TMI Blog2023 (11) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... st the use of rented premises. It is evident from the record that sufficient opportunity was granted to the assessee during the reassessment proceedings to produce the documentary evidence in support of the submission that the income is earned from the Hotel Management Business. Assessee neither before the lower authorities nor before us produced any evidence to substantiate its claim beyond doubt. Therefore, in the absence of satisfactory documentary evidence, we do not find any merit in the plea of the assessee that the income is on account of Hotel Management Business. Assessee pleaded that the entire turnover cannot be brought to tax and only the real income embedded therein would be held as suppressed income - As assessee has not discharged its onus to satisfactorily prove the incurring of expenditure for running the alleged Hotel Management Business. Ledger account of the Hotel Management receipts and salary paid to the staff is also not furnished by the assessee in the year under consideration. Therefore, in the absence of satisfactory documentary evidence, the plea of the assessee is rejected and the addition made by the AO under section 68. - Decided against assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate issued by the Gram Panchayat confirming the fact that she is a farmer. Therefore, when sufficient source i.e. receipt pursuant to the Memorandum of Understanding dated 30/01/2009, was furnished by assessee s mother, we find no basis in doubting the payment in cash as a gift to the assessee. Accordingly, the addition made by the AO on this aspect is deleted. Assessee appeal allowed. Addition in respect of gifts received from the mother, wife, and relatives. - A.Y. 2011 12 - HELD THAT:- As assessee did not furnish the bank statement of Mr. Bikash Chandra Shee or any other document to substantiate the creditworthiness of the donor. The ITR acknowledgement and gift deeds may prove the genuineness of the transaction and the identity of the donor, however, the creditworthiness of the donor is still not satisfactorily proved by the assessee. Accordingly, we find no infirmity in the findings of the learned CIT(A) in upholding the addition. Cash received from mother - Since the relief of Rs. 1,65,000 has already been granted in the year 2010-11, the balance amount of Rs. 5,35,000 can be said to have been paid by the assessee s mother from the aforesaid sum of Rs. 7,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see submitted that the gifts are received from the mother, wife, and other relatives which are covered under Explanation (e) to section 56(2)(vii) of the Act, and thus the same is not taxable - As per section 68 of the Act the assessee is required to offer an explanation about the nature and source of any sum credited to his books to the satisfaction of the AO, and in this regard, the assessee is not only required to prove the identity of the creditor and genuineness of the transaction but also the creditworthiness of the creditor, which the assessee has failed to prove in case of certain transactions as noted above. Accordingly, mere reliance on Explanation (e) to section 56(2)(vii) of the Act would not absolve the assessee from the onus cast on him u/s 68. Addition u/s 68 of the Act on the sale of ornaments - HELD THAT:- From the record, it is evident that apart from M/s Motaba Sons Jewellers, Colaba, Mumbai the assessee has claimed that it has sold the jewellery to Mahavir Jewellers. However, as evident from the record, neither notice under section 133(6) of the Act nor summons u/s 131 were issued to Mahavir Jewellers. Further, the assessee claimed that the aforesaid sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under hotel management had been estimated of Rs. 1,50,000/-; 4.0 The Ld. CIT(A), before sustaining the addition u/s. 68 of entire turnover of hotel management of Rs. 14,15,620/-, erred seriously in ignoring the understated vital facts, being; a) In original assessment u/s. 143(3), the business of hotel management had been accepted as genuine and profit thereon had been assessed at Rs. 4,52,182/- [@33.86% on turnover]; b) The Ld. CIT(A), in A.Y-2008-09, 2009-10 and 2013-14, had determined the addition on hotel management business on estimation basis, not disputed by Ld AO before Hon'ble ITAT; c) The entire turnover cannot be brought to tax and only the real income embedded thereon could be held as suppressed income; d) No contrary material had been brought on record to disprove the bonafide transactions of the appellant. 