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2016 (10) TMI 414 - ITAT CHENNAI

2016 (10) TMI 414 - ITAT CHENNAI - TM - Unexplained cash credits - rental advance received - Held that:- Admittedly, there is no dispute over Cenotaph Road property acquired by the assessee. It is the submission of the assessee that cash deposit of ₹.5,00,000/- relates to rental advance received from the previous owner for letting out the property on rent. He also submits that the rental advance paid by the tenant earlier was held in credit by the previous owner and once the property was a .....

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amp paper does not contain valid details such as PAN number of two tenants or the rental agreement was notarised by Registered Notary or it is registered document. - As in the document, it was mentioned that the amount of ₹.5,00,000/- towards rental advance shall be payable by the tenants to the owner of the property, but no evidence has been filed by the assessee before any of the authorities. Not only that the assessee has not furnished any details about the PAN number, identity of .....

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ated 13.10.2015 before the ld. CIT(A) at para 3.9, the assessee submits that “there is no need for him to provide any documentary evidence to show the receipt of ₹.6,00,000/- so long the previous owner of the Cenatoph Road property did not contradict the payment of ₹.6,00,000/- to the assessee or the Assessing Officer has any information to that effect which he has chosen to bring upon record in support of the assessment order”, appears to be contrary to the rental agreement, wherein .....

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Shri P.G. Sadguru Das, C.A. For The Respondent : Shri A.V. Sreekanth, JCIT ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 4, Chennai dated 10.11.2015 relevant to the assessment year 2011-12. The assessee has raised the following grounds: 1. The order of the Commissioner of Income-tax (Appeals) in confirming the addition of ₹ 57,00,000/- as unexplained credits and deposit made by t .....

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one Mr. Satyamoorthy, an agriculturist and the lower authorities have rejected the submission of the appellant without any enquiry or examination of the said person even though he has given confirmation letter confirming the amount provided by him for purchase of the property. 4. The Commissioner of Income-tax (Appeals) erred in confirming the addition of ₹ 15 lakhs being the cash deposited on 19/2/2011 when the appellant had explained that the same represented the advance received for sa .....

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9;s friend Mr. R.Vijayanathan for starting a new business and the same was also taken back by him when the intended business could not start. The amount was held by the appellant only as a custodian of Mr. R.Vijayanathan and it does not belong to the appellant. The lower authorities have rejected the confirmation given by the said person without any valid reason and without any examination of the concerned person. 7. The appellant submits that he has discharged his initial onus of proving the cr .....

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f consultancy in patent and trade mark and filed his return of income admitting a total income of ₹.1,05,75,480/-. The return filed by the assessee was processed under section 143(1) of the Income Tax Act, 1961 [ Act in short]. Subsequently, the case of the assessee was selected for scrutiny and notice under section 143(2) of the Act was issued on 31.07.2012 and duly served on the assessee. After considering various details filed by the assessee, the Assessing Officer has completed the ass .....

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.6,00,000/-. From the perusal of the saving bank account 30725338862 of the assessee, the Assessing Officer has noticed that the cash amount was being deposited on different intervals and the same is reproduced as under: Date Particulars Amount 23.08.2010 Cash Deposit 3,00,000/- 0-9-.-09-.2010 Cash Deposit 5,00,000/- 07.02.2011 Cash Deposit 25,00,000/- 19.02.2011 Cash Deposit 14,50,000/- Total 47,50,000/- Out of the total cash deposit of ₹.47,50,000/-, the amount of ₹.3,00,000/- depo .....

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sessee has stated that this Cenotaph Road property was acquired by him during this relevant year under consideration. He further stated that the tenant already existed with the previous owner before his purchase of the property and continued the tenancy with him. The rental advance paid by the tenant earlier was held in credit by the previous owner. This sum of ₹.5,00,000/- was transferred to the assessee by the previous owner of the property by directly depositing cash into his above ment .....

