The Assisatant Commissioenr of Income-tax, Hoshiarpur V. Sh. Maninder Singh Cheema, Hoshiarpur

ITA 719/ASR/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7727 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-06-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 10-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV K GUBGOTRA
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Additional evidence
• Section: 143(3); 131; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 719/ASR/2013 AS SESSMENT YEAR: 2007-08 ASSTT. COMMISSIONER OF INCOME TAX, HOSHIARPUR CIRCLE, HOSHIARPUR VS. MANINDER SINGH CHEEMA, H. NO. 298, ST. NO. 20, GURU NANAK NAGAR, HOSHIARPUR [PAN: AEYPC 4778B] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJEEV K. GUBGOTRA (D.R.) RESPONDENT BY: SH. SURINDER MAHAJAN, (C.A.) DATE OF HEARING: 26.06.2018 DATE OF PRONOUNCEMENT: 31.07.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, LUDHIANA ( CIT (A)' FOR SHORT) DATED 10.09.2013, ALLOWING THE ASSESSEES APPEAL CONTESTI NG ITS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) DA TED 30.12.2009 FOR THE ASSESSMENT YEAR (AY) 2007-08. 2. THE APPEAL RAISED THREE GROUNDS, AS UNDER; THE F OURTH BEING GENERAL IN NATURE, WARRANTING NO ADJUDICATION: 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.10 LACS MADE BY THE A.O . U/S. 68 OF THE INCOME TAX ACT, 1961 BY ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 2 HOLDING THAT THE ASSESSEE IN THE GARB OF EARNEST MO NEY INTRODUCED HIS OWN UNACCOUNTED MONEY. 2. THAT, ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.15 LACS MADE BY THE A.O . U/S. 69 OF THE I.T. ACT, 1961, BEING UNEXPLAINED INVESTMENT MADE FOR THE PURCHASE OF LAN D. 3. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.2,50,000/- MADE BY THE A.O. AS I NCOME FROM UNDISCLOSED SOURCES BY DISALLOWING THE EXCESSIVE AGRICULTURE INCOME CLAIME D BY THE ASSESSEE IN THE ABSENCE OF ANY EVIDENCE FOR THE SALE OF AGRICULTURAL PRODUCE. 3. THE FIRST GROUND IS IN RESPECT OF AN ADDITION FO R RS.10 LACS MADE U/S. 68 OF THE ACT. THE ASSESSEE, AN AGRICULTURIST AND COLONIZ ER, WAS DURING THE RELEVANT YEAR ENGAGED IN DEVELOPMENT OF A COLONY BY THE NAME KAR TAR ESTATES, AT PHAGWARA. EARNEST MONEY (AT RS.101.77 LACS) WAS STATED AS REC EIVED FROM VARIOUS PERSONS TOWARD BOOKING OF PLOTS IN THE SAID COLONY. ON EXAM INATION, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT OF TH E SAME, RS.32.55 LACS WAS RECEIVED IN CASH, WHICH WAS EXPLAINED TO HAVE BEEN EITHER ADJUSTED AGAINST THE PLOT REGISTERED IN THE NAMES OF THE DEPOSITOR-ALLOTTEES, OR REPAID, I.E., WHERE FOR SOME REASON THE CONCERNED DEPOSITOR DID NOT OPT TO PURCH ASE THE PLOT. EIGHT PERSONS, FROM WHOM AN AGGREGATE SUM OF RS.10 LACS, IS STATED TO HAVE BEEN RECEIVED IN CASH, WERE FOUND TO HAVE BEEN REPAID, WHICH THOUGH WAS BY WAY OF A SINGLE CHEQUE OF RS.10 LACS FAVOURING ONE, RAJ SHER SINGH, ON WHOSE ADVICE, IT WAS CLAIMED, THE SAID DEPOSITORS HAD BOOKED THE PLOTS, PAYING THE EA RNEST MONEY, AS UNDER: NAME OF THE PERSON FROM WHOM AMOUNT (RS. ) MODE OF PAYMENT EARNEST MONEY WAS RECEIVED S/SHRI 1. GURVINDER SINGH 50,000/- CASH 2. GAGANDEEP SINGH 50,000/- CASH 3. SANJIV MEHTA 2,00,000/- CASH 4. INDERJIT SINGH 1,50,000/- CASH 5. SATISH KUMAR 1,50,000/- CASH ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 3 6. DALWINDER SINGH 1,50,000/- CASH 7. HOSHIAR SINGH 1,00,000/- CASH 8. SURINDER BANSAL 1,50,000/- CASH TOTAL RS.10,00,000/- AFFIDAVITS FROM SIX OF THEM WERE FILED, I.E., OTHER THAN THE PERSONS LISTED AT SERIAL NOS. 1 