TaxTMI 
TaxTMI 
2023 (11) TMI 1150
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....which are without prejudice to any other :- 1.0 On fact and circumstances of the case and in law, Ld. CIT(A), erred in deciding the appeal without considering the rebuttal to remand report filed by the appellant before Ld. CIT(A) and finding of Ld. AO provided in the remand report; 2.0 On fact and circumstances of the case and in law, Ld. CIT(A) erred in sustaining the addition of Rs. 1,48,902/- on estimating the additional income @5% of sale turnover of cloth and fabrics; 3.0 On fact and circumstances of the case and in law, Ld. CIT(A), erred in sustaining the addition u/s. 68 of Rs. 14,15,620/- of entire turnover disclosed in hotel management business, though at page-33 of CIT(A) order, the addition under hotel management had been estimated of Rs. 1,50,000/-; 4.0 The Ld. CIT(A), before sustaining the addition u/s. 68 of entire turnover of hotel management of Rs. 14,15,620/-, erred seriously in ignoring the understated vital facts, being; a) In original assessment u/s. 143(3), the business of hotel management had been accepted as genuine and profit thereon had been assessed at Rs. 4,52,182/- [@33.86% on turnover]; b) The Ld. CI....
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.... 147 of the Act was completed on 18/10/2011 assessing total income at Rs. 4,12,590. Subsequently, notice dated 07/05/2012 under section 148 of the Act was issued and served on the assessee. In response thereto, the assessee filed a letter enclosing a copy of the return for the year on 29/08/2011. However, the same was not treated as compliance with the said notice as no return of income was filed by the assessee in response to the notice issued under section 148 of the Act. In the reasons recorded for reopening the assessment, it was observed that the assessee is filing two separate returns of income on two different names and PANs. It was further observed that he has claimed a deduction under Chapter VI-A of more than Rs. 1 lakh, a lower rate of taxes and basic exemption twice in the same year, by filing two different returns. It was further observed that in one return of income the assessee has used the name Shri Sanjib Sudhir Pradhan, having PAN AKIPP8300J, while in the return filed with ITO-25(2)(4), the assessee has used his name Shri Rajiv Rama Pattanayak, and used the PAN AVSPP 7197H. It was further observed that the assessee has made huge cash deposits in the bank account w....
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....erprises of the assessee from where assessee declared profit of Rs. 4,79,297/-. The AO has held that the assessee not carried out any genuine business transaction during the year under consideration to gain hotel management charges on the ground that bills issued by the assessee were not genuine and the Balance Sheet does not show any fixed asset as required to carry out such type of business, therefore, the total amount appearing in books of account under the head hotel management services treated as unexplained cash credit u/s 68 of the Act. On the basis of the material on record, it is noticed that the assessee simply stated that he is running catering business as third party brokers. In this condition. the assessee should have provided the name, address and telephone numbers of the broker who has supplied the labourers/staff. However, he failed to provide the same. As per remand report, it is noticed that the assessee submitted various receipts and these receipts are mostly shown as services for hall and hall decoration, services for serving food and beverage, services for bringing all utensils etc. The bill issued by "The assessee does not contain (1) Serial number (i....
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....t and loss account does not show payment of rent against the use of rented premises. It is evident from the record that sufficient opportunity was granted to the assessee during the reassessment proceedings to produce the documentary evidence in support of the submission that the income is earned from the Hotel Management Business. However, the assessee neither before the lower authorities nor before us produced any evidence to substantiate its claim beyond doubt. Therefore, in the absence of satisfactory documentary evidence, we do not find any merit in the plea of the assessee that the income of Rs. 14,15,620 is on account of Hotel Management Business. It is further the plea of the assessee that the entire turnover cannot be brought to tax and only the real income embedded therein would be held as suppressed income. In this regard, it is pertinent to note that the assessee has not discharged its onus to satisfactorily prove the incurring of expenditure for running the alleged Hotel Management Business. Further, the ledger account of the Hotel Management receipts and salary paid to the staff is also not furnished by the assessee in the year under consideration. Therefore, in the a....
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....f his late father, agricultural income, if any, arising out of this land pertains to her mother and not to him. In view of the above, the AO held that the agricultural income shown in his hands is not his income. In order to prove that assessee has earned agricultural income, assessee produced bill for sale of agricultural produce issued by M/s Mahalaxmii Enterprises The assessee's claim of agricultural income was denied by the AO due to the following reasons:- i The assessee had mentioned different amounts as receipts from agricultural produce during the course of original assessment and re- assessment proceedings. ii The bills produced in these separate proceedings were issued on different dates and none of the bills were matching with those submitted earlier. iii This is the first year during which agricultural income was declared. iv The bills issued by M/s Mahalaxmi Enterprises produced by the assessee during the course of reassessment proceedings mentioned the state as West Bengal whereas in the original assessment the state mentioned was Orissa. Further receipt of payment from M/s Mahalaxmi Enterprises is shown on five date in....
