TaxTMI 
TaxTMI 
2004 (2) TMI 698
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....rn 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 deletion thereof by the ld. CIT(A) to be q....
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.... other persons for ₹ 15,000. He has contended that the Assessing Officer made the addition of ₹ 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 @ ₹ 250 per sq. yard, in total for ₹ 8,75,000 out of which an advance of ₹ 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 ₹ 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 from Narend....
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....ell a portion of the land. 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 ₹ 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 co....
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....was made by Assessing Officer on the basis of documents found during search. 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.....
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....e view that the investments in purchase of the two plots in the names of 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 ₹ 1 lakh out of addition of ₹ 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 ₹ 57,872 on account of marriages of assessee's two daughters due ....
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....age of assessee's second/younger daughter [Deepika], the assessee gave electric goods like BPL Washing Machine, Symphony 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 ₹ 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 ₹ 1,30,000 which was in addition to the expenditure of ₹ 62,128 incurred on items like TV, Refrigerator, Audio System, etc. purchased for both the daughters and thus the total expenditure aggregated to ₹ 1,92,128. It has been contended that as per seized material the evidence is only of an expenditure of ₹ 62,128. It has been contended that the estimate of expenditure at ₹ 3 lakhs by Assessing Officer and at ₹ 2.5 lakhs by the ld. CIT(A) is erroneous when, in fact, the expenditure on marriage was ₹ 1,92,128 which is duly declared/disclosed by the assessee and the source of such expenditur....
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....R/2000) disputes the non-allowing of set off/credit of ₹ 1,50,000 out of receipt of sale proceeds of agricultural land from Shri Bhabhoota Ram. 25. The assessee had agreed to purchase agricultural land and paid a sum of ₹ 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 ₹ 1 lakh, ₹ 3 lakhs and ₹ 4 lakhs (2 instalments of ₹ 2 lakhs each) respectively, and this sale money is stated to have been received by assessee prior to the payment of ₹ 4.5 lakhs by him to Shri Abdul Khan. The Assessing Officer accepted ₹ 4 lakhs by way of proceeds by Shri Gajaram and Shri Poonaram and so allowed credit to the extent of ₹ 4 lakhs and thereby made the addition of balance payment of ₹ 50,000 (out of ₹ 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....
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....aft of sale agreement of which the final sale agreement Annex. A-16/page 10. It has been contended that thus no addition need appropriately be made in respect of any rough noting on a rough paper, the blank side of which is being used for preparing rough draft due to the practice 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 ₹ 3,21,000, the sale price or of ₹ 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.....
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....d to sell 31 Bighas of land of Khasra No. 6 in village Desuria to M.H. @ ₹ 35,000 per bigha as per Exh. A-20/page 6, placed on page 442 of P.B. He has contended that M.H., who was also P/A holder of other persons in respect of agricultural land of Khasra No. 6 in village Desuria, agreed to sell 100 Bighas of land of same Khasra @ ₹ 45,000 per bigha to assessee, who paid a sum of ₹ 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 ₹ 22,96,000 to M.H. for 51 Bighas @ ₹ 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 ₹ 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 ₹ 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 t....
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..... 33. He has thus contended that on entire payment of ₹ 22,96,000 Sh. M.H. brought two agreements of sale in respect of 10 bighas from same 10 persons, (i) one in favour of assessee (i.e. assessee and his wife Smt. Anand Kaur) (pages 452 to 455) and (ii) another in favour of person without mentioning 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 ₹ 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 ₹ 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 ....
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....nfirmity. We, therefore, decline to interfere with the same. 37. Revenue's ground No. XI disputes the deletion of addition of ₹ 1,50,000 out of ₹ 8,51,000 made by Assessing Officer on account of payments made by assessee to Smt. Poosi Bai, towards agreement for purchase of 23 Bighas, 5 biswas land for ₹ 13,20,812. The ld. DR 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 ₹ 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 ₹ 7,01,000 and not of ₹ 8,51,000 till 18-12-1995. It has been contended that from the cancellation deed (....
