TMI Blog2023 (4) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the assessee for investment in land; the source of which was not explained. No evidences were filed to the Assessing Officer, nor to the learned CIT(A)explaining the source of investment. CIT(A) has recorded a finding to this effect that the assessee has failed to prove the source of investment in cash in the land purchased. Even additional evidences filed by the assessee were considered by the Ld.CIT(A) and found to be of no relevance - Decided against assessee. Disallowance of employee benefit expenses and other expenses in the absence of any evidence filed by the assessee to substantiate its claim - HELD THAT:- In the absence of representation of the assessee before us, the findings of the Ld.CIT(A) remain un controverted upholding the disallowances - Decided against assessee. - ITA No. 270/Ahd/2017 - - - Dated:- 22-3-2023 - MRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER For the Assessee : None For the Revenue : Shri Rakesh Jha, Sr. DR ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER : This appeal is preferred by the assessee against the order of the learned Commissioner of Income-tax (Appeals)-1, Ahmeda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 PoojanHit eshbhai Shah PoojanBunglow, Ashwamegh Bunglows-5, Satellite Road, Ahmedabad 1,25,000 10 - 12,50,000 BAWPS30 69Q 1(1)(3 ),Ahd From the above details, the A.O. has observed that assessee has furnished only name, address and PAN of the appellant. The assessee has not proved the creditworthiness and genuineness of the of share capital raised during the year. Further, the appellant has failed to discharge the burden of proof vis a vis credits in the books and the genuineness. Therefore, an amount an of Rs.25,00,000/- is added to the total income of the assessee as unexplained cash credit under section 68 of the Act by the A.O. On the other hand appellant has contended that he has already submitted the details in the prescribed format as asked by the A.O. along with filed the copy of income tax return, PAN, Passport and copy of ROC for issuing of shares. The appellant has also argued that A.O. has not verified all the details submitted at the time of assessment proceedings. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were received through banking channels or that companies existed in the ROC s register do not meet the burden of proof under section 68 of the I. T. Act. The evidence adduced by the assessee has to be examined and not superficially but depth and having regard to the test of human probabilities and normal course of hum conduct. The affidavits submitted by the assessee need not be accepted as a reliable at when there is enough material on record to doubt the veracity of the transaction. In such a case it cannot said that the affidavits can be rejected only after cross verification. In this judgement CIT v/s Nova promoters fin lease private limited in 18 taxmann.com 217 Hon'ble Delhi High Court has made the following observation:- 19. The position thus is that even where a reference of a question of law is made to the High Court under Section 66 of the Indian Income Tax. Act, 1922 or Section 256 of the Income Tax Act, 1961 over which the High Court exercises advisory jurisdiction, and not appellate jurisdiction, where normally the findings of fact recorded by the Tribunal are binding on the High Court, it has been held by the Supreme Court that the findings are not binding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer issued summons u/s.131 and thereafter impounded the shareholders' register, share application forms and share transfer register. It was contended by the assessee in that case that because of the action of the Assessing Officer, it was not able to furnish any details about the share subscribers, The Tribunal found that the allotment of shares was made as per the relevant rules of the Securities Contracts (Regulation) Act, 1956 as well as those of the Delhi Stock Exchange. No evidence had been brought on record by the Assessing Officer to indicate that the shareholders were either benamidars of the assessee-company or fictitious or that the share application monies were the unaccounted income of the assessee-company. The Tribunal accordingly held that the onus that lay on the assessee under sec. 68 stood discharged. 34. In respect of the other assessee, namely, General Exports Credits Ltd., the monies were received by the said company on issue of rights shares to five companies pursuant to the renunciation of rights by several individual shareholders. A search had been conducted on the premises of the assessee, but those renunciation forms were not fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amine the assessment records of the share applicants whose income tax rile numbers were given. Though the Assessing Officer had sufficient time to carry out the examination, he did not do so, but put forth an excuse that the assessee was taking several adjournments. This court observed that it is for the Assessing Officer to manage his schedule and he should have ensured that because of the adjournments he did not run out of time for discharging the duties cast on him by law. It was held that when details were furnished by the assessee, the burden shifted to the Assessing Officer to investigate into the creditworthiness of the share applicants which he was unable to discharge. Thus, the order of the Tribunal deleting the addition was held not giving rise to any question of law, much less any substantial question of law. 36. It is not only relevant to note the above facts, which distinguish those three cases (supra) from the case before us, but it is also relevant tonote the following observations made by this court in the above three cases: There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rged if the creditor/subscriber denies or repudiates the transaction set up by the assessed nor should the AO take such repudiation at face value and construe it, without more, against the assessed. (7) The Assessing Officer is duty-bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation. 