AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 848
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....ent of colonies, so, to say in one phase it is doing the business in real estate. The assessee-firm purchases large chunks of land, develops them into plots and then sells them. The assessee has also claimed earning of commission income in this melee. For A.Y. 2004-05 it filed its return of income (ROI) on 03.01.2005 declaring NIL income which was processed u/s 143(1) of the Income Tax Act, 1961, the 'Act' for short. Subsequently, on 15.12.2009 and 16.12.2009, a search and seizure action u/s 132 of the Act was carried out at the business premises of the assessee firm and at the residences of the partners. Simultaneously, survey u/s 133A of the Act was also conducted. During this search certain incriminating documents / loose papers and books of accounts were found which were seized. Some documents were seized during survey operation. Consequently, a notice u/s 153A of the Act was issued to this assessee on 14.10.2010. The assessee-firm responded by filing Return of Income [ROI] on 15.03.2011 repeating NIL income as was disclosed in the original return. 2.1 During the course of assessment proceedings computerized books of accounts were produced by the assessee. The assessee-firm al....
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....of appeal on or before its hearing before your honour." 2.4 We have heard rival submissions and have carefully perused the entire record. 3. The facts apropos ground No. 1(a) 1(b) are that the assessee-firm has shown unsecured loan totaling to Rs. 24,92,130/- from various persons, the details of which are as under :- S.No. Name of person Amount 1. Sumenesh Vyas 202000 2. Ashok Sharma 252500 3. Jabbar Singh Khinchi 707000 4. Hari Singh Rathore 505000 5. Bhim Singh Rathore 505000 6. Taruna Sharma 90900 7. Rajiv Vyas 111100 8. Leeladhar Khatri 100000 9. MD Sharma HUF 18630 Total Rs. 24,92,130 The A.O. demanded proof of the above loan in terms of Section 68 of the Act, failing which the A.O. has added Rs. 24,92,130/- u/s 68 of the Act. 3.1 In appeal the assessee produced various evidence to prove this unsecured loan. The additional evidence was dealt with in the light of Rule 46A of the I.T. Rules, 1962 and a remand report was called from the A.O. However, the ld. CIT(A) has ignored the remand report of the A.O. 3.2 The assessee took a plea that unsecured loan had been disclosed in the original return filed u/s 139(1) of the....
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....e consideration and has been treated as income. It was stated that the ld. CIT(A) accepted the additional evidence produced before him and sent them to AO who after examining them in detail has submitted his report. In this report he has objected to the admission of the additional evidence but at the same time he has examined them and has verified them. Therefore, according to ld. A.R. the loans stand confirmed and proved by the confirmation of the cash creditors and since these loans have been received through account payee cheques and there being no contrary evidence on record. The ld. AR has placed reliance on many judicial decisions in support of his contention. 3.4 Per contra, ld. CIT(DR) Shri O.P. Meena has contested all the above points raised by ld. AR and has relied heavily on the orders of the authorities below. He has stated that the assessee failed to produce any confirmation or proof of the above loans before A.O. He has stated that ld. CIT(A) has correctly refused to accept the additional evidence under Rule 46A. He has further stated that despite the fact that no incriminating evidence was found relatable to these loans the A.O has to compute 'total income' of the a....
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....prove the three ingredients of Section 68 of the Act. The following chart depicts the assessee's submission with regard to these cash credits alongwith proof. The evidence(s) submitted by the assessee-firm are listed at pages 17 and 18 of the written submissions furnished by the ld. A.R of the assessee which is as under: Sumesh Vyas 202000 AEJPV 2427 B Amount recd. As advance against sale. Amount already taken as income by including in sale. Details of sale made submitted 2. Ashok Sharma 252500 No. PAN Amount recd. As advance against sale. Amount already taken as income by including in sale. Details of sale made submitted. 3. Jabbar Singh Khinchi 707000 ABOPK9728I J Amount recd by cheques. Confirmation filed to AO. Regular Income Tax Assessee. Accepted in regular returns. 4. Hari Singh Rathore 505000 AFHPR2644P Amount recd by cheques. Confirmation filed to AO. Regular Income Tax Assessee. Accepted in regular returns. 5. Bhim Singh Rathore 505000 NO PAN Amount recd by cheques. Confirmation filed to AO. Regular Income Tax Assessee. Accepted in regular returns. 6. Taruna Sharma 90900 BQQPS5286K Amount recd by cheques. Confirmation filed to AO. Regular Income ....
