TaxTMI 
TaxTMI 
2022 (5) TMI 771
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....id- 19 Pandemic, both the parties have placed their written as well as oral arguments during this online hearing process. 3. The lead matter is taken for the assessment year 2015-16 and therefore, the facts are drawn from the said records for the purpose of adjudication. 4. The department has challenged the order of the Ld. CIT(A) for assessment year 2015-16 on the following solitary ground taken in ITA No. 1231/JPR/2019. "On the facts and circumstances of the case and in law the ld. CIT(A) has erred in deleting the addition made on account of unexplained cash loan of Rs. 2,75,00,000/- without appreciating the fact the assessee has not maintained any books of accounts and also failed to provide name, PAN, address of the persons with whom the loans were said to be taken." 5. Whereas, the assessee has challenged the order of the Ld. CIT(A) for assessment year 2015-16 on the following grounds in ITA No. 1222/JPR/2019: 1.0 That the ld assessing officer has erred in law as well on the facts and circumstances of the case in not accepting the agriculture income of Rupees 1246718.00 disclosed in the return of income, whereas the evidences for earning the agricult....
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....o assessment of its income were called for u/s 142(1) of the Act by means of a questionnaire. Further, notices u/s 142(1) was issued from time to time. 8. During the course of search, various incriminating documents were found & seized from assessee's residential premises situated at Bank Colony, Alwar on vacation of prohibition order. The assessee, during the course of assessment proceedings vide query letter dated 04/09/2017, was confronted with the contents of the following documents which were seized and annexed as under: S.No. Page no. of Annexure AS Exhibit-1 Date of Transaction A. Y. Amount in Rs. 1 71A 11.12.2014 2015-16 10,00,000 2 71A 11.12.2014 2015-16 10,00,000 3 71A 12.02.2015 2015-16 1,50,00,000 4 71A 24.02.2015 2015-16 25,00,000 5 71A 11.03.2015 2015-16 30,00,000 6 71A 25.03.2015 2015-16 50,00,000 On perusal of these documents the assessing officer was of the view that these loose papers appear to be related to cash loans/advances given by the assessee. The assessee was asked to explain the nature of these transactions along with source thereof. He was furth....
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....y, proposed addition of Rs. 2,75,00,000/- on account of alleged unaccounted cash loans is not justified, which is against the facts and accordingly no interest thereon is called for. The reply of the assessee was considered and the same was examined in the light of reply given on that particular seized papers annexed as page no. 71A (back side of page 71) exhibit-1. The assessee has replied entry wise transaction mentioned on that seized page as annexure-4 which is reproduced here under:- The Assessing Officer has considered the reply of the assessee but found it without supporting documents, therefore, not accepted. Thus, the assessee was vide letter dated 18/12/2017 again asked as under: "1. Kindly refer to your reply dated 11/12/2017 received in this office on 12/12/2017 regarding incriminating documents seized from P.O. operation of your residential premise situated at Bank Colony, Alwar. In reply to page no. 71A of Exhibit-1 of annexure AS, you have submitted that you had received advances of Rs. 2.75 crore (from 11/12/2014 to 25/03/2015) during the year under consideration (F.Y. 2014-15) against sale of agricultural land (from 6 persons) and various....
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....2/2017 submitted as under: "With reference to the notice mentioned hereinabove, at the outset, it is submitted that your good-self has alleged in the impugned notice that no corroborating document in support of the claim of advances against sale of interest in agriculture land and expenditures has been furnished. In this regard, it is submitted that the loose paper [Page No. 71A Exhibit AS-1] pertaining to receipt of advances against sale of share in agricultural land by the Assessee duly forms part of the material/documents seized during the course of search. Also, various loose papers evidencing the expenditures done by the Assessee have also been seized during the course of search and duly form part of the assessment records. This establishes beyond doubt that all the material/documents evidencing the claims made by the Assessee duly form part of the material/documents seized during the course of search due to which no additional corroborative documents are required to prove the case of the Assessee, however, the point-wise replies of the Assessee to the specific queries raised by your goodself are given hereunder: Query No. 1. In regard to the details of the land(s) ag....
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....tted that as stated above the assessee does not maintain any of books of accounts, therefore cash flow statement/cash book for the desired period as mentioned in the query letter are not available. However, the assessee has already explained all the entries mentioned in the query letter dated 04.09.2017 through assessee's letter dated 11.12.2017 and annexure attached thereto and a copy of such details and explanations of such entries are again enclosed herewith as annexure-1." The reply of the assessee was considered meticulously. First of all the contention of A/R is not correct that the said receipts are advance against sale of agriculture land on the following counts: (i) Assessee has contended that as these transactions are mentioned overleaf at page no. 71 and as page no. 71 contains the details of land holdings of Sh. Babu Lal Data, therefore, these advances are also on account of sale of those land pieces only. Here it is worth to mentioning that no supporting agreement of land has been furnished by the assessee. Just by mentioning of these entries on the backside of a paper, which contains the details of agriculture land, does not sufficient to conclud....
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....action were made The question arises that on account of disputed land how one can entered into sale agreements with numbers of persons and if so than why those individuals would give him so much of advances without even knowing the title clearance of the land in question which is subject to rights being accrued by the court order only. Further, very interestingly these accounts are still not got settled by them and rolling over time to time. (iv) Further, if we have a close look over the said document seized and which is under consideration, it transpires that the word "r" in which the assessee is putting stress in support of its claim is actually termed as "a". If we consider as otherwise, than ""/advance could not be subject matter of renewal on time to time on market rate as there is no common practice of renewal of advances in the matter of land deals. Such kind of deals either got finalized and executed through registered document or got cancelled, if not materialized, but not got renewed. (v) The contention of the assessee of advance against agriculture land is also found contradictory that such transactions were entered into through brokers. On going throug....
