9911796707
TMI Blog2008 (12) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the case in deleting the addition of Rs. 11 lakhs made under section 68 on account of unexplained deposits in the name of M/s. Maheshwari Electronics (Prop. M/s. Radhey Lal Maheshwari) without properly appreciating the facts of the case. 4. That while deleting the addition of Rs. 11 lakhs learned Commissioner of Income-tax (Appeals)-II, Agra has totally ignored the facts that the depositor Sh. Radhey Lal failed to justify cash deposits in his cash book, consequently, the assessee failed to justify the genuineness of the transaction and creditworthiness of the depositors. 5. That the learned Commissioner of Income-tax (Appeals)-II, Agra has erred in law and on facts of the case in deleting the addition of Rs. 6,65,000 made under section 69 on account of unexplained gifts allegedly taken by the assessee from his brother Sh. Ved Prakash Kapoor without properly appreciating the facts of the case. 6. That while deleting the addition of Rs. 6,65,000 learned Commissioner of Income-tax (Appeals)-II, Agra has totally ignored the facts that the alleged donor Sh. Ved Prakash Kapoor has never given any gift to anybody even to his wife or to any of his children. 7. That while de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any books of account in respect of this business. The same business was carried in the immediately preceding year also where profit rate of 12 per cent on sales of Rs. 24,97,790 had been accepted. There was thus no justification in deviating from the settled position by the Assessing Officer. If ld. CIT(Appeals) corrected the error, he cannot be held wrong. 6. We have heard the parties and perused the material on record. Under the peculiar facts, the decision taken by the ld. CIT(A) does not call for any interference. The construction of the project under consideration was not complete during the year. In the immediately preceding year a profit rate of 12 per cent on sales made during construction period itself had been accepted. No justifiable reasons have been advanced by revenue to deviate from the accepted position. It was not proper for the Assessing Officer to have disallowed 50 per cent of expenses incurred on the project under construction. If the assessee did not maintain books of account and vouchers, the cost of construction can be established only when it is finally complete by taking expert opinion so that the rest of the real income from the project can be brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --------------------------- However, at the time of recording of statement, Sh. Radhey Lal Maheshwari could not furnish any satisfactory reply regarding the identity of depositors and genuineness of deposits. Therefore, summons/notices under section 133(6) were sent to the addresses of the depositors as stated by Sh. Maheshwari. But any information has not been received from respective parties. Then summons dated 9-11-2004 and 1-12-2004 under section 131 were also sent to Sh. Maheshwari requiring him to justify the above credits in his cash book but Sh. Maheshwari has not attended. In view of these facts and circumstances of the case, it is clear that the source of above deposits in the books of Sh. Maheshwari is not explained, so source of deposit of Rs. 30,000 on 3-2-2001, Rs. 10,000 Rs. 50,000 on 5-2-2001 and Rs. 4,50,000 on 6-2-2001 in his bank account is also not explained. Therefore, it is concluded that the source of loan particularly loan of Rs. 6,00,000 given by Sh. Radhey Lal Maheshwari on 7-2-2001 to Sh. Sarv Prakash Kapoor is also not explained. In the result, the source of loan given by Sh. Radhey Lal Maheshwari to Sh. Sarv Prakash Kapoor is not explained and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Kapoor. The assessee claims to have received two gifts of Rs. 2,00,000 and Rs. 4,65,000 from his brother Shri Ved Prakash Kapoor. Confirmation from the donor had been furnished. Since the assessee did not produce the donor, the Assessing Officer was not satisfied with the genuineness of the gift. He, accordingly, added the same as income under section 68 of the Act. 15. Before the ld. CIT(A), the assessee made following submissions:- "Rs. 6,65,000 from Shri Ved Prakash Kapoor Shri Ved Prakash Kapoor has made the gift for Rs. 6,65,000 to assessee. The donor Ved Prakash Kapoor is real brother of the assessee who has made the gift for Rs. 6,65,000 in the following manner:- Rs. 2,00,000 through cheque on 21-12-2000 which was drawn at Allahabad Bank, same bank a/c No. 9732/433/168 Rs. 4,65,000 through cheque on 28-2-2001 drawn at SBI a/c No. 01190044590. He is a regular taxpayer and assessed to tax by Income-tax Officer, Ward 1(4) under PAN AGMPK 2769G. Necessary evidence in respect of filing of return, computation of income, copy of bank a/c. The confirmatory letter of the gift given to assessee is also enclosed." 16. The ld. CIT(A) sought remand report on these submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances. The essentials of a valid gift have been satisfied. The donor is the real brother of the respondent and gift has been made out of natural love and affection which needed no special occasion. The transaction has been made through banking channels and there is nothing hanky panky about it. The donor is a man of means and the amount of gift drawn has been found to have direct nexus with the own income of the donor. The assessee had duly established the source, the solvency of the donor and his love and affection by his brother, who made him the gift under consideration. On the facts and circumstances of the case and in the absence of any cogent material having been brought on record by revenue to enable us to interfere with the findings reached by ld. CIT(A), it cannot be held that the cash credit was a receipt of an income nature. We, therefore, uphold the decision reached by ld. CIT(A) and finding no merit in grounds raised in appeal by revenue, the same stand rejected. 