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2016 (9) TMI 458 - ITAT KOLKATA

2016 (9) TMI 458 - ITAT KOLKATA - TMI - Unexplained investment in land, residential flat & shop, etc. - Held that:- It is seen from the material available on record that in the order of assessment, the AO has not disputed the datewise transactions maintained in the cash book by the Assessee. Therefore there should not be any difficulty in calculating the availability of cash on any given day. There were deposits and withdrawals in this cash book. The AO has come to the conclusion here that cash .....

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e disputed. The AO has himself noted in the assessment order that the Assessee’s business turnover for the year was ₹ 2,67,54,866/- and that he had no debtors. Therefore, availability of cash with the Assessee does not appear to be in doubt. The correlation between the cash book and the deposit in the bank account has also been accepted by the CIT(A). The source of funds in so far as it relates to the Assessee’s wife has also been given but the same was neither examined nor rejected by the .....

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cumstances, we are of the view that the addition made by the AO was rightly deleted by the CIT(a) - Decided in favour of assessee. - Addition on account of gift received - failure to prove the creditworthiness of the donors from the party of the assessee - Held that:- As seen from the Record that the AO himself has admitted that the Assessee has submitted the name of the donor, the amount of gift and the mode of transaction which, admittedly, is through cheque. Therefore the CIT(A) has right .....

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T(A) in this regard and dismiss Gr.No.2 of the Revenue.- Decided in favour of assessee. - Addition on account of liabilities for failing to substantiate the same - Held that:- There was no evidence for the AO to come to a conclusion that liability in question was not genuine. On the other hand, the payment to the above said party by the assessee in the subsequent year by cash and the availability of cash to make payment were satisfactorily explained by the assessee - Decided in favour of ass .....

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Sri Swapan Kumar Das that there was cash deposit of ₹ 2 lakhs on 25-03-2008. Immediately, thereafter on 27-28 March 2008 four cheques of ₹ 50,000/- each ws issued to the assessee by Swapan Kumar das. Prior to deposit of cash, Mr. Swapan Kr. Das had a balance of ₹ 2,50,000/- in his bank account. In these circumstances, we are of the view that the assessee failed to satisfactorily explain the loan taken from Swapan Kumar Das. We, therefore, confirm this addition.- Decided against .....

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r 2008-09. The Assessee has also filed a Cross-objection against the very same order of the CIT(A). 2. There is a delay of 05 days in filing the appeal by Revenue, for which the condonation petition has been filed explaining the reason for delay in filing as owing to administrative delay. After perusing the same and hearing both the parties, we condone the delay in filing the appeal by the revenue. 3. Ground no.1 raised by the revenue reads as follows:- That, the ld. CIT(A), Asansol has erred in .....

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lled upon the Assessee to explain the source of investment made. 5. In his explanation, the assessee explained that for the purchase of Shop Room at Armenian Street, Kolkata, he has paid ₹ 11,39,850/- from the bank account no.... 2073 of Sudhi Bastralaya of Axis Bank, Burdwan and ₹ 7,00,000/- from the bank account no.. ...2097 of Sudhi Textile (Prop. Bubai Kar, wife of the assessee). Regarding investment made in purchase of Flat at Buro Shibtola Main Road, Behala, he stated that the .....

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e Assessee submitted that it was purchased in earlier years and for this remaining amount of ₹ 1,15,020/- was paid to Rameswara Developers Pvt. Ltd, Kolkata on 04.04.2007 from the Axis Bank account no. 2073 of Sudhi Bastralaya. Regarding investment in Land, he explained that Land purchased (1/2 share) of ₹ 3,75,000/- at Raina has been purchased from withdrawal of cash from Sudhi Bastralaya. 6. On verification of the balance sheet of M/s. Sudhi Bastralaya, the AO found that the openin .....

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t of other investment such as LIC etc. If net profit of the current year of ₹ 6,89,764/- is included with the capital, even then the assessee has withdrawn excess amount of ₹ 17,10,507/- from his proprietorship business Sudhi Bastralaya, which he has shown as contra entry in his books of account. According to the AO, a person cannot withdraw capital of ₹ 30,28,626/-, when he has the capital of ₹ 6,28,353/- only. The AO found that in the circumstances was of the view that .....

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. To verify the availability of cash with Sudhi Bastralaya, the AO called upon the assessee to produce cash book for the relevant year. In response to this, the assessee produced cash book, which was manually maintained in a register. In this register entry of cash inflow-outflow and transaction made in bank are mixed together. According to the AO the cash book availability of cash was not ascertainable. According to him, on various occasion, it has been found that cash has been deposited in cas .....

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s books of account. The AO, therefore, concluded that the assessee did not have sufficient fund to withdraw from proprietorship business concern Sudhi Bastralaya and he has used his own undisclosed money to invest in Flat, Shop room and Land by giving it a colour of withdrawal from Bank account of his own business concern and the business concern of his wife. The assessee had shown withdrawal for flat of ₹ 18,65,237/- and for Land of ₹ 4,50,000/- from the capital of Sudhi Bastralaya. .....

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bitrary, baseless and made out of misappropriation of facts for the reasons given below:- a. Flat at Behala : The Investment of flat at Behala purchased jointly with his wife Smt. Bubai Kar, proprietor of M/s. Sudhi Textiles, a wholesale cloth merchant assessed by the Income Tax Officer, Ward 3(1), Asansol under PA No. AFCPK8252M for ₹ 12,35,000/-. The source of fund was ₹ 6,10,367/- paid from the bank account of the business M/s. Sudhi Bastralaya (A/c No.2073 of Axis Bank, Burdwan), .....

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was shown in the personal capital account of the assessee out of withdrawals from the business of the assessee. All these investments have been made from the bank accounts of the assessee and his wife and also from bank loan and from withdrawals from his business which have been properly reflected in the books of the assessee. The books maintained are correct and truly reflected in transaction. Every receipts and disbursement made during the year are correctly entered and are properly explained .....

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deleted. The Axis Bank account of the business of M/s. Sudhi Bastralaya, M/s. Sudhi Textiles, ICICI loan accounts, full set of accounts of M/s. Sudhi Bastralaya along with personal capital account, of the assessee and Balance Sheet, I.T papers, bank statements, capital accounts of the assessee s wife, Smt. Bubai Kar showing the transactions are being enclosed. The details of payment towards the cost of the properties are also being submitted. 9. The ld. CIT-A on consideration of the above submi .....

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quently has also been returned to him. The AO has come to the conclusion here that cash book was not properly maintained. I cannot agree with this conclusion of the AO. As stated above, the AO does not mention any gaps occurring in the cash book. If the cash book has been maintained on day to day basis then calculating the availability of cash on a particular day should not be a problem. The AO has also mentioned that on occasions the appellant has introduced his own cash in the business but par .....

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in the assessment order that the appellant s business turnover for the year was ₹ 2,67,54,866/- and that he had no debtors. Therefore, availability of cash with the appellant does not appear to be in doubt. In course of appellate proceedings, the bank accounts maintained by the appellant and his wife for their business have been submitted. It is seen that the deposits are almost exclusively in cash. But in my opinion, this is only to be expected in a business where the sales are invariably .....

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assessment order that the appellant had submitted before the AO details regarding the investment made by his wife. However, no examination of such submission by the AO is available on record. The total addition is seen to have been made as if the appellant had invested the entire amount. The appellant s wife is seen to be separately assessed to tax. Under the circumstances, I do not see how her investments can draw adverse inference in the hands of the appellant. Thus, out of the total addition .....

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explained investment can be made without any discussion. It also needs to be mentioned that the amount of capital in a particular business can only be a pointer but cannot be the only yardstick for judging whether withdrawals in excess of such capital can be made. Under the circumstances, I find that the withdrawals made by the appellant from his business for making the investment are well supported by his sources which are explained. In view of that, the addition made is directed to be deleted. .....

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ook by the Assessee. Therefore there should not be any difficulty in calculating the availability of cash on any given day. There were deposits and withdrawals in this cash book. The AO has come to the conclusion here that cash book was not properly maintained. This conclusion of the AO was not based on any discrepancy in the cash book but rather on surmises. The AO does not mention any gaps occurring in the cash book. The AO has not also disputed the source of cash as one from the sale proceeds .....

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sh book and the deposit in the bank account has also been accepted by the CIT(A). The source of funds in so far as it relates to the Assessee s wife has also been given but the same was neither examined nor rejected by the AO. Therefore the conclusion that the Assessee invested the entire funds including the share of the Assessee s wife was rightly held by the CIT(a) to be incorrect. The fact that the Assessee had taken a loan from M/s. ICICI Bank, is clear from the evidence on record but in his .....

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leting the addition of ₹ 4,51,516/- disallowed by the Assessing Officer on account of gift received being failed to prove the creditworthiness of the donors from the party of the assessee. 13. The assessee had shown to have taken Gift of ₹ 2,15,000/- from his relatives and gift of ₹ 2,36,516/- from his wife Bubai kar during the relevant year. The AO called upon the assessee to furnish the name and other details of the relatives from who gift was received. In response to this, t .....

