TMI Blog2014 (11) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of property which were adjusted against sale made subsequently - this receipt cannot partake the character of income – the claim of the assessee is quite justified – Decided in favour of assessee. Addition out of expenses on the basis of original assessment sustained u/s 40(i)(a) – Held that:- Total addition of ₹ 10,86,632/- was made in the assessment order passed u/s 143(3) of the Act - This addition included a sum of ₹ 8,86,880/- made u/s 40(i)(a) and of ₹ 38,050/- made on account of various expenses – the addition has been confirmed by the CIT(A) as well as Appellate Tribunal and the appeal of the assessee is stated to be pending before the Hon'ble Jurisdictional High Court – thus, there is no reason to interfere in the order – Decided against assessee. Addition made u/s 40A(3) deleted - purchase of agricultural land – Land stock in trade or not – Held that:- Following the decision in Smt. Jiya Devi Sharma Versus The ACIT, Central Circle – 2, Jodhpur [2014 (11) TMI 835 - ITAT JODHPUR] - in the case of the payment to agriculturists were made under circumstances which are excluded under the provisions of Rules - The agricultural land cannot be converte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NIL income as was disclosed in the original return. 2.1 During the course of assessment proceedings computerized books of accounts were produced by the assessee. The assessee-firm also objected to the initiation of action by issuance of notice u/s 153A of the Act. However, the assessment u/s 153A/143(3) was completed on 28.12.2011 at a total income of ₹ 38,55,980/-. In arriving at the above income, the A.O. has made the following additions :- (i) Addition of ₹ 24,92,130 u/s 68 as per para 4 of the asstt order (ii) Addition of ₹ 13,36,500 u/s 68 (as per para 6 of the asstt. order (iii) Other addition of ₹ 27,350/- as per para 7 of the asstt. Order 2.3 Aggrieved, the assessee-firm filed first appeal and the ld. CIT(A), Jaipur, vide impugned order dated 31.03.2014, has confirmed all the above three additions. Now, the assessee is further aggrieved and has filed this second appeal by raising the following grounds :- 1. a. The id. CIT(A) has erred in sustaining the addition of ₹ 24,92,130/- u/s 68 in relation to cash credits. The addition so sustained is bad in law and bad on facts and is outside the scope of assessment u/s 153A. b. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 111100 8. Leeladhar Khatri 100000 9. MD Sharma HUF 18630 Total ₹ 24,92,130 The A.O. demanded proof of the above loan in terms of Section 68 of the Act, failing which the A.O. has added ₹ 24,92,130/- u/s 68 of the Act. 3.1 In appeal the assessee produced various evidence to prove this unsecured loan. The additional evidence was dealt with in the light of Rule 46A of the I.T. Rules, 1962 and a remand report was called from the A.O. However, the ld. CIT(A) has ignored the remand report of the A.O. 3.2 The assessee took a plea that unsecured loan had been disclosed in the original return filed u/s 139(1) of the Act which had already been processed u/s 143(1) of the Act. In the backdrop of these facts it was argued that since no incriminating evidence was found during search relatable to this item of income and the assessee had disclosed all unsecured loans in its original return how can this very loan be considered while framing assessment order u/s 153A r.w.s. 143(3) of the Act. But this argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans stand confirmed and proved by the confirmation of the cash creditors and since these loans have been received through account payee cheques and there being no contrary evidence on record. The ld. AR has placed reliance on many judicial decisions in support of his contention. 3.4 Per contra, ld. CIT(DR) Shri O.P. Meena has contested all the above points raised by ld. AR and has relied heavily on the orders of the authorities below. He has stated that the assessee failed to produce any confirmation or proof of the above loans before A.O. He has stated that ld. CIT(A) has correctly refused to accept the additional evidence under Rule 46A. He has further stated that despite the fact that no incriminating evidence was found relatable to these loans the A.O has to compute total income of the assessee u/s 153A and that processing of income u/s 143(1) does not tantamount to making of an assessment order. He has further stated that when the additional evidence has not been accepted these loans cannot be treated as explained even if the AO has examined and verified them on merits. He has also relied on his written submissions and has also placed reliance of the following decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AEJPV 2427 B Amount recd. As advance against sale. Amount already taken as income by including in sale. Details of sale made submitted 2. Ashok Sharma 252500 No. PAN Amount recd. As advance against sale. Amount already taken as income by including in sale. Details of sale made submitted. 3. Jabbar Singh Khinchi 707000 ABOPK9728I J Amount recd by cheques. Confirmation filed to AO. Regular Income Tax Assessee. Accepted in regular returns. 4. Hari Singh Rathore 505000 AFHPR2644P Amount recd by cheques. Confirmation filed to AO. Regular Income Tax Assessee. Accepted in regular returns. 5. Bhim Singh Rathore 505000 NO PAN Amount recd by cheques. Confirmation filed to AO. Regular Income Tax Assessee. Accepted in regular returns. 6. Taruna Sharma 90900 BQQPS5286K Amount recd by cheques. Confirmation filed to AO. Regular Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a case in which the assessee had not filed ROI prior to search and incriminating evidence regarding undisclosed income was found. In that case, it was held that the assessee was required to prove the credits appearing in the paper/seized material. Therefore, the ratio of this judgment is not at all relevant and the decision has been rendered on entirely different facts. 3.8 Likewise, the judgment in the case of CIT Vs. Ajay Kumar Sharma reported in 259 ITR 240 is again of no help to the Revenue because in that case books of account were found and as per them, the assessee had not offered for taxation the credits shown in the books. In that eventuality, similar decision was taken as was taken in the case of Elegant Homes Pvt. Ltd [supra]. Thus the facts of both these Rajasthan High Court judgments are entirely on different issues and on different footing and are not applicable to the facts of the given case. The decision of Cas Card Finance Ltd of Ahmedabad Bench [supra], a Third Member decision is also having entirely distinguishable facts. In that case, during the course of search, certain incriminating documents were found. Thus this decision is also distinguishable and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to prove these advances. The AO has sent his remand report after verifying them. It is noticed that the assessee had received advances against sale of property which were adjusted against sale made subsequently. In any case this receipt cannot partake the character of income. The position of advances and subsequent sale made against these advances is revealed at pages 19 and 20 of the written submissions filed by the ld. A.R of the assessee. 4.4 In the above scenario, we have found that this claim of the assessee is quite justified. The impugned addition deserves to be deleted. The decision referred to above in relation to addition made u/s 68 of the Act also applies to greater extent for this issue as well. Accordingly, with similar reasoning we order deletion of this amount as well and allow ground No. 2(a) and 2(b) of assessee s appeal. 5. The ground No. (3) is relating to disallowance of interest of ₹ 27,350/- out of interest paid to lenders. Since we have already accepted the loans as genuine and this interest amount of ₹ 27,350/- was mainly disallowed because the loan was held ingenuine, has to be allowed. Accordingly, we delete this addition of ₹ 27, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant had failed to substantiate the exceptional conditions under which the cash payments were made. 13. We have heard rival submissions. In assessee s appeal ground No. 1, 3, 4 and 5 are same and similar to the grounds raised in A.Y. 2004-05. The arguments of both the parties regarding then are also identical. Therefore, with similar reasoning, as given in A.Y. 2004-05, as above, we dispose of them and allow ground No. (1) but dismiss ground Nos. 3, 4 and 5 of assessee s appeal. 14. The ground No. 2 of assessee s appeal is regarding sustained addition of ₹ 8,86,880/- made u/s 40(a)(ia) of the Act and ₹ 38,050/- out of expenses on the basis of original assessment. In fact, total addition of ₹ 10,86,632/- was made in the assessment order passed u/s 143(3) of the Act. This addition included a sum of ₹ 8,86,880/- made u/s 40(i)(a) and of ₹ 38,050/- made on account of various expenses. This addition has been confirmed by the ld. CIT(A) as well as Appellate Tribunal and the appeal of the assessee is stated to be pending before the Hon'ble Jurisdictional High Court. Therefore, we do not interfere in this issue and the A.O has to follow and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Hon'ble Supreme Court in the case of Gopal Sugar Mills reported at 40 ITR 618, is relevant. Accordingly, we order to delete the impugned deletion of ₹ 4,80,000/- made in this regard and allow ground No. 4 of this appeal. Thus, we are convinced that the facts of this issue are identical in Jiya Devi Sharma s [group case]. BY respectfully following this order the ld. CIT(A) has taken his decision. How can we deviate from this finding of our own Bench. Accordingly, we do not find any merit in this ground of revenue s appeal and dismiss it. 18. In the result, the appeal of the assessee is partly allowed and that of the revenue is dismissed. ITA No. 253 and 348 /Jodh/2014 (A.Y. 2007-08) 19. These are cross appeals, filed against the order of ld. CIT(A), Jaipur, dated 31.03.2014. The assessee has raised the following grounds in its appeal:- 1. The Id. CIT(A) has erred in sustaining the disallowance out of interest amounting to ₹ 1,83,869/- out of interest payment claimed by the appellant. The addition so sustained is bad in law and bad on facts and outside the scope of assessment u/s 153A. 2. The Id. CIT(A) has erred in not granting tele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of revenue s appeal. In all other appeals for A.Ys. 2008-09, 2009-10 and 2010-11 this Ground [Ground No. ii] are exactly identical except for the amounts of disallowance. 