TaxTMI 
TaxTMI 
2005 (5) TMI 290
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....ound is rejected as not pressed. 5. Ground NO.2. This ground is directed against the estimated income of the assessee from dairy business at Rs. 70,000. The assessee was running dairy under the name M/s Gajraj Dairy, Meerut. In his return filed in compliance to notice issued under s. 148 of the Act, the assessee had shown a total income of Rs. 32,650 and agricultural income at Rs. 60,000 and income from the dairy business was declared by the assessee as Rs. 25,000. It was done without enclosing any P&L ale or statement of income, etc. In compliance to the notice, the assessee filed the following computation of income from the dairy vide reply dt. 3rd March, 2003. (i) Winter Season (6 months) (a) Retail sales daily 100 Kg. Profit @ Re. 1 per Kg. = 100 x 30 x 6 18,000 (b) Wholesale daily 300 Kg. Profit @ Re. 0.25 per Kg. = 75 x 30 x 6 13,500 ....
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....bsp; ------ 6. As the statistics given by the assessee was not supported by any documentary evidence on the working of dairy income given by the assessee, the AO did not accept the same and proceeded to examine the matter. For this purpose, he took into consideration the report of the Dy: Director of Income-tax (Inv.) (DDIT) and reported the following facts: (i) Shri Timraj Singh told that in year 2000-01, he has engaged 8 milk vendors, they bring milk both in morning and evening, milk obtained in morning is 600 Kg. and in the evening is 500 Kg. approximately. On being asked to show accounts of milkman, Shri Timraj Singh said that he does not maintain any books and only he enters milk brought by vendors in the dairy kept by him. Shri Timraj Singh told that he sales 75 Kg. milk in morning and 50 Kg. in the evening in retail. On being asked to show list of daily customers, only a copy was shown which had mention of customers, who took about 15 Kg. milk in all, daily most of the sale is on cash payment basis. However, nearby dairy owner told sale of M/s Gajraj Dairy should be about 200 Kg. in the morning and 150 Kg. in the evening. Retail price of 65 specific gravity (degr....
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....; (Rs.) (a) Income from retail sale of milk 1,26,000 Profit from sale of 350 Kg. Milk in retails daily 350 Kg. Profit from sale of milk in retails a year = 350 x 30 x 12 = 1,26,000 (b) Income from wholesale sale of milk 1,18,500 (i) In 8 months of a year = (1100-350) Kg. x Rs. 0.50/Kg. x 30x8 = 750 x 0.50 x 30 x 8 = 90,000 (ii) In 4 months of a year = (1100-350) Kg. x Rs. 0.50/Kg x 30 x 4 = 750 x 0.50 x 30 x 4 = 28,500 (c) Loss from sale of milk at plants (-) = 1100/4 Kg. x Rs. 1.80/Kg. x 30 x 4 = 275 x 1.80 x 30 x 4 = 59,400 59,400 (d) Income from sale of ghee = 100 Kg. x Rs. 5/Kg....
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....; 6 Calculation 350 x 0:30 x 6 x 30 days 18,900 Sale of ghee 6,000 Total income (+) 40,650 Less: Expenses (-) 78,480 (-) 37,830 D. However, the learned AO has assessed the dairy business income as he deemed fit i.e., partly by taking into consideration the report of the ITI and partly on his own sweet will, which is grossly incorrect, in view of the Hon'ble Supreme Court of India's decision, in the case of Indore Malwa United Mills Ltd. vs. State of MP & Ors. (1966) 60 ITR 41 (SC), wherein the Hon'ble Court has held as under: '1. That as the appellant produced before the assessing authori....
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....bsp; 72,000 (-) 78,480 --------- Net income 68,220 --------- 10. Thus, the assessee's income after considering assessee's objection works out to Rs. 68,220 for the assessment year under consideration. The AO was quite reasonable in estimating of income at Rs. 70,000. Therefore, the income estimated by the AO is quite reasonable and hence is upheld. 11. Before us, the learned counsel for the assessee submitted that the learned CIT(A), was not justified in estimating the income from d....
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....o estimate the income from dairy at Rs. 50,000. This estimate is based on several factors including the statement of the assessee recorded by the DDIT. The assessee therefore, gets a relief of Rs. 20,000 and this ground is therefore, partly allowed in favour of the assessee. 14. Ground NO.3, This ground challenges the sustenance of addition to the extent of Rs. 68,000. During the previous year relevant to the asst. yr. 1995-96, the assessee had deposited cash to the tune of Rs. 1.50,000 on 17th Feb., 1995 in saving bank a/c No. 3040 with Punjab National Bank, Eastern Kutchery Road, Meerut. Before the DDIT(Inv.), the assessee had explained that the source of Rs. 1,50,000 was on account of sale proceeds of agricultural income but no evidence was filed to support this version. During the assessment proceedings, the assessee filed statement in which secured loan of Rs. 60,000 was declared from the following persons: Shri Lachchu Singh, R/o Village Rs. 19,500 Fafunda, Tehsil Meerut dt. 15-1-1995 cash Shri Raj Kumar, R/o Village &n....
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....sp; 1,37,000 The total availability is 1,37,000 Less: Withdrawals towards household expenses 55,000 for 11 months (Rs. 60,000 towards household expenses admitted by the assessee through his counsel, vide letter dt. 25-2-2003 in para 4 of letter dt. 25-2-2003) Balance funds available for deposit 82,000 Total deposit 1,50,000 -------- Unexplained &....
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....hort time i.e., one day only, he could not find out relevant entry as to how and from where the aforesaid amount was received by him and by memory/brain tracing only, he thought that this might have been received from LIC on maturity of some policy or part payment of any policy, under money back policy. (c) That also, time period was sought to search out and find out the documents in respect of the above receipt, so as to give correct information, however, no time was allowed by the learned AO. (d) That, later on the assessee enquired from the bank and came to know that the above amount represents the return credit of daily collection account, which was being run by the assessee since 13th Dec., 1991 with Syndicate Bank and the said account was matured and the assessee received the credit vide pay order from Syndicate Bank on 28th Feb., 1995. The said daily account was of Rs. 20 per day. Confirmation letters to this effect from the bank have already been filed before your Honour, vide paper book dt. 29th Jan., 2004'. 19. The learned CIT(A) directed the AO to verify the genuineness of this receipt from Syndicate Bank by observing as under: 'Facts of the case and submissi....
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....is deposit, the assessee submitted the following working: Cash in hand 4,004 Withdrawals from bank 1,70,000 upto 30-9-1995 Agricultural income 35,000 upto 30-9-1995 Dairy income upto 30-9-1995 20,000 Unsecured loan 2,07,000 Less: LIP Personal and - 32,678,00 cash in hand --------- Total cash in hand 4,03,326 &n....
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.... Sh. Rakesh Kumar 19,500 S/o Sh. Duli Chand on 25-9-1995 (i) Sh. Rajbir Singh 19,500 S/o Ramlal Singh on 26-9-1995 (j) Sh. Jagbir Singh 17,500 S/o Sh. Prem Singh on 26-9-1995 (k) Sh. Ranbir Singh 18,500 S/o Shri Prem Singh on 1-10-1995 -------- 2,07,000 Out of withdrawal 93,000 from bank on various dates, as under: 18-4-1995 50,000 25-4-1995 &n....
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....cord, it is found that the assessee discharged the burden to explain the source of credits. The learned CIT(A) has not given any cogent reasons to disbelieve the documentary evidence filed by the assessee. 32. In view of the above, the addition of Rs. 1,67,000 sustained by the learned CIT(A) deserves to be deleted. 33. Ground NO.4. This ground challenges the addition of Rs. 1,16,000 made under s. 69 of the IT Act. The AO found that the assessee had purchased agricultural land by making investment of Rs. 2,93,000. As per the assessee the payment was made on the following dates (Rs.) 16-10-1995 1,50,000 30-10-1995 1,03,500 30-10-1995 stamp duty 36,760 30-10-1995 other expenses 2,740 &nbs....
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....e other sources. But as mentioned in the finding in respect of deposit of Rs. 3 lakhs, only Rs. 93,000 had been taken into account for considering the availability of funds for deposit of Rs. 3 lakhs whereas the withdrawals from the bank account were of Rs. 1,70,000 from 18th April, 1995 to 30th May, 1995. Thus, the balance amount of Rs. 1,70,000 - Rs. 93,000 = Rs. 77,000 has to be considered as being available with the assessee. Thus, out of 1.93,000 benefit of Rs. 77,000 has to be allowed and thus, balance amount of Rs. 1,16,000 only remains for which no satisfactory explanation has been given and hence, addition to the extent of Rs. 1,16,000 is upheld'. 36. The learned CIT(A) has not considered the reply of the assessee reproduced above. The assessee had fully explained the discrepancy of Rs. 2,93,000 by submitting cash flow and other evidence. In view of the reply of the assessee, there remains no discrepancy in making the payment of Rs. 2,93,000. Thus, the learned CIT(A) was not justified in sustaining the addition to the extent of Rs. 1,16,000 and the same is, therefore, deleted. 37. Ground No. 4 is allowed in favour of the assessee. 38. Ground No. 5 is general in na....
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.... footing as extraneous material has been taken into consideration. After taking into consideration the relevant material and after following our approach adopted in the asst. yr. 1995-96 on this issue, we estimate the income from dairy business at Rs. 70,000. The assessee will get a relief of Rs. 70,000, hence the ground is partly allowed in favour of the assessee. 51. Ground No. 3 is general in nature and does not require' any specific adjudication. 55. Ground No. 4 relates to charging of interest under ss. 234A, 234B and 234C of the IT Act. Charging of interest is consequential in nature and the AO shall work out the interest and finally determine the taxable income. 53. In the result, the appeal filed by the assessee is partly allowed. 54. ITA No. 4590/Del/2004 (asst. yr. 2000-01) 55. Ground No. 1 not pressed hence rejected. 56. Ground No. 2. This ground relates to income shown by the assessee from dairy business at Rs. 40,000. The AO estimated the same at Rs. 1,20,000. The learned CIT(A) in appeal upheld the action of the AO. It may be pointed out that while doing so, the AO as well as the learned CIT(A), took into consideration, the report of DDIT (Inv.) a....