9911796707
TMI Blog2018 (7) TMI 2167X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 7,46,48,917/- shown by it as on 01.04.2011. Especially so since it had shown Nil amount as its capital in the Balance sheet as on 31.03.2011 forming part of its return for assessment year 2011-12. Explanation of the assessee that the sum of ₹ 1,02,06,929/- represented cash in hand, value of food grain stock and value of agricultural produce was not substantiated before the ld. Assessing Officer, through any evidence. That apart, agricultural income shown by the assessee himself was in the vicinity of ₹ 1,00,000/- to ₹ 1,25,000/- per year, and the probability of accumulating a huge amount from such agricultural income was negligible. Drawings and taxes in the earlier years - It is an admitted position that such drawings and taxes do not appear in the table furnished by the assessee reproduced by us at para 3 above - assessee had no source for his personal expenses and taxes paid. Hence, we have to consider that such amounts had gone out of the income of the respective years. Then without doubt, opening capital as on 01.04.2011, would remain unexplained to the extent of such aggregate drawings and taxes. Commissioner of Income Tax (Appeals) in ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following the binding decision of the Jurisdictional High Court in C.Pakirasamy VS.ACIT (315 ITR 293) on identical circumstances. 2.6) The Ld CIT(A) erred in holding that balance sheet of the assessee cannot be relied upon when asssessee furnished such signed balance sheet before bank authorities as well as enclosed with the income tax return filed under verification. 2.7) The Ld CIT(A) erred in holding that the opening capital is only a notional entry and it is not reflected as assets in balance sheet when the balance sheet shows corresponding assets such as investments and Loan and advances and whether such findings of CIT(A) is perverse being contrary to facts on record. 3. For these and other grounds that may be adduced at the time of hearing. It is prayed that the order of the Learned CIT(A) may be set aside and that of the Assessing Officer restored . 3. Facts apropos are that assessee an individual having income from real estate, income from other sources and agricultural income, had filed his return for the impugned assessment year disclosing income of ₹ 2,51,033/-. From the Balance Sheet as on 31.03.2012 filed by the assessee, it was noted by the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005-06 3,31,853 ...... 49,32,670 ...... 52,64,523 2006-07 1,69,954 ...... ...... 14,988 1,84,942 2007-08 27,62,260 1,00,000 ...... 5,396 28,67,656 2008-09 5,49,667 1,25,000 ...... 5,995 6,80,662 2009-10 9,85,550 1,25,000 4,60,00,000 ...... 4,71,10,550 2010-11 6,29,562 1,25,000 ...... ...... 7,54,562 Total 7,46,48,918 4. Ld. Assessing Officer did not doubt the claim of agricultural income, nor the claim of capital gains, nor the claim of dividend as appearing in the table furnished by the assessee. However, he required the assessee to substantiate the opening balance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93 2009-10 1,56,000 8,06,262 2010-11 1,68,000 1,44,825 2011-12 1,80,000 ...... Total 11,88,000 13,17,620 Ld. Assessing Officer took a view that, if these amounts were also considered as outflows for the respective years, funds available for explaining the capital of ₹ 7,46,48,917/- as on 01.04.2011 shown by the assessee, would go down by like amount. Additions of ₹ 11,88,000/- and ₹ 13,17,620/- were also made. Aggregate additions came to ₹ 1,27,12,549/-. 6. Aggrieved, assessee moved in appeal before ld. Commissioner of Income Tax (Appeals). Argument of the assessee was that the amount of ₹ 1,18,42,598/-, was opening capital as on 01.04.2003, and could not be considered for taxation for the impugned assessment year. Similarly, as per the assessee notional drawings for earlier years and taxes paid for earlier years could not have been considered for addition for the impugned assessment year since these did not relate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that there was no unexplained cash credit available with the appellant during the year under consideration which the Assessing Officer could have taxed u/s.68 of the Act. Accordingly, the addition of ₹ 1,02,06,929/- is deleted. 17. The other addition is on account of unexplained drawings of ₹ 11,88, 000/-. The AO has once again relied on the impugned balance sheet of the appellant for the relevant year under consideration and observed that the appellant had not reduced the amount of personal drawings and d taxes paid during the corresponding period from the said accumulated capital. The AO also noticed that the drawings of ₹ 2.56,407/- admitted by the appellant for the relevant year under consideration consisted of taxes paid only. In view f this, the AO held that the personal drawings and taxes paid which were not considered by the appellant, represented money already spent and not available as capital -as on 31/03/2012. Hence, according to the AO, to the extent of drawings and taxes paid in the previous assessment years, the appellant did not explain the source of capital. Based on this assumption, the AO calculated the personal drawings at ₹ 11,88, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et did not present the correct figures. Contention of the ld. Departmental Representative was that the opening balance claimed by the assessee on 01.04.2003 was a fictitious one. Once this was ignored, as per the ld. Departmental Representative, there was a deficit of ₹ 1,02,06,929/- in the opening balance of ₹ 7,46,48,917/- as on 01.04.2011 claimed by the assessee. As per the ld. Departmental Representative, difference in opening balance, to the extent not explained by the assessee, could be added u/s.68 of the Act, by virtue of the judgment of Hon ble Jurisdictional High Court in the case of C. Packirisamy vs. ACIT, 315 ITR 293. 9. Viz-a-viz, addition made for deficit arising due to expenditure incurred for personal needs and payment of taxes for earlier years, contention of the ld. Departmental Representative was that assessee himself had not shown any source for such amounts. If these amounts were considered as paid out of the income declared by the assessee for earlier years, as per the ld. Departmental Representative, there would be a further deficit of ₹ 25,05,620/- in the opening capital as on 01.04.2011. As per the ld. Departmental Representative, ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital of ₹ 7,46,48,917/- as on 01.04. 2011 in its Balance sheet filed with its return for the impugned assessment year. It is also an admitted position that in the Balance sheet forming part of the return filed for the immediate preceding assessment year 2011-12, it had shown proprietors capital as Nil. Thus, capital of the assessee increased from Zero as on 31.03.2011 to ₹ 7,46,48,917/- on 01.04.2011. What we find is that ld. Assessing Officer had accepted the explanation of the assessee for the above sum except for ₹ 1,27,12,549/-. The table reproduced by us at para 3 above was furnished by the assessee to justify the opening capital of ₹ 7,46,48,917/-. This table, in our opinion could be considered only as a self serving document. Even if assessee had no agricultural income, no capital gains and no dividend, and no investments in land it could still have claimed that the opening balance in the capital account came from balances held by it as on 01.04.2003, or earlier by simply reframing this table. In other words assessee could change any figures given in table given above, to satisfy the requirement of capital as on 01.04.2011, and argue that opening ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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