SHRI SURESH KUMAR, BATHINDA V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2, BATHINDA

ITA 285/ASR/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5610 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-07-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 02-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CIRCUMSTANCES FROM WHICH A REASONABLE INFERENCE
• Keywords: Unexplained cash credit; Capital asset
• Section: 148; 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DASGUPTA, JUDICIAL MEMBER I.T.A. No. 285/Asr/2023 Assessment Year: 2016-17 Sh. Suresh Kumar, 184-B, Veer Colony, Amrik Singh Road, Bathinda-151001 [PAN: AIOPK0230E] (Appellant) Vs. Dy. Commissioner of Income Tax,Circle-2, Bathinda (Respondent) Appellant by Respondent by : : Sh. Sudhir Sehgal, AR Sh. Ravinder Mittal, Sr. DR Date of Hearing Date of Pronouncement : : 03.07.2024 26.07.2024 ORDER Per Dr. M. L. Meena, AM: The captioned appeal has been filed by the assessee against the order passed by National Faceless Appeal Centre (NFAC/CIT(A)), Delhi dated 22.09.2023 in respect of Assessment Year: 2016-17. 2 ITA No. 285/Asr/2023 Suresh Kumar v. Dy. CIT 2. The assessee has raised the following grounds of appeal: “1. On the facts and facts and circumstances of the case as well as in law the Ld. CIT(A) has erred in confirming the addition of Rs. 1,58,00,000/- made by the A.O. on account of unexplained credits in the books of account whereas as per explanation furnished and material placed on record, the assessee appellant has duly explained the credits in detail as part of sale transaction 2. That the appellant craves leave to add or amend any grounds of appeal before the appeal is finally heard or disposed of.” 3. Briefly facts of the case are that the assessee appellant is an individual and filed his return on 06-07-2017 declaring an income of Rs. 38,53,2507/-. During the assessment proceedings all the required documents were submitted before the AO. However, the AO being not satisfied, the assessment has been framed by computing the income at Rs.1,96,53,250/- on the ground that the amount received on sale of agriculture land was unexplained credit in the books of accounts of the assessee appellant. 4. Being aggrieved, with the assessment order, assessee went in appeal before the learned CIT appeal who has confirmed the addition by observing as under: 5.2 Ground No. 2: Vide this ground of appeal, appellant has challenged the findings of Assessing Officer wherein AO has made addition of Rs.1,58,00,000/- on account of unexplained credit in the books of the appellant despite furnishing 3 ITA No. 285/Asr/2023 Suresh Kumar v. Dy. CIT relevant material on record and explaining the credit in detail. The appellant has stated that such decision is unjustified and uncalled for. 5.3 I have duly considered the assessment order and reply filed by the appellant during the appellate proceeding. From the perusal of assessment order it is seen that AO has made addition after proper examination of the fact and providing ample opportunities to the appellant to file reply during assessment proceedings. It is seen that appellant has sold the agriculture land to Shri Kesar Singh and has claimed such receipt from the sale proceeds as exempt agricultural income. Further, AO has noted that appellant has purchased the land for Rs.22,50,000 on 30.11.2012 and the same has been sold for Rs.1,98,000 on 25.08.2014 within 21 months. Further, it is important to note that the land sold is much higher rate against the collector rate. Based on these observations the AO had given detailed show-cause notice to the appellant seeking the explanation with regard to transactions of sale of land to Shri Kesar Singh. 5.4 Appellant has more or less given the same reply during appellate proceedings with regard to explanation of sale of agricultural land and claim of exempt agricultural income to the tune of Rs.1,58,000/-. The appellant has stated that the land purchaser i.e. Shri Kesar Singh had given 3 cheques amounting to Rs.70,00,000, 68,00,000/- and 60,00,000/- on 30-06.2014. However, it was further explained that after the registration of land it came to notice that there was no fund in the bank account accordingly the appellant approached the purchaser and after prolonged negotiation fresh cheque have been received for the month of February 2016. Out of these cheques, amounting to Rs.1,58,000/- has been encashed and the balance amount of Rs.40,00,000/- remained outstanding. In support of this the appellant has given the copy of bank account of Shri Kesar Singh. Further, appellant has claimed that Shri Kesar Singh is man of means having big entries of credit and debit and having sufficient amount in his bank. 5.5 From the reply of the appellant, it is seen that there is nothing substantial to prove the creditworthiness of Shri Kesar Singh and at the same time appellant has not given concrete evidence to prove the genuineness of such transaction. From the perusal of bank account and sale deed, it is seen that there are inconsistencies and deficiency in the explanation of the appellant. Further, from the perusal of purchaser account i.e. Shri Kesar Singh bank account no. 651965629746 with SBI it is seen that before transferring the amount to the appellant's account cash was deposited of the same amount on the same day. Further, the AO has given hisclear cut findings that this happened on 8 instances 4 ITA No. 285/Asr/2023 Suresh Kumar v. Dy. CIT and whole of Rs.1.5 crore is shown to be received in F.Y. 2015-16. Further, it is pertinent and relevant to note the findings of AO in his assessment order wherein he has stated as “selling of agricultural land at much higher rate than collector rate and deposit of cash in the bank account of purchaser followed by transfer to assessee account and moreover claiming the income as exempt clearly shows that assessee is trying to introduce its own cash in the garb of sale of agriculture land and then claiming it as exempt agricultural income”. 