TaxTMI 
TaxTMI 
2012 (4) TMI 592
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....shares. The AO made an addition of Rs. 42,93,350/- in respect of application money received from four persons as per following details. (i) Smt. Sharmila Kashid Rs. 5,00,000/- (ii) Shri Shankar Kashid Rs. 17,75,700/- (iii) M/s. Pushkraj Packaging (India) Pvt. Ltd. Rs. 15,17,650/- (iv) Shri Jeevan Visram Sawant Rs. 5,00,000/- Total Rs. 42,93,350/- Of the above, Shri Shankar Kashid is the Managing Director of the Assessee company and Smt. Sharmila Kashid is his wife. On being asked to prove the genuineness of the claim, the assessee produced before the AO the Income tax particulars and copy of the relevant bank account of the above persons besides producing the above individuals for examination of the AO. The AO, however, was not satisfied and added an aggregate sum of Rs. 42,93,350/- as unexplained cash credit u/s. 68 of the Act. 2.1. According to the AO the financial capacity of Smt. Sharmila Kashid and the genuineness of the transaction could not be established by the assessee. In this regard the AO has made a reference to the fact that this share applicant had explained source of investment out of funds lying in her bank account with Satara Jilla Madhyavarti ....
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....ication money was nothing but unproved cash credits in the A/cs. of the assessee company. The AO also made a reference to the fact that the said assessment has been upheld in 1st appeal. In the circumstances and as the genuineness of the transactions according to the AO was not established, the amount of Rs. 15,17,650/- was added as unproved cash credits u/s.68 of the I.T.Act. 2.4 A sum of Rs. 17,75,000/- was received as share application money from Shri Shankar Kashid. The AO on perusal of the copy of his A/c. No. 010428 with the Deccan Merchant Co-op. Bank Ltd., Dahisar, noticed credits in the said account from particular accounts belonging to the assessee group. The details of which were as under Date Credits Debits (Share application money) 13.04.2008 4,21,000 4,57,000 13.04.2008 5,86,000 10,07,000 5,50,000 10,07,000 08.07.2005 6,94,700 3,22,400 08.07.2005 _________ 6,94,700 3,71.378 6,93,718 21.7.2005 50.000 50,000 22.7.2008 50,000 50,000 8.9.2005 Cash 10,000 9.9.2005....
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....s free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment." In view of the above, I delete the addition made of Rs. 42,93,350/- as unexplained share application money. The ground is allowed." 4. Before us the ld. D.R submitted that the CIT(A) fell into an error in not examining the capacity of the share applicants and also genuineness of the transactions. According to him merely establishing the identity of share applicant is not sufficient and the assessee was bound to explain the capacity of the share applicant(creditworthiness) and also the genuineness of the transactions. The ld. Counsel for the assessee brought to our notice the various documents submitted before AO in the course of assessment proceedings and submitted that the assessee had duly discharged its burden under section68 of the Act and the CIT(A) was justified in deleting the addition made by the AO. 5. We have considered the rival submissions. As far as Smt. Sharmila Kashid is concerned the share application signed by her disclosing the PAN had been filed. Her Income Tax return for A.Y 2006-07 alongwith computation of inco....
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....ibunal set aside the order of the revenue authorities and remanded the issue to the AO for fresh consideration. The AO made the addition in the set aside proceedings but the CIT(A) on appeal by the assessee deleted the addition made by the AO holding that the assessee has furnished satisfactory explanation with regard to this share applicant. We are of the view that in the light of the evidence filed by the assessee prima facie the receipt of share application money has been satisfactorily explained. 5.3 Shri Shankar Kashid: As far as this share applicant is concerned the share application signed by her disclosing the PAN had been filed. Her Income Tax return for A.Y 2006-07 alongwith computation of income copies had been filed. The bank account from which the payment had been made had also been filed. In our view the reasons assigned by the AO for making the impugned addition cannot be sustained. The law is well settled that the assessee is not obliged to prove the source of source. The evidence filed by the assessee prima facie establishes the receipt of share application money by the assessee and therefore, the order of the CIT(A) has to be sustained for the above reasons. Th....
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.... Accordingly, the excess depreciation of Rs. 48,34,428/-(11942747 - 7108319) was disallowed. 9. On appeal by the assessee the CIT(A) deleted the addition made by the AO for the following reasons: "4.3.3 The other dispute is on admissibility of full depreciation claimed on the additions made. The appellant contends that the added machineries were put to use in the first half of the year and it began commercial production of flexible packaging materials in August, 2005. The AC disbelieved this and allowed only 50% of the depreciation. It is seen from the details of fixed assets filed before the AO that the appellant had incurred trial run expenses which appear in the work in progress capitalized prior to 30/9/2005. There are invoices in those details which show sale of packaging materials in the month of September'05. I notice that the appellant has credited total sales of Rs. 27,26,97,968/- to the P&L A/c. this year. It seen that it had sales ranging between Rs. 1.11 crores and Rs. 1.34 crores during April'05 to August,05. The sales rose to Rs. 2.02 crores in September'05 and remained around that touching Rs. 2.28 crores in December'05. The sales shot to Rs. 3.6....
