TaxTMI 
TaxTMI 
2025 (2) TMI 1357
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....e Act amounting to Rs. 1,01,59,959/- without considering the confirmation letters issued by the landlords, cash deposits out of prior withdrawals, capital contribution and agricultural income. 3. The ld. CIT(A) has further erred in rejecting the interest amount of Rs. 7,48,842/-, which is nothing but interest paid on loan availed from M/s GE Capital, wholly and exclusively incurred for the purpose of business which is evident from rate of interest charged. 3. The brief fact of the case is that the assessee is a farmer and is also running a ladies' hostel under the name and style "Saraswathi Bhavanam" and is also engaged in agricultural activities. The assessee's husband Mr.P.Seeman is running a tutorial centre in Chennai in the name of M/s.Seeman Entrance Coaching Centre. A search was conducted u/s.132 of the Act in the case of Mr.P.Seeman on 23/08/2014 and consequently, the assessee's case was reopened for 4 assessment years from 2010-11 to 2013-14 and based on the following information received from the Investigation Wing: "to verify the cash deposits in the Bank of India, T.Nagar, Capital Gain on sale of immovable property at T.Nagar, Chennai" ....
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....he same as cash inflow. R Malathy 15,00,000 Rs. 7.50 lacs vide two cheques (Refer 957925 for Rs. 5,00,000/- & Rs. 2,50,000/-) and the balance Rs. 7.50 lacs by way of cash as clearly mentioned in the confirmation letter. The Ld.CIT(A) wrongly construed from the confirmation letter Page 3 of Paper Book) the entire amount of Rs. 15.00 lacs 957926 was received by way of two cheques. Copy of relevant page of the bank statement is enclosed vide Page 15 of paper book (highlighted for easy reference) Thus, the CIT(A) ought to have allowed cash received to an extent of Rs. 7,50,000/- as cash inflow. Sathurappan 5,00,000 Rs. 8,74,000/- vide two cheques viz., Chg no. 44959 and 187162 of Rs. 4,37,000/- each and the balance Rs. 1,26,000/- by way of cash as clearly Mentioned in the confirmation letter. The Ld.CIT(A) erred in not considering the cash portion of rental advance received back which has been clearly mentioned in the confirmation letter (Refer Page 5 of Paper Book) Rukmani Sathurappan 5,00,000 K.Balaraman 6,11,500/- Cash The assessee had submitted the cancelled rental agreement (Refer Page 7 to 11 of Paper Book) along with date of cancellat....
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....essee explained to the AO as well as the ld.CIT(A) the amount received from her husband Mr.P.Seeman who has made drawings from his proprietary concern in the earlier years. In this regard, the assessee has furnished the copies of Inocme tax returns of Mr.P.Seeman for the AY 2001-02, 2002-03 & 2003-04 and 2007-08. Further, the assessee received pin money from her husband for family maintenance over a period of time and the same was used for the cash outflows mentioned above. From the above, the ld. AR submitted that no addition on cash deposits can be made u/s.69 once the assessee has duly explained the cash flow statement as discussed by the Tribunal in the case of Smt.Renukaben Umedsinh Parmar, vs. The Income Tax Officer, Ward-3, Navsari, ITAT Surat Bench (ITA No.2493/AHD/2015) dated 08.03.2021. It is further submitted by the ld.AR that the addition towards the difference in cash flow statement made by the AO is merely on the basis of whims and fancies. The AO has made the additions without any justified reasoning and cogent basis. The opinion of the AO is required to be formed objectively with reference to the material on record. The genuineness of the transaction can be....
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....4,67,664/-. 4. On a number of pages, entries struck down with pencil, only monthly abstract given in ledger account etc. In view of the above facts, the authenticity/correctness of the books of account produced itself is under question...)" Accordingly, the AO has made addition of Rs. 1,01,59,959/- towards unexplained cash credit u/s.68 of the Act. The ld.CIT(A) in his Order dated 30.07.2020 vide para 7.6 has stated that the assessee did not explain the defects pointed out by the Assessing Officer in the Remand Report with supporting evidences. Hence the ld.CIT(A) has rightly rejected the claim of the assessee that the rental advance received back as the source for cash credit and upheld the decision of the AO in making addition in this regard. (a) Rent advance received back: Rs. 41,15,000/-: It is pertinent to mention that in the confirmation letters attached with the paper book for the respective year does not contain vital detail such as Door No. to demonstrate proper address, date of issue of letter and place with proof of identity viz. Aadhaar Number/PAN/Voter ID. In the absence of above important details the authenticity and genuineness of the co....
