TMI Blog2022 (11) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... om the aforementioned 18 parties had filed with the A.O duly notarized affidavits of all the aforementioned 18 parties who had admitted of having advanced the respective amounts to the assessee for purchase of land at Village Urkura, Phase No. 108, RIC, Raipur (C.G), Kh No. 100/2, Page 252 to 318 of APB. Also, the respective parties in their 'affidavits' had categorically given the reasons for cancelling the deal and receiving back of the advance/earnest money from the assessee. On a perusal of the aforesaid affidavits , it transpires that all of the said parties were being assessed to tax and had categorically mentioned their PAN in their respective depositions. A.R rebutting the aforesaid claim of the A.O had stated that 8 parties had though appeared before the A.O, however, he had recorded the statements of only 2 parties who had in their respective statements confirmed the transactions in question. It is further the claim of the ld. A.R that the assessee was never intimated by the A.O about the fact that the notices issued to some of the parties were returned unserved. In our considered view though the assessee had duly substantiated the authenticity of the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted against the order passed by the CIT(Appeals)-I, Raipur dated 01.02.2019, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-Tax Act, 1961 (for short 'the Act') dated 30.12.2016 for assessment year 2014-15. The department has assailed the impugned order on the following grounds of appeal before us: 1. Whether on points of law and on facts circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,28,50,000/- made by the AO u/s. 68 of the I.T. Act on account of unexplained cash credits? 2. Whether on points of law and on facts circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,10,00,000/- made by the -AO u/s. 68 of the I.T. Act on account of impugned advance received from M/s. Tirthyatra Investment Properties Ltd. for sale of land.? 3. Whether on points of law and on facts circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,28,50,000/- Rs. 2,10,00,000/- when the assessee had failed to discharge his primary onus to justify the cash credits on account of impugned advance received against sale of land an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh? 8. Whether on points of law and on facts circumstances of the case, the Ld. CIT(A) was justified in deleting the addition. of Rs. 1,28,50,000/- Rs. 2,10,00,000/- made by the AO on account of impugned advance from customers M/s. Tirthyatra Investment Properties Ltd. which is contrary to the ratio of the decisions of Hon'ble Supreme Court in the case of A. Govindarajulu Mudaliar Vs CIT (1958) 34 ITR 807 (SC), CIT Vs M. Ganapathi Mudaliar (1964) 53 ITR 623 (SC), which clearly states that where the assessee failed to prove satisfactorily the source and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assessee, it is not necessary for the Department to locate its exact source? 9. Whether on points of law and on facts circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,28,50,000/- Rs. 2,10,00,000/- made by the AO on account of impugned advance from customers M/s. Tirthyatra Investment Properties Ltd., thereby without considering and distinguishing the ratio of the judgment of the cases such as Rameshwar Prasad Bagla 68 ITR 653(Allahabad) Homi Vs CIT 41 ITR 135, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee who is engaged in the business of real estate had e-filed his return of income for the assessment year 2014-15 on 24.03.2015, declaring an income of Rs. 32,87,130/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee had, inter-alia, shown advance (against land) of Rs. 3.70 crore in his balance sheet for the year under consideration. The assessee on being queried placed on record copies of agreements to sell executed with 23 different parties from whom advances were received through various modes like cheque/RTGS/cash, as under: Particulars Amount Amrik Singh Land Adv. 100000.00 Anil Verma Land, Adv. 500000.00 Anita Chandel 500000.00 Chhaya Yadav 400000.00 Kamlesh Sahu S/o. Pitamberlal Land Adv. 500000.00 Kishor Agrawal Land Adv. 40000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the stamp papers were not his and he had during the relevant period suspended his work as that of a stamp vendor. Elaborating on his aforesaid contention, it was stated by him that as he had during the period 26.07.2010 to 31.03.2014 not carried out any work of purchase/sale of stamp papers, therefore, there was no question of having sold the stamp papers in question. It was further clarified by him that he had only subsequent to 30.04.2014 got back into his work of purchase/sale of stamp papers and since then had been filing the complete details with the Sr. District Registrar, Raipur. Once again he referred to his affidavit and the letter dated 21.12.2016 that was filed with Sr. District Registrar, Raipur, wherein the aforesaid facts were deposed by him. The A.O on the basis of the aforesaid facts observed that the assessee had filed false agreements to sell that were claimed to have been executed with the following 18 parties: S.No. Name of the purchaser Stamp No. S. No. with date of sale of stamp Amount received by the assesee as advance for land. 