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....gainst this, the ld. AR of assessee has contended that the Assessing Officer had made the following additions in respect of agreement for purchase of agricultural land and plot : - Name Amount Assessing Officer Order on Page Shri Hukmi Chand: ₹ 3,10,000 17 Shri Maqbul Hussain: ₹ 22,96,000 17 to 22 Shri Abdul Khan: ₹ 6,95,000 18 smt Pooshi Bai: ₹ 8,51,000 27 to 29 Smt. Draupadi: ₹ 22,000 29 to 30 Total: ₹ 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 ₹ 22,96,000, from Abdul Khan for ₹ 10,75,000 and from Smt. Pooshi Bai (on behalf of Shri Mall....
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....on the order of ld. CIT(A). 43. As regards the amount of ₹ 10 lakhs received from Shri Mitha Lal the ld. AR of assessee has contended that the assessee agreed to sell (resell) 20 bighas of agricultural land out of 51 bighas which the assessee had agreed to purchase from M.H. It has been contended that Sh. Mitha Lal confirmed the payment of ₹ 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 ₹ 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 ₹ 2,50,000 from Shri Lacharam and ₹ 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 i....
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..... Similarly, as regards assessee's receipts on resale from Shri Bhabhuta Ram, Shri Poonaram and Shri Gajaram the same stand corroborated by their respective statements on pages 327, 316 and 314 respectively, together with the sale deeds in their favour 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 t....
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....lucid discussion of the ld. CIT(A) we agree with the ld. CIT(A) on this count as the same are quite justified. We, therefore, decline to interfere with the same. 52. Ground No. XIV of revenue disputes the deletion of addition of ₹ 1,00,563 made by Assessing Officer on 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 co....
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....Smt. Anju and Smt. Seema. He has contended that these purchases relate to rough valuation/estimate of gold ornaments. He has contended that this rough valuation/estimate was got prepared from assessee by a highly placed Government official (presently, DIG of Police) in respect of 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 ₹ 6,50,000 on account of investment in purchase....
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....ccounting period had not expired on the date of search being 31-1-997, and so the Assessing Officer was in error in considering the income on the basis of entries recorded in seized books pertaining to the period 20-10-1996 to 3-1-1997 on the basis of Annexure B-1 as income from undisclosed sources. It has been contended that the total job charges for the said period worked out to ₹ 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 ₹ 4,69,068 received by assessee from customers between the period 20-10-1996 to 3-1-1997 and made the addition of ₹ 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.....
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....ornaments manufactured either deliver gold or value of gold and thus there is no need for the assessee to employ his own capital in the purchase of gold on behalf of customer. He has contended that this issue is covered in assessee's favour by a decision of ITAT, Jodhpur rendered on 27-5-2002 in the case 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 contenti....
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.... ₹ 1,61,000. He has also observed that the said addition on account of investment made by assessee is not called for because the amount introduced by assessee in the business must have been utilized therein. The ld. CIT(A) accordingly deleted this addition. As such, considering all the facts and circumstances 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 ₹ 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 ₹ 8 to 10 lakhs in money lending and accordingly he surrendered ₹ 10 lakhs on account of unexplained investment ....
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....IT (1965) 57 ITR 185. 68. We have considered the rival contentions the relevant material on record as also the cited decisions. As regards surrender of ₹ 10 lakhs in respect of money lending advances, it has been contended that at the time of search the Authorized Officer obtained a surrender on the basis of papers found and seized during search, irrespective 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 cas....
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....nvestment in purchase of land from Sh. Tara Chand in Assessment Year 1997-98. The learned DR of revenue has contended that this addition has been made regarding investment in purchase of land and that he relies on his same contentions as made in respect of a similar ground being ground No. XXI pertaining to the purchase of land. His contentions as raised on ground 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 ₹ 3,21,000 by three persons and so the learned CIT(A) rightly sustained the addition of ₹ 1,07,000 and deleted the addition of ₹ 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....
