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TMI Blog2021 (2) TMI 728X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appellate Tribunal) Rules, 1963, would, strictly speaking, apply. Suffice to state that he ought to have, in the view of the clear mandate of s. 68, recording a clear finding in the matter, required the AO, before whom the burden of proof is required to be discharged by the assessee, to examine the same. Reference here may also be made to Tin Box Co. v. CIT [ 2001 (2) TMI 13 - SUPREME COURT] explaining that an opportunity before an appellate authority does not substitute that before the assessing authority. The course suggested by us for being followed by the ld. CIT(A) supra, is equally valid for us, being in fact the dictate of justice in the facts and circumstances of the case. As exhorted by the Apex Court time and again, as in CIT v. Walchand Co. (P.) Ltd. [ 1967 (3) TMI 2 - SUPREME COURT] wherein, expounding on the jurisdiction as well as the duty of the Tribunal as the final fact finding body, it explained that it is to deal with and determine questions which arise out of the subject-matter of the appeal in the light of the evidence, and consistently with the justice of the case. For the reasons afore-stated, notwithstanding the non-satisfaction of the cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r survive our adjudication, which has been sought to be guided by the decision in Walchand Co . (P.) Ltd . (supra). - ITA No.21/JAB/2020 - - - Dated:- 16-2-2021 - Shri NRS Ganesan, Judicial Member And Sanjay Arora, Accountant Member For the Appellant : Shri I. B. Khandel, Sr.DR For the Respondent : Shri Rahul Bardia, CA ORDER PER SANJAY ARORA, AM: This is an Appeal by the Revenue directed against the Order dated 22/6/2020 by the Commissioner of Income Tax (Appeals)-1, Jabalpur ( CIT(A) for short) allowing the Assessee s appeal agitating its assessment under section 143(3) of the Income Tax Act, 1961 ( the Act hereinafter) dated 30/12/2019 for assessment year (AY) 2017-18. 2. At the very outset, we observe that the appeal is delayed by 5 days. The circumstances under which it was so stand explained in the condonation application dated 27/10/2020 on record, which also bears reference to the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 as well as to the Gazetted Notifications issued thereunder by the Central Government extending the period for various compliances from time to time. No objection qua the same, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant firm by Smt. Sunita Khatri: (Amt. in Rs.) Head of receipt from Smt Sunita Khatri Opening Balance Addition Repayment Closing balance Unsecured loan Nil 30,00,000/- (05.07.2016) 50,000/- (16.07.2016) Nil 30,50,000/- Advance against booking 68,41,693 50,00,000/- (27.06.2016) Nil 1,18,41,693/- Total 80,50,000/- 1,48,91,693/- The appellant has also explained source of loan and advance with supportive documents. The appellant has submitted that Smt. Sunita Khatri and other entered into an agreement on 29.01.2016 with M/s. Balaji Infrastructure for development and construction of duplex/building in the name of project Swastik Heights' on land owned by Smt. Sunita Khatri and others. Against this agreement Smt. Sunita Khatri in AY 2016-17 received a sum of ₹ 1,39,88,535/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan/advance through banking channel. Copies of bank statements of lender is placed on record and perused. From perusing the bank statements of the lender as furnished in the paper book, it is found that no cash was deposited in the bank account prior to issuance of cheque to the assessee for the unsecured loan/advance. iii. Creditworthiness of the creditor - the lender is income tax payer and filing the income tax return. The lender has received advance amount from M/s. Balaji Infrastructure and the same was utilized for purchase of property from appellant firm. Finding thus the nature and source of the impugned credits as explained in terms of identity and capacity of the creditor, and the genuineness of the credit transactions, he directed the deletion of the addition, citing decisions in Umesh Electricals v. Asst. CIT [2011] 131 ITD 127 (Agra) and Aseem Singh v. Asst. CIT [2012] 19 ITJ 52 (Ind.) toward the satisfaction of the said three conditions (para 4.1.3). Aggrieved, the Revenue is in appeal, raising the following Grounds: 01. Whether on the basis of the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sums received by Smt. Sunita Khatri during the year from M/s. Balaji Infrastructure by way of advance against land. On a query by the Bench that the sums received by her therefrom had been, as stated in the assessment order, invested in an immovable property, he would submit it to be not so inasmuch as, as apparent from the bank statement, all the three receipts under reference were duly reflected as debits therein, and which in turn were explained with reference to the credits therein during the relevant year or the preceding year, all duly accounted, for which he would also refer to her balance-sheet as on 31/3/2017 (PB pg.48). 5. We have heard the parties, and perused the material on record. 5.1 We firstly observe that the Revenue s objection to the impugned order is not on merits, but qua procedure. All that, therefore, the assessee was required to show us was that the supportive documents furnished before the ld. CIT(A) were not so for the first time, and had been furnished during the assessment proceedings, while, as we shall presently see, even the certificate to the paper-book is wrong. No case has been made by the assessee in defence; Sh. Bardia, before us al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vide assessee s replies dated 13/12/2019 25/12/2019/PB pgs.103-108). Why, even the creditor s bank statement for the current or the preceding years the relevant sum being stated as received by the creditor in part prior to the current year, to establish the nature and source of the credits, were not furnished before the AO. It is the bank statement/s that would conclusively prove of the same as having been actually received from her . Why, while the AO states of the creditor having received ₹.70 lacs during the year from Balaji Infrastructure, her bank statement, adverted to during hearing, reflects receipt of ₹. 