5.6. From the perusal of assessment order and explanation offered by appellant, it is seen that appellant has failed to substantiate its claim of exempt agricultural income amounting to Rs.1.58 crores. The AO has made a clear cut case of introduction of own money from undisclosed sources in the garb of exempt agricultural income which is further evident from the fact that Shri Kesar Singh had no funds in F.Y. 2014-15 and suddenly there was cash deposit in his bank account followed by immediate transfer on the same date to the account of appellant Shri Suresh Kumar. Hence, appellant has failed to prove the creditworthiness of Shri Kesar Singh and genuineness of transaction has not been established. Hence, I concur with the findings of the AO in his assessment order with regard toaddition of unexplained credit amounting to Rs.1.58 crores and therefore this addition is confirmed. Hence, no interference is warranted in the findings of assessment order. Accordingly, the appeal of the appellant is hereby dismissed. 5. The Ld. Counsel submitted that the Ld. CIT(A) has erred in confirming the addition of Rs. 1,58,00,000/- made by the A.O. on account of unexplained credits in the books of account as the assessee appellant has duly explained the credits in detail as part of sale transaction as per explanation furnished and material placed on record, before the authorities below. In support of its contentions, he filed a brief synopsis which reads as under: 5 ITA No. 285/Asr/2023 Suresh Kumar v. Dy. CIT “1. The assessee filed the return of income for the relevant assessment year declaring an income of Rs.38,53,250 and agriculture income of Rs.24,63,994. 2. The case of the assessee was selected for scrutiny, and notice u/s 143(2) was issued on 06.07.2017. The addition during the course of assessment proceedings has been made amounting to Rs. 1,58,00,000/- on account of the amount received from the buyer namely Sh. Kesar Singh, against the sale of agricultural land. 3. The addition has been made by treating the said amount received by the assessee as unexplained credits, alleging that the assessee has not been able to justify the creditworthiness of Kesar Singh and genuineness of the transactions. 4. The assessee filed an appeal before the Worthy CIT(A), which has been dismissed by the CIT(A) NFAC, and the relevant findings of thesame are given in serial No. 5.3 to 5.6 of the appellate order. 5. Now we are in appeal against the same, and our submission is as under: 1. The assessee sold one agricultural land on 25.08.2014 vide the registered sale deed enclosed in the paper book at pages 6-9B, for a total consideration of Rs. 1,98,00,000/-. 2. That the buyer Sh. Kesar Singh, had given three cheques amounting to Rs. 70,00,000/-, Rs. 68,00,000/-, and Rs. 60,00,000/- on 30.06.2014 as per the page-7 of the paper book which is the first page of the registry. 3. Due to non-availability of funds in the Bank Account of the buyer, the said cheques could not be encashed, and after prolonged negotiations, fresh cheques have been received during the relevant A.Y., amounting to Rs. 1,58,00,000/- against Rs. 1,98,00,000 as per the registry. 4. It is submitted that the said agricultural land was a rural agricultural land, and the same has been accepted by the Ld.AO and the Worthy CIT(A) has not drawn any adverse inference of the same. 5. Thus the said agriculture land was not a capital asset and the same was not required to be disclosed in the ITR form. 6 ITA No. 285/Asr/2023 Suresh Kumar v. Dy. CIT 6. The addition has been made in respect of the said payment received from the buyer on account of the sale proceedsoftheruralagricultural land which was received in the relevant assessment year as the earlier cheques as per the title deed could not be encashed. 7. It is not the case of the assessee that the amount has been received as an afterthought as the said deed wasregisteredearlier.It isalso clarified that in the said sale deed it has been clearly mentioned that the responsibility for clearance of the cheques is of thebuyer. Moreover, the said registry has duly been executed in front of the appropriate authority which has photograph of both the buyerand the seller 8. Thus, since the buyer did not had sufficient balance in his bank account, the cheques could not be en-cashed and after many persuasions and regular follow up by the assessee, the buyer paid the amount of consideration during the relevant assessment year. 9. The Ld. AO and the Worthy CIT(A) have wrongly alleged that the amount received by the assessee does not pertain to be sale consideration and it has been alleged that the same is introduction of own money of the assessee, whereas the said consideration isduly supported by the registered sale deed and thus, the validity of the said registered deed cannot be negated. 10. The law is settled by the Apex Court in the case of K.P. Varghese vs ITO (1981) 7 Taxman 13 (SC) (relevant extracted below); “18. We must, therefore, hold that sub-section (2) of section 52 can be invoked only where the consideration for the transfer has been understated by the assessee or, in other words, the consideration actually received by the assessee is more than what is declared or disclosed by him and the burden of proving such understatement or concealment is on the revenue. Thisburden may be discharged by the revenue by establishing facts and circumstances from which a reasonable inference can bedrawn that the assessee has not correctly declared or disclosed the consideration received by him and there is understatementor concealment of consideration in respect of the transfer. Sub-section (2) has no application in case of an honest and bonafide transaction where the consideration received by the assessee has been correctly declared or 7 ITA No. 285/Asr/2023 Suresh Kumar v. Dy. CIT disclosed by him, and thereis no concealment or suppression of the consideration. We find that, in the present case, it was not the contention of the revenue that the property was sold by the assessee to his daughter- in-law and five of his children for a consideration which was more than the sum of Rs. 16,500 shown to be the consideration for the property in the instrument of transfer and there was understatement or concealment of the consideration in respect of the transfer. It was common ground between the parties and that was a finding of fact reached by the income- tax authorities that the transfer of the property by the assessee was a perfectly honest and bona fide transaction where the full value of the consideration received by the assessee was correctly disclosed at the figure of Rs. 16,500. Therefore, on the construction placed by us, sub- section (2) had no application to the present case and the ITO could have no reason to believe that any part of the income of the assessee had escaped assessment so as to justify the issue of a notice under section 148. The order of reassessment made by the ITO pursuant to the notice issued under section 148 was accordingly without jurisdiction and the majority judges of the Full Bench were in error in refusing to quash it. ” 11. The department has time and time again failed to prove why the said consideration received by the assessee is not on account of sale consideration and how the same takes the character of the assessee’s own money without any cogent evidence. 12. Therefore, the genuineness of the sale deed and the consideration received by the assessee cannot be denied. 13. Therefore, the sale deed is genuine and the department has not been able to prove any other consideration received by the assessee in respect of the said registry then the impugned amount received by the assessee from the buyer cannot be alleged to be otherwise than the consideration amount for the sale of the property. 14. Furthermore, it is also not the case of any unexplained credits as the amount has been received in respect of the simple transaction of the sale of land and the same cannot be taken under the garb of unexplained credits. Therefore, the assessee is not liable to prove the creditworthiness of the buyer who has purchased the land from the assessee. The amount received by the assessee is a consideration against the land sold by the assessee to Sh. Kesar Singh and thus, it was not the case of the assessee to know the sources from which such payment have been 8 ITA No. 285/Asr/2023 Suresh Kumar v. Dy. CIT received as the assessee had given an asset in exchange for such consideration and it is not the case of any deposit or loan. 15. It is also submitted here that even though it was not the responsibility of the assessee to prove the sources of such funds even then the assessee has filed the bank statement of the buyer starting from 01.04.2015 to 31.03.2016, and the said bank statement clearly reflects that the buyer was a man of means and regularly deposits in crores were being received by the said buyer in the earlier years also, and therefore it cannot be alleged that the buyer has no funds. 16. Notwithstanding the above, as the assessee was duly furnished evidence in order to prove the identity and creditworthiness of the buyer and the genuineness of the transaction, and even then if the Ld. AO or department has any apprehension in respect of the same, then they were free to open the case of the buyer, and reliance in this regard is placed upon the following judgments: - a. Chandigarh Bench of the Tribunal in the case of JAWAHAR LAL vs. INCOME TAX OFFICER in 35 ITR (Trib) 0075. b. Sewa Ram vs ITO, ITAT Chandigarh in ITA No.327/CHD/2011- Thus it is clear that when loans have been taken from the family members and which have been routed through bank by most of such family members, they cannot be added as cash credits unless it is found as a fact that such bank accounts are benami of the assessee. In case before us, it cannot be alleged that bank account of various family members are benami of the assessee because loans have been taken from such family members for last many years and which have been shown as opening balance and have