Rajeshwar Sharma, Jaipur V. ITO Wd4(3), Jaipur

ITA 412/JPR/2022

AI Insights

The case involves Rajeshwar Sharma, the appellant, who appealed against the order of the National Faceless Appeal Centre (NFAC/CIT(A)), which sustained the Income Tax Officer's (ITO) addition of Rs. 15,00,000 to his income for the assessment year 2009-10. This amount was allegedly received in cash from Shree Sunda Ram Swami as an advance for the sale of land, which was later deposited in the bank. The ITO and CIT(A) found the transaction to be unexplained and the appellant failed to substantiate the source of the cash deposit. The Tribunal dismissed the appeal, agreeing with the lower authorities that the burden of proof regarding the genuineness of the transaction and the creditworthiness of the creditor was not met by the appellant.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132391 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 28-02-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 22-11-2022
• Other Referred Cases: Sudhir Kumar Sharma (HUF) Vs. CIT, Arun Kumar J Muchhala Vs. CIT, CIT vs. Orissa Corporation (P) Ltd, Labh chand Bohra vs ITO, Daulat Ram's case
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revision of order; Principle of natural justice; Source of fund; Onus to prove
• Section: 68; 263; 271(1)(c); 143(3)

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR MkWa- ,l-lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 412/JPR/2022 fu/kZkj.k o"kZ@Assessment Years : 2009-10 Rajeshwar Sharma 10, Shyam Nagar Nadi Ka Phatak Benar Road, Jaipur. cuke Vs. ITO, Ward-4(3), Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AOZPS 9189 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : None (Written submission) jktLo dh vksj ls@ Revenue by : Ms Monisha Choudhary (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing 01/03/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 14/03/2023 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the assessee against the order of the National Faceless Appeal Centre, Delhi [hereinafter referred to as “NFAC/CIT(A)”], dated 27.09.2022 for the assessment years 2009-10, which in turn arises from the order passed by the Income Tax Officer Ward- 4(3), Jaipur passed under Section 263/143(3) of the Income tax Act, 1961 (in short 'the Act') dated 26.12.2014. ITA No. 412/JPR/2022 Rajeshwar Sharma 2 2. The assessee has raised the following grounds:- “1. That Learned CIT Appeals has erred in law and fact in sustaining the Learned A.O.’s order by treating the bank deposit as undisclosed income of assessee which is wrong, unjustified and deserved to be deleted and ld. A.O. has wrongly treated it as undisclosed income of assessee. The impugned order is bad in law and facts. The appellant craves leave to add, amend or alter all or any of the grounds of appeal on or before the date of hearing.” 3. None appeared on behalf of the assessee however, the Bench decided to proceed the matter on merit based on the materials available on record, concerning the issue in question. 4. The brief facts of the case are that assessee is an individual and filed its return of income on 31.03.2010 declaring total income of Rs. 1,49,090/-. The assessment u/s 143(3) of the Act was completed vide order dated 24.11.2014 at the total income of Rs. 1,93,327/-, but after the ld. CIT-II, Jaipur has passed order u/s 263 of the Income Tax Act on 23.01.2013 treating the assessment order dated 24.11.2011 has erroneous in so for as it is prejudicial to the interest of the Revenue and directed to recomputed the total income of the assessee after verify the source of cash deposited of Rs. 20,29,000/- in saving bank account of the assessee, ITA No. 412/JPR/2022 Rajeshwar Sharma 3 therefore ld. AO has made assessment u/s 263/143(3) vide order dated 26.12.2014 at Rs. 16,93,330/- by addition of Rs. 15,00,000/-. 4. The ld. AO observed that the contention of the AR of the assessee that instead of personally produce to Shri Sunda Ram Swami an affidavit dully attested can be consider by your good self and affidavit can also be treat as person present before you is not tenable and acceptable on account of that the affidavit filed by the ld. AR of the assessee is also a self serving document and itself have no value without corroborative evidences. Further, no evidences regarding agricultural produce and sold thereof furnished by the ld. AR of the assessee. Therefore, the contention of the assessee is not accepted. In view of the above facts and circumstances and detailed discussion made above, the amount of Rs. 15,00,000/- is held to the undisclosed income of the assessee and hereby added in the total income of the assessee. Since the assessee has concealed particulars of income, penalty