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TMI Blog2014 (10) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... r findings of facts that AO failed to properly considered the material produced by the assessee in discharge to its primary onus - due to non-appreciation of assesses explanation and evidence in a proper manner, AO has made contradictory observations the order of the CIT(A) is upheld as the assessee duly discharged its primary onus in terms of sec 68 to explain the entries in SBI and ABN Amro bank A/cs Decided against revenue. Unconfirmed creditors Held that:- Assessee has filed sufficient evidence which are detailed above and claims to have discharged its primary onus in terms of sec 68 - CIT(A) has rightly held that in income tax proceedings attested photocopies duly signed are admissible as evidence in income tax proceedings - the assessee has been able to demonstrate that due to name change of Taral Vincom to Link point Infrastructure Pvt. Ltd w.e.f. 6.5.2009, the notice u/s 133(6) remained unserved - AO has to ascertain the facts and discharge of primary onus on the basis of material available on record after giving adequate opportunity of hearing - He cannot brush aside the entire evidence on the pretext that party is not physically produced more so when it is appar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontest the proposed additions, you are required to file your explanation along with the cash flow statements in the following formats:- Sl. NO. Date A/c-1 A/c-2 A/c-3 Net Balance at the end of the day Remarks 1. 01-04-07 Rs. X1 Rs. X2 Rs. X3 Rs. X6. 2. 02-04-07 3. 03-04-07 4. 04-04-07 365th day Upto 31- 03-08 2. You have shown investment /purchase of land details are as per your Balance Sheet / P L A/c. You are required to explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not materialize, the money is refunded. As explained, we reproduce the letter submitted on 23rd December, 2010. The assessee company paid advances to agriculturists for purchase of land which was conditional as to the land use. The assesse proposed to build hospital and/or educational institution, which was dependent upon the change in land use under the master Pan, as the lands were agricultural. The Master Plan did not change the land use and the advances paid for the same were received back; otherwise the same would have been forfeited. Complete details of cash withdrawn from the bank for the said purpose in the shape of relevant bank statement are attached and cash book for the relevant period is produced for verification. Copy of bank statements for assessment year 2008-09 have already been submitted. It is once again submitted that there were no cash credits/loans received by the assessee during the year. 2) The assessee is doing business of sale/purchase of real estate. In real estate the prices fluctuate very unpredictably and there is no standard of GP/NP rate. The assessee had a net profit rate of 2% in the previous year, i.e. assessment year 2007-08, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party is also sending the set of documents through Speed Post and will reach you in a day or two. We express our inability to produce the party at such a short notice (24 hours). However, complete set of documents which are verifiable with PAN have been submitted. 4) Books of accounts are produced. 2.2. AO, however, apropos first ground, was not satisfied with assessee s explanation and apropos first ground made an addition of ₹ 20,37,05,000/- u/s 68 treating all the bank deposits in ABN Amro Bank and State Bank of India as unexplained, by following observations: The submissions of the assessee has been considered and found not tenable on the basis that it has only been mentioning that complete details of all entries in bank accounts re submitted but no such details have been ever furnished during the assessment proceedings. The assessee has failed to provide the information in the given pro forma along with evidences and full narration thereto and has also failed to prove sources of deposits. It is also note above that the assessee has sold/purchased properties at the rate which is quite below that the circle rate which cannot be a genuine case. It is an undis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and given advance for purchase of land is proved. Their credit worthiness has been proved and the genuineness of the transactions has been proved as all payment are through banking channels. Perusal of the record showed order sheet entry dated 24/12/10 He produces ledger (printed copy) of cash book, bank book and other books of account which could not be verified in absence of bills/ vouchers. It is therefore very clear that books of account were produced. However it appears vouchers/bills were produced. But here again the AO did not provide any further opportunity to the appellant to produce the bills/vouchers. Also no additions have been made on the ground of non verification of expenses in absence of bills and vouchers. The AO has stated that the appellant has sold/purchased properties at the rate which below the circle rate. However, no instances have been cited by the AO to show in which cases this has occurred. The AO also did not make any inquiries in this regard. The addition ultimately made by the AO was under Section 68. I have further perused the record and seen that copies of bank account ledger accounts, cash book and copies of all sale deeds, confirmation f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplete details of the parties, confirmation copies, copies of cheques and income tax details were provided to the Ld. Assessing officer. 