TaxTMI 
TaxTMI 
2010 (6) TMI 600
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....nvestments. Since during the operation under section 132 cash worth Rs. 49,11,000 and jewellery worth Rs. 34,18,512 was found. Notice was issued to the assessee. In response to the enquiry letter issued assessee filed an application stating that assessee's counsel was busy for the time being and unable to attend the proceedings. Again second notice was issued intimating the assessee that adjournment could not be granted. The assessee was asked to produce sources of acquisition of cash found at residence. It was stated that assessee had offered cash of Rs. 40 lakhs as undisclosed income but not disclosed in the filed return. It was required to show cause as to why the entire amount of Rs. 49.11 lakhs could not be treated as undisclosed income. It was stated that assessee surrendered Rs. 1 lakh in the statement recorded on 11-3-2005 during the course of search without verifying the books of account and documents under mental stress. After verifying the books, assessee surrendered Rs. 25 lakhs on 31-10-2005. The assessee explained that assessee had withdrawn money from sister concern M/s. Dolphin Marbles (P.) Ltd., Account of M/s. Dolphin Marbles were furnished. On verification it was....
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....book which is submitted before me. On going through the bank statement of the company M/s. Dolphin Marble (India) Pvt. Ltd. and also entries in its books of account which clearly show withdrawal of cash from the bank account and payment to Shri V.P. Gupta, and in absence of any evidence that Shri V.P. Gupta, had applied the money for any other purpose, the addition of Rs. 20,00,000 stands deleted." The revenue is in appeal. 2.2 While dealing with the appeal in the case of M/s. Dolphin Marbles, we had confirmed the order of the learned CIT(A), wherein he accepted the receipt of share application money and in the light of the above facts, this ground by the revenue is liable to be dismissed and it is dismissed. 3. The second ground of the revenue is addition of Rs. 13,11,500 made on account of unexplained jewellery claiming to be belonging to Smt. Saroj Gupta. During the search action old jewellery of 5697.500 grm. was found and detected. Assessee was required to explain the sources of acquisition of the jewellery worth Rs. 34.18 lakhs. It was submitted that assessee was assessed to Wealth-tax up to 2000-01 and had 1453 grams of gold in the computation of wealth. It was furt....
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....he hands of the assessee substantively, whereas in the hands of Smt. Saroj Gupta on protective basis. 3.3 Aggrieved by the above order, the assessee approached the first appellate authority. 3.4 This addition was deleted by the learned CIT(A) vide paras 5.3, 5.4 and 5.5 and it is observed as under : "5.3 At the time of hearing before me, counsel of the appellant submitted that (i) since appellant has produced purchase bills before the Assessing Officer and certificate of State Bank of India regarding purchase of gold bon, the evidences should have been accepted by him. In the purchase bill itself, entry in cash book page number or else were payment has been effected by cheque, the cheque number itself is noted. To my query why no books of account where withdrawals for purchases of gold were purportedly noted were produced before the Assessing Officer, the counsel submitted that since these are very old matters, books of account for the relevant period are no longer available. However, the fact that the purchase of gold has been recorded in books of account of the Smt. Saroj Gupta is very clear from the notation of cash book entry in the purchase bill preserved by the appel....
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....of her investment in gold but only objection of the revenue was that corroborative evidence in the forms of books of account could not be produced by Smt. Saroj Gupta treating that she is assessed to tax substantively and explained reasonably. Due to above reasons, the addition if at all should be made in the hands of Smt. Saroj Gupta. 3.6 In view of the above, the addition made in the hands of the assessee on substantive basis is deleted. 4. Coming to the deletion of addition of Rs. 48,285 made on account of jewellary belonging to Smt. Smita Gupta and deleting the addition of Rs. 38,018 on account of jewellary belonging to Shri Mukesh Gupta, the facts leading to the dispute are as under : 4.2 Regarding the jewellary belonging to the daughter-in-law of Smt. Smithy Gupta, it was stated that she received ornaments during her marriage at 581.030 gms. but there was no evidence. 500 gms. was accepted as explained looking to the family background of the assessee. Other 81.030 grams was added as undisclosed. 4.3 The learned CIT(A) in further appeal held that the receipt of 581.03 grams at the time of marriage cannot be disbelieved looking to the background of the family, hence....
