TMI Blog2022 (5) TMI 771X X X X Extracts X X X X X X X X Extracts X X X X ..... f advance is income of the assessee or not? - Since, the possession of the land and transfer is not took place this advance receipt is not chargeable to tax under the Act. Now, we have to see that the law permits to receive the money in advance or not? The receipt of money in cash w.e.f. 01.06.2015 considered as specified sum under the provision of section 269SS of the act and since, the money has been received before this date this receipt of advance is also in accordance with the law. Thus, the money so received and noted on this page is not prohibited receipt in the hand of the assessee and considering the nature of the receipt the same is also not chargeable to tax. Merely, the assessee looking to the facts and circumstance expressed his inability to submit the circumstantial evidence the basic nature of transaction in absence of this information does not change its nature of receipt. When the details connected with the transaction are outside the purview of the provision of section 68 as all the circumstantial evidence found in the course of search conducted by the department proves that the money so received is an advance against the sale of agricultural land. The benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the family at the time of search. The submission of the assessee made before the Ld. CIT(A) is duly recorded on the page from 9 to 24, which is very detailed and exhaustive and was relied upon by assessee in addition to the brief submitted before us. No incriminating documents were found to proof that the assessee has made purchase out of books of the jewellery. Looking the detailed finding of ld. CIT(A) and since, the ld. DR has not placed any tangible argument that how and why the finding of the ld. CIT(A) is not correct on fact and on law, in the absence of such argument we find no reason to interfere in the finding of the Ld. CIT(A) and this ground no. 2 raised by the department in this appeal stands dismissed. Unaccounted sale of mustard seed / oil - profit estimated on account of the unexplained sales the separate disallowance u/s. 40A(3) made - HELD THAT:- We confirm the action of the ld. CIT(A) that whole sale consideration cannot be added as income only the related profit can be added in the income of the assessee. As regards the estimation of profit the ld. AR of the assessee has filed the comparative rate of profit before us for two parties having substantial t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Sh. P. C. Parwal, CA For the Revenue : S. Naiyer Ali Najmi, CIT ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM These bunch of four appeals are cross appeal of the assessee as well as of the department and are arising out of the order of the learned Commissioner of Income Tax, Appeals-4, Jaipur [ Here in after referred as Ld. CIT(A) ] for the assessment year 2015-16 assessment year 2016-17 dated 19.08.2019. As this is related to same assessee for two separate assessments year where in the facts are largely similar and issues involved are identical and thus disposed of by a common order. 2. The hearing of these appeals was concluded through audio-visual medium on account of Government guidelines on account of prevalent situation of Covid- 19 Pandemic, both the parties have placed their written as well as oral arguments during this online hearing process. 3. The lead matter is taken for the assessment year 2015-16 and therefore, the facts are drawn from the said records for the purpose of adjudication. 4. The department has challenged the order of the Ld. CIT(A) for assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the Assessee on 04/07/2016 requiring him to file a true and correct return of income as prescribed under Rule 12 of the Income Tax Rules, 1962 within 15 days of the service of the said notice. The assessee filed its return u/s 139 on 30/03/2017 vide acknowledgement no. 12567361029316 declaring total income of Rs. 13,06,680/- and agricultural income of Rs. 12,46,718/-. In response to notice u/s 153A of the Act, the assessee has e-filed its return of income on 08/02/2017 vide acknowledgement no. 615333541080217/- declaring income of Rs. 13,06,680/-. During the course of search cash of Rs. 4,31,265 was found, further various documents were seized from the residence of the assessee. 7. Notice u/s 142(1) dated 04-09-2017 was issued to the assessee and information and details pertaining to the case of the Assessee relevant to assessment of its income were called for u/s 142(1) of the Act by means of a questionnaire. Further, notices u/s 142(1) was issued from time to time. 8. During the course of search, various incriminating documents were found seized from assessee s residential premises situated at Bank Colony, Alwar on vacation of prohibition order. The assessee, duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serial no. AS-1. Ann.-3. Page-wise reply of annexures seized during search operation from residential premises at Vaishali Nagar, Jaipur having serial no. from AS-1 to AS-8. In regard to the entries referred by your good office in the loose papers seized as AS-1 seized from residential premises at Bank Colony, Alwar, entry wise reply of the same enclosed herewith as Annexure-4. We also wish to submit that from the explanation given in respect of seized papers as above, which is corroborating with the nottings mentioned on seized documents, it is clear that the assessee has received advances of Rs. 2.75 Crore during AY 2015-16 and advances of Rs. 1.68 Crore during AY 2016-17 against sale of agricultural land. The summary of receipt of such advances is also mentioned on the page no. 71A of Exhibit No. AS-1, which is evident from bare perusal of the seized paper itself. The various payments in the nature of expenditures, investments etc. found to have been made by the assessee as per the seized papers, have been made out the funds available with the assessee from the source of such advances aggregating to Rs. 4.43 Crore (Rs. 2.75 Crore+1.68 Crore-4.43 Crore) received by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h cash advances as claimed, and in respect of their identity please furnish name, complete postal address, PAN, copy of their ITR, copy of their bank account or cash books and agreement/Ikararnama done in this regard and establish their credit worthiness and genuineness of the transaction made with them. (iii) Please furnish complete ledger accounts since opening to 31.03.2016 of the following persons as mentioned at page no. 71A (back side of page no. 71) of the referred annexure: (a) Smt. Madhuri Gupta. (b) Smt. Renu Gupta. (c) Sh. Brahamdat Modi. (d) Sh. Shaurya Kumar. (e) Sh. Amit Agarwal. (f) Sh. Ronak Kumar. (iv) Furnish the cash flow statement or cash book from 01/04/2014 to 31.03.2015 for the year under consideration. In absence on any of fulfillment of any of the requirement you are asked to show cause as to why the addition of Rs. 2.75 Crore may not be made to the total income of the year under consideration. You are also requested to please furnish the statement of affairs for the year under consideration