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Somabhai Ambaalal Prajapati and Others Versus ACIT, Central Circle-2 (2) , Ahmedabad

Unexplained bank transactions - Held that:- The assessees could not explain as to how the amount of ₹ 5 lakhs withdrawn from the common bank account was utilized. Looking at the entire facts and circumstances, the issues were to be decided on surrounding circumstances and human conduct. The burden to prove the cash entries is on the assessee since the requisite burden has not been discharged by the assessee in this behalf. In view thereof, the orders of the ld. CIT(A) on this issue are uph .....

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lculation and established that the source of loan of ₹ 18,81,429/- remained unexplained. Assessee, except making general comments, could not objectively prove that the assessee’s prima facie onus in respect of this loan was satisfactorily discharged. - Assessee appeal dismissed - IT(SS)A No. 348 & 349/Ahd/2012, 350/Ahd/2012, 351/Ahd/2012 - Dated:- 20-7-2016 - SHRI R.P. TOLANI, JUDICIAL MEMBER For The Assessee : Shri P.F. Jain, AR For The Revenue : Shri R.I. Patel, CIT-DR ORDER These a .....

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ised in all these appeals are to the effect that the ld. CIT(A) has erred in law and on facts in upholding the addition of :- (a) Shri Somabhai Ambalal Prajapati: For AY 2004-05 - Rs,1,66,666/- (1/3 rd out of cash flow) For AY 2005-06 - Rs.3,54,800/- (unaccounted sales) (b) Shri Chandulal Ambalal Prajapati: For AY 2004-05 - Rs.1,66,666/- (1/3 rd out of cash flow) (c) Shri Pankaj Somabhai Prajapati: For AY 2009-10 - Rs.18,81,429/- (out of ₹ 30 lakh) 3. The brief facts are - all the assessee .....

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as challenged with an alternative plea that GP rate may be adopted. 3.2 Ld. CIT(A) dismissed the contention qua the 1/3rd difference of cash flow entry by following observations in the case of Shri Somabhai A. Prajapati and Shri Chandulal :- 4. I have considered the submissions of the appellant. It may be mentioned that the appellants are not maintaining any books of accounts till the date of search. During the course of search, it was found that the appellants have purchased and sold land by ma .....

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subsequent years. The AO had allowed the credit of the withdrawals of ₹ 20.50 Lacs made in the month of March, 2003 but did not allow the credit of the withdrawals of ₹ 5 Lacs made in the month of February 2003 on the ground that if the appellants had 5 lakh in their possession, then what was the need of making further withdrawals from the bank. The AO therefore presumed that the amount of ₹ 5 lakh withdrawn in the month of February 2003 was utilised by the appellants somewher .....

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proceeds of their agricultural land. For doing so, an attempt has been made to show maximum cash balance available with them in the form of opening cash balance on the cash received by way of sale of land so that they can explain the investments in land. If the contention of the appellant is accepted then all the withdrawals made prior to April 2003 should also have been considered as opening cash balance as on 1/4/2003. Non-maintenance of books of accounts cannot be advantageous to the appellan .....

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31st March 2003. In the absence of the maintenance of books of accounts by the appellants, I also hold that the withdrawals of ₹ 5 lacs made in the month of February 2003 does not represent the cash balance as on 1.4.2003. In other words, the addition of ₹ 166,666/- made by the AO in the hands of the each appellant is hereby confirmed. 3.3 In case of Somabhai for AY 2005-06 the addition qua the unaccounted sales were held to be net profit by ld. CIT(A) as all the expenses were alrea .....

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e as the income of the appellant. However, if all the purchases are accounted for by the appellant and some of the sales are not accounted for, in that case, the unaccounted sales will form part of the total sales and accordingly the income would be increased by the amount of unaccounted sales. Since in this case, there is evidence of only unaccounted sales, in my considered view, the whole unaccounted sale is liable to be added as the unaccounted income of the appellant. The decisions relied up .....

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ellant. This addition has been accepted by the appellant. This means that the appellant has accepted that the fund belongs to the appellant on which interest income of ₹ 670,000 was earned by him during assessment year 2010-11. In my considered view, the interpretation of the AO that only loan of ₹ 30 lakhs was given by the appellant and the other loans shown in the paper are out of the return of the loan of ₹ 30 Lacs is not correct because the loan of ₹ 30 Lacs has been .....

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, the appellant had given loans of ₹ 30 lakhs, ₹ 25 Lacs, ₹ 10 Lacs, ₹ 5 Lacs, ₹ 5 Lacs and ₹ 10 Lacs totaling ₹ 85 Lacs simultaneously. Instead of the figure of ₹ 30 lakhs, the AO should have adopted the figure of ₹ 85 Lacs. 6.2. Even if it is accepted that the appellant had his share of income of ₹ 36,52,071 + ₹ 19,66,500+Rs.10,00,000 = ₹ 66,18,571, then the source of the loan of ₹ 85 lakh given by the appellant can .....

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words, the addition of ₹ 30 lakh made by the AO is directed to be reduced to ₹ 18,81,429/- (Rs. 85 Lacs minus ₹ 66,18,571). 4. Ld. Counsel for the assessee contends as under:- i) The incriminating paper based on which the addition was made was a dump document and a rough paper; ii) Exact contents of the paper were neither opinion of the assessee nor the Assessing Officer could explain them; iii) This amount was deducted from opening cash balance which has arisen on account of c .....

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unt of ₹ 5 lakhs was split into ₹ 1,66,666/- and disallowed in the hands of three brothers. 4.2 Apropos unaccounted sales it is contended that entire sales cannot be treated as net profit and the GP should be applied. Reliance is placed on following judgments of Hon ble jurisdictional High Court:- i) CIT vs. President Industries, (2002) 258 ITR 0654 (Guj.) ii) Pipush Kumar O. Desai vs. CIT, (2001) 247 ITR 0568 (Guj.) 5. Ld. DR relied on the orders of ld. CIT(A). It is contended that .....

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