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....e case of CIT Vs. Ajay Kumar Sharma reported in 259 ITR 240 is again of no help to the Revenue because in that case books of account were found and as per them, the assessee had not offered for taxation the credits shown in the books. In that eventuality, similar decision was taken as was taken in the case of Elegant Homes Pvt. Ltd [supra]. Thus the facts of both these Rajasthan High Court judgments are entirely on different issues and on different footing and are not applicable to the facts of the given case. The decision of Cas Card Finance Ltd of Ahmedabad Bench [supra], a Third Member decision is also having entirely distinguishable facts. In that case, during the course of search, certain incriminating documents were found. Thus this decision is also distinguishable and the ratio rendered in that case will not apply to the facts of the present case. 3.9 Accordingly, in the light of the above discussion we are of the considered opinion that the addition of Rs. 24,92,130/- is not justified and deserves to be deleted. As a result we order deletion of addition of Rs. 24,92,130/- and allow ground No. 1(a) and 1(b) of assessee's appeal. 4. The facts propos ground No. 2(a) and 2(b)....
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....oan was held ingenuine, has to be allowed. Accordingly, we delete this addition of Rs. 27,350/- and allow ground No. 3 of assessee's appeal. 6. Ground No. (4) is regarding charging of interest u/ss 234B and 234B. Since the charging of interest is mandatory, only consequential relief is admissible. Accordingly, we don't allow this ground and dismiss the same. 7. Ground No. (5) has become of academic interest only, as we have not sustained any addition which can be set off against the surrendered income. Hence, this ground is dismissed on that score. 8. Ground No. 6 was not pressed at the time of hearing. Therefore, this ground is also dismissed as not argued. Ground No. (7) is general in nature and does not require any adjudication. 9. In the result the appeal in ITA No. 251/Jodh/2014 for A.Y. 2004-05 is partly allowed. ITA No. 347 and 252/Jodh/2014 (A.Y. 2005-06) 10. These are cross appeals filed against the order of ld. CIT(A), Jaipur dated 31.03.2014. 11. The assessee has raised following grounds in its appeal :- 1. The Id. CIT(A) has erred in sustaining the disallowance out of interest amounting to Rs. 2,94,390/- out of interest payment claimed by the appellant. The addi....
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.... has to follow and apply the verdict finally given by the High Court. Till then, we cannot allow the ground No. 2 of assessee's appeal and dismiss the same. 15. In the result, the appeal of the assessee is partly allowed. 16. In revenue's appeal the only effective ground is ground No. 1(i) which relates to deletion of addition of Rs. 10,80,000/- added by the AO u/s 40A(3) of the Act. The facts apropos, this ground are that the assessee made payment of Rs. 54 lakhs to various parties towards the purchase of agricultural land (page 2 para 5 of AO's order). However, even after mentioning, as above, he has invoked the provisions of Section 40A(3) and after disallowing 20% of this payment of Rs. 54 lakhs has added a sum of Rs. 10,80,000/-. 17. Before ld. CIT(A) the assessee was successful. The ld. CIT(A) has followed the Tribunal Order in the case of Smt. Jiya Devi, another assessee of this group in which on identical facts the jurisdictional Tribunal has deleted addition so made in her hands. But, the revenue is now aggrieved. The contention of ld. CIT(DR) that the payment was not made against a agricultural land but it was paid for purchasing stock-in-trade. We have considered this....
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.... already surrendered by the appellant in various years and has also further erred in not granting telescoping effect of additions sustained. 3. The interest charged u/s 234B and 234C is bad in law and bad on facts." 20. The revenue has raised the following grounds in its appeal :- i). Whether on the facts and circumstances of the case, the Ld. CIT(A)-I, Jaipur has erred in law and on facts in directing to delete the addition of Rs. 35,20,000 made by the AO on account of disallowance u/s 40A(3) of the I.T. Act, 1961 in respect of purchase of agricultural land ignoring that the land were stock-in-trade of the assessee and also ignoring the fact that the appellant had failed to substantiate the exceptional conditions under which the cash payments were made. (ii) Whether on the facts and circumstances of the case, the Ld. CIT(A)-1, Jaipur has erred in law and on facts in directing to delete the addition of Rs. 13,05,700/- made by the AO on account of 50% disallowance out of the land development expenses, ignoring the fact that the assessee consistently failed to furnish any evidence despite opportunities given during assessment as well as during appellate proceeding." 21. We have ....
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....disallowance u/s 40A(3) of the I.T. Act, 1961 in respect of purchase of agricultural land ignoring that the land were stock-in-trade of the assessee and also ignoring the fact that the appellant had failed to substantiate the exceptional conditions under which the cash payments were made. (ii) Whether on the facts and circumstances of the case, the Ld. CIT(A)-1, Jaipur has erred in law and on facts in directing to delete the addition of Rs. 9,37,675/- made by the AO on account of 50% disallowance out of the land development expenses, ignoring the fact that the assessee consistently failed to furnish any evidence despite opportunities given during assessment as well as during appellate proceeding. iii) Whether on the facts and in the circumstances of the case CIT(A)-i, Jaipur has erred on facts in deleting the addition of Rs. 32,00,200/- made by the AO on account of investment treated as unexplained u/s 69 of the I.T. Act, 1961, ignoring the fact that the appellant has consistently failed to furnish any details or any substantiating evidences, in spite of granting of reasonable and sufficient opportunities during the assessment proceeding or even during the appellate proceedings t....
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.... reversed or its operation is stayed. Accordingly, there is no merit in this ground of Revenue's appeal and we dismiss the same. In the result, the appeal of the assessee is partly allowed and that of the Revenue is dismissed. ITA NO. 350 AND 255/JODH/2014 (A.Y. 2009-10) 30. These are cross appeals filed against the order of the ld. CIT(A) dated 31.3.2014. 31. The assessee has raised the following grounds: "1. The Id. CIT(A) has erred in sustaining the disallowance out of interest amounting to Rs. 2,21,203/- out of interest payment claimed by the appellant. The addition so sustained is bad in law and bad on facts and outside the scope of assessment u/s 153A. 2. The Id. CIT(A) has erred in not granting telescoping effect of income already surrendered by the appellant in various years and has also further erred in not granting telescoping effect of additions sustained. 3. The interest charged u/s 234B and 234C is bad in law and bad on facts." 32. The Revenue has raised the following grounds: i). Whether on the facts and circumstances of the case, the Ld. CIT(A)-I, Jaipur has erred in law and on facts in directing to delete the addition of Rs. 2,10,00,000 made by the AO on ac....
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....ding. (iii) Whether on the facts and circumstances of the case, the Ld. CIT(A)-1, Jaipur has erred in law and on facts in directing to delete the substantive addition of Rs. 94,00,000/- made by the AO on account of unexplained investment in construction of properties, ignoring the fact that this was part of the undisclosed income of the assessee disclosed u/s 132(4) of the I.T. Act, 1961 on the basis of seized documents which was offered for taxation in the hands of the assessee firm. (iv) Whether on the fact and circumstances of the case, the Ld. CIT(A)-1, Jaipur has erred in law and on facts in directing to delete the substantive addition of Rs. 94,00,000/- made by the AO on account of unexplained investment in construction of properties ignoring the fact that the assessee has consistently failed to furnish any details nor any substantiating evidences such as fund flow statement, sources of investment, bills voucher complete books of accounts etc. in spite of granting reasonable and sufficient opportunities during the assessment proceedings or even during the first appellate proceedings to justify the claim regarding genuineness of the expenditure. (v) Whether on the facts and....
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....he Asstt. order. (Para 7, pages 3 to 5). On examination of the records during the assessment proceedings it was noticed that the assessee failed to disclose the surrendered amounts fully in its return of income for various AY's. The surrender made by the assessee during the course of search was on the basis of specific seized documents which pertained to the assessee and seized from their premises. Further, the assessee surrendered the amount voluntarily and under the statement taken on oath and recorded u/s 132(4) which have evidentiary value and binding on the assessee. Further any of the assessees of the group had not filed any retraction at any stage. The assessee has failed to either offer for taxation the incomes disclosed during the search and failed to specify the manner in which the such income has been derived or to substantiate the manner in which the undisclosed income was derived and to pay the tax in respect of the said undisclosed incomes. Therefore, after granting opportunity, the assessment was finalized. From the discussion made in the assessment order it was concluded fact that the assessee has completely failed to substantiate his claim with corroborative evi....
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....Hon'ble ITAT in its order in the case of Shri M.D. Sharma had directed to delete the substantive addition of Rs. 35 lakhs, made on account of purchase of building material for purchase of residence house in his case for the A.Y. 2010-11. The Hon'ble ITAT has also dismissed the ground No. 2 and 3 taken in the Revenues's appeal in that case regarding addition made on account of undisclosed income of Rs. 94,00,000/- on protective basis and set off of undisclosed income, as decided in the assessee's appeal. The Hon'ble ITAT has observed that from the perusal of the details it became evidently clear that the assessee had not retracted the surrender. The Hon'ble ITAT has accepted the assessee's contention that surrender of incomes of Rs. 20 Lakhs (A.Y. 2007-08) Rs. 13 Lakhs (A.Y. 2005-06 and A.Y. 2006-07) (8,00,000 + 5,00,000), Rs. 30 lakhs (A.Y. 2008-09) and Rs. 50 Lakhs (A.Y. 2009-10) was made against which the assessee has shown Rs. 35 Lakhs (Construction of house) Rs. 35 Lakhs (Construction of Complex) Rs. 25 Lakhs (farm house) and thus, had only claimed credit of the income available with him on account of various incomes surrendered by him in the various years prior to search. The....
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....corded u/s 132(4), each and every pages were confronted to the assessee and after carefully analysis of facts, better known to the partner and the assessee- firm at that time in full conscious, the partner had offered undisclosed income on account of various head (as stated above) for taxation for various A.Ys. During the course of assessment proceedings, each & every page even each and every entries were again confronted to the assessee vide this office various query letters & assessee was also asked to substantiate his claim with cogent and concrete evidences to prove the claim. But submission of assessee has not found supported with corroborative evidence & found in very casual nature. (iv) On going through the statements and other proceedings during the search, it was noticed that the books of accounts have not been maintained on regular basis. During the course of the search operation, the assessee has accepted categorically that he has not maintained his regular books of accounts. He has also accepted that the loose papers note books etc. found during search pertain to his firm's business. No regular books of accounts were found either hard copies or in the computers etc. du....
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....s goods i.e. Lands, Plots etc. which were traded and hence it cannot be interpreted that the entire surrendered income was considered for investment in the construction of properties. The Hon'ble ITAT has not considered this aspect, while deciding the issue relating to protective addition in the case of Shri M. D. Sharma. The assessee during the assessment proceedings, or even at the appellate proceedings, has failed to substantiate his claim regarding telescopy of surrendered income with reference to any corroborative evidences to support his claim of investments. x) The Hon'ble ITAT's observation in the case of Shri M. D. Sharma that the undisclosed income was earned by the assessee and utilized in the investment in construction and such income does not relate to the firm as the funds were available with the partners and the credit of the same was shown by them towards investment. Therefore, it has held that separate addition cannot be made on such expenditure. The Hon'ble ITAT has made those observations in the case of the firm without considering the facts of the firm, in respect of the appeals which were pending at that time. In this connection it is submitted that the Hon'....
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....4, Artisan Colon, 2. Masuria, Jodhpur Rs. 16184200/- 2. Farm House at Vaibhav Enclave, Village Pal, Jaisalmer Road, Jodhpur. Rs. 11751000/- 3. Residential house at 221-222, Shyam Nagar, Pal Link Road, Jodhpur Rs. 16763800/- From the report of the Valuation Officer, it was conclusively established that cost of construction of the said properties invested by the assessee and Shri M. D. Sharma in the under consideration was Rs. 44699000/-. The assessee has not submitted any details of expenditure incurred on construction of properties before the AO, the DVO, whereas in the returns of income filed, he claimed to have invested Rs. 34747535/- for construction of these properties. Thus, there was difference in valuation works out to Rs. 9951465/- and this amount of Rs. 9951465/- was treated as Unexplained Investment U/s 69 of the I.T. Act in respect of the assessee's residence. However, addition of Rs. 9000000/- was made under the head "surrender of income" on account of unexplained investment in construction, therefore, the remaining amount of Rs. 951465/- was added to the total income of Shri Murlidhar Sharma on substantive basis and in the case of the assessee on protective basis. T....