9911796707
TMI Blog2016 (1) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... ears to be a common source of fund”. Once the AO accepts that there appears to be a common source of fund and when the family of the assessee owns more than 93 acres of agricultural land on which various crops are grown, therefore, we find force in the submission of the Ld. Counsel for the assessee that the money available from such agricultural activity is sufficient to meet the auction money required for the sand business. - Decided against revenue Addition on income from sand business activity - CIT(A) deleted the addition - Held that:- Admittedly, the assessee has not declared any income from sand business activity. The additional income so declared in the return filed in response to notice u/s.153A is on account of writing off of certain sundry creditors. Therefore, once the income from sand business was not specifically declared in the return of income, the Ld.CIT(A), in our opinion, was not justified in deleting the same. We accordingly reverse the order of the CIT(A) on this issue and the addition of ₹ 2,10,000/- made by the AO is restored. - Decided against assessee Disallowance of expenses - CIT(A) deleted the addition - Held that:- From the assessment order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be set off by the CIT(A). Therefore, we reverse the finding of the CIT(A) on this issue - Decided in favour of revenue Credit of additional income to the profit and loss account - whether ₹ 12,12,500/- declared by the assessee during the course of search should have been taxed over and above the income determined by the AO? - Held that:- We find the assessee in the instant case has not filed his return of income for the impugned assessment year before the search. Although he had declared additional of ₹ 12,12,500/-, however, the assessee has not honoured the same while filing return of income and has declared NIL income by filing profit and loss account in which the additional income has been credited to the profit and loss account and various expenses claimed which assessee could not substantiate. Under these circumstances, the total income of the assessee cannot be less than ₹ 12,12,500/-. We hold and direct accordingly. The ground by the revenue is decided accordingly. Addition on account of suppressed sale of scrap - CIT(A) deleted the addition - Held that:- Since during the course of assessment proceedings the assessee was unable to produce the monthly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return filed on 31- 10-2005 had declared income of ₹ 1,71,360/-. The additional income declared in the return filed in response to notice u/s.153A amounting to ₹ 14,70,000/- was on account of 11 sundry creditors being written off as income. 3. During the course of assessment proceedings the AO noted that as per Annexure A-2/20 and Annexure A-1/16 seized from the residence of the assessee there is a reference to the sand contract for Chumble/Aadhar site and Dabhade site. For the purpose of verification the AO issued letters of enquiry to the District Collector, Nashik seeking complete details of sand contracts issued since 01-04-2002. From the replies obtained it was gathered that the Tahsildar, Malegaon had allotted a contract to Waman P. Chumble, brother of the assessee for mining/dredging of sand at Chinchwad site for ₹ 35 lakhs for the period 04-10-2004 to 31-07-2005. The amount has been paid in cash. On verification of records of Waman P. Chumble the AO noted that the said payment has not been accounted for. When it was confronted, the assessee vide letter dated NIL submitted in the office of the AO on 20-12-2010 stated as under : 1. While the contract w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter of this appeal, we are not discussing those issues. 6. Before CIT(A) it was submitted that while making the addition of ₹ 35 lakhs the AO completely ignored the common pool funds of members of Chumble family which has been sourced mainly out of agricultural income from the land admeasuring more than 93 acres owned by the members of the family. The observation of the AO at page 4 of the assessment order was brought to the notice of the CIT(A) where the AO has observed that there appears to be a common source of funds and that the assessee himself has admitted that this business is carried out by him out of the pool of funds belonging to the family. It was submitted that the AO has completely ignored the submissions filed before him vide letter dated 25-12-2010 along with necessary evidence of the agricultural income of the members of Chumble family. It was submitted that the agricultural income for A.Y. 2003-04 to 2005-06 and the members of Chumble family out of ancestral agricultural land and lands acquired out of agricultural income of ancestral lands is ₹ 39,55,937/-. The said income being mainly from ancestral lands of HUF have not been credited to capital a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made for obtaining sand contract at Chinchwad in the name of Shri Vaman Chumble. It is undisputed fact that the sand contract has been executed by Shri Shivaji Chumble i.e. the appellant out of a pool of funds belonging to the Chumble family out of common source of fund. The fact is also supported by the notings in the seized material as per which Shri Vaman Chumble has forwarded substantial amounts of ₹ 27,65,500/- to Shri Shivaji Chumble during 15/7/2005 to 16/9/2005 i.e. prior to the payment of deposit for sand contract. The appellant vide letter dated 15/12/2010 has filed details of agricultural income earned by the members of the Chumble family. The appellant has filed 7/12 extracts of the agricultural lands admeasuring 93.78 acres showing crops grown on the said land. The appellant has worked out quantum of agricultural produce of crops grown on the basis of established norms published by various institutions and authors including Rahuri Krishi Vidyapith. The sale proceeds of the crops grown have been worked out on the basis of rates of agricultural produce certified by Nashik Krishi Utpanna Bazar Samiti. From this gross agricultural sale proceeds the appellant has redu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Net Agricultural income from grape Income per acre for grape Income per acre for other crops 2003-04 14,83,440 49.54 12.25 9,92,880 81,051 13,155 2004-05 12,49,284 27.20 12.25 10,80,900 88,237 11,263 2005-06 26,00,280 46.25 31.50 24,28,020 77,080 11,679 2006-07 28,85,940 93.76 31.50 25,90,020 82,223 4,753 2007-08 33,36,420 93.76 31.50 29,94,480 95,063 5,492 2008-09 38,63,850 93.76 31.50 33,95,010 1,07,778 7,530 From the above tabular charts, it has been n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were claimed to be partners in the sand contract. In view of the above facts, the alternative contention of the appellant is rejected. In view of the above facts and discussion, the A.O. is directed to delete the addition on account of unexplained deposit paid for sand contract out of undisclosed income to the extent of ₹ 25,00,000/- out of total addition of ₹ 35,00,000/-. The balance addition of ₹ 10,00,000/- is confirmed. This ground of appeal is partly allowed. 9. So far as addition of ₹ 2,10,000/- on account of profit on sale of sand is concerned it was submitted that the assessee has offered to tax undisclosed income of ₹ 14,39,000/- which has been utilised for payment to creditors. Therefore, the income of ₹ 2,10,000/- is covered in the said income offered to tax. 10. Based on the arguments advanced by the assessee the Ld.CIT(A) deleted the addition of ₹ 2,10,000/- by observing as under : 9.1 I have carefully considered the facts of the case, the assessment order and the rival submissions. On perusal of statement of computation of income filed by the appellant, it has been noticed that the appellant has offered to tax s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of sundry creditors without appreciating the fact that the assessee never disclosed this business in the returns filed before and after search. 7. The appellant craves leaves to add, alter/delete any of above ground of the appeal. 8. Any other ground that may be urged at the time of hearing. 12. The Ld. Departmental Representative strongly challenged the order of the CIT(A). He submitted that the assessee has not disclosed any agricultural income in the return filed. During the search it was found that Chumble group have shown agricultural income of HUF in individual returns of income. During the course of search although the assessee was asked to furnishe the details of agricultural income along with documentary evidence in support of the same, however, no such details were furnished. The assessee did not maintain any record of agricultural income. The search party also did not find any evidence in support of agricultural income during the search proceedings. No details of agricultural income like sale patties, purchase bills and agricultural inputs were filed by the assessee during the search. No agricultural income has been offered by the assessee in his return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering crops grown, production of agricultural produce from crop, sale price of the agricultural produce on the basis of the average market price of the agricultural income. This income is utilised for the sand business purpose. Even the AO in the body of the assessment order has also accepted this fact for the above purpose. The Ld. Counsel for the assessee drew the attention of the Bench to the following observation of the AO at page 4 of the AO : The assessee has not been able to furnish either the names or confirmation of any of the socalled partners. It is not denied that the entire contract is in the name of Waman Chumble who is the brother of the assessee. The assessee himself has admitted that this business is carried out by him out of a pool of funds belonging to the family. He has further stated that this issue should be considered in his hands. The contention of the assessee is acceptable since page 13 of Annexure A-2/20 shows that on 15-07-2005 and 24-08-2005 ₹ 5.50 Lacs and ₹ 10 Lacs have been given to Shivaji Appa , i.e. Shivaji Chumble in respect of Chinchwad contract on behalf of Vaman Chumble. Again on 04-09-2005 and 16-09-2005 amounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had explained the source of funds which is from agricultural income of the Chumble family which was kept in common family pool and it was introduced in the business as and when required. Considering the family holding of 93 Acres of agricultural land, where different crops such as Grapes, Khurasana, Tomato, Masur, Groundnuts and Vegetables are produced and considering the quantum of agricultural produce on the basis of established norms published by various institutions and authors and the rate for such agricultural produce certified by Nashik Krishi Utpanna Bazar Samiti, the Ld.CIT(A) accepted the source of common funds for investing in the sand dredge business. We find no infirmity in the order of the CIT(A). From page 4 of the paper book, we find the assessee vide letter dated 15-12-2010 addressed to the AO has given the following details : To The Income Tax Officer, Nashik Central-3, Nashik Date : 15-12-10 Respected Sir, Reg : Shri Shivaji Pandurang Chmbale and Brothers/Family members, At Post Gaulane, Tal. Dist. Nashik. PAN : AANPC0932C Subject : Scrutiny Assessment Proceeding for the Assessment Year 2003-04 to 2007-08. With reference to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d much substance in the same in view of the letter addressed by the assessee to the AO, the contents of which have already been reproduced in the preceding paragraph. In this view of the matter and in view of the detailed reasoning given by the CIT(A) we find no infirmity in his order deleting ₹ 35 lakhs. Accordingly, the order of the CIT(A) on this issue is upheld and the ground raised by the Revenue on this issue is dismissed. 