9911796707
TMI Blog2016 (1) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the said search action. In response to notice u/s.153A which was served on the assessee on 04-08-2002, the assessee filed return of income declaring total income of Rs. 16,41,360/-. It may be pertinent to mention here that the assessee in the original return filed on 31- 10-2005 had declared income of Rs. 1,71,360/-. The additional income declared in the return filed in response to notice u/s.153A amounting to Rs. 14,70,000/- was on account of 11 sundry creditors being written off as income. 3. During the course of assessment proceedings the AO noted that as per Annexure A-2/20 and Annexure A-1/16 seized from the residence of the assessee there is a reference to the sand contract for Chumble/Aadhar site and Dabhade site. For the purpose of verification the AO issued letters of enquiry to the District Collector, Nashik seeking complete details of sand contracts issued since 01-04-2002. From the replies obtained it was gathered that the Tahsildar, Malegaon had allotted a contract to Waman P. Chumble, brother of the assessee for mining/dredging of sand at Chinchwad site for Rs. 35 lakhs for the period 04-10-2004 to 31-07-2005. The amount has been paid in cash. On verification of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 to 31-07-2005 the AO took proportionate profit for 6 months and determined the profit @10% on such amount which works out to Rs. 2,10,000/-. 5. Since the various other additions are not subject matter of this appeal, we are not discussing those issues. 6. Before CIT(A) it was submitted that while making the addition of Rs. 35 lakhs the AO completely ignored the common pool funds of members of Chumble family which has been sourced mainly out of agricultural income from the land admeasuring more than 93 acres owned by the members of the family. The observation of the AO at page 4 of the assessment order was brought to the notice of the CIT(A) where the AO has observed that there appears to be a common source of funds and that the assessee himself has admitted that this business is carried out by him out of the pool of funds belonging to the family. It was submitted that the AO has completely ignored the submissions filed before him vide letter dated 25-12-2010 along with necessary evidence of the agricultural income of the members of Chumble family. It was submitted that the agricultural income for A.Y. 2003-04 to 2005-06 and the members of Chumble family out of ancestral agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order and the rival submissions. On perusal of the same, It has been observed that the only dispute is regarding the source of the payment of Rs. 35,00,000/- made for obtaining sand contract at Chinchwad in the name of Shri Vaman Chumble. It is undisputed fact that the sand contract has been executed by Shri Shivaji Chumble i.e. the appellant out of a pool of funds belonging to the Chumble family out of common source of fund. The fact is also supported by the notings in the seized material as per which Shri Vaman Chumble has forwarded substantial amounts of Rs. 27,65,500/- to Shri Shivaji Chumble during 15/7/2005 to 16/9/2005 i.e. prior to the payment of deposit for sand contract. The appellant vide letter dated 15/12/2010 has filed details of agricultural income earned by the members of the Chumble family. The appellant has filed 7/12 extracts of the agricultural lands admeasuring 93.78 acres showing crops grown on the said land. The appellant has worked out quantum of agricultural produce of crops grown on the basis of established norms published by various institutions and authors including Rahuri Krishi Vidyapith. The sale proceeds of the crops grown have been worke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been noticed that the agricultural income claimed by the appellant is reasonable and the same is supported by 7/12 extracts of the land holdings on which crops grown with area has been mentioned, data published by Rahuri Krishi Vidyapith, sale rates of various crops for the years under appeal, certified by Krishi Utpanna Bazar Samiti, Nashik. The appellant has claimed the source of deposit of Rs. 35,00,000/- for the sand contract is out of common family pool fund sourced by agricultural income. From the tabular chart filed by the appellant, the cumulative balance in family pool fund as on 1/4/2004 and 31/3/2005 was Rs. 18,07,714/- and Rs. 35,72,132/-. The payment of deposit for sand contract has been made in the last fortnight of September, 2005. Therefore, the agricultural income received upto last fortnight of September is available for F.Y. 2004-05. The appellant has pointed out that sale proceeds of grapes are generally received in the month of April and May. Considering these facts, the agricultural income for F.Y. 2004-05 upto the date of deposit is estimated at RS.8,50,000/-. The previous balance claimed by the appellant is available as on 1/4/2004 was Rs. 18,07,714/-. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment paid off by the appellant and offered to tax as paid out of income from undisclosed sources to avoid litigation. The appellant, therefore, claimed that the addition of Rs. 2,10,000/- towards alleged profit on sale of sand should be telescoped against the above undisclosed income of Rs. 14,39,000/- allegedly utilized for payment to outstanding creditors. The above contention of the appellant is found to be correct and supported by following decisions : 1. Ananthram Veersinghaiah & Co. CIT 123 ITR 457 (SC) 2. S. Kupuswami Mudaliar Vs. CIT 51 ITR 457 3. CIT Vs. S. Millappan 66 ITR 722 4. CIT Vs. Vyankateshwara Timber Depot 222 ITR 768(AP) 5. CIT Vs. K.S.M. Guruswamy Nadar & Sons 149 ITR 127 (Mad) 6. ITO Vs. Republic Poultry Foods 45 ITD 359 (Chd.) The addition of Rs. 2,10,000/- is, therefore, deleted. This ground of appeal is allowed." 11. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : 1. On the fact and circumstances of the case the Ld. CIT(A) erred in deleting the addition of Rs. 25.00 lacs on account of unexplained investment in sand dredging business. 2. On the fact and circumstances of the case the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UF. 13. However, the assessee has put forward claim of agricultural income only hypothetically. No bills for agricultural produce were submitted. Further evidences like books published by institutions and agricultural college, rates of Krishi Utpanna Bazar Samiti were accepted by the CIT(A) at the back of the AO in contravention of provisions of Rule 46A. No remand report was called from the AO. Referring to the decision of the Pune Bench of the Tribunal in the case of Abhijit Subash Gaikwad Vs. DCIT and other connected appeals vide ITA No.699/PN/2013, 700 and 701/PN/2013 order dated 27-05-2015 for A.Y. 2009-10 he submitted that the Tribunal in the said decision has upheld the order of the CIT(A) who has disregarded the agricultural income from the land despite 7/12 extracts produced before himself stating that assessee was deriving agricultural income. Therefore, the order of the CIT(A) is not justified. 14. So far as the deletion of Rs. 2,10,000/- is concerned, the Ld. Departmental Representative submitted that such deletion is not at all correct because the assessee had declared the income on account of sundry creditors and not from any other income. The income from sand dredg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and deposited towards executing the Chinchwad/Aadhar Contract. This cash was deposited in the name of Vaman Chumble but was executed by Shivaji Chumble. Moreover there appears to be a common source of fund. Thus the assessee is solely and completely responsible for the contract amount of Rs. 35 Lacs, and any income generated out of the same." 16. He submitted that the HUF does not own any bank account. Since the agricultural income of the family has been utilized by the members of the family for the auction purpose, therefore, the CIT(A) was fully justified in deleting the addition. Moreover, although number of persons have participated in the auction but the auction can be allotted in the name of only one person which in the instant case is the assessee. Therefore, the common pool of fund available in the family has been utilized for the auction and therefore the Ld.CIT(A) was fully justified in deleting the addition. 17. So far as the decision relied on by the Ld. Departmental Representative is concerned he submitted that the said decision is distinguishable and not applicable to the facts of the present case. In that case, it was categorically mentioned in the 7/12 extracts fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forefathers owned agricultural land at village Gaulane Tal. and Dist. Nashik. The family is basically agriculturist family. Out of the agricultural income of the family the members of the family have acquired substantial agricultural land at various places in and around Gaulane. The agricultural income of the family was returned by various members of the family in individual capacity while filing returns of income upto A.Y. 2006-07. However, considering the above facts the agricultural income for the family belongs to HUF and hence not considered for rate purposes while filing returns of members of Chumbale family. The total agricultural land belonging to the family is 93.78 acres and the crops grown are grapes, Khurasani, Tomato, Masur, Groundnut and Vegetable. The details of agricultural income of the family are enclosed. The said income has been worked out by considering crops grown, are under cultivation of each crop, production of agricultural produce per acre sale price of the agricultural produce on the basis of average market price of the agricultural income. The said income for the family has been used by members of the family as and when required. Thanking You Yours fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. The AO noted that during the course of search the statement of the assessee was recorded u/s.132(4) on 02-05-2008 during which the assessee had admitted additional income of Rs. 10 lakhs for the year under consideration and Rs. 4,53,000/- on account of error and omission for 6 years in the hands of all family members. The AO noted that during the year under consideration the assessee has credited an amount of Rs. 2,12,500/- to the profit and loss account on account of error and omission. The assessee accordingly admitted and made total declaration of additional income of Rs. 12,12,500/- for A.Y. 2007-08. However, in the profit and loss account, after crediting the above Rs. 12,12,500/- the assessee declared net loss of Rs. 5,57,871.14. The AO compared the diesel and petrol expenses during the year as well as such expenses in the preceding assessment year, vis-à-vis, truck hiring charges and noted that such expenses have increased substantially whereas the truck hire charges has decreased. Similarly, the expenses incurred for repairs of vehicles, i.e. fuel expenses and various other expenses claimed in the profit and loss account could not be substantiated along with bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .80C at Rs. 1 lakh by the AO was also challenged. 29. Based on the arguments advanced by the assessee the Ld.CIT(A) deleted the entire addition made by the AO. While doing so, he further held that the rejection of book results by the AO u/s.145 of the Act was not correct. 30. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : "1. On the fact and circumstances of the case the Ld. CIT(A) erred in holding that the A.O. wrongly rejected the book result u/s. 145 of the Act without any basis. The Ld. CIT(A) also erred in not appreciating the fact that assessee was unable to produce evidence regarding expenditure vouchers and bills and that fact was admitted by the A. R. of the assessee during assessment proceeding which is on record. 2. On the fact and circumstances of the case the Ld. CIT(A) erred in deleting the addition of Rs. 1,33,000/- made towards estimation of truck hiring business. The Ld. CIT(A) erred in not appreciating the fact that in absence of expenditure vouchers and bills, the AO has correctly applied the provision of section 44AE. 3. On the fact and circumstances of the case the Ld. CIT(A) erred in allowing set off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional income of Rs. 12,12,500/- under section 132(4) of the Act. 10. On the fact and circumstances of the case the Ld. CIT(A) erred in deleting the addition of Rs. 71,313/- on account of profit on sale of bricks. The Ld. CIT(A) also erred in not appreciating the fact that addition is made to regular business income on the basis of seized documents and assessee's own admission, which is on record. 11. The appellant craves leaves to add, alter/delete any of above ground of the appeal. 12. Any other ground that may be urged at the time of hearing." 31. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. So far as ground of appeal No.1 is concerned we find the same relates to the order of the CIT(A) in accepting the book results declared by the assessee. From the assessment order, we find when the AO asked the assessee to produce the details of expenses incurred for truck hiring charges, diesel and petrol expenses, repairs and maintenance expenses, scrap sales, sale of bricks etc. the Authorised Representative of the assessee expressed his inability to furnish the requisit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as Ground of appeal No.4 is concerned it is the grievance of the Revenue that Rs. 12,12,500/- declared by the assessee during the course of search should have been taxed over and above the income determined by the AO. The assesssee cannot credit this additional income to the profit and loss account and adjust various other expenses and declare Nil income. 36. After hearing both the sides, we find the assessee in the instant case has not filed his return of income for the impugned assessment year before the search. Although he had declared additional of Rs. 12,12,500/-, however, the assessee has not honoured the same while filing return of income and has declared NIL income by filing profit and loss account in which the additional income has been credited to the profit and loss account and various expenses claimed which assessee could not substantiate. Under these circumstances, the total income of the assessee cannot be less than Rs. 12,12,500/-. We hold and direct accordingly. The ground by the revenue is decided accordingly. 37. In ground of appeal No.5 the Revenue has challenged the order of the CIT(A) in deleting the addition of Rs. 1,65,559/- on account of suppressed sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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