TaxTMI 
TaxTMI 
2008 (12) TMI 253
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....r ss. 234B and 234C of the Act. 2. Heard and considered the arguments advanced by the parties in view of the orders of the lower authorities, material available on record and the decisions relied upon by them. Ground No. 1 3. It is general in nature hence does not need independent adjudication. Ground No. 2 4. During the course of assessment proceedings, the AO noticed that the assessee had submitted balance sheet, capital account and cash flow chart along with his letter dt. 23rd Dec., 2004 showing opening capital at Rs. 1,89,286.49 in the balance sheet and cash in hand at the end of the year at Rs. 94,645.79, wherein the opening cash was at Rs. 1,85,619.10. The AO rejected the explanation of the assessee that this capital was accumul....
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....n of availability of the opening capital at Rs. 15,619 is totally baseless, arbitrary and in any case it cannot be said to be a fair estimation. On the other hand the assessee had admittedly filed copies of capital account in the balance sheet starting from the period 1st April, 1997 onwards, copies of which have been placed at page Nos. 3 to 3A of the paper book. From the same it can be seen that in these annual statements of accounts the assessee had declared income from agriculture, pension income, income from vehicle etc. Except making some adverse remarks on agricultural income, that too in a very vague term, the AO has not at all disputed the availability of these income generating sources nor the fact of earning of income from these ....
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....es. If an exercise is done keeping the average annual agricultural income with Rs. 5,000 per annum per Bigha the income for 8 Bighas comes around Rs. 40,000 per annum. After retirement since 1987, the assessee has been doing agricultural operations on his own land then also the total agricultural income would have been around Rs. 5,00,000. The land taken on lease from others and earning agricultural income therefrom was in addition thereto. This human probability however totally lost sight of by the authorities below. The learned Authorised Representative submitted further that the other important factor while working out the capital is the outgoings, which in the present case was mainly household expenses. There is no substance in the alle....
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....hicle and trading of cattle feeds, besides agricultural income. During the relevant period the assessee has disclosed total turnover of Rs. 3,00,000 on which net profit of Rs. 15,500 under the provisions of s. 44AF of the Act was shown. Similarly, he also disclosed profit of Rs. 43,200 under the provisions of s. 44AE of the Act from plying of light goods vehicles. The AO noted from the trading account that assessee had shown the sales as balancing figures to arrive at the gross profit for the relevant period. The AO also noted that the assessee had not kept the vouchers and bills, etc. relating to his sales and purchases. The AO accordingly estimated the sales at Rs. 3,50,000 as against Rs. 2,99,881 disclosed by the assessee and made an add....
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....st appellate order on the issue direct the AO to delete the addition of Rs. 1,20,000 sustained by the learned CIT(A). Ground No. 2 is thus allowed. Ground No. 3 8. In support of this ground the learned Authorised Representative submitted that family of the assessee at that time consisted of himself, his wife, son's wife and another son being a student. The elder son was in service of Air Force and was not residing with the family. During the year there was a birth ceremony of the grandson of the assessee. The AO disbelieving the amount of household expenses declared by the assessee at Rs. 51,136, estimated the same at Rs. 1,00,000. The learned CIT(A) has restricted the addition to Rs. 70,000, but he has not made separate addition keep....
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....were 200 to 250 persons invited on the occasion of birth ceremony of the grandson. 9. The learned Departmental Representative on the other hand tried to justify the first appellate order. 10. Considering the above submissions of the parties in view of orders of the lower authorities, we find substance in the above contention of the assessee that, an addition cannot be made merely on the basis of suspicion especially when there was no material on record to suggest that the household expenses claimed to have been incurred and declared by the assessee were not correct and there was no evidence that some big function were organized by the assessee on the occasion of birth ceremony of his grandson. We thus while setting aside orders of the low....