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of 03.05.2013 500000/- 18. Smt. Sudha Chandel P-580381 322 of 03.05.2013 500000/- Total Amount 1,28,50,000/- The A.O on the basis of his aforesaid observations called upon the assessee to explain that now when the stamp papers on which the impugned agreements to sell that were claimed to have been executed with the aforementioned 18 parties were proved to be fake, therefore, why the amount of Rs. 1,28,50,000/- that was shown to have been received from the aforementioned 18 parties may not be held to be his unaccounted income. In reply, the assessee placed on record affidavits of all the aforementioned parties wherein they had duly confirmed of having given advances to the assessee for purchase of land. However, the A.O did not find favour with the aforesaid explanation of the assessee and rejected the same for the following reasons: (a) Out of the total land advance of Rs. 3,70,00,000/- all the advance has been returned to the purchaser due to land agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riting in back of stamp, which is written by the stamp vendor is same as used in the above case of Zafar Ali, Stamp Vendor. (c) The assessee in his submission dated 26.12.2016 in para 10.1 of page no 13, it is submitted that he is enclosing the ledger account and bank statement of the M/s. Trithyatra Investment Properties Ltd., Raipur but the submission was only supported with ledger account of the purchaser company. (d) Looking to the status of the purchaser company it is not possible to give such a huge amount to the assessee. (e) The purchaser company has cancelled the agreement and not purchased the land for which the land advance was given. 5. It was further observed by the A.O that though the assessee had made investments in exempt income yielding shares but had not offered on a suo-motto basis any disallowance u/s. 14A of the Act. Accordingly, the A.O worked out the disallowance u/s. 14A r.w.r 8D(2)(iii) at an amount of Rs. 6,52,712/-. 6. The A.O on the basis of his aforesaid observations after. inter alia, making the aforesaid additions/disallowances, vide his order passed u/s. 143(3) dated 30.12.2016 assessed the income of the assessee at Rs. 3,77, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties as unexplained cash credits u/s. 68 of the Act. The CIT(Appeals) was also not persuaded to subscribe to the adverse inferences which were drawn by the A.O by relying on the standalone statements of the stamp vendors. The CIT(Appeals) observed that the duly substantiated claim of the assessee of having received the aforesaid amounts towards advance/earnest money from the aforementioned 18 parties could not have been dislodged only for the reason that the stamp vendor concerned had acted in an irresponsible manner and not properly maintained his records. In fact, it was observed by him that now when all the 18 parties had themselves confirmed the transactions in question and admitted of having advanced money to the assessee, therefore, merely on the basis of suspicion that found its roots in the uncorroborated statements of the stamp vendors that the claim of the assessee could not have been summarily rejected and impugned additions made in his hands. The CIT(Appeals) further observed that Shri Sabbir Ali (supra) had filed an 'affidavit' dated 12.02.2017, wherein he had duly confirmed of having sold the stamp papers on which the agreement to sell was executed between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration. Also, the CIT(Appeals) was of the view that though Shri Zafar Ali (supra) had claimed that he had restarted his work of purchase/sale of stamp papers from 31.03.2014, however, there was no material available on record which would irrefutably evidence that he was not carrying out the activities prior to the said date. The CIT(Appeals) on the basis of his aforesaid observations concluded that there was no justifiable reason for the A.O to have drawn adverse inferences as regards the receipt of advance/earnest money by the assessee on the basis of the respective agreements to sell from the aforementioned parties. The CIT(Appeals) was also of the view that now when the assessee had duly substantiated the authenticity of the transactions by placing on record confirmations of the parties who had admitted of having given the respective advances to the assessee, therefore, re-characterization of the amounts received by him from the said parties as unexplained cash credits u/s. 68 of the Act could not be sustained and was liable to be vacated. Accordingly, the CIT(Appeals) on the basis of his aforesaid observations vacated the entire addition of Rs. 338.50 lac that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id addition of Rs. 338.50 lac comprises of two parts, viz. (i) addition towards advances received by the assessee from 18 parties : Rs. 1,28,50,000/-; and (ii) addition towards advance received by the assessee from M/s. Tirthyatra Investment Properties Pvt. Ltd. Raipur.: Rs. 2,10,00,000/-, which are being dealt with as under: (A) Advance received by the assessee from 18 parties: Rs. 1,28,50,000/- 14. On a perusal of the records it transpires that the assessee was in receipt of an amount of Rs. 1.60 crore from 22 parties. The A.O accepted advances of Rs. 31.50 lac that were received by the assessee from four parties. Accordingly, the controversy hinges around the advances which are claimed by the assessee to have been received by him in lieu of agreements to sell from 18 parties, as under: Particulars Amount Amrik Singh Land Adv. 100000.00 Anil Verma Land, Adv. 500000.00 Anita Chandel 500000.00 Chhaya Yadav 400000.00 Kamlesh Sahu S/o. Pitambe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the statement of the aforementioned stamp vendor, viz. Shri Zafar Ali (supra), but despite specific requests by the assessee for cross-examination of the said person he had failed to facilitate the same to him. Be that as it may, we are of the considered view that as observed by the CIT(Appeals) and, rightly so, the claim of the assessee of having received advances from the aforementioned 18 parties (supra) which he had substantiated on the basis of their respective confirmations/'affidavits' could not have been summarily scrapped merely on the basis of the aforesaid unsubstantiated claim of Shri Zafar Ali, Stamp vendor. We, say so, for the reason that as observed by the CIT(Appeals) there could be multiple reasons as to why Shri Zafar Ali (supra) would have declined of having sold the stamp papers in question. Apart from that, we concur with the CIT(Appeals) that the failure on the part of the stamp vendor to properly maintain his records could not have on such standalone basis justified drawing of adverse inferences as regards the genuineness of the transactions under consideration which the assessee had duly substantiated on the basis of supporting documentary eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid persons two parties requested for some further time to effect compliance, while for summons in case of 7 parties were returned unserved. Accordingly, the A.O recorded the statements of the 2 parties who had appeared before him. The ld. A.R rebutting the aforesaid claim of the A.O had stated that 8 parties had though appeared before the A.O, however, he had recorded the statements of only 2 parties who had in their respective statements confirmed the transactions in question. It is further the claim of the ld. A.R that the assessee was never intimated by the A.O about the fact that the notices issued to some of the parties were returned unserved. Be that as it may, in our considered view though the assessee had duly substantiated the authenticity of the transactions of having received advances from 18 parties (supra), but the A.O had failed to dislodge the same by placing on record any such material which would irrefutably disprove the authenticity of the said claim. Also, we are unable to persuade ourselves to subscribe to the view taken by the A.O that the authenticity of the transaction was to be summarily rejected on the basis of the unsubstantiated claim of Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforementioned company during the year under consideration. 19. On a perusal of the records, it transpires that the assessee had received the aforementioned amount of Rs. 75 lac(supra) through banking channel from the aforementioned party. During the year the assessee had repaid an amount of Rs. 40 lacs to the aforesaid company through banking channel. In order to substantiate the authenticity of the aforesaid transaction the assessee had filed with the A.O confirmations of the aforesaid company, viz. M/s. Tirthayatra Investment Properties Ltd. Raipur, Page 186 of APB. Also, the assessee in order to dispel all doubts had filed before the A.O an 'affidavit' of Shri Mukesh Singhania, Director of M/s. Tirthayatra Investment Properties Ltd., Raipur, wherein the latter had deposed of having advanced an amount aggregating to Rs. 2.50 crore for purchase of land at Dumur Talab, Phase No. 35, RIC, Raipur, Ward No. 14, Ishwarichand Shukl Ward, Tah. Dist. Raipur (C.G.), Kh. No. 373/1, area 18500 Sq. ft, which thereafter on the cancellation of the deal was refunded in tranches through banking channel. Copy of the account of the aforesaid party for the immediately succeeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee on the basis of irrefutable documentary evidences had duly substantiated his claim of having received the advance/earnest money from the aforementioned party, viz. M/s. Tirthayatra Investment Properties Ltd., Raipur, and thus, discharged the primary onus that was cast upon it to prove the nature and source of the credit in its books of account, while for the A.O had absolutely failed to dislodge the authenticity of the said claim on the basis of any material proving to the contrary, therefore, there was no justification for the A.O to have dubbed the amount so received by the assessee as an unexplained cash credit u/s. 68 of the Act. We, thus, in terms of our aforesaid observations principally concur with the view taken by the CIT(Appeals) and uphold the deletion of addition of Rs. 2.10 crore, which as observed by us hereinabove was partially made on the basis of incorrect facts. Accordingly, finding no infirmity in the view taken by the CIT(Appeals) who had rightly vacated the addition of Rs. 3,38,50,000/-, we uphold his order to the said extent. Thus, the Grounds of appeal No. (s) 1 to 9 Grounds No. 12, 13 14 (to the extent relevant) raised by the revenue are dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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