The Dy.CIT, Agra v. Sh. Satya Narain Jain, Agra

ITA 216/AGR/2009 | 2006-2007
Pronouncement Date: 18-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 21620314 RSA 2009
Assessee PAN ABPPJ6188E
Bench Agra
Appeal Number ITA 216/AGR/2009
Duration Of Justice 1 year(s) 10 month(s) 10 day(s)
Appellant The Dy.CIT, Agra
Respondent Sh. Satya Narain Jain, Agra
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 18-03-2011
Date Of Final Hearing 13-01-2011
Next Hearing Date 13-01-2011
Assessment Year 2006-2007
Appeal Filed On 08-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER AND SHRI H.S. SIDHU JUDICIAL MEMBER ITA NO. 215 313 & 216 /AGRA/2009 ASSTT. YEAR : 2005-06 2005-06 & 2006-07 RESPECTIVE LY DY. COMMISSIONER OF INCOME-TAX VS. SHRI SATYA NA RAIN JAIN CENTRAL CIRCLE AGRA. 17-18 GOPAL KUNJ NEW AG RA. (PAN ABPPJ 6188 E) C.O. NO. 29 & 27/AGR./2009 (IN ITA NO. 215 & 216 /AGRA/2009) ASSTT. YEAR : 2005-06 & 2006-07 SHRI SATYA NARAIN JAIN VS. DY. COMMISSIONER OF INCOME-TAX 17-18 GOPAL KUNJ NEW AGRA. CENTRAL CIRCLE AGRA . (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI HOMI RAJVANSH CIT DR. FOR ASSESSEE : SHRI K.C. AGARWAL ADVOCATE. ORDER PER BENCH: ITA NO.215/AGRA/2009 BY REVENUE AND CROSS-OBJECTION NO. 29/AGRA/2009 BY ASSESSEE RELATING TO ASSESSMENT YEAR 2005-06 HAV E BEEN FILED AGAINST THE ORDER OF CIT(A) DATED 23.01.2009 WHILE THE REVENUES APPE AL NO. 313/AGRA/2009 FOR THE SAME ASSESSMENT YEAR HAS BEEN FILED AGAINST THE ORDER OF CIT(A) DATED 08.04.2009. SIMILARLY ITA NO. 216/AGRA/2009 BY REV ENUE AND CROSS OBJECTION NO. 27/AGRA/2009 BY ASSESSEE RELATING TO ASSESSMENT YEAR 2006-07 HAVE BEEN FILED 2 AGAINST ANOTHER ORDER OF CIT(A) DATED 23.01.2009. FOR THE SAKE OF CONVENIENCE ALL THESE APPEALS AND CROSS OBJECTIONS ARE DECIDED BY T HIS COMMON ORDER. ITA NO. 215/AGRA/2009 (A.Y. 2005-06): 2. THE REVENUE HAS TAKEN FOLLOWING EFFECTIVE GROUND S OF APPEAL : 1. THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEAL S)-II AGRA HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS.85 41 000/- MADE ON ACCOUNT OF UNEXPLAINED LOANS SHOWN FROM 60 PERSONS AND DISALLOWANCE OF INTEREST AMOUNTING TO R S.12 33 467/- ON SUCH LOANS WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE A.O. 1(I). THAT IN DOING SO THE LD. CIT(A)-II AGRA HAS NOT APPRECIATED THE FACT THE BURDEN OF PROOF LAY ON THE ASSESSEE TO PROVE THE IDENTITY OF THE LENDERS THEIR CREDITWORTHINESS AND GENUINENESS OF THE LOANS RECEIVED FROM THEM WHICH THE ASSESSEE FA ILED TO DISCHARGE IN SPITE OF BEING ESPECIALLY REQUIRED BY THE A.O. T O DO SO. 2. THAT THE LD. CIT(A)-II AGRA HAS ERRED IN LAW A ND ON THE FACTS IN DELETING THE ADDITION OF RS.54 18 000/- BE ING UNDISCLOSED INVESTMENT MADE IN PROPERTY AT TOHRA VILLAGE JOINTL Y WITH SHRI RAMA SHANKER AGARWAL AND SHRI ANIL AGARWAL WITHOUT APPRE CIATING THE FACTS BROUGHT ON RECORD BY THE AO PARTICULARLY THE DOCUMENTS MARKED AT LP-7 PAGE NO. 48 & 52 SEIZED FROM THE RESIDENCE OF SRI ANIL AGARWAL MAINPURI WHO IS CLOSELY ASSOCIATED WITH TH E ASSESSEE IN THE VARIOUS PROPERTY TRANSACTIONS. 3. THAT THE LD. CIT(A)-II AGRA HAS ERRED IN LAW AN D ON THE FACTS IN DELETING THE ADDITION OF RS.60 00 000/- BE ING UNDISCLOSED INVESTMENT MADE IN PROPERTY AT PARINAY KUNJ AGRA J OINTLY WITH SHRI RAMA SHANKER AGARWAL AND SHRI ANIL AGARWAL WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE AO. 4. THAT THE LD. CIT(A)-II AGRA HAS ERRED IN LAW AN D ON THE FACTS IN DELETING THE ADDITION OF RS.29 47 867/- BE ING UNDISCLOSED 3 INVESTMENT MADE IN PROPERTY AT KHATA NO. 102 AND KH ASRA NO. 168 RAKBA 2 0053 HECTARE AT MAYAPUR FATEHABAD ROAD AG RA JOINTLY WITH SHRI RAMA SHANKER AGARWAL AND SHRI ANIL AGARWAL WIT HOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE AO PARTICULARLY THE DOCUMENTS MARKED AS ANN. O-2 PAGE NO. 48 & 554-38 S EIZED FROM THE RESIDENCE. 5. THAT THE LD. CIT(A)-II AGRA HAS ERRED IN LAW AN D ON THE FACTS IN DELETING THE ADDITION OF RS.32 50 000/- BE ING UNDISCLOSED INVESTMENT MADE IN PROPERTY OF VINOD KHAD LAND I WI THOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE AO PARTICULARLY THE DOCUMENTS MARKED AS ANN LP-6 PAGE NO. 112 & X-53 P AGE 10 OF LP- 10 SEIZED FROM THE RESIDENT. 6. THAT THE LD. CIT(A)-II AGRA HAS ERRED IN LAW AN D ON THE FACTS IN DELETING THE ADDITION OF RS.1 68 55 525/- BEING UNDISCLOSED INVESTMENT MADE IN PROPERTY PURCHASED FROM SETH HAR I RAM WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE AO PARTICULARLY THE DOCUMENTS MARKED AS ANN-LP-13 PAGE NO. 22 LP-6 AT PAGE 14 LP-8 PAGE-7 & LP-13 PAGE 8 SEIZED FROM THE RESIDENCE. 3. GROUND NO. 1 RELATES TO THE DELETION OF ADDITION OF RS.85 41 000/- MADE U/S. 68 IN RESPECT OF LOANS RECEIVED FROM 60 PERSONS AND DISALLOWANCE OF INTEREST ON SAID LOANS. THE BRIEF FACTS RELATING TO THIS GROUN D ARE THAT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS RECEIVED LOAN AMOUNTING TO RS.82 25 000/- FROM 40 PERSONS THE LIST OF WHICH IS GIVEN IN PARA 3 OF TH E ASSESSMENT ORDER. IT WAS ALSO NOTED THAT THE ASSESSEE HAS TAKEN LOAN BELOW RS.20 000/- FROM SEVERAL PERSONS IN CASH WHICH WERE REPAID BY 31.03.2005. THE TOTAL OF SAID LOAN WAS RS.3 16 000/- THE DETAILS OF WHICH ARE GIVEN UNDER PARA 3 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH COMPLETE A DDRESS OF THE PERSONS FROM 4 WHOM THE UNS4CURED LOANS HAVE BEEN TAKEN ALONG WITH COPY OF ACCOUNT DATE AND MODE OF RECEIPT OF LOAN CONFIRMATION AND ASKED TO JUSTIFY THE LOAN IN TERMS OF IDENTITY OF THE CREDITORS THEIR CREDITWORTHINESS A ND GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE FURNISHED COPY OF ACCOUNT OF THE DEPOS ITORS ALONG WITH THEIR PERMANENT ACCOUNT NUMBERS AND ADDRESSES. THE ASSESS ING OFFICER THEREFORE TOOK THE VIEW THAT THE ASSESSEE HAS NOT FURNISHED ANY EV IDENCE TO EXPLAIN PROVE AND JUSTIFY THE IDENTITY OF THE CREDITORS NAME AND ADD RESS OF THE TRUSTEES OF THE LENDER TRUST TERMS OF LOAN AND ITS REPAYMENT AND COPY OF BANK ACCOUNT CONSTANT AVAILABILITY OF MONEY SO AS TO PROVE CAPACITY OF MA KING LOAN AND SOURCE OF INCOME AND FUNDS IN THE HANDS OF THE CREDITORS COPIES OF COMPUTATION OF INCOME BALANCE SHEET AND ACKNOWLEDGEMENT FOR FILING OF RETURNS FOR THE RELEVANT ASSESSMENT YEAR. THE ASSESSING OFFICER ALSO DISALLOWED THE INTEREST CLAIMED BY THE ASSESSEE ON THESE LOANS. 4. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AN D BEFORE THE CIT(A) THE ASSESSEE CONTENDED THAT THE ASSESSEE HAD SUBMITTED THAT EACH AND EVERY PARTY IS THE INCOME-TAX ASSESSEE THEIR COMPLETE ADDRESSES PERM ANENT ACCOUNT NUMBERS CONFIRMATORY COPY OF ACCOUNTS THEIR COPIES OF BANK PASSBOOKS WERE FILED BEFORE THE ASSESSING OFFICER. ALL THE AMOUNTS WERE RECEIVE D THROUGH ACCOUNT PAYEE CHEQUES. THE OBSERVATION OF THE ASSESSING OFFICER T HAT IDENTITY OF THE CREDITORS 5 THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANS ACTION HAVE NOT BEEN PROVED IS WITHOUT ANY BASIS AND IS UNJUSTIFIED. AGAIN ALL THE SE EVIDENCES WERE FILED BEFORE THE CIT(A). IT WAS CONTENDED THAT THE ASSESSING OFFICER IF HAD ANY DOUBT ABOUT THE GENUINENESS OF ANY LOAN SHOULD HAVE VERY WELL SUMM ONED THE CONCERNED PARTY U/S. 131 FOR WHICH THE ASSESSEE HAD SPECIFICALLY R EQUESTED. THE CIT(A) CALLED FOR THE REMAND REPORT . IN RESPONSE THERETO THE REJOIN DER WAS FILED BY THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE REMAND REPORT AND THE REJOINDER THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UND ER :- 3(VII). FROM THE PERUSAL OF THE RECORDS I FIND THA T THE APPELLANT HAS FURNISHED COMPLETE DETAILS OF LENDERS THEIR COMPLETE NAMES AND ADDRESSES ACKNOWLEDGEMENT FOR FILING OF RETURN THEIR PERMANENT ACCOUNT NUMBERS WHICH SHOW THAT ARE ASSE SSED TO INCOME- TAX AND TO SUBSTANTIATE THE IDENTITY CREDITWORTHIN ESS GENUINENESS THE APPELLANT AHS PLACED ON RECORD THE COPIES OF BANK A CCOUNTS OF THE LENDERS THEIR CONFIRMATIONS OF HAVING GIVEN LOAN T O THE APPELLANT AS WELL AS ALSO PROVED THE SOURCE OF THE SOURCE. THE D ECISION OF CIT VS. DURGA PRASAD MORE-82 ITR 540 CITED BY THE A.O. DOES NOT APPLY TO THIS CASE AS IT HAS BEEN RENDERED ON DIFFERENT FACT S. FROM THE RECORDS I FIND THAT THE APPELLANT HAS FILED AFFIDAVITS OF T HE LENDERS AND HAS ALSO PRODUCED 22 PERSONS BEFORE THE ASSESSING OFFICER FO R EXAMINATION AND THEIR STATEMENTS WERE RECORDED WHEREIN THEY HAVE CO NFIRMED TO HAVE GIVEN LOANS TO THE APPELLANT AND THE SOURCE OF THE FUND HAS ALSO BEEN ILLUSTRATED THEREIN. THEY HAVE ALSO CONFIRMED THAT THEY ARE ASSESSED TO INCOME-TAX. IN THE CASE OF NON ASSESSEE THEY HAVE SPECIFIED THEIR SOURCES OF INCOME AND ALSO SUBSTANTIATED THE LAND H OLDING AND AGRICULTURAL INCOME. AS REGARDS ASSESSING OFFICERS OBSERVATION THAT ALL THE AFFIDAVITS ARE NOTARIZED ON ONE SINGLE DATE I AM OF THE OPINION THAT SINCE THE PROCEEDINGS WERE CONTINUOUSLY GOING ON AND THE APPELLANT WAS REQUIRED TO PROVE THE GENUINENESS OF THE LOAN CREDITS AS SUCH TO SUBSTANTIATE HIS SUBMISSION HE MAY HAV E CALLED ALL THE LOAN CREDITORS TO GIVE PROOF OF DEPOSIT AND WHO MAY HAVE DEPOSED THEIR AFFIRMATION IN THE AFFIDAVITS. HOWEVER SINCE THE ASSESSING 6 OFFICER HAS SUMMONED AND EXAMINED THE LOAN CREDITOR AND ALL THE LENDERS HAVE CONFIRMED TO HAVE GIVEN LOAN TO THE AP PELLANT INCLUDING THEIR SOURCE OF INCOME THEN WHAT MORE EVIDENCE IN T HIS REGARD SHOULD BE PLACED ON RECORD BY AN APPELLANT FOR PROVING THE GENUINENESS OF THE LOANS HAS NOT BEEN POINTED OUT BY THE ASSESSING OFFICER. IN THIS CASE THE APPELLANT HAS SUBMITTED ALL THE PAPERS AN D DOCUMENTS REGARDING THE GENUINENESS OF THE LOANS CREDITWORTH INESS AND IDENTITY OF EACH LENDER WHICH HAS NOT BEEN CONTESTED BY THE AO IN ANY MANNER. 3(VIII). KEEPING IN VIEW THE MATERIAL AND EVIDENCES PLACED ON RECORD I HOLD THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ADDITION OF RS.82 25 000/- + RS.3 16 000/- IN RESPE CT OF LOAN CREDITORS AND SQUARED UP LOANS. THEREFORE I HEREBY DELETE TH E ENTIRE ADDITION OF RS.82 25 000/- + 3 16 000 = RS.85 41 000/-. 5. SIMILARLY THE DISALLOWANCE OF INTEREST ON THESE LOANS HAVE ALSO BEEN DELETED BY OBSERVING UNDER PARA 3(IX) OF THE APPELLATE ORDE R AS UNDER : 3(IX). FURTHER SINCE THE ADDITION OF LOAN CRDITS H AS BEEN DELETED AS ABOVE AS SUCH THE PAYMENT OF INTEREST THEREON AMOUNTING TO RS.12 33 467/- IS ALSO ALLOWABLE. FROM THE PERUS AL OF THE DETAILS OF INTEREST GIVEN IN THE ASSESSMENT ORDER I FIND THE ASSESSING OFFICER HAS COMMITTED TOTALING MISTAKE OF RS.3 06 124/-. THIS S HOULD HAVE BEEN RS.9 27 343/- WHICH IS ALSO VISIBLE IN THE COPY OF INTEREST ACCOUNT PLACED ON RECORD BY THE APPELLANT. THEREFORE THE A DDITION OF RS.12 33 467/- IN RESPECT OF THE PAYMENT OF INTERES T ON THE AFORESAID LOAN IS HEREBY DELETED. 6. THE LEARNED DR BEFORE US VEHEMENTLY CONTENDED TH AT THE ASSESSEE COULD NOT PROVE THE CREDITWORTHINESS OF THE PARTIES FROM WHOM THE MONEY HAS BEEN RECEIVED BY HIM. ACCORDING TO HIM SOME OF THE CREDITORS HAV E DEPOSITED CASH IN THEIR ACCOUNTS PRIOR TO ISSUE OF CHEQUES TO THE ASSESSEE. THE ONUS IS ON THE ASSESSEE TO PROVE THE CASH CREDIT TO THE SATISFACTION OF THE AS SESSING OFFICER. HE RELIED ON THE 7 ORDER OF THE ASSESSING OFFICER AND ALSO RELIED ON T HE SUBMISSIONS MADE IN THE CASE OF M/S. PADAMSHREE DEVELOPERS PVT. LTD. 7. THE LEARNED AR ON THE OTHER HAND REITERATED TH E SUBMISSIONS MADE BEFORE THE CIT(A) AND VEHEMENTLY CONTENDED THAT THE ASSESS EE HAS SUBMITTED EVIDENCE IN RESPECT OF EACH OF THE CREDITORS GIVING HIS NAME C OMPLETE ADDRESS PERMANENT ACCOUNT NUMBER CONFIRMATIONS PROOF OF FILING OF I NCOME-TAX RETURN IN THE SHAPE OF ACKNOWLEDGEMENT COPY OF BANK ACCOUNT AND OTHER EVIDENCES TO PROVE THE IDENTITY AND CREDITWORTHINESS OF CREDITORS AND GENU INENESS OF THE TRANSACTIONS. THE ASSESSEE HAS DEDUCTED TDS ON THE INTEREST PAID TO T HESE DEPOSITORS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 194A OF THE ACT. THE ASSESSEE HAS THUS DULY DISCHARGED HIS ONUS. THE ASSESSEE HAD REQUESTED THE ASSESSING OFFICER THAT IN CASE HE IS NOT SATISFIED HE MAY SUMMON THE PARTIES U/S. 131 FOR VERIFICATION. RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION PVT. LIMITED 159 ITR 78 (SC). IT WAS A LSO POINTED OUT THAT THE ASSESSEE IS NOT SUPPOSED TO PROVE THE SOURCE OF SOU RCES. IN THIS REGARD RELIANCE WAS PLACED ON THE DECISION OF DCIT VS. ROHINI BUILDERS 256 ITR 360 (GUJ). OUR ATTENTION WAS DRAWN TOWARDS THE PAPERS FILED BEFORE THE ASSESSING OFFICER ALONG WITH CHART APPEARING AT PAGES 32 & 33 OF THE PAPER BOOK AS WELL AS THE STATEMENT OF VARIOUS DEPOSITORS RECORDED BY THE DEPARTMENT APPEA RING FROM PAGE 144 TO 173 OF 8 THE PAPER BOOK POINTING OUT THAT THE DEPOSITORS IN THE STATEMENTS RECORDED BY THE DEPARTMENT HAVE DULY CONFIRMED THE DEPOSIT BEING GI VEN TO THE ASSESSEE. THE STATEMENTS WERE RECORDED IN THE CASE OF ALL THE SQU ARED UP CASH CREDITS. ATTENTION WAS ALSO DRAWN AT PAGE 174 175 TO 211 WHICH CONTAI NED THE PHOTOCOPIES OF THE AFFIDAVITS OF THE LENDERS FILED BEFORE THE ASSESSIN G OFFICER. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE ALLAHABAD HIGH CO URT IN THE CASE OF CIT VS. JOHRI MAL GOYAL 147 TAXMAN 448 (ALL.) AND IT WAS V EHEMENTLY CONTENDED THAT THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DECISIO N OF JURISDICTIONAL HIGH COURT. IN THIS CASE THE JURISDICTIONAL HIGH COURT HAS HELD T HAT WHEN THE AMOUNT IS FOUND DEPOSITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE O NLY THEN SECTION 68 APPLIES AND NOT WHEN THE AMOUNT IS FOUND DEPOSITED IN THE BOOKS OF THIRD PARTY. THE ASSESSEE CANNOT BE ASKED TO PROVE THE SOURCE OF SOURCES OR T HE ORIGIN OF THE DEPOSITS. REFERRING TO THE DECISIONS RELIED BY THE LEARNED DR IT WAS POINTED OUT THAT THE DECISION IN THE CASE OF SAMATI DAYAL 214 ITR 801 I S NOT APPLICABLE TO THE FATS OF THE CASE AS IT DOES NOT RELATE TO THE ADDITION MADE U/S. 68 BUT IT RELATES TO THE INCOME SHOWN BY THE ASSESSEE. RELATING TO THE DECIS ION OF DELHI HIGH COURT IN THE CASE OF CIT VS. DIVINE LEASING AND FINANCE LTD. 299 ITR 268 IT WAS POINTED OUT THAT THIS DECISION RELATES TO THE APPLICABILITY OF SECTION 68 IN CASE OF SHARE CAPITAL RECEIVED BY THE COMPANY. IN THIS CASE THE HONBLE HIGH COURT HAS LAID DOWN THAT NO ADVERSE INFERENCE IS TO BE DRAWN IF THE SHARE HO LDER FAILED TO RESPOND THE NOTICE 9 ISSUED BY THE ASSESSING OFFICER. IT IS THE DUTY OF THE ASSESSING OFFICER TO INVESTIGATE THE CREDITWORTHINESS OF THE SHARE HOLDE R. THUS IT WAS CONTENDED THAT THIS DECISION IN FACT SUPPORTS THE CASE OF THE AS SESSEE. REFERRING TO THE DECISION IN THE CASE OF CIT VS. P. MOHANKALA 291 ITR 278 IT WA S POINTED OUT THAT THE HONBLE SUPREME COURT IN THAT CASE CLEARLY LAID DOWN THAT O N THE EXPLANATION OF THE ASSESSEE THE ASSESSING OFFICER SHOULD FORM THE OPIN ION OBJECTIVELY ON PROPER APPRECIATION OF THE MATERIAL. EVEN IF THE EXPLANATI ON OF THE ASSESSEE IS NOT SATISFACTORY THE MATERIAL CANNOT LEAD TO CONCLUSIO N THAT THE RECEIPT IS OF THE INCOME NATURE. THE BURDEN IS ON THE ASSESSEE TO PROVE THE CASH CREDIT. THE ASSESSEE HAS DULY DISCHARGED HIS BURDEN BY ADDUCING ALL THE EVID ENCES. OUT ATTENTION WAS ALSO DRAWN TOWARDS THE FACT THAT THE ASSESSEE SPECIFICAL LY ASKED THE ASSESSING OFFICER THAT IN CASE THE ASSESSING OFFICER HAS ANY DOUBT H E MAY SUMMON THE DEPOSITORS U/S. 131 OF THE INCOME-TAX ACT. IF THE ASSESSING OF FICER FAILED TO SUMMON THE CREDITORS ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. THE CIT(A) HAS DULY ASKED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER AND IN THE REMAND REPORT THE ASSESSING OFFICER HAS NOT DISPUTED THAT THE ASSESSEE HAS NOT FILED ALL THE EVIDENCES AS WERE FILED BEFORE THE CIT(A) AND NO FR ESH MATERIAL WAS FILED. RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS : I) KALYAN MEMORIAL & CHARITABLE TRUST VS. ACIT 124 TTJ 883 II) CIT VS. DAYA CHAND JAIN VAIDYA (1975) 98 ITR 280 (A LL.) III) DCIT VS. ROHINI BULDERS 256 ITR 360 (GUJ.) IV) NEMI CHAND KOTHARI VS. CIT 264 ITR 254 10 V) CIT VS. DAULAT RAM RAWATMULL 87 ITR 349 (SC) VI) CIT VS. REAL TIME MARKETING P. LTD. 306 ITR 35 (DE L.) VII) CIT VS. LAUL TRANSPORT CORPORATION 180 TAXMAN 185 (P&H) VIII) CIT VS. JOHRI MAL GOYAL 147 TAXMAN 448 (ALL.) IX) CIT VS. ASHOK KUMAR KAKKAR HUF 171 TAXMAN 354 (DEL. ) X) NATHU RAM PREM CHAND VS. CIT 49 ITR 561 (DEL.). 