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....not concealed income at all, and therefore, retracted from taxation. Interestingly, out of total 1,12,92,817/-, Rs. 31,66,065/- only has been admitted as unaccounted taxable income and remaining Rs. 81,26,752/- (Rs. 12,46,718/-has been offered as agriculture income in the year under consideration i.e. AY 2015-16) has been offered in different assessment years as non taxable income in the form of agricultural income. The submission made by assessee in this regard is reproduced as under: "Under the instruction given by the above assessee, we humbly submit that as per the statement recorded u/s. 132(1) of the Act, dated 11.12.2015 of assessee during search and seizure proceedings conducted by the department on 14.10.2015 onwards, an ad-hoc surrender of Rs. 2,01,00,000/- was made and it was also stated that the details whereof will be provided later-on. In this regard, it is submitted that the surrender of Rs. 2,01,00,000/- was made without verifying seized papers and verification of fact of his income from the books of accounts and other documents. This surrender of income was made with a view of buy peace of mind and to avoid protracted litigation and to ma....
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.... income for taxation, meaning thereby he knew that at least so much of income certainly taxable income "not the exempt one" but unaccounted at this end and therefore, assessee made surrender of Rs. 2.01 Crore but now, assessee is claiming that out of total 2:01 Crore Rs. 1,12,92,817/- only was unaccounted income and out of this 1,12,92,817/- also Rs. 81,26,752/- (A.Y. 2015-16 Rs. 12,46,718/-) was although unaccounted so offered in return but was agricultural income only so not taxable at all and moreover, rebate of the same has also been claimed for tax rate calculation purpose. The contention of assessee made during course of assessment proceedings in respect of the retraction of surrendered amount, is found completely cooked up story and an afterthought of the following accounts: (i) First of all, on going through the loose papers seized it was noticed there are hardly some of the loose papers where reference of some agricultural activities was found, those are page no. 19, 20 & 21 of AS-4 for a very petty amount as agricultural income only and no other major papers to substantiate the claim of assessee that surrender was made on the basis of those papers. ....
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....ure land pertains to the person who is the land holder and not to anyone else but here assessee without having any rent agreement tried to club all the agricultural income, if any, of all the family members in its own. If it be so, than, it is unbelievable that they also forgot to offer their respective agriculture income in their respective returns. This fact suggests that the claim of assessee that he forgot to offer it agriculture income is nothing but it is a deliberate attempt to justify its unaccounted income which he otherwise surrendered for tax during search. (b) The assessee failed to furnish any land revenue record such as Khasra, Girdavari, in support of its claim whether any agricultural activity was actually performed in the so much of land(s) which he is owner. (c) Furthermore, in support of sale of agriculture produce, the assessee could not furnish any sale vouchers, dharma Kanta parchi for sale of Safeda, copy of contract / agreement etc to substantitate its claim. (d) More importantly, assessee was specifically asked to provide his statement of affairs vide letter dated 16/11/2017, but the same has not been furnished upto the date of fi....
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....1A of annexure A.S. Exhibit 1 is the amount received by the appellant and not paid by the appellant. The dispute is with respect to whether the amount is advance towards sale of agricultural land or is cash loan received by the appellant. Ultimately the addition is made under section 68 of the Act. For the sake of brevity section 68 is extracted herein: 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year: Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory, unless (a) the person, being a resident in whose name such credit is recorded in the books of such comp....
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....ssessee. Meaning thereby, that the condition precedent to apply this section is the existence of books and the recording of a sum, as cash credit therein - ITO v. Rajendra Kumar Taparia [2008] 22 SOT 23 (Jodh.) (URO). Meaning of 'Books' 7. Clause (12A) of section 2 of the Act gives an inclusive definition of 'books'. The said clause (12A) provides that: the term 'books or books of account' includes ledgers, day-books, cash books, account books and other books whether kept in written form or as print-outs of data stored in a floppy disc, tape or any other form of electro-magnetic data storage device. CBDT's Circular No. 14/2001 explains clause (124) of section 2 as under: 'Defining of 'Books of Account' and 'Document' so as to include electronic records, etc. 7.2 With the passing of the Information Technology Act, 2000, the Act has provided definitions of books of account' and 'document' in section 2 of the Income-tax Act, so as to include electronic records within the meaning of these terms. 7.3 As the definition is not exhaustive and only inclusive, one needs ....
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.... record which a businessman is required to maintain to record his day to day transactions. According to the well settled principles of accountancy, each transaction is required to be treated under two heads - under one head, debit entry is made while under the other head, credit entry is to be made. For example, if money is received from 'K' then cash account is to be debited and account of 'K' is to be credited by the same amount. For the same reason if any sum is introduced in the books by the assessee from his own sources then cash account is debited while assessee's own account has to be credited. Cash book is nothing but the cash account which is debited if money is received and is credited if money is spent or invested by the assessee. In such cases, corresponding credit or debit entries are to be made by assessee in respect of accounts. If such entries are not made, the accounts of assessee would not tally. Therefore, failure on the part of assessee to make credit entry in the respective account would not entitle the assessee to claim that no account is credited (sic). The assessee cannot be allowed to take undue advantage of his own lapses/mistakes. Ther....
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....e of his activity to record all the transaction of his income and expenditure as also assets and liabilities. It should also pertain to a specific period which is generally a period of 12 months which coincides with financial year as defined in the act. Any other record of receipts and payment, which if not in the normal course of recording income and expenditure or assets and liabilities but only a summary of such receipt and payment will not amount to books of accounts but only an extract of the receipts and payments. Since the prerequisite for invoking section 68 is that there should be a credit of a sum in the books of an assessee maintained for any previous year, in absence of such books of accounts said section cannot be invoked. There is a well laid down logic behind requirement of books of accounts for purpose of invoking section 68 particularly when said section is read in conjunction with provision of section 69, 69A, 69B, 69C etc. For invoking section 69, 69A, 69B, 69C, the same can be done provided the same is not recorded in the books of accounts if any maintained by him for any source of income. Therefore, if books of accounts are maintained and investment or money or....