been accepted by the Department. c. Chandigarh Bench of the ITAT in the case of Sh. Ashok Kumar in ITA no. 825/chd/2007 dated 18.11.2009 and the relevant discussion is in para 19 of the order, in which, it has been held as under:- “In the totality of facts and circumstances of the case, the genuineness of transactions stands established. The amounts have been advanced through account payee cheques and we find no merit in the addition being made on this account. Their Lordships of Hon’ble Supreme Court in CIT 9 ITA No. 285/Asr/2023 Suresh Kumar v. Dy. CIT V/s ChuniLal [211 ITR (ST) 11] had held that cash credits received through bank account of wife, son and daughter in law could not be added unless it is proved that they were benamidars of the assessee. In the facts of present case, father of assessee has proved the availability of cash in hands. The requirement of law is not to prove the source of source of cash credit. Accordingly, we direct the Assessing Officer to delete the addition of Rs.35 Lacs credited to the books of the assessee, being on account of loan received from the father of the assessee. Thus, the grounds No.8 & 9 raised by the assessee are allowed. ” d. Shri Timple Kumar vs ITO, Malerkotla in ITA No. 509/Chd/2013 dtd 16.07.2015 Therefore, the addition made in the case of the assessee is uncalled for since the impugned amount received by the assessee during the year under consideration was out of the rural agriculture land sold by the assessee in the previous assessment year and-the evidences in respect of the same have been furnished by the assessee.” 6. The Ld. DR relied on the impugned order. 7. We have heard the rival contentions, perused material on record, impugned order and written submissions filed before us. It is alleged by the department that the disputed amount has been received by the appellant as an afterthought as the sale deed was registered earlier. The Ld. AR has clarified that in the said sale deed it has been categorically mentioned that the responsibility for clearance of the cheques is of the buyer. The AR contended that the said registry has duly been executed in front of the appropriate authority which has photograph of both the buyer and the seller. 10 ITA No. 285/Asr/2023 Suresh Kumar v. Dy. CIT 8. It is evident from the record that since the buyer did not had sufficient balance in his bank account, the cheques could not be en-cashed and only after persuasions and regular follow up by the assessee, the buyer paid the amount of consideration during the relevant assessment year. In our view, the Ld. AO and the CIT(A) have frivolously alleged that the amount received by the assessee does not pertain to be sale consideration and it has been allegedly presumed as if introduction of own money by the assessee, although the said sale consideration is duly supported by the registered sale deed and the validity of the said registered deed cannot be negated until or unless its content are disproved. 9. From the record, as it is evident that the sale deed was genuine and the department has not been able to prove any other consideration received by the assessee in respect of the said registry, then the said amount received by the assessee from the buyer cannot be alleged to be other than the sale consideration amount for the sale of the property. Further, it is also not the case of any unexplained credits as the amount has been received in respect of the transaction of the sale of land which cannot be taken under the garb of unexplained credits. Therefore, the assessee is not liable to prove the creditworthiness of the buyer who has purchased the land from the assessee. The amount received by the 11 ITA No. 285/Asr/2023 Suresh Kumar v. Dy. CIT assessee is a consideration against the land sold by the assessee to Sh. Kesar Singh and thus, it was not the case of the assessee to know the sources from which such payment have been received as the assessee had given an asset in exchange for such consideration and thus, it is not the case of any deposit or loan. 10. In the present case, although it was not the responsibility of the assessee to prove the sources of such funds even then the assessee has filed the bank statement of the buyer starting from 01.04.2015 to 31.03.2016, and the said bank statement clearly reflects that the buyer was a man of means and having regularly deposits in crores were being received by the said buyer in the earlier years also, and therefore it cannot be alleged that the buyer has no funds. Meaning thereby that the assessee has duly furnished evidence to prove the identity and creditworthiness of the buyer and the genuineness of the transaction, and even then, if the Ld. AO or department has any apprehension in respect of the same, then they are free to open the case of the buyer. 11. Considering the factual matrix and judicial precedents, we hold that the requirement of law is not to prove the source of source of cash credit. 12 ITA No. 285/Asr/2023 Suresh Kumar v. Dy. CIT Accordingly, we hold that the alleged credit of Rs. 1,58,00,000/- stands explained and as such, the addition is deleted. 12. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 26.07.2024 Sd/- Sd/- (Udayan Dasgupta) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1)The Appellant: (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T. True Copy By Order