KCC premium cash credit account. In this regard statement of Sh. Amandeep Singh was recorded by the undersigned on 13.09.2019 and he was confronted on this statement. He was asked to explain the purpose of cash withdrawals of Rs. 126,40,000/- between 01.04.2013 to 17.06.2023 from the said KCC premium cash credit account and he replied that there was hardly any expenditure on cultivating the land during this period except for preparing the land for the next crops as well as sowing of the next crop. He stated that these withdrawals were basically with the intention to purchase land which was re-deposited in the KCC premium as no deal could materialize. Obviously, such huge withdrawals by no stretch of imagination was for agriculture operations in this period. The expenditure in this period from 01.04.2023 to 15.06.2013 on agriculture was at best between'Rs. 3500/- to Rs. 4000/- per acre on leveling of land, watering, sowing and some manuring. However Sh. Amandeep Singh' has failed to furnish any evidence in the form of bills/ vouchers of agriculture expenses since the matter is more than 6 years old. Be that it may, it has been held by Hon'ble H....
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....mandeep Singh after deducting Rs. 2,23,214/- on account of expenditure incurred for agriculture operation during this period as discussed above was only Rs. (1,26,40,000 - 57,00,000 - 2,23,214 )= Rs. 67,16,786/-. In the cash flow statement of Sh. Amandeep Singh for the F.Y. 2013-14 he has shown opening cash balance as on 01.04.2013 was of Rs. 31,01,679/-. The appellant has explained the generation of opening cashing hand as under- 1. 12-12-2012 Agriculture receipts Rs 164,864/- 2. 18.12.2012 Agriculture receipts Rs 226,902/- 3. 28-12-2012 Agriculture receipts Rs 263,318/- 4. KOTAK MAHINDRA BANK (CASH WITHDRAWAL) Rs 22,50,000/- 5. 2-01-2013 Agriculture receipts Rs 60,676/- 6. 16-1-2012 Agriculture receipts Rs 135.919/- Rs 31,01,679/- It was submitted by the appellant in written submission and discussion during the course of hearing that the sum of Rs 22,50,000/- was withdrawn from HDFC bank. That he had a KCC limit account with HDFC bank" earlier from where he had withdrawn this amount. The said loan amount of Rs 22,5^,000/- was taken over by Kotak bank by paying to HDFC bank amount of Rs 22,50,000/- on 30.1.2013. This is a....
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....e. Rs 11,25,000/-, was available with him as on 1.4.2013 as cash in hand out of cash withdrawals of Rs 2,50,000/- from his KCC account in HDFC bank during FY 2012-13. Further, since Sh. Amandeep singh is an agriculturist who was cultivating 25 acre of his- own land and 25 acre land taken on lease from Sh. Harpal Singh in FY 2012-13 and whose gross agriculture receipts in FY 2012-13 has been taken at Rs 35,71,428/- as in FY 2013-14 (above),, therefore the cash receipts of Rs 164,864/- , Rs 226,902/-, Rs 263,318/-, Rs 60676/- and Rs 135,919/- during December 2012 and January 2013 respectively as given in the details of opening cash balance as on 1.4.2013 is accepted. Therefore the opening cash balance in the hands of Sh. Amandeep Singh as on 1.4.2013 is upheld only to the extent of Rs (11,25,000 +164,864/- + 226,902/-+ 263,318/-+ 60676/- + 135,919/- ) = Rs 19,76,679/- only. Therefore, in view of the above discussion, it is held that the cash available with Sh. Amandeep Singh as on, 17.06.2013 i.e. immediately before depositing cash of Rs. 50,00,000/- and Rs. 50,00,000/- in his KCC premium cash credit account in Kotak Mahindra Bank on 26.06.2013 8s 29.06.2013 respectively was as....
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....uce during F.Y. 2013-14 in view of the above facts of the case are recomputed as under- (a). Net agriculture income ffom own land has been estimated @ Rs. 50,000/- per acre on the basis of statement of Sh. Sukhdeep Singh,' recorded by the AO in assessment proceedings and the decisions of Hon'ble ITAT, Amritsar in several cases. Therefore, net income from 23 acre of own land of Sh. Sukhdeep Singh comes to Rs. 11,50,000/-. The gross receipts work out to Rs. 16,42,857/-. 2. It was stated by Sh. Sukhdeep Singh in his statement on oath recorded by the AO that he earned net yearly income from lands taken on lease were nearly Rs 7000 to Rs 8000/- per acre during FY 2013-14. However he also stated that he was cultivating and managing the land and his brother Sh. Amandeep singh was dealing with the accounts. Therefore Sh. Amandeep Singh was in a better position to explain the actual income derived from the lands taken on lease by him and his brother jointly of 35 acre from Sh. Baljit Singh. As explained by Sh. Amandeep Singh in his statement recorded by the undersigned on 13.9.2019 that he looked after the financial matters and his brother Sh. Sukhdeep Singh was not aware at all of th....
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....ch is less than the gross receipts computed above at Rs 41,42,857/- and therefore the gross receipts from agriculture as shown in the cash flow statement of Sh sukhdeep singh for FY 2013-14 at Rs 31.92,872/- is accepted. (b) Further the source of cash deposits of Rs. 50,00,000/- and Rs. 25,00,000/- on 28.06.2013 and 2.7.2013 respectively were stated to be from cash withdrawn from KCC cash credit account of Sh. Sukhdeep Singh in Kotak Mahindra Bank. The copy of the KCC premium account of Sh Sukhdeep Singh in Kotak Mahindra Bank as above reveals the following cash withdrawals and cash deposits upto 02.07.2013. Date Transaction Withdrawal (Dr) Deposits(Cr) 6.5.2013 Cash deposit 37,00,000 7.5.2013 Cash deposit 6,00,000 10.5.2013 Cash withdrawal 37,00,000 17.6.2013 Cash withdrawal 30000/- It was stated by Sh. Amandeep Singh in his statement recorded by the AO in the assessment proceedings that he had withdrawn cash from his KCC premium -cash credit account during F.Y. 2013-14 for agriculture purposes and after utilizing the same, he had deposited the unused amount back in the same KCC premium cash cred....
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.... to 17.6.2013 shown in the cash flow statement is upheld. (c) Now coming to the cash available with Sh. Sukhdeep Singh out of cash withdrawals from the KCC premium cash credit account for re-deposit in the same account. Obviously, Sh. Sukhdeep Singh had not withdrawn the cash from his KCC premium cash credit account only for meeting the agriculture expenses of agriculture operations performed by him during the year under consideration. In his statement recorded by the undersigned in appeal proceedings Sh. Amandeep Singh had stated that these withdrawals were basically with the intention to purchase land and when the deal did not materialize, he re-deposited the amount of unused cash withdrawal in the KCC premium cash credit account. I agree with this explanation of Sh. Amandeep Singh for reasons given above that such huge cash withdrawals by no stretch of imagination was for agriculture operations in this period. In the period 01.04.2013 to 17.06.2013 the net cash available with Sh. Sukhdeep Singh after deducting Rs. 239,465*/- on account of expenditure incurred for agriculture operation during this period' „as discussed above was only Rs. (37,00,000 + 30000 - 239,465 )....
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....12.2012 16,50,000 43,25,000 6.12.2012 1,30,000/- 44,55,000 7.01.2013 20,000 44,75,000 Therefore Sh. Sukhdeep singh had at best availability of cash in hand of Rs 44,75,000/- as on 1.4.2013 out of cash withdrawals from his KCC cash credit account in Kotak Mahindra Bank according to the above cash flow statement by considering only the cash withdrawals and cAsh deposits therein. However, Sh. Sukhdeep singh had also met his agriculture expenses out of cash withdrawals from the said KCC account in FY 201*2-13. (on the basis of the statement of his brother Sh. Amandeep Singh recorded by th§ AO in assessment proceedings discussed above). Therefore considering the gross agriculture receipts of sale of agriculture produce by Sh. Sukhdeep Singh in FY 2012-13 to be the same as in FY 2013-14 at Rs 31,92,872/-, his agriculture expenses of FY 2012-13 are estimated at 30% of Rs 31,92,872/- or Rs 957,861/-for the whole year, which were met out of cash withdrawals from the said KCC account of Sh. Sukhdeep Singh in Kotak Mahindra bank. The agriculture expenses of 5 months from 8th August 2012 to 7th Januray 2013 in same proportion comes to Rs 399,108/-. ....
