TaxTMI 
TaxTMI 
2018 (12) TMI 1688
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....10,00,000/- u/s.271D of the Income Tax Act, 1961 (in short ''the Act'') for loans accepted in cash during the previous year relevant to assessment year 2006-2007, which levy was confirmed by ld. Commissioner of Income Tax (Appeals). Appeal No.2930/Chny/2017 is again levy of penalty of Rs. 3,00,000/- u/s.271E of the Act on repayment of loan in cash for the very same assessment year, which was also confirmed by ld. Commissioner of Income Tax (Appeals). Appeal No.2931/Chny/2017 is an appeal against an order dated 11.10.2017 of ld. Commissioner of Income Tax (Appeals)-19, Chennai confirming certain additions/disallowances made by the ld. Assessing Officer in the assessment done for assessment year 20122013. 3. Grounds taken by the assessee in its appeal ITA 2928/Chny/2017 for assessment year 2006-07, count ten of which grounds 1 and 2 are general needing no specific adjudication, whereas grounds 10 and 11 are on levy of interest under Section 234A and 234B of the Act, which are consequential in nature. 4. Vide its grounds 3 to 5, assessee assails sustenance of an addition of Rs. 90,62,161/-.(Actual figure it appears is Rs. 90,66,072/-) 5. Facts apropos are that assessee, a paw....
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....s. 49,40,160/- (c) M/s. C. Madanlal & Sons Rs. 50,000/- (d) M. Jeevaraj Rs. 2,00,000/- (e) Kalyanmalji Ranka Rs. 2,00,000/- (f) C. Kamalachand Rs. 4,00,000/- (g) A.Pukhraji Gulecha Rs. 1,00,000/- 59,40,160/- It is to be noted that out of the total sum of Rs. 60,00,000/- claimed by the assessee to have been received from Shri. Sivarajan Nadar, a sum of Rs. 49,40,160/- was accepted by the ld. Assessing Officer and balance sum of Rs. 10,59,840/- alone was considered to be unexplained. The claims which were not accepted by the ld. Assessing Officer were as under:- M/s. C. Kishanlal & Sons and C. Kishanlal A6,56,232 M/s. C. Kishanlal (HUF) A7,00,000 C. Shri Sivaraja Nadar Rs. 10,59,840 Shri. B.K. Vimal Chand Rs. 34,00,000 Smt. V. Suvetha Rs. 9,00,000 Smt. Kanchan Bai Rs. 23,50,000 Total Rs. 90,66,072/- 7. Reasons for disbelieving the above claims of loans/advances, cited by the ld. Assessing Officer were as under:- (i) M/s. C. Kishanlal & Sons Rs. 6,56,232/- - Though it was claimed as cash balance held by the assessee, income returned by the assessee from his busi....
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....eved. 10. Alluding to the sum of Rs. 7,00,000/- claimed to have been received from Shri. C. Kishnalal & Sons (HUF), ld. Authorised Representative submitted that the said amount was reflected in the Trial Balance and return of income filed by the said HUF. As per the ld. Authorised Representative, HUF had earlier advanced a sum of Rs. 10,20,000/- to one Shri. M. Venkatachalam who had repaid it in two installments during the relevant previous year. According to him, HUF had advanced Rs. 7,00,000/- to the assessee out of the said amount. 11. Viz-a-viz, addition of Rs. 10,59,840/-, out of Rs. 60,00,000/- received from Shri. Shivraj Nadar, contention of the ld. Authorised Representative was that the said sum was duly reflected in the ledger of the assessee. According to him, the sum of Rs. 10,59,840/- was adjusted against agricultural land sold by the assessee as power agent and after such adjustments the balance due to Shri. Shivraj Nadar was A49,40,160/-. According to him, this did not deplete the availability of A60,00,000/- with the assessee. 12. Coming to the claim of advance of Rs. 34,00,000/- from Shri. B.K. Vimalchand, ld. Authorised Representative submitted that the am....
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....n this capital account do not show any amount to have been utilized for effecting payment to M/s.Surana Corporation. If it had come out of the cash balance, as claimed by the assessee, it would be definitely reflected in his capital account. In the circumstances, we are not inclined to accept the claim of the assessee that the sum of Rs. 6,56,232/- came out of his capital account. The sum remains unexplained, without source. 17. Coming to the second item which is the claim of the assessee that a sum of Rs. 7,00,000/- was received from C.Kishnalal & Son (HUF), Income Tax return of the said HUF for assessment year 2006-07 is placed at paper book page 125. The said Income Tax return has been filed on 23.02.2007 much prior to the date of search. Trial Balance as on 31.03.2006, filed alongwith the said return, copy of which is available at paper book page 127 clearly shows an agricultural land advance of Rs. 7,00,000/- paid to C. Kishanlal. In our opinion, return of C.Kishnalal & Son (HUF) having been filed much earlier to the date of search, there can be no reason to disbelieve the advance shown in such return. It may be true that assessee could not produce evidence for the advance ....
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....ing Officer, copy of which is available at paper book page 149 and it read as under:- RICABCHAND&CO., . Phone:25387313 Chartered Accountants No.121,N.S.C.BOSE ROAD, M.GOUTAMCHAND JAIN,B.COM., F.C.A Sowcarpet, Chennai-6000079 Date :11.03 2014 The Assistant Commissioner of Income Tax, Central Circle III (3), Chennai- 600034. Sir Ref: Shri.C.Kishanlal, PAN : AAKPK 7263 K/2006-2007 Sub : Source for money advanced by Shri,B.K.Vimalchand to Shri.C.Kishanlal- regarding. With reference to above and we state that Shri.B.K,Vimalchand has deposited a sum of Rs. 3000000/- by way of cheque during the ass.year 2006-2007 with Shri C.Kishanlal. The source for above deposited made by Shri.B.K.Vimaichând is out of refund by Agriculture land advance of Rs. 3400000/- which was made by him during the asst. year 2005-2006.We are herewith enclosing the financial statement of Shri B.K. Vimalchand relating to asst. year 2005-06. We are also herewith enclosing intimation of 143(1) of the I T. Act of relating to asst.year 2005-2006 and 2006-2007 of Shri.B.K. Vimalchand as well as his Bank statement for ye....
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....he impugned assessment year, we cannot say that Smt. V. Suvitha did not have the wherewithal to give a loan of Rs. 9,00,000/- to the assessee. 21. Sixth item is a claim of loan of Rs. 23,50,000/- received from Smt.Kanchan Bai, wife of the assessee. Here also we find that Smt.Kanchan Bai had given a confirmation which reads as under:- Kanch Bai No.23, Kutchery Road, Mylapore, Chennai -600 004. Date: 31.03.2006 CONFIRMATION I hereby confirm having advanced a sum of Rs. 25,40,000/- ( Rupees Twentyfive Lakhs Forty Thousand ) (Details as below ) to Shri. C.Kishanlal, residing at No.23, Kutchery Road, Mylapore, Chennai - 600 004 towards lease advance for Agricultural land situated at No.41, Laxmipuram Village, Sri-perumpudur Taluk, Thiruvallur District comprised in Survey no. 23/4A of an extent 0 acre 31 cents, Survey no. 59/1Rs. 1 of an 0 acre 02 cents, Survey no. 59/1B2 of an extent 0 acre 07 cents, Survey no. 59/2Rs. 1 of an extent 0 acre 26 cents, Survey no. 34/3B of an extent 0 acre 28 cents, Survey no. 34/3A of an extent 0 acre 04 cents, Survey no. 30/2 of an extent 0 acre 02 cents, Survey no. 28/1 of an extent 0 acre 59 cents, and Survey no. 28....
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....was no reason to disbelieve the advance of Rs. 23,50,000/- claimed to have received been from Smt.Kanchan Bai. 22. Based on the discussions in para 16 to 21 above, we delete the additions made by the lower authorities with regard to the following loans/advances claimed by the assessee. M/s. C. Kishnalal & Sons : Rs. 7,00,000/- Shivraj Nadar : Rs. 10,59,840/- B.K. Vimalchand : Rs. 30,00,000/- V.Suvitha : Rs. 9,00,000/- Kanchan Bai : Rs. 23,50,000/- Balance addition is sustained. Grounds 3 to 5 are treated as partly allowed. 23. Vide it grounds 6 & 7, assessee assails an addition of Rs. 3,14,93,768/- made disbelieving the claim of sale proceeds of jewellery belonging to his relatives. 24. As already mentioned by us at para 5 above, source for the investment of Rs. 4,65,00,000/- made by the assessee with M/s. Surana Corporation was partly explained by the assessee as coming out of sale proceeds of jewels of relatives. Assessee had stated before the ld. Assessing Officer that proof for sale of jewellery aggregating to Rs. 3,14,93,768/- belonging to his family members, were handed over to Shri. Saravana Prabhu, Inspector of Police, Egmore, when a police com....
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....r the declarations of Shri. C. Kamal Chand and Smt. K. Susila. In other words almost all such persons were residing at Old No.23 or Old No. 24 of Kutchery Road, Mylapore. Panchanama prepared at the time of search placed at paper book page No.28 indicate the place of search as Old No.23, Kutchery Road. It is not disputed by the Revenue that the persons from whom assessee had claimed receipt of gold ornaments as deposits were all his close relatives. In the Crl. M.P. No.7934/15 filed by the Inspector of Police before Hon'ble Principal District and Sessions Judge, Chennai placed at paper book pages 207 to 214 in connection with the case filed by the assessee, it is stated by the said officer as under at para 8:- 8. I submit that investigation done by the CS CID discloses the following facts: i. Lakshmi Chand Bafna who is the Paterhal uncle of the accused Pinku @ Bafna. The De facto Complainant Kishanlal was introduced to the accused during the month of October 2005 at R.B. Jewelry, situated in No.1411 8, Veerappan St., Sowcarpet, Chennal by Lakshmichand Bafna. ii. The petitioner /accused conspired together with intent to cheat the De facto Complainant with d....
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.... were vouched for the source for invested amount. There is no case for the Revenue that during the course of search, any of the jewellery deposited by the close relatives with the assessee, were found or were available. If it was still with the assessee or such relatives, who were all living with the assessee or in the very next door, it would have been found by the Inspecting Officials. Admittedly, nothing of the sort was found. As mentioned by us, declarations of the relatives placed at paper book pages 174 to 204 has not been doubted by the lower authorities. Their doubt is on claim of the assessee that such jewellery was sold by the assessee. In our opinion, report filed by the Investigating Officer before Principal District and Sessions Judge when seen along with the failure of the Revenue to find any such jewellery at the time of search, clearly indicate that the jewellery deposited by the close relatives with the assessee were sold by the latter. Preponderance of probability, in our opinion, is on the side of the assessee. We are of the opinion that the claim of the assessee that a sum of Rs. 3,14,93,768/- had come out of sale proceeds of jewellery deposited by his relatives....
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....Rs. 3,11,722/-, but this was not considered. According to him, if this was considered, the deficit would come down to Rs. 11,226/- only. 36. Per contra, ld. Departmental Representative submitted that main cash book claimed by the assessee was never found at the time of search. According to him, it cannot be relied upon. 37. We have considered the rival contentions and perused the orders of the authorities below. It is not disputed that cash of A4,50,000/- was found at the time of search. Pawn register found at the time of search reflected cash balance of Rs. 1,27,052/- only. In the circumstances, we are of the opinion that lower authorities were justified in ignoring any other books produced by the assessee at a later stage. The addition of Rs. 3,22,948/-, in our opinion was rightly made. Grounds 3 and 4 of the assessee stand dismissed. 38. Vide its grounds 5 & 6, assessee is aggrieved on an addition of Rs. 1,26,76,768/- considered as unexplained investment in silver bars. 39. Ld. Counsel for the assessee submitted that at the time of search 325.334 kgs of silver in the form of silver bars were found and seized by the Department. According to him, out of the above 325.3....
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....s filed before lower authorities. As per the ld. Authorised Representative, assessee had shown agricultural land in his Wealth Tax returns filed prior to the date of search. According to him, the claim of agricultural income was unjustly disallowed. 44. Per contra, ld. Departmental Representative submitted that there was no details or evidence given by the assessee for earning any agricultural income. 45. We have considered the rival contentions and perused the orders of the authorities below. It is not disputed by the Revenue that assessee owned 3.26 acres of land. It might be true that assessee was unable to produce evidence for agricultural cultivation and earning of agricultural income. Nevertheless, we cannot say that assessee could have earned no agricultural income from a holding of 3.26 acres of land. We are of the opinion that assessee ought have been given credit of agricultural income at the rate of A5,000/- per acre. Accordingly, we restrict the addition to A72,874/-. Grounds 7 & 8 of the assessee are partly allowed. 46. Now, we take up appeals of the assessee in ITA Nos.2929 & 2930/CHNY/2017 which are against levy of penalty u/s.271D and 271E of the Act respec....