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Timraj Singh Vs. Income Tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Meerut
Decided On
Judge
Reported in(2006)99TTJNULL252
AppellantTimraj Singh
Respondentincome Tax Officer
Excerpt:
1. these are six appeals filed by the same assessee against the different orders of the learned cit(a), meerut. as the facts relating to these appeals are common and common issues are involved, for the sake of convenience, these six appeals have been decided by a common order.2. shri vinod kumar goel appeared for the assessee whereas shri o.p.meena, learned departmental representative represented the department.3. as pointed out by the parties, the main order has been passed by the learned cit(a) in the appeal for the asst. yr. 1995-96. we consider it proper to decide ita no. 4588/del/2004 relating to asst. yr. 1995-96.in this appeal, ground no. 1 has been taken to challenge the validity of the notice issued under section 148 of the act. at the time of hearing of the appeal, the learned.....
Judgment:
1. These are six appeals filed by the same assessee against the different orders of the learned CIT(A), Meerut. As the facts relating to these appeals are common and common issues are involved, for the sake of convenience, these six appeals have been decided by a common order.

2. Shri Vinod Kumar Goel appeared for the assessee whereas Shri O.P.Meena, learned Departmental Representative represented the Department.

3. As pointed out by the parties, the main order has been passed by the learned CIT(A) in the appeal for the asst. yr. 1995-96. We consider it proper to decide ITA No. 4588/Del/2004 relating to asst. yr. 1995-96.

In this appeal, ground No. 1 has been taken to challenge the validity of the notice issued under Section 148 of the Act. At the time of hearing of the appeal, the learned Counsel for the assessee did not press this ground, hence this ground is rejected as not pressed.

5. Ground No. 2. This ground is directed against the estimated income of the assessee from dairy business at Rs. 70,000. The assessee was running dairy under the name M/s Gajraj Dairy, Meerut. In his return filed in compliance to notice issued under Section 148 of the Act, the assessee had shown a total income of Rs. 32,650 and agricultural income at Rs. 60,000 and income from the dairy business was declared by the assessee as Rs. 25,000. It was done without enclosing any P&L a/c or statement of income, etc. In compliance to the notice, the assessee filed the following computation of income from the dairy vide reply dt.

3rd March, 2003.(a) Retail sales daily 100 Kg. Profit @ Re. 1 per Kg.= 100x30x6(b) Wholesale daily 300 Kg. Profit @ Re. 0.25 per Kg.= 75x30x6 13,500 -------(a) Retail sales daily 50 Kg. Profit @ Re. 1 per Kg.= 50 x 30 x 6 9,000(b) Wholesale daily 150 Kg. Profit @ Re. 0.25 per Kg.= 37.50x30x6 6,750 -------Gross total 47,250Less : Expenses including salary to servants Rs. 19,200 22,250 ------- 6. As the statistics given by the assessee was not supported by any documentary evidence on the working of dairy income given by the assessee, the AO did not accept the same and proceeded to examine the matter. For this purpose, he took into consideration the report of the Dy. Director of Income-tax (Inv.) (DDIT) and reported the following facts : (i) Shri Timraj Singh told that in year 2000-01, he has engaged 8 milk vendors, they bring milk both in morning and evening, milk obtained in morning is 600 Kg. and in the evening is 500 Kg.

approximately. On being asked to show accounts of milkman, Shri Timraj Singh said that he does not maintain any books and only he enters milk brought by vendors in the dairy kept by him. Shri Timraj Singh told that he sales 75 Kg. milk in morning and 50 Kg. in the evening in retail. On being asked to show list of daily customers, only a copy was shown which had mention of customers, who took about 15 Kg. milk in all, daily most of the sale is on cash payment basis.

However, nearby dairy owner told sale of M/s Gajraj Dairy should be about 200 Kg. in the morning and 150 Kg. in the evening. Retail price of 65 specific gravity (degree) milk is Rs. 12 per Kg. as was paid by customers. The milkman normally supply milk of 65 degree @ Rs. 11 per Kg. If the milk of vendor is of 50 degree, it is purchased by dairy @ Rs. 10 per Kg. This profit on sale in retail comes to Rs. 1 per Kg., if 65 degree milk is sold. (ii) Shri Timraj Singh (sells) milk in wholesale at profit of (sic) per Kg. to Shri Alimuddin Halwai of Bhumia Ka Paul, Shri Dharam Pal and Shri Pali. Last two being tea stall owners of Bhagat Singh Market. However, profit should be at least @ Rs. 0.50 per Kg.

(iii) Shri Timraj Singh and another dairy owner of Shahpeer Gate claimed that about half of milk obtained is sold at milk plants in 6 months in a year at a loss of Rs. 1.75 per Kg. But this seems unrealistic at the maximum, it can be assumed that 1/4th of the milk brought from milkman is sold at milk plants in 4 months in a year.

The milk plants are said to take 65 degree milk @ Rs. 9.20 per Kg.

The cost of 65 degree milk obtained from vendors is Rs. 11 per Kg.

Thus, there is loss of Rs. 1.80 per Kg., if milk is sold to plants.

Shri Timraj Singh told that he sales his unsold milk to Shri Satyaprakash, owner of Kailash Dairy at Rithani.

(iv) Shri Timraj Singh told that he makes ghee, monthly sale of this about 60 Kg. @ Rs. 110 (sic-Rs. 115) per Kg. Cost of ghee comes to Rs. 115 (sic-Rs. 110) per Kg. Thus, profit of one Kg. is Rs. 5.

Cream is used for processing of ghee. There is no sale of cream.

Shri Timraj Singh does not make curd. The monthly sale of ghee should be at least 100 Kg.

(v) Shri Timraj Singh has kept three workers dairy Shri Nasim, Shri Gurmukh and Shri Bhojveer. Each is getting salary at Rs. 2000 per month. Shri Nasim is working since 4 years and other two are working since 6 years.

(vi) The premises of M/s Gajraj Dairy is on rent and rent paid @ Rs. 540 per month. Earlier it was paid @ Rs. 440 per month.

(vii) Shri Timraj Singh has told that he has 10 milk vendors in 1999, who supplied 1000 Kg. milk in the morning and 700 Kg. in the evening. Thus, he got 1700 Kgs. milk daily. He purchased milk @ Rs. 10, the retail price that time was Rs. 11 per Kg. In 1997, he has 7 vendors who supplied 750 Kg. milk daily. In 1995, he had 4 vendors who supplied 700 Kg. milk daily.

(viii) The annual income of M/s Gajraj Dairy as under : (Rs.)(a) Income from retail sale of milk 1,26,000Profit from sale of 350 Kg. Milk in retails daily 350 Kg.Profit from sale of milk in retails a year(b) Income from wholesale sale of milk 1,18,500(i) In 8 months of a year= 275 x 1.80x30x4 =59,400 59,400(d) Income from sale of ghee= 100 Kg. x Rs. 5/Kg x 12 = Rs. 6,000 6,000Gross total income 1,91,100Less : Rent of shop = 540 x 12 = 6,480Salary of 3 workers = 3 x 2000 x 12 72,000 78,480 -------- ---------Net income from dairy business for financial year 2000-01 1,12,620 --------- As this was the income for the financial year 2000-01, the AO estimated the income at Rs. 70,000 for the asst. yr. 1995-96.

7. The Inspector or the AO calculated the income of the assessee on the basis of the facts reported in the report of the DDIT and estimated the income from dairy for the asst. yr. 1995-96 at Rs. 70,000.

8. In appeal, the assessee challenged the action of the AO. Before the learned CIT(A), the following submissions were made : A (i) The return of income filed by the assessee is showing income from dairy business at Rs. 25,000.

(ii) The learned AO has not pointed out any mistake or placed any adverse material on record, while not accepting the income from dairy business, as shown by the assessee.

B. The learned AO had relied upon the ITI's report. However, the income of the assessee has not been computed on the facts and figures given in the ITI's report.

C. In view of the report of the ITI, the net result of the dairy business income comes at a loss of Rs. (-) 37,830 as below :Sale of milk to others when milk is not sold to milk plant Quantity 350 Kg. Profit rate 0.30 p. Month 6 Calculation 350 x 0.30 x 6 x 30 days 18,900 Sale of ghee 6,000 Total income (+) 40,650 D. However, the learned AO has assessed the dairy business income as he deemed fit i.e., partly by taking into consideration the report of the ITI and partly on his own sweet will, which is grossly incorrect, in view of the Hon'ble Supreme Court of India's decision, in the case of Indore Malwa United Mills Ltd. v. State of MP and Ors. (1966) 60 ITR 41 (SC), wherein the Hon'ble Court has held as under : 1. That as the appellant produced before the assessing authorities all its registers, it was their duty to definitely come to one conclusion or the other in regard to the reliability of everyone of the relevant accounts filed by the appellant and in the absence of any such finding, it was not open to them to pick and choose some of the registers, which were more favourable to the Revenue.

E. That in the assessee's case, the learned AO has taken the part figures of the ITI's report and part figures out of his own mind (without any material basis). Had he drawn computation of income of dairy business, exactly in accordance with the ITI's report, it would have come/reached at a loss of Rs. (-) 37,830.

F. That the learned AO has not brought anything on record for disbelieving the income shown by the assessee, except report of the ITI and that too has not been followed in toto.

G. In the aforementioned circumstances, the income shown by the assessee deserves to be accepted or in the alternative, the income ought to have been determined at a loss of Rs. (-) 37,830 as per report of the ITI.9. The learned CIT(A), upheld the estimate made by the AO in the following manner :Total quantity of milk supplied by vendors 700 Kg.(a) Income from retails sale of milkprofit 350 x 30 x 12 1,26,000(b) Income from wholesale sale of milk Gross total income 1,46,700Less : Rent of shop= 3 x 2000 x 12 72,000 (-) 78,480 -------- Net income 68,220 -------- 10. Thus, the assessee's income after considering assessee's objection works out to Rs. 68,220 for the assessment year under consideration.

The AO was quite reasonable in estimating of income at Rs. 70,000.

Therefore, the income estimated by the AO is quite reasonable and hence is upheld.11. Before us, the learned Counsel for the assessee submitted that the learned CIT(A), was not justified in estimating the income from dairy business. According to the learned Counsel the report of ITI was not related to 2000 and 2001 and on that basis the estimate made by the AO cannot be held to be proper. The learned Counsel for the assessee submitted that the report of ITI was not confronted to the assessee and therefore, the same cannot be used against the assessee.

12. The learned Departmental Representative on the other hand placed reliance on the order of the learned CIT(A).

13. We have carefully considered the entire material and the rival submissions on the basis of calculation and working done in the report of Inspector, the net income from dairy business was. accepted at Rs. 112,620 for the financial year 2000-01. Although, this working has been made on the basis of the statement of Shri Timraj Singh, who had supplied relevant information including the information that quantity of milk received in the morning was 600 Kg. and in the evening was 500 Kg. Shri Timraj Singh admitted that he did not maintain any books and that he entered the quantity of milk brought by the vendors in the dairy kept by him. The ITI also took into consideration the statement of another dairy owner of nearby area who disclosed that the sale of M/s Gajraj Dairy should be about 200 Kg. in the morning and 150 Kg. in the evening. It is not clear as to whether any statement of the neighbour dairy owner was recorded or not and whether his statement was confronted to assessee or not. The evidence of third party cannot be utilised against the assessee unless the assessee is given an opportunity to confront such witness. Shri Timraj Singh, had given information relating to financial year 1999 and such information cannot be utilised for the asst. yr. 1995-96. Thus, the estimate made on the basis of information relating to 1999, cannot be on sound basis for estimating income for asst. yr. 1995-96. However, the fact remains that the assessee himself had not maintained any books of account. It was also not denied by the assessee that he was not earning income from sale of ghee and sale of milk on retail and wholesale. The assessee had given working for calculating income from dairy at Rs. 25,000, but this working is not supported by any documentary evidence. After taking into account the entire material facts and figures on record and the evidence considered by the AO and the learned CIT(A), we find it proper to estimate the income from dairy at Rs. 50,000. This estimate is based on several factors including the statement of the assessee recorded by the DDIT. The assessee therefore, gets a relief of Rs. 20,000 and this ground is therefore, partly allowed in favour of the assessee.

14. Ground No. 3. This ground challenges the sustenance of addition to the extent of Rs. 68,000. During the previous year relevant to the asst. yr. 1995-96, the assessee had deposited cash to the tune of Rs. 1,50,000 on 17th Feb.,1995 in saving bank a/c No. 3040 with Punjab National Bank, Eastern Kutchery Road, Meerut. Before the DDIT(Inv.), the assessee had explained that the source of Rs. 1,50,000 was on account of sale proceeds of agricultural income but no evidence was filed to support this version. During the assessment proceedings, the assessee filed statement in which secured loan of Rs. 60,000 was declared from the following persons :Shri Lachchu Singh, R/o Village Fafunda, Tehsil Meerut Rs. 19,500dt. 15-1-1995 cashShri Raj Kumar, R/o Village Fafunda, Tehsil Meerut Rs. 18,000dt. 25-1-1995 cashShri Gajraj Singh, R/o Village Fafunda, Tehsil Meerut Rs. 18,500dt. 1-2-1995 cash The assessee disclosed that he received life insurance policy receipts of Rs. 37,420 and there was cash in hand at Rs. 72,000. The AO did not accept the explanation and made an addition of Rs. 1,50,000 under Section 69 of the Act.

15. In appeal, the learned CIT(A) sustained the addition to the extent of Rs. 68,000 by observing as under: Facts of the case and submission of the learned Authorised Representative have been considered. I have gone through the letters dt. 25th Feb., 2003 and 26th March, 2001. It was for the first time that the assessee's counsel has taken up the plea that sum of Rs. 56,000 had been received as loan from the agriculturists. If that was the fact what prevented the assessee or his counsel in taking up this plea initially. This clearly shows that it was only an afterthought. When he found that deposit of Rs. 1.50 lakhs in the bank on 17th Feb., 1995 was difficult to explain and as happens, confirmation from some of the villagers were taken who owned agricultural land. In view of frequently changed stands, I agree with the AO that the assessee had no satisfactory explanation for the deposit of Rs. 1.50 lakhs. However, the credit has to be given for the agricultural income which has been accepted by the AO at Rs. 60,000 for the year. Since the income from business has been estimated at Rs. 70,000, benefit of availability of that money also has to be given. Since the deposit was made on 17th Feb., 1995, the agricultural income and income from business for 11 months available with the assessee must have been as follows :Agricultural income 55,000Income from dairy business 65,000Cash in hand had been claimed 17,000 --------The total availability is 1,37,000Less :Withdrawals towards household expenses for 11 months 55,000(Rs. 60,000 towards household expenses admitted by theassessee through his counsel, vide letter dt. 25-2-2003 inpara 4 of letter dt. 25-2-2003)Balance funds available for deposit 82,000Total deposit 1,50,000 --------- 16. Before us, the contention of the learned Counsel for the assessee was that the learned CIT(A) has not considered the explanation of the assessee regarding the loan of Rs. 56,000. In this regard, it was submitted that confirmation letters from the creditors, copy of Kisan Bahi, Khasra abstract, etc. were also filed to prove their source of income. We find full force in this submission of the assessee. The assessee had filed the relevant documentary evidence to prove the identity of the creditors, the genuineness of the transaction and the capacity of the creditors. The AO did not direct the assessee to produce the creditors nor summoned them. The mere fact that the plea was not taken before the DDIT (Inv.) should not have been taken adversely against the assessee. In our opinion, the assessee discharged the burden. The amount of loan advanced by three persons to the assessee was below Rs. 20,000. Thus, looking to the quantum of amount also the version of the assessee should have been accepted.

17. Thus, in our view, the learned CIT(A) was not justified in rejecting the version of the assessee in relation to source of Rs. 56,000. The findings of the learned CIT(A) on this issue were set aside and the ground taken before was allowed in favour of the assessee. The addition to the extent of Rs. 12,000 is sustained. The assessee is given a relief of Rs. 56,000. This ground is allowed accordingly.

18. Ground No. 4. This ground is directed against disallowing the claim of Rs. 37,420 from LIC included in the cash flow statement. As the assessee could not file documentary evidence, the AO made an addition of Rs. 37,420 as unexplained amount under Section 68 of the Act.

Before the learned CIT(A), following submissions were made by the assessee : (a) That during the course of assessment proceedings on 24th March, 2003, the learned AO has raised a query to explain the amount of Rs. 37,420 deposited in the savings bank account and allowed only one day's time i.e., 26th March, 2003, to reply the same.

(b) That the assessee is an illiterate person and he does not have any idea or knowledge for keeping his documents, receipts, etc. in a proper manner. Besides, he is a chronic patient of diabetes and as such often remains ill. So, in a short time i.e., one day only, he could not find out relevant entry as to how and from where the aforesaid amount was received by him and by memory/brain tracing only, he thought that this might have been received from LIC on maturity of some policy or part payment of any policy, under money back policy.

(c) That also, time period was sought to search out and find out the documents in respect of the above receipt, so as to give correct information, however, no time was allowed by the learned AO. (d) That, later on the assessee enquired from the bank and came to know that the above amount represents the return credit of daily collection account, which was being run by the assessee since 13th Dec, 1991 with Syndicate Bank and the said account was matured and the assessee received the credit vide pay order from Syndicate Bank on 28th Feb., 1995. The said daily account was of Rs. 20 per day.

Confirmation letters to this effect from the bank have already been filed before your Honour, vide paper book dt. 29th Jan., 2004' 19. The learned CIT(A) directed the AO to verify the genuineness of this receipt from Syndicate Bank by observing as under : Facts of the case and submissions of the learned Authorised Representative have been considered. It seems that there was mistake in stating that this amount was received from LIC. The assessee has filed a certificate from Syndicate Bank dt. 28th Jan., 2004 which is to the effect that Shri Timraj Singh had maintained daily collection account No. PD 65586 since 13th Nov., 1991 and a sum of Rs. 37,420 was paid to him by pay order on 28th Feb., 1995. Since this certificate was not filed before the AO, he could not have verified the source of this deposit. The AO is, therefore, directed to verify the genuineness of this receipt from Syndicate Bank. If found correct, the addition may be deleted.

20. On going through the order of the learned CIT(A), we are of the opinion that he adopted a correct approach. In fact, the assessee should not have any grievance against the direction of the learned CIT(A), because the matter was restored to the AO to verify the genuineness of the source disclosed by the assessee. This ground was, therefore, rejected.

21. Ground No. 5 is general in nature and does not require any specific adjudication.

22. Ground No. 6 relates to charging of interest under Sections 234A, 234B and 234C of the IT Act. Charging of interest is consequential in nature and the AO shall work out the interest and finally determine the taxable income.

26. Ground No. 2. In this year, the AO had estimated the income from dairy business at Rs. 80,000. While doing so, the AO took into account report of the Inspector, reference to which has been made while deciding ITA No. 4588/Del/for the asst. yr. 1995-96. The learned CIT(A) has estimated the income from dairy at Rs. 70,000. After considering the entire material on record and by following our approach adopted while deciding the same issue in earlier year, we estimate the income from dairy business at Rs. 50,000 and the assessee will get further relief of Rs. 20,000. This ground is, therefore, partly allowed in favour of the assessee.

27. Ground No. 3. This ground challenges the sustenance of addition of Rs. 1,67,000. The AO found that there was deposit of cash of Rs. 3 lakhs on 13th Oct., 1995 in savings bank account No. 3040 with PNB, E.K. Road, Meerut. To explain this deposit, the assessee submitted the following working : Cash in hand 4,004 Withdrawals from bank upto 30-9-1995 1,70,000 Agricultural income upto 30-9-1995 35,000 Dairy income upto 30-9-1995 20,000 Unsecured loan 2,07,000 Less : LIP Personal and cash in hand - 32,678.00 --------- Total cash in hand 4,03,326 --------- 28. The AO required the assessee to prove the unsecured loan of Rs. 2,07,000. The assessee filed Kisan Bahi of 11 depositors, but the depositors could not be produced for examination. The AO held that filing of the Kisan Bahi did not prove the capacity of the depositors.

He, therefore, made an addition of Rs. 3 lakhs. In appeal, the assessee made the following submissions before the learned CIT(A).

a. That the assessee is maintaining a savings bank account with PNB, E.K. Road, Meerut, bearing No. 3040.

b. That the assessee deposited a sum of Rs. 3 lakhs in cash on 13th Oct., 1995.

c. That the receipt and expenditure chart was filed during the course of assessment proceedings and every expenditure against receipt is duly verified and tallied.

d. That vide letter dt. 26th March, 2003 the assessee has given a cash flow as on 13th Oct., 1995 explaining the total amount of cash in hand, for depositing the said sum of Rs. 3 lakhs in the bank.

However, the learned AO added a sum of Rs. 3 lakhs, as deposited in cash with the bank. The assessee has explained the same during the course of assessment proceedings and the same is as under, for your Honour's perusal.(a) Sh. Damak Singh S/o Sh. Khem Chand on 28-9-1995 18,500(b) Sh. Shayam Singh S/o Sh. Khacheru Singh on 1-10-1995 19,000(c) Shri Jas Ram S/o Sh. Khajan Singh on 27-9-1995 19,500(d) Sh. Bal Raj Singh S/o Sh. Jai Prakash on 28-9-1995 19,500(e) Sh. Jai Prakash S/o Sh. Nanoo Singh on 27-9-1995 19,000(f) Sh. Kartar Singh S/o Sh. Khajan Singh on 1-10-1995 18,500(g) Sh. Surinder Pal S/o Sh. Dhani Ram on 30-9-1995 18,000(h) Sh. Rakesh Kumar S/o Sh. Duli Chand on 25-9-1995 19,500(i) Sh. Rajbir Singh S/o Ramlal Singh on 26-9-1995 19,500(j) Sh. Jagbir Singh S/o Sh. Prem Singh on 26-9-1995 17,500(k) Sh. Ranbir Singh S/o Shri Prem Singh on 1-10-1 18,500 --------Out of withdrawal from bank on various dates, as under : 93,000 18-4-1995 50,000 25-4-1995 20,000 2-5-1995 15,000 8-5-1995 40,000 17-5-1995 40,000 30-5-1995 5,000 -------- That confirmation letters, copy of Kisan Bahi, duly having photograph and signatures of the above loaners along with Khasra abstract are being appended herewith for your Honour's perusal. These all were also filed with the learned AO during the assessment proceedings, but the learned AO disbelieved the same, stating that no evidence regarding identity and capacity of the loaners has been explained. The aforesaid materials/documents were filed before the learned AO. However, he has not converted the same.

30. The learned CIT(A) did not accept the explanation of the assessee in relation to loans of Rs. 2,07,000. However, he gave relief to the assessee and sustained the addition to the extent of Rs. 1,67,000 by taking into consideration the availability of funds with the assessee.

31. We have carefully considered the entire material. The assessee has given the names of the creditors and their full addresses. The details of their agricultural land were also furnished, but they were not produced for examination. On perusal of the details reproduced in the order of the first appellate authority, it is found that these loans are from 25th Sept., 1995 to 1st Oct., 1995. The confirmation letters had been filed on record. The confirmation letters including the copies of Kisan Bahi, copies of Khasra and other documentary evidence had been filed on record. The AO had not summoned these creditors for examination. In view of the evidence on record, it is found that the assessee discharged the burden to explain the source of credits. The learned CIT(A) has not given any cogent reasons to disbelieve the documentary evidence filed by the assessee.

32. In view of the above, the addition of Rs. 1,67,000 sustained by the learned CIT(A) deserves to be deleted.

33. Ground No. 4. This ground challenges the addition of Rs. 1,16,000 made under Section 69 of the IT Act. The AO found that the assessee had purchased agricultural land by making investment of Rs. 2,93,000. As per the assessee the payment was made on the following dates : 34. The AO found that only a sum of Rs. 1 lakh was withdrawn on 18th Oct., 1995. As no proper explanation regarding the remaining amount of Rs. 1,93,000 was given the AO made the addition of Rs. 1,93,000 under Section 69. In order to challenge the addition, the following submissions before the learned CIT(A) : That no such type of query had been given by the learned AO at the time of assessment proceedings and, therefore, no submissions in this respect were made to him. As such, in this regard, it is humbly submitted that this a part payment for agricultural land of Rs. 2,93,000 which has already been tallied with the total receipt and expenditure account.

That cash flow till 30th Sept., 1995 was also filed, which reveals that the assessee was having an amount of Rs. 4,03,326 out of which an amount of Rs. 3 lakhs was deposited in the bank and the rest of the amount of Rs. 1,03,000 and withdrawal from bank on 16th Oct., 1995-Rs. 1,05,000 and on 9th Nov., 1995-Rs. 1,00,000 (as per separate agreement with the party), i.e., totalling to Rs. 3,08,000 was invested in the land. As such, there is no discrepancy at all in making the payment of Rs. 2,93,000.

That as such the investment made by the assessee stands explained.

However, the learned AO added both the amounts i.e., Rs. 3 lakhs and Rs. 1.93 lakhs, which is against the facts of the case and as such the same deserves to be deleted.

35. The learned CIT(A) gave benefit of Rs. 77,000 to the assessee and upheld the addition to the extent of Rs. 1,16,000 by observing as under : The facts of the case and submissions of the learned Authorised Representative have been considered. I agree with the AO that it is only a sum of Rs. 1 lakh which was withdrawn before the date of purchase and the rest of the amount has been paid from some other sources. But as mentioned in the finding in respect of deposit of Rs. 3 lakhs, only Rs. 93,000 had been taken into account for considering the availability of funds for deposit of Rs. 3 lakhs whereas the withdrawals from the bank account were of Rs. 1,70,000 from 18th April, 1995 to 30th May, 1995. Thus, the balance amount of Rs. 1,70,000 - Rs. 93,000 = Rs. 77,000 has to be considered as being available with the assessee. Thus, out of 1,93,000 benefit of Rs. 77,000 has to be allowed and thus, balance amount of Rs. 1,16,000 only remains for which no satisfactory explanation has been given and hence, addition to the extent of Rs. 1,16,000 is upheld.36. The learned CIT(A) has not considered the reply of the assessee reproduced above. The assessee had fully explained the discrepancy of Rs. 2,93,000 by submitting cash flow and other evidence. In view of the reply of the assessee, there remains no discrepancy in making the payment of Rs. 2,93,000. Thus, the learned CIT(A) was not justified in sustaining the addition to the extent of Rs. 1,16,000 and the same is, therefore, deleted.

38. Ground No. 5 is general in nature and does not require any specific adjudication.

42. Ground No. 2. This ground is directed against the estimate of income from dairy business at Rs. 70,000. After considering the entire material on record and in view of our observations made while deciding this issue, in the asst. yr. 1995-96, we consider it proper to estimate income from dairy business for this year at Rs. 50,000. The assessee will, therefore, get a relief of Rs. 20,000. This ground is, therefore, partly allowed.

