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2022 (4) TMI 332 - AT - Income TaxAddition u/s 68 - unexplained cash credit - HELD THAT - Additions made by the AO for the loan received from the parties namely Shri Parshottambhai Mohanbhia Patel and Shri Kalpeshkumar Parshottambhai Patel is hereby deleted and the addition on account of loan from the other parties for the amount is hereby confirmed. Hence the ground of appeal of the assessee is partly allowed. Addition made on account of investments made in different properties - HELD THAT - Assessee has discharged his primary onus imposed under the provisions of section 68/69 - Accordingly, the onus shifted upon the revenue to disprove the contention of the assessee which was possible by way of carrying out necessary verification of the details furnished by the assessee. But we find that, the authorities below, despite having sufficient powers in the hands, have not exercised their authorities provided under the provisions of section 131/133(6) of the Act to carry out necessary verification. In our considered view the assessee has discharged the onus and the assessee is not under the obligation to justify the source of money in the hands of the respective hands. We are unable to convince ourselves with the contention of the assessee. It is for the reason that the assessee on one hand claims to have invested in the impugned properties bearing survey No. 125 and 124 out of the money received from the 3 parties and in the event of non-furnishing the necessary details on the other hand AR changed his stand by submitting that the impugned loan can be treated as the utilization against the gift received by the assessee. Thus in our view, the assessee failed to discharge the onus and therefore we confirmed the addition to the extent of ₹ 19 lacs. Regarding the investment in the property taluka Dhanduk bearing survey number 143 we note that it was the onus upon the assessee to justify the source of money in pursuance to the provisions of section 69A - we find that, the assessee failed to do so. Rather the assessee has changed his stand by contending that the investment the properties can be assumed out of the gift which is not acceptable in the absence of necessary evidences. Accordingly we do not find any reason to interfere in the finding of the authorities below and therefore confirmed the addition by adding to the total income of the assessee. In view of the above and after considering the facts in totality, the ground of appeal of the assessee is partly allowed. Addition made by the AO by treating the agriculture income as income from other sources - HELD THAT - At the outset we note that the learned CIT-A has been empowered under rule 46A(4) to call for the additional evidences for the disposal of the appeal. Considering the nature of the addition made by the AO, we are of the view that the learned CIT-A should have exercised his power by resorting to the Rule 46A(4) of income tax rule. Considering the amount involved in the dispute, we admit the additional document filed by the assessee. The genuineness of the additional document filed by the assessee has nowhere been doubted. AO in his order has himself admitted the agriculture income per hectare, therefore we are of the view that the assessee should not be deprived of the benefit available to him merely on the reasoning that the assessee failed to furnish the correct information during the proceedings. Accordingly, we hold that income earned by the assessee from the agricultural activity. Hence ground of appeal of the assessee is allowed. Addition sustained under the provisions of section 68 - investments under section 69 - HELD THAT - Total amount credited in the bank account of the assessee in the year under consideration stands which was treated as unexplained cash credit under section 68 of the Act by the AO. However, the AO in his finding has concluded that out of such sum, an amount has been utilized in making the investment in the properties. Accordingly, the AO did not make any addition on account of unexplained properties under the provisions of section 69 as it was representing the application of the unexplained cash credit under section 68 of the Act. Now the balance amount being unexplained cash credit under section 68 of the Act which can only be considered for the purpose of the telescoping as contended by the learned AR for the assessee at the time of hearing. Accordingly, we direct the AO to allow the benefit of telescoping to the assessee to the tune while making the addition for the investments in the unexplained properties. It is for the reason that there is no information available on record suggesting that impugned amount has been used for any other purpose. In the absence of relevant information, we are inclined to assume that such amount has been utilized by the assessee for making the investment in the properties which were subject to the addition under the provisions of section 69. Hence the ground of appeal of the assessee is allowed.
Issues Involved:
1. Addition under Section 68 of the Income Tax Act on account of unexplained cash credit. 2. Change in the nature of additions from Section 68 to Section 69 by the CIT(A). 3. Addition under Section 69 on account of unexplained investment in agricultural land. 4. Treatment of agricultural income as income from other sources. 5. Non-admission of additional evidence by CIT(A). 6. Benefit of telescoping for various additions. Detailed Analysis: 1. Addition under Section 68 of the Income Tax Act on account of unexplained cash credit: The assessee received a total loan amount of ?53,57,640 from various parties through banking channels. The AO was not satisfied with the evidence provided by the assessee, such as PAN, and treated the entire amount as unexplained cash credit under Section 68. The CIT(A) partly deleted the addition, confirming ?33,07,640 and enhancing the addition by ?1.85 lakhs for one party. The Tribunal found that the assessee had provided sufficient evidence like PAN, bank statements, and fixed deposit maturity details for some parties and deleted the additions of ?1.85 lakhs and ?15.8 lakhs made by the AO. However, the Tribunal confirmed the addition of ?15,42,640 due to insufficient evidence. 2. Change in the nature of additions from Section 68 to Section 69 by the CIT(A): The CIT(A) changed the nature of the addition from Section 68 to Section 69 without giving the assessee an opportunity to be heard. The Tribunal noted that the assessee itself had submitted details under Section 69 before the CIT(A), and thus, there was no violation of Section 251(2). The Tribunal upheld the CIT(A)'s decision to treat the unexplained investments under Section 69. 3. Addition under Section 69 on account of unexplained investment in agricultural land: The assessee had made investments in three agricultural lands. The AO treated part of these investments as unexplained under Section 69 due to insufficient evidence about the source of funds from the parties who made payments on behalf of the assessee. The CIT(A) upheld these additions. The Tribunal, after examining the evidence provided by the assessee, including confirmations, PAN, and bank statements, deleted the additions of ?51,58,888 but confirmed the addition of ?19 lakhs due to the lack of evidence for three parties. The Tribunal also confirmed the addition of ?9,17,900 for another property as the assessee failed to justify the source of funds. 4. Treatment of agricultural income as income from other sources: The AO treated ?4 lakhs out of the declared agricultural income of ?7,00,120 as income from other sources due to insufficient evidence. The CIT(A) upheld this decision, rejecting additional evidence provided by the assessee. The Tribunal admitted the additional evidence and held that the agricultural income of ?7,00,120 was genuine, allowing the assessee's claim. 5. Non-admission of additional evidence by CIT(A): The CIT(A) did not admit additional evidence regarding the agricultural landholding details. The Tribunal found that the CIT(A) should have exercised the power under Rule 46A(4) to admit the additional evidence and accordingly allowed the assessee's claim for agricultural income. 6. Benefit of telescoping for various additions: The Tribunal noted that there should not be double addition for the same item of income. The AO had already considered part of the unexplained cash credit for making investments in properties. The Tribunal directed the AO to allow the benefit of telescoping for ?3,58,729, which was not utilized elsewhere, while making additions for unexplained investments. Conclusion: The Tribunal partly allowed the appeal, deleting certain additions while confirming others based on the evidence provided. The benefit of telescoping was also granted to avoid double taxation on the same income. The order was pronounced on 30/03/2022 at Ahmedabad.
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