BHOPAL SINGH SHEKHAWAT,JAIPUR vs. ITO, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES “A”, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 656/JP/2016 fu/kZkj.k o"kZ@Assessment Year: 2008-09 cuke Bhopal Singh Shekhawat, Income Tax Officer, Vs. 6, Bhartendu Nagar, Ward-1(4), Khatipura, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AOWPS 1925 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Mahendra Gargieya (Adv) jktLo dh vksj ls@ Revenue by : Shri J.C. Kulhari (JCIT) lquokbZ dh rkjh[k@ Date of Hearing : 03/12/2018 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 11/01/2019 vkns'k@ ORDER PER: VIJAY PAL RAO, J.M.

This appeal by the assessee is directed against the order dated 31/03/2016 of ld. CIT(A)-I, Jaipur for the A.Y. 2008-09. The assessee has filed revised/modified grounds of appeal as under: “1. The Id. CIT(A) erred in law as well as on the facts of the case in confirming the very action taken u/s 147 r/w 148 by the AO which, is bad in law without jurisdiction and being void ab-initio, the same kindly be quashed. Consequently the impugned assessment framed u/s 148 dated 24.03.2014 also kindly be quashed.

2. Rs.1,18,432/-: The Id. CIT(A) further erred in law as well as on the facts of the case in confirming the addition of Short Term Capital Gain made by the AO of Rs. 1,18,432/- on account of the sale of two

ITA 656/JP/2016_ 2 Bhopal Singh Shekhawat Vs ITO plots in the hands of the appellant individual instead of HUF without any justification. The addition so made and confirmed by the Id. CIT(A), is contrary to the provisions of law and facts hence, kindly be deleted in full.

3. Confirmation of addition of Long Term Capital Gain (LTCG) Rs.7,57,192/-:

3.1 The Id. CIT(A) seriously erred in law as well as on the facts of the case in confirming the addition of LTCG of Rs. 7,57,192/- irt plots No.157-A & 157-B which were sold for & on behalf of Mohd. Irshad and also in holding the appellant to be the beneficiary owner and liable for LTCG. The addition so made and confirmed by the Id. CIT(A) being completely contrary to the provisions of law, the evidences and material brought on record and hence, kindly be deleted in full.

Alternatively & without prejudice to above,

3.2 The Id. CIT(A) further erred in law as well as on the facts of the case in even rejecting the claim of the appellant of the reduction of the (indexed) cost of acquisition as mandated by Sec. 48(2) and in confirming the taxing of notional income as against real income, ignoring the settled law that without considering the cost, the provisions of Sec.45 itself could not have been invoked & applied. The addition so made and confirmed by the Id. CIT(A) being a result of misconception of law & facts and being in utter violation of the binding law, the authorities below be directed to reduce the cost of acquisition u/s 48(2) or alternatively, to delete the entire addition in toto.

4. Enhancement of income & direction without jurisdiction:

The Id. CIT(A) further very seriously erred in law as well as on the facts of the case in exceeding the jurisdiction while directing & setting aside to the AO to refer the matter to the I.G. (Stamps) and to re-compute the LTCG accordingly, merely suspecting possible enhancement, which is in complete violation of the mandatory requirement of Sec.251 (2) and being an illegality, the same kindly be quashed.

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5. Rs.16,56,000/- & Rs. 6,00,000/-: The Id. CIT(A) erred in law as well as on the facts of the case in confirming the additions of Rs. 16,56,000/- made on account of cash deposits and addition of Rs.6,00,000/- made on account of cheque deposited in Bank account. The additions so made and confirmed by the Id. CIT(A), is contrary to the provisions of law and facts hence, kindly be deleted in full.

6. The Id. AO further erred in law as well as on the facts of the case in charging interest u/s 234A, & 234B of the Act and as also in withdrawing of interest u/s 244A of the Act. The appellant totally denies its liability of charging and withdrawal of any such interest. The interest so charged/withdrawn, being contrary to the provisions of law and facts, kindly be deleted in full.

7. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.”

ITA 656/JP/2016_ 4 Bhopal Singh Shekhawat Vs ITO The assessee challenged the assessment order before the ld. CIT(A) and also raised an objection against the validity of reopening. The ld. CIT(A) confirmed the validity of reopening and rejected the objection raised by the assessee.

