TMI Blog2022 (8) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceeds from Krishi Upaj Mandi Samiti, the same is again to no consequence as the sale of agricultural produce does not in any manner show that the same stands cultivated by the seller, for which the assessee ought to have produced the revenue record. The assessee s claim is wholly unproved. The returned income is, accordingly, directed to be assessed as income from other sources. Unexplained cash credits - HELD THAT:- We are completely at loss to understand the Revenue s case. The very fact that the money credited by VSPL to the assessee s account in it s books, originates from the assessee s bank account; rather, ought to be the reason for regarding the source of investment or movable property (in the form of loan) as explained instead of unexplained. Further, the same, duly accounted for in their regular accounts, both by the debtor (lendee) (VSPL) and the creditor (lendor), what, then, is the issue? The only concern and, further, for the reason that the source of the said credit/s is not referable to the assessee, is for the balance credit of Rs. 3 lacs. The ld. CIT(A) confirmed the same in the absence of any corroborative evidence furnished by the assessee. How coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it against the impugned sums to two parties, both of which record the same as payments thereto in their accounts. Quizzical indeed. None of the payments , it is apparent, have been realized by MMC during the preceding year. How has the amount been adjusted in the assessee s accounts in future, with even the account for the current year, i.e., f.y. 2013-14, being conspicuous by its absence, is also relevant. The matter requires a thorough and proper examination, also bringing on record, where and the extent required, evidence from both MMC MRI; the assessee being wholly unable to explain the transactions and, as appears to us from his submisions by Shri Usrethe, in a confused state of mind. The matter being wholly indeterminate, we, vacating the findings by the first appellate authority, set aside the matter for fresh adjudication by the AO, who shall decide it in accordance with law upon issuing definite findings of fact, and after allowing the assessee a reasonable opportunity of being heard, as well as, as afore- stated, seeking evidence from MMC MRI in the matter. Disallowance of bonus expenses - HELD THAT:- CIT(A) agreed with the AO in principle, but found no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 14,97,188, claimed to be the sale of Masoor Dal, from Krishi Upaj Mandi Samiti, Tendukeda, Dist. Narsinghpur, notwithstanding, even as the AO had by mistake, as was a common ground before us, regarded the entire of it (Rs. 14.97 lacs) as income. The part relief by the ld. CIT(A) was on the basis that the assessee had a past history of acceptance of agricultural income, beginning AY 2012-13 (at Rs. 4.61 lacs); AY 2013-14 (at Rs. 1.93 lacs), with the latter being per a sec. 143(3) order. Even for the subsequent year, i.e., AY 2015-16, the claim of agricultural income stood accepted u/s. 143(3) at Rs. 4.60 lacs. In this view of the matter; the agricultural land holding being not disputed, he estimated the agricultural income for the relevant year at Rs. 5.50 lacs. 3.2 The ld. CIT(A), in so doing, does not in any manner meet the AO s objections. True, the claim of agricultural income stands accepted for the earlier, and even for a later year (PB pgs.51-62). However, the same is sans any finding in the matter. There is no whisper on this aspect in the relevant orders, each of which stands perused, wherin the returned figure of agricultural income stands adopted as such. It is onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, in addition, also credited Rs. 167 lacs advanced by the assessee on behalf of it s partners, and another Rs. 3 lacs from others. This was found on comparing the accounts of the lender and the lendee in each other s books; all the transactions being through the banking channel. The debit to the partners respective accounts in the assessee s accounts, at an aggregate of Rs. 167 lacs, was also shown. Further, the debtorcompany had in the immediately succeeding year (i.e., fy 2014-15), reversed the excess credits, transferring the same (Rs. 167 lcas) to the accounts of the respective partners, who were also shareholders in the debtor-company. The explanation did not find favour, both with the ld. CIT(A) as well as, before him, the AO, as the amounts debited by the assessee to the partners accounts (Rs. 167 lacs) had been transferred to the debtor s bank account through the assessee s bank account. 4.2 During hearing, Shri Usrethe would take us through each of the entries in the assessee s accounts, correlating the entries in the books of the lendee/debtor for the current as well as the succeeding year (depicting reversal of the excess credit allowed) as also the assessee s bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he latter can be called upon by it to explain the nature and source thereof and, in the event of it being not satisfactorily explained, deem it as the assessee s income. In the instant case, the evidence relied upon, being a credit in the assessee s name in the books of a lendee, stands explained by the assessee who cannot be called upon to prove a negative, as not attributable to it, and which stands identified by the debtor-lendee, a related concern, as being received from another, correcting it s accounts in admission of the mistake, corroborating the assessee s claim/s. There is thus no adverse material with the Revenue in its respect. 5.3 We, therefore, find no merit in the said addition and, accordingly, direct its deletion. We decide accordingly. This decides Ground Nos. 2 to 4 of the assessee s appeal. 6. Vide Ground # 5, the assessee contests the disallowance of labour expenses in the sum of Rs. 6.27 lacs, i.e., at 5% of the total expenditure claimed in its respect, being at Rs. 125.33 lacs. The disallowance by the AO was as he, on verification, found the expense vouchers to be unverifiable in part, being through self-made debit vouchers, with some of them being ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favouring MRI toward, as stated, mining royalty payable to MMC. Further, all the amounts were debited in the assessee s accounts to the account of MMC, being, as stated, toward royalty instalments, though no expenditure in its respect had been claimed for the relevant previous year ((PB pgs.142-15, 153 154) . The ld. CIT(A) found that the difference was thus suitably reconciled, and the confirmation issued by it s partner (for and on behalf of firm) as being issued without verifying the accounts and, thus, retracted for bona fide reasons. The addition, in his opinion, if at all, should be made in the hands of Manjula Chandel (proprietor, MRI), and there was no warrant for invocation of s.68 in the hands of the assessee. Aggrieved, the Revenue is in appeal. 9. We have heard the parties, and perused the material on record. 9.1 We begin by reproducing the findings by the ld. CIT(A): (pgs. 27-28) 7.2.4 On perusal of the documents and other material placed on record, it is apparent that no sum is found credited in the books of accounts of the appellant, but the sum is found credited in the books of accounts of Smt. Manjula Chandel Prop: M/s. Maa Reva Infrastructure. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheque in it s favour, and which has banked the same, as evident from the copy of the assessee s account in it s books (PB pg.152), wherein the same is, as stated, in respect of royalty and, accordingly, debited in it s accounts to the account of MMC? Where, one may ask, is the question of the assessee handing over the drafts favouring MMC to MRI for the latter to account for the same? In other words, though the source of amount has been, without doubt, explained by the assessee, the nature of the transactions has definitely been not, and it is only on a satisfactory explanation qua both, the nature and source of the said sums, representing, as per the assessee, either an expenditure paid in advance or an asset, that deeming of the same as it s unexplained income (u/ss. 69/69A/69B/69C etc.) would not obtain. True, the AO mentioned it as u/s. 68, which is qua an unexplained credit in the assessee s accounts. The same would though be to no consequence. It is trite law that exercise of power would be referable to a jurisdiction which confers validity upon it, and not to a jurisdiction under which it would be nugatory (L. Hazari Mal Kuthiala vs. ITO [1961] 41 ITR 12 (SC)). As long as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er for fresh adjudication by the AO, who shall decide it in accordance with law upon issuing definite findings of fact, and after allowing the assessee a reasonable opportunity of being heard, as well as, as afore- stated, seeking evidence from MMC MRI in the matter. We decide accordingly. 10. The third and final ground of the Revenue s appeal relates to the deletion of a disallowance for Rs. 6.40 lacs by the AO, i.e., to the extent of Rs. 6.25 lacs. The verification of the said payment, being bonus payable, recorded in the assessee s accounts on 30/06/2014, revealed that against the names of the employees mentioned at serial nos. 28, 29 30, etc. of the payment list, signatures of one, Vijay Razak, appeared in different patterns, so that clearly the same were fake and manipulated (PB pgs.160-161). The AO, accordingly, disallowed the entire expenditure, claimed at Rs. 6.40 lacs. The ld. CIT(A) agreed with the AO in principle, but found no reason to extend the disallowance to other names, no doubt in respect of which had been expressed by the AO. He, accordingly, restricted the disallowance to the payments against the names at serial nos. 28-30, allowing the assessee relief fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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