TMI Blog2020 (11) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee from whom he received gift are housewives. They do not have independent source of income except the gift received and savings made out of household expenses. The assessee did not place any evidence proving their independent source of income. Hence, no fault can be found in the action of assessing officer for reopening of assessment. Addition and enhancement made by the Ld. CIT(A) invoking the provision of section 68 - HELD THAT:- Looking to the facts of the present case when the assessee is claiming that the source of investment was from the gifts given by the family members and considering the facts that the assessing officer has verified the factum of gifts received by the assessee and partly granted the relief. There was no credible evidence before the Ld. CIT(A) to rebut the findings of assessing officer. The assessee placed documents related to sale of property by father-in-law and mother-in-law - entire evidence could not be brushed aside without making proper verification. The Ld. CIT(A) was not justified enhancing the income. Therefore, we direct the assessing officer to delete the addition. Addition on declaration made in the return - assessee had placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017 09.05.2018. First we take the assessee appeal in quantum proceedings in ITANo.86/Ind/2018. The assessee has raised following grounds of appeal: 1.1] That on the facts and in the circumstances of the case and in law the Ld CIT(A) erred in approving the action of the Ld Assessing officer in issuance of notice U / s 148 of the Act merely on the basis of presumption and on the basis of information received by him in the absence of any tangible material and live link of concealment of income. 1.2] That on the facts and in the circumstances of the case and in law Ld CIT[A] erred in approving the action of the Ld Assessing officer in issuance of the notice U / s 148 of the Act merely on the basis of information as received by him without properly appreciating the facts of the case and submission made before him and without independent applications of his mind prior to the issuance of the notice U / s 148 of the Act 2] That on the facts and in the circumstances of the case and in law the Ld CIT(A) erred in maintaining the addition of ₹ 31,10,000/- to the total income of the appellant by invoking the provisions of section 68 of the Act merely for the reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC) 8. That on the facts and in the circumstances of the case and in law the amount of interest as charged u/s 234B and 234C of the Act of ₹ 3,61,774/- and ₹ 32,141/- is either wrong or excessive and the same now requires to be deleted in full or reduced substantially. 9. The appellant reserve his right to add, alter, modify or delete any grounds of appeal on or before the date of final hearing. 2. The facts in brief are that the assessee is an individual and having salary income being employed as Chartered Accountant. He filed his return of income for the A.Y. 2012-13 by way of e-filing on 28.07.2012 declaring total income of ₹ 2,02,437/-. Assessee had purchased an agricultural land at Gram Ahirkhedi Tehsil Dist. Indore, on 19.10.2011 at sale consideration of ₹ 60,00,000/-. On the basis of the information received from the office of the registrar assessment of the assessee was reopened u/s 147 of the Act, On the ground that the assessee had purchased an agricultural land thereby he made investment of ₹ 64,66,000/-. In pursuance to the notice u/s 148 the assessee filed return of income declaring income at ₹ 33,12,440/- however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 148 of the Act 02-07-2015 5 Total income declared in the income-tax return filed in response to the notice issued under section 148 of the Act 33,12,440 6 Date of passing of assessment order under section 143(3) r.w.s. 147 of the Act 29-12-2016 7 Total income assessed in the assessment order passed under section 143(3) r.w.s. 147 of the Act 34,12,437 8 Date of passing of order under section 250 of the Act by the Ld CIT(A), Ujjain 12-12-2017 9 Amount by which income of the appellant was enhanced by the Ld CIT(A), Ujjain 43,07,300 10 Total assessed income of the appellant after giving effect of the order of Ld CIT(A), Ujjain 77,19,737 A.4] The case of the appellant for the Assessment Year 2012-13 was reopened for verification of source of purchase of agricultural land by the appellant. The appellant categorically ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her-in-law Gift 5,00,000 5,00,000 NIL 6 Shri Virendra Singh Rajput Father-in-law Gift 7,00,000 7,00,000 NIL 7 Shri Awadesh Singh Rajput Brother-in-law Gift 3,00,000 3,00,000 NIL 8 Shri Ravi Gurjar Friend Loan 9,90,000 NIL 9,90,000 9 Opening balance of capital - Opening Capital 8,43,150 8,43,150 NIL Total 65,74,150 34,64,150 31,10,000 A.6] The appellant during the course of reassessment proceedings specifically lodged a claim before the assessing officer to withdraw the amount of ₹ 31,10,000/- as offered for tax in the income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Awadesh Singh Rajput Gift 3,00,000 NIL 3,00,000 3,00,000 1.8 Shri Ravi Gurjar Loan 9,90,000 9,90,000 NIL 9,90,000 1.9 Opening balance of capital Opening Capital 8,43,150 NIL 8,43,150 8,43,150 Sub-Total [A] 65,74,150 31,10,000 34,64,150 65,74,150 2 Opening balance of capital added twice [Double Addition] Opening Capital 8,43,150 8,43,150 Sub-Total [B] 65,74,150 31,10,000 43,07,300 74,17,300 3 Addition on account of marriage expenses Sub-Total [C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-13 in the most casual and high-handed manner merely for verification of source of purchase of land which is not permissible in law. 1.4.1] It is a settled position of law that reopening cannot be resorted to for verification of source of purchase of asset since the investment need not necessarily come from income of an assessee chargeable to tax. It may be out of income exempted from tax, past savings, loans, gifts, liquidation of investment or sale of another property etc. It is only if there is any definite information that the assessee has some additional income, which is not disclosed by him and is invested in purchase of property, then alone the notice under Section 148 of the Act can be issued, and that too, only after recording the basis on which the Assessing Officer has formed his opinion that he has reason to believe that any such income has escaped assessment. 