AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 2167
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....n 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 the order of the Learned CIT(A) may be set aside and that of the Assessing Officer restored''. 3. Facts apropos ar....
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....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 Sholinganallur but refused to accept the claim of the assessee that Rs. 1,02,06,929/- was cash and value of agricultural produce and food grain stock as on 01.04.2003. He held that a sum of Rs. 1,02,06,929/- out of the opening capital of Rs. 7,49,48,917/- as on 01.04.2011 shown by the assessee stood unexplained. An addition of Rs. 1,02,06,929....
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.... 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 have considered the above submissions of the appellant and the same are found acceptable. First of all, the foremost thing to be noted is that whether this amount of Rs. 1,02,06,929/-was ever introduced in the form of cash in the books of accounts of the appellant during the relevant year 'under consideration or whether it was deposited in the bank account of the appellant in that relevant year. If the same is no....
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....ount 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 capital had increased to Rs. 7,46,48,918/-, in one day. Viz capital of zero as on 31.03.2011 had increased to Rs. 7,46,48,917/- as on 01.04.2011. Despite this, as per the ld. Departmental Representative, the ld. Assessing Officer had accepted the explanation for the source given by the assessee except for the sum of Rs. 1,27,12,549/-. According to him, ld. Assessing Officer was fair enough to accept the claim of agricultural income....
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....r. 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 Representative such expenses/payments also pertained to earlier years. Thus, as per the ld. Authorised Representative, ld. Commissioner of Income Tax (Appeals) was justified in deleting the additions made by the ld. Assessing Officer. As for the judgment of Hon'ble Jurisdictional High Court in the case of C. Packirisamy (supra), contention of the ld. Authorised Representative was that in the said case concerned assessee had filed returns f....
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....lain 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 taxes in the earlier years, it is an admitted position that such drawings and taxes do not appear in the table furnished by the assessee reproduced by us at para 3 above. Or in other words, assessee had no source for his personal expenses and taxes paid. Hence, we have to consider that such amounts had gone out of the income of the respective years. Then without doubt, opening capital as on 01.04.2011, would remain unexplained to the extent o....