TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 599
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....e assessee from the following persons: Name Amount Jagdishji 5,00,000 Laxmanlal 5,00,000 Mohan Shingh 5,00,000 Rupalalji 5,00,000 Vijay Singh 5,00,000 Gordhan Singh 5,00,000 Mod Singh 5,00,000 Total 35,00,000 It was the case of the assessee that these amounts were given to the aforementioned persons in earlier years for the purpose of mining, which were received back by the assessee during the year under consideration. However, the AO disbelieved such version of the assessee and added a sum of Rs. 36,80,000/-, which included the aforementioned amount of Rs. 35 lacs. The addition was agitated in an appeal filed before the CIT(A), who confirmed the addition vide his order dated 15.03.2011. The addition was sustained by the learned CIT(A) mainly on the ground that amount of Rs. 35 lacs is outstanding to be receivable even in the balance sheet filed for A Y 2005- 06 and these findings of the learned CIT(A) in the quantum order are found in para 16 to 18, which are reproduced below: "16. Having said that the return filed by appellant starting from assessment year 1997-98 onwards have also been looked into. It is seen from the balance sheet of Ms. Kusum Jain on ....
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....at the balance sheet for that year is showing loans and advances for Rs. 35,00,000/- however as stated there is no schedule available giving the details like name of the parties and amount thereof for the loans and advance reflected at Rs. 35,00,000/- till A.Y. 2003-04. It is only in A.Y. 2004-05 that seven names are reflected as produced above. Again loan and advances are reflected at Rs. 35,00,000/- as on 31.03.2005 even though appellant claims that Rs. 5,00,000/- were returned by one of debtors named Shri Jagdish Gameti on 14.07.2004 which goes against appellant. (2) Along with this the whole issue revolved around the make believe story of appellant was that it was done because intensive labour was required to work on the site and they have to be paid in cash only for the reason that in initial stage of mining the extraction of sub soil and soft strata is not possible with the help of machines i.e. Pocklain machine and JVC as it is intensive manual job. Now having found that the appellant was hiring Pocklain machine way back in 1997 as reflected in P & L Account of Lovely Marbles and could purchase it in 2004 only as reflected in opening balance of block of assets in A.Y. 2002....
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....; (emphasis implied) 3. On the basis of the confirmation of addition by the CIT(A), impugned penalty has been levied by the AO. The aforementioned order of the CIT(A) was challenged by the assessee in further appeal, which has been decided by the Tribunal vide its order dated 17.06.2015 and it was found that aforementioned findings of the CIT(A) in the quantum proceedings were contrary to the facts available on record as the aforementioned amount of Rs. 35 lacs was not outstanding in the balance sheet for A Y 2005-06. Therefore, the order passed by the learned CIT(A) was set aside and the matter was restored back to the file of the AO with the following observations: "5. Before us, the Ld A.R demonstrated that the assessee has been filing personal balance sheet regularly along with her return of income and in AY 2004-05, the break up details of advance amount of....
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....nd on completion of work the amounts were received back by the assessee. The evidence filed before the AO, as per the submissions recorded by the learned CIT(A) is as under: During the course of assessment proceedings as well as during the course of appellant proceedings and also during the penalty proceedings the appellant had given party wise details of advance as given above to following persons along with necessary evidence as under:- 1. MOHAN SING RAJPUT: The amount is given to Shri Mohan Sing Rajput on 10/01/98 to carry out the initial working and that they were given mobilization advance in term of deposit and Shri Monhan Singh Rajput was required handle the extraction activities which interalia include arrangements of the workers required. The copy of agreement attached herewith for your ready reference. The appellant has also filed confirmation of accounts appearing in the assessee's book duly confirmed by the Shree Mohan Singh Rajput. Appellant had also requested AO "If you need You can also verify the genuinely of the above transaction by issuing the summons or notice u/s. 131 or 133(6) of the income tax act and verify accordingly" 2. GORDHAN SING RAJPUT : The amoun....
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....ou need You can also verify the genuinity of the above transaction by issuing the summons or notice u/s. 131 or 133(6) of the income tax act and verify accordingly. 6. VIJAY SING : The amount was given to him on 15/7/97 to carry out the initial working and that they were given mobilization advance in term of deposit and he were required to handle activities which interalia include arrangements of the workers required. The copy of agreement attached herewith for your ready reference. The appellant has also filed confirmation of accounts appearing in the assessee's books duly confirm by him. Appellant has also requested AO if you need You can also verify the genuinity of the above transaction by issuing the summons or notice u/s. 131 or 133(6) of the income tax act and verify accordingly. 7. RUPALAL MEGHWAL : The amount was given on 05/1/98 to carry out the initial working and that they were given mobilization advance in term of deposit and he were required handle the extraction activities which interalia include arrangements of the workers required. The copy of agreement attached herewith for your ready reference. The appellant has also filed confirmation of accounts appearing i....
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....ce the people would not be possible without any legal rights and therefore it was on AO to have issued summons of commission to verify the genuineness of those transactions for which detailed submissions were made." Considering the aforementioned evidence and various judicial pronouncements, which have been referred in detail in the order passed by the CIT(A), he has recorded the following conclusion "6. I have gone through the submission of the appellant as well as order of the A.O. levying the penalty and find merit in the appellant's case. In the present case, the appellant had deposited cash in her bank account which was stated to be the amount received back by the appellant from advances given by her in earlier years. It is also true that the appellant had been showing such advances as outstanding year after year and that during the year under consideration the appellant has reduced the aforesaid debt as outstanding. Thus, there is a reduction of advances to the extent of amount shown to have been received by the appellant. These facts are neither controverted nor disproved. The appellant has also explained the transactions of receipts and payments in cash as due to non ava....