TaxTMI 
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2011 (4) TMI 1366
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....g decided by this consolidated order. 3. Rival contentions have been heard and records perused. 4. The facts, in brief, are that the assessee Shri Kulwant Singh is an individual mainly engaged in business of petrol pump in his proprietorship capacity under the name and style of M/s. Janta Sales and Service. In addition to income from petrol pump, the assessee also derives income from truck plying which was declared on presumptive basis and also agricultural income and income from house property. The assessee was regularly filing return wherein aforesaid income was disclosed in the return of respective years and tax was also paid thereon. A search was undertaken on the business and residential premises of the assessee on 02-11-2004, which was concluded on 04-11-2004. No incriminating material or evidence was found during the course of search or thereafter. Similarly, no undisclosed or disproportionate moveable/immovable assets were found during the course of search or thereafter. However, during the course of search, a sum of ₹ 70,00,000/- was surrendered by the assessee, from which he subsequently retracted on 18-11-2004 by filing an affidavit before Investigation Wing, as ....
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....hri Hot hand ₹ 108343/- Undisclosed income deposited in the SB A/c. Of Allahabad Bank ₹ 32557/- Unexplained Deposit in SB A/c. No.3494 in the Name of Shri Harbinder Singh Rs. 20000/- Undisclosed deposit with Smt. Satinder Kaur ₹ 128000/- Addition on account of Gross Profit ₹ 146382/- Addition on account of Evaporation expenses ₹ 40,000/- Total Income ₹ 2108591 Less : Income declared u/s 153A ₹ 20,000/- Assessed Income ₹ 2088591 Similar additions were made in the assessment years 2000-01 to 2005-06, part of such additions were deleted by the ld. CIT(A) against which revenue is in appeal before us and assessee had also filed cross objections. 5. First addition of ₹ 1,22,153/- was made by the Assessing Officer on account of investment in plot No. B-3 in the name of daughter Smt. Kulpreet Kaur. However, this addition was made on protective basis in the hands of the assessee. Substantive addition was made in the hands of Smt. Kuldeep Kaur. Relevant facts are that Smt. Kuldeep Kaur is daughter of the assessee, who purchased one plot No. B-3, Nehru Nagar, Bhopal, for ₹ 3,07,481/- on 31st March, 1999. It was pu....
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....essment proceedings simultaneously taken by him. No evidence/material was found during the course of search evidencing that the investment in the said plot was not assessee's fund, nor the AO brought on record a corroborative evidence/material to support his allegation. Hence the AO has failed in discharging basic requirement of law and, therefore, no addition can be made on the basis of suspicion, probability and surmises. It is needless to add that if the AO wanted to treat investment by his daughter as benami of the assessee, even then the allegation of the AO has no legs to stand because as held in the case of CIT Vs. Daulatram Rawatmal 87 ITR 349 (SC) that it is for the department to prove the same. It was propounded in this case that "Personal presumption, imagination and suspicion has no sanction of law unless some evidence is brought on record to prove beyond doubt that the money belong to someone else and not in the name of a person in whose name it has been kept and deposited." The latest decisions that followed the above proposition of law are ITO Vs. Sumer Singh Patel (2004) 2 ITJ 22 (Jabalpur ITAT) and B.D. Gupta Vs. DCIT (2004) 32 ITC 351 (Agra ITAT). Al....
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....milar addition had been made by the Assessing Officer on substantive basis u/s 153C in the hands of assessee's daughter Kulpreet Kaur. Hence, no addition was warranted in the hands of the assessee, because it will amount to double taxation of the income. Even on merit, we do not find any justification for such addition in the hands of Smt. Kuldeep Kaur in so far as even before the date of search, Smt. Kuldeep Kaur had already filed return of income, wherein investment made in the plot in the respective years vis-à-vis source of income to acquire the same was already disclosed and nothing incriminating was found during course of search to indicate that plot was owned by the assessee or that the money used to acquire the same was given by the assessee. Nowhere the AO has brought any material to conclude that the investment in the plot was from the assessee's funds. Accordingly, we do not find any merit in the addition of ₹ 1,22,153/-, which was wrongly mentioned in place of ₹ 1,07,481/- in the computation part of AO's order. 8. Next issue relates to addition on account of agricultural income at ₹ 69,000/-. 9. In this regard, we found that the assessee decla....
