Shree Narayan Meena Vs ITO (ITAT Jaipur)
Conclusion: AO was justified in making addition under section 68 on account of unexplained cash deposits found in bank account in case having regard to the human probabilities and normal course of human conduct, explanation offered by assessee was not wholesome, credible and verifiable.
Held: During the course of assessment proceedings, assessee was asked to furnish source of cash deposits in his bank account exceeding Rs. 10,00,000/- during the financial year. Assessee submitted that based on the power attorney issued in his name by the land owners and on behalf of the land owners, he had sold land during the year to S. It was submitted by assessee that from time to time money was received from S and based on the same, the post-dated cheques issued by him in favour of the land owners were presented by the land owners and cleared from his bank account. AO however made addition under section 68 on account of alleged unexplained cash deposits in bank account. Since assessee was beneficiary, hence the addition was made in the hands of assessee on substantive basis and the matter was referred to the Income-tax Officer, Ward -2(3), Jaipur for making addition on protective basis in the hands of S. It was held where any sum was found credited in the books maintained by assessee, the primary requirements, which should be satisfied cumulatively by assessee in such cases was identification of the person, creditworthiness of that person and the genuineness of the transaction which had not been satisfied in the instant case. The explanation offered and material submitted by assessee in support of its explanation was not wholesome, credible and verifiable. These requirements had been examined in the instant case having regard to the human probabilities and normal course of human conduct and it was found that the explanation offered by assessee at this stage had not been satisfied. AO had rightly brought to tax the unexplained cash deposits found deposited in the bank account.
FULL TEXT OF THE ITAT JUDGEMENT
This is an appeal filed by the assessee against the order of Ld. CIT(A)-II, Jaipur dated 09.12.2013 for A.Y. 2009-10 wherein the assessee has taken following grounds of appeal:-
“1. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition o f Rs. 63,38,820/- on account of alleged unexplained cash deposits in bank account. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 63,38,820/-.
2. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition of Rs. 16,10,491/- on account of alleged unexplained cheques deposits in bank account. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 16,10,491/-.
3. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition o f Rs. 31,50,000/- on account of alleged income on sale of plot No. 143 Swaroop Vihar, Jagatpura, Jaipur. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 31,50,000/-.
4. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in not accepting the gift of Rs. 2,00,000/- received from brother although no separate addition is made on this account. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 2,00,000/-.
2. Regarding first ground of appeal, brief facts of the case are that the return of income was filed by the assessee declaring an income of Rs. 1,48,340/- which was assessed at Rs. 1,12,57,130/- u/s 143(3) of the Act. During the course of assessment proceedings, the assessee was asked to furnish source of cash deposits in his bank account, maintained with Punjab Nation Bank, Bapu Nagar, Jaipur, exceeding Rs. 10,00,000/- during the financial year. It was submitted by the assessee that based on the power attorney issued in his name by the land owners and on behalf of the land owners, he has sold land during the year to Shri Shravan Kumar S/o Ramu R/o Ashok Pur, New Sanganer, Sodala, Jaipur. It was submitted by the assessee that from time to time money was received from Shri Shravan Kumar and based on the same, the post-dated cheques issued by him in favour of the land owners were presented by the land owners and cleared from his bank account. The Assessing Officer observed that the land was sold on 28.10.2006 and 11.01.2007 but the sale consideration was received by the assessee almost after 15th to 18th months which cannot be believed. Further, the assessee has not given the complete address of Shri Shravan Kumar and even his PAN details were not submitted by the assessee. Thereafter, the assessee started avoiding attending to the assessment proceedings and as a result, notice u/s 142(1) was issued requiring the assessee to furnish source of cash deposits in his bank account and it was also stated in the said notice that in case of non compliance, assessment will be completed u/s 144 and entire deposits in his bank account will be added to his total income. Subsequently, on receipt of such notice, the assessee came forward and attended the assessment proceedings and filed an affidavit from Shri Shravan Kumar where he had admitted that he had purchased land on power of attorney and paid cash to the assessee from time to time in lieu of which assessee has issued cheques to the land owner. The Assessing officer did not find the affidavit as reliable piece of evidence for various reasons discussed in the assessment order. Some of the reasons given by the Assessing officer are worth noting which are as follows:
“1. He had not mentioned any details of cash paid by him i.e. dates and amounts when he had paid cash to Shree Narayan Meena.
2. Details of colony developed by him were not mentioned.
3. The land was purchased by him in October, 2006 and January, 2007 and payments were made in May 2008 onwards, making payments after 15th to 18 months and reasons for delayed payments were not given. ”
3. Thereafter, the assessee was asked to produce Shri Shravan Kumar but he avoided presenting him and in turn requested the Assessing Officer to issue summons u/s 131 of the Act. However, in absence of complete address, the Assessing Officer could not issue the summons to Shri Shravan Kumar.
