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TMI Blog2005 (5) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... ted against the estimated income of the assessee from dairy business at Rs. 70,000. The assessee was running dairy under the name M/s Gajraj Dairy, Meerut. In his return filed in compliance to notice issued under s. 148 of the Act, the assessee had shown a total income of Rs. 32,650 and agricultural income at Rs. 60,000 and income from the dairy business was declared by the assessee as Rs. 25,000. It was done without enclosing any P L ale or statement of income, etc. In compliance to the notice, the assessee filed the following computation of income from the dairy vide reply dt. 3rd March, 2003. (i) Winter Season (6 months) (a) Retail sales daily 100 Kg. Profit @ Re. 1 per Kg. = 100 x 30 x 6 18,000 (b) Wholesale daily 300 Kg. Profit @ Re. 0.25 per Kg. = 75 x 30 x 6 13,500 ------ 31,500 (ii) Summer Season (6 months) (a) Retail sales daily 50 Kg. Profit @ Re. l per Kg. = 50 x 30 x 6 9,000 (b) Wholesale daily 150 Kg. Profit @ Re. 0.25 per Kg. = 37.50 x 30 x 6 6,750 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onths in a year. The milk plants are said to take 65 degree milk @ Rs. 9.20 per Kg. The cost of 65 degree milk obtained from vendors is Rs. 11 per Kg. Thus, there is loss of Rs. 1.80 per Kg., if milk is sold to plants. Shri Timraj Singh told that he sales his unsold milk to Shri Satyaprakash, owner of Kailash Dairy at Rithani. (iv) Shri Timraj Singh told that he makes ghee, monthly sale of this about 60 Kg. @ Rs. 110 (sic-Rs. 115) per Kg. Cost of ghee comes to Rs. 115 (sic-Rs. 110) per Kg. Thus, profit of one Kg. is Rs. 5. Cream is used for processing of ghee. There is no sale of cream. Shri Timraj Singh does not make curd. The monthly sale of ghee should be at least 100 Kg. (v) Shri Timraj Singh has kept three workers dairy Shri Nasim, Shri Gurmukh and Shri Bhojveer. Each is getting salary at Rs. 2000 per month. Shri Nasim is working since 4 years and other two are working since 6 years. (vi) The premises of M/s Gajraj Dairy is on rent and rent paid @ Rs. 540 per month. Earlier it was paid @ Rs. 440 per month. (vii) Shri Timraj Singh has told that he has 10 milk vendors in 1999, who supplied 1000 Kg. milk in the morning and 700 Kg. in the evening. Thus, he got 1700 Kgs. mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sold to milk plant Quantity 350 Kg. Profit rate 0.30 p. Month 6 Calculation 350 x 0:30 x 6 x 30 days 18,900 Sale of ghee 6,000 Total income (+) 40,650 Less: Expenses (-) 78,480 (-) 37,830 D. However, the learned AO has assessed the dairy business income as he deemed fit i.e., partly by taking into consideration the report of the ITI and partly on his own sweet will, which is grossly incorrect, in view of the Hon'ble Supreme Court of India's decision, in the case of Indore Malwa United Mills Ltd. vs. State of MP Ors. (1966) 60 ITR 41 (SC), wherein the Hon'ble Court has held as under: '1. That as the appellant produced before the assessing authorities all its registers, it was their duty to definitely come to one conclusion or the other in regard to the reliability of everyone of the relevant accounts filed by the appellant, and in the absence of any such finding, it was not open to them to pick and choose some of the registers, which were more favourable to the Revenue.' E. That in the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. 12. The learned Departmental Representative on the other hand placed reliance on the order of the learned CIT(A). 13. We have carefully considered the entire material and the rival submissions on the basis of calculation and working done in the report of Inspector, the net income from dairy business was. accepted at Rs. 112,620 for the financial year 2000-01. Although, this working has been made on the basis of the statement of Shri Timraj Singh, who had supplied relevant information including the information that quantity of milk received in the morning was 600 Kg. and in the evening was 500 Kg. Shri Timraj Singh admitted that he did not maintain any books and that he entered the quantity of milk brought by the vendors in the dairy kept by him. The ITI also took into consideration the statement of another dairy owner of nearby area who disclosed that the sale of M/s Gajraj Dairy should be about 200 Kg. in the morning and 150 Kg. in the evening. It is not clear as to whether any statement of the neighbour dairy owner was recorded or not and whether his statement was confronted to assessee or not. The evidence of third party cannot be utilised against the assessee unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 68,000 by observing as under: "Facts of the case and submission of the learned Authorised Representative have been considered. I have gone through the letters dt. 25th Feb., 2003 and 26th March, 2001. It was for the first time that the assessee's counsel has taken up the plea that sum of Rs. 56,000 had been received as loan from the agriculturists. If that was the fact what prevented the assessee or his counsel in taking up this plea initially. This clearly shows that it was only an afterthought. When he found that deposit of Rs. 1.50 lakhs in the bank on 17th Feb, 1995 was difficult to explain and as happens, confirmation from some of the villagers were taken who owned agricultural land. In view of frequently changed stands, I agree with the AO that the assessee had no satisfactory explanation for the deposit of Rs. 1.50 lakhs. However, the credit has to be given for the agricultural income which has been accepted by the AO at Rs. 60,000 for the year. Since the income from business has been estimated at Rs. 70,000, benefit of availability of that money also has to be given. Since the deposit was made on 17th Feb., 1995, the agricultural income and income from business for 11 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cash flow statement. As the assessee could not file documentary evidence, the AO made an addition of Rs. 37,420 as unexplained amount under s. 68 of the Act. Before the learned CIT(A), following submissions were made by the assessee: '(a) That during the course of assessment proceedings on 24th March, 2003, the learned AO has raised a query to explain the amount of Rs. 37,420 deposited in the savings bank account and allowed only one day's time i.e., 26th March, 2003, to reply the same. (b) That the assessee is an illiterate person and he does not have any idea or knowledge for keeping his documents, receipts, etc. in a proper manner. Besides, he is a chronic patient of diabetes and as such often remains ill. So, in a short time i.e., one day only, he could not find out relevant entry as to how and from where the aforesaid amount was received by him and by memory/brain tracing only, he thought that this might have been received from LIC on maturity of some policy or part payment of any policy, under money back policy. (c) That also, time period was sought to search out and find out the documents in respect of the above receipt, so as to give correct information, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inspector, reference to which has been made while deciding ITA No. 4588/Del/for the asst. yr. 1995-96. The learned CIT(A) has estimated the income from dairy at Rs. 70,000. After considering the entire material on record and by following our approach adopted while deciding the same issue in earlier year, we estimate the income from dairy business at Rs. 50,000 and the assessee will get further relief of Rs. 20,000. This ground is, therefore, partly allowed in favour of the assessee. 27. Ground NO.3. This ground challenges the sustenance of addition of Rs. 1,67,000. The AO found that there was deposit of cash of Rs. 3 lakhs on 13th Oct., 1995 in savings bank account No. 3040 with PNB, E.K. Road, Meerut. To explain this deposit, the assessee submitted the following working: Cash in hand 4,004 Withdrawals from bank 1,70,000 upto 30-9-1995 Agricultural income 35,000 upto 30-9-1995 Dairy income upto 30-9-1995 20,000 Unsecured loan 2,07,000 Less: LIP Personal and - 32,678,00 cash in hand --------- Total cash in hand 4,03,326 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,000 2-5-1995 15,000 8-5-1995 40,000 17-5-1995 40,000 30-5-1995 5,000 -------- 1,70,000 That confirmation letters, copy of Kisan Bahi duly having photograph and signatures of the above loaners along with Khasra abstract are being appended herewith for your Honour's perusal. These all were also filed with the learned AO during the assessment proceedings, but the learned AO disbelieved the same, stating that no evidence regarding identity and capacity of the loaners has been explained. The aforesaid materials/documents were filed before the learned AO. However, he has not converted the same." 30. The learned CIT(A) did not accept the explanation of the assessee in relation to loans of Rs. 2,07,000. However, he gave relief to the assessee and sustained the addition to the extent of Rs. 1,67,000 by taking into consideration the availability of funds with the assessee. 31. We have carefully considered the entire material. The assessee has given the names of the creditors and their full addresses. The details of their agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000 (as per separate agreement with the party), i.e., totalling to Rs. 3,08,000 was invested in the land. As such, there is no discrepancy at all in making the payment of Rs. 2,93,000. That as such the investment made by the assessee stands explained. However, the learned AO added both the amounts i.e., Rs. 3 lakhs and Rs. 1.93 lakhs, which is against the facts of the case and as such the same deserves to be deleted.' 35. The learned CIT(A) gave benefit of Rs. 77,000 to the assessee and upheld the addition to the extent of Rs. 1,16,000 by observing as under: 'The facts of the case and submissions of the learned Authorised Representative have been considered. I agree with the AO that it is only a sum of Rs. 1 lakh which was withdrawn before the date of purchase and the rest of the amount has been paid from some other sources. But as mentioned in the finding in respect of deposit of Rs. 3 lakhs, only Rs. 93,000 had been taken into account for considering the availability of funds for deposit of Rs. 3 lakhs whereas the withdrawals from the bank account were of Rs. 1,70,000 from 18th April, 1995 to 30th May, 1995. Thus, the balance amount of Rs. 1,70,000 - Rs. 93,000 = Rs. 77 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under ss. 234A, 234B and 234C of the IT Act. Charging of interest is consequential in nature and the AO shall work out the interest and finally determine the taxable income. 47. In the result, the appeal filed by the assessee is partly allowed. 48. ITA No. 4586/Del/2004 (asst. yr. 1998-99) 49. Ground No. 1, not pressed hence rejected. 50. Ground No. 2. This ground challenges the estimate of income from dairy business made by the AO at Rs. 1 lakh and sustained by the learned CIT(A) at the same amount. Both the AO and the learned CIT(A) have taken into consideration the report of the DDIT (Inv.) and the report of ITI and other material. While deciding the appeal for the asst. yr. 1995-96 on this issue, wherein we have held that the estimate made by the Departmental Authorities is not based on sound footing as extraneous material has been taken into consideration. After taking into consideration the relevant material and after following our approach adopted in the asst. yr. 1995-96 on this issue, we estimate the income from dairy business at Rs. 70,000. The assessee will get a relief of Rs. 70,000, hence the ground is partly allowed in favour of the assessee. 51. Ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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