TMI Blog2020 (5) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... w, by giving reasonable, sufficient opportunity of being heard to the assessee. Assessee may produce other evidences before A.O, if necessary or called for by the A.O. on this issue. With these directions Ground No.1 of the appeal of the Assessee is partly allowed. Unexplained credit shown as addition to assessee s capital account in the proprietary of M/s. Rhea Distribution Co . - cash deposited in the bank account and capital account have not been explained - surrender as additional income - HELD THAT:- Since surrender have been made in earlier year as well as in subsequent year of the amounts in question and taxes have been paid and the amount which was surrendered in earlier year have been realized in assessment year under appeal, therefore, same would not be taxable in assessment year under appeal. This reason alone is sufficient to delete the addition against the assessee. Documentary evidences on record and explanation of assessee, we do not find any justification to sustain any addition against the assessee. We set aside the Orders of the authorities below and delete the entire addition. Ground No.2 of the appeal of assessee is allowed. - ITA.No.663/Del./2019 - - - Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s while disallowing the above expenditure. The Ld. CIT(A) noted that assessee has failed to provide details of the fixed assets before A.O. as well as before him, therefore, depreciation was not allowed. 4. Learned Counsel for the Assessee submitted that there is no evidence available on record of incurring of any expenditure as alleged by the A.O. Further burden is upon A.O. to prove that assessee incurred expenses, therefore, addition is wholly unjustified. 5. On the other hand, Ld. D.R. relied upon the Orders of the authorities below and submitted that assessee has not claimed any expenses in the P L A/c which cast doubt on the explanation of assessee. Therefore, addition is justified. 6. After considering the rival submissions, we are of the view that addition is excessive in nature. Considering the nature of business of assessee and that no evidence has been brought on record by the A.O. of incurring all these expenses, the estimate made by the A.O. of ₹ 10 lakhs expenditure is wholly unjustified. Further, it is a fact that assessee has not claimed any expenditure of routine business expenses, electricity expenses, fuel expenses which are necessary for running ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing addition in capital was also received through system as one of the reasons for selection of the case under scrutiny. The assessee was required to file the following details : (i) Statement of affairs for A.Y 2012-13 and A.Y. 2011-12. (ii) Details of net capital addition to the tune of ₹ 24,50,91,663/- in the capital account of the assessee as on 31-03-2012 with evidence. (iii) Justification of cash deposits of ₹ 9,72,59,500/- with supporting evidences. (iv) Loans and advances receivable to the tune to ₹ 25,61,01,000/- along with supporting evidences. 8.1. The A.O. noted that assessee has not furnished the requisite details. Therefore, both the above amounts remain unexplained. The A.O, therefore, made addition of ₹ 9,72,59,500/- and addition to the capital account to the tune of ₹ 24,50,91,663/-, totaling to ₹ 34,23,51,163/- under section 69 of the I.T. Act, 1961. 9. The assessee challenged the addition before the Ld. CIT(A). The detailed written submissions of the assessee is reproduced in the appellate order in which the assessee briefly explained that as per Question No.18 of the assessee s statement recorded under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in response thereto filed details of the loans and advances along with confirmations, balance-sheet and details of the sources along with bank statements. The details of the loans and advances of ₹ 9,02,95,000/- were also submitted by the assessee which are 10 in number. The A.O. issued notice under section 133(6) on test check basis which were served upon 06 parties and they have filed their replies along with documentary evidences. Further details were also submitted with regard to the source of the deposits, therefore, remand report was submitted stating that issue may be decided on merit. Since general comments were given by the A.O, therefore, A.O. was further asked to submit detailed remand report on all the above issues. The A.O. further filed the remand report which is also reproduced in the appellate order in which detailed investigation carried-out by the A.O. have been mentioned with regard to unsecured loans and advances received by the assessee and unsecured loans received in the Bank account of M/s. Rhea Distribution Co. and cash surrendered during the course of search. The A.O, however, noted that assessee failed to explain these issues. The assessee in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and utilised in firm ₹ 38,86,000/-). ₹ 13,50,20,500/- B. Unsecured Loan received in bank account of Rhea Distribution Co. (Prop. Firm) (in the ITR shown as capital) ₹ 3,98,00,000/- C. Loan and Advances given by the Proprietor Roop Kishore Madan in preceding years from his proprietorship concern Roop International and transferred to the balance-sheet of another proprietorship concern M/s. Rhea Distribution Company. ₹ 9,02,95,000/- D. Less :- Drawings of the Assessee ₹ 2,00,23,837/- Total addition to Capital Account (A+B+C-D) ₹ 24,50,91,663/- 10.1. Learned Counsel for the Assessee submitted that on all the above issues documentary evidences were submitted which are filed in the paper book. He has referred to assessee s capital account which is submitted in the paper book-1 at pages 53 to 55. The assessee filed confirmations along with assessee s bank statements with regard to addition of ₹ 3.98 crores, copies of which are submitted in PB- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered ₹ 15.92 crores, on which, taxes have been paid, but, ₹ 15 crores was not actually received which cash was later on received and introduced in the books of account, therefore, this amount was available with the assessee to explain the addition of ₹ 13,50,20,500/-. The assessee further explained that balance cash of ₹ 1,16,09,500/- was received in subsequent A.Y. 2013- 2014 which was also deposited in the Bank account of assessee which have been accepted by the A.O. in the Order under section 143(3) of the I.T. Act, 1961. There were thus no justification to make addition of ₹ 13,50,20,500/-. 10.2. Learned Counsel for the Assessee as regards addition of ₹ 3,98,00,000/- reiterated that assessee filed confirmations along with bank statements and income tax returns. Therefore, initial onus upon assessee have been discharged. The A.O. has not brought any material on record to dispute the contention of assessee. He has relied upon decisions of Hon ble Delhi High Court in the cases of CIT vs., Diamond Products Ltd., 177 Taxman 331 (Del.), CIT vs., Dwarkadhish Investment Pvt. Ltd., 330 ITR 298 (Del.) and decision of Hon ble Madhya Pradesh High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at page 122 of the PB. The assessee during the course of search has made a statement that out of total amount of ₹ 15.92 crores, ₹ 15 crore is still to be received. Thus, the assessee paid taxes on the entire surrendered amount in preceding A.Y. 2011- 2012, but, according to explanation of assessee ₹ 15 crores is yet to be received. The explanation of assessee had been that this ₹ 15 crore was received in assessment year under appeal which is introduced in the books of account of the assessee. therefore, to that extent assessee is able to explain the source of ₹ 15 crores, on which, no adverse inference have been drawn by the A.O. as well in the remand proceedings, therefore, there were no justification to make any addition to the extent of ₹ 15 crores against the assessee. 12.1. As regards other two additions are concerned, the assessee produced sufficient documentary evidences on record i.e., confirmation of the creditors, their balancesheet, their bank statements etc., which clearly show that they are assessed to tax and have source of giving loan and advance to the assessee. The loan and advance have been taken directly to the proprietary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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