TaxTMI 
TaxTMI 
2005 (5) TMI 290
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....5. Ground NO.2. This ground is directed against the estimated income of the assessee from dairy business at Rs. 70,000. The assessee was running dairy under the name M/s Gajraj Dairy, Meerut. In his return filed in compliance to notice issued under s. 148 of the Act, the assessee had shown a total income of Rs. 32,650 and agricultural income at Rs. 60,000 and income from the dairy business was declared by the assessee as Rs. 25,000. It was done without enclosing any P&L ale or statement of income, etc. In compliance to the notice, the assessee filed the following computation of income from the dairy vide reply dt. 3rd March, 2003. (i) Winter Season (6 months) (a) Retail sales daily 100 Kg. Profit @ Re. 1 per Kg. = 100 x 30 x 6 18,000 (b) Wholesale daily 300 Kg. Profit @ Re. 0.25 per Kg. = 75 x 30 x 6 13,500 ------ 31,500 (ii) Summer Season (6 months) (a) Retail sales daily 50 Kg. Profit @ Re. l per Kg. = 50 x 30 x 6 9,000 (b) Wholesale daily 150 Kg. Profit @ Re. 0.25 per Kg. = 37.50 x 30 x 6 6,750 ------ Total 15,750 ------ Gross total 47,250 Less: Expenses including salary to servants Rs. 19,200 22,250 ------ 25,000 ------ 6. As the statisti....
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.... sale of this about 60 Kg. @ Rs. 110 (sic-Rs. 115) per Kg. Cost of ghee comes to Rs. 115 (sic-Rs. 110) per Kg. Thus, profit of one Kg. is Rs. 5. Cream is used for processing of ghee. There is no sale of cream. Shri Timraj Singh does not make curd. The monthly sale of ghee should be at least 100 Kg. (v) Shri Timraj Singh has kept three workers dairy Shri Nasim, Shri Gurmukh and Shri Bhojveer. Each is getting salary at Rs. 2000 per month. Shri Nasim is working since 4 years and other two are working since 6 years. (vi) The premises of M/s Gajraj Dairy is on rent and rent paid @ Rs. 540 per month. Earlier it was paid @ Rs. 440 per month. (vii) Shri Timraj Singh has told that he has 10 milk vendors in 1999, who supplied 1000 Kg. milk in the morning and 700 Kg. in the evening. Thus, he got 1700 Kgs. milk daily. He purchased milk @ Rs. 10, the retail price that time was Rs. 11 per Kg. In 1997, he has 7 vendors who supplied 750 Kg. milk daily. In 1995, he had 4 vendors who supplied 700 Kg. milk daily. (viii) The annual income of M/s Gajraj Dairy as under: (Rs.) (a) Income from retail sale of milk 1,26,000 Profit from sale of 350 Kg. Milk in retails daily 350 Kg. Profit from sa....
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.... '1. That as the appellant produced before the assessing authorities all its registers, it was their duty to definitely come to one conclusion or the other in regard to the reliability of everyone of the relevant accounts filed by the appellant, and in the absence of any such finding, it was not open to them to pick and choose some of the registers, which were more favourable to the Revenue.' E. That in the assessee's case, the learned AO has taken the part figures of the ITI's report and part figures out of his own mind (without any material basis). Had he drawn computation of income of dairy business, exactly in accordance with the ITI's report, it would have come/reached at a loss of Rs. (-) 37,830 F. That the learned AO has not brought anything on record for disbelieving the income shown by the assessee, except report of the ITI and that too has not been followed in toto. G. In the aforementioned circumstances, the income shown by the assessee deserves to be accepted or in the alternative, the income ought to have been determined at a loss of Rs. (-) 37,830 as per report of the ITI." 9. The learned CIT(A), upheld the estimate made by the AO in the following manner: Total q....
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....wner was recorded or not and whether his statement was confronted to assessee or not. The evidence of third party cannot be utilised against the assessee unless the assessee is given an opportunity to confront such witness. Shri Timraj Singh, had given information relating to financial year 1999 and such information cannot be utilised for the asst. yr. 1995-96. Thus, the estimate made on the basis of information relating to 1999, cannot be on sound basis for estimating income for asst. yr. 1995-96. However, the fact remains that the assessee himself had not maintained any books of account. It was also not denied by the assessee that he was not earning income from sale of ghee and sale of milk on retail and wholesale. Tl1e assessee had given working for calculating income from dairy at Rs. 25,000, but this working is not supported by any documentary evidence. After taking into account the entire material facts and figures on record and the evidence considered by the AO and the learned CIT(A), we find it proper to estimate the income from dairy at Rs. 50,000. This estimate is based on several factors including the statement of the assessee recorded by the DDIT. The assessee therefore....
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....o be given. Since the deposit was made on 17th Feb., 1995, the agricultural income and income from business for 11 months available with the assessee must have been as follows: (Rs.) (Rs.) Agricultural income 55,000 Income from dairy 65,000 business Cash in hand had 17,000 been claimed ------ 1,37,000 The total availability is 1,37,000 Less: Withdrawals towards household expenses 55,000 for 11 months (Rs. 60,000 towards household expenses admitted by the assessee through his counsel, vide letter dt. 25-2-2003 in para 4 of letter dt. 25-2-2003) Balance funds available for deposit 82,000 Total deposit 1,50,000 -------- Unexplained 68,000 Thus, in place of Rs. 1.50,000 the addition of Rs. 68,000 is sustained." 16. Before us, the contention of the learned counsel for the assessee was that the learned CIT(A) has not considered the explanation of the assessee regarding the loan of Rs. 56,000. In this regard, it was submitted that confirmation letters from the creditors, copy of Kisan Bahi, Khasra abstract, etc. were also filed to prove their source of income. We find full force in this submission of the assessee. The assessee had filed the relevant ....
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.... above amount represents the return credit of daily collection account, which was being run by the assessee since 13th Dec., 1991 with Syndicate Bank and the said account was matured and the assessee received the credit vide pay order from Syndicate Bank on 28th Feb., 1995. The said daily account was of Rs. 20 per day. Confirmation letters to this effect from the bank have already been filed before your Honour, vide paper book dt. 29th Jan., 2004'. 19. The learned CIT(A) directed the AO to verify the genuineness of this receipt from Syndicate Bank by observing as under: 'Facts of the case and submissions of the learned Authorised Representative have been considered. It seems that there was mistake in stating that this amount was received from LIC. The assessee has filed a certificate from Syndicate Bank dt. 28th Jan., 2004 which is to the effect that Shri Timraj Singh had maintained daily collection account No. PD 65586 since 13th Nov., 1991 and a sum of Rs. 37,420 was paid to him by pay order on 28th Feb., 1995. Since this certificate was not filed before the AO, he could not have verified the source of this deposit. The AO is, therefore, directed to verify the genuineness of th....
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....sitors. He, therefore, made an addition of Rs. 3 lakhs. In appeal, the assessee made the following submissions before the learned CIT(A). 29. The learned Authorised Representative submitted as follows: "a. That the assessee is maintaining a savings bank account with PNB, E.K. Road, Meerut, bearing No. 3040. b. That the assessee deposited a sum of Rs. 3 lakhs in cash on 13th Oct., 1995. c. That the receipt and expenditure chart was filed during the course of assessment proceedings and every expenditure against receipt is duly verified and tallied. d. That vide letter dt. 26th March, 2003 the assessee has given a cash flow as on 13th Oct., 1995, explaining the total amount of cash in hand, for depositing the said sum of Rs. 3 lakhs in the bank. However, the learned AO added a sum of Rs. 3 lakhs, as deposited in cash with the bank. The assessee has explained the same during the course of assessment proceedings, and the same is as under, for your Honour's perusal. (i) By taking loans as under: (Rs.) (a) Sh. Damak Singh 18,500 S/o Sh. Khem Chand on 28-9-1995 (b) Sh. Shayam Singh 19,000 S/o Sh. Khacheru Singh on 1-10-1995 (c) Shri Jas Ram 19,500 S/o Sh. Khajan Singh o....
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....y the assessee. 32. In view of the above, the addition of Rs. 1,67,000 sustained by the learned CIT(A) deserves to be deleted. 33. Ground NO.4. This ground challenges the addition of Rs. 1,16,000 made under s. 69 of the IT Act. The AO found that the assessee had purchased agricultural land by making investment of Rs. 2,93,000. As per the assessee the payment was made on the following dates (Rs.) 16-10-1995 1,50,000 30-10-1995 1,03,500 30-10-1995 stamp duty 36,760 30-10-1995 other expenses 2,740 -------- 2,93,000 -------- 34. The AO found that only a sum of Rs. 1 lakh was withdrawn on 18th Oct., 1995. As no proper explanation regarding the remaining amount of Rs. 1,93,000 was given the AO made the addition of Rs. 1,93,000 under s. 69. In order to challenge the addition, the following submissions before the learned CIT(A): 'That no such type of query had been given by the learned AO at the time of assessment proceedings and, therefore, no submissions in this respect were made to him. As such, in this regard, it is humbly submitted that this a part payment for agricultural land of Rs. 2,93,000 which has already been tallied with the total receipt and expenditur....
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.... 39. In the result, the appeal filed by the assessee is partly allowed. 40. ITA No. 4587/Del/2004 (asst. yr. 1997-98) 41. Ground No. 1, not pressed hence rejected. 42. Ground No. 2. This ground is directed against the estimate of income from dairy business at Rs. 70,000. After considering the entire material on record and in view of our observations made while deciding this issue, in the asst. yr. 199596, we consider it proper to estimate income from dairy business for this year at Rs. 50,000. The assessee will, therefore, get a relief of Rs. 20,000. This ground is, therefore, partly allowed. 43. Ground No. 3. This ground challenges the addition of Rs. 15,000 made by the AO under s. 68 of the Act and was sustained by the learned CIT(A). The contention of the learned Authorised Representative was that this was incorrect credit made by the bank in the account of the assessee. It was pointed out that later on the mistake was corrected by the bank on 29th Sept., 1997. In this regard, the certificate from the bank was also given. The learned CIT(A) directed the AO to call for the details from the assessee, and if the details are found to be correct then to delete the addition. 44. ....