TaxTMI 
TaxTMI 
2014 (10) TMI 432
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....ances of expenses without any cogent reasons and ignoring that assessee completely failed to discharge his onus in respect of proving the genuineness of expenses by production of books of a/c, bills, vouchers, bank statements etc. 3. Whether in the facts and circumstances of the case, the ld Commissioner of Income Tax (Appeal) has erred in law in deleting the addition of Rs. 1,02,000/- made by the AO on a/c of low house hold withdrawals without pointing out any deficiency in working of total house hold withdrawals at Rs. 1,92,000/- by the AO." 3. Apropos ground No.1 deletion of addition of Rs. 13,59,347/- made on account of unexplained credits. 4. Brief facts of the case is that the assessee has been carrying on money lending business. During the current assessment year the assessee has shown net income of Rs. 85,000/-. The AO after perusal of the statement of affairs for the relevant assessment filed by the assessee noticed that the assessee had shown the following closing balance of assets side besides all other closing balance:- A. Y. 2007-08 A. Y. 2006-07 UCO Bank 6102.00 Nil Advances 400000.00 Nil Cash advances and State Bank of Patiala 1359347.00 370911.....
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....t to three different persons. The AO further noticed that the assessee has made withdrawal of Rs. 8,80,000/-, and the assessee as per records had paid Rs. 2,00,000/- to different parties for purchase of land; and therefore the AO wondered how the assessee had Rs. 8,69,247/- as cash in hand from the withdrawals from the firm M/s Sharda Estate Developers, Meerut. 8. The AO also observed that after perusing the record he found that the cash balance of Rs. 1,19,916/- and also observed that the assessee had received cash receipts as per records during the year as under:- Rs.10,90,307/- Commission Income Rs.85,000/- Interest Income Rs. 11,000/- Gift surrendered Rs. 2,05,307/-Rs.12132/- profit from firm M/s. Sharda Estate Developers, which stood remain credited in his account as capital balance. 9. So, according to the AO, the assessee had earned cash receipt of Rs. 2,05,307/- and he has made expenses as under:- Rs.99,473/- deposited in LIC Rs.36,000/- H/H withdrawals Rs.1,35,473/- 10. In this way, the assessee was having cash balance of Rs. 69,824/- (2,05,307/--1,35,473/-) only out of his current year's income with him. 11. In respect to the amount of Rs. 3,70,184/- which was ....
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....counts of both banks have been filed before the AO. However the AO made no comment on these loans too. Thus total funds available with the assessee on 3-03-2007 stood at Rs. 31,78,541/- against which there are total assets of Rs. 31,78,541/ - including cash in hand and balance in account of -State bank of Patiala at Rs. 13,59,347/-. The AO has failed to appreciate that as long as assets held by assessee and appearing on debit side of statement of affairs are covered with proved funds on its credit side any part of such assets may not be held as unexplained. It was also important to note that it was not the case of deptt. that assessee was holding some assets out side the statement of affairs and hence the cash in hand may not be held as unexplained. It was also submitted that the assessee has arranged the cash in question for being investment in new firm. The new firm could be organized in next year and the cash in question was invested therein. Thus it was pleaded before the CIT(A) that entire additions and disallowance of Rs. 15,64,040/- liable to be deleted. 17. It was also brought to the knowledge of the CIT(A) that all the above submission on this point of cash in hand were m....
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....t were available before the AO. Which clarify the mistake in question. 21. That to prove the availability of cash in hand at Rs. 13,57,269/- the appellant has made a long drown process of working out cash in hand as on 31-03-2007 after taking into consideration all transactions of the year. Through this process cash in hand is worked out at Rs. 13,60,954/- in place of Rs. 13,57,269/- shown through statement of affairs and hence cash in hand and advances shown in the statement of affairs deserve to be held as proved and acceptable on facts and in law and according to the principle of accountancy. 22. .Taking note of the aforesaid submission and careful perusal of the records we find that the ld CIT(A) has made a finding that on 31.03.2007 the assessee was having total cash of Rs. 13,60,954/-; and the assessee had filed all the details in respect to his withdrawals from the account of the assessee in the firm M/s. Approve Home Developers, which we have seen at Pg. 7 of the paper book and Withdrawal from the account of the assessee in the firm M/s. Sharda State Promoters placed at page 8 of the paper book and cash drawn from other bank accounts of the appellant as indicated in the s....
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....e claim of Rs. 5746/ - for all type of business expenses deserved to be allowed as reasonable expenses for business purpose. 4. That after completion of assessment is] s 143(3) the AO sent the demand for recovery to the TRO Meerut, without waiting for the results of appeal in question and ignoring the stay petition pending before the AO. On receipt of recovery notice from TRO the appellant moved petition u/ s 154 of the Act, before the AO on 24-08-2010 through Dak counter which is still pending before the AO, copy of the said petition is placed at pages 20 to 22 the paper book in which similar submissions were made and the rectification of the mistake were sought. In view of above submission the disallowance of expenses of Rs. 102693/- may be held as wrong illegal and unwarranted and therefore deserve to be deleted in its entirety. 5. That the family consists of 4 persons namely appellant himself, his wife Smt. Usha Agarwal, his son Ankit and daughter Asha Garg. All the 4 persons are regularly assessed to income tax and have been making withdrawals for house hold expenses form their own sources of income. There IS one HUF Hariom & Sons which is also making withdrawals for house ....