K.A.Palanisamy, Coimbatore V. ACIT, Coimbatore

ITA 319/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7700 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 01-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-02-2016
• Court: TRIBUNAL
• Department Lawyers: M SHIVA SRINIVAS JT
• Keywords: Sale consideration of property below Jantri Value; Unexplained expenditure; Capital asset; Gift; Source of fund; Additional evidence; Fair market value
• Section: 143(3); 50C; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A, CHENNAI , . , ! ' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ITA NO.319/MDS/2016 ! # $# / ASSESSMENT YEAR : 2009-10 K.A.PALANISAMY, NO.117, KURUCHI HOUSING UNIT PHASE-1, COIMBATORE 641 021. [PAN: BGFPP 8606P] ( %& /APPELLANT) VS. COMMISSIONER OF INCOME TAX (APPEALS)-3, COIMBATORE. ( '(%& /RESPONDENT) %& ) * /APPELLANT BY : SHRI S.PARAMASIVAN, INCOME TAX PRACTITIONER '(%& ) * /RESPONDENT BY : SHRI M. SHIVA SRINIVAS, J T. CIT ) + /DATE OF HEARING : 01.12.2016 ,$ ) + /DATE OF PRONOUNCEMENT : 28.02.2017 /O R D E R PER SANJAY ARORA, AM : THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-3, COIMBATORE (CIT(A) FOR SHORT) DATED 16.11.2015, PARTLY ALLOWING THE ASSESSEES AP PEAL CONTESTING ITS ASSESSMENT U/S. 143(3) R/W S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DATED 27.03.2014 FOR ASSESSMENT YEAR ( AY) 2009-10. 2 ITA NO.319/MDS/2016 (AY 2009-10) K.A.PALANISAMY V. ASST. CIT 2. ASSESSMENT IN THE INSTANT CASE WAS MADE BY MAKIN G THE FOLLOWING ADJUSTMENTS TO THE RETURNED INCOME OF . 13,27,680/-: (AMOUNT IN . ) SL. NO. AMOUNT REMARKS A) LONG TERM CAPITAL GAIN (LTCG) U/S. 45. (ON SALE OF 4.36 ACRES OF AGRICULTURAL LAND ON 30.05.2008) 49,38,306/- WORKED OUT BY APPLYING S. 50C AND DENYING DEDUCTION U/S. 54F, CLAIMED AT . 19,20,000/-, AS WELL AS (INDEXED) COST OF IMPROVEMENT AT . 8,56,704/-. B) CASH DEPOSITED IN BANK (U/S. 69 / 69A (WITH BANK OF INDIA, KURICHI INDUSTRIAL ESTATE) 31,50,000/- OUT OF TOTAL OF . 36.40 LACS DEPOSITED CASH ON 02.06.2008. THE LD. CIT(A) HAVING ALLOWED RELIEF IN RESPECT OF DEDUCTION U/S. 54F, THE ASSESSEE BEFORE US DISPUTES THE DENIAL OF COST OF I MPROVEMENT; THE APPLICATION OF SECTION 50C, AS WELL AS THAT QUA THE DEPOSIT OF CASH IN HIS BANK ACCOUNT. WE SHALL TAKE EACH OF THE GRIEVANCES SEPARATELY. 3. THE FIRST ISSUE ARISING FOR ADJUDICATION IS QUA THE DENIAL OF THE COST OF IMPROVEMENT IN COMPUTING LONG-TERM CAPITAL GAIN (LT CG). BEFORE THE ASSESSING OFFICER (AO), IT WAS CLAIMED THAT THE SAI D COST WAS INCURRED FOR CLOSING A ROCK PIT, MAKING IT FIT FOR AGRICULTURE. THE SAME WAS DISALLOWED FOR WANT OF SUBSTANTIATION AND, BESIDES, THE PARENT DOC UMENT ITSELF STATED THE LAND TO BE FIT FOR AGRICULTURE. BEFORE THE LD. CIT(A), IT W AS EXPLAINED THAT IN THE ENTIRE AREA THE LAND SUFFERED ON ACCOUNT OF DUST FROM THE ACC CEMENT FACTORY NEARBY, AND ACID BURNING, DETERIORATING THE LAND, WHICH HAD NECESSITATED THE EXPENDITURE ON ITS RECLAMATION, AS IT WERE. BEFORE US, AGAIN, THE LD. AUTHORIZED REPRESENTATIVE (AR) REITERATED THE SAME, FURTHER ST ATING, ON ENQUIRY, THAT IT WAS NOT POSSIBLE TO EVIDENCE THE INCURRING OF THE EXPEN DITURE, WHICH THOUGH COULD NOT BE DOUBTED ON THAT SCORE. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD 3 ITA NO.319/MDS/2016 (AY 2009-10) K.A.PALANISAMY V. ASST. CIT POINT TO THE CHANGE IN THE ASSESSEES EXPLANATION A S WELL AS OF IT BEING WHOLLY UN-EVIDENCED. 4. WE HAVE HEARD BOTH THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. WE FIRSTLY OBSERVE AN AMBIVALENCE IN THE ASSESSEES STAND QUA A BASIC FACT, I.E., THE NATURE OF THE EXPENDITURE INCURRED. WHILE BEFORE THE AO IT WAS TOWARD FILLING UP A ROCK PIT (WITH GRAVEL), BEFORE THE FIRST APPELLATE AUTHORITY, IT BECAME ON SALVAGING THE LAND FROM DUST AND ACID. TH E TWO ARE TOTALLY DIFFERENT. HOW, ONE WONDERS, COULD THAT BE, I.E., IF THE EXPEN DITURE WAS ACTUALLY INCURRED? THERE IS NO EXPLANATION FOR THE CHANGE (IN THE NATU RE OF THE EXPENDITURE) AT ANY STAGE. DOES IT MEAN THAT WHAT WAS STATED BEFORE THE AO WAS UNTRUTH OR FALSE? COUPLE THIS WITH THE FACT OF IT BEING WHOLLY UN-EVI DENCED, BOTH AS TO THE NATURE AND THE QUANTUM OF THE EXPENDITURE, WITH RATHER THE ASSESSEE INSINUATING THAT IT IS THE AO WHO OUGHT TO HAVE MADE BASIC ENQUIRIES IN TH E MATTER. TRUE, EVENTS OF THE PAST MAY NOT BE FULLY EVIDENCED, BUT THE ASSESS EE OUGHT TO HAVE PLACED SOME MATERIAL BEFORE THE FIRST APPELLATE AUTHORITY, BEFO RE WHOM THE CLAIM (IN THE REVISED FORM) WAS MADE FOR THE FIRST TIME, TOWARD T HE SAME, AS (SAY) CERTIFICATE FROM THE LAND REVENUE OFFICE WITH REGARD TO DEPLETI ON IN THE LAND QUALITY BECAUSE OF THE RAVAGES OF DUST AND ACID. THIS IN FA CT WOULD BE ACCOMPANIED BY FALLING YIELDS/OUTPUT (PRIOR TO INCURRING THE EXPEN DITURE) AND RISING YIELDS THEREAFTER. RATHER, THE ASSESSEE OUGHT TO ALSO EXP LAIN THE BASIS FOR ESTIMATING THE EXPENDITURE; IT BEING STATED TO HAVE BEEN INCURRED YEARS EARLIER. THIS IS AS EVEN ASSUMING IT HAVING BEEN INCURRED, HOW, IN ITS ABSEN CE, DOES HE ESTIMATE THE COST AND, FURTHER, APPLY INDEXATION? ON BOTH ASPECTS OF THE CLAIM, THERE IS COMPLETE ABSENCE OF ANY