TaxTMI 
TaxTMI 
2011 (4) TMI 1366
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....ere heard together and are now being 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 Rs. 70,00,000/- was surrendered by the assessee, from which he subsequently retracted on 18-11-2004 by filing an affid....
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....Expenses Rs. 633819/- Undisclosed Household expenditure Rs. 121153/- Addition on account of Marriage Expenses Rs. 500000/- Undisclosed Income deposited in the account Of Shri Hot hand Rs. 108343/- Undisclosed income deposited in the SB A/c. Of Allahabad Bank Rs. 32557/- Unexplained Deposit in SB A/c. No.3494 in the Name of Shri Harbinder Singh Rs. 20000/- Undisclosed deposit with Smt. Satinder Kaur Rs. 128000/- Addition on account of Gross Profit Rs. 146382/- Addition on account of Evaporation expenses Rs. 40,000/- Total Income Rs. 2108591 Less : Income declared u/s 153A Rs. 20,000/- Assessed Income Rs. 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 Rs. 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....
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....al expenses. She started to live with her husband only from March 2004 when he came back to India. This fact was clearly brought to the notice of the AO by Smt. Kulpreet Kaur in her assessment 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 late....
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.... Rs. 1,22,153/ - and in the process the appeal is allowed. " 7. We have considered the rival contentions and find from the record that similar 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 Rs. 1,22,153/-, which was wrongly mentioned in place of Rs. 1,07,481/- in the computation part of AO's order. 8. Next....
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.... Khasara No. 511 & 515 Khasara No. 569 & 570" 11. We found that the assessee was earning agricultural income from the above 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 Rs. 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 Rs. 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." ....
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....arned from aforesaid sources, the assessee compiled cash flow statement. In the cash flow statement, the assessee had shown opening cash balance of Rs. 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 Rs. 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 wa....
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....d income. There is no dispute to the well settled proposition that the assessee is fully authorized to prepare 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 ....
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....e expenditure incurred by the assessee for their Bina Refinery as per requirement of 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 Rs. 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....
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....om current year's cash income only. The same, on the contrary, can, and is also out of opening 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 Rs. 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, ....
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.... Out of personal e] 18000 43000 18800 18000 218000 348000 175000 From Janta Sales, Bairagrh 24000 24000 24000 40000 50000 58000 90000 Smt. Satinder Kaur wife Out of personal a/c 11000 30000 12000 - 22000 42000 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 Rs. 48,000/- in the past for A.Y.2001-02 in scrutiny assessment u/s 143(3) as....
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....made by AO aggregating it to Rs. 48,000/- in the scrutiny assessment u/s 143(2). There is no change in the circumstances leading to higher estimation of household expenses. I, therefore, delete the addition of Rs. 1,21,153/- made by the' AO. The assessee shall get relief of Rs. 1,21,153/- and in the process the appeal of the assessee stands allowed. 21. Rival contentions have been considered. The AO has made addition on account of house hold expenses without pointing out any particular expenses as having been incurred nor any evidence was found during course of search indicating any expenditure having been incurred but not accounted for. The ld. CIT(A) has deleted the addition by 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 Rs. 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 circumstan....
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....ed expenditure of Rs. 5 lacs on the marriage of his daughter. No details or evidence whatsoever have been brought on record to justify the estimation of the marriage expenses. The addition was thus not supported by any evidence and was based on imaginations, surmises & conjectures only. The AR relied on the following decisions: Mahesh Kumar Singhai vs. DCIT (2007) 9 ITJ 682 (Indore Tribunal), Narain Singh Bhati Vs. ACIT (1991) 40 TTJ 381 (JP) CIT Vs. C.L. Khatri (2005) 4 ITJ 193 (MP) Ashok Kr. Jain Vs. DCIT, 32 ITC 527 (Indore ITAT) ACIT Vs. Surajbai, (2005) 4 ITJ 524 (Indore ITAT) Ramesh K.Shap Vs. DCIT (2004) 82 TTJ 827 (Bang.) Deenanath Agrawal Vs. ACIT (2004) 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 submi....
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....unt of Rs. 20,000/- was deposited on 9.1.1999. The assessee submitted that he has taken loan from Shri Harminder Singh. By recording a finding that Harminder Singh confirmed to give loan of Rs. 20,000/- to the assessee and nothing incriminating was recorded during search nor approved by the Assessing Officer that the loan given by Shri Harminder Singh from the assessee's funds, the ld. CIT(A) deleted the addition. We do not find any infirmity in the finding recorded by the ld. CIT(A) in so far as Shri Harinder Singh has duly confirmed advancing of loan of Rs. 20,000/- to the assessee. 29. With regard to gross profit addition of 1,46,382/-, contention of the ld. Authorized Representative before the ld. CIT(A) was as under :- "The 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 Yea....
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....ing from the company. The employees of the assessee are not skilled and are not that literate. Only such employees have been writing dip stock on the stock register. While doing so, they have done so many inadvertent mistakes of writing actual dip stock against earlier day's meter reading and the like, Sometimes they have written wrong quantity of actual dip stock and so on. We filed before the AO amended chart explaining above clerical mistakes evidencing that: * Dip stock was wrongly written against earlier day's meter reading. * Dip stock was wrongly written against later day's meter reading. * Dip stock written was itself wrong. The above clerical mistakes were verified by the AO and the same were 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 Depart....
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....counting has been consistently followed by us for last several years and has been accepted by the Department and thy books were never disturbed in any of the preceding assessment years. Even in assessment year 2001-02, the scrutiny assessment of the assessee was undertaken u/s 143(3) and books results shown by the assessee involving GP percentage of 1.94% was accepted. The Office of the Oil Company vide its guidelines has confirmed the variation of normal handling loss which is eligible to the assessee and it should be allowed to the dealers on total receipts. The variation of the applicant was below these guidelines. It is now well established that essential ingredients for rendering the accounts incomplete and unreliable are: (a) Omission of purchases. 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 asses....
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....idence was found during search or brought on record by AO. No evidence was 'unearthed either during the search or brought on record by AO through post search investigation. The assessee filed various inspection reports of the Oil Company, on surprise check basis, before AO, in which nowhere it was found that the assessee was flouting qualitative or quantitative norms fixed by Oil Companies. These reports were not taken cognizance by the AO while making high-pitched additions. The assessee requested the AO to call for the report of the Oil Company regarding stringent quantitative and qualitative control exercised, but the AO totally ignored it. The assessee has obtained a Certificate from Oil Company and furnished the same. The said Certificate clearly evidence that no adverse action has ever 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 verifi....
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....o delete the addition made by the AO, which sails on his pure surmises and conjectures. The addition of Rs. 1,46,382/- made by the AO is, therefore, deleted and the assessee gets a relief of Rs. 1,46,382/- and in the process the appeal is allowed." 31. Rival contentions have been heard and records perused. During the course of assessment, the AO made trading addition of Rs. 1,46,382/- in respect of petrol pump business of the assessee. The main allegation of the AO was that the assessee has been doing mixing in diesel and petrol. The ld. CIT(A) observed that no evidence was found either during the course of search nor any material was brought by the Assessing Officer on post search inquiry to indicate that the assessee was doing any adulteration in diesel and petrol thereby earning 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....
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....the AR, he ought to have understood that the evaporation claimed by assessee is well within the norms issued by the Oil Company, regarding permissible limits of evaporation. Moreover, no basis was given by the AO regarding the adhoc addition made by him. In view of this, the addition of Rs. 40,000/- is vacated and the assessee gets a relief of Rs. 40,000/- and the appeal is allowed. " 36. We have considered the rival contentions and found from record that whatever evaporation has been claimed by the assessee, the same were within the norms issued by the Oil Company. We also found that before the AO, the assessee has furnished a letter from the Oil Company. Evaporation claimed by the assessee was below the permissible limit and norms of the oil company. We also found that quantitative 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 Assessin....
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.... cash flow statement furnished before the AO. 40. Next issue relates to addition on account of capital gains. 41. In this regard, observation of the AO was that in the S. B. Account No. 3494 in Allahabad Bank there are receipts from Shri Vishal Tamrakar at Rs. 50,000/- & Rs. 1,00,000/ - on 31-01-2000 and 02-03-2000. In this regard it was submitted by the assessee that the above receipts are on account of sale of shop to Shri Vishal Tamrakar during this assessment year and the above receipt was utilized in purchase of shop at K.K.Plaza. As per statement of Shri Govind Tamrakar the above shop was purchased in the name of his wife Smt. Kiran Tamrakar and his son Shri Vishal Tamrakar for Rs. 8,00,000/- and total payment made to the assessee so far was Rs. 3,50,000/-. It was also stated by him that they are having possession of the above shop. As per section 2(47) (v) of the IT Act, 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....
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....cuments was filed before the AO alongwith reply for assessment year 1999-2000. The assessee had encroached further land aggregating to 1055 sq.ft. The said shop was agreed to be sold to Mr. Vikas Tamrakar for Rs. 8 lakhs. No agreement was executed. The assessee only received Rs. 3.50 lakhs as advance through cheques vide four cheques of Rs. 50,000/-, Rs. 1 lakh, Rs. 1 lakh and Rs. 1 lakh. However, the purchaser wanted the assessee to get entire 1055 sq.ft. registered in its name, but since the assessee was owner of only 270 sq.ft., he declined registration of entire area of 1055 sq.ft. Thus, a dispute arose between the assessee and the buyer, hence the delay could not be completed. The assessee has also not given possession to the buyer. Under these circumstances, no capital gains arose to the assessee and he also agreed to pay tax as and when the sale will be completed. The assessee also asked the AO to 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 Rs. 3,77,609/-. 45. The ....
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...." 46. By the impugned order, the ld. CIT(A) deleted the addition after having the following observations :- "I have considered the submissions of the AR and the observations of the AO. There is no dispute that these loans have been owned up by the assessee and therefore, were incorporated in the memorandum cash flow statement submitted before AO. As rightly argued by the AR, this addition by AO also impinges on his non-imparting evidence to the personal cash flow statement. As I have imparted credence to the personal cash flow statement and since the assessee had sufficient overall cash available with him with reference to cash flow statement/cash rotation chart submitted before AO, the addition made by the AO requires to be deleted. Accordingly, I delete the addition of Rs. 1,01,500/- made by the AO. The assessee gets a relief of Rs. 1,01,500/and thus the appeal is allowed. " 47. Rival contentions have been considered in view of our observations 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 : 4....
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....was paid to the driver of the heavy vehicle because lot of petrol pumps have come up and it is difficult to get business due to stiff competition. 2. The dealer cannot charge higher rate on the declared price of the petroleum rather he can allow commission to the drivers for boosting the sales for better profit. Because of this, the sales during the year have increased income arisen to the earlier ear as under: - A.Y. 2000-01 A.Y. 2001-02 (Present year) Sales 1,36,12,950/- 1,89,04,809/- Sales figure mentioned buy AO in his order at Pg.22 para 8 Page 21-22 Para 8 3. In this case, on the impugned issue of commission, the assessment was originally completed u/s 143(3) after due scrutiny. The AO duly allowed commission expenditure claimed by the assessee in the said assessment. There is a presumption u/s 114(e) of the Indian Evidence Act, 1872 that all judicial and official acts have been regularly performed. Kindly permit us to refer to a recent decision of Delhi High Court Full Bench in the case of CIT v. Kelvinator India Ltd. (2002) 256 ITR 1 (Del) wherein they have held as under: "It is well known that a presump....
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....ed or disproved by the AO. This is the basic fact which goes to the root of the matter coupled with the fact that once the availability of cash from undisclosed sources is accepted, the other issue equally important is utilization of the same. Here also, very heavy legal burden was on the AO, particularly in a case where action u/s. 132 took place, to prove that the money available with the assessee from the cash income earned (other than from petrol pump) and disclosed by him have been utilized elsewhere in some movable/immovable investment and expenditure, which have not been disclosed to the department. But, I find that the AO has failed in proving the money available with the assessee has been utilized elsewhere, other that the destination explained by the assessee. The AO has thus sailed on his bare conjectures and surmises in not giving credence to personal cash flow statement prepared by the assessee without proving anything against the assessee. I also agree that the owner of the money only knows where his money has gone and none else and once the owner of the money explains in clear terms that his money has gone into so and so avenues and rolled over in such and such fashi....
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....overall cash available with him----" lX. All other explanations of the assessee, as given in the aforesaid chart are found to be correct and acceptable. Since I have imparted due credence/reliability to the cash flow statement prepared by the assessee, all those additions made by the AO, which impinge upon and revolve around the shortage or availability of cash due to non-imparting credence to the cash flow statement of the assessee, shall get vacated for all the assessment years namely, A.Y. 1999-00 in hand to A.Y.2005-06, unless otherwise expressly stated by me, so long as the assessee has overall cash available with him.-------" 55. In view of our discussion made hereinabove with regard to the cash flow statement furnished by the assessee to show availability of cash on various occasions and purposes, we find that the ld. CIT(A) has correctly deleted the above addition by giving finding that cash flow statement was correct. We do not see any reason to interfere in the order of CIT(A) for deleting the addition made on account of cash deposited in the bank account. 56. As discussed hereinabove in the assessment year 1999-2000, we do not find any infirmity in the ....
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....ure speculation and personal presumptions because if the assessee was doing adulteration on such large scale, as alleged by AO, at least a single paper or evidence of purchase of solvent and kerosene have been recovered, during the search or even there after. Here it is noteworthy that it is a case of extreme step of search were every nook and corner of the business premises and residence of assessee was searched and after thorough and prolong action of search, even no iota of evidence for purchase of solvent and kerosene even of a single rupee was found; under these circumstances the action of the AO can only be termed as height of arbitrariness, punitiveness and grossly whimsical and nothing else. Such an action of the AO should fall from ground. 3. The AO has made huge addition of Rs. 5763036/- for unaccounted income on account of out of book sales and adulteration as under :- For Petrol at pump at Janta Sales & Service Rs. 9,06,406/- For Diesel at pump at Janta Sales & Service. Rs. 48,56,630/- Total Rs. Rs. 57,63,036/- In case if the assessee has earned such heavy magnitude of income only in one year, the total income should have be....
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....ogicality resting on suspicions/technical inferences must be spurned." In the following decision of jurisdictional High Court of M.P., though relates to block assessment, but it applies with equal force to the amended Law, in which, it was held as under :- "On a perusal of amended and un-amended provisions and CBDT Circular, we are of the considered view that there has been no specific effect as far as this facet is concerned - Emphasis has been given on the fact evidence must have been found during search and only thereafter, the question of gathering any information would arise based on search, inquiry." CIT vs. Khushalchand Nirmal Kumar, (2003)183 CGTR 503 (MP). 5. Following recent decisions of Hon'ble Jurisdictional Tribunal also buttress this view that even in the amended new law u/s 153A addition has to based on some evidence and not on surmises & conjectures. Assessment in Search - U/s 153A of the Income-tax Act, 1961, - Law house hold withdrawals - Held - No incriminating material found during course of search - Addition is purely on conjectures - deleted. Mahesh Kumar Singhal vs. DCIT, (2007) 9 ITJ 682 (Indore). 6. 6. The ad....
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....ervations :- "I have considered the submissions of the AR and findings of AO. I find that the addition is made on unproved unilateral allegation of the AO primarily because as per the AO, there was variation in stock as per meter reading recorded in the Retail Outlet Sales Register vis-à-vis stock as per dip (on physical verification ). He also alleged that the appellant was involved in doing adulteration. This issue has been dealt by me in detail while dealing ground no. 5 of A.Y. 1999-2000 because the issue had interconnection, interlacing and bearing on the issue of gross profit, for which, separate addition has been made by the Assessing Officer. In my decision, ground no. 5 of assessment year 199-- 2000, which is adjudicated by me simultaneously, I have given detailed reasoning as to why the allegations of the AO were incorrect and not supported by any corroborative evidence brought on record. The variation in stock as per Stock Register and as per actual dip on physical verification was explained to the AO by filing amended chart, which contained human error done by the illiterate staff of the appellant. The AO verified this chart and did not find any falsity ....
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....iling amended chart, which contained human error done by the illiterate staff of the assessee. The ld. CIT(A) also found that the AO has verified this amended chart and did not find any falsity therein. With regard to allegations regarding mixing of kerosene in the petrol, the ld. CIT(A) observed that not even a single rupee purchase of kerosene was found despite extreme step taken by the search party. The ld. CIT(A) also observed that it was a search case and had the assessee been involved in adulteration, something could have found either in the search proceedings or on subsequent inquiry. The finding recorded by the ld. CIT(A) at page 14 has not been controverted, we, therefore, do not find any reason to interfere in the same. Accordingly, the ground taken by the Revenue for deletion of addition on account of adulteration in petrol and diesel are dismissed. 62. In the assessment year 2005-06, the Revenue is aggrieved for deletion of addition of Rs. 17,64,996/- on account of excess payment/receipt. In this regard, we found that during the course of survey, the AO found that cash book was written up to 1.4.2004 to 1.11.2004. In this cash book, complete day to day sales and expe....
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....d during course of survey was having incomplete entries, which was completed thereafter. The ld. CIT(A) found that variation was only due to the fact that some entries of the relevant period was not accounted for in the incomplete cash book found during survey. The ld. CIT(A) also found that during course of assessment, the assessee has explained the difference, entry by entry by producing both the books of account i.e. complete as well as incomplete. As per CIT(A), if the entries, which were subsequently accounted for in the incomplete books of account, were not found properly supported by the evidence or voucher only then some addition could have been warranted by recording a finding that since difference in incomplete and complete books of account stands reconciled and same was supported by proper entries not controverted by the Assessing Officer, no addition was called for, particularly in view of the fact that cash as per complete cash book was found to be positive, which has not been disputed by the Assessing Officer. Nothing was brought to our notice to persuade us to interfere in the findings recorded by the ld. CIT(A). We, therefore, do not see any reason to interfere in t....
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.... 6,00,000/- included in total surrender of Rs. 70,00,000/- made by appellant, I find that the appellant has already retracted form the total surrender of Rs. 70,00,000/- on the ground that the same was done under coercion and intimidation and that whatever income will come after verification of papers and documents, the same shall be declared in the return of income. In my opinion, since the surrender was not made or quantified with reference to any documents or evidence, the same has no evidentiary value because even otherwise the same stands retracted later on. Hence this limb of the argument of AO loses its significance. Moreover, I find that a specific query was put to assessee in the statement recorded u/s 132(4) during the course of search on 04-11-2004 on page 10 regarding the above agreement to sell dated 29.10.2004 and particularly regarding the cash advance of Rs. 6,00,000/- taken by his wife Smt. Satinder Kaur and father in-law Shri Gurudev Singh. In reply to the said query, he categorically explained in loud and clear terms that his wife and father in-law had made an agreement for sale of aforesaid plots to the above named parties for which they have taken cash advance ....
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....e appeal is allowed." 67. We have considered the rival contention and found that search took place at the assessee's premises on 2.11.2004, wherein original agreement of sale dated 29.10.2004 was found and seized. This agreement clearly contained the fact of giving cash advance of Rs. 6 lakhs to the assessee against the proposed sale of plot. The ld. CIT(A) has also recorded a finding that during course of search original agreement to sale was found for selling 3,000 sq.ft. of plot registered in the name of wife of assessee, Smt.Satinder Kaur and 5700 sq.ft. in the name of Gurudev Singh, father in-law of the assessee. The agreement so found was joint for selling both the properties. In the said agreement, cash payment of Rs. 6 lakhs was clearly shown as advance. The addition was made by the Assessing Officer merely on the plea that cash found during course of survey was not the same money, which was received as advance against sale of plot. The detailed finding recorded by the ld. CIT(A) at pages 20 & 21 has not been controverted. We, therefore, do not find any reason to interfere in the order of CIT(A) for deleting this addition. 68. Next ground relates to addition in respec....
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.... issue summon to him u/s 131. In view of this factual position, we do not see any reason to interfere in the order of ld. CIT(A) for deleting the addition. 71. The other grounds taken by the Revenue in all the other assessment years under consideration are the same, for the reasons discussed by us hereinabove, while dealing with assessment years 1999-2000, 2000-01 and 2001-02, we confirm the action of the CIT(A) except with respect to the addition made on account of house hold expenses and expenditure on commission payment 72. With regard to the cross objection filed by the assessee on account of part of the additions retained by the ld. CIT(A), we have already discussed this issue while deciding the Revenue's appeal with regard to these additions/disallowances in all the years under consideration. Nothing was brought to our notice by the ld. Authorized Representative to persuade us to deviate from the findings given by the ld. CIT(A) for retaining part additions/disallowances in the respective years. Accordingly, we do not find any merit in the cross objection filed by the assessee. The same are, therefore, dismissed in all the years under consideration. 73. In the res....
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....sallowance and the revenue is in further appeal before us and assessee has also filed cross objections. 79. The assessee has also taken a ground before us with regard to legality of assumption of jurisdiction u/s 153C of the Act. It was contended by the ld. Counsel for the assessee that no satisfaction was recorded by the Assessing Officer in case of searched person, Shri Kulwant Singh, to the effect that no document was found during the course of search which indicates undisclosed income of the assessee. He further contended that assumption of power by the Assessing Officer u/s 153C of the Act for framing the assessment is subject to the condition that the Assessing Officer assessing the searched party is satisfied that any document, bullion or jewellery or books of accounts or documents seized from the premises of the searched person pertained to some person other than the person referred to in section 153A of the Act that the books of accounts or documents or assets so seized were requisitioned shall be handed over by the Assessing Officer of the searched person to the Assessing Officer having jurisdiction over such other person. He further submitted that the opening words of....
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...., he added the amount in the assessee's income. 86. By the impugned order, the learned Commissioner of Income Tax (Appeals) has deleted the addition after having the following observations :- " The submissions of the AR and the observations of the A.O. have been duly considered by me. In my opinion, the additions made by the A.O. is 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 A.O. thereafter that these credits are non-genuine or these are the funds of appellant circuitously introduced as cash credit. The appellant filed confirmations of all the creditors, who are regular tax payers bearing PAN. The loan was received through banking channels. Under these circumstances the identity, capacity and genuineness of the loan were proved by the appellant and the initial onus cast on him was fully discharged. Naturally, the appellant cannot be expected to prove the source of source. In this view of the matter, I am of the considered view that the impugned cash credit cannot be added as income of the assessee u/s 68..." 87. We have considered the rival contentions, gone through the or....
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....unds and confirm the action of the learned Commissioner of Income tax (Appeals). 93. Similarly, the disallowance of interest on cash credit has already been dealt with in the assessee's case for the assessment year 1999-00. As the facts are the same, we follow our decision in the assessee's own case for the assessment year 1999-00 and confirm the action of the learned Commissioner of Income tax (Appeals) in deleting the disallowance of interest paid on these credits. 94. The addition of Rs. 4,40,000/- on account of unexplained cash credit from Jamuna Prasad and Shri Kulwant Singh Rs. 1,13,940/-has been deleted by the learned Commissioner of Income tax (Appeals) after recording detailed findings. This ground is the same as dealt with in the assessment year 1999-00 in the assessee's own case. Following the same reasoning and conclusion, we confirm the action of the learned Commissioner of Income tax (Appeals). 2001-02 95. The grounds taken by the revenue with regard to agricultural income, interest expenses, unexplained cash credit, gross profit addition, disallowance of evaporation expenses are the same as discussed in the assessee's own case for the assessment year 1999-00....
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....of Rs. 1,40,000/-. A.Ys. 2002-03, 2003-04, 2004-05 and 2005-06: 100. The deletion of addition on account of agricultural income, interest expenses, gross profit addition, disallowance of evaporation expenses, amount deposited as capital, amount deposited in SB account Rs. 6668/- have already been discussed by us in earlier year. As the facts are the same and detailed findings have been given by the learned Commissioner of Income tax (Appeals), we confirm his action. 101. The next ground for the assessment year 2002-03 relates to deleting the disallowance of Rs. 20,000/- out of conveyance and general expenses. The learned Commissioner of Income tax (Appeals) has deleted the disallowance by observing that the Assessing Officer has not pointed out any expenditure of unverifiable nature. Just by mentioning that the assessee has incurred operative and administrative expenditure of Rs. 15,956/- and sales promotion expenses of Rs. 23,906/-, the Assessing Officer on a lump sum basis disallowed Rs. 20,000/- by stating that the genuineness of expenditure cannot be verified. We find that the assessee has furnished all the supporting evidence and the learned Commissioner of Income tax....
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....d to the cross objection filed by the assessee wherein part of the disallowances/additions retained by the ld. CIT(A) has been challenged, nothing was brought to our notice by the ld. Authorized Representative to persuade us to deviate from the findings given by the ld. CIT(A), we, therefore, do not see any merit in the cross objection filed by the assessee. Accordingly, cross objections in all the years under consideration are dismissed. I.T(SS).A.Nos.56/Ind/2008 & C.O.No.37/Ind/2008 : 109. This is an appeal filed by the Revenue and cross objection filed by the assessee against the order of CIT(A) for the assessment year 2005-06. 110. The facts, in brief, are that the assessee is an individual and is daughter of Shri Kulwant Singh. There was a search at the residential premises of the father of the assessee Shri Kulwant Singh on 2.11.2004. Before the AO, the assessee raised objection for proceedings u/s 153C and asked the AO to show satisfaction arrived at for assuming jurisdiction u/s 153C. However, the AO did not respond to the objections raised by the assessee and proceeded to make assessment u/s 153C. The same was submitted before the CIT(A) by the assessee, but he di....
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....low gross profit, evaporation expenses are the same as dealt with in case of Shri Kulwant Singh in the assessment year 1999-2000. Following the same reasoning and conclusion, we confirm the action of the CIT(A) for deleting the addition on account of gross profit and evaporation expenses. 116. With regard to addition on account of conveyance and general expenses amounting to Rs. 30,000/-, which has been deleted by the ld. CIT(A), we find that personal element in such expenses cannot be ruled out. Accordingly, we confirm the addition of Rs. 10,000/- on this account. 117. The AO has also disallowed salary expenses of Rs. 1,41,700/- by stating that salary is excessive and not supported by the evidence. The ld. CIT(A) deleted the same by observing as under :- "I have perused the AR's submission and findings of the AO. In my opinion, the additions made by the Assessing Officer were unwarranted and uncalled for. The reasons adduced by the Assessing Officer for such disallowance are totally irrelevant and superfluous. He 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 exorb....