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....00/-, Rs. 2,92,500/, Rs. 3,75,000/- and Rs. 3,04,980/- respectively. However, in this respect also appellant has failed to substantial that the payments were accepted through account payee cheque or demand draft or the other banking channel and the same had been credited in assessee's account. On the other hand, it is also found that during the assessment proceedings, the appellant had mentioned different amounts as receipts from agricultural produce during the course of original assessment and re-assessment proceedings. The bills produced in original assessment and re-assessment proceedings were issued on different dates and none of the bills were matching with those submitted earlier. The format of the bills filed during the course of these two proceedings also varied. The other major discrepancy in the bill is signature of the proprietor varies from bill to bill. Therefore, the genuineness of the receipts from agricultural produce is not proved. Therefore, in this case it cannot be assume that assessee owns any agricultural land and carry out any agricultural activity or earned any income thereof. The addition made by the AO of Rs. 12,34,980/- u/s 68 of the I.T. Act, 1961 is....
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....basis, the AO came to the conclusion that the reply to the notice issued under section 133(6) of the Act was not received from the genuine trader of the paddy but the assessee has managed to get the letter to his associates and prepared reply to it himself with forged signatures. In view of the facts and circumstances, we are of the considered view that if the Revenue doubts the genuineness of the documents submitted by the assessee then it is either required to direct the assessee to produce the person who has executed such document or issue summons to such person in this regard. The documents cannot be doubted without completing the enquiry in all respects. During the hearing, the learned AR placed on record the copy of the order passed by the learned CIT(A) for the assessment year 2013-14, wherein it was accepted that the assessee was involved in agricultural activity. However, from the record, it is evident that in the present case, the Revenue has doubted this aspect. Therefore, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication after examination of all the details filed by the assessee. In this regard, we also direct the AO to conduct ....
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..... Being aggrieved, the assessee is in appeal before us. 17. We have considered the submissions of both sides and perused the material available on record. From the perusal of the paper book filed by the assessee, we find that notice dated 30/06/2015 under section 133(6) of the Act was issued to assessee's mother calling for various information. In response thereto, vide letter dated 14/07/2015, assessee's mother submitted that she had given a gift in cash of Rs. 16,65,000 to her son, i.e. the assessee. It was further submitted that the gift of Rs. 15,00,000 was pursuant to the gift deed dated 08/05/2010, while vide gift deed dated 04/03/2010 gift of Rs. 1,65,000 was given to the assessee. It was further submitted that the assessee settled with his family in Mumbai and he was in need of funds for purchasing a residential house in Mumbai. Therefore, a sum of Rs. 16,65,000 was given as a gift to the assessee. As regards the source of the aforesaid gift, assessee's mother submitted that she is an owner of agricultural land and in this regard furnished a copy of the 7/12 extract of the land owned by her. Further, it was submitted that part of the agricultural land was sold on 30/01/2....
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....ther, we find no basis in doubting the payment of Rs. 1,65,000 in cash as a gift to the assessee. Accordingly, the addition made by the AO on this aspect is deleted, and ground no. 7 raised in assessee's appeal is allowed. 18. Vide application dated 12/09/2022, the assessee sought admission of additional grounds of appeal challenging the reopening of assessment under section 147 of the Act. However, we find that on 17/03/2023 the learned AR chose not to press the aforesaid application. The endorsement in this regard by the learned AR forms part of the record. Accordingly, the aforesaid application seeking admission of additional grounds of appeal is dismissed as not pressed. 19. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITA no.1503/Mum./2022 Assessee's Appeal - A.Y. 2011-12 20. In its appeal, the assessee has raised the following grounds:- "The appellant prefers an appeal against an order passed by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi dated 29/3/2022 on following amongst other grounds each of which are without prejudice to any other :- 1.0 On fact and circumstanc....
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....ilizers and other documents to prove the genuineness of agricultural activities is filed on record. 8.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in sustaining the addition u/s. 68 of Rs. 40.38,300/- of Gifts received from appellant's mother, wife and relatives covered under Expl. (e) to Sec. 56(2)(vii) on holding that credit-worthiness of donors is not proven; 9.0 The Ld. CIT(A), before sustaining the addition u/s. 68 of gifts received of Rs. 40,38,000/- from relatives, ought to have considered the understated vital facts, being; a) The identity and genuineness of the gifts have been proven on filing notorised gifts deeds, PAN card, Aadhar Card, Voter ID, etc; b) The credit-worthiness of donors had been proven on filing the agriculture lands, properties, assets, income, etc on record; c) The notices u/s. 133(6) issued to the donors have been served and respective replies along with documentary evidences had been filed on record: 10.0 On facts and circumstances of the case and in law, Ld. CIT(A), erred in sustaining the addition u/s. 68 of Rs. 8.91.548/- on sale of ornaments and on ignoring the sett....
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....r under consideration to gain Hotel Management charges. Accordingly, the amount appearing in the books of account under the head Hotel Management charges was treated as unexplained cash credit and an addition of Rs. 24,86,743 was made to the total income of the assessee under section 68 of the Act. 26. The learned CIT(A), vide impugned order, dismissed the ground raised by the assessee on this issue, by observing as under:- "6.2 .......... In support of its claimed assessee has submitted P&L account, Balance Sheet, copies of sale bills of Pradhan Enterprises of the assessee from where assessee declared profit of Rs. 10,44,433/-. The AO has held that the assessee not carried out any genuine business transaction during the year under consideration to gain hotel management charges on the ground that bills issued by the assessee were not genuine and the Balance Sheet does not show any fixed asset as required to carry out such type of business, therefore, the total amount appearing in books of account under the head hotel management services treated as unexplained cash credit u/s 68 of the Act. On the basis of the material on record, it is noticed that the assessee ....
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....rt of the paper book from pages 151-154. The assessee has also placed on record the copy of bills of Hotel Management receipts from pages 159-177 of the paper book. From the perusal of these bills, it is evident that the same have been raised in respect of services for Hall and lawn decoration, serving food and beverages, bringing utensils, services of waiters and waitresses, and services for attendants. However, it is also evident that none of these invoices mentioned the complete address of the service recipient. Further, not even the location of rendering of services is mentioned in these invoices, except mentioning the name of the city, i.e. Mumbai. Further, from the perusal of aforesaid ledger accounts, it is evident that the name of the person, from whom the payment is received and to whom the salary is paid, is not mentioned. Similar to the assessment year 2010-11 this year also there are no details regarding the purchase of raw materials for running the catering business during the year under consideration. It is evident from the record that the address of the service receiver was neither provided by the assessee nor called for by the AO during the assessment proceedings. I....
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....brief facts of the case pertaining to this issue are that the assessee has claimed to have received the gift of Rs. 4,038,300, during the year, from various relatives in cash. The details of the same are as under:- Sl. No. Name of the Donor Relationship with the assessee Amount (in Rs. ) 1. Renukabala Pradhan Mother 15,00,000 2. Suresh Chandra Shee Father-in-law 2,51,000 3. Rashmi Sanjib Pradhan Wife 11,95,000 4. Mihir Kumar Pradhan Uncle (father's brother) 1,51,000 5. Bikash Chandra Shee Brother-in-law 9,41,300 Total 40,38,300 31. As regards the gift of Rs. 9,41,300 received from Mr. Bikash Chandra Shee in cash, the assessee could not furnish the name of the relative, the identity, creditworthiness, and capacity during the assessment proceedings. Accordingly, the AO treated the gift of Rs. 9,41,300 as unexplained cash credit and added the same to the total income of the assessee under section 68 of the Act. However, during the appellate proceedings before the learned CIT(A), the assessee submitted that he received the sum of Rs. 9,41,300 as a gift from Mr. Bikash Chandra Shee (assessee's brother-in-la....
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....68 of the Act. The learned CIT(A), vide impugned order, after considering the Memorandum of Understanding dated 30/01/2009 and copy of the sale deed of land made on 25/03/2013 came to the conclusion that assessee's mother had not sold the land instead she had gifted the land to a trust and accordingly source of gift to the assessee is not the sale of land. Accordingly, the learned CIT(A) dismissed the ground raised by the assessee on this issue. 34. It is pertinent to note that the Memorandum of Understanding dated 30/01/2009 and registered sale deed dated 25/03/2013 were relied upon by assessee's mother in her reply to the notice issued under section 133(6) of the Act to substantiate the source of gifts given to the assessee in cash. In the present case, the learned CIT(A) has treated the sale deed as a deed for the gift of land to the trust. However, even if it is considered as a sale deed, as claimed by the assessee, the entire consideration of Rs. 14,00,000 cannot be held to have been received by assessee's mother in the year under consideration, as the deed is dated 25/03/2013. Therefore, without going into the issue whether the deed entered on 25/03/2013 is a gift deed or ....