4. In the mean time, on 12.12.2011, the assessee filed written submission before the Ld. AO which interalia contains following submission:-
“3. That Mr. Sharwan Lal has purchased land at Shrikishanapura (Jagatpur Tehsi Sanganer, Jaipur by registered sale deed through power of attorney of Mr. Shri Narain Meena and details of all these transactions are already on record and after purchasing above land, Shri Sharwan Lal has developed scheme known as Nehru enclave extension and get the land divided in various plots and started selling the same and out of sale proceeds, Mr. Sharwan Lal started making payment to me so that I can clear the cheques mentioned in registered sale deed and I will submit detailed site plan, list of plot holders to whom plots were sold and area of each plot and amount received against each plot within a weeks time.
4. I had given complete address of Shri Sharwan Lan and Smt. Ruby Srivastav and I further request you to please issue summons for getting other detailed information from them and I am prepared to bear the cost of summoning them.
5. I am also trying to collect all those relevant information from those persons and no sooner I get the information I will submit the same to you immediately. ”
5. Thereafter, summons u/s 131 were issued to Shri Shravan Kumar who finally appeared before the AO on 16.12.2011 where his statement were recorded u/s 131 of the Act. However for details reasons given in the assessment order, the AO did not believe the said statement to be reliable piece of evidence to substantiate the source of cash deposits in the assessee’s bank accounts and in particular the creditworthiness of Shri Shravan Kumar.
6. Thereafter assessee was again given an opportunity to submit the details of money received from Shri Shravan Kumar and dates when it was received and details of payments made to the farmers when the payments were made however there was no compliance on the part of the assessee and thereafter, the Assessing Officer finally made the addition of Rs. 63,38,820/- as unexplained cash deposits with the following final findings:-
“In absence of details mentioned at Sl. No. a to o, it cannot be believed that the assessee has received any cash from Shri Sharwan Kumar during the year under consideration. Therefore, I hold that the cash deposited in the bank accounts of assessee was the undisclosed income of assessee which was deposited in bank account. The peak of cash deposited and withdrawn from all the three bank accounts is enclosed as Annexure-A to this order. As per this annexure total peak comes at Rs. 63,38,820/-. The same is held as unaccounted income of the assessee and added to his total income. Thus Rs. 63,38,820/- is added to the total income of the assessee.
Since the assessee is beneficiary, hence the addition is made in the hands of assessee on substantive basis. The matter is referred to the Income-tax Officer, Ward -2(3), Jaipur for making addition on protective basis in the hands of Shri Sharwan Kumar.”
7. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) wherein following submissions were made and which were again reiterated during the course of hearing before us:
“7. Briefly the facts of the case are that the assessee appellant aged about 39 years completed his MA in Sociology in the year 1996 and belongs to a small village Bassi where his father is involved in farming and is currently residing at Jagatpura, Jaipur. After completing his education, he was in search of some livelihood.
7.1 He was a man of meagre means. He belonged to an agriculturist family.
He had no resources to do any real estate business. However, since he was of rural background he thought if fit to do dalali business where he could locate prospective sellers of the farm land and get them appropriate buyers.
7.2 The assessee appellant, under his normal course of dalali business, came in contact with the following persons:
a. Ganga Devi
b. Shri Mool chand
c. Shri Ramjilal
d. Shri Ramdhan
7.3 The above persons had a land situated near a nullah, in village Vidhani, Goner Road. The land owners were belonging to Scheduled Caste, and therefore, their land could be purchased by other persons of the same caste only. Moreover, the land of these persons was located near a Nullah and the land owners were unable to find a buyer by themselves. Under these circumstances, the assessee appellant found a willing buyer of this land, Shri Shravan Kumar. However, looking to so many strings attached ( limitation of SC and location near a Nullah) to the land deal; it was agreed amongst the buyer and the sellers that they will execute registries in favour of the buyer Shri shravan Kumar. It was also mutually agreed that they will receive post dated cheques against the sale consideration which will be presented for clearing on a later date with the prior approval of Shri Shravan Kumar. Unfortunately, Shri Shravan Kumar, the buyer of the land did not have any bank account at that point of time. The bank account of Shri Shravan Kumar was opened in March, 2012, Shri Shravan Kumar’s earlier bank account with UCO Bank in NBC Campus, Jaipur became inoperative after his retirement from NBC in the year 1999. Ignorant of the legal consequences and driven by his zeal to complete the deal, the assessee appellant issued cheques of his own bank account with the understanding that cash will be made available by Shri Shravan Kumar which will be deposited by the assessee appellant and the cheques will be cleared in favour of the land owners (sellers). It was also decided that Shri Shravan Kumar will be allowed some time to develop the said land and find prospective buyers from whom Shri Shravan Kumar could receive money for payment to the land owners (sellers).
7.4 On the basis of being a local acquaintance to the land owners, the land owners executed Power of Attorney in favour of the assessee appellant and the assessee appellant, in turn, on the basis of that authority executed the sale deeds in favour of Shri Shravan Kumar.
The land owners executed the following power of Attorney in favour of the appellant:
