When the assessee failed to prove the capacity of the concerned persons who alleged to have given the unsecured loan and/or gift, it cannot be said that the learned Tribunal has committed any error in confirming the additions made by the Assessing officer and confirmed by the CIT (Appeals) of Rs.19,92,730/- as unsecured cash credit. Now, so far as submission on behalf of the assessee that all the concerned persons gave their confirmation, the aforesaid confirmations are neither here or there. These confirmations are required to be decided and/or considered along with the capacity / financial capacity of the concerned persons. Mere confirmation alone is not sufficient. In a given case, it may happen that a labourer may give a confirmation of Rs.1 Crore, but ultimately the same is to be decided or considered, considering his paying capacity.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
M.R. Shah, J. – Feeling aggrieved and dissatisfied with the impugned judgment and order dated 02.02.2018 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Ahmedabad in ITA Appeal No.861/Ahd./2015 for the Assessment Year : 2006-2007, by which the learned Tribunal dismissed the Appeal preferred by the assessee and confirmed the addition made by the Assessing Officer and further confirmed by the learned CIT (Appeals) of Rs.18,26,730/- as unexplained cash credit, the assessee has preferred the present appeal with the following proposed question of law :
“(i) Whether on the facts and in the circumstances of the case as well as on law the Tribunal was right in law in not allowing relief in reference to addition made towards unsecured loans / gifts amounting to Rs.18,48,730/-?
(ii) Whether on the facts and in the circumstances of the case the Tribunal has erred in law and on facts in not considering the arguments and paper books filed by the Appellant and therefore, it is prayed that the matter should go back to the final fact finding body i.e. Income Tax Appellate Tribunal?”
2. The facts leading to filing of the present Appeal, in a nutshell, are as under :—
(a) That the assessee filed a return of income for the Assessment Year 2006-2007. Through annual information return, information was received by the Department that the assessee has made deposits of Rs.19,92,730/- in his bank account. The case was therefore, re-opened based on the above information. Notice under Section 148 of the Act was issued to the assessee. Thereafter, notice under Section 143(2) and 142(1) of the Act dated 03.07.2013 alongwith questionnaire, calling for certain details was issued by the assessing officer and served upon the assessee. No submissions were made nor any one attended. Thereafter, further letters were issued and served upon the assessee for furnishing the details as called for. Still nobody appeared. Thereafter, a show-cause notice was issued which was served personally on the assessee. In the show-cause notice, the assessee was called upon to show-cause why the addition / disallowance on additional cash deposits as well as other credits in the bank account and the addition of interest received from the Bank be not disallowed and why the penalty under Section 271(f) of the Act should not be levied? Despite the same, the said letter remained uncomplied with. Therefore, the assessing officer proceeded further ex-parte and considering the material on record, made an addition of Rs.18,49,305/- into the total income as unexplained cash credit.
(b) Before the CIT (Appeals), the assessee was unsuccessful. In the Appeal before the learned Tribunal, the learned Tribunal by the impugned order has also dismissed the said Appeal and hence, the assessee is before this Court.
3. We have heard learned Counsel Mr. Ketan H. Shah appearing on behalf of the assessee. It is vehemently submitted by learned Counsel Mr. Ketan H. Shah that the learned Tribunal has materially erred in dismissing the Appeal without considering the material produced along with the Paper Book which was produced before the learned CIT (Appeals). It is submitted that the learned Tribunal has not properly appreciated the fact that those persons who made the gift have specific confirmations and therefore, the learned Tribunal ought to have allowed the Appeal and disallow the addition made by the Assessing Officer.