as required vide this office letter no. 1717 dated 16.11.2017 which is still pending. In response, the assessee vide reply dated 21/12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale of portion/part and parcel of rural agriculture land through broker, belonging to his and his family members with the stipulation that the interest would be paid. Query No. 2. In regard to the details of all the 6 persons from whom such advance against sale of agriculture land was received, it is submitted that such advances were received through brokerls in open market, which is a normal and prevailing practice. All the transactions have been entered through broker. The names of all these persons have been given by the broker/s. At present, the brokers are not in touch with the assessee. Query No. 3. In regard to the complete ledger accounts of the persons as mentioned at page no. 71A (back side of the page no. 71) from whom assessee has received the advances against sale of agriculture land, it is submitted that assessee does not maintain any of books of accounts for his personal transaction, therefore ledger account since opening to 31.03.2016 of the mentioned in the query letter are not available. persons Query No. 4. In regard to the submission of cash flow statement or cash book for the desired period, it is submitted that as stated above the assessee does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt order only but remained silent regarding the sale agreements of the land against which such a huge amount of advances have been said to be received by him. He badly failed to furnish any details in respect of the land against which advances were said to be taken. Also, even the assessee failed to furnish even PAN and address of the persons to whom advances were said to be taken against agricultural land. The assessee submitted that these transactions were entered into through brokers. However, could not provide PAN and complete address of such brokers even. As the assessee has intentionally not furnished the addresses of neither those persons who advanced the money and nor of the brokers to enable this office for any further inquiry either u/s 133(6) or u/s 131 of I.T. Act, 1961 to be conducted. It is quite strange that assessee is unaware of whereabouts of those persons and of the brokers, from whom he had taken such a huge amount of advances. (iii) On being asked about the present status of land, the A/R simply said that these lands are under dispute and subject to adjudication under Courts and above transaction were made The question arises that on account of disputed la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not the advances against the land as claimed but the cash loans (cash credits under the ambit of section 68 of I.T. Act, 1961). 10. While making the assessment order the assessing officer has also added a sum of Rs. 12,46,718/- as bogus agricultural income for the year under consideration. The relevant observation of the assessing and submission on this issue is extracted here in below for the sake of brevity Bogus agricultural income claimed to be set off against surrender: During the search action statement of assessee were recorded and all the seized documents confronted to the assessee. Assessee, after taking into consideration all the transactions recorded in those loose papers and giving a thoughtful consideration to his concealed and unaccounted income, surrendered Rs.2.00 crores on the basis of these loose papers only. However, during course of assessment proceedings, assessee has retracted the said surrender. Out of surrender of Rs. 2.01 crore, only Rs.1,12,92,817/- has been offered as unaccounted income and has contended that, income of Rs. 87,07,183/- was not concealed income at all, and therefore, retracted from taxation. Interestingly, out of total 1,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A-115, Bank Colony, Alwar during the course of search 31,66,065 Total Additional Income 1,12,92,817 Thus, a sum of Rupees 1,12,92,817/- may kindly be considered as income surrendered w/s. 132(4) of the Income Tax Act, 1961 in place of Rs. 2,01,00,000/ and accordingly stated u/s. 132(4) of the Act stands retracted/modified/amended. The assessee has earned the aforesaid additional income from activity of agriculture, business other miscellaneous activities. The submission of assessee was not found tenable. It is observed that this year assessee had offered Rs. 12,46,718/- as non taxable income in the form of agriculture income and in this way benefit of total Rs. 12,46,718/- has been claimed from the income of A.Y. 2015-16 on account of surrender made. It is also worth mentioning here that the statement of Shri B.L.Data were recorded on the occasion of revoking prohibitory order made on his house on 11.12.2015 i.e almost after one month of the search. Therefore, it can't be assumed that assessee was under pressure of search team and have not been given sufficient time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of agriculture income was completely a baseless argument as no one will surrender unaccounted exempt income just to take rebate. the contention of the assessee is just an afterthought and manipulation of the facts and therefore, the same is hereby rejected and no set off of agriculture income so offered is given on account of surrender, out of total addition made. 8.2 Now on the other hand discussion regarding merits of the claim regarding agriculture income. It has been noted that assessee was specifically asked to provide the following details regarding agriculture income vide letter dated 04/09/2017: (a) Please furnish details of agricultural land holding with documentary evidence of ownership from which you have earned agriculture income of Rs. 12,46,718/-. (b) Please furnish details of crops grown, expenditure incurred, product sold during the year in respect of agriculture income. (c) Please furnish copy of Khasra Girdawari for the relevant period in respect of agriculture income. In response, the assessee vide letter dated 21/12/2017 submitted the details of land holding of all the family members and P L account for this income, but still the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Ld. CIT(A) has accepted the contention of the assessee that a sum of Rs. 2.75 cr is not warranted u/s. 68 and addition was deleted. In respect of the agriculture income of Rs. 12,46,718/- offered in his return of income is held as bogus and just an afterthought. Thus, the revenue and assessee has challenged that order of the Ld. CIT(A) and thus these cross appeals are filed before us by the revenue and the assessee. 13. First, we take up the appeal of the revenue in ITA No. 1231/JPR/2019 for assessment year 2015-16 where the solitary ground taken by the department against the deletion of an addition of Rs. 2.75 cr. The grievance of the revenue is that the Ld. CIT(A) has deleted the addition without appreciating the fact that the addition is related to unexplained cash loan and has not appreciated the fact that the assessee has not maintained the books of accounts and also failed to provide the Name, PAN, address of the persons with whom the loans were said to be taken. 14. In respect of the ground taken by the department the Ld. CIT(A) has recorded his detailed findings based on the written submission filed by the assessee and he has given his finding vide para 5 to 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.3 Before comments are made on the action by the ld. assessing officer visa- vis facts of the case it would be worthwhile to discuss general principle relating to section 68 and what constitute books of accounts etc.. Assessee has maintained 'books' 6. The AO before invoking the power u/s 68 must be satisfied that there are books of account maintained by the assessee and the cash credit is recorded in the said books of account. The differences in wordings of section 68 on the one hand and sections 69 and 69A is noteworthy. In the latter sections, the words 'books of account' are followed by 'if any'. In section 68, the words 'if any' are conspicuous by their absence. This only shows that if assessee is not maintaining any books section 68 cannot be applied unlike sections 69 and 69A where assessee not maintaining books does not bar application of those sections. 6.2 The existence of books of account is a condition precedent for invoking of the power. Discharging of burden is a subsequent condition. If the first point is not fulfilled the question of burden of proof does not arise. - Anand Ram Raitani v. CIT [1997] 223 ITR 544 (Gau.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. 'Books of Account' means such books of account as are usual in the business and do not extend to letters, cheques and vouchers from which books of account can be made up. (Per Cave, J., Re. Winslow, 55 LJQB) Loose sheets or scraps of papers cannot be termed as book because they can easily be detached and replaced. Where loose sheets seized from assessee's premises consist of pages torn out of diary and contain no closing balances nor opening balances and is no reconciliation of these entries, such loose sheets cannot be termed as books maintained by the assessee during the previous year as these loose sheets S.P. Goyal v. Dy. CIT [2002] 82 ITD 85 (Mum.)(TM). The two words 'books of account' and 'documents' do not carry the same meaning. A document may necessarily be not a books of account. Section 68 is applicable to any entry credited in the books of account. Section 68 is a deeming provision and it is to be strictly interpreted. Applicability of section 68 cannot be enlarged. Hence, section 68 is not applicable in respect of any entry in document - Dy. CIT v. Raja Udayshankar [2006] 7 SOT 680 (Bang.) If a diary is maintained as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch could not be construed to be a book. The term 'book' is to be construed as it is understood in the common parlance. No special meaning could be assigned to that term. Therefore, the assessee's case could not be put within the ken of section 68.- Kantilal Bros. v. Asstt. CIT [1995] 52 ITD 412 (Pune) 8.2 In the back drop of the above it is clear that the predominant condition is to maintain the books of accounts these conditions needs to be cumulatively fulfilled and in absence of anyone of the fulfilling criteria, the amount cannot be added under section 68 of the act. It is also settled law that the onus to prove the genuineness of the credit is upon the assessee. The main plank of the AO is that the assessee has failed to prove the identity, creditworthiness and genuineness of the transaction of the loan was received by him. The counter contention of the appellant is that since the amount is not found credited in the books of an assessee since the assessee is not maintaining any books of accounts itself addition under section 68 is not permissible. There is no dispute to the fact that the assessee is not maintaining any books of accounts. Though the phra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant in this regard has relied upon various case laws wherein such view is adopted. Since there is no contrary judgment and based on simple interpretation of s. 68, I hold that addition of Rs. 2,75,00,000 is not warranted u/s 68 and hence same is deleted . 9. Even looking otherwise, it is seen that the appellant has explained that the amount received is towards sale of agricultural land. The AO has treated as amount borrowed, but the same is unexplained cash credit within the meaning of s. 68 of the act. Thus, there is no dispute at least to the extent that the amount is borrowed though the explanation of AO and appellant is different but the in the final analysis, the amount is in the nature of capital receipts and not revenue receipts. It is equally settled law that only such sum as is in the nature of revenue receipts are taxable and not capital receipts. On this count also, the amount could not have been assessed to tax. 10 All other grounds taken in this regard are only being arguments advanced and not a different grievance other than addition of Rs. 2,75,00,000, the same are not required to be adjudicated. Since the addition was made u/s 68, but since the appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch books account and other documents true; and (iii) that the signature and every other of such books of account other documents which purport to be the handwriting any particular person which may reasonably be assumed to have been signed or to be in the handwriting any particular are in that person's handwriting, in the case of a document stamped, executed attested, that was duly stamped and executed attested the person by whom purports to have been executed attested. The CBDT in Circular of 2008 dated 12.03.2008 in the explanatory to provisions relating Direct Taxes, clarified rational of introduction section 292C of the Income Act, 1961 which the presumption 132(4A) the Act has been extended to proceedings u/s 153A the Act. The relevant extract from the said circular is reproduced below. 69. Clarification in respect of presumption to seized books of account, money, bullion, jewellery other valuable article or thing to other proceedings under the Income-tax Act. 69.1 The provisions of sub-section (4A) of section 132 provides that the books of account. money, bullion, jewellery or other valuable article or thing found in the possession or control of any person i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in this money-lending business belonged to the assessee, instead of brokerage he would have received the entire interest and in the diary No. 31. the entries of interest received would have been found. The brokerage in the entire year is around Rs. 3.52,000 while if the assessee had received the interest, this amount of interest would have been around 18 per cent (normal rate of interest) which would have been about Rs. 40 lakhs. Thus, diary No. 31, which is seized is itself an evidence in favour of the assessee that he was receiving only brokerage and not the interest and this fact itself indicates that as a broker he arranged the finance for the borrower from the lender and accordingly, the money did not belong to him . On perusal, it is found that diary No. 27 is a ledger giving the accounts of various borrowers. It