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2018 (5) TMI 500
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....ience. First we take up assessee's appeal in ITA No. 2818/Kol/2013. 3. The grounds raised by the assessee per its appeal are as under:- "1. For that the Ld. Commissioner of Income Tax (Appeals) erred both in law and in fact by confirming the following expenses, which were incurred exclusively for the purpose of business in spite of the fact that the Ld. Assessing Officer in his remand report does not raise any objection against all these expenses, though the assessment was made ex parte u/s. 144 of the I Act, 1961. a) Freight - Rs. 31,400/- b) Power & Fuel - Rs. 55,600/- c) Salaries, wages & bonus - Rs. 1,98,500/- d) Travelling expenses - Rs. 28,780/- 2. For that the Ld. Commissioner of Income Tax (Appeals) erred both in law and in fact by confirming 50% of material expenses amounting to Rs. 1,52,719/- whereas total miscellaneous expenditure debited in the profit & loss account was Rs. 11,650/-. Hence, it is prim facie wrong and without any basis. 3. For that the Ld. Commissioner of Income Tax (Appeals) erred both in law and in fact by reducing the agricultural income by Rs. 2,40,000/- only instead of Rs. 16,68,43....
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....rmed the order of AO by observing as under:- "(ii) As regards the claim of expenses under the other head e.g. payments claimed for salary, wages & bonus at Rs. 1,98,500.00, freight, power & fuel, conveyance/travelling, I find that these expenses are incurred mainly for the agricultural activity, income of which is exempt. Hence, I am of the view that the AO was perfectly correct in disallowing the said expenses. Hence, the disallowances made under these heads of expenses claimed are confirmed." Being aggrieved by this order of Ld. CIT(A) assessee has come up in an appeal before us. 7. Ld. AR for the assessee before us filed two sets of paper book which is running pages from 1 to 18 (1) and 1 to 95 (2) respectively and submitted that the assessee besides agricultural has also declared other taxable income which was accepted by the Revenue. Ld. AR in support of assessee's claim drew our attention on audited profit and loss account which is placed on page 10 of the paper book (1). Ld. AR also submitted that assessee being a body of corporate has to incur certain expenses in order to keep its status active. Therefore, disallowance of all the expenses cannot be made. ....
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....e cannot be just brush aside. Therefore the disallowance of the entire expenses cannot be made. But at the same time the amount of expenditure necessary for the sustenance of the company and which has nexus with the business activity of the assessee is eligible for deduction. Thus in the absence of the information we are of the view that all the expenses incurred by the assessee cannot be treated as business expenses. Therefore in our view after considering the entire facts of the case the justice shall be served if the disallowance made by the AO is restricted to the reasonable extent. Hence, in the interest of justice & fair play we are inclined to restrict the disallowance of the expenses to the tune of 50% of the expenses claimed by the assessee. In view of above we restrict the disallowance to the extent of 50% of the expenditure as discussed above. Accordingly, AO is directed. Thus, the part ground regarding salary, wage & bonus of appeal of assessee is partly allowed. 9. Next issue raised by assessee in ground No.2 is that Ld. CIT(A) erred in restricting the disallowance of miscellaneous expenditure from Rs. 3,05,438/- to Rs. 1,52,719/- only. The assessee in the yea....
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....ring any satisfactorily reply. Hence we have no hesitation to reverse the order of authorities below. Accordingly AO is directed. Hence the ground of appeal of the assessee is allowed. 13. Next issue raised by assessee in ground No.3 is that Ld. CIT(A) erred in reducing the agricultural income to Rs. 2.40 lakh instead of Rs. 16,68,430/-. 14. The assessee in the year under consideration has shown its agricultural income of Rs. 16,68,430/- but during the course of assessment proceedings assessee failed to furnish the supporting evidence to justify that it has earned income from agricultural activities. Therefore, the AO treated the entire agricultural income as "income from other source". 15. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that supporting evidence to justify the earning of agricultural income was shown during assessment proceedings. The assessee also contended that similar income was also shown in the earlier year which was accepted by the Department. The assessee also submitted that it has incurred expense in connection with agricultural income which needs to be set off to determine the correct agricultura....
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....agricultural source, in that case the net income is required to be computed by deducing the relevant expenses debited to P&L A/c from the agricultural sale proceeds credited for consideration as the appellant's income from other source and not the entire of such sale proceeds. I also find force in the argument of the A/R that since the appellant company owned 12 Acres of agricultural lands in a place where the agricultural income shown by the husband of one of the directors is accepted by the Department, the claim of agricultural income of the appellant should not have been doubted. I have considered the enquiry findings of the AO while he was trying to ascertain the veracity of the claim of the appellant regarding the extent of agricultural income. I have also gone through the judgements of the case laws relied upon by the appellant. In view of the above and after considering the entire facts and circumstances of the case, I am of the considered view that the AO was not justified in treating the entire sale process of the agricultural produce as income of the appellant. Therefore, the AO is directed to work out the net income (A) shown by the appellant under this source b....
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....nga, District Burdwan, West Bengal. It is also undisputed fact that the husband of one of the Director namely Shri Deb Kumar Sinha of the assessee company also owned a piece of land about 4 acres in the same area. Shri Deb Kumar Sinha has declared an agricultural income of Rs. 10,25,000.00 in the AY 2003-04 in respect of the aforesaid land which was allowed by the Hon'ble ITAT in the case of ITO Vs. Shri Deb Kumar Sinha in ITA No. 2101/Kol/2006 vide order dated 30-04- 2007. The relevant extract of the order is reproduced below:- "10. We have given our careful consideration to the rival submissions mad before us and have perused the orders of tax authorities. In this case, the AO has disallowed the claim of the assessee observing that the assessee has not claimed such agricultural income in the immediately preceding year and has failed to file the details of the buyers of such agricultural trees. However, the ld. CIT has given a categorical finding that the assessee has shown agricultural income in the previous year also and the Department has accepted the same. Apart from the above fact, we have also considered the remand report by the AO in which he has not controverted t....
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....sh balance of Rs. 3,78,525/- as unexplained cash credit by observing as under:- "Decision The submissions and counter submissions are considered and the facts of the case perused. The judgments referred by the appellant are also gone through. I do not find any merit in the argument put forward on behalf of the appellant. The facts of the case laws relied upon by the appellant are distinguishable from the facts of the appellant. Moreover, I do not find any merit in the explanation offered by the appellant regarding the shortage of cash in the cash book on the different dates from 24.09.2005 to 25.02.2006 even though the appellant made investment in the property in question during the period. Therefore, I agree with the findings of the AO that the reply of the appellant indicates that its audited books of accounts were not correct as incorrect entries were made in the cash book. Even if the statement of the assessee is taken to be true, the assessee company did not explain how it had negative cash balance of Rs. 3,78,525/- on 27/01/2006. In view of the above discussion and finding, the explanations offered by the appellant either before the AO or before me ....
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....merits of the claim for relief in respect of super-tax. It was at that stage that counsel for the assessee stated that he wanted to lead certain evidence in respect of the claim for the assessee-firm for relief from super-tax. That this was what happened before the Tribunal is expressly stated in the order of the Tribunal and it is only in this background and in this context that the words relating to vacating the order of the Appellate Assistant Commissioner and restoring of the appeal must be read. It is true that read by itself the last sentence of the order would suggest that the Appellate Assistant Commissioner was being directed to deal with the entire appeal on its own merits. The order of the Tribunal must, however, be read and understood in the proper context and in the light of all that is stated in the order itself and if we do so, as indeed we should do so, there is considerable force in the submission on behalf of the assessee that the order must be read as restricting the scope of the inquiry by the Appellate Assistant Commissioner only to the question of merits affecting the claim for relief from super-tax. We must, however, observe that there is in this case scope f....
