TaxTMI 
TaxTMI 
2018 (10) TMI 1625
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....tain to the A.Yrs. 2007-08 to 2011-12. During the assessment, the AO made various additions and the details of returned income, additions made and the assessed income are tabulated as under: Particulars 2007-08 2008-09 2009-10 2010-11 2011-12 Returned income 34,92,176 2,67,24,730 1,23,23,550 54,32,410 1,16,77,560 Unexplained cash credit u/s.68 32,50,000 46,00,000 68,10,000 Unexplained expenditure u/s.69C 3,50,000 -- -- 1,58,06,000 4,00,000 Unexplained money u/s.69A -- -- -- -- 38,41,000 Unexplained investment in jewellery -- -- -- -- 2,20,000 Unexplained investment in Fixed Deposit u/s.69 2,30,970 -- -- -- -- Unexplained investment in land -- -- 1,06,42,500 -- -- Excess claim of agricultural income 23,004 19,98,851 3,09,640 14,52,247 5,28,293 Income from house property -- 75,600 -- -- -- Cash payment to Shrushti Sangam 10,00,000 -- -- -- -- Assessed Income 3,97,46,150 3,20,49,181 2,78,75,690 2,95,00,657 1,66,66,843 2.1 Referring to the additions made by the AO, giving the fate of these additions before the CIT(A), assessee filed issue-wise chart raised in both appeals of Reven....
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....is relevant for the A.Yrs. 2008-09 to 2010-11. Referring to the chart mentioned above, Ld. Counsel for the assessee submitted that the assessee received loans from various creditors and the same were added by the AO u/s.68 of the Act. CIT(A) granted part relief. Aggrieved with the same, the Revenue is in appeal on the sum of Rs. 25 lakhs for A.Y. 2008-09. Further, the CIT(A) confirmed the addition of Rs. 7,50,000/-. Therefore, the assessee is in appeal on this part of the addition. For other assessment years also, i.e. A.Yrs. 2009-10 and 2010-11, as seen from the table above, both Revenue and Assessee are in appeal. 4.1 Going into the details of the addition on account of loans for the A.Y. 2008-09, the total loans in this year amounts to Rs. 1,24,17,886/-. There are 8 creditors in this year namely (1) Bipin Shah (HUF)- Rs. 2,50,000/- (2) Harsha C. Vora-Rs.6,00,000/- (3) Kalpana D. Shah- Rs. 3,50,000/- (4) Dilip A. Shah-Rs.2,50,000/- (5) Hetel Enterprises- Rs. 5,00,000/- (6) Neeta S. Jain-Rs.5,00,000/- (7) Sambhav Deep- Rs. 5,00,000/- and (8) Tarla D. Shah-Rs.3,00,000/-. The details are given in the table at Para No.3.2.1 of the order of CIT(A). AO added the said amount of Rs. 32.....
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....at the assessee's application before ITSC is genuine one, Ld. AR submitted that the loan transactions are genuine. Therefore, the addition made by the AO is fully unsustainable. However, on evidences filed by the assessee, AO raised objections with regard to the inaccuracies with reference to signatures and the Permanent Account Numbers of the creditors. 4.3 On considering the submissions made by the assessee before the First Appellate Authority, the CIT(A) granted part relief to the assessee barring unsecured loans of Rs. 2.50 lakhs and Rs. 5 lakhs contributed by Mr. Dilip A. Shah and Smt. Neeta S. Jain respectively stand confirmed for the A.Y. 2008-09. Relevant paras are extracted here as under : "3.2.7 I do not agree with the learned AO. During the appellate proceedings, the Appellant has furnished the additional evidence in terms of the loan confirmation letters, ledger accounts of the lenders showing the loan transaction by cheque and copy of the acknowledgment of the return filed by the lenders. This evidence was forwarded to the learned AO for his remand report. The learned AO in his remand report has repeated the same facts, which were mentioned in the assessment order w....
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....the assessee to the extent of Rs. 25 lakhs, the Department is in appeal and aggrieved with the confirmation of addition of Rs. 7.50 lakhs, (i.e. Rs. 2.50 lakhs and Rs. 5 lakhs by Mr. Dilip A. Shah and Smt.Neeta S. Jain respectively), the assessee is in appeal. 4.5 Similarly, for the A.Y. 2009-10, there are 8 creditors. The CIT(A) granted relief to the tune of Rs. 40,70,000/- and confirmed an amount of Rs. 5,30,000/- involving 3 creditors namely (1) Shri Dilip Shah (HUF) - Rs. 85,000 (2) Smt. Rekha Shah - Rs. 1,45,000/- and (3) Smt.Varsha S.Shah - Rs. 3 lakhs). Contents of Para No.4.2.5 of the order of CIT(A) are relevant. The reasons for granting relief to the assessee to the tune of Rs. 40,70,000/- are given by the CIT(A) vide the discussion in Para Nos. 4.2.2 to 4.2.5. For the sake of completeness, the operational para No.4.2.5 is extracted here as under : "4.2.5 Findings on this Ground of Appeal are covered by the findings on Ground of Appeal 2 of the A.Y. 2008-09. Same findings will be applicable here. However, I find on the examination of the loan confirmations submitted by the Appellant that the lenders - Shri Dilip Shah (HUF) with the loan amount of Rs. 85,000 has not sig....
