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Assistant Commissioner of Income Tax, Satara Circle, Satara Versus Late Mrs. Shailaja Uttamrao Jadhav and Vica-Versa

2016 (1) TMI 568 - ITAT PUNE

Addition towards unsecured loans - CIT(A) deleted the addition - Held that:- The Revenue has assailed the amount of ₹ 1,11,111/- received by the assessee from Smt. Bharti B. Pawar and ₹ 4,78,000/- received from Shri Uttamrao Jadhav, HUF. We do not find any infirmity in the order of Commissioner of Income-tax (Appeals) in deleting these amounts as the assessee has been able to prove the source as well as creditworthiness of the persons for advancing the said loan amounts. The ld. DR h .....

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before us. In the absence of corroborative evidence, 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 .....

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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 ₹ 3,000/- paid to Manthan Publications was included under the head ‘Donations’. Thus, the actual donation is only ₹ 5,000/-. The Commissioner of Income Tax (Appeals) made addition of the entire donation amount. We .....

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3/- on 14.08.2002 stands repeated at least thrice instead of as a single transaction. Similarly, silver tukda payments made in cash amounting to ₹ 1,95,270/- paid on 17.08.2002 have been duplicated in Annexure 3 as well as 6. The last 4 items in annexure 3 (R. Nos. 250, 321, 335 & 441) have been supposedly taken as cash purchases, but the appellant has clarified that the amounts represent cash deposited into the Karad Urban Co-operative Bank account and are not cash purchases. This has bee .....

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lling 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 receipt no. 452 dated 31.03.2002 for ₹ 62,500/- aggregating to ₹ 1,07,730/-. The Commissioner of Income Tax (Appeals) disallowed 20% of the said amount under the provisions of section 40A(3) of the Act. The ld. AR has not been able to justify cash payments of ₹ 1,07,730/-. Accordingly, we uphold the findings of Commissioner .....

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elating 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 f .....

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/-. The assessee is engaged in the business of manufacturing diamond studded jewellery since 1993. The assessee must be having some savings and own funds for investment in flat. - Decided against revenue

Addition made on account of commission paid to selling agents - CIT(A) deleted the addition - Held that:- Assessing Officer disallowed the claim of assessee on the ground that it is supported by self made vouchers. The Commissioner of Income Tax (Appeals) in his order has given a cate .....

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elling agent. - Decided against revenue

Addition made on account of unexplained investment in purchase of NSC - CIT(A) deleted the addition - Held that:- 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 Acc .....

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. DR has not been able to controvert the findings of Commissioner of Income Tax (Appeals) - Decided against revenue

Unexplained cash credit in the bank accounts - CIT(A) deleted the addition - Held that:- Commissioner of Income Tax (Appeals) has deleted the additions after verification of the bank account and the transactions. The Assessing Officer had made addition in an arbitrary and unjustified manner without verifying the bank accounts of the assessee. The Commissioner of Income T .....

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dditions 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 .....

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has been filed by Shri Uttamrao Jadhav, legal heir of the assessee. The return of income was filed on behalf of the assessee by Shri Padmsinha U. Jadhav son of assessee on 20.11.2003 declaring total income of ₹ 9,67,320/- inclusive of agricultural income of ₹ 6,95,630/-. The case of the assessee was selected for scrutiny. Accordingly, notice under section 143(2) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) was issued to the assessee on 12.10.2004. During the cou .....

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ssessee and the Revenue are in appeal before the Tribunal. The additions / disallowances made by the Assessing Officer and the relief granted / additions sustained by the Commissioner of Income-tax (Appeals) on which rival sides are in appeal before the Tribunal are tabulated hereunder:- Sr. No. Additions made by AO Upheld by CIT(A) Assessee in appeal Deleted by CIT(A) Dept. in appeal 1 Unsecured loans 22,54,486 5,97,000 5,89,111 2 Unaccounted Advances 28,24,278 24,23,278 - 3 Difference in Gold .....

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0 35,12,762 2,68,900 3,22,000 3. For the purpose of adjudicating the issues raised in the appeals, we will take up the appeal of assessee along with the corresponding issues raised by the Department in its appeal. Thereafter, the remaining issues raised by the Department in appeal will be taken up. Unsecured Loans: 4. The Assessing Officer had made addition of ₹ 22,54,486/- towards unsecured loans, as they were not proved by the assessee. During the course of proceedings before the first a .....

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rlier assessment years and were not assessable during the current assessment year. Further, the Commissioner of Income-tax (Appeals) held that unsecured loans of ₹ 1,11,111/- taken from Smt. Bharti B Pawar was proved. The assessee could show the source as well as creditworthiness of the creditor advancing the loan. The Commissioner of Income-tax (Appeals) also granted relief to the extent of ₹ 4,78,000/- in respect of unsecured loans advanced by Shri Uttamrao H. Jadhav, HUF on the gr .....

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submitted that apart from other persons, the assessee had taken loan from Smt. Neena S. Kamat ₹ 1,50,000/- and Smt. Shobha B. Mohite ₹ 1,00,000/-. Smt. Neena S. Kamat had filed an affidavit along with extract of bank account before the Commissioner of Income-tax (Appeals). The assessee had also filed a copy of bank pass book of Smt. Shobha B. Mohite along with photocopy of letter stating that she had advanced ₹ 1,00,000/- by cheque to the assessee as a help for purchase of hous .....

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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 . Th .....

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of ₹ 1,00,000/- has been credited by transfer from State Bank of India. Thus, the ld. AR has been able to show the source of unsecured loan to the extent of ₹ 1,90,000/- from the aforesaid two persons. Since, the amounts have been transferred through banking channels and both the persons have admitted the transaction, we do not find any reason to disbelieve the same. We further delete addition to the extent of ₹ 1,90,000/- from the amount of unsecured loans. Accordingly, this g .....

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as the assessee has been able to prove the source as well as creditworthiness of the persons for advancing the said loan amounts. The ld. DR has not been able to controvert the findings of Commissioner of Income Tax (Appeals) in deleting the aforesaid amounts. Accordingly, this ground of appeal raised by the Department is rejected. Unaccounted Advances: 6. The second ground raised by the assessee in appeal is against unaccounted advances of ₹ 24,23,278/- confirmed by the Commissioner of In .....

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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 Asses .....

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ot 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 infirmity in the findings of Commissioner of Income Tax (Appeals) in confirming the addition. Accordingly, this ground of appeal raised by the assessee is dismissed. Difference in Gold Stock: 7. The third ground of appeal raised by the assessee is with regard to addition on account of difference in gold stock. The Assessing Officer made addition of &# .....

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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). This ground of appeal is partly accepted in the aforesaid terms. Difference in stock of Silver: 8. The fourth .....

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chool. Before Assessing Officer the assessee claimed donations of ₹ 8,000/-. The 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 ₹ 3,000/- paid to Manthan Publications was included under the head Donations . Thus, the actual donation is only ₹ 5,000/-. The Commissioner of Income T .....

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ssment 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 .....

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s the addition of ₹ 4,84,028/-representing @ 20% of cash purchases amounting to ₹ 24,20,139/-. The details regarding cash purchases of ₹ 24,20,139/- are as per annexure 16 of the assessment order r/w annexures 3 & 6 therein. During remand proceedings the appellant contended before the Assessing Officer that the actual cash purchases are to the extent of ₹ 9,57,913/- (comprising ₹ 7,06,070 + ₹ 1,89,343 + ₹ 62,500) made from unregistered dealers who re .....

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have verified the relevant annexure 3 & 6 and it is found that the first 4 amounts as per annexure 3 (Rs.2,50,200/- , ₹ 1,90,300/-, ₹ 1,50,300/- & ₹ 1,95,270/-) totalling ₹ 7,06,070/- are cash purchases which stand repeated as per fifth amount in the same annexure and are clearly seen to be duplicate entries. The Assessing Officer has taken the yearend total of cash purchases as ₹ 7,06,070/- once again as a separate item of cash purchase. The silver ingots .....

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operative Bank account and are not cash purchases. This has been verified to be correct from the copy of the Karad 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 S .....

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t 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 receipt no. 452 dated 31.03.2002 for ₹ 62,500/- aggregating to ₹ 1,07,730/-. The Commissioner of Income Tax (Appeals) disallowed 20% of the said amount under the provisions of section 40A(3) o .....

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llate proceedings, the Commissioner of Income Tax (Appeals) has deleted the addition to the extent of ₹ 15,91,270/- and confirmed the addition of ₹ 30,630/- only. Against the findings of Commissioner of Income Tax (Appeals), both the assessee and Revenue are in appeal before us. The Commissioner of Income Tax (Appeals) after analyzing the break-up of cash deposit by debtors has concluded as under:- 21.1. The appellant contends that the total amount of cash deposited in bank accounts, .....

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h deposit of ₹ 50,000/- into BOI C.A. of appellant dated 09.07.2002. Therefore, 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 cas .....

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ot 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 o .....

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00/-. The Assessing Officer had made addition of ₹ 52,27,096/- in respect of investment made in flat at Dadar, Mumbai by the assessee. Before the first appellate authority, the assessee has been able to show that the flat costing ₹ 68,13,538/- inclusive of stamp duty, was purchased by taking loan of ₹ 45,00,000/- from the bank and ₹ 9,25,000/- as advance from the relatives. The Commissioner of Income Tax (Appeals) deleted the remaining amount of ₹ 13,00,000/- on the .....

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gly, this ground of appeal raised by the Department is dismissed. Payment of Commission: 19. The ground No. 4 in appeal by the Revenue is with respect to deleting of addition made on account of commission paid to selling agents ₹ 85,812/-. The commission has been paid by the assessee as an incentive to the selling agents. The assessee is not maintaining any jewellery show room and is carrying on the business through direct sales. The assessee is paying commission @ 4% on sale of diamond st .....

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ing any show room, payment of commission on sales made through agent is justified. The ld. DR has not been able to controvert the findings of Commissioner of Income Tax (Appeals). We do not find any error in the findings of Commissioner of Income 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 delet .....

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e 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 deposits. The explanation furnished by the assessee was found ge .....

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ed being devoid of merit. 21. The ground No. 6 in the appeal of Revenue has been adjudicated along with the appeal of assessee in para 10 above. This ground of appeal of the Revenue has been dismissed for the detailed reasons given above. 22. In ground Nos. 7, 8, 10 and 11 of the appeal, the Revenue has assailed the findings of Commissioner of Income Tax (Appeals) in deleting the additions made on account of unexplained cash deposits in various bank accounts of the assessee. A perusal of the imp .....

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various bank accounts, cash books and other relevant documents. The Commissioner of Income Tax (Appeals) further observed that the additions have been made on account of cash deposits in an arbitrary manner. Although assessment order is passed u/s. 143(3) but factually the assessment has been made as best judgment assessment u/s. 144 of the Act. The Commissioner of Income Tax (Appeals) after analyzing the documents and explanation furnished by the assessee held that the assessee has been able t .....

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rative 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 ͅ .....

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held that against the cash receipts of ₹ 49,30,614/-, the sources for the same arrived at by the Assessing Officer is ₹ 87,05,039/-. Thus, there is no cash receipt which remains unexplained and requires to be added to the assessee s income. Thus, the Commissioner of Income Tax (Appeals) deleted the entire amount of ₹ 35,12,762/- in the hands of the assessee. 22.3 The Revenue has also assailed the findings of Commissioner of Income Tax (Appeals) in deleting the addition of ͅ .....

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x (Appeals) deleted the addition after examining the bank transactions. 22.4 As regards the amount of ₹ 3,22,000/- deleted by the Commissioner of Income Tax (Appeals) in respect of assessee s saving bank account no. 53057 with State Bank of India is concerned the Commissioner of Income Tax (Appeals) has observed that there are only two cash deposits amounting to ₹ 55,000/-. These deposits are from sale of jewellery and have already been declared in the return of income. The rest of t .....

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