TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 1100
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.... in the circumstances of the case, the learned CIT (A) has erred in law and on facts in deleting the above addition in spite of the facts on records that the Branch Manager of the P.N.B Budhwari Bazar Bilaspur has deposed on oath in a statement U/s 131. (d) The reliance by CIT(A) on the decision of MP High Court in the case of CIT V, Raja Ginning Udyog 268 ITR 383 (MP) is not justified as opportunity had been given to the assessee before making the addition . (e) The CIT(A) erred in holding that the appellant was not given opportunity to cross examine the persons whose statements were recorded as no such opportunity was asked for by the assessee and the appellant had been confronted with the statements and the appellant though was asked to produce Om Prakash Nema did not produce him . (f) The CIT(A) erred in appreciating the fact that as per section 106 of Evidence Act where any fact is within the knowledge of any person , the burden of proving that fact is upon him , thus when certain transactions are recorded by the assessee then primary onus of explaining the transactions lies on the assessee and not on the revenue. (g) The CIT(A) erred in not appreciating the fact that ....
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....ot on the revenue. (e) The CIT(A) erred in not appreciating the fact that as per the decision of Delhi H.C. in CIT V. Motor General Finance Ltd. (254 ITR 449) for failure of the assessee to produce documents and facts, adverse inference can be drawn against the assessee . 2. (a) That on the facts and in the circumstances of the case, the learned CIT(A) erred in law and on facts in deleting the addition of Rs. 2,12,566/-made U/s 69C on account of unexplained house hold expenses without properly appreciating the facts. (b) That on the facts and in the circumstances of the case, the learned CIT(A) erred in law and on facts in deleting the above addition which has been made on the basis of the facts collected during the search and seizure operation in the case of the assessee. 3. (a) That on the facts and in the circumstances of the case, the learned CIT (A) has erred in law and on facts in deleting the addition of Rs. 47,340/- and Rs. 6,10,223/- made by the A.O. U/s 69A on the basis of loose paper found and seized during search in the case of the assessee. (b) That on the facts and in the circumstances of the case, the learned CIT (A) has erred in law and on facts in deletin....
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....uences if this information is revealed. In response to summons u/s.131 of the Act, Shri O.K. Sharma, Branch Manager of the said bank attended and had not refuted the depositions given on oath by Shri Sunil Shrivastav. According to the AO, the assessee was confronted with these statements/depositions of the bank official-cum-cashier Shri Sunil Shrivastava and except denying the same, the assessee had not adduced any evidence substantiating such denial, photocopies of two letters from Shri Shyam Bullions (prop. Omprakash Nema) were filed. Since the said Omprakash Nema had not complied with the summons u/s.131 of the Act, for further verification of the facts and for arriving at right, and reasonable conclusions on the claimed crux of the issues, the assessee was specifically directed to produce the said Omprakash Nema with books of account of Shri Shyam Bullion, but there was no compliance from the assessee, except laying emphasis on the confirmation purported to have been given by the alleged Shri Shyam Bullion. The AO opined that mere denial by the assessee having any connection or relation with the aforementioned huge deposits of cash made by him in the said bank a/c., was not suf....
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.... the bank which were not disclosed in the original assessment. The pass book of only one of the said accounts was produced. From the copy of the accounts of Oriental Traders obtained by the ITO, he found that the sole proprietor of the business was one M, who was none other than the assessee While in the case of the assessee, under consideration, the following are the facts obtaining from the record. In the case of Praveen Kumar Saluja, vide query letter dt. 04-12-08, referring to the deposits of above Rs. 50 Crores in A/c No. 990 in Punjab National Bank, Budhwari Bazar Branch, Bilaspur, the assessee was requested to produce Shri Omprakash Nema, Proprietor of Shree Shyam Bullion, Indore. When contacted, Shri Omprakash Nema, Proprietor of that concern had categorically affirmed that he is the sole owner of the said concern and is being assessed by ITO Ward -1(2) Indore under PAN No ACRPN2535N. Shri Omprakash Nema affirmed that in the name of the above proprietary concern, he has business dealing in Bilaspur Region and for facilitating safe and secured depositing of the business cash collected towards sale proceeds from various customers of that area and for transferring the same t....
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....d facts to be true to the best of his knowledge and belief. Copy of the same was submitted before the AO in assessment proceedings. No evidence whatsoever was found during search nor thereafter to controvert the aforementioned affirmation of facts confirmed by Shri Omrakash Nema. (ii) In the case of Mriganka Mohan Sur (Supra), the ITO also found that the assessee had several accounts in the bank, was well known to the bank authorities and the assessee's cousin was a director of the bank. The ITO also found that the assessee had one-third share in the premises of Oriental Traders, and that there was no other person at the premises having the same name and surname as that of the assessee. These are not the facts forthcoming in the assessee's case, under consideration, and hence no adversity should be held against the assessee. (iii) In the case of Mriganka Mohan Sur (Supra), the denial of the assessee that he had any connection with the Oriental Traders and its bank account was not accepted by the ITO who held that the bank account in the name of Oriental Traders was that of the assessee and the reassessment was made accordingly. In the case of the assessee, under considerati....
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....tainable on facts and in law and hence the same be deleted." 9. The CIT(A) considering the submissions of assessee, deleted the addition. 10. We have heard rival submissions and perused the orders of lower authorities and materials available on record. The assessee is a proprietor of M/s. Mahendra Jewellers. A search and seizure operation was conducted in the case of the assessee on 31.01.2007 and 01.02.2007. Thereafter notice u/s.153A of the Act was issued and in pursuance of which the impugned order of assessment was made. The AO made addition of Rs. 9.65 crores to the income of the assessee on the ground that the assessee has deposited the said amount in cash in Punjab National Bank, Budhwari Bazar Branch, Bilaspur(C.G.), Account No.990. According to the AO, an information was received from the bank that that during the period 02.04.2005 to 31.05.2005 the assessee deposited vide 149 entries of Rs. 9.65 crores in account No.990 in the name of Shree Shyam Bullion. On being confronted the assessee denied his making of said deposits. 11. Further the Branch Manager, Shri J.Ekka vide letter dated 10.12.2008 also informed the AO that the earlier information provided by the bank was ....
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....nt at Indore. (i.e. to the business headquarters of this proprietory concern), he had opened account with Punjab National Bank, Budhwari Bazar Branch, Bilaspur, Account No. 990; (iii) The business cash so collected from time to time is deposited in this account by the personnel deputed by him for the purpose and according to the business needs, the sums so required are transferred from this bank account to his bank account hi Punjab National Bank at Ahmedabad; (iv) Shri Omprakash Nema affirmed that all the deposits, debits and credits appearing in this bank account No. 990 in Punjab National Bank, Budhwari Bazar Branch, Bilaspur, absolutely and exclusively related to the business of his proprietory concern named above and none of the entries in this Bank Account No. 990 in Punjab National Bank, Bilaspur, have any connection or relation with either Shri Mahendralal Saluja, Tikrapara, Bilaspur or with any member or concern of that family group; (v) Since the aforementioned Bank Account No. 990 in Punjab National Bank, Budhwari Bazar Branch, Bilaspur belongs to the business of his proprietory concern named above, all the entries made therein stood reflected and considered in the regul....
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....e appellant and the appellant was not given opportunity to cross-examine them. Despite specific request, it was vehemently urged that the appellant was not supplied with copies of the same. In the given circumstances, such statements, recorded behind the back of the appellant, in my considered view, had no evidentiary value. In Kishinchand Chellaram v CIT (1980) 125 1TR 713 (SC) it was held that since the IT Authorities propose to rely on the statements of a witness obtained behind the back of the appellant, they are bound to produce the same before the appellant so that he can controvert the statements by asking for an opportunity to cross examine the said witness with reference to the statements made by him. In CIT v Eastern Commercial: 210 ITR 103 (Cal.) it was held that: "As a matter of fact, the right to cross-examine a witness adverse to the appellant is an indispensable right and the opportunity of such cross examination is one of the corner stones of natural justice. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re- examination if necessary. It is not just a question of form or a question....
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....sources of income. The extensive search had not unearthed any incriminating evidence to prove the case against the appellant in this regard. The AO had also not placed on record any incriminating evidence to substantiate his allegations against the appellant in this regard. The AO had simply proceeded arbitrarily in finalizing the assessment, by treating the impugned deposits in bank account of somebody else, as undisclosed income of the appellant. Before resorting to such arbitrary conclusions against the appellant, it was incumbent upon the AO to have brought evidence to substantiate that the appellant in fact earned the aforementioned sum during the relevant previous year from undisclosed sources. This was not done. Hence the impugned addition made on presumptions and suspicions is unsustainable on facts and in law. It is settled position of law that in the scrutiny assessments that too completed as a result of extensive search operations, the AO was not empowered to base his conclusions on presumptions and surmises as he held by the SC in Dhakeshwari Cotton Mills Ltd. v. CIT (1954) 26 ITR 775, 782 (SC): In CIT v Bhayana (2008) 296 ITR 101 (P&H) it was held that in case the expl....
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....use hold expenses. 22. Brief facts relating to the above ground are that the AO during the course of search u/s. 132(1) of the Act in residential premises of the assessee, the search team found air-conditions, televisions and other luxury goods which, prima facie indicate that the assessee was enjoying luxurious life whereas the household withdrawal shown in IT returns, were meager. The AO further noted that the family of the assessee consists of 28 members, which comprised of 18 adult and 10 children. The total withdrawal shown by the family members were Rs. 3,20,900/- (about Rs. 31/- per day per person) and Rs. 3,70,300/- (about Rs. 36/- per day per person) respectively for the two assessment years, under consideration, summarized at page No. 28 by the AO. The AO found the withdrawal ridiculously low in view of the facts that they have three cars, five two wheelers, two Alsatian pet dogs. The AO has also taken on record some telephone and electricity bills. In spite of specific query, the assessee had not furnished complete breakup of household expenses, viz. milk consumed, cloth purchased, ration purchased, school fee and other incidental expenses. In absence thereof, the AO es....