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....ds of appeal the assessee contested that the amount introduced as capital contribution was out of her drawings during previous years and current years. 11.3 During the appeal proceedings the A.R stated that the sources for the capital of Rs. 4,00,436/- were earlier drawings and gift from Shri. P. Seeman. 11.4 In the Remand Report the Assessing Officer stated that the Assessee did not furnish any evidence regarding another source of capital contribution of Rs. 4,00,436/-. Regarding the gift from Shri P Seeman the A.R filed copies of returns of income of Shri P. Seeman for A. Y.2001-02 to 2003-04 and 2007-08. The returns of income contain the details of drawings made by Shri P.Seeman from his Proprietary concern. The AR did not furnish any other evidence to substantiate claim of receipt of gift from P.Seeman. 11.5 In the reply to the Remand Report the A.R stated that it is natural that as per our Indian culture the drawings are given to the wife for savings or investments and hence the explanation of gift of Rs. 4,00,436/- from Shri. P. Seeman should have been accepted. 11.6 However the assessee did not furnish any evidence in support of the earlie....
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....nking channel, the same cannot be treated as inflow for cash used towards application of funds. 4.6 Further, the assessee has explained that the source to the tune of Rs. 18,50,000/- has been drawn by herself from the bank account of the business through the self cheques drawn by his son for regular business expenditure of the hostel. We note that the said amount has been drawn from Bank of India a/c. No.80192010002063 standing in the name of Saraswathi Bhavanam, viz, a ladies hostel run by the assessee and the confirmation from the said bank also has been furnished by the assessee for having drawn the cash. Therefore, we are of the view that the AO and that of ld.CIT(A) has erred in rejecting the evidences for the source of Rs. 18,50,000/- and inclined to delete the addition to the extent of Rs. 18,50,000/-. 4.7 Further, the assessee has also claimed that the staff of 'Saraswathi Bhavanam' withdrew cash of Rs. 28,64,163/- for various payments during the impugned assessment year, which was confirmed by Bank of India vide letter dated 02.01.2019. However, the AO did not consider the bearer cheques given by the assessee to their staff for various expenses. We note that these be....
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....m of interest under the pretext that the hostel building was kept vacant as it was in a dilapidated condition and not used for the purpose for business. In this regard, the assessee wishes to reproduce the definition of 'dilapidated' as per Legal Law Lexion as below: "State of bad repair, falling into decay. "A wasteful destroying, or letting of Building run w ruin and decay, for want of reparation" (emphasis supplied). From the above, it is clear that the building was in need of repair works and the purpose of the loan was to renovate the hostel building. The ld.AR stated that considering the above facts, it is evident that the loan was utilized for the purpose of business and hence ought to be allowed. It is worthwhile to mention here that as per the Section 36 of Income Tax Act, 1961, "if any interest paid for the business purpose, the same has to be allowed as business expenditure " as held in the cases of - The DCIT, Cir. 1(1)(1), Ahmedabad v. Applitech Solution Ltd. (ITAT Ahmedabad B Bench) in ITA no.248/Ahd/2020 pronounced on 19/05/2023; and Vodafone India Ltd. vs. Additional Commissioner of Income Tax, (ITAT Mumbai) in ITA no.216/Chandi/201....
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....sessment proceedings the assessee has explained that the above amount was borrowed for repayment of caution deposit. Hence the assessing officer has concluded that the caution deposit would be available with the assessee either in cash or in bank and as such there is no need to borrow funds to repay the caution deposit. Accordingly, the assessing officer has made addition since the interest-bearing borrowed funds were utilized in non-business activities. Later in the grounds of appeal the assessee has stated that the said loan was taken during the year 2004-05 for paying rental advance for hostel premises and was disclosed in the IT return filed for year 31.03.2005. In the written submission under consideration the assessee has provided definition for 'dilapidated' as per Legal Law Lexion as below: "State of bad repair, falling into decay. A wasteful destroying, or letting of Building run to ruin and decay, for want of reparation" (emphasis supplied). From the above, it is clear that the building was in need of repair works and the purpose of the loan was to renovate the hostel building. The ld.AR prayed that considering the above facts, it is evident t....