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....ry to the appellant, ld. Counsel for the appellant submitted that since there is no finding that the appellant has also incurred certain expenses or acquired any assets or money etc. the addition in alternative grounds is also not sustainable. I find force in the arguments. Since there is no finding that for explaining any money, or valuable article etc or any expenditure incurred the said amount received as advance against sale of land was offered as source, the addition under alternative provisions is not attracted. 15. The assessee has filed their submission in relation to the appeal filed by the revenue and relevant submission filed before us is reproduced here in below: At the outset is submitted that the seized paper on the basis of which addition is made is titled "Ramgarh Jamin ke pete" under which the date, name of person, amount received and the narration on account of land interest market rate is noted. Thus, the paper clearly indicates that the amount noted on this paper in relation the amount received against Ramgarh This is further supported from the fact that this noting made overle of page 71 (PB-5) which contain the details of agricultural land holding ....
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....e presumed that the contents of such books of account and other documents are true, and that the signature and every other part of such books of account and other documents which purport to be in handwriting of any particular person which may reasonably be assumed to have been signed by, or to be in the handwriting of any particular person, are in that person's handwriting, and in the case of a document stamped. executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. 69.2 A new section 292C has been inserted so as to clarify that presumptions provided in sub section (4A) of section 132 can be made in any proceedings under this Act" It is thus clear from the above that in order to give effect to the legislative intent, while bringing in section 132(4A) of the Act of presumption, the provisions of section 292C of the IT Act, 1961 was brought in the statute vide Finance Act, 2007 with retrospective effect from 01.10.1975. It would thus suffice that section 292C of the Income Tax Act, 1961 lays down a binding deeming fiction that the books of account, other documents, money, bu....
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....uch accounts which have been fully settled have been scratched If the assessee had not taken these amounts from the lenders there was no reason for him to write these initials of the lenders in these accounts. The fact itself indicates that he had borrowed the money from these various persons It is noted that both these diaries are considered by the Department as true. genuine and correct documents under s 132(4A) and if that be so, the diary No 27 gives, on one hand, the ledger accounts of the borrower and in the same accounts, the amounts taken from the lenders are mentioned When the Department considers the diary as genuine, there is no reason for the Department to doubt these entries in the diaries regarding the lenders. The principle of law is that under s. 132(4A) the document found in search is genuine vis-a-vis the entire contents thereof and the Revenue is not justified in holding a view that only a part of the content, i.e. the name of the borrower, is correct and not the name of the lender. Hence, in this case on the facts the entire diary has to be considered as genuine, true and correct document and if that is so, the fact that the initials of the lenders are ....
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....found in search should be treated as genuine with respect to all the entries recorded therein. The Revenue is not justified in taking a view that only a part of the contents, i.e., the names of the borrowers is correct and not the names of lenders Entire documents should read as a whole and contents of entire documents should be treated as correct or rejected as a whole Navjivan Oil Mills vs. CIT (2001) 170 CTR (Guj) 224: (2001) 252 TTR 417 (Guj), Kantilal Bros vs. Asstt. CIT (2995) 51 MI (Pune) 513: (1995)52 TD 412 (Pune), Glass Lines Equipment Co. Lid vs CIT (2001) 170 CTR (G) 170 (2002) 253 ITR 454 (Gnj), Mehta Parikh & Co vs CIT (1956) 30 TR 181 (SC) and Chander Mohan Mehta vs. Asstt. CIT (lm) (1999) 65 TTJ (Pune) 327 (1999) 71 TD 245 (Pune) applied. First thing the AO has to prove is that it is the investment of the assessec. In other words, the ownership of the investment must be proved to be that of the assessee the one is on the Department to prove it before actually deeming the income, relevant to the investment, as that of the assessee. Further the words used in 69 are "may presume" It casts discretion with the AO to treat the alleged investment as unexplained or....
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....t A-2 and A-4 belonged to the third parties. After this, the burden again shifts to the Revenue to prove, with some additional material that even though outgoings recorded in A-2 and A-4 belonged to third parties but outgoings recorded in 1-3 and A-5 belonged to the assessee. No such material has been brought on record or no cogent reasons have been advanced. There cannot be two standards of presumption, one for set A-2 and A-4 and other for A-3 and 4-5.- CIT vs SMS Investment Corporation (P) Ltd (1994) 207 FTR 364 (Raj) and I1O vs T. Abdul Majeed (1987) 64 CTR (Ker) 266: (1988) 169 ITR 440 (Ker) relied on. Since all the entries in A-3/A-5 contain the names of the lenders, therefore, what the assessee means in the statement is that money was advanced through him and it does not, therefore, lead to the inference that money so advanced belonged to the assessee. Thus, not much weight can be given to the question and answers recorded on 3rd Jan. 1995 particularly when legal implication of the words used in the statement are not clear to the deponent and when he is under lot of stress due to search operation and fear of life, due to disclosure of the names of the lenders. Furth....
