TaxTMI 
TaxTMI 
2024 (7) TMI 578
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....ead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount disputed. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 203/JP/2024 is taken as a lead case. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No. 203/JP/2024 on the following grounds; "1 The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 1,77,67,000/- u/s 69 of the Act on account of alleged unexplained investment in purchase of plot by not accepting the explanation of assessee that source of such investment is out of undisclosed income offered for tax by its trustees Sh. Joginder Sunda and Sh. Piyush Sunda accepted by Hon'ble Interim Board of Settlement vide order dt. 29.05.2023 by making various incorrect, irrelevant and unwarranted observations. 2 The Ld. CIT(A) has erred on facts and in law in confirming that taxing of alleged unexplained investment u/s 69 @ 60% instead of taxing t....
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....tion u/s 132(1) of the I.T. Act, 1961 was carried out at premises of Shri Jogendra Singh, Shri Plyush Sunda & Smt. Urmila, situated at Opp. Prince School, Palwas Road, Sikar, wherein a registered sale deeds / documents / loose papers was found and seized as page no. 1 to 7, exhibit-13, Annexure-AS. A sale deed dated 30.06.2016 executed between Smt. Mohini Devi w/o Shri Manglaram Raibari, Vill. Dula Ki Dhani at present Vill. Palwas, Tehsil- Dhod, Sikar (seller) and Vivekanand Shiksha Samiti through its president Shri Gopal Singh S/o Shri Jaisaram Sunda, Vill. Shyampura, Tehsil Dhod, Sikar (Purchaser) for sale of land admeasuring 2.40 hectares situated at Khasra No. 1061 rakba 0.35 hectare and Khasra No. 1065 rkaba 2.05 hectare at Village Kanwarpura, Tehsil- Dhod, Sikar. The sale consideration in this registered sale deed has been reported at Rs. 15,00,000/-. But as per the evidences gather during the course of search at the office premises of Prince Public School Society and Princess Academy Society image of mobile data of Shri Jogendra Singh were taken and seized. The image data contains, a page containing land data wherein at the top of the page area of land is mentioned as 2.40 h....
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....acts question arises why a Individual will invest his unaccounted money in a property of society when he cannot gain or earn from the same for his own benefit and property become a public property. (iv) Shri Jogendra Singh Sunda and Shri Piyush Sunda have filed an application before the Hon'ble Settlement Commission, New Delhi wherein he was compelled to disclosed his unaccounted income earned from school fee of his prop. concern M/s Prince Defence Academy and M/s Prince Career Pinoneer. As these persons were having excess fund on account of undisclosed receipts so they offered the same as utilization of undisclosed income as investment in aforesaid property which is only a adjustment to avoid addition in hands of society. 3.5 Based on this observation the ld. AO further noted that why an Individual will invest his unaccounted money in a property of society when he cannot gain or earn from the same for his own benefit and property become a public property. Thus, with this observation the ld. AO held that the amount shown in sale deed is unexplained investment of the society itself and claiming the same as undisclosed income of Shri Jogendra Singh Sunda and Shri Piyu....
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....16-17 offered for tax before the Hon'ble Settlement Commission, New Delhi by holding that the property purchased is an asset of the society and payment made over and above the amount shown in sale deed is an unexplained investment of the society itself and claiming the same as undisclosed income of Shri Jogendra Singh Sunda is nothing but an eye wash. Accordingly he made addition of Rs. 1,77,67,000/- u/s 69 of the Income Tax Act, 1961 The Ld. AR of the appellant explained that Jogendra Singh Sunda and Piyush Singh Sunda are trustees of the society. The assessee society has no source of income except nominal membership fees received in the year under consideration. In search also no evidence was found that assessee society has any source of income. Further the appellant society had also not started its activities except receipt of membership fees. As against this, Shri Jogendra Singh Sunda, at Para 14(h) of his Settlement Petition, have submitted that differential consideration of Rs. 1,77,67,000/- (1,92,17000 - 14,50000 ) has been paid by him and his brother Shri Piyush Sunda out of their additional income of FY 16-17 (PB 46). Further at Para 13 of the Settlement Petit....
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....ppellant was not an applicant in those proceedings the question of getting order on the issue of addition which has been done in the hands of the appellant does not arise. The Id. AR argued that source of unaccounted cash payment w.r.t. the immovable property purchased by the society is now explained as the same is out of taxed income as the same is sourced from and is the application of the undisclosed cash income of Sh. Joginder Singh and Sh. Piyush Sunda which now stands taxed as per the order of Hon'ble IBS The implication of the same is that payment of unaccounted cash for the land purchased by the appellant is made by Sh. Joginder Singh and Sh. Piyush Sunda on behalf of the appellant society. This order of the honorable Interim Board of Settlement was passed after the date of passing of the assessment order and as such the matter was not settled till then. Submission of the applicants as inter-alia noted by the Hon'ble IBS in the order that "If the office bearers of the society have paid the amount out of their own sources and not claimed the same from the society, it cannot be construed to be undisclosed investment of the society and if it is claime....
