THE ACIT, 2(1), UJJAIN vs. SHRI RAMESHWAR CHOUDHARI, SHAJAPUR

आदेश /O R D E R

PER SHRI C.M. GARG, JM

This appeal has been filed by the assessee against the order

of the learned CIT(A), Ujjain dated 28.4.2016 in First Appeal No. U-

103/2015-16 for the assessment year 2012-13.

2. By way of ground no. 1 the assessee agitates the order of the

learned CIT(A) on the ground that the learned CIT(A) was not

justified in deleting the addition of Rs.16,39,814/- on account of

unexplained sundry creditors.

assessee is engaged in the business of trading in land, potatoes,

rental income from warehouse and job charges on grading of grains.

The assessee has filed the return of income declaring total income

at Rs.25,20,940/-. The case of the assessee was selected for

scrutiny assessment and the notice u/s 143(2) of the Act was

issued. Notices u/s 142(1) of the Act were also issued in this case

from time to time, in response to which the assessee submitted

various details as required by the Assessing Officer.

Officer observed that the assessee has shown Rs.16,39,814/- as

trade creditors. The assessee was, therefore, asked to submit the

confirmation and details of the same. The Assessing Officer also

issued a show cause notice asking the assessee to show reasons as

to why the creditors should not be treated bogus and the amount of

Rs.16,39,814/- be not added to the total income of the assessee 2

under section 41(1) of the Act. In its turn, the assessee submitted

as under :-

“The account is in the nature of unsecured loan which is

wrongly classified in the head of sundry creditors – Assessee

started hospital in the year 2009-10. Due to losses, assessee

closed the hospital after some time. At the time of closure of

hospital, some creditors were outstanding for payment. The

hospital was having medical instruments purchased at the time

of opening of hospital. These instruments were given to various

creditors and the accounts of creditors were settled. The copy of

ledger account of these creditors is being enclosed. Following

two creditors were wrongly shown under the head “Trade

Creditors.

On consideration of the above reply of the assessee, the Assessing

Officer observed that in his tax audit report, the auditor has

certified that these accounts are in the nature of trade creditors but

the assessee is claiming the same creditors in his tax audit report of

the assessment year 2011-12 in which the assessee was running a

hospital. He further observed in the assessment year 2012-13 the

same creditors are shown as the parties who have given loans for 3

starting the hospital which is not justified. In this view of the

matter, the Assessing Officer disallowed the amount of Rs.

16,39,814/- and added the same to the total income of the

assessee.

Assessing Officer, the assessee went in appeal before the learned

CIT(A). The learned CIT(A), after considering the submissions of the

assessee in the wake of the facts obtaining in this case, deleted the

addition made by the Assessing Officer by observing as under :-

“Ground No. 3 :- Through this ground of appeal the

appellant has challenged the addition ofRs.16,39,814/-

on account of unexplained sundry creditors. The a.O.

made the addition on the ground that in the tax audit

report of A.Y. 2011-12 the appellant- has shown them as

creditors pertaining to the business of running hospital

and during the assessment under consideration the same

has been shown as Trade Creditors. The appellant

constructed the hospital and purchased the equipments

accordingly. The appellant was running a hospital in the

A.Y. 2011-12 and the creditors has been shown 4

accordingly. Subsequently, due to the loss in the running

of the hospital the same has been converted into the hotel.

The creditors were for the purchases made for the

hospital which has been squared up subsequently either

by returning the goods purchased from them or by making

the payment. The A.O. failed to bring on record anything

which suggests that the creditors were bogus. The

appellant was having the bill in respect of the purchases

made the creditors were duly reflected in the balance

sheets prepared as on 01.04.2010 and 01.04.2011.

