DHAS KISHOR RAMCHANDRA, AURANGABAD V. DWARKAPRASAD BHIKULAL SONI, JALNA

ITA 1188/PUN/2024

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A), which pertained to the assessment year 2021-22. The primary issues revolved around the valuation of unquoted shares and immovable properties for tax purposes, and the consequent additions made by the Assessing Officer under sections 50CA and 56(2)(x) of the Income Tax Act, 1961. The CIT(A) had deleted these additions, accepting the valuations provided by the assessee, which were based on various factors including the lack of discount on marketability and the application of different valuation standards. The Tribunal examined the CIT(A)'s decision and the arguments presented by both parties, ultimately agreeing with the CIT(A) and dismissing the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474211 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962, Companies Act, 2013, Stamp Duty Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMOL KHAIRNAR
• Assessee Lawyers: ANAND PARTANI
• Keywords: Corroborative evidences; Unexplained expenditure; Depreciation; Unexplained investment; Sale consideration of property below Jantri Value; Fair market value; Salary income; Document seized; Documents seized; Valuation report; Loose papers
• Section: 132; 69; 69C; 69A; 50C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1188/PUN/2024 िनधाᭅरण वषᭅ / Assessment Year : 2021-22 ACIT, Central Circle-1, Aurangabad. Vs. Dwarkaprasad Bhikulal Soni, H.No.13, Manik Nagar, Near Sambhaji Nagar, Jalna- 431203. PAN : AEOPS4005F Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the Revenue is directed against the order dated 31.03.2024 passed by Ld. CIT(A)-12, Pune [‘CIT(A)’] for the assessment year 2021-22. 2. The Revenue has raised the following grounds of appeal :- “1. Whether in the facts and circumstances of the case and in law, the Ld. CTT(A) erred in deleting the addition of Rs.3,32,79,840/- u/s 56(2)(x) of the Income Tax Act, 1961 and restricting the addition to the extent of Rs.1,42,000/- as against addition made of Re. 12,92,000- under section 50CA of the Income Tax Act, 1961 without appreciating the fact that the Revenue by : Shri Amol Khairnar Assessee by : Shri Anand Partani Date of hearing : 19.11.2024 Date of pronouncement : 14.02.2025 ITA No.1188/PUN/2024 2 valuation for the purpose of section 56(2)(x) and 50CA is the Fair Market Value [FMV] which is derived as prescribed method of valuation in accordance with the Rule 11U & 11UA of Income Tax Rule, 1962 with respect to the unquoted shares. 2. Whether in the facts and circumstances of the case and in law, the L. CIT (A) erred in considering other various aspects as per the valuation standard as per the Companies Act, 2013, Valuation Standard issued by ICAI, other factors like discount on marketability, purpose of valuation & availability of willing buyers, realisability of Immovable property and margin of safety as they are not applicable for determining the FMV of unquoted shares for the purpose of section 56(2)(x) & 50CA in accordance with the Rule 11U & 11UA of Income Tax Rules, 1962. 3. Whether in the facts and circumstances of the case and in law, the Ld. CIT (A) erred in accepting the second valuation report furnished by assessee for the purpose of land situated at Survey No. 79, 82, 63 & 86 Village-Yerur valuing at Rs.7,44,67,966/- and not accepting the value of said land as determined by AO at Rs.9,84,25,980/- in accordance with the Rule 16(c) of Stamp Duty Act based on first valuation report furnished by assessee. 4. Whether in the facts and circumstances of the case and in law, the Ld. CIT (A) erred in accepting the second valuation report furnished by assessee for the purpose of land situated at Survey No. 159/1, 2, Kochi Bhadravati, Chandrapur valuing at Rs.60,75,383/- as per the IGR rate and not accepting the value of said land as determined by AO at Rs.74,29,514/- as per stamp duty value based on first valuation report furnished by assessee. 5. Whether in the facts and circumstances of the case and in law, the Ld. CIT (A) erred in accepting the deduction for provisions of gratuity while determining the FMV of unquoted shares in accordance with the provisions of Rule 11U & 11UA of the Income Tax Rules, 1962 though It's a non-contingent & non- current liability. 6. Whether in the facts and circumstances of the case and in law, the Ld. CIT (A) erred in accepting the concept of tolerance limit & safe harbor while determining the FMV of unquoted shares in accordance with the provisions of Rule 11U & 11UA of the Income Tax Rules, 1962. 