9911796707
TMI Blog2024 (6) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... the unpaid amount is only a liability of assessee. Hence, without any lengthy deliberation, it can be easily concluded that the purchase done by assessee cannot be said to be without consideration . Accordingly, it is neither a case of section 56(2)(vii)(b) nor of section 28(iv) as perceived by the lower-authorities. Hence, the addition made by AO and confirmed by CIT(A) is not justified. We, therefore, delete the addition made by AO. Addition u/s 69 on account of unexplained deposits in bank a/c. - HELD THAT:- As in the situation, when the assessee has undisputed cash-withdrawals from one bank, there is a source available for making deposits in another bank. AO has, however, rejected assessee s submission on certain reasons which are not substantial and more in the nature of conjecture or surmise. For instance, the AO has stated that the cash-book is not a sufficient evidence to explain that the source of deposits was the withdrawals. This itself is a vague point taken into account by AO. Then, the AO says that there is a time-gap between withdrawals and deposits or the amounts of withdrawals and deposits are not same but by raising this point, one cannot say that the money withdr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... damaru - AO has, however, made addition on account of cash-receipt alone without giving any finding in assessment-order on other side of refund. We find that the addition made by AO is not in order when the assessee has refunded money back to the giver immediately within a period of four days due to cancellation of deal. Consequently, we delete the addition. Receipt on account of advance for Badwai - Relying upon this letter of assessee to AO, Ld. AR requested that no addition was warranted in present AY 2012-13 when the same has already been taxed in AY 2015-16. Since the point raised by assessee is a matter of record, we remit this issue back to the file of AO for verification of record of AY 2015-16 qua the claim of assessee and therefore make adjudication afresh. We direct the assessee to provide necessary assistance when called upon by AO. This issue is thus allowed for statistical purpose. - Shri Vijay Pal Rao, Judicial Member And Shri B.M. Biyani, Accountant Member For the Assessee : Shri S.S. Deshpande, CA AR For the Revenue : Shri Ashish Porwal, Sr. DR ORDER PER B.M. BIYANI, A.M.: Feeling aggrieved by appeal-order dated 22.09.2023 passed by learned Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the CIT(A) was not justified in confirming addition of Rs. 90,75,000/- made by AO u/s 56(2)(vii) or 28(iv). 5. The precise facts relevant to this issue, as could be culled out from noting made by AO on page 2, 4 to 6 of assessment-order, are such that the assessee alongwith Shri Anchit Goyal (son of assessee) purchased an immovable property for Rs. 1,81,50,000/- from Shri Gyan Singh and others and the consideration was paid through cheques issued from bank accounts of assessee and Shri Anchit Goyal. But since none of the cheques issued by assessee was encashed, the AO observed that the assessee has not made any payment for consideration towards purchase and therefore received the immovable property amounting to Rs. 90,75,000/- (50% of Rs. 1,81,50,000/-) without consideration and therefore the transaction was taxable u/s 56(2)(vii)(b). When the AO show-caused, the assessee submitted that the section 56(2)(vii)(b) was not applicable because of two-fold reasons, (i) a sum of Rs. 3,75,000/- was paid by cheque of her father-in-law Shri Prahlad Goyal/P.D. Goyal towards consideration on assessee s behalf. Further, the assessee and Shri Anchit Goyal paid part of the consideration th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in trade of the assessee, as per section 28(iv) of the Act, the value of any benefit or perquisite whether convertible into money or not arising out of business and profession is income from business in the hands of the assessee. In this case, benefit of Rs. 90,75,000/- arose in the hands of the assessee on account of exercise of her business as no consideration was paid by her for purchase of such immovable property. Therefore, Rs. 90,75,000/- is being added in the hands of the assessee under the head Profits and Gains of business and profession as the assessee has submitted that she is maintaining books of accounts and the property has been purchased as stock in trade. 6. During first-appeal, the assessee made a detailed submission to CIT(A) which in re-produced in para 6.2 of CIT(A) s order. However, the CIT(A) rejected assessee s submission and upheld AO s action by observing and holding thus: 6.3 DECISION 6.3.1 The appellant s submission is that (a) the property of Rs. 1,81,50,000/- is jointly purchased with her son Sri Anchit Goyal (b) the cheques paid for the same have not been encashed by the party (c) there is litigation on this property with the Bhopal Development Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the registered-deed, one can easily find that the cheques were post-dated as 24.03.2012 (there are 4 cheques each of Rs. 1,25,000/- dated 24.07.2010 which are not post-dated but those cheques were paid by Shri Anchit Goyal, son of assessee). So far as the non-clearing of post-dated cheques is concerned, Ld. AR submitted that though the sellers have mentioned in Para 2 / Page No. 6 of the registered-deed placed at Page No. 26 of Paper-Book that the impugned property was free from all charges, it was never sold to anybody or never litigated anywhere and it was a clean property, etc., but the fact was such that the impugned land had already been handed over by sellers to Bhopal Development Authority ( BDA ) vide agreements dated 24.11.2010, prior to purchase by assessee on 17.06.2011 because the BDA had acquired impugned land in terms of a notification dated 08.05.2009 for developing a scheme under Town Development Scheme, 2005 of Govt. Therefore, the assessee and Shri Anchit Goyal made only part-payment through cleared cheques and the rest of the payment was made through post-dated cheques to be presented at a later date. Ld. AR went on submitting further facts that as per Scheme, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject land is under a scheme plan of BDA and the assessee is helpless and can do nothing. He submitted that in the event, the decision of High Court or BDA does not materialize in favour of assessee, there would be cancellation of deal only and still if the assessee keeps the deal, the assessee would necessarily release the amounts of post-dated cheques to the sellers. Thus, the unpaid amount is a liability of assessee and Shri Anchit Goyal. Therefore, the deal of purchase undertaken by assessee cannot be said to be without consideration . 10. We have considered rival contentions of both sides and perused the orders of lower-authorities as well as the material held on record to which our attention has been drawn. The first undisputed fact is such that the assessee alongwith her son Anchit Goyal has undertaken a deal for purchase of land vide registered-deed dated 17.06.2011 wherein the consideration agreed upon is Rs. 1,85,00,000/- and the same has been paid through cheques. The details of cheques paid by assessee and Shri Anchit Goyal to the sellers are clearly mentioned in the registered-deed as under: Further, the sellers have acknowledged receipt of full consideration th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evel of withdrawals from bank as well as deposits in bank does not commensurate with the turnover/profit declared by assessee. When the AO show-caused assessee to explain the withdrawals and deposits, the assessee filed a cash-book and claimed that the cash withdrawn from Bank of India was deposited in Central Bank of India. The assessee further explained the necessity of withdrawal and re-deposit due to cheques issued from another bank. However, the AO rejected assessee s submissions by observing that (i) the cash-book is not a sufficient evidence to show that the deposits were made out of withdrawals, (ii) the quantum of deposits is not same as the quantum of withdrawals, (iii) there was a time lag between deposits and withdrawals, (iv) the deposits and withdrawals did not commensurate with the turnover and gross-profit declared by assessee and (v) the assessee has not submitted evidence of any transaction for which she was necessitated to issue cheques from another bank a/c. With these observations, the AO stated Therefore, considering the above, the rationale of the assessee for withdrawals and deposit of cash in the bank account does not appear to be that of a prudent and rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arnath Jute Mfg. Co. Ltd. V. CIT (1971) 82 ITR 363 (S.C.), Sutlej Cotton Mills v. CIT (1979) 116 ITR 1 (S.C.), Tuticorin Alkali Chemicals and Fertilizers Ltd. V. CIT (1997) 227 ITR 172 (S.C.) and United Commercial Bank v. CIT (1999) 240 ITR 355 (S.C.). Thus, mere existence and audit of books of accounts does not mean the same are to be accepted as they are. 7.3.3 In this case, the veracity of the books is highly questionable when the appellant has no audited books and in fact, is declaring income u/s 44AD. The other argument is that the AO did not reject the books. There is no need for the AO to pass specific observations on rejections of books and estimation of income, as the income is returned by the appellant on basis of 44AD without the books of accounts. When AO did not accept the cash book as explaining the cash deposits, the rejection of the stated books is evidence and as the income is already on estimated basis, there was no necessity to mention the estimation of income again. 7.3.4 The appellant has not provided any explanation of the said sources for the cash deposits nor provided the cash book to the appellate authority. In the current case, the appellant has not offere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of the stated money, the burden is on the possessor as to prove he is not the owner. As the money was found with the appellant in his bank account, it is on the appellant to prove the money does not belong to him. Since this burden is not discharged by the appellant, there lies no further burden on the revenue to prove anything. Hence, the AO can make addition to the income u/s 69A. In view of the same, the addition of the AO is upheld. 14. Before us, Ld. AR for assessee strongly assailed the orders of lower authorities on various counts as under: (i) That the assessee filed cash-book to AO during assessment proceeding and copy is also filed at Page No. 66-68 of the Paper-Book. Referring to same, Ld. AR showed that all entries of cash-withdrawals and cash-deposits are duly recorded therein. He also pointed that although the majority of transactions are such that the cash withdrawals from Bank of India have been deposited in Central Bank of India but on a few occasions, the cash has also been re-deposited in the Bank of India itself. (ii) He submitted that it is a choice of assessee to withdraw from one bank and re-deposit in another bank or same bank and issue cheques fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source. The assessee has explained that the cash withdrawn from one bank was utilized for making cash deposits in other bank or same bank. The assessee has also filed a cash-book or cash flow statement wherein date-wise entries of cash-withdrawals and cash-deposits as well as a few other entries of cash inflows/outflows are duly recorded while showing balance in hand. The AO has neither rejected this cash-book or cash flow statement nor pointed out any single discrepancy therein. The quantum of cash-withdrawals exceeds the quantum of cash-deposits made during the year. The cash balance is not negative on any date. Further, there are regular withdrawals and deposits on various dates. Therefore, in the situation, when the assessee has undisputed cash-withdrawals from one bank, there is a source available for making deposits in another bank. The AO has, however, rejected assessee s submission on certain reasons which are not substantial and more in the nature of conjecture or surmise. For instance, the AO has stated that the cash-book is not a sufficient evidence to explain that the source of deposits was the withdrawals. This itself is a vague point taken into account by AO. Then, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were on a plain paper and unregistered. Then, Ld. AR carried us to various pages of Paper-Book to show that the receipts shown by assessee were genuine. He firstly referred Page 14 of Paper-Book where the Computation of Total Income filed by assessee is submitted wherein taxable income of Rs. 15,36,745/- under the head Income from Business or Profession was declared by assessee. He correlated this figure of business income from Page 16 of Paper-Book where the P L A/c of assessee shows Profit of Rs. 3,68,627/- from land at Barkhedi (+) Profit of Rs. 11,69,826/- from land at Pura Chindwara (-) Bank charges of Rs. 1,708/-, thus net result comes to Rs. 15,36,745/-. Thereafter, to explain the cash-receipt of Rs. 9,00,000/- for land at Barkhedi, Ld. AR carried us to Page 17 of Paper- Book where the P L A/c of land at Barkhedi is filed showing three cash-receipts of Rs. 3,00,000/- each on 01.08.2011, 10.09.2011 and 25.09.2011, aggregating to Rs. 9,00,000/- from Smt. Kaviti Indra to whom the assessee sold land as well as cost of Rs. 5,31,373/- incurred by assessee, thus leaving a net profit of Rs. 3,68,627/-. Next Ld. AR carried us to Page 70-71 of Paper-Book where the unregistered agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee is engaged in the business of purchase and sale of immovable properties, (ii) that the impugned cash-receipts declared by assessee are relatable to the sale of lands held by assessee, (iii) that the assessee has filed agreements for sale of lands which are duly signed by assessee, purchasers and witnesses, (iv) that the agreements contain full details of the assessee as seller, the purchasers and the receipts shown by assessee towards sale consideration, and (v) the receipts are also recorded in assessee s cash-book. The only defect noted by AO is that the agreements are on plain paper and unregistered which is certainly a fact. But, however, we find that the assessee has shown taxable receipts and not claimed deduction of any expenditure on the basis of those agreements. Undisputably, those receipts are part of sale-proceeds of the lands and the profit resulting therefrom has been offered in assessee s return as business income and duly assessed by AO. Thus, the AO has not doubted the cost, sale-proceeds and profits from those lands. An additional fact in case of land at Pura Chindwara is such that the major portion of sale-proceed has been received through cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
