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2022 (7) TMI 845 - AT - Income TaxAssessment u/s 153A - As contended that the satisfaction recorded u/s 153C of the Act was vague and does not satisfy the well settled parameters in this regard - HELD THAT - As we notice that the Ld CIT(A) has addressed both the issues by his detailed order, which we find to be reasonable and in accordance with law. Accordingly, we reject both the legal grounds urged by the assessee. Characterization of income - addition of agricultural income declared by the assessee treating it as income from other sources - HELD THAT - Assessee is holding agricultural lands and the fact that cultivation was going thereon was also accepted. There may be genuine difficulty for the assessee in producing bills of past years, when the assessments were completed in 2008, in view of the fact that the agriculture market is mostly unorganised in our Country. We are also of the view that it is unreasonable not to accept the availability of agricultural income in AY 2001-02 to 2004-05, when the assessee is holding agricultural land. In fact, the AO has accepted part of agricultural income in AY 2002-03 and 2004-05.Accordingly, we are of the view that there is no reason to restrict the agricultural income to 40% of the bills produced. The generation of agricultural income without bills cannot be ruled out. Since there was failure on the part of the assessee in substantiating the quantum of agricultural income, in the facts and circumstances of the case, we are of the view that the entire income cannot be accepted. Accordingly, we are of the view that the agricultural income may be accepted to the extent of 70% of the amount declared by the assessee in all the years, i.e., from AY 2001-02 to 2007- 08.Accordingly, we modify the orders passed by Ld CIT(A) on this issue in all the years under consideration and direct the AO to accept agricultural income to the extent of 70% of the amount declared by the assessee in each of the years. Addition u/s 68 - AO noticed that the assessee has shown advance for purchase of a property - as submitted that the said property was proposed to be purchased jointly by the assessee along with others - HELD THAT - As submission of the assessee that the property was proposed to be purchased jointly and the amount of Rs.8.00 lakhs was contributed by other co-owners for the land proposed to be purchased, meaning thereby, it is not a case of loans being taken by the assessee. If that is found to be true, in our view, the assessee cannot be assessed u/s 68 of the Act in respect of this amount, since the amount of Rs.8.00 lakhs cannot be considered to be investment made by the assessee. The factual position in this regard is required to be examined. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining it afresh. If the assessee is considered to have made the entire investment of Rs.13.00 lakhs, then the assessee is liable to prove the cash credits of Rs.8.00 lakhs in terms of sec. 68 of the Act. Since the assessee has failed to prove the cash credits, the addition of Rs.8.00 lakhs is liable to be confirmed. On the other hand, if the assessee is not considered to have made the investments to the extent of Rs.8.00 lakhs, then the same is not assessable u/s 68 - we restore this issue to the file of AO. Unexplained investment - HELD THAT - As assessee had declared agricultural income which has been accepted partly as agricultural income and partly as income from other sources. We notice that the investment of Rs.24,000/- also stands explained by the amount of agricultural income. Accordingly, we direct deletion. Unexplained investment in KVPs - HELD THAT - As factual aspects have not been properly appreciated by the tax authorities. We also noticed that the addition has been made by computing the possible value of investment on the basis of interest income declared by the assessee. If the investment has not been made during the year under consideration, there is no requirement of making any addition. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO for examining the submissions of the assessee and for taking decision in accordance with the law in the light of discussions made supra. Purchase of galas and claimed the sources to be amount received from her husband - HELD THAT - If the investments have been made out of cash withdrawals from Abhinav Bank and the funds available in the banks have been accepted, in our view, such withdrawals could be accepted as sources. In that case, there is no requirement for making any addition as unexplained investment. However, it is required to be shown that the funds available with Abhinav Bank has been accepted by the AO. We notice that relevant details are not available on record. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO for examining it afresh. Unexplained sundry creditors balance - HELD THAT - In the interest of natural justice, we are of the view that the assessee may be provided with one more opportunity to prove the sundry creditors by obtaining confirmation from them. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO. After affording adequate opportunity to the assessee, the AO may take appropriate decision in accordance with law. Addition of payment of LIC premium as unexplained investment - HELD THAT - As the assessee claimed that he has withdrawn a sum of Rs.51,480/- from his capital account and the said withdrawal was used to make the LIC payment. Since the explanation was found to be too general, the Ld CIT(A) confirmed the disallowance. In our view also, the explanation so furnished by the assessee does not explain the sources for making LIC payment - Accordingly, we confirm this addition. Addition relating to the value of computer and domestic equipments shown in Balance sheet - HELD THAT - We notice that the AO has accepted the genuineness of deposit of Rs.1,00,000/-. Accordingly, we are of the view that the aggregate amount of Rs.1,90,000/- would explain the sources for making investments in computer and domestic appliances to the extent of Rs.1,54,750/-. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition of Rs.1,00,000/- confirmed by Ld CIT(A).
Issues Involved:
1. Validity of proceedings initiated under Section 153A of the Income Tax Act. 2. Treatment of agricultural income as income from other sources. 3. Addition of unexplained investments and cash credits under Section 68. 4. Addition of unexplained sundry creditors. 5. Addition of unexplained loans. Issue-wise Detailed Analysis: 1. Validity of Proceedings Initiated Under Section 153A: The assessee contended that the proceedings initiated under Section 153A were invalid, arguing that the satisfaction recorded under Section 153C was vague and did not meet established parameters. However, the CIT(A) addressed these issues in detail, and the tribunal found the CIT(A)'s order to be reasonable and in accordance with the law. Hence, the tribunal rejected the legal grounds urged by the assessee. 2. Treatment of Agricultural Income as Income from Other Sources: The assessee declared agricultural income for the assessment years (AY) 2001-02 to 2007-08, which was partly accepted and partly disallowed by the Assessing Officer (AO) and confirmed by the CIT(A). The tribunal noted that the assessee held significant agricultural land and that cultivation was acknowledged. Given the difficulty in producing past bills due to the unorganized nature of the agricultural market, the tribunal found it unreasonable to restrict agricultural income to 40% of the bills produced. Instead, it directed the AO to accept 70% of the declared agricultural income for all the years under consideration. 3. Addition of Unexplained Investments and Cash Credits Under Section 68: - AY 2001-02: The AO added Rs. 8.00 lakhs as unexplained cash credits related to a property purchase. The tribunal noted the need to verify whether the amount was indeed contributed by other co-owners and not a loan to the assessee. The issue was remanded to the AO for fresh examination. - AY 2002-03: The AO added Rs. 24,000 as unexplained investment in land. The tribunal directed the deletion of this amount, noting that it was covered by the accepted agricultural income. - AY 2003-04: The AO added Rs. 3,75,000 as unexplained investment in KVPs. The tribunal remanded the issue to the AO to verify the assessee's claim that the KVPs were purchased in 1997 and were reflected in earlier balance sheets. - AY 2004-05: The AO added Rs. 2,95,000 as unexplained investment in galas. The tribunal remanded the issue to the AO to verify the claim that the investment was made from withdrawals from Abhinav Bank. - AY 2005-06: The tribunal linked the addition of Rs. 3.00 lakhs to the previous year's issue and remanded it to the AO for fresh examination. - AY 2006-07: The tribunal remanded the addition of Rs. 86,500 as unexplained loan from Housabai Society to the AO for verification. 4. Addition of Unexplained Sundry Creditors: - AY 2005-06: The AO added Rs. 4,65,412 as unexplained sundry creditors. The tribunal remanded the issue to the AO, allowing the assessee an opportunity to obtain confirmations from the creditors. - AY 2006-07: The AO added Rs. 2,74,119 as unexplained sundry creditors. The tribunal remanded the issue to the AO with similar directions as for AY 2005-06. 5. Addition of Unexplained Loans: - AY 2006-07: The AO added Rs. 86,500 as an unexplained loan from Housabai Society. The tribunal remanded the issue to the AO for verification. - AY 2007-08: The AO added Rs. 72,000 as an unexplained loan from Baktapur Society. The tribunal remanded the issue to the AO for verification. Other Issues: - AY 2004-05 (Shri Nilesh Sanap): The AO added Rs. 31,466 as unexplained investment in LIC premium. The tribunal confirmed the addition, finding the explanation provided by the assessee insufficient. - AY 2007-08 (Shri Nilesh Sanap): The AO added Rs. 1,54,750 related to the value of computer and domestic equipment. The tribunal directed the AO to delete the addition of Rs. 1,00,000 confirmed by the CIT(A), as the sources for the investment were adequately explained. Conclusion: The appeals filed by Smt. Lata Sanap were partly allowed, while the appeal filed by Shri Nilesh Sanap for AY 2004-05 was dismissed, and the appeal for AY 2007-08 was allowed. The order was pronounced in the open court on 21.06.2022.
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