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TMI Blog2020 (11) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount is totally sourced by the cash withdrawals made earlier. Hence, adverse inference drawn by the revenue authorities under these peculiar facts and circumstances is unwarranted. Therefore, in our view, the CIT(A) erred in sustaining the addition without considering this fact that the cash deposited in the bank account was fully sourced from the earlier cash withdrawals from the same bank account, therefore, the findings of the ld. CIT(A) that immediate source of advancing money is unverifiable, are factually incorrect and are perverse. Therefore, keeping in view our above discussion, we direct the A.O. to delete the addition made u/s 68. Addition of advance payment by the assessee against the sale of property from Shri Ram Swaroop Mali - admission of additional evidence - HELD THAT:- During the course of argument, the assessee had also placed on record an application dated 21/09/2020 to accept an affidavit as additional evidence under the provisions of Income Tax Appellate Rules, 1963 (in short, the Rules). In the said application, the assessee wants to place on record an affidavit of Shri Chhitar Mali, S/o- Shri Ramswaroop Mali as additional evidence, however, the ld AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case and in law, the ld. CIT(A) grossly erred in not quashing the invocation of the provisions of Section 115BBE of the Income Tax Act, 1961 to the additions sustained. 5. That the appellant craves leave to add, amend, alter, modify, substitute or delete any ground or grounds of appeal on or before the hearing of the appeal. 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. Briefly stated facts of the case are that the assessee filed her return of income in response to notice issued U/s 148 of the Income Tax Act, 1961 (in short, the Act) on 29/06/2018 declaring income from business and profession U/s 44AE of the Act. Income from house property and income from other sources at the same income declared initially u/s 139 of the Act. The assessment in the present case was reopened U/s 147 of the Act on the ground that the assessee had purchased an immovable property and the source of which remained unexplained. Therefore, order U/s 147/143(3) of the Act was passed whereby making addition U/s 68 of the Act on account of unexplained investment in the property. 4. Aggrieved by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no reason to believe that any income has escaped assessment. Copy of the judgment is submitted herewith at paper book page no. 36 to 38, relevant para no. 8 at page no. 38, which is also reproduced hereunder :- 8. Having heard Shri Desai, the learned senior counsel for the Appellant, as well as Shri Bhujale, the learned counsel for the Respondents, it is an admitted position that the assessee had invested a sum of ₹ 2,50,000/- for the purpose of purchasing the flat and what was sought to be investigated was the source of income. A bare perusal of the aforesaid notice dated 10.10.1991, clearly indicates that the Officer was wanting to know the details with regard to the source of funds with regard to purchase of the said flat for a sum of ₹ 2,50,000/-. Obviously in the above, there is no question of the assessing officer having any basis to reasonably entertain the belief that any part of the income of the assessee had escaped the assessment and that such escapement was by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts. The words used in section 147 has reason to believe are stronger than the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reason to suspect that income chargeable to tax has escaped assessment. In this regard, the ld AR has relied upon the decision of Hon ble Bombay High Court in the case of CIT Vs Maniben Valji Shah (2006) 283 ITR 453 (Bom) and also the decision rendered by the Hon ble Supreme Court in the case of Sheo Nath Singh Vs AAC (1971) 82 ITR 147 (SC). However, after considering the decisions relied upon the assessee, we found that the facts of the cited cases are distinguishable from the facts of the present case, therefore, the judgments relied upon by the assessee are not applicable to the facts of the present case. As far as the present case of the assessee is concerned, we are of the view that the material before the A.O. was relevant and affords a live link or nexus to the formation of a prima facie belief that income chargeable to tax has escaped assessment in the hands of the assessee. In our view, the sufficiency and correctness of material need not be looked at the initial stage at the time of reopening of the case. 8.1 While considering whether commencement of reassessment proceedings was valid, the court has only to see whether there was prima facie some material on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni 75,000 0 2 Sh. Naresh Gyanani 50,000 0 3 Sh. Diksha Gyanani 2,50,000 2,50,000 Deleted by CIT(A) 4 Sh. Kamala Tahaliyani 5,00,000 5,00,000 Under this Appeal 5 Sh. Lal Chand Parchani 4,00,000 4,00,000 Deleted by CIT(A) Total 12,75,000 11,50,000 Following documents are furnished herewith in support of the loan transactions :- S.No. PARTICULARS PAGE NOS. 1 Confirmation of Kamla Tahaliyani 6 2 Bank statement of Kamla Tahaliyani 7 to 11 3 Purchase Deed dated 12.07.2012 12 to 19 4 Copy of Bank Account Pass book of Meera Devi Reply letters by the Assessee to The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property, the appellant took loans from her relatives, hence the genuineness of loan transaction is also established. The appellant submitted during the assessment proceedings (P.B. Pg 25) that cash of ₹ 6,00,000/- was withdrawn by the loan creditor from the bank account on 18- 19.05.2012 which was deposited back on 31.05.2012 before advancing a sum of ₹ 5,00,000/- to the appellant. Hence, in fact, the cash deposits in the bank account are totally sourced by the cash withdrawals made earlier, hence any adverse inference in these facts is unwarranted. The ld. CIT(A) erred in sustaining the addition without considering this fact that the cash deposits in bank account were fully sourced from the earlier cash withdrawals from the same bank account. Hence, the finding of the ld. CIT(A) that immediate source of advancing money is unverifiable is perverse. 