2018 (12) TMI 1136 - AT - Income Tax

Addition on account of loans u/s 68 - Held that - It is an admitted fact that there are common names in the loan creditors and the list of investments in shares of certain companies of the group. This is the admitted position as evident from the application filed before the ITSC. It is the claim of the assessee that the transactions entered into by such names of persons can be partly genuine when it comes to unsecured loans and partly bogus when it comes to investment in shares . This aspect was not properly examined by the CIT(A) applying the strict tests while adjudicating the issue and while granting part relief to the assessee. This is the case of Revenue, when it comes to the unsecured loans, that the relief was liberally granted by the CIT(A) without scrutinizing the loan transactions properly. As we examined the documentation filed by the assessee with regard to the correctness of the transactions of loan creditors. We find all is not well with the documentation qua the creditworthiness, signatures on the confirmations, PANs etc. It is not justified as to why the creditors failed to give their signatures on the confirmation letters. Addition on account of agricultural income - Held that - As decided in DEVENDRA P. SHAH, VERSUS DCIT, CENTRAL CIRCLE-1 (1) , PUNE AND VICE-VERSA 2018 (10) TMI 1625 - ITAT PUNE as per CIT(A) Net agricultural income is assessed at 65% of the gross agricultural income Assessee-Net agricultural income is assessed at 88% of the gross agricultural income - decision of CIT(A) is appropriate and it does not call for any interference. Unexplained Jewellery - Held that - The jewellery found during the course of search action was worth ₹ 2.88 crores out of the same assessee disclosed ₹ 2.20 crores as unaccounted income of the assessee leaving the balance of ₹ 68 lakhs. The amount added in the hands of Netra P. Shah (wife of assessee) now stands deleted by the Tribunal. The relevant extract of the order of the Tribunal is given above. Considering the commonality of the facts, we are of the opinion the said order of the Tribunal in the case of Netra P. Shah (supra) is applicable to the facts of the issue under consideration. Accordingly, the issue decided in favour of the present assessee too for the same reasoning. Unexplained investment in FDRs - Held that - this matter needs examination in the light of the details of the cash flow. In case of availability of sufficient cash balance is demonstrated by the assessee in the remand proceedings, the benefit of excess cash needs to be granted in favour of the assessee. Only exception to this principle is that the AO should examine the likely use of such excess cash for any other expenditure other than for making the said FDs claimed by the assessee.

Issues Involved:
1. Addition on account of loans u/s 68 of the Act.
2. Addition on account of agricultural income.
3. Unexplained silver.
4. Unexplained jewellery.
5. Unexplained investment in FDRs.
6. Additional grounds challenging assessments made u/s 143(3) of the Act.

Detailed Analysis:

1. Addition on account of loans u/s 68 of the Act:
The issue of addition on account of loans u/s 68 of the Act was common in various appeals filed by both the assessee and the Revenue. The Tribunal noted that the issue was similar to the case of Shri Devendra P. Shah, where the Tribunal had remanded the entire issue of unsecured loans to the file of the Assessing Officer for fresh adjudication due to inconsistencies in the confirmation letters, creditworthiness, and other documentation. The Tribunal found it appropriate to remand the issue to the Assessing Officer for fresh adjudication with identical directions, thus allowing the issue for statistical purposes.

2. Addition on account of agricultural income:
Specific to the assessee's appeals for the assessment years 2010-11 and 2011-12, the Tribunal observed that the issue had already been adjudicated in the case of Shri Devendra P. Shah. In that case, the CIT(A) had considered 65% of gross agricultural income as net agricultural income. The Tribunal upheld this decision, considering it appropriate and not requiring any interference. Consequently, the Tribunal applied the same reasoning to the present case, deciding the issue in favor of the assessee.

3. Unexplained jewellery:
For the assessment year 2011-12, the Tribunal noted that the Assessing Officer had made an addition of ?9,16,863, which was 50% of the differential amount between jewellery found and unaccounted income offered during the search. The Tribunal referred to its previous decision in the case of Netra Pritam Shah (wife of the assessee), where the addition was deleted. The Tribunal accepted the explanation regarding the difference in jewellery and applied the same finding to the present case, deciding the issue in favor of the assessee.

4. Unexplained silver:
For the assessment year 2011-12, the Tribunal observed that a similar discrepancy was noticed in the case of Netra P. Shah, where 1/4th of ?8,80,000 was added in her hands and subsequently deleted by the Tribunal. The Tribunal applied the same reasoning to the present case, deciding the issue in favor of the assessee.

5. Unexplained investment in FDRs:
For the assessment years 2007-08 and 2011-12, the Tribunal noted that the issue had come up for adjudication in the case of Shri Devendra P. Shah, where it was remanded to the Assessing Officer for fresh adjudication with specific directions. The Tribunal found the facts and arguments to be common and remanded the issue to the Assessing Officer for fresh adjudication with similar directions, allowing the issue for statistical purposes.

6. Additional grounds challenging assessments made u/s 143(3) of the Act:
The assessee raised additional grounds challenging the assessments made u/s 143(3) of the Act in the absence of any incriminating material. The Tribunal, considering the reliance on the Jurisdictional High Court judgment in the case of CIT vs. Continental Warehousing Corporation Ltd., remanded the issue to the Assessing Officer for distinguishing addition in light of the binding judgment. The Tribunal directed the Assessing Officer to make abated or non-abated assessments accordingly, admitting the additional grounds and remanding them for adjudication.

Conclusion:
In conclusion, the Tribunal partly allowed the respective appeals of the assessee and the Revenue for statistical purposes, remanding several issues to the Assessing Officer for fresh adjudication with specific directions. The order was pronounced on the 17th day of December, 2018.

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