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Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI
Before: SHRI PRASHANT MAHARISHI & SHRI K.N.CHARYShri Tilak Raj Anand,
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order the order of the ld CIT(A)-XI, New Delhi dated 28.02.2013 for the Assessment Year 2009-10. 2. The assessee has raised the following grounds of appeal:- “1. That the learned CIT(Appeals) has erred in confirming the addition of Rs.55,64,500/- and Rs.1.25 crores made by the Assessing Officer u/s 68 of the Act on the allegation of unexplained deposits in the bank account.
2. That the learned ClT(Appeals) has failed to appreciate that the additions have been made by arbitrarily brushing aside the explanation furnished by the assessee in respect of the amount of Rs.55,64,500/- and without allowing adequate opportunity to explain the source of the deposit of the amount of Rs. 1.25 crores. That the learned CIT(Appeals) has erred in upholding the addition of Rs.2,17,95,000/- made by the Assessing Officer u/s 68 of the Act on the allegation of unexplained deposit in the bank account of the assessee.
3. That the addition of Rs.2,17,95,000/- was made by the Assessing Officer without allowing adequate opportunity to the assessee to explain the source of deposit in the bank account which were all through normal banking channels.
4. That the learned CIT(Appeals) has failed to appreciate that the source of deposit of Rs. 1.00 crore was duly explained by assessee during the course of assessment proceedings on the directions of the Assessing Page | 1 Shri Tilak Raj Anand Vs DCIT (Assessment Year: 2009-10) Officer and that the Assessing Officer has not raised any further query regarding the balance amount of credits during the assessment proceedings.
5. That the learned CIT(Appeals) has erred in not admitting additional evidences as filed by the assessee under Rule 46A and which were also sent by her to the Assessing Officer for remand report.
6. That the learned CIT(Appeals) has failed to appreciate that all the additional evidences were duly considered by the Assessing Officer during remand proceedings and no discrepancy was pointed out by the Assessing Officer in these additional evidences examined by him during the course of remand proceedings.
7. That the learned CIT(Appeals) ought to have admitted the additional evidences so sent by her to the Assessing Officer wherein no discrepancy was found by the Assessing Officer during remand proceedings.
8. That the learned CIT (Appeals) ought to have considered the additional evidences in the interest of substantial justice in the instant case.”
3. Brief facts of the case shows that assessee is an individual who filed its return of income of Rs 43, 39, 978/–. Assessment u/s 143 (3) of the income tax act was passed on 28/12/2011 where the learned assessing officer has made the addition u/s 68 of the income tax act of Rs. 18064500/– and also of Rs. 21795000/–. The total income of the assessee was determined at Rs. 44199478/–. The assessee aggrieved with the order of the learned Assessing Officer preferred an appeal before the learned CIT(A). The addition of Rs. 5564500/– and Rs. 12,500,000/- made by the learned Assessing Officer were confirmed. Thus, the assessee is in appeal before us.
4. Despite notice to the assessee, none appeared on 10/6/2019 the last opportunity was given to the assessee however, on this appointed date of hearing on 28/8/2019, assessee did not care to represent before the tribunal. Further, on earlier 7 occasions assessee has sought for adjournment. In view of these facts, the matter is decided on the merits of the case as per information available on record. 5. However, in appeal memo assessee has raised 3 different grounds of appeal
however all related to addition u/s 68 of the Income Tax Act.
6. The learned Authorised Representative extensively referred to the order of the learned lower authorities and submitted that the addition confirmed by Page | 2 Shri Tilak Raj Anand Vs DCIT (Assessment Year: 2009-10) the learned Assessing Officer as well as by the ld CIT(A) deserves confirmation as assessee has failed to show, the creditworthiness of the depositors and genuineness of the transaction.
