ACIT, Sawai Madhopur V. DINESH KUMAR, Kota

ITA 350/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2223 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 04-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Unexplained cash credit; Rejection of books of accounts; Gift; Depreciation; Business expenditure; Salary income; Source of fund; Tangible material; Onus to prove
• Section: 133(6); 147; 68; 37; 56; 15

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO.350/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 ASSTT. COMMISSIONER OF INCOME- TAX, CIRCLE SAWAI MADHOPUR CUKE VS. SHRI DINESH KUMAR M/S LADDHA ORNAMENTS CHOUMUKHA BAZAR, BUNDI LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABPPL5675G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ C.O. NO. 34/JP/2017 (ARISING OUT OF ITA NO. 350/JP/2017) FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2012-13 SHRI DINESH KUMAR M/S LADDHA ORNAMENTS CHOUMUKHA BAZAR, BUNDI CUKE VS. ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE SAWAI MADHOPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABPPL5675G JKTLO DH VKSJ LS @ REVENUE BY : SHRI R. A. VERMA (ADDL.CIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 04/12/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 03/01/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AND THE CROS S OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) KOTA DATED 22.02.2017 FOR AY 2012- 13 WHEREIN THE REVENUE AND THE ASSESSEE HAVE TAKEN FOLLOWING GROUNDS OF APPEAL:- ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 2 GROUNDS OF REVENUES APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN:- I). NOT UPHOLDING THE REJECTION OF BOOKS OF ACCOUN T U/S 145(3) OF THE ACT WITHOUT APPRECIATING THE DEFECTS POINTED OUT BY THE AO; II) DELETING TRADING ADDITION OF RS. 13,87,305/- WI THOUT APPRECIATING THE FACTS OF CASE; III) DELETING ADDITION OF RS. 3,98,025/- MADE BY DI SALLOWING INTEREST EXPENSES; IV) DELETING ADDITION OF RS. 4,52,332/- MADE BY DIS ALLOWING INTEREST EXPENSES INCURRED ON NON-BUSINESS IMMOVABLE PROPERT Y; V) DELETING ADDITION OF RS. 10 LACS MADE U/S 68 ON ACCOUNT OF GIFT RECEIVED FROM SISTER, MERELY ON THE BASIS OF ASSESSEES REPL Y; VI) RESTRICTING THE ADDITION OF RS. 33,854/- TO RS. 16,927/- MADE BY DISALLOWING VEHICLE DEPRECIATION AND INSURANCE ON A CCOUNT OF PERSONAL USE; VII) DELETING ADDITION OF RS. 3,42,200/- MADE ON AC COUNT OF LOW WITHDRAWAL FOR HOUSEHOLD EXPENSES AND FOREIGN TOUR EXPENSES. GROUNDS IN ASSESSEES CROSS OBJECTIONS: 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE ADDITION OF RS. 5 LACS U/S 68 OF THE ACT, 1961 BY TREATING T HE LOAN RECEIVED FROM SH. SUNIL AGARWAL AS UNDISCLOSED INCOME OF THE ASSESSEE . 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF RS. 16,927/- OUT OF DEPRECIATION ON CAR, TWO WHEELER AND CAR INSURANCE. 2. REGARDING THE 1 ST & 2 ND GROUND OF REVENUES APPEAL, BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF GOLD & SILVER ORNAMENTS UNDER THE NAME & STYLE M/S LADD HA JEWELLERS. HE HAS ALSO INCOME FROM REAL ESTATE BUSINESS. THE AO OBSER VED THAT ASSESSEE DOES NOT MAINTAIN THE ITEM WISE, QUALITY WISE & QUANTITY WISE STOCK RECORDS. IN PURCHASE & SALES BILLS ALSO, IT IS NOT MENTIONED TH AT WHICH QUALITY OF GOLD/SILVER IS SOLD WHEREAS THE VALUE OF GOLD/SILVER ITEMS IS D ETERMINED ON THE BASIS OF ITS PURITY. ACCORDINGLY, THE AO REJECTED THE BOOKS OF A CCOUNT OF ASSESSEE U/S ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 3 145(3) OF THE IT ACT, 1961. HE FURTHER OBSERVED THA T ASSESSEE HAS DECLARED G.P. RATE OF 49.55% AS AGAINST G.P. RATE OF 56.12% IN FY 2009-10. OUT OF TOTAL RECEIPTS OF RS.20,43,150/-, RS.15,95,975/- PERTAINS TO GOLD & SILVER ORNAMENTS ON WHICH GROSS PROFIT OF RS.8,80,695/- IS DECLARED GIVING A G.P. RATE OF 55.18%. ASSESSEE HAS SHOWN CLOSING STOCK OF GOLD & SILVER ORNAMENTS AT RS.13,52,132/-. IT IS A NORMAL BUSINESS PRACTICE TH AT SALES ARE 4-5 TIMES OF THE CLOSING STOCK. IN ASSESSEES CASE, AFTER TAKING INT O CONSIDERING ALL RELEVANT FACTS, SALES IS ESTIMATED AT 3 TIMES OF THE CLOSING STOCK WHICH COMES TO RS.40,56,396/- (13,52,132*3) BUT WAS DETERMINED AT RS.40,50,000/-. ON THIS SALES OF RS.40,50,000/-, G.P. RATE OF 56% IS APPLIE D WHICH GIVES GROSS PROFIT AT RS.22,68,000/-. HENCE, TRADING ADDITION OF RS.13,87 ,305/- (22,68,00-8,80,695) WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. THE L D CIT(A) HAS HOWEVER NOT AGREED TO THE REJECTION OF BOOKS OF ACCOUNTS AND ES TIMATION OF GROSS PROFIT AND HAS DELETED THE TRADING ADDITION. NOW, THE REV ENUE IS IN APPEAL BEFORE US. 3. THE LD DR IS HEARD WHO HAS VEHEMENTLY ARGUED THE MATTER AND SUPPORTED THE ORDER OF THE AO. 4. DURING THE COURSE OF HEARING, LD. AR SUBMITTED T HAT ASSESSEE IS MAINTAINING QUANTITATIVE DETAILS (IN TERMS OF WEIGHT) OF GOLD & SILVER ORNAMENTS PURCHASED AND SOLD. MAINTAINING ITEM WISE DETAILS IS NOT POSS IBLE AS THE JEWELLERY SO PURCHASED IS NOT SOLD AS IT IS. IN CASE OF OLD JEWE LLERY, IT IS FIRST MELTED, CONVERTED INTO BULLION AND ISSUED TO THE SUNARS FOR MANUFACTURING OF NEW ORNAMENTS AND THEN THE NEW ORNAMENTS WERE SOLD TO T HE CUSTOMERS. SOMETIMES THE DESIGN OF NEW JEWELLERY IS NOT ACCEPT ED BY THE CUSTOMER AND EVEN THE NEW JEWELLERY IS REMELTED. THUS, IN SARRAF FA BUSINESS IT IS NOT POSSIBLE TO MAINTAIN ITEM WISE DETAILS OF PURCHASE & SALES. HENCE, ONLY BECAUSE ITEM WISE STOCK REGISTER IS NOT MAINTAINED CANNOT BE A GROUND FOR REJECTION OF BOOKS OF ACCOUNTS. ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 4 5. REGARDING TRADITION ADDITION OF RS.13,87,305/- M ADE BY THE AO, IT WAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS, ASSESSEE HAS PRODUCED ITS BOOKS OF ACCOUNTS ALONG WITH PURCHASE & SALE BILLS. THE AO HAS VERIFIED THE SAME AND HAS NOT POINTED OUT ANY SINGL E TRANSACTION OF PURCHASE OR SALES WHICH ARE NOT SUPPORTED BY EVIDENCES OR WH ICH IS UNRECORDED. THE AO HYPOTHETICALLY CALCULATED THAT SALES SHOULD BE 4 -5 TIMES OF THE CLOSING STOCK AND ACCORDINGLY ASSUMED THE SALES AT RS.40,50 ,000/- AS AGAINST RS.20,43,150/- DECLARED BY THE ASSESSEE WITHOUT BRI NGING OUT ANY EVIDENCE OF UNRECORDED SALES. ON SUCH SALES OF RS.40,50,000/-, HE APPLIED THE G.P. RATE OF 56.12% DECLARED BY THE ASSESSEE IN FY 2009-10. HOWE VER, WHILE DOING SO HE IGNORED THAT G.P. RATE OF 49.55% DECLARED DURING TH E YEAR IS BETTER THAN THE G.P. RATE OF 48.30% DECLARED IN THE IMMEDIATELY PRE CEDING FY AND N.P. RATE OF 93.62% DECLARED DURING THE YEAR IS MUCH BETTER THAN THE PREVIOUS TWO YEARS. THUS, AO PURELY ON SUSPICION AND ASSUMPTION, ESTIMA TED THE SALES AT RS.40,50,000/- AND APPLIED THE G.P. RATE OF 56.12% WHICH IS AGAINST THE PROVISION OF LAW AND THE PRINCIPLE OF NATURAL JUSTI CE. HENCE, TRADING ADDITION OF RS.13,87,305/- MADE BY THE AO BE DELETED. 6. IT WAS SUBMITTED THAT IT IS A SETTLED LAW THAT O NLY BECAUSE THERE IS A DECLINE IN THE G.P. RATE OR STOCK REGISTER IS NOT M AINTAINED, THE SAME SHOULD NOT NECESSARILY LEAD TO THE TRADING ADDITION OR REJ ECTION OF BOOKS OF ACCOUNTS. FOR THIS PURPOSE, RELIANCE IS PLACED ON THE FOLLOWI NG CASES:- PCIT VS. BHAWANI SILICATE INDUSTRIES (2016) 236 TAX MAN 596 (RAJ) PR. CIT VS. HUES INDIA LTD. 2015-TIOL-2275 (RAJ.) D ATED 30.07.2015 MALANI RAMJIVAN JAGANNATH VS. ACIT (2009) 316 ITR 1 20 / 207 CTR 19 (RAJ) CIT VS. SMT. POONAM RANI (2010) 326 ITR 223/ 41 DTR 194 (DEL) CIT VS. GOTAN LIME KHANIZ UDYOG (2002) 256 ITR 243 (RAJ) ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 5 ASHOKE REFRACTORIES P. LIMITED V. CIT 279 ITR 457 ( CAL) 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE REGARDING THE QUANT ITY OF STOCK PURCHASED AND SOLD DURING THE YEAR AS WELL AS THE STOCK AT THE BE GINNING AND AT THE END OF THE YEAR. ONLY DISPUTE POSSIBLY RELATES TO VALUATI ON OF SUCH STOCK IN ABSENCE OF THE QUALITATIVE DATA NOT BEING MAINTAINED BY THE ASSESSEE WHICH THE ASSESSEE HAS EXPLAINED TO HAVE VALUED ON AVERAGE BA SIS ON A CONSISTENT BASIS ON YEAR TO YEAR. FURTHER, NO SPECIFIC DEFECTS HAVE BEEN HIGHLIGHTED BY THE AO. FURTHER, THE SALES FIGURES HAVE BEEN WORKED OUT BAS ED ON CLOSING STOCK WITHOUT ANY EVIDENCE WHICH CAN CORROBORATES SUCH SA LES BEING MADE OUT OF BOOKS OF ACCOUNTS. IN VIEW OF THE SAME, THE REJECT ION OF BOOKS OF ACCOUNTS AND ESTIMATION OF GROSS PROFIT AS DONE BY THE AO IS NOT CORRECT AND SUCH ACTION CANNOT BE SUSTAINED IN THE EYES OF LAW. WE ACCORDINGLY CONFIRM THE FOLLOWING FINDINGS OF THE LD CIT(A) WHICH IS REPROD UCED AS UNDER: AS REGARDS GROUNDS OF APPEAL NO. 1 & 2, FROM A PE RUSAL OF THE ASSESSMENT ORDER & THE SUBMISSIONS GIVEN, IT IS SEE N THAT THE APPELLANT ASSESSEE HAS BOTH JEWELLERY & PROPERTY DEALING BUSI NESSES. THE N.P RATE IS VERY HIGH BECAUSE OF THAT REASON WHILE G.P IS COMPARABLE TO EARLIER YEARS WITH SLIGHT UPWARD TREND THIS YEAR AS COMPARED TO EARLIER YEAR. FURTHER, IT IS AN ACCEPTED FACT THAT IN THE JEWELLE RY BUSINESS, THE WEIGHT OF GOLD & SILVER CONSUMED IS IMPORTANT AS DESCRIPTI VE VALUATION IS NOT PRACTICAL DUE TO SEVERAL CHANGES ON CUSTOMERS REQU EST ESPECIALLY IN OLD JEWELLERY REMODELLING. FURTHER IT IS THE WEIGHT OF GOLD & SILVER IN AN ITEM WHICH DECIDES THE COST. THE ASSESSEE HAS MAINTAINED QUALITY WISE AND QUANTITY WISE STOCK OF GOLD & SILVER. HE IS DEBITIN G LABOUR COSTS OF ITEMS TO ADD TO THE STOCK & SELLS THESE ITEMS MADE FOR A PROFIT. THE AO HAS NOT BEEN ABLE TO FIND ANY SIGNIFICANT DIFFERENCE IN EXPENSES DEBITED ON ACCOUNT OF LABOUR COSTS OR DETECTED ANY SIGNIFICANT FALL IN G.P., WHICH IS ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 6 HIGHER THAN THE PREVIOUS YEAR. UNDER THE CIRCUMSTAN CES, TO FIND FAULT IN NOT KEEPING INDIVIDUAL ITEM WISE STOCK IS UNREALIST IC. THEREFORE, IN MY OPINION THIS OBJECTION OF THE AO IS JUST FOR THE SA KE OF FINDING AN UNREAL FAULT IN THE ASSESSEES BOOKS. HE HAS ALSO NOT BROU GHT ON RECORD IF ANY COMPARABLE PARTY IS ALSO KEEPING SUCH RECORDS OR IF THE EXCISE/VAT DEPARTMENTS HAVE SUCH REQUIREMENT WHICH THE ASSESSE E IS NOT COMPLYING. THUS INSISTENCE OF THE AO ON DESCRIPTIVE STOCK IN T HIS CASE CANNOT BE CONSIDERED A SIGNIFICANT ANOMALY WHILE REJECTING TH E BOOKS AS THIS IS NOT A CASE OF UNDERVALUATION OF STOCK. THIS IS THE ONLY REASON GIVEN BY THE AO FOR BOOK REJECTION BESIDES DIFFERENCE IN G.P (BE ING LOWER) IN COMPARISON TO AY 2010-11. NON MAINTENANCE OF STOCK REGISTER ON DAY TO DAY BASIS DETAILING INDIVIDUAL ITEMS, BY ITSELF SHO ULD NOT LEAD TO INFERENCE THAT IT IS NOT POSSIBLE TO DEDUCE THE TRU E INCOME OF THE ASSESSEE FROM THE ACCOUNTS MAINTAINED BY ASSESSEE, NOR CAN THE ACCOUNTS BE SAID TO BE DEFECTIVE OR INCOMPLETE FOR THIS REASON ALONE. IF THE ASSESSEE IS DEALING IN SUCH ITEMS WHERE MAINTEN ANCE OF STOCK REGISTER IS NOT POSSIBLE I.E. KEEPING IN MIND THE Q UANTITY, SIZE, VARIETIES, PROCESSES INVOLVED IN PRODUCTION ETC IT CANT BE TR EATED AS DEFECT FOR APPLICATION OF SECTION 145(3) OF THE ACT. THE FACT THAT THERE IS NO QUALITATIVE STOCK TALLY M AY CAUTION THE ASSESSING OFFICER AGAINST THE FALSITY OF THE RETURN S MADE BY THE ASSESSEE. HE CANNOT SHOW THAT MERELY BECAUSE THERE IS NO QUALITATIVE STOCK TALLY THE ACCOUNT BOOKS MUST BE FALSE. SIMILA R PROPOSITION HAS BEEN MADE IN THE CASE OF PANDIT BROTHERS VS. CIT(19 54) 26 ITR 159. FURTHER, THE AOS ESTIMATION OF G.P. IS BASED ON A MULTIPLICATION FACTOR OF AMOUNT WHICH SHOULD BE KEPT AS CLOSING STOCK (BE ING 1/4 TH OR 1/5 TH OF TOTAL SALES). HENCE HE HAS CALCULATED FROM CLOSING STOCK, SALES BY ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 7 MULTIPLICATION AND THEN CALCULATED G.P. @ 56% (TAKI NG AY 2010-11 GP) TO WORK OUT THE TRADING ADDITION. THE AO SHOULD HAVE BROUGHT OUT SPECIFIC DEFECTS IN THE ABOVE MENTIONED BOOKS AND RECORDS, WHICH HE DID NOT DO. H E HAS MERELY EXTRAPOLATED AND HYPOTHETICALLY CREATED ARTIFICIAL RATIOS AND PROFITS TO MAKE THE ADDITIONS VERY HIGH-PITCHED. HE HAS NOT DE TECTED ANY ADDITIONAL TURNOVER WITH EVIDENCES, BUT CONCOCTED A N ARTIFICIAL G.P. ON SUCH THEORETICAL TURNOVER TO REACH THE ESTIMATION O F G.P. FURTHER, PRESUMPTIVE CALCULATION ON WHAT SHOULD BE THE IDEAL STOCK & SALES RATIO IS UNACCEPTABLE METHOD IN RESORTING TO ESTIMATION. IN FACT HE HAS INCREASED THE SALES BY MORE THAN DOUBLE IN THIS CASE & ALSO THE G.P. ON JEWELLERY TRADE SHOWN BY THE ASSESSEE. THIS MAKE S THE G.P ADDITION LOOK BOTH ARBITRARY & HIGH PITCHED AS IT IS NOT BAS ED ON ANY EVIDENCES. AS A RESULT, I AM NOT IN AGREEMENT ON THE REJECTIO N OF BOOKS AS WELL AS THE ESTIMATION ADOPTED BY THE AO AND ACCORDINGLY DO NOT UPHOLD THE ADDITION MADE TO THE TRADING ACCOUNT OF RS. 13,87,3 05/- THE SAME IS DIRECTED TO BE DELETED. 7. IN THE RESULT, GROUND NO. 1 & 2 OF THE REVENUE S APPEAL IS DISMISSED. 8. REGARDING THE 3 RD GROUND OF REVENUES APPEAL, BRIEFLY THE FACTS OF T HE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS TAKEN LOAN OF RS.1,50,69,432/- FROM VARIOUS PERSONS NAMEL Y SMT. PREMLALA LADDHA, SMT. RACHNA LADDHA, SMT. SHALINI LADDHA, SH. SURESH AGARWAL, SH. HARISH SHARMA, SH. ASHOK SHRINGI AND MS. PRATIMA LADDHA AN D THE ASSESSEE WAS ASKED TO PRODUCE THEM FOR VERIFICATION BUT THE ASSE SSEE FAILED TO DO SO. THE AO ON VERIFICATION OF BANK ACCOUNT OF THESE PERSONS OBSERVED THAT BEFORE GIVING LOAN TO ASSESSEE, CASH OF SIMILAR AMOUNT WAS DEPOSITED IN THEIR ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 8 ACCOUNT. ACCORDINGLY, HE DISALLOWED THE INTEREST EX PENDITURE OF RS.3,98,025/- PAID TO THESE PERSONS U/S 37 OF THE IT ACT. 9. THE LD. CIT(A) HELD THAT IN CASE IT WAS SUSPECT ED THAT THIS IS THE APPELLANTS MONEY, THEN THE AO SHOULD HAVE REFERRED THE MATTER TO THE CONCERNED AOS OF THE LENDERS OR EXAMINED THE APPELL ANT AND BROUGHT OUT ANY UNDISCLOSED RECEIPT IN HIS HANDS. FURTHER, THE INTE REST RATE OF 9% PAID TO THESE PERSONS ALSO APPEARS TO BE LOWER THAN THE NORMAL AC CEPTABLE BAND OF 12%- 15% IN OTHER CASES AS HAS BEEN SEEN IN VARIOUS ORDE RS OF HIGHER APPELLATE AUTHORITIES. THE AO HAS NOT BEEN ABLE TO BRING OUT HOW THE SAID INTEREST WAS NOT AS PER BUSINESS EXPEDIENCY OR SUCH FUNDS WERE N OT UTILIZED FOR THE PURPOSE OF BUSINESS. ACCORDINGLY, HE DELETED THE DI SALLOWANCE OF INTEREST EXPENSES OF RS.3,98,025/-. NOW, THE REVENUE IS IN A PPEAL AGAINST THE SAID FINDINGS OF THE LD CIT(A). 10. DURING THE COURSE OF HEARING, THE LD AR SUBMITT ED THAT THE ONLY REASON GIVEN BY THE AO FOR DISALLOWING THE INTEREST EXPENS ES OF RS.3,98,025/- IS THAT BEFORE GIVING LOAN TO ASSESSEE, CASH OF SIMILAR AMO UNT WAS DEPOSITED IN THE LENDERS ACCOUNT. IN THIS REGARD, IT WAS SUBMITTED T HAT THE LOAN AMOUNT ON WHICH INTEREST WAS DISALLOWED BY AO ARE NOT RAISED DURING THE YEAR BUT ARE OLD LOANS COMING FROM LAST YEARS WHICH IS VERIFIED BY T HE AO FROM THE LEDGER ACCOUNT AND THE CONFIRMATIONS PRODUCED BY THE ASSES SEE IN COURSE OF ASSESSMENT PROCEEDINGS. ALL THESE PERSONS ARE TAXAB LE UNDER THE IT ACT AND ARE REGULARLY FILING THEIR RETURNS. THE INTEREST PA ID BY THE ASSESSEE IS DULY SHOWN BY THEM IN THEIR RETURN AND IN SUPPORT OF SAM E ASSESSEE HAS FILED THE COPY OF THEIR RETURNS. THUS, WHEN THE ASSESSEE HAS NOT RAISED ANY FRESH LOAN IN THE YEAR UNDER CONSIDERATION, DISALLOWANCE OF IN TEREST ON THESE LOANS WITHOUT ANY FINDING THAT THE SAME IS NOT FOR THE PU RPOSE OF BUSINESS IS UNCALLED FOR AND THEREFORE, SUCH DISALLOWANCE IS RI GHTLY DELETED BY LD. CIT(A). ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 9 IN VIEW OF ABOVE, THE ORDER OF LD. CIT(A) BE UPHELD BY DISMISSING THE GROUND OF DEPARTMENT. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LOAN TRANSACTIONS ON WHICH INTEREST DI SALLOWANCE HAS BEEN MADE HAS BEEN ACCEPTED BY THE REVENUE IN THE EARLIER YEA RS. ONCE THE LOAN TRANSACTION HAS BEEN ACCEPTED BY THE REVENUE, THERE IS NO FINDING THAT LOAN FUNDS HAVE NOT BEEN UTILIZED FOR BUSINESS PURPOSES. THERE IS ALSO NO FINDING THAT THESE TRANSACTIONS ARE WITH RELATED ENTITIES A ND RATE OF INTEREST IS NOT COMPARABLE WITH SIMILAR LOAN TRANSACTIONS WITH UNRE LATED PARTIES. IN LIGHT OF THE SAME, WE HEREBY CONFIRM THE ORDER OF THE LD CIT (A) WHO HAS RIGHTLY DELETED THE INTEREST DISALLOWANCE. THE GROUND OF A PPEAL IS ACCORDINGLY DISMISSED. 12. REGARDING THE 4 TH GROUND OF REVENUES APPEAL, BRIEFLY THE FACTS OF T HE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS PURCHASED AN AGRICULTURAL LAND FOR RS.52,32,500/-. THE AO OBSERVED THAT THE LAND IS NOT PURCHASED FOR BUSINESS PURPOSES AS THE SAME IS NOT SHOWN IN STOCK-IN- TRADE. THE EXPLANATION OF ASSESSEE THAT T HIS PROPERTY IS PART OF BUSINESS AS IT HAS BEEN PURCHASED FOR FURTHER SALES AND ASSESSEE HAS SOLD ONE PLOT & EARNED INCOME ON IT WAS NOT FOUND ACCEPTABLE AS THIS PROPERTY WAS NOT MADE PART OF STOCK-IN-TRADE AND ASSESSEE HAS NOT SH OWN ANY EVIDENCE OF SALE OF PLOT. THE AO FURTHER OBSERVED THAT ASSESSEE HAS DEBITED INTEREST OF RS.8,50,357/- @ 9%-12% IN ITS P&L A/C. ON INVESTMEN T OF RS.52,32,500/-, INTEREST @ 10.5% (9+12/2) IS CALCULATED AT RS.5,49, 412/- WHICH WAS TREATED AS A NON-BUSINESS EXPENDITURE OUT OF THE TOTAL INTE REST EXPENSES OF RS.8,50,357/- DEBITED BY THE ASSESSEE IN ITS P&L A/ C. SINCE THE INTEREST EXPENSES OF RS.3,98,025/- WAS ALREADY DISALLOWED, B ALANCE INTEREST EXPENSES OF RS.4,52,332/- (8,50,357-3,98,025) WAS DISALLOWED . ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 10 13. THE LD. CIT(A) DELETED THE DISALLOWANCE BY HOLD ING THAT THERE IS SALE OF PLOTS OF LAND DURING THE YEAR UNDER CONSIDERATION. THE APPELLANT PLOTS THE AGRICULTURAL LAND & HAS SHOWN PROFIT FROM SALE IN H IS P&L A/C. MERE FACT OF NON TRANSFERRING THE SAME INTO STOCK- IN- TRADE CANNOT JUSTIFY THE CONCLUSION THAT IT WAS A PERSONAL INVESTMENT. THE AO SHOULD HAVE EXAMI NED IF THE SAME WAS PLOTTED & SOLD LATER ON OR WHETHER IT STILL REMAINE D WITH THE ASSESSEE AS INVESTMENT. FURTHER, LOANS WERE APPARENTLY CARRIED FORWARD FROM EARLIER YEARS EXCEPT A LOAN OF RS 5 LACS FROM ONE PERSON AND THUS , THE NEXUS OF DIVERSION OF INTEREST BEARING FUNDS TO PURCHASE LAND COULD ALSO NOT BE HELD TO BE THERE. THE DISALLOWANCE OF INTEREST WAS ACCORDINGLY DELETE D. NOW, THE REVENUE IS IN APPEAL BEFORE US. 14. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT THE ASSESSEE IS ALSO ENGAGED IN REAL ESTATE BUSINESS AND DURING THE YEAR, IT HAS DECLARED INCOME OF RS.1,31,705/- ON SALE OF PLOT. IN COURSE OF THIS ACTIVITY, HE PURCHASED AN AGRICULTURAL LAND FOR RS.52,32,500/- I N FRONT OF RAILWAY STATION, BUNDI. THE LAND IS PURCHASED IS FOR THE PURPOSE OF BUSINESS ONLY. THE ASSESSEE HAS NOT IMMEDIATELY TRANSFERRED THE LAND T O STOCK- IN- TRADE AS IT IS A NORMAL BUSINESS PRACTICE THAT LAND IS TRANSFERRED W HEN THERE IS A FAVOURABLE MARKET CONDITION. UNDER THE IT ACT, ASSESSEE CAN TR ANSFER ITS ASSETS AT ANY TIME IN STOCK-IN- TRADE AND THEREFORE, THE BASIS AD OPTED BY AO FOR DISALLOWING THE INTEREST THAT THE LAND IS NOT APPEARING IN STOC K- IN- TRADE IS NOT JUSTIFIED. 15. WITHOUT PREJUDICE TO ABOVE, IT WAS SUBMITTED TH AT ALL THE UNSECURED LOANS ON WHICH INTEREST WAS PAID DURING THE YEAR WA S CARRY FORWARD FROM PREVIOUS YEARS EXCEPT THE LOAN OF RS.5 LACS TAKEN F ROM SH. SUNIL AGARWAL ON WHICH INTEREST OF RS.17,500/- WAS PAID WHEREAS THE LAND WAS PURCHASED FOR RS.52,32,500/-. THUS, THERE IS NO NEXUS BETWEEN THE INTEREST BEARING FUNDS AND THE AGRICULTURAL LAND PURCHASED. INTEREST BEARI NG LOAN WAS USED FOR THE PURPOSE OF BUSINESS AND NOT FOR PURCHASE OF AGRICUL TURAL LAND AND THUS INTEREST ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 11 OF RS.4,52,332/- DISALLOWED BY AO IS UNCALLED FOR A ND THE ORDER OF THE LD CIT(A) SHOULD BE SUSTAINED. 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO FINDING RECORDED BY THE AO T HAT INTEREST BEARING FUNDS WHICH HAVE BEEN TAKEN IN THE EARLIER FINANCIAL YEAR S HAVE BEEN UTILIZED FOR THE PURPOSES OF PURCHASING THE AGRICULTURAL LAND UNDER CONSIDERATION. IN ABSENCE OF SUCH A FINDING, WE ARE UNABLE TO ACCEDE TO THE C ONTENTION OF THE AO THAT INTEREST ON SUCH LOANS SHOULD BE DISALLOWED IN THE HANDS OF THE ASSESSEE. IN THE RESULT, GROUND OF REVENUES APPEAL IS DISMISSED . 17. REGARDING THE 5 TH GROUND OF REVENUES APPEAL, BRIEFLY THE FACTS OF T HE CASE ARE THAT D URING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HA S CLAIMED TO HAVE RECEIVED A GIFT OF RS.10 LACS FROM HIS SISTER SMT. REKHA MANTRI ON 02.04.2011. THE AO OBSERVED THAT THE GIFT DEED SO PRODUCED DOES NT CONTAIN THE DATE OF EXECUTION AS WELL AS SIGNATURE OF WITNESSES. A SHOW CAUSE WAS ACCORDINGLY ISSUED TO THE ASSESSEE TO PRODUCE THE INCOME TAX RETURN, BANK STATEMENT, FINANCIAL STATEMENT OF SMT REKHA MANTRI AND ALSO TO PRODUCE HER FOR NEC ESSARY VERIFICATION. IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS NOT RECEIV ED/GIVEN ANY GIFT PRIOR TO THIS GIFT. IT WAS OBSERVED BY THE AO THAT THE ASSESSEE H AS FAILED TO FILE THE BANK STATEMENT AND RETURN OF INCOME OF SMT. REKHA MANTRI THROUGH WHICH HER CREDITWORTHINESS CAN BE PROVED. FURTHER, ASSESSEE H AS FAILED TO EXPLAIN THE SOURCE OF AMOUNT DEPOSITED IN THE BANK ACCOUNT OF SMT. REKHA MANTRI ON 31.03.2011 BEFORE GIVING GIFT TO HIM. ACCORDINGLY, THE AO TREATED THE GIFT OF RS.10 LACS RECEIVED FROM SMT. REKHA MANTRI AS UNEXPLAINED INCOME OF THE ASSE SSEE AND MADE ADDITION U/S 68 OF THE IT ACT. 18. THE LD. CIT(A) HELD THAT SINCE THE RELATION HAS NOT BEEN DISPUTED BY THE AO AND THE GIFT DEED & COPY OF BANK STATEMENT IS THERE , MATTER GETS COVERED U/S 56 AND THE SOURCE IS CONSIDERED AS EXPLAINED EVEN IF THERE WERE CASH DEPOSITS IN THE SAID ACCOUNT PRIOR TO THE GIFT. IT WAS FOR THE AO TO PRO VE THAT THE SOURCE OF SUCH CASH WAS ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 12 FROM ASSESSEE WHICH HE DID NOT DO. NOR HAS HE REFER RED THE MATTER TO THE AO OF THE DONOR CONCERNED. THE NON GIFTING BY THE ASSESSEE TO HIS SISTER AT ANY TIME IS NOT MATERIAL AS ANY GIFT CAN BE UNILATERAL AND NOT NECE SSARILY RECIPROCATIVE. THE ACCOUNT BEING JOINT WITH HUSBAND, HIS CERTIFICATE OF SALARY & AUTHORIZATION WERE INCIDENTAL EVIDENCES ON THE CREDITWORTHINESS OF THE DONOR. HEN CE, THE ONUS HAS BEEN DISCHARGED BY THE ASSESSEE IN THAT SENSE. ACCORDING LY, LD. CIT(A) DELETED THE ADDITION OF RS.10 LACS MADE BY THE AO. NOW, THE REV ENUE IS IN APPEAL BEFORE US. 19. DURING THE COURSE OF HEARING, LD. AR SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED ALL THE EVIDENCES IN SUPPORT OF THE GIFT RECEIVED FROM SMT. REKHA MANTRI . FROM THE GIFT DEED EXECUTED BETWEEN ASSESSEE AND SMT. REKHA MANTRI, IT CAN BE NOTED THAT GIFT OF RS.10 LACS WAS GIVEN THROUGH CHEQUE NO.489281 OF SBI DT. 02.04.2011. THE GIFT WAS GIVEN FROM THE JOINT BANK ACCOUNT OF S MT. REKHA MANTRI AND HER HUSBAND SH. DURGASHANKER TEJMAL MANTRI. SH. DURGASH ANKER TEJMAL MANTRI HAS GIVEN ALL THE RIGHTS TO HIS WIFE SMT. REKHA MAN TRI TO USE HIS INCOME AND SAVINGS FOR THE PURPOSE OF DONATION OR ANY KIND OF GIFT TO RELATIVES AND FAMILY MEMBERS AND A CERTIFICATE IN THIS REGARD BY SH. DUR GASHANKER TEJMAL MANTRI IS SUBMITTED HEREWITH. SH. DURGASHANKER TEJMAL MANTRI IN AY 2012-13 HAS GROSS SALARY INCOME OF MORE THAN RS. 20 LACS AS EVIDENT F ROM HIS RETURN OF INCOME. FROM THE BANK ACCOUNT, IT CAN BE NOTED THAT ON 30.0 3.2011, THERE IS A CREDIT OF RS.15,19,365/- (8,11,200+7,08,165) BY RTGS. THUS , ASSESSEE HAS DULY DISCHARGED HIS BURDEN TO PROVE THE IDENTITY OF CRED ITOR, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF DONOR SMT. REKH A MANTRI THROUGH SH. DURGASHANKER TEJMAL MANTRI. HENCE, ADDITION MADE BY THE AO U/S 68 IS UNCALLED FOR. 20. IN SUPPORT, THE LD AR PLACED RELIANCE ON THE FO LLOWING CASES:- CIT VS. RAM DEV KUMAR CHITLANGIA 315 ITR 435 (RAJ): ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 13 INCOMECASH CREDITGENUINENESS OF GIFTSQUESTION AS TO WHETHER A GIFT IS GENUINE IS ESSENTIALLY A QUESTION OF FACTIN THE IN STANT CASE, IDENTITY OF ANY DONOR IS NOT DISPUTEDTRANSACTIONS WERE CHANNELIZED THROUGH BANKS AND FOUR GIFTS WERE MADE BY RELATIVES ALTHOUGH BLOOD RELATIO NSHIP BETWEEN THE DONOR AND THE DONEE IS NOT NECESSARY TO ESTABLISH THE GEN UINENESS OF THE GIFT THERE IS NO TANGIBLE MATERIAL ON RECORD TO SHOW ANY THING WHICH MAY CAST ANY DOUBT ON THE GENUINENESS OF THE GIFT OR TO ESTABLIS H THAT THE PURPORTED TRANSACTIONS OF GIFT WERE TRANSACTIONS OF MONEY LAU NDERINGTHEREFORE, THE FINDINGS OF THE CIT(A) AND THE TRIBUNAL ACCEPTING T HE GENUINENESS OF GIFTS DO NOT WARRANT ANY INTERFERENCE. NEM KUMAR VS. ACIT 274 ITR 575 (RAJ): INCOMEADDITIONGENUINENESS OF GIFTSMT. A, THE DON OR, HAS GIVEN AN AFFIDAVIT AND ALSO FILED A DECLARATION THAT SHE HAS GIVEN GIFT OF RS. 1 LAKH TO THE ASSESSEEIN SPITE OF CIT(A)S DIRECTION THE DONOR H AS NOT BEEN EXAMINED BY THE AOCIT(A) FOUND THAT THE DONOR WAS DOING BUSINE SS AT THE RELEVANT TIME AND WAS ASSESSED TO TAXIN HIS EXAMINATION BY THE A O, ASSESSEE EXPLAINED THAT HE WAS KNOWING SMT. A SINCE LONG AND THAT SHE HAD GOOD RELATIONS WITH HIS FAMILYTHERE IS NO MATERIAL EVIDENCE WHATSOEVER TO SHOW THAT THE MONEY WAS DEPOSITED BY THE ASSESSEE OR BY ANY RELATIVE IN THE BANK FROM WHERE IT CAME BACK TO THE ASSESSEE AS A GIFTTHUS, GIFT CANN OT BE TREATED AS NON- GENUINE ON MERE CONJECTURES AND SURMISESTHERE WAS NO JUSTIFICATION FOR ADDITION. CIT VS. PADAM SINGH CHOUHAN 315 ITR 433 (RAJ): INCOMECASH CREDITGENUINENESS OF NRI GIFTSAO, TAK ING INTO ACCOUNT THE FACTS THAT NRI DONORS MADE DEPOSITS IN THEIR ACCOUN TS SOON BEFORE THE GIFTS AND THE ASSESSEE HAD WITHDRAWN THE HUGE AMOUNT WITH IN A SHORT SPAN OF TIME, DOUBTED THE TRANSACTION AS A MANAGED AFFAIR A ND MADE ADDITION TREATING THE GIFTS AS NOT GENUINECIT(A) FOUND THAT THE ASSE SSEE HAD FURNISHED GIFT ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 14 DEEDS AND AFFIDAVITS OF DONORS AND WHILE OBSERVING THAT BLOOD RELATIONSHIP WAS NOT NECESSARY FOR MAKING GIFT OUT OF LOVE AND AFFEC TION AND IT WAS NOT A CASE WHERE MONEY ADVANCED BY ASSESSEE TO DONORS RETURNED BACK TO ASSESSEE BY WAY OF GIFT, REVERSED THE FINDINGS OF AOTRIBUNAL A FFIRMED THE FINDINGS OF CIT(A)JUSTIFIEDASSESSEE HAVING PRODUCED COPIES OF GIFT DEEDS AND AFFIDAVITS OF NRI DONORS, IN THE ABSENCE OF ANYTHIN G TO SHOW THAT THE TRANSACTION WAS BY WAY OF MONEY LAUNDERING, ADDITIO N COULD NOT BE MADE IN THE HANDS OF ASSESSEE DONEE FOR ABSENCE OF BLOOD RE LATIONSHIP OR CLOSE RELATIONSHIP BETWEEN THE DONOR AND THE DONEE. 21. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO HAS OBSERVED THAT THE ASSESSEE H AS RECEIVED A SUM OF RS 10 LACS BY WAY OF GIFT FROM HIS SISTER ON 2.4.2011 WHICH WAS BROUGHT TO TAX AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE LD CIT(A) HAS HOWEVER EXAMINED THE MATTER FROM THE PERSPECTIVE OF SECTION 56 GIVEN THAT THE LATTER CONTAINS SPECIFIC PROVISION RELATING TO RECEIPT OF GIFTS FROM THE RELATIVE AND HELD THAT SINCE THE CONFIRMATION OR RELATION OF THE ASSESSEE WITH THE DONOR HAS NOT BEEN DISPUTED BY THE AO AND EVEN THE GIFT DEED AND COPY OF BANK STATEMENT IS THERE AND HAS DELETED THE ADDITION SO MADE BY THE AO. WE ARE OF THE VIEW THAT WHERE ANY AMOUNT HAS TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE, THE SAME HAS TO BE CLASSIFIED UNDER A NY OF THE SPECIFIED HEADS OF INCOME AND TAXED IN ACCORDANCE WITH THE RESPECTI VE PROVISIONS AS CONTAINED IN THE SPECIFIED HEAD. IN THE INSTANT CASE, EVEN T HOUGH THE AO HAS INVOKED PROVISIONS OF SECTION 68, THE FACT REMAINS THAT EVE N AN AMOUNT WHICH IS BROUGHT TO TAX UNDER SECTION 68 HAS TO BE CLASSIFIE D UNDER ONE OF THE SPECIFIED HEADS. THERE IS NO FINDING OF THE AO THAT THE AMOU NT OF RS 10 LACS FOUND CREDITED IN THE ASSESSEES BANK ACCOUNT IS ARISING OUT OF HIS BUSINESS. RATHER, THERE IS A FINDING THAT THE AMOUNT HAS BEEN RECEIVE D AS A GIFT FROM THE ASSESSEES SISTER. ONCE THE SAID FINDING OF RECEIP T OF SUM OF MONEY AS GIFT IS RECORDED, SUCH GIFT OF MONEY CAN BE BROUGHT TO TAX, IF AT ALL, UNDER THE SPECIFIC ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 15 PROVISIONS OF SECTION 56(VII)(A) OF THE ACT. THE SA ID PROVISIONS PROVIDE THAT WHERE AN INDIVIDUAL RECEIVES IN ANY PREVIOUS YEAR, FROM ANY PERSON ON OR AFTER 1 ST DAY OF OCT, 2009, ANY SUM OF MONEY, WITHOUT CONSID ERATION, THE AGGREGATE VALUE OF WHICH EXCEEDS RS 50,000, THE WHOLE OF THE AGGREGATE VALUE OF SUCH SUM, SHALL BE CHARGEABLE TO TAX. REGARDING ABSENCE OF ANY CONSIDERATION, THE ASSESSEE HAS SUBMITTED A COPY OF GIFT DEED WHICH TA LKS OUT GIFTING OF SAID MONEY WITHOUT ANY CONSIDERATION. IN ABSENCE OF ANY INDEPENDENT ENQUIRY OR FINDING BY THE AO CHALLENGING THE AUTHENCITY OF THE GIFT DEED OR THE FACT THAT SUCH RECEIPT OF MONEY IS IN LIEU OF ANY CONSIDERATI ON WHICH THE ASSESSEE HAS FULFILLED IN THE PAST OR IN RESPECT OF ANY FUTURE O BLIGATION, THE LEGALITY OF THE GIFT IS NOT UNDER CHALLENGE. THE ASSESSEE WHO HAS RECEIVED A SUM OF MONEY EXCEEDING RS 50,000 THUS FALLS UNDER THE CHARGING P ROVISIONS OF SECTION 56(VII)(A) OF THE ACT. FURTHER, THE SAID PROVISIO NS OF SECTION 56(VII)(A) OF THE ACT PROVIDE FOR AN EXCEPTION STATING THAT THE SAID PROVISIONS SHALL NOT APPLY TO ANY SUM OF MONEY OR ANY PROPERTY RECEIVED FROM ANY RELATIVE. IN THE INSTANT CASE, THE ASSESSEE HAS RECEIVED A SUM OF RS 10 LACS FROM HIS SISTER WHO IS A SPECIFIED PERSON AND FALLS WITHIN THE DEFINITION OF THE TERM RELATIVE. IN LIGHT OF THE SAME, THE SUM OF MONEY SO RECEIVED THOUGH CH ARGEABLE UNDER THE PROVISIONS OF SECTION 56(VII)(A) FALLS UNDER THE EX CEPTION CATEGORY AS SPECIFICALLY CARVED OUT BY THE STATUTE AND HENCE, C ANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. WE ACCORDINGLY AFFIRM T HE ORDER OF THE LD CIT(A) WHO HAS CONFIRMED THE DELETION OF ADDITION OF RS 10 LACS. IN THE RESULT, GROUND NO. 5 OF REVENUES APPEAL IS DISMISSED. 22. REGARDING THE 6 TH GROUND OF REVENUES APPEAL AND CROSS OBJECTION NO. 2 OF ASSESSEES APPEAL, BRIEFLY THE FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT ASSESSEE HAS CLAIMED DEPRECIATION ON CAR AT RS .1,45,319/-, DEPRECIATION ON TWO WHEELER AT RS.551 AND CAR INSURANCE EXPENSES AT RS.23,400/-, AGGREGATING TO RS.1,69,270/-. SINCE THE ASSESSEE HA S FAILED TO PROVE THAT THE CAR AND TWO WHEELER ARE USED FOR BUSINESS PURPOSES BY PRODUCING THE LOG ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 16 BOOK, PERSONAL USE OF THE SAME CANNOT BE RULED OUT. ACCORDINGLY, HE DISALLOWED 20% OF RS.1,69,270/-, I.E. RS.33,854/-. 23. ON APPEAL, THE LD. CIT(A) HELD THAT AO HAS NOT GIVEN ANY BASIS FOR 20% DISALLOWANCE. THE EXPENSES ARE NOT CONSIDERED UNREA SONABLE AND THUS, THE DISALLOWANCE CONSIDERING THE NATURE OF SUCH EXPENSE S WAS RESTRICTED TO 10%, BEING RS.16,927/-. NOW, BOTH THE PARTIES ARE IN APP EAL BEFORE US. 24. IT WAS SUBMITTED BY THE LD AR THAT THE VEHICLES WERE USED FOR BUSINESS PURPOSE ONLY. THE EXPENDITURE IS REASONABLE CONSIDE RING THE VOLUME OF BUSINESS. THE LOWER AUTHORITIES HAVE NOT SPECIFIED ANY INSTANCES WHERE VEHICLES ARE USED FOR PERSONAL PURPOSE. IN FACT THE LD. CIT(A) HAS ACCEPTED THAT EXPENDITURE ARE NOT UNREASONABLE BUT WITHOUT A NY BASIS CONFIRMED THE DISALLOWANCE OF RS.16,927/-. THUS, THE DISALLOWANCE MADE BY THE LOWER AUTHORITIES IS UNJUSTIFIED. FURTHER, HONBLE ITAT J AIPUR BENCH IN CASE OF KAILASH CHAND GUPTA V/S DCIT 35 TAXWORLD 36 HELD THAT CLAIM OF DEPRECIATION IS A STATUTORY PROVISION WHICH CANNOT BE DENIED ON THE B ASIS OF PERSONAL USE OF THE ASSESSEE. 25. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. INTERESTINGLY, DEPRECIATION ON CAR AND TWO-WHEELER, AND CAR INSURANCE HAS BEEN DISALLOWED TO AN EXTENT OF 20% B Y THE AO WHICH HAS BEEN REDUCED TO 10% BY THE LD CIT(A) ON THE PRESUMPTION THAT PERSONAL USE OF SUCH VEHICLES CANNOT BE RULED OUT. HOWEVER, THERE IS NO DISALLOWANCE OF THE VEHICLE FUEL EXPENSES INCURRED BY THE ASSESSEE. AT THE SAME TIME, IT IS TRUE THAT WHERE THE AO HAS QUESTIONED THE USAGE OF THE V EHICLES, THE ONUS IS ON THE ASSESSEE TO PROVIDE THE NECESSARY EXPLANATION T HAT THE VEHICLES HAVE BEEN USED FOR THE PURPOSES OF HIS BUSINESS. DEPRECIATIO N IS NO DOUBT A STATUTORY ALLOWANCE BUT AT THE SAME TIME, THE ASSESSEE HAS TO DEMONSTRATE THAT THE VEHICLES ON WHICH THE DEPRECIATION IS SO CLAIMED IS USED FOR THE PURPOSES OF THE BUSINESS. WHERE THE ASSESSEE HAS FAILED TO PRO VIDE THE NECESSARY DETAILS, ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 17 THE ONUS CAST ON THE ASSESSEE CANNOT BE SAID TO BE DISCHARGED. IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, THE D ISALLOWANCE MADE BY THE AO IS SUSTAINED. IN THE RESULT, GROUND NO. 6 OF TH E REVENUES APPEAL IS ALLOWED AND GROUND NO. 2 OF THE ASSESSEES CROSS OB JECTION IS DISMISSED. 26. REGARDING THE 7 TH GROUND OF REVENUES APPEAL, BRIEFLY THE FACTS OF T HE CASE ARE THAT THE AO OBSERVED THAT ASSESSEE HAS SHO WN HOUSEHOLD EXPENSES OF RS.2,39,800/-. IT WAS OBSERVED BY THE AO THAT AS SESSEES CHILDREN WERE STUDYING OUTSIDE AND HE HAS ALSO GONE FOR FOREIGN T OUR IN THIS PERIOD. ACCORDINGLY, HE REQUIRED THE ASSESSEE TO EXPLAIN TH E DETAILS OF HOUSEHOLD EXPENSES AND FOREIGN TOUR EXPENSES INCURRED BY HIM. IN RESPONSE TO SAME, ASSESSEE SUBMITTED THE REPLY VIDE LETTER DT. 24.02. 2015. HOWEVER, AO DID NOT ACCEPT THE EXPLANATION OF ASSESSEE AND AFTER ASSUMI NG THE HOUSEHOLD EXPENSES OF RS.6,000/- PER MONTH PER PERSON, DETERM INED THE TOTAL HOUSEHOLD EXPENSES AT RS.4,32,000/- (6000*12*6) AND MADE ADDI TION OF RS.1,92,200/- (432,000-239,800). HE FURTHER MADE ADDITION OF RS.1 ,50,000/- ON ACCOUNT OF FOREIGN TRAVELLING EXPENSES, THEREBY TOTALLING TO R S.3,42,200/- (1,92,200+1,50,000). 27. THE LD. CIT(A) DELETED THE ADDITION BY HOLDING THAT AO HAS NOT FIND ANY ADVERSE EVIDENCES IN THIS REGARD. HE HELD THAT THE AO DID NOT CONSIDERED THAT BESIDES THE REGULAR HOUSEHOLD EXPENSES, ASSESSEE HA D ALSO SHOWN EXPENSES OF RS.2,15,000/- ON TUITION FEES AND RS.1,10,496/- ON FOREIGN TRAVEL. THUS, THE AOS ESTIMATION IS BASED ON PRESUMPTION AND NOT BAS ED ON EVIDENCES. 28. DURING THE COURSE OF HEARING, THE LD AR SUBMITT ED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE HAS SUBMI TTED DETAILED REPLY IN WHICH VARIOUS HEAD OF EXPENSES LIKE ELECTRICITY, WA TER, TELEPHONE, EDUCATION AND RENT PAID WAS EXPLAINED. THE CONTRIBUTION MADE BY OTHER FAMILY MEMBERS WAS ALSO SUBMITTED. BESIDES THE REGULAR HOUSEHOLD E XPENSES, ASSESSEE HAD ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 18 ALSO SHOWN EXPENSES OF RS.2,15,000/- ON TUITION FEE S AND RS.1,10,496/- ON FOREIGN TRAVEL. THUS, THE ASSESSEE HAS SHOWN TOTAL WITHDRAWAL OF RS.6,01,296/- WHICH IS VERY REASONABLE. IN THE WRIT TEN SUBMISSION, ASSESSEE ALSO EXPLAINED THAT HIS DAUGHTER WAS LIVING WITH HE R UNCLE AND THUS THE ASSESSEE HAS NOT INCURRED ANY MAJOR EXPENDITURE ON HER IN THE YEAR UNDER CONSIDERATION. THE AO WITHOUT ANY BASIS ESTIMATED T HE HOUSEHOLD EXPENSES AT RS.4,32,000/- AND MADE FURTHER ADDITION OF RS.1,50, 000/- ON ACCOUNT OF FOREIGN TRAVELLING EXPENSES. SINCE THE ESTIMATION M ADE BY AO IS PURELY ON ASSUMPTION AND PRESUMPTION, LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. IN VIEW OF ABOVE, THE ORDER OF LD. CIT(A) BE UPHELD BY DISMISSING THE GROUND OF DEPARTMENT. 29. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSE D THE MATERIAL AVAILABLE ON RECORD. THE LD CIT(A) HAS RETURNED A FINDING TH AT THE ASSESSEE HAD SHOWN EXPENSES OF RS.2,15,000/- ON TUITION FEES AND RS.1, 10,496/- ON FOREIGN TRAVEL OTHER THAN REGULAR HOUSEHOLD WITHDRAWALS OF RS 2,39 ,800. THE SAID FINDING REMAINS UNCONTROVERTED BEFORE US. BEFORE, NO SPECI FIC VERIFIABLE EVIDENCE HAS BEEN BROUGHT ON RECORD TO JUSTIFY LOW HOUSEHOLD WIT HDRAWAL OR THE FACT THAT THE ASSESSEE HAS INCURRED ANY HOUSEHOLD EXPENDITURE WHICH IS MORE THAN THE DECLARED WITHDRAWALS DURING THE YEAR. IN THE RESUL T, WE UPHELD THE ORDER OF THE LD CIT(A) AND DISMISS THE GROUND NO. 7 OF THE R EVENUES APPEAL. 30. NOW COMING TO THE 1 TH GROUND OF ASSESSEES CROSS OBJECTION, BRIEFLY THE FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS TAKEN UNSECURED LOAN OF RS.5 LACS FROM SH. SUNI L AGARWAL ON 11.11.2011. AO RECORDED THE STATEMENT OF SH. SUNIL AGARWAL ON 0 5.01.2015 WHICH IS REPRODUCED AT PG 6-7 OF THE ORDER. AO OBSERVED THAT SH. SUNIL AGARWAL HAS DEPOSITED CASH OF RS.2,50,000/- ON 08.11.2011 AND 0 9.11.2011 IN HIS BANK ACCOUNT BEFORE GIVING LOAN TO ASSESSEE. SH. SUNIL A GARWAL EXPLAINED THAT HE HAS INCOME FROM COMMISSION, AGRICULTURE, GODOWN REN T, INTEREST INCOME, ETC. ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 19 BUT NO EVIDENCE IS FILED NOR THE DETAIL OF THE PERS ONS TO WHOM ADVANCE HAS BEEN GIVEN IS PROVIDED. HE THEREFORE, MADE ADDITION OF RS.5 LACS U/S 68. 31. THE LD. CIT(A) CONFIRMED THE ADDITION BY HOLDIN G THAT ASSESSEE HAS NOT ABLE TO PROVIDE EVIDENCE IN SUPPORT OF THE CREDITWO RTHINESS OF THE LENDER AND HIS STATEMENT REMAINED UNPROVED REGARDING AGRICULTU RE, INTEREST OR OTHER SOURCE OF INCOME. 32. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT SH. SUNIL AGARWAL IS ASSESSED TO TAX. HE HAS FILED RETURN FOR AY 2012-13 DECLARING GROSS TOTAL INCOME OF RS.2,97,845/- AND AGRICULTURAL INCO ME OF RS.42,500. IN THE BALANCE SHEET FILED WITH THE RETURN, THE AMOUNT OF ADVANCE & LOAN AS ON 31.03.2012 IS REFLECTED AT RS.14,68,520/- OUT OF WH ICH RS.5 LACS IS REFLECTED IN THE NAME OF M/S LADDHA JEWELLERS, I.E. THE ASSESSEE . SH. SUNIL AGARWAL RESPONDED TO THE AO AND FURNISHED THE REQUIRED INFO RMATION CALLED U/S 133(6) OF THE ACT. HIS STATEMENT WAS RECORDED BY AO ON 05. 01.2015 WHERE HE EXPLAINED THE SOURCE OF INCOME AND ACCEPTED HAVING GIVEN LOAN TO THE ASSESSEE. HE FURTHER STATED IN RESPONSE TO THE QUES TION OF THE AO THAT WHY HIS CASE BE NOT REOPENED U/S 147 THAT WHATEVER ACTION I S DEEMED REASONABLE MAY BE TAKEN. THUS, WHEN SH. SUNIL AGARWAL HAS ACCE PTED HAVING ADVANCE LOAN TO THE ASSESSEE AND ALSO EXPLAINED HIS SOURCE, THE ONUS REQUIRED U/S 68 IS DISCHARGED BY THE ASSESSEE AND THEREFORE, THE AD DITION MADE BY THE AO AND CONFIRMED BY LD. CIT(A) IS NOT AS PER LAW. 33. RELIANCE IN THIS CONNECTION WAS PLACED ON THE F OLLOWING CASES:- CIT VS. ORISSA CORPORATION PVT. LTD. 159 ITR 78 (SC ) CIT VS. SHIV DHOOTI PEARLS & INVESTMENT LTD. (2016) 237 TAXMAN 104 (DEL.) CIT VS. JAI KUMAR BAKLIWAL (2014) 366 ITR 217/ 101 DTR 377 (RAJ.) CIT VS. H.S. BUILDERS (P.) LTD. (2012) 78 DTR 169 ( RAJ.) ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 20 LABH CHAND BOHRA VS. ITO 189 TAXMAN 141/ 219 CTR 57 1 (RAJ.) KANHAIALAL JANGID VS. ACIT 217 CTR 354 (RAJ.) ARAVALI TRADING CO. VS. ITO 187 TAXMAN 338 (RAJ.) 34. THE LD DR HAS VEHEMENTLY ARGUED THE MATTER AND RELIED UPON THE ORDER OF THE LOWER AUTHORITIES. 35. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSE D THE MATERIAL AVAILABLE ON RECORD. THE AO HAS INVOKED THE PROVISIONS OF SE CTION 68 WHEREBY UNSECURED LOAN TAKEN BY THE ASSESSEE FROM SHRI SUNI L AGARWAL HAS BEEN BROUGHT TO TAX FOR FAILURE OF THE ASSESSEE TO DISCH ARGE THE INITIAL ONUS CAST ON HIM. FURTHER, THE LD CIT(A) HAS ALSO RETURNED A FI NDING THAT THE ASSESSEE HAS FAILED TO SUPPORT THROUGH DEMONSTRABLE EVIDENCE THE CREDITWORTHINESS OF SHRI SUNIL AGARWAL WHO HAS ADVANCED THE LOAN OF RS 5 LAC S TO THE ASSESSEE COMPANY. SIMILAR CONTENTIONS AS RAISED BEFORE THE LOWER AUTHORITIES HAVE BEEN TAKEN BEFORE US. IT IS A SETTLED POSITION IN LAW THAT WHERE THE AO INTENDS INVOKING PROVISIONS OF SECTION 68, THE INITIAL ONUS IS CAST ON THE ASSESSEE TO SATISFY THE REQUIREMENTS AND PROVIDE THE NECESSARY EXPLANATION SUPPORTED BY VERIFIABLE EVIDENCE IN TERMS OF IDENTITY, CREDITWOR THINESS AND GENUINENESS OF THE TRANSACTION AND ON PERUSAL OF EVIDENCE ON RECOR D, WE AGREE WITH THE LD CIT(A) THAT THE SAME HAS NOT BEEN DISCHARGED IN THE INSTANT CASE. WE ACCORDINGLY CONFIRM THE FOLLOWING FINDINGS OF THE L D CIT(A) WHICH IS REPRODUCED AS UNDER: AS REGARDS GROUND OF APPEAL NO. 5 REGARDING ADDITI ON U/S 68 IT IS SEEN THAT THE LENDER HAS NOT BEEN ABLE TO PROVIDE EVIDEN CES IN SUPPORT OF HIS CREDITWORTHINESS AND ALL THE STATEMENTS REMAIN UNPR OVED REGARDING AGRICULTURAL, INTEREST OR SIMILAR SOURCES OF INCOME . ALTHOUGH THE IDENTITY OF THE LENDER IS PROVED, HOWEVER, AS PER SECTION 68 , UNLESS THE GENUINENESS & THE CREDITWORTHINESS OF THE LENDER IS ALSO BEYOND DOUBT, THE CREDIT WOULD BE CONSIDERED UNEXPLAINED. UNDER T HE FACTS INVOLVED, IT ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 ACIT VS SHRI DINESH KUMAR, BUNDI 21 IS SEEN THAT THE LENDER HAS NOT BEEN ABLE TO PROVE HIS CAPACITY OR THE SOURCE OF THE AMOUNT LENT BEYOND DOUBT SO THE CREDI T CANNOT BE HELD TO BE EXPLAINED WITHIN THE MEANING OF SECTION 68 AND T HE ADDITION OF RS. 5,00,000/- MADE BY THE AO IS LIABLE TO BE UPHELD. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/01/2018. SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 03/01/2018 *GANESH KR VKNS'K DH IZFRFYFI VXZSF'KR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - ACIT, SAWAI MADHOPUR 2. IZR;FKHZ@ THE RESPONDENT - SHRI DINESH KUMAR, BUNDI 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 350/JP/2017 & CO NO. 34/JP/2017 VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.