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....have been made for the asst. year 2004-05 on the basis of bills produced, there is no flow in the finding of the learned CIT(A). Appeal by the revenue hence liable to be dismissed and it is dismissed. 5. Next ground by the revenue is against deletion of addition of Rs. 2 lakhs made by the Assessing Officer treating the gift received from Shri Naveen Khera as unexplained cash credit. 5.1 During the asst. proceedings, Assessing Officer noticed that assessee has received Rs. 2 lakhs from Shri Naveen Khera on 23-6-2004 as gift. The genuineness of the gift was asked to be proved and the assessee was requested to produce the donor for verifying further. But the assessee could furnish only gift deed between Shri Naveen Khera, the donor and the assessee that too without any documentary evidence proving the capacity of the donor. Considering that there was no relation between the donor and the donee and also there was no occasion to gift, the learned Assessing Officer made impugned addition. 5.2 A copy of the written submission of the assessee's representative was forwarded to Assessing Officer for his comments by the learned CIT(A) and in the reply, learned CIT(A) noted that Asses....
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.... a few hundred rupees only. There is no transaction of even a thousand rupees for long in the account of both the above persons. From the above, it is evident that these persons are of very small means. The credit worthiness of the creditors was not proved. The assessee has not at given any information or evidence regarding the sources of funds out of which such credit has been given. Simply giving confirmation letters is not enough to prove the creditworthiness of the creditor. It has been clearly held by the Hon'ble Allahabad High Court in the case of Nanakchandra Laxmandas v. CIT [1983] 140 ITR 151 (All.) that filing of confirmation letter is not enough. It has also been held by Hon'ble Kolkatta High Court in the case of Shankar Industries v. CIT 114 ITR 689 (Kol.) that the assessee should prove the creditworthiness of the creditors. The Hon'ble Court in this case has laid down various - conditions to be fulfilled by the assessee to enable the Assessing Officer to accept the cash credits. The assessee failed to discharge the onus of proving the capacity and creditworthiness of cash credits and therefore the same is added to the total income of the assessee being investment ou....
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....y came into the account of parties concern. There was no transaction even of Rs. 1,000 in the account of both these persons. Hence, he opined that creditworthiness of the creditors was not proved. However, the order of the learned CIT(A) speaks otherwise. He records that both of them are assessed in Katni and the PAN No. also mentioned that they had advanced money to at least one person other than the assessee which also been accepted by the revenue. The payments by both of them were made through bank challan. Both of them were confirmed it by filing affidavit. Shri Dataram had also appeared before the Assessing Officer. The Assessing Officer has incorrectly recorded that donor was not produced for examination. On these loans, interest has been paid. This is also reflected in the account, which has been accepted. In the light of the above fact and in the absence of any other evidence to show that the money had gone from the assessee to these accounts directly, we are not inclined to accept the appeal by the revenue. On this ground revenue fails and it is dismissed. 7. Coming to the next ground, it is against the order of the learned CIT(A) deleting the addition of Rs. 18,000 mad....
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....During the course of search, six blank cheques signed by the respective account holders were found in appellant's custody. The names of the account holder who signed the cheque are Lakhmichand, Vasudev, Prakash, Asuda, Murlidhar and Shyam. Another loose paper was found where notation is as follows : Amount Name/M/s/Shri Rs. 3,00,000 Laxmi Dresses Rs. 3,00,000 Murlidhar Adwani Rs. 1,00,000 Asumal Chetwani Rs. 1,00,000 Prakash Chandwani Rs. 1,50,000 Vasudev Chetwani Rs. 50,000 Laxmichand Chetwani Apart from the above, two other signed cheques bearing amounts of Rs. 1,50,000 and Rs. 1,00,000issued by Shobha Khairha were found in appellant's custody. On the presumption that the cheques were kept as security for loans advanced outside books to the respective parties, the Assessing Officer had asked the appellant to explain the cheques. The appellant replied that he had not advanced any money to the parties concerned. Whenever, he requires to borrow money, he contacts a certain dalal who hands him over the cheques. The blank cheques are later filed upon on the basis of money available with the prospective creditor. As far as the blank chequ....
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.... learned first appellate authority, we are in agreement with the finding of the learned CIT(A). As rightly noted by the learned CIT(A) the assessee had taken a loan from the person whose cheques were found with him at the time of search. He should have produced the persons concerned. Since the assessee shirked away from his responsibility, it leads to.irresistible conclusion as rightly noted that cheque was taken, while giving loans in the open market from outsiders as a security. This ground by the assessee hence fails and dismissed. In the result, the appeal of the revenue as well by the assessee is dismissed. Per B.R. Kaushik, Accountant Member. - I have perused the proposed order of the ld. Vice-Presidentin this case. 2. The issue involved in this appeal by the revenue for the assessment year 2005-2006 is regarding deletion of addition of Rs. 20 lakhs made by the Assessing Officer on substantive basis in this case. The facts of the case are that amount of Rs. 25 lakhs was credited in the books of account of M/s. Dolphin Marbles P. Ltd. as share application money, shown as received from four different companies. The Assessing Officer held that those companies existed on....
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.... details of which have been given at page 3 of the Assessment Order in his case. The assessee also claimed that the cash of Rs. 49,11,000 was fully accounted for the details of sources of acquisition of cash of Rs. 49,11,000 as per claim of the assessee have also been given by the ITO at page 3 of the Assessment Order. It is also seen that the ld. CIT(A) has deleted the substantive addition in the case of the assessee and also deleted protective addition of Rs. 20 lakhs made in the case of Dolphin Marbles (P.) Ltd. (supra) on account of share application money considered as unexplained by the Assessing Officer for the reason that the companies in question were not found to be actually in existence at the addresses given by the assessee and their capacity and genuineness of the transactions in question were not proved. The ld. CIT(A) admitted additional evidence in contravention of Rule 46A of the Income-tax Act. I have, therefore, with due respect, dissented from the order of the ld. V.P. in the case of Dolphin Marbles (P.) Ltd. (supra) and for the reasons discussed in details in my order in the case of Dolphin Marbles (P.) Ltd. (supra) restored the issue to the Assessing Officer f....
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....iscussed by the Assessing Officer at page 9. The Assessing Officer has accepted the claim of 1.00 gms, out total jewellery of 163.800 gms. of jewellery claimed to be of Shri Mukesh Gupta and found at the time of search, in view of CBDT instruction No. 1916 dated 11-5-1994. The Assessing Officer made addition of Rs. 38,018 for the remaining 63.8 gms. of gold ornaments substantively in the hands of the assessee and protectively in the hands of Shri Mukesh Gupta. The ld. CIT(A) deleted the addition on the basis of bill dated 22-11-2003 regarding purchase of 113.8 gms. ornaments for Rs. 62,602 from Tribhuwandas Bhimji Javeri. The Assessing Officer made the addition for the reason that the ornaments were claimed to have been purchased out of past savings and gifts received. The ld. CIT(A) deleted the addition on the basis of evidence produced regarding the purchase of gold ornaments. Since the Assessing Officer has made the addition for the reason that the assessee could not explain the source of funds for the purchase of 113.8 gms. of gold, addition can not be deleted only on the basis of bill of purchase of 113.8 gms. of gold. However, the purchase made on 22-11-2003 has not been d....
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.... on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the assessee that it was a receipt of an income nature." 14. It is observed that the Hon'ble Apex Court in the case of Sumati Dayal (supra) has held as under : "....in all cases in which a receipt is sought to be taxed as income, the burden lies upon the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within' an exemption provided by the Act lies upon the assessee. . . . But, in view of section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is in the opinion of the Assessing Officer, not satisfactory. In such a case, there is prima facie evidence against the assessee, viz. the receipt of money, and if he fails to rebut, the said evidence being unrebutted, can be used against him by holding that it was a receipt of an income nature." 15. It is dear from ....
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.... Yash Pal Goel (supra), the Hon'ble Punjab & Haryana High Court referred to the following cases : 1. Murlidhar Lahorimal v. CIT [2006] 280 ITR 5126 (Guj.) 2. Sikri & Co. (P.) Ltd. v. CIT [1977] 106 ITR 682 (Cal.) 3. Sumati Dayal (supra) and held as under: "Section 68 of the Income-tax Act, 1961, provides that where any sum is found credited in the books of the assessee for any previous year it may be charged to income-tax as the income of the assessee of the previous year if the explanation offered by the assessees about the nature and source of such sums found credited in the books of the assessees is in the opinion of the Assessing Officer not satisfactory. Such opinion formed itself constitutes a prima facie evidence against the assessee relating to the receipt of money, and if the assessee fails to rebut the evidence it can be used against the assessee by holding that it was a receipt of an income nature. A simple identification of the donor and showing the movement of the gift amount through banking channels is not sufficient to prove the genuineness of the gift. Since the claim of gift is made by the a....
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....isclose the source from which the money has been received by the assessee. This does not require the assessee to disclose the source of that source, i.e., the source from which the donor or investor have received the money which has been invested, (b) it consists of offering an explanation which is "satisfactory" in the opinion of the Income-tax Officer. What explanation would be considered "satisfactory" and how much of details should be furnished to make the explanations "satisfactory" normally depend upon the facts." It was held that the explanation to be furnished under section 68 in order to qualify as "satisfactory" would require the assessee to disclose the source of depositor for establishing the "capacity" of the creditor. Mere explanation regarding the source of the receipt or credits in the account book of the assessee that he received the money from his wife any minor son who are not earning was far from "satisfactory". 24. The ITAT as per its decision dated 28-6-1995 in the case of D.C. Rastogi (HUF) v. Asstt. CIT [1996] 57 ITD 295 (Delhi) has also held that "in case of cash credits and gifts, the onus lies on assessee to establish identity and capacity of credit....
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.... gift in question was not established and the alleged donor was neither related to nor closely connected with the assessee nor there was any occasion to give the gift. The gift in question can not therefore be considered genuine because the gift was not given out of natural love and affection. I am, therefore, of the considered opinion that the decision of the learned CIT(A) in deleting the addition made by the Assessing Officer can not be upheld and the appeal of the revenue is liable to be allowed on this issue. 29. The grounds No. 1(vi) and (vii) are against deletion of additions of Rs. 4,50,000 on account of unexplained cash credits and interest of Rs. 18,000 paid thereon. The Assessing Officer has discussed this issue at para 6.1 and 6.2 of the Assessment Order at pages 21 & 22. It was observed that the assessee has shown fresh credits of Rs. 2,50,000 and Rs. 2,00,000 in the names of Devandas Pathashu Mal and Dataram Tehlani respectively, the interest of Rs. 18,000 was claimed at the rate of 12 per cent per annum for four months. The Assessing Officer observed that the assessee filed confirmation from the cash credits and copy of their respective bank statements. It was als....
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....ness premises of each concern. Whereas, no books of account were found or seized by the search team from any of the business premises of the assessee. Hence it is evident that no books of account were maintained by the assessee. The books produced by the assessee now were prepared after the search operation to match various transaction and cash found and seized during the course of search and seizure operation." 33. Thus the books of account of the assessee can not be considered correct and the claim of the assessee that Rs. 50,000 were received from Shri Devandas is also not supported from the copy of his affidavit dated 21-7-2006 placed at pages 69 to 70 of the paper book filed by the assessee on 24-2-2009, because the aforestated Shri Devandas deposed that he had given Rs. 2,00,000 on loan to M/s. Battoolal Mohanlal on 27-12-2004 as per cheque No. 064713 dated 27-10-2004 of Union Bank of India, Katni but the amount of Rs. 2,50,000 has no where been narrated in the copy of his affidavit. In the balance sheet of Shri Devandas as on 31-3-2005 filed at page 75 of the paper book, the loan shown to M/s. Mohanlal Battoolal is Rs. 2,50,000. Thus the name of the propriety concern of t....
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....the Assessing Officer, which has not been discussed in the Assessment Order and the assessee has also not taken any specific objection in this regard before the ld. CIT(A). Copy of any letter written to the Assessing Officer in this regard or statements of the parties have not been filed in the paper book dated 24-2-2009 consisting of 119 pages. 34. The observation of the ld. CIT(A) that "the recent trend of Judicial decisions including that of the Jurisdictional High Court in such cases is that once the creditor has confirmed the credit appellant can not be questioned the source of cash which was deposited the creditors bank account prior to the advancement of loan to the appellant.", with due respect, is not correct in view of the decisions in the cases of : (i) P. Mohankala's case (supra) (ii) Sumati Dayal's case (supra) (iii) Yashpal Goyal's case (supra) (iv) Tirath Ram Gupta's case (supra) (v) Banarsi Prasad's case (supra) and (vi) the decision of the Hon'ble Jurisdictional High Court in the case of Rathi Finlease Ltd's case (supra) relevant portion of w....
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....uced at page 3 of Assessment Order that admitted concealed income of Rs. 22,04,858 is under specific heads. The balance undisclosed income of Rs. 2,95,145 only is on account of other possible discrepancies, which could have at best been considered by the ld. CIT(A) has not relating to any specific disclosure. However, since the claim of set off was not made before the Assessing Officer, and the assessee did not take any ground or additional ground of appeal on this issue, the ld. CIT(A) was not correct in giving the set off in question in view of the decision in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 11 (SC). This ground of appeal of the revenue is allowed, with due respect to the decision of the ld. V.P. on this issue. 39. The appeal of the department is partly allowed. ITA No. 110/Jab./2008 40. I agree with the conclusion of the ld. V.P. in dismissing the appeal of the assessee. 41. As a result, the appeal of the department is partly allowed and the appeal of the assessee is dismissed. In the matter of : Shri. Vishwanath Prasad Gupta, Prop. Battoolal Mohanlal, Bus Stand, Katni : Assessment year 2005-06 in ITA No. 221/Jab./2008 We, the Members ....
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.... Assessing Officer for fresh consideration, as held by the learned A.M.? (ii) Whether, on the facts and in the circumstances of the case, learned Vice-President was justified in confirming the order of the Commissioner of Income-tax (A) in deleting the addition of Rs. 2 lakhs made by the Assessing Officer, treating the gifts received from Shri Naveen Khera as unexplained cash or the AM is justified in reversing the order of the Commissioner of Income-tax(A) ? (iii) Whether, on facts and in the circumstances of the case, the learned Vice President is right in upholding the order of the Commissioner of Income-tax (A) allowing the set off of Rs. 5,28,302 or the learned AM is right in allowing the appeal by the revenue ? (iv) Whether, on the facts and in the circumstances of the case, the issue regarding deletion of addition of Rs. 4,50,000 on account of cash credit considered unexplained by the Assessing Officer and Rs. 18,000 being interest paid thereon disallowed by the Assessing Officer should be restored to the Assessing Officer for fresh consideration as held by the leaned A.M. ? 2. As regards question No. (i), the facts, in brief, are th....
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.... the matter to the file of the Assessing Officer for fresh decision as opined by the ld.A.M. 5. As regards question No. (ii), the facts, in brief, are that the Assessing Officer made the addition of Rs. 2 lakhs treating the gift received from Shri Naveen Khera as unexplained cash credit. During the course of assessment proceedings, the Assessing Officer required the assessee to prove the genuineness of the gift and the capacity of the alleged donor. The assessee filed a gift deed dated 25-6-2004, but failed to produce the donor or file any other evidence to prove the genuineness of gift and the creditworthiness of the capacity of the alleged donor. On appeal, the ld. CIT(A) deleted the addition. 6. The revenue filed an appeal before the Tribunal against the order of the ld.CIT(A). The ld. V.P. confirmed the order of the ld.CIT(A) stating that in absence of evidence to show that money routed and generated from the assessee and came back, there is no reason to disturb the order of the first appellate authority. 7. The ld.A.M.,who wrote the dissent, held that the gift in question is not genuine. 8. I have considered the facts, the dissenting orders and the rival contention....
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....by him. 10. The revenue filed an appeal before the Tribunal against the order of the ld. CIT(A). The Ld.V.P., who passed the leading order, confirmed the order of the ld.CIT(A) in allowing the set off of Rs. 5,28,302 against the addition of Rs. 12 lakhs confirmed by the ld.CIT(A). 11. The ld.A.M, who wrote the dissent, held that the assessee is not entitled to set-off of Rs. 5,28,302 because the claim of set off was not made before the Assessing Officer and the assessee did not take any ground or additional ground of appeal on this issuer-He also relied on the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra). 12. At the outset, I may point out that the ld.A.M. was not correct in stating that the assessee is not entitled to set-off of Rs. 5,28,302 against the addition of Rs. 12 lakhs confirmed by the ld.CIT(A) on account of blank cheques found with the assessee. The Explanation below section 251 reads as under : "Explanation.-In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the " order appealed against was passed, notwithstanding that such matter was not raised....
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....in the above loan transaction is recorded, which is available at pages 71 and 72 of the assessee's Paper Book. Shri Devandas Pathashumal is also assessed to tax. Copies of return of income and Balance Sheet of Shri Devandas Pathashumal are available at pages 73 to 75 of the assessee's Paper Book. The Balance Sheet shows a sum of Rs. 2,50,000 receivable from the assessee. The Balance Sheet also, shows that Shri Devandas Pathashumal also advanced loan of Rs. 3,75,000 to M.Ishaq M.Gulam. I find that this loan has been accepted by the department. It is stated that Shri Devandas Pathashumal also appeared personally before the Assessing Officer. The Assessing Officer did not record all these facts and incorrectly recorded that the creditor was not produced for examination in spite of opportunities allowed to him. On these loans, interest has been paid. This is also reflected in the account, which has been accepted. It seems that the Assessing Officer had made the addition without proper verification and without giving finding in respect of the creditor. In my opinion, the assessee has discharged the onus of proving the identity of the creditor, the capacity of the creditor and the genuin....