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....lability of only Rs 66,26,769/- as on 30.5.2013, out of which he had deposited cash of Rs 50,00,000/- as on 28.6.2013 in his KCC account in Kotak Mahindra bank. Therefore, it is held that Sh. Sukhdeep singh was creditworthy to deposit cash of Rs 50,00,000/- in his KCC account in Kotak Mahindra bank on 28.6.2013 and the addition of Rs 50,00,000/- is deleted. Sh. Sukhdeep singh had further deposited cash of Rs 25,00,000/- in his said KCC account in Kotak Mahindra bank on 2.7.2013 which was met to the extent of Rs 16,26,769/- out of cash in hand as per recast cash flow statement of FY 2013-14 / as above. Therefore it is held that Sh. Sukhdeep singh was also creditworthy to deposit cash of Rs 16,26,769/- in his KCC account in Kotak Mahindra bank on and the addition of Rs 16,26,769/- is also deleted. Further, it has been held as above that the net income of Sh. Sukhdeep Singh from the sale of animal fodder and vegetables grown between April 2013 to june 2013 after harvest of wheat was accepted to the tune of Rs 5,50,000/- (on the basis of the statement of Sh. Amandeep Singh recorded by the undersigned). Therefore Sh. Sukhdeep singh was also creditworthy to the extent of Rs 5,50,000/- ....
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....the addition by admitting the cash flow statements of the loan submitted before the Assessing Officer; by recording the statements of the loan creditors during appellate proceedings and by estimating the agricultural income of the creditors; that the Ld CIT(A)-1, Amritsar was not correct in estimating the agricultural income of the loan creditors on lease hold land whereas there was no evidence that the loan creditors had taken land on lease for the agricultural activities and that estimating the agricultural income as a source of cash deposits without considering the facts that there was no evidence of types of crops grown, quantity of agricultural produce and value of such agricultural produce and also the fact that the loan creditors have not shown any agricultural income in their return of income. The Ld. DR also contended that the Ld CIT(A)-1, Amritsar was not justified in deleting the disallowance of Rs. 11,82,945/- made by the Assessing Officer on account of claim of payment of interest on the unexplained cash credits. He relied on the assessment order. 7. Per contra, the Ld. Counsel for the appellant heavily relied on the impugned order. In support, he filed a written syno....
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....g a/c of Sh.Amandeep Singh. (xii) It was further submitted by the appellant that the assessee had paid interest @12% to the depositors and had also deducted tax at source thereon. (xiii) Rejecting all the above submissions the ld.AO made the addition of deposit of Rs. one crore and seventy five lacs received from Amandeep Singh and his brother Sh.Sukhdev Singh respectively on the following grounds as per para 3.1 of page 11 of the assessment orders: a) Assessee failed to prove the genuineness of the loan transactions. b) Credit worthiness of the loan creditors was not proved. c) Cash was deposited by the creditors in their KCC A/c immediately before the issue of cheques to the appellant which leads to the conclusion that the cash deposited in the bank accounts of the loan creditors was assessee's own money. d) Finally the ld.AO relied upon the judgement of Delhi High Court in the case of CIT V. Navodaya Castles Pvt Ltd Appeal No.320/2012 while making the addition. REBUTTAL: In rebuttal to the decision of the AO we submit as under:- 1 The assessee u/s 68 is required to prove following three facts in respect of unsecured loans:- i) Identity of depositors ii) Gen....
