TaxTMI 
TaxTMI 
2024 (9) TMI 265
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....e even though it was not found/ seized/ produced/ disclosed during the search proceedings on 11.02.2016 but the unregistered sale agreement was submitted by the assessee during the assessment proceedings, and therefore, it was on afterthought? 2. Whether on facts and circumstances of the case and in law, the Id. CIT(A) was justified in deleting the addition of Rs. 32.80 Cr. made by AO on account of cash deposits made in bank account of the assessee on 30.03.2015 and claimed to out of sale of land on the basis of unregistered sale agreement dated 30.03.2015 submitted by the assessee during the assessment proceedings, and which was not seized/produced/ disclosed during the search proceedings on 11.02.2016 and therefore, it was on afterthought? 3. Whether on facts and circumstances of the case and in law, the Id. CIT(A) was justified in deleting the addition of Rs. 32.80 Cr. made by AO on account of cash deposits made in bank account of the assessee on 30.03.2015, as the assessee failed to prove the genuineness of transaction of sale of land with M/S Bhagwati Lacto Vegetarian Exports Ltd.? 4. Whether on facts and circumstances of the case and in law, the Ids....
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....the learned CIT appeal who has granted relief to the assessee while adjudicating ground no. 3 by observing as under: "5.3 Ground of Appeal No. 3: In this ground, the AR has contested the addition of Rs. 32,80,00,000/- on account of deposits represent sale proceed of the property after withdrawing cash from the same bank account on same day. The AR during the course of appellate proceedings has submitted that during the course of assessment proceeding, assessee firm was asked for the source of cash deposit of Rs. 32.80 Crore in its bank account maintained with State Bank of Patiala (now SBI, Ferozepur). As per AR, during the year under consideration assessee company was entered into an agreement of sale of property measuring 5 Acre, near Village Ballo Majra, Tehsil Kharar for a consideration of Rs. 45.00 crore with M/S Bhagwati Lacto Vegetarian Exports Pvt. Ltd. and against this agreement assessee firm received Rs. 34.00 Crore in advance and deposited the same in its bank account. The AR further stated that the information was called from bank regarding time of deposit and withdrawal and the bank furnished its submission, wherein it is represented that cash was deposit betw....
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.... first and then make withdrawal entries, which also put in seconds and it proved beyond any doubt that it is not possible for any human being to count the huge amount of cash in seconds or milli seconds. The AR also held that on the date 30.03.2015, when the impugned transaction was transacted, there was a heavy rush in bank due to closings and also due to last date of income tax returns, so number of challans were pending with the staff. Also, as per the AR, that the staff of bank put the entries in bank account of M/S GNMP and M/S BLVE as per his/her convenience because both accounts were maintained in the same branch. 5.3.3 Further, the AR stated that the AO admitted this fact that assessee entered into an agreement for sale of land and registration deed of said land to prove the ownership of assessee has already been filed on record and as per AR also, the AO stated that deal was still pending and final sale deed has not been executed which as per AR, proves that the agreement of sale of land and receipt of advance in cash is a made-up story since no prudent businessman will hand over the substantial amount of Rs, 34 Crore as advance without getting ownership title tra....
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....wing important facts needs to be discussed: (a) Both the bank accounts are in the same branch of bank. Therefore, as such there was no need to physically transfer the money. (b) There was sufficient cash balance in the bank account of the entity from where the cash was withdrawn and deposited into appellant's bank account. (c) Both the entities are part of same group, and such there is no introduction of any money/cash from outside. (d) Statement of the branch manager was recorded by the AO. In this statement, the bank manager of the branch has also accepted this fact - that there is no movement of cash. He has mentioned that although the #1me stamp as per the bank record is correct, but due to heavy rush in bank on 30th and 31 st March, there was no physical movement of cash. In the statement of Bank manager, he also clarified the fact that the entries were post as per the convenience of their staff as there were heavy rush in the bank being the closing date of Financial Year (e) The Branch Manager also stated that the branch, where these transactions were happened, is a very small bank having only 7 employees. (f) The stat....
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....ome-tax reported at [1959] 37 ITR 151 (SC) [05-03-1959] held as under:- "Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Order of Assessment year 1948-49 - Whether Tribunal should not base its findings on suspicions, conjectures, or surmises nor should it act on evidence at all or on proper rejection of material and relevant evidence or partly on evidence and suspicions, conjectures or surmises and if it does anything of that sort, its finding even though on questions of fact, will be liable to be set aside by - Held, yes" The Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills . CIT reported at 26 ITR 151 775 held as under: "When making an assessment u/s 143(3), the AO is not entitled to make a pure guess without any evidence or material at all, Reliance is also placed on the following judgments: * International Forest co, vs. CIT [1975] 101 ITR 721 (J&K), * Mohammad Hayet vs. CIT 5 ITC 159 * Gunda Subbayya vs. CIT 7 ITR 21 28 (Mad.) (FB) * Radhaylal vs. CIT 4 ITC 454 * Binjraj vs. CIT 5 ITC 303 * Dhunichand vs. CIT 2 ITC 188 * Mrs. Hirabai D. Desai & sons vs....
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....vi vs. ITO, {120171 81 taxmann.com 30} which has been upheld by Gujarat High Court {120181 90 taxmann.com 386(Gujarat)} and appeal of the assessee has been dismissed by Supreme Court {120181 97 taxmann.com 398(SC)} wherein it is held that it is duty of assessee to prove genuineness of transaction and that the Id. CIT(A) was justified in deleting the addition of Rs. 32.80 Cr. made by AO on account of cash deposits made in bank account of the assessee on 30.03.2015 as the assessee failed to prove the source of seed money by way of transfer of Rs. 744 Cr. from bank account of M/S Bhagwati Lacto Vegetarian Exports Ltd. from Andhra Bank to its account in State Bank of Patiala? 7. Per contra, the defendant, ld. Counsel for the assessee that during the course of assessment proceeding, assessee has explained the source of cash deposit of Rs. 32.80 Crore in its bank account maintained with State Bank of Patiala (now SBI, Ferozpur) as the said was out of sale consideration duly supported with an agreement of sale of property measuring 5 Acre, near village ballo majra, tehsil kharar for a consideration of Rs. 45.00 crore with M/S Bhagwati Lacto Vegetarian Exports P. Ltd. (hereinafter refer....
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....no adverse inference are drawn by him. The Ld. AO accepted the same agreement of sale of land and no addition was made in the hands of company APB, Pgs. 41-43). 7.4 The AO during the course of remand proceedings, issued summons u/s 131(1) of the Income Tax Act, 1961, to the persons, who were parties to the agreement dated 30.03.2015 for sale of land between M/S Guru Nanak Milk Products and M/S Bhagwati Lacto Vegetarian Exports Pvt.Ltd and also to the persons who filed affidavits in order to verify the genuineness of the claim made by the assessee during appellate proceedings and the AO could not controvert the evidence filed by the assessee on record. From the statement of Sh. Gurmeet Singh, it is evident that the cash deposited in the bank account of the assessee firm by the employee of M/S Bhagwati Lacto Vegetarian Exports Pvt. Ltd. was on account of sale of land situated at Village Ballo Majra by the assessee company to M/S Bhagwati Lacto Vegetarian Exports. b. That no physical cash was involved in the transaction since it was not possible to count huge cash in such time as mentioned in the letter. In the remand proceeding, the bank manager stated that no cash was involved, f....
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....y incorrect as it is not possible to count huge cash in such time of few minutes. 10. In the present case, the AO has made addition purely on presumption and guess basis. It is settled principle of law that while making an assessment u/s 143(3), the AO is not entitled to make a pure guess without any evidence or material at all on record. In view of that matter, we find no infirmity or perversity in the decision of the ld. CIT(A) in deleting the addition of Rs. 32.80 Cr. 11. Accordingly, we find no merit and substance in the ground of the department and therefore, the order of the CIT(A) is upheld on the issue of deleting the addition of Rs. 31.80 Cr. 12. The appellant assessee has raised the following grounds of appeal in I.T.A. No. 320/Asr/2023: 1. That the order passed by the Hon'ble CIT (A) dated 18.10.2023 is against the law and facts of the ease. 2. That having regard to the facts and circumstances of the case, Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction and framing the impugned assessment order u/s 153C/143(3) of the Act which is bad in law and against the facts and circumstances ....
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....ricted to the original claim of Rs. 23,94,258/- and fresh additional claim of Rs 60,20, 750/- was disallowed. The CIT(A) confirmed the finding of the AO. 13.2 The Ld. AR submitted that in assessee's own case for the Assessment Year 2016-17, similar addition was made bythe AO and later confirmed by the CIT(A) but this issue was decided in favour of assessee by the Hon'ble ITAT Amritsar in ITA no.132/Asr/2022 vide order dtd. 09.11.2023 in which it was held as under: "We heard the revenue's submission, peruse the orders of venue authorities and consider the documents available in the record. Related to ground no., the assessee already placed that the activities of the assessee are more requirement of lands for maintaining the livestock, chilling of milk, distribution. All are related to business, Further, the opening and closing balance of cash credit limit does not reveal that there is no use funds of the assessee. The Id AR relied on the order of Hon'ble Apex Court in the case of Vardhman Polytex Ltd. v. Commissioner of Income-tax[ 2012] 25 taxmann.com 281 (SC), the relevant paragraphs are reproduced as below:- "The question which arises for determin....
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.... this cash was generated on account of the unaccounted profit arising out of trading receipts based on this document. The Ld. CIT(A) has considered the submission of the appellant, that these amounts also represent unaccounted business turnover, is acceptable but not agreed by stating that the AO has clearly mentioned in the assessment order about the nature of these entries that these are loan entries by the partner of appellant firm from whose possession, this annexure was seized. Accordingly, he finds no force in the argument of the appellant that these are also entries of unaccounted sale, as in annexure A-2 without controverting the contention of the appellant with supporting corroborative documentary evidence on record. 14.2 The Ld. AR submitted that CIT(A) has erred in law and on facts in confirming an addition of Rs. 1,76,57,729/- without appreciating the facts of the case that the total receipts as per A-2 amounts Rs. 6,45,07,729/-, out of which part receipt pertain to the AY 2016-17 and remaining amount of Rs. 4,76,57,729/- pertain to Assessment Year under consideration. The Ld. CIT(A) had allowed the benefit of Rs. 3,00,00,000/- (being amount surrendered during search....