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TMI Blog2012 (10) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... - made by the AO u/s 68/69 of I.T. Act without properly appreciating the facts of the case. 2. That the ld CIT(A) has erred in law and on facts in deleting the addition of Rs.10,00,000/- made by the AO on accounts of Bardana trading holding that this addition is covered by the surrender of Rs.155 lacs, though the surrender was on account of entries made in the name of "Vijay Bhai" in the cash book and the assessee had not taken into account this income while making the surrender. 3. That the ld CIT(A) has erred in law and on facts in deleting the addition of Rs.5,78,262/- made by the AO on account of interest income earned by the farmers on the loan given to the farmers holding that this amount is covered by the surrender of Rs.155 lacs, though the surrender was on the basis of entries in the name of "Vijay Bhai" in cash book and for the interest income. 4. That the ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.2,60,684/- made by disallowing the expenditure incurred for earning exempted income, on the basis of concocted story, the falsity of which is proved from the reply dated 06.11.2009, wherein Sh. Vijay Kumar Agrawal admitted that Rs.5 lacs only wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputer printout revealed that books of accounts of all three concerns were being maintained together and combined cash book and Léger accounts were generated from 01.11.2006 to 23.10.2007. In the cash book Annexure P-1, huge amount of cash was introduced on different dates in the name of "Vijay Bhai" and others. The assessee was required to explain these entries and produce regular books of account. The assess filed a copy of report in the newspaper published on 16.11.2007 that all the books of accounts of the three concerns of the group were lost and hence no books of accounts were produced to explain and reconcile the accounts found on computer. The assessee filed return of income showing total income of Rs.12,83,940/- wherein Rs.12,50,000/- was disclosed as surrendered income from other sources. On the basis of examination of records and other documents, the A.O. found that Shri Vijay Kumar Agarwal does not have any funds at his disposal to make investment of Rs.1,54,20,346/- in the cash book of assessee group w.e.f. 01.11.2006 to 31..03.2007. The A.O. issued summon under section 131 and statement on oath was recorded on 18.12.2009. The relevant questions and replies qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke the total Rs.1.55 cr. I shall file a surrender letter in this matter on the next hearing. It is requested that since I have agreed to surrender Rs.1.20 cr. in addition to my returned income in my hand, no separate addition on the basis of impounded documents be made in hands of Agarwal Ice & Cold Storage, Ramwati Sheetgrah and T.R. Sons Business Pvt. Ltd. Q-10 It is seen that you have surrendered Rs.12.50 lacs at the time of filing of return of income. Similarly, Rs.15 lacs in Ramwati Cold Storage and Rs.7.50 lacs in Agarwal Ice & Cold Storage. What is the basis of this surrender ? Ans-10 At the time of filing of returns of income, since the complete photocopies of books of accounts impounded were not available, I had filed the returns on estimated basis dividing the income surrendered into two years. However, during assessment proceedings I would like to surrender on basis of entries in the name of 'Vijay Bhai' in Cash Book P-1, to avoid litigation with the department in following concerns of my group- M/ s Ramwati Cold Storage Rs.15 lacs M/s Agarwal Ice & Cold Storage Rs.7.5 lacs Sh. Vijay Kumar Agarwal Rs.12.50 lacs + Rs.l.20 crore. I would like to make it clear that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.35 lacs should be given from the sum of Rs.l,54,20,346/- introduced in the account captioned as "Vijay Bhai". On this account alone, the appellant is entitled to a relief of Rs.12.5 lacs. 5. Regarding the merits of the addition, the submission of the assessee is that the impugned money reflected in the account of "Vijay Bhai" was received from farmers in the course of business. The appellant in support of his contention submitted their copy of account duly confirmed along with their affidavits in some cases. The appellant had also offered to produce the respective farmer from whom the amount was received, if needed. The A.O. neither controverted the affidavits nor the copy of accounts furnished by the appellant. Though there is merit in the case of the appellant, yet, it is an undoubted fact that the appellant had surrendered Rs.120 lacs in the course of assessment proceedings and this surrender has at no point of time been retracted by the appellant. Hence, the addition of Rs.120 lacs is confirmed and the appellant on account of Ground No.2 shall get the resultant relief of Rs.11,70,346/-." 