Without making any enquiry, the A.O. is not justified in

making the addition merely because the creditors were

pertaining to the hospital business. Therefore, the

addition made by the A.O. amounting to Rs.16,39,814/-

is deleted. Therefore, the appeal on this ground is

allowed.”

filing the present appeal.

has rightly made the addition of Rs.16,39,814/- on account of 5

unexplained sundry creditors by observing that in the tax audit

report of the assessment year 2011-12, the assessee has shown the

very same creditors pertaining to the business of running the

hospital and during the assessment year, under consideration, the

same creditors have been shown as trade creditors and as such the

learned CIT(A) has grossly erred in deleting the addition rightly

made by the Assessing Officer.

submitted that the assessee started hospital in the year 2009-10

but after sometime, due to losses, the hospital had to be closed. He

submitted that at the time of closure of hospital, some creditors

were outstanding for payment. Since the assessee had no funds to

pay-off the creditors, the assessee gave the instruments of the

hospital to various creditors in lieu of the credits and in this way

the accounts of the creditors were settled. The learned counsel for

the assessee further submitted that that the Assessing Officer has

made the addition without making any inquiry or bringing anything

on record and even without discarding the stand of the assessee.

The learned counsel for the assessee, therefore, prayed that the

order of the learned CIT(A) deserves to be sustained. 6

the wake of the facts of the case, we are of the opinion that the

creditors were for the purchases made for the hospital which have

been squared up subsequently either by giving them the

equipments of the hospital or by making the payment. The A.O. has

utterly failed to bring on record anything which suggests that the

creditors were bogus. The appellant was having bills in respect of

the purchases made from the creditors which were duly reflected in

the balance sheets prepared as on 01.04.2010 and 01.04.2011.

Without making any enquiry, the A.O. was not justified in making

the addition merely because the creditors were pertaining to the

hospital business. We, therefore, have no hesitation in holding that

the learned CIT(A) was fully justified in deleting the addition. The

order of the learned CIT(A) is accordingly confirmed. Ground no. 1

of the appeal of the revenue is thus dismissed.

learned CIT(A) whereby addition of Rs. 25 lacs made by the

Assessing Officer on account of agricultural income was deleted.

(Correct amount deleted was Rs.20 lacs). 7

of assessment proceedings the Assessing Officer found that the

assessee has shown net agricultural income of Rs. 25 lacs for which

total cash receipts of Rs. 30 lacs from sale of grain, potato, onion,

garlic and eucalyptus tree was shown. The Assessing Officer,

therefore, vide order sheet entry dated 6.2.2015 asked the assessee

to show cause as to why the agricultural income should not be

treated as bogus income and the cash receipts should not be added

back u/s 68 of the Act. In reply, the assessee produced bills of sale

of agriculture crops, potato and vegetables but could not submit the

proof of production of agricultural commodity on the same

agricultural land. The Assessing Officer, therefore, observed that

the assessee did not produce bills of Mandi tax and receipts. The

Assessing Officer further observed that the assessee has shown the

cash receipts for sale of eucalyptus trees but he did not submit the

efforts and documentary proof of expenses incurred by him for

growing eucalyptus trees. The Assessing Officer, therefore, opined

that it is clear that the income shown by assessee from sale of

agricultural commodities is nothing but bogus income of the 8 assessee. The Assessing Officer also observed that the assessee has

claimed Rs. 5 lacs as agriculture expenses without submitting

bills/vouchers of purchases of agriculture seed, agriculture

implements and other expenses like wages, etc. In this view of the

matter, the Assessing Officer held that the assessee is routing his

own undisclosed income by using a colourable device of agricultural

income through cash credits in books of accounts and, therefore,

disallowed Rs. 25 lacs claimed as agricultural income by the

assessee.

holdings and sale of eucalyptus trees, restricted the addition to Rs.5

lacs by giving relief of Rs. 20 lacs. Against this relief of Rs.20 lacs by

the learned CIT(A), the revenue is in appeal before the Tribunal.

Assessing Officer with the submission that since the assessee could

not produce bills/vouchers of agriculture seeds, agriculture

equipments and other expenses, the learned Assessing Officer was

fully justified in making the disallowance. He further submitted that

the learned CIT(A) has granted relief of Rs.20 lacs without any basis 9 therefor. He, therefore, prayed that the order of the learned CIT(A)

deserves to be set aside and that of the Assessing Officer restored.

submitted that all bills and vouchers pertaining to the agricultural

income were submitted before the Assessing Officer and as such the

observation of the Assessing Officer to the contrary is not correct.

The learned counsel for the assessee, therefore, prayed that the

order of the learned CIT(A) deserves to be sustained.

parties, in our opinion, since it is the claim of the Assessing Officer

that the assessee did not produce any bills/vouchers in support of

his claim and the assessee claims contrary, it would be just and

proper to restore the issue to the file of the Assessing Officer with

the direction to examine as to whether all the bills/vouchers were

produced by the assessee in support of his claim. In case all the

bills/vouchers were produced before him, the Assessing Officer is

directed to verify the same and reframe the assessment accordingly,

after providing the assessee a reasonable opportunity of being

heard. We may also point out that the record of crop is kept by the 10

Patwari and entry to this effect is also made in the revenue land

record. Thus, if any crop or agricultural activity has been

undertaken by the assessee then it can also be dstablished by the

assessee by producing copies of land record and the Assessing

Officer, if found necessary, can also call the copies of land record to

verify the factum of agricultural activities done by the assessee

during the F.Y. 2011-12 and F.Y. 2012-13. Needless to mention

that the assessee is at liberty to produce all the material documents

in support of his claim before the Assessing Officer.

justified in deleting the addition of Rs. 16,46,306/- made by the

Assessing Officer on account of suppressed income from sale of

land.

land at Rs. 6,03,18,870/-. The assessee sold the bigger piece of

land at the prevailing market rate. Small piece of land admeasuring

540 sq. ft. which was facing main road has been sold at higher

price. The Assessing Officer asked the assessee to submit details

thereof which were submitted by the assessee. On perusal of the

same, the Assessing Officer observed that the assessee did not 11

furnish all the registered deeds of land sold during the year under

consideration. The Assessing Officer held that all the lands have

been sold at the price of Rs. 538.88 per sq.ft. as peak consideration

of each plot sold during the year under consideration. He also

observed that prevailing ‘On-money’ system during the sale

transaction cannot be ruled out. The Assessing Officer, therefore,

disallowed a sum of Rs. 16,46,306/- as difference in valuation of

cost of land and added the same to the total income of the assessee.

Officer has failed to bring on record that the assessee has sold the

plots at less than the guideline value, as adopted by the stamp duty

authorities, deleted the addition made by the Assessing Officer.

Against this finding of the learned CIT(A), the revenue is in appeal

before the Tribunal.

parties, we are of the view that since it is a case of sale of different

plots at different rates and different places and the Assessing

Officer as well as the assessee have not produced sufficient material

in support of their respective claims, it would be in the interest of

justice and equity to restore the issue to the file of the Assessing 12

Officer with the direction to make a fresh inquiry in respect of sale

of plots of different sizes at different rates and different places and

then to adjudicate the issue afresh, after providing the assessee

reasonable opportunity of being heard. The assessee may also

submit copies of the sale deeds showing distinction in the locational

value and other rates as without such copies, it would not be

practically possible to make distinction about the value between the

plots sold on different rates during the period under consideration

at different prices located at same area and the Assessing Officer, if

finds it necessary, may also call the same for proper adjudication of

the issue. It needs mention that the assessee is at liberty to furnish

evidence in support of his claim before the Assessing Officer.

for statistical purposes.

The order has been pronounced in open Court on 28th March, 2017. Sd sd लेखा सद�य �या�यक सद�य (O.P.Meena) (C.M. Garg) Accountant Member Judicial Member

March 28, 2017 Dn/