MATERIAL OR EVIDENCE. THE IMPUGNED O RDERS CLEARLY CANNOT BE FAULTED WITH. THE ASSESSEE HAS ALSO NOT VOLUNTEERED ANY MATERIAL BEFORE US, WITH RATHER THE LD. AR INDICATING ABSENCE OF ANY SUCH. W E ACCORDINGLY FIND NO REASON FOR INTERFERENCE. IN FACT, EVEN CONSIDERING THE INC URRING OF THE EXPENDITURE FOR THE STATED PURPOSE, SO THAT THE ONLY ISSUE THAT SUR VIVES IS ITS ESTIMATION, THE SAME 4 ITA NO.319/MDS/2016 (AY 2009-10) K.A.PALANISAMY V. ASST. CIT TO OUR MIND WOULD NOT QUALIFY AS A COST OF IMPROVEM ENT. THE REASON IS SIMPLE. ASSUMING DEPLETION OR EROSION IN LAND QUALITY OR NU TRIENTS FOR DIFFERENT REASONS, THE ASSESSEE HAS, BY INCURRING THE EXPENDITURE, ONL Y RESTORED THE LAND FOR AGRICULTURE, THE PURPOSE FOR WHICH IT WAS ORIGINALL Y FIT, I.E., AT THE TIME OF ITS ACQUISITION. THERE HAS BEEN NO IMPROVEMENT THEREI N AS AN AGRICULTURAL LAND. THE AOS REFERENCE TO THE PARENT DOCUMENT IN THIS R EGARD IS TO BE READ IN THIS CONTEXT. WE, ACCORDINGLY, UPHOLD THE DISALLOWANCE O F THE (INDEXED) COST OF IMPROVEMENT. WE MAY THOUGH ADD THAT THE ASSESSEES CLAIM FOR DED UCTION UNDER SECTION 54F, SINCE ALLOWED, MAY UNDERGO AN INCREASE ON ACCOUNT OF THIS DISALLOWANCE IN-AS-MUCH AS IT WOULD ALTER THE AMOUN T OF CAPITAL GAIN CHARGEABLE U/S. 45 . WE DECIDE ACCORDINGLY. 5. THE ASSESSEES NEXT GRIEVANCE IS TOWARD DEEMING THE FAIR MARKET VALUE OF THE CAPITAL ASSET, THE AGRICULTURAL LAND, AS ASSESS ED BY THE VALUATION OFFICER (VO), I.E., AT . 54.50 LACS, AS THE TRANSFER CONSIDERATION, AS AGA INST THE STATED (DOCUMENT) CONSIDERATION OF . 43.60 LACS. THE ASSESSEE HAS PRESSED THIS GROUND (GD. 4) WITHOUT STATING THE BASIS OF HIS GRI EVANCE. ON BEING SHOW CAUSED (BY THE AO) IN THE MATTER WITH REFERENCE TO THE STAMP VALUATION OF . 130.80 LACS, SO THAT THE SAME WOULD STAND TO BE ADO PTED IN VIEW OF SECTION 50C(1), THE ASSESSEE REQUESTED REFERENCE TO THE VO. THE SAID REFERENCE, THOUGH REFERRED TO BY THE AO AS U/S. 55A, IS THUS ONLY U/S . 50C(2). WE CLARIFY THIS AS THERE IS NO PROVISION IN LAW FOR DEEMING THE FAIR M ARKET VALUE ESTIMATED U/S. 55A AS THE TRANSFER CONSIDERATION FOR THE PURPOSE O F S.48 IN COMPUTING CAPITAL GAIN CHARGEABLE U/S. 45 (REFER: RENOWNED ENGINEERS (P.) LTD. V. ASST. CIT (IN ITA 1267/MDS/2016 DATED 19/12/2016). WE HAVE, IN TH E ABSENCE OF ANYTHING TO THE CONTRARY, PRESUMED THE STAMP VALUATION OF THE S UBJECT LAND AS NOT IN DISPUTE BY WAY OF APPEAL, REFERENCE, ETC. (REFER SECTION 50 C(2)(B)). WE EMPHASIZE THIS AS, WHERE SO, NO REFERENCE TO THE VO COULD BE MADE BY THE AO, AND ONLY THE STAMP VALUATION, AS ASSESSED BY THE STAMP VALUATION AUTHORITY, OR AS REVISED IN 5 ITA NO.319/MDS/2016 (AY 2009-10) K.A.PALANISAMY V. ASST. CIT APPEAL, REFERENCE, ETC., COULD BE ADOPTED FOR COMPU TING CAPITAL GAINS (S.50C(3)). AS THERE IS NO STOPPLE AGAINST LAW, IF AT ANY STAGE , IT IS FOUND THAT THE STAMP VALUATION WAS IN DISPUTE IN THE MANNER AS ENVISAGED IN S.50C(2)(B), BOTH THE PARTIES ARE AT LIBERTY, AND THE AO INDEED OBLIGED, TO CAUSE CORRECTION BY WAY OF SUBSTITUTION OF THE VALUE SO DETERMINED FOR THE TRA NSFER CONSIDERATION. WE DECIDE ACCORDINGLY, DISMISSING THE ASSESSEES GROUND. 6. THE THIRD AND THE LAST ISSUE IS QUA AN ADDITION ON ACCOUNT OF CASH DEPOSIT OF . 36.40 LACS IN THE ASSESSEES BANK ACCOUNT ON 02/6 /2008, CONSIDERED UNEXPLAINED TO THE EXTENT OF . 31.50 LACS. THE ASSESSEE EXPLAINED THE SOURCE OF THE SAME AS UNDER: A) COLLECTION OF ADVANCES GIVEN TO VARIOUS PARTIES: . 30.50 LACS B) AGAINST FD: . 4 LACS C) CASH IN HAND AS ON 01.4.2008: . 99,365/- D) CASH RECEIVED FOR STANDING CROPS: . 1 LAC (TO BE TREATED AS AGRICULTURAL INCOME) THE ASSESSEE FURNISHED, IN SUPPORT, CONFIRMATIONS FROM SIX PARTIES TO WHOM ADVANCES, WHICH ARE CLAIMED TO HAVE BEEN RECEI VED BACK, HAD BEEN GIVEN. NO INTEREST HAD BEEN CHARGED. HAVING BEEN NOW RECEI VED BACK, THE SAME WERE DEPOSITED IN BANK. THE ASSESSEE AS WELL AS THE PART IES WERE EXAMINED BY THE AO IN THE ASSESSMENT PROCEEDINGS. THE DEPOSITIONS AS W ELL AS ATTENDING CIRCUMSTANCES, COUPLED WITH ABSENCE OF ANY MATERIAL , FORM THE BASIS OF HIS FINDINGS IMPUGNING THE ASSESSEES CLAIM ON THE GROU NDS OF GENUINENESS (OF THE TRANSACTIONS) AS WELL AS THE CAPACITY OR CREDIT-WOR THINESS (OF THE PARTIES). THE EXPLANATION WITH REGARD TO STANDING CROPS WAS ALSO NOT ACCEPTED, EFFECTING THUS AN ADDITION FOR . 31.50 LACS, WHICH WAS CONFIRMED ON THE SAME BASIS , SO THAT, AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 7. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. (A) CASH RECEIVED AGAINST STANDING CROPS : 6 ITA NO.319/MDS/2016 (AY 2009-10) K.A.PALANISAMY V. ASST. CIT WE SHALL TAKE UP THE EXPLANATION FOR . 1 LAC, ASCRIBED TO STANDING CROPS, FIRST. WHO HAS PAID THE ASSESSEE THIS AMOUNT, I.E., EVEN A SSUMING SO, I.E., AS THE EXPLANATION SUGGESTS, TOWARDS STANDING CROPS ON THE LAND AT THE TIME OF ITS SALE. WE FIND NO ANSWER, MUCH LESS ANY EVIDENCE OR MATERI AL IN SUPPORT, SO THAT EVEN THE IDENTITY OF THE PAYER IS NOT KNOWN. IF PAID BY THE VENDEE (PURCHASER OF LAND), THE SAME WOULD FIND MENTION IN THE SALE DEED ITSELF , SO THAT ALL THAT WAS REQUIRED WAS TO SEGREGATE THE TOTAL CONSIDERATION, AND