TaxTMI 
TaxTMI 
2018 (7) TMI 2167
X X X X Extracts X X X X
X X X X Extracts X X X X
....ddition for taxes paid for Rs. 13, 17,620/-. 2.3) The Ld CIT(A) erred in directing the AO to delete the addition of Rs. 1,27,12,549/- made u/s 68 of the IT Act. 2.4) The Ld CIT(A) erred in deleting the excess claim of opening capital even though assessee failed to substantiate the same and existence of such opening capital. 2.5) The Ld CIT(A) grossly erred in not following the binding decision of the Jurisdictional High Court in C.Pakirasamy VS.ACIT (315 ITR 293) on identical circumstances. 2.6) The Ld CIT(A) erred in holding that balance sheet of the assessee cannot be relied upon when asssessee furnished such signed balance sheet before bank authorities as well as enclosed with the income tax return filed under verification. 2.7) The Ld CIT(A) erred in holding that the opening capital is only a notional entry and it is not reflected as assets in balance sheet when the balance sheet shows corresponding assets such as "investments" and "Loan and advances" and whether such findings of CIT(A) is perverse being contrary to facts on record. 3. For these and other grounds that may be adduced at the time of hearing. It is prayed that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1,69,954 ...... ...... 14,988 1,84,942 2007-08 27,62,260 1,00,000 ...... 5,396 28,67,656 2008-09 5,49,667 1,25,000 ...... 5,995 6,80,662 2009-10 9,85,550 1,25,000 4,60,00,000 ...... 4,71,10,550 2010-11 6,29,562 1,25,000 ...... ...... 7,54,562 Total 7,46,48,918 4. Ld. Assessing Officer did not doubt the claim of agricultural income, nor the claim of capital gains, nor the claim of dividend as appearing in the table furnished by the assessee. However, he required the assessee to substantiate the opening balance of Rs. 1,18,42,598/- as on 01.04.2003, shown in such table. Assessee explained the said amount of Rs. 1,18,42,598/- as follows:-- Sl.No Particulars Amount (B) 1 Land at Pallikaranai 4,89,562 2 Land at Karapakkam 4,51,527 3 Land at Sholinganallur 6,84,080 4 Cash at Bank 10,500 5 Value of agricultural produce, food grain stock and cash in hand. 1,02,06,929 Total 1,18,42,598 Ld. Assessing Officer believed the claim of the assessee with regard to value of the land at Pallikaranai, Karapakkam and Sholinganal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. As per the assessee, opening capital was nothing but the cumulative sum of the aggregate value of investments. 7. Ld. Commissioner of Income Tax (Appeals) after considering the above submissions held that the sum of Rs. 1,02,06,929/- was not introduced by the assessee either in the form of cash or in his bank account during the relevant previous year. As per the ld. Commissioner of Income Tax (Appeals) opening balance represented the aggregate value of the assets and the Balance sheet which was prepared for the purpose of bank loan might not present exact facts and figures. Further, as per the ld. Commissioner of Income Tax (Appeals), inadequate drawings of Rs. 11,88,000/- for earlier years worked out by the ld. Assessing Officer was purely based on assumptions and had no justification. Ld. Commissioner of Income Tax (Appeals) also reached a finding that the addition of Rs. 13,17,620/- made for deficit due to taxes paid during the earlier years, was also not justified. Thus, he deleted the additions made by the ld. Assessing Officer. Finding of the ld. Commissioner of Income Tax (Appeals) as it appears at paras 16 to 18 of his order is reproduced hereunder:- 16. I ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he above findings of the AO and the same are not acceptable. The above assumptions and the corresponding calculations carried out by the AO do not substantiate his findings. As already discussed in detail at para 16 above, the impugned balance sheet does not reflect correct and objective facts and figures which could be relied on for effecting such additions. Therefore, it will be wrong on the part of the AO to hold that this amount of Rs. 11,88,OOO/-did not suffice the opening capital of the appellant. Hence, the same cannot be treated as unexplained cash credit for the year under consideration. Accordingly, the AD is directed to delete the addition of Rs. 11,88,000/- 8. Now before us, the ld. Departmental Representative strongly assailing the order of the ld. Commissioner of Income Tax (Appeals) submitted the Balance sheet filed by the assessee as a part of its return for assessment year 2011-12, reflected proprietors' capital as ''Nil''. As per the ld. Departmental Representative, such Balance Sheet was an integral part of the return for the immediately preceding assessment year 2011-2012, filed by the assessee. Contention of the ld. Departmental Representative was that the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....subject matter of addition for impugned assessment year. As per the ld. Authorised Representative, value of the assets held by the assessee as on 31.03.2012 after deducting the outside liabilities was shown by it as its capital. Contention of the ld. Authorised Representative was that assets in the Balance sheet were all acquired in earlier years and hence the opening balance did not represent any income of the impugned assessment year. As per the ld. Authorised Representative, assessee owned 20 to 25 acres of agricultural land with sugarcane and paddy cultivation. Further, as per the ld. Authorised Representative, assessee was in Gulf working as fitter and labour contractor during the period 1990 to 2000 and had the wherewithal to acquire assets shown in the Balance sheet in the earlier years. Long and short of the contentions of the ld. Authorised Representative was that opening capital represented assets acquired during earlier years and could not be a subject matter of addition for the impugned assessment year. Viz-a-viz the addition made for deficit in opening capital due to inadequacy of source for personal expenses and payment of taxes, submission of the ld. Authorised Repre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee, ld. Assessing Officer accepted what all the assessee could even remotely substantiate in such opening balance. Ld. Assessing Officer, in our opinion was more than fair in accepting every explanation given by the assessee except for its claim of opening capital of Rs. 1,02,06,929/- as on 01.04.2003 and deficit due to non reflection of drawings and sources for tax payments in the earlier years. Assessee was duty bound to explain every rupee out of the opening capital balance of Rs. 7,46,48,917/- shown by it as on 01.04.2011. Especially so since it had shown ''Nil'' amount as its capital in the Balance sheet as on 31.03.2011 forming part of its return for assessment year 2011-12. Explanation of the assessee that the sum of Rs. 1,02,06,929/- represented cash in hand, value of food grain stock and value of agricultural produce was not substantiated before the ld. Assessing Officer, through any evidence. That apart, agricultural income shown by the assessee himself was in the vicinity of Rs. 1,00,000/- to Rs. 1,25,000/- per year, and the probability of accumulating a huge amount from such agricultural income was negligible. 12. Coming to the question of drawings and taxe....