proceedings u/s 271(1)(c) of the IT Act are also being initiated separately. With the remarks, the total income is re-computed as under:- Assessed income vide order dated 24.11.2011 Rs. 1,93,327/- Add:- Addition as discussed above Rs. 15,00,000/- Total income Rs. 16,93,327/- ITA No. 412/JPR/2022 Rajeshwar Sharma 4 Rounded of Rs. 16,93,330/- 5. The ld. CIT(A) after hearing the contention of the assessee given his relevant findings on the issue, which reads as under:- “ 6.2 The submission made by the appellant have been gone through. The appellant mainly contended that Rs. 15,00,000/- received in cash from Sri Sunda Ram toward purchase of property, was deposited into the bank account. In support of this, the appellant also filed affidavit of Sri Sunda Ram. It is observed from the assessment order that Mr. Sunda Ram never appeared before the AO, nor explained about the transaction undertaken between them. More importantly, he has failed to substantiate the cash of Rs. 15,00,000/- was given by him to the appellant. It is important to note that, the burden of proof lies on the appellant to prove the genuineness of the transactions by way of fulfilling the following conditions: 1) Identity of the creditor, 2) Creditworthiness of the creditor; and 3) Genuineness of the transaction. 6.4 However, in the instant case, out of the three basic ingredients which are required to be proved in order to demonstrate the genuineness of the transactions, the appellant could fulfil only one i.e., identity of the creditors/person but failed to fulfil the balance two most important conditions stated above i.e., (1) the creditworthiness, and (2) the genuineness of the transactions. Thus, I am of the confirmed view that the appellant has failed to prove the genuineness of cash credits appearing into the bank account to the tune of Rs. 15,00,000/-. 6.5 In the instant case, the appellant has failed to discharge the onus of proving the creditworthiness of the parties and genuineness of the transactions. Under the circumstances, the Department need not prove such amount as forming part of income and the same would by default become income of the appellant u/s. 68/69 of the Act, as the case may be. 1. Sudhir Kumar Sharma (HUF) Vs. CIT [2014] 224 Taxman 128 (P & H HC) 2. Arun Kumar J Muchhala Vs. CIT [2017] 339 ITR 256 (Bom. HC): ITA No. 412/JPR/2022 Rajeshwar Sharma 5 In the above mentioned cases, it is held by the Hon'ble High Courts that, burden of proof u/s. 68 of the Act would always lie on the appellant and if the appellant failed to explain the source of cash deposits made in the bank account to the satisfaction of the AO, then such amount would become income of the appellant without any further action from the appellant. 6.6 Thus, in view of the aforementioned factual matrix and settled position of law, I am of the considered opinion that the appellant has failed to discharge the onus cast on him with regard to creditworthiness of creditor and genuineness of transactions to the tune of Rs. 15,00,000/-. Accordingly, I don't find fault with the AO in treating the same as unexplained income. Thus, the ground no. (1) raised by the appellant on this issue are dismissed.” 5. As the assessee did not find any favor from the order of the ld. CIT(A) they preferred the present appeal before the Tribunal. To support the grounds so taken by the assessee, the ld. AR for the assessee has submitted his written submission and the same is reads as under:- “1. BRIEF FACTS 1.1 The assessee has received advance amount of Rs. 15, 00,000/- In cash, against sale agreement of residential plot vide agreement dated 12/08/2008 with Sh. Sunda Ram Swami and cash received from buyer Sh. Sunda ram was deposited into bank by assessee. 2. ASSESSING OFFICER 2.1 Ld. AO not considered the payment of advance received from sh. Sunda ram Swami but A.O. has rejected the same on the ground that the genuineness and creditworthiness of transaction was not proved by assessee by way of not producing the Sh. Sunda ram swami due to some unavoidable circumstances who has entered an agreement to purchase the plot of assessee, on 12/08/2008 Sh. Sunda ram swami could not appear before Ld. A.O. but sent affidavit, I.D. proof and agriculture land holding details etc for source of income but not consider the same by Ld. A.O. and disallowed Rs. 15,00,000/- 3. SUBMISSIONS ITA No. 412/JPR/2022 Rajeshwar Sharma 6 3.1 Without prejudice to the submission cited above it is humbly submitted that even if it is assumed that the appellant could not explained the source of funds of the purchasers for paying advance for purchase of land pursuant to agreement dated 12.08.2008, the said advance paid by the purchasers of land cannot be held as unexplained simply on the basis of the same. Assessee has submit before Ld. A.O documents regarding sale of land i.e. sale agreement, purchasers Id proof, purchasers source of agriculture crop sold in cash, affidavit of purchaser but Ld. A.O. rejected the all evidence and submission of assessee as declared as unexplained income, under the provisions of section 68 of the Act, the assessee cannot be forced to prove the source of source. 3.2 It is not the burden of the assessee to explain the source of funds of the purchasers paying advance for purchase of land. The burden lying upon the assessee u/s 68 of the Act, is to explain the source of the credit found in his books of accounts not the source of the source. If the assessee is enforced to explain the source of funds of the purchasers, it shall amount to enforce the assessee to explain the source of the source. Additional burden was on department to show that lender did not have means to make advance payment for purchase of land, the advance payment made by them actually emanated from coffers of the assessee so as to enable it to be treated as undisclosed income of assesee. In the absence of such findings, addition could not made in the income of assessee under section 68 of the act. 3.3 As held by Hon'ble jurisdictional high court in Labh chand Bohra vs ITO 219 CTR 571, so far as capacity of the lender is concerned, in our view on the face of the judgment of the hon'ble supreme Court in Daulat Ram's case and other judgments, capacity of the lender to advance money to the assessee was not a matter which could be required of the assessee to be established, as that would amount to calling upon him to establish source of the source. 3.4 Therefore the claim of the assessee towards receipt of Rs.1500000/- as advance against sale of land vide agreement dated 12.08.2008, may kindly be accepted and the addition of Rs.15, 00,000/- made by Ld. A.O. may kindly be deleted. 3.5 Decision of coordinate bench in case of ITO V. Davendra kumar meena ITA No. 436/JP/2015 & 219/JP/2016 in which issues are same and assessee's case is resemble to this case. 3.6 Undisputedly, the primary onus to establish genuineness of the transaction is on the assessee. In the instant case, the assessee has provided the necessary explanation, furnished documentary evidence in terms of filings, affidavits, I.D. Proof of Shree Sunda Ram Swami, source of income of the lender, to satisfy the cardinal test of identity, creditworthiness and genuineness of the transaction. However, the Assessing officer has not given any finding in ITA No. 412/JPR/2022 Rajeshwar Sharma 7 respect of such explanation, documentary evidence as well as independent confirmation. Apparently, the reason for not accepting the same is that not produce to Shree Sunda ram Swami personally from whom cash received by assesee. The Assessing officer stated that the primary onus is on the assessee to establish the genuineness of the transaction claimed by it. It is incumbent on the assessee to produce the parties along with necessary documents to establish the genuineness of the transaction. It is noted that no material has been placed by the Assessing Officer to even allege that such funds/sums raised was from the coffers of the assessee. The material on record reveals that lenders have sufficient source to give advance to assessee. 3.7 In the facts of the present case, both the nature & source of the amount received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of Shree Sunda Ram Swami. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, of person, creditworthiness/capability of person and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 of the Act. 3.8 It was further submitted that the assessee has taken actual advance from Shree Sunda Ram Swami through cash no accommodation entry was taken from Shree Sunda Ram Swami. In the books of accounts of the assessee, no irregularity has been pointed out by the AO. Therefore, the entries recorded in the books of account of the assessee is evidence under the Evidence Act and should be accepted, the burden to prove that the amount attributable to the assessee represents its concealed income would be on the department. This burden cannot be discharged merely on suspicion, surmises and conjectures. The Judicial view has been that there cannot be a presumption against assessee due to circumstances that Shree Sunda Ram personally not attended before A.O. In light of above discussions, in our view, the crux of the issue at hand is that whether the principle of natural justice stand violated in the instant case. In other words, where the A.O. doesn't want to accept the explanation of the assessee and the documentation furnished regarding the genuineness of the transaction. In support of this contention, assessee relied upon the decision of Hon'ble Apex Court in the case of CIT, Orissa Vs. Orissa Corporation P. LTD (1986) 159 ITR 78 It is the settled proposition of law that in order to assume jurisdiction u/s 263 of the Act, the twin conditions namely, (a) that the order is erroneous and (b) that the order is prejudicial to the interest of the Revenue must be satisfied. In the instant case, the assessee has furnished all the requisite information and the AO after examining the facts on record and after conducting all possible enquiries had passed the order by making certain additions. Therefore, merely ITA No. 412/JPR/2022 Rajeshwar Sharma 8 because the Id. PCIT does not agree with the order of the AO cannot make the order erroneous as long as the same was passed after all possible enquiries and due verification of facts on record. Therefore it is held that in the circumstances of the case it could not be held that the ITO has made without making proper enquiries and issue in question had been explained before Ld. A.O.in original assessment order U/s 143(3) and same was considered and accepted by AO in original assessment order U/s 143(3) about genuineness of the transaction this fact can be verified from Ld. A.O. record. It is not a case of lack of enquiry or lack of investigation so as the order of the AO cannot be said to be erroneous. Relief sought: - It is prayed that disallowances and uncalled addition so made may kindly be deleted.” 6. The ld. AR of the assessee also relied upon the decision of Hon’ble Supreme Court in case of CIT vs. Orissa Corporation (P) Ltd. 1986 AIR 1849. 7. Per contra, the ld. Sr. DR relied on the order of the lower authorities. 8. We have heard the rival contentions and also gone through the various contentions raised by both the parties. The ld. AR for the assessee was not present but the ld. AR for the assessee has requested in his letter dated 28.02.2023 to consider his written submission dated 22.12.2022 as arguments and that the disallowances and uncalled addition may be deleted. During the course of appellate proceedings, the ld. AR for the assessee has filed the submission which has been ITA No. 412/JPR/2022 Rajeshwar Sharma 9 considered by the ld. CIT(A) in his order in page No. 5 but the ld. CIT(A) found not satisfactorily with the written submission filed by the assessee where it is observed that Shri Sunda Ram never appeared before the Assessing Officer nor explained about the transactions undertaken between them. It is noted that the assessee has not proved that Rs. 15,00,000/- received from Shri Sunda Ram towards purchase of the property which was deposited in the bank account the source of cash deposit is not explained. On second issue, the ld. CIT(A) observed that the burden of proof lies on the assessee to prove the genuineness of the transactions by way of fulfilling the right conditions where it is held as under:- 1. Identity of the Creditor, 2. Creditworthiness of the creditors, and 3. Genuineness of the transaction. It is noted that the ld. CIT(A) has rightly dismissed the appeal of the assessee, that the assessee has failed to discharge the onus of proving in order to demonstrate the genuineness of the transactions under which the ld. CIT(A) has taken reliance on the following decision wherein it is held as under:- “1. Sudhir Kumar Sharma (HUF) Vs. CIT [2014] 224 Taxman 128 (P & H HC) ITA No. 412/JPR/2022 Rajeshwar Sharma 10 2. Arun Kumar J Muchhala Vs. CIT [2017] 339 ITR 256 (Bom. HC): In the above mentioned cases, it is held by the Hon'ble High Courts that, burden of proof u/s. 68 of the Act would always lie on the appellant and if the appellant failed to explain the source of cash deposits made in the bank account to the satisfaction of the AO, then such amount would become income of the appellant without any further action from the appellant.” Taking strong reliance of decision, therefore, we are of the considered view the full facts and settled proposition of law, the assessee has failed to discharge the onus of cast earning with regard of creditworthiness of genuineness of transaction to the tune of Rs. 15,00,000/- hence we confirmed the order of the ld. CIT(A). Thus, the appeal of the assessee is dismissed. In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 14/03/2023. Sd/- Sd/- ¼ jkBksM deys'k t;UrHkkbZ ½ ¼ MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 14/03/2023. *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Rajeshwar Sharma, Jaipur. 2. izR;FkhZ@ The Respondent- ITO, Ward-4(3), Jaipur. 3. vk;dj vk;qDr@ CIT 4. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. ITA No. 412/JPR/2022 Rajeshwar Sharma 11 5. xkMZ QkbZy@ Guard File { ITA No. 412/JPR/2022} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar