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TMI Blog2024 (2) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... s well as on the facts of the case in refusing to admit the additional evidences filed under Rule 46A without any justified basis. Even though he discussed and considered the same while adjudicating the grounds on merit. The impugned order of the Id. CIT(A) deserves to be suitably modified to this extent. 3. Rs. 35,36,100/-: The CIT(A) erred in law as well as on the facts of the case in confirming addition of a huge amount of Rs. 35,36,100/- in relation to the purchase of a house property situated at Plot No.66, Jagdish Colony, Mahesh Nagar, Jaipur alleging that the same to be undisclosed income. The addition so made being contrary to the provisions of law and facts of the case and contrary hence, the same kindly be deleted in full. 4. Rs. 5,00,000/-: The Id. CIT(A) erred in law as well as on the facts of the case in confirming the addition made on account of alleged unexplained cash deposits in the bank of Rs. 5,00,000/- on 15.02.2012 alleging that the assessee has failed to supply supporting evidences. The addition so made being contrary to the provisions of law and facts of the case and contrary hence, the same kindly be deleted in full. 5. The Id.AO further erred in law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he belief cannot be investigated by the Court Sheo Nath Singh v/s AAC (1971) 82 ITR 147 (SC). However, in the present case the AO has not followed the settled principles. 2. In addition, it was further submitted that the AO has referred to some information, which is stated to be brought on record. However, neither that information was ever supplied to the assessee nor any details thereof has been shown in the assessment order and thus, without confronting the appellant, the AO proceeded to form reason to believe and issued the impugned notice u/s 148. The foundational document, based on which the AO formed reason to believe must have been supplied to the assessee as per the principal of natural justice in absence of which otherwise, it was a case of mere reason to suspicion and not reason to believe. The photocopy of the so called prior agreement dt. 12.02.2012 was given by Shri Dave to the appellant but the AO never supplied the same to the appellant. On this ground alone therefore, the entire proceedings has to be quashed. Reliance is to be placed on Micro Marbles (P) LTD. vs. ITO (2023) 331 CTR (Raj) 329 (DPB1-8) wherein it was held as under: "Supply of the material which fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me had escaped assessment. In support of her claim, she has relied on certain case laws centering on the notion that the AO should have 'reason to believe and not reason to suspect'. In the present case, the AO has recorded that the appellant, had in her return of income, disclosed only a nominal amount of Rs. 1,88,570/- whereas in the agreement to sell dated 12/02/2012, she had agreed to pay Rs. 34,71,000/- for purchase of a property, out of which Rs. 6,00,000/- had been paid in cash as an advance and the balance Rs 28,71,000/- was assured to be paid by 15/03/2012. Given these facts, it is evident that the AO had sufficient grounds to form the belief that the appellant's income had escaped assessment and therefore he issued the notice u/s 148. In the case of Nova Promoters and Finlease Pvt Ltd. 342 ITR 169 (Delhi), the Hon'ble Delhi High Court had laid down the principle that the prima facia belief of the AO that the income had escaped assessment is enough at the stage of reopening and merits of the matter are not relevant. In the light of the above facts, the AO's action in reopening the appellant's assessment for the A.Y. 2012-13 is found to be in accordance with the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finlease (P) Ltd. 349 ITR 169 (Del.), the Hon'ble Delhi High Court had laid down the principle that ''prima facie belief'' of the AO that income had escaped assessment is enough at the stage of reopening and merits of the matter are not relevant at this stage. In the case of ACIT vs Rajesh Jhaveri Stock Brokers (P) Ltd. 291 ITR 500 (SC), it was held by the Hon'ble Court that at the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Therefore, whether the materials would conclusively prove that the escapement is not concern at that stage. This is so because the formation of belief by the AO with the realm of subjective satisfaction. Thus keeping in view the above principles, we hold that AO's action in reopening the assessee's assessment for A.Y.2012-13 is found to be in accordance with the provisions of the law. Therefore, these grounds raised by the assessee stands dismissed. 3.1 The Ground No. 2 of the assessee is denial of admission of additional evidences under Rule 46A by the ld. CIT(A). Brief facts of the case are that during the course of ongoing proceedings, the assessee sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld, yes - Whether even otherwise case fell within rule 46A(1)(c) - Held, yes" Commissioner of Income-tax v. K. Ravindranathan Nair [2003] 131Taxman 743 (Kerala) Section 250 of the Income-tax Act, 1961 - Commissioner (Appeals) - Procedure in Appeal - Assessee in his accounts had shown that he had received loans during relevant year - Assessing Officer, however, did not accept same for want of confirmation letters from creditors, and, accordingly, made additions under section 68 - On appeal before Commissioner (Appeals), assessee produced confirmation letters - Commissioner (Appeals) rejected said additional evidence by holding that assessee's case did not fall under any of exceptional circumstances mentioned in rule 46A - Appeal filed against said order was allowed by Tribunal - Whether in view of sub-rule (4) of rule 46A and provisions of section 250, Commissioner (Appeals) was not justified in rejecting confirmation letters produced by assessee straightaway and he should have directed Assessing Officer to consider said confirmation letters and find out identity, creditworthiness, etc., of persons who had made fixed deposits - Held, yes Section 80HHC of the Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance at the time of signing of agreement and rest of Rs. 28,71,000/- was assured to be paid by 15.03.2012. When asked the assessee submitted vide letter dated `NIL` that the assessee paid Rs. 12 lakhs through various cheques to purchase the property through conveyance deed registered on 22.03.2012 before the Sub Registrar-Jaipur VIII, Jaipur. However, dissatisfied with the reply of the assessee, the AO concluded that the assessee had actually purchased the property for Rs. 34,71,000/- as per Agreement to Sale dated 12.02.2012 (PB 47-51) instead of Rs. 12.00 Lacs declared and that she had also incurred expenses of Rs. 4500/- for stamp duty and Rs. 20,100/- for registration charges. Finally, he made addition of Rs. 35,36,100/- on account of unexplained income. The breakup of the same are as under:- 1. Rs. 22,71,000/-(Rs. 34,71,000/paid- less Rs. 12,00,000/- declared) 2. Rs. 12,00,000/- 3. Rs. 65,100/- (Stamp and Registration) 4.2 In the first appeal, the CIT(A) also confirmed the additions by observing at para 11 & 12 of his order in the following words:- "On merits too, the additional evidence in the form of affidavits does not significantly help the appellant's case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions and creditworthiness of the lenders have not been established. Thus, the appellant cannot claim to have discharged the onus placed on her and therefore the reliance on the case laws cited by the AR is misplaced. One affidavit filed by Shri Satya Narain Maheshwari, who is the son-in-law of the seller merely affirms that he was a witness to the registered sale deed and that the transaction amount was only Rs. 12 lakhs. Given his relationship with the seller the contents of the affidavit cannot be accepted at mere face value. To sum up, the affidavits are self-serving documents and cannot be the basis for accepting the appellant's claims The appellant too did not file her bank statement to be able to substantiate her ability to make the balance cash payments. In the case of Krishnaveni Ammal vs CIT 158 ITR 526 (Madras), the Hon'ble Madras High Court held that if best evidence is not placed before a Court, an adverse inference can be drawn against a person who ought to have produced it. In case of non-furnishing of documentary evidence of corroborative value, which is within reach of the assessee, judicial body cannot act on such interested testimony of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Photocopy has no evidentiary value as held in the cases of Shri Krishna Gopal vs. ITO ITA No. 3249/Del/2015 dt. 16.05.2017(DPB 43-50), Moosa S. Madha and Azam S. Madha vs. CIT [1973] 89 ITR 65 (SC) (DPB 51-57) and Dy. CIT vs. B. Vijaya Kumar ITA No. 235/Hyd./10 dt. 18.09.2012 pg.12 pr. 11 (DPB 58-74) 1.2.2 The allegation of the AO at Pg-7 Pr-3.4 that the seller had confessed and confirmed the fact that actual sale consideration was 34,71,000/-, is completely contrary to her statement. Smt. Sushila Maheshwari (Seller) in reply to Q-12 clearly admitted that she had sold the subjected property only for actual consideration of Rs. 12,00,000/- (AO Pg-7) and she did never get any amount more than the agreed sale consideration. When again asked vide Q-13 as to why not addition should be made to her income assuming the sale consideration of Rs. 34,71,000/-, she again firmly replied that she sold the house no. 66 for Rs. 12,00,000/- only. Such statement, taken on oath, were binding upon the AO. 1.2.3 Further, the DLC rates of the property at the point of time when sold also suggested the sale price (full value of sale consideration) only further Rs. 12,00,000/- and not Rs. 34.71 Lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected transaction was took place at Rs. 12,00,000/- only. 2.1 The appellant was never confronted when enquiries made from the seller nor copy of the statement were ever supplied along with the show cause notice issued to the appellant on dated 17.11.16, nor any opportunity of cross examination of the seller Smt. Shushila was ever afforded to the appellant. Unfortunately, even the material gathered at the back of the appellant and was used adverse to the appellant, which is completely contrary to the principle of natural justice and it is not a mere irregularity but such a lapse is serious going to the root and hence was a nullity. Kindly refer the Andaman Timber Industries vs CCE (2015) 127 DTR 241(SC) (DPB 75-77). They have been followed by the Jaipur ITAT in various cases. It is settled and there are several judicial pronouncements on this point yet it will be sufficient to refer to Sec.142(3) of the Act itself which provides that the material collected by the ld. AO must be confronted to the assessee before making any addition. Unless the appellant was given an opportunity to cross examine, the law clearly prohibits the use of such a testimony given by the witness. Kindly r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... create a pressure on the parties. Normally parties, once having engaged a professional like a real estate broker, trust him and sign the papers and even also hand over the cheque as per his directions/advice. 3.2.1. Shri Durgesh Dave thus, intentionally mentioned the higher figure to pressurize (nothing wrong if even said to be a case of blackmailing) both the parties. He also obtained two blank cheques on dated 04.03.2012 from the assessee (Ch. No. 047626 for Rs. 1,00,000/- and Ch. No. 054357 for Rs. 50,000/-) and misappropriated the same without any authority of the appellant. In fact, these cheques were given for onward delivery to the seller when required by the buyer appellant but the broker neither handed over the same to the seller nor even returned back. Therefore, the assessee lodged FIR (No. 168/12 Mahesh Nagar Police Station) against him u/s 406/420/471 of IPC on dated 23.06.2012 (PB- 18). The fact of mentioning of higher sale consideration or not may not be in there in the FIR, yet however the very fact of filing the FIR against Shri Durgesh shows that something seriously wrong was done by the broker with the assessee, which was to the extent that he compelled the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to establish a negative, namely, that he did not receive any consideration beyond that declared by him". Similar view has been taken in the case of CIT v/s Shivakami Co. (P) Ltd. (1986) 159 ITR 71 (SC) holding that unless there is evidence that more consideration than what was stated in the document of transfer was received the declared sale consideration was to be accepted. This has been followed in CIT v/s Raja Narendra (1994) 210 ITR 250 (Raj.) wherein, it is held that: "The onus is on the Revenue to prove that there was understatement by the assessee i.e. the consideration received by the assessee in respect of the transactions was not truly declared or disclosed by him but was shown at a lower figure. What is intended to be taxed are the actual gains of an assessee, not what an assessee might have gained or could have gained or received." In the present case also the AO merely acted on suspicion based on unregistered agreement to sale completely disown by the parties and AO having failed to prove understatement. The ratio so laid down, holds good till date. 5.1 There apart, the amended law u/s 50C creates a legal fiction for the purposes of determining the full val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts of lenders. Further, it is also noticeable that during the whole course of assessment proceedings, the assessee has not filed the copy of her bank account statement for the year under consideration. Therefore, it is also not clear how the loans were received and used in payments of purchase consideration. Therefore, the confirmations filed by the assessee for the amount of Rs. 4.50 lacs are not acceptable. The assessee has not even filed confirmation of rest of the amount (Rs. 5.00 lacs)." The dispute is whether the AO was justified in making the addition of Rs. 12,00,000/- alleging that the assessee has failed to explain the sources of Rs. 12.00 lakhs. The AO has dealt with this issue at Pg-7 Pr-3.5, the subjected amount of Rs. 12,00,000/- was received from 5 Persons as per details given to the AO (PB-46). Submission: 1.1 It was submitted before the ld. AO that the assessee availed financial assistance from his nears and dears to make payment to the sellers and even confirmation in some of the cases were filed but were rejected without there being any justified ground. As Admitted by the AO himself, confirmations from three persons (Shri Pradeep Jain of Rs. 2 Lakhs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason that the AO never confronted of the doubt in his mind on this aspect and straight away made the addition therefore, the assessee couldn't file the evidences in support of the contention. 1.5 Addition of Cash Deposit of Rs. 2,50,000/-: It is submitted that this was deposited by the assessee out of her past and present savings. The return declared this year was at Rs. 1,88,570/-. The assessee was already filing ROI in the past as well. Details of the income declared by the assessee in her ROI are as under: S.No. A.Y. Return filed on Income Declared PB 1. 2008-09 26.07.2008 1,65,750/- 24 2. 2009-10 14.05.2009 2,49,802/- 27 3. 2010-11 16.11.2010 1,94,420/- 31 4. 2011-12 - 2,02,030/- 34 Apart from her business savings she has saved more than Rs. 5-6 lakh from her stridhan, which she got from her parents and other relatives on different occasions. The ld. AO however, appears to have completely ignored the same, which directly prove the source of Rs. 2,50,000/- was out of past savings. 2. Addition u/s 69 is discretionary: with regard to the financial assistance provided by the different person the CIT(A) do not deny that affirmatory affidavits duly swo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2008) 8 DTR 199 (Raj).) (DPB 31-38) held that: "Once the existence of the creditors is proved and such persons own the credits which are found in the books of the appellant, the appellant's onus stand discharged and the latter is not further required to prove the sources from which the creditors could have acquired the money deposited with him and, therefore the addition u/s 68 cannot be sustained in the absence of anything to establish that the sources of the creditors deposits flew from the appellant itself." 3.The AO completely ignored the settled law that u/s 68, 69 etc. only discretion has been conferred upon the AO to be exercised judiciously but he is not always obliged to make the addition if the explanation is not found satisfactory. Kindly refer CIT v/s P. K. Noorjahan (1999) 237 ITR 570 (SC) (DPB 39-42) " In the corresponding clause of the Bill which was introduced in Parliament, while inserting section 69 in the Income Tax Act, 1961, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- towards registration charges were paid without any source and hence was unexplained income of the assessee. The AO has dealt with this issue at Pg-3 pr 3.1 Submission: This was a small amount which, the assessee paid out of her past and present savings from her. The return declared this year was around Rs. 2,00,000/-. In the past also she was receipt of such income and filed ROI. Her Husband and Son are also employed and getting salaries. Thus, the impugned addition kindly be deleted in full.'' 4.4 On the other hand, the ld. DR supported the order of the ld. CIT(A) 4.5 We have heard both the parties and perused the materials available on record. In this case, it is noted that the assessee vide Ground of Appeal No. 3 challenges the addition of Rs. 35,36,100/- which consisted of three parts. The difference of Rs. 22,71,000/- between the sale consideration shown in the sale agreement dated 12.02.2012, and the one declared in the registered Sale Deed Rs 12 lacs. The lack of source of the payment of stamp duty and registration charges of Rs. 65,100/-. Lastly the absence of source of Rs. 12 Lakh paid by the appellant to the seller - Sushila Devi. With regard to the addition of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier agreement, which was neither owned nor was acted upon. Now coming to the addition of Rs. 12,00,000/- w.r.t payment of the declared sale consideration, the AO made the addition for want of supporting evidence biz. bank statement. The ld. CIT(A) observed the affidavits filed do not show that how payment was received and transferred to the seller. The appellant claimed receipt of, loans/ financial assistance from Ram Prasad Sharma of Rs. 4,00,000/-, Pradeep Jain Rs. 2,00,000/-, Satya Narayan Sharma Rs. 1,00,000/- , Seema Sharma Rs. 1,00,000/-, Umesh Kumar Sharma Rs. 1,00,000/-totaling to Rs. 9,50,000/- as per detail placed at pg.46 of the Paper book and in support affidavits are also available in the paper book. A perusal thereof shows that apart from affirming the fact of extending financial health, the cheques number with dates and the bank are duly mentioned therein. It is not disputed that these cheque numbers find place in the registered sale deed at pg.6 of the paper book hence, the fact of making payment by these persons directly to the seller is established. Although these affidavits were before the AO as sent during the remand proceedings, however, the AO failed to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this regard, it is worth mentioning that the assessee has not filed any bank account statement with her written submission. It is also not clear that the assessee's account is joint account with her husband and the same was deposited by her husband. The submission with is without any supporting evidences. It is not explained that which property was sold by her husband. Therefore, the amount of cash deposit of Rs. 5.00 is unexplained in the hands of the assessee and is considered her unexplained income of the year under consideration. Further, since the assessee has not filed copy of bank statement for verification, therefore, as per discussion in para 1 of show cause notice dated 17-11-2016, a lump sum addition of further Rs. 5.00 lacs is considered to be appropriate on this account. Hence, an addition of Rs. 10.00 lacs is made on account of unexplained income." 5.2 The ld. CIT (A) confirmed the addition of cash deposit of Rs. 5 lacs, but the other addition of Rs. 5 lakhs was deleted holding as under: "4.3 Ground of appeal no. 3 relates to the addition made of an amount of Rs. 5,00,000/-being unexplained cash deposits in the appellant's bank account. Neither during the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of past savings. 1.2 Husband Shri Navinder Kumar Sharma: He is also a Central Government employee with Department of Post and has been serving as postman (now in other capacity) and getting salary more than of Rs. 3,00,000/- Annually. Here also if a minimum amount of saving of Rs. 30,000/- if considered for last 10 years he was also in a position to save Rs. 3 Lakhs at least. 1.3 Son Shri Umesh Kumar Sharma: He is aged 37 yrs and passed out B.Com and providing computer maintenance and repairing services. He is also drawing a handsome amount of professional fee. Here also if a minimum amount of saving of Rs. 20,000/- if considered for last 10 years he was also in a position to save Rs. 2 Lakhs at least. Since all are residing jointly/ incurring house hold expenses commonly, the availability of more than sufficient cash/funds cannot be denied, could not be dispute by the AO even though basic submissions very duly made before him, hence he failed to discharge the onus shifted to him. The preponderance of the probabilities thus, suggest that taken together the family could have saved this much of the amount over a period of time and keeping of cash to this extent was not ..... 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