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....out considering the gift received from spouse, capital contribution and agricultural income. 3. The ld. CIT(A) has further erred in rejecting the interest amount of Rs. 6,10,002/-, which is nothing but interest paid on loan availed from M/s GE Capital, wholly and exclusively incurred for the purpose of business which is evident from rate of interest charged. 6. A search was conducted u/s 132 of the Act in the case of Mr.P.Seeman on 23.08.2014 and consequently based on the information received from the Investigation Wing: "to verify the cash deposits in the Bank of India, T Nagar, Capital Gain on sale of immovable property at T Nagar, Chennai", The assessee's case was reopened for 4 assessment years from A Y 2010-11 to A Y 2013-14. The assessment was completed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961, for the A.Y. 2011-12, wherein the following additions were made by the AO: Sl. No. Details Amount In Rs. Income admitted in Return of Income 2,45,080/- Additions: 1 Unexplained Cash Deposits u/s 68 44,60,849/- 2 Disallowance of interest 6,10,002/- 3 Disallowance of Rent payment ....
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....ntra, the ld.DR stated that the ld.CIT(A) has rightly confirmed the Unexplained Cash Deposits u/s.68 of the Act to the tune of Rs. 44,60,849/-. Further, the ld.DR stated that vide earlier report submitted on 04.08.2022, the assessing officer has reported as under: "From the documents filed, the assessee has proved that, she has earned agricultural income and in respect of A.Ys. 2010-11 & 2011-12, the agricultural income admitted by the assessee appears to be fair and correct and can be considered." Gift received from Mr.P.Seeman: Rs. 25,00,000/-: The ld.DR stated that on examination of the documents attached in the paper book it is noticed that the assessee has furnished only a confirmation letter from her husband Shri P.Seeman in respect of receipt of Rs. 25,00,000/- as gift on 20.06.2010. But the assessee has failed to substantiate the above claim with authentic evidence of document such as gift deed and copy of capital account for the respective Assessment Year. Hence the claim of the assessee is only an afterthought and does not deserve any merit for consideration. Own Source: Rs. 14,82,084/-: In respect of the above, the ld. DR stated that the ld.CIT(A) in....
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....essee is running a ladies' hostel under the name and style "Saraswathi Bhavanam" and is also engaged in agricultural activities. During the assessment proceedings the assessee has furnished the details of income and expenditure along with the cash flow have been submitted. We note that the AO has accepted the income of the assessee from the business of running a ladies hostel. The assessee has claimed that an amount of Rs. 25.00 Lakhs has been received as Gift from her spouse Sri P.Seeman during the impugned assessment year and has filed confirmation letter to this effect. Further, the assessee stated that her spouse is a regular income tax assessee and having a capital balance of Rs. 8.00 crores and having credit worthiness to pay such amount as gift. We note that the assessee's husband is having income from business of coaching centre as well as from agriculture activities and have filed income tax returns with a cumulative capital balance of Rs. 8.00 Crores. Hence, the assessee has proved source, identity and credit worthiness of the spouse and also filed a confirmation letter for the same. Hence, the action of AO and that of the ld.CIT(A) in making an addition of the sai....
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.... "State of bad. repair, falling into decay. "A wasteful destroying, or letting of Building run to ruin and decay, for want of reparation" (emphasis supplied). From the above, it is clear that the building was in need of repair works and the purpose of the loan was to renovate the hostel building. Considering the above facts, it is evident that the loan was utilized for the purpose of business and hence ought to be allowed. It is worthwhile to mention here that as per the Section 36 of Income Tax Act, 1961, "if any interest paid for the business purpose, the same has to be allowed as business expenditure" as held in the cases of - The DCIT, Cir. 1(1(1), Ahmedabad v. Applitech Solution Ltd. (/TAT Ahmedabad B Bench) in ITA no.248/4hd/2020 pronounced on 19/05/2023; and Vodafone India Ltd. vs. Additional Commissioner of Income Tax, (/TAT Mumbai) in ITA no.216/Chandi/2011 pronounced on 16103/23. 8.1 Per contra, the ld.DR stated that the ld.CIT(A) in his Order dated 30.07.2020 vide para 9 has discussed as under and rejected the assessee's ground in respect of claim of interest. 9. Ground No.5 - Disallowance of interest on Rs. 60,00,000/-: ....