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.... As regards the gift in cash of Rs. 1,51,000 received from Mr. Mihir Kumar Pradhan (assessee's uncle), the assessee filed a gift deed dated 02/05/2010 during the assessment proceedings. In reply to the notice issued under section 133(6) of the Act, this party enclosed a copy of documents of holding of agricultural land. Since the assessee could not furnish any documentary evidence to prove the creditworthiness of the donor and the ownership of the agricultural land does not prove the capacity of the donor to make the gift, the AO vide assessment order made an addition of Rs. 1,51,000 received from Mr. Mihir Kumar Pradhan as unexplained cash credit and added the same to the total income of the assessee under section 68 of the Act. The learned CIT(A), vide impugned order, observed that Mr. Mihir Kumar Pradhan does not have a PAN and is also not filing the income tax return. Further, it was observed that the assessee has not submitted any bank account statement for the year under consideration to prove the genuineness of the transaction and the capacity of the donor. Accordingly, the learned CIT(A) dismissed the ground raised by the assessee on this issue. We find that even before us ....
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....f gifting cash of Rs. 2,51,000 to the assessee. Further, apart from the aforesaid documents no other document has been placed on record which could prove the creditworthiness of the donor. The assessee has also not brought any evidence on record to controvert the detailed factual findings of the AO which have been upheld by the learned CIT(A). Accordingly, we find no infirmity in the findings of the learned CIT(A) in upholding the addition of Rs. 2,51,000 under section 68 of the Act in respect of gift in cash received from Mr. Suresh Chandra Shee. 38. As regards the gift in cash of Rs. 11,95,000 received from Smt. Rashmi Sanjib Pradhan (assessee's wife), the source of funds was shown as agricultural income. During the assessment proceedings, upon perusal of the capital account of assessee's wife for the period 01/04/2009 to 31/03/2010, it was observed that her closing Balance is Rs. 9,72,550. It was further observed that she has filed a return of income for the assessment year 2010-11 of Rs. 1,68,695. Further, the balance as on 31/03/2011 was Rs. 8,26,193. It was also noted that in the last 5 years the donor has never shown any agricultural income. Since the creditworthiness of ....
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....11,95,000 under section 68 of the Act in respect of gift in cash received from assessee's wife. 40. The assessee has also submitted that the gifts are received from the mother, wife, and other relatives which are covered under Explanation (e) to section 56(2)(vii) of the Act, and thus the same is not taxable. However, it is pertinent to note that as per section 68 of the Act the assessee is required to offer an explanation about the nature and source of any sum credited to his books to the satisfaction of the AO, and in this regard, the assessee is not only required to prove the identity of the creditor and genuineness of the transaction but also the creditworthiness of the creditor, which the assessee has failed to prove in case of certain transactions as noted above. Accordingly, mere reliance on Explanation (e) to section 56(2)(vii) of the Act would not absolve the assessee from the onus cast on him under section 68 of the Act. As a result, grounds no. 8 and 9 raised in assessee's appeal are partly allowed for statistical purposes. 41. The issue arising in ground No. 10, raised in assessee's appeal, pertains to an addition under section 68 of the Act on the sale of ornamen....
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..... Act, Sh. Dimpesh Jain has stated that Sh. Sanjib Pradhan was asked him to give back dated invoice bill mentioning value of 7 items as per his description for the rate as on 10.04.2009. Sh. Sanjib Pradhan informed to Sh. Dimpesh Jain that he wants this invoice for his record only. However, during the assessment proceedings, Sh. Dimpesh Jain has submitted copy of the invoice dated 10.04.2009 wherein it is mentioned that this invoice is for only 'valuation purpose', no purchase has to be linked with this rough estimate and this is counter signed by Mr. Sanjib Pradhan. Therefore, it is clear that no transaction was carried out vide bill no. 1000. Further, regarding the bill No. 1115, Sh. Dimpesh Jain has again stated in his oath statement u/s 131 of the I.T. Act, 1961 that Sh. Sanjib Pradhan was asked him to give back dated invoice bill. Since, the business of the jeweller was started on 09.02.2011 and received TIN No. 12.01.2011, therefore, it is not possible that the above mentioned sale/purchase will be carried out in the prior to 09.02.2011. Therefore, the addition made by the AO on account of sale/purchase of Gold ornaments of Rs. 8,91,548/- are, therefore, sustained. Ac....