TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 1007
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....ns have been heard and record perused. Facts in brief are that the assessee is an individual and derived income from salary and other sources during the years under consideration. A search was conducted on 18.07.2012 in the case of the assessee group. The assessee is head of family so he undertaken to pay all the due taxes and also undertake other responsibilities. The search was conducted on 18.07.2012. During the course of search in the statement recorded u/s 132(4) of the Income Tax Act, 1961 the assessee has admitted total surrendered of Rs. 15.89 Crores in the hands of all the family members. The details of surrender admitted are as under: - Sr.No. Particulars Surrender in the hands of Amount Remarks 1 On account of loans and advances as per exhibit-4, 5 & 6 Mangi Lal Kandoi 86000000 2 Seized documents Mangi Lal Kandoi 2500000 Set off is claimed 3 Seized documents Mangi Lal Kandoi 4924000 4 Seized documents Mangi Lal Kandoi 1241200 4 Jewellery and other discrepancies Mangi Lal Kandoi 40000000 Subject to verification and clarification 5 Sale of plot at Arpit Nagar Rajkumar Kandoi and Sadhna Kandoi 24300000 Set off is claimed ....
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....). 9. An addition of Rs. 2,09,63,520/- was made by the A.O. on account of jewellery found during the course of search by treating the same as unexplained. By the impugned order, the ld. CIT(A) has confirmed the addition of Rs. 97,65,444/- out of the addition made on account of jewellery. 10. By the impugned order, the ld. CIT(A) has deleted the addition of Rs. 2,03,965/- made by the A.O. on account of interest earned on undisclosed advances of Rs. 25.00 lacs. Further the ld. CIT(A) has also deleted the addition of Rs. 6,87,125/- made by the A.O. on account of interest earned on undisclosed advances of Rs. 49.24 lacs. 11. The ld. CIT(A) also deleted addition of Rs. 2,06,257/- made by the A.O. on account of interest earned on undisclosed advances of Rs. 12.41 lacs. 12. During the course of assessment, the A.O. had also made addition of Rs. 4.00 crores on account of unexplained transactions which was deleted by the ld. CIT(A). 13. The ld. CIT(A) has also deleted addition of Rs. 1,11,98,057/- made by the A.O. on account of unexplained investment in jewellery. The ld. CIT(A) had also deleted addition of Rs. 56,39,819/- made on account of unexplained expenditure U/s 69C of the Act. ....
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.... taking action u/s 153A in the hands of het assessee there being no material relating to him found during the course of search. Plethora of decisions were cited wherein it has been held that if during the course of search no undisclosed income is noticed, action u/s 153A is not triggered. The following case laws are relied on: - (i) DCIT Vs. Royal Marwar Tobacco Product (P.) Ltd [2009] 29 SOT 53 (AHD.)(URO): Since no material indicating any suppressed sales for assessment years 2000-01 to 2003-04 had been found during course of search for said years, and there was no defect in books of account, Assessing Officer was not. justified, in making addition for said years on basis of material seized relating to assessment year 2004-05. (ii) In Kusum Gupta v. DCIT (ITA Nos. 4873/DeI2009, (2005-06) 2510(A.Y. 2003-04), 3312 (A.Y. 2004-05) 2833/Del/2011 (A.Y. 2006-07) order dt. 28-032013): ITAT Delhi bench also held as under: "10. On perusal of the assessment order for the year under consideration and others in question in the appeals before us, we find substance in the contention of Ld. AR that no incriminating material found or statement recorded during the course of search was ther....
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....basis of incriminating documents, and assets found and seized during the search. Wherever the proceedings are completed prior to the search then nothing merges with proceding u/s 153A of the Act and nothing abates. In such a situation, the AO has to respect the completeness of the proceedings. Admittedly, in the case of assessee, no incriminating documents were found and seized. The provisions of section 153A give power to assessing officer to assess and reassess the income. The assessing officer is empowered to make addition on account of undisclosed income or income escaped assessment. In the case under consideration, there is no incriminating material found during the course of search relating to the assessment year under consideration. The time period for issuing notice u/s 143(2) was already expired prior to the date of search. Therefore, the proceedings do not get abated by virtue of proviso to Section 153A. In view of the facts of the case it is submitted when there was no material found during search warranting action u/s 153A, the Ld. Assessing Officer has no power to frame the assessment u/s 153A. The issue has now been decided by the Jurisdictional High Court of Rajast....
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....ons of section 153A trigger only when there exist any incriminating material found during search which may be in the form of any document, books of accounts, cash, stock or bullion. In this case nothing of the sort was found or seized. Hence the notice issued u/s 153A is invalid. The issue has now been decided by the Jurisdictional High Court of Rajasthan in the case of Jai Steel India Vs. ACIT 88 DTR 1. The Hon'ble High Court has held as under - "Section 153A cannot be read in isolation, in as much as, the same is triggered only on account of any search/requisition u/s 132 or 132A. If any books of accounts or other documents relevant to the assessment had not been produced in the court of original assessment and found in the course of search, such books of accounts or other documents have to be taken into consideration while assessing or reassessing the total income under the provisions of s. 153A. Even in a case where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration. The requirement of assessment or reassessment under the said section has to be read in the context of s. 132 or s. 132A, ....
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.... ratio of the aforesaid case laws is fully applicable to the facts of the case, therefore, framing of the assessment is illegal and unlawful. Therefore, the notice issued u/s 153A deserves to be quashed. 18. As per the ld AR while confirming the addition of Rs. 6.00 lacs the Ld. CIT(A) has not perused the seized papers nor has gone through the statement of the assessee recorded u/s 132(4) of the Act, wherein the assessee had very clearly stated that the amount of Rs. 600000/- was undisclosed income of Shri Anand Singhal who was present at the time of statement and admitted that the income of Rs. 600000/- pertained to him. The statement u/s 132(4) is on oath and carries evidentiary value. It cannot be superseded by a subsequent affidavit of the assessee that income of anybody may be assessed in his hand. In these circumstances the addition was wrongly been made in the hands of the assessee and the Ld. CIT(A) has also erred in confirming the same. 19. It was argued by the ld AR that the Confessional statement u/s 132(4) being under pressure violates the Board circulars. 20. The ld AR has submitted that in the case of the assessee during the course of search statement was recorded ....
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.... of its director as there is no proof to show that the amount mentioned in the said document was paid by the company. (iii) Moolchand Kumawat & Sons Vs. DCIT (Ajmer) ITAT Jaipur Bench 42 Taxworld 241 in M.A. No. 93/JP/2008 arising out of ITSSA No. 24/JP/2005 order dated 20.02.2009 Addition cannot be made on the basis of a dumb document or on the basis of entries found recorded on a paper seized during search without conducting any enquiry from the concerned party. (iv) Assistant Commissioner of Income Tax Vs. Satya Pal Wassan (2007) 295 ITR 9 AT 352 (Jabalpur) A documents found during the course of a search must be a speaking one and without any second interpretation, must reflect all the details about the transaction of the assessee in the relevant Assessment Year. Any gap in the various components for the charge of tax must be filled up by the Assessing Officer through investigation and correlation with the other material found either during the course of the search or on investigation. Without this no addition can be made on the basis of a loose sheet. (v) It was held in the following cases that addition could not be made on the basis of uncorroborated noting on loose ....
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.... justice involves a right in the assessee to inspect the reports and obtain the substance of the all relevant documents such as statements, orders, reports etc. so as to be able to lead evidence in rebuttal or to cross examine witness who have given evidence against him. It also means that the assessee should be given a reasonable time and opportunity to produce such evidence as he may consider necessary. (iii) In the following it was held that the Assessing Officer can make enquiries to gather material privately and confidentially. He can also summon witnesses and record their statement in the presence of the assessee or even behind his back. However, the substance of any information sought to be used against the assessee, should be put to him and he should have fare opportunity. It is upto the assessee to avail of it, constant with the principal of natural justice, to rebut the same. (a) Chiranji Lal Steel Rolling Mills Vs. CIT (1972) 84 ITR 222 (P&H) (b) Namasivayam Chettiar (S.N.) Vs. CIT (1960) 38 ITR 579 (SC) (c) Abdul Razak Vs. CIT (1935) 3 ITR 361 (Pat) (d) Balasubramanian (P.N.) Vs. ITO (1978) 112 ITR 512 (AP) (e) Bagsu Devi Bafna Vs. CIT (1966) 62 ITR 506 (Cal....
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....ssee either with the other material found during search or by conducting any post search enquires. It is settled principle of law that unless the period of the papers is established and the writer of these papers is known, no addition could be made. 25. As per the ld AR, the additions were made against the principles of natural justice. It was submitted that the A.O. had referred to some report submitted by the CIT to ITSC and additions have been made exploiting this report. But the same was not furnished to the assessee for defense. It is settled position of law no material can be used against the assessee gathered at his back unless opportunity is provided. 26. The ld AR has further contended that the additions have been exclusively based on statement u/s 132(4) which was taken under duress and in clear cut violations of Baord's circulars. The addition has been made with reference to a paper which was got prepared then and there at the time of search when the assessee was surrounded by a number of revenue officers. No opportunity was provided to analyze and relate the papers with the business affairs of the group. The assessee wants to submit that the statement which was pr....
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....mmissioner of Income Tax Vs. Satya Pal Wassan (2007) 295 ITR 9 AT 352 (Jabalpur) A documents found during the course of a search must be a speaking one and without any second interpretation, must reflect all the details about the transaction of the assessee in the relevant Assessment Year. Any gap in the various components for the charge of tax must be filled up by the Assessing Officer through investigation and correlation with the other material found either during the course of the search or on investigation. Without this no addition can be made on the basis of a loose sheet. (v) It was held in the following cases that addition could not be made on the basis of uncorroborated noting on loose sheets and papers - (1) S.P. Goyal VS. DCIT (2002) 77 TTJ 1 (Mum) (2) Chandra Mohan Mehta Vs. ACIT (1999) 65 TTJ 327 (Pune) (3) Bansal Strips Pvt. Ltd. Vs ACIT (2006) 100 TTJ 665 (Del) (4) Kishan Chand Sobhraj Mal (1991) 42 TTJ 423 (JP) (5) CIT Vs. Naresh Khattar (HUF) (2003) 261 ITR 664 (Del) (6) Lal Chand Agarwal vs ACIT 21 TW 213 (ITAT Jaipur) (7) CIT Vs. S.M. Agarwal (2007) 293 ITR 43 (Del) (8) CIT Vs. Girish Choudhary (2008) 296 ITR 619 (Del) (9) Jayanti Lal Patel ....
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....t has resulted in addition on account of interest. The interest has been calculated notionally and addition has been made accordingly. No addition can be made on notional basis. The following case laws are quoted in support: - (i) COMMISSIONER OF INCOME TAX vs. EXCEL INDUSTRIES LTD. (2013) 358 ITR 295 (SC) Income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that for the purposes of taxability that the income is not hypothetical and it has really accrued to the assessee (ii) Mrs. Sushila Mallik Vs. ITO (2011) 61 DTR 437 (Lucknow) (iii) Kesri Chand Jai Sukh lal Vs. CIT 248 ITR 47 (Guwahati) No addition can be made on notional basis, if the assessee has not charged interest on advances the Assessing Officer cannot decide that he should have charged the interest. (iv) Kishanchand Jaisukh Lal Vs. CIT 248 ITR 47 (Guwahati) No addition can be made on notional basis. If the assessee has not charged interest on advances, the Assessing Officer cannot decide that he should have charged the interest. (v) CIT Vs. Asian Hotels Ltd. (2010) 323 ITR 470 (Del) Notional interes....
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....6. It was submitted before the Ld. AO that the entries recorded in Annexure-A- Exhibit-1 are part of Annexure-AS- 4, 5, 6. The year wise additions made by the Ld. AO on the basis of Annexure-A Exhibit-1 are as under :- 1) Assessment Year 2010-11 Rs. 6,00,000/-. In the assessment order on page no. 13 in para 8.2.2 the assessee has submitted that above Rs. 6,00,000/- is part of 8.6 Cr. surrendered by the assessee on the basis of Annexure-AS- 4, 5, 6. Therefore this required deletion. 2) Assessment Year 2012-13 Rs. 49,24,000/- + Rs. 4,50,000/. In the assessment order on page no. 12 in para 7.2.2 the assessee has submitted that above Rs. 49,24,000/- is part of 8.6 Cr. surrendered by the assessee on the basis of Annexure-AS- 4, 5, 6. This addition was made on the basis of Annexure- A-1 Page no. 5 for the amount of Rs. 17 Lacs + 30 Lacs + 2.24 Lacs in the order on page 12 in para 7.2.2. The assessee has stated as under: - "In explanation to Rs. 17 lacs, 30 lacs and 2.24 lacs it is provided that these amounts pertain to the loans and advances given to the aforementioned parties which have been received back by the assessee. Further, it is humbly submitted that such advances have....
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....ious additions so made by the A.O. Accordingly, he requested for upholding various additions so made by the A.O. 34. We have considered the rival contentions and carefully gone through the orders of the authorities below. We had also gone through the statement recorded U/s 132(4) of the Act and the various documents seized during the course of search and the reply of the assessee on such seized documents. We had also deliberated on the judicial pronouncements referred by the lower authorities in their respective orders as well as cited by the ld. AR and DR before us during the course of hearing in the context of factual matrix of the case. From the record we found that during the course of search, the assessee has surrendered Rs. 15,89,65,200/-. Yearwise breakup of the income surrendered as given at para 3 of this order hereinabove, we found that in the A.Y. 2008-09 and 2009-10, the A.O. had made addition of Rs. 1.50 lacs and Rs. 2.00 lacs respectively on account of advances surrendered by the assessee. We also found that the detailed finding has been given by the A.O. and the ld. CIT(A) with regard to amount found to have been advanced by the assessee, accordingly, we confirm the....
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....ocuments. (ii) Addition of Rs. 25,00,000/- on account of alleged