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Shri Rajendra Singh Versus The ITO Ward- 3, Bharatpur

2017 (11) TMI 795 - ITAT JAIPUR

Addition of opening cash balance by treating the same as unexplained income of the assessee u/s 68 - Held 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 Out of it, ₹ 2,73,000/- was withdrawn between 13.02.2013 to 28.02.2013 and ₹ 1,60,000/- is deposited back on 13.03.2013 in the bank. Thus, the cash withdrawal for the month of February, 2013 is ₹ 1,13,000/- (R .....

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aim of opening cash in hand at ₹ 1,50,000/- only. The AO is therefore, directed to accept the claim 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 a .....

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t 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 paid in advance out of the sale proceeds of agricultural produce and past savings. In Q. No.20, he explained that remaining amount would be paid when the plot is registered in their name. Thus, .....

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nue : Smt. Poonam Rai, DCIT- DR ORDER PER BHAGCHAND, AM The assessee has filed an appeal against the order of the ld. CIT(A), Alwar dated 24-03-2017 for the assessment year 2014-15 raising therein following grounds:- 1. The ld. CIT(A) has erred on facts and in law in confirming the addition of ₹ 3,45,222/- out of opening cash balance by treating the same as unexplained income of the assessee u/s 68 of the Act. 2. The ld. CIT(A) has erred on facts and in law in confirming the addition of &# .....

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as emerges from the order of the ld. CIT(A) is as under:- 5.3 I have gone through the assessment order as well as submissions made by the appellant. Following have emerged. 1. That the assessee is a salaried employee deriving his income from salary. During the year under consideration, the appellant had declared total income of ₹ 2,70,278/-. 2. That a total of cash amounting to ₹ 39,78,000/- was found deposited in the bank account maintained at Axis Bank, Bharatpur during the year un .....

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sits. 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, .....

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8377; 3,45,222/-. Accordingly, appellant s ground of appeal on this issue is partly allowed. 2.2 During the course of hearing, the ld.AR of the assessee prayed for deletion of addition sustained by the ld. CIT(A) for which the ld.AR of the assessee filed the following written submission. Submission:- 1. It may be noted that assessee is regularly filing the return from last number of years. AO himself has verified the returns from AY 2009-10 onwards. In the Axis Bank account of the assessee (PB 1 .....

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/-. 2. The Ld. CIT(A) has accepted the opening balance to the extent of ₹ 1,50,000/- considering the withdrawals of ₹ 1,94,500/- made between 16.03.2013 to 28.03.2013 from the bank account. However, he has not considered the net cash withdrawal of ₹ 1,13,000/- made in the month of February, 2013. If both these withdrawal are aggregated, it amounts to ₹ 3,07,500/-. Therefore, credit of ₹ 1,50,000/- given by the Ld. CIT(A) is unreasonable. Thus, an amount of ₹ 3 .....

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o above, it is to submit that section 68 is applicable only if amount is credited in the books of accounts of the assessee in the relevant financial year. No addition can be made 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 .....

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ng 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. We have considered the rival submissions. We are of the view that the addition was rightly deleted by the CIT(A). As already seen the CIT(A) also found justification in .....

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that the opening cash balance cannot be said to be any sum found credited in the books of the assessee maintained for the previous year which is the year from 01-04-2006 to 31-03- 2007. The decisions relied upon by the assessee before the CIT(A) support the plea of the assessee. The decision of the Hon ble Madras High Court is contrary to the decision rendered by the Hon ble Karnataka High Court in the case of CIT Vs N.L. Sathyanarayana Setty, (supra). Therefore, the same would not be binding. .....

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The AO has relied on the decision of Hon ble Madras High Court in case of C. Packirisamy Vs. ACIT 315 ITR 293. In this case, assessee claimed opening balance of capital at ₹ 5,73,960/-. Books of accounts were not produced by assessee. The returns for earlier AYs were filed on the same day as that of current year. In these facts it was held that assessee failed to prove formation of capital and the addition of 50 per cent of opening capital is justified. Thus, this case is distinguishable .....

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O 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 ba .....

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.03.2013 in the bank. Thus, the cash withdrawal for the month of February, 2013 is ₹ 1,13,000/- (Rs. 2,73,000 minus ₹ 1,60,000). In the month of March, 2013, assessee has withdrawn ₹ 1,94,500/-. Thus, the total withdrawal made from the bank account in February & March, 2013 is ₹ 3,07,500/- (Rs.1,13,000+ ₹ 1,94,500). It is also noted that assessee is regularly assessed to tax and in the Balance Sheet as on 31.03.2013, there is cash in hand of ₹ 4,95,222/- ( .....

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der as well as submission made by the appellant. 1. That the assessee is a salaries employee deriving his income from salary. During the year under consideration, the appellant had declared total income of ₹ 2,70,278/-. 2. That a total of cash amounting to ₹ 39,78,000/- was found deposited in the bank account maintained at Axis Bank, Bharatpur during the year under consideration.. 3. That the assessee has submitted before the AO that ₹ 15 lakhs were raised as unsecured loan fro .....

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ces filed during the course of appellate proceedings. It is seen that unsecured loan received from various persons and the evidences filed during assessment and appellate proceedings is collated as under:- S.N. 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 l .....

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mmissioner of Income Tax - Appellant Through: Mr.Deepak Chopra, Advocate Versus Nova Promoters & Finlease (P) Ltd.- Respondent Through Mr. C.S. Agarwal, Sr. Advocate with Mr. Prakash Kumar and Mr. Arta Trana Panda, Advocate. CORAM: Hon'ble ble Mr. Justice SanjivKhanna, Hon'ble Mr. Justice R.V. Easwar. …….36. It is not only relevant to note the above facts which distinguish those three cases (supra) from the case before us but it is also relevant to note the following ob .....

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I have taken into account factual matrix of the case. So far as loan amount shown to have been taken from Shri Man Singh and Shri Baney Singh are concerned, they are not income tax assessee and the identical cash amount were found to have been deposited in their account prior to advance of loan to the appellant. Therefore, going by parameters set by the above mentioned judicial pronouncement, the appellant has failed to discharge his onus of proving the genuineness of transaction. Therefore, in .....

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ri Man Singh is sustained. Therefore, the addition is reduced to ₹ 9 lakhs and the appellant s ground of appeal on this issue is partly allowed. 3.2 During the course of hearing, the ld.AR of the assessee prayed for deletion addition sustained by the ld. CIT(A) for which the ld.AR of the assessee filed the following written submission. 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 .....

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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 confirmati .....

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uineness of the transaction is established. Sh. Man Singh- ₹ 2 lacs He is a Government teacher deriving income from salary. He has advanced sum of ₹ 2 lacs during the month of Dec, 2013 & Jan, 2014. To prove the creditworthiness of creditor and genuineness of transaction, assessee has filed confirmation of Man Singh (PB 42) and return acknowledgment along with Form No.16 (PB 43-46) which shows that he has earned salary of ₹ 5,34,716/- during the year. Thus, advancing ₹ .....

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ior to advancement of loan to assessee is incorrect. Hence, creditworthiness of the creditor and genuineness of the transaction cannot be doubted. 2. From the above, it can be noted that assessee has discharged his onus to prove the creditors u/s 68. Both the creditors have accepted giving advance to the assessee. The fact that identical cash was deposited in the account of creditors before loan was advanced to the assessee does not prove that the money was deposited by the assessee company more .....

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e 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 in .....

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9 (Raj.) (HC) (2012) In this case, order of CIT(A) deleting addition u/s 68 was upheld by Tribunal after finding that assessee had submitted the accounts of return, computations of income, balance sheets of the creditors and also supplied all their particulars to evidence that the money given to the assessee had been shown in the respective balance sheets of the creditors, and that the creditors who were called by the AO did affirmed the fact of giving money and explained the source of same. Tri .....

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ve confirmed the credits by making statements on oath and the amounts having been advanced by account payee cheques, impugned addition in respect of the entries in the names of said creditors cannot be sustained. Capacity of the lender to advance money to the assessee is not a matter which could be required to be established by the assessee, as that would amount to calling upon him to establish source of the source. Kanhaialal Jangid Vs. ACIT 8 DTR 38/217 CTR 354 (Raj.) (HC) While it is the asse .....

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about the source from where he procured the money to be deposited or advanced to the assessee, is not relevant for the purpose of rejecting the explanation furnished by the assessee and making additions of such deposits as income of the assessee from undisclosed sources by invoking section 68, unless it can be shown by the department that the source of such moneys come from the assessee himself or such source could be traced to the assessee itself. In the present case, while the existence of th .....

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e 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 be .....

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see. CIT Vs. Deen Dayal Choudhary (2017) 148 DTR 275 (Raj.) (HC) Both the appellate authorities after taking note of the facts and going through the statements of three cash creditors have come to definite finding that not only the identity was established but the genuineness and creditworthiness of the creditors were well proved. All the cash creditors have not only placed on record the entire material but have also affirmed in their examination that they had advanced money to the assessee from .....

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becomes income of the assessee from undisclosed sources unless there is strong evidence direct or substantial to show that the amount which has been advanced by the cash creditor to the assessee actually was received from the assessee. Thus, findings by the Tribunal is essentially a finding of fact based on the material on record after appreciation of evidence and no substantial question of law can be said to arise out of the order passed by the Tribunal. CIT Vs. Shiv Dhooti Pearls & Investm .....

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orm of loan 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 .....

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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 Singh, ₹ 7 lacs from Sh. Baney Singh and ₹ 2 lacs from Man Singh as unexplained u/s 68 of the Act . The ld. CIT(A) after giving a finding that Sh. Koushalendra Singh is an existing income tax assessee and has given his confirmation, deleted the addition of ₹ 6 lacs but confirmed the addition o .....

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3.50 lacs in cash on 25.04.2013 and ₹ 1.50 lacs on 25/26.04.2013 by cheque against the sale of agricultural produce to Food Corporation of India PBP- 31). He has also rental income of ₹ 4,800/- p.m (PBP 31-32). This amount was withdrawn in cash for ₹ 5 lacs on 27.04.2013. Thereafter he deposited ₹ 7,05,000/- in his bank account on 17.05.2013 from which loan of ₹ 7 lacs is given to the assessee PBP 31). The loan has been repaid by cheque on 19.06.2015. All these fac .....

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me tax assessee. Therefore, in case of Man Singh who has a salary income of more than ₹ 5 lacs and has filed the confirmation and he is an income tax assessee, the Bench finds no merit in confirming the addition by ld. CIT(A). Considering all these facts and material available on records, 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. 4.1 Apropos Ground No. .....

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ously, 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 appell .....

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d before the AO and their statement was recorded on 21.11.2016. Sh. Jai Singh, in his statement reproduced at Pg 9-10 of the assessment order, in reply to Q.No.18 & 19 accepted that he along with his younger brother Shivram has entered into an agreement with assessee for purchase of plot situated at Anirudh Nagar, Bharatpur on 24.05.2013 for consideration of ₹ 21 lacs. Shivram has purchased the plot in the name of his wife Smt. Manju Singh. Out of total consideration of ₹ 21 lacs .....

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ment for the reason that even after lapse of such a long time, neither the property is sold to them nor they have demanded the money back from the assessee. This cannot be a reason for disbelieving the transaction more particularly when in the sale agreement it is mentioned that on this land there is some encroachment and the seller after getting the land vacant would execute the registry on payment of the balance consideration. Therefore, solely on assumptions and presumptions, the amount of &# .....

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rinciple that governs a deeming provision is that the initial onus lies upon the revenue to raise a prima facie doubt on the basis of credible material. The onus, thereafter, 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 rev .....

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xposition 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 legitimately arise that such a large amount could not be given as a gift on the marriage of assessee s daughter as this question is speculative .....

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