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....ngs it was explained that the amount noted on this paper is advance received against sale of rural agricultural land from various persons and on various dates through brokers with the stipulation that interest would be paid. This fact was also stated in course of assessment proceedings vide reply filed on 21.12.2017 (PB 14-15). The AO at Pg 8 of the assessment order in Para (v) has also observed that it might be possible that any land deal could be done through any mediator/ broker but it is unbelievable that advance against such kind of deal would also be received through broker only. This is only the assumption of AO but at the same time he admitted that land deal could be through broker. No material is brought on record by the AO that the amount noted on this paper is not an advance received against sale of Ramgarh land. Therefore, the content of this paper has to be read as such in view of section 292C of the Act and therefore, addition made by the AO by treating these amounts as unexplained cash loan is unwarranted and unjustified. 3 Without prejudice to above, AO has made the addition of the amounts noted on this paper u/s 68 of the Act. Section 68 of the Act reads a....
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.... not justified. It is noticed that over and above the peak credit, the AO has further made an addition of Rs. 52.40.137/- on account of debtors exceeding the creditors. We have found that the peak determined by the AO is not correct, otherwise also, when once peak amount has been added then no separate addition is required. It seems that the AO has not properly prepared the list of debtors and creditors based on any logic. The Ld. CIT(A) has confirmed the addition of Rs. 52,40,137/- under the Provisions of Section 69B of the Act. This section relates to investment made by the assessee in the acquisition of bullion jewellery or other valuable articles but it does not speak about any investment in debtors. Moreover, Section 69B also stipulates the position where the investment exceeds the amount shown in the books of account. Since the assessee does not maintain any books of account where in the debtors and creditors are reflected, therefore, this addition has also been wrongly made and upheld u/s 69B of the Act Hence, in our considered opinion, only commission income has to be determined in this case and nothing more. Accordingly, we reverse the findings of the Ld. CIT(A) and order ....
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....o day transactions of its business including ledgers, day-books, cash books, account books and other books. The term other books does not mean to include some dumb documents like diary, notebook or deleted entries of computer CPU. The term other books refers to any other books which are relevant and in consonance with ledgers, daybooks, cash books, account books, etc. Therefore, in order to include any other books of accounts maintained by the assessee within the ambit of term 'other books', those books must be relevant in the business of the assessee to keep track of transactions. Hence, other books refers to in the ordinary course of any business of the assessee are stock books maintained in the ordinary course of business to record movement of stocks, books of accounts maintained for recording salary and wages as required under the Wages Act and other statutory books prescribed under any other law. But, it does not include diary, notebook and some other dumb documents maintained by any person for any reason. Therefore, in our considered view books refer to under section 68 means, regular books of accounts maintained by an assessee in the ordinary course of business to re....
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....received is a capital receipt. The only difference is that as per the AO it is a cash loan for which penalty proceedings u/s 271D has been initiated whereas according to assessee it is a receipt of cash advance against property. Therefore, in either of situation no addition u/s 68 can be made. In view of above, order of Ld. CIT(A) be upheld by dismissing the ground of department. 16. In addition to the written submission filed the Ld. AR has made further arguments before us stating that the assessee, his wife and sons owns approximate 230 vigha of land at village Ramgadh. This fact is not disputed by the department and the seized records consists of the proof of land holding. The seized documents it self is an evidence that on the same very paper which is seized the date, amount and name of person along with the purpose is very well written. The assessee being individual partner in various firms not required to be maintain regular books of accounts. Looking to the nature of transaction being under dispute done with the help of the broker the advance against land is not income not required to be considered as income of the assessee u/s. 68 as the seized paper itself prov....
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.... the CIT(A) is correct so far as this receipt is concerned and is not covered under the provision of section 68 of the Act. He further drawn our attention to the finding of the Ld. CIT(A) that even if the receipt is considered as income or a loan then in that case since the transfer is not made the income cannot be considered as chargeable tax under the head capital gain in the year under consideration and if considered as loan even then the same is capital receipt and is not chargeable to tax in the year under receipt. Thus, he has submitted that the findings of CIT(A) is clear finding on all aspects of law and thus, there is no error in the said order of the Ld. CIT(A) on facts as well as in law the same should sustain. 18. On the other hand, the Ld. DR argued that looking to the nature of amount recorded on the reverse side of seized page 71 and in the absence of the relevant supporting documents the version of the assessee cannot be considered as true and thus, he has vehemently argued to confirm the action of the assessing officer. He has also contended that assessee failed to submit any details about the sale document or agreement to sale and in the absence of these import....
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....g the provision of section 292C no additional corroborative documents are required to prove the case of the Assessee. Even though he has dealt with all the four questions of the assessing officer, which is reproduced in the assessment order and the gist of the same is that (i) sale deed could not be made on account of dispute between the brothers pending in court and the holding of the land is also forms part of the seized records and law does not restrict to take advance on the disputed land to (ii) The broker has arranged the land deal and the broker was not in touch therefore, these advance being related to the capital receipt has no bearing on the income of the assessee for the year under consideration (iii) As assessee is not required to maintain the books so ledger not available but in fact the details written on the seized paper will serve the purpose of the information called for (iv) since no regular books are written cash flow is not available. 21. On perusal of the reply of the assessee on the points raised by the AO we find no breach of provision of law once the transaction recorded on the seized paper evidently make it clear that the money so received is on account ....
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....receipt is concerned as section 292C cast an obligation upon the parties that when the documents found in search the party who is alleging that the facts are different as to what has been written has to prove with an evidence that the content written on the seized paper are not correct. Thus, at this stage it is also noted after taking into consideration the receipt the subsequent page seized source is considered as money received as advance. 23. All these seized documents confronted to the assessee during the course of search in the statement recorded, he has offered a sum of Rs. 2.Cr. based on the loose papers found during the course of search although the income consists partly of as undisclosed income and partly as agricultural income. 24. Alternatively, once it is accepted to be a loan or advance it is a capital receipt and not a revenue receipt. Hence, on this analogy also the amount cannot be added to income as also held by 1d. CIT(A), as we find no contrary argument before us or any material brought before us by the Revenue to convince us to take a different view of the matter then the view so taken by the Ld CIT(A). Thus, we do not find any merit in this ground of ap....