2.10. Hon ble High Court also considered other decisions on this issue and held that: 38. The ratio of a decision is to be understood and appreciated in the background of the facts of that case. So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holders' register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under sec. 68 and the remedy open to the revenue is to go after the share applicants in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence or material adduced by the assessee cannot be thrown out without any enquiry. The ratio does not extend beyond that. The boundaries of the ratio cannot be, and should not be, widened to include therein cases wherethere exists material to implicate the assessee in a collusive arrangement with persons who are self-confessed accommodation entry providers . 40. Reference was also made on behalf of the assessee to the recent judgment of a Division Bench of this court in CIT v. Oasis Hospitalities Private Limited, (2011) 333 ITR 119. We have given utmost consideration to the judgment. It disposes of several appeals in the case of different assessees. Except the case of CIT v Oasis Hospitalities P Ltd. (ITA Nos. 2093 2095/2010), the other cases fall under the category of Orissa Corporation (supra). However, in the case of Oasis Hospitalities P Ltd., there is reference to information received by the Assessing Officer from the investigation wing of the revenue on the basis of which it was found that six investors belong to one Mahesh Garg Group who were not carrying on any real business activity and were engaged in the business of providing accommodation entries. They were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubscription monies to the assessee. There was thus specific involvement of the assessee- company in the modus operandi followed by Mukesh Gupta and RajanJassal. Thus, on crucial factual aspects the present case stands on a completely different footing from the case of CIT v Oasis Hospitalities P. Ltd. (supra). 42. In the light of the above discussion, we are unable to uphold the order of the Tribunal confirming the deletion of the addition of Rs. 1,18,50,000 made under section 68 of the Act as well as the consequential addition of Rs.2,96,250. We accordingly answer the substantial questions of law in the negative and in favour of the department. The assessee shall pay costs which we assess at Rs. 30,000/-. The jurisdictional High Court (Hon'ble Gujarat High Court) in the case of Kaushal H. Patel vs. Income-tax Officer [2014] 50 taxmann.com 136 (Gujarat) the Hon ble High Court had held that: Where assessee received huge amount through banking channels as cash credits in its bank account but failed to render an explanation for same, said amount was to be treated as income in hands of assessee . 2.7. In view of the above-mentioned facts and legal position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from Smt. Bhavna Hitesh Shah, u/s 68 of the Income-Tax Act. 7. The learned CIT(A) has dealt with the facts of the case and has adjudicated the issue in this regard at paragraph Nos. 3.3 to 3.5 of his order as under:- 3.3 I have carefully considered the Assessment Order and submission filed by the Appellant. The Assessing Officer has observed that appellant has accepted unsecured loan of Rs. 5,00,000/-. The A.O. has asked to appellant to furnish copy of ledger account, address, PAN of persons from whom unsecured loan has been taken. The appellant has submitted return of income of Bhavnaben Hitesh Shah from whom unsecured loan of Rs.5,00,000/- has been accepted during the year under consideration but appellant has not furnished the confirmation in this regard. The appellant has failed to prove the creditworthiness and genuineness before A.O. Therefore, an amount an of Rs.5,00,000/- is added to the total income of the assessee as unexplained cash credit under section 68 of the Act by the A. O. The appellant has submitted that the Assessing Officer has made addition of Rs. 5,00,000/- u/s.68 after holding that the appellant has failed to prove genuineness of transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Income Tax Act, 1922 or Section 256 of the Income Tax Act, 1961 over which the High Court exercises advisory jurisdiction, and not appellate jurisdiction, where normally the findings of fact recorded by the Tribunal are binding on the High Court, it has been held by the Supreme Court that the findings are not binding on the High Court if they are perverse or if the findings are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. The position in an appeal under Section 260A of the Act is a fortiori as the judgment of the Supreme Court in the case of DIT v. Bharat Dimond Bourse, (supra) would show. We shall demonstrate in the following paragraphs as to how both the CIT (Appeals) and the Tribunal have failed to appreciate the evidence in the proper perspective and on the lines indicated by the Hegde J. in the case of Durga Prasad More (supra). The present case is also not one, as we shall show presently, where the conclusion of the Tribunal is a reasonable conclusion which should not normally be disturbed even if the appellate court would have taken a different view on the same evidence and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... htly held the unsecured loan as remaining unexplained and thus confirming the addition made by the Assessing Officer. Ground of appeal No.2 of the assessee is thus dismissed. 9. Ground of appeal No.3 raised by the assessee reads as under:- 3. The ld. CIT(A) has grossly erred in law and on facts in confirming the addition of Rs.36,00,000/-, being part consideration paid in cash out of total purchase price of land and building of Rs.1,10,00,000, u/s 69 of the Income Tax Act even though the whole purchase price of land and building were recorded in the books. 10. The learned CIT(A) has dealt with the facts of this case and has adjudicated the issue at paragraph Nos. 4.3 to 4.5 of his order as under:- 4.3 I have carefully considered the Assessment Order and submission filed by the Appellant. It is seen from balance sheet that assessee has purchased land and building of Rs.1,12,88,865/-. The A.O. has asked to appellant to submit the details regarding purchase deed of land and source of investment in immovable property with supporting evidences during the year consideration. Further on careful perusal of purchase deed, the A.O. has observed that appellant has paid a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not submitted any detail during the time of appeal proceedings before me. Hence as the appellant could not justify his claim even after reasonable opportunities given both at the time of assessment as well as appellate proceedings it can be presumed that he has nothing to say in the matter. In the case of Blessing Construction v/s ITO in 32 Taxmann.com 366(Guj) has been held as under:- 6.1 Counsel further submitted that assesses had not only established the identity of the depositors, had received the amount through cheque. Genuineness of the transaction therefore, could not have been doubted. The creditworthiness of the depositors also was sufficiently established. Assessee thereafter could not have been asked to establish the source of the income of such creditors. With respect to the legal contention that the Revenue cannot insist on assessee supplying the source of source is impeccable. However, the facts of the present case are vastly different. It is of-course true that some of the observations made by the Tribunal may suggest that the Tribunal did concern itself with the source of the source. However, such observations cannot be picked in isolat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detected that the books of accounts were incomplete. K. Palanisamy was not in a position to explain the source of the deposit amount of Rs. 1.18 crores (approx.). Therefore, the Assessing Officer ( the AO ) treated the said amount as undisclosed income of the persons in whose names the deposit appeared. The assessment made in respect of K. Chinnathamban was Rs. 5.16 lakhs consisting of Rs. 16,148 as salary and Rs. 5lakhs as undisclosed income under section 69. This order of assessment was upheld by the Commissioner of Income-tax (Appeals). The assessee, K. Chinnathamban, carried the matter in appeal with the Tribunal. By the impugned judgment, the Tribunal held that since the claim was made by the members of the public, it was not proper to treat the amount as income from undisclosed source of various assessees and, therefore, according to the Tribunal, it was necessary to link up all these amounts with the books of the firm. It is this part of the reasoning given by the Tribunal which is the subject-matter of these civil appeals. At the outset, we may state that none appeared for the assessees though served. M/s. V.V. Enterprises ostensibly was a firm floated for carrying on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence that the assessee had the aforestated amount as his income which was subject to tax under section 69A. In our view, the Tribunal should not have interfered with these findings of fact rightly recorded by the Assessing Officer and the Commissioner of Income-tax (Appeals). In the present case, the Tribunal has further held that the partners were employees of public sector undertakings; that they had acted as partners; that the firm was floated and, therefore, though the firm was illegally constituted, however, the very existence of the firm was never in doubt. The Tribunal held that the members of the public have placed their deposits with the said firm through the relatives and friends. The Tribunal has further held that though the aforestated amount ought to have been deposited in the name of the firm, it was not so done and, therefore, it was necessary to link up the said amounts with the books of the firm and to the extent possible should be shown as amounts received by the said firm as deposits from various persons. We do not see any basis for recording the aforestated findings. There is no evidence to show that members of the public have been placing their deposits with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings and has been taking note of them. It is further seen that these papers are no help as per as the unexplained investment u/s. 69 has been made and do not prove the source of investments. Considering the facts discussed herein above and following the decision of Hon'ble Supreme Court and Gujarat High Court referred supra, the appellant has not justified the same. The appellant has In view of the above, disallowance made by the A.O. of Rs. 36,00,000/- is being confirmed. The ground of appeal is dismissed. 11. As is evident from the above, the addition of Rs.36 lacs has been made on account of cash payment noted to have been made by the assessee for investment in land; the source of which was not explained. No evidences were filed to the Assessing Officer, nor to the learned CIT(A)explaining the source of investment. The Ld.CIT(A) has recorded a finding to this effect that the assessee has failed to prove the source of investment in cash in the land purchased. Even additional evidences filed by the assessee were considered by the Ld.CIT(A) and found to be of no relevance. In the absence of any representation of the assessee before us to counter the findings of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Appellant. On careful perusal of Profit loss account, it is seen that the appellant has claimed employee benefit expenses of Rs. 6,44,000/- which included Salary, Wages and bonus director s remuneration and other expenses which included machinery expenses, property valuation charges and documentation charges etc. of Rs. 7,10,000/- The A.O. has asked to appellant to submit the copy of ledger account of various expenses with supporting evidences. However, in spite of issuing various notices/letters, the assessee has not filed the details in support of various expenses with supporting evidences. However, the assessee has not furnished any details. In the absence of supporting evidence, the A.O. has made disallowance of Rs. 13,54,000/- and added back to the total income. On the other hand appellant has contended that purchase of Rs. 5,00,000/- relates the machinery purchase from which the sales affected and relates to the Director Remuneration which is already shown in the return of income of the promoters and the same reproduced before A. O. at the time of assessment proceedings. The appellant has also argued that during the course of assessment proceedings A.O. ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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