BINAY KRISHNA DAS,BHUBANESWAR vs. DCIT, CIRCLE-2(1), BHUBANESWAR

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ITA 90/CTK/2016Status: DisposedITAT Cuttack26 July 2017AY 2011-128 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer was justified in making the addition as the assessee failed to provide satisfactory evidence to explain the cash credits. The non-compliance with summons by the depositors and the delay in registration further supported the AO's findings.

What were the facts?

The Assessing Officer made an addition of Rs. 30 lakhs to the assessee's income as unexplained cash credit, based on cash deposits from 11 individuals into the assessee's bank accounts. The assessee claimed these were for processing flat registrations.

What were the issues?

Whether the cash deposits in the assessee's bank accounts constituted unexplained cash credits, and if the assessee had discharged the onus of proving their genuineness.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK

Before: SHRI N.S SAINI

For Appellant: Shri P.C.Sethi, AR
For Respondent: Shri D.K.Pradhan, DR
Pronounced: 26/07

This is an appeal filed by the assessee against the order of CIT(A)-

2, Bhubaneswar, dated 9.12.2015 for the assessment year 2011-12.

2.

The sole issue involved in this appeal of the assessee is that the

CIT(A) erred in confirming the order of the Assessing Officer making

addition of Rs.30 lakhs as unexplained cash credit to the income of the

assessee.

3.

Brief facts of the case, as observed from the order of the Assessing

Officer and the CIT(A) are that the Assessing Officer found from the

2 ITA No. 90/ CTK/2016 Asse ssment Year :20 11- 12 perusal of different bank accounts of the assessee that there were cash

deposits of Rs.30,00,000/- on different dates from 11 persons as under:

SI Received in cash Received from Bank Date of no. receipt (Rs.) 1 23.06.2010 150000 Ajit patnaik Standard chartered account no. 76815 09.02.2011 150000 -do- Standard chartered account no. 76815 23.06.2010 Sachidananda Singh Standard chartered 2 200000 account no. 76815 03.07.2010 125000 -do- SBI.A/c NO. 57558 3 23.06.2010 Ch. Bikram Keshari Standard chartered 200000 Praharaj account no. 76815 23.02.2011 -do- Standard chartered 100000 account no. 76815 4 14.09.2010 Kamala Kanta Choudhury Standard chartered 200000 account no. 76815 80000 -do- SBI,A/c NO. 57558 28.12.2010 5 14.09.2010 150000 Ratnakar Jena Standard chartered account no. 76815 70000 -do- SBI,A/C NO. 57558 28.12.2010 14.09.2010 150000 Suvendu Kumar Pati Standard chartered 6 account no. 76815 23.11.2010 150000 -do- SBI,A/c NO. 57558 7 03.07.2010 175000 Uma Devi Agarwal SBI,A/c NO. 57558 125000 -do- SBI,A/c NO. 57558 28.12.2010 05.08.2010 150000 Absar Beuria SBI,A/c NO. 57558 8 09.02.2011 -do- Standard chartered 200000 account no. 76815 I9 175000 Rama Kanta Mishra SBI,A/c NO. 57558 28.12.2010 10 23.11.2010 150000 Prafulla Kumar Choudhury SBI,A/c NO. 57558 23.02.2011 50000 -do- Standard chartered account no. 76815 23.02.2011 150000 Ratan Kumar Mishra Standard chartered 11 account no. 76815 09.03.2011 100000 -do- SBI, A/c NO. 57558 Total 3000000 ______________

3 ITA No. 90/ CTK/2016 Asse ssment Year :20 11- 12 4. In reply to show cause notice issued by the Assessing Officer to

explain the source of cash deposits made in the bank accounts, the

assessee submitted that the amounts were received from 11 persons for

processing of registration of flats. The Assessing Officer issued summons

to those persons and no reply was received by him. The Assessing Officer

further observed that registration work was completed after one year and

in some cases after more than 2 years. The non-compliance of summons

by the prospective buyers and such delay in process of registration was

communicated to the assessee through show cause notice dated

25.3.2014, in reply to which, the assessee submitted that the delay in

registration was primarily caused due to local area problems, land

acquisition problems, delay in construction and also strikes by lawyers

and closure of Sub-Registrar office, which was beyond the control of the

assessee. The Assessing Officer, however, did not accept the above

submissions of the assessee and made an addition of Rs.30,00,000/- to

the income of the assessee.

5.

On appeal before the CIT(A), the assessee submitted that the

Assessing Officer failed to appreciate the evidences furnished to establish

the identity, creditworthiness of the persons and genuineness of the

transaction and made addition on the ground of timing of advances rather

than genuineness of the transaction. It was explained that the delay in

registration of the flats was due to unforeseen circumstances explained to

the Assessing Officer at the time of assessment proceedings that the

4 ITA No. 90/ CTK/2016 Asse ssment Year :20 11- 12 advance received from 11 persons amounting to Rs.30 lakhs towards

registration cost of their flats had creditworthiness as they have availed

loans from various banks for purchase of the flats. The identity of the

persons and genuineness of transaction were also established by evidence

of affidavit submitted by them to the Assessing Officer. Some persons

appeared before the Assessing Officer and some had telephonically

confirmed the transaction. It was submitted that the assessee

established three ingredients of section 68 of the Act and, therefore, no

addition under the deeming provisions was sustainable, for which, he

placed reliance on the following cases:

i) ITO vs NC Cables Ltd., (2014) Taxpub (IDT) 4204;

ii) CIT vs. Nova Promoters & Finlease (P) Ltd., 342 ITR 169;

iii) CIT vs. Lovely Exports, 319 ITR 5(SC)

iv) CIT vs. Venkateswara Rao and Others, 370 ITR 212

6.

The CIT(A) after considering the above submissions of the assessee

observed that the assessee is the Managing Director of M/s. Bivab

Developers (P) Ltd. The assessee explained the source of cash deposit of

Rs.30,00,000/- as advance received from eleven prospective purchasers

of flats from the company. The assessee furnished documents including

affidavit of the concerned persons to establish the claim. The Assessing

Officer verified the same and found that there was no nexus of such

advance received from the purchasers with date of registration. In order

5 ITA No. 90/ CTK/2016 Asse ssment Year :20 11- 12 to ascertain the correctness of transactions, the Assessing Officer issued

summons to 11 persons and received reply from two persons namely Shri

Vikram Keshari Praharaj and Shri Kamalakanta Choudhury. The

creditworthiness of the purchaseswas not demonstrated with necessary

evidence like source of income, loan sanction letters if any, bank

statements, remittance of cash to the account of the assessee.

Therefore, he held that the Assessing Officer was justified in making the

addition.

7.

Before me, ld A.R. reiterated the submissions made before the

lower authorities.

8.

Ld D.R. on the other hand, supported the orders of lower

authorities.

9.

I have heard the rival submissions, perused the orders of lower

authorities and materials available on record. In the instant case, the

undisputed facts are that the Assessing Officer found that the assessee

has made cash deposits of Rs.30,00,000/- in his various bank accounts

during the year under consideration. The assessee explained the source

of deposit of Rs.30 lakhs received from 11 persons as the cost towards

processing and registration charges of flats purchased from the company,

of M/s. Bivab Developers (P) Ltd., of which, the assessee is the Managing

Director. The Assessing Officer did not accept the explain of the assessee

as he found that the registration of the flat was done one year after the

receipt of the amount and in some cases after two years of receipt of the

6 ITA No. 90/ CTK/2016 Asse ssment Year :20 11- 12 amount. In order to verify the cash deposits, the Assessing Officer issued

summons to all eleven persons from whom the assessee had received

cash and deposited in his bank accounts. Out of 11 persons, two persons

namely, Shri Vikram Keshari Praharaj and Shri Kamalakanta Choudhury

appeared before the Assessing Officer and confirmed having given the

amount to the assessee. The assessee thereafter filed affidavits of the

persons to evidence that they have given the amount to the assessee

towards registration of flats purchased by them from the company, M/s.

Bivab Developers (P) Ltd., Hence, the Assessing Officer held that there

was no nexus between the deposits of cash in the bank accounts and the

explanation of the assessee.

10.

On appeal, the CIT(A) confirmed the action of the Assessing Officer.

11.

I find that in the instant case, the assessee has claimed to have

received Rs.30,00,000/- from eleven persons on account of registration

fee to be paid by them. The assessee has furnished the names and

addresses of the 11 persons is not in dispute. The said 11 persons have

purchased flats from M/s. Bivab Developers Pvt Ltd., is also not in

dispute. Summons issued to the said persons were duly served. In the

above circumstances, the identity of 11 persons are established and as

they have purchased flats, therefore, their creditworthiness to make

payment of the registration fee also cannot be doubted. To establish the

genuineness of the transactions, the assessee has furnished evidences of

all the 11 persons before the Assessing Officer. It is also observed that

7 ITA No. 90/ CTK/2016 Asse ssment Year :20 11- 12 out of 11 persons, two persons namely, Shri Vikram Keshari Praharaj and

Shri Kamalakanta Choudhury also appeared before the Assessing Officer.

The Assessing Officer after examining the said two persons could not

bring any material on record to show that the said two persons have not

paid the amount to the assessee. In the above circumstances, in my

considered opinion, merely because there was gap between the date on

which money was paid to the assessee and the date on which actual

registration was done, it cannot be concluded that the amounts in

questions were not paid by the prospective purchasers of the flats to the

assessee for registration expenses. As I find that the initial burden which

was upon the assessee under law was duly discharged by the assessee

and after that no positive material could be brought on record by the

Revenue to disprove the transaction, the addition so made cannot be

sustained. I, therefore, set aside the orders of lower authorities and

delete the addition of Rs.30,00,000/- and allow the ground of appeal of

the assessee.

12.

In the result, appeal filed by the assessee is allowed.

Order pronounced on 26 /07/2017.

Sd/- (N.S Saini) ACCOUNTANT MEMBER

Cuttack; Dated 26 /07/2017 B.K.Parida, SPS

8 ITA No. 90/ CTK/2016 Asse ssment Year :20 11- 12 Copy of the Order forwarded to : 1. The appellant : Binay Krishna Das, Bivab House, Bivab Estate, Baramunda, Bhubaneswar 2. The respondent: DCIT, Circle 2(1), Bhubaneswar. 3. The CIT(A) -2, Bhubaneswar 4. Pr.CIT-2, Bhubaneswar BY ORDER, 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack

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