TMI Blog2017 (10) TMI 1402X X X X Extracts X X X X X X X X Extracts X X X X ..... initoo Jain ORDER 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal wherein the Tribunal has partly allowed the appeal of the department. 2. While admitting the appeal this Court on 26.09.2012 framed following substantial question of law:- Whether, the tribunal was justified in law in admitting new plea contrary to the facts on record and contrary to the Rule 29 of the Appellate Tribunal Rules, 1963 and to based his findings thereon while sustaining the addition of ₹ 12.50 lacs, can be said to be legal one? 3. However, on an application moved on 08.09.2017, We have added one more question on 20.9.2017 which reads as under:- Whether addition made by the Assessing Officer u/s 68 of the IT Act, and deleted by the CIT(A), can be controverted u/s 69A by the Tribunal while sustaining the addition of ₹ 12,50 lacs, irrespective of the fact that the appellant is not maintaining books of accounts and source of income is pension and interest only, such conclusion is proper? 4. The Tribunal in its order dated 2.3.2012 has observed as under:- 2. The facts of the case are that at the very outset, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,81,000 Cr. 19-7-2007 By cash (Out of cash withdrawn on 12-7-2007) 7,81,000 Cr. 27-7-2007 By cash (Out of cash withdrawn on 14-7-2007 and cash in hand) 8,81,000 Cr. 3-8-2007 By cash (amount brought from Ahmedabad) 12,31,000 Cr. 15,51,000 The assessee's explanation before the Assessing Officer (A.O.) was that an amount of ₹ 11.50 lacs stands sourced from sixty three (63) persons (creditors) residing at Ahmedabad, in support of which their confirmations, containing their addresses as well as PAN, were submitted. It would at this stage be relevant to narrate the background facts of the case. The assessee made a verbal Agreement for the sale of his residential house at Sri Nagar Road, Ajmer for ₹ 45.00 lacs, receiving a sum of ₹ 5.00 lacs from one, Uma Khandelwal, vide cheque deposited in his bank account with ICICI Bank (erstwhile `Bank of Rajasthan ) on 17/1/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 and again deposited in the Union Bank savings bank account on 03-08-2007. 3.2 The AO, however, considered the entire cash deposited in the Union Bank of India account (Rs. 15.50 lacs) as not satisfactorily explained. Firstly, the creditors/loaners were not produced. As regards the documents furnished in support, the returns in most cases were for A.Y. 2008-09 and, thus, not relevant, even as in some cases no returns were filed. In fact, the balance-sheets, filed along with in most cases, did not reflect the loan in some cases. The capacity of the creditors was thus not proved. The entire cash collected was from Ahmedabad, and deposited in a newly opened account with another bank. None of the confirmations stated of the cash loans having been repaid, which was claimed to be so during the same financial year. In any case, mere filing of confirmations would not prove the credits. The claim of cash deposit of ₹ 4.0 lacs in bank account in July 07 as being essentially a redeposit of funds withdrawn was also considered by him as an unsubstantiated plea. In appeal, the ld. CIT(A) was of the view that the AO having not found any alternate application of the funds withdrawn fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observe the assessee s explanation as fantastic by all counts, bordering on the bizarre. Firstly, the need to raise funds, which constitutes the essence of the assessee s explanation, is itself not understood. The assessee, by own admission, had secured funds to the tune of ₹ 9 lacs as advance against the sale of his Sri Nagar Road property by 27/4/2007. He furnishes no balancesheet or cash flow statement, so as to be able to know his financial position, the amount as well as the manner of 6 utilization of funds at his disposal, including those raised, and which may be parked in different banks/bank accounts. Even assuming the assessee to have no funds whatsoever of his own (as on that date), it only implies that liquid funds for a maximum of ₹ 2.84 lacs were to be arranged for; the property under purchase costing ₹ 11.84 lacs, including registration cost of ₹ 0.83 lacs, and by 21/7/2007, i.e., the date by which the purchase had to be concluded. We say so as the assessee ascribes even the source of ₹ 15,000/- deposited cash in his bank account (with ICICI Bank) on 21/5/2007 to the cash advance stated to be received from the buyers of his Sri Nagar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the requirement for funds stated to be raised was established, would make the transaction/s impractical and improbable. In fact, as his son has such a large number of good contacts, who would come to rescue at the time of need, it only implies that the son has a good financial and social standing, and a sound reputation, apart from the assessee enjoying excellent relations with his son. As such, the necessary funds could - if at all be easily raised from one or a couple of parties. Why, rather, we wonder, could not then the son have himself chipped in the minor sum required. We wonder if this is done to beat the law; the same proscribing acceptance or repayment of loan/ deposit in cash where exceeding the threshold limit of ₹ 20,000/-. Though normally a matter left to the discretion and wisdom of the assessee, the said consideration follows directly from the stated and admitted circumstances, given the assessee s explanation. 