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....ay the caution deposit. Accordingly, the assessing officer has made addition since the interest-bearing borrowed funds were utilized in non-business activities. Later in the grounds of appeal the assessee has stated that the said loan was taken during the year 2004-05 for paying rental advance for hostel premises and was disclosed in the IT return filed for year 31.03.2005. In the written submission under consideration the assessee has provided definition for 'dilapidated' as per Legal Law Lexion as below: "State of bad repair, falling into decay. "A wasteful destroying, or letting of Building run to ruin and decay, for want of reparation" (emphasis supplied). From the above, it is clear that the building was in need of repair works and the purpose of the loan was to renovate the hostel building. Considering the above facts, it is evident that the loan was utilized for the purpose of business and hence ought to be allowed. However, the assessee has failed to substantiate that the amount borrowed were utilized for the renovation of hostel building with authentic evidence such as bills/vouchers in respect of expenditure incurred in this regard. In view of th....
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.... Appeal: 1. The ld. CIT(A) has erred in sustaining the order of the ld. AO as the notice for reassessment was initiated without any fresh tangible material/evidence available to support the reassessment proceedings. 2. The ld. CIT(A) has erred in affirming the order of the ld. AO, who relying solely on the statement made by assessee's husband, treated the sale value of the property as Rs. 5.20 Crores instead of the actual value of Rs. 1.20 Crores without any corroborative evidence. 3. The ld. CIT(A) has also erred in confirming the ld. AO's order without considering the fact that the actual sale value of Rs. 1.20 Crores accepted by the sub-registrar and had been re-invested as per Section 54 of the Act without attracting any capital gain tax. 4. The ld. CIT(A) has also erred in confirming the ld. AO's order without appreciating absence of any cash flow but based on book entry in the capital account to the extent of Rs. 60 lakhs. 5. The ld. CIT(A) has also failed to appreciate that the assessee & her entire family has been into agricultural activities and due to family settlement arrangement, the assessee received a sum of Rs.....
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.... 6,88,06,200 13. Difference in Cash Flow Statement treated as unexplained u/s. 69 of the Act: Addition made: Rs. 3,39,89,953/-: The ld.AR submitted that during the course of assessment proceedings, the assessee filed cash flow statement which was not accepted by the AO and the same was recasted as given below: In support of other cash inflows mentioned above, the assessee has submitted the details which were not considered by the AO as well as the ld.CIT(A). The source for the cash inflow statement for the above is explained as under: 13.1 Caution Deposits: (Rs. 59,00,000-Rs. 7,60,650): The assessee is running ladies' hostels at different locations in Chennai with as many as 120 to 130 rooms containing single, double, triple or dormitory type rooms and received caution deposits during the year from 412 students for which the assessee has submitted the copies of the receipts and have shown the cash register during the course of assessment and the same was not considered by the AO stating that other details are not available. However, the details of register for caution deposits and ID/address proof copies of the inmates were lost during the flood in Che....
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....vities since 1988. The assessee is the second wife of Mr.P.Seeman and till the year 2010, the first wife of the Mr.P.Seeman looked after the agricultural activities in Cumbum, Theni District. She (first wife) did not deposit all the money earned out of agricultural activities in the bank account as this would facilitate her to acquire additional agricultural lands as and when they were available at an attractive price. The first wife along with her sons later shifted to Chennai and the assessee & her husband P.Seeman, moved to Cumbum district. Consequently, the agricultural activities till 2010 managed by the first wife were handed over to the assessee (relocated to Cumbum) and the hostel activities thus far managed by the assessee handed over to the first wife (relocated to Chennai). The ld.AR further submitted that the assessee's family owns 166 acres of land, consisting of Paddy, Grapes & Veg, Mango Farm, Coconut Farm. These lands were purchased by the family over a period of time. The year wise details of land (including) lease held by the Seeman family is summarized below: Year Name Measurement (in acres) Village 1988 to 2008 Seeman/Jayanthi Seeman/ La....