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....he expenses incurred for erection of the machinery had been in the month of July. The purchase of the machinery and its arrival in the assessee's premises prior to 30/9/2005 had not been disputed by the AO. In our view the AO has not considered any of the aforesaid evidence and has rejected the claim of the assessee for no valid reasons. In our view the CIT(A) was fully justified in deleting the addition made by the AO. The order of the CIT(A) is, therefore, confirmed and Ground No.2 raised by the revenue is dismissed. 11. Ground No.3 raised by the revenue reads as follows: 3. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in deleting the addition of Rs. 30,35,408/- being cash deposits added as unexplained income and the Ld. CIT(A) failed to appreciate how cash of Rs. 50 lakhs was generated in school's counter in rural area. 12. The AO noticed the following cash deposits in the three bank accounts maintained by the assessee. S.No. Name of the Bank Place Total amount deposited in cash 1. State Bank of India (IFB),( Current A/c.) Worli, Mumbai Mumbai Rs. 53,91,000 2. The Cosmos Co.Op. Bank Ltd. ,Kan....
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....of considerable sums was brought to Mumbai as claimed instead of depositing in the bank account in Kaledhon. 7.3 As mentioned earlier, cash sales of Rs. 6,85,250/- are stated to be deposited in bank account in Kaledhon, representing cash sales of the area, whereas cash of Rs. 62,36,222/- is deposited in Mumbai A/cs. Of the latter, an amount of Rs. 1,65,406/- is stated to be the sales made in Mumbai / suburbs. It may also be mentioned here that in scrutiny assessment proceedings for the immediately preceding year wherein an addition at 50% of cash deposits in Mumbai's bank a/c was made on account of unexplained deposits in bank accounts of Mumbai. Under these circumstances and after careful consideration of the case, I hold that 50% of the cash deposits in Mumbai's Bank a/cs excluding Mumbai's sales of Rs. 1,65,406/-, is out of undisclosed sources of the assessee. The addition comes to Rs. 30,35,408/.. i.e. 1/2 ( 6236222- 165406)." 13. On appeal by the assessee the CIT(A) deleted the addition made by the AO for the following reasons. "5.3 I have considered the issue. It is not the case of the AO that the bank accounts were not disclosed. There were auth....
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....gue and in any event cannot be the basis to disregard documentary evidence filed on behalf of the Assessee. We are of the view that the CIT(A) had rightly deleted the addition made by the AO. Consequently, Gr.No.3 raised by the Revenue is dismissed. 15. Ground No.4 raised by the assessee reads as follows: "4. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in deleting two expenses of Rs. 9,66,592/- without appreciating that expenses were religious and expenses would not amount to advertisement." 16. The assessee had claimed advertisement expenses totalling Rs. 31,66,584/-. Out of the same a sum of Rs. 3,51,350/- was incurred on distribution of free note books to poor students and Rs. 6,15,342/- on arranging mahaprasad on festive occasion like Ganesh Chaturthi Pooja. The AO was of the view that free distribution of note book is a philanthropic work and in such case the name of the assessee is displayed on such note book and expenditure will not be advertisement expenditure. Similarly in respect of Mahaprasad expenses the AO was of the view that the same was purely religious and cannot be allowed as deduction. 17. On appeal by the a....
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....CIT(A) full details of expenses which were also given during the assessment proceedings showing that the impugned expenses were in the nature of normal repairs and maintenance of the factory building. The Assessee claimed that the expenses could not be said to have resulted in any enduring benefit or created any capital asset and should be allowed as revenue expenses u/s 37(1) of the Act. Alternatively and without prejudice, the Assessee submitted that depreciation may be allowed on the disallowance. 22. The CIT(A) held that the expenditure was revenue expenditure for the following reasons: "7.3 I have considered the issue. The only reason given by the AO for treating the impugned expenses as capital in nature is that concrete flooring and shutters endure for more than one year. Firstly, this is his mere assumption. If the logic of the AO is accepted then the expenditure on white washing of a building which also generally lasts for more than a year can be termed capital expenditure. In my opinion no time frame can be applied in order to treat any expenditure on capital account. The requirement for the purpose is enduring advantage and/or creation of a capital asset. In ....