The believe of the Assessing Officer should be as to escapement of income and it should not be a product of imagination or speculation. In support of his contention, he has relied upon the decision of the Hon'ble Supreme Court in the case of Gangasharan & Sons Pvt. Ltd. Vs ITO (1981) 130 ITR 1 (SC). Hence, the ld AR has contended that the belief must be of an honest and reasonable person based upon the reasonable grounds. The belief must be based on direct or circumstantial evidence but must not be based on mere suspicion, gossip or rumor. The ld AR has thus pointed out that in the case of assessee, the Assessing Officer has not followed the settled guidelines while reopening the assessment as he was not having any material direct to circumstantial to have believe that ITA 656/JP/2016_ 5 Bhopal Singh Shekhawat Vs ITO the income assessable to tax has escaped assessment. The second objection of the ld AR is that the reopening is without application of mind and based on borrowed satisfaction. The Assessing Officer has acted merely on some information received from the Director of Income Tax (CIB) that the assessee has sold some immovable properties without even verifying the fact that there was no capital gain arising from sale of those properties. Therefore, there has been a complete lack of application of mind by the Assessing Officer. Some of the property which was sold by the assessee only as a power of attorney holder was also considered by the Assessing Officer for working out the capital gain without reducing the cost of acquisition. Thus, the ld AR has submitted that the reopening is not valid and liable to be quashed. In support of his contention, he has relied upon the decision of the Hon’ble Jurisdictional High Court in the case of CIT Vs. Shri Rajasthan Syntax Ltd. (2009) 313 ITR 231 (Raj) as well as the decision of the Hon’ble Delhi High Court in the case of CIT Vs. SFIL Broking Ltd. (2010) 325 ITR 285 (Del).

4. On the other hand, the ld DR has submitted that the assessee has not disclosed any capital gain in his return of income and subsequently the Assessing Officer received information that the assessee has sold as many as four properties during the year under consideration, therefore,

ITA 656/JP/2016_ 6 Bhopal Singh Shekhawat Vs ITO the Assessing Officer was having a tangible material to form a belief that the income assessable to tax has escaped assessment when the assessee has not declared any capital gain in the return of income and even the details of the sale of the properties were also not given in the return of income. The ld DR has further contended that the reopening is within the period of four years from the end of the assessment year and further there was no original assessment. Hence, the information received by the Assessing Officer would constitute a reasonable material evidence on the basis of which a reasonable belief can be formed that the income assessable to tax has escaped assessment. He has relied upon the orders of the authorities below.

“Reasons for belief that the income has escaped assessment.

The assessee (PAN No. AOWPS1925G) filed on 31/3/2009 his return for A.Y. 2008-09 of declaring total income of Rs. 1,34,790/-, which was processed u/s 143(1) at returned income. As per information received from Director of Income Tax (CIB), Jaipur it was noticed that the assessee has sold immovable properties situated as under: S. Property Name Date of Face value Evaluated Difference No. Registry value 1. 10, Jai Karni Nagar, 07/01/2008 Rs. 450000 Rs.533720 Rs. 83720 Niwaroo Road, Jaipur 2. 11, Jai Karni Nagar, 07/01/2008 Rs. 450000 Rs. 547242 Rs.97242 Niwaroo Road, Jaipur 3. Plot No. 157-A, Vishal 12/06/2007 Rs. 111000 Rs.132192 Rs.21192 Nagar, Akeda Doongar, Jaipur 4. Plot No. 157-B, Vishal 12/06/2007 Rs. 625000 Rs. 321921 Rs. 303079 Nagar, Road No. 17, VKI Area, Jaipur Rs.1636000 Rs.1535075 Rs.505233

On going through the copy of return filed by assessee for A.Y. 2008-09, it was found that he had not disclosed income from Long Term Capital Gains. Since, the Long Term Capital Gain of the assessee is Rs. 5,05,233/-. Therefore, I have reasons to believe that income chargeable to tax Rs. 5,05,233/- has escaped assessment within the meaning of Section 147 of the IT Act. Accordingly, proceedings u/s 147 is initiated by issue of notice u/s 148 of the IT act, 1961 for the A.Y. 2008-09.”

It is clear from the reasons recorded by the Assessing Officer that the Assessing Officer received information from the Director of Income Tax (CIB), Jaipur regarding the sale of four properties by the assessee during the year under consideration. The details of the face value and evaluated value being stamp duty valuation shows that there is a difference of Rs.

