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TMI Blog2016 (12) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of CIT(A), who had perused the bank statements and also scanned and reproduced the same as part of the appellate order. On perusal of the same, the assessee was found to have deposited ₹ 5 lakhs each on 05.01.2005 totaling ₹ 15 lakhs in respect of said amount received from three persons. Though before the Assessing Officer in the original assessment proceedings, the assessee only produced 7/12 extract of the said persons but could not produced the same, hence addition was made to the extent of ₹ 15 lakhs. However, before the CIT(A) during the course of remand proceedings, all the three persons were produced, who admitted to have advanced sum of ₹ 5 lakhs each to the assessee. The entire transaction was through banking channel. In such circumstances, where the identity of the persons have been proved and even the creditworthiness has been established by filing relevant 7/12 extract, agricultural land holding and the produce, then the genuineness of transactions stands established and there is no merit in the addition made under section 68 of the Act and the same is deleted. Accordingly, the grounds of appeal raised by the assessee are allowed. - ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the account extract of M/s. Nirmal Seeds, Pachora, Dist. Jalgaon, it came to the notice of Assessing Officer that the assessee had received compensation from the said party at ₹ 20,05,000/- for faulty seeds, which was not reflected in the return of income for the year under consideration. The assessment proceedings were reopened after recording the reasons for reopening under section 147 of the Act. In response to the notice issued under section 148 of the Act, the assessee furnished letter dated 27.04.2012 requesting that the original return of income filed on 15.12.2006 may be treated as filed in response to the notice under section 148 of the Act. Thereafter, the assessment proceedings were taken up and the assessee attended and filed details and explanation on various dates. The assessee was dealing in Seeds Fertilizers under the name and style M/s. Bhagyashree Krushi Seva Kendra, at Nandurbar in the year under consideration. The assessee also had dealership of Seeds of M/s. Nirmal Seeds, Pachora, Dist. Jalgaon. The assessee further explained that he was engaged in the business of Seeds and Fertilizers and plot trading. He also derived income from other sources and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y M/s. Nirmal Seeds in respect of persons to whom the compensation was to be paid by the company during the year. In the absence of satisfactory explanation, sum of ₹ 50,000/- was treated as undisclosed income of the assessee. 7. Before the CIT(A), the assessee furnished written submissions dated 13.08.2014 which are reproduced under para 5 at pages 3 and 4 of the appellate order. In the said communication, reference was made to the earlier letter dated 19.06.2014, wherein the assessee had furnished certain details which were forwarded to the Assessing Officer, who in turn, had submitted remand report dated 25.05.2014. The contention of assessee in this regard was that since the Assessing Officer has not rebutted the submissions and the contentions of assessee vide letter dated 19.06.2014, then no addition of ₹ 15 lakhs is to be made in the hands of assessee. The second contention in alternative which was made before the CIT(A) was that the assessee had claimed to have incurred total expenditure of ₹ 49,20,000/- in respect of compensation paid to farmers, out of which ₹ 20 lakhs was reimbursed by M/s. Nirmal Seeds, Pachora, Dist. Jalgaon, an amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant could not prove the genuineness of the loans amounting to ₹ 15 lac that he had deposited in his bank account. In this regard the appellant has submitted that the statement recorded by the AO. pertained to the farmers who belonged to rival political party and were against the appellant's group. 6.1 The A.O. has noted that the appellant has received reimbursement of compensation of ₹ 20,00,000/- from the company and out of the said receipt the appellant has not paid compensation to the extent of ₹ 50,000/- to a farmer namely Shri Ishwar Manik Mali and hence made an addition of payment of compensation to farmers, the A.O. has accepted the said payment to the extent of ₹ 19,50,000/-. It has also been noticed that the said payments have been made by the appellant by bearer cheques and the appellant has not maintained proper record to prove the said expenditure of ₹ 49,20,000/- stated to have been incurred on behalf of M/s. Nirmal Seeds, Pachora. The appellant has not shown the payment of the said compensation in the financial statements (B/s, PandL A/c.). Nowhere in the financial statements the appellant has mentioned the fact of pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/-. The plea of assessee in this regard was that in case the payments are accepted to the extent of ₹ 19,50,000/- which were sourced out of proceeds from M/s. Nirmal Seeds, no further addition is merited in the hands of assessee. However, the CIT(A) rejected the claim of assessee in view of cash deposits in the bank account. The CIT(A) noted from the bank entries that the assessee had repaid ₹ 10 lakhs on 18.12.2004 to Satpuda Tr. Co. and had paid compensation to the farmers to the extent of ₹ 20,05,000/-. In view thereof, where the assessee had paid compensation to the extent of ₹ 20,05,000/- and was left with ₹ 45,000/-, then the submissions of assessee that he had availability of cash out of disallowance of compensation was found to be completely misplaced by the CIT(A). The CIT(A) noted that the Assessing Officer had disallowed the payment of compensation to one farmer amounting to ₹ 50,000/- and the assessee had deposited ₹ 15 lakhs on 05.01.2005 out of his undisclosed income and hence, the addition of ₹ 15 lakhs under section 68 of the Act on account of unsecured loans confirmed by the CIT(A). 9. The assessee is in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative for the Revenue on the other hand, placed reliance on the order of CIT(A). 12. The issue arising in the present appeal is against the addition made under section 68 of the Act amounting to ₹ 15 lakhs. The assessee has raised additional ground of appeal and has raised an issue of allowing telescoping of the amount disallowed in the hands of assessee. The claim of assessee was that it was required to pay compensation to the farmers against the Mirchi seeds, which were sold by him, which in turn, were manufactured by M/s. Nirmal Seeds. Since the seeds did not fructify, the farmers were entitled to the compensation against the claim of ₹ 49,20,000/-, M/s. Nirmal Seeds paid compensation to the tune of ₹ 20 lakhs. The assessee before the Assessing Officer claimed that it had paid balance compensation out of his funds. However, the finding of authorities below was that the assessee had paid compensation to the tune of ₹ 20 lakhs only. The assessee was asked to explain the expenditure of ₹ 49,20,000/-, which said to have been incurred on behalf of M/s. Nirmal Seeds. The assessee had not shown the said payment of compensation in its financial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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