AND 2 ABOVE, WHO WERE NEITHER PRODUCED BY TH E ASSESSEE NOR ATTENDED IN RESPONSE TO THE SUMMONS ISSUED TO THEM BY THE ASSES SING OFFICER (AO) U/S. 131 (PB PGS. 27-30, 34-36). THE DEPONENTS WERE CALLED F OR BEING PRODUCED BY THE AO, I.E., AS ASSESSEES WITNESSES. EXCEPT FOR DALWINDER SINGH (SERIAL NO. 6), THE OTHER FIVE WERE PRODUCED AND DEPOSED BEFORE THE AO, CONFI RMING TO HAVE RECEIVED BACK THE DEPOSIT, WHICH WAS STATED TO BE OUT OF PERSONAL SAVINGS, THROUGH RAJ SHER SINGH. NONE OF THEM, HOWEVER, WAS FOUND TO HAVE A C APACITY TO PAY THE DEPOSIT AMOUNT. IN FACT, THEIR STATED INCOME WAS SO MEAGER SO AS TO BE INSUFFICIENT TO MAKE THEIR BOTH ENDS MEET. THE AMOUNT WAS REPAID NOT TO THEM DIRECTLY, BUT TO A THIRD PERSON, WHO HAD NOTHING TO DO, OR SHOWN TO HAVE ANY THING TO DO, WITH THE BOOKING OF THEIR PLOTS. IT WAS ALSO NOT THE CASE THAT THE A MOUNT HAD BEEN REPAID TO THE THIRD PERSON IN THE PRESENCE OF THE DEPOSITORS. THE BOOKI NG ITSELF WAS SANS ANY AGREEMENT, SPECIFYING THE PARTICULARS, VIZ. THE PLO T SIZE, PURCHASE PRICE, PAYMENT PERIOD, ETC. UNDER THE CIRCUMSTANCES, THE DEPOSIT A MOUNT (RS.10 LACS) WAS INFERRED BY THE AO AS THE ASSESSEES UNACCOUNTED INCOME, INT RODUCED IN CASH IN THE GARB OF EARNEST MONEY, AND ACCORDINGLY BROUGHT TO TAX U/S. 68 OF THE ACT (PARAS 2 TO 2.2 OF THE ASSESSMENT ORDER). IN APPEAL, THE ASSESSEE FOUN D FAVOUR WITH THE LD. CIT(A) ON THE BASIS THAT THE ASSESSEE HAD DISCHARGED THE INIT IAL ONUS ON HIM BY FURNISHING AFFIDAVITS FROM THE CONCERNED PERSONS AS WELL AS PR ODUCING THEM BEFORE THE AO, AND WHO HAD CONFIRMED HAVING RECEIVED BACK THEIR DE POSITS THROUGH SH. RAJ SHER SINGH. THE ASSESSEE WAS NOT IN THE BUSINESS OF RAIS ING MONEY, BUT OF SELLING PLOTS; ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 4 AS SUCH, ENQUIRY INTO THE CREDITWORTHINESS OF THE O STENSIBLE BUYERS WAS OUTSIDE THE PURVIEW OF THE ASSESSEE AND, THUS, THE AO (PARA 5 O F THE IMPUGNED ORDER). [ 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 OUR FIRST OBSERVATION IN THE MATTER IS THAT THE ISSUE INVOLVED IS PRINCIPALLY FACTUAL, WITH THE PRIMARY FACT OF RECEIPT OF MONEY BY THE ASSESSEE BEING NOT IN DISPUTE. IT IS THEREFORE ON ACCOUNT OF A VARIANCE I N THE INFERENCES DRAWN, I.E., THE INFERENTIAL FINDINGS, WHICH ARE AGAIN FINDINGS OF F ACT, THAT THE DIFFERENCE OBTAINS BETWEEN THE FINDINGS ISSUED BY THE AO AND THE LD. C IT(A). WHILE, ONE, THE LATTER, REGARDS THE CASH CREDITS AS PROVED, THE OTHER CONSI DERS THEM AS NOT, I.E., ON THE PARAMETERS OF SECTION 68, (ALSO) STATED BEFORE US A S NOT APPLICABLE TO A TRADE CREDIT - AND WHICH IS WHAT THE EARNEST MONEY ESSENTIALLY IS, RELYING ON THE FOLLOWING DECISIONS: CIT V. BHITAL DAS MODI [2005] 276 ITR 517 (ALL) CIT V. PANCHAM DASS JAIN [2006] 156 TAXMAN 507 (ALL) ITO V. LACHHMAN DAS MAKHIJA [2009] 116 ITD 47 (AGRA) (TM). 4.2 EVEN AS OBSERVED BY THE BENCH DURING HEARING, W HETHER IN THE GIVEN FACTS AND CIRCUMSTANCES, I.E., THE EXPLANATION OFFERED, A ND THE MATERIALS LED IN SUPPORT, COULD THE DEPOSITORS BE SAID TO HAVE DEPOSITED TH E EARNEST MONEY, WHICH ONLY WOULD QUALIFY THEM TO BE REGARDED AS TRADE CREDITOR S, IS THE QUESTION ARISING. THIS WOULD ALSO BE APPARENT FROM A READING OF THE ASSESS MENT ORDER AS WELL AS THE NARRATION OF THE FACTS AFORE-NOTED. THE LEGAL PLEA RAISED BY THE ASSESSEE IS THEREFORE MISPLACED. IF THEY INDEED HAD, AS THE PLEA RAISED PRESUMES, WH ERE IS THE QUESTION OF THE SAME BEING DEEMED AS UNEXPLAINED AND, THUS, AS THE ASSESSEES INCOME BY WAY OF AN UNEXPLAINED CREDIT? FURTHER, THIS WOULD BE SO IRRESPECTIVE OF WHETHER THEY HAD PAID THE ASSESSEE MONEY TOWARD BOOKING OF PLOTS , AS CLAIMED, OR OTHERWISE. ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 5 THAT IS, IN EITHER CASE, SECTION 68 CANNOT BE INVOK ED. THE EXPLANATION OF THE SAME AS REPRESENTING EARNEST MONEY, IT NEEDS TO BE APPRE CIATED, IS AN EXPLANATION TOWARD THE NATURE OF THE CREDIT, WHICH, ALONG WITH SOUR CE, IS TO BE SATISFACTORILY EXPLAINED, I.E., ESTABLISHED ON THE PARAMETERS OF I DENTITY AND CREDITWORTHINESS (OF THE CREDITOR) AND THE GENUINENESS (OF THE TRANSACTI ON), AS IS WELL SETTLED AND EMPHASIZED TIME AND AGAIN BY THE APEX COURT, TO SOM E DECISIONS BY WHICH, AS ALSO BY THE HON'BLE JURISDICTIONAL HIGH COURT, SETTLING THE LAW IN THE MATTER, WE MAY REFER TO FOR THE SAKE OF COMPLETENESS OF DISCUSSION : GOVINDA RAJULU MUDALIAR V. CIT [1958] 34 ITR 807 (SC) SREELEKHA BANERJEE & OTHRS. V. CIT [1963] 49 ITR 112 (SC) KALEKHAN MOHAMMED HANIF V. CIT [1963] 50 ITR 1(SC) [AFFIRMING 34 ITR 669 (MP)] CIT V. DURGA PRASAD MORE [1971] 82 ITR 540 (SC) CIT V. BIJU PATNAIK [1986] 160 ITR 674 (SC) S UMATI DAYAL V. CIT [1995] 214 ITR 801 (SC) CIT VS. P. MOHANAKALA &OTHERS [2007] 291 ITR 278 (SC) CIT V. LACHHMANDASS OSWAL [1980] 126 ITR 446 (P&H) HARI CHAND VIRENDER PAUL V. CIT [1983] 140 ITR 148 (P&H) CIT V. Y.M. SINGLA [2014] 366 ITR 242 (P&H) NAMDEV ARORA V. CIT [2016] 389 ITR 434 (P&H) THE REASON FOR THE SAME IS SIMPLE; THE ASSESSEE BEI NG IN RECEIPT OF A SUM OF MONEY, THE ONUS IS ON HIM TO SHOW THAT THE SAME WAS NOT IN THE NATURE OF INCOME, OR, EVEN SO, IS OUTSIDE THE AMBIT OF TAXATION UNDER THE PROV ISIONS OF THE ACT. IN THE ABSENCE OF SUCH PROOF, THE ASSESSING OFFICER IS ENTITLED TO TREAT IT AS THE ASSESSEES TAXABLE INCOME (REFER PARA 4 OF THE DECISION IN KALE KHAN MOHAMMAD HANIF V. CIT (SUPRA), REPRODUCED IN LACHHMAN DASS OSWAL (SUPRA) (AT PG. 448)). WHETHER THE CREDIT IS, OR CAN BE SAID TO BE SO PROVED, OR NOT, IS THE QUESTION, AND WHICH IS PRINCIPALLY A QUESTION OF FACT, AS AGAIN EMPHASIZED TIME AND AGAIN BY THE APEX ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 6 COURT, AS RECENTLY IN VIJAY KUMAR TALWAR V. CIT [2011] 330 ITR 1 (SC); P. MOHANKALA (SUPRA) (ALSO REFER BALBIR SINGH V. CIT [2011] 334 ITR 287 (P&H)). 4.3 COMING TO THE FACTS OF THE CASE, WE ARE UNABLE TO PERSUADE OURSELVES TO BE SATISFIED WITH THE CREDITS UNDER THE REFERENCE AS P ROVED, OR THAT THE AO, IN REJECTING THE ASSESSEES EXPLANATION QUA THE NATURE AND SOURCE THEREOF, WAS NOT ACTING REASONABLY, AND OUGHT TO HAVE BEEN SATISFIED THEREW ITH. TO BEGIN WITH, NO CONFIRMATION HAS BEEN PRODUCED FROM THE FIRST TWO C REDITORS, STATED TO HAVE ADVANCED RS. 1 LAKH. IT IS DIFFICULT, THEREFORE, TO SAY THAT THE IDENTITY STANDS PROVED QUA THESE TWO CREDITS. IT IS DEFINITELY SO FOR THE BALANCE SIX, AFFIDAVITS FROM WHOM STAND FURNISHED, BESIDES FIVE OF THEM BEING PRODUCE D BEFORE THE AO. HOWEVER, THEIR CAPACITY IS WHOLLY UNPROVED; RATHER, DISPROVE D IN-AS-MUCH AS THEY HAVE ADMITTED THEIR INCOME/S, WHICH IS MEAGER BY ANY STA NDARDS. MUCH LESS THAN THINKING IN TERMS OF BUYING A RESIDENTIAL PLOT OF L AND (COSTING RS. 6 LACS), SUCH A PERSON WOULD BE HARD PUT TO MEET HIS DAY-TO-DAY NEE DS, I.E., THE MAINTENANCE COST OF SELF AND FAMILY. THAT IS, BEING ENGAGED WHOLLY I N PROVIDING FOR SUSTENANCE; THE COST OF LIVING ITSELF BEING EVER INCREASING, MUCH L ESS UPGRADE IT, I.E., IMPROVE HIS STANDARD OF LIVING, THE QUESTION OF THINKING OF INV ESTMENT, MUCH LESS MAKE SO, DOES NOT ARISE. THERE IS NO BASIS FOR THE ACCUMULATION OF PERSONAL SAVINGS, TO WHICH THE AMOUNT PAID IS ATTRIBUTED, WITH WE FINDING THAT THE IR INCOME (RS. 80,000 TO RS. 1 LAKH PER ANNUM) WOULD BARELY SUFFICE FOR THEIR SURV IVAL. WHY, THERE IS NOTHING ON RECORD TO SHOW THAT THEY OWN ASSETS, APART FROM SOM E AGRICULTURAL LAND, WHERE THE STATED SOURCE OF INCOME IS AGRICULTURAL. PURCHASE O F A PLOT THE STATED PURPOSE OF THE CREDIT, WOULD IN FACT REQUIRE CAPITAL FAR IN EX CESS, FURTHER SEVERELY IMPINGING ON THE GENUINENESS OF THE TRANSACTION. FURTHER STILL, WHY DID THEY PAY IN CASH, AS ANY PRUDENT PERSON WOULD, FOR RECORD PURPOSES, PREFER T O PAY THROUGH THE BANKING CHANNEL. THE RECEIPTS ARE NOT STAMPED, SO THAT THAT ISSUED IS NOT AN EVIDENCE OF DEBT ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 7 OWED. THAT APART, THE DEPOSIT IS WITHOUT ANY ACCOMP ANYING AGREEMENT, WHICH, EVEN IF NOT REGISTERED, IS A NORMAL INCIDENCE OF THE TRA DE, SPECIFYING THE TERMS AND CONDITIONS ON WHICH THE DEPOSIT STANDS GIVEN. NOBOD Y WOULD GIVE MONEY WITHOUT ARRIVING AT AN AGREEMENT, REDUCED IN THE WRITING TO ESCHEW ANY DIFFERENCES ARISING AS WELL AS FOR RECORD AND, THUS, DOCUMENTING THE VA RIOUS ASPECTS OF THE TRANSACTION, VIZ. THE IDENTITY OF THE PLOT, I.E. , ITS SIZE & AD DRESS, SPECIFYING THE NAME AS WELL AS THE STATUS OF THE RESIDENTIAL AREA, I.E., APPROVED OR UNAPPROVED OR PENDING APPROVAL; THE VALIDITY PERIOD OF THE DEPOSIT (BOOKING); THE P ERIOD IN WHICH THE ALLOTMENT IS TO BE MADE; ITS PURCHASE PRICE; HOW IS THE SAME TO BE PAID, ETC. - IN SHORT, ALL SUCH INFORMATION AS ANYONE ENTERING THE TRANSACTION WOUL D NEED TO CRYSTALLIZE BEFORE ENTERING THE SAME, BINDING HIMSELF THEREWITH. THE A MOUNT IS THEN STATED TO BE PAID BACK. SURPRISINGLY, THIS IS AGAIN WITHOUT ANY DOCUM ENTARY EVIDENCE. IT IS NOT TO THESE PERSONS, BUT TO ANOTHER. THERE IS NO CONTEMPO RANEOUS MATERIAL TO SHOW THAT SH. RAJ SHER SINGH (RSS) IS THE PERSON THROUGH WHOM THE BOOKING TRANSACTION WAS MADE. WHY, HE IS ALSO NOT SHOWN TO BE, AS CLAIM ED BEFORE US, A BROKER, SOLICITING CUSTOMERS FOR A FEE (COMMISSION). WHY, O NE OF THE DEPOSITORS, SHRI SANJAY MEHTA, STATES THE ASSESSEE TO BE HIS FRIEND (PB PGS. 46-47). WHY WOULD HE, THEN, APPROACH ANOTHER PERSON, A SOLICITOR, AND WHY , AGAIN, WOULD THE ASSESSEE NOT REFUND HIM THE BOOKING AMOUNT ON CANCELLATION, RATH ER THAN TO ANOTHER. THE REASON FOR THE CANCELLATION OF THE BOOKING IS STATED TO BE THE LITIGATION IN WHICH THE COLONIZER WAS EMBROILED. DOES THAT IMPLY THAT THE A SSESSEE DID NOT DISCLOSE HIS FRIEND ABOUT THE ONGOING LITIGATION AND ITS STATUS, FOR HIM TO HAVE INVESTED/CAUSED INVESTMENT, AND CANCELING SOON THEREAFTER, CITING L ITIGATION AS THE REASON? RATHER, ANY PRUDENT BUSINESSMAN WOULD NOT ONLY REPAY THE DE POSITORS DIRECTLY, BUT ALSO OBTAIN THE SIGNATURE OF THE BROKER, WHERE SO, AS A CONFIRMING PARTY, AS WELL AS A DECLARATION TO THE EFFECT THAT THE SAME (REPAYMENT) SHALL OPERATE TO TERMINATE ALL THE RIGHTS OF THE DEPOSITOR IN THE PLOT BOOKED. THEN, A GAIN, EXPECTEDLY, THERE IS NOTHING ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 8 TO SHOW THAT RSS PAID THE CREDITORS. NO DOUBT, THE CREDITORS HAVE SO STATED, BUT THEN WHAT VALUE THEIR STATEMENT WHEN NEITHER THE PA YMENT BY THEM IS SUBSTANTIATED NOR HAVE THEY BEEN SHOWN TO HAVE CAPACITY FOR THE S AME, SO THAT THE TRANSACTION IS WHOLLY UNEVIDENCED. THAT IS, THE SAME IS ONLY A SEL F-SERVING STATEMENT/S, AS IS THEIR CONFIRMATION/S OF THE DEPOSIT/S (REFER: CIT V. DURGA PRASAD MORE (SUPRA); S UMATI DAYAL V. CIT (SUPRA)). HOW COULD, THEN, IT BE SAID THAT PAYMENT TO THEM BY RSS STANDS