ITA 656/JP/2016_ 8 Bhopal Singh Shekhawat Vs ITO 5,05,233/- in the face value shown in the document and the valuation of the stamp duty authority. Though, some of the valuation shown in the documents is more than the stamp duty valuation, therefore, the net outcome of all the four transactions would be less than what was considered by the Assessing Officer in the reasons recorded. However, at the time of reopening of the assessment, the Assessing Officer is not required to establish the correctness of material to form belief that the income chargeable to tax has escaped assessment but if on the basis of the information or material available with the A.O., a reasonable belief can be formed that the income assessable to tax has escaped assessment then the reopening of the assessment satisfies the conditions as provided U/s 147 of the Act. Though the assessee has given one line note in the return of income, however in absence of the description of the properties which were sold by the assessee during the year under consideration the said note regarding the capital gain would not constitute disclosure of the transaction. If the assessee was of the firmed view that there was no capital gain arising from the sale of the properties in question then the details of the properties with cost of acquisition and sale consideration would have been given in proper manner in the return of income showing the net result as NIL or loss as the case may be.

However, the assessee has not given all these details in the return of ITA 656/JP/2016_ 9 Bhopal Singh Shekhawat Vs ITO income and therefore, in absence of minimum required disclosure in the return of income and subsequent information received by the Assessing Officer regarding the sale of the properties in question at a consideration less than the deemed full value consideration U/s 50C of the Act it amounts to escapement of the income in the form of capital gain. The ld. CIT(A) has considered this issue as under:

“Determination: (i) The facts of the case are that the appellant filed its return of income on 31.03.2009 for the AY under consideration declaring total income at Rs. 1,34,790/- which was processed u/s 143(1) of the Act and subsequently, after recording the reasons, the AO issued notice u/s 148 on 28.03.2013. The copy of the reasons for initiating proceedings 147 of the Act was also provided to the appellant on 28.11.2013 by the AO and it appears that no objections were raised thereof.

(ii) It is noted from the reasons recorded by the AO that information was received from Director of Income Tax (CIB), Jaipur wherein it was informed that during the year under consideration, the appellant has sold four immovable properties. As the appellant had not shown long term capital gains in its return of income, consequently, the AO had reason to believe that the income amounting to Rs. 5,05,233/- has escaped assessment.

(iii) During the appellate proceedings, it was the contention of *he appellant that in respect of two transactions of sale of immovable properties, the AO himself computed short term capital gain thereof instead of LTCG as stated in the reasons for reopening the case. Further, the AO has not taken into account the cost of acquisition while computing the alleged LTCG and thus

ITA 656/JP/2016_ 10 Bhopal Singh Shekhawat Vs ITO there exist no reason to believe for initiating proceedings, u/s 147 of the Act.

(iv) I have duly considered the reasons recorded by the AO for reopening the case of the appellant and submissions of the appellant. It is noted from the computation of income of the appellant for the year under consideration (PB: 11) that it has given a note as under:

“There is no capital gain as the purchase price and sale price was same’’.

(v) In the computation of income, the appellant has not stated how many properties were sold by it during the year under consideration and what were their cost of acquisition and when these properties were acquired. It is, therefore, held that the appellant has not disclosed full facts in its return of income for the year under consideration. It may be mentioned that at the stage of initiation of proceedings u/s 147 of the Act, the AO must have some reasons to believe that income had escaped assessment. In the case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [2007] 291 ITR 500 (SC), it was held by the Apex Court that if the AO, for whatever reason, has reason to believe that income has escaped assessment, it confers jurisdiction to re-open the assessment. It is a fact that no assessment was made earlier u/s 143(3)/l 44 of the Act in the case of the appellant, therefore, the ratio in the case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (Supra) applies squarely to the facts of the case.

(vi) Further, the Courts cannot look into the sufficiency of the reasons recorded by the AO for reopening the assessment u/s 147 of the Act. Reliance is placed on the decision of Hon’ble Apex Court in the case of Raymond Woollen Mills Ltd. Vs ITO [1999] 236 ITR 34 (SC), wherein it was held by their lordship that:

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“In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts come to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed.”

(vii) In view of the above discussion, it is held that the AO was justified in initiating proceedings u/s 147 of the Act. Hence, this additional ground of appeal is hereby rejected.”

Therefore, the sufficiency and correctness of the material available with the Assessing Officer at the time of recording the reasons is not required to be considered while forming the belief that the income assessable to tax has escaped assessment. In view of the facts and circumstances of the case when the assessee has not disclosed the transactions of sale of the properties during the year under consideration giving a very vague one line note that “no capital gain as purchased and sale price was same”, we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue. Further the reopening is not hit by the proviso to Section 147 of the Act, therefore, the objections raised by the assessee have no merits or substance. Accordingly, ground No. 1 of the assessee’s appeal is dismissed.

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However, the ld. CIT(A) was not impressed with this explanation of the assessee and upheld the addition made by the Assessing Officer.

The ld AR has contended that the genuineness of the settlement was not doubted by the Assessing Officer and by virtue of the said settlement, the assessee and his two brothers namely Mr. Ashok Singh Shekhawat and ITA 656/JP/2016_ 13 Bhopal Singh Shekhawat Vs ITO Mr. Sarjeet Singh Shekhawat succeeded ancestral properties acquired by the grandfather of the assessee. The settlement between the brothers arrived only after the death of mother of the assessee on 15/4/2001, therefore, a new HUF came into existence comprising of assessee, his wife and children. Once the assessee has proved the fact that these plots were ancestral properties succeeded by the assessee out of the family settlement and consequently belong and possessed by the HUF came into existence on 01st May, 2001 then the Assessing Officer was not justified in sustaining the capital gain in the hand of the assessee. Hence, the ld AR has submitted that the addition made by the Assessing Officer and sustained by the ld. CIT(A) may be deleted.

ITA 656/JP/2016_ 14 Bhopal Singh Shekhawat Vs ITO to establish that these plots were owned by the HUF and also sold by the HUF. He has relied upon the orders of the authorities below.

“3.1.2 Determination: (i) I have duly considered the submissions of the appellant, assessment order and the material placed on record. During the year under consideration, the appellant has sold two plots on 07.01.2008 for total sale consideration of Rs. 10,80,962/-. It was noted by the Assessing

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Officer that the appellant has not shown any capital gain income on the sale of these plots in its return of income. It was the contention of the appellant that these two plots were acquired out of Bhopal Singh Shekhawat (HUF) and belonged to the said HUF only. However, the AO rejected the contention of the appellant and held that the properties were not sold by the HUF but by the assessee himself in view of the following reasons:

* That the plots were purchased in 2006 and sold in 2008 and the HUF was allotted the PAN only on 01.11.2013.

* That the assessee has no bank account for the HUF.

* That the assessee has never filed return of income for the HUF.

* That the sale proceeds of the above mentioned two plots were reflected in the individual saving bank account of the assessee.

* That the purchase and sale deed nowhere mentions that the above two plots were purchased and sold by the HUF.

* That the assessee has failed to produce any evidence to show that the above two plots were in the possession of the HUF.

(ii) During the appellate proceedings, it was submitted by the appellant that a family settlement between appellant and his two brothers was reached and executed on 01.05.2001 wherein the appellant got 1/3 share in the ancestral agricultural land and cash of Rs. 3,00,000/- with gold ornaments weighing 40 Tolas. These apart, 1/3 share in the residential house and nohra situated in gram Dhana Tehsil, Haryana also came to the share of the appellant. The said property was yielding rental income right since 2001 and thus, it were the accumulations and the savings, out of which Rs. 9,00,000/- being the cost was invested in the purchases of ITA 656/JP/2016_ 17 Bhopal Singh Shekhawat Vs ITO the subjected plots in the year 2006. In support of the above referred family partition, the appellant filed affidavits of two witnesses as additional evidence (PB- 117-120).

(iii) I have gone through the family settlement dated 01.05.2001 (PB- 5) and found it to be a self serving document as no documentary evidence has been submitted which support that the father of the appellant Late Shri Chhatrapal Singh Shekhawat was owning Rs. 9 Lac in cash, 120 Tolas of Gold jewellery and agriculture land. Further, no evidence has been submitted which may indicate that the inherited properties were yielding any rental income as claimed by the appellant. Nothing has been brought on record that the alleged properties were owned by the father of the appellant as HUF property. The appellant has filed the copies of Nakal Jamabandi/ Padat Patwar of the appellant along with his brothers (PB: 39-45). On a perusal of the same, it is observed that these documents do not reveal that the agriculture lands stated therein were inherited as HUF property. It is evident from the purchase deed of the plots dated 26.09.2006 (PB: 66-79) and 09.10.2006 (PB: 80-93) that the plot No. 10 and 11 were purchased by the appellant in its individual capacity only and not as Karta of Bhopal Singh Shekhawat (HUF) as claimed by the appellant. It is also evident from the sale deeds dated 07.01.2008 in respect of Plots NO. 10 (PB: 94-105) and 11 (PB: 106-116) that these were sold by the appellant in its individual capacity only. It may be mentioned that these purchase deeds and sale deeds are registered documents and it is a settled law that what is apparent is real unless controverted. The onus lay upon the person, who alleges that what is apparent is not real. Reliance is placed on the decision of Hon’ble Apex Court in the case of CIT (Central) v/s Daulat Ram Rawatmull (1973) 87 ITR 349 (SC), followed in CIT v/s Bedi & Co. Pvt. Ltd. (1998) 230 ITR 580 (SC). In the instant case under consideration, the appellant has failed

ITA 656/JP/2016_ 18 Bhopal Singh Shekhawat Vs ITO to brought on record any material which may lead to the conclusion that the apparent is not real. The alleged family settlement as stated earlier is only a self serving document and hence cannot be relied upon.

(iv) In view of the above discussion, it is held that the short term capital gain of Rs. 1,18,432/- on account of sale of two plots has rightly been assessed by the AO in the hands of the appellant, hence this ground of appeal is rejected.”

In view of the facts and circumstances of the case where these plots were acquired by the assessee through sale deed and also sold by the assessee in his personal capacity and sale consideration was also received by the assessee and deposited in his personal bank account, then the claim of the assessee is devoid of any merit or substance. Hence, we confirm the order of the ld. CIT(A) qua this issue.

ITA 656/JP/2016_ 20 Bhopal Singh Shekhawat Vs ITO of Haryana (2012) 340 ITR 1. The ld. AR has also relied upon the following decisions of the Coordinate Benches of this Tribunal:

(i) Gyan Chand Agarwal Vs ACIT in order dated 10/07/2017.

(ii) Shri Suraj Narain Khatoria Vs ITO in dated 27/05/2013.

The ld AR has further submitted that as per the record, the properties were purchased by Mohd. Irshad on 14/3/2001 and were transferred in his name by JDA vide letter dated 17/3/2001. Though the assessee received sale consideration but it was for and on behalf of the seller only.

The ld. AR also objected to the enhancement of the assessment by the ld. CIT(A) regarding the stamp duty valuation. Alternatively, the ld. AR has submitted that the ld. CIT(A) has ignored the provisions of Section 48 of the Act regarding the cost of acquisition. Once it was held that the assessee is the beneficial owner of the property then the cost of acquisition as on the date of acquisition shall be computed either as fair market value of the property or the cost of acquisition in the hand of Md.

Irshad.

“(vi) I have duly considered the alternate contention of the appellant. Though, certainly there must be some cost of acquisition for acquiring the plot no. 157 over which all the rights of an owner were acquired by the appellant through a power of attorney. It may be mentioned that the onus is upon the appellant to provide evidence in support of cost of acquisition of the property, which was not discharged by the appellant. As the appellant has not come forward with clean hands i.e. it had not provided the copy of the agreement to sell with Mohd. Irshad, no deduction on account of cost of acquisition could be given as no evidence was furnished in this regard.

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(vii) Further, it is noted from the sale deeds placed on record that plot no. 157A and 157B admeasuring 116.11 and 130.05 square meters were sold for Rs. 1,11,000/- and Rs. 6,25,000/- and the sub registrar for the purpose of stamp duty valued the same at Rs. 1,32,192 and Rs. 6,25,000/- respectively. It is not understandable, how there can be so much difference in the sale consideration and the value adopted by sub registrar for almost similar size of plot (difference of only 13.94 Sq. meters) which are nothing but part of plot no. 157 only and both of them were sold on the same date. The AO is directed to refer the matter to the IG (Stamps) or other appropriate authority for taking necessary action in respect of plot No. 157A. The Assessing Officer is further directed to recomputed capital gains U/s 50C after getting the report from concerned authority.

In view of the above discussion, this ground of appeal is rejected.”

Therefore, so far as the ownership of the plots of land in question is concerned, we find that the assessee has sold the plots in question after dividing one plot into two which shows that the assessee was having the domain over the property and also acted as beneficial owner and not merely a power of attorney holder. As per the attorney the assessee was not authorized to divide the plots but only to act on behalf of the principal to represent him in certain matters including the sale of plots in question.

The division of the plot by the assessee itself shows that the assessee was having full domain and control as the owner of the property in question. As regards the alternative plea that once the assessee was ITA 656/JP/2016_ 24 Bhopal Singh Shekhawat Vs ITO treated as an owner then even if the cost of acquisition is not available on the document, the cost of acquisition as on the date of execution of power of attorney dated 25/6/2001 be taken as prevailing DLC rates/fair market value. The Assessing Officer is directed to recompute the capital gain by allowing the cost of acquisition as DLC/fair market value of the plot as on 25/6/2001. Accordingly, this issue is set aside to the record of the Assessing Officer.

ITA 656/JP/2016_ 25 Bhopal Singh Shekhawat Vs ITO consideration of plot of land in question, therefore, the assessee can raise objection before the Assessing Officer. He has relied upon the orders of the authorities below.

Before us, the ld. AR of the assessee has submitted that the assessee received a sum of Rs. 16,56,000/- from four persons varying from 3,56,000/- to 4,50,000/-. The assessee produced the confirmation from these persons alongwith identity as well as their land holding to show the agricultural income and other source of income. He has referred to the affidavits of these persons to establish the creditworthiness and ITA 656/JP/2016_ 27 Bhopal Singh Shekhawat Vs ITO genuineness of the amount received by the assessee. Thus, the assessee discharged its initial onus of proving the identity, creditworthiness and genuineness of the transactions. All the four persons have confirmed having given advances to the assessee and explained the source through their affidavits. The Assessing Officer as well as the ld. CIT(A) has rejected the evidence produced by the assessee without conducting a further enquiry, therefore, once the assessee has discharged its initial onus it is shifted to the revenue to prove the contrary. The ld AR has thus contended that the addition made by the Assessing Officer may be deleted. He has further pointed out that all these four persons have agricultural income as well as agricultural land holding to prove the source of amount given to the assessee. The cash deposited in the account was also refunded during the year under consideration. Therefore, once the amount was repaid within the year then it cannot be treated as unexplained cash credit. The ld AR has relied upon the decision of the Hon’ble Jurisdictional High Court in the case of CIT Vs. Shree Rajasthan Syntex Ltd. (2009) 313 ITR 231.

ITA 656/JP/2016_ 28 Bhopal Singh Shekhawat Vs ITO before the ld. CIT(A) which was duly considered by the ld. CIT(A) while deciding this issue. The ld. CIT(A) has examined the affidavits filed by the assessee of each of the four persons and found that none of the persons were having the capacity to advance the huge amount to the assessee.

Therefore, the assessee has failed to explain the cash deposit in the bank account and specifically the creditworthiness and genuineness of the transaction. Though the assessee has taken a plea which is an afterthought that the amount was received from these persons for making an application for allotment of petrol pump, however, no evidence was produced by the assessee either before the authorities below or before this Tribunal in support of that claim. He has relied upon the orders of the authorities below.

The details and particulars of the person and amount claimed to have been received are as under:

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(i) Narayan Lal Choudhary Rs. 4,500,000/- (ii) Dilip Singh Rs. 4,50,000/- (iii) Sarwan Singh Rs. 3,56,000/- (iv) Tejpal Singh Rs. 4,00,000/- Total Rs. 16,56,000/- The assessee has not shown these cash credits in the books of account but it only deposited in the bank account of the assessee and therefore, the addition was made by the Assessing Officer on account of unexplained cash deposit in the bank account. Before the ld. CIT(A), the assessee has also taken a plea that these advances were received from these four persons for making an application for allotment of a petrol pump. The assessee has also claimed that amount was also refunded in cash during the year under consideration. We find that the assessee has not produced any documentary evidence in support of the claim that the advances were taken by the assessee for the purpose of making the application for allotment of petrol pump. Even the details of allotment of petrol pump were also not given by the assessee. Hence, this explanation of the assessee that he has received the advances from four persons do not inspire any confidence when the assessee has not produced any documentary evidence to show that the assessee has actually applied for any petrol pump. Even the details of the proposed petrol pump were also not given by the assessee. Hence, we find that it is only an afterthought, baseless claim made by the assessee that the source of cash deposit in ITA 656/JP/2016_ 30 Bhopal Singh Shekhawat Vs ITO the bank account is an amount received from these persons. Once the assessee has failed to prove the purpose of taking the advance, the affidavits filed by the assessee from these persons will not serve any purpose. The ld. CIT(A) has considered this issue as under:

“3.3.2 Determination:

(i) I have carefully perused the submissions of the appellant and the material placed on record. During the appellate proceedings, the appellant filed copies of affidavits dated 07.11.2015 of Shri Narayan Lal Choudhary, Shri Dilip Singh, Shri Shravan Singh and Shri Tejpal Singh, wherein all of them claimed to be friends of the appellant, advanced huge amount to appellant in cash for the application made by the appellant for allotment of a petrol pump and received back the same during the year under consideration in cash only. It was prayed by the appellant that these affidavits may be admitted as additional evidence under Rule 46A of the IT Rules as sufficient opportunity was not provided by the AO at the assessment stage to prove their identity, creditworthiness genuineness of the cash creditors. As these additional evidences goes to the root of the matter and required for deciding the appeal, hence, these are admitted in the interest of natural justice under Rule 46A of the I.T. Rules. These four affidavits are summarized as under:

S. No Particulars Source explained Other Evidence Affidavit PB No.

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2. Dilip Singh (Rs. Out of agricultural Form 61 (PB 19) 127-128 4,50,000/-) income. He is having irrigated land of 30 biga yielding Rs. 7-8 lacs p. a.

3. 129-130 Sarwan Singh Out of his Form 61 (PB (Rs. 3,56,000/-) accumulated saving 22), Pension Slip (PB 122), Bank from pension and income from bank of Rs. 15,000/- p.m. and Statement also out of the (PB-I1123) amount of Rs. 61,317/- received at the time of retirement.

(ii) It is noted from the evidences placed on record relating to copies of Khasra Girdawari, voter id of cash creditors etc. in support of their agriculture income that:

* Shri Shrawan Singh purchased 7 Bigha of agriculture land on 17.05.2000 for a sum of Rs. 80,000/-. It is noted from Pension Payment Order (PPO) of Sh. Shrawan Singh dated 08.05.1989 that pensions benefits of Rs. 61,317/- were paid and the monthly pension was reduced to Rs. 289/-. No bank statement has been filed as claimed by the appellant and no evidence was filed in respect of income from bank of Rs. 15,000/- per month. It is difficult to understand, how the retirement benefits could be a source of granting loan of Rs. 3,56,000/- to the appellant especially looking to the fact

ITA 656/JP/2016_ 32 Bhopal Singh Shekhawat Vs ITO that Sh. Shrawan Singh purchased land on 17.05.2000 for a sum of Rs. 80,000/-.

* Narayan Lal Choudhary: It is claimed that Sh. Choudhary own 15 bhighas of agriculture land and 10 buffaloes. However, no evidence was submitted to show that he was deriving agriculture income of Rs. 3 to Rs. 3.5 Lac per annum by sale of two crops as claimed in the affidavit. The dates of giving loan to the appellant has not been stated. It is difficult to understand that if the annual income is between Rs. 3 to Rs. 3.5 Lac, how Sh. Choudhary could give loan of Rs. 4.5 Lac to the appellant.

* Tejpal Singh: It appears that Sh. Tejpal Sing received a sum of Rs. 1,89,051/- as pensionery benefits on 01.03.2003. the Pension Payment Order (PPO) is not legible. As per PPO, Sh. Tejpal Singh should be having a bank account with the State bank of Patiala, Satnali, Mohindergarh, Haryana. The appellant has filed a copy of the bank account relating to the period 15.09.2014 to 11.02.2015 (PB: 123) which is not relevant for the instant case under consideration. It is pertinent to mention that as per the above bank statement, the monthly pension was to the tune of Rs. 9267/- only and not Rs. 15,000/- as claimed in the affidavit. Thus, the amount of Rs. 189051/- received on 01.03.2003 cannot be the basis of alleged loan of Rs. 4 Lac to the appellant during the year under consideration, especially looking to the fact that Sh. Tejpal Singh was maintaining a bank account as stated above in his PPO.

* Dilip Singh: The appellant has filed Jamabandi of Sh. Dilip Singh for the Samvat year 2068-2071 i.e. pertaining to calendar year 2012-2015 which was issued on 23.12.2014. The same is not relevant as it is not relating to the period under consideration.

ITA 656/JP/2016_ 33 Bhopal Singh Shekhawat Vs ITO

* A copy of form No. 61 dated 24.02.2014 has been filed in support of the affidavit of all the above four cash creditors. I tail to understand how the said Form No. 61 can prove their creditworthiness.

(iii) Thus, the documents filed by the appellant to prove the creditworthiness of these four cash creditors are of no help to the appellant. Further, none of the four creditors is assessed to income tax. All the transaction were made in cash. The loans were claimed to be provided to the appellant for the purported purpose of making an application by the appellant for allotment of a petrol pump but no evidence was filed which may indicate that the appellant had applied for a petrol pump during the year under consideration which was rejected and the appellant received back the money and repaid its alleged loans. Therefore, in view of the above facts, neither the creditworthiness of the creditors nor the genuineness of the transaction could be proved by the appellant. It may be mentioned that in the income tax proceedings strict rule of evidence do not apply and surrounding circumstances and the test of human probability have to be taken into account as held by the Hon’ble Apex Court in the case of Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC).

