TMI Blog2011 (3) TMI 1627X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s. 68. The above view is fortified as per the ratio laid down by the Hon'ble Delhi High Court in the case of COMMISSIONER OF INCOME-TAX VERSUS USHA STUD AGRICULTURAL FARM LTD. [ 2008 (3) TMI 91 - DELHI HIGH COURT] . Considering the totality of the facts, we do not see any valid ground to interfere with the findings of the ld. CIT(A) - Decision in favour of Assessee. Assessment u/s 153A - Disallowance of Business Loss - AO disallowed the business loss on the ground that the final accounts of the business relating to assessee's proprietorship firm (M/s Arohi International) have not been filed by him HELD THAT:- In the instant case, the AO acknowledge in his assessment order that the assessee attached profit and loss account and balance sheet with the regular return of income, therefore, the AO was not justified in making the disallowance when the assessee had already disclosed the relevant documents in the original return of income, therefore, the AO could not have considered the impugned loss in the proceedings u/s. 153A, particularly when nothing contrary was unearthed during the course of search. We, therefore, considering the totality of the facts do not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce u/s. 153A of the Act was issued requiring the assessee to file his return of income. The assessee stated that the return filed on 21.1.2002 declaring total income at ₹ 3,52,701 may be treated as return in response to the said notice. In the original return, the assessee declared income as under:- Income from business : (-) ₹ 1,26,820 Income from other sources : ₹ 4,91,521 ₹ 3,64,701 Less: Exempt u/s. 80L : ₹ 12,000 Total income 3,52,701 8. During the course of assessment proceedings, the Assessing Officer pointed out that the assessee had filed balance sheet and profit and loss account for the year ending on 31.3.2001. However, the assessee has not filed the capital account, profit and loss account as well as the balance sheet of the business concern, M/s Arohi International and it is not know what are the assets and liabilities of the above concern. The Assessing Officer pointed out that the cash flow statement was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.45,000/- -do- Vishwa Nath Gupta Rs.45,000/- 2005-06 Santosh Tripathi Rs.27,000/- 2006-07 Anil Chand Tripathi Rs.25,000/- -do- Wmesh Chand Saxena Rs.38,000/- 2007 -08 Ram Gopal Tiwari Rs.70,000/- 9. On the basis of the above facts, the Assessing Officer was of the view that the assessee did not have the cash balance of ₹ 16,42,480 as on 1.4.2001, as claimed. He, therefore, held that the cash has been introduced by the assessee only to explain the investment of expenses in the subsequent years. He accordingly added a sum of ₹ 16,42,480 to the income of the assessee. 10. The assessee carried the matter to the ld. CIT(A) and the submissions made by the assessee as mentioned in para 11 of the order of the ld. CIT(A) read as under:- The Ld. A.O. arbitrarily and without assigning any cogent reason and without bringing any evidence on record treated the opening bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere submitted before the Ld. AO. Entire jewellery, silver coins utensils and gold ginnies etc. so disclosed were later sold off for ₹ 24,55,010/- to M/s Panna Lal Mahesh Chand Jewellers. M/s N.B. Impex and M/s P.B. Society Jewelers as per their purchase memos enclosed in the paper book as were submitted before the Ld. AO. The appellant had partly utilized the money by investing in FDR's and balance amount it held as cash in hand which has continued since then. The Ld. AO has formed his belief about non availability of cash in hand with the appellant, mainly due to the reason that the appellant has taken loans/overdrafts facilities from various persons and institutions during various assessment years and no wealth tax returns have been filed. These observations made by the Ld. AO are of little consequence because business dealings can not be merged with personal assets. The Ld. AO has simply presumed and doubted about the existence of the opening cash balance. It is settled principle that presumption howsoever strong can not take place of a legal proof. The Ld. AO could have examined the availability of cash balance as on 01.04.2000 from the return for A.Y 2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught forward cash balance, so it was not justified to treat the opening balance as unexplained. He also pointed out that it was on record that the business of the assessee was existing and continuing even before the assessment year under consideration, therefore, the brought forward balance was sub-matter of verification in the preceding year. According to the ld. CIT(A), the Assessing Officer ignored the record and documents of the assessee available with the Department and the capital of ₹ 16,42,480 of the assessee was proved as per documents filed with the Department, namely return of income, VDIS certificate and balance sheets of the earlier years. He, therefore, deleted the addition of ₹ 16,42,480 made by the Assessing Officer. 12. Now the Department is in appeal. 13. The ld. D.R. strongly supported the order of the Assessing Officer and reiterated the observations made by the Assessing Officer in paras 7 to 7.4 of the assessment order dated 31.12.2008, 14. In his rival submissions, the ld. counsel for the assessee reiterated the submissions made before the authorities below and strongly supported the order of the ld. CIT(A) on this issue. 15. We have c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts related to the issue in brief are that the Assessing Officer while disallowing the loss of ₹ 1,26,820 observed as under:- The assessee vide notice u/s. 153A was required to file his return of income but he filed the photocopy of acknowledgment of return of income without any computation and annexure but it is stated that return filed on 21.01.02 may be treated as return filed in compliance of notice u/s. 153A. From the perusal of the copy of the acknowledgment of the return, it is noticed that the assessee has claimed the loss of ₹ 1,26,820/- from M/s Arohi International. The details of business, final account have not been filed. The assessee has thus not been able to prove loss. In view of the above facts, the loss will not be allowed to reduce from Income from Other Sources and business loss is being treated as Nil. 18. The assessee carried the matter to the ld. CIT(A) and the submissions made before him as mentioned in para 7 of the impugned order are reproduced verbatim as under:- The assessee was proprietor of the firm M/s Arohi International engaged in the business of trading in Kirana Goods, which was started in the year under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer from which he could have examined the details of the business. He further observed that the powers given to the Assessing Officer were confined to assess the undisclosed income unearthed during the course of search and the Assessing Officer could not have included items which were disclosed in the original assessment proceedings. Reliance was placed on the decision of the ITAT Mumbai bench in the case of Anil Khimani v. DCIT 2010 TIOL 177. 20. Now the Department is in appeal. 21. After considering the submissions of both the parties and the materials available on record, it appears that the Assessing Officer disallowed the business loss of ₹ 1,26,820 while framing the assessment u/s. 153A of the Act on the ground that the final accounts of the business relating to M/s Arohi International have not been filed by the assessee. The claim of the assessee was that he had filed complete set of final accounts along with the original return filed on 21.1.2002 and the same were already on record with the Department. In the instant case, the Assessing Officer acknowledge in his assessment order that the assessee attached profit and loss account and balance sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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