EVIDENCED? PER CONTRA, THE SAME IS COMPLETEL Y UNPROVED. RATHER, RSS, HAVING RECEIVED THE AMOUNT ADVANCED, ASSUMING SO, U NDER TRUST, WOULD TAKE ALL POSSIBLE STEPS TO EVIDENCE THE REPAYMENT TO THE DEP OSITORS. IN FACT, RSS HIMSELF IS CONSPICUOUS BY HIS ABSENCE. WHAT IS HIS OCCUPATION? HOW DOES HE KNOW THESE PERSONS RESIDING IN THE DIFFERENT DISTRICTS OF THE STATE? HOW MANY CUSTOMERS, THAT IS, BESIDES THESE EIGHT, CREDIT FROM WHOM IS NOT ESTABL ISHED, HAS HE SOLICITED? DID HE ACCEPT REPAYMENT ON BEHALF OF OTHERS, RATHER THAN F ACILITATING REPAYMENT TO THEM? IS THIS THE NORMAL PRACTICE? IN FACT, THE AMOUNT HAVIN G BEEN REPAID SOON AFTER, WHY DID HE MISGUIDE THE CUSTOMERS INTO BOOKING PLOTS ON A SITE EMBROILED IN LITIGATION, WHICH IS STATED AS A REASON FOR REPAYMENT? THIS BEC OMES PARTICULARLY RELEVANT AS IT IS NOT SHOWN, OR EVEN STATED, THAT THE OTHER CREDIT S, THAT IS, BY WAY OF EARNEST MONEY, STOOD SIMILARLY REPAID, OR THE BULK OF IT, I NASMUCH AS THE NORMAL TENDENCY OF THE DEPOSITOR WOULD BE TO STAY CLEAR OF ANY DISP UTED PROPERTY. HOW COULD THEN IT BE SAID THAT THE TRANSACTION/S AND, RESULTANTLY, TH E DEPOSITS REPRESENT A GENUINE TRANSACTION/S? THE LD. CIT(A) HAS CONSIDERED NONE O F THESE ASPECTS ARISING IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS, IT MAY BE APPRECIATED, THE GENUINENESS OF A TRANSACTION THAT IS DETERMINATIVE AND, IN ANY CAS E, GUIDES THE DETERMINATION OF THE MATTER. THE IDENTITY AND CAPACITY, THOUGH LISTED AS SEPARATE PARAMETERS, THAT IS, APART FROM GENUINENESS, ARE, IT MAY BE APPRECIATED, ELEMENTS THAT GO TO ESTABLISH THE GENUINENESS OF THE TRANSACTION OR CONTRIBUTE TH ERETO. COULD, FOR EXAMPLE, WHERE ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 9 THE IDENTITY AND/OR THE CAPACITY OF THE CREDITOR IS NOT PROVED, BE CONSIDERED AS GENUINE? 4.4 WE, NEXT, CONSIDER THE ASSESSEES ARGUMENT THAT SECTION 68 IS NOT APPLICABLE TO A TRADE CREDIT. AS AFORE-DISCUSSED, THAT THE IMP UGNED CREDITS REPRESENT TRADE CREDITS IS NOT PROVED. THAT THE AMOUNT REPRESENTS A TRADE CREDIT IS ITSELF AN EXPLANATION AS TO THE NATURE OF THE CREDIT, WHICH T HE PROVISION (S.68) OBLIGES AN ASSESSEE TO FURNISH TO THE SATISFACTION OF THE AO. FURTHER STILL, WE DO NOT FIND ANY SUCH RATIO EMANATING FROM THE CITED DECISIONS, WHIC H WE HAVE CAREFULLY PERUSED. IN EACH DECISION, THE VERDICT TURNED ON THE FACTS AND CIRCUMSTANCES THE CASE, WITH THE LD. THIRD MEMBER IN ITO V. LACHHMAN DAS MAKHIJA (SUPRA) CLARIFYING THAT WHERE THERE IS A CASH CREDIT, CREDITWORTHINESS OF THE CRE DITOR, GENUINENESS OF THE TRANSACTION, THE IDENTITY OF THE CREDITOR, THE SOUR CE OF MONEY, IS REQUIRED TO BE EXAMINED AND PROVED (PARA 12 OF THE ORDER). THE ONL Y DECISION THAT CAN, IF AT ALL, BE SAID TO BE ISSUING A STATEMENT OF LAW IS CIT V. PANCHAM DASS JAIN (SUPRA) IN-AS- MUCH AS THE HONBLE COURT STATES THAT SECTION 68 IS NOT APPLICABLE TO A PURCHASE TRANSACTION. PURCHASE OF GOODS/SERVICES, IT MAY BE APPRECIATED, CANNOT BE EQUATED WITH RECEIPT OF MONEY, WHICH OBTAINS IN THE PRESENT CASE, FOR THE SAID DECISION TO BE SAID TO BE APPLICABLE IN THE PRESENT CASE . FURTHER, WHEN THE GENUINENESS OF THE PURCHASE A MATTER OF FACT, IS NOT IN DOUBT OR STA NDS ESTABLISHED, AS IT INDEED WAS IN THAT CASE, HOW COULD, ONE WONDERS, THE CORRESPONDIN G CREDIT TO THE SUPPLIERS ACCOUNT BE DOUBTED? GENUINENESS OF A PURCHASE WOULD IMPLY THAT GOODS/SERVICES IN THE SPECIFIED QUANTITY/QUALITY STAND ACQUIRED/AVAIL ED, AT THE SPECIFIED RATE, AT A SPECIFIC TIME AND PLACE, FROM THE SPECIFIED SOURCE/ SUPPLIER. IT IS IN THIS