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TMI Blog2016 (1) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on behalf of the assessee by Shri Padmsinha U. Jadhav son of assessee on 20.11.2003 declaring total income of Rs. 9,67,320/- inclusive of agricultural income of Rs. 6,95,630/-. The case of the assessee was selected for scrutiny. Accordingly, notice under section 143(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') was issued to the assessee on 12.10.2004. During the course of scrutiny assessment proceedings, the Assessing Officer made certain additions / disallowances in the income returned by the assessee and assessed the total income at Rs. 2,23,06,970/-. Aggrieved by the assessment order dated 13.03.2006, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) vide impugned order granted part relief to the assessee. Against the findings of Commissioner of Income-tax (Appeals), both the assessee and the Revenue are in appeal before the Tribunal. The additions / disallowances made by the Assessing Officer and the relief granted / additions sustained by the Commissioner of Income-tax (Appeals) on which rival sides are in appeal before the Tribunal are tabulated hereunder:- Sr. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lture and poultry business of HUF to the extent of Rs. 4,78,000/- in the period relevant to the assessment year 2003-04. Hence, the same was accepted by the Commissioner of Income-tax (Appeals). The assessee in appeal has assailed the findings of Commissioner of Income-tax (Appeals) in upholding the disallowance of unsecured loans to the extent of Rs. 5,97,000/-. 4.1 The ld. AR submitted that apart from other persons, the assessee had taken loan from Smt. Neena S. Kamat Rs. 1,50,000/- and Smt. Shobha B. Mohite Rs. 1,00,000/-. Smt. Neena S. Kamat had filed an affidavit along with extract of bank account before the Commissioner of Income-tax (Appeals). The assessee had also filed a copy of bank pass book of Smt. Shobha B. Mohite along with photocopy of letter stating that she had advanced Rs. 1,00,000/- by cheque to the assessee as a help for purchase of house. The Commissioner of Income-tax (Appeals) rejected the evidences filed on behalf of above said two persons on the ground that Affidavit submitted by Smt. Neena S. Kamat is contrary to the bank statement filed by her. In the Affidavit, she had mentioned the amount as Rs. 1,50,000/-, whereas as per the bank statement, the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, this ground of appeal raised by the Department is rejected. Unaccounted Advances: 6. The second ground raised by the assessee in appeal is against unaccounted advances of Rs. 24,23,278/- confirmed by the Commissioner of Income Tax (Appeals). The Assessing Officer had made addition of Rs. 28,24,278/-. The assessee had allegedly received advances from various persons viz. Shri Anandrao Shamrao Gaikwad, Shri Kiran K. Jadhav, Shri Niwas M. Jadhav, Shri Sambhaji A. Jadhav, etc. Neither the assessee could produce any evidence in support of his submissions nor the aforesaid persons appeared before the Assessing Officer in response to the summons issued. During the course of first appellate proceedings, the assessee filed affidavits from the individuals from whom the assessee had allegedly received advances. However, the Commissioner of Income Tax (Appeals) rejected the same, except an advance of Rs. 1,90,000/- from Shri Niwas Madhukar Jadhav, which pertains to balance brought forward from the earlier assessment year. The Commissioner of Income Tax (Appeals) held that the assessee has not been able to substantiate the identity, creditworthiness and genuineness of the transactions eit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod relevant to the assessment year 2003-04, the assessee has made donation of Rs. 5,000/- to Sarmik Sahyog Residential School. Before Assessing Officer the assessee claimed donations of Rs. 8,000/-. The Assessing Officer made addition of 50% of donations made. Before the Commissioner of Income Tax (Appeals) it was submitted that during the year, the assessee has given donation of Rs. 5,000/- to the School. Inadvertently advertising expenses of Rs. 3,000/- paid to Manthan Publications was included under the head 'Donations'. Thus, the actual donation is only Rs. 5,000/-. The Commissioner of Income Tax (Appeals) made addition of the entire donation amount. We are of the considered view that the donation has been made by the assessee to a school for education, which is a charitable activity. Accordingly, we delete the addition of Rs. 5,000/- and allow this ground of appeal. Cash Purchases: 10. The assessee as well as Revenue has assailed the findings of Commissioner of Income Tax (Appeals) in respect of addition on account of cash purchases. The Assessing Officer during the scrutiny assessment proceedings has made addition of Rs. 4,84,028/-. In first appeal, the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tands repeated at least thrice instead of as a single transaction. Similarly, silver tukda payments made in cash amounting to Rs. 1,95,270/- paid on 17.08.2002 have been duplicated in Annexure 3 as well as 6. The last 4 items in annexure 3 (R. Nos. 250, 321, 335 & 441) have been supposedly taken as cash purchases, but the appellant has clarified that the amounts represent cash deposited into the Karad Urban Co-operative Bank account and are not cash purchases. This has been verified to be correct from the copy of the Karad Urban Co-operative Bank account filed before me. Consequently, taking into my factual findings and the remand report of the Assessing Officer, the addition that stands confirmed is Rs. 1,11,583/- (20% of 9,57,913). Ground no.14 stands partly allowed." We do not find any error in the well reasoned findings of Commissioner of Income Tax (Appeals) in restricting disallowance to Rs. 1,11,583/-. Accordingly, this ground of appeal of the assessee as well as Revenue is dismissed. Cash Payments: 11. The next ground of appeal raised by the assessee in appeal is with regard to cash payments. The Assessing Officer has made an addition of Rs. 3,92,393/- u/s. 40A(3) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcation submitted to the Assessing Officer regarding cash sales of jewellery, amounting to Rs. 11,24,308/-. So far as cash deposits relating to sale of agricultural produce is concerned, ever if we consider the amount of Rs. 7,45,630/- as cash received on this account as per para 19.2 supra, the total cash deposits from sale of agriculture produce (inclusive of Rs. 3,85,000/- above) comes to Rs. 11,30,630/- Since the gross agricultural income, as per the appellant's books, and as accepted by the Assessing Officer is Rs. 11,00,000/-, what survives for addition is a sum of Rs. 30,630/-. Ground no. 18 is partly allowed. The appellant sets relief of Rs. 15,91,270." 13. The representatives of the rival sides have not been able to point out any error in the findings of Commissioner of Income Tax (Appeals). We do not find any infirmity in the factual findings of Commissioner of Income Tax (Appeals) on this count. Accordingly, this ground of appeal of assessee, as well as of the Revenue is dismissed. 14. In view of our above finding, the appeal of the assessee is partly accepted in the aforesaid terms. 15. Now, we proceed to decide the remaining grounds in the appeal of the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit memos in the form of Paper Book before the Assessing Officer. Since the assessee is not maintaining any show room, payment of commission on sales made through agent is justified. The ld. DR has not been able to controvert the findings of Commissioner of Income Tax (Appeals). We do not find any error in the findings of Commissioner of Income Tax (Appeals) in deleting the addition on account of payment of commission to selling agent. Accordingly, this ground of appeal raised by the Revenue is dismissed. Investment in NSC: 20. The ground No. 5 in appeal by the Revenue is with respect to deleting of addition made on account of unexplained investment in purchase of NSC to the tune of Rs. 2,50,000/-. The Assessing Officer noted that the assessee has shown interest income of Rs. 25,375/- as interest on NSC in the Profit & Loss Account, whereas in the Balance Sheet, the assessee has shown investment in NSC only to the tune of Rs. 10,000/-. From the interest income, the Assessing Officer calculated the investment in NSCs to arrive at figure of Rs. 2,50,000/-. During the proceedings before the Commissioner of Income Tax (Appeals), the assessee explained that the interest income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. 22.1 In so far as addition of Rs. 15,95,630/- is concerned the Commissioner of Income Tax (Appeals) held that an amount of Rs. 5,95,630/- and Rs. 1,00,000/- are part of gross agricultural income earned by the assessee during the year. This contention of the assessee was found to be correct after verification of records. Another sum of Rs. 5,00,000/- has been added as cash deposited in current account no. 57 with M/s. Karad Urban Co-operative Bank Ltd. On verification of records it was found that the said amount represent local bill purchased by the bank and not the cash deposits. Further in the Bank of India, Wadala, Bombay branch current account no. 3137 an amount of Rs. 70,000/-, 1,25,000/- and Rs. 1,05,000/- have been debited vide cheque nos. 292410, 292407 and 292409 respectively in favour of M/s. Pioneer Stones. Therefore, these amounts cannot be said to be cash deposit. Regarding the balance two amounts of Rs. 50,000/- each, they represent cash deposit from income from agriculture and sale of jewellery. The Commissioner of Income Tax (Appeals) finally concluded that none of the amounts aggregating Rs. 15,95,630/- can be considered as unexplained cash deposits. 22.2 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsactions. The Assessing Officer had made addition in an arbitrary and unjustified manner without verifying the bank accounts of the assessee. The Commissioner of Income Tax (Appeals) has observed in his order that the Assessing Officer has deliberately ignored the information furnished by the assessee. The exercise which Assessing Officer has failed to perform has been done by the Commissioner of Income Tax (Appeals). Thus, in view of factual findings given by the Commissioner of Income Tax (Appeals) after examination of bank accounts and other relevant documents, we do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in deleting the additions in respect of unexplained cash credit in the bank accounts of the assessee. 23. In ground no. 9 of the appeal, the Department has assailed the findings of the Commissioner of Income Tax (Appeals) in partly deleting the addition on account of unexplained cash deposits to the extent of Rs. 15,91,270/- from the debtors. This ground of appeal has already been adjudicated along with the appeal of the assessee in para 13 above. For the reasons given therein, this ground of appeal of the Revenue is dismissed. 24. Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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