TaxTMI 
TaxTMI 
2018 (8) TMI 1041
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....2(1) of the Act were served upon the assessee. The income of Rs. 78, 000/- declared in the return filed on 31. 03. 2004. Necessary details as called for were filed. During the course of assessment proceedings Ld. AO, on going through the statements given by the assessee during the survey proceedings as well as various loose papers seized marked as LP-01 to LP 04, observed that there were three bundles of promissory notes. As per these promissory notes amounts were advanced to various persons on credit and interest rates as well as date of receiving the money and advance money were mentioned. In the statement given during the course of survey the assessee accepted undisclosed income of Rs. 9, 00, 000/- being offered to tax on account of promissory notes. However, as the assessee did not declare the alleged surrendered income in the income tax return. The ld. AO being not convinced with the submissions of the assessee made an addition of Rs. 7, 15, 900/- and addition of interest on promissory notes at Rs. 99, 848/-. The Ld. AO also made addition of Rs. 17, 000/- for understatement of net profits and addition for unaccounted purchase at Rs. 1, 36, 864/-. In total addition of Rs. 9, 70....
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....unted investments in promissory notes and also against the addition confirmed for the interest income of Rs. 99, 848/-. 7. The Ld. Counsel for the assessee vehemently argued referring to the written submission given before the Tribunal and the same are reproduced below; 7. 1 That in the said ground of appeal the assessee has challenged the addition as made to the Total Income of the Assessee of Rs. 7, 15, 900/- on account of Amount Advanced against the Promissory Notes during the year under consideration. List of such promissory notes is given on Page Nos 28 & 29 of the Compilation. 7. 2 A Survey proceedings was carried out at the business premises of the assessee u/s 133A of the Income Tax Act on 27. 05. 2003 i. e. during the previous year relevant to the Asst Year 2004-05. The assessing officer on the basis of Promissory notes as found in possesison of the appellant observed that these were not incorporated in the regular books of account of the appellant. The appellant received Promissory notes from the debtors from whom goods were sold and amount was not realised in time. The amount of Promissory notes relates to the amount of sundry debtors as shown in the Balance she....
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....tself. Detail of the same is enclosed on page 17 of the paper book. Further it was also been explained to the Ld. A. O, that an amount of Rs. 70400/- out was received out of Promissory Notes pertaining to A. Y. 2000-01 to 2002-03. Detail of the same is enclosed on page 17 of the paperbook. Summary of the same is as under:- F. Y. Total Amount Advanced Realisations as per the Noting on Promissory Notes Balance as on 31. 03. 2003 1999- 2000 2000- 01 2001-02 2002-03 1999- 00 54200 5000 30000 19200 2000- 01 65500 0 0 23000 20000 22500 2002- 03 715900 0 0 0 259900 456000 Total 918400 5000 1330 23000 330300 558770 7. 3. 4 That in view of the above, the amount of promissory notes as found in possession of the appellant was duly explained and properly reflected in the Statement of affairs as filed with the return of total income before the assessing officer. The Ld CIT [A] while deciding the appeals for the Asst Years 2000-01, 2001-02 and 2002-03 has also accepted similar contention of the appellant. The addition of Rs. 7, 15, 900/- is th....
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.... 9. We have heard rival contentions and the perused the records placed before us. The assessee has challenged the finding of Ld. CIT(A) confirming the addition of Rs. 7, 15, 900/- for the alleged unaccounted investment in promissory note and addition of Rs. 99, 848/ made by the Ld. A. O calculating interest on promissory note not offered to tax. 10. This fact is not disputed by the assessee that during the course of survey promissory notes were found which indicated that the assessee apart from his business of retail trading was also engaged in money lending business by way of giving short term advances on interest. Perusal of the promissory notes placed in the paper book indicates the amount advanced on interest, name of the money lender, name of the borrower, date of signing the promissory note and rate of interest. The Ld. Counsel for the assessee in its contentions has referred to the findings of Ld. CIT(A) for other assessment years which are connected to the survey proceedings wherein assessee has been granted relief for the additions made on promissory notes was deleted. It is true that the amount of addition in the other assessment years are very small and the maximum....
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....s to whether the assessee was having explained source to cover up the investment in the promissory notes. For reaching to the correct conclusion we have gone through the computation of income and statement of affairs filed by the assessee during the A. Y 1999-2000 placed at page 103 of the paper book which shows that the assessee was having closing capital balance of Rs. 6, 43, 781/- and sundry creditor of Rs. 68, 409/-. Against the total of Rs. 7, 32, 190/- on the liability side assessee has shown investments in PPF, closing stock, old property, sundry debtors of Rs. 49, 200/- and cash in hand and bank balance of Rs. 1, 09, 200/-. In this statement of affairs Rs. 49, 200/- is the amount shown as sundry debtors and promissory notes found for this year were at Rs. 54, 200/. Similarly in the financial year 2000- 01 sundry debtors of Rs. 1, 14, 700/- have been shown in the statement of affairs and promissory notes at Rs. 65, 555/- and as far as financial year 2001-02 is concerned debtors have been disclosed at Rs. 1, 26, 430/-. From the perusal of statement of financial statement filed by the assessee the source of investment in assets has been explained by way of opening balance, inc....
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....ay of issuing promissory notes. Ground No. 1 of the assessee is partly allowed. 17. As regards Ground No. 2 relating to alleged interest income of Rs. 99, 848/- as interest on promissory notes we are of the view that the assessee deserves set off of interest income of Rs. 20, 000/- shown in the income tax return and we accordingly accept the alternate submission of the assessee and confine the addition to Rs. 79, 848/-. In the result Ground No. 2 is partly allowed. Ground No. 3 18. Now we came to Ground No. 3 which reads as follows; "3. That on the facts and in the circumstances of the case the Ld. CIT(A) erred in maintaining the addition of Rs. 137864/- on account of alleged investment in purchases by observing that such purchases were not recorded in the regular books of accounts and assessee has failed to furnish the source of investment. " 19. Brief facts of this ground are that the Ld. Assessing Officer on the strength of the list of purchase bill and loose papers bundle appearing at LP-4 found during the survey noticed that there was unaccounted investment in purchase of Rs. 1, 37, 864/-. It is contended by the assessee that it offers income u/s 44AF of t....
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....lanation given by the appellant is not satisfactory, the Assessing Officer can disbelieve the alleged transaction of loan: given. But the law is equally settled that if the, initial burden is discharged by the appellant by producing sufficient materials in support of the unexplained money, the onus shifts upon the Assessing Officer and after verification, he can call for further explanation from the appellant and in the process, the onus may again shift from the Assessing Officer to the appellant. It has been held in the case of CIT vs. K. T. M. S. Mohammad {1997} 92 Taxman 169/228 ITR 113 (Mad. ) that the burden of proof is always on the assessee. Therefore, the appellant failed to discharge the burden of proof by not establishing the source of investment in the promissory notes. Therefore, the addition made by the AO on this ground amounting to Rs. 7, 15, 900/- is Confirmed. The appeal on this ground is Dismissed". 20. Now the assessee is in appeal before the Tribunal. The Ld. Counsel for the assessee submitted that assessee is an Individual carrying on the business of Trading of Pump Sets, its parts, GC Sheets and PVC pipes etc. at Garoth under his Prop. Con....