Shri Narendra B. Patel, Sabarkantha V. The Income Tax Officer, Ward-2, Himatnagar

ITA 3153/AHD/2014

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5775 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 27-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURVEY NO.
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Opportunity of being heard; Principle of natural justice; Source of fund; Additional evidence; Question of law; Reasonable cause; Onus to prove; Set aside
• Section: 131; 68; 69; 143(3); 69A

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ A’’ BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./ITA No. 3153/AHD/2014 िनधाᭅरण वषᭅ/Asstt. Year: 2011-12 Narendra B. Patel, 592, Pampaliva Vas, Moyad, Sabarkantha-383110. PAN: ASUPP6989M Vs. I.T.O., Ward-2, Himatnagar. (Applicant) (Respondent) Assessee by : Shri Tushar Hemani, Sr. Advocate with Shri Parimalsinh B. Parmar, A.R Revenue by : Shri Mukesh Jain, Sr.D.R सुनवाई कᳱ तारीख/Date of Hearing : 25/02/2022 घोषणा कᳱ तारीख /Date of Pronouncement: 30/03/2022 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-VIII, Ahmedabad, dated 18/09/2014 arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2011-12. ITA no.3153/AHD/2014 A.Y. 2011-12 2 2. The assessee has raised the following grounds of appeal: 1. The Id. CIT (A), has erred in law and on the facts by confirming the action AO of making addition u/s 68 of the Act on account of unexplained cash credit to the tune of Rs.33,07,640/-. 2. The Id. CIT (A), has erred in law and on the facts in changing the nature of additions from under section 68 of the Act to Section 69 of the Act. This action of Ld. CIT(A) is illegal and without jurisdiction firstly because the same has been done without issuance of any notice and secondly the same has been done mechanically without any application of mind. 3. The Ld. CIT (A), has erred in law and on the facts by confirming the action of AO in making addition of Rs.46,24,400/- u/s 69 of the Act on account of alleged unexplained investment in purchase of agriculture land at Block/Survey No. 125 Prantij Sabarkantha. 4. The Ld. CIT (A), has erred in law and on the facts by confirming the action of AO in making addition of Rs.23,91,488/- u/s 69 of the Act on account of alleged unexplained investment in purchase of agriculture land at Block/Survey No. 124 Prantij Sabarkantha. 5. The Ld. CIT (A), has erred in law and on the facts by confirming the action of AO in making addition of Rs.9,17,900/- u/s 69 of the Act on account of alleged unexplained investment in purchase of agriculture land at Block/Survey No. 143 Dhandhuka. 6. The Id. CIT (A), has erred in law and on the facts by confirming the action of AO in making addition of Rs.4,00,000/- treating the agriculture income as income from other sources. 7. Without prejudice to the above Ld. CIT (A) erred in law and on the facts by not admitting the additional evidences submitted during the appellate proceedings contending the same as having not been supported by reasonable cause. 8. Alternatively and without prejudice, Id. CIT(A) ought to have granted benefit of telescoping while confirming various additions. 9. Both the power authorities have passed the orders without properly appreciating the facts and that they further erred in grossly ignoring various submission, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 3. The 1 st issue raised by the assessee is that the learned CIT (A) erred in confirming the addition made by the AO for Rs. 33,07,640/- out of the total addition of Rs. 53,57,640/- made by the AO instead of deleting the same in entirety. ITA no.3153/AHD/2014 A.Y. 2011-12 3 4. The facts in brief are that the assessee in the present case is an individual and declared income from agricultural activity. The assessee in the year under consideration has received certain amount of loan of Rs. 53,57,640/- from different parties through banking channel. The party wise and amount wise details of the loan is available on page 3 in the order of the AO. The assessee during the assessment proceedings in support of such loan has filed the copy of the PAN. 4.1 However, the AO was not satisfied with the details furnished by the assessee in support of such loan received by him. As per the AO, it was the onus of the assessee to furnish the confirmation, bank details, source of income of the loan parties. But the assessee failed to do so. Accordingly, the AO treated the entire amount of loan of Rs. 53,57,640/- as discussed above as unexplained cash credit under section 68 of the Act and added total income of the assessee. 5. Aggrieved assessee preferred an appeal to the learned CIT-A, the assessee before learned CIT-A submitted that during the assessment proceeding he has explained the sources of money received by it in the bank account by furnishing necessary detail. The assessee with respect to amount received from Shri Mithilesh Kumar P. Patel, Shri Parshottambhai Mohanbhai Patel and Kamleshkumar Parshotttambhai Patel submitted that he has received loan amount of Rs. 2 Lacs, Rs. 4.85 Lacs and Rs. 31.3 Lacs respectively through banking channel. These 3 parties are his relatives and engaged in agricultural activity and they have provided loan to him out of personal saving kept in the form of fixed deposit with Banks which were matured during the year. The assessee in support of his claim with respect to these parties furnished copy of PAN, Copy bank statement of parties, copy of maturity of fixed deposit and copy of 7/12 for having agricultural land. Accordingly the assessee prayed that it has discharged the onus cast under section 68 of the Act. ITA no.3153/AHD/2014 A.Y. 2011-12 4 6. The learned CIT-A after considering the fact in totality has deleted the addition in part and enhanced the addition made by the AO for ₹ 1.85 Lacs with respect to the loan party namely Shri Parshottambhai Mohanbhai Patel. The amount of addition deleted, confirmed and enhanced are as detailed below: S. No. Party name Addition by the AO Enhance/ decrease by The CIT-A Total as per the CIT-A Addition deleted by the CIT-A Final addition confirmed 1. Parshottambhai Mohanbhai Patel Rs. 3,00,000/- Rs. 1,85,000/- Rs. 4,85,000/- Rs. 3,00,000/- Rs. 1,85,000/- 2. Kalpeshkumar Parshottambhai Patel Rs. 33,15,000/- (Rs. 1,85,000/-) Rs. 31,30,000/- Rs. 15,50,000/- Rs. 15,80,000/- 3. Mithelesh Kumar Ptael Rs. 2,00,000/- - Rs. 2,00,000/- Rs. 2,00,000/- - 4. Other Parties Rs. 15,42,640/- - Rs. 15,42,640/- - Rs. 15,42,640/- 5. Total Rs. 53,57,640/- - Rs. 53,57,640/- Rs. 20,50,000/- Rs. 33,07,640/- 6.1 The learned CIT-A accepted the explanation of assessee with respect to the loan amount of Rs. 2 Lacs received from Shri Mithulesh Kumar P Patel that such party has provided the fund to the assessee out of maturity of fixed deposit. 