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.... the withdrawals and the agrl. income as source of family expenditure. On verification of capital account, it was noticed that the agrl. income has been credited in accounts and therefore, the same could not be the source of household withdrawal. Otherwise also, since no evidence was adduced to prove earning of agrl. income, action of the AO in assessing the returned agrl. income, as income from undisclosed sources, was upheld. Thus, the withdrawals shown in books were only the source for meeting household expenses. Another fact noticed is that the appellant claimed that Shri Mahendra lal Saluja is residing with his sons; and the brothers of Shri Mahendra Lal Saluja are residing separately and, therefore, size of family is of 10 members and not 28 members as erroneously considered by the AO. On this basis, for the AY 2006-07 the addition to be sustained u/s. 69C of the Act, works out to Rs. 21,100/- resulting in relief of Rs. 1,91,133/-. Since the withdrawals shown for the AY 2007-08 were more than estimated on the above basis, the addition of Rs. 2,12,566/- was unwarranted and hence, the same is deleted. Accordingly the appellant gets relief of Rs. 1,91,133/- for AY 2006- 07 and....
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....and hence, the AO observed that no credence could be given to it. On this premise, the entire excess stock of gold weighing 7.697 kg, valued at Rs. 47,79,969 and excess stock of silver of 227 kg, valued at Rs. 43.13 lakh, was treated as amount of investment not fully disclosed in books of account and the same was added to the income of the assessee. 29. On appeal before the CIT(A), the assessee submitted that when confronted to explain the alleged excess stock of gold/silver, it was explained, in proceedings before the AO, that there was no such difference as alleged since Mahendra lal Saluja and other members of the family are having gold and silver jewellery in sufficient quantity as per their status. Apart from the old jewellery owned by them, almost all the members including assessee had further filed VDIS declarations, disclosing sizable volume of gold, silver-and diamond jewellery. 30. The CIT(A) after considering the submissions of AR of the assessee deleted the addition after observing as under :- "5.6 I have carefully considered the submissions made on behalf of the appellant with reference to the facts obtaining from the record. Detailed chart indicating the old jewel....
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....s held by the SC in Dhakeshwari Cotton Mills Ltd. v. CIT (1954) 26 JTR 775 (SC). In CIT v Bhayana (2008) 296 ITR 101 (P&H) it was held that in case the explanation of the appellant was to be disbelieved, the AO should have some material to rebut the same. Mere conjectures and surmises cannot form the basis for making additions. To the extent of income and assets, entered in the current books, there is no question of any allegation for concealment of income. In order to reduce the rigours of new procedure, it is essential that the additions should be made only in relation to such income in respect of which some incriminating material has been found during the course of search. There should be no estimation of income and additions thereof merely on the basis of circumstantial evidence and in any case, not on the basis of mere speculation germane to half baked discussion of facts or un-corroborative piece of evidence. Courts have uniformly taken the view mat, post-search assessment should be with reference to the seized assets and material gathered during search. It may possibly include the result of further enquiry with reference to such materials but it cannot provide an occasion fo....
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....eleting the addition of Rs. 47,340/- and Rs. 6,10,223/- made by the A.O. U/s 69A on the basis of loose paper found and seized during search in the case of the assessee. 33. Brief facts to the above ground are that the during the course of assessment proceedings the assessee was equired to explain loose paper No. A-2/33- Page No.14 which is a receipt of Rs. 47,340/- dated 27.10.2006 by M/s. Mahendra Jewellers and not found recorded anywhere. Since the assessee failed to submit any plausible explanation, this sum of Rs. 47,340/- was presumed as unexplained money received by the assessee and added to the income u/s. 69 A of the IT Act, 1.961, The AO also noted that Page No. 35 to 38 of the loose paper bundle No. A- 2/33, seized during search, were the sale of ornaments. The weights involved along with date in each loose sheet were as under: Page No.35 1934 Grams Date 28.07.06 Page No.36 3868 Grams Date 14.06.06 Page No.37 8767 Grams Date 10.05.06 Page No.38 17548 Grams Date 21.08.06 The AO held that these unrecorded transactions pertained to sale of silver and in absence of any plausible explanation, these unrecorded sales computed at Rs,6,10,223/- were a....
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....es and do not mean anything. Hence income should not be estimated by applying multiplier of thousand or even lac. Over the course of time, the courts have held that the AO has no such authority and unless meaningful data could be culled out, which could be corroborated from other material, no addition is called for on the basis of such dump documents. It is for the AO to supply language to dump documents, substantiated on the strength of evidence. In the absence of any evidence, about the nature of figures noted on the impugned loose papers seized, date, name of the party etc., no addition could be made merely on suspicion. (ACIT v Shailesh S. Shah (1997) 63 ITR 153 (Bom.). In the instant case, the only known facts are that certain papers were found in the business premises of the appellants and they contained certain calculations, (origin and connection of which is not known) and no intelligible inference therefrom can be drawn. No sensible inference of any fact can be drawn from such known facts. In this view of the matter, the additions made were held imaginary as a result of suspicion. (Brinjal Rupchand v ITO (1991) 40 TTJ 668 (Indore). It is trite law that, if an income not ad....