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TMI Blog2020 (2) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... n or cession of liability in the case of assessee. Remission has to be granted by the creditors and the cession of the lability may occur either by reason of operation of law. Remission of liability arises only when the creditor voluntarily gives up the claim. The cession of liability arises when it ceases to exist in the eyes of law for all purposes - Since as far as the facts of the present case, the assessee has still shown the creditors as payable, therefore, there is no cessation of liability. - Decided in favour of assessee Advance towards sale of house property - HELD THAT:- From the records, we are noticed that assessee has received the money from three different persons who were not relatives of the assessee and it is also undisputed fact that assessee had received the money in pursuance of an authority to sell entered into on 01-09-2008. A.O. has recorded the statements of the persons from whom the advance was received. These persons have categorically confirmed and admitted of have doing agricultural activities. The land holdings in the form of 7/12 and also the certificate of Talati cum mantri has already been placed on record. The method by which the tissue wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances. 2. Aggrieved by the order of the A.O. the assessee preferred appeal before the ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties dismissed the appeal filed by the assessee. 3. Aggrieved by the order of ld. CIT(A), the assessee preferred appeal before the us on the grounds mentioned hereinbelow. 1. The learned Commissioner of Income Tax (Appeals)- VI, Baroda [ the CIT(A) ] erred in fact and ;n law in confirming the action of the Income Tax Officer, Ward -1, Bharuch ( the AO ) in making an addition of ₹ 5,36,556/- u/s 41(1) of the Income Tax Act, 1961 ( the Act ). 2. The learned CIT(A) erred in fact and in law confirming the action of AO in making an addition of ₹ 75.00,000/- received as advance towards sale of house property purely on the basis of assumptions, surmises and conjectures. 3. The learned CIT(A) erred in fact and in law in confirming the action of AO in charging interest u/s 234B of the Act. 4. The learned CIT(A.) erred in fact and in law in confirming the action of AO in initiating penalty proceedings u/s 274 r.w.s 271(l)(c) of the Act. Ground No. 1 4. This ground raised by the assessee relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the liability to pay. After appreciating the facts of the present case, we are of the view that for invoking provisions of section 41(1) of the Act, there has to be remission of liability. There is no remission or cession of liability in the case of assessee. Remission has to be granted by the creditors and the cession of the lability may occur either by reason of operation of law. Remission of liability arises only when the creditor voluntarily gives up the claim. The cession of liability arises when it ceases to exist in the eyes of law for all purposes. We draw strength from the decision of J.K. Synthetics Ltd. vs. ITO 105 ITR 864, CCIT vs. Kesari Tea Company Ltd. 254 ITR 434 (SC) and CIT Vs. Abdul Adhal 247 ITR 710. Since as far as the facts of the present case, the assessee has still shown the creditors as payable, therefore, there is no cessation of liability. In this context, we rely upon the following decisions:- a. Eicher Mother Ltd. v. Dy. CIT 82 TTJ 61(Ind) Subsisting liability-Since the amounts were payable and had not been waived off by the creditors, the provisions of s. 41(1) were not applicable to the facts of the case. b. New Commercial Mills Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though the time period mentioned in the banakhat was over, the bungalow was not sold as the assessee had requested for further time, which was allowed by the buyers. The assessee also submitted that since immediate source of the received money was proved, the addition u/s. 68 cannot be made in the hands of the assessee. The assessee has also relied upon the decision in the case of 1. CIT Vs. U.M. Shah, Prop. Shrenik Trading Co. (90 ITR 0396) (Bom. H.C.), 2. CIT Vs. Metachem Industries (245 ITR 0160) (MP) (HC), 3.Oriential Trading Co. Ltd. Vs. CIT (49 ITR 0723) (Bom. H.C), 4. Sarogi Credit Corporation Vs. CIT (103 ITR 0344) (Pat HC), 5, ITO Vs. Thakorbhai Chhotubhai Patel (ITO 880/Ahd/2012) 6. Balwinder Kumar Sharma V. ACIT (77 ITR 380) (Chandigarh Trib) and 7. Kalubhai Dhameliya Vs. ITO (88/Srt/2018 (Srt Trib). 9. On the other hand, the ld.Departmental Representative(DR) relied upon the orders passed by the Revenue Authorities. 10. We have heard the counsels for both the parties and we have also perused the material on record and judgments cited by the parties as well as orders passed by the revenue authorities. From the facts of the present case, we noticed that assessee dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - II at page nos. 74 to 79. Some of the important facts as stated in the statement u/s. 131 is .reproduced hereinbelow: Q3: What are your sources of income? A3: My main source of income is agriculture income. I am having 8 acres of agriculture landin which I cultivate Bananas, roses and sugarcane. Q8: What is the agricultural output where do you sell your agricultural produce? A8: I cultivate bananas on 2.5 acres producing about 80 tonnes of bananas sold to local merchants at ₹ 7/kg fetching approx. ₹ 5,50,000. 1 also cultivate roses and sell to local merchants fetching ₹ 1,50,000/- per annum. For the 1st time this year I have cultivated sugarcane on 3 acres of land which will fetch around 120 tonnes of sugarcane. The sale proceeds are around ₹ 1900/- per tonne would be ₹ 2,28,000/-. Q10: During FY 2008-09 did you have any financial transactions with ShriFarsuram R Bhamwala? If yes, give details? A10: Yes, during FY 2008-09 I had entered into an agreement (banakhat) with ShriFarsuram R Bhamwala - along with my cousin brother named Sh. KishorUpendra Joshi cousin sister named Kum. JyotibenRashmikantPandya for purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rthy is not as per the evidences on record ShrikishorUpendrakumarJoshi ShriKishore Joshi had given an amount of ₹ 25,00,000 to the Appellant. For proving the same ShriKishore Joshi filed a confirmation with the AO (refer page 7). ShriKishore Joshi also further filed an affidavit dated 26-12-2011 confirming the advance given to the Appellant (refer page 48 to 51). ShriKishor Joshi in his statement U/s. 131 dated 1-12-2011 before the AO confirmed to have given the money to the Appellant. Copy of the statement is attached in Index - II at page nos. 68 to 71. Some of the important facts as stated in the statement u/s. 131 is reproduced hereinbelow: In reply to question 4 ShriKishor has stated that he has approximately 10 acres of agricultural land. The yearly income from agricultural activities is ₹ 5 to 6 lacs. Main crops are banana, cotton, papaiya. The land is owned by his father but as he is the only son he handles the entire activity. In reply to question no. 5 ShriKishor has given the details of movable and immovable properties owned by him and has also stated that the age of his father is 66 years and therefore his father cannot work. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umption for rejecting the said evidences. Smt. Jyotiben RashminkantPandya Smt. Jyotiben had given an amount of ₹ 25,00,000 to the Appellant. For proving the same Smt. Jyotiben filed a confirmation with the AO (refer page 7). Smt. Jyotiben also further filed an affidavit dated 26-12-2011 confirming the advance given to the Appellant (refer page 27 to 30). Smt. Jyotiben in her statement U/s. 131 dated 1-12-2011 before the AO confirmed to have given the money to the Appellant. Copy of the statement is attached in Index - II at page nos. 72 to 73. Some of the important facts as stated in the statement u/s. 131 is reproduced hereinbelow: In reply to question 4 Smt. Jyoti has stated that she has approximately 5 acres of agricultural land. The land is owned by her mother and her maternal auntie. Her maternal auntie being blind cannot do any activity and her mother being 79 years old no agricultural activities can be carried out by her. In view of the same Smt. Jyoti looks after the entire agricultural activities and takes care of the land. In reply to question 7 she has confirmed to have grown banana and sugarcane. The method of procur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Talati cum mantri has already been placed on record. The method by which the tissue were procured by the creditors was sold in the market has also been mentioned by the respective persons. All those persons have specifically stated that agricultural activities being carried out by them. The certificate of Talati also shows that the land owned by those persons are very fertile and the early income for the year under consideration was between 8 to 9 lacs for these individuals. Apart from that they have also specifically stated before the assessing officer that the amount was advanced from accumulated savings of past years. In this respect, we rely upon the decision in the case of Sarogi Credit Co-operative Society Vs. CIT 103 ITR 0344 (Patna High Court) wherein it was held as under:- Cash credit-Burden of proof-Creditors appearing before the ITO and stating that amount of ₹ 20,000 was in fact advanced by them-ITO disbelieving them and making addition-Tribunal accepting the deposit to be genuine to the extent of ₹ 5,000 making addition of ₹ 15,000-Not justified-Once the identity or the third party creditors established before the ITO and the creditors hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv. Prashant Plastic Products vs. ITO 96 Taxman 340 (Ahd) (Mag) Where J, who owned 20 acres of land and had income from dairy farming also, invested ₹ 1.00 lacs in firm, in which he was a partner, J s creditworthiness to advance said sum could not be doubted on ground he had 20 members in his family and had incurred heavy expenses on account of household expenses and marriage in the family. v. ITO vs. Padmanabh Investment Co. Ltd. 38 TTJ 55 (Bom) Section 68 does not provide that in all cases where explanation of assessee is not there or is not satisfactory according to standards of ITO, amount has got to be charged to income tax as income of the assessee company. vi. MeghajiNarain Co. v. ITO 37 TTJ 624 (Indore) Evidence as to genuineness of cash credit must be weighted on probabilities of case and not strict evidence, as being beyond reasonable doubts, should be expected. We also gone through the decisions cited by the assessee which are as below:- 1. CIT Vs. U.M. Shah, Prop. Shrenik Trading Co. (90 ITR 0396) (Bom. H.C.), 2. CIT Vs. Metachem Industries (245 ITR 0160) (MP) (HC), 3.Oriential Trading Co. Ltd. Vs. CIT (49 ITR 0723) (Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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