TMI Blog2015 (8) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... of cold storage in the FY 2009-10, the statement of the farmers cannot be given much credence. In the aforesaid view of the matter, there being no infirmity in the order of ld. CIT(A) - Decided in favour of assessee. Addition u/s 69 - addition deleted by CIT(A) - Held that:- Addition u/s 69 of the Act has been made purely on conjectures and surmises. The department’s contention that bonds were not produced before AO by assessee, though, technically may be correct, but, at the same time, it is to be noted that bank authorities have submitted all informations relating to loan granted to farmers on the basis of the bonds/receipts given by assessee. Therefore, on the face of such evidence, it cannot be said that stocks kept in the cold storage are unexplained investment of assessee. Department having failed to bring any material on record to controvert the aforesaid facts, addition made has no legs to stand. Accordingly, ld. CIT(A) was justified in deleting the addition and, hence, upholding the order of ld. CIT(A), we dismiss the grounds raised by revenue.- Decided in favour of assessee. - ITA No. 1277/Hyd/2014 - - - Dated:- 29-7-2015 - Shri B. Ramakotaiah and Shri Saktijit Dey, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angal on 31/03/2013 (subsequently rectified to 31/03/10 u/s 154.) He further observed that as per the information filed by assessee and report of the auditor, the cold storage plant commenced its activity w.e.f. 23/03/10. However, from the list of farmers, it was seen that they have stated storing their produce in the cold storage from 09/03/10. Further, from the information obtained from Indian Overseas Bank, Madhira. It was found that farmers stated to have kept their agricultural produce in the cold storage and obtained loans from the bank from 25/02/10 (wrongly mentioned as 25/02/13). From the aforesaid facts, AO inferred that assessee has issued bonds to the farmers to whom loans were given by bank even prior to the date of commencement of business i.e. 23/03/10. AO observed that without obtaining statutory licence from the govt. authorities, assessee could not have commenced its business. He therefore proposed to disallow assessee s claim of deduction u/s 35AD. Though, assessee objected to the proposed disallowance by submitting a detailed reply, but, AO rejecting the explanation of assessee held that assessee having failed to prove that it has commenced its business activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced before AO. She also referred to the acknowledgment of the Industries Department, which indicated that assessee has commenced its operations from 23/03/2010. She also found that assessee has issued bonds to farmers, which indicated the date of commencement of cold storage from 22/02/2010. Thus, on the basis of evidences available on record, ld. CIT(A) concluded that assessee s claim of having commenced its business within the relevant FY is acceptable, hence, assessee is eligible for claim of deduction u/s 35AD of the Act. Accordingly, she deleted the addition made by AO. 8. Ld. DR submitted before us, assessee in course of assessment proceeding, has changed its stand from time to time with regard to the date of commencement of business. Though, initially, he stated to have commenced the business for a period of 10 days in the month of March 10, but, subsequently, it has claimed that business started in the month of early part of March 10, whereas, the bonds issued on the basis of which the farmers obtained loan from bank revealed that date of commencement of business was in the month of February 10. Thus, it was submitted by ld. DR, assessee has not produced any authentic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation obtained from the bank authorities, it is evident that the bank has granted loans to the farmers on the basis of bonds/receipts issued by assessee towards products stored by farmers in the cold storage. Thus, it cannot be said that the bank authorities without verifying the fact whether the farmers actually stored their products in the cold storage had granted loan to the concerned farmers. Moreover, the most crucial evidence, in our view, is the fact that AO while making addition on account of unexplained investment in stock has himself observed that assessee was having stocks of ₹ 1,43,05,000 during the relevant FY in the cold storage. It is another matter, AO has inferred that such stock of chillies belong to assessee as he has purchased them from farmers and stored in the cold storage but the fact remains, AO admits that there are stock kept in the cold storage worth ₹ 1,43,05,000. This itself proves that the cold storage was operating during the relevant FY. In the aforesaid view of the matter, there cannot be any doubt with regard to assessee s claim that the cold storage has started operating during the relevant FY, irrespective of the fact whether it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onds in case of 16 farmers, who obtained loan from banks for total amount of ₹ 85,83,000. AO, therefore, concluded that assessee has actually purchased stock from farmers and stock of chillies kept in the cold storage belong to assessee, which was purchased out of its income from unexplained sources. On the basis of assessee s explanation that bank gives loan for an amount of 60 to 70% of value of chillies held in the cold storage, AO quantified the value of total stocks held by assessee at ₹ 1,43,05,000, which was treated as unexplained investment of assessee in purchase of stocks as per section 69 of the Act and added to the income of assessee. Being aggrieved of such addition, assessee challenged the same before ld. IT(A). Ld. CIT(A) deleted the addition by holding as under: 5.2.1 After going through the facts of the case and the evidences available on record, I am in agreement with the submissions of the appellant. It is seen that the appellant has issued bonds to the alleged farmers for preserving their stocks in the appellant s cold storage, which were also produced before the Assessing Officer. It is also a fact that the farmers have been granted loans by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that there are variations in the names of farmers in the list submitted by assessee and the list submitted by bank, and the fact that assessee has not submitted bonds issued to the farmers to prove the fact that it was farmer s stock, which has been kept in the cold storage, AO has made the addition u/s 69 by treating them as assessee s stock. However, on perusal of the assessment order, it is very much evident that AO in fact has made an enquiry with the Indian Overseas Bank, Madhira with regard to the loans granted to farmers. It is also evident that in response to summons issued by AO, bank authorities appeared and furnished all informations relating to grant of loans to the farmers. That being the case, when all informations relating to loans granted to the farmers are available before AO, he cannot say that there is no evidence to show that stocks kept in cold storage belong to assessee. On the contrary, there is no evidence brought on record by AO to prove the fact that stock of chillies held in the cold storage were purchased by assessee from farmers. As it appears, addition u/s 69 of the Act has been made purely on conjectures and surmises. The department s contention tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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