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....d M/s Prince Career Pinoneer. As these persons were having excess fund on account of undisclosed receipts so they offered the same as utilization of undisclosed income as investment in aforesaid property which is only a adjustment to avoid addition in hands of society". The appellant has not filed any direct submission on this finding of the assessment order. No documentary or corroborative evidences have been filed to show the money flow from the two individuals and the same cannot be presumed. The onus is on the appellant to explain the source along with supporting's. The Id. AO has relied upon following circumstantial factors and evidences in support of the conclusion of the assessment which have not been rebutted/responded by the appellant:- "(ii) The society is not a prop, concern of any individual but an association of a person which exist and works to achieve certain objectives of public utility and does not have any profit earning motive. (iii) In view of the above facts question arises why a Individual will moest his unaccounted money in a property of society when he cannot gain or earn from the same for his own benefit and property became a public proper....
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....e society appellant but merely because the two individuals have stated this fact in their applications and there is no additional tax liability to such individuals on making of such statement and as such the parties are also related parties amongst themselves and no documents or corroborative evidence has been filed regarding the actual cash flow regarding the property from the two individuals to the seller. There cannot be reverse onus on the Id. AO as it is settled law that where the assessee has failed to prove satisfactorily the source and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assessee, it is not necessary for the department to locate its exact source CIT v. M.Ganapathi Mudaliar [1964] 53 ITR 623 (SC) / A Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC) and similar legal principle is applicable to the present facts of the case pertaining to source of unexplained investment. Since the income owned up by the two individuals in the settlement proceedings are on account of receipt of fees by them and not on account of impugned cash payment in land and rather the impugned cash payment for the land is not lead....
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.... Taxation Laws (second amendment) Act, 2016 will apply w.e.f 1.04.2017 on enhanced rate of tax @ 60%, instead of @ 30%. The enhanced rates applies from the commencement of the assessment year relevant to previous financial year. In this case, this applies to Financial Year 2016-17 relevant to Assessment Year 2017-18. Accordingly, this ground of appeal is dismissed." 5. As the assessee did not find any favour, from the appeal so filed before the ld. CIT(A), assessee has preferred this appeal before this tribunal. To support the grounds of appeal so raised by the assessee the ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below; Facts:- 1. The assessee society was constituted on 25.03.2013 with the main object of imparting education (PB 1-18). It was in the process of acquiring land to carry out educational activity. Except for membership fees of Rs. 1,80,000/- there is no other receipt during the year under consideration (PB 21-22) and therefore since the income was below the maximum amount chargeable to tax, the return was not filed. 2. A search u/s 132 was carried out on Prince Group, Sikar on 10.0....
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....- was made u/s 69 of the Income Tax Act, 1961. 6. Before the Ld. CIT(A) assessee filed the relevant pages of order dt. 29.05.2023 passed by Interim Board of Settlement (IBS) (PB 66-74). The Interim Board of Settlement after considering the utilization of undisclosed income by Jogendra Singh Sunda and Piyush Sunda in the land purchased by the assessee to the extent of Rs. 1,77,67,000/-, settled the income of Jogendra Singh Sunda and Piyush Sunda. 7. The Ld. CIT(A) at Para 4.2, Pg 8-11 of the order observed that order of Hon'ble Interim Board of Settlement was passed after the date of passing of the assessment order and in that order Sh. Joginder Singh Sunda and Piyush Sunda have claimed that if the office bearers of society have paid the amount out of their own sources and not claimed the same from society, it cannot be construed to be undisclosed investment of the society and if it is claimed by the office bearers, it will be only liability of the society to pay them and therefore AO is directed to examine the applicability of section 271D/271E of the Act. Further in none of the submissions the assessee has made any categorical statement that payment of unaccounte....
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....'ble IBS have settled the undisclosed income of Joginder Singh Sunda at Rs. 14,19,50,801/- and of Piyush Sunda at Rs. 3,63,98,529/-. The Hon'ble IBS at Para 9.6.1 and Para 9.6.2 (PB 68) after considering the objection of Ld. PCIT and the contention of Joginder Singh Sunda and Piyush Sunda, at Para 55 (PB 73) has allowed the capitalization of income offered by them in their SOF. Thus when assessee has explained the source of 'on money' in purchase of land as out of the undisclosed income offered for tax by Joginder Singh Sunda and Piyush Sunda and the same is allowed for capitalization by the Hon'ble IBS, addition confirmed by Ld. CIT(A) u/s 69 of the Act is unlawful. 2. The various observations made by Ld. CIT(A) in its order are incorrect. The same is explained hereunder:- (i) The Ld. CIT(A) at Pg 8 of the order has directed the AO to pass the information to the jurisdictional officers to examine the applicability of section 271D/271E of the Act. This means that the Ld. CIT(A) has accepted that amount is not paid by the society out of income but by arranging funds from Joginder Singh Sunda and Piyush Sunda. Therefore, addition confirmed is prima facie incorrect. ....
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....iced that learned CIT(A) observed that despite having sufficient cash in hand, the assessee withdraw the amount. It is correct that the assessee has withdrawn higher amounts than the immediate preceding years but that cannot be sole reason for making addition purely on the basis of suspicion. Further, I failed to understand the reasoning of the AO that the amount was withdrawn to justify the cash deposits during demonetization period i.e., between 9th Nov., 2016 to 30th Dec., 2016. It is also seen that the cash was withdrawn much prior to such event. So far observation regarding sharp increase in payable expenses is concerned, there is no finding by the AO that such expenses are bogus. Therefore, in my considered view, the addition has been made purely on the basis of suspicion. Such action of authorities below cannot be affirmed. I, therefore, direct the AO to delete the impugned addition. Thus, ground raised by the assessee in this appeal is allowed." Krishna Agarwal Vs. ITO (2021) 63 CCH 0048 (Jodh.) (Trib) Para 14 of the decision is reproduced as under:- "14. In this regard, it is noted that the assessee has explained that out of earlier year's ca....
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.... account then the source of funds is prima facie demonstrated or explained by the Assessee. The Karnataka High Court in the case of S.R. Ventakaratnam Vs. CIT (1981) 127 ITR 0807 has held that once the Assessee discloses the source as having come from the withdrawals made on a given date from a given bank, it was not open to the revenue to examine as to what the Assessee did with that money and cannot chose to disbelieve the plea of the Assessee merely on the surmise that it would not be probable for the Assessee to keep the money unutilized. The ratio laid down in such judgment will apply to the facts of the present case. If the revenue wants to disbelieve the plea of the Assessee then it must show that the previous withdrawal of cash would not have been available with the Assessee on the date of deposit of cash in the bank account. The AO and CIT(A) have proceeded purely on assumption and surmises that cash would not be lying idle with the Assessee for such a long time. The Assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. Therefore, addition is deleted. Ramilaben B. Patel Vs. ITO (2019) 71 ITR (Trib) 004....
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....out prejudice, argument, i.e., qua Non-retrospectivity, we find considerable force therein. Section 1(2) of the Amending Act provides that save as otherwise provided therein, it shall come into force "at once". The same only conveys the intent for, except where a later date is specified, the legislation to take immediate effect, i.e., as soon the assent of the Hon'ble President of India is received, by signing the same. The words "at once" convey an urgency, so that the same represents the earliest point of time at which the same is to take effect, i.e., 15/12/2016 itself, and which also explains the same being enacted during the course of the fiscal year, tax rates for which stand already clarified at the beginning of the year per the relevant Finance Act (FA, 2016). The said words "at once" would loose significance if the provisions of the Act are to, as stated by the ld. CIT(A), be read as effective 01/04/2017, implying AY 2018-19. The same, for substantive amendments, as in the instant case, represents the first day of the assessment year, i.e., AY 2017-18, which explains the assessee's grievance of it being thus effective for fy 2016-17 or, w.e.f. 01/4/2016. Enacting it mi....
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....icable u/s 115BBE would be 30% and not 60%." 6. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: 7. The ld. AR of the assessee submitted that the assessee carry out educational activities. For the year under consideration except for membership receipt of Rs. 1,80,000/- no other income or receipt accrues and whatever receipt received being below the maximum amount not chargeable to tax, the assessee not filed any return of income. A search and seizure operation were carried out on Prince Group on 10.03.2018 of which assessee is one of the group entities. In the search operation at premises of Shri Joginder Sunda, Shri Piyush Sunda and Smt. Urmila, a registered sale deed / loose paper was found at Page 1 to 7 of Annexure AS, Exhibit 18 (APB 23-29). According to the sale deed land measuring 2.40 hectare situated at Village Kanwarpura, Dhod, Sikar was purchased by M/s Vivekanand Shiksha Samiti. The sale deed records the total sales consideration of Rs. 15,00,000/-, Rs. 50,000/- paid in cash and Rs. 14,50,000/- paid by cheque. Based on the image found by the search team from the mobile data of Shri J....
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....(IBS) (APB 66- 74), in that order the utilization of undisclosed income by Shri Jogendra Singh Sunda and Shri Piyush Sunda in the land purchased by the assessee to the extent of Rs. 1,77,67,000/-, were settled and accepted. Thus, there is no reason to add same amount second time. In the order of ld. CIT(A) he contended that the order of Hon'ble Interim Board of Settlement was passed after the date of passing of the assessment order. Not only that the office bearers of society have paid the amount out of their own sources and not claimed the same from society, but it also cannot be construed to be an undisclosed investment of society. 7.3 The ld. CIT(A) has not appreciated the fact that the assessee purchased the land to start the educational activities the land was purchased and consideration so paid by the trustees. The ld. CIT(A) has not appreciated the fact that without starting of activity what is the source of the earning income by the assessee trust and it is obvious that the same has been paid by the trustees. In support of the contention the ld. CIT(A) has not appreciated the order of the Interim Board of Settlement (IBS) and affidavit placed on record. When the capitali....
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....a registered sale deed / loose paper was found at page 1 to 7 of Annexure AS, Exhibit 18 found. From the said sale deed it is noted that the assessee has purchased land measuring 2.40 hectare situated at Village Kanwarpura, Dhod, Sikar for total sales consideration of Rs. 15,00,000/-. The said consideration was paid Rs. 50,000/- in cash and Rs. 14,50,000/- paid by account payee cheque. 10. During the search from the mobile data of Shri Jogindar Singh Sunda an image was extract and the same is reproduced at Page 3 of the assessment order. From that image it is noted the whole transaction of the land purchased by the assessee was recorded where in the details of payment made in cash and cheque recorded. The ld. AO comparing the sale deed with that of the image found noted that (i) sale deed is dated 30.06.2016 which is also the date of sale recorded in the image (ii) the area of land mentioned on the image is same as mentioned in the sale deed and (iii) as per the image the total consideration is Rs. 1,92,17,000/- out of which amount paid by cheque is Rs. 14,50,000/- which is same as mentioned in the sale deed and rest amount was paid in cash. Thus, it is concluded by the ld. AO t....
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....t is claimed by the office bearers, it will be only liability of the society to pay them. He further directed the ld. AO to examine the applicability of section 271D/271E of the Act. The ld. CIT(A) also noted that the two individuals have no right to such asset. No documentary or corroborative evidence has been filed to show the money flow from the two individuals. The statements of two individuals have not been produced. There is no evidence on record that cash from earlier years as per the cash flow statement was accumulated and not spent. There cannot be a reverse onus on the AO as it is a settled law that where assessee failed to prove satisfactorily the onus and the nature of credit entries in his books, it is the income of assessee, and it is not necessary for the department to locate its exact source. Under these circumstances the onus is even greater on the assessee to show what has been claimed with stronger evidence. Even in the order of Hon'ble IBS, there is no direction or finding that addition in the hands of assessee is liable to be deleted or the source stands explained. No document is filed to show how the effect of order of Hon'ble IBS has been given between the tw....
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....da at Rs. 3,63,98,529/-. The Hon'ble IBS at Para 9.6.1 and Para 9.6.2 recorded his finding after considering the objections of the revenue in Rule 9 report. The relevant finding is reproduced here in below, wherein the IBS has considered the source of investment for purchase of the land under dispute: "Land purchased by Vivekanand Shikshan Samition: 9.6.1 The PCIT in his Rule 9 report mentioned that, as per the applicant, Vivekanand Shikshan Samition purchased a land at Sikar on 02.07.2016 for Rs. 1,82,17,000/- but the sale deed was executed for Rs. 14,50,000/- and the differential consideration is Rs. 1,77,67,000/- and this was paid by the applicant and his brother Sh. Piyush Sunda. This was not disclosed in their returns of income. Out of Rs. 1,77,67,000/ the applicant has paid Rs. 77,67,000/- and the balance amount of Rs. 1,00,00,000/- was paid by his brother. However, both have not offered any additional income on this account. Further, the PCIT submitted the following for the consideration of IBS. i) The land was purchased by the society and the asset is in the name of the society Hence, the investment made thereon has to be considered in the hands o....
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....ding of IBS allowing the benefit of on money paid by the trustee for the land purchase of land in the name of the assessee trust. 15. The bench also noted that ld. CIT(A) at Pg 8 of the order has directed the AO to pass the information to the jurisdictional officers to examine the applicability of section 271D/271E of the Act, this itself suggest that the ld. CIT(A) consider that the money is not paid by the society out of income but sourced from Shri Joginder Singh Sunda and Shri Piyush Sunda. The observation of ld. CIT(A) that in none of the submissions the assessee has made any categorical statement that payment of unaccounted cash for the land was made by the two individuals on its behalf is in correct because the assessee submitted all the details related to that available with the assessee. The ld. CIT(A) has not appreciated the fact that two brother though has no legal right on the land purchased by the assessee but it is incorrect on part of Ld. CIT(A) to observe that no documentary or corroborative evidence has been filed to show that the money flowed from the two individuals when the working of the on money is found from the mobile of Shri Joginder Singh Sunda. The sou....