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TMI Blog2011 (4) TMI 1451X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of ₹ 17,15,000 and ₹ 5,50,000 which represent unsecured loans and advances. 3. The brief facts of the case are that the assessee is an individual. He is director of M/s. Prateek Resort & Builders (P) Ltd. He was also running a proprietorship concern in the name and style of M/s. Sharma Associates. In these assessment years, he derives income from house property and business income from the business of real estates. A search under section 132 of the Income-tax Act, 1961was carried out at his residential premises comprised at 66-Pritam Road, Dehradun on 15.2.2008. A survey under section 133A was carried out simultaneously at his office premises situated at 78-Rajpur Road, Dehradun. During the course of search, a cash of ₹ 1,60,510 was found at the residence out of which a sum of ₹ 1,00,000 was seized. Jewellery having value of ₹ 6,59,900 found at the residence but nothing was seized. A notice under sec. 153A of the Act was issued upon the assessee on 17.8.2009. The assessee has filed his return of income on 5.10.2009 declaring total income at ₹ 3,02,055. Assessing Officer has passed the assessment order on 29.12.2009. He assessed the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has admitted that as far as loan amounts mentioned against the names of Shri SK Sudan, Vijay & Ramesh Goel are concerned, assessee has submitted bank statements, copies of income-tax returns confirmations etc. He also observed that these loans are brought forward from the earlier years as on 31.3.2001. Learned CIT(Appeals) has reproduced the comments of the Assessing Officer in the remand report, in this connection, at page No.8 of the impugned order. Thereafter, Learned CIT(Appeals) has observed that these loans were taken in earlier years. They are brought forward, hence they cannot be admitted to the income of the assessee for current year. Similarly, Learned First Appellate Authority has reproduced the remand report submitted by the Assessing Officer in respect of other loans wherein Assessing Officer was satisfied with regard to the quality of evidence submitted by the assessee in order to discharging the onus. Learned DR submitted before us that Learned CIT(Appeals) ought to have not relied upon the remand report submitted by the Assessing Officer rather he should have independently examined the evidence submitted by the assessee and thereafter decided the fate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his appeal also, the grounds taken by the revenue are not in consonance with rule 8 of ITAT Rules. They are descriptive and argumentative in nature. In brief, the first grievance relates to deletion of ₹ 15,60,000/- which was added by the AO on account of un explained unsecured loans available in the books of the assessee. The next grievance relates to deletion of interest amounting to ₹ 34,500/- which paid on the alleged bogus loan. This amount was disallowed by the AO on the ground that loans are held as bogus, therefore, there cannot be any interest expenditure. The next grievance relates to deletion of ₹ 1,79,000/- which was added by the AO on the ground that assessee failed to disclose full sale consideration in respect of Dehradun land. 9. The brief facts, as discussed in asstt. Year 2002-03, are similar in this asstt. year also. Return was filed on 5.10.2009 in response to the notice received u/s 153A. Assessee declared an income of ₹ 3,33,374/-. The asstt. was completed by the AO on 29.12.2009 as was done in asstt. year 2002-03. He determined the total income of the assessee at ₹ 21,16,874/-. The AO has made following additions :- i. Additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has accepted the genuineness of the claim. Ld. CIT(A) has reproduced the remand report in respect of each credit at page 8,9,10,11,12,13 of the impugned order. After going through the remand report and the relevant evidence, Ld. First Appellate Authority has deleted the addition. 11. With the assistance of Ld. Representative, we have gone through the record carefully. There is no disparity of facts in the present asstt. year viz a viz asstt. year 2002-03. Ld. DR relied upon the asstt. order as well as the grounds raised by the revenue. According to him, Ld. CIT(A) ought to have not put reliance on the remand report rather examine the facts and circumstances of each cash credit. In our opinion, Ld. First Appellate Authority has gone through the evidence as well as the remand report. Considering our finding in asstt. year 2002-03, we do not find any merit in ground No. 1 raised by the revenue. The deletion of ₹ 15,60,000/- is upheld. 12. In ground No. 6, the revenue has challenged deletion of ₹ 34,500/-. This amount was claimed by the assessee as interest expenses incurred on the above loans. Since we have upheld the genuineness of the loans taken by the assessee, conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 54,99,073. He has made the following additions: i. Addition on a/c of disallowance of commission Rs.35,500 ii. Addition on a/c of basis of receipts not declared by the assessee but evident from affidavits of Sushma Breja & Siddhartha Barejs Rs.9,00,000 iii. Addition under sec.68 on a/c of unexplained loans Rs.37,50,000 iv. Addition under sec. 68 on a/c of unexplained advance credits Rs.5,00,000 v. Addition under sec. 69C on a/c of unexplained explained. ₹ 19,342 Total ₹ 52,04,842 17. On appeal, Learned CIT(Appeals) deleted these additions. 18. The revenue is challenging the deletion of these additions. Learned First Appellate Authority has noticed the unsecured loans while reproducing the findings of the Assessing Officer at page 3 which read as under: "The A.O. has given following reason while making the addition: "The details of parties from whom unsecured loans have been claimed by the assessee to have been received during the year, where only confirmations have been filed and no other supporting documentary evidences like bank statements have been filed to prove the creditworthiness of the claimed loan creditors are as under: S.No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ushma Breja and Siddharath Breaj. In this way, Learned CIT(Appeals) has deleted the addition in respect of ₹ 7,50,000 mentioned at Sr. No.2 of the table. As far as the addition of ₹ 12 lacs in respect of the amount shown against the name of Smt. Savita Devi is concerned, we find that Assessing Officer has accepted the claim of assessee to the extent of ₹ 10 lacs. Learned CIT(Appeals) has gone through the evidence submitted by the assessee in respect of ₹ 2 lacs also. We have specifically gone through the findings of the Learned CIT(Appeals) at page No.11 in paragraph 6.3 (v). Taking into consideration this finding of the Learned CIT(Appeals), we do not find any error in it. Taking into consideration the parity of facts in respect of other cash credits and the stand of the Assessing Officer in the remand report via-a-vis the discussion made by the Learned CIT(Appeals), we do not find any error in the order of Learned CIT(Appeals) and the ground in respect of deletion of ₹ 37,50,000 is rejected. 20. In ground No.6, the dispute relates to deletion of ₹ 5 lacs received from Siddharath Breja and ₹ 4 lacs from Smt. Sushma Breja. We find that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 3,66,655. Addition of ₹ 45,50,000 was made by disbelieving the genuineness of unsecured loan taken by the assessee. The addition of ₹ 3,63,655 was made by making a disallowance of interest expenses which were claimed by the assessee as paid to the loaners on such unsecured loans. 25. With the assistance of learned representatives, we have gone through the record carefully. We find that return in response to the notice received under sec. 153A of the Act was filed on 5th October 2009 declaring an income of ₹ 5,39,141. Assessing Officer has completed the assessment on 29.12.2009. He made the following additions: i. Addition on a/c of disallowance of interest Rs.3,63,655 ii. Addition on a/c of disallowance of water tax ₹ 707 iii. Addition on a/c of difference in WIP ₹ 3,36,774 iv. Addition u/s 68 on a/c of unexplained loans Rs.45,50,000 v. Addition u/s 69C on a/c of unexplained house hold expenditure ₹ 20,218 Total Rs.52,71,154 26. Assessing Officer has noticed the following details while making the addition of unsecured loans amounting to ₹ 45,50,000: "The A.O. has given following reason while making the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has declared work-in-progress at ₹ 29,16,868 as on 31.3.2004 relevant for assessment year 2004-05. According to the Assessing Officer, the closing WIP would be the opening WIP on Ist April 2004. He further observed that assessee had made an addition of ₹ 5 lacs and ₹ 8,45,250 in the WIP. Thus, according to the Assessing Officer, at the end of the year, WIP should be ₹ 42,62,118. As against this, assessee has shown WIP at ₹ 39,25,344. Assessing Officer made the addition of ₹ 3,36,774 being the difference in the WIP. 29. Before Learned CIT(Appeals), it was submitted by the assessee that Assessing Officer failed to appreciate the accounts of the assessee. The assessee has incurred a sum of ₹ 5 lacs which he has separately capitalized as part of fixed assets. This amount cannot be included in the WIP. If this amount is excluded then closing WIP would be ₹ 37,62,118 which is lower than the amount disclosed by the assessee at ₹ 39,25,344. Learned CIT(Appeals) has considered this aspect and perused the record. He was of the opinion that a dispute relates to the treatment of ₹ 5 lacs. Whether this amount is revenue expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ₹ 1,50,25,000/-. This amount has been added by the AO on account of failure of assessee to prove genuineness of unsecured loans. The AO has noticed the details of parties from whom unsecured loans have been received by the assessee. These details have been reproduced by the Ld. CIT(A) also while taking note of the AO's finding. They read as under :- "The details of parties from whom unsecured loans have been claimed by the assessee to have been received during the year, where only confirmations have been filed and no other supporting documentary evidences like bank statements have been filed to prove the creditworthiness of the claimed loan creditors are as under :- S.No. Name Amount of loan claimed to have been taken during the year Details of Evidences/Documents not filed 1. Indu Bala Singh 8,00,000/- Bank statement not filed 2. Savitri Devi Aggarwal 20,00,000/- Bank statement and copy of return not filed 3. Siddhartha Bareja 2,00,000/- Bank statement and copy of return not filed 4. Hira Aswal 8,00,000/- Bank statement and copy of return not filed 5. N.D. Bareja 2,00,000/- Bank statement and copy of return not filed 6. Parul Goel 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld the finding of Ld. CIT(A) with regard to the genuineness of the loans and consequently interest expenses has to be allowed. Therefore, this ground is devoid of any merit. Hence rejected. 37. In Ground No. 7, Revenue is impugning the deletion of ₹ 4,80,000/- and ₹ 4,10,000/-. The brief facts in respect of the addition of ₹ 4,80,000/- are that according to the AO, assessee has purchased properties from Shri Anuj & Tanuj Kumar and Shri Sunil Kumar Nagpal for a sum of `1,40,000/- and ₹ 3,40,000/-. He did not disclosed purchase of these properties in the total purchases declared by the assessee. He treated it as unexplained investment and made the addition. On appeal, it was contended by the assessee that these purchases have duly been noticed by the assessee. The properties were sold during the year and a net profit / loss were accounted by the assessee. The properties were sold to Prateek Resorts & Builders Pvt. Ltd. Assessee has produced purchase deed and sale deed for butteracing his contention. Ld. First Appellate Authority has verified these aspects and observed that if it is found that investment / purchases was recorded in the books of accounts t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat for purchase of any property, the buyer has to produce the stamp paper according to the stamp duty fee fixed by the State Government. This is an unavoidable cost and is bound to be incurred whenever any immovable property is purchased. The assessee is involved in the business of sale and purchase of property. In any purchase of property, incurrence of any expense in the shape of stamp duty would be a direct expenditure. Ld. CIT(A) further observed that purchase of stamp duty has been accounted for and recorded in the books of accounts of assessee. He has verified the books. Contrary to this finding there is no evidence brought on record by the revenue nor there is any pleading that it is factually incorrect. We could understood the case of revenue if it had filed the paper book containing books of accounts, exhibiting the fact that no such expenses were accounted by the assessee. The AO has made the addition in a sweeping way whatever he noticed in the accounts without verifying the facts. Thus, in our opinion no interference is called for in the order of Ld. CIT(A) on this issue. 40. In ground No. 9, grievance of the revenue is that Ld. CIT(A) has erred in deleting the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the properties. I have considered assessment order, books of accounts of assessee and also the submissions of assessee. It is concluded that as per accounting principles, the assessee should have declared sales as receipt and corresponding purchases as payment in profit & loss account. But, it is also important to consider that the assessment procedure is a methodology to arrive at the net income of the assessee. In this case though the assessee has not declared the sales as receipts and purchases as payment, yet the net profit arising out of the sale of the properties has been declared. The books of account of assessee also substantiate the fact. Therefore, it can be said that the sale of properties was wrongly accounted by assessee but it cannot be said that these sale of properties remained unaccounted. d. Addition of ₹ 14,30,000/- The AO made the addition on the basis of three sale deeds of ₹ 5,50,000/-, ₹ 3,80,000/- and ₹ 5,00,000/- submitted by assessee during the assessment proceedings but not found in details of sales submitted by assessee. The assessee in his submissions has stated that these aforesaid three sales deeds aggregating to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009. He determined the taxable income of the assessee at ₹ 3,58,60,763/- after making the following additions :- S.No. Particulars Amount 1. Disallowance of interest 3,65,300/- 2. Disallowance of expenses claimed for development of land 88,82,390/- 3. Disallowance of expenses claimed for Sahastradhara Project 39,45,000/- 4. Addition u/s 68 on account of unexplained loans/advances as discussed above 1,79,95,000/- 5. Unexplained investment for capital introduction in firm 5,50,000/- 6. Unexplained cash payment made to Mr. Pintoo (Rs. 8 lacs + ₹ 1.32 lacs + ₹ 1,08,200) as discussed above 10,40,200/- 7. Unexplained cash payment made to Mr. Mehta a/c 2,29,000/- 8. Unexplained cash investment in GMS Property 18,00,000/- Total 3,48,06,890/- 46. On appeal, Ld. CIT(A) deleted almost all the additions. 47. Ground No. 1 & 6 are interconnected to each other. In these ground of appeal, the grievance of revenue is that Ld. CIT(A) has erred in deleting the addition of ₹ 1,79,95,000/- and addition of ₹ 1,43,060/-. These additions were made by treating the loans and advances as non genuine and disallowance of interest payment on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the year but where even the confirmations have not been filed are as under :- S. No. Name Amount of loan/advances claimed to have been taken during the year Details of Evidences/Documents not filed 1. Laxman Singh 4,00,000/- Confirmation, Bank statement and copy of return not filed 2. Pankaj Chetri 4,00,000/- Confirmation, Bank statement and copy of return not filed 3. Prateek resorts 46,75,000/- Confirmation, Bank statement and copy of return not filed Total 54,75,000/- 49. With the assistance of Ld. Representative, we have gone through the record carefully. We find that AO did not provide sufficient opportunity to the assessee during the asstt. proceeding for explaining the nature of unsecured loans and the credit entries available in his books of accounts. The assessee has filed additional evidence before the Ld. CIT(A) and Ld. CIT(A) has called for remand report from the AO. In the remand report, AO has accepted the genuineness of the loan in respect of the creditors except Smt. Lata Rawat. This addition has been deleted by the Ld. CIT(A) after satisfying himself with the quality of evidence produced by the assessee. According to the Ld. CIT(A) assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance of revenue is that Ld. CIT(A) has erred in deleting the addition of ₹ 5,50,000/-. The brief facts of the case are that assessee is a partner in the firm M/s Pratyush and Associates. He has introduced cash capital of ₹ 5,50,000/- on three occasions namely, `1,70,000/- on 29.8.2006, `1,50,000/- on 2nd September 2006 and ₹ 2,30,000/- on 3rd October 2006. The AO made the addition on the ground that assessee has failed to explain the source of the funds. Before Ld. CIT(A), it was contended that assessee has withdrawn a sum of ₹ 8,85,000/- from the firm in the month of June itself. He has re deposited ₹ 5,50,000/- in the month of August, September and October out of the cash withdraw in June. Ld. CIT(A) on verification of these facts, was satisfied with the explanation of assessee and deleted the addition. We do not find any error in the finding of Ld. CIT(A). The assessee has explained the source of funds available with him. 53. In this ground of appeal, grievance of the revenue is that Ld. CIT(A) has erred in deleting the addition of ₹ 10,40,200/-. The brief facts of the case are that during the course of search, a diary and certain loose pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tially assessee has took the plea that deal was made to purchase the property at ₹ 55 lacs but later on the actual purchase was made for ₹ 44 lacs. Before Ld. CIT(A), it was contended by the assessee that there is no evidence on the record which can suggest that a sum of ₹ 18 lac was paid in cash. Ld. CIT(A) has deleted the addition by observing as under :- "I have considered the AO's order, books of accounts of assessee and submissions of assessee. It is found that as per purchase deed, submitted by assessee, there was no mention of ₹ 18,00,000/- in the said purchase deed. The transaction of assessee is supported by a registered purchase deed, which in itself is a legal document. The ground of addition made by AO is only that ₹ 18,00,000/- were found written against the name of seller in one of the diaries seized during the search. However, there is no other document or evidence available in the hands of the AO, which could establish that such transaction of making payment of ₹ 18,00,000/- was made by assessee. Even the books of accounts of assessee do not establish the same. Therefore, additions merely on the basis of writing on loos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive that no cash was paid. He has been alleging from the very beginning that no cash was paid by him. The AO could have recorded the statement of vendor . He should have verified from Shri Kailash Gulati i.e. any cash was paid, or not, if paid, it was solely paid by the assessee etc. The assessee has explained the position about the entry at the time of search itself. He has explained about the certain other entries in the diary and submitted that there were rough calculations also. The AO instead of investigating the issue simply made the addition. Ld. First Appellate Authority has considered all these aspects and deleted the addition. After taking into consideration the finding of Ld. CIT(A) extracted supra, we do not find any merit in the ground of appeal raised by the revenue it is rejected. 57. In view of the discussion, appeal of the revenue is dismissed. CO No. 67/De/2011 58. Assessee did not press the cross objection, hence it is rejected. ITA No.828/Del/2011: 59. Ground Nos. 2 to 5 are general ground of appeal and in a way, these are the arguments in support of the ground numbers 1 & 6. In ground No.1, grievance of the revenue is that Learned CIT(Appeals) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49,52,000 Bank statement and copy of return not filed. 2 N.D. Bareja 2,50,000 Bank statement and copy of return not filed. 3 V.P. Monga 2,50,000 Bank statement and copy of return not filed. 4 S.K. Sudan 13,50,000 Bank statement not filed. 5 D.K. Aggarwal 10,00,000 Bank statement and copy of return not filed. Total 78,02,000 S.No. Name Amt of loan claimed to have been taken during the year Details of Evidences/Documents not filed. 1 Pragati 25,00,000 Confirmation, Bank Associates statement and copy of return not filed. This amount has been worked out after adjusting loan of ₹ 20 lacs claimed by the assessee in A.Y. 2006- 61. We find that in the remand report, Assessing Officer has accepted the genuineness of the loan and all other ingredients required to be fulfilled by the assessee under section 68 of the Act. Learned CIT(Appeals) has reproduced the remand report of the Assessing Officer. Remand report in connection with each creditor has been reproduced on page Nos. 9 to 14 and 16 of the impugned order. Taking into consideration the findings of the Learned CIT(Appeals) and the satisfaction of the Assessing Officer, we are of the view that no in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r savings. Assessing Officer was not satisfied with the explanation of the assessee. He made the addition. On appeal, Learned CIT(Appeals) deleted the addition on the ground that similar query was asked from the wife of assessee in her regular proceedings. The department was satisfied by her explanation and no addition was made. Learned CIT(Appeals) made a reference to the order of the ITAT in the case of Jawaharlal Jain reported in 48 TTJ 653 wherein jewellery was accepted on the basis of human probability. The quantity of jewellery was not on a very high side. Possibility of acquiring this much of jewellery at the time of marriage and over a time thereafter from day to day savings cannot be ruled out. Considering the findings of the Learned CIT(Appeals), we do not see any reason to interfere in it. 64. In the next ground of appeal, grievance of the revenue is that Learned CIT(Appeals) has erred in deleting the addition of ₹ 47 lacs which was added by the Assessing Officer on account of undisclosed payment to IP Arora. 65. The brief facts of the case are that the assessee had paid an amount of ₹ 1,85,00,000 to one Shri I.P. Arora. A sum of ₹ 61 lacs was paid th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a declaration of ₹ 1 crore in order to explain all unaccounted money. Learned CIT(Appeals) has observed that out of the total amount, a sum of ₹ 14,30,520 remained unutilized hence telescoping against this amount can be granted. Considering the findings of the Learned CIT(Appeals), this ground of appeal is rejected. 68. In ground No.11, grievance of the revenue is that Learned CIT(Appeals) has erred in deleting the addition of ₹ 16 lacs. 69. The brief facts of the case are that a diary was found wherein on page No.4, three items were mentioned. Assessee has received a sum of ₹ 10 lacs through account payee cheques from Manju Semwal. He has further written ₹ 9 lacs and ₹ 7 lacs to be received in cash. According to the assessee, as per agreement dated 26.6.2006 Manju Semwal was required to pay ₹ 9 lacs by January 2007 and ₹ 7 lacs by May 2007. She has not paid these amounts. Assessing Officer did not accept this contention on the ground that assessee has received a sum of ₹ 10 lacs through account payee cheques. He must have received sum of ₹ 16 lacs also in cash. Learned CIT(Appeals) has deleted the addition on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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