TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 583
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....njustified, arbitrary and against the facts of the case. Relief may please be granted by appropriately working the peak balance. 2. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of ld. AO in treating the opening balance of capital account of Rs. 4,31,450/- as undisclosed income. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said additions of Rs. 4,31,450/-. 3. In the facts and circumstances of the case and in law the ld. AO has erred in estimating the net profit @ 8% against the declared net profit rate of 2.30% resulting into trading addition of Rs. 6,23,202/-. The action of ld. AO is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the trading addition of Rs. 6,23,202/-." 2. Briefly stated, the facts of the case are that the assessment was completed u/s 143(3) read with section 144 wherein the AO has treated cash deposit of Rs. 10,33,563/- as undisclosed income in the hands of the assessee. Further, the opening balance of capital account of Rs. 2,51,450/- was also tre....
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....idering the contention of the assessee on the basis of surmise and conjecture, in a very summary manner upheld the addition made by the ld. AO. 3.6 It is clear that lower authorities have erred in interpretation of section 69. As per the language of section, ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. A discretion has been conferred on the ITO under section 69 to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case. Reliance is placed on the decision of Hon'ble Supreme Court in the case of CIT vs. Smt. P.K. Noorjahan [1999] 103 TAXMAN 382 (SC) wherein it is held as under: " ..The submission is that once the explanation offered by the assessee for the sources of the investments found to be nonacceptable the only course open to the ITO was to treat the value of the investments to be the income of the assessee. The submission is that the word 'may' in section 69 should be re....
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....e amounts in the undisclosed Bank Account, the peak credit has been arrived at and added as undisclosed receipts. Further, the Assessing Officer has telescoped the addition of business income with the addition for the amounts found in Bank Account. In the present proceeding the AR has submitted that the addition of Rs. 4,10,361 may be deleted / telescoped with 8% of turnover. This plea of the AR cannot be heeded to as the telescoping has already been correctly allowed by the Assessing Officer. This ground of appeal is dismissed." 6. We have heard the rival contentions and purused the material available on the record. The ld CIT(A) has returned a finding that "this is the first year of business in liquor, of the assessee. The assessee initially did not disclose this Bank Account and also the cash book produced by the assessee did not have any entry related to this account. This was an account which was concealed and was being used to deposit unrecorded receipts of the assessee." Given that the cash deposits were found deposited in the bank account maintained by the assessee in his own name, the onus is on the assessee to demonstrate that these deposits are out of his business trans....
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....t. * Copy of affidavit of the assessee' father, accepting the fact that gift of Rs. 6,31,450 was given by him to the assessee. * Copy of receipt from Newai Krishi Upaj Mandi for a recent sale transaction of Rs. 1,42,650 . * Certificate from Sarpanch of village stating that a land is owned by the father of the assessee on which cultivation is done. 3.3. It is submitted that Id. CIT(A) erred in holding that since Bank Statement of the assessee's father and Gift Deed evidencing such gift has not been produced, the transaction is not genuine and the creditworthiness is also not established. 3.4 It is submitted that the assessee has produced all the possible evidences as stated above in order to establish creditworthiness of his father. It is a well known fact that farmers generally do not maintain Bank Accounts and don't even keep Books of Account since their income is exempt from tax. The assessee's father is also a farmer and from past many years till date is engaged in carrying out agriculture activities on his land. The assessee by providing Jamabandi, Girdawari Report, Certificate of Sarpanch and latest photographs of his land has proved the creditworthines....
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....ty and taken us through the order of the ld. CIT(A) at para 3.3. "3.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. The opening balance of capital account of Rs. 6,31,450/- was sought to be explained by the assessee as gift from the assessee's father, who is an agriculturist. The Authorized Representative further submitted a copy of Khasra Giralawari Report, some photographs of crops being cultivated and an affidavit from the father stating that the gift had been given, confirmation of sale of crop of mustard and a certificate from the Sarpanch of village Gunshi, in the present proceeding in support of the creditworthiness of the father to extend the gift referred above. All evidence now filed were forwarded to AO for his comments also. The assessee has submitted an affidavit of the father affirming that he owns agricultural land and an amount of Rs. 6,00,000/- was given by him to his son as gift and the amount was paid in cash. Further as no gift deed was executed, this affidavit can at best acknowledge that the father is making a claim of having made the gift and also regarding his land holding, but the important questi....