Kailash Swaroop Agarwal v. Commissioner of Income-tax, Ajmer
[Citation -2017-LL-1003-9]

Citation 2017-LL-1003-9
Appellant Name Kailash Swaroop Agarwal
Respondent Name Commissioner of Income-tax, Ajmer
Court HIGH COURT OF RAJASTHAN
Relevant Act Income-tax
Date of Order 03/10/2017
Judgment View Judgment
Keyword Tags unexplained cash deposit • financial institution • application of mind • extension of time • sale transaction • source of income • valuable article • creditworthiness • conveyance deed • limitation date • appellate order • cash deposited • house property • excess amount • onus to prove • loans in cash • cash balance • cash in hand • savings bank • real estate • cash flow
Bot Summary: The same relates to the restriction of the addition in the sum of Rs. 15,51,000/- on account of unexplained cash deposit by the assessee in his savings bank account with Union Bank of India, to Rs. 81,000/-. The assessee made a ITA-175/2012 verbal Agreement for the sale of his residential house at Sri Nagar Road, Ajmer for Rs. 45.00 lacs, receiving a sum of Rs. 5.00 lacs from one, Uma Khandelwal, vide cheque deposited in his bank account with ICICI Bank on 17/1/2007. In anticipation of the receipt of the sale proceeds by the said date, the assessee entered into an agreement for purchase of a residential property at Bhagchand Soni Nagar, Foy Sagar Road, Ajmer for a sum of Rs. 11.01 lacs on 21-05-2007, paying a token amount of Rs. 21,101/-, again, by cheque drawn on his bank account with ICICI Bank. Though normally a matter left to the discretion and wisdom of the assessee, the said consideration follows directly from the stated and admitted circumstances, given the assessee s explanation. Further, the transmission, even if the loans came to be accepted in cash, could easily be effected through deposit of cash in the assessee s bank account at Ahmedabad; the bank accounts, even though maintained by the home branch, are not strictly branch-specific, so that they could be operated and accessed from any station where the bank has a branch. CIT(A) being a tacit admission thereof, even as ITA-175/2012 undoubtedly the assessing authority could definitely facilitate the same by exercising his powers as vested in a civil court for enforcing attendance, where the creditors are not responding to the assessee in this regard, upon being communicated this fact by the assessee, along with a request for the same. In spite of the purchase transaction having been concluded, and the assessee now admittedly engaged or involved in the exercise or project, if we may call it so, of transfer of funds back to Ahmedabad, the collection spree goes unabated, with the assessee ITA-175/2012 moping up another Rs. 3.50 lacs, depositing the same in his bank account on 03-08-2007, i.e., after claiming the same to be received at Ajmer on 02- 08-2007.


HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 175 / 2012 Kailash Swaroop Agarwal S/o Late Shri Narayan Swaroop Agarwal, R/o 45-A, Seth Bhagchand Soni Nagar, Foy Sagar Road, Ajmer Appellant Versus Commissioner of Income Tax, Ajmer Respondent For Petitioner(s) : Mr. P.K. Kasliwal For Respondent(s) : Ms. Parinitoo Jain HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 03/10/2017 1. By way of this appeal, appellant has challenged judgment and order of Tribunal wherein Tribunal has partly allowed appeal of department. 2. While admitting appeal this Court on 26.09.2012 framed following substantial question of law:- Whether, tribunal was justified in law in admitting new plea contrary to facts on record and contrary to Rule 29 of Appellate Tribunal Rules, 1963 and to based his findings thereon while sustaining addition of Rs.12.50 lacs, can be said to be legal one? 3. However, on application moved on 08.09.2017, We have added one more question on 20.9.2017 which reads as under:- Whether addition made by Assessing Officer u/s 68 of IT Act, and deleted by CIT(A), can be controverted u/s 69A by Tribunal while (2 of 17) [ITA-175/2012] sustaining addition of Rs.12,50 lacs, irrespective of fact that appellant is not maintaining books of accounts and source of income is pension and interest only, such conclusion is proper? 4. Tribunal in its order dated 2.3.2012 has observed as under:- 2. facts of case are that at very outset, it was observed by Bench that Revenue s appeal is delayed by period of 28 days, having been filed on 01-08-2011 as against communication date (of order appealed against) of 02-05-2011. However, Commissioner of Income-tax, Ajmer (`CIT ) vide order dated 27-07-2011, issued in response to defect notice issued by Registry of Tribunal, clarified that appellate order by ld. CIT(A) was in fact communicated to his office only on 03- 06-2011, so that limitation expires on 01-08-2011. Our 2 attention was drawn thereto by ld. DR, in view which we condone delay. Not only are we are inclined to give due credence to statement by responsible officer, reason stated is only understandable inasmuch as impugned order is itself dated 02/5/2011, so that specification of its receipt date in F/36 as `02/5/2011 appears to be by way of mistake. hearing of appeal was accordingly proceeded with, with assessee having preferred to furnish written submissions, placed on record. 3.1 appeal raises three issues. We shall deal with principal issue, raised per third ground, first, other two even otherwise getting subsumed therein. same relates to restriction of addition in sum of Rs. 15,51,000/- on account of unexplained cash deposit by assessee in his savings bank account with Union Bank of India, to Rs. 81,000/-. details of transactions in said bank account are as under: (3 of 17) [ITA-175/2012] Date Particulars Cheq No. Withdrawals Deposits Balance 04.06.2007 B/F - - - 0,00 04.06.2007 By cash 1,000.00 1,000,00 Cr. (Account Open) 11.06.2007 By cash 6,01,000,00 Cr. (Amount brought from Ahmedabad) 12.06.2007 By cash 8,01,000,00 Cr. (Amount brought from Ahmedabad) 12.07.2007 By Cash 297491 3,00,000,00 - 5,01,000,00 Cr. 14.07.2007 By Cash 297492 20,000,00 - 4,81,000,00 Cr 19.07.2007 By Cash (Out 7,81,000,00 Cr. of cash withdrawn on 12.07.2007) 27.07.2007 By cash ( Out 8,81,000,00 Cr. of cash withdrawn on 14.07.2007 and cash in hand) 03.08.2007 By cash 12,31,000,00 (amount Cr. brought from Ahemdabad) 15,51,000,00 assessee's explanation before Assessing Officer (A.O.) was that amount of Rs. 11.50 lacs stands sourced from sixty three (63) persons (creditors) residing at Ahmedabad, in support of which their confirmations, containing their addresses as well as PAN, were submitted. It would at this stage be relevant to narrate back- ground facts of case. assessee made (4 of 17) [ITA-175/2012] verbal Agreement for sale of his residential house at Sri Nagar Road, Ajmer for Rs. 45.00 lacs, receiving sum of Rs. 5.00 lacs from one, Uma Khandelwal, vide cheque deposited in his bank account with ICICI Bank (erstwhile `Bank of Rajasthan ) on 17/1/2007. property had been sold to four buyers i.e., three others besides Uma Khandelwal, to be conveyed thereto vide separate (registered) sale deeds to be executed within 3 months, i.e., by end April, 2007. In anticipation of receipt of sale proceeds by said date, assessee entered into agreement for purchase of residential property at Bhagchand Soni Nagar, Foy Sagar Road, Ajmer for sum of Rs. 11.01 lacs on 21-05-2007, paying token amount of Rs. 21,101/-, again, by cheque drawn on his bank account with ICICI Bank. balance payment of Rs. 10.80 lacs was to be made on or before 21-07-2007. As sale proceeds for Sri Nagar Road property were not forthcoming, assessee resorted to cash borrowings, lest purchase agreement for house property (at Bhagchand Soni Nagar, Ajmer) be cancelled. It is claimed that sum of Rs. 8.00 lacs, collected from various persons at Ahmedabad, was received by him at Ajmer on 10-06-2007 and, accordingly, deposited in his newly opened bank account with Union Bank of India, Sri Nagar Road, Ajmer Branch on 11-06-2007 (Rs. 6.00 lacs) and 12-06-2007 (Rs. 2.00 lacs). So however, assessee did not draw upon said funds; his conscious not allowing him to do so, and raised bank loans against FDRs of self and wife. registry of Bhagchand Soni Nagar property was executed on 13-07-2007 by availing bank loan for requisite sum of Rs. 10.80 lacs, i.e., Rs. 2.0 lacs (on 20-06- 2007) and Rs. 8.80 lacs (on 11-07- 2007). Further, Rs. 3.20 lacs were withdrawn from bank on 12- 07-2007 (Rs. 3.0 lacs) and 14-07-2007 (Rs. 0.20 lacs). This sum is stated to have been withdrawn for paying back creditors at Ahmedabad; assessee having since discharged payment obligation under purchased agreement. However, as same could not be remitted to Ahmedabad due to safety reasons, amount was deposited back in bank account at Rs. 3.00 lacs (on 19-07-2007) and Rs. 1.00 lac (on 27-07- (5 of 17) [ITA-175/2012] 2007), i.e., at total of Rs. 4.0 lacs (as against Rs. 3.20 lacs withdrawn). excess amount of Rs. 80,000/- (i.e., Rs. 4.0 lacs minus Rs. 3.20 lacs) was stated to be out of cash balance with him. Further, assessee's son had raised more funds at Ahmedabad, i.e., Rs. 3.50 lacs, which were received in Ajmer on 02-08-2007 and again deposited in Union Bank savings bank account on 03-08-2007. 3.2 AO, however, considered entire cash deposited in Union Bank of India account (Rs. 15.50 lacs) as not satisfactorily explained. Firstly, creditors/loaners were not produced. As regards documents furnished in support, returns in most cases were for A.Y. 2008-09 and, thus, not relevant, even as in some cases no returns were filed. In fact, balance-sheets, filed along with in most cases, did not reflect loan in some cases. capacity of creditors was thus not proved. entire cash collected was from Ahmedabad, and deposited in newly opened account with another bank. None of confirmations stated of cash loans having been repaid, which was claimed to be so during same financial year. In any case, mere filing of confirmations would not prove credits. claim of cash deposit of Rs. 4.0 lacs in bank account in July 07 as being essentially redeposit of funds withdrawn was also considered by him as unsubstantiated plea. In appeal, ld. CIT(A) was of view that AO having not found any alternate application of funds withdrawn from bank (Rs. 3.20 lacs), recycling of same by way of deposit in same bank account subsequently could not be doubted. assessee had though not substantiated his claim of deposit of Rs. 80,000/- out of his own sources. As regards, loan raised from Ahmedabad (Rs. 11.50 lacs), i.e., at Rs. 8.00 lacs on 10-06-2007 and Rs. 3.50 lacs on 02-08-2007, assessee had submitted necessary documents, including income-tax returns as well as balance-sheets of creditors. As such, onus casts on assessee had been met. assessee could not possibly be required to establish source of source, i.e., source of funds with creditors. Reliance was placed on decision by hon'ble jurisdictional (6 of 17) [ITA-175/2012] High Court in case of Kanhaiya Lal Jangid vs ACIT, 217 CTR 354. AO could not draw adverse inference out of non-production of creditors, and which he (AO) could do on his own, drawing strength from decision in case of CIT vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC). Aggrieved, Revenue is in appeal. 5. Tribunal while considering matter in para 5.1 to 5.8, observed as under:- 5.1 first thing that we observe is that addition sustained by ld. CIT(A), i.e., Rs. 81,000/-, includes Rs. 1,000/- deposited cash for opening of new (savings bank) account with Union Bank of India on 04-06-2007. ld. CIT(A) having deleted two additions, for total of Rs. 97,800/-, on basis that assessee could reasonably be expected to maintain some cash balance, as well as receipt of Rs. 4 lacs (stated to be received cash as advance on 27/4/2007 in respect of sale of Sri Nagar Road property), addition of Rs. 1000/- is thus inconsistent therewith. assessee, however, has not disputed sustained addition of Rs. 81,000/-, which is principally by non-accepting its claim for having cash balance, particularly considering that reasonable sum had already been considered as so by ld. CIT(A). Notably, for both said additions, aggregating to Rs. 97,800/-, assessee had not pleaded for having cash balance with him, ascribing its source to cash receipt of Rs. 4.00 lacs from four lady purchasers of his Sri Nagar Road, Ajmer property. 5.2 Coming to impugned addition of Rs. 14.70 lacs, we observe assessee s explanation as fantastic by all counts, bordering on bizarre. Firstly, need to raise funds, which constitutes essence of assessee s explanation, is itself not understood. assessee, by own admission, had secured funds to tune of Rs. 9 lacs as advance against sale of his Sri Nagar Road property by 27/4/2007. He furnishes no balance- sheet or cash flow statement, so as to be able to know his financial position, amount as well as manner of 6 utilization of funds at his disposal, (7 of 17) [ITA-175/2012] including those raised, and which may be parked in different banks/bank accounts. Even assuming assessee to have no funds whatsoever of his own (as on that date), it only implies that liquid funds for maximum of Rs. 2.84 lacs were to be arranged for; property under purchase costing Rs. 11.84 lacs, including registration cost of Rs. 0.83 lacs, and by 21/7/2007, i.e., date by which purchase had to be concluded. We say so as assessee ascribes even source of Rs. 15,000/- deposited cash in his bank account (with ICICI Bank) on 21/5/2007 to cash advance stated to be received from buyers of his Sri Nagar Road property on 27/4/2007, so that he admittedly had no funds of his own as on that date. Also, assessee admittedly has funds in near liquid securities in form of bank FDRs, which could easily be monetized to meet liquidity required, as indeed was done by him. This is all more so as need for funds was admittedly only temporary, neutralize as it would on receipt of balance Rs. 36 lacs (45 lacs 9 lacs) against contracted sale of Sri Nagar Road residence; rather would not have at all arisen if said sale transaction had matured in time, i.e., as originally envisaged (end April, 2007). Further, this is assuming that no extension of time for purchase was possible, and for which no evidence has been led; assessee s own house having been sold to same persons and at same price as agreed for even though transaction came to be completed much later (16/8/2007). In other words, need to raise funds (Rs. 11.50 lacs), and particularly in manner done (from as many as 63 outstation parties), is completely incomprehensible in view of: a). need for funds actually required for stated purpose (at maximum of Rs. 2.84 lacs); b). access to funds in form of near liquidity admittedly available in form of bank FDRs; c). fact that necessary funds could be easily tapped from buyers of his residential house, who were allowed excess time by assessee for completing real estate transaction (wherein time lines are to be, as general rule, strictly honoured, even as assessee seeks to qua his (8 of 17) [ITA-175/2012] purchase transaction) and by months - so that he could under circumstances have easily bargained for amount required, being only fraction of what was due (Rs. 36 lacs); and d). admittedly temporary nature of need (for funds). 7 As against such practically nil or at best feeble and temporary need for funds, which could easily be got financed from any bank or financial institution, as by way of loan against property or bank deposits, assessee runs amuck, seeking funds from all and sundry, even if it amounts to raising same from outstation parties, and for minor amounts, using good offices of his son, ostensibly stationed at Ahmedabad. time and energy required to be expended in raising funds in such minor sums, even if requirement for funds stated to be raised was established, would make transaction/s impractical and improbable. In fact, as his son has such large number of good contacts, who would come to rescue at time of need, it only implies that son has good financial and social standing, and sound reputation, apart from assessee enjoying excellent relations with his son. As such, necessary funds could - if at all be easily raised from one or couple of parties. Why, rather, we wonder, could not then son have himself chipped in minor sum required. We wonder if this is done to beat law; same proscribing acceptance or repayment of loan/ deposit in cash where exceeding threshold limit of Rs. 20,000/-. Though normally matter left to discretion and wisdom of assessee, said consideration follows directly from stated and admitted circumstances, given assessee s explanation. 5.3 second query that arises directly, again to no answer, is as regards mode of acceptance of funds. Why were funds accepted in cash? Acceptance of loans in cash, which is risky proposition by any standards, is particularly so in instant case considering that funds are to be admittedly transmitted to another station, involving time and risk, if not also cost. That is, stated course represents another act that no reasonable man of ordinary prudence and average (9 of 17) [ITA-175/2012] intelligence exercising diligence would ordinarily undertake. What makes this particularly quizzical is that firstly funds lent are ostensibly accounted funds, given from their apparently explained sources by creditors, who are largely income- tax assessees 8 and, two, that there was no immediate need for funds; first instalment arriving at Ajmer on 10/6/2007, i.e., much prior to limitation date of 21/7/2007, and would have in fact been accepted only prior to its transmission, while second tranche of Rs. 3.50 lacs (received in Ajmer on 03/8/2007) was admittedly not even required to be accepted; purchase transaction having been already concluded on 13/7/2007. Rather, even if accepted, was not required to be transmitted to Ajmer, and could have easily been returned back to creditors at Ahmedabad itself. Further, transmission, even if loans came to be accepted in cash, could easily be effected through deposit of cash in assessee s bank account (with Union Bank of India - assuming deposit to be necessarily made in that account - or ICICI Bank) at Ahmedabad; bank accounts, even though maintained by home branch, are not strictly branch-specific, so that they could be operated and accessed from any station where bank has branch. Now, it is certainly not case that either Union Bank of India or ICICI Bank has no branch at Ahmedabad, much bigger place than Ajmer itself. In fact, funds could also have been deposited in son s account at Ahmedabad, and transmitted to Ajmer through banking channel. Not only this, funds are, to equal amazement, also repaid in cash, attracting same (and equal) risk. In fact, while collected funds could be placed in single account of assessee-borrower, repayment involves distribution of cash to several creditors, so that repayment vide negotiable instrument or banking channel is definitely much more convenient and desirable from all angles, including safety factor which admittedly constrained assessee from remitting funds withdrawn from bank to Ahmedabad. To our mind, this (safety) benefit alone outweighs by far any other consideration in favour of non-cash transmission, as safety has many dimensions to it and, apart from potential (10 of 17) [ITA-175/2012] loss of funds, also entails risk to life and property of those involved in transmission. There is in fact no comparison whatsoever, both practically and conceptually, between two modes of transfer of funds. Just consider this: in one stroke money gets deposited in bank account of creditor in matter of minutes at minimum or couple of days at maximum (depending on manner chosen), and at no risk and almost nil cost. It obviates need to obtain confirmation of receipt of money individually from each creditor, but for which assessee cannot claim to have discharged his obligation of repayment, sine qua non for any debtor. 9 Finally, needless to add, no evidence in respect of transmission of cash from Ahmedabad to Ajmer or vice versa stands adduced by assessee before any authority. 5.4 Another equally intriguing aspect of assessee s case, as made out, is that no `receipts were admittedly obtained from creditors upon repayment of loans. Why? In fact, there is no contemporaneous material to evidence either receipt of funds from, or their repayment to, creditors, which is uncomprehensible indeed, given that both receipt as well as repayment of loans is in cash. Any creditor would insist on being issued receipt, if not execution of pronote, witnessed independently and also containing terms of loan, including as to repayment. Similarly, any debtor would insist on being issued receipt or endorsement on pronote while discharging his obligation under loan agreement/arrangement, which becomes primary document evidencing transaction. There is no explanation, again, for admitted absence of such basic and primary document. assessee claims to have repaid loans during financial year of receipt itself, i.e., f.y. 2007-08, relevant previous year. Clearly, such receipts, if maintained, could have been produced in first instance itself. Also, why did not, as also noted by AO, then, confirmations by creditors contain information on this vital aspect, i.e., of liability having been since discharged. Further still, in admitted absence of basic document as receipt or pronote, what is basis for issue of such incomplete confirmations? (11 of 17) [ITA-175/2012] 5.5 next aspect which is vital to validity and, thus, acceptance of assessee s explanation, is non-production of creditors before AO for his examination, as specifically called for by him. This is for simple reason that many query, as some posed by us hereinbefore while discussing assessee s case, as well as that may similarly appear hereinafter, concerning factual aspects of assessee s explanation, in substantiation and verification thereof, that may arise in mind of AO, could best be answered in format of extempore interview with creditor himself, who only can authentically reply queries in relation to his personal affairs, viz. What is personal relationship with debtor (as creditors do not appear to be in financing trade); what is immediate source of monies lent; proof thereof (this is toward validation of stated source and not of source of 10 source); why did he prefer to extend loan in cash; what was document/s executed, if any; to whom was cash handed; who, if any, witnessed transaction; its terms, including as to security, etc., replies to which, including materials supplied in support as well as replies to any further queries that may concomitantly and spontaneously arise, are extremely relevant in arriving at satisfaction or otherwise by AO with assessee s explanation as to nature and source of impugned deposit of funds; in other words, about truth of matter. This requirement is non- negotiable, and assumes prime significance as law envisages `satisfaction or otherwise only of AO, so that purview of appellate authority like us is to examine whether non- satisfaction expressed by AO is sustainable in law, i.e., is explanation furnished by assessee one which should satisfy man of ordinary prudence, acting reasonably and judicially, given normal course of events, as well that of human conduct. impugned order is largely silent on this aspect, except for stating that creditors could have been summoned by AO. It is trite law that onus to prove credits is on assessee; very argument by ld. CIT(A) being tacit admission thereof, even as (12 of 17) [ITA-175/2012] undoubtedly assessing authority could definitely facilitate same by exercising his powers as vested in civil court for enforcing attendance, where creditors are not responding to assessee in this regard, upon being communicated this fact by assessee, along with request for same. However, there is no such communication or request to AO by assessee in present case. Quite on contrary, in response to AO s specific requisition for production of creditors for verification on 24-10-2010, assessee chooses to remain silent, not even indicating of any hardship or non- cooperation in its respect from creditors, if so, being faced by him and, as if surreptiously, vide letter dated 23-12-2010, i.e., two months later and barely few days prior to setting in of time limitation for assessment (31/12/2010), given not directly to AO but only in Dak, claims that it was not possible to produce creditors, being inhabitants of Ahmedabad, at such short notice. Further, that creditors were cooperating with assessee is apparent from fact that they furnished not only their confirmations but also income-tax returns and financial statements, which would only be at assessee s behest, to whom they lend monies ostensibly to bail him out of difficult situation. Also, there was no request before AO to call for, at his choice, some of large number (63) of creditors, facilitating process of validation without presumably compromising on 11 quality of verification, even as admittedly each credit constitutes separate case, warranting specific adjudication. In fact, even before first appellate authority, assessee does not stake any claim for being afforded opportunity for production of creditors, having been ostensibly constrained for want of time before AO, and qua which latter had drawn adverse inference per assessment framed and under challenge by him (assessee). Under circumstances, shifting of onus by ld. CIT(A) on AO; onus under law being clearly on assessee, whose conduct casts considerable shadow on his bona fides in matter, by relying on decision in case of CIT vs. Orissa Corporation Pvt. Ltd. (supra) is not valid (13 of 17) [ITA-175/2012] in law. Attention in this regard is also invited to decisions in case of Kusum Sharma v. CIT, 303 ITR 381 (P&H) and CIT v. Meghdoot Village Products (P.) Ltd., 212 CTR (All) 484. 5.6 explanation and narrative furnished by assessee in fact bears several other anomalies, more and more of which tumble out as we continue to subject it to scrutiny or closer examination in its various aspects. We say so as it may not be correct or proper to discard or reject explanation only on basis of single incongruity; any person may be prone to unusual behaviour at times, with same person himself behaving differently under similar situations at different times. first instalment of bank loan (through which purchase transaction was eventually financed) was availed on 20-06-2007, so that decision to do so, i.e., to go for bank loan for purpose was taken even prior thereto. Secondly, why was loan availed when assessee had no immediate intention to mature purchase, time for which was available up to 21- 07-2007; balance amount of bank loan being availed only on 11-07-2007, and only understandably so, considering that acquisition was completed on 13-07- 2007. This is as loan entails interest and, besides, keeping cash in hand is always risky proposition, so that nobody would do so, particularly where it does not serve any purpose. assessee states of having withdrawn cash from Union Bank of India only after being released of burden of registration of conveyance deed qua purchase, while fact of matter is that same was transacted on 13- 07-2007, and cash was in main withdrawn prior thereto on 12-07-2007. person focussed on concluding purchase which has burdened him for so long, would hardly be bothered to meet part payment to Ahemdabad on eve of and on verge of closing purchase transaction. same, rather, points to amount having 12 been withdrawn for or toward said purchase or for some other purpose. Yes, there could exceptions to this, as (say) where some reliable person is proceeding to Ahemdabad on that date itself (12- 07-2007), and has agreed to carry cash (up to that amount) with him, or where (say) one more (14 of 17) [ITA-175/2012] creditors are urgently pressing for funds, so that arrangements were made to transmit amount borrowed from him/them. But, then, we cannot proceed on any hypothesis, and it is for assessee to supply facts, as well as substantiate same, being only part of his explanation. Not only is cash not transmitted on that date (12-07-2007), assessee `realizes that he had to remit Rs. 20,000/- more, and which he withdraws from bank only on 14-07-2007. This is perplexing. Nobody would keep remission pending - which clearly shows that there was no urgency for same for want of Rs. 20,000/-, for which again which no basis has been disclosed. If at all, it indicates that assessee did not have Rs. 20,000/- with him or was short by that amount, for whatever purpose same may have been required to be withdrawn. question of assessee having Rs. 80,000/- in cash for depositing in bank, for which again no basis has been furnished, thus, does not arise. This is also inconsistent with assessee's stand of having opened up (separate) bank account with Union Bank of India for parking his borrowings from Ahemdabad separately. Surprisingly, again, no cash is remitted even on or after 14-07-2007, i.e., after completing shortfall in amount that had to be purportedly transferred, stating safety as reason. Not only that, programme for transfer of funds, which represented only fraction of total amount to be remitted to Ahmedabad, without disclosing any basis therefor, was not deferred by one or two days, as for firming up safety arrangements, but was totally dropped, and cash `re-deposited in bank. We have already explained that bank transfer is conceptually, technically as well as practically far superior to cash mode; rather, practical necessity, given distance as well as number of persons involved, for non-resort to which no reason has been advanced by assessee at any stage. string of unexplained events does not stop here. In spite of purchase transaction having been concluded, and assessee now admittedly engaged or involved in exercise or project, if we may call it so, of transfer of funds back to Ahmedabad, collection spree goes unabated, with assessee (15 of 17) [ITA-175/2012] moping up another Rs. 3.50 lacs, depositing same in his bank account on 03-08-2007, i.e., after claiming same to be received at Ajmer on 02- 08-2007. We are afraid, but same can under circumstances be only termed as ludicrous. Finally, we 13 cannot help but noting that though assessee claims to have repaid loans during same year, i.e., year of receipt, it specifies no date/s, nor even source of same, leave alone producing any material in support. In this regard it would be relevant to state that copy of bank account with Union Bank of India, where borrowed funds have been deposited, as provided on record extends only up to 03-08-2007, i.e., date of last deposit. 5.7 Without doubt, entire explanation (as discussed at paras 5.1 to 5.6 above) rings untrue and concocted, is beyond comprehension and bounds of reasonability, inconsistent with normal human conduct and behaviour, apart from being totally unsubstantiated. It is these reasons that persuaded us to state at beginning of our narrative that explanation furnished is fantastic and non-acceptable. We, accordingly, have no hesitation in approving AO s action for being not satisfied with assessee s explanation. law in matter is trite, and for which we may refer to case laws by hon ble apex court, which has time and again explained that receipt of money of which assessee is beneficiary is itself prima facie evidence against him, who has to satisfactorily explain same, i.e., render explanation as to its nature and source, which is proper, reasonable and acceptable, even as finding as to non- satisfaction therewith is to be rendered on basis of proper appreciation of material and other attending circumstances available on record; application of mind being sine qua non for forming opinion. Also, that it is cumulative effect of all facts in their setting as whole that has to be looked into, without attaching any specific weight to any particular fact in isolation. We may refer to some of case laws, clarifying well settled law in matter, as under:- CIT vs. P. Mohanakala &Others, 291 ITR 278 (SC) (16 of 17) [ITA-175/2012] Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) CIT v. Biju Patnaik (1986) 160 ITR 674 (SC) CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) Kalekhan Mohammed Hanif v. CIT (!963) 50 ITR 1(SC) Sreelekha Banerjee & Othrs. v. CIT (1963) 49 ITR 112 (SC) A. Govinda Rajulu Mudaliar v. CIT (1958) 34 ITR 807 (SC) Though rendered largely in context of sec. 68, while provision applicable in instant case is sec. 69A, law is para materia as, in either case, assessee has to offer 14 satisfactory explanation about nature of source of impugned credit or debit (money, bullion, jewellery, any valuable article, i.e., assets), as case may be. 5.8 Further on, we are unable to appreciate case laws relied on by assessee, viz. CIT vs. United Commercial & Industrial Co. (P) Ltd., 187 ITR 596 (Cal.) and CIT vs. Precision Finance (P) Ltd (1994), 208 ITR 465 (Cal.). Both decisions, in ratio, confirm trite law in matter, i.e., that onus to establish credit on parameters of identity and capacity of creditor and genuineness of transaction, is on assessee, and only where it by satisfactory proof establishes so, that onus gets shifted to Revenue. Further, mere production of confirmatory letters or even fact that transaction is routed through banking channel, does not by itself prove loan, making non-genuine transaction, genuine. In instant case genuineness of transactions stands thoroughly impugned, so that we do not consider credits/deposits in assessee s bank account with Union Bank of India as representing his liability or borrowings. We, therefore, do not consider it necessary to consider aspect of creditworthiness of lenders, even as there is no contemporaneous or corroborative material evidencing transactions. Coming to decision in case of Kanhaiya Lal Jangid v. ACIT (supra), we again find no statement of law therein, toward which case law is legion, contradictory or inconsistent with stand taken (17 of 17) [ITA-175/2012] by Revenue; question of satisfaction or otherwise, on basis of explanation furnished including surrounding facts, as borne by material on record, being even otherwise question of fact. only ratio of said decision is that assessee cannot be called upon to establish source of source. We have already clarified that assessee has made no case to prove genuineness of transactions, which are un-evidenced and de hors probabilities of human conduct. Further, question of Revenue doubting source of source does not arise, with creditors, even though called for, having not been produced. cited decision, if at all, validates Revenue s case; hon'ble court upholding addition u/s. 68 despite production of affidavit from creditor, under circumstances of non-production of creditor coupled with non-furnishing of his correct address. opportunity to Revenue to examine assessee or creditor vis-a-vis explanation and materials furnished is again sine qua non for any reliance to be placed thereon. 6. In our considered opinion view taken by Tribunal is just and proper. 7. Hence issue is answered in favour of department and against assessee. 8. appeal stands dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Chouhan/40 Kailash Swaroop Agarwal v. Commissioner of Income-tax, Ajmer
Report Error