DISCL OSE THE AMOUNT TOWARD STANDING CROPS AS AGRICULTURAL INCOME. NO AMOUNT OV ER AND ABOVE THE STATED CONSIDERATION WOULD ARISE; THE ENTIRE OF WHICH HAS BEEN DISCLOSED AS AGAINST LAND SUBJECT TO CAPITAL GAIN. IF, ON THE OTHER HAND, FRO M A THIRD-PARTY, WHO IS IT, AND FROM WHOM THUS CONFIRMATION IN SUPPORT COULD BE OBT AINED? RATHER, THE ASSESSEE WOULD HAVE IN SUCH A CASE ISSUED A RECEIPT , WHICH WOULD ALSO BEAR THE NATURE OF THE RECEIPT, I.E., BESIDES EVIDENCING THE SAME. THE ASSESSEE HAS IN FACT PER DEPOSITION DATED 25/11/2013 CLARIFIED THAT THER E WAS NO ACTIVITY UP TO ONE YEAR PRIOR TO THE DATE OF SALE, REMOVING THE VERY B ASIS OF A RECEIPT AGAINST STANDING CROPS. STATING IT AS BEING AGAINST SPONTAN EOUS GROWTH, ETC., BESIDES BEING A CHANGE OF EXPLANATION, WOULD MAKE IT TAXABL E (REFER, INTER ALIA, MAHARAJ DHIRAJ SIR KAMESHWAR SINGH V. CIT [1957] 32 ITR 587 (SC)). BOTH THE NATURE AND THE SOURCE OF THE RECEIPT THUS REMAIN TOTALLY U NEXPLAINED AND/OR UNPROVED . THE NON-ACCEPTANCE OF THE CLAIM IS ACCORDINGLY JUST IFIED. (B) COLLECTION OF ADVANCES AT . 30.50 LACS : THE ASSESSEE EXPLAINED THE SOURCE OF PAYMENT (RECEI VED FROM SIX PARTIES) TO BE OUT OF SAVINGS, IMPLYING EARNINGS OR CAPITAL. THERE IS NO EVIDENCE OF THE SAME, I.E., THE INCOME EARNED, MUCH LESS SAVED, NOR IS AN Y WITH REGARD TO CAPITAL OR ASSET/S, WHICH COULD BE THE SOURCE, SHOWN. ON THE C ONTRARY, THE ASSESSEE, MAINTAINING A FAMILY OF EIGHT, I.E., INCLUDING HIMS ELF, WAS INFERRED BY THE AO TO BE BARELY EKING OUT A LIVING, CONSIDERING HIS EARNI NG RECORD, WHICH HAS BEEN AS A MILL WORKER EARNING A MONTHLY SALARY OF . 300 FOR 12 YEARS WHICH IS IN FACT 7 ITA NO.319/MDS/2016 (AY 2009-10) K.A.PALANISAMY V. ASST. CIT NOT SUFFICIENT FOR SURVIVAL OF EVEN ONE PERSON. THI S IS STATED TO BE SUPPLEMENTED BY EARNING FROM TWO AUTOS AND AGRICULTURE ACTIVITY ON THE SUBJECT LAND, STATED TO YIELD A HALF YEARLY INCOME OF . 5,000/-, I.E., . 10,000/- P.A. HOW COULD THE ASSESSEE WORK IN A MILL AND ALSO EARN FROM THE AUTO S - THE SOURCE OF INVESTMENT IN WHICH WOULD ALSO NEED TO BE EXPLAINED, AT THE SA ME TIME. AGAIN, THE CLAIM IS UNSUPPORTED BY ANY MATERIAL. SO HOWEVER, THIS WOULD NOT ALTER THE FACTUAL MATRIX MATERIALLY; THE MONTHLY HOUSEHOLD EXPENDITURE ADMIT TED TO BE IN THE RANGE OF . 3,000-4,000/-, WHICH ONLY WOULD THUS BE ABLE TO BE MET. IN FACT, CONSIDERING THE EDUCATION OF THE CHILDREN AND THE STATED GIFTS TO H IS FIVE DAUGHTERS, THE STATED SOURCES OF INCOME FALL SHORT OF THE LIKELY EXPENDIT URE. BE THAT AS IT MAY, THE CAPACITY OF THE ASSESSEE FOR EITHER GENERATING SAVI NGS OR MAKING PAYMENT, MUCH LESS IN TERMS OF LAKHS OF RUPEES, IS THUS COMPLETEL Y UNPROVED . AGAIN, THE SOURCE OF THE FUNDS IN THE HANDS OF THE LOANEES, I.E., EVE N ASSUMING PAYMENT/S TO THEM, SO AS TO PAY THE ASSESSEE AMOUNTS RANGING FROM . 4.50 LACS TO . 6 LACS, MUCH LESS IN ONE GO, IS HARDLY EXPLAINED, IF NOT DISPROV ED, I.E., ON THE BASIS OF THE FACTS STATED BY THEM. WHY, THEY COULD NOT EVEN STATE, MUC H LESS DEMONSTRATE, THE PURPOSE FOR WHICH THE LOANS WERE TAKEN BY THEM. THE DISCUSSION IN ITS RESPECT, WHICH IS SEPARATELY FOR EACH PERSON, IS MA DE EXHAUSTIVELY AT PAGES 5 THROUGH 9 OF THE ASSESSMENT ORDER. THE ASSESSEE HAS ONLY SHIFTED HIS OBLIGATION TO EXPLAIN THE NATURE AND THE SOURCE OF THE DEPOSIT TO THESE PERSONS, WITH NO REPAYMENT CAPACITY, BY STATING TO HAVE PAID THEM EA RLIER, WHICH IS AGAIN WITHOUT ANY EVIDENCE. IN FACT, WE FIND IT IRONICAL THAT T HE ASSESSEE RECALLED ALL THESE LOANS/ADVANCES, STATED TO BE PAID DURING 2005-06, T OGETHER, AND AT THE TIME OF THE SALE OF HIS AGRICULTURAL LAND, WHEREAT, HE BEING FL USH WITH FUNDS, HAD NO APPARENT NEED FOR LIQUIDITY OR FUNDS. THAT APART, WE OBSERVE THAT NONE OF THE PARTIES IS KNOWN, MUCH LESS RELATED, TO THE ASSESSEE, WITH THE LOANS IN SOME OF THE CASES BEING STATED TO BE GIVEN THROUGH THE AUDITOR, SHIVR AJ. THE ASSESSEE HAS NOT BEEN ABLE TO REBUT ANY OF THE FINDINGS BY THE REVENUE IN ANY MANNER. COUPLE THIS WITH THE FACT THAT THE SO CALLED LOANS WERE GIVEN ON UNSECURED BASIS, WITHOUT 8 ITA NO.319/MDS/2016 (AY 2009-10) K.A.PALANISAMY V. ASST. CIT ANY PROOF, WITHOUT CONSIDERATION (INTEREST), TO PAR TIES WITH WHOM THERE IS NO WHISPER OF ANY CONNECTION, WITH NO PROVEN CAPACITY (FOR REPAYMENT), WITH THE ASSESSEES DISCLOSED SOURCES OF INCOME BEING BARELY SUFFICIENT TO MAINTAIN HIM AND HIS FAMILY, AND THE PROPOSITION MADE IS LUDICRO US AND BIZARRE. IN FACT, OF THE THREE LOANS STATED TO HAVE BEEN PAID THROUGH THE AU DITOR, SHIV RAJ, ONE, K.ANAND, DENIED HAVING RECEIVED ANY SUM, AND OF HAV ING SIGNED THE CONFIRMATION ONLY TO OBLIGE THE ASSESSEE. THE ASSES SEE HAS OSTENSIBLY RECEIVED . 43.60 LACS ON THE SALE OF A PROPERTY, THE STAMP V ALUATION OF WHICH (AS ON THE TRANSFER DATE) IS . 130.80 LACS, I.E., . 87 LACS IN EXCESS. EVEN THE FMV AS ESTIMATED BY THE VO IS, AT . 54.50 LACS, IN EXCESS (OF THE STATED CONSIDERATIO N) BY ABOUT . 11 LACS. NO WONDER THEN THAT . 36.40 LACS SUDDENLY APPEAR IN THE ASSESSEES BANK ACCOUNT JUST A FEW DAYS LATER I.E., AFTER THE SALE? IN FACT, THIS IS ITSELF INCREDULOUS THAT THE ASSESSEE RECALLED LOANS /ADVANCES, GIVEN TO PERSONS YEARS AGO, ALL TOGETHER, AND A TIME WHEN HE, IN REC EIPT OF SALE PROCEEDS OF HIS AGRICULTURAL LAND, HAD NO APPARENT NEED OF FUNDS, M UCH LESS IMMEDIATE. IN FACT, UNLESS THE CAPACITY TO HAVE PAID THE PARTIES IN THE FIRST PLACE IS SHOWN, WHICH IS COMPLETELY UN-EVIDENCED, THERE IS NO BASIS FOR THE ASSESSEES EXPLANATION. THERE IS NOTHING TO EVIDENCE THE PAYMENT. AGAIN, ASSUMING SO, NONE OF THE PARTIES HAVE BEEN SHOWN TO HAVE THE REPAYMENT CAPACITY TO R ETURN SUMS, SINCE EXPENDED, MUCH LESS IN ONE GO. BOTH THE CAPACITY AND THE GENUINENESS OF THE CREDITS IS NOT PROVED, IF NOT DISPROVED, WITH EVEN THE IDENTITY BEING UNPROVED IN ONE CASE . BEFORE US THE ASSESSEE RAISED A NEW CLAIM OF BEING A PARTNER IN A FIRM, IN WHICH DEPOSITS BY WAY OF CAPITAL AND LOAN WERE AVAI LABLE, AND FROM WHICH HE, RETIRING ON 01.4.2006, WITHDREW HIS CAPITAL. THE SA ME, I.E., THE ASSESSEES CAPITAL AND LOAN ACCOUNT IN THE FIRM, WERE PRAYED FOR BEING ADMITTED AS ADDITIONAL EVIDENCE, ALSO FILING ITS RETURNS OF INCOME. WHERE ARE, WE MUST SAY, COMPLETELY UNMOVED FOR ACCEPTING THE ASSESSEES PRAYER. RULE 2 9 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, WHICH IS AKIN TO ORDER 41, RULE 27(1) OF CODE 9 ITA NO.319/MDS/2016 (AY 2009-10) K.A.PALANISAMY V. ASST. CIT OF CIVIL PROCEDURE, 1908, CAN BE ADMITTED ONLY IF T HE COURT/TRIBUNAL CONSIDERS THE SAME AS NECESSARY FOR PASSING AN ORDER. IT IS NOT, AS EXPLAINED IN VELJI DEORAJ & CO. V. CIT [1968] 68 ITR 708 (BOM), AFTER A REVIEW OF JUDICIA L PRECEDENTS, TO ENABLE AN ASSESSEE OR THE DEPARTMENT TO TENDER FRES H EVIDENCE TO SUPPORT ITS CASE, MUCH LESS TO MAKE OUT A NEW CASE. IT CLARIFIE D THAT THE ADMISSION OF ADDITIONAL EVIDENCE IS MADE TO DEPEND NOT ON THE RE LEVANCY OR MATERIALITY BUT UPON THE FACT WHETHER OR NOT THE APPELLATE COURT RE QUIRES THE EVIDENCE TO ENABLE IT TO PRONOUNCE THE ORDER OR FOR ANY OTHER SUBSTANT IAL CAUSE. FURTHER, THE MERE FACT THAT THE EVIDENCE SOUGHT TO BE PRODUCED IS VIT AL AND IMPORTANT DOES NOT PROVIDE A SUBSTANTIAL CAUSE TO ALLOW ITS ADMISSION AT THE APPELLATE STAGE, ESPECIALLY WHEN THE EVIDENCE WAS AVAILABLE TO THE P ARTY AT THE INITIAL STAGE AND HAD NOT BEEN PRODUCED BY HIM. THIS, IT WAS FURTHER EXPLAINED, IS AS THE RULE IS NOT TO ALLOW A LITIGANT, WHO HAS BEEN UNSUCCESSFUL IN THE LOWER COURTS, TO PATCH UP THE WEAK PARTS OF HIS CASE AND FILL UP THE OMISS IONS IN THE COURT OF LAW. THE ADMISSION OF ADDITIONAL EVIDENCE BY THE TRIBUNAL IS THUS DEPENDENT ON THE TRIBUNAL REQUIRING IT FOR THE PURPOSE OF PRONOUNCIN G ITS JUDGMENT OR FOR THE PURPOSE OF CURING SOME INHERENT LACUNA WHICH IT HAS ITSELF DISCOVERED (REFER PGS. 713-715 OF THE REPORTS). WE HAVE, ON AN EXAMINATION OF THE EXPLANATIONS AND THE MATERIALS ADDUCED, ALREADY FOUND THE ASSESSEES CAS E AS WITHOUT ANY SUBSTANCE AND WHOLLY PRESUMPTUOUS AND MAKE BELIEVE. ON THE MERITS OF THE CASE, I.E., ON ITS BASIS, WH ERE WAS THE MONEY INVESTED, ASSUMING ITS WITHDRAWAL IN APRIL, 2006, I.E., UP TO THE TIME OF ITS DEPOSIT? THIS IS AS A NEXUS BETWEEN THE TWO IS TO BE ESTABLISHED, WI TH THAT OF LOANS TO THE SIX PERSONS AFORE-SAID NOT PASSING MUSTER. IN FACT, UND ISCLOSED INCOME ITSELF CANNOT BE AN EXPLANATION FOR UNEXPLAINED EXPENDITURE/ASSET , THE BANK DEPOSIT IN THE PRESENT CASE. THE DEPOSITS IN THE FIRM AS WELL AS I NCOME BY WAY OF INTEREST THEREON OVER THE YEARS HAVE ADMITTEDLY NOT BEEN DIS CLOSED TO THE REVENUE. AN UNEXPLAINED SOURCE CANNOT BE AN EXPLANATION FOR ANO THER UNEXPLAINED SOURCE. IN FACT, THE SAID FIRM, EVEN GOING BY THE ASSESSEES S TAND, ONLY FORMS AN AVENUE FOR 10 ITA NO.319/MDS/2016 (AY 2009-10) K.A.PALANISAMY V. ASST. CIT PARKING THE FUNDS, AND ITSELF DOES NOT CONSTITUTE A SOURCE, WHICH COULD ONLY BE SAID TO BE QUA INTEREST INCOME. THE SAME BEING, HOWEVER, UNDISCLO SED, CANNOT BE A VALID SOURCE TO EXPLAIN ASSETS IN THE FORM OF THE DEPOSIT, I.E., TO THAT EXTENT. THE CAPITAL INVESTED IN THE FIRM, ASSUMING SO, MAY HAVE BEEN BY THE ASSESSEE OUT OF HIS ACCUMULATED CAPITAL OR FROM EARNINGS. HOWEVE R, THE LAW DEEMS IT AS HIS INCOME OF THE YEAR HE IS FOUND TO BE IN THE CONTROL AND POSSESSION OF THE MONEY, BULLION, VALUABLE ARTICLE, ETC. - THE CASH DEPOSITE D IN HIS BANK ACCOUNT IN THE INSTANT CASE. SECTIONS 69/69A, ET. AL. ARE ONLY RUL ES OF EVIDENCE EMBODYING THE PRINCIPLES OF COMMON LAW JURISPRUDENCE AS REFLECTED IN S. 110 OF THE INDIAN EVIDENCE ACT, 1872. THE ASSESSEES RETURNS OF INCOM E FOR THE EARLIER YEARS ADMITTEDLY DO NOT DISCLOSE ANY SUCH CAPITAL, MUCH L ESS SOURCE THEREOF, OR INTEREST INCOME FROM THE INVESTEE FIRM. WE, ACCORDINGLY, FIN D NO REASON WHATSOEVER TO ADMIT THE SAID EVIDENCE/S. THE ASSESSEES ENTIRE CASE IS WITHOUT BASIS AND ME RIT, AND IS ACCORDINGLY DISMISSED. WE DECIDE ACCORDINGLY, DISMISSING THE RE LEVANT GROUNDS. 8. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED ON FEBRUARY 28, 2017 AT CHENNAI . SD/- SD/- ( . ) ( ) (G. PAVAN KUMAR) (SANJAY ARORA) ! /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, - /DATED, FEBRUARY 28, 2017. EDN. . ) '!+/0 10$+ /COPY TO: 1. %& /APPELLANT 2. '(%& /RESPONDENT 3. 2+ ( )/CIT(A) 4. 2+ /CIT 5. 034 '!+! /DR 6. 45# 6 /GF