Shri Farsuram Ratilal Bhamwala, Bharuch V. The Income Tax Officer, Ward-1, Bharuch

ITA 1935/AHD/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5796 (ITAT-SURAT)
• Duration Of Justice: 5 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-08-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 24-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPMA SINGLA
• Assessee Lawyers: RASESH SHAH
• Keywords: Source of fund
• Section: 234B; 274; 48; 73; 72; 13; 131; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE: SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER SHRI FARSURAM RATILAL BHAMWALA, 3, PRITAM SOCIETY-2, KASAK, BHARUCH-392001 PAN: ADFPB0662F (APPELLANT) VS THE ITO, WARD-1, BHARUCH-392001 (RESPONDENT) REVENUE BY: MS. ANUPMA SINGLA, SR. D.R. ASSESSEE BY: SHRI RASESH SHAH, A.R. DATE OF HEARING : 04-02-2020 DATE OF PRONOUNCEMENT : 14-02-2020 /ORDER PER : SANDEEP GOSAIN, JUDICIAL MEMBER:- THE BRIEF FACT OF THE CASE ARE THAT ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 10-02-2011 DECLARING TOTAL INCOME FOR RS. 2,21,970/-. THE CASE SELECTED FOR SCRUTINY WAS FINALIZED ON 30-12-2011 DETERMINING THE TOTAL INCOME AT RS. 10,51,080/- AFTER MAKING VARIOUS ADDITIONS AND DISALLOWANCES. 2. AGGRIEVED BY THE ORDER OF THE A.O. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES DISMISSED THE APPEAL FILED BY THE ASSESSEE. ITA NO. 1935/AHD/2014 ASSESSMENT YEAR 2009-10 SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 2 3. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE PREFERRED APPEAL BEFORE THE US ON THE GROUNDS MENTIONED HEREINBELOW. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- VI, BARODA ['THE CIT(A)'] ERRED IN FACT AND ; N LAW IN CONFIRMING THE ACTION OF THE INCOME TAX OFFICER, WARD -1, BHARUCH ('THE AO') IN MAKING AN ADDITION OF RS.5,36,556/- U/S 41(1) OF THE INCOME TAX ACT, 1961 ('THE ACT'). 2. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW CONFIRMING THE ACTION OF AO IN MAKING AN ADDITION OF RS. 75.00,000/- RECEIVED AS ADVANCE TOWARDS SALE OF HOUSE PROPERTY PURELY ON THE BASIS OF ASSUMPTIONS, SURMISES AND CONJECTURES. 3. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN CHARGING INTEREST U/S 234B OF THE ACT. 4. THE LEARNED CIT(A.) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN INITIATING PENALTY PROCEEDINGS U/S 274 R.W.S 271(L)(C) OF THE ACT. GROUND NO. 1 4. THIS GROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE ACTION OF ITO IN MAKING ADDITIONS OF RS. 5,36,556/- U/S. 41(1) OF THE INCOME TAX ACT, 1961. 5. LD. A.R. APPEARING ON BEHALF OF THE ASSESSEE REITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE THE LD. CIT(A). IT WAS SUBMITTED THAT THE PRESENT CASE IS NOT A CASE OF CESSATION OF LIABILITY OR REMISSION OF LIABILITY AS MATRINAGAR CO-OPERATIVE HOUSING SOCIETY HAD NOT GIVEN UP THEIR RIGHT TO RECOVER THE AMOUNT FROM THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT ASSESSEE STILL ADMIT THE LIABILITY AND ALSO ASSERTED THAT THE FACT THAT THE SOCIETY AS WELL AS THE ASSOCIATED LIABILITY WERE MORE THAN 20 YEARS OLD WERE OF NO CONSEQUENCE. THE ASSESSEE HAD CONSTRUCTED A SOCIETY MATRINAGAR CO-OPERATIVE HOUSING SOCIETY AT BHARUCH AND WAS REQUIRED TO INCUR EXPENSES ON ACCOUNT OF SEWAGE LINE, BOUNDARY WALL, TEMPLE ETC. TOWARDS DEVELOPMENT OF THE SOCIETY. IT WAS SUBMITTED THAT THESE EXPENSES WERE INCURRED BY THE OWNERS OF THE SOCIETY FOR WHICH ASSESSEE WAS REQUIRED TO REIMBURSE THEM THEREFORE IN VIEW OF THE SAME, THE ASSESSEE HAS CREATED A PROVISION IN SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 3 THE BOOKS OF ACCOUNT TOWARDS THIS LIABILITY AND, THEREFORE, IT IS NOT A CASE OF CESSATION OF LIABILITY OR REMISSION OF LIABILITY. 6. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. 7. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD, JUDGMENTS CITED BY THE PARTIES AND THE ORDERS PASSED BY THE REVENUE AUTHORITIES. FROM THE FACTS OF THE PRESENT CASE, WE NOTICED THAT ADMITTEDLY THE ASSESSEE CONSTRUCTED A SOCIETY NAMED MATRINAGAR CO-OPERATIVE HOUSING SOCIETY BHARUCH AND WAS THUS REQUIRED TO INCUR EXPENSES ON ACCOUNT OF DRAINAGE BOUNDARY WALL, TEMPLE ETC. TOWARDS DEVELOPMENT OF THE SOCIETY. SINCE THESE EXPENSES WERE INCURRED BY THE OWNER OF THE SOCIETY FOR WHICH ASSESSEE WAS REQUIRED TO REIMBURSE THEM THEREFORE THE ASSESSEE HAD CREATED A PROVISION IN THE BOOKS OF ACCOUNT TOWARDS THIS LIABILITY. WE ALSO FOUND THAT MATRINAGAR ASSOCIATION HAS NOT GIVEN UP THEIR RIGHT TO RECOVER THE AMOUNT FROM THE ASSESSEE. IN THE ABSENCE OF CONFIRMATION IT CANNOT BE PRESUMED THAT MATRI NAGAR ASSOCIATION HAS GIVEN UP RIGHT OF RECOVERY OF THE SAID AMOUNT FROM THE ASSESSEE AND MOREOVER THE SAID AMOUNT HAS ALSO BEEN SHOWN AS PAYABLE BY THE ASSESSEE IS ALSO A POINTER THAT ASSESSEE STILL ADMITS THE LIABILITY TO PAY. AFTER APPRECIATING THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT FOR INVOKING PROVISIONS OF SECTION 41(1) OF THE ACT, THERE HAS TO BE REMISSION OF LIABILITY. THERE IS NO REMISSION OR CESSION OF LIABILITY IN THE CASE OF ASSESSEE. REMISSION HAS TO BE GRANTED BY THE CREDITORS AND THE CESSION OF THE LABILITY MAY OCCUR EITHER BY REASON OF OPERATION OF LAW. REMISSION OF LIABILITY ARISES ONLY WHEN THE CREDITOR VOLUNTARILY GIVES UP THE CLAIM. THE CESSION OF LIABILITY ARISES WHEN IT CEASES TO SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 4 EXIST IN THE EYES OF LAW FOR ALL PURPOSES. WE DRAW STRENGTH FROM THE DECISION OF J.K. SYNTHETICS LTD. VS. ITO 105 ITR 864, CCIT VS. KESARI TEA COMPANY LTD. 254 ITR 434 (SC) AND CIT VS. ABDUL ADHAL 247 ITR 710. SINCE AS FAR AS THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAS STILL SHOWN THE CREDITORS AS PAYABLE, THEREFORE, THERE IS NO CESSATION OF LIABILITY. IN THIS CONTEXT, WE RELY UPON THE FOLLOWING DECISIONS:- A. EICHER MOTHER LTD. V. DY. CIT 82 TTJ 61(IND) SUBSISTING LIABILITY-SINCE THE AMOUNTS WERE PAYABLE AND HAD NOT BEEN WAIVED OFF BY THE CREDITORS, THE PROVISIONS OF S. 41(1) WERE NOT APPLICABLE TO THE FACTS OF THE CASE. B. NEW COMMERCIAL MILLS CO. LTD. V. DY. CIT 73 TTJ 893 (AHD 'C') IN THE ABSENCE OF ANY COGENT REASON AND MATERIAL TO COME TO CONCLUSION THAT THE LIABILITIES OUTSTANDING FOR 10 TO 15 YEARS HAVE CEASED IN THE YEAR UNDER CONSIDERATION SAME COULD NOT BE CHARGED TO TAX U/S 41(1). C. CIT V.TAMILNADU WAREHOUSING CORPN. 292 ITR 310 (MAD) REMISSION OF LIABILITY - AMOUNT SHOWN AS LIABILITY IN BALANCE -SHEET - NO EVIDENCE OF CESSATION OF LIABILITY - AMOUNT NOT ASSESSABLE UNDER SECTION 41. D. CIT V. SOUTHERN ROADWAYS LTD. 202 CTR 289 (J&K) AMOUNTS CARRIED FORWARD FOR YEARS - IN THE ABSENCE OF ANY EVIDENCE OF CESSATION OF LIABILITY , AMOUNT WHICH HAS BEEN MERELY CARRIED FORWARD FOR YEARS IN THE BOOKS OF ACCOUNT IS NOT ASESSABLE UNDER S 41(1). KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AS WELL AS KEEPING IN VIEW THE PRINCIPLE LAID DOWN BY DIFFERENT COURT/TRIBUNALS AS MENTIONED ABOVE, WE DELETE THE ADDITIONS MADE ON THIS ACCOUNT. CONSEQUENTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS ALLOWED. GROUND NO. 2 8. THIS GROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF CIT(A) IN CONFIRMING ACTION OF ASSESSING OFFICER IN MAKING AN ADDITION OF RS. 75 LACS RECEIVED AS ADVANCE TOWARDS SALE OF HOUSE PROPERTY. LD. A.R. APPEARING ON BEHALF OF ASSESSEE REITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE LD. CIT(A). IT WAS SUBMITTED THAT ASSESSEE