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....dering all the facts and circumstances of the case together material available on record including, in particular, the evidence referred to and discussed above, we find the assessee's investment in this transaction of purchase of land from Shri Tara Chand to be only of ₹ 1,07,000. Accordingly the Assessing Officer's addition of ₹ 5,21,000 is found to be uncalled for and not justified; and the deletion of ₹ 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 ₹ 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 ₹ 10 lakhs at the time of search vide his statement recorded under section 132(4) and had admitted the investment of ₹ 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 surrend....
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....essee had made unexplained investment to the extent of ₹ 10 lakhs. Specific additions based on specific evidence/material found as a result of search have already been made separately; and so no further addition can justifiably be made merely on the basis of a surrender when the same stands retracted and the assessee is stated to have not been feeling well and being, in particular, under the influence of injection and 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 a....
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....bove issue. It has been contended that the learned CIT(A) did not accept the contention of the assessee on the ground that no link was established between the amount withdrawn from HUF and the amount invested by the assessee. It has been contended that during the course of appellate proceedings before the learned CIT(A) the 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 th....
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....e assessee is able to show inflow of money, that is receipts/incoming with him during the block period, whether by way of income as disclosed in the books, or by way of undisclosed income resulting from intangible addition, the same will constitute source of money/fund available with the assessee for utilization by way of recycling/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 expend....
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....rce, the assessee may justifiably claim and may well be treated as duly entitled to the benefit of telescopy/set off/credit of all such amounts of inflow whether by way of receipts or by way of undisclosed income resulting from intangible additions of the block period and thus being available with assessee and which amount/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 inde....
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....eveals the following position: (i) The withdrawal of ₹ 10,200 from HUF was made between 5-1-1993 to 24-3-1993, in Assessment Year 1993-94 and so it was available for utilization towards three items of investment/expenditure incurred between 12-2-1993 to 31-3-1993 as reflected on page 122 (RHS). (ii) The withdrawal of ₹ 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 ₹ 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 ₹ 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 ₹ 1,01,....
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....ment order. It has been contended that the period of completion/compliance of the agreement was of 6 months. It has been contended that Shri Hukmi Chand was not the real owner but was the P/A holder of his relatives and friends and at whose instructions Shri Hukim Chand cancelled the agreement on 30-9-1995 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 ....
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....ng Officer and the CIT(A) but the authorities below failed to give any specific finding thereon as the learned CIT(A) failed to decide the issue raised before him in ground No. 2 (ii)(b) before him so the same amounts to rejection of the ground by CIT(A) and the Tribunal is expected to decide the issue on merits. It has been 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 ₹ 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) perta....
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....d telescoping one into another. From the perusal of record, considering all the facts and circumstances of the case, we find it established that the assessee received a sum of ₹ 3,10,000 back from Sh. Hukmi Chand to whom the assessee had paid, by way of advance, towards the purchase agreement. In the instant case we find that the said amount of ₹ 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 Office....
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....nd ₹ 51,000 received back from Smt. Poosi Bai and Smt. Rajkumari/Sh. Ram Dayal respectively, having been raised in appeal before CIT(A), the issues have not been decided by the learned CIT(A) in his impugned appellate order and so the same amounts to rejection of assessee's claim in respect of the above two amounts by him. 96. In view of our above discussion, we find it established that the assessee received back the above-mentioned two amounts of ₹ 3,10,000 and ₹ 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 ₹ 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 decisio....
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....ng made in assessee's hands on the basis of assets, i.e. investment in gold and silver etc. as on the date of search, being 3-1-1997. So the money withdrawn by assessee from Bank after depositing the above cheque in his bank, the same constituted a source available with assessee for reinvestment/recycling in the block period for which the Assessing Officer had made separate addition. We may well observe here, in the 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 ₹ 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 ₹ 3,78,050 (correct figure being ₹ 3,77,050) being the difference of actual money lending debtors of ₹ 1,11,000 as on the date of search and the addition of ₹ 4,88,050 sustained by learned CIT(A) on t....
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....es the non-allowing of credit in respect of ₹ 2 lakhs, but the learned AR of assessee has amended/revised this ground in summarized grounds contained in assessee's paper book on pages 1 to 4. This ground of appeal, as it finally stands amended/revised, and also as discussed in the W/S of learned AR of assessee, disputes the non-allowing of credit of set off of the balance sum of ₹ 50,000, on the basis of slip being Annexure A-11/page 79 (page 86 of PB). The learned 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 ₹ 50,000 at assessee's residence along with the said slip and also promised therein to further pay ₹ 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 ₹ 1 lakh on the basis of this slip. He has contended that the benefit of set off to the extent of ₹ 50,000 has al....
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.... lakhs from Sh. Gajaram, Sh. Poonaram and Sh. Bhabhoot Ram (Bhabhoot Singh), the receipt from Sh. Bhahbhoot Ram having been of ₹ 2 lakhs. The assessee's receipt from Shri Bhabhoot Ram to the extent of ₹ 50,000 stands accepted and benefit of set off in respect of the same stands allowed. Thus the benefit of ₹ 4,50,000 which includes a sum of ₹ 50,000 received by assessee from Shri Bhabhoot Singh, stands accepted and allowed, being the amount returned to assessee, which the assessee had earlier given to assessee's seller Sh. Abdul Khan and others, However, the assessee having received a sum of ₹ 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 ₹ 1,50,000 mentioned against serial No. 5 (page 125 PB No. 6), and the assessee having been allowed the benefit of credit of ₹ 50,000 only, so the assessee justifiably deserves the benefit of set off of the balance sum of ₹ 1.5 lakhs also. We direct the Assessing Officer accordingly. 103. Ground No. 3 disputes the add....
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....'s claim regarding 218 grams having been received from customers, but sustained addition of ₹ 1,66,991 for 362 grams. It has been contended that the balance sheet (page 234 of PB) has been prepared on the basis of seized record, and the same explains the source of acquisition of 362 grams and so there was no justification for learned CIT(A) to sustain the addition of ₹ 1,66,991. As against the above, the learned DR of revenue has supported the orders of authorities below. 110. Regarding the addition pertaining to silver, the learned AR of assessee has contended that the Assessing Officer has made an addition of ₹ 73,256 in respect of silver items found at residence and treated as unexplained and an addition of ₹ 1,11,478 in respect of silver items found at the shop. He has contended that this total addition of ₹ 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 prep....
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....4 to 305 of PB. It has been contended that Smt. Anand Kaur purchased the shop for ₹ 75,554 and the said shop is reflected in her balance sheet (page 275 of PB). It has been contended that she also owns assets to the extent of ₹ 4,80,340 including this shop; and this shop is registered in her name. As against the above, the learned D.R. of revenue has contended that his addition has rightly been made by Assessing Officer and sustained by learned CIT(A). He has supported the orders of authorities below. 113. We have considered the rival contentions as also the relevant material on record. Smt. Anand Kaur, the wife of assessee, is an independent 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 ....
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.... ₹ 16,950. The facts of these two judgments are different and the decisions are also on different grounds. In the case before us the appellant is asking for allowing of benefit of availability of cash against the sustained addition. 3. The learned AR has also relied upon the case of Suraj Prakash Soni (supra) decided by this Bench through its order 27-5-2002 vide para 51 at page 26 in I.T.A. No. 492/JP/1999. The facts in the case before us and the facts in the case of Surat Prakash Soni (supra) are different. 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 d....
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....e that the amount was utilized by the assessee towards purchase of agricultural land. Therefore, no benefit of ₹ 2,25,000 received from Shri Ugam Raj Soni can be allowed. 6. Ground No. 2(iv): The assessee disputes the non-allowing of set off/credit of ₹ 3,78,050, being the difference of actual money lending debtors of ₹ 1,11,000 as on the date of search and the addition of ₹ 4,88,050 sustained by the CIT(A) on the basis of the advances, against additions made for acquisition of assets. The learned AR of the assessee has contended that at the time of search money lending debtors were found to the extent of ₹ 1,11,000 whereas the learned CIT(A) sustained the addition on account of advances to money lending debtors at ₹ 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 ₹ 1,11,000 only, the same shows that the assessee had recovered a sum of ₹ 3,77,050 (Rs. 4,88,050 minus ₹ 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....
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....In ITA No. 08/JDPR/2000, in the case of Rameshwarlal Soni, for the block period 1987-88 to 1997-98, the learned A.M. has passed a separate order, wherein he has given his dissenting decision on a number of grounds, which after signing of all the pages by him was received by me vide his D.O. Letter dated 24-7-2003. The relevant facts as also the related evidence have already been mentioned/discussed in the main order. The relevant grounds together with decision of JM and AM thereon are summarized as under: Ground No. with amount claimed for set-off/credit J.M. decision with para A.M. decision with para Ramarks 2(i) ₹ 3,11,081 Allowed, para 84 Restored to A.O, para 3 2(ii) (a) ₹ 3,10,000 Allowed, para 92 Not allowed, para 4 (b) ₹ 7,10,000 Not allowed, para 93 -do- (c) ₹ 51,000 Allowed, para 95 -do- 2(iii) ₹ 2,25,000 Allowed, para 96 Not allowed, para 5 2(iv) ₹ 3,78,050 Allowed, para 98 Not allowed, para 6 2(v) ₹ 50,000 Not allowed, para 99 Commented ';rightly rejected';, para 7 2(vi) ₹ 1,50,000 Allowed, para 101 -- Ground No. with amount claimed for set-off/credit J.M. decision with para A.M....
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.... be referred by the President of the Tribunal for hearing on such point or points by one or more of the other Members of the Tribunal, and such point or points shall be decided according to the opinion of the majority of the Members of the Appellate Tribunal who have heard the case, including those who first heard it. The mandate of the section prescribes that only point of difference would be 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....
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....ssessee did not establish nexus between the amount withdrawn from HUF and the investments made. Addition was made on final investment as on the date of search in respect of the entire block period and also in respect of the expenditure incurred in the block period. 10. It was contended that while computing the undisclosed income as per seized records, income has to be estimated on the basis 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....
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....hile making addition for unrecorded sales, adjustment for rotation, recycling, reinvestment, telescoping, credit purchases, peak credit etc. should be given. 15. The Ld. Judicial Member has held that benefit of telescoping should be given to the assessee in respect of the amount withdrawn from HUF. He examined this issue with reference to the block assessment. In block assessment, when additions 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 tha....
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....pect of the property. At the instance of the owner Hukami Chand revoked the agreement on 30-9-1995 and returned money to the assessee in the Financial Year 1995-96. Shri Jain submitted that the amount so recovered from Hukami Chand was utilized in other investments. There is absolutely nothing on record to indicate that assessee had purchased that property for which the advance was made. Assessing Officer 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 fro....
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....377; 20,000 on 28-9-1995 and ₹ 1,85,000 on 11-10-1995 also appeared in the bank records. As such it is evident that recycling was possible. Assessee did establish the source protanto. On this factual finding Ld. JM extended the benefit of telescopy in regard to that amount. This was considered as source available with the assessee for reinvestment in block period for which the Assessing Officer made separate addition. As such he directed the Assessing Officer to allow telescopy in respect of ₹ 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 ₹ 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 ₹ 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....
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....fficer made separate addition. On this factual finding, Learned Judicial Member allowed to the assessee, the benefit of telescopy of ₹ 3,77,050 against the sustained addition. 29. Ld. Accountant Member opined that for allowing benefit of telescopy, it is sine qua non, to point out specific source with date of receipt, specific date of withdrawal and specific date of investment. This may be a case of bad debts or the case where no proof regarding recovery of proof is 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 ₹ 4,88,050. From the Panchnama it is clear that as on the date of search, money lending debtors were to the tune of ₹ 1,11,000 only. From this it can be concluded that assessee did receive ₹ 3,78,050 back from the debtors. The presumption of bad debt is not possible under the circumst....