8. The Revenue is in appeal against the deletion of amount of Rs.11,70,346/- out of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest calculated by the A.O. applying 15% on advance of Rs.1,54,20,346/- from November to March. The A.O. also made addition of Rs.2,94,851/- invoking section 14A of the Act. The A.O. noticed that the assessee made investment in share application money of Rs.15,00,000/- in M/s. T.R. Sons & Business Pvt. Ltd. after taking loan of Rs.25,00,000/-. The interest of Rs.2,94,851/- has been paid by the assessee. Therefore, the same is disallowable as there was no commercial expediency for making the investment in T.R. Sons & Business Pvt. Ltd. There was also dividend income, which is exempt. Therefore, the said amount of interest is disallowable keeping in view the provisions of section 14A of the Act. 13. The CIT(A) deleted the addition of Rs.10,00,000/- on the ground that the assessee has already made surrender of Rs.1.325 crores. Therefore, no separate addition is warranted on the ground that the assessee received interest of Rs.2,60,684/- from Vijay Kumar Singhal, HUF. The relevant finding of CIT(A) are as under :- (paragraph no.12) "I have gone through the facts of the case and the entire chain of fund flow clearly shows that the funds in the year in question remained with V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Now coming to the quantification of the investment in Bardana in the hands of the assessee, as explained in the foregoing paras that the consolidated books were found, therefore, the total investment in Bardana needs to be apportioned in the three cold storages i.e. M/s T.R. Sons Business Pvt. Ltd., M/s Ramwati Sheet Grih Prop. Smt. Charu Agarwal (assessee) and M/s Agarwal Ice & Cold Storage on the basis of rent received by them. The rent receipt is being taken as yard stick for apportionment of investment in Bardana because the investment in Bardana is directly proportional to the number of bags kept in the cold storage during the year. Hence, undisclosed investment comes out to be as under :- Name of cold Storage Rent received % age of total rent rcvd. undisclosed inv. Agarwal Ice & Cold Rs.81,62,736 31.7% Rs.25,63,583 T.R. & Sons Business P. Ltd. Rs.1,04,76,212 40.7% Rs.31,91,414 Ramwati Sheet Grih Rs.70,75,400 27.5% Rs.22,23,928 Therefore, Rs.22,23,928/- is being added to the income of the assessee on account of undisclosed investment in Bardana. (Addition of Rs.22,23,928/-)" 19. Similarly, during the examination of impounded material & computer printout it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced as below :- (Paragraph nos.3.1 & 4.1) "3.1 For deletion of this addition, the ld. AR of the appellant vide his written submissions has submitted as under: "The ld. AO has made an addition of Rs.22,23,928/- on account of alleged undisclosed investment in Bardana. The Id. AO observed that the group concerns made payment for bardana to the tune of Rs.80,87,014/- as under: Total of Annexure E-1 Rs.59,60,900 (refer PB153 to 155) Purchase from bardana account Rs.21,26,114 (refer PB 156) Total Rs.80,87,014/- The appellant share in the total receipts of the all the cold storages in the group was 27.50%. Therefore, 27.5% of Rs.80,87,014/- i.e. Rs.22,23,928/- were added to the disclosed income. In this regards the assessee begs to submit that the very basic allegation of the Id. AO that the investment in Bardana to the tune of Rs.80,87,014/- is from undisclosed sources is erroneous in so far as the entire investment has been made from the account captioned as Vijay Bhai Agarwal shown at PB 157- 158. Your honour kind attention is invited to this account. The account clearly shows a peak Rs.1,63,95,005/- on 18.06.2007. This amount stands fully explained & taxed (Rs.1,54,20,346 /- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is a loss which has occurred to the revenue. It may kindly be noted that in exactly identical circumstances the addition on account of interest was made in the hands of Shri Vijay Kumar Agarwal in F.Y. 2006-07 (A.Y.2007-08) (refer PB 90 para 5). Further it has been categorically stated by the appellant that no interest is collected & therefore, has not been ever shown in the books. Therefore, there remains no logic to adopt a different stands in year in question so as to attract double taxation which can never be the intent of law. Under the circumstances, the addition made on this count may kindly be deleted." 23. We have heard the ld. Representatives of the parties and records perused. The contention of the assessee that the activity related to Bardana and advances to farmers and charging of interest thereon relates to Shri Vijay Kumar Agarwal. Shri Vijay Kumar Agarwal in A.Y. 2007-08 and 2008-09 has surrendered the amount on these accounts. It was submitted that under similar facts and circumstances in A.Y. 2007-08 the peak of consolidated cash book of Vijay Bhai was Rs.1,63,95,005/- on 18.06.2007 pertains to A.Y. 08-09. As per the assessee, the peak pertaining to A.Y. 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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