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.... DCIT (ITAT Delhi) in ITA Nos.2576/Del/2015 dated 04/02/2022, wherein it is held that "the AO cannot disallow expenses on his whims & fancies & needs to follow rule of consistency". The ld.AR stated that from the submission made supra, the assessee & the family predominantly derives income from agricultural activities and only due to the family relocation, the cash deposits were received from the first wife and deposited in the assessee's bank account. Therefore, the deposit amount in the bank during the year under consideration pertain to collection of caution deposit collected from students of the hostel to the tune of Rs. 59,00,000/-, bank withdrawals of Rs. 22,83,000/- and agricultural income of the earlier years and hence there are no unexplained cash deposits. Hence, from the above facts, the ld.AR submitted that the addition towards the difference in cash flow statement made by the AO is merely on the basis of whims and fancies. The AO made the addition without any justified reasoning and cogent basis. The opinion of the AO is required to be formed objectively with reference to the material on record. The genuineness of the transaction can be decided on....
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.... deposited the same in her account. In the assessment order vide page 10 the Assessing Officer has made addition of Rs. 3,39,89,953/- as discussed below: "By going through the contradictory statements made by the assessee and Shri.P.Seeman and in the absence of any evidence for having earned agricultural income of Rs. 4,11,86,448/- over the years and particularly Rs. 3,48,35,000/- during the previous year relevant to the AY.2012-13, the assessee's contention that the source for the cash deposits were made of the agricultural income earned and handed over by Smt.Lakshmi is not accepted and the cash deposits of Rs. 3,39,89,953/- for which no source was explained satisfactorily, is treated as unexplained cash u/s.68 of the I.T.Act and assessed to tax under the head 'income from other sources' chargeable to tax at maximum marginal rate." The ld.CIT(A) in his Order dated 30.07.2020 vide para 8.5 has rejected the assessee's ground in respect of claim of Agricultural Income as source for cash deposits stating that the assessee did not produce any lease agreement for having taken the agricultural lands belonging to her family members on lease. Hence agricultu....
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....hanmuganathan and Smt.Seethalakshmi who purchased the property jointly. Both the individuals stated that they have purchased the property at a cost of Rs. 1,20,00,000/- only. Though these individuals claim to have purchased the property at a cost of Rs. 1,20,00,000/- it is to be noted that Shri.P.Seeman not only admitted receipt of sale proceeds at Rs. 5,20,00,000/- but has also admitted the application of the said sale proceeds as given in the table above." 5. Summon u/s.131(1A) was issued to Smt.Jayanthi Seeman to verify the huge credits in the bank account of M/s.Saraswathi Bhavanam, which were mostly by way of cash deposits as discussed in para 1 above. In response to the summons Smt.Jayanthi Seeman appeared on 05-09-2014 and a Sworn Statement was recorded. Vide question No.4 of the statement Smt.Jayanthi Seeman was required to explain the details of cash deposits in her account which is maintained in the name of M/s.Saraswathi Bhavanam. To explain the cash deposits Smt.Jayanthi Seeman stated that Smt.S.Lakshmi, first wife of Shri.P.Seeman, handed over to her a sum of Rs. 3,39,00,000/- in cash on various dates in the year 2011 as under:- Sl. No. Date Amount ....
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....Rs. 3,39,00,000/- - Caution deposit of Rs. 59,00,000/- We note that assessee is running ladies' hostels at different locations in Chennai with as many as 120 to 130 rooms containing single, double, triple or dormitory type rooms and received caution deposits during the year from 412 students for which the assessee has submitted the copies of the receipts and have shown the cash register during the course of assessment and the AO has accepted Rs. 7,60,650/- as explained based on the rental income offered by the assessee. It is pertinent to note that the assessee has lost further evidence / documents during natural calamity of heavy floods at Chennai as submitted before the AO and that of the ld.CIT(A). Further, in support of her claim to accept the source in the absence of documents due loss of documents in natural calamity, the assessee relied on the decision in the case of CIT vs. Rawatson Engineers Pvt. Ltd. 51 IPR 67, Kolkata Tribunal, wherein it was held that "Disallowance cannot be made based on the failure to provide evidence due to natural calamity". Further, on perusal of preceding assessment orders, we have observed that the AO has accepted the cas....
