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2016 (3) TMI 1089 - ITAT CHANDIGARH

2016 (3) TMI 1089 - ITAT CHANDIGARH - TMI - Addition out of agricultural income - Held that:- We have accepted the earning of agricultural income @ ₹ 15,000/- per acre and accepted the claim of assessee in a sum of ₹ 21,30,000/-. In the Assessment year under appeal, the AO has mentioned that assessee has declared agricultural income of ₹ 21,30,000/- but in the computation it was shown at ₹ 21,25,607/-. Therefore following the orders for preceding Assessment year 2009-10 a .....

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nder consideration as well as in preceding Assessment year. The assessee claimed that since location of the liquor shop have been changed year to year and there was increase in the license fee therefore there cannot be comparison of the profit from the earlier years. The reasons given by the assessee have not been rebutted by the AO in his comments before the Ld. CIT(A). No inflation of purchases or suppression of sales were found. AO has not pointed out if any expenses have been inflated by the .....

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r (Excise) Jalandhar and Gurdaspur to prove that additional license fee has been paid by the assessee as directed by the Excise And Taxation Department. Since the additional license fee is paid as per direction of the State Government for running of the business, therefore, the amount was spent wholly and exclusively for the purpose of business and as such allowable deduction.- Decided against revenue

Addition on account of disallowance of interest - Held that:- If there are interest .....

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ecided against revenue.

Addition on account of unexplained cash found during the search - Held that:- The assessee explained the source of the cash found during the course of search operation. The AO has not rebutted the claim of the assessee in his comments filed at the appellate stage. Therefore, Ld. CIT(A) on proper appreciation of facts and materials on record correctly deleted the addition.- Decided against revenue.

Addition on account of excessive jewellery found - He .....

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5 (In ITA No. 661/Chd/2015) - Dated:- 15-3-2016 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER For the Respondent : Sh. Manoj Mishra, CIT DR For the Petitioner : Sh. Sudhir Sehgal, Advocate ORDER PER BHAVNESH SAINI, J.M. The Departmental appeal as well as Cross Objection(C.O.) by the assessee are directed against the order of Ld. CIT(A)-5, Ludhiana dt. 26/03/2015 for Assessment Year 2011-12. 2. We have heard the Ld. Representatives of both the parties and perused the .....

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come @ ₹ 10,000/- per acre and allowed the appeal of the assessee deleting the addition of ₹ 14,20,000/- and rest of the amount of ₹ 7,05,607/- was confirmed. The Revenue is now challenging deletion of addition of ₹ 14,20,000/- and assessee in the C.O. challenged the part addition sustained by the Ld. CIT(A) in a sum of ₹ 7,05,607/-. Ld. Representative of both the parties submitted that the issue is identical as have been argued by them in Cross Objection No. 26 &am .....

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m of assessee in a sum of ₹ 21,30,000/-. In the Assessment year under appeal, the AO has mentioned that assessee has declared agricultural income of ₹ 21,30,000/- but in the computation it was shown at ₹ 21,25,607/-. Therefore following the orders for preceding Assessment year 2009-10 and 2010-11(supra), we delete the entire addition sustained by the Ld. CIT(A) in the sum of ₹ 7,05,607/- thus the C.O. of the assessee is allowed and department appeal is dismissed. 6. On Gr .....

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was fair and reasonable to estimate the profits from business by adopting the G.P. ratio of 2.85% as declared by the assessee for Assessment year 2010-11 and made the above addition. 7.1 The assessee challenged the addition before Ld. CIT(A)and it was submitted that assessee has carried on business of purchase and sale of liquor on allotted vends by the Excise and Taxation department for F.Y 2010-11. The assessee has maintained regular books of account in his regular course of business. All the .....

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ach year and other business factors. In the year under appeal the assessee had carried on business of liquor at Gurdaspur, Pathankot & Bhogpur Excise Circle having total 18 retail vends whereas in the preceding year the vends were in the Ferozepur, Faridkot, Jalandhar, Excise Circle having different number of vends. Each year is an independent year and profitability in the trade depends upon many factors like demand and supply, place, competition in the market, availability of finances etc. .....

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er year. All the transactions are carried out through the Excise Department therefore, without any evidence of suppression of sale, the addition was wholly unjustified. It was also submitted that assessee has surrendered income of ₹ 2.25 Crores which has been duly reflected in the profit and loss account and even if there was any discrepancy the same would stand covered by the income surrendered. The submissions of the assessee were forwarded to the AO for his comments in which the AO reit .....

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ing documents have been highlighted to support the addition, thus the AO could not reject the books result and whole addition is unjustified. Ld. CIT(A) accordingly deleted the addition. 9. After considering the rival submissions, we do not find any merit in this ground of appeal of the Revenue. No specific defects have been pointed out in maintenance of books of account by the assessee. The assessee has sufficient reasons for fall in gross profit i.e; change of the location of the vends allotte .....

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ny expenses have been inflated by the assessee. Ld. Counsel for the assessee refer to Paper Book page no. 22, highlighted the reasons that there was increase in the expenses in the year under consideration by referring to the chart which is filed at page 22 and 23 of the Paper Book. Hon ble Punjab & Haryana High Court in the case of CIT vs. K.S. Bhatia [2004] 269 ITR 577 has held that mere low gross profit is not a ground to reject the books of account of the assessee. The submission of the .....

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0,937/- as additional license fee which is charged on account of non or low payment of license fee. The AO considered it to be penalty in nature and disallow the same. The assessee submitted before the Ld. CIT(A) that AO has never confronted the assessee on this issue and it was submitted that additional license fee has been imposed by the Excise and Taxation Department, Government of Punjab on every purchase made under the Atta Daal Scheme introduced in the Assessment year under appeal. It was .....

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in this issue. The assessee produce sufficient material on record to prove that additional license fee has been imposed by the Excise and Taxation Department, Government of Punjab on every purchase under Atta Daal Scheme therefore addition was found to be unjustified and deleted. 13. After considering the rival submission we do not find any merits in this ground of appeal of the Revenue. The assessee referred to Paper Book page no. 29 and 30 which is the certificate by Excise And Taxation Office .....

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ion of addition of ₹ 30,00,000/- on account of disallowance of interest. The AO has highlighted that assessee had debited an amount of ₹ 51,97,670/- as bank interest in profit and loss account and had also made investment in purchase of property, shares etc. which were not connected with the business carried on by him. The AO also observed that the assessee had made payment to his near and dear ones as well as sister concerns on which no interest had been charged. The assessee did no .....

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est was paid to them. The assessee has given loans and advances to different parties at different times which it thought was for business and commercial expediency as required for betterment of the business. It is alleged that assessee made investment in purchase of property and shares which is not connected with the business activities. AO has neither given any detail in this regard nor it has ever established any direct nexus of the amount utilized as alleged out of interest bearing loans. It .....

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terest free in the year under assessment. No addition can be made when the advances were opening brought forward balance from the last year. The assessee relied upon several decisions in support of its contention. The rest of advances also do not have any direct nexus with interest bearing loans. The Revenue has nowhere established that the loan has been given only for personal purpose. However the loan has been given on account of commercial expediency. AO has wrongly disallowed the amount of i .....

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ble would have been much more than the interest receivable. The assessee relied upon several decisions in support of the above contention which are reproduced in the appellate order. It was therefore submitted that addition may be deleted. 16. The AO in his comments merely reiterated the facts stated in the assessment order and had not rebutted the contention of the assessee. 17. Ld. CIT(A) considering the explanation of the assessee and that the submission of the assessee had not been rebutted .....

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ground of appeal of the Revenue. Ld. Counsel for the assessee referred to Paper Book page no. 31 and 32 which is the details of capital of the assessee, unsecured loans, sundry creditors and the amount due to the assessee which were available and sufficient to give loans to others. It is also claimed that assessee has not charged any interest. Further details are filed at Paper Book page no 33 & 34 shows sufficient funds available to the assessee and that the loans and advances were mostly o .....

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Court in case of CIT Vs. Reliance Utilities and Power Ltd.[2009] 313 ITR 340 that if there are interest free funds available a presumption would arise that investment would be out of the interest free funds generated or available with the company, if the interest free funds were sufficient to meet the investments . 19. Considering the facts and circumstances noted above and the findings of the facts arrived at by the Ld. CIT(A), we do not find any merit in this ground of appeal of the Revenue a .....

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d at far and near places from the place of business. Assessee has given reasons for increase in the expenditure due to increase in the purchases therefore, addition was wholly unjustified which have been correctly deleted by the Ld. CIT(A). Therefore, this ground of appeal of the Revenue is dismissed. 22. On Ground No. (f), the Revenue has challenged the deletion of addition of ₹ 6,91,700/-, on account of unexplained cash found during the search. 23. The AO made the above addition because .....

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urse of search belonging to his mother and balance of ₹ 91,700/- were out of the savings of other family members which are mostly reasonable and man of status. It was further explain that assessee had already surrendered ₹ 2.25 crores therefore the same is also available to explain this addition. Ld. CIT(A) accepted the contention of the assessee with regard to the amount of ₹ 6.00 lacs belongs to mother of the assessee. 25. The AO in his comment did not object to the contentio .....

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nts filed at the appellate stage. Therefore, Ld. CIT(A) on proper appreciation of facts and materials on record correctly deleted the addition. 28. Therefore, this ground of appeal of the Revenue is dismissed. 29. On Ground No. (g), the Revenue challenged the deletion of addition of ₹ 90,04,851/- on account of excessive jewellery found. 30. The AO made the above addition on account of excessive jewellery. During the search operation, at the premises, jewellery weighing 6711.900 gms was fou .....

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