AI Drafter 
TaxTMI 
TaxTMI 
2016 (5) TMI 233
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....ng u/s. 147 read with Sec. 148 of the I.T. Act is vague, arbitrary, bad in law and beyond the provision of law and therefore reopening proceeding is liable to be quashed. (2) That under the fats circumstances of the case, the L'd CIT(A) erred in confirming the addition of Rs. 49,50,127/- of those investments / deposits in banks etc. holding that no evidence was produced to establish the nexus or immediate connection between maturity values of earlier investments to purchase the listed alleged investments, although the AO in the Remand Report dated 14/02/2011 at para - 5 conducted detailed examination of various documents, evidence & consequently recommended for deletion of the addition of Rs. 49,50,127/-. (3) The L'd CIT(A) did not consider the repeated & multiple additions, once in the relevant Asst. Year when such investments were purchased and again in the year of maturity when matured amounts were being deposited in the bank accounts. (4) The L'd CIT(A) erred in confirming the addition made by the L'd AO which was based on surmises, suspicion & conjecture as evident from para - 14 of the Asst. Order. (5) The L'd CIT(A) erred in confirming the....
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....ng to the specific issue of the case, let us understand the history of the case. The assessee is an individual and serving as Central Government employee in Central Excise Department. There was a search operation conducted at the residence of assessee in Mumbai by the Central Bureau of Investigation (CBI for short) on dated 20-02-2002. As a result of search, various documents such as FDRs, TDRs, Bank passbook were seized by the search party which were handed over to the Department of Income Tax. The AO examined the seized documents and found various deposits, investments in the name of assessee, his wife, Amita Puri, his daughters - Divya Puri and Neha Puri and details of such investment / deposits are tabulated and reproduced below:- Sl No. Description V.K.Puri Amita Puri Divya Puri Neha Puri 1 D-141 page 1521 UTI Bank Ltd. Pune, 30.06.01 31.03.02 65,995 65,995 65,995 2 Page 220 Syndicate bank Intt. 112/-, 9,399/-, 145, 65,286/-, 58,727/-, 19,586/-, 42,630/-, 8/-, from 09.07.01 to 21.03.02 1,95,893 3 D-299 Syndicate VCCC No.45546 01.12.01 42,000 4 D-331 DH....
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....f Rs. 4,52,166/- for the relevant previous year. The AO observed huge difference between the income of assessee declared in the return and the investment / FD revealed from the seized documents. The AO also observed that the assessee did not attend the income tax proceedings at all and kept the matter lingering on one or the other pretext. Since the assessee in the present case is a central government employee and was transferred from one place to another during the proceedings of income tax therefore the assessee failed to attend the hearing. However the AO sought the clarification on the facts revealed from the seized documents. The assessee submitted a reply vide letter dated 10.03.2005 but no corroborative evidence was furnished in support of his claim. The assessee being a central govt. employee was posted at Raipur at the time of assessment so he could not attend the assessment proceedings personally to defend his case. At the same time, assessment was getting time barred so AO had no alternate but to frame the assessment u/s 144 of the Act to the best of his judgment. Accordingly, AO framed the assessment under section 144 of the Act as under : i) Income as per retu....
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....d primary/ original investment. 2) The appellant failed to substantiate the sources of funds wherefrom the original investment was made or investment made from his disclosed sources of income. 3) No evidence that the father of Mrs. Amita Puri was the man of means. No gift deed was filed. The jewellery was never disclosed in the return of income or wealth tax return. 4) No declaration was filed under gold control Act. 5) The assessee Shri V.K. Puri never declared the said assets as per the CCS (Conduct) Rules, 1964. 6) Shree Amibika Jewellers was very small firm dealing in artificial jewellery and no such purchase of jewellery from Smt. Amita Puri was recorded in its books of accounts or its sales tax and income tax return. 7) The CBI's investigation led to the finding that Shri Vinesh Vyash, prop. of Shree Ambika Jewellers, had fraudulently prepared the purchase bills with the help of Shri Girish Jain, his employee and Shri Dinesh Vyas in June-July, 2002, i.e., after the registration of R.C. against the assessee, his wife Smt. Amita Puri, and Shri Vinesh Vyas u/s. 120B, 104, 193 of IPC r.w.s. 13(2), 13(10)(e) of Prevention of Co....
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....come in IT/WT returns, the claim of the appellant regarding sale of gold and silver items cannot e accepted. If it is accepted then any person can be able to convert his black money into white by just claiming that he has sold gold and silver without producing any documentary evidence in the form of Income Tax and Wealth Tax returns. Considering all the facts & circumstances of the case I confirm the additions on account of investment of Rs. 26,84,104/- for Asstt. Yr. 1997-98 and Rs. 54,87,706/- for Asstt. Yr. 2002-03. " Being aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us. Shri P.K.Himmat Singhka Ld. Authorized Representative appearing on behalf of assessee and Shri Alak Nag, Ld. Departmental Representative appearing on behalf of Revenue. 6. We have heard rival contentions of both the parties and perused the materials available on record. Ld. AR submitted two sets of paper books containing pages from 1 to 318 and also submitted written submission which runs from pages 1 to 45. Before us the ld. AR also submitted a chart in tabular form where the source of every FD and investment in respect of all the four persons i.e. assessee, his wife a....