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....irst wife) did not deposit all the money earned out of agricultural activities in the bank account as this would facilitate her to acquire additional agricultural lands as and when they were available at an attractive price. The first wife along with her sons later shifted to Chennai and the assessee & her husband P.Seeman, moved to Cumbum district. Consequently, the agricultural activities till 2010 managed by the first wife were handed over to the assessee (relocated to Cumbum) and the hostel activities thus far managed by the assessee handed over to the first wife (relocated to Chennai). We note that the assessee's family owns 166 acres of land, consisting of Paddy, Grapes & Veg, Mango Farm, Coconut Farm. These lands were purchased by the family over a period of time. The year wise details of land (including lease hold) held by the Seeman family is summarized below: Year Name Measurement (in acres) Village 1988 to 2008 Seeman/Jayanthi Seeman/ Lakshmi/ other family members Vayal land (paddy cultivation 48.10) Cumbum / K K Patti From 1997 Jayanthi Seeman Mango Farm 7.17 Cumbum / K K Patti 2012 Seeman and Jayanthi Seeman Coconut F....
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.... handing over the agricultural activities and the assessee thereafter deposited the same in her account. In support of the same, the assessee relied on the decision of the Apex Court in the cases of Kale Vs Deputy Director of Consolidation [1976] 3 SCC 119 wherein it was held that "the family arrangement may even be oral". At this juncture, we also note that the assessee's case was selected for scrutiny to verify the agricultural income for the A.Y. 2017-18 and A.Y.2018-19 and the assessments were completed wherein agricultural income offered by the assessee of Rs. 1,28,72,944/- and Rs. 82,66,504/- respectively, were accepted by passing orders u/s.143(3) of the Act, without making any addition under the head "Income from other sources" by rejecting the claim of agricultural income. Therefore, in the peculiar facts and circumstances of the case, we concur with the reliance of the assessee on the decision of Gopal Das Estates & Housing Pvt. Ltd. vs. DCIT (ITAT Delhi) in ITA Nos.2576/Del/2015 dated 04/02/2022, wherein it is held that "the AO cannot disallow expenses on his whims & fancies & needs to follow rule of consistency". It is clear from the above, the ....
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....nt addition has been made by the AO is based on the transaction of sale of immovable property. Admittedly the assessee is a 50% owner of the property and hence the 50% sale proceeds has been accounted after reducing book value of Rs. 300.00 lakhs i.e. Rs. 2.40 Crores to the capital account of the assessee. Therefore, we are of the considered view that there is no error in the entries recorded in the capital account and hence, we delete the addition made by the AO by setting aside the order of the ld.CIT(A) and direct the AO to recompute the total income accordingly. 15. Unexplained investment u/s.69: Addition made - Rs. 29,06,348/-: 15.1 The total cash deposit during the year is Rs. 3,78,88,000/- as per Bank of India, T Nagar. The same has been considered as deposit out of accruals of prior years' agricultural income. As the same is included in the addition for agricultural income of previous years as already explained, this addition has to be telescoped and no fresh addition should be made. The Assessee therefore prays for deletion of this addition. 15.2 Per contra, the ld.DR stated that the ld.CIT(A) in his Order dated 30.07.2020 vide para 14.5 has rejected the asses....
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.... Page 18 of paper book. Hence this ground is not pressed. 17.2 The ld.DR submitted that the relief has been given by the ld.CIT(A) in the order dated 30.07.2020, in the giving effect order passed on 07.07.2021 this addition was deleted. Hence Comments on this ground is not required. Moreover, the assessee has also not pressed the same. 17.3 We have heard both parties. Since, the ld.CIT(A) has given relief and hence the assessee has not pressed this ground, this ground of the assessee is dismissed. 18. Unexplained Fee Receipts: Addition made - Rs. 18,25,000/-: The Ld.AR stated that the fee receipt register of Saraswathi Bhavanam inadvertently included the hostel fee receipt of M/s.Seeman Entrance Coaching Centre of Rs. 18.25 lacs. The said receipt has been duly considered in the financials of Mr.P.Seeman, being proprietor of M/s.Seeman Coaching Centre. The copy of Income and Expenditure, Balance Sheet and ITR Acknowledgement of Mr.P.Seeman for A.Y. 2012-13 is given in Page 19 to Page 24 of paper book. Hence the same receipt cannot be considered in hands of the assessee as it would amount to taxing the income twice. The assessee therefore prays for deletion of this amount....
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....5,20,00,000/- and computed capital gains as under: Sale Rs. 5,20,00,000/- Less: Cost of property+ stampduty Rs. 44,00,000 Indexed cost of property (785/447 * Rs. 77,27,06/- Long Term Capital Gain Rs. 4,42,72,931/- 50% thereof relating to the assessee Rs. 2,21,36,465/- However, Mr.P.Seeman has retracted the statement immediately and the same was not considered by the AO. The AO made the addition merely based on the statement recorded by Mr.P.Seeman u/s.132(4) without any corroborating evidence. It is to be noted that the statement made by Mr.P.Seeman is not binding on the assessee. Without prejudice to the above, though a statement recorded u/s.132(4) can be treated as evidence for making an addition, however, without corroborative evidence, addition cannot be made on a standalone basis on the statement of the assessee. In this regard, the following cases are relied upon by the assessee: - DCIT v. Sudhir Kumar Agarwal (ITAT Indore), in ITA No.85/Ind/2021 dated 18/5/2023 - Pullangode Rubber Produce Co Ltd Vs. State of Kerala (1973) 91 ITR 18 (SC) - Nagubhai Ammal Vs.B.Shayama Rao (AIR 1956 SC 593) - Sarwan Singh ....
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.... has rejected the assessee's ground for the reason that the sources stated by the assessee for cash deposit were proved as wrong which in turn proved that the reason based on which Shri.P.Seeman retracted the statement, is wrong. Hence the retraction is not valid by relying the case law in [2011] 14 taxmann.com 108 (Ahmedabad) Kantilal C Shah vs ACIT, Ahmedabad. Where the assessee has retracted from his earlier statement without demonstrating any evidence to establish that statement recorded earlier was incorrect. Therefore, addition made on statement recorded u/s.132(4) has to be upheld. The ld.DR stated that in the present appeal the basis given for retraction was proved as wrong. Hence, respectfully following the above stated case law the computation of Capital Gains taking the sale consideration as Rs. 5.20 Crores is upheld. As observed by the Assessing Officer (i) As per Municipal approval (ii) valuation report the building belongs to Shri.Seeman and (iii) payments for construction expenses were made from Shri.P.Seeman's Bank Account. Hence the ld.DR prayed for confirming the rejection of the deduction claimed u/s.54. In view of the above and the title of t....
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....t the AO to consider the sale consideration as Rs. 60.00 Lakhs (50% of Rs. 1.20 crores) as claimed by the assessee in her return of income. In respect of the deduction claimed by the assessee u/s.54 of the Act, since the assessee has filed details of payments made towards construction of new property along with the bank statement evidencing the said payments, we deem it appropriate to remit this issue back to the file of the AO. We direct the AO to verify the payments and allow the deduction u/s.54 in accordance with law. 20. In the result the appeal of the assessee is partly allowed. ITA No. 773/2020: Assessment Year: 2013-14 21. The assessee filed the following concise Grounds of Appeal 1. The ld. CIT(A) has erred in sustaining the order of the ld. AO as the notice for reassessment was initiated without any fresh tangible material/evidence available to support the reassessment proceedings. 2. The ld. CIT(A) has erred in confirming the order of ld. AO without accepting the opening cash balance of Rs. 1,50,90,760/- at Cumbum, instead, mentioned the opening balance as Rs. 10,58,799/- based on the premise that when the closing balance for AY 2012-13 was ....
