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TMI Blog2015 (7) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... had sold buffalo and tuda for more than ₹ 1 lacs cannot be doubted particularly when at the time of taking the statement the AO did not ask for the same assessee should be allowed further credit of ₹ 1 lakk from the addition made for house hold expenses over and above the credit to be allowed in respect of educational expenses, which were only ₹ 33,830/- (Rs. 17,515/- + 16,315/-) and not ₹ 2 lakhs subject to verification of the certificates from D.A.V. School (supra). The matter is restored to the file of AO for verification of the certificates from DAV school contained at pages 22 & 23 of the PB. - Decided partly in favour of assessee for statistical purposes. Addition on interest - Held that:- Bare perusal of the noted explanation makes it evident that Sh. Vijender Mann and assessee had current account and the entire agricultural produce was sold through assessee on which assessee got commission.In respect of other advances also there were business dealings with the parties and, therefore, amounts were lying in different accounts on account of commercial expediency. Hence, no addition was called for on account of debit balances lying with customers on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee ₹ 67,150/- 3. Ld. CIT(A), while partly allowing the assessee s appeal, confirmed the aforementioned additions. 4. Being aggrieved, the assessee is in appeal before us and has taken following grounds of appeal: 1. That on the facts and in the circumstances of the case addition of ₹ 309000/- alleged low and unexplained HH exp. Vide para 4 of the assessment order have arbitrarily been made on wrong observations of facts and are illegal. 2. That the learned CIT(A) on mere technical considerations confirmed the unexplained HH exp. ₹ 309000/- vide para 5 of the appeal order and ignored the natural justice. 3. That advances to farmers were made vide para 6 of the assessment order in the course of business expediency without consideration of interest. The AO without any reasons charged interest of ₹ 23700/- 81905/- and the learned CIT(A) vide para 7 of the appeal order erred in confirming the same. 4. That AO can t compel to maximize the profits and ratio of CIT/Abhishek Ind. Ltd. 286 ITR 1 is not applicable as such addition of ₹ 23700/- + 81905/- have wrongly been made and are warranted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he had paid lease money for agriculture land in earlier years out of advance from the firm M/s Divine Enterprises and some part out of loan from brother or any other relatives but no such matter was brought to the notice of the Assessing Officer when statement of Sh. Vijender Mann was recorded. However, no evidence regarding sales of buffaloes, tuda and loan taken from brother and other relatives have been filed. The explanation filed by the assessee has been considered and cannot be accepted in toto. As stated above, Sh. Vijender Mann, husband of the assessee was not in a position to meet out all the expenses for household and education of the children. Moreover, the bank statement furnished by the assessee reveals the account is maintained jointly by the assessee and her spouse. It has also been noticed that Sh. Vijender Man has withdrawn an amount of ₹ 100000/- only on 9.5.2006 from Punjab National bank and has not made any withdrawals upto 4.9.2006 which is surprising as the major expenses on account of education of children and harvesting of wheat, ploughing of fields, plantation of paddy, fertilizer and pesticides, irrigation etc. are to be incurred along with other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord. The statement of Shri Vijender Mann is contained at pages 17 to 19 of the PB. In reply to the question relating to family members, Shri Vijender had, inter alia, stated as under: Que:- Please give the details of your family members along with their occupation and source of income? Ans:- We are four members i.e. myself, wife two children. Both the children are college going, myself is agriculturist and my wife Smt. Krishna Devi is prop. Of Divine Enterprises, Madlauda. Sh. Vipin who is studying in LLB 1st year in Kurukshetra university and Miss Vidhi Mann (daughter) is studying B. Sc. Phy. Honours, Marinda House Delhi University. 12. From the reply, noted above, of Sh. Vijender Mann it is evident that he was giving answers in present tense and, therefore, we find considerable force in the submission of ld. counsel for the assessee that the statement refers to the position as obtaining on 23-9-2009 when admittedly the children were not college going. However in AY 2006- 07 the children were school going as is evident from the certificate filed in the PB. These certificates are photo copies only and were not furnished before the AO and were filed for the first time before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 54,598/- whereas she was paying heavy interest on the borrowed funds to the banks and others. The AO, relying on the decision of Hon ble Punjab Haryana High Court in the case of CIT Vs. Abhishek Industries Ltd. 286 ITR 1, and after considering the assessee s reply, made addition of ₹ 23,700/- in respect of interest free advances to Sh. Vijender Mann of ₹ 3,95,000/- and ₹ 81,905/- in respect of advance to other farmers on total debit balance of ₹ 6,82,940/-. 16. Ld. CIT(A) confirmed the AO s finding, inter alia, observing that the plea of the assessee, that giving interest free advance was advantageous in business and regular mode of earning and these advances were in the nature of commercial expediency and accepted in trade practice, was not tenable as the assessee had paid interest to each and every creditors i.e. all the farmers to whom cost of their produces remained unpaid or adjusted the loan along with interest out of their sale proceeds. 17. We have considered the rival submissions and perused the material available on record. The assessee s explanation before AO is contained at pages 26 to 29 of the PB, in which as regards advance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h my firm. The amount of advance is very small. Some time he deposits his money with-the firm and I do not pay him any interest. I neither charge any interest from nor pay any interest to him. 18. A bare perusal of the above noted explanation makes it evident that Sh. Vijender Mann and assessee had current account and the entire agricultural produce was sold through assessee on which assessee got commission. 19. In respect of other advances also there were business dealings with the parties and, therefore, amounts were lying in different accounts on account of commercial expediency. Hence, no addition was called for on account of debit balances lying with customers on notional basis for not charging interest on their account. We may further observe that there is no finding recorded by lower revenue authorities as to whether the advances lying with customers were out of borrowed funds or out of own funds. Therefore, we are of the opinion that lower revenue authorities were not justified in making addition on this count. We, therefore, delete the addition in question. 20. Apropos ground no. 5, regarding disallowance of shortage of paddy, brief facts are that assessee had cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n question. The assessee used this device only to avoid to pay taxes. As regards to the contention that average rate come to ₹ 1295 per qtl as against rate applied by the AO at ₹ 1539/- is not tenable as the rate of 1539/- was herself adopted by the assessee while valuing the closing stock. Moreover, no documentary evidence substantiate her claim of average rate of ₹ 1295/- per quintal was furnished by the assessee either during the course of assessment proceedings or before your good office. 23. Ld. CIT(A) after considering the remand report, confirmed the addition, by observing as under: 8.04 The issue is considered. The main argument put forth by the appellant is that in the case of rice Shellers, driage and pilferage up to 10% is allowable, whereas, the appellant has only claimed a shortage of 8%, which the appellant contends is normal. As rightly observed by the AO in the assessment order, as the purchases were made in the financial year 2004-05 and 2005- 06, the appellant should have claimed shortages in those years too. Therefore, the AO was right in concluding that the excuse of driage and paddy eaten by rats is a device used by appellant to avo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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