TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 233
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....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 addition The L'd AO (a) on the basis of non existent investments On the ba....
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....ral 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 DHFC Bank 01.04.01 to 31.03.02 5,27,489 5 D-38, page 1560 Stock Holding Corpn. 09.10.01 60,000 6 05.10.01 1561 page - do- 3,00,00....
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....he 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 return Addition made in the assessment : 4,52,166.00 ii) Undisclosed investment 49,50,127.00 iii) Income declared by kum. Neha puri 3,63,470.00 iv) Income declared by kum. Divya puri 1,74,109.00 v) Estimated interest income of Amita Puri 1,61,638.00 The Ld. CIT(A) has enhanced the income of the assessee as detailed below : vi) Income from interest 4,36,048.00 vii) Income from interest 64,552.00 Now let us take the specific grounds of appeal raised by the asses....
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.... 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 Corruption Act, 1988, with the court of Special Judge, Patiala House Courts, New Delhi on 30.01.2004. 8) During the first round of appeal the then Ld. CIT(A) had issued summons to the principal officer of Shree Ambika Jewellers. However, the summons was not complied with. The appellant was also asked to produce him, however, he could not produce the principal officer before the then CIT(A). In view of the above findings ld. CIT(A) upheld the action of AO by observing as under:- "..... I am of the considered view that this is a case where the appellant has floated the stor....
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....d 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 and two daughters was explained. For instance the AO added a sum of Rs. 65,995.00x3= 1,97,985.00 in the hands of the assessee as undisclosed income. But actually these are 3 FDs in the name of the assessee, his wife and one daughter - Neha Puri. The ld. AR drew our attention to pages 115 to 117 of the paper book where it was seen from the bank statement that a sum of Rs. 48,000.00 each were deposited in FD account in the above three names on dated 26.3.1999. These FD got matured on 27.03.2002 for gross amount of Rs. 68,459/- (Net after TDS Rs. 65,995/-) This FD was disclosed to the income tax dep....
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....ly 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. 42,630/- to VCC 56068,VCC 56068 for Rs. 42,000/- was invested on 21.11.2001 which is placed at page 124 of the paper book by renewal and out of maturity amount of VCC 45646. It was pre-maturely cashed on 11.03.2002 for Rs. 42,630/- amount credited in SB a/c. VCC 45546, VCC 47971 and VCC 47972 are figuring in the statement of affairs of Amita Puri (as on 31.03.2001) at Sl. No. 9, 40 & 41 at pages 30- 31. Interest amount of Rs. 16,399/- relating to VCC 45546, Rs. 15,286/- relating to VCC 47971, Rs. 4,586/- relating to VCC 47972 and Rs. 630/- relating to VCC 56068, were offered to tax by Amita Puri and assessed in her hands. Refe....
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....f 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 Hon'ble ITAT Nagpur in the case of Divya Puri has treated the income in her own hand on substantive basis and the copy of the order is placed at page 104 of the Paper Book. On the other hand the ld. DR relied on the order of authorities below. 11.1 From the aforesaid discussion we find that income declared by the daughters of the assessee in their respective hand were taxed in the hands of the assessee on substantive basis. Now from the submission of the assessee, we observe that the same has been taxed in their individual names on substantive basis. The ld. DR has not brought anything on record contrary to the argument of ld. AR. and simp....
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....nce 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 additions of Rs. 4,36,048/- on account of bank FD interest, and Rs. 64,552/- on account of interest on company deposits is required to be added in the hands of the appellant in AY 2002-03. Hence, for the same reason for A.Y 2002-03, the AO is directed to make addition of Rs. 4,36,048/- by way of bank FD interest and a sum of Rs. 64,552/- by way of interest in Company deposits. With aforesaid direction the additions made by the Assessing Officer are confirmed for both the years. Accordingly, ground No. (viii) of the appeal of both years are dismissed." Being aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us. 17. We have heard both ....
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....py 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, the initiation of proceeding 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 facts & circumstances of the case, the L'd CIT(A) erred in confirming the addition of Rs. 26,84,104/- of those investments / deposits, etc. in banks etc. holding that no evidence was produced to established the nexus or immediate connection between maturity values of earlier investments to purchase the listed alleged investments, although the AO has stated in the remand report dated 14/02/2011, at para 3 thereof, that he conducted detailed examination of various d....
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....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 20-02-2002. 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 minor daughters - Divya Puri and Neha Puri and details of such investment / deposits are tabulated reproduced below:- SL. No. Description Amount Shri V.K. Puri Smt. Amita Puri Kum. Divya Puri! Kum. Neha Puri 1 D-434 ICICI Banking Corpn. Ltd. Mumbai FD No. 045123 & 24 Dt. 26/04/1996 15,000 15,000 2. D-293 Syndicate Bank, Connaught Circle N. Delhi FX 57212 & 23 Dt. 06/05/1996 25,000 50,000 &....
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....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 Service P. Ltd., Bond Certificate No.55984 dt. 21.03.97 10,000 TOTAL 16,60,240 521,810 786,810 215,810 215,810 The AO found that the assessee has filed his return of income declaring income of Rs. 1,94,230/- 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 wife of assessee Smt. Amita Puri also submitted a reply admi....
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.... 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 CIB'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 Jai, his employee and Shri Dinesh Vyas in June-July, 2002 i.e. after the registration of RC against the assessee, his wife Smt. Amita Puri, and Shri Vinesh Vyas us/s 120B, 104, 193 of IPC r.w.s 13(2), 13(10)(e) of Prevention of Corruption Act, 1988, with the court of Special Judge, Patiala House Courts, New Delhi on 30.01.2004 8) During the first round of appeal the then Ld. CIT(A) had issued summons to the principal officer of Shree Ambika Jewellers. However the summons was not complied with the appellant was also asked to produce him, however, he could not produce the principal officer before the then CIT(A). 22.1 In view of the above findings of the ld. CIT(A) upheld the action of AO by observing as under :- "..... I am of the considered view that this is a case where the appellant has floated the story of sale of jewellery and silver utensils to explain the investm....
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....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 and two daughters was explained. For instance the AO added a sum of Rs. 15000.00x2= 30,000/- in the hands of the assessee as undisclosed income. But actually these are 2 FDs in the name of the assessee, his wife. The ld. AR drew our attention to pages 93 to 94 of the paper book where it was seen that these investments have been made out of cash withdrawals of Rs. 1.10 lakh (Rs. 35,000/- from SB a/c No. 6581 on 26.04.1996 page 299 or Rs. 10,000/- and Rs. 25,000/- from SB a/c No. 6583 on 20.04.1996 and 26.04.1996 page 303, Rs. 20,000/- from SB a/c No. 6663 on 26.04.1996 page 306 and Rs. 20,000/- from SB a/c No. 6664 on 26.04.1996 page 309, all of UBI of Mumbai). The cash flow statement may be seen at page 283 of the paper book. The source of credits in these four SB accounts of UBI is given at page 234 of paper book. The total ....
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.... 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 additions of Rs. 4,36,048/- on account of bank FD interest, and Rs. 64,552/- on account of interest on company deposits is required to be added in the hands of the appellant in AY 2002-03. Hence, for the same reason for A.Y 2002-03, the AO is directed to make addition of Rs. 4,36,048/- by way of bank FD interest and a sum of Rs. 64,552/- by way of interest in Company deposits. With aforesaid direction the additions made by the Assessing Officer are confirmed for both the yea....