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reover, the assessee has not produced any proof of receipt of such amount from the previous owner and any other relevant documentary evidence and further, the Assessing Officer has noticed that this cash deposit of ₹.5,00,000/- did not reflect in the relevant cash book of the assessee. The Assessing Officer has also noticed that the cash of ₹.5,00,000/- was deposited by the assessee himself in the bank and not by the so-called previous owner of the property, as claimed by the assesse .....

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y, etc. as well, the Assessing Officer has the disallowed the above claim and added to the total income of the assessee. 5.2 Before the ld. CIT(A), the assessee has reiterated the same submissions as made before the Assessing Officer and pleaded to delete the addition made by the Assessing Officer. The assessee has also contended before the ld. CIT(A) that vide letter dated 20.01.2014 to the Assessing Officer, the assessee has established the identity of the creditor and the source of the credit .....

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enancy with me. The Rental Advance made by the tenant earlier was held in Credit by the previous owner. This sum was ₹.5,00,000/- and the same was transferred to me by the previous owner by directly depositing cash into my Bank Account. 5.3 On perusal of the written submissions dated 13.10.2015, the ld. CIT(A) has observed that it is not correct on the part of the assessee to state that there was no need for him to provide any documentary evidence to show the receipt of ₹.6,00,000/- .....

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the entire submissions of the appellant, it is revealed that besides submitting the above explanations, the appellant has not been able to provide any documentary evidences to prove the genuineness of the transaction, the identity of the tenant and his creditworthiness. The assessee has not been able to discharge the very basic onus cast upon him. Moreover, the contradiction in the replies of the assessee that this amount of ₹ 5,00,000/-was deposited in his bank account by the previous own .....

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cuments including copy of the rental agreement. On the other hand, the ld. DR has supported the order of the authorities below. 5.5 We have heard both sides, perused the materials on record and gone through the orders of authorities below. Admittedly, there is no dispute over Cenotaph Road property acquired by the assessee. It is the submission of the assessee that cash deposit of ₹.5,00,000/- relates to rental advance received from the previous owner for letting out the property on rent. .....

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agreement filed by the assessee cannot be accepted as a valid document since the rental agreement in the twenty Rupees non-judicial stamp paper does not contain valid details such as PAN number of two tenants or the rental agreement was notarised by Registered Notary or it is registered document. Moreover, in the document, it was mentioned that the amount of ₹.5,00,000/- towards rental advance shall be payable by the tenants to the owner of the property, but no evidence has been filed by .....

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e ld. CIT(A) to make enquiry or order the Assessing Officer to make enquiry. Hence the submission is vague. In the written submission dated 13.10.2015 before the ld. CIT(A) at para 3.9, the assessee submits that there is no need for him to provide any documentary evidence to show the receipt of ₹.6,00,000/- so long the previous owner of the Cenatoph Road property did not contradict the payment of ₹.6,00,000/- to the assessee or the Assessing Officer has any information to that effect .....

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d raised in the appeal of the assessee is that the ld. CIT(A) has erred in confirming the disallowance of ₹.25,00,000/- made by the Assessing Officer as unexplained cash credit under section 68 of the Act. The Assessing Officer has observed that there was cash deposit of ₹.25,00,000/- in the saving bank account number 30725338862 of the assessee with the SBI Gopalpuram. When the assessee was asked to furnish source for the above deposit, the assessee has submitted before the Assessin .....

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n migrating to city for studies and jobs. Initially he wanted to buy a property of Mr. Martin for which he arranged an initial advance amount of ₹ .25,00,000. But it became unaffordable to him. Also the prospects of availing Housing Loan were not favorable as he did not have Tax Returns or Audited Accounts. This advance was then moved to me by depositing into my Bank Account. In the meanwhile I had also located another property for him for purchase and I advanced this money of ₹ .25, .....

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the assessee could not produce identity of the person, genuineness of the transaction and creditworthiness of the person making the payment before the Assessing Officer. 6.2 Further, the assessee has not substantiated the receipt of ₹.25,00,000/- in cash with any documentary proof. The assessee has not produced any proof of receipt of such cash from the 'previous owner' as claimed by the assessee in his response to the show cause. It also raises the doubt on the credibility of S. S .....