43. Ground No. 3. This ground challenges the addition of Rs. 15,000 made by the AO under Section 68 of the Act and was sustained by the learned CIT(A). The contention of the learned Authorised Representative was that this was incorrect credit made by the bank in the account of the assessee. It was pointed out that later on the mistake was corrected by the bank on 29th Sept., 1997. In this regard, the certificate from the bank was also given. The learned CIT(A) directed the AO to call for the details from the assessee and if the details are found to be correct then to delete the addition.

44. In our view, there is no error in the directions given by the learned CIT(A), we therefore, upheld his findings. This ground as taken by the assessee is, therefore, rejected.

45. Ground No. 4 is general in nature and does not require any specific adjudication.

46. Ground No. 5 relates to charging of interest under Sections 234A, 234B and 234C of the IT Act. Charging of interest is consequential in nature and the AO shall work out the interest and finally determine the taxable income.

50. Ground No. 2. This ground challenges the estimate of income from dairy business made by the AO at Rs. 1 lakh and sustained by the learned CIT(A) at the same amount. Both the AO and the learned CIT(A) have taken into consideration the report of the DDIT (Inv.) and the report of ITI and other material. While deciding the appeal for the asst. yr. 1995-96 on this issue, wherein we have held that the estimate made by the Departmental Authorities is not based on sound footing as extraneous material has been taken into consideration. After taking into consideration the relevant material and after following our approach adopted in the asst. yr. 1995-96 on this issue, we estimate the income from dairy business at Rs. 70,000. The assessee will get a relief of Rs. 70,000, hence the ground is partly allowed in favour of the assessee. 51. Ground No. 3 is general in nature and does not require any specific adjudication.

52. Ground No. 4 relates to charging of interest under Sections 234A, 234B and 234C of the IT Act. Charging of interest is consequential in nature and the AO shall work out the interest and finally determine the taxable income.

56. Ground No. 2. This ground relates to income shown by the assessee from dairy business at Rs. 40,000. The AO estimated the same at Rs. 1,20,000. The learned CIT(A) in appeal upheld the action of the AO.It may be pointed out that while doing so, the AO as well as the learned CIT(A), took into consideration, the report of DDIT (Inv.) and the report of Inspector. The estimate made on the basis of such report and other material referred to in the order of the AO and that of the learned CIT(A) cannot be treated to be a sound estimate, in view of the reasons given while deciding this ground in the asst. yr. 1995-96.

After carefully considering the entire material and the submissions of the parties made before us, we consider it proper to estimate the income from dairy business at Rs. 80,000. The assessee will get a further relief of Rs. 40,000. This ground is partly allowed in favour of the assessee.

57. Ground No. 3 is general in nature and does not require any specific adjudication.

58. Ground No. 4 relates to charging of interest under Sections 234A, 234B and 234C of the IT Act. Charging of interest is consequential in nature and the AO shall work out the interest and finally determine the taxable income.

62. Ground No. 2. This ground challenges the estimate of income from dairy business and sustained by the learned CIT(A) at Rs. 1,10,000.

63. Both the AO and the learned CIT(A) have taken into account the report of DDIT(Inv.), the statement of the assessee and other material for making estimate. In our opinion, this estimate is not based on sound footing. Hence, following our discussion and observations on this issue made while deciding the same in the asst. yr. 1995-96, we estimate the income from dairy business at Rs. 75,000. The assessee will, therefore, get a relief of Rs. 35,000. This ground is, therefore, partly allowed in favour of the assessee.

64. Ground No. 3 is general in nature and does not require any specific adjudication.

65. Ground No. 4 relates to charging of interest under Sections 234A, 234B and 234C of the IT Act. Charging of interest is consequential in nature and the AO shall work out the interest and finally determine the taxable income.


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