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2015 (6) TMI 203

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..... /-could have been made. The AO has no material to justify his suspicion that earlier cash withdrawals from bank have been spent or invested by the appellant somewhere else, and in the absence of such material, no adverse view can be taken against the appellant. Therefore allow this ground of appeal and delete the addition for ₹ 10 lakhs. - Decided against revenue. Addition to loan given to Smt. Rita Dhingra - CIT(A) deleted the addition - Held that:- The loan transaction, as entered into between the parties, is to be verified with reference to the question whether this transaction of loan involves transfer of funds which needs to be explained. In this case, there is nothing which needs to be explained when source of the same FDR has already been considered by the AO himself in his order. So far as the remaining amount of ₹ 1,05,000/- is concerned, the AO has accepted the source of this being out of 3 months' rent @ ₹ 35,0001- per month collected and credited in bank account of appellant wherein his wife Mrs. Rita Dhingra was a joint holder of account and also this rent has been declared by the appellant in his return of income for A.Y. 2005-06. Accordingly, the .....

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..... 77; 11,05,000/- made by the Assessing Officer on account of loan given to Smt. Rita Dhingra. 4. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 7,52,522/- made by the Assessing Officer out of the drawing for personal expenses. 5. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 1,44,000/- made by the Assessing Officer on count of unexplained cash credits. 6. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in admitting additional evidences under rule 46A? 7. The order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law. 2. Ld. D.R. at the outset invited our attention to the relevant paragraphs of assessment order and submitted that the additions made by A.O. were based upon facts and were made as the assessee was unable to explain the same. He heavily relied upon the order of the A.O. Ld. D.R. further submitted that Ld. CIT(A) had accepted additional evidence in violation of the provisions of Rule 46A of I. T. Rules. 3. Ld. A.R. on the other hand .....

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..... k and I find that the appellant had sufficient amount of cash available as per the cash book so as to enable to him to make the investment of the above amounts. Regarding the objection of the AO, that the cash withdrawn might have been spent by the appellant somewhere else and there was no chance of the appellant having cash in hand with him sufficient enough to make cash deposits with the bank from which the investment has been made by the appellant, I find that the above objection of the AO is not supported by any hard evidence and is based on general observation. Since there is no cogent material before the AO to support his above suspicion of the appellant having spent the cash balance on some other activities, I allow a relief of ₹ 6,63,300/-. 6.3 Finding on Ground No.4. I have considered the entire material available in the form of observation in the assessment order and the submissions of the appellant and the remand report and rejoinder of the appellant thereon. From the brief discussion in the assessment order, I find that the only reason given by the AO is that FDR is not reflected in the statement of affairs of the appellant as on 31/3/05. I find that in the .....

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..... rce of which remains to be explained. Considering the ledger account submitted from the books of Mrs. Rita Dhingra, the loan transaction consists of credit of FDR of ₹ 10,00,000/- and source of above FDR has already been considered by the AO in para 2 of the impugned order and therefore, there is nothing which remains unexplained as far as purchase of FDR is concerned. The loan transaction, as entered into between the parties, is to be verified with reference to the question whether this transaction of loan involves transfer of funds which needs to be explained. In this case, there is nothing which needs to be explained when source of the same FDR has already been considered by the AO himself in his order. So far as the remaining amount of ₹ 1,05,000/- is concerned, the AO has accepted the source of this being out of 3 months' rent @ ₹ 35,0001- per month collected and credited in bank account of appellant wherein his wife Mrs. Rita Dhingra was a joint holder of account and also this rent has been declared by the appellant in his return of income for A.Y. 2005-06. Accordingly, the entire addition for ₹ 11,05,000/- being explained is directed to be deleted .....

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..... of ₹ 78000/- (between the total personal expenses of ₹ 1,23,000/- and the cash expenses of ₹ 45,000/-) is because of the fact that such expenses for personal contingencies were incurred through cheques or through direct payments from bank, which cannot be considered in the cash flow statement or the cash account of the appellant. In view of above, I find that there is no difference in the accounted personal expenses as per the information given during assessment proceedings and therefore, source of the above personal expenses stand explained in view of reconciliation of cash flow statement. Regarding the balance amount of ₹ 1,29,521/-the AO has not raised any objection on the appellant's explanation in his report. It is observed that this balance amount for ₹ 1,29,521/- consists of LIC Premium for ₹ 1,07,4711-; mediclaim insurance for ₹ 17,995/- and Travel Insurance for ₹ 4055/-. All these payments have been made through cheques from the Account of G J Apparels and are, therefore, explained. I therefore allow this ground of appeal and the AO is directed to delete the addition for ₹ 7,52,522/-. 9.2 Additions due to cash c .....

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