6.2 The learned CIT-A on perusal of bank statement of loan parties namely Shri Parshottambhai Mohanbhai Patel and Shri Kalpeshkumar Parshottambhai Patel found that the assessee has received loan of Rs. 4.85 lacs and 31.3 lacs only on different dates. However only an amount of Rs. 3 lacs and 15.5 Lacs from the respective parties found to be sourced from maturity of fixed deposit maintained with bank. Thus the ld. CIT-A held that the remaining amount of Rs. 1.85 lacs and 15.85 lacs from Shri Parshottambhai Mohanbhai Patel and Shri Kalpeshkumar Parshottambhai Patel as unexplained for the reason that these amount were not sourced from maturity of FD. As such just before transfer of fund to the assessee these amounts were credited in the bank of the loan parties and source of credit of these amount in the bank account of loan parties were not properly explained. ITA no.3153/AHD/2014 A.Y. 2011-12 5 6.3 The learned CIT-A with respect to remaining amount of loan of Rs. 15,42,640/- from other parties found that the assessee has not furnished any further details. Therefore, the learned CIT-A in the absence of documentary evidence and proper explanation held the same as unexplained cash credit. Thus the learned CIT- A in view of the above deleted the part addition of Rs. 20.5 lacs and confirmed the remaining amount of Rs. 33,07,640/- only. 7. Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us. 8. The learned AR before us submitted that the AO in his assessment order has made the addition of ₹ 3 Lacs with respect to Shri Parshottambhai Mohanbhaia Patel which was deleted by the learned CIT-A after making the enhancement of ₹ 1.85 lacs. As per the learned AR, the amount of addition was enhanced by the learned CIT-A without giving any opportunity to the assessee which is in violation of the provisions of section 251(2) of the Act. Accordingly, the learned AR contended that there cannot be any addition to the tune of ₹ 1.85 lacs in the hands of the assessee. Likewise, the learned AR on merits submitted that the assessee has filed confirmation along with the PAN of the party, bank statement of the lender to justify the source of money. Accordingly, as per the learned AR, the assessee is not answerable to justify the source of source in the hands of the lender. 8.1 The learned AR made the similar submissions on merit with respect to loan from Shri Kalpeshkumar Parshottambhai Patel. 9. On the other hand, the learned DR vehemently supported the order of the authorities below. ITA no.3153/AHD/2014 A.Y. 2011-12 6 10. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the present case relates to the loan taken by the assessee from various parties which can be summarized as under: S. No. Loan Parties Amount of loan Addition confirmed 1. Parshottambhai Mohanbhai Patel Rs. 4,85,000/- Rs. 1,85,000/- 2. Kalpeshkumar Parshottambhai Patel Rs. 31,30,000/- Rs. 15,80,000/- 3. Others Rs. 15,42,640/- Rs. 15,42,640/- 4. Total Rs. 51,57,640/- Rs. 33,07,640/- 10.1 With respect to the loan taken by the assessee for Rs. 15,42,640/- from the parties namely, Jayeshkumar Patel (Rs. 6,82640/-), Ashwin M Patel (Rs. 5 lacs) and friends and relative (Rs. 3.6 lacs), we note that there was no detail furnished by the assessee in support of such parties. These details include evidences to prove the identity, creditworthiness of the parties and the genuineness of the transactions. The assessee has furnished the identity of the parties only which is not sufficient enough to discharge onus cast on the assessee under the provisions of section 68 of the Act. The Hon’ble Supreme Court in the landmark case of Kale Khan Mohammad Hanif vs. CIT reported in 50 ITR 1 and Roshan Di Hatti vs. CIT reported in 107 ITR 938 has held that the primary onus to prove the identity, genuineness of transaction and creditworthiness with respect to the cash credit under section 68 of the Act lies upon the assessee. The relevant extract of observation of Hon’ble Supreme Court in case of Kale Khan Mohammad Hanif vs. CIT (supra) reads as under: It is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the ITO is entitled to treat it as taxable income: 10.2 In the absence of, the necessary details as discussed above, we are of the view that the assessee failed to discharge the onus with respect to the impugned amount of loan of Rs. 15,42,640/- received from the parties as stated above. Accordingly, to this extent, we do not find any infirmity in the order of the authorities below. Thus we confirm the same. ITA no.3153/AHD/2014 A.Y. 2011-12 7 10.3 With respect to the loan taken by the assessee of Rs. 4.85 Lacs from Shri Parshottambhai Mohanbhai Patel, we note that the AO has made the addition of ₹ 3 Lacs only. However the assessee before the learned CIT-A submitted that the actual amount of loan taken from such party stands at ₹ 4.85 Lacs whereas the loan from the party namely Shir Kalpeshkumr Parshottambhai Patel stands at Rs. 31.3 Lacs only against the addition made by the AO at Rs. 33.15 Lacs. 10.4 Based on the above submission of the assessee, the learned CIT-A confirmed the addition made by the AO to the tune of ₹ 1.85 Lacs with respect to the loan shown from the party namely Shri Parshottambhai Mohanbhai Patel. As such, the learned CIT-A was pleased to delete the addition of ₹ 3 Lacs from the said party which is not in dispute before us. 10.5 The learned AR with respect to the addition of ₹ 1.85 lacs has made two fold contentions. Firstly, the learned CIT-A have enhanced the addition by ₹ 1.85 lacs without following the procedures specified under the provisions of section 251(2) of the Act. Secondly, the assessee has discharged the onus by furnishing the necessary details in support of genuineness of such loan. Furthermore, the assessee was not under the obligation to explain the source of source in the hands of the lenders. 10.6 As regards the 1 st contention of the learned AR of the assessee that there was the enhancement of addition made by the learned CIT-A, we disagree with the contention of the learned AR. It is for the reason that the assessee himself has submitted that he has received the loan of ₹ 4.85 lacs from the party namely Shri Parshottambhai Mohanbhai Patel. The relevant submission of the assessee before the learned CIT-A reads as under: The appellant has received unsecured loan from Patel Parshottambhai Mohanbhai of Rs.485000/- Rs.300000/- received by account payee cheque no.52780 drawn in the Salal Nagrik Sahkari Bank Ltd. Saving Bank A/c No.02648 and remaining amount of Rs.185000/- received by account payee cheque no.52780 drawn in Bank of India, saving a/c no.240010100002174. ITA no.3153/AHD/2014 A.Y. 2011-12 8 10.7 Thus, from the above submissions, there remains no ambiguity that the learned CIT-A has acted upon the submission of the assessee by treating the amount of loan at ₹ 4.85 lacs. Therefore, it is inappropriate to say that the learned CIT-A has enhanced the addition without giving the opportunity to the assessee under the provisions of section 251(2) of the Act. Accordingly, we reject the contention of the learned AR for the assessee. 10.8 With respect to the merit of the case in respect of the remaining amount of loan of ₹1.85 lacs from the party namely Shri Parshottambhai Mohanbhai Patel, we note that the assessee has discharged the onus by furnishing the details such as PAN, confirmation letter, Bank statement of the party, copy of maturity of FD held by the party which can be verified from the pages 6 to 8 placed in the paper book. Furthermore, the part of the amount has been accepted as genuine therefore for the remaining amount we are not inclined to concur with the finding of the learned CIT-A, merely on the reasoning that the assessee failed to justify the source of source in the hands of loan party. The Hon’ble Gujarat High Court in the case of CIT vs. Paragati Co. Op. Bank Ltd reported in 278 ITR 170, has observed as under: This Court is in respectful agreement with the aforesaid principles. In the case of Dy. CIT v. Rohini Builders [2002] 256 ITR 360 1 (Guj.), this Court has, while dismissing Departmental tax appeal, upheld the approach of the Tribunal based on the judgment of Patna High Court that an assessee can be asked to prove source of credit in books but cannot be asked to prove source of source. 10.9 With respect to the part addition made by the learned CIT-A for Rs. 15.8 Lacs for the loan received from the party namely Shir Kalpeshkumar Parshottambhai Patel, we note that, the addition made by the learned CIT-A is uncalled for the identical reasoning as discussed above in the case of the loan taken from Shri Parshottambhai Mohanbhai Patel Rs. 1.85 lacs. Thus, we set aside the addition made by the AO with the direction to the AO to delete the addition made by him. In view of the above and after considering the facts totality, the additions made by the AO for Rs. 1.85 Lacs and Rs. 15.8 Lacs for the loan received from the parties namely Shri Parshottambhai Mohanbhia Patel and Shri Kalpeshkumar ITA no.3153/AHD/2014 A.Y. 2011-12 9 Parshottambhai Patel is hereby deleted and the addition on account of loan from the other parties for the amount of Rs. 15,42,640/- is hereby confirmed. Hence the ground of appeal of the assessee is partly allowed. 11. The 2 nd issue raised by the assessee in ground Nos. 2 to 5 is common and interconnected. Therefore, we have clubbed all of them together for the purpose of adjudication for the sake of brevity and convenience. The interconnected issue raised by the assessee is that the learned CIT-A erred in confirming the addition made by the AO for Rs. 79,33,788/- on account of investments made in different properties. 12. The assessee in the year under consideration has purchased certain pieces of agricultural lands bearing different survey numbers. Out of such pieces of lands, 3 agricultural lands, which are in dispute, detailed as under: S. Nos. Survey number Amount of investments 1. 125 at Ta. Prantji Rs. 48,24,400/- 2. 124 at Ta. Prantji Rs. 2,11,90,400/- 3. 143 at Ta. Dhanduka Rs. 9,17,900/- Survey No. 125 12.1 The assessee has purchased the impugned survey numbers at a price of Rs. 48,24,400/-. As per the assessee, the payment against the purchase of survey number was made directly by different persons form their respective bank accounts as detailed below: Sr.No. Name of the party Bank Name Cheque No/date Amount 1. Sanjaybhai Jadeja Union Co-op Bank Ltd. Naroda Branch 261435 1/3/2011 2,00,000/- 2. Sanjaybhai Jadeja Allahabad bank, Naroda Branch 243315 1/3/2011 2,00,000/- 3. Prakrut Bhavsar SBI, Guj. University Branch 186536 1/3/2011 5,00,000/- ITA no.3153/AHD/2014 A.Y. 2011-12 10 4. Prakrut Bhavsar SBI, Guj. University Branch 186537 1/3/2011 5,00,000/- 5 Dipali Bhadresh Modi ICICI Naranpurta 811658 1/3/2011 5,00,000/- 6 Maunik Ishwarbhai Bhavsar ICICI Naranpura 825288 1/3/2011 7,50,000/- 7 Maunik Ishwarbhai Bhavsar ICICI Naranpura 825289 1/3/2011 7,50,000/- 8 Aroon Mafatlal Patani Bank of India Navranpura 272512 1/3/2011 3,00,000/- 9 Aroon Mafatlal Patani Bank of India Navranpura 018423 1/3/2011 3,00,000/- 10 Narendra B. Patel Axis Bank Himatnagar 166569 1/3/2011 2,00,000/- 11 Mr.Deepak Ganpatlal Sharma ICICI Bank, JMC House 393198 1/3/2011 6,24,400/- 12.2 The assessee in support of the impugned transaction as discussed above has furnished the confirmation from the parties along with their PAN numbers and party wise/ date wise payment to vendor along with cheque details. Accordingly the assessee, contended that the impugned transactions were carried out through the banking channel and therefore the genuineness of the same cannot be doubted. The assessee, also submitted that the sum of Rs. 2 lacs was directly deposited from his bank account. 12.3 However, the AO during the assessment proceedings found that the assessee failed to furnish the necessary details about the availability of funds in the hands of the parties who have made payments on behalf of the assessee to vender. Likewise, the assessee has not furnished any information whether the loan parties have filed the income tax return. Accordingly, the AO doubted on the creditworthiness of the parties. Thus the AO treated the impugned amount of loan entries shown by the assessee as unexplained cash credit under section 68 of the Act except the sum of Rs. 2 lacs and added the remaining amount of Rs. 46,24,400/- to the total income of the assessee. ITA no.3153/AHD/2014 A.Y. 2011-12 11 Survey No. 124 12.4 The assessee has purchased the impugned survey number at a price of Rs. 2,11,90,400/-. As per the assessee, the payment against the purchase of survey number was made directly by different persons from their respective bank accounts as detailed below: Sr. No Name of the party Bank Name Cheque No/ date Amount 1 Narendra B. Pate! Axis Bank. Himatnagar 166567 1/3/2011 20.00,000/- 2 Narendra B. Patel Axis Bank, Himatnagar 166566 1/3/2011 27,98,912/- 3 Prakash Babaldas Patei Axis Bank. Himatnagar 006226 1/3/2011 1 ,40,00,000/- 4 Dilipbhai Zala SBI.Mithakhali 602878 1/3/2011 10.00.000/- 5 Mr. Deepak Ganpatlal Sharma ICICI Bank, JMC. House 393200 1/3/2011 3,50 ,000/- 6 DevaDhai Patel Bank of India. Salal 006906 1/3/201 1 10,41,488/- 12.5 The assessee in support of the impugned transaction as discussed above has furnished the confirmation from the parties along with their PAN numbers and party wise/ date wise payment to vendor along with cheque details. Accordingly the assessee, contended that the impugned transactions were carried out through the banking channel and therefore the genuineness of the same cannot be doubted. The assessee, also submitted that the sum of Rs. 47,98,912/- was directly deposited from his bank account and sum of Rs. 1.4 crores transferred from the bank account ITA no.3153/AHD/2014 A.Y. 2011-12 12 of his brother namely Shri Prakash Babaldas Patel from whom it received gift. In this regard the assessee submitted gift deed of Rs. 2,04,20,000/-. 12.6 However, the AO during the assessment proceedings found that the assessee with respect remaining amount of Rs. 23,91,448/-paid by other parties (other than Rs. 1.4 by brother and Rs. 47,98,912/- from his own bank) failed to furnish the necessary details about the availability of funds in the hands of the parties who has made payment on behalf of the assessee to vendor. Likewise, the assessee has not furnished any information whether the loan parties have filed the income tax return. Accordingly, the AO doubted on the creditworthiness of the parties. Thus the AO treated the impugned amount of loan entries for Rs. 23,91,488/- shown by the assessee as unexplained cash credit under section 68 of the Act and added the same to the total income of the assessee. Property at Ta Dhanduka survey no. 143 12.7 The AO during the assessment proceedings observed on the basis of AIR information that the assessee has purchased a property at Dhanduka at 8.75 lacs and incurred stamp duty charges at Rs. 42,900/- aggregating to Rs. 9,17,900/-. However, the assessee has not disclosed the same in his income tax return. Likewise, the assessee has not disclosed the source of money used for making the impugned investments in the property. Accordingly the AO treated the investment as unexplained in pursuance to the provisions of section 69A of the Act and added to the total income of the assessee. 13. Aggrieved assessee preferred an appeal to the learned CIT-A. Submission with respect to Survey Nos. 125 and 124 ITA no.3153/AHD/2014 A.Y. 2011-12 13 14. The assessee before the learned CIT-A submitted that he has furnished all the details of the parties who have made payment for purchase of land on his behalf. Such details include the copy of PAN, confirmation letter, bank statement, copy of sale/purchase deed where cheque numbers were mentioned which is sufficient enough to prove the identity, genuineness of transaction and creditworthiness of the parties and to establish the source of money paid for the investment in the property bearing survey No. 125 and 124. But the AO without pointing any defect in the document submitted and without requiring any other document for his satisfaction treated the part of investment in property in above mentioned survey numbers as unexplained investment under section 69 for Rs. 46,24,400 and Rs. 23,91,488/- respectively. 14.1 With respect to the purchase of property at taluka Dhanduka bearing survey number 143, the assessee before the learned CIT(A) submitted that purchase consideration of Rs. 8,75,000/- was paid by Shri Kuldipsinh Mahipatbhai Jadeja through account payee cheque dated 19-01-2011. Further stamp duty charges of Rs. 42,900/- was also paid by him as per purchase agreement. 14.2 The assessee accordingly prayed that no addition under section 69 of the Act is required to be made in his hands on account of investment in above 3 properties. However, the learned CIT-A disagreed with the contention of the assessee by observing as under: Survey No. 125 The investment and various evidence given by the appellant in respect of each persons mentioned above is analysed hereunder: i. The appellant has claimed that one Mr Sanjaybhai jadeja has made payment of Rs.2 lakhs each from his bank account directly to jayanti Distributors private Limited, as per the details mentioned at serial number one and two of the above table. The AO has pointed out that the appellant has not given any proof in respect of this payment and the claim made by the appellant. The appellant has also not been able to dive any evidence in respect of the payment of Rs.4 lakh made by Sanjaybhai Jadeja. In absence of any documentary evidence the explanation of the appellant that the cheque number has been mentioned in the sale ITA no.3153/AHD/2014 A.Y. 2011-12 14 deed and the payment has been made through banking channel cannot be accepted. It cannot be considered as sufficient evidence to discharge the onus cast on the appellant. The appellant has therefore, not been able to explain the source of investment of Rs.4 lakh which is claimed to have been made in the name of this person. In view of these facts,I am of the considered view that the addition made by the AO in respect of this investment under section 69 was justified. The same is accordingly upheld. ii. The appellant has claimed that payment of Rs. 10 lakh has been made by Shri Praknit Bhavsar, the details of which are mentioned at serial No. 3 & 4 of the above table. It is noted that the appellant has given some information from the above person. The person has a PAN and is a non-resident Indian. The money has been given by cheque from bank account and copy of the same has been submitted. An examination of the bank account of this person show that the amount has been received by him through clearing from some other bank account and subsequently the cheques \ have been issued in favour of Jayanti Distributors Private Limited on behalf of the appellant. The details available on record to show that the depositor b not filing any return of income ever though it has a PAN. The source of money in the bank account of this non-resident person is not clear. The money has been transferred from some other bank account for which no further details are available. The funds have not been received in foreign exchange. In view of these tacts, The appellant has not fully discharged its onus of giving suitable explanation regarding the amount given on his behalf to the other party for purchase of property. The addition made responding to this payment is therefore, upheld. iii. The appellant has claimed that a payment of Rs. 5 lakh has been made by one Deepali Bhadresh Modi, as per the details mentioned at serial number five of the above table, to Jayanfi Distributors Private Limited on behalf of the appellant. It is noted that the appellant has not been able to file any confirmation from the above person nor any source of deposit from that person has been given by the appellant. Mere mention of cheque in the sale deed is net a sufficient discharge of the onus. The