TMI Blog2018 (1) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... record that these produce were sold in regulated market or to middlemen. It is immaterial at this stage as the family members have already confirmed that these lands were used to cultivate the cotton seeds and they confirm that these were genuine, in the absence of any findings from the AO that these are not genuine transactions, we have no option but to consider the affidavits as genuine. - Decided in favour of assessee. - ITA No. 483/Hyd/2016 And C.O. No. 32/Hyd/16 - - - Dated:- 24-1-2018 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Revenue : Smt. S. Praveena For The Assessee : Shri K.C. Devdas ORDER PER S. RIFAUR RAHMAN, AM: This appeal is filed by the revenue against the order of CIT(A), Kurnool, dated 12/01/2016 for the AY 2011-12. The assessee filed C.O. against the said order of the CIT(A). 2. Briefly the facts of the case are, assessee filed his return of income for the AY 2011-12 on 30/09/2012 admitting an income of ₹ 19,80,540/-, which was processed u/s 143(1) of the Income-tax Act, 1961 (in short the Act ). Subsequently, the case was selected for scrutiny and notices u/s 143(2) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... many of the farmers in the native village and used to carry on this trading activity. In support of this, he furnished a constructed profit and loss a/c. 2.4. The AO observed that the assessee had not furnished any evidence for carrying out such business activities in agricultural commodities and not furnished details of the purchasers and sellers as well as not furnished any books of accounts for such transactions. Further, he observed that the assessee had not furnished even bills for purchases and sales, but, submitted a profit and loss account, which was not supported by any sort of evidence. From the facts of the case, the AO was of the view that that the assessee is trying to explain unfounded sources for the alleged cash deposits in the bank account. He, accordingly, held that the assessee made the above cash deposits in the above bank account out of unexplained sources and accordingly, treated the above cash deposits in the bank accounts as income of the assessee. 2.5 The AO accordingly, determined the income of the assessee at ₹ 1,58,87,896/- as against the returned income of ₹ 19,80,540/-. Aggrieved, the assessee preferred an appeal before the CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of deemed dividend as a normal/routine business transaction of the appellant on the grounds of commercial expediency holds good. Hence, ground No.2 of the appellant is allowed. 4. As regard the addition of ₹ 1,07,00,000/-, the CIT(A) observed as under: 7. Ground No.3 relates to addition of ₹ 1,07,00,000/- as unexplained sources. The various facts, issues and circumstances of the instant case were perused. The lack of opportunity to the appellant and the lack of the principle of natural justice have been noted and brought out in para-6.1, 6.2 supra. From the submissions of the appellant, the remand report of the Assessing Officer and the rejoinder to \ remand report by the appellant apart from other relevant details, it is seen that the identity, creditworthiness and genuineness was brought out with regard to the sum of ₹ 1,07,00,000/- at the stage of assessment itself as can be seen from the assessment record. In Para-2.2 of the assessment order it was brought out as follows: 2.2 During the course of assessment proceedings, the assesse has been asked to explain sources for the above cash deposits. In response, the assesse stated that he eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t even disclosed in the Return of Income filed by the assessee and taken this, after thought stand at the time of assessment to explain the credits ? 3. Any other grounds that may be urged at the time of hearing. 6. The Assessee has raised the following objections in his C.O.: 1. The learned Commissioner of Income-Tax (Appeals) (CIT(A) ought to have in the alternative considered the plea of the appellant that only a sum of ₹ 28,74,400 which is the peak credit was assessable as against the net profit ofRs.8,62,125/-. 2. Any other ground(s) that may arise at the time of hearing. 7. Ld. DR submitted that AO made the addition u/s 2(22)(e) on the ground that assessee would purchase corporate office building, but, there is no building brought on company books. He submitted that it is only an arrangement to escape from provisions of section 2(22)(e). With regard to cash deposits, CIT(A) has deleted the addition relying on the confirmation letters from the farmers, but, there is no evidence to show to whom assessee has sold the agricultural produce. He relied on the order of AO and also relied on the decision of ITAT, Bangalore Bench in the case of Shri Hem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 155(Delhi) 11. CIT V s. Atul Engineering U dyog (Allahabad) 228 Taxman 295 12. CIT Vs. Amrik Singh (Punj ab Haryana) 231 Taxman 731 13. CIT Vs. F.Praveen (Madras) 220 CTR 639 14. case of CIT Vs. Nagindas M.Kapadia (Bombay) 177 ITR 393 15. Jaypeem Granites(P) Ltd. Vs. ITO (Hyderabad) 139 lTD 564 16. ACIT Vs. Harshad V. Doshi (Chennai) 130 lTD 137 17. Namita V. Samant Vs.CIT (Bombay) 161 lTD 0015 9. Considered the submissions of both the counsels and material on record. There is no dispute with the fact that assessee has allowed his personal properties as collateral in order to facilitate the company to get the loan from the Andhra bank. The company has given a loan in order to purchase an office building by way of resolution. At the same time, the assessee claims that even otherwise, the company has given loan as a compensation for allowing the personal properties to utilize as collateral securities. Therefore, this transaction will not fall within the ambit of section 2(22)(e). Hon ble Calcutta High Court has adjudicated in the case of Pradeep Kumar Malhotra (supra) as this advance is outside the ambit of section 2(22)(e) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the above advances as commercial advances, which are outside the provisions of section 2(22)(e). Therefore, ground No. 1 of the revenue is dismissed. 9.1 With regard to addition u/s 68, we have considered the affidavit submitted by the relatives, who are brothers, father and sister-in-laws of the assessee. These affidavits are accompanied by PAN, return of income and chitta book, in support of land holding and income earned. These funds were allowed by respective members to be with the assessee and they will draw as and when they require. At this stage, there is identity of the creditors, creditworthiness and genuineness of the transaction is proved. Only contention submitted by department is that assessee could not bring on record the persons to whom the agricultural produce were sold. It is not brought on record that these produce were sold in regulated market or to middlemen. It is immaterial at this stage as the family members have already confirmed that these lands were used to cultivate the cotton seeds and they confirm that these were genuine, in the absence of any findings from the AO that these are not genuine transactions, we have no option but to consider the affida ..... X X X X Extracts X X X X X X X X Extracts X X X X
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