6 7 to 11 10, 11, 25 1.1 IDENITITY, CAPACITY OF CREDITORS AND GENUINENESS OF TRANSACTION STANDS ESTABLISHED APPELLANT HAS DISCHARGED ITS ONUS. It is hum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises and conjectures. 1.3 LOAN FROM A PERSON WHO DOES NOT FILE HIS/HER RETURN OF INCOME OR WHO DO NOT HAVE BANKING HABITS NEED NOT NECESSARILY ALWAYS BE BOGUS. It is humbly submitted that simply because a cash creditor does not file his/her return of income, it does not necessarily mean that the loan is bogus or not genuine. Reliance is being placed on the following judgments in this regard :- Prabhajeet Kaur Vs. ITO (ITAT, Jaipur Bench) XXXIV Tax World 101 In this case, the Hon ble bench held as under :- a) Whether non-filing of income-tax return by creditors ipso facto bring the transaction of cash credit under shadow of doubt? - Held No. b) Whether transaction of cash credit not having been done through banking channels does by itself constitute to be non-genuine? Held No. c) Also held that once assessee has discharged its onus, it is for the department to bring on record sufficient evidence to prove that creditors are persons of no means and transactions are not genuine. 1.5 SOURCE OF SOURCE NEED NOT BE PROVED. The issue under consideration in this appeal is squarely covered by the judgment of the Hon ble Rajasthan High Court in the case of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ani as the assessee had established identity, genuineness and creditworthiness of the transactions by filing confirmations and bank accounts and copy of return of income. However, in the case of Smt. Kamla Tahaliyani, it was held by the revenue authorities that the assessee had only placed on record confirmation and apart from that no other evidence was submitted by the assessee. It was also held that the loan creditor i.e. Smt. Kamla Tahaliyani was not assessed to tax. However, while going through the documents placed on record in the paper book by the assessee in respect of loan taken from Smt. Kamla Tahaliyani is concerned, we noticed that apart from confirmation of Smt. Kamla Tahaliyani, the bank statement of the said lady has also been placed on record, which is at page Nos. 7 to 11 of the paper book. However, the claim of the assessee was denied in respect of loan taken from Smt. Kamla Tahaliyani merely on the ground that cash was deposited in the bank account of the creditor before issue of cheque. We are of the view that merely because cash was deposited in the bank account of the creditor does not necessarily implied either the cash does not belong to the creditor or the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards advance for purchase of property. Shri Ram Swaroop Mali never denied that ₹ 10 lakhs was not paid to the appellant, instead Mr. Ram Swaroop Mali also explained the source of cash payment of ₹ 10 lakhs with evidences. ₹ 5,11,000/- was received by Mr. Ram Swaroop Mali from his son Shri Chithar Mali towards purchase of house which was received by his son from sale of Tata truck no. RJ-05-G-4334 (chassis no. 82332GVZ733023, engine no. 497TC89GVZ90408) the documents of which were submitted during the assessment proceedings (Paper book page no. 34 to 35). Mr. Ram Swaroop Mali contended that source of the balance ₹ 4,89,000/- was his agricultural income in support of which he submitted copy of jamabandi, sarpach certificate etc. which was duly accepted by the ld. CIT(A). Following documentary evidences were submitted by the appellant before both the lower authorities:- S.NO. PARTICULARS PAGE NOS. 1 Copy of Aadhar Card of Ramswaroop Mali 26 2 Affidavit of Ramswaroop Mali 27 to 28 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ITAT, Jaipur Bench) XXXIV Tax World 101 It is further submitted that though the appellant has established with evidences the Source of Source of the sum of money of ₹ 10,00,000/- received from Mr. Ram Swaroop Mali, but as per the settled proposition of law, the source of source need not be proved as per the judgment of the Hon ble Rajasthan High in the case of M/s Aravali Trading Co. Vs. Income Tax Officer reported at (2008) 8 DTR 199, wherein it was held that once the existence of the creditors is proved and such persons own the credits which are found in the books of the assessee, the assessee s onus stands discharged and the latter is not further required to proves the source from which the creditors could have acquired the money deposited with him either in terms of section 68 or on general principle. Merely because the depositor s explanation about the sources of money was not acceptable to the AO, it cannot be presumed that the deposit made by the creditors is money belonging to the assessee itself. Hence, it is now a well established law that in case of loan transactions, source of source need not be proved. Once the identity, capacity and genuineness of a loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s placed on record copy of agreement to sell. However, during the course of assessment proceedings, the said Shri Ramswaroop Mali was called by the A.O. wherein his statement was recoded. The said Shri Ramswaroop Mali was not assessed to tax and in his answer to question No. 8, he has specifically stated that he had received ₹ 5.11 lacs from his son, who had sold his truck and the same was used to advance money to the assessee. Apart from that it was also submitted that the balance amount of ₹ 4,89,000/- was out of his agricultural income. The A.O. had believed the source of ₹ 4,89,000/- from the agricultural income of Shri Ramswaroop Mali but in respect of the amount of ₹ 5.11 lacs, the assessee has not placed on record any document in respect of purchase and sale of truck by son of Shri Ramswaroop Mali. The assessee has not placed on record any corroborative evidence, such as, Registration, transfer certificate or any other documents to demonstrate for acquiring and sale of truck by son of Shri Ramswaroop Mali and absolutely no evidence to prove that the said son had given amount to Shri Ramswaroop Mali. In view of the above facts and circumstances, we fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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