Rajiv Yashwant Bhale, Pune V. Deputy Commissioner of Income tax, Pune

ITA 279/PUN/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0058 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-06-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 03-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Keywords: Unexplained cash credit; Income from undisclosed sources; Opportunity of being heard; Principle of natural justice; Rule of consistency; Additional evidence; Reasonable cause; Bad and doubtful debts; Condonation of delay
• Section: 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NOS.27 & 279/PUN/2017 / ASSESSMENT YEARS : 2010-11 AND 2011-12 MR. RAJIV YASHWANT BHALE, 1194/27A, SHIVAJINAGAR, YASHOMALA, PUNE 411 005 PAN : AARPB9109L ....... / APPELLANT / V/S. DCIT, CENTRAL CIRCLE-1(2), PUNE / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE REVENUE BY : SHRI SANJEEV GHEI / DATE OF HEARING : 29.06.2018 / DATE OF PRONOUNCEMENT : 12.09.2018 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE TWO APPEALS FILED BY THE ASSESSEE UNDER CONS IDERATION INVOLVING ASSESSMENT YEARS 2010-11 AND 2011-12. THEY A RE FILED AGAINST SEPARATE ORDERS OF CIT(A)-11, DATED 21-09-2016 AND 28- 11-2016 RESPECTIVELY. WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE FOR THE A.Y. 2010-11 ITA NO.27/PUN/2017 A.Y. 2010-11 2. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED AS UNDER : 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS BY UPHOLDING THE ORDER OF THE LEARNED AO WHEREIN THE INCOME OF THE A PPELLANT HAD BEEN ASSESSED AT RS. 25,75,51,510/- INSTEAD OF THE RETUR NED INCOME OF RS. 21,72,611/-. 2. THE LEARNED AO AS WELL AS THE LEARNED CIT(A) ERR ED IN LAW AND ON FACTS BY GRANTING DEDUCTION OF LAND COST ONLY TO TH E EXTENT OF 35% INSTEAD OF 2 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE THE DEDUCTION OF 65% AGAINST THE RELATED REVENUE FO R SALE OF LAND. THE IT AUTHORITIES OUGHT TO HAVE TAKEN A VIEW BASED ON THE DECISION OF THE HONOURABLE SETTLEMENT COMMISSION IN RESPECT OF THIS VERY SAME ASPECT. 3. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE AMOUNT OF RS. 18,06,30,231, BEING AMOUNT PAID T O KOTAK BANK DIRECTLY BY M/S PRIDE GROUP ENTITIES WAS NOT A TAXABLE REVEN UE OF THE APPELLANT CONSIDERING PRINCIPLE OF OVERRIDING TITLE. 4. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT APPELLANT'S ELIGIBLE TO CLAIM, PARTIALLY OR FULLY, LOSS OF LOAN EXTENDED TO M/S PRATHAM DESIGN INNOVATION PVT LTD AMOUNTING TO RS. 9,58,78,294 SINCE THE SAID ENTITY HAS SUFFERED MAJOR QUANTUM LOSS OF RS. 9,75,30,252 AS OF 31 ST MARCH 2010 AND AS SUCH, THE LOAN BALANCE HAS RESULT ED IN BUSINESS LOSS. 5. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT APPELLANT IS ELIGIBLE TO CLAIM, PARTIALLY OR FULLY, BUSINESS LOSS OF AMOUNT INVESTED IN M/S PRATHAM MOTORS AS CAPITAL AMOUNTING TO RS. 3,10,82,519 SINCE THE SAID ENTITY HAS SUFFERED MAJOR QUANTUM LO SS OF RS. 2,21,67,349 AS OF 31 ST MARCH 2010 AND AS SUCH, THE CAPITAL BALANCE HAS RE SULTED IN BUSINESS LOSS. 6. THE APPELLANT CRAVES LEAVE TO ADD / MODIFY / ALT ER / DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE IS AGGR IEVED WITH THE WAY THE ASSESSMENT IS DONE DETERMINING THE ASSESSED INCOME AT RS.25.76 CRORES (ROUNDED OFF) AGAINST THE RETURNED INCOME OF RS.21,7 2,611/- (GROUND NO.1). AO QUANTIFIED THE TAXABLE INCOME SUMMARILY AP PLYING THE FIXED FLAT RATE OF 65% OF THE SALE PROCEEDS OF THE PLOT S OF THE LAND (GROUND NO.2). THERE IS ARGUMENTATIVE GROUND RELATING TO T HE PAYMENT OF RS.18.06 CRORES PAID TO KOTAK BANK DIRECTLY BY THE PRIDE GROUP (GROUND NO.3). FURTHER, GROUND NOS. 4 AND 5 RELATES TO THE LOSS O N ACCOUNT OF LOANS GIVEN TO M/S. PRATHAM DESIGN INNOVATION PVT. LTD. AN D M/S PRATHAM MOTORS. ASSESSEE CLAIMS LOSS SHOULD BE ALLOWED AS A BUSINESS LOSS IN BOTH THESE CASES. I. PRELIMINARY ISSUE CONDONATION OF DELAY OF 16 D AYS 3. CONDONATION OF DELAY : BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS DELAY OF 16 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. IN THIS REGARD, LD. COUNSEL DREW OUR A TTENTION TO THE 3 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE AFFIDAVIT DATED 30-12-2016 FILED BY THE ASSESSEE AND SUBM ITTED THAT THE DELAY IS ATTRIBUTABLE TO VARIOUS PROBLEMS RELATED TO THE B USINESS OF THE ASSESSEE, FINANCIAL CONDITION AND ATTACHMENT OF PROPERTIES ETC. 4. ON GOING THROUGH THE CONTENTS OF THE AFFIDAVIT, WE FIND TH ERE WAS A REASONABLE CAUSE FOR THE ASSESSEE IN NOT FILING THE APPEAL BEFORE THE STIPULATED TIME. THEREFORE, WE ARE OF THE OPINION THAT THE DELAY OF 16 DAYS IN FILING THE APPEAL IS CONDONED AND THE APPEAL IS TAKE N UP FOR ADJUDICATION. II. ON MERITS OF THE ADDITIONS OF GROUNDS OF APPEAL 5. FACTS : BRIEF FACTS OF THE CASE INCLUDE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE PROPERTY DEVELOPERS AND B UILDER. ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME O F RS.21,72,611/-. DURING THE YEAR UNDER CONSIDERATION, IN CON TINUATION OF THE BUSINESS OF SALE OF LAND, ASSESSEE REPORTED THE GROSS RECEIPTS OF RS.34,82,50,154/-. AGAINST THE SAID INCOME, ASSESSEE CLAIMED ALLOWABLE EXPENSES AMOUNTING TO RS.31,65,16,595/-. DURING THE ASSE SSMENT PROCEEDINGS, ASSESSEE CONTESTED THE REQUIREMENT OF COMP LYING WITH THE ORDER OF THE SETTLEMENT COMMISSION IN THIS YEAR ALSO CONS IDERING THE COMMONALITY OF THE FACTS. IN THIS REGARD, ASSESSEE SUBMITT ED THAT ASSESSEE APPROACHED THE HONBLE INCOME TAX SETTLEMENT COMMISSION (ITSC) FOR THE A.YRS. 2002-03 TO 2008-09 AND THE COMMISSIO N ORDERED FOR ALLOWING 65% OF THE SALES TOWARDS THE DEDUCTION OF EXPENSE S ON ACCOUNTS OF LAND COST, LAND DEVELOPMENT COST, LAND LITIGATION COST, ETC . THUS, THE MATTER BECAME FINAL FOR THOSE ASSESSMENT YEARS AND THE SIMILAR ASSESSMENTS WERE MADE FOR SUBSEQUENT ASSESSMENT YEAR S WITH THE EXCEPTION OF THE CURRENT ASSESSMENT YEAR 2010-11. HOW EVER, IGNORING 4 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE THE ABOVE CONSISTENCY AS WELL AS THE ORDER OF THE SETTLE MENT COMMISSION, AO PROCEEDED TO ESTIMATE THE EXPENDITURE RELATABLE TO T HE SALE PROCEEDS AT 35% OF THE SALES. ACCORDINGLY, HE MADE ADDITION OF RS.2 3,84,14,584/- AS PER THE CONTENTS OF PARA NO.8 OF THE ASSESSMENT ORD ER. RELEVANT LINES OF THE SAID PARA ARE EXTRACTED AS UNDER: 8 .. IN VIEW OF THE ABOVE FACTS, I ESTIMATE THE EXPENDITURE OF THE ASSESSEE AT 35%, I.E. RS.11,00,35,570/- AND ALLOW A S DEDUCTION. HENCE, THE AMOUNT OF RS.23,84,14,584/- IS CONSIDERED AS BU SINESS INCOME. INITIATE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I T ACT, 1961 FOR FURNISHING INACCURATE PARTICULARS OF INCOME. FURTHER, IT IS S EEN THAT THE ASSESSEE HAS SHOWN INTEREST INCOME OF RS.1,91,36,928/-. THE SAM E IS TAKEN AS INCOME FROM OTHER SOURCES. DURING THE PROCEEDINGS, THERE IS NO ISSUE RELATING TO THE CLAIM OF BUSINESS LOSS INVOLVING M/S. PRATHAM DESIGN INNOVATION PVT. LTD. AND M/S PRATHAM MOTORS (GROUND NOS. 4 & 5). 6. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE R AISED VARIOUS GROUNDS AGAINST THE DECISION OF THE AO IN QUANTIFYING THE EXPENSES AT 35% AND TAKING THE BALANCE 65% AS INCOME OF THE ASSESSEE ON ACCOUN T OF SALE OF LANDS AS WELL AS RAISED VARIOUS ADDITIONAL GROUNDS I NVOLVING THE AFORESAID CLAIM OF BUSINESS LOSS INVOLVING M/S. PRATHAM DESIGN INNOVATION PVT. LTD. AND M/S PRATHAM MOTORS. ASSESSEE FURNISHED WRITTEN SUBMISSIONS AND RELIED HEAVILY ON THE ORDER OF S ETTLEMENT COMMISSION AS WELL AS OTHER ASSESSMENT ORDERS FOR OTHER YEARS, I.E. 2009-10, 2011-12 AND 2012-13. 6.1 REGARDING THE ADDITIONAL GROUNDS, ASSESSEE PRAYED FOR ADMISSION OF THE SAME AND SUBMITTED FOR ALLOWING THE BUSINESS LOSS INVOLV ING THE GROSS LOSS OF RS.11.97 CRORES (ROUNDED OFF)- M/S. PRATHAM DESIGN INNOVATION PVT. LTD. AND M/S PRATHAM MOTORS. CIT(A) CONS IDERED THE 5 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE SUBMISSIONS OF THE ASSESSEE ON THE ISSUE OF ALLOWABLE DEDUC TIONS ON ACCOUNT OF LAND COST, LAND DEVELOPMENT COST, LAND LITIGATION C OST, ETC., AND DISMISSED THE APPEAL OF THE ASSESSEE. CONTENTS OF PA RA 17 CONTAIN THE GIST OF THE CONCLUSION AND THE SAME IS EXTRACTED AS UNDER : 17. CONSIDERING THE FACT THAT THE EXPENDITURE ALLO WED ON LAND DEVELOPMENT BY THE SETTLEMENT COMMISSION WAS NOT EV EN 20% OF THE GROSS RECEIPTS, THE AOS OVERALL ESTIMATE OF 35% EXPENDIT URE THIS APPEARS TO BE QUITE GENEROUS. AS REGARDS THE INTEREST CLAIMED EV EN IF THE SAME IS ALLOWED FULLY AS CLAIMED IN THE P&L ACCOUNT, THE TO TAL (20% OF GROSS RECEIPTS AS LAND DEVELOPMENT COST AND FULL INTEREST AS CLAIMED) WOULD NOT CROSS 35% OF THE GROSS RECEIPTS. WE ALSO HAVE TO K EEP IT IN MIND THAT THE APPELLANT IS NOT A CONSTRUCTOR/CONTRACTOR. HIS PRO FITS ARE MAINLY DUE TO THE APPRECIATION IN THE LAND VALUES BECAUSE OF VARIOUS PERMISSIONS/CLEARANCES ARRANGED BY HIM AND THE APPRECIATION IN THE LAND VA LUE OVER PERIOD OF TIME. IN THIS TYPE OF BUSINESS PROFITS SOMETIMES ARE MANY TIMES OF THE ORIGINAL INVESTMENT. THE AOS ESTIMATE OF PROFIT @65% OF GR OSS RECEIPTS APPEARS TO BE QUITE REASONABLE. THE APPELLANTS GROUND OF APP EAL NO.5 IS THEREFORE DISMISSED. 