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....interest of Rs. 3705/- which is placed at page 28 of the paper book. As seen from Bank statement, Rs. 9,399/- relates to Vikas Cash Certificate (for short VCC) of Syndicate Bank 45546, VCC 45546 was invested for Rs. 35,000/- on 21.08.1998 which matured on 21.11.2001for Rs. 51,399/- which is placed at page 120 of the Paper Book. This FD was renewed on 21.11.2001 for Rs. 42,000/- as VCC 56068 and balance of Rs. 9,399/- was credited in SB a/c No.36516 on 01.12.2001.As seen from bank statement Rs. 65,266/- to VCC 47971, VCC 47071 was invested for Rs. 50,000/- on 06.05.1999 which is placed at page 121 of the Paper Book and pre-maturely cashed on 11.03.2002 for Rs. 65,286/- of amount credited in SB a/c.As seen from bank statement of Rs. 58,727/- to VCC 47977, VCC 47977 was invested for Rs. 45,000/- on 08.05.1999 which is placed at page 122 and pre-maturely cashed on 11.03.2002 for Rs. 58,727/- amount credited in SB a/c. As seen from Bank statement, Rs. 19,586/- relates to VCC 47972, VCC 47972 was invested for Rs. 15,000/- on 06.05.1999 which is placed at page 123 of Paper Book and pre-maturely cashed on 11.03.2002 for Rs. 19,586/- amount credited in SB a/c. As seen from bank statement Rs....
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....their individual hands which was assessed in their respective hands on protective basis. During the course of assessment proceedings of Mr. V.K. Puri the AO found several Investments/FDs in the name of assessee, his wife and his daughters which were not disclosed for the taxation purpose. The AO treated all the undisclosed investments/ FDs as the income of the assessee. Accordingly the AO opined that the income shown by the daughters of the assessee in actuality is the income of the assessee and it has just been routed through their accounts to avoid the tax liability. Therefore the AO added the income declared by both the daughters of assessee to the total income of assessee on substantive basis. 9. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who upheld the action of AO. Being aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us. We have heard rival contentions and perused the materials available on record. 10. The ld. AR before us submitted that the ld. CIT(A) Raipur in the case of Neha Puri has treated the income in her own hand on substantive basis and the copy of the order is placed at page 63 of the Paper Book. Similarly the ....
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....of the assessee but there was no information of such income. So in the absence of any information, it was not possible to quantify the interest income with accuracy. Therefore AO presumed interest rate @ 10% and worked out interest income of Rs. 1,61,638/- and added to the total income of assessee. 16. Aggrieved, assessee preferred appeal before Ld. CIT(A) who upheld the action of AO by observing as under:- "12.3 I have carefully considered the submission of the appellant and the remand report. As the addition of undisclosed investments have been upheld, it is concluded that addition of the income earned on such investments is justified in law. Hence the addition of Rs. 2,68,410/- (for AY 97-98) and Rs. 1,61,638/- (for AY 02-03) made by Assessing Officer are confirmed. Further, on the basis of submissions before me, I am inclined to agree with the views of the AO that in accordance with the provisions of law three fourth of interest received from Company Deposits i.e. Rs. 4,86,480/- needs to be added in the hands of Shri V.K.Puri along with bank FD interest of Rs. 6,70,567/- accordingly. Similarly for the same reasons the AO has suggested in the remand report that addit....
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....dy been taxed in the hands of Amita Puri - wife of the assessee. 18.1 The ld. CIT (A) has enhanced the interest income in the hands of the assessee for the deposits made in the FD and in the company deposit on basis of remand report received from the AO. This interest income was not disputed by the AO at the time of assessment. However the ld. AR of the assessee submitted before us that the interest income for Rs. 5,00,600/- is actually the income of the wife (Smt. Amita Puri) of the assessee which is the part of the income declared by her for the AY 2002-03 for an amount of Rs. 16,01,520.00. Our attention drew to the page no. 50-52 of the paper book where the copy of the assessment order was placed. The ld. DR at the time of hearing did not bring anything on record contrary to the submission of the assessee. We find that the addition of the interest income in the hands of the assessee will amount to double tax. Accordingly we reverse the order of the ld. CIT(A) and this ground of the appeal of the assessee is allowed. Coming to ITA No.1905/Kol/2012 for A.Y. 97-98. 19. Assessee has raised following grounds:- "(1) That under the facts & circumstances of the case, t....
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....,70,567/- which is unjustified, arbitrary and beyond the provision of law, since the same has already been taxed in the hands of Mrs. Amaita Puri, the wife of the appellant. (8) That the L'd CIT(A) was wrong in relying upon the 2nd remand report dated 12/-09/2012, which was framed without any detailed examination of the various documents & submissions and therefore suffers from injury, illegality and irrelevance. (9) That the L'd CIT(A) erred in observing that additional evidence is not admissible despite paper books containing various documentary evidence were referred to the AO by him for examination in terms of the ITAT, Kolkata order dated 25/06/2010, thus rule 46A was complied with. 20. At the time of hearing Ld. AR of assessee fairly conceded that grounds No. 1 and 3 to 5 are not pressed. Hence, these are dismissed as not pressed. 21. Second ground of assessee's appeal is that Ld. CIT(A) erred in confirming the addition of Rs. 26,84,104/- on account of the following : The brief facts of the case are that there was a search operation conducted at the residence of assessee in Mumbai by the Central Bureau of Investigation (CBI for short) on dated 20-02....
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.... LME 0818038 & 37 Dt. 23.10.96 50,000 50,000 17. D-219 Syndicate bank Dehradun Vikas Cash Certificate 232119, 20 Dtd. 29.10.96 50,000 50,000 18. D-586 Bharat Forgte Ltd. Pune 000279, 280, 281 & 282 Dt. 30.10.96 11,000 11,000 11,000 11,000 19. D-542 Clariant India Ltd. Mumbai CF 800100104, 101, & 800099 Dt.31.10.96 11,000 11,000 11,000 11,000 20. D-541 Kirloskar Pncunatic Co. Ltd. A 64996, 97, 98 & 655020 Dt. 11.11.96 11,000 11,000 11,000 11,000 21. D 308 PNB Dehradum FD 2559 Dt. 14.03.97 50,000 22. D-557 Zee Telefilm Ltd. FD 6000157, 156, 155, 154 Dt. 25.03.97 11,000 11,000 11,000 11,000 23. D-621 IL & FS Ltd. Mumbai, FD 00144548, 459, 460, 461 Ddt. 31.03.97 11,000 11,000 11,000 11,000 24. D-620 Bharat Petroleum Corpn. Ltd. Mumbai TD No. 636793, 795, 796 & 797 Dt. 12.04.96 11,000 11,000 11,000 11,000 25. D-555 Krishna Bhagya Jala Nigam Ltd., 640473, 74, 75, & 76 Dt. 15.04.96 5,000 5,000 5,000 5,000 26. D-585 MAS Ser....
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....1992 to January 1995. It was further submitted by the ld. AR that the source of making the investment during the period from September 1992 to January 1995 was the sale proceeds of 20 Kg gold and 197 Kg. silver. The wife of the assessee, Mrs. Amita Puri received the gold and silver from her father Mr. Inder Sain Puri. However the ld. CIT(A) disregarded the claim of the assessee by observing as under : 1) No evidence was produced before the AO to establish the nexus or immediate connection between maturity value and primary/ original investment. 2) The appellant failed to substantiate the sources of funds wherefrom the original investment was made or investment made from his disclosed sources of income. 3) No evidence that the father of Mrs. Amita Puri was the man of means. No gift deed was filed. The jewellery was never disclosed in the return of income or wealth tax return. 4) No declaration was filed under gold control Act. 5) The assessee Shri V.K. Puri never declared the said assets as per the CCS (Conduct) Rules, 1964. 6) Shree Ambika Jewelers was very small firm dealing in artificial jewellery and no such purchase of jewellery from....
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....he appellant has also tried to save himself by creating a design to shift his income in the hands of his wife, Smt. Amita Puri. It is well settled principle of law that if income belongs to 'A', it ought to be taxed in the hands of 'A', not in the hands of 'B' unless 'A' is minor. Income must be taxed in the hands of the person to whom it has accrued and to whom it really belongings. Therefore, the appellant cannot be allowed to take shelter behind the income of any other person. In absence of any disclosure of assets/income in IT/WT returns, the claim of the appellant regarding sale of gold and silver items cannot e accepted. If it is accepted then any person can be able to convert his black money into white by just claiming that he has sold gold and silver without producing any documentary evidence in the form of Income Tax and Wealth Tax returns. Considering all the facts & circumstances of the case I confirm the additions on account of investment of Rs. 26,84,104/- for Asstt. Yr. 1997-98 and Rs. 54,87,706/- for Asstt. Yr. 2002-03. " Being aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us. 23. We have heard rival contentions of both the parti....
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.... In view of above we are inclined to reverse the order of the lower authorities and assessee's ground is allowed. 25. Sixth issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of AO by making the addition of interest income of Rs. 2,68,410/- being 10% of investment of Rs. 26,84,104/- in the hands of his wife i.e. Amita Puri. During the course of assessment proceedings AO has added a sum of Rs. 26,84,104.00 as undisclosed investment but the assessee did not offer any interest income in the year under consideration. As the above investment has been included as undisclosed income of the assessee, therefore the interest accrued on such investment also needs to be included in the income of the assessee but there was no information of such income. So in the absence of any information, it was not possible to quantify the interest income with accuracy. Therefore AO presumed interest rate @ 10% and worked out interest income of Rs. 2,68,410/- and added to the total income of assessee. 26. Aggrieved, assessee preferred appeal before Ld. CIT(A) who upheld the action of AO by observing as under:- "12.3 I have carefully considered the submi....