19. Ground Nos. 8 9, being general, need no comments. 20. In the result, the appeal of the revenue stands dismissed. 21. In assessee's appeal in ITA No. 93/Agr./2005, the grounds raised read as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer, who vide his letter dated 27-7-2004 stated as under:- "Regarding gilt of Rs.l0 lakhs shown in the name of Shri Romit Kapoor.-The assessee has shown receipt of gift of Rs. 10 lakhs on 7-4-2000 from Shri Sanjeev Kumar Dagar s/o Shri Balram Singh Dagar, 56-A, Gali No. 2A, Durga Park Nasirpur, New Delhi. The gift was allegedly given by Shri Dagar to Shri Romit Kapoor the minor son of the assessee. In order to ascertain the genuineness of gift, the assessee was required to produce Shri Sanjeev Dagar. Shri Dagar (aged about 35 years) is presently residing at 3137, 1st Floor, Seventh Main, ESI Hospital Road, HAL, Stage-II, Indra Nagar, Bangalore. He was produced on 10-9-2004 and his statement on oath was recorded. In his statement he has deposed that during the period 1991-96 he was doing export business of Maganese Ore in Goa. As per his statement, his turnover during 1995-96 was around Rs. 3 crores and income has been stated in the tune of Rs. 2 lakhs to 3 lakhs per year. He has stated to be assessed to tax since 19944PAN AELPD5474 L. Income for the year 2000-01 till the year 2003304 has been stated to be between Rs. 1,50,000 to Rs. 2.25 lakhs. From the year 1996 to 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases of computers etc. and stated to give such details later on. Finally, a question was asked from Shri Dagar to specify whether he had given any gift to his wife or children or had he received any gift from anybody in last 10 years? In reply to this question, Shri Dagar has stated that at the time of the birth of his daughter gift of gold items weighing 5 to 6 tolas was received from his father in law and thereafter no gift has been received. He has further stated that except the above gift of Rs. 10 lakhs he has never given any gift to anybody. On 14-9-2004 Shri Dagar sent copy of 3 purchase bills dated 1/3/4-4-2000 of M/s. Shiva Sales, Naraina, Delhi. Then, notice under section 133(6) dated 17-9-2004 along with copy of bills was sent to M/s. Shiva Sales. The prop. of Shiva Sales Shri Rajesh Chaturvedi filed an affidavit deposing as under - 1. That I was the prop. of M/s. Shiva Sales, Y-254/1, 1st Floor, Loha Mandi, Naraina, New Delhi - 110 028 2. That the firm was closed on 5-6-2002 3. That I do not know Mr. Sanjeev Dagar c/o Sanjeev Dagar Co., 56A, Street No. 2A, Durga Park, Nasipur, New Delhi-110 045 and I had not sold any computers to him and I have not receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... livelihood. It is strange and un-understandable that a man who had never given any gift to any of his children, wife will suddenly give gift of Rs. 10 lakhs without any occasion or without any other reasonable reason to a person who is already more wealthy and well to do than the donor. 3. If computers etc. were purchased by Shri Dagar on dated 1st, 4th and 5th April, 2000 for establishing computer institute, then the question is that why had he sold the computers on 7-4-2000 without utilizing them at all. 4. Shri Dagar is not much acquainted with computer operations so it is also strange that for establishing a computer institute he had purchased computers worth Rs. 20 lakhs at the first stage. 5. Though in his statement Shri Dagar has stated that he had never given any gift to anybody in last 10 years except the gift of Rs. 10 lakhs given to Shri Romit Kapoor, from the information gathered from the Bank it is found that he had perhaps given two more amount of Rs. 5 lakhs each to the family members (namely Ms. Ruchi Kapoor Neelam Kapoor) of Shri Sarv Prakash Kapoor on 5-4-2000. 6. Summons sent at Bangalore, returned un-served so the address given by Sh. Dagar appears ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered as not genuine, in this connection it is submitted that donor has appeared before the Assessing Officer in response to the notice issued by the Assessing Officer and admitted on oath that he has made the gift for Rs. 10 lakhs to Master Romit Kapoor, minor son of Shri Sarv Prakash Kapoor out of natural love and affection. He has also stated in his statement before the Assessing Officer that the gift was made on account of the facts that in the past, Shri Sarv Prakash Kapoor had supported the donor when he was facing the financial hardship and also left his parent and house. At that time nobody had supported nor helped him but only Shri Sarv Prakash Kapoor, who is brother in law of his close friend had supported and helped him like brother. At that time, Shri Sanjeev Kumar Dagar thought and decided that in future if Sarv Prakash Kapoor requires any type of help, he (Shri Dagar) will provide the help to his utmost efforts to Shri Kapoor. The Donor was of the view that he has to give the return of his love, affection and support extended by Shri Sarv Prakash Kapoor. On account of these sentiments and relations with Shri Sarv Prakash Kapoor, the Donor when came to know that Sarv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the purchase of computers and also in support of sale of computers to M/s. G.K. Consultant Ltd. The assessee has received the cheque for Rs. 10 lakhs on which there is no doubt because the cheque was issued from the a/c of M/s. G.K. Consultant Ltd. in support of genuine gift which the assessee's son has received. Your kind attention is invited towards the following facts :- 1. Assessee's son has received the gift by cheque. The transaction was made between the two bank a/cs one of the donor and another of the donee by which the amount has been transferred to the a/c of the assessee's son. The amount of Rs. 10 lakhs which Dagar has made the gift was out of withdrawal by cheque from his bank a/c wherein the amount of Rs. 10 lakhs was deposited on account of sale of computers to M/s. G.K. Consultant Ltd. which was credited in the bank a/c, the same