9911796707
TMI Blog2018 (10) TMI 1860X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural land sold - As contended that 50% of the transfer charges was required to be borne by the assessee - HELD THAT:- A.O. in the remand report has stated that the signature on the confirmation of stamp vendor Shri Iqbal Khan as submitted do not match with the signature on last page of sale deed as submitted in the paper book. Therefore, confirmation is not established to be of Shri Iqbal Khan. In reply to this observation, the assessee has stated that the signatures of a person may differ at different times. A.O. did not choose to call Shri Iqbal Khan in order to verify the authenticity of the confirmation. It is also stated that Shri Iqbal Khan has given an affidavit which is enclosed in the paper book at page No.250. We have perused the contents of this affidavit. As per this, the deponent of the affidavit Shri Iqbal Khan had admitted to have received money in respect of purchase of stamp papers related to the transaction in question. A.O. ought to have summoned the deponent of the affidavit and examine him. This exercise is not done by the A.O. We therefore, set aside the order of the authorities below on this issue and restore this issue to the A.O. to decide afresh to ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved nexus with the expenditure incurred and income earned. Therefore, the addition is hereby deleted. Ground No.6 of the assessee s appeal is allowed. Disallowance of agricultural income - HELD THAT:- It is prayed that the agricultural income may be estimated. After considering totality of the facts and material on record as the land was sold in Jan 16 and the Pustika of the another land is also placed on record, we therefore, estimate income at 1 lakh. The assessee gets relief of 1 lakh. A.O. to delete addition of 1 lakh. This ground of the assessee s appeal is partly allowed. Addition on account of not accepting the deposits received from the persons against booking of flat - HELD THAT:- We find that the assessee has furnished PAN No., Income tax Returns of the two persons namely Sunil Solanki and Dilip Solanki. The assessee has claimed that the amount so received as advance not as a loan. This fact requires verification by the A.O. We therefore, set aside the order of the Ld. CIT(A) on this issue and restore the issue to the file of the A.O. for verification from the persons who had advanced money to the assessee and decide the issue afresh. Addition on non acceptance of gift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, it is clear that the assessee was having cash in hand and cash received from Dainik Prabhat Kiran on sale of agricultural crop and refund of loan, etc. to make deposits in the bank. The revenue has not placed any adverse material contradicting the submissions of the assessee. Under these facts, the addition cannot be sustained. Hence, this ground of assessee s appeal is allowed. Addition on account of agricultural income - HELD THAT:- We find that the authorities below made addition purely on estimation basis. We have given our thoughtful consideration to the facts of the present case, we restrict the disallowance to the extent of 2 lakhs. X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 2,05,383/- in respect of insurance premium paid and ₹ 7,25,000/- in respect of transfer expenses and sale of agricultural land. The A.O. also made addition by invoking the provisions of section 50C of the Act of ₹ 35,46,018/-. The A.O. made addition of ₹ 3,70,000/- in respect of the loans taken from his children. Further, the A.O. made disallowance of interest paid on term loan of ₹ 9,38,756/-, disallowance of agricultural income of ₹ 2 lakhs, cash deposited in the bank of ₹ 7 lakhs, purchase of shares of ₹ 17,78,522/- and further, the difference in disclosing the interest income of ₹ 42,461/-. 3. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who partly allowed the appeal. In respect of the lower withdrawals, the Ld. CIT(A) reduced the addition to ₹ 4,17,500/-, deleted addition made on account of insurance premium paid and confirmed the addition of ₹ 7.25 lakhs claimed as transfer expenses. The Ld. CIT(A) affirmed the disallowance of deduction u/s 54B of the Act, confirmed the addition made on account of loan received from children and also confirmed the addition on the expenses in respect of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (3,70,000) in sr. no 4 3,30,000 10 9. Gift from Smt. Kanta Sojatia 17,78,522 - 17,78,522 11. 10. Interest from bank not shown in return 42,461 - 42,461 - 11. Cash Deposit in Bank 26,01,000 (9,00,000) 17,01,000 The grounds are taken as per the revised grounds of appeal. Ground-wise submissions are made as under: GROUND NO.2: LOW HOUSEHOLD EXPENSES ₹ 4,17,500/- AO para 5. CIT(A) pg. 30 para 8. FACTS The family of the appellant consists of the following: Household expenses shown by the appellant family are as under: Particulars Debited by Sunil Debited by Prabhat PB Ref. A. Expenses Other Household expenses Sunil 1,20,000 Wife 26,500 HUF 36,000 Prabhat 3,37,101 Wife 45,000 HUF 36,000 PB 49 PB 56 PB 179 Tution/ Education Fees 1,75,500 1,37,700 PB 49, 56 TOTAL (A) 3,58,000 5,55,801 B. Investments LIC Premium 2,66,802 6,66,767 PB 48 Medical Insurance 7,153 566 PB 47 Personal Accident Policy 3,52,856 PB 47 TOTAL (B) 2,73,955 10,20,189 TOTAL EXPENSES (A) + (B) 6,31,955 15,75,990 It is also a pertinent fact that: - a. Appellant owns the house. b. Housing loan was taken for construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) House was owned by assessee. (iv) There were no vehicles (two wheelers/ four wheelers) in personal capacity. (v) No evidence of any other expenses were found. (vi) Also, the appellant along with his wife own agriculture land (Refer income & exp account at PB 56) and the basic food, vegetable and milk requirements are fulfilled from the same. It is therefore prayed that the household expenses are very reasonable and therefore no addition is called for such an adhoc addition, which is not based on any evidence. GROUND NO.3: TRANSFER EXPENSES ON SALE OF AGRICULTURAL LAND ₹ 7,25,000 AO para 6. CIT(A) pg. 31 para 10. FACTS 1. Assessee had sold an agricultural land to Samridhi Indore Town Planner P Ltd for ₹ 1.36 crores. Capital gains was claimed to be exempt u/s. 54F, which is contested in other ground. 2. On sale of said agricultural land, transfer expenses of ₹ 7,25,000 were paid, which were denied by ld lower authorities while computing the capital gains. 3. As per clause 15 of the agreement, the expenses of registry were to be borne by the assessee, the seller. PB 189, para 15. 4. The total transfer expenses are ₹ 14,50,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the sale of agricultural land at Rao is exempt u/s. 54B. If the said ground is allowed, the addition, if any would be neutralized. f. Ld AO in the remand proceedings has accepted this fact at CIT(A) pg. 18 para 3, which is quoted as under: "Assessee has submitted copies of sale deed of land and letter from purchaser M/s. Samridhi Indore Town Planner Pvt. Ltd. stating that all such expenses are borne by the assessee, copy of stamp vender. On perusal of these documents it is evident that the 50% of transfer expenses i.e. stamp duty and other expenses of ₹ 7,25,000/- has been paid by the assessee against sale of land through account payee cheque." Thus, although the fact that ld AO had accepted these expenses, still ld CIT(A) confirmed the same, without bringing any material to prove that the findings of ld AO in remand report are incorrect. It is therefore prayed that the disallowance of registration expenses may kindly be deleted. GROUND NO.4: DISALLOWANCE OF DEDUCTION U/S. 54B RS. 35,46,018/- AO para 7. CIT(A) pg. 32 para 11. Purchase of Agricultural Land at Rao 31.03.2006. Sale of Agricultural land 06.01.2010. ₹ 68,20,000. PB 180-249. PB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es already on record. The appellant therefore prays that the exemption u/s. 54B, which is a legally allowable claim, may kindly be granted. GROUND NO. 5: CREDITS FROM CHILDREN ₹ 3,70,000 AO para 8. CIT(A) pg. 34 para 12. The appellant has received booking advance/ credits from minor children in the family:- i. Ku. Sanjana Sojatia ₹ 45,000 ii. Mast. Mayank Sojatia ₹ 1,25,000 iii. Mast. Sujal Sojatia ₹ 2,00,000 ₹ 3,70,000 Ld AO added the same denying the credits and the source of minor children. Ld CIT(A) confirmed the same holding that the source of children remains unexplained. SUBMISSIONS: a. Under the head, booking against flat ₹ 7,00,000 (PB 46), the total credit includes a credit of ₹ 3,70,000 from the three minor children. b. Trial Balance and the source of the children were already on record. PB 256-261, PB 275, 280, PB 297-302. Gift deeds showing source of source are filed as additional evidences before your honours. These documents only support the plea taken by the assessee before the learned lower authorities. c. There is also an unsecured credit from all the three children. PB 48. The total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed was ₹ 4,14,00,000. 2. For this ₹ 1 crores was paid by the appellant as per the payment schedule on PB 112. The payment was in the form of deposit in No lien account in Dena Bank. The bank agreed to pay interest as per SAVIFIX scheme of Bank till permission of M.P. High Court was obtained. Same is noted at PB 108. The balance was to be paid immediately after getting the permission of the High Court. 3. For making this payment, assessee took a loan from ICICI Bank of ₹ 117 lakhs. Loan was taken on 28.03.2007. The loan disbursement is at PB 114-115, which was taken to State Bank of Indore. From there, FDR for security deposits/ advance was made for ₹ 1 crores. 4. Interest income on this SAVFIX Deposit was offered at ₹ 9,31,984. Same was offered as income in the computation of income. PB 43-44. 5. The appellant has claimed interest expenditure on term loan from ICICI bank at ₹ 9,38,756. Ld AO disallowed this holding that assessee has not shown any business income in the computation of income. 6. Ld CIT(A) held that the appellant has not raised any ground of appeal for same. However, he decided the same. The appellant is therefore i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 Interest income F.Y. 2009-10 ₹ 9,31,984 PB 47 ₹ 16,07,195 FDR is reflected at ₹ 1,14,52,287, net of TDS. The same can be verified from the FDR account at PB 321. The amount was already offered for taxation. The addition made is therefore totally wrong, and would amount to double addition. e. In respect of jurisdiction for enhancement. Ld CIT(A) enhanced the income from ₹ 9,31,984 to ₹ 14,52,287 stating that entire interest income ought to have been offered. Ld CIT(A) states that enhancement notice was given covering the issue at point no. (xiii). Point no. (xiii) is at Pg. 23 of ld CIT(A) order which reads as under: "What is the basis of claiming interest expenses of ₹ 9,38,756/-. Give details of loan taken and purpose of such loan on which such interest was paid. Under which section of Income Tax Act, 1961 you have claimed such deduction and how it is allowable." The entire question relates to interest "expenditure" paid to ICICI Bank and not to interest "income" from Dena Bank. Thus, no notice of enhancement, as claimed by the ld CIT(A) was given in respect of the interest income from Dena Bank. The fact of enhancement notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant in respect of advances may kindly be deleted. GROUND NO. 9 (REVISED): GIFT FROM SMT. KANTA SOJATIA ₹ 17,78,522 AO para 12. CIT(A) pg. 39 para 17. Gift from Smt. Kanta (mother) ₹ 15,00,000 Other Credit Balance (taken to capital a/c) ₹ 2,78,522 TOTAL ₹ 17,78,522 GIFT OF ₹ 15,00,000 1. Gift of ₹ 15,00,000 from mother is evidenced by (i) Gift deed PB 137 (ii) Cheque from mother. PB 138 (iii) Return, Computation etc from mother. PB 139-146. Gift of ₹ 17,78,622 reflected in her capital account. PB 144. (iv) Bank pass book of S.B. Indore. PB 147-156. Specific PB 149, the gift is reflected. (v) Ledger account of mother. PB 157. 2. In the remand report, ld Assessing Officer accepted of having taken gift of ₹ 15,00,000 from mother. CIT(A) pg. 19 para 9. He stated as under: "Assessee submitted photocopy of gift deed and cheque, bank passbook of Smt. Kanta Sojatia, Ledger copy of account, balance sheet, capital account for F.Y. 2008-09, 209910 and acknowledgement of IT Return. On perusal of these documents it is evident that assessee had received gift from his mother by an account payee cheque from a bank acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing in the books of assessee in her name was taken as gift, by mutual consent in the family. The said gift was reflected by her in her capital account also. PB 144. 2. The assessee has also treated the same as gift and was reflected in his capital account. PB 49. The nature and source of the credit is explained. 3. In any case, the credit balance was opening balance. No sum of money was credited in this year. It is a settled proposition of law that opening balance cannot added as a unexplained credit in the current year. This is so as there is no "sum credited" in the current P.Y. Hotel Excelsior Limited; 114 TTJ 248 (Del.). The gifts are established as the identity is undoubted; the gifts are confirmed by the mother by entries in her books and also gift deed; she was a regular income tax assessee; and had sufficient capital; the gift was received from close relative. She had gifted a substantial part of her capital to family members. The gift is therefore acceptable. GROUND NO.10 (REVISED) : INTEREST FROM BANK ₹ 42,461 AO para 13. CIT(A) pg. 40 para 18. Interest received ₹ 1,18,383 Disclosed (per AO) ₹ 75,922 Balance added ₹ 42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cash in hand on 31.03.2009 was ₹ 15,98,017 as per Audited Accounts. PB 162. None of the deposit was found to be unaccounted. Section 69 would apply only in respect of deposits, which are not recorded in the books. b. Opening cash balance ₹ 15,98,017. i) Opening cash balance is reflected in the balance sheet of earlier year. PB 162. ii) Assessment u/s. 143(3) of A.Y. 2009-10 was completed and the cash balance was accepted. PB 126-129. iii) The appellant was having high cash in hand, in the earlier years also. On 31.03.2008 also, the cash in hand was at a very high figure of ₹ 89,65,372. PB 340. c. Withdrawals during April, 2009 ₹ 2,35,000 i) Withdrawals in April have been accepted. No defect is found in same. ii) Ld CIT(A) only stated that why appellant withdrew the amount when he had sufficient cash balance. The fact remains that the ld CIT(A) himself accepted the fact that the amount was withdrawn. Further opening cash was available which was accepted by him only in the assessment for A.Y. 2009-10. Thus, the appellant prays that the addition is baseless and the source of the deposits is duly explained, and each deposit has already been t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has stated that the signatures of a person may differ at different times. The A.O. did not choose to call Shri Iqbal Khan in order to verify the authenticity of the confirmation. It is also stated that Shri Iqbal Khan has given an affidavit which is enclosed in the paper book at page No.250. We have perused the contents of this affidavit. As per this, the deponent of the affidavit Shri Iqbal Khan had admitted to have received money in respect of purchase of stamp papers related to the transaction in question. In our considered view, the A.O. ought to have summoned the deponent of the affidavit and examine him. This exercise is not done by the A.O. We therefore, set aside the order of the authorities below on this issue and restore this issue to the A.O. to decide afresh to verify the facts of the affidavit of Shri Iqbal Khan by summoning him and making such enquiry which is necessary for verification. This ground of the appeal is allowed for statistical purposes. 9. Ground No.4 is against sustaining the addition of ₹ 35,46,018/- on account of disallowing the exemption claimed u/s 54B of the Act. In respect of this disallowance, it is stated by the assessee that deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mortgaged with Dena Bank. The borrower was Shri Ashish Bhandari and the lender bank was Dena Bank. The agreement for purchase of property was entered on 7.5.2007. Our attention was drawn on paper book page Nos.107 to 113. Total consideration fixed was of ₹ 4,14,00,000/-. For this ₹ 1 crore was paid by the appellant as per the payment schedule. The payment was in the form of deposit in no lien account in Dena Bank. The bank agreed to pay interest as per Savifix scheme of bank till permission by the Hon'ble M.P. High Court was obtained. The balance was to be paid immediately after getting permission of the Hon'ble High Court. For making this payment, the assessee took a loan from ICICI bank of ₹ 117 lakhs on 28.3.2007. The loan was dispersed and deposited in the State Bank of Indore from their FDR for security deposit/advance so made. Interest income on Savifix deposit was offered at ₹ 9,31,984/- in return of income. In support of this, our attention was drawn to computation of income at paper book page Nos.43 to 44. The assessee claimed interest there on and the same was disallowed by the A.O. on the ground that the assessee had not shown any business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of gift from mother of the assessee Smt. Kanta Sojatia. It is stated that the assessee had received a gift of ₹ 15 lakhs from his mother. A gift deed to this effect is duly executed which is enclosed at paper book page No.137, copy of the cheque is also enclosed at paper book page No.138. Return computation etc. of mother is also enclosed. Bank pass book, ledger account is also enclosed. The A.O. has also accepted the factum of gift. It is stated that the Ld. CIT(A) has proceeded only on the ground of suspicion. It is stated that there is no evidence to demonstrate that the cash of ₹ 15 lakhs was deposited by the assessee. It is further stated that mother of the assessee is a regular income tax payee. The capital of ₹ 40,98,329/- is duly reflected and disclosed to the department. It is further pointed out that on 5.11.2009, a sum of ₹ 9 lakhs was withdrawn from the bank account. Therefore, it cannot be inferred that mother of the assessee was not having any source of income. Under these facts, we are unable to sustain the finding of the Ld. CIT(A). Further, the assessee has demonstrated that balance amount of ₹ 2,78,522/- standing on the credit ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the appellant. It is not based on the facts on record and it is contrary of the provisions of law and justice. 2. The Ld. CIT(A) is not justified in maintaining addition of ₹ 3,03,000/- on account of less withdrawals for house hold expenses. 3. The Ld. CIT(A) is not justified in maintaining the addition of ₹ 56,82,161/- on account of cash deposits in bank account. 4. The Ld. CIT(A) is not justified in enhancing the addition by ₹ 34,800/- on account of agriculture income of ₹ 2,34,800/- shown by the assessee out of ₹ 2,34,800/- A.O. has already added ₹ 2,00,000/- under the head unexplained deposits in bank account. 5. The Ld. CIT(A) is not justified in maintaining initiation of penalty u/s 271(1)(c). 6. The Ld. CIT(A) is not justified in maintaining charging of interest u/s 234B and 234C. 7. The Appellant craves leave to add, amend or alter any ground or appeal and/or raise any other ground of appeal. 20. Apropos to these grounds, Ld. Counsel for the assessee has reiterated the submissions as made in the written submissions, which are reproduced as under: Return 18.01.2011 at ₹ 18,79,050/- and agricultural income at &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above cash deposit of ₹ 58,07,161, an amount of ₹ 57,82,161 was deposited before 08.07.2009. Withdrawal before 08.07.2009 was ₹ 1,00,000. Thus difference of ₹ 56,82,161/- was added as unexplained deposits of the appellant. SUBMISSIONS: - 1. The summary of cash flow for the current year is as follows (PB 93, reproduced with respective PB nos. of current paper book) : - Particulars Amount Reference Opening Cash Balance (01.04.2009) [supported by wealth-tax return PB 88] 37,31,517 PB 88 Add: Cash Withdrawal from ICICI bank a/c no 094501501974 1,05,000 PB 68 Cash Withdrawal from ICICI bank a/c no 094501500001 3,27,000 PB 71 Cash Withdrawal from SBI bank a/c no 53005469860 1,50,000 PB 73 Cash Withdrawal from IDBI bank a/c no 052910400001236 1,52,230 PB 76 Cash Withdrawal from Partnership firm 'Dainik Prabhat Kiran' 8,00,000 PB 99 On sale of Agriculture crop 2,00,000 PB 99 Refund of Loan from Shri Satyanarayan Soni 4,14,028 PB 101 Refund of Loan from Prakash Purohit 81,375 PB 103 Cash Inflow 59,61,150 Less: Cash Deposit in ICICI Bank a/c no 094501501974 49,00,000 PB 68 Cash Deposit in ICICI bank a/c no 094501500001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is also in the return of income at PB 38. Otal 14,95,403 It is therefore prayed that the addition may kindly be deleted. GROUND NO. 4: AGRICULTURAL INCOME CIT(A) Pg. 31. Shown in return ₹ 2,34,800 AO Added NIL CIT(A) enhanced ₹ 2,34,800 ₹ 2,34,800 Less: CIT(A) deleted amount already Deposited in bank (added as deposits) ₹ 2,00,000 CIT(A) confirmed ₹ 34,800 1. Basis of ld CIT(A). No evidence for agriculture submitted. 2. See CIT(A) pg. 20 reply to Que 7. Evidences submitted. Thus, the very foundation for addition is wrong. The appellant further submits that the appellant has land at Gram Bicholi Mardana. PB 43. Bills for sale of agricultural produce (both at mandi and outside) are given. Same were not disputed by the learned CIT(A). Further, as this issue does not arise out of assessment, ld CIT(A) could not have done enhancement on this issue. It is a trite law that the ld CIT(A) has powers of enhancement. These powers are wide and empower ld CIT(A) to decide any issue in the interest of justice. However, this does not mean that the powers are unfettered. Ld CIT(A) can only do "enhancement of assessment" i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk a/c no 53005469860 1,50,000 PB 73 Cash Withdrawal from IDBI bank a/c no 052910400001236 1,52,230 PB 76 Cash Withdrawal from Partnership firm 'Dainik Prabhat Kiran' 8,00,000 PB 99 On sale of Agriculture crop 2,00,000 PB 99 Refund of Loan from Shri Satyanarayan Soni 4,14,028 PB 101 Refund of Loan from Prakash Purohit 81,375 PB 103 Cash Inflow 59,61,150 Less: Cash Deposit in ICICI Bank a/c no 094501501974 49,00,000 PB 68 Cash Deposit in ICICI bank a/c no 094501500001 25,000 PB 71 Cash Deposit in SBI bank a/c no 53005469860 8,82,161 PB 73 Cash Deposit in IDBI bank a/c no 052910400001236 24,314 PB 76 Cash Withdrawal for Domestic Expenses 96,000 PB 44 Balance as on 31.03.2010 33,675 PB 42 Thus, all the deposits are explained. 24. It is pointed out that the assessee had deposited out of opening cash balance of ₹ 37,31,577/- and the same is duly reflected in the wealth tax return pertaining to the assessment year 2009-10. The cash balance is also explained through cash book of assessment year 2009-10. Further, opening balance of cash as on 1.4.2008 for ₹ 69,58,428/- is supported with the return of income and statement of affairs per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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