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....firmation letters filed by the assessee, their signatures, their PAN Numbers, lack of credit worthiness, etc are essentially the reasons for confirming the additions by the CIT(A). From the Revenue side, the grant of relief despite the offer of additional income on account of bogus investments in shares before the ITSC, the CIT(A) granted relief on account of loan creditors without going into the facts. In all other cases of creditors, the documentation furnished by the assessee was accepted by the CIT(A) to a large extent and the creditors were found genuine. AO is of the opinion that the "bogus investors in Equity" cannot be "genuine loan creditors". CIT(A) relied heavily on the remand report furnished by the AO in this regard. However, CIT(A) rejected the AO's contention that all the transactions undertaken by the persons whose transaction that the share application money contributed to M/s. Bhagyalaxmi Dairy Pvt. Ltd., are bogus. CIT(A) is of the opinion that non-genuine transactions were already offered by the assessee through the ITSC and it has become final. Therefore, it is an admitted fact that there are common names in the loan creditors and the list of investments in sh....
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....the assessee's own records on this issue, AO held that net profit rate of 40% of gross agricultural income is reasonable. Accordingly, the AO disallowed the balance based on the internal data of the assessee. The net profit rates of the assessee from the total agricultural income are (1) A.Y. 2007-08-47.78%; (2) A.Y. 2008-09- 72.49%; (3) A.Y. 2009-10 -44.83%; (4) A.Y. 2010-11 - 88.32%; and (5) A.Y. 2011-12 - 48.05% respectively. At the end of the proceedings, the AO determined the net agricultural income @40% of the gross agricultural income. However, the CIT(A) granted additional benefit to the assessee by stating that the net agricultural income @65% of the gross agricultural income should be reasonable. Contents of Para No.2.5.5. of the order of CIT(A) are self explanatory and the same reads as under : "2.5.5 However, I agree with the learned AO that the net agricultural income @88% of the gross agricultural income is highly excessive and is not in accordance with the reality. It is known that an expense as low as @12% of the gross agricultural income is not prevalent in agricultural activity. Therefore, According to me, this is not the case of the excess agricultural income d....
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....ssessed at 40% of the gross agricultural income CIT(A) - Net agricultural income is assessed at 65% of the gross agricultural income Assessee-Net agricultural income is assessed at 88% of the gross agricultural income Considering the adhocism involved in this matter, we find the average of all the above comes very close to the decision of 65% as held by the CIT(A) in his order. Therefore, we are of the opinion that the decision of CIT(A) is appropriate and it does not call for any interference. Accordingly, the relevant grounds raised by the assessee are dismissed. 6. The third issue relates to unexplained expenditure on account of Elections. This issue is relevant for the A.Yrs. 2007-08 and 2010-11. Relevant facts include that the AO made addition of Rs. 3.50 crores in the A.Y. 2007-08 and Rs. 1,58,06,000/- for the A.Y. 2010-11. There was search and seizure action on the assessee u/s.132 of the Act on 04-02- 2011. During the search, certain papers were seized from the office premises of M/s. Parag Milk and Milk Products Pvt. Ltd. Analysis of the writings on the said papers revealed that the same pertains to the details of the expenditure incurred during the elections of Zill....
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....CIT(A) to give credit of Rs. 14 crores against the additions made in the individual members. CIT(A) considered the above submissions of the assessee and gave a finding in favour of the assessee and deleted the addition of Rs. 3.50 crores as per the discussion given in Para No.2.2.4 of the impugned order and the is extracted here as under : "2.2.4 I have considered the facts and arguments of the Appellant. I have also gone through the order of the Honourable Settlement Commission. I find in the para 10.4 of the order of the Honourable Settlement Commission that the Appellant had incurred unaccounted expenditure totaling Rs. 5.12 cr. It has been stated the Appellant group had offered income of Rs. 14 cr in its settlement application on account of the unaccounted expenditure. Subsequently, the Appellant offered the additional income of Rs. 4 cr on this account. Accordingly, I find that this issue is covered by the order of the Settlement Commission. Therefore, I delete the addition of Rs. 3,50,00,000 made by the learned AO." 6.3 Before us, Ld. Counsel for the assessee made written submissions which is found very close to the written submissions made before the CIT(A). Contents of P....
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....ld not establish that the assessment year specific amount of Rs. 14 crores. He also mentioned that the total expenditure is Rs. 18.86 crores offer of the assessee is only Rs. 14 crores. Ld. DR could not explain about the balance of Rs. 4.46 lakhs stands taxed and the assessment year details. 6.5 We heard both the sides and perused the orders of the Revenue and facts before the ITSC. The seized documents reflect the election expenditure of Rs. 18.86 crores. The family members of the assessee are also undisputedly involved in this expenditure. Assessee offered Rs. 14 crores in two instalments ( Rs. 10 cr. + Rs. 4 cr.) in the application before the ITSC and the same has been accepted by the ITSC. Thus offer of additional income was made in the hands of the companies. Additional income was not offered in the hands of the names appearing in the seized papers. Going to the bifurcation of this claim of expenditure outside the books of account, the case of the AO is that a sum of Rs. 5.12 crores was incurred by Devendra P. Shah (assessee). It is also the claim of the assessee that the entire unexplained expenditure on elections of Rs. 5.12 crores was owned up by the company and paid the t....
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....issions of assessee is duly considered but not acceptable. Assessee neither during search nor during assessment proceedings, stated that disclosure made on this issue was not correct. Further, assessee made no comments on page No.12, which contains. Receipt on the letter lead of srushti sangam in the name of Devendra Shah against short term loan dated 28.04.06 at Rs. 10 lakhs. Inference is drawn that cash was paid by assessee to srushti sangam and the same is also admitted by assessee. Accordingly, Rs. 10,00,000/- is added back in the income of assessee being unexplained expenditure. Penalty proceedings u/s.271(1)(c) is initiated separately for concealment of particulars of income." 7.1 During the First Appellate proceedings, assessee made various submissions stating that the assessee paid Rs. 10 lakhs towards the loan and the loan was never returned. Eventually, the said loan has become irrecoverable resulting in bad debt and, therefore, the assessee requested to allow the claim as deduction as bad debt. He relied on the High Court judgment in the case of Indo Airways Pvt. Ltd. 349 ITR 85 (Delhi) and others. Eventually, the CIT(A) confirmed the addition made by the AO as per the ....
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....T decision Ghanshambhai Thakkar 56 TTJ 460 and Chuturvedi & Pithisaria page 4907. 6.4 The seized paper page No.13, which is original cheque given by the said party, which is not encashed (Refer Page No.114 of PB-1) and therefore this evidence also supports the contention of the appellant that the said amount is lost and is allowable as deductible. Thus, in totality effect of seized papers nothing can be added in the hands of appellant. 6.5 It is submitted before your Honour that the seized material has to be considered in its entirety, including those which favour the assessee, reliance was placed on the decision of Hon'ble Delhi High Court in the case of CIT Vs. Indeo Airways Pvt. Ltd. 349 ITR 85 (Del). 6.6 As the amount is irrecoverable, it is a loss which is allowable as deduction and therefore net addition called for is NIL. It is submitted that the addition made by AO and confirmed by the CIT(A) be deleted." 7.3 On the other hand, Ld. DR relied on the orders of AO/CIT(A). 7.4 We heard both the sides and perused the orders of the Revenue and the written submissions of the assessee. We find the case of the assessee is that amount of Rs. 10 lakhs was paid and the same was ne....
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....sits of Rs. 2,30,970/- and the same is not reflected in regular books. Accordingly, Rs. 2,30,970/- is treated as undisclosed income of the assessee as unexplained investment in fixed deposits u/s.69 of the Act." Eventually, the AO made addition of Rs. 2,30,970/- invoking the provisions of section 69 of the Act. AO held that the investments are not recorded in the books of account of the assessee. AO treated the same as undisclosed income of the assessee as unexplained investment in FDs. 8.2 In the First Appellate proceedings, assessee made various submissions and discussed the details of FDs maintained by the assessee in different banks and Pat Sansthas. CIT(A) noted that the assessee never filed the returns in HUF capacity before the search action. No financial statements of the HUF were also filed. CIT(A) observed that the FDs are held in the individual names not in the name of the HUF. CIT(A) extracted the written submissions of the assessee in Para No.2.3.3. and also considered the additional evidences furnished by the assessee before him. CIT(A) called for the remand report on the said documents. CIT(A) also called for the counter comments from the assessee on the findings o....