TMI Blog2012 (10) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... re is an interest receipt of Rs.2,60,684/-. Therefore, interest pertaining to diversion of borrowed fund in share application is required to be restricted only in respect of net amount of interest. Thus the CIT(A) has rightly allowed relief of Rs.2,60,684/- and has correctly confirmed the addition to the extent of Rs.34,167/-. Activity related to Bardana and advances to farmers and charging of interest - Held that:- The pages of Paper Book referred by the assessee at the time of hearing requires necessary reconciliation. It has also been noticed that there is no consolidated reconciliation on record based on which it can be said that the transaction relating to Bardana and interest has been the entries for amounts which were considered for calculation of peak amount. In the absence of complete reconciliation of details in this regard that the transaction relating to Bardana and interest were included in the consolidated cash book on which basis a peak amount has been calculated. In the absence of complete facts, the issue pertaining to Bardana and interest cannot be decided at this stage the order of CIT(A) is not in accordance with section 250(6) & send back to decide the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O be restored. 6. The appellant craves leave to add or alter any or more ground or grounds of appeal as may be deemed fit at the time of haring of appeal. 3. The grounds of Cross Objection raised by the assessee in the case of Shri Vijay Kumar Agarwal read as under :- 1. The Ld. CIT Appeal has erred in law facts in confirming an addition of Rs.120 lacks without properly appreciating the facts of the case. 2. That the CIT(A) has erred in law on facts in retaining an addition of Rs.34,167/- out of Rs.2,94,851/- made by A.O. by invoking provisions of Sec 14A without properly appreciating the facts of the case. 4. The grounds of appeal raised by the assessee in the case of Smt. Charu Agarwal read as under :- 1. That having regard to the facts circumstances of the case the Ld. CIT (Appeals II) has erred in law and facts in confirming an addition of Rs.22,23,928/- on account of alleged undisclosed investment in Bardana without appreciating the facts and merits of the case. 2. That having regard to the facts circumstances of the case, the Ld CIT(Appeals II) has erred in law and facts in conforming an addition of Rs.2,34,643/- on account of alleged unaccounted int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on oath recorded on 18.12.2009 during which the various loopholes in the theory of imprest account was confronted to him. From the assessee s statement relevant question and reply are being quoted :- Q-8 On the basis of books of accounts impounded during the survey, the entries of all three concerns, namely Agarwal Ice Cold Storage, Ramwati Sheet Grah and T.R. Sons Business Pvt. Ltd., are combined and jumbled up. No day-to-day flow of funds of each business concern can be bifurcated. Besides these, you have stated regular books of accounts are lost, hence, the returns are furnished on fabricated basis without any accounts. Explain why they may not be rejected and entire cash introduced be taxed in the hands of Sh. Vijay Agarwal i.e. yourself s case. Ans-8 I have to the best of my efforts furnished explanation to each and every entry with support at my disposal. It may kindly be noted that I have already surrendered Rs.1 crore in two years as committed during survey. Out of this, Rs.35 lacs were surrendered in the year in question. Q-9 The above reply is not satisfactory as in the impounded books/printout, there are clear cash introduction in the name of Vijay Bhai of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessees. 6. On the basis of examination and above statement of Shri Vijay Bhai the A.O. accepted the cumulative peak of cash introduction during the year at Rs.1,54,20,346/-. After allowing the adjustment of surrender of different groups the A.O. made addition of Rs.1,31,70,346/- as under :- (Paragraph no.3.3) 3.3 On the basis of the above statement as well in the reply furnished on 21.12.2009, the assessee has once again reiterated the surrender of Rs.120 lacs on account of entries in impounded documents. On the basis of the cumulative peak of cash introduction during the year being Rs.1,54,20,346/-, the surrender on this account in assessee s hands after excluding Rs.15 lacs surrendered in the hands of Ramwati Sheet Grah and Rs.7.5 lacs in Agarwal Ice Cold Storage totalling to Rs.22.5 lacs be reduced from Rs.1,54,20,346/- i.e. Rs.1,31,70,346/- is being added as undisclosed/unexplained money or investment by invoking deeming provisions of section 68/69 of the I.T. Act, 1961. Penalty proceedings u/s 271(1)(c) are being separately initiated for non-disclosure of true particulars of his income. [Addition of Rs.1,31,70,346/-] 7. The CIT(A) restricted the addition to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enged the addition of Rs.120 lacs sustained by the CIT(A). 9. We have heard the ld. Representative of the parties and records perused. The undisputed facts of the case are that cumulative peak of cash introduced during the year was Rs.1,54,20,346/- on the basis of this peak amount of other material the assessee surrendered Rs.1,20,00,000/- in addition to Rs.12,50,000/-. Surrender at the time of survey. This amount of Rs.12,50,000/- has been incorporated by the assessee while filing return of income and offered to tax. The A.O. made addition of Rs.1,31,70,346/-, being the cumulative peak of cash introduced during the year. After allowing set of/adjustment of amount surrendered in different concerns the group. The CIT(A) found that the assessee himself has disclosed Rs.12,50,000/- in the return of income. Therefore, this amount was also required set off and adjustment in the addition of Rs.1,31,70,346/- is required to be reduced. Even this amount of Rs.12,50,000/- is reduced from Rs.1,31,70,346/- and balance comes to Rs.1,19,20,346/-. However, the CIT(A) restricted the addition to the extent of Rs.1,20,00,000/- allowing relief of Rs.11,70,346/- on the ground that the assessee him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relief of Rs.2,60,684/- only and balance Rs.34,167/- shall be added to income. 14. We have heard the ld. Representatives of the parties and records perused. After considering the totality of the facts, we find that the CIT(A) has rightly deleted the addition of Rs.10,00,000/- on account of Bardana and Rs.5,78,262/- on account of interest as both items related to business activities, in other words trading activities, and on that account addition to the extent of Rs.1.20 crores has already been confirmed. Therefore, we are of the view that these separate additions are not warranted. We find that the CIT(A) has rightly deleted the additions. In the light of the fact, we confirm the order of CIT(A) in deleting both the additions of Rs.10,00,000/- and Rs.5,78,262/- made by the A.O. 15. As regards the addition under section 14A of the Act of Rs.2,94,851/- we find that the CIT(A) has correctly appreciated the facts and found that entire funds of group has been channelised through Vijay Kumar Agarwal. There is an interest receipt of Rs.2,60,684/-./ Therefore, interest pertaining to diversion of borrowed fund in share application is required to be restricted only in respect of net a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed material computer printout it was noticed that the assessee earned interest income also but the same was not found credited in Profit Los Account. The interest charged from farmers during the period 25.04.2007 to 23.10.2007 was Rs.55,69,760/-. The A.O. after considering the assessee s submission made addition of Rs.2,34,643/- as under :- (Page no.7, paragraph no.3.2) As regards the quantification of the amount, the out of books interest received is being recalculated on the basis of actual receipt of interest as mentioned in the Kisan Bahi i.e. Annexure E-9 and it comes out to Rs.8,53,248/-. Therefore, undisclosed interest income needs to be taxed in the hands of the cold storages and the same is being apportioned on the basis of rent received which comes out to Rs.2,34,643/- i.e. 27.5% of the total interest earned in the assessee s case.) (Addition of Rs.2,34,643/-) 20. The CIT(A) confirmed both the additions as under :- (Paragraph no. 3.2) 3.2 I have analysed the matter and find that it is a matter of fact that consolidated books of account pertaining to 3 cold storages were found. I also agree with the AO that Shri Vijay Kumar Agarwal has managed three concerns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully explained taxed (Rs.1,54,20,346 /- in A.Y. 2007-08 Rs.9,74,659/- in A.Y. 2008-09) (Refer PB 84 to 99) (PB 99A to 99B) various withdrawals have been made from time to time in this account. All the payments which are shown in annexure E-l have been reflected between 11.10.2007 to 19.10.2007. The total of annexure E-1 is Rs.59,60,900/- whereas the amount reflected in Vijay Bhai account between 11.10.2007 to 19.10.2007 is Rs.54,50,000/-. The residue amount of Rs.5,10,900/- was paid by Shri Vijay Bhai directly without routing it through the consolidated accounts of the group concern. Regarding payment of Rs.21,26,114/- for bardana purpose, it is clarified that this amount is not a payment. This is a credit entry against which the payment of Rs.25,00,000/- is made on 27.08.2007 and reflected in the account of Vijay Bhai. Hence the entire block of Rs.80,87,014/- already stands taxed , therefore, the addition made by Id. AO may kindly be deleted. ---------- 4.1 For deletion of this addition, the Id. AR of the appellant vide his written submissions has submitted as under: The Id. AO has made an addition of Rs.2,34,643/- on account of alleged unaccounted interest received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the assessee, the peak pertaining to A.Y. 2007-08 Rs.1,54,20,346/- has already been explained in the hands of Shri Vijay Kumar Agarwal in A.Y. 2007-08. The peak difference of Rs.9,74,659/- is pertaining to A.Y. 2008-09 which has been offered to tax by surrender of income by Vijay Bhai in A.Y. 2008-09. Similarly, interest received was also offered to tax in the hands of Shri Vijay Kumar Agarwal by surrendering the amount in A.Y. 2008-09. It was submission of the assessee that transaction relating to Bardana and interest has been explained by the assessee and the same has been offered to tax in the hands of Shri Vijay Kumar Agarwal. Therefore, no separate addition is warranted in the hands of Smt. Charu Agarwal. On perusal of order of CIT(A), we notice that the CIT(A) simply reproduced the A.O. s finding and assessee s submission and confirmed the addition without any discussion and his finding in respect of submission of the assessee. The contention of the assessee that the transaction related to Bardana and interest has fully been explained in the hands of Shri Vijay Kuamr Agarwal in the A.Y. 2008-09 by surrendering income on these accounts. During the course of hearing, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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