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2016 (1) TMI 411 - ITAT BANGALORE

2016 (1) TMI 411 - ITAT BANGALORE - TMI - Addition as agricultural income - Held that:- No doubt, there cannot be a surmise that it was not probable for an assessee to retain cash withdrawn from bank account, without utilizing the same. However, here the explanation for the same was not withdrawal from the bank, but earnings from agricultural income. It is difficult to believe that a person who was having a bank account would have kept as much as 18 lakhs in cash in her / his house without banki .....

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tilising for a period of one year. Therefore, preponderance of probability is that the amount of ₹ 2.98 lakhs withdrawn by the assessee in August and September 2005 would have been used by her for some other purposes. This cannot be considered as a surmise, for a simple reason that assessee had to pay interest on the cash credit account. In such a situation, we are of the opinion that lower authorities were justified in not accepting the withdrawal from the cash credit account, more than o .....

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elur had no bank account cannot be accepted, when there were banks available within a reasonable periphery. It is against the principle of preponderance of probability that huge sums of money would have been kept in cash by them, over a number of years and loaned to the assessee in one go. Assessee might have been able to prove the credit worthiness of the parties and identity of the creditors. However in our opinion genuineness of the transaction has not been proved by the assessee. In such a s .....

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d saved and kept a sum of ₹ 5 lakhs in cash at his residence over various years and loaned it in cash to the assessee is difficult to believe. It is not a surmise but against the principle of preponderance of probability . Just because the creditor had produced evidence in the nature of agricultural holding or income of ₹ 4.5 lakhs per year would not be sufficient to come to a conclusion that they had funds with them to give a loan to the assesee in cash. Here also, in our opinion, g .....

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dmittedly there was a bank facility in Gadag which was only ten kms away. In this case also assessee has not been able to establish the genuineness of loan.

Coming to the loan of ₹ 5 lakhs taken from Devappa, situation is almost the very same. Claim is that loan was taken in cash and the creditor had saved the money out of agricultural income over various years. In our opinion, genuineness of the transaction has not been proved here also.

However, addition of ₹ .....

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grounds, except for grounds 1 and 5 which are general in nature, relate to additions made by the AO disbelieving the explanations given by the assessee on the source for acquiring a land measuring 1 acre 25 guntas at Gadag. 02. Facts apropos are that assessee had acquired a piece of land at Gadag for a total cost of ₹ 50,79,755/-. Source of this investment furnished by the assessee along with her return of income read as under : 03. AO verified each of the above source given by the assess .....

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fter verifying the submissions of the assessee and also considering the Village Accountant s certificate, came to a conclusion that assessee and her family members had substantial agricultural holding and family of the assessee was one of the richest in the area. However according to him, savings from agricultural income claimed at ₹ 18 lakhs, if it was really there, would not have been held by the assessee in cash but would have been banked. He was of the opinion that assessee s claim tha .....

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irmation, the latter affirmed that he had given cheques to Dheerendra B. Huilgol. AO himself has stated that passbook of Shri. B. F. Dandin, President of Kanakadas Shikshana Samithi was verified. However, AO was of the opinion that the amount borrowed by assessee s husband from Shri. B. F. Dandin was not connected with the investment made by the assessee for purchase of the property. As per the AO, there was no reason why assessee did not borrow the money directly from Shri. B. F. Dandin and why .....

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k account. Such bank account reflected withdrawals totalling ₹ 2,98,000/- during August and September 2005. AO was of the opinion that due to the time gap of one year two months between withdrawal and purchase of the property, the source claimed by the assessee could not be accepted. He made an addition of ₹ 3 lakhs as unexplained investment in the property. 06. For the hand loan of ₹ 8 lakhs claimed to have been received from Veeramma S. Sajjanar and Smt. Girijadari V. Sajjana .....

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rmation of Shri. Veeranna S. Sajjanar & Smt. Giridari V. Sajjanar with caliginosity. According to him, though the village accountant had certified an annual income of ₹ 2,75,000/- for Veeranna S. Sajjanar and his wife, after considering their personal expenditure they would not have had sufficient funds with them to lend a sum of ₹ 8 lakhs to the assessee. Further as per the AO, these persons had also not produced any evidence for sale of agricultural produce and their claim that .....

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per annum therefrom. He also stated that the sale of agricultural produce was done on the field on spot basis and there were no records for sale. AO refused to believe this also for a reason that after meeting the expenditure of the big family that the lender had, he would not have had much cash with him for giving loans to assessee's husband. Further as per the AO if assessee needed money she would have borrowed directly and not through her husband. He considered ₹ 5 lakhs also as un .....

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09. For the loan of ₹ 5 lakhs claimed to have been taken from Devappa G. Kadi, through her husband Dheereendra B. Huilgol, assessee produced the creditor before the AO. Said person stated that he along with his brothers were holding 38 acres of land with different agricultural produce. His agricultural earnings came to ₹ 4.5 lakhs per annum and he had no other source of income. AO refused to accept this also for a reason that the loans were taken through assessee's husband for n .....

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illage accountant were filed. 11.Aggrieved assessee moved in appeal before the CIT (A) against each of the above addition. The very same averments which were made before the AO were repeated before the CIT (A). CIT (A) affirmed the order of AO considering that assessee could not discharge the duty vested on her to establish that loans were genuine. As per the CIT (A) in almost all the cases, receipt of loans were in cash. Claim of the assessee that creditors had kept large amounts of money in th .....