addition made by the AO is therefore, upheld in respect of this payment made on behalf of the appellant. iv. The appellant has claimed that the payment of Rs. 15 lakh has been made by one Shri Maunik Ishwerbhai Bhavsar, as per the details given at serial No. 6 & 7 seven of the above table, !o Jaycrtti Distributors Private Limited on behalf of th appellant. It is noted that the appellant has give confirmation from this person and has also given the copies of bank account from which the cheques have been issued. The person also has a PAN. A perusal of the bank account shows that the cheques have been issued from the bank account with ICICI bank. An examination of the bank account shows that there was some balance in the bank account of the person from which the cheques have been issued. However, the sources of the funds in the bank account are not given. It is also noted that though the depositor has PAN number, it is nof filing the return of income as no details regarding filing of return of income have been given. In view of these facts, the appellant has not discharged its onus of proving the payment. The sources of funds which have been given to the appellant for purchase of properly are not clear. The addition under section 69 in this respect is therefore, upheld. v. The appellant has claimed that another payment of Rs. 6 lakh was made by one Mr Aroon Mafatlal Patani, as per the details mentioned at serial No. 8 & 9 of the above table, to Jayanti Distributors Private Limited. It is noted that the appellant has given some confirmation from this person. It holds a permanent account number. The payment has been made through banking channel. The appellant has also given a copy of telephone bill in support of proving the identity of the person. If has also given a copy of the bank account from which the cheques have been issued. It is noted that in the bank account, i.e. Bank of India, the cheque: have been issued against the available credit balance in the account. An examination of the bank account shows that there was some balance in the bank account of the person from which the cheques have been issued. However the sources of the funds ITA no.3153/AHD/2014 A.Y. 2011-12 15 in the the bank account are not given. If is also noted that though the depositor has a PAN number, if is not filing the return of income as no details regarding filing of return of income have been given. In view of these facts, the appellant has not discharged its onus of proving the payment. The sources of funds which have been given to the appellant for purchase of property are not clear. The addition under section 69 in this respect is therefore, upheld. The AO is Q!SO directed to pass the information to the assessing officer of this person for taking necessary act'on for verification of the source of deposit in the bank account. vi. The appellant has claimed that another payment of Rs.9744QO/-has been made by one Mr Deepak Ganpatlal Sharma as per the details given at serial number 11 of the above table. The appeiiant has given confirmation from the above person. It is also given a copy of the PAN and driving licence of the person. The payments have been issued through cheque drawn on a bank account in ICICI bank. Further examination of the bank account No. 002401C76917, which is with ICICI Bank, Parima! Garaen, Ahmedabad branch, show that the money has been credited in the bank account in US dollars and the cheques have been issued out of that credit available with the person. However, it is noted that there are several entries of cash deposit and issue of cheques in the same bank account on several dates. It appears that the account is being used by the depositor for the purpose of accommodation entries. The sources of funds in the bank account are not clear. Though the person appears to be a non-resident Indian his source of income in America is not clear as to whether from this money has come. Over all facts and circumstances related to this depositor clearly show that the sources of funds issued in his name are doubtful. In view of these facts, the addition made" by the AO is upheld. To sum up the addition made by the Ao under section 69 in respect of this property amounting to Rs.4824400/- is upheld. Survey No. 124 The appellant has claimed that an amount of Rs. 10 lakh has been paid by Shri Diiipbhai Zala, as per the details at serial number four of the above table. However, it is noted that the appellant has not fifed any / confirmation from the person who have supposedly given the payment on / behalf of the appellant for the property which has been purchased in his name. Mere mention of cheque number and bank in the purchase deed / is not sufficient discharge of the onus. The addition made by the AO in this/ respect is therefore, upheld. The appellant has also claimed that the payment of Rs. 3.5 lakh has been made by one Mr Deepak Ganpatlal Sharrna, as per the details mentioned at serial number five of the above table. The appellant has given confirmation from the above person, if is also given a copy of the PAN and driving licence of the person. The payments have been issued through cheque drawn on a bank account in ICO bank. The sources of funds and nature thereof has been discussed in detail in preceding pages in para (vi), wherein the issue of funds given by him for purchase of another property has been discussed. After examining various details it has been held by me that the sources of funds given by this person are doubtful and cannot be considered as explained. In view of these facts, I am of the considered opinion, that the appellant not discharged its onus of proving the source of payment from that person. The addition made by the AO is therefore, upheld. The appellant has also claimed that payment of Rs. 1041488/- has been made by one Devabhai Patel, as per the details at serial No.6 of the above table. The appellant has given confirmation from the above person. It is also given a copy of the PAN and driving license of the person. The payments have been issued through cheque drawn on a bank account in Bank of India . Further examination of the bank account show that the cheques have been issued out of the credit available with ins person. However there are several ITA no.3153/AHD/2014 A.Y. 2011-12 16 entries of cash deposit and withdrawal from that bank account. The credit which has been used for issuing the check in the case of the appellant is on account of cash deposit of Rs. 3.2 lakh and transfer of funds from other bank account. The sources of these funds are not clear and the appellant has MOT given any information regarding these funds. Though the person holds a PAN no details regarding filing of returns are available on record. The depositor is apparently not filing his return of income, if appears that the depositor is utilising this account for the purpose of issuing accommodation entry. In view of these facts, I am of the considered opinion, the appellant H O S not discharged its onus of proving the source of payment from that person. The addition made by the AO is therefore, upheld. To sum up the addition of Rs.2391488A is upheld. Property at Ta Dhanduka survey no. 143 3. Addition of Rs. 9,17.900/- The appellant has also purchased another property for a consideration of Rs. 9,17,900/-. It is noted that the appellant has not been able to explain the source of investment in respect of purchase of that property. The explanation was not given before the AO during the course of assessment proceedings nor any explanation has been filed by if during the course of appellate proceedings. The appellant has not given any evidence to discharge its onus of proving the investment in ihe property. The claim of the appellant that the AO has failed to prove that the explanation offered by the appellant was not found satisfactory is without any basis. The AO has clearly mentioned in the assessment order that the appellant did not file any detail explaining the investment. In absence of any expenditure the action of the AO was justified. The addition is accordingly upheld. The ground of appeal is accordingly, dismissed. 15. Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us. 16. The learned AR before us with respect to the investments made for survey numbers 125 and 124 submitted that the AO has made the addition under the provisions of section 68 of the Act by observing that the assessee failed to explain the source of money in the hands of the party who has made the payment on behalf of the assessee for making the investments. However, the learned CIT-A has confirmed the addition under the provisions of section 69 of the Act considering the impugned investments as unexplained. As such, the learned CIT-A has changed the stand for confirming the addition by treating the same as unexplained investment under the provisions of section 69 of the Act. As per the learned AR, the change in the stand of the learned CIT-A is enhancement of income but the same has been done without giving any opportunity of being heard to the assessee as mandated under the provisions of section 251(2) of the Act. Accordingly, the addition sustained ITA no.3153/AHD/2014 A.Y. 2011-12 17 by the learned CIT-A under different provisions of the Act without providing the opportunity of being heard to the assessee is unsustainable. 17. The learned AR on merit with respect to the investments made for survey numbers 125 and 124 submitted that the assessee has duly furnished the details of the parties during the proceedings before the authorities below. As per the learned AR the assessee has furnished the confirmation, PAN, license, bank statement of the lender, the cheque number as appearing in the conveyance deed and confirmation, light bill, banks statements etc. with respect to certain parties as detailed below: S. No. Name of persons Amount of loan (Rs.) Invested in survey no 1. Prakrut Bhavsar 10,00,000/- 125 2. Maunik Ishwarbhai Bhavsar 15,00,000/- 125 3. Aroon Mafatla Opatani 6,00,000/- 125 4. Deepak Ganpatlal Sharma 6,24,400/- 125 5. Deepak Ganpatlal Sharma 3,50,000/- 124 6. Devbhai Patel 10,41,488/- 124 7. Total 51,58,888/- 17.1 The learned AR further submitted that the assessee has received a gift of Rs. 2,04,20,000/- which has been accepted as genuine. The amount utilized for the impugned investments out of such gift is of ₹ 1.4 crores only leaving a surplus balance of ₹64,20,000/- which can be treated as source of investments against the loan of following parties/investments: S. No. Name of persons Amount of loan (Rs.) Invested in survey no 1. Sanjaybhai Jadeja 4,00,000/- 125 2. Dipali Bhadresh Modi 5,00,000/- 125 3. Dilipbhai Zala 10,00,000/- 124 4. Investment in property at Dhanduka as per AIR 9,17,000/- - 5. Total 28,17,900/- ITA no.3153/AHD/2014 A.Y. 2011-12 18 18. On the other hand, the learned DR vehemently supported the order of the authorities below. 19. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the present case relates to the source of investment made by the assessee in the properties as discussed above. 19.1 The assessee in the year under consideration has made the investments in the properties bearing survey No. 125 and 124 out of borrowed fund from different individual. Admittedly, the AO made the addition with respect to the investment made by the assessee out of borrowed fund in the property bearing survey No. 125 and 124 under the provisions of section 68 of the Act. The AO was of the view that the assessee failed to justify the source of fund from the unsecured loan parties. However, the learned CIT-A has treated the impugned investments as unexplained in pursuance to the provisions of section 69 of the Act. Indeed, the learned CIT-A has change the stand for confirming the addition made by the AO which is nothing but enhancement of income. Therefore, it appears that it was mandatory for the learned CIT-A to provide the opportunity of being heard to the assessee in pursuance to the provisions of section 251(2) of the Act. However, it is very significant to note that the assessee himself before the learned CIT-A has made the submissions considering the impugned investments under the provisions of section 69 of the Act. The relevant submission made by the assessee before the learned CIT-A stand as under: Your honour, ground No.2,3 and 4 of this appeal related to additions u/s.69 of the Act in respect of unexplained investment of Rs.7933788/- in immovable property. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Ld.AO has made addition on accounts of unexplained investment u/s.69 of the Act without properly appreciating the fact and ignoring the submission and explanation of the appellant and made addition to the total income of the appellant of Rs.7933788/- [Rs.4624400/- + Rs.2391488/- + Rs.917900/-] XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX For applying Section 69. the Assessing Officer must first come to a finding that the assessee made investments which are not recorded in the books of account and thereafter call for an explanation from the assessee about the nature and source of the investments and if he ITA no.3153/AHD/2014 A.Y. 2011-12 19 finds that no such explanation was furnished by the assessee-firm or the explanation I offered by the assessee was not satisfactory, he could treat the value of \ the investments to be the income of the assessee-firm of the financial year in which it has made the investments. 