TaxTMI 
TaxTMI 
2020 (11) TMI 870
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....e A.O. u/s 68 of the Income-tax Act,1961 ['the Act' for short]. 2. The facts relating to the issue are stated in brief. The assessee is engaged in advertisement agency business. During the course of assessment proceedings, the A.O. noticed that the assessee has shown unsecured loans to the tune of Rs. 49.32 lakhs. Out of the above said loans, the assessee has received a sum of Rs. 19.50 lakhs from a person named Shri Prabhulingappa, who is the father of Managing Director of the company. It was noticed that the loans were received in cash. The assessee furnished confirmation letter obtained from Shri Prabhulingappa, wherein he had confirmed that he has given a sum of Rs. 19 lakhs to the assessee, even though the amount received fr....
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....ppa by way of cheque in the subsequent years which goes to show that the amount of Rs. 19.50 lakhs represent genuine loan taken by the assessee. He further submitted that Shri Prabhulingappa is basically an agriculturist and hence, did not file return of income. Subsequent to the assessment order, Shri Prabhulingappa has filed his return of income, wherein agricultural income earned by him was duly declared. He submitted that Shri Prabhulingappa is an agriculturalist for the past 40 years and the impugned loan amount of Rs. 19.50 lakhs was given to the assessee company out of his accumulated savings. Accordingly, he submitted that the tax authorities are not justified in disbelieving the loan transactions. The Ld. A.R. submitted that the....
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.... Ld. CIT(A).: "7 When enquired about why the money was received in cash, the appellant sought that there was business expediency. On further enquiry about the sources of the money, the appellant submitted that Mr. Prabhulingappa has agricultural income from cultivation of land which belongs to him, his wife and his two brothers. Later he claimed that he has rights to cultivation and keep income arising out of it with him for lands belonging to him, his wife and his younger brother Shri. Umesh K N. Shri. Prabhulingappa has submitted a copy of GPA executed by Shri. Umesh K.N upon him giving him the right to cultivate the said land. It is also claimed that Shri. Prabhulingappa's brothers and his wife have given right to keep earni....
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.... same land to Shri. Prabhuling.ppa. In view of this, I find that in absence of distinct dealing of monetary terms, it cannot be inferred that the income accruing from the share of land of Shri. Umesh K.N is to be considered in the hands of Shri. Prabhulingappa. 12. In view of the above the share of land of Shri. Prabhulingappa and others and their share of income are to be considered separately. Incomes from the produce are accruing in the hands of related parties are as below: Name of holder and relation with Prabhulingappa KN Area of land Proportionate income from sale of areca nut Proportionate income from sale of other produces Prabhulingappa KN 6.72 acres Rs. 10,23,704 Rs. 3,58,294 Smt. Prathima(Wife....
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.... In view of the above, I find that firstly the loan should have been given via banking channels which has not happened in this case. Further, out of the given income from agriculture of areca nuts and others, the appellants share is only Rs. 13,81,998/-. Rest of the income of Rs. 20,89,450/- is accrued in the hands of Shri. Prabhulingappa's wife and his brothers. It is also seen that agricultural income is the only source of income for Shri. Prabhulingappa. 17. The Net agricultural income worked out will be 50% Rs. 13,81,998[approx. 6.92 Lacs]. Further, the entire amount of Rs. 13,81,998/- cannot be saved by him. Assuming that a minimum of Rs. 20,000 per month is required for his basic sustenance, Hence, an amount of Rs. 2,40,0....