Assistant Commissioner of Income-tax, V. Shri Mahesh Bhagwat Chaudhary, Jalgaon

ITA 629/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9503 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VIJAYA B REDDY
• Assessee Lawyers: DEVENDRA KULKARNI
• Keywords: Sale consideration of property below Jantri Value; Unexplained expenditure; Capital asset; Business expenditure; Source of fund; Additional evidence; Valuation report
• Section: 50C; 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.629 TO 634/PUN/2016 / ASSESSMENT YEARS : 2006-07 TO 2011-12 ACIT, CENTRAL CIRCLE-2, NASHIK . /APPELLANT VS. SHRI MAHESH BHAGWAT CHAUDHARY, 11, SWED BINDU, SHANTI NAGAR, YAWAL ROAD, BHUSAWAL, DIST. JALGAON 625201 PAN : AAQPC1999N . / RESPONDENT / APPELLANT BY : SHRI T. VIJAYA B. REDDY / RESPONDENT BY : SHRI DEVENDRA KULKARNI / DATE OF HEARING : 11.01.2018 / DATE OF PRONOUNCEMENT: 17.01.2018 / ORDER PER BENCH : THERE ARE SIX APPEALS UNDER CONSIDERATION INVOLVING ASSES SMENT YEARS 2006-07 TO 2011-12. ALL THE APPEALS ARE FILED BY TH E REVENUE AGAINST THE CONSOLIDATED ORDER OF CIT(A)-12, PUNE, DATED 25-01-20 16. 2. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAP HS. FIRST WE TAKE THE APPEAL ITA NO.629/PUN/2016 FOR A.Y. 2006-07. GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING ADDITIONAL EVIDENCE UNDER RULE 46A WHEREAS THE ASSESSEE'S CASE IS NOT COVERED BY THE E XCEPTIONS PROVIDED UNDER RULE 46A OF THE I.T. RULES. ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 2 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE FOREIGN TOU R EXPENSES AMOUNTING TO RS. 10,000/- BY ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULES, IGNORING THE FACT THAT THE ASSESSEE HAD NOT FURNISHED THE RELEVANT DOCUMENTS IN SPITE OF OPPORTUNITIES GIVEN DURING AS SESSMENT PROCEEDINGS AND DESPITE BEING GIVEN SPECIFIC INSTRUCTION? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF 'DISALLOWANCE OF INTEREST EXPENDITURE' TO THE EXTENT OF RS.1,60,560/ - BY ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A OF I.T. RULES, THOUGH THE ENTIRE IN TEREST WAS NOT SUBSTANTIATED BY THE ASSESSEE DURING ASSESSMENT PRO CEEDINGS, DESPITE BEING GIVEN OPPORTUNITY? 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.52,13,333/ - BEING UNDISCLOSED INVESTMENT IN PROPERTIES BY ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULES AND NOT APPRECIATING THAT THE ASS ESSEE HAD OPPORTUNITIES TO SUBMIT THE NECESSARY EVIDENCE DURING THE ASSESSMENT PROCEEDINGS? 3. FROM THE ABOVE, IT IS EVIDENT THAT THE REVENUE IS AG GRIEVED AGAINST ADMITTING OF THE ADDITIONAL EVIDENCES BY THE CIT(A) IN VIOLATIO N OF RULE 46A OF THE INCOME TAX RULES, 1962. 4. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE IS A DEALER IN PIAGGIO VEHICLES ( 3W AND 4W). THERE WAS SEARCH AND SEIZU RE ACTION ON THE CHAUDHARI GROUP OF CASES ON 04-10-2011. ASSESSMENTS W ERE COMPLETED U/S.143(3) R.W.S. 153A OF THE ACT. AO MADE VARIOUS ADDITIONS IN THE ASSESSMENTS AND ASSESSED THE INCOME FOR THESE YEARS AS PER DETAILS GIVEN IN THE TABLE BELOW : ASSESSMENT YEAR RETURNED INCOME ASSESSED INCOME 2006-07 2,99,429 59,79,140 2007-08 4,15,841 9,13,070 2008-09 1,53,741 7,02,330 2009-10 11,99,778 26,07,330 2010-11 15,48,638 88,00,180 2011-12 13,25,420 1,62,58,260 5. DURING THE PROCEEDINGS BEFORE US AND AT THE OUTSET, IN RESPONSE TO THE QUERY FROM THE BENCH REGARDING IDENTIFICATION OF THE SA ID ADDITIONAL EVIDENCES WHICH WAS ADMITTED AT THE BACK OF THE AO OR IN CONTRAVENTION TO RULE 46A OF THE I.T. RULES, 1962, LD.DR FOR THE REVENUE FAI RLY SUBMITTED ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 3 THAT THE FACT OF CIT(A) GRANTING RELIEF TO THE ASSESSEE DE LETING ALL THE ADDITIONS ON MERITS ADMITTING THE ADDITIONAL ARGUMENTS R AISED BEFORE THE CIT(A) FOR THE FIRST TIME NOT RAISED BEFORE THE ASSESSING A UTHORITY, AMOUNTS TO ADMISSION OF THE ADDITIONAL EVIDENCES. THEREFORE, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL FOR ADJUDICATION OF THE ISSUE. 6. IN RESPONSE, SHRI DEVENDRA KULKARNI, LD. AR FOR THE ASS ESSEE SUBMITTED THAT ASSESSEE NEVER FILED ANY EVIDENCES PER SE BUT ONLY SUBMITTED WRITTEN SUBMISSIONS ADDITIONALLY BEFORE THE CIT(A) AND THEREFORE, THERE IS NO CONTRAVENTION OF THE PROVISIONS OF R ULE 46A BY THE CIT(A). HENCE, THE ORDER OF CIT(A) SHOULD BE CONFIRMED IN TOTO AND DISMISS THE GROUNDS OF THE REVENUE IN THIS APPEAL. 7. ON HEARING BOTH THE PARTIES ON THE ISSUE OF EXISTENC E OF ANY ADDITIONAL EVIDENCES PER SE, WITH REFERENCE TO GROUND NO.1 AND OTHERS, WE FIND THE LD. ARS REPLY APPEARS TO BE CORRECT. FOR THE SAKE OF EXAMPLE, WE EXAMINED THE CONTENTS OF CIT(A) ON THE ISSUE RELATING TO G ROUND NOS. 5 TO 6 BEFORE THE CIT(A) AND FIND THE PRODUCTION OF BOOKS OF ACC OUNT WAS THE SUBJECT MATTER QUA THE SUBMISSION OF ADDITIONAL EVIDENCE A ND FURNISHING OF A LETTER WHICH IS CORRESPONDENCE BETWEEN THE AO AND THE ASSESSEE. IN OUR VIEW, CALLING FOR A REMAND REPORT OF THE SAID LETTER EMA NATED FROM THE OFFICE OF THE AO IS NOT REQUIRED AND IT IS UNWARRANTED. FOR THE SAKE OF COMPLETENESS, RELEVANT LINES ARE EXTRACTED HERE AS UNDER : 35.2 . . . . . .THE AO WAS IN POSSESSION OF AUDITE D BALANCE SHEET AND PROFIT AND LOSS ACCOUNT BUT DID NOT BRING ANY MATERIAL ON RECORD WHICH WAS GATHERED DURING THE SEARCH OR DURING THE ASSESSMENT PROCEEDINGS TO DISCARD THE AUDITED RESULT OF THE APPELLANT. AS REGARDS PR ODUCTION OF BOOKS OF ACCOUNT, THE APPELLANT CONTENDED THAT AO HAD KEPT B OOKS OF ACCOUNTS OF GROUP CONCERNS FOR ABOUT 2 MONTHS WITHOUT IMPOUNDIN G THE SAME. IN SUPPORT APPELLANT HAD ALSO FILED COPY OF LETTER REC EIVED BY THE OFFICE OF AO BY WHICH BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE AO . IT WAS ALSO CONTENDED THAT BOOKS OF ACCOUNTS OF THE APPELLANT W ERE ALSO PRODUCED AND AO HAD ALSO NOT PERMITTED PERSONAL PRESENCE OF THE AR OF THE APPELLANT. THE ASSESSMENT YEAR UNDER CONSIDERATION WAS NOT PEN DING AT THE TIME OF SEARCH AND THE AO WAS NOT JUSTIFIED IN REJECTING TH E BOOK RESULT WITHOUT HAVING ANY MATERIAL IN HAND TO DISTURB THE CONCLUDE D ASSESSMENT IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN CASE O F MURLI AGRO PRODUCTS ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 4 (SUPRA). ADDITION MADE OF RS.4,35,741 IS THEREFORE DELETED AND THE GROUNDS RAISED BY THE APPELLANT ARE ALLOWED. 8. THE ABOVE PARAGRAPH IS EVIDENT FROM THE FACT THAT TH E CIT(A) NEVER ADMITTED ANY ADDITIONAL EVIDENCES WHICH REQUIRES REMANDI NG TO THE AOS FILE. IT IS MERELY A LETTER EVIDENCING THE EXISTENCE OF BOO KS OF ACCOUNTS IN THE POSSESSION OF THE AO. WHEN THE BOOKS OF ACCOUNTS A RE UNDISPUTEDLY LYING WITH THE AO FOR MONTHS, THE ASSESSING OFFICER CANNOT ALLEGE THAT THE BOOKS OF ACCOUNTS WERE NOT FURNISHED BY THE ASSESSEE O N THIS ISSUE OF ADDITION OF RS.4,35,741/-, WE FIND THE LD.CIT(A) GRANTED RELIEF ON THE BASIS OF THE BINDING JUDGMENT OF JURISDICTIONAL HONBLE HIGH COURT. 9. SIMILAR IS THE CASE WITH OTHER ADDITIONS DELETED BY THE CIT(A). FROM THIS POINT OF VIEW, THE CONTRAVENTION OF THE PROVISIONS OF S ECTION 46A OF THE I.T. RULES, 1962 IS NOT RAISED ON CORRECT FACTS. REVENUE COULD NOT DEMONSTRATE, ATLEAST ONE CRUCIAL DOCUMENT WHICH GOES TO THE ROOT OF THE MATTER ADMITTED BY THE CIT(A) AT THE BACK OF THE AO AND WITHOUT CALLING FOR REMAND REPORT, IF ANY. THEREFORE, WE ARE OF THE VIEW TH AT GROUNDS RAISED BY THE REVENUE IN THIS APPEAL HAVE NO MERIT. SINCE THE REVENUE FAIL ON THIS LEGAL ISSUE, ALL THE SAID GROUNDS RAISED BY THE R EVENUE HAVE TO BE DISMISSED. HOWEVER, ON MERITS ALSO, GROUNDS RELATING TO VARIOUS ADDIT IONS ARE BEING DEALT IN THE FOLLOWING PARAGRAPHS. 10. GROUND NO.2 BY THE REVENUE RELATES TO DELETION OF RS .10,000/- BY THE CIT(A) ON ACCOUNT OF FOREIGN TRAVEL EXPENSES. 11. FACTS RELATING TO THIS ISSUE INCLUDE THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT ASSESSEE AN D HIS TWO SONS TRAVELLED TO SINGAPORE AND AUSTRALIA AND INCURRED RS.1,66,00 0/- TOWARDS THE SAME. AO CALLED FOR RELEVANT INFORMATION FROM THE ASSE SSEE TO ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 5 SUPPORT THE SAID EXPENDITURE. APPELLANT CONTENDED THAT T HE FOREIGN TOUR WAS SPONSORED BY THE INSURANCE COMPANIES/PRINCIPLE COMPA NIES. HOWEVER, NO DETAILS WERE SUBMITTED BY THE ASSESSEE BEFOR E THE AO. THEREFORE, THE AO PROCEEDED TO MAKE ADDITION OF RS.1,66,00 0/- ON ESTIMATION BASIS AS UNEXPLAINED EXPENDITURE. DURING THE FIRS T APPELLATE PROCEEDINGS, ASSESSEE SUBMITTED THAT THE FOREIGN TRIP WAS SPONSORED BY HERO MOTORCORP LTD. AND FURNISHED A COPY OF LETTER DATED 26-09-2005 RECEIVED FROM THE SAID COMPANY. THE COPY OF LETTER INDICA TES THAT THE EXPENSES TO BE BORNE BY THE DEALER. IN ABSENCE OF ANY DOCUMENTARY EVIDENCE TOWARDS THE EXPENSES INCURRED ON THIS FOREIGN T RAVEL, CIT(A) CONFIRMED THE ADDITION OF RS.1,56,000/-. HOWEVER, THE HOTEL EXPENSES OF RS.10,000/- MADE BY THE ASSESSEE HAVE ONLY BEEN CONSI DERED BY THE CIT(A) AS SPONSORED BY HERO MOTORCORP LTD. THUS, THE CI T(A) GAVE PART RELIEF TO THE ASSESSEE. AGGRIEVED WITH THE SAID RELIEF OF RS. 10,000/-, THE REVENUE IS IN APPEAL BEFORE US. ASSESSEE IS NOT IN APPEA L AGAINST THE CONFIRMED ADDITION OF RS.1,56,000/-. 12. AFTER HEARING BOTH THE SIDES, WE FIND THE REASONING GIV EN BY THE CIT(A) IN PARA NO.5.3 OF HIS ORDER IS A WELL REASONED ONE. T HE AMOUNT OF RS.10,000/- CONSIDERED BY THE CIT(A) ON ACCOUNT OF HOTEL E XPENDITURE, AS HAVING SPONSORED BY THE INSURANCE COMPANY NEEDS NO INT ERFERENCE. IT IS ALSO A FACT THAT AO MADE THE ADDITION ONLY ON ESTIMATION BASIS. REGARDING THE ADDITIONAL EVIDENCE, THE LD. AR FOR THE ASSES SEE FILED THE FOLLOWING WRITTEN SUBMISSIONS : THE RESPONDENT SUBMITS THAT OUT OF THE TOTAL ADDIT ION OF RS.1,66,000/- THE CIT(A) HAS UPHELD ADDITION TO THE EXTENT OF RS.1,56 ,000/- AND RS.10,000/- IS ALLOWED ON THE BASIS OF THE COPY OF LETTER FILED BY THE RESPONDENT WHICH WAS ALREADY SUBMITTED TO THE LD. AO DURING THE ASSE SSMENT PROCEEDINGS. THEREFORE, THE QUESTION OF ADDITIONAL EVIDENCE UNDE R RULE 46A AND CALLING FOR THE REMAND REPORT FROM THE LD. AO SIMPLY DID NO T ARISE. THEREFORE, THE GROUND RAISED BY THE REVENUE IS DISMISSED IN PRINCIPLE. ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 6 13. GROUND NO.3 BY THE REVENUE RELATES TO DISALLOWANCE O F INTEREST EXPENDITURE AMOUNTING TO RS.1,60,560/- BY THE CIT(A). 14. RELEVANT FACTS OF THIS ISSUE ARE THAT ASSESSEE IS A PARTNER IN M/S. CHAUDHARI AUTOMOBILES. DURING THE YEAR UNDER CONSIDERAT ION, ASSESSEE RECEIVED REMUNERATION OF RS.72,000/- AND INTEREST ON CAPIT AL OF RS.1,35,394/-. ASSESSEE BORROWED SOME LOANS FROM BANK OF INDIA AND TAPI SOCIETY AND PAID INTEREST OF RS.2,80,378/- AND CLAIMED THE SAME AS BUSINESS EXPENDITURE. AO REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE MADE ADDITION OF RS.2,80,378/- IN THE HANDS OF ASSESSEE. C IT(A) GAVE PART RELIEF TO THE ASSESSEE. AGGRIEVED WITH THE ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 15. ON HEARING BOTH THE SIDES AND ON GOING THROUGH THE ORDERS OF THE REVENUE AUTHORITIES, WE FIND THE AO MADE ADDITION OF RS.2,80 ,378/-, THE AMOUNT WHICH WAS PAID BY THE ASSESSEE AS INTEREST ON H IS BORROWED LOANS. ASSESSEE DREW THE ATTENTION OF CIT(A) TO THE BALANCE SHE ET AND THE CAPITAL ACCOUNT OF THE ASSESSEE AND TRIED TO JUSTIFY THE CLAIM O F RS.2,07,394/- AS SET OFF OF THE INTEREST EXPENDITURE AGAINST THE REMUNERA TION AND INTEREST ON CAPITAL DERIVED FROM THE FIRM. ASSESSEE ALSO TRIED TO E XPLAIN THAT HE HAS RS.11,22,205/- AS CASH IN HAND AND THEREFORE THE INTE REST EXPENDITURE SHOULD BE ALLOWED AS SUFFICIENT INTEREST FREE FUND S AVAILABLE WITH THE ASSESSEE. THE CIT(A) NOTED SINCE THE ASSESSEE HAS ONLY SHOWN TOTAL INCOME OF RS.3,20,000/-, THE CIT(A) WAS OF THE OPINION THAT ONLY RS.2,00,000/- SHOULD BE CONSIDERED AS WORKING CAPITAL AND A CCORDINGLY, COMPUTED THE INTEREST PAID ON BORROWINGS AT RS.13,89,872/ - ON PRO-RATA BASIS WHICH WORKS OUT TO RS.1,60,560/-. THUS, RS.1,19,818/- IS UPHELD. REGARDING THE ADDITIONAL EVIDENCE, THE LD. AR FOR THE ASSE SSEE FILED THE FOLLOWING WRITTEN SUBMISSIONS : ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 7 THE LD.CIT(A) HAS DELETED THE SAID ADDITION ON PRO -RATA BASIS AFTER TAKING INTO CONSIDERATION THE BALANCE SHEET WHICH WAS FILE D BEFORE THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SINCE THE BOOKS OF ACCOUNTS CONTAINING THE BALANCE SHEET WAS DULY SUBMITTED BEF ORE THE LD. AO, THE QUESTION OF ADDITIONAL EVIDENCE UNDER RULE 46A AND CALLING FOR THE REMAND REPORT FROM THE LD. AO SIMPLY DID NOT ARISE. THUS, WE FIND THE CONCLUSION GIVEN BY THE CIT(A) AFTER TAKING INTO COGNIZANCE THE CAPITAL ACCOUNT AND BALANCE SHEET OF THE ASSESSEE IS FAIR AND REASONABLE AND DOES NOT CALL FOR ANY INTERFERENCE. A S SUCH, WE DO NOT FIND ANY VIOLATION OF PROVISIONS OF SECTION 46A OF THE INCOME TAX RULES, 1962. GROUND NO.3 RAISED BY THE REVENUE IS THEREFORE DISMISSED. 16. GROUND NO.4 BY THE REVENUE RELATES TO DELETION OF RS .52,13,333/- BY THE CIT(A) AS UNDISCLOSED INVESTMENT IN PROPERTIES. 17. BRIEFLY STATED RELEVANT FACTS ARE THAT DURING THE CO URSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF SHRI RAJESH PRAKA SH CHAUDHARI OF THE GROUP, THE AO NOTED THAT LOAN SANCTIONED BY UCO B ANK TO SHRI RAJESH P. CHAUDHARI AGAINST THE SECURITY OF LAND SITUATED AT S.NO.2 40/3A/3B/3C AT SAKEGAON, STANDING IN THE NAME OF THE ASSESSEE, SHRI B HAGWAT M. CHAUDHARI AND SHRI NAMDEV M. CHAUDHARI. FOR THE PURPOSE OF LOAN, THE VALUER HAS VALUED THE PROPERTY AT RS.1,87,68,000/- AS O N 04-02-2006. AO GAVE 20% ALLOWANCE ON THIS ASSESSED VALUE BEING HIGHER THAN THE ACTUAL INVESTMENT AND THE COST PRICE OF THE PROPERTY W AS THUS TAKEN AT RS.1,56,40,000/-. THUS, 1/3 RD OF THE AMOUNT WORKS OUT TO RS.51,13,333/-. IN ABSENCE OF ANY DETAILS ABOUT THE INVES TMENT IN THE PROPERTY, IN THE BALANCE SHEET OF THE ASSESSEE, THE AO P ROCEEDED TO MAKE ADDITION OF RS.51,13,333/- IN THE HANDS OF THE ASSESSEE. I N THE FIRST APPELLATE PROCEEDINGS, CIT(A) DELETED THE ADDITION. AGGRIEVED WITH TH E SAID ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 18. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS O F THE REVENUE ON THIS ISSUE. ON GOING THROUGH THE ORDER OF CIT(A) ON THIS IS SUE, WE FIND IT ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 8 RELEVANT TO EXTRACT THE RELEVANT OPERATIONAL LINES FROM T HE FINDING OF THE CIT(A) IN PARA NO.7.3 OF HIS ORDER AND THE SAME READS AS UNDER : 7.3 . . . . .I FIND MERIT IN THE CONTENTION OF THE APPLICANT. IT WAS NOTED THAT THE AO DID NOT PERMIT PERSONAL HEARING TO THE AUTHO RIZED REPRESENTATIVE OF THE APPELLANT TO EXPLAIN THE TRANSACTION ON THE PRE TEXT THAT APPELLANT COULD NOT AUTHORIZE MORE THAN ONE REPRESENTATIVES U/S.288 (1) OF THE ACT AND ON THE OTHER HAND DID NOT VERIFY THE DOCUMENTS OF PURC HASE OF THE PROPERTY IN QUESTION AND ASSUMED THAT SINCE PROPERTY WAS NOT AP PEARING IN THE BALANCE SHEET HENCE IT WAS PURCHASED ON THE DATE OF VALUATI ON ITSELF. NO ENQUIRY WAS CONDUCTED WITH THE LENDING BANK OR WITH THE VAL UER OF THE PROPERTY. NO EVIDENCE WAS FOUND DURING THE SEARCH TO REACH TO TH E CONCLUSION THAT INVESTMENT WAS MADE DURING THE YEAR UNDER CONSIDERA TION. ON THE OTHER HAND, APPELLANT HAD SATISFACTORILY DEMONSTRATED THA T PROPERTY IN QUESTION WAS PURCHASED DURING FY 1998-99. NO ADDITION CAN B E MADE ON PRESUMPTION AND CONSIDERING THE FACTS OF THE CASE, ADDITION MADE BY THE AO OF RS.52,12,333 IS DELETED AND GROUND RAISED BY THE APPELLANT IS ALLOWED. 19. FROM THE ABOVE, IT IS EVIDENT THAT THE PROPERTY IN Q UESTION WAS PURCHASED PRIOR TO THE PERIOD OF SEARCH AND THE AO MAD E THE ADDITION ON PRESUMPTION BASIS. CIT(A) HAS APPRECIATED THE ISSUE IN THE RIGHT PERSPECTIVE AND DELETED THE ADDITION. THUS, ON MERITS, WE FIN D THE ORDER OF CIT(A) IS FAIR AND REASONABLE. REGARDING THE ADDITIONAL EVIDEN CE, THE LD. AR FOR THE ASSESSEE FILED THE FOLLOWING WRITTEN SUBMISSIONS : THE RESPONDENT SUBMITS THAT HE HAS DULY PRODUCED TH E COPY OF PURCHASE DEED OF THE SAID LAND BEFORE THE LD . A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN HE HAS EXPLAINED THAT THE SAID LAND W A S PURCHASED BY THE RESPONDENT PRIOR TO SEARCH PERIOD. IT IS APPARE NT FROM THE RECORDS THAT THE RESPONDENT HAD PURCHASED THE SAID LAND PRIOR TO THE SEARCH, HENCE THE ADDITION MADE BY THE LD. AO . IS UNJUSTIFIED AND THE LD . CIT (A) IS JUSTIFIED IN DELETING THE SAID ADDITION . SINCE , THE PURCHASE DEED WAS PRODUCED BEFORE THE LD . AO. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE QU ESTION OF CALLING FOR THE REMAND REPORT SIMPLY DOES NOT ARISE . FURTHER I AM ENCLOSING HEREWITH THE COPY OF SUBMISSION FILED WITH THE LD . AO . WHEREIN IT IS CLEARLY STATED THAT THE PURCHASE DEED OF THE SAID LAND WAS SUBMITTED IN THE PAPER BOOK. ACCORDINGLY, GROUND NO.4 RAISED BY THE REVENUE IS DISMISSED. 20. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO.630/PUN/2016 A.Y. 2007-08 ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 9 21. GROUNDS RAISED BY THE REVENUE IN THIS APPEAL ARE EXT RACTED AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, WHETHER THE ID.CIT(A) WAS JUSTIFIED IN DELETING THE FOREIGN TOU R EXPENSES AMOUNTING TO RS.79,000/-? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF 'UNDISCLOSED INTEREST IN FDR' AMOUNTING TO RS.6,000/-? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF' DISALLOWANCE OF INTEREST EXPENDITURE' TO THE EXTENT OF RS.2,39,227/ -, THOUGH THE ENTIRE INTEREST WAS NOT SUBSTANTIATED BY THE ASSESSEE DURI NG ASSESSMENT PROCEEDINGS, DESPITE BEING GIVEN OPPORTUNITY? 22. GROUND NO.1 BY THE REVENUE RELATES TO THE RELIEF GRAN TED BY THE CIT(A) IN CONNECTION WITH THE CLAIM RELATING TO FOREIGN TRAV EL EXPENSES. RELEVANT FACTS INCLUDE THAT THE ASSESSEE VISITED SINGAPORE AND MAURITIUS AND CLAIMED EXPENDITURE ON ACCOUNT OF FOREIGN TRAVEL. AO DISALLOWED THE SAID EXPENSES INCURRED BY THE ASSESSEE IN CONNECTION WIT H HIS TRAVEL TO SINGAPORE AND MAURITIUS FOR WANT OF DETAILS AND THE SOURCE OF FUNDS. ASSESSEE COULD NOT DEMONSTRATE THE SAME EXCEPT STATIN G THAT THE EXPENDITURE WAS SPONSORED BY THE INSURANCE COMPANIES. NO DETAILS WERE FURNISHED IN SUPPORT OF THE SAME. DURING THE FIRST APPELLAT E PROCEEDINGS, ASSESSEE FURNISHED COPIES OF THE EMAILS SENT BY JOHN DEERE EQUIPMENTS PVT. LTD. EMAILS WERE ADDRESSED TO M/S. CHAUDHARI MOTORS IN RESPECT OF MAURITIUS TOUR. BASICALLY, FOR WANT OF DETAILS, CIT(A) DELETED THE ADDITION OF RS.79,000/- AND CONFIRMED THE BALANCE OF RS.1,73,000/-. 23. DURING THE PROCEEDINGS BEFORE US, LD. DR FOR THE REV ENUE RELIED HEAVILY ON THE ORDER OF THE AO. ON THE OTHER HAND, LD. AR FOR THE ASSESS EE DREW OUR ATTENTION TO THE SPEAKING ORDER OF THE CIT(A). 24. ON HEARING BOTH THE PARTIES, WE FIND IT IS RELEVANT TO EXTRACT THE RELEVANT LINES FROM THE ORDER OF CIT(A) AND THE SAME READS AS UNDER : ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 10 14. . . . . .AS DISCUSSED IN AY 2006-07 WHILE DEAL ING WITH SIMILAR ADDITION, THE SPONSOR HERO MOTORS HAD CLEARLY MENTIONED THAT TICKETS HAVE TO BE BORNE BY THE DEALER. THE APPELLANT ALSO DENIED OF TRAVELL ING OF THEIR SONS TO MAURITIUS AND SINGAPORE BUT DID NOT FURNISH COPY OF THEIR PASSPORT TO SUPPORT THE CLAIM. IN THE CIRCUMSTANCES, THE FACT OF TRAVELLING TO SINGAPORE AND MAURITIUS HAS BEEN BROUGHT BY THE AO ON THE REC ORD AND FOR WANT OF FURTHER DETAILS, HE WAS LEFT WITH NO OTHER OPTION B UT TO ESTIMATE THE EXPENDITURE. HOWEVER, AO HAD FAILED TO GIVE CREDIT TO THE AMOUNT OF RS.79,000/- DEBITED THE CAPITAL ACCOUNT OF THE APPE LLANT. THEREFORE, ADDITION TO THE EXTENT OF RS.79,000/- IS DELETED AN D BALANCE ADDITION OF RS.1,73,000/- IS UPHELD. GROUNDS RAISED BY THE APP ELLANT IS PARTLY ALLOWED. 25. CONSIDERING THE ABOVE, WE ARE OF THE VIEW THAT THE D ECISION OF CIT(A) IS TAKEN BASED ON THE PLAUSIBLE REASONING WHICH DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.1 IS DISMISSED. 26. GROUND NO.2 RELATES TO DELETION OF ADDITION OF INTEREST INCOME OF RS.6,000/- ON ACCOUNT OF UNDISCLOSED INCOME FROM FDR. RELE VANT FACTS INCLUDE THAT THE ASSESSEE HAD A FDR WITH UCO BANK AMO UNTING TO RS.1 LAKH AND EARNED INTEREST. WITHOUT REALIZING THE FACT THAT THE SAID INCOME WAS ALREADY OFFERED TO TAX, AO ESTIMATED THE INTEREST ACC RUED ON THE SAID FDR AND MADE ADDITION. DURING THE FIRST APPELLATE PROCEED INGS, ASSESSEE DEMONSTRATED VIDE HIS LETTER DATED 16-11-2015 THE FACT OF OFFERING OF RS.6,000/- WHICH FORMED PART OF THE INCOME RETURNED BY TH E ASSESSEE. ON CONSIDERING THE SAME AND EXAMINING THE FACTS, THE CIT(A) GR ANTED RELIEF. RELEVANT OPERATIONAL PARA IS EXTRACTED AS UNDER : 15.2 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS FILED BY THE APPELLANT. AS DISCUSSED E ARLIER, PROPER OPPORTUNITY COULD NOT BE GRANTED TO THE APPELLANT, AND THE AO W ITHOUT EXAMINING THE COMPUTATION OF TOTAL INCOME FILED BY THE APPELLANT ALONG WITH THE RETURN OF INCOME FILED ON 08-08-2008 HAD ASSUMED THAT INTERES T ON FDR KEPT WITH THE UCO BANK WAS NOT OFFERED TO TAX. I HAVE EXAMINED T HE COMPUTATION OF TOTAL INCOME AND IT IS SEEN THAT APPELLANT HAS OFFERED INTEREST OF RS.5,807/- AS INTEREST ON FDR WITH THE UCO BANK. THEREFORE, E STIMATED ADDITION OF RS.6,000/- MADE ON THIS GROUND STANDS DELETED. GRO UND RAISED BY THE APPELLANT IS ALLOWED. 27. CONSIDERING THE ABOVE, WE FIND THE ORDER OF CIT(A) IS FAIR AND REASONABLE AND DOES NOT WARRANT ANY INTERFERENCE. AC CORDINGLY, GROUND NO.2 IS DISMISSED. ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 11 28. GROUND NO.3 RELATES TO DELETION OF ADDITION ON ACCOUN T OF DISALLOWANCE OF INTEREST EXPENDITURE AMOUNTING TO RS.2,39,227 /-. RELEVANT FACTS INCLUDE THAT THE ASSESSEE CLAIMED THE ABOV E INTEREST EXPENDITURE AS BUSINESS EXPENDITURE AGAINST THE INTERES T AND REMUNERATION RECEIVED FROM THE FIRM. AO DISALLOWED THE CLAIM AS PER THE DISCUSSION GIVEN IN PARA 11 OF HIS ORDER. DURING THE FIRST APPELLATE PROCEEDINGS OF CIT(A), ASSESSEE MADE WRITTEN SUBMISSION AND THE SAME RELEVANT PORTION ARE EXTRACTED IN PARA NO.16 OF THE ORDE R OF CIT(A). ON CONSIDERING THE SAME, CIT(A) HELD THAT THE DISALLOWANCE OF INT EREST IS UNCALLED FOR CONSIDERING THE ASSESSEES OWN FUNDS AND THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF RELIANCE UTILITIES AND PO WER LTD. 313 ITR 340. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELE VANT FINDING OF CIT(A) IS EXTRACTED AS UNDER : 16.2 TOTAL INVESTMENT IN THE FIRMS STOOD AT RS.24, 48,730 AND APART FROM THAT ALL OTHER INVESTMENTS WERE PERSONAL INVESTMENT S OF THE APPELLANT IN THE LAND, HOUSE PROPERTY AND SAVING BANK ACCOUNT. HON BLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITY & POWER 313 ITR 340 (BOM.), HELD THAT IF THERE BE INTEREST FREE FUNDS AVAILABLE TO AN ASSESSEE SUF FICIENT TO MEET ITS INVESTMENT AND AT THE SAME TIME THE ASSESSEE HAD RA ISED A LOAN, IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTERES T FREE FUNDS AVAILABLE. FOR THE YEAR UNDER CONSIDERATION, PERSONAL INVESTME NT OF THE APPELLANT ARE ONLY RS.8,54,311/- WHICH ARE LESSER THAN HIS OWN CA PITAL OF RS.10,05,620/-. THEREFORE, IT IS HELD THAT BORROWED FUNDS OF RS.16, 22,420/- WERE USED FOR MAKING INVESTMENT IN THE PARTNERSHIP FIRM. THE APP ELLANT HAD RECEIVED INTEREST ON THE CAPITAL FROM THE FIRM OF RS.2,39,16 7/- AND PAID INTEREST OF RS.2,39,227/- ON THE FUNDS INVESTED IN THE PARTNERS HIP FIRM. IN THESE FACTS DISALLOWANCE MADE BY THE AO WAS NOT CALLED FOR AND THEREFORE DELETED. GROUND RAISED BY THE APPELLANT IS ALLOWED. 29. THE FINDING OF THE CIT(A) RELYING ON THE JUDGMENT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD.(SUPRA) IS FAIR AND REASONABLE. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE DOES NOT H AVE INTEREST FREE FUNDS FOR INVESTMENT ACTIVITY. CONSIDERING THE ABOVE, WE FIND THE REASONING GIVEN BY THE CIT(A) IS REASONABLE. 30. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 12 ITA NO.631/PUN/2016 A.Y. 2008-09 31. GROUNDS RAISED BY THE REVENUE READ AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNDISCLOSED INTEREST IN FDR AMOUNTING TO RS. 9,000/-. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENDITURE TO THE EXTENT OF RS. 2,76,279 /-, THOUGH THE ENTIRE INTEREST WAS NOT SUBSTANTIATED BY THE ASSESSEE DURI NG ASSESSMENT PROCEEDINGS, DESPITE BEING GIVEN OPPORTUNITY? 32. GROUND NO. 1 RAISED BY THE REVENUE RELATES TO ADDIT ION ON ACCOUNT OF INTEREST ON FDR AMOUNTING TO RS.9,000/-. 33. ON HEARING BOTH THE SIDES, WE FIND THIS ISSUE IS IDENTICA L TO THE GROUND RAISED BY THE REVENUE IN A.Y. 2007-08 RAISED BY THE ASSESSEE VIDE GROUND NO.2. THE FDR IN QUESTION IS ONE AND THE SAME. WE HAVE UPHELD THE DECISION OF CIT(A) IN THE SAID ASSESSMENT YEAR. FOLLOWIN G THE SAME REASONING AND CONSIDERING THE COMMONALITY OF THE FACTUAL MA TRIX, WE DELETE GROUND NO.1 RAISED BY THE REVENUE IN THIS YEAR TOO. 34. GROUND NO.2 BY THE REVENUE RELATES TO DISALLOWANCE OF INTEREST EXPENDITURE OF RS.2,76,279/-. THE FACTS RELATING TO THIS GRO UND ARE IDENTICAL TO THE FACTS DISCUSSED IN GROUND NO.3 OF THE APPE AL FOR A.Y. 2007-08. WE GRANTED RELIEF TO THE ASSESSEE IN THAT ASSE SSMENT YEAR RELYING ON THE RATIO OF THE RELIANCE UTILITIES AND POWER LTD.(SUPRA). 35. ON HEARING BOTH THE SIDES, WE FIND THIS ISSUE AS WELL AS THE FACTS ARE IDENTICAL TO THE GROUND NO.3 OF APPEAL FOR A.Y. 2007-08. WE H AVE UPHELD THE DECISION OF CIT(A). FOLLOWING THE SAME REASONING, WE DELET E GROUND NO.2 RAISED BY THE REVENUE IN THIS YEAR TOO. 36. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 13 ITA NO.632/PUN/2016 A.Y. 2009-10 37. GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCO UNT OF UNDISCLOSED INTEREST IN FDR AMOUNTING TO RS.9,000 /-. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.4,35,7 41/- MADE BY ESTIMATING NP @ 6%, IGNORING THE FACT THAT THE ASSE SSEE DID NOT PRODUCE BOOKS OF ACCOUNTS FOR VERIFICATION DURING A SSESSMENT PROCEEDINGS , DESPITE BEING GIVEN OPPORTUNITY? 38. GROUND NO. 1 RAISED BY THE REVENUE RELATING TO INTERE ST ACCRUED ON FDR IS IDENTICAL TO THE GROUND RAISED BY THE REVENUE IN A .Y. 2007-08 VIDE GROUND NO.2. WE HAVE UPHELD THE DECISION OF CIT(A) IN THE SAID ASSESSMENT YEAR. FOLLOWING THE SAME REASONING, WE DELETE GROUND NO.1 RAISED BY THE REVENUE IN THIS YEAR. 39. GROUND NO.2 BY THE REVENUE RELATES TO DELETION OF RS.4,35,741/-BY THE CIT(A) ON ACCOUNT OF ESTIMATION OF NET PROFIT @6% BY THE AO. 40. RELEVANT FACTS INCLUDE THAT THE ASSESSEE SHOWN THE TURNOVER OF RS.2.19 CRORES (ROUNDED OFF) WITH NET PROFIT @4.01%. HOWEVER, THE AO MADE ADDITION OF RS.4,35,741/- ESTIMATING THE PROFITS @6% ON THE GROUND THAT ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT. I N THE FIRST APPELLATE PROCEEDINGS, ASSESSEE CONTENDED THAT BOOKS OF ACCOUNT WERE AUDITED U/S.44AB OF THE ACT. TOTAL TURNOVER OF THE ASSE SSEE WAS RS.2.19 CRORES WHICH INCLUDES THE TRADING OF SPARES AND OIL. AO WA S IN POSSESSION OF THE AUDITED BALANCE SHEET AND THE PROFIT AND LOSS ACCO UNT AND COULD NOT FIND ANY DISCREPANCY. HAVING CONSIDERED THE FACT THAT A O WAS IN POSSESSION OF THE BOOKS AND THERE WAS NO MATERIAL WITH T HE AO TO DISTURB THE CONCLUDED ASSESSMENT. CIT(A) ALSO EXAMINED THE LETTER RECEIVED FROM THE AO THAT THE ASSESSEE PRODUCED BOOKS OF ACCOUNT B EFORE HIM. FURTHER, ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 14 RELYING ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MURLI AGRO PRODUCTS, CIT(A) DELETED THE ENTIRE ADDITION OF R S.4,35,741/- AS PER THE DISCUSSION GIVEN IN PARA NO.35.2 OF HIS ORDER. WE H AVE ALREADY DEALT WITH THE SAME ISSUE WHILE DEALING WITH THE ISSUE OF VIO LATION OF RULE 46A OF THE I.T. RULES, 1962. 41. IN VIEW OF THE ABOVE REASONED FINDING OF THE CIT(A) ON T HIS ISSUE, WE UPHOLD THE ORDER OF CIT(A). AS SUCH, REVENUE HAS NO REA SON FOR MAKING ADDITION OF RS.4,35,741/-. ACCORDINGLY, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 42. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO.633/PUN/2016 A.Y. 2010-11 43. GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE FOREIG N TOUR EXPENSES AMOUNTING TO RS.3,95,800/- BY ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULES, IGNORING THE FACT THAT THE ASSESSEE HAD NOT FURNISHED THE RELEVANT DOCUMENTS IN SPITE OF OPPORT UNITIES GIVEN DURING ASSESSMENT PROCEEDINGS AND DESPITE BEING GIV EN SPECIFIC INSTRUCTION? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCO UNT OF 'DISALLOWANCE OF INTEREST ON PURCHASE OF LAND' OF R S.1,20,000/- WITHOUT APPRECIATING THE FACT THAT THE PRIME PURPOS E FOR MAKING INVESTMENT REMAINS UNPROVEN EVEN IN APPELLATE PROCE EDINGS BEFORE THE LD. CIT(A) ? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCO UNT OF 'UNDISCLOSED INTEREST IN FDR' AMOUNTING TO RS.9,000/-? 4.WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCO UNT OF 'UNPROVED AGRICULTURAL INCOME' OF RS.1,06,535/-? 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.6,12,0 02/- MADE BY ESTIMATING NP @ 6%, IGNORING THE FACT THAT THE ASSE SSEE DID NOT PRODUCE BOOKS OF ACCOUNTS FOR VERIFICATION DURING A SSESSMENT PROCEEDINGS, DESPITE BEING GIVEN OPPORTUNITY? ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 15 44. GROUND NO.1 BY THE REVENUE RELATES TO THE RELIEF GRAN TED BY THE CIT(A) IN CONNECTION WITH THE CLAIM RELATING TO FOREIGN TRAVEL EXPENS ES. 45. WE FIND THIS GROUND IS IDENTICAL TO THE GROUND NO.1 RAISE D BY THE REVENUE IN A.Y. 2007-08. WE HAVE UPHELD THE FINDING GIVEN B Y THE CIT(A) ON THIS ISSUE. IT IS THE CASE OF THE ASSESSEE THAT THE SOURCE OF FUND FOR THE FOREIGN TRAVEL EXPENSES IS THE COMPANY TO WHICH THE AS SESSEE IS A DEALER OR THE OTHER COMPANIES. FOLLOWING THE SAME PARITY OF REAS ONING, WE CONCUR WITH THE FINDINGS GIVEN BY THE CIT(A). ACCORDINGLY, GR OUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 46. GROUND NO.2 BY THE REVENUE RELATES TO DISALLOWANCE OF INTEREST AMOUNT OF RS.1,20,000/-PAID ON LOAN AVAILED FROM M/S. CHADHAR I AUTOMOBILES. 47. RELEVANT FACTS ON THIS ISSUE INCLUDE THAT ASSESSEE TO OK LOAN OF RS.30 LAKHS FROM M/S. CHAUDHARI AUTOMOBILES ON 27-11-2009 FOR MA KING INVESTMENT IN LAND. HE PAID INTEREST AMOUNT OF RS.1,20,000/- ON THE SAID LOAN. ASSESSEE COULD NOT DEMONSTRATE BEFORE THE CIT(A) A BOUT THE SPECIFIC INVESTMENT EXCEPT STATING THAT THE PURCHASED PROPERTY WAS ACCOUNTED IN THE BOOKS OF ACCOUNT. CIT(A) AFTER PERUSING THE BALANCE SH EET OF THE ASSESSEE AND DISCUSSING THE VARIOUS INVESTMENTS MADE BY THE ASSESSEE CAME TO A CONCLUSION THAT THE INVESTMENT MADE IS OUT O F INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. WHILE COMING TO THE CONC LUSION OF DELETING THE DISALLOWANCE OF INTEREST U/S.36(1)(III) OF THE ACT, THE CIT(A) RELIED ON THE DECISION OF RELIANCE UTILITIES AND POWER LTD. 313 ITR 340. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, WE FIND IT RELEV ANT TO EXTRACT THE FINDING GIVEN BY THE CIT(A) IN PARA NO.44.2 ON THIS ISSUE AND THE SAME IS REPRODUCED HERE AS UNDER : ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 16 44.2 . . . . . .I HAVE PERUSED THE BALANCE SHEET O F HE APPELLANT AS ON 31-03- 2010. CAPITAL OF THE APPELLANT STOOD AT RS.55,74,1 86/- AS ON 31-03-2010 WHEREAS TOTAL INVESTMENT STOOD AT RS.88,33,777/- AS ON 31-03-2010. THE INCREASE IN THE INVESTMENT WAS MAINLY ON ACCOUNT OF INVESTMENT IN SHARES OF M/S. CHOUDHARI CARS PVT. LTD. OF RS.29,63,800/- AND FURTHER INVESTMENT IN THE FIRM M/S. CHOUDHARI AUTOMOBILES WHICH STOOD AT RS.46,31,842/- AS ON 31-03-2010. INVESTMENT IN THE FIRM IS CONSIDERED FO R THE PURPOSE OF BUSINESS AS APPELLANT HAD OFFERED INTEREST AND REMU NERATION OF RS.5,36,663/- FROM THE FIRM UNDER THE HEAD INCOME F ROM BUSINESS AND PROFESSION. HOWEVER, OTHER INVESTMENTS INCLUDING T HE INVESTMENT IN THE SHARES OF M/S. CHOUDHARI CARS PVT. LTD. ARE TREATED AS PERSONAL INVESTMENT NOT RELATED TO CARRYING OUT OF BUSINESS. IN THIS M ANNER, PERSONAL INVESTMENT NOR RELATED TO BUSINESS OF THE APPELLANT AT RS.42,0 1,935/- (RS.88,33,777 RS.46,31,842) AS AGAINST CAPITAL OF RS.55,74,186/-. HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITY & POWER 313 I TR 340 (BOM.), HELD THAT IF THERE BE INTEREST FREE FUNDS AVAILABLE TO AN ASSESS EE SUFFICIENT TO MEET ITS INVESTMENT SAND AT THE SAME TIME THE ASSESSEE HAD R AISED A LOAN, IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTERES T FREE FUNDS AVAILABLE. SINCE THE CAPITAL OF APPELLANT IS MORE THAN THE PER SONAL INVESTMENTS NO DISALLOWANCE OF INTEREST U/S.36(1)(III) IS CALLED F OR. ADDITION OF RS.1,20,000/- IS DELETED AND GROUND RAISED BY THE APPELLANT IS HE REBY PARTLY ALLOWED. 48. THE ABOVE CONCLUSION DRAWN BY THE CIT(A) IS FOUND TO BE REASONABLE AND THEREFORE, WE DO NOT FIND ANY REASON TO REVERSE THE SAME. ACC ORDINGLY, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 49. GROUND NO. 3 RAISED BY THE REVENUE, I.E. INTEREST INCOM E LINKED TO THE FDR IS IDENTICAL TO THE GROUND RAISED BY THE REVENU E IN A.Y. 2007-08 RAISED BY THE ASSESSEE VIDE GROUND NO.2. WE HAVE UPHELD THE DECISION OF CIT(A). FOLLOWING THE SAME REASONING, WE DELETE GROUND NO.3 RAISED BY THE REVENUE. 50. GROUND NO.4 BY THE REVENUE RELATES TO DELETION OF ADD ITION BY THE CIT(A) ON ACCOUNT OF INCOME FROM OTHER SOURCES AMOUNTING TO RS.1,06,535/- (BEING 50% OF THE DISCLOSED AGRICULTURAL INCOME). 51. RELEVANT FACTS OF THIS ISSUE INCLUDE THAT THE ASSESSEE IN RESPONSE TO NOTICE U/S.153A OF THE ACT DISCLOSED THE GROSS AGRICULTUR AL INCOME OF RS.2,13,071/-, NET AGRICULTURAL INCOME OF RS.1,25,556/- AFTER R EDUCING THE EXPENSES OF RS.87,515/-. AO CONSIDERING THE GROSS SALES OF AGRICULTURAL PRODUCE OF RS.2,13,071/- AS NET AGRICULTURAL INCOME AND MAD E ADDITION OF RS.1,06,535/- ON ESTIMATION BASIS. ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 17 52. DURING THE FIRST APPELLATE PROCEEDINGS, ASSESSEE PRODU CED ONE SALE BILL OF COTTON AMOUNTING TO RS.2,13,071/- BUT THE CIT(A) HAS NOT ADMITTED THE SAME AS ADDITIONAL EVIDENCE. ASSESSEE IS NOT IN APPEAL BEFORE US ON THIS DECISION OF CIT(A). HOWEVER, THE CIT(A) HAVING CONSIDERE D THE NET AGRICULTURAL INCOME OF RS.1,25,556/- AS DISCLOSED BY THE ASSE SSEE AND SINCE NO MATERIAL WAS GATHERED DURING THE COURSE OF SEA RCH EVENTUALLY DELETED THE ADDITION. 53. ON HEARING BOTH THE SIDES, WE FIND IT RELEVANT TO EXTR ACT THE FINDING GIVEN BY THE CIT(A) IN PARA NO.46.2 ON THIS ISSUE AND THE S AME READS AS UNDER : 46.2 . . . . . . . .DURING THE COURSE OF APPELLATE PROCEEDINGS, APPELLANT HAD PRODUCED ONE SALE BILL OF COTTON OF RS.2,13,071/- I SSUED BY THE KRISHI UTPANNA BAJAR SAMITEE, JAMNER, DIST. JALGAON ON 25- 01-2010. APPELLANT HAS FAILED TO SHOW AS TO WHAT PREVENTED HIM TO PRODU CE THE BILLS BEFORE THE AO. THEREFORE, ADDITIONAL EVIDENCE FURNISHED BEFOR E ME IS NOT ADMITTED. HOWEVER, NO MATERIAL WAS GATHERED DURING THE COURSE OF SEARCH AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO DIST URB THE ACCEPTED NET AGRICULTURAL INCOME OF RS.1,25,556/- FOR THE YEAR U NDER CONSIDERATION. IN CASE OF CONCLUDED PROCEEDINGS, ADDITIONS NOT BASED ON MATERIAL GATHERED DURING THE SEARCH OR DURING THE COURSE OF SEARCH AS SESSMENT ARE NOT PERMITTED ON VIEW OF THE FINDINGS OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MURLI AGRO PRODUCTS (SUPRA). HENCE, ADDITION MADE BY THE AO ON ADHOC AND ESTIMATED BASIS IS DELETED AND GROUND RAI SED BY THE APPELLANT IS ALLOWED. 54. FROM THE ABOVE, IT IS EVIDENT THAT THE AO MADE THE A DDITION ON ESTIMATION BASIS AND THERE WAS NO INCRIMINATING MATERIAL GAT HERED DURING THE COURSE OF SEARCH. THEREFORE, WE FIND THE ORDER OF CIT (A) IN DELETING THE ADDITION IS REASONABLE. THUS, WE UPHOLD THE ORDER OF CIT(A) AND THE GROUND NO.4 RAISED BY THE REVENUE IS DISMISSED. 55. GROUND NO.5 RAISED BY THE REVENUE RELATES TO ADDITION OF RS.6,12,002/- MADE BY THE AO ADOPTING THE NET PROFIT RATE OF 6% REJECTING THE ASSESSEES BOOK RESULTS. AO CLAIMS THAT THE ASSESS EE HAS NOT PRODUCED THE BOOKS OF ACCOUNT BEFORE HIM. THE ARGUMENT S/COUNTER ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 18 ARGUMENTS ARE, SIMILAR TO THE GROUND NO.2 (PARA 40 SUPRA ) ALREADY ADJUDICATED BY US FOR A.Y. 2009-10. 56. AFTER HEARING BOTH THE SIDES, WE FIND THIS GROUND IS IDEN TICAL TO GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IN A.Y. 2009-1 0. IT IS THE CASE OF THE ASSESSEE THAT THE AO IMPOUNDED THE BOOKS A ND THEY WERE LYING WITH THE AO FOR PERIOD OF 2 MONTHS OR MORE. WE HAVE ALR EADY DECIDED THIS ISSUE UPHOLDING THE ORDER OF CIT(A) DELETING THE ADDITION. F OLLOWING THE SAME REASONING, WE DISMISS THE GROUND RAISED BY THE REVENUE. 57. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO.634/PUN/2016 A.Y. 2011-12 58. GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C A S E AND IN LA W , THE LEARNED C IT(A) HA S E RR E D IN ALLOWING ADDITION A L E V ID E NCE UNDER RU LE 46A WH EREAS THE A S S ESSEE ' S CA S E I S N O T C O V ERED B Y THE EXCEPTION S PROVIDED UNDER RUL E 4 6A OF THE I.T . RULES. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF 'UNRECORDED ADVANCE RECEIPTS' AMOUNTING TO RS.1,00, 00,000/-, BY ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULE S, IGNORING THE FACT THAT THE ASSESSEE HAD NOT FURNISHED THE RELEVANT DOCUMEN TS IN SPITE OF OPPORTUNITIES GIVEN DURING ASSESSMENT PROCEEDINGS A ND DESPITE BEING GIVEN SPECIFIC INSTRUCTION? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.38,82,200/ - MADE ON ACCOUNT OF SHORT TERM CAPITAL GAINS, BY IGNORING THE FACT THAT THE VALUATION OF THE PROPERTY WAS DONE BY RECOGNIZED FINANCIAL INSTITUTI ON THROUGH A VALUER FOR THE PURPOSE OF GRANTING LOAN? 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF 'DISALLOWANCE OF INTEREST ON PURCHASE OF LAND' OF RS.3,60,000/- WITH OUT APPRECIATING THE FACT THAT THE PRIME PURPOSE FOR MAKING INVESTMENT REMAIN S UNPROVEN EVEN IN APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A)? 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNDISCLOSED INTEREST IN FDR AMOUNTING TO RS.9,000 /-. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNPROVED AGRICULTURAL INCOME OF RS.1,14,816/-? ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 19 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.4,03,573/- MADE BY ESTIMATING NP @ 6%, IGNORING THE FACT THAT THE ASSESSEE DID NOT PRO DUCE BOOKS OF ACCOUNTS FOR VERIFICATION DURING ASSESSMENT PROCEEDINGS, DES PITE BEING GIVEN OPPORTUNITY? 59. GROUND NOS. 1 RAISED BY THE REVENUE IS AGAINST ADM ITTING OF THE ADDITIONAL EVIDENCES BY THE CIT(A) IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962. 60. ON HEARING BOTH THE SIDES, WE FIND THESE GROUNDS ARE IDENTICAL TO THE GROUNDS OF APPEAL RAISED IN ITA NO.629/PUN/2016 FOR A.Y. 2006-07. WE HAVE ALREADY DECIDED THIS ISSUE AGAINST THE REVENUE HOLDING THAT CIT(A) HAS NOT ADMITTED ANY ADDITIONAL EVIDENCES AT THE BACK OF THE AO. THEREFORE, ON THE SAME REASONING, THE ABOVE GROUNDS RA ISED BY THE REVENUE ARE DISMISSED. 61. GROUND NO.2 RAISED BY THE REVENUE RELATES TO UNREC ORDED ADVANCE RECEIPT OF RS.1 CRORE ON ACCOUNT OF SALE OF PROPERTY TO SHRI ASHOK VIJAYKUMAR KOTECHA (M/S. CHAUDHARI MOTORS) WHICH WAS DELE TED BY THE CIT(A) ADMITTING ADDITIONAL EVIDENCE. 62. RELEVANT FACTS INCLUDE THAT THE ASSESSEE SOLD THE LAND TO SHRI ANIL VIJAYKUMAR KOTECHA ADMEASURING 7725.16 SQ. MTRS, SITUATE D AT GAT NO.277/2 AT SAKEGAON, TALUKA BHUSAWAL, DIST. JALGAON AND REC EIVED RS.1 CRORE AGAINST THE SAME. THERE WAS SURVEY ACTION AT M/ S. CHAUDHARI MOTORS AND DRAFT COPY OF SAUDA PAWTI DATED 11-10-2010 WAS IMPOUNDED BY THE AO. ASSESSEE SUBMITTED BEFORE THE AO THAT THE AMOUNT OF RS.1 CRORE WAS RECEIVED FROM SHRI ANIL VIJAYKUMAR KOTECHA ON ACCOUNT OF PROPOSED SALE OF LAND. HOWEVER, THE SALE TRANSACTION COULD NOT MATERIALIZE AND THE SAID AMOUNT OF RS.1 CRORE WAS RETURNED BACK TO SHRI ANIL VIJAYKUMAR KOTECHA. AS PER THE ASSESSEE, THE TRANSAC TION WAS DULY REFLECTED IN THE BOOKS OF ACCOUNTS. COPY OF SAUDA PAWT I AND THE ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 20 CANCELLATION DOCUMENT ARE ON RECORD. ASSESSEE IN HIS ST ATEMENT U/S.132(4) ALSO STATED THE ABOVEMENTIONED FACTS BEFORE TH E REVENUE AUTHORITIES. IN RESPONSE TO NOTICE, THOUGH SHRI ANIL VIJAY KUMAR KOTECHA DID NOT ATTEND IN PERSON, HE SUBMITTED THE PHOTOCOPY OF SAUDA PAWTIS CANCELLING THE ORIGINAL TRANSACTION. HOWEVER, AO PROCEEDED TO MAKE ADDITION OF RS. 1 CRORE AS INCOME OF THE ASSESSEE AS THE ASSESSEE COULD NOT PROVE THE TRANSACTION BEYOND DOUBT. 63. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) PERUSED THE SAUDA PAWTIS DATED 11-10-2010 AND 14-10-2010 BETWEEN THE A SSESSEE AND SHRI ASHOK KOTECHA, SIGNED BY BOTH THE PARTIES. CIT(A) ALSO P ERUSED THE DEED OF CANCELLATION OF THE SAUDA PAWTIS DATED 16-02-2011. CIT (A) OBSERVED THAT SHRI ANIL KOTECHA OFFERED THE AMOUNT OF RS.1 CRORE AS ADDITIONAL INCOME AND THE SAME WAS NOT DENIED BY THE AO. EVENTUA LLY, CIT(A) CAME TO THE CONCLUSION THAT THERE IS NO DOUBT THAT AMOUNT O F RS.1 CRORE WHICH WAS ADVANCED BY THE ASSESSEE TO SHRI ANIL KOTECHA WAS RETURNED BACK TO HIM. THERE WAS NO MATERIAL BEFORE THE CIT(A) TO HOLD OTHER WISE AND THE ADDITION OF RS.1 CRORE IN THE HANDS OF THE ASSESSEE WAS DELETED. 64. AGGRIEVED WITH THE SAID ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 65. ON HEARING BOTH THE SIDES AND ON PERUSING THE ORDERS OF THE R EVENUE AUTHORITIES, WE FIND IT IS THE CASE OF THE ASSESSEE THAT HE SOLD THE LAND SITUATED AT GAT NO.277/2, SAKEGAON, TALUKA BHUSAWAL, DIST JALGAON TO SHRI ANIL KOTECHA FOR A CONSIDERATION OF RS.1 CRORE. AGAINST THE SAID LAND DEAL, SAUDA PAWTI DATED 11-10-2010 WAS ENTERED INTO BY THE ASSESSEE AND SHRI ANIL KOTECHA. HOWEVER, THE LAND DEAL WAS NOT MATERIALIZ ED AND THE AMOUNT OF RS.1 CRORE TAKEN AS ADVANCE WAS EVENTUALLY R ETURNED BACK BY THE DEED OF CANCELLATION/SAUDA PAWTI DATED 14-10-2010. T HESE FACTS HAVE ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 21 BEEN DISCLOSED BY THE ASSESSEE BEFORE THE AO U/S.132(4) O F THE ACT. IT IS THE CASE OF THE REVENUE AUTHORITIES THAT THE ASSESSEE COULD NOT SATISFACTORILY PROVE THE SAID TRANSACTION AND THEREFORE, R S.1 CRORE SHOULD BE ADDED AS INCOME OF THE ASSESSEE AS UNRECORDED ADVA NCE RECEIVED AGAINST SALE OF THE PROPERTY, THUS PRAYED FOR REVERSING THE ORDER OF C IT(A). 66. AFTER GOING THROUGH THE FINDING GIVEN BY THE CIT(A) IN P ARA NOS. 54.2 AND 54.3 ON THIS ISSUE, WE DO NOT FIND ANY IOTA OF FAULT IN TH E REASONING GIVEN BY THE CIT(A) DELETING THE ADDITION OF RS.1 CRORE. WHIL E DELETING THE ADDITION, CIT(A) HAS CONSIDERED ALL ASPECTS; (1) SAUDI PAWTIS DA TED 11-10- 2010 AND 14-10-2010 (2) CANCELLATION DOCUMENT (3) STATEMEN T GIVEN BY THE ASSESSEE U/S.132(4) (4) CONFIRMATION OF SHRI ANIL KOTECHA C ANCELLING THE ORIGINAL TRANSACTION IN RESPONSE TO THE SHOW CAUSE N OTICE ISSUED BY THE AO. ALL THESE DOCUMENTS CLEARLY SUGGEST THAT THE AMOUNT OF RS.1 C RORE WAS RETURNED BACK TO SHRI ANIL KOTECHA. REGARDING THE REVENUES ALLEGATION THAT THE CIT(A) ADMITTED CERTAIN ADDITIONAL EVIDENC ES, WE FIND THAT NO SPECIFIC DOCUMENT WAS SPECIFIED BY THE LD. DR FOR T HE REVENUE BEFORE US WHICH CONSTITUTES ADDITIONAL EVIDENCE. REGARDING SAUDA PAWTI AND THE DEED OF CANCELLATION, WE FIND THEY EXIST IN THE FILES OF THE AO. THEREFORE, THERE IS NO VIOLATION OF RULE 46A OF THE INCOME T AX RULES, 1962 IN THIS REGARD. THEREFORE, WE DO NOT FIND ANY REASON TO R EVERSE THE ORDER OF CIT(A). THUS, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 67. GROUND NO.3 RAISED BY THE REVENUE RELATES TO THE AD DITION MADE BY THE AO ON ACCOUNT OF SHORT TERM CAPITAL GAINS. 68. RELEVANT FACTS OF THIS ISSUE INCLUDE THAT ASSESSEE PURC HASED A LAND SITUATED AT G.NO.16 AND 18 AT VILLAGE MANYARKHEDA, TALUKA A ND DIST. JALGAON FOR TOTAL CONSIDERATION OF RS.24,22,000/- FROM SHRI ASH WIN JAYANTILAL SHAH AND SHRI RAJNIKANT JAYANTILAL SHAH AS PER KHA RADI KHAT ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 22 DATED 30-11-2009 WHICH WAS SUBSEQUENTLY TRANSFERRED T O M/S. CHAUDHARI CARS PVT. LTD. ON THE SAID LAND, M/S. CHAUDHARI CARS PVT. LTD. CONSTRUCTED A SHOW ROOM THROUGH BANK FINANCE AND KEPT THE PROPERTY UNDER MORTGAGE. FURTHER, M/S. CHAUDHARI CARS PVT. LTD. ISSUED 2,86,380 SHARES OF RS. 10/- VALUE AGAINST THE SAID TRANSACTION. IN THE PROCESS OF COLLATERAL SECURITY OF THE LAND, THE REGISTERED VALUER ASSE SSED THE VALUE OF THE LAND AT RS.68,46,000/- VIDE VALUATION REPORT DATED 08 -07-2010. AGAINST THE AOS PROPOSAL OF CONSIDERING RS.68,46,000/- AS THE VALUE OF LAND AS AGAINST THE DECLARED VALUE OF RS.29,63,800/-, ASSESS EE SUBMITTED THAT THE SAID FIGURE OF RS.68,46,000/- IS RELEVANT FOR A.Y. 201 1-12 AND APPLICABILITY OF PROVISIONS OF SECTION 50C SHOULD NOT BE INVOKE D IN THE HANDS OF THE ASSESSEE BUT IN THE CASE OF BUYER OF THE LA ND. REJECTING THE SAME, AO PROCEEDED TO TAX THE DIFFERENCE, I.E. RS.68,46,000 RS.29,63,800/- = RS.38,82,200/- AS INCOME OF THE ASSESSE E U/S.50C OF THE ACT. 69. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) DELETED T HE ADDITION. RELEVANT DISCUSSION GIVEN BY THE CIT(A) IN PARA NO.55.3 IS RE PRODUCED HEREUNDER FOR THE SAKE OF BREVITY : 55.3. . . . . I FIND MERIT IN THE CONTENTION OF THE APPELLANT AS NO EVIDENCE WAS FOUND DURING THE SEARCH TO REVEAL THAT LAND WAS PURCHASED BY THE APPELLANT FOR CONSIDERATION DIFFERENT FROM THAT MEN TIONED ON THE REGISTERED DOCUMENT. SIMILARLY, NO EVIDENCE WAS FOUND TO REVEA L THAT APPELLANT RECEIVED CONSIDERATION APART FROM SHARES OF VALUE O F RS.29,63,800/- ON TRANSFER OF LAND. THE AO HAS ALSO NOT POINTED OUT THAT CONSIDERATION WAS LESS THAN THE STAMP DUTY VALUATION FOR THE PURPOSE. MERELY ON THE BASIS OF VALUATION DONE BY THE TRANSFEREE COMPANY FOR THE PU RPOSE OF SEEKING FINANCE FROM THE BANK, SALE CONSIDERATION CANNOT BE ASSUMED IN THE HANDS OF TRANSFEROR. THERE IS SPECIFIC PROVISION U/S.50C OF THE ACT FOR ADOPTING DEEMED SALE CONSIDERATION WHICH WAS NOT FOUND APPLI CABLE IN THIS CASE. ADDITION MADE OF RS.38,82,200/- ON THE BASIS OF VAL UATION REPORT WAS NOT JUSTIFIED AND THEREFORE DELETED. GROUND RAISED BY THE APPELLANT IS HEREBY ALLOWED. 70. ON HEARING BOTH THE PARTIES ON THIS ISSUE AND PERUSIN G THE ORDER OF CIT(A), WE FIND THE ABOVE DISCUSSION OF THE CIT(A) REVEAL TH AT RS.68,46,000/- IS NOT THE VALUE AS PER THE RECORDS OF ST AMP DUTY ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 23 AUTHORITIES. THE VALUE OF RS.68,46,000/- IS THE FIGURE AS PER THE REGISTERED VALUER WHICH IS CREATED FOR LOAN PURPOSE AND HENCE, IT HA S NO SANCTITY UNDER THE PROVISIONS OF SECTION 50C OF THE ACT. IT IS THE FINDING OF CIT(A) THAT THERE IS NO EVIDENCE TO DEMONSTRATE THAT THE ASS ESSEE RECEIVED HIGHER CONSIDERATION THAN THAT OF RS.29,63,800/-. ON THE FACTS OF THIS CASE, WE ARE OF THE OPINION THAT ADDITION OF RS.38,82,200/- IS UNWAR RANTED. GROUND NO.3 RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 71. GROUND NO.4 RAISED BY THE REVENUE RELATES TO ADDITION OF RS.3,60,000/- MADE BY THE AO ON ACCOUNT OF INTEREST OF P URCHASE OF LAND AND DELETED BY THE CIT(A). 72. FACTS ON THIS ISSUE ARE THAT ASSESSEE TOOK UNSECUR ED LOAN OF RS.30 LAKHS FROM M/S. CHAUDHARI AUTOMOBILES FOR MAKING INVESTMENT IN LAND. AO MADE THE ADDITION OF RS.3,60,000/- BEING THE INTEREST ON THE SAID LOAN FOR THE PERIOD OF ONE YEAR @12%. DURING THE FIRST APPELLAT E PROCEEDINGS, ASSESSEE CONTENDED THAT THE SAID INTEREST IS SQUARED U P ON 01-04-2010 ITSELF AND NO INTEREST WAS PAID TO THE COMPANY. FURTHER, ASSESSEE ALSO STATED THE ASSESSEE HAS SUFFICIENT FUNDS AVAILABLE AND NO BORROWED FUNDS ARE USED FOR NON-BUSINESS PURPOSES. CONSIDERING THE ARG UMENTS OF THE ASSESSEE AND PERUSING THE BALANCE SHEET OF THE ASSESSE E, THE CIT(A) GAVE RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A) T HE REVENUE IS IN APPEAL. 73. ON HEARING BOTH THE SIDES AND PERUSING THE ORDER OF CIT(A) ON THIS ISSUE, WE FIND IT RELEVANT TO EXTRACT THE RELEVANT FINDING GIV EN BY THE CIT(A) IN PARA NO.56.2 OF THIS ORDER AND THE SAME READS AS UNDER : 55.2 . . . . . . .I HAVE PERUSED THE BALANCE SHEET OF THE APPELLANT AS ON 31- 03-2011 AND CAPITAL OF THE APPELLANT STOOD AT RS.1, 08,66,956 WHEREAS INVESTMENT AT RS.1,26,66,329. OUT OF THIS INVESTME NT, INVESTMENT IN THE PARTNERSHIP FIRM M/S. CHAUDHARI AUTOMOBILES WAS RS. 81,85,790 AND SAME IS CONSIDERED INVESTMENT FOR THE PURPOSE OF BUSINESS AS APPELLANT HAD ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 24 DISCLOSE D INCOME OF RS.5,46,781 BEING INTEREST AND REMUNERATION FROM THE FIRM UNDER THE HEAD BUSINESS AND PROFESSION. THE REFORE, INVESTMENT FOR NON-BUSINESS PURPOSE STOOD AT RS.44,69,539/- WHICH IS LESS THAN APPELLANTS CAPITAL OF RS.1,08,66,956. HONBLE BOM BAY HIGH COURT IN THE CASE OF RELIANCE UTILITY & POWER 313 ITR 340 (BOM.) , HELD THAT IF THERE BE INTEREST FREE FUNDS AVAILABLE TO AN ASSESSEE SUFFIC IENT TO MEET ITS INVESTMENT AND AT THE SAME TIME THE ASSESSEE HAD RAISED A LOAN , IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST FREE FU NDS AVAILABLE. IN VIEW OF THE DECISION THE CAPITAL OF APPELLANT IS HELD TO BE INVESTED FOR PERSONAL INVESTMENT AND CONSEQUENTLY NO BORROWED FUNDS CAN B E CONSIDERED TO HAVE BEEN USED FOR NON-BUSINESS PURPOSE. THEREFORE, NO DISALLOWANCE OF INTEREST WAS CALLED FOR. ADDITION MADE OF RS.3,60,000 IS DI RECTED AND THE GROUND RAISED BY THE APPELLANT IS HEREBY ALLOWED. 74. FROM THE ABOVE, IT IS EVIDENT THAT THE LOAN IS ACTUALLY SQUARED UP BY 01-04-2010 RELEVANT TO A.Y. 2011-12. NO INTEREST IS ACCR UED IN PRINCIPLE DUE TO THE SAID SQUARING UP OF THE LOAN. NOTWITHSTANDING THE SAME, ASSESSEE HAS A STRONG CAPITAL BASE TO THE TUNE OF RS.1.0 9 CRORES AND THE PRESUMPTION LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN T HE CASE OF RELIANCE UTILITIES AND POWER LTD. (SUPRA) THAT NO FUNDS ARE UTILIZED FOR PAYMENTS TOWARDS INVESTMENT IN THE LAND. CONSIDERING TH E ABOVE DISCUSSION GIVEN BY THE CIT(A) WHILE DELETING THE ADDITION, WE FIND THE ORDER OF CIT(A) IS A WELL REASONED ONE AND THEREFORE, IT DOE S NOT CALL FOR ANY INTERFERENCE. 75. GROUND OF NO.5 RAISED BY THE REVENUE RELATING TO ACCR UAL OF INTEREST ON FDR IS IDENTICAL TO THE GROUND RAISED BY THE REVENUE IN A.Y. 2007-08 VIDE GROUND NO.2. WE HAVE ALREADY DECIDED THIS ISSUE AGAINST THE RE VENUE AND UPHELD THE DECISION OF CIT(A). FOLLOWING THE SAME REAS ONING, WE DELETE GROUND NO.5 RAISED BY THE REVENUE IN THIS ASSESSMENT YEAR. 76. GROUND NO.6 RAISED BY THE REVENUE RELATING TO UNPROV ED AGRICULTURAL INCOME IS IDENTICAL TO THE GROUND RAISED BY THE REVENUE IN A.Y. 2010-11 VIDE GROUND NO.4. WE HAVE ALREADY DECIDED THIS ISSUE AGAINST THE REVENUE WHILE ADJUDICATING GROUND NO.4 OF THE REVENUE. FOLLOWING THE SAME REASONING, WE DELETE GROUND NO.6 RAISED BY THE REVENUE IN THIS ASSESSMENT YEAR. ITA NO.629 TO 634/PUN/2016 SHRI MAHESH B. CHAUDHARY 25 77. GROUND NO. 7 RAISED BY THE REVENUE RELATING TO ESTIM ATION OF NET PROFIT @6% IS IDENTICAL TO GROUND OF APPEAL NO.2 RAISED BY TH E REVENUE IN A.Y. 2009-10. WE HAVE ALREADY DECIDED THIS ISSUE AGAINST T HE REVENUE UPHOLDING THE ORDER OF CIT(A) DELETING THE ADDITION. FOLLOWING THE SAME REASONING, WE DISMISS THE GROUND NO.7 RAISED BY THE REVENUE. 78. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 79. TO SUM UP, ALL THE SIX APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF JANUARY, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 17 TH JANUARY, 2018 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-12, PUNE 4. CIT-12, PUNE 5. , , B BENCH PUNE; 6. / GUARD FILE.