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2018 (4) TMI 642

nded 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, 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. It is thus not a fit case where another opportunity can justifiably be given to the assessee. 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. - Unexplained investment - Held that:- Investment made by the assessee in purchase 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 th .....

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eld that the financial capacity of the concerned sixteen creditors was not established by the assessee and accordingly the entire cash claimed to be received by the assessee from them aggregating to ₹ 40,26,000/- was added by the A.O. to the total income of the assessee under section 68 by treating the same as unexplained cash credit. 4. The addition made by the A.O. u/s 68 was challenged by the assessee in the appeal filed before the Ld. CIT(A). During the course of appellate proceedings before the Ld. CIT(A), a detailed submission was made by the assessee in support of its case on this issue. The said submission was forwarded by the Ld. CIT(A) to the A.O. for his comments. In the remand report submitted to the Ld. CIT(A), the A.O. offered his comments on this issue and when the same were confronted by the Ld. CIT(A) to the assessee, the later filed his rejoinder. 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 re .....

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the said cash deposit of ₹ 40,26,000/- as unexplained cash credit which is totally draconian in mindset. In this regard the case of Aravali Trading Co. vs ITO, 187 Taxman 338 (Rajasthan) can be referred to where the Ld. High Court of Rajasthan on 25/01/2007 has ordered that "The fact that the depositors' explanation about the sources wherefrom they acquired the money is not acceptable to the Assessing Officer, it cannot be presumed that the deposits made by such creditors is the money of the assessee himself. There is no warrant for such presumption. In such event if the creditors explanation is found to be not acceptable about such deposits, the investment owned by such persons may be subjected to the proceedings for inclusion of such investment as their income from undisclosed sources or if they have been found Benami, the real owner can be brought 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 .....

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oan is owned by such existing person. On such proof the assessee's onus is discharged. The capacity of lender to advance money to the assesses is not a matter which the assessee himself is required to established as that would amount to calling upon him to establish the source of source as observed in the case of Labh Chand Bohra vs ITO (2008) 219 CTR RAJ 57 and also in the case of ITO WARD 38, Kolkata -vs- Jamuna Das Gupta I.T.A. No 692/Kolkata/2010 dated 31 August 2010, ITAT Kolkata. Honorable Calcutta High Court up held the decision vide order dated 15.02.2011 that source of source cannot be the onus on the assessee to prove. The appellant has relied upon some judgements such as Aravali Trading Co. vs ITO, 187 Taxman 338 (Rajasthan), CIT vs P. Mohonakala (2007) 161 taxman 169 / 291ITR 278 (S.C) , Labh Chand Bohra vs ITO (2008) 219 CTR 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 .....

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imit. I find force in the contention of the appellant that "in the present case the deeming section 68 cannot be in invoked as the 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 capacity of lender to advance money to the assessee is not a matter which the assessee himself is required to established as that would amount to calling upon him to establish the source of source as observed in the case of Labh Chand Bohra vs ITO (2008) 219 CTR RAJ 57 and also in the case of ITO Ward 38, Kolkata vs Jamna Das Gupta ITA No. 692/Kolkata/2010 dated 31st August 2010, ITAT Kolkata. Hon ble Calcutta High Court upheld the decision vide order dated 15.02.2011 that source of source cannot be the onus on the assessee to prove. Hence 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 .....

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id creditors were not assessed to tax and no books of accounts were maintained by them in respect of the business claimed to be carried on. There was nothing brought on record to show that they had any regular source of income or they had maintained any bank account. As rightly contended by the learned DR, the Ld. CIT(A) however overlooked this vital aspect and deleted the addition made by the A.O. under section 68 by holding that once the identity of the creditors was proved and such creditors owned up credits, the assessee s onus stood discharged. In my opinion, this view taken by the Ld. CIT(A) is contrary to the settled position of law on the issue of onus that lies on the assessee to explain the cash credits in terms of Section 68 as reiterated by the Hon ble Kolkata High Court in the case of CIT vs Mihir Kanti Hazra (supra) 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 .....

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t has submitted that again during the financial year 2011-12 the assessee has purchased a piece of land for ₹ 3,63,300/-. The date of purchase as per the deed of registry is 22.11.2011, however the assessee has shown the asset in his books on 31.03.2012 and amount of cost of land has been shown ₹ 3,15,500/- excluding of ancillary expenses like stamp duty fee, registry fee, advocate s fee etc. Now the Assessing Officer is of the opinion that since the date of booking of asset was not 22.11.2011 then the same is unexplained expenditure. So he has imposed the provision of section 68 of Income Tax Act, 1961and added the same. The Assessing Officer did not consider the fact that the assessee was not required to maintain his books of accounts since he was not subject to the provisions of section 44AB of Income 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 .....

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