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TMI Blog2018 (9) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... tice of converting the black money into white may not be correct in the facts and circumstances of the case. Apart from the loan transactions, the AO has relied upon the statements given by Shri S.K. Terdale. We have noticed earlier that the statements given by him were not substantiated and hence not reliable. We have also noticed that the assessee cannot be expected to prove a negative fact. Accordingly we are of the view that the statements given by Shri S.K. Terdale cannot be taken support by the Assessing Officer. The assessee has not accepted the statements of Shri S.K. Terdale. D.R mentioned about the failure of the assessee to avail cross-examination. We agree with the contentions of the ld A.R that there was no requirement to make any cross examination, since the assessee was not required to prove any negative fact. Hence, for the detailed reasons, discussed in the preceding paragraphs, we are of the view that none of the evidences support the case of the Assessing Officer. Accordingly we set aside the orders passed by ld CIT(A) on this issue in all the three years under consideration and direct the AO to delete the impugned additions made in all the three years u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e three years under consideration as detailed below:- Assessment year Amount (Rs. in lakhs) 2009-10 50 2010-11 316 201 1-12 519 885 Shri S.K. Terdale submitted the name and address of the assessee and also identified him as MLA of Belgaum South. He however submitted that he does not have FD account opening forms of any of the depositors. He confirmed his statement again on 23.1.2012. 4. Thereafter, the ADIT summoned the assessee and confronted the statement so given by Shri S.K. Terdale. The assessee, however, disowned the alleged deposits and stated that none of the transactions are related to him. The assessee further submitted that he does not have any deposits with the above said Society and is not associated with it in any manner. The AO offered the assessee an opportunity of cross-examining Shri S.K. Tardale and the Chairman of Society, but the assessee refused to avail the same. 5. Based on the above said information, the AO reopened the assessments of the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the assessee has claimed to have received such kind of moneys from seven persons. However, Mr. Terdale could produce only two parties who have accepted the amounts as their own deposits. Neither the Revenue nor Mr. Terdale could trace four parties at all. The learned AR submitted that the above facts clearly show that the statement of Mr. Terdale could not be relied in toto. The assessee, being a MLA, has duly cooperated with the ADIT/Assessing Officer by appearing before him and responding to his notices. Since the transactions are not related to him, the assessee has totally denied the transactions. The learned AR submitted that the assessee is a popular political figure and it is quite possible that somebody might have instigated Mr. Terdale to write name of the assessee or used the name of the assessee without the knowledge of Mr. Terdale either to hide his identity or to damage the social and political carrier of the assessee. He further submitted that Mr. Terdale has admitted in the statement given by him that he has never met the assessee and money was brought by some other persons and not by the assessee. Mr. Terdale has also admitted that he does not remember t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se loans aggregating to ₹ 120 lakhs were availed by the relatives only in financial year 2010-11, where as the assessee was alleged to have been making deposits from financial year 2008-09 onwards. Had it been a case of converting black money into white, the assessee would have taken loans in financial year 2008-09 itself. He submitted that the loan transactions are independent transactions unconnected with the alleged deposits linked to the assessee. Accordingly, he submitted that the loans taken by the relatives cannot be taken as corroborative evidences and hence the very basis on which the Assessing Officer has made impugned additions would fail on account of foregoing discussions on the loans aspect. 12. The learned AR submitted that the entries found in the books of account alone shall not constitute sufficient evidence to implicate a person since the same is only corroborative evidence. He submitted that the above said proposition was laid down by Hon ble Supreme Court in the case of Common Cause (A Registered Society) v. Union of India [2017] 394 ITR 220. He submitted that the Hon ble Supreme Court has held in the case of CBI v. V.C. Shukla AIR 1998 SC 1406 that en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t M/s. Vasu Films had produced some other books of account for the purpose of assessment. Accordingly, the learned AR submitted that facts available in the present case are identical with the facts available in the case of Miss Lata Mangeshkar (supra). Accordingly he submitted that the entries made in the diary maintained by Mr. Terdale cannot, be relied upon by the Assessing Officer for making the impugned additions. He further submitted that the statement given by Mr. Terdale is self-serving statement and the same could not have been relied upon by the Assessing Officer. Accordingly the learned AR submitted that the additions made in all the three years under consideration are without any credible evidence or basis and hence they are liable to be deleted. 16. The learned DR, on the contrary, submitted that the diary has been found during the course of survey operations conducted in the hands of the society/bank and it contained entries relating to receipts of money from the assessee. The diary has been maintained by Mr. Terdale and he has explained that the moneys were received from the assessee and hence it has been recorded against the name of the assessee. He has further st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R submitted that the Assessing Officer was justified in taking the view that the assessee has adopted the modus operandi of converting his black money into white through banking operations. The learned DR further submitted that the Principles Preponderance of probabilities can be adopted in Income Tax proceedings and it is always not necessary to bring on record foolproof evidences. He submitted that various evidences collected by the Department and circumstances in which entries were found to have been made in the diary would show that the Assessing Officer has correlated the evidences and entries made in the diary and the principles of preponderance of probabilities support the stand taken by the AO. The learned DR further submitted that the entries, which could not be linked with any specific person, have been assessed in the hands of the assessee as unexplained cash credit. Accordingly, learned DR submitted that learned CIT(A) was justified in confirming the additions made by the Assessing Officer in all the three years under consideration. 