Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
आदेश / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by the assessee is against the order of CIT(A)-2, Aurangabad, dated 11.05.2016 relating to assessment year 2009-10 against order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).
The assessee has raised the following grounds of appeal:- 1. The Ld. CIT(A) is erred in law and on facts in confirming addition made by A.O. of Rs.12,21,000/- out of the total addition of Rs.12,80,600/- made by A.O. The Ld. CIT(A) failed to appreciate the creditworthiness
2 ITA No.1663/PUN/2016 Tukaram Maruti Venjane
of three parties namely Narayan Venkatrao Gude, Timbak Sangappa Pete, Satish Shrirang Bndapalle who have given advance (bayana) to purchase the land. The creditworthiness of the parties can be established from total holding of Land as evident from Extract 7/12 of lands, Bank statements, pension details. Remand Report was asked from A.O. to check the creditworthiness of the parties who had given advance. A.O. interviewed these parties, checked Land holdings documents, Bank passbooks, Pension documents and earning source of other persons in the family. Going through this process A.O. confirmed the creditworthiness of the parties to give advance amount of Rs.4/4.21 Lakhs each. The action of Ld. CIT(A) ignoring the documents produced, statements recorded and also Remand Report submitted by A.O. is in clear violation of the principles of Natural Justice. 2. The Ld. CIT(A) is erred in law and on facts in not giving opportunity to cross or being heard while rejecting the Remand Report of A.O. which is in clear violation of the principles of Natural Justice.
The assessee is in appeal against the orders of authorities below in confirming the addition of ₹ 12,21,000/- out of total addition of ₹ 12,80,600/- made by the Assessing Officer. The case of Revenue is that the assessee had failed to prove creditworthiness of the persons who had given advances to purchase the land.
Briefly, in the facts of the case, the assessee for the year under consideration, had furnished the return of income declaring total income of ₹ 2,47,050/-. The case of assessee was picked up for scrutiny. The assessee was engaged in legal profession. The Assessing Officer received AIR information of cash deposit in ICICI bank. The assessee was asked to explain the source of cash deposit of ₹ 11,16,000/- and ₹ 11,38,843/-. The assessee in reply submitted that advances were received against sale of land for which it had produced handmade vouchers. The Assessing Officer asked the assessee to produce documentary evidences in this regard including the sale deed of each plot, against which the advances were given. The learned Authorized Representative for the assessee submitted the details as called for and also furnished detailed submissions which are reproduced under para 4 of assessment order. The assessee explained that he owned agricultural land
3 ITA No.1663/PUN/2016 Tukaram Maruti Venjane
measuring 0.46R at Renapur, against which he executed an agreement to sell on 28.11.2008 for ₹ 18 lakhs in favour of three persons. The assessee further claimed that he had received ₹ 12 lakhs on the date of agreement from the said purchasers and the same was deposited in cash in Savings Bank account with ICICI Bank. The same land was converted into Non-agricultural land vide order of SDO, Latur dated 07.12.2007, which was further converted into 25 plots. Out of said 25 plots, the assessee claims to have sold 11 plots, against which it had received advance of ₹ 13,45,000/-. The assessee in this regard stated that he deposited ₹ 2,40,000/- and ₹ 3,19,821/- in different Savings Accounts of ICICI Bank. The Assessing Officer questioned two transactions and held that the assessee has failed to explain the source of cash deposit in the Savings Accounts and rejected the plea in respect of advance received from three persons of ₹ 12 lakhs. As against advances received against sale of plots from various persons, the Assessing Officer accepted explanation of ₹ 13,45,000/-. The Assessing Officer also had recorded statements of three persons, who could not give any reasons for cancellation of agreements. The Assessing Officer thus, treated sum of ₹ 12,21,000/- as ‘Income from undisclosed sources’.
Before the CIT(A), the assessee pointed out that the Assessing Officer had failed to consider evidences produced by the persons to whom the land was agreed to be sold. The persons from whom advance payment of ₹ 12,21,000/- was received by the assessee had confirmed the advance payment and had also submitted 7/12 extracts of lands, photocopies of sale patties of agricultural produce and hence, proved the genuineness of payments and the availability of funds with them. The next plea of assessee was that he had clarified the availability of sufficient funds from sources as well as regular cash withdrawals which would be sufficient to prove the deposits made in the
4 ITA No.1663/PUN/2016 Tukaram Maruti Venjane
bank accounts. Further plea of assessee was that the agreement to sell was orally cancelled by mutual consent and the assessee had refunded sum of ₹ 12,21,000/- to three purchasers.. During the course of appellate proceedings, the assessee furnished joint affidavit of three persons, who had advanced the said sum of ₹ 12,21,000/-, which was forwarded to the Assessing Officer and he was asked to call for the said persons for verification and to find out their capacity and creditworthiness to advance the said amounts. The Assessing Officer in reply, submitted its remand report. The CIT(A) referred to the statement recorded of each person and noted that three persons apart from establishing the fact that they owned agricultural land had not been able to establish necessary income from agriculture which could be utilized for giving advance to the assessee. Further, two out of three had failed to produce any sale patties to establish their case of agricultural produce. In the case of Shri Pete, who had furnished various sale patties, the CIT(A) noted that the same could not establish his case of generating enough surplus which could be utilized for giving advance to the assessee. In the absence of the same, the CIT(A) upheld the order of Assessing Officer as the assessee had failed to establish the source of deposits made in the said bank accounts.
The assessee is in appeal against the order of CIT(A).
The learned Authorized Representative for the assessee pointed out that before the Assessing Officer and in the remand / appellate proceedings before the CIT(A), the assessee has explained the source of cash deposits in bank accounts. However, the authorities below are enquiring into the source of source which cannot be so enquired. In this regard, he placed reliance on the ratio laid down by the Hon’ble High Court of Jharkhand in Prayag Tendu Leaves Processing Co. Vs. CIT (2018) 252 TAXMAN 306 (Jharkhand) and
5 ITA No.1663/PUN/2016 Tukaram Maruti Venjane
Chandigarh Bench of Tribunal in Jawahar Lal Vs. ITO (2014) 35 ITR (Trib) 71 (Chandigarh).
The learned Departmental Representative for the Revenue placed reliance on the order of CIT(A).
On perusal of record and after hearing both the learned Authorized Representatives, the issue which arises in the present appeal is against addition of ₹ 12,21,000/-. The Assessing Officer had received AIR information in respect of cash deposits in two separate bank accounts with ICICI Bank. The assessee was practicing High Court Advocate and had owned agricultural land admeasuring 0.46R at Renapur. The assessee on one hand claims that NA permission was received on 07.12.2007 and the land was converted into 25 plots, out of which the assessee sold 11 plots to various persons. The assessee claims to have received advance of ₹ 13,45,000/-, which was deposited in one of the bank accounts. The Assessing Officer accepted explanation in respect of said advance received. In respect of deposit in other bank account, the assessee explained that it had entered into an agreement to sell on 28.11.2008 for sale of aforesaid agricultural land in favour of three different persons, again from whom he received cumulative sum of ₹ 12,21,000/-. The same was deposited in cash in his bank account with ICICI bank and on later date, the same was also refunded. The first disparity which was noted by the Assessing Officer that on one hand, the assessee claims that the agricultural land was converted into plots, out of which 11 plots were sold and in respect of plot Nos.2 and 3, sale deed was executed on 11.09.2008. The business profits arising on the said plot of land were also added as business income in the hands of assessee. On the other hand, the assessee claims that in respect of the same land, out of which two plots have been sold
6 ITA No.1663/PUN/2016 Tukaram Maruti Venjane
on 11.09.2008, another agreement to sell was entered into on 28.11.2008. The Assessing Officer in the first instance has doubted the said agreement being feasible where the said land has already been plotted and out of which sale deed for two plots were also executed on 11.09.2008; hence the agricultural land as such, could not be agreed to be sold to three different persons. The disparity in the explanation noted by the Assessing Officer has not been clarified by the assessee till date. The case of assessee is time and again to stress that the persons who had given advance against alleged agreement to sell dated 28.11.2008 had appeared before the Assessing Officer and given their respective 7/12 extracts and admitted to have given cash to the assessee and hence, source of source could not be questioned and explanation should be accepted in toto. There is no merit in the claim of assessee as both the Assessing Officer and CIT(A) have found for sure, that the landholdings and the earnings from the said landholdings were not sufficient for the said persons to have made even the advance of about ₹ 4 lakhs each. The total earnings in three years in respect of one of the parties who had produced sale patties totaled to ₹ 7,92,180/-, which would take care of his agricultural operations, expenses of himself and his family during the period of three years and was not sufficient to generate surplus of ₹ 4 lakhs. In respect of balance two parties, the sale patties of agricultural produce have not been produced before any of the authorities. Merely the said parties owned agricultural lands and the respective 7/12 extracts have been produced by the said parties does not justify the earning of revenue in the form of agricultural produce. The onus is upon the assessee not only to identify the persons but also to prove the creditworthiness of said persons and also prove the genuineness of transactions. The assessee has failed to discharge the burden cast upon him and in the absence of the same, the assessee cannot take the shelter that the Assessing Officer and CIT(A) have raised queries in respect of source of
7 ITA No.1663/PUN/2016 Tukaram Maruti Venjane
source. There is no merit in the same. The queries were raised in order for the assessee to explain creditworthiness of the persons from whom it had received the above said amounts. In the absence of same being discharged, the said explanation of assessee cannot be accepted. In respect of genuineness of transactions, the same has been doubted in view of the plot of land being sub- plotted and 11 plots being already sold by the assessee independent of the transactions with three persons in respect of same land. Accordingly, upholding the order of CIT(A), the grounds of appeal raised by the assessee are dismissed.
In the result, appeal of assessee is dismissed.
Order pronounced on this 28th day of February, 2018.
Sd/- (SUSHMA CHOWLA) न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 28th February, 2018. GCVSR आदेश की प्रयिलऱपप अग्रेपषि/Copy of the Order is forwarded to : 1. अऩीऱाथी / The Appellant; 2. प्रत्यथी / The Respondent; 3. आयकर आयुक्त(अऩीऱ) / The CIT(A)-2, Aurangabad; 4. The Pr.CIT-2, Aurangabad; ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे, एक-सदस्य 5. मामऱा / DR ‘SMC’, ITAT, Pune; गार्ड पाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune