TaxTMI 
TaxTMI 
2004 (2) TMI 698
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....andard of living of assessee with modern facilities. As against this, the ld. A/R of assessee has contended that no incriminating document was found as a result of search suggesting any household expenditure over and above that disclosed by the assessee. He has contended that the Assessing Officer made this addition on estimate made of his own, and without any basis. He has contended that the ld. CIT(A) rightly deleted the addition. He has relied on the decision of ITAT, Jaipur in the case of Shri Ram Raj Soni [ITSSA No. 6(JAI) of 1997 dated 31-8-1992], Lalchand Agarwal v. Asstt. CIT 21 TW 213 and Abdulgafar A. Nadiadwala v. Dy. CIT (2000) 75 ITD 394(Bom.). 4. We have considered the rival contentions, the relevant material on record as also the cited decisions. Considering all the facts and circumstances of the case, and in particular the fact that no incriminating evidence/material, suggestive of house-hold expenses higher than those declared by assessee, was found as a result of search, together with the legal position emanating from the above referred decisions, we find the addition made by Assessing Officer on estimate basis to be uncalled for and not justified and so the de....
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....ltural land to Manohar Lal and 5 other persons for Rs. 15,000. He has contended that the Assessing Officer made the addition of Rs. 15,000 on the basis of a xerox copy of sale deed dated 17-12-1988 executed by Smt. Leela Devi w/o Shri Gopal Das Machar for some portion of land in favour of Narayan and 7 other persons (pages 57 to 60 of PB). He has contended that so far as the assessee is concerned, the assessee purchased the land measuring 3,500 sq. yards, admittedly from one Shri Hukmichand @ Rs. 250 per sq. yard, in total for Rs. 8,75,000 out of which an advance of Rs. 3,10,000 were paid by assessee to Shri Hukmichand on execution of agreement for sale (page 50 of PB) by Shri Hukmichand in favour of assessee on 29-4-1995. He has contended that the assessee purchased only a portion of land being 3,500 sq. yards only out of the land being 11 bighas, 17 biswas sold by Shri Narendra Singh for Rs. 69,000 to Smt. Leela Devi, Smt. Gulabi Devi and others being 18 purchasers in all, through sale deed dated 18-9-1986 [pgs. 52-56 PB]. He has contended that if Assessing Officer's stand was to be accepted and accordingly if the assessee had purchased the land measuring 11 bighas, 17 biswas fro....
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.... 12. We have considered the rival contentions as also the relevant material on record. Undisputedly, the documents on the basis of which these three additions were made by Assessing Officer, were only xerox copies of three sale deeds found during search at assessee's premises. No original sale deeds of the same were found in the possession of the assessee during search. The xerox copies also suggest sales in favour of other persons and not assessee. The Assessing Officer has not brought any convincing/cogent material/evidence on record to substantiate his finding regarding the investments through the said Xerox copies of sale deeds to have been made by assessee. In that view of the matter, considering all the facts and circumstances of the case, we find the deletion of these additions by ld. CIT(A) to be quite proper and justified. We, therefore, decline to interfere with the same. 13. Ground No. (v) disputes the deletion of addition of Rs. 68,000 made by the Assessing Officer on account of unexplained investment in money lending on the basis of Annexure A-21/10 [pg. 67 of PB] dated 16-2-1994. The ld. D/R of revenue has contended that the assessee could not explain this docum....
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....earch. He has contended that the ld. CIT(A) deleted the addition wrongly as the documents, being the basis of addition, were found in the possession of assessee. He has relied on the orders of the Assessing Officer. As against this, the ld. AR of assessee has contended that no document, i.e., no original sale deed was found in the possession of assessee but only Xerox copies of the sale deeds were found which were there for the reason of having been given by owners of the properties [Shri Shiv Prakash Soni, sale deed of himself and his wife] to assessee for sale of the related properties by assessee, as the assessee also deals in real estate business. He has contended that the Assessing Officer added the amounts of these copies together with the amounts of chain documents though the same were not assessee's purchases but were of customers. He has contended that no original document was found during search pertaining to the said document. He has also contended that the Assessing Officer has also admitted, in the assessment order, that during the course of search, the department found 'photocopy' of the sale deeds. It has been contended that mere availability of Xerox copies of regis....
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.... two persons, namely, Shri Shiv Prakash Soni and Smt. Uma w/o Shri Shiv Prakash, were made by assessee and mere availability of photocopy of two sale deeds registered in the name of different persons being other than the assessee, at the assessee's premises during search, can hardly be basis for attributing the investment to assessee and much more so when the assessee is a dealer in real estate business and the said photocopies are stated to have been given to assessee by Shri Shiv Prakash Soni for finding out customers for the said properties being in the name of Shri Shiv Prakash Soni and his wife. We, therefore, find the action of the ld. CIT(A) in deleting this addition to be quite justified and so we decline to interfere with the same. 17. Ground No. (vii) disputes the allowing of relief of Rs. 1 lakh out of addition of Rs. 3 lakhs made on account of unexplained expenses on marriage. Ground No. 3 of assessee in assessee's appeal No. 08/JDPR/2000 is also related with this issue as the same disputes the sustenance of addition of Rs. 57,872 on account of marriages of assessee's two daughters due to estimation of the same at Rs. 2,50,000 by ld. CIT(A) as against Rs. 1,92,128 sh....
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....ny Air Cooler and Audio Music System to his first/elder daughter [Suman] also, and the total cost of such electric goods, given to each daughter works out to Rs. 31,064, and the relevant bills and vouchers [Ex. A-11/57 to 65] were also found and seized at the time of search. It has been contended that the expenditure on reception, etc. were incurred only in respect of the second daughter for which the assessee declared an expenditure of Rs. 1,30,000 which was in addition to the expenditure of Rs. 62,128 incurred on items like TV, Refrigerator, Audio System, etc. purchased for both the daughters and thus the total expenditure aggregated to Rs. 1,92,128. It has been contended that as per seized material the evidence is only of an expenditure of Rs. 62,128. It has been contended that the estimate of expenditure at Rs. 3 lakhs by Assessing Officer and at Rs. 2.5 lakhs by the ld. CIT(A) is erroneous when, in fact, the expenditure on marriage was Rs. 1,92,128 which is duly declared/disclosed by the assessee and the source of such expenditure is duly supported by statement of income/expenditure/investment prepared by assessee on the basis of entire seized material for each year in the for....
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....tural land and paid a sum of Rs. 50,000 to Shri Abdul Khan during assessment year 1995-96. The assessee sold this entire land in parts to Shri Gajaram, Shri Poonaram and Shri Bhabhoota Ram from whom he alleged to have received Rs. 1 lakh, Rs. 3 lakhs and Rs. 4 lakhs (2 instalments of Rs. 2 lakhs each) respectively, and this sale money is stated to have been received by assessee prior to the payment of Rs. 4.5 lakhs by him to Shri Abdul Khan. The Assessing Officer accepted Rs. 4 lakhs by way of proceeds by Shri Gajaram and Shri Poonaram and so allowed credit to the extent of Rs. 4 lakhs and thereby made the addition of balance payment of Rs. 50,000 (out of Rs. 4.5 lakhs). The ld. CIT(A) considered the sale deed to have been registered in favour of shri Bhabhoota Ram accepted the assessee's plea regarding receipt of sale proceeds from Shri Bhabhoota Ram as well, and in our considered opinion, rightly so. Considering all the facts and circumstances of the case we find no fault with the impugned order of ld. CIT(A) in accepting the receipt of sale proceeds by assessee from Shri Bhabhoota Ram as well and according the credit of Rs. 50,000 in respect of balance payment of Rs. 50,000 (out....
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....ce of the advocate using used (with one side blank) papers for the purpose. It has been contended that even otherwise, the back side of Annex. A-16/page 20 (back side of page 495 of PB) is page 2 of a photocopy of sale deed executed by Shri Hari Singh Rajput in favour of Shri Ghewar Ram Jat and neither in favour of assessee nor in favour of any member of assessee. As such, from the perusal of record we find that no material/evidence to support the Assessing Officer's conclusion regarding there having been any investment of Rs. 3,21,000, the sale price or of Rs. 21,000 being the advance in respect of the plot, the subject matter of sale deed contained in page 2 of the photocopy, being the back side of Annex. A-16/page 20. We, therefore, find the addition to be uncalled for and in turn, the deletion thereof by ld. CIT(A) to be justified. We, therefore, decline to interfere with the same. 28. Ground No. X of revenue disputes the deletion of addition of Rs. 75,000 made by Assessing Officer in assessment year 1996-97 on account of payment to Sh. Ibrahim (and 9 other persons, Abdul Rahman etc.) for purchase of agricultural land measuring 10 Bighas. Revenue's ground No. XXI disputes th....
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....land of same Khasra @ Rs. 45,000 per bigha to assessee, who paid a sum of Rs. 1 lakh as advance on 16-5-1995 to M.H. vide Exh. A 10/page 30 (page 443 P.B.). He has contended that sale agreement in respect of the above was entered into between M.H. and assessee (R.S.) on 19-5-1995 (pages 444 to 447 PB). He has contended that the assessee claimed to have paid Rs. 22,96,000 to M.H. for 51 Bighas @ Rs. 45,000 per bigha although seized documents (Exh. A-10 pages 22 to 25, 26 to 29) (pages 443 to 447, 448 to 451 of P.B.) showed payment of only Rs. 19,10,000 as detailed at serial No. 6 on page 513 of P.B. He has contended that the Assessing Officer has already considered the payment of Rs. 22,96,000 and made addition in respect of the same as discussed on pages 17 to 22 of assessment order. He has contended that Shri M.H., to escape his own liability of tax, managed agreement of sale coupled with P/A from real owners of land in favour of assessee or in favour of person whose name has been left blank. He has contended that M.H. obtained the following documents from original owners in respect of same land in favour of assessee and also in favour of person leaving the name blank to enable th....
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.... the name of purchaser to enable assessee to resell (pages 464 to 467 P.B.), for registration purposes, in respect of 10 bighas of land, out of 51 Bighas, for Rs. 75,000, each, from the owners of land on whose behalf he was acting as a P/A holder. 34. He has contended that similarly Shri M.H., the P/A holder got the receipts, agreement to sell and P/A from respective actual owners in respect of their shares in the land, in favour of assessee, that is for 18 Bighas from 17 persons and for 23 Bighas from 23 persons. 35. The ld. AR of assessee has accordingly contended that since the Assessing Officer has already considered the entire transaction of 51 Bighas separately and made an addition of Rs. 22,96,000 (pages 17 to 22 of assessment order), no further/separate addition in respect of the same transaction was justified and so the ld. CIT(A) rightly deleted the above two additions. 36. We have considered the rival contentions as also the relevant material on record. From the perusal of record we find that the assessee purchased 51 Bighas of land through M.H. the P/A holder, who himself had entered into an agreement for purchase of the said land with B.K., the earlier P/A hol....
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....R of revenue has referred to page 17 of Assessing Officer's order and contended that the document was found during search, Annexure A-10/Pages 20, 21. He has relied on his same arguments as raised by him on ground No. IX. 38. As against the above the ld. AR of assessee has contended that the assessee had agreed to purchase agricultural land belonging to Smt. Poosi Bai and her son on behalf of Malla Ram, and made a total payment of Rs. 7,01,000 (pages 185 to 191 PB). It has been contended that Smt. Poosi Bai belongs to Scheduled Caste, and her land was not transferable to non-Scheduled Caste persons, and so the agreement was cancelled on 8-6-1998 (pages 117 to 119 PB). It has been contended that the total payment made was of Rs. 7,01,000 and not of Rs. 8,51,000 till 18-12-1995. It has been contended that from the cancellation deed (pages 117 to 119, PB) also it is proved the total payment to Smt. Poosi Bai was of Rs. 7,01,000 which was returned on 8-6-1998 on account of cancellation of agreement. He has contended that the sustenance of addition of Rs. 7,01,000 is being challenged in assessee's appeal [vide ground No. 3(ii)(b)] and that the ld. CIT(A) rightly deleted the addition ....
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....mt Pooshi Bai: Rs. 8,51,000 27 to 29 Smt. Draupadi: Rs. 22,000 29 to 30 Total: Rs. 41,74,000 He has contended that the assessee was dealing in purchase and sale of agricultural land and plot etc. and the modus operandi adopted by assessee, as evident from the seized documents was that he first used to make an agreement to purchase land, and to advance a token money; and obtain a P/A to sale the land; and the assessee used to enter into agreement for resale of land and used to collect money from the purchaser and to pass over the same to the seller. 41. He has contended that the assessee explained before both the authorities below that in respect of the land the assessee agreed to purchase from M.H. for Rs. 22,96,000, from Abdul Khan for Rs. 10,75,000 and from Smt. Pooshi Bai (on behalf of Shri Malla Ram) to whom a sum of Rs. 7,01,000 was paid, the assessee received the following amounts, as advance on resale, from the following persons : - (I) In respect of land purchased from M.H. i. Shri Ugmaram Soni: 10,00,000 ii. Shri Mithalal Sharma: 10,00,000 iii. Shri Bhanwarlal: 3,00,000 iv. Shri Lachi Ram: 2,50,000....
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....bighas which the assessee had agreed to purchase from M.H. It has been contended that Sh. Mitha Lal confirmed the payment of Rs. 10 lakhs to assessee before Assessing Officer and also filed a copy of the sale agreement and receipt issued by assessee (pages 405 to 406 PB). It has been contended that the sale deed also stands executed in his favour. It has been contended that the ld. CIT(A) was justified in accepting the source of receipt of Rs. 10 lakhs from Sh. Mitha Lal which was utilized by assessee in making payment to M.H. and the same is appearing in balance sheet on p. 229 of PB. 44. It has been contended that the assessee received a sum of Rs. 2,50,000 from Shri Lacharam and Rs. 3 lakhs from Shri Bhanwarlal for sale of 5 bighas and 67 bighas respectively out of land which the assessee had agreed to purchase from M.H. It has also been contended that the assessee filed necessary evidence before Assessing Officer, and the same is appearing in balance sheet and receipt and payment account on page 229 of PB. It has been contended that the sale deed also stands registered in their names. 45. As regards the land the assessee agreed to purchase from Shri Abdul Khan, it has bee....
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....avour as placed on pages 99 to 104, 93 to 98, and 87 to 92 of PB respectively. 48. As such, considering all the facts and circumstances of the case together with the modus operandi of assessee in dealing with these transactions of 'purchase of agricultural land and plot etc. by entering into an agreement of purchase with sellers and thereby advancing token money to them, and the assessee entering into agreement for sale of such land with purchasers by entering into resale agreement with them and taking advances from them and passing over the same i.e., (advances so received) to the sellers of assessee, as also the evidence placed on record in the form of confirmations of respective purchases and sale deeds in their favour, we are of the view that the ld. AR of assessee has been able to substantiate his contention that the assessee received the resale proceeds from various purchasers from assessee and utilized the same in making payments to assessee's sellers. In that view of the matter we find the deletion of addition of Rs. 25,25,000 by ld. CIT (A) to be quite proper and justified and suffering for no informity. We, therefore, decline to interfere with the same. 49. Revenue'....
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.... account of gold ornaments found during search. The ld. DR of revenue has contended that this addition has been made on account of gold ornaments found at the residence and shop of assessee during search. He has referred to pages 6 and 7 of Assessing Officer's order. He has contended that the assessee explained that 218 grams of gold ornaments belonged to customers but the assessee did not furnish names and addresses of the customers and so the Assessing Officer had rightly made the addition in respect of the whole of the gold ornaments. He has relied on Assessing Officer's order. 53. As against the above, ld. AR of assessee has contended that as per seized record Exh. B-1 the assessee has received gold ornaments weighing 218 grams from customers for making new ornaments. It has also been contended that the assessee had started the shop "M/s. Anand Mangal Abhushan " on 20-10-1996 and the search was conducted on 3-1-1997. It has also been contended that at the time of search the department found/seized books of account of M/s. Anand Mangal Abhushan. It has been contended that on the basis of seized books of account the assessee has prepared the balance sheet. It has been contende....
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....gold ornaments belonging to various members of his family, as he intended to know the rough value held by his family members and to put the slips of rough valuation in their respective boxes for placing those boxes/ornaments in the locker in the bank. He has contended that the assessee simply valued the ornaments, and as per these slips the assessee neither manufactured ornaments, nor sold/purchased the same; nor such ornaments were found at the time of search. He has contended that normally such slips are not required to be preserved but the assessee preserved the rough valuation slips thinking that he may be asked in future about the said valuation by the said customer. He has contended that whatever gold ornaments were found were duly considered by Assessing Officer separately and there was no logic/basis for making this addition, so this addition of Rs. 6,50,000 on account of investment in purchase of gold ornaments, are not in existence. He has contended that the ld. CIT(A) rightly deleted this addition for the reasons discussed in para 27.2 on page 55 of his appellate order. It has also been contended that it is an established facts that ornaments are made after receipt of go....
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....osed sources. It has been contended that the total job charges for the said period worked out to Rs. 26,029 and the same was duly shown by assessee in the computation of income. It has been contended that the Assessing Officer applied profit rate of 30% on the total amount of Rs. 4,69,068 received by assessee from customers between the period 20-10-1996 to 3-1-1997 and made the addition of Rs. 1,40,720. It has been contended that the addition is totally unfounded and uncalled for as there is no evidence on record to establish that the assessee earned profit at 30% on the amount received from customers for making the ornaments. It has been contended that the assessee's earned income was only of job charges received by assessee and the same are duly accounted for in the books maintained by assessee. It has been contended that the ld. CIT(A) was perfectly justified in deleting this addition. It has also been contended that the issue is covered in assessee's favour by the decision of ITAT, Jodhpur in the case of Suraj Prakash Soni, the brother of assessee vide paras 35 and 36 on pages 14 and 15 (Pages 576 and 577 of PB) of Tribunal's order dated 27-5-02 in ITA No. 506/JDPR/99. 60. W....
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....se of assessee's brother, Shri Suraj Prakash Soni in ITA No. 50-6/JDPR/99 vide para 29 on pages 12 and 13 of Tribunal's order (574 and 575 PB). 62. We have considered the rival contentions, the relevant material on record, as also the referred decision. From the perusal of record we find that the ld. CIT(A) has considered the relevant facts and duly discussed the various aspects of the issue and noted that there was no evidence found as a result of search showing that the assessee made any investment in purchase of gold which was utilized in manufacturing of the gold ornaments of customer Shri Hari Ram and of the necklace Chandra Haar weighing 20 tolas and so he deleted these two additions holding the same to have been made by Assessing Officer merely on the basis of assumption and presumption. As such, considering all the facts and circumstances of the case, the explanatory contentions made by ld. AR of assessee, the lucid discussion made by ld. CIT(A), and respectfully following the above-mentioned decision of this Tribunal we find these two additions made by Assessing Officer to be not justified and uncalled for and, in turn, deletion made by ld. CIT(A) to be quite proper and....
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....umstances of the case as also the contentions raised by the ld. AR of assessee, and the discussions made by the ld. CIT(A), we find the above addition made by Assessing Officer to be uncalled for and not justified and in turn, the deletion thereof by ld. CIT(A) to be quite proper and justified. We, therefore, decline to interfere with the same. 66. Ground No. XX of revenue disputes the deletion of addition of Rs. 5,11,950 made by Assessing Officer on account of investment in money lending business in assessment year 1997-98. The ld. DR of revenue has referred to pages 10 and 11 of Assessing Officer's order and contended that the assessee has admitted in his statement recorded under section 132(4) at the time of search on 3-1-1997 about his investment of Rs. 8 to 10 lakhs in money lending and accordingly he surrendered Rs. 10 lakhs on account of unexplained investment in money lending. He has contended that the Assessing Officer, therefore, rightly made the above addition of Rs. 5,11,950. He has thus supported the order's of Assessing Officer. 67. As against the above, the ld. AR of assessee has contended that the authorized officer prepared inventory J/p1 (page 4 of PB) in re....
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....e of the fact that the same were rough papers, xerox copies of documents obtained from previous owners, who agreed to sell land to assessee, xerox copies obtained from customer for sale of their land, duplicate copies, and the documents obtained by P/A holder from original owners in respect of sale agreement by P/A holder. It has been contended that the surrender so obtained is factually incorrect and does not reflect correct investment by assessee. It has been contended that the assessee has, while filing his return for the block period, taken into account all the actual transactions done by him, the investment made and funds received back on resale of such land. He has relied on a number of decisions including the following: Pullangode Rubber & Produce Co. Ltd.'s case (supra) Bharat General RL-Insurance Co. Ltd.'s case (supra) Alapati Venkata Ramiah's case (supra) In Pullangode Rubber & Produce Co. Ltd.'s case (supra) the Hon'ble Supreme Court has held that: "An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect." In Bharat General R....
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....nd No. XXI had been that the seized documents reveal purchase of agricultural land by assessee and so the Assessing Officer rightly made addition on account of investment in purchase of agricultural land. As such, the learned DR of revenue has supported the orders of Assessing Officer. 70. As against the above, the learned AR of assessee has contended that vide para No. iii on page 621 of P.B./W/S. that the seized record shows a payment of only Rs. 3,21,000 by three persons and so the learned CIT(A) rightly sustained the addition of Rs. 1,07,000 and deleted the addition of Rs. 4,14,000 . It has further been contended (vide para iv on page 621 of PB) that at the direction of learned CIT(A) the Assessing Officer summoned Sh. Kailash Chand Jajoo who also confirmed the above fact vide his letter dated 3-2-1999 (page 410 PB) and admitted that the original agreement was lying with him whereas Shri Rameshwar Lal Soni (assessee) had only a xerox copy with him. It has been contended that Shri Kailash Chand Jajoo also stated that he was assessed to tax and share of each partner in investment was the same of Rs. 1,07,000 and the same is appearing in his books of account. It has been conten....
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....deletion of Rs. 4,14,000 by learned CIT(A) to be quite proper and justified. We, therefore, decline to interfere with the same. 72. Ground No. XXIII disputes the deletion of addition of Rs. 10 lakhs made by Assessing Officer on account of alleged investment in properties on the basis of statement of assessee recorded under section 132(4). The learned DR of revenue has contended that the assessee had made a surrender of Rs. 10 lakhs at the time of search vide his statement recorded under section 132(4) and had admitted the investment of Rs. 10 lakhs in the land transactions. He has contended that the Assessing Officer made this addition on the basis of assessee's own surrender. The learned DR has, in this regard,referred to page 22 of PB containing the above surrende admission in the assessee's statement. He has referred to page 42 of Assessing Officer's order and relied on the orders of Assessing Officer. 73. As against the above, the learned AR of assessee has contended that at the time of search the authorized officer obtained surrender from assessee in respect of all kinds of papers including chain of documents including duplicate copies, rough papers and xerox copies of d....
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....d thus not being in a medically fit state to make the statement; and the tension/stress due to the long drawn process of search may also not be deniable; and when there is no material on record to support/justify the surrender. In that view of the matter considering all the facts and circumstances of the case we find the conclusion drawn by the learned CIT(A) to be quite proper and justified. We, therefore, decline to interfere with the same. 75. In the result, revenue's appeal No. 56/JDPR/2000 is dismissed. 76. Now we take up assessee's appeal being ITA No. 08/JDPR/2000. Ground No. 1 of assessee has not been pressed by learned AR of assessee during arguments and so the same is dismissed accordingly. 77. Ground No. 2 disputes the learned CIT(A)'s order in not allowing credit of set off in respect of the following amounts : (i) Amount withdrawn from the books of HUF3,11,081 lying seized & utilized for various investments. (ii) Amount received back on cancellation of agreement & recycled in the business : (a) From Shri Hukmi Chand 3,10,000 (b) Smt. Poosi Bai 7,01,000 (c) Shri Ram Dayal 51,00010,62,000 (iii) Amount receive....
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.... assessee filed a detailed letter (pages 392 to 404 of PB) showing final investment as on the date of search in respect of the entire block period and the expenditure incurred for the block period and also explained the source thereof. 80. The learned AR has also contended that while computing the undisclosed income as per seized record, income has to be estimated on the basis of assets acquired and expenditure incurred; and the total of expenditure has to be reduced from the source available to the assessee. It has been contended that since the authorities below have made separate additions in respect of each and every investment as well as expenditure incurred on construction and marriage, etc. the authorities below ought to have allowed the credit for the source which is verifiable from seized record. It has been contended that there being no evidence with the department that the amounts so withdrawn were utilized for any other purpose than the investment/expenditure in respect of which separate additions have already been made by the Assessing Officer, the non-allowing the assessee's claim for set off of Rs. 3,11,081 is not justified. The learned A/R of assessee has also con....
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....ecycling/rotating in further investments, and thus for making expenditure/investment or for acquiring the asset which the Assessing Officer has found as unexplained and has, in turn, made addition in respect thereof, unless the above-mentioned receipts are found to have been used/exhausted in incurring some other expenditure/investment or in acquiring some other asset, for which the Assessing Officer has not made addition, whereagainst the aforesaid receipts (inflows) stand adjusted. 82. Intangible additions, i.e. additions other than those which are made on account of tangible/perceivable objects/items/assets also result in income to the assessee, for the simple reason that the income, for which these (intangible) additions are made, not having their tangible/perceivable objects/items/assets for which the same could have been utilized by way of incurring expenditure/investment therein; addition on account of suppressed profit (trading addition) or inflated/bogus expenditure, may be cited as example of the same. The income, or for that matter, the undisclosed income, resulting from intangible additions is available with assessee as much a real income as any other income, or for ....
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....unt/income could be utilized by the assessee for incurring the expenditure or making the investment or acquiring the asset found and remaining unexplained as on the date of search. The assessee will be entitled to the above- mentioned benefit even though the assessee may not be able to establish a direct/live link/nexus of the said resultant undisclosed income with the unexplained expenditure/investment/asset. It may be no less funny to realize that when direct link of source of an expenditure/investment/asset is established, the same can hardly be treated as unexplained. Obviously, and understandably too, the benefit of aforesaid telescopy/set off/credit of the said resultant undisclosed income is given only when the expenditure/investment/asset is found as unexplained due to any direct source of the same having not been established, so as to avoid separate and independent addition on account of the said expenditure/investment/asset, which, though remains unexplained, yet because the assessee has some undisclosed income available with him, having resulted from intangible additions. For allowing the aforesaid benefit, in our view, a direct/live link/nexus, date-wise or otherwise, o....
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....d on page 122 (RHS). (ii) The withdrawal of Rs. 74,776 between 27-4-1993 to 31-3-1994 (page 123 PB No. 6) was available for utilization towards first seven items of investment/expenditure incurred between 28-5-1993 to 6-1-1994 as detailed on RHS of page 123 of PB No. 6. (iii) The withdrawal of Rs. 74,950 between 23-4-1994 to 28-12-1994 in Assessment Year 1995-96 as mentioned at serial No. 4 on page 125 of PB No. 6, was available for utilization towards various items of investment/expenditure mentioned against serial Nos. 4 and 5, detailed on RHS of page 125 PB No. 6. (iv) The withdrawal of Rs. 49,245 (serial No. 11 of page 127 of PB No. 6) between 20-4-1995 to 31-3-1996 in Assessment Year 1996-97 was available for utilization towards various items of investment/expenditure mentioned against serial Nos. 11, 12 and 13 as detailed on page 127 PB No. 6. (v) The withdrawal of Rs. 1,01,900 (serial No. 12) between 6-5-1996 to 23-12-1996 in Assessment Year 1997-98 (page 127 PB No. 6) was available for utilization towards various items of investment/expenditure mentioned against serial No. 13 as on 3-1-1997 in Assessment Year 1997-98. 85. As such, cons....
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....9-1995 and returned the money to the assessee in the same Financial Year 1995-96 as has been clearly shown in receipt and payment account for Assessment Year 1996-97 on pg. 230 of PB No.1. It has also been contended that it is also evident from the above receipt and payment account [pg. 230 of PB No.1] that the amounts so recovered from Shri Hukmi Chand was utilized in other investments. It has been contended that the Assessing Officer made addition in respect of each and every asset on the basis of date of advance, he ought to have given credit in respect of the above amount received back by assessee from Shri Hukmi Chand, or else it will amount to double addition. It has also been contended that the Assessing Officer did not consider the issue and even failed to summon Shri Hukmi Chand for which the assessee had made specific requests by his letters [para iv on pg. 360 and para ii on pg. 363 of PB No.1]. It has been contended that in spite of search, no document was found suggestive of sale of land by Shri Hukmi Chand to assessee or any of his family members. It has been contended that the assessee has raised his claim specifically in ground No. (ii)(b) [pg. 393 of PB No. 1]. It ....
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....n contended that the Assessing Officer made the additions on the basis of investments. It has been contended that the assessee is entitled to relief of set off of Rs. 7,01,000 from the total additions made on account of investments as this amount received by assessee from Shri Malla Ram was utilized in investment. It has been contended that the copy of cancellation deed, statement of affairs of Sh. Malla Ram along with his affidavit were furnished before learned CIT(A). It has been contended that there is no evidence on record contrary to the assessee's claim and suggestive of the fact that the land was actually purchased and the sale deed was executed in favour of assessee or any other member. He has placed reliance on the decision of this Bench in the case of Suraj Prakash Soni (page 62 of PB). 90. As regards the issue involved in ground No. 2(ii)(c) pertaining to Sh. Ram Dayal/Smt. Rajkumari, the learned AR of assessee has contended that the assessee had entered into an agreement to purchase a house belonging to Sh. Ram Dayal for Rs. 9 lakhs on 25-7-1996 through his P/A holder Smt. Rajkumari. It has been contended that the assessee having not been able to manage the balance a....
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.... the said amount of Rs. 3,10,000 has also been reflected in the Receipt and Payment Account (LHS) on page 230 of PB, the correctness of which has not been disputed/doubted by Assessing Officer The above fact is also corroborated by the assessee's explanation as furnished in para 12 (middle portion) on page 342 of PB (internal page 6 of assessee's letter) and in paras 29(b), (c) on internal page 12 of the letter (page 348 of PB) as also by para 4 on internal page 2 of assessee's letter (page 360 PB), para (iv) on internal page 2 of assessee's letter (page 393 of PB) and para No. 1 (top) on page 364 of PB which also reveal that the assessee did make a specific request to Assessing Officer to call/summon Sh. Hukmi Chand for verification of the fact of cancellation of purchase agreement and refund of advance by him to the assessee but the Assessing Officer made no efforts and took no steps for the purpose. In the above situation, the agreement having not been fulfilled, the amount obviously was received back by assessee (page 230 PB). In that view of the matter, considering all the facts and circumstances of the case and taking a circumspect view of the entire fact situation, we find t....
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....scussion, we find it established that the assessee received back the above-mentioned two amounts of Rs. 3,10,000 and Rs. 51,000 from his two intended sellers, namely Sh. Hukami Chand and Sh. Ram Dayal/Smt. Rajkumari due to cancellation of assessee's purchase agreements with them, and so the said amounts having become available with the assessee as source for reinvestment in other assets including items mentioned against serial Nos. 8 to 10 (page 127 of PB No. 6) being between 26-6-1996 and 20-7-1996 (as regards Rs. 3,10,000), and against addition mentioned as item No. 2 (Rs. 73,256) of serial No. 13, being on 3-1-1997, the assessee is entitled to benefit of credit/set off of the same against additions, made on the basis of unexplained source/investment/asset. In this regard we find support from this Tribunal's decision rendered in the case of Suraj Prakash Soni (page 62 of PB) and the decision of ITAT, Jaipur in Ramesh Chand Modi's case (supra). We, therefore, direct the Assessing Officer to accord the aforesaid benefit of set off/telescopy of the amounts of Rs. 3,10,000 and Rs. 51,000, against sustained additions. However, the assessee's plea for set off/telescopy in respect of 7 ....
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....he relevant context, that in case of there being unexplained expenditure/investment/asset, amounting to outflow of fund, when there is also a corresponding inflow of fund, resulting from intangible addition, there seems to be no understandable reason as to why the former be not telescoped into the letter. We, therefore, direct the Assessing Officer to allow the assessee the benefit of set off/telescopy of Rs. 2,25,000 against sustained additions. We order accordingly. 98. Ground No. 2 (iv) of assessee disputes the non-allowing of set off/credit of Rs. 3,78,050 (correct figure being Rs. 3,77,050) being the difference of actual money lending debtors of Rs. 1,11,000 as on the date of search and the addition of Rs. 4,88,050 sustained by learned CIT(A) on the basis of advances, against additions made for acquisition of assets. The learned AR of assessee has contended that at the time of search money lending debtors were found to the extent of Rs. 1,11,000 as is evident from Annexure J-1 of Panchnama (page 4 of PB) whereas the learned CIT(A) sustained the addition, on account of advances to money lending debtors at Rs. 4,88,050, on the basis of advances in the preceding years. It has ....
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....ed AR of assessee has contended that in fact Sh. Mehendra Singh, Jagirdar intended to have the ornaments prepared for the marriage of his daughter and for this purpose he had left Rs. 50,000 at assessee's residence along with the said slip and also promised therein to further pay Rs. 50,000. He has contended that the Assessing Officer treated this amount as advance made by assessee and so made the addition which stands confirmed by the learned CIT(A). He has contended that on the basis of treatment given by authorities below in respect of this slip the assessee deserves/set off of Rs. 1 lakh on the basis of this slip. He has contended that the benefit of set off to the extent of Rs. 50,000 has already been given by learned CIT(A) in the marriage expenses of assessee's daughter but similar benefit in respect of balance Rs. 50,000 which the assessee received from Sh. Mahendra Singh as promised in the slip has not been given, which should be given. Considering the facts and circumstances of the case, we find the plea of learned AR of assessee to be not tenable inasmuch as we do not find any material/evidence on record to substantiate the same; and it has not been established that the ....
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..... Abdul Khan and others, However, the assessee having received a sum of Rs. 2 lakhs from Sh. Bhabhoot Singh in Assessment Year 1995-96, as is revealed from record, and the same having been available with the assessee for further utilization in investment/expenditure including the third item of addition of Rs. 1,50,000 mentioned against serial No. 5 (page 125 PB No. 6), and the assessee having been allowed the benefit of credit of Rs. 50,000 only, so the assessee justifiably deserves the benefit of set off of the balance sum of Rs. 1.5 lakhs also. We direct the Assessing Officer accordingly. 103. Ground No. 3 disputes the addition of Rs. 57,872 (wrongly mentioned as Rs. 97,872 in the memo of appeal) has already been discussed/decided by us above against the assessee, while deciding revenue's ground No. (vii). 104. Ground No. 4 disputes the addition of Rs. 1 lakh on account of loan by assessee to Sh. Mahendra Singh. The learned AR of assessee has contended that the assessee has not made any advance to Sh. Mahendra Singh and that Sh. Mahendra Singh, an erstwhile Jagirdar, intended to get the ornaments manufactured for marriage of his daughter and for that purpose he paid a sum o....
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....ssessing Officer has made an addition of Rs. 73,256 in respect of silver items found at residence and treated as unexplained and an addition of Rs. 1,11,478 in respect of silver items found at the shop. He has contended that this total addition of Rs. 1,84,734 is uncalled for in view of the balance sheet (page 234 of PB) prepared on the basis of seized record. 111. We have considered the rival contentions as also the relevant material on record. From the perusal of record we find that the assessee has furnished the relevant balance sheet on page 234 of PB, which is stated to have been prepared on the basis of seized books of the shop (M/s. Anand Mangal Abhushan). In the said balance sheet a sum of Rs. 1,25,262 has been shown as advances received from customers for manufacturing of ornaments, as per Annexure B-1. In the said Annexure B-1 (page 391 of PB) the amount received from various customers, as advance from customers for making ornaments is shown at Rs. 1,01,947 instead of Rs. 1,25,262 (page 234 of PB) and the balance amount of about Rs. 24,000 is not understandable from the said Account/Balance Sheet. From perusal of assessee's Receipt, Payment and Investment Account (RHS,....
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....nt assessee under I.T. Act and this shop, is registered, in her name, and has been duly reflected in her balance sheet. Besides, there is not an iota of evidence on record to show the said purchase of shop, and in turn the investment therein having been made by assessee. In the circumstances we find no justification for making the addition in assessee's hands for investment in the purchase of this shop in assessee's wife's name. We, therefore, delete this addition. 114. Ground Nos. 8 and 9 have not been pressed by the learned AR of assessee, so the same are dismissed accordingly. 115. In the result, this appeal of assessee being ITA No. 8/JDPR/2000 is allowed in part as indicated above. Per Khatri -I have carefully perused the order of the learned Judicial Member in ITA No. 8(JDPR)2000 for the block period 1987-88 to 1997-98, but I have not been able to persuade myself to agree with the conclusions contained in the draft order of the learned Judicial Member. 2. In ground No. 2 the appellant disputes that the learned CIT(A) erred in not allowing credit of set off of the following amounts: (i) Amount withdrawn from the books of HUF lying seized & utilized for various i....
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....t. In that case the appellant had filed specific chart showing specific withdrawals from the cash book on specific dates and with specific utilization i.e. for investment in the house property. This issue had been restored to the Assessing Officer with a direction to check the availability of cash withdrawn from the account of HUF for investment in the house property and the Assessing Officer was directed not to allow any benefit, if any mistake found regarding specific withdrawal and specific utilization in the house property. In the present case, as in the case of Suraj Prakash Soni (supra) cash book of HUF had not been produced before us which is lying seized with the department. The facts of this case and that of Shri Suraj Prakash Soni are identical to the extent that the amount of Rs. 3,11,081 had been withdrawn from the cash book of the HUF which is to be verified by the Assessing Officer from the cash book lying in his custody. In that case there was specific utilization for investment in the house property. The learned AR has failed to establish live-link between withdrawal and the investment. Besides, the Assessing Officer has not verified this fact from the cash book lyi....
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....s contended that at the time of search money lending debtors were found to the extent of Rs. 1,11,000 whereas the learned CIT(A) sustained the addition on account of advances to money lending debtors at Rs. 4,88,050 on the basis of advances in the preceding year. It was contended that since actual money lending on the date of search was to the extent of Rs. 1,11,000 only, the same shows that the assessee had recovered a sum of Rs. 3,77,050 (Rs. 4,88,050 minus Rs. 1,11,000) from the debtors which was available with the assessee and constituted a source and the assessee utilized the same for further investment in other assets. I am of the opinion that no benefit of availability of cash of Rs. 3,77,050 can be given as the appellant had not given any proof of recovery from the debtors and neither it can be proved on the basis of seized documents that any recovery was made from the debtors. For allowing benefit of availability of cash, specific source with date of receipt, specific date of withdrawal and specific date of investment are required. This may be a case of bad debts or the case where no proof regarding recovery of debt is on record. 7. Ground No. 2(v): Amount received as a....
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....ision with para A.M. decision with para Ramarks 2(i) Rs. 3,11,081 Allowed, para 84 Restored to A.O, para 3 2(ii) (a) Rs. 3,10,000 Allowed, para 92 Not allowed, para 4 (b) Rs. 7,10,000 Not allowed, para 93 -do- (c) Rs. 51,000 Allowed, para 95 -do- 2(iii) Rs. 2,25,000 Allowed, para 96 Not allowed, para 5 2(iv) Rs. 3,78,050 Allowed, para 98 Not allowed, para 6 2(v) Rs. 50,000 Not allowed, para 99 Commented ';rightly rejected';, para 7 2(vi) Rs. 1,50,000 Allowed, para 101 -- Ground No. with amount claimed for set-off/credit J.M. decision with para A.M. decision with para Ramarks 3 Rs. 97,872 Not allowed, para 102, r/w 22 Commented "right conclusion", para 8 Correct amount is Rs. 57,872 4 Rs. 50,000 Not allowed, para 104 -do-, para 8 5. Rs. 1,66,991 Allowed partly (sustained Rs. 24,000) para 110 Not allowed, para 9 6. Rs. 1,84,734 -do- Not allowed, para 10 7. Rs. 74,554 Allowed, para 112 Not allowed, pa....
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....referred to a Third Member and the issue on which there is difference will be adjudicated according to the decision of the majority. As such it is beyond the ken of section 255(4) to elongate the scope of the appeal. I therefore decline to accept the prayer made by the Ld. Counsel for raising the additional ground. 4. Apropos the question referred for the consideration of the Third Member, it was further stated that on ground No. 2(iii) there existed a difference of opinion between the Members but inadvertently that difference is not projected in the question. Similarly in regard to ground No. 2(vi) there exists no difference between the Ld. members. The Ld. Accountant Member did not comment on this ground still it is projected in the difference. 5. My attention was adverted to the decision of the Tribunal rendered in the case of Khopade Kisanrao Manikrao v. Asstt. CIT (2000) 74 ITD 25 (Pune) (TM). In this case it was held that the jurisdiction of Third Member is not limited to the language of the questions framed in the reference but it extends to the entire sums and substance of opinion on the specified points. The questions are framed in accordance with rules for identifyi....
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....of assets acquired and expenses incurred; and the total of expenditure has to be reduced from the source available to the assessee. Revenue authorities made separate additions in respect of each and every investment as well as in respect of expenditure, viz. construction of house, marriage etc. Nothing was found at the time of search indicating that amount withdrawn were utilized for any other purposes. Investments and expenditures detected at the time of search were explained with reference to the withdrawals. 11. In the case of Pipush Kumar O. Desai v. CIT (2001) 247 ITR 568(Guj.) a search was conducted at the residence of the assessee. Cash and jewellery found at the time of search were seized. Assessing Officer concluded that since jewellery was not recorded in the books of account and the assessee had not explained the same, it was liable to be included in the income of the assessee. Hon'ble High Court has held that since the assessee had given sufficient details with regard to the source from which the jewellery was purchased and with regard to the cash inflow and since the Tribunal had not considered the genuineness of the relevant statements and documents pertaining to t....
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....ions are made in respect of unexplained investment, expenditure etc. detected on the date of search, all the unexplained outgoing and incoming should be considered. If the assessee explains inflow of money during the block period as disclosed or undisclosed income resulting from tangible or intangible addition it will reflect the availability of fund. Utilization can be explained with reference to recycling, rotation in further investment. As such the benefit of telescoping/set off credit should be allowed. 16. Ld. Accountant Member has held that in the case of Suraj Prasad Soni [IT Appeal No. 492 (JP.) of 1999] the issue was restored to the Assessing Officer with direction to examine the availability of cash withdrawn from the account of HUF for investment in house property. It was stated that facts of the present case are identical with that of Shri Suraj Prasad Soni as such the amount of Rs. 3,10,081 withdrawn from the cash book of the HUF should be verified. The matter was restored to the file of the Assessing Officer for verification. 17. Each case depends on its own facts, and a close similarity between one case and another is not enough, because even a single significa....
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....made addition in respect of each and every asset on the basis of date of advance. Credit in respect of amount received back was not given back to the assessee. As such there was double addition. Assessee did make specific request to call Hukami Chand. Letter in this regard is appended in the paper book No. 1 at page 360. During the course of search no suggestive documents were found indicating any transaction with Hukami Chand. On this factual backdrop it was alleged that assessee is entitled to the credit of the said sum, which he received back from Hukami Chand. 21. Learned Accountant Member stated in the order that the specific receipt of money evidencing the payment back was not produced. Onus was on the assessee to prove the receipt of money. There is no proof of receipt from the person and there is no proof of withdrawal from the particular source on specific date and also utilization in specific asset on specific date. 22. It is pertinent to note that assessee is not maintaining books of account. The transaction was not routed through the bank. As such it was not possible on the part of the assessee to produce the cash book or bank pass book to prove the veracity of th....
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....such he directed the Assessing Officer to allow telescopy in respect of Rs. 2,25,000. Ld. AM has not given any reasoning for differing with the Ld. JM. He simply relied on the opinion of CIT(A) and denied the benefit of telescoping to the assessee. 26. Assessee did receive Rs. 2,25,000 by cheques is not a disputed fact. This was proved with reference to the bank records. Withdrawals also did appear in the bank account against the said deposit. Therefore, it cannot be said that availability of Rs. 2,25,000 was doubtful. I have perused the various reasoning adduced by Ld. JM for allowing the claim. In my opinion Ld. JM took a correct view in the matter. As such I agree with him on this count. 27. Next issue relates to the allowability of credit in respect of Rs. 3,77,050 being the amount of difference projected on the basis of search material. 28. I have heard the rival submissions in the light of material placed before me. At the time of search some loose slips were found. On the basis of those slips addition to the tune of Rs. 4,88,050 was made. It was alleged that these slips represent the money lending debtors. The list of money lender debtors was also found at the time ....
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....s on record. 30. There is absolutely no material on record to indicate that the amount as advanced by assessee became bad debts. More so when the loans are made against pledge of ornaments the possibility of bad debt is not there. The dictum of approbate and reprobate prescribes that one cannot play hot and cold in the same stream. Assessing Officer accepted the fact of loan advanced by the assessee to the extent of Rs. 4,88,050. From the Panchnama it is clear that as on the date of search, money lending debtors were to the tune of Rs. 1,11,000 only. From this it can be concluded that assessee did receive Rs. 3,78,050 back from the debtors. The presumption of bad debt is not possible under the circumstances. Various reasoning adduced by Learned Judicial Member in this context are very much in consonance of principles of justice. As such I agree with his decision on this count. 31. Next issue in respect of ground Nos. 5 and 6 relate to the sustaining of addition of Rs. 1,66,991 on account of gold ornaments found at the shop in assessment year 1997-98 and addition of Rs. 1,84,734 on account of silver ornaments and utensils found at the residence and the shop in assessment year ....