TMI Blog2018 (10) TMI 1860X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee - HELD THAT:- A.O. in the remand report has stated that the signature on the confirmation of stamp vendor Shri Iqbal Khan as submitted do not match with the signature on last page of sale deed as submitted in the paper book. Therefore, confirmation is not established to be of Shri Iqbal Khan. In reply to this observation, the assessee has stated that the signatures of a person may differ at different times. A.O. did not choose to call Shri Iqbal Khan in order to verify the authenticity of the confirmation. It is also stated that Shri Iqbal Khan has given an affidavit which is enclosed in the paper book at page No.250. We have perused the contents of this affidavit. As per this, the deponent of the affidavit Shri Iqbal Khan had admitted to have received money in respect of purchase of stamp papers related to the transaction in question. A.O. ought to have summoned the deponent of the affidavit and examine him. This exercise is not done by the A.O. We therefore, set aside the order of the authorities below on this issue and restore this issue to the A.O. to decide afresh to verify the facts of the affidavit of Shri Iqbal Khan by summoning him and making such enquiry whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned. Therefore, the addition is hereby deleted. Ground No.6 of the assessee s appeal is allowed. Disallowance of agricultural income - HELD THAT:- It is prayed that the agricultural income may be estimated. After considering totality of the facts and material on record as the land was sold in Jan 16 and the Pustika of the another land is also placed on record, we therefore, estimate income at ₹ 1 lakh. The assessee gets relief of ₹ 1 lakh. A.O. to delete addition of ₹ 1 lakh. This ground of the assessee s appeal is partly allowed. Addition on account of not accepting the deposits received from the persons against booking of flat - HELD THAT:- We find that the assessee has furnished PAN No., Income tax Returns of the two persons namely Sunil Solanki and Dilip Solanki. The assessee has claimed that the amount so received as advance not as a loan. This fact requires verification by the A.O. We therefore, set aside the order of the Ld. CIT(A) on this issue and restore the issue to the file of the A.O. for verification from the persons who had advanced money to the assessee and decide the issue afresh. Addition on non acceptance of gift from mother of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cash flow statement as furnished by the assessee, it is clear that the assessee was having cash in hand and cash received from Dainik Prabhat Kiran on sale of agricultural crop and refund of loan, etc. to make deposits in the bank. The revenue has not placed any adverse material contradicting the submissions of the assessee. Under these facts, the addition cannot be sustained. Hence, this ground of assessee s appeal is allowed. Addition on account of agricultural income - HELD THAT:- We find that the authorities below made addition purely on estimation basis. We have given our thoughtful consideration to the facts of the present case, we restrict the disallowance to the extent of ₹ 2 lakhs. - ITA Nos.312/Ind/2015, ITA Nos.310/Ind/2015 - - - Dated:- 23-10-2018 - SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For the Appellant : Shri Ashish Goyal Shri N.D. Patwa, A.Rs For the Respondent : Shri P.K. Mitra, DR ORDER PER KUL BHARAT, J.M: ITA No.312/Ind/2015: Appeal by the assessee is directed against the order of CIT(A)-1, Indore dated 19.1.2015 pertaining to the assessment year 2010-11. The assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n before the Assessing officer and filed the requisite details. However, the A.O. made addition on account of lower withdrawal of ₹ 4,80,000/- and further made addition of ₹ 2,05,383/- in respect of insurance premium paid and ₹ 7,25,000/- in respect of transfer expenses and sale of agricultural land. The A.O. also made addition by invoking the provisions of section 50C of the Act of ₹ 35,46,018/-. The A.O. made addition of ₹ 3,70,000/- in respect of the loans taken from his children. Further, the A.O. made disallowance of interest paid on term loan of ₹ 9,38,756/-, disallowance of agricultural income of ₹ 2 lakhs, cash deposited in the bank of ₹ 7 lakhs, purchase of shares of ₹ 17,78,522/- and further, the difference in disclosing the interest income of ₹ 42,461/-. 3. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who partly allowed the appeal. In respect of the lower withdrawals, the Ld. CIT(A) reduced the addition to ₹ 4,17,500/-, deleted addition made on account of insurance premium paid and confirmed the addition of ₹ 7.25 lakhs claimed as transfer expenses. The Ld. CIT(A) affirmed the disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Original Grounds) Gr. No (from Revised Grounds) Ground AO CIT(A)(deleted) /Enhanced CIT(A) confirmed (Before Your Honours) 2. 2. Low House Hold Withdrawals 4,80,000 (62,500) 4,17,500 3. 3. Disallowance of Transfer exp on sale of agricultural land 7,25,000 - 7,25,000 4. 4. Disallowance of Deduction u/s54B 35,46,018 35,46,018 5. 5. Cash loan from children 3,70,000 - 3,70,000 6. 6. (Old 6 7 merged) Disallowance of Interest claimed on Term loan 9,38,756 - 9,38,756 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PB 47 TOTAL (B) 2,73,955 10,20,189 TOTAL EXPENSES (A) + (B) 6,31,955 15,75,990 It is also a pertinent fact that: - a. Appellant owns the house. b. Housing loan was taken for construction of house. Interest on same was booked separately in capital account (apart from household expenses). c. Assessee does not own any vehicle in personal capacity. Thus, household expenses are bound to be less. WHAT THE LD AO DID? a. Ld AO quoted the capital account of the appellant showing drawings of ₹ 1,20,000/-. Further, he alleged that the assessee have 3 school going children and directorship in 3 companies and partner in firm. He cannot survive at ₹ 8,000/- p.m. Thus, he added ₹ 4,80,000/- to the income of the assessee. The total household expenses, therefore were estimated at ₹ 6,00,000. No basis was given for arriving at an ad hoc figure of ₹ 6,00,000 (i.e. ₹ 50,000 p.m.) Disclosed (as per ld AO) ₹ 1,20,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milk requirements are fulfilled from the same. It is therefore prayed that the household expenses are very reasonable and therefore no addition is called for such an adhoc addition, which is not based on any evidence. GROUND NO.3: TRANSFER EXPENSES ON SALE OF AGRICULTURAL LAND ₹ 7,25,000 AO para 6. CIT(A) pg. 31 para 10 . FACTS 1. Assessee had sold an agricultural land to Samridhi Indore Town Planner P Ltd for ₹ 1.36 crores. Capital gains was claimed to be exempt u/s. 54F, which is contested in other ground. 2. On sale of said agricultural land, transfer expenses of ₹ 7,25,000 were paid, which were denied by ld lower authorities while computing the capital gains. 3. As per clause 15 of the agreement, the expenses of registry were to be borne by the assessee, the seller. PB 189, para 15. 4. The total transfer expenses are ₹ 14,50,000 on sale of agriculture land at Rau. Assessee had 50% share i.e. ₹ 7,25,000 which was debited in the capital account PB 49. 5. The same was claimed to be paid by cheque to Iqbal Khan. Registry for sale of land was dated 06.01.2010. The stamps were purchased on 29.12.2009. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has submitted copies of sale deed of land and letter from purchaser M/s. Samridhi Indore Town Planner Pvt. Ltd. stating that all such expenses are borne by the assessee, copy of stamp vender. On perusal of these documents it is evident that the 50% of transfer expenses i.e. stamp duty and other expenses of ₹ 7,25,000/- has been paid by the assessee against sale of land through account payee cheque. Thus, although the fact that ld AO had accepted these expenses, still ld CIT(A) confirmed the same, without bringing any material to prove that the findings of ld AO in remand report are incorrect. It is therefore prayed that the disallowance of registration expenses may kindly be deleted. GROUND NO.4: DISALLOWANCE OF DEDUCTION U/S. 54B RS. 35,46,018/- AO para 7. CIT(A) pg. 32 para 11. Purchase of Agricultural Land at Rao 31.03.2006. Sale of Agricultural land 06.01.2010. ₹ 68,20,000. PB 180-249. PB 182 mentions land as agricultural. Purchase of New Agricultural Land Located at Bicholi Mardana, Indore. ₹ 65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exemption u/s. 54B, which is a legally allowable claim, may kindly be granted. GROUND NO. 5: CREDITS FROM CHILDREN ₹ 3,70,000 AO para 8. CIT(A) pg. 34 para 12. The appellant has received booking advance/ credits from minor children in the family:- i. Ku. Sanjana Sojatia ₹ 45,000 ii. Mast. Mayank Sojatia ₹ 1,25,000 iii. Mast. Sujal Sojatia ₹ 2,00,000 ₹ 3,70,000 Ld AO added the same denying the credits and the source of minor children. Ld CIT(A) confirmed the same holding that the source of children remains unexplained. SUBMISSIONS: a. Under the head, booking against flat ₹ 7,00,000 (PB 46), the total credit includes a credit of ₹ 3,70,000 from the three minor children. b. Trial Balance and the source of the children were already on record. PB 256-261, PB 275, 280, PB 297-302. Gift deeds showing source of source are filed as additional evidences before your honours. These d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition by ld AO ₹ 9,38,756 - Expenditure for earning interest Enhancement by ld CIT(A) ₹ 5,20,303 - Interest income not offered TOTAL ₹ 14,59,059 FACTS Interest income on Deposit (with Dena Bank Int. on ₹ 1 crs.) ₹ 9,31,984 Interest expenditure (Loan from ICICI Bank- for deposit with Dena Bank) ₹ 9,38,756 NET (₹ 6,772) 1. The appellant wanted to purchase a mortgaged property, mortgaged with Dena Bank. The borrower was Ashish Bhandari and the Lender Bank was Dena Bank. The agreement for purchase of property was entered into on 7th May 2007. PB 107-113. Total consideration fixed was ₹ 4,14,00,000. 2. For this ₹ 1 crores was paid by the appellant as per the payment schedule on PB 112. The payment was in the form of deposit in No lien account in Dena Bank. The bank agreed to pay interest as per SAVIFIX scheme of Bank till permission of M.P. High Court was obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any ground of appeal for same. However, he decided the same. The appellant is therefore in appeal against the order of ld CIT(A). This ground arises out of the order of ld CIT(A). Thus, the appellant, being aggrieved by this addition, which was confirmed by ld CIT(A), is challenging the same before your honours. Alternatively, and without prejudice, the same may be considered as additional ground in any case. d. Interest Income: - Interest income, ₹ 9,31,984, which was accrued and subjected to TDS was offered in the current year. Interest income which accrued in F.Y. 2008-09 was already offered in F.Y. 2008-09, amounting to ₹ 6,75,211. (PB 320 is the ledger of Interest on FDR). Interest on FDR was reflected in Income and Expenditure account for F.Y. 2008-09 which was covered in total interest on FDR ₹ 7,04,352. PB 160. Interest income F.Y. 2008-09 ₹ 6,75,211 PB 320, 160 Interest income F.Y. 2009-10 ₹ 9,31,984 PB 47 ₹ 16,07,195 FDR is reflected at ₹ 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1. The appellant owns a land at Collector office, Lal Bagh, Indore. The appellant planned to construct flats on same. 2. The appellant has received advance against booking of flats at ₹ 7,00,000. 3. Ld CIT(A) gave relief of ₹ 3,70,000 being amount received in respect of (i) to (iii) above, which related to addition already confirmed in other grounds by him. Ld CIT(A) however, confirmed the addition of ₹ 1,65,000 and ₹ 1,65,000 for loan from Dilip and Sunil Solanki. 4. The advance of ₹ 3,30,000 was received from following persons: Name Amount Address Other evidences Sunil Solanki 1,65,000 16/1, Sindhi Colony, Indore (a) PAN ANYPS1153M. (b) Confirmation PB 332. (c) IT Return. PB 333-336. Dilip Solanki 1,65,000 16/1, Sindhi Colony, Indore (a) PAN BSWPS7183P. PAN copy PB 338. (b) Confirmation PB 337. 5. At the relevant time, there was no restriction in respect of receipt of advances in cash. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not give right to revenue to invoke sec 68 against the authority, it is settled law that assessee need not prove 'source of source' d. Similarly, as per the locus classics in DCIT vs. Rohini Builders [2003] 127 TAXMAN 523 (GUJ.) it was held that assessee was not expected to prove genuineness of cash deposited in bank accounts of creditors, because under law, assessee can be asked to prove source of credits in its books of account but not source of source e. In yet another case, CIT, Ajmer vs. Jai Kumar Bakliwal [2014] 45 taxmann.com 203 (Rajasthan) it was held that unsecured loan raised by assessee from relatives was added in income of assessee on ground that none of creditors were able to prove source of amount advanced to assessee and immediately before grant of loan by them cash was deposited in their accounts - However, it was admitted by Assessing Officer that all creditors were assessed to Income tax and they had provided confirmation as well as their PAN - Moreover, all payments were through account payee cheques and most of cash creditors appeared before Assessing Officer and were examined on oath.Thus, there was no clinching evidence nor Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advertently, this ground left to be taken in the respective column of grounds of appeal. 4. The appellant acted in good faith and merely for the reason of human error, this ground skipped the grounds of appeal. The happened due to the fact that more than 10 grounds of appeal were before the Hon ble ITAT and also the fact that some of the grounds which are before Hon ble ITAT were not raised before the ld CIT(A) [due to enhancement], but it was only the ld CIT(A) who did enhancement on same; thus there was a lot of confusion. On merits , it is submitted that the appellant had deposited ₹ 26,01,000 in ICICI bank account. The source of deposit was explained as under: Out of Opening Cash ₹ 15,98,017 Withdrawal in April 2009 ₹ 2,35,000 Advance received ₹ 7,00,000 considered in other grounds Ld CIT(A) added ₹ 17,01,000 out of the above cash deposit after giving credit of ₹ 7,00,000 covered in other grounds of appeal. Ld AO had not made addition for same. Cash flow submitted to ld CIT(A) is placed at PB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. Counsel for the assessee had supported the findings and reasoning given by the Ld. CIT(A). 7. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. Ground No.2 is against confirmation of addition made on account of low household expenditure. We find that the authorities below made addition purely on estimation basis. Reasoning given by the authorities below are on the ground that the assessee has 3 school going children, therefore, it is not possible to maintain the expenditure as claimed by the assessee. However, it is submitted by the assessee that school fee was shown separately in capital account. The total household expenses are shown at ₹ 6,00,601/-. The family is residing jointly. Therefore, it is contended that no addition is called for. We have given our thoughtful consideration to the facts of the present case keeping in view of the facts that fee and other expenditure have been claimed separately. We, therefore, restrict the disallowance to the extent of ₹ 2 lakhs. Rest of the addition is deleted. Ground No.2 of the assessee s appeal is partly allowed. 8. Ground No.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by placing any contrary material on record. Moreover, we notice that the Ld. CIT(A) has also observed that intention of the assessee was not for utilising the land for agricultural purposes. We are of the view that where the assessee has demonstrated that it has fulfilled the conditions for availing the benefit of section 54B of the Act, intention of the assessee behind purchase and sale is of no consequence. We therefore, direct the A.O. allow deduction u/s 54B of the Act as claimed by the assessee, and delete the addition. 10. Ground No.5 is against confirming the addition of ₹ 3,70,000/- made u/s 68 of the Act. It is stated by the Ld. Counsel for the assessee that the amount was received from the minor children of ₹ 3,70,000/-. He submitted that the assessing officer and CIT(A) both erred in not allowing the claim of the assessee and making addition. We find that in the remand proceedings, the A.O. has categorically stated that these advances were received from the minor children and these amounts pertain to the past savings of the children. The Ld. CIT(A) has not brought on record any adverse material rebutting the finding of the A.O. We therefore, direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered and the expenditure incurred there on was a direct nexus with earning of such income which is allowable u/s 57 of the Act. The factum of offering of income of ₹ 9,31,084/- is duly admitted by the A.O. in his remand report. The assessee has proved nexus with the expenditure incurred and income earned. Therefore, the addition is hereby deleted. Ground No.6 of the assessee s appeal is allowed. 12. Ground No.7 is against addition of ₹ 2 lakhs on account of disallowing the claim of agricultural income. Apropos to this ground, it is stated that the agricultural income was offered in the assessment year 2008-09 of ₹ 3,42,000/- and in assessment year 2009-10 of ₹ 2,25,000/-, was accepted and balance sheet rejected as no bills, etc. were submitted. It is prayed that the agricultural income may be estimated. After considering totality of the facts and material on record as the land was sold in Jan 16 and the Pustika of the another land is also placed on record, we therefore, estimate income at ₹ 1 lakh. The assessee gets relief of ₹ 1 lakh. A.O. to delete addition of ₹ 1 lakh. This ground of the assessee s appeal is partly allowed. 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smiss this ground of the assessee s appeal. 16. Ground No.11 is against confirming the addition of ₹ 17,01,000/- on account of unexplained cash deposits in bank. It is contended that assessee had deposited a sum of ₹ 26,01,000/- in bank. The source of deposit was out of opening cash of ₹ 15,98,017/- withdrawal in April, 2009 of ₹ 2,35,000/-, advance received of ₹ 7 lakhs. It is stated that all the transactions of preceding year are recorded in the books of accounts. The books are duly audited. The cash on hand as on 31.3.2009 of ₹ 5,98,017/-. As per the audited accounts, none of the deposit was found to be unaccounted. Section 69 of the Act would apply only when the transaction is not recorded in the books. It is stated that the assessment of assessment year 2009-10 was completed u/s 143(3) of the Act, wherein the cash balance was duly accepted. It is also stated that the cash in hand in earlier years was accepted. Ld. D.R. could not rebut this contention of the assessee that in the earlier year cash balance was duly accepted in the assessment proceedings. Therefore, the addition as made is deleted. In respect of the addition of ₹ 2,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Household expenses added by ld AO ₹ 4,80,000 Less: Deleted by ld CIT(A) as already shown ₹ 1,77,000 ** Confirmed by ld CIT(A) ₹ 3,03,000 ** Correct household expenses shown ₹ 4,18,010. At the first instance, the household expenses shown by assessee is taken wrongly by ld CIT(A) as PB 41 shows household expenses at ₹ 3,37,010 and other expenses like education is shown separately ₹ 1,37,700. Ld CIT(A) has taken household expenses only at ₹ 96,000 for assessee instead of ₹ 3,37,100. Further, the ground is covered by ground no. 2 of Sunil Sojatiya Appeal No. ITA 312/ IND/ 2015. Particulars Debited by Sunil Debited by Prabhat (A) Expenses Other Household Expenses Sunil 1,20,000 Wife 26,500 HUF 36,000 Prabhat 3,37,010 Wife 45,000 HUF 36,000 Tution/Education Fees 1,75,500 1,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reference Opening Cash Balance (01.04.2009) [supported by wealth-tax return PB 88] 37,31,517 PB 88 Add: Cash Withdrawal from ICICI bank a/c no 094501501974 1,05,000 PB 68 Cash Withdrawal from ICICI bank a/c no 094501500001 3,27,000 PB 71 Cash Withdrawal from SBI bank a/c no 53005469860 1,50,000 PB 73 Cash Withdrawal from IDBI bank a/c no 052910400001236 1,52,230 PB 76 Cash Withdrawal from Partnership firm Dainik Prabhat Kiran 8,00,000 PB 99 On sale of Agriculture crop 2,00,000 PB 99 Refund of Loan from Shri Satyanarayan Soni 4,14,028 PB 101 Refund of Loan from Prakash Purohit 81,375 PB 103 Cash Inflow 59,61,150 Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. No Particulars Amount Remarks . Cash withdrawal from firm Dainik Prabhat Kiran 8,00,000 The form 26AS have the details of ₹ 6 lac and tax deducted on the same.(PB 48)The Ledger extract of dainik Prabhar Kiran (PB 99-100) and form 16.(53-54 . Loan to Mr. Satyanarayan Soni was received in cash 4,14,028 The confirmation and ledger is in PB 101-102 . Loan from Shri Prakash Purohit received in cash 81,375 The confirmation and ledger is in PB 103 . Sale of agriculture crop 2,00,000 The cash received is supported by sale bills on PB 115-135 and the amount is credited in capital account on PB 47, the same is also in the return of income at PB 38. Otal 14,95,403 It is ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o annulling assessment, if it is without jurisdiction. 21. At the time of hearing, Ground No.1 is not pressed and the same is dismissed as such. 22. Ground No.2 is against maintaining the addition of ₹ 3,03,000/-. We find that the authorities below made addition purely on estimation basis. We have given our thoughtful consideration to the facts of the present case we restrict the disallowance to the extent of ₹ 2 lakhs. Rest of the addition is deleted. Ground No.2 of the assessee s appeal is partly allowed. 23. Ground No.3 is against addition on account of cash deposits in bank of ₹ 56,82,161/-. It is stated that the opening cash balance of ₹ 37,31,517/-. It is also stated that the assessee in ICICI Bank Rajwada branch deposited a sum of ₹ 49,25,000/- and in the State Bank of Indore a sum of ₹ 8,82,161/-. The assessee has given a cash flow statement in the submission 6. The summary of cash flow for the current year is as follows (PB 93, reproduced with respective PB nos. of current paper book) : - Particulars Amount Reference Opening Cash Balance (01.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is also stated that assessee has also received cash withdrawal from Dainik Prabhat Kiran of ₹ 8 lakhs, loan from Satyanarayan Soni and Shri Prakash Purohit of ₹ 4,14,028 ₹ 81,375/- and out of sale of agricultural crop of ₹ 2 lakhs. From the cash flow statement as furnished by the assessee, it is clear that the assessee was having cash in hand and cash received from Dainik Prabhat Kiran on sale of agricultural crop and refund of loan, etc. to make deposits in the bank. The revenue has not placed any adverse material contradicting the submissions of the assessee. Under these facts, the addition cannot be sustained. Hence, this ground of assessee s appeal is allowed. 25. Ground No.4 is in respect enhancing the addition by ₹ 34,800/- on account of agricultural income of ₹ 2,34,800/-. We find that the authorities below made addition purely on estimation basis. We have given our thoughtful consideration to the facts of the present case, we restrict the disallowance to the extent of ₹ 2 lakhs. 26. It is contended by the Ld. Counsel for the assessee that the basis of making addition is wrong and contrary to the material available on re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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