2011 (9) TMI 1132 - AT - Income Tax

Summary

Issues Involved:

1. Justification of Ld CIT(A) in not accepting the appeal against protective assessment and sustaining additions on account of loans.
2. Charging of interest u/s. 234B and 234C of the Act.
3. Deletion of addition made on account of excess jewellery found.
4. Deletion of addition made on account of cash donation to Tirupati Devasthan.
5. Sustaining additions on account of differences in valuation of properties.
6. Sustaining additions on account of loans received from Shri J.H. Maniyar.
7. Sustaining addition on account of education expenses.
8. Deletion of addition made on account of unexplained investment in property.
9. Deletion of addition made on account of wrong claim of deduction u/s. 57.
10. Sustaining addition on account of agricultural subsidy.
11. Sustaining addition on account of loans from Shri J.H. Maniyar.
12. Sustaining addition on account of donations made to Tirupati Devasthan.
13. Sustaining addition under the head income from Dairy business.
14. Deletion of addition made on account of agricultural sales treating the same as bogus.
15. Deletion of addition made on account of dairy business.

Issue-wise Detailed Analysis:

Ground No. 1: Justification of Ld CIT(A) in not accepting the appeal against protective assessment and sustaining additions on account of loans.
The revenue questioned the Ld CIT(A)'s decision in not accepting the appeal against protective assessment and sustaining additions of Rs. 20,50,000/- and Rs. 30,00,000/- for A.Y. 2001-02 and 2002-03, respectively. The Tribunal noted that the assessment in the case of Shri J.H. Maniyar was reopened and decided by the Nagpur Bench of the Tribunal, which affirmed his financial capacity to advance loans. The Tribunal set aside the matter to the file of the Ld CIT(A) to decide afresh considering the Nagpur Bench's decision, allowing the ground for statistical purposes.

Ground No. 2: Charging of interest u/s. 234B and 234C of the Act.
The charging of interest u/s. 234B and 234C was deemed consequential and did not require separate adjudication. This ground was accordingly disposed of.

Ground No. 3: Deletion of addition made on account of excess jewellery found.
The Tribunal upheld the Ld CIT(A)'s decision to delete the addition of Rs. 10,85,091/- made on account of unexplained jewellery found during the search. The Ld CIT(A) noted that the jewellery included that of Sanjay Malu's family, which was covered in the search, and the valuation report mentioned the names of various family members. The Tribunal found no reason to interfere with the Ld CIT(A)'s reasoned order and rejected the ground.

Ground No. 4: Deletion of addition made on account of cash donation to Tirupati Devasthan.
The Tribunal upheld the Ld CIT(A)'s decision to delete the addition of Rs. 12,00,000/- made on account of cash donation to Tirupati Devasthan. The Ld CIT(A) followed the first appellate order in the case of Rajendra Malu, noting that the entire income, whether assessed as agricultural income or income from other sources, was available for the donation. The Tribunal found no reason to interfere with the Ld CIT(A)'s reasoned order and rejected the ground.

Ground No. 5: Sustaining additions on account of differences in valuation of properties.
The Tribunal upheld the Ld CIT(A)'s decision to give part relief on additions made u/s. 69B on account of unexplained investment in properties. The Ld CIT(A) considered the difference in rates adopted by the DVO, the local PWD rates, and the value of furniture and fixtures. The Tribunal found that the Ld CIT(A) had given sufficient relief and rejected the ground.

Ground No. 6: Sustaining additions on account of loans received from Shri J.H. Maniyar.
The Tribunal set aside the matter to the file of the Ld CIT(A) to decide afresh in view of the Nagpur Bench's decision in the case of Shri J.H. Maniyar. The Tribunal followed its decision in ITA Nos. 241 to 243/PN/2009 and allowed the ground for statistical purposes.

Ground No. 7: Sustaining addition on account of education expenses.
The Tribunal upheld the disallowance of Rs. 27,000/- on account of education expenses, noting that the personal capital account did not show any debit for educational expenses or personal withdrawals. The Tribunal found no reason to interfere with the orders of the authorities below and rejected the ground.

Ground No. 8: Deletion of addition made on account of unexplained investment in property.
The Tribunal upheld the Ld CIT(A)'s decision to delete the addition of Rs. 8,28,611/- in A.Y. 2005-06 and Rs. 6,08,438/- in A.Y. 2006-07 towards unexplained investment in property. The Tribunal found the Ld CIT(A)'s order comprehensive and reasoned and rejected the ground.

Ground No. 9: Deletion of addition made on account of wrong claim of deduction u/s. 57.
The Tribunal upheld the Ld CIT(A)'s decision to delete the additions of Rs. 15,934/- and Rs. 5,000/- in A.Y. 2006-07 made on account of wrong claim of deduction u/s. 57. The Tribunal found the expenses related to the business of the assessee and allowable under income from business or proportionately to different sources of income. The ground was accordingly rejected.

Ground No. 10: Sustaining addition on account of agricultural subsidy.
The Tribunal set aside the matter to the file of the Ld CIT(A) to decide afresh considering the additional evidence provided by the assessee, i.e., certificates issued by the Divisional Agricultural Officer. The Tribunal allowed the ground for statistical purposes.

Ground No. 11: Sustaining addition on account of loans from Shri J.H. Maniyar.
The Tribunal set aside the matter to the file of the Ld CIT(A) to decide afresh in view of the Nagpur Bench's decision in the case of Shri J.H. Maniyar. The Tribunal followed its decision in ITA Nos. 241 to 243/PN/2009 and allowed the ground for statistical purposes.

Ground No. 12: Sustaining addition on account of donations made to Tirupati Devasthan.
The Tribunal set aside the matter to the file of the Ld CIT(A) to examine whether sufficient funds were available with the assessee to make the donation, considering the entire income for cash flow purposes. The Tribunal allowed the ground for statistical purposes.

Ground No. 13: Sustaining addition under the head income from Dairy business.
The Tribunal upheld the Ld CIT(A)'s decision regarding the income from dairy business, noting that the Ld CIT(A) had given a reasonable finding considering the needed expenditure. The Tribunal found the first appellate order reasoned and rejected the ground.

Ground No. 14: Deletion of addition made on account of agricultural sales treating the same as bogus.
The Tribunal partly allowed the ground, directing the A.O to estimate the income from fruits and vegetables by accepting the claim of the assessee up to 80% of the standard yield reported by NHB and ICAR. The Tribunal found that books of account regarding agricultural activities were not maintained in the regular course of affairs, and correct income could not be deduced therefrom.

Ground No. 15: Deletion of addition made on account of dairy business.
The Tribunal upheld the Ld CIT(A)'s decision regarding the income from dairy business, following its decision in the appeals preferred by the assessee for A.Ys. 2002-03 to 2006-07. The Tribunal found the first appellate order reasoned and rejected the ground.

Summary:
- ITA Nos. 241 to 243/PN/2009, 383/PN/2009, & 385/PN/2009 are allowed.
- ITA Nos. 245 to 250/PN/2009, 381, 382 & 384/PN/2009, 386 to 387/PN/2009 & 753 to 759/PN/2009 are partly allowed.
- ITAs 318/PN/2009, 752/PN/2009, 316 to 317/PN/2009, 388 to 390/PN/2009 and 244/PN/2009 are dismissed.