1.4.2] In the facts of the present case, appellant provided details regarding the source of purchase of land to the assessing officer wherein it was categorically mentioned that the land was purchased out of gifts received from relative, loan received from friend and out of past savings of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by any stretch of imagination be treated as reason to believe but it merely tantamounts to reopening for making fishing and roving inquiries which is not permissible in law. 1.4.5] It has been held in a catena of judicial precedents that reopening cannot be done for verification of source of purchase of asset. Relevant extracts from few of the landmark judicial precedents which have enunciated the above-mentioned principles are reproduced hereunder for your ready reference: 1.5.1] The Hon ble Karnataka High Court in the case of Sri C.M. Mahadeva Vs. CIT [ITA No. 795/2009] has held that: 16. The facts of the aforesaid case are quite similar to the one on hand. In the present case also the reason for reopening is for further investigation to find out the source of investment for the purchase of the property, which is not permissible in law. 18. In the present case, what we find is that there is no nexus or live link between the material which had come to the notice of the Assessing Officer, and the formation of his belief that there was escapement of income by the assessee which may be assessable to tax. Merely by mentioning the income of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid, we are of the opinion that the issuance of notice under Section 148 for assessment or re-assessment under Section 147 of the Act, was not be valid in the facts of the present case. [Emphasis Supplied] 1.5.2] The Hon ble Bombay High Court in the case of CIT v. Smt. Maniben Valji Shah as reported in [2006] 283 ITR 453 (Bombay) has categorically held that: Having heard Shri Desai, learned senior counsel for the appellant, as well as Shri Bhujale, learned counsel for the respondent, it is an admitted position that the assessee had invested a sum of ₹ 2,50,000 for the purpose of purchasing the flat and what was sought to be investigated was the source of income. A bare perusal of the aforesaid notice dated October 10, 1991, clearly indicates that the officer was wanting to know the details with regard to the source of funds with regard to purchase of the said flat for a sum of ₹ 2,50,000. Obviously in the above, there is no question of the Assessing Officer having any basis to reasonably entertain the belief that any part of the income of the assessee had escaped assessment and that such escapement was by reason of omission or fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be self-evident from the reasons recorded. Reasons must be self-speaking and self-defending as held by the Hon ble Delhi High Court in the case of CIT Vs Indo Arab Air Services 283 CTR 0092 (Del) that: There is a long distance to travel between a suspicion that income had escaped assessment and forming reasons to believe that income had escaped assessment. The purported reasons do not show any such exercise by the learned Assessing officer and hence we have no hesitation in holding that the learned Assessing officer has exceed his authority in wrongly acquiring the jurisdiction in the matter. 30. In view of the above discussion, we are of the considered view that the reasons recorded by the learned Assessing officer, are no reasons in the eye of law for assuming jurisdiction in this case for issuing notice under section 148 of the Act. 31. We therefore, quash the assessment orders u/s 144 read with section 147 of the Act dated 30.03.2016 passed in consequence to notice dated 20.03.2015 for Assessment Year 2008-09 in the present appeal. [Emphasis Supplied] 1.5.4] The Hon ble ITAT Lucknow Bench B in the case of Shri Chunnilal Prajapati v. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated. Since we have decided the legal issue in favour of the assessee, therefore, no finding has been given on the other grounds contested by the assessee on merits. [Emphasis Supplied] 1.6] In view of the above discussion and findings reiterated in the judicial precedents cited supra, it is humbly submitted that the case of the appellant as reopened merely for verification of source of purchase of asset did not tantamount to any valid reason to believe that income chargeable to tax has escaped from assessment thereby undermining the validity of entire reassessment proceedings. The reassessment proceedings initiated in the case of the appellant merely for verification of source of purchase of land was therefore grossly unjustifiable and wholly unwarranted and entire reassessment proceedings deserve to be quashed and set-aside on this count itself. 1.7.1] It has been held in various judicial precedents that the assessing officer should have reasons to believe and not reasons to suspect that income chargeable to tax has escaped assessment and reopening based on mere suspicion was held to be bad in law and without jurisdiction. It has been reiterated that susp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. [Emphasis Supplied] 1.8.2] The Hon ble Bombay High Court in the case of Pr CIT Vs Shodiman Investments (P) Ltd. as reported in [2018] 93 taxmann.com 153 (Bombay) has held that: 12. The re-opening of an Assessment is an exercise of extra-ordinary power on the part of the Assessing Officer, as it leads to unsettling the settled issue/assessments. Therefore, the reasons to believe have to be necessarily recorded in terms of Section 148 of the Act, before re-opening notice, is issued. These reasons, must indicate the material (whatever reasons) which form the basis of re-opening Assessment and its reasons which would evidence the linkage/nexus to the conclusion that income chargeable to tax has escaped Assessment. This is a settled position as observed by the Supreme Court in S. Narayanappa v. CIT [1967] 63 ITR 219, that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 200 (Bom)] 6. CIT-V v. Orient Craft Ltd. - [2013] 354 ITR 536 (Delhi) 7. Pr. CIT v. Tupperware India (P.) Ltd. - [2016] 284 CTR 68 (Delhi) 8. Nu Power Renewables (P.) Ltd. v. DCIT, Circle 1(2)(a) - [2018] 94 taxmann.com 29 (Bombay) 1.9] In view of the above, it is humbly submitted that reasons recorded by the assessing officer that income chargeable to tax of ₹ 63,75,000/- had escaped from assessment was not based on any tangible material in possession of the assessing officer so as to prove the live link of concealment of income. Hence, case of the appellant as reopened merely for verification of source of purchase of asset tantamount to reopening for making fishing and roving inquiries which is not at all permissible in law. 7] GROUND NO. 8 CHARGEABILITY OF INTEREST UNDER SECTION 234B AND SECTION 234C OF THE INCOME-TAX ACT, 1961 7.1] The appellant in this ground of appeal has challenged the chargeability of interest under section 234B and section 234C of the Act of ₹ 3,61,774/- and ₹ 32,141/- respectively. 