TaxTMI 
TaxTMI 
2016 (7) TMI 389
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....the assessee had kept Fixed Deposits with the said Pat Sanstha as under : 23-03-2002 Chintamani Nagari Sah. Pat Pedhi Maryadit, Dhule Rs.1,00,000/- 29-08-2001 -do- Rs.25,000/- 29-08-2001 -do- Rs.25,000/- 3. The source of investment was not satisfactorily explained by the assessee before the ADIT (Investigation), Nashik. Notice u/s.158BD dated 24-02-2003 was served on the assessee on 07-03-2003. The assessee filed return of income for the Block Period on 28-01-2005 disclosing total income of Rs. 3,17,700/-. The AO completed the assessment u/s.158BC(c) r.w.s. 158BD of the Act on 24- 03-2005 determining the undisclosed income at Rs. 3,72,267/-, the details of which are as under : Asst. Year Amount 1997-98 Rs.70,196/- 1998-99 Rs.79,358/- 1999-00 Rs.1,06,293/- 2001-02 Rs.59,321/- 2002-03 Rs.57,099/- 4. The assessee filed an appeal before the CIT(A) who had partly allowed the appeal of the assessee. Subsequently, the assessee approached the Tribunal. The Tribunal vide order dated 13-08-2010 while partly allowing the appeal of the assessee restored the issue to the file of the AO with the followin....
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.... above patsanstha. The appellant has given a detailed cash flow statement and other supporting documents to explain the source of these FDRs. The appellant was having business income of Rs. 15,000/- and Rs. 32,000/- for A.Ys. 1997-98 and 2000-01 respectively. I find from the records that the AO has not given any credit for the said business income towards FDRs. While it is true that the appellant has not been able to fully match the FDRs with the availability of funds, AO was also not justified in not giving any credit of the business income towards investments in FDRs. In the facts and the circumstances of the case and also keeping in view the smallness of the tax involved and the number of years these cases have been pending in appeal [ since 2002], I am of the considered opinion that 25% of the business income could be allowed towards source of the unexplained FDRs for A.Y. 1997-98. This will meet the ends of the justice. Similarly a credit of Rs. 3,240/- [i.e. the net addition retained on account of unexplained FDR after giving relief by the CIT(A)] is given to the appellant for A.Y. 1999-2000 out of his business income. Therefore, the appellant gets a benefit of Rs. 3,75....
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....e facts and circumstances of the case should have been accepted and the AO should not have enhanced such income in A.Yrs. 1998-99 to 2002-03. 10. Referring to the decision of Hon'ble Madras High Court in the case of CIT Vs. A.N. Dyaneswaran reported in 297 ITR 135 he submitted that the Hon'ble High Court in the said decision has held that items regarding which assessee had reasonable explanation cannot be assessable as undisclosed income. He submitted that since the assessee in the instant case is only a Hawker and has disclosed business income on account of selling of Pooja items the same should not have been enhanced by the AO. 11. So far as addition made by the AO to the undisclosed income on account of Fixed Deposits made by the assessee is concerned, he submitted that if the original investments in Fixed Deposit with Vijaya Bank are considered, then no addition is called for. Referring to page 58 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the details of Fixed Deposits on the date of search, i.e. on 17-09-2002, which are as under : Modi Group case Details of FDRs as on 17-09-2002, i.e. as on the date of search On Chintam....
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....to the fact that the assessee in the instant case has not maintained any books of account and has filed the return of income for the block period, the details of which are already given at Para 9 of this order. We find the AO accepted the returned business income for A.Y. 1997-98 at Rs. 51,700/- but for the subsequent years he made certain additions, the details of which are already given at Para 9 of this order. In our opinion, under the facts and circumstances of the case, the addition on account of business income for different assessment years appears to be in the higher side. We therefore direct the AO to substitute the income excluding Fixed Deposits and deduction u/s.80L and exemption limit as under : Income returned by the assessee before claiming deduction u/s.80L and exemption limit (Rs.) Income assessed by the AO excluding FDR and deduction u/s.80L and exemption limit (Rs.) To be determined as per our direction 51,700/- 51,700/- N/A 50,858/- 91,358/- 55,000/- 58,121/- 94,621/- 60,000/- 56,262/- 56,262/- 60,000/- 58,821/- 71,321/- 60,000/- 62,154/- 66,099/- 65,000/- 15. So far as addition on account o....
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....ashchand Modi) : 17. Grounds raised by the assessee are as under : "1. The CIT(A) erred in determining the undisclosed income at Rs. 23,015/- by not allowing the proper credit for the available cash flow for the investment in FDRs and by confirming the additions to the estimated business income. 2. The undisclosed income should be determined at Rs. NIL. 3. The appellant craves leave to Add/Alter/Amend/Delete any of the grounds of appeal." 18. After hearing both the sides, we find the details of addition after appeal effect is as under : Sr. No. A.Y. Income returned by the assessee before claiming deduction u/s.80L and exemption limit (Rs.) Income assessed by the AO excluding FDR and deduction u/s.80L and exemption limit (Rs. Addition to the income on estimate basis made by the AO (Rs.) Addition on account of FDR made by the AO (Rs.) 1 1997-98 48,956/- 48,956/- NIL 2 1998-99 48,338/- 48,338/- NIL 3 1999-2000 55,064/- 55,064/- NIL 4 2000-01 58,497/- 58,497/- NIL 20,432/- 5 2001-02 57,038/- 72,238/- 15,200/- 6 20....
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....ilarly the deposit of Rs. 85,000/- was explained to be out of gifts received from the husband. The same was disbelieved by the revenue authorities on the ground that the gift transactions are neither registered nor notarized and that there is no independent authority and/or third party witnessing the transactions and therefore such transaction has no legal support. 23. Since the assessee in the instant case is a lady and belongs to the family of a Hawker and was not filing regular returns nor maintaining books of account, it is not expected of the assessee to make gift deeds for such petty gifts which have been received from the family members. Considering the totality of the facts of the case, nature of business and status of the assessee, we direct the AO to delete the addition of Rs. 50,000/- in A.Y. 200-01. Similarly, the amount of Rs. 85,000/- has been explained to be out of gifts from the husband of the assessee which has been disbelieved by the revenue authorities. It is also a fact that assessee has filed the return showing business income of Rs. 28,000/- for A.Y. 200-01 and Rs. 51,475/- for Rs. 2002-03. Since we have accepted the gift of Rs....
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....ion is neither registered nor notarized. There is no independent authority and/or third party witnessing the transaction and as such transaction has not been recorded for which the claim of transaction has no legal support. 27. Since we have already mentioned in the preceding paragraphs that assessee belongs to a family of Hawkers selling Pooja Items, it is not expected of him to maintain such details which are usually maintained by assessees in regular business and taking help of lawyers and Chartered Accountants. The combined business income of the Modi group of cases show business income of Rs. 11,71,687/- for the block period whereas the total deposits during the block period is Rs. 9,45,000/- only. If the previous deposits are considered which were made prior to the block period, then the entire deposit of the group stands explained from the business income declared by various family members. Since various family members are staying together, it is possible that the parents keep the deposits in the name of their children. Considering the totality of the facts of the case, we are of the considered opinion that the deposit of Rs. 1 lakh by the assessee stand....