TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 730
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....ction 56(2)(vii) and or 28(iv) of the Act. (3) That on the facts and in the circumstances of the case of the assessee the Ld. CIT(A), Delhi, was not justified in confirming disallowance of addition of Rs. 50,25,000/- towards cash deposited in bank under section 69 treating the same as unexplained deposit. (4) That on the facts and in the circumstances of the case of the assessee the ld. CIT(A), Delhi, was not justified in confirming disallowance of addition of Rs. 15,50,000/- towards cash received by assessee treating the same on unexplained cash." 2. The background facts leading to present appeal are such that the assessee-individual filed her return for AY 2012-13 on 31.07.2012 declaring a total income of Rs. 8,06,570/- which was duly assessed. Subsequently, the AO re-opened assessment through notice dated 29.09.2019 u/s 148. In response to this notice, the assessee re-filed return repeating the same income of Rs. 8,06,570/-. Then, the AO issued notices u/s 143(2)/142(1). Ultimately, the AO completed assessment u/s 147 r.w.s. 143(3) vide order dated 30.11.2019 after making certain additions. Aggrieved, the assessee carried matter in first-appeal wherein the CIT(A) granted pa....
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....the assessee, cheques amounting to Rs. 64,45,029/- were issued. None of the cheques issued by the assessee was encashed. Therefore, the assessee did not pay any consideration for purchase of land. As per legal parlance, the term consideration in contract law refers to something of value given to someone in return for goods, services or some other promise. In the case of the assessee, the assessee has not paid any consideration for purchase of land, against which the assessee has received joint holding in land along with Shri Anchit Goyal, the market value of which stood at Rs. 1,81,50,000/-. Therefore, the assessee has received immovable property amounting to Rs. 90,75,000/- without consideration. The assessee has contended that Rs. 3,75,000/- has been paid by her father in law. The assessee claimed that in such circumstances, the purchase cannot be said without consideration. The contention of the assessee has been considered. It is true that some consideration has been paid by Shri Prahlad Goyal, however, as per the provisions of the Act, the immovable property has been received without consideration by Smt. Jyoti Goyal i.e. no consideration has been paid by Smt. Jyoti Goya....
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....for receiving the land, which is shown in stock in trade, then there is a benefit accrued to appellant without payment and therefore, the AO considered the receipt of land without payment as a benefit u/s 28(iv) and brought to tax as income from business. 6.3.3 What the appellant has provided in the appeal proceedings, of writ filed and correspondence with the Bhopal Development Authority does not take away from the fact that the appellant got the land and as submitted by appellant, it is without payment. Outcome of litigation does not determine the ownership. Thus, the receipt of benefit is clear. As the said land is supposed to be part of the appellant's business, the AO treated the same as benefit accrued liable to be taxed as income from business as per the section 28(iv). This action of the AO, is upheld." 7. Before us, Ld. AR for assessee made a very forceful submission to contest that neither section 56(2)(vii)(b) nor section 28(iv) was applicable to the facts of case. Ld. AR submitted that the AO has wrongly observed that it was a case of purchase without consideration. To buttress his point, Ld. AR submitted that the land was purchased as per registered-deed dated 17.06....
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....operty was not clean and free from encumbrance though it was so stated by sellers in registered-deed. Ld. AR made an assertion standing at the Bar that the BDA has not developed the Scheme even till now. Thus, in these circumstances, the assessee and Shri Anchit Goyal made payment through post-dated cheques and those cheques are also not cleared till now. Ld. AR submitted that ultimately depending upon development of scheme by BDA or outcome of the Writ Petition by Hon'ble High Court, the assessee shall be either making payment as agreed to the sellers or otherwise the deal itself would be cancelled. Therefore, it is not a case of purchase 'without consideration' in terms of section 56(2)(vii)(b) nor there is any benefit to assessee in terms of section 28(iv). Ld. AR submitted that the revenue authorities have branded the transaction done by assessee as 'without consideration' merely because the cheques given by assessee were post-dated and not cleared but the authorities have ignored the underlying facts as narrated. Ld. AR submitted that how could the sellers give a property having value as high as Rs. 1,85,00,000/- to the assessee and Shri Anchit Goyal without consideration, is ....