7. Whether in the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition of Rs.20,00,000/- made on account of receipt of on-money on sale of immovable ITA No.1188/PUN/2024 3 property by holding the seized material with respect to the immovable property transaction as dumb document even when the seized document clearly demonstrate the payment received in cheque as well as in cash and the corollary of immovable property transaction is exactly in the line with seized document. 8. Whether in the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition of Rs.23,10,817/- made on account of unexplained investment made in Fine Living Bungalow, Jalna by relying on the cash flow statement furnished by assessee though the assessee could not satisfactorily substantiated the inflow of funds and his meager drawings. 9. Whether in the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition of Rs.23,10,817/- by accepting the amount payable shown by assessee at Rs.13,36,073/- in absence of any documentary evidences. 10. Whether in the facts and circumstances of the case and in law, the Ld. CTT (A) erred in deleting the addition of Rs.1,00,000/- made on account of unexplained cash expenditure u/s 69C RWS 115BBE of the Act though the assessee had admitted the above said unexplained expenditure in his statement recorded on oath u/s 132(4) of the Act, which has an evidentiary value until not proven otherwise along with supporting documentary evidences. 11. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance made of Rs.1,49,910/- out of agricultural income only on the basis of land holding ignoring the fact that assessee could not produce any supporting documentary evidences with respect to the agricultural activities carried out by him and subsequent sale of agricultural produces. 12. The appellant reserve the right to alter, amend and add & modify any grounds of appeal during the Appellate Proceedings.” 3. The facts of the case, in brief, are that the assessee is an individual deriving income from salary, capital gain, income from other sources and also income as partner in partnership firm. The assessee filed return of income on 14.02.2022 declaring total ITA No.1188/PUN/2024 4 income of Rs.2,64,28,720/-. A search u/s 132 of the IT Act was carried out in the case of the assessee on 23.09.2021. Notices u/s 142(1) were issued and assessee furnished information during the course of assessment proceedings. After considering the reply of the assessee, the Assessing Officer completed the assessment u/s 143(3) determining total income at Rs.6,55,61,287/- as against the income returned by the assessee at Rs.2,64,28,720/-. The above assessed income includes the following additions :- 1. Addition u/s 50CA of the IT Act Rs.12,92,000/- 2. Addition u/s 56(2)(x) of the IT Act Rs.3,32,79,840/- 3. Addition on receipt of on-money on sale of house Rs.20,00,000/- 4. Addition on account of investment in Bungalow u/s 69 Rs.23,10,817/- 5. Addition on account of cash transaction u/s 69A Rs.1,00,000/- 6. Addition on account of agricultural income Rs.1,49,910/- Total Rs.3,91,32,567/- 4. In first appeal, after considering the reply of the assessee Ld. CIT(A) partly allowed the appeal of the assessee. It is this order against which the Revenue is in appeal before this Tribunal. 5. In ground nos.1 to 6, the Revenue has challenged the deletion of addition on account of difference between the transaction value & fair market value of shares as per provisions of section 50CA ITA No.1188/PUN/2024 5 (Rs.12,92,000/-) and as per section 56(2)(x) (Rs.3,32,79,840/-). In this regard, Ld. DR submitted that Ld. CIT(A) erred in deleting both the above additions by relying on various other factors which are not applicable for determining the fair market value of unquoted shares for the purposes of section 56(2)(x) and section 50CA in accordance with Rule 11U and Rule 11UA of IT Rules and accordingly requested to set-aside the order passed by Ld. CIT(A) and confirm that of the Assessing Officer. 6. Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A) is reasoned one and does not require any interference. 