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Shri M. Rajendran and Shri K. Palanisamy Versus The Income Tax Officer, Ward I (1) , Kumbakonam

Addition towards interest on money lending - Held that:- The assessee himself offered interest income exorbitantly higher figure. When the assessee himself offered the higher rate of interest from money lending business, this Tribunal is of the considered opinion that estimating the interest income does not arise for consideration. Moreover, the estimation made by the Assessing Officer at 25% is highly arbitrary and without any supporting material. Therefore, this Tribunal is unable to sustain t .....

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uced bills or vouchers - Held that:- When the assessee has filed the copies of the patta to substantiate the land holding and the details of the crop, the Assessing Officer is not justified in restricting the income from agriculture. Expecting bills and vouchers from the agriculturist for sale of agricultural produce is something which could not be produced by the ordinary agriculturist. The assessee is an individual and not maintaining any books of account. This Tribunal is of the considered op .....

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he Revenue is that the assessee deposited the cash for issue of DD - Held that:- No material is available on record to suggest that the assessee deposited the cash in the bank account of Shri Pugazhendi. The Assessing Officer on presumption observed that money belongs to the assessee was deposited. The fact remains that DD was issued from the account of Shri Pugazhendi. The cash was deposited to the account of Shri Pugazhendi. Therefore, it is for Shri Pugazhendi to explain the source for making .....

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from the bank account of the above said Shri Pugazhendi. Therefore, as observed earlier, addition, if any, has to be made in the hands of Shri Pugazhendi and not in the hands of the assessee. Accordingly, the orders of both the authorities below are set aside and the addition made by the Assessing Officer is deleted. - Addition made towards investment in chits - Held that:- AO estimated the assessee’s contribution on the basis of the statement said to be recorded from one Shri Ramasamy. Othe .....

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made by 20 members and the firm consisting of six partners is acting as foreman. The contribution to chit was made by other members and not by the partners. Therefore, the addition made in the hands of the assessee is not justified. If at all any addition is to be made, it has to be made in the hands of 20 members who contributed / subscribed to the chits. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of both the authorities below are .....

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icer is deleted. - Cost of construction - Held that:- As rightly submitted by the Ld.counsel for the assessee, the addition made by the Assessing Officer is less than 15% of cost of construction. In fact, the cost of construction declared by the assessee is at ₹ 82,75,777/-, whereas, the Departmental Valuation Officer has valued at ₹ 90,81,900/-. Admittedly, the difference between the two is only less than 15%. The allowance for supervision and purchase of material by the assess .....

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an, CA For The Respondent : Shri Supriyo Pal, JCIT ORDER All the appeals of the two independent assessees are directed against the respective orders of the Commissioner of Income Tax (Appeals), Tiruchirappalli. Since common issue arises for consideration in all these appeals, I heard these appeals together and dispose of the same by this common order. 2. The first issue arises for consideration is addition towards interest on money lending in the case of both the assessees. 3. Shri N. Quadir Hos .....

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oan and interest received, etc. before the Assessing Officer. In fact, the Assessing Officer has reproduced the same at page 2 of his order. The CIT(Appeals) confirmed the addition without going into the details filed by the assessee. According to the Ld. counsel, the income estimated by the Assessing Officer is arbitrary. The Assessing Officer estimated the rate of interest as 24 to 30% in the money lending business. According to the Ld. counsel, 24 to 30% is very unreasonable. Therefore, the a .....

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of loan, etc., the Assessing Officer in fact estimated the income from money lending business. For the assessment year 2002-03, the assessee himself agreed for estimation of interest at ₹ 2,50,000/-. Considering the rate of interest charged as per the information furnished, the Assessing Officer reasonably estimated the interest at 25%. Therefore, according to the Ld. D.R., no interference is called for. 5. I have considered the rival submissions on either side and perused the relevant ma .....

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/- and the interest income offered was ₹ 45,000/-. Similarly, for the period ending 31.03.2001, the outstanding hand loan was ₹ 2,25,000/-. The interest income offered was ₹ 40,000/-. The rate of interest worked out to 17.7%. The assessee himself offered interest income exorbitantly higher figure. When the assessee himself offered the higher rate of interest from money lending business, this Tribunal is of the considered opinion that estimating the interest income does not aris .....

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next ground of appeal is with regard to income from agriculture in the case of both the assessee. 7. Shri N. Quadir Hoseyn, the Ld.counsel for the assessee, submitted that the assessee has claimed agricultural income by producing necessary material. According to the Ld. counsel, the Assessing Officer without any basis, disallowed the claim of the assessee. 8. I have heard Shri Supriyo Pal, the Ld. Departmental Representative also. As seen from the order of the CIT(Appeals), the assessee filed th .....

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d holding and the details of the crop, the Assessing Officer is not justified in restricting the income from agriculture. Expecting bills and vouchers from the agriculturist for sale of agricultural produce is something which could not be produced by the ordinary agriculturist. The assessee is an individual and not maintaining any books of account. This Tribunal is of the considered opinion that when the assessee filed the copies of the patta and the details of the crop cultivated, the Assessing .....

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sel for the assessee, submitted that the assessee has received loan from Shri K. Pugazhendi. According to the Ld. counsel, the assessee has filed confirmation letter from the creditor. Therefore, according to the Ld. counsel, the Assessing Officer is not justified in making any addition. 11. On the contrary, Shri Supriyo Pal, the Ld. Departmental Representative, submitted that on verification of bank account of Shri Pugazhendi, the Assessing Officer found that the funds were transferred to the a .....

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books of account is nothing but income of the assessee. The Assessing Officer has also reproduced the credits in the bank account with reference to the date and DD. According to the Ld. D.R., whenever the assessee required funds, DD was issued from the account of Shri Pugazhendi. Before issuing the DD, the amount was deposited in the account of Shri Pugazhendi. Therefore, according to the Ld. D.R., it is nothing but routing the money belongs to the assessee. 12. I have considered the rival subm .....

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Assessing Officer on presumption observed that money belongs to the assessee was deposited. The fact remains that DD was issued from the account of Shri Pugazhendi. The cash was deposited to the account of Shri Pugazhendi. Therefore, it is for Shri Pugazhendi to explain the source for making deposit in his bank account. From the orders of the lower authorities it appears that the said Shri Pugazhendi was examined by the Assessing Officer and he confirmed the fact of giving the money to assessee. .....

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orders of both the authorities below are set aside and the addition made by the Assessing Officer is deleted. 13. The next ground of appeal is with regard to addition made towards investment in chits in the case of both the assessees. 14. Shri N. Quadir Hoseyn, the Ld.counsel for the assessee, submitted that the Assessing Officer found during the course of survey that one of the partners, Shri P. Ramaswamy admitted unaccounted chit auction with several persons. Based on question No.21 recorded .....

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made and subscription to the chit funds are not available on record. The assessee claims that the chit contributions were made from available funds and from the interest earned on the money lending business. In the early part of this order, this Tribunal deleted the addition made towards interest on money lending business. The Assessing Officer estimated the assessee s contribution on the basis of the statement said to be recorded from one Shri Ramasamy. Other than this statement of Shri Ramasa .....

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sisting of six partners is acting as foreman. The contribution to chit was made by other members and not by the partners. Therefore, the addition made in the hands of the assessee is not justified. If at all any addition is to be made, it has to be made in the hands of 20 members who contributed / subscribed to the chits. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of both the authorities below are set aside and the addition made by t .....

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66,899/- after adjusting the cost of acquisition of 960 grams of jewellery claimed at the cost of ₹ 6,50,899/-. The Assessing Officer disallowed the claim of the assessee on the ground that the assessee has not produced any bills or vouchers for purchase and sale of gold jewellery. According to the Ld. counsel, the assessee in fact sold the gold jewellery and suffered a loss. Therefore, the Assessing Officer is not justified in making any addition. 18. On the contrary, Shri Supriyo Pal, th .....

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considered the rival submissions on either side and perused the relevant material available on record. The assessee has shown a sum of ₹ 3,84,000/- in the cash flow statement as sale of gold jewellery. Jewellery cannot be sold to a dealer without bills. The acquisition of gold jewellery may be incidental one and the assessee may not be able to produce purchase bill for purchasing the gold jewellery. However, when the assessee sells the gold jewellery to a goldsmith or any other individual .....

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