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....agricultural land situated at different places and the same was offered in earlier years. In the return of income filed with the Department which were duly accepted by the Department. We found that there was scrutiny assessment for the assessment year 2001-02, wherein after making detailed inquiry, the AO has accepted agricultural income of ₹ 1 lakh declared by the assessee by categorically stating as under :- "Agricultural Income-During the year under consideration the assessee has shown agriculture income of ₹ 1,00,000/-. It was stated by the assessee that he is having 16 acres of the agricultural land and crops so produced were sold to the nearby villagers. The assessee was asked to furnish details regarding agricultural income such as receipt of sale of agriculture produce, evidence of ownership of agricultural land, bills and vouchers for verification. The information so called were furnished by assessee and was found correct therefore, the agriculture income as shown by assessee appears to be reasonable and accepted." 12. We also found that the assessee has even furnished before the AO form No. P2-II evidencing agricultural operations on the land own....
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....see had shown opening cash balance of ₹ 2.50 lakhs as on 1st April, 1996. However, the AO did not accept the same. This opening balance was out of the income earned by the assessee in earlier years out of his agricultural sources, rental income and income from truck plying. Keeping in view the range of income being earned out of aforesaid sources, we do not find anything wrong in taking the opening cash balance of ₹ 2.50 lakhs in his cash flow statement. The objection of the AO was that on the one hand, the assessee is claiming expenditure on truck plying to have benefit of presumptive taxation u/s 44AE and simultaneously, the same amount was meant for truck expenses have been incorporated in the so called cash book and cash flow statement in order to explain un-accounted deposits in the various bank account. The amount shown as deposit in the cash flow statement was out of truck plying receipt from BPCL and were deposited initially in the S. B. Account No. 0105006175 in S.B.I.Bairagarh in the name of Janta Transport and all the receipts were so checked, hence, there was no unaccounted deposit in the bank. No where the AO had pointed out any instance of deposit, which i....
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....repare and submit before the AO the source of investment as asked by the Assessing Officer. Only if the AO found that such sources do not exist, he has all the rights to treat such investment as unexplained. In the instant case, at the time of framing the assessment, the AO asked regarding source of deposit in the Bank account of the assessee and other family members and some of the investments made by the assessee. To explain the source of these deposits, the assessee prepared a cash flow statement to indicate availability of cash which has been utilized for deposit in various Bank accounts and making investment. With regard to the queries raised by the Assessing Officer, the assessee has fully replied and the ld. CIT(A) has properly dealt with all the queries and observations of the AO, which has been met out by the assessee in the written submissions filed before him. We also found that the income other than from petrol pump available with the assessee and the income representing the impugned cash was duly offered for taxation in respect of assessment year and was accepted by the Department. The ld. CIT(A) also observed that fundamental fact of availability of cash that the asse....
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.... BPCL and, hence, the same is not the income of the assessee. Thus, it was found by the ld. CIT(A) that the assessee had sufficient cash/income available with him to explain various deposits(investment) expenditure. This finding of CIT(A) is as per material on record, accordingly, no interference is required therein. However, this cash flow statement has been referred by the assessee to explain deposit in bank account in all the years under consideration. Accordingly, ground taken by the Revenue with this regard, are dismissed in all the years under consideration. 16. In the assessment year 2000-01, the Revenue is also aggrieved for deletion of addition of ₹ 4,97,350/- on account of investment in the name of Gurudev Singh. In this regard, we found that during the course of search and seizure operation it was found that the assessee had purchased a plot measuring 8700 sq.ft. at One Tree Hill, Bairagarh, on 01.09.1997. In the above plot the major portion i.e. 5700 sq.ft., was in the name of Shri Gurudev Singh, father-in-law of the assessee. It was stated by the assessee that Shri Gurudev Singh is around 80 years old and living at Ludhiana. A Sale Agreement of the above plot @ ....
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....ning cash & bank balances and withdrawals from banks, receipt of money from somebody etc., other than current year's income. He miserably failed to understand that while considering availability of funds for household expenses, the total availability of cash with reference to cash flow statement has to be seen and not the sum total of current year's income alone, as wrongly taken by the AO. Thus, since the AO has not pointed out any such deficiency in availability of cash based on the cash flow statement, the peculiar methodology adopted by the AO needs to be rejected in view of the fact that the assessee had sufficient cash available with him to incur household expenses as per the cash flow statement submitted to the AO. Secondly, without prejudice to above, the household expenses estimated by the AO at ₹ 2,00,000/- was uncalled for due to the following reasons: (a) No. query at all was put up by the AO to the assessee regarding household expenditure. (b) Despite extreme step of search, no material was found during search, much less any incriminating material, suggesting inadequacy of household expenditure by the assessee. (c) No corroborative evidence was br....
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....00 35000 From Janta Sales, Bakania 30500 - 30000 38000 52000 54000 72000 Smt. Harbans Kaur mother Out of personal e] c 18000 17000 - - 45000 460000 80000 From Janta Traders 12000 9600 - 10000 - - - Avneet Singh-son Out of personal a/c - - - 21700 11000 18000 18000 TOTAL 113500 123600 84800 127700 398000 980000 470000 It will be of ample importance to observe that the AO has treated household expenditure of ₹ 48,000/- in the past for A.Y.2001-02 in scrutiny assessment u/s 143(3) as adequate. It is note worthy that the assessee had shown withdrawal of ₹ 24,000/- as against which addition of ₹ 24,000/was made by the AO on account of low withdrawal aggregating it to ₹ 48,000/-. There is no change in circumstances relating to withdrawal for the year under consideration as compared to the past and moreover, as already submitted, no material was found during the search to show that there was drawing, which was not recorded by the assessee in the regular books of account. The AR has also relied on the following decisions: Mahesh Kumar Singhai, Vs. DCIT (2007) 9 ITJ 682 (Indore Tribunal) Narain Singh Bhati s. A....
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.... observing that the AO has ignored withdrawals made by other family members and total withdrawals made by the assessee as given in the chart and written submissions. It was also observed that in the assessment year 2001-02, wherein scrutiny assts were framed, the AO has estimated house hold expenses at ₹ 48,000/- and since there is no change in the circumstances leading to higher estimation of house hold expenses, no addition is warranted. Keeping in to view the totality of the facts and circumstances and the standard of living of the assessee, we deem it reasonable to retain the addition to the extent of 25 % on account of lower house hold expenses shown by the assessee. This ground of Revenue's appeal is allowed in part. 22. On the same analogy the ground taken by the Revenue with regard to the deletion of house hold expenses in all the years are confirmed to the extent of 75%, resulting in upholding of addition to the extent of 25 % in all the years under consideration. 23. The AO has also made addition of ₹ 5 lakhs on account of marriage expenses. In the assessment order, the AO observed that expenditure on marriage of second daughter Smt. Kuldeep Kaur was not acc....
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....4) 82 TTJ 689 (Agra) Abdul Gaffar A.Nadiawala Vs.DCIT (2001) 70 TTJ 462 (Mum.) Pradeep C.Patel Vs. DCIT (1997) 58 TTJ 409 (Ahd.) David Dhawan Vs. ACIT (2000) 66 TTJ 188 (Mum.) Jagdish Lal Khurana Vs. DCIT (2004) 87 TTJ 1059 (Asr.) 25. After considering ld. Authorized Representative's submission, the ld. CIT(A) deleted the additions after having the following observations :- "I have considered the assessee's submissions as well as the findings of AO. In my opinion, the addition was not warranted in this year because marriage of the daughter of the assessee, Kulpreet Kaur, was solemnized on 12-12-1999 falling in next A.Y. 2000-01 and not in the present A.Y. 1999-00 in hand. Even otherwise, the AO has not considered the marriage expenses shown by the wife of the assessee, Smt. Satinder Kaur and gift given by mother of assessee, Smt. Kulpreet Kaur. He also has not considered gift received from relatives and friends, as brought on record by the assessee. No evidence was recovered .during the course of search or even thereafter to prove that the assessee has incurred expenditure of ₹ 5,00,000/- on the marriage of his daughter. No details, evidence or basis has b....
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....he books of account could not be produced at the time of survey as it was incomplete and were not written by the accountant who used to come part time. The same were however, produced before the AO along with quantitative tally, as affirmed by him. The AO verified the same and did not point out any mistake or defect therein. The GP shown by assessee vis-a.- vis considered by AO in different years are given in the reply for individual Assessment Years. That, the assessee maintained a contemporaneous records of all business transactions, quantitative details of opening stock; purchases, sales and closing stock on even daily basis and this fact was duly placed on record during assessment proceedings. The survey was carried out at the Business premises and after the extensive investigation no incriminating material whatsoever was found. It was also submitted by the assessee that the sales rate has been declared by the Ministry of Petroleum from time to time and the assessee is bound to sell the controlled commodity of petroleum according to the rates decided and prescribed by the Ministry and he cannot charge extra rate other than that fixed by the Government and he had to follow the c....
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.... not disputed or disproved by him. In order to make addition, he has kept mum on the same. Stringent Qualitative and quantitative controls exercised by company officials and Food and Civil Supplies Department: The AO's allegations of out of book sales and adulteration in Petrol/Diesel are totally unfounded also for the reason that very stringent and strict qualitative and quantitative controls are exercised by Food and Civil Supplies Department and no adverse action has ever been taken by the said department against the assessee, as set out here in below. Even the supplier Govt Companies is very strict and carryout checks periodically on surprise basis as regards to quantity and quality. Some of the periodical inspection reports were also submitted before AO with our reply for A.Y.2005-06. The inspection reports clearly evidenced that: • The variations between meter reading and dip stock taken on surprise visit was always well within the permissible limits. • There was no excess stock found on any of the surprise visits. • The quality of the products dealt in was always excellent and as per the norms of the company. • Samples taken on surprise bas....
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....hases. I. (b) Effecting of purchases at inflated prices from sister concerns for extra commercial consideration. ' (c) Omission of investment or expenditure. (d) Non production of proper particulars and vouchers where the G.P. rate shown in abnormally low. (e) Unexplained adjustments at critical dates. (f) Suppression of part of sales. If any of the above is proved against assessee, it justifies rejection of books of account but in our case no suppression in sales or inflation in purchases had been detected by the AO. The accounts have been regularly maintained and are duly audited. The AO also has not established against the assessee any omission of investment or expenditure. The purchases and sales also have not been held to be unvouched. No detection of any unexplained adjustments at any critical dates have been found by AO. He has not rejected the books of account and it has not been brought on record by him that income of assessee cannot be properly deduced. Hence such arbitrary estimation made by AO is highly unjustifiable and against the legal standards. The assessee is relying on the following decisions wherein it was held that low profit without any ot....
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....been taken against the assessee for flouting the qualitative and quantitative norms fixed by the Oil Company. Under these circumstances, the allegation that the assessee has been resorting to adulteration has to be rejected. As regards the contentions of the AO that there was a variation in the stock as per meter reading in the stock register and as per actual dip (stock on. physical verification), I find that here also the AO has not substantiated his findings. The assessee clearly explained to him that first of all stock as per actual dip, was started to be written on the stock register from financial year 2003-04 onwards on the oral instructions of Company officials, as otherwise, there was no requirement of doing so Illiterate employees of the assessee wrote the stock register and they have done lot of mistakes in writing the same. The assessee filed before the AO the amended and correct chart explaining that whatever variance was pointed out by him was practically not possible and it was only due to inadvertent mistakes of writing actual dip stock against earlier day's meter reading and the like. It was also explained that sometimes, the employees have written wrong quanti....
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....more profit. It was also observed that the assessee had filed various inspection report of the oil company on surprise check basis, in which nowhere it was found that the assessee was flouting qualitative and quantitative norms fixed by the oil company. We also found that these reports were not taken cognizance by the Assessing Officer while making trading addition. Even we found that the assessee had requested the AO to call for report of the oil company regarding stringent qualitative and quantitative control exercise, but the AO totally ignored the same. Furthermore, the assessee had obtained the certificate from Oil Company and furnished the same before the AO, which clearly evidenced that no adverse action has been ever taken against the assessee for flouting the qualitative and quantitative norms fixed by the Oil Company. Keeping into view all these factual position, the ld. CIT(A) held that allegation of the AO that the assessee was resorting to adulteration has to be rejected. Even it was found by the CIT(A) that contention of the AO that there was a variation in the stock as per meter reading in the stock register and as per the physical verification, it was found that not....
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....e and qualitative details were maintained by the assessee with regard to the purchase, sale and stock of oil as per the requirement of oil company and Food Department without which no petrol pump can run. We found that even the quantitative details were filed before the AO, wherein no defect was found by the AO, accordingly, there was no basis of ad hoc addition of evaporation as given by the Assessing Officer. Thus, we do not find any infirmity in the order of the CIT(A) in deleting the ad hoc disallowance of ₹ 40,000/- on account of evaporation. 37. Similarly, the addition made on account of evaporation expenses in various years are deleted in terms of the finding recorded by the ld. CIT(A) in the respective orders. We have already discussed the issue in the assessment year 1999-2000, accordingly, we confirm the action of the ld. CIT(A) on account of deletion of addition on account of evaporation expenses in all the years under consideration. A.Y. : 2000-01 : 38. Most of the grounds raised in this year are common. Addition with regard to expenditure incurred and various deposit in the Bank account was deleted by the CIT(A) after having following observations :- "This i....
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....allowing of possession of any immovable property is treated as transfer. Since the assessee has given transfer of property, therefore it is treated that transfer is complete in all respects and assessee is liable to pay capital gains tax which is worked out as under: - Particular Year of purchase Amount. Purchase value of the shop F.Y 1997-98 (date of purchase- Rs.1,81,600/- Sales value of the shop F.Y 1999- 00 Rs.8,00,000/- Indexed Cost 181600 X 389 /331 Rs.2,13,421/- Capital Gain (LTCG) Rs.5,86,578/- Tax payable calculated separately after giving set off of on unabsorbed capital losses of ₹ 2,08,969/- as claimed in the original return for assessment year 1999-2000. Thus, long term capital gain is ₹ 5,86,578 - ₹ 2,08,969 =3,77,609 and the LTCG payable is ₹ 3,77,609/- x 20 % = ₹ 75,522/-." 42. By the impugned order, the ld. CIT(A) deleted the addition after having following observations :- "I have gone through the observations of the AO and the submissions of the AR. I am of the considered view that the addition made by the AO was not warranted on facts available on record. No independent enquiry was conducted by the AO despite s....
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.... confirm the facts from buyer by issuing notice u/s 131. Under these facts and circumstances, we do not find any infirmity in the order of the CIT(A) for deleting the addition made by the Assessing Officer on account of long term capital gain amounting to ₹ 3,77,609/-. 45. The addition of ₹ 1,01,500/- has been discussed by the Assessing Officer at page 21 of his order as under :- "The assessee has shown unsecured loan in the name of following persons:- S1. No. Name of the person Amount l. Sh. Ganga Ram 15,000/- 2. Sh. Jairam Dhankani 15,000/- 3. Sh. Jamuna Prasad 16,000/- 4. Sh. Matin Khan 18,000/- 5. Sh. Navdeep Singh 18,000/- 6. Sh. Radhe Shyam 19,500/- Total 1,01,500/- It was submitted by the assessee that all the above persons are not cooperating in owning up their respective loans, though they are genuine, hence the same have been treated as his own money the source whereof was available with him out of cash in the personal cash rotation chart. As per the AO, the argument submitted by the assessee cannot be accepted because there was no excess cash available with him as discussed in para 6.1 to 6.13 of the assessment order. On ....
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....s as noted above with regard to the cash flow statement submitted by the assessee, the assessee was having sufficient cash available with him. Accordingly, deletion of addition by CIT(A) was justified. A.Y. : 2001-02 : 48. Addition with regard to deposit in the Bank has been discussed by the Assessing Officer at page 13 of his order :- "On the basis of my decision imparting credence to the personal cash flow statement made by the assessee in ground No.5 as above, the following additions made by the AO are deleted since these impinge upon only on the so-called shortage of cash available with the assessee as per AO and because the assessee is found to be having overall sufficient cash available with him with reference to the cash flow statement: Ground Of appeal no. Particulars Discussed by AO at Pg. and para no. Addition by AO Ground No. 7 Deposit in S.B A/c of Janta Transport Pg. 13 Para 6.11 8,01,002/- Ground No.8 Deposit in S.B. A/c No.8 No.61075 of Janta Transport Pg. 14 Para 6.12 1,91,000/- Ground No. 11 Deposit In S.B A/c of Hotchand Pg. 19 Para 7.1 1,42,325/- Ground No. 12 Deposit in S.B. A/c No3494 of Allahabad Bank Pg. 20 Para 7.2 85,033/- Total 12,1....
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....wherein they have held as under: "It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act, 1872, judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessment Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi judicial function to take benefit of its own wrong. Hence it is clear that section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceedings upon a mere change of opinion." 4. The books of account are audited and no expenses of unverifiable nature have been pointed out by the AO. 5. No evidence was found during search or brought on record by AO that the said expenditure is not genuine. " 52. By the impugned order, the ld. CIT(A) deleted the disallowance after having following observations :- "The submissions of the AR and the observations of the AO have been perused by me. Though, I broadly agre....
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....gone into so and so avenues and rolled over in such and such fashion, the AO cannot brush aside his explanation simply on his personal whims and caprice without proving anything against him. My view is fortified from the observation of Hon'ble Delhi High Court in the case of CIT vis. Kulwant Rai (2007) 163 Taxman 585, to the affect that the cash flow statement furnished by the assessee cannot be rejected by the AO on suspicion that the assessee must have spent amount for some other purpose because, no material has been relied by the AO to support his view that the entire cash withdrawals must have been spent by the assessee. While imparting credence and reliability to the cash flow statement of various Assessment Years, I have also considered the followings: i. Since the assessee has been earning huge cash income from agriculture, plot rent, house rent and presumptive income from truck plying since earlier years , opening cash balance of ₹ 2,50,000/- as on 0l.04.1996 was possible and hence, the same is taken as correct. ii. The explanation of the assessee regarding ₹ 1,65,000/as given in chart, is found reasonable because, the aforesaid cheque was self cheque.....
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....find any infirmity in the order of CIT(A) for deleting trading addition made by the Assessing Officer on the surmises that the assessee was indulged in mixing of petrol/diesel. Since these are controlled commodities and rates are fixed by the Ministry of Petroleum from time to time and the assessee is bound to sell at the rates so fixed. We also found that variations between the meter reading and dip stock taken on surprised visit was always well within the prescribed limit. Accordingly, no interference is warranted in the order of the CIT(A) for deleting these additions after recording detailed findings. 57. In the assessment year 2004-05, the Revenue is aggrieved for deletion of addition with respect to income on account of unaccounted sales and adulteration in diesel. 58. We have considered the rival contentions and found that the AO has made the addition by observing that there is a difference in the stock as per meter reading recorded in out-let sales register vis-à-vis stock as per dip. The AO also stated that such variation was more than permissible limit of 4.6 % for petrol and 4.4 % for diesel. 59. Following was the submission of the assessee before the CIT(A), wi....
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.... range of crores on this score alone for seven years of block period , and the total income earned by the assessee should have been much more than that. And as held by Hon'ble Supreme Court, some disproportionate assets should be found by AO before concluding that the assessee has deemed income of so much proportion for the proposition that possibility for earning the alleged income, which is deemed the income of the assessee by AO has to be seen. Movable/immovable assets must represent the income deemed by AO in the form of liquidity with reference to utilization of the alleged income - Roshan Di Hatti vs. CIT, (`1977)107 ITR 938( S. C.) 4. As regards this allegation of AO that sales outside the books of account and tampering of meter is being done in general by petrol pump owners, it is submitted that this allegation is only hearsay and not based on any evidence. As already submitted no evidence was recovered regarding purchase of solvent and kerosene, it is settled position of law that assessment proceedings under the Act, being quasi-judicial proceedings, the assessment of any particular year must be based not on mere suspicion, bare guess and probabilities but on legiti....
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....rmises and guess work and on this point case of Dhakeshwari Cotton Mills vs. CIT, (1954) 26 ITR 775 ( S.C.) may be referred to , in which held :- "IN making an assessment u/s 23(3) of the Indian Income Tax Act, the ITO is not fettered by the technical rules of evidence and pleadings, and he is entitled to act on material which may not be accepted as evidence in a court of law, but the ITO is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment u/s 23(3). The rule of law on this subject has been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh vs. CIT, Punjab, (1944) 12 ITR 393." (p. 776). 7. In case of Sivan Pillai vs. CIT, 34 ITR 328 and CAG vs. M. G. Cheiran, 117 ITR 371 held - ITO fixed the price of paddy at a rate higher than that fixed under Kerala paddy order - no finding that assessee has sold paddy at higher rate - there could be no presumption in favour of illegality of transaction-possibility of assessee getting higher price would be a matter of pure conjecture - ITO cannot take cognizance of sal....
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....eady observed that not even a single rupee purchase of solvent/kerosene was found despite extreme step of search. I have also held that had the assessee doing adulteration on such mass level, as claimed by AO, his dealership would have been terminated long back. But, on the contrary, Oil Company ( a Government Company ) has given clean chit to the appellant regarding qualitative and quantitative controls exercised by him. Moreover, it cannot be lose sight of that it is a search case and had the assessee been involved in adulteration at such large scale, he must have amassed huge wealth which could have been found either in kind or coil during the course of search. But, nothing of that sort has been found. Under these circumstances, the assessee cannot be burdened with such huge addition simply on the basis of the personal suspicion, guess, surmises and conjectures. He cannot be taxed with such heavy additions solely on the basis of public rumor as illegitimately done by the Assessing Officer. My decision in ground no. 5 of assessment year 1999- 2000 is elaborate on the point. In view of all this, I am of the considered opinion that such addition cannot be sustained and I, therefore....
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....t there are regular deposits in the Bank, which are shown in the cash book. The AO has fully discussed this issue at page nos. 27 to 28 in para 13. 63. By the impugned order, the ld. CIT(A) deleted the addition after having following observations :- "I have duly considered the findings of AO and submission of the appellant. I have seen the variation in entries, in the incomplete as well as complete books of account. I find that the books of account found during survey were having incomplete entries. For instance, most of the entries for the month of October 2004 made in the complete cash book were not found recorded in the incomplete cash book. Opening cash balance in both the books of account was similar at ₹ 41,216.71 and correct, and the variation was only due to some entries of relevant period, which were not accounted for in the incomplete cash book found during survey. I am, thus, of the considered view that the disallowance made by AO was totally unjustified. First of all, the appellant had explained the difference, entry by entry, to the AO by producing both the books of account - incomplete as well as complete. But in any case, since both the books of account were....
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.... Officer on account of excess payment/receipts. 65. Next issue relates to addition in respect of cash of ₹ 6 lakhs found during survey. 66. The AO has discussed this issue at page 33 & 34 at para 15. by the impugned order, the ld. CIT(A) deleted the addition after having following observations :- "I have considered the submissions of the AR and the observation of AO. In my opinion, the addition made by AO was erroneous and unsustainable. The observation of the AO that it was not the same money received as advance against sale of plot, which was found at the premises of the assessee, is totally presumptive and conjectural because the search took place on 02-11-2004 and original agreement to sale dated 29.10.2004 was found and seized during the course of search, the said agreement to sale clearly contained the fact of giving cash advance of ₹ 6,00,000/- to them against the proposed sale of aforesaid plot. The observations of the AO and the submissions of the appellant have been considered by me. In my opinion, the addition is not sustainable. It is not in dispute that during the course of search, an original agreement to sell was found for selling 3,000 sq.ft. of plot....
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....llant stated before AO that both the buyers of the plot viz. Shri Manohar Lal Vaswani and Mr. Naresh Kumar informed him that their statements were recorded by investigation wing and they have confirmed to have given aforesaid cash advance of ₹ 6,00,000/- to his wife and father in-law in pursuance to above agreement. The appellant also requested for the copy of the said statements to be supplied to him but it appears that the same has not been supplied to him. It may also be noted the fact that at the time of search no efforts were made in this matter by the search party to take the statement of wife of appellant Smt.Satinder Kaur and to examine her about the said deal though she was very much present at the time of search. Further, regarding the argument of AO that since major portion of plot was belonging to Shri Gurudev Singh, father-in-law of the appellant, the advance should have gone to Mr.Gurudev Singh an not to wife of the assessee Smt. Satinder Kaur. In my opinion, this argument of AO is far from being practical and is superfluous. This is because Smt. Satinder Kaur is own daughter of Shri Gurudev Singh and Shri Gurudev Singh was out of station at the relevant point o....
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....1.50 lakhs given to Shri Ramesh Sharma. 69. It has been discussed by the Assessing Officer at page 34, para 10 by observing that it is an undisclosed investment for advance given to Shri Ramesh Sharma. The AO has made the addition. By the impugned order, the ld. CIT(A) deleted the same after observing as under :- "I find that during the search no money receipts or hundies have been recovered which could support the allegation of the AO that the appellant has given loan to Mr. Ramesh Sharma nor the AO has brought on record any corroborative evidence to support his assertions. Also, even notings of any sort were found suggesting lending of loan to Mr. Ramesh Sharma. The only way out under these circumstances left with the AO was that he should have examined Mr. Ramesh Sharma to unearth the truth; but the same appears to not have been done despite the request of the appellant to summon him u/s 131. As regards, requisite balance not being in the account of Mr. Ramesh Sharma at the relevant point of time, I find it difficult to accept that the same can be a basis to make the impugned addition. This may be relevant for proceedings in some other Act but no definitely under the Income T....
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....e assessee in all the years under consideration are dismissed. I.T(SS).A.Nos.230 to 236/Ind/2008 : 74. These are the appeals filed by the revenue and cross objection by the assessee against the order of the learned Commissioner of Income Tax (Appeals) for the Assessment Years 1999-00 to 2005-06 in the matter of order passed u/s 153C of the Act. 75. The facts in brief are that the assessee is an Individual and is wife of Shri Kulwant Singh, mainly engaged in the business of petrol pump, trading of lubricant oil, truck plying and also having rental and agricultural income. The search action was carried out at the residential premises of husband of the assessee, Shri Kulwant Singh on 2.11.2004 which was completed on 4.11.2004. However, during the course of search proceedings, no money, jewellery or other valuable articles or things or any other material of any kind was found even for worth name. Similarly, no undisclosed or disproportionate movable or immovable assets were found during the course of search or thereafter. During the course of proceedings before the Assessing Officer the assessee raised objection for the proceedings u/s 153C/153A and asked the question before the A.O....
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....ything contained in sections 139, 147, 149, 151 and 153 where the Assessing Officer is "satisfied" that any money, bullion, jewellery or books of accounts or documents seized or requisitioned belong to a person other than the person referred to in section 153S, meaning thereby the Assessing Officer is to record satisfaction to the effect that such documents, etc. have not belonged to the searched person but to some other person referred to in section 153A of the Act. As per the ld. Counsel for the assessee, no such satisfaction was arrived at by the Assessing Officer, therefore, the assumption of jurisdiction u/s 153C of the Act was not justified. For this purpose, he relied upon the decision of the coordinate Bench in the case of Chirchind Hydro Power order dated 29th December, 2010. 80. On the other hand, contention of ld. CIT DR was that in view of decision of Chhatisgarh High Court reported at 17 ITJ 446, since the AO who has initiated proceedings u/s 153A and 153C is the same , there is no requirement of handing over the material seized by department, therefore, no satisfaction was required to be recorded before assuming jurisdiction u/s 153C of the Income-tax Act, 1961. 81.....
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....itted confirmation letters/affidavits, complete address, cheque number and GIR/PAN to prove the genuineness of the cash creditor. The learned Commissioner of Income Tax (Appeals) deleted the addition after recording detailed findings as above wherein he observed that the assessee has discharged initial onus cast upon him. The finding recorded by the learned Commissioner of Income Tax (Appeals) has not been controverted. We, therefore, do not find any reason to interfere with the same. 88. The next grievance of the revenue relates to deletion of interest expenses in respect of cash credits discussed above. As we have confirmed the action of the learned Commissioner of Income tax (Appeals) in deleting the addition on account of cash credit, we confirm the action of the learned Commissioner of Income tax (Appeals) in deleting the add in respect of interest paid to these parties. 89. The Assessing Officer has made addition of R.1,28,000/- on protective basis on account of cash credit in the name of Janta Transport, a proprietorship of Shri Kulwant Singh. We have already discussed in detail this issue in the case of Shri Kulwant Singh for the assessment year 1999-00. Accordingly, the ....
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....ssessment year 1999-00. We follow the same reasoning, proposition and confirm the action of the learned Commissioner of Income tax (Appeals). 96. The ground with regard to unexplained cash credit of Shri Kulwant Singh amounting to ₹ 1,40,610/- is the same as dealt with in the assessment year 1999-00 in the case of Shri Kulwant Singh. We follow the same reasoning and confirm the action of the learned Commissioner of Income tax (Appeals). 97. The grounds relating to gross profit addition and disallowance of evaporation expense are the same as discussed by us in the case of Shri Kulwant Singh for the assessment year 1999-00. We follow the same reasoning, proposition and confirm the action of the learned Commissioner of Income tax (Appeals). 98. The next grievance of the revenue relates to addition of ₹ 1,21,000/- on account of purchase of shop in Krishna Complex for ₹ 1,21,000/-. The Assessing Officer made the addition on the belief that the assessee was not having sufficient cash balance. The learned Commissioner of Income tax (Appeals) deleted the addition by observing that the assessee was having overall availability of cash with her as per the cash flow statem....
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....none of the expenditure was found to be unverifiable by the Assessing Officer and that books of accounts were duly audited and produced before the Assessing Officer which were examined by him. Under these circumstances, we do not find any infirmity in the order of the learned Commissioner of Income tax (Appeals) in deleting the disallowance and confirm the same. 102. The revenue has also challenged the deletion of disallowance of ₹ 10,000/- out of conveyance and general expenses. In this regard, we find that personal element of expenses on conveyance cannot be ruled out, accordingly, there was nothing wrong in the order of the learned AO disallowing a sum of ₹ 10,000/- out of such expenses. 103. In the result, both the appeals are allowed in part. 104. In the assessment year 2005-06 the revenue is also aggrieved by the deletion of disallowance of ₹ 35,000/- on account of conveyance and general expenses. By observing that nothing was pointed out by the Assessing Officer as unverifiable expenses, the learned Commissioner of Income tax (Appeals) has deleted the same. Keeping in view personal element in such expenses, we confirm the disallowance to the extent of &#....
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....aised by the assessee. Therefore, in the cross objection, the assessee is aggrieved for assumption of jurisdiction u/s 153C. 111. In the course of assessment, the AO has made addition u/s 68 in respect of cash credit by stating that the assessee has not furnished the Bank statement of any persons and considered the assessee has having failed to prove the genuineness of the credit, capacity of the creditors. 112. By the impugned order, the ld. CIT(A) deleted the addition by observing as under :- "The submissions of the AR and the observations of the AO have been duly considered by me. In my opinion, the additions made by the Assessing Officer are not called for and hence, cannot be sustained. This is because first of all no material was found during search or brought on record by the Assessing Officer thereafter that these credits are non-genuine or these of the funds circuitously introduced as cash credit. The appellant filed confirmations/affidavits of all the creditors, who are regular tax payers bearing PAN. The loan was received through banking channels. Under these circumstances, the appellant proved the identity, capacity and genuineness of the loan and the initial onus c....
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....audited and supported by the vouchers. I agree that there is no provision in law in permitting allowance of salary in proportion to sale, as done by the Assessing Officer." 118. We have considered the rival contentions and found that expenditure on salary was incurred wholly and exclusively for the purpose of business. The ld. CIT(A) has recorded a finding to the fact that the AO has not pointed out any part of the salary, which was not supported by vouchers nor he could bring out a case that the salary paid to any person was exorbitant, even anything was mentioned in the audited accounts by the auditor. Accordingly,, we do not find any reason to interfere in the order of CIT(A) for deleting the disallowance. 119. An addition on account of unaccounted sales and adulteration in diesel, is the same as dealt with in the assessment year 2004-05 in the case of Shri Kulwant Singh. Following the same reasoning and conclusion, we confirm the action of the CIT(A) in this regard. 120. In the result, the appeal of the Revenue is allowed in part. 121. In the cross objection, the assessee has basically agreed for confirmation of addition of ₹ 1,15,450/- on account of alleged bogus cr....