4) An amount of ₹ 1,75,00,000/- was received as advance and was paid back during the year. Here also complete details of the parties, confirmation copies, copies of cheques and income tax details were provided to the Ld. Assessing officer. 5) An amount of ₹ 1,07,05,000/- was received on account of sale of land. Copies of the conveyance Deeds relating to each sale were submitted. 6) ₹ 27,50,000/- was the amount of cash deposited in the bank account of the assessee which was also treated as unexplained cash credit. 7) An amount of ₹ 1,65,00,000/- was deposited as advance received from parties as on 31.03.2008 and the same was reversed on the same day as the cheque was bounced. The cheques which bounced can never be credited to the party s account again and therefore cannot be treated as unexplained cash credit, which is totally unreasonable and without any logic. In my view the AO should have given a finding in respect of each person who had given the deposit/advance / credit. To add up all without making p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increase in sundry creditors was unexplained by following observations: 5. From the records it is seen that there is huge increase in sundry creditors of ₹ 4,32,63,611/- as compared to the previous year of ₹ 56,217/-. The assessee has submitted that amount was standing against the party Taral Vincom Pvt. Ltd which was paid back subsequently. To verify the claim of the assessee notice u/s 133(6) of the Act back subsequently. To verify the claim of the assessee notice u/s 133(6) of the Act was issued to Taral Vincom Pvt. Ltd., 37A, Bentick Street, Kolkata- 700069 asking the party to furnish following information: 1. Certified ledger copy of the above named assessee in your books of account. 2. Proof of payment made to the above named assesse through banking channel. 3. Kindly explain on what account the said payments were made by you. 4. Copy of bank statement, copy of ITR and copy of audited balance sheet and audit report be submitted for AY 2007-08, 2008-09, 2009-10. 5. Kindly provide share holding pattern for the financial year ending 2007, 2008 and 2009. 2.5. The 133(6) notice was returned back with the remark Not known . The appellant was ask ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is directed to forward the details of all persons who have invested in the land with M/s Shokeen Properties Pvt. Ltd. to their respective AO s. The concerned AO s may examine the investment of the investors made. If on the basis of details may be gathered by AOs, the AO of M/s Shokeen Properties Pvt. Ltd. gets information that the amounts represents the income of the appellant in terms of the provision of the Act the AO may initiate action under section 148 for the relevant assessment year in the case of the appellant on the basis of such information. 2.7. Aggrieved revenue is before us. Ld. DR contends that: (i) CIT(A) has failed to appreciate that there was non compliance on the part of the assessee. Thus, it indicates that the assessee failed to discharge its onus; (ii) The confirmations are from unconfirmed creditors and various doubts about the valuation of property transactions being less than the market value has been pointed out. Thus, assessee was generating unaccounted money which has been introduced in the bank accounts on various dates. (iii) The notice sent to Taral Vincom came unserved. Therefore, the assessing officer drew adverse inference and made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions about facts, law and circumstances has based his observations and findings on cogent material and reasonings. 4.1. Apropos first ground i.e. ad hoc addition of all the credit entries in SBI And ABN Amro Bank A/cs it is pleaded that: (a) The assessee is a Private Limited Company and is required to maintain proper books of account in accordance with various regulatory laws. The accounts are approved by the board of, shareholders and also field before the Registrar of Companies. No adverse comment/ qualification have been made in the statutory audit report/ Tax audit report. (b) The complete correspondence during the course of assessment filed by the assessee with the Assessing Officer is part of the paper book. The gamut of evidence filed corroborates assessee s stand about sufficient discharge of its primary onus in this behalf. (c) It shall be pertinent to mention that for the purpose of detailed verification, complete ledger was retained by the learned assessing officer. A fresh set of Cash book and Ledger along with all the supporting vouchers/ documents were produced as mentioned in letter dated 28th December, 2010. (d) An affidavit duly sworn by Sh. Dhiraj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r giving adequate reasons for granting the relief. (h) It is submitted that the bank deposits are not credits but debits. It represents outflow of funds and not inflow of funds. Cash credit necessarily by definition involves funds received (inflows) and not funds going out (outflows). The Ld. Assessing Officer has wrongly invoked sec. 68 to add even outflows which is not as per law. (i) In assessee s case the amounts were received against sale of land, the sale deeds of which were filed with the Ld. Assessing Officer. Advances received from the customers and refund and advances received back with all the vouchers/ confirmations and copies of cheques were filed with the Ld. Assessing Officer. Therefore, there is no justification in insisting for original bills/vouchers relating to expenses with the additions made. (j) There is no logic/basis of addition of ₹ 20,37,05,000/- as the income of the assessee, which is against the letter and spirit of the law. (k) The total credits in ABN Amro Bank were taken for 3 months period only. There were credits for the remaining 9 months of ₹ 22,67,62,500/-. In SBI the credits for the entire 12 months was taken. Ld counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat each instance of cash credit is to be identified and a bunch of transaction without specifying the details cannot be added u/s 68. Thus, the action of assessing officer is also to the contrary to the mandate of Hon ble Delhi High Court. 5.3. Keeping in view these facts, circumstances and compliance on record the discharge of initial onus is not properly rebutted by AO. Assessee has explained each credit entry in both the bank a/cs along with the source thereof i.e. cash available in books. Bank a/cs are disclosed and part of the regular recording of assesses real estate business. They have not been rejected, therefore, the books of accounts and generation of cash is thus impliedly accepted by AO. Having accepted the books of a/cs it does not lie with assessing officer to adopt a presumptive approach to summarily hold that all credit entries in bank and books are unexplained. There is total lack of appreciation of facts and material available on record and the assessing officer s observations suffer from self contradictions. CIT(A) has duly verified the same from record, besides is no revenue ground that any additional evidence was relied on by CIT(A). Power of ld. CIT(A) are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt of Income Tax Return for assessment year 2008-2009 filed with I.T.O. 3(1), Kolkata vide receipt No. 0331000349 dated 14-10-2008. (d) Certificate of Tax deducted at source. (e) Photocopies of all the Cheques issued to the said party (M/s Taral Vincom Pvt. Ltd) (f) Copy of Bank account of Said Party (M/s Taral Vincom Pvt. Ltd.) with AXIS Bank towards depicting credit of cheques issued by us to them. (g) Audit Report, Directors Report and complete accounts including Balance Sheet and Profit and Loss account with all schedules. The amount of contractual receipts in schedule 8 are ₹ 77,74,34,648/-, which includes our amount of ₹ 4,31,66,881/- and the figure of Sundry Debtors in Schedule 3 in ₹ 31,50,60,434/- which also includes our figure. (h) The figure of TDS in schedule 5 is ₹ 74,73,019/- which includes TDS deducted by us and accounted for in their accounts. (i) Copy of ledger account of M/s Taral Vincom Pvt. Ltd. (j) Certificate of Registrar of Companies, West Bengal, certifying the change of name of the company from Taral Vincom Pvt. Ltd. To Linkpoint Infrastructure Pvt. Ltd w.e.f. 6.5.2009. (iv) The argument of the learned assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Metals 214 Taxman 423 Oasis Hospitalities 373 ITR 119 7. We have heard the rival contentions and perused the material available on the record. Assessee has filed sufficient evidence which are detailed above and claims to have discharged its primary onus in terms of sec 68. AO has rejected the explanation on the ground that original documents have not been filed. In our view ld. CIT(A) has rightly held that in income tax proceedings attested photocopies duly signed are admissible as evidence in income tax proceedings. It is more so as technical rules of evidence are not applicable to income tax proceedings and third parties can not be expected to hand over their original documents. In our view the assessee has been able to demonstrate that due to name change of Taral Vincom to Link point Infrastructure Pvt. Ltd w.e.f. 6.5.2009, the notice u/s 133(6) remained unserved. Besides one day time given for physical production of party was too short. AO has to ascertain the facts and discharge of primary onus on the basis of material available on record after giving adequate opportunity of hearing. He cannot brush aside the entire evidence on the pretext that party is not physically pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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