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.... lease basis. Their annual income from agriculture itself was more than 40 lacs per annum. Moreover, they had huge KCC agriculture limit of Rs. 98 lacs and Rs. 75 lacs respectively with Kotak Mahindra Bank. The assessee has proved all the three parameters laid down u/s 68 to prove the genuineness of the deposits u/s 68 of the Act. The AO has not brought even an iota of evidence to prove that the amount advanced to her by the two depositors was provided by her. In view of the above submissions it will be appreciated that the doubts of the AO as to the genuineness of the transactions of deposit are purely on surmises and conjectures conveniently ignoring the fact that amount deposited in KCC limit A/c was the same which was earlier withdrawn by them from this very bank account. The AO has not given even an iota of evidence to rebut the submissions made by the assessee. Nor the AO has brought any evidence on record to justify his contention that the deposits received from the two depositors were assessee's own money which he got rotated through the above depositors. The AO has disbelieved the contentions of the assessee simply on the basis of suspicion and conjectures and surm....
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....5 lacs was repaid during the immediately next year i.e. year ending 31.3.2015 and balance amount of Rs. 10 lacs was repaid during the year ending 31.3.2017 and the loan got squared up. Interest was also paid during all these years to him and tax was deducted at source. In the case of Amandeep Singh the assesee had paid interest on year to year basis after deduction of tax at source. Further, Rs. 31 lacs was repaid during the year ending 31.3.2017 and Rs. 3500000 was repaid during the current year out of principal amount. Assessee is not required to prove the source of source and origin of origin. Further, it is submitted that it is a settled law that the assessee is not required to explain the source of source in respect of deposits accepted by the assessee. However, inspite of the above proposition the assessee has duly explained even the source of the source. 8. Heard rival contentions, perused the material on record, impugned order, written submission and case law cited before us. Admittedly, it is fact on record that the appellant assessee had received unsecured loan of Rs. 1,00,00,000 from Sh. Amandeep Singh and Rs. 75,00,000 from Sukhdeep Singh by account payee's che....
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.... the appellant has also submitted the copies of TDS returns filed, showing the amount of tax deducted at source on interest paid to the loan creditors. This further proves the genuineness of the loan advanced by Sh. Amandeep Singh to the appellant in the year under consideration. 11. Thus, the identity of Sh. Amandeep Singh stands established as he attended proceedings before the AO and the appeal proceedings as well and he is regular assessee filing income tax return; the genuineness of transaction is established as the loan was given through banking channel and that credit worthiness to pay advance of Rs. 1 Crore to the appellant is established as discussed above. In our view, all the ingredients of section 68 of the act are satisfied with regard to loan of Rs 1,00,00,000/- received by the appellant from Sh. Amandeep Singh in the year under consideration and no addition of Rs. 1,00,00,000/- is called for u/s 68 of the act in respect of loan from Sh. Amandeep Singh. Therefore, we find no perversity to the facts on record in the impugned order and hence, no interference is required in the finding of the CIT(A) deleting the addition made u/s 68 of the act, in respect of loan from S....
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....vestor had deposited cash in his bank a/c for issuing cheques for investment in the share capital of appellant company and the investor did not have its own profit making apparatus and it simply rotated money through bank and the bank did not reflect their credit worthiness or genuineness of the transaction. The High Court has further observed that the appellant company did not pay any dividend or interest to the investors and the profit motive normal in the case of investment was entirely absent. The High Court further observed that any person who would invest or give loan would certainly seek return or income as consideration. In the present case, the creditworthiness and genuineness of transactions stand proved beyond any doubt. The source of deposit of cash by the depositors in their bank account stand proved beyond any reasonable doubt as the depositors had sufficient cash in hand which was withdrawn from the bank. Moreover, the depositors had been paid interest by the assessee @12% and tax was duly deducted therefrom and the principle amount with interest has been paid back in the succeeding year. So the criteria of return on investment laid by the Hon'ble High Court stand fu....