TaxTMI 
TaxTMI 
2011 (12) TMI 383
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade on account of undisclosed investment in jewellery; (2) Rs.57,908/- made on account of undisclosed investment in FDRs; (3) Rs.67,01,049/- made on account of undisclosed investment in money lending business; (4) Rs.15,00,000/- made on account of undisclosed investment in financing for vehicles; (5) Rs.1,31,000/- made by the assessing officer u/s 69 of the Act on account of undisclosed investment in Lakshmi Hardware shop; and (6) On the facts and in the circumstances of the case and in law, the CIT (A) has erred in holding that the assessee was having agricultural income of Rs.3 to 4 lakhs per annum without appreciating the fact that mere holding of agricultural land was not sufficient to prove the source of agricultural income. 3. The facts of the case, in brief, are that the assessee is an individual and was engaged in the business of financing for two wheelers and also carrying on money lending business for the last several years. There was an action u/s 132 of the Act in the residential-cum-business premises of the assessee on 21.1.2001 and consequence of which, the assessee was required to furnish his return for the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to explain the source of investment in the gold jewellery with documentary proof thereof. Although the assessee was required to furnish his reply by 28.11.2002, no explanation whatsoever was submitted on the given date. Accordingly, another letter was issued on 6.1.2003 asking him to furnish the information called for on 15.1.2003. In response to letter dt. 6.1.2003, the assessee in his reply dated 15.1.2003 replied that ornaments were owned by his wife without any supporting evidence. Subsequently, the assessee vide his letter dt. 22.1.2003 stated that the ornaments were purchased out of agricultural income and a portion of the ornaments was out of streedhan and received by way of gift on various occasions. It is quite obvious to mention here that no documentary evidence was furnished to substantiate the contention of the assessee with regard to acquisition of gold jewellery. The assessee's argument that a portion of the jewellery was acquired out of agricultural income is not satisfactory and acceptable in view of the assessee's deposition in the statement recorded u/s 132(4) of the Act wherein he has stated that his agricultural income per year is Rs.15000/- to Rs.20000/- whic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....- relating to ornaments is wrongly made the same may please be deleted." After considering the assessee's contentions, the ld. CIT (A) had observed thus: "8.2. The submission of the appellant and reasoning of the appellant is duly considered and I find force in the submission of the appellant that the credit of at least 60 tolas should have been given by the AO being 40 tolas streedhan and 20 tolas on account of minimum purchases of 2 to 3 tolas on different occasions during the block period. In view of this, the credit of 60 tolas is very reasonable and accordingly the explained investment is worked out at Rs.96,420/- (976.300 - 699.840 gms). However, in view of the fact that during 1.11.1999 to 30.1.2001, the appellant had disclosed interest income of Rs.5,96,116/-, the plea of the appellant that the same may be considered as acquired out of interest income has to be accepted. While allowing the telescoping of Rs.96,240/-, the AO is directed to delete the addition of Rs.32,60,057/-." 6.1 We have duly considered the assessee's explanation before the first appellate authority and the finding of the ld. CIT (A) on this point. At a glimpse of the assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....these FDs are on 3.7.96 i.e., prior to the commencement of finance business therefore, the same has to be considered as out of agricultural income and, hence, no addition is justified. 9.3. I find force in the submission that due to substantial agricultural income and also additional income disclosed by him in the appellate proceedings on account of interest income, which is Rs.33,750/- up-to 31.3.96 (Pl. refer to para 16 of this order) the plea has to be accepted that the source is explained. The AO is thus directed to delete the addition of Rs.57,908/-." 7.1 We have duly considered the assessee's submission before the ld. CIT (A) and also her reasoning in deleting the addition. As rightly pointed out by the first appellate authority, the assessee had the substantial agricultural income year after year and also disclosed additional income on account of interest income, the investment of Rs.57,908 - Rs.4,000 stands explained. This ground is decided against the Revenue. III. Deletion of addition of Rs.67,01,049/- made on account of undisclosed investment in money lending business: 8. It was the case of the ld. AO that during the course of sear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, ignoring the credit entries appearing in individual accounts i.e., in the name Abdulbhai Pathan, the AO has considered debit of Rs.1,42,062/- whereas in the seized material there are debits of Rs.1,49,835/- and credits of Rs.1,00,158/-. Number of such entries were pointed out by the appellant which could explain the difference between the working of appellant and the AO. 10.5. Now coming to the source to explain the deficit of Rs.48.73 lacs, the appellant has broadly given following sources i.e., (a) agricultural income (b) amount withdrawn from NRE A/c of Paresh D Patel son of the appellant (Rs.4,26,000/-) (c)Gifts received from the following persons: (i) Shri Dilip Amin Rs.14,25,000/- (ii) Appabhai M Patel Rs.5,00,000/- (d) Amount received on sale of scrap material of old building Rs.6.35 lacs. (e) Recoveies made from 12 debtors (Rs.11,02,430/-) (f) Bond of Bank of India NRE A/c Rs.50,000/- 10.6. It is seen that in the assessment proceedings, the AO failed to examine the evidences places by the appellant on record, therefore, the case was remanded back to the file of the AO. On the basis ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eceived from Shri apabhai Maganbhai PatelRs.5,00,000/- The representative of the assessee produced Shri Diliphabi Amin in the remand proceedings and his statement u/s 131 was recorded. He had furnished xerox copies of passport and US Citizen identification dt. 11.9.01. he is engaged in the business of running motels in USA and earns USD1,00,000 to $ 1,50,000 besides having agricultural land as at Tarapur in India. He confirmed to have a close relationship with the assessee namely Shri Dhiraibhai B Patel since last 15 years and admitted to have gifted Rs.14,25,000 during the period from October 1994 to January 1996 out of withdrawal from NRE and NRO accounts of Andhra Bank, Baroda Branch and furnished copy of pass book showing withdrawal from the Bank a/c at the time of statement. At the request of the assessee and due to illness of Shri Apabhai, the Inspector of this office was deputed at the residence of Shri Apabhai. He stated that he stays at UK since 1970 as a proof identity he has furnished Xerox copy of British Passport. He admitted in his statement that Rs,5,00,000/- was gifted to Shri Dhirajbhai on various dates from withdrawal from his bank account. &nb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Shashikan V Patel - staying abroad; and (4) Rasikbhai C Baria and Piyush Thakorlal -NA. The following persons were available and their identity was verified. In their self confirmatory statements, they stated as follows: (i) Shri Kaushikkumar Dinshabhai Patel Rs.58,500/-: Shri K.D.Patel aged 36 years has stated he holds 20 vighas of land. His aznnual agricultural income is Rs.100000/- to Rs.125000/- and out of sale of water the income is approximately Rs.15000 and Rs.20000/-. Regarding ownership of land he has furnished 7/12. he stated that for purchase of seeds, fertilizers and for other miscellaneous expenses he used to borrow money from Shri Dhirajbhai who is his nearest relatives. He stated that he has repaid the loan and furnish as copy of extract from cash book maintained by him as proof of repayment. (ii) Shri Bhavarlal Devilal Marvadi alias Kerosenewala Rs.51,000/- Shri Bhavarlal aged 35 years stated that he is doing business of selling kerosene on retail basis as a hawker. He admitted to have taken loan and stated to have repaid the same with interest. However, he could not produce any proof of document either for acceptanc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... accepted as the appellant can not produce them now. If the AO had taken care to examine these persons at the time of assessment proceedings, possibly some adverse effect could have been drawn. However, in the present set of circumstances, the explanation of the appellant has to be accepted on the basis of confirmation, involving Rs.1,02,000/. However, with regard to other 5 persons, it has to be held that mere filing confirmation does not discharge the onus lies on him. In view of these facts, it is held that the appellant has failed to explain the sources to the extent of Rs.3,98,800/-. 10.8. (sic) 10.10. However, if we see the overall position, it is seen that the appellant has been able to demonstratively prove the following sources: 1 Agricultural income Rs.30 to 40 lacs 2 NRE A/c of son Rs.4,26,000 3 Gifts Rs.20 lacs 4 Recoveries made Rs.7 lacs 5 Bonds realization Rs.1.6 lacs 6 Withdrawal from NRE A/c No.7531 Rs.50,000 10.11 So, all the above amounts are sufficient to explain the cash deficit of Rs.48.73 lacs. It is even sufficient to explain the addition of Rs.67.01 lacs which is inclusive of interest ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....15 lakhs. 9.1 During the course of appellate proceedings, the assessee had contended that: [Para 11.1 of CIT(A)'s order] "Vehicle finance Rs.1500000/-: In the assessment order Rs.15 lacs has been added over and above Rs.67.02 (sic) 67.1 lacs on the ground that total vehicle financed as per statement of 'Yogi Auto Mobiles' is 75 vehicles as against 25 vehicles stated by assessee in the statement recorded u/s 132(4) in para 7(5) of AO. As explained by us assessee was under mental stress due to sudden problem of wife and, therefore, reply given by assessee cannot be considered as fully correct. That apart, the whole diary seized on the basis of which Rs.67.01 lacs has been worked out in assessment includes 90% relating to vehicle loans only. Addition of further Rs.15 lacs is nothing but duplication of the loans covered under Rs.67.01 lacs. It was pointed out that in case of following 5 persons vehicle loans given could not be explained (Para 7). 1) Shri Udesing Rathwa } They are already included in list of 2) Shri Dilipsinh Sinore } diaries as per annexure - I 3) Shri Pravin Baria alias Pappu Baria } 4....
X X X X Extracts X X X X
X X X X Extracts X X X X
....regard to the said investment. In the absence of any satisfactory explanation with documentary proof, a sum of Rs.1,31,000/- is treated as unaccounted investment for the block period and taxed accordingly." 10.1 The Ld. CIT (A) has recorded the reasons for deleting the addition of Rs.1.31 lakhs as under: "13.1. In the appellate proceedings, the appellant has reiterated his submission. I find myself in conformity with the views of the appellant that since in 1991, he was having no other source of income except agricultural income, the same has to be considered as explained out of agricultural income. Hence, the addition of Rs.1,31,000/- is directed to be deleted." 10.2 Considering the reasoning of the ld. CIT (A) and also the facts of the issue, we find that there is no cause for any interference at this stage. It is ordered accordingly. VI. Agricultural income of Rs.3- 4 lakhs per year: 11. Briefly stated, the assessee, during the course of search operation, appears to have admitted that his agricultural income was Rs.15,000/- to Rs.20,000/- per year and that the land was acquired in Narmada Project 15 years back for which he had re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he produced certificate of talati. 11.2 The Ld. CIT (A) has mentioned in her impugned order as under: "7.1.The above details were forwarded to the AO. The AO in his remand report dt. 25.3.04, the AO has confirmed that on the basis of Annexure A-2, the appellant has been found to be the owner of the following agricultural land which is over and above the land acquired by the Government in Narmada Project: Place Survey No. Area Page No. of Annex.A2 Zankherpura Ta.Sankheda 36 1-82-11 As per A's submission Dhanknakia Ta. Jambughoda Ahmarya ta. Samkheda 60/P 7 3-03-51 3-05-54 11 12 Dhanknakia ta. Jambhughoda - do - 3 10 0-10-12 0-10-12 27 13 7.2. Though the AO has accepted the existence of 25 acres of land but has not commented upon the extent of agricultural income which could have been earned by the appellant during the block period. 7.3. In this connection, it is seen that the AO has discussed this issue in details on pages 7 to 10. The observation and conclusion of the AO in this regard are reproduced below ........................................................................ 7.4 In the app....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d: 'Agricultural land: As explained earlier, all agricultural land owned by assessee are ancestral land and the evidence relating to the same is already lying in the seized papers. We enclosed herewith the copies of Form 6 which we could find from seized record. We also enclose herewith the fresh certificate taken from Talati/Sarpanch of Khadivav and Alikherva villages confirming that (1) Land is ancestral and transferred in the name of assessee as heir (2) Land was used for agriculture and various crops was taken by assessee. Father of assessee expired when age of assessee was only 15 years. Since then he is taking care of the family. Assessee was maintaining his mother, brother and a sister out of agricultural income. Agricultural income: Right from the beginning of this case we have stasted that in the statement recorded u/s 132 (4), it is wrongly stasted that income from agriculture is Rs.15,000/- only. From the total area of land itself one can estimate that agricultural income of the family even before 30 - 40 years must be around Rs.1 or 2 lacs and in the period from 1980 onwards it must be ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the assessee must be having net agricultural income of around Rs.3- 4 lakhs per annum which, according to the Ld. D R, doesn't command any merit. 11.4 We have cautiously considered the contentions of the assessee, perused the reasoning of the ld. CIT (A) and also the arguments put forth by the ld. D R as well as the voluminous paper books furnished at the time of hearing. 11.5 At the outset, we would like to recall the assertion of the ld. AO in his remand report addressed to the ld. CIT (A) that the assessee has been owning and under agricultural cultivation of 9-74-29 which was equivalent to 25 acres of fertile land though the assessee stated in his statement u/s 132(4) of the Act that his agricultural land has been acquired by the Government in Narmada project evidences show that he had agricultural land as on the date of search as mentioned at page no. 481 of the departmental paper book. Another salient feature is that the said lands are situated on or nearer to the river-bed with facility of plentiful water for irrigation uninterruptedly. This amply dispels the Revenue's apprehension that mere holding of agriculture land would not sufficient to prove th....