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que except the gift by Bubai Kar through book adjustment. 14. According to the AO, the onus to prove the identity of the person making the gift, the capacity of the donor to donate money and the genuineness of the transaction prima facie lie on the assessee. But the assessee did not produce anything regarding any person from which the above three thing can be established. He has simply submitted the name and amount and mode of transaction. The AO held that the mere furnishing of particulars or t .....

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510/- paid by him to her on behalf of half share in the advance money of the new flat. The remaining amount of ₹ 2,36,516/- has been shown as gift paid to him from his wife Bubai Kar. According to the AO from the investments made by the assessee in various properties, it is quite clear that he himself is a person of worth and the persons from whom he has claimed to have received gift is not so much affluent. This is clear from the fact that one of the person Swapan Das who is the brother i .....

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ssessee submitted as under:- The disallowance of gifts by the Learned Income Tax Officer is wrong unjust in view of the following reasons:- (i) Gift by Sri Bhakti Binod Sinha Sri Sinha is a retired employee and has at present running a PCO Booth, made the gift by making bank draft out of withdrawal from savings account of United Commercial Bank, Raniganj where his transactions are fully reflected which is being submitted. (ii) Sri Sushil Kar Sri Sushil Kar is a bachelor of about 78 years and is .....

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the appellant had given a sum ofRs. 25,000/- as gift to his brother. The amount was given from her personal bank account out of own savings for the last 30/35 years as a married lady. (iv)Sri Swapan Das, the brother-in-law of the appellant had made a gift of ₹ 25,000/-out of his personal savings account of Post Office out of savings from agricultural income. (v) Smt. Mamata Kar, the mother of the appellant had made a gift of ₹ 70,000/- to the appellant during the year out of the savi .....

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tralaya, and details of assessment papers are being submitted. All these gifts are genuine and the donors are in the capacity to make such gifts. Hence, the disallowance is arbitrary and uncalled for and should be fully allowed. The appellant has submitted the declaration of the persons, their identities have been proved and the bank statement of the donors have also shown to prove the genuineness of the transactions. Basing upon the principle laid down by the Supreme Court in case of CIT Vs. P. .....

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e is not in terms of the words shall be charged to income tax as the income of the previous year. The appellant has discharged his onus in terms of Section 68 by proving the identity of the donors, their full address, their P.A Nos. And assessment records where there are such assessment made. The gifts made through A/c payee cheques/drafts from the bank accounts of the accounts of the donors. Hence the gifts should be fully allowed. 16. The ld. CIT-A on consideration of the above submissions hel .....

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Besides, no adverse comments are seen to have been made by the AO on any of the details submitted. I also find these amounts to be meagre and cannot be said to be beyond the means of the donors given their relationship with the appellant. Under the circumstances, I cannot uphold the AO s action in this regard. However, addition in respect of the gift from Swapan kr. Das, is confirmed because his relation with the appellant does not come within the definition of relative as Explanation to Proviso .....

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d the action of the ld.CIT-A in sustaining the addition made in respect of gifts received from Sri Swapan Kumar Das. 18. We have heard the rival submissions. The ld.DR relied on the order of the AO and the ld. Counsel for the assessee relied on the order of the ld.CIT(A) in so far as the ground of appeal No.2 of the revenue is concerned and relied on the submissions made before CIT(A) in so far as it relates to Gr.o.2 raised in the C.O. 19. As far as Gr.No.2 raised by the revenue is concerned, i .....

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action of the AO bases itself on surmises and cannot be held to be correct. Besides, no adverse comments are seen to have been made by the AO on any of the details submitted. Under the circumstances, we uphold the order of the CIT(A) in this regard and dismiss Gr.No.2 of the Revenue. 20. As far as Gr.No.2 raised by the Assessee in his C.O. is concerned, first aspect which we notice is that Sri Swapan Kumar Das is the brother-in-law of the assessee and he has made a gift of ₹ 25,000/-. The .....

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ansol has erred in law and on facts by deleting the additions of ₹ 2,82,618/- disallowed by the Assessing Officer on account of liabilities for failing to substantiate the same. 22. Facts of this issue are that the assessee had shown amount of ₹ 2,82,618/- payable to Amit Traders. Notice u/s. 133(6) was issued to him by the AO. Notice sent to Amit Traders was returned unserved with postal remark Insufficient Address . The assessee was asked to produce the evidence of transaction made .....

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fferent dates at an amount of ₹ 20,000/- per instance or less spread over the entire F.Y 2008-09. The genuineness of cash payment can not be relied upon. As the notice sent to them has not been served and the assessee failed to prove the payment made in subsequent year with any documentary evidence. Hence, the amount of ₹ 2,82,618/- shown as liability payable is treated as bogus and added to the income of the assessee. 23. Before the ld.CIT-A the assessee submitted that the addition .....

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e succeeding year and not in the year under appeal. 24. The ld. CIT-A after considering the above deleted the addition by observing as under:- It appears from the assessment order that the AO s direction were complied with. However, the AO has taken an adverse view based on the fact that payments for the settlement of the account were made wholly in cash. In my opinion, by itself this cannot draw any adverse notice. Further, the AO is also seen to have mentioned that the full address of the cred .....

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d on facts. Under the circumstances, the addition made is directed to be deleted. This ground of appeal is allowed. 25. Aggrieved by such order of the ld.CIT-A the revenue ground no.3 before the tribunal. 26. We have heard the rival submissions. There was no evidence for the AO to come to a conclusion that liability in question was not genuine. On the other hand, the payment to the above said party by the assessee in the subsequent year by cash and the availability of cash to make payment were s .....

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missioner of Income Tax (Appeals) has also erred in confirming the same. 28. Brief facts of this case that the return of income for the A.Y under consideration was filed manually on 31-03-2009 declaring total income of ₹ 6,88,737/-. However, the case was selected for scrutiny by issuance of statutory notices. The assessee has taken loan from Aparna Banerjee and Swapan kr. Das of ₹ 3,00,000/- and ₹ 2,00,000/- respectively during the relevant year. Before the AO the assessee file .....

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cash of ₹ 3,00,000/- on 03.04.2008 in her UCO Bank, Raniganj account and advanced the same money of ₹ 3,00,000/- to Sudhi Bastralaya on 15.04.2008. No other major transaction prior to this has been made in this account apart from this transaction. If this transaction is excluded then the pick balance in the account was of ₹ 26,996/-, which is due to the credit of ₹ 26,248/- deposited as closure proceeds of some account. ii. She herself has admitted that she is a house wi .....

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d then the pick balance in the account was of ₹ 2610/-. ii. He did not explain the source of cash deposited in the account. He has also not submitted the source of his income. iii. He has sent the copy of his I.T Return filed in ITR-1 for the A.Y 2009-10 and 2008-09 submitted at Ward-1(3), Burdwan declaring income of ₹ 1,49,046/- and ₹ 1,31,077/- respectively. iv. On verification from the bank deposit slip, it has been found that the cash was deposited in his account by some Ta .....

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ies Vs. CIT (Cal) 114 ITR 689 and in many other cases by different courts of law of India that in order the discharge the onus, the assessee must prove the followings:- i) The identity of the creditor, ii) The capacity of the creditor to advance money, and iii) The genuineness of the transaction. There mere furnishing of particulars or the mere fact of payment by an account payee cheque, or the mere submission of confirmatory letter by the creditor is, by itself, not enough to shift onus on the .....

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orthiness of the lender. Hence, in the light of the above facts and circumstances, the above mentioned amount of ₹ 5,00,00/- was added to the income of the assessee as cash credit u/s. 68 of the I.T Act, 1961. 30. Before CIT(A), the Assessee submitted that the appellant during the year under appeal appeal received a loan of ₹ 3,00,000 and ₹ 2,00000 from Smt. Aparna Banerjee and Sri Swapan Kumar Das respectively. Both these loan creditors has confirmed the transactions and also .....

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ecided that a case of such credit/deposit three cardinal points to be taken into account viz. (i) the' identity of the parties (ii) genuinity of transaction (iii) creditworthiness. Here, in both the credits, the identity of the parties, the genuinity of the transaction and creditworthiness of the parties have been amply proved by submitting relevant bank statements and proof of income. The Learned Income Tax Officer has without summoning the parties U/s. 131 or without making any further enq .....

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ying with the appellant. This fact has been stated on oath in the affidavit of Smt Banerjee. Sri Swapan Kumar Das being an assistant Headmaster of a School, draws a considerable amount of salary and the amount of loan was given out of his personal savings. Since he also owns cultivated land in Burdwan area where 2/3 crops are grown, has also considerable agricultural income. Hence, the claim of the appellant should be upheld and the addition of ₹ 5,00,000/- in the income should be deleted. .....

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328 ITR 437(Guj), CIT Vs. Micro Melt (P) Ltd 327 ITR 70(Guj.) 31. The ld.CIT-A however, did not accept the plea of the assessee for following reasons:- Before me, the appellant s case is that the identity of the loan creditor has been established and the transactions have been made through bank. Therefore, the genuinity of the transactions are not in question. I do not agree with the appellant s view. No evidence regarding the creditworthiness of the alleged loan creditors have been furnished. I .....

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