TMI Blog2016 (9) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Act. 1.1 That the learned Commissioner of Income Tax (Appeals) has proceeded to uphold the addition by failing to appreciate that deposits in the bank stood duly explained out of the advance received from one Shri Balwant Singh Pannu who had duly confirmed the advance by appearing in person and as such the addition confirmed is legally unsustainable. 1.2 That the finding that Shri Balwant Singh Pannu had no means and source to advance ₹ 16 lacs is neither based on proper appreciation of facts and circumstances of the case and nor is in accordance with law. 1.3 That the learned Commissioner of Income Tax (Appeals) has overlooked relevant evidence placed on record and, drawn factually incorrect and legally unsustainable inferences based on irrelevant and extraneous consideration and thus, addition sustained is wholly unwarranted and not in accordance with law. 2 That the learned Commissioner of Income Tax (Appeals) Hisar has further erred both in law and on facts in upholding addition of ₹ 5,49,000/- representing loans received by the assessee and, held to be unexplained cash credit u/s 68 of the Act. 2.1 That the learned Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as from Sh. Balwant Singh Pannu which was stood duly explained who had confirmed the advance by appearing in person. He further stated that lower authorities finding that Shri Balwant Singh Pannu had no means and source to advance ₹ 16 lacs is neither based on proper appreciation of facts and circumstances of the case and nor is in accordance with law. It was further stated that the lower authorities has overlooked relevant evidence placed on record and, drawn factually incorrect and legally unsustainable inferences based on irrelevant and extraneous consideration and thus, addition sustained is wholly unwarranted and not in accordance with law. To support his contention, he relied upon the following case laws and stated that the issue in dispute stands squarely covered by the said decisions and therefore, the addition in dispute may be deleted. a) CIT vs. Daulat Ram Rawatmull 87 ITR 349 (SC) b) CIT vs. Diamond Products Ltd. 177 Taxman 331 (Del.) c) CIT vs. Real Time Marketing (P) Ltd. 306 ITR 35 (Del.) d) ITA No. 1583/Del/2011 AY 1996-97 dated 11.5.2013 in the case of DCIT vs. Rainee Singh following judgments. i) 264 ITR 254 Page. 261 to 266 (Gau.) Nemichand K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned, I find that in the instant case the Assessing officer and CIT(A) observed that The Ikrarnama was made on 12.10.2009 whereas the conveyance deed, was to be executed on 12.07.2010 i.e. after a period of 10 months, which is abnormal in such transactions. It is submitted that, the amount involved in the instant transaction was high i.e. ₹ 1,05,00,000/- and it is an agreement between the buyer and the seller as per the terms suitable to them and the fixed period of such Agreement to sell (Ikrarnama) is nowhere laid down. Hence, both Assessing officer and CIT(A) are not justified in concluding that the period of 10 months is abnormal. Further, both the authorities below observed that Shri Balwant Singh Pannu had no means and source to advance ₹ 16 lacs for the purchase of property worth of ₹ 1 Crore which is a wrong presumption. However, the person concerned was an Executive in the Land Mortgage Bank who retired in 2004 and was practicing in the Punjab and Haryana High Court since then. Further he also owned 20 acres of Agricultural Land against which he has also availed Kisan Credit Card Limit of ₹ 5,00,000/- from nationalized bank. In my view, Shri Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. There is no warrant for such presumption. b) 256 ITR 360 (Guj) DCIT vs. Rohini Builders Thus it is clear that the assessee had discharged the initial onus which lays on it terms of section 68 by proving the identity of the creditors by giving their complete addresses, GIR numbers/permanent accounts numbers and the copies of assessment orders wherever readily available. It has also proved the capacity of the creditors by showing that the amounts were received by the assessee by account payee cheques drawn from bank accounts of the creditors and the assessee is not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source as held by the Bombay High Court in the case of Orient Trading Co. Ltd. v. CIT [1963] 49 ITR 723. The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. Merely bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of these investment companies. 14 The important question which arises at this stage is as to whether on the basis of these facts, could it be said that it is the assessee which has not been able to explain the source and receipt of money. According to the assessee, he had given the required information to explain the source and was not obligated to prove source of the money. It is the submission of the assessee that even in case there is some doubt about the source of money in giving into coffers of the share applicants which they invested with the assessee, it would not automatically follow that the said money belongs to the assessee and becomes unaccounted money. According to us, the assessee appears to be correct on this aspect. We feel that something more which was necessary and required to be done by the AO was not done. The AO failed to carry his suspicious to logical conclusion by further investigation. After the registered letters sent to the investing company had been received back undelivered, toe AO presumed that these companies did not exist at the given address. No doubt, if the companies are not existing, i.e., they have only paper existence, one can draw the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2010) [reported at (2010) 45 DTR (Del) 281 : (2011) 239 CTR (Del) 478-Ed.] in the following words: Just because the creditors/share applicants could not be found at the address given, it would not give the Revenue the right to invoke s. 68. One must not lose sight of the fact that it is the Revenue which has all the power and wherewithal to trace any person. Moreover, it is settled law that the assessee need not to prove the 'source of source'. 7.2 With regard to addition of ₹ 5,49,000/- representing loans received by the assessee is concerned, I find that the Ld. CIT(A) has observed that the mere fact that none of the persons were having enough credit to advance such loans to the assessee and cash of more or less equal amounts were deposited in their respective bank accounts before the issue of cheques to the assessee clearly establishes that the unsecured loans in the name of these persons is an arranged affair. But, I find that Ld. CIT(A) has failed to observed that unsecured loans aggregating to ₹ 5,49,000/- had been received by account payee cheques from identifiable parties who had duly confirmed that the loans had been advanced to the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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