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TMI Blog2018 (1) TMI 1519X X X X Extracts X X X X X X X X Extracts X X X X ..... y admitting additional evidence under rule 46A of the I.T. Rules, ignoring the fact that the assessee had not furnished the relevant documents in spite of opportunities given during assessment proceedings and despite being given specific instruction? 3. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of 'Disallowance of interest expenditure' to the extent of Rs. 1,60,560/- by admitting additional evidence under rule 46A of I.T. Rules, though the entire interest was not substantiated by the assessee during assessment proceedings, despite being given opportunity? 4. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition of Rs. 52,13,333/- being undisclosed investment in properties by admitting additional evidence under rule 46A of the I.T. Rules and not appreciating that the assessee had opportunities to submit the necessary evidence during the assessment proceedings? 3. From the above, it is evident that the Revenue is aggrieved against admitting of the additional evidences by the CIT(A) in violation of Rule 46A of the Income Tax Rules, 1962. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... session of audited balance sheet and profit and loss account but did not bring any material on record which was gathered during the search or during the assessment proceedings to discard the audited result of the appellant. As regards production of books of account, the appellant contended that AO had kept books of accounts of group concerns for about 2 months without impounding the same. In support appellant had also filed copy of letter received by the office of AO by which books of accounts were produced before the AO. It was also contended that books of accounts of the appellant were also produced and AO had also not permitted personal presence of the AR of the appellant. The assessment year under consideration was not pending at the time of search and the AO was not justified in rejecting the book result without having any material in hand to disturb the concluded assessment in view of the decision of Hon'ble Bombay High Court in case of Murli Agro Products (Supra). Addition made of Rs. 4,35,741 is therefore deleted and the grounds raised by the appellant are allowed." 8. The above paragraph is evident from the fact that the CIT(A) never admitted any additional evidences whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsored by Hero Motorcorp Ltd. Thus, the CIT(A) gave part relief to the assessee. Aggrieved with the said relief of Rs. 10,000/-, the Revenue is in appeal before us. Assessee is not in appeal against the confirmed addition of Rs. 1,56,000/-. 12. After hearing both the sides, we find the reasoning given by the CIT(A) in Para No.5.3 of his order is a well reasoned one. The amount of Rs. 10,000/- considered by the CIT(A) on account of hotel expenditure, as having sponsored by the insurance company needs no interference. It is also a fact that AO made the addition only on estimation basis. Regarding the additional evidence, the Ld. AR for the assessee filed the following written submissions : "The Respondent submits that out of the total addition of Rs. 1,66,000/- the CIT(A) has upheld addition to the extent of Rs. 1,56,000/- and Rs. 10,000/- is allowed on the basis of the copy of letter filed by the respondent which was already submitted to the Ld. AO during the assessment proceedings. Therefore, the question of additional evidence under Rule 46A and calling for the Remand Report from the Ld. AO simply did not arise." Therefore, the ground raised by the Revenue is dismissed in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonable and does not call for any interference. As such, we do not find any violation of provisions of section 46A of the Income Tax Rules, 1962. Ground No.3 raised by the revenue is therefore dismissed. 16. Ground No.4 by the Revenue relates to deletion of Rs. 52,13,333/- by the CIT(A) as undisclosed investment in properties. 17. Briefly stated relevant facts are that during the course of assessment proceedings in the case of Shri Rajesh Prakash Chaudhari of the group, the AO noted that loan sanctioned by UCO Bank to Shri Rajesh P. Chaudhari against the security of land situated at S.No.240/3A/3B/3C at Sakegaon, standing in the name of the assessee, Shri Bhagwat M. Chaudhari and Shri Namdev M. Chaudhari. For the purpose of loan, the valuer has valued the property at Rs. 1,87,68,000/- as on 04-02-2006. AO gave 20% allowance on this assessed value being higher than the actual investment and the cost price of the property was thus taken at Rs. 1,56,40,000/-. Thus, 1/3rd of the amount works out to Rs. 51,13,333/-. In absence of any details about the investment in the property, in the balance sheet of the assessee, the AO proceeded to make addition of Rs. 51,13,333/- in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before the Ld. AO. during the course of assessment proceedings, the question of calling for the remand report simply does not arise. Further I am enclosing herewith the copy of submission filed with the Ld. AO. wherein it is clearly stated that the Purchase deed of the said land was submitted in the paper book." Accordingly, Ground No.4 raised by the revenue is dismissed. 20. In the result, appeal of the Revenue is dismissed. ITA No.630/PUN/2016 A.Y. 2007-08 21. Grounds raised by the Revenue in this appeal are extracted as under : "1. Whether on the facts and circumstances of the case, whether the Id.CIT(A) was justified in deleting the foreign tour expenses amounting to Rs. 79,000/-? 2. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of 'undisclosed interest in FDR' amounting to Rs. 6,000/-? 3. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of' 'Disallowance of interest expenditure' to the extent of Rs. 2,39,227/-, though the entire interest was not substantiated by the assessee during assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income from FDR. Relevant facts include that the assessee had a FDR with UCO Bank amounting to Rs. 1 lakh and earned interest. Without realizing the fact that the said income was already offered to tax, AO estimated the interest accrued on the said FDR and made addition. During the First Appellate proceedings, assessee demonstrated vide his letter dated 16-11-2015 the fact of offering of Rs. 6,000/- which formed part of the income returned by the assessee. On considering the same and examining the facts, the CIT(A) granted relief. Relevant operational para is extracted as under : "15.2 I have gone through the assessment order and the submissions filed by the appellant. As discussed earlier, proper opportunity could not be granted to the appellant, and the AO without examining the computation of total income filed by the appellant along with the return of income filed on 08-08-2008 had assumed that interest on FDR kept with the UCO Bank was not offered to tax. I have examined the computation of total income and it is seen that appellant has offered interest of Rs. 5,807/- as interest on FDR with the UCO Bank. Therefore, estimated addition of Rs. 6,000/- made on this gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment activity. Considering the above, we find the reasoning given by the CIT(A) is reasonable. 30. In the result, appeal of the revenue is dismissed. ITA No.631/PUN/2016 A.Y. 2008-09 31. Grounds raised by the Revenue read as under : "1. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of 'undisclosed interest in FDR' amounting to Rs. 9,000/-. 2. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of 'Disallowance of interest expenditure' to the extent of Rs. 2,76,279/-, though the entire interest was not substantiated by the assessee during assessment proceedings, despite being given opportunity? 32. Ground No. 1 raised by the Revenue relates to addition on account of interest on FDR amounting to Rs. 9,000/-. 33. On hearing both the sides, we find this issue is identical to the Ground raised by the revenue in A.Y. 2007-08 raised by the assessee vide Ground No.2. The FDR in question is one and the same. We have upheld the decision of CIT(A) in the said assessment year. Following the same reasoning and considering the commonality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at AO was in possession of the books and there was no material with the AO to disturb the concluded assessment. CIT(A) also examined the letter received from the AO that the assessee produced books of account before him. Further, relying on the judgment of Hon'ble Bombay High Court in the case of Murli Agro Products, CIT(A) deleted the entire addition of Rs. 4,35,741/- as per the discussion given in Para No.35.2 of his order. We have already dealt with the same issue while dealing with the issue of violation of Rule 46A of the I.T. Rules, 1962. 41. In view of the above reasoned finding of the CIT(A) on this issue, we uphold the order of CIT(A). As such, revenue has no reason for making addition of Rs. 4,35,741/-. Accordingly, Ground No.2 raised by the Revenue is dismissed. 42. In the result, appeal of the revenue is dismissed. ITA No.633/PUN/2016 A.Y. 2010-11 43. Grounds raised by the Revenue are as under : "1. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) was justified in deleting the foreign tour expenses amounting to Rs. 3,95,800/- by admitting additional evidence under rule 46A of the I.T. Rules, ignoring the fact that the assessee had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stments made by the assessee came to a conclusion that the investment made is out of interest free funds available with the assessee. While coming to the conclusion of deleting the disallowance of interest u/s.36(1)(iii) of the Act, the CIT(A) relied on the decision of Reliance Utilities and Power Ltd. 313 ITR 340. For the sake of completeness of this order, we find it relevant to extract the finding given by the CIT(A) in Para No.44.2 on this issue and the same is reproduced here as under : "44.2 . . . . . .I have perused the balance sheet of he appellant as on 31-03- 2010. Capital of the appellant stood at Rs. 55,74,186/- as on 31-03-2010 whereas total investment stood at Rs. 88,33,777/- as on 31-03-2010. The increase in the investment was mainly on account of investment in shares of M/s. Choudhari Cars Pvt. Ltd. of Rs. 29,63,800/- and further investment in the firm M/s. Choudhari Automobiles which stood at Rs. 46,31,842/- as on 31-03-2010. Investment in the firm is considered for the purpose of business as appellant had offered interest and remuneration of Rs. 5,36,663/- from the firm under the head income from Business and Profession. However, other investments including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 53. On hearing both the sides, we find it relevant to extract the finding given by the CIT(A) in para No.46.2 on this issue and the same reads as under : "46.2 . . . . . . . .During the course of appellate proceedings, appellant had produced one sale bill of cotton of Rs. 2,13,071/- issued by the Krishi Utpanna Bajar Samitee, Jamner, Dist. Jalgaon on 25-01-2010. Appellant has failed to show as to what prevented him to produce the bills before the AO. Therefore, additional evidence furnished before me is not admitted. However, no material was gathered during the course of search as well as during the course of assessment proceedings to disturb the accepted net agricultural income of Rs. 1,25,556/- for the year under consideration. In case of concluded proceedings, additions not based on material gathered during the search or during the course of search assessment are not permitted on view of the findings of Hon'ble Bombay High Court in the case of Murli Agro Products (supra). Hence, addition made by the AO on adhoc and estimated basis is deleted and ground raised by the appellant is allowed." 