5.3 The second query that arises directly, again to no answer, is as regards the mode of acceptance of the funds. Why were the funds accepted in cash? Acceptance of loans in cash, which is a risky proposition by any standards, is particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , this (safety) benefit alone outweighs by far any other consideration in favour of non-cash transmission, as safety has many dimensions to it and, apart from the potential loss of funds, also entails risk to life and property of those involved in transmission. There is in fact no comparison whatsoever, both practically and conceptually, between the two modes of transfer of funds. Just consider this: in one stroke the money gets deposited in the bank account of the creditor in a matter of minutes at the minimum or a couple of days at the maximum (depending on manner chosen), and at no risk and almost nil cost. It obviates the need to obtain confirmation of receipt of money individually from each creditor, but for which the assessee cannot claim to have discharged his obligation of repayment, a sine qua non for any debtor. 9 Finally, needless to add, no evidence in respect of transmission of cash from Ahmedabad to Ajmer or vice versa stands adduced by the assessee before any authority. 5.4 Another equally intriguing aspect of the assessee s case, as made out, is that no `receipts were admittedly obtained from the creditors upon repayment of loans. Why? In fact, there is no con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action; its terms, including as to security, etc., replies to which, including the materials supplied in support as well as the replies to any further queries that may concomitantly and spontaneously arise, are extremely relevant in arriving at a satisfaction or otherwise by the AO with the assessee s explanation as to the nature and source of the impugned deposit of funds; in other words, about the truth of the matter. This requirement is nonnegotiable, and assumes prime significance as the law envisages `satisfaction or otherwise only of the AO, so that the purview of an appellate authority like us is to examine whether the nonsatisfaction expressed by the AO is sustainable in law, i.e., is the explanation furnished by the assessee one which should satisfy a man of ordinary prudence, acting reasonably and judicially, given the normal course of events, as well that of human conduct. The impugned order is largely silent on this aspect, except for stating that the creditors could have been summoned by the AO. It is trite law that the onus to prove the credits is on the assessee; the very argument by the ld. CIT(A) being a tacit admission thereof, even as undoubtedly the assessing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 381 (P H) and CIT v. Meghdoot Village Products (P.) Ltd., 212 CTR (All) 484. 5.6 The explanation and the narrative furnished by the assessee in fact bears several other anomalies, more and more of which tumble out as we continue to subject it to scrutiny or closer examination in its various aspects. We say so as it may not be correct or proper to discard or reject an explanation only on the basis of a single incongruity; any person may be prone to an unusual behaviour at times, with the same person himself behaving differently under similar situations at different times. The first instalment of the bank loan (through which purchase transaction was eventually financed) was availed on 20-06-2007, so that the decision to do so, i.e., to go for the bank loan for the purpose was taken even prior thereto. Secondly, why was a loan availed when the assessee had no immediate intention to mature the purchase, time for which was available up to 21- 07-2007; the balance amount of bank loan being availed only on 11-07-2007, and only understandably so, considering that acquisition was completed on 13-07- 2007. This is as loan entails interest and, besides, keeping cash in hand is alway ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of funds, which represented only a fraction of the total amount to be remitted to Ahmedabad, without disclosing any basis therefor, was not deferred by one or two days, as for firming up the safety arrangements, but was totally dropped, and cash `re-deposited in bank. We have already explained that the bank transfer is conceptually, technically as well as practically far superior to the cash mode; rather, a practical necessity, given the distance as well as the number of persons involved, for non-resort to which no reason has been advanced by the assessee at any stage. The string of unexplained events does not stop here. In spite of the purchase transaction having been concluded, and the assessee now admittedly engaged or involved in the exercise or project, if we may call it so, of transfer of funds back to Ahmedabad, the collection spree goes unabated, with the assessee moping up another ₹ 3.50 lacs, depositing the same in his bank account on 03-08-2007, i.e., after claiming the same to be received at Ajmer on 02- 08-2007. We are afraid, but the same can under the circumstances be only termed as ludicrous. Finally, we 13 cannot help but noting that though the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ria as, in either case, the assessee has to offer a 14 satisfactory explanation about the nature of the source of impugned credit or debit (money, bullion, jewellery, any valuable article, i.e., assets), as the case may be. 5.8 Further on, we are unable to appreciate the case laws relied on by the assessee, viz. CIT vs. United Commercial Industrial Co. (P) Ltd., 187 ITR 596 (Cal.) and CIT vs. Precision Finance (P) Ltd (1994), 208 ITR 465 (Cal.). Both the decisions, in ratio, confirm the trite law in the matter, i.e., that the onus to establish the credit on the parameters of identity and capacity of the creditor and the genuineness of the transaction, is on the assessee, and only where it by satisfactory proof establishes so, that the onus gets shifted to the Revenue. Further, mere production of confirmatory letters or even the fact that the transaction is routed through the banking channel, does not by itself prove the loan, making a non-genuine transaction, genuine. In the instant case the genuineness of the transactions stands thoroughly impugned, so that we do not consider the credits/deposits in the assessee s bank account with Union Bank of India as represent ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