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....edings. Thus we are inclined to reverse the order of authorities below. Accordingly, AO is directed. Hence, the ground of appeal of the assessee is allowed. 22. In the result, assessee's appeal is partly allowed. Coming to Revenue's appeal in ITA No.04/Kol/2014. 23. The revenue has raised the following grounds:- "1. That is the facts and in law of the case the Ld. CIT(A) erred in deleting the addition made by the AO under the head liabilities amounting to Rs. 14,90,887/- and provisions amounting to Rs. 28,259/- ignoring the Asst. Order as well as Remand Report made by the AO. 2. That is the facts and in law of the case the Ld. CIT(A) erred in deleting the addition made by the AO under the head secured loans amounting to Rs. 65,00,000/- though the assessee was unable to prove identity, authenticity & creditworthiness of the loan creditor." 24. First issue raised by Revenue in ground No.1 is that Ld. CIT(A) erred in deleting the addition made by the AO for Rs. 14,90,887/- and Rs. 28,259/- on account liability and provision respectively. 25. The assessee in its balance-sheet has shown liabilities and provisions of Rs. 14,90,887 and Rs. 28,259/- only. B....
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....the assessment order of the Assessing Officer for the said year and the audited balance-sheet with P&L A/c. Under the facts and circumstances of the case, the addition made by the AO is hereby deleted and this ground of appeal is allowed." Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 27. Ld. DR for the Revenue before us submitted that the addition has been deleted by Ld. CIT(A) on the basis of additional evidence which was accepted in contravention to the provision of Rule 46A of the IT Rules, 1962. Accordingly, Ld. DR prayed before the Bench to restore the matter before AO for fresh adjudication in accordance with law. On the other hand, Ld. AR for the assessee submitted that merely non-finding the company at the given address cannot be the basis of making the addition in the hands of the assessee. The AO erred in not considering the confirmation furnished by CSIL. He further reiterated the same arguments that were made before Ld. CIT(A) though he relied on the order of Ld. CIT(A). 28. We have heard the rival contentions of both the parties and perused the materials available on record. It is not disputed that the current liabilities of R....
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....igned any confirmation. Ld. AO also submitted Shri Asit Roy was not the proprietor of SM during the financial year 2005-06. However, assessee in his rejoinder submitted that Mr. Asit Roy has appeared before AO in compliance to the notice issued u/s 131 of the Act. There was a confirmation from the manager of UCO Bank, where bank account of SM was maintained and confirmed that cash credit limit of Rs. 175 lakh was sanctioned to SM. Shri Asit Roy has not denied the transaction of loan in his statement furnished u/s. 131 of the Act. The assessee also submitted that all the transactions were routed through banking channel of the assessee as well as SM. The Ld. CIT(A) after considering the submission of assessee deleted the addition made by the AO by observing as under:- "4.5.5 Decision: I have carefully considered the submission put forth on behalf o the appellant along with the supporting details/documents furnished, case laws relied upon, perused the facts and case records including the findings of the AO in the impugned assessment order and other materials brought on record. It is contended by the A/R of the appellant that the genuineness of the identity, genuinene....
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....ndoubtedly proves the creditworthiness of the creditor, the above loan of Rs. 65,00,000 (Rs.35 lakhs + Rs. 30 lakhs) are reflected in the two bank statements i.e. one of the loan creditor and another of the appellant. Thus, the genuineness of the transactions is proved. As regards observation of the AO that during the relevant period, Shri Mudranalaya was not a proprietorship concern, it was a partnership concern, it is stated that from thee two bank statements filed along with the other evidences, it would be revealed that both the partnership bank account as well as the proprietorship bank account of Shree Mudranalaya were maintained by Shree Mudranalaya in the same bank branch i.e. UCO Bank, Carnawalis Street Branch, Kolkata. the account numbers are 2836 of the proprietorship and 4294 of the partnership, which was opened on 29.042006. Therefore, it is argued that it cannot be said that only the firm's account in the UCO Bank was operated. Here it is proved that both the accounts of the firm i.e. partnership and the proprietorship were operated by the proprietor / partner of M/s Shree Mudranalaya. Therefore, it is proved beyond any doubt the identity of the creditor, cre....