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2018 (4) TMI 642

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..... hase of land excluding ancillary expenses like stamp duty, registration fees etc. was duly reflected in his balance sheet. A.O. however treated the said investment as unexplained because the relevant entry in the books of accounts was made by the assessee only on 31.03.2012 while the investment was actually made on 22.11.2011. As contended on behalf of the assessee before the CIT(A) in this regard, he was not required to maintain books of accounts and therefore, the conclusion drawn by the A.O. regarding unexplained investment merely on the basis of different dates appearing in the books of account was not justified especially when the said investment was duly reflected in the balance sheet of the assessee. Keeping in view this explanation of the assessee, Ld. CIT(A) deleted the addition made by the A.O. on account of alleged unexplained investment made by the assessee - I.T.A. No. 1480/Kol/2017 - - - Dated:- 11-4-2018 - Shri P.M. Jagtap, AM Shri P. K. Mandal, Addl. CIT appearing on behalf of the Revenue Shri S. K. Mukherjee, Advocate appearing on behalf of the Assessee ORDER This appeal is preferred by the revenue against the order of Ld. CIT (A) 12, Kolkat .....

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..... . After taking into consideration this entire material available on record, the Ld. CIT(A)proceeded to delete the entire addition made by the A.O. u/s 68 for the following reasons given in his impugned order: I have carefully examined the facts of the case and the submissions of the appellant as well as the remand report. It is a fact that cash deposit of ₹ 40,26,000/- was made on several dates during the financial year 2011-12 relevant to the assessment year 2012-13 in bank account No. 910010001652562 maintained with Axis Bank Ltd., Fulia Branch. It is also seen from the bank statement that the amount deposited on several dates was transferred to the account of R.K. Global Shares and Securities Ltd on the same date. The assessee was asked to explain the source of cash deposit made in the said account. He stated that during the financial year 2011-12 he made transaction with commodity exchange transaction through R.K. Global Shares and Securities Ltd and investment made in the said transaction was not from his own source of income alone. His relatives and friends and invested in the said transaction through him and he deposited the said amount to the said bank account of .....

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..... ought to the tax net. But in order to fasten liability on the assessee by including such credits as his income from unexplained sources a nexus has to be established that the sources of creditors' deposit flew from the assessee. In the absence of any such link additions of cash credits found in the books of account of the assessee cannot be considered to be unexplained income of the assessee, where existence of depositors of such credits is established and such deposits/advance/loan is owned by such existing person. On such proof the assessee's onus is discharged. The expression 'the assessee offers no explanation' means where the assessee offers no proper, reasonable and acceptable explanation as regards the sum found Credited in books maintained by the assessee. The opinion of the Assessing Officer for not accepting the explanation offered by the assessee is required to be based on proper appreciation of materials and other attending circumstances available on record. Application of mind is the sine-que-non for forming the opinion as found in the case of CIT vs P. Mohonakala (2007) 161 taxman 169/ 291 ITR 278 (S.C) where it was proved that the cash creditor .....

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..... RAJ 57 and in the case of ITO WARD 38, Kolkata -vs- Jamna Das Gupta I.T.A. No 692/Kolkata/2010 dated 31 August 2010, ITAT Kolkata. In the present case the identification of the creditors were proved. All of the six depositors summoned by the Assessing Officer have appeared before the Assessing Officer, their statements were recorded and all of them admitted to the claim of the assessee that they have deposited cash in the bank account of Bapi Sandhukhan, the assessee. Once the existence of the creditors is proved and such persons own up the credits which are found in the books of the assessee, the assessee's onus stands discharged. The creditors were all poor handloom operators who received all their income in cash and invested part of their income with the appellant in good faith. Section 68 of the I.T. Act states: where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous y .....

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..... ence the addition made by the A.O. is deleted. 5. The learned DR submitted that although the source of cash deposits found to be made in his bank account was explained by the assessee as cash received from his friends and relatives for making investment in commodity exchange and some of the said creditors had confirmed the said transactions, their financial capacity to give such cash to the assessee was not established. He contended that the said creditors were not assessed to tax and there was nothing brought on record to establish their financial capacity to advance the amounts in question to the assessee in cash. He contended that the Ld. CIT(A) however overlooked this vital aspect and deleted the addition made by the A.O. under section 68 on the ground that the identity of the creditors having been proved and the said creditors having owned up the credits, the onus was discharged by the assessee. By relying on the decision of Hon ble Kolkata High Court in the case of Mihir Kanti Hazra 375 ITR 555, he contended that the creditworthiness of the concerns creditors and genuineness of the relevant transactions having been not proved, the Ld. CIT(A) was not justified in deletin .....

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..... ra) cited by the learned DR wherein it was held that creditworthiness of the concerned creditors and the genuineness of the relevant transactions having been not proved by the person who responded to summons under section 131, the addition made by the A.O. u/s 68 on account of unexplained cash credit was fully justified. As regards the contention raised by the learned counsel for the assessee seeking one more opportunity to the assessee to establish the financial capacity of the creditors, I find that the assessee has already been given sufficient opportunity in this regard and there is no evidence filed by the assessee even at this stage before the Tribunal to establish the financial capacity of the concerned creditors. In my opinion, it is thus not a fit case where another opportunity can justifiably be given to the assessee. I, therefore, set aside the impugned order of the Ld. CIT(A) on this issue and restore that of the A.O. for making the addition under section 68. Ground No. 1 of the revenue s appeal is accordingly allowed. 8. In Ground No. 2, the revenue has challenged the action of the Ld. CIT(A) in deleting the addition of ₹ 3,63,300/- made by the A.O. on account .....

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..... come Tax Act, 1961 to get his books of account audited as per Section 44AB. Nor the assessee has claimed any deduction for which his taxable income has become less. The assessee has not made any attempt to hide his investment and declared the same as his asset on 31.03.2012 and also he has produced all the necessary documents regarding the acquisition of the land before the Assessing Officer. So the Assessing Officer did injustice by ordering the same purchase of land as unexplained expenditure and such draconian order must be quashed. I find force in the contention of the appellant. The A.O. has added the amount of ₹ 3,63,300/- as unexplained investment but is not understood as to how it can unexplained when it has been reflected in his books. The A.O. has not brought out as to how it is unexplained. The appellant has produced documents relating to the land which have not been proved to be untrue. Hence there is no basis for the addition by the A.O. and it is deleted 11. I have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the investment made by the assessee in purchase of land excluding ancillary .....

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