TaxTMI 
TaxTMI 
2015 (9) TMI 1357
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....ri Hiren B. Parmar for Assessment Years 2002-03 to 2008-09. 2. The Ground No.1 which is common in all the years in the appeals by the Revenue as well as by the Assessee is with regard to estimation of profit from the sale of Audio and Video Cassettes by the assessee. The CIT (A) has partly allowed the ground and therefore, the Revenue is in appeal against the addition deleted while the assessee is in appeal against the addition sustained. 3. The facts of the case are that the assessee who is an Individual was serving with the Police Department as a constable who was dismissed by the Government on 15-4-2000.Subsequently the assessee started the business of production and sale of audit and video cassettes. Police had conducted a search action against the assessee and his wife Smt. Geetaben H. Parmar on 10-09-2005 and seized various incriminating documents, cash and valuables. The investigation wing of the Income Tax Department subsequently initiated proceedings u/s. 132A of the Income Tax Act, 1961. As consequence of action u/s.132A conducted by the investigation wing of the Income Tax Department notices under section 153A were issued and served upon the assessee for A.Y. 2002-....
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....mate of profit of each of the copies. Howe3ver, he has to consider the cost which is narrated in reply to question number 9 by the appellant, which is Rs. 5 to 8 for blank copy, copying charges of Rs. 0.50, packing and label charges. Thus cost is Rs. 12 and sale price is about Rs. 16/-. This is specially explained in reply to question No.4. Thus, the estimate made by the A.O. itself is not correct. Having regard to the position on facts, the estimate made by the A.O. is not correct. He has to take into consideration the fact as recorded in the statement of the appellant dated 14-8-2007 recorded u/s. 131 (1A), wherein, in reply to question No.9 the appellant has started that he had produced 5 to 6 lacs CDs of video albums and the cost of each blank CD was around Rs. 8 and copying charges was about Rs. 0.50 and it was sold by him to Shiv Video at the rate of about Rs. 16 per copy. Similarly, in respect of the audio album, he had specifically stated that he had produced about 2 lakh copies and cost of each blank CD was about Rs. 8 to 9 and that such CDs were sold for Rs. 12 per CD. Nothing contrary is pointed out by the Assessing Officer. Considering the above facts, I do not ac....
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....he period during which the appellant has carried out this activity. As stated by the A.O. himself the business was started in January,2002 and, therefore, the Income during the A.Y. 2003-04 to 2004-05 is to be disturbed as under:- Assessment Year Amount (Rs.) 2003-04 3,73,600/- 2004-05 3,73,600/- 2005-06 8,50,000/- The A.O. is directed to recompute the income after taking into consideration the above figures." 5. For Assessment Year 2002-03, the CIT (A) deleted the entire addition of Rs. 2 lacs made by the Assessing Officer from the production and sale of video and audio business on the ground that the assessee started the business of production and sale of audio and video cassettes after 15-01-2002 and therefore, the probability of income from such business in A.Y. 2002-03 was negligible. CIT (A) therefore, allocated the profit from the business of production and sale of audio and video cassettes between the A.Y. 2003-04, 2004-05 and 2005-06. In A.Y.2002-03 the Assessing Officer has estimated the income of Rs. 1 lac from video shooting business which the assessee was carrying out at the relevant time. Assessee had disclosed the income from v....
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....of lower authorities. The CIT (A) has pointed out from the statement of the assessee that the estimate of the profit by the A.O. was excessive. The A.O. has not given any proper basis or justification for the estimation of profit from sale of each cassette by assessee. We find that the CIT (A) has referred to the statement of the assessee and has considered the cost of production of each video/audio cassettes, packing charges of each cassette and also the sale price and then estimated the profit at Rs. 5 per video cassettes and Rs. 3 per audio cassettes. After considering the facts of the case and the arguments of both the sides we are of the opinion that the estimate of income from production and sale of video /audio cassette by the CIT (A) is quite fair and reasonable. We therefore, uphold the same and reject the appeal filed by the assessee as well as Revenue on this count. 8. The next ground which is again common for Assessment Year 2002-03 to 2006-07 in assessee's appeal as well as in Revenue's appeal is with regard to the addition for low withdrawal of Household expenses. The figures of household expenditure disclosed by the assessee, estimated by the A.O. and by the CIT (....
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....ng the addition for less household expenditure. Accordingly, we direct the A.O. to work out the availability of the cash with the assessee and if the availability of cash is sufficient to incur the household expenditure as estimated above then no addition is to be made in respect of the household expenses. 11. There is no other ground in the assessee's appeal for A.Y. 2003- 04. However, for the Revenue's appeal for A.Y. 2003-04 there is one more ground which is with regard to deletion of the addition of Rs. 1,41,844/- made by the Assessing Officer u/s. 69 of the Income Tax Act. 12. We have heard both the parties and perused the material placed before us. The A.O. made the addition of Rs. 1,41,844/- for unexplained investment in the property in the name of Smt. Geetaben H. Parmar and Maniben Parmar. CIT (A|) deleted the addition with the following findings:- "6.2. I have considered the assessment order and the above submissions. The appellant has produced copy of balance sheet and Profit and Loss Account of Geetaben Parmar and Maniben Parmar, wherein, the investment in above property is reflected. The P.A. No. of these ladies is as under: Gitaben Parmar AOHPP 6393 J ....
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....e sheet of Gitaben, appellant's wife and hence there is no reason for considering the unexplained investment in the hands of the appellant, particularly when Gitaben has reflected such payments in her books and that she is being assessed with the same Ward. The addition of these two amounts is, therefore, not justified and is deleted. The A.O. may consider the facts in the case of Gitaben if he finds it necessary. The P.A. No. of Gitaben is already stated in the earlier para. Further, the following amounts are not reflecting any payment but it is in the nature of acknowledgement/welcome letter of the above said two policies as can be seen from the copies thereof submitted with the appellant's written submissions. As such, the same being not payment and only formal forwarding letter of policies referred to earlier and the same are directed to be deleted. Policy No. Amount Remarks 51102594 Rs.45,000/- It a welcome letter in respect of Policy No.00777446 of Samarth H. Parmar which is reflected in the books of Gitaben as discussed earlier. 51102592 Rs.45,000/- It a welcome letter in respect of Policy No.778503 of Tirth H. Parmar which is reflected in the b....
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....ed to the extent that there cannot be separate addition for the income as well as the application of income. He stated that year after year substantial business income is estimated and the acquisition of these business assets were only the application of those income by acquiring assets for the purpose of business. He therefore, submitted that if the funds are available out of the business income as finally assessed in the preceding years and in this year is sufficient to finance the asset then no separate addition can be made. The Ld. D.R. on the other hand relied upon the order of the authorities below and he stated that when the acquisition of these assets are not in dispute and the assessee is not able to explain the specific source for acquisition of each and every asset, the CIT (A) was fully justified in sustaining the addition. After considering the facts of the case and the arguments of both the sides we agree with the contention of the Ld. Counsel that the separate addition cannot be made for the income and application of such income. However, whether the enough cash is available for investment in those assets needs verification at the hand of the A.O. We therefore set as....
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....tion against the assessee and his wife Smt. Geetaben H. Parmar on 10-09-2005 and seized cash of Rs. 23,00,000/- and gold jewellery worth Rs. 8,50,609/-. The assessee vide show cause notice was requested to explain the source of seized cash and gold jewellery. In response to the same, M/s. Y.C. Anarkat & Associates, CAs., authorized representative of the assessee vide its letter dt. 27-11-2009 have tried to explain the jewellery seized by quoting CBDT's Instruction No.1916 dt. 11-05-1994. In this context, it needs to be mentioned that though in this instruction CBDT has taken sympathetic view towards the seizure of jewellery considering the status of family, customs and practices of their community etc. However, it does not mean that an element of concealed income involved therein not to be taxed and neither the CBDT has provided such explanation in this circular. The stand taken by the assessee is not sustainable and therefore, rejected. Accordingly, value of jewellery seized is brought to tax in assessee's hand amounting to Rs. 8,50,609/- u/s. 69A of the Income Tax Act,1961. Penalty proceedings u/s. 271(1)(c) of the Income Tax Act, 1961, are initiated for default committed with....
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....en cash flow statement, on the basis of income returned/assessed is prepared. In the earlier paras of the instant appellate order, the income from the video and audio album activities of the appellant has been determined at Rs. 36.00 lacs for A.Y. 2002-03 to 2006-07. In A.Y. 2006-07, the appellant has declared Rs. 19,25,000/- from video and audit album activities. Based on such estimates and considering the cash incoming/outgoing and investments, the Assessing Officer is directed that while giving effect to the instant appellate order, to prepare cash flow statement and then determine the unaccounted cash, if any. The cash available with other family members of the appellant on the basis of records should also be considered by the Assessing Officer, while doing this exercise. This issue is disposed of accordingly." 26. The total jewellery found with the assessee was 1064.650 gms. As per the instruction of the CBDT vide instruction No.1916, considering the members in the family jeweler upto 1400 gms should not be seized. This fact has not been disputed by the Revenue before us. But the only argument advanced by the Ld. D.R. was that above instruction of the CBDT was with regard t....
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.... the assessee's hands u/s.69 of the Income Tax Act,1961, are initiated for default committed within the meaning of that section." 28. The CIT (A) set aside this matter back to the file of Assessing Officer with the following finding:- "7.2. I have considered the assessment order and the above submissions. It is noticed that payment of Rs. 13,61,000/- comprises of 2 figures. The first amount is of Rs. 5,50,000/- for investment in shop as per the details given to the A.O. by the appellant and the second amount is of Rs. 8,11,000/- is on account of the investment on the basis of loose paper. The appellant has explained that the amount of Rs. 5,50,000/- is accounted in his books and reflected in the balance sheet. The source thereof is income disclosed/taxed over the period. It has been represented before me that the figure of Rs. 8,11,000/- included investment of Rs. 5,50,000/- and seized document relates to the same shop premises. The Assessing Officer is directed that while giving effect to the instant appellate order, verify this point and if it so, then restrict the addition to Rs. 2,61,000/- (Rs.8,11,000 - Rs. 5,50,000).The Assessing Officer is directed to pass a speaking o....
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....dy discussed this issue in assessee's own case for A.Y. 2002-03 to 2006-07. For the detailed discussion therein we hold that the household expenditure disclosed by the assessee was less considering the facts of the case and number of family members. In fact we have estimated the higher household expenditure than what is estimated by the CIT (A) in the immediately preceding year. However, as the Revenue is not in appeal, therefore, we uphold the order of CIT (A) in this regard and reject assessee's ground of appeal which was against the addition sustained for low household expenses. Smt. Geetaben H. Parmar. -A.Y. 2002-03 to 2008-09. 33. The only ground in the assessee's appeal/C.O. for all the years is against estimation of income from the business of production and sale of audio-video cassettes as well as video shooting. The Revenue has accepted the order of the CIT (A) in all the years except A.Y. 2005-06 and 2006-07. In these two years the Revenue has challenged the reduction of estimation by the CIT (A) in respect of income from business. The year-wise position of the income disclosed by the assessee, estimate made by the A.O. and the CITA (A) is as under:- Asstt.Year ....
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....gs, the assessee was specifically asked to furnish the details as well as clarification in respect of some calculation appearing on page No.130 of the Annexure A-5 seized during the course of search, with regard to purchase of property in the joint names ofSAmt. Maniben H. Parmar and Smt. Geetaben H. Parmar according to which the cost of the property was Rs. 10,01,000/-. The assessee has failed to furnish any explanation till date therefore the above transaction is considered as unexplained investments. Accordingly, penalty proceedings u/s. 271(1)(c ) of the Income Tax Act,1961 are initiated for committing default within the meaning of that section." 37. The CIT (A) deleted the addition with the following finding:- "5.2. I have considered the assessment order and the contentions of appellant. So far as addition ofRs.1,00,000/- is concerned, it is the contention of the appellant that it is reflected in balance sheet and that therefore, the source thereof is reflected in the books. Apart from this, the income shown by the appellant from year to year is adequate to make investment in such property. Hence, the addition of Rs. 1,00,000/- is not justified. The same is deleted. ....