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....00,000/- as agricultural income. The ld.AR stated that the assessee had submitted bills and vouchers relating to the same at the time of assessment proceedings. Copy of bills for major portion of agricultural income is given in Page 51 to Page 100 of Paper book. From this it is clear that the assessee earned agricultural income to an extent of Rs. 67.00 lacs and thereby substantiated the cash outflows. It is further submitted by the ld.AR that the assessee's family owns 77 acres of land consist of paddy and mango. These lands were purchased by the family in various years from 1988. Further, the assessee purchased additional 89 acres of land (thottam lands) during the year 2012-13. The ld.AR stated that the assessee and her husband are having lands in Cumbum valley which is one of the most fertile regions of Tamil Nadu which contributes nearly 85% of grapes production in the State apart from that the crops like paddy, coconut, ground nuts and various kinds of fruits and vegetables are being cultivated in the area. Supply of paddy and purchase of land and cardamom estate are adequate proof of agricultural income. The ld.AR submitted that while disallowing the claim of....
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....;s case was selected for scrutiny to verify the agricultural income for the A.Y.2017-18 and A.Y.2018-19 and the assessments were completed wherein agricultural income offered by the assessee Rs. 1,28,72,944/- and Rs. 82,66,504/- respectively, were accepted without making any addition under the head income from other sources by accepting the above said agricultural income declared by the assessee in her return of income. (Refer Page 109 to Page 122 to Paper book). Hence, from the above facts, it is noted that the AO made the addition purely on the basis of whims and fancies, which is not sustainable in law as held in the following decisions: "AO cannot disallow expenses on his whims & fancies & needs to follow rule of consistency"- Gopal Das Estates & Housing Pvt Ltd vs. DCIT (ITAT Delhi) in ITA Nos.2576/Del/2015 dated 04/02/2022. "No addition on cash deposits can be made u/s 69 once duly explained with cash flow statement" - Smt. Renukaben Umedsinh Parmar, vs. The Income Tax Officer, Ward-3, Navsari, /TAT Surat Bench (LT.A No.2493/AHD/2015) pronounced on 08.03.2021. "If the assessee has explained the source of deposit in bank based on the cash book, ad....
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.... Entries regarding agricultural expenses, amount transferred to Chennai. Closing cash balance (Cumbum) etc. are not found in the register produced by the assessee relating to the A.Y.201314. It is not clear as to how the assessee is admitting closing cash balance of Rs. 62,97,271/- when there no separate books of accounts were produced for Cumbam. Since no entries are found in respect of these transactions in the Register maintained for receipt/payment of cash and produced by the assessee, the same are not taken into consideration and genuineness/correctness of these payments have not been determined." The ld.CIT(A) in his Order dated 30.07.2020 vide para 7 has rejected the assessee's ground as discussed below: "7.1 The assessee admitted agricultural income of Rs. 46,07,813/- but did not furnished the details regarding the crops cultivated, extent of land cultivated, income and expenditure a/c with supporting vouchers etc. Hence the Assessing Officer estimated the agricultural income of the assessee for A. Y.2013-14 at Rs. 3,00,000/- based on the Chitta/ Adangal. 7.2 In the grounds of appeal the assessee contested that the Agricultural Income of Rs. 46,07,....
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....g mode of receipt. In other words, in most of the above self-made vouchers mode of receipt has not been specifically mentioned to establish that the amounts were received in cash. Apart from the above it is pertinent to mention that all the above self-made vouchers were in the name of Shri. Seeman and not in the name of the assessee. Further the certificate issued by the VAO relates to A.Y.2015-16 which was also issued in the name of Shri. Seeman and not in the name of Assessee. Considering the discrepancy stated above and based on the documents and materials furnished, the Assessing Officer vide report that 04.08.2022 has given relief in respect of agricultural income as source for cash deposits during the year 2012-13 relevant to the A.Y.2013-14 to the extent of Rs. 15,00,000/- as against to Rs. 3,00,000/- considered in the scrutiny Assessment and hence ld.DR prayed for dismissing the grounds of appeal of the assessee. 23.3 Since, the facts and issues are identical in the appeal filed by the assessee for the A.Y.2012-13 vide appeal ITA No.772/Chny/2020, to the facts and issues of the appeal of the assessee for the A.Y. 2013-14, the findings and decision given in para No 13.....