TMI Blog2005 (1) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... e offer was on clear understanding that no further adverse inference will be drawn at the time of assessment in respect of the documents inspected and prepared at the time of survey. So there is a breach of trust. So no cognisance of these papers be taken and addition out of peak amount unexplained investment amount Rs. 3,00,000 be deleted." 4.1 The Revenue has also taken only ground, which reads as under : "On the facts and in the circumstances, in the case, the learned CIT(A) has erred in deleting the addition of Rs. 4,00,000 on account of unexplained peak investment made under s. 69 of the IT Act, 1961, made by the AO." 5. Briefly stated, the facts are that the AO made addition of Rs. 4,00,000 being unexplained peak investment made under s. 69 of the IT Act, 1961. The Authorised Representative of the assessee submitted that the assessee is engaged in the business of Kachi Arhat under the name and style of M/s Sunder Mal Sat Pal, Muktsar. The assessee filed his return of income declaring an income of Rs. 1,56,687. The case was selected for scrutiny. In this case, survey under s. 133A was conducted on 21st Aug., 1997 in the case of the assessee as also in the case of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the CIT(A). The same submissions were reiterated and it was submitted that the assessee made surrender of the amount of Rs. 4,00,000 over and above the normal profit which accrued to the assessee and the said amount has already been included in the return of income and as such addition was unwarranted. The CIT(A) considering the submissions of the assessee allowed the appeal of the assessee partly and restricted the addition to Rs. 3 lakhs instead of Rs. 4 lakhs. The operative order of the CIT(A) in para 2.2 in the impugned order reads as under : "2.2. I have given careful consideration to the views expressed by both the sides. It is a fact that the business premises of the assessee and its sister-concern namely, M/s Chet Ram Ravi Kumar, Muktsar, were surveyed under s. 133A of the IT Act, 1961, on 21st Aug., 1997. It is also a fact that the appellant and their sister-concern are engaged in the business of Kachi Ahrat i.e., they are making payments on the sale proceeds of agricultural produce after realising the same from the purchasers of agricultural produce of the farmers and in between earning commission known as Dammi. The inflow and the outflow in the books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P L a/c in which the surrender of Rs. 4 lakhs has been added in the normal profit of the business. He has argued that since the amount of Rs. 4 lakhs is also added, there was no question of further making the addition of Rs. 4 lakhs. The learned counsel for the assessee invited our attention to pp. 10 and 11 of the paper book which is reply before the AO in which also apart from normal profit of the business, surrender income of Rs. 4 lakhs has been shown and it is also explained that the net Dammi income reduced from Rs. 4,01,354 to Rs. 2,00,703 as compared to the previous year. The main source of the income of the assessee is Dammi and interest. Due to change in crop cycle and decrease in main crops, the Dammi was badly affected. It was also explained that the second main source of income in Kachi Arhat is interest from the farmers. In the period under question, the position of the farmers was very bad and the recovery was very low. Even the principal amount becoming doubtful. So there is no question of charging interest from the farmers. However, the firm has to pay interest to lenders. The net effect that interest has changed from credit balance to expenses in the year. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In normal course, if the surrendered income is added, it will work out the returned income in a sum of Rs. 1,56,690 upon which the assessee has filed return of income. We accordingly do not find any justification to sustain the addition of Rs. 3 lakhs in the matter. The entire addition is, therefore, deleted. The orders of the authorities below are set aside. As a result, the appeal of the assessee is allowed and the appeal of the Revenue is dismissed. 10. No other issue arises in the Departmental appeal. 11. Now we take up the second issue in the assessee's appeal in which the AO has made the addition of Rs. 37,100 on account of Dammi income. It was submitted that the addition on account of Dammi on estimate basis in a sum of Rs. 37,100 is arbitrary and without any basis because the assessee has fully explained the reasons for fall in Dammi account which is due to change in crop cycle and decrease in main crop. The AO, on the other hand, was of the view that the assessee has shown Dammi income of Rs. 87,801 upto the date of survey and, therefore, Dammi income shown for the balance period in spite of Narma and paddy season at Rs. 1,12,901 is much less as compared to the previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 (by Revenue) On the first ground in the case of the assessee's appeal, the assessee offered addition of Rs. 5 lakhs. However, the AO has made the addition of Rs. 3,10,364 upon which the CIT(A) restricted the addition to Rs. 2,00,000. The Revenue is in appeal against the deletion of addition of Rs. 1,10,364 and the assessee is in appeal for deletion of the addition of Rs. 2 lakhs. This ground is similar to that of in the case of M/s Sunder Mal Sat Pal, Muktsar, in ITA Nos. 310/Asr/2001 and 372/Asr/2001 above. The facts and the circumstances are identical. We accordingly, by following our earlier order in the case of M/s Sunder Mal Sat Pal, delete the entire addition. As a result, the appeal of the assessee is allowed and the appeal of the Revenue is dismissed. 20. Second issue in assessee's appeal is as regards assessment of Dammi income upon which the AO made the addition of Rs. 31,661 and the same was restricted to Rs. 10,000 by the CIT(A). This issue is also similar to that raised in ITA No. 310/Asr/2001. By following the same order, we delete the addition of Rs. 10,000. As a result, the appeal of the assessee is allowed on ground No. 2. 21. In ground No. 3 in assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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