7.2] The interest under these sections is consequential and mandatory in nature. Hence, it is humbly submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the Ld. CIT(A) invoking the provision of section 68 of the Act. The Ld. counsel for the assessee reiterated the submission as made in the written submissions. The submissions of the assessee are reproduced as under: 2] GROUND NO. 2, 4.1 AND 6 CHALLENGING THE ADDITION MAINTAINED BY THE ASSESSING OFFICER AND FURTHER ENHANCEMENT MADE BY THE LD CIT(A) ON ACCOUNT OF GIFTS/ LOAN RECEIVED FROM RELATIVES/ FRIEND 2.1] The appellant in these grounds of appeal has challenged the addition of ₹ 31,10,000/- as maintained by the assessing officer and further enhancement of ₹ 34,64,150/- as made by the Ld CIT(A) on account of gifts/ loan received from relatives/ friend and opening balance of capital. 2.2.1] The income-tax return of the appellant under section 139 of the Income-Tax Act, 1961 was filed on 27-07-2012 wherein total income was declared at ₹ 2,02,437/-. 2.2.2] However, the income-tax return of the appellant in response to the notice issued under section 148 of the Income-Tax Act, 1961 was filed on 02-07-2015 wherein total income was declared at ₹ 33,12,440/- including an amount of ₹ 31,10,000/- which was received as gift/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. [Emphasis Supplied] 2.4.3] The above circular has been judicially noted and approved in many judgments and has been relied upon in support of claim of the assessee. It is quite clear in light of Article 265 of the Constitution of India and Circular issued by the Hon ble CBDT that only legitimate amount of tax due can be recovered and the Department cannot take advantage of ignorance of an assessee as to his rights. Relevant extracts from few of the judicial precedents which have enunciated the above-mentioned principles are reproduced hereunder for your ready reference: 2.5.1] The Hon ble Calcutta High Court in the case of CIT v. Bhaskar Mitter as reported in [1994] 73 Taxman 437 (Calcutta) has held that: 8. The controversy raised in the second question is as to whether the annual letting value of the property determined by the Tribunal could be a figure lower than that returned by the assessee. The principles for determining the annual letting value under section 23 are now well-settled and if the value returned is not in accordance with such princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pprehension can make it taxable. The taxability or the authority to impose tax is independent of admission. Neither there can be any waiver of the right by the assessee. The department cannot rely upon any such admission or misapprehension if it is not otherwise taxable. [Emphasis Supplied] 2.5.3] The Hon ble ITAT Kolkata Bench A in the case of Sushil Kumar Das v. ITO as reported in [2011] 11 ITR(T) 17 (Kolkata)(URO) has held that: 9. We have heard the rival submissions and perused the materials available on record. The moot question arising out of this appeal is whether the income determined by the Assessing Officer on the basis of the return filed by the assessee can be a figure lower than the income returned by the assessee. It is a well settled that the principle for determining the taxable income of the assessee under the Income-tax Act should be within the purview of the law in force. If the taxable income determined by the Assessing Officer is not in accordance with such principle it is open to the assessee to contend the same before the higher authorities to follow the correct application of law to determine the actual taxable income of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Shelly Products as reported in [2003] 261 ITR 367 (SC) has categorically held that: 31. We cannot lose sight of the fact that the failure or inability of the revenue to frame a fresh assessment should not place the assessee in a more disadvantageous position than in what he would have been if a fresh assessment was made. In a case where an assessee chooses to deposit by way of abundant caution advance tax or self-assessment tax which is in excess of his liability on the basis of return furnished or there is any arithmetical error or inaccuracy, it is open to him to claim refund of the excess tax paid in the course of assessment proceeding. He can certainly make such a claim also before the concerned authority calculating the refund. Similarly, if he has by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income-tax, or is not income within the contemplation of law, he may likewise bring this to the notice of the assessing authority, which if satisfied, may grant him relief and refund the tax paid in excess, if any. Such matters can be brought to the notice of the concerned authority in a case w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E BY THE LD CIT(A) IS NOT SUSTAINABLE EVEN ON MERITS OF THE CASE 2.7.1] The case of the appellant for the Assessment Year 2012-13 was reopened for verification of source of purchase agricultural land during the year under consideration. 2.7.2] The appellant purchased an agricultural land situated at Gram Ahirkhedi, Indore on 19-10-2011 for a consideration of ₹ 64,66,000/- which comprised of basic consideration of ₹ 60,00,000/-, stamp duty of ₹ 3,75,000/- and registration charges of ₹ 91,000/-. 2.8.1] The appellant categorically stated during the course of reassessment proceedings that amount invested in the purchase of agricultural land was out of gifts received from relatives, out of loan received from friend and out of his past savings represented in the form of capital. 2.8.2] Party-wise details of the source of investment made by the appellant which was also provided during the course of reassessment proceedings is as under: S. No Name of the Party Nature of Receipt Relation with appellant PAN Amount [in Rs.] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gross amount [in Rs.] Amount not accepted as genuine by AO/ Addition maintained by AO [in Rs.] Amount accepted as genuine by AO which was enhanced by Ld CIT(A) [in Rs.] Amount in dispute before the Hon ble Bench [in Rs.] 1 Shri Gopal Singh Tomar Gift 17,00,000 11,00,000 6,00,000 17,00,000 2 Smt Nilima Tomar Gift 5,26,000 3,26,000 2,00,000 5,26,000 3 Smt Jasoda Bai Tomar Gift 6,00,000 4,00,000 2,00,000 6,00,000 4 Smt Kirti Tomar Gift 4,15,000 2,94,000 1,21,000 4,15,000 5 Smt Madhu Bala Rajput Gift 5,00,000 NIL 5,00,000 5,00,000 6 Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Confirmation of Gift duly notarized 75 5 Smt Madhu Bala Rajput, Mother-in-law of the appellant Gift of ₹ 5,00,000/- 5.1 Confirmation of Gift duly notarized 76 5.2 Sale deed of agricultural land which was the source of making gift to the appellant 77-82 6 Shri Virendra Singh Rajput, Father-in-law of appellant Gift of ₹ 7,00,000/- 6.1 Confirmation of Gift duly notarized 89 6.2 Sale deed of agricultural land which was the source of making gift to the appellant 90-94 7 Shri Avdhesh Singh Rajput, Brother-in-law of appellant Gift of ₹ 3,00,000/- 7.1 Confirmation of Gift duly notarized 83 7.2 Sale deed of agricultural land which was the source of making gift to the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but not in the hands of the appellant. Considering the age of father of the appellant and his past savings, amount of gift of ₹ 17,00,000/- requires to be accepted as genuine and reasonable 2 Smt Nilima Tomar AOXPT5375G 5,26,000 In absence of income-tax return, source of gift is not fully acceptable but considering the past saving, gift of ₹ 2,00,000/- was accepted and ₹ 3,26,000/- is treated as unexplained Confirmation of Gift duly notarized was filed before the assessing officer. The PAN of donor was also provided. If the assessing officer was not satisified with the source of gift made by donor, he could have made addition in the hands of the donor but not in the hands of the appellant. Considering the age of mother of the appellant and her past savings, amount of gift of ₹ 5,26,000/- requires to be accepted as genuine and reasonable 3 Smt Jasoda Bai Tomar N.A. 6,00,000 In absence of income-tax return, source of gift is not fully acceptable but considering the past saving, gift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 820L 9,90,000 The assessee has not filed the confirmation and bank account. The assessee has also not provided complete address. The assessee has failed to discharge the primary onus lying on him to explain the source. Hence same is treated as not properly explained Confirmation of accounts duly signed was filed before the Ld CIT(A). The complete address and PAN of the lender was also provided before the Ld CIT(A). If the Ld CIT(A) was not satisified with the source of loan given by lender, he could have made addition in the hands of the lender but not in the hands of the appellant 9 Opening balance of capital - 8,43,150 The assessee is a chartered accountant from January 2009 and filed the return of income from A.Y. 2011-12. The submission of the assessee in this regard is considered The assessing officer duly accepted the contentions of the appellant. However, the Ld CIT (A) grossly erred in adding this amount to the total income of the appellant under section 68 of the Act even when such amount of capital was duly justified looking at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have been made to the total income of the donor/ lender but not in the hands of the appellant. Supporting documentary evidences so as to establish the source of gifts made by the relatives were also filed before the assessing officer and the Ld CIT(A) in respect of gifts received from few of the relatives thereby justifying the source of source of funds received by the appellant. The lower authorities did not doubt the genuineness of the transaction of gift and also the identity of the donors/ lender. Hence, there was no rationale behind presuming that the appellant routed his unaccounted/ undisclosed income in the garb of gift/ unsecured loan. The appellant qualified as a chartered accountant in the month of January, 2009. He was a salaried person and received nominal income during the year under consideration and in the subsequent years. The Department failed to bring on records any other source of income of the appellant apart from his salary income. Looking at the circumstantial evidences and applying the test of human probability which is heavily relied upon the Department of late, the onus was on the Department who was alleging that the apparent was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oof, considering that the donor was an NRI at the given point of time in 1984, might have been asking for too much. In any event this Court is of the opinion that since a concurrent finding has been rendered largely based on facts no interference is called for. Reference is accordingly rejected. [Emphasis Supplied] 2.14.2] The Hon ble Andhra Pradesh and Telangana High Court in the case of Pendurthi Chandrasekhar v. DCIT, Central Circle-11, Hyderabad as reported in [2018] 407 ITR 179 (Andhra Pradesh and Telangana) has held that: 21. The further observation of the AO that the assessee appeared to have opened the bank account only for the purpose of receiving cash in the guise of a gift, is also flimsy. When the donor herself has given a confirmation letter clearly stating therein that she has transferred the amount of ₹ 73,00,000/- to the account of the assessee and further declaring that she gave the said gift out of her natural love and affection towards her nephew, the AO ought not to have entertained further doubts. If for facilitating receipt of a gift the assessee has opened an account, we do not find anything wrong in that. In our opinion, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not privy to any information regarding the source of funds with Mr. B.P. Bhardwaj. One cannot be oblivious to the fact that such a large gift received from a foreign country is bound to raise suspicion but can not disregard the fact that suspicion and doubt cannot replace proof or translate into reasons, much less reasons for invoking a deeming provision to hold that gifts represent the income of the assessee, particularly in the absence of relevant facts. [Emphasis Supplied] 2.14.4] The Hon ble Bombay High Court in the case of Mrs. Komal Wazir v. DCIT as reported in [2015] 281 CTR 506 (Bombay) has held that: 14. We find that the explanation offered by the respondent-assessee to her possession of jewellery of ₹ 6.57 Lakhs was that the same was gifted to her on occasion of her marriage by her father and father-in-law. This explanation was not contested by the father and father-in-law. The authorities accepted the source of the jewellery in her possession. However, the Tribunal was not satisfied with the evidence produced by her father and father-in-law. This cannot be lead to be conclusion that the explanation offered by the respondent-assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to be so. The revenue could not bring any conclusive evidence to establish that donors from whom the gifts were received were bogus and the assessee's own undisclosed money came back to her en-route bogus gifts. The above position is also supported by the decision of the Hon'ble Gauhati High Court in the case of Nemi Chand Kothari (supra), wherein their Lordships of jurisdictional High Court while explaining the scope of section 68 of the Act has observed as under :- .... The logical conclusion, therefore, has to be that an inquiry under section 68 need not necessarily be kept confined by the Assessing Officer to the transactions, which took place between the assessee and his creditor but the same may be extended to the transactions, which have taken place between the creditor and his sub-creditor. Thus, while the Assessing Officer is, under section 68, free to look into the source(s) of the creditor and/or of the sub-creditor, the burden on the assessee under section 68 is definitely limited. According to the said decision, therefore, creditor's creditworthiness has to be judged vis- -vis transactions, which have taken place between the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fts are normally made by relatives through natural love and affection and do not necessarily require any particular occasion. In the present case on hand, the assessee has discharged his burden by furnishing necessary details before the A.O. The A.O. has summoned the donor and the donor has personally appeared before the A.O. and admitted that he had given gifts to his brother. Under these circumstances, we are of the view that the A.O. was not correct in coming to the conclusion that the assessee has not discharged genuineness of the transactions and capacity of the donor. Therefore, we direct the A.O. to delete the additions made towards alleged gifts of ₹ 15 lakhs for the assessment year 2009-10, ₹ 22,90,000/- for the assessment year 2010-11 and ₹ 43,00,789/- for the assessment year 2011-12 .. [Emphasis Supplied] 2.14.8] The Hon ble ITAT Chandigarh Bench A in the case of Kuldeep Singh v. ITO, Ward-1, Jagraon as reported in [2020] 113 taxmann.com 265 (Chandigarh - Trib.) has held that: 8. We have heard the contentions of both the parties. We are not in agreement with the Ld.CIT(A) holding the explanation of the source of cash deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by assessee's father is placed on record. It is also submitted by Ld. counsel for the assessee, that assessee's father has also expired before some time. 16. We, therefore, in the given facts and circumstances of the case and looking to the peculiarity of the facts wherein in the donor has expired after signing an affidavit for the gift given to his son, find no justification in the action of the Ld. AO making the addition for unexplained investment u/s 69 of the Act, since the assessee has duly explained the source of ₹ 2,50,000/- being receipt from his father. Accordingly addition u/s 69 of the Act is deleted. Thus, ground no. 2 3 stands allowed. [Emphasis Supplied] 2.14.10] The Hon ble ITAT Indore Bench in the case of Shri Sunil Sojatia vs ACIT as reported in (2018) 54 CCH 0110 IndoreTrib has held that: 10. Ground No.5 is against confirming the addition of ₹ 3,70,000/- made u/s 68 of the Act. It is stated by the Ld. Counsel for the assessee that the amount was received from the minor children of ₹ 3,70,000/-. He submitted that the assessing officer and CIT(A) both erred in not allowing the claim of the assessee and making a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt had been issued in the name of B, the burden laid on the department to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of B. A simple way of discharging the onus and resolving the controversy was to trace the source and origin of the amount and find out its ultimate destination. So far as the source was concerned, there was no material on the record to show that the amount came from the coffers of the respondent-firm or that it was tendered in B Calcutta branch of the Central Bank, on behalf of the respondent. As regards the destination of the amount, there was nothing to show that it went to the coffers of the respondent. On the contrary, there was positive evidence that the amount was received by B. It would thus follow that both as regards the source as well as the destination of the amount, the material on the record gave no support to the claim of the department. [Emphasis Supplied] 2.17.2] The Hon ble Rajasthan High Court in the case of Aravali Trading Co. v. ITO as reported in [2008] 220 CTR 622 (Rajasthan) has held that: 19. This Court held by the parity of reasonings which prevailed in Daulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee about the receipt of ₹ 16,000 from Devendra Sankhla was rejected on the ground that on inquiry from Devendra Sankhla the creditor could not satisfactorily explain source wherefrom whether he could have advanced ₹ 16,000, looking to his income and family expenditures. In other words, the cash credit in the name of Devendra Sankhla was rejected on the ground that the assessee has failed to prove source wherefrom deposit or advance by Sri Devendra Sankhla could be made. This finding has been consistently affirmed by CIT(A) as well as by Tribunal. We are of the opinion that in rejecting the explanation of the assessee on the undisputed facts is founded on erroneous application of law in the matter. While it was the assessee's burden to furnish explanation relating to such cash credits, the assessee's burden does not extend beyond proving the existence of the creditor and further proving that such creditor owns to have advanced the amount credited in the account of assessee to him. However, the burden does not go beyond to put the assessee under an obligation to further prove that wherefrom the creditor has got or procured the money to be deposited or advanced to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SATISFACTION OF THE AO AND NOT OF THE CIT(A) 3.1] The appellant in this ground of appeal has challenged the enhancement of ₹ 34,64,150/- as made by the Ld CIT(A) on account of gifts received from relatives and opening balance of capital of the appellant by invoking the provisions of section 68 of the Income-Tax Act, 1961 more so when section 68 of the Act talks about satisfaction of the AO and not of the CIT(A). 3.2.1] The relevant extract of the provision of section 68 and section 2(7A) of the Income-Tax Act, 1961 is reproduced hereunder for your ready reference: Cash credits. 68. 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 year: Definitions. 2. In this Act, unless the context otherwise requires,- . (7A) Assessing Officer means the Assistant Commissioner or Deputy Commissioner or Assistant Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs ACIT, Central Circle-2,Jaipur vide its order dated 30- 10-2017 in ITA No.385/JP/2017 (Assessee's appeal) for the Assessment Year 2012-13 by observing as under:- 8.4 We have heard the rival contentions and perused the materials available on record. In this ground, it is noted that the AO made the addition of ₹ 3,68,27,500/- out of which the ld CIT(A) deleted the addition of ₹ 2,86,27,500/- and sustained the addition of ₹ 82.00 lacs as mentioned at para 3.2.2. and 2.1.4.6 2.1.4.7 of the ld. CIT(A) s order (supra). The question arises as to whether the ld CIT(A) can make the addition u/s 68 of the Act or not. For this purpose, the definition of Section 68 of the Act is as under:- 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 year. From the above definition, it is noted that Section 68 of the Act does not empower the ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Ld CIT(A) on account of gifts received from relatives and opening balance of capital by invoking the provisions of section 68 of the Act is totally unjustifiable and uncalled for in view of the settled legal position that CIT(A) is not an Assessing Officer as per the provision of section 2(7A) of the Act and provision of section 68 of the Act talks about the satisfaction of the Assessing Officer and CIT(A) not being an Assessing Officer cannot resort to making enhancement by invoking the provisions of section 68 of the Act. The enhancement of ₹ 34,64,150/- as made by the Ld CIT(A) deserves to be quashed and set-aside on this count itself. 4] GROUND NO. 7 CHALLENGING THE ADDITION MAINTAINED BY THE ASSESSING OFFICER AND ENHANCEMENT MADE BY THE LD CIT(A) ON ACCOUNT OF GIFTS/ LOAN RECEIVED FROM RELATIVES/ FRIEND IN LIGHT OF THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF SMT. P.K. NOORJAHAN 4.1] The appellant in this ground of appeal has challenged the addition of ₹ 31,10,000/- maintained by the assessing officer and enhancement of ₹ 34,64,150/- made by the Ld CIT(A) on account of gifts/ loan received from relatives/ friend in light of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounted/ undisclosed income. 4.7] It is also a well settled position of law that the provision of section 68 of the Act contains the word may and not shall which implies that even if the explanation offered by the assessee is not found to be satisfactory, even then the assessing officer is not obliged to treat such credit as income in every case. 4.8] The Hon ble Supreme Court of India in the case of CIT v. Smt. P.K. Noorjahan as reported in [1999] 237 ITR 570 (SC) has categorically held that: 2. The appeals relate to the assessment years 1968-69 and 1969-70. The assessee is a Muslim lady who was aged about 20 years during the previous year relevant for the assessment year 1968-69. On 15-11-1967 she had purchased 16 cents of land in Ernakulam and the amount spent by her, inclusive of stamp and registration charges, for this purchase was ₹ 34,628. On 27-11-1968, she purchased another 12 cents of land at Ernakulam and the total investment for this purchase was ₹ 25,902, the explanation of the assessee regarding the source of the purchase money for these investments was that the same were financed from out of the savings from the income of the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue, has urged that the Tribunal as well as the High Court were in error in their interpretation of section 69. The submission is that once the explanation offered by the assessee for the sources of the investments found to be non- acceptable the only course open to the ITO was to treat the value of the investments to be the income of the assessee. The submission is that the word 'may' in section 69 should be read as 'shall'. We are unable to agree. As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in the Parliament, the word 'shall' had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word 'may'. This clearly indicates that the intention of the Parliament in enacting section 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case keeping a closed eye towards the living standard of the appellant and his nominal and limited sources of income. Hence, the addition of ₹ 31,10,000/- maintained by the assessing officer and enhancement of ₹ 34,64,150/- made by the Ld CIT(A) on account of gifts/ loan received from relatives/ friend is grossly unreasonable and requires to be deleted on this count itself. 9. Ld. counsel for the assessee submitted that the authorities below were not justified in making the addition and sustaining the same. Further, the Ld. CIT(A) has grossly erred enhancing the income of the assessee had given sufficient documentary evidences in support of the gift received from the relatives. We find that the Ld. CIT(A) has decided this ground in his order by observing as under: Ground No.2:- Through this ground of appeal the appellant has challenged the addition of ₹ 31,10,000/- u/s 68 of the I.T. Act. A notice u/s 148 was issued to the appellant on 03.06.2015. In response to the notice u/s 148 the appellant filed the return of income declaring total income of ₹ 33,12,440/- on 02.07.2015. The AO assessed the income of the appellant at ₹ 34,12,440 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly a statutory recognition of what was always understood to be the law based upon the rule that burden of proof is on the taxpayer to prove the genuineness of borrowings or other credits in his books, since the relevant facts are exclusively within his knowledge. The expression nature and source has to be understood together as 1 requirement of identification of the source and the nature of the source, so that the genuineness or otherwise could be inferred. It is settled law that while considering the question whether the alleged gift taken by the appellant was a genuine transaction, the initial onus is always upon the appellant and if no explanation is given or the explanation given by the appellant is not satisfactory. The Income Tax Authority can disbelieve the alleged transaction of gift. But the law is equally settled that if the initial burden is discharged by the appellant by producing sufficient materials in support of the gift the onus shifts upon the Income Tax Authority and after verification. The can' call for further explanation from the appellant and in the process, the onus may again shift from the Income 'Tax Authority to the appellant. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the nature of the source, so that the genuineness or otherwise could be inferred. It is settled law that while considering the question whether the alleged gift taken by the appellant was a genuine transaction, the initial onus is always upon the appellant and if no explanation is given or the explanation given by the appellant is not satisfactory. The income Tax Authority can disbelieve the alleged transaction of gilt But the law is equally settled that if the initial burden is discharged by the appellant by producing sufficient materials in support of the gift the onus shifts upon the Income Tax Authority and after verification, he can call for further explanation from the appellant and in the process, the onus may again shift from the Income Tax Authority to the appellant. Therefore, the appellant failed to discharge the burden 0f proof by not establishing the genuineness of transaction and credit worthiness of the donor. (3) Smt, Nilima Tomar Gift of ₹ 5,26,000/- The appellant has allegedly received the gift of ₹ 5,26,000/- from Smt. Nilima Tomar. The AO made the addition of ₹ 3,26,000/- only. The appellant was requested to show cause why a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the Income Tax Authority and after verification, he can call for further explanation from the appellant and in the process, the onus may again shift from the Income Tax Authority to the appellant. Therefore, the appellant failed to discharge the burden of proof by not establishing the genuineness of transaction and credit worthiness of the donor. (4) Smt. Jasoda Bai Tomar Gift of ₹ 6,00,000/- The appellant has allegedly received the gift of ₹ 6,00,000/- from Smt. Jasoda Bai Tomar. The AO made the addition of ₹ 4,00,000/- only. The appellant was requested to show cause why an enhancement of ₹ 2,00,000/- cannot be made considering the remaining amount as income from undisclosed sources. The appellant was requested to furnish the documentary evidences in support of the claim of the gift like bank statement of Smt. Jasoda Bai Tomar and corresponding entry in appellant's bank statement. Registered gift deed, occasion of the gift source of income of Smt Jasoda Bai Tomar and copy of income tax return filed by Smt. Jasoda Bai Tomar , creditworthiness of the donor etc. any other document on which appellant rely. The appellant has not furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gift of ₹ 5,00,000/- from ,Smt. Madhubala Rajput. The AO has not made any addition in this regard. The appellant was requested to show cause why an enhancement of ₹ 5,00,000/- cannot be made considering the amount as income from undisclosed sources. The appellant was requested to furnish the documentary evidences in support of the claim of the gift like bank statement of Smt. Madhubala Rajput and corresponding entry in appellant's bank statement, Registered gift deed, occasion of the gift, source of income of Smt Madhubala Rajput and copy of income tax return filed by Srnt. Madhubala Rajput, creditworthiness of the donor etc. and any other documents on which appellant rely. Whether the donor falling in the definition of relative as per Income Tax Act from who gift can be received. The appellant has not furnished the above documents in respect of the gift. The appellant only furnished the notarized confirmation of gift only. The other documents asked have not been furnished. The appellant failed to establish the genuineness of the transaction and creditworthiness of the donor. There is no reason to consider the gift of ₹ 5,00,000I- as genuine. Section 68 prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich your rely .Whether the donor is failing in the definition of relative as per Income Tax Act from whom gift can be received. the appellant has not furnished the above asked documents in respect of the (1.. The appellant only furnished the notarized confirmation of gin only. The other documents asked have not been furnished. The appellant failed to establish the genuineness of the transaction and creditworthiness of the donor. There is no reason to consider the gift of ₹ 7OOOOO/- as genuine. Section 68 provides that any cash credit found in the books relating to which appellant offers no explanation about the nature and source thereof or such explanation is unsatisfactory. Such credits could be charged to tax as income of the appellant. The principle embodied in section 68 is only a statutory recognition of what was always understood to be the law based upon the rule that burden of proof is on the taxpayer to prove the genuineness of borrowings or other credits in his books, since the relevant facts are exclusively within his knowledge. The expression nature and source has to be understood together as a requirement of identification of the source and the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h explanation is unsatisfactory, such credits could be charged to tax as income of the appellant The principle embodied in section 68 is only a statutory recognition of what was always understood to be the law based upon the rule that burden of proof is on the taxpayer to prove the genuineness of borrowings or other credits in his book', since the relevant facts are exclusively within his knowledge. The expression nature and source has to be understood together as a requirement of identification of the source and the nature of the source, of that the be inferred. It is settled law that while considering the question whether the alleged gift taken by the appellant was a genuine transaction, the initial onus is always upon the alleged gift taken by the appellant was a genuine transaction, the initial onus is always upon the appellant and if no explanation is given or the explanation given by the appellant is not satisfactory, the Income Tax Authority can disbelieve the alleged transaction of gift. But the law is equally settled that if the initial burden is discharged by the appellant by producing sufficient materials in support of the gift, the onus shifts upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oming to the issue about sustaining of the addition of ₹ 31,10,000/- as declared by the assessee in the return of income. It is contended throughout by the assessee that the declaration made in the return was wrongly made. The assessee had placed on record all evidences regarding receipt of gifts etc. from the family members before this Tribunal also the assessee has placed a chart along with written synopsis mentioning the quantum of gift received from various persons as from the father of assessee had received ₹ 17,00,000/- from mother of assessee received gift of ₹ 5,26,000/- from grandmother of assessee received gift of ₹ 6,00,000/- from wife he received gift of ₹ 4,15,000/- and other relatives Smt. Madhu Bala Rajput, mother-in-law of the assessee gift of ₹ 5,00,000/-, Shri Virendra Singh Rajput father-in-law of the assessee gift of ₹ 7,00,000/-, Shri Awadesh Singh Rajput, brother-in-law of assessee gift of ₹ 3,00,000/- and friend Ravi Gurjar loan of ₹ 9,90,000/-. Looking to the material placed before us, we find that the assessee has placed sufficient evidence to prove the receipt of gift received from his father amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect he would delete the remaining addition made in this respect. The grounds of the assessee are partly allowed in the terms indicated hereinabove. 12. Ground No.5 is against the disallowance of opening balance of capital. Ld. counsel for the assessee reiterated the submissions as made in the written submissions. The submissions of the assessee are reproduced as under: 5] GROUND NO. 5 CHALLENGING THE ENHANCEMENT OF ₹ 8,43,150/- MADE BY THE LD CIT(A) ON ACCOUNT OF OPENING BALANCE OF CAPITAL OF THE APPELLANT 5.1] The appellant in this ground of appeal has challenged the enhancement of ₹ 8,43,150/- made by the Ld CIT(A) on account of opening balance of capital of the appellant. 5.2] A table summarizing the addition of ₹ 31,10,000/- made by the assessing officer and enhancement of ₹ 34,64,150/- made by the Ld CIT(A) is as under: S. No Name of the Party Nature of Receipt Gross amount [in Rs.] Amount not accepted as genuine by AO/ Addition maintained by AO [in Rs.] Amount accepted as genuine by AO which was enhanced by Ld CIT(A) [i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the assessee that the ld. CIT(A) did not consider opening capital of ₹ 8,43,150/-. This opening capital was out of gift from father and other family members. Ld. CIT(A) ought to have considered this. We find that the Ld. CIT(A) had decided this issue in para 4.8 of the impugned order as under: Opening Capital ₹ 8,43,150/- The appellant had shown the opening balance of ₹ 8,43,150/-. The appellant was requested to furnish the documentary evidences in support of his claim. The appellant submitted that he is earning from 2004 regularly a semi-qualified and from 2009 as qualified chartered accountant. The appellant has not furnished the documentary evidences like salary certificate and proof of filing of return of income in the earlier years. The appellant failed to establish that he was earning any income and paying taxes. In the absence of any evidences, therefore, the income of the appellant is enhanced by ₹ 8,43,150/-. Penalty proceedings u/s 271(1)(c) are separately initiated on this enhancement. From the above, it is clear that the opening balance was part of the enhancement made by the ld. CIT(A) as we have deleted the enhancement. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that he had met the expenses incurred for the Singapore trip. In her Will which was probated, the assessee's mother had mentioned about this affidavit sworn in January 1996. It was also brought on record that the marriage expenditure in respect of booking the hall was made by Dharmambal Namasivayam Trust. These explanations were accepted by the Tribunal. The addition made by the Assessing Officer is purely a guess work and the Tribunal has rightly deleted the addition made by the Assessing Officer. [Emphasis Supplied] 6.5.2] The Hon ble ITAT Indore Bench in the case of Shri Rajat Maheshwari v. DCIT as reported in (2019) 34 ITJ 557 (Trib. - Indore) has held that: 8. Ld. Counsel for the assessee contended that the addition is merely estimated because number of guests were much less and the list was a proposed list and not a final list of the invitees who attended the ceremony. On going through the submission made by Ld. Counsel for the assessee before the lower authorities as well as the loose papers impounded during the course of search we observe that at page 1 to57 of BS-4 and page 1 to 97 of BS-12 list of tentative invitees were 1589 persons but in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r but it would not prove the case of the Assessing Officer to make higher estimate of marriage expenses. 20. Considering the totality of the facts and circumstances noted above, we do not sustain the additions made by the authorities below. We, accordingly, set aside the orders of authorities below and delete the addition of ₹ 8lacs on account of marriage expenses. [Emphasis Supplied] 6.6] In view of the above, it is humbly submitted that lump sum addition of ₹ 1,00,000/- made by the assessing officer on account marriage expenses was wholly based upon assumptions and guess work and therefore, it requires to be deleted in entirety 16. On the contrary, Ld. Sr. DR opposed the submission made by the Ld. counsel for the assessee 17. We have heard the rival submissions and perused the materials available on record. Looking to the facts of the case, we do not see any infirmity into the finding of the authorities below. The addition made on account of low marriage expenses is hereby sustained. 18. Ground No.8 of the assessee s appeal is against charging of interest is consequential, we hold accordingly. 19. Ground No.9 is general in nature which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no concealment of filing of inaccurate particular of income. The assessment was reopened purely on the basis of verification of source of investment made in the immovable property. He submitted that the requirement of law is not satisfied as the authorities below have not made specific charge whether the assessee was guilty of furnishing of inaccurate particulars of income or concealing of the particulars of income. 24. On the contrary, Ld. Sr. DR opposed the submission and supported the order of the authorities below. Ld. Sr. DR submitted that the authorities below were justified in initiating the penalty proceedings and imposing the penalty. 25. We have heard the rival submissions and perused the materials available on record and gone through the orders of the authorities below. In this case in quantum appeal (ITANo.86/Ind/2018) substantial addition made by the assessing officer has been deleted and rest of the additions made has been set aside for verification of the assessing officer. Under these facts, we hereby set aside the penalty order and direct the AO to delete penalty in respect of additions deleted and additions in respect of issues which have been set aside in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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