Shri Hakumantrai Dakhinmal Jadhwani, Jalgaon V. Joint CIT, Range-1, Jalgaon

ITA 876/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2918 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Business expenditure; Principle of natural justice; Proportionate interest; Notional interest
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO. 876 /PN/201 3 / ASSESSMENT YEAR : 20 0 9 - 1 0 SHRI HAKUMANTRAI DAKHINMAL JADHWANI, PROP. SURESH TRADING CO., 32 - 2, KANWAR NAGAR, SINDHI COLONY, JALGAON 425003 . / APPELLANT PAN: AA LPJ4652N VS. THE JOIN T COMMISSIONER OF INCOME TAX, RANGE 1, JALGAON . / RESPONDENT / APPELLANT BY : S HRI PRAMOD SHINGTE / APPELLANT BY : S HRI PRAMOD SHINGTE / RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 26 . 1 1 .2015 / DATE OF PRONOUNCEMENT: 15 . 0 1 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - II , NASHIK , DATED 20 . 0 2 .20 1 3 RELATING TO ASSESSMENT YEAR 20 0 9 - 1 0 AGAINST ORDER PASSED UNDER SECTION 143(3) (II) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN MAKING THE DISALLOWANCE OF TRANSPOR T EXPENSES, DEPRECIATION AND INTEREST OVER TRUCKS A SUM OF RS.5,46,024/ - BY DISREGARDING APPELLANT'S CONTENTION IN THIS REGARD.' ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 2 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN MAKING THE DISALLOWANCE OF RS .4,83,120 / - OUT OF TOTAL SALARY PAID MERELY BY ASSUMING THAT RELATIVES OF APPELLANT ARE NOT OFFERING ANY SERVICES. SUCH 100% DISALLOWANCE IS NOT IN CONFORMITY WITH SCHEME OF THE ACT.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN MAKING THE DISALLOWANCE OF RS.2,05,461/ - AS NOTIONAL INTEREST FOR CASH WITHDRAWAL BY INVOKING THE PROVISIONS OF SECTION 36(1)(III) OF THE INCOME TAX ACT, 1961.' 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN MAKING THE DISALLOWANCE OF RS.1,50,000 / - CLAIMED UNDER SECTION 24(II) OF THE INCOME TAX ACT, 1961FOR SELF OCCUPIED HOUSE PROPERTY.' 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERR ED IN MAKING THE DISALLOWANCE OF RS.11,94,186 / - BEING PART OF THE INTEREST OUT OF TOTAL INTEREST PAID. 6. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN MAKING THE DISALLOWANCE OF RS.1 , 98 , 582/ - BEING 50% OUT OF TOTAL VEHICLE EXPENSES. 7. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN MAKING THE ADDITION OF R S.12,00,000/ - ON ACCOUNT OF CONSTRUCTION EXPENSES. 8. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LOWER A U THORITIES ERRED IN MAKING THE ADDITION OF RS.4,50,000 / - , BEING INCOME OF HUF BY TREATING IT AS APPELLANTS INCOME, BY DISREGARDING APPELLANT'S OF HUF BY TREATING IT AS APPELLANTS INCOME, BY DISREGARDING APPELLANT'S CONTENTION IN THIS REGARD. 9. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE LOWER AUTHORITIES ERRED IN MAKING TRADING ADDITION OF RS.10,37,396/ - BY REJECTING THE BOOKS OF ACCOUNTS U / S 145(3) OF THE INCOME TAX ACT, 1961 AND BY ADOPTING HIGHER GROSS PROFIT THEN DECLARED. 10. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN MAKING THE ENHANCEMENT TO THE TOTAL INCOME BY DISALLOWING CLAIM OF DEPRECIATION TO THE EXTENT OF RS.3,97,776 / - BY DISREGARDING APPELLANT'S CONTENTION IN THIS REGARD . THE APPELLANT CRAVES FO R TO LEAVE, ADD, ALTER, MODIFY, DELETE, ALTER ABOVE GROUND OF APPEAL BEFORE OR AT THE TIME HEARING, IN THE INTEREST OF NATURAL JUSTICE. 3. THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL AGAINST SEVERAL DISALLOWANCES MADE BY THE ASSESSING OFFICER AND CO NFIRMED BY THE CIT(A) AND WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 3 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESS EE WAS PROPRIETOR OF M/S. SURESH TRADING CO., WHICH WAS DEALING IN EMPTY BOTTLES AND ALSO IN TRANSPORT BUSINESS. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 62,19,170/ - . SURVEY UNDER SECTION UNDER SECTION 133A OF THE ACT WAS CONDUCTED UPON THE PREMISES OF THE ASSESSEE ON 05.03.2009. DURING THE COURSE OF SURVEY, THE ASSESSEE MADE DECLARATION OF RS. 59,91,665/ - AS ADDITIONAL INCOME , ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY OF RS. 15,00,750/ - AND UNVERIFIABLE PURCHASES OF RS. 44,90,915/ - . THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSING OFFICER MADE VARIOUS ADDITIONS / DISALLOWANCES WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT. THE ISSU E VIDE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS AGAINST THE DISALLOWANCE OF TRANSPORT EXPENSES, DEPRECIATION AND INTEREST O N TRUCKS LOAN AMOUNTING TO RS.5,46,024/ - . THE ASSESSEE HAD INCURRED AN EXPENDITURE OF RS. 6,30,892/ - ON TRANSPORTATION CHARGES . THE ASSESSING OFFICER HAD OBSERVED THAT THE ASSESSEE HAD NOT MAINTAINED PROPER VOUCHERS AND PROPER NARRATIONS WERE NOT MENTIONED IN THE VOUCHERS, HENCE, ENTIRE EXPENDITURE WAS DISALLOWED. THE ASSESSING OFFICER HAD FURTHER DISALLOWED INTEREST ON TRUCKS L OAN TOTALING RS. 72,857/ - . 5. THE CIT(A) NOTED THAT THE ASSESSEE HAD NOT PRODUCED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THE SAID EXPENSES. FURTHER, IT WAS ALSO NOT CLEAR WHETHER THE ASSESSEE HAD INCURRED THE SAID EXPENDITURE FOR RUNNING HIS TRANSPORT BUS INESS, FOR WHICH HE HAD DECLARED AN INCOME OF RS. 80,720/ - UNDER SECTION 44AE OF THE ACT OR INCURRED EXPENDITURE IN CONNECTION WITH THE BUSINESS OF EMPTY BOTTLES. THE CIT(A) WAS OF THE VIEW THAT PART OF THE EXPENDITURE WAS INCURRED FOR RUNNING HIS OWN TRAN SPORT BUSINESS AND HENCE, 25% OF THE TRANSPORT AND FREIGHT EXPENDITURE WAS ALLOWED AS BEING INCURRED FOR THE EMPTY BOTTLE BUSINESS . S INCE THE ASSESSEE HAD CLAIMED INCOME UNDER SECTION 44AE ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 4 OF THE ACT, NO INTEREST ON TRUCKS WAS ALLOWED AS DEDUCTION. THE AD DITION TO THE EXTENT OF RS. 5,46,024/ - WAS CONFIRMED BY THE CIT(A), AGAINST WHICH THE ASSESSEE IS IN APPEAL. 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ON THE ONE HAND, THE ASSESSING OFFICER HAD MADE ADHOC DISALLOWANCES, BUT ON THE OTHER HAND, REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE GROSS PROFIT, AGAINST WHICH THE ASSESSEE IS IN APPEAL VIDE GROUND OF APPEAL NO.9 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ONCE THE BOOKS OF ACCOUNT WERE RE JECTED, THE DISALLOWANCE OF EXPENSES UNDER SEVERAL HEADS, WAS NOT PERMISSIBLE. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, RELIED ON THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS DEALING IN THE BUSINESS OF EMPTY BOTTLES, WHICH WERE PURCHASED FROM SMALL VENDORS AND SOLD THEREON. THE ASSESSEE WAS NOT MAINTAINING ANY BILLS AND THE PAYMENTS AGAINST THE PURCHASES WERE FROM UN - REGISTERED DEALERS. SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 05.03.2009 AND PHYSICAL STOCK WAS COUNTED TO THE TUNE OF RS.51,50,750/ - . THE ASSESSEE PURSUANT TO THE SURVEY ACTION, OFFERED SUM OF RS. 44,90,915/ - ON ACCOUNT OF CREDITORS B EING NOT VERIFIABLE AND ALSO DIFFERENCE IN STOCK OF RS. 15,00,750/ - AS ADDITIONAL INCOME . THE ASSESSEE CLAIMS THAT ITS GROSS PROFIT RATIO UP TO 05.03.2009 WAS 4.63%, BUT IN VIEW OF THE ADDITIONAL INCOME OFFERED, THE GROSS PROFIT RATE WORKS TO 9%. THE ASSE SSEE FURTHER POINTED OUT THAT THE ENTIRE SALES WERE ON CREDIT AND NO CASH SALES WERE EFFECTED BY THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT IN MAJORITIES OF ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 5 THE MONTH, THE GP RATIO WAS MORE THAN 9% AND HENCE, THE OFFER MADE BY THE ASSESSEE W AS ON A LOWER SIDE. IN VIEW THEREOF, THE BOOKS OF ACCOUNT WERE FOUND TO BE UN - RELIABLE AND PROVISIONS OF SECTION 145(3) OF THE ACT WERE APPLIED AND THE SALES WERE ESTIMATED IN THE HANDS OF ASSESSEE A ND GP RATE OF 10% WAS APPLIED . AN ADDITION OF RS. 70,11, 202/ - WAS PROPOSED BY THE ASSESSING OFFICER, OUT OF WHICH CREDIT OF OFFER MADE BY THE ASSESSEE AT THE TIME OF SURVEY OF RS. 44,90,915/ - WAS ALLOWED AND ALSO UNDISCLOSED INVESTMENT IN HOUSE PROPERTY AT RS.12 LAKHS AND OUT OF BOOKS PURCHASE S OF RS. 1,48,950/ - WERE ALLOWED AND EXTRA PROFIT ADDITION OF RS. 11,71,337/ - WAS MADE IN THE HANDS OF ASSESSEE. THE CIT(A) VIDE PARA 8.11 AT PAGE 10 OF THE APPELLATE RE - COMPUTED THE TRADING ADDITIONS IN THE HANDS OF THE ASSESSEE. THE CIT(A) NOTED THAT THE ASSESSEE HAD ALREA DY DECLARED ADDITIONAL INCOME OF RS. 59,91,665/ - IN ITS TRADING ACCO UNT WHICH GIVES A GROSS PROFIT OF RS. 11,26,84,411/ - I.E. GP RATE OF 9.61% . THE CIT(A) FURTHER OBSERVED THAT DISCREPANCY OF RS. 3,15,695/ - WAS NOTED IN THE VALUATION OF CLOSING STOCK FOUND D URING THE COURSE OF SURVEY AND HENCE, ESTIMATED THE GP RATE AT 10.5% , IN TURN , WOULD TAKE CARE OF ENHANCEMENT ON ACCOUNT OF DISCREPANCY IN THE VALUATION OF INVENTORY OF STOCK FOUND DURING THE COURSE OF SURVEY AND NO SEPARATE ADDITION WAS MADE IN THIS REGAR D. SINCE, NO INSTANCE OF SAL ES OUTSIDE BOOKS OF ACCOUNT WERE FOUND DURING THE COURSE OF SURVEY UNDER SECTION 133A OF THE ACT, THE GP RATE WAS ESTIMATED @ 10.5% ON SALES OF RS.11.71 CRORES. THE CIT(A) ESTIMATED THE GP RATE AT RS.1,23,05,807/ - AS AGAINST R S. 1,12,68,411/ - DECLARED BY THE ASSESSEE. THE DIFFERENCE OF RS. 10,37,396/ - WAS ADDED AS INCOME OF THE ASSESSEE, AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US BY WAY OF GROUND OF APPEAL NO.9 . 9. THE SECOND PLEA RAISED BY THE ASSESSEE BEFORE US WAS T HAT ONCE ITS BOOKS OF ACCOUNT WERE REJECTED UNDER SECTION 145(3) OF THE ACT AND THE GP WAS ESTIMATED IN THE HANDS OF ASSESSEE, THERE WAS NO MERIT IN SEPARATE ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 6 DISALLOWANCE BEING MADE UNDER RESPECTIVE HEADS OF EXPENDITURE. IT WAS PUT TO THE LEARNED AUTHORIZ ED REPRESENTATIVE FOR THE ASSESSEE DURING THE COURSE OF HEARING THAT WHERE ONLY GP ADDITION WAS MADE IN THE HANDS OF ASSESSEE, WHICH WAS CONNECTED TO ITS TRADING ACTIVITIES, HOW CAN THE DISALLOWANCE MADE ON ACCOUNT OF EXPENSES BE NOT DISALLOWED IN THE HAND S OF ASSESSEE ? THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD NO REPLY TO THE SAME. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW AND POINTED OUT THAT IN THE FACT S OF THE CASE, THERE IS NO MERIT IN THE PLEA OF THE ASSESSEE THAT NO DISALLOWANCE OUT OF EXPENSES COULD BE MADE. IN THIS BACKGROUND, WE PROCEED TO DECIDE THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE, WHICH IS AGAINST THE DISALLOWANCE OUT OF TRANSPORT AND FREIGHT CHARGES. THE ASSESSEE HAD CLAIMED EXPENDITURE OF RS. 6,30,890/ - IN THIS REGARD AND FURTHER INTEREST ON TRUCKS LOAN OF RS. 72,857/ - . AS POINTED OUT IN THE PARAS HEREINABOVE, THE ASSESSEE WAS CARRYING ON TWO S TREAMS OF BUSINESS I.E. ONE IN SALE A ND PURCHASE OF EMPTY BOTTLES AND SECOND IN TRANSPORT BUSINESS. IN RESPECT OF SECOND BUSINESS I.E. TRANSPORT, THE ASSESSEE HAD DECLARED THE INCOME UNDER SECTION 44AE OF THE ACT, WHICH ARE DEEMING PROVISIONS, UNDER WHICH THE ASSESSEE OFFERS THE IN COME FROM TRUCK BUSINESS AT A CERTAIN PERCENTAGE AS PRESCRIBED IN THE ACT. THE SAID SECTION ITSELF PROVIDES THAT WHERE THE INCOME I S SO ESTIMATED ON ACCOUNT OF TRUCKS, THE DEPRECIATION AND OTHER EXPENSES WOULD BE DEEMED TO HAVE BEEN ALLOWED TO THE ASSESSEE. IN VIE W THEREOF, WHERE THE ASSESSEE WA S CARRYING ON THE SAID TRUCK BUSINESS AND INCOME WAS DECLARED UNDER SECTION 44AE OF THE ACT , W E FIND NO MERIT IN THE PLEA OF THE ASSESSEE IN RESPECT OF INTEREST ON TRUCK LOANS AMOUNTING TO RS. 72,857/ - . THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT THE SAID TRUCKS WERE USED FOR THE PURPOSE OF CARRYING ON OF OTHER BUSINESS OF THE ASSESSEE EXCLUSIVELY. IN THE ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 7 TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE VI S - - VIS INTEREST PAID ON TRUCK LOANS AMOUNTING TO RS.72,857/ - . 10. NOW, COMING TO THE SECOND PART OF THE EXPENDITURE I.E. RS. 6,30,890/ - INCURRED ON TRANSPORT AND FREIGHT CHARGES. BEFORE BOTH THE AUTHORITIES BELOW, THE ASSESSEE HAD NOT FURNISHED COMPLETE VOUCHERS IN THIS REGARD AND THE ASSESSEE HAD ALSO NOT CLARIFIED ITS POSITION AS TO WHETHER THE SAID EXPENDITURE WAS RELATABLE TO ITS TRANSPORT BUSINESS OR THE OTHER BUSINESS OF EMPTY BOTTLES . WHERE PART OF THE EXPENDITURE IS RELATABLE TO TRANSPORT BUSINESS , THE SAME IS NOT TO BE ALLOWED IN THE HANDS OF ASSESSEE, SINCE THE ASSESSEE HAD DECLARED INCOME UNDER SECTION 44AE OF THE ACT ON ACCOUNT OF ITS TRUCK BUSINESS, WHERE THERE IS A PRESUMPTION THAT ALL THE EXPENSES FOR RUNNING HIS BUSINESS HAVE BEEN ALLOWED I N HIS HANDS. IN VIEW THEREOF, WHERE THE EXPENDITURE IS RELATABLE TO THE DIESEL USED BY THE TRUCKS, SUCH TYPE OF EXPENDITURE CANNOT BE ALLOWED AS DEDUCTION WHILE COMPUTING INCOME IN THE HANDS OF ASSESSEE, SINCE THE SAID DEDUCTION WHILE COMPUTING INCOME IN THE HANDS OF ASSESSEE, SINCE THE SAID EXPENDITURE IS DEEMED TO HAVE BEEN A LLOWED IN THE HANDS OF ASSESSEE, WHILE ESTIMATING INCOME FROM TRUCK BUSINESS UNDER SECTION 44AE OF THE ACT. THE CIT(A) HAD ALLOWED 25% OF THE TRANSPORT AND FREIGHT EXPENSES BEING RELATABLE TO EMPTY BOTTLE BUSINESS. 11. THE LEARNED AUTHORIZED REPRESENTA TIVE FOR THE ASSESSEE BEFORE US HAS STRESSED THAT THE BUSINESS OF ASSESSEE FROM EMPTY BOTTLES WAS TO THE TUNE OF RS.11.64 CRORES, WHEREAS ITS TRANSPORT BUSINESS WAS ON LOWER SIDE. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE DIRECT THE AS SESSING OFFICER TO ALLOW 50% OF THE EXPENSES AS BEING RELATABLE TO THE EMPTY BOTTLES BUSINESS AND ALLOWABLE IN THE HANDS OF ASSESSEE . HOWEVER, NO ALLOWANCE OF INTEREST PAID ON TRUCK LOANS AMOUNTING TO RS.72,857/ - IS ALLOWABLE IN THE HANDS ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 8 OF ASSESSEE. TH E GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 12. THE SECOND EXPENDITURE CONSIDERED BY THE ASSESSING OFFICER WAS SALARY EXPENSES. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF HAD SUBMITTED THAT EXPENDITURE TOTALING RS.1,80,000/ - WAS BOGUS AND THE SAME IS NOT ALLOWABLE IN THE HANDS OF ASSESSEE. WITH REGARD TO THE BALANCE SALARY EXPENDITURE, IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE SAME WAS PAID TO THE SONS OF THE ASSESSEE AND WAS DULY ALLOWABLE AS BUSINESS EXPENDITURE. HOWEVER, THE CASE OF THE REVENUE WAS THAT THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT THE SERVICES TO THAT EXTENT HAVE BEEN RENDERED BY THE SONS OF ASSESSEE AND IN VIEW THEREOF, THERE I S NO MERIT IN THE CLAIM OF THE ASSESSEE. ON PERUSAL OF THE RECORD, WE FIND THAT THE ASSESSING OFFICER HAD DISALLOWED SUM OF RS. 4,83,120/ - OUT OF TOTAL EXPENDITURE OF RS. 7,53,120/ - CLAIMED BY THE ASSESSEE IN ITS BOOKS OF OUT OF TOTAL EXPENDITURE OF RS. 7,53,120/ - CLAIMED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. THE ASSESSEE ON ITS OWN M OTION ADMITTED TO DISALLOWANCE OF RS.1,80,000/ - ON ACCOUNT OF BOGUS SALARY AND HENCE, THE SAME IS UPHELD. FURTHER, IN RESPECT OF SALARY PAID TO THE SONS OF THE ASSESSEE, THERE WAS INCREASE IN SALARY AS COMPARED TO THE SALARY BEING PAID TO THEM IN THE PREC EDING YEAR, FOR WHICH, THE ASSESSEE WAS NOT IN A POSITION TO GIVE ANY JUSTIFICATION, HENCE, SALARY TO THE EXTENT OF RS. 3,03,120/ - WAS DISALLOWED IN THE HANDS OF THE ASSESSEE. WE FIND NO MERIT IN THE SAID STAND TAKEN BY THE AUTHORITIES BELOW IN THE ABSENCE OF ANY FINDING THAT THE SAID EXPENDITURE IS HIT BY THE PROVISIONS OF SECTION 40 A( 2 )(A) OF THE ACT I.E. WHETHER THE S ALARY PAID TO THE SONS WAS AT MARKET PRICE OR HIGHER. IN THE ABSENCE OF THE SAID FINDING, WE FIND NO MERIT IN THE SAID DISALLOWANCE MADE B Y THE AUTHORITIES BELOW IN RESTRICTING THE SALARY PAYMENT TO SONS OF THE ASSESSEE. HOWEVER, WE CONFIRM THE DISALLOWANCE OF RS.1,80,000/ - . CONSEQUENTLY, THE ASSESSEE GETS RELIEF OF ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 9 RS.3,03,120/ - . THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS, PARTLY ALLOWED. 13. THE ISSUE IN GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS ON ACCOUNT OF DISALLOWANCE OF RS. 2,05,461/ - AS NOTIONAL INTEREST FOR CASH WITHDRAWAL MADE BY THE ASSESSEE. 14. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEE DINGS, EXAMINED THE CASH BOOK AND FOUND THAT THE ASSESSEE HAD WITHDRAWN CASH OF RS. 92 .90 LAKHS DURING THE PERIOD 0 1 .10.2008 TO 05.03.2009 AND RE - DEPOSITED THE SAID CASH DURING THE PERIOD 07.03.2009 TO 20.03.2009 . THE ASSESSING OFFICER WAS OF THE VIEW THAT THE AMOUNT WAS NOT UTILIZED FOR THE BUSINESS PURPOSE AND WAS UTILIZED BY THE P ROPRIETOR FOR HIS PERSONAL USE AND ON THE OTHER HAND, INTEREST EXPEN DITURE WAS CLAIMED. THE SAID AMOUNT WAS INTEREST BEARING AMOUNT AND THEREFORE, THE PROPORTIONATE INTEREST UN DER SECTION 36(1)(III) OF THE AMOUNT AND THEREFORE, THE PROPORTIONATE INTEREST UN DER SECTION 36(1)(III) OF THE ACT WAS PROPOSED TO BE DISALLOWED. THE ASSESSEE HAD WORKED OUT THE DISALLOWANCE OF RS.2,05,461/ - , WHICH WAS DISALLOWED IN THE HANDS OF THE ASSESSEE. 15. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN VIEW OF D IVERSION OF BORROWED FUNDS FOR NON - BUSINESS PURPOSE S BY THE ASSESSEE AND CONFIRMED THE DISALLOWANCE OF RS.2,05,461/ - . 16. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) . 17. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE DREW OUR ATTENTION TO THE COPY OF BALANCE SHEET PLACED AT PAGE 183 OF THE PAPER BOOK AND POINTED OUT THAT THE ASSESSEE HAD SUFFICIENT BALANCE IN THE SOLE PROPRIETA RY ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 10 CONCERN, OUT OF WHICH WITHDRAWALS COULD BE MADE BY IT AND THERE WAS NO MERIT IN THE NOTIONAL DISALLOWANCE UNDER SECT ION 36(1)(III) OF THE ACT. 18. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT IS WARRANTED WHERE THE ASSESSEE HAD DIVERTED ITS FUNDS FOR THE PURPOSE OTHER THAN THE BUSINESS, ESPECIALLY IN CASES WHERE THE ASSESSEE HAD BORROWED FUNDS ON INTEREST AND UTILIZED THE SAME FOR THE PURPOSE OF ITS BUS I NESS. THE ASSESSEE BEFORE US IS A SOLE PROPRIETOR OF A CONCERN NAMED SURESH TRADING COMPANY. THE OPENING CAPITAL BALANCE OF THE ASSESSEE WAS RS. 25,45,631/ - . THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD WITHDRAWN RS.92. 90 LAKHS DURING THE PERIOD 01.10.2008 TO 05.03.2009 . THE SAID CASH WAS LATER RE - DEPOSITED IN THE CAPITAL 01.10.2008 TO 05.03.2009 . THE SAID CASH WAS LATER RE - DEPOSITED IN THE CAPITAL ACCOUNT DURING THE PERIOD 07.03.2009 TO 20.03.2009 . ADMITTEDLY, THE CAPITAL BALANCE OF THE ASSESSEE IN THE SOLE PROPRIETARY CONCERN WAS LESS THAN THE AMOUNT UTILIZED BY THE ASSESSEE FOR HIS OWN PURPOSE. ON THE OTHER HAND, THE ASSESSEE HAD BORROWED LOANS FROM VARIOUS QUARTERS AND WAS PAYING INTEREST ON THE SAID LOANS. THOUGH AT THE END OF THE CLOSING YEAR, THE ASSESSEE HAD CREDIT BALANCE OF RS. 95,17,876/ - , BUT THE OPENING BALANCE WAS RS.25,45,631/ - , E VEN IF WE C ONSI DER THE PROFIT FROM THE SOLE PROPRIETARY BUSINESS OF THE ASSESSEE, SUM TOTALING RS. 64,60,859/ - . IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE ASSESSEE HAS FAILED TO EXPLAIN AND ESTABLISH THAT THE WITHDRAWALS HAS MADE FROM HIS PR OPRIETARY CONCERN WERE FOR SPECIFIC PURPOSE, LEA V ING THE CAPITAL BALANCES IN THE SOLE PROPRIETARY CONCERN TO BE NIL OR NEGATIVE, THEN THE ONUS HAVING NOT BEEN DISCHARGED BY THE ASSESSEE, WE FIND ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 11 NO MERIT IN THE SAID PLEA OF THE ASSESSEE. UPHOLDING THE DIS ALLOWANCE OF RS. 2,05,461/ - , WE DISMISS THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE. 20. THE GROUND OF APPEAL NO.4 IS NOT PRESS ED, HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 2 1 . THE ISSUE IN GROUND OF APPEAL NO.5 RAISED BY THE ASSESSEE IS AGAINST THE DISALLOWANCE OF RS.11,94,186/ - BEING PART OF INTEREST OUT OF TOTAL INTEREST PAID. 2 2 . THE ASSESSING OFFICER FROM THE PERUSAL OF AUDIT REPORT NOTED THAT THE ASSESSEE HAD CLAIMED INTEREST OF RS.22,10,196/ - IN THE PROFIT & LOSS ACCOUNT. SCHEDULE M OF THE AUDIT REPORT , WHICH GAVE DETAILS OF INTERE ST PAID, WHICH INCLUDED INTEREST OF RS.18,02,254 / - PAID TO THE BANK ON CC LIMIT. THE ASSESSEE STATED THAT THE HOUSING LOAN WAS TAKEN FROM ICICI BANK TO WHOM INTEREST OF RS.11,94,186/ - WAS PAID AND THE SAME WA S NOT DEBITED TO THE PROFIT & LOSS ACCOUNT. FURTHER, THE CLAIM OF THE ASSESSEE IN THIS REGARD WAS THAT THE SAID AMOUNT WAS SHOWN IN HIS DRAWING ACCOUNT AND SINCE HE HAD NOT CLAIMED ANY EXPENDITURE, THERE WAS NO MERIT IN ANY DISALLOWANCE. THE ASSESSING OF FICER HOWEVER, DISALLOWED SUM OF RS. 11,94,196/ - BEING INTEREST RELATABLE TO DIVERTED NON - INTEREST BEARING FUNDS. 2 3 . THE CIT(A) FROM THE PERUSAL OF LEDGER COPY OF THE ICICI BANK ACCOUNT NOTED THAT THE PAYMENTS TO ICICI BANK HAVE BEEN MADE FROM CURRENT A CCOUNT WITH UNION BANK OF INDIA AND BORROWED FUNDS ON WHICH, INTEREST WAS PAID BY UBI WERE USED FOR LIQUIDATING PERSONAL HOUSING LOAN. IN VIEW THEREOF, THE DISALLOWANCE OF RS. 11,94,186/ - WAS JUSTIFIED, HENCE, ADDITION OF RS.11,94,186/ - WAS CONFIRMED. ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 12 2 4 . THE ASSESSEE IS IN APPEAL AGAINST THE AFORESAID ADDITION AND POINTED OUT THAT THE SAID INTEREST ON HOUSING LOAN WAS DEBITED TO ITS CAPITAL ACCOUNT AND WAS NOT CLAIMED AS DEDUCTION AND HENCE, NOT DIS ALLOWABLE IN THE HANDS OF THE ASSESSEE. 2 5 . THE LEARNE D DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 2 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD CLAIMED INTEREST EXPENDITURE OF RS. 22, 10,196/ - , OUT OF WHICH INTEREST OF RS. 18,02,254/ - WAS PAID TO UBI BANK ON CC LIMIT. ON THE OTHER HAND, THE ASSESSEE HAD RAISED HOUSING LOAN FROM ICICI BANK AND PAID INTEREST OF RS.11,94,186/ - . THIS INTEREST WAS NOT DEBITED TO THE PROFIT & LOSS ACCOUNT, B UT WAS SHOWN AS DRAWING ACCOUNT OF THE ASSESSEE IN ITS SOLE PROPRIETARY CONCERN. BOTH THE AUTHORITIES BELOW HAVE NOT DISALLOWED THE SOLE PROPRIETARY CONCERN. BOTH THE AUTHORITIES BELOW HAVE NOT DISALLOWED THE INTEREST PERSE, BUT HAVE DISALLOWED INTEREST AS THE SAME HAVING BEEN USED FOR A PURPOSE OTHER THAN BUSINESS. THE FINDING O F THE CIT(A) SHOWS THAT THE ASSESSEE WAS MAKING PAYMENTS TO ICICI BANK I.E. HOUSING LOAN ACCOUNT FROM HIS CC ACCOUNT NO. 53015 WITH UBI, OUT OF WHICH THREE CHEQUES OF RS.25 LAKHS EACH ON 2 6 .0 3 .2009 , WERE TRANSFERRED TO THE CC ACCOUNT OF ICICI BANK. IN OTHE R WORDS, BORROWED FUNDS WERE UTILIZED FOR LIQUIDATING THE PERSONAL HOUSING LOAN RAISED BY THE ASSESSEE. IN VIEW THEREOF, WHERE INTEREST BEARING FUNDS HAVE BEEN UTILIZED BY THE ASSESSEE FOR HIS PERSONAL USE I.E. FOR THE PURPOSE OF REPAYMENT OF HOUSING LOAN RAISED BY THE ASSESSEE , THE DISALLOWANCE OF RS.11,94,186/ - HAS NOT BEEN MADE PERSE, BUT THE INTEREST RELATABLE TO THE FUNDS NOT UTILIZED FOR THE PURPOSE OF BUSINESS, HAVE BEEN DISALLOWED. WHERE THE INTEREST BEARING FUNDS HAVE BEEN UTILIZED BY THE ASSESSE E FOR HIS PERSONAL PURPOSES AND ALSO IN VIEW OF THE FACT THAT THE CREDIT BALANCE OF SOLE PROPRIETARY ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 13 CONCERN HAD BEEN WITHDRAWN BY THE ASSESSEE, FOR HIS PERSONAL USE, AS REFERRED TO BY US IN THE PARAS HEREINABOVE, IN THE ABSENCE OF ANY INTEREST FREE CAPITA L BEING AVAILABLE WITH THE ASSESSEE, WHICH HAS NOT BEEN PLEADED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE IN THIS REGARD. UPHOLDING THE STAND OF THE CIT(A), WE DISMISS THE GROUND OF APPEAL NO. 5 RAISED BY THE ASSESSEE. 2 7 . THE NEXT DISALLOWANCE MADE IN THE HANDS OF ASSESSEE IS OUT OF VEHICLE EXPENSES I.E. 50% OF THE EXPENDITURE ON PETROL, REPAIRING EXPENSES, INTEREST ON VEHICLE AND DEPRECIATION WAS DISALLOWED BY THE ASSESSING OFFICER FOR NON - MA INTENANCE OF LOG BOOKS AND VOUCHERS FOR RUNNING FOUR VEHICLES. IN THE ABSENCE OF PROPER RECORDS, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PERSONAL USE OF VEHICLES COULD NOT BE RULED OUT. 2 8 . THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER AND DISA LLOWED 50% OF 2 8 . THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER AND DISA LLOWED 50% OF THE EXPENSES AS THE ASSESSEE HAD NOT INCURRED ANY OTHER EXPENDITURE ON THE SAID VEHICLES OTHER THAN THE ONE DEBITED TO SOLE PROPRIETARY CONCERN OF THE ASSESSEE. 2 9 . THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 30 . WE HAVE HEARD T HE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN RESPECT OF THE AFORESAID DISALLOWANCE OUT OF VEHICLES EXPENSES @ 50% OF THE TOTAL EXPENSES, PUNE BENCH OF TRIBUNAL IN VARIOUS CASE S HAS TAKEN VIEW THAT IN CASES WHERE THE PERSONAL ELEMENT OF USE IS NOT DOUBT ED, THEN CERTAIN DISALLOWANCES HAS TO BE MADE IN THE HANDS OF THE ASSESSEE. HOWEVER, DISALLOWANCE HAS BEEN RESTRICTED TO THE EXTENT OF 10% OF THE TOTAL EXPENSES . FOLLOWING THE SAME PARITY OF REASONING, WE DIRECT THE ASSESSING OFFICER TO ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 14 DIS ALLOW 10% OUT OF VEHICLE EXPENSES AS RELATABLE TO PERSONAL USAGE BY THE ASSESSEE. THE GROUND OF APPEAL NO.6 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 3 1 . THE ISSUE IN GROUND OF APPEAL NO.7 IS AGAINST THE DISALLOWANCE OF RS.12 LAKHS ON ACCOUNT OF CONSTRUCTION EXPENSES. 3 2 . THE ASSESSING OFFICER NOTED THAT THE HOUSE WAS UNDER CONSTRUCTION SINCE FINANCIAL YEAR 2005 - 06 . THE VALUATION OF THE CONSTRUCTION PORTION WAS REFERRED TO THE DVO BY THE ASSESSING OFFICER, WHO IN TURN, VALUED THE INVESTMENT AT RS. 1,10,86,000/ - AS AGA INST RS.54,66,781/ - SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. AFTER GIVING REBATE OF 7.5% ON ACCOUNT OF PERSONAL SUPERVISION, THE SHORTFALL WAS CALCULATED AT RS. 47,87,769/ - . THE ASSESSEE HIMSELF DECLARED RS.12 LAKHS AS ADDITIONAL INCOME ON ACCOUNT O F OUT OF BOOKS OF ACCOUNT INVESTED IN CONSTRUCTION OF THE HOUSE. THE SAME WAS ADDED BACK IN THE HANDS OF ASSESSEE BY THE ASSESSING OFFICER, WHICH WAS ADDED BACK IN THE HANDS OF ASSESSEE BY THE ASSESSING OFFICER, WHICH WAS CONFIRMED BY THE CIT(A). 3 3 . THE ONLY PLEA RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE BEFORE US WAS THAT IN GROUND OF APPEAL NO.9, ADDITION TO THE EXTENT OF RS. 10,37,396/ - HAS BEEN MADE ON ACCOUNT OF GP ADDITION AND SET OFF OF THE PRESENT ADDITION OF RS.12 LAKHS BE ALLOWED OUT OF THAT ADDITION. IN THE FIRST INSTANCE, THE GROUND OF APPE AL NO.9 RAISED BY THE ASSESSEE IS AGAINST THE ESTIMATION OF GP RATE AND THE CONSEQUENT ADDITION THERETO OF RS. 10 , 3 7,396 / - IS DECIDED AGAINST THE ASSESSEE. FURTHER, THE ASSESSEE IS ALLOWED TO SET OFF OF THE SAID ADDITION AGAINST THE PROPOSED ADDITION ON AC COUNT OF UNDER - VALUATION OF THE CONSTRUCTION EXPENSES AT RS.12 LAKHS. THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE ADDITION ON ACCOUNT OF CONSTRUCTION EXPENSES TO THE BALANCE AMOUNT I.E. RS. 10,37,396/ - TO THE PROPOSED ADDITION OF RS.12 LAKHS. THE GR OUND OF ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 15 APPEAL NO.7 RAISED BY THE ASSESSEE IS PARTLY ALLOWED AND THE GROUND OF APPEAL NO.9 IS DISMISSED. 3 4 . NOW, COMING TO THE GROUND OF APPEAL NO.8 WHICH IS AGAINST THE ADDITION OF RS.4,50,000/ - . 3 5 . THE RELEVANT FACTS RELATING TO THE ISSUE WERE THAT T HE ASSESSEE HAD RECEIVED SUM OF RS.4,50,000/ - FROM HIS HUF. THE ASSESSING OFFICER NOTED THAT THE SAID HUF HAD DEPOSITED SUM OF RS. 4,50,000/ - IN CASH ON 26.03.2009 IN UNION BANK OF INDIA AND ON THAT DAY ITSELF, THE SAME WAS TRANSFERRED TO THE ASSESSEE. TH E ASSESSEE IN THIS REGARD PRODUCED THE COPY OF CASH BOOK OF SURESH H. JADWANI (HUF) SHOWING OPENING BALANCE OF RS. 4,64,642/ - , WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE. THE ASSESSING OFFICER OBSERVED THAT W HERE THE HUF HAD CASH OF RS.4,50,000/ - AS ON 01.04.2008, WHY THE SAME WOULD BE DEPOSITED ON RS.4,50,000/ - AS ON 01.04.2008, WHY THE SAME WOULD BE DEPOSITED ON 26.03.2009. THE ASSESSING OFFICER DISMISSED THE CLAIM OF THE ASSESSEE AND MADE AN ADDITION OF RS. 4,50,000/ - . 3 6 . THE CIT(A) UPHELD THE SAID ADDITION OF RS.4,50,00 0/ - . 3 7 . THE CASE OF THE ASSESSEE BEFORE US WAS THAT WHERE CASH WAS AVAILABLE WITH HIS HUF, WHICH IN TURN, WAS DEPOSITED IN HIS BACK ACCOUNT AND WHERE THE HUF WAS SEPARATELY ASSESSED THE TAX, THERE WAS NO MERIT IN THE ADDITION MADE IN THE HANDS OF ASSESSE E. 3 8 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS PLACED RELIANCE ON THE ORDER OF CIT(A). ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 16 3 9 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING VIDE PRESENT GROUND OF APPEAL IS IN RELATION TO THE LOAN RECEIVE D BY THE ASSESSEE FROM HIS HUF. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE CREDITWORTHINESS OF HUF AND HENCE, THE SAID LOAN AMOUNT WAS ADDED IN THE HANDS OF ASSESSEE. IN SUPPORT OF ITS CLAIM, THE ASSESSEE HAD PROD UCED THE CASH BOOK OF SURESH H. JADWANI (HUF) , UNDER WHICH THE OPENING CASH BALANCE AS ON 01.04.2008 WAS RS. 4,64,642/ - , WHICH WAS DEPOSITED IN HIS SAVINGS BANK ACCOUNT ON 26.03.2009, THE SAME WAS WITHDRAWN ON THE SAME DAY AND TRANSFERRED TO ASSESSEE S ACCO UNT BY CHEQUE. THE SAID HUF HAD DECLARED INCOME FROM COMMISSION ON SALES TO THE EXTENT OF RS. 74,725/ - AND THE INCOME TAX RETURN WAS FURNISHED BY THE ASSESSEE BEFORE THE DEPARTMENT . T HE COPY OF THE ACKNOWLEDGEMENT OF FILING RETURN OF INCOME BY THE HUF OF THE ASSESSEE HAVING PAN NUMBER AACHJ6556J ALONG WITH COMPUTATION OF INCOME IS PLACED AT PAGES 37 AND 38 OF THE PAPER BOOK. THE DATE OF FILING THE RETURN OF INCOME WAS 09.03.2010. THE COPY OF THE BANK ACCOUNT OF HUF IS PLACED AT PAGE 40 OF THE PAPER BOOK ALONG WITH EXTRACT COPY OF CASH BOOK. 40 . IN THE ENTIRETY OF THE EVIDENCES FILED BY THE ASSESSEE, WE FIND NO MERIT IN THE ORDERS OF AUTHORITIES BELOW. THE EXPLANATION OF THE ASSESSEE CANNOT BE SUMMARILY REJECTED AS TO WHY THE OPENING CASH IN HAND WAS N OT DEPOSITED IN THE BANK ACCOUNT FOR SOME TIME. THE REQ UIREMENT OF LAW IS TO ESTABLISH SOURCE OF AMOUNT RECEIVED AND NOT SOURCE OF SOURCE . FURTHER, THE ASSESSEE HAS ESTABLISHED THE IDENTITY OF THE CREDITOR BEING HIS HUF AND HAS ALSO FURNISHED ON RECORD T HE CAPACITY OF HUF TO PAY THE SAID AMOUNT BY WAY OF CHEQUE TRANSACTION. THE GENUINENESS OF THE TRANSACTION BETWEEN THE ASSESSEE AND ITS HUF CANNOT BE DOUBTED AND IN VIEW THEREOF, WE FIND NO MERIT IN THE AFORESAID ITA NO. 876 /PN/20 1 3 HAKUMANTRAI DAKHINMAL JADHWANI 17 ADDITION OF RS. 4,50,000/ - . THE GROUND OF APPEAL NO.8 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 4 1 . THE GROUND OF APPEAL NO.10 RAISED AGAINST ENHANCEMENT OF INCOME BY CIT(A) TO THE EXTENT OF RS.3,97,776/ - IS NOT PRESSED, HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 4 2 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 15 TH DAY OF JANUARY , 201 6 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 15 TH JANUARY , 201 6 . GCVSR GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RES PONDENT; 3. ( ) / THE CIT (A) - II , NASHIK ; 4. / THE CIT - I I, NASHIK ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE