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TMI Blog2022 (9) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 68 as to identity and establish the credit worthiness of the creditors and genuineness of the transaction to the satisfaction of the AO, otherwise the AO shall be free to proceed against the assessee company and make additions u/s. 68 of the Act as unexplained cash credit. The use of the word any sum found credited in the books in Section 68 indicates that it is widely worded and the AO can make enquiries as to the nature and source thereof. AO can go to enquire/investigate into truthfulness of the assertion of the assessee regarding the nature and the source of the credit in its books of accounts and in case the AO is not satisfied with the explanation of the assessee with respect to establishing identity and credit worthiness of the creditor and the genuineness of the transactions, the AO is empowered to make additions to the income of the assessee u/s. 68 of the Act as an unexplained credit in the hands of the assessee company because the AO is both an investigator and adjudicator. Thus, in the instant case, we hold based on facts and circumstances of the case, that the assessee fails to satisfy the mandate of Section 68 as creditworthiness of these persons as well ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary to the facts and against the principle of equity and natural justice. 3. The brief facts of the case are that the assessee is engaged in business of construction of residential flats at Varanasi. The assessee filed return of income declaring income of Rs. 30,02,510/- , on 30th September, 2013. The case was selected by Revenue for framing scrutiny assessment under Section 143(3) read with Section 143(2) of the 1961 Act. During assessment proceedings, the AO observed that the assessee has not given any details with regard to advances received amounting to Rs. 54,00,000/- in aggregate . The assessee was confronted by AO that no details are being provided with respect to advances received to the tune of Rs. 54 lacs and in absence of details thereof, the same shall be treated as income of the assessee from undisclosed sources and shall be treated as unaccounted money of the assessee in benami names . The AO issued notices under Section 133(6) of the Act to all the parties in whose names advances were standing for verification of the identity, genuineness and creditworthiness of persons in whose names the advances were standing. The AO observed that the notices sent to Miss Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ineness of the transactions. The AO added the advance of Rs. 68,000/- each received from Miss Nandini Singh and Mr. Laxmieshwar Singh as income of the assessee , as unexplained cash credit by invoking provisions of Section 68 of the Act, and further amount of Rs. 54,00,000/- being unverified advances were added by AO as income of the assessee being unexplained cash credit, by invoking provisions of Section 68 , vide assessment order dated 18.03.2016 passed by AO u/s 143(3) of the 1961 Act, as under:- S. No. Name Amount 1 Miss Nalini Singh 68,000/- 2 Mr. Laxmishwar Singh 68,000/- 3 Unverified Advance 54,00,000/- While making aforesaid additions, the AO also relied upon following judicial precedents: a) Hon ble Supreme Court judgment and order in the case of CIT v. P. Mohankala , (2007) 291 ITR 278(SC) b) Hon ble Delhi High Court judgment and order in the case of Rakesh Kalia v. CIT, reported in (2006) 286 ITR 357(Del. HC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unverified Advance 54,00,000/- 6. Note-4 to the balance sheet as on 31.03.2013, contains details of 'other long term liabilities' (flat bookings) which has names of various persons including the name of the Ms. Nandini Singh, Mr. Laxmieshwar Singh and advanced from customers for flat bookings amounting to Rs. 68,000/-, 68,000/- and Rs. 54,00,000/- respectively received during the year under consideration. Vide order sheet entry point no.-6 dated 22.12.2015, the A.O. pointed out to the assessee that amount of Rs. 2,32,86,000/- has been shown (being other long term liabilities-flat bookings). He also noted that no details including addresses of the persons have been furnished and sought explanation of the assessee on the same. Vide order sheet entry dated 06.01.2016, the A.O. further noticed that details with regards to advance amounting to Rs. 54,00,000/- has not been filed and no evidence with regard to receipts of advance during the year have been filed. Vide its reply dated 18.01.2016, the counsel of the assessee submitted before the A.O. the list of the names of the persons from whom advances of Rs. 54,00,000/- have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aracter of cash credit and the appellant has clearly failed to establish the creditworthiness and genuineness of such cash credit and accordingly, the addition made by the A.O. amounting to Rs. 54,00,000/- is confirmed. 8. Similarly, the appellant has not been able to establish the genuineness of the amounts received in the name of Ms. Nandini Singh and Laximeshwar Singh, Rs. 68,000/- each and accordingly, the addition of Rs. 1,36,000/ made by the A.O. is confirmed. 9. In the result, the appeal is dismissed. 5. Aggrieved by the appellate order dated 08.11.2017 passed by ld. CIT(A), the assessee has filed second appeal with tribunal. The Learned counsel for the assessee opened arguments before the Division Bench of the tribunal . The ld. Counsel for the assessee submitted that booking advance to the tune of Rs. 54 lacs was received by Director of the company in cash in Mumbai from 17 person who booked flats in Vinayaka Project of the assessee situated at Varanasi ,which cash amount was deposited by said Director in Mumbai in the bank account of the assessee maintained with ICICI Bank. It was submitted that all the 17 bookings of flats against which aforesaid advance a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,00,000/- l. Babu Pandurang Vaje 4,00,000/- m. Bhupendra Rajendra Singh 4,00,000/- n. Santosh Sarayu Hari Sutar 3,50,000/- o. Saroj Rajendra Salian 3,50,000/- p. Santosh Viswakarma 3,50,000/- q. Durgesh Kumar Singh 3,50,000/- Our attention was also drawn to Page 72 to 76 of the paper-book wherein details of flat bookings are placed , and page No. 85 to 87 of the paper-book, wherein bank statement of ICICI Bank are placed in which the amounts aggregating to Rs. 54 lacs stood deposited in cash during the period 25th April, 2012 to 16th May, 2012. It was submitted by ld. Counsel for the assessee that only three flats in this Vinayaka Project were unsold but booking of 17 flats was accepted from the aforesaid persons in cash in Mumbai , which cash of Rs. 54 lacs stood deposited in Mumbai in bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th respect to amounts received from Ms. Nandini Singh and Mr. Lakshmieswar Singh be deleted . It was also submitted that with respect to additions of Rs. 54,00,000/- , the aforesaid additions should be deleted or in alternative the matter can be set aside to the file of AO for fresh adjudication . It was reiterated that an amount of Rs 54,00,000/- which was received as booking advance for booking of 17 flats, were refunded in cash in the subsequent financial year to all the 17 persons who earlier booked 17 flats in Vinayaka Project, as all the 17 booking were cancelled by the applicants. 5b. The Ld. Sr.DR on the other hand, submitted that there were two credit of Rs. 68,000/- each being amount given by Miss. Nandini Singh and Mr. Laxmieshwar Singh, and further an aggregate amount of Rs. 54,00,000/- was received from seventeen different persons towards alleged booking of 17 flats in Vinayaka Project at Varanasi. It was submitted that Rs. 68000/- each was received from Miss. Nandini Singh and Mr. Laxmieshwar Singh on 31.07.2012 , by cheque but that does not make it acceptable as being not chargeable to tax. Our attention was drawn to page No. 11 and 13 of the paper-book, where led ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the additions. 5c. The Ld. counsel for the assessee submitted in rejoinder that Section 68 of the 1961 Act has no application to the facts of the case, as the assessee has sold flats. 6. We have heard rival contentions and perused the material on record. We have observed that assessee is engaged in the business of construction of residential flats at Varanasi. The first issue before us for adjudication is with respect to additions made by AO with respect to an aggregate amount of Rs. 54 lacs claimed by the assessee to be received in cash from seventeen different persons towards booking advance amount for booking seventeen flats in Vinayaka Project at Varanasi. The said cash was claimed by assessee to be received in Mumbai by Director of the assessee company from the persons who booked these seventeen flats in Vinayaka Project(Varanasi) , and it is claimed by assessee that the said Director had deposited aforesaid cash of Rs. 54 lacs at Mumbai with ICICI Bank, between 25th April, 2012 to 16th May, 2012. The list of such seventeen persons who as per assessee claim gave Rs. 54 lacs for booking seventeen flats in Vinayaka Project(Varanasi), are as under: S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had mandated assessee to sell their flats on their behalf , and it is claimed by assessee that against the mandate of these landlords(owners) in Vinayaka Project(Varanasi), the assessee accepted bookings from these seventeen persons for selling the flats owned by landlords/owners. It is pertinent to mention that even at the stage of tribunal as of now, the assessee has not disclosed the particulars of flats in Vinayaka Project (Varanasi) which were booked by these seventeen persons who have stated by assessee to have given cash of Rs. 54 lacs to the assessee. It is also pertinent to mention that no agreements with these 17 persons are produced even till the stage of tribunal as of now. It is further pertinent to mention that even uptill the stage of tribunal as of now, no cancellation agreement is produced by the assessee with these 17 persons cancelling their so called booking of 17 flats. Even the details of the seventeen landlords(owners) who gave mandate to the assessee to sell their flats in Vinayaka Project( Varanasi), nor any agreement to that effect is furnished by the assessee. The amount of Rs. 54 lacs is claimed to be received by the assessee in cash and also the same i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils of flat, while the cash is claimed by the assessee to be received in April/May 2012. Now, at this stage on 23.08.2022(i.e. one day prior to hearing) fresh evidences are filed by assessee such as affidavit and some confirmations , without permission of the Bench, as is mandated under Rule 29 of the Income-tax(Appellate Tribunal) Rules, 1963. We could have allowed the admission of additional evidence, but the entire facts and circumstances of the case including evidences sought to be produced, does not inspire our confidence in the theory set up the assessee as outlined above, which is highly improbable and we are not satisfied with the explanation submitted by the assessee. The contentions of the ld. Counsel for the assessee that Section 68 is not applicable to the facts and circumstances of the case, is rejected as the assessee is not able to disclose the true and correct sources of receipt of the amount of Rs. 54 lacs in cash, and we hold that this amount was from undisclosed sources as is an unexplained cash credit in the assessee s books of accounts which is hit by Section 68 of the 1961 Act. We are of the considered view that Section 68 of the Act creates a legal fiction wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 68 indicates that it is widely worded and the AO can make enquiries as to the nature and source thereof. The AO can go to enquire/investigate into truthfulness of the assertion of the assessee regarding the nature and the source of the credit in its books of accounts and in case the AO is not satisfied with the explanation of the assessee with respect to establishing identity and credit worthiness of the creditor and the genuineness of the transactions, the AO is empowered to make additions to the income of the assessee u/s. 68 of the Act as an unexplained credit in the hands of the assessee company because the AO is both an investigator and adjudicator. Thus, in the instant case, we hold based on facts and circumstances of the case, that the assessee fails to satisfy the mandate of Section 68 as creditworthiness of these persons as well genuineness of the transactions could not be proved by the assessee, and we sustain the addition of Rs. 54 lacs as was upheld by ld. CIT(A). The assessee fails on this issue.We order accordingly. 6b. So far as the other two additions to the tune of Rs. 68000/- each being amount received from Mrs. Nandini Singh and Mr. Lakshmieshwar Singh by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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