JAGDAMBE STONE COMPANY,BHARATPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, BHARATPUR

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ITA 959/JPR/2017Status: DisposedITAT Jaipur27 March 2018AY 2014-155 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that while the firm discharged its onus by providing details, the CIT(A) correctly identified a shortfall in explained agricultural income for three partners. The addition made by the AO under Section 68 for the unexplained capital contribution was sustained.

What were the facts?

The assessee firm introduced capital contributions from its partners. The Assessing Officer (AO) made an addition under Section 68 as the source of capital was not adequately explained by three of the four partners, despite them claiming it was from agricultural produce sales. The CIT(A) confirmed the addition for the unexplained portion.

What were the issues?

Whether the unexplained capital contribution in the firm's hands, sourced from partners' alleged agricultural income not declared individually, is liable for addition under Section 68. Whether ad-hoc additions to telephone and travelling expenses are justified.

Which sections of the Income-tax Act were involved?

Section 68,Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR

Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 959/JP/2017

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 959/JP/2017 fu/kZkj.k o"kZ@Assessment Years : 2014-15 cuke M/s Jagdambe Stone Deputy Commissioner of Income Tax, Vs. Company, Bijasana, Pahari, Circle, Bharatpur. Bharatpur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AAIFJ 7275 L vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : None jktLo dh vksj ls@ Revenue by : Smt. Seema Meena (JCIT)

lquokbZ dh rkjh[k@ Date of Hearing : 26.03.2018. ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 27/03/2018.

vkns'k@ ORDER

PER: VIKRAM SINGH YADAV, AM

The appeal is filed by the assessee against the order of ld. CIT(A)-22,

Alwar, dated 09.10.2017 for the A.Y. 2014-15 wherein the assessee has taken

the following grounds of appeal:-

“1. That having regard to the facts and circumstances of the case, the Ld. CIT(A) erred in law and on facts by confirming addition of Rs. 3,90,137/- in total income of the appellate firm as made by Ld. AO u/s 68 without appreciating the facts of the case and the material brought on record by the appellant. 2. In doing so, the Ld. CIT(A) has erred in law and on facts by confirming addition u/s 68 in regard of capital contribution of Rs. 3,90,137/- in the income of the firm and not in the income of the partners individually. 3. That telephone and travelling expense are purely business expenses and the Ld. CIT(A) was not justified in confirming ad-hoc additions of Rs. 12,330/- u/s 37(1) made by Ld. AO.”

2 ITA No. 959/JP/2017. Jagdambe Stone Company vs. DCIT

2.

No one appeared on behalf of the assessee nor any adjournment

application was filed. Therefore, it was decided to hear the matter ex-parte

qua the assessee based on material available on record.

3.

In ground no. 1 & 2, the assessee has challenged the addition of

Rs. 3,90,137/- which has been sustained by the Ld. CIT(A) u/s 68 of the Act.

Briefly the facts of the case are that, during the year under consideration, four

partners of the assessee firm have contributed Rs. 12 lakhs each as partner’s

capital in the firm. The partners claimed to have agricultural land in their

individual names and have claimed that the source of partner’s capital is from

the sale of agricultural produce. The AO, however, rejected the claim of the

assessee for the reasons that no agricultural income has been declared in

their individual tax return filed by the respective partners. During the course

of appellate proceedings, the Ld. CIT(A) has given a finding that there is not

dispute with regard to holding of agricultural land in the individual names of

the partners. The Ld. CIT(A) has also taken note of the fact that the partners

have given confirmations and have also filed Jamabandi and the proof of sale

of agricultural produce along with anaaj mandi vouchers during the

assessment proceeding. Regarding the objections of the AO of not reporting

the agricultural income by the Partners in their individual return of income,

the ld. CIT(A) held that if the individual partners have failed to declare such

agricultural receipts in their return of income, then they should be held

3 ITA No. 959/JP/2017. Jagdambe Stone Company vs. DCIT

responsible for the omission and necessary action may be initiated against

them by the Revenue. However, as far as the firm is concerned, it is a

separate legal entity and the firm has discharged its onus by providing all the

necessary details with regard to capital received during the year under

consideration. The Ld. CIT(A) thereafter examined the individual source of

income in the hands of the each of the four partners vis-à-vis capital

introduced and has given a finding that Shri Om Prakash is a only partner who

has the adequate agricultural income to cover the investment in the share

capital and as far as other three partners are concerned, there is a short fall

of Rs. 3,90,137/-, the source of which remain unexplained. It was accordingly

held by the Ld. CIT(A) that the partners capital investment to the extent to

Rs. 44,09,863/- has been explained. However, the balance amount of Rs.

3,90,137/- remains unexplained and to that extent the addition made by the

AO u/s 68 was sustained. There is nothing on record to controvert the said

findings of the ld CIT(A). We therefore do not see any infirmity in the said

order of the Ld. CIT(A) and the addition so made by the AO is hereby

confirmed. In the result, Ground nos. 1 & 2 of the assessee’s appeal are

dismissed.

4.

In ground no. 3, the assessee has challenged the action of the Ld.

CIT(A) in sustaining the disallowance of Rs. 12,330/- out of Rs. 40,660/-

made by the AO on account of various expenses. The Ld. CIT(A) while

confirming the said disallowance held that the telephone and travelling

4 ITA No. 959/JP/2017. Jagdambe Stone Company vs. DCIT

expenses do have an element of personal expenses and he therefore,

confirmed the same. We do not see any infirmity in the said findings of the

Ld. CIT(A) and the same is hereby affirmed. In the result, ground no. 3 of

the assessee’s appeal is dismissed.

5.

In the result, appeal of the assessee is dismissed.

Order pronounced in the open Court on 27/03/2018.

Sd/- Sd/- (Jh fot; iky jko) (foØe flag ;kno ½ (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;kf;d lnL; / Judicial Member ys[kk lnL; /Accountant Member

Jaipur Dated:- 27/03/2018. Pooja/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

1.

The Appellant- M/s Jagdambe Stone Company, Bharatpur. 2. The Respondent – DCIT, Circle-Bharatpur. 3. The CIT. 4. The CIT (4), 5. The DR, ITAT, Jaipur 6. Guard File (ITA No. 959/JP/2017) vkns'kkuqlkj@ By order,

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

5 ITA No. 959/JP/2017. Jagdambe Stone Company vs. DCIT

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