4. Having heard learned Advocate appearing on behalf of the appellant – assessee, and considering the material on record, and even considering the impugned orders, it appears that the assessee has shown receipt of Rs.19,92,730/- by way of unsecured loan and/or gift from various persons. However, on appreciation of evidence, and by giving cogent reasons, the learned CIT (Appeals) as well as the learned Tribunal has doubted the capacity of the concerned persons, who are alleged to have given the unsecured loan / gift. As per the assessee, he received a total sum of Rs.19,92,730/- by way of unsecured loan and/or gift as under :—
|Name||Unsecured loan||Gift||Confirmation||Statement recorded|
|Rameshbhai Patel||18500||–||Yes||Yes, Dt.30.09.14|
|Arvindbhai Patel||18500||–||Yes||Yes, Dt.20.08.14|
|Harshad Patel||18500||–||Yes||Yes, Dt.17.09.14|
|Ashmitaben||–||5,00,000||Yes||Yes, Dt.23.09.14 (Karshanbhai)|
|Karshanbhai Kakadia||–||5,00,000||Yes||Yes, Dt.23.09.14|
|Bharat Patel||19000||–||Yes||Yes, Dt.09.10.14|
|Amrat Patel||–||2,50,000||Yes||Expired, Dt.26.12.10|
5. The aforesaid have been considered by the learned Tribunal in detail. On appreciation of evidence, the learned Tribunal has observed in Paragraph 5 as under :—
“5. We have gone through the relevant record and impugned order. Appellant received gift of Rs.17,00,000/- from relatives and Rs.1,50,400/-borrowings from relative and friends.
With regard to the disallowance and addition made of Rs.17,00,000/- being claimed by the appellant, as gift were received from the following persons.
|(1)||Rs.5,00,000/- from father in law.|
|(2)||Rs.5,00,000/- from Ashmitaben S. Patel who in turn from her father Shri Karsan Naran Kalariya|
|(3)||Rs.2,50,000/- from his brother Shri Amratlal Ramchanddas Patel.|
|(4)||Rs.4,50,000/- from Ashitaben Sitarambhai Patel who in turn from her uncle Shri Ramniklal N. Kalaria.|
In the remand report, AO mentioned that gift from relatives of Rs.17,00,000/- and borrowing from friends and relatives of Rs.1,50,400/- cannot be accepted as depositors are mostly labourers working in APMC Market and appellant has proved the paying capacity of such borrowings. Appellant could not prove such borrowings. It is also a fact, that they have not been maintaining any accounts and their statements were recorded on oath. The contention of the appellant that the borrowings had been repaid to them is baseless and made up story and an afterthought. Further, the contention of the appellant that the donors had confirmed on oath in their statements that they had given the gift out of agricultural income is also doubtful in the absence of documentary evidences. To prove source of such gift no evidences have been produced before the AO either during the assessment proceedings or remand proceedings. It was a claim of the appellant that the source of such gifts were from agricultural income and pass savings of the donors but appellant failed to produce any bank statement to prove that gift was given from past savings. Appellant has been failed to produce either before the authorities below or before us that sale of agriculture produced receipts and bills etc. in support of his contention and not even a single transaction have been entered through bank.
A statement of Shri Krashan Naran Kaladiya S/o Shri Naran Kaladiya was recorded by the AO u/s. 131 of the I.T. Act at Page No.31 and 32, he stated that he owned 14 Bigha agricultural land and his total crops was 500 Mann (1 Mann = 20 Kg) and 500 mann peanuts produce from agriculture land. We are just fail to understand how this much of land can produce such a huge crop. It is a matter of research for the Agriculture Scientist as well. This statement cannot be relied upon and in support of its contention he has not produced any certificate from the agriculture department and when he was specifically asked whether he has maintaining any record then in reply he stated that he does not have any documentary evidence and moreover he has not maintaining any account of agriculture produce and bank account. He further stated that he does not have any gift deed when he gifted the amount to the relatives. So in our considered opinion, appellant has been failed to prove his case as he has not maintaining any bank account nor his relatives and friends are maintaining any bank account either they are labourers or framers. Therefore, there credit worthiness is in doubt.”
6. Considering the aforesaid facts and circumstances and when the assessee failed to prove the capacity of the concerned persons who alleged to have given the unsecured loan and/or gift, it cannot be said that the learned Tribunal has committed any error in confirming the additions made by the Assessing officer and confirmed by the CIT (Appeals) of Rs.19,92,730/- as unsecured cash credit. Now, so far as submission on behalf of the assessee that all the concerned persons gave their confirmation, the aforesaid confirmations are neither here or there. These confirmations are required to be decided and/or considered along with the capacity / financial capacity of the concerned persons. Mere confirmation alone is not sufficient. In a given case, it may happen that a labourer may give a confirmation of Rs.1 Crore, but ultimately the same is to be decided or considered, considering his paying capacity.
7. In the facts and circumstances narrated herein above and for the reasons enumerated, it cannot be said that the Tribunal has committed any error. No substantial question of law arises in the present Appeal and therefore, the present Appeal deserves to be dismissed and is accordingly dismissed.