19.2 From the above submission, it is transpired that it was the assessee who has change the stand before the learned CIT-A. Meaning thereby, the assessee was aware of the proceedings before the learned CIT-A. It is not a case that the assessee made the submissions considering the provisions of section 68 of the Act rather it is a case where the assessee has made the submissions in accordance with the provisions of section 69 of the Act. Therefore, we find it difficult to convince ourselves with the contention of the learned AR for the assessee. Accordingly, we reject the contention of the learned AR for the assessee. 19.3 As regards merit of the case, with respect to investment in survey No. 125 and 124, for Rs. 70,15,488/- (Rs. 46,24,000 + 23,91,488), we note that the assessee has furnished the necessary details such as confirmation, PAN, license, bank statement of the lender, the cheque number as appearing in the conveyance deed and confirmation, light bill, banks statements etc. about the parties from whom the assessee has taken the unsecured loan. These details are placed in the paper book. The details of such parties stand as under: S. No. Name of persons Amount of loan (Rs.) Invested in survey no Relevant page of paper book 1. Prakrut Bhavsar 10,00,000/- 125 76 to 79 2. Maunik Ishwarbhai Bhavsar 15,00,000/- 125 80 to 83 3. Aroon Mafatla Opatani 6,00,000/- 125 84 to 89 4. Deepak Ganpatlal Sharma 6,24,400/- 125 90 to 95 5. Deepak Ganpatlal Sharma 3,50,000/- 124 90 to 95 6. Devbhai Patel 10,41,488/- 124 96 to 98 7. Total 51,58,888/- 19.4 From the above, it appears that the assessee has discharged his primary onus imposed under the provisions of section 68/69 of the Act. Accordingly, the onus shifted upon the revenue to disprove the contention of the assessee which ITA no.3153/AHD/2014 A.Y. 2011-12 20 was possible by way of carrying out necessary verification of the details furnished by the assessee. But we find that, the authorities below, despite having sufficient powers in the hands, have not exercised their authorities provided under the provisions of section 131/133(6) of the Act to carry out necessary verification. In our considered view the assessee has discharged the onus and the assessee is not under the obligation to justify the source of money in the hands of the respective hands. In holding so we draw support and guidance from the judgment of Hon’ble Supreme Court in case of CIT vs. Orissa Corporation Pvt. Ltd. reported in 159 IT 78 (SC), the relevant extract of the judgment reads as under: In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such could arise. 19.5 Therefore, in view of the above discussion and case law we hereby held that the assessee has discharged his onus casts for explanation of investment to the extent of Rs. 51,58,888/- in property bearing survey numbers 125 and 124. Hence the addition of Rs. 51,58,888/- cannot be sustained. 19.6 Before parting, it is important to note that the assessee has claimed to have made investments in the properties bearing survey numbers 125 and 124 out of the money received from three other parties as detailed below: 1. Sanjaybhai Jadeja Rs. 4,00,000/- 2. Dipali Bhadres Modi Rs. 5,00,000/- 3. Dilipbhai Zala Rs. 10,00,000/- ITA no.3153/AHD/2014 A.Y. 2011-12 21 19.7 However, at the time of hearing the learned AR has changed his stand by contending that there was a gift of Rs. 2,04,20,000/- which was accepted as genuine. As per the learned AR only a sum of ₹ 1.40 crores was utilized towards the investments in the impugned properties. Therefore the balance amount of ₹ 64,20,000/- should be treated as against the loan taken from the 3 parties as discussed above. However, we are unable to convince ourselves with the contention of the assessee. It is for the reason that the assessee on one hand claims to have invested in the impugned properties bearing survey No. 125 and 124 out of the money received from the 3 parties and in the event of non-furnishing the necessary details on the other hand, the learned AR changed his stand by submitting that the impugned loan can be treated as the utilization against the gift received by the assessee. Thus in our view, the assessee failed to discharge the onus and therefore we confirmed the addition to the extent of ₹ 19 lacs. 19.8 Regarding the investment in the property taluka Dhanduk bearing survey number 143 for ₹ 9,17,900, we note that it was the onus upon the assessee to justify the source of money in pursuance to the provisions of section 69A of the Act. However we find that, the assessee failed to do so. Rather the assessee has changed his stand by contending that the investment the properties can be assumed out of the gift which is not acceptable in the absence of necessary evidences. Accordingly we do not find any reason to interfere in the finding of the authorities below and therefore confirmed the addition of ₹ 9,17,900/- by adding to the total income of the assessee. In view of the above and after considering the facts in totality, the ground of appeal of the assessee is partly allowed. 20. The next issue raised by the assessee in ground No. 6 is that the learned CIT-A erred in confirming the addition made by the AO by treating the agriculture income as income from other sources amounting to Rs. 4 Lacs. ITA no.3153/AHD/2014 A.Y. 2011-12 22 21. The assessee in the year under consideration has declared agriculture income in his income tax return of ₹ 7,00,120/- on the agricultural land held by him admeasuring to 3.10 hectare. The assessee in support of his contention has filed form 7/12 extract to the AO. As per the AO, the furnishing of 7/12 extract is not sufficient enough to infer that the assessee has earned agriculture income for an amount of ₹ 7,00,120/- only. Likewise, the assessee has not furnished any other supporting details such as the crop produced, quantity of crop produce and sales of crop. However, the AO considering the fact for the possession of agricultural land with the assessee and after taking a note of production chart report of Sabarkantha district was of the view that the assessee was in a position to produce the crop of ₹ 1 lacs per hectare aggregating to ₹ 3 Lacs. Thus, the AO treated the balance amount of Rs. 4 Lacs as income from other sources. 