CONTEXT, AS A READING OF THE ENTIRE DECISION WOULD CLARIFY, THAT THE HONBLE COURT STATES THAT S. 68 IS NOT APPLICABLE TO A PURCHASE TRANSACTION. THE PU RCHASE (OF GOODS/SERVICES), IT MAY BE NOTED, IS AGAIN A DESCRIPTION OF THE NATURE OF THE CREDIT. THERE IS, STRICTLY ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 10 SPEAKING, NOTHING IN THE LANGUAGE OF THE SECTION PER SE , WHICH SPEAKS OF ANY SUM FOUND CREDITED IN THE ASSESSEES BOOKS OF ACCOUNT, BUT THE SURROUNDING FACTS AND CIRCUMSTANCES OF THE CASE THAT PROMPTED THE HONBLE COURT TO STATE SO. NOT SO READING THE SECTION WOULD BE TO DO VIOLENCE TO ITS CLEAR LANGUAGE, WHICH HAS TO BE GIVEN FULL PLAY AND EFFECT WHERE THERE IS NO AMBIGU ITY THEREIN FOLLOWING THE GOLDEN RULE OF INTERPRETATION OF STATUTE (REFER: CIT V. CALCUTTA KNITWEARS [2014] 362 ITR 673 (SC); AJMERA HOUSING CORPORATION V. CIT [2010] 326 ITR 642 (SC)). AGAIN, NOT SO READING MAY SUBJECT THE PROVISION TO MISUSE. ONE ASSESSEE MAY INTRODUCE HIS OWN MONEY IN THE NAME OF A NAME LENDER, AND USE THE MONEY TO PURCHASE GOODS FOR HIS BUSINESS. THE TWO TRANSACTIONS BEING DISTIN CT, S.68 WOULD BECOME APPLICABLE TO THE FORMER TRANSACTION OF RECEIPT OF MONEY. ANOT HER MAY, INSTEAD, BUY GOODS FROM HIS UNACCOUNTED MONEY, ATTRIBUTING THE PURCHAS E TO A NAME LENDER. NOW, IF THE SECTION RECEIVES THE INTERPRETATION AS SOUGHT T O PLACED THEREON, THE CREDIT QUA PURCHASE WOULD BE REGARDED AS OUTSIDE THE AMBIT OF S.68, DEFEATING THE LAW. THAT IS, THE SECOND ASSESSEE WOULD CIRCUMVENT THE LAW, DEFEA TING ITS INTENT AND PURPOSE. AS HELD BY THE HONBLE APEX COURT IN CBI VS. KESHUB MAHINDRA & OTHERS [IN CURATIVE PETITION NOS. 39-42 OF 2010 IN CRIMINAL APPEAL NOS. 1672-1675 OF 1996], NO COURT, ITSELF INCLUDED, COULD ACCORD AN INTERPRETAT ION TO A STATUTE THAT DEFEATS ITS VERY PURPOSE. THIS, IT MAY BE APPRECIATED, IS ALSO ONE O F THE ESTABLISHED RULES OF INTERPRETATION OF STATUTES. SEC. 68, AS WELL AS OTH ER SECTIONS OF CHAPTER VI, VIZ. SS. 69, 69A TO 69D, ARE, APART FROM CONSTITUTING SUBSTA NTIVE LAW INASMUCH AS THEY DEEM AN UNEXPLAINED RECEIPT (BESIDES OTHERS, BEING AN ASSET, EXPENDITURE, ETC, REPRESENTING A MANIFESTATION OF THE INCOME), AS THE ASSESSEES UNDISCLOSED INCOME, ARE ALSO RULES OF EVIDENCE, INCORPORATING THE PRINC IPLES OF COMMON LAW JURISPRUDENCE AND, THEREFORE, STOOD APPLIED BY THE COURTS OF LAW EVEN WHEN THE SAID PROVISIONS WERE NOT ON THE STATUTE BOOK, AS A READI NG OF SOME OF THE DECISIONS REFERRED TO EARLIER, RENDERED UNDER THE 1922 ACT, S HALL SHOW. REFERENCE IN THIS ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 11 CONTEXT MAY ALSO BE MADE TO SOME OF THE RECENT DECI SIONS BY THE AMRITSAR BENCH OF THE TRIBUNAL, AS IN THE CASE OF ABDUL HAFIZ V. DY. CIT (IN ITA NO. 465/ASR/2017, DATED19/3/2018; HARMANPREET KAUR V. ITO (IN ITA NO. 15/ASR/2017, DTD. 29/6/2018). IT IS PRINCIPALLY FOR THESE REASONS THA T A DECISION QUA THESE PROVISIONS, AS FOUND BY US IN THE CONTEXT OF THE DECISIONS CITE D SUPRA BY THE ASSESSEE, TURNS ON ITS FACTS. WHY, THE APEX COURT IN VIJAY KUMAR TALWAR (SUPRA) DID NOT FIND THE ASSESSEES CLAIM, MADE VEHEMENTLY, THAT THE SUM OF MONEY WAS RECEIVED FROM A TRADE DEBTOR, AS PROVED, SO THAT THE APPLICATION OF SECTION 68 WAS, IN THE FACTS AND CIRCUMSTANCES CASE, UPHELD. IF A CREDIT FROM (OR AT TRIBUTED TO) A TRADE DEBTOR IS NOT EXCLUDED FROM THE PURVIEW OF S.68, HOW COULD THAT F ROM A TRADE CREDITOR BE? THAT IS, PER SE . WHERE THE CREDIT IS IN RESPECT OF MONEY RECEIVED, THE ACCOUNT, BE IT OF A TRADE CREDITOR OR TRADE DEBTOR, IS, ESSENTIALLY, ON LY OF A PERSON THE STATED SOURCE OF THE CREDIT, WHICH IS TO BE ESTABLISHED ON FACTS. RE FERENCE IN THIS CONTEXT MAY BE WITH PROFIT MADE TO THE DECISION IN CIT V. VARINDER RAWLLEY [2014] 366 ITR 232 (P&H). NO DOUBT, THE HONBLE HIGH COURTS IN V.I.S.P. (P.) LTD. VS. CIT [2004] 265 ITR 202 (MP) (REFERRED TO BY THE BENCH DURING HEARI NG); INDIAN WOOLLEN CARPET FACTORY VS. INCOME-TAX APPELLATE TRIBUNAL [2003] 260 ITR 658 (RAJ), CLARIFIED THAT SEC. 68 WOULD APPLY TO A CREDIT TRANSACTION OF PURC HASE AS WELL, EVEN AS, AS AFORE- NOTED, THE PRESENT CASE IS NOT OF A PURCHASE (OF GO ODS/SERVICES). 4.5 IN VIEW OF THE FOREGOING, IN OUR CLEAR VIEW, SE CTION 68 STANDS RIGHTLY INVOKED BY THE AO IN THE FACTS AND CIRCUMSTANCES THE CASE. THE IMPUGNED ORDER IS ACCORDINGLY SET ASIDE ON THIS GROUND, AND THE IMPUG NED ADDITION UPHELD. 5. THE SECOND GROUND IS IN RESPECT OF ADDITION OF R S. 15 LACS ON ACCOUNT OF UNEXPLAINED INVESTMENT TOWARD PURCHASE OF AGRICULTU RAL LAND, PURCHASED DURING THE YEAR FOR RS. 22 LACS. THE ASSESSEE EXPLAINED THE SA ME AS SOURCED FROM AGRICULTURAL ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 12 INCOME DISCLOSED AT RS. 9 LACS, AND THE BALANCE F ROM WITHDRAWALS FROM HIS AOP. OF THE STATED INCOME OF RS. 9 LACS, THE AO CONSIDER ED THAT RS.2 LACS WOULD GO TOWARD HOUSEHOLD WITHDRAWALS, SO THAT ONLY THE BALA NCE RS. 7 LACS WAS ADMITTED FROM THE SAID SOURCE, LEAVING A BALANCE OF RS. 15 L ACS, WHICH WAS ADDED IN THE ABSENCE OF ANY EVIDENCE OF THE WITHDRAWALS FROM THE AOP, DOUBTING ITS VERY EXISTENCE. IN APPEAL, THE ASSESSEE FURNISHED VARIOU S DETAILS OF THE AOP AS WELL AS ITS ACCOUNTS FOR THE RELEVANT YEAR. THE SAME WERE A DMITTED BY THE LD. CIT(A), CALLING FOR A REMAND REPORT. THE ASSESSEE WAS ALLOW ED RELIEF BY HIM ON THE BASIS OF SUCH EVIDENCE. THE REVENUES CASE BEFORE US WAS THA T THE ENTIRE STORY OF THE WITHDRAWALS FROM AOP HAS BEEN DISCREDITED BY THE AO IN HIS REMAND REPORT; THE ENTIRE EVIDENCE HAVING BEEN MADE UP LATER. THE ASSE SSEE WOULD, ON THE OTHER HAND, RELY ON THE IMPUGNED ORDER, STATING OF HAVING BEEN ALLOWED RELIEF BY THE FIRST APPELLATE AUTHORITY FOR COGENT REASONS. 6. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WITHOUT DOUBT, NO EVIDENCE WAS PRODUCED BY THE ASSE SSEE IN THE ASSESSMENT PROCEEDINGS TOWARD THE WITHDRAWALS FROM THE AOP. TH E ASSESSEE, HOWEVER, HAS FURNISHED SUBSTANTIAL MATERIAL TOWARD THE SAME IN T HE APPELLATE PROCEEDINGS. THE SAME WAS OBJECTED TO BY THE AO. WITHOUT DOUBT, QUES TIONS ARISE IN THE MATTER. WHY, FOR EXAMPLE, WERE THE DETAILS OF THE AOP AND I TS BOOKS OF ACCOUNT, EXHIBITING THE SOURCE FROM WHERE THE FUNDS ARE STATED TO HAVE BEEN WITHDRAWN, NOT PRODUCED BEFORE THE AO, SETTLING THE MATTER; THE ONUS OF WHI CH IS ON THE ASSESSEE. RATHER, THIS, DESPITE BEING SPECIFICALLY CALLED FOR BY THE AO, AS VIDE ORDER SHEET ENTRY DATED 8.12.2009, WHICH THOUGH REMAINED UNAVAILED, WITH TH E ASSESSEE SEEKING FURTHER TIME, ALSO GRANTED. WHY, THE ASSESSEES ACCOUNT WIT H AOP, AS PRODUCED, SHOWS A WITHDRAWAL OF RS.22.30 LACS FOR THE PURCHASE OF AGR ICULTURAL LAND DURING THE RELEVANT YEAR (PB PG.159). IF THAT WAS SO, WHERE WAS, ONE MAY AS K, THE NEED FOR THE ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 13 ASSESSEE TO STATE OF RS.9 LACS AS SOURCED FROM AGRI CULTURAL INCOME, AS HE DOES IN THE ASSESSMENT PROCEEDINGS. THE SAID ACCOUNTS, PRODUCED AT THE FIRST APPELLATE STAGE, WERE CLEARLY NOT EXISTENT AT THE TIME OF ASSESSMENT , SO THAT THE QUESTION OF THEIR PRODUCTION, EVEN AS OBSERVED BY THE BENCH DURING HE ARING, DID