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TMI Blog2024 (8) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... e given. In our opinion, this issue has been considered by this Tribunal in the case of Bhoopalam Marketing Services Pvt. [ 2022 (11) TMI 331 - ITAT BANGALORE] wherein held abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non- availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not. In view of the above order of the Tribunal, we are inclined to remit the issue in dispute to the file of ld. AO for fresh consideration to examine in the light of above order of the Tribunal. Unsecured loan receipts - assessee has not submitted any details which can prove the genuineness of the unsecured loan and creditworthiness of persons who have advanced the loan - D.R. is that there is a doubt about the capacity of the lenders and genuineness of the transactions and documents produced by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of res judicata does not applicable to the income tax proceedings. More so, there is no evidence produced by the assessee to suggest that in earlier assessment years, the agricultural income has been accepted by the department vide scrutiny assessment u/s 143(3) of the Act. The agricultural income earned by assessee in each assessment year depend upon the various factors and the assessee is required to establish in each assessment year that he has earned the agricultural income declared in his return of income. Being so, in the interest of justice, it is appropriate to remit the issue in dispute to the file of ld. AO to examine these facts with regard to earning of agricultural income. - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER For the Appellant : Shri Hemasundara Rao P., A.R. For the Respondent : Shri Subramanian S., D.R. ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal by assessee is directed against order of NFAC for the assessment year 2017-18 dated 25.9.2023 passed u/s 250 of the Income Tax Act, 1961 (in short The Act ). The assessee has raised following grounds of appeal: 1. The order of the learned Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late proceedings, despite the fact that these documents formed part of the appellant's submissions. 11. The learned ClT (Appeals) ought to have appreciated the fact that the part of the loan received from HUF as reflected in the appellant's books of accounts in the relevant assessment year constitutes an adjustment entry and no actual funds were received to that extent in the preceding assessment year. 12. The learned CIT(Appeals) ought to have appreciated the facts that source and creditworthiness were duly explained by furnishing the return of income of the specified parties. 13. The learned CIT (Appeals) completely erred in by not considering the submissions made during the course of the proceedings and upheld the view of the learned Assessing officer based on surmises and conjectures without any logical reasoning. 14. Without prejudice to the above, Ld. CIT(A) was partially satisfied with some of the claims of the Appellant arid therefore, he should not have disallowed the claim to the extent he was satisfied with the submissions of the Appellant. 15. The learned CIT (Appeals) erred in confirming the disallowance of Rs. 1,70,850/- as an expenditure towards the agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the assessee was not able to satisfactorily explain the source of the cash deposit of Rs. 31,98,000/- and is liable to be treated as unexplained cash credit u/s 68 of the Act. Further the assessee has not submitted before the ld. AO, the Form 4 which is the proof that the declaration of assessee is accepted under PMGKY and he is eligible for immunity. Hence, the ld. AO observed that in absence of Form 4 the claim of the assessee is not eligible for getting benefit under PMGKY and the amount of Rs. 30,00,000/- is liable to be added as unexplained cash credit u/s 68 of the Act and the ld. AO made addition u/s 68 of the Act at Rs. 61.98 lakhs. 3.1 During the first appeal proceedings, the learned CIT (Appeals) accepted the contention of the Assessee that the deposit of Rs. 30,00,000/- offered for taxation under the PMGKY scheme, taxes were duly paid and additions to the extent were deleted. Further relating to the remaining additions of Rs. 31,98,000/- the learned CIT (Appeals) partially upheld the addition of Rs. 21,98,000/- under section 69A of the Act without accepting the submissions of the Assessee that enough cash balance exists as of 09-Nov-2016 i.e of Rs. 26,94,953/- an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the credits, when most turnover is cash is given. It is rather impossible that all patients paid only cash and there are no credit card or payments or bank transfers. If this was the general mode of business for the assessee, then the pattern of cash deposits across years is to be the same. This is not established by the assessee. Further, no details are given. In view of the same, the ld. CIT(A) held that considering the business of the assessee and the agricultural income, income returned, Rs. 10,00,000/- is found to be the acceptable source of cash deposit and the addition of Rs. 21,98,000/- is upheld and he directed the ld. AO to restrict the addition to this amount. Against this assessee is in appeal before us. 5. The ld. A.R. submitted that the Assessee has a cash balance of Rs. 26,94,953/- as of 09-Nov-2016 wherein the books of accounts have been audited and the cash book of the year is produced before the learned Assessing Officer and Appeal Authority. Therefore, the cash balance accumulated till the demonetized date is from the income of professional receipts and rental income. Hence, the source of the available cash balance is explained to the extent, and for the rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance available in the books of account. Accordingly, I set aside the order passed by learned CIT(A) on this issue and direct the Assessing Officer to delete the addition of Rs. 45 lakhs. 5.5 The ld. A.R. also placed reliance on the judgment of the Hon'ble ITAT, Ahmadabad in the case of Shree Sanand Textile Ltd. ITA No. 995/Ahm./2014, wherein it was held that the provisions of section 68 cannot be applied in relation to the sales receipt shown by the assessee in the books of accounts. It is because the sales receipt has already been shown in the books of accounts as income at the time of sale only. 5.6 Further he placed reliance on the decision of Hon'ble High Court of Patna case of Lakshmi Rice Mills (1974) 97 ITR 258 (Patna), wherein it has held that, when books of account of the assessee were accepted by the revenue as genuine and cash balance shown therein was sufficient to cover high denomination notes held by the assessee, then the assessee was not required to prove source of receipt of said high denomination notes which were legal tender at that time. 5.7 Further he placed reliance on the decision of the Hon'ble ITAT, Vishakhapatnam in the case of M/s, Hirapan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tantiated by the evidence, and therefore provisions of section 115BBE of the Act will have no application to treat the income of the Assessee as income from other sources. 5.13 The ld. A.R. submitted that with context to above, he placed reliance on the decision of Bangalore ITAT in the case of Anantpur Kalpana vs. Income-tax Officer [2022] 138 taxmann.com 141 where the Tribunal while considering the issue of the implication of section 68 of the Act during demonetization held as under (Para 9): I have carefully considered the rival submissions. Both the AO and CIT(A) accepted the fact that the cash receipts are nothing but sale proceeds in the business of the assessee. The addition has been made only on the basis that after demonetization, the demonetized notes could not have been accepted as valid tender. Since the sale proceeds for which cash was received from the customers was already admitted as income and if the cash deposits are added under section 68 of the Act that will amount to double taxation once as sales and again as unexplained cash credit which is against the principles of taxation. It is also on record that the assessee was having only one source of income from trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perm it for such change of provision of law. As per section 250 of the Act, the Id. CIT(A) is empowered to make further inquiry as he thinks fit or may direct the Assessing Officer to make further inquiry and report to the Id. CIT(A). As per section 251(l)(o) of the Act, in appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment, but there is no such power provided by the law that Id. CIT(A) could change the provision of law qua the item of which assessment was made. Therefore, in the absence of such power, learned CIT(Appeals) could not have treated the addition made under section 69A of the Act. Therefore, the addition made by the Id. CIT(A) under section 69A of the Act is liable to be deleted . 6. On the other hand, the ld. D.R. relied on the order of the ld. CIT(A) and submitted that the assessee has not explained the sources for the deposit of Rs. 31.98 lakhs and the same has been rightly considered as an addition u/s 69A of the Act and the same to be confirmed. 7. We have heard the rival submissions and perused the materials available on record. In this case, out of addition of Rs. 61.98 lakhs made by ld. AO u/s 68 of the Act, the ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es a hint regarding what kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases. 8. In one of such instructions dated 09/08/2019 speaks about the comparative analysis of cash deposits, cash sales, month wise cash sales and cash deposits. It also provides that whether in such cases the books of accounts have been rejected or not where substantial evidences of vide variation be found between these statistical analyses. Therefore, it is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money. 8.1 The instruction dated 21/02/2017 that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. The instruction is also suggested some indicators for suspicion of back dating of cash else or fictitious sales where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal before ld. CIT(A). 9. The learned CIT (Appeals) has accepted the contention of the assessee that out of the total unsecured loan of Rs. 3,96,81,929/-, an amount of Rs. 1,98,10,565/- relating to the previous years and to that extent, additions were deleted. For the remaining balance of Rs. l,98,71,364/-, the learned CIT (Appeals) upheld the addition stating that the assessee has not proved the genuineness and creditworthiness of the unsecured loans even though the assessee has furnished bank statements, return of income. The remaining addition under unsecured loans consists of two balances Rs. 1,10,05,034/- from the Vishwanathareddy HUF and Rs. 88,66,330/- from Mrs. Niveditha. Against this assessee is in appeal before us. 10. The ld. A.R. with regard to loan payable to Dr. Vishwanathareddy HUF of Rs. 1,10,05,34/-, submitted that the additions related to the HUF Loan amount of Rs. 1,10,05,034/- consist of adjustment entries in the books of accounts. The actual loan taken during the year is only Rs. 14,26,612/- and the remaining loan amounts were adjustment entries of the previous year Rs. 95,78,422/-. During the previous years, there was construction of a hospital wherein paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red loans such as the return of income, and bank statements along with the confirmation letters from the unsecured loans, and fortified the payment through banking channels when all the onus obligated on the Assessee have been duly discharged the addition of the sum of Rs. 1,98,71,364/-. In this context, where the Assessee explained the credit by furnishing evidence of identity along with the confirmations, the Assessee can be said to have discharged his initial burden, so that where an addition is made with no further attempt on the part of the learned Assessing Officer to examine the source of credit, the addition with reference to section 68 of the Act will not be justified. The ld. A.R. further submitted that the learned Assessing Officer failed to perform his right empowered by the statute of issuing notice to the other parties under section 133(6) of the Act or to cross-examine them. It is a well-established principle of natural justice that the evidence filed by the Assessee cannot be disregarded unless it is cross-verified. In this regard, the Assessee company placed reliance on the decision of the ITAT, Delhi in the case of M/s. K.P.Manish Global Ingredients Pvt. Ltd. Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Gujarat has held that - We find that during the remand proceedings, the details such copy PAN, ledger account and confirmation and other details such as bank statement, audited books were made available before the AO. However, the AO without considering and pointing any deficiency in the above primary documentheld that the assessee failed to prove the identity of the creditor, explain the genuineness of transaction and establish the credit worthiness of the creditor. 10.4 The ld. A.R. submitted that on the prima facie reading of the order under section 250, nowhere the learned CIT (Appeals) has considered the submissions made by the Assessee and the same amounting to the miscarriage of justice. The learned CIT (Appeals) ought to have considered the submission made by the Assessee in his support. He submitted that it is evident that the learned Assessing Officer and the learned CIT (Appeals) have made and upheld the addition without considering the submissions made by the Assessee. This demonstrates the lack of application of mind on the matter of the fact. Hence, he prayed before us to delete the addition made on the unsecured loan amount under section 68 of the Act. 11. On the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who should have the financial capacity to make the advance in question, to the satisfaction of the AO, so as to discharge the primary onus. The ld. AO is duty bound to look into the creditworthiness of the parties, verify the identity of the creditors and ascertain whether the transaction is genuine entries in the name of lenders. If the enquiries reveal that the identity of the creditors to be lack of creditworthiness, then the genuineness of the transaction would not be established. In such case, the assessee would not have discharged the primary onus contemplated by section 68 of the Act. 12.3 It was held by Hon ble Supreme Court in the case of Roshan Di Hatti Vs. CIT (107 ITR 938) (SC) that onus of proving the source of sum of money found to have been received by the assessee, is of assessee. Once the assessee has submitted the documents relating to identity, genuineness of transactions and creditworthiness, then ld. AO must conduct enquiry and call for more details before invoking section 68 of the Act. If the assessee is not able to provide a satisfactory explanation of the nature and sources, the credit shown in the books of accounts in the assessment year under consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issue in dispute to the file of ld. AO to carry out necessary enquiry on this issue as deemed fit and to decide accordingly. Ground Nos.15 to 18:- 13. Facts of the issue are that the assessee has shown agriculture income of Rs. 5,69,500/-. The assessee was asked to provide the details of agriculture income along with the details of expenditure incurred for earning the same along with supporting vouchers by the ld. AO. The assessee has not submitted any details regarding expenditure incurred on earning agriculture income and the sources for such expenditure to the ld. AO. As the assessee has not submitted any details regarding sources for expenditure made for earning agriculture income therefore 30% of the agriculture receipts was deemed as expenditure for earning agriculture income which is incurred from income from other sources. Accordingly, Rs. 1,70,850/- is added to the returned income as income from other sources and Penalty u/s. 270A of the Act is initiated for misreporting of income as discussed by the ld. AO. 14. On appeal, the ld. CIT(A) observed that the assessee has only given the general submission. No land records are given, nor agricultural income certificate. Not e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equently, the learned CIT (Appeals) has upheld the addition by stating in para 6.3.1 of the order under section 250 of the Act that the Assessee has not submitted any land records and not even the statement of calculation of agricultural income but in fact, the Assessee has submitted the agricultural land record and the agricultural income receipts during the assessment proceedings and without considering the submissions made by the Assessee and passing order would result against the principles of natural justice. He submitted that the ld. Assessing Officer has made an addition of 30% of the agricultural income on an ad hoc basis and did not specify the section under which it is taxable. Further, he submitted that the learned CIT (Appeals) upheld the additions stating that by disallowing the 30% expenditure of Rs. 1,70,850/-, the agricultural income gets reduced and the amount becomes unexplained cash credit under section 68 of the Act in the books of the Assessee. The learned CIT (Appeals) completely erred in including the expenditure in the taxable income under Section 68 of the Act, a section that the learned Assessing Officer did not invoke. Moreover, the learned CIT (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adangal. Therefore, the only official document maintained in the course of administration is the adangal extract maintained by the Village Administrative Officer. Beyond this, the assessee cannot produce any evidence for establishing the cultivation. 6. Moreover, for yield, there cannot be any other evidence other than estimation. A coconut tree may yield 100-120 nuts in a year. Now the Agriculture Department and Agriculture University invented hybrid coconut varieties which give 150-200 nuts in a year. Therefore, estimation of yield in agriculture is something difficult and which needs to be appreciated by the authorities who are performing judicial function. When agricultural produce including coconuts is traded in unorganized market like Uzhavar Sandhai and other local market, expecting the assessee to produce bills and vouchers is nothing but asking the assessee to perform an impossible task. Therefore, this Tribunal finds no reason to disallow any claim of the assessee. Had the Assessing Officer found that the assessee has no land or he has not cultivated as claimed, the matter might have stood in a different foot. In this case, the Assessing Officer accepted the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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