54. From the above, it is evident that the AO made the addition on estimation b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f land' of Rs. 3,60,000/- without appreciating the fact that the prime purpose for making investment remains unproven even in appellate proceedings before the ld. CIT(A)? 5. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of "undisclosed interest in FDR' amounting to Rs. 9,000/-. 6. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of 'unproved agricultural income' of Rs. 1,14,816/-? 7. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition of Rs. 4,03,573/- made by estimating NP @ 6%, ignoring the fact that the assessee did not produce books of accounts for verification during assessment proceedings, despite being given opportunity?" 59. Ground Nos. 1 raised by the revenue is against admitting of the additional evidences by the CIT(A) in violation of Rule 46A of the Income Tax Rules, 1962. 60. On hearing both the sides, we find these grounds are identical to the grounds of appeal raised in ITA No.629/PUN/2016 for A.Y. 2006-07. We have already decided this issue against the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us. 65. On hearing both the sides and on perusing the orders of the revenue authorities, we find it is the case of the assessee that he sold the land situated at Gat No.277/2, Sakegaon, Taluka Bhusawal, Dist Jalgaon to Shri Anil Kotecha for a consideration of Rs. 1 crore. Against the said land deal, Sauda pawti dated 11-10-2010 was entered into by the assessee and Shri Anil Kotecha. However, the land deal was not materialized and the amount of Rs. 1 crore taken as advance was eventually returned back by the deed of cancellation/Sauda pawti dated 14-10-2010. These facts have been disclosed by the assessee before the AO u/s.132(4) of the Act. It is the case of the revenue authorities that the assessee could not satisfactorily prove the said transaction and therefore, Rs. 1 crore should be added as income of the assessee as unrecorded advance received against sale of the property, thus prayed for reversing the order of CIT(A). 66. After going through the finding given by the CIT(A) in Para Nos. 54.2 and 54.3 on this issue, we do not find any iota of fault in the reasoning given by the CIT(A) deleting the addition of Rs. 1 crore. While deleting the addition, CIT(A) has consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) in Para No.55.3 is reproduced hereunder for the sake of brevity : "55.3. . . . . I find merit in the contention of the appellant as no evidence was found during the search to reveal that land was purchased by the appellant for consideration different from that mentioned on the registered document. Similarly, no evidence was found to reveal that appellant received consideration apart from shares of value of Rs. 29,63,800/- on transfer of land. The AO has also not pointed out that consideration was less than the stamp duty valuation for the purpose. Merely on the basis of valuation done by the transferee company for the purpose of seeking finance from the bank, sale consideration cannot be assumed in the hands of transferor. There is specific provision u/s.50C of the Act for adopting deemed sale consideration which was not found applicable in this case. Addition made of Rs. 38,82,200/- on the basis of valuation report was not justified and therefore deleted. Ground raised by the appellant is hereby allowed." 70. On hearing both the parties on this issue and perusing the order of CIT(A), we find the above discussion of the CIT(A) reveal that Rs. 68,46,000/- is not the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee sufficient to meet its investment and at the same time the assessee had raised a loan, it can be presumed that the investments were from the interest free funds available. In view of the decision the capital of appellant is held to be invested for personal investment and consequently no borrowed funds can be considered to have been used for non-business purpose. Therefore, no disallowance of interest was called for. Addition made of Rs. 3,60,000 is directed and the ground raised by the appellant is hereby allowed." 74. From the above, it is evident that the loan is actually squared up by 01-04-2010 relevant to A.Y. 2011-12. No interest is accrued in principle due to the said squaring up of the loan. Notwithstanding the same, assessee has a strong capital base to the tune of Rs. 1.09 crores and the presumption laid down by the jurisdictional High Court in the case of Reliance Utilities and Power Ltd. (supra) that no funds are utilized for payments towards investment in the land. Considering the above discussion given by the CIT(A) while deleting the addition, we find the order of CIT(A) is a well reasoned one and therefore, it does not call for any interference. 75. G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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