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....l Income 11,628 5 2015-16 Agricultural Income 25,78,644 6 2016-17 Agricultural Income 12,46,718 7 2017-18 Agricultural Income 3,41,513 8 Income recorded in the material seized from A-115, Bank Colony, Alwar during the course of search 31,66,065 Total Additional Income 1,12,92,817 Thus, a sum of Rupees 1,12,92,817/- may kindly be considered as income surrendered w/s. 132(4) of the Income Tax Act, 1961 in place of Rs. 2,01,00,000/ and accordingly stated u/s. 132(4) of the Act stands retracted/modified/amended. The assessee has earned the aforesaid additional income from activity of agriculture, business & other miscellaneous activities. 27. The AO, however, held that assessee is claiming agricultural income in respect of land holdings of all his family members as his agricultural income which is nothing but a deliberate attempt to justify his unaccounted income surrendered in search. The assessee has also failed to furnish Khasra Girdawari and sale vouchers evidencing the sale of agricultural produce and therefore, he considered the agricultural income of 12,46,718/- in the return....
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....he Bench on the date of hearing the Ld. AR appearing on behalf of the assessee first reiterated the facts stated in the written submission that same is extracted here in below 1. The assessee and his family members owns 57.18 hectare i.e. approx. 230 bigha of agricultural land in Tehsil Ramgarh (PB 5-10). From Khasra Girdawari of such land at PB 16-95 it is evident that safeda trees are grown on part of this land and agricultural crop is cultivated on part of the land. The assessee in his statement dt. 11.12.2015 u/s 132(4) in reply to Q.No.2 has also stated that apart from salary and remuneration he earns agricultural income. 2. In course of appellate proceedings, assessee in support of the agricultural income filed Khasra Girdawari (PB 16-95), P&L A/c of agricultural activity (PB 96), sale statement supported by invoices (PB 97-164), sale agreement with Sohrab of safeda trees (PB 165-168) and the affidavit of family members as to the belonginess of the agricultural income to the assessee (PB 169-174). However, the Ld. CIT(A) has ignored all these evidences before holding that assessee failed to prove the agricultural income. 3. It may be noted that in A....
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....ral income, corroborated this income with the seized bills related to these agricultural activities of the assessee. Even the ld. CIT(A) has accepted that the assessee has earned the agricultural income but has not given the benefit of exemption. We observed on looking to the size of the holding evidence showing the earning of the net agricultural income supported by an evidence to the extent of Rs. 12,46,718/- cannot be considered as not proved or not genuine and thus ground of the assessee is allowed. Thus, the two grounds raised by the assessee for agricultural income in ITA No. 1222/JPR/2019 is allowed. 34. Now we take up ITA No. 1232/JPR/2019 being the appeal filed by the revenue against the order of the ld. CIT(A) for assessment year 2016-17. In this appeal revenue has taken following grounds of appeal 1. "On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition of Rs.6,02,275/ made on account of unexplained cash without appreciating the fact that the assessee has not maintained any books of accounts in respect of agricultural income and did not furnish details of his assets and liabilities." 2. "Or the facts ....
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.... and the Ld. CIT(A) in respect of an appeal filed by the assessee before us in ITA No. 1222/JPR/2019 for assessment year 2015-16 in assessee's own case. Hence, the decision taken in ITA No. 1222/JPR/2019 shall apply mutatis mutandis in this appeal of the assessee and considering that decision we find no reason to interfere in the finding of the Ld. CIT(A), as the fact of the case in this year and in A. Y. 2015-16 being similar the agricultural income is required to be considered as genuine based on the set of facts placed by the assessee. The ld. DR on the other hand relied on the order of the AO and has not placed any contrary evidence that the assessee has submitted in his submission. Based on this findings, ground no. 1 taken by the department in this appeal is dismissed. 37. The second ground that has been raised by the department in this appeal is in relation to the action of the ld. CIT(A) in deleting the addition made on unexplained jewelry of Rs. 25,34,587/- ignoring the fact that the assessee has not submitted any concrete evidence in support of jewelry found during the search proceedings. 38. The facts in this regard is that during the course of search at the premis....
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....eld by different members of the family aggregated to 7186.208 gms. This is also supported by affidavit of various family members/ wealth tax returns (PB 13-19). This fact is also accepted by the AO at second para of Pg 11 where he admitted that such sheet of jewellery furnished by Sh. Ajay Data during search action while recording the statement has an evidentiary value to some extent and the same cannot be held as an afterthought but at the same time he further observed that such sheet does not put evidential value to a document itself until and unless it is supported with documentary evidences. He further held that jewellery found from residence and bank locker at Alwar alone is to be considered in the hands of assessee in view of the alleged contradictions in the statement of various persons recorded in search as narrated in the assessment order and thus out of 3319.93 gms of gold jewellery and 5955.60 gms of silver items found, gold jewellery of 2437.67 gms and silver of 4406 gms is explained. Accordingly, unexplained gold jewellery was worked out at 882.93 gms valued at Rs.23,66,252/- along with value of other precious stones of Rs.1,11,000/- and unexplained silver articles was....
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.... lockers at Jaipur including the jewellery found from the room of Smt. Mohini Data, w/o Sh. Babu Lal Data explained that all the jewellery and silver items belongs to various family members for which the person wise list of jewellery was furnished during search itself. Further when the AO himself has considered cash of Rs.1,71,010/- found at Jaipur residence as belonging to the assessee, there is no reason not to consider part of the jewellery found at Alwar as belonging to his daughter-in-laws. Thus, the jewellery found needs to be considered in totality and on that basis no excess jewellery was found particularly when in search no evidence was found that assessee has purchased any jewellery/ silver articles which is not disclosed. 5. Otherwise also alleged unexplained gold jewellery of 882.93 gms and silver article of 1.550 kg found from family members of assessee comprising of 3 male members, 3 ladies and 4 children can't be presumed to be excessive/ unreasonable considering the status of assessee. In this connection reliance is placed on the decision of Hon'ble Delhi High Court in case of Ashok Chaddha Vs. ITO 69 DTR 82 where gold jewellery weighing 906 gms fou....
