TaxTMI 
TaxTMI 
2016 (1) TMI 677
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....emises of the assessee were also covered during the said search action. In response to notice u/s.153A which was served on the assessee on 04-08-2002, the assessee filed return of income declaring total income of Rs. 16,41,360/-. It may be pertinent to mention here that the assessee in the original return filed on 31- 10-2005 had declared income of Rs. 1,71,360/-. The additional income declared in the return filed in response to notice u/s.153A amounting to Rs. 14,70,000/- was on account of 11 sundry creditors being written off as income. 3. During the course of assessment proceedings the AO noted that as per Annexure A-2/20 and Annexure A-1/16 seized from the residence of the assessee there is a reference to the sand contract for Chumble/Aadhar site and Dabhade site. For the purpose of verification the AO issued letters of enquiry to the District Collector, Nashik seeking complete details of sand contracts issued since 01-04-2002. From the replies obtained it was gathered that the Tahsildar, Malegaon had allotted a contract to Waman P. Chumble, brother of the assessee for mining/dredging of sand at Chinchwad site for Rs. 35 lakhs for the period 04-10-2004 to 31-07-2005. The amo....
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....er, since the contract is for the period from 04-10- 2004 to 31-07-2005 the AO took proportionate profit for 6 months and determined the profit @10% on such amount which works out to Rs. 2,10,000/-. 5. Since the various other additions are not subject matter of this appeal, we are not discussing those issues. 6. Before CIT(A) it was submitted that while making the addition of Rs. 35 lakhs the AO completely ignored the common pool funds of members of Chumble family which has been sourced mainly out of agricultural income from the land admeasuring more than 93 acres owned by the members of the family. The observation of the AO at page 4 of the assessment order was brought to the notice of the CIT(A) where the AO has observed that there appears to be a common source of funds and that the assessee himself has admitted that this business is carried out by him out of the pool of funds belonging to the family. It was submitted that the AO has completely ignored the submissions filed before him vide letter dated 25-12-2010 along with necessary evidence of the agricultural income of the members of Chumble family. It was submitted that the agricultural income for A.Y. 2003-04 to 2005-0....
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....er : "8. I have carefully considered the facts of the case, the assessment order and the rival submissions. On perusal of the same, It has been observed that the only dispute is regarding the source of the payment of Rs. 35,00,000/- made for obtaining sand contract at Chinchwad in the name of Shri Vaman Chumble. It is undisputed fact that the sand contract has been executed by Shri Shivaji Chumble i.e. the appellant out of a pool of funds belonging to the Chumble family out of common source of fund. The fact is also supported by the notings in the seized material as per which Shri Vaman Chumble has forwarded substantial amounts of Rs. 27,65,500/- to Shri Shivaji Chumble during 15/7/2005 to 16/9/2005 i.e. prior to the payment of deposit for sand contract. The appellant vide letter dated 15/12/2010 has filed details of agricultural income earned by the members of the Chumble family. The appellant has filed 7/12 extracts of the agricultural lands admeasuring 93.78 acres showing crops grown on the said land. The appellant has worked out quantum of agricultural produce of crops grown on the basis of established norms published by various institutions and authors including Rahuri Kris....
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.... 93.76 31.50 25,90,020 82,223 4,753 2007-08 33,36,420 93.76 31.50 29,94,480 95,063 5,492 2008-09 38,63,850 93.76 31.50 33,95,010 1,07,778 7,530 From the above tabular charts, it has been noticed that the agricultural income claimed by the appellant is reasonable and the same is supported by 7/12 extracts of the land holdings on which crops grown with area has been mentioned, data published by Rahuri Krishi Vidyapith, sale rates of various crops for the years under appeal, certified by Krishi Utpanna Bazar Samiti, Nashik. The appellant has claimed the source of deposit of Rs. 35,00,000/- for the sand contract is out of common family pool fund sourced by agricultural income. From the tabular chart filed by the appellant, the cumulative balance in family pool fund as on 1/4/2004 and 31/3/2005 was Rs. 18,07,714/- and Rs. 35,72,132/-. The payment of deposit for sand contract has been made in the last fortnight of September, 2005. Therefore, the agricultural income received upto last fortnight of September is available for F.Y. 2004-05. The appellant has pointed out that sale proceeds of grapes are genera....