23. In the result, the appeal of the assessee is partly allowed and that of the revenue is dismissed. ITA No. 254 and 349/Jodh/2014 (A.Y. 2008-09) 24. These are cross appeal, filed against the order of ld. CIT(A), Jaipur, dated 31.03.2014. The assessee has raised following grounds:- 1. The Id. CIT(A) has erred in sustaining the disallowance out of interest amounting to ₹ 1,99,707/- out of interest payment claimed by the appellant. The addition so sustained is bad in law and bad on facts and outside the scope of assessment u/s 153A. 2. The Id. CIT(A) has erred in not granting telescoping effect of income already surrendered by the appellant in various years and has also further erred in not granting telescoping effect of additions sustained. 3. The interest charged u/s 234B and 234C is bad in law and bad on facts. 25. The revenue has raised following grounds :- i). Whether on the facts and circumstances of the case, the Ld. CIT(A)-I, Jaipur has erred in law and on facts in directing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32,00,200/- in its hand. 28. The ld. CIT(A) has deleted this addition after discussing this issue in paras 8 to 9.1 at pages 8 to 10 of his order. He has observed that the source of this investment stands explained. He has followed the decision of the Appellate Tribunal, Jodhpur Bench, rendered in the group case of Shri M.D. Sharma in ITA No. 213 to 215/JU/2013 dated 24.9.2013. Before us both the parties have reiterated their earlier arguments, both the parties have made their similar arguments as were made before the ld. CIT(A). The ld. CIT[DR] has filed a written submission, which is as per the submission of the A.O. We have gone through these written submissions as well. We have perused the Tribunal order dated 24.9.2013 [supra]. 29. After considering the rival submissions the entire gamut of facts in their proper perspective, we have found that the facts in M.D. Sharma s case, supra are mutatis mutandis same to similar. The arguments of both the sides, on merits of this issue are also identical. The ld. CIT(A) has deleted this addition by following para 5.2 of the above said order dated 24.9.2013. The ld. CIT(DR) has also admitted this fact in his written submissions. Bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. The addition so sustained is bad in law and bad on facts and outside the scope of assessment u/s 153A. 2. The Id. CIT(A) has erred in not granting telescoping effect of income already surrendered by the appellant in various years and has also further erred in not granting telescoping effect of additions sustained. 3. The interest charged u/s 234B and 234C is bad in law and bad on facts. 35. The revenue has raised the following grounds: (i) Whether on the facts and circumstances of the case, the Ld. CIT(A)-I, Jaipur has erred in law and on facts in directing to delete the addition of ₹ 65,10,000/- made by the AO on account of disallowance u/s 40A(3) of the I.T. Act, 1961 in respect of purchase of agricultural land ignoring that the land were stock-in-trade of the assessee and also ignoring the fact that the appellant had failed to substantiate the exceptional conditions under which the cash payments were made. (ii) Whether on the facts and circumstances of the case, the Ld. CIT(A)-1, Jaipur ha erred in law and on facts in directing to delete the addition of ₹ 31,44,125/- made by the AO on account of 50% disallowance out of the land development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound No. 1 of the Departmental appeal is identical to Ground No. 1 taken in other A.Ys. We have deleted the additions made u/s 40A(3) made in respect of payment made for the purchase of agricultural land. With the same reasoning, we dismiss ground No. (1) of Revenue s appeal. 38. Similar is the position of Ground No. (ii) which relates to 50% disallowance out of the development expenses claimed by the assessee. We have dismissed the common issue, in earlier years. Following our view, we dismiss Ground No. (ii) of A.Y. 2010-11 as well. 39. Ground No. (iii) and (iv) of Departments appeal are in relation to deletion of an addition of ₹ 94,00,000/-. To explain the reasons for addition by the A.O and the reasons for deletion given by the ld. CIT(A), as well as the written submission of the ld. CIT(DR) in this respect, we incorporate para 4 at pages 5 to 8 of written submissions of the Department filed for A.Y. 2010-11 which reads as under: During the course of search action, various issues were noticed on the basis of material found and seized and confronted to the various assessees of this group. In response, the main person of the group namely Shri Murlidhar Sharma, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A - 34 page 2 Sale of shops in KuIdeep Vihar 4,00,000/- 2010-11 Q.No. 21 A - 33 Advances given out of books] for purchase of 15 bigha land for AiyushiVihar. 30,00,000/- 2010-11 Q.No. 22 GRAND TOTAL 1,29,00,000/ Out of total additions of ₹ 1,29,00,000/-, additions of ₹ 35 Lacs as per Anx-A-18, on account of building materials for the residence under construction was made on substantive basis in the hands of Shri Murlidhar Sharma and the other additions aggregating to ₹ 94 Lacs brought to tax in the hands of Shri Murlidhar Sharma. consisting of ₹ 25 Lacs for construction of farm house, ₹ 4 Lacs as per page No. 2 of A-34, ₹ 30 Lacs as per Anx-A-33 were made on substantive basis in the hands of M/s Aayshi Builders Developers and in the hands of Shri Muralidhar Sharma on protective basis. The Ld. CIT(A) has discussed the issue in paras 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fund flow statement, sources of investment etc. were not produced even at the first appellate proceedings. The Hon ble ITAT Jodhpur Bench decision in the case of Shri Murlidhar Sharma in ITA Nos. 213 to 215/Jodh/2013 for the A.Y. 2010-11 dated 24/09/2013 has not been accepted by the Deptt. and a further appeal u/s 260A of the I.T. Act, 1961 has been filed before the Hon ble Rajasthan High Court on 19/02/2014 which is pending for decision. Therefore, a further appeal was recommended on this ground in this case also. From the facts discussed by the AO in the assessment order and the findings of the Ld. CIT(A), it appears that decision the Ld. CIT(A) is not acceptable/justified for the following reasons:- (i) The Hon ble ITAT Jodhpur Bench decision in the case of Shri Murlidhar Sharma in ITA Nos. 213 to 215/Jodh/2013 for the A.Y. 2010-11 dated 24/09/2013 has not been accepted by the Deptt. and a further appeal u/s 260Aof the I.T. Act, 1961 has been filed before the Hon ble Rajasthan High Court on 19/02/2014 which is pending for decision. (ii) The surrender made voluntarily by the main person of the group namely Shri Murlidhar Sharma, who is also a partner in the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rma. (v) As discussed in the assessment order, the assessee has completely failed to substantiate his claim with corroborative evidence. The primary onus lies upon the assessee to explain each and every entry as well as transactions appearing the entire seized material has not been attempted to be discharged. However, on under oath, the unexplained investment/ expenses/ advances, outside the books of account, which were not regularly maintained and not declared in return of income, were offered for taxation u/s. 132(4) but the assessee has not declared the same in the return filed, nor were retracted. vii) The first appeals in respect of the substantive addition aggregating to ₹ 94 Lakhs made in the case of the firm M/s Ayushi Builders Developers has been decided now by the Ld. CIT(A). The Hon ble ITAT s finding in the case of Shri M. D. Sharma that the sustenance of the substantive addition even in the hands of the firm was not correct has been made without considering the facts relating to the pending appeal in the case of the firm and also ignoring the fact that Shri M. D. Sharma the assessee himself had voluntarily made surrender u/s 132(4) during search, as a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Hon ble Rajasthan High court on 19/02/2014 which is pending for decision. The decision regarding filing of appeal u/s 260A of the I. T. Act, 1961 in the case of Shri M. D. Sharma in ITA Nos. 213 to 215/Jodh./2013 for the A.Ys. 2006-07 2010-11 was communicated to this office vide the CIT(C), Jaipur office letter no. CIT(C)/Tech./JPR/CSR/2013-14/3203 Dt. 14/02/2014. Therefore, a further appeal to the Hon ble ITAT on this issue has been filed in this case. In view of the above, it is submitted that the Ld. CIT(A) has erred in directing to delete the said addition and hence the Hon ble ITAT may kindly be requested to set-aside the order of the Ld. CIT(A) and uphold the addition made by the AO on this ground as discussed in the assessment order. Thus it becomes very obvious that this bench has taken a view on this issue as discussed in the written submissions of the Department itself. For keeping the consistency we cannot deviate from our above view which has been taken after considering entire gamut of facts and after hearing both the parties. Accordingly, we cannot allow Ground Nos. (iii) and (iv) of Department s appeal and therefore, dismiss them both. 40. Ground No. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 to 215/Jodh/2013. Therefore, the Ld. C'IT(A) has held that the addition made on protective basis in the hands of the appellant does not survive and accordingly has directed to delete the addition made in this case. In this connection it is submitted that the Hon ble ITAT decision on this issue where the addition was made on substantive basis in the case of Shri M. D. Sharma in its common order in ITA No. 213 to 215/Jodh./2013 for the A.Y. 2010-11 has not.bee accepted by the department and a further appeal u/s 260A of the I. T. Act has been filed before the Hon ble Rajasthan High court on 19/02/2014 which is pending for decision. The decision regarding filing of appeal u/s 260A of the I. T. Act, 1961 in the case of Shri M. D. Sharma in ITA Nos. 213 to 215/Jodh./2013 for the A.Ys. 2006-07 2010-11 was communicated to this office vide CIT(C), Jaipur office letter no. CIT(C)/Tech./JPR/CSR/2013-14/3203 Dt. 14/02/2014. Therefore, a further appeal to the Hon ble ITAT on this issue has been filed in this case. In view of the above, it is submitted that the Ld. CIT(A) has erred in directing to delete the said addition and hence the Hon ble ITAT may kindly be requested to set-a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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