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TMI Blog2018 (5) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... earned CIT(A) has been made without the application of mind. We also note that the disallowances of the expenses cannot exceed the amount of actual expenses claimed by the assessee. Therefore we are of the view no disallowance on account of Misc. expenditure in the given facts and circumstance is warranted. On questioned to the ld. DR, he failed to bring any satisfactorily reply. No hesitation to reverse the order of authorities below. Accordingly AO is directed. Hence the ground of appeal of the assessee is allowed. Agricultural income - CIT(A) reducing the agricultural income to ₹ 2.40 lakh instead of ₹ 16,68,430/- - Held that:- We find from the order of the Ld. CIT(A), it is clear that the assessee has earned agricultural income from its agricultural land but the same was quantified at ₹ 20,000 per acre only. However, on perusal of the order of Ld CIT(A) we note that the basis of ₹ 20,000 per acre has not been substantiated by the Ld CIT(A) on the basis of documentary evidences produced by assessee. The assessee before the CIT-A submitted that some of the buyers of agriculture appeared before the AO and accepted to have purchased the agricultural pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd proceedings. It cannot be said that the ld. CIT(A) has admitted the additional evidence - Decided against revenue - ITA No.2818/Kol/2013 & ITA No.04/Kol/2014 - - - Dated:- 27-4-2018 - Shri Waseem Ahmed, Accountant Member And Shri S.S.Viswanethra Ravi, Judicial Member By Assessee : Shri S.K. Tulsian, Advocate By Respondent : Shri Imlimeren Jamir, Addt CIT ORDER Per Waseem Ahmed, Accountant Member The assessee as well as Revenue are in cross-appeals against the common order of Commissioner of Income Tax (Appeals)-XII, Kolkata dated 12.08.2013. Assessment was framed by DCIT, Circle-12, Kolkata u/s 144/143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his common order dated 05.12.200 for assessment year 2006-07. Shri S.K. Tulsiyan, Ld. Advocate appeared on behalf of assessee and Shri Imlimeren Jamir, Ld. Departmental Representative appeared on behalf of Revenue. 2. Both the appeals are heard together and being disposed of by way of this consolidated order for the sake of convenience. First we take up assessee s appeal in ITA No. 2818/Kol/2013. 3. The grounds raised by the assessee per its appeal are as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. Thus, the part ground of first issue of appeal raised by assessee remains to be adjudicated on account of addition made for salary, wages and bonus for ₹ 1,98,500/-. 5. Briefly stated facts are that assessee in the present case is a private limited company and engaged inter alia in the agricultural business. The assessee in the year under consideration has claimed an expense of ₹ 1,98,500/- on account of salaries, wages and bonus expenses. During the course of assessment proceedings, the assessee failed to furnish supporting evidence. Therefore, the AO disallowed the same and added to the total income of assessee. 6. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that expenses were incurred by it for its business activities. The AO was erred in disallowing the entire expense. The Ld. CIT(A) called for remand report from AO who remained silent in his remand report in respect of salary, wages and bonus expenses. However, Ld. CIT(A) disregarded the contention of assessee and confirmed the order of AO by observing as under:- (ii) As regards the claim of expenses under the other head e.g. payments claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not struck off the register or unless the company is dissolved. So long as the company is in operation, it has to maintain the status as a company and it has to discharge certain legal obligations and for that purpose it is necessary to appoint clerical staff and secretary or accountant and incur incidental expenses. In this background, the conclusion of the Tribunal that the expenses incurred were wholly and exclusively for the activities to earn income was a reasonable conclusion. The Tribunal was, thus, justified in allowing the expenditure claimed by the assessee as deduction. However the ld. AR before us has not brought any material on record suggesting that the expenses claimed under the head of business were incurred exclusively for the business purpose and no part of it was incurred in connection with the exempted declared by the assessee. In the absence of information we apprehend that the assessee should not avail the double deduction of the same expenses. Indeed, the facts that the assessee has shown being sales and a body corporate cannot be just brush aside. Therefore the disallowance of the entire expenses cannot be made. But at the same time the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R for the Revenue vehemently relied on the order of Authorities Below. 12. We have heard the rival contentions of both the parties and perused the material available on record. In the instant case, the assessee has claimed miscellaneous expenses of ₹ 11,650 only where as the AO has disallowed entire miscellaneous expenses amounting to ₹ 3,05,438.00 only. However the learned CIT- A reduced the disallowances to the extent of 50% of the miscellaneous expenses i.e. 1,52,719/- (50% of 3,05,438.00). However on perusal of the audited financial statements we note that the assessee has claimed Miscellaneous Expenses only for ₹ 11,650.00. Therefore we hold that the disallowances made by the AO and subsequently party confirmed by the learned CIT(A) has been made without the application of mind. We also note that the disallowances of the expenses cannot exceed the amount of actual expenses claimed by the assessee. Therefore we are of the view no disallowance on account of Misc. expenditure in the given facts and circumstance is warranted. On questioned to the ld. DR, he failed to bring any satisfactorily reply. Hence we have no hesitation to reverse the order of authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue in terms of order passed by the Co-ordinate Bench of this Tribunal in the case of ITO vs. J.H. Deb Kumar Sinha in ITA No.2101/Kol/2006. The assessee also submitted that it has 12 acres of agricultural land which has given rise to the agricultural income of ₹ 16,68,435/-. However, Ld. CIT(A) after considering the submission of the assessee deleted the addition in part made by the AO by observing as under:- 4.7.4 Decision: I have carefully considered the submission counter reply put forth on behalf of the appellant along with the supporting details//documents furnished case laws relied upon, perused the facts and case records including the impugned assessment order, the remand report and other materials brought on record. It is seen that the AO has considered the entire agricultural sale proceeds as the income of the appellant as income from other source. To my mind, this treatment employed by the AO cannot be considered as a sensible and practical proposition and devoid of merit. I am of the view that even if the appellant failed to substantiate the earning of income from agricultural source, in that case the net income is required to be computed by ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore Ld. CIT(A). On the other hand, Ld. DR submitted that assessee failed to furnish any documentary evidence in support of assessee s agricultural income. Therefore he vehemently relied on the order of authorities below. 17. We have heard the rival contentions of both the parties and perused the materials available on record. In the instant case, the assessee has shown agricultural income of ₹ 16,68,430/- which was treated by the AO as income from other sources. The AO also in his remand report recommended to treat the amount entire amount of ₹ 16,68,430/- as income from other sources on the ground that the assessee failed to furnish the names and complete addresses of the person to whom such agricultural goods were sold. 17.1 However the Ld CIT(A) worked out the agricultural income of ₹ 20,000 per acre and accordingly treated the sum of ₹ 2.40 lakh as agricultural income of the assessee and treated the remaining amount of ₹ 14,28,430.00 (16,68,430.00 - 2,40,000.00) as income from other sources. There is no dispute that the assessee owned to an agriculture land of 12 acres at Panagarh, Beldanga, District Burdwan, West Bengal. It is also un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Shri Deb Kumar Sinha (supra) having identical facts cannot be ignored as the identical issue was decided in favour of assessee. We also note that Shri Deb Kumar Sinha has shown agricultural income of ₹ 2,27,777/- per acre whereas the assessee has shown only ₹ 1,39,035 per acre. The income declared by Shri Deb Kumar Sinha was based on the Inspector report furnished during the assessment proceedings. In view of above and after keeping reliance in the order of this Tribunal in the case of Shri Deb Sinha (supra) we are inclined to reverse the order of authorities below and directing the AO to delete the same. Hence, the ground of appeal of the assessee is allowed. 18. Next issue raised by assessee in ground No.4 is that Ld. CIT(A) erred in enhancing the income of assessee by ₹ 3,74,525/- on account of negative cash balance. 19. The AO during his remand proceedings has observed that there is negative cash balance in the cash book of the assessee for ₹ 3,78,525/- on 27.01.2006. Accordingly, the AO recommended the addition on account of negative cash balance of ₹ 3,78,525/- Accordingly, Ld. CIT(A) treated the negative cash balance of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently confirmed by the Ld CIT(A) is liable to be deleted. In holding so we find support and guidance from the judgment of Honourable Bombay High Court in the case of CIT vs. Indo-Aden Salt Works Company reported in 36 ITR 429 (Bom) wherein it was held as under : That brings us to the consideration of the real contention of the assessee which turns on the interpretation of the Tribunal's order when it directed the Appellate Assistant Commissioner to dispose of the appeal on its merits. It appears from that order that it was a common ground before the Tribunal at the hearing of that appeal that it was a case of succession within the meaning of section 25(4). It is also clear that the only question which the Tribunal was asked to consider and which the Tribunal had jurisdiction to consider was whether the Appellate Assistant Commissioner was right in deciding the appeal on the sole legal contention that there was no right in the assessee to claim relief in respect of super-tax. The Tribunal having reached the conclusion that the Appellate Assistant Commissioner had taken a technical and narrow view of the matter would have proceeded to go into the merits of the claim for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an exercise his jurisdiction on the issue on which the Assessing Officer IT No.4179/M/03 Aventis Pharma Ltd. could have exercised but did not do so. In the case when the Assessing Officer has no jurisdiction over an issue, then in the appellate proceedings, the jurisdiction of the Commissioner of Income Tax (Appeals) cannot be enlarged beyond the jurisdiction of the Assessing Officer. Hence, we set aside the orders of the authorities below on this issue as without jurisdiction. 21.1 We also find support and guidance from the order of ITAT Delhi Bench in the case of DCIT v. Daulat Ram Arora in IT(SS) No.8/Del/2013 dated 14.08.2015 wherein it was held as under:- 12. On a consideration of the same, we find that the AO in the present proceedings had incorrectly proceeded to re-consider the issues which already stood concluded by the Co-ordinate Bench. It is trite law that in the remand proceedings, the AO cannot travel beyond the directions given in the remand. In view of above proposition and respectfully following the aforesaid orders of ITAT Mumbai and Delhi Benches, we hold that the AO cannot take up the fresh issue in the remand proceedings. Thus we are inclined to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from CSIL and such company was not found at the given addresses. The assessee in rejoinder submitted that non-finding of company at the given address cannot be the ground for making the addition. The assessee in support of its claim has filed copy of confirmation and the assessment order and audited balance-sheet justifying that the amount of advance was paid by CSIL. However, Ld. CIT(A) after considering the submission of assessee deleted the addition made by the AO by observing as under:- 4.3.3 Decision: After considering the submission and counter reply furnished on behalf of the appellant along with the supporting documents/details, perusing the entire facts of the case including the observation and findings of the AO in the assessment order as well as in the remand report and other materials brought on record, i am inclined to agree with the contention of the appellant that mere non-finding of the person at present address cannot be the basis for disallowance of a sum, which was advanced some eight years back by brushing out the valid supporting and corroborative documents furnished by the appellant e.g. the confirmation letter of the company, the copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of Ld CIT(A). Hence we uphold the same. Thus the ground of appeal raised by the Revenue is dismissed. 29. Next issue raised by Revenue in ground No.2 is that Ld. CIT(A) erred in deleting the addition made by the AO forRs. 65 lakh on account of secure loan. 30. The assessee in the year under consideration has taken a secured loan of ₹ 65 lakh but failed to furnish the supporting evidence to the AO at the time of assessment proceedings. Therefore, same was disallowed and added to the total income of assessee. 31. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that AO has made the disallowance by treating the loan amount expenditure without applying his mind. The Ld. CIT(A) called for remand report from AO who has admitted that assessee has furnished the bank statement and confirmation from the party namely Mr. Asit Ray proprietor of Shree Mudralaya (SM for short) for the loan of ₹ 65 lakh. However, AO in his remand report further submitted that Mr. Asit Roy has not shown any receivable in its balance-sheet from the assessee. The statement u/s 131 of the Act of Shri Asit Roy was recorded wherein he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the relevant loan amount has been shown/reflected in the balance sheet (as on 31.03.20006) of the creditor as receivable from the appellant or not. Further, in the case records received from the AO pertaining to the creditor, the balance sheet for the relevant period is found to be unavailable. I find force in the argument of the A/R that the bank account produced by the appellant before AO as well as before me during the appellate stage which clearly shows that ₹ 65 lacs was issued from Shree Mudranalaya, from the account maintained with UCO Bank, Carnawalis street Branch, comprising two cheques (Nos 000612387 000612388) cleared on 25.01.2006 and deposited in the bank a/c of the appellant maintained with the Allahabad Bank, Gariahat Branch on the same date. It is also submitted that it would be revealed from the bank statement of the creditor that on 13.01.2006, the opening balance was ₹ 60,61,618/- and from the bank correspondence, it would also be revealed that Senior Manager, UCO Bank, Carnawalis Street Branch, Kolkata vide his letter dated 25.043.2006 informed M/s Shree Mudranalaya that they have sanctioned credit facilities in the form of cash credit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirm the same. On the other hand the Ld. AR submitted that all evidence in support of loan amount of ₹ 65 lakh was duly furnished before the authorities below including the bank statement of both the parties. The creditworthiness of the SM cannot be doubted as it was sanctioned a loan amount of ₹ 175lakh by the UCO Bank. Mr. Asit Roy duly appeared before AO in response to the notice issued u/s. 131 of the Act. Therefore, the identity of the loan creditor cannot be denied. Ld. DR relied on the order of AO. 33. We have heard the rival contentions of both the parties and perused the materials available on record. In the instant case the assessee has received the loan of ₹ 65 lacs from Messieurs Shree Mudralaya prop shri Asit Roy. The AO in his remand report has admitted the fact that the assessee has filed copy of the confirmation of the account from Shri Asit Roy and the copy of the bank statement. However further enquiries from the AO having jurisdiction over Shri Asit Roy revealed that there is no receivable in the accounts of Shri Asit Roy. Accordingly notice under section 131 of the Act was issued to Shri Asit Roy who admitted that he has not signed the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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