TMI Blog2015 (4) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... as income from undisclosed sources representing un-explained investment in the purchase of land at Nandurkhi, which has been confirmed by the CIT(A)- Held that:- We find merit in the plea of the assessee that out of total investment of ₹ 21,30,000/- made during the year under consideration, a sum of ₹ 2,00,000/- has been paid by way of cheque dated 04.04.2008 drawn on Andhra Bank. The balance cheques in the preceding year were also drawn on Andhra Bank which is the business bank account of the assessee, hence, there is no merit in making any addition on account of said payment of ₹ 2,00,000/-. For balance payment perusal of audited financial statements relating to the financial year 2008-09 reflects that the assessee had declared the investment in plot at ₹ 39,00,500/- in its balance sheet as on 31.03.2009. Once the amount has been declared by the assessee in the balance sheet as on 31.03.2009 as investment in the purchase of plot, then investment to that extent merits to be accepted in the hands of the assessee. One point also be clarified herein that the sum of ₹ 2,00,000/- paid by cheque drawn on Andhra Bank, dated 04.04.2008 stands covered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal (Ld. CIT (A) and Learned Assessing Officer (Ld. AO) erred under circumstances and facts of the case and in law by upholding and making addition of ₹ 1,81,819/- to the trading results by rejecting books of accounts of appellant and adopting net profit @ 2.50% of sales. Addition of ₹ 21,30,000/- as Income from Undisclosed source representing unexplained investment.: 2. The Ld. CIT (A) and Ld. AO erred under circumstances and facts of the case and in law not appreciating that appellant audited balance sheet as on 31st March 2009 discloses under the head Investment, Plot advance of ₹ 39,00,500/-. 3. The Ld. CIT (A) and Ld. AO erred under circumstances and facts of the case and in law without appreciating that appellant being agriculturalist he has invested accumulated cash agricultural income to purchase agricultural land at Nadurkhi Bk Tal Rahata, Dist. Ahmadanagar. 4. Without prejudice to Ground No.1 the Ld. CIT (A) erred on facts of the case and in law by not appreciating that the Ld, AO has worked out appellant's income for AY 2009-10 is of ₹ 4,82,573/- only and not unearth any other taxable source of income. 5. The Ld. CIT(A) under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment was withdrawal from the business books only. However, he pointed out that books reflected the investment under the head plot advance at ₹ 39,00,500/-. The claim of the assessee in this regard was that, it was because of wrong accounting entry. However, the assessee was unable to substantiate the claim by producing supporting evidences. Another issue noted by the Assessing Officer was that as per the accounts extract appearing in the books of account of Shri Sai Nagari Sahakari Patpurvartha Sanstha, the debit balance as on 31.03.2009 was ₹ 5,30,168/-. However, the ledger account of the Sanshta in the assessee s book showed credit balance of ₹ 5,49,995/-. When confronted, the learned Authorized Representative for the assessee conceded that the liability was wrongly shown. 6. In the above said background, the assessee was show caused as to why the books of account should not be rejected under section 145(3) of the Act and the net income be computed by adopting the net profit rate of 2.5% on the disclosed turnover. Rejecting the explanation of the assessee vis- -vis nature of business, the Assessing Officer computed the income from business by estimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plea of the assessee was rejected by the CIT(A) and it was held as under:- 4.2 These submissions are duly considered. It seen that the factual position submitted with reference to cheque totaling ₹ 15,00,000/- which are made from appellant s Andhra Bank Account, actually pertain to A.Y. 2008-09. No addition has been made by the Assessing Officer on this account. As regards addition of ₹ 21,30,000/- during the year, it is simply stated to be paid from books of account. Further, it is submitted that assessee has paid balance amount out of his saving from agriculture business. The extract of Andhra Bank statement provided has been examined which gives account statement for the period 25.03.2008 to 31.03.2008, which is not relevant to the impugned A.Y. No other evidences are filed to substantiate the appellant s claim that the investments in land made in cash are out of unaccounted income as per books. Therefore, I have no hesitation, in confirming the addition of ₹ 21,30,000/- under this head. 8. The assessee is in appeal against both the above said additions. 9. The learned Authorized Representative for the assessee took us through the facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rting expenses, implying that the assessee after making purchases, sorted out the bottles and supplied to different liquor manufacturers. Once the bottles were being sorted out, the quantitative details could have been maintained by the assessee. Further, the assessee did not furnish any details in respect of the expenditure booked under the head salaries . During the course of assessment proceedings, the assessee admitted that even if there were any defects in the books of account, the sales made by him were fully supported. In the entirety of the above facts and circumstances, where the assessee had failed to maintain proper record and the expenses not being backed by proper details, we hold that the provisions of section 145(3) of the Act are attracted and the book results declared by the assessee cannot be relied upon. After dismissing books of account, next resort was to estimation of income. The assessee during the year under consideration had disclosed turnover of ₹ 1,93,02,933/- on which, it had declared net profit of ₹ 3,00,754/-. The Assessing Officer however, applied NP rate at 2.5% on total sales and computed the income at ₹ 4,82,573/-. We uphold the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 21,00,000 + 2,30,000/- i.e. ₹ 23,30,000/-. The Assessing Officer while computing the details of investment year-wise at page 4 of the assessment order, has committed an error in totaling the payment for financial year 2007-08 at ₹ 28 lakhs as against the total payment of ₹ 29 lakhs made by the assessee, which recognized in the second column, but in the first column by mistake, the figure of ₹ 17 lakhs was picked up. 14. Now, coming to the investment for the year under consideration, the plea of the assessee was that sum of ₹ 39,00,500/- had been paid by cheques or by way of deposits in cash in the sellers bank account maintained with Andhra Bank branch at Shirdi. The source of the said sum of ₹ 39,00,500/- was out of the business income of the assessee. The balance consideration and stamp duty expenses were claimed by the assessee to have been paid by the other family members as well the assessee out of accumulated agricultural income. The balance of such payment was ₹ 13,29,500/-. The first grievance of assessee was that the Assessing Officer had erred in adding ₹ 21,30,000/- as income from undisclosed sources representing un- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o merit in the claim of the assessee in this regard. The perusal of the assessment order reflects that the assessee had only declared income of ₹ 2,91,150/- and no agricultural income had been offered to tax. In the absence of the same, we find no merit in the plea of the assessee that the balance investment totaling ₹ 13,29,500/- was made out of agricultural income. 17. Now, coming to the alternate plea raised by the assessee that the additional income assessed in the hands of the assessee under the head income from business i.e. ₹ 1,81,819/- being set off against the balance addition made in the hands of the assessee i.e. ₹ 13,29,500/-. We find merit in the plea of the assessee in this regard. Accordingly, we direct the Assessing Officer to give the benefit of set off of the additional income against the source of investment in the purchase of plot. Accordingly, the addition in the hands of the assessee on account of undisclosed investment in the purchase of plot of land is restricted to ₹ 13,29,500/- - 1,81,819/- = 11,47,681/-. The ground of appeal No.2 raised by the assessee is thus, partly allowed. 18. In the result, the appeal of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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