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TMI Blog2024 (9) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal. From the record, it is evident that Sh. Gurmeet Singh, in his statement has categorically admitted and explained that the disputed cash was deposited in the bank account of the assessee by the employee of M/S Bhagwati Lacto Vegetarian Exports Pvt. Ltd. on account of sale of land situated at Village Ballo Majra by the assessee company to M/S Bhagwati Lacto Vegetarian Exports and that there was no physical cash transaction since it was not possible to count huge cash in such short time as mentioned in the letter. In the remand proceeding, further the bank manager stated that no cash was transaction was involved, for the reason that the bank accounts of both the firm/company were in the same bank branch, so there was no need of actual movement of cash, since the funds were to be actually transferred from one bank account to another within the same branch, without the actual involvement of cash. Thus, it can be logically concluded from the statement of Sh. Sudhanshu Kumar, i.e. Branch Manager, that the certificate given by bank with respect to timing of cash deposit and cash withdrawal is factually incorrect as it is not possible to count huge cash in such time of few minutes. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent : Sh. Amit Jain, CIT DR. ORDER PER DR. MITHA LAL MEENA, AM: These cross appeals are filed by the revenue and assessee against the order of the Ld. Commissioner of Income Tax, Ludhiana [in short the CIT(A) ] which is arising from the assessment order passed by the Dy. Commissioner of Income Tax, Central Circle-1, Jalandhar (hereinafter referred to as the AO ) in respect of the Assessment Year 2015-16. 2. The department has taken the following grounds of appeal in I.T.A. No. 10/Asr/2024: 1. Whether on facts and circumstances of the case and in law, the Id. CIT(A) was justified in considering the unregistered sale agreement dated 30.03.2015 as genuine even though it was not found/ seized/ produced/ disclosed during the search proceedings on 11.02.2016 but the unregistered sale agreement was submitted by the assessee during the assessment proceedings, and therefore, it was on afterthought? 2. Whether on facts and circumstances of the case and in law, the Id. CIT(A) was justified in deleting the addition of Rs. 32.80 Cr. made by AO on account of cash deposits made in bank account of the assessee on 30.03.2015 and claimed to out of sale of land on the basis of unregistere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .00 crore with M/S Bhagwati Lacto Vegetarian Exports P. Ltd. (hereinafter referred as M/S BLVE) and against the said agreement assessee firm received Rs. 34.00 Crore in advance during the year under consideration and deposited the same in its bank account and also disclosed the same in the Audited Books of Accounts. However, the AO being not satisfied with the reply of the assessee, made the addition of Rs. 32.80 Cr. on account of cash deposits made in bank account of the assessee on 30.03.2015 to the return income of the assessee. 5. Being aggrieved with the assessment order, the assessee filed appeal before the learned CIT appeal who has granted relief to the assessee while adjudicating ground no. 3 by observing as under: 5.3 Ground of Appeal No. 3: In this ground, the AR has contested the addition of Rs. 32,80,00,000/- on account of deposits represent sale proceed of the property after withdrawing cash from the same bank account on same day. The AR during the course of appellate proceedings has submitted that during the course of assessment proceeding, assessee firm was asked for the source of cash deposit of Rs. 32.80 Crore in its bank account maintained with State Bank of Pati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within 5 to 6 seconds and this is humanly or even electronically not possible. 5.3.2 The AR further submitted that his act of bank proves beyond any doubt that bank data operator/clerk put up the entries as per his convenience because both the bank account i.e. of assessee and of M/S BLVE were in the same branch and they neither make any withdrawal or counted the cash. Also, as per AR, the cashier/clerk of the bank put deposit entries first and then make withdrawal entries, which also put in seconds and it proved beyond any doubt that it is not possible for any human being to count the huge amount of cash in seconds or milli seconds. The AR also held that on the date 30.03.2015, when the impugned transaction was transacted, there was a heavy rush in bank due to closings and also due to last date of income tax returns, so number of challans were pending with the staff. Also, as per the AR, that the staff of bank put the entries in bank account of M/S GNMP and M/S BLVE as per his/her convenience because both accounts were maintained in the same branch. 5.3.3 Further, the AR stated that the AO admitted this fact that assessee entered into an agreement for sale of land and registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cash deposits on 30.032015 and which as per AO are unaccounted money from undisclosed sources of the assessee. Thus, the basic question, which goes to the very root of the matter, ts that whether there was actual physical movement of cash i.e. withdrawal from one account and deposit into another account and secondly whether the deposits were prior to the withdrawals. To decide these aspects following important facts needs to be discussed: (a) Both the bank accounts are in the same branch of bank. Therefore, as such there was no need to physically transfer the money. (b) There was sufficient cash balance in the bank account of the entity from where the cash was withdrawn and deposited into appellant's bank account. (c) Both the entities are part of same group, and such there is no introduction of any money/cash from outside. (d) Statement of the branch manager was recorded by the AO. In this statement, the bank manager of the branch has also accepted this fact - that there is no movement of cash. He has mentioned that although the #1me stamp as per the bank record is correct, but due to heavy rush in bank on 30th and 31 st March, there was no physical movement of cash. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk manager himself during remand proceedings. Therefore, as such the addition made by the AO falls under the category of assumptions. In this regard, the reliance is being placed on following judgments: The Hon'ble Supreme Court of India in the case of Omar Salay Mohamed Sait vs. Commissioner of Income-tax reported at [1959] 37 ITR 151 (SC) [05-03-1959] held as under:- Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Order of Assessment year 1948-49 - Whether Tribunal should not base its findings on suspicions, conjectures, or surmises nor should it act on evidence at all or on proper rejection of material and relevant evidence or partly on evidence and suspicions, conjectures or surmises and if it does anything of that sort, its finding even though on questions of fact, will be liable to be set aside by - Held, yes The Hon ble Supreme Court in the case of Dhakeshwari Cotton Mills . CIT reported at 26 ITR 151 775 held as under: When making an assessment u/s 143(3), the AO is not entitled to make a pure guess without any evidence or material at all, Reliance is also placed on the following judgments: International Forest co, vs. CIT [1975] 101 ITR 721 (J K), Mohamm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of transaction and ignoring the decision of Hon'ble ITAT, Ahmedabad in the case of Pavan Kumar M. Sanghvi vs. ITO, {120171 81 taxmann.com 30} which has been upheld by Gujarat High Court {120181 90 taxmann.com 386(Gujarat)} and appeal of the assessee has been dismissed by Supreme Court {120181 97 taxmann.com 398(SC)} wherein it is held that it is duty of assessee to prove genuineness of transaction and that the Id. CIT(A) was justified in deleting the addition of Rs. 32.80 Cr. made by AO on account of cash deposits made in bank account of the assessee on 30.03.2015 as the assessee failed to prove the source of seed money by way of transfer of Rs. 744 Cr. from bank account of M/S Bhagwati Lacto Vegetarian Exports Ltd. from Andhra Bank to its account in State Bank of Patiala? 7. Per contra, the defendant, ld. Counsel for the assessee that during the course of assessment proceeding, assessee has explained the source of cash deposit of Rs. 32.80 Crore in its bank account maintained with State Bank of Patiala (now SBI, Ferozpur) as the said was out of sale consideration duly supported with an agreement of sale of property measuring 5 Acre, near village ballo majra, tehsil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration wherein the same Ld. AO considered all the identical facts and evidences where no adverse inference are drawn by him. The Ld. AO accepted the same agreement of sale of land and no addition was made in the hands of company APB, Pgs. 41-43). 7.4 The AO during the course of remand proceedings, issued summons u/s 131(1) of the Income Tax Act, 1961, to the persons, who were parties to the agreement dated 30.03.2015 for sale of land between M/S Guru Nanak Milk Products and M/S Bhagwati Lacto Vegetarian Exports Pvt.Ltd and also to the persons who filed affidavits in order to verify the genuineness of the claim made by the assessee during appellate proceedings and the AO could not controvert the evidence filed by the assessee on record. From the statement of Sh. Gurmeet Singh, it is evident that the cash deposited in the bank account of the assessee firm by the employee of M/S Bhagwati Lacto Vegetarian Exports Pvt. Ltd. was on account of sale of land situated at Village Ballo Majra by the assessee company to M/S Bhagwati Lacto Vegetarian Exports. b. That no physical cash was involved in the transaction since it was not possible to count huge cash in such time as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e certificate given by bank with respect to timing of cash deposit and cash withdrawal is factually incorrect as it is not possible to count huge cash in such time of few minutes. 10. In the present case, the AO has made addition purely on presumption and guess basis. It is settled principle of law that while making an assessment u/s 143(3), the AO is not entitled to make a pure guess without any evidence or material at all on record. In view of that matter, we find no infirmity or perversity in the decision of the ld. CIT(A) in deleting the addition of Rs. 32.80 Cr. 11. Accordingly, we find no merit and substance in the ground of the department and therefore, the order of the CIT(A) is upheld on the issue of deleting the addition of Rs. 31.80 Cr. 12. The appellant assessee has raised the following grounds of appeal in I.T.A. No. 320/Asr/2023: 1. That the order passed by the Hon'ble CIT (A) dated 18.10.2023 is against the law and facts of the ease. 2. That having regard to the facts and circumstances of the case, Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction and framing the impugned assessment order u/s 153C/143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest expenses was restricted to the original claim of Rs. 23,94,258/- and fresh additional claim of Rs 60,20, 750/- was disallowed. The CIT(A) confirmed the finding of the AO. 13.2 The Ld. AR submitted that in assessee s own case for the Assessment Year 2016-17, similar addition was made bythe AO and later confirmed by the CIT(A) but this issue was decided in favour of assessee by the Hon'ble ITAT Amritsar in ITA no.132/Asr/2022 vide order dtd. 09.11.2023 in which it was held as under: We heard the revenue's submission, peruse the orders of venue authorities and consider the documents available in the record. Related to ground no., the assessee already placed that the activities of the assessee are more requirement of lands for maintaining the livestock, chilling of milk, distribution. All are related to business, Further, the opening and closing balance of cash credit limit does not reveal that there is no use funds of the assessee. The Id AR relied on the order of Hon'ble Apex Court in the case of Vardhman Polytex Ltd. v. Commissioner of Income-tax[ 2012] 25 taxmann.com 281 (SC), the relevant paragraphs are reproduced as below:- The question which arises for de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounted profit arising out of trading receipts based on this document. The Ld. CIT(A) has considered the submission of the appellant, that these amounts also represent unaccounted business turnover, is acceptable but not agreed by stating that the AO has clearly mentioned in the assessment order about the nature of these entries that these are loan entries by the partner of appellant firm from whose possession, this annexure was seized. Accordingly, he finds no force in the argument of the appellant that these are also entries of unaccounted sale, as in annexure A-2 without controverting the contention of the appellant with supporting corroborative documentary evidence on record. 14.2 The Ld. AR submitted that CIT(A) has erred in law and on facts in confirming an addition of Rs. 1,76,57,729/- without appreciating the facts of the case that the total receipts as per A-2 amounts Rs. 6,45,07,729/-, out of which part receipt pertain to the AY 2016-17 and remaining amount of Rs. 4,76,57,729/- pertain to Assessment Year under consideration. The Ld. CIT(A) had allowed the benefit of Rs. 3,00,00,000/- (being amount surrendered during search declared in the Audited balance sheet) and confi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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