7. We have heard Ld. Counsels from both the sides and perused the material available on record in this regard. With regard to addition of Rs.12,92,000/- u/s 50CA and Rs.3,32,79,840/- u/s 56(2)(x) made by the Assessing Officer, we find that Ld. CIT(A) has deleted both the additions by observing as under :- “5.2 I have gone through the submission of the appellant along with supporting documents submitted during the appellate proceedings as well as during the assessment proceedings before the Ld. AO. The appellant has contested the determination of fair market value of the equity shares of Meta Rolls Ispat Private Ltd (MIPL). During the year under consideration, the appellant has transferred the equity shares of MIPL to Smt Radhika Birla. The appellant has submitted that while estimating the FMV of equity shares, various aspects need to be considered as per the valuation standards accepted under the ITA No.1188/PUN/2024 6 Companies Act, valuation standards issued by the ICAI which are in line with international valuation standards, factors like- lack of discount on marketability, purpose of valuation and availability of willing buyers, realisability of immovable properties, margin of safety, WDV of depreciable assets as per the Income Tax Act etc. The Ld. AO has determined the fair market value (FMV) of the shares as per rule 11UA and rejected the contentions of the appellant as under. 5.2.1 On the basis of the submission made by the appellant the AO observed that one of the immovable properties which belongs to the appellant is situated at Survey No.79, 82, 83, and 86 of Yerur Village (adjacent to Tadali MIDC). The Ld. AO has not accepted the valuation determined by the appellant. The value determined by the appellant based on guideline rate is Rs. 7,44,67,966/- whereas the AO has derived the value at Rs.9,84,25,980/-, the net difference being Rs. 2,39,58,014/-. I have gone through the of valuation report submitted by the appellant along with the guideline rates of Industrial NA plot with open area, amenity area and parking area. The appellant has submitted the valuation as per stamp duty rules. It is seen that there are different rules for valuation of industrial NA plots based on criteria like open area, amenity area and parking area etc. Further, the appellant has submitted fair valuation of the land situated at Survey No. 79, 82, 83, and 86 of Yerur Village which is an undeveloped industrial NA land and the said land is a barren land. Further, the said land is not demarcated as usable land as per the NA order as per the Stamp Duty Authority Rules for valuation which need to be followed while assessing the fair value of the immovable property for levy of stamp duty purpose. On perusal of the valuation report it is seen that the Stamp Duty Authority Rules are followed by the valuer for assessing the value of Immovable property. Hence, the valuation done by the valuer of Land situated at Survey No. 79,82,83 and 86 Yerur Village (adjacent to Tadali MIDC) at Rs. 7,44,67,966/- is found to be reasonable since no uniform valuation rate is to be used for the entire land. Thus, impact of higher value of Rs. 10.20 per equity shares worked out by the Ld. AO is Rs. 2,39,58,014/- (i.e. difference between value worked out by the Ld. AO and the Appellant divided by / Rs. 2,34,67,670/- paid up capital * Rs. 10/- face value of equity shares.) 5.2.2 Secondly, the AO noted that in the valuation report submitted by the appellant, the value adopted for land situated at Survey No. 159/1,2 Kochi Bhadravati Chadrapur is Rs. 60,75,383/- whereas the AO has derived the value at Rs.74,29,514/-. Thus net difference is Rs. 13,54,131/-. On perusal of the valuation report of the appellant which is supported by valuation rules for stamp duty it is seen that the value arrived at Rs. 60,75,383/- is as per the IGR rate available on the website of Government of Maharashtra. Thus, the valuation adopted ITA No.1188/PUN/2024 7 by the appellant is found to be reasonable. In view of this, impact of higher value of Re. 0.06 per equity shares worked out by the Ld. AO is Rs. 13,54,131/- i.e. difference between value worked out by Ld. AO and Appellant divided by / Rs. 2,34,67,670/- paid up capital * Rs. 10/- face value of equity shares. 5.2.3 Further, in the valuation report of the valuer Shri Vishal Holani, CA, he has deducted the provision for gratuity and considered as liability which is payable in near future as most of the employees of the appellant company have submitted that they have their continuous service of more than 5 years and eligible for the gratuity entitlement, thus provision for gratuity is a certain liability, and the shareholders/members of the company are bound to be paid the gratuity. Thus, it is accounted as per the accounting standards. It is to be noted that the gratuity is mandatorily to be paid to those employees who have completed their service as per the rules and regulations of receipt of gratuity and payment is required to be made to the employees once they are retired. Most of the employees have crossed the requisite limit of service and are eligible for gratuity. On perusal of the same, it is seen that such provision of gratuity is made based on some scientific approach and the same has been derived by analyzing past data. Therefore, liability of the gratuity needs to be considered at the time of valuation. Thus, impact of higher value of Rs. 0.62 per equity share worked out by the Ld. AO is Rs. 1,45,28,805/- (i.e. provision for gratuity divided by / Rs. 2,34,67,670/- paid up capital * Rs. 10/- face value of equity shares). 