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established. Concerned persons had appeared before the AO and confirmed the loans. Concerned persons had also produced proof for holding of agricultural land and income therefrom. Therefore, according to her, assessee had discharged her onus for proving the identity and creditworthiness of the creditors and genuineness of the transaction. 13. Continuing her arguments, Ld. AR submitted that the money was kept in cash by the creditors, since there was no bank in Huilgol village. According to her a .....

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he case of Smt. P. Padmavathi v. ITO [ITA.No.414 of 2009, dt.06.10.2010] had held that once the money was with the assessee it was not the concern of the Department as to why it was not actually deposited in the bank. As for the addition made for agricultural income claimed by the assessee, Ld. AR submitted that AO had himself admitted assessee to be the richest farmer in the village having substantial agricultural holding. Keeping the money in cash was not a proper reason for disbelieving the s .....

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cash as such in their house without banking. As for the reliance placed by the Ld. AR in the case of Meena Nagaraj Naik (supra), Ld. DR submitted that time gap in the said case was only 42 days whereas in the case of the assessee, creditors were holding the cash for so many years which was unbelievable. 15. We have perused the orders and heard the rival contentions. Ground through which the assessee has assailed the addition of ₹ 13 lakhs disbelieving the claim of ₹ 18 lakhs as agri .....

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ce any evidence for sale of the agricultural produce. In our opinion the reasons given by the AO was well justified. In the first place assessee herself was having an account in Punjab & National Bank, Gadag. Assessee's husband was also having bank account in Corporation Bank as well as State Bank of India, Gadag, which fact he affirmed in his answer to question no.7 posed by the AO during his examination on 27.02.2009. Assessee's husband had admittedly received some of the loans, cl .....

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om bank account, without utilizing the same. However, here the explanation for the same was not withdrawal from the bank, but earnings from agricultural income. It is difficult to believe that a person who was having a bank account would have kept as much as 18 lakhs in cash in her / his house without banking. In such circumstances, we are of the opinion that AO was justified in considering ₹ 5 lakhs as saving from agricultural income that could have been kept by the assessee. In our opini .....

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bout one year and two months. What we notice is that the drawing claimed is from cash credit account on which interest would have been paid by the assessee. No man with reasonable prudence would have taken an interest bearing loan and kept it with him / her as cash without utilising for a period of one year. Therefore, preponderance of probability is that the amount of ₹ 2.98 lakhs withdrawn by the assessee in August and September 2005 would have been used by her for some other purposes. T .....

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ount. Accordingly we are of the opinion that lower authorities were justified in making an addition of ₹ 2.98 lakhs. Ground 3 of the assessee stands dismissed. 17. Ground taken by the assessee vis-a-vis loans from Kanakadasa Shikshana Samiti, Veeranna S. Sajjanar and Smt. Girijadari V. Sajjanar, Shivappa H. Neeralgi, Allasab H. Kadad and Devappa G. Kadi, appear as ground no.2. Of these persons, loan from Kanakadasa Shikshana Samithi, loan from Shivappa, loan from Allasab and loan from Deva .....

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countant for the holdings as well as the income. 18. AO disbelieved the loan from Kanakadasa Shikshana Samithi for a reason that assessee herself could have raised the loan and the loans need not have been taken through her husband. Further, as per the AO there was a gap of 4 - 5 months between the loan and acquisition of the property. What we note is that the loans from Kanakadasa Shikshana Samithi were taken by assessee's husband through cheques of ₹ 5 lakhs and ₹ 2 lakhs and t .....

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imed to have been taken from Veeranna Sajjanar and Girijadari Sajjanar of Kelur village, the agricultural income certified by the village accountant was only ₹ 2,75,000/- per annum. It is not possible to believe that after meeting the expenditure of their family, Veeranna Sajjanar, could save enough to give a loan of ₹ 8 lakhs to the assessee. Said persons also could not show that why they could not give the loan through a bank account. Their claim that there was no banking facility .....

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bank branch can be envisaged only within a reasonable vicinity of the place of residence of a person and not at his door step. Even in cities, a bank can be 10 to 15 kms away from the residence of an individual. In our opinion claim of creditors that they did not have any bank account, since the village they lived viz., Huilgol / Kelur had no bank account cannot be accepted, when there were banks available within a reasonable periphery. It is against the principle of preponderance of probabilit .....

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loan of ₹ 5 lakhs alleged to have been taken from Shivanna, the said transaction was also claimed to be in cash. No doubt here also, the village accountant had certified the holding of the concerned Shivanna to be about 30 acres. As mentioned by us, Shivanna was also a resident of Huilgol village. To believe that he had saved and kept a sum of ₹ 5 lakhs in cash at his residence over various years and loaned it in cash to the assessee is difficult to believe. It is not a surmise but .....

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ere very similar to that of the loan claimed to have been taken from Shivappa. Transactions were claimed to have been in cash. There is no evidence for sale of agricultural produce. Money claimed to have been accumulated was never banked. Claim that there was no banking facility in Huilgol was only a camouflage since admittedly there was a bank facility in Gadag which was only ten kms away. In this case also assessee has not been able to establish the genuineness of loan. 22. Coming to the loan .....

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