TaxTMI 
TaxTMI 
2011 (9) TMI 1132
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.... on account of loan received from Shri K.H. Maniyar (Ground No.1) and secondly, the Ld CIT(A) was not justified in charging interest u/s. 234B and 234C of the Act (Ground No. 2). Ground No. 1 2. The relevant facts are that during the A.Ys. 2001-02 and 2002-03, the assessee claimed to have taken unsecured loans of ₹ 2,50,000/- and ₹ 30,00,000/- respectively from his brother-in-law Shri J.H. Maniyar of Nagpur. The A.O doubted creditworthiness of Shri Maniyar and made the addition u/s. 68 of the Act on this account at ₹ 20,50,000/- in A.Y. 2001-02 and ₹ 30,00,000/- in A.Y. 2002-03. The Ld CIT(A) did not adjudicated upon the issue on the basis that first appeal is not maintainable against the addition made on protective basis since a decision on an addition of substantive basis would also be taken on the findings in the case of Shri Maniyar. 3. Before us, the Ld. A.R. pointed out that assessment in the case of Shri J.H. Maniyar was re-opened and it has now been ultimately decided by the Nagpur Bench of the Tribunal. The Ld. A.R. submitted that the income of Shri Maniyar has been assessed for all the years under appeal at ₹ 23.71 Crores as against amount....
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....agpur Bench of the Tribunal in the case of Shri Maniyar was not available before the authorities below. Since Ld. A.R. has not made available the order of the Nagpur Bench of the Tribunal in the case of Shri J.H. Maniyar before the Tribunal, we set aside the matter to the file of the Ld CIT(A) to decide the issue afresh in the case of the assessee in view of the decision of Nagpur Bench of the Tribunal in the case of creditor Shri J.H. Maniyar after giving opportunity of being heard to the assessee to establish creditworthiness of the creditor and that the funds were available with him when it was advanced to the assessee and to the AO to rebut the same.. 6. In view of the above developments, the contention of the assessee that first appeal lies also against protective assessment has turned academic only. Hence, it does not need adjudication. The Ground No. 1 is thus allowed for statistical purposes. Ground No. 2 7. The charging of interest u/s. 234B and 234C of the I.T. Act is consequential in nature, hence does not need a separate adjudication. This ground is accordingly disposed off. 8. In result, appeals are allowed for statistical purposes. ITA No. 318/PN/2009 9. The Rev....
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....; In absence of rebuttal of above stated material findings of the ld CIT(A) by the Ld. D.R., we are not inclined to interfere with the first appellate order in this regard as the same is reasoned one. The same is upheld. The ground is accordingly rejected. 12. In result, appeal is dismissed. ITA No. 752/PN/2009 13. The revenue has questioned first appellate order mainly on the ground that the Ld CIT(A) has erred in deleting the addition of ₹ 12,00,000/- made on account of cash donation giving to Tirupati Devasthan. 14. The relevant facts are that during the course of search, a bundle containing donor pass books of Tirupati Devasthan was found showing that the assessee had given donation in his name and in the name of other members of his family. It was explained that the donations were given out of agricultural income. The A.O did not accept the explanation of the assessee on the basis that the donation was not reflected in the capital account of the assessee in the books of Venkateshwara Agricultural Farm which was the source of agricultural income. It was further observed that Venkateshwara Agricultural Farm did not earn sufficient income to enable the cash donation of....
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....d reason to interfere with the first appellate order on the issue. The same is upheld. The ground is accordingly rejected. 18. In result, appeal is dismissed. ITA Nos. 244, 245, 246, 247, 248, 249 & 250/PN/2009 19. In these appeals, the assessee has questioned first appellate order on different grounds.. 20. In the A.Ys. 2000-01, 2002-03, 2004-05, 2005-06 and 2006-07, the assessee has questioned first appellate order on the ground that the Ld CIT(A) was not justified in sustaining the addition of ₹ 4,05,019/- on account of difference in valuation of Mahableshwar Property ( A.Y. 2000-01), ₹ 3,25,158/- on account of difference in the valuation of Panhala property (A.Y. 2002-03), in not accepting the valuation of the property known as Hotel Shambhavee in A.Ys. 2004-05, 2005-06 and 2006-07. 21. The relevant facts are that the A.O made addition u/s. 69B of the Act on account of unexplained investment in purchase/construction of various properties. These are as under : "A.Y. Farm House Mahabaleshwar Land & Bldg. Panhala Hotel Sambhavi Factory Bldg. 99-00 629412 -- -- -- 00-01 -- -- -- 52655 02-03 -- 622430 -- -- 03-04 -- -- -- -- 04-05 -....