amount has been transferred to the appellant's son as a gift. 2. The amount received from M/s. G.K. Consultant Ltd. has been duly accepted by the firm that they hove purchased the computers and issued the cheque for Rs. 10 lakhs. The Donor Shri Sanjeev Dagar has appeared before the Assessing Officer and has accepted in his statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The proprietor of Shiv a Sales from whom donor allegedly purchased computers, has categorically denied to have made any sales to him. Thus, when the purchase of computers itself has not been proved, the question of selling the same and receiving any amount on their sale does not arise. The assessee's plea that M/s. Shiva Sales did not record the sale to donor in his books stood discarded as the onus to show this fact lay upon the appellant. He, therefore, drew an inference that the appellant, the alleged donor and Shri Subodh Gupta of G.K. Consultants have indulged in clandestine transaction. The ld. CIT(A) also stated that the transaction of sale of computers does not inspire any confidence inasmuch as the fact is that M/s. G.K. Consultants, the party who had issued cheque to the donor for alleged purchase of computers from him has made huge deposits in cash in its bank account. The person operating the bank account of G.K. Consultants and Shiva Sales were the same used for providing bogus en tries to various persons. The ld. CIT(A) has also found that from the donor's bank account only three cheques have been issued and that too for gifts to the appellant's family members which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other hand, the ld. D.R. supports the decision taken by ld. CIT (Appeals) for sustaining addition of Rs. 10 lakhs made under section 68 of the Act as the explanation given by appellant was not found satisfactory. 30. We have heard the parties and perused the entire material on record carefully. Under the peculiar facts of this case, the finding reached and decision arrived by ld. CIT(Appeals) does not call for any interference. The alleged donor was neither related nor did he have any direct friendship with the appellant. There was no occasion of making gift to the appellant's son. The donor did not have capacity to make gift to the appellant's son for Rs. 10,00,000 and other family members of equal amount as the source of making gift has been found to have a direct nexus with the Hawala operator Shri Subodh Gupta. The bank account of the person who operated the account of M/s. G.K. Consultants from whom he alleged to have made purchases of computers and M/s. Shiva Sales to whom alleged sale is claimed to have been made, were found operated by the same person used for giving accommodation entry only. There is thus proper application of mind by ld. CIT (Appeals) in forming his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not spelled out the issue to be discussed. May speak and/or discuss whenever find herself free. Sd 6-8-2007 (A.M.) Ld. J.M." 2. Accordingly, the issues on which discussion was sought was spell out specifically in the following manner:- "Qua Ground Nos. 1 2 of revenue while confirming the relief reference has been made to the position immediately preceding assessment year; (1) However facts to this extent are not borne out from the orders of the tax authorities; (2) No evidence in support of the said fact is found in the Paper Book filed by the assessee; (3) Nor reference to this extent is found in the log book; However if any such request was made by yourself on the Bench as per usual practice then also evidence to this extent is not on record. Accordingly you may reconsider the view taken in the absence of necessary evidence. Qua Ground Nos. 4 to 7 in the revenue's appeal I find myself not in agreement with the view taken. Accordingly you may like to reconsider the same or return the files along with the proposed order for proceeding as per law to the undersigned. Sd. 17-8-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, the assessee on the contrary has been treating these opportunities with a casual and careless disregard. The duties which were cast upon him as a result of the opportunities granted to him by the Assessing Officer had been casually ignored. A perusal of the relevant material on record would show that despite the repeated careless disregard shown by the assessee towards the constant alertness of showing due care and attention by the Assessing Officer while considering the right of the assessee, the duties to be performed as a result thereof have been consistently missing on the part of the assessee. It would show the amount of participation/co-operation made by the assessee despite which the Assessing Officer continued to grant number of adjournments to the assessee to enable him to substantiate its claims. A right vested in a person is corresponded with duty on the part of the person who claims the right. 9. Despite the casual and careless approach of the assessee, it would show that each and every adjournments of the assessee was treated fairly and judiciously by the Assessing Officer However, the assessee in the facts of the peculiar case it is seen has abused the fair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer fairly and judiciously on the basis of the limited information which was made available to him makes the following observations:- "The assessee is enjoying income from running a hotel-cum-restaurant. Besides this income from proprietorship concern M/s. Prakashwanti Palace engaged in construction work has also been declared. The assessee is a builder also. After constructing of flat of his own, income from sales of shops have been declared. In respect of Prakashwanti Palace, Agra total sales of flat have been shown at Rs. 4,60,000 only. The opening and closing stock are at Rs. 40,06,681 and Rs. 49,32,203 respectively. The assessee has debited a sum of Rs. 12,67,140 in the P L a/c as cost of construction and expenses. As per P L a/c there is a net profit of Rs. 51,300 from the sale of shops at Prakashwanti Palace, Agra." 11. Thereafter at page 2 of the Assessment Order the Assessing Officer referred to the notice issued under section 142(1) dated 24-12-2003 apart from the notices issued on the various dates under section 143(2) which stood mentioned at page 1 of the Assessment Order. In this background he records that the following information was required to be furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the AR.-The Assessing Officer has made the addition for Rs. 6,92,760 by making the disallowances in respect of expenditure/investment shown by the assessee in the profit loss accounts in respect of business undertaken under the name style of Prakashwanti Palace, Agra. The Assessing Officer has made the addition by disallowing the 50 per cent investment made by the appellant at Rs. 13,85,522 towards the construction of building. In this connection it is submitted that during the year under consideration assessee was constructing a commercial building wherein assessee has made the expenditure to the tune of Rs. 13,85,522 which was of the capital nature. The opening balance in respect of construction made was at Rs. 40,06,681. After making the further investment towards the construction the total amount towards the construction comes to Rs. 53,92,203 out of which the assessee has made the sales at Rs. 4,60,000 against which assessee has shown the net profit at Rs. 51,300. The net profit shown by the assessee against the sales is about 12 per cent. The Assessing Officer without appreciating the facts that the assessee has invested the amount of Rs. 13,85,522 towards the constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es a N.P. rate of 8 per cent. As against this the assessee has shown the rate of 12 per cent. The Assessing Officer has added/disallowed the amount (Rs. 6,92,760) which is even more than the gross sales (Rs. 4,60,000). In no case the disallowance can be of this magnitude. Considering these facts, the disallowance of Rs. 6,92,760 made by the Assessing Officer is deleted." 15. In the aforementioned facts, the revenue is in appeal before the Tribunal. Since the above facts available on record have not been referred to in the proposed draft order it was considered necessary to first refer to the findings of fact arrived at in the orders of the Assessing Officer and the CIT(A) and the manner in which the issue was discussed therein to appreciate the grievance of the revenue. 16. The arguments put forth by the learned D.R. in regard to this ground was that on the basis of the material available on record it was his submission that the Assessing Officer himself has been more than fair and reasonable as despite the fact that no documentary evidence by way of primary records were either shown or produced before him despite this fact the Assessing Officer has proceeded to disallow only 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order it was submitted that these facts were specifically mentioned by the Assessing Officer and the assessee was required to give the complete details of property sanction plan submitted to the Agra Development Authority along with the map. The assessee was also required to inform the Assessing Officer in regard to the same as to up to what stage the construction was completed during the year. It was his submission that the assessee by his silence and deliberate action of keeping the Assessing Officer in the dark has already got more than adequate relief from the Assessing Officer himself as no particulars of even information available with him was given i.e., the sanction plan etc. The books of account required to be produced along with supporting evidences in order to consider the claim of expenditure put forth was never substantiated. Investment in land and plot which was claimed to have gone up was also required to be justified and was not done. The source of investment with supporting evidences along with details of particulars of land and amount invested therein also were never substantiated. It was submitted that despite these detailed queries on record, no information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reasoning accepting the profit rate of 12 per cent in the immediately preceding assessment year in the facts of the present case even if considered to have been argued before the Bench as reliance was placed by the ld. A.R. on the impugned order. Considering the said order, it is seen that the arguments found recorded in para 3.1 of the same etc., make a mention of it, however, in reference to the same it is seen that the CIT(A) does not give his own independent finding thereon since in regard to the actual position of the preceding assessment year he has not made any mention. Apart from that the averments made before the CIT(A) no doubt were not specifically addressed before the Bench it is seen that the same are not supported by any documentary evidence which was referred to either in the course of the hearing or filed subsequently. Attempts not only orally but even by way of written communication available on the record referred to in the earlier part of this order to address the issue have also not been controverted. In the light of the Conventions of the ITAT and settled judicial decorum to be followed in proposing and finalizing an order have been made vainly. Being over c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced by the revenue to deviate from the accepted position". I find myself for the above reasons unable to agree with the reasoning and the conclusion as the above facts are not borne out from the record. 21. Secondly, the arguments advanced on behalf of the department wherein the issue of learned CIT(A) in granting relief has taken the issue in an entirely different direction and the argument that the issue has been decided purely on the basis of the reasonableness and not on facts as are available in the assessment order has not been considered and dealt with in the proposed draft order. Thus, in the peculiar facts and circumstances of the case as have been discussed at length in the earlier paras, I am of the considered humble view that the facts as brought in detail in the assessment order cannot be ignored. The assessee may have an arguable case that he has not maintained books however he has as per record not come clean before the Assessing Officer he has to come out clean and make his stand clear. If no books are kept then the basis of claim of expenditure put forth has not been addressed appropriately and fairly by the assessee before the Assessing Officer. In fact as it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and umbrage expressed is absurd in the face of his own stated stand of non-maintenance of these accounts coupled with the constant seeking of adjournments before the Assessing Officer knowing presumably fully well that the seeking of adjournments was farcical as these accounts allegedly if were never being maintained then if the stand is true then obviously the supporting documents well within the knowledge of the assessee also could never be produced the bona fide of seeking adjournments before the Assessing Officer becomes questionable coupled further with the fact that even what could be shown by the assessee i.e., the construction/architectural plan submitted for obtaining the sanction of the Agra Development Authority specifically called forth by the Assessing Officer was also not produced. Thus, it is evident that the bona fide of the assessee became questionable and deliberate silence and non-co-operation before the Assessing Officer as per record in the face of the casual arguments before the CIT(A) are absurdly naive. The statement of non-maintenance of accounts for construction has not been adjudicated upon by the CIT(A). The profit rate casually accepted again without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces remain completely distinct and divergent. No arguments have been advanced on behalf of the assessee to show that the disallowance is excessive. However, looking at the fact that the ultimate stand of the assessee is that no books of account are maintained by it in regard to this issue of business on which fact no finding as observed has been given by the CIT(A). Thus, looking at the fact that the issue is of a recurring nature as such in the peculiar circumstances it would be appropriate to restore the issue back to the file of the CIT(A) in order to first have the full facts correctly and completely on record and thereafter the CIT(A) shall pass a speaking order in accordance with law after giving the assessee an opportunity of being heard. Accordingly, for the reason given hereinabove, the CIT(A) may if necessary call forth for a remand report in the light of the facts as are placed before him by the assessee. The ground raised by the revenue as such is allowed for statistical purposes. 22. The next issue addressed by the revenue in their ground is the deletion of the addition of Rs. 11 lakhs. 23. The relevant facts with regard to this addition of Rs. 11 lakhs are found d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wari Rs. 3,00,000 ** M/s. Maheshwari Electronics Rs. 11,00,000 Assessee has received the loan for Rs. 5,00,000 on 30-1-2001 and Rs. 6,00.000 on 10-2-2001 from Shri Radhey Lal Maheshwari, Proprietor M/s. Maheshwari Electronics. He is regular taxpayer and assessed to tax by the Income-tax Officer, Ward 1(3) under PAN ACKPM 2127Q. Prior to advance of money, assessee has made the deposit of Rs. 16,22,250 and Rs. 12,69,400 out of the sale of property in the bank account No. SOD 13 with Jammu Kashmir Bank Limited. The details of the same is as under:- E. No. 693031 Rs. 4,00,000 E. No. 693032 Rs. 4,00,000 E. No. 693033 Rs. 4,00,000 Sale deed dated 13-11-2000 E. No. 693035 Rs. 4,22,250 ------------ 16,22,250 E. No. 693041 Rs. 4,00,000 E. No. 693042 Rs. 4,00,000 Sale deed dated 8-12-2000 E. No. 693043 Rs. 4,69,400 ------------ 12,69,400 The photocopies of the acknowledgement slip for filing of return, computation of income, bank accounts along with copy of sale deed showing the sale of property are enclosed herewith in support of the loan given by M/s. Maheshwari Electronics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,77,072 -------------------------------------------------- However at the time of recording of statement, Sh. Radhey Lal Maheshwari could not furnish any satisfactory reply regarding the identity of depositors and genuineness of deposits. Therefore, summons/notices under section 133(6) were sent to the addresses of depositors as stated by Sh. Maheshwari. But any information has not been received from respective parties. Then summons dated 9-11-2004 and 1-12-2004 under section 131 were also sent to Sh. Maheshwari requiring him to justify the above credits in his cash book but Sh. Maheshwari has not attended. In view of these facts and circumstances of the case, it is clear that the source of above deposits in the books of Sh. Maheshwari is not explained, so source of deposit of Rs. 30,000 on 3-2-2001, Rs. 10,000 Rs. 50,000 on 5-2-2001 and Rs. 4,50,000 on 6-2-2001 in his bank account is also not explained. Therefore it is concluded that the source of loan particularly loan of Rs. 6,00,000 given by Sh. Radhey Lal Maheshwari on 7-2-2001 to Sh. Sarv Prakash Kapoor is also not explained. In the result, the source of loan given by Sh. Radhey Lal Maheshwari to Sh. Sarv Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghtly contended by the AR, the loan has been given out of the sale proceeds of plot and not from the aforesaid cash deposits on which the Assessing Officer has made the observations. Considering these facts and the position of law, it is held that the assessee has satisfactorily explained the loan of Rs. 11 lakhs also. No addition is, therefore, required to be made under section 68 of the Act. In the result, this ground of appeal is allowed." 29. Aggrieved by this, the revenue is in appeal before the Tribunal qua the deletion of the addition of Rs. 11 lakhs. 30. The contention of the learned DR was that even in the remand proceedings the assessee has not been able to explain the capacity of the concerned person in regard to the cash deposits to the tune of Rs. 11 lakhs and this fact has been reproduced by the CIT(A) in pages 5 and 6. It was argued that despite this fact, the CIT(A) in para 4.4 at page 7 has been persuaded only by the fact that the depositor appeared before the Assessing Officer in the remand proceedings so as to delete the addition. While doing so it was argued the CIT(A) has given a wrong factual finding on record namely that the depositor before the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the reasons that there was no material or basis before the CIT(A) to hold that the depositor has explained these cash deposits in his books as nothing new was said by the depositor after the Remand Report. This fact it was argued is supported from the fact that the CIT(A) has also not cared to discuss either the cash deposits appearing in the bank account which have been taken note of by the Assessing Officer nor has he himself cared to examine the actual dates on which as per the books the amounts were received by the depositor from the alleged sale of plot and the actual dates on which they were advanced to the assessee. The facts brought out in the remand proceedings on record by the Assessing Officer it was argued have not been specifically addressed in the impugned order as such how the CIT(A) came to the conclusion that the depositor had explained the cash deposit has not been discussed at all either on facts nor any reasoning has been given. It was argued that no facts, reasons or discussion in the impugned order the CIT(A) has taken place and decision in haste has been arrived at by the CIT(A). It was his submission that the relief allowed to the assessee by the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese peculiar facts and circumstances it would be appropriate to restore the issue back to the file of the CIT(A) so that the necessary facts and evidences on record may be considered and discussed qua the availability of funds from the alleged receipts of sale of plot on specific dates on which the payments were made and received by the assessee. A perusal of the Paper Book at pages 48 and 49 which contain a very faded and illegible photocopy of the creditor's bank pass book has been filed before the Bench. It is seen that neither the CIT(A) has cared to discuss nor the assessee has cared to make any arguments on facts to show the availability of fund supposedly from the alleged sale of plot on specific date. A perusal of page 47 would show that certain deposits were made of Rs. 5 lakhs and Rs. 6 lakhs namely 2-4-2001 and 7-2-2001 it would show that substantial cash deposits also appeared in the said pass book. As such, whether the amounts so advanced were made through the said cash available or otherwise has not been demonstrated by the assessee either before the Assessing Officer in the remand proceedings or in rejoinder to the Remand Report placed before the CIT(A) since as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion that the loan was out of the sales proceeds of the plot and not from the cash deposits has taken place. No attempt to discuss in regard to the availability of funds on specific date as observed has been addressed by the assessee before the Tribunal also. The photocopy of the bank account relied upon in Paper Book is not legible and has not been addressed entry-wise or date-wise by the ld. AR also in regard to availability of specific amounts on specific dates as such in these peculiar facts and circumstances of the case, I consider it appropriate to restore the ground Nos. 3 and 4 raised by the revenue back to the file of the CIT(A) with the direction to adjudicate afresh upon the same in the light of the discussion made above and arrive at a finding thereafter in accordance with law by way of a speaking order. Needless to say the assessee shall be afforded an opportunity of being heard. 36. The next issue agitated by the revenue vide their ground Nos. 5, 6 7 is the deletion of the addition of Rs. 6.65 lakhs by the CIT(A). 37. The relevant facts of the case are that the claim of the assessee as per learned AR is that the assessee is an influential local politician. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of loan taken and its utilisation. The assessee was also asked to produce the donors Sh. Ved Prakash Kapoor and Sh. Sanjiv Kumar Dagar with supporting evidences vide order sheet entry dated 24-2-2004 but the assessee has not produced the donors nor complete copy of bank a/c to prove the creditworthiness of the donors has been furnished. The assessee has submitted vide reply letter dated 1-3-2004 that "Shri Dagar has applied for bank statement which has not been received so far. Copy of bank a/c in the case of Shri Ved Prakash Kapoor A/c No. CA3212 for the period 1-4-2001 to 31-5-2001 has been furnished whereas gifts received shown on 28-2-2001 and 21-12-2000 and the copy of bank a/c No. 9032 does not clearly reflect the balance of Rs. 2,00,000 as on 22-12-2000 in the bank account. Since the assessee has not furnished the supporting documentary evidences to prove the creditworthiness of the donors and has not produced the donors, the genuineness of the gifts and creditworthiness of the donors have not been proved. Hence the amount of Rs. 16,65,000 is added to the declared income of the assessee under section 68 of Income-tax Act. Addition Rs. 16,65,000." 41. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven any gift to his wife or children or had he received any gift from anybody in last 10 years, Shri Ved Prakash Kapoor has stated that he has never given any gift to anybody except the above gift of Rs. 6.65 lakhs. It is strange and un-understandable that a man who had never given any gift to any of his children, wife will suddenly give gift of Rs. 6.5 lakhs without any occasion or without any other reasonable reason to a person who is already more wealthy and well to do than the donor. In view of it, the genuineness of gift is doubtful. So the gift in the name of Sh. Ved Prakash Kapoor was rightly added and deserves to be confirmed." 