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....as per the standard hindu family tradition, a male married member can possess 250 gms of gold jewelry, married female member can possess 500 gms gold jewelry and other member can validly possess 100 gms of gold jewelry. In the family of the appellant, apart from the appellant and his wife consists of two married sons, two daughter-in-law and their three children. Giving credence to the circular and considering the likely jewelry held by them, it can be said that the excess considered by the Ld. AO is much less than the permissible limit. The excess gold jewelry worked out by the Ld. AO is only to the extent of 882.93 gms which could be validly possessed by the married sons and daughter-in-law of the appellant. Though the circular is with reference to the non-seizure of the jewelry during search to the extent mentioned therein, various courts in the judgments relied upon by the appellant, it was held that the same applies also to consider the same as explained for purpose of s. 69 of the act also and to be considered as explained. Accordingly, addition in respect of gold jewelry and precious stones studded therein is to be deleted. 41. On the contrary, the ld. DR has relied upon ....
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.... challenged by the revenue in this appeal is deletion of the addition made on account of cash purchases u/s. 40A(3) of the Act of Rs. 1,95,06,818/- ignoring the fact that the assessee made purchases in cash and could not have verified from the books of accounts. Since both these grounds are on the same set of evidence and are inter related, we deal it together. 45. The AO considered certain seized material consisting various entries recorded therein and based on the working of debit and credit entries in such seized material, the AO at p. 42-49 of his order firstly calculated total debit entries to be of Rs. 4.05 crores and that of credit entry to be of Rs. 4.21 crores. He also computed peak of these credit entries to be Rs. 4.43 crores pertaining to A.Y. 2015-16 as well as A.Y. 2016-17. Accordingly for year under appeal he treated Rs. 1.68 crores to be unexplained and added u/s 68 of the Act. The said addition has been deleted by us as per earlier para of this order. On the same very seized pages and on very same entry, the AO carved out certain entries to be of purchase and sale of mustard seeds/ oil. The total of credit entries was worked out to be Rs. 1,34,76,825 and that of....
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....mated by applying g.p. rate of 10%, no further disallowance u/s 40A(3) is called for in view of the decision of Allahabad & Karnataka High Court and accordingly deleted the addition of Rs.1,95,06,818/-. Submission: 1. At the outset it is submitted that AO has considered amount of Rs.1,34,76,825/- as sale of mustard oil and made addition for the same. She also admitted that the transaction noted on Pg 53 & 54 of the assessment order relate to sale and purchase/ trading of mustard seeds and oil. Thus, once all these transactions are considered as relatable to sale & purchase, the sale amount as such cannot be added to income. What can be added is only the profit margin in such sales as held in the following cases: CIT Vs. Balchand Ajit Kumar 263 ITR 610 (MP) (HC) The facts of this case were that in a search conducted at the business and residential premises of the assessee, it was found that there were credit sales which were not reflected in the books of account. On scrutiny of the books of account of the assessee, the Assessing Officer added a sum of Rs.8,19,255/- towards the sales profit of the assessee. The Commissioner (Appeals) came to the conclusion ....
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....rference. The Tribunal was, therefore, justified in deleting the addition of Rs. 10,85,003 made on account of unaccounted cash sales." Agrawal Motors Vs ACIT 68 ITD 407 (Jab.), Abhishek Corporation Vs. DCIT 63 TTJ 651 (Ahd.) Addition can be made only of G.P./N.P. on suppressed sales and not entire sale price itself. The principles laid down in these cases are equally applicable in case of assessee and therefore, the Ld. CIT(A) has rightly held that sales as such cannot be taxed as income. 2. The Ld. CIT(A) after holding that sales as such cannot be added to income has applied g.p. rate of 10% on such sale to confirm addition of Rs.13,47,683/-. The g.p. rate of 10% applied by Ld. CIT(A) is on a higher side. The average g.p. rate in this trade is not more than 5% as evident from the g.p. rate declared by the following concerns: Name of concern Turnover (in Rs.) Gross profit (in Rs.) G. P. Rate (in %) AY15-16 A.Y.16-17 AY15-16 A.Y.16-17 AY15-16 A.Y.16-17 Saurabh Agrotech P. Ltd. 2570631687 1679784674 116058401 76607325 4.51 4.56 Ritika Vegetable Oil P. Ltd 1285202945 3618084989 41799397....
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....ofit rate. In view of above, Ld. CIT(A) has rightly deleted the disallowance made by AO u/s 40A(3) and therefore, this ground of the department be dismissed. 47. On the contrary, the ld. DR has relied on the order of the authorities below and submitted that the assessing officer after recording detailed finding made the addition of unexplained sales of the assessee on account muster oil/seeds and thus on this issue he has supported the order of the ld. AO. Alternatively, against the argument of the ld. AR of the assessee for reduction of estimation of G. P. he supported the order of the Ld. CIT(A) and as regards, the disallowance u/s. 40A(3) being the cash payment made for purchases he relied on the order of the learned assessing officer and submitted his version of both the ground and heavily supported the order of the assessing officer. 48. The finding of the ld. CIT(A) on both these ground is extracted here in below for the sake of brevity of issue on hand: I have considered the issues raised, the assessment order and the submissions made. The issue to be considered is as to whether the transactions reflect unaccounted sales and purchases or not. At the f....
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....w that the whole of the sale proceeds does not become the income. Only the gross profit embedded in such sale proceeds can be brought to tax. I therefore, hold that the gross profit @ 10% of such sales needs to be taxed and not the entire amount of sale proceeds. Accordingly, addition of Rs. 13,47,683 is confirmed and balance addition out of addition of Rs. 1,21,29,142/- (Relief = Rs. 1,34,76,825 Rs. 13,47,683 = Rs. 1,21,29,142/-) is deleted. 17.2 As regards disallowance invoking provision of s. 40A(3) is concerned, I find that the amount is presumed to be purchases made in cash. Since I have estimated an amount of 10% as income, no further disallowance is attracted. The estimation of income takes care of each and every allowance/disallowance. This view is supported by the decision of Allahabad high court in the case of CIT V. Banwari Lal Bansidhar (229 ITR 229) wherein identical question came before the court. The court held thus: "The question for consideration is when no deduction was sought and allowed under section 40A(3), was there any need to go into section 40A(3) and rule 6DD(j). We see force in the view taken by the Appellate Tribunal that when the incom....
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.... cited comparable cases for which revenue has on the contrary not filed any such comparable and merely stated that the same may be estimated @ 8 % of sales. Based on the rival submission we feel that estimate of 5 % G. P. will be fair and reasonable looking to the facts on hand and would render justice. The ld. AR of the assessee further argued before us that when the profit is estimated on account of the unexplained sales the separate disallowance u/s. 40A(3) should not be made. 50. On the issue we have heard the arguments and submission of both the parties. The revenue has not controverted the figure of the sales and has also not filed any tangible material that why the estimation made by the ld. CIT(A) @ 10 % being the profit estimated should sustain. On the contrary ld. AR of the assessee has relied upon the various judgments in his submission and submitted that value of sales cannot be added as income only the income earned can be added. He has relied the various decision. One of the such decision in the case we have followed in the case of ITO VS. Gurubachan Singh J. Juneja 216 ITR 99 (AT) (Ahd.) (Trib.) (TM) in this case it was held that value of the cash sales can't ....
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.... revenue in this appeal stands dismissed. 51. The sixth ground of the revenue in this appeal is deletion of addition of Rs. 1,18,63,959/- made on account of unexplained cash credits without appreciating the fact that during the search proceedings certain loose papers consisting of credit entries found and the assessee could not have verified from his books of accounts. 52. The facts in this regard are that the AO considered certain seized material consisting various entries recorded therein. Based on the working of debit and credit entries in such seized material, the AO at p. 42-49 of his order firstly calculated total debit entries to be of Rs. 4,05,05,446/- and that of credit entry to be of Rs. 4,21,40,484/-. He also computed peak of these credit entries to be Rs. 4.43 crores pertaining to A.Y. 2015-16 as well as A.Y. 2016-17. Thus, out of total credit entry of 4.21 crores, he made addition of 1.68 crores as unexplained cash credit u/s 68 of the Act. Further sum of Rs. 1.34 crores was added as unaccounted sale and added as such. For the balance sum of Rs. 1,18,63,659 (4,21,10,484-1,68,00,000 1,34,76,825) he noted that the said sum is unexplained cash credit. He accordingly....
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....ivity of assessee which is already declared by the assessee in the return of income and is part of the agricultural income of Rs.3,41,513/- declared by the assessee (PB 99-100). Out of the balance, an amount of Rs.65 lacs was given to Sh. Ashok Gupta, Rs.33 lacs was given to Puran Chand Gupta and Rs.9,50,000/- was given to Sh. Amit out of which Rs.76,50,000/- was subsequently received back and thus, it is repayment of advance given and not the advance received. The transaction wise details is at Pg 58-59 of the order of Ld. CIT(A). Further Rs.25 lacs at entry no.12 in the name of Sh. Shaurya Kumar on 15.09.2015 is a contra entry (refer Pg 47 of the assessment order) and is in fact renewal of amount received on 24.02.2015 (refer Pg 42 of the assessment order). Again entry at S. No.8 of Rs.10 lacs in the name of Sh. Brahm Dutt Modi is contra entry of same date (refer Pg 45 of the assessment order) and shows only interest payment of Rs.80,000/- and is in fact renewal of amount received on 12.02.2015 (refer Pg 42 of the assessment order). Therefore, the amount of Rs.1,18,63,659/- is either the realisation of advance given or is agricultural income or considered in the return filed u/s ....
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....e filing ROI u/s 153A of Income Tax Act, 1961. Further, the Ld. AO has also agreed with inclusion of such income in return of the appellant and has accordingly, first made addition under this ground and then deducted the same before arriving at total income which nullified the effect of addition made here. Thus, there is no issue regarding this amount. For ready reference, kindly refer computation of total income on page no. 64 of assessment order. 6.3.2 Entry no. 13, 14 & 19 In relation to this, it is submitted that amount of Rs. 169929.00 an (22663.00/23663.00+88938.00+58328.00) is an agricultural income of the appellant which has been dealt by the Ld. AO in ground of agricultural income during assessment years 2016-17. In support of the same, we are furnishing Profit and Loss statement of and sales statement for AY 2016-17 (Annexure 23) wherein the amounts have been explicitly stated for the purpose of calculation of agricultural income of the appellant. Further, it is pertinent to note here that the Ld. AO has also considered such agricultural income of the appellant as bogus and accordingly has made addition for it. Since, the amount has been already added in....
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.... is submitted that the assessee has given the amount for a short period, which was received back after a short while, which is evident from the seized material. The said amount was given out of the amount available with the assessee. The assessee is not maintaining any books of accounts and no ledger account of these parties. Since the amount has been given for a short period, therefore neither any interest have been accrued to the assessee nor have been received by the assessee. These transactions are not in the nature of loan or advances. To Unquote Nevertheless, we have extracted out entries from the table made by the Ld. AO on page no. 42-49 of assessment order. This extract contains details of amount given and taken to abovementioned parties. Kindly, refer below tables: From above tables, it is evident that the appellant has first provided above amount as temporary advance to these parties and then received them back after a short period of time. But in case of Mr. Ashok Gupta, there stands a credit balance; this is because the Ld. AO has considered incomplete details for addition due to which credit balance is standing. Thus, addition based....
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....cepted herself in note 5 that AS-1 page number 71 back, AS-1 page number 91 and As-4 page number 27 of Rupees. 2500000.00 amount represent one transaction whereas 3 times amount taken. Since. This entry is already considered while making addition u/s 68 of Income Tax Act, 1961 for page 71A, thus, addition over here too will only lead to double taxation. Thus, kindly delete addition of Rupees. 2500000.00 from this ground. 6.3.7 Entry no. 8 In this respect, it is submitted that the appellant was required to pay interest of Rupees. 80000.00 on advances against sale of agricultural land. In this relation, the appellant has 1st shown payment of amount of Rupees. 1080000.00 on 13.08.2015 then shown receipt of Rupees. 1080000.00 on the same date for settlement of interest. However, actually it is only payment of interest with different approach of presentation. Thus, it is our humble request to delete addition of Rupees. 1000000.00, since, it has been returned on the same date and has no effect. From above explanation, it can be concluded that the appellant has adequately elucidated nature and source of credits, thus, it is infirmity to consider the same as unex....
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....he source of the advancing this money was the amount received on agricultural land which is already considered and thus, once the money advances sources are proved, then on receipt that money against that receipt is not subjected to tax. Therefore, this credit not attract the provision of section 68 of the Act and thus, the ld. CIT(A) has correctly deleted this addition and in the absence of any tangible material provided by the ld. DR we hold to confirm the view of the ld. CIT(A) and thus ground no. 6 raised by the department is dismissed. 58. The last and seventh ground raised by the revenue in this appeal is deletion of addition of Rs. 14,23,639/- made on account of undisclosed interest income despite the fact that assessee has paid interest to various persons against the cash loan whereas assessee having cash creditors. 59. The ld. AO held that since the appellant has given advances of Rs. 1,18,63,659/- as noted in earlier paras, the appellant must have earned interest thereon. He accordingly added a sum of Rs. 14,23,639/- being the interest earned at 12% there on and added the as income. 60. Before us the ld. AR of the assessee vehemently argued that there is no proof....
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....sessee and in this appeal the assessee has raised following grounds of appeal: 1. That the ld assessing officer has erred in law as well on the facts and circumstances of the case in not considering the submission of the assessee in proper perspective with regard to unaccounted sales, whereas there is no such sales and has erred in making an addition of total sales of Rupees 13476825.00 and the ld. CIT (A)-IV, Jaipur, has erred confirming a sum of Rupees 1347683.00 by applying a gross profit rate of 10% on such sale. 2. That the ld assessing officer has erred in law as well on the facts and circumstances of the case in not accepting the agriculture income of Rupees 341513.00 disclosed in the return of income, whereas the evidences for earning the agriculture income are lying in the seized material and has also erred in giving various finding in the assessment order which are out of her presumption and surmises, and the ld. CIT (A)-Iv, Jaipur has erred in sustaining the same. 3. That the ld assessing offer has erred in law as well on the facts and circumstances of the case in making addition of Rupees. 341513.00 in respect of agricultural income claimed ex....
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....re land (already covered in notice and reply for AY 2015-16) Amount received as an advance against sale of agriculture land (already covered in notice and reply for AY 2015-16) Amount received as an advance against sale of agriculture land (already covered in notice and reply for AY 2015-16) Amount received as an advance against sale of agriculture land (already covered in notice and reply for AY 2015-16) Document 2 पà¥à¤°à¤¶à¥à¤¨-7:- कà¥à¤¯à¤¾ आप कà¥à¤› और कहना चाहते है उतà¥à¤¤à¤° अपनी मानसिक शानà¥à¤¤à¤¿ फिलहाल 201,00,000/- (दो करोड à¤à¤• लाख मातà¥à¤°) रूपये अपनी अघोषित आय मानते हà¥à¤ आयकर हेतॠसमरà¥à¤ªà¤....
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.... taxed (s) and not for the income which is not subject matter of tax. All these facts are sufficient to draw a conclusion that Document 4 S.No. Posting Date ANX Page no. Amount Narration 1 15-Jun-15 4 53 115760.00 2 15-Jun-15 4 54 1000000.00 Considered u/s 153A Received from Ashok Gupta 3 15-Jun-15 4 55 950000.00 Received from Amit Ji through Raj Dalal 4 21-Jun-15 4 59 900000.00 Received from Ashok Gupta 5 24-Jun-15 4 66 600000.00 Received from Ashok Gupta 6 4-Jul-15 3 13 300000.00 Considered u/s 153A 7 6-Jul-15 4 78 52970.00 Personal expenses 8 20-Aug-15 3 32 1000000.00 9 31-Aug-15 4 72 1000000.00 10 3-Sep-15 4 76 100000.00 11 8-Sep-15 3 2 400000.00 12 15-Sep-15 AS 91 2500000.00 13 27-Sep-15 4 19 22663.00 14 27-Sep-15 4 20 88938.00 15 27-Sep-15 4 21 75000.00 16 29-Sep-15 4 5 700000.00 17 3-Oct-15 3 21 300000.00 Received From Sh. Baraham Dutt Modi for six months @ 12% Received from ....