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....e's submission that part of the cheques given to the sellers have not been cleared for payment because of the litigation or uncertainty attached with the property. Hence, the assessee is very much correct in claiming that it cannot be said to be a case of purchase 'without consideration'. The assessee's claim gets further strength from the assertion by Ld. AR that in the event the decision of High Court or BDA does not materialize in favour of assessee, there would be cancellation of deal only and still if the assessee keeps the deal, the assessee would necessarily release the amounts of postdated cheques to the sellers. Therefore, in the situation, the purchase is made for consideration and the unpaid amount is only a 'liability' of assessee. Hence, without any lengthy deliberation, it can be easily concluded that the purchase done by assessee cannot be said to be 'without consideration'. Accordingly, it is neither a case of section 56(2)(vii)(b) nor of section 28(iv) as perceived by the lower-authorities. Hence, the addition made by AO and confirmed by CIT(A) is not justified. We, therefore, delete the addition made by AO. This ground is allowed. Ground No. 3: 11. In this groun....
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....ther, under what section of the IT Act, is withdrawal of cash from bank account taxable, is also not mentioned by the AO." However, the CIT(A) upheld addition of Rs. 50,25,000/- qua cash-deposits by passing following order: "7.3.1 The AO's main argument is that the cash withdrawn from one bank account cannot be considered as the source of cash deposit into another account in view of the lag between the dates, i.e. cash withdrawn is not immediately deposited into another account. On the other hand, the appellant only relied on its cash book, stating that books have not been rejected. 7.3.2 In this case, the appellant has relied on cash book, but has not produced the same to the appellate authority. No explanation of the cash deposits is also given. The AO has rejected the cash book as the basis. There is no merit in appellant's argument that if a cash book is there, the same is to be accepted. As the Apex Court observed in case of Devas Multimedia P. Ltd. vs. Antrix Corpn. Ltd. & Anr. In civil appeal No. 5906 of 2021 SCC online Del 1608 2023 that the chartered accountants qualify their statements with riders such as 'according to the information and explanation gives to us in t....
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....f anything, the onus of proving that he was not the owner was on the person who affirmed that he was not the owner, was incorrect and inapplicable to taxation proceedings. This contention was rejected. The Bombay High Court held that what was meant by saying that the Evidence Act did not apply to the proceedings under the Act was that the rigour of the rules of evidence contained in the Evidence Act, was not applicable but that did not mean that the taxing authorities were desirous of invoking the principles of the Act in proceedings before them, they were prevented from doing so. Secondly, all that section 110 does is that it embodies a salutary principle of common law jurisprudence which could be attracted to a get of circumstances that satisfy its condition." 7.3.5 Thus, the court affirmed that as per the evidence act, a person in possession of anything has the onus of proving he is not the owner and that this is a common law jurisprudence which applies to taxing statute too. In this case while the assessee was acquitted under other acts finally by the courts concerned, as far as income of assessee taxable under IT Act, the court by above principle upheld the view of the reven....
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....not rejected assessee's cash-book nor found any discrepancy therein. (v) He submitted that the AO was prompted to make addition by making a wrong comparison of cash-withdrawals/deposits with turnover/ gross-profit of assessee whereas the fact is that cash-withdrawn from one bank was re-deposited in another bank or same bank. When it so, how the figures of cash-withdrawals/deposits will have any commensuration with turnover/gross-profit? (vi) He submitted that the AO has gone to the height that he made additions for cash-withdrawals as well as cash-deposits. During first appeal, the CIT(A) has though deleted addition qua cash-withdrawals and while doing so, in Para No. 5.3.2 of his order re-produced above, categorically noted "The withdrawals are from the deposits into the bank account and therefore, are not unexplained". But despite this, the CIT(A) has not deleted the addition of cash-deposits which is very wrong. He submitted that when the withdrawals are held to be genuine, how can the cash-deposits be unexplained? 15. Per contra, Ld. DR for revenue read over the orders of lower-authorities, emphasized the observations made by authorities therein and prayed to uphold the ad....
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....n the assessee claims that the moneys withdrawn were re-deposited. It is nobody's case that the business turnover was deposited. We also agree with Ld. AR that there are numerous decisions wherein the cash-withdrawals from bank have been accepted as source for re-deposit in bank and additions have been deleted. Taking into account all these aspects, we are of the considered view that the addition made by AO and upheld by CIT(A) is not correct. Consequently, we delete the same. This ground is also allowed. Ground No. 4: 17. In this ground, the assessee claims that the CIT(A) was not justified in confirming the addition of Rs. 15,50,000/- made by AO towards cash-receipts by assessee treating the same as unexplained. 18. During assessment-proceeding, the AO found that the assessee has shown cash-receipts of (i) Rs. 9,00,000 for land sold in Barkhedi + Rs. 4,00,000 for land sold in Pura Chindwara, (ii) Rs. 70,000 on account of agreement of land for Godarmaru and (iii) Rs. 4,80,000 as advance received for land at Badwai. Ld. AR pointed that the total of these receipts come to Rs. 18,50,000/- but the AO has wrongly taken at Rs. 15,50,000/-. The AO treated these receipts as unexplained....
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.... land. The sum of Rs. 36,54,000/- includes the impugned receipt of Rs. 4,00,000/- in cash on 18.10.2011 and remaining portion was received through cheques or remained outstanding. The assessee has incurred cost of land at Rs. 24,84,174/-, thus leaving a net profit of Rs. 11,69,826/-. Next Ld. AR carried us to Page 73-76 of Paper- Book where the agreement entered by assessee with the purchaser Shri Tarik duly witnessed by two witnesses is filed which contains the details of the payment of Rs. 4,00,000/- made by Shri Tarik to assessee. This receipt is also recorded by assessee in the cash-book filed at Page 66-68 of Paper- Book. By showing these documents, Ld. AR contended, that the assessee has received the sum of Rs. 9,00,000/- from Kavita Indra and Rs. 4,00,000/- from Shri Tarik for the lands at Barkhedi and Pura Chindwara respectively. Ld. AR submitted that the assessee has made this very submission before both of the lower authorities with the documents narrated. He submitted that the profit of Rs. 3,68,627/- from land at Barkhedi (+) Profit of Rs. 11,69,826/- from land at Pura Chindwara as offered by assessee in the return of income as 'business income' have been duly assessed ....
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....ale-proceeds, it amounts to double taxation of the transactions when the AO has assessed profits arising therefrom and at the same time added cash-receipts separately. This, in our considered view, is not justified. Being so, we delete the additions of Rs. 9,00,000 + 4,00,000 made by AO. (ii) Receipt of Rs. 70,000/- on account of agreement for Godamaru: Ld. AR drew our attention to Page 77 of Paper-Book where the assessee has filed a Ledger A/c of Shri Gorelal Newari according to which the assessee received a cash-advance of Rs. 70,000/- from Shri Gorelal Newari on 06.03.2012 against land but the same was refunded back on 10.03.2012 due to cancellation of deal. Ld. AR referred Page 85-87 where a letter dated 18.11.2019 filed by assessee to AO during assessment-proceeding is placed. In para 3(ii)(c), the assessee categorically informed to AO the same facts of advance-receipt and refund due to cancellation of deal. Further, the transactions of cash-receipt and refund are found recorded in assessee's cash-book filed at Page 66-68 of Paper-Book. The AO has, however, made addition of Rs. 70,000/- on account of cash-receipt alone without giving any finding in assessment-order on other ....