TaxTMI 
TaxTMI 
1998 (11) TMI 666
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.... Rs. 87,594 1988-89 Rs. 48,962 Rs. 80,962 1989-90 Rs. 75,563 Rs. 1,16,563 1990-91 Rs. 80,461 Rs. 1,23,461 1991-92 Rs. 53,981 Rs. 31,95,984 1992-93 Rs. 60,851 Rs. 1,18,851 1993-94 Rs. 2,47,332 Rs. 2,87,332 1994-95 Rs. 12,71,400 Rs. 14,48,512 1995-96 Rs. 12,75,385 Rs. 17,74,129 1996-97 Rs. 32,76,529 Rs. 38,07,015 1997-98 Rs. 1,08,19,344 Rs. 1,26,74,287 Till 18-12-1996 Total Rs. 1,72,61,405 (Sic) Rs. 2,37,14,690 Rs. 64,53,285 3. The addition made under various heads are challenged as under :- ADDITION ON ACCOUNT OF BENAMI INVESTMENT IN PROPERTIES AT BANGALORE 3.1 During the course of search, an agreement (Annexure A-1) was seized from the premises of the assessee. The agreement was between one, Mrs. Pushpa Rawal and Mrs. Kiran Mohan, elder sister of assessee's wife, Smt. ....
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....aw. Mrs. Rawal also admitted that she had received Rs. 31 lakhs at the time of signing of agreement and that amount was spent on construction, although, Mrs. Kiran Mohan had denied payment of Rs. 31 lakhs. As Mrs. Kiran Mohan denied the payment, the only inference that was possible was that payment was actually made by Shri David Dhawan. The Assessing Officer also made the following observations to justify the addition in the hands of the assessee :- "Even if, for a moment, it is presumed that the investment was made by Smt. Kiran Mohan and not by the assessee, the said agreement should have been kept with Smt. Kiran Mohan and could not have been recovered from the custody of the assessee during the search. Making undisclosed investment by paying so much unaccounted cash makes the deal shady and secret. The only available evidence for such undisclosed transaction can be a document signed by both the parties and only the genuine investor will keep it safely with him for any future eventuality." (vii)The presumption of correctness of entries under section 132(4A) was invoked by the learned Assessing Officer. He further observed that there was no evidence on record which might p....
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.... was purchased by Mrs. Kiran Mohan, who is sister of assessee's wife. Mrs. Pushpa Rawal in her statement dated 2-12-1996 had stated on oath as under:- "Kiran Mohan agreed to make some investments in my project and had advanced me a sum of Rs. 31 lakhs in cash. An agreement was also made to this effect." 5.1 The aforementioned documentary evidence and oral evidence clearly establish that Mrs. Kiran Mohan invested sum of Rs. 31 lakhs in purchase properties at Bangalore on 29-2-1992. By no stretch of imagination and from the record, an inference can be drawn that the assessee invested Rs. 31 lakhs in purchase of shops. With utmost humility and respect, we say that the Assessing Officer did not make out any case to establish that the assessee is benami owner of properties in question or investment was made by him. Even suggestion to that effect was not made by the Assessing Officer while examining the witnesses. This is clear from the following questions put to Mrs. Pushpa Rawal and her answers :- "Q. 5. When the agreement was prepared and who had arranged the witnesses ? Ans. The agreement typed on stamp paper brought by Mrs. Kiran Mohan on which I put my signature. The wi....
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....you have not given any proof or evidence for the above categorically, I am asking the same question i.e. Q. No. 6 above, again. Please state categorically whether you have any proof/evidence to prove that the said property papers do not belong to you ? Ans. Please give me some time to produce the proof, and I will furnish the same. Coincidentally the party concerned i.e. Mrs. Kiran Mohan, happens to be my sister who lives in Delhi, and she will own the papers. Q. No. 8 How do you get the business for the Dee Dee Edits ? (not relevant)" Evidently, the case is being made on the basis of "presumptions" under the Evidence Act. A layman not having knowledge of Evidence Act cannot reasonably be expected to say that presumptions raised against him/her in the question are wrong. But we do not know how when name of the purchaser is specifically recorded in the agreement, any presumption of ownership can be raised against the assessee. At any rate, above statement on oath rebuts the presumption and shifts the onus on the revenue to prove that the assessee was benamidar of the property and had made the investment. 6. As already noted, the revenue has not established that the as....
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....Memorandum of Understanding. I was planning to buy this property at Bangalore for which two copies of the said MOU were made. The next at the residence of Mrs. David Dhawan, my sister. There was some dispute and the agreement was cancelled and tore off my copy of the said papers. It seems that Mrs. Rawal left her copy which was no value to her behind." 9. It is clear from the above that she did not deny having made payment to Mrs. Pushpa Rawal but took a stand that deal was cancelled and original agreement was torn off. The agreement seized might have been kept by Mrs. Rawal. This statement, of course, is against other material available on record and, therefore, cannot be accepted. 10. The third important related question raised by the Assessing Officer is that clear evidence of capacity of Mrs. Kiran Mohan to make the disputed investment was not shown. Against this, during the course of hearing, the learned counsel for the assessee brought to our knowledge assessee's letter dated 5-1-1998 filed before the Assessing Officer to the effect that Mrs. Kiran Mohan had made a disclosure under the Amnesty Scheme and that disclosure covers Rs. 31 lakhs in dispute. The above evidence....
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....e which had to establish that she did not have such means, have not brought any material on record to establish that she could not make investment as disclosed. Therefore, second and third circumstances mentioned above do not advance the case of the revenue. Now, turning to fact that agreement of sale was recovered from the possession of Mr. & Mrs. Dhawan, the above fact alone cannot be treated as conclusive or irrefutable to hold that the assessee as a benamidar of Mrs. Kiran Mohan. The relative importance of this fact is to be taken with other documentary and oral evidences available on record. Therefore, on consideration of all circumstances, we find it difficult to accept the case made out by the revenue. The possession of agreement has also been reasonably explained. Therefore, in our opinion, the Assessing Officer was not justified in making addition of Rs. 31,00,000 as 'income from undisclosed income'. The same is directed to be deleted. 12. In the next ground of appeal, the assessee has challenged the addition through disallowance of fees of Rs. 2,50,000 paid for acquiring membership of Otters Club. 12.1 The Assessing Officer was of the view that the assessee is a fam....
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....de has no support of any material and is unjustified. It is seen that even in the assessment years 1995-96 and 1996-97 when assessee and his wife showed household withdrawals of Rs. 78,000 and Rs. 1,20,000, the Assessing Officer made ad hoc addition of Rs. 20,000 and Rs. 42,000 on general observations and without giving any basis. We further find that the assessee earned substantial income only from assessment year 1994-95 onwards. Upto assessment year 1992-93, the income of the assessee ranged between Rs. 50,000 to Rs. 80,000 approximately. Having regard to the above figures, the withdrawals shown are quite reasonable. The Assessing Officer was not justified in applying the yard stick of latest year when income was shown at more than one crore in earlier years, when admittedly professional income ranged from Rs. 50,000 to Rs. 80,000. From assessment years 1993-94 onwards, the wife of assessee had also contributed to household withdrawals. If those figures are taken into account, the withdrawal cannot be said to be inadequate. Without material to show that the assessee made unexplained investment or incurred unexplained expenditure, we are unable to hold that assessee earned and sp....