TaxTMI 
TaxTMI 
2010 (5) TMI 499
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.... of Rs.20,00,000/- amount invested by appellant's brother in Life Insurance Policies as unaccounted and undisclosed income of the appellant. Learned CIT (Appeals) ignoring explanation along with corroborative evidences, has erred in confirming action of the A.O. 2. Amount of Rs.20,00,000/- explained to be invested by the brother of appellant, corroborated with his holding of land in Form NO. 7/12. Arbitrator's award and appearing in capital a/c of the appellant cannot be held as income undisclosed of the appellant. Learned CIT (Appeals) has also erred in confirming action of A. O. in treating this amount as undisclosed income." 4. The learned CIT(A) while deciding the appeal of the assessee for assessment year 2003-04, has followed his own order in the case of the assessee for assessment year 2002-03. The facts of the case are that the assessee is involved in the business of cheques discounting and also earned interest on loans given out. In the course of search and seizure proceedings u/s 132 of the IT Act, some papers were found which revealed existence of undisclosed income. The assessee's husband made disclosure of Rs. 2,76,68,805/- for cash loans given to different per....
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....e addition of Rs. 20,00,000/- and Rs. 4,51,000/- in both the assessment years under appeal. Before the learned CIT(A) the assessee reiterated the same pleas as made before AO and relied upon various decisions including the decision of the Hon'ble Supreme Court in the case of CIT v. Smt. P. K. Noorjahan 237 ITR 570. 5. The learned CIT(A) considering the facts of the case and the submissions of the assessee dismissed the appeal of the assessee by observing as under: "7. I have considered the submissions and the material on the record it is very important to note that most of the investment is made in a very short span of time i.e. May 2001 to December, 2001 and the claim of the appellant is that her brother on her request was making investments in those policies. Obviously, it would mean that such big sum was available in cash to the appellant's brother which got investment over a period of 5 - 6 months. Did he keep her share of agricultural income accumulated all these years and invested all rather suddenly. Further, para 5.6 of the assessment order also notes that the agricultural income would not be substantial and of course agricultural income is not shown in the Income-tax ret....
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....e of the existence of so-called foolproof documentary evidence of the existence of jackpot winnings. 12. As already mentioned, the contentions made by the appellant has many holes and discrepancies and the appellant and her husband are really involved in fairly big business of cheques discounting etc. The Assessing Officer was right in not accepting the appellant's claim of investment of Rs. 20 lakhs in a course of few months by her brother on her request as her share of agricultural income and God alone knows pertaining to how many years? Appellant's this ground of appeal is rejected. 13. The only other ground, is about initiation of penalty proceedings and this is not maintainable. 14. In the result, appeal is dismissed". 6. The learned Counsel for the assessee reiterated the submissions made before the authorities below and submitted that investments in LIC policies were made from 25-05-2001 to 24-12-2001 falling in the assessment year under appeal. He has referred to PB -18 which is statement of Shri G. V. Shah, brother of the assessee in which he has explained that he was working as Assistant Manager in Central Bank of India and he has explained in his statement that the a....
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....hich is record of landholding to show that the assessee is co-owner of the agricultural land and entitled to share in the agricultural income which is not disputed by the AO. The learned Counsel for the assessee alternatively submitted that since the AO in the assessment year 2004-05 accepted the agricultural income, therefore, reasonable estimate of agricultural income may be made and resultant benefit may be given to the assessee. 7. On the other hand, learned DR relied upon the orders of authorities below and referred to the findings of the AO and submitted that all the LIC policies were purchased in the year under appeal and there is no dispute that investments in LIC policies were made by the assessee in her name and in the name of her husband. He has referred to PB-36 which is reply of the assessee in which the assessee in the assessment year under appeal has not shown any agricultural income in the return of income. The learned DR submitted that no return of HUF has been filed declaring agricultural income. Brother of the assessee has also not shown agricultural income. The statement of the brother of the assessee in favour of the assessee is not reliable. He has submitted ....
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....licies in the year 2001. According to the award dated 15-03-2003, the brother of the assessee has not objected to the right of the assessee to share agricultural landholding. According to the award all the LIC policies have been given to the assessee of Rs. 20,00,000/- which were already purchased prior to the arbitration agreement and the award. Therefore, it is a clear case of manipulation of the arbitration agreement and the award. When there was no dispute about the ownership of the agricultural land, where was the need for appointment of the arbitrator and even according to the award there was no dispute because the brother of the assessee has been purchasing the LIC policies prior to the appointment of the arbitrator and declaration of the award. Authorities below were, therefore, justified in holding that the award is afterthought story. It may also be pointed out that brother of the assessee has been working as Assistant Manager in Central Bank of India. He has also not deposited the cash accumulated during several years in Bank as per his statement. Being the officer of the bank, he was aware of the fact that keeping of the cash belonging to other is safe while depositing ....