(iv) The surrounding circumstances as discussed above, clearly establish that an effort was made by the appellant to explain the cash deposit in its bank account. However, the appellant failed to prove the creditworthiness and genuineness of the cash transactions as claimed by it. Therefore, in view of the above discussion and looking to the facts and circumstances of the case, it is held that the appellant was not able to prove the source of cash deposit of Rs. 16,56,000/- in its bank account and the addition made by the AO is hereby sustained.”

ITA 656/JP/2016_ 34 Bhopal Singh Shekhawat Vs ITO Thus, the very basis of the assessee’s explanation remained unsubstantiated by any evidence. Accordingly, in view of the facts and circumstances of the case, we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue.

As regards the addition made on account of cheques total amounting to Rs. 6.00 lacs deposited in the bank account, the ld AR of the assessee has submitted that the Assessing Officer has made this addition merely on suspicion when these payments were made through account payee cheques. He has further contended that the assessee could not recall the details and the persons from whom these cheques were received in the bank account. However, the Assessing Officer has made the addition without conducting a proper enquiry from the bank regarding the details of the persons who have given the cheques, thus the ld AR has submitted that instead of making the addition, a proper enquiry ought to have conducted by the Assessing Officer by issuing the summon U/s 131 of the Act to the bank. The assessee tried his best to collect the details from the bank but the bank has not obliged to the assessee for providing the necessary details. Hence, the ld AR has submitted that at once, the amount was received through cheque, the ITA 656/JP/2016_ 35 Bhopal Singh Shekhawat Vs ITO Assessing Officer could have conducted a proper enquiry from the bank before making addition. He has pointed out that the amount of Rs. 6.00 lacs was repaid by the assessee on 21/11/2007 through cheques of Rs. 3.00 lacs each, therefore, no addition can be made when the assessee has repaid the amount.

ITA 656/JP/2016_ 36 Bhopal Singh Shekhawat Vs ITO however, the assessee failed to explain the particulars of the persons from whom the cheques were received. The Assessing Officer accordingly made the addition of the said amount of Rs. 6.00 lacs for want of any explanation from the assessee. Even before us, the assessee has failed to explain as from whom these cheques were received by the assessee.

Though, the assessee claimed to have repaid the said amount through cheque, however, the assessee has not even given the particulars of the persons to whom the amount was repaid. Therefore, there is a complete failure on the part of the assessee to explain the deposit of Rs. 6.00 lacs in the bank account through two cheques. Mere deposit made through cheque is not sufficient to discharge the onus of source of deposit. The ld. CIT(A) decided this issue as under:

“3.4.2 Determination: (i) I have duly considered the submissions of the appellant and the material placed on record. The brief facts are that cheque no. 712141 of Rs. 1,00,000 & cheque no. 037315 of Rs. 5,00,000 were credited in the appellant's bank account maintained with SBBJ on 23.08.2007 and 01.09.2007 respectively. During the assessment proceedings, the AO required the appellant to explain the source of deposit of above cheques totaling to Rs.6,00,000/-, however, no reply was furnished and consequently the AO made addition of Rs. 6 Lac to the income of the appellant on account of unexplained cheque deposit in its bank account.

(ii) During the appellate proceedings, it was submitted by the appellant that the requisite details were out of the memory of the appellant and it has ITA 656/JP/2016_ 37 Bhopal Singh Shekhawat Vs ITO been trying with the concerned bank for obtaining the details as to the name of the person who gave these cheques and stated that the AO should have issued summons to the bank for getting the necessary details and the addition u/s 69 is discretionary in nature.

(iii) It may be mentioned here that the primary onus is on the appellant to explain the source of cheque deposit in its bank account. The said onus has not been discharged by the appellant. In fact, the appellant is not aware from whom he received the said payments. Since, the appellant is not aware of the source of the cheques amounting to Rs. 6 Lac deposited in its bank account, there is no question of getting any confirmation from the concerned persons. It is therefore, held that the amount of Rs. 6 Lac deposited in the bank account of the appellant through cheques remained unexplained. Thus, the addition of Rs. 6 Lac made by the AO is hereby sustained.”

Thus, the assessee has failed even to give the necessary particulars about the persons from whom cheques were received and deposited in the bank account. It is pertinent to note that the assessee is not engaged in any business and has shown income from salary and therefore, if any cheque was deposited in the bank account of the assessee, it was not difficult for the assessee to explain the same. However, failure on the part of the assessee to produce even the minimum particulars and details regarding the deposit of cheque has led to the conclusion that the said deposit of Rs. 6.00 lacs remained unexplained. Accordingly, we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue.

ITA 656/JP/2016_ 38 Bhopal Singh Shekhawat Vs ITO