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TMI Blog2021 (2) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee. In the case of the assessee, (i) the identity of Shri Hanuman remains undisputed, as the summons issued by the AO was duly served upon him, (ii) genuineness of the transaction is also proved (from books of accounts) beyond doubt, as amount paid as advance to him, duly appeared in the balance sheet of the assessee since FY 2004-05, as also the agreement to sale, that duly substantiates the transaction was available on records. As far as the third condition is concerned, it is submitted, that the assessee had not received any loan/ advance from him, but had only recovered his own money, thus, capacity is not the issue involved. Thus, all the conditions envisaged above are completely satisfied by the assessee. Section 68 makes it clear that in respect of a cash credit entry the explanation offered by the assessee can be rejected by the Income tax Officer only on cogent grounds, that is, only if such grounds are not based upon any evidence and the assessee has filed complete evidences for the explanation offered by it, and the sole reason to reject the assessee s explanation, was that the persons did not appear in person for the assessment proceedings. Your honors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the submission of the assesssee that the cash deposits were made out of sum received back of advance from one Shri Hanuman to whom advance was made for purchase of land in earlier years. 3. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal. 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. Brief facts of the case are that the assessee derived income from capital gain and interest income. For the year under consideration, the assessee filed his return of income on 29/03/2012 declaring total income of ₹ 5,72,221/-. The case of the assessee was selected for scrutiny under CASS and notices were issued. The A.O. passed assessment order vide order dated 25/03/2014 assessing total income of ₹ 54,88,057/- by making the following additions: Particulars Amount Income from undisclosed source 45,50,000 Capital Gain (by applying provisions of sec 50C) 3,65,836 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank statement (as asked for by ld.AO, directly to the office of ld. AO). The ld. AO rejected the source of deposit of cash ₹ 30.50 lacs, for the reason that, the bank statement of Smt. Premlata (which was directly submitted to ld.AO and was never confronted to appellant) did not show withdrawals of ₹ 30.50 lacs and as she did not attend the assessment proceedings of the appellant in person, the explanation of the appellant cannot be considered bonafide, and thus made addition of ₹ 30,50,000/- as undisclosed income. In this regard it is further submitted before Your Honors that, the provisions of sec 68 reads as under: Sec 68. Where any sum is found credited in the book of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year The appellant has explained the source of cash deposit of ₹ 30.50 lacs in his a/c as being the sale proceeds of the property sold by him to Smt. Premlata v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d nature of deposit of cash of ₹ 30,50,000/- needs to accepted as duly substantiated, and thereby the addition of this ₹ 30,50,000/- deserves to be deleted. The adverse inference so drawn by ld.AO without confronting the evidence so collected behind the back of assessee is against the principle of natural justice and consequent addition so made is bad in law and therefore deserves to be deleted. During the appellate proceedings, Ld. CIT(A) did not consider the submissions filed by the appellant and upheld the addition made by the ld.AO summarily by holding that since the cash deposited in the bank accounts were quite earlier than the date of registration of the sale deed (i.e. 07.03.2011) the contention of the appellant that, the sale proceeds were utilized for making cash deposits, is not acceptable. It is humbly submitted that, the fact of sale of land is not disputed, the sale deed is duly registered, as also the fact that entire sale consideration was received in cash is accepted, and thus the receipt of sale consideration in instalments cannot be doubted and needs to be accepted. It is a practice in case of cash settlements to first receive the entire consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and carefully gone through the orders of the authorities below. We also deliberated upon the judicial pronouncements referred by the parties. From perusal of the record, as per facts of the present case, we noticed that, on perusal of the bank a/c of the assessee, the AO noticed cash deposits made to the tune of ₹ 45,50,000/- It was explained that the cash deposit of ₹ 30,50,000/- was made from sale of land, in the year under appeal, to Smt. Premlata, for which the entire consideration was received in cash. In support thereof, the assessee filed sale deed dated 07.03.2011. We observe that the assessee had offered the capital gain arising on the above sale, in his computation of Income filed along with the Return of Income. This capital Gain offered by the assessee was duly taxed as LTCG in his Computation of Total Income. The AO had then issued summons u/s 131 of the Income Tax Act, 1961 (in short, the Act) to the purchaser of the land, in response to which, the purchaser Smt. Premlata could not appear in person. But had filed her bank statement (as asked by the AO, directly to the office of AO). The AO rejected the source of deposit of cash ₹ 30.50 lacs, for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the deposit as unexplained, merely because the purchaser did not appear before the AO. In this regard we observe that when the sale transaction is substantiated beyond doubt, the identity of the purchaser is not doubted, the fact that the land stood transferred to the purchaser is not in dispute, the receipt of entire sale consideration is evident from the sale deed, there is no reason to reject the explanation offered by the assessee that the cash deposited was the sale proceeds so received, only for the reason that the bank statement of Smt. Premlata did not show withdrawals of ₹ 30,50,000/-. Here it is pertinent to mention that, the assessee was never confronted with the bank statements of Smt. Premlata, which were allegedly used against the assessee despite of specific request made by assessee to make available any documents/information collected by the AO and which were being used against the assessee. 10. We observe that during the appellate proceedings, Ld. CIT(A) did not consider the submissions filed by the assessee and upheld the addition made by the AO summarily by holding that since the cash deposited in the bank accounts were quite earlier than the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant observations are as under: A person may have funds from any source and an assessee, on such information received, may take a loan from such a person. It is not the business of the assessee to find out whether the source of sources from which the creditor had agreed to advance the amounts were genuine or not. If a creditor has, by any undisclosed source, a particular amount of money in the bank, there is no limitation under the law on the part of the assessee to obtain such amount of money or part thereof from the creditor, by way of cheque in the form of loan and in such a case, if the creditor fails to satisfy as to how he had actually received the said amount and happened to keep it in the bank, the said amount cannot be treated as income of the assessee from undisclosed sources. In the case of Mehta Parika and Co. Vs CIT Bombay 30 ITR 181 (SC) wherein the Hon ble Supreme Court has held: Held, (i) that applying the true principles as to interference with findings of fact of the Tribunal, the Court was under the circumstances entitled to consider whether the finding that ₹ 30,000 represented undisclosed profits was correct; (ii) as the cash book of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of ₹ 15,00,000/- made by the ld.AO by alleging the same as undisclosed income, being cash deposits appearing in the bank statement of the assessee, upheld by Ld.CIT(A). Out of the total cash deposits of ₹ 45,50,000/- appearing in the bank statement, as stated above, ₹ 15,00,000/- was explained as received from Shri Hanuman. The appellant had paid this amount to him as an advance against purchase of his land in FY2004-05. Later due to some disputes with the title of the said land the deal could not materialize, and the advance paid, remained receivable from Shri hanuman. This amount duly appeared in the appellant s balance sheet as on 31.03.2005 [APB 16] This transaction was further substantiated by filing the duly notarized sale agreement , entered into between the appellant and Shri Hanuman [APB 7-12].The said amount was recovered in the year under appeal, and the same was explained as being deposited in cash by the assessee. During the assessment proceedings the appellant had furnished complete address of Shri Hanuman the ld.AO issued summons, he did not attend the proceedings, and therefore the ld.AO, treated the same as unexplained credit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation offered by it, and the sole reason to reject the appellant s explanation, was that the persons did not appear in person for the assessment proceedings. Your honors would appreciate the fact in such kind of land deals, normally advance paid is never returned and Sh. Hanuman was also not willing to repay advance taken by him and assessee had to put continuous efforts and follow up to persuade him to pay back money (which was eventually received in installments) and he was not in good terms with assessee for this reason. In such circumstances, it was not accepted from him to cooperate with Income Tax department in the case of assessee. In this regard it is further submitted that, it is a settled position of law that if the parties had received the summons but did not appear, the assessee could not be blamed-CIT v. U.M. Shah, Proprietor, Shrenik Trading Co. [1973] 90 ITR 396 (Bom.) Based on above, it is submitted that, the cash deposit of ₹ 15,00,000/- appearing in the bank statement, also stands fully explained and substantiated, and thus prays that the addition so made may kindly be deleted. 13. On the other hand, the ld DR has relied on the orders of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iates the transaction was available on records. As far as the third condition is concerned, it is submitted, that the assessee had not received any loan/ advance from him, but had only recovered his own money, thus, capacity is not the issue involved. Thus, all the conditions envisaged above are completely satisfied by the assessee. Section 68 makes it clear that in respect of a cash credit entry the explanation offered by the assessee can be rejected by the Income tax Officer only on cogent grounds, that is, only if such grounds are not based upon any evidence and the assessee has filed complete evidences for the explanation offered by it, and the sole reason to reject the assessee s explanation, was that the persons did not appear in person for the assessment proceedings. Your honors would appreciate the fact in such kind of land deals, normally advance paid is never returned and Sh. Hanuman was also not willing to repay advance taken by him and assessee had to put continuous efforts and follow up to persuade him to pay back money (which was eventually received in installments) and he was not in good terms with assessee for this reason. In such circumstances, it was not accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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