contains the accounts of the various borrower's and in the same accounts, the assessee has mentioned the names of the lenders in the coded form (initials). As against these names are written the amounts again in code form (for example, 100 indicates Rs.1 lakh) . The due dates on which the borrowers have to repay the amounts are also mentioned and if there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions in A-3 and A-5 are in cash and are not recorded in regular books of account There are common parties in the two sets indicating thereby that some parties have taken money in cash as well as through banking channels. These diaries on right side reflect brokerage received by the assessee from various persons. The assessee is admittedly a finance broker arranging finance for various, persons, i.e.. borrowers and money is obtained from parties, i.e. lenders. The money is generally borrowed for a short period of time which is at many times extended and a mark made in the diary. It seems that assessee is charging brokerage only form the borrowers and not from the lenders. The brokerage varies from 10 to 15 paise per hundred per month arranged for the borrower. The entries in A-3 and A-5 did not reflect that assessee is receiving interest. If the assessee had not arranged this finance from the lender then there was no need for him to write the names of such lenders. It is not possible to believe that assessee intended to hoodwink somebody by mentioning the names of lenders. If presumption under s. 132(4) is raised in respect of A-2 and A-4 then same should be equally and in identi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvanced belonged to the assessee or not, and such presumption about ownership is always rebuttable. Under s. 132(4A) like in s. 114 of Evidence Act, the words used are may be presumed It is not a mandate that whenever books of account, etc. are seized the authority shall necessarily draw the presumption irrespective of any other facts which may dissuade the Court or the authorities from doing so. Thus, when the AO raised the presumption under s 132(4A) about A-3 and A-5 that outgoings so recorded in them are investment for the assessee, then the assessee simultaneously discharged the burden lay on him by submitting that A-2 and A-4 are also a similar record of the events as A-3 and A-5 and once outgoings recorded in A-2 and A-4 are treated as investment of the lenders, the similarly placed diaries A-3, 4-5 also record the outgoings whose money investment belonged to the third parties, i.e., the lenders The AO did not point out any cogent reason as to why the onus lay on the assessee by virtue of presumption under s 132(4A) is not discharged. The onus lying on the assessee regarding explaining the investments in outgoing or about the ownership of the investment is discharged the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable in common list was accepted as true Thus, there is no case for making addition in the case of the assessee under s. 69 and even under 68, in respect of the borrowings in the case of the finance broker. He can at best be assessed only on the finance brokerage. The additions so sustained by CIT(A) under s. 69 are hereby deleted. Conclusion: AO having accepted that the outgoings recorded in two diaries maintained in the normal course of finance business were from lenders to borrowers and the assessee was entitled only to his brokerage, outgoings found recorded in other two diaries with similar particulars could not, he treated as money belonging to the assessee and unexplained investment under s. 69 and there being no material on record so as to fasten the ownership of the outgoings to the assessee, addition was not called for. In the present case also Pg 71A of Annexure AS-1 clearly indicates that the amount is received against the land at Ramgarh. This land was purchased by the assessee and his family members long back and therefore, the transaction noted on this paper cannot be with reference to the purchase of land. On this paper statement of the assessee was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument/ paper, addition u/s 68 cannot be made. In this connection reliance is placed on the following decisions: Aruna Sankhla Vs. DCIT ITA No.484/JP/2016 dt. 01.12.2017 (Jaipur) (Trib.) In this case Hon ble ITAT at para 7.4 of its order held as under: After considering the rival submissions and the materials available on record, we are of the considered opinion that the seized papers cannot be treated as books of account. Furthermore only the commission income can be assessed in the hands of the assessee @ 0.10% on a total of the credits of Rs. 91,67.81.272/ The addition u/s 68 of the Act can he made only if any sum is found credited in the books of the assessee. A book means a collection of sheets of papers bound together with the intention that such binding shall be permanent and papers used are kept collectively in one volume. A book which contains successive entries of items maybe a good memorandum book but until those entries are totaled or balanced or both as the case may be there is no reckoning and no accounts. A book which merely contains entries of items of which no account is made at any time, is not a book of account in a commercial sense. Thus, the addition m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments or material evidence with the Revenue to link flow of unrecorded transactions with the assessee. Since there is no contrary material brought before us by the Revenue to convince us to take a different view, we do not find any merit in this ground of appeal. It is dismissed. DCIT Vs. GSNR Rice Industries Pvt. Ltd. (2021) 90 ITR (Trib.) 114 Chennai. The relevant para 21 of this decision reads as under: 21. The Income Tax Act, 1961 has defined books and books of accounts u/s. 2(12A) of the Act. as per which books and books of accounts includes, ledgers, day-books, cash books, account books and other books, whether kept in the written form or as print- outs of data stored in a floppy. disk, tape or any other form of electro-magnetic data storage device. Therefore, when books of accounts are clearly defined under the Act, then diary, notebook and retrieved data of computer CPU can be considered as books of accounts or not is a question that needs to be considered. From the definition of books' or 'books of accounts, it is abundantly clear that books of accounts means regular books of accounts maintained by the assessee for any previous year to record day to day t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to income as also held by 1.d. CIT(A) at Para 9 of Pg 22 of his order 5. It may also be noted that AO by treating these amounts as loan has made a reference to Addl. CIT for levy of penalty proceedings u/s 2711 for failure to comply with the provisions of section 269SS. Thereafter, the Addl. CIT imposed the penalty u/s 2711 vide order dt. 12.06.2018 (The L.d. CIT(A) has deleted the penalty on the ground that the amount received is against sale of land and therefore, there is no violation of section 269SS against which appeal filed by the department is also fixed for hearing before the