Income-tax Officer, V. Shri Digambar Bhaurao Patil (Hotalkar), Nanded

ITA 87/PUN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93894 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 31-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV HARIT CIT SINGH
• Assessee Lawyers: ABHIJIT DONGAONKAR
• Keywords: Unexplained cash credit; Unexplained investment; Depreciation; Opportunity of being heard; Additional evidence; Wrong claim
• Section: 80C

Judgement Text

] IQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !' # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM / ITA NOS.87 & 88/PN/2014 $ % % / ASSESSMENT YEARS : 2007-08 & 2008-09 ITO, WARD-3(2), NANDED . / APPELLANT V/S SHRI DIGAMBAR BHAURAO PATIL, (HOTALKAR), PROP. GANGARAMJI GINNING & PRESSING FACTORY, NAIGAON TAL. NAIGAON, DIST : NANDED PAN NO.ABQPP0362D . / RESPONDENT / APPELLANT BY : SHRI CHETAN KARIA SHRI CHANDRASEKHAR M. PATIL & SHRI ABHIJIT DONGAONKAR / DEPARTMENT BY : SHRI RAJEEV HARIT, CIT SINGH & / ORDER PER R.K. PANDA, AM : THE ABOVE TWO APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 31-10-2013 OF THE CIT(A), AU RANGABAD RELATING TO ASSESSMENT YEARS 2007-08 AND 2008-09 RESP ECTIVELY. FOR THE SAKE OF CONVENIENCE BOTH THE APPEALS WERE HEARD TO GETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. / DATE OF HEARING : 23.04.2015 / DATE OF PRONOUNCEMENT:15.07.2015 2 ITA NOS.87 AND 88/PN/2014 ITA NO.87/PN/2014 (A.Y. 2007-08) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF GINNING AND PRESSING. HE FILED HIS RETURN OF INCOME ON 11-02-2011 DECLARING TOTAL INCOME OF RS.4,18,543/- AND AGRICULTURAL INCOME OF RS.7 LAKHS. THE ABOV E RETURN WAS FILED IN RESPONSE TO NOTICE U/S.148 OF THE I.T. ACT ON 01- 02-2011. THE AO ISSUED STATUTORY NOTICE U/S.142(1) ON VA RIOUS DATES BUT THERE WAS NO COMPLIANCE. SUBSEQUENTLY, AFTER THE PEN ALTY OF RS.10,000/- WAS LEVIED U/S.271(1)(B) OF THE I.T. ACT ON 21-10 -2011 THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE OFFICE OF THE AO ON 24-10-2011 AND SOME DETAILS WERE FILED. HOWEVE R, FROM THE ORDER OF THE AO IT IS SEEN THAT ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNTS FOR VERIFICATION AND FILED COPIES OF COMPUTATION OF IN COME, GINNING AND PRESSING ACCOUNTS, PROFIT AND LOSS ACCOUNT AND CAPITAL ACCOUNT OF THE PROPRIETOR AND BALANCE SHEET. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT ASSESSEE IS CARRYING ON GINNING AND PRESSING FACTORY BUSINESS AT SHELGAON ROAD, NAIGAON BAZAR, NAIGAON, DISTRICT NANDED. THE ACTIVITY OF GINNING AND PRESSING FACTORY IS MAINLY OF JOB WOR KS AND DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAS RECEIVED GROSS PILLAI RECEIPTS AMOUNTING TO RS.37,85,210/- FROM MAHARA SHTRA STATE COTTON GROWER MARKETING FEDERATION LTD. AND OF OT HERS. ON THE ABOVE GROSS RECEIPT OF RS.37,85,210/- THE ASSESSEE HAS DECLARED G ROSS PROFIT OF RS.26,52,258/- AND NET PROFIT OF RS.5,18,543/-. THE AO ANALYSED THE VARIOUS FIGURES APPEARING IN THE BALANCE SHE ET AS WELL AS THE PROFIT AND LOSS ACCOUNT FILED BY THE ASSESSEE. FROM T HE VARIOUS DETAILS HE OBSERVED THAT ASSESSEE HAS SHOWN AGRICULTURA L INCOME OF RS.7 LAKHS. ON BEING CONFRONTED BY THE AO IT WAS SUBMITTE D THAT THE 3 ITA NOS.87 AND 88/PN/2014 ASSESSEE HOLDS APPROXIMATELY 45 ACRES OF AGRICULTURAL LAND AT HIS NATIVE PLACE HOTALA VILLAGE AND AT NAIGAON WHICH ARE IRRIGATE D AND FERTILE AND THE YIELDS FROM THE LANDS IS QUITE HEALTHY. THE ASSESSEE EARNS AGRICULTURAL INCOME OF RS.9 TO 10 LAKHS ANNUALLY AND AFTER MEETING THE AGRICULTURE EXPENSES THE AMOUNT OF RS.7 LAKHS HAS BEEN DECLARED. THE ASSESSEE ALSO FURNISHED 7/12 EXTRACTS OF THE LAND HOLDING OF THE ASSESSEE. THE AO OBSERVED THAT ASSESSEE HOLDS AROUND 28.5 ACRES OF LAND WHICH ARE TOTALLY NON IRRIGATED (JIRAYA T) AS MENTIONED IN EACH OF THE 7/12 EXTRACTS SUBMITTED BEFORE HIM. THEREFORE, THE CONTENTION OF THE ASSESSEE IS BASELESS AND CONTRARY TO THE FACTS OF THE CASE. HE FURTHER NOTED FROM THE BACKSID E OF 7/12 ABSTRACT THAT IT WAS NOTED IN EACH YEAR THAT THE CROP S PRODUCED BY ASSESSEE ARE SOYABEAN, TUR, JAWAR, URAD AND MOONG ETC. WHICH WERE GENERALLY PRODUCED IN NON-IRRIGATED (JIRAYAT) LAND. IF THE LANDS ARE IRRIGATED, I.E. (BHAGAYAT) THEN THE ASSESSEE COULD HAVE PROD UCED CASH CROPS SUCH AS SUGARCANE, BANANA, TURMERIC, GRAPES, VEGET ABLES ETC. HE THEREFORE REJECTED THE CONTENTION OF THE ASSESSEE T HAT THE LAND IS IRRIGATED AND IS EARNING SO MUCH INCOME. THE AO ACCORDING LY ESTIMATED THE NET AGRICULTURAL INCOME OF THE ASSESSEE @ R S.8,000/PER ACRE FOR 28.5 ACRES AND DETERMINED SUCH AGRICULTURAL INCOM E AT RS.2,32,000/-. AFTER DEDUCTING THE SAME FROM THE AGRICULTUR AL INCOME DECLARED BY THE ASSESSEE AT RS.7 LAKHS THE AO CO NSIDERED THE BALANCE AMOUNT OF RS.4,68,000/- AS INCOME FROM OTHER SOUR CES U/S.56 OF THE I.T. ACT. 4. AS REGARDS THE GINNING AND PRESSING EXPENSES SHOWN AT RS.11,32,052/- IS CONCERNED, IN ABSENCE OF ANY SUPPORTING D ETAILS ETC. PRODUCED BY THE ASSESSEE BEFORE HIM THE AO DISALLOW ED AN AMOUNT OF RS.2,26,610/- BEING 20% OF THE EXPENSES ON EST IMATE 4 ITA NOS.87 AND 88/PN/2014 BASIS. SINCE THE ASSESSEE ALSO FAILED TO SUBSTANTIATE THE FO LLOWING EXPENSES WITH SUPPORTING VOUCHERS AND OTHER DETAILS AND AGREED FOR 10% DISALLOWANCE VIDE LETTER DATED 02-12-2011 THE AO DISA LLOWED AN AMOUNT OF RS.2,43,445/- BEING 20% ON ESTIMATE BASIS OUT OF THE EXPENSES CLAIMED UNDER SALARIES, HAMALI AND WAGES, MACHINER Y REPAIRS AND MAINTENANCE, MISCELLANEOUS EXPENSES, THE DETAILS OF WHICH ARE AS UNDER : SALARIES RS.3,15,000/- HAMALI AND WAGES RS.7,00,995/- MACHINERY REPAIRS & MAINTENANCE RS.1,26,715/- MISC. EXPENSES RS. 74,518/- ----------------- TOTAL RS.12,17,228/- ----------------- 20% OF THE ABOVE RS.2,43,445/- ----------------- 5. THE AO SIMILARLY NOTED THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS.1,11,592/- TO THE PROFIT AND LOSS ACCOUNT UNDER THE HE AD LOSS IN FIRE ACCIDENT. IN ABSENCE OF SUBMISSION OF COPY OF FIR AND PANCHANAMA REGARDING LOSS IN FIRE ACCIDENT OF RS.1,11,592/- T HE AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE AO FURTHER NOTED THAT ASSESSEE HAS SHOWN AN A MOUNT OF RS.14,74,385/- AS LIABILITY IN THE BALANCE SHEET UNDER THE H EAD AGRICULTURE (HUF) ACCOUNT OUTSTANDING AS ON 31-03-2007. ON BEING CONFRONTED BY THE AO IT WAS SUBMITTED THAT THE ASSESSE ES FAMILY ARE BASICALLY AGRICULTURIST OWNING OF ABOUT 100 ACRES OF AGRICULT URE LAND AT HOTALA VILLAGE, TALUKA NAIGAON. THESE AGRICULTURAL LANDS AR E IRRIGATED AND FERTILE AND THE YIELD FROM THESE LANDS IS QUITE HEALTHY AND FROM THESE LANDS THE HUF DERIVES QUITE GOOD YIELD FROM THESE AGRICULTURAL PRODUCE WHICH ARE SOLD AND THE MONEY IS DEPO SITED WITH ASSESSEES GINNING AND PRESSING FACTORY AS AND WHEN REQ UIRED FOR HIS 5 ITA NOS.87 AND 88/PN/2014 BUSINESS PURPOSE. THE ASSESSEE ALSO FILED THE EXTRACT OF THE AGRICULTURE (HUF) WHICH IS AS UNDER : TO BALANCE C/F RS.14,74,385-00 BY OPENING BALANCE RS.8,84,921-00 BY CREDITED DURING YEAR RS.5,89,464-00 --------------------- -------------------- - RS.14,74,385-00 RS.14,74,385-00 ---------------------- -------------------- - 7. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE ABOV E CONTENTION OF THE ASSESSEE IN ABSENCE OF PRODUCTION OF A NY EVIDENCE IN REGARD TO FORMATION OF AGRICULTURE (HUF) BY THE ASSESSE E TO SHOW THAT IT IS IN EXISTENCE AND THE NAME OF THE MEMBERS FOR SUCH HUF IN AGRICULTURE ACCOUNT. NO EVIDENCE WAS FILED TO SHOW THAT RETURNS HAVE BEEN FILED SHOWING SUCH INCOME OR SEPARATE ACCOUNTS ARE OPENED IN THE BANK. SINCE THE ASSESSEE DURING THE IMPUGNED ASSES SMENT YEAR HAS CREDITED AN AMOUNT OF RS.5,89,464/- TO THE AGRICULTUR E (HUF) ACCOUNT THE ASSESSING OFFICER TREATED THE SAME AS UNEX PLAINED CASH CREDIT U/S.68 OF THE I.T. ACT AND ADDED THE SAME TO THE TOTAL INCOME O F THE ASSESSEE. 8. THE ASSESSING OFFICER FURTHER NOTED FROM THE BALANCE SH EET THAT WIFE OF THE ASSESSEE SMT. SINDHU DIGAMBAR PATIL HAS ADVANCE D LOAN OF RS.4,50,000/- WHICH IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE. IN ABSENCE OF ANY EXPLANATION GIVEN BY THE ASSESSEE TO HIS SATISFACTION AND OBSERVING THAT SMT. SINDHU DIGAMBAR PATIL IS A HOUSE WIFE HAVING NO SOURCE OF INCOME TO ADVANCE SUCH HU GE LOAN TO THE ASSESSEE THE ASSESSING OFFICER MADE ADDITION OF RS.4,50,0 00/- TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 OF THE I.T. ACT. THUS, THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME OF THE ASSESS EE AT RS.25,07,650/- AND AGRICULTURE INCOME OF RS.2,32,000/- AS AGA INST 6 ITA NOS.87 AND 88/PN/2014 THE RETURNED INCOME OF RS.4,18,543/- AND AGRICULTURE INCOM E OF RS.7 LAKHS. 