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TMI Blog2008 (11) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... e. On scrutiny of the balance-sheet, it was found that the assessee had shown liabilities aggregating to Rs. 80,06,090 under the head "advance against properties". It was further found that the liability under this head amounted to Rs. 9 lakhs at the beginning of the year. Thus, advances of Rs. 71,06,090 were taken during the year. The assessee was required to furnish the details of liabilities raised during the year. It was submitted that the liability pertained to advances taken against HCL property at Rs. 34,32,664 and Rajpur Heights at Rs. 37,23,426. The list of persons, their addresses and the amounts taken as advance in respect of aforesaid projects were also filed. The Assessing Officer required the assessee to establish the genuineness of the liabilities in terms of section 68 of the Act. The assessee produced evidence such as registration forms for booking of flats to substantiate its claim that the advances were genuine. The Assessing Officer required the production of the depositors. It was explained that in spite of the best efforts of the assessee, he had not been able to persuade the depositors to appear before the Assessing Officer. However, it was pointed that regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded to the learned CIT(A) along with the following comments: "1. Affidavits of 9 persons of district Bijnore and Amroha filed during the course of assessment proceedings cannot be accepted as evidence as the persons have stated that affidavits were prepared by the assessee and most of the persons are marginally qualified and do not know how to read, write and understand English. The signatures put on the affidavits are quite different from those put on statements. Some of the persons have stated signing of the affidavits at Dehradun, while some at Bijnore while all the affidavits have been deposed before one Notary of Bijnore : (1) Shri Rajesh Pal Singh, Advocate of Bijnore, is shown to have introduced all the 9 persons which is practically not possible since the persons belong to different places of Bijnore and Distt. Amroha. (2) District Agricultural Officer, Bijnore, has reported net income less than 50 per cent in case of all the crops other than sugarcane. The proportion of net income out of gross income as stated by the persons is highly excessive. (3)The persons have denied having taken any receipts while giving the money for booking of the flats. Amount is still o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at source. He was also not owning any agricultural land. Therefore, capacity in his case also was not proved. Thus, additions of Rs. 1.50 lakhs and Rs. 3.75 lakhs in their cases were confirmed and the addition of Rs. 31.98 lakhs in respect of 10 persons was deleted. The learned CIT (Appeals) also made certain comments about his feeling that there was an under current to punish the assessee some how or the other in spite of the fact that he had declared income of Rs. 38,90,960 and another return was filed in the status of Association of Persons declaring income of Rs. 76,73,190 for assessment year 2000-01. Aggrieved by this order, both the assessee and the revenue are in appeals. ITA No. 2454 (Delhi)/2007 - Appeal of the assessee 3. Ground No. 1 is to the effect that the Assessing Officer erred in selecting the case for scrutiny against the intent and spirit and the instructions of the Board in this matter. In this connection, it is mentioned in the order of the learned CIT (Appeals) that the assessee had moved an application before the CIT (Appeals), Dehradun, on 16-7-2004, and the Chief Commissioner of Income-tax on 6-9-2004. Further, the assessee moved an application to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -paid the tax in any manner, he may serve on the assessee a notice requiring him to attend his office or produce or cause to be produced any evidence on which the assessee may rely in support of the return. This provision starts with a non obstante clause with the words "Notwithstanding anything contained in clause ( i )". Clause ( i ) deals with a situation where the Assessing Officer has reason to believe that any loss, exemption, deduction etc. claimed in the return is inadmissible, he may serve a notice on the assessee. Clause ( ii ) is an omnibus provision for complete scrutiny of the return in case the Assessing Officer considers it necessary or expedient to ensure that the assessee has not under-stated the income or has not computed excessive loss or has not under-paid the tax in any manner. The issue of notice under this section is based upon the consideration of the Assessing Officer and he is the authority to decide whether a notice should be issued or not. Thus, the general guidelines issued by the Board in the matter to the Assessing Officers are not in the nature of binding instructions, as if so interpreted, the instructions will undermine the aforesaid provision fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of proving satisfactorily an entry of credit in the books of account is on the assessee. In this case, the advances were received in cash allegedly for booking of flats. Therefore, it was for the assessee to adduce evidence for establishing the identity of the creditor, his capacity to advance the money and the genuineness of the transaction. The learned CIT(Appeals) has given a clear finding that Kishore Kumar is stated to have invested Rs. 1.50 lakhs. He is assessed to tax and his only source of income is salary of Rs. 6,000 p.m. He has no other source of income and does not own any agricultural income. In the case of Lalit Kumar it was mentioned by him that he stated to have advanced a sum of Rs. 3.75 lakhs. He is a petty contractor, who does not even file the return of income, which is usually done by such persons to claim refund of tax deduction at source. He was also not owning any agricultural land. Thus, it is clear that the capacity to advance monies by these persons was not proved and, therefore, the transaction was also not genuine transaction for purchase of flats. It was further pointed out that the assessee has not worked on Rajpur Heights project and even land for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem. 6.1 In this connection, the learned DR referred to page 12 of the assessment order, where it is mentioned that having regard to the facts and circumstances of the case, the material placed on record, the discrepancies found in the evidence and the arguments made by the assessee, it is concluded that deposits of Rs. 37,23,426 shown in the names of 12 different persons were not genuine. The assessee introduced his own money in the garb of advances against booking of flats in project which never came into existence. It is further mentioned that there was an excess deposit of Rs. 426 and the identity of the person who gave such excess deposit, was not disclosed. Therefore, the entire amount of Rs. 37,23,426 was considered as unexplained credit in the books of the assessee, liable to be taxed under section 68 of the Act. Thereafter, he referred to the findings of the learned CIT (Appeals) in paragraph 5.7 in respect of Kishore Kumar and Lalit Kumar, in which the alleged advances in respect of these persons were held to be not proved under section 68. He also referred to the findings of the learned CIT (Appeals) in paragraph 9, in which the deposits in respect of 10 other person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee actually received the deposits or not. Therefore, it was agitated that the learned CIT (Appeals) was right in deleting the impugned addition of Rs. 31.98 lakhs. 6.3 We have considered the facts of the case and rival submissions. We do find weight in the argument of the learned DR that the learned CIT (Appeals) did not go into the question of income of the agriculturists and their house-hold expenditure with a view to find out whether they had enough savings with them for making advances for booking the flats. The evidence in regard to sale proceeds of agricultural products etc. not produced or examined in this behalf. On the other hand, he sustained the addition in the case of Kishore Kumar and Lalit Kumar by having reference to the smallness of their incomes. There is some contradiction in the aforesaid two findings of the learned CIT (Appeals) inasmuch as the deletion of the addition is not based upon the estimate of their savings, leading to any firm conclusion about the capacity of the depositors. We also find that the learned CIT(A) made some averments about his feeling that the assessee was sought to be punished by the Assessing Officer, for which there is no evid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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