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TMI Blog2022 (7) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... al land in support of which Khatauni of agricultural land at village Tanda and Bairakh were filed. The assessee had shown agricultural income at Rs.25,000 in the year under consideration which has been accepted by the A.O. 4. Because total deposit in the bank account of assessee son were 15,03,900 out of which Rs.7,00,000 were received as loan from relatives which has wrongly been treated by the learned A.O. as unexplained and also confirmed by learned CIT(A) ignoring evidence / documents filed before him. 5. Because the A.O. is grossly unjustified in stating in Para 4 of Assessment Order that the information called for u/s. 133(6) from all the six parties / relatives, who have given loan to assessee, no response were received from any one of them and in treating the loan amount of Rs. 70,000/- as unexplained and learned CIT(A) also erred in confirming the addition ignoring the facts and documents on record. 6. The observation of the learned A.O. in Para 4 of assessment Order dt.27.12.2017 is wrong and misleading that no reply was filed by any of the 6 parties, to whom notices u/s. 133(6) were issued, ignoring the vital fact that reply by Kalpnath Singh, Manish Singh and Samr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y AO are already submitted." 10. Because the time allowed u/s 133(6) to all the parties, who have given loan to assessee, was extremely short and it was not possible to furnish the information within the time allowed. The notices were send by registered post / speed post: Amount Borrowed (Rs.) Name of Lenders Date of Notice Dispatch date of Notice Service Date of Notice Due Date of Compliance 1,50,000 Manish Singh 13.12.2017 16.12.2017 - 20.12.2017 1,00,000 Kalpnath Singh 20.12.2017 21.12.2017 - 26.12.2017 1,00,000 Surjeet Singh 20.12.2017 21.12.2017 1.1.2018 26.12.2017 1,00,000 Yogesh Singh 20.12.2017 21.12.2017 1.1.2018 26.12.2017 1,00,000 Samrath Singh 13.12.2017 14.12.2017 - 20.12.2017 11. The assessee filed affidavit of notary public sworn by all the 6 persons who gave loan to assessee before the learned CIT(A). The issue for all the 6 parties were identical and a common format was prepared by the assessee himself being on advocate in which the following blank space / were left filled in by hand writing: (1) Name and Address (2) Whether PAN Card or not (3) Source of income agriculture or service (4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 900/- and consequently the addition of Rs. 2,03,900/- was made on account of unexplained and undisclosed income. Thus, the total addition of Rs. 9,03,900/- made by the Assessing Officer to the return of income of the assessee. The assessee challenged the action of the Assessing Officer before the CIT(A) and submitted that the Assessing Officer ignored the confirmation letters of three persons containing the information as required by the Assessing Officer submitted and the confirmation letter of the rest three persons were ready to file but the order was passed by the Assessing Officer before the said information was to be submitted. Thus, the assessee contended that the Assessing Officer has not given the sufficient time to the assessee or to the loan creditors to submit the information. The CIT(A) was not impressed with submissions of the assessee and confirmed the additions made by Assessing Officer. 3. Ground no. 3 is regarding the addition of Rs. 2,03,900/- on account of past savings of the assessee. The learned AR of the assessee has submitted that the assessee is in legal practice as an Advocate since 1976-77 and also having a substantial income from agricultural operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the order of the Assessing Officer that the Assessing Officer has accepted that the assessee is in the profession of law since last so many years and also has an agricultural income and therefore, it cannot be denied that he is having no savings. The Assessing Officer then observed that in the absence of any credible evidence, the past savings was accepted at Rs. 6,00,000/-. It is pertinent to note that the Assessing Officer has not given any basis for acceptance of past savings at Rs. 6,00,000/- when the assessee in in the legal profession for last more than 40 years as well as having the agricultural land holding and agricultural income. Therefore, the estimation of the Assessing Officer without any basis at Rs. 6,00,000/- as against the claim of Rs. 9,03,900/- is arbitrary and unjustified. Even otherwise the savings of Rs. 8,00,000/- in the legal profession of more than 40 years as well as the proof of agricultural land holding of the assessee is not an excessive claim and therefore, in the absence of any contrary material or fact brought by the Assessing Officer, the denial of this claim of past savings and restricting the same to Rs. 6,00,000/- as against Rs. 8,03,900/- is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t point or called upon the assessee to produce any documentary evidence in support of the contents in the affidavit. Thus, the learned AR has contended that assessee could not produce the evidence during the assessment proceedings because the Assessing Officer has not given the sufficient time to the loan creditors or to the assessee to produce the relevant details and information called by the Assessing Officer while issuing the notice under section 133(6) of the Act. He has pointed out that the Assessing Officer has issued the notice under section 133(6) at the fag end of the limitation period of framing the assessment leaving no time to comply with within the due date given by the Assessing Officer. Further, when these informations were ready to be submitted before the Assessing Officer, he passed the assessment order on 27th December, 2017. Some of the notices were issued on 21st December, 2017 and therefore, passing the order on 27th December, 2017 itself shows that the Assessing Officer has not given sufficient opportunity and time to furnish the requisite details and information called by the Assessing Officer vide notice issued under section 133(6) of the Act. Thus, he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and no confirmation/information was received from anyone who has given him loan. Therefore, Rs.7,00,000/- is treated as an unexplained/undisclosed income of the assessee and the same is added into the total income of the assessee." 9. The Assessing Officer has stated in the assessment order that enquiry letter under section 133(6) of the Income Tax Act were sent to the address of the persons as provided by the assessee calling for information regarding the amount and mode of payment, bank account etc,. The Assessing Officer further stated that no response was received from any of them and consequently the Assessing Officer rejected the explanation and made the addition. It is pertinent to note that the Assessing Officer issued the notices under section 133(6) dated 13.12.2017 and 20.12.2017. The details of the date of notices, dispatch of the notices and due date of compliance is given by the assessee in ground no. 10 itself which is again reproduced as under:- Amount Borrowed (Rs.) Name of Lenders Date of Notice Dispatch date of Notice Service Date of Notice Due Date of Compliance 1,50,000 Manish Singh 13.12.2017 16.12.2017 - 20.12.2017 1,00,000 Kalpnath Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee furnished all those details alongwith confirmation in the shape of affidavits of the loan creditors during the appeal proceedings before the CIT(A). The CIT(A) though called for a remand report from the Assessing Officer however, the Assessing Officer has objected to the admission of the additional evidence in the remand report which is reproduced by the CIT(A) at pages 5 and 6 of the impugned order as under:- 1) Appeal memo/written submission, containing brief facts and grounds of appeal, on which comments are sought, is not signed by the appellant and therefore deserve to be rejected out rightly being a non-entertainable piece of document. 2) Two additions have been made by the AO and both are based on well recorded findings of the AO and deserve to be confirmed. 3) Since the assessee had failed to prove claim of loan before the AO as all ingredients of the section 68 were not proved by him, the addition of Rs. 7 lakhs was justified. Though, it was obligatory on the part of the assessee to prove identity, genuineness of transaction and creditworthiness of the lenders, but the assessee did not produce any evidence to prove those ingredients. He simply filed a le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this addition. 10) Before parting with the matter and in addition to the submission made above, it is further submitted that if your good self arrive at the conclusion of genuineness of the cash loans, after through examination of the alleged lenders, then the assessee may be proceeded for penalty u/s 271D of the I-T Act, as he had accepted cash loan in contravention of provisions of section 269SS of the I-T Act. The condition of both, lenders and borrower, being farmer and having no income other than agriculture income is not satisfied." In the remand report, the Assessing Officer instead of examining the evidence furnished by the assessee or examining the loan creditors has straightway objected to the admission of the additional evidence except in para 7 of the remand report the Assessing Officer stated that if the CIT(A) wants to admit these documents, the contents of the same are required to be verified by an examination of deponents. It was requested by Assessing Officer before arriving to any conclusion, the deponent may be examined under section 133(6) of the Act. Thus, the Assessing Officer alternatively desired to verify and examine the deponents before the evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order was passed. Therefore, it is a case of no enquiry conducted by the Assessing Officer to contradict the explanation of the assessee. Even otherwise the assessee submitted the requisite information and evidence before the CIT(A) but instead of examining and verifying the correctness of the evidence produced by the assessee, the same was rejected out rightly. This conduct of the Assessing Officer as well as CIT(A) is not in accordance with the procedure ought to have been adopted by the quasi-judicial authority. There is no dispute that the Assessing Officer can also bring the material to counter the evidence and explanation furnished by the assessee but in the absence of any such material brought on record by the Assessing Officer to prove that the cash credit is in fact the money belongs to the assessee, the addition made by the Assessing Officer is not justified. Thus, the explanation offered by the assessee cannot be rejected by the Assessing Officer without any cogent ground. 12. Further in the absence of any evidence or material to substantiate the rejection of the explanation a presumption against the assessee cannot be raised. An explanation prima facie b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, Shri Pathak has drawn our attention to a decision of the Supreme Court of India in Parikh and Co. v. Commissioner of Income-tax, Bombay, 1956-30 ITR 181 : ((S) AIR 1956 SC 554) (A). In that case, their Lordships of the Supreme Court, in very similar circumstances, held that the rejection of an affidavit filed by an assessee was not justified unless the assessee had either been cross-examined or called upon to produce documentary evidence in support of the affidavit sworn by him. Their Lordships held: "No further documents or vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. The appellants took it that the affidavits of these parties were enough and neither the Appellate Assistant Commissioner, nor the Income-tax Officer, who was present at the hearing of the appeal before the Appellate Assistant Commissioner, considered it necessary to call for them in order to cross-examine them with reference to the statements made by them in their affidavits. Under these circumstances it was not open to the Revenue to challenge the correctness of the cash book entries or the statements ..... X X X X Extracts X X X X X X X X Extracts X X X X
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