TaxTMI 
TaxTMI 
2004 (9) TMI 367
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....on higher side without considering the following deductions: (a) Rs. 5 lakhs being the share of undisclosed income from M/s. Khivsara Lunkad & Co. available for investment and remained to have been considered for adjustment while disclosing investment at the time recording statement under section 132(4). (b) Claim of Rs. 4,50,000 on account of amounts erroneously declared as investment, though factually not invested in case of following parties: (i) Phiroz Mistry Rs. 1,00,000 (refer to question No. 10 page No. 8 of paper book), (ii) B.C. Porwal Rs. 1,50,000 (refer to question No. 7 page 2 of paper book), (iii) Navlakha Agency Rs. 1,00,000 (refer to question No. 7 page 2 of paper book), (iv) B.B. Raisoni Rs. 1,00,000 (refer to question No. 8 page 8 of paper book). (c) Not allowing claim of bad debts amounting to Rs. 3 lakhs written off in the books of account since the amount became irrecoverable from Porwal Builders Rs. 2 lakhs (page 60 para 3) and Sancheti Traders Rs. 1 lakh (page 13 para g). The said amounts have not been recovered till date. Further not allowing professional fee payable Rs. 10,000 and professional tax Rs. 600. The assessment was completed....
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....claration made at the time of search and seizure. As regards the amount of Rs. 1,00,000 advanced to Shri Jal Firoz Mistry, it was submitted that the assessee had given Rs. 1,00,000 to Jal Firoze Mistry and his wife Sou. Firoza Firoze Mistry on 11-7-1991, but after three months they repaid the amount of Rs. 1,00,000 as the deal could not be completed and all these happened before the search. The Assessing Officer was not satisfied with this explanation and stuck to the point since the assessee had made a declaration of Rs. 35 lakhs during the course of search, the same has to be added. 5. The assessee appealed to the ld. CIT(A) and reiterated the submissions made before the Assessing Officer. The CIT(A) was not satisfied and held that after considering the facts and circumstances "in their entirety" he was inclined to agree with the findings of the Assessing Officer that the amount declared originally under section 132(4), viz- Rs. 35,00,000 has to be adopted since all the contentions raised are "after thoughts and not supported by any acceptable documentary or circumstantial evidence". 6. Shri N.C. Khandelwal, the learned counsel for the assessee has filed Paper Book No. 1, P....
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....while filing return is Rs. 5 lakhs only, since this is the amount which has been recovered by him. The learned counsel submitted that it may be noted that at the time of recording of statement under section 132(4), the assessee had not declared the amount which was paid to Shri B.C. Porwal, but had stated the amount which was receivable as per his calculations as on the date of search. He submitted that Rs. 1,50,000 was never realised or admitted by Mr. Porwal and accordingly, the authorities below ought to have accepted the contention of the assessee that only Rs. 5 lakhs was due from Shri Porwal instead of Rs. 6,50,000. The learned counsel further submitted that the amount paid to Jal Phiroz Mistry of Rs. 1,00,000 had been recovered within three months which is prior to the date of search. In this connection, he drew our attention to answer to question No. 10 appearing on page 8 of the paper book. As regards the declaration of Rs. 10 lakhs by the firm M/s. Khivsara Lunkad & Co. the learned counsel submitted that the said firm had declared Rs. 10 lakhs as its undisclosed income and was so assessed in the case of the said firm. The assessee has received Rs. 5 lakhs from such undisc....
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....ndisclosed income and was so assessed in the case of the said firm. The assessee had received Rs. 5 lakhs from such undisclosed income towards his share. The other partner Shri B.B. Lunkad also received similar amount from the said source. Accordingly, this amount was available with the assessee for the purpose of investment. This Tribunal in the case of the other partner, namely Shri B.B. Lunkad on similar facts has held that the amount of Rs. 5 lakhs received as his share from the firm's undisclosed income was available. Following the aforesaid order of the Tribunal placed at page 58 of the paper book and the reference application filed by the Revenue having been rejected, we hold that there is no justification for the addition of Rs. 5 lakhs. The Assessing Officer is directed to exclude the same because there cannot be double taxation. 10. After perusing the reconciliation statement filed by the learned counsel and after perusing Annexure-D to the statement under section 132(4) and after perusing confirmation letters from M/s. Navlakha Agency and M/s. B.B. Raisoni & Sons, which have not been rebutted either by the Assessing Officer or by the CIT(A), we hold that there were no....
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....hree months which is prior to the date of search. This has been clearly stated in answer to question No. 10 appearing on page 8 of the paper book. Accordingly, this fund was available with the assessee for making investment before the date of search. At the time of recording of the statement under section 132(4), the assessee had mistakenly offered Rs. 1,00,000 as the amount receivable from Jal Phiroz Mistry and his wife Sou. Firoza Firoze Mistri which in fact was already received. Accordingly, this amount of Rs. 1,00,000 is not considered as forming part of the undisclosed income. The addition of Rs. 1,00,000 is accordingly deleted. 12. Now, coming to the arguments of the learned D.R. that till today no retraction has been made, we do not find any merit in the same. No doubt, during the course of statement under section 132(4) the assessee did declare undisclosed income of Rs. 35 lakhs, but on further examination of his state of affairs and accounts he realised his mistakes and accordingly in the return of income he declared only an income of Rs. 25,98,061. That amounts to retraction and all-through the assessment proceedings before the Assessing Officer the assessee maintained....
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....ed real estate business. No books of account for this business had been maintained and in his statement under section 132(4), the assessee had confessed that the entire investment was unaccounted and undisclosed. Holding that such activity could not be called the business of the assessee and further that the assessee had not written off the amount of Rs. 3 lakhs in his books of account (in fact, no books had been maintained) as per provisions of section 36(1)(vii), the claim of bad debts of Rs. 3 lakhs was not allowable. As regards Rs. 10,000 on account of professional fees and Rs. 600 on account of professional tax, the Assessing Officer disallowed the same as no proof of payment had been submitted before him. 15. On appeal, the ld. CIT(A) confirmed the additions accepting the reasons given by the Assessing Officer for making disallowances. 16. Shri N.C. Khandelwal, the learned counsel for the assessee, submitted that the assessee was doing business of dealing in real estates and had stated so during the assessment proceedings. He drew our attention to the assessee's letter to the ACIT, Inv. Cir. 1(1)and submitted that the assessee had given details of deals made with people....
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....ered since M/s. Porwal Builders had declared bankruptcy. Similarly, M/s. Sancheti Traders had refused to repay back Rs. 1 lakh advanced to them and the assessee had informed the same to the Assessing Officer by letter appearing on page 13. He further submitted that the bad debts had been written off from the books of account which were prepared by the assessee on computer after the search. As regards the disallowance of Rs. 10,000 on account of professional fees and Rs. 600 on account of professional tax, the learned counsel submitted that the Assessing Officer had never questioned about the provisions of expenses claimed in the statement of income. After receiving the assessment order, it was noticed by the assessee that the claims had not been allowed. The assessee had not been given any benefit of the reasoning for disallowance of this claim as it is neither mentioned in the assessment order nor was it ever questioned to the assessee during the assessment proceedings. The assessee, during the first appeal, submitted that there is no requirement as per law to attach any proof for claiming such expenses as provisions as stated by the Assessing Officer during the course of appeal p....
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....s on very high side. The value declared by the appellant should have been accepted as per provisions of law and on facts and circumstances prevailing in the case." 21. During the course of assessment proceedings, the Assessing Officer noted that the assessee had constructed a house property at Ruturaj Housing Society, Pune. The assessee had declared the cost of construction of the said property at Rs. 20.96 lakhs including the cost of the land of Rs. 3.83 lakhs. The assessee obtained a valuation report from the approved valuer who certified that the cost of construction was Rs. 14.88 lakhs. In the course of search, the assessee had made declaration of income of Rs. 4.25 lakhs towards the cost of construction in addition to his cost of construction recorded in his books. It was pleaded before the Assessing Officer that since the assessee had shown the cost at Rs. 20.96 lakhs as against Rs. 14.88 lakhs worked out by the registered valuer, the cost shown by the assessee be accepted. The Assessing Officer, however, referred the matter to the Valuation Officer who put the cost at Rs. 28,75,000. The assessee submitted before the Assessing Officer that the reference to the Valuation Of....
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....d thereunder. He submitted that the valuation so arrived at should be treated as void ab initio. On merits, the learned counsel submitted that the assessee had maintained relevant particulars of expenses incurred on the construction supported by vouchers and books of account. This fact has been mentioned in the report of the approved valuer appearing at page 33 of the paper book. The Valuation Officer was also communicated the details of actual cost incurred by the assessee vide letter received by the Valuation Officer's office on 11-8-1993 which is appearing at page 35 of the paper book. According to the learned counsel, since the assessee was maintaining records in the form of books and vouchers for the construction of the bungalow, there was no scope for making any addition, unless such details were found false or incomplete by the Valuation Officer. In support of this contention, he placed reliance on the decision of the Hon'ble Rajasthan High Court in the case of CIT v. Hotel Joshi [2000] 242 ITR 478. The learned counsel further submitted that the Valuation Officer in fact should not have based his valuation adopting CPWD rates since the construction had been done by a private....
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....se and as per provisions of law, it be held that the ld. taxing authorities below had erred in imposing interest under section 234A of the Act. It further be held that no interest is chargeable in terms of provisions of section 234A of the Act in the case of the appellant. The interest charged be deleted." 27. During the course of assessment proceedings, the Assessing Officer has levied interest under section 234A as, according to him, the return was filed late. It has been pointed out by the representative of the assessee that due date for filing the return under section 139(1) was 31-10-1991. 31st October, 1991 was Saturday and 1st November, 1991 was Sunday. Both the days were closed days and holidays and as such return was filed immediately on the next working day i.e., on Monday, the 2nd November, 1991 which should have been considered as filed within the time limit prescribed under section 139(1) of the Act as per the Circular No. 639 dated 13-11-1992 issued by the CBDT appearing in 199 ITR (St.) 1. 28. The above factual position given by the learned counsel is correct and accordingly, we hold that there is no interest chargeable in this respect for such a delay in filin....
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....ly in accordance with section 132B. Section 132B(4) in clear terms provides for payment of simple interest at the rate of 15 per cent on the amount retained. In a case of seizure which arises out of section 132, section 244A(1)(b) of the Income-tax Act, 1961, will have no application." In our opinion, the ratio laid down by the Hon'ble Madhya Pradesh High Court squarely applies to the facts of the case and accordingly, we decline to interfere. This additional ground raised by the assessee is accordingly dismissed. 30. In the result, the appeal is allowed in part. ITA No. 460PN/1995-Asst. year 1992-93 Per U.B.S. Bedi, Judicial Member 31. I have had an occasion to through the order of the learned Accountant Member and despite my best persuasion to myself, I have not been able to fully agree with the proposed order passed by the learned Accountant Member and I proceed to write my dissenting order with respect to findings and conclusions drawn by him in deleting the following additions: (1) Rs. 5.00 lakhs being the share of undisclosed income from M/s. Khivsara Lunkad & Co. available for investment and remained to have been considered for adjustment while disclosing i....
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....planation and stuck to the point that since the assessee had made a declaration of Rs. 35 lakhs during the course of search, the same has to be added. The assessee appealed against this order of the Assessing Officer and the learned CIT(A) confirmed the action of the Assessing Officer and hence the assessee is in further appeal. 32. The arguments of both sides are appropriately recorded in paras 6,6A and 7 of the proposed order and those are not repeated for the sake of brevity. 33. After hearing both the sides and considering the material on record, I find that the learned CIT(A) has categorically recorded a finding of fact about the non-availability of Rs. 5.00 lakhs on pages 3 and 4 of his order while confirming the action of the Assessing Officer and not accepting the plea of the assessee as under: "In response to the above claim of the appellant, the learned Assessing Officer reported that the declaration in the case of M/s. Khivsara Lunkad & Co. had been made on account of transactions not recorded in the books of account. In the case of the assessee, the declarations were made in the nature of unaccounted investments. It was thus argued by him that Rs. 5.00 lakhs wh....
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.... would be just and appropriate if this issue is set aside and restore back the matter on the file of the Assessing Officer for deciding the issue afresh. As such, while considering all the facts and circumstances of the case, I set aside the order of the Assessing Officer in this regard and restore the matter back on his file with a direction to decide the issue afresh after giving due opportunity to the assessee. 35. As regards another addition of Rs. 1.00 lakh to Jal Firoze Mistry is concerned, the assessee pleaded to delete the same on the ground that the amount was received back within three months on having paid to the said party and hence it cannot be added in the income of the assessee. The learned D.R. relying upon the basis and reasoning as given by the CIT(A) has pleaded for conformation of the impugned order in this regard. 36. Having heard both the parties and going through the record, I find that as per the question Nos. 8, 9, 10, 11, 13 and 16 and answers thereof of the statement recorded on 17-12-1991 placed at pages 8 and 9 of the paper book, the addition has been made as the assessee was not able to explain how this amount was spent as the same was not added ....
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....you. ------------------------------------------------------------------ 1. As per Q.No. 7 given to Shri B.C. Porwal : Rs. 6,50,000 2. As per question No. 9 : Rs. 23,25,000 3. As per question No. 10 : Rs. 1,00,000 4. As per question No. 11 : Rs. 45,000 ------------------ Total: ....
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....o pass such orders as the President may desire: "1. Whether on the facts and circumstances of the case, the CIT(A) is justified in confirming the addition of Rs. 5,00,000 being the share of undisclosed income from M/s. Khivsara Lunkad & Co.? 2. Whether on the facts and circumstances of the case, the CIT(A) is justified in rejecting the claim of Rs. 3,00,000 on account of amounts erroneously declared as investment though factually not invested in the case of the following parties: ------------------------------------------------ (a) Phiroz Mistry Rs. 1,00,000 (b) Navlakha Agency Rs. 1,00,000 (c) B.B. Raisoni Rs. 1,00,000 --------------------------------------------- Per U.B.S. Bedi, Judicial Member- As there is a different of opinion between the Members on the Bench, following point of difference are being referred to Hon'ble President for hearing on such point/s or for nominating the Third Member or to pass such orders as the Hon'ble President may deem fit and proper: ....
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....come from M/s. Khivsara Lunkad & Co.? 2. Whether on the facts and circumstances of the case, the order of the Accountant Member in deleting the addition of Rs. 1,00,000 with respect to Navlakha Agency and B.B. Raisoni, each, is justified or the order of the J.M. in restoring the matter back on the file of the Assessing Officer in this regard is justified? 3. Whether on the facts and in the circumstances of the case, the CIT(A) is justified in confirming the addition of Rs. 1,00,000 with respect of Shri Phiroz Mistry." 2. I have heard the rival submissions in the light of material placed before me and precedents relied upon. In regard to the first Question, I find that the issue is squarely covered by the order of the Tribunal rendered in the case of Bansilal B. Lunkad v. Asstt. CIT [IT Appeal No. 1421 (Pune)of 1994, dated 8-3-1985], for the assessment year 1992-93. The question before the Tribunal was as under: - "2. The learned taxing authorities below had erred in law and on facts and circumstances prevailing in the case in holding that the explanation given by the appellant for the investments made in various articles, shares, etc. is not acceptable and it is the aft....
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....ely nothing on record to indicate that the matter was admitted by the Hon'ble High Court under section 256(2) of the Income-tax Act, 1961 (hereinafter called the Act). Therefore, in my opinion, it is not proper to disturb the earlier finding of the Tribunal. There is absolutely nothing in the order of learned Judicial member to indicate that the order of Tribunal was rendered per incurium. I find that the present facts are also identical. I, therefore, in view of the order of the Tribunal, agree with the view taken by the learned Accountant Member. 7. In regard to Question No. 2, the learned AM, at Page 9 of the order, observed as under: - "...If the Assessing Officer was not satisfied with the confirmations, he could have examined these persons, but he rejected this vital piece of evidence without placing any evidence on record and the CIT(A) simply endorsed the finding of the Assessing Officer which was based on erroneous appreciation of facts. We accordingly direct the Assessing Officer to delete the two amounts of Rs. 1,00,000 each, i.e. Rs. 2,00,000 in aggregate." 8. The learned AM impliedly applied the principles of natural justice in deciding the issue and struck do....