TaxTMI 
TaxTMI 
2018 (1) TMI 1519
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....ting the foreign tour expenses amounting to Rs. 10,000/- by admitting additional evidence under rule 46A of the I.T. Rules, ignoring the fact that the assessee had not furnished the relevant documents in spite of opportunities given during assessment proceedings and despite being given specific instruction? 3. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of 'Disallowance of interest expenditure' to the extent of Rs. 1,60,560/- by admitting additional evidence under rule 46A of I.T. Rules, though the entire interest was not substantiated by the assessee during assessment proceedings, despite being given opportunity? 4. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition of Rs. 52,13,333/- being undisclosed investment in properties by admitting additional evidence under rule 46A of the I.T. Rules and not appreciating that the assessee had opportunities to submit the necessary evidence during the assessment proceedings? 3. From the above, it is evident that the Revenue is aggrieved against admitting of the additional evidences ....
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....ffice of the AO is not required and it is unwarranted. For the sake of completeness, relevant lines are extracted here as under : "35.2 . . . . . .The AO was in possession of audited balance sheet and profit and loss account but did not bring any material on record which was gathered during the search or during the assessment proceedings to discard the audited result of the appellant. As regards production of books of account, the appellant contended that AO had kept books of accounts of group concerns for about 2 months without impounding the same. In support appellant had also filed copy of letter received by the office of AO by which books of accounts were produced before the AO. It was also contended that books of accounts of the appellant were also produced and AO had also not permitted personal presence of the AR of the appellant. The assessment year under consideration was not pending at the time of search and the AO was not justified in rejecting the book result without having any material in hand to disturb the concluded assessment in view of the decision of Hon'ble Bombay High Court in case of Murli Agro Products (Supra). Addition made of Rs. 4,35,741 is therefor....
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.... on this foreign travel, CIT(A) confirmed the addition of Rs. 1,56,000/-. However, the hotel expenses of Rs. 10,000/- made by the assessee have only been considered by the CIT(A) as sponsored by Hero Motorcorp Ltd. Thus, the CIT(A) gave part relief to the assessee. Aggrieved with the said relief of Rs. 10,000/-, the Revenue is in appeal before us. Assessee is not in appeal against the confirmed addition of Rs. 1,56,000/-. 12. After hearing both the sides, we find the reasoning given by the CIT(A) in Para No.5.3 of his order is a well reasoned one. The amount of Rs. 10,000/- considered by the CIT(A) on account of hotel expenditure, as having sponsored by the insurance company needs no interference. It is also a fact that AO made the addition only on estimation basis. Regarding the additional evidence, the Ld. AR for the assessee filed the following written submissions : "The Respondent submits that out of the total addition of Rs. 1,66,000/- the CIT(A) has upheld addition to the extent of Rs. 1,56,000/- and Rs. 10,000/- is allowed on the basis of the copy of letter filed by the respondent which was already submitted to the Ld. AO during the assessment proceedings. ....
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.... calling for the Remand Report from the Ld. AO simply did not arise." Thus, we find the conclusion given by the CIT(A) after taking into cognizance the capital account and balance sheet of the assessee is fair and reasonable and does not call for any interference. As such, we do not find any violation of provisions of section 46A of the Income Tax Rules, 1962. Ground No.3 raised by the revenue is therefore dismissed. 16. Ground No.4 by the Revenue relates to deletion of Rs. 52,13,333/- by the CIT(A) as undisclosed investment in properties. 17. Briefly stated relevant facts are that during the course of assessment proceedings in the case of Shri Rajesh Prakash Chaudhari of the group, the AO noted that loan sanctioned by UCO Bank to Shri Rajesh P. Chaudhari against the security of land situated at S.No.240/3A/3B/3C at Sakegaon, standing in the name of the assessee, Shri Bhagwat M. Chaudhari and Shri Namdev M. Chaudhari. For the purpose of loan, the valuer has valued the property at Rs. 1,87,68,000/- as on 04-02-2006. AO gave 20% allowance on this assessed value being higher than the actual investment and the cost price of the property was thus taken at Rs. 1,56,40,000/-. Thu....
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....nt from the records that the respondent had purchased the said land prior to the search, hence the addition made by the Ld. AO. is unjustified and the Ld. CIT (A) is justified in deleting the said addition. Since, the purchase deed was produced before the Ld. AO. during the course of assessment proceedings, the question of calling for the remand report simply does not arise. Further I am enclosing herewith the copy of submission filed with the Ld. AO. wherein it is clearly stated that the Purchase deed of the said land was submitted in the paper book." Accordingly, Ground No.4 raised by the revenue is dismissed. 20. In the result, appeal of the Revenue is dismissed. ITA No.630/PUN/2016 A.Y. 2007-08 21. Grounds raised by the Revenue in this appeal are extracted as under : "1. Whether on the facts and circumstances of the case, whether the Id.CIT(A) was justified in deleting the foreign tour expenses amounting to Rs. 79,000/-? 2. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of 'undisclosed interest in FDR' amounting to Rs. 6,000/-? 3. Whether on the facts and ci....
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....nsidering the above, we are of the view that the decision of CIT(A) is taken based on the plausible reasoning which does not call for any interference. Accordingly, Ground No.1 is dismissed. 26. Ground No.2 relates to deletion of addition of "interest income" of Rs. 6,000/- on account of undisclosed income from FDR. Relevant facts include that the assessee had a FDR with UCO Bank amounting to Rs. 1 lakh and earned interest. Without realizing the fact that the said income was already offered to tax, AO estimated the interest accrued on the said FDR and made addition. During the First Appellate proceedings, assessee demonstrated vide his letter dated 16-11-2015 the fact of offering of Rs. 6,000/- which formed part of the income returned by the assessee. On considering the same and examining the facts, the CIT(A) granted relief. Relevant operational para is extracted as under : "15.2 I have gone through the assessment order and the submissions filed by the appellant. As discussed earlier, proper opportunity could not be granted to the appellant, and the AO without examining the computation of total income filed by the appellant along with the return of income filed on 08-0....
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....as not called for and therefore deleted. Ground raised by the appellant is allowed." 29. The finding of the CIT(A) relying on the judgment in the case of Reliance Utilities and Power Ltd.(supra) is fair and reasonable. It is not the case of the revenue that the assessee does not have interest free funds for investment activity. Considering the above, we find the reasoning given by the CIT(A) is reasonable. 30. In the result, appeal of the revenue is dismissed. ITA No.631/PUN/2016 A.Y. 2008-09 31. Grounds raised by the Revenue read as under : "1. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of 'undisclosed interest in FDR' amounting to Rs. 9,000/-. 2. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of 'Disallowance of interest expenditure' to the extent of Rs. 2,76,279/-, though the entire interest was not substantiated by the assessee during assessment proceedings, despite being given opportunity? 32. Ground No. 1 raised by the Revenue relates to addition on account of interest on FDR amounting to Rs.....
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.... of account. In the First Appellate proceedings, assessee contended that books of account were audited u/s.44AB of the Act. Total turnover of the assessee was Rs. 2.19 crores which includes the trading of spares and oil. AO was in possession of the audited balance sheet and the profit and loss account and could not find any discrepancy. Having considered the fact that AO was in possession of the books and there was no material with the AO to disturb the concluded assessment. CIT(A) also examined the letter received from the AO that the assessee produced books of account before him. Further, relying on the judgment of Hon'ble Bombay High Court in the case of Murli Agro Products, CIT(A) deleted the entire addition of Rs. 4,35,741/- as per the discussion given in Para No.35.2 of his order. We have already dealt with the same issue while dealing with the issue of violation of Rule 46A of the I.T. Rules, 1962. 41. In view of the above reasoned finding of the CIT(A) on this issue, we uphold the order of CIT(A). As such, revenue has no reason for making addition of Rs. 4,35,741/-. Accordingly, Ground No.2 raised by the Revenue is dismissed. 42. In the result, appeal of the revenue i....
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....essee took loan of Rs. 30 lakhs from M/s. Chaudhari Automobiles on 27-11-2009 for making investment in land. He paid interest amount of Rs. 1,20,000/- on the said loan. Assessee could not demonstrate before the CIT(A) about the specific investment except stating that the purchased property was accounted in the books of account. CIT(A) after perusing the balance sheet of the assessee and discussing the various investments made by the assessee came to a conclusion that the investment made is out of interest free funds available with the assessee. While coming to the conclusion of deleting the disallowance of interest u/s.36(1)(iii) of the Act, the CIT(A) relied on the decision of Reliance Utilities and Power Ltd. 313 ITR 340. For the sake of completeness of this order, we find it relevant to extract the finding given by the CIT(A) in Para No.44.2 on this issue and the same is reproduced here as under : "44.2 . . . . . .I have perused the balance sheet of he appellant as on 31-03- 2010. Capital of the appellant stood at Rs. 55,74,186/- as on 31-03-2010 whereas total investment stood at Rs. 88,33,777/- as on 31-03-2010. The increase in the investment was mainly on account o....
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.... During the First Appellate proceedings, assessee produced one sale bill of cotton amounting to Rs. 2,13,071/- but the CIT(A) has not admitted the same as additional evidence. Assessee is not in appeal before us on this decision of CIT(A). However, the CIT(A) having considered the net agricultural income of Rs. 1,25,556/- as disclosed by the assessee and since no material was gathered during the course of search eventually deleted the addition. 53. On hearing both the sides, we find it relevant to extract the finding given by the CIT(A) in para No.46.2 on this issue and the same reads as under : "46.2 . . . . . . . .During the course of appellate proceedings, appellant had produced one sale bill of cotton of Rs. 2,13,071/- issued by the Krishi Utpanna Bajar Samitee, Jamner, Dist. Jalgaon on 25-01-2010. Appellant has failed to show as to what prevented him to produce the bills before the AO. Therefore, additional evidence furnished before me is not admitted. However, no material was gathered during the course of search as well as during the course of assessment proceedings to disturb the accepted net agricultural income of Rs. 1,25,556/- for the year under consi....
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....ther on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition of Rs. 38,82,200/- made on account of short term capital gains, by ignoring the fact that the valuation of the property was done by recognized financial institution through a valuer for the purpose of granting loan? 4. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of 'disallowance of interest on purchase of land' of Rs. 3,60,000/- without appreciating the fact that the prime purpose for making investment remains unproven even in appellate proceedings before the ld. CIT(A)? 5. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of "undisclosed interest in FDR' amounting to Rs. 9,000/-. 6. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition made on account of 'unproved agricultural income' of Rs. 1,14,816/-? 7. Whether on the facts and circumstances of the case, the ld. CIT(A) was justified in deleting the addition of Rs. 4,03,573/- made by es....
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....tis dated 16-02-2011. CIT(A) observed that Shri Anil Kotecha offered the amount of Rs. 1 crore as additional income and the same was not denied by the AO. Eventually, CIT(A) came to the conclusion that there is no doubt that amount of Rs. 1 crore which was advanced by the assessee to Shri Anil Kotecha was returned back to him. There was no material before the CIT(A) to hold otherwise and the addition of Rs. 1 crore in the hands of the assessee was deleted. 64. Aggrieved with the said order of CIT(A) the revenue is in appeal before us. 65. On hearing both the sides and on perusing the orders of the revenue authorities, we find it is the case of the assessee that he sold the land situated at Gat No.277/2, Sakegaon, Taluka Bhusawal, Dist Jalgaon to Shri Anil Kotecha for a consideration of Rs. 1 crore. Against the said land deal, Sauda pawti dated 11-10-2010 was entered into by the assessee and Shri Anil Kotecha. However, the land deal was not materialized and the amount of Rs. 1 crore taken as advance was eventually returned back by the deed of cancellation/Sauda pawti dated 14-10-2010. These facts have been disclosed by the assessee before the AO u/s.132(4) of the Act. It is th....
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....ue of land as against the declared value of Rs. 29,63,800/-, assessee submitted that the said figure of Rs. 68,46,000/- is relevant for A.Y. 2011-12 and applicability of provisions of section 50C should not be invoked in the hands of the assessee but in the case of buyer of the land. Rejecting the same, AO proceeded to tax the difference, i.e. Rs. 68,46,000 - Rs. 29,63,800/- = Rs. 38,82,200/- as income of the assessee u/s.50C of the Act. 69. In the First Appellate proceedings, the CIT(A) deleted the addition. Relevant discussion given by the CIT(A) in Para No.55.3 is reproduced hereunder for the sake of brevity : "55.3. . . . . I find merit in the contention of the appellant as no evidence was found during the search to reveal that land was purchased by the appellant for consideration different from that mentioned on the registered document. Similarly, no evidence was found to reveal that appellant received consideration apart from shares of value of Rs. 29,63,800/- on transfer of land. The AO has also not pointed out that consideration was less than the stamp duty valuation for the purpose. Merely on the basis of valuation done by the transferee company for the purpose....
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....his investment, investment in the partnership firm M/s. Chaudhari Automobiles was Rs. 81,85,790 and same is considered investment for the purpose of business as appellant had disclose d income of Rs. 5,46,781 being interest and remuneration from the firm under the head "Business and Profession". Therefore, investment for non-business purpose stood at Rs. 44,69,539/- which is less than appellant's capital of Rs. 1,08,66,956. Hon'ble Bombay High Court in the case of Reliance Utility & Power 313 ITR 340 (Bom.), held that if there be interest free funds available to an assessee sufficient to meet its investment and at the same time the assessee had raised a loan, it can be presumed that the investments were from the interest free funds available. In view of the decision the capital of appellant is held to be invested for personal investment and consequently no borrowed funds can be considered to have been used for non-business purpose. Therefore, no disallowance of interest was called for. Addition made of Rs. 3,60,000 is directed and the ground raised by the appellant is hereby allowed." 74. From the above, it is evident that the loan is actually squared up by 01-04-2010 relevant t....