The 1st ground of appeal is with respect to the addition of Rs. 55,64,500/– and Rs. 1,25,00,000/– as unexplained cash deposits. It was found that assessee has deposited cash of Rs. 55,64,500/– in Indian bank account No. 438312195 and in State Bank of Patiala account No. 55102848720 of Rs. 1,25,00,000/–. The above information was obtained by the learned assessing officer by issuing notice u/s 133 (6) of the Income Tax Act. Before the learned Assessing Officer assessee tried to explain the cash deposit appearing in the annual information report however the explanation was not accepted by the learned Assessing Officer as same were not supported by the valid and reliable evidences. AO further noted that in the past year i.e. assessment year 2007-08 addition of Rs. 1,600,000/- was made u/s 68 of the Income Tax Act as unexplained cash credit. Accordingly, the learned Assessing Officer made an addition of Rs 5564500/- and Rs. 1,25,00,000/- amounting in all Rs. 2,18,64,500/- as unexplained cash in the hands of the assessee which is deposited in the bank account of the assessee. On appeal before the learned CIT(A) same was confirmed. The learned CIT(A) vide ground deciding ground number 2 of the appeal of the assessee held as under:- “ Ground No. 2 is in respect of cash deposits in Indian Bank and State Bank of Patiala. The AO added Rs. 55,64,500/- and Rs. 1,25,00,000/- as unexplained cash deposits. The appellant had not given any explanation about the cash entries in his bank account. The appellant explained that the amount of Rs. 56,50,000/- was given in cash by Sh. Ramesh Kumar Gupta, out of sale proceeds of his property. The appellant enclosed confirmation of Sh. R. K. Gupta along with his PAN card. The appellant has not given any further evidence like copy of sale agreement of house sold by Mr. R. K. Gupta, copies of R.K. Gupta's bank account, to show the credit of the money from property sold. I do not think a confirmation and PAN can sufficiently explain the cash deposit. In view therefore, the Shri Tilak Raj Anand Vs DCIT (Assessment Year: 2009-10) addition of Rs. 55,64,500/- has been rightly made by the AO and is therefore, confirmed. Regarding the deposit of Rs. 1,25,00,000/- the appellant submitted that it was made by Mrs. Maahu Singh and submitted a confirmation from her and an affidavit stating that the amounts were given for purchase of properties. The appellant stated that the amount was 1,15,00,000/- But’Tn the remand report the AO has enclosed an affidavit of Mrs. Madhu Singh wherein it is stated that Rs. 1,23,00,000/- were given. It is indeed surprising that lady filing a return in a ward (as claimed) can advance Rs. 1,23,00,000/- without interest and without any documentation. It is not known what is her sourced of income and from what means she has been able to get such a large sum of money to advance. No bank accounts have been attached to show whether the money was being reflected in her amounts. I am not inclined to accept the contentions of the appellant. The addition of Rs. 1,23,00,000/-, as unexplained cash deposit, is confirmed. This ground of appeal is ruled against the appellant.”
8. With respect to the deposit of Rs. 5650000/- which was received by the assessee in case out of the sale proceed of his property, the assessee could only submitted the confirmation of the buyer and his PAN card number however no, sale deed, bank account of the depositor was submitted. In view of this, we do not find any infirmity in the order of the learned lower authorities in confirming the addition of Rs. 5564500/– u/s 68 of the income tax act on account of cash deposited in the Indian bank account of the assessee.
9. Similarly with respect to the State Bank of Patiala account where the assessee has deposited Rs. 12,500,000/- only confirmation and affidavit was submitted where there is a difference in the amount confirmed by the depositor was found. Further, there was no confirmation or the source of money of the depositor was mentioned. No bank account of such person was also shown before the lower authorities. Therefore, the lower authorities have correctly doubted about the means of the person who has deposited with the assessee about such a large sum of money to be advanced to the assessee. In view of this we do not find any infirmity in the order of the Page | 4 Shri Tilak Raj Anand Vs DCIT (Assessment Year: 2009-10) lower authorities in confirming the above addition of Rs. 1,25,00,000/– u/s 68 of the Income Tax Act on account of cash deposited in the state Bank of Patiala account of the assessee. Accordingly, ground No. 1 of the appeal is dismissed.
10. Ground No. 2 of the appeal is with respect to the confirmation of the addition of Rs. 2,17,95,000/- made by the Assessing Officer u/s 68 of the income tax act on account of the allegation of the unexplained deposit in the bank account of the assessee. It was further noted that assessee is maintaining bank account with HDFC bank, State Bank of Patiala account, Indian bank account. In all these 3 bank accounts respectively Rs 1 crore, Rs. 2,400,000/-, Rs. 9395000/– were deposited. The assessee failed to give any explanation about this deposits. Therefore, the Learned Assessing officer made the addition of Rs 2,17,95,000/–. The learned CIT(A) also confirmed the same holding as under:- ”Ground No. 3 is in respect of addition of Rs. 2,17,95,000/- on account of unexplained deposits. The AO found that in 3 bank accounts, there were certain deposits, which could not be explained by the appellant. The details of the 3 accounts and deposits are as under: Rs. 1,00,00.000/- deposited in A/c No. 04221000008536 of HDFC Bank Rs. 24,00,000/- deposited in A/c No. 55102848720 of State Bank of Patiala Rs. 93,95,000/- deposited in A/c No. 438312195 of Indian Bank The appellant had not given any details at the time of assessment proceedings, but has now given copies of some documents. The appellant has given a breakup of the amount of Rs. 2,17,95,000/-. 1) Rs. 1,00,00,000/- were deposited through RTGS by M/s TRA Developers. The appellant has filed a copy of account of TRA Developers confirmation has been filed. A perusal of the bank account shows a credit on 08.04.2008 of Rs. 5 crores and then transfer out within a week of various amounts. 2) Rs. 24,00,000/- were deposited through RTSS by Ms. Shikha Pahujc. The appellant filed a confirmation and copy of her account. There is no information about the source of income of the lady and her income during the year. Page | 5 Shri Tilak Raj Anand Vs DCIT (Assessment Year: 2009-10) 3) Rs. 50,00,000/- were received from Royal Tower Pvt. Ltd. Copy of account has now been filed by the appellant. However, no confirmation has been filed. 4) Rs. 7,95,000/- were received from S. S. Dhindsa. The appellant has now enclosed copy of account and confirmation. However, no copy of return was filed to show income and source of funds. 5) Rs. 11,00,000/- were given by M/s TRA Developers. Copy of account has been filed. However, no confirmation has been filed. 6) Rs. 25,00,000/- were received from Kapil Dev Agarwal. The appellant has filed a copy of bank account but no confirmation. I am not admitting the additional evidence filed; therefore, I am not going to take into cognizance the details filed now. Further, even on merit, the appellant has not satisfactorily explained the deposits. The accounts of the appellant showed credits. The onus was on the appellant to explain the credits satisfactorily. I shall now quote Sec. 68:- “Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory', the sum so credited maybe charged to income tax as the income of the assessee of that previous year. Thus from the plain reading of the section it is seen that if there is any amount which is found credited in the books of the appellant and the appellant does not offer any explanation about the nature and source of the amount so credited or the explanation offered by the appellant is not satisfactory in the eyes of the AO, the sum so credited may be charged to income tax as income for that year. Section 68 is very widely worded and the AO is not precluded from making an enquiry as to the nature and source of a sum credited in the books of account of the appellant company even if the same is credited as receipt of share application money. Various case laws given below clearly go towards establishing that any cash credit must be explained by the person in whose books the credits are appearing.
1. Bhartesh Jain v DCIT(Dek) 483 CTR : Vol. 201 : DTD 07/04/06 - Cash credits - could not be satisfactorily explained by the assessee which means that onus u/s 68 has not been discharged. Hence addition u/s 68 is valid.
Shri Tilak Raj Anand Vs DCIT (Assessment Year: 2009-10) 2. CIT v Biju Patnaik 160 ITR 674 (SC) - It has been held that evidences to prove creditworthiness to donor/creditor is very vital and that the assessee is required to prove even the source of the source.
CS-Kale Khan Mohammad Hanif v CIT (1963) 50 ITR 1 (SC) - Asstt of unexplained cash credits in the a/c of business assessable as income from undisclosed sources. Cash credits appearing in accounts relating to business remaining unexplained.
CIT v P. Mohanakala (2007) 291 ITR 278 (SC) It is stated that: "It is true that even after rejecting the explanation given by the assessee if unacceptable, the crucial aspect whether on the facts and circumstances of the case it should be inferred the sums credited in the books of the assessee constituted income assesses rebut the evidence and the inference drawn to reject the explanation offered as unsatisfactory. We are required to notice that Sec. 68 of the Act itself provides, where any sum is found credited in the books of the assessee for any previous year the same may be charged to income tax as the income of the assessee of the previous year if the explanation offered by the assessees about the nature and source of such sums found credited in the books of the assessees is in the opinion of the AO not satisfactory. Such opinion found itself constitutes a prima facie evidence against the assessees, viz., the receipt of money, and if the assessees fail to rebut the said evidence the same can be used against the assessee by holding that it was a receipt of an income nature. In the case in hand the authorities concurrently found the explanation offered by the assessee unacceptable.
Indus Valley Promoters Ltd v CIT (2008) 305 ITR 202 (Delhi) it is stated that: worthiness of the depositors must be established to the satisfaction of the AO. Where there is an unexplained cash credit, it is open to the AO to hold that it is income of the assessee and no further burden lies on the AO to show that income in question comes from any particular source. The Hon'ble Delhi High Court in a recent judgment in the case of CIT vs. Nipun Builders & Developers Pvt. Ltd; while allowing appeal of the Department has held that: " the burden of proof to establish genuineness of the transaction is on the assessee - Whether the assessee can instruct an assessing authority about the mechanism of doing investigation, even if the onus is on himself- Whether in order to prove creditworthiness of the assessee, submission of copies of bank accounts of its subscriber companies is a sufficient compliance - Whether there can be an embargo on the powers of the assessing authority to invite the assessee to prove its realness - Whether the investigation report on the basis of which the reassessment Page | 7 Shri Tilak Raj Anand Vs DCIT (Assessment Year: 2009-10) was initiated, can be a valid ground for cancellation of reassessment, in case it was not presented before the assessee for rebuttal - Whether when an assessee fails to prove satisfactorily the source and nature of certain amount of cash received, the FTO is entitled to draw the inference that the receipts are of assessable nature - Whether when it is held that an amount credited in the books of the assessee is the income of the assessee, it is not necessary for the department to locate its exact source." There were various credits/deposits in the account of the appellant. The additions of various deposits were correctly made by the AO. I, therefore, confirm the additions of Rs. 55,64,500/- Rs. 123,00,000/- and Rs. 2,17,95,000/- made by the AO. The grounds of appeal
therefore, rules against the appellant.”
11. On careful analysis of the order of the learned CIT(A) it is apparent that the assessee has failed to show the receipt through real-time gross settlement from various parties however no confirmation son has been filed of those parties. Even the basic nature of the amount of deposits was also not explained. The learned CIT(A) also noted that though assessee has filed the additional evidences however same were not considered as even in the remand report the assessee could not satisfactorily explain the creditworthiness and genuineness of the about transaction. The assessee has merely stated that it has received loans from various persons or as an advance against property however, no further details with respect to the nature of the transaction, the details of the property, the buyer of the property, the seller of the property, the actual sale of the property with the sale deed was produced before the learned assessing officer or even before the learned CIT(A). However, the learned CIT(A) held completely considered all the explanation given by the assessee before him. We do not find any reason to upset the order of the lower authorities as assessee has failed to show the creditworthiness of the parties and the genuineness of the transaction of the above amount and therefore the addition u/s 68 of the income tax act of Rs 2,17,95,000/– is confirmed. Accordingly, ground No. 2 of the appeal is dismissed.
12. Ground number 3 of the appeal is with respect to non-admission of the additional evidences filed before the learned CI(A). On careful reading of the order of the learned CIT(A) it is apparent that he has considered all the Page | 8