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2020 (11) TMI 364

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.... on account of alleged unexplained cash credits u/s. 68 of the Act." 3. The fact in brief is that return of income declaring total income of Rs. 4,25,230/- was filed on 5th October, 2020. The case was subject to scrutiny assessment and order u/s. 143(3) of the Act was finalized on 28th March, 2013. The relevant facts as per the issues contested in the grounds of appeal are discussed as under:- Ground No. 1 (Addition of Rs. 14,137/- u/s. 14A of the Act ) 4. During the course of assessment, the Assessing Officer stated that assessee has shown exempt income as dividend of Rs. 3,35,994/- from investment made in shares and securities and claimed interest expenditure of Rs. 10,28,811/-. However, the assessee has not made any disallowance of expenditure incurred on earning exempt income u/s. 14A of the Act, therefore, the Assessing Officer has computed expenditure to the amount of Rs. 14,137/- attributable towards earning exempt income u/s. 14A as per rule 8D of I.T. Rule, 1962. 5. Aggrieved assessee filed appeal before the Ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee stating that Assessing Officer has correctly applied section 14A of the Act. 6. We have hear....

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....rectly by the appellant and balance of Rs. 98,85,528/- has been paid by the remaining two co-owners from their bank accounts. It is further submitted that the appellant paid Rs. 24 lakhs by cheque No.85652 dtd. 7.10.2008 drawn on SRI, Bapunagar branch to one of the co-owners ShriRashmikant C. Patel who in turn made payment to the land owner from his bank account. It is also contended that out of total consideration an amount of Rs. 34 lakhs has been born by the appellant and which was explained to the AO. It is further submitted that in the present case not only the appellant has explained the sourced of investment but has also explained the investment made by him including source thereof which is also recorded in the book of accounts and therefore provisions of Section 69 have no application in the present case. The appellant has relied upon the following decisions :- Dhakeshwari Cotton Mills 26 ITR 775 (SC) Natu Ram PremchandVs.CIT 49 ITR 561 (All) Kamdhenu Steel & Alloys Ltd. 206 Taxman 254 (Delhi HC) Audobindo Sanitary Stores Vs. CIT 276 ITR 549 (Ori) The appellant has also contended that out of total investment of Rs. 1,08,85,528/-, an amount of Rs. 76 lakhs was made i....

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....ly explain the payment of Rs. 10 lacs made on 27th October, 2009. Therefore, the Assessing Officer has added Rs. 44 lacs to the total income of the assesse as unexplained investment made by the assessee in the immovable property. At the time of appellate proceedings before the ld. CIT(A), the assessee claimed that he had paid Rs. 24 lacs by cheque dated 7th October, 2008 to one of the co-owner Shri Rashmikant C. Patel who had made further payment to the land owner from his bank account. The assessee has also submitted that out of total investment of Rs. 1,08,85,528/- payment of Rs. 76 lacs was made in earlier years and the remaining amount of Rs. 32,82,528/- was only paid during the year under consideration. Therefore, it was contended that Rs. 76 lacs was opening investment made in the earlier years which cannot be added u/s.69 of the Act during the year under consideration. In the light of the above facts and circumstances, we observe that assessee had tried to explain the part investment made out of Rs. 76 lacs in the earlier years which had already been deleted by the ld. CIT(A). However, in respect of payment made during the previous year relevant to the year under considerati....

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....en an adverse view in respect of these cash credits. A perusal of remand report shows that most of these letters were issued either on 29.03,2013 or 30.03.2013 wereas the assessment order has been passed en 28.03.2003. According to Section 68 of the Act, any sum found credited in the books of the assessee maintained for any previous year may charge to income-tax as income of the assessee of that previous year if- (i) The assessee offers no explanation about the nature of source of such sum, or (ii) The explanation offered by him is, in the opinion of the AO not satisfactory. Here in the instant case credits of Rs. 2,14,28,772/- were taken by the assessee in earlier years. In the relevant previous year the assessee has shown only opening balance of these credits. These credit entries did not relate to the year under consideration for being considered u/s.68 of the Act. The AO could have enquired the genuineness of the credits in the year the assessee took them and could have made addition u/s.68 of the Act in that year if not found genuine. Considering the provisions of the section and the decisions cited by the appellant, the addition of Rs. 2,14,28,772/- which represents....