9. BEFORE CIT(A) THE ASSESSEE FILED REVISED TRADING ACCOUNT, PROFIT AND LOSS ACCOUNT BY RE-WRITING THE ACCOUNTS AFTER COMPLE TION OF THE ASSESSMENT. IT WAS SUBMITTED THAT THE ASSESSEE HAS G ONE THROUGH KIDNEY TRANSPLANTATION PROCEDURE ON 03-062010 AND IS SU FFERING FROM THE KIDNEY PROBLEMS SINCE 2006 FOR WHICH HE WAS NOT IN P ROPER MENTAL STATE AND THEREFORE THE BOOKS OF ACCOUNT AND RE TURN OF INCOME COULD NOT BE CORRECTLY PREPARED. IT WAS SUBMITTED THA T THE BOOKS OF ACCOUNTS HAVE BEEN PREPARED BY THE MANAGER AND HAVE BEEN FINALISED BY THE ADVOCATE LOOKING AFTER TAX MATTERS ON THE BASIS OF INCORRECT INFORMATION FURNISHED AND HENCE THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET PREPARED WAS NOT SUPPORTED BY PROPER A ND COMPLETE BOOKS AND OTHER EVIDENCES. IT WAS SUBMITTED THAT IN VIE W OF THE ABOVE FACTS THE BOOKS HAVE BEEN RE-WRITTEN AND REVISED FINAL STATEMENT OF ACCOUNTS HAVE BEEN PREPARED. THE ASSESS EE ALSO FILED COMPARISON OF THE AMOUNTS SHOWN UNDER VARIOUS HEADS AS PER RETURN OF INCOME FILED, DIFFERENCE IN THE AMOUNT AS PER RETURN FILED AN D REVISED FINAL STATEMENT OF ACCOUNTS AND REMARKS ABOUT TH E SAME. THE ASSESSEE ACCORDINGLY PREPARED AND FILED REVISED COMP UTATION OF INCOME SHOWING RENT INCOME OF RS.2,89,450/-, INCOME FROM BUS INESS AS PER PROFIT AND LOSS ACCOUNT AT RS.3,43,020/- BOTH TO TALLING TO RS.6,32,470/-. AFTER CLAIMING DEDUCTION OF RS.1 LAKH U/S.80C O F THE I.T. ACT THE ASSESSEE DECLARED TAXABLE INCOME OF RS.5,32,4 70/- AND AGRICULTURE INCOME OF RS.7 LAKHS. THE ASSESSEE ALSO FILED COP Y OF THE REGISTERED AGREEMENT FOR PURCHASE OF FLAT AT PUNE ON 11 -06-2003. THE ASSESSEE ALSO FILED MEDICAL HISTORY AND VARIOUS DOCUME NTS AND PAPERS IN RESPECT OF THE KIDNEY PROBLEM/KIDNEY TRANSPLANT ATION 7 ITA NOS.87 AND 88/PN/2014 DURING THE YEAR 2006 TO 2010. CERTAIN ADDITIONAL EVIDENCE S WERE ALSO FILED BEFORE THE LD.CIT(A). 10. BASED ON THE ARGUMENTS ADVANCED BEFORE HIM AND THE ADDITIONAL EVIDENCES FILED THE LD.CIT(A) CALLED FOR A REMAND RE PORT FROM THE ASSESSING OFFICER. AFTER CONSIDERING THE SAME AND THE COUNTER COMMENTS OF THE ASSESSEE TO SUCH REMAND REPO RT, THE LD.CIT(A) DIRECTED THE AO TO RESTRICT CERTAIN ADDITIONS DUE TO WHICH THE TOTAL INCOME WAS DETERMINED BY HIM AT RS.6,73,053/- AS AGAINST THE INCOME ASSESSED AT RS.25,07,654/-. 11. SO FAR AS THE DETERMINATION OF AGRICULTURAL INCOME AT RS.2,32,000/- BY THE AO IS CONCERNED, HE OBSERVED THAT THE ASSESSING OFFICER IN THE REMAND REPORT HAS ACCEPTED THE AGRICULTURE INCOME OF RS.6,50,000/- AND HELD THAT THE ASSESSEE COULD N OT PRODUCE THE EXPENSES VOUCHERS OF RS.50,000/- FOR HIS VE RIFICATION OUT OF THE TOTAL EXPENSES OF RS.2,40,454/- AND THE ASSESSEE H AS SHOWN GROSS AGRICULTURE INCOME OF RS.9,40,454/- BY PRODUCING SALE BILLS OF AGRICULTURE GOODS SOLD TO KRISHI UTPANNA BAZAR SAMITEE, NA IGAON. CONSIDERING THE ABOVE HE RESTRICTED SUCH DISALLOWANCE TO RS.25,000/- AND ACCORDINGLY SUSTAINED THE ADDITION OF RS.25,000/- OUT OF RS.4,68,000/- MADE BY THE ASSESSING OFFICER. 12. SO FAR AS THE DISALLOWANCE OF RS.2,26,610/- BEING 20% OF THE GINNING AND PRESSING EXPENSES IS CONCERNED HE DIRECTED THE ASSES SING OFFICER TO RESTRICT SUCH DISALLOWANCE TO RS.25,000/-. SIMILARLY , OUT OF THE DISALLOWANCE OF RS.2,43,445/- ON ACCOUNT OF SALARY, HAMALI AND WAGES AND MACHINERY REPAIRS AND MAINTENANCE AND MISCELLAN EOUS EXPENSES HE SUSTAINED ONLY AN AMOUNT OF RS.20,000/-. 8 ITA NOS.87 AND 88/PN/2014 13. AS REGARDS THE DISALLOWANCE OF RS.1,11,592/- ON ACCOU NT OF FIRE ACCIDENT IS CONCERNED HE DELETED THE ENTIRE ADDITION ON T HE BASIS OF THE REVISED FINAL STATEMENT OF ACCOUNTS WHERE THE ASSESS EE HAS NOT CLAIMED SUCH EXPENDITURE. 14. AS REGARDS THE ADDITION OF RS.5,89,464/- U/S.68 ON ACCO UNT OF UNEXPLAINED CASH CREDIT IN AGRICULTURE (HUF) ACCOUNT IS CONC ERNED THE LD.CIT(A) DELETED THE ENTIRE AMOUNT ON THE BASIS OF T HE REVISED FINAL STATEMENT OF ACCOUNTS, REVISED BOOKS OF ACCOUNTS AN D COMPUTATION OF INCOME WHERE THE ASSESSEE HAS NOT CLAIMED ANY LOAN FROM HUF AGRICULTURE ACCOUNT DURING THE YEAR UNDER APPEAL. 15. SO FAR AS THE ADDITION OF RS.4,50,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT FROM SMT. SINDHU DIGAMBAR PATIL, WIFE O F THE ASSESSEE IS CONCERNED HE ALSO DELETED THE SAME ON THE BASIS OF THE REVISED FINAL STATEMENT OF ACCOUNTS, REVISED BOOKS OF ACCOU NT AND COMPUTATION OF INCOME WHEREIN THE ASSESSEE HAS NOT CLAIME D ANY LOAN FROM SMT. SINDHU DIGAMBAR PATIL. HE ACCORDINGLY DETERM INED THE INCOME OF THE ASSESSEE AT RS.6,73,053/- AFTER TAKING INTO ACCOUNT THE RENTAL INCOME DECLARED BY THE ASSESSEE AND THE DISA LLOWANCE OF DEPRECIATION OF RS.70,583/- AFTER REDUCING RS.4,70,550/- BE ING AMOUNT RECEIVED ON ACCOUNT OF STATE SUBSIDY FROM THE AS SETS ON WHICH DEPRECIATION HAS BEEN CLAIMED. 16. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPAL BEFORE US WITH THE FOLLOWING GROUNDS : THE CIT(A), AURANGABAD ERRED IN DELETING THE ADDIT IONS MADE BY THE A.O FOR VARIOUS DISALLOWANCES TO THE TUNE OF RS.20,19,111/- AS DETAILED UNDER:- 9 ITA NOS.87 AND 88/PN/2014 2. THE CIT(A) ERRED IN IGNORING THE FACT THAT THE C ASE IS AN AUDITED ONE DULY CERTIFIED BY A CHARTERED ACCOUNTANT. 3. THE CIT(A) ERRED IN ADMITTING THE REVISED ACCOUNT STATEMENTS SINCE THE SAME WERE ALREADY AUDITED ONES AND THERE WAS NO ANY PROPRIETARY IS REVISING THE BOOKS OF ACCOUNTS BY THE ASSE SSEE AT THE ASSESSMENT/APPELLATE STAGE. 4. THE CIT(A) ERRED IN IGNORING THE FACT THAT FOR T HE DISALLOWANCE AT SR. NO.2 AND 3 ABOVE THE ASSESSEE HIMSELF AGREED FOR ADD ITION OF 10%. 5. THE ORDER OF THE CIT(A) BE VACATED AND THAT OF T HE A.O. BE RESTORED. 6. THE APPELLANT CRAVES, LEAVES TO ADD, AMEND OR ALTE R ANY GROUNDS OF APPEAL. 17. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OPPOSE D THE ORDER OF THE CIT(A) GIVING SUBSTANTIAL RELIEF TO THE ASSESSEE BY ACCEPTING BOOKS OF ACCOUNT WRITTEN AFTER THE ASSESSMENT S WERE COMPLETED. HE SUBMITTED THAT BEFORE THE ASSESSING OFFICER BOOKS OF ACCOUNTS WERE NEVER PRODUCED, NO DOCUMENTARY EVIDENCE WAS PRODUCED TO SUBSTANTIATE THE VARIOUS INCOME AND EXPEND ITURE SHOWN IN THE PROFIT AND LOSS ACCOUNT AND THE ASSETS AND LIABILITIES SHOWN IN THE BALANCE SHEET. HE SUBMITTED THE CIT(A) IS NOT JUSTIFIE D IN DELETING THE VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER BY SIMP LY STATING THAT THE ASSESSING OFFICER HAS NOT POINTED OUT IN HIS REPO RT THE SPECIFIC VOUCHERS WHICH ARE NOT MAINTAINED AND PRODUCED FO R VERIFICATION BY THE ASSESSEE. HE SUBMITTED THAT THE POWE RS OF CIT(A) SR. NO. PARTICULARS OF ADDITION RELIEF GRANTED BY THE CIT(A) 1 ALLEGED EXCESSIVE AGRICULTURAL INCOME TAXED AS INCOME FROM OTHER SOURCES 4,43,000 2 DISALLOWANCE OF GINNING & PRESSING EXPENSES @ 20% 2,01,610 3 DISALLOWANCE OF SALARY, HAMALI & WAGES, MACHINERY REPAIRS AND MAINTENANCE AND MISC. EXPENSE @ 20% 2,23,445 4 DISALLOWANCE OF EXPENSES ON ACCOUNT OF FIRE ACCIDENT 1,11,592 5 UNEXPLAINED CASH CREDIT FROM AGRICULTURE HUF ACCOUNT 5,89,464 6 UNEXPLAINED CASH CREDIT FROM SMT. SINDHU DIGAMBAR 4,50,000 TOTAL 20,19,111 10 ITA NOS.87 AND 88/PN/2014 ARE CO-TERMINUS WITH THAT OF THE ASSESSING OFFICER. IF THE ASSESSING OFFICER HAS MISSED ANYTHING IT WAS THE DUTY OF THE CIT(A) TO VERIFY ALL THOSE DETAILS AND PASS APPROPRIATE ORDER. WHEN THE ASS ESSEE DURING THE COURSE OF ASSESSMENT WAS NON COOPERATIVE AND HAS NOT FILED THE REQUISITE DETAILS, THE CIT(A) WAS NOT JUSTIFIED IN STATING THAT THE ASSESSING OFFICER HAS NOT POINTED OUT SPECIFIC VOUCHERS WHIC H ARE NOT MAINTAINED AND PRODUCED FOR VERIFICATION. HE SUBMITTED THAT THE SUBSTANTIAL RELIEF GIVEN BY THE CIT(A) IS UNCALLED FOR UNDER T HE FACTS AND CIRCUMSTANCES OF THE CASE. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE ORDER O F THE ASSESSING OFFICER BE RESTORED. 18. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). REFERRING TO THE VARIOUS MEDICAL REPORTS FILED IN THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE MEDICAL HISTORY PRIOR TO KIDNEY TRANSPLANTATION IN THE CASE OF THE ASSESSEE. REFERRING TO THE AFFIDAVIT OF THE ASSESSEE PLACED IN THE PAPER BOOK NO.2 HE SUBMITTED THAT THE BUSINESS OF THE A SSESSEE IS LOOKED AFTER BY HIS MANAGER SHRI PARUSHURAM PAWLE. DUE TO THE DETERIORATION OF HEALTH SINCE 2006 ONWARDS DUE TO DISFUNCT ION OF KIDNEY HE SUBMITTED THAT THE RETURNS WERE PREPARED BY INCOME-TAX CONSULTANT SHRI SAIPRAKASH SHANMUKHAM AND MANAGER SHR I PARUSHURAM PAWLE AND THE BOOKS ARE OSTENSIBLY AUDITED BY THE CHARTERED ACCOUNTANT SHRI M.G. GUPTA. HE SUBMITTED THAT WHEN THE ASSESSMENT ORDERS WERE RECEIVED, LOOKING ON THE HUGE D EMAND THE ASSESSEE CONTACTED ONE SHRI CHANDRASHEKHAR PATIL, CHART ERED ACCOUNTANT WHO IS A DISTANT RELATIVE. SHRI CHANDRASHEKH AR PATIL, IN TURN, INVOLVED LOCAL EXPERT SHRI RAVI BHARTIYA, PRACTICING CH ARTERED ACCOUNTANT. SINCE THE BOOKS OF ACCOUNTS ON THE BASIS O F WHICH AUDIT 11 ITA NOS.87 AND 88/PN/2014 WAS EARLIER CARRIED OUT AND THE PROFIT AND LOSS ACCOUNT A ND BALANCE SHEET WERE PREPARED HAVE NOT BEEN HANDED OVER TO TH E ASSESSEE BY HIS PREVIOUS CONSULTANT SHRI SAIPRAKASH SHANMUKHAM NOR B Y CHARTERED ACCOUNTANT SHRI M.G. GUPTA THE ASSESSEE ON T HE BASIS OF BANK STATEMENT AND VOUCHERS AND OTHER EVIDENCES AVAILA BLE WITH THE MANAGER RE-WROTE FRESH BOOKS OF ACCOUNT AND PREPARED THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET WHICH WERE FILED BEFORE THE CIT(A). REFERRING TO THE COMPARATIVE CHART FILED AT PAGE 49 OF THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF T HE BENCH TO THE DIFFERENCE IN VARIOUS ITEMS OF THE ASSETS AND LIABILITY SIDE GIVING THE DIFFERENCE. HE SUBMITTED THAT BASED ON THE VARIOUS D ETAILS FURNISHED DURING APPEAL PROCEEDINGS THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER DURING THE REMAND PROCEEDINGS HAS EXAMINED THE VARIOUS DETAILS FURNISHED BEFORE THE CIT(A) AND SUBMITTED HIS REPORT. THE LD.CIT(A) BASED ON THE REMAND REPORT OF THE ASSESSING OFFICER HAS DELETED THE ADDITION, THEREFORE, THE SAME BEING IN ORDER SHOULD BE UPHELD. 19. REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. MCMILLAN AND COMPANY REPORTED IN 33 ITR 182 (SC) HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAID DECISION HAS HELD THAT IN AN APPEAL THE APPELLATE COMMISSIONER OR T HE CIT(A) CAN RE-EXAMINE THE BOOKS OF ACCOUNT TO TEST THE CORRE CTNESS OF THE ASSESSMENT MADE. HE ACCORDINGLY SUBMITTED THAT THERE IS NOTHING WRONG IN THE ORDER OF THE CIT(A) BY CONSIDERING THE FRESH SETS OF BOOKS OF ACCOUNT PREPARED AFTER THE ASSESSMENT PROCEEDINGS W ERE COMPLETED. HE ACCORDINGLY SUBMITTED THAT THE GROUNDS R AISED BY THE REVENUE SHOULD BE DISMISSED. 12 ITA NOS.87 AND 88/PN/2014 20. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. IT IS A N UNDISPUTED FACT THAT IN THE INSTANT CASE THE ASSESSEE WHILE FILING THE ORIGINAL RETURN OF INCOME HAD FILED AUDITED ACCOUNTS DULY CERTIFIED B Y A CHARTERED ACCOUNTANT. FURTHER, DURING THE COURSE OF ASS ESSMENT PROCEEDINGS THERE WAS NO PROPER COMPLIANCE FOR WHICH TH E AO HAD MADE VARIOUS ADDITIONS. WE FIND BEFORE CIT(A) THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS WHICH WERE PREPARED AFTER THE COMPLET ION OF THE ASSESSMENT MADE U/S.143(3). IT IS ALSO AN UNDISPUTED FACT THAT THE ORIGINAL BOOKS OF ACCOUNTS ARE AUDITED BY THE PREVIOUS AU DITORS AND AS STATED BY THE LD. AUTHORISED REPRESENTATIVE, THE ASS ESSEE HAS PREPARED FRESH SETS OF BOOKS OF ACCOUNTS ON THE BASIS O F THE INFORMATIONS WHICH WERE NOT GIVEN TO THE PREVIOUS AUDITOR S WHILE AUDITING ACCOUNTS U/S.44AB OF THE I.T. ACT. UNDER THESE CIRCUMSTANCES, WE ARE UNABLE TO ACCEPT THE PLEA OF THE A SSESSEE THAT THE CIT(A) WAS JUSTIFIED IN ACCEPTING THE FRESH SETS OF BOOK S OF ACCOUNTS PREPARED ON THE BASIS OF INFORMATION AVAILABLE WIT H THE ASSESSEE WHICH WERE NOT BEFORE THE AUDITORS WHILE AUDITING ACCOUNTS U/S.44AB. WE DO NOT DISPUTE THE HEALTH CONDITION OF THE A SSESSEE ON THE BASIS OF VARIOUS DOCUMENTARY EVIDENCES FILED BEFORE US. AS ADMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE PREVIOU S TAX CONSULTANT AND AUDITORS HAVE NOT RETURNED THE BOOKS O F ACCOUNT WHICH WERE PREPARED BY THE MANAGER AND AUDITED BY THE AUDITOR MR. M.G. GUPTA ON THE BASIS OF WHATEVER VOUCHERS/DETAILS GIVEN TO THEM. IT IS ALSO THE SUBMISSION OF THE LD. AUTHORISED REPRESEN TATIVE THAT THE NEW BOOKS OF ACCOUNT ARE PREPARED ON THE BASIS O F BANK 13 ITA NOS.87 AND 88/PN/2014 STATEMENTS AND VOUCHERS AVAILABLE WITH THE MANAGER OTHE R THAN THE VOUCHERS NOT RETURNED BY THE PREVIOUS AUDITORS. WE DO NOT DISPUTE THE PROPOSITION THAT THE CIT(A) CAN RE-EXAMINE THE BOOKS OF ACCOUNT TO CHECK THE CORRECTNESS OF THE SAME. HOWEVER, HERE T HE QUESTION THAT ARISES IS THAT CAN THE ASSESSEE RE-WRITE THE BOOK S OF ACCOUNT WHICH WERE AUDITED AND THE RETURN OF INCOME WAS FILED ON T HAT BASIS AND ASSESSMENT COMPLETED ON THE BASIS OF THE SAME U/S .143(3). IN THE INSTANT WE FIND, DESPITE THE ILL HEALTH OF THE ASSESSEE T HE BUSINESS OF THE ASSESSEE WAS GROWING. THE INCOME TAX RETURN WHIC H WAS ACCOMPANIED WITH SUCH AUDITED ACCOUNTS WAS DULY SIGNED BY THE ASSESSEE. THEREFORE, IT CANNOT BE A GROUND ONLY FOR THE PURPOSE OF PREPARING FRESH SETS OF BOOKS OF ACCOUNTS THAT THE ASSE SSEE WAS ILL AND FOR THE BUSINESS HIS AFFAIRS WERE DULY LOOKED AFTER BY THE EMPLOYEES. IT IS ALSO TO BE KEPT IN MIND THAT THE ASSESS EE HAS NOT TAKEN ANY ACTION AGAINST THE CONCERNED CHARTERED ACCO UNTANT FOR AUDITING THE BOOKS ON INCOMPLETE DETAILS. IN VIEW OF THE A BOVE, WE HOLD THAT THE BOOKS OF ACCOUNTS PREPARED SUBSEQUENT T O THE COMPLETION OF THE ASSESSMENT U/S.143(3) HAVE TO BE REJECT ED AND THE MATTER HAS TO BE DECIDED ON THE BASIS OF ORIGINAL SETS OF BOOKS OF ACCOUNTS WHICH WERE DULY AUDITED BY THE AUDITORS AND T HE AUDITED ACCOUNTS FILED ALONG WITH THE ORIGINAL RETURN OF INCOME WHICH WERE ALSO DULY SIGNED BY THE ASSESSEE. 21. NOW COMING TO THE VARIOUS ADDITIONS MADE BY THE AO, WE FIND THE ASSESSEE IN HIS RETURN OF INCOME HAS DISCLOSED AGRICULT URE INCOME OF RS.7 LAKHS. SINCE FULL DETAIL WERE NOT PRODUCED DURING ORIG INAL ASSESSMENT PROCEEDINGS TO SUBSTANTIATE THE AGRICULTURE INCOME, THE AO MADE ADDITION OF RS.4,68,000/- U/S.56 OF THE I.T. ACT. WE FIND BEFORE CIT(A) THE ASSESSEE PRODUCED VARIOUS DETAILS TO JU STIFY THE 14 ITA NOS.87 AND 88/PN/2014 AGRICULTURE INCOME BASED ON WHICH THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. WE FIND THE AO IN HIS REMAND REPORT HAS REPORTED AS UNDER WHICH HAS BEEN REPRODUCED BY CIT(A) AT PARA 6 OF THE ORDER AND WHICH READS AS UNDER : THE ASSESSEE HAS SHOWN THE AGRICULTURAL INCOME OF RS.7,00,000/- IN HIS RETURN OF INCOME FILED ON 11/02/2011. THE ASSESSING OFFICER ESTIMATED THE AGRICULTURE INCOME AT THE RATE OF RS.8 ,000/- PER ACRE AS THE ASSESSEE HAS NOT PRODUCED SALE PATTIES TREATING THE AGRIC ULTURE LAND AS NON IRRIGATED. NOW, THE ASSESSEE HAS PRODUCED SALE BILLS O F AGRICULTURAL GOODS SOLD TO KRISHI UTPAANA BAZAR SAMITHI, NAIGAON AM OUNTING TO RS.9,40,454/- AGAINST THIS INCOME. THE ASSESSEE HAS SHOWN EX PENSES RS.2,40,454/- WHEN THE ASSESSEE ASKED TO FURNISH THE BILLS AND VOUCHERS FOR EXPENSES CLAIMED, THE BILLS & VOUCHERS FURNISHED BY THE ASSESSEE FOR VERIFICATION AFTER VERIFICATION OF THESE VOUCHERS IT IS NOTICED THAT THE VOUCHERS ARE NOT PROPERLY MAINTAINED AS WELL AS VOUCHE RS AMOUNTING TO RS.50,000/- ARE NOT PRODUCED FOR VERIFICATION. CONSID ERING THIS RS.50,000/- DISALLOWED FROM EXPENSES CLAIMED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 22. SINCE THE AO IN HIS REMAND REPORT WHILE ACCEPTING TH E GROSS SALE PROCEEDS AT RS.9,40,454/- HAS HELD THAT THE ASSESSE E WAS UNABLE TO PRODUCE VOUCHERS FOR RS.50,000/- OUT OF THE EXPENSES OF RS.24,04,541/- AND OTHER VOUCHERS ARE NOT PROPERLY MAIN TAINED, THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE CONSIDERED OPINION THAT CIT(A) WAS NOT JUSTIFIED IN REST RICTING SUCH DISALLOWANCE TO RS.25,000/-. THEREFORE, WE ARE OF THE OPINION THAT DISALLOWANCE TO THE EXTENT OF RS.50,000/- FOR WHICH NO VOUCHERS WERE PRODUCED HAS TO BE SUSTAINED. ACCORDINGLY, THE OR DER OF THE CIT(A) IS MODIFIED AND IT IS HELD THAT AN AMOUNT OF RS.50,000/- OUT OF THE ADDITION OF RS.4,68,000/- MADE BY THE AO HAS TO BE SU STAINED. GROUND RAISED BY THE REVENUE ON THIS ISSUE IS PARTLY ALLOWED. 23. SO FAR AS THE ADDITION OF RS.2,26,610/- MADE BY THE AO BEING 1/5 TH EXPENSES ON ACCOUNT OF GINNING AND PRESSING EXPENSES IS CONCERNED WE FIND BASED ON THE VARIOUS SUBMISSIONS MADE BY THE 15 ITA NOS.87 AND 88/PN/2014 ASSESSEE THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE AO WHO HAS REPORTED AS UNDER : ' THE ASSESSEE HAS CLAIMED EXPENSES IN HIS OLD BOOKS OF ACCOUN TS TOWARDS GINNING EXPENSES OF RS.11,33,052/- BUT THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNTS AND BILLS/VOUCHERS AND THE THEN AR OF THE ASSESSEE HIMSELF AGREED FOR 10% DISALLOWANCES, AO RIGHTLY DISALLOWED 20% EXPENSES AND ADDED TO THE TOTAL INCOME OF THE ASSE SSEE. HOWEVER, IN NEW BOOKS OF ACCOUNTS THE ASSESSEE INCURRED T OTAL EXPENSES AMOUNTING TO RS.9,62,690/-. WHEN THE AR OF TH E ASSESSEE ASKED TO FURNISH BILLS & VOUCHERS FOR VERIFICATION, THE A.R. OF THE ASSESSEE FURNISHED BILLS AND VOUCHERS WHICH ARE VERIFIED. DURING THE VERIFICATION IT IS NOTICED THAT THESE ARE NOT MAINTA INED PROPERLY AS WELL AS SOME BILLS ARE HAND WRITTEN. CONSIDERING THIS FACT IT IS PROPOSED TO DISALLOW AT 10% EXPENSES OUT OF EXPENSES CLAIMED RS.9,6 2,690/- WHICH COMES TO RS.96,269/-. 24. WE FIND THE ASSESSEE BEFORE THE AO DURING ASSESSMEN T PROCEEDINGS HAS AGREED FOR 10% DISALLOWANCE SINCE THE VOU CHERS WERE NOT MAINTAINED PROPERLY AS WELL AS SOME BILLS WERE HAND WR ITTEN. UNDER THESE CIRCUMSTANCES, WE FAIL TO UNDERSTAND AS TO H OW THE CIT(A) COULD RESTRICT THE DISALLOWANCE TO RS.25,000/-AS AGA INST RS.96,269/- PROPOSED BY THE AO AS PER THE REMAND REPO RT. AS HELD EARLIER, THE BOOKS OF ACCOUNTS WRITTEN SUBSEQUENT TO THE COMPLET ION OF THE ASSESSMENT PROCEEDINGS U/S.143(3) CANNOT BE CONSIDER ED AS RELIABLE AND THEREFORE CANNOT BE ACCEPTED. SINCE THE ASS ESSEE IN THE RE-WRITTEN BOOKS OF ACCOUNTS HAS SHOWN TO HAVE INCURRE D AN AMOUNT OF RS.9,62,690/- TOWARDS GINNING AND PRESSING EXPENSES AND HAS AGREED BEFORE THE AO DURING ASSESSMENT PROCEEDINGS FOR 10% DISALLOWANCE, THEREFORE, WE ARE UNABLE TO UNDERSTAND THE LO GIC GIVEN BY THE CIT(A) IN RESTRICTING THE SAID DISALLOWANCE TO RS.25,00 0/-. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND SUS TAIN ADDITION OF AN AMOUNT OF RS.96,269/- BEING 10% OF RS.9,62,690/- SUGG ESTED BY THE AO AS PER THE REMAND REPORT AS UNVERIFIABLE EXPE NSES. THE 16 ITA NOS.87 AND 88/PN/2014 ORDER OF THE CIT(A) IS ACCORDINGLY MODIFIED AND THE GROUND RAISED BY THE REVENUE ON THIS ISSUE IS PARTLY ALLOWED. 25. SO FAR AS THE DISALLOWANCE OF RS.2,43,445/- ON ACCOUN T OF SALARY, HAMALI AND WAGES, MACHINERY REPAIRS AND MISCELLANEOU S EXPENSES ETC. IS CONCERNED WE FIND BASED ON THE ARGUME NTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE AO WHO HAS REPORTED AS UNDER : 'THE ASSESSEE HAS CLAIMED EXPENSES IN HIS PROFIT & LOSS ACCOU NT IN OLD BOOKS OF ACCOUNTS RS.12,17,228/- BUT THE ASSESS HAS NOT PR ODUCED BOOKS OF ACCOUNTS AND BILLS/VOUCHERS AND THE THEN AR OF THE ASSESSEE HIMSELF AGREED FOR 10% DISALLOWANCES, AO RIGHTLY DISALLOWED 20 % EXPENSES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. HOWEVER, IN NEW BOOKS OF ACCOUNTS THE ASSESSEE INCURRED TOTAL EXPENSES AMOUNTING TO RS.4,42,839/-. WHEN THE AR OF THE ASSESSEE ASKED TO FURNI SH BILLS & VOUCHERS FOR VERIFICATION, THE A.R. OF THE ASSESSEE FUR NISHED BILLS AND VOUCHERS WHICH ARE VERIFIED, DURING THE VERIFICATION IT IS NOTICED THAT THESE ARE NOT MAINTAINED PROPERLY AS WELL AS SOME BILLS ARE HAND WRITTEN. CONSIDERING THIS FACT IT IS PROPOSED TO DISALLOW 10% EXP ENSES OUT OF EXPENSES CLAIMED RS.4,42,839/- WHICH COMES TO RS.44,283/ -.' 26. WE FIND AS AGAINST RS.12,17,228/- TOWARDS SALARY, HAMALI AND WAGES, MACHINERY REPAIRS AND MAINTENANCE, MISCELLANEOUS EXP ENSES ETC. THE ASSESSEE HAS SHOWN TO HAVE INCURRED EXPENSES OF RS.4,42,839/- IN THE REVISED BOOKS OF ACCOUNTS PREPARED A FTER COMPLETION OF THE ASSESSMENT U/S.143(3). IT IS ALSO A FACT THAT DURING REMAND PROCEEDINGS ALTHOUGH THE ASSESSEE HAD PRODUCED BILLS AND VOUCHERS TOWARDS THESE EXPENSES THE AO HAS NOTED TH AT THESE ARE NOT MAINTAINED PROPERLY AS WELL AS SOME BILLS ARE HAND WRITTEN . SINCE THE ASSESSEE DURING THE ORIGINAL ASSESSMENT PROCEEDINGS HAS AGREED FOR 10% DISALLOWANCE OUT OF RS.12,17,228/-, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ATLE AST 10% OF THE AMOUNT SHOWN TO HAVE INCURRED IN THE RE-WRITTEN BOOKS OF ACCOUNTS AND AS SUGGESTED BY THE AO IN THE REMAND REPORT SHOU LD HAVE BEEN 17 ITA NOS.87 AND 88/PN/2014 DISALLOWED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FAIL TO UNDERSTAND THE LOGIC ADOPTED BY THE CIT(A) RESTRICTING TH E DISALLOWANCE TO RS,20,000/- AS AGAINST RS.44,283/- AS PER T HE REMAND REPORT. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DISALLOW THE AMOUNT OF RS.44,283/- OUT OF THE EXPENSES ON ACCOUNT OF SALARY, HAMALI AND WAGES, MACHINERY REPAIRS AND MAINTENANCE, MISCELLANEOUS EXPENSES ETC. GROUND RAIS ED BY THE REVENUE ON THIS ACCOUNT IS ACCORDINGLY PARTLY ALLOWED. 27. SO FAR AS THE DISALLOWANCE OF RS.1,11,592/- MADE BY THE AO WE FIND BASED ON THE SUBMISSIONS MADE BY THE ASSESSEE DURI NG APPEAL PROCEEDINGS THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM T HE AO WHO HAS REPORTED AS UNDER : 'THE ASSESSEE HAS CLAIMED FIRE EXPENSES IN HIS PROFIT & L OSS ACCOUNT IN OLD BOOKS OF ACCOUNTS OF RS.1,11,592/- BUT THE ASSESS HAS NOT P RODUCED BOOKS OF ACCOUNTS AND BILLS/VOUCHERS AND AO RIGHTLY DISA LLOWED RS.1,11,592/- EXPENSES AND ADDED TO THE TOTAL INCOME O F THE ASSESSEE. IN NEW BOOKS OF ACCOUNT THE ASSESSEE HAS NOT CLAIMED LOSS FROM FIRE ACCIDENT, CONSIDERING THIS FACT, NO QUESTION OF ANY AD DITION ARISE ON THIS ISSUE. IT IS REQUESTED THAT, THE DECISION MAY BE TAKEN O N MERIT.' 28. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THAT THE AO IN HIS REMAND REPORT HAS STATED THAT ASSESSEE HAS NOT CLAIMED ANY LOSS FROM FIRE ACCIDENT THE LD. CIT(A) DELETED THE ADDITION. I T IS AN UNDISPUTED FACT THAT DURING THE ORIGINAL ASSESSMENT PROC EEDINGS THE ASSESSEE INITIALLY IN HIS SUBMISSION HAS SHOWED HIS INTENTION TO FURNISH THE SAME IN DUE COURSE OF TIME. EVEN AT PARA 12. 1 OF THE ASSESSMENT ORDER THE AO HAS NOTED THAT IN EVERY YEAR THE ASSESSEE IS CLAIMING LOSS IN FIRE ACCIDENT THAT TOO WITHOUT ANY PROOF/EVID ENCE. SINCE WE HAVE ALREADY HELD THAT THE RE-WRITTEN BOOKS AR E NOT TO BE RELIED AND THE MATTER HAS TO BE PROCEEDED ON THE BASIS OF THE ORIGINAL 18 ITA NOS.87 AND 88/PN/2014 PROFIT AND LOSS ACCOUNT FILED ALONG WITH THE RETURN OF INCOME WHICH WAS DULY AUDITED, THEREFORE THE BOGUS CLAIM OF RS.1,11,592/- ON ACCOUNT OF LOSS IN FIRE ACCIDENT HAS TO BE SUSTAINED. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND UPHO LD THE ADDITION OF RS.1.11.592/-. 29. SO FAR AS THE DELETION OF RS.5,89,464/- MADE BY THE AO U/S.68 OF THE I.T ACT BEING UNEXPLAINED CASH CREDIT FROM AGRICULTU RE HUC ACCOUNT, WE FIND THE AO IN HIS REMAND REPORT HAS REPORTED AS UNDER : 'THE ASSESSING OFFICER ADDED HUF LIABILITY CREDITED DUR ING THE YEAR RS. 5,89,464/-, WHICH WAS SHOWN IN HIS OLD BOOKS OF ACCOUNT . IN THIS BOOKS OF ACCOUNTS THE ASSESSEE HAS SHOWN TOTAL HUF LIABILITY AMOUNT ING TO RS.14,74,385/- IN WHICH RS.8,84,921/- ARE OPENING BAL ANCE AND RS.5,89,464/- SHOWN AS ADDED DURING THE YEAR. HOWEVER , IN NEW BOOKS OF ACCOUNTS THE ASSESSEE HAS NOT SHOWN ANY ADDITION TO UNSECU RED LOAN TAKEN FROM AGRICULTURE HUF DURING THE YEAR UNDER CO NSIDERATION, AS WELL AS THE ASSESSEE EXPLAINED THAT THERE IS NO AGRICULTURE HU F, THIS UNSECURED LOAN WAS TAKEN FROM HIS BROTHER LATE SHRI. JEEVAN B P ATIL WHICH ARE CARRIED FORWARD FROM LAST 5-6 YEARS. CONSIDERING THIS F ACT NO ADDITION IS MADE DURING THE YEAR IN UNSECURED LOAN SHOWN FROM AGR ICULTURE HUF, HENCE IT IS REQUESTED THAT THE DECISION MAY BE TAKEN O N MERIT.' 30. SUBSEQUENT TO THE REMAND REPORT WE FIND THE ASSES SEE IN HIS COUNTER COMMENTS HAS REPLIED AS UNDER : 'AS PER FINANCIAL STATEMENT SUBMITTED ALONG WITH RETUR N OF INCOME THERE IS ADDITION OF RS. 5,89,464/- TO THE AGRICULTURE HUF A/C. ASSESSEE HAS DENIED THESE FINANCIAL STATEMENT AND SUBMITTED REVISED FINANCIAL STATEMENT IN WHICH HE HAS NOT SHOWN ANY ADDITION IN AG RICULTURE HUF A/C. ASSESSEE HAS ALSO CLARIFIED THAT THIS UNSECURED LOAN W AS TAKEN FROM HIS BROTHER LATE SHRI JEEVAN B. PATIL, WHICH IS INAD VERTENTLY REFLECTED IN FINANCIAL STATEMENT AS AGRICULTURE HUF. AS PER COMMENT OF A.O. 'CONSIDERING THE FACT THAT NO ADDITION IS MADE DURING THE YEAR IN UNSECURED LOAN SHOWN FROM AGRICULTURE HUF, HENCE IT IS REQUESTED THAT THE DECISION MAY BE TAKEN ON MERIT'. OUR COMMENT IN RESPECT OF THIS IS THAT A.O. IS CORRECT IN STATING THAT THERE IS NO ADDITION IN UNSECURED LOAN SHOWN AS AGRICULTURE H UF.' 31. WE FIND BASED ON THE ARGUMENTS ADVANCED BY THE AS SESSEE AND ON THE BASIS OF THE REMAND REPORT THE LD.CIT(A) DELETED THE ADDITION. WE FIND THE ASSESSEE HAS CLARIFIED THAT THE UNSECURED LOAN WAS TAKEN 19 ITA NOS.87 AND 88/PN/2014 FROM HIS BROTHER LATE SHRI JEEVAN B. PATIL WHICH WAS INADVE RTENTLY REFLECTED IN THE FINANCIAL STATEMENT AS AGRICULTURE HUF. CON SIDERING THE TOTALITY OF THE FACTS OF THE CASE AND CONSIDERING THE FACT THAT THAT THE AO IN HIS REMAND REPORT HAS ACCEPTED THE CONTENTIO N OF THE ASSESSEE THAT THE UNSECURED LOAN WAS TAKEN FROM HIS BR OTHER LATE SHRI JEEVAN B. PATIL WHICH ARE CARRIED FORWARD FROM LAST 5 -6 YEARS AND HAS NOT DISPUTED THE CONTENTION OF THE ASSESSEE D URING REMAND PROCEEDINGS, THEREFORE, WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSU E AND THE GROUND RAISED BY THE REVENUE ON THIS ISSUE IS DISMISSED. 32. SO FAR AS THE DELETION OF RS.4,50,000/- BEING UNEXPLAINED CASH CREDIT FROM SMT. SINDHU DIGAMBAR PATIL, WIFE OF THE ASSESSEE IS CONCERNED, WE FIND THE AO IN HIS REMAND REPORT HAS OBSER VED AS UNDER : 'THE ASSESSING OFFICER ADDED THIS AMOUNT TO THE TOTAL IN COME OF THE ASSESSEE, AS DURING THE ASSESSMENT PROCEEDING THE AR OF THE ASSESSEE NOT PROVED THE GENUINENESS AND CREDIT WORTHINESS OF SMT. S INDHU D PATIL WIFE OF THE ASSESSEE. HOWEVER, IN NEW BALANCE SHEET, THE ASSESSE E HAS NOT SHOWN THIS UNSECURED LOAN IN HIS NEW BOOKS OF ACCOUNTS F URNISHED FOR VERIFICATION. CONSIDERING THIS, IT IS REQUESTED THAT TH E DECISION MAY BE TAKEN ON THIS POINT ON MERIT.' 33. FROM THE ABOVE IT IS SEEN THAT THE AO HAS NOT COM MENTED UPON ANYTHING EXCEPT STATING THAT IN THE NEW BOOKS OF ACCOUN T NO SUCH LOAN HAS BEEN SHOWN. WE FIND THE LD.CIT(A) DELETED THE ADD ITION MERELY ON THE GROUND THAT NO SUCH LOAN HAS BEEN SHOW N IN THE REVISED BALANCE SHEET PREPARED ON THE BASIS OF NEW BOOK S OF ACCOUNT. SINCE WE HAVE ALREADY HELD THAT THE REVISED ACCOUNTS C ANNOT BE RELIED UPON, THEREFORE, THE DELETION OF RS.4,50,000/- BY THE CIT(A) ON THE BASIS OF THE NEW BOOKS OF ACCOUNT CANNOT BE JUSTIFIED. SIN CE NOTHING HAS BEEN BROUGHT BEFORE US TO SUBSTANTIATE THE CREDIT WORTHINESS OF 20 ITA NOS.87 AND 88/PN/2014 MRS. SINDHU DIGAMBAR PATIL TO EXTEND SUCH HUGE LOAN OF RS.4,50,000/- WE ARE UNABLE TO ACCEPT THE SAID LOAN. ACC ORDINGLY, THE ORDER OF CIT(A) ON THIS ISSUE IS REVERSED AND THE GRO UND RAISED BY THE REVENUE ON THIS ISSUE IS ALLOWED. ITA NO.88/PN/2014 (A.Y. 2008-09 ) : 34. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 11-02-2011 DECLARING TOTAL INCOME OF RS.6,50,17 5/- AND AGRICULTURAL INCOME OF RS.8 LAKHS. THE ABOVE RETURN WAS FILED IN RESPONSE TO NOTICE U/S.148. THE AO ISSUED STATUTORY NO TICE U/S.142(1) ON VARIOUS DATES BUT THERE WAS NO COMPLIANCE. SUBSEQUENTLY, AFTER THE PENALTY WAS LEVIED U/S.271(1)(B) OF TH E I.T. ACT ON 21-10-2011 LEVYING OF PENALTY OF RS.10,000/- THE A UTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE OFFICE OF THE AO ON 24-10- 2011 AND SOME DETAILS WERE FILED. HOWEVER, FROM THE ORDER OF THE AO IT IS SEEN THAT ASSESSEE HAS NOT PRODUCED BOOKS OF ACC OUNTS FOR VERIFICATION AND FILED COPIES OF COMPUTATION OF INCOME, GINNING AN D PRESSING ACCOUNTS, PROFIT AND LOSS ACCOUNT AND CAPITAL GAI N OF THE PROPRIETOR AND BALANCE SHEET. 35. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR HAS SHOWN GROSS PILLAI RECEIPTS AMOUNTING TO RS.72,92,908/- FROM MAHARASHTRA STATE COTTON GROWER MARKETING FEDERATION LTD. AND OF OTHERS. ON THE ABOVE GROSS RECEIPT OF RS.72,92,908/- THE ASSESSEE HAS DECLARED G ROSS PROFIT OF RS.47,43,592/- AND NET PROFIT OF RS.7,50,175/-. THE AO ANALYSED THE VARIOUS FIGURES APPEARING IN THE BALANCE SHE ET AS WELL AS THE PROFIT AND LOSS ACCOUNT FILED BY THE ASSESSEE. FROM T HE VARIOUS 21 ITA NOS.87 AND 88/PN/2014 DETAILS HE OBSERVED THAT ASSESSEE HAS SHOWN AGRICULTURA L INCOME OF RS.8 LAKHS. BASED ON HIS FINDINGS IN THE PRECEDING ASSESSM ENT YEAR WHERE HE HAS CONSIDERED AGRICULTURE INCOME AT RS.2,32,000/ - THE AO FOR THE IMPUGNED ASSESSMENT YEAR ALSO DETERMINED THE AG RICULTURE INCOME AT RS.2,32,000/- AND MADE ADDITION OF RS.5,68,000/- BE ING THE DIFFERENCE BETWEEN THE AGRICULTURE INCOME SHOWN AND AGRICULTURE INCOME DETERMINED BY THE AO U/S.56 OF THE I.T. ACT. 36. AS REGARDS THE GINNING AND PRESSING EXPENSES OF RS.25,49,116/- SHOWN IN THE PROFIT AND LOSS ACCOUNT BY THE ASSESSEE IS CONCERNED THE AO NOTED THAT THE ASSESSEE HIMSELF EX PRESSED HIS DESIRE FOR DISALLOWANCE OF 10% OF SUCH EXPENSES ON ESTIMAT E BASIS. SINCE THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUN TS, VOUCHERS AND REGISTERS MAINTAINED FOR THE ABOVE EXPENSES THE AO DISALLOWED 20% OF SUCH EXPENSES ON ESTIMATE BASIS AND MADE ADDITION OF RS.5,09,823/-. THE AO SIMILARLY NOTED THAT ASSESSEE HAS D EBITED THE FOLLOWING EXPENSES IN HIS PROFIT AND LOSS ACCOUNT : SALARIES RS.3,84,000/- HAMALI AND WAGES RS.10,15,950/- MACHINERY REPAIRS & MAINTENANCE RS.2,30,232/- MISC. EXPENSES RS. 85,230/- ----------------- TOTAL RS.17,15,412/- ----------------- 37. ON BEING CONFRONTED BY THE AO THE ASSESSEE ADMITTE D THAT 10% OF THE ABOVE EXPENSES MAY BE DISALLOWED. HOWEVER, SINCE THE ASSESSEE DID NOT PRODUCE BILLS/VOUCHERS ETC., TO SUBSTAN TIATE THE CLAIM ALONG WITH EVIDENCE THE AO DISALLOWED AN AMOUNT OF RS.3,43,082/- BEING 20% OF SUCH EXPENSES ON ESTIMATE BASIS . THE AO FURTHER NOTED THAT AN AMOUNT OF RS.1,35,685/- HAS BEE N DEBITED 22 ITA NOS.87 AND 88/PN/2014 TO THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD LOSS DUE TO FIRE ACCIDENT. SINCE THE ASSESSEE DID NOT FURNISH ANY EVIDENCE TO JUSTIFY SUCH CLAIM AND NOTING THAT THE ASSESSEE IS CLAIMING SUCH EXPENSES EVERY YEAR THE AO DISALLOWED THE AMOUNT OF RS.1,35,685/- DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE AO FURTHER NOTED THAT ASSESSEE HAS RECEIVED STATE SUBSIDY OF RS.4,70,550/-. THE AO ASKED FOR THE DETAILS OF SUCH STATE SUBSIDY. IT WAS CLARIFIED BY THE ASSESSEE T HAT THIS FIGURE HAS BEEN CARRIED FORWARD FROM YEARS TOGETHER IN THE BALA NCE SHEET AND THE FIGURE MAY BE ACCEPTED AS GENUINE. SINCE THE AS SESSEE HAS CLAIMED DEPRECIATION ON VARIOUS ASSETS AMOUNTING TO RS.12,8 5,775/- THE AO WAS OF THE OPINION THAT THE SUBSIDY AMOUNT SHOULD BE REDUCED FROM THE ASSETS FOR THE PURPOSE OF CALCULATING DE PRECIATION. HE ACCORDINGLY DISALLOWED AN AMOUNT OF RS.70,583/- BEING E XCESS DEPRECIATION CLAIMED BY THE ASSESSEE. THE AO FURTHER NOT ED THAT AN AMOUNT OF RS.13,11,470/- WAS BROUGHT AS ADDITIONAL CAPITAL W HICH WAS CREDITED TO THE CAPITAL ACCOUNT. ON BEING ASKED BY THE AO IT WAS EXPLAINED BY THE ASSESSEE THAT HE HAS A SAVING ACCOUNT WITH STATE BANK OF INDIA, NAIGAON WHEREIN HE DEPOSITS THE SALE PROCEE DS OF THE AGRICULTURE PRODUCTS FROM TIME TO TIME. THE ASSESSEE HAS DEPOSITED THE AMOUNTS FROM TIME TO TIME. DURING THE YEAR THE ASSE SSEE HAS WITHDRAWN FROM THE SAID SAVINGS ACCOUNT AND INTRODUCED T HE SAME IN HIS CAPITAL ACCOUNT. THE AO ANALYSED THE BANK ACCOUNT EXTRACTS SUBMITTED BY THE ASSESSEE AND NOTED THAT THERE ARE N O HEAVY DEPOSITS IN THE BANK ACCOUNT. THERE WAS A DEPOSIT OF RS.6,63,37 4/- ON 17-10- 2008 AND THERE WAS WITHDRAWAL OF RS.6,63,374/- BY CHEQUE . SINCE THE ASSESSEE COULD NOT EXPLAIN PROPERLY THE AO MADE AD DITION OF RS.13,11,470/- TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 OF THE I.T. ACT. 23 ITA NOS.87 AND 88/PN/2014 38. THE AO SIMILARLY NOTED THAT AN AMOUNT OF RS.29,74,385/ - HAS BEEN SHOWN AS LIABILITY UNDER THE HEAD AGRICULTURE HUF AS ON 31-03- 2008. ON BEING CONFRONTED BY THE AO THE ASSESSEE SUBM ITTED THAT THE ASSESSEES FAMILY ARE BASICALLY AGRICULTURISTS OWNING A BOUT 100 ACRES OF AGRICULTURAL LAND AT HOTALI VILLAGE TALUKA NAIGAON. T HESE LANDS ARE IRRIGATED, RICH AND FERTILE AND THE YIELDS FROM THES E LANDS IS QUITE HEALTHY AND FROM THESE LANDS GOOD YIELD OF AGRICULTURA L PRODUCE IS DERIVED. IT IS BEING LOOKED AFTER BY THE COUSIN BROTHER S OF THE ASSESSEE WHO LIVE JOINTLY AT HOTALA VILLAGE. FROM THESE AG RICULTURAL PRODUCE SALES THE MONEY IS DEPOSITED WITH THE BUSINESS O F GINNING AND PRESSING FACTORY AS AND WHEN REQUIRED FOR HIS BUSINES S PURPOSES. THE FOLLOWING DETAILS WERE ALSO FILED : TO BALANCE C/F RS.29,74,385-00 BY OPENING BALANCE RS.14,74,385-00 BY CREDITED DURING YEAR RS.15,00,000-00 --------------------- -------------------- - RS.29,74,385-00 RS.24,74,385-00 ---------------------- ------------------- -- IN ABSENCE OF PRODUCTION OF ANY EVIDENCE TO THE SATISFACT ION OF THE AO REGARDING FORMATION OF AGRICULTURE HUF, ITS EXISTENCE, THE N AME OF THE MEMBERS OF THE HUF, BANK ACCOUNT, IF ANY MAINTAINED BY THE HUF AND COPY OF INCOME TAX RETURNS ETC., THE AO DECLINED TO ALLOW SUCH CLAIM MADE BY THE ASSESSEE. THE AO ACCORDINGLY MADE AD DITION OF RS.15 LAKHS U/S.68 OF THE I.T. ACT TO THE TOTAL INCOME OF THE ASSESSEE. 39. THE AO SIMILARLY NOTED FROM THE BALANCE SHEET THAT A N AMOUNT OF RS.8,50,000/- WAS SHOWN AS OUTSTANDING PAYABLE TO SMT. SINDHU DIGAMBAR PATIL, WIFE OF THE ASSESSEE. ON BEING CONFRONTED BY THE AO IT WAS SIMPLY STATED THAT SHE IS WIFE OF THE ASSESSEE. FR OM THE VARIOUS DETAILS AVAILABLE IN THE BALANCE SHEET OF THE CURRE NT YEAR AS 24 ITA NOS.87 AND 88/PN/2014 WELL AS PRECEDING ASSESSMENT YEAR, THE AO NOTED THAT SM T. SINDHU DIGAMBAR PATIL IS A HOUSEWIFE AND HAS NO INDEPENDENT SOURC E OF INCOME TO ADVANCE LOAN TO THE ASSESSEE. OUT OF RS.8,50,0 00/- OUTSTANDING AT THE END OF THIS YEAR AN AMOUNT OF RS.4,50,0 00/- WAS THE OPENING BALANCE AND AN AMOUNT OF RS.4 LAKHS WAS CRED ITED DURING THE YEAR. SINCE THE ASSESSEE WAS UNABLE TO SUB STANTIATE THE CREDIT WORTHINESS OF THE LOAN CREDITOR AND THE GENUINENE SS OF THE TRANSACTION THE AO MADE ADDITION OF RS.4 LAKHS U/S.68 OF T HE I.T. ACT TO THE TOTAL INCOME OF THE ASSESSEE. 40. THE AO SIMILARLY NOTED THAT THE ASSESSEE HAS RECEIV ED AN AMOUNT OF RS. 10 LAKHS FROM SHRI SHIVAJI BHAURAO PATIL AND A NOTHER RS. 8 LAKHS SHRI DATTATRAY BHAGWANRO PATIL WHO ARE BROTH ERS OF THE ASSESSEE. THE AO ASKED THE ASSESSEE TO SUBSTANTIATE THE GENUINENESS OF THE ABOVE LOAN CREDITS. HOWEVER, IN ABSENC E OF ANY CONFIRMATION FILED BY THE ASSESSEE CONFIRMING THE LOANS FROM THE ABOVE PERSONS AND IN ABSENCE OF ANY EVIDENCE TO SHOW T HEIR CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION THE AO, FOLLO WING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SREE LEKHA BANERJEE VS. CIT REPORTED IN 49 ITR 112, MADE ADDITION O F RS.18 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 OF THE I.T. ACT. 41. THE AO OBSERVED FROM THE COMPUTATION OF INCOME THAT ASSESSEE HAS PAID LIC PREMIUM OF RS.2,19,461. SINCE THE ABOVE AMOUN T WAS NOT DEBITED TO THE CAPITAL ACCOUNT AS A WITHDRAWAL AND T HE ASSESSEE COULD NOT SUBSTANTIATE THIS CLAIM THE AO ADDED THIS AMOU NT TO THE TOTAL INCOME OF THE ASSESSEE U/S.69 AS UNDISCLOSED INVESTMENT. 25 ITA NOS.87 AND 88/PN/2014 42. FROM THE DEPRECIATION CHART ANNEXED TO THE BALANC E SHEET AND AUDIT REPORT FOR THE YEAR ENDING 31-03-2008, THE AO NOT ED THAT THE MACHINERY ACCOUNT OPENING BALANCE IS SHOWN AT RS.37,75,0 00/- WHEREAS THE CLOSING BALANCE IN THE PRECEDING YEAR BALANCE SHEET WAS SHOWN AT RS.14,72,360/-. THE AO CONFRONTED THE ASSESSEE REGARDING THE ADDITION OF RS.23,03,640/-. SINCE THE ASSESSEE WAS UN ABLE TO EXPLAIN ANYTHING ON THIS MATTER THE AO MADE ADDITION OF RS.23,02,640/- TO THE TOTAL INCOME OF THE ASSESSEE AS UNE XPLAINED INVESTMENT U/S.69 OF THE I.T. ACT. 43. THE AO SIMILARLY OBSERVED FROM THE DEPRECIATION CHART ANNEXED TO THE BALANCE SHEET AND THE AUDIT REPORT THAT THE OP ENING BALANCE OF WORKSHOP SHED, TOOLS AND EQUIPMENTS ACCOUNT, IS SHOWN AT RS.10,50,000/- WHEREAS CLOSING BALANCE IN THE PREVIOUS YEAR BALANCE SHEET OF THE SAID ACCOUNT WAS RS.1,92,350/-. SINCE THE AS SESSEE WAS UNABLE TO EXPLAIN ANYTHING ON THIS MATTER THE AO MADE AD DITION OF RS.8,57,650/- TO THE TOTAL INCOME OF THE ASSESSEE AS UNE XPLAINED INVESTMENT U/S.69 OF THE I.T. ACT. 44. THE AO SIMILARLY OBSERVED FROM THE DEPRECIATION CHART ANNEXED TO THE BALANCE SHEET, AUDIT REPORT FOR THE YEAR ENDING 3 1-03-2008 THAT THE OPENING BALANCE OF ELECTRICAL FITTINGS, PANEL BOARD , TRANSFORMER ACCOUNT HAS BEEN SHOWN AT RS.14,83,000/- WH EREAS CLOSING BALANCE IN THE PRECEDING YEAR BALANCE SHEET OF THE SAID ACCOUNT WAS NIL. IN ABSENCE OF ANY SATISFACTORY EXPLANAT ION GIVEN BY THE ASSESSEE THE AO MADE ADDITION OF RS.14,83,000/- TO T HE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT U/S.69 OF THE I.T. ACT. THUS, THE AO DETERMINED THE TOTAL INCOME OF THE AS SESSEE AT RS.1,21,51,569/- AND AGRICULTURAL INCOME OF RS.2,32,000/- AS 26 ITA NOS.87 AND 88/PN/2014 AGAINST THE RETURNED INCOME OF RS.6,50,175/- AND AGRICULTU RAL INCOME OF RS.8,00,000/-. 45. BEFORE CIT(A) THE ASSESSEE REITERATED THE SAME SUBM ISSIONS AS MADE DURING A.Y. 2007-08 SUCH AS HE HAS GONE THROUGH K IDNEY TRANSPLANTATION PROCEDURE AND WAS SUFFERING FROM SEVERE K IDNEY PROBLEMS SINCE 2006 FOR WHICH HE WAS NOT IN PROPER MENTA L STATE AND THEREFORE THE BOOKS OF ACCOUNT AND RETURN OF INCOME COU LD NOT BE CORRECTLY PREPARED. IT WAS SUBMITTED THAT THE BOOKS OF ACCOUNTS HAVE BEEN PREPARED BY THE MANAGER AND HAVE BEEN FINALISED BY THE ADVOCATE LOOKING AFTER TAX MATTERS ON THE BASIS OF INCORR ECT INFORMATION FURNISHED AND HENCE THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET PREPARED WAS NOT SUPPORTED BY PROPER A ND COMPLETE BOOKS AND OTHER EVIDENCES. IT WAS SUBMITTED THAT IN VIE W OF THE ABOVE FACTS THE BOOKS HAVE BEEN RE-WRITTEN AND REVISED FINAL STATEMENT OF ACCOUNTS HAVE BEEN PREPARED. THE ASSESS EE ALSO FILED COMPARISON OF THE AMOUNTS SHOWN UNDER VARIOUS HEADS AS PER RETURN OF INCOME FILED, DIFFERENCE IN THE AMOUNT AS PER RETURN FILED AN D REVISED FINAL STATEMENT OF ACCOUNTS AND REMARKS ABOUT TH E SAME. THE ASSESSEE ACCORDINGLY PREPARED AND FINALIZED REVISED C OMPUTATION OF INCOME SHOWING RENTAL INCOME OF RS.1,91,730/- AND INCOME FR OM BUSINESS, AS PER PROFIT AND LOSS ACCOUNT AT RS.10,68,536/-, THUS, DECLARING GROSS TOTAL INCOME OF RS.12,60,266/-. THE ASSESSEE CLAIMED DEDUCTION OF RS.1 LAKHS U/S.80C AND NET TAXABLE INCOME OF RS.11,60,266/- WAS DECLARED. THE ASSESSEE DECLARED AGRICU LTURE INCOME OF RS.16,30,230/-. THE ASSESSEE ALSO FILED A COPY OF T HE REGISTERED AGREEMENT FOR PURCHASE OF FLAT AT PUNE ON 11- 06-2003. HE ALSO FILED THE MEDICAL HISTORY AND VARIOUS DOCUMENTS AND PA PERS IN 27 ITA NOS.87 AND 88/PN/2014 SUPPORT OF THE KIDNEY PROBLEM/KIDNEY TRANSPLANTATION DURIN G THE YEARS 2006 TO 2010. 46. THE LD.CIT(A) SENT ALL THE DETAILS FILED BY THE ASSESSEE AND THE WRITTEN SUBMISSION OF THE ASSESSEE TO THE AO FOR HIS COMM ENTS AND CALLED FOR A REMAND REPORT FROM THE AO. BASED ON THE R EMAND REPORT OF THE AO AND THE COMMENTS OF THE ASSESSEE TO SUCH RE MAND REPORT THE LD.CIT(A) SUSTAINED THE ADDITION MADE BY THE AO ON AC COUNT OF AGRICULTURE INCOME AT RS.30,000/- AS AGAINST RS.5,68,000/- B Y THE AO. SIMILARLY, HE RESTRICTED THE GINNING AND PRESSING EXPE NSES OF RS.35,000/- AS AGAINST RS.3,76,236/- RECOMMENDED BY THE AO IN THE REMAND REPORT. 47. SO FAR AS THE SALARY, HAMALI & WAGES, MACHINERY REPAIRS AND MAINTENANCE AND MISC. EXPENSES ARE CONCERNED HE SUSTA INED THE ADDITION OF RS.25,000/- AS AGAINST RS.3,42,082/- MADE BY TH E AO. SO FAR AS THE ADDITION OF RS.1,35,685/- ON ACCOUNT OF FIRE AC CIDENT IS CONCERNED HE DELETED THE SAME. THE ADDITION MADE BY TH E AO AMOUNTING TO RS.13,11,470/- ON ACCOUNT OF UNEXPLAINED CRED IT TO CAPITAL ACCOUNT WAS DELETED BY THE CIT(A). SIMILARLY, HE ALSO DELETED THE ADDITION OF RS.15 LAKHS ON ACCOUNT OF LOAN FROM AGRICULTU RE HUF. THE ADDITION MADE BY THE AO AMOUNTING TO RS.4 LAKHS BEIN G UNEXPLAINED CASH CREDIT FROM THE WIFE OF THE ASSESSEE AND AN AMOUNT OF RS.18 LAKHS FROM THE 2 BROTHERS OF THE ASSESSEE WERE ALSO DELETED BY THE CIT(A) ON THE BASIS OF THE REVISED BOOKS OF ACCOUN TS. HE ALSO DELETED THE ADDITION MADE BY THE AO AMOUNTING TO RS.2,19,4 61/- ON ACCOUNT OF UNEXPLAINED INVESTMENT BEING LIC PREMIUM PAID. THE ADDITION MADE BY THE AO AMOUNTING TO RS.23,02,640/- ON AC COUNT OF UNEXPLAINED INVESTMENT UNDER THE HEAD MACHINERY, RS.8,57,65 0/- ON 28 ITA NOS.87 AND 88/PN/2014 ACCOUNT OF UNEXPLAINED INVESTMENT UNDER THE HEAD WORKS HOP SHED, TOOLS AND EQUIPMENTS AND THE ADDITION OF RS.14,83,000/- ON A CCOUNT OF UNEXPLAINED INVESTMENT UNDER THE HEAD ELECTRICAL FITTINGS, PANEL BOARD, TRANSFORMER ETC., WERE ALSO DELETED BY THE CIT(A) ON THE BASIS OF RE-WRITTEN NEW BOOKS OF ACCOUNTS. THUS, THE LD.CIT(A) D ETERMINED THE TOTAL INCOME AT RS.13,20,849/- AS AGAINST THE RETURNE D INCOME OF RS.6,50,175/- WHICH WAS ASSESSED BY THE AO AT RS.1,21,51,569/-. 48. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : THE CIT(A), AURANGABAD ERRED IN DELETING THE ADDIT IONS MADE BY THE A.O FOR VARIOUS DISALLOWANCES TO THE TUNE OF RS.1,13,40,811 /- AS DETAILED UNDER:- 2 . T H E C I T ( 2. THE CIT(A) ERRED IN IGNORING THE FACT THAT THE C ASE IS AN AUDITED ONE DULY CERTIFIED BY A CHARTERED ACCOUNTANT. SR. NO. PARTICULARS OF ADDITION RELIEF GRANTED BY THE CIT(A) 1 ALLEGED EXCESSIVE AGRICULTURAL INCOME TAXED AS INCOME FROM OTHER SOURCES 5,38,000 2 DISALLOWANCE OF GINNING & PRESSING EXPENSES @ 20% 4,74,823 3 DISALLOWANCE OF SALARY, HAMALI & WAGES, MACHINERY REPAIRS AND MAINTENANCE AND MISC. EXPENSE @ 20% 3,18,082 4 DISALLOWANCE OF EXPENSES ON ACCOUNT OF FIRE ACCIDENT 1, 3 5 ,685 5 DISALLOWANCE OF DEPRECIATION 0 6 UNEXPLAINED CREDIT TO CAPITAL ACCOUNT 13,11,470 7 UNEXPLAINED CASH CREDIT FROM AGRICULTURE HUF ACCOUNT 15,00,000 8 UNEXPLAINED CASH CREDIT FROM SMT. SINDHU DIGAMBAR 4,00,000 9 UNEXPLAINED CREDIT IN THE NAME OF SHRI SHIVAJI B, P ATIL AND SHRI DATTARAYA B. PATIL 18,00,000 10 UNEXPLAINED INVESTMENT UNDER HEAD LIC 2,19,461 11 UNEXPLAINED INVESTMENT UNDER HEAD MACHINERY 23,02,640 12 UNEXPLAINED INVESTMENT UNDER HEAD WORKSHOP SHED, TOOLS AND EQUIPMENT 8,57,650 13 UNEXPLAINED INVESTMENT UNDER THE HEAD ELECTRICAL FITTINGS, PANEL BOARD, TRANSFORMER 14,83,000 TOTAL 1,13,40,811 29 ITA NOS.87 AND 88/PN/2014 3. THE CIT(A) ERRED IN ADMITTING THE REVISED ACCOUNT STATEMENTS SINCE THE SAME WERE ALREADY AUDITED ONES AND THERE WAS NO ANY PROPRIETARY IS REVISING THE BOOKS OF ACCOUNTS BY THE ASSE SSEE AT THE ASSESSMENT/APPELLATE STAGE. 4. THE CIT(A) ERRED IN IGNORING THE FACT THAT FOR T HE DISALLOWANCE AT SR. NO.2 AND 3 ABOVE THE ASSESSEE HIMSELF AGREED FOR ADD ITION OF 10%. 5. THE ORDER OF THE CIT(A) BE VACATED AND THAT OF T HE A.O. BE RESTORED. 6. THE APPELLANT CRAVES, LEAVES TO ADD, AMEND OR ALTE R ANY GROUNDS OF APPEAL. 49. BOTH SIDES REITERATED THE SAME ARGUMENTS AS ADVAN CED WHILE ARGUING THE APPEAL FOR A.Y. 2007-08. THEREFORE, THE SAME IS NOT BEING REPEATED. 50. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. SO FAR AS THE REVISED COMPUTATION OF INCOME, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET ETC., PREPARED ON THE BASIS OF RE-WRITTEN BOOKS OF ACCOU NTS IS CONCERNED WE HAVE ALREADY HELD IN PARA 20 OF THE IMPUGNE D ORDER THAT BOOKS OF ACCOUNTS PREPARED SUBSEQUENT TO THE CO MPLETION OF THE ASSESSMENT U/S.143(3) HAVE TO BE REJECTED AND THE MATT ER HAS TO BE DECIDED ON THE BASIS OF ORIGINAL SETS OF BOOKS OF ACCOUNTS WHICH WAS DULY AUDITED BY THE AUDITORS AND THE AUDITED ACCOUNTS FILED ALONG WITH THE ORIGINAL RETURN OF INCOME WHICH WERE ALSO DULY SING ED BY THE ASSESSEE. THEREFORE, FOLLOWING THE SAME PRINCIPLE, THE ORDER OF THE CIT(A) ACCEPTING THE REVISED BOOKS OF ACCOUNTS PREPARED BY THE ASSESSEE AFTER THE COMPLETION OF THE ASSESSMENT IS REJEC TED AND THE MATTER HAS TO BE PROCEEDED ON THE BASIS OF THE INDIVIDUA L ADDITIONS MADE BY THE AO. 30 ITA NOS.87 AND 88/PN/2014 51. SO FAR AS THE FIRST ADDITION IS CONCERNED, I.E., DISALLOWANCE OF AGRICULTURE INCOME OF RS.5,68,000/-, WE FIND THE ASSESSEE HA D DECLARED AGRICULTURE INCOME OF RS.8 LAKHS WHICH WAS DETERMIN ED BY THE AO AT RS.2,32,000/-. WE FIND ON THE BASIS OF THE VARIOU S DETAILS PRODUCED BY THE ASSESSEE BEFORE THE CIT(A) HE CALLED FOR A REMAND REPORT FROM THE AO WHO HAS REPORTED AS UNDER : 'THE ASSESSEE HAS SHOWN THE AGRICULTURAL INCOME RS.8,00,00 0/-IN HIS RETURN OF INCOME FILED ON 11/02/2011. THE ASSESSING OFF ICER ESTIMATED THE AGRICULTURE INCOME AT THE RATE OF RS.8,000/- PER ACRE AS THE ASSESSEE HAS NOT PRODUCED SALE PATTIES TREATING THE AGRICULTURE LAND AS NON IRRIGATED. NOW, THE ASSESSEE HAS PRODUCED SALE BILLS OF A GRICULTURAL GOODS SOLD TO BHARTIYA KAPAS NIGAM AMOUNTING TO RS.29,73,73 3/- AGAINST THIS INCOME. THE ASSESSEE HAS SHOWN EXPENSES RS.13,43,503/- WHEN THE ASSESSEE WAS ASKED TO FURNISH THE BILLS AND VOUCHERS FOR EXP ENSES CLAIMED, THE BILLS & VOUCHERS FURNISHED BY THE ASSESSEE FO R VERIFICATION. AFTER VERIFICATION OF THESE VOUCHERS IT IS NOTICED TH AT THE VOUCHERS ARE NOT PROPERLY MAINTAINED AS WELL AS BILLS AMOUNTING TO RS.1 ,50,000/- ARE NOT PRODUCED FOR VERIFICATION. CONSIDERING THIS RS.1,50,00 0/- DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE.' 52. SINCE IN THE REMAND REPORT THE AO HAS OBSERVED TH AT THE ASSESSEE WAS UNABLE TO PRODUCE THE BILLS AND VOUCHERS A MOUNTING TO RS.1,50,000/- FOR HIS VERIFICATION, THEREFORE, WE ARE UNABLE T O UPHOLD THE ORDER OF THE CIT(A) RESTRICTING SUCH DISALLOWANCE TO RS .30,000/-. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE HOLD T HAT DISALLOWANCE OF RS.75,000/- UNDER THE FACTS AND CIRCUMSTANC ES OF THE CASE OUT OF THE AGRICULTURE INCOME IS REASONABLE AND MEET THE ENDS OF JUSTICE. WE THEREFORE MODIFY THE ORDER OF THE CIT(A) TO THIS EXTENT AND DIRECT THE AO TO CONFIRM THE ADDITION OF RS.75,000/- AS INC OME FROM OTHER SOURCES U/S.56 OUT OF THE AGRICULTURE INCOME. 53. SO FAR AS THE DISALLOWANCE OF RS.5,09,823/- BY THE AO OUT OF THE GINNING AND PRESSING EXPENSES IS CONCERNED WE FIND TH E AO IN HIS REMAND REPORT HAS OBSERVED AS UNDER : 31 ITA NOS.87 AND 88/PN/2014 'THE ASSESSEE HAS CLAIMED EXPENSES IN HIS OLD BOOKS OF ACCOU NTS TOWARDS GINNING EXPENSES RS.25,49,116/- BUT THE ASSESS HAS NOT PRO DUCED BOOKS OF ACCOUNTS AND BILLS/VOUCHERS AND THE THEN AR OF THE ASSESSEE HIMSELF AGREED FOR 10% DISALLOWANCES, AO RIGHTLY DISALLOWED 20 % EXPENSES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. HOWEVER, IN NEW BOOKS OF ACCOUNTS THE ASSESSEE INCURRED TOTAL EXPENSES AMOUNTING T O RS.37,62,383/-. WHEN THE AR OF THE ASSESSEE ASKED TO FURN ISH BILLS & VOUCHERS FOR VERIFICATION, THE A.R. OF THE ASSESSEE FUR NISHED BILLS AND VOUCHERS WHICH ARE VERIFIED. DURING THE VERIFICATION IT IS NOTICED THAT THESE ARE NOT MAINTAINED PROPERTY AS WELL AS SOME BILLS ARE HAND WRITTEN. CONSIDERING THIS FACT, IT IS PROPOSED TO DISALLOW AT 10% EXPENSES OUT OF EXPENSES CLAIMED RS.37,62,363/-WHICH COMES TO RS.3,76,23 6/-.' 54. FROM THE ABOVE IT IS SEEN THAT AS AGAINST RS.25,49,11 6/- IN THE OLD BOOKS OF ACCOUNTS THE ASSESSEE HAS CLAIMED SUCH EXP ENSES AT RS.37,62,383/- IN THE NEW BOOKS OF ACCOUNTS. IT IS ALSO A FACT THAT DURING ORIGINAL ASSESSMENT PROCEEDINGS THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS AGREED FOR 10% OF SU CH DISALLOWANCE. NOW THE CIT(A) HAS RESTRICTED THE SAID DISALLOW ANCE TO RS.35,000/- WHICH IN OUR OPINION IS WITHOUT ANY BASIS. WE HA VE ALREADY HELD THAT THE NEW BOOKS OF ACCOUNT CANNOT BE R ELIED UPON WHICH WERE WRITTEN AFTER THE COMPLETION OF THE ASSESSMENT . CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE DISALLOWANC E OF RS.2 LAKH ON ESTIMATE BASIS OUT OF THE GINNING AND PRESSING EX PENSES IN OUR OPINION WILL MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE ORDER OF THE CIT(A) RESTRICTING SUCH DISALLOWANCE TO RS.35,000/- IS MO DIFIED AND THE AO IS DIRECTED TO RESTRICT SUCH DISALLOWANCE TO RS.2 LAKHS. 55. SO FAR AS THE ADDITION OF RS.3,43,082/- BY THE AO OUT OF THE SALARY, HAMALI & WAGES, MACHINERY REPAIRS AND MAINTENANCE A ND MISC. EXPENSES ETC. IS CONCERNED WE FIND THE AO IN HIS RE MAND REPORT HAS OBSERVED AS UNDER : 'THE ASSESSEE HAS CLAIMED EXPENSES IN HIS PROFIT & LOSS ACCOU NT IN OLD BOOKS OF ACCOUNTS OF RS. 17,15,412/- BUT THE ASSESSEE HAS N OT PRODUCED BOOKS OF ACCOUNTS AND BILLS/VOUCHERS AND THE THEN AR OF THE ASSESSEE HIMSELF AGREED FOR 10% DISALLOWANCES, AO RIGHTLY DISALL OWED 20% 32 ITA NOS.87 AND 88/PN/2014 EXPENSES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. H OWEVER, IN NEW BOOKS OF ACCOUNTS THE ASSESSEE INCURRED TOTAL EXPENSES AMOU NTING TO RS.20,05,940/-. WHEN THE AR OF THE ASSESSEE WAS ASKED TO F URNISH BILLS & VOUCHERS FOR VERIFICATION, THE A.R. OF THE ASSESSEE FUR NISHED BILLS AND VOUCHERS WHICH ARE VERIFIED, DURING THE VERIFICATION IT IS NOTICED THAT THESE ARE NOT MAINTAINED PROPERLY AS WELL AS SOME BILLS ARE HAND WRITTEN CONSIDERING THIS FACT IT IS PROPOSED TO DISALLOW AT 10% EXPENSES OUT OF EXPENSES CLAIMED RS.20,05,940/-WHICH COMES TO RS.2,00,59 4/-.' 56. FROM THE ABOVE WE FIND THE ASSESSEE IN HIS OLD BOOKS OF ACCOUNTS DEBITED SUCH EXPENSES AT RS.17,15,412/- AND BE FORE THE AO HAD AGREED FOR 10% DISALLOWANCE. WE FIND THE LD.CIT(A) RESTR ICTED SUCH DISALLOWANCE TO RS.25,000/- ON ESTIMATE BASIS WHICH IN OUR OPINION IS NOT PROPER. SINCE WE HAVE ALREADY HELD THAT TH E RE-WRITTEN BOOKS OF ACCOUNTS CANNOT BE ACCEPTED AND THE ASSESSE E THROUGH HIS THE THEN AUTHORISED REPRESENTATIVE HAS AGREED FOR DISALLO WANCE OF 10% OF THE EXPENSES, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE HOLD THAT DISALLOWANCE OF RS.75,000/- OUT OF SU CH EXPENSES WILL MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE O RDER OF THE CIT(A) CONFIRMING THE ADDITION TO THE EXTENT OF RS.25,000/- IS MODIFIED AND THE AO IS DIRECTED TO RESTRICT SUCH DISALLOWANC E AT RS.75,000/-. 57. SO FAR AS THE ADDITION OF RS.1,35,685/- BEING EXPENSES ON ACCOUNT OF FIRE ACCIDENT IS CONCERNED WE FIND THE AO IN HIS REMAND REPORT HAS OBSERVED AS UNDER : 'THE ASSESSEE HAS CLAIMED FIRE EXPENSES IN HIS PROFIT & L OSS ACCOUNT IN OLD BOOKS OF ACCOUNTS OF RS.1,35,685/- BUT THE ASSESS HAS NOT P RODUCED BOOKS OF ACCOUNTS AND BILLS/VOUCHERS AND AO RIGHTLY DISA LLOWED RS.L,35,685/-EXPENSES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN NEW BOOKS OF ACCOUNT THE ASSESSEE HAS NOT CLAIMED LOSS FROM FIRE ACCIDENT, CONSIDERING THIS FACT, NO QUESTION OF ANY AD DITION ARISE ON THIS ISSUE. IT IS REQUESTED THAT, THE DECISION MAY BE TAKEN O N MERIT.' 33 ITA NOS.87 AND 88/PN/2014 58. IT IS AN ADMITTED THAT THE ASSESSEE WAS CLAIMING SUC H TYPE OF EXPENSES EVERY YEAR. WE HAVE ALREADY HELD THAT THE NE W BOOKS OF ACCOUNTS PREPARED AFTER COMPLETION OF THE ASSESSMENT OR DER CANNOT BE RELIED UPON. THEREFORE, IT IS IMMATERIAL AS TO WHETHER TH E ASSESSEE HAS SHOWN SUCH EXPENSES IN THE NEW BOOKS OF ACCOUNTS OR NOT. SIMILAR DISALLOWANCE MADE BY THE AO IN THE PRECEDING YEAR H AS ALREADY BEEN UPHELD BY US IN THE PRECEDING PARAGRAPHS. FOLLOWING THE SAME REASONINGS, THE ADDITION MADE BY THE AO ON THIS ACCOUNT IS UPHELD AND THE ORDER OF THE CIT(A) DELETING SUCH ADDITION IS REVERSED. 59. AS REGARDS THE ADDITION OF RS.13,11,470/- ON ACCOUNT OF UNEXPLAINED CREDIT IN THE CAPITAL ACCOUNT IS CONCERNED WE FIND THE AO IN HIS REMAND REPORT HAS OBSERVED AS UNDER : 'IN OLD BOOKS OF ACCOUNTS THE ASSESSEE HAS INTRODUCED ADDI TIONAL CAPITAL AMOUNTING TO RS.13,11,470/- WHICH WAS ADDED TO THE T OTAL INCOME OF THE ASSESSEE AS THE ASSESSEE HAS NOT GIVEN EXPLANATION PROPERLY. CONSIDERING THIS FACT INTRODUCTION OF ADDITIONAL CAPITAL ADDED T O THE TOTAL INCOME OF THE ASSESSEE BY THE A.O. HOWEVER, IN NEW BOOKS OF ACCOUN T PRODUCED NOW THE ASSESSEE HAS NOT INTRODUCED ANY NEW ADDITIONAL CAPIT AL IN THE BOOKS OF ACCOUNT. CONSIDERING THIS FACT, IT IS REQUESTED THA T DECISION MAY BE TAKEN ON MERIT.' 60. THE ASSESSEE IN HIS COUNTER COMMENTS HAS ALSO STAT ED AS UNDER: AS PER FINANCIAL STATEMENT SUBMITTED ALONG WITH RETUR N OF INCOME THERE IS INTRODUCTION OF ADDITIONAL CAPITAL OF RS. 13,11,4 70/-. ASSESSEE HAS DENIED THESE FINANCIAL STATEMENT AND SUBMITTED REVISED FINANCIAL STATEMENT IN WHICH HE HAS NOT SHOWN ANY INTRODUCTION O F ADDITIONAL CAPITAL OF RS. 13,11,470/-. A.O. HAS ADMITTED THAT AS PER NEW BOOKS OF ACCOUNTS PRODUCED ASSESSEE HAS NOT INTRODUCED ANY NEW CAP ITAL. AS PER COMMENT OF A.O. 'CONSIDERING THIS FACT IT IS REQUESTED THAT DECISION MAY BE TAKEN ON MERIT'. OUR COMMENT IN RESPECT OF THIS IS THAT A.O. IS CORRECT IN STATING THAT ASSESSEE HAS NOT INTRODUCED ADDITIONAL CAPITAL OF RS. 13, 11,470/-. 61. WE FIND THE LD.CIT(A) DELETION THE ADDITION BASED ON TH E NEW BOOKS OF ACCOUNTS WHICH WERE PREPARED AFTER THE ASSESS MENT IS 34 ITA NOS.87 AND 88/PN/2014 COMPLETED. SINCE WE HAVE ALREADY HELD THAT SUCH BOOKS OF ACCOUNTS PREPARED AFTER THE COMPLETION OF THE ASSESSMENT CANNOT BE RELIED UPON, THEREFORE, WE FIND NO MERIT IN THE ORDER OF THE CIT(A) DELETING SUCH ADDITION. ACCORDINGLY, THE ADDITION OF RS.13,11,470/- M ADE BY THE AO IS CONFIRMED AND THE ORDER OF THE CIT(A) DELETING TH E ADDITION IS REVERSED. HOWEVER, CONSIDERING THE AGRICULTURAL INCOME DETERMIN ED IN THE HANDS OF THE ASSESSEE IN THIS YEAR AND CONSIDERING PROBABLE PAST SAVINGS OUT OF SUCH AGRICULTURAL INCOME, THE INTRODUCT ION OF CAPITAL TO THE TUNE OF RS.13,11,470/- BY THE ASSESSEE IN T HIS YEAR IN OUR OPINION MAY BE ACCEPTED. WE HOLD AND DIRECT ACCORDIN GLY. THE ORDER OF THE LD.CIT(A) ON THIS ISSUE IS ACCORDINGLY UPHELD BUT NOT ON THE BASIS OF REASONINGS GIVEN BY HIM. 62. SO FAR AS THE ADDITION OF RS.15 LAKHS ON ACCOUNT OF UN EXPLAINED CASH CREDIT FROM AGRICULTURE HUF IS CONCERNED WE FIND THE AO IN HIS REMAND REPORT HAS OBSERVED AS UNDER : 'IN OLD FINANCIAL STATEMENT OF ACCOUNTS, THE ASSESSEE SHOW N CREDIT AMOUNT OF RS.15 LAKHS DURING THE YEAR IN RESPECT OF AGRICULTURAL HUF. HOWEVER, THE ASSESSEE HAS NOT GIVEN ANY SATISFACTORY EXPL ANATION WITH DOCUMENTARY EVIDENCES FOR CREDIT OF THIS AMOUNT. HENC E, A.O. ADDED THIS AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE. HOWEVER, I N NEW BOOKS OF ACCOUNT THE ASSESSEE HAS NOT SHOWN ANY ADDITION TOWARDS UN SECURED LOAN IN RESPECT OF AGRICULTURAL HUF AS WELL AS THE ASSESSE E EXPLAINED THAT THERE IS NO AGRICULTURAL HUF, THESE UNSECURED LOAN IS T AKEN FROM HIS BROTHER LATE SHRI JEEVAN PATIL WHICH ARE CARRIED FO RWARD FROM LAST 5 TO 6 YEARS. CONSIDERING THIS FACT AND AS THERE IS NO ADDITION MADE DURING THE YEAR IN UNSECURED LOAN SHOWN HENCE, IT IS REQUESTED THA T THE DECISION MAY BE TAKEN ON MERIT.' 63. THE ASSESSEE IN HIS COUNTER COMMENTS TO SUCH REMA ND REPORT HAS REPLIED AS UNDER : 'AS PER FINANCIAL STATEMENT SUBMITTED ALONG WITH RETUR N OF INCOME THERE IS ADDITION OF RS.15 LACS TO THE AGRICULTURE HUF A/C. ASSESSEE HAS DENIED THESE FINANCIAL STATEMENT AND SUBMITTED REVISED FINANCI AL STATEMENT IN WHICH THERE IS NO ADDITION TO AGRICULTURE HUF A/C. A SSESSEE HAS ALSO CLARIFIED THAT THIS UNSECURED LOAN WAS TAKEN FROM HIS B ROTHER LATE SHRI 35 ITA NOS.87 AND 88/PN/2014 JEEVAN B. PATIL WHICH IS INADVERTENTLY REFLECTED IN FINANCIAL STATEMENT AS AGRICULTURE HUF. AS PER COMMENT OF A.O. 'CONSIDERING THIS FACT AND THERE IS NO ADDITION MADE DURING THE YEAR IN UNSECURED LOAN SHOWN HENCE IT IS REQUESTED THAT THE DECISION MAY BE TAKEN ON MERIT. OU R COMMENT IN RESPECT OF THIS IS THAT A.O. IS CORRECT IN STATING THAT THERE IS NO ADDITION IN UNSECURED LOAN SHOWN AS AGRICULTURE HUF.' 64. WE FIND BASED ON THE ARGUMENTS ADVANCED BY THE AS SESSEE THE LD.CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 13.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTI CED THAT IN THE REVISED FINAL STATEMENTS OF ACCOUNTS, REVISED BOOKS OF AC COUNTS AND COMPUTATION OF INCOME PRODUCED BY THE APPELLANT BEF ORE THE A.O. IN REMAND PROCEEDINGS, THE APPELLANT HAS TAKEN LOAN FROM HIS BROTHER LATE SHRI JEEVAN B. PATIL, WHICH IS INADVERTENTLY REFLECT ED IN FINANCIAL STATEMENT AS AGRICULTURE HUF. CONSIDERING THE ABOVE FA CT AND THE COMMENT OF THE A.O. IN THE REPORT FILED NO ADDITION ON THIS COUNT IS REQUIRED. THE ADDITION OF RS.15,00,000/- IS THEREFORE DELETED. GROUND NO.7 IS ALLOWED. 65. WE ARE UNABLE TO ACCEPT THE ORDER OF THE CIT(A) DELE TING THE ADDITION OF RS.15,00,000/- BEING LOAN FROM AGRICULTURAL HUF WH ICH WAS SUBSEQUENTLY CLARIFIED AS LOAN FROM LATE JEEVAN B. PAT IL. CONSIDERING THE SUBMISSION OF THE ASSESSEE THAT IT WAS AN OLD LOAN FROM HIS LATE BROTHER WHICH WAS APPEARING SINCE LAST 5/6 Y EARS, THE ADDITION WAS DELETED IN THE PRECEDING YEAR. HOWEVER, NOTH ING HAS BEEN BROUGHT BEFORE US ABOUT THE AMOUNT OF RS.15,00,000/ - OBTAINED DURING THIS YEAR. AS ALREADY HELD THE NEW BOOKS OF ACCOU NT WRITTEN AFTER COMPLETION OF ASSESSMENT CANNOT BE ACCEPTED AS RE LIABLE. THEREFORE IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE, THE ORDER OF THE AO MAKING THE ADDITION OF RS.15,00,000/- IS RESTORED AND THE ORDER OF CIT(A) ON THIS ISSUE IS REVERSED. 66. SO FAR AS THE ADDITION OF RS.4 LAKHS ON ACCOUNT OF UNE XPLAINED CASH CREDIT FROM SMT. SINDHU DIGAMBAR PATIL IS CONCERNED WE FIND THE AO IN HIS REMAND REPORT HAS OBSERVED AS UNDER : 36 ITA NOS.87 AND 88/PN/2014 'IN OLD FINANCIAL STATEMENT OF ACCOUNTS, THE ASSESSEE INT RODUCE CREDIT AMOUNT OF RS.4 LAKHS DURING THE YEAR IN RESPECT OF SMT . SINDHU DIGAMBAR PATIL. HOWEVER, THE ASSESSEE HAS NOT PROVED ANY SOURCE N ATURE AND GENUINENESS OF THESE CREDITS. HENCE, A.O. RIGHTLY ADDED THIS AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE. HOWEVER, IN NEW BOOKS OF ACCOUNT THE ASSESSEE HAS NOT SHOWN ANY ADDITION TO UNSECURED LOAN TAKE N FROM SMT. SINDHU DIGAMBAR PATIL. CONSIDERING THIS FACT AND AS TH ERE IS NO ADDITION MADE DURING THE YEAR IN UNSECURED LOAN SHOWN HENCE, I T IS REQUESTED THAT THE DECISION MAY BE TAKEN ON MERIT.' 67. SINCE WE HAVE ALREADY HELD THAT THE NEW BOOKS OF AC COUNTS PREPARED AFTER THE COMPLETION OF THE ASSESSMENT CANNOT BE RELIED UPON, THEREFORE, THE SUBMISSION OF THE ASSESSEE BEFORE CIT (A) THAT NO LOAN HAS BEEN ACCEPTED AS PER THE NEW BOOKS OF ACCOUN TS FOR WHICH NO ADDITION IS CALLED FOR CANNOT BE ACCEPTED. SINCE THE LD .CIT(A) HAS DELETED THE ADDITION BASED ON THE REVISED BOOKS OF ACCOU NTS AND COMPUTATION OF INCOME, THEREFORE, THE ORDER OF THE CIT(A) D ELETING THE ADDITION CANNOT BE ACCEPTED SINCE THE ASSESSEE WAS UNA BLE TO EXPLAIN THE CREDIT WORTHINESS OF SMT. SINDHU DIGAMBAR PATIL, WIFE OF T HE ASSESSEE FROM WHOM LOAN AMOUNT OF RS.4 LAKHS SHOWN. THER EFORE, THE AO WAS FULLY JUSTIFIED IN MAKING THE ADDITION OF RS.4 LAKHS U/S.68 OF THE I.T. ACT. ACCORDINGLY, THE ORDER OF THE CIT(A) IS RE VERSED AND THAT OF THE AO IS RESTORED. 68. AS REGARDS THE ADDITION OF RS.18 LAKHS BEING UNEXPLAIN ED CREDIT IN THE NAME OF SHRI SHIVAJI B. PATIL RS. 10LAKHS AND FROM SHRI DATTATRAYA B. PATIL RS. 8LAKHS ARE CONCERNED WE FIND THE A O IN HIS REMAND REPORT HAS REPORTED AS UNDER : 'IN OLD FINANCIAL STATEMENT OF ACCOUNTS, THE ASSESS EE INTRODUCE CREDIT AMOUNT OF RS.18 LAKHS DURING THE YEAR IN THE NAME OF SHRI SH IVRAJ BHAURAO PATIL & SHRI DATTATRAY B. PATIL. HOWEVER, THE ASSESSEE HAS NOT PROVED ANY SOURCE, NATURE, GENUINENESS AND CONFIRMATION OF THESE CREDITS THOUG H THESE ARE THE BROTHERS OF THE ASSESSEE. HENCE, A.O. RIGHTLY ADDED THIS AMO UNT TO THE TOTAL INCOME OF THE ASSESSEE. HOWEVER, IN NEW BOOKS OF ACCOUNT THE ASSESSEE HAS NOT SHOWN ANY ADDITION TO UNSECURED LOAN TAKEN FROM SHR I SHIVRAJ BHAURAO PATIL & SHRI DATTATRAY B. PATIL. CONSIDERING THIS FACT AND AS THERE IS NO ADDITION 37 ITA NOS.87 AND 88/PN/2014 MADE DURING THE YEAR IN UNSECURED LOAN SHOWN HENCE, IT IS REQUESTED THAT THE DECISION MAY BE TAKEN ON MERIT.' 69. WE FIND THE LD.CIT(A) DELETED THE ADDITION MADE BY TH E AO ON THE GROUND THAT ASSESSEE HAS NOT SHOWN TO HAVE TAKE N ANY SUCH LOAN FROM THE ABOVE 2 PERSONS IN THE REVISED BOOKS OF ACCOUN TS. SINCE WE HAVE ALREADY HELD THAT THE NEW BOOKS OF ACCOUNTS PREP ARED AFTER THE COMPLETION OF THE ASSESSMENT CANNOT BE RELIED UPON, THERE FORE, IN ABSENCE OF ANY MATERIAL BEFORE US TO SUBSTANTIATE THE CR EDIT WORTHINESS OF THE 2 BROTHERS FROM WHOM LOAN OF RS.18 LAKHS HAS BEEN TAKEN, THE ADDITION MADE BY THE AO U/S.68 OF THE I.T. ACT IS UPHELD. GROUND RAISED BY THE REVENUE ON THIS ACCOUNT IS ACCORD INGLY DISMISSED. 70. SO FAR AS THE ADDITION OF RS.2,19,461/- ON ACCOUNT OF UNEXPLAINED INVESTMENT UNDER THE HEAD LIC IS CONCERNED WE FIND THE AO IN HIS REMAND REPORT HAS REPORTED AS UNDER : 'IN OLD FINANCIAL STATEMENT OF ACCOUNTS, THE ASSESSEE HAS SHOWN PAYMENT OF RS. 2,19,461/- TOWARDS LIC. HOWEVER, A WITHDRAWAL FOR THIS PAYMENT WAS NOT SHOWN IN CAPITAL ACCOUNT. CONSIDERING THIS FACT A. O. ADDED THIS AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE. HENCE, A.O. RIGHTLY ADDED THIS AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE. HOWEVER, I N NEW BOOKS OF ACCOUNT THE ASSESSEE HAS SHOWN LIC PAYMENT OF RS. 72,047/- AND THIS AMOUNT DULY REFLECTED IN CAPITAL ACCOUNT ALSO. CONSID ERING THIS FACT AND AS THERE IS NO ADDITION MADE DURING THE YEAR IN UNSECURE D LOAN SHOWN HENCE, IT IS REQUESTED THAT THE DECISION MAY BE TAKEN ON MERIT.' 71. SIMILARLY, THE ASSESSEE IN HIS COUNTER COMMENTS TO SU CH REMAND REPORT HAS STATED AS UNDER : 'AS PER COMPUTATION OF INCOME SUBMITTED ALONG WITH RE TURN OF INCOME ASSESSEE HAS CLAIMED DEDUCTION U/S. 80C BY SHOWING LIC PAY MENT OF RS.2,19,461/-. AT THE SAME TIME AS PER FINANCIAL STATEM ENT SUBMITTED ALONG WITH RETURN OF INCOME THERE WERE NO LIC PAYME NT IN CAPITAL A/C. ASSESSEE HAS DENIED THESE FINANCIAL STATEMENT AND SUBMITTED REVISED FINANCIAL STATEMENT SHOWING LIC PAYMENT OF RS 72,047/- . A.O. HAS ACCEPTED THAT AS PER NEW BOOKS OF ACCOUNT THERE IS LIC PAYMENT OFRS.72, 047/-. A .O. HAS MADE FOLLOWING COMMENT. 38 ITA NOS.87 AND 88/PN/2014 72. FROM THE ABOVE IT IS SEEN THAT THE ASSESSEE HAS PAID AN AMOUN T OF RS.72,047/-. HOWEVER, BEFORE CIT(A) THE ASSESSEE IN HIS R E-WRITTEN BOOKS OF ACCOUNTS HAS SHOWN TO HAVE CLAIMED DEDUCTION O F RS.1 LAKH U/S.80C. THEREFORE, WE RESTORE THIS ISSUE TO THE FILE OF TH E AO WITH A DIRECTION TO FIND OUT THE EXACT AMOUNT THAT HAS BEEN PA ID BY THE ASSESSEE TOWARDS LIFE INSURANCE PREMIUM. SINCE VARIOUS O THER ADDITIONS HAVE BEEN SUSTAINED, THEREFORE, THE AO IS DIRECTE D TO GIVE TELESCOPING EFFECT OF SUCH ADDITION AND IF ANY SURPLUS IS AVAILA BLE, THEN THE AO WILL RE-CONSIDER THE SAME ACCORDINGLY. 73. SO FAR AS DELETION OF RS.23,02,640/- ON ACCOUNT OF UNE XPLAINED INVESTMENT UNDER THE HEAD MACHINERY, RS.8,57,650/- ON ACC OUNT OF UNEXPLAINED INVESTMENT UNDER THE HEAD WORKSHOP SHED, TO OLS AND EQUIPMENT AND RS.14,83,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT UNDER THE HEAD ELECTRICAL FITTINGS, PANEL BOARD, TRANSFORMER ARE CONCERNED WE FIND THE AO MADE THE ADD ITION OF THESE AMOUNTS ON THE GROUND THAT THERE WAS DIFFERENCE IN THE OPE NING BALANCES OF THESE ITEMS FOR THE IMPUGNED ASSESSMENT YEAR AND THE CLOSING BALANCE OF THE PRECEDING ASSESSMENT YEAR. WE FIND THE LD.CIT(A) DELETED THE ADDITION MADE BY THE AO ON THE GROU ND THAT NO SUCH ADDITION IS THERE IN THE RE-WRITTEN BOOKS OF ACCOUN TS. AS WE HAVE ALREADY HELD THAT SUCH RE-WRITTEN BOOKS OF ACCOUNT S PREPARED AFTER THE COMPLETION OF THE ASSESSMENT CANNOT BE ACCEPT ED, THEREFORE, THE ORDER OF THE CIT(A) DELETING THE ABOVE 3 ADDITIONS IS R EVERSED. HOWEVER, SINCE IN THE VARIOUS GROUNDS OF THE REVENUE WE HAVE SUSTAINED CERTAIN ADDITIONS, THEREFORE, WE ARE OF THE CONSID ERED OPINION THAT THE ASSESSEE IS ENTITLED TO TELESCOPING EFFECT OF SUCH ADDITIONS. WE THEREFORE RESTORE THE ISSUE TO THE FILE OF TH E AO WITH A DIRECTION TO GIVE TELESCOPING EFFECT AND RECOMPUTE THE ADD ITION THAT IS 39 ITA NOS.87 AND 88/PN/2014 WARRANTED U/S.69 OF THE I.T. ACT. THE AO IS ALSO DIRECTED TO ALLOW DEPRECIATION ON ACCOUNT OF THESE ASSETS AS PER LAW. NEE DLESS TO SAY, THE AO SHALL GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHILE CALCULATING THE TELESCOPING BENEFIT. THE GROU NDS RAISED BY THE REVENUE ON THIS ISSUE IS ACCORDINGLY PARTL Y ALLOWED FOR STATISTICAL PURPOSES. 74. IN THE RESULT, ITA NO.87/PN/2014 FILED BY THE REVENUE IS PARTLY ALLOWED WHEREAS ITA NO.88/PN/2014 FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15-07-2015. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER IQ.KS PUNE ; !' DATED : 15 TH JULY, 2015. LRH'K &'()*+,+) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ $ % ( ) , (')! / THE CIT(A), AURANGABAD 4. $ $ % , (')! / THE CIT, AURANGABAD 5. *+) ,,-. , $ -. , IQ.KS / DR, ITAT, A PUNE; 6. )01 2 / GUARD FILE. &$ / BY ORDER , * , //TRUE COPY// 345 ,6 -7 / SR. PRIVATE SECRETARY $ -., IQ.KS / ITAT, PUNE