NOT ARISE. IN FACT, WE OBSERVE THAT THE LD. CIT(A) APPLIED HIS MIND TO THE MATTER, AND REJECTED THE ASSESSEES APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE U/R. 46A UPON CONSIDERING THE FACTS OF THE CASE AS WELL AS THE JU DICIAL PRECEDENTS, INCLUDING BY THE BY THE HONBLE JURISDICTIONAL HIGH COURT IN S. UTTAM KAUR EDUCATIONAL SOCIETY V. CIT [2008] 173 TAXMAN 229 (P&H), HOLDING THAT NONE OF THE CONDITIONS OF SUB- RULE (A) TO (D) OF RULE 46A(1) WERE MET (PAGE 77 OF THE IMPUGNED ORDER (IO)). SO HOWEVER, TO ENABLE HIM TO DISPOSE THE APPEAL OR FOR A SUBSTANTIAL CAUSE, INCLUDING ENHANCEMENT OF INCOME, HE, IN EXERCISE OF HIS POWERS U/S. 250(4), ADMITTED SOME OF THE EVIDENCES LISTED IN THE ASSESS EES APPLICATION U/R. 46A(1). THE CREDIT TO THE ASSESSEES ACCOUNT IN THE BOOKS OF TH E AOP, AS SUBMITTED, WAS RS.50.18 LACS. IF THE AOPS INCOME WAS BELOW RS.50. 69 LACS, AS DISCLOSED (PB PGS. 185-186), THE EXCESS CREDIT WOULD NEED TO BE ADDED IN THE ASSESSEES HANDS AS UNEXPLAINED CREDIT. THE MATTER WAS ACCORDINGLY EXAM INED BY HIM IN LIGHT OF THE ADMITTED MATERIAL, AND THE AO ISSUED DIRECTIONS FOR FURTHER EXAMINATION (PGS.101- 102 OF THE IO). AFTER CONSIDERING THE AOS REPORT A S WELL AS THE ASSESSEES REPLY THERETO, HE CONCLUDED THAT AN AOP WAS IN EXISTENCE SINCE THE YEAR 2004, WHICH HAD CARRIED OUT AGRICULTURAL OPERATIONS ON 178 ACRES OF LAND DURING THE RELEVANT YEAR, EARNING AS MUCH AS RS. 50 LACS. THERE WAS ACCORDING LY NO CASE TO DOUBT THE RECEIPT OF FUNDS ATTRIBUTED BY THE ASSESSEE TO THE AOP. THE ADDITION OF RS.15 LACS WAS THEREFORE DELETED (PG. 116 OF THE IO). THE FINDING STANDS ISSUED UPON AN EXHAUSTIVE ANALYSIS BY THE LD. CIT(A). NO CONTRARY MATERIAL, O R OTHERWISE ANY INFIRMITY THEREIN, STANDS SHOWN TO US DURING HEARING. RATHER, WE COMPLIMENT THE FIRST APPELLATE AUTHORITY FOR THE PAINSTAKING EFFORT MADE BY HIM TO ASCERTAIN THE FACTS. ITA NO. 719/ASR/2013 (AY 2007-08) MANINDER SINGH CHEEMA V. ASSTT. CIT 14 WE FIND NO REASON FOR INTERFERENCE AND, ACCORDINGLY , DECLINE TO. THE ASSESSEE SUCCEEDS. 7. THE THIRD AND FINAL GROUND IS QUA AGRICULTURAL INCOME, DISCLOSED, AS AFORE- STATED, AT RS.9 LACS. THE ASSESSEE HAS 9 ACRES OF L AND, STATED TO BE DRIP IRRIGATED, YIELDING AN ANNUAL RETURN OF RS.57,500 PER ACRE, AP ART FROM 19 ACRES PURCHASED DURING THE YEAR, WHICH WAS THEREFORE CULTIVATED ONL Y FOR A PART OF THE YEAR, BESIDES BEING ADMITTEDLY NOT DRIP IRRIGATED, STATED TO HAVE FETCHED RS. 20,000 PER ACRE. NO EVIDENCE TOWARD THE LAND PURCHASED DURING THE YEAR BEING PUT TO AGRICULTURAL USE, MUCH LESS THE PERIOD FOR WHICH IT IS, OR OF THAT AL READY OWNED BEING DRIP IRRIGATED, BEING PRODUCED, THE AO ESTIMATED THE ASSESSEES INC OME FROM AGRICULTURE AT RS. 6.50 LACS, MAKING AN ADDITION FOR RS.2.50 LACS. THE LD. CIT(A) REGARDED THE ASSESSEES ESTIMATE AS REASONABLE, AND DELETED THE ADDITION. WE FIND THE ASSESSEES CASE AS WHOLLY UNSUBSTANTIATED. THE AOS ESTIMATE I S, UNDER THE CIRCUMSTANCES, IN OUR VIEW, ONLY REASONABLE. WE, THEREFORE, DECLINE I NTERFERENCE THEREIN, AND THE REVENUE SUCCEEDS IN RESULT. 8. IN THE RESULT, THE REVENUES APPEAL IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 31, 2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 31.07.2018 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: ASSTT. COMMISSIONER OF INCOM E TAX, HOSHIARPUR CIRCLE HOSHIARPUR (2) THE RESPONDENT: MANINDER SINGH CHEEMA, H. N O. 298, ST. NO. 20, GURU NANAK NAGAR, HOSHIARPUR (3) THE CIT(APPEALS)-1, LUDHIANA TRUE COPY (4) THE CIT CONCERNED BY ORDER (5) THE SR. DR, I.T.A.T