TaxTMI 
TaxTMI 
2008 (8) TMI 914
X X X X Extracts X X X X
X X X X Extracts X X X X
.... been questioned by the Revenue in ITA No. 372/Jp/2007 (asst. yr. 1998-99) on the ground that the learned CIT(A) has erred in : "1. allowing the relief of Rs. 5,20,820 by determining the commission income at Rs. 86,832 by applying the rate of 1/3 of only 10 paise per hundred rupees of the turnover where the AO had rightly applied rate of 100 paise per hundred rupees turnover and had already allowed 50 paise per hundred turnover as expenses. 2. (a) holding that the assessee was only an introducer/facilitator for bogus billing and the owners of the primary and secondary concerns were not benamidars of Svs. Rakesh R. Purohit, Ramesh Chand Manihar and Manmohan Krishna Bagla but were engaged in issuing bogus bills on their own and not (on) behalf of the assessee, Ramesh Chand Manihar and Manmohan Krishna Bagla by ignoring statements/affidavits of the owners of primary and secondary concerns, their financial status, and the overall circumstances of the case. (b) holding that the statements recorded of the benamidars under s. 131 of the IT Act, 1961 during the assessment proceedings have no evidentiary value and therefore cannot be relied upon, though the assessee was provided the o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roceedings void ab initio. It is contended that the assessment order passed under s. 153A r/w ss. 153B and 143(3) of IT Act is bad in law, void ab initio and deserves to be annulled because the assessment is based on invalid and non est return. 2. confirming the addition of Rs. 51,649 on account of commission in bogus billings by holding that the assessee has acted as introducer/ broker in the bogus billings made by Shri Om Prakash Ghiya, Prop. M/s Anmol Ratan, Shri Mahesh Sharma Prop. M/s Tirupati Balaji Gems, Shri Gauri Shanker Pareek Prop. M/s Vinayak Overseas, M/s Naman Gems (P) Ltd. and Shri Umesh Saboo Prop. M/s Shruti Gems. 3. confirming the addition of Rs. 53,800 on account of disallowance out of petrol expenses, depreciation on car, and telephone expenses. 4. In the appeals filed by the Revenue and assessee for remaining assessment years ground Nos. 1 to 5 in Revenue's appeal and ground No. 2 in the assessee's appeal is common and the only difference is of the amount deleted by learned CIT(A)/sustained by learned CIT(A). Facts and issue being common in all the assessment years, therefore for the sake of convenience and also to avoid repetition, these grounds a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... issue of bogus purchase bills @ Rs. 0.50 per hundred. 6.2 On the basis of the reasons mentioned in paras A to R at pp. 9 to 10 of assessment order for asst. yr. 2000-01, the AO held that Shri Umesh Saboo, Shri O.P. Ghiya, Shri Mahesh Sharma, Shri Mahesh Khandelwal, Shri Mohan Prakash Sharma, Shri Gauri Shanker Pareek, and Shri Raghuvar Dayal Pareek were benamidar of the assessee, and his partners Shri Manmohan Krishna Bagla and Shri Ramesh Chand Manihar (Maheshwari) and the business concerns in the name of these persons and M/s Naman Gems (P) Ltd. were actually managed and controlled by the assessee and his partners, Shri Manmohan Krishna Bagla and Shri Ramesh Chand Maheshwari. The learned AO held that the above said business concerns in the name of the above said benami persons were benami concerns of the assessee and his partner Shri Manmohan Krishna Bagla and Ramesh Chand Maheshwari (Manihar). However, the AO has treated Shri Sanjay Pareek (Prop. M/s Mine O Gems) and Shri Ram Ratan Patwari as independent persons. 6.3 1/3rd income determined in the following cases except M/s Vinayak Overseas (Prop. Shri Gauri Shanker Pareek) have been taxed in respective assessment years in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1,649 86,832 1,98,377 2,40,710 2,75,081 5,41,152 2,15,807 7. The Revenue is in appeal against the additions deleted by the learned CIT(A) and the assessee is in appeal against the additions sustained by learned CIT(A). 8. The learned Departmental Representative vehemently argued the case and submitted that these business concerns were involved in the issue of bogus purchase bills. During the course of search and seizure operations over Mittal Gems and Sanjeev Prakashan Group, the Department found that M/s Anmol Ratna, M/s Shruti Gems, M/s Tirupati Balaji Gems, M/s Vinayak Overseas, M/s Naman Gems, M/s Ram Ratan Patwari and M/s Mine O Gems have issued purchase bills of gemstones in the name of M/s Mittal Gems. The statement of Anand Shanker Mittal recorded by search party revealed that these concerns have issued bogus purchase bills to M/s Mittal Gems. The proprietors/directors of these business concerns were men of little means and were not in position to make the transactions worth of crores of rupees. The learned Departmental Representative submitted that these concerns have issued bogus bills to several other beneficiary parties. The learned Departmental Represen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Shri Manmohan Krishna Bagla and they were working under the instruction and control of these persons and business concerns in their names were benami concerns of Shri Rakesh R. Purohit, Shri Ramesh Chand Maheshwari and Shri Manmohan Krishna Bagla. Further, the AO has given opportunity to the assessee and his partners for cross-examination, which was not availed by them. These statements are acceptable evidence under the Evidence Act and cannot be ignored specially when Shri Umesh Kumar Saboo, Shri Mahesh Sharma, Shri Raghuvar Dayal Pareek, Mohan Prakash Sharma, O.P. Ghiya who were different persons gave statements and affidavits disclosing the persons controlling the business activities of their concerns/company which indicates that they were telling truth and were simply benamidars and the circumstantial evidences were thus against the assessee and his associates as per the decision of Supreme Court in the case of Smt. Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124: (1995) 214 ITR 801(SC) and CIT vs. Durga Prasad More 1973 CTR (SC) 500: (1971) 82 ITR 540(SC). As regards the statement of these persons recorded by Investigation Wing, the learned Departmental Representative submitted t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....been in two states of mind and was not sure as to whether the income had actually gone to the assessee or not. Such double state of mind is not permissible in judicial parlance. The AO was in the state of "to-be" or "not-to-be" and therefore proceeded to make such additions half-heartedly knowingly well that the assessee and his partners cannot be held as real owner of the business concerns owned by the alleged benami persons in absence of documentary evidence and the Department has no material to discharge its onus. In such fluid state of mind, the additions made in the hands of assessee are bad in law and deserve to be deleted. The learned Authorised Representative submitted further that the onus is on the Department to prove that owner of the primary and secondary concerns were benami of the assessee and his associates. To hold a person as benami of another, one ought to have concrete evidences in contrast to sheer presumptions and suspicion and in such cases initial burden lies on Revenue. The learned AO failed to appreciate the facts, evidence and the tests laid down by apex Court and High Court. The learned Authorised Representative submitted further that the AO has held Nama....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se, the cross-examination to these person would not serve any purpose specially when the AO has not provided the copy of the regular returns, copy of bank statements and copy of demat account of these persons. The learned Authorised Representative submitted that these persons were not independent persons but they themselves were charge of guilty and they made the statements in self-interest with a motive to shift the guilt. Further, these persons were not men of veracity. They have stated something before the Investigation Wing/Custom Department and something else before the AO. The credit of these persons was shaken and impeached and their statements before the AO are not admissible as evidence. The facts as stated by the alleged benami persons in their statements/affidavit before the AO during the course of assessment proceedings were factually incorrect. In the statement they deposed that they were benami of the assessee and his associates and bogus purchase bills were issued in the alleged benami concerns owned by them whereas it is evident from the document that they were real and beneficial owner of these concerns. Thus their deposition before the AO was patently incorrect. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....., 2005 (paper book p. 432) he stated that his present income from brokerage business is about Rs. 80,000. In answer to question No. 9 of statement dt. 3rd March, 2006, he stated his income from brokerage is about Rs. 3,500 per month. (paper book p. 444). (iii) In answer to question No. 7, he said that the real owner of M/s Shruti Gems were Shri Rakesh R. Purohit, Shri Ramesh Manihar and Shri Manmohan Krishna Bagla (paper book p. 433); and in answer to question No. 8, he said that he knows nothing about the working of M/s Shruti Gems. Shri Umesh Saboo in his statement dt. 30th June, 2003, in answer to question No. 5 (paper book p. 192) said that he started the business concern M/s Shruti Gems; in answer to question No. 7 (paper book p. 193), he said he was owner of M/s Shruti Gems; in answer to question No. 13 (paper book p. 194) he said that the key of the office of M/s Shruti Gems remains with him and he used to open the office of M/s Shruti Gems, and all the workings of this firm were looked after by himself. In answer to question No. 15, (paper book p. 195) he stated in detail the working of the said firm, he stated complete process of purchases in the said firm; in answer to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....falsus in omnibus as propounded by the Hon'ble Calcutta High Court in the case of Amal Kumar Chakraborty (supra), such statements were irrelevant and immaterial and cannot be relied upon. Hon'ble Calcutta High Court has held that the dictum falsus in uno falsus in omnibus is sound principle to apply in taxation when the matter is finding of fact on the basis of the statement. 9.1 The learned Authorised Representative submitted further that investment in 5,90,000 shares of Gaytri Shakti Paper Board Ltd. of Rs. 59,00,000 by Shri Umesh Saboo out the funds of M/s Shruti Gems was considered as explained investment by the AO in the hands of Shri Umesh Saboo. The balance sheet of M/s Shruti Gems for asst. yr. 2002-03, (paper book p. 487) reveals the investment of Rs. 36,00,000 in the name of Agrashakti Paper Mills, Rs. 35,00,000 in the name of Kiren Ben Shah, Rs. 15,00,000 in the name of Ridhi S. Shah and Rs. 5,00,000 in the name of Mr. Siddharth S. Shah. The balance sheet of M/s Shruti Gems for asst. yr. 2003-04 (paper book p. 462) reveals investment in shares Rs. 95,00,000. Thus, the break-up of investment in shares can be seen as under : Name of company Asst. yr. 2002-03 As....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5.03.13 at pp. 75-76 of his order. After the completion of the assessment under s. 153A, Shri Mohan Prakash Sharma has filed his return for asst. yr. 2005-06 on 7th June, 2006 (paper book pp. 502-519), and in this return he has shown himself as proprietor of Shri Ambika Impex. 9.4 As regard M/s Naman Gems (P) Ltd. learned Authorised Representative submitted that after the search, the annual accounts of M/s Naman Gems (P) Ltd. were signed by Shri Om Prakash Ghiya and Shri Mahesh Khandelwal in the capacity of director (paper book pp. 524-536). The learned CIT(A) after appraising the facts has rejected the statements/affidavits filed by its directors and has held that M/s Naman Gems (P) Ltd. is an independent company and was not benami company of the assessee group. The directors of this company have accepted the decision of the learned CIT(A) and have not filed appeal against the order of learned CIT(A). Thus, the decision of learned CIT(A) has reached at finality on the issue of benami of M/s Naman Gems (P) Ltd. 9.5 As regard Shri Gauri Shanker Pareek Prop. of M/s Vinayak Overseas, the learned Authorised Representative submitted that the learned CIT(A) after appraising the facts h....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 101, Navjeevan Chambers, Vinoba Marg, C-Scheme, Jaipur, which was never occupied, owned and possessed by Shri Ramesh Chand Manihar. In para 4, he states about physical handling of goods whereas in previous statement he said bogus billing in the firm. Thus, the affidavit filed by Shri Mahesh Sharma cannot be relied upon. Therefore, going by the principle of falsus in uno falsus in omnibus as propounded by the Hon'ble Calcutta High Court in the case of Amal Kumar Chakraborty (supra), such statements in the affidavit were irrelevant and immaterial and cannot be relied upon. 9.8 As regard Shri Raghuvar Dayal Pareek proprietor of secondary concerns the learned Authorised Representative submitted that the learned CIT(A) after appraising the facts has rejected the statements/affidavits filed by Shri Raghuvar Dayal Pareek and has held that secondary concerns namely Nawal Enterprises, M/s Oskar Diam, M/s Shiv Enterprises, etc are independent business concerns of Shri Raghuvar Dayal Pareek and these concerns were not benami concerns of the assessee group. Shri Raghuvar Dayal Pareek has accepted the decision of the learned CIT(A) and has not filed appeal against the order of learned CIT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....person of good financial position would not involve in such type of business. 9.12 The learned Authorised Representative further submitted that Naman Gems (P) Ltd. is a company incorporated under the Companies Act. From the order of learned CIT(A) it appears that this company was incorporated by Shri Om Prakash Ghiya and Shri Mahesh Khandelwal in assr. yr. 2002-03. This company was not in existence in asst. yr. 1998-99. Therefore, on the basis of the address on the bank account at Mumbai, the owners of primary and secondary concerns cannot be held as benami of the assessee. The registered office of the above named company is situated at 74, Bhatto Ki Gali, opposite Hawa Mahal, Jaipur and the assessee and his associates are not concerned with this premise. Similarly, the assessee or his associates are not concerned with the address of other primary and secondary concerns. Naman Gems (P) Ltd. was never operated from 16, Girgaum Terrace, Dr. DD Sathe Marg, Opera House, Mumbai nor it was place of business of Naman Gems (P) Ltd. Admittedly, no activity of this company was operated from the above mentioned address. The above address was given by someone else without the consent and appr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ami persons is relative of the assessee or his associates within the definition of relative given under IT Act and even within wider definition of relative given under the Companies Act. The learned Authorised Representative submitted that the circumstantial evidences are also in favour of the assessee. The Department has carried out intensive search operations over the assessee and no document belonging to the alleged benami concerns was found from the possession and control of the assessee. It has been alleged that the owner of the primary and secondary concerns signed blank cheque book which was used by the assessee but on search no such cheque books were found; even counter-folios of the used cheque books were not found. It was alleged that the assessee was issuing the bogus purchase bills but neither blank bill book nor used bill books of these concerns were found from the possession of the assessee. Further, the Department has investigated the case of several parties who purchased goods from these concerns and Department alleged that these parties have taken bogus purchase bills from these concerns. But none of these parties have said that the assessee or his associates was o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng that the assessee or his partners introduced some entry taker persons who wanted bills of purchase and might have earned commission of Rs. 0.10 per hundred. The Department has completed the assessment of several persons who brought the gemstones from M/s Shruti Gems, M/s Anmol Ratan and others and none of them have said that the assessee or his partners have introduced them or acted as middle men. The learned Authorised Representative prayed that the addition confirmed by learned CIT(A) deserves to be deleted. The learned Authorised Representative relied upon the following decisions in support of his contentions : (i) Sri Krishna vs. CIT (1983) 36 CTR (All) 75 : (1983) 142 ITR 618 (All); (ii) Amal Kumar Chakraborty vs. CIT (supra); (iii) CIT vs. Daulatram Rawatmull 1972 CTR (SC) 411 : (1973) 87 ITR 349 (SC); (iv) Jaydayal Poddar vs. Bibi Hazra AIR 1974 SC 171; (v) Prakash Narain vs. CIT (1981) 20 CTR (All) 147 : (1982) 134 ITR 364 (All); (vi) Lal Chand Agarwal vs. Asstt. CIT 21 Tax World 213 (Jp); (vii) ITO vs. Shree Ladani Family Trust 21 Tax World 351 (Jp); (viii) Dy. CIT vs. PSM Family Trust 21 Tax World 553; (ix) Ravi Mathur & Ors. vs. Asstt. CIT 22 Tax Wor....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under s. 108 of Customs Act, wherein he has admitted that he is owner of M/s Shruti Gems. Of course the AO was right in his observation that the statements given before the customs authorities are not binding to him under the income-tax proceedings but it is also correct to say that those statements recorded by another authority of the Government of India cannot be totally ignored without having adverse material with the AO to disbelieve the same. The learned AO has completely disregarded the statements of Shri Umesh Saboo and his family members, Shri Om Prakash Ghiya, Shri Mohan Prakash Sharma, before the search party and statements of Shri Umesh Saboo and Shri Gauri Shanker Pareek before the customs authorities without having any adverse documentary evidence. Further, the AO has relied upon the statements made/affidavit filed before him by the alleged benami persons without verifying the truth in the statements specially when these persons have alleged in the statements before the AO that the assessee and his partners were keeping and using their blank signed cheque book and the Department has not found any such cheque book or any other documents relating to these alleged benami....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o or in the hands of any other person. We also noticed from this demat account that Shri Umesh Saboo has received shares of Reliance Petroleum Ltd. on 5th May, 2006 in allotment under public issue. Therefore, it cannot be held that this demat account was opened and operated by the assessee and his associates by any stretch of imagination. The AO has completely ignored the regular returns filed by these alleged benami persons, wherein they have declared themselves as owner of their concerns. These persons have signed the IT returns and audited annual accounts, which cannot be disregarded merely on the self-serving statement. After the search, these persons have submitted their returns under s. 153A of IT Act, wherein they have also not denied their ownership over their concern. The bank account and demat account remained in operations much after the search. The learned CIT(A) has discussed the position of their returns and financial positions at pp. 61-74 of his order and we noticed that Shri Mohan Prakash owned two cars and paying more than Rs. 1 lac in LIC. Shri Om Prakash Ghiya and Shri Umesh Saboo have also car. Shri Umesh Saboo was paying instalment of the loan against car out ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ank account/demat account by the alleged benamidar before and after the search and filing of the returns before and after the search by alleged benamidar and various case laws and we fully agree with these and uphold the findings of learned CIT(A) that the contemporary evidence which are in the form of statement recorded by search party under s. 132(4)/131 and statements recorded under the customs authorities clearly speak that the alleged benamidars were acting for themselves. No corroborative evidence was brought on record to prove that the business concerns belonging to these alleged benamidars were funded, managed and controlled by the assessee or his associates and they are the beneficial owner of these concerns. Under the above facts and circumstances we are of the view that there was no sufficient material or evidence before the AO to come to the conclusion that Shri Umesh Saboo, Shri O.P. Ghiya, Shri Mahesh Sharma, Shri Mohan Prakash Sharma, Naman Gems (P) Ltd., Shri Gauri Shanker Pareek, Shri Mahesh Khandelwal, and Shri Raghuvar Dayal Pareek were benamidar of the assessee and his partners, Manmohan Krishna Bagla and Shri Ramesh Chand Maheshwari and the assessee and his par....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e AO. The learned Authorised Representative submitted that the books of account were audited by chartered accountant and audit report was filed along with the regular return under s. 139. The auditors examined the books of account much before the date of search. The audit report is evidence and should be accepted. The learned Authorised Representative placed reliance on the decision of Delhi High Court in the case of Addl. CIT vs. Jay Engineering Works Ltd. (1978) 113 ITR 389(Del), 391-2. The learned Authorised Representative further submitted that the Department has carried out search and no evidence was found that the assessee is suppressing the sales or GP of M/s Lalluji & Co. The estimation of the AO is nothing but wild guess, which cannot be sustained. Even if the books of account are rejected and estimation is made, the estimation should be fair and in logical manner. 14. Considering the above submissions of the parties, we find substance in the contention of the learned Authorised Representative. We find that the Department has carried out search operations and no material was found to show that the assessee has suppressed the profit or sales. The AO estimated the profit wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....action totalling to Rs. 3,15,25,000 which was divided equally in the hands of Shri Rakesh R. Purohit, Shri Ramesh Chand Maheshwari and Shri Manmohan Krishna Bagla and the AO has rightly made the addition of Rs. 1,05,08,334 being 1/3rd of Rs. 3,15,25,000 in the hands of the assessee and therefore the order of the learned CIT(A) in this regard should be set aside and the addition made by the AO should be upheld. On the other hand the learned Authorised Representative submitted that the AO has wrongly held that the assessee has made unexplained investment in shares and earned commission in sham share transaction. Under s. 69, the first onus was on the AO to show that the assessee has made investment. In s. 69, the words used are 'the assessee has made investments which are not recorded in the books of account'. In this connection, it is submitted that the AO has to record a finding that the assessee has made investment and therefore, such investment is to be proved by the Department. In such a situation rule of evidence would apply and the rule of presumption cannot be applied for the basic foundation or say that there cannot be a further fiction on a fiction. Further, what be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appeal filed by the Revenue and the Department has no material to hold that these persons were benamidar of the assessee and his partners. Further the AO himself has considered the share transaction as sham share transaction then question of investment in the shares cannot arise. The learned Authorised Representative submitted that the addition is not based on evidence or material but on surmises and conjectures. Suspicion howsoever strong cannot take the place of proof. The learned Authorised Representative submitted that these shares were neither transferred in the name of the assessee or his partners nor credited in the demat account of the assessee or his partners. Further, the AO himself considered the share transaction of Rs. 59 lacs made by Shri Umesh Saboo of the same company in asst. yr. 2002-03 and asst. yr. 2003-04 as explained in the hands of Shri Umesh Saboo. The learned Authorised Representative drew our attention towards the demat account of Shri Umesh Saboo, which was opened on 30th Oct., 2003 (after the search) (paper book p. 269) wherein the shares of Gaytri Shakti Paper Board were transacted on 3rd March, 2005 (paper book p. 270). In the same demat account the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order for asst. yr. 1998-99 after considering the search statement of Shri O.P. Ghiya and seized documents marked Annexs. AA26 and AA28. Shri O.P. Ghiya in search statements has categorically said that the share transactions in the shares of Gaytri Shakti Papers Boards Ltd. is an accommodation entry. The Annex. AA26 which is share file of Anmol Ratan shows that M/s Anmol Ratan purchased shares of Rs. 3.35 crores, out of which transactions of Rs. 20 lakhs relates to asst. yr. 2002-03 and Rs. 3.05 crores relates to asst. yr. 2003-04. The seized documents AA28 shows that Agarwal family of Mumbai purchased the shares worth Rs. 3.05 crores for Rs. 74,50,000 from Shri O.P. Ghiya. The AO has not brought any material to show that the Annexs. AA26 and AA28 were seized from the possession and control of the assessee. We have already held under ground Nos. 1 to 5 of the appeal filed by the Revenue that there was no sufficient material or evidence before the AO to come to the conclusion that Shri Umesh Saboo, Shri O.P. Ghiya, Shri Mahesh Sharma, Shri Mohan Prakash Sharma, M/s Naman Gems (P) Ltd., Shri Gauri Shanker Pareek, Shri Mahesh Khandelwal, and Shri Raghuvar Dayal Pareek were benamidar o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see Treated as unexplained by the AO Gold jewellery grams Silver items grams Gold jewellery grams Silver items grams Smt. Mandakani 502.160 2000 502.160 0 Smt. Sweta Purohit 498.400 2000 498.400 0 Ancestral belonging to late mother of assessee 699.620 4000 699.620 4000 Total 1700.18 4000 The learned AO made addition of Rs. 5,49,270 on account of unexplained jewellery belonging to Smt. Mandakani Purohit and Smt. Sweta Purohit, daughters-in-law of assessee and made an addition of Rs. 3,84,091 and Rs. 32,000 on account of unexplained gold jewellery and silver items respectively totalling to Rs. 4,16,091 on account of unexplained jewellery and silver articles belonging to Smt. Ram Janki Devi, late mother of assessee. The learned CIT(A) deleted the addition on account of jewellery belonging to late mother of the assessee on the basis of jewellery declared in WT return and ratio laid down by Hon'ble Tribunal Jaipur Bench in the case of Ashok Kumar Kataria vs. Dy. CIT IT(SS)A No. 48/Jp/2001 [reported at (2002) 75 TTJ (Jp) 392'Ed.] and treated the jewellery belonging to Smt. Mandakani Purohit and Smt. Sweta Purohit explained r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....paper book pp. 114-115 wherein the assessee has stated on oath that his mother expired on 8th June, 1998 and at the time of her death, he was only her living son and her entire jewellery was passed to him. The contents of affidavits, which are not vague should be accepted correct. As regard silver articles of 4000 gms., the learned Authorised Representative submitted that the father of the assessee late Shri Ram Prasad Ji was Jagirdar of Village Badhbaughpura Tehsil Chaksu. The father of the assessee was very rich and reputed person. On the death of the father of the assessee, the assessee received silver items by inheritance. In support of his contention, the assessee filed sworn affidavit. The claim of the assessee is very reasonable looking into the status of the family of the assessee and deserves to be accepted. As regard jewellery belonging to Smt. Mandakani Purohit and Smt. Sweta Purohit, the learned Authorised Representative submitted that the assessee explained 502.10 gms. and 498.400 gms. jewellery belonging to Smt. Mandakani Purohit and Smt. Sweta Purohit (daughters-in-law), respectively. In support of the claim, the assessee filed sworn affidavits of Smt. Mandakani Puro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the assessee has made investment in the jewellery belonging to daughters-in-law. The learned Authorised Representative relied upon the findings made by learned CIT(A) in his order at pp. 11-13 and prayed that the findings of learned CIT(A) should be upheld. The learned Authorised Representative placed reliance on the following decisions in support of his contention : (i) Mehta Parikh & Co vs. CIT (1956) 30 ITR 181 (SC); (ii) Dilip Kumar Rao vs. CIT (1974) 94 ITR 1 (Bom); (iii) Malwa Knitting Works vs. CIT (1977) 107 ITR 379 (MP); (iv) Sri Krishna vs. CIT (supra); (v) Smt. Pati Devi vs. ITO & Anr. (2000) 159 CTR (Kar) 28 : (1999) 240 ITR 727 (Kar); (vi) Navratan Duggar vs. Dy. CIT [IT(SS)A No. 1/Jp/2000]; (vii) Kanak Chand Jain vs. Dy. CIT 27 Tax World 377 (Jp); (viii) Todarmal Mishra vs. Asstt. CIT 24 Tax World 88 (Jp); (ix) Kailash Chand Sharma vs. Dy. CIT 25 Tax World 349 (Jp); (x) Smt. Neena Syal vs. Asstt. CIT (2000) 69 TTJ (Chd) 516 : (1999) 70 ITD 62 (Chd); (xi) Dr. (Mrs.) Kamlesh Datta vs. Asstt. CIT (1999) 65 TTJ (Chd)(TM) 222: (1999) 69 ITD 218(Chd)(TM). 19. After considering the above, we find substance in the contention of learned Authorised Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ry from time-to-time on the old jewellery. Further the claim of the assessee for 4,000 gms. silver items as ancestral is very reasonable. Therefore, in the circumstances and facts of the case, the AO was not justified in making addition of Rs. 4,16,091 on account of the jewellery and silver articles explained by the assessee as belonging to his late mother Smt. Ram Janki and learned CIT(A) has rightly deleted the addition. 20. The next issue is with regard to jewellery of 502.160 gms. and 498.400 gms. explained by the assessee as belonging to his daughters-in-law, Smt. Mandakani Purohit and Smt. Sweta Purohit. The assessee has filed sworn affidavits of Smt. Mandakani Purohit and Smt. Sweta Purohit in support of their claim. The AO has not controverted the contents of the affidavits. It is undisputed fact that the jewellery weighing 335.504 gms. (net) was found from the bedroom of Smt. Sweta Purohit and jewellery of 382.00 gms. (net) was found from the locker of Smt. Sweta Purohit and the jewellery of 414.032 (net) gms. was found from the possession of Smt. Mandakani Purohit. Thus, the search party found jewellery weighing 1131.536 gms. from the possession of these two ladies. We a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... statements. Later, the books of account were prepared on the basis of bank statements and seized records and correct position of the cash was computed on the basis of documents. It was contended that the oral statement cannot supersede the documents. Reliance was placed in this regard on several decisions referred by the first appellate authority in his order. The decision of Jaipur Bench of Tribunal in the case of Rajendra Kumar Kedia vs. Dy. CIT 22 Tax World 506 (Jp) on the issue was also cited, wherein it has been held that where the books of account are not properly maintained, the same could be subsequently prepared and recasted on the basis of his bank statements, vouchers and other related documents of the sales and purchases which could be relied upon for the purpose of making the income-tax assessment. The learned Authorised Representative also brought to our notice that Departmental appeal in the case of wife of the assessee Smt. Sneh Purohit has been decided by Tribunal Jaipur Bench on 27th July, 2007 in ITA No. 186/Jp/2007 wherein Tribunal Jaipur Bench has confirmed the findings of learned CIT(A) by holding that learned CIT(A) has rightly deleted the addition on accoun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of the expenses. The Revenue has also questioned the deletion of disallowance of expenses under ground No. 7 in ITA No. 377/Jp/2007 (asst yr. 2003-04) and under ground Nos. 6, 7, and 8 in ITA No. 378/Jp/2007 (asst. yr. 2004-05). Beings facts and issue being more and less common, therefore for the sake of convenience and also to avoid repetition, these grounds are decided simultaneously 27. The AO disallowed the expenses as under : Asst. yr. 1998-99 1. Rs. 7,800 Disallowed out of total petrol expenses @ 2. Rs. 10,210 Disallowance out of depreciation on car @ 1/4 3. Rs. 35,790 Disallowed out of telephone expenses @ 1/5 Asst. yr. 1999-2000 1. Rs. 9,458 Disallowed out of total petrol expenses @ 1/4 2. Rs. 8,168 Disallowance out of depreciation on car @ 3. Rs. 31,383 Disallowed out of telephone expenses @ Asst. yr. 2000-01 1. Rs. 19,007 Disallowed out of telephone expenses @ 1/5 2. Rs. 3,012 Disallowed out of total car expenses @ 1/4 Asst. yr. 2001-02 1. Rs. 30,863 Disallowed out of telephone expenses @ 1/5 Asst. yr. 2003-04 Nature of expenses disallowed Amount disallowed by AO Deleted by CIT(A) (under appeal by Reven....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s wrongly disallowed Rs. 1,52,770 in respect of the interest on car loan without appreciating the fact that the assessee himself has disallowed this expense in the return filed by him, and considering this fact the learned CIT(A) has rightly deleted this addition. The expenses of the Bombay office cannot be disallowed merely on the ground that the assessee has not made any sale in the Bombay office. The explanation of the assessee that due to slump in the market, the assessee could not obtain the orders, the business of the assessee was not closed but he could not obtain the profit making orders and the assessee remained busy in attending the office of Dy. Director of IT and other authorities due to search during the year and the business of the assessee remained unattended and the clients shifted to other parties cannot be brushed aside without giving any adverse material against the assessee. For other expenses like car petrol, car insurance, interest on car loan, depreciation on car, we find the disallowance is at higher side. We thus, while setting aside orders of the lower authorities in this regard, direct the AO to restrict the disallowance upto 10 per cent of the total expe....