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ates that the cash of ₹.25,00,000/- was taken from bank on 07.02.2011 and the same deposited next day into the same bank account. But it is found from the Gopalapuram Branch of SBI bank through a letter dated 10.01.2014 by calling for information under section133(6) of the Act that the said cash of ₹.25,00,000/- was deposited by the assessee himself only on 07.02.2011 and not on 08.02.2011. This improper accounting of said cash credit itself gives raise to doubt on the credibility of .....

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of ₹.25,00,000/- satisfactorily, the Assessing Officer added the cash credit of ₹.25,00,000/- to the income of the assessee as unexplained cash credits under section 68 of the Act. 6.3 The assessee carried the matter in appeal before the ld. CIT(A) and furnished written submissions vide his letter dated 13.10.2015 by reiterating the submissions as made before the Assessing Officer. The assessee has not discharged the onus cast upon him with documentary evidence and accordingly, he c .....

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hrough the orders of authorities below. Admittedly, the assessee has not furnished any documentary evidence for the cash deposit of ₹.25,00,000/- into his saving bank account. It is true that the onus cast upon the assessee to produce identity of the creditor, creditworthiness and genuineness of the transaction. When the Assessing Officer has called details from the SBI Gopalapuram under section 133(6) of the Act, similarly, the Assessing Officer would have summoned Shri S. Sathyamurthy an .....

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order of the ld. CIT(A) on this issue and remit the matter to the file of the Assessing Officer for summoning Shri S. Sathyamurthy for making enquiry and verification of his savings. If Shri S. Sathyamurthy fails to appear or the assessee fails to produce Shri S. Sathyamurthy before the Assessing Officer along with all details, the addition made by the Assessing Officer stands sustained. With the above directions, the ground raised by the assessee is allowed for statistical purposes. 7. The next .....

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ly, the assessee stated as under: This deposit is out of cash balance available on that date. On an earlier date, that is on 06/02/2011 an amount of ₹.15,00,000 was received in cash as an advance for sale of my property at Cenotaph Road. The sale did not take place and this advance of ₹.15,00,000 has been returned before 31/03/11 as ₹.10,80,000 from my Bank and ₹.4,20,000 by Cash." 7.1 The Assessing Officer considered the reply of the assessee and observed as follows .....

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the person from whom he got such cash. The assessee submits that the out of the above said ₹ .15,00,000/-, he has deposited ₹ .14,50,000/- into his bank account on 19.02.2011.But the following entry is found in the cash book of the assessee for FY 2010-11 with respect to the said cash credit of ₹ .15,00,000/-, Date Particulars Debit Credit Balance 06-02-2011 Advance received towards Sale of Cenetoph Road Property 15,00,000.00 21,94,722.50 Dr 07-02-2011 State Bank of India 14,50 .....

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.2011. This improper accounting of said cash credit itself gives raise to the doubt on the credibility and genuineness of such transaction. Also the assessee submits that this advance of ₹ .15,00,000/- has been returned before 31.03.2011 as ₹ .10,80,000/- from his bank account and ₹ .4,20,000/- by cash. But it is found from the bank statement of the assessee that with respect to ₹ .10,80,000/- the assessee has himself withdrawn ₹ .10,80,000/- as cash on 14.03.2011. .....

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assessee has not explained the nature and source of such cash credit of ₹.15,00,000/- into his cash book on 06.02.2011 satisfactorily, the Assessing Officer has treated the same as unexplained cash credit under section 68 of the Act and added to the total income of the assessee. 7.3 The assessee carried the matter in appeal before the ld. CIT(A). The assessee has furnished a written reply vide his letter dated 13.10.2015 reiterating the submissions as made before the Assessing Officer, bu .....

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number 30725338862. The assessee has submitted that he has received the above amount in cash as an advance for sale of his property at Cenotaph Road. Since, the sale did not take place, the advance money of ₹.15,00,000 has been returned before 31.03.2011 as ₹.10,80,000/- from his bank account and ₹.4,20,000 by cash. Since the assessee has not furnished the identity of person from whom he has received the advance, creditworthiness and genuineness of the transaction with any docu .....

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e addition made by the Assessing Officer should be deleted. The assessee has filed paper book running pages upto 101. But the assessee has not filed any sort of particulars with regard to the identity of person, creditworthiness or genuineness of the transactions or any copy of confirmation letter from the creditor as contended by the ld. Counsel for the assessee. Under the above facts and circumstances, we have no alternate but to sustain the addition made by the Assessing Officer under section .....

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and nor in response to the notice under section 142(1) of the Act. The AR of the assessee has informed the Assessing Officer that the assessee was not having any such bank account. As per the information obtained from the bank, the details of cash deposits in the said bank account are as under: Date Particulars Amount 17.09.2010 Cash Deposit Self 3,00,000/- 04.11.2010 Cash Deposit Self 3,00,000/- 11.12.2010 Cash Deposit Self 5,00,000/- Total 11,00,000/- In reply to the queries of the Assessing .....

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ig in posh and luxury cars, cars with fancy numbers and cars owned by leading personalities. He advanced money to me on 3 occasions, all aggregating to ₹.11,00,000 to pay advance and block if any such car being put to sale would come to my knowledge. Being involved in political and public service I get acquaintances and information on this. However, at that time, during FY 10-11 due to increased harness in the political scenario I could not concentrate and follow up all this so as to comme .....

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g Officer has observed as under: For any unexplained cash credits, the burden is on the assessee to establish the identity of the person, genuineness of the transaction and creditworthiness of the person. The assessee has made submission that he had received the said cash of ₹.11,00,000/- as an advance amount from his friend R. Vijayananthan. But the assessee has failed to establish the creditworthiness of R. Vijayanaruhan satisfactorily. The assessee has submitted only the confirmation le .....

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ounted the transactions of this bank account in his books of accounts (neither in cash book nor in bank book). This itself gives raise to doubt on the credibility of source of such cash deposits. Only after a show cause notice on the said cash deposits was issued, the assessee responded with some explanation in his submission to the show cause. Unless the scrutiny is done, this concealment could not have been unearthed i.e. except for the efforts of the department, the assessee would not have re .....

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rce of acquisition of such money of ₹.11,00,000/- satisfactorily, the Assessing Officer has added the said amount to the income of the assessee as unexplained money under section 69A of Act. 8.4 The assessee carried the matter in appeal before the ld. CIT(A). The assessee filed a written reply vide letter dated 13.10.2015 during the course of appellate proceeding by reiterating the same submissions as made before the Assessing Officer. The assessee also filed a confirmation letter from Shr .....

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advances were received from a particular person or party for the purpose mentioned in the confirmation certificate. The entire transaction is effected in cash with the alleged customers and also with the present assessee, which is quite an abnormal thing to be noticed. Nevertheless, all such transactions must get reflected in the books of accounts maintained for the purpose by the said entity. There is no exception to this that the appellant was simply a custodian of the money. There is no evid .....

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the said creditor provided to the A.O. There are no bank account details or the books of accounts of the creditor reflecting the withdrawal of the said amount, given to the A.O. Therefore, without any documentary evidences and books of accounts to substantiate the claim of the appellant and the said the creditor, the submissions and confirmation letter have only a narrative value. Hence, it is held that the assessee has failed to discharge the onus cast upon him to prove the genuineness of the .....

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han the piece of paper in the form of confirmation letter, the assessee has not filed any details even before the Tribunal. However, we are of the opinion that until and unless proper enquiries are made with Shri R. Vijayanathan, the actual facts will not come to the light. Under the above facts and circumstances, we are of the considered opinion that the assessee should be given one more opportunity to produce Shri R. Vijayanathan along with books of account, etc. before the Assessing Officer f .....

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