37.50 lacs from the said company, to which reference was made by Sh. Bardia. The finding by the ld. CIT(A) as to the books of account of Smt. Sunita Khatri having been verified by the AO (at para 4.1.1) is not borne out by the record, i.e., the submissions by the assessee before the AO (PB pgs.92-108) or before the ld. CIT(A)(PB pgs. 23-91); there being in fact nothing on record to show of the same having been produced before him. As regards the documents submitted by the assesse before the AO, the Confirmation could at best prove the identity of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, inasmuch as the AO has drawn a negative inference in the matter, we, though not otherwise inclined to consider the merits of the case, having been not raised by the Revenue, shall advert to this aspect of the matter at a later stage. The said statement is though inconsistent with the assessee s bank account which, as aforestated, reflects receipt of only ₹. 37.50 lacs prior to the transfers to the assessee. 5.3 The matter, clearly, requires being examined by the AO with reference to material, since admitted by the ld. CIT(A). It would, therefore, be only proper to remit the matter back to the file of the ld. CIT(A) for a compliance of the requirement of rule 46A(3). We are conscious, when we say so, that implicit therein is the validation of the admission of the additional evidence by the ld. CIT(A), even as there has clearly been, as afore-noted, non-satisfaction of the conditions specified in r. 46A(1) and r. 46A(2), only subject to which could an additional evidence before the first appellate authority be admitted by him, leading to his placing reliance thereon, at which stage r. 46A(3), warranting the same being first confronted to the AO and seeking his adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the documents at the fag-end of the proceedings; the assessment getting time barred on 31/12/2019. Not only is the AO constrained for time to verify or examine the same, no clarification, where required, could be furnished by the assessee, i.e., no meaningful exercise undertaken, resulting in matters getting unnecessarily dragged before the appellate authorities. All this again points to the poor conduct of the representation in the proceedings before the AO, which in fact form the foundation of any assessment, hearing wherein, as apparent from the title to the assessment order, closed on 21/12/2019, so that no cognizance of the materials furnished on 23/12/2019 25/12/2019 was taken by the AO. The AO, though cannot be faulted with inasmuch as both the nature and the source need to be established, the burden of which is on the assessee, who only is in the possession of the relevant material and explanations, surely ought to have represented before the ld. CIT(A) who allowed him opportunity to do so (which was not availed), bringing to the fore the non production of the relevant materials before him, i.e., the very aspect he now raises before us. This would have helped resolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deal with and determine questions which arise out of the subject-matter of the appeal in the light of the evidence, and consistently with the justice of the case. 6. For the reasons afore-stated, notwithstanding the non-satisfaction of the conditions of r. 46A(1)/(2), as indeed of r. 46A(3), the issue with regard to the maintainability of the impugned credits u/s. 68 is restored to the file of the AO. He shall be at liberty to require, besides the documents furnished by the assessee before the ld. CIT(A), any other as he may deem fit and proper under the circumstances. Likewise, the assessee is not constrained in any manner. The whole purpose of the open set aside is a proper decision on the merits of the case, i.e., u/s. 68, law on which is well-settled. We may here also express our view with regard to the adverse inference drawn by the AO with regard to the creditor s claim u/s. 54, since allowed. The said claim cannot be called into question in the instant proceedings. In fact, the AO also doesn t do so, and his objection proceeds on the basis of the said claim, i.e., presuming its validity, inasmuch as the amount realized by way of sale proceeds of the property by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negative inference therefrom, as sought to be by the AO, could be drawn. The reason is simple. The issue on merits is qua s. 68, i.e., toward furnishing a satisfactory explanation as to the nature and source of the credits in the assessee s books, so that, irrespective of their taxability in the hands of the creditor, an assessee with the Revenue, where the same are shown by the assessee-firm as arising from the creditor, i.e., be it sourced from her capital or current income or even her confirmed liability, the onus on it to explain the same u/s. 68 gets discharged, which would shift back only on an infirmity in the assessee s case being pointed out or material in rebuttal thereof brought out by the Revenue. Further, as afore-noted, it would be a different matter where the genuineness of the arrangement/s under which the credits arise is in doubt, which has to be on some cogent basis, and of which there is upto now no suggestion. This aspect, though concerning the merits of the addition, which we are not called upon to address, has been clarified inasmuch as while the AO relies thereon, the ld. CIT(A) has not expressed any view thereon, so that it may not, at least in princi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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