TMI Blog2016 (2) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue authorities should have verified the contention of the assessee. In fact, no such exercise has been done. As regards the past savings of the assessee also, the authorities below have rejected the contention of the assessee without assigning any cogent reasons. Shri Gurbachan Singh had been doing pheri business for the past many years and he was also having agricultural income. There is no evidence on record to controvert the explanation of the assessee that he was the owner of agricultural land and he had also produced the Jamabandi for the year 1985 in support of his claim. It is also seen that for the year under consideration, the assessee had declared an agricultural income of ₹ 15,000 which has been accepted by the Revenue authorities. In our opinion, the Revenue authorities were not justified in rejecting the assessee's explanation on the basis of surmises and conjectures. Accordingly, we hold that the assessee had invested a sum of ₹ 8,53,150 out of his past savings and out of sale of properties mentioned hereinabove. In view of the above, we confirm the addition of ₹ 7,75,000 and allow a relief of ₹ 19,78,150 (Rs. 11,25,000 + ₹ 8,53 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Store, Chandigarh Road, Samrala, was carried out by the Additional Director of Income-tax on August 8, 1996. During the course of survey, registered deeds for purchase of agricultural land by Shri Gurbachan Singh, S/o Sh. Rattan Singh (deceased assessee) were found. Shri Gurbachan Singh expired on April 22, 1999. One diary written in Urdu containing debtors entries regarding sale of cloth was found. The assessee was found to have made investment in the purchase of agricultural land to the tune of ₹ 27,53,150 (value of land + stamp duty + other expenses). Statement of Shri Gurbachan Singh was recorded on oath by the Additional Director of Income-tax during the course of survey. As per this statement, he surrendered a sum of ₹ 15 lakhs as undisclosed amount invested in the agricultural land and the balance of ₹ 12 lakhs were stated to be out of loan raised from various persons. Another amount of ₹ 6 lakhs was claimed to be out of his savings. The Assessing Officer noted that since the investment made in the purchase of agricultural land related to the assessment year 1992-93 and some sales recorded in the diary also pertained to the assessment years 1992-93 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lpur 20,000 20,000 1.10.91 Agricultural land at village Beholpur 1,98,000 1/3rd 66,000 9.10.91 -do- 1,98,000 1/3rd 66,000 2.12.91 -do- 75,000 1/3rd 25,000 The source of the balance investment of ₹ 5,47,150 was stated to be out of his past saving, which fact was not mentioned in assessee's letter dated December 4, 1997. The assessee has filed a letter dated December 15, 1997, and letter dated December 17, 1997, about the investment made and the source thereof for the purchase of agricultural land. 4. As regards the unsecured loans of ₹ 19 lakhs, the assessee submitted the affidavits of 22 persons before the Assessing Officer. With regard to the source and ownership of the agricultural land, as per the assessment order, the assessee submitted Jamabandi of 1985. Certain photocopies of Form J with regard to the sale of paddy in 1987 and 1990 to one M/s. Inder Singh, Bhupinder Singh, Mandi Chamkaur Sahib, District Ropar w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Khalsa Cloth Store, Chandigarh Road, Samrala, recorded during the survey proceedings under section 133A(1) of the Income-tax Act, 1961, on August 8, 1996, at about 6 p.m. Stated on oath that I shall speak the truth, only truth and nothing but truth. Question During survey operations, one diary marked 'Gero' Coca Cola Colour was found and whose photo copies have been taken, you are requested to explain to whom this diary relates, to whom all the entries relate, by whom the diary has been written, whether all the recorded entries relating to different years have been reflected in the regular books of account of any business concern of your or of any family members business ? Answer I identify and admit that this diary is written by me and the entries relate to the business transactions of M/s. Khalsa Cloth Store relating to different years in 1992-93 and most all these entries are reflected in the regular books of account of M/s. Khalsa Cloth Store, which is the proprietorship concern of my son, Sh. Charanjit Singh. Question You had purchased a