18. In the rejoinder, the ld A.R submitted that the assessee has refuted the allegations made by Shri S.K. Terdale in his statements a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts have been received from seven persons, which included the name of the assessee also. Though Shri S.K.Tardale submitted that he will produce all the seven persons, according to ld A.R, four persons could not be traced at all and only two persons have admitted that they have given money to Shri S.K. Tardale as recorded in the diary. The remaining person was the assessee and he has also appeared before the tax officials and submitted that he does not have any type of connection with the Society/Bank and refuted/disowned the entries recorded in the diary against his name. He also did not accept the statements given by Shri S.K. Tardale and stated that he has not given any money to the society as alleged by Shri S.K. Tardale. 21. Thus the impugned additions have been made by the AO on the basis of statements given by Shri S.K.Terdale with regard to the entries noted in the diary found during the course of survey operations, referred above. It was also noticed that some close relatives of the assessee have taken loans for an aggregate amount of ₹ 120 lakhs from the Society/bank in F.Y 2010-11. The AO has considered the same as an important piece of evidence supporting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri S.K. Terdale, in our view, the same cannot be used against the assessee. As rightly pointed out by ld A.R, in our view, the assessee is being asked to prove a negative fact, which is not permissible under the law. 24. Now we shall examine the impugned transactions under the test of human conduct and human probabilities. As noticed earlier, the aggregate, amount recorded against the name of the assessee was ₹ 8,85 lakhs in a period of three years though various instalments, In case of money transactions of high magnitude, a prudent person would always insist for some kind of acknowledgment for the payments made, i.e., when the assessee makes payment to Shri S.K. Terdale, the assessee would have got acknowledgment from him and when Shri S.K.Terdale returns back money to the assessee, he would have got acknowledgment from the assessee. If there is no such acknowledgment, then there bound to be some difference with regard to the quantum of money transacted and hence in order to ensure that no such difference should arise, usually, some kind of acknowledgment/record shall be maintained. Under practical circumstances, a person could insist on repayment of money only if some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the money was received from the persons named in the diary, but could not furnish any other corroborative material to support his statement. Shri S.K. Tardale, however, could produce two persons and they have also owned up the transactions, meaning thereby, the society/bank can be said to have proved its stand with regard to those two persons. We have noticed that the assessee has denied/disowned the transactions and has also not accepted the statements given by Shri S.K.Terdale, In this kind of situation, it is the responsibility of the Society/S.K. Terdale to show that the assessee was wrong and the society was right. We have noticed earlier that the society/S.K. Tardele could not substantiate the statements given by him and also could not prove that the assessee was wrong. Hence, in our view, the society/bank or Shri S.K.Tardale could not be said to have substantiated or proved its stand in respect of the assessee. As observed earlier, it may not be fair to compel the assessee to prove a negative fact. The ld D.R, during the course of his argument, also submitted that the unexplained deposits have been assessed in the hands of society/bank as unexplained cash credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that too in the third year only. If the theory of the Assessing Officer that the assessee bias given money in black and obtained loan in white is accepted, then the assessee should have taken loans through his relatives in FY 2008-09 itself. If the above said theory of the Assessing Officer is accepted as correct for a moment, then the assessee would not have repaid the loans so long as the deposits were available with the society. It was not shown that the entire money claimed to have been received from the assessee has been repaid to the assessee. The manner of repayment of money, if any, has also not been examined. Since the deposits do not stand in the name of the assessee, effectively the assessee will not have control over the deposits. However, in respect of loan taken, the borrowers would be liable to repay the loans, since the society/bank can always initiate legal action against the borrowers for recovery of loans. A prudent man cannot be expected to enter into such kind of deals. The loans taken through accounting channels can be repaid only through accounting channels only. We have noticed that the loans taken by the relatives have been repaid by them. We notice that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken by the Tribunal. In our view, this decision supports the case of the assessee also. The entries recorded in the diary were different from the entries found recorded in the regular books of account of the Society, i.e., the names of depositors noted in diary were not found in the regular books of account of the Society. Before income tax authorities, the society could have furnished only its regular books of accounts and it could not have relied upon the diary. Even though Shri S.K. Terdale has explained the entries recorded in the diary, he could not bring any material to substantiate his statements. The Chairman of the Society or any other higher authorities does not have any knowledge about the entries made in the diary. The assessee has not accepted the statements of Shri S.K. Terdale. The ld D.R mentioned about the failure of the assessee to avail cross-examination. We agree with the contentions of the ld A.R that there was no requirement to make any cross examination, since the assessee was not required to prove any negative fact. Henee, for the detailed reasons, discussed in the preceding paragraphs, we are of the view that none of the evidences support the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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