TaxTMI 
TaxTMI 
2016 (8) TMI 1166
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.... b) Handloom Machinery A/c Rs. 15,79,809/- Rs. 37,92,961/- ii) Addition on account of inflated sales Rs. 6,41,625/- 3. The AO observed that on verification of capital account of HUF it was found that the following movable and immovable properties were received by HUF from individual status of Sri G. Kishore Babu: Description Immovable property (building) Movable property (machinery) Total cost Rs. 5,71,152/- Rs. 21,79,809/- Consideration paid by HUF to individual Rs. 35,00,000/- Rs. 6,00,000/- Difference Rs. 22,13,152/- Rs. 15,79,809/- Total Rs. 37,92,961/- 3.1 AO brought the above of Rs. 37,92,961/- to tax u/s 56(2)(vii) as the HUF paid inadequate consideration. 4. Aggrieved, the assessee preferred an appeal before the CIT(A). 5. The CIT(A) referring to the provisions of section 56(2)(vii), observed that as per clause (e) of section 56(2)(vii) 'relative' in case of HUF is any member of the family. Therefore, the CIT(A) held that since the assessee HUF received immovable property from a relative (individual) the provisions of section 56 are not applicable. Hence, he deleted the amount of ....
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.... the auspicious day of starting of business and the delivery was given two weeks later. (f) This explanation of the assessee is totally in contradiction to the explanation given on 16.08.2013 wherein the assessee had stated that raw-material was given to the weavers 10 to 15 days prior to 01.04.2010. In view of the above reasons, the Assessing Officer made addition of Rs. 6,41,625/- as unexplained sales / inflation of sales. 7. The CIT(A) after considering the submissions of the assessee, confirmed the said addition by observing that the corresponding purchases for the sales made during the first 10 days of the business could not be explained by the assessee with any reliable evidence. 8. Aggrieved by the order of the CIT(A) the assessee is in appeal before us. 9. Ground Nos. 1 to 4 are pertaining to addition of Rs. 15,79,809/- made u/s 56(2)(vii) of the Act. Ground Nos. 5 to 12 are pertaining to the addition of Rs. 6,41,625/-. Ground No. 13 is pertaining to levy of interest u/s 234C of the Act. Ground Nos. 14 to 16 are general in nature. 10. As regards the addition of Rs. 15,79,809/-, the ld AR submitted that the first appellate authority has misunder....
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....ers of revenue authorities. 12. Considered the submissions of both the parties and perused the material facts on record. Ld. AR submitted that the property definition given in section 56(2)(vii) is only illustrative and does include the assets given as gift between the relatives, irrespective of kind of assets. We have carefully analysed the section 56(2)(vii) of the Act, which was introduced in Finance Act, 2009. The sub-section in that Finance Act stood as below: "(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,- (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; (b) any immovable property,- (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration; Provided that where....
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....b) "fair market value" of a property, other than an immovable property, means the value determined in accordance with the method as may be prescribed; (c) "jewellery" shall have the meaning assigned to it in the Explanation to sub-clause (ii) of clause (14) of section 2; (d) "property" means- (i) immovable property being land or building or both; (ii) shares and securities; (iii) jewellery; (iv) archaeological collections; (v) drawings; (vi) paintings; (vii) sculptures; or (viii) any work of art; " 12.1 Subsequently in Finance Act, 2010, included the assets Bullion. On careful reading of the section, it is clear that the legislature intended to exclude the properties which are personal belongings like land and buildings, shares, securities and personal effects. It was never intended to exclude the business assets like stock-in-trade, machinery etc. On safe and infallible principle is to read the words through and see if the rule is clearly stated. If the language employed gives the rule in words of sufficient clarity and precision, nothing more requires to be done, in such a case, the task ....
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....have been understood in the correct perspective. The assessee by asking the weavers to commence weaving operations prior to auspicious day of opening, procured raw materials on credit and on the day of opening, made purchases of raw materials such as Zari, resham and warp and book the bills therefor on the date of opening to square up the credit purchases for the 15 days credit. Reference is invited to the recent decision of the Hon'ble Bombay High court rendered on 4th February 2015 in the case of CI T - 8 Vs. Hariram Bhambhani in 1. T.A. No 313 of 2013 wherein it was held that the entire unaccounted sales cannot be assessed as undisclosed income particularly if the purchases have been accounted for. Only the net profit on such unaccounted sales can be taken as income; However in the present case no unaccounted sale or purchase has been unearthed but the Assessing Officer simply disbelieves the opening day sales which is duly accounted while accepting the pro tanto purchases therefor. Hence there is no ground for adding a sum of Rs. 6,41,625/-as alleged inflation in sales, when the said sales are already part of the recorded transactions and the Assessing Officer has accepted the ....