5.2.4 The appellant has made the submission as to why there is no scope for estimating the value of equity shares under rule 11UA of the Income Tax Rules. The factors like concept of safe harbor limit or tolerance band or discount for lack of market ability apply when the valuation is considered as per the valuation standards and adopted under the companies act. The concern raised by the appellant is considered and seems to be logical and a valid ground on account of uncertainty to arrive at fair market value (FMV), basis of fair valuation, as it depends on various factors viz. The willingness of the buyer, type of assets, generation of income from those assets, legally clear and freely traded in open market, availability of willing buyers etc. In the present case the Rajuri group members and promoters had decided to part of their shareholding pattern of the company viz. Rajuri Steels Private Ltd (now Rathi Steel and Metal Private Limited (RSMPL), Meta Rolls Ispat Private Limited (MIPL). The promoters of this company have decided to exchange the shares of these companies amongst promoters/members of the group only and not to transfer to any third person. Thus, the promoters/members, considering the various aspects to arrive at fair market value determined the equity shares as per weighted average method out of three methods viz. ITA No.1188/PUN/2024 8 DCF, NAV and NAV (based on market price of immovable property) considering the various aspects such as future earnings, value of assets and capacity of the plant etc. The purpose of transfer of shares is distribution of shares among the promoters/members only. As per the provisions of Companies Act 2013 related to transfer of share in case of Private Company, restrict the Private Company to transfer the shares without prior consent of previous shareholders. This arrangement is done only to transfer the shares internally among the promoters and is within the law. 5.2.5 As per the rules for valuation with regard to the Plant and machinery and other depreciable assets there are two values- one is book value as per books and other is WDV as per the Income Tax Act. In the present case the book value as per books is higher than the WDV as per the Income Tax Act. Further as per the section 50C of the Income Tax Act, the capital gain is calculated by considering the WDV as per Income Tax Act. The reason behind the difference in these two mechanisms for arriving at the fair valuation is the question of law. However, the new shareholders might lose the benefit of tax saving on depreciation. Consequently, this element to determine the valuation of the unquoted equity shares is to be considered in a broader way. 5.2.6 Further while determining the deeming income under the Income Tax Act, various concepts are there such as Safe Harbor Rule, Section 50C etc for dealing with the practical difficulties and uncertainties. However, the section 50CA is silent on such deeming fiction. The same issue of Fair valuation is dealt with in section 50C where the Income Tax Act allows 10% of the difference between stamp duty value and the sales consideration in case of Immovable property. This rate of variation is increased from 5% to 10% in the Finance Act 2020 keeping in mind the practical difficulties and uncertainties while calculating the fair value. 5.2.7 Similarly as regards to the valuation of shares under rule 11UA, over the period, valuation method has changed from Net asset valuation method to Discounted Cash Flow method. On 25th September 2023 a notification was issued by the Central Board of Direct of Taxes (CBDT). The amended Rule 11UA provides five more methods of valuation for issue of unquoted equity shares viz. Comparable Company Multiple Method, Probability Weighted Expected Return Method, Option Pricing Method, Milestone Analysis Method and Replacement Cost Method. Further the Income Tax Act has also allowed the discount for lack of marketability. 5.2.8 As per the amended rules of shares valuation, the method to be used has to be from the prescribed methods as per the valuation standards issued by the ICAI valuation, in line with international ITA No.1188/PUN/2024 9 valuation standards which has been adopted under the Companies Act and Insolvency and bankruptcy Code monitored by Insolvency and Bankruptcy Board of India (IBBI) and National Company Law Tribunal. The appellant has used weighted average of DCF, NAV and NAV of market value to determine the value of equity shares for calculation of fair valuation of shares. The same is most appropriate and in accordance with law and regulations accepted by the various statues and bodies which is most perfect to estimate the value of equity shares with set rules and guidelines. The Appellant has taken the valuation report from the certified valuer by adopting this method and the valuer has considered the challenge and uncertainties to determine the fair valuation as the concept of fair valuation is very dynamic in nature. 5.2.9 Based on the various aspects and considering the practical difficulties and uncertainties the value of share at Rs. 540 is found to be reasonable as the Fair value of equity shares of MIPL. Even if it is considered that the value of shares determined under the rule 11UA worked out by the CA of Rs.640 per equity shares is to be adopted, then also, considering the various practical difficulties to sell the immovable properties of the appellant companies by removing the plant thereon and required timeframe as well as some legal issues such as related to employees, demolishing the plant, the time taken for big industrial unit etc. the discount of 15% is to be considered on account of lack of marketability of shares needs to be applied. Accordingly, as discussed above the fair market value of equity shares of MIPL comes to Rs.544 and rounded to Rs.540. Thus, the estimated addition under section 50CA or 56(2)(x) of the Act needs to be restricted. Addition u/s 50CA of the Act of Rs. 12,92,000/- on account of sale of equity shares of MIPL (i.e. 9500 equity shares * Rs. 136 (Rs. 661- Rs. 525). The appellant has sold the equity shares below the FMV as discussed above and the FMV worked out is Rs.540/-). Thus, the addition is restricted to Rs.1,42,000/- [i.e.9500*(Rs.540/- i.e. FMV determined as discussed above– Rs.525/- i.e. selling price of shares)].” 8. From perusal of the above order of Ld. CIT(A), we find that Ld. CIT(A) has considered various factors such as different rules for valuation of Industrial NA plots based on criteria like open area, amenity area & parking area. Further, he has also given a ITA No.1188/PUN/2024 10 finding that the land situated at Survey No.79, 82, 83 & 86 of Yerur village was an undeveloped industrial NA Land & the said land was a barren Land. Even as per the Stamp Duty Authority Rules, the said land is not demarcated as usable land. It was also found by Ld. CIT(A) that while preparing the valuation report Stamp Duty Authority Rules were followed for assessing the value of immovable property. Accordingly Ld. CIT(A) has accepted the valuation furnished by the valuer of the assessee of land situated at Yerur village. A perusal of the order shows that Ld. CIT(A) has passed a detailed and speaking order wherein he has also provided the reasons for allowing 15% discount in the value calculated as per Rule 11UA of the IT Rules. No contrary material has been brought on record by Ld. DR against the detailed reasonings of the Ld. CIT(A) on this issue. Therefore, in absence of any distinguishable feature brought on record we do not find any infirmity in the order passed by Ld. CIT(A) on this issue. Accordingly we confirm the same. Thus, the ground nos.1 to 6 raised by the Revenue are dismissed. 9. In ground no.7, the Revenue has challenged the deletion of addition of Rs.20,00,000/- made on account of receipt of on-money ITA No.1188/PUN/2024 11 on sale of immovable property which was added on the basis of seized material. 9.1 In this regard, Ld. DR submitted before us that during the course of search proceedings, a copy of registry of property was seized and on the back side of page no.28 it was mentioned as- total sale value of Rs.1,06,00,000/- out of which Rs.86,00,000/- was received in cheque and Rs.20,00,000/- was received in cash. It was submitted that as per registered sale deed total consideration was shown at Rs.86,00,000/- only, therefore, remaining Rs.20,00,000/- received in cash were added by the Assessing Officer and Ld. CIT(A) committed error in deleting the same. 10. Ld. AR appearing from the side of the assessee reiterated the submission as made before Ld. CIT(A) and relied on the order passed by Ld. CIT(A). 11. We have heard Ld. Counsels from both the sides and perused the material available on record and the paper book furnished by the assessee. We find the Assessing Officer has made addition of Rs.20,00,000/- on the basis of some jotting on seized documents. We find that the assessee has sold property in Jalna whereas in the seized documents Viman Nagar has been mentioned, although no ITA No.1188/PUN/2024 12 such description of the entries was written on the seized documents. Even the area of the property mentioned on the seized documents, does not match with the description of Jalna property, sold by the assessee. We find that Ld. CIT(A) has deleted the above addition by observing as under :- “6.2 I have considered the submission of the appellant and the facts of the case and the seized documents. It is observed that the seized documents do not contain anything to show that the appellant has received on money on sale of residential house of Jalna. The appellant has raised various points as stated above. From the seized documents, it is clear that the appellant has not received any on money on sale of residential house at Jalna, as the area of residential house at Jalna is different and property mentioned on seized documents is written as Vimannagar, the said area is in Pune and not in Jalna. Thus, addition made on probability and presumption on the basis of dumb documents is not sustainable. The AO has not been able to prove that the appellant has received on money on sale of residential house. Therefore, the impugned addition of Rs. 20,00,000/- is hereby, deleted. The Ground No. 6 of the appeal is therefore, ALLOWED.” 12. From a perusal of the above order of Ld. CIT(A), we find that while deleting the above addition of Rs.20,00,000/-, Ld. CIT(A) has considered the reply furnished by the assessee and after analyzing seized documents, which has also been made part of the order of Ld. CIT(A), the addition has been deleted. Therefore, in absence of any contrary material brought to our notice against the reasoned order of Ld. CIT(A) we do not find any ITA No.1188/PUN/2024 13 infirmity in the same. Accordingly, the same is confirmed. Thus, ground no.7 raised by the Revenue is dismissed. 13. In ground no.8 and 9, the Revenue has challenged the deletion of addition of Rs.23,10,817/- made on account of unexplained investments in construction of bungalow. 13.1 In this regard, Ld. DR appearing from the side of the Revenue submitted before us that the assessee has constructed a bungalow along with his wife Mrs. Urmila Soni and the assessee has admitted to have invested Rs.48,74,977/- in the construction of the house wherein Rs.13,36,073/- was shown as payable/outstanding and Rs.14,56,392/- was claimed to be spent in cash but the Assessing Officer has not accepted the availability of cash of Rs.14,56,392/- and accepted the availability of cash at Rs.5,81,650/- only and therefore addition of Rs.23,10,817/- was made, which was justified and Ld. CIT(A) erred in deleting the above addition. 14. In this regard, Ld. AR appearing from the side of the assessee reiterated the submission of Ld. CIT(A) and relied on the order of Ld. CIT(A). ITA No.1188/PUN/2024 14 15. We have heard Ld. Counsels from both the sides and perused the material available on record including paper book filed by the assessee in this regard. We find that Ld. CIT(A) has deleted the above addition by observing as under :- “7.2 I have considered the submission of the appellant and the facts of the case and supporting evidence submitted before me and before the Ld. AO. After analyzing the submission with supporting evidence, it is observed that the addition is made by the Ld. AO after recalculating the summary of cash flow statement and the AO has worked out the addition under the head construction of house. The Ld. AO has accepted that some of the expenses were incurred by the wife of the appellant i.e. Rs.36,40,142/- and the appellant has incurred house construction expenses to the tune of Rs. 48,74,977/- totalling to Rs. 85,15,119/-. The summary of cash flow submitted by the appellant before the Ld. AO as per the assessment order is tabulated below to analyze the exact position of unaccounted expenses for construction of house. xxxxxxxx From the above table, it is clear that the Ld. AO has rejected the summary of cash flow submitted by the appellant without any valid grounds i.e. when the appellant has offered commission income of Rs.3,99,832/- in the ITR why the Ld. Assessing Officer has reworked the same to Rs.1,50,000/- is