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TMI Blog2017 (11) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... 63,38,820. 2. In the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of the learned Assessing Officer in making the addition of Rs. 16,10,491 on account of the alleged unexplained cheques deposits in the bank account. The action of the learned Commissioner of Income-tax (Appeals) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 16,10,491. 3. In the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of the learned Assessing Officer in making the addition of Rs. 31,50,000 on account of the alleged income on sale of plot No.143 Swaroop Vihar, Jagatpura, Jaipur. The action of the learned Commissioner of Income-tax (Appeals) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 31,50,000. 4. In the facts and in the circumstances of the case and in law the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the assessee has issued cheques to the land owner. The Assessing Officer did not find the affidavit as reliable piece of evidence for various reasons discussed in the assessment order. Some of the reasons given by the Assessing Officer are worth noting which are as follows : "1. He had not mentioned any details of cash paid by him i.e. dates and amounts when he had paid cash to Shree Narayan Meena. 2. Details of colony developed by him were not mentioned. 3. The land was purchased by him in October, 2006 and January, 2007 and payments were made in May 2008 onwards, making payments after 15th to 18 months and reasons for delayed payments were not given." 3. Thereafter, the assessee was asked to produce Shri Shravan Kumar but he avoided presenting him and in turn requested the Assessing Officer to issue summons under section 131 of the Act. However, in absence of complete address, the Assessing Officer could not issue the summons to Shri Shravan Kumar. 4. In the mean time, on December 12, 2011, the assessee filed written submission before the learned Assessing Officer which inter alia contains following submission : "3. That Mr. Sharwan Lal has purchased the land at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k accounts is enclosed as annexure-A to this order. As per this annexure the total peak comes at Rs. 63,38,820. The same is held as unaccounted income of the assessee and added to his total income. Thus Rs. 63,38,820 is added to the total income of the assessee. Since the assessee is the beneficiary, hence the addition is made in the hands of assessee on substantive basis. The matter is referred to the Income-tax Officer, Ward-2(3), Jaipur for making addition on protective basis in the hands of Shri Sharwan Kumar." 7. Being aggrieved, the assessee carried the matter in appeal before the learned Commissioner of Income-tax (Appeals) wherein the following submissions were made and which were again reiterated during the course of hearing before us : "7. Briefly the facts of the case are that the assessee-appellant aged about 39 years completed his MA in Sociology in the year 1996 and belongs to a small village Bassi where his father is involved in farming and is currently residing at Jagatpura, Jaipur. After completing his education, he was in search of some livelihood. 7.1 He was a man of meagre means. He belonged to an agriculturist family. He had no resources to do any real e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le deeds in favour of Shri Shravan Kumar. The land owners executed the following power of attorney in favour of the appellant : Name Date of execution of power attorney Smt. Ganga Devi 6th September, 2006 Shri Mool Chand 6th September, 2006 Shri Ramjilal 6th September, 2006 Shri Ramdhan 6th September, 2006 The land of the abovementioned land owners were sold by the assessee-appellant on the basis of power of attorney to Shri Shravan Kumar through the following sale deeds : Name Date of execution of sale deed Smt. Ganga Devi 11th January, 2007 Shri Mool Chand 11th January, 2007 Shri Ramjilal 28th October, 2006 Shri Ramdhan 28th October, 2006 7.5 In terms of the above understanding amongst the parties, the sale deeds were executed by the sellers through the power of attorneys wherein post dated cheques were issued. In sale deed, the cheque numbers were mentioned that were issued as consideration. These very cheques were cleared in favour of the sellers by depositing the cash received from Shri Shravan Kumar. 7.6. The above facts were placed before the learned Assessing Officer during the course of assessment proceedings. Shri Shravan Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by Shri Shravan Kumar can have no bearing on the earlier part of the deal. * The learned Assessing Officer has also taken a plea that if cash is paid by Shri Shravan Kumar then the same is disallowed in his hands under section 40A(3). This cannot be a reason for not believing the proof of cash having been received from Shri Shravan Kumar. * The other reasons like Shri Shravan Kumar being a checker in NBC, Jaipur and after retirement purchased mini bus and truck and sold the same at loss had no bearing on the issue before the learned Assessing Officer. * Another reasons mentioned by the learned Assessing Officer is that payments by Shri Shravan Kumar being made after a lapse of 15-18 months from the date of purchase of land cannot be believed. This is a fact not only confirmed by the assessee-appellant but also by Shri Shravan Kumar and is fully corroborated by the gap in execution if registry and cheques cleared in favour of land owners. Nothing more is needed to substantiate this aspect which the learned Assessing Officer has ignored without giving any cogent reason. 8.1 Analysis of the sale deeds executed by the assessee-appellant in favour of Shri Shravan Kumar will rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11,00,000 D. Following cheques originally issued to Smt. Ganga Devi by assessee-appellant were misplaced by her and were replaced by Shri Shravan Kumar himself : Name Amount Old Cheque No. New Cheque No. P.B. Date of clearance of cheque Receipt Pass book Shri Ganga Devi 11,00,000 183270 008282 44 67 17-5-2012 11,00,000 183271 008281 45 67 9-5-2012 Total 22,00,000 The above two cheques were not cleared from the assessee-appellant's bank account but were directly cleared from the bank account of Shri Shravan Kumar. Shri Shravan Kumar had obtained receipts from Smt. Ganga Devi to this effect. The said receipts do further confirm that the land was sold by Smt. Ganga Devi to Shri Shravan Kumar through Shri Narayan Meena. The pass book of Shri Shravan Kumar is not additional evidence but is only a further evidence to further substantiate what was submitted during the assessment proceedings by the learned Assessing Officer. These facts were admitted by Shri Shravan Kumar, when he appeared for his statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant's bank account, onus is on the appellant to explain the nature and source of such cash deposit. This burden can never be shifted to the Assessing Officer. The appellant only produced Shri Shravan Kumar before the Assessing Officer who recorded his statement and came to the conclusion that there were many missing links in the statement and there was no evidence of possession of such huge cash with Shri Shravan Kumar. Even in the statement recorded Shri Shravan Kumar could not provide the source of such huge cash particularly when he was in employment as very lowpaid employee till 1999 and thereafter not doing any major anything which can give him such cash. How such huge cash can be available with a person like him is not explained by anybody. Why with such substantial cash he did not have any bank account which he opened subsequently after this controversy arose. Just by admit ting that he has given such huge cash to the appellant is not sufficient. There has to be evidence of source of such substantial cash which is completely missing even in the case of Shri Shravan Kumar. Therefore Assessing Officer after analysing the affairs of Shri Shravan Kumar concluded that the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween Shri Shravan Kumar and Shri Narayan Meena. (c) Copy of sale deed executed on January 11, 2007 between Shri Shravan Kumar and Shri Narayan Meena. (ii) Power of attorney : (a) Copy of power of attorney executed on September 6, 2006 between Smt. Ganga Devi and Shri Narayan Meena. (b) Copy of power of attorney executed on September 6, 2006 between Shri Moolchand, Shri Ramjilal and Shri Ramdhan with Shri Narayan Meena. (iii) Stale cheques replaced by original buyer Shri Shravan Kumar. (iv) Copy of pass book of P.N.B. of the appellant to prove deposits in his bank account found destination to the sellers of the land. 10.2 The learned Commissioner of Income-tax (Appeals) failed to appreciate the reason for depositing the cash made available by Shri Shravan Kumar in the appellant's own bank account. Shri Shravan Kumar got his bank account opened as late as April 6, 2012, whereas sale deeds were executed on October 28, 2006 and January 11, 2007, on which dates Shri Shravan Kumar had no bank account of his own and the cheque numbers were required to be mentioned in the sale deeds. It is also important to note that at that point of time, the buyer Shri Shravan Kumar had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not absolve the appellant from his onus." Once this is established that Shri Shravan Kumar made available the cash to the appellant as consideration of his purchasing the land for onward transfer of money to the sellers of the land, the appellant acting as broker, there cannot be any reason to invoke section 68 in the hands of the appellant. Section 68 is not applicable for receiving the sale consideration. Section 69 can be invoked in the hands of the payer of such sum. Otherwise also even for section 68, the hon'ble jurisdictional High Court in the cases of Kanhaialal Jangid v. Asst. CIT [2008] 217 CTR 354 (Raj), Aravali Trading Co. v. ITO [2008] 220 CTR 622 (Raj), Labh Chand Bohra v. ITO [2010] 189 Taxman 141 (Raj) and CIT, Ajmer v. Jai Kumar Bakliwal [2014] 366 ITR 217 (Raj), has held that the source of source need not be proved by the assessee. In view of the above addition of Rs. 63,38,820 made by the learned Assessing Officer and confirmed by the learned Commissioner of Income- tax (Appeals), deserve to be deleted by allowing this ground of appeal. 11. The learned Departmental representative is heard who has vehemently argued the matter and took us through the detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The degree of burden of proof on the assessee will vary from assessee to assessee. Where amounts are borrowed from or shares are allotted through private placement, to persons generally known to directors or shareholders, directly or indirectly, burden of proof is on higher pedestal and the courts have laid down a strict approach in terms of satisfying such burden of proof. (f) The word "identity" means the condition or fact of a person or thing being that specified unique person or thing. The identification of the person would include the place of work, the staff, the fact that it was actually carrying on business and recognition of the said company in the eyes of public. Merely producing certificate of incorporation, PAN number or assessment particulars did not establish the identity of the person. PAN numbers are allotted on the basis of applications without actual de facto verification of the identity or ascertaining active nature of business activity. The actual and true identity of the person or a company was the business undertaken by them. Further, these documents have their limitation and cannot be relied upon blindly when there are surrounding circumstances to show tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him. If the Assessing Officer harbours any doubts of the legitimacy of any subscription, he is empowered, nay duty-bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings or has no material in his possession, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company. (j) The case of CIT v. Orissa Corporation (P.) Ltd. [1986] 159 ITR 78 (SC) ; [1986] 25 Taxman 80F (SC) exemplifies the category of cases where no action is taken by the Assessing Officer to verify or conduct an enquiry into the particulars about the creditors furnished by the assessee, including their Income-tax file numbers. In these cases, the decision was based on the fundamental rule of law that evidence or material adduced by the assessee cannot be thrown out without any enquiry. The ratio does not extend beyond that. The boundaries of the ratio cannot be, and should not be, widened to include therein cases where there exists material to implic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/2009 Smt. Ganga Devi (183277) 11,00,000 78,500 23/9/2009 Shri Shravan Kumar 5,00,000 5,78,500 24/9/2009 Shri Shravan Kumar 5,99,500 11,78,000 24/9/2009 Smt. Ganga Devi (183278) 11,00,000 78,000 6/7/2010 Shri Shravan Kumar 11,00,000 11,78,000 8/7/2010 Smt. Ganga Devi (183276) 11,00,000 78,000 23/9/2011 Shri Shravan Kumar 5,00,000 5,78,000 24/9/2011 Shri Shravan Kumar 6,00,000 11,78,000 26/9/2011 Smt. Ganga Devi (183272) 11,00,000 78,000 78,000 Total 76,16,000 69,50,000 1,44,88,000 14. The narrations regarding deposits and withdrawals in the above bank statement are as per the assessee. As can be seen from above, there is a clear pattern of cash deposits and immediate withdrawal by way of issuance of cheques from time to time. Every time, a cheque is cleared, there is prior deposit of cash in denomination of Rs. 6 lakhs and Rs. 5 lakhs. As per the assessee, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts which were sold and when sold. (c) He was not having any idea of rate at which the plots were sold. (d) He was not having any idea of location of land on which the colony was developed. (e) He was not having any idea that whether the sale proceeds were received by him by cheque or by cash. (f) He was not having any idea that whether he is an Income-tax assessee or not. (g) He was not having any idea of whether he is having permanent account number or not. (h) He was not having any idea that whether the colony/scheme was approved by the Government or not. (i) He was not having any idea that what is the name of colony. (j) The only idea he was having was that he had purchased land from Shri Shree Narayan Meena for Rs. 99,00,000 and the amount was paid by him in cash. (k) It may be mentioned that if the amount is paid by the Shri Sharwan in cash then these payments will hit by the provisions of section 40A(3) and the entire amount is to be disallowed. (l) He was bearing checker in National Engineering Industries, Jaipur, who retired in the year 1999. (m) After retirement he purchased one mini bus and one truck, but sold these vehicles after heavy losses after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h which has been received, copies of his bank statements where he has deposited such cash and given the huge quantum of cash involved going by the assessee's own version, the amount and date of payment of such cash claimed to have been paid to the assessee. However, we find that there is nothing which has been brought on record to this effect. In the absence of the same, it does not lead us to anywhere but to disbelieve the explanation so offered by him. To our mind, the affidavit and the statement of Shri Shrawan Kumar are self-serving document, are inconsistent with the version advanced by the assessee, are therefore not reliable and does not inspire any confidence in accepting the same in the absence of any credible verifiable supporting the documentation to support the sale of land by way of plots by him and receipt of consideration in form of cash which is claimed to have been handed over to the assessee from time to time. 18. Now coming to the contention of the learned authorised representative that the learned Commissioner of Income-tax (Appeals) has failed to appreciate, in correct perspective, the vital evidences in the form of power of attorney and sale deeds which b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o transactions. We find that the whole of the sale consideration has been claimed to be discharged by issuance of post-dated cheques and the said cheques have been cleared after a long period of time which is quite unusual in dealings in land and other real estate. Why would a land owner hand over the title and possession of his land without receiving any consideration or even a part of it and agree to receive it at a later point in time which is again uncertain and without any underlying surety or guarantee. It has been claimed that the land belongs to scheduled caste and this land could be purchased by a person belonging to the same caste and further the land was located near a nullah, hence, they were finding it difficult to find a suitable buyer. Finally, a buyer of the land namely Shrawan Kumar was identified and it was agreed that they will execute the sale deeds in favour of the buyer but will receive whole of the sale consideration in post-dated cheques which will be presented for clearing on a later date with the prior approval of Shrawan Kumar. It was further submitted that Shravan Kumar did not have any bank account at that point of time and ignorant of the legal consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements have been examined in the instant case having regard to the human probabilities and normal course of human conduct and we find that the explanation offered by the assessee at this stage does not passes this muster and the initial onus cast on the assessee has not been satisfied. In the instant case, the Assessing Officer has also carried out necessary verification and has rightly brought to tax the unexplained cash deposits found deposited in the bank account. We have also gone through the various decisions cited by the learned authorised representative and we find that the same have been rendered in the peculiar facts and are thus distinguishable and does not support the case of the assessee. At the same time, the broad legal proposition emerging therefrom has been duly considered. In the result, the ground of appeal is dismissed. Ground No. 2 relating to addition of Rs. 16,10,491 21. Briefly, the facts of the case are that the cheques worth Rs. 16,10,491 deposited in the assessee's bank account has been brought to tax by the Assessing Officer. 21.1 During the course of hearing, the learned authorised represent ative submitted that out of the total cheques of Rs. 16, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Ramji Lal and Shri Ramdhan and purchase consideration has flowed from Shri Shravan Kumar (buyer) to the sellers through the appellant broker, the explanation for the cheques deposited would in itself become fully justified and acceptable. In view of the above, this ground of appeal may please be allowed. 22. We now refer to the relevant findings of the learned Commissioner of Income-tax (Appeals) which are under challenge before us. The same are reproduced as under : "4.3 I have considered the facts of the case ; assessment order and the appellant's written submission. The Assessing Officer made addition in respect of cheques deposited in his bank account which were not explained by the appellant. The appellant submitted that these were the cheques relating to land deals in which he was acting as broker. However from the details submitted by the appellant, the nature and source of such cheque deposits is not clear. The appellant submitted that the cheques were given by Shri Shravan Kumar but his bank account itself was opened on April 6, 2012 and therefore he could not have given cheques to the appellant in 2008. Again the appellant tried to divert the attention by focus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed of. Ground No. 3 relating to the addition of Rs. 31,50,000 24. Briefly the facts of the case are that during the year under consideration, the assessee sold plot No. 143, Swaroop Nagar, Jagatpura, Jaipur for Rs. 31,50,000 to Smt. Richa Choudhary. This plot was in the name of Smt. Ruby Shrivastav and the assessee was the power of attorney of the said land. As per the Assessing Officer, there was no occasion to execute power of attorney in favour of an unknown person and it is a case where the assessee bought the plot from Smt. Ruby Shrivastav and sold the same during the year under consideration. In the absence of cost of purchase and the year of purchase, the entire sale consideration of Rs. 31,50,000 which was received by the appellant in his bank account was brought to tax by the Assessing Officer. Being aggrieved, the assessee carried the matter in appeal before the learned Commissioner of Income-tax (Appeals) which has confirmed the findings of the Assessing Officer. 25. During the course of hearing, the learned authorised representative submitted that the learned Commissioner of Income-tax (Appeals) did not accept the fact of power of attorney held by the appellant fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the facts of the case ; assessment order and the appellant's written submission. The appellant received money in his bank account on sale of property standing in the name of Ruby Shrivastav. The appellant was the power of attorney holder in respect of this land and therefore he executed the sale deed and received the money which was deposited in his bank account. The lady in whose name the property stands is not related to the appellant. Wherea bouts of Ruby Shrivastav is not known to the appellant. Her address is also not given. All these facts clearly prove that the appellant was the real owner of the property and only name of Ruby Shrivastav was used. No one will give power of attorney in favour of any stranger unless the property itself is sold to such person. The appellant did not submit the identity and details of Ruby Shrivastav's address. She is also not produced for examination before the Assessing Officer there fore it is clear that the appellant did not discharge his onus to explain the nature and source of deposits. As a broker, the appellant is not supposed to accept money and deposit in his bank account unless he's the real owner and the party to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not give any assistance in service and summons could not be served on Shri Babulal. Therefore it is clear that the appellant did not discharge his onus by either producing the donor or assisting the Department in examination of the donor. The submission of documents are not relevant if the person who executed these documents is either not traceable or do not attend to confirm the content of such documents. Since the appellant did not explain the nature and source of money received from Shri Babulal, the Assessing Officer was justified in treating the same as unexplained. Accordingly addition made by the Assessing Officer is confirmed." 30. During the course of hearing, the learned authorised representative submitted that a confirmation has all the legal sanctity under section 56(vii)(a), when the gift is from a very close relative and the donor not being able to appear does not lead to any adverse inference in this regard. 31. As per section 56(vii)(a), a gift of money without consideration from the wife's brother cannot be brought to tax as income in the hands of the assessee and an affidavit in this regard has been filed during the course of assessment proceedings. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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