TaxTMI 
TaxTMI 
1999 (12) TMI 142
X X X X Extracts X X X X
X X X X Extracts X X X X
....e order of the AO the assessee is in appeal before us. Seven grounds have been raised. The same are discussed and disposed of as follows: 3. Ground No. 1 reads as under: "On the facts and in the circumstances of the ease, the AO has gravely erred in making the addition of the various amounts received by the appellant's four children on different occasions being customary receipts or presents, treating the same as bogus gifts. The details of these additions are: ----------------------------------- Financial year Amount ----------------------------------- 1995-96 (Part) 1,500 1994-95 3,500 1993-94 8,701 1992-93 9,150 1991-92 &n....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... our attention to p. 1 of the paper book which showed the details of yearwise gifts received by the above four children. He submitted that the amounts of gifts are so petty that there is no reason to disbelieve the gifts received. Each child has received the gifts every year in the range of Rs. 1,500 to Rs. 3,000. The learned counsel also submitted that these gifts are received on birthdays and on occasions like Diwali, family social functions and so on considering the community to which these children belongs such receipt of gifts being customary should not have been disbelieved. The learned counsel further submitted that except on birthdays there is no reason for incurring any expenditure for the gifts received on other occasions. The birthday gifts are taken at net amount i.e., after setting off the petty expenses incurred on birthday functions. In spite of these, there are shown petty withdrawals to the capital accounts of these children as per the details shown on p. 2 of the paper book. The learned counsel further submitted that these children have agricultural income which also is taken at net amount after paying off petty expenses, if any, incurred on birthday functions. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 1992-93 50,000 Excess paid over document price. 1992-93 6,89,000 Difference of market value and document price. 1994-95 4,94,582 Difference of market value and document price. 1995-96 5,27,000 Difference of market value and document price. --------- 20,46,052 -------------------------------------------------------- The assessee and his children had purchased the agricultural lands during the financial years 1986-87 to 1994-95. There are as many as 15 agricultural lands purchased by the assessee and his children durin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nnumerable factors such as adverse title to the lands, litigation, inconvenient locality, lack of approach road, non-availability of water, further possible development of acquisition, if any uneven or hilly lands and so on. In nutshell, the learned counsel submitted that the price agreed and mentioned in the document is the price willing to be accepted by the vendors and willing to be paid by the purchaser. He submitted that for the purpose of income-tax assessments what is important is the amount actually paid. As regards the allegation of excess payment made to the vendors, the learned counsel submitted that as these vendors in cross-examination retracted from their original statements which were taken by the AO at the back of the assessee, there is no justification for the impugned addition of Rs. 1,36,470. In this behalf, he draw our attention to the original statements as well as the statements given in cross-examination placed in the paper book. The learned counsel further submitted that in the draft assessment order submitted to the CIT for approval, the following two additions were not proposed. &nb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rs. 99,000 for asst. yr. 1991-92 and Rs. 6,89,000 for asst. yr. 1992-93 are bad in law because the same were not proposed in the draft assessment submitted for the approval to the CIT and accordingly, the assessee never got an opportunity to put his case before the Revenue authorities. 12. As regards the addition of Rs. 1,36,470 is concerned, the same has been made by the AO on the basis of statements of the vendors recorded at the back of the assessee. Such statements recorded at the back of the assessee have no evidentiary value in the eyes of law. Later on, when the assessee insisted in the cross-examination, these vendors, retracted from their statements before the AO and confirmed that they had not received any money more than the amounts stated in the documents. The AO has conveniently ignored these statements. It is further noted that during the course of search, no document or paper whatsoever was found to indicate that the assessee had paid any amount over and above the amounts recorded in the documents executed for the purchase of land. Accordingly, we see no justification for this additions too. Under the circumstances, this ground succeeds and the assessee gets relief ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m the assessee. The learned counsel further submitted that there is no record or evidence found and seized from her premises at the time of search which could substantiate the collection of such on money. The learned counsel further submitted that as per the assessee, whatever on money he collected from his retail customers for and on behalf of the manufacturer had been paid to the manufacturer and that this does not give rise to any income much less the undisclosed income. This factual position has been accepted by the AO and quite rightly this amount has not been taken as undisclosed income. According to the learned counsel, the AO could not have relied on the original statement of Smt. S.N. Godbole and should have relied upon her statement given in cross-examination. He further submitted that merely because the said Smt. S.N. Godbole had shown such on money collection for the reasons best known to her that itself cannot be taken as evidence against the assessee unless it is corroborated by an independent evidence that establishes the payment of such on money by the assessee. It is possible that Mrs. S.N. Godbole might have stated and confirmed such collection of money to suit he....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in answer to question No. 7 that he had paid the 'on money' to M/s S.N. Products on the purchases of country liquor at the rate of Rs. 10 per box. A copy of the statement is placed on pp. 93 to 95 of the Departmental paper book. Smt. S.N. Godbole, proprietress of M/s. S.N. Products has also accepted this fact in her statement recorded under s. 132(4) on 21st Sept., 1995. In answer to question No. 13 it has been specifically admitted by her that she was charging on money from her customers including the assessee. The relevant question No. 13 and answer thereto appears at p. 106 of the Departmental paper book. This fact was again admitted by her in her statement under 132(4) dt. 22nd Sept., 1995, in answer to question No. 2 which appears at p. 110 of the Departmental paper book. This statement has great evidentiary value since they were recorded in the course of search and corroborated each other. Further, the statement of Smt. S.N. Godbole was recorded on 24th July, 1996. In that statement also, she confirmed that she received on money at the rate of Rs. 10 per box from the assessee on the sales since July, 1993. The cross-examination was allowed by the AO to the assessee on 27th S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 2,38,597 i.e. Rs. 3,77,303 remains and this addition was not pressed. Accordingly, this addition of Rs. 3,77,703 would stay. It was conceded by the learned Departmental Representative that the addition of Rs. 2,38,597 was a double addition. 20. After hearing both the sides, we delete the addition of Rs. 2,38,597 and the remaining addition of Rs. 3,77,703 is confirmed. This ground accordingly succeeds in part. 21. In ground No. 6, the assessee has challenged the addition of Rs. 4,35,000 which amount, according to the assessee, represents the difference between the amount of Rs. 15 lakhs declared in the statement recorded under s. 132(4) and the amount of Rs. 10,65,000 out of business income actually disclosed in the block return. 22. In the statement recorded under s. 132(4) the assessee for himself, HUF and Mrs. B.J. Agarwal had made a declaration of Rs. 15 lakhs as income for the block period. However, while filing the block return, the group offered the following amount: Business Agricultural Total &....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and agriculture. Moreover, the agricultural income is also indirectly taxed under the IT Act. 24. Shri Adhir Jha, the learned Departmental Representative strongly supported the order of the AO. 25. We have considered the rival submissions. We do not find much force in the submission of the learned counsel for the assessee. The assessee had offered a sum of Rs. 15.00 lakhs in his statement under s. 132(4) which was given on estimate basis. However, after verification of the facts the offer was retracted to Rs. 13,15,000. Since there is no material on record that the assessee had invested any amount over and above Rs. 13,15,000 we accept the retraction to this extent. However, there is no material on record to suggest that undisclosed income pertained to agricultural income. In his statement under s. 132(4) the assessee never stated that he had received money outside the books of accounts from agricultural activities. In our opinion, he has conveniently stated that the sum of Rs. 2.50 lakhs related to agricultural income. In the absence of any material on record, this submission of the assessee cannot be accepted. Accordingly, an addition of Rs. 2.50 lakhs is hereby sustained on t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee for the asst. yr. 1996-97. 27. Shri S.N. Doshi, the learned counsel for the assessee drew our attention to NRI Bank pass book of Bank of India, Bhawani Peth, Pune (placed on record) where the said amounts stand debited. Prior to these withdrawals there are gifts/deposits of Rs. 6 lakhs and Rs. 3,99,390 by clearance of foreign remittances. He submitted that the donor Smt. Chhaya Shah had duly confirmed that she had given the said gifts from her NRI Bank account No. 13597 with Bank of India, Bhawani Peth Branch, Pune. He therefore, submitted that there was no justification on the part of the AO for not accepting the genuineness of the gifts. The learned counsel also raised a legal objection i.e. the addition of Rs. 2 lakhs had not been produced and incorporated in the draft assessment order dt. 9th Sept., 1996. He drew our attention to the copy of the draft assessment order placed on record. He, therefore, submitted that since the assessee did not get an opportunity to explain this issue before the CIT who approved the draft assessment order, there is no justification for the impugned addition. At this stage, the learned Departmental Representative filed copies of correspo....