TaxTMI 
TaxTMI 
2012 (12) TMI 481
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....l Nagori group in which a search and seizure action u/s.132 of the Act was conducted on 10-08-2006. During the search operation certain documents, which are marked as Page No.97 to 102 of Bundle No. 1, were seized. These are stated to be hundies given as security against the loans obtained. The AO noted that almost all of them are blank and only signature of the person taking the loan is appearing or some times the name of the concern is mentioned by putting the rubber stamp and no other details are mentioned. A chart of such hundies prepared by the Assessing Officer on the basis of the above seized documents show the following transactions : Page No. Amount of loan given Date of giving of loan Name and address of the loan taking party 98 5,00,000 02-05-2006 Vinod - security cheque No. 415884 of Mahesh Sah, Bank Ltd., Laxmi Road, Pune 99 5,00,000 18-05-2006 J.S. Goel partner of Goel Associates, San Mahu Complex, Pune 100 1,00,000 -- Polyking Industries, Prop: Mukund T. Band 101 3,00,000 21-03-2006 Bhandari Construction Co., Partner - Omprakash M. Bhandari 102 2,00,000 -- Sri S.S. Kegade, 459, Narayan Peth, Pune. 3. On being questio....
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.... was the same money which was accounted for in the above years which was being rotated for making further loans and which the AO failed to appreciate. It was argued that the addition of Rs. 6,00,000/- is purely on adhoc basis and surmises and suspicion and amounts to double taxation. Accordingly it was pleaded that the same should be deleted. 6. However, the submission of the assessee did not find favour with the CIT(A). The learned CIT(A) analysed the seized documents identified as Page No. 64 to 102 of Bundle No.1 and the statements recorded during the search. He noted that the transactions in the seized documents apparently indicate that the hundies/promissory notes along with post dated cheques were obtained as security as against loans advanced by the assessee. In the statement recorded u/s. 132(4) on 18-8-06, the assessee vide Question No.16 of the statement was asked to explain the nature of transactions recorded in the said seized documents. However, the assessee has expressed his inability to explain the transactions recorded therein. On analysing the transactions recorded in the Page 64 to Page 97 he noted that the same do not contain amounts of loans given by the a....
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....es or promissory notes. However, no such promissory notes/cheques were found from the residence of the assessee during the search. Therefore, no addition is called for. In his alternate contention the learned counsel for the assessee referred to Page 24 of the Paper Book and drew the attention of the Bench to the details of additional income declared by the assessee, the details of which are as under : Sr.No. A.Y. Original return income Additional income declared Revised total income Assessed Income 1 2001-02 2,24,530/- 56,928/- 2,81,460/- 2,81,460/- 2 2002-03 2,81,850/- 2,28,888/- 5,10,740/- 5,10,740/- 3 2003-04 3,04,090/- 3,62,950/- 6,67,040/- 6,67,740/- 4 2004-05 1,96,650/- 70,087/- 2,66,740/- 6,39,010/- 5 2005-06 3,02,970/- 81,000/- 3,84,510/- 3,84,510/- 6 2006-07 2,03,760/- 90,000/- 2,93,760/- 3,94,510/- 7 2007-08 0 5,50,000/- (Cash 1,00,000/- + Gold A/c 4,50,000/-) 8,78,280/- 25,46,140/- TOTAL 15,13,850/- 14,39,853/- 32,82,530/- 54,24,110/- 8. Referring to the following chart giving the availability of income for set off, the learned counsel for the assessee drew the attention of the Benc....
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....e chart giving availability of income for set off we find very meagre amount has been shown towards drawings and other expenses. We find during assessment year 2004-05 there is negative cash balance. Therefore, this chart in our opinion cannot be accepted in its entirety. However, considering the additional income declared by the assessee and in absence of maintenance of regular books of accounts an amount of Rs. 2 lakhs on estimate in our opinion may be allowed as set off for investment in financing out of the income disclosed. Thus out of Rs. 3,61,025/- sustained by the CIT(A) the assessee gets a relief of Rs. 2,00,000/-. The grounds raised by the assessee are partly allowed. ITA No. 1427/PN/2010 (A.Y. 2007-08) : 10. The first issue in the grounds raised by the assessee relates to the order of the CIT(A) in sustaining an addition of Rs. 9,10,000/- out of Rs. 10 lakhs added by the AO. 11. Facts of the case, in brief, are that on the basis of the documents seized during the course of search the AO made addition of Rs. 10 lakhs being amount financed by the assessee as loan. In appeal the learned CIT(A) sustained the addition of Rs. 10 lakhs in principle but gave telescoping....
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....p; Less : Cash claimed to be belonging to 1. Mrs. Asha Hasmukh Nagori 35,000 2. Nagori Hasmukh Mithalal HUF 30,000 3. Nagori Hasmukh Mithalal 40,000 4. Nagori Vibha Hasmukh 20,000 Rs. 4,18,358 DIFFERENCE Rs.6,69,742 Since the assessee could not reconcile the differential cash amount of Rs. 6,69,742/-, the same was offered as unexplained cash for the assessment year 2007-08. However, this additional income was not offered in the return of income filed by the assessee for the assessment year under appeal. On a query in this regard by the Assessing Officer, it was submitted by the assessee that though he had offered the above sum as his additional income during the survey operations, later on while going through the seized documents including cheques and other transactions, he realised that the said amount dates back to earlier assessment years and thus, declared in the respective years on the basis of which additional cash account was prepared and attached with the return of income filed. The year-wise declaration of income made was stated to be as under : F.Y. Amount (Rs.) 2000-01 5....
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....d by the borrowers, therefore, he rejected the explanation given by the assessee. He accordingly upheld the addition made by the AO. Aggrieved with such order of the CIT(A), the assessee is in appeal before us. 16. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the revised income declared by the assessee and the cash flow statement and on the basis of the same we have already allowed relief to the tune of Rs. 2 lakhs for A.Y. 2006-07 and Rs. 50,000/- for A.Y. 2007- 08 being cash available towards the financing business of the assessee. Therefore, no further cash balance is available to the assessee which can be treated as explained for the cash found on the date of search. Further we find the assessee in Question No. 7 of the statement recorded u/s. 132(4) on 18-08-06 had also admitted that the cash amounting to Rs. 6,69,742/- is his extra income for the A.Y. 2007-08. Relevant question and answer reproduced by the CIT(A) at Page 11 of his order reads as under : "Q.17. Please see the Q.No. 11 and its answer. You will find that the amount of Rs....
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....ellery was purchased. The Page-wise clarification given before the AO and reproduced in the body of the order of the CIT(A) reads as under : Page No. 28 Particulars Rs. Weight of old jewellery given for melting valued at 3,78,674 Less: Value of new ornament made 2,62,418 Balance due to assess/family 1,16,256 Add : Discount received 1,334 Total Balance receivable by assessee 1,17,590 Page No. 27 Particulars Value of new ornaments made out of the melted gold 1,97,992 Page No. 25 Particulars In this page, the value of old jewellery given for melting mentioned 1,78,015 Less : Value of new jewellery as mentioned in 1,97,992 Page No. 24 Balance Payable Page No. 26 Labour charges payable to jeweller (paid in cash) 3,300 Page No. 29 Particulars Payable to the jeweller against jewellery 11,183 Summary Balance receivable from jeweller as per page 28 1,17,590 Less : Amount payable to jeweller as per page No. 25 19,590 Amount adjusted as per page 29 11,183 Balance amount receivable adjusted for further jewellery making 86,817 20. ....
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...., therefore, held that new item of jewellery totalling to Rs. 2,00,192/- which includes Rs. 1,97,992/- as mentioned is explained and therefore the AO is was not justified in making the addition of Rs. 2,00,192/- on account of entries recorded in seized documents No. 27 r.w. loose sheet No. 25. 24. So far as the entries made in the seized documents No. 28, he observed that it is not clear from the loose sheets which are the new items of jewellery claimed to have been acquired by the assessee out of exchange of old jewellery so as to compare the same with the list of the jewellery items found and inventorised during the search operations. The assessee also could not produce any evidence to substantiate that these entries also relate to old jewellery items given for remaking the new items of jewellery and the old items were out of Streedhan or jewellery declared under VDIS 1997. In absence of any corroborative evidence unlike Loose Sheet No.25 r.w. loose sheet No.27 he held that the AO was justified in making the addition of Rs. 3,78,674/-. 24.1 So far as the addition of Rs. 11,183/- on the basis of entries recorded on loose sheet No. 29 he upheld the action of the AO in absence....