5.0 On fact and circumstances of the case and in law, Ld. CIT(A), erred in making the addition u/s. 68 of Rs. 12,34,980/- of gross turnover/receipts of agriculture activity; 6.0 The Ld. CIT(A), before sustaining the addition u/s. 68 of entire turnover/receipts of agriculture produce of Rs. 12,34,980/-, ought to have considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twice in the same year, by filing two different returns. It was further observed that in one return of income the assessee has used the name Shri Sanjib Sudhir Pradhan, having PAN AKIPP8300J, while in the return filed with ITO-25(2)(4), the assessee has used his name Shri Rajiv Rama Pattanayak, and used the PAN AVSPP 7197H. It was further observed that the assessee has made huge cash deposits in the bank account with Axis Bank operated in the name of Shri Rajiv Rama Pattanayak. Further, his other bank account was with the United Bank of India in the name of Shri Sanjib Sudhir Pradhan. During the reassessment proceedings, the assessee filed an affidavit cum declaration stating that Shri Sanjib Sudhir Pradhan and Shri Rajiv Rama Pattanayak are his two names, and the person in both the name is the same. 7. During the reassessment proceedings, it was observed that the assessee has shown Hotel Management Business in the case of Shri Sanjib Sudhir Pradhan in his individual capacity. Further, it was observed that the assessee has not disclosed the place from where he has conducted this business. The balance sheet also does not show any fixed asset that can be used as a hotel and the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the broker who has supplied the labourers/staff. However, he failed to provide the same. As per remand report, it is noticed that the assessee submitted various receipts and these receipts are mostly shown as services for hall and hall decoration, services for serving food and beverage, services for bringing all utensils etc. The bill issued by The assessee does not contain (1) Serial number (ii) Name, address and registration of the service provider (assessee) (iii) Address of the service receiver (iv) The amount of service tax payable etc. The assessee did not disclose the place at which the services were provided. However, in common practice, in catering business, the name, address and phone numbers of the parties are necessarily to be maintained because the nature of such services is that the orders are placed well in advance sometime 6 to 7 months in advance. There is always a probability that it may get canceled as any unfortunate incident can happen any time. However, the assessee failed to produce any details of his customers. Hence, considering the defects in the bill and the assessee's failure to furnish complete details relating to his alleged hotel management ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be held as suppressed income. In this regard, it is pertinent to note that the assessee has not discharged its onus to satisfactorily prove the incurring of expenditure for running the alleged Hotel Management Business. Further, the ledger account of the Hotel Management receipts and salary paid to the staff is also not furnished by the assessee in the year under consideration. Therefore, in the absence of satisfactory documentary evidence, the plea of the assessee is rejected and the addition made by the AO under section 68 of the Act is upheld. As a result, grounds no. 3 and 4 raised in assessee s appeal are dismissed. 11. The issue arising in grounds no. 5 and 6, raised in assessee s appeal, pertains to the addition under section 68 of the Act in receipts of agricultural activity. 12. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the year under consideration, the assessee has shown agricultural income of Rs. 6,25,200. During the reassessment proceedings, the AO observed that the assessee has stated that the sale of agricultural produce of Rs. 8,52,800 whereas during the reassessment proceedings, the same is shown at Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This is the first year during which agricultural income was declared. iv The bills issued by M/s Mahalaxmi Enterprises produced by the assessee during the course of reassessment proceedings mentioned the state as West Bengal whereas in the original assessment the state mentioned was Orissa. Further receipt of payment from M/s Mahalaxmi Enterprises is shown on five date in the reassessment proceedings whereas in the original assessment the receipts are shown only on two dates. v The format of the bills filed during the course of two proceedings also varied. vi The reply to notice u/s 133(6) in the case of Mahalaxmi Enterpries was In view of the above observation, the AO held that the contents of the bills of M8s Mahalaxmi Enterprises were fake and that assessee managed to get the letter to his associates and prepared replies with forged signature. From the records available, it is seen that assessee has signed various documents including bank account opening form, D'mat account opening form, property registration papers, etc. by making signatures of different style. In the above backdrop, the entire receipt of Rs. 12,34,980/- from agricultural activities was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the proprietor varies from bill to bill. Therefore, the genuineness of the receipts from agricultural produce is not proved. Therefore, in this case it cannot be assume that assessee owns any agricultural land and carry out any agricultural activity or earned any income thereof. The addition made by the AO of Rs. 12,34,980/- u/s 68 of the I.T. Act, 1961 is, therefore, sustained as the assessee failed to prove the genuineness of agricultural receipt. Accordingly, this ground of appeal is dismissed. Being aggrieved, the assessee is in appeal before us. 14. We have considered the submissions of both sides and perused the material available on record. In his return of income, the assessee disclosed agricultural income of Rs. 6,56,200. As per the assessee, he does not hold any agricultural land. However, land admeasuring 10 acres is in the name of his late father and 3 acres in the name of his mother, which was used for agriculture operations. In support of his submission that the agricultural income is earned from the sale of agricultural produce, the assessee has placed on record the invoices raised by Mahalaxmi Enterprises, forming part of the paper book from pages 43-4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was involved in agricultural activity. However, from the record, it is evident that in the present case, the Revenue has doubted this aspect. Therefore, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication after examination of all the details filed by the assessee. In this regard, we also direct the AO to conduct thorough verification/examination of all the aspects pertaining to the claim of income as agricultural income. Needless to mention the AO shall have the liberty to call for/summon any party to whom the assessee has claimed to have sold agricultural products in respect of its agricultural activity. Needless to mention no order shall be passed without affording reasonable opportunity of being heard to the assessee. The assessee is also directed to furnish all the information/details as may be sought by the AO. With the above directions, we remand this issue to the file of the jurisdictional AO and set aside the findings in the impugned order on this ground. As a result, for statistical purposes, grounds no. 5 and 6 raised in assessee s appeal are allowed. 15. The issue arising in ground No. 7, raised in assessee s appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house in Mumbai. Therefore, a sum of Rs. 16,65,000 was given as a gift to the assessee. As regards the source of the aforesaid gift, assessee s mother submitted that she is an owner of agricultural land and in this regard furnished a copy of the 7/12 extract of the land owned by her. Further, it was submitted that part of the agricultural land was sold on 30/01/2009 at a price of Rs. 14,00,000. Along with the aforesaid letter, assessee s mother also furnished a Memorandum of Understanding dated 30/01/2009 confirming the receipt of Rs. 7,00,000 and a registered sale deed dated 25/03/2013 of Rs. 14,00,000. It is evident from the record that without doubting various documents submitted by the assessee s mother along with the reply to the notice issued under section 133(6) of the Act, the AO proceeded to make the addition after examining the bank statement of assessee s mother and mismatch in her handwriting. It is further the allegation of the Revenue that assessee s mother has signed in English on the gift deed, while in all the documents including registration papers of immovable property and letter she has signed in Bengali. In this regard, the assessee has placed on record the cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Y. 2011 12 20. In its appeal, the assessee has raised the following grounds: The appellant prefers an appeal against an order passed by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi dated 29/3/2022 on following amongst other grounds each of which are without prejudice to any other :- 1.0 On fact and circumstances of the case and in law, Ld. CIT(A) erred in deciding the appeal without considering the rebuttal to remand report filed by the appellant before Ld. CIT(A) and on ignoring the finding of Ld. AO provided in the remand report; 2.0 On fact and circumstances of the case and in law, Ld. CIT(A) erred in sustaining the addition u/s. 69 of Rs. 2,00,000/- of capital contribution made by the appellant in partnership firm M/s. A.K. Associates; 3.0 On fact and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition of remuneration from partnership firm M/s. A.K. Associates of Rs. 60,000/- and interest from such firm of Rs. 22,488/-; 4.0 On fact and circumstances of the case and in law, Ld. CIT(A) erred in sustaining the addition u/s. 68 of Rs. 24,86,743/- of entire turnover disclosed in Hotel M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the donors have been served and respective replies along with documentary evidences had been filed on record: 10.0 On facts and circumstances of the case and in law, Ld. CIT(A), erred in sustaining the addition u/s. 68 of Rs. 8.91.548/- on sale of ornaments and on ignoring the settled law that only the profit embedded on disputed transactions could be brought to tax. The appellant craves leave to add, amend, alter, and/or withdraw any of the grounds of appeal at the time of hearing. 21. In the larger interest of justice, the slight delay of 4 days in filing the appeal by the assessee is condoned. 