Income Tax Appellate Tribunal - Chandigarh
Sh. Basant Singh,, Moga vs Assessee on 15 January, 2016
I N T H E I N C O M E T A X AP P EL L AT E T R I BU N A L
D I VI S I O N B EN C H , C H AN D I G A R H
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND Ms.RANO JAIN, ACCOUNTANT MEMBER
ITA No. 1256/CHD/2009
& ITA 121/CHD/2012
Assessment Year: 2006-07
Shri Basant Singh, Vs The DCIT,
Prop. M/s Basant General Store, Circle,
Bagh Gali, Moga.
Moga.
PAN: AIZPS5461J
(Appellant) (Respondent)
Appellant by : Shri Rakesh Jain
Respondent by : Shri S.K.Mittal
Date of Hearing : 05.01.2016
Date of Pronouncement : 15.01.2016
O R D E R
PER BHAVNESH SAINI,JM This order shall dispose of both the above appeals filed by the assessee on quantum as well as penalty matter. Both the appeals are decided as under. ITA 1256/2009
2. This appeal by assessee is directed against the order of ld. CIT(Appeals)-II Ludhiana dated 30.10.2009 for assessment year 2006-07.
3. We have heard ld. Representatives of both the parties. The ld. counsel for the assessee reiterated the 2 submissions made before authorities below and referred to various statements of the creditors, agreement to sell and other documents and affidavits filed in the Paper Book in support of the argument that assessee received genuine credits and also relied upon certain decisions in support of his contention. On the other hand, ld. DR relied upon order of the authorities below. We, therefore, decide the respective grounds of appeal in assessee's appeal as under.
4. On ground No. 1, assessee challenged the addition of Rs. 3,30,000/- on account of 'Istridhan' under section 68 of the Income Tax Act. The Assessing Officer noticed that assessee made addition to his capital account by Rs. 3,30,000/-. The Assessing Officer asked the assessee to produce documentary in support of the explanation of source of this deposit. The assessee submitted that addition of Rs. 3,30,000/- was out of savings (Istridhan) of his wife. The Assessing Officer, however, observed that explanation of the assessee is not convincing and not supported by any documentary evidence. The Assessing Officer further observed that it was not believable that such heavy amount was kept at home by wife of the assessee. The Assessing Officer, accordingly, treated the same as unexplained and made addition under section 68 of the Income Tax Act.
5. The assessee challenged the addition before ld. CIT(Appeals) and it was explained that assessee was 3 married about 35 years ago and savings of Rs. 3,30,000/- out of 'Istridhan' by his wife was on account of receipts on social and other customary occasions. The ld. CIT(Appeals), however, did not accept contention of the assessee and dismissed this ground of appeal of assessee because the source of the amount kept by the assessee's wife was not supported by any evidence.
6. On consideration of the rival submissions, we do not find any merit in this ground of appeal of the assessee. It is not in dispute that assessee has added Rs. 3,30,000/- in his capital account, therefore, burden was upon assessee to prove source of the same. The assessee explained that this amount was received from his wife and filed affidavit of Smt. Mukhtiar Kaur, wife of Shri Basant Singh (assessee) (PB-117) in which she has merely stated that Rs. 10,000/- have been saved annually out of the money given by her husband i.e. by the assessee, but the counsel for assessee pleaded before the ld. CIT(Appeals) that such amount was accumulated by wife of the assessee on different occasions by way of gift etc. from their parent and in- laws side at different regular occasions. The affidavit of wife of the assessee is thus, contradictory as against submissions made by the assessee before ld. CIT(Appeals). Further, the affidavit of wife of the assessee is not supported by any evidence or material on record. Thus, assessee failed to prove credit 4 worthiness of his wife and the genuineness of the transaction in the matter. The authorities below were, therefore, justified in making and confirming the addition of Rs. 3,30,000/-. This ground of appeal of assessee is accordingly dismissed.
7. On ground No. 2, assessee challenged the addition of Rs. 36,04,000/- on account of unexplained credit under section 68 of the Income Tax Act.
7(i) As per balance sheet annexed to the return of income, the assessee was found to have introduced fresh unsecured loans in the name of following persons :
i) S/Shri Jeet Singh, Hari Singh Rs. 25,75,000/-
& Balbir Singh
ii) Shri Gurdiwan Singh Rs. 10,00,000/-
iii) Shri Iqbal Singh Rs. 29,000/-
Total : Rs. 36,04,000/-
8. The assessee produced Shri Jeet Singh before
Assessing Officer and his statement was recorded 'on oath'. In his statement, Shri Jeet Singh has stated that he advanced a sum of Rs. 25,7,5,000/- in cash to Shri Basant Singh for purchase of land. The Assessing Officer, however, noted that he did not remember the day and date when the money was handed over to him. In his statement, Shri Jeet Singh further stated that money was advanced to Shri Basant Singh, assessee at his shop and his two brothers namely Shri Hari Singh 5 and Shri Balbir Singh also accompanied him at the time of passing of the said money. The name of the shop of assessee was found to be not known to the creditor and further, he could not remember the denomination of the notes given to the assessee. The Assessing Officer also recorded statement of Shri Hari Singh, brother of Shri Jeet Singh and as per his statement, Shri Jeet Singh alone has given this money to the assessee at his home. Shri Hari Singh further stated that he and his brother Shri Balbir Singh never accompanied Shri Jeet Singh at the time of handing over the money to the assessee. From these statements, Assessing Officer observed that same were contradictory and as such, did not believe the statement of Shri Jeet Singh. The Assessing Officer also observed that assessee is not property dealer nor dealing in the property, therefore, there was no reason why Shri Jeet Singh or Shri Hari Singh has given this much amount to the assessee for purchase of land. The cash kept at the residence by the creditor was also not believed. These credits were, therefore, considered to be in-genuine by the Assessing Officer.
8(i) The Assessing Officer considered the credit of Shri Gurdiwan Singh in a sum of Rs. 10 lacs. He was also produced before Assessing Officer and his statement was recorded 'on oath'. He has stated in his statemenet that he never advanced any money to anyone on interest basis for the last six years. He has simply stated that 6 he has given Rs. 10,000/- to Rs. 20,000/- to his close relatives as demanded and no interest was being charged as a courtsey. Shri Gurdiwan Singh categorically admitted that he did not advance any money to the assessee in a sum of Rs. 10 lacs nor any interest has been received by him. The Assessing Officer, therefore, observed that Rs. 10 lacs was not given by Shri Gurdiwan Singh to the assessee at any point of time and it was own money of the assessee which was introduced in the balance sheet in the name of Shri Gurdiwan Singh. The amount was, therefore, added under section 68 on account of undisclosed income. So far as credit of Rs. 29,000/- is concerned, the amount was shown in the name of Shri Iqbal Singh, payable to him on account of money transfer payment. The assessee did not produce him before Assessing Officer for his examination. No evidence was also produced in support of this credit, therefore, addition was made in the hands of the assessee.
9. The Assessing Officer also noted that assessee was coming in Esteem Car alongwith his two sons and a driver from Delhi on 28.10.2005 and on the way, during Naka by the police near Himmatpuri Drain, Moga Barnala Road, Police Station, Nihal Singh Wala, he was trapped by the police at about 10 PM and during search by the police, cash of Rs. 59,75,000/- from the bag lying at the backside of the vehicle was seized from the 7 Esteem car. The entire money so seized was handed over to the Enforcement Directorate, Jalandhar for investigation. The Enforcement Directorate recorded the statement of the assessee on 29.10.2008 and as per copy obtained by Assessing Officer, the assessee has stated that he had gone to Delhi to bring money on call received from Philippines alongwith his son. At the fly- over of Rohtak Road, Delhi, one person came to them in Santro Car and handed over one suite case containing 18 lacs and one bag containing Rs. 41,75,000/- and the entire money was seized by the police. It was further stated that this amount was to be distributed to various persons as per directions from Billu of Philippines. Even list of the persons concerned, to whom money was to be distributed, was stated to have been sent to assessee's son through FAX. The assessee admitted in his statement that in token of this service, assessee received commission @ 800 per lac. The Assessing Officer, observed that assessee was doing hawala business and said money belong to him. The assessee did not give the name of S/Shri Jeet Singh, Hari Singh and Gurdiwan Singh etc. to the police or the Enforcement Directorate, when his statement was recorded. The Assessing Officer, therefore, inferred that assessee failed to prove the source of the money credited in the books of account and addition of Rs. 36,04,000/- was made in the hands of the assessee. 8
10. The assessee challenged the addition before ld. CIT(Appeals) and written submission of the assessee is reproduced in the appellate order in which the assessee briefly explained that there are three credits in the name of Shri Jeet Singh and others Rs. 25,75,000/-, Gurdiwan Singh Rs. 10 lacs and Iqbal Singh Rs. 29,000/-. Detailed explanation and evidences were produced during investigation conducted by DDIT, Ludhiana and during assessment proceedings, it was explained that S/Shri Jeet Singh, Hari Singh and Balbir Singh have handed over a sum of Rs. 25,75,000/- to the assessee to purchase ½ share i.e. 14 killas in agriculture land measuring 28 killas with the assessee. All the persons submitted their duly sworn affidavits dated 28.11.2005 before DDIT, Ludhiana during the course of investigation. Copies of the same were also filed before authorities below alongwith copies of the sale deed of agriculture land sold by them in the month of April,2005 of Rs. 6,82,000/-, Rs. 6,81,000/- and Rs. 6,82,000/-. All the three persons were produced before Assessing Officer at assessment stage and their statements have been recorded. Besides that, all the three persons have received Rs.7 lacs as advance for sale of agriculture land and they have confirmed having handed over money to the assessee for purchase of agriculture land jointly with the assessee. The Assessing Officer rejected the evidences without any reason. These persons are agriculturists and they did 9 not avail banking facilities. Their statements could not be rejected by the Assessing Officer without any reasons. It was further submitted that Shri Gurdiwan Singh is agriculturist and his statement was recorded by Assessing Officer and his affidavit was also submitted before DDIT, Ludhiana in which he has confirmed advance of money to the assessee, therefore, his statement should not be rejected. He has further filed affidavit before ld. CIT(Appeals) in support of giving of Rs. 10 lacs to the assessee.
11. The assessee further claimed that Rs. 29,000/- was in the name of Shri Iqbal Singh and assessee was carrying on business of money transfer, therefore, no addition could be made. The assessee in the further submissions submitted that regarding the amount received from Shri Jeet Singh and others, copies of their Sale Deed have been filed alongwith their affidavits. The affidavit of Shri Gurdiwan Singh was also filed. It was also submitted that the recovery of cash of Rs. 59,75,000/- by the police has been fabricated story just to implicate the assessee and his family in FERA case. In fact, police had picked up the assessee and his son from their residence and false case have been planted upon him. It was also explained that the only evidence is statement recorded of Shri Basant Singh on 29.10.2005. A bare reading of the statement revealed that it is not clear who has recorded the statement 10 before whom and where the statement has been recorded, whether it is recorded under FEMA Act or otherwise. The assessee also retraced from the statement later on, therefore, it could not be said to be voluntary statement of the assessee. No material or evidence has been brought on record in support of this statement. This statement was recorded just to implicate the assessee in a false case. It was submitted that there are various judicial pronouncements to prove that when statement has not been recorded by duly authorized Gazetted Officer under the respective Act, such statement cannot be relied upon in evidence. The assessee relied upon several decisions in support of this contention.
12. The ld. CIT(Appeals), considering the explanation of the assessee and material on record confirmed all the three additions. The ld. CIT(Appeals) confirmed the finding of the Assessing Officer because there was contradiction in the statement of S/Shri Jeet Singh and Hari Singh recorded by the Assessing Officer and the contention of the assessee was not accepted that agriculturists in the villages have kept the cash at their houses.
12(i) The ld. CIT(Appeals), with regard to investigation by Enforcement Directorate, noted Assistant Director has intimated that efforts were being made to collect further evidence from the bank as well as abroad and 11 investigation is in process. The ld. CIT(Appeals), therefore, noted that this aspect could be considered by the concerned authorities after making enquiries and investigation and assessee cannot be allowed any benefit in this regard. The ld. CIT(Appeals) also noted that in the balance sheet as on 31.03.2006, the seized amount by the Enforcement Directorate is shown on the asset side of the balance sheet and to make up this amount, credits have been shown on liability side of the balance sheet. Therefore, he agreed with findings of Assessing Officer. It was noted that nothing has prevented the assessee from explaining this factual position before police and Enforcement Directorate. The ld. CIT(Appeals), in view of the contradiction in the statement of Shri Jeet Singh and Shri Hari Singh, confirmed the addition of Rs. 25,75,000/-. As regards addition of Rs. 10 lacs in respect of the creditor Shri Gurdiwan Singh admitted in his statement that he did not advance any money to the assessee at any time, therefore, genuineness of the credit is not proved. The ld. CIT(Appeals) did not accept subsequent affidavit filed by the assessee of this creditor at the appellate proceedings and rejected the same and accordingly, confirmed the addition. In respect of credit of Rs. 29,000/- in respect of Shri Iqbal Singh, ld. CIT(Appeals) noted that assessee failed to prove source of the same and no evidence in this regard have been produced, therefore, assessee failed to explain this credit to the 12 satisfaction of the Assessing Officer and accordingly, this credit was also confirmed and this ground of appeal of the assessee was dismissed.
13. We have considered rival submissions. The first credit is of Rs.25,75,000/- received from Shri Jeet Singh. PB-46 is statement of Shri Hari Singh recorded 'on oath' by the Assessing Officer in which he has confirmed that he alongwith his two brothers S/Shri Jeet Singh and Balbir Singh have struck a deal of joint land. He has also explained that they have sold the land and have struck a deal for purchase of another land and the land was to be purchased in proportionate share of ½ with Shri Basant Singh i.e. assessee. In his statement, he has explained that amount in question has been paid by his brother Shri Jeet Singh. He has also explained source of their payment. PB-50 is statement of Shri Jeet Singh recorded by Assessing Officer 'on oath' at assessment stage in which he has confirmed to have given amount of Rs. 25,75,000/- to the assessee for purchase of land as advance. He has confirmed that he is making statement of his own consent and without any pressure in the presence of the assessee. PB-94 is Agreement to Sell by S/Shri Hari Singh, Jeet Singh, Gurdeep Singh and Balbir Singh to prove the source of giving amount in question to the assessee. PB-119 is the copy of account of these three persons in the books of account of the assessee showing 13 credit of Rs. 25,75,000/-. The assessee explained before ld. CIT(Appeals) that during investigation conducted by DDIT, Ludhiana it was explained that S/Shri Jeet Singh, Hari Singh and Balbir Singh have handed over the amount in question for purchase of property jointly. They have also submitted their affidavits before DDIT in this regard and confirmed giving of amount in question to the assessee. They have also explained their source by selling different lands for giving the amount in question to the assessee. These facts have not been disputed by ld. DR during the course of arguments. The statement of Shri Jeet Singh has been corroborated by material evidence on record and reliable.
13(i) The ld. counsel for the assessee referred to various replies filed before DDIT (Investigation) in the Paper Book which were filed at the time of investigation before DDIT to show that same facts were pleaded before DDIT (Investigation) with regard to the amount in question received from Shri Jeet Singh and others for purchase of the property jointly. PB-11 is reply dated 27.06.2006 filed before DDIT (Investigation) Ludhiana in which also same facts have been pleaded that Rs. 25,75,000/- have been advanced in cash to the assessee for the purpose of purchasing the property jointly with Shri Jeet Singh and others. It was also stated in the same reply that their affidavits have also been filed 14 before DDIT (Investigation). Source of the amount being sale of the property were also filed. It was also explained that since these persons are villagers and they did not maintain bank account, therefore, they have kept the cash with them after selling their land for the purpose of purchasing the property jointly with the assessee. It is, therefore, clear that even before start of the assessment proceedings, assessee has been consistent in his stand before investigating agencies that amount in question was received from Shri Jeet Singh and his brothers for purchase of the property jointly with them. Same amount was recorded in the books of account of the assessee. Thus, identity of these creditors has been proved by assessee. For their source of giving amount in question, assessee has also proved through sale of land by them and thus, assessee has been able to prove the genuineness of the transaction in the matter. Since these persons were agriculturists and living in villages, therefore, the contention of the assessee is probable that they might not have maintained any bank account and thus, have kept cash with them after selling their properties. Therefore, initial onus upon assessee stands discharged to prove genuine credit in the matter. 13(ii) The assessee also pleaded before authorities below that FERA case was framed against the assessee and his son on which also, ld. CIT(Appeals) has given an observation that since matter is under investigation, therefore, such a matter would be decided by the concerned authorities. However, on going through the 15 statement of the assessee recorded on 29.10.2005, i.e. after seizure of the cash by the police, copy of the statement is filed at page 44 of the Paper Book, would reveal that it is not clarified as to under what circumstances and under which provision of the Act, such statement of the assessee has been recorded. It is a well settled law that in criminal proceedings, the cases shall have to be decided on the basis of the evidences produced by the prosecution and the prosecution shall have to prove the case against the accused beyond doubt. However, in the Income Tax proceedings, matters shall be decided on the basis of the evidences and material on record in the light of principle of prepondence of probabilities. The ld. counsel for the assessee relied upon following decisions:
i) Judgement of Hon'ble Punjab & Haryana High Court in the case of it Vs Ramneet Singh 306 ITR 267 (P&H) in which it was held as under :
"In view of the findings of the Tribunal that the creditors were produced and their statements were recorded and in their statements, the creditors have confirmed having advanced loans, it was justified in confirming the order of the CIT(A) deleting addition under s. 68.
ii) Decision of Hon'ble Punjab & Haryana High Court in the case of CIT Vs Laul Transport Corporation 180 Taxman 185 (P&H) in which it 16 was held as under :
"Finding recorded by the Tribunal accepting the identity and creditworthiness of the creditors to advance money and genuineness of cash credits is a pure finding of fact, and the appellant having not pointed out any illegality or perversity in the said finding of fact, no interference is warranted."
iii) Decision of Hon'ble Punjab & Haryana High Court in the case of CIT Vs Shri Ram Narain Goel, 224 ITR 180 in which it was held as under :
"Finding of the Tribunal that cash credits were genuine being based on material on record, the observation of the Tribunal that the assessee was not supposed to prove the source of the loan did ( not give rise to any referable question of law."
14. Considering the facts and circumstances and material on record, it is clear that assessee, since beginning has been pleading that amount in question was received as advance from Shri Jeet Singh and his brothers for purchase of the property jointly and has produced them and their statements have been recorded by the Assessing Officer in which Shri Jeet Singh has confirmed to have given amount in question to the assessee. Therefore, even if there are certain contradictions in the statement of Shri Jeet Singh and Shri Hari Singh, the same would not be significant as is required under the Criminal Law, therefore, the judgements relied upon by ld. counsel for the assessee clearly apply to the facts of the case in support of the 17 assessee. We, therefore, do not find any justification to sustain the orders of authorities below. The initial onus upon assessee has thus, been discharged to prove genuine credits in the matter. The Assessing Officer has not brought any evidence against the assessee to contradict or rebut the material on record. We, therefore, set aside the orders of authorities below and delete the addition of Rs. 25,75,000/-. This ground of appeal of the assessee is allowed.
15. As regards the credit in the name of Shri Gurdiwan Singh in a sum of Rs. 10 lacs, his statement was recorded at assessment stage by Assessing Officer, copy of which is filed at page 53 of the Paper Book in which he has categorically denied to have given any loan to the assessee. He has explained that he has not taken any loan or given any loan for the last six years. He has given about Rs. 10,000/- to Rs. 20,000/- of loan to his brother and sister. Since Shri Gurdiwan Singh was witness of the assessee who has deposed against the assessee, therefore, assessee failed to prove the source of the credit and genuineness of the transaction in the matter. The ld. counsel for the assessee, however, submitted that subsequent to the statement recorded on 06.11.2008, Shri Gurdiwan Singh filed his affidavit before ld. CIT(Appeals) on 16.05.2009 confirming giving of loan to the assessee. Such an affidavit filed at the subsequent stage without making retraction to the 18 earlier statement given to Assessing Officer would not serve any purpose. Further affidavit of Shri Gurdiwan Singh has not been supported by any evidence or material on record, therefore, authorities below were justified in making and confirming the addition of Rs. 10 lacs. Thus, assessee failed to explain genuineness of the credits in respect of Rs. 10 lacs. This ground of appeal of the assessee is accordingly, dismissed.
16. In respect of addition of Rs. 29,000/-, shown to have been given by Shri Iqbal Singh, assessee has not produced any evidence before authorities below to explain even his identity, what to say of credit worthiness and genuineness of the transaction in the matter. He was also not produced before Assessing Officer for examination. Therefore, in the absence of any evidence or material on record, authorities below were justified in making and confirming addition of Rs. 29,000/-. This ground of appeal of the assessee is accordingly dismissed.
17. In the result, ground No. 2 of appeal of the assessee is partly allowed.
18. On ground No. 3, assessee challenged addition of Rs. 20 lacs on account of unexplained cash credit. In the balance sheet of the assessee as on 31.03.2006, the assessee was found to have shown a sum of Rs. 20 lacs on account of same agreement. Before Assessing Officer, 19 it was explained that this amount was received by the assessee from Shri Pritam Singh against mortgage of house. The amount was, however, not related to any business transaction. The Assessing Officer asked the assessee to produce Shri Pritam Singh with whom the agreement of mortgage of house for Rs.25 lacs was claimed to have been entered into and receipt of Rs. 20 lacs from him. Shri Pritam Singh was produced before Assessing Officer and his statement was recorded. In his statement, Shri Pritam Singh stated that he had given amount of Rs. 20 lacs in cash to the assessee in the month of September, 2005 after selling some land in August,2004. Shri Pritam Singh further stated that denomination of notes were not known to him. It was also stated that the possession of the kothi for mortgage of this amount had not been handed over to Shri Pritam Singh. The kothi in question is in the name of Smt. Manjit Kaur, however, the deal for the sale of the same was with the assessee as power of attorney holder. The Assessing Officer, however, did not accept the contention of the assessee. He has mentioned that kothi in question is in the name of Smt. Manjit Kaur and that assessee was not having the possession of the same. The Assessing Officer further noted that land was sold by Shri Pritam Singh in August,2004 and the cash amount was given to the assessee in September,2005. The Assessing Officer did not believe that cash amount can be kept by Shri Pritam Singh at his house for more 20 than one year. For the reason that cash was seized from the assessee, Assessing Officer observed that assessee has tried to convert the same into the agreement amount in the name of Shri Pritam Singh. The Assessing Officer, accordingly, disallowed the cash credit of Rs. 20 lacs and made addition under section 68 of the Income Tax Act.
19. The assessee challenged the addition before ld. CIT(Appeals) and written submission is reproduced in the appellate order in which the assessee briefly explained that sum of Rs. 20 lacs was received on account of mortgage of the house from Shri Pritam Singh. Copy of the mortgage agreement was produced by Shri Pritam Singh before Assessing Officer. It was explained that source of advancing the money being the sale proceeds of the agriculture land. Copy of the Power of Attorney alongwith original mortgage deed was filed before Assessing Officer. It was, therefore, explained that initial burden upon assessee to prove genuine credit has been discharged. The assessee relied upon certain decisions in support of his contention. It was also explained that Assessing Officer disbelieved statement of Shri Pritam Singh because money was kept for one year at house. But, Assessing Officer failed to consider that Shri Pritam Singh was having no bank account and being an agriculturist, he has kept the cash at his house. The Assessing Officer also ignored 21 the agreement of purchase executed on 15.10.2005 by Shri Prem Kumar Singla, Document Writer who has duly entered in his separate register on a stamp paper and general Power of Attorney is duly registered with the Sub Registrar, Moga on 22.07.2002, held by the assessee having full authority to sell the house. In view of the statement of Shri Pritam Singh, supported by documentary evidence on record, Assessing Officer was not justified in disbelieving his statement. It was submitted that there is a general proposition that more than 35% people in India have been keeping their money at their house without using banking channel. The Assessing Officer has, however, failed to make any enquiry in the matter with regard to availability of the amount with Shri Pritam Singh and his source thereof.
20. The ld. CIT(Appeals), however, did not accept contention of the assessee and dismissed this ground of appeal of the assessee. The ld. CIT(Appeals) also observed that the creditor has given amount to the assessee in September, 2005 out of the sale proceeds of land received by him in August, 2004. The ld. CIT(Appeals) accepted that agriculturists keep such huge cash at home for a long time for depositing the same into any bank account. However, in this case, since cash is seized from the assessee by the police, therefore, evidences produced by assessee are not relevant and findings of the Assessing Officer are not 22 unjustified. The ld. CIT(Appeals), accordingly, confirmed the findings of the Assessing Officer and dismissed this ground of appeal of the assessee.
21. We have considered rival submissions. The assessee explained that Rs. 20 lacs was advanced by Shri Pritam Singh against mortgage of house. It was also claimed that the amount did not relate to the business transaction. The Assessing Officer asked the assessee to produce Shri Pritam Singh for examination in order to verify the genuineness of the transaction in the matter. The assessee produced Shri Pritam Singh before Assessing Officer at assessment stage and his statement has been recorded in which he has confirmed that he is agriculturist and has confirmed to have given Rs. 20 lacs to the assessee in September,2005 after selling the land in August,2004. He has confirmed that he has kept the money at his house after selling the land because he was not having any bank account. He has further explained in his statement that he had sold the land to Shri Darshan Singh, Dhandari, Distt. Ludhiana and thereafter, he has not purchased any land. He has further explained that the amount in question was given to the assessee in the presence of Shri Baljit Singh, Sukhanand and Nachhatar Singh, resident of Saido. He has also explained in his statement that in lieu of the money, assessee has promised to give him kothi. The deal of the kothi was 23 struck for Rs. 25 lacs against which Shri Pritam Singh has given Rs. 20 lacs to the assessee which was recorded on the stamp paper of Rs. 300/-. He has also explained that he knew the assessee for the last 10 to 15 years. He has further explained with regard to the fact that kothi which was proposed to be purchased is in the name of Smt.Manjit Kaur, Shri Pritam Singh explained that he has checked from the Deed Writer that the Power of Attorney of the kothi in question is with the assessee due to which he had paid earnest money of the kothi to the assessee. He has explained that he is making the statement in full senses without any pressure. The statement made by Shri Pritam Singh therefore, clearly proved on record that he has paid Rs. 20 lacs to the assessee after selling the land and since he was not having any bank account therefore, he has kept the cash with him at his house. He also confirmed in his statement that since Power of Attorney of the property in question was in the name of the assessee, therefore, he has given earnest money to the assessee. The statement of Shri Pritam Singh is not assailed to through any evidence or material on record. PB-100 is Agreement of Mortgage dated 15.10.2005 in which it is clearly mentioned that the assessee is General Attorney of the property in question through Registered Deed dated 22.07.2002 and Shri Pritam Singh has given Rs. 20 lacs to the assessee as earnest money as against total consideration of Rs. 25 lacs.
2421(i) PB-106 is the General Power of Attorney executed by the owner of the property in favour of the assessee which is registered document dated 22.07.2002 authorizing the assessee to mortgage, sell or gift the property in question to anyone. PB-109 to 114 are the copies of the Sale Deed executed by Shri Pritam Singh on 18.08.2004 and 19.08.2004 in favour of Shri Darshan Singh for selling the property through consideration. Therefore, the statement of Shri Pritam Singh is corroborated by the registered Power of Attorney in his favour as well as Mortgage Deed and the Sale Deed executed by Shri Pritam Singh for availability of the cash prior to entering into the transaction with the assessee. Thus, assessee is able to prove the identity of Shri Pritam Singh, his credit worthiness and genuineness of the transaction in the matter. The ld. CIT(Appeals) in his findings accepted that the agriculturists keep huge cash at home for a long time for depositing the same into bank account, however, the authorities below have failed to take note of the fact that Shri Pritam Singh explained in his statement that since he was not having any bank account, therefore, entire sale amount was kept at the house. Therefore, the statement of Shri Pritam Singh is correct and probable and would not lead to any inference against the assessee. The Assessing Officer has not brought any evidence on record that sale consideration received by Shri Pritam Singh was used somewhere else for 25 purchase of any other property. Shri Pritam Singh in his statement had also confirmed that after selling the land, he has not purchased any land except the amount in question handed over to the assessee through Mortgage Agreement. The Assessing Officer, thereafter, did not make any further enquiry to impeach the statement of Shri Pritam Singh. It is, therefore, clear that statement of Shri Pritam Singh is corroborated by the evidences and material on record and proves that he has handed over Rs. 20 lacs to the assessee. The decisions of Hon'ble Punjab & Haryana High Court in the cases of Ramanjit Singh (supra), Laul Transport Corporation (supra) and Shri Ram Narain Goel (supra) clearly support the explanation of the assessee of proving genuine credit in the matter. Thus, the assessee is able to prove identity of the creditor, his credit worthiness and genuineness of the transaction in the matter. The initial onus upon assessee to prove the above ingredients under section 68 of the Act are thus, discharged. However, Assessing Officer has not brought any material against the assessee to rebut the evidences produced by the assessee. The authorities below rejected the explanation of assessee as to why the cash was kept for about one year at the house by Shri Pritam Singh for which explanation has already been offered and we find the same to be reasonable and proper. Further, the authorities below rejected the explanation of the 26 assessee because of the cash seized by the police authorities.
21(ii) The ld. CIT(Appeals) on one of the issue has already noted that the Enforcement Directorate have intimated that the matter is under investigation and in progress, therefore, this issue could be decided by the Enforcement Directorate. Since issue before authorities below was addition under section 68 of the Act, therefore, the issue shall have to be decided on the basis of the parameters prescribed for genuineness of the transaction under section 68 of the Act which, in our opinion, assessee has been able to prove that he has received the money in question from Shri Pritam Singh through genuine transaction. We, therefore, do not find any justification for the authorities below to make and sustain the addition of Rs. 20 lacs. We, accordingly, set aside the orders of authorities below and delete the addition of Rs. 20 lacs. Ground No. 3 of appeal of the assessee is allowed.
22. On ground No. 4 assessee challenged the disallowance of Rs. 19,322/- on account of use of telephone and motor vehicle for personal purposes. The Assessing Officer disallowed these expenses because no log-book or day-to-day running was kept and expenses were not subject to verification. The element of personal usage of vehicles by the assessee and his family members cannot be ruled out. The assessee's 27 counsel also submitted before ld. CIT(Appeals) that non- business use of vehicles cannot be ruled out. The ld. CIT(Appeals), therefore, rightly held that similarly personal and non-business use of telephone cannot be ruled out and accordingly restricted the addition to Rs. 19,322/- and granted relief to the assessee partly.
23. On consideration of the rival submissions, we do not find any merit in this ground of appeal of the assessee. The assessee has not produced any evidence before us to contradict the finding of fact recorded by the authorities below. Since the expenses were not subjected to verification and no log-book or details have been maintained and ld. counsel for the assessee submitted before ld. CIT(Appeals) that non-business use of vehicles cannot be ruled out, would clearly support the findings of authorities below that these expenses were not subject to verification and were not supported by the vouchers. The disallowance was, therefore, justified. This ground is accordingly dismissed.
24. On ground No. 5, assessee challenged the addition of Rs. 20,000/- on account of household withdrawals. The assessee has shown household withdrawals of Rs. 80,000/- to support the family of four members. The Assessing Officer, therefore, estimated household expenditure in a sum of Rs. 1 lac and made deduction of Rs. 20,000/-. No specific arguments were made before ld. CIT(Appeals), therefore, ld. CIT(Appeals) considering 28 the return of income filed by assessee at Rs. 3,21,460/- confirmed the addition and dismissed this ground of appeal of the assessee.
25. On consideration of the rival submissions, we do not find any merit in this ground of appeal of the assessee. The assessee has failed to produce details of household expenses as per requirement of the family. Therefore, authorities below were left with no alternate except to estimate the household expenditure. Before us, no sufficient evidence or material is produced to justify the withdrawals in a sum of Rs. 80,000/-. Therefore, this ground has no merit and is accordingly dismissed.
26. On ground Nos. 6, 7 and 8, assessee merely stated that the statement recorded by Enforcement Directorate stands retracted. These are, therefore, general grounds and call for no finding because it relate to different matters under investigation by Enforcement Directorate. These grounds, therefore, do not require any further finding.
27. No other point is argued or pressed.
28. In the result, appeal of the assessee is partly allowed.
29ITA 121/2012
29. This appeal by assessee is directed against the order of ld. CIT(Appeals)-II, Ludhiana dated 17.11.2011 for assessment year 2006-07 challenging the levy of penalty under section 271(1)(c) of the Act. The Assessing Officer noted in the penalty order that above additions have been made at the assessment stage, therefore, the same would reveal that assessee had furnished inaccurate particulars of income in the garb of addition to capital account, unsecured loans and bogus agreement and additions have been made totaling to Rs. 59,34,000/-. Since these additions have been confirmed by the ld. CIT(Appeals) we well, therefore, Assessing Officer found that assessee had concealed his income to the tune of Rs. 59,34,000/- by furnishing inaccurate particulars of income and accordingly levied the penalty under section 271(1)(c) of the Act. The ld. CIT(Appeals) dismissed the appeal of the assessee.
30. We have considered the rival submissions. The Assessing Officer imposed the penalty under section 271(1)(c) of the Act on the additions made as under :
i) Cash introduced in Rs. 3,30,000/-
capital accoun t
ii) Shri Jee t Sing h Rs. 25,75,000/-
S/o Shri Balbir Singh
iii) Shri Gurdiwa n Singh Rs. 10,00,000/-
iv) Shri Iq bal Singh Rs. 29,000/-
v) Agreement Account Rs. 20,00,000/-
Total : Rs. 59,34,000/-
30
31. In ITA 1256/2009, we have decided the appeal of the assessee on quantum in which we have deleted the additions of Rs. 25,75,000/- in respect of amount received from Shri Jeet Singh and also deleted addition of Rs. 20 lcs on account of amount received from Shri Pritam Singh on account of Mortgage Agreement therefore, nothing survives in favour of the revenue to levy penalty on these amounts. We, accordingly, set aside the orders of authorities below and cancel the penalty on the additions of Rs. 25,75,000/- and Rs. 20,00,000/-, totaling to Rs. 45,75,000/-. This part of ground of appeal of the assessee is allowed. 31(i) As regards the addition of Rs. 3,30,000/-, assessee did not produce any evidence before the authorities below to explain the addition to the capital account. On the addition of Rs. 10 lacs in respect of amount received from Shri Gurdiwan Singh, he has denied to have given any loan to the assessee in his statement recorded under section 131 of the Income Tax Act, further no evidence has been filed in respect of amount received of Rs. 29,000/- from Shri Iqbal Singh. No explanation have been given at any stage to explain genuineness on receipt of these amounts. Therefore, the assessee failed to substantiate any explanation filed before authorities below. The assessee has thus, filed inaccurate particulars of income so as to attract levy of the penalty under section 271(1)(c) of the Act. The 31 penalty was levied by the Assessing Officer because appeal of the assessee was dismissed by the ld. CIT(Appeals). On this issue, we have also confirmed the additions in the absence of any evidence on record. Therefore, no interference is called for in the matter and authorities below are justified in levying penalty on these three additions. These grounds of appeal of the assessee are dismissed. The Assessing Officer shall re- compute the levy of penalty as is directed above.
32. In the result, appeal of the assessee is partly allowed.
33. In the result, both the appeals of the assessee are partly allowed.
Order pronounced in the Open Court.
Sd/- Sd/- (RANO JAIN) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 15th January, 2016. 'Poonam' Copy to:
The Appellant, The Respondent, The CIT(A), The CIT,DR Assistant Registrar, ITAT/CHD