6.2 REGARDING THE ADDITIONAL GROUND, THE CIT(A) CALLED FOR A R EMAND REPORT AND CONSIDERED THE FACT THAT AO OBJECTED TO TH E ADMISSION OF THE SAME. CIT(A) PROCEEDED TO ADMIT THE SAME AS PER THE DISC USSION GIVEN IN PARA NO.19 OF HIS ORDER IN VIEW OF VARIOUS SUPPORTING DECISIO NS IN FAVOUR OF THE ASSESSEE. HOWEVER, ON MERITS OF THE CLAIM OF LOSS, TH E CIT(A) DELIBERATED MORE CONSIDERING THE CLAIM OF THE ASSESSEE AS A CASE OF CLAIM OF BAD DEBTS RATHER THAN THE BUSINESS LOSS ALLOWABLE U/S.28 OF THE ACT. HOWEVER, HE TOUCHED UPON THIS CLAIM OF BUSINESS LOSS AND H ELD THAT THE ASSESSEE IS NOT A MONEY LENDER. RELEVANT DISCUSSION IS G IVEN IN PARA NOS. 28 TO 39 INVOLVING BOTH THE CONCERNS, I.E. M/S. PRATHA M DESIGN INNOVATION PVT. LTD. AND M/S PRATHAM MOTORS. EVENTUALLY , THE APPEAL OF THE ASSESSEE WAS DISMISSED. 7. AGGRIEVED WITH THE SAID ORDER OF THE CIT(A), THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE CIT(A) AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ADDITION MADE BY THE AO. 6 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE BEFORE THE TRIBUNAL 8. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUND N OS.1 AND 6 ARE GENERAL IN NATURE. FURTHER, LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT HE DOES NOT WISH TO PRESS GROUND NO.3. ACCORDINGL Y, THE SAID GROUNDS 1, 6 AND 3 ARE DISMISSED AS GENERAL/NOT PRESSE D, AS THE CASE MAY BE. THAT LEAVES GROUND NOS. 2, 4 & 5 FOR SPECIFIC ADJUDICATION. 9. BEFORE US, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR AT TENTION TO THE ORDER OF SETTLEMENT COMMISSION AND SUBMITTED THAT TH E SETTLEMENT COMMISSION DETERMINED THE ALLOWABLE DEDUCTION @65% OF THE S ALE PROCEEDS OF LAND. FURTHER, HE FILED A CHART SHOWING THE DE CISION OF THE VARIOUS AOS IN MATTERS OF THE EXTENT OF ALLOWABLE DEDUCTIO N OF EXPENSES SINCE THE A.Y. 2002-03 ONWARDS. THE CHART AS SUMMARISED BY THE ASSESSEE IS REPRODUCED AS UNDER: AY LAND RIGHTS/LAND SALE AMOUNT % OF PROFITS AMOUNT OF PROFIT TAXED REMARKS 2002-03 TO 2008-09 50,00,00,000 35% 17,50,00,000 REFER PAGE 50 OF SETTLEMENT COMMISSION ORDER DATED 01-12-2011 (COPY IN PAPER BOOK) 2009-10 1,25,68,350 35% 43,98,923 REFER PAGE 6 OF O RDER U/S.143(3) DATED 30-12-2016 (COPY ENCLOSED) 2010-11 * 34,84,50,154 65% 23,84,14,584/- REFER PAGE 10 OF ORDER U/S.143(3) DATED 25-03-2013 2011-12 90,00,000 35% 31,50,000 REFER PARA NO.10.3, PAGE 22 OF THE CIT(A) ORDER DATED 28-11-2016 (COPY ENCLOSED) 2012-13 25,00,000 35% 8,75,000 REFER PAGE 6 OF ORDE R U/S.143(3) DATED 30-03-2015 (COPY ENCLOSED) 7 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE *A.Y. 2010-11 IS THE ONLY ASSESSMENT YEAR, WHERE TH E AO DEVIATED FROM THE RULE OF GRANTING DEDUCTION TOWARDS EXPENDITURE AND TAXING PROFITS @35%. 9.1 TAKING US THROUGH THE ABOVE CHART, LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE ISSUE UNDER CONSIDERATION VIDE GROUN D NO.2, IS IDENTICAL TO THE ONE FOR THE A.YRS. 2002-03 TO 2008-09. E LABORATING THE SAME, LD. COUNSEL MENTIONED THAT THE ISSUE STANDS DIRECTL Y COVERED BY THE SETTLEMENT COMMISSION ORDER DATED 01-12-2011 (PAGE 50 OF THE PAPER BOOK NO.1). FURTHER, REFERRING TO THE DECISION OF THE AOS FOR THE A.YRS. 2009-10, 2011-12 AND 2012-13, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT 65% OF THE SALE PROCEEDS WAS CONSIDERED AS AN ALLOWABLE DEDUCTION IN THOSE ASSESSMENT YEARS. FURTHER, HE SUBMIT TED THAT SAME STANDS CONFIRMED BY THE ORDER OF CIT(A) IN ALL THESE 3 YEAR S. IT IS ALSO MENTIONED THAT THE FACTS ARE COMMON FOR THE A.YRS. 2010- 11 AND 2011- 12 AND HOWEVER, THE DECISIONS OF CIT(A) ARE DIVERGENT IN TH ESE ASSESSMENT YEARS. WHILE THE CIT(A) CONFIRMS DEDUCTION OF E XPENSES @65% OF SALES FOR THE A.Y. 2011-12, HE HELD 35% SHOULD BE A LLOWED AS DEDUCTION FOR THE A.Y. 2010-11. THE REASONS MENTIONED IN PARA NOS. 15 AND 16 OF THE ORDER OF CIT(A). ON THE REASONING THAT THE COMMISSIONS ORDER OF CONSIDERING THE EXPENDITURE FOR LAND COST IS ERRO NEOUS AND THE SAME SHOULD NOT BE FOLLOWED FOR THE A.Y. 2010-11. HE HOWEV ER DID NOT GIVE THE REASON FOR ALLOWING THE SAME FOR THE A.Y. 2011-12. THEREFORE, THE DEPARTMENT IS NOT IN APPEAL FOR THE A.YRS. 2009-10, 20 11-12 AND 2012-13 BEFORE THE TRIBUNAL. IN OTHER WORDS, THE REVENU E ACCEPTED THE DECISION OF CIT(A)/ITSC ON THIS ISSUE OF ALLOWING THE DEDUCTIO N OF EXPENSES @65% FOR THESE YEARS. 9.2 FURTHER, LD. COUNSEL SUBMITTED THAT THE SAME RELATES TO THE ESTIMATION OF PROFITS EARNED BY THE ASSESSEE ON THE SALE O F LAND. THE CASE 8 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE OF THE REVENUE IS THAT THE EXPENDITURE ALLOWABLE OUT OF TH E SALE PROCEEDS SHOULD BE @35% OF SALES. IN THIS REGARD, REFERENCE IS MADE TO PARA NO.8 OF THE AOS ORDER WHICH IS ALREADY EXTRACTED ABOVE. 10. IN RESPONSE TO THE ABOVE, LD. DR FOR THE REVENUE FILED A REMAND REPORT FROM THE AO DATED 06-06-2018 AND FAIRLY SUBMITTE D THAT THE SAME IS EVIDENT BUT THE VIEW POINT OF THE CIT(A) GIVEN IN PARA NOS. 15 AND 16 OF HIS ORDER, I.E. DIGGING UP THE HOLES IN THE ORDER OF ITSC QU A THE ALLOWABILITY OF DEDUCTION ON ACCOUNT OF LAND COST, LAND DEVEL OPMENT COST, LITIGATION COST ETC. BUT IT IS VERY WEIRD THAT ON ONE SIDE THE CIT(A) IS ALLOWING DEDUCTION OF EXPENSES @65% OF SALES FOR THE A.Y. 201 1-12 AND NOT ALLOWING SIMILAR DEDUCTION IN ANOTHER A.Y. 2010-11, THE YE AR UNDER CONSIDERATION. HOWEVER, LD. DR FAIRLY SUBMITTED THAT THE FI NDING OF ITSC FOR THE A.Y. 2002-03 TO 2008-09 ARE IN PRINCIPLE ACCEPTED BY THE REVENUE FOR THE A.YRS. 2009-10, 2011-12 AND 2012-13. 11. WE HAVE HEARD BOTH THE PARTIES ON THIS CORE ISSUE O F EXTENT OF ALLOWABLE DEDUCTION OF 65% OF SALE PROCEEDS OF PLOTS OF LAND TOWARDS EXPENSES AND TAXING THE BALANCE OF 35% AS TAXABLE INCOM E OF THE ASSESSEE. FURTHER, WE PERUSED THE ORDER OF THE SETTLE MENT COMMISSION DATED 01-12-2011 (PAGE 50 OF THE PAPER BOOK NO.1) PASSE D U/S.245D (4) OF THE ACT. WE FIND PARA NO.11 OF THE ORDER DEALS WITH THE VARIOUS EXPENSES SUCH AS LAND COST, LAND DEVELOPMENT COST, LAND LIT IGATION COSTS AND OTHER EXPENDITURE AND CONSIDERED THE ARGUMENTS OF THE CIT-DR AND THE COMMISSION FINALLY GAVE A FINDING IN PARA NO.15 WHICH REA DS AS UNDER : 15. TO US IT APPEARS THAT NO ACCURATE PICTURE EMER GES OUT OF THE BOOKS MAINTAINED BY THE APPELLANT. THE DETAILED EXERCISE DONE BY THE SPECIAL AUDITOR, THOUGH FAIRLY INDICATIVE, HAS NOT BEEN ABL E TO CONCLUDE THE MATTER, AND EVEN THE DEPARTMENT HAS NOT FULLY RELIED ON HIS CONCLUSIONS. IT SEEMS 9 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE THAT THE COST ARRIVED AT BY AUDITOR MERELY SETS AN UPPER LIMIT FOR THE PROJECT COST. THERE IS NO DOUBT THAT THE APPLICANT WAS ABL E TO SHOW THAT THE TWO LOANS OF SSB, ON WHICH INTEREST WAS NOT ALLOWED BY THE AUDITOR, DO HAVE NEXUS WITH THE OTHER THREE LOANS WHICH HAD BEEN FAV OURABLY CONSIDERED BY THE AUDITOR. BUT THE MOOT POINT STILL REMAINS AS T O WHAT PORTION OF THE LOANS FAVOURABLY CONSIDERED BY AUDITOR WAS INCURRED FOR THE PURPOSE OF WAKAD PROJECT? AS A MATTER OF FACT THE PLEA OF CIT (DR) THAT PART OF THESE LOANS MIGHT RELATE TO AUTOMOBILE BUSINESS CANNOT BE IGNORED. THERE IS NO DOUBT THAT LARGE SCALE DEVELOPMENT WORK WAS DONE BY THE APPLICANT ON THE PROJECT SITE AS EVIDENT FROM THE PHOTOGRAPHS PRODUC ED BEFORE US AS WELL AS THE STATE OF LAND AS DEPICTED IN THE PETITION FILED BY THE DEO FAMILY WITH THE GOVERNMENT OF MAHARASHTRA. THERE IS SO MUCH INTERM INGLING AMONGST VARIOUS TRANSACTIONS OF THE GROUP MEMBERS THAT IT I S DIFFICULT TO GET A CLEARER PICTURE. BE IT AS IT MAY, WE ARE OF THE OPINION TH AT EVEN THE REVISED CLAIM MADE BY THE APPLICANT IS AN INFLATED ONE, AND HAS T O BE SCALED DOWN. AFTER DISCUSSION, IT WAS UNANIMOUSLY DECIDED THAT I T WILL BE REASONABLE TO APPLY A PROPER RATE TO THE TURNOVER OF RS.50 CRORES TO ARRIVE AT A FAIR ESTIMATE OF INCOME GENERATED BY THE APPLICANT. THE MATTER WAS CONSIDERED BY THE CIT(DR) WHO STATED THAT, LOOKING TO THE FACT S AND CIRCUMSTANCES OF THE CASE A REASONABLE PROFIT RATE WOULD BE 50% WHIC H WOULD GIVE NET PROFIT OF RS.25 CRORES. THIS WAS STRONGLY OBJECTED BY THE LD. A.R. OF THE APPLICANT. ACCORDING TO HIM, INSPITE OF ALL THE LA CUNAS IN THE BOOKS OF ACCOUNT OF THE APPLICANT, SUCH A HIGH RATE SHOULD N OT BE APPLIED IN A CASE WHERE PROJECT WENT ON FOR MORE THAN 16 YEARS. ACCO RDING TO HIM THE AFORESAID RATE SUGGESTED BY THE CIT(DR) DOES NOT TA KE INTO ACCOUNT SEVERAL FACTS THAT THE DEPARTMENT DID NOT RECOVER VERY MANY UNEXPLAINED ASSETS DURING SEARCH, HUGE EXPENDITURE WAS INCURRED ON LIT IGATION; THE APPLICANT HAD TO TAKE SERIES OF LOANS FROM THE BANKS IN VARIO US NAMES MERELY TO STOP EARLIER LOANS FROM BECOMING NPA AND CONSEQUENT PROC EEDING FOR RECOVERY AND THAT THE LOANS WERE RAISED AT A VERY HIGH RATE OF INTEREST. WE FIND THAT IF THE PROJECT EXPENDITURE OF RS.41.46 CRORES IS AD OPTED AS OFFERED BY AR AND THE OTHER EXPENSES ARE TAKEN AT RS.1.90 CRORES AS ALLOWED ABOVE, THE TOTAL ALLOWABLE EXPENDITURE WILL COME TO RS.43.36 C RORES RESULTING INTO A NET PROFIT OF RS.6.64 CRORES, I.E. 14%. ON THE OTH ER HAND IF WE START WITH THE PROJECT COST AS ADOPTED BY SPL. AUDITOR AS THE UPPER LIMIT, THE TOTAL COST WILL BE RS.31.55 + RS.1.90 = RS.33.45 CRORES GIVING A PROFIT RATE OF 33%. THUS A SUITABLE RATE IN BETWEEN 13% AND 50% HAS TO BE ADOPTED. AFTER CONSIDERING THE ENTIRETY OF THE FACTS, WE ARE OF TH E OPINION THAT IT WILL BE IN THE FITNESS OF THE THINGS IF A RATE OF 3 5% IS APPLIED, AND THE NET PROFIT CALCULATED ACCORDINGLY. AS ALREADY MENTIONED, DEDUCTION WILL HAVE TO BE ALLOWED OF AN AMOUNT EQUI VALENT TO RS.55 LACS IN RESPECT OF B&M CONSTRUCTION WORK. 11.1 FURTHER, WE HAVE ALSO PERUSED THE ORDER OF CIT(A) ON THIS ISSUE FOR THE A.Y. 2011-12 AND THE SAME READS AS UNDER : 10.2 THE EXPLANATION FURNISHED BY THE APPELLANT IS THEREFORE ACCEPTED AND THE ADDITION OF RS.90,00,000/- IS DIRECTED TO B E DELETED. HOWEVER, IT IS WORTH MENTIONING THAT THE AO HAS REFERRED TO THE AP PELLANTS P&L ACCOUNT ETC., BUT THE APPELLANT HIMSELF HAS AGAIN AND AGAIN REITERATED THAT HE HAD NOT MAINTAINED PROPER BOOKS OF ACCOUNTS AND HIS EXP LANATIONS OF THE CASH DEPOSITS SHOULD NOT BE REJECTED ON THE GROUND THAT THE SAME DOES NOT MATCH WITH THE P&L ACCOUNT OR BALANCE SHEET FILED W ITH THE RETURN OF INCOME. AS REGARDS THIS PARTICULAR SALE OF TRANSAC TION OF RS.9,00,000/- THE APPELLANT HAD SUBMITTED AS UNDER BEFORE THE AO IN H IS LETTER DATED 24-03- 2014 : 10 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE 3. TRANSACTION WITH ABS PROPERTIES RS.90 LACS THE SAID CONSIDERATION OF RS.90 LACS WAS RECEIVED BY THE ASS ESSEE FROM M/S. ABS PROPERTIES TOWARDS SALE OF TWO SMALL PLOTS OF L AND IN WAKAD PROJECT. THE ASSESSEE SUBMITS COPY OF THE RELATED AGREEMENT IN THIS RESPECT AND CONFIRMS THAT THE SAID TRANSACTION NEED S TO BE OFFERED TO TAX IN A.Y. 2011-12. HOWEVER, THE ASSESSEE IS NOT HAVING BOOKS OF ACCOUNTS AND OTHER DOCUMENTS TO JUSTIFY THE RELATED COSTS. AS STATED EARLIER, THE ASSESSEES BOOKS OF ACCOUNTS AR E LOCKED IN CUSTODY OF THE PROPERTY ALREADY POSSESSED FOR THE C AUSE OF M/S. TATA FINANCE LIMITED. THE ASSESSEE SUBMITS, THE AP PROACH ASSUMED BY THE HONOURABLE SETTLEMENT COMMISSION OF DETERMINING PROFIT @35% OF REVENUE MAY PLEASE BE ASSUMED IN THE PRESENT CASE CONSIDERING THE PECULIAR DIFFICULTIES FACED AT PRESENT. ONCE THE RECORDS BECOME AVAILABLE, THE ASSESSEE SHALL SUBMIT THE SAME FOR NECESSARY. 10.3 CONSIDERING THIS SUBMISSION OF THE APPELLANT I DIRECT THE AO TO TREAT AN AMOUNT OF RS.31,50,000/- AS ASSESSEES INCOME FR OM THIS TRANSACTION. THUS, INSTEAD OF RS.90,00,000/-, THE ADDITION IS RE STRICTED TO RS.31,50,000/-. 11.2 FROM THE ABOVE ORDER OF THE SETTLEMENT COMMISSION FO R THE A.YRS. 2002-03 TO 2008-09 AS WELL AS THE ORDER OF CIT(A) FOR THE A.Y. 2011-12, WE FIND THAT THE DEPARTMENT HAS BEEN GIVING A CONSISTENT FINDING TO CONSIDER 65% OF THE SALES TOWARDS THE ALLOWABLE EXPENDITUR E ON ACCOUNT OF LAND COST, ITS DEVELOPMENT, LAND LITIGATION ETC. AND 35% OF THE SALES TO BE CONSIDERED AS INCOME OF THE ASSESSEE. CIT(A) & AO DID NOT MAKE OUT A CASE FOR NOT FOLLOWING THE SETTLED PROPOSITIONS. THEY HAV E NOT MADE OUT ANY CASE TO DIFFER FROM THE SETTLED NATURE OF THE ISSUE. F ACTS ARE ALSO IDENTICAL. SAME STOCK-IN-TRADE, SAME MARKET, SAME EXPENDIT URE ACCOUNT ETC., DO NOT JUSTIFY THE APPROACH OF THE CIT(A) ON THIS ISS UE OF QUANTIFYING THE EXTENT OF EXPENDITURE OUT OF THE SALE PROCEEDS. THE AO/CIT(A) DECISION IN ADOPTING DIFFERENT FIGURE ON ADHOC BASIS IS NOT AP PRECIATED. THEREFORE, FOLLOWING THE RULE OF CONSISTENCY, WE FIND THE ORD ER OF CIT(A) IN THE YEAR UNDER CONSIDERATION (I.E. A.Y. 2010-11) NEED TO B E REVERSED. ACCORDINGLY, WE DIRECT THE AO TO CONSIDER 65% OF THE SA LES AS EXPENDITURE. GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED . 11 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE 12. GROUND NOS. 4 AND 5 OF THE APPEAL RELATES TO THE C LAIM OF LOSS INVOLVING COUPLE OF ENTITIES NAMELY (1) PRATHAM DESIGNS INNOV ATION PVT. LTD. AND (2) PRATHAM MOTORS. LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE GAVE LOANS TO THE ABOVE TWO CONCER NS. THE SAID COMPANIES WERE NOT DOING WELL FINANCIALLY. CONSIDERING THE C OMMERCIAL CONNECTION TO THE ASSESSEES BUSINESS, ASSESSEE HAD TO GIVE THE LOANS TO THE SAID CONCERNS AND THE SAID LOANS BECOME BAD OVER T HE PERIOD OF TIME. IN THE BOOKS OF ACCOUNT, ASSESSEE DID NOT CLAIM THESE D EBTS AS BAD DEBTS IN THE BOOKS OF ACCOUNT. IN ORDER TO CLAIM THE SAME AS ALLOWABLE BAD DEBTS. ASSESSEE HOWEVER CLAIMED THE LOSS AS BUSINESS LO SS AND ALSO CLAIMED HIS STATUS AS MONEY LENDER. ACCORDINGLY, THERE AR E NO DEBITS ON ACCOUNT OF BAD DEBTS IN THE PROFIT AND LOSS ACCOUNT OF TH E ASSESSEE. ASSESSMENT WAS ACCORDINGLY COMPLETED HAVING NO REGARD FOR THE SAID LOSS/DEBTS. 13. DURING THE FIRST APPELLATE PROCEEDINGS, FOR THE FIRST TIM E, ASSESSEE RAISED THE GROUND RELATING TO THESE DEBTS/BUSINESS LOSS BY WAY OF RAISING ADDITIONAL GROUNDS. ASSESSEE PRAYED BEFORE THE CIT(A) FOR GRANT OF THE SAME AS BUSINESS LOSS U/S.28 OF THE ACT (GROUND NOS. 4 T O 8 IN FORM NO.35 BEFORE THE CIT(A) ARE RELEVANT). CIT(A) CALLED FOR A REMAND REPORT IN THIS REGARD FROM THE AO. IN THE SAID REMAND REPORT, THE AO OBJECTED BOTH THE ADMISSION OF THE ADDITIONAL GROUND AS WELL AS FOR ALLOWING OF THE CLAIM. RELEVANT DISCUSSION IS GIVEN IN PARA NO.26 OF THE ORDE R OF CIT(A). EVENTUALLY, REGARDING THE CLAIM OF BUSINESS LOSS, THE CIT(A) H AD RESERVATIONS ABOUT THE CLAIM OF FINANCING BUSINESS OF THE AS SESSEE AND ACCORDINGLY, HE DISMISSED THE GROUNDS ON MERITS. HOWEVER , HE ADMITTED THE ADDITIONAL GROUNDS. HE ALSO OBSERVED THAT WHEN THE LOANS GIVEN TO THE RELATED CONCERNS BECAME ALLOWABLE DEBT THE INCOME RE CEIVED FROM THE 12 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE RELATED CONCERNS SHOULD ALSO BE TREATED AS INCOME BEING PART OF THE FINANCING BUSINESS ACTIVITY. HE ALSO HAS CERTAIN CONFUSION AB OUT THE FIGURES AND FACTS. EVENTUALLY, THE CIT(A) ADMITTED THE GROU NDS OF APPEAL AND DISMISSED THE CLAIM ON MERITS. 14. AGGRIEVED WITH THE SAME, THE ASSESSEE IS IN APPEAL BEFORE US. 15. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE T WO CONCERNS ARE UNDISPUTEDLY RELATED TO THE ASSESSEE AND ITS BUSINE SS ACTIVITIES. HE ALSO TRIED TO DEMONSTRATE THE FACT THAT WHILE GRANTING T HE LOANS, THE BANKER IS AWARE OF THE LIKELY USE OF THE SAME FOR GIVING LOANS TO THE SISTER CONCERNS. THEREFORE, GIVING PART OF THE LOANS TO THE SAID CONCERNS, IS WITHIN THE SCOPE OF THE GRANTING LOANS BY THE BANK. HE AL SO REITERATED THAT THE ASSESSEE IS ENGAGED IN THE FINANCING ACTIVITIES AN D IN SUPPORT OF THE SAME HE RELIED ON THE LOANS GIVEN BY THE ASSESSEE T O THE SISTER CONCERNS ONLY. FURTHER, HE LISTED CERTAIN ISSUES AND MA DE OUT A CASE FOR REMANDING THE ISSUE TO THE FILE OF AO FOR FRESH EXAMINATION AND CONSIDERATION OF THE ISSUE OF BUSINESS LOSS. THE ISSUES ARE LISTED AS UNDER; (A) CIT(A) DID NOT HAVE CLARITY ON THE FACTS AND THE FIGURES; (B) CIT(A) DISCUSSED MUCH ON THE APPLICABILITY OF THE PROVISIONS OF SECTION 37(1)(VII) WHICH IS NOT CLAIMED BY THE ASSESSEE IN PRINCIPLE; (C) C IT(A) DID NOT DISCUSS ON THE APPLICABILITY OF PROVISIONS OF SECTION 28 A ND THE FINANCING BUSINESS NATURE OF THE ASSESSEE; (D) IN CASE OF BU SINESS LOSS, THE REQUIREMENT OF WRITE OFF IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IS NOT A MANDATORY CONDITION. THEREFORE, THE CIT(A) SHOULD HAVE ALLOWED THE CLAIM OF BUSINESS LOSS; AND (E) CIT(A) UNFAIRLY RELIED ON DISTINGUISHAB LE JUDGMENT OF KARNATAKA HIGH COURT IN THE CASE OF UNITED BREWERIES LTD. 321 ITR 546. 13 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE IN VIEW OF THE ABOVE, LD. COUNSEL SUBMITTED IN WRITING FOR REMANDING THE ISSUES TO THE FILE OF AO. 16. PER CONTRA, LD. DR FOR THE REVENUE SUBMITTED THAT THE LOANS GIVEN BY THE ASSESSEE TO THE SAID TWO CONCERNS IS NEVER A B USINESS LOSS AS THE ASSESSEE NEVER ENGAGED IN THE FINANCING BUSINESS ACTIVITI ES. HE ALSO SUBMITTED THAT THE ASSESSEE NEVER HAD THE LICENSE OF FINA NCING. HE ALSO NOTED THE FACT THAT THE LOANS WERE GIVEN ONLY TO THE S ISTER CONCERNS AND NEVER TO THE THIRD PARTIES FOR EARNING THE INTEREST INCOM E. HE ALSO SUBMITTED THAT THE INTEREST INCOME WAS NEVER DECLARED IN THE RETURN OF INCOME FOR ANY ASSESSMENT YEAR. 17. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS O F THE REVENUE AND THE PAPER BOOK FILED BEFORE US. IT IS EVIDENT THAT T HE ASSESSEE GAVE LOANS TO THE SISTER CONCERNS, (1) M/S.PRATHAM DESIGNS IN NOVATION PVT. LTD. AND (2) PRATHAM MOTORS. AS PER THE LD. COUNSEL, THE SAME CONSTITUTES MONEY LENDING ACTIVITY OF THE ASSESSEE. THERE FORE, THE FAILURE OF THE SISTER CONCERNS TO REPAY THE SAME CONSTITUTES BUSINESS LOSS. HOWEVER, THERE IS REQUIREMENT OF FACTS TO KNOW THE SAID S TATUS OF MONEY LENDING ACTIVITY OF THE ASSESSEE AND THE SAME IS REQUIRED TO BE EXAMINED/VERIFIED BY THE AO. FURTHER, THERE IS A REQUIREME NT OF ANALYZING THE NATURE OF BANK LOANS GRANTED TO THE ASSE SSEE AND IF THE SAID SANCTION ORDER OF LOAN TAKEN BY THE ASSESSEE ALLOWS GIVING LOANS TO SISTER CONCERNS. OTHERWISE, LD. COUNSEL FOR THE ASSESSEE CLAIMS BEFORE US THAT GIVING LOANS IS PERMITTED. IT IS THE REQUEST OF TH E LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE RAISED IN GROUND NOS. 4 AND 5 NEEDS TO REVISIT THE FILE OF AO FOR FRESH CONSIDERATION/EXAMINATION OF THE ISSUE AND THE DECISION OF THE AO. 14 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE CONSIDERING THE SAME, WE ARE OF THE OPINION THAT THE REQ UEST OF THE ASSESSEES COUNSEL IS FAIR AND REASONABLE. AO IS REQUIRED TO EXAMINE THIS ISSUE AFRESH AFTER GRANTING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO DEMONSTRATE HIS POINT OF VIEW. WHILE PASSING T HE ORDER, AO SHALL CONSIDER THE OBJECTIONS RAISED BY THE LD. DR AS WELL AS THE ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE BEFO RE US AND PASS A SPEAKING ORDER. ACCORDINGLY, GROUND NOS. 4 AND 5 RAISE D BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2011-12. ITA NO.279/PUN/2017 A.Y. 2011-12 19. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. THE LD. CIT-11, PUNE ERRED IN LAW AND ON FACTS BY MAKING AN ADDITION TO THE EXTENT OF RS.3,39,93,500/- BEING TH E ALLEGED PEAK NEGATIVE CASH BALANCE AND THEREBY FAILED TO GRANT CREDIT OF THE AVAILABLE OPENING AVAILABLE CASH BALANCE. 2. THE LD.CIT(A)-11, PUN ERRED IN LAW AND ON FACTS BY UPHOLDING THE ADDITION MADE BY THE LD. AO ON ACCOUNT OF THE VARIO US CREDIT CARD PAYMENTS AMOUNTING TO RS.18,91,959/- MADE BY THE AP PELLANT AS REFLECTING IN THE INDIVIDUAL TRANSACTION STATEMENT A S AVAILABLE IN THE RECORD OF THE IT AUTHORITIES AND THEREBY FAILED TO APPRECI ATE THE FACT THAT THE SAID PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNELS. 3. THE APPELLANT CRAVES LEAVE TO ADD/MODIFY/ALTER/D ELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 20. FACTS OF THE CASE INCLUDE THAT THE ASSESSEE FILED RET URN OF INCOME DECLARING LOSS OF RS.2.78 CRORES FOR THE A.Y. 2011-12. IN T HE ASSESSMENT PROCEEDINGS, ASSESSEE DID NOT COOPERATE WITH THE AO. AC CORDINGLY, THE AO INVOKED THE PROVISIONS OF SECTION 144 OF THE ACT AND M ADE THE ASSESSMENT AFTER MAKING ADDITION OF RS.20.89 CRORES (ROUNDE D OFF) ON 15 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE ACCOUNT OF CASH TRANSACTION AS DISCUSSED IN PARA NO.6 OF HIS ORDER. IN THE ASSESSMENT, THE AO ANALYSED THE VARIOUS TRANSACT IONS FROM THE BANK ACCOUNT OF HDFC, FERGUSSION COLLEGE ROAD, PUNE AND HELD TH AT ASSESSEE DEPOSITED HUGE CASH AMOUNTING TO RS.20.89 CRORES ON VAR IOUS DATES DURING THE YEARS 2010 AND 2011. CALCULATION IS DONE IN PA RA NO.6.1 OF THE ASSESSMENT ORDER. THE CONCLUSION OF THE AO IS EXTRA CTED HERE AS UNDER : 6.1 THE ASSESSEE WAS REQUESTED TO FURNISH COMPLETE DETAILS OF BANK ACCOUNT ALONG WITH EVIDENCES FOR TRANSACTION/ENTRIE S IN ABOVE BANK ACCOUNTS. THE ASSESSEE HAS NOT COOPERATED DURING T HE ASSESSMENT PROCEEDING BY FURNISHING THE DETAILS OF SOURCE OF F UND FOR THE SAID CASH DEPOSITED IN BANK ACCOUNT. HENCE I HAVE REASONS TO CONCLUDE THAT THESE CASH DEPOSIT HAVE BEEN MADE BY THE ASSESSEE FROM HI S UNACCOUNTED INCOME. THEREFORE PROVISIONS OF SECTION 69 OF THE I.T. ACT, 1961 ARE APPLICABLE IN THIS CASE. IN VIEW OF THE ABOVE DISC USSION THE AMOUNT OF RS.20,88,73,959/- IS ADDED TO THE TOTAL INCOME OF A SSESSEE AS UNEXPLAINED CASH CREDITS U/S.68 OF THE I.T. AC, 1961. THE PENA LTY PROCEEDINGS U/S.271(1)(C) ARE INITIATED FOR CONCEALING THE PART ICULARS OF INCOME. 21. AGGRIEVED WITH THE SAME, ASSESSEE FILED AN APPEAL BEFORE THE CIT(A ). THE CIT(A) PARTLY ALLOWED THE ISSUES RAISED BY THE ASSESSEE. 22. REGARDING THE ISSUE OF CASH CREDITS RAISED IN GROUND NO.1 THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO, COPY OF IT IS EXTRACTED IN PARA NO.6. 3 AND HELD THAT IT IS A FIT CASE FOR MAKING ADDIT ION ON ACCOUNT OF PEAK NEGATIVE CASH BALANCE . HE ACCORDINGLY, DISCUSSED THIS ISSUE IN PARA NO.6.4 OF HIS ORDER AND HELD THAT THE PEAK NEGATIV E CASH BALANCE WHICH WORKS OUT TO RS.3,39,93,500/- AT THE END OF MAY, 2010. THERE FORE, THE CIT(A) TREATED THE SAME AS UNEXPLAINED CASH BALANCE AND CONFIRMED THE SAME. FOR THE SAKE OF COMPLETENESS, WE PROCEED TO EXTRACT THE SAID FINDING GIVEN BY THE CIT(A) HERE AS UNDER : 6.4 I HAVE CONSIDERED THE FACTS OF THE CASE; THE A OS REMAND REPORT AND THE APPELLANTS EXPLANATION. IT IS ADMITTED THAT T HE APPELLANT HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNTS. THE APPELLAN T WAS THEREFORE ASKED AT THE TIME OF APPEAL HEARING ON 15-11-2016 TO JUST IFY THE OPENING CASH 16 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE BALANCE BY GIVING DETAILS OF THE CASH WITHDRAWAL AN D DEPOSITS DURING THE EARLIER PERIOD. THE CASE WAS FIXED FOR HEARING ON 28-11-2016. BUT INSPITE OF SPECIFIC INSTRUCTIONS, THE APPELLANT HAS NOT FUR NISHED ANY DETAILS TO JUSTIFY THE OPENING CASH BALANCE OF RS.2,85,00,000/ - AS ON 1-4-2010. SIMILARLY THE APPELLANT HAS NOT PRODUCED BANK STATEM ENT OF THE ACCOUNT WITH SAMATA NAGRIK BANK. THE APPELLANT HAS CLAIMED CASH WITHDRAWALS OF RS.1,92,00,000/- FROM THIS ACCOUNT IN THE MONTH OF APRIL 2010 IN THE ABSENCE OF THE BANK STATEMENT CREDIT CANNOT BE GIVE N FOR THIS WITHDRAWAL. IF THE OPENING CASH BALANCE AND THE WITHDRAWAL FROM THE SAMATA NAGRIK BANK ARE IGNORED, THERE IS HUGE NEGATIVE CASH BALAN CE OF RS.3,39,93,500/- IN THE APPELLANTS CASH FLOW STATEMENT IN THE MONTH S OF APRIL AND MAY, 2010. THUS THE AOS COMMENT THAT THE CASH FLOW STA TEMENT PREPARED BY THE APPELLANT IS NOT RELIABLE APPEARS TO BE CORRECT . THEREFORE THE APPELLANTS EXPLANATION THAT THE ABOVE MENTIONED CA SH DEPOSITS WERE OUT OF WITHDRAWALS FROM THE SAME BANK ACCOUNTS IS NOT A CCEPTABLE. THE PEAK NEGATIVE CASH BALANCE OF RS.3,39,93,500/- ARISING AT THE END OF MAY, 2010, IS THEREFORE TREATED AS UNEXPLAINED AND ADDIT ION TO THIS EXTENT IS CONFIRMED 23. AGGRIEVED WITH THE SAME, ASSESSEE IS IN APPEAL BEFORE T HE TRIBUNAL WITH GROUND NO.1 EXTRACTED ABOVE. 24. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE PAPER BOOK AND SUBMITTED THAT, APART FROM OTHER S, THE ITEM AT SL.NO.7 RELATES TO THE CASH FLOW STATEMENT FROM 01-01-2010 TO 31-03- 2010 (4 TH QUARTER) AND SUBMITTED THAT THE SAID CASH FLOW, WORKED OUT BY THE CIT(A)/AO), IS NOT PROPER. POINTING OUT TO THE MISTAKES IN THE CASH FLOW CALCULATIONS, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ANNEXURE TO THE ORDER OF CIT(A) AND SUBMITTED THAT THE DECISION OF CIT(A), IN NOT ALLOWING THE OPENING BALANCE, IS NOT CORRECT. T HE SAID ANNEXURE TO ORDER, SUGGESTS THE CLAIM OF THE OPENING BA LANCE OF RS.2.85 CRORES. THE SAME WAS NOT CONSIDERED BY THE CIT(A) AS GENUINE AND EXCLUDED THE SAME FROM ZONE OF CONSIDERATION FOR WORKING O UT THE NEGATIVE CASH BALANCE. IN THIS REGARD, FOR FURNISHING THE D OCUMENTS AND EVIDENCES IN SUPPORT OF THE EXISTENCE OF THE SAID OPENING BALANCE OF RS.2.85 CRORES, LD. COUNSEL REQUESTED FOR REMANDING THE ISS UE TO THE FILE 17 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE OF AO. LD. COUNSEL IS OF THE VIEW THAT THE CIT(A) ENTERTA INED THE DOUBTS AGAINST THE ASSESSEE. 24.1 FURTHER, BRINGING OUR ATTENTION TO THE PAPER BOOK FILE D ON 06-04- 2018, LD. COUNSEL SUBMITTED THAT THE ITEMS PLACED AT SL.NO. 5.7, 8 AND 9 OF THE PAPER BOOK THAT ARE FURNISHED FOR THE FIRST TIME BE FORE THE TRIBUNAL. FURTHER, LD. COUNSEL SUBMITTED THAT THEY CONST ITUTE ADDITIONAL EVIDENCES AND PRAYED FOR ADMITTING THE SAME. HOWEVER, HE ALSO MENTIONED THAT CONTENTS OF THESE ITEMS OF DOCUMENTS WILL G O TO THE ROOT OF THE ISSUE RAISED IN THE APPEAL ON CALCULATION OF PEAK NEGATIVE CASH BALANCE. 25. ON PERUSAL OF THE SAME AND AFTER HEARING THE PARTIES, WE FIND THESE PAPERS PERTAINS TO THE DAILY CASH FLOW STATEMENTS, BANK STATEMENTS OF HDFC AND BANK PASSBOOK OF JANATA SAHAKARI BANK AND OTH ER CREDIT CARD PAYMENTS ETC. WE HAVE ALSO CONSIDERED THE WRITTEN SUBMISSION FOR PRODUCTION OF ADDITIONAL EVIDENCES AND REQUEST FOR ADMISSION OF THE SAME. IT IS THE CLAIM OF THE ASSESSEE THAT THE OPENING BALANCE IS GENUINE ONE AND HE SHALL DEMONSTRATE THE SAME IF AN OPPORTUNITY IS GIVEN BEFORE THE AO. ON CONSIDERING THE SAME AND ON HEARING BOTH THE PARTIE S, WE PROCEED TO ADMIT THE SAME IN THE INTEREST OF ADMINISTRATIO N OF JUSTICE. CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE, WE FIND IT IS REQ UIRED TO REMAND THE ISSUE TO THE FILE OF AO FOR FRESH EXAMINATION OF THE CLAIMS MADE BY THE ASSESSEE IN THESE DOCUMENTS. ACCORDINGLY, GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 26. LD. COUNSEL DID NOT PRESS THE ISSUE RAISED IN GROUND N O.2 CONSIDERING THE SMALLNESS OF THE ISSUE. ACCORDINGLY, THE SA ID GROUND IS 18 ITA NOS.27 & 279/PUN/2017 MR. RAJIV YASHWANT BHALE DISMISSED AS NOT PRESSED. GROUND NO.3 BEING GENERAL IN NATURE IS DISMISSED. 27. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 28. TO SUM UP, BOTH THE APPEALS OF THE ASSESSEE ARE PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 12 TH DAY OF SEPTEMBER, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 12 TH SEPTEMBER, 2018. SATISH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-11, PUNE. 4. THE PR. CIT-10, PUNE. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. ' / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.