not clear. The appellant has earned agricultural income of Rs. 2,49,910/-. The Ld. AO has reworked the same to Rs. 1,00,000/- arbitrarily. Moreover the Ld. AO also made further addition of Rs. 1,49,910/- on account of unexplained agricultural income. This amounts to double addition of the same income. Further the Ld. AO has increased drawings by Rs. 4,75,000/- just by stating that the social status of the Appellant is high and inflation nowadays is low. Thus, the AO increased drawings arbitrarily without any corroborative evidence. The reworking of cash flow by the Ld. AO is purely on assumption and guesswork. Further, the Ld. AO miscalculated the addition of Rs. 23,10,817/-. It clearly indicates that there is totalling mistake and the AO has made further addition of Rs. 1,00,000/- under section 69A, which amounts to double addition of the same income. The addition of Rs. 1,00,000/- is therefore, deleted. The appellant has stated that an amount of Rs. 13,36,073/- is payable to various contractors. Without bringing out any evidence on record, the AO has made addition on account of ITA No.1188/PUN/2024 15 amount payable to contractors. The appellant has submitted that the amount is subsequently paid off and has submitted the details of the same. Hence, this addition being arbitrary the same is not justified and is therefore, deleted. Based on the submission and supporting evidence and recalculation of cash flow summary as above, the addition of Rs. 23,10,815/- made by the Ld. AO is not tenable. Thus, the Grounds No. 7 and 8 are allowed.” 16. From perusal of the above order of Ld. CIT(A), we find that the addition was made by the Assessing Officer on the basis of estimation only. While making the addition the Assessing Officer has increased the household expenses without any concrete evidence and also reduced the agricultural income and further reduced commission income which was already disclosed by the assessee in his return of income and due tax was also paid. We do not find any valid reason with the Assessing Officer for which he has done the above exercise which resulted in so called shortage of cash with the assessee and consequently affecting the availability of cash with the assessee which ultimately resulted in addition of Rs.23,10,817/-. We find that Ld. CIT(A) has considered the fact that other family members are also earning members and they have also contributed towards household expenses. Further, Ld. CIT(A) has also found that a list of the expenditure outstanding as payable ITA No.1188/PUN/2024 16 for the house construction was produced along with names of the parties before the Assessing Officer. Ld. CIT(A) has also found that the list of expenditure incurred along with names of the parties and the amount of Rs.13,36,073/- outstanding to be paid on 31.03.2022 was also reflected in the statement of affairs submitted during the course of assessment proceedings. We therefore do not find any infirmity in the order of Ld. CIT(A) in deleting the addition made by the Assessing Officer. Ld. DR could not point out any error or perversity in the order of Ld. CIT(A) on this issue. Accordingly, the same is upheld and the ground nos.8 and 9 raised by the Revenue are dismissed. 17. In ground no.10, the Revenue has challenged the deletion of addition of Rs.1,00,000/- made on account of unexplained cash expenditure u/s 69C which was admitted in the statement recorded u/s 132(4) of the IT Act. 17.1 In this regard, Ld. DR appearing from the side of the Revenue submitted before us that during the search proceedings statement of assessee was recorded on oath u/s 132(4) of the IT Act and he himself has accepted that Rs.1,00,000/- was paid to ITA No.1188/PUN/2024 17 Shri Sandeep for purchase of items for the house and Ld. CIT(A) erred in deleting the same. 18. Ld. AR appearing from the side of the asessee reiterated the submission as made before Ld. CIT(A) and relied on the order passed by Ld. CIT(A) in this regard and requested to confirm the same. 19. We have heard Ld. Counsel from both the sides and perused the material available on record including paper book furnished by the assessee. We find that Ld. CIT(A) deleted the addition of Rs.1,00,000/- by observing as under :- “8.2 I have considered the submission of the appellant and the facts of the case and supporting evidence submitted before me and before the Ld. AO. During the appellate proceedings, the appellant has stated that Shri Sandeep Lasurkar was doing aluminum and curtain work to whom an amount of Rs. 1,00,000/- was advanced which was duly recorded in the books of the appellant’s wife i.e. Smt. Urmila Soni and the source thereof is out of income and cash withdrawals from bank time to time. However, the cash summary of his wife for FY 2020-21 relevant to AY 2021-22 was also submitted to the Ld. AO. The same is submitted by the appellant, which is as under: xxxxxxxxx In view of the above summary, it is seen that the appellant’s wife has withdrawal total amounting of Rs. 3,00,000/- during the year. Out of Rs. 3,00,000/-, his wife has spent Rs. 1,43,330/- for construction of house given to Shri Sandeep Lasurkar. Thus, the addition of Rs. 1,00,000/- made by AO on account of unaccounted investment u/s 69A is not sustainable. The ground No. 9 of appeal is, therefore, allowed.” ITA No.1188/PUN/2024 18 20. We find that Ld. CIT(A) has deleted the addition of Rs.1,00,000/- by accepting the contention of the assessee that the amount of Rs.1,00,000/- was paid by the appellant’s wife i.e. Smt. Urmila Soni out of her income and cash withdrawal from bank from time to time. We also find that the cash summary of Smt. Urmila Soni was also submitted before the Assessing Officer. Considering the totality of the facts of the case, we are of the considered opinion that Ld. CIT(A) has rightly deleted the addition of Rs.1,00,000/- because the same was incurred by wife of the assessee and the cash flow statement of wife of the assessee was also produced before the Assessing Officer as well as before Ld. CIT(A). Accordingly, ground no.10 raised by the Revenue is dismissed. 21. In ground no.11, the Revenue has challenged the deletion of disallowance of Rs.1,49,910/- out of agricultural income disclosed by the assessee. 21.1 Ld. DR appearing from the side of the Revenue submitted before us that the assessee has disclosed Rs.2,49,910/- as agricultural income and in the absence of any documentary evidence with respect to the agricultural income, the Assessing ITA No.1188/PUN/2024 19 Officer has disallowed Rs.1,49,910/- and added the same as income from other sources and Ld. CIT(A) erred in deleting the same in the absence of any supporting documents with regard to agricultural income. 22. Ld. AR appearing from the side of the assessee reiterated the submission as made before Ld. CIT(A) and relied on the order passed by him and requested to confirm the same. 23. We have heard Ld. Counsels from both the sides and perused the material available on record including paper book filed by the assessee. In this regard, we find that Ld. CIT(A) deleted the addition of Rs.1,49,910/- by observing as under :- “9.2 I have considered the submission of the appellant and the facts of the case. The appellant has declared agricultural income in ITR Rs. 2,49,910/- the Ld. AO has restricted the agricultural income to Rs. 1,00,000/- and made the addition of Rs. 1,49,910/-. I have gone through the submission of the appellant. The document of 7/12 has been produced by the appellant which shows that the appellant has sufficient land holding i.e. 4-hectare 6 R and further it is observed that the 7/12 extract has notings of the crops cultivated during the year. The agricultural land holding of the appellant is 4 hectare and net agricultural income per hectare is worked out to Rs. 61,555/- only a very negligible agricultural income. In the light of the documentary evidence of land holding and noting of crop cultivated on the agricultural land by the appellant and considering that the agriculture income is of Rs 1,49,910/- which is very meager, the contention of the appellant is acceptable. The Ground No. 10 is, therefore, allowed.” 24. We find that Ld. CIT(A) has deleted the addition of Rs.1,49,910/- pertaining to agricultural income after considering ITA No.1188/PUN/2024 20 the fact that appellant has furnished 7/12 extract wherein notings of the crop cultivated during the year has been mentioned and also considered the fact that the assessee holds sufficient agricultural land i.e. more than 4 hectares and a reasonable sum of only Rs.2,49,910/- was shown as net agricultural income which comes to Rs.61,555/- per hectare only. Accordingly, we do not find any error in the order passed by Ld. CIT(A) on this ground. Hence this ground no.11 raised by the Revenue is dismissed. 25. In the result, the appeal filed by the Revenue stands dismissed. Order pronounced on this 14th day of February, 2025. Sd/- Sd/- (R. K. PANDA) (VINAY BHAMORE) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 14th February, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-12, Pune. 4. The Pr. CIT/CIT concerned. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "