TMI Blog2018 (1) TMI 1645X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter should be restored to the file of the AO allowed. Addition u/s.69B - HELD THAT:- As supplying the copy of the document to the assessee is her legitimate right before any addition is made in her hands relying on the said document. AO is directed to supply the same and also cross examination if any before making any addition in her case and in the remand proceedings. Accordingly, as requested, the issue is restored to the file of the AO for fresh adjudication. AO is directed to grant reasonable opportunity of being to the assessee in accordance with law. Accordingly, Ground No.3 raised by the assessee is allowed for statistical purposes. Capital gain computation - addition u/s.50C - HELD THAT:- We direct the AO to examine all the aspects of the issue and decide the requirement of making addition in the hands of the assessee u/s.50C of the Act. AO shall grant reasonable opportunity of being heard to the assessee in connection with the set principles of natural justice. Accordingly, Ground No. 4 and the additional grounds raised in his chart. Addition u/s 28(iv) - HELD THAT:- This is a case where the assessee purchased commercial premises for a lesser consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue : Shri Rajeev Kumar Shri Mukesh Jha, CIT DRs. ORDER PER D. KARUNAKARA RAO, AM : There are 3 appeals under consideration. There are cross appeals for the A.Y. 2009-10 and they are ITA Nos. 732/PUN/2013 and 904/PUN/2013. These appeals are filed by the Assessee and the Revenue against the order of CIT(A)-II, Nashik dated 26-02-2013. Further, there is another appeal filed by the assessee vide ITA No.447/PUN/2015 for the same assessment year and the same has genesis in the rectification order passed u/s.154 of the I.T. Act. 2. Brief facts of the case are that the assessee is a partner in M/s. Bafna Builders and Land Developers, Jalgaon. Assessee is engaged in the business of trading activity in Gold and bullion ornaments, diamond and diamond ornaments. Assessee filed the return of income declaring total income of ₹ 30,11,75,820/-. Assessment was completed u/s.143(3) of the Act determining the assessed income at ₹ 36,07,76,280/-. Number of additions were made by the AO and the details in summary are given in page 17 of the assessment order. 3. Aggrieved with the said additions, assessee filed an appeal before the CIT(A)-II, Nashik. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of other part of interest, AO invoked the provisions of section 36(1)(iii) of the Act for denying the claim of the assessee. It is the argument of the Ld. Counsel for the assessee that the lower authorities erred in relying on the provisions of section 36(1)(iii) for denying the claim as the advances received are for business purposes and therefore, the interest claimed if any is allowable u/s.37 of the Act. Ld. Counsel for the assessee filed the written submissions mentioning the following : The AO has made the addition on the ground of diversion of funds for non business purpose and u/s.36(1)(iii) of the I.T. Act, 1961. The appellant had filed her explanation before Ld. CIT(A) vide page Nos. 55 to 69 of paper book which has been quietly ignored by the Ld. CIT(A) who has drawn erroneous conclusions of his own. Basically all the advances were for business considerations, i.e. advances were given during the course of carrying on the business on which no interest was charged. The Ld. AO made the disallowance on account of diversion of funds for non business purposes and also u/s. 36(1)(iii) of the I.T. Act, 1961 and Ld.CIT(A) made the disallowance only u/s.36(1)(iii) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A). 12. Before us, Ld. Counsel for the assessee submitted that the assessee has excess funds which were invested in the shares which yielded dividend income and the interest claimed by the assessee is nothing to do with the investments made by him in the exempt income yielding investments. For examining the claim of the assessee as well as applying the correct law on this issue, Ld. Counsel desires that the matter should be restored to the file of the AO. 13. On hearing both the parties and also in tune with our finding on an identical issue raised in Ground No.3 of the appeal adjudicated by us in the case of M/s.Bafna Builders and Land Developers, we are of the opinion that this should also re-visit to the file of the AO with identical directions. Accordingly, Ground No.2 raised by the assessee is allowed for statistical purposes. 14. Ground No.3 relates to the addition of ₹ 63,75,000/- made u/s.69B of the Act. Background facts of this issue include that Chhoriya Group was searched u/s.132 of the Act. Search resulted in seizure of a document involving Shri Ratanlal C. Bafna for the A.Y. 2009-10. According to the said document, the assessee purchased Shirdi plo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requested, the issue is restored to the file of the AO for fresh adjudication. AO is directed to grant reasonable opportunity of being to the assessee in accordance with law. Accordingly, Ground No.3 raised by the assessee is allowed for statistical purposes. 17. Ground No.4 by the assessee relates to the addition of ₹ 1,67,54,510/-. Background facts of this issue includes that assessee is a co-owner of a property which was given to M/s. Bafna Builders and Land Developers. As per the AO, Assessee has 1/5th share in the said property along with other 4 members. Value of the property as per the stamp duty purposes is around ₹ 13.38 crores (rounded off). However, as per records, her share of sale consideration of the property is around ₹ 1 crore in equal proportion. This property was referred to the valuation during the remand proceedings. However, there was delay in receipt of the said DVO s report by the AO and the assessment was completed considering the assessee s share of consideration at ₹ 2,67,54,510/- out of ₹ 13.38 crores. After reducing the accounted portion of ₹ 1 crore, the AO proceeded to make addition of the balance amount of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counted consideration of ₹ 1 crore, the balance to be taxed u/s.50C of the Act, is determined at ₹ 34,50,311/- (₹ 6,72,51,553/5 = ₹ 134,50,311/- - ₹ 1,34,50,311 ₹ 1 Crore = ₹ 34,50,311/-) 20. Aggrieved with the said addition of ₹ 34,50,311/- after rectification as well as aggrieved with the original addition of ₹ 1,67,54,510/-, in toto, the assessee has raised the said Ground No.4 as well as 3 other grounds vide ITA No.447/PUN/2015 (relating to proceedings u/s.154 of the Act. In this appeal assessee raised the objections against rectification done by the CIT(A) and demanded cancellation of the same. However, during the assessment proceedings before us, Ld. Counsel for the assessee fairly submitted that these issues gets covered by the adjudication of the Tribunal if any in the present appeal vide Ground Nos. 4 to 6 raised in the main appeal of the assessee. Accordingly, the said appeal No.447/PUN/2015 is dismissed. We shall deal with all these grounds in a composite manner in the next paragraph along with cross appeals. 21. In this regard, relating to addition u/s.50C of the Act r.w.s. 154 of the Act, Ld. Counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to various additional grounds (No. 1 2) raised before us, Ld. Counsel for the assessee submitted that these grounds also have nexus to Ground No.4 discussed above. While additional Ground No.1 deals with applicability of provisions of section 45(3) of the Act qua the section 50C of the Act, the additional Ground No.2 deals with the nature of the property if the same constitutes stock in trade, in which case the provisions of section 50C has no application in the relevant assessment year. 23. Before us, Ld. Counsel for the assessee argued that provisions of section 45(3) of the Act overrides the provisions of section 50C of the Act and they are not mutually exclusive. Fairly mentioning that whole of these issues needs to revisit to the file of the AO for comprehensive adjudication of the various aspects of the issues raised in grounds as well as in the additional grounds, Ld. Counsel submitted that provisions of section 50C of the Act have no application to this property, which has become the stock-in-trade of the firm to the extent the partner transferred her share of property in which assessee is a partner. Further, Ld. AR also identified certain bonafide mistakes occurred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the books of account, the balance required to be added is ₹ 43,27,403/- and not the lesser amount of ₹ 34,50,311/-, as adopted by the CIT(A) in his order. To that extent of ₹ 6,77,092/-, (₹ 41,27,403 ₹ 34,50,311), there is loss to the Revenue. Further, we find the decision of the Andhra Pradesh High Court in the case of CIT Vs. S. Venkat Reddy vide ITA No.501/2013 was not considered which is relevant for the proposition that date of possession of property prevails over the date of registration of property for the purpose of determination of the market value. As per the Ld. Counsel for the assessee, the date for determining the value of the property required to be considered is 01-08-2007. Considering the large number of issues and the arguments raised by the Ld. Counsel for the assessee, we are of the view that there is a need for bringing out the facts relating to the ownership of the property, requirement of exclusion of ₹ 1,07,41,941/- of Mr. Rahul Bafna, the date of registration of property vs. the date of possession of the property qua the applicability of judgment of Hon ble Andhra Pradesh High Court (supra), whether the property transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal in Para Nos. 20 to 24 of the said Tribunal s order in the case of the M/s. Bafna Builders and Land Developers (supra). The Tribunal confirmed the said decision of the CIT(A) holding that 24 Therefore, the provisions of section 28(iv) is not relevant to this issue. The said provisions are relevant, when the benefit is accrued to the assessee and not in a case like the present one where the assessee is a seller and the discount is allowed to the partner of the firm. Accordingly, we are of the view that the decision of CIT(A) is plausible view taken by him and it does not require any interference. Accordingly, ground No.1 and 2 raised by the Revenue are dismissed. 30. Therefore, the issue of applicability of section 28(iv) of the Act is required to be analysed at length in the case of the present assessee, the beneficiary of the benefit. 31. Before us, Ld. Counsel for the assessee submitted that the provisions of section 28(iv) are not applicable to the assessee who happened to purchase part of the constructed area which constituted stock in trade. He also made various arguments in support of the said claim. In the chart submitted by Ld. Counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Smt. Taradevi Bafna. The above direction of the CIT(A) has a background and the same is evident in the preceding lines of the said Para No.6.5.5. We discussed the relevant facts in the preceding paragraphs of this order. We have also considered the written submissions filed by the Ld. Counsel for the assessee vide letter dated 13-11-2017 (Para No.4). To brief the same, this is a case where the assessee purchased commercial premises for a lesser consideration qua the fair market value of the same. Originally, the AO taxed the differential cost u/s.28(iv) of the Act in the hands of the firm who sold the commercial premises to the assessee. The assessee has 60% shareholder in the said firm by name M/s. Bafna Builders and Land Developers. It is the finding of the CIT(A) that the assessee got the benefit to the tune of ₹ 2,44,62,169/-. It is the finding of the Tribunal as well as the CIT(A) that the said amount is not taxable in the hands of the firm. In the background of these facts, the CIT(A) have given the above direction, which in our view is consequential comment of the CIT(A) Even if the said direction is absent in the said paragraph, the authorities below woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... salary bonus as compared to last year. 6. On the facts and circumstances of the case the Ld.CIT(A)-II, Nashik erred in granting the relief of ₹ 10,41,440/- on account of disallowance u/s.14A r.w.r 8D. The additions is made by Assessing Officer after considering the diverted borrowed funds and given interest free advances. 7. On the facts and circumstances of the case the Ld.CIT(A)-II, Nashik erred in deleting of ₹ 1,67,54,510/- made by AO u/s.50C of Act. The additions is made by Assessing Officer after taking out the base of Stamp duty valuation in view of provisions of section 50C of the I.T. Act, 1961. 36. Ground No.1 raised by the revenue relates to granting relief of ₹ 7,87,262/- against addition of ₹ 10,87,262/- on account of vehicle expenses. This ground raises the issue on deletion of addition of ₹ 1 lakh shop expenses. 37. Relevant facts are discussed in Para 5 of the assessment order. Assessee owns 11 cars 6 cars out of them are shown as fixed assets in the year under consideration. Considering absence of maintenance of log books of each vehicle and also considering the fact that the vehicles are held in the name of Smt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not call for any interference. Accordingly, this part of Ground No.1 by the Revenue is also dismissed. 42. Ground No.2 raised by the Revenue relates to the addition of ₹ 15 lakhs on account of boxes, i.e. the packing material. Relevant discussion is given in Para Nos. 6.3 and 6.3.1 of the CIT(A) s order. Assessee debited the said expenses on account of consumption of boxes, i.e. packing material given to the customers on extra sales of gold items in Jalgaon Branch. Assessee made claim of expenses on account of purchase of packing material amounting to ₹ 21,75,879/- and ₹ 5,88,189/- for Aurangabad and Jalgaon Branches respectively on this account of packing material. AO disallowed ₹ 15 lakhs out of the same on adhoc basis-cum-estimations. On these facts, CIT(A) held that exercise of disallowance is purely out of surmises and doubt. The addition made by the AO does not have any corroborative evidence. Relevant lines from the order of CIT(A) is extracted here asunder : 6.3.1. . . . . . .Carry bags are given liberally for publicity and I am of the considered view that the appellant with this social and economic standing will not indulge in inflating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Kavi Sammelan does not warrant any interference from our side. Accordingly, Ground No.3 raised by the Revenue is dismissed. 46. Ground No.4 by the Revenue relates to relief granted by the CIT(A) in connection with the arguments revolving around the applicability of provisions of section 28(iv) qua addition of ₹ 2,44,62,169/-. This amount constitutes taxable as a benefit in the hands of the assessee. This issue was dealt while dealing with Ground No.4 and the related Additional Ground No.4 of the appeal of the assessee. Accordingly, Ground No.4 raised by the Revenue is also remanded to the file of AO for fresh adjudication as per the direction given by us in the said appeal of the assessee. Accordingly, Ground No.4 raised by the revenue is allowed for statistical purposes. 47. Ground No.5 relates to the deletion of addition of ₹ 2,55,550/- u/s.40A(2)(b) of the Act. This amount was claimed as payment of salary and bonus to the employees. The same constitutes an extra amount paid in this year qua the last year s claim. 48. On hearing both the sides, we find the AO is duty bound to prove the salary and bonus paid to the employees as unreasonable. CIT(A) has right ..... X X X X Extracts X X X X X X X X Extracts X X X X
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