TaxTMI 
TaxTMI 
2018 (10) TMI 1860
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....old. 4. The Ld. CIT(A) is not justified in maintaining the addition of Rs. 35,46,018/- on account of disallowing the exemption claimed u/s 54B for sale of agricultural land. 5. The Ld. CIT(A) is not justified in maintaining the addition of Rs. 3,70,000/- u/s 68 on account of loan taken from three minor children. 6. The Ld. CIT(A) is not justified in maintaining the addition of Rs. 9,38,756/- on account of disallowing of interest paid to bank on term loan and enhancing the interest income on term loan against FD to Rs. 5,20,303/-. 7. The Ld. CIT(A) is not justified in maintaining the addition of Rs. 2,00,000/- on account of disallowing the claim of agricultural income. 8. The Ld. CIT(A) is not justified in maintaining the addition of Rs. 3,30,000/- on account of non accepting the deposits received from two persons. (Rs. 1.65 lakhs each) against flat booking. 9. The Ld. CIT(A) is not justified in maintaining the addition of Rs. 17,78,552/- on account of non acceptance of Gift from mother Smt. Kanta Sojatia. 10. The Ld. CIT(A) is not justified in maintaining the addition of Rs. 42,461/- on account of interest received from....
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....deposits and also confirmed the addition made in respect of the gift received from mother of Rs. 15 lakhs. Apropos to Ground Nos.1 to 13, the Ld. Counsel for the assessee reiterated the submissions as made in the written submissions of the assessee, which are reproduced below: Sunil Sojatia, Indore A.Y 2010-11 Appeal No. ITA No. 312/IND/2015 SYNOPSIS Source Salary from Divya Prabhat Publications Pvt Ltd., House Property Income, Capital Gains, Interest income, Agricultural Income. Return 13.11.2010 at Rs. 18,70,500/- (PB 42-50) & Agricultural Income Rs. 2,00,000. Assessment order U/s 143(3) 02.01.2013. Assessed Income - 1,08,57,210/- The order of the ld AO was challenged before the ld CIT(A). Detailed proceedings were conducted by the ld CIT(A). The pleadings before ld CIT(A) are given in the order of ld CIT(A) as under: Proceedings Pg/ Para Grounds of Appeal Pg. 1 para 1 Order of ld AO Quoted Pg. 5 para 2 W.S. to ld CIT(A) reproduced Pg. 8 para 3 Remand Report dt. 07.03.2014 Pg. 17 para 4 Rejoinder Pg. 19 para 5 Notice u/s. 251 by ld CIT(A) Pg. 22 para 6 Reply by assessee Pg. 23 Findi....
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.... It is also a pertinent fact that: - a. Appellant owns the house. b. Housing loan was taken for construction of house. Interest on same was booked separately in capital account (apart from household expenses). c. Assessee does not own any vehicle in personal capacity. Thus, household expenses are bound to be less. WHAT THE LD AO DID? a. Ld AO quoted the capital account of the appellant showing drawings of Rs. 1,20,000/-. Further, he alleged that the assessee have 3 school going children and directorship in 3 companies and partner in firm. He cannot survive at Rs. 8,000/- p.m. Thus, he added Rs. 4,80,000/- to the income of the assessee. The total household expenses, therefore were estimated at Rs. 6,00,000. No basis was given for arriving at an ad hoc figure of Rs. 6,00,000 (i.e. Rs. 50,000 p.m.) Disclosed (as per ld AO) Rs. 1,20,000 Undisclosed (Estimated) Rs. 4,80,000 TOTAL Rs. 6,00,000 b. A pertinent fact is that he also contended that the capital account does not reflect the life insurance premium, Medical Insurance Premium and Personal accident premium, whereas the same was claimed under....
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....r expenses of Rs. 7,25,000 were paid, which were denied by ld lower authorities while computing the capital gains. 3. As per clause 15 of the agreement, the expenses of registry were to be borne by the assessee, the seller. PB 189, para 15. 4. The total transfer expenses are Rs. 14,50,000 on sale of agriculture land at Rau. Assessee had 50% share i.e. Rs. 7,25,000 which was debited in the capital account PB 49. 5. The same was claimed to be paid by cheque to Iqbal Khan. Registry for sale of land was dated 06.01.2010. The stamps were purchased on 29.12.2009. Iqbal Khan, who is stamp vender, helped the assessee in getting the registration formalities completed. Payment was made for stamp charges and registration charges. 6. Ld AO merely held that no evidence was available for expenses on registration. He disallowed the entire expenses of assessee Rs. 7,25,000. 7. Ld CIT(A) held that the assessee had stated to have sold the land through Iqbal Khan. Stamp vendor's name on Stamp Paper is written as Sh. Narendra Joshi. Thus, the transfer expenses could not be justified; and he therefore made disallow....
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....ct that ld AO had accepted these expenses, still ld CIT(A) confirmed the same, without bringing any material to prove that the findings of ld AO in remand report are incorrect. It is therefore prayed that the disallowance of registration expenses may kindly be deleted. GROUND NO.4: DISALLOWANCE OF DEDUCTION U/S. 54B RS. 35,46,018/- AO para 7. CIT(A) pg. 32 para 11. Purchase of Agricultural Land at Rao 31.03.2006. Sale of Agricultural land 06.01.2010. Rs. 68,20,000. PB 180-249. PB 182 mentions land as agricultural. Purchase of New Agricultural Land Located at Bicholi Mardana, Indore. Rs. 65,00,000. Purchase deed. PB 71-77. PB 72 mentions land as agricultural. FACTS 1. The appellant in his computation of income claimed deduction u/s. 54B on purchase of new agricultural land (PB 44). 2. Ld AO disallowed the claim holding simplicitor that no evidence for claim of exemption u/s. 54B was filed. 3. Ld CIT(A) accepted the fact that the new land was purchased. However, he contended that assessee could not establish that the old and new land were used ....
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.... Rs. 3,70,000 Ld AO added the same denying the credits and the source of minor children. Ld CIT(A) confirmed the same holding that the source of children remains unexplained. SUBMISSIONS: a. Under the head, booking against flat Rs. 7,00,000 (PB 46), the total credit includes a credit of Rs. 3,70,000 from the three minor children. b. Trial Balance and the source of the children were already on record. PB 256-261, PB 275, 280, PB 297-302. Gift deeds showing source of source are filed as additional evidences before your honours. These documents only support the plea taken by the assessee before the learned lower authorities. c. There is also an unsecured credit from all the three children. PB 48. The total of unsecured credit and advance against flat are as under: Name PAN Unsecured Credit PB 48 Booking from Flat PB 46 Total Shown in their Trial Balance Sanjana Sojatia EXJPS6693M PB 255 Rs. 10,62,856 Rs. 45,000 11,07,856 PB 259 Mayank Sojatia Rs. 5,20,428 Rs. 1,25,000 Rs. 6,45,428 PB 300. Rs. 6,18,904 Suj....
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....to pay interest as per SAVIFIX scheme of Bank till permission of M.P. High Court was obtained. Same is noted at PB 108. The balance was to be paid immediately after getting the permission of the High Court. 3. For making this payment, assessee took a loan from ICICI Bank of Rs. 117 lakhs. Loan was taken on 28.03.2007. The loan disbursement is at PB 114-115, which was taken to State Bank of Indore. From there, FDR for security deposits/ advance was made for Rs. 1 crores. 4. Interest income on this SAVFIX Deposit was offered at Rs. 9,31,984. Same was offered as income in the computation of income. PB 43-44. 5. The appellant has claimed interest expenditure on term loan from ICICI bank at Rs. 9,38,756. Ld AO disallowed this holding that assessee has not shown any business income in the computation of income. 6. Ld CIT(A) held that the appellant has not raised any ground of appeal for same. However, he decided the same. The appellant is therefore in appeal against the order of ld CIT(A). 7. Further, ld CIT(A) did enhancement holding that the accrued interest income was Rs. 14,52,287, and only Rs. 9,31,984 w....
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....FDR is reflected at Rs. 1,14,52,287, net of TDS. The same can be verified from the FDR account at PB 321. The amount was already offered for taxation. The addition made is therefore totally wrong, and would amount to double addition. e. In respect of jurisdiction for enhancement. Ld CIT(A) enhanced the income from Rs. 9,31,984 to Rs. 14,52,287 stating that entire interest income ought to have been offered. Ld CIT(A) states that enhancement notice was given covering the issue at point no. (xiii). Point no. (xiii) is at Pg. 23 of ld CIT(A) order which reads as under: "What is the basis of claiming interest expenses of Rs. 9,38,756/-. Give details of loan taken and purpose of such loan on which such interest was paid. Under which section of Income Tax Act, 1961 you have claimed such deduction and how it is allowable." The entire question relates to interest "expenditure" paid to ICICI Bank and not to interest "income" from Dena Bank. Thus, no notice of enhancement, as claimed by the ld CIT(A) was given in respect of the interest income from Dena Bank. The fact of enhancement notice quoted by ld CIT(A) is incorrect. Question no. ....
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....and deposits, and not on advances. The appellant therefore prays that the addition made in the hands of the appellant in respect of advances may kindly be deleted. GROUND NO. 9 (REVISED): GIFT FROM SMT. KANTA SOJATIA Rs. 17,78,522 AO para 12. CIT(A) pg. 39 para 17. Gift from Smt. Kanta (mother) Rs. 15,00,000 Other Credit Balance (taken to capital a/c) Rs. 2,78,522 TOTAL Rs. 17,78,522 GIFT OF Rs. 15,00,000 1. Gift of Rs. 15,00,000 from mother is evidenced by (i) Gift deed PB 137 (ii) Cheque from mother. PB 138 (iii) Return, Computation etc from mother. PB 139-146. Gift of Rs. 17,78,622 reflected in her capital account. PB 144. (iv) Bank pass book of S.B. Indore. PB 147-156. Specific PB 149, the gift is reflected. (v) Ledger account of mother. PB 157. 2. In the remand report, ld Assessing Officer accepted of having taken gift of Rs. 15,00,000 from mother. CIT(A) pg. 19 para 9. He stated as under: "Assessee submitted photocopy of gift deed and cheque, bank passbook of Smt. Kanta Sojatia, Ledger copy of account, balance sheet, capital account for F....
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....f Assessing Officer appeared to be based on mere suspicion and, thus, addition was deleted. The gift to the tune of Rs. 15,00,000 is therefore explained. GIFT OF Rs. 2,78,522. 1. Credit balance standing in the books of assessee in her name was taken as gift, by mutual consent in the family. The said gift was reflected by her in her capital account also. PB 144. 2. The assessee has also treated the same as gift and was reflected in his capital account. PB 49. The nature and source of the credit is explained. 3. In any case, the credit balance was opening balance. No sum of money was credited in this year. It is a settled proposition of law that opening balance cannot added as a unexplained credit in the current year. This is so as there is no "sum credited" in the current P.Y. Hotel Excelsior Limited; 114 TTJ 248 (Del.). The gifts are established as the identity is undoubted; the gifts are confirmed by the mother by entries in her books and also gift deed; she was a regular income tax assessee; and had sufficient capital; the gift was received from close relative. She had gifted a substantial part of her ca....
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....atement. Details of Bank-wise withdrawals and deposits is given at PB 342. Also for preceeding F.Y. 2008-09 (A.Y. 2009-10), the same are given at PB 340. During current year, the deposit in ICICI Bank was Rs. 26,01,000. The appellant submits as under: a. All the transactions of preceeding year are recorded in the books of accounts. The books are duly audited for F.Y. 2008-09. Cash in hand on 31.03.2009 was Rs. 15,98,017 as per Audited Accounts. PB 162. None of the deposit was found to be unaccounted. Section 69 would apply only in respect of deposits, which are not recorded in the books. b. Opening cash balance Rs. 15,98,017. i) Opening cash balance is reflected in the balance sheet of earlier year. PB 162. ii) Assessment u/s. 143(3) of A.Y. 2009-10 was completed and the cash balance was accepted. PB 126-129. iii) The appellant was having high cash in hand, in the earlier years also. On 31.03.2008 also, the cash in hand was at a very high figure of Rs. 89,65,372. PB 340. c. Withdrawals during April, 2009 Rs. 2,35,000 i) Withdrawals in April have been accepted. No defect is f....
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....hat 50% of the transfer charges was required to be borne by the assessee. This fact is not controverted by the authorities below. He submitted that the A.O. in his remand report has duly accepted this fact. The A.O. in the remand report has stated that the signature on the confirmation of stamp vendor Shri Iqbal Khan as submitted do not match with the signature on last page of sale deed as submitted in the paper book. Therefore, confirmation is not established to be of Shri Iqbal Khan. In reply to this observation, the assessee has stated that the signatures of a person may differ at different times. The A.O. did not choose to call Shri Iqbal Khan in order to verify the authenticity of the confirmation. It is also stated that Shri Iqbal Khan has given an affidavit which is enclosed in the paper book at page No.250. We have perused the contents of this affidavit. As per this, the deponent of the affidavit Shri Iqbal Khan had admitted to have received money in respect of purchase of stamp papers related to the transaction in question. In our considered view, the A.O. ought to have summoned the deponent of the affidavit and examine him. This exercise is not done by the A.O. We therefo....
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....he interest income on the term loan against fixed deposits to Rs. 5,20,303/-. It is stated that the A.O. had made addition of Rs. 9,38,756/- expenditure for earning interest. The Ld. CIT(A) enhanced this to Rs. 14,59,059/-. It is stated that interest income on deposit with the Dena Bank was accrued at Rs. 9,31,984/-. Interest expenditure loan from ICICI bank was deposited with Dena Bank of Rs. 9,38,756/- and net interest income was of Rs. 6,772/-. It is stated that assessee wanted to purchase a property mortgaged with Dena Bank. The borrower was Shri Ashish Bhandari and the lender bank was Dena Bank. The agreement for purchase of property was entered on 7.5.2007. Our attention was drawn on paper book page Nos.107 to 113. Total consideration fixed was of Rs. 4,14,00,000/-. For this Rs. 1 crore was paid by the appellant as per the payment schedule. The payment was in the form of deposit in no lien account in Dena Bank. The bank agreed to pay interest as per Savifix scheme of bank till permission by the Hon'ble M.P. High Court was obtained. The balance was to be paid immediately after getting permission of the Hon'ble High Court. For making this payment, the assessee took a lo....
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....amely Sunil Solanki and Dilip Solanki. The assessee has claimed that the amount so received as advance not as a loan. This fact requires verification by the A.O. We therefore, set aside the order of the Ld. CIT(A) on this issue and restore the issue to the file of the A.O. for verification from the persons who had advanced money to the assessee and decide the issue afresh. 14. Ground No.9 is against maintaining the addition of Rs. 17,78,552/- on non acceptance of gift from mother of the assessee Smt. Kanta Sojatia. It is stated that the assessee had received a gift of Rs. 15 lakhs from his mother. A gift deed to this effect is duly executed which is enclosed at paper book page No.137, copy of the cheque is also enclosed at paper book page No.138. Return computation etc. of mother is also enclosed. Bank pass book, ledger account is also enclosed. The A.O. has also accepted the factum of gift. It is stated that the Ld. CIT(A) has proceeded only on the ground of suspicion. It is stated that there is no evidence to demonstrate that the cash of Rs. 15 lakhs was deposited by the assessee. It is further stated that mother of the assessee is a regular income tax payee. The capital of Rs....
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....34C of the Act. Ground No.12 being premature is dismissed as such. Ground No.13 is consequential in nature and is held accordingly. 18. In the result, appeal of the assessee is partly allowed for statistical purposes. 19. Now we take up ITA No.310/Ind/2015 wherein the assessee has raised following grounds of appeal: 1. The CIT(A) upheld the assessment order without entertaining/admitting/considering the submissions of the appellant. It is not based on the facts on record and it is contrary of the provisions of law and justice. 2. The Ld. CIT(A) is not justified in maintaining addition of Rs. 3,03,000/- on account of less withdrawals for house hold expenses. 3. The Ld. CIT(A) is not justified in maintaining the addition of Rs. 56,82,161/- on account of cash deposits in bank account. 4. The Ld. CIT(A) is not justified in enhancing the addition by Rs. 34,800/- on account of agriculture income of Rs. 2,34,800/- shown by the assessee out of Rs. 2,34,800/- A.O. has already added Rs. 2,00,000/- under the head unexplained deposits in bank account. 5. The Ld. CIT(A) is not justified in maintaining initiation of penalty u/s 271(1)(c). ....
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....was booked separately in capital account (apart from household expenses). g. Assessee does not own any vehicle in personal capacity. Thus, household expenses are bound to be less. h. No evidence of any other expenses were found. GROUND NO.3 - CASH DEPOSIT IN BANK Rs. 56,82,161 AO para 6. CIT(A) pg. 25 para 9. The Cash deposits by appellant on various dates in Bank accounts: - Account No Name of Bank Amount 094501501974 ICICI Bank, Rajwada Branch, Indore 49,00,000 094501500001 ICICI Bank, Rajwada Branch, Indore 25,000 53005469860 State Bank of Indore, Rajwada Branch, Indore 8,82,161 Total 58,07,161 Out of the above cash deposit of Rs. 58,07,161, an amount of Rs. 57,82,161 was deposited before 08.07.2009. Withdrawal before 08.07.2009 was Rs. 1,00,000. Thus difference of Rs. 56,82,161/- was added as unexplained deposits of the appellant. SUBMISSIONS: - 1. The summary of cash flow for the current year is as follows (PB 93, reproduced with respective PB nos. of current paper book) : - Particulars Amount Re....
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....x returns/ computations are as under: Valuation Date A.Y. Cash in hand 31.03.2008 2008-09 Rs. 69,58,428 [PB 173] 31.03.2009 2009-10 Rs. 37,31,517 [PB 88] 5. The assessee received the cash from following sources also during the F.Y 2009-10, which was deposited in bank account: r. No Particulars Amount Remarks . Cash withdrawal from firm 'Dainik Prabhat Kiran' 8,00,000 The form 26AS have the details of Rs. 6 lac and tax deducted on the same.(PB 48)The Ledger extract of 'dainik Prabhar Kiran' (PB 99-100) and form 16.(53-54 . Loan to Mr. Satyanarayan Soni was received in cash 4,14,028 The confirmation and ledger is in PB 101-102 . Loan from Shri Prakash Purohit received in cash 81,375 The confirmation and ledger is in PB 103 . Sale of agriculture crop 2,00,000 The cash received is supported by sale bills on PB 115-135 and the amount is credited in capital account on PB 47, the same is also in the return of income at PB 38. Otal 14,95,403 It i....
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....ion. 21. At the time of hearing, Ground No.1 is not pressed and the same is dismissed as such. 22. Ground No.2 is against maintaining the addition of Rs. 3,03,000/-. We find that the authorities below made addition purely on estimation basis. We have given our thoughtful consideration to the facts of the present case we restrict the disallowance to the extent of Rs. 2 lakhs. Rest of the addition is deleted. Ground No.2 of the assessee's appeal is partly allowed. 23. Ground No.3 is against addition on account of cash deposits in bank of Rs. 56,82,161/-. It is stated that the opening cash balance of Rs. 37,31,517/-. It is also stated that the assessee in ICICI Bank Rajwada branch deposited a sum of Rs. 49,25,000/- and in the State Bank of Indore a sum of Rs. 8,82,161/-. The assessee has given a cash flow statement in the submission 6. The summary of cash flow for the current year is as follows (PB 93, reproduced with respective PB nos. of current paper book) : - Particulars Amount Reference Opening Cash Balance (01.04.2009) [supported by wealth-tax return PB 88] 37,31,517 PB 88 Add: Cash Withdrawal from ICICI bank a/c no 0945....
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....dition purely on estimation basis. We have given our thoughtful consideration to the facts of the present case, we restrict the disallowance to the extent of Rs. 2 lakhs. 26. It is contended by the Ld. Counsel for the assessee that the basis of making addition is wrong and contrary to the material available on record. It is further contended that all evidences related to the agricultural income was placed before the Ld. CIT(A). In support of this, he has taken us through the paper book on the evidences furnished, it is clear that the assessee is having agricultural income, therefore, the addition made by the Ld. CIT(A) is hereby deleted. 27. Ground No.5 is in respect of initiation of penalty and Ground No.6 is against charging of interest. Ground No.5 being premature is dismissed as such. Ground No.6 is consequential in nature and is held accordingly. 28. Ground No.7 is general in nature and needs no separate adjudication. 29. In the result, the appeal of the assessee is partly allowed. 30. The appeal of the assessee in ITA No.312/Ind/2015 is partly allowed for statistical purposes and the appeal of the assessee in ITA No.310/Ind/2015 is partly allowed. Order was ....
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....submitted for alleged gifts received. Identity and capacity of donors for such gifts are not furnished along with the additional details. All gifts are of amounts either of Rs. 50,000/- or of Rs. 1,00,000/- and on similar dates raises suspicion about purpose and genuineness of gifts. No evidences to establish that income generated on such fund were offered u/s 64 in return filed by the parents of three children. No fund flow is furnished with evidences to establish that the alleged amounts received in 2003/2004 were available with children for giving unsecured loan to the assessee in FY 2009-10 that too in cash . Moot issue is that why unsecured loans in FY 2009-10 were given in cash in violation of section 269SS of the I. T. Act, 1961 when alleged gifts are shown through cheques subject to verification. In view of the above, unsecured loans claimed to have been received in cash in F.Y. 2009-10 from 3 children totaling to Rs. 3,70,000/- is not proved genuine transaction and the capacity of minors to give unsecured loans in F.Y. 2009-10 is also not proved by such alleged gift deeds. 5. It is submitted that observations s....
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....4 to provide that a sum of money exceeding Rs.25,000 received by an individual or HUF from any person after 01.09.2004 without consideration will be deemed to be income, the Amount received from any relative, as defined in explanation to section 56(2)(v)/(vi) is also not chargeable to tax. Prior to the above amendment, any amount received as gift or without consideration no tax was leviable either for giver or receiver. In the present case, the gifts were prior to that. ii. Why alleged Gifts deeds on stamp papers were never furnished before the AO and the CIT(A). b. The Gift Deeds pertaining to year 2003 and 2004 are filed as additional evidence, in order to justify the financial capacity of minor children. Although, the same is towards showing source of source, these documents only support the plea taken by the assessee before the Id lower authorities. iii. No evidences on copies of Gift deeds are regarding purchase of stamp papers from Stamp vendor with Sr. no of stamp and date of stamp purchase are found on copies of alleged gift deeds submitted. c. The Gift deeds are on Stamp papers of Rs. 50. The transaction is through banking....
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.... On perusal of these documents it is evident that Document 7 the assessee has received loan/advance from children, these amounts were given out of past savings." The amount was given towards Flat Booking advance and not an unsecured loan. x. Moot issue is that why unsecured loans in F.Y. 2009-10 were given in cash in violation of section 269SS of the IT Act, 1961 when alleged gifts are shown through cheques subject to verifications. j. The amount was given towards Flat Booking advance and not an unsecured loan. The advance for booking of flats was accepted in cash at that time, there was no restriction on receipt of the advance against sale of flat in cash. The restriction was on a loan or deposit u/s 269SS. It is therefore prayed that the addition on account of unexplained credits from Children Rs. 3,70,000/- may please be deleted in light of above submissions. Document 8 11. Gr. no.4 is against disallowance of claim made by appellant against capital gain u/s 54B of I.T. Act of Rs.35,46,018/-. The AO disallowed such claim because appellant failed to submit any proof in this regard. Now during appellate proceedings appellant has furnish....