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2012 (10) TMI 669

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..... at the addition, if any, can be made in the hands of the AOP which is not possible as the ultimate beneficiaries of this colourable device is the assessee itself as the members of the AOP and the partners of the assessee firm are the same persons. Thus remand this appeal to the file of the AO to examine the respective claims of AOP and also of the assessee - in favour of revenue for statistical purposes. - ITA No. 191/Ind/2011 - - - Dated:- 19-7-2012 - SHRI JOGINDER SINGH AND SHRI R.C. SHARMA, JJ. Appellant by Shri R.A. Verma, Sr.DR Respondent by Shri Manjeet Sachdeva, Advocate ORDER PER JOGINDER SINGH , judicial member The Revenue is aggrieved by the impugned order dated 1.6.2011 on the ground that the impugned order is erroneous in law as well as on facts being contrary to the view of the learned CIT(A) itself as enumerated in para 4.1.2 and wrongly deleted the addition on one hand and on other hand agreeing with the view of the Assessing Officer that the source of loan from M/s NF Farms is not genuine. 2. During hearing, we have heard Shri R.A. Verma, learned Senior DR and Shri Manjeet Sachdeva, ld. Counsel for the assessee. The crux of argumen .....

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..... he AOP and the partners of the assessee firm are the same persons. The genuineness and source of such unsecured loans was asked to be furnished. The assessee was also asked to furnish various details as mentioned at pages 3 onwards of the assessment order dated 20.12.2010. Subsequently, vide order sheet entry dated Ist December, 2010, the assessee was also asked to explain the following points :- (i) How the loan taken from NF Farms is genuine (ii) The sales shown in the NF Farms are mostly in cash therefore name and addresses are not available. How these sales are genuine. (iii) How it is possible to have such a whooping baby corn crop ? In the absence of Patwari certification why it should be considered as genuine. (iv) Why the NF Farms are not filing Return of income ? (v) How you justify the receipt of NF Farms with such a meagre expenditure ? Do you have any parallel example in the same area. (vi) Why the AOP should not be considered as a facade to clean the unaccounted monies available with the assessee. (vii) Why the agricultural income of NF Farms should not be considered as business income, considering the nature of receipt and moreover non verification poss .....

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..... expenses steeply increased to Rs.13,46,552/- and the profit was Rs.66,34,327/- out of Rs.79,80,879/-. Surprisingly, as on 31.3.2005, the expenses steeply reduced to Rs.4,34,597/- and profit rose to Rs. 67,29,796/- out of receipt of Rs.71,64,393/-. As on 31.3.2008 the expenses again decreased to Rs.4,36,246/- and the profit rose to Rs.82,35,678/- out of total receipt of Rs.86,71,294/-. From any angle, about 98% profit even cannot be imagined. Even otherwise, the Indian agriculture is gamble of monsoon and depends upon so many weather conditions including supply of water, labour problem, insects, manure and fertilizers, high cost of agricultural produce, etc. The profit is alarmingly very high. We will be glad if such a huge profit is actually earned from farming. The claim mentioned in the chart is, therefore, factually incorrect. From any angle, roughly the agricultural production cost cannot be less than 50% of the agricultural production. It is pertinent to mention here that the assessee claimed that majority of cash sales was made to restaurant, hotels, dhabas, etc. but no proof of the same was produced by the assessee at any stage. Even otherwise, the sale was made to partic .....

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..... g Officer in the cases of partners have not been correct. Detailed invfestigations are required in the case of all the four members of the said AOP. It is noted that Rs. 50 lakhs was given by the said AOP M/s NF Farms to the assessee firm but at the same time repayment of Rs. 80 lacs wasa made (there was opening balance also). It si also noted that huge withdrawal were made year after eyar by the partners of the assessee firm out of their capital in the said AOP as a result of such huge abnormal agricultural income. In principal, I agree with the conclusion of the Addl. CIT Range 1, Indore, in the case of the assessee firm that sources of loan from M/s NF Farms is not genuine. In other words, the claim of sales of hybrid babycorn so as to enable the said AOP to earn such an abnormal profit is not acceptable. In the circumstances, addition if any on this aspect need to be made in the hands of the members of the AOP and not in the hands of the assessee firm. It is also noted that these members have made up their huge capital without payment of due taxes by way of introducing the unaccounted money in the garb of exempted share of profit from the said AOP. Accordingly, addition of Rs. .....

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