TaxTMI 
TaxTMI 
2016 (8) TMI 1166
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....2,961/- 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 Rs. 22,13,152/- being the inadequate consideration paid by HUF on transfer of building. 5.1 However, he....
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....nation 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 misunderstood the purport of section 56 (2) (vii) which seeks to tax assets, hitherto treated as exempt capital assets within the meaning of section 2 (14) of the Act. Section 2 (14) of the Act, int....
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....) 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 the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purposes of this s....
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....eing 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 of interpretation can hardly be said to arise. Absoluta sententia expositore non indiget. The language used by the legislature best declares its intention and must be accepted as decisive of it. Hence, it is clear that the intention of the legislature not to include business assets in the exclusion list, it has to be accepted as such. Considering the above discussion, we are of the view that t....
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....ed 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 pro tanto purchases and manufacturing operations as correct. 13.2. Ld. AR submitted that it is also pertinent to note that the Assessing Officer having accepted the purchases are available, vide his observation in para 3, page 5 of the assessment order, there is no case for suspecting that the sales are bogus. However, in view of the inherent inconsistencies in the accounts rendered per-se, the a....