46. This report was confronted to the assessee as per para 5.3 of the impugned order. The learned AR filed his Rejoinder dated 29-12-2004 in respect of gift from Shri Sanjay Kumar Dagar. However in regard to the gift from Shri Ved Prakash Kapoor, the submissions made earlier were reiterated. For ready reference the submissions as recorded by the CIT(A) at page 15 of the impugned order are as under:- "As regards the gift from Shri Ved Prakash Kapoor the AR reiterated the submissions made earlier. It was stated by him that the gifts were given out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade before the CIT(A) in the rejoinder were again reiterated before him as such nothing new was stated or argued to rebut the Remand Report. It was his submission that merely statements have been given that the gift was given out of the rent receipt by the donor and the security received by him from the tenants. The actual availability of funds at the relevant point of time it was argued has not been substantiated as such not examined as per the requirement of law by the CIT(A). It was further submitted that no evidence in this regard has been placed on record by the assessee before the CIT(A) nor before the Bench. Consequently no discussion on actual facts has also taken place in the impugned order. It was his submission that herein also the finding of fact recorded is perverse on facts. It was also submitted by ld. AR that merely because the gift has been received by cheque and donor is assessed to tax is not sufficient reason as per law for the CIT(A) to grant relief in the facts of the present case. It was argued that it was necessary for the CIT(A) to give finding after referring to the facts in the Remand Report which was already on record. The Remand Report so sought by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s finding has not been controverted either by the assessee or by the CIT(A). Accordingly, it was submitted that in the facts of the case the addition in fact should have been upheld as genuineness and availability of funds at the relevant point of time allegedly from the stated sources was never established. 50. The learned AR, on the other hand relied upon the impugned order. 51. Having heard the submissions and perused the material available on record, I find myself unable to agree with the findings arrived at in the proposed order in para 18. Merely because the donor is the real brother of the assessee and has been an income-tax assessee himself the requirements under the law are not fulfilled. The only evidence in favour of the assessee's claim is that it was through banking channels. The said issue has been laid at rest by the Hon'ble Delhi High Court in the case of Sajjan Das Sons v. CIT [2003] 264 ITR 435 as such merely because the cheque is routed through banking channels that fact alone it has been held will not be sufficient to declare the transaction to be genuine. It is necessary to first establish the availability of the funds with the donor at the relevant point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e overall position of the peculiar facts as recorded where the assessee does not try to place its books of account on record attempts to justify the availability of funds for investment through gifts allegedly made to his minor son by Shri Dagar which has not been accepted by the department further has attempted to justify the availability of funds by way of gift from his brother in regard to which the full facts and circumstances in regard to the availability of fund at the relevant point of time with the donor has not been discussed at all. Apart from that he has also tried to justify the availability of funds through loans to the tune of Rs. 11 lakhs odd all these facts and circumstances as per record need to be considered. The finding in the impugned order de hors the relevant facts is legally not correct. The undue importance to the facts that the gift is through banking channel by an identifiable assessee and circumstances of the case cannot be upheld. As per record the CIT(A) has based his factual finding in regard to the funds with the donor on the general fact that the donor enjoyed a certain rental income etc. had an annual income of Rs. 6.65 lakhs i.e., the annual gifts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. The other fact on record that no gifts by the donor admittedly have been made to his wife or children and have been allegedly made of his entire alleged annual income to a brother who is better of financially also stands unrebutted. As such, the burden placed upon the assessee has not been discharged. Accordingly for the reasons given hereinabove, the finding available at in the impugned order is held to have been based on no facts, as such, factually and legally incorrect. The finding upheld in the proposed order as such with all humbleness accordingly cannot be subscribed to. The impugned order as such is set aside and the issue is restored back to the file of the CIT(A) with the direction to decide the same in accordance with law in the light of the above discussion by way of a speaking order after giving the assessee an opportunity of being heard. 53. Accordingly, ground Nos. 5, 6 7 of the revenue are allowed for statistical purposes and stand restored back to the file of the CIT(A). 54. In the result, appeal of the revenue is allowed for statistical purposes and the appeal of the assessee is dismissed. THIRD MEMBER ORDER Per G.E. Veerabhadrappa, Vice President (As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences. He was also required to give details of particulars of land and amount invested therein and further asked year-wise details of what extent the construction was completed." 4. The assessee filed certain replies in pursuance to the above queries. In respect of the construction done by M/s. Prakashwanti Palace, no names from whom the materials were purchased were given to the Assessing Officer. No opening stock and closing stock details were given. No vouchers for salary and conveyance expenses were available with the assessee. No regular books of account were maintained. The Assessing Officer disallowed 50 per cent of the total cost of construction and expenses debited to profit loss account on an estimated basis resulting in a disallowance of Rs. 6,92,760. This disallowance was challenged before the learned CIT(A) and before the learned CIT(A), the assessee explained with reference to the similar transactions in the last year and the learned CIT(A) found the rate of profit at 12 per cent declared in respect of the construction business was quite reasonable and he deleted the disallowance made by the Assessing Officer. 5. The Assessing Officer found from the details of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence proving the creditworthiness of the donor was not given, an addition of Rs. 16,65,000 was made. In the appellate proceedings before the learned CIT(A), the assessee came up with some more details. The learned CIT(A) called for a remand report from the Assessing Officer in respect of these gifts. The learned CIT(A) after going through the remand report and the details filed before him was of the view that the gift of Rs. 6,65,000 from Shri Ved Prakash Kapoor who is the real brother was accepted. According to him, the gift was genuine, gift was received by cheque and the donor is assessed to tax and he has sufficient creditworthiness to explain the nature and source of the gift and Shri Ved Prakash Kapoor had sufficient rent and security deposit receipts which had sourced the gift and there is also close relationship between the donor and the donee and the identity and genuineness of the donor is proved, the addition of Rs. 6,65,000 was deleted. The other gift was not accepted by the learned CIT(A). 7. There are other small disallowances which the learned CIT(A) had substantially deleted. Both the assessee and the revenue came up in appeal before the Tribunal. 8. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made under section 68 on account of unexplained gifts allegedly taken by the assessee from his brother Sh. Ved Prakash Kapoor without properly appreciating the facts of the case. 6. That while deleting the addition of Rs. 6,65,000 learned Commissioner of Income-tax (Appeals)-II, Agra has totally ignored the facts that the alleged donor Sh. Ved Prakash Kapoor has never given any gift to anybody even to his wife or to any of his children. 7. That while, deleting the addition of Rs. 6,65,000 learned Commissioner of Income-tax (Appeals)-II, Agra has totally ignored the facts that the alleged gift was claimed to be given without any occasion or without any other reasonable reason to a person who is already more wealthy and well to do than the donor." 10. It may be seen that the revenue has agitated mainly in respect of the three issues. 11. When the matter travelled to the Tribunal, the learned Accountant Member who proceeded to draft the order for the Bench has dismissed both the appeals by the assessee and the revenue. When the draft order was placed before the learned Judicial Member, she took certain serious exceptions as to the manner of the discussions and she expressed h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts and circumstances of the case to again set aside the matter to the learned CIT(A) without any valid reason. In fact, the learned CIT(A) it may be mentioned had called for a remand report from the Assessing Officer vide his letter dated 13-12-2004 and the Assessing Officer has not made any comments meaning thereby even the Assessing Officer cannot have any grievance in respect of this matter. In the light of above, I concur with the learned AM on this issue. 14. As regards the second issue, the learned DR supported the findings of the learned JM. According to him, the assessee has not discharged the onus that lay upon him to prove the cash credit under section 68 of the Act. The addition, according to him, deserves to be restored. The learned counsel for the assessee, on the other hand, strongly supported the order of the learned AM in the light of the discussions that are made in the order of the learned CIT(A). The learned counsel pointed out that cash credits have been sufficiently explained with all supporting documents and there is no reason to make an addition under section 68 of the Act. 15. I have carefully gone through the records and completely agree with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Rs. 6,65,000. In these facts and circumstances, it cannot be said that gift received from Shri Ved Prakash Kapoor cannot be accepted as genuine. I, therefore, agree with the view taken by the learned AM in respect of the same. In my view, there is no need in the matter to be again restored to the file of the learned CIT(A). The learned CIT(A) in this case had obtained the remand report from the Assessing Officer on all the evidences that were there before him and no purpose would be served in again restoring the matter before the learned CIT(A). Accordingly, I agree with the view of the learned AM in respect of the said issue. The matter will now go before the Division Bench. ORDER Per Hari Om Maratha, Judicial Member.-In these cases, there was a difference of opinion between the Members constituting the original Bench. The learned Accountant Member had dismissed both the appeals by the assessee and the revenue whereas the ld. Judicial Member had agreed with the dismissal of assessee's appeal, but allowed the appeal of revenue for statistical purposes. The learned Third Member has agreed with the view taken by the learned Accountant Member. Thus, in the light of the majority ..... X X X X Extracts X X X X X X X X Extracts X X X X
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