HAD ENTERED INTO AN AGREEMENT ON 01-09-2008 TO SELL HIS RESIDENTIAL HOUSE PROPERTY, SITUATED AT 3, PRITMA NAGAR-1, KASAK, SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 5 BHARUCH, TO THREE PERSONS AT A CONSIDERATION OF RS. 1.50 CR. THE AMOUNT OF RS. 25,00,000/- EACH OF THREE PERSONS WAS RECEIVED IN CASH ON VARIOUS DATES. THE ASSESSEE SUBMITTED THAT THREE PERSON WHO ADVANCED THE MONEY WERE NOT HIS RELATIVES. THE ASSESSEE HEAVILY RELIED ON THE STATEMENTS RECORDED U/S.131 OF THE ACT, OF THREE CREDITORS WHERE THEY HAD CONFIRMED THE PAYMENT OF RS. 25,00,000/- EACH TO THE ASSESSEE AND TO BOLSTER ITS CASE REGARDING THE SOURCE OF THE FUNDS AND THE CREDITWORTHINESS OF THE THREE CLAIMED BUYERS, ALSO PRODUCED CERTIFICATES OF THE RESPECTIVE TALATIS, WHO CERTIFIED THE INCOME OF THE SAID BUYERS FOR VARIOUS YEARS. CERTIFICATES OF LAND HOLDING WERE ALSO PRODUCED IN CASE OF ALL THE THREE BUYERS. THE ASSESSEE ALSO CLAIMED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION BASED ON CONJECTURES, SURMISES AND ASSUMPTIONS. THE ASSESSEE SUBMITTED THAT ALTHOUGH THE TIME PERIOD MENTIONED IN THE BANAKHAT WAS OVER, THE BUNGALOW WAS NOT SOLD AS THE ASSESSEE HAD REQUESTED FOR FURTHER TIME, WHICH WAS ALLOWED BY THE BUYERS. THE ASSESSEE ALSO SUBMITTED THAT SINCE IMMEDIATE SOURCE OF THE RECEIVED MONEY WAS PROVED, THE ADDITION U/S. 68 CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION IN THE CASE OF 1. CIT VS. U.M. SHAH, PROP. SHRENIK TRADING CO. (90 ITR 0396) (BOM. H.C.), 2. CIT VS. METACHEM INDUSTRIES (245 ITR 0160) (MP) (HC), 3.ORIENTIAL TRADING CO. LTD. VS. CIT (49 ITR 0723) (BOM. H.C), 4. SAROGI CREDIT CORPORATION VS. CIT (103 ITR 0344) (PAT HC), 5, ITO VS. THAKORBHAI CHHOTUBHAI PATEL (ITO 880/AHD/2012) 6. BALWINDER KUMAR SHARMA V. ACIT (77 ITR 380) (CHANDIGARH TRIB) AND 7. KALUBHAI DHAMELIYA VS. ITO (88/SRT/2018 (SRT TRIB). 9. ON THE OTHER HAND, THE LD.DEPARTMENTAL REPRESENTATIVE(DR) RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 6 10. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL ON RECORD AND JUDGMENTS CITED BY THE PARTIES AS WELL AS ORDERS PASSED BY THE REVENUE AUTHORITIES. FROM THE FACTS OF THE PRESENT CASE, WE NOTICED THAT ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD RECEIVED RS. 75 LACS AS ADVANCE TOWARDS AGREEMENT TO SELL HIS RESIDENTIAL BUNGALOW. THE SAID ADVANCE WAS RECEIVED FROM 3 PERSONS EACH RS. 25 LACS. IN THIS RESPECT ASSESSEE HAS ENTERED INTO A VALID AGREEMENT TO SELL WITH THREE PERSONS HOWEVER DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER DIRECTED THE ASSESSEE TO FILE THE CONFIRMATION OF THESE PERSONS AND ACCORDINGLY THE ASSESSEE DULY FILED THE CONFIRMATIONS AND ALSO THE AFFIDAVITS OF THESE THREE PERSONS THEREBY CONFIRMING THE ADVANCES GIVEN BY THESE PERSONS TO THE ASSESSEE. THOUGH IT IS ALSO A FACTUAL POSITON THAT THOSE PERSONS HAVE ALSO STATED THEIR SOURCE OF INCOME, WE ALSO NOTICED THAT ALL THOSE PERSONS WERE NOT RELATED TO THE ASSESSEE. EVEN THE A.O. ISSUED SUMMONS U/S. 131 TO THESE PERSONS FOR FINDING OUT THE TRUTH AND CONSEQUENTLY ALL THESE PERSONS PERSONALLY APPEARED BEFORE THE LD. A.O. IN PURSUANCE OF SUMMONS U/S. 131 AND ALL THOSE PERSONS WERE PERSONALLY EXAMINED BY THE A.O. IN THEIR STATEMENTS BEFORE THE A.O. ALL THE PERSONS CONFIRMED WHO HAD PAID THE AMOUNT TO THE ASSESSEE. THE SOURCE OF MAKING PAYMENT WAS ALSO DISCLOSED BY ALL THE PERSONS, HOWEVER, AO REJECTED THE EVIDENCES AND THE STATEMENTS RECORDED U/S. 131 AND PROCEEDED TO MAKE THE ADDITIONS. 