TMI Blog2014 (10) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... firm M/s. Sharda State Promoters and cash drawn from other bank accounts of the appellant as indicated in the statement - CIT(A) rightly held that the AO erred in arriving at the correct figure of cash in hand with reference to the income shown in the P & L account & aforesaid withdrawal from firms of banks – the order of the CUT(A) is upheld – Decided against revenue. Expenses on car – Household expenses – Failure to discharge onus and to prove genuineness of expenses – Held that:- All expenses disclosed are comparable to the earlier years - There is no material to show that there is any exorbitant increase in expenditure - The AO proceeded on assumption which is not permissible - All expenses are supported by necessary evidence which has been placed on record before AO and the revenue has not brought to our notice any material so as to show that no evidence was furnished before the AO - the nature of expenses claimed by the assessee does not warrant any addition - There is no dispute as to the existence of car and the car loan, facts of which was duly reflected in the statement of affairs, which has been accepted by the AO - depreciation of cost of car and interest on car loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown net income of ₹ 85,000/-. The AO after perusal of the statement of affairs for the relevant assessment filed by the assessee noticed that the assessee had shown the following closing balance of assets side besides all other closing balance:- A. Y. 2007-08 A. Y. 2006-07 UCO Bank 6102.00 Nil Advances 400000.00 Nil Cash advances and State Bank of Patiala 1359347.00 370911.00 5. On query the assessee submitted that the he had maintained only one bank account No.21563 at UCO Bank in which the assessee had closing balance of ₹ 6,102/-. Further it was submitted that the assessee was not maintaining any other bank account at the UCO Bank. It was also stated that the cash advance and UCO bank reflected in written statement of affairs as shown above was clerical mistake; and the advances of ₹ 4,00,000/- was infact the amount on which the assessee had earned interest income of ₹ 85,000/-. It was also submitted that this amount was inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the assessee had ₹ 8,69,247/- as cash in hand from the withdrawals from the firm M/s Sharda Estate Developers, Meerut. 8. The AO also observed that after perusing the record he found that the cash balance of ₹ 1,19,916/- and also observed that the assessee had received cash receipts as per records during the year as under:- Rs.10,90,307/- Commission Income Rs.85,000/- Interest Income ₹ 11,000/- Gift surrendered ₹ 2,05,307/-Rs.12132/- profit from firm M/s. Sharda Estate Developers, which stood remain credited in his account as capital balance. 9. So, according to the AO, the assessee had earned cash receipt of ₹ 2,05,307/- and he has made expenses as under:- Rs.99,473/- deposited in LIC Rs.36,000/- H/H withdrawals Rs.1,35,473/- 10. In this way, the assessee was having cash balance of ₹ 69,824/- (2,05,307/--1,35,473/-) only out of his current year s income with him. 11. In respect to the amount of ₹ 3,70,184/- which was stated as cash in hand as on 31.03.2006 and the AO observed after perusal of the statement of affairs for Assessment Year 2006-07 that no investment had been shown by the assessee in his mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee on 3-03-2007 stood at ₹ 31,78,541/- against which there are total assets of ₹ 31,78,541/ - including cash in hand and balance in account of -State bank of Patiala at ₹ 13,59,347/-. The AO has failed to appreciate that as long as assets held by assessee and appearing on debit side of statement of affairs are covered with proved funds on its credit side any part of such assets may not be held as unexplained. It was also important to note that it was not the case of deptt. that assessee was holding some assets out side the statement of affairs and hence the cash in hand may not be held as unexplained. It was also submitted that the assessee has arranged the cash in question for being investment in new firm. The new firm could be organized in next year and the cash in question was invested therein. Thus it was pleaded before the CIT(A) that entire additions and disallowance of ₹ 15,64,040/- liable to be deleted. 17. It was also brought to the knowledge of the CIT(A) that all the above submission on this point of cash in hand were made before the AO through petition dated 03-03-2010 moved u/ s 154 of the Act, after completion of the assessment in questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to prove the availability of cash in hand at ₹ 13,57,269/- the appellant has made a long drown process of working out cash in hand as on 31-03-2007 after taking into consideration all transactions of the year. Through this process cash in hand is worked out at ₹ 13,60,954/- in place of ₹ 13,57,269/- shown through statement of affairs and hence cash in hand and advances shown in the statement of affairs deserve to be held as proved and acceptable on facts and in law and according to the principle of accountancy. 22. .Taking note of the aforesaid submission and careful perusal of the records we find that the ld CIT(A) has made a finding that on 31.03.2007 the assessee was having total cash of ₹ 13,60,954/-; and the assessee had filed all the details in respect to his withdrawals from the account of the assessee in the firm M/s. Approve Home Developers, which we have seen at Pg. 7 of the paper book and Withdrawal from the account of the assessee in the firm M/s. Sharda State Promoters placed at page 8 of the paper book and cash drawn from other bank accounts of the appellant as indicated in the statement placed at Pg. 15 of the paper book. We find that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / - for all type of business expenses deserved to be allowed as reasonable expenses for business purpose. 4. That after completion of assessment is] s 143(3) the AO sent the demand for recovery to the TRO Meerut, without waiting for the results of appeal in question and ignoring the stay petition pending before the AO. On receipt of recovery notice from TRO the appellant moved petition u/ s 154 of the Act, before the AO on 24-08-2010 through Dak counter which is still pending before the AO, copy of the said petition is placed at pages 20 to 22 the paper book in which similar submissions were made and the rectification of the mistake were sought. In view of above submission the disallowance of expenses of ₹ 102693/- may be held as wrong illegal and unwarranted and therefore deserve to be deleted in its entirety. 5. That the family consists of 4 persons namely appellant himself, his wife Smt. Usha Agarwal, his son Ankit and daughter Asha Garg. All the 4 persons are regularly assessed to income tax and have been making withdrawals for house hold expenses form their own sources of income. There IS one HUF Hariom Sons which is also making withdrawals for house hold expe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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