Where having regard to human probabilities and normal course of human conduct, explanation furnished by assessee as regards cash deposits in his bank account was not wholesome and verifiable, AO was justified in making addition under section 68

0
103

Where having regard to human probabilities and normal course of human
conduct, explanation furnished by assessee as regards cash deposits in his bank
account was not wholesome and verifiable, AO was justified in making addition
under section 68

NARAYAN MEENA vs. INCOME TAX OFFICER

ITAT, JAIPUR TRIBUNAL
KUL BHARAT, JM & VIKRAM SINGH YADAV, AM.
ITA No. 139/JP/14
6th September, 2017
(2017) 51 CCH 0541 JaipurTrib
(2017) 59 ITR (Trib) 0403 (Jaipur)
Legislation Referred to
Section 68, 69, 56(vii)(a)
Case pertains to
Asst. Year 2009-10
Decision in favour of:
Revenue
Income Cash credits Unexplained cash deposits Addition Return of income
was filed by assessee declaring income which was assessed u/s 143(3) During
course of assessment proceedings, assessee was asked to furnish source of cash
deposits in his bank account, maintained with Bank AO treated cash deposited in
bank account of assessee as unexplained cash deposits AO held that, in absence
of details, it could not be believed that assessee had received any cash from X
during year under consideration, thus AO finally made addition as unexplained
cash deposits CIT(A) confirmed order of AO Assessee claimed that, CIT(A) had
erred in confirming action of AO in making addition on account of alleged
unexplained cash deposits in bank account Held, where any sum was found
credited in books maintained by assessee, section 68 required that assessee
should offer explanation about nature and source of such sum found credited in its
books of accounts to satisfaction of AO In absence of explanation, or in event of
explanation being not found satisfactory, sum so credited would be included in
income of assessee Where any sum was found credited in books maintained by
assessee, primary requirements, which should be satisfied cumulatively by
assessee in such cases was identification of person, creditworthiness of that
person and genuineness of transaction which had not been satisfied in instant
case—Explanation offered and material submitted by assessee in support of its
explanation was not wholesome, credible and verifiable—Explanation offered by
assessee at this stage didn't passes this muster and initial onus cast on assessee
had not been satisfied—AO had also carried out necessary verification and had
rightly brought to tax unexplained cash deposits found deposited in bank
account—Assessee’s appeal dismissed.
Held:

As tribunal had stated above, where any sum was found credited in the books maintained
by the assessee, the primary requirements, which should be satisfied cumulatively by the
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 the assessee in support of its explanation is
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 tribunal found that the explanation offered by the assessee at this stage did n't passes
this muster and the initial onus cast on the assessee has not been satisfied. In the instant
case, the Assessing officer had also carried out necessary verification and had rightly
brought to tax the unexplained cash deposits found deposited in the bank account.Tribunal
had also gone through the various decisions cited by the ld AR and same had been rendere
in the peculiar facts and were thus distinguishable and doesn't support the case of       the assessee. At the same time, the broad legal proposition emerging therefrom had been duly considered. In the result, ground of appeal was dismissed.
(Para 20)
Conclusion:
Where any sum was found credited in books maintained by assessee, section 68 required
that assessee should offer explanation about nature and source of such sum found credited
in its books of accounts to satisfaction of AO and in absence of explanation, or in event of
explanation being not found satisfactory, sum so credited would be included in income of
assessee.
In favour of:
Revenue
Income from other sources—Gift—Addition—Assessee received sum which was
claimed to be received as gift from Y, elder brother of assessee's wife—Copy of gift
deed had been claimed to be submitted during assessment proceedings and source
of income had not been mentioned—Hence, AO didn't accept explanation of
assessee and made addition—On appeal, CIT(A) confirmed AO's order—Assessee
claimed that, CIT(A) had erred in confirming action of AO in not accepting gift
received from brother although no separate addition was made on this
account—Held, as per section 56(vii)(a), gift of money without consideration from
wife's brother could not be brought to tax as income in hands of assessee and
affidavit in this regard had been filed during course of assessment
proceedings—However, contents of confirmation/affidavit were not on record
which could help determine creditworthiness and genuineness of transaction by
way of gift as claimed—Order of CIT(A) confirmed—There would not be any
separate addition on this account.
Held:
As per section 56(vii)(a), a gift of money without consideration from wife's brother could not be brought to tax as income in the hands of the assessee and an affidavit in this regard had been filed during the course of assessment proceedings. However, the contents of the confirmation/affidavit were not on record which could help determine the creditworthiness and genuineness of the transaction by way of gift as claimed. Tribunal accordingly confirm the order of the ld CIT(A). At the same time, on perusal of the assessment order, tribunal found that there was no separate addition made by the AO and the amount of Rs 2 lacs was part of unexplained cash deposit of Rs 63,38,820 which had already been confirmed as discussed in ground no. 1 supra. In light of the same, there would not be any separate addition on this account.
(Para 31)
Conclusion:
Where there was creditworthiness and genuineness of transaction by way of gift, addition
made on that ground would be justified.
In favour of:
Revenue
Case referred to
Kanhaialal Jangid v Asstt CIT (2008) 217 CTR (Raj) 354
Aravali Trading Co v ITO (2008) 220 CTR (Raj) 622
Labh Chand Bohra v ITO (2010)189 Taxman 141 (Raj)
CIT, Ajmer v Jai Kumar Bakliwal (2014) 366 ITR 217(Raj)
CIT v. Orissa Corporation (P.) Ltd. [1986] 159 ITR 78/25 Taxman 80 (SC)
Counsel appeared:
Rajeev Sogani (C.A.) for the Assessee.: Roshanta Meena (Addl.CIT) for the Revenue
ORDER
VIKRAM SINGH YADAV, AM. :

1. 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 of 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 of 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 15 th 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. Smt. 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:

Name                   Date of Execution of Power Attorney
Smt. Ganga Devi     6th September, 2006
Shri Mool Chand      6th September, 2006
Shri Ramjilal           6th September, 2006
Shri Ramdhan         6th September, 2006

The land of the above mentioned land owners were sold by the assessee appellant on the
basis of Power of Attorney to Shri Shravan Kumar through the following sale deeds:

Name                        Date of Execution of Sale Deed
Smt. Ganga Devi          11th January, 2007
Shri Mool Chand           11th January, 2007
Shri Ramjilal                28th October, 2006
Shri Ramdhan              28th October, 2006

7.5 In terms of the above understanding amongst the parties, the sale deeds were executed
by the sellers through the Power of Attorneys wherein post dated cheques were issued. In
sale deed, the cheque numbers were mentioned that were issued as consideration. These
very cheques were cleared in favour of the sellers by depositing the cash received from Shri Shravan Kumar.
7.6. The above facts were placed before the ld AO during the course of assessment
proceedings. Shri Shravan Kumar also appeared before the ld. AO on 16 th December, 2011.
His statements were recorded by the ld. AO Shri Shravan Kumar confirmed the nature of
transaction and also confirmed that the land was purchased by him (Shri Shravan Kumar).
Shri Shravan Kumar also confirmed having made available cash to the assessee appellant
for clearing the cheques.
7.7 The ld. AO, without bringing any material to support his action, disregarded the
complete facts including the statement and the affidavit given by Shri Shravan Kumar. The
ld. AO treated the cash deposited in the bank account of the assessee appellant as unexplained cash deposits and added a sum of Rs. 63,38,820/- by calculating the peak
amount.
8. During the course of hearing, the ld. AO totally disregarded the facts confirmed by Shri
Shravan Kumar during the course of his statements recorded by the ld. AO. The ld. AO has
given reasons for not accepting the facts so emerging of his order. The reasons so given by
the ld. AO have no relevance to the issue which he was expected to decide. Shri Shravan
Kumar had categorically confirmed that he had made available the cash and the cheques to
the assessee appellant so that the cheques issued to the land owners could be cleared from
the bank statement of the assessee appellant.
The same facts were also confirmed by Shri Shravan Kumar vide certificate given by Shri
Shravan Kumar.
Further, these facts were also confirmed by way of his sworn affidavit by Shri Shravan
Kumar.
• The ld. AO's reason for not accepting the said confirmations by Shri Shravan
Kumar were that Shri Shravan Kumar did not mention the dates on which he handed
over the cash to the assessee appellant. Not remembering the dates cannot be so
fatal to disbelieve the entire confirmation.
• Further, the ld. AO disregarded Shri Shravan Kumar's statements because he did
not remember the details of plots sold by him rates at which plots were sold, colony
which were developed, he was assessed to tax or not etc.. All these issues are not
relevant. The ld. AO has not disputed the fact of the lands having been purchased by
Shri Shravan Kumar. Once this fact is undisputed, details of subsequent sale by Shri
Shravan Kumar can have no bearing on the earlier part of the deal.
• The ld. AO has also taken a plea that if cash is paid by Shri Shravan Kumar then
the same is disallowed in his hands u/s 40A(3). This cannot be a reason for not
believing the proof of cash having been received from Shri Shravan Kumar.
• The other reasons like Shri Shravan Kumar being a checker in NBC, Jaipur and
after retirement purchased mini bus and truck and sold the same at loss had no
bearing on the issue before the ld. AO.
• Another reasons mentioned by the ld. AO is that payments by Shri Shravan Kumar
being made after a lapse of 15-18 months from the date of purchase of land cannot
be believed. This is a fact not only confirmed by the assessee appellant but also by
Shri Shravan Kumar and is fully corroborated by the gap in execution if registryand
cheques cleared in favour of land owners. Nothing more is needed to substantiate
this aspect which the ld. AO has ignored without giving any cogent reason.
8.1 Analysis of the sale deeds executed by the assessee appellant in favour of Shri Shravan
Kumar will reveal the following vital facts which were before the ld. AO himself:
A. The cheque numbers mentioned in the sale deeds are cleared from the bank account of
the assessee appellant in favour of the original land owners:

Particulars Details of
Cheques In
Sale Deed

Amount Date of
Clearance of
Cheque

P.B
In Pass
Book

In Sale
Deed

Sale Deed for Smt.
Ganga Devi Executed on
11th January 2007 at Rs.
99,00,000

183270 11,00,000/- By Shravan
Kumar

29

183271 11,00,000/- By Shravan
Kumar

29
183272 11,00,000/- 26.09.2011 59 29
183273 11,00,000/- 03.07.2008 55 29
183274 11,00,000/- 29.07.2008 55 29
183275 11,00,000/- 04.09.2008 55 29
183276 11,00,000/- 08.07.2010 59 29
183277 11,00,000/- 04.03.2009 57 29
183278 11,00,000/- 24.09.2009 58 29
Total 99,00,00/-

Sale Deed for Shri Mool
chand Executed on 11th
January 2007 at Rs.
33,00,000

183267 11,00,000/- Replaced by
New Cheque

25
183268 11,00,000/- 03.06.2008 55 25
183269 11,00,000/- 16.09.2008 56 25
Total 33,00,000/-

Sale Deed for Shri
Ramdhan and Ramjilal 671609

7,44,000/- Replaced by
New Cheque

21

executed on 28 th October,
2006 at Rs. 14,88,000

671608

7,44,000/- Replaced by
New Cheque

21
Total 14,88,000/-

The fact that the cheques were given in advance is established from the fact that they are
not cleared in chronological order.
B. Following cheques became stale, and therefore, were replaced by the assessee appellant.
The replaced cheques were also cleared in favour of the land loners:

Name Amount Old Cheque

No.

New Cheque
No.

P.B. Date of
clearance of
cheque
Shri Ramjilal 7,44,000 671609 883893 56 19.12.2008
Shri Ramdhan 7,44,000 671608 883892 56 17.12.2008
Total 14,88,000

C. Following cheque was lost by the land owner and was replaced by the assessee appellant
which was cleared in favour of the land owner:

Name Amount Old Cheque

No.

New Cheque
No.

P.B. Date of
clearance of
cheque
Shri Mool chand 11,00,000 183267 883894 56 23.12.2008
Total 11,00,000

D. Following cheques originally issued to Smt. Ganga Devi by assessee appellant were
misplaced by her and were replaced by Shri Shravan Kumar himself:

Name Amount Old Cheque
No.

New
Cheque No.

P.B. Date of
clearance of
cheque

Receipt Pass
Book

Shri Ganga Devi 11,00,000 183270 008282 44 67 17.05.2012
11,00,000 183271 008281 45 67 09.05.2012

Total 22,00,000

The above two cheques were not cleared from the assessee appellant's bank account but
were directly cleared from the bank account of Shri Shravan Kumar.
Shri Shravan Kumar had obtained receipts from Smt. Ganga Devi to this effect. The said
receipts do further confirm that the land was sold by Smt. Ganga Devi to Shri Shravan
Kumar through Shri narayan Meena.
The pass book of Shri Shravan Kumar is not additional evidence but is only a further
evidence to further substantiate what was submitted during the assessment proceedings by
the ld. AO. These facts were admitted by Shri Shravan Kumar, when he appeared for his
statements before the ld. AO. However, a matter of abundant precaution application under
rule 46A is being moved for admitting this evidence.
8.2 At no point of time the assessee appellant ever became the owner of the land. nor, at
the time of obtaining the Power of Attorney, the payments were made to the land owners.
Both the aspects are substantiated by the bank statement wherein the cheques mentioned
in the registered sale deed are cleared in favour of the land owners.
8.3 The cash which was received from Shri Shravan Kumar and deposited by the assessee
in his bank account, duly confirmed by Shri Shravan Kumar, has not been accepted by the

ld. AO with so many corroborative evidences, the transaction having taken place in the
manner explained cannot be denied. The ld. AO has not accepted the said explanation
without bringing anything on record to support his action.
8.4 The ld. AO has erred in applying peak theory. Peak theory is relevant when it is
established that the money belongs to the assessee. In the instant case source of deposits
have been established beyond doubt. Hence, the peal theory application is unjustified and
deserves to be quashed.
In view of the above, the cash deposits are fully explained. The addition of the peak amount
is totally unjustified and deserves to be deleted.”
9. The ld CIT(A) however didn't agree with the contentions of the assessee and confirmed
the order of the AO. The relevant findings of the ld. CIT(A) which are under challenge before
us are reproduced as under:-
“3.5 I have considered the facts of the case, assessment order and appellant's
written submission. Assessing Officer made addition in respect of peak of substantial
cash deposits in appellant's bank account. Total Rs. 99 Lacs were deposited on
various dates and after considering the cash withdrawals, assessing officer made the
addition in respect of peak cash deposited in appellant's bank account. Appellant
submitted that such huge cash was given to him by the prospective buyer of the
property Shri Shravan Kumar. Why appellant deposited the cash allegedly given by
Shri Shravan Kumar in his bank account is not clearly explained. When money is
deposited in the appellant's bank account, onus is on the appellant to explain the
nature and source of such cash deposit. This burden can never be shifted to the
assessing officer. Appellant only produced Shri Shravan Kumar before the AO who
recorded his statement and came to the conclusion that there were many missing
links in the statement and there was no evidence of possession of such huge cash
with Shri Shravan Kumar. Even in the statement recorded Shri Shravan Kumar could
not provide the source of such huge cash particularly when he was in employment as
very low- paid employee till 1999 and thereafter not doing any major anything which
can give him such cash. How such huge cash can be available with a person like him
is not explained by anybody. Why with such substantial cash he did not have any
bank account which he opened subsequently after this controversy arose. Just by
admitting that he has given such huge cash to the appellant is not sufficient. There
has to be evidence of source of such substantial cash which is completely missing
even in the case of Shri Shravan Kumar. Therefore assessing officer after analysing
the affairs of Shri Shravan Kumar concluded that the admission of giving cash by
Shri Shravan Kumar is without any basis and the money deposited in the bank
account belonged to the appellant only and the same was his unaccounted credit.
During appellate stage, appellant submitted additional evidences in the form of
receipt given by seller and copy of passbook of Shri Shravan Kumar. But none of
these evidences provide any indication with regard to source of cash deposits in
appellant's bank account. These evidences are of the period after assessment was
completed and these are not of the period during which cash was deposited.
Subsequent evidences can be created and therefore these do not have evidentiary
value. In any case, appellant tried to divert the main issue i.e. the source of cash
deposit in the appellant's bank account. Till date appellant was not able to provide
any evidence or material to explain the source of cash deposits in his bank account.
Even if for the sake of argument it is accepted that appellant was provided cash by

Shri Shravan Kumar then the source of cash need to be proved in his case which was
also not done. Protective assessment in his hand recommended by AO does not
absolve appellant from his onus. Since appellant deposited the money in his bank
account and there is no source for such deposit except claiming that it was given by
Shri Shravan Kumar who in turn does not have a source, I have no hesitation in
holding that money deposited in appellant's bank account was unexplained and
accordingly addition made by assessing officer is confirmed.”
10. Further, during the course of hearing, the ld AR submitted that the Ld. CIT(A) has failed
to appreciate, in correct perspective, the vital evidences which beyond doubt prove that
following persons namely Smt. Ganga Devi, Shri Moolchand, Shri Ramji Lal and Shri
Ramdhan had sold their respective pieces of land to Shri Shravan Kumar and the appellant
acted as a broker using his bank account for transferring the money from buyer to sellers.
10.1 The vital evidences before the ld. CIT(A) were as below:
i. Sale Deeds:
a. Copy of sale deed executed on 28/10/2006 between Shri Shravan Kumar and Shri
Narayan Meena.
b. Copy of sale deed executed on 11/01/2007 between Shri Shravan Kumar and Shri
Narayan Meena.
c. Copy of sale deed executed on 11/01/2007 between Shri Shravan Kumar and Shri
Narayan Meena.
ii. Power of Attorney:
a. Copy of power of attorney executed on 06/09/2006 between Smt. Ganga Devi and
Shri Narayan Meena.
b. Copy of power of attorney executed on 06/09/2006 between Shri Moolchand, Shri
Ramjilal and Shri Ramdhan with Shri Narayan Meena.
iii. Stale cheques replaced by original buyer Shri Shravan Kumar.
iv. Copy of pass book of P.N.B. of appellant to prove deposits in his bank account
found destination to the sellers of the land.
10.2 Ld. CIT(A) failed to appreciate the reason for depositing the cash made available by
Shri Shravan Kumar in appellant's own bank account. Shri Shravan Kumar got his bank
account opened as late as 06/04/2012, whereas sale deeds were executed on 28/10/2006
and 11/01/2007, on which dates Shri Shravan Kumar had no bank account of his own and
the cheque numbers were required to be mentioned in the sale deeds. It is also important
to note that at that point of time, the buyer Shri Shravan Kumar had no cash available with
him. This mechanism of mentioning the cheque numbers of appellant could lead to conclude
the deal and therefore, the action was like a pragmatic businessman which needs to be
appreciated by tax authorities.

10.3 The ld. CIT(A) also failed to appreciate that Shri Shravan Kumar, in turn received the
cash from the different buyers to whom he had sold/ agreed to sell the plots out of the land
purchased by him. Since, this cash was used for clearing the cheques in favour of the
sellers, Shri Shravan Kumar did not feel any necessity to deposit the cash in his own
account by opening a new account.
10.4 One vital evidence of replacing the stale cheques by the cheques of buyer of lands,
Shri Shravan Kumar have been rejected by simply observing that this is an afterthought and
is an evidence which is created subsequently. No one can lose/ misplace cheques in
retrospect. The following cheque numbers were subsequent to cheque numbers 183270 and
183271:

Cheque No. Date of clearance of cheque
183272 26/09/2011
183273 03/07/2008
183274 29/07/2008
183275 04/09/2008
183276 08/07/2010
183277 04/03/2009
183278 24/09/2009

Still, the cheque numbers 183270 and 183271 were not cleared by Shri Ganga Devi because
she had lost these cheques. Since, all these cheques were of same amount of Rs.
11,00,000/- each, Smt. Ganga Devi kept on depositing other cheques and asked for
replacement when cheques available with her were exhausted. The two lost cheques were
replaced by the cheques of Shri Shravan Kumar himself numbering 8281 and 8282 which
cleared on 09/05/2012 and 17/05/2012 respectively. These facts were evident before the
ld. CIT(A).
10.5 Ld. CIT(A) was inclined to accept the fact of cash being made available to the appellant
by Shri Shravan Kumar, yet he denied the relief for the simple reason that source in the
hands of Shri Shravan Kumar was not proved. Following observation of ld. CIT(A) at Pg 12
of his order is worth noticing:
“Even if for the sake of argument it is accepted that appellant was provided cash by
Shri Shravan Kumar then the source of cash need to be proved in his case which was
also not done. Protective assessment in his hand recommended by A.O. does not
absolve appellant from his onus.”
Once, this is established that Shri Shravan Kumar made available the cash to the appellant
as consideration of his purchasing the land for onward transfer of money to the sellers of
the land, the appellant acting as broker, there cannot be any reason to invoke section 68 in

the hands of the appellant. Section 68 is not applicable for receiving the sale consideration.
Section 69 can be invoked in the hands of the payer of such sum. Otherwise also even for
section 68, the Hon'ble jurisdictional High Court in the cases of Kanhaialal Jangid v Asstt CIT
(2008) 217 CTR (Raj) 354, Aravali Trading Co v ITO (2008) 220 CTR (Raj) 622, Labh Chand
Bohra v ITO (2010)189 Taxman 141 (Raj) and CIT, Ajmer v Jai Kumar Bakliwal (2014) 366
ITR 217(Raj), has held that source of source need not be proved by the assessee.
In view of the above addition of Rs. 63,38,820/- made by the ld. A.O. and confirmed by ld.
CIT(A), deserve to be deleted by allowing this ground of appeal.
11. The ld DR is heard who has vehemently argued the matter and took us through the
detail findings of the AO and the ld CIT(A) and supported the said findings.
12. We have heard the rival contentions and purused the material available on record. The
issue under consideration relates to cash found deposited in the bank account maintained
and operated by the assessee and whether the assessee is able to offer suitable explanation
regarding the nature and source of such cash deposits to the satisfaction of the Assessing
officer.
12.1 Here, it would be relevant to refer to the legal propositions in the context of section 68
which has emerged after examining various legal authorities including those quoted by the
ld AR on the subject as under:
a) Where any sum is found credited in the books maintained by the assessee,
Section 68 requires that the assessee should offer an explanation about the nature
and source of such sum found credited in its books of accounts to the satisfaction of
the Assessing officer. In absence of explanation, or in the event of explanation being
not found satisfactory, the sum so credited would be included in the income of the
assessee.
b) The primary requirements, which should be satisfied cumulatively by the assessee
in such cases is identification of the creditor/shareholder, creditworthiness of
creditor/shareholder and the genuineness of the transaction.
c) The explanation offered and material submitted by the assessee in support of its
explanation should be wholesome, credible and verifiable. These three requirements
thereafter have to be tested by the Assessing officer not superficially but in depth
having regard to the human probabilities and normal course of human conduct. It is
only when the explanation and the material offered by the assessee at this stage
passes this muster that the initial onus placed on it would shift leaving it to the
Assessing Officer to start inquiring into the affairs of the third party.
d) Whilst it is true that the assessee cannot be called upon to adduce conclusive
proof on all these three requirements, it is nonetheless legitimate expectation of the
process that he would bring in sufficient proof, which is credible and at the same
time verifiable, so as to discharge the initial burden placed on him. Whether initial
onus stands discharged would depend upon facts and circumstances of each case.
e) The degree of burden of proof on the assessee will vary from assessee to
assessee. Where amounts are borrowed from or shares are allotted through private
placement, to persons generally known to directors or shareholders, directly or

indirectly, burden of proof is on higher pedestal and the Courts have laid down a
strict approach in terms of satisfying such burden of proof.
f) The word "identity" means the condition or fact of a person or thing being that
specified unique person or thing. The identification of the person would include the
place of work, the staff, the fact that it was actually carrying on business and
recognition of the said company in the eyes of public. Merely producing certificate of
incorporation, PAN number or assessment particulars did not establish the identity of
the person. PAN numbers are allotted on the basis of applications without actual de
facto verification of the identity or ascertaining active nature of business activity. The
actual and true identity of the person or a company was the business undertaken by
them. Further, these documents have their limitation and cannot be relied upon
blindly when there are surrounding circumstances to show that the subscriber was a
paper company and not a genuine investor.
g) In respect of the genuineness of the transaction and creditworthiness of the
shareholder/lender, it would be incorrect to state that the onus to prove the same
stands discharged in all cases if payment is made through banking channels and the
fact that the money originally lent has been returned through banking channels.
Whether or not onus is discharged depends upon facts of each case. It depends on
whether the two parties are related or known to each other; the manner or mode by
which the parties approached each other, whether the transaction was entered into
through written documentation and due diligence to protect the investment and the
pay back on such investment, whether the investor professes and was an angel
investor, the object and purpose (profit motive) behind the investment and whether
any dividend declared and distributed in the past or not. Whether share subscribers
have their own profit making apparatus and were involved in any tangible business
activity or were they merely rotated money, which was coming through the bank
accounts, which means deposits by way of cash and issue of cheques.
Creditworthiness and genuineness of the transaction is therefore not proved by
showing merely issue and receipt of a cheque or by furnishing a copy of statement of
bank account of share subscriber, when circumstances requires that there should be
some more evidence of positive nature to show that the subscribers had made
genuine investment. Similar analogy will apply in respect of any loan transaction.
h) The entire evidence available on record has to be considered and a reasonable
approach has to be adopted. The final conclusion must be pragmatic and practical,
which takes into account holistic view of the entire evidence including the difficulties,
which the assessee may face to unimpeachably establish identity, creditworthiness of
the shareholders and the genuineness of the transaction.
i) Where the assessee has discharged the initial burden placed upon him under sec.
68 to prove and establish the identity and creditworthiness of the share
applicant/lender and the genuineness of the transaction, the burden of proof shifts
on the Assessing officer. In such a case, the Assessing Officer cannot sit back with
folded hands till the assessee exhausts all the evidence or material in his possession
and then come forward to merely reject the same, without carrying out any
verification or enquiry into the material placed before him. If the Assessing Officer
harbours any doubts of the legitimacy of any subscription, he is empowered, nay
duty-bound, to carry out thorough investigations. But if the Assessing Officer fails to
unearth any wrong or illegal dealings or has no material in his possession, he cannot

obdurately adhere to his suspicions and treat the subscribed capital as the
undisclosed income of the Company.
j) The case of CIT v. Orissa Corporation (P.) Ltd. [1986] 159 ITR 78/25 Taxman 80
(SC) exemplifies the category of cases where no action is taken by the Assessing
Officer to verify or conduct an enquiry into the particulars about the creditors
furnished by the assessee, including their income-tax file numbers. In these cases,
the decision was based on the fundamental rule of law that evidence or material
adduced by the assessee cannot be thrown out without any enquiry. The ratio does
not extend beyond that. The boundaries of the ratio cannot be, and should not be,
widened to include therein cases where there exists material to implicate the
assessee in a collusive arrangement with persons who are self-confessed
"accommodation entry providers".
13. In light of above legal propositions, we now refer to the factual matrix of the matter.
Firstly, we refer to the bank statement for the period under consideration and the
explanation offered by the assessee in this regard:

Date Particulars Receipt Particulars Payments Balance
Cash Cheque
09/05/2008 Shri Shravan

Kumar 500000

500000

13/5/2008 Shri Shravan

Kumar 600000

1100000

03/06/2008

Shri
Moolchand
(183268)

1100000 0

01/07/2008 Shri Shravan

Kumar 600000

600000

02/07/2008 Shri Shravan

Kumar 500000

1100000

03/07/2008

Smt. Ganga
Devi
(183273)

1100000 0

28/7/2008 Shri Shravan

Kumar 600000

600000

29/7/2008 Shri Shravan

Kumar 500000

1100000

29/7/2008

Smt. Ganga
Devi
(183274)

1100000 0

2/9/2008 Shri Shravan

Kumar 500000 700000

1200000
4/9/2008       Smt. Ganga 1100000 100000

Devi
(183275)

5/9/2008 Shri Shravan

Kumar 516500

616500

16/9/2008 Shri Shravan

Kumar 500000

1116500

16/9/2008

Shri
Moolchand
(183269)

1100000 16500

19/9/2008 Smt. Richa
Chaudhary
251000

 

267500

27/10/2008 Smt. Richa
Chaudhary
2899000

 

3166500

31/10/2008

Smt. Ruby
Srivastav
(cash)

1300000 1866500

24/11/2008

Smt. Ruby
Srivastav
(cash)

700000 1166500

17/12/2008

Shri
Ramdhan
(883892)

744000 422500

18/12/2008 Shri Shravan
Kumar
800000

1222500

19/12/2008       Shri Ramji

Lal (883893) 744000 478500

20/12/2008 Shri Shravan
Kumar
700000

1178500

23/12/2008

Shri
Moolchand
(883894)

1100000 78500

2/3/2009 Shri Shravan

Kumar 600000

678500

3/3/2009 Shri Shravan

Kumar 500000

1178500

4/3/2009

Smt. Ganga
Devi
(183277)

1100000 78500

23/9/2009 Shri Shravan
Kumar
500000

 

578500

24/9/2009 Shri Shravan
Kumar 599500

 

1178000

24/9/2009

Smt. Ganga
Devi
(183278)

1100000 78000

6/7/2010 Shri Shravan
Kumar
1100000

 

1178000

8/7/2010

Smt. Ganga
Devi
(183276)

1100000 78000

23/9/2011 Shri Shravan
Kumar 500000

 

578000

24/9/2011 Shri Shravan
Kumar 600000

 

1178000

26/9/2011

Smt. Ganga
Devi
(183272)

1100000 78000
78000
Total 7616000 6950000   14488000

14. The narrations regarding deposits and withdrawals in the above bank statement are as
per the assessee. As can be seen from above, there is a clear pattern of cash deposits and
immediate withdrawal by way of issuance of cheques from time to time. Every time, a
cheque is cleared, there is prior deposit of cash in denomination of Rs 6 lacs and Rs 5 lacs.
As per the assessee, the cash which has been received from Shrawan Kumar has been
deposited in his bank account from time to time and subsequent withdrawal by way of
issuance of cheque is in favour of various persons from whom the land was purchased by
Shrawan Kumar. In effect, the contention of the assessee is that there were transactions of
sale and purchase among the land owners and Shrawan kumar, the cash deposited belongs
to Shrawan kumar and the assessee acted as a facilitator by allowing the use of his bank
account as Shrawan kumar was not having a bank account of his own at that point in time.
Regarding the source of cash deposits by Shrawan kumar, it was submitted by the assessee
before the AO that Sharwan kumar after purchasing the above land had developed a
scheme known as Nehru enclave extension and got the land divided in various plots and
started selling the same and out of sale proceeds, Shrawan kumar started making payment
to him from time to time. It was also submitted by the assessee that he 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. However, we find that there is nothing on record to support the
said contention of the assessee regarding cash deposits by Shrawan kumar. No verifiable
evidence has been filed by the assessee either during the assessment or the appellate
proceedings in this regard. If the assessee is aware of particulars of source of receipts in
hands of Shrawan Kumar and has claimed to have facilitated the whole transaction, we
don't understand what stops the assessee in bringing on record the documentation in
support of such receipts. It is not a question of determining the source of source but it is a
question of determining the genuineness of the transaction and creditworthiness of Shrawan
Kumar in respect of whom it has been claimed that the cash deposits belongs to him.
15. We know refer to the affidavit of Shrawan kumar filed by the assessee and statement of
Shrawan kumar recorded u/s 131 by the AO during the course of assessment proceedings.
Affidavit of Shri Sharwan Kumar

PICTURE
16. The AO however didn't find the above affidavit and statement of Shri Shrawan Kumar
credible for reasons as stated below:
a. he was not having any idea of the colony developed by him.
b. he was not having any idea about the plots which were sold and when sold.
c. he was not having any idea of rate at which the plots were sold.
d. He was not having any idea of location of land on which the colony was developed.
e. He was not having any idea that whether the sale proceeds were received by him
by cheque or by cash.
f. He was not having any idea that whether he is an income tax assessee or not.
g. He was not having any idea of whether he is having PAN or not.
h. He was not having any idea that whether the colony/scheme was approved by the
Government or not.
i. He was not having any idea that what is the name of colony.
j. The only idea he was having was that he had purchased land from Shri Shree
Narayan Meena for Rs.99,00,000/- and the amount was paid by him in cash.
k. It may be mentioned that if the amount is paid by the Shri Sharwan in cash then
these payments will hit by the provisions of section 40A(3) and the entire amount is
to be disallowed.
i. He was bearing checker in National Engineering Industries, Jaipur, who retired in
the year 1999.
m. After retirement he purchased one mini bus and one truck, but sold these
vehicles after heavy losses after three-four years.
n. he is not an Income-tax assessee and not haning any PAN, if he had any PAN or
Shri Sharwan Kumar.
o. He is not having any sources to buy such large chunk of land for such huge
amount.”
17. On perusal of the above statement and the affidavit of Shrawan Kumar, we note that
Shri Shrawan kumar has tried to broadly explain that the land purchased by him has
subsequently been divided into various plots and sold to various persons and the cash
received on such sale of plots has been handed over to the assessee from time to time and
the cheque has been deposited in his UCO Bank. However, to verify the credence of such
explanation so offered by Shrawan kumar, the AO has asked certain specific questions to

him but his responses have been very sketchy throughout and the onus has been shifted
totally to his accountant Shri Jain and surprisingly he is not even aware of his accountant's
whereabouts and his full name and address. If a person is dealing in sale/purchase of land,
however, illiterate he may be and who doesn't know the basics of accounting, atleast he will
know the specifics of the land, its location, the area, the number of plots, rate at which the
plots have been sold to various buyers and the specifics of the amount paid to the assessee
from time to time especially given the huge quantum involved. However, we find that Shri
Shrawan Kumar has miserably failed in disclosing these basic facts and sharing the same
with the AO. Further, the details of cash paid to the assessee has been stated by him to be
in thousands, which is vague without specifying the amount and date of payment and also
inconsistent with the version of the assessee where the assessee says that he has received
cash in lacs from Shrawan Kumar as we have noted above while reviewing the bank
statement of the assessee. Even if we take into consideration the theory of fading memory
with advancement of age given that Shri Shrawan Kumar is a retired person having retired
in the year 1999 and the statement being recorded in the year 2011, atleast he should
come foreward and share some credible evidence to support his assertions as stated in his
statement and the affidavit, in form of sale deeds with the buyers to whom the plots have
been claimed to be sold and consideration in form of cash which has been received, copies
of his bank statements where he has deposited such cash and given the huge quantum of
cash involved going by assessee's own version, the amount and date of payment of such
cash claimed to have been paid to the assessee. However, we find that there is nothing
which has been brought on record to this effect. In absence of the same, it doesn't lead us
to anywhere but to disbelieve the explanation so offered by him. To our mind, the affidavit
and statement of Shri Shrawan Kumar are self-serving document, are inconsistent with the
version advanced by the assessee, are therefore not reliable and doesn't inspire any
confidence in accepting the same in absence of any credible verifiable supporting
documentation to support the sale of land by way of plots by him and receipt of
consideration in form of cash which is claimed to have been handed over to the assessee
from time to time.
18. Now coming to the contention of the ld AR that the Ld. CIT(A) has failed to appreciate,
in correct perspective, the vital evidences in form of power of attorney and sale deeds which
beyond doubt prove that Smt. Ganga Devi, Shri Moolchand, Shri Ramji Lal and Shri
Ramdhan had sold their respective pieces of land to Shri Shravan Kumar and the appellant
acted as a broker using his bank account for transferring the money from Shri Shravan
Kumar to sellers. We have gone through and examined these documents in form of power
of attorneys and the sale deeds in detail. The power of attorney has been executed by the
land owners in favour of the assessee in September 2006 and the sale deeds have been
executed between the assessee as power of attorney holder on behalf of the land owners
and Shri Shrawan Kumar in October 2006 and January 2007. However, what is critical to
note that as far as discharge of sale consideration for purchase of land under the subject
sale deeds are concerned, the cheques as mentioned in the sale deeds have been issued
and cleared from the assessee's bank account. The money therefore has travelled from
assessee's bank account to the sellers. It is assessee's contention that cash which has been
received from Shri Shrawan kumar has been deposited in his bank account and the cheques
issued in favour of the sellers have been cleared therefrom. As we have held above, the
statement and affidavit of Shri Shrawan Kumar is not reliable and there is nothing on record
to suggest that cash found deposited in the assessee's bank account belong to Shri Shrawan
Kumar. In absence of the same, these sale deeds on a standalone basis don't support the
case of the assessee. Rather the factual position which emerges from perusal of such sale
deeds is that given the fact that consideration has been paid by the assessee to the land
owners though the land stood transferred in name of Shrawan kumar, Shri Shrawan Kumar
was a mere name lender in these sale/purchase transactions and it is assessee's

undisclosed own money which has been deposited in his bank account and subsequently
paid to the land owners.
19. Further, we are intrigued by the fact that there is huge time gap between the execution
of the sale deed and realisation of sale consideration by the respective land owners. For
instance, in case of Ganga Devi, the sale deed was executed on 11.01.2007 and first cheque
was cleared on 03.07.2008 and the last cheque on 26.09.2011. Similar is the situation in
case of other two transactions. We find that the whole of the sale consideration has been
claimed to be discharged by issuance of post dated cheques and the said cheques have
been cleared after a long period of time which is quite unusual in dealings in land and other
real estate. Why would a land owner hand over the title and possession of his land without
receiving any consideration or even a part of it and agree to receive it at a later point in
time which is again uncertain and without any underlying surety or guarantee. It has been
claimed that the land belongs to Scheduled caste and this land could be purchased by a
person belonging to the same caste and further land was located near a nullah, hence, they
were finding it difficult to find a suitable buyer. Finally, a buyer of the land namely Shrawan
Kumar was identified and it was agreed that they will execute the sale deeds in favour of
the buyer but will receive whole of the sale consideration in post dated cheques which will
be presented for clearing on a later date with the prior approval of Shrawan kumar. It was
further submitted that Shravan Kumar did not have any bank account at that point of time
and 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. It was also claimed
that it was agreed that 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. However, we donot find any iota of evidence on record to
support these so called understanding between the land owners, Shrawan kumar and the
assessee. Looking at purely from a commercial angle, why would assessee in his zeal issue
cheques in favour of Smt Ganga Devi worth Rs 99 lacs, in favour of Shri Mool Chand worth
Rs 33 lacs and in favour of Shri Ramdhan and Shri Ramjilal worth Rs 14.88 lacs in absence
of any surety or guarantee that Shrawan kumar in whose name the land stood registered
will honour his commitment. What would happen when the land owners present the cheques
on due date and by that Shrawan Kumar has not returned the amount and the
consequences of dishonour of cheques under the Negotiable Instruments Act. What are the
timelines for receipt of such huge payments from Shrawan Kumar. These are some of the
questions which come to our mind and which remain unanswered. To our mind, these are
merely contentions and nothing more to support the theory of cash deposit as belonging to
Shrawan kumar which could not be substantiated by any credible piece of evidence. As we
have stated above, only conclusion which can be drawn is that Shrawan Kumar was a name
lender and it is assessee's own money which has been paid to the land owners and
effectively, the beneficial ownership over the land so purchased is with the assessee.
20. As we have stated above, where any sum is found credited in the books maintained by
the assessee, the primary requirements, which should be satisfied cumulatively by the
assessee in such cases is identification of the person, creditworthiness of that person and
the genuineness of the transaction which has not been satisfied in the instant case. The
explanation offered and material submitted by the assessee in support of its explanation is
not wholesome, credible and verifiable. These requirements have been examined in the
instant case having regard to the human probabilities and normal course of human conduct
and we find that the explanation offered by the assessee at this stage doesn't passes this
muster and the initial onus cast on the assessee has not been satisfied. In the instant case,
the Assessing officer has also carried out necessary verification and has rightly brought to

tax the unexplained cash deposits found deposited in the bank account. We have also gone
through the various decisions cited by the ld AR and we find that the same have been
rendered in the peculiar facts and are thus distinguishable and doesn't support the case of
the assessee. At the same time, the broad legal proposition emerging therefrom has been
duly considered. In the result, ground of appeal is dismissed.
Ground No. 2 relating to addition of Rs. 16,10,491/-
21. Briefly, the facts of the case are that the cheques worth Rs 16,10,491 deposited in
assessee's bank account has been brought to tax by the AO.
21.1 During the course of hearing, the ld AR submitted that out of the total cheques of Rs.
16,10,491/-, three cheques of Rs. 10,073/-, Rs. 418/- and Rs. 1,00,000/- respectively
(aggregating Rs. 1,10,491) were deposited, being brokerage income of assessee and were
part of the total income of Rs. 1,48,340/- declared by the appellant in his return of income.
Ld. CIT(A) has not at all considered this explanation and even without discussing this aspect
has confirmed this addition.
21.2 It was further submitted that in respect of the two cheques amounting to Rs.
8,00,000/- and Rs. 7,00,000/- respectively, it was explained that these cheques were made
available by Shri Shravan Kumar for onward transfer of money (against the already issued
cheques) to the sellers of the land. The use of this Rs. 15,00,000/- in clearing the cheques
of Rs. 7,44,000/- and Rs. 11,00,000/- respectively was explained to the ld. CIT(A) as
appearing of his order. This explanation is not at all disputed by ld. CIT(A). However, ld.
CIT(A) has denied the relief for the reason given by him, that the bank account of Shri
Shravan Kumar was opened on 06/04/2012 and therefore, these cheques cleared on
18/12/2008 and 20/12/2008 cannot be given by Shri Shravan Kumar. Ld. CIT(A) has failed
to appreciate that these cheques were made available and not issued by Shri Shravan
Kumar. Since Shri Shravan Kumar was onward selling the land to other persons, he
obtained two cheques of the above sums from those parties directly in the name of the
appellant, so that his obligation of getting the cheques cleared in favour of sellers of land
could be fulfilled. Shri Shravan Kumar had no bank account which is the reason he took the
cheques directly in the name of appellant.
21.3 The explanation has to be evaluated in the background of the total factual matrix of
the case. Evaluating the transaction in isolation is not justified. In the instant case the buyer
Shri Shravan Kumar has paid the purchase consideration to the sellers through following
three modes:
i. Cash deposited in assessee's bank account.
ii. Cheques given to the assessee.
iii.Direct payment to the farmers.
Since, this fact is established that land has been purchased by Shri Shravan Kumar and sold
by Smt. Ganga Devi, Shri Moolchand, Shri Ramji lal and Shri Ramdhan and purchase
consideration has flowed from Shri Shravan Kumar (Buyer) to the sellers through the
appellant broker, the explanation for the cheques deposited would in itself become fully
justified and acceptable.

In view of the above, this ground of appeal may please be allowed.
22. We now refer to the relevant findings of the Ld. CIT(A) which are under challenge before
us. The same are reproduced as under:-
“4.3 I have considered the facts of the case; assessment order and appellant's
written submission. Assessing officer made addition in respect of cheques deposited
in his bank account which were not explained by the appellant. Appellant submitted
that these were the cheques relating to land deals in which he was acting as broker.
However from the details submitted by the appellant, the nature and source of such
cheque deposits is not clear. Appellant submitted that the cheques were given by
Shri Shravan Kumar but his bank account itself was opened on 6.04.2012 and
therefore he could not have given cheques to the appellant in 2008. Again appellant
tried to divert the attention by focusing on the payments made to sellers of the land
which has nothing to do with nature and source of cheques deposited. From the
discussion made in earlier ground, it is clear that Shri Shravan Kumar did not give
any cheque to the appellant therefore nature and source of these cheques remained
unexplained. Any money received by the appellant is either on revenue account or
capital account. However appellant did not explain these credits whether these are
revenue or on capital account. Since source of these deposits and nature are not
explained properly, addition made by the assessing officer is confirmed.”
23. The facts relating to this ground are pari-materia to ground no. 1 except that instead of
cash, cheque deposit worth Rs 16,10,491 has been examined by the AO to determine the
nature and source thereof. The assessee has given a similar explanation that the cheque
has been received from Shrawan Kumar and deposited in the assessee's bank account
towards part consideration for sale of land. The ld CIT(A) has given a finding that Shravan
Kumar's bank account itself was opened on 6.04.2012 and therefore he could not have
given cheques to the appellant in 2008. In response, the assessee has submitted that these
cheques were made available and not issued by Shri Shravan Kumar. It was further
contended that since Shravan Kumar was onward selling the land to other persons, he
obtained two cheques of the above sums from those parties directly in the name of the
appellant, so that his obligation of getting the cheques cleared in favour of sellers of land
could be fulfilled. In our view, these are merely contentions and not supported by any
credible evidence that cheques were issued by ultimate buyers directly in favour of the
assessee. Further, in view of the detailed reasoning given in respect of ground no. 1 above,
we affirm the order of the ld CIT(A) to the extent of Rs 15 lacs. Regarding Rs. 1,10,491
which is claimed to be brokerage income and already offered in the return of income, the
matter is set-aside to the file of the AO to examine the same and where it is found to be
correct, allow the necessary relief to the assessee as amount already offered cannot be
brought to tax again. The ground of appeal of the assessee is accordingly disposed off
Ground No. 3 relating to addition of Rs. 31,50,000
24. Briefly the facts of the case are that during the year under consideration, the assessee
sold plot no. 143, Swaroop Nagar, Jagatpura, Jaipur for Rs. 31,50,000/- to Smt. Richa
Choudhary. This plot was in the name of Smt. Ruby Shrivastav and the assessee was the
power of attorney of the said land. As per AO, there was no occasion to execute power of
attorney in favor of an unknown person and it is a case where the assessee bought the plot
from Smt. Ruby Shrivastav and sold the same during the year under consideration. In
absence of cost of purchase and the year of purchase, the entire sale consideration of Rs
31,50,000 which was received by the appellant in his bank account was brought to tax by

the AO. Being aggrieved, the assessee carried the matter in appeal before the ld CIT(A)
which has confirmed the findings of the AO.
25. During the course of hearing, the ld AR submitted that the ld. CIT(A) did not accept the
fact of power of attorney held by the appellant for the sole reason that Smt. Ruby
Shrivastav was not related to the appellant. Ld. CIT(A) erred in missing the fact that
appellant was a real estate broker and unrelated persons do execute power of attorney in
favour of known brokers in order to facilitate sale of their property.
25.1 Ld. CIT(A) also opined that as a broker appellant was not expected to deposit the
money in his bank account. Here again ld. CIT(A) could not appreciate the fact that in the
instant case, appellant was not only acting as a broker but was also acting as a power of
attorney holder. The normal practice is that the buyer, to safeguard his interest, makes
payment in name of the power of attorney holder who is executing the sale deed.
25.2 Ld. CIT(A) also did not allow the relief for the reason that the handing over the money
to Smt. Ruby Shrivastav was not evidenced. The payment was made to Smt. Ruby
Shrivastav by withdrawing the money from his bank and this was evident from the pass
book.
25.3 Ld. CIT(A) also erred in law by not appreciating the legal position that if the appellant
as a power of attorney holder is treated as real owner then the investment could be taxed in
the A.Y. 2008-09 (as power of attorney was executed on 19/05/2007) and not in A.Y. 2009-
10. In A.Y. 2009-10 only short term capital gain on sale of land could be taxed and not the
entire sale proceeds. Ld. CIT(A) and also the ld. A.O. were duty bound to accept this legal
proposition. Both, the lower authorities have not countered this legal proposition, yet have
erred in not taxing the capital gain in the year of sale of property. Ld. A.O. in his remand
report has mentioned that since the appellant did not disclose the amount invested and
source of investment, there was no other alternative but to tax the entire consideration in
the year of receipt. In view of the above, this ground of appeal may please be allowed.
26. We now refer to the relevant findings of the ld. CIT(A) which are under challenge before
us. The same are reproduced as under:-
“5.5 I have considered the facts of the case; assessment order and appellant's
written submission. Appellant received money in his bank account on sale of property
standing in the name of Ruby Shrivastav. Appellant was Power of attorney holder in
respect of this land and therefore he executed the sale deed and received the money
which was deposited in his bank account. The lady in whose name the property
stands is not related to the appellant. Whereabouts of Ruby Shrivastav is not known
to the appellant. Her address is also not given. All these facts clearly prove that
appellant was the real owner of the property and only name of Ruby Shrivastav was
used. No one will give power of attorney in favour of any stranger unless the
property itself is sold to such person. Appellant did not submit the identity and
details of Ruby Shrivastav's address. She is also not produced for examination before
AO therefore it is clear that appellant did not discharge his onus to explain the nature
and source of deposits. As a broker, appellant is not supposed to accept money and
deposit in his bank account unless he's the real owner and the party to the
transaction. Even if appellant's argument is accepted then where has he given
money bank to Ruby Shrivastav. Claim of giving payment by cash to her nominee is
not evidenced by any document or contemporary material. Since appellant did not
disclose any investment in the property standing in the name of Ruby Shrivastav,

entire sale consideration is taxable in the hands of the appellant during the current
year. Accordingly, addition made by the assessing officer is confirmed.”
27. We have gone through the factual matrix and hereby confirm the above findings of the
ld CIT(A) except for the fact that instead of entire sale consideration, only gain on sale of
land should be brought to tax in the hands of the assessee as purchase through power of
attorney has been claimed to have been executed on 19.05.2007 falling in year AY 2008-09.
The matter is accordingly set-aside to the file of the AO for determination of quantum of
capital gains which can be brought to tax as per law. The ground of the assessee is disposed
off accordingly.
Ground No. 4 relating to addition of Rs. 2,00,000
28. Briefly the facts of the case are that the appellant received a sum of Rs. 2,00,000/-
which is claimed to be received as gift from Shri Babul lal Meena, the elder brother of the
assessee's wife. Copy of gift deed has been claimed to be submitted during the assessment
proceedings while the AO stated that the affidavit has been submitted by Shri Babul lal
Meena which is signed much later on 7.12.2011 and even PAN details and source of income
has not been mentioned. Hence, the AO didn't accept the explanation of the assessee.
29. On appeal, the ld CIT(A) confirmed the AO's order and his relevant findings which are
under challenge before us are reproduced as under:-
“6.5 I have considered the facts of the case; assessment order and appellant's
written submission. Appellant claimed receipt of gift of Rs. 2 Lacs from one Shri
Babulal. When assessing officer asked to produce Shri Babulal, he was not produced.
Assessing officer deputed inspector to serve summons on Shri Babulal and appellant
was asked to assist in locating the said person. However appellant did not give any
assistance in service and summons could not be served on Shri Babulal. Therefore it
is clear that appellant did not discharge his onus by either producing the donor or
assisting the Department in examination of the donor. The submission of documents
are not relevant if the person who executed these documents is either not traceable
or do not attend to confirm the content of such documents. Since appellant did not
explain the nature and source of money received from Shri Babulal, assessing officer
was justified in treating the same as unexplained. Accordingly addition made by the
assessing officer is confirmed.”
30. During the course of hearing, the ld AR submitted that a confirmation has all the legal
sanctity under section 56(vii)(a), when the gift is from a very close relative and the donor
not being able to appear does not lead to any adverse inference in this regard.
31. As per section 56(vii)(a), a gift of money without consideration from wife's brother
cannot be brought to tax as income in the hands of the assessee and an affidavit in this
regard has been filed during the course of assessment proceedings. However, the contents
of the confirmation/affidavit are not on record which can help determine the
creditworthiness and genuineness of the transaction by way of gift as claimed. We
accordingly confirm the order of the ld CIT(A). At the same time, on perusal of the
assessment order, we find that there is no separate addition made by the AO and the
amount of Rs 2 lacs is part of unexplained cash deposit of Rs 63,38,820 which has already
been confirmed as discussed in ground no. 1 supra. In light of the same, there would not be
any separate addition on this account. The ground is disposed off accordingly.

In the result, the appeal of the assessee is disposed off with above directions.
Order pronounced in the open court on 06/09/2017.

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