11. WE HAVE ALSO GONE THROUGH THE DETAILS OF ALL THOSE PERSONS BY THE ASSESSEE BEFORE REVENUE AUTHORITIES AS WELL AS BEFORE US BY WAY OF PAPER BOOK. FROM THE RECORDS, WE ARE NOTICED THAT ASSESSEE HAS RECEIVED THE MONEY FROM THREE DIFFERENT PERSONS WHO WERE NOT RELATIVES OF THE ASSESSEE AND IT IS ALSO UNDISPUTED FACT THAT ASSESSEE HAD SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 7 RECEIVED THE MONEY IN PURSUANCE OF AN AUTHORITY TO SELL ENTERED INTO ON 01-09-2008. WE NOW ANALYZED THE EVIDENCES BASED ON RECORD VIS-- VIS THE CONTENTIONS OF THE A.R. WHICH ARE SUBMITTED BY ASSESSEE VIDE THEIR WRITTEN SUBMISSION WHICH ARE SUBMITTED AS FOLLOWS:-. SHRI JANARDANNARENDRAKUMARJOSHI SHRIJANARDAN JOSHI HAD GIVEN AN AMOUNT OF RS. 25,00,000 TO THE APPELLANT. FOR PROVING THE SAME SHRIJANARDAN JOSHI FILED A CONFIRMATION WITH THE AO (REFER PAGE 7). SHRIJANARDAN JOSHI ALSO FURTHER FILED AN AFFIDAVIT DATED 26-12- 2011 CONFIRMING THE ADVANCE GIVEN TO THE APPELLANT (REFER PAGE 60 TO 63).SHRIJANARDAN JOSHI IN HIS STATEMENT U/S. 131 DATED 1-12-2011 BEFORE THE AO CONFIRMED TO HAVE GIVEN THE MONEY TO THE APPELLANT. COPY OF THE STATEMENT IS ATTACHED IN INDEX - II AT PAGE NOS. 74 TO 79. SOME OF THE IMPORTANT FACTS AS STATED IN THE STATEMENT U/S. 131 IS .REPRODUCED HEREINBELOW: 'Q3: WHAT ARE YOUR SOURCES OF INCOME? A3: MY MAIN SOURCE OF INCOME IS AGRICULTURE INCOME. I AM HAVING 8 ACRES OF AGRICULTURE LANDIN WHICH I CULTIVATE BANANAS, ROSES AND SUGARCANE. Q8: WHAT IS THE AGRICULTURAL OUTPUT & WHERE DO YOU SELL YOUR AGRICULTURAL PRODUCE? A8: I CULTIVATE BANANAS ON 2.5 ACRES PRODUCING ABOUT 80 TONNES OF BANANAS SOLD TO LOCAL MERCHANTS AT RS. 7/KG FETCHING APPROX. RS. 5,50,000. 1 ALSO CULTIVATE ROSES AND SELL TO LOCAL MERCHANTS FETCHING RS. 1,50,000/- PER ANNUM. FOR THE 1 ST TIME THIS YEAR I HAVE CULTIVATED SUGARCANE ON 3 ACRES OF LAND WHICH WILL FETCH AROUND 120 TONNES OF SUGARCANE. THE SALE PROCEEDS ARE AROUND RS. 1900/- PER TONNE WOULD BE RS. 2,28,000/-. Q10: DURING FY 2008-09 DID YOU HAVE ANY FINANCIAL TRANSACTIONS WITH SHRIFARSURAM R BHAMWALA? IF YES, GIVE DETAILS? A10: YES, DURING FY 2008-09 I HAD ENTERED INTO AN AGREEMENT (BANAKHAT) WITH SHRIFARSURAM R BHAMWALA - ALONG WITH MY COUSIN BROTHER NAMED SH. KISHORUPENDRA JOSHI & COUSIN SISTER NAMED KUM. JYOTIBENRASHMIKANTPANDYA FOR PURCHASE OF HOUSE PROPERTY LOCATED AT BUNGLOW NO. 3 PRITAMNAGER - 1 SOCIETY, MAKTAMPUR, BHARUCH FOR A TOTAL CONSIDERATION RS. 1.5 CRORES OUT OF WHICH RS. 75 LACS WERE PAID IN FY 2008-09 (RS 25 LACS EACH). Q11: WHAT IS THE SOURCE OF YOUR PAYMENT OF RS. 25 LACS DURING FY 2008-09 TO SHRIFARSURAM R BHAMWALA? A11: I HAVE PAID RS. 25 LACS IN CASH IN 3 INSTALMENTS OF RS. 10 LACS, 10 LACS& 5 LACSON 1/9/08, 2/10/08 AND 30/3/09 OUT OF ACCUMALATED SAVINGS OF EARLIER YEARS.' ON THE PERUSAL OF THE ABOVE YOUR KIND OFFICE WOULD NOTICE THAT IN NO UNCERTAIN WORDS IT HAS BEEN STATED THAT THE AMOUNT WAS GIVEN TO THE APPELLANT. THE SOURCES OF MAKING THE PAYMENT WAS ALSO GIVEN. WHEN QUESTIONED WHETHER THE AMOUNT WAS GIVEN IN CASH IT WAS CONFIRMED THAT THE PARTY BEING A FANNER HAD GIVEN THE AMOUNT IN CASH. WITH RESPECT TO THE CREDITWORTHINESS, WE SUBMIT THAT SHRIJANARDAN JOSHI HAD CATEGORICALLY STATED THE INCOME FROM SALE OF BANANA, ROSES AND SUGARCANE. THE INCOME EARNED BY SHRIJANARDAN JOSHI IS RS. 9,28,000 PER YEAR. IT WAS ALSO CONFIRMED THAT THE AMOUNT WAS GIVEN OUT OF PAST SAVINGS. FURTHER, IN ORDER TO PUT THE MATTER BEYOND DOUBT WE INVITE YOUR KIND ATTENTION TO THE CERTIFICATE OF THE TALATI CUM MANTRI ATTACHED IN THE PAPER BOOK AT PAGE NOS. 52-53. IN THE SAID CERTIFICATE THE TALATI CUM MANTRI HAS CONFIRMED THE INCOME OF RS. 8,00,000 FOR FY 2008-09 AND RS. 6,00,000 AND RS. 7,00,000 FOR FY 2006-07 AND 2007-08 RESPECTIVELY. THEREFORE THE CONTENTION OF THE AO THAT SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 8 SHRIJANARDAN JOSHI IS NOT CAPABLE OF GIVING THE AMOUNT TO THE APPELLANT IS NOT AS PER THE FACTS ON RECORD. FURTHER, THERE IS NO EVIDENCE EXCEPT PRESUMPTION FOR REJECTING THE SAID EVIDENCES. AT PAGE NOS. 54 TO 59 WE HAVE ATTACHED THE PROOF OF THE LAND HOLDING. ON THE PERUSAL OF THE SAME YOUR KIND OFFICE WOULD NOTICE THAT THE LAND ARE REGISTERED AS AGRICULTURAL LAND IN GOVERNMENT RECORDS. THE CROP IS ALSO MENTIONED IN THE SAME. FURTHER, WE MAY ALSO LIKE TO PUT ON RECORD THAT THE LAND IS SITUATED AT VILLAGE MANGLESHWAR. THE LAND MENTIONED IN THE 7/12 RECORDS IS ON THE RIVER FRONT AND VERY FERTILE LAND (REFER PAGE 61-62). IN VIEW OF THE SAME THERE IS HIGH YIELD AND MORE THAN ONE CROP CAN BE TAKEN IN ONE SEASON. THESE FACTS HAVE NOT BEEN CONTROVERTED BY THE AO. IN VIEW OF THE SAME WE SUBMIT THAT THE CONTENTION OF THE AO THAT THE PERSONS ARE NOT CREDITWORTHY IS NOT AS PER THE EVIDENCES ON RECORD SHRIKISHORUPENDRAKUMARJOSHI SHRIKISHORE JOSHI HAD GIVEN AN AMOUNT OF RS. 25,00,000 TO THE APPELLANT. FOR PROVING THE SAME SHRIKISHORE JOSHI FILED A CONFIRMATION WITH THE AO (REFER PAGE 7). SHRIKISHORE JOSHI ALSO FURTHER FILED AN AFFIDAVIT DATED 26-12-2011 CONFIRMING THE ADVANCE GIVEN TO THE APPELLANT (REFER PAGE 48 TO 51). SHRIKISHOR JOSHI IN HIS STATEMENT U/S. 131 DATED 1-12-2011 BEFORE THE AO CONFIRMED TO HAVE GIVEN THE MONEY TO THE APPELLANT. COPY OF THE STATEMENT IS ATTACHED IN INDEX - II AT PAGE NOS. 68 TO 71. SOME OF THE IMPORTANT FACTS AS STATED IN THE STATEMENT U/S. 131 IS REPRODUCED HEREINBELOW: > IN REPLY TO QUESTION 4 SHRIKISHOR HAS STATED THAT HE HAS APPROXIMATELY 10 ACRES OF AGRICULTURAL LAND. THE YEARLY INCOME FROM AGRICULTURAL ACTIVITIES IS RS. 5 TO 6 LACS. MAIN CROPS ARE BANANA, COTTON, PAPAIYA. THE LAND IS OWNED BY HIS FATHER BUT AS HE IS THE ONLY SON HE HANDLES THE ENTIRE ACTIVITY. > IN REPLY TO QUESTION NO. 5 SHRIKISHOR HAS GIVEN THE DETAILS OF MOVABLE AND IMMOVABLE PROPERTIES OWNED BY HIM AND HAS ALSO STATED THAT THE AGE OF HIS FATHER IS 66 YEARS AND THEREFORE HIS FATHER CANNOT WORK. > IN REPLY TO QUESTION NO. 7 SHRIKISHOR HAS STATED THAT IN 3 ACRES OF LAND BANANA IS GROWN. THE DETAILS AS TO HOW AND FROM WHOM THE BANANA TISSUES ARE PURCHASED IS ALSO MENTIONED IN THE REPLY. IT HAS ALSO BEEN STATED THAT PAPAIYA IS GROWN, COTTON IS GROWN AND ALSO SUGARCANE IS GROWN. DETAILS OF EACH ITEMS THE TIME TAKEN AND ALSO HOW THE SEEDS / TISSUES ARE PROCURED IS ALSO STATED. THE METHOD OF SELLING THESE CROPS IS ALSO STATED IN DETAIL IN REPLY TO HIS QUESTION. > IR REPLY TO QUESTION NO. 8 SHRIKISHOR HAS STATED THAT HE IS KNOWING THE APPELLANT SINCE LAST 3 YEARS. IT HAS BEEN STATED THAT SINCE SHRIBHAMWALA WAS GOING TO SELL HIS BUNGLOW THEY HAD CONTACTED HIM. IT HAS BEEN CONFIRMED THAT SHRIKISHOR ALONG WITH OTHER TWO RELATIVES HAVE GIVEN AN AMOUNT OF RS.25,00,000 TO THE APPELLANT. > THE AO IN THE ASSESSMENT ORDER WHILE DEALING WITH THE STATEMENT OF SHRIKISHOR HAS STATED THAT THE LAND IS NOT OWNED BY SHRIKISHOR. THE AO HAS REPEATED THIS CONTENTION IN PARA (I) ON PAGE 11 OF THE ASSESSMENT ORDER. WE MOST RESPECTFULLY SUBMIT THAT IN THE STATEMENT OF SHRIKISHOR ITSELF IT HAD BEEN CLARIFIED THAT THE LAND IS IN THE NAME OF HIS FATHER SHRIUPENDRAKUMAR JOSHI. > REFER PAGE 33 WHEREIN THE LAND HOLDING OF SHRIUPENDRAKUMAR JOSHI HAS BEEN MENTIONED. IN THE 7/12 ATTACHED AT PAGE NOS. 34 TO 40 THE CROP GROWN IS ALSO MENTIONED. > IN THE AFFIDAVIT SHRIKISHOR HAS CONFIRMED TO HAVE GIVEN THE MONEY TO THE APPELLANT. REFER PAGE 48 TO 51. > FURTHER, WE MAY ALSO LIKE TO PUT ON RECORD THAT THE LAND IS SITUATED AT VILLAGE MANGLESHWAR. THE LAND MENTIONED IN THE 7/12 RECORDS IS ON THE RIVER FRONT AND VERY FERTILE LAND (REFER PAGE 50). IN VIEW OF THE SAME THERE IS HIGH YIELD AND