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2016 (10) TMI 488 - ITAT KOLKATA

2016 (10) TMI 488 - ITAT KOLKATA - TM - Addition on account of unexplained cash credit - Held that:- The opening balance of cash-in-hand for ₹ 16 lakhs as reflected in the previous year’s balance-sheet i.e. 31-03-2006 has been accepted by the Department. Before us Ld. DR has not brought out anything contrary about the opening balance of the cash-in-hand. In our considered view, the opening balance, alone has been credited in the consolidated cash book of assessee. Therefore, the issue of m .....

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t:- We find that advance shown in the balancesheet as on 31.03.2007 was after adjusting the loan liability from Shri Manuvir Agarwal. We further find that it was a clerical error having no impact on the profitability of the assessee. As such, we find that there is no undisclosed investment on account of adjustment of liability with the amount of advances. Before us, Ld. DR failed to bring anything contrary to the advance argument of Ld. AR in this regard. In this view of the matter, we find no i .....

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same to a new account with the name RDB & CO. (HUF) (housing loan). We find that assessee has shown this amount as housing loan in the current year and thereafter certain amount was also received through banking channel which was shown as housing loan. The old loan amount was repaid by assessee during the current year through banking channel. We further find all the repayment of loan and accepting the fresh loan has been made through banking channel. There was certain other movement of cash thro .....

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nd of Revenue is dismissed. - Addition on account of undisclosed income - Held that:- AO has made the addition on surmise and conjecture. He has not exercised his power by issuing notice u/s. 133(6) of the Act to the broker for ascertaining the nature and source of aforesaid receipts. Before us Ld. AR has submitted that the aforesaid receipts represents the sale proceeds of the said shares and in support of its claim has submitted the copy of the contract notes which are placed on pages from .....

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order of Commissioner of Income Tax (Appeals)-XIX, Kolkata dated 10.12.2010. Assessment was framed by ITO Ward-31(1), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 14.12.2009 for assessment year 2007-08. 2. At the outset, it is noticed that the appeal of Revenue is delayed of 11 days and condonation petition has been filed explain the reasons for delay along with supporting affidavit. On query, from the Bench, Ld. counsel for the asses .....

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in deleting additions of ₹ 9,99,900/-, ₹ 89,600/- and ₹ 10,19,000/-, made u/s. 68 of the IT Act, holding that Çhaitali & Rajshree were one and the same person whereas in fact, the Balance Sheet of the assessee as on 31.03.2006 has separate, independent entries in the names of Chaitali & Rajshree . 2. That the CIT(A) erred in deleting the addition of ₹ 3,50,000/- being undisclosed investment by failing appreciate that the advance for land to the same extent .....

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notes, despite the categorical finding given by the AO in the remand report to the effect that the transactions shown in the contract note did not match the sales register and hence either the sales register or the contract notes were fabricated. 4. First issue raised by Revenue in this appeal is that ld. CIT(A) erred in deleting the additions of ₹ 9,99,900/-, ₹ 89,600 and ₹ 10.19 lakh made by the AO under section 68 of the Act. 5. The facts in brief are that the assessee in t .....

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e assessee. On question, the assessee submitted that there was sufficient cash balance on the last day of the immediate preceding year and these cash entries are reflecting from the opening balance of cash only. The assessee also submitted that the cash balance was shown in the name of Chaitali for the sake of administrative convenience as the assessee was also having the residence in Mumbai as well. The accountant of the assessee accordingly has shown the cash-in-hand in Mumbai & Kolkata. I .....

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ssee which has been brought in the books of account in the guise of above stated facts. Therefore, the AO disallowed the claim of the assessee and added to the total income of the assessee. 6. Aggrieved, assessee preferred an appeal to learned CIT(A) whereas assessee filed an affidavit stating that the nickname of the assessee is Chaitali . The assessee shifted to Mumbai after her marriage but the accounts were maintained in Kolkata. The accountant for the easy reference of the cash availability .....

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tement reflecting all the entries of cash deposits. Accordingly, ld CIT(A) deleted the addition made by the AO by observing as under:- … …On careful consideration of the facts, I am of the opinion that by making such observations, it cannot be denied that the appellant was having opening cash balance as on 1.4.2006 at ₹ 17,10,500/-. If, the said cash was appearing in different heads in the balance-sheet and not under one head as cash in hand , does it mean that the appellant .....

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bay and cash at Calcutta are appearing. It is not known that when both the cash balances i.e at Bombay and Calcutta are appearing in the balance-sheets of the appellant, how the AO can conclude or have suspicion that the appellant had no source to keep such cash in hand. It is not the case of the AO that the aforesaid amount of cash is not appearing in the balance-sheet as on 31.3.2006 and the appellant has tried to explain the source of deposit in the bank from that amount. Further, I am of the .....

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as just tried to support the additions made by him in the assessment order by making reference to various other points which is, in my opinion, are not very relevant to decide the fact as to whether appellant was having cash in hand of ₹ 17,10,500/- as on 1.4.2006. On verification of balance-sheet for the AY 2006-07, I am inclined to believe the submission of the appellant that as on 1.4.2006, she was having opening cash balance of ₹ 17,10,500/- which were shown under various heads i .....

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d. Being aggrieved by the order of ld. CIT(A), Revenue is in appeal before us. 7. Before us ld. DR submitted that identity of Chaitali is to be verified and therefore it should be restored before AO for further verification and he vehemently relied on the order of AO. On the other hand, Ld. AR before us filed a paper book which is running pages from 1 to 65 and submitted that the name Chaitali is a nick name of assessee. Therefore, no cash was received from the third party and the cash shown in .....

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d in the previous year s balance-sheet i.e. 31-03-2006 has been accepted by the Department. Before us Ld. DR has not brought out anything contrary about the opening balance of the cash-in-hand. In our considered view, the opening balance, alone has been credited in the consolidated cash book of assessee. Therefore, the issue of making any addition on account of unexplained cash credit does not arise in the aforesaid facts and circumstances. Ld. AR has also submitted the amalgamated cash book and .....

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of several persons for ₹ 17.75 lakh as on 31.03.2006 and the same was reduced in the subsequent year to ₹ 14.25 lakh as on 31.03.2007 leaving the difference of ₹ 3.50 lakh. On question by the AO the assessee submitted that there was liability in the name of M/s Jai Sai Udhyog for ₹ 3.50 lakh as on 31.03.2006 but the same was inadvertently adjusted with the amount of aforesaid advances for land. Accordingly there is arising the said difference of ₹ 3.50 lakh if comp .....

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h was appearing in the name of various persons in the assets side as stood on 31.03.2006, where the name of Manuvir Agarwal appeared twice in the liability side once for ₹ 26000/- and other for ₹ 3.50 lakh because the character of first deposit was different but in subsequent year, i.e. 31.03.2007 the amount of ₹ 26,000/- was brought forward at ₹ 3.50 lakh against the name of Manuvir Agarwal was shifted from the liability side and adjusted with ₹ 17.75 lakh brought .....

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essee contended that said sum of ₹ 3.50 lakh could easily be verified from cash book and bank book as were submitted before AO while framing assessment order where assessee categorically stated that said sum of ₹ 3.50 lakh was neither refunded nor added with the fresh deposit of the year received from Shri Manuvir Agarwal. Considering the submissions and perused the assessment order together with the remand report submitted by AO, Ld. CIT(A) opined that as per the balance-sheet as on .....

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lity of ₹ 3,50,000/- is not appearing in the name of Manuvir Agarwal. The liability of ₹ 22,50,000/- appearing in the name of Manuvir Agarwal as on 31.3.2007 was the fresh liability created during the year and the amount of ₹ 3,50,000/- was no included in the said sum of ₹ 22,50,000/- Thus, I am of the opinion that there is no reasons to disbelieve that the amount of advance of ₹ 3,50,000/- appearing in the liability side of the preceding year s balance-sheet was ad .....

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plained investment as done by the AO. In view of above, I am of the considered opinion that addition of ₹ 3,50,000/- made by the AO is not correct and same is directed to be deleted. This ground no. 2 is allowed. Being aggrieved by the order of ld. CIT(A), Revenue is in appeal before us. 12. Before us ld. DR submitted that the name of M/s Jai Sai Udyog is not reflecting in the balance-sheet of assessee and he relied on the order of Assessing Officer. On the contrary, Ld. AR submitted that .....

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paper book. He very much relied on the order of Ld. CIT(A). 13. We have heard the rival contentions and perused the materials available on record. From the foregoing discussion, we find that advance shown in the balancesheet as on 31.03.2007 was after adjusting the loan liability from Shri Manuvir Agarwal. We further find that it was a clerical error having no impact on the profitability of the assessee. As such, we find that there is no undisclosed investment on account of adjustment of liabili .....

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to M/s RDB & Co. (HUF) through banking channel on different dates as detailed under:- (iii)(c) Payments by transfer of ₹ 2,75,000/- vide cheque number 104726 of UCO bank on 12.6.2006, ₹ 8,01,631/- on 30.8.2006 vide cheque number 104372, ₹ 50,000/- on 26.3.2007 vide cheque number 104736 and Rw.1,75,000/- on 31.3.2007 vide cheque number 104739 were made to CA- 10288 being the account maintained by RDB & Co.(HUF) was not reflected in the loan confirmation of account betwee .....

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th the capital account of the assessee. However, the AO disregarded the plea of the assessee and added to the total income of the assessee as undisclosed investment. 15. Aggrieved, assessee preferred an appeal to learned CIT(A) whereas assessee submitted that he has taken loan from RDB & company (HUF) in the earlier year which is reflected in the balance sheet as on 31.3.2006 for an amount of ₹ 11,26,631/-. From this amount, a sum of ₹ 10 lakhs was transferred to the new housing .....

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77; 2.75 lakh and ₹ 8,01,631/- through banking channel respectively. Accordingly, ld CIT(A) deleted the addition made by the AO by observing as under:- (8.4) I have considered the submission of the appellant and perused the assessment order. I have also gone through the remand report, rejoinder to remand report and copies of ledger account of M/s. R.D.B. & Co. HUF. On perusal of balance-sheet of the appellant as on 31/3/2006, it is observed that there was loan of ₹ 11,26,631/- fr .....

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llant had also given sum of ₹ 2,75,000/- on 10/6/06 and ₹ 8,01,631/- on 29/8/06 to R.D.B.& Co. HUF. In this manner, the total of debit side also became ₹ 20,76,631/- and the loan account which was appearing in the balance-sheet as on 31/3/06 was squared off. The confirmation of this account was filed before the AO which, according to him, was filed by the appellant after detection of entries of payment by the appellant to the R.D.B.& Co. HUF. As mentioned above, the old .....

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is duly reflected in the balance-sheet as on 31/3/07.. Thus, I am of the opinion that the AO has failed to appreciate the two accounts maintained by the appellant and the two loan confirmations filed during the course of assessment proceedings. On perusal of ledger accounts, it is further observed that the sum of ₹ 1,75,00/- was paid by the appellant to R.D.B & Co. HUF on account of current account and sum of ₹ 50,000/- was paid as rent which is deducted from the capital as shown .....

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ss-verified by AO, therefore, it should be restored back to the file of AO for verification. In rejoinder, Ld. AR submitted that assessee had brought forward loan which was duly reflected in the balance-sheet as on 31.03.2006 at ₹ 11,26,631/- and which was different from the housing loan which was taken only during FY 2006-007 relevant to AY 2007-08 reflected at page 28 of the paper book and was at ₹ 18,71,808/-. Ld.AR further stated that assessee had a current account during the yea .....

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record. From the foregoing discussion, we find that AO had made the addition for ₹ 13,01,631/- on account of payment made to RDB & Co. (HUF) on the ground that this payment was not reflecting in the balance-sheet of assessee. However, we find that there was a opening loan liability for ₹ 11,26,631/- which was adjusted by ₹ 10 lakh by transferring the same to a new account with the name RDB & CO. (HUF) (housing loan). We find that assessee has shown this amount as housi .....

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adjusted with the capital account of assessee. The Ld. AR in support of its claim has placed the confirmation from RDB & Co. (HUF) which are placed on pages 25 to 28 of the paper book. Before us Ld. DR failed to bring anything contrary to the confirmation filed by Ld. AR. In view of above facts and circumstances in the present case, we uphold the order of Ld. CIT(A). This ground of Revenue is dismissed. 18. Fourth issue raised by Revenue is that the learned CIT(A) erred in deleting the addi .....

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e aforesaid sum of money ₹ 16,22,427/- received by the assessee does not represent the sale of shares but it is some other income from different sources of the assessee. Therefore the AO treated the same as income from undisclosed source and added to the total income of the assessee. 20. Aggrieved, assessee preferred an appeal to ld CIT(A) who has deleted the addition made by the AO by observing as under:- … … On careful consideration of the facts and on perusal of copy of co .....

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r form the said party against the sale of shares. In the same para, the AO has specifically mentioned that the ledger account shows that ₹ 16,22,339/- was received by the appellant on account of sale of shares of Dabur, Ganesh Fortgin,Gujarat Ammbuja, Indian Overseas, Mahindra & Mahindra, MRF, Orchid Chem, Reliance Industries, Satyam Computers and Tata Tea. Thus, on the basis of copy of ledger account of M/s Bakliwal Financial Services, it was concluded by the AO that the sum of ₹ .....

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of the appellant from undisclosed sources. Though, in the sales register, the name of Vishant Leasing and Vir Alloy is written, but it not clear whether these names related to share broker or not. But the fact remains that as per the contract note and the copy of ledger account of Bakliwal Financial Services, the appellant had sold shares through said broker and received the sale proceeds of ₹ 16,22,339/-. Under the circumstances, it is to be held that the sum of ₹ 16,22,427/- was re .....

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