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TMI Blog2015 (1) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... ,972/-. The total expenditure of ₹ 11,32,229/- represented 37.29% of gross agricultural receipt of ₹ 30,26,200/-. CIT(A) held that reasonable expenses incurred on any agricultural activity would constitute 40% of total agricultural receipt. In case of assessee, the percentage was 37.29 which meant that there was still a gap of 2.71%. i.e. assessee had understated the expenditure to the extent of ₹ 82,281/-. Assessee's l/6th share worked out to ₹ 13,714/-. Accordingly, addition was limited to that extent. - Decided against Revenue. Unexplained investment u/s. 69B - CIT(A) deleted the addition - Held that:- Reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same because the said provision of Section 50C of the Act was not applicable at relevant point of time and provides that valuation made by Stamp Valuation Authority is to be deemed as consideration received by seller. Accordingly, order of CIT(A) on the issue is uphold. - Decided against Revenue. Unexplained cash credit - CIT(A) deleted the addition - Held that:- Assessee had furnished all relevant details including confirmation letters showing complete addresses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of ₹ 2,88,43,616/- made on account of suppression of sales inspite of material evidence brought on record to prove the unaccounted production of the assessee. 3. Assessee is engaged in business of sizing and processing of yarn. First issue in Revenue s appeal for A.Y. 2006-07 is with regards to addition of ₹ 1,08,99,405/-on account of suppression of sales of same. The GP ratio shown during the year was 3.66% on a turn over of ₹ 6.32 crores, as against GP ratio of 3.06% on a turnover of ₹ 8.66 crores in the immediately preceding year. From the details furnished by assessee, the Assessing Officer compared the monthly consumption of electricity in terms of units with monthwise production of sized yarn. The data has been shown in a chart in para-4, page-3 of the assessment order. From this chart, the Assessing Officer observed that assessee had achieved production of 4.73 kgs per unit of electricity in month of July, 4.12 kg in May and 4.04 kg in April and so on and so forth. However, in the month of February, the production was only 2.79 kg per unit. The consumption of electricity was 9200 units as against 15080 units in July, when the highest produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciate the very basic that production could not be consistent in all months. In principle, Assessing Officer accepted the variation to reach the conclusion that monthly variation could not be in excess of 20-30%, her action of reducing the total production figure by 30% to arrive at suppressed sales is devoid of logic. In view of this, CIT(A) was justified in deleting the addition made by Assessing Officer after rejecting the books account. This reasoned factual finding of CIT(A) needs no interference. Same is upheld. 4. Next issue is with regards to addition on account of agricultural expenses. Assessing Officer made addition of ₹ 78,000/- being unaccounted expenses incurred on agricultural activity. Assessing Officer noted that assessee had claimed net agricultural income of ₹ 3,17,329/-. Relevant documents in support of ownership of land as also copies of sale bills of agricultural produce were furnished along with the income and expenditure account. Assessing Office noted that assessee had shown expenses of ₹ 77,000/-, which was only 19.54% of the total agricultural receipt. Assessing Officer estimated agricultural expenses at 40% and added the difference o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess of what had been shown in books of account. According to Assessing Officer, SVA adopts a scientific method and due procedure to value properties. So, he added a sum of ₹ 2,82,750/- to the assessee s total income being unexplained investment in said property. 5.1 Matter was carried before First Appellate Authority and having considered the same, CIT(A) has deleted the addition in question. Same has been opposed before us inter alia submitting that CIT(A) was not justified in deleting the addition in question. On other hand, ld. Authorized Representative supported the order of CIT(A). 5.2 After going through rival submissions and material on record, we find that CIT(A) following the decision of Bharat N Patel vs. ACIT, Circle-3, for AY 2005-06, dated 29-08-2008, in ITA no. 1749/Ahd/2008, wherein identical addition was confirmed by CIT(A), was deleted by ITAT by observing as under: 10. After careful consideration of the rival submissions, facts and circumstances of the case, provisions of law as well as decision(s) of Hon'ble Supreme Court and various Benches relied upon by the parties, we are of the opinion that the CIT(Appeals) was not justified in confirmin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts creditors totaling ₹ 4,85,000/- as unexplained cash credits, and added the same to assessee's total income, which was deleted by CT(A). u/s 68 of the IT Act. 7.2 Same has been opposed before us on behalf of Revenue inter alia submitting that CIT(A) was not justified in deleting the addition in question. Accordingly, order of CIT(A) be set aside and that of Assessing Officer be restored. On other hand, ld. Authorized Representative supported the order of CIT(A). 7.3 After going through rival submissions and material on record, we find that Assessing Officer is listed out nine creditors yet, he left out three of them in his final analysis and focused only on the remaining six for reasons known to him. While doing so, he did not record any reason or observation. He left out Shri Arjun Marfatia, Shree Chakradhar Synthetics and Shri Gordhan K Radadia, in respect of whom no detail was furnished, as recorded by him in the chart on pages 3-4 of the assessment order. He only focused on those creditors in respect of whom complete details, bank pass books, and bank statements had been furnished, and where he found that cash has been deposited before giving loans to assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simply chose to add the cash deposits in the bank account of creditors in the hands of the assessee. He completely ignored the fact that loans had been repaid during the year by cheques and this was evidenced by bank statements/pass books of the creditors. In other words, they no longer appeared as outstanding unexplained in the hands of assessee. In such circumstances, additions were not justified and they were rightly deleted by CIT(A). We uphold the same. 8. Next issue is with regards to addition of ₹ 2,88,43,616/- on account of estimated suppressed sales. Similar issue arose in A.Y. 2006-07 in para 3 of this order, wherein CIT(A) has deleted addition made by Assessing Officer and we have confirmed the order of deletion of similar addition as discussed therein. Facts being similar, so following the same reasoning, we are not inclined to interfere in the finding of CIT(A) who has deleted the addition of ₹ 2,88,43,616/- made by Assessing Officer on account of suppression of sales. Same is upheld. 9. As a result, both appeals filed by Revenue are dismissed. Pronounced in the open Court on this the 31st day of December, 2014. - - TaxTMI - TMITax - Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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