MORE THAN ONE CROP CAN BE TAKEN IN ONE SEASON. THESE FACTS HAVE NOT BEEN CONTROVERTED BY THE AO. IN VIEW OF THE SAME WE SUBMIT THAT THE CONTENTION OF THE AO THAT THE PERSONS ARE NOT CREDITWORTHY IS NOT AS PER THE EVIDENCES ON RECORDS. SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 9 > THE TALATI CUM MANTRI HAS CERTIFIED THE INCOME OF SHRIKISHOR. REFER PAGE 31 WHEREIN THE INCOME FOR FY 2008-09 HAS BEEN STATED TO BE RS.9,00,000 AND FOR FY 2006-07 AND FY 2007-08 TO BE RS. 7,00,000 AND RS. 8,00,000 RESPECTIVELY (PAGE 32). THEREFORE THE CONTENTION OF THE AO THAT SHRIKISHOR IS NOT CAPABLE OF GIVING THE AMOUNT TO THE APPELLANT IS NOT AS PER THE FACTS ON RECORD. FURTHER, THERE IS NO EVIDENCE EXCEPT PRESUMPTION FOR REJECTING THE SAID EVIDENCES. SMT. JYOTIBEN RASHMINKANTPANDYA SMT. JYOTIBEN HAD GIVEN AN AMOUNT OF RS. 25,00,000 TO THE APPELLANT. FOR PROVING THE SAME SMT. JYOTIBEN FILED A CONFIRMATION WITH THE AO (REFER PAGE 7). SMT. JYOTIBEN ALSO FURTHER FILED AN AFFIDAVIT DATED 26-12-2011 CONFIRMING THE ADVANCE GIVEN TO THE APPELLANT (REFER PAGE 27 TO 30). SMT. JYOTIBEN IN HER STATEMENT U/S. 131 DATED 1-12-2011 BEFORE THE AO CONFIRMED TO HAVE GIVEN THE MONEY TO THE APPELLANT. COPY OF THE STATEMENT IS ATTACHED IN INDEX - II AT PAGE NOS. 72 TO 73. SOME OF THE IMPORTANT FACTS AS STATED IN THE STATEMENT U/S. 131 IS REPRODUCED HEREINBELOW: > IN REPLY TO QUESTION 4 SMT. JYOTI HAS STATED THAT SHE HAS APPROXIMATELY 5 ACRES OF AGRICULTURAL LAND. THE LAND IS OWNED BY HER MOTHER AND HER MATERNAL AUNTIE. HER MATERNAL AUNTIE BEING BLIND CANNOT DO ANY ACTIVITY AND HER MOTHER BEING 79 YEARS OLD NO AGRICULTURAL ACTIVITIES CAN BE CARRIED OUT BY HER. IN VIEW OF THE SAME SMT. JYOTI LOOKS AFTER THE ENTIRE AGRICULTURAL ACTIVITIES AND TAKES CARE OF THE LAND. > IN REPLY TO QUESTION 7 SHE HAS CONFIRMED TO HAVE GROWN BANANA AND SUGARCANE. THE METHOD OF PROCURING THE TISSUE AND ALSO THE METHOD OF SALE IS MENTIONED IN THIS REPLY. > IN REPLY TO QUESTION 8 SHE HAS CONFIRMED TO HAVE GIVEN AN AMOUNT OF RS.25.00 LACS ON DIFFERENT DATES TO THE APPELLANT. > THE AO IN THE ASSESSMENT ORDER WHILE DEALING WITH THE STATEMENT OF SMT. JYOTI HAS STATED THAT THE LAND IS NOT OWNED BY HER. THE AO HAS REPEATED THIS CONTENTION IN PARA (I) ON PAGE 11 OF THE ASSESSMENT ORDER. WE MOST RESPECTFULLY SUBMIT THAT IN THE STATEMENT OF SMT. JYOTI ITSELF IT HAD BEEN CLARIFIED THAT THE LAND IS IN THE NAME OF HER MOTHER SMUASHKANTABEN JOSHI. > REFER PAGE 23 TO 26 WHEREIN THE LAND HOLDING OF SMT. JASHKANTABEN JOSHI HAS BEEN MENTIONED. > IN THE AFFIDAVIT SMT. JYOTI HAS CONFIRMED TO HAVE GIVEN THE MONEY TO THE APPELLANT. REFER PAGE 27 TO 30. > FURTHER, WE MAY ALSO LIKE TO PUT ON RECORD THAT THE LAND IS SITUATED AT VILLAGE MANGLESHWAR. THE LAND MENTIONED IN THE 7/12 RECORDS IS ON THE RIVER FRONT AND VERY FERTILE LAND (REFER PAGE 29). IN VIEW OF THE SAME THERE IS HIGH YIELD AND MORE THAN ONE CROP CAN BE TAKEN IN ONE SEASON. THESE FACTS HAVE NOT BEEN CONTROVERTED BY THE AO. IN VIEW OF THE SAME WE SUBMIT THAT THE CONTENTION OF THE AO THAT THE PERSONS ARE NOT CREDITWORTHY IS NOT AS PER THE EVIDENCES ON RECORDS. > THE TALATI CUM MANTRI HAS CERTIFIED THE INCOME OF SMT.JVOTI. REFER PAGE 21 WHEREIN THE INCOME FOR FY 2008-09 HAS BEEN STATED TO BE RS.8,00,000 AND FOR FY 2006-07 AND FY 2007-08 TO BE RS. 6,00,000 AND RS. 7,00,000 RESPECTIVELY (PAGE 22). THEREFORE THE CONTENTION OF THE AO THAT SMT. JYOTI IS NOT CAPABLE OF GIVING THE AMOUNT TO THE APPELLANT IS NOT AS PER THE FACTS ON RECORD. FURTHER, THERE IS NO EVIDENCE EXCEPT PRESUMPTION FOR REJECTING THE SAID EVIDENCES. AFTER APPRECIATING ABOVE MENTIONED FACTS ALONG WITH THE DOCUMENTARY EVIDENCES PLACED ON RECORD, WE NOTICED THAT THERE WAS EVIDENCES IN THE FORM OF CONFIRMATION, AFFIDAVIT, STATEMENT U/S. 131, INCOME PROOF, IN THE FORM OF CERTIFICATE OF TALATI CUM MANTRI, LAND HOLDINGS ETC.. THERE IS NO DOCUMENTARY EVIDENCES IN THE POSSESSION OF THE DEPARTMENT TO DISPROVE THE EVIDENCE AS PLACED ON RECORD BY THE SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 10 ASSESSEE. THE A.O. HAS RECORDED THE STATEMENTS OF THE PERSONS FROM WHOM THE ADVANCE WAS RECEIVED. THESE PERSONS HAVE CATEGORICALLY CONFIRMED AND ADMITTED OF HAVE DOING AGRICULTURAL ACTIVITIES. THE LAND HOLDINGS IN THE FORM OF 7/12 AND ALSO THE CERTIFICATE OF TALATI CUM MANTRI HAS ALREADY BEEN PLACED ON RECORD. THE METHOD BY WHICH THE TISSUE WERE PROCURED BY THE CREDITORS WAS SOLD IN THE MARKET HAS ALSO BEEN MENTIONED BY THE RESPECTIVE PERSONS. ALL THOSE PERSONS HAVE SPECIFICALLY STATED THAT AGRICULTURAL ACTIVITIES BEING CARRIED OUT BY THEM. THE CERTIFICATE OF TALATI ALSO SHOWS THAT THE LAND OWNED BY THOSE PERSONS ARE VERY FERTILE AND THE EARLY INCOME FOR THE YEAR UNDER CONSIDERATION WAS BETWEEN 8 TO 9 LACS FOR THESE INDIVIDUALS. APART FROM THAT THEY HAVE ALSO SPECIFICALLY STATED BEFORE THE ASSESSING OFFICER THAT THE AMOUNT WAS ADVANCED FROM ACCUMULATED SAVINGS OF PAST YEARS. IN THIS RESPECT, WE RELY UPON THE DECISION IN THE CASE OF SAROGI CREDIT CO-OPERATIVE SOCIETY VS. CIT 103 ITR 0344 (PATNA HIGH COURT) WHEREIN IT WAS HELD AS UNDER:- CASH CREDITBURDEN OF PROOFCREDITORS APPEARING BEFORE THE ITO AND STATING THAT > AMOUNT OF RS. 20,000 WAS IN FACT ADVANCED BY THEMITO DISBELIEVING THEM AND MAKING ADDITIONTRIBUNAL ACCEPTING THE DEPOSIT TO BE GENUINE TO THE EXTENT OF RS. 5,000 MAKING ADDITION OF RS. 15,000NOT JUSTIFIEDONCE THE IDENTITY OR THE THIRD PARTY CREDITORS ESTABLISHED BEFORE THE ITO AND THE CREDITORS HAVE PLEDGED THEIR OATH THAT THEY HAS ADVANCED THE AMOUNTS IN QUESTION TO THE ASSESSEE, THE BURDEN IMMEDIATELY SHIFTS ON TO THE DEPARTMENT TO SHOW AS TO WHY THE ASSESSEE'S CASE COULD NOT BE ACCEPTED AND AS TO WHY MUST BE HELD THAT THE ENTRY, THOUGH PURPORTING TO BE IN THE NAME OF A THIRD PARTY, SI REPRESENTED THE INCOME OF THE ASSESSEE FROM A SUPPRESSED SOURCEFURTHER, TRIBUNAL HAVING ACCEPTED THE GENUINENESS OF CASH CREDITS IN PART, THE OTHER PART OF THE TRIBUNAL FINDING WAS WITHOUT EVIDENCE AS PER ABOVE DECISION OF HONBLE HIGH COURT IT WAS CATEGORICALLY HELD ONCE THE IDENTITY OF THE THIRD PARTY CREDITOR IS ESTABLISHED BEFORE THE ITO AND THE CREDITORS HAVE PLEDGED THEIR OATH THAT THEY HAVE ADVANCED THE AMOUNTS IN QUESTIONS, ASSESSEE, THEN, THE BURDEN IMMEDIATELY SHIFTS ON TO THE DEPARTMENT TO SHOW AS TO WHY THE SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 11 ASSESSEES CASE COULD NOT BE ACCEPTED AS TO WHY IT MUST BE HELD THAT THE ENTRY THOUGH PERTINENT TO BE IN THE NAME OF THIRD PARTY STILL REPRESENTS THE INCOME OF THE ASSESSEE FROM A SUPPRESSED SOURCE. APART FROM THIS, WE RELY UPON THE DECISION IN THE CASE OF I DCIT V SMT. ARCHANA DEVI 84 TTJ 467 (JD) EVIDENCE PLACED ON RECORD SHOWING THAT ASSESSEE HAD SUBSTANTIAL LAND AND HE HAD SUBSTANTIAL RECEIPTS FROM SALE OF AGRICULTURAL PRODUCE AND HE HAS CONFIRMED THE CASH CREDIT IN HIS STATEMENT AND ALSO IN AN AFFIDAVIT THE CREDITWORTHINESS OF THE SAID CREDITOR AS WELL AS THE GENUINENESS OF THE TRANSACTION WITH THE ASSESSEE STOOD ESTABLISHED AND THEREFORE THE ADDITION U/S. 68 COULD NOT BE SUSTAINED. II CIT V. AJAY KUMAR SHARMA 177 CTR 529 (RAJ) ALL CASH CREDITORS EXCEPT ONE HAVING APPEARED AND CONFIRMED THE PETTY LOAN ADVANCED BY THEM TO THE ASSESSEE EVEN DISCLOSED THEIR RESPECTIVE SOURCES OF INCOME THE CREDITWORTHINESS OF THESE CREDITORS AND THE GENUINENESS OF THE CASH CREDITS COULD NOT BE DISBELIEVED AND ADDITION COULD NOT BE MADE EXCEPT IN THE CASE OF THE CREDITOR WHO NEITHER APPEARED NOR FILED THE CONFIRMATION. III VINAY CLOTH STORES V. ITO 96 TAXMAN 20 (AHD) (MAG) IN THIS CASE IT WAS HELD THAT IN RESPECT OF CASH CREDITS IN ACCOUNTS OF PARTNERS OF ASSESSEE FIRM, IT WAS SHOWN THAT PARTNERS HAD TAKEN LOANS FORM CERTAIN DEPOSITORS WHO HAD AGRICULTURAL HOLDINGS AND SAVINGS FROM AGRICULTURAL INCOME, OUT OF WHICH THEY HAD ADVANCED LOANS TO PARTNERS, ADDITION OF SUCH CASH CREDITS TO ASSESSEE'S INCOME WAS NOT JUSTIFIED. IV. PRASHANT PLASTIC PRODUCTS VS. ITO 96 TAXMAN 340 (AHD) (MAG) WHERE J, WHO OWNED 20 ACRES OF LAND AND HAD INCOME FROM DAIRY FARMING ALSO, INVESTED RS. 1.00 LACS IN FIRM, IN WHICH HE WAS A PARTNER, JS CREDITWORTHINESS TO ADVANCE SAID SUM COULD NOT BE DOUBTED ON GROUND HE HAD 20 MEMBERS IN HIS FAMILY AND HAD INCURRED HEAVY EXPENSES ON ACCOUNT OF HOUSEHOLD EXPENSES AND MARRIAGE IN THE FAMILY. V. ITO VS. PADMANABH INVESTMENT CO. LTD. 38 TTJ 55 (BOM) SECTION 68 DOES NOT PROVIDE THAT IN ALL CASES WHERE EXPLANATION OF ASSESSEE IS NOT THERE OR IS NOT SATISFACTORY ACCORDING TO STANDARDS OF ITO, AMOUNT HAS GOT TO BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE COMPANY. VI. MEGHAJINARAIN & CO. V. ITO 37 TTJ 624 (INDORE) EVIDENCE AS TO GENUINENESS OF CASH CREDIT MUST BE WEIGHTED ON PROBABILITIES OF CASE AND NOT STRICT EVIDENCE, AS BEING BEYOND REASONABLE DOUBTS, SHOULD BE EXPECTED. WE ALSO GONE THROUGH THE DECISIONS CITED BY THE ASSESSEE WHICH ARE AS BELOW:- 1. CIT VS. U.M. SHAH, PROP. SHRENIK TRADING CO. (90 ITR 0396) (BOM. H.C.), 2. CIT VS. METACHEM INDUSTRIES (245 ITR 0160) (MP) (HC), SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 12 3.ORIENTIAL TRADING CO. LTD. VS. CIT (49 ITR 0723) (BOM. H.C), 4. SAROGI CREDIT CORPORATION VS. CIT (103 ITR 0344) (PAT HC), 5, ITO VS. THAKORBHAI CHHOTUBHAI PATEL (ITO 880/AHD/2012) 6. BALWINDER KUMAR SHARMA V. ACIT (77 ITR 380) (CHANDIGARH TRIB) AND 7. KALUBHAI DHAMELIYA VS. ITO (88/SRT/2018 (SRT TRIB) AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT SINCE THERE IS AMPLE DOCUMENTARY EVIDENCE ON RECORD WHICH PROVES THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS ON THE RECORD IN THE FORM OF AGREEMENT TO SELL, AFFIDAVITS, STATEMENT OF PERSONS WHO HAD MADE THE PAYMENT TO THE ASSESSEE AND THEIR SOURCE OF PAYMENT, CERTIFICATE OF TALATI AND MANTRI AND ALSO PROOF OF LAND HOLDINGS, THEREFORE, ALL THOSE DOCUMENTARY EVIDENCES CANNOT BE DISBELIEVED AND ADDITIONS CANNOT BE MADE, MERELY REJECTING THE EVIDENCES FILED AND THE EVIDENCES GIVEN BY THE ASSESSEE DO NOT ENTITLE THE AO TO MAKE THE ADDITION U/S. 68 OF THE INCOME TAX ACT AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ORISSA CORPORATION PVT. LTD. 159 ITR 78. MORE PARTICULARLY IN THIS CASE THE ASSESSEE HAS DISCHARGED HIS ONUS BY PUTTING FORTH ALL THE DOCUMENTS, EVIDENCE PLACED ON RECORD CLEARLY SHOWS THAT AGREEMENT TO SELL WAS ENTERED INTO BY THE ASSESSEE WITH THE ABOVE THREE PERSONS WHO HAD SUBSTANTIAL LAND AND CONFIRMED THE PAYMENTS MADE IN THE STATEMENT ALSO IN AN AFFIDAVIT, THEREFORE, THE CREDITWORTHINESS OF THE PERSONS AS WELL AS GENUINENESS OF THE TRANSACTIONS WITH THE ASSESSEE STOOD ESTABLISHED AND THUS THE ADDITION U/S. 69 COULD NOT BE SUSTAINED. THEREFORE, THIS GROUND RAISED BY THE ASSESSEE STANDS ALLOWED. SHRI FARSURAM RATILAL BHAMWALA IN ITA NO.1935/AHD/2014 P AGE | 13 OTHER GROUNDS OF APPEAL ARE OF GENERAL IN NATURE WHICH DO NOT REQUIRE ANY ADJUDICATION. 10 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14-02-2020 SD/- SD/- (O.P. MEENA) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 14/02/2020 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / / TRUE COPY / / / ,