TMI Blog2016 (1) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... , we do not find any infirmity in the findings of Commissioner of Income Tax (Appeals) in confirming the addition - Decided against assessee Difference in Gold Stock - Held that:- We are of the considered view that some allowance has to be given for variation in stock of gold on account of use of gold in manufacturing of diamond studded jewellery. Accordingly, we delete 40% of the addition on account of variation caused by use of gold in manufacturing of diamond studded jewellery. Accordingly, we confirm the addition to the extent of 60% made by the Commissioner of Income Tax (Appeals). - Decided partly in favour of assessee Difference in stock of Silver - Held that:- AR has raised similar plea as was raised in case of difference in stock of gold. For the similar reasons, we restrict the addition to the extent of 60% made by the authorities below - Decided partly in favour of assessee Addition of 50% of donations - Held that:- Assessing Officer made addition of 50% of donations made. Before the Commissioner of Income Tax (Appeals) it was submitted that during the year, the assessee has given donation of ₹ 5,000/- to the School. Inadvertently advertising expenses of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total cash deposits found representing sale proceeds of jewellery inclusive of this amount in ₹ 4,27,100/-, which is found to be accounted for in the bifurcation submitted to the Assessing Officer regarding cash sales of jewellery, amounting to ₹ 11,24,308/-. So far as cash deposits relating to sale of agricultural produce is concerned, ever if we consider the amount of ₹ 7,45,630/- as cash received on this account as per para 19.2 supra, the total cash deposits from sale of agriculture produce (inclusive of ₹ 3,85,000/- above) comes to ₹ 11,30,630/- Since the gross agricultural income, as per the appellant's books, and as accepted by the Assessing Officer is ₹ 11,00,000/-, what survives for addition is a sum of ₹ 30,630/-. - Decided partly in favour of assessee Unexplained Investment in flat at Dadar, Mumbai - Held that:- Commissioner of Income Tax (Appeals) deleted the remaining amount of ₹ 13,00,000/- on the presumption that the Assessing Officer has not brought anything on record to show that the assessee was not having sufficient own funds to pay the balance purchase consideration. We do not find any error in the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions. The Assessing Officer had made addition in an arbitrary and unjustified manner without verifying the bank accounts of the assessee. The Commissioner of Income Tax (Appeals) has observed in his order that the Assessing Officer has deliberately ignored the information furnished by the assessee. The exercise which Assessing Officer has failed to perform has been done by the Commissioner of Income Tax (Appeals). Thus, in view of factual findings given by the Commissioner of Income Tax (Appeals) after examination of bank accounts and other relevant documents, we do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in deleting the additions in respect of unexplained cash credit in the bank accounts of the assessee.- Decided against revenue - ITA No. 2074/PN/2013, ITA No. 2143/PN/2013 - - - Dated:- 23-10-2015 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Dr. Prayag Jha/Prateek Jha For The Revenue : Shri Rajesh Damor ORDER PER VIKAS AWASTHY, JM : These cross appeals have been filed by the Revenue and the assessee against the order of Commissioner of Income Tax (Appeals) III, Pune dated 02.09.2013 for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Difference in closing stock of Silver 95,074 95,017 - 5 Donations 4,000 5,000 - 6 Cash Purchases 4,84,028 1,11,583 3,70,347 7 Cash Payments 3,92,393 21,546 8 Cash Deposits 16,21,900 30,630 15,91,270 9 Unexplained investment in flat at Dadar, Mumbai 52,27,096 -13,00,000 10 Commission paid to selling agent 85,812 - 85,812 11 Investment in NSC 2,50,000 - 2,50,000 12 Unexplained cash deposit in Bank accounts of the assessee 15,95,630 35,12,762 2,68,900 3,22,000 - 15,95,630 35,12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th photocopy of letter stating that she had advanced ₹ 1,00,000/- by cheque to the assessee as a help for purchase of house. The Commissioner of Income-tax (Appeals) rejected the evidences filed on behalf of above said two persons on the ground that Affidavit submitted by Smt. Neena S. Kamat is contrary to the bank statement filed by her. In the Affidavit, she had mentioned the amount as ₹ 1,50,000/-, whereas as per the bank statement, the amount advanced is ₹ 90,000/- only. For similar reasons, the Commissioner of Income-tax (Appeals) rejected the evidence filed on behalf of Smt. Shobha B. Mohite. The ld. AR contented that the Commissioner of Income-tax (Appeals) has not contradicted the fact that the amounts have been received by the assessee through bank transactions. The ld. AR has drawn our attention to pages 84 and 85 of Paper Book, wherein State Bank of India savings account bank pass book in respect of Smt. Neena S. Kamat is placed on record. A perusal of bank pass book shows that an amount of ₹ 90,000/- has been debited vide cheque No.601294 issued in favour of Shailaja U J . The ld. AR further draws our attention to pages 89 and 90 of the paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of first appellate proceedings, the assessee filed affidavits from the individuals from whom the assessee had allegedly received advances. However, the Commissioner of Income Tax (Appeals) rejected the same, except an advance of ₹ 1,90,000/- from Shri Niwas Madhukar Jadhav, which pertains to balance brought forward from the earlier assessment year. The Commissioner of Income Tax (Appeals) held that the assessee has not been able to substantiate the identity, creditworthiness and genuineness of the transactions either before the Assessing Officer or in the remand proceedings. The ld. AR submitted that the affidavits filed by the assessee were not considered by the Commissioner of Income Tax (Appeals). In the Remand Report, the Assessing Officer has not proved that the contents of the affidavit are incorrect. 6.1 We find that the affidavits filed by the assessee were without corroborative evidence and the assessee has not been able to prove the identity, creditworthiness and genuineness of the transactions. The assessee has not been able to show from records the genuineness of the transactions even before us. In the absence of corroborative evidence, we do not find any infi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade addition of the entire donation amount. We are of the considered view that the donation has been made by the assessee to a school for education, which is a charitable activity. Accordingly, we delete the addition of ₹ 5,000/- and allow this ground of appeal. Cash Purchases: 10. The assessee as well as Revenue has assailed the findings of Commissioner of Income Tax (Appeals) in respect of addition on account of cash purchases. The Assessing Officer during the scrutiny assessment proceedings has made addition of ₹ 4,84,028/-. In first appeal, the Commissioner of Income Tax (Appeals) restricted the addition to ₹ 1,11,583/-. The assessee had made cash purchases of gold and silver from un-registered dealers. The assessee has not been able to substantiate such purchases by placing on record any cogent evidence. The Commissioner of Income Tax (Appeals) restricted the addition to 80%. The ld. AR has not brought any cogent evidence before us to controvert the findings of Commissioner of Income Tax (Appeals) in confirming the addition to the extent of 20% of the disallowance made by the Assessing Officer. Similarly, the ld. DR has not been able to highlight a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Urban Co-operative Bank account filed before me. Consequently, taking into my factual findings and the remand report of the Assessing Officer, the addition that stands confirmed is ₹ 1,11,583/- (20% of 9,57,913). Ground no.14 stands partly allowed. We do not find any error in the well reasoned findings of Commissioner of Income Tax (Appeals) in restricting disallowance to ₹ 1,11,583/-. Accordingly, this ground of appeal of the assessee as well as Revenue is dismissed. Cash Payments: 11. The next ground of appeal raised by the assessee in appeal is with regard to cash payments. The Assessing Officer has made an addition of ₹ 3,92,393/- u/s. 40A(3) of the Income-tax Act in respect of cash payments made by the assessee. In appeal, the Commissioner of Income Tax (Appeals) has granted part relief to the assessee and has confirmed the addition only to the extent of ₹ 21,546/-. The Commissioner of Income Tax (Appeals) has observed in his order that the assessee has not been able to show compelling reasons for making cash payments vide receipt no. 247 dated 21.10.2002 for ₹ 23,855/-, receipt no. 232 dated 20.11.2002 for ₹ 21,375/- and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the gross agricultural income, as per the appellant's books, and as accepted by the Assessing Officer is ₹ 11,00,000/-, what survives for addition is a sum of ₹ 30,630/-. Ground no. 18 is partly allowed. The appellant sets relief of ₹ 15,91,270. 13. The representatives of the rival sides have not been able to point out any error in the findings of Commissioner of Income Tax (Appeals). We do not find any infirmity in the factual findings of Commissioner of Income Tax (Appeals) on this count. Accordingly, this ground of appeal of assessee, as well as of the Revenue is dismissed. 14. In view of our above finding, the appeal of the assessee is partly accepted in the aforesaid terms. 15. Now, we proceed to decide the remaining grounds in the appeal of the Department. 16. The first ground of appeal raised by the Department is general in nature and hence require no adjudication. 17. The ground No. 2 in appeal raised by the Department has been decided along with ground of appeal No.1 of the appeal of the assessee. The same has been dismissed. Unexplained Investment in flat at Dadar, Mumbai: 18. The ground No. 3 of appeal raised by the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax (Appeals) in deleting the addition on account of payment of commission to selling agent. Accordingly, this ground of appeal raised by the Revenue is dismissed. Investment in NSC: 20. The ground No. 5 in appeal by the Revenue is with respect to deleting of addition made on account of unexplained investment in purchase of NSC to the tune of ₹ 2,50,000/-. The Assessing Officer noted that the assessee has shown interest income of ₹ 25,375/- as interest on NSC in the Profit Loss Account, whereas in the Balance Sheet, the assessee has shown investment in NSC only to the tune of ₹ 10,000/-. From the interest income, the Assessing Officer calculated the investment in NSCs to arrive at figure of ₹ 2,50,000/-. During the proceedings before the Commissioner of Income Tax (Appeals), the assessee explained that the interest income of ₹ 25,375/- includes interest on investment in ICICI deposits of ₹ 10,000/-, ICICI Safety Bonds of ₹ 20,000/-, NSC of ₹ 10,000/- and PPF account ₹ 1,51,835/-. In the Profit Loss Account, it was inadvertently mentioned as interest on NSCs, whereas the interest was from aforesaid various de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound to be correct after verification of records. Another sum of ₹ 5,00,000/- has been added as cash deposited in current account no. 57 with M/s. Karad Urban Co-operative Bank Ltd. On verification of records it was found that the said amount represent local bill purchased by the bank and not the cash deposits. Further in the Bank of India, Wadala, Bombay branch current account no. 3137 an amount of ₹ 70,000/-, 1,25,000/- and ₹ 1,05,000/- have been debited vide cheque nos. 292410, 292407 and 292409 respectively in favour of M/s. Pioneer Stones. Therefore, these amounts cannot be said to be cash deposit. Regarding the balance two amounts of ₹ 50,000/- each, they represent cash deposit from income from agriculture and sale of jewellery. The Commissioner of Income Tax (Appeals) finally concluded that none of the amounts aggregating ₹ 15,95,630/- can be considered as unexplained cash deposits. 22.2 The next ground is with respect to addition of ₹ 35,12,762/-. In the assessment order, the Commissioner of Income Tax (Appeals) after analyzing the working of the Assessing Officer and the explanation furnished by the assessee held that against the cash re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has deliberately ignored the information furnished by the assessee. The exercise which Assessing Officer has failed to perform has been done by the Commissioner of Income Tax (Appeals). Thus, in view of factual findings given by the Commissioner of Income Tax (Appeals) after examination of bank accounts and other relevant documents, we do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in deleting the additions in respect of unexplained cash credit in the bank accounts of the assessee. 23. In ground no. 9 of the appeal, the Department has assailed the findings of the Commissioner of Income Tax (Appeals) in partly deleting the addition on account of unexplained cash deposits to the extent of ₹ 15,91,270/- from the debtors. This ground of appeal has already been adjudicated along with the appeal of the assessee in para 13 above. For the reasons given therein, this ground of appeal of the Revenue is dismissed. 24. Ground Nos. 12 and 13 of the appeal of the Revenue are general in nature, hence, require no adjudication. 25. In the result, the appeal of the Revenue is dismissed being devoid of any merit. Order pronounced on Frida ..... X X X X Extracts X X X X X X X X Extracts X X X X
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