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.....00 Total 8234872.00 6007286.00 1070108 1216170 8293564 R.Off 8235000.00 6007286.00 1070108 1216170 8293564 20. It is mentioned in the assessment order that valuation of the Departmental Valuation Officer did not include cost of land, cost of movable furniture, cost of electronic gazettes, electronic installation, transformers etc. The net difference has been worked out to ₹ 26,64,851/- over a period of years. It is seen from the valuation report that the savings for self supervision has been worked out at 7.5% of ₹ 86,68,286/-. It has been decided in the case of Haripreet Hotels Pvt. Ltd., Aurangabad by the Pune Bench of the ITAT, ITA No. 1156 to 1160/PN/00 and accepted in number of other cases that the deduction on account of self supervision should be 10% instead of 7.5%. The deduction on this account should therefore be ₹ 8,66,828/- instead of ₹ 6,50,121/-. The difference in value works out toRs.2,16,707/-.In the above decision of the Pune Tribunal it has also been held that the CBDT circular followed by the Departmental Valuation Officers refers to the Delhi Plinth Area rates as the base. These rates have to be suitably adjusted for smalle....
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....er, due to the above imperfection in the title, deduction of 10% the value of land is considered sufficient. 24. As regards Panhala land and building, the difference in valuation works out to 17%. The property is also subject to certain disputes with Govt. According to the Govt., certain terms and conditions had not been followed by the property owners and therefore notices had been issued to the plot owners for the deposits of certain sums of money. The dispute was pending when the property was purchased. Since there were liabilities on the property, there would be some amount of discount on the market value. The contention of the appellant has force. However, the appellant has not given any details of the dispute which is pending and the sum of money which is liable to be paid to the Govt. The contention therefore cannot be accepted. It has been held in the case of valuation of other properties above, that a deduction of 15% on the Delhi Plinth Area rates adopted by the Departmental valuer is to be made to compensate for difference of rates between metros and smaller towns. In keeping with this decision, the value of the Mahabaleshwar and Panhala properties would be reduced as ....
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....se, there was specific finding of the Tribunal that the books of account were never rejected. Under these circumstances, the decision of the Tribunal was approved whereby it was held that the assessing authority could not have referred the matter to the DVO when the books of account were not rejected. It is an established proposition of law that there is no need for the A.O to write in specific wording that books of account are rejected in case it is not reliable to deduce the correct income of the assessee and even if the A.O mentions about the non-reliability of the books of account, it is sufficient to draw an inference that books of account have been rejected. In the present case before us, books of account of the assessee have not been found reliable by the A.O to deduce correct income of the assessee, hence the only inference is that books of account have been rejected by him. The ground is accordingly rejected. 24. In A.Ys. 2001-002, 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07, the assessee has questioned the first appellate order firstly on the ground that the Ld CIT(A) was not justified in not accepting the appeal of the assessee on the basis that there is no provision....
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.... The ground is accordingly rejected. 28. The last ground is common in all the A.Ys. under consideration whereby the assessee has questioned its liability to pay interest u/s. 234B and 234C of the Act. 29. The issue raised in the ground is consequential in nature, hence does not need adjudication. It is accordingly disposed of. 30. In result, ITA No. 244/PN/2009 is dismissed, and remaining appeals are partly allowed. ITA No. 316 & 317/PN/2009 31. The revenue has questioned first appellate order firstly on the ground that the Ld CIT(A) has erred in deleting the addition of ₹ 8,28,611/- in A.Y. 2005-06 and ₹ 6,08,438/- in A.Y. 2006-07 made on account of unexplained investment in property (ground no. 1); and secondly, on the ground that the Ld CIT(A) has erred in deleting the addition of ₹ 15,934/- and ₹ 5000/- in A.Y. 2006-07 made on account of wrong claim of deduction u/s. 57 under the head "income from other sources" (ground no. 2). Ground No.1 32. We have already dealt with the issue hereinabove in the case of appeals preferred by the assessee i.e. ITA Nos. 244 to 250/PN/2009 which includes appeals for A.Ys. under consideration as well. Foll....
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....ng the disallowance of the claim made u/s. 57 of the Act (of ₹ 1,07,379 in A.Y. 2000-01, ₹ 50, 931/- in A.Y. 2001- 02 and ₹ 2700/- in A.Y. 2005-06). 37. At the outset of hearing of the appeal, the Ld. A.R. pointed out that the assessee does not want to press this ground as she wishes to move application u/s. 154 of the Act in this regard before the A.O. The ground is, therefore, rejected as not pressed. 38. The other common ground raised in the A.Y. 2000-01 & 2001-02 is that Ld CIT(A) was not justified in confirming the addition of ₹ 80,740/- in A.Y. 2000-01 and ₹ 12000/- in A.Y. 2001-02 received on account of agricultural subsidy. 39. In support of this ground, the Ld. A.R. furnished certificates issued by Divisional Agricultural Officer, Jaisingpur, Dist. Kolhapur, issued on 20th July 2010. The Ld. D.R., on the other hand, relied upon the orders of the authorities below. 40. During the A.Ys. under consideration i.e. A.Y. 2000-01 and 2001-02, the assessee claimed agricultural subsidy as capital receipt, to which, A.O did not agree with and treated the same as revenue receipt. The A.O noted that the subsidy has been treated as a revenue receipt in ....
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....A, 234B and 234C of the Act against the assessee. The same being in consequential nature, we are of the view that it does not need independent adjudication. 45. In result, ITA No. 381, 382 and 384/PN/2009 are partly allowed and 383/PN/2009 is allowed for statistical purposes. ITA No. 385/PN/2009 46. The assessee has questioned first appellate order firstly on the ground that Ld CIT(A) was not justified in holding the appeal not maintainable against protective assessment whereby addition of ₹ 13.50 lacs made on account of loan taken from Shri J.H. Maniyar by the A.O has been upheld. In the second ground, the levy of interest u/s. 234A, 234B and 234C has been questioned. 47. So far as issue raised in ground No. 1 questioning the sustenance of addition of ₹ 13.50 lakhs doubting the credit worthiness of the creditor Shri J.H. Maniyar is concerned, an identical issue under the similar facts of the case has been decided by us hereinabove in the case of Shri Babulal Laxminarayan Malu (Supra). Following the decision taken therein, the matter is set aside to the file of the Ld CIT(A) to decide the issue afresh in the case of the assessee in view of the decision of Nagpur Ben....
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....support of the ground, the ld. A.R. has basically reiterated the submissions made before the authorities below. He submitted that there was no systematic activity of dairy farming. Most of the milk produced was consumed by the family members and sold when it was in excess. He submitted that dairy farming was incidental to the main agricultural activity. The Ld. A.R. submitted that cattles were maintained for the purpose of activity of organic farming of various crops, for which, natural fertilizer was required. The excess milk supplied to the dairy and payments received from were duly accounted in the books . Even the milk supplied to family members was billed and accounted for. He submitted that the A.O did not find any specific defects in the books of account and she has estimated the bill without any basis. The Ld. A.R. submitted further that the fodder of the cattles was a by-product of the agricultural activities carried out in the agricultural farm. It was billed separately since the assessee had admitted to separate dairy farming activity as a profit centre. Ld. A.R. submitted that the cows are purchased from the local market and therefore, they are hybreed and not pure bree....
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....expenditure therefore should be debited to have an accurate idea of the profits of the dairy business. The appellant had given a detailed chart showing average fodder consumption on the basis of which, the amount for sell fodder has been calculated. In the same manner as self fodder is debited to the account, the appellant has credited the dairy account with compost sale since this receipt is relatable to the dairy business. In my opinion, therefore, the expenditure which is claimed by the appellant should be allowed. The income from dairy business should therefore be computed as under; A.Y. Receipts Expenditure Income 2002-03 454086 267020 187066 2003-04 689760 472397 217363 2004-05 765936 576040 189896 2005-06 1093356 751592 341764 2006-07 1444428 845649 598779 The AO is directed accordingly." As discussed above, we find that the ld CIT(A) considering the totality of the fats on the issue has given a reasonable finding taking into account the needed expenditure as pointed out by the assessee. The first appellate order, in our view, is reasoned one, hence we are not inclined to interfere therewith. The same is upheld. The ground is, accordingly, re....
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....ssue that the Ld CIT(A) has deleted the additions made in the hands of respective members of Malu family on the basis of decision taken by the first appellate authority in the case of Rajendra Malu for the A.Y. 2002- 03. The assessee therein tried to explain the source of donation as income received from Venkateshwara Agriculture Farm. The addition therein has been deleted on the ground that without going into the nature of the income on the merit of the addition in the case of Venkateswara Agriculture Farm, the amount of income was available for application for the purpose of the donation. It was pointed out that the A.O had not accepted entire income shown from the agriculture which the assessee tried to explain the source for the donation. A portion of the income declared from agriculture was treated as income from other sources. Thus, it was held that whatever may be the nature of income or the source of income, the fact is that the amount was available for the expenditure by way of donation. The Ld CIT(A) held that the entire income has to be taken for the purposes of cash flow, whether income is assessed as agriculture income or assessed as income from other sources. We have....
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....ch income has been claimed by the assessee. He submitted further that ignoring all these material facts, the ld CIT(A) was not justified in granting complete relief on account of agricultural income claimed by the assessee. 65. The Ld. A.R., on the other hand, submitted that the books of account were regularly maintained regarding the agricultural activities of the assessee on the basis of which, the assessee has been filing its return of income. He referred page Nos. 37 to 69 of the paper book i.e. copies of statement of accounts and returns of income filed for A.Ys. under consideration. He submitted further that copies of all 7/12 extracts made available at page Nos. 70 to 75 of the paper book, were furnished before the authorities below. The Ld. A.R. submitted that in the books of account for its agriculture activities maintained by the assessee, it has shown the agricultural production, sales, labour payment, plant purchases, seeds for green vegetables' purchases and dairy sales. He submitted that at the time of survey action, the books of account were very much there, but were not inventorized. The Ld. A.R. pointed out that the A.O in the assessment order for A.Y. 2002-03....
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....d. A.R. that books of account maintained by the assessee in regular course of the business cannot be outrightly rejected without assigning proper reason for the same but in the present case before us, the availability of books of account regularly maintained remained doubtful as the same was not found during the course of search and seizure or survey operations. The A.O nowhere has accepted any specific wording that books of accounts were found during the course of search or survey operation , hence existence of the same always remained in doubt. Under these circumstances, the only option left with the authorities below was to examine the possibility of acceptance of the claimed agriculture income by the assessee on estimate basis keeping in mind the area of land held by the assessee and agricultural activities, shown by the assessee thereon supported with evidence. The A.O noted that there was substantial cash deposits in the account of the assessee which were stated to be out of agricultural income. From the details furnished of agricultural income, it was seen that while part of agricultural produce was properly billed, some of vegetables and fruits were shown to have been sold ....
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....ribed as mangoes, chikku, banana, coconut, papaya, lemon etc., Regarding vegetable, the ld CIT(A) has observed that compared to the land holding the sale of vegetables at ₹ 15 lakhs over the period of 7 years cannot be said to be an unlikely sum especially when the assessee is primarily an agricultural farm which has been set up for the agricultural activities. He has further noted that the A.O has added the entire amount shown as cash sales as income of the assessee from undisclosed income without appreciating that if this income is removed from the agricultural receipt, a peculiar situation emerges in which in almost all the years, the income is lower than the total expenditure debited to the books resulting in loss from agricultural activities, which is unusual to say. He has also noted that the production of fruits is within the standards published by Indian Government bodies. He has also noted that yield of fruits and vegetables per unit area was compared with the standards evolved by the National Housing Bank for the purpose of agricultural credit. He noted that except in the case of banana the standards of yield followed by NHB are much higher than the actual yield obt....