9911796707
TMI Blog2014 (2) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... pur from three persons, namely Shri Sobran Singh S/o Shri Gainda Lal, Babarpur, Sikandara, Agra, Smt. Shivdhara w/o Shri Sushil Chand Yadav, 43/11, Sikandara, Agra and Shri Vijay Bhan Singh S/o Shri Nawab Singh, Bainpur, Agra. Shri Sobran Singh is shown to have paid Rs.11 lacs and Smt. Shivdhara and Shri Vijay Bhan Singh are shown to have paid Rs.10 lac each. In order to examine the correctness of the explanation fled by the assessee, the AO required all these persons to be produced before him. However, only one person i.e. Shri Sobran Singh was produced before the AO and after examination of Shri Sobran Singh, the AO found that he had no capacity to pay Rs.11 lac in cash and therefore, creditworthiness of Shri Sobran Singh was not established. The other two persons were not produced before the AO and therefore, their creditworthiness and identity, both could not be established. The AO also made independent inquiry through his Inspector who also reported that these two persons are men of no means and therefore, after finding that the explanation offered by the assessee about the source of cash deposit of Rs.30 lac in her bank account was not satisfactory, the AO held this amount as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed to prove their creditworthiness. Copy of the sale deed dated 01.06.2007 of Rs.26,50,000/- was also filed to show that Shri Sobran Singh and other co-owners have sold their land would prove that he was having sufficient funds to give advance to the assessee for purchase of land. It was, therefore, submitted that the addition u/s. 69A is unjustified. The ld. CIT(A) remanded the matter to the AO for examination of all the three persons who have advanced money to the assessee and the AO examined all the three persons and their statements were recorded and were forwarded to the ld. CIT(A) for his perusal. The ld. CIT(A) called for the explanation of the assessee because he was not satisfied with the creditworthiness of the purchasers. The assessee submitted a detailed reply before the ld. CIT(A) which is also incorporated in the impugned order, in which the assessee reiterated the submissions already made and also explained that due to dispute of measurement, the sale deed could not be executed and the purchasers asked for the refund of the amount which was returned through account payee cheques. If a person comes and gives advance for purchase of property, the seller is not requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em through account payee cheques. The purchasers have also filed their affidavit and copy of the bank accounts and the transactions carried out through their bank account subsequently also support the case of assessee that all the purchasers were having creditworthiness to enter into the transaction of purchase of property. Even in the case of Sobran Singh, copy of sale deed dated 01.06.2007 is filed at page 31 of the paper book to show that he had sold the property along with other co-sharers in a sum of Rs.26.50 lacs. He has, therefore, submitted that it is not in dispute that advance money was returned through banking channel, which is also verified by the AO. Therefore, in case of advance taken by the assessee, there is no loan or deposit to attract these provisions of law for making addition against the assessee. The assessee on receipt of advance money in cash made deposit in her bank account. He has submitted that from the same bank account with Oriental Bank of Commerce, in which the assessee made deposit of Rs.30 lacs, amounts were refunded to the same buyers. Copy of the bank account is filed at page 48 of the paper book. He has submitted that the assessee has been able t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee is over. Whether that person is an income-tax payer or not and where he had brought this money from, is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be the income of the firm for the purposes of income-tax." (v). The decision of Hon'ble Allahabad High Court in the case of Commissioner of Income-tax Vs. Jauharimal Goel, 147 Taxman 448, in which it was held - "Section 68, read with section 69, of the Income-tax, 1961 - Cash credits - Assessment year 1987-88 - Whether section 68 applies when an amount is found deposited in books of account of assessee and not in third party - Held, yes - Whether assessee cannot be asked to prove source of source or origin of origin of a deposit - Held, yes - In books of account of assessee, certain deposits were found credited in name of his two daughters - Assessee explained that money was deposited by his daughters after withdrawi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the agreement to sale was not executed in writing to fix the terms and conditions of the sale transactions. Therefore, in the absence of written agreement, the ld. CIT(A) was of the view that the veracity of the claim of assessee could not have been examined. The beginning of these findings of the ld. CIT(A) would show that the ld. CIT(A) was swayed by the fact that in the absence of written agreement to sale, the transaction between the assessee and the buyers is not genuine and ultimately the ld. CIT(A) dismissed the appeal of the assessee finding that the assessee has not been able to prove the creditworthiness of the purchasers. However, there is no such requirement under the law to execute written agreement to sale for entering into the transaction between the parties or to take advance. Under the law of contract, there is no need to execute agreement to sale in writing. The oral agreement is also permissible in law which has to be proved and inferred by the act of the parties. The assessee made a claim before the authorities below that she has entered into agreement to sale and received advance of Rs.31 lacs from three purchasers which amount was deposited by her in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e having creditworthiness to make advance with the assessee for purchase of land. All of them have confirmed transaction entered into with the assessee and refund of the amount on cancellation of deal and also explained how they have arranged the money for giving advance to the assessee. It is not a case of loan or deposit taken by the assessee. It is a case of advance taken against the proposed sale of property in question. The identity of the purchasers is not in dispute. The genuineness of the transaction could not be disputed. It is, therefore, none of the concerns of the assessee at the time of taking advance money against sale of property as to from where the purchasers have arranged the money to give advance to the assessee. If the transaction between the parties would have completed and the sale deed would have been executed, where was the question for the AO to have disbelieved the transaction between the parties. In the case of cash sale or immediate consideration passed to the seller, the seller is not required to verify from where the purchaser has made payment to him. Such fact regarding creditworthiness of the buyers would have been relevant in the case of credit sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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