2015 (7) TMI 533

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....7,150/-   3. Ld. CIT(A), while partly allowing the assessee's appeal, confirmed the aforementioned additions. 4. Being aggrieved, the assessee is in appeal before us and has taken following grounds of appeal: "1. That on the facts and in the circumstances of the case addition of Rs. 309000/- alleged low and unexplained HH exp. Vide para 4 of the assessment order have arbitrarily been made on wrong observations of facts and are illegal. 2. That the learned CIT(A) on mere technical considerations confirmed the unexplained HH exp. Rs. 309000/- vide para 5 of the appeal order and ignored the natural justice. 3. That advances to farmers were made vide para 6 of the assessment order in the course of business expediency without consideration of interest. The AO without any reasons charged interest of Rs. 23700/- & 81905/- and the learned CIT(A) vide para 7 of the appeal order erred in confirming the same. 4. That AO can't compel to maximize the profits and ratio of CIT/Abhishek Ind. Ltd. 286 ITR 1 is not applicable as such addition of Rs. 23700/- + 81905/- have wrongly been made and are warranted. 5. That addition of Rs. 67115/- vide para 7 of the assessment o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ises and some part out of loan from brother or any other relatives but no such matter was brought to the notice of the Assessing Officer when statement of Sh. Vijender Mann was recorded. However, no evidence regarding sales of buffaloes, tuda and loan taken from brother and other relatives have been filed. The explanation filed by the assessee has been considered and cannot be accepted in toto. As stated above, Sh. Vijender Mann, husband of the assessee was not in a position to meet out all the expenses for household and education of the children. Moreover, the bank statement furnished by the assessee reveals the account is maintained jointly by the assessee and her spouse. It has also been noticed that Sh. Vijender Man has withdrawn an amount of Rs. 100000/- only on 9.5.2006 from Punjab National bank and has not made any withdrawals upto 4.9.2006 which is surprising as the major expenses on account of education of children and harvesting of wheat, ploughing of fields, plantation of paddy, fertilizer and pesticides, irrigation etc. are to be incurred along with other household expenses during this period. The assessee has not even maintained any agriculture expenses, ploughing, gro....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ri Vijender had, inter alia, stated as under: Que:- Please give the details of your family members along with their occupation and source of income? Ans:- We are four members i.e. myself, wife two children. Both the children are college going, myself is agriculturist and my wife Smt. Krishna Devi is prop. Of Divine Enterprises, Madlauda. Sh. Vipin who is studying in LLB 1st year in Kurukshetra university and Miss Vidhi Mann (daughter) is studying B. Sc. Phy. Honours, Marinda House Delhi University. 12. From the reply, noted above, of Sh. Vijender Mann it is evident that he was giving answers in present tense and, therefore, we find considerable force in the submission of ld. counsel for the assessee that the statement refers to the position as obtaining on 23-9-2009 when admittedly the children were not college going. However in AY 2006- 07 the children were school going as is evident from the certificate filed in the PB. These certificates are photo copies only and were not furnished before the AO and were filed for the first time before the ld. CIT(A). Ld. CIT(A) has not considered these certificates. Therefore, the authenticity of these certificates needs to be examined at....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 286 ITR 1, and after considering the assessee's reply, made addition of Rs. 23,700/- in respect of interest free advances to Sh. Vijender Mann of Rs. 3,95,000/- and Rs. 81,905/- in respect of advance to other farmers on total debit balance of Rs. 6,82,940/-. 16. Ld. CIT(A) confirmed the AO's finding, inter alia, observing that the plea of the assessee, that giving interest free advance was advantageous in business and regular mode of earning and these advances were in the nature of commercial expediency and accepted in trade practice, was not tenable as the assessee had paid interest to each and every creditors i.e. all the farmers to whom cost of their produces remained unpaid or adjusted the loan along with interest out of their sale proceeds. 17. We have considered the rival submissions and perused the material available on record. The assessee's explanation before AO is contained at pages 26 to 29 of the PB, in which as regards advance to various debit balances, it is stated as under: "Advance to Sh. Vijender Mann: Sh. Vijender Mann is my husband. He is doing agriculture operations. During the year 2006-07, he has sold agriculture produce worth Rs. 1137629/- on ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....n and assessee had current account and the entire agricultural produce was sold through assessee on which assessee got commission. 19. In respect of other advances also there were business dealings with the parties and, therefore, amounts were lying in different accounts on account of commercial expediency. Hence, no addition was called for on account of debit balances lying with customers on notional basis for not charging interest on their account. We may further observe that there is no finding recorded by lower revenue authorities as to whether the advances lying with customers were out of borrowed funds or out of own funds. Therefore, we are of the opinion that lower revenue authorities were not justified in making addition on this count. We, therefore, delete the addition in question. 20. Apropos ground no. 5, regarding disallowance of shortage of paddy, brief facts are that assessee had claimed shortage of paddy weighing 43.61 qtls. The assessee's explanation was that the paddy was old and she had purchased this paddy last year. Hence there was small shortage of 43.61 qtls due to drying. The AO rejected the assessee's contention observing that the assessee had been doi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....k. Moreover, no documentary evidence substantiate her claim of average rate of Rs. 1295/- per quintal was furnished by the assessee either during the course of assessment proceedings or before your good office. " 23. Ld. CIT(A) after considering the remand report, confirmed the addition, by observing as under: 8.04 The issue is considered. The main argument put forth by the appellant is that in the case of rice Shellers, driage and pilferage up to 10% is allowable, whereas, the appellant has only claimed a shortage of 8%, which the appellant contends is normal. As rightly observed by the AO in the assessment order, as the purchases were made in the financial year 2004-05 and 2005- 06, the appellant should have claimed shortages in those years too. Therefore, the AO was right in concluding that the excuse of driage and paddy eaten by rats is a device used by appellant to avoid to pay taxes. Further, the plea of the assessee is also not tenable in view the fact that the appellant has been doing the business of purchase and sale of paddy for last so many year but has never made a claim of shortage ever in the earlier years. Moreover, the appellant ahs not furnished any evidence ....