22. Aggrieved assessee preferred an appeal to the learned CIT-A. 23. The assessee before the learned CIT-A contended that the agricultural land available with him is 6.67 hectare but inadvertently failed to bring to the notice of the AO during the assessment proceedings. Accordingly, the assessee before the learned CIT-A filed the additional evidences in support of his claim. As such it was the contention of the assessee that even the rate as adopted by the AO for the production of agriculture crop is taken then also the agricultural income of the assessee stands at Rs. 6,67,000/- only. 24. However, the learned CIT-A confirmed the order of the AO by observing as under: After carefully examining all the evidences produced by the AO it is noted that the appellant had not furnished the details of land which he is now seeking to produce in the appellate proceeding. During the course of assessment proceedings, it had informed +he AO about only for pieces of land of different survey number however during the appellate proceedings he has claimed that it has 8 pieces of land and his share would come to 6.67 hectare. The submission of the appellant cannot be accepted now, as the (and holding details were not produced before the AO and the same is accordingly additional evidence. The appellant has not given any reasonable cause for not producing the details earlier. Accordingly, the additional evidence now submitted by him cannot be admitted and considered for disposal ITA no.3153/AHD/2014 A.Y. 2011-12 23 of appeal. It is noted that the AO I has adopted a reasonable estimate for working out the agricultural income on the basis of land holding per hectare. No interference in the I estimate done by the AC is called tor accordingly. The disallowance made by the AO in respect of the agricultural income is therefore, upheld. The ground of appeal is accordingly, dismissed. 25. Being aggrieved by the order of the learned CIT-A the assessee is in appeal before us. 26. The learned AR before us reiterated the submissions as made before the authorities below whereas the learned DR vehemently supported the order of the authorities below. 27. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that the learned CIT-A has been empowered under rule 46A(4) to call for the additional evidences for the disposal of the appeal. Considering the nature of the addition made by the AO, we are of the view that the learned CIT-A should have exercised his power by resorting to the Rule 46A(4) of income tax rule. Considering the amount involved in the dispute, we admit the additional document filed by the assessee. The genuineness of the additional document filed by the assessee has nowhere been doubted. The AO in his order has himself admitted the agriculture income of ₹ 1 lakh per hectare, therefore we are of the view that the assessee should not be deprived of the benefit available to him merely on the reasoning that the assessee failed to furnish the correct information during the proceedings. Accordingly, we hold that income earned by the assessee is for ₹7,00,120/- from the agricultural activity. Hence ground of appeal of the assessee is allowed. 28. The last issue raised by the assessee is that if any addition is sustained under the provisions of section 68 of the Act, then the same should be treated as used for the investments under section 69 of the Act if any confirmed. ITA no.3153/AHD/2014 A.Y. 2011-12 24 29. The learned AR before us submitted that if any addition is sustained under the provisions of section 68 of the Act, then there cannot be any addition to the extent of such amount invested in the unexplained properties in the manner provided under section 69 of the Act, otherwise, it would lead to the double addition. As such, the learned AR before us prayed to grant the benefit of telescoping if any. 30. On the other hand, the learned DR opposed to give the benefit of telescoping on the reasoning that the assessee failed to establish the nexus between the amount of unexplained cash credit viz a viz the investment made in the unexplained properties. 31. We have heard the rival contentions of both the parties and perused the materials available on record. It is the trite law that there cannot be double addition under the provisions of Act for the same item of income. In other words, if any addition has made under the provisions of section 68 of the Act then its application cannot be made subject to tax under the other provisions of the Act. For example, the assessee has been made subject to the addition of ₹10 Lacs under the provisions of section 68 of the Act. Simultaneously, the assessee has purchased the property of ₹10 Lacs of which the assessee failed to explain the source for such investment in the property. Then there can be addition to the tune of ₹10 Lacs only. In such facts and circumstances, the amount of ₹10 Lacs used in the investment will be presumed as if invested out of the impugned unexplained cash credit until and unless the facts and circumstances warrants otherwise. As such, if it is proved that the assessee has incurred personal expenses for example on foreign trip for ₹10 Lacs, then there will be no benefit of telescoping on account of the investment made by the assessee in the unexplained property. 31.1 Now coming to the present facts of the case, we note that the total amount credited in the bank account of the assessee in the year under consideration stands ITA no.3153/AHD/2014 A.Y. 2011-12 25 at ₹53,57,640.00 which was treated as unexplained cash credit under section 68 of the Act by the AO. However, the AO in his finding has concluded that out of such sum, an amount of ₹ 49,98,912 has been utilized in making the investment in the properties. Accordingly, the AO did not make any addition on account of unexplained properties under the provisions of section 69 of the Act to the tune of ₹ 49,98,912.00 as it was representing the application of the unexplained cash credit under section 68 of the Act. 31.2 Now the balance amount of ₹ 3,58,729 ( Rs. 53,57,640 minus 49,98,912) being unexplained cash credit under section 68 of the Act which can only be considered for the purpose of the telescoping as contended by the learned AR for the assessee at the time of hearing. Accordingly, we direct the AO to allow the benefit of telescoping to the assessee to the tune of ₹ 3,58,729.00 while making the addition for the investments in the unexplained properties. It is for the reason that there is no information available on record suggesting that impugned amount of ₹ 3,58,729.00 has been used for any other purpose. In the absence of relevant information, we are inclined to assume that such amount of ₹ 3,58,729.00 has been utilized by the assessee for making the investment in the properties which were subject to the addition under the provisions of section 69 of the Act. Hence the ground of appeal of the assessee is allowed. 32. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the Court on 30/03/2022 at Ahmedabad. Sd/- Sd/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 30/03/2022 Manish