2017 (10) TMI 1628 - AT - Income Tax

Unexplained cash deposits in bank account and made cash payment for purchase of certain land - AO in the absence of any specific details rejected explanation of the assessee and held the cash deposit/payment as unexplained and made addition of the same to returned income - HELD THAT - The assessee has provided necessary details in support of his claim and the AO in remand proceedings has neither doubted the genuineness of the relevant agreements/details nor given any contradictory finding. The claim of the assessee duly supported by documentary evidences cannot be rejected simply for the reason that the assessee could not produce the witnesses personally that too after lapse of several years from the relevant point of time. Therefore ld. CIT(A) is not justified in not admitted the additional evidences and in rejecting the explanation of the assessee to the extent relating to refund of advances on cancellation of relevant agreements. As transpired from the record, the assessee apart from his explanation to the extent of Rs.12,50,000/-, has not submitted any other details/evidences. Thus under the totality of facts and circumstances of the case, the addition of Rs.12,50,000/- is hereby deleted and the balance addition of Rs.20,64,000/-is sustained. Unexplained investment u/s 69 - cash deposited into the bank and payment made for purchase of agriculture land - HELD THAT - As appears from the transactions contained in the bank accounts of the purchasers, it cannot be said that they have no means for paying relevant advance. There is a weight in the submission of the ld.AR that the burden lying upon the assessee u/s 68 of the Act, is to explain the source of funds and not the source of the source, therefore it is not the burden of the assessee to explain the source of funds of the purchasers paying advance for purchase of the land. The Hon ble Jurisdictional High Court in the case of Labh Chand Bohra 2008 (4) TMI 731 - RAJASTHAN HIGH COURT held that so far as capacity of the lender is concerned, in our view on the face of the judgment of the Daulat Ram s case 1972 (9) TMI 9 - SUPREME COURT capacity of the lender to advance money to the assessee was not a matter which could be required of the assessee to be established, as that would amount to calling upon him to establish source of the source. In this view of the matter, the addition made by the lower authorities is deleted. Thus solitary ground of the assessee is allowed

Summary

Issues Involved:
1. Admission of Additional Evidence under Rule 46A.
2. Addition towards unexplained investments under Section 69 of the Income Tax Act.
3. Estimation of agricultural income.

Issue-Wise Detailed Analysis:

1. Admission of Additional Evidence under Rule 46A:
The assessee contended that the Commissioner of Income Tax (Appeals) [CIT(A)] was not justified in not admitting additional evidence submitted under Rule 46A of the Income Tax Rules, 1962. The CIT(A) held that sufficient opportunities were given during the assessment proceedings to produce evidence. The assessee failed to provide basic details like names and addresses of persons to whom advances were given. The CIT(A) also noted that the additional evidence lacked evidentiary value as the assessee could not produce witnesses during remand proceedings. The Tribunal found that the assessee had provided documentary evidence supporting the claim of refund of advances on cancellation of agreements. Therefore, the Tribunal held that the CIT(A) was not justified in rejecting the additional evidence and deleted the addition of Rs. 12,50,000.

2. Addition towards Unexplained Investments under Section 69:
For Assessment Year 2006-07, the assessee had made cash deposits of Rs. 21,50,000 and cash payments of Rs. 14,64,000 for purchasing land. The source was claimed to be from agricultural income, advances recovered, and bank withdrawals. The CIT(A) upheld the addition to the extent of Rs. 33,14,000, rejecting the explanation for Rs. 12,50,000 due to lack of evidence and non-production of witnesses. The Tribunal, however, found that the assessee had provided necessary details and documentary evidence, and thus deleted the addition of Rs. 12,50,000, sustaining the balance addition of Rs. 20,64,000.

For Assessment Year 2007-08, the assessee made cash deposits of Rs. 9,20,000 and cash payments of Rs. 19,29,960 for purchasing land. The source was claimed to be an advance received from an agreement to sell land. The CIT(A) did not accept the explanation due to discrepancies in the statements of the parties involved and the inability to prove the purchasers' capacity to advance such amounts. The Tribunal found that the purchasers had admitted to paying the advance and had sufficient means, and held that the assessee is not required to prove the source of the source. Thus, the Tribunal deleted the addition of Rs. 28,49,960.

3. Estimation of Agricultural Income:
For Assessment Year 2006-07, the CIT(A) estimated agricultural income at Rs. 3,00,000 from 16 bighas of agricultural land, based on the facts and lack of evidence provided by the assessee. The Tribunal did not find any further contention from the assessee on this point, and the estimation was upheld.

For Assessment Year 2007-08, the CIT(A) accepted agricultural income of Rs. 2,93,520 based on the evidence provided, including purchase bills of produce and girdawari of the land. The Tribunal upheld this estimation as well.

Conclusion:
The Tribunal partly allowed the appeal for Assessment Year 2006-07 by deleting the addition of Rs. 12,50,000 and sustaining Rs. 20,64,000. For Assessment Year 2007-08, the Tribunal allowed the appeal by deleting the addition of Rs. 28,49,960. The Tribunal emphasized that the assessee is not required to establish the source of the source for the advances received, aligning with judicial precedents.