22. Ground No. 1, raised in assessee s appeal, is general in nature and therefore, needs no separate adjudication. 23. Grounds no. 2 and 3 were not pressed during the hearing, therefore these grounds are dismissed as not pressed. 24. The issue arising in grounds no. 4 and 5, raised in assessee s appeal, pertains to the addition under section 68 of the Act in respect of Hotel Management charges. 25. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that for the year under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset as required to carry out such type of business, therefore, the total amount appearing in books of account under the head hotel management services treated as unexplained cash credit u/s 68 of the Act. On the basis of the material on record, it is noticed that the assessee simply stated that he is running catering business as third party brokers. In this condition, the assessee should have provided the name, address and telephone numbers of the broker who has supplied the labourers/staff. However, he failed to provide the same. As per remand report, it is noticed that the assessee submitted various receipts and these receipts are mostly shown as services for hall and hall decoration, services for serving food and beverage, services for bringing all utensils etc. The bill issued by the assessee does not contain (1) Serial number (ii) Name, address and registration of the service provider (assessee) (iii) Address of the service receiver (iv) The amount of service tax payable etc. The assessee did not disclose the place at which the services were provided. However, in common practice, in catering business, the name, address and phone numbers of the parties are necessarily t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding the purchase of raw materials for running the catering business during the year under consideration. It is evident from the record that the address of the service receiver was neither provided by the assessee nor called for by the AO during the assessment proceedings. It is further evident that the AO rejected the plea of the assessee on the basis that the balance sheet does not show any fixed asset that can be used as a hotel. However, before us by referring to the schedule of fixed assets, the assessee has submitted that it has three flats from where the business of Hotel Management was conducted by the assessee. Further, the cash vouchers forming part of the paper book from pages 9-17, relied upon by the assessee, pertain to the financial year 2011-12. Therefore, we are of the view that this issue requires reconsideration as neither the assessee has furnished complete documentation before the AO for proper examination nor AO conducted a thorough investigation by summoning the service recipients or issuing notice under section 133(6) of the Act, least seeking their complete address. Accordingly, we restore this issue to the file of AO for de novo adjudication after the nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hee Brother-in-law 9,41,300 Total 40,38,300 31. As regards the gift of Rs. 9,41,300 received from Mr. Bikash Chandra Shee in cash, the assessee could not furnish the name of the relative, the identity, creditworthiness, and capacity during the assessment proceedings. Accordingly, the AO treated the gift of Rs. 9,41,300 as unexplained cash credit and added the same to the total income of the assessee under section 68 of the Act. However, during the appellate proceedings before the learned CIT(A), the assessee submitted that he received the sum of Rs. 9,41,300 as a gift from Mr. Bikash Chandra Shee (assessee s brother-in-law) and also submitted a reply under section 133(6) furnished by Mr. Bikash Chandra Shee along with PAN card, deed of gift and ITR acknowledgement for the assessment year 2010-11. The learned CIT(A), vide impugned order, noted that the declared income as per the ITR acknowledgement of Mr. Bikash Chandra Shee is Rs. 1,64,857. The learned CIT(A) in the absence of bank account statement for the year under consideration of Mr. Bikash Chandra Shee doubted the genuineness of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that the Memorandum of Understanding dated 30/01/2009 and registered sale deed dated 25/03/2013 were relied upon by assessee s mother in her reply to the notice issued under section 133(6) of the Act to substantiate the source of gifts given to the assessee in cash. In the present case, the learned CIT(A) has treated the sale deed as a deed for the gift of land to the trust. However, even if it is considered as a sale deed, as claimed by the assessee, the entire consideration of Rs. 14,00,000 cannot be held to have been received by assessee s mother in the year under consideration, as the deed is dated 25/03/2013. Therefore, without going into the issue whether the deed entered on 25/03/2013 is a gift deed or sale deed and whether assessee s mother ultimately received the total consideration of Rs. 14,00,000, it is pertinent to note that as per the Memorandum of Understanding dated 30/01/2009, forming part of the paper book from pages 34-36, assessee s mother received an amount of Rs. 7,00,000 as an advance for sale of the agricultural land. Though it has been alleged by the Revenue that there is no proof or evidence for receipt of Rs. 7,00,000, at the same time the Revenue h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not prove the capacity of the donor to make the gift, the AO vide assessment order made an addition of Rs. 1,51,000 received from Mr. Mihir Kumar Pradhan as unexplained cash credit and added the same to the total income of the assessee under section 68 of the Act. The learned CIT(A), vide impugned order, observed that Mr. Mihir Kumar Pradhan does not have a PAN and is also not filing the income tax return. Further, it was observed that the assessee has not submitted any bank account statement for the year under consideration to prove the genuineness of the transaction and the capacity of the donor. Accordingly, the learned CIT(A) dismissed the ground raised by the assessee on this issue. We find that even before us the documents as sought by the lower authorities have not been furnished by the assessee. Accordingly, we find no infirmity in the findings of the learned CIT(A) in upholding the addition of Rs. 1,51,000 under section 68 of the Act in respect of gift in cash received from Mr. Mihir Kumar Pradhan. 36. As regards the gift in cash of Rs. 2,51,000 received from Mr. Suresh Chandra Shee (assessee s father-in-law), the assessee furnished the copy of the gift deed dated 04/05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Act in respect of gift in cash received from Mr. Suresh Chandra Shee. 38. As regards the gift in cash of Rs. 11,95,000 received from Smt. Rashmi Sanjib Pradhan (assessee s wife), the source of funds was shown as agricultural income. During the assessment proceedings, upon perusal of the capital account of assessee s wife for the period 01/04/2009 to 31/03/2010, it was observed that her closing Balance is Rs. 9,72,550. It was further observed that she has filed a return of income for the assessment year 2010-11 of Rs. 1,68,695. Further, the balance as on 31/03/2011 was Rs. 8,26,193. It was also noted that in the last 5 years the donor has never shown any agricultural income. Since the creditworthiness of the donor was not proved, the AO treated the transaction as non-genuine and added the sum of Rs. 11,95,000 to the total income of the assessee as unexplained cash credit. During the appellate proceedings before the learned CIT(A), the assessee submitted that his wife received a cash gift amounting to Rs. 6,41,300 from his father Mr. Suresh Chandra Shee. As the AO had found that Mr. Suresh Chandra Shee was getting meagre salary of Rs. 14,000-16,000 per month and there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to his books to the satisfaction of the AO, and in this regard, the assessee is not only required to prove the identity of the creditor and genuineness of the transaction but also the creditworthiness of the creditor, which the assessee has failed to prove in case of certain transactions as noted above. Accordingly, mere reliance on Explanation (e) to section 56(2)(vii) of the Act would not absolve the assessee from the onus cast on him under section 68 of the Act. As a result, grounds no. 8 and 9 raised in assessee s appeal are partly allowed for statistical purposes. 41. The issue arising in ground No. 10, raised in assessee s appeal, pertains to an addition under section 68 of the Act on the sale of ornaments. 42. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case pertaining to this issue are that during the year under consideration, the assessee has claimed the sale of gold ornaments and shown receipt of Rs. 8,91,548 in cash. The assessee claimed that the said ornaments were sold to M/s Motaba Sons Jewellers, Colaba, Mumbai. In support of his claim, the assessee has submitted the sale bill of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase has to be linked with this rough estimate and this is counter signed by Mr. Sanjib Pradhan. Therefore, it is clear that no transaction was carried out vide bill no. 1000. Further, regarding the bill No. 1115, Sh. Dimpesh Jain has again stated in his oath statement u/s 131 of the I.T. Act, 1961 that Sh. Sanjib Pradhan was asked him to give back dated invoice bill. Since, the business of the jeweller was started on 09.02.2011 and received TIN No. 12.01.2011, therefore, it is not possible that the above mentioned sale/purchase will be carried out in the prior to 09.02.2011. Therefore, the addition made by the AO on account of sale/purchase of Gold ornaments of Rs. 8,91,548/- are, therefore, sustained. Accordingly, this ground of appeal is dismissed. 43. It is the plea of the assessee that he had sold gold ornaments to M/s Motaba Sons Jewellers, Colaba, Mumbai, and Mahavir Jewellers, Dahisar (West), Mumbai during the year and the sale consideration was received in cash. As evident from the record, in order to determine the genuineness of the transaction, the assessee was given an opportunity to produce the party for verification of the claim. However, due to the inabil ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
