9911796707
TMI Blog2014 (2) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... for scrutiny and thereafter assessment was framed under section 143(3) vide order dated 30.11.2010 and the total income was determined at Rs. 76,27,360/-. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A). CIT(A) vide order dated 17.08.2011 allowed the appeal of the Assessee. Aggrieved by the aforesaid order of CIT(A) Revenue is now in appeal before us and has raised the following effective grounds:- 1. On the facts and in the circumstances of the case and in law, the CIT(A)-IV, Surat has erred in deleting the addition on account of unexplained Credits of Rs. 23,99,365/- made by the Assessing Officer. 2. On the facts and in the circumstances of the case and in law, the CIT(A)-IV, Surat has erred in deleting the addition on account of unexplained expenditure u/s. 69C of the Act of Rs. 20,22,861/- made by the Assessing Officer. Ground no. 1 is with respect to unexplained credit of Rs. 23,99,365/-. 4. During the course of assessment proceedings, A.O. noticed that capital of Rs. 22,16,365/- has been introduced in the firm. The Assessee was asked to furnish evidence in respect of source and genuineness of the transaction. From the details, A.O. noticed that S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one lac. He noticed that the total income of Shri Rajeshbhai Patel was nearly Rs. 61,456/- out of which he had made payments for policies of LIC and Mediclaim thereby exhausting the capability of any further investment. He thus concluded that the creditworthiness of Shri Rajeshbhai Patel to be doubtful. 7. In the case of Ramnikbhai Patel, A.O. noticed that Rs. 2,25,000/- was deposited in cash as capital contribution. The capital account of Shri Ramnikbhai Patel did not reflected the withdrawals of cash which was shown as credited into the books of account of the Assessee as capital contribution. Further no cash book was furnished by Patel was furnished before A.O. A.O. therefore concluded that the capital contribution of Shri Ramnikbhai Patel did not explain the source of creditworthiness. 8. With respect to Kantibhai Patel, A.O. noticed that a sum of Rs. 2,23,000/- was noticed as capital contribution in cash but the capital account by Kantibhai Patel did not reflect the withdrawals of cash. He accordingly considered the investment made in cash to be unexplained. 9. With respect to Hitesh T. Mistry, A.O. noticed that a sum of Rs. 5,42,365/- was introduced as his capital, the so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. that such set off is not permitted as income disclosed in survey was revenue and addition made u/s. 68 is capital is not correct as once addition is made u/s.68 it becomes income of the appellant and the criteria of capital/revenue looses its relevance. If addition u/s. 68 retained its capital nature, then it cannot be brought to tax as incomes of capital nature other than those mentioned in "Capital Gains" are not subject to tax. No separate addition was therefore required to be made. The addition of Rs.6,86,000/- + Rs. 50,000/- is therefore deleted. 12. In the case of Pareshbhai Patel, the addition was deleted by holding as under:- 2 (i) This partner has introduced Rs. 1,00,000/- and this was recorded in his capital account in the books of accounts of the appellant firm. It was explained to the A.o. that the partner had deposit with M/s. Shree Surya Packaging which was taken back vide cheque No. 950407 and deposited in his personal bank account. The amount was subsequently withdrawn and draft purchased in cash on the same date and deposited into the appellant's bank account. Details like bank statement, balance sheet and return of the partner were submitted to the A.O. it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant firm. The basis for not accepting the explanation is due to non-appreciation of accounting entries by the A.O. Since the capital was introduced out of cash on hand and this is reflected in the balance sheets, the amount is held as explained. The addition made is deleted. 15. In the case of Kantibhai Patel, the addition was deleted by holding as under:- 5.(i) (i) This partner has introduced capital of Rs.2,23,000/- which is recorded in the books of the appellant firm. The A.O. also observed that a sum of Rs.25,000/- was shown as introduced by the partner on 25.01.2008 in annexure-BF12 but not in the capital account. It was claimed before the A.O. that Rs. 2,23,000/- was introduced out of cash on hand available with the partner. This was not accepted by the A.O. only for the reason that there was no cash withdrawal reflected in the personal capital account of the partner. During the course of appeal proceedings and also in assessment, it was explained that such entry would not appear in the personal capital account but will be reflected on the asset side only. Copies of balance sheet, etc. were provided to the A.O. The conclusion of the A.O. cannot be upheld as it is based only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that there was nobody by the name of Dineshbhai and that the temporary person recording these rough notings may have written Dineshbhai instead of Shivajibhai G. Patel who had contributed Rs.30,000/- on 2.2.2008, which was duly recorded in the books and the source of which had been explained. The A.O. did not accept this explanation and added the amount of Rs.30,000/- as unexplained credit. Before me, similar arguments were taken. In the alternate, it was also suggested that credit of disclosure should be given against this income. Having gone through the facts of the case, it appears that the explanation given by the appellant may be correct given that the date, amount and mode of contribution tallies with the recorded entry. Even otherwise, the appellant is entitled to the benefit of telescoping with additional income declared and therefore this addition is deleted. In effect, the addition made on account of capital introduced - recorded in the books of account and those recorded only in annexure-BF12 is deleted. 18. CIT(A) thus deleted the addition made by A.O. Aggrieved by the order of CIT(A), the Revenue is now in appeal before us. 19. Before us, the ld. D.R. took us thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintained by the Assessee. He therefore rejected the books of accounts and estimated the total expenditure on the basis of average of expenses of the 6 weeks found during the survey and extrapolated it for 52 weeks of the year. He accordingly arrived at the figure of unexplained expenditure of Rs. 31,69,565/- and after giving credit for the expenses which were accounted for, made an addition of Rs. 20,22,861/-. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A). CIT(A) after considering the submissions made by the Assessee deleted the addition by holding as under:- 4.1 During the course of appeal proceedings, it was submitted by the appellant's A.R. that the expenses as appearing in annexure-BF12 exactly tallied datewise for five weeks out of six and only for the week ending 22.12.2007 the expenses did not match datewise but tallied with neighbouring dates in the regular books of accounts. It was submitted that the estimation made by the A.O. for the whole year was without any base. It was further submitted that the total turnover receipt of the appellant was only Rs. 34,00,000/- (approx.)in the year and this has not been shown to be incorrect. As against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss account. He therefore submitted that in the absence of any satisfactory explanation, the A.O. was fully justified in making the addition. 23. The ld. A.R. on the other hand submitted the details of expenses credited in the books of accounts for each date and placed it on record at page 79 to 81 of the paper book. He further submitted that except for the entry of 22.12.2007 all the entries have been debited in the books of accounts. He further submitted that CIT's finding has not been challenged by Revenue. He further submitted that CIT(A) after considering the submissions made by the Assessee has deleted the addition. He thus supported the order of CIT(A). 24. We have heard the rival submissions and perused the material on record. CIT(A) while deleting the addition has noted that on the comparison of details of expenses recorded in the books and those mentioned in the loose papers, it is seen that the expenses were recorded in the books except from some minor discrepancies for week ending 22.12.2007. He has further held that mismatch of data for one week cannot be extrapolated for the year. Before us, the ld. D.R. could not controvert the findings of CIT(A) nor has brought an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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