land at the village Rounke Kalan and Beer Vadani, the total expense/on this purchase deal is about ₹ 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree brothers namely 1. Myself, i.e., Sh. Gurbachan Singh 2. Sh. Harnam Singh 3. Sh. Kulwant Singh This land was situated at village Beholelpur District Ferzepur. Ten acres of land was taken on lease from the Government at Village Villon adjoining to the village Beholepur. Later on the land measuring ten kilas was purchased/allotted to one at the rate of ₹ 200 per kila by the Government within year 1961-62. Till then, we were doing agriculture on this land. I have shifted to Samrala in the year 1951. The land at the village Villon was sold 25 to 26 years back at the rate of ₹ 3,600 per kila, (three thousand six hundred per kila). The total consideration was ₹ 31,200. The land at Behalelpur was sold about five to six years back at the rate of ₹ 15,03,000 per kila but the registry of the land was made at lower rate. I received my share value of ₹ 2 lakhs. It was not deposited in any bank and the same was utilised in our household expenses like marriage of my five daughters and two sons. Question Please explain whether you had purchased agricultural land measuring 171 K-9 M at the village Raunke Kalan and 34 kanals at Village ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed and source of payment of advance amount ? Answer One Parminder Singh Namberdar of the village Palmajra was to make some advance to Sh. Som Nath. Since, Sh. Parminder was not sure that whether Som Nath will execute any agreement with him, therefore, he requested me to get this paper executed in my name. Whereas the said payment of ₹ 40,000 has been made by Sh. Parminder only. This agreement of sale is a mere security on behalf of said Parminder Singh. Question You had stated earlier that you had raised loans from different friends and relatives, please, state whether any written agreement has been executed by you with them ? Answer No written agreements have been executed. Question Please give details of the persons to whom you had advanced loans and interest received from them ? Answer I had advanced loan of ₹ 1 lakhs through draft and I used to receive monthly interest at the rate of 2 per cent. The interest is received through cheques. The above statement is true and correct to the best of my knowledge and belief and nothing has been concealed. Sd/- Gurbachan Singh 8/8/96 7. Shri Sudhir Sehgal, the learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made during survey under section 133A of the Act has not evidentiary value ? The hon'ble High Court has answered the above question in the affirmative, observing as under (page 166) : From the foregoing discussion, the following principles can be culled out : '(i) An admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of account do not correctly disclose the correct state of facts, vide decision of the apex court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) ; (ii) In contradistinction to the power under section 133A, section132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act is not given any evidentiary value obviously for the reason that the officer is not authorised to admin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which has no evidentiary value. Even the Central Board of Direct Taxes (CBDT) has issued instructions to the Income-tax authorities that no efforts should be made to extract the surrender without corroborative evidence. From the facts of the present case, and the statement of the assessee, it is crystal clear that the amount was surrendered only on the basis of apprehension that the assessee may not be able to lead the evidence to the extent of ₹ 15 lakhs of the remaining amount and being an old man, he had stated that I do not have any evidence at this moment, we have already observed hereinabove, the Commissioner of Income-tax (Appeals) held that the retraction was made after long time. In my opinion, the observation of the Commissioner of Income-tax (Appeals) is not correct because it is well settled that retraction is permissible only in those circumstances where it is shown by the assessee that it was contrary to the real facts and the assessee is able to lead the evidence in that regard. In our opinion, in the instant case, the deceased assessee did not retract from the statement, as it is evidentially clear from the statement reproduced hereinabove, that the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a report on March 15, 2002, stating