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TMI Blog2017 (10) TMI 1402X X X X Extracts X X X X X X X X Extracts X X X X ..... P.K. Kasliwal For the Respondent(s) : Ms. Parinitoo Jain ORDER 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal wherein the Tribunal has partly allowed the appeal of the department. 2. While admitting the appeal this Court on 26.09.2012 framed following substantial question of law:- "Whether, the tribunal was justified in law in admitting new plea contrary to the facts on record and contrary to the Rule 29 of the Appellate Tribunal Rules, 1963 and to based his findings thereon while sustaining the addition of ₹ 12.50 lacs, can be said to be legal one?" 3. However, on an application moved on 08.09.2017, We have added one more question on 20.9.2017 which reads as under:- "Whether addition made by the Assessing Officer u/s 68 of the IT Act, and deleted by the CIT(A), can be controverted u/s 69A by the Tribunal while sustaining the addition of ₹ 12,50 lacs, irrespective of the fact that the appellant is not maintaining books of accounts and source of income is pension and interest only, such conclusion is proper?" 4. The Tribunal in its order dated 2.3.2012 has observed as under:- "2. The facts of the case are that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses as well as PAN, were submitted. It would at this stage be relevant to narrate the background facts of the case. The assessee made a verbal Agreement for the sale of his residential house at Sri Nagar Road, Ajmer for ₹ 45.00 lacs, receiving a sum of ₹ 5.00 lacs from one, Uma Khandelwal, vide cheque deposited in his bank account with ICICI Bank (erstwhile `Bank of Rajasthan') on 17/1/2007. The property had been sold to four buyers i.e., three others besides Uma Khandelwal, to be conveyed thereto vide separate (registered) sale deeds to be executed within 3 months, i.e., by end April, 2007. In anticipation of the receipt of the sale proceeds by the said date, the assessee entered into an agreement for purchase of a residential property at Bhagchand Soni Nagar, Foy Sagar Road, Ajmer for a sum of ₹ 11.01 lacs on 21-05-2007, paying a token amount of ₹ 21,101/-, again, by cheque drawn on his bank account with ICICI Bank. The balance payment of ₹ 10.80 lacs was to be made on or before 21-07-2007. As the sale proceeds for the Sri Nagar Road property were not forthcoming, the assessee resorted to cash borrowings, lest the purchase agreement for the house pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same financial year. In any case, mere filing of confirmations would not prove the credits. The claim of cash deposit of ₹ 4.0 lacs in bank account in July'07 as being essentially a redeposit of funds withdrawn was also considered by him as an unsubstantiated plea. In appeal, the ld. CIT(A) was of the view that the AO having not found any alternate application of the funds withdrawn from the bank (Rs. 3.20 lacs), recycling of the same by way of deposit in the same bank account subsequently could not be doubted. The assessee had though not substantiated his claim of the deposit of ₹ 80,000/- out of his own sources. As regards, the loan raised from Ahmedabad (Rs. 11.50 lacs), i.e., at ₹ 8.00 lacs on 10-06-2007 and ₹ 3.50 lacs on 02-08-2007, the assessee had submitted the necessary documents, including the income-tax returns as well as balance-sheets of the creditors. As such, the onus casts on the assessee had been met. The assessee could not possibly be required to establish the source of the source, i.e., the source of the funds with the creditors. Reliance was placed on decision by the hon'ble jurisdictional High Court in the case of Kanhaiya Lal Jangid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty under purchase costing ₹ 11.84 lacs, including registration cost of ₹ 0.83 lacs, and by 21/7/2007, i.e., the date by which the purchase had to be concluded. We say so as the assessee ascribes even the source of ₹ 15,000/- deposited cash in his bank account (with ICICI Bank) on 21/5/2007 to the cash advance stated to be received from the buyers of his Sri Nagar Road property on 27/4/2007, so that he admittedly had no funds of his own as on that date. Also, the assessee admittedly has funds in near liquid securities in the form of bank FDRs, which could easily be monetized to meet the liquidity required, as indeed was done by him. This is all the more so as the need for funds was admittedly only temporary, neutralize as it would on the receipt of the balance ₹ 36 lacs (45 lacs - 9 lacs) against the contracted sale of the Sri Nagar Road residence; rather would not have at all arisen if the said sale transaction had matured in time, i.e., as originally envisaged (end April, 2007). Further, this is assuming that no extension of time for the purchase was possible, and for which no evidence has been led; the assessee's own house having been sold to the same pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said consideration follows directly from the stated and admitted circumstances, given the assessee's explanation. 5.3 The second query that arises directly, again to no answer, is as regards the mode of acceptance of the funds. Why were the funds accepted in cash? Acceptance of loans in cash, which is a risky proposition by any standards, is particularly so in the instant case considering that the funds are to be admittedly transmitted to another station, involving time and risk, if not also cost. That is, the stated course represents another act that no reasonable man of ordinary prudence and average intelligence exercising diligence would ordinarily undertake. What makes this particularly quizzical is that firstly the funds lent are ostensibly accounted funds, given from their apparently explained sources by the creditors, who are largely incometax assessees 8 and, two, that there was no immediate need for funds; the first instalment arriving at Ajmer on 10/6/2007, i.e., much prior to the limitation date of 21/7/2007, and would have in fact been accepted only prior to its transmission, while the second tranche of ₹ 3.50 lacs (received in Ajmer on 03/8/2007) was adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... needless to add, no evidence in respect of transmission of cash from Ahmedabad to Ajmer or vice versa stands adduced by the assessee before any authority. 5.4 Another equally intriguing aspect of the assessee's case, as made out, is that no `receipts' were admittedly obtained from the creditors upon repayment of loans. Why? In fact, there is no contemporaneous material to evidence either the receipt of funds from, or their repayment to, the creditors, which is uncomprehensible indeed, given that both the receipt as well as repayment of loans is in cash. Any creditor would insist on being issued a receipt, if not execution of a pronote, witnessed independently and also containing the terms of the loan, including as to repayment. Similarly, any debtor would insist on being issued a receipt or an endorsement on the pronote while discharging his obligation under a loan agreement/arrangement, which becomes the primary document evidencing the transaction. There is no explanation, again, for the admitted absence of such a basic and primary document. The assessee claims to have repaid the loans during the financial year of receipt itself, i.e., f.y. 2007-08, the relevant previous year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of events, as well that of human conduct. The impugned order is largely silent on this aspect, except for stating that the creditors could have been summoned by the AO. It is trite law that the onus to prove the credits is on the assessee; the very argument by the ld. CIT(A) being a tacit admission thereof, even as undoubtedly the assessing authority could definitely facilitate the same by exercising his powers as vested in a civil court for enforcing attendance, where the creditors are not responding to the assessee in this regard, upon being communicated this fact by the assessee, along with a request for the same. However, there is no such communication or request to the AO by the assessee in the present case. Quite on the contrary, in response to the AO's specific requisition for production of the creditors for verification on 24-10-2010, the assessee chooses to remain silent, not even indicating of any hardship or noncooperation in its respect from the creditors, if so, being faced by him and, as if surreptiously, vide letter dated 23-12-2010, i.e., two months later and barely a few days prior to the setting in of the time limitation for assessment (31/12/2010), given no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the assessee had no immediate intention to mature the purchase, time for which was available up to 21- 07-2007; the balance amount of bank loan being availed only on 11-07-2007, and only understandably so, considering that acquisition was completed on 13-07- 2007. This is as loan entails interest and, besides, keeping cash in hand is always a risky proposition, so that nobody would do so, particularly where it does not serve any purpose. The assessee states of having withdrawn cash from Union Bank of India only after being released of the burden of registration of the conveyance deed qua the purchase, while the fact of the matter is that same was transacted on 13- 07-2007, and the cash was in the main withdrawn prior thereto on 12-07-2007. A person focussed on concluding the purchase which has burdened him for so long, would hardly be bothered to meet the part payment to Ahemdabad on the eve of and on the verge of closing the purchase transaction. The same, rather, points to the amount having 12 been withdrawn for or toward the said purchase or for some other purpose. Yes, there could exceptions to this, as (say) where some reliable person is proceeding to Ahemdabad on that date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unabated, with the assessee moping up another ₹ 3.50 lacs, depositing the same in his bank account on 03-08-2007, i.e., after claiming the same to be received at Ajmer on 02- 08-2007. We are afraid, but the same can under the circumstances be only termed as ludicrous. Finally, we 13 cannot help but noting that though the assessee claims to have repaid the loans during the same year, i.e., the year of receipt, it specifies no date/s, nor even the source of the same, leave alone producing any material in support. In this regard it would be relevant to state that the copy of the bank account with Union Bank of India, where the borrowed funds have been deposited, as provided on record extends only up to 03-08-2007, i.e., the date of the last deposit. 5.7 Without doubt, the entire explanation (as discussed at paras 5.1 to 5.6 above) rings untrue and concocted, is beyond comprehension and bounds of reasonability, inconsistent with normal human conduct and behaviour, apart from being totally unsubstantiated. It is these reasons that persuaded us to state at the beginning of our narrative that the explanation furnished is fantastic and non-acceptable. We, accordingly, have no hes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the banking channel, does not by itself prove the loan, making a non-genuine transaction, genuine. In the instant case the genuineness of the transactions stands thoroughly impugned, so that we do not consider the credits/deposits in the assessee's bank account with Union Bank of India as representing his liability or borrowings. We, therefore, do not consider it necessary to consider the aspect of the creditworthiness of the lenders, even as there is no contemporaneous or corroborative material evidencing the transactions. Coming to the decision in the case of Kanhaiya Lal Jangid v. ACIT (supra), we again find no statement of law therein, toward which case law is legion, contradictory or inconsistent with the stand taken by the Revenue; the question of satisfaction or otherwise, on the basis of the explanation furnished including the surrounding facts, as borne by the material on record, being even otherwise a question of fact. The only ratio of the said decision is that the assessee cannot be called upon to establish the source of a source. We have already clarified that the assessee has made no case to prove the genuineness of the transactions, which are un-evidenced and de h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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