Hon'ble ITAT). Thus, there is no dispute between the assessee and the AO that amount has been received. The only difference is that according to the assessee the amount is received as advance against sale of land whereas according to the AO the amount received is loan simplicitor. Therefore, once the AO accept that the amount received is loan and thus, levied penalty u/s 2711) for violation of section 269SS, the same cannot be added to the income as both sections 68 and 269SS are mutually exclusive. Further it can be noted that there is no dispute that the amount received is a capital receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, money, bullion, jewellery and valuable article or thing found in the possession/control of the person would be deemed to belong to the person in whose possession/control it is found and seized and the contents of the books of account or other documents are true. As held in the judicial rulings, the sole exception to this rule is that if it is alleged that the contents are not true or does not belong to that person, then the person alleging so is obliged to establish it. In this regard reliance is placed on the following judgments: Ramanlal P. Chordia Vs. ACIT (2001) 20 CCH 0047 (Pune) (Trib.) Biren V. Savla Vs. ACIT (2005) 24 CCH 0634 (Mum.ITAT) 17. He has submitted that since the facts are identical the appeal of the revenue has no stand and the same is required to dismiss. He submitted that on the contrary there is no other records found in the search which proves that the contentions raised by the assessee is false and is contrary to the finding written on this page. Not only that department has not placed contrary finding that the amount is not an advance against the sale of agricultural land. Thus, the findings of the CIT(A) is correct so far as this recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land against which advance of Rs. 4.43 crores, out of which Rs. 2.75 cr pertains to this assessment year under appeal, is said to be taken with supporting documents such as copy of agreement and copy of sale deed etc., Also the present status of the said deal was asked. (ii) complete details of all 6 persons from which such cash advances are received along with address, PAN, copy of ITR, copy of bank statement, cash book other supporting agreement (iii) he has also called for the ledger account of all the six persons whose name is appearing at the back side of Page 71, (iv) The cash flow statement for the year under consideration. Against the each of the query raised by the assessing officer, the assessee has submitted that the loose paper [ page no. 71A Exhibit AS-1] pertaining to receipt of advances against sale of share in agricultural land by the assessee duly forms part of the material / documents seized during the course of search. This seized document established beyond doubt that all the material/ documents evidencing the claim made by the Assessee duly form part of the seized material during the course of search. Thus, considering the provision of section 292C no addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame is also not chargeable to tax. Merely, the assessee looking to the facts and circumstance expressed his inability to submit the circumstantial evidence the basic nature of transaction in absence of this information does not change its nature of receipt. 22. Whether the details such as ledger account, cash book, cash flow, PAN card, address, bank statement if submitted or not will change the natura of transaction entered by the assessee, rather it will also not change the situation that the land documents could not be made as the dispute is subject to the outcome of the court order. Thus, the contentions raised by the assessing officer while making this addition is not correct to add this advance as income of the assessee under the provision of section 68 of the Act. When the details connected with the transaction are outside the purview of the provision of section 68 as all the circumstantial evidence found in the course of search conducted by the department proves that the money so received is an advance against the sale of agricultural land. The benefit of doubt, thus, goes in favour of the assessee so far as regard the nature of receipt is concerned as section 292C cast a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Rs. 12,46,718/- offered as agricultural income for the year under consideration. The AO has called for the explanation of the assessee about the income disclosed. The submission made by assessee in this regard is reproduced as under : In this regard, it is submitted that the surrender of Rs. 2,01,00,000/- was made without verifying seized papers and verification of fact of his income from the books of accounts and other documents. This surrender of income was made with a view of buy peace of mind and to avoid protracted litigation and to maintain good and cordial relation with the Department. The assessee has worked out the details of additional Income for AY 2010- 11 to 2016-17 and additional Income of Rs. 1,12,92,817/ have been included in the return of income filed in response to section 153A of the Income Tax Act, 1961. The details of such additional Income offered is as under: Sr. No. A. Y. Particulars of Additional Income Amount 1 2010-11 Agricultural Income 13,70,630 2 2011-12 Agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qually settled law that the onus to prove that the income is exempt as per the scheme of the act is upon the assesssee. Thus, if the appellant claims that the income earned by him is exempt as per provision of law, it is he who has to prove that the condition of relevant granting exemption is fulfilled. Having said that, in the light of the present facts, there is no denial of fact that the appellant has declared income as exempt. Therefore, the appellant has to prove that the same is falling within the meaning of agricultural income as per s. 10(1) of the act. Any person claiming agricultural income will demonstrate the land on which such activity is carried on. He will also show what are the crops grown, what is the quantity sold, to whom it is sold and at what rate it is sold. He has to produce. necessary bills for the same. He has also to demonstrate the expenditure incurred for the same. The agricultural income is not generated on paper. The evidence filed does not prove of earning of net agricultural income to the extent of 12,46,718 as claimed by the appellant. As regards the case laws cited all are on the facts of respective cases where the assessee proved that he has agric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, addition made by AO and confirmed by Ld. CIT(A) be directed to be deleted. 30. Then, ld. AR of the assessee drawn our attention to the fact the he has filed before the lower authorities the copy of Khasra Girdawari of agricultural income, copy of income and expenditure account of agricultural income along with the supporting evidence, copy of agreement with Mr. Soharab for sale Eucalyptus trees, copy of declaration of Deepak Data, Ajay Datta and Mohini Datta stating that agricultural income of their land belongs to the assessee. 31. On the contrary the ld. DR relied upon the findings of the lower authorities and has not controverted on any of the facts stated by the assessee in his submission and evidences filed by the assessee except that holding of the assessee is not 230 vigha and his holding is less then 40 vighas of land. The declaration of the family members was filed of late with the CIT(A) and not with the AO 32. The assessing officer has stated that merely the income disclosed is agricultural income he has considered though the offered in return of income as bogus income and charged as income from other source. Whereas the CIT(A) while considering this issue ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t unaccounted sales of mustard seed/oil of Rs.1,21,29,142/-(only 10% of uncounted sales of Rs.1,34,76,825/-sustained) ignoring the fact that the assessee has failed to verify the sale trar.sactions from its group concerns. 5. On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition made on account. cash purchases u/s 40A (3) of the Act of Rs.1,95,06,818/ ignoring the fact that the assessee made purchases in cash and could not have verified from the books of accounts. 6. On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition Rs.1,18,63,659/ made on account of unexplained cash credits without appreciating the fact that during the search proceedings certain loose papers consisting of credit entries found and the assessee could not have verified from his books of accounts. 7. On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition Rs.14,23,639/ made on account of undisclosed interest income despite the fact that assessee has paid interest to various persons against cash loans whereas assessee having cash creditors. 35. As regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of female member to the extent of 500 gms. And for other members to the extent of 100 gms per member should be treated as explained. The Ld. AO did not accepted the same. He held that in the statement recorded during search at assessee premises of himself, his wife and his son, there is contradiction and hence the theory of jewelry of all family members held together is not acceptable. Since the jewelry was declared in the wealth tax returns of the appellant, his HUF and his wife, to that extent the same was considered as explained and balance was treated as unexplained. Thus, addition of Rs. 882.93 gms of gold jewelry worth Rs. 23,66,252/- weighing 945 gms other precious stones worth Rs. 1,11,000/- and silver ware of 1549.6 gms worth Rs. 57335 was treated as unexplained making total addition of Rs. 25,34,587. 39. At the outset, the Ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the Ld. CIT(A) and also relied upon the written submission filed before the bench and the same are reproduced below; 1. In course of search gold jewelery weighing 7181.730 gms and silver articles weighing 45.113 kgs (PB 11) was found from the resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milarly silver items is found to be excessive only to the extent of 1549.6 gms which considering the status of assessee and size of the family can be considered as acquired by way of gift on social occasions. Accordingly, addition made by the AO was deleted. 4. It is submitted that the family of assessee is a joint family comprising of the family of assessee and family of his two sons Sh. Ajay Data and Sh. Deepak Data. The family has residence at Alwar and also at Jaipur. The assessee usually resides at Alwar whereas his two sons and their family normally resides at Jaipur. Therefore, it is not uncommon that the jewellery of the daughter-in-laws of assessee is kept at the residence/ locker at Alwar. Hence, the jewellery so found at Alwar and Jaipur needs to be considered together. The AO has not accepted this contention by referring to the statement of Deepak Data/ Ajay Data, sons of assessee and Mohini Data, wife of assessee. However, these statements were not considered in proper perspective. In the statement of Mohini Devi dt. 05.11.2015 (copy enclosed) in Q.No.1 she stated that her residence is at Alwar and Jaipur. Further in reply to Q.No.2 3 which was with reference to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatus and more customary practices. In the present case also, considering the family background of the assessee, 800 gms of jewellery claimed by her is reasonable particularly when no evidence was found in search to suggest that assessee made any unexplained investment in jewellery. 40. Based on the submission, comments of the assessing officer were called for in remand report from the assessing officer, there is no controverting facts as submitted by the assessee before the lower authorities and ld. CIT(A) has based on the detailed submission of the assessee, considered the joint family size and the fact that the assessee is a regular tax payer, have also filed certain wealth tax return and thus the ld. CIT(A) based on the following finding deleted the addition of Rs. 25,34,587/- made by the assessing officer; I have considered the impugned order as also the contention raised during assessment proceedings and as now submitted before me. It is fact that during course of search no jewelry other than that found as mentioned above was found in respect of any other member of the family. It is also fact that all the members were covered under search and all the premises were searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by the ld. AR of the assessee in addition to the brief submitted before us. No incriminating documents were found to proof that the assessee has made purchase out of books of the jewellery. Looking the detailed finding of ld. CIT(A) and since, the ld. DR has not placed any tangible argument that how and why the finding of the ld. CIT(A) is not correct on fact and on law, in the absence of such argument we find no reason to interfere in the finding of the Ld. CIT(A) and this ground no. 2 raised by the department in this appeal stands dismissed. 43. The third ground raised by the revenue in this appeal is the action of the ld. CIT(A) in deleting the addition made as unexplained cash loan of Rs. 1,68,00,000/- without appreciating the fact that the assessee has not maintained any books of accounts and also failed to provide name, PAN, address of the persons with whom the loans were said to be taken. Similar ground has been taken by the revenue in ITA No. 1222/JPR/2019 for assessment year 2015-16 in assessee s own case. Hence, the decision taken in ITA No. 1222/JPR/2019 shall apply mutatis mutandis in this appeal of the assessee and considering that decision we find no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order referred to the various amounts noted on the seized papers amounting to Rs.9,52,49,567/- and required the assessee to show cause why the same be not treated as unaccounted cash loan/ income. 2. The assessee filed a detailed reply in respect of the individual amount noted on these papers which is reproduced at Pg 18-40 of the order. After considering the same AO accepted that an amount of Rs.1.30 crores are repetition of entries. The remaining entries was tabulated by him date wise as debit entry, credit entry, balance and narration at Pg 42-49 of the order according to which the debit amount is worked out at Rs.4,05,05,446/- and credit amount is worked out at Rs.4,21,40,484/-. The debit amount was considered to be out of the credit amount and therefore, no adverse inference with reference to the debit amount was taken. Out of the credit amount AO separately made addition of Rs.1,68,00,000/- as discussed in Ground No.3 above. From the remaining credit amount of Rs.2,53,40,484/- he identified the credit entries to the extent of Rs.1,34,76,825/- as relatable to sale of mustard seeds/ oil and also noted that assessee has made payment for purchases of Rs.1,95,06,818/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded as the profit of the assessee. The net profit rate had to be adopted and once it was adopted it could not be said that there was perversity of approach. Mohan Sadhani Vs. CIT 304 ITR 52 (MP) (HC) Held that entire sale proceeds cannot be added to income, only NP rate to be adopted. CIT Vs. President Industries 258 ITR 654 (Guj.) (HC) The amount of sales could not represent the income of the assessee who had not disclosed the sales. The sales only represented the price received by the seller of the goods; only the realization of the excess over the cost incurred could form part of the profit included in the consideration for the sales. Since there was no finding to the effect that investment by way of incurring the cost in acquiring the goods, which were sold, had been made by the assessee and that investment was also not disclosed, only the excess over the cost incurred could be treated as profit. Accordingly, only profits embedded in sale proceeds can be taxed. ITO VS. Gurubachan Singh J. Juneja 216 ITR 99 (AT) (Ahd.) (Trib.) (TM) It was held that value of the cash sales can't be added to the total income as there was no material on record that assessee made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the same was disallowed. It is submitted that out of the total amount of Rs.1,95,06,818/-, an amount of Rs.1,45,00,000/- has been given to Padam Trading Co. as security advance out of which Rs.1,43,67,005/- is received back as tabulated at Pg 56 of the assessment order leaving a balance of Rs.1,32,995/- (PB 96, 175, 185 208). Therefore, by giving such advance there is no violation of section 40A (3). Similarly Rs.30 lacs given to Mr. Jain (PB 243) is only an advance on which section 40A(3) is not applicable. Further amount of Rs.10,56,435/- paid is against the amount received as reflected at Pg 56 of the assessment order. In any case once all these transactions are considered by the AO as purchase transaction and the income is estimated by application of g.p. rate, disallowance u/s 40A (3) cannot be made as held in the following cases: CIT Vs. Banwarilal Bansidhar 229 ITR 229 (All.) (HC) When income of the assessee was computed applying the gross profit rate and that when no deduction was allowed in regard to the purchases of the assessee, there was no need to look into the provisions of sec. 40A(3) and Rule 6DD(j). When gross profit rate is applied, that would take c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries. The description mentioned by the AO against each such entries is not challenged by the appellant. The appellant has tried to explain the source out of which such advance is given. The AO has not added such advance paid as paid out of undisclosed income but by treating same as sale proceeds it has been taxed. Therefore, the contention of the appellant has no merit. Another contention raised is that the appellant has not claimed the amount as deduction by way of purchase thereof and hence s. 40A(3) cannot be invoked. Though the appellant has not claimed the amount paid as deduction, if on proper examination of such evidence, it is found that the amount is towards purchases, the AO is required to give deduction when he is taxing the sales. Thus, there is no infirmity in the order of the AO to this extent. It is also contended that the addition is only on the basis of presumption and hence not tenable. I find from the record that before drawing adverse inference, the AO has given specific opportunity of being heard to the appellant. If the appellant does not come forward with any plausible explanation duly supported by way of evidence, there is no infirmity if the AO draws an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. When the gross profit rate is applied, that would take care of everything and there was no need for the Assessing Officer to make scrutiny of the amount incurred on the purchases by the assessee. 17.3 Similarly Hon'ble Karnataka High Court in the case of CIT v. Bahubali Neminath Muttin (72 Taxmann. Com 139) held thus: Therefore, as no such substantial question of law has been framed and the questions pertain to findings of fact, which cannot be said to be perverse as it is evident that the books of accounts of the respondent had been rejected by the assessing authority, in which case the same books of accounts could not be relied upon in an addition on account of trade creditors and also for arriving at the closing stock. This is an established principle as has been held in the decisions relied upon by the respondent namely Indwell Constructions case (supra), Banwari Lal Banshidhar's case (supra), Aggarwal Engineering Company's case (supra)and Amman Steel and Allied Industries, case (supra). 17.4 In view of the above discussion, it can be held that since gross profit rate is estimated to be applied, no further addition can be made invoking the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee which was reflected by the alleged unaccounted sales the finding of the Tribunal that only the gross profit on the said amount can be brought to tax does not call for any interference. The Tribunal was, therefore, justified in deleting the addition of Rs. 10,85,003 made on account of unaccounted cash sales. Thus, following the ratio of that decision we confirm the action of the ld. CIT(A) that whole sale consideration cannot be added as income only the related profit can be added in the income of the assessee. As regards the estimation of profit the ld. AR of the assessee has filed the comparative rate of profit before us for two parties having substantial turnover and the profit declared by them ranging between 3.25 % to 4.56 % as G. P. On the other hand, the ld. DR has requested that as per provision of estimated profit @ 8 % in section 44AD the same may be considered instead of 10 %. Having considered the rival contentions we feel that 8 % being the rate of general rate of estimate for small assessee, whereas the ld. AR has filed the chart showing the rate of profit declared by the assessee engaged in the similar line of activity. Thus it would be the end of justice if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditworthiness and genuineness of the transaction, the same is to be added as unexplained cash credit u/s 68 of the Act. 53. In respect of this addition the assessee has filed a detailed submission before the ld. CIT(A) and also filed before us, the submission filed before us is reproduced as under: Facts: 1. Out of the total credit entries of Rs.4,21,40,484/-, after reducing the amount of Rs.1.68 crores and Rs.1,34,76,825/- for which additions were made separately by the AO as dealt in Ground No.3 4 above, the remaining amount of Rs.1,18,63,659/- was added on the ground that assessee failed to furnish details of these receipts and prove identity creditworthiness of these persons and genuineness of transactions. She further made addition of Rs.14,23,639/ by calculating notional interest of 12% p.a. on such amount. 2. The Ld. CIT(A) at Para 20, Pg 64 held that the amount added by AO are not cash credit, as to these persons the amount was first advanced and then received back. Further amount is not credited in the books of accounts and therefore, section 68 is not applicable. Accordingly, addition made by the AO is deleted. Further at Para 23, Pg 69 70 AO held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrated in p. 58 and 59 are cash credit at all. The narration mentions the same as given to Mr. Ashok Gupta and Mr. Pooran Chand Gupta. Thus, it is the amount advanced and not received and hence the same cannot be considered as cash credit. Even during the assessment proceedings, it was explained that the said sum is temporary advance given. Looking to the table on pg. 42-49 of the order where all the entries in seized material are summarized, it is clear that peak credit was 4.43 crores. Only out of such sum the amount stated in P. 58-59 have been advanced by the appellant. The amount is not credited in the books of accounts maintained by the appellant which is a pre-requisite to make addition u/s 68 of the act. Thus, on either count, the amount could not have been added u/s 68 of the act. Hence the contention of the appellant is accepted and the addition of Rs. 1,18,63,659 made u/s 68 is required to be deleted and which is so ordered now. 55. At the outset the ld. AR of the assessee in addition to the written submission filed before the ld. CIT(A) and before us, has argued that the learned assessing officer in the assessment order made a table listing all the entries as credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 amounting to Rs. 75000.00 is receipt of such amount only. In support of our explanation, we would like to furnish page no. 21 of AS 4 (Annexure 24) on which such entry is stated. By plain reading of this paper, it is evident that the appellant has paid an amount of Rs. 50000.00 and Rs. 25000.00 on 3/7/2015 and 14/9/2015 respectively for the purpose of carrying on agricultural activities and same was refunded back on 27/9/2017 on by the same individual. Since, the amount received is not in the nature of income of the appellant, thus, addition deserves to be deleted. 6.3.4 Entry no.7 In this context, it is submitted that an amount of Rs. 52970.00 was received from Marudhar Trading Company which is evident from seized document itself (Annexure 25). We have already provided expounded nature of transactions of the appellant with Marudhar Trading Company in para no. 3.9. However, it is reiterated that Marudhar Trading Company works similar like Padam Trading Company i.e the appellant has ance secu extended advance security to even Marudhar Trading Company for the purpose of cracking cheaper supply deals through it. Later, after execution of contract with supplier, Marudhar Tradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows:- To Unquote This implies that the Ld. AO has accepted the fact that the amount was given by the Appellant but she has rejected to believe that the said amounts only were received back by the Appellant from the concerned parties just after a short period of time. This proposition as concocted by the Ld. AO is itself contradictory. Further, it is pertinent to note that these entries have been picked from table drawn by the Ld. AO which clearly emphasizes the fact that Ld. AO was cognizant about these details. However, she has deliberately avoided acceptance of the truth in order to tax the appellant without any cogent basis. Furthermore, it is reiterated that the appellant does not maintain books of accounts, thus, he was unable to furnish the same. Also, the amount which has been provided to abovementioned parties was out of funds available with the appellant, evident from cash flow statement drawn by Ld. AO. Thus, it is our humble request to delete the addition of Rs. 7650000.00 since it is only the amount received back by the Appellant from the concerned parties and not his income. When the giving of amount as advances was accepted by the Ld. AO then receiving bac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on offered by the appellant and also, no corroborative evidence has been placed to establish the allegation of the Ld. AO. 56. On the other hand on this issue ld. DR argued that in the absence of regular books of account why the transaction can be considered as money given and then received back. The surrender of income made by the assessee is lump sum and not verifiable. In addition, assessee has disclosed unexplained agricultural income. The advance given to Ashok Gupta and Puran Chand are not verifiable as no regular books are maintained. At the same time he has agreed that while making the table two three entries are repeated and thus he supported the findings of the AO. 57. We have heard rival submission and gone through the facts and figure placed before us. We would like to extract the finding of the Ld. CIT(A), in para 4.2 of his order the same is useful in dealing this ground therefore, the same is extracted here in below 4.2 I therefore, proceed to dispose this appeal by considering grievance of the appellant in respect of specific addition made. For disposal of gound I have perused the submission made by the appellant on two dates, 04.02.2019 22.02.2019. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given his finding on this issue at para 23 the same is reproduced here in below : 23. Having considered the impugned order and submission made before me, I am inclined to delete the addition made. First of all there is no logic in charging interest for the entire year when the entries itself reveal the same to be for part of the year. Even after search as narrated in all the pages, there is no entry stating that any interest was received by the appellant from the person stated in p. 58-59 of the impugned order. The assessment is to be made on the basis of evidence and not on hearsay or presumptions. Neither any person has stated so to have paid any interest nor the seized material state so. The entry of payment of interest is of no consequences for the reason that neither any such interest has been allowed while computing the income nor the appellant have ever claimed the same. The addition being solely on the basis of presumption and not on the basis of any evidence is liable to be deleted. I accordingly delete the addition of Rs. 14,23,639. 61. On the contrary the ld. DR has not controverted the submission and finding of the ld. CIT(A) has relied upon the finding of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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