that about 13 persons have stated that the loans were given to the assessee. Out of 13 persons, three have stated that the amount given have since been returned back. The Assessing Officer has also mentioned the details of these three persons. As regards, six persons mentioned in the report, the Assessing Officer has observed that some of them are residing abroad and some have died as per the report of the notice server of his office and the details have been given in the report. It is relevant to reproduce the report, which reads as under : No. Office of the Income tax Officer. Ward-I, Khanna, Dated Khanna 15-3-2002 The Commissioner of Income-tax, (Appeals), Ludhiana. Sir, Sub : Appellate proceedings in the case of the late Gurbachan Singh, Samrala report submission of- Kindly refer to appellate proceedings in the abovementioned case. The main issue contested in appeal relates to investment of ₹ 27,53,150 in the purchase of agricultural land out of which a sum of ₹ 19,00,000 were shown as unsecured loans from various persons. During the course of last hearing, the appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Vill. Paul-Majra ₹ 40,000 25 acres of land (vi) Sh. Ram Dass s/o. Sewa Ram, Vill. Chak Samoo ₹ 50,000 20 acres of land (vii) Sh. Baljinder Singh s/o Sher Singh, Vill. Bondli ₹ 30,000 12 acres of land (viii) Sh. Gurdip Singh s/o Sh. Labh Singh, Vill. Bondlv ₹ 50,000 20 acres of land (ix) Sh. Bagga Singh s/o Albel Singh, Vill. Pataudi ₹ 50,000 26 acres of land (x) Sh. Harbans Singh s/o Bhagwan Singh, Vill. Khatran ₹ 75,000 23 acres of land (xi) Sh. Harpal Singh s/o Uayal Singh, Vill. Ladhran ₹ 80,000 Teacher (xii) Sh. Ram Pal Singh s/o Joginder Singh, Vill. Parodi ₹ 30,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 do- 6. Sh. Hari Singh, village Jhar-Sahib ₹ 20,000 do- It is further to be submitted that as per statements recorded only three persons have stated that the amounts given have since been returned back. These persons are as under : (i) Sh. Balwant Singh, S/o. Sh. Mai Singh, village Jhar-Sahib Rs.25,000 (ii) Sh. Ram Singh, S/o, Sh. Balwant Singh, village Behlolpur Rs.40,000 (iii) Sh. Sadhu Singh, S/o. Khazan Singh, village Attarri Rs.10,000 The assessment record in one volume is enclosed. Yours faithfully, Sd/- (B. S. Chauhan) Income tax Officer, Ward-I, Khanna. 10. It is also relevant to observe here that the assessee had submitted photocopies of the bank accounts in most of the cases and on a perusal of such bank account it is clear that the creditors had bank accounts and they confirmed having given loans to the assessee. The list of unsecured loans taken by Shri Gurbachan Singh for the purpose of land and their sources are as under : List of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Master Hari Singh, Todarpur 25,000 Cheque (P-75) Yes - - 75-76 12. Amarjit Singh, Village Katala 30,000 Cheque (P-77) Yes - - 77-78 13. Balwant Singh, Jhar Sahib 20,000 - Yes Yes (confirms) - 79-80 14. Mohinder Singh, Khera 1,00,000 Cheque (P-82) Yes - - 81-82 15. Gurmall Singh Saini, Behlolpur 30,000 Cheque (P-83) Yes - - 83-84 16. Ram Pal Singh, Prodi 30,000 Cheque (P-86) Yes Yes (confirms) - 85-87 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,000 Cheque (P-117) - - - 117 30. Labb Singh, Berma (Abroad) 1,00,000 Cheque (P-120) - - Certificate of Sarpanch 120-122 Total loan Affidavit-22 Statement recorded Statement-14 11. We have perused the documentary evidence available at pages 17 to 122 of the paper book. Out of the above 30 persons (listed in scanned copy), the assessee could not prove the creditworthiness and genuineness of the transactions. These are as under : The assessee claimed that he had taken a loan of ₹ 1 lakh from master Darbara Singh, Barma (Sl. No. 19). We may observe here that the assessee had produced the affidavit of Shri Darbara Singh dated September 2, 1997, who died on October 7, 1998. The said person was never produced before the Assessing Officer. The assessee could not prove the creditworthiness of the deceased, Shri Darbara Singh. In the affidavit, he has stated that he was hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 10,000 from one Shri Hardev Singh, Lallon (Sl. No. 25). In this case also, the assessee has failed to prove the identity, credit worthiness of the creditor and the genuineness of the transaction, and, accordingly, we confirm the addition of ₹ 10,000. The assessee has also claimed that he had received a sum of ₹ 50,000 from one Shri Gurdev Singh, Gharkhana (Sl. No. 22). It is observed that