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....nsidered the facts of the case, the assessment order and the rival submissions. On perusal of statement of computation of income filed by the appellant, it has been noticed that the appellant has offered to tax sundry creditors of Rs. 14,39,000/- which are infact towards payment paid off by the appellant and offered to tax as paid out of income from undisclosed sources to avoid litigation. The appellant, therefore, claimed that the addition of Rs. 2,10,000/- towards alleged profit on sale of sand should be telescoped against the above undisclosed income of Rs. 14,39,000/- allegedly utilized for payment to outstanding creditors. The above contention of the appellant is found to be correct and supported by following decisions : 1. Ananthram Veersinghaiah & Co. CIT 123 ITR 457 (SC) 2. S. Kupuswami Mudaliar Vs. CIT 51 ITR 457 3. CIT Vs. S. Millappan 66 ITR 722 4. CIT Vs. Vyankateshwara Timber Depot 222 ITR 768(AP) 5. CIT Vs. K.S.M. Guruswamy Nadar & Sons 149 ITR 127 (Mad) 6. ITO Vs. Republic Poultry Foods 45 ITD 359 (Chd.) The addition of Rs. 2,10,000/- is, therefore, deleted. This ground of appeal is allowed." 11. Aggrieved with such order of the CIT(A) the Rev....
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....tural income like sale patties, purchase bills and agricultural inputs were filed by the assessee during the search. No agricultural income has been offered by the assessee in his return of income for agrarian purpose but only amounts have been credited to his capital account as agricultural income from HUF. 13. However, the assessee has put forward claim of agricultural income only hypothetically. No bills for agricultural produce were submitted. Further evidences like books published by institutions and agricultural college, rates of Krishi Utpanna Bazar Samiti were accepted by the CIT(A) at the back of the AO in contravention of provisions of Rule 46A. No remand report was called from the AO. Referring to the decision of the Pune Bench of the Tribunal in the case of Abhijit Subash Gaikwad Vs. DCIT and other connected appeals vide ITA No.699/PN/2013, 700 and 701/PN/2013 order dated 27-05-2015 for A.Y. 2009-10 he submitted that the Tribunal in the said decision has upheld the order of the CIT(A) who has disregarded the agricultural income from the land despite 7/12 extracts produced before himself stating that assessee was deriving agricultural income. Therefore, the order of t....
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..... 10 Lacs have been given to "Shivaji Appa", i.e. Shivaji Chumble in respect of Chinchwad contract on behalf of Vaman Chumble. Again on 04-09-2005 and 16-09-2005 amounts of Rs. 1.25 Lacs and Rs. 10,90,500/- have been deposited with "Appa", i.e. Shivaji Chumble. These notings make it clear that cash was collected and deposited towards executing the Chinchwad/Aadhar Contract. This cash was deposited in the name of Vaman Chumble but was executed by Shivaji Chumble. Moreover there appears to be a common source of fund. Thus the assessee is solely and completely responsible for the contract amount of Rs. 35 Lacs, and any income generated out of the same." 16. He submitted that the HUF does not own any bank account. Since the agricultural income of the family has been utilized by the members of the family for the auction purpose, therefore, the CIT(A) was fully justified in deleting the addition. Moreover, although number of persons have participated in the auction but the auction can be allotted in the name of only one person which in the instant case is the assessee. Therefore, the common pool of fund available in the family has been utilized for the auction and therefore the Ld.CIT....
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....At Post Gaulane, Tal. Dist. Nashik. PAN : AANPC0932C Subject : Scrutiny Assessment Proceeding for the Assessment Year 2003-04 to 2007-08. With reference to the above mentioned subject it is humbly submitted to your honour is as under : At the outset it is humbly submitted that Chumbale family, i.e. Shri Pandurang Chumbale and his forefathers owned agricultural land at village Gaulane Tal. and Dist. Nashik. The family is basically agriculturist family. Out of the agricultural income of the family the members of the family have acquired substantial agricultural land at various places in and around Gaulane. The agricultural income of the family was returned by various members of the family in individual capacity while filing returns of income upto A.Y. 2006-07. However, considering the above facts the agricultural income for the family belongs to HUF and hence not considered for rate purposes while filing returns of members of Chumbale family. The total agricultural land belonging to the family is 93.78 acres and the crops grown are grapes, Khurasani, Tomato, Masur, Groundnut and Vegetable. The details of agricultural income of the family are enclosed. The said income has bee....
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....00/- made by the AO is restored. The ground of appeal No.4 raised by the Revenue on this issue is accordingly allowed. ITA No.1576/PN/2011 (A.Y. 2007-08) : 23. The assessee for the impugned assessment year had not filed any return of income u/s.139(1) In response to notice u/s.153A the assessee filed his return of income on 23-02-2010 declaring Nil income. The AO noted that during the course of search the statement of the assessee was recorded u/s.132(4) on 02-05-2008 during which the assessee had admitted additional income of Rs. 10 lakhs for the year under consideration and Rs. 4,53,000/- on account of error and omission for 6 years in the hands of all family members. The AO noted that during the year under consideration the assessee has credited an amount of Rs. 2,12,500/- to the profit and loss account on account of error and omission. The assessee accordingly admitted and made total declaration of additional income of Rs. 12,12,500/- for A.Y. 2007-08. However, in the profit and loss account, after crediting the above Rs. 12,12,500/- the assessee declared net loss of Rs. 5,57,871.14. The AO compared the diesel and petrol expenses during the year as well as such expenses i....
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.... 28. The estimation of profit from sand business was also challenged stating that the profit estimated by the AO is covered by the income of Rs. 12,12,500/- credited to the profit and loss account towards undisclosed income and therefore no separate addition is required. Similar argument was advanced for addition of Rs. 71,313/- from the profit on sale of bricks. Non allowance of deduction u/s.80C at Rs. 1 lakh by the AO was also challenged. 29. Based on the arguments advanced by the assessee the Ld.CIT(A) deleted the entire addition made by the AO. While doing so, he further held that the rejection of book results by the AO u/s.145 of the Act was not correct. 30. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : "1. On the fact and circumstances of the case the Ld. CIT(A) erred in holding that the A.O. wrongly rejected the book result u/s. 145 of the Act without any basis. The Ld. CIT(A) also erred in not appreciating the fact that assessee was unable to produce evidence regarding expenditure vouchers and bills and that fact was admitted by the A. R. of the assessee during assessment proceeding which is on record. 2. ....
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....al income without remanding the matter to the AO in contravention of Rule 46 of the income Tax Rule. 9. On the fact and circumstances of the case the Ld. CIT(A) erred in deleting the addition of Rs. 4,55,555/- on account of profit of sale on sand. The Ld. CIT(A) also erred in not appreciating the fact that income from sand business is regular business income and cannot be treated as part of declaration of additional income of Rs. 12,12,500/- under section 132(4) of the Act. 10. On the fact and circumstances of the case the Ld. CIT(A) erred in deleting the addition of Rs. 71,313/- on account of profit on sale of bricks. The Ld. CIT(A) also erred in not appreciating the fact that addition is made to regular business income on the basis of seized documents and assessee's own admission, which is on record. 11. The appellant craves leaves to add, alter/delete any of above ground of the appeal. 12. Any other ground that may be urged at the time of hearing." 31. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. So far as ground of appeal No.1 is concerned we find....
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....4AE. Since we have upheld the above action of the AO, therefore, we hold that the CIT(A) was not justified in giving set off of loss of Rs. 2,78,533/- from the income offered to tax during the course of search proceedings as additional income. The loss should not have been allowed to be set off by the CIT(A). Therefore, we reverse the finding of the CIT(A) on this issue and the ground raised by the Revenue is allowed. 35. So far as Ground of appeal No.4 is concerned it is the grievance of the Revenue that Rs. 12,12,500/- declared by the assessee during the course of search should have been taxed over and above the income determined by the AO. The assesssee cannot credit this additional income to the profit and loss account and adjust various other expenses and declare Nil income. 36. After hearing both the sides, we find the assessee in the instant case has not filed his return of income for the impugned assessment year before the search. Although he had declared additional of Rs. 12,12,500/-, however, the assessee has not honoured the same while filing return of income and has declared NIL income by filing profit and loss account in which the additional income has been credi....