TaxTMI 
TaxTMI 
2018 (10) TMI 1625
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.... non-abated assessments etc. The appeals pertain 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 ....
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....on six counts namely (1) addition on account of loan u/s.68 of the Act; (2) addition on account of agricultural income; (3) addition of unexplained election expenses; (4) addition of unexplained silver; (5) addition of unaccounted investment in loan given; and (6) addition of unexplained investment in FDR. 4. Addition of unsecured loans u/s.68 of the Act : This addition 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 S....
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....essee-Parag Milk Foods Pvt. Ltd. filed an application before the ITSC. The contribution in the form of share application money to M/s. Bhagyalaxmi Dairy Pvt. Ltd. were treated as not genuine and offered to the taxation. The contribution made by the said creditors in the form of unsecured loans should not be treated on par with the same and hold that the loan creditors are bogus too. Stating that 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 App....
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.... else on their behalf as 'for'. Since, the loan confirmation is not signed by the lender, the requirement of establishing genuineness of the loan transaction is not satisfied. Therefore, I confirm the addition of Rs. 7,50,000/-. Accordingly, the addition is restricted to Rs. 7,50,000/- as against the addition of Rs. 32,50,000/- made by the learned AO." 4.4 Aggrieved with the above finding of the CIT(A) granting relief to 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....
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....-10 than her loan confirmation filed in the A.Y. 2010-11. Therefore, according to me, her loan confirmations are not credible. Therefore, I confirm the addition of Rs. 30,000 pertaining to her unsecured loans. As a result, the addition is restricted to Rs. 30,000 as against Rs. 68,10,000 added by the learned AO." 4.7 We heard both the parties on the issue of loan creditors involving the assessee. The inconsistencies with reference to the confirmation 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....
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.... of Rs. 1,41,207/-. The net profit from the agricultural operations worked out to 88.32% of the gross agricultural income. This figure is worked out after netting the agricultural expenses. In the assessment proceedings, the AO came to the conclusion that the agricultural income disclosure is inflated. AO is of the opinion that such high net profit rate is not there in the agricultural operations of the assessee for the past 5 years. On the basis of 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 ....
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.... that case, the crops grown in the fields relate to various cereals, sugarcane, vegetables etc. We find there is requirement of examining the applicability of the said decision of the Tribunal to the facts of the present case. We find Ld. Counsel for the assessee has given concession on deciding the issue as appropriate. 5.4 We find, the following are the ratios decided by the revenue authorities in their respective orders : AO - Net agricultural income is assessed 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 2....
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....nal income. During the assessment proceedings before the ITSC, assessee offered further additional income of 4 crores making the total additional income of Rs. 14 crores as against the expenditure of Rs. 18.84 crores recorded in the seized material. AO did not consider the said disclosure before the ITSC and made additions. In this regard, written submissions of the assessee are extracted in Para No.2.2.3 of the impugned order. In the said written submissions, assessee made a request to the 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 inco....
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.... submitted that there is no comprehensive details as to the assessee-wise bifurcation of the unexplained expenditure over the assessment years. Bringing substantial reference to the assessee's under consideration, Ld. DR submitted that against the addition of Rs. 5.12 crores involving 3 assessment years there is no clarify in the order of the ITSC if the entire amount stands offered as additional income in the hands of the assessee or not. He also analysed the fact relating to the quantitative details of disclosure before the ITSC and could 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....
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....there is seizure of cheque received by the assessee from the Srusti Sangam. During the recording of a statement on oath, it is admitted that the assessee paid Rs. 10 lakhs as loan to Srusti Sangam and the same remained unpaid. AO proposed to make the same as unexplained investment in the loan. In response, assessee furnished a reply stating that the cheque received from the bank was never submitted by Srusti Sangam. Eventually, the AO considered the submission of the assessee and made addition of Rs. 10 lakhs stating the following : "The submissions 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 separ....
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....ber 12 of this bundle is the receipt issued in favour of the appellant. 6.2 Addition made by the Ld. AO is incorrect since while giving reply u/s.132(4) the appellant had stated that the said amount is unrecoverable as the party is insolvent. Therefore, if part of the statement is considered as correct and relied upon by the AO, then there is no reason to disregard the other part of the statement. 6.3 It is settled law that the statement has to be taken as a whole and the AO is not justified in ignoring certain answers which were in favour of the assessee (Refer ITAT 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 d....
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.... owns FDRs amounting to Rs. 2,30,970/-. 8.1 During the assessment proceedings, the assessee made submissions against making of another addition on this account. AO considered the same and rejected for the following reasons : "3. Fixed deposits were made in the name of individual and not in the name of HUF, and both are separate legal entities for income tax purpose. If, the source of income of HUF than investment should have made in HUF status only. Therefore, it is apparent that the claim of assessee has no force and it is merely an afterthought exercise. During A.Y., assessee has made investment in fixed deposits 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 s....
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....possibility of said maturity of FDs to become a source for buying the new FDs. The facts about filing of such documents before the Revenue authorities were also mentioned. As per the Ld. Counsel, if the said cash flow is analysed properly, the addition that is required to be made would be around Rs. 79,771/- against the addition of Rs. 2,30,970/- in the case of the assessee for the assessment year under consideration. 8.4 On the other hand, Ld. DR for the Revenue relied heavily on the orders of AO and the assessee's failure to provide cash flow statements before the revenue authorities. 8.5 We heard both the sides, perused the orders of the Revenue and the written submissions filed by the assessee before us. On going through the above facts, we find the source of income for making the FDs worth of Rs. 2,30,970/- is the core issue under litigation. It is the case of the assessee that the source for the same is the proceeds received by the assessee on maturity of the earlier FDs. There is need for furnishing the cash flow of the matured FDs which form part of the new FDs of Rs. 2,30,970/-. It is an admitted fact before us that the assessee offered only an amount of Rs. 79,771/-....