TMI Blog2017 (11) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... im of opening cash in balance of ₹ 4,95,222/-. Hence, the addition confirmed by ld. CIT(A) is deleted by allowing the ground No. 1 of the assessee. Addition treating the loan received as unexplained u/s 68 - Held that:- As the identity, creditworthiness and genuineness of the transaction is established and therefore, the addition is directed to be deleted. Thus ground No. 2 of the assessee is allowed. Addition treating the advance received from Shri Jay Ssingh and Smt. Manju Singh against sale of property as unexplained income of the assessee u/s 68 - Held that:- It is noted that that assessee has received advance from Sh. Jai Singh and Sh. Manju Singh against agreement to sale dated 24.05.2013 in respect of his plot of land at Anirudh Nagar, Bharatpur (PBP 47-48). The AO has recorded statement of both Sh. Jai Singh and Smt. Manju Singh on 21.11.2016. From the extract of the statement reproduced in the assessment order, it is noted that in reply to Q. No. 18 & 19, Sh. Jai Singh has accepted that he and his brother Shivram through his wife Smt. Manju Singh has entered into an agreement with assessee for purchase of said plot for R.21 lacs of which ₹ 15 lacs was pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod and has shown an amount of ₹ 4,95,222/- as the opening in cash in hand. The assessee has claimed that the cash in hand represents accumulate cash from the preceding year. 4. That the AO has rejected the assessee's claim as no concrete evidence was filed in support of his claim and AO held it as mere afterthought to somehow explain the source of cash deposits. 5.3.2 I have considered the above mentioned facts of the case. It is a fact that unusual cash were found deposited in the appellant s bank accounts. The appellant is merely a salaried employing deriving a total annual income of ₹ 2,70,278/- only. Even past year income is found to be too meager to explain the source of cash deposits. The AO has given a well reasoned order on this issue. However, I have also taken into consideration that the assessee had withdrawn cash of ₹ 1,94,500/- during the month of March, 2013. The appellant has claimed that part of opening cash in hands is from this withdrawal. As the cash withdrawal is made in the month of March, 2013 only to appellant s claim on this part is found to be reasonable. Therefore, it is my considered view that an amount of ₹ 1,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the amount is brought forward from earlier years. In the present case also, the balance is coming from the last year. It is not the case of the AO that this amount is credited in the books of accounts on 01.04.2013. Thus, no addition for this amount can be made in the year under consideration as it is brought forward amount of previous year. For this purpose, reliance is placed on the following cases:- ACIT Vs. Smt. N. Sasikala 92 TTJ 1196 (Chennai) (Trib.) The head note of this decision is as under:- Income from undisclosed sources-Addition-Genuineness of opening cash balance-AO doubted the availability of physical cash to the extent of ₹ 6,57,642 as shown by assessee and made addition of ₹ 6,50,000-Not justified-Return for the preceding year was also before the AO-Instead of treating the opening balance of cash as unexplained, the AO could have dealt with this issue in the earlier year-Thus, opening balance of cash could not be treated as unexplained in the relevant year-CIT(A) rightly deleted the addition. ITO Vs. Shri N. Muddaiah 2012 ITL 311 (Bang.) (Trib.) The Hon ble ITAT at para 8 of its order held as under:- 8. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 is verifiable. In view of above, the addition confirmed by Ld. CIT(A) be directed to be deleted. 2.3 On the other hand, the ld. DR supported the order of the lower authorities and relied on following case laws. (i) Dayal Singh and Sons vs CIT, 335 ITR 90 (P H) (ii) Umesh Krishnani vs ITO 217 Taxman 13 (Guj) (iii) Kamal Motors vs ld. CIT 131 Taxman 155 (Raj.) 2.4 The Bench has heard the rival contentions and perused the materials available on record. It is noted that the AO did not allow the claim of opening cash balance as on 01.04.2013 of ₹ 4,95,222/- as per the cash book and made the addition u/s 68 of the Act r.w.s.115BE of the I.T. Act to the total income of the assessee. The ld. CIT(A) noted that during the month of March, 2013 there is a cash withdrawal from the bank account of ₹ 1,94,500/- and therefore, he accepted the opening cash balance at ₹ 1,50,000/- and confirmed addition of ₹ 3,45,222/-. It is noted from page 17 of the paper book of the assessee that assessee has opened a bank account with Axis Bank on 19.01.2013. In this bank account, there is a deposit of ₹ 3,10,000/- in the month of February, 2013. Out of it, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of the lender Loan amount in Rs. Cash/ cheque IT assessee or not Confirmation filed or not Remarks 1. Sh Kaushalendra Singh 6,00,000 Cheque Yes Yes Cash deposited prior to advancement of loan by cheque 2. Sh. Baney Singh 7,00,000 Cheque No Yes Cash deposited prior to advancement of loan by cheque 3. Sh. Man Singh 2,00,000 Cheque No Yes Cash deposited prior to advancement of loan by cheque 6.3.3 In this regard, I have also taken into consideration the Hon'ble Delhi High Court ruling which lays down the parameters for verification of share application money/ creditors which has been further confirmed by the Apex Court. In the High Court of Delhi at New Delhi subject: Income Tax Act, 1961 ITA No.342 of 2011 R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Submission:- 1. The assessee s explanation on the observation of the AO/CIT(A) is as under:- Sh. Baney Singh- ₹ 7 lacs He is an agriculturist deriving income from sale of agricultural produce. He is not liable to file his income tax return. The creditworthiness is proved from the fact that he his holding around 12 bigha of land (copy of Jamabandi is at PB 35-37 ) and regularly deposit the sale proceeds of agricultural produce in his bank account. Before giving loan to assessee, he has deposited cash of ₹ 3,50,000/- on 25.04.2013 and cheque of ₹ 1,50,000/- on 25/26.04.2013 against sale of agricultural produce to Food Corporation of India (PB 31) . The bank statement also shows that he earned rent of ₹ 4,800/- p.m. from bank itself (PB 31-32) . Thus, creditworthiness of creditor could not be doubted. The genuineness of transaction is proved from the fact that the entire transaction has been carried out through banking channel. The loan has been repaid subsequently through cheque on 19.06.2015. Copy of bank pass book and bank statement of assessee of subsequent year evidencing the repayment is at PB 38-41 . The confirmation of the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the creditworthiness of the creditor cannot be doubted the addition confirmed by the Ld. CIT(A) be deleted. In this connection, reliance is placed on the following cases:- CIT Vs. Jai Kumar Bakliwal (2014) 366 ITR 217/ 101 DTR 377 (Raj.) (HC) The assessee raised unsecured loan from the relatives. The AO made addition u/s 68 on the ground that none of the creditors were able to prove the source of amount advanced to the assessee and immediately before the grant of loan by them, cash was deposited in their accounts. However, it was admitted by the AO that all the creditors were assessed to income-tax and they have provided confirmation as well as their PAN. Moreover, all the payments were through account payee cheques and most of the cash creditors appeared before the AO and were examined on oath. It was held that since there was no clinching evidence nor the AO had been able to prove that the money actually belonged to none but to the assessee himself, action of the AO appeared to be based on mere suspicion and thus addition cannot be made. CIT Vs. H.S. Builders (P.) Ltd. 78 DTR 169 (Raj.) (HC) (2012) In this case, order of CIT(A) deleting addition u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself. In the present case, while the existence of the creditor is not in doubt he has admitted to have advance the loan to the assessee, the fact that the explanation furnished by the creditor about his source of such advancement has not been accepted by the revenue authority cannot lead to any presumption that the source of such advancement by creditor emanated from the assessee. Therefore, the addition in the income of the assessee as cash credit cannot be sustained. Aravali Trading Co. Vs. ITO 187 Taxman 338 (Raj.) (HC) Once the existence of the creditors is proved and such persons own the credits which are found in the books of the assessee, the assessee s onus stands discharged and the latter is not further required to prove the source from which the creditors could have acquired the money deposited with him either in terms of s. 68 or on general principle. Merely because the depositors explanation about the sources of money was not acceptable to the AO, it cannot be presumed that the deposit made by the creditors is money belonging to assessee itself. If the creditors explanation about the source of deposits is not found to be acceptable, the investment ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an from creditor though routed through sub-creditors actually belongs to or was of assessee himself. CIT Vs. Varinder Rawlley (2015) 366 ITR 232/114 DTR 367 (P H) (HC) Assessee received and repaid the amount in question through banking channels and also furnished PAN of creditor. The transactions were reflected in the bank accounts of the assessee as well as the creditor. The assessee having shown that the entries regarding credit in a third party's account were in fact received from the third party and are genuine, it cannot be charged as the assessee's income in the absence of any material to indicate that they belong to the assessee. Thus, assessee burden u/s 68 stood discharged and AO having failed to invoke sec.131 for summoning the creditor, Tribunal was justified in deleting the addition. In view of above, the addition confirmed by CIT(A) be directed to be deleted. 3.3 On the other hand, the ld. DR relied on order of the authorities below. 3.4 After hearing both the parties and perusing the materials available on record, it is noted that the AO made addition of ₹ 15 lacs by treating the loan of ₹ 6 lacs received from Koushalendra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 7.3 I have gone through the assessment order as well as submissions made by the appellant. The appellant has claimed that an amount of ₹ 15 lakhs were received as advance against the impending sale of property to Shri Jay Singh and Smt. Manu Singh. However, I find it quite strange that even after lapse such a long time, the property in question was never sold to Shri Jay Singh and Smt. Manju Singh. Curiously, they have not even demanded the money back from the appellant also. The contents of the statement recorded by the AO during assessment proceeding also shows that the explanation given for this amount is far from satisfactory. Therefore, the AO has rightly concluded that explanation put forward by the appellant in support of deposits of ₹ 15 lakhs in his bank account lacks reasonableness. Therefore, in my considered view that the addition of ₹ 15 lakhs in the hand of the appellant under section 68 of the Act is justified hence sustained. Appellant s ground of appeal on this issue is dismissed. 4.2 During the course of hearing, the ld.AR of the assessee prayed for deletion of addition for which the ld.AR of the assessee filed the following writte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter, shifts to the assessee to prove that the gift is genuine and if the assessee is unable to proffer a credible explanation, the AO may legitimately raise an inference against the assessee. If, however, the assessee furnishes all relevant facts within his knowledge and offers a credible explanation, the onus reverts to the revenue to prove that these facts are not correct. The revenue cannot draw an inference based upon suspicion or doubt or perceptions of culpability or on the quantum of the amount involved. Any ambiguity or any ifs and buts in the material collected by the AO must necessarily be read in favour of the assessee, particularly when the question is one of taxation under a deeming provision. Thus, neither suspicion/doubt, nor the quantum shall determine the exercise of jurisdiction by the AO. The above exposition shall not be misconstrued to restrict the power of the revenue to raise an inference as to the efficacy of material produced by or before the AO. Therefore, where donor appeared before the AO and admitted the gift and had bank account from where demand drafts were prepared, the gift cannot be treated as non genuine merely because a question may legitim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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