2011 (4) TMI 1506 - AT - Income Tax

Issues Involved:
1. Determination of Agricultural Income.
2. Additions of Rs. 4.90 crores and Rs. 5.29 crores for AY 2007-08 and 2008-09.
3. Additions of Rs. 5.50 lakhs and Rs. 50 lakhs for AY 2007-08 and 2008-09.
4. Additions of Rs. 17,83,500/-, Rs. 1,63,45,000/- and Rs. 25,00,000/- for AY 2008-09.
5. Additions based on deposits in bank accounts for AY 2004-05 to 2007-08.
6. Disallowance of bad debts for AY 2007-08.
7. Additions of unexplained cash credits for AY 2003-04 to 2005-06.

Summary:

1. Determination of Agricultural Income:
The primary issue was whether the agricultural income claimed by the assessee-AOP was genuine. The CIT(A) accepted the holding of 63 acres of cultivable land and the fact that agricultural activities were carried out. However, the quantum of agricultural income reported by the assessee was considered exorbitantly high. The CIT(A) estimated the agricultural income at Rs. 22 lakhs per annum for the assessment years 2002-03 to 2007-08, which was upheld by the Tribunal. Both the Revenue's and assessee's contentions on this issue were rejected.

2. Additions of Rs. 4.90 crores and Rs. 5.29 crores for AY 2007-08 and 2008-09:
The Assessing Officer made additions based on seized papers reflecting transactions totaling Rs. 10.19 crores. The CIT(A) deleted these additions, attributing the transactions to individuals involved in property deals, not the assessee-AOP. The Tribunal upheld this finding, agreeing that the transactions were personal and not related to the assessee-AOP.

3. Additions of Rs. 5.50 lakhs and Rs. 50 lakhs for AY 2007-08 and 2008-09:
These additions were made on the ground of payments to Ms. Jayanthi Krishnamurthy. The CIT(A) deleted these additions, reasoning that the facts were similar to the Rs. 10.19 crores transaction. The Tribunal agreed with this finding, confirming the deletion of these amounts.

4. Additions of Rs. 17,83,500/-, Rs. 1,63,45,000/- and Rs. 25,00,000/- for AY 2008-09:
The Assessing Officer made these additions as loans advanced by the assessee without explaining the source. The CIT(A) found that the assessee had already offered Rs. 1.4 crores as unexplained cash credit, thus reducing the addition to Rs. 41,28,500/-. The Tribunal upheld this modification and confirmed the differential amount of Rs. 26,200/- for interest income.

5. Additions based on deposits in bank accounts for AY 2004-05 to 2007-08:
Additions were made based on deposits in bank accounts operated by the assessee's employees. The CIT(A) confirmed these additions, finding that the accounts were indeed operated by the assessee. The Tribunal upheld this finding, agreeing with the lower authorities.

6. Disallowance of bad debts for AY 2007-08:
The Assessing Officer disallowed the claim of bad debts of Rs. 2,01,64,838/-. The CIT(A) allowed the claim, applying the Supreme Court judgment in TRF Ltd. v. CIT (323 ITR 397), which states that writing off bad debts in the books of accounts is sufficient evidence. The Tribunal upheld this decision, rejecting the Revenue's grounds.

7. Additions of unexplained cash credits for AY 2003-04 to 2005-06:
The Assessing Officer made additions based on unexplained cash credits in the Balance Sheet. The CIT(A) confirmed these additions as the assessee admitted it had no evidence to support the credits. The Tribunal upheld this finding, rejecting the assessee's contentions.

Conclusion:
The Tribunal confirmed the order of the CIT(A) in all aspects, dismissing the appeals by the Revenue and the cross objections by the assessee. The judgment was pronounced on April 29, 2011.

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