the assessee had submitted the affidavit of Shri Gurdev Singh (page 104 of the paper book) and also the death certificate who expired on May 16, 1997. In the affidavit, it is stated that he had advanced a loan of ₹ 50,000 out of sale proceeds of agricultural products. There is no supporting evidence on record to show the creditworthiness of Shri Gurdev Singh. The assessee has also claimed to have received a sum of ₹ 25,000 from one Shri Amarjit Singh Kotla (Sl. No. 21). The assessee has submitted affidavit of Shri Amarjit Singh wherein it is claimed that the amount in question was given out of sale proceeds of agricultural produce. There is no supporting evidence on record. The assessee has failed to prove the creditworthiness of the creditor and the genuinenes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirm the addition of ₹ 1 lakh. Further, the assessee also claimed that he had received a sum of ₹ 30,000 from Shri Gurmail Singh Saini, Behlolpur (Sl. No. 15) as a loan. The assessee submitted an affidavit of Shri Gurmail Singh Saini, S/o. Shri Ramji, wherein he has stated that he had given a sum of ₹ 30,000 to the assessee out of sale proceeds of agricultural produce. It is stated that he is having eight acres of land at village Behlolpur. However, the assessee failed to prove the creditworthiness of the creditor. In the absence of any supporting evidence, the claim of the assessee cannot be accepted. 12. It is well settled law that in order to establish the fact of the receipt of the cash credit, as required under section 68 of the Act, the assessee must prove the three important conditions, namely : (i) the identity of the creditors, (ii) the capacity of the creditors to advance money ; and (iii) the genuineness of transaction. The burden of proving the source of cash credits is on the assessee. In the above transactions, the assessee credited the amount by cheques. In our opinion, mere payment by account payee cheques is not sacrosanct nor c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is available at pages 106 and 107 of the paper book) wherein in reply to question No. 2, he has categorically stated that a sum of ₹ 4,50,000 was given to the assessee from his bank account No. 6385 through cheque. As regards the purpose of advancing the money, Shri Jasbir Singh stated that there was an understanding with Shri Gurbachan Singh to purchase agriculture land with a purpose to be sold later on for earning profit. The Revenue has not doubted the identity of Shri Jasbir Singh and also the creditworthiness of the creditor. In his statement Shri Jasbir Singh has categorically stated that he is an agriculturist and is owning 32 acres of land. The transactions were through banking channels. Thus, there was no question in doubting the genuineness of these transactions. The other creditors also confirmed having given the loans to the assessee as admitted by the Assessing Officer in his remand report dated March 15, 2002, and they had also explained the sources of deposits and the transactions were through banking channels. We, therefore, hold that there was no justification in making the addition of ₹ 11,25,000 (Rs.19,00,000 - ₹ 7,75,000). Accordingly, we al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese documents were filed to claim that the assessee was earning agricultural income and the amount was kept at home and also given to some persons by mortgaging agricultural land. It is also apparent from the record that photocopies of some mortgage deeds were produced before the lower authorities. The assessee has also claimed that he was partner in M/s. Gurbachan Singh C/o. M/s. Inder Singh Chamkaur Sahib who was being assessed by Income-tax Officer, Ropar and the firm was dissolved with effect from April 1, 1981. It is observed that the learned Commissioner of Income-tax (Appeals) has rejected the explanation of the assessee stating that for the year under consideration the assessee had declared income of only ₹ 19,600 in addition to the agricultural income of ₹ 15,000 in his return of income. He observed that in the preceding year, the position would have not been better than this. He therefore, rejected the explanation of the assessee. In our opinion, the action of the Commissioner of Income-tax (Appeals) cannot be held correct, particularly when he has not brought any material on record to disprove the explanation of the assessee. It is observed that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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