8. AN IDENTICAL GROUND CHALLENGING THE DELETION OF ADDITION OF RS.1 12 00 188/- MADE ON ACCOUNT OF UNEXPLAINED LOANS RECEIVED FROM 19 PERSONS AND DISALLOWANCE OF INTEREST ON SUCH LOANS HAS ALSO BEEN TAKEN BY RE VENUE IN APPEAL NO. 216/AGRA/2009 FOR ASSESSMENT YEAR 2006-07. BOTH THE PARTIES AGREE THAT THE FACTS AND CIRCUMSTANCES UNDER WHICH THE ADDITIONS AND DIS ALLOWANCE OF LOANS AND INTEREST WERE MADE ARE SAME AND THEREFORE THEIR A RGUMENTS MADE IN GROUND NO. 1 IN APPEAL FOR A.Y. 2005-06 SHOULD ALSO BE CONSIDERE D FOR DECIDING GROUND NO. 1 IN A.Y. 2006-07 AND WHATEVER VIEW THIS TRIBUNAL MAY TA KE IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2005-06 THE SAME VIEW MAY BE TAKEN FOR THE ASSESSMENT YEAR 2006-07. 09 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD ALONGWITH THE ORDERS OF THE TAX AUTHORITI ES BELOW. WE HAVE ALSO GONE THROUGH VARIOUS CASE LAWS CITED BEFORE US FROM BOTH THE SIDES. THIS IS THE FACT ON RECORD THAT THE ASSESSEE HAS SUBMITTED THE NAMES A DDRESSES PERMANENT ACCOUNT NUMBERS CONFIRMATIONS PROOF FOR FILING OF RETURN ALONG WITH COPY OF BANK 11 ACCOUNTS OF VARIOUS PARTIES FROM WHOM THE LOAN HAS BEEN RECEIVED BY THE ASSESSEE DURING THE YEAR. THE ASSESSEE HAS ALSO PAID INTERES T ON WHICH THE TDS HAS BEEN DEDUCTED IN ACCORDANCE WITH THE PROVISIONS OF SECTI ON 194A OF THE INCOME TAX ACT. WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO PROVE THE CASH CREDIT THE ASSESSEE HAS SUBMITTED ALL THESE EVIDENCES. EVEN TH E ASSESSEE HAS SPECIFICALLY REQUESTED THE ASSESSING OFFICER TO ISSUE SUMMONS U/ S. 131 IN CASE THE ASSESSING OFFICER IS NOT SATISFIED WITH THE EXPLANATION OF TH E ASSESSEE. EVEN THOUGH THE DEPOSITORS WERE EXAMINED BY THE DEPARTMENT I.E. A DI (INV.) IMMEDIATELY AFTER THE SEARCH AND THE DEPOSITORS HAVE CONFIRMED AND OWNED THE DEPOSITS MADE WITH THE ASSESSEE. THE ASSESSING OFFICER WAS NOT SATISFIED W ITH THE EXPLANATION OF THE ASSESSEE WHO MADE THE ADDITION MERELY ON THE BASIS THAT THE ASSESSEE COULD NOT PROVE THE SOURCE OF THE DEPOSITORS. NOW THE QUESTI ON ARISES WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THIS CASE THE ADDITION CAN BE SUSTAINED IN THE CASE OF THE ASSESSEE MERELY ON THE BASIS THAT THE ASSESSEE COUL D NOT PROVE THE SOURCE OF SOURCES. IN ORDER TO APPRECIATE THE CONTROVERSY IT WOULD BE APPROPRIATE TO REPRODUCE THE PROVISIONS OF SECTION 68 OF THE ACT H EREIN BELOW: 68. CASH CREDITS WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESS ING OFFICER SATISFACTORY THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 12 10. BEFORE CHARGING THE CREDIT AS THE INCOME OF THE ASSESSEE THE AO HAS TO FORM AN OPINION. THIS OPINION IS SUBJECTIVE BUT IT HAS TO BE JUDICIOUS AND BASED ON MATERIAL ON RECORD. AN OPINION IS AN INFERENCE OF FACTS FROM OBSERVED FACTS. IT IS NOT AN IMPRESSION. IT IS A CONVICTION BASED ON APP RAISAL OF EVIDENCE ON RECORD. IN V.L.S. FINANCE LTD. V CIT (2000) 246 ITR 707 THE H ONBLE DELHI HIGH COURT OBSERVED AS UNDER: OPINION MEANS SOMETHING MORE THAN MORE RETAILIN G OF GOSSIP OR HEARSAY; IT MEANS JUDGMENT OR BELIEF THAT IS A BE LIEF OR A CONVICTION RESULTING FROM WHAT ONE THINKS ON A PARTICULAR QUES TION. IT MEANS: JUDGMENT OR BELIEF BASED ON GROUNDS SHORT OF PROOF. IF A MAN IS TO FORM AN OPINION AND HIS OPINION IS TO GOVERN HE MU ST FORM IT HIMSELF ON SUCH REASONS AND GROUNDS AS SEEM GOOD TO HIM. THUS BEFORE THE AO FORMS AN OPINION HE MUST CONSI DER THE MATERIAL BEFORE HIM. HE HAS BEFORE HIM THE MATERIAL SUBMITTED BY THE ASS ESSEE WHILE GIVING AN EXPLANATION THEN HE MUST COLLECT HIS OWN MATERIAL AS AN ENQUIRY OFFICER WEIGH THE TWO MATERIALS AND AS A QUASI-JUDICIAL AUTHORITY FOR M AN OPINION AS TO WHETHER EXPLANATION FURNISHED BY THE ASSESSEE IS SATISFACTO RY OR NOT. IF THE AO DOES NOT APPLY HIS MIND IN EXAMINING THE DOCUMENTS FURNISHED BY THE ASSESSEE AND DOES NOT FIND ANY SUBSTANTIVE ERROR IN THEM NOR HE COLLECTS ANY MATERIAL BY EXERCISING POWERS UNDER INCOME-TAX ACT THEN THE CLAIM OF THE ASSESSEE CAN NOT BE STRAIGHTWAY REJECTED. IF HE DOES IT WOULD BE A VIO LATION OF PRINCIPLES OF NATURAL JUSTICE AND PROVISIONS OF SECTION 68. 13 11. THE EXPRESSION THE ASSESSEE OFFERS NO EXPLANAT ION MEANS WHERE THE ASSESSEE OFFERS NO PROPER REASONABLE AND ACCEPTABL E EXPLANATION AS REGARDS THE SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT MAINTAIN ED BY THE ASSESSEE. THE OPINION OF THE AO FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY MUST BE BASED ON PROPER APPRECIATION O F THE MATERIAL AND OTHER SURROUNDING CIRCUMSTANCES AVAILABLE ON RECORD. THE OPINION OF THE AO IS TO BE BASED ON APPRECIATION OF THE MATERIAL ON RECORD. 12. THE WORD MAY USED IN SECTION 68 PROVIDES DISC RETION TO THE AO. IN GENERAL THE WORD MAY IS AN AUXILIARY VERB CLARIFYING THE MEANING OF ANOTHER VERB OF EXPRESSING AN ABILITY CONTINGENCY POSSIBILITY OR PROBABILITY. WHEN USED IN A STATUTE IN ITS ORDINARY SENSE THE WORD IS PERMISSIV E AND NOT MANDATORY. BUT WHERE CERTAIN CONDITIONS ARE PROVIDED IN THE STATUTE AND ON THE FULFILLMENT THEREOF A DUTY IS CAST ON THE AUTHORITY CONCERNED TO TAKE AN ACTIO N THEN ON FULFILLMENT OF THOSE CONDITIONS THE WORD MAY TAKE THE CHARACTER OF SH ALL AND THEN IT BECOMES MANDATORY. IN SECTION 68 WE FIND THAT THERE ARE N O SUCH CONDITIONS ON THE FULFILLMENT OF WHICH THE AO IS DUTY BOUND TO MAKE T HE ADDITION. THE WORD MAY DENOTES THE DISCRETION OF THE AO THAT HE CAN MAKE A N ADDITION OR CANNOT MAKE AN ADDITION. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V SMT. P K NOORJAHAN 237 ITR 570 (SC) WHILE DEALING WITH THE WORD MAY IN S ECTION 69 OBSERVED AS UNDER: 14 'IN THE CORRESPONDING CLAUSE OF THE BILL WHICH WAS INTRODUCED IN PARLIAMENT WHILE INSERTING SECTION 69 IN THE INCOM E-TAX ACT 1961 THE WORD 'SHALL' HAD BEEN USED BUT DURING THE COURS E OF CONSIDERATION OF THE BILL AND ON THE RECOMMENDATION OF THE SELECT COMMITTEE THE SAID WORD WAS SUBSTITUTED BY THE WORD 'MAY'. THIS C LEARLY INDICATES THAT THE INTENTION OF PARLIAMENT IN ENACTING SECTIO N 69 WAS TO CONFER A DISCRETION ON THE INCOME-TAX OFFICER IN THE MATTER OF TREATING THE SOURCE OF INVESTMENT WHICH HAS NOT BEEN SATISFACTOR ILY EXPLAINED BY THE ASSESSEE AS THE INCOME OF THE ASSESSEE AND THE INCOME-TAX OFFICER IS NOT OBLIGED TO TREAT SUCH SOURCE OF INVESTMENT A S INCOME IN EVERY CASE WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE NOT SATISFACTORY. THE QUESTION WHETHER THE SOURCE OF TH E INVESTMENT SHOULD BE TREATED AS INCOME OR NOT UNDER SECTION 69 HAS TO BE CONSIDERED IN THE LIGHT OF THE FACTS OF EACH CASE. IN OTHER WORDS A DISCRETION HAS BEEN CONFERRED ON THE INCOME-TAX OFFICER UNDER SECT ION 69 OF THE ACT TO TREAT THE SOURCE OF INVESTMENT AS THE INCOME OF THE ASSESSEE IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND SA TISFACTORY AND THE SAID DISCRETION HAS TO BE EXERCISED KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE.' 13. IN THE INSTANT CASE WE NOTED THAT THE ASSESSEE HAS SUBMITTED THE NAMES ADDRESSES CONFIRMATIONS PERMANENT ACCOUNT NUMBERS AND PROOF OF FILING THE RETURN BY EACH OF THE CREDITORS AS WELL AS XEROX CO PY OF THE BANK ACCOUNT OF THE LENDERS. THE ASSESSING OFFICER NOTED THAT IN MOST O F THE CASES THE LENDER HAS DEPOSITED THE CASH IN THEIR RESPECTIVE ACCOUNTS BEF ORE ADVANCING MONEY TO THE ASSESSEE AND ON THAT BASIS HE TOOK THE VIEW THAT T HE ASSESSEE COULD NOT PROVE THE CASH CREDITS AND FOR THAT THE RELIANCE WAS PLACED B Y THE LD. DR MAINLY ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SU MATI DAYAL VS. CIT (SUPRA). WE HAVE GONE THROUGH THIS DECISION AND WE NOTED THA T IN THIS CASE THE HONBLE 15 SUPREME COURT HAS HELD THAT IN VIEW OF SECTION 68 O F THE INCOME-TAX ACT 1961 WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR IT MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF TH E ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT TH E NATURE AND SOURCE THEREOF IS IN THE OPINION OF THE ASSESSING OFFICER NOT SATISFACT ORY. IN SUCH A CASE THERE IS PRIMA FACIE EVIDENCE AGAINST THE ASSESSEE VIZ. THE REC EIPT OF MONEY AND IF HE FAILS TO REBUT THE SAID EVIDENCE IT CAN BE USED AGAINST HIM BY HOLDING THAT IT WAS A RECEIPT OF AN INCOME NATURE. WHILE CONSIDERING THE EXPLANAT ION OF THE ASSESSEE THE DEPARTMENT CANNOT HOWEVER ACT UNREASONABLY. IN TH IS CASE DURING THE ASSESSMENT YEAR 1971-72 THE ASSESSEE CLAIMED THAT SHE RECEIVE D A TOTAL AMOUNT OF RS.3 11 831/- BY WAY OF RACE WINNINGS IN JACKPOTS A ND TREBLE EVENTS IN RACES AT TURF CLUBS IN BANGALORE MADRAS AND HYDERABAD. THE SAID AMOUNT WAS SHOWN BY THE ASSESSEE IN THE CAPITAL ACCOUNT IN HER BOOKS. FOR T HE ASSESSMENT YEAR 1972-73 SHE CLAIMED RECEIPTS OF RS.93500/- AS RACE WINNINGS IN TWO JACKPOTS AT BANGALORE AND MADRAS AND THE SAID AMOUNT WAS CREDITED IN THE CAPI TAL ACCOUNT IN THE BOOKS. THE ASSESSING OFFICER INCLUDED THESE AMOUNTS AS INCOME FROM OTHER SOURCES AND ASSESSED THEM. THE AAC CONFIRMED THE ADDITION. THE MATTER WENT TO SETTLEMENT COMMISSION WHO BY A MAJORITY HELD THAT THE EXPLANAT ION OF THE ASSESSEE WAS NOT GENUINE DUE TO THE REASONS (I) THAT THE ASSESSEES KNOWLEDGE OF RACING WAS VERY MEAGER (II) THAT A JACKPOT IS A STAKE OF FIVE EVEN TS IN A SINGLE DAY AND ONE CAN 16 BELIEVE A REGULAR AND EXPERIENCED PUNTER CLEARING A JACKPOT OCCASIONALLY BUT THE CLAIM OF THE ASSESSEE OF HAVING WON A NUMBER OF JAC KPOTS IN THREE OR FOUR SEASONS NOT MERELY AT ONE PLACE BUT AT THREE DIFFERENT CENT RES NAMELY MADRAS BANGALORE AND HYDERABAD APPEARED PRIM FACIE TO BE WILD AND CONTRARY TO STATISTICAL THEORIES AND EXPERIENCE OF FREQUENCIES AND PROBABILITIES (I II) THE ASSESSEES BOOKS DID NOT SHOW ANY DRAWINGS ON RACE DAYS OR ON THE IMMEDIATEL Y RECEDING DAYS FOR THE PURCHASE OF JACKPOT COMBINATION TICKETS WHICH ENTA ILED SIZABLE AMOUNTS VARYING GENERALLY BETWEEN RS.2 000/- AND RS.3 000/- (IV) T HE ASSESSEES CAPITAL ACCOUNT WAS CREDITED WITH THE GROSS AMOUNT WITHOUT SHOWING ANY EXPENSES AND PURCHASES OF TICKETS OR FOR LOSSES (V) IN VIEW OF THE EXCEPT IONAL LUCK CLAIMED TO HAVE BEEN ENJOYED BY THE ASSESSEE HER LOSS OF INTEREST IN RA CES FROM 1972 WAS VERY SIGNIFICANT. THE SETTLEMENT COMMISSION TOOK THE VIE W THAT ONE WOULD NOT LOSE INTEREST IN RACE FROM 1972 AND INCOME YIELDING ACTI VITIES MERELY BECAUSE THE INCOME FROM THAT SOURCE BECOMES CHARGEABLE TO TAX. WHEN THE MATTER WENT BEFORE THE SUPREME COURT IT DISMISSED THE APPEAL OF THE A SSESSEE. FROM THE FACTS OF THIS CASE IT IS APPARENT THAT THIS CASE DOES NOT RELATE TO THE CASE WHERE THE ASSESSEE HAS TAKEN LOAN FROM ANY PARTIES BUT IT IS A CASE WHERE THE ASSESSEE HIMSELF HAS SHOWN THE INCOME FROM A PARTICULAR SOURCE AND INCOME SHOW N BY THE ASSESSEE WAS NOT FOUND TO BE GENUINE. THIS CASE IN OUR OPINION WIL L NOT ASSIST THE REVENUE. 17 14. THE LEARNED DR ALSO RELIED ON THE DECISION OF T HE SUPREME COURT IN THE CASE OF CIT VS. P. MOHANKALA (SUPRA). WE HAVE GONE THROU GH THIS DECISION. WE NOTED FROM THIS DECISION THAT THIS DECISION SPEAKS OF THA T IN THE CASE OF SECTION 68 THE BURDEN IS ON THE ASSESSEE TO PROVE THE CASH CREDITS . THIS FACT IN OUR OPINION IS NOT DENIED. THE BURDEN IS ON THE ASSESSEE TO PROVE THE CASH CREDIT BY ADDUCING THE EVIDENCE ABOUT THE NATURE AND SOURCES OF THE CASH C REDIT. THIS JUDGMENT ALSO STATES THAT ONCE THE ASSESSEE OFFERED THE EXPLANATION THE OPINION OF THE ASSESSING OFFICER OF NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASS ESSEE AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATE RIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD. THE OPINION OF T HE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATE RIAL ON RECORD. THE APPLICATION OF MIND IS SINE QUA NON FOR FORMING THE OPINION. TH E ASSESSEE IN THE CASE BEFORE US HAS SUBMITTED ALL THE EVIDENCES WHAT CAN BE EXPECTE D FROM THE PERSON UNDER THESE FACTS. THEREFORE ON THE FACTS THIS DECISION IN O UR OPINION WILL NOT ASSIST THE REVENUE. 15. WE HAVE ALSO GONE THROUGH THE DECISION IN THE C ASE OF CIT VS. DIVINE LEASING AND FINANCE LTD. AND OTHERS (SUPRA). THIS D ECISION IN OUR OPINION WILL ALSO NOT BE APPLICABLE TO THE FACTS OF THE CASE BEF ORE US RATHER WE ARE OF THE OPINION THAT THIS DECISION WILL HELP THE ASSESSEE. THIS DECISION CLEARLY STATES THAT IT 18 IS THE DUTY OF THE ASSESSING OFFICER TO INVESTIGATE THE CREDITWORTHINESS OF THE SHARE HOLDERS AND IN CASE SHARE HOLDERS FAIL TO RESPOND T O THE NOTICE ISSUED BY THE ASSESSING OFFICER THE ASSESSING OFFICER SHOULD NOT TAKE AN ADVERSE INFERENCE ON THE BASIS OF THE NON-RESPONSE OF THE NOTICE. THE FA CTS OF THE CASE BEFORE US ARE SIMILAR TO THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF CIT VS. ORISSA CORPORATION PVT. LIMITED (SUPRA). IN THIS CASE THE INCOME-TAX OFFICER DID NOT ACCEPT THE ASSESSEES ACCOUNTS SHOWING CASH CREDITS WHICH WERE SHOWN TO HAVE BEEN RECEIVED BY WAY OF LOANS FROM THREE INDIVIDUAL CREDITORS. THE INCOME-TAX OFFICER TREATED THE ENTIRE AMOUNT AS UNPROVED CASH CREDIT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. ON APPEAL THE TRIBUNAL TOO K THE VIEW THAT THE ASSESSEE COULD NOT PRODUCE THOSE PERSONS ALLEGED TO BE CREDI TORS BUT IT DID NOT FOLLOW AUTOMATICALLY THAT AN ADVERSE INFERENCE SHOULD BE D RAWN THAT THE AMOUNT REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE. THE CREDITORS THEMSELVES WERE INCOME-TAX ASSESSEES. IN THESE CIRCUMSTANCES THE T RIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DISCHARGED THE BURDEN THAT LA Y ON HIM. IN THESE CIRCUMSTANCES THE HONBLE COURT HELD THAT THE TRIBUNALS CONCLUSI ON WAS NOT UNREASONABLE OR PERVERSE. THIS DECISION OF HONBLE SUPREME COURT IS FOUND APPLICABLE TO THE CASE BEFORE US. 19 16. IN THE CASE OF DCIT VS. ROHINI BUILDERS 256 ITR 360 (GUJ.) THE FACTS ARE THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAD TAKEN LOANS FROM VARIOUS PARTIES AND DURING THE COURSE OF ASSES SMENT PROCEEDINGS THE ASSESSEE HAD FURNISHED THE LOAN CONFIRMATIONS GIVING FULL AD DRESSES GIR NUMBERS/PERMANENT ACCOUNT NUMBERS ETC. OF ALL THE D EPOSITORS. THE ASSESSING OFFICER ISSUED SUMMONS TO SOME OF THE CREDITORS AND ALSO CONDUCTED INQUIRIES INTO THE GENUINENESS OR OTHERWISE OF THE LOANS TAKEN BY THE ASSESSEE. ULTIMATELY THE ASSESSING OFFICER MADE AN ADDITION OF RS.12 85 000/ - TO THE RETURNED INCOME OF THE ASSESSEE WHICH WAS CONFIRMED BY THE CIT(A). ON FUR THER APPEAL THE TRIBUNAL HELD THAT THE PHRASEOLOGY OF SECTION 68 OF THE ACT WAS C LEAR THAT THE LEGISLATURE HAS LAID DOWN THAT IN THE ABSENCE OF A SATISFACTORY EXPLANAT ION THE UNEXPLAINED CASH CREDIT MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE A SSESSEE OF THAT PREVIOUS YEAR THAT THE LEGISLATIVE MANDATE IS NOT IN TERMS OF THE WORDS SHALL BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEARS THAT THE UNSATISFACTORINESS OF THE EXPLANATION DOES NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS INCOME OF THE ASSESSEE. THE TRIBUNAL FOUND THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS WHICH LAY ON IT IN TERMS OF SECTION 68 BY PROVING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES GIR NUMBERS/PERMANENT ACCOUNT NUMBERS AN D THE COPIES OF ASSESSMENT ORDERS WHEREVER READILY AVAILABLE THAT IT HAD ALSO PROVED THE CAPACITY 20 OF THE CREDITORS BY SHOWING THAT THE AMOUNTS WERE R ECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES DRAWN FROM BANK ACCOUNTS OF T HE CREDITORS AND THE ASSESSEE WAS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CA SH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS BECAUSE UNDER LAW THE A SSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACCOUNT B UT NOT THE SOURCE OF THE SOURCE. THUS TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN PARTICULAR THE FACT THAT THE ASSESSIN G OFFICER HAD NOT DISALLOWED THE INTEREST CLAIMED/PAID IN RELATION TO THESE CREDITS IN THE ASSESSMENT YEAR UNDER CONSIDERATION OR EVEN IN THE SUBSEQUENT YEARS AND TAX HAD BEEN DEDUCTED AT SOURCE OUT OF THE INTEREST PAID/CREDITED TO THE CREDITORS THE TRIBUNAL HELD THAT THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIED IN MAKI NG THE ADDITION OF RS.12 85 000/-. THE HONBLE HIGH COURT DISMISSED TH E APPEAL OF THE DEPARTMENT. HONBLE SUPREME COURT ALSO DISMISSED THE SPECIAL LE AVE PETITION. THIS DECISION CLEARLY LAYS DOWN THE PROPOSITION THAT THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE. THE ASSESSEE CAN BE ASKED ONLY TO PROVE THE SOURCE OF THE CREDIT. THIS DECISION IN OUR OPINION IS CLEARLY APPLICABL E TO THE FACTS OF THE CASE BEFORE US. THE ASSESSEE IN THE CASE BEFORE US HAS DULY DISCHAR GED HIS ONUS BY FILING THE CONFIRMATION ADDRESS PERMANENT ACCOUNT NUMBER AND THE COPY OF BANK ACCOUNT OF THE CREDITOR COPIES OF ACKNOWLEDGEMENT FOR FILING THE RETURNS OF INCOME ETC. 21 17. WE HAVE ALSO GONE THROUGH THE DECISION IN THE C ASE OF CIT VS. JOHRIMAL GOEL 147 TAXMAN 448 (ALL.) IN THIS CASE THE ASSES SING OFFICER FOUND TWO DEPOSITS IN THE BOOKS OF ACCOUNT OF ASSESSEE IN THE NAME OF HIS DAUGHTERS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THESE DEPOSIT S. THE ASSESSEE EXPLAINED THAT THE AMOUNTS WERE PAID BY THE TWO LADIES THROUGH CHE QUE AND THAT BOTH OF THEM HAD BEEN ASSESSED TO TAX UNDER THE AMNESTY SCHEME. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD INTRODUCED HIS BLACK MON EY BY FILING VOLUNTARY RETURNS OF HIS DAUGHTERS AND THEREFORE ADDED THE AMOUNTS AS HIS INCOME UNDER SECTION 68. THE CIT(A) TOOK THE VIEW THAT THE TWO LADIES CREDIT ED THE AMOUNT IN THEIR BANK ACCOUNT IN MARCH 1986. THEREFORE IF THE ASSESSING OFFICER WAS OF THE VIEW THAT THE LADIES DID NOT HAVE ANY INDEPENDENT SOURCE OF I NCOME AND THE TWO BANK ACCOUNTS ACTUALLY BELONGED TO THE ASSESSEE THEN PRO PER COURSE FOR THE ASSESSING OFFICER WAS TO ADD ENTIRE AMOUNTS OF DEPOSITS IN TH EIR BANK ACCOUNTS IN THE HANDS OF THE ASSESSEE AND THE PROVISIONS OF SECTION 69 WOULD HAVE BEEN ATTRACTED AND THE CORRECT ASSESSMENT YEAR WOULD HAVE BEEN 1986-87 AND NOT THE RELEVANT ASSESSMENT YEAR 1987-88. THE TRIBUNAL CONFIRMED THE ORDER OF C IT(A). WHEN THE MATTER WENT BEFORE THE HIGH COURT THE HIGH COURT HELD AS UNDER :- UNDER SECTION 68 IF ANY SUM IS FOUND CREDITED IN T HE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OF FERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTO RY THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE 22 OF THAT PREVIOUS YEAR. THEREFORE WHAT HAS TO BE EN QUIRED INTO BY THE ASSESSING AUTHORITY IS ABOUT THE NATURE AND SOURCE OF THE DEPOSIT. IF THE EXPLANATION WITH REGARD TO NATURE AND SOURCE IS FOUND UNSATISFACTORY ONLY THEN THE AMOUNT SO CREDITED MA Y BE TREATED AS INCOME. IN THE INSTANT CASE THE ASSESSEE OFFERED T HE EXPLANATION BOTH ABOUT THE NATURE AND SOURCE OF THE MONEY. IT WAS EX PLAINED THAT THE MONEY WAS DEPOSITED BY THE TWO LADIES WHICH THEY H AD DEPOSITED AFTER WITHDRAWING FROM THEIR BANK ACCOUNT. THE COMMISSION ER (APPEALS) AND THE TRIBUNAL HAD FOUND THAT THE ASSESSEE HAD DI SCHARGED HIS BURDEN IN PROVING THE SOURCE OF THE MONEY WHICH HA D FLEW FROM THE BANK ACCOUNT. IT WAS FURTHER HELD THAT IN ADDITION TO THE SOURCE OF MONEY FROM THE BANK ACCOUNT BOTH THE LADIES WERE T HE INCOME-TAX ASSESSEES AND ASSESSED TO TAX UNDER THE AMNESTY SCH EME AND THE AMOUNT DEPOSITED IN THEIR BANK ACCOUNT WAS AS A RES ULT OF THEIR DISCLOSURE OF INCOME UNDER THE AMNESTY SCHEME. THE COMMISSIONER (APPEALS) AND THE TRIBUNAL FOUND THE EXPLANATION SA TISFACTORY AND ACCORDINGLY DELETED THE ADDITION. IT WAS NOT A CAS E WHERE THE ASSESSEE CLAIMED ANY IMMUNITY FROM TAX ON ACCOUNT OF THE DIS CLOSURE OF INCOME BY THE TWO LADIES. IT WAS A CASE WHERE THE ASSESSEE WAS ASKED TO EXPLAIN THE DEPOSITS IN HIS BOOKS OF ACCOUNT ABOUT THE NATURE AND SOURCE WHICH THE ASSESSEE HAD EXPLAINED. THE ASSES SING AUTHORITY HAD NOT ACCEPTED THE EXPLANATION BUT THE COMMISSION ER(APPEALS) AND THE TRIBUNAL HAD ACCEPTED THE EXPLANATION. THE FIND ING OF THE TRIBUNAL WAS A FINDING OF FACT IN THAT REGARD AND I T WAS NOT SHOWN THAT THE FINDING RECORDED BY THE TRIBUNAL WAS PERVERSE. VARIOUS COURTS HAVE HELD THAT THE ASSESSEE HAS TO PROVE THREE CONDITIONS : (1) IDENTITY OF THE CREDITOR (2)CAPACI TY OF SUCH CREDITOR TO ADVANCE MONEY AND (3) GENUINENESS OF THE TRANSACTI ONS. IF ALL THE AFORESAID THREE CONDITIONS ARE PROVED THE BURDEN W OULD SHIFT ON THE REVENUE TO PROVE THAT THE AMOUNT BELONGED TO THE AS SESSEE. IT HAS BEEN HELD BY THE VARIOUS HIGH COURTS THAT THE ASSESSEE C ANNOT BE ASKED TO PROVE THE SOURCE OF SOURCE OR THE ORIGIN OF DEPOSIT . UNDER THE AMNESTY SCHEME THE NEW TAX PAYERS WERE ALLOWED TO DECLARE THEIR INCOME FOR VARIOUS YEARS AND THEIR RE TURNS WERE ALLOWED TO BE ACCEPTED WITHOUT ANY CHARGE OF PENALTY AND IN TEREST. IT APPEARED THAT BOTH THE LADIES HAD FILED RETURNS UNDER THE AM NESTY SCHEME DECLARING CERTAIN INCOME AND AS A RESULT OF SUCH DE CLARATION SAVINGS HAD BEEN DEPOSITED IN THE BANK ACCOUNT WHICH HAD BE EN SUBSEQUENTLY 23 PAID TO THE ASSESSEE. THERE WAS NO DISPUTE THAT THE INCOME-TAX RETURNS UNDER THE AMNESTY SCHEME IN THE CASE OF BOTH THE LA DIES HAD BEEN ACCEPTED. FURTHER THERE WAS NO ERROR IN THE ORDER OF THE TR IBUNAL WHERE THE TRIBUNAL HELD THAT IN CASE THE AMOUNT DEPOSITED IN THE BANK ACCOUNT OF THOSE TWO LADIES WERE TO BE TREATED AS T HE AMOUNT BELONGING TO THE ASSESSEE AND THE DEPOSITS MADE BY THE ASSESSEE THEN IT WOULD BE A CASE OF INVESTMENT MADE BY THE ASSESS EE IN THE NAME OF THOSE TWO LADIES AND THE PROVISION OF SECTION 69 WO ULD APPLY AND NOT SECTION 68 AND FOR THAT PURPOSE THE FINANCIAL YEAR WOULD BE RELEVANT AND THEN SUCH INVESTMENT MIGHT BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR WHICH WOULD FALL IN THE ASSESSMENT YEAR 1986-87 AND NOT 1987-88. SECTION 68 APPLIES WH EN THE AMOUNT IS FOUND DEPOSITED IN THE BOOKS OF ACCOUNT OF AN ASSES SEE AND NOT IN THIRD PARTY. DEPOSIT IN THE ACCOUNT OF BANK WOULD A MOUNT TO INVESTMENT AND SECTION 69 WOULD APPLY AND NOT SECTI ON 68. 18. IN OUR OPINION THE CASE OF THE ASSESSEE IS DUL Y COVERED BY THE DECISION OF JURISDICTIONAL HIGH COURT WHICH WE ARE BOUND TO FOL LOW AND ON THE BASIS OF THIS DECISION ITSELF WE ARE OF THE VIEW THAT NO INTERFE RENCE IS CALLED FOR IN THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE IN RESPECT OF CASH CREDIT BY THE ASSESSING OFFICER IN EACH OF THE ASSESSMENT YEAR 2005-06 AND 2006-07 AND SIMILARLY NO INTERFERENCE IS CALLED FOR IN DELETION OF DISALLOWA NCE MADE OUT OF THE INTEREST PAID ON THESE DEPOSITS. THE DECISION GIVEN BY THE CIT(A) IS DULY SUPPORTED BY THE DECISION OF JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF ROHINI BUILDERS (SUPRA) AS WELL AS THAT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION PVT. LTD. (SUPRA). WE ACCORDINGLY DISM ISS GROUND NO. 1 TAKEN BY THE REVENUE IN BOTH THE YEARS. 24 19. GROUND NO. 2 RELATES TO THE DELETION OF ADDITIO N OF RS.54 18 000/- BEING UNDISCLOSED INVESTMENT IN PROPERTY AT TOHRA VILLAGE JOINTLY WITH SRI RAMA SHANKAR AGARWAL AND SHRI ANIL AGARWAL. THE BRIEF FACTS RELA TING TO THIS GROUND ARE THAT THIS ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF PAPER FOUND DURING THE COURSE OF SEARCH FROM THE PREMISES OF SH RI ANIL AGARWAL MAINPURI IN RESPECT OF INVESTMENT MADE IN THE PROPERTIES OUTSID E THE BOOKS OF ACCOUNT ALONG WITH SHRI RAMA SHANKAR AGARWAL AND ANIL AGARWAL JOI NTLY IN A VILLAGE TOHRA NEAR J.P. HOTEL. HE WAS OF THE VIEW THAT COMPLETE DETAIL S OF THE INVESTMENT INCLUDING COMMISSION STAMP DUTY ETC. AND SHARE OF EACH CO-O WNER WERE MENTIONED AT PAGE 48 OF LP-7 AND ON THAT BASIS THE SHARE OF THE ASSE SSEE WAS RS.54 18 000/-. HE ACCORDINGLY TREATED THE SAID AMOUNT AS UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE. 20. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). IT WAS CONTENDED THAT THE ASSESSEE WAS NOT ASSOCIATED WITH SHRI ANIL AGARWAL AND THE PRESUMPTIONS U/S. 132(4A) ON THE BASIS OF ADDITION MADE ARE NOT APPLI CABLE IN THE CASE OF ASSESSEE. THEY ARE APPLICABLE ONLY ON THE PERSON FROM WHOSE C USTODY THE PAPERS/DOCUMENTS ARE RECOVERED. THE ANNEXURE LP-7 PAGE 52 WAS FOUND FROM THE POSSESSION AND CONTROL OF SHRI ANIL KUMAR AGARWAL. THE COPY OF THI S PAPER WAS NEVER SUPPLIED TO 25 THE ASSESSEE EVEN THOUGH THE ASSESSEE HAD MADE SPEC IFIC REQUEST. IT WAS POINTED OUT THAT IT IS THE SETTLED LAW THAT LOOSE PAPERS CANNOT BE MADE BASIS FOR ANY ADDITION UNTIL AND UNLESS THEY ARE SUPPORTED BY CORROBORATIV E EVIDENCE AND FOR THIS RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS : (I). POORNUTE BERY VS. ITO 264 ITR 54 (II). S.P. GOYAL VS. DCIT 82 ITD 85 (MUM.)(TM) (III). UMA CHARAN SHAW & BROS. CO. VS. CIT 37 ITR 271 (SC). (IV). 183 ITR 388 (ALL.) (V). ACIT VS. SHAILESH S. SHAH 63 ITD 153 (BOM.) (VI). 69 ITD 336 (VII). USHA KANT N. PATEL VS. CIT 282 ITR 533. 21. THE CIT(A) CALLED FOR THE REMAND REPORT AND AFT ER CONSIDERING THE REMAND REPORT AND REPLY OF ASSESSEE THE CIT(A) DELETED TH E ADDITION BY OBSERVING AS UNDER :- 10(IV). I HAVE PERUSED AND CONSIDERED THE ASSESSME NT RECORDS ASSESSMENT ORDER REMAND REPORT OF THE ASS ESSING OFFICER REPLY AND REJOINDER AND OTHER SUPPORTING PAPERS FIL ED BY THE APPELLANT WHICH ARE PLACED ON RECORD. FROM THE PER USAL OF THE RECORDS I FIND THAT ALL THE ADDITIONS HAVE BEEN MA DE ON THE BASIS OF LOOSE PAPERS FOUND AND SEIZED FROM THE PREMISES OF A THIRD PERSON VIZ. ANIL KUMAR AGARWAL 233 NARAIN NAGAR MAINPURI. AS SUCH THE PRESUMPTION U/S. 132(4A) DOES NOT APPLY. I AGREE WI TH THE APPELLANT THAT THE SAID PRESUMPTION IS APPLICABLE TO MONEY BU LLION JEWELLERY OR OTHER ARTICLE OR THING OR BOOKS OF ACCOUNT AND OTHE R DOCUMENTS FOUND FROM THE POSSESSION OR CONTROL OF ANY PERSON THEN I T WILL BE PRESUMED THAT THESE THINGS BELONG TO SUCH PERSON AND CONTENT S OF SUCH BOOKS OF DOCUMENTS ARE TRUE. NEITHER THESE LOOSE PAPERS ARE FOUND FROM THE CUSTODY OF APPELLANT OR LOOSE PAPERS AS PER CASE LA W CITED CAN BE TREATED AS BOOKS OF ACCOUNTS OR DOCUMENTS. HENCE P ROVISIONS OF SECTION 132(4A) ARE NOT APPLICABLE. 26 10(V). I HAVE GONE THROUGH THE VARIOUS DECISIONS O F THE HIGHER COURTS VIZ. SUPREME COURT ALLAHABAD HIGH COURT AND OTHER HIGH COURTS CITED WHEREIN IT HAS BEEN HELD THAT LOO SE PAPERS ARE NOT THE ACCOUNT BOOKS AND BASE OF THOSE PAPERS CANNOT B E TAKEN FOR MAKING ADDITION WITHOUT ANY CORROBORATED EVIDENCE O R MATERIAL TO SUBSTANTIATE AND IN SUPPORT OF THE ADDITIONS MADE B Y HIM NOR THE ASSESSING OFFICER HAS FOUND ANY TANGIBLE INVESTMENT AS NARRATED IN LOOSE PAPERS SO AS TO ATTRACT THE PROVISIONS OF SEC TION 69. SINCE THE PAPERS WERE FOUND FROM THE PREMISES OF ONE SHRI ANI L KUMAR AGARWAL HE MUST DISPROVE THE NOTINGS OF PAPERS AND INVOLVEMENT OF THE APPELLANT WITH THE SAID PAPERS FOUND FROM HIS P REMISES AND IF ANY ADDITION WAS TO BE MADE ON THE BASIS OF THOSE PAPER S IT COULD HAVE BEEN MADE IN THE HANDS OF ANIL KUMAR AGARWAL ON THE BASIS OF PRESUMPTION U/S. 132(4A) OF THE I.T. ACT. THUS THE RELATION OF THE APPELLANT WITH THOSE PAPERS IS NOT JUSTIFIED. 10(VI). THE ASSESSING OFFICERS CONTENTION WITH RE GARD TO PAPER LP-7 REFERRED TO IN GROUND NO. 6 AND PAPER NO. 42-4 3 IN GROUND NO.9 IS NEGATIVED BY THE FACT THAT SALE DEED OF THE SAME ALREADY STANDS MADE IN THE NAME OF PADAM SHREE BUILDERS FOR RS.32 LAKH INSTEAD OF LOWER AMOUNT OF RS.29 47 867/- IN LP-7. 10(VII). NO OTHER EVIDENCE HAS BEEN PLACED ON REC ORD BY ASSESSING OFFICER TO LINK ANY LOOSE PAPER WITH ANY SALE OR PURCHASE TRANSACTION OF THAT LAND/PROPERTY MADE BY THE APPEL LANT OR PASSING OF ANY MONEY IN RESPECT OF ANY TRANSACTION. 10(VIII). LOOKING AT THE TOTALITY OF FACTS AND LEGA L POSITION OF THE CASE AND AFTER CONSIDERATION OF ALL THE EVIDENC E PLACED ON RECORD I AM OF THE VIEW THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING TOTAL ADDITIONS OF RS.3 44 71 392 (I.E. RS.54 18 00 0 + 60 00 000 +29 47 867 +32 50 000 + 1 68 55 525). I HEREBY DELE TE THE ENTIRE ADDITIONS OF RS.3 44 71 392/- AS DETAILED IN FOREGO ING LINES. 22. THE LEARNED DR RELIED ON THE ORDER OF ASSESSING OFFICER WHILE THE LEARNED AR RELIED ON THE ORDER OF CIT(A). WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ORDERS OF THE TAX AUTHORITIES BELOW. THIS IS A FACT 27 THAT THIS ADDITION HAS BEEN MADE ON THE BASIS OF LO OSE PAPERS FOUND FROM THE POSSESSION OF ONE SHRI ANIL KUMAR AGARWAL. THE PRES UMPTION U/S. 132(4A) IS AVAILABLE ONLY AGAINST THE PERSON AGAINST WHOM THE PROCEEDINGS U/S. 132 HAVE BEEN CARRIED OUT. SIMILAR IS THE POSITION IN RESPECT TO THE PRESUMPTION AVAILABLE U/S. 292C WHICH IS ALSO AVAILABLE AGAINST THE PERSON SEARCHED OR SURVEYED AND NOT AGAINST THE THIRD PARTY. IN THE CASE BEFORE US THE ALLEGATION OF THE REVENUE IS THAT CERTAIN PAPERS WERE FOUND DURING THE COURSE OF SEARCH CARRI ED OUT AT THE PREMISES OF SHRI ANIL KUMAR AGARWAL. THEREFORE ON THE BASIS OF THE PAPERS FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF SHRI ANIL KUMAR AGARWA L THE PRESUMPTION WILL NOT BE AVAILABLE TO THE REVENUE AGAINST THE ASSESSEE. THE COPIES OF THESE LOOSE PAPERS EVEN THOUGH THE REVENUE IS IN APPEAL WERE NOT FIL ED BEFORE US TO ASCERTAIN THE CORRECT FACTS AVAILABLE ON LOOSE PAPERS. THE ADDITI ON HAS BEEN MADE MERELY ON THE BASIS OF LOOSE PAPERS FOUND FROM THE POSSESSION OF THE THIRD PARTY. THE BURDEN TO PROVE IN RESPECT OF THESE PAPERS IS ON THE REVENUE THAT THE PAPERS BELONG TO THE UNDISCLOSED INVESTMENT BEING MADE BY THE ASSESSEE O UTSIDE THE BOOKS OF ACCOUNT. NOT ONLY THIS THE ASSESSMENT IN THIS CASE HAS BEEN MADE U/S. 153A READ WITH SECTION 143(3). THE ASSESSMENT HAS NOT BEEN COMPLET ED COMPLYING WITH THE PROVISION OF SECTION 153C ON THE BASIS OF WHICH THE ADDITION CLAIMED TO HAVE BEEN MADE WERE FOUND DURING THE COURSE OF SEARCH CARRIED OUT AT THE PREMISES OF SHRI ANIL KUMAR AGARWAL. THE ASSESSMENT IN THE CASE OF A SSESSEE HAS BEEN MADE U/S. 28 153A. THE ASSESSMENT OF SHRI ANIL KUMAR AGARWAL WOU LD HAVE BEEN MADE BY HIS ASSESSING OFFICER U/S. 153A ON THE BASIS OF THESE M ATERIALS AND IN CASE THE ASSESSING OFFICER OF SHRI ANIL KUMAR AGARWAL WAS SA TISFIED THAT THESE PAPERS BELONG TO ASSESSEE HE SHOULD HAVE HANDED OVER THES E PAPERS TO THE ASSESSING OFFICER OF THE ASSESSEE. NO SATISFACTION NOTE ETC. BEING RECORDED OR MADE UP BY THE ASSESSING OFFICER OF SHRI ANIL KUMAR AGARWAL WAS BR OUGHT ON RECORD SO THAT THE ADDITION ON THE BASIS OF THIS MATERIAL COULD HAVE B EEN MADE ON THE ASSESSEE AFTER COMPLYING WITH THE PROVISIONS OF SECTION 153C. WE D O NOT FIND ANY SUCH MATERIAL BEING BROUGHT TO OUR RECORD. UNDER THESE FACTS WE ARE OF THE OPINION THAT THIS IS NOT A FIT CASE WHICH WARRANTS OUR INTERFERENCE IN THE O RDER OF THE CIT(A) AND CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.54 18 000/-. 23. IN RESPECT OF GROUND NO. 3 4 5 AND 6 BOTH TH E LEARNED DR AND AR POINTED OUT THAT ADDITIONS MADE IN THESE GROUNDS AND DELETE D BY THE CIT(A) WERE BASED ON THE MATERIAL FOUND DURING THE COURSE OF SEARCH CARR IED AT THE PREMISES OF SHRI ANIL KIMAR AGARWAL MAINPURI. THE ASSESSING OFFICER MADE ADDITIONS BY INVOKING PRESUMPTION U/S. 132(4A). AGAINST ALL THESE ADDITIO NS THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) DELETED ALL THESE ADD ITIONS ALONG WITH THE ADDITIONS OF RS.54 18 000/- WHICH HAS BEEN DEALT WITH IN GROU ND NO. 2 BY GIVING COMMON FINDING BY US AS CAN BE SEEN IN THE PRECEDING PARAG RAPH OF THIS ORDER. 29 24. BOTH THE LEARNED AR AND DR AGREED THAT THE FACT S RELATING TO THESE ADDITIONS ARE THE SAME AND WHATEVER VIEW THIS TRIBUNAL WILL T AKE IN RESPECT OF GROUND NO. 2 THE SAME MAY BE TAKEN IN RESPECT OF GROUND NO. 3 TO 6. 25. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALREADY CONFIRMED THE ORDER OF C IT(A) DELETING THE ADDITION OF RS.54 18 000/-. BOTH THE PARTIES AGREED THAT THE F ACTS RELATING TO THE ADDITIONS WHICH HAVE BEEN TAKEN BY THE DEPARTMENT IN GROUND N O. 3 4 5 & 6 ARE THE SAME AND ALL THE ADDITIONS HAVE BEEN MADE ON THE BASIS O F THE DOCUMENTS FOUND FROM THE POSSESSION OF SHRI ANIL KUMAR AGARWAL. THE COPY OF THE DOCUMENTS SO SEIZED EVEN THOUGH REVENUE IS IN APPEAL HAVE NOT BEEN FIL ED BEFORE US EITHER BY THE REVENUE OR BY ASSESSEE. WE HAVE ALREADY CONFIRMED T HE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS.54 18 000/- ON THE BASI S OF THE FINDING GIVEN IN PARA 22 HEREINABOVE. SINCE THE FACTS INVOLVED IN THE ADDITI ONS GIVEN IN GROUND NO. 3 TO 6 ARE SAME THEREFORE RESPECTFULLY ENDORSING OUR REA SONING GIVEN IN THE SAID PARAGRAPH HEREINABOVE WHILE DISPOSING OF THE GROUND NO.2 WE CONFIRM THE ORDER OF CIT(A) IN RESPECT OF GROUND NO. 3 TO 6 AND HOLD THAT IT IS NOT A FIT CASE WHICH WARRANTS OUR INTERFERENCE. 30 26. IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. C.O. NO. 29/AGRA/2009 (A.Y. 2005-06): 27. GROUND NO.1 SINCE NOT PRESSED STANDS DISMISSED AS NOT PRESSED.. 28. GROUND NO.2 RELATES TO DISALLOWANCE OF RS.20 93 6/- BEING 1/5 TH OF TOTAL CLAIM OF THE VEHICLE MAINTENANCE CAR INSURANCE DEPRECIA TION AND TELEPHONE EXPENSES MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). 29. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERING THE SAME WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS VERY REASONABLE IN DISALLOWING 1/5 TH OF THE EXPENDITURE INCURRED FOR VEHICLE AND TELEPHO NE. THE PERSONAL USER OF THE VEHICLE AND TELEPHONE HAS NOT BEEN DENIED BY THE LE ARNED AR. THE ASSESSING OFFICER U/S. 38(2) CAN DISALLOW SUCH EXPENDITURE. H ENCE THIS GROUND OF CROSS OBJECTION STANDS DISMISSED. AS A RESULT THE C.O. F ILED BY ASSESSEE STANDS DISMISSED. ITA NO. 313/AGRA/2009 (A.Y. 2005-06) : 30. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO THE RECTIFICATION OF THE MISTAKE APPARENT ON RECORD. AFTER PASSING OF THE OR DER BY THE CIT(A) THE ASSESSEE MOVED APPLICATION U/S. 154/250 POINTING OUT THAT G ROUND NO. 9 IN THE SAID ORDER THOUGH HAS BEEN FULLY DISCUSSED AND DECIDED IN FAVO UR OF THE ASSESSEE ALONGWITH 31 THE OTHER GROUND IN PARA 10 OF THE SAID APPELLATE O RDER BUT WHILE GIVING FINAL RELIEF IN PARA 10(VIII) FOR QUANTIFYING THE RELIEF AND THE DELETION OF TOTAL ADDITIONS THIS AMOUNT OF RS.1 99 608/- WAS INCLUDED. THUS HE CONT ENDED THAT A MISTAKE APPARENT ON RECORD HAS ERUPTED IN THE ORDER OF CIT(A). THE C IT(A) RECTIFIED THE ORDER PASSED ALLOWING THE APPLICATION OF THE ASSESSEE. 31. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERED THE SAME. WE NOTED THAT THE CIT(A) HAS ALLOWED THE RELIEF TO THE ASSESSEE IN RESPECT OF RS.1 99 608/- UNDER PARA 10 OF THE IMPUGNED ORDER BUT WHILE QUANTIFYING THE RELIEF UNDER PARA 10(VIII) THE SUM OF RS.1 99 608/- WAS L EFT OUT. THUS THERE WAS A MISTAKE APPARENT ON RECORD AND THE CIT(A) HAS RIGHT LY RECTIFIED ITS ORDER. IN VIEW OF THIS WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) AND WE CONFIRM THE SAME. 32. IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ITA NO. 216/AGRA/2009 (2006-07): 33. GROUND NO.1 WE HAVE ALREADY DISMISSED WHILE DI SPOSING OF GROUND NO. 1 IN THE APPEAL FOR THE ASSESSMENT YEAR 2005-06 IN ITA N O. 215/AGRA/2009. 32 34. GROUND NO. 2 RELATE TO DELETION OF ADDITION OF RS.5 80 500/-. THE FACTS RELATING TO THIS ADDITION ARE THAT THE ASSESSEE WAS ALLOTTED LAND AT TAJ NAGARI AGRA BY ADA ON 06.03.2006 IN LIEU OF HIS LAND ACQUIRED B Y THE ADA. NO COST WAS PAID BY THE ASSESSEE EXCEPT THE COST INCURRED FOR STAMP DUTY AND OTHER CHARGES AMOUNTING TO RS.58 050 + 2551. ON THE BASIS OF STAM P DUTY THE VALUE OF THE LAND WAS WORKED OUT AT RS.5 80 500/-. THE LAND WAS ALLOT TED AGAINST THE LAND ACQUIRED BY ADA FOR WHICH THE COMPENSATION WAS GIVEN TO THE ASSESSEE AND TAXED IN THE EARLIER YEARS ALSO. ACCORDING TO THE ASSESSING OFFI CER THIS SUM REPRESENTS THE EXTRA CONSIDERATION RECEIVED BY THE ASSESSEE DURING THE Y EAR IN RESPECT OF ACQUISITION OF THE LAND. THE ASSESSEE WENT IN APPEAL BEFORE THE CI T(A). THE CIT(A) DELETED THE ADDITION ON THE BASIS THAT THE ASSESSEE SOLD THE LA ND IN ASSESSMENT YEAR 2007-08 AND SHOWN FULL CAPITAL GAIN ON THE SALE OF LAND TAKING SALE PRICE MINUS COST OF THE STAMP ONLY. 35. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY CONSIDERED THE SAME. THIS IS UN-CONTROVERTED FACT ON THE BASIS OF THE SUBMISSIONS MADE BY BOTH THE PARTIES THAT THE ASSESSEE WAS ALLOTTED LAND BY AGRA DEVELOPMENT AUTHORITY IN CONSEQUENCE OF THE ACQUISITION OF LAND BY AGRA DEVE LOPMENT AUTHORITY IN THE EARLIER YEAR. THE NATURE OF THIS LAND ALLOTTED BY T HE ASSESSEE IN OUR OPINION REPRESENTS THE ENHANCED COMPENSATION. IN VIEW OF PR OVISIONS OF SECTION 45(5)(B) 33 THE ENHANCED COMPENSATION HAS TO BE DEEMED TO BE TH E INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAIN OF THE PREVIOUS YEAR IN WHICH SUCH AMOUNT IS RECEIVED BY THE ASSESSEE. THEREFORE IN OUR OPINION THE CIT(A) WAS NOT CORRECT IN LAW IN DELETING THE ADDITION MERELY ON THE BASIS THAT THE ASSESSEE HAS SHOWN THE CAPITAL GAIN ON THE SALE OF THIS PLOT IN THE SUCCEEDING ASSESSMENT YEAR TAKING THE COST OF ACQUISITION OF THIS PLOT ONLY AT RS.60 565/- WHICH REPRESENTS THE EXPENSES INCURRED BY THE ASSESSEE IN RESPECT OF STAMP DUTY AND OTHER CHARGES FOR REGISTRATION IN HIS FAVOUR. UNDER THE INCOME-TAX ACT THE INCOME ACCRUING IN ON E ASSESSMENT YEAR HAS TO BE ASSESSED IN THE ASSESSMENT YEAR IN WHICH IT HAS ACC RUED OR RECEIVED IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME-TAX ACT. MERELY T HAT THE ASSESSEE HAS RETURNED THE INCOME IN OTHER ASSESSMENT YEAR THE INCOME CAN NOT ESCAPE ASSESSMENT IN THE ASSESSMENT YEAR IN WHICH IT WAS CHARGEABLE TO TAX. WE ACCORDINGLY SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND RESTORE THE ORDER OF THE ASSESSING OFFICER. THIS GROUND NO. 2 TAKEN BY THE REVENUE IS ALLOWED. 36. GROUND NO. 3 RELATES TO DELETION OF ADDITION OF RS.81 00 000/- BEING UNDISCLOSED INVESTMENT IN PURCHASE OF PROPERTY AT B UDERA BASAI AGRA. THE BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE HAD PURCHA SED A LAND AT BUDHERA BASAI ON 25.08.2005 FROM ONE SHRI MANGELAL SHOWING THE COST OF LAND AT RS.25 00 000/-.. ACCORDING TO THE ASSESSING OFFICER THE SELLER OF T HE LAND SHRI MANGELAL WAS 34 SUMMONED DURING THE INVESTIGATION WHO STATED THAT HE HAD SOLD THE LAND TO THE ASSESSEE FOR A SALE CONSIDERATION OF RS.1 16 00 000 /-. ON BEING ASKED THE ASSESSEE DENIED TO HAVE MADE ANY PAYMENT OVER AND ABOVE RS.2 5 00 000/-. THE ASSESSING OFFICER FINDING THE REPLY OF ASSESSEE UNSATISFACTO RY ADDED THE DIFFERENCE OF RS.81 00 000/- TO THE INCOME OF ASSESSEE AS UNEXPLA INED INVESTMENT IN PROPERTY U/S. 69A OF THE ACT. THE LEARNED CIT(A) AFTER CONSI DERING THE SUBMISSIONS OF THE ASSESSEE REMAND REPORT SOUGHT FROM THE ASSESSING O FFICER AND THE SUPPORTING EVIDENCES LAID ON RECORD ON BEHALF OF THE ASSESSEE DELETED THE ADDITION. 37. BEFORE US THE LD. DR SUBMITTED THAT THE CIT(A) HAS COMMITTED AN ERROR IN DELETING THE ADDITION WITHOUT APPRECIATING THE FACT S THAT THE SELLER OF THE LAND HAD STATED TO HAVE SOLD HIS LAND TO THE ASSESSEE FOR A CONSIDERATION OF RS.1 16 00 000/- AS AGAINST RS.25 00 000/- DECLARED TO HAVE BEEN PAI D BY THE ASSESSEE TOWARDS THE PURCHASE OF IMPUGNED LAND. HE THEREFORE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 38. THE LEARNED AR ON THE OTHER HAND SUBMITTED BE FORE US AS ALSO BEFORE THE CIT(A) THAT THE SELLER OF THE LAND SOLD HIS LAND TO TWO PARTIES. HALF OF THE SHARE WAS PURCHASED BY ASSESSEE AGAINST WHICH THE ASSESSEE MA DE PAYMENT OF RS.25 00 000/- BY PAY ORDER NO.111503 DATED 24.08.2005 DRAWN ON IC ICI BANK. THE OTHER HALF 35 SHARE WAS PURCHASED BY SHRI MADHUSUDAN NIRMAN PVT. LTD. WHO ALSO MADE THE PAYMENT OF RS.25 00 000/- THROUGH BANKING CHANNEL. THE SALE DEEDS OF BOTH THE PORTIONS OF LAND WERE EXECUTED ON 25.08.2005 IN FAV OUR OF BOTH THE PROSPECTIVE BUYERS AND THE SAME CONSIDERATION OF RS.25 LAKHS EA CH WAS RECEIVED BY THE SELLER AND DEPOSITED BY HIM IN HIS BANK ACCOUNT NO.1019933 997 WITH STATE BANK OF INDIA TAJGANJ FATEHABAD ROAD AGRA. COPY OF BANK ACCOUNT OF SHRI MANGE LAL WAS ALSO FILED. THE LD. COUNSEL FURTHER SUBMITTED T HAT THE STAND OF ASSESSING OFFICER IS BASED MERELY ON THE ALLEGED STATEMENT OF THE SELLER WHICH HAS BEEN CHALLENGED BY ASSESSEE STATING THAT COPY OF SUCH ST ATEMENT OF SELLER ALLEGEDLY RECORDED AT THE BACK OF ASSESSEE WAS NEITHER SUPPL IED TO THE ASSESSEE NOR THE STATEMENT MAKER WAS ALLOWED TO BE INTERROGATED BY T HE ASSESSEE NOR THE DEPARTMENT BOTHERED TO INTIMATE THE ASSESSEE ABOUT THE ALLEGED STATEMENT FOR CROSS EXAMINATION WITH THE PERSON MAKING STATEMENT. THERE IS NO MENTION IN THE ASSESSMENT ORDER AS TO WHICH AUTHORITY RECORDED THE SAID STATEMENT. INVITING OUR ATTENTION TO PAGE 104 OF THE PAPER BOOK CONTAINING AFFIDAVIT OF THE SELLER SHRI MANGELAL HE SUBMITTED THAT THE SELLER OF THE LAND HAS CONFIRMED HAVING RECEIVED ONLY RS.25 00 000/- AS SALE CONSIDERATION OF LAND F ROM THE ASSESSEE AND HAS CATEGORICALLY DENIED TO HAVE GIVEN ANY SUCH STATEME NT BEFORE ANY OF THE AUTHORITIES AS ALLEGED BY THE DEPARTMENT. HE THEREFORE RELIED ON THE ORDER OF CIT(A). 36 39. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY CONSIDERED THE SAME. WE FIND CONSIDERABLE SUBSTANCE IN THE CONTENT IONS OF THE LEARNED AR. IT IS NOTABLE THAT PAYMENT OF RS.25 00 000/- AS COST OF T HE LAND MADE BY THE ASSESSEE STANDS PROVED BY DOCUMENTARY EVIDENCE IN THE SHAPE OF REGISTERED SALE DEED OF PROPERTY THE PAYMENT HAVING BEEN MADE THROUGH BANK ING CHANNEL BANK STATEMENT OF THE SELLER WHO DEPOSITED THE SALE CONSIDERATION OF RS.25 00 000/- RECEIVED FROM THE ASSESSEE IN HIS BANK ACCOUNT NO. 1019933997 WIT H STATE BANK OF INDIA TAJGANJ FATEHABAD ROAD AGRA. THE INVESTMENT OF RS .25 00 000/- IN THE PURCHASE OF PROPERTY FURTHER STANDS SUPPORTED BY THE FACT TH AT HALF OF THE LAND WAS SOLD BY THE SAME SELLER TO OTHER PARTY SHRI MADHUSUDAN NIRMAN P VT. LTD. FOR A SALE CONSIDERATION OF RS.25 00 000/- ON THE SAME DAY AND THE PAYMENT FROM THIS BUYER WAS ALSO DEPOSITED BY THE SELLER IN HIS SAME BANK A CCOUNT. THE ALLEGATION OF THE REVENUE THAT THE ASSESSEE MADE INVESTMENT IN PURCHA SE OF SAID LAND OF RS.1 16 00 000/- IS NOT FOUND SUPPORTED BY ANY CORR OBORATING EVIDENCE EXCEPT THE ALLEGED STATEMENT OF THE SELLER WHICH TOO HAS BEEN DENIED TO HAVE BEEN GIVEN BY SELLER BEFORE ANY OF THE TAX AUTHORITIES BY FILING AFFIDAVIT BEFORE THE CIT(A). IN THE REMAND REPORT SOUGHT BY THE CIT(A) NO ADVERSE COMM ENTS HAVE BEEN GIVEN BY ASSESSING OFFICER. IT IS NOT IN DISPUTE THAT THE DE PARTMENT HAS NOT SUPPLIED THE COPY OF ANY SUCH STATEMENT TO THE ASSESSEE NOR GOT THE A SSESSEE CROSS EXAMINED WITH THE STATEMENT MAKER BEFORE APPLYING THE ALLEGED STATEME NT AGAINST THE ASSESSEE. 37 THEREFORE SUCH STATEMENT IN OUR OPINION WOULD NO T IPSO FACTO MAKE OUT A CASE AGAINST THE ASSESSEE. THE EXPRESS DENIAL OF GIVING ANY SUCH STATEMENT BY THE STATEMENT MAKER IN HIS AFFIDAVIT AND LACK OF CORROB ORATING EVIDENCE WITH THE REVENUE TO SUPPORT THE ALLEGED STATEMENT LEAD US T O PLACE CREDENCE ON THE CONTENTION OF ASSESSEE THAT HE MADE NO INVESTMENT I N THIS PROPERTY OVER AND ABOVE RS.25 00 000/- AND FOR WANT OF ANY EVIDENCE THE ON US THAT LAY ON THE REVENUE DOES NOT STAND DISCHARGED. IN PRESENCE OF THESE FAC TS WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF CIT(A) ON THIS COUNT. T HIS GROUND OF REVENUE IS THEREFORE REJECTED. 40. IN THE RESULT THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. C.O. NO.27/AGRA/2009 (A.Y. 2006-07) : 41. GROUND NO.1 SINCE NOT PRESSED STANDS DISMISSED AS NOT PRESSED. 42. GROUND NO.2 RELATES TO DISALLOWANCE OF RS.10 46 7/- BEING 1/5 TH OF TOTAL CLAIM OF THE VEHICLE MAINTENANCE CAR INSURANCE DEPRECIA TION AND TELEPHONE EXPENSES MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). 43. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERING THE SAME WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS VERY REASONABLE IN DISALLOWING 1/5 TH 38 OF THE EXPENDITURE INCURRED FOR VEHICLE AND TELEPHO NE. THE PERSONAL USER OF THE VEHICLE AND TELEPHONE HAS NOT BEEN DENIED BY THE LE ARNED AR. THE ASSESSING OFFICER U/S. 38(2) CAN DISALLOW SUCH EXPENDITURE. H ENCE THIS GROUND OF CROSS OBJECTION STANDS DISMISSED. AS A RESULT THE CROSS OBJECTION OF ASSESSEE IS DISMISSED. 44. IN THE RESULT ITA NO. 215 & 213/AGRA/2009 FILE D BY REVENUE ARE DISMISSED. ITA NO. 216/AGRA/2009 FILED BY REVENUE IS PARTLY AL LOWED. THE CROSS-OBJECTIONS NOS. 29 & 27/AGRA/2009 FILED BY ASSESSEE ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.3.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18 TH MARCH 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT CONCERNED 5. DR ITAT AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY