Appeal Details
Counselvise Citation
[2022] 105 COUNSELVISE.COM (IT) 3011 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 6 month(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-05-2022
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2016-2017
Appeal Filed On
29-10-2019
Judgement Text
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA Nos. 1231 &1232/JP/2019 fu/kZkj.k o"kZ@Assessment Years : 2015-16 & 2016-17 Assistant Commissioner of Income Tax, Central Circle, Alwar cuke Vs. Shri Babu Lal Data, 20, 21 & 22, old Ind. Area, Alwar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAQ PD7663J vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA Nos. 1222 & 1223/JP/2019 fu/kZkj.k o"kZ@Assessment Years : 2015-16 & 2016-17 Shri Babu Lal Data, 20, 21 & 22, old Ind. Area, Alwar cuke Vs. DCIT, Central Circle, Alwar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAQ PD7663J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Sh. P. C. Parwal, CA jktLo dh vksj ls@Revenue by: S. Naiyer Ali Najmi, CIT lquokbZ dh rkjh[k@Date of Hearing : 16/03/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 05/05/2022 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM These bunch of four appeals are cross appeal of the assessee as well as of the department and are arising out of the order of the learned Commissioner of Income Tax, Appeals-4, Jaipur [ Here in after referred as Ld. CIT(A) ] for the assessment 2 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar year 2015-16 & assessment year 2016-17 dated 19.08.2019. As this is related to same assessee for two separate assessments year where in the facts are largely similar and issues involved are identical and thus disposed of by a common order. 2. The hearing of these appeals was concluded through audio-visual medium on account of Government guidelines on account of prevalent situation of Covid- 19 Pandemic, both the parties have placed their written as well as oral arguments during this online hearing process. 3. The lead matter is taken for the assessment year 2015-16 and therefore, the facts are drawn from the said records for the purpose of adjudication. 4. The department has challenged the order of the Ld. CIT(A) for assessment year 2015-16 on the following solitary ground taken in ITA No. 1231/JPR/2019. “On the facts and circumstances of the case and in law the ld. CIT(A) has erred in deleting the addition made on account of unexplained cash loan of Rs. 2,75,00,000/- without appreciating the fact the assessee has not maintained any books of accounts and also failed to provide name, PAN, address of the persons with whom the loans were said to be taken.” 5. Whereas, the assessee has challenged the order of the Ld. CIT(A) for assessment year 2015-16 on the following grounds in ITA No. 1222/JPR/2019: 1.0 That the ld assessing officer has erred in law as well on the facts and circumstances of the case in not accepting the agriculture income of Rupees 1246718.00 disclosed in the return of income, whereas the evidences for earning the agriculture income are lying in the seized material and has also erred in giving various finding in the 3 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar assessment order which are out of her presumption and surmises, and the ld. CIT (A)-Iv, Jaipur has erred in sustaining the same. 2.0 That the ld assessing offer has erred in law as well on the facts and circumstances of the case in making addition of Rupees. 1246718.00 in respect of agricultural income claimed exempt by the assessee while treating the same to be unaccounted taxable income and the ld. CIT (A)-IV, Jaipur has erred in sustaining the same. 6. The facts as canned from the order of the lower authorities is that the assessee is an individual derives income from salary, interest & remuneration from various concerns in which he is partner and also earns income from other sources. A search and seizure action u/s 132 of the Income Tax Act, 1961 ("the Act") was carried out by the Income Tax Department on the members/concerns of Data Group, Alwar on 14/10/2015 of which the Assessee is one of the members. During the course of the above referred action(s), stock-in-trade, documents, books of account and/or loose papers were found and/or seized from the premises of the members of the Data Group of which one such member happens to be the Assessee. Thereafter, the jurisdiction over the case was assigned to Central Circle, Alwar by the Pr. Commissioner of Income Tax, Alwar by means of an Order u/s 127 of the Act circulated vide Pr. CIT/Alw/127/2015-16/2602 dated 12-02-2016. Notice under section 153A of the Act was issued and served upon the Assessee on 04/07/2016 requiring him to file a true and correct return of income as prescribed under Rule 12 of the Income Tax Rules, 1962 within 15 days of the service of the said notice. The assessee filed its return u/s 139 on 30/03/2017 vide acknowledgement no. 12567361029316 declaring total income of Rs. 13,06,680/- and agricultural income of Rs. 12,46,718/-. In response to notice u/s 153A of the Act, the assessee has e-filed its return of income on 08/02/2017 vide acknowledgement no. 615333541080217/- declaring income of Rs. 13,06,680/-. 4 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar During the course of search cash of Rs. 4,31,265 was found, further various documents were seized from the residence of the assessee. 7. Notice u/s 142(1) dated 04-09-2017 was issued to the assessee and information and details pertaining to the case of the Assessee relevant to assessment of its income were called for u/s 142(1) of the Act by means of a questionnaire. Further, notices u/s 142(1) was issued from time to time. 8. During the course of search, various incriminating documents were found & seized from assessee’s residential premises situated at Bank Colony, Alwar on vacation of prohibition order. The assessee, during the course of assessment proceedings vide query letter dated 04/09/2017, was confronted with the contents of the following documents which were seized and annexed as under: S.No. Page no. of Annexure AS Exhibit-1 Date of Transaction A. Y. Amount in Rs. 1 71A 11.12.2014 2015-16 10,00,000 2 71A 11.12.2014 2015-16 10,00,000 3 71A 12.02.2015 2015-16 1,50,00,000 4 71A 24.02.2015 2015-16 25,00,000 5 71A 11.03.2015 2015-16 30,00,000 6 71A 25.03.2015 2015-16 50,00,000 On perusal of these documents the assessing officer was of the view that these loose papers appear to be related to cash loans/advances given by the assessee. The assessee was asked to explain the nature of these transactions along with source thereof. He was further asked to show cause, in absence of any proper justification, as to why it may not be held that these transactions are his unaccounted cash loans 5 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar and accordingly why addition of Rs. 2,75,00,000/- along with the interest rate ranging between 12% to 18% as deemed fit, may not be made in his total income for A.Y. 2015-16. 9. In response, the assessee vide letter dated 12/12/2017 furnished written submission which is extracted here under: a) With regard to the seized material, we humbly beg to submit that based upon the copies of the documents provided by the investigation wing and listed down in the query letter and to the best information and knowledge of the assessee, detailed explanation to each and every page for all the exhibits hereby enclosed in the following sequence: Ann.-1. Page-wise reply of annexures seized during search operation from residential premises at Bank Colony, Alwar having serial no. from A-1 to A- 4. Ann.-2. Page-wise reply of annexures seized during search operation from residential premises at Bank Colony, Alwar having serial no. AS-1. Ann.-3. Page-wise reply of annexures seized during search operation from residential premises at Vaishali Nagar, Jaipur having serial no. from AS-1 to AS-8. In regard to the entries referred by your good office in the loose papers seized as AS-1 seized from residential premises at Bank Colony, Alwar, entry wise reply of the same enclosed herewith as Annexure-4. We also wish to submit that from the explanation given in respect of seized papers as above, which is corroborating with the nottings mentioned on seized documents, it is clear that the assessee has received advances of Rs. 2.75 Crore during AY 2015-16 and advances of Rs. 1.68 Crore during AY 2016-17 against sale of agricultural land. The summary of receipt of such advances is also mentioned on the page no. 71A of Exhibit No. AS-1, which is evident from bare perusal of the seized paper itself. The various payments in the nature of expenditures, investments etc. found to have been 6 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar made by the assessee as per the seized papers, have been made out the funds available with the assessee from the source of such advances aggregating to Rs. 4.43 Crore (Rs. 2.75 Crore+1.68 Crore-4.43 Crore) received by the assessee. Thus, as explained above, there is no cash loans given by the Assessee. Accordingly, proposed addition of Rs. 2,75,00,000/- on account of alleged unaccounted cash loans is not justified, which is against the facts and accordingly no interest thereon is called for. The reply of the assessee was considered and the same was examined in the light of reply given on that particular seized papers annexed as page no. 71A (back side of page 71) exhibit-1. The assessee has replied entry wise transaction mentioned on that seized page as annexure-4 which is reproduced here under:- 7 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar The Assessing Officer has considered the reply of the assessee but found it without supporting documents, therefore, not accepted. Thus, the assessee was vide letter dated 18/12/2017 again asked as under: "1. Kindly refer to your reply dated 11/12/2017 received in this office on 12/12/2017 regarding incriminating documents seized from P.O. operation of your residential premise situated at Bank Colony, Alwar. In reply to page no. 71A of Exhibit-1 of annexure AS, you have submitted that you had received advances of Rs. 2.75 crore (from 11/12/2014 to 25/03/2015) during the year under consideration (F.Y. 2014-15) against sale of agricultural land (from 6 persons) and various payments in the nature of expenditure, investments etc were made in succeeding financial year i.e. (F.Y. 2015 16), out of funds available with the assessee as mentioned in the various documents/loose papers seized and annexed as annexure AS-1, AS-3 & AS- 4. The submission made by you so far, has been considered and thoroughly examined and it was observed that no corroborating document in support of your claim in respect of the said advances and expenditures has been furnished. Therefore, finally you are once again requested to furnish the following details in this regard: (i) Furnish details of the land(s) against which advance of Rs 4.43 crores, out of which Rs. 2.75 crores pertains to this assessment year, is said to be taken with supporting documents such as copy of agreement and copy of sale deed etc. Also, inform what is the present status of the land(s) whether the same have been sold out in between or not, If yes, then furnish copy of sale deed and if not, then furnish supporting for cancellation of any such agreement. (ii) Furnish complete details of all the 6 persons from which such cash advances as claimed, and in respect of their identity please furnish name, complete postal address, PAN, copy of their ITR, copy of their bank account or cash books and agreement/Ikararnama done in this regard and establish their credit worthiness and genuineness of the transaction made with them. (iii) Please furnish complete ledger accounts since opening to 31.03.2016 of the following persons as mentioned at page no. 71A (back side of page no. 71) of the referred annexure: 8 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar (a) Smt. Madhuri Gupta. (b) Smt. Renu Gupta. (c) Sh. Brahamdat Modi. (d) Sh. Shaurya Kumar. (e) Sh. Amit Agarwal. (f) Sh. Ronak Kumar. (iv) Furnish the cash flow statement or cash book from 01/04/2014 to 31.03.2015 for the year under consideration. In absence on any of fulfillment of any of the requirement you are asked to show cause as to why the addition of Rs. 2.75 Crore may not be made to the total income of the year under consideration. You are also requested to please furnish the statement of affairs for the year under consideration as required vide this office letter no. 1717 dated 16.11.2017 which is still pending." In response, the assessee vide reply dated 21/12/2017 submitted as under: "With reference to the notice mentioned hereinabove, at the outset, it is submitted that your good-self has alleged in the impugned notice that no corroborating document in support of the claim of advances against sale of interest in agriculture land and expenditures has been furnished. In this regard, it is submitted that the loose paper [Page No. 71A Exhibit AS-1] pertaining to receipt of advances against sale of share in agricultural land by the Assessee duly forms part of the material/documents seized during the course of search. Also, various loose papers evidencing the expenditures done by the Assessee have also been seized during the course of search and duly form part of the assessment records. This establishes beyond doubt that all the material/documents evidencing the claims made by the Assessee duly form part of the material/documents seized during the course of search due to which no additional corroborative documents are required to prove the case of the Assessee, however, the point-wise replies of the Assessee to the specific queries raised by your goodself are given hereunder: Query No. 1. In regard to the details of the land(s) against which advance against sale of agriculture land of Rs. 2.75 crore for assessment year 2015-16, were received by the assessee, it is submitted that the assessee and data family members consisting of wife Smt. Mohini Devi, sons Sh. Ajay Data and Sh. 9 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar Deepak Data having various parcels of land at Tehsil Ramgarh, Distt. Alwar. Details of such land family member wise are already lying in the seized material – refer page number 71 to 75 of Exhibit AS-1 and certificate of Tehsildar page number 97 to 105 of Exhibit AS-1. The sale deed of aforesaid land could not be executed till date due to ongoing family disputes between the Data family, which is pending in courts. All the immovable properties including agriculture lands of Data family is subject to courts order and above transaction were made subject to rights being accrued by the court order only. It would be pertinent to invite your honor kind attention towards the following explanation furnished before the investigation wing during the post search operation: "Details showing amount received as part advance against sale of rural agriculture land from various parties and on various dates. Sh. Babu Lal Data entered into transaction for sale of portion/part and parcel of rural agriculture land through broker, belonging to his and his family members with the stipulation that the interest would be paid." Query No. 2. In regard to the details of all the 6 persons from whom such advance against sale of agriculture land was received, it is submitted that such advances were received through brokerls in open market, which is a normal and prevailing practice. All the transactions have been entered through broker. The names of all these persons have been given by the broker/s. At present, the brokers are not in touch with the assessee. Query No. 3. In regard to the complete ledger accounts of the persons as mentioned at page no. 71A (back side of the page no. 71) from whom assessee has received the advances against sale of agriculture land, it is submitted that assessee does not maintain any of books of accounts for his personal transaction, therefore ledger account since opening to 31.03.2016 of the mentioned in the query letter are not available. persons Query No. 4. In regard to the submission of cash flow statement or cash book for the desired period, it is submitted that as stated above the assessee does not maintain any of books of accounts, therefore cash flow statement/cash book for the desired period as mentioned in the query letter 10 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar are not available. However, the assessee has already explained all the entries mentioned in the query letter dated 04.09.2017 through assessee's letter dated 11.12.2017 and annexure attached thereto and a copy of such details and explanations of such entries are again enclosed herewith as annexure-1." The reply of the assessee was considered meticulously. First of all the contention of A/R is not correct that the said receipts are advance against sale of agriculture land on the following counts: (i) Assessee has contended that as these transactions are mentioned overleaf at page no. 71 and as page no. 71 contains the details of land holdings of Sh. Babu Lal Data, therefore, these advances are also on account of sale of those land pieces only. Here it is worth to mentioning that no supporting agreement of land has been furnished by the assessee. Just by mentioning of these entries on the backside of a paper, which contains the details of agriculture land, does not sufficient to conclude that the advances have been received against sale of those pieces of land only. In fact, if we take a look on seized documents, we found that page no. 71 to 75 is in continuity of each other and having details of land holdings of all the family member in his/her individual capacity. Therefore, a random noting of transaction on a certain page correlated the transaction with that page automatically without any supporting documentary evidences. (ii) Moreover, the assessee was specifically asked to furnish details of the land(s) against which advance of Rs. 2.75 crores, is said to be taken with supporting documents such as copy of agreement and copy of sale deed etc. Also, to inform the present status of the land(s) whether the same have been sold out in between or not, if yes, then furnish copy of sale deed and if not, then furnish supporting for cancellation of any such agreement. But assessee has simply submitted that The sale deed of aforesaid land could not be executed till date due to ongoing family disputes between the Data family, which is pending in courts. All the immovable properties including agriculture lands of Data family is subject to courts order and above transaction were made subject to rights being accrued by the court order only but remained silent regarding the sale agreements of the land against which such a huge amount of advances have been said to be received by him. He badly failed to furnish any details in respect of 11 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar the land against which advances were said to be taken. Also, even the assessee failed to furnish even PAN and address of the persons to whom advances were said to be taken against agricultural land. The assessee submitted that these transactions were entered into through brokers. However, could not provide PAN and complete address of such brokers even. As the assessee has intentionally not furnished the addresses of neither those persons who advanced the money and nor of the brokers to enable this office for any further inquiry either u/s 133(6) or u/s 131 of I.T. Act, 1961 to be conducted. It is quite strange that assessee is unaware of whereabouts of those persons and of the brokers, from whom he had taken such a huge amount of advances. (iii) On being asked about the present status of land, the A/R simply said that these lands are under dispute and subject to adjudication under Courts and above transaction were made The question arises that on account of disputed land how one can entered into sale agreements with numbers of persons and if so than why those individuals would give him so much of advances without even knowing the title clearance of the land in question which is subject to rights being accrued by the court order only. Further, very interestingly these accounts are still not got settled by them and rolling over time to time. (iv) Further, if we have a close look over the said document seized and which is under consideration, it transpires that the word "r" in which the assessee is putting stress in support of its claim is actually termed as "a". If we consider as otherwise, than ""/advance could not be subject matter of renewal on time to time on market rate as there is no common practice of renewal of advances in the matter of land deals. Such kind of deals either got finalized and executed through registered document or got cancelled, if not materialized, but not got renewed. (v) The contention of the assessee of advance against agriculture land is also found contradictory that such transactions were entered into through brokers. On going through subsequent seized pages, it is very much evident, in which name of some loan broker Mr. Rahul reflecting through which transactions was made. It might be possible that any land deal could be done through any mediator/broker but it is 12 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar unbelievable that the advances against such kind of deal would also be received through broker only. Moreover, it is further evident from page no. 88, 89, 90, 91 seized, said advances were renewed from time to time and fixed rate of interest were paid on it which itself proves that the amount taken is not advances taken against agricultural land but cash loan taken on interest through loan broker. (vi) Furthermore, the assessee vide letter dated 16/11/2017 and again by letter dated 18/12/2017 was asked to furnish the complete details of assets and liabilities u/s 142(1)(iii) of the LT. Act, 1961 which was pending up to the finalization of the order. In absence of this very essential document, the nature of transaction cannot be ascertained or whether accounted for or not. Even cash flow statement/cash book was also not been furnished by the assessee to verify the transaction. He simply stated that the same has not been maintained. The above discussion is sufficient to draw the conclusion that the said receipts of advances are not the advances against the land as claimed but the cash loans (cash credits under the ambit of section 68 of I.T. Act, 1961). 10. While making the assessment order the assessing officer has also added a sum of Rs. 12,46,718/- as bogus agricultural income for the year under consideration. The relevant observation of the assessing and submission on this issue is extracted here in below for the sake of brevity Bogus agricultural income claimed to be set off against surrender: During the search action statement of assessee were recorded and all the seized documents confronted to the assessee. Assessee, after taking into consideration all the transactions recorded in those loose papers and giving a thoughtful consideration to his concealed and unaccounted income, surrendered Rs.2.00 crores on the basis of these loose papers only. However, during course of assessment proceedings, assessee has retracted the said surrender. Out of surrender of Rs. 2.01 crore, only Rs.1,12,92,817/- has been offered as unaccounted income and has contended that, income of Rs. 87,07,183/- was not concealed income at all, and therefore, retracted from taxation. 13 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar Interestingly, out of total 1,12,92,817/-, Rs. 31,66,065/- only has been admitted as unaccounted taxable income and remaining Rs. 81,26,752/- (Rs. 12,46,718/-has been offered as agriculture income in the year under consideration i.e. AY 2015-16) has been offered in different assessment years as non taxable income in the form of agricultural income. The submission made by assessee in this regard is reproduced as under: "Under the instruction given by the above assessee, we humbly submit that as per the statement recorded u/s. 132(1) of the Act, dated 11.12.2015 of assessee during search and seizure proceedings conducted by the department on 14.10.2015 onwards, an ad-hoc surrender of Rs. 2,01,00,000/- was made and it was also stated that the details whereof will be provided later-on. In this regard, it is submitted that the surrender of Rs. 2,01,00,000/- was made without verifying seized papers and verification of fact of his income from the books of accounts and other documents. This surrender of income was made with a view of buy peace of mind and to avoid protracted litigation and to maintain good and cordial relation with the Department. The assessee has worked out the details of additional Income for AY 2010- 11 to 2016-17 and additional Income of Rs. 1,12,92,817/ have been included in the return of income filed in response to section 153A of the Income Tax Act, 1961. The details of such additional Income offered is as under: Sr. No. A. Y. Particulars of Additional Income Amount 1 2010-11 Agricultural Income 13,70,630 2 2011-12 Agricultural Income 13,85,650 3 2012-13 Agricultural Income 11,91,969 4 2014-15 Agricultural Income 11,628 5 2015-16 Agricultural Income 25,78,644 6 2016-17 Agricultural Income 12,46,718 7 2017-18 Agricultural Income 3,41,513 8 Income recorded in the material seized from A-115, Bank Colony, Alwar during the course of search 31,66,065 Total Additional Income 1,12,92,817 14 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar Thus, a sum of Rupees 1,12,92,817/- may kindly be considered as income surrendered w/s. 132(4) of the Income Tax Act, 1961 in place of Rs. 2,01,00,000/ and accordingly stated u/s. 132(4) of the Act stands retracted/modified/amended. The assessee has earned the aforesaid additional income from activity of agriculture, business & other miscellaneous activities." The submission of assessee was not found tenable. It is observed that this year assessee had offered Rs. 12,46,718/- as non taxable income in the form of agriculture income and in this way benefit of total Rs. 12,46,718/- has been claimed from the income of A.Y. 2015-16 on account of surrender made. It is also worth mentioning here that the statement of Shri B.L.Data were recorded on the occasion of revoking prohibitory order made on his house on 11.12.2015 i.e almost after one month of the search. Therefore, it can't be assumed that assessee was under pressure of search team and have not been given sufficient time to reconcile his unaccounted transactions when he was much aware that search has already been conducted in his residence on 14.10.2015, Assessee has willfully surrendered Rs. 2.01 crores as unaccounted income after going through all the Seized documents and transactions recorded therein. Further, statement of assessee is reproduced here verbatim: 7:- ! ! 201,00,000/- (दो ोड ए ! ख '( ) *ो+, ए + - . /0 1 2 3 4 5 -6 7 5 8 9 7 6 द 3 5 +6: ; 10 द 1 :./: 0 ो< = .>- ो 6 6 += द= 6 ?6 @ द 8ो .>- A B 3 = ो ; @ C D 6 E ? F GH 7 ;0 It is evident that assessee has surrendered its unaccounted income for taxation, meaning thereby he knew that at least so much of income certainly 15 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar taxable income "not the exempt one" but unaccounted at this end and therefore, assessee made surrender of Rs. 2.01 Crore but now, assessee is claiming that out of total 2:01 Crore Rs. 1,12,92,817/- only was unaccounted income and out of this 1,12,92,817/- also Rs. 81,26,752/- (A.Y. 2015-16 Rs. 12,46,718/-) was although unaccounted so offered in return but was agricultural income only so not taxable at all and moreover, rebate of the same has also been claimed for tax rate calculation purpose. The contention of assessee made during course of assessment proceedings in respect of the retraction of surrendered amount, is found completely cooked up story and an afterthought of the following accounts: (i) First of all, on going through the loose papers seized it was noticed there are hardly some of the loose papers where reference of some agricultural activities was found, those are page no. 19, 20 & 21 of AS-4 for a very petty amount as agricultural income only and no other major papers to substantiate the claim of assessee that surrender was made on the basis of those papers. (ii) It is also interesting and unbelievable as well to know that assessee is a prudent businessman who regularly files his return under Income Tax Act and much aware of provisions of income tax Act but he inadvertently not offered his agriculture income in return which is substantial in amount and for which he could be rebate also. Now, after search, all of sudden realized that so much of agriculture income he had been earned year by year but remained unoffered, so he offered the same. (iii) It is beyond doubt that an assessee-during search always surrenders its unaccounted income which is taxable income and not the exempt income, which otherwise makes no difference in his returned income but except the tax calculation only. So the contention of assessee that suttider Tascade on account of agriculture income was completely a baseless argument as no one will surrender unaccounted exempt income just to take rebate. (iv) The statement of assessee I !ए ! ! 201,00,000/- (दो ोड ए ! ख '( ) *ो+, ए + - . / itself witnessed that the surrender was made for the income which is liable to be taxed (s) and not for the income which is not subject matter of tax. All these facts are sufficient to draw a conclusion that 16 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar the contention of the assessee is just an afterthought and manipulation of the facts and therefore, the same is hereby rejected and no set off of agriculture income so offered is given on account of surrender, out of total addition made. 8.2 Now on the other hand discussion regarding merits of the claim regarding agriculture income. It has been noted that assessee was specifically asked to provide the following details regarding agriculture income vide letter dated 04/09/2017: "(a) Please furnish details of agricultural land holding with documentary evidence of ownership from which you have earned agriculture income of Rs. 12,46,718/-. (b) Please furnish details of crops grown, expenditure incurred, product sold during the year in respect of agriculture income. (c) Please furnish copy of Khasra Girdawari for the relevant period in respect of agriculture income." In response, the assessee vide letter dated 21/12/2017 submitted the details of land holding of all the family members and P&L account for this income, but still the agriculture is not found genuine for the following reasons that: (a) In support of agricultural land holdings in his name, on which he is claiming agricultural income, the assessee furnished all the lands registered in the name of his family members and tried to club the agricultural income of all the family members in his own. First of all the agriculture land pertains to the person who is the land holder and not to anyone else but here assessee without having any rent agreement tried to club all the agricultural income, if any, of all the family members in its own. If it be so, than, it is unbelievable that they also forgot to offer their respective agriculture income in their respective returns. This fact suggests that the claim of assessee that he forgot to offer it agriculture income is nothing but it is a deliberate attempt to justify its unaccounted income which he otherwise surrendered for tax during search. (b) The assessee failed to furnish any land revenue record such as Khasra, Girdavari, in support of its claim whether any agricultural activity was actually performed in the so much of land(s) which he is owner. 17 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar (c) Furthermore, in support of sale of agriculture produce, the assessee could not furnish any sale vouchers, dharma Kanta parchi for sale of Safeda, copy of contract / agreement etc to substantitate its claim. (d) More importantly, assessee was specifically asked to provide his statement of affairs vide letter dated 16/11/2017, but the same has not been furnished upto the date of finalization of order. In absence of the same no claim of assessee neither of land holding nor of income can be examined at the end of this office. In view of the above discussion the agriculture income of Rs. 12,46,718/- offered in his return of income is held as bogus and just an afterthought to cover up the surrender offered for unaccounted taxable income. Therefore, an addition of Rs. 12,46,718/- is being made as income from other sources. 11. Based on the above finding the assessing officer has added a sum of Rs. 2,75,00,000/ being the amount received against the sale of agricultural land as cash loan u/s. 68 of the Act and a sum of Rs. 12,46,718/- offered in his return of income is held as bogus and just an afterthought. 12. Aggrieved from the said order of the assessing officer, an appeal was filed before the Ld. CIT(A) by the assessee. The Ld. CIT(A) has accepted the contention of the assessee that a sum of Rs. 2.75 cr is not warranted u/s. 68 and addition was deleted. In respect of the agriculture income of Rs. 12,46,718/- offered in his return of income is held as bogus and just an afterthought. Thus, the revenue and assessee has challenged that order of the Ld. CIT(A) and thus these cross appeals are filed before us by the revenue and the assessee. 13. First, we take up the appeal of the revenue in ITA No. 1231/JPR/2019 for assessment year 2015-16 where the solitary ground taken by the department against the deletion of an addition of Rs. 2.75 cr. The grievance of the revenue is 18 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar that the Ld. CIT(A) has deleted the addition without appreciating the fact that the addition is related to unexplained cash loan and has not appreciated the fact that the assessee has not maintained the books of accounts and also failed to provide the Name, PAN, address of the persons with whom the loans were said to be taken. 14. In respect of the ground taken by the department the Ld. CIT(A) has recorded his detailed findings based on the written submission filed by the assessee and he has given his finding vide para 5 to 11. The findings of the Ld. CIT(A) required to be swayed and is extracted as under:- 5. I have carefully considered the relevant facts and arguments advanced as also the case law cited. The undisputed fact culled out by the assessing officer which is also stated by the appellant is that as per the seized material being paid 71A of annexure A.S. Exhibit 1 is the amount received by the appellant and not paid by the appellant. The dispute is with respect to whether the amount is advance towards sale of agricultural land or is cash loan received by the appellant. Ultimately the addition is made under section 68 of the Act. For the sake of brevity section 68 is extracted herein: 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 Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year: Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory, unless (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: 19 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10. 5.2 Reading the provision of section 68, it becomes clear that the said section is attracted to make addition in respect of unexplained cash credit in following circumstances; 1. Any sum is found credited in the books of an assessee. 2. Such books should be maintained for the relevant previous year. 3. The assessee offers no explanation about the nature and source thereof or the explanation offered is not satisfactory. 5.3 Before comments are made on the action by the ld. assessing officer vis- a-vis facts of the case it would be worthwhile to discuss general principle relating to section 68 and what constitute books of accounts etc.. Assessee has maintained 'books' 6. The AO before invoking the power u/s 68 must be satisfied that there are books of account maintained by the assessee and the cash credit is recorded in the said books of account. The differences in wordings of section 68 on the one hand and sections 69 and 69A is noteworthy. In the latter sections, the words 'books of account' are followed by 'if any'. In section 68, the words 'if any' are conspicuous by their absence. This only shows that if assessee is not maintaining any books section 68 cannot be applied unlike sections 69 and 69A where assessee not maintaining books does not bar application of those sections. 6.2 The existence of books of account is a condition precedent for invoking of the power. Discharging of burden is a subsequent condition. If the first point is not fulfilled the question of burden of proof does not arise. - Anand Ram Raitani v. CIT [1997] 223 ITR 544 (Gau.). Section 68 starts with the words "Where any sum is found credited in the books of an assessee maintained for any previous year". Thus, section 68 comes into play immediately when an entry relating to a sum is found to have been credited in the books kept by the assessee. Meaning thereby, that the condition precedent to apply this section is the existence of books and the recording of 20 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar a sum, as cash credit therein - ITO v. Rajendra Kumar Taparia [2008] 22 SOT 23 (Jodh.) (URO). Meaning of 'Books' 7. Clause (12A) of section 2 of the Act gives an inclusive definition of 'books'. The said clause (12A) provides that: the term 'books or books of account' includes ledgers, day-books, cash books, account books and other books whether kept in written form or as print-outs of data stored in a floppy disc, tape or any other form of electro-magnetic data storage device. CBDT's Circular No. 14/2001 explains clause (124) of section 2 as under: 'Defining of 'Books of Account' and 'Document' so as to include electronic records, etc. 7.2 With the passing of the Information Technology Act, 2000, the Act has provided definitions of books of account' and 'document' in section 2 of the Income-tax Act, so as to include electronic records within the meaning of these terms. 7.3 As the definition is not exhaustive and only inclusive, one needs to examine the connotation of the term in ordinary commercial parlance. The following judicial rulings deal with ordinary commercial parlance meaning of the term: A book which merely contains entries of items of which no account is made at any time, is not a 'books of account' in commercial sense. To account means to reckon, and it is difficult to conceive any accounting which does not involve either additions or subtractions or both of these operations of arithmetic. A book which contains successive entries of items may be a good memorandum book; but until those entries are totalled or balanced, or both as the case may be, there is no reckoning and no accounts. A book which merely contains entries of items of which no account is made at any time, is not a 'books of account' in commercial sense. - Sheraton Apparels v. Asstt. CIT [2002] 123 Taxman 238 (Bom.) Books in which merchants, businessmen and traders generally keep their accounts. 'Books of Account' means such books of account as are usual in the 21 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar business and do not extend to letters, cheques and vouchers from which books of account can be made up." (Per Cave, J., Re. Winslow, 55 LJQB) Loose sheets or scraps of papers cannot be termed as "book" because they can easily be detached and replaced. Where loose sheets seized from assessee's premises consist of pages torn out of diary and contain no closing balances nor opening balances and is no reconciliation of these entries, such loose sheets cannot be termed as books maintained by the assessee during the previous year as these loose sheets S.P. Goyal v. Dy. CIT [2002] 82 ITD 85 (Mum.)(TM). The two words 'books of account' and 'documents' do not carry the same meaning. A document may necessarily be not a books of account. Section 68 is applicable to any entry credited in the books of account. Section 68 is a deeming provision and it is to be strictly interpreted. Applicability of section 68 cannot be enlarged. Hence, section 68 is not applicable in respect of any entry in document - Dy. CIT v. Raja Udayshankar [2006] 7 SOT 680 (Bang.) If a diary is maintained as a memorandum book, it will be treated as 'book' for section 68 purposes.- ITO v. Chikkalingaiah [2006] 9 SOT 786 (Bang.) 7.4 Books of account do not mean cash book only. It would mean complete record which a businessman is required to maintain to record his day to day transactions. According to the well settled principles of accountancy, each transaction is required to be treated under two heads - under one head, debit entry is made while under the other head, credit entry is to be made. For example, if money is received from 'K' then cash account is to be debited and account of 'K' is to be credited by the same amount. For the same reason if any sum is introduced in the books by the assessee from his own sources then cash account is debited while assessee's own account has to be credited. Cash book is nothing but the cash account which is debited if money is received and is credited if money is spent or invested by the assessee. In such cases, corresponding credit or debit entries are to be made by assessee in respect of accounts. If such entries are not made, the accounts of assessee would not tally. Therefore, failure on the part of assessee to make credit entry in the respective account would not entitle the assessee to claim that no account is credited (sic). The assessee cannot be allowed to take undue advantage of his own lapses/mistakes. Therefore, whenever any money is received by assessee and is entered in cash book it can be said that sum is credited in the books of assessee even though corresponding credit entry in the ledger account may be made subsequently. If the contention of assessee is accepted then it would amount to circumvent the provisions of section 68 which would further amount to allow the 22 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar dishonest assessees to bring the unaccounted money in the books without paying any tax. Such construction of the provisions, in my considered opinion, is not permitted. - Haji Nazir Hussain v. ITO [2004] 91 ITD 42 (Delhi) (TM). Whether piece of paper is 'books' 8. Section 68 essentially contains a deeming provision which applies when the assessee's explanation about cash credit found in his books is rejected. To invoke this section, it is a sine qua non that the sum must be credited in assessee's books maintained for a previous year. The 'piece of paper' impounded at the time of search could not be construed to be a book. The term 'book' is to be construed as it is understood in the common parlance. No special meaning could be assigned to that term. Therefore, the assessee's case could not be put within the ken of section 68.- Kantilal & Bros. v. Asstt. CIT [1995] 52 ITD 412 (Pune) 8.2 In the back drop of the above it is clear that the predominant condition is to maintain the books of accounts & these conditions needs to be cumulatively fulfilled and in absence of anyone of the fulfilling criteria, the amount cannot be added under section 68 of the act. It is also settled law that the onus to prove the genuineness of the credit is upon the assessee. The main plank of the AO is that the assessee has failed to prove the identity, creditworthiness and genuineness of the transaction of the loan was received by him. The counter contention of the appellant is that since the amount is not found credited in the books of an assessee since the assessee is not maintaining any books of accounts itself addition under section 68 is not permissible. There is no dispute to the fact that the assessee is not maintaining any books of accounts. Though the phrase "books of accounts" is not defined in the act, yet by giving of common parlance meaning to the same, it can be defined as regular set of accounts maintained by the assessee in the normal course of his activity to record all the transaction of his income and expenditure as also assets and liabilities. It should also pertain to a specific period which is generally a period of 12 months which coincides with financial year as defined in the act. Any other record of receipts and payment, which if not in the normal course of recording income and expenditure or assets and liabilities but only a summary of such receipt and payment will not amount to books of accounts but only an extract of the receipts and payments. Since the prerequisite for invoking section 68 is that 23 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar there should be a credit of a sum in the books of an assessee maintained for any previous year, in absence of such books of accounts said section cannot be invoked. There is a well laid down logic behind requirement of books of accounts for purpose of invoking section 68 particularly when said section is read in conjunction with provision of section 69, 69A, 69B, 69C etc. For invoking section 69, 69A, 69B, 69C, the same can be done provided the same is not recorded in the books of accounts if any maintained by him for any source of income. Therefore, if books of accounts are maintained and investment or money or expenditure etc. are recorded therein, addition under section 69,69A, 69B, 69C is not attracted or permissible. It is for the reason that if the investment / expenditure etc. are recorded in books of accounts, the same will be depicted by way of source of such investment or expenditure. In such a situation the source will be by way of credit of any sum. Therefore, if the books of accounts are maintained addition cannot be made under section 69,69A, 69B, 69C etc. but only of the amount credited in books of accounts to explain such investment money or expenditure. Therefore, when provision of section 68 is not attracted due to non- maintenance of books of accounts, provision of section 69,69A, 69B, 69C can be invoked if the investment money expenditure are not explained. In view of such a situation, it can be held that since the appellant is not maintaining any books of accounts wherein such sum is found credited, the addition could not have been made under section 68 of the act. The appellant in this regard has relied upon various case laws wherein such view is adopted. Since there is no contrary judgment and based on simple interpretation of s. 68, I hold that addition of Rs. 2,75,00,000 is not warranted u/s 68 and hence same is deleted. 9. Even looking otherwise, it is seen that the appellant has explained that the amount received is towards sale of agricultural land. The AO has treated as amount borrowed, but the same is unexplained cash credit within the meaning of s. 68 of the act. Thus, there is no dispute at least to the extent that the amount is borrowed though the explanation of AO and appellant is different but the in the final analysis, the amount is in the nature of capital receipts and not revenue receipts. It is equally settled law that only such sum as is in the nature of revenue receipts are taxable and not capital receipts. On this count also, the amount could not have been assessed to tax. 10 All other grounds taken in this regard are only being arguments advanced and not a different grievance other than addition of Rs. 2,75,00,000, the 24 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar same are not required to be adjudicated. Since the addition was made u/s 68, but since the appellant has not maintained books of accounts, the addition was not sustainable. 11 However, I need to examine the applicability s. 69. 69A. 69B or 69C etc. In this regard, on my query to the appellant, ld. Counsel for the appellant submitted that since there is no finding that the appellant has also incurred certain expenses or acquired any assets or money etc. the addition in alternative grounds is also not sustainable. I find force in the arguments. Since there is no finding that for explaining any money, or valuable article etc or any expenditure incurred the said amount received as advance against sale of land was offered as source, the addition under alternative provisions is not attracted. 15. The assessee has filed their submission in relation to the appeal filed by the revenue and relevant submission filed before us is reproduced here in below: At the outset is submitted that the seized paper on the basis of which addition is made is titled “Ramgarh Jamin ke pete” under which the date, name of person, amount received and the narration on account of land interest market rate is noted. Thus, the paper clearly indicates that the amount noted on this paper in relation the amount received against Ramgarh This is further supported from the fact that this noting made overle of page 71 (PB-5) which contain the details of agricultural land holding of assessee Ramgarh and the subsequent pages at 72-75 (PB 7-10) contain the details agricultural land holding the family members assessee. Thus, it is beyond doubt that 71A(PB- 6) relate amount received against Ramgarh land. 2. It is submitted that as per the provisions of section 132(4A) the Act is presumed that the contents of the books of accounts and other documents found in the possession or control of any person in the course of search are true. Similar presumption drawn 292C the Act for the purpose of assessment. Section 292C reads as under: 292C (i) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person the course of a search under 25 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar section 132 or survey under section 133A, it may, in any proceeding under Act, be presumed (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person, (ii) that the contents of such books account and other documents true; and (iii) that the signature and every other of such books of account other documents which purport to be the handwriting any particular person which may reasonably be assumed to have been signed or to be in the handwriting any particular are in that person's handwriting, in the case of a document stamped, executed attested, that was duly stamped and executed attested the person by whom purports to have been executed attested. The CBDT in Circular of 2008 dated 12.03.2008 in the explanatory to provisions relating Direct Taxes, clarified rational of introduction section 292C of the Income Act, 1961 which the presumption 132(4A) the Act has been extended to proceedings u/s 153A the Act. The relevant extract from the said circular is reproduced below. "69. Clarification in respect of presumption to seized books of account, money, bullion, jewellery other valuable article or thing to other proceedings under the Income-tax Act. 69.1 The provisions of sub-section (4A) of section 132 provides that the books of account. money, bullion, jewellery or other valuable article or thing found in the possession or control of any person in the course of a search under section 132 will be presumed to belong to the said person. is further provided that will be presumed that the contents of such books of account and other documents are true, and that the signature and every other part of such books of account and other documents which purport to be in handwriting of any particular person which may reasonably be assumed to have been signed by, or to be in the handwriting of any particular person, are in that person's handwriting, and in the case of a document stamped. executed or 26 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. 69.2 A new section 292C has been inserted so as to clarify that presumptions provided in sub section (4A) of section 132 can be made in any proceedings under this Act" It is thus clear from the above that in order to give effect to the legislative intent, while bringing in section 132(4A) of the Act of presumption, the provisions of section 292C of the IT Act, 1961 was brought in the statute vide Finance Act, 2007 with retrospective effect from 01.10.1975. It would thus suffice that section 292C of the Income Tax Act, 1961 lays down a binding deeming fiction that the books of account, other documents, money, bullion, jewellery and valuable article or thing found in the possession/control of the person would be deemed to belong to the person in whose possession/control it is found and seized and the contents of the books of account or other documents are true. As held in the judicial rulings, the sole exception to this rule is that if it is alleged that the contents are not true or does not belong to that person, then the person alleging so is obliged to establish it. In this regard reliance is placed on the following judgments: Ramanlal P. Chordia Vs. ACIT (2001) 20 CCH 0047 (Pune) (Trib.) The assessee, as a broker, was arranging the finance for various persons (borrowers) and the amounts were obtained from the various parties (lenders). The amounts were generally taken by the borrowers or a short period of say 3 months and which if necessary, was being extended The assessee was charging brokerage only to the borrowers and not to the lenders. His brokerage was to the tune of about 10 to 15 paise per month for Rs. 100 arranged for the borrower. If this money which is invested in this money-lending business belonged to the assessee, instead of brokerage he would have received the entire interest and in the diary No. 31. the entries of interest received would have been found. The brokerage in the entire year is around Rs. 3.52,000 while if the assessee had received the interest, this amount of interest would have been around 18 per cent (normal rate of interest) which would have been about Rs. 40 lakhs. Thus, diary No. 31, which is seized is itself an evidence in favour of the assessee that he was receiving only brokerage and not the interest and this fact itself 27 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar indicates that as a broker he arranged the finance for the borrower from the lender and accordingly, the money did not belong to him. On perusal, it is found that diary No. 27 is a ledger giving the accounts of various borrowers. It contains the accounts of the various borrower's and in the same accounts, the assessee has mentioned the names of the lenders in the coded form (initials). As against these names are written the amounts again in code form (for example, 100 indicates Rs.1 lakh). The due dates on which the borrowers have to repay the amounts are also mentioned and if there are extensions sought by the borrowers, the extended dates also are mentioned clearly. Some of such accounts which have been fully settled have been scratched If the assessee had not taken these amounts from the lenders there was no reason for him to write these initials of the lenders in these accounts. The fact itself indicates that he had borrowed the money from these various persons It is noted that both these diaries are considered by the Department as true. genuine and correct documents under s 132(4A) and if that be so, the diary No 27 gives, on one hand, the ledger accounts of the borrower and in the same accounts, the amounts taken from the lenders are mentioned When the Department considers the diary as genuine, there is no reason for the Department to doubt these entries in the diaries regarding the lenders. The principle of law is that under s. 132(4A) the document found in search is genuine vis-a-vis the entire contents thereof and the Revenue is not justified in holding a view that only a part of the content, i.e. the name of the borrower, is correct and not the name of the lender. Hence, in this case on the facts the entire diary has to be considered as genuine, true and correct document and if that is so, the fact that the initials of the lenders are mentioned in the accounts of the borrowers, they are to be considered as genuine Chandra Mohan Mehta vs. Asstt CIT (1999) 65 771.1 (Pune) 327 (1999) 71 ITD 245 (Pune) und TS Kumarasamy vs. Asstt. CIT (1998) 65 TTD 388 (Mad) relied on Biren V. Savla Vs. ACIT (2005) 24 CCII 0634 (Mum.) (Trib.) It is an admitted fact that diaries were maintained in the normal course of finance business. Diaries A-2 and A-4 reflected cheque transactions. The contents in the two sets of diaries are similar in nature. Against the name of 28 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar the borrowers, the names of various lenders were written, against each transaction interest rate is mentioned. The names of lenders appear against more than one borrower on different pages. Similarly, one borrower borrows money from different lenders. There are separate interest rates in respect of different lenders giving money to the common borrower. Each page is borrower-wise kept and no separate page or details is kept in respect of lenders The transactions recorded in A-2 and A-4 are admittedly made through cheques and recorded in regular books of account and transactions in A-3 and A-5 are in cash and are not recorded in regular books of account There are common parties in the two sets indicating thereby that some parties have taken money in cash as well as through banking channels. These diaries on right side reflect brokerage received by the assessee from various persons. The assessee is admittedly a finance broker arranging finance for various, persons, i.e.. borrowers and money is obtained from parties, i.e. lenders. The money is generally borrowed for a short period of time which is at many times extended and a mark made in the diary. It seems that assessee is charging brokerage only form the borrowers and not from the lenders. The brokerage varies from 10 to 15 paise per hundred per month arranged for the borrower. The entries in A-3 and A-5 did not reflect that assessee is receiving interest. If the assessee had not arranged this finance from the lender then there was no need for him to write the names of such lenders. It is not possible to believe that assessee intended to hoodwink somebody by mentioning the names of lenders. If presumption under s. 132(4) is raised in respect of A-2 and A-4 then same should be equally and in identical proportion be raised in respect of A-3 and A-5. The principle is that a document found in search should be treated as genuine with respect to all the entries recorded therein. The Revenue is not justified in taking a view that only a part of the contents, i.e., the names of the borrowers is correct and not the names of lenders Entire documents should read as a whole and contents of entire documents should be treated as correct or rejected as a whole Navjivan Oil Mills vs. CIT (2001) 170 CTR (Guj) 224: (2001) 252 TTR 417 (Guj), Kantilal Bros vs. Asstt. CIT (2995) 51 MI (Pune) 513: (1995)52 TD 412 (Pune), Glass Lines Equipment Co. Lid vs CIT (2001) 170 CTR (G) 170 (2002) 253 ITR 454 (Gnj), Mehta Parikh & Co vs CIT (1956) 30 TR 181 (SC) and Chander Mohan Mehta vs. Asstt. CIT (lm) (1999) 65 TTJ (Pune) 327 (1999) 71 TD 245 (Pune) applied. First thing the AO has to prove is that it is the investment of the assessec. In other words, the ownership of the investment must be proved to be that of the assessee the one is on the Department to prove it before actually deeming 29 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar the income, relevant to the investment, as that of the assessee. Further the words used in 69 are "may presume" It casts discretion with the AO to treat the alleged investment as unexplained or explained. It goes without saying that such discretion has to be exercised judiciously. If the AO ignores the preponderance of probabilities, then it could not be said that such discretion was exercised judiciously. For invoking s.69 the Revenue has to establish that investment belonged to the assessee. In the present case, onus cast on the Revenue to establish that outgoings belonged to the assessee bus not been discharged Therefore, the deeming provisions of s. 69 cannot be invoked in this case. For making addition under s 69, there ought to be some material to prove that outgoings taken by the borrowers belonged to the assessee CIT vs. Smt PK. Noorjahan (1999) 155 CTR (SC) 509 (1999) 237 ITR 570 (SC) relied on. Where certain document is found in the search from the premises of the assessee then a presumption is drawn under s 132(4A) that transactions recorded therein belonged to the assessee. But such presumption is not absolute. Presumption under s. 132(4A) is rebuttable as the words used in the section are "it may be presumed". It is only a question of fact as to whether investment in loan advanced belonged to the assessee or not, and such presumption about ownership is always rebuttable. Under s. 132(4A) like in s. 114 of Evidence Act, the words used are "may be presumed" It is not a mandate that whenever books of account, etc. are seized the authority shall necessarily draw the presumption irrespective of any other facts which may dissuade the Court or the authorities from doing so. Thus, when the AO raised the presumption under s 132(4A) about A-3 and A-5 that outgoings so recorded in them are investment for the assessee, then the assessee simultaneously discharged the burden lay on him by submitting that A-2 and A-4 are also a similar record of the events as A-3 and A-5 and once outgoings recorded in A-2 and A-4 are treated as investment of the lenders, the similarly placed diaries A-3, 4-5 also record the outgoings whose money investment belonged to the third parties, i.e., the lenders The AO did not point out any cogent reason as to why the onus lay on the assessee by virtue of presumption under s 132(4A) is not discharged. The onus lying on the assessee regarding explaining the investments in outgoing or about the ownership of the investment is discharged the moment the AO accepted that the outgoings recorded in similarly placed document A-2 and A-4 belonged to the third parties. After this, the burden again shifts to the Revenue to prove, with some additional material that even though outgoings recorded in 30 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar A-2 and A-4 belonged to third parties but outgoings recorded in 1-3 and A-5 belonged to the assessee. No such material has been brought on record or no cogent reasons have been advanced. There cannot be two standards of presumption, one for set A-2 and A-4 and other for A-3 and 4-5.- CIT vs SMS Investment Corporation (P) Ltd (1994) 207 FTR 364 (Raj) and I1O vs T. Abdul Majeed (1987) 64 CTR (Ker) 266: (1988) 169 ITR 440 (Ker) relied on. Since all the entries in A-3/A-5 contain the names of the lenders, therefore, what the assessee means in the statement is that money was advanced through him and it does not, therefore, lead to the inference that money so advanced belonged to the assessee. Thus, not much weight can be given to the question and answers recorded on 3rd Jan. 1995 particularly when legal implication of the words used in the statement are not clear to the deponent and when he is under lot of stress due to search operation and fear of life, due to disclosure of the names of the lenders. Further, the statement cannot be read in isolation of seized documents, which reflect that borrowings by borrowers belonged to the lenders. This is particularly important when Department did not pursue further on the summons issued by it to the common lenders/ borrowers in two sets Thus, merely on the basis of part of the statement in question No 5, it cannot be inferred that entire lending reflected in A-3/4-5 belonged to the assessee. It is un admitted position that there are common names of lenders and borrowers in A-2/A-4 und A-3/A 5. Nothing stopped the Department from pursuing these common entries by calling the details from the bank from the regular books, summon the parties and record the statements about transactions so recorded in A-3/4-5. The Department chose not to pursue the matter further in respect of some summons issued by the AO. If the Department accepts that entries common in two sets are genuine, then it should accept that all the entries in A-3/A-5 are genuine and true. Hence nothing much can be derived from not providing names/ addresses of all the lenders borrowers particularly when what was available in common list was accepted as true Thus, there is no case for making addition in the case of the assessee under s. 69 and even under 68, in respect of the borrowings in the case of the finance broker. He can at best be assessed only on the finance brokerage. The additions so sustained by CIT(A) under s. 69 are hereby deleted. Conclusion: 31 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar AO having accepted that the outgoings recorded in two diaries maintained in the normal course of finance business were from lenders to borrowers and the assessee was entitled only to his brokerage, outgoings found recorded in other two diaries with similar particulars could not, he treated as money belonging to the assessee and unexplained investment under s. 69 and there being no material on record so as to fasten the ownership of the outgoings to the assessee, addition was not called for. In the present case also Pg 71A of Annexure AS-1 clearly indicates that the amount is received against the land at Ramgarh. This land was purchased by the assessee and his family members long back and therefore, the transaction noted on this paper cannot be with reference to the purchase of land. On this paper statement of the assessee was not recorded u/s 132(4). However, in post search proceedings it was explained that the amount noted on this paper is advance received against sale of rural agricultural land from various persons and on various dates through brokers with the stipulation that interest would be paid. This fact was also stated in course of assessment proceedings vide reply filed on 21.12.2017 (PB 14-15). The AO at Pg 8 of the assessment order in Para (v) has also observed that it might be possible that any land deal could be done through any mediator/ broker but it is unbelievable that advance against such kind of deal would also be received through broker only. This is only the assumption of AO but at the same time he admitted that land deal could be through broker. No material is brought on record by the AO that the amount noted on this paper is not an advance received against sale of Ramgarh land. Therefore, the content of this paper has to be read as such in view of section 292C of the Act and therefore, addition made by the AO by treating these amounts as unexplained cash loan is unwarranted and unjustified. 3 Without prejudice to above, AO has made the addition of the amounts noted on this paper u/s 68 of the Act. Section 68 of the Act reads as under: 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 Assessing Officer, satisfactory the sum so credited may be charged to income-tax as the income of the assessee of that previous year. 32 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar From plain reading of this section it can be noted that this section applies when any sum is found credited in books of accounts. Therefore, if the credit is not in the books of accounts, section 68 cannot be invoked. The definition of the books of accounts is given u's 2012A) of the Act as under: "books or books of account" includes ledgers, day-hooks, cash books, account-books and other books, whether kept in the written form or as print- outs of data stored in a floppy, dive, tape or any other form of electro- magnetic data storage device" The definition of books of accounts is an inclusive definition. However, notepad, loose papers and diaries which can be easily detached and replaced cannot be termed as books. Ilence on the basis of the entries in document/ paper, addition u/s 68 cannot be made. In this connection reliance is placed on the following decisions: Aruna Sankhla Vs. DCIT ITA No.484/JP/2016 dt. 01.12.2017 (Jaipur) (Trib.) In this case Hon’ble ITAT at para 7.4 of its order held as under: "After considering the rival submissions and the materials available on record, we are of the considered opinion that the seized papers cannot be treated as books of account. Furthermore only the commission income can be assessed in the hands of the assessee @ 0.10% on a total of the credits of Rs. 91,67.81.272/ The addition u/s 68 of the Act can he made only if any sum is found credited in the books of the assessee. A book means a collection of sheets of papers bound together with the intention that such binding shall be permanent and papers used are kept collectively in one volume. A book which contains successive entries of items maybe a good memorandum book but until those entries are totaled or balanced or both as the case may be there is no reckoning and no accounts. A book which merely contains entries of items of which no account is made at any time, is not a "book of account in a commercial sense. Thus, the addition made u/s 68 is not justified. It is noticed that over and above the peak credit, the AO has further made an addition of Rs. 52.40.137/- on account of debtors exceeding the creditors. We have found that the peak determined by the AO is not correct, otherwise also, when once peak amount has been added then no separate addition is required. It seems that the AO has not properly 33 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar prepared the list of debtors and creditors based on any logic. The Ld. CIT(A) has confirmed the addition of Rs. 52,40,137/- under the Provisions of Section 69B of the Act. This section relates to investment made by the assessee in the acquisition of bullion jewellery or other valuable articles but it does not speak about any investment in debtors. Moreover, Section 69B also stipulates the position where the investment exceeds the amount shown in the books of account. Since the assessee does not maintain any books of account where in the debtors and creditors are reflected, therefore, this addition has also been wrongly made and upheld u/s 69B of the Act Hence, in our considered opinion, only commission income has to be determined in this case and nothing more. Accordingly, we reverse the findings of the Ld. CIT(A) and order to delete the entire addition so made. Thus Ground Nos. 3 and 4 of the assessee are allowed DCIT Vs. Smt. Manishaben N. Mashru ITA No.958/RJT/2010 dt. 04.01.2018 (Rajkot) (Trib.) "In the third ground, the Revenue challenges deletion of addition of Rs. 27.00 lakhs by the ld. CIT(A) on account of disallowance of fictitious liability 90. We heard both the parties and perused record and the orders of the Revenue authorities. During the assessment proceedings, on the basis of papers found in the survey proceedings, the AO formed an opinion that the assessee was having credit balance of Rs. 8.05,000/-with M/s Divya Travels, and in the books of the assessee the assessee has shown liability of Rs 18,95.000 The AO held the same to be fictitious liability and taxed accordingly Assessee challenged this addition before the ld CIT(A) who deleted the addition on the ground that rough papers found from the premises of wife of the assessee were mere notebooks and diaries and not books of accounts of the assessee. Besides, he observed that wife of the assessee has owned up the noting in the rough diary and taxed accordingly. The ld CIT(A) has also observed that there is no documents or material evidence with the Revenue to link flow of unrecorded transactions with the assessee. Since there is no contrary material brought before us by the Revenue to convince us to take a different view, we do not find any merit in this ground of appeal. It is dismissed." 34 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar DCIT Vs. GSNR Rice Industries Pvt. Ltd. (2021) 90 ITR (Trib.) 114 Chennai. The relevant para 21 of this decision reads as under: "21. The Income Tax Act, 1961 has defined books and books of accounts u/s. 2(12A) of the Act. as per which books and books of accounts includes, ledgers, day-books, cash books, account books and other books, whether kept in the written form or as print- outs of data stored in a floppy. disk, tape or any other form of electro-magnetic data storage device. Therefore, when books of accounts are clearly defined under the Act, then diary, notebook and retrieved data of computer CPU can be considered as books of accounts or not is a question that needs to be considered. From the definition of books' or 'books of accounts, it is abundantly clear that books of accounts means regular books of accounts maintained by the assessee for any previous year to record day to day transactions of its business including ledgers, day-books, cash books, account books and other books. The term other books does not mean to include some dumb documents like diary, notebook or deleted entries of computer CPU. The term other books refers to any other books which are relevant and in consonance with ledgers, day- books, cash books, account books, etc. Therefore, in order to include any other books of accounts maintained by the assessee within the ambit of term 'other books', those books must be relevant in the business of the assessee to keep track of transactions. Hence, other books refers to in the ordinary course of any business of the assessee are stock books maintained in the ordinary course of business to record movement of stocks, books of accounts maintained for recording salary and wages as required under the Wages Act and other statutory books prescribed under any other law. But, it does not include diary, notebook and some other dumb documents maintained by any person for any reason. Therefore, in our considered view books refer to under section 68 means, regular books of accounts maintained by an assessee in the ordinary course of business to record its business affairs and also to prepare financial statements for the relevant year. Any other documents. including, loose sheets, dairy, note book and other unconnected documents cannot be considered as books, unless the same is part of books of accounts maintained by the assessee. S.P. Goyal Vs. DCIT (2002) 82 ITD 85 (Mum.) (Trib.) in this case the Hon'ble Tribunal held that loose sheet of paper torn out of a diary could not be construed as books for the purpose of section 68 and further held that 35 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar addition could not be made simply on the basis of certain notings on loose sheets of a diary without any corroborative evidence in the form of extra cash, jewellery or investment outside the books. The Ld. CIT(A) at Pg 15 to 22 of the order after analyzing section 68 and the fact that assessee is not maintain any books of accounts has rightly deleted the addition holding that section 68 is not attracted in the present case. 4. Without prejudice to above, the AO has observed that amount noted on this paper is loan received by the assessee. Once it is accepted to be a loan it is a capital receipt and not a revenue receipt. Hence, on this analogy also the amount cannot be added to income as also held by 1.d. CIT(A) at Para 9 of Pg 22 of his order 5. It may also be noted that AO by treating these amounts as loan has made a reference to Addl. CIT for levy of penalty proceedings u/s 2711 for failure to comply with the provisions of section 269SS. Thereafter, the Addl. CIT imposed the penalty u/s 2711 vide order dt. 12.06.2018 (The L.d. CIT(A) has deleted the penalty on the ground that the amount received is against sale of land and therefore, there is no violation of section 269SS against which appeal filed by the department is also fixed for hearing before the Hon'ble ITAT). Thus, there is no dispute between the assessee and the AO that amount has been received. The only difference is that according to the assessee the amount is received as advance against sale of land whereas according to the AO the amount received is loan simplicitor. Therefore, once the AO accept that the amount received is loan and thus, levied penalty u/s 2711) for violation of section 269SS, the same cannot be added to the income as both sections 68 and 269SS are mutually exclusive. Further it can be noted that there is no dispute that the amount received is a capital receipt. The only difference is that as per the AO it is a cash loan for which penalty proceedings u/s 271D has been initiated whereas according to assessee it is a receipt of cash advance against property. Therefore, in either of situation no addition u/s 68 can be made. In view of above, order of Ld. CIT(A) be upheld by dismissing the ground of department. 36 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 16. In addition to the written submission filed the Ld. AR has made further arguments before us stating that the assessee, his wife and sons owns approximate 230 vigha of land at village Ramgadh. This fact is not disputed by the department and the seized records consists of the proof of land holding. The seized documents it self is an evidence that on the same very paper which is seized the date, amount and name of person along with the purpose is very well written. The assessee being individual partner in various firms not required to be maintain regular books of accounts. Looking to the nature of transaction being under dispute done with the help of the broker the advance against land is not income not required to be considered as income of the assessee u/s. 68 as the seized paper itself proves the nature of transaction wherein date, amount, name of person paying and the broker itself is evidently written. Merely that paper does not reveal any income chargeable to tax in the year of receipt of money the same cannot be made chargeable to tax under the pretext of section 68 of the Act. For this he relied the provision of section 292C and requested to grant the relief in accordance with the law. He further stated that when any document found during the course of search the content written on the page found is to believe as correct. He also relied on the CBDT circular no. 14/2001. He constantly argued that when on the face of the seized paper it is clearly written that the amount received is Ramgadh jamin pete what else proof require to prove the nature of transaction. He has also argued that it is thus clear that in order to give effect to the legislative intent, while bringing in section 132(4A) of the Act of presumption, the provisions of section 292C of the IT Act, 1961 was brought in the statute vide Finance Act, 2007 with retrospective effect from 01.10.1975. It would thus suffice that section 292C of the Income Tax Act, 1961 lays down a binding deeming fiction that the books of account, other documents, money, bullion, jewellery and valuable article or thing found in the 37 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar possession/control of the person would be deemed to belong to the person in whose possession/control it is found and seized and the contents of the books of account or other documents are true. As held in the judicial rulings, the sole exception to this rule is that if it is alleged that the contents are not true or does not belong to that person, then the person alleging so is obliged to establish it. In this regard reliance is placed on the following judgments: • Ramanlal P. Chordia Vs. ACIT (2001) 20 CCH 0047 (Pune) (Trib.) • Biren V. Savla Vs. ACIT (2005) 24 CCH 0634 (Mum.ITAT) 17. He has submitted that since the facts are identical the appeal of the revenue has no stand and the same is required to dismiss. He submitted that on the contrary there is no other records found in the search which proves that the contentions raised by the assessee is false and is contrary to the finding written on this page. Not only that department has not placed contrary finding that the amount is not an advance against the sale of agricultural land. Thus, the findings of the CIT(A) is correct so far as this receipt is concerned and is not covered under the provision of section 68 of the Act. He further drawn our attention to the finding of the Ld. CIT(A) that even if the receipt is considered as income or a loan then in that case since the transfer is not made the income cannot be considered as chargeable tax under the head capital gain in the year under consideration and if considered as loan even then the same is capital receipt and is not chargeable to tax in the year under receipt. Thus, he has submitted that the findings of CIT(A) is clear finding on all aspects of law and thus, there is no error in the said order of the Ld. CIT(A) on facts as well as in law the same should sustain. 38 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 18. On the other hand, the Ld. DR argued that looking to the nature of amount recorded on the reverse side of seized page 71 and in the absence of the relevant supporting documents the version of the assessee cannot be considered as true and thus, he has vehemently argued to confirm the action of the assessing officer. He has also contended that assessee failed to submit any details about the sale document or agreement to sale and in the absence of these important document one cannot believe that the sum received by the assessee is in relation to their agricultural land. He further cogently argued that the assessee has not provided the details of the broker, address, bank statement, PAN, ITR of these persons from whom substantial amount has been recorded as received and assessee unable to submit any proof except relying on the loose paper where in the relevant noting’s were made. The assessee is silent about the present status of the land deal and has merely stated that the deal is delayed as there is a dispute going on between the family member. Based on these arguments he supported the order of the Ld. AO and submitted to consider the present appeal based on these set of facts. 19. We have considered the rival contentions, persuaded the material on record and duly considered facts of the case in the light of the applicable legal position. 20. If we start from the assessment proceeding that the assessing officer after considering the submission of the assessee called for certain details in respect of the amount involved in the issue of 2.75 cr being the advance received against the sale of agricultural land being the base to make the addition and these were ( i) details of land against which advance of Rs. 4.43 crores, out of which Rs. 2.75 cr pertains to this assessment year under appeal, is said to be taken with supporting documents such as copy of agreement and copy of sale deed etc., Also the present 39 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar status of the said deal was asked. (ii) complete details of all 6 persons from which such cash advances are received along with address, PAN, copy of ITR, copy of bank statement, cash book other supporting agreement (iii) he has also called for the ledger account of all the six persons whose name is appearing at the back side of Page 71, (iv) The cash flow statement for the year under consideration. Against the each of the query raised by the assessing officer, the assessee has submitted that the loose paper [ page no. 71A Exhibit AS-1] pertaining to receipt of advances against sale of share in agricultural land by the assessee duly forms part of the material / documents seized during the course of search. This seized document established beyond doubt that all the material/ documents evidencing the claim made by the Assessee duly form part of the seized material during the course of search. Thus, considering the provision of section 292C no additional corroborative documents are required to prove the case of the Assessee. Even though he has dealt with all the four questions of the assessing officer, which is reproduced in the assessment order and the gist of the same is that (i) sale deed could not be made on account of dispute between the brothers pending in court and the holding of the land is also forms part of the seized records and law does not restrict to take advance on the disputed land to (ii) The broker has arranged the land deal and the broker was not in touch therefore, these advance being related to the capital receipt has no bearing on the income of the assessee for the year under consideration (iii) As assessee is not required to maintain the books so ledger not available but in fact the details written on the seized paper will serve the purpose of the information called for (iv) since no regular books are written cash flow is not available. 40 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 21. On perusal of the reply of the assessee on the points raised by the AO we find no breach of provision of law once the transaction recorded on the seized paper evidently make it clear that the money so received is on account of the proposed sale of agricultural land of the assessee. The argument of the AO that the advance is subject to interest but it has no bearing on the receipt of the money so far as to its nature is concerned. Thus, merely in absence of the direct evidence the prime and important evidence cannot be put aside and the department cannot take a different view than what is written in the seized records. The seized records evidently clear, the purpose of advance, name of broker, name of person paying and the date and amount paid is clearly written. Thus, now we have to see that whether this receipt of advance is income of the assessee or not? Since, the possession of the land and transfer is not took place this advance receipt is not chargeable to tax under the Act. Now, we have to see that the law permits to receive the money in advance or not? The receipt of money in cash w.e.f. 01.06.2015 considered as specified sum under the provision of section 269SS of the act and since, the money has been received before this date this receipt of advance is also in accordance with the law. Thus, the money so received and noted on this page is not prohibited receipt in the hand of the assessee and considering the nature of the receipt the same is also not chargeable to tax. Merely, the assessee looking to the facts and circumstance expressed his inability to submit the circumstantial evidence the basic nature of transaction in absence of this information does not change its nature of receipt. 22. Whether the details such as ledger account, cash book, cash flow, PAN card, address, bank statement if submitted or not will change the natura of transaction entered by the assessee, rather it will also not change the situation that the land 41 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar documents could not be made as the dispute is subject to the outcome of the court order. Thus, the contentions raised by the assessing officer while making this addition is not correct to add this advance as income of the assessee under the provision of section 68 of the Act. When the details connected with the transaction are outside the purview of the provision of section 68 as all the circumstantial evidence found in the course of search conducted by the department proves that the money so received is an advance against the sale of agricultural land. The benefit of doubt, thus, goes in favour of the assessee so far as regard the nature of receipt is concerned as section 292C cast an obligation upon the parties that when the documents found in search the party who is alleging that the facts are different as to what has been written has to prove with an evidence that the content written on the seized paper are not correct. Thus, at this stage it is also noted after taking into consideration the receipt the subsequent page seized source is considered as money received as advance. 23. All these seized documents confronted to the assessee during the course of search in the statement recorded, he has offered a sum of Rs. 2.Cr. based on the loose papers found during the course of search although the income consists partly of as undisclosed income and partly as agricultural income. 24. Alternatively, once it is accepted to be a loan or advance it is a capital receipt and not a revenue receipt. Hence, on this analogy also the amount cannot be added to income as also held by 1d. CIT(A), as we find no contrary argument before us or any material brought before us by the Revenue to convince us to take a different view of the matter then the view so taken by the Ld CIT(A). Thus, we do not find any merit in this ground of appeal raised by the revenue and thus, 42 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar appeal of the revenue on this ground is dismissed. In the result the appeal of the department bearing No. 1231/JPR/2019 is dismissed. 25. In the appeal filed by the assessee in ITA NO. 1222/JPR/2019 for the same assessment year, he has challenged action of the assessing officer in not believing the agricultural income of Rs. 12,46,718/- declared in the return of income even though the evidences for earning the agricultural income are lying in the seized material and has also erred in not considering this income as exempt income. The assessee in a statement u/s 132(4) dt. 11.12.2015 made adhoc surrender of Rs.2.01 crores. Thereafter vide letter dt. 28.04.2017 it is claimed that out of the total income surrender, Rs.1,12,92,817/- is not declared in the return of which Rs.81,26,752/- represent the agriculture income. Out of this amount the agriculture income for the AY under consideration is 12,46,718/- which is declared in the return filed u/s 153A. 26. In the assessment proceeding the Ld. AO contended that based on loose paper assessee has surrendered Rs. 2.00 cr as unaccounted income. Out of that assessee has offered a sum of Rs. 81,26,752/- as agricultural for the block period and Rs. 12,46,718/- offered as agricultural income for the year under consideration. The AO has called for the explanation of the assessee about the income disclosed. The submission made by assessee in this regard is reproduced as under : In this regard, it is submitted that the surrender of Rs. 2,01,00,000/- was made without verifying seized papers and verification of fact of his income from the books of accounts and other documents. This surrender of income was made with a view of buy peace of mind and to avoid protracted litigation and to maintain good and cordial relation with the Department. The assessee has worked out the details of additional Income for AY 2010- 43 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 11 to 2016-17 and additional Income of Rs. 1,12,92,817/ have been included in the return of income filed in response to section 153A of the Income Tax Act, 1961. The details of such additional Income offered is as under: Sr. No. A. Y. Particulars of Additional Income Amount 1 2010-11 Agricultural Income 13,70,630 2 2011-12 Agricultural Income 13,85,650 3 2012-13 Agricultural Income 11,91,969 4 2014-15 Agricultural Income 11,628 5 2015-16 Agricultural Income 25,78,644 6 2016-17 Agricultural Income 12,46,718 7 2017-18 Agricultural Income 3,41,513 8 Income recorded in the material seized from A-115, Bank Colony, Alwar during the course of search 31,66,065 Total Additional Income 1,12,92,817 Thus, a sum of Rupees 1,12,92,817/- may kindly be considered as income surrendered w/s. 132(4) of the Income Tax Act, 1961 in place of Rs. 2,01,00,000/ and accordingly stated u/s. 132(4) of the Act stands retracted/modified/amended. The assessee has earned the aforesaid additional income from activity of agriculture, business & other miscellaneous activities. 27. The AO, however, held that assessee is claiming agricultural income in respect of land holdings of all his family members as his agricultural income which is nothing but a deliberate attempt to justify his unaccounted income surrendered in search. The assessee has also failed to furnish Khasra Girdawari and sale vouchers evidencing the sale of agricultural produce and therefore, he considered the 44 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar agricultural income of 12,46,718/- in the return as bogus agricultural income and made addition for the same. 28. The Ld. CIT(A) held that there is no denial of earning of income but the assessee failed to prove that the same was in nature of agricultural income and therefore, addition made by the AO was confirmed. The relevant finding of the ld.CIT(A) in this regard is extracted here in below: “I have carefully considered the submissions made. The limited question arises is as to whether in respect of income earned by the appellant, he is entitled to exemption as agricultural income or not as per s. 10(1) or not. It is settled law that the primary onus to prove that the income is chargeable to tax is upon the revenue. However, it is equally settled law that the onus to prove that the income is exempt as per the scheme of the act is upon the assesssee. Thus, if the appellant claims that the income earned by him is exempt as per provision of law, it is he who has to prove that the condition of relevant granting exemption is fulfilled. Having said that, in the light of the present facts, there is no denial of fact that the appellant has declared income as exempt. Therefore, the appellant has to prove that the same is falling within the meaning of agricultural income as per s. 10(1) of the act. Any person claiming agricultural income will demonstrate the land on which such activity is carried on. He will also show what are the crops grown, what is the quantity sold, to whom it is sold and at what rate it is sold. He has to produce. necessary bills for the same. He has also to demonstrate the expenditure incurred for the same. The agricultural income is not generated on paper. The evidence filed does not prove of earning of net agricultural income to the extent of 12,46,718 as claimed by the appellant. As regards the case laws cited all are on the facts of respective cases where the assessee proved that he has agricultural activities carried on agricultural land, sale of products with necessary evidences. Therefore, said case laws will not help the case of the appellant. Since there is no denial of earning of income but since the appellant failed to prove that the same was in nature of agricultural income, exemption u/s 10(1) was rightly denied and same was treated as income from other sources. On the facts and in the circumstances of the case, this ground accordingly is dismissed. 45 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 29. Before the Bench on the date of hearing the Ld. AR appearing on behalf of the assessee first reiterated the facts stated in the written submission that same is extracted here in below 1. The assessee and his family members owns 57.18 hectare i.e. approx. 230 bigha of agricultural land in Tehsil Ramgarh (PB 5-10). From Khasra Girdawari of such land at PB 16-95 it is evident that safeda trees are grown on part of this land and agricultural crop is cultivated on part of the land. The assessee in his statement dt. 11.12.2015 u/s 132(4) in reply to Q.No.2 has also stated that apart from salary and remuneration he earns agricultural income. 2. In course of appellate proceedings, assessee in support of the agricultural income filed Khasra Girdawari (PB 16-95), P&L A/c of agricultural activity (PB 96), sale statement supported by invoices (PB 97-164), sale agreement with Sohrab of safeda trees (PB 165-168) and the affidavit of family members as to the belonginess of the agricultural income to the assessee (PB 169-174). However, the Ld. CIT(A) has ignored all these evidences before holding that assessee failed to prove the agricultural income. 3. It may be noted that in AY 2010-11 to 2014-15 also assessee has declared the agricultural income in the return filed u/s 153A which was assessed by AO as income from other sources. However, in these AYs the Ld. CIT(A) vide order dt. 19.08.2019 has deleted the addition made by the AO by holding that additions made by the AO are without any reference to the seized material and thus, not legally tenable. Against this order department has not filed any appeal before the Hon'ble ITAT. Thus, when addition has been deleted in earlier years, though on a technical ground, the addition sustained by Ld. CIT(A) in the year under consideration even when all the evidence of craning of agricultural income has been filed is bad in law. In view of above, addition made by AO and confirmed by Ld. CIT(A) be directed to be deleted. 30. Then, ld. AR of the assessee drawn our attention to the fact the he has filed before the lower authorities the copy of Khasra Girdawari of agricultural income, copy of income and expenditure account of agricultural income along with the supporting evidence, copy of agreement with Mr. Soharab for sale Eucalyptus 46 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar trees, copy of declaration of Deepak Data, Ajay Datta and Mohini Datta stating that agricultural income of their land belongs to the assessee. 31. On the contrary the ld. DR relied upon the findings of the lower authorities and has not controverted on any of the facts stated by the assessee in his submission and evidences filed by the assessee except that holding of the assessee is not 230 vigha and his holding is less then 40 vighas of land. The declaration of the family members was filed of late with the CIT(A) and not with the AO 32. The assessing officer has stated that merely the income disclosed is agricultural income he has considered though the offered in return of income as bogus income and charged as income from other source. Whereas the CIT(A) while considering this issue has observed as under : “para 14........Since there is no denial of earning of income but since the appellant failed to prove that the same was in nature of agricultural income, exemption u/s. 10(1) was rightly denied and same was treated as income from the other sources.” 33. On going through the bunch of evidence where in the holding of land is as much as 230 vighas are in possession and the assessee has placed on records the accounts of the agricultural income, corroborated this income with the seized bills related to these agricultural activities of the assessee. Even the ld. CIT(A) has accepted that the assessee has earned the agricultural income but has not given the benefit of exemption. We observed on looking to the size of the holding evidence showing the earning of the net agricultural income supported by an evidence to the extent of Rs. 12,46,718/- cannot be considered as not proved or not genuine and 47 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar thus ground of the assessee is allowed. Thus, the two grounds raised by the assessee for agricultural income in ITA No. 1222/JPR/2019 is allowed. 34. Now we take up ITA No. 1232/JPR/2019 being the appeal filed by the revenue against the order of the ld. CIT(A) for assessment year 2016-17. In this appeal revenue has taken following grounds of appeal 1. "On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition of Rs.6,02,275/ made on account of unexplained cash without appreciating the fact that the assessee has not maintained any books of accounts in respect of agricultural income and did not furnish details of his assets and liabilities." 2. "Or the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition made on unexplained jewelry of Rs.25,34,587/- ignoring the fact that the assessee has not submitted any concrete evidence in support of jewelry found during search proceedings." 3. "On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition made on unexplained cash loan of Rs.1,68,00,000/-without appreciating the fact that the assessee has not maintained any books of accounts and also failed to provide name, PAN, address of the persons with whom the loans were said to be taken." 4. "On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition made on account unaccounted sales of mustard seed/oil of Rs.1,21,29,142/-(only 10% of uncounted sales of Rs.1,34,76,825/-sustained) ignoring the fact that the assessee has failed to verify the sale trar.sactions from its group concerns." 5. "On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition made on account. cash purchases u/s 40A (3) of the Act of Rs.1,95,06,818/ ignoring the fact that the assessee made purchases in cash and could not have verified from the books of accounts." 48 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 6. "On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition Rs.1,18,63,659/ made on account of unexplained cash credits without appreciating the fact that during the search proceedings certain loose papers consisting of credit entries found and the assessee could not have verified from his books of accounts." 7. "On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition Rs.14,23,639/ made on account of undisclosed interest income despite the fact that assessee has paid interest to various persons against cash loans whereas assessee having cash creditors." 35. As regards the ground no. 1 raised by the revenue against the action of the Ld. CIT(A) deleting the addition of Rs. 6,02,275/- made on account of unexplained cash without appreciating the fact that the assessee has not maintained any books of accounts in respect of agricultural income and did not furnish details of his assets and liabilities. 36. Similar ground has been taken by the assessee for confirmation of action of the AO and the Ld. CIT(A) in respect of an appeal filed by the assessee before us in ITA No. 1222/JPR/2019 for assessment year 2015-16 in assessee’s own case. Hence, the decision taken in ITA No. 1222/JPR/2019 shall apply mutatis mutandis in this appeal of the assessee and considering that decision we find no reason to interfere in the finding of the Ld. CIT(A), as the fact of the case in this year and in A. Y. 2015-16 being similar the agricultural income is required to be considered as genuine based on the set of facts placed by the assessee. The ld. DR on the other hand relied on the order of the AO and has not placed any contrary evidence that the assessee has submitted in his submission. Based on this findings, ground no. 1 taken by the department in this appeal is dismissed. 49 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 37. The second ground that has been raised by the department in this appeal is in relation to the action of the ld. CIT(A) in deleting the addition made on unexplained jewelry of Rs. 25,34,587/- ignoring the fact that the assessee has not submitted any concrete evidence in support of jewelry found during the search proceedings. 38. The facts in this regard is that during the course of search at the premises of the assessee and in the bank locker, jewellery in the form of gold and silver were found which is tabulated by the AO in page. 8 of the impugned order. According to which, gold jewellery was of 3319.93 gms. Plus 945 gms of precious stones which was valued at Rs. 95,30,784 and silver ware of 5955.6 gms was valued at Rs. 1,95,353. Thus, total jewelry found was Rs. 97,26,137. During the assessment proceedings the appellant contended that the appellant and the HUF of which he is karta is owning certain jewelry and is also disclosed in wealth-tax returns. It was also contended that the jewelry of the family as a whole is kept in the bank locker and hence as per CBDT circular no. 1916 of 11th May 1994, jewelry of married male member to the extent of 250 gms, that of female member to the extent of 500 gms. And for other members to the extent of 100 gms per member should be treated as explained. The Ld. AO did not accepted the same. He held that in the statement recorded during search at assessee premises of himself, his wife and his son, there is contradiction and hence the theory of jewelry of all family members held together is not acceptable. Since the jewelry was declared in the wealth tax returns of the appellant, his HUF and his wife, to that extent the same was considered as explained and balance was treated as unexplained. Thus, addition of Rs. 882.93 gms of gold jewelry worth Rs. 23,66,252/- weighing 945 gms & other 50 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar precious stones worth Rs. 1,11,000/- and silver ware of 1549.6 gms worth Rs. 57335 was treated as unexplained making total addition of Rs. 25,34,587. 39. At the outset, the Ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the Ld. CIT(A) and also relied upon the written submission filed before the bench and the same are reproduced below; 1. In course of search gold jewelery weighing 7181.730 gms and silver articles weighing 45.113 kgs (PB 11) was found from the residence/ bank locker of assessee & his family members at Jaipur and Alwar as under: Particulars Gold Jewellery (in gms) Silver Articles ( in kgs ) From Residence and bank locker at Alwar 3319.93 5.956 From Residence and bank locker at Jaipur 3861.80 39.157 Total 7181.730 45.113 2. In search person wise list of jewellery was found (PB 12) according to which the gold jewellery held by different members of the family aggregated to 7186.208 gms. This is also supported by affidavit of various family members/ wealth tax returns (PB 13-19). This fact is also accepted by the AO at second para of Pg 11 where he admitted that such sheet of jewellery furnished by Sh. Ajay Data during search action while recording the statement has an evidentiary value to some extent and the same cannot be held as an afterthought but at the same time he further observed that such sheet does not put evidential value to a document itself until and unless it is supported with documentary evidences. He further held that jewellery found from residence and bank locker at Alwar alone is to be considered in the hands of assessee in view of the alleged contradictions in the statement of various persons recorded in search as narrated in the assessment order and thus out of 3319.93 gms of gold jewellery and 5955.60 gms of silver items found, gold jewellery of 2437.67 gms and silver of 4406 gms is explained. Accordingly, unexplained gold jewellery was worked out at 882.93 gms 51 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar valued at Rs.23,66,252/- along with value of other precious stones of Rs.1,11,000/- and unexplained silver articles was worked out at 1549.6 gms valued at Rs.57,335/- and thus, addition of Rs.25,34,587/- was made by AO. 3. The Ld. CIT(A) held that all the members and all the premises were covered by search. No addition in respect of jewellery is made in the hands of any other member of family which give credence to the contention of assessee that all the family members are staying together and therefore, the jewellery is also held together. The excess gold jewellery worked out by AO is only to the extent of 882.93 gms which could be validly possessed by married sons and daughter-in-law of the assessee. Similarly silver items is found to be excessive only to the extent of 1549.6 gms which considering the status of assessee and size of the family can be considered as acquired by way of gift on social occasions. Accordingly, addition made by the AO was deleted. 4. It is submitted that the family of assessee is a joint family comprising of the family of assessee and family of his two sons Sh. Ajay Data and Sh. Deepak Data. The family has residence at Alwar and also at Jaipur. The assessee usually resides at Alwar whereas his two sons and their family normally resides at Jaipur. Therefore, it is not uncommon that the jewellery of the daughter-in-laws of assessee is kept at the residence/ locker at Alwar. Hence, the jewellery so found at Alwar and Jaipur needs to be considered together. The AO has not accepted this contention by referring to the statement of Deepak Data/ Ajay Data, sons of assessee and Mohini Data, wife of assessee. However, these statements were not considered in proper perspective. In the statement of Mohini Devi dt. 05.11.2015 (copy enclosed) in Q.No.1 she stated that her residence is at Alwar and Jaipur. Further in reply to Q.No.2 & 3 which was with reference to the jewellery found in locker at Alwar she stated that the same belongs to her, her husband and HUF. However, no question was asked as to the jewellery found at residence. In the statement of Deepak Data dt. 15.10.2015 as referred in the assessment order, in reply to Q.No.24 where he was questioned about the jewellery found at residence at Alwar he only stated that the explanation about the same can be given by his parents. Sh. Ajay Data in statement dt. 14.10.2015 in reply to Q.No.38 (copy enclosed) where he was questioned about the jewellery found at residence from various rooms and lockers at Jaipur including the jewellery found from the room of Smt. Mohini Data, w/o Sh. Babu Lal Data explained that all the jewellery and silver items 52 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar belongs to various family members for which the person wise list of jewellery was furnished during search itself. Further when the AO himself has considered cash of Rs.1,71,010/- found at Jaipur residence as belonging to the assessee, there is no reason not to consider part of the jewellery found at Alwar as belonging to his daughter-in-laws. Thus, the jewellery found needs to be considered in totality and on that basis no excess jewellery was found particularly when in search no evidence was found that assessee has purchased any jewellery/ silver articles which is not disclosed. 5. Otherwise also alleged unexplained gold jewellery of 882.93 gms and silver article of 1.550 kg found from family members of assessee comprising of 3 male members, 3 ladies and 4 children can't be presumed to be excessive/ unreasonable considering the status of assessee. In this connection reliance is placed on the decision of Hon'ble Delhi High Court in case of Ashok Chaddha Vs. ITO 69 DTR 82 where gold jewellery weighing 906 gms found in search was held to be not substantial as being 'Stri Dhan' of the assessee's wife and accordingly addition u/s 69A was deleted. Again the Hon'ble ITAT Delhi Bench in case of Vibhu Aggarwal Vs. DCIT (2018) 170 ITD 580 where jewellery of 2531.50 gms was found at the assessee's residential premises, considered the same as reasonable by holding that in view of CBDT Instruction No. 1916 dt. 11th May, 1994, the excess jewellery found in the case of assessee, his parents, his wife, their children and the HUF was very nominal and was very much reasonable keeping in mind the riches and high status and more customary practices. In the present case also, considering the family background of the assessee, 800 gms of jewellery claimed by her is reasonable particularly when no evidence was found in search to suggest that assessee made any unexplained investment in jewellery. 40. Based on the submission, comments of the assessing officer were called for in remand report from the assessing officer, there is no controverting facts as submitted by the assessee before the lower authorities and ld. CIT(A) has based on the detailed submission of the assessee, considered the joint family size and the fact that the assessee is a regular tax payer, have also filed certain wealth tax return 53 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar and thus the ld. CIT(A) based on the following finding deleted the addition of Rs. 25,34,587/- made by the assessing officer; I have considered the impugned order as also the contention raised during assessment proceedings and as now submitted before me. It is fact that during course of search no jewelry other than that found as mentioned above was found in respect of any other member of the family. It is also fact that all the members were covered under search and all the premises were searched. No addition in respect of jewelry is made in the hands of any other member of the family. Thus it gives credence to the contention of the appellant that all the family members are staying together and therefore it can be held that the jewelry also belong to them held together. To the extent the jewelry disclosed in the wealth tax returns, the same is considered as explained and no other member has filed any wealth-tax returns as the wealth-tax liability is not attracted in their hands. Thus the CBDT circular squarely applies. In the said circular, it was opined that as per the standard hindu family tradition, a male married member can possess 250 gms of gold jewelry, married female member can possess 500 gms gold jewelry and other member can validly possess 100 gms of gold jewelry. In the family of the appellant, apart from the appellant and his wife consists of two married sons, two daughter-in-law and their three children. Giving credence to the circular and considering the likely jewelry held by them, it can be said that the excess considered by the Ld. AO is much less than the permissible limit. The excess gold jewelry worked out by the Ld. AO is only to the extent of 882.93 gms which could be validly possessed by the married sons and daughter-in-law of the appellant. Though the circular is with reference to the non-seizure of the jewelry during search to the extent mentioned therein, various courts in the judgments relied upon by the appellant, it was held that the same applies also to consider the same as explained for purpose of s. 69 of the act also and to be considered as explained. Accordingly, addition in respect of gold jewelry and precious stones studded therein is to be deleted. 41. On the contrary, the ld. DR has relied upon on the order of the assessing officer and has also not controverted the submission and contention raised by the assessee and has merely supported the order of the assessing officer. 54 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 42. Having heard the rival submission and gone through the relevant material on record, the ld. AR of the assessee explained and reconciled the valuables with the Wealth tax return and holding of the various family member reconciling the version of the family at the time of search. The submission of the assessee made before the Ld. CIT(A) is duly recorded on the page from 9 to 24, which is very detailed and exhaustive and was relied upon by the ld. AR of the assessee in addition to the brief submitted before us. No incriminating documents were found to proof that the assessee has made purchase out of books of the jewellery. Looking the detailed finding of ld. CIT(A) and since, the ld. DR has not placed any tangible argument that how and why the finding of the ld. CIT(A) is not correct on fact and on law, in the absence of such argument we find no reason to interfere in the finding of the Ld. CIT(A) and this ground no. 2 raised by the department in this appeal stands dismissed. 43. The third ground raised by the revenue in this appeal is the action of the ld. CIT(A) in deleting the addition made as unexplained cash loan of Rs. 1,68,00,000/- without appreciating the fact that the assessee has not maintained any books of accounts and also failed to provide name, PAN, address of the persons with whom the loans were said to be taken. Similar ground has been taken by the revenue in ITA No. 1222/JPR/2019 for assessment year 2015-16 in assessee’s own case. Hence, the decision taken in ITA No. 1222/JPR/2019 shall apply mutatis mutandis in this appeal of the assessee and considering that decision we find no reason to interfere in the finding of the Ld. CIT(A), as the fact of the case in this year and in A. Y. 2015-16 being similar. Thus, the third ground raised by the revenue in this regard is dismissed. 55 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 44. The fourth ground of appeal raised by the revenue is action of the ld. CIT(A) in deleting the addition made on account of unaccounted sale of mustard seed / oil of Rs. 1,21,29,142/- ( only 10 % of unaccounted sales of Rs. 1,34,76,825/- sustained) ignoring the fact that the assessee failed to verify the sale transactions from its group concerns. The fifth addition that has been challenged by the revenue in this appeal is deletion of the addition made on account of cash purchases u/s. 40A(3) of the Act of Rs. 1,95,06,818/- ignoring the fact that the assessee made purchases in cash and could not have verified from the books of accounts. Since both these grounds are on the same set of evidence and are inter related, we deal it together. 45. The AO considered certain seized material consisting various entries recorded therein and based on the working of debit and credit entries in such seized material, the AO at p. 42-49 of his order firstly calculated total debit entries to be of Rs. 4.05 crores and that of credit entry to be of Rs. 4.21 crores. He also computed peak of these credit entries to be Rs. 4.43 crores pertaining to A.Y. 2015-16 as well as A.Y. 2016-17. Accordingly for year under appeal he treated Rs. 1.68 crores to be unexplained and added u/s 68 of the Act. The said addition has been deleted by us as per earlier para of this order. On the same very seized pages and on very same entry, the AO carved out certain entries to be of purchase and sale of mustard seeds/ oil. The total of credit entries was worked out to be Rs. 1,34,76,825 and that of debit entries to be Rs. 1.95,06,818. The credit amount has been treated as sale out of books and accordingly added as such. The debit amount is considered as purchase of mustard seeds and since the same is in a sum exceeding Rs. 20000/- the same was disallowed and added u/s 40A(3) of the Act for an amount of Rs. 1,95,06,618/-. 56 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 46. At the outset, the ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied upon the written submission filed before the Bench and the same are reproduced below : Facts : 1. The AO at Pg 15-18 of the assessment order referred to the various amounts noted on the seized papers amounting to Rs.9,52,49,567/- and required the assessee to show cause why the same be not treated as unaccounted cash loan/ income. 2. The assessee filed a detailed reply in respect of the individual amount noted on these papers which is reproduced at Pg 18-40 of the order. After considering the same AO accepted that an amount of Rs.1.30 crores are repetition of entries. The remaining entries was tabulated by him date wise as debit entry, credit entry, balance and narration at Pg 42-49 of the order according to which the debit amount is worked out at Rs.4,05,05,446/- and credit amount is worked out at Rs.4,21,40,484/-. The debit amount was considered to be out of the credit amount and therefore, no adverse inference with reference to the debit amount was taken. Out of the credit amount AO separately made addition of Rs.1,68,00,000/- as discussed in Ground No.3 above. From the remaining credit amount of Rs.2,53,40,484/- he identified the credit entries to the extent of Rs.1,34,76,825/- as relatable to sale of mustard seeds/ oil and also noted that assessee has made payment for purchases of Rs.1,95,06,818/- in contravention of section 40A(3) of the Act as per the details given at Pg 53-54 of the order. Accordingly, he made addition of Rs.1,34,76,825/- on account of unaccounted sale proceeds and Rs.1,95,06,818/- on account of contravention of section 40A(3). 3. The Ld. CIT(A) held that the whole of the sale proceeds cannot be added as income but only the gross profit embedded in such sales can be brought to tax. He therefore, by applying g.p. rate of 10% of such sale confirmed the addition of Rs.13,47,683/-. He further held that since the income is estimated by applying g.p. rate of 10%, no further disallowance u/s 40A(3) is called for in view of the decision of Allahabad & Karnataka High Court and accordingly deleted the addition of Rs.1,95,06,818/-. Submission: 1. At the outset it is submitted that AO has considered amount of Rs.1,34,76,825/- as sale of mustard oil and made addition for the same. She also admitted that the transaction noted on Pg 53 & 54 of the assessment order relate to sale and purchase/ trading of mustard seeds and oil. Thus, once all 57 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar these transactions are considered as relatable to sale & purchase, the sale amount as such cannot be added to income. What can be added is only the profit margin in such sales as held in the following cases: CIT Vs. Balchand Ajit Kumar 263 ITR 610 (MP) (HC) The facts of this case were that in a search conducted at the business and residential premises of the assessee, it was found that there were credit sales which were not reflected in the books of account. On scrutiny of the books of account of the assessee, the Assessing Officer added a sum of Rs.8,19,255/- towards the sales profit of the assessee. The Commissioner (Appeals) came to the conclusion that the entire credit sales could not have been included in the total income of the assessee and accordingly followed the method of adding net profit rate of five per cent, on these sales and accordingly Rs.40,960/- was included on that score. The Tribunal held that the Commissioner (Appeals) had recourse to a reasonable method by adopting the net profit rate of five per cent in as much as the entire sale could not have been regarded as the profit of the assessee. The Tribunal, however, did not think it appropriate to reduce the rate which was added by the first appellate authority. On appeal, it is held that the total sale could not be regarded as the profit of the assessee. The net profit rate had to be adopted and once it was adopted it could not be said that there was perversity of approach. Mohan Sadhani Vs. CIT 304 ITR 52 (MP) (HC) Held that entire sale proceeds cannot be added to income, only NP rate to be adopted. CIT Vs. President Industries 258 ITR 654 (Guj.) (HC) The amount of sales could not represent the income of the assessee who had not disclosed the sales. The sales only represented the price received by the seller of the goods; only the realization of the excess over the cost incurred could form part of the profit included in the consideration for the sales. Since there was no finding to the effect that investment by way of incurring the cost in acquiring the goods, which were sold, had been made by the assessee and that investment was also not disclosed, only the excess over the cost incurred could be treated as profit. Accordingly, only profits embedded in sale proceeds can be taxed. 58 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar ITO VS. Gurubachan Singh J. Juneja 216 ITR 99 (AT) (Ahd.) (Trib.) (TM) It was held that value of the cash sales can't be added to the total income as there was no material on record that assessee made investment to make unaccounted sales. Gross profit rate should be applied to the unaccounted sales. This decision is approved by Hon'ble Gujarat High Court reported in 302 ITR 63 where at Para 6 it was held as under: "6. Hence, in the absence of any material on record to show that there was any unexplained investment made by the assessee which was reflected by the alleged unaccounted sales the finding of the Tribunal that only the gross profit on the said amount can be brought to tax does not call for any interference. The Tribunal was, therefore, justified in deleting the addition of Rs. 10,85,003 made on account of unaccounted cash sales." Agrawal Motors Vs ACIT 68 ITD 407 (Jab.), Abhishek Corporation Vs. DCIT 63 TTJ 651 (Ahd.) Addition can be made only of G.P./N.P. on suppressed sales and not entire sale price itself. The principles laid down in these cases are equally applicable in case of assessee and therefore, the Ld. CIT(A) has rightly held that sales as such cannot be taxed as income. 2. The Ld. CIT(A) after holding that sales as such cannot be added to income has applied g.p. rate of 10% on such sale to confirm addition of Rs.13,47,683/-. The g.p. rate of 10% applied by Ld. CIT(A) is on a higher side. The average g.p. rate in this trade is not more than 5% as evident from the g.p. rate declared by the following concerns: Name of concern Turnover (in Rs.) Gross profit (in Rs.) G. P. Rate (in %) AY15-16 A.Y.16-17 AY15-16 A.Y.16- 17 AY15 -16 A.Y.1 6-17 Saurabh Agrotech P. Ltd. 2570631687 1679784674 116058401 76607325 4.51 4.56 Ritika Vegetabl e Oil P. Ltd 1285202945 3618084989 41799397 152312140 3.25 4.21 59 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar Therefore, g.p. rate of 10% applied by Ld. CIT(A) is on a very higher side and the same be reduced to 5% and to that extent the addition confirmed by Ld. CIT(A) be deleted. 3. The Ld. AO has presumed that assessee has made purchases of Rs.1,95,06,818/- and the payment made is in contravention of section 40A(3) and therefore, the same was disallowed. It is submitted that out of the total amount of Rs.1,95,06,818/-, an amount of Rs.1,45,00,000/- has been given to Padam Trading Co. as security advance out of which Rs.1,43,67,005/- is received back as tabulated at Pg 56 of the assessment order leaving a balance of Rs.1,32,995/- (PB 96, 175, 185 & 208). Therefore, by giving such advance there is no violation of section 40A (3). Similarly Rs.30 lacs given to Mr. Jain (PB 243) is only an advance on which section 40A(3) is not applicable. Further amount of Rs.10,56,435/- paid is against the amount received as reflected at Pg 56 of the assessment order. In any case once all these transactions are considered by the AO as purchase transaction and the income is estimated by application of g.p. rate, disallowance u/s 40A (3) cannot be made as held in the following cases: CIT Vs. Banwarilal Bansidhar 229 ITR 229 (All.) (HC) When income of the assessee was computed applying the gross profit rate and that when no deduction was allowed in regard to the purchases of the assessee, there was no need to look into the provisions of sec. 40A(3) and Rule 6DD(j). When gross profit rate is applied, that would take care of everything and there was no need for the AO to make scrutiny of the amount incurred on the purchases by the assessee. No disallowance could have been made in view of the provisions of sec. 40A(3) r/w Rule 6DD(j) as no deduction was allowed to and claimed by the assessee in respect of the purchases. CIT VS. Gobind Ram (2015) 229 Taxman 491 (P&H) (HC) Where income of assessee is computed by applying gross profit rate, section 40A(3) need not be invoked. CIT Vs. Hindustan Equipment Pvt. Ltd. 84 CCH 285 (MP) (HC) When net profit rate was applied by AO, there was no scope for further disallowance of any expenditure u/s 40A(3) in respect of such purchase. 60 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar CIT VS. Purshottamlal Tamrakar Uchehra 270 ITR 314 (MP) (HC) Sec. 40A (3) is not applicable when income is determined by applying net profit rate. In view of above, Ld. CIT(A) has rightly deleted the disallowance made by AO u/s 40A(3) and therefore, this ground of the department be dismissed. 47. On the contrary, the ld. DR has relied on the order of the authorities below and submitted that the assessing officer after recording detailed finding made the addition of unexplained sales of the assessee on account muster oil/seeds and thus on this issue he has supported the order of the ld. AO. Alternatively, against the argument of the ld. AR of the assessee for reduction of estimation of G. P. he supported the order of the Ld. CIT(A) and as regards, the disallowance u/s. 40A(3) being the cash payment made for purchases he relied on the order of the learned assessing officer and submitted his version of both the ground and heavily supported the order of the assessing officer. 48. The finding of the ld. CIT(A) on both these ground is extracted here in below for the sake of brevity of issue on hand: I have considered the issues raised, the assessment order and the submissions made. The issue to be considered is as to whether the transactions reflect unaccounted sales and purchases or not. At the first, it is to be held that whenever any evidence is found during course of search, it is for the assessee to explain the same with cogent evidence. Simply denying the transaction without any supporting evidence will not absolve the appellant from being taxed based on the entries mentioned in seized material. The appellant cannot wash off his hands and offer no explanation in relation to such entries. The description mentioned by the AO against each such entries is not challenged by the appellant. The appellant has tried to explain the source out of which such advance is given. The AO has not added such advance paid as paid out of undisclosed income but by treating same as sale proceeds it has been taxed. Therefore, the contention of the 61 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar appellant has no merit. Another contention raised is that the appellant has not claimed the amount as deduction by way of purchase thereof and hence s. 40A(3) cannot be invoked. Though the appellant has not claimed the amount paid as deduction, if on proper examination of such evidence, it is found that the amount is towards purchases, the AO is required to give deduction when he is taxing the sales. Thus, there is no infirmity in the order of the AO to this extent. It is also contended that the addition is only on the basis of presumption and hence not tenable. I find from the record that before drawing adverse inference, the AO has given specific opportunity of being heard to the appellant. If the appellant does not come forward with any plausible explanation duly supported by way of evidence, there is no infirmity if the AO draws an adverse inference. Thus, the case laws relied in this regard are not applicable to the facts of the case. At the same time, the contention is raised that only gross profit contained in such unaccounted sale is to be taxed and not whole of such sale proceeds. For this proposition also, various case laws has been cited. If the appellant has given security advance, it can only be for the purchase of goods by some of the group entity which the appellant was supposed to disclose. By not giving the name of such entity, it can be presumed to be of the appellant alone. Hence the narration "Advance security" for amount paid and "receipt from Vinod Kumar & co" and like description for debit and credit entries was rightly considered towards sale of mustard seeds. At the same time, it is also a settled law that the whole of the sale proceeds does not become the income. Only the gross profit embedded in such sale proceeds can be brought to tax. I therefore, hold that the gross profit @ 10% of such sales needs to be taxed and not the entire amount of sale proceeds. Accordingly, addition of Rs. 13,47,683 is confirmed and balance addition out of addition of Rs. 1,21,29,142/- (Relief = Rs. 1,34,76,825 Rs. 13,47,683 = Rs. 1,21,29,142/-) is deleted. 17.2 As regards disallowance invoking provision of s. 40A(3) is concerned, I find that the amount is presumed to be purchases made in cash. Since I have estimated an amount of 10% as income, no further disallowance is attracted. The estimation of income takes care of each and every allowance/disallowance. This view is supported by the decision of Allahabad high court in the case of CIT V. Banwari Lal Bansidhar (229 ITR 229) wherein identical question came before the court. The court held thus: "The question for consideration is when no deduction was sought and allowed under section 40A(3), was there any need to go into section 40A(3) 62 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar and rule 6DD(j). We see force in the view taken by the Appellate Tribunal that when the income of the assessee was computed applying the gross profit rate and when no deduction was allowed in regard to the purchases of the assessee, there was no need to look into the provisions of section 40A(3) and rule 6DD(j). No disallowance could have been made in view of the provisions of section 40A(3) read with rule 6DD(j) as no deduction was allowed to and claimed by the assessee in respect of the purchases. When the gross profit rate is applied, that would take care of everything and there was no need for the Assessing Officer to make scrutiny of the amount incurred on the purchases by the assessee." 17.3 Similarly Hon'ble Karnataka High Court in the case of CIT v. Bahubali Neminath Muttin (72 Taxmann. Com 139) held thus: "Therefore, as no such substantial question of law has been framed and the questions pertain to findings of fact, which cannot be said to be perverse as it is evident that the books of accounts of the respondent had been rejected by the assessing authority, in which case the same books of accounts could not be relied upon in an addition on account of trade creditors and also for arriving at the closing stock. This is an established principle as has been held in the decisions relied upon by the respondent namely Indwell Constructions case (supra), Banwari Lal Banshidhar's case (supra), Aggarwal Engineering Company's case (supra)and Amman Steel and Allied Industries, case (supra)." 17.4 In view of the above discussion, it can be held that since gross profit rate is estimated to be applied, no further addition can be made invoking the provision of S. 40A (3) of the Act. I therefore delete the addition of Rs. 1,95,06,818/-. 49. At the outset the ld. AR of the assessee argued that it is not disputed by both the party about the unaccounted sale figure derived by the lower authorities. The revenue is of the view that the whole sale proceeds should be added as unexplained income of the assessee. Whereas, ld. AR of the assessee relying on the comparable case prayed to reduce the estimate of profit which is made @ 10 % of the turnover by CIT(A). While estimating the rate of profit ld. CIT(A) has not cited any 63 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar comparable case and ld. AR based on the comparable cases relied requested to restrict the addition at a reasonable rate @ 5 %. We find force in the argument of ld. AR of the assessee and considering the cited comparable cases for which revenue has on the contrary not filed any such comparable and merely stated that the same may be estimated @ 8 % of sales. Based on the rival submission we feel that estimate of 5 % G. P. will be fair and reasonable looking to the facts on hand and would render justice. The ld. AR of the assessee further argued before us that when the profit is estimated on account of the unexplained sales the separate disallowance u/s. 40A(3) should not be made. 50. On the issue we have heard the arguments and submission of both the parties. The revenue has not controverted the figure of the sales and has also not filed any tangible material that why the estimation made by the ld. CIT(A) @ 10 % being the profit estimated should sustain. On the contrary ld. AR of the assessee has relied upon the various judgments in his submission and submitted that value of sales cannot be added as income only the income earned can be added. He has relied the various decision. One of the such decision in the case we have followed in the case of ITO VS. Gurubachan Singh J. Juneja 216 ITR 99 (AT) (Ahd.) (Trib.) (TM) in this case it was held that value of the cash sales can't be added to the total income as there was no material on record that assessee made investment to make unaccounted sales. Gross profit rate should be applied to the unaccounted sales. This decision is approved by Hon'ble Gujarat High Court reported in 302 ITR 63 where at Para 6 it was held as under: "6. Hence, in the absence of any material on record to show that there was any unexplained investment made by the assessee which was reflected by the alleged unaccounted sales the finding of the Tribunal that only the gross profit on the said 64 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar amount can be brought to tax does not call for any interference. The Tribunal was, therefore, justified in deleting the addition of Rs. 10,85,003 made on account of unaccounted cash sales." Thus, following the ratio of that decision we confirm the action of the ld. CIT(A) that whole sale consideration cannot be added as income only the related profit can be added in the income of the assessee. As regards the estimation of profit the ld. AR of the assessee has filed the comparative rate of profit before us for two parties having substantial turnover and the profit declared by them ranging between 3.25 % to 4.56 % as G. P. On the other hand, the ld. DR has requested that as per provision of estimated profit @ 8 % in section 44AD the same may be considered instead of 10 %. Having considered the rival contentions we feel that 8 % being the rate of general rate of estimate for small assessee, whereas the ld. AR has filed the chart showing the rate of profit declared by the assessee engaged in the similar line of activity. Thus it would be the end of justice if the G. P. addition be restricted to 5 % instated of 10 % estimated by the ld. CIT(A). Thus, the ground no. 4 of the revenue is considered accordingly and the assessee got relief to the extent of 5 % and thus, this ground no. 4 of the revenue is partly allowed. As regards the separate disallowance made u/s. 40A(3) on the alleged unexplained purchases of muster oil/seeds we find no reason to touch the finding given by the ld. CIT(A) relying on the various cited judgement in the order in the absence of any fresh, tangible argument that how and why the finding of the ld. CIT(A) is not correct on fact and in law. Thus, we find no reason to interfere in the finding of the Ld. CIT(A) and this ground no. 4 of the revenue is partly allowed & Ground no. 5 raised by the revenue in this appeal stands dismissed. 51. The sixth ground of the revenue in this appeal is deletion of addition of Rs. 1,18,63,959/- made on account of unexplained cash credits without appreciating 65 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar the fact that during the search proceedings certain loose papers consisting of credit entries found and the assessee could not have verified from his books of accounts. 52. The facts in this regard are that the AO considered certain seized material consisting various entries recorded therein. Based on the working of debit and credit entries in such seized material, the AO at p. 42-49 of his order firstly calculated total debit entries to be of Rs. 4,05,05,446/- and that of credit entry to be of Rs. 4,21,40,484/-. He also computed peak of these credit entries to be Rs. 4.43 crores pertaining to A.Y. 2015-16 as well as A.Y. 2016-17. Thus, out of total credit entry of 4.21 crores, he made addition of 1.68 crores as unexplained cash credit u/s 68 of the Act. Further sum of Rs. 1.34 crores was added as unaccounted sale and added as such. For the balance sum of Rs. 1,18,63,659 (4,21,10,484-1,68,00,000 1,34,76,825) he noted that the said sum is unexplained cash credit. He accordingly asked the appellant to explain them. The appellant vide his letter dated 21/12/2017 explained the same as temporary advances given out of funds available with him as per advance received for sale of agricultural land. The said advances have been received back without any interest being charged thereon. The Ld. AO was not satisfied with explanation offered. He held that since the appellant failed to prove the identity, creditworthiness and genuineness of the transaction, the same is to be added as unexplained cash credit u/s 68 of the Act. 53. In respect of this addition the assessee has filed a detailed submission before the ld. CIT(A) and also filed before us, the submission filed before us is reproduced as under: Facts: 1. Out of the total credit entries of Rs.4,21,40,484/-, after reducing the amount of Rs.1.68 crores and Rs.1,34,76,825/- for which additions were 66 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar made separately by the AO as dealt in Ground No.3 & 4 above, the remaining amount of Rs.1,18,63,659/- was added on the ground that assessee failed to furnish details of these receipts and prove identity & creditworthiness of these persons and genuineness of transactions. She further made addition of Rs.14,23,639/ by calculating notional interest of 12% p.a. on such amount. 2. The Ld. CIT(A) at Para 20, Pg 64 held that the amount added by AO are not cash credit, as to these persons the amount was first advanced and then received back. Further amount is not credited in the books of accounts and therefore, section 68 is not applicable. Accordingly, addition made by the AO is deleted. Further at Para 23, Pg 69 & 70 AO held that there is no evidence on record that any interest was received by the assessee from these persons and therefore, addition made solely on the basis of presumption is deleted. Submission: 1. The details of individual amount comprising of Rs.1,18,63,659/- is tabulated at Pg 56-57 of the order of Ld. CIT(A). Out of it entry at S. No.1 & 6 of the said table amounting to Rs.4,15,760/- (1,15,760+3,00,000) (PB 142 & 158) is included by the assessee in the return filed u/s 153A. Further amount against entry S. No. 13, 14 & 19 of the said table amounting to Rs.1,69,929/- (22,663+88,938+58,328) (PB 236, 237 & 258) and at S. No.15 of Rs.75,000/- (PB 21) are of advance given which was received back. These amounts relate to the agricultural activity of assessee which is already declared by the assessee in the return of income and is part of the agricultural income of Rs.3,41,513/- declared by the assessee (PB 99-100). Out of the balance, an amount of Rs.65 lacs was given to Sh. Ashok Gupta, Rs.33 lacs was given to Puran Chand Gupta and Rs.9,50,000/- was given to Sh. Amit out of which Rs.76,50,000/- was subsequently received back and thus, it is repayment of advance given and not the advance received. The transaction wise details is at Pg 58-59 of the order of Ld. CIT(A). Further Rs.25 lacs at entry no.12 in the name of Sh. Shaurya Kumar on 15.09.2015 is a contra entry (refer Pg 47 of the assessment order) and is in fact renewal of amount received on 24.02.2015 (refer Pg 42 of the assessment order). Again entry at S. No.8 of Rs.10 lacs in the name of Sh. Brahm Dutt Modi is contra entry of same date (refer Pg 45 of the assessment order) and shows only interest payment of Rs.80,000/- and is in fact renewal of amount 67 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar received on 12.02.2015 (refer Pg 42 of the assessment order). Therefore, the amount of Rs.1,18,63,659/- is either the realisation of advance given or is agricultural income or considered in the return filed u/s 153A and therefore, the Ld. CIT(A) has rightly deleted the addition made by the AO. 54. The relevant finding of the ld. CIT(A) in respect of the deletion of the said addition in his order is recorded at page 20 of his order and the same is extracted here in below; I have considered the relevant part of the assessment order, the submissions made during assessment as also filed before me. The issue arises for consideration is whether the entries narrated in p. 58 and 59 are cash credit at all. The narration mentions the same as given to Mr. Ashok Gupta and Mr. Pooran Chand Gupta. Thus, it is the amount advanced and not received and hence the same cannot be considered as cash credit. Even during the assessment proceedings, it was explained that the said sum is temporary advance given. Looking to the table on pg. 42-49 of the order where all the entries in seized material are summarized, it is clear that peak credit was 4.43 crores. Only out of such sum the amount stated in P. 58-59 have been advanced by the appellant. The amount is not credited in the books of accounts maintained by the appellant which is a pre-requisite to make addition u/s 68 of the act. Thus, on either count, the amount could not have been added u/s 68 of the act. Hence the contention of the appellant is accepted and the addition of Rs. 1,18,63,659 made u/s 68 is required to be deleted and which is so ordered now. 55. At the outset the ld. AR of the assessee in addition to the written submission filed before the ld. CIT(A) and before us, has argued that the learned assessing officer in the assessment order made a table listing all the entries as credit and debit from the seized material. The same is appearing on page 42 to 49 of the assessment order. The entries related to this addition is explained by the assessee and is appearing on page 56-57 of order of the CIT(A). The same is extracted here in below to understand the nature and purpose of this entries on this seized material. 68 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar The ld. AR of the assessee submitted that he has submitted explanation on each of 20 entries considered by the AO u/s. 68 and the same is reproduced here in below to understand the contention of the assessee; 6.3 Contention of each entry 6.3.1 Entry no. 1 & 6 An amount of Rs. 415760.00 (115760.00+ 300000.00) has been already included in total income of the appellant while filing ROI u/s 153A of Income Tax Act, 1961. Further, the Ld. AO has also agreed with inclusion of such income in return of the appellant and has accordingly, first made addition under this ground and then deducted the same before arriving at 69 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar total income which nullified the effect of addition made here. Thus, there is no issue regarding this amount. For ready reference, kindly refer computation of total income on page no. 64 of assessment order. 6.3.2 Entry no. 13, 14 & 19 In relation to this, it is submitted that amount of Rs. 169929.00 an (22663.00/23663.00+88938.00+58328.00) is an agricultural income of the appellant which has been dealt by the Ld. AO in ground of agricultural income during assessment years 2016-17. In support of the same, we are furnishing Profit and Loss statement of and sales statement for AY 2016-17 (Annexure 23) wherein the amounts have been explicitly stated for the purpose of calculation of agricultural income of the appellant. Further, it is pertinent to note here that the Ld. AO has also considered such agricultural income of the appellant as bogus and accordingly has made addition for it. Since, the amount has been already added in total income of the appellant as bogus agricultural income, thus, inclusion of same over here too will lead to double taxation. Thus, it is our humble request to delete the same. 6.3.3 Entry no. 15 In relation to this, it is submitted that the appellant is engaged in agricultural activities for which he provides fund for expenses to farmers working on his agricultural fields. This entire amount is paid back to the appellant by the same farmer after sale of crops. Entry no. 15 amounting to Rs. 75000.00 is receipt of such amount only. In support of our explanation, we would like to furnish page no. 21 of AS 4 (Annexure 24) on which such entry is stated. By plain reading of this paper, it is evident that the appellant has paid an amount of Rs. 50000.00 and Rs. 25000.00 on 3/7/2015 and 14/9/2015 respectively for the purpose of carrying on agricultural activities and same was refunded back on 27/9/2017 on by the same individual. Since, the amount received is not in the nature of income of the appellant, thus, addition deserves to be deleted. 6.3.4 Entry no.7 In this context, it is submitted that an amount of Rs. 52970.00 was received from Marudhar Trading Company which is evident from seized document itself (Annexure 25). We have already provided expounded nature of 70 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar transactions of the appellant with Marudhar Trading Company in para no. 3.9. However, it is reiterated that Marudhar Trading Company works similar like Padam Trading Company i.e the appellant has ance secu extended advance security to even Marudhar Trading Company for the purpose of cracking cheaper supply deals through it. Later, after execution of contract with supplier, Marudhar Trading Company refunds back the advance security after deduction of its commission. As a result, amount of Rs. 52970.00 is nothing but refund of advanc security. Thus, same should not be considered as income of the appellant. 6.3.5 Entry no. 2-5, 9-11, 16, 17, 18 & 20 In relation to this, it is submitted that the appellant had provided temporary advance to Mr. Ashok Gupta, Mr. Puran Chand and Mr. Amit for their personal purpose only for a short period of time. The appellant has provided in his reply dated 21/12/2017, verbatim of same is as under: To Quote With regard to the temporary advances given to various persons mentioned in the relevant para, it is submitted that the assessee has given the amount for a short period, which was received back after a short while, which is evident from the seized material. The said amount was given out of the amount available with the assessee. The assessee is not maintaining any books of accounts and no ledger account of these parties. Since the amount has been given for a short period, therefore neither any interest have been accrued to the assessee nor have been received by the assessee. These transactions are not in the nature of loan or advances. To Unquote Nevertheless, we have extracted out entries from the table made by the Ld. AO on page no. 42-49 of assessment order. This extract contains details of amount given and taken to abovementioned parties. Kindly, refer below tables: 71 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 72 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar From above tables, it is evident that the appellant has first provided above amount as temporary advance to these parties and then received them back after a short period of time. But in case of Mr. Ashok Gupta, there stands a credit balance; this is because the Ld. AO has considered incomplete details for addition due to which credit balance is standing. Thus, addition based on perception of Ld. AO is unjustified as she has only obtained partial understanding of the facts Further, it is pertinent to note that the Ld. AO herself has accepted the fact that the amount was given to these parties. She has explicitly stated the same on page no. 58 of assessment order. Her exact words are as under: 73 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar To Quote "On perusal of documents seized from P.O operation of your residential premise situated at Bank Colony, Alwar annexed as Exhibit- 1 of AS, AS-3 & AS-4 has been observed that you have given cash advances as follows:-" To Unquote This implies that the Ld. AO has accepted the fact that the amount was given by the Appellant but she has rejected to believe that the said amounts only were received back by the Appellant from the concerned parties just after a short period of time. This proposition as concocted by the Ld. AO is itself contradictory. Further, it is pertinent to note that these entries have been picked from table drawn by the Ld. AO which clearly emphasizes the fact that Ld. AO was cognizant about these details. However, she has deliberately avoided acceptance of the truth in order to tax the appellant without any cogent basis. Furthermore, it is reiterated that the appellant does not maintain books of accounts, thus, he was unable to furnish the same. Also, the amount which has been provided to abovementioned parties was out of funds available with the appellant, evident from cash flow statement drawn by Ld. AO. Thus, it is our humble request to delete the addition of Rs. 7650000.00 since it is only the amount received back by the Appellant from the concerned parties and not his income. When the giving of amount as advances was accepted by the Ld. AO then receiving back the said amounts cannot be rejected. The Ld. AO cannot blow hot and cold while making additions to the total income of the Appellant. 6.3.6 Entry no.12 In this regard, it is submitted that amounts of Rs. 2500000.00 was received from Sh. Shorya Kumar as advances from sale of agricultural land on 24.02.2015. The entry number 12 is nothing but a renewal/ rollover of Rupees. 2500000.00 on 15.09.2015 which was originally received on 74 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 24.02.2015. Further, we would like to draw your kind attention on page number 34 of assessment order dated 30.12.2017 wherein the Learned Assessing officer has accepted herself in note 5 that AS-1 page number 71 back, AS-1 page number 91 and As-4 page number 27 of Rupees. 2500000.00 amount represent one transaction whereas 3 times amount taken. Since. This entry is already considered while making addition u/s 68 of Income Tax Act, 1961 for page 71A, thus, addition over here too will only lead to double taxation. Thus, kindly delete addition of Rupees. 2500000.00 from this ground. 6.3.7 Entry no. 8 In this respect, it is submitted that the appellant was required to pay interest of Rupees. 80000.00 on advances against sale of agricultural land. In this relation, the appellant has 1st shown payment of amount of Rupees. 1080000.00 on 13.08.2015 then shown receipt of Rupees. 1080000.00 on the same date for settlement of interest. However, actually it is only payment of interest with different approach of presentation. Thus, it is our humble request to delete addition of Rupees. 1000000.00, since, it has been returned on the same date and has no effect. From above explanation, it can be concluded that the appellant has adequately elucidated nature and source of credits, thus, it is infirmity to consider the same as unexplained and make addition in pursue of section 68 of Income Tax Act, 1961. 6.4 In conjunction to above, it is reiterated that if some documents are found during the course of search, the burden is on the assessee to provide details of the seized paper and explain the transactions as noted down on the seized paper. However, once such explanation is furnished by the Assessee then, the burden shifts upon the Revenue to prove as to how the explanation offered by the Assessee is false. In the case under consideration, no evidence or material has been brought by the revenue on record to distinguish the explanation offered by the appellant and also, no corroborative evidence has been placed to establish the allegation of the Ld. AO. 75 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 56. On the other hand on this issue ld. DR argued that in the absence of regular books of account why the transaction can be considered as money given and then received back. The surrender of income made by the assessee is lump sum and not verifiable. In addition, assessee has disclosed unexplained agricultural income. The advance given to Ashok Gupta and Puran Chand are not verifiable as no regular books are maintained. At the same time he has agreed that while making the table two – three entries are repeated and thus he supported the findings of the AO. 57. We have heard rival submission and gone through the facts and figure placed before us. We would like to extract the finding of the Ld. CIT(A), in para 4.2 of his order the same is useful in dealing this ground therefore, the same is extracted here in below “4.2 I therefore, proceed to dispose this appeal by considering grievance of the appellant in respect of specific addition made. For disposal of gound I have perused the submission made by the appellant on two dates, 04.02.2019 & 22.02.2019. On certain issues remand report was also called. The ld. Assessing officer has sent the remand report dated 28.03.2019. The rejoinder to remand report as filed by the ld. AR on 13.05.2019. These remand report & rejoinder are taken into account wherever necessary.” The DR admitted that yes there were issues in making the chart and thereby in the addition. On the contrary the ld. AR of the assessee based on the detailed argument presented by way chart proved that the money that has been received as alleged by the AO is in fact the money that has been received back. The source of the advancing this money was the amount received on agricultural land which is already considered and thus, once the money advances sources are proved, then on receipt that money against that receipt is not subjected to tax. Therefore, this credit not attract the provision of section 68 of the Act and thus, the ld. CIT(A) has correctly deleted this addition and in the absence of any tangible material provided 76 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar by the ld. DR we hold to confirm the view of the ld. CIT(A) and thus ground no. 6 raised by the department is dismissed. 58. The last and seventh ground raised by the revenue in this appeal is deletion of addition of Rs. 14,23,639/- made on account of undisclosed interest income despite the fact that assessee has paid interest to various persons against the cash loan whereas assessee having cash creditors. 59. The ld. AO held that since the appellant has given advances of Rs. 1,18,63,659/- as noted in earlier paras, the appellant must have earned interest thereon. He accordingly added a sum of Rs. 14,23,639/- being the interest earned at 12% there on and added the as income. 60. Before us the ld. AR of the assessee vehemently argued that there is no proof in the seized material that this money that was advanced was on interest and when the assessee has not received any interest no notional interest income is required to be added. Before the ld. CIT(A) the AR of the assessee filed a detailed submission and based on that submission the ld. AR vehemently argued before us that so far as addition of interest on the above amount is concerned the seized paper nowhere indicate that any interest has been received, therefore, addition of notional interest calculated by the AO on surmises & conjectures on the said amount is rightly deleted by the Ld. CIT(A). The ld. CIT(A) has given his finding on this issue at para 23 the same is reproduced here in below : “23. Having considered the impugned order and submission made before me, I am inclined to delete the addition made. First of all there is no logic in charging interest for the entire year when the entries itself reveal the same to 77 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar be for part of the year. Even after search as narrated in all the pages, there is no entry stating that any interest was received by the appellant from the person stated in p. 58-59 of the impugned order. The assessment is to be made on the basis of evidence and not on hearsay or presumptions. Neither any person has stated so to have paid any interest nor the seized material state so. The entry of payment of interest is of no consequences for the reason that neither any such interest has been allowed while computing the income nor the appellant have ever claimed the same. The addition being solely on the basis of presumption and not on the basis of any evidence is liable to be deleted. I accordingly delete the addition of Rs. 14,23,639.” 61. On the contrary the ld. DR has not controverted the submission and finding of the ld. CIT(A) has relied upon the finding of the ld. AO. 62. We have heard the rival contentions and have also persuaded the submission placed on record. Considering the arguments of the assessee and in the absence of any tangible argument from the ld. DR stating as to why and how the addition of notional interest would survive in the light of the facts submitted before us and therefore, we have no reason to hold a different view than what has been decided by the ld CIT(A) and thus, the ground no. 7 raised by the revenue is dismissed. 63. Now we take up ITA No. 1223/JPR/2019 being the appeal filed by the assessee and in this appeal the assessee has raised following grounds of appeal: 1. That the ld assessing officer has erred in law as well on the facts and circumstances of the case in not considering the submission of the assessee in proper perspective with regard to unaccounted sales, whereas there is no such sales and has erred in making an addition of total sales of Rupees 13476825.00 and the ld. CIT (A)-IV, Jaipur, has erred confirming a sum of Rupees 1347683.00 by applying a gross profit rate of 10% on such sale. 78 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar 2. That the ld assessing officer has erred in law as well on the facts and circumstances of the case in not accepting the agriculture income of Rupees 341513.00 disclosed in the return of income, whereas the evidences for earning the agriculture income are lying in the seized material and has also erred in giving various finding in the assessment order which are out of her presumption and surmises, and the ld. CIT (A)-Iv, Jaipur has erred in sustaining the same. 3. That the ld assessing offer has erred in law as well on the facts and circumstances of the case in making addition of Rupees. 341513.00 in respect of agricultural income claimed exempt by the assessee while treating the same to be unaccounted taxable income and the ld. CIT (A)-IV, Jaipur has erred in sustaining the same. 64. In respect of ground no. 1, we have given our detailed finding on this issue of estimation of profit and unaccounted sale made by the assessee. As we have already given a detailed finding on this issue in ITA NO. 1232/JPR/2019 while dealing with the ground no. 4 of the department appeal and we have partly considered the grievance of the assessee and the finding given in that appeal of the department we have dealt it with in detail and thus the finding given in ITA no. 1232/JPR/2019 shall apply mutatis mutandis in this ground also and thus, this ground No.1 of appeal is partly allowed. 65. As regards the ground no. 2 & 3 we have given our detailed finding while dealing with the assessee’s appeal in ITA No. 1222/JPR2019 for Assessment year 2015-16 since the facts are identical and therefore, the findings given by us in the appeal of the assessee in ITA No. 1222/JPR/2019 shall apply mutatis mutandis in these grounds also and thus, the grounds raised by the assessee is allowed. In ITA No. 1231/JP/2019, in the result, appeal of the revenue is dismissed. In ITA No. 1232/JP/2019, in the result, appeal of the revenue is partly allowed. In ITA No. 1223/JP/2019, in the result, appeal of the assessee is partly allowed. 79 ITA Nos. 1232, 1231, 1223 & 1222/JP/2019 ACIT, Alwar vs Shri Babu Lal Data, Alwar In ITA No. 1222/JP/2019, in the result, appeal of the assessee is allowed. Order pronounced in the open court on 05/05/2022. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 05/05/2022 *Ganesh Kr. vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Assistant Commissioner of Income Tax, Central Circle, Alwar 2. izR;FkhZ@ The Respondent- Shri Babu Lal Data, Alwar 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA Nos. 1232, 1231, 1223 & 1222/JP/2019) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar
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