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2015 (7) TMI 533 - ITAT DELHI

2015 (7) TMI 533 - ITAT DELHI - TMI - Addition on low and unexplained House Hold exp. - Held that:- From the reply of Sh. Vijender Mann it is evident that he was giving answers in present tense and, therefore, we find considerable force in the submission of ld. counsel for the assessee that the statement refers to the position as obtaining on 23-9-2009 when admittedly the children were not college going. However in AY 2006- 07 the children were school going as is evident from the certificate fil .....

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8377; 2 lacs. Further, keeping in view the extensive agricultural activities carried out by assessee’s husband, his statement that he had sold buffalo and tuda for more than ₹ 1 lacs cannot be doubted particularly when at the time of taking the statement the AO did not ask for the same assessee should be allowed further credit of ₹ 1 lakk from the addition made for house hold expenses over and above the credit to be allowed in respect of educational expenses, which were only ₹ .....

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agricultural produce was sold through assessee on which assessee got commission.In respect of other advances also there were business dealings with the parties and, therefore, amounts were lying in different accounts on account of commercial expediency. Hence, no addition was called for on account of debit balances lying with customers on notional basis for not charging interest on their account. We may further observe that there is no finding recorded by lower revenue authorities as to whether .....

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fore, on account of drying of paddy loss in weight is bound to occur. We are in agreement with ld. CIT(A) that as far as the opening balance is concerned, no loss on this count can be allowed because, if there was any such loss, it should have been claimed in earlier year. However, in respect of purchase of paddy during the year, we are of the opinion that it would meet the ends of justice if 5% loss on the purchase of paddy during the year is allowed on account of moisture less of the paddy. In .....

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rmined the total income at ₹ 10,49,331/-, inter alia, making following additions: (a) On account of low house hold withdrawals ₹ 3,09,000/- (b) Interest to the assessee s taxable income on account of a sum of ₹ 3,95,00/- remaining with the assessee for six months ₹ 23,700/- (c) Interest on debit balances of ₹ 6,82,949/- in respect of advances to other farmers, lying with the assessee. ₹ 81,905/- (d) Disallowance on shortage of paddy loss claimed by the assesse .....

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siderations confirmed the unexplained HH exp. ₹ 309000/- vide para 5 of the appeal order and ignored the natural justice. 3. That advances to farmers were made vide para 6 of the assessment order in the course of business expediency without consideration of interest. The AO without any reasons charged interest of ₹ 23700/- & 81905/- and the learned CIT(A) vide para 7 of the appeal order erred in confirming the same. 4. That AO can t compel to maximize the profits and ratio of CIT .....

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₹ 10,500/- only. The assessee pointed out that she with her husband Shri Vijender Mann would explain the source of house-hold expenses. The AO recorded the statement of Shri Vijender Mann on 23-9- 2009, in which he deposed that the expenses on the education of the children were approximately ₹ 2 lacs and ₹ 10,000/- p.m. had been incurred on house-hold expenses. The source of these expenses were explained from agricultural income of ₹ 11.33 lakhs derived from 20 acres of l .....

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ses on the education of the children after withdrawing the same from the bank a/c, since no documentary evidence was furnished, the AO show caused as to why ₹ 3,20,000/- should not be treated as incurred out of source not disclosed to the department and addition of ₹ 3,09,500/- be not made as Shri Vijender Mann was not in a position to meet out all the expenses. The assessee, inter alia, stated as under: It is stated by the assessee vide reply dated 9.11.2009 that he had withdrawn mo .....

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tural land, it was stated that he had paid lease money for agriculture land in earlier years out of advance from the firm M/s Divine Enterprises and some part out of loan from brother or any other relatives but no such matter was brought to the notice of the Assessing Officer when statement of Sh. Vijender Mann was recorded. However, no evidence regarding sales of buffaloes, tuda and loan taken from brother and other relatives have been filed. The explanation filed by the assessee has been consi .....

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006 which is surprising as the major expenses on account of education of children and harvesting of wheat, ploughing of fields, plantation of paddy, fertilizer and pesticides, irrigation etc. are to be incurred along with other household expenses during this period. The assessee has not even maintained any agriculture expenses, ploughing, growing, irrigation, seeds, maintenance of fields. payments to servants, harvesting of crops etc. Keeping in view the above facts, it is clear that the assesse .....

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s withdrawals and expenses incurred on household, education of children and agriculture expenses. Therefore, an amount of ₹ 30900/- incurred for household purposes and on education of children has been spent by the assessee out of her undisclosed sources and the same is added towards her taxable income. 7. In appeal, ld. CIT(A) confirmed the AO s action. 8. Ld. counsel for the assessee submitted that the statement of Sh. Vijender Mann was recorded on 23-9-2009. He referred to the state of .....

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of the PB wherein the details of fee for the whole period is given which was ₹ 17,515/- in case of Vidhi Mann and ₹ 16,315/- in case of Vipin Mann. Ld. counsel further referred to the details of withdrawals for AY 2006-07 and 2007-08, contained at pages 24 & 25 of the PB in respect of Sh. Vijender Mann. 9. Ld. counsel further submitted that no credit has been allowed in respect of sale of buffalo, tuda and Krishi Card Loan from Central Bank of India at ₹ 3 lacs. 10. Ld. DR .....

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ng, myself is agriculturist and my wife Smt. Krishna Devi is prop. Of Divine Enterprises, Madlauda. Sh. Vipin who is studying in LLB 1st year in Kurukshetra university and Miss Vidhi Mann (daughter) is studying B. Sc. Phy. Honours, Marinda House Delhi University. 12. From the reply, noted above, of Sh. Vijender Mann it is evident that he was giving answers in present tense and, therefore, we find considerable force in the submission of ld. counsel for the assessee that the statement refers to th .....

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te the very basis for making addition of ₹ 3,09,000/- which was primarily made on the basis of house-hold expenses being ₹ 10,000/- per month and children education at ₹ 2 lacs. Further, keeping in view the extensive agricultural activities carried out by assessee s husband, his statement that he had sold buffalo and tuda for more than ₹ 1 lacs cannot be doubted particularly when at the time of taking the statement the AO did not ask for the same which is evident from the .....

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/- I have also withdrawn ₹ 725000/- through cheques and the same were deposited in my saving A/c where from I have met out all the other expenses. In addition to sale of Agri products I have also sold Tura and buffaloes etc. for more than ₹ 1 lakh. The balance exp. of ₹ 85000/- were met out of the cash money received on sale of Tura/buffaloes. 13. Therefore, assessee should be allowed further credit of ₹ 1 lakk from the addition made for house hold expenses over and above .....

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the balance-sheet AO noticed that assessee had not charged interest against debit balances outstanding from Shri Om Pal Duhan (Rs. 6,00,000/-), Sh. Vijender Mann, Sh. Balbir ₹ 27,951/- and Sh. Badan Mann ₹ 54,598/- whereas she was paying heavy interest on the borrowed funds to the banks and others. The AO, relying on the decision of Hon ble Punjab & Haryana High Court in the case of CIT Vs. Abhishek Industries Ltd. 286 ITR 1, and after considering the assessee s reply, made addit .....

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tenable as the assessee had paid interest to each and every creditors i.e. all the farmers to whom cost of their produces remained unpaid or adjusted the loan along with interest out of their sale proceeds. 17. We have considered the rival submissions and perused the material available on record. The assessee s explanation before AO is contained at pages 26 to 29 of the PB, in which as regards advance to various debit balances, it is stated as under: Advance to Sh. Vijender Mann: Sh. Vijender Ma .....

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consists of the payment to him ₹ 100000/- on 19.03.2007 and ₹ 1000001- on 23.03.2007. Hence I did not charge any interest from him. Advance to Sh. Badan Mann: Sh. Badan Mann is an old customer of my firm. He sells his farm produce on my shop. During the year 2006-07, he has sold his agriculture produce amounting to ₹ 527385/- on my shop. He has purchased fertilizer for ₹ 434211- from my shop. He has taken the balance in cash or account payee cheques. During the year 2006 .....

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e installment of ₹ 200001- each) in the last week of March, 2007. It is very difficult to recover back the principal of the loan from him, what to say of interest. I am recovering back the loan from him in small amounts. Presently an amount of ₹ 3100001- of principal is outstanding towards him and there me very low chances. of recovery of this amount. I will file a case in the court for the recovery of my loan. When there are very low chances of recovery of principal amount, it is no .....

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ove noted explanation makes it evident that Sh. Vijender Mann and assessee had current account and the entire agricultural produce was sold through assessee on which assessee got commission. 19. In respect of other advances also there were business dealings with the parties and, therefore, amounts were lying in different accounts on account of commercial expediency. Hence, no addition was called for on account of debit balances lying with customers on notional basis for not charging interest on .....

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g 43.61 qtls. The assessee s explanation was that the paddy was old and she had purchased this paddy last year. Hence there was small shortage of 43.61 qtls due to drying. The AO rejected the assessee s contention observing that the assessee had been doing the business of purchase and sale of paddy for last so many years but no shortage had been found to be claimed in the year. Moreover, the assessee had not furnished any evidence to prove the genuineness of the claim made by the assessee on acc .....

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05-06 F. years and during the year 213.54 qt. was purchased. It contain great moisture and over a gape of time it is dried up resulting shortage. Even. Paddy purchased by the shallers holders are diredup & shortage in normal practice 10 to 12% are allowed. But in the case of assessee brought forward stock remained for a longer period, which is also decreased by eating by rats. Shortage occurred is about 8% which in normal course is allowable due to natural causes & may please be allowed. .....

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de in 2004-05 and 2005-06 and in financial year in question 213.54 qtls. Paddy was purchased and it contain great moisture and over a gape of time it is dried up resulting into shortage. It is not tenable keeping I view fact that had the purchases were made in the financial year 2004-05 and 2005-06, the shortage should be claimed in that year also not in the year in question. The assessee used this device only to avoid to pay taxes. As regards to the contention that average rate come to ₹ .....

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sue is considered. The main argument put forth by the appellant is that in the case of rice Shellers, driage and pilferage up to 10% is allowable, whereas, the appellant has only claimed a shortage of 8%, which the appellant contends is normal. As rightly observed by the AO in the assessment order, as the purchases were made in the financial year 2004-05 and 2005- 06, the appellant should have claimed shortages in those years too. Therefore, the AO was right in concluding that the excuse of dria .....

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