22. So far as deletion of ₹ 2,10,000/- is concerned we do not agree with the finding given by the CIT(A). Admittedly, the assessee has not declared any income from sand business activity. The additional income so declared in the return filed in response to notice u/s.153A is on account of writing off of certain sundry creditors. Therefore, once the income from sand business was not specifically declared in the return of income, the Ld.CIT(A), in our opinion, was not justified in deleting the same. We accordingly reverse the order of the CIT(A) on this issue and the addition of ₹ 2,10,000/- made by the AO is restored. The ground of appeal No.4 raised by the Revenue on this issue is accordingly allowed. ITA No.1576/PN/2011 (A.Y. 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m scrap business. 25. Similarly, the AO made addition of ₹ 3,44,335/- being investment towards sand contract. Further, the AO also made addition of ₹ 4,55,555/- being 10% of income from the sand auction, the auction amount of which was ₹ 45,55,555/- for the year. The AO also made addition of ₹ 71,313/- on account of brick business by estimating profit @10% on sale value of material of ₹ 7,13,133/-. 26. Before CIT(A) the assessee vehemently challenged the order of the AO in making the various additions. It was submitted that books of account were audited and duly supported by bills and vouchers which were produced before the AO. Therefore, the AO was not justified in rejecting the book results and go for various additions on estimate basis. 27. So far as investment in sand auction is concerned it was submitted that the family has huge agricultural land the income of which is sufficient to make investment required for the sand auction. It was further submitted that as per the seized documents, the contract was taken by 9 persons and the contribution of the assessee was only ₹ 10,25,000/- which amounts to 23.38%. Therefore, the whole amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loss account. 5. On the fact and circumstances of the case the Ld. CIT(A) erred in deleting the addition of ₹ 1,65,559/- on account of suppressed sale of scrap. The Ld. CIT(A) erred in not appreciating the fact that assessee was unable to produce expenditure vouchers and bills and that this fact was admitted by the A.R. of the assessee during assessment proceeding, thereby requiring A.O. to estimate the same. 6. On the fact and circumstances of the case the Ld.CIT(A) erred in deleting the addition of ₹ 3,44,335/- on account of alleged unexplained payment for sand auction. The Ld. CIT(A) also erred in not taking into cognizance the fact that the addition was made on the basis of seized documents. 7. On the fact and circumstances of the case the Ld. CIT(A) erred in accepting assessee's plea that payment for sand auction has been made out of common pool funds of the family generated out of agricultural activities. The Ld. CIT(A) erred in not appreciating the fact that no evidence of agricultural income was found at the time of search or has been submitted during assessment proceedings. 8. On the fact and circumstances of the case the Ld. CIT(A) erred in adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ₹ 4,53,000/- on account of error and omission. Therefore, since the assessee has not maintained proper books of account from truck plying business, the income of the assessee has to be estimated as per provisions of section 44AE. Although the AO has computed such income at ₹ 1,33,000/-, however, the income declared by the assessee at ₹ 12,12,500/- which we are upholding in the subsequent paragraphs will take care of this issue. Therefore no separate addition is called for. Ground raised by the Revenue is accordingly dismissed. 33. So far as ground of appeal No.3 is concerned, the grievance of the revenue is regarding set off of loss of ₹ 2,78,533/- from the income offered to tax at ₹ 12,12,500/- u/s.132(4) of the I.T. Act. 34. After hearing both the sides, we find the AO during the course of assessment proceedings observed that in the profit and loss account the assessee has debited petrol and diesel expenses of ₹ 13,84,767/- and repair expenses of ₹ 4,68,000/- against the lorry hiring charges of ₹ 12,71,515/-. The ratio of expenditure as compared to the preceding assessment year was very high. The AO, therefore, held that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 1,65,559/- is required. 38. Grounds of appeal No.6 to 8 are on account of deletion of ₹ 3,44,355/- on account of alleged unexplained payment for sand auction. 39. Since in ITA No.1575/PN/2011 we have already held that the income of the family from agricultural land of more than 93 acres is sufficient to meet the amount required for sand auction, therefore, no addition on this account is called for. This ground raised by the Revenue is accordingly dismissed. 40. In ground of appeal No.9 the Revenue has challenged the order of the CIT(A) in deleting the addition of ₹ 4,55,555/- on account of profit on sale of sand. In ITA No.1575/PN/2011 we have already upheld such estimation of income from sand business. Therefore, facts being similar, the order of the AO in determining ₹ 4,55,555/- on account of profit on sale of sand is upheld. This ground by the Revenue is decided accordingly. However, since we have held that the income of the assessee cannot be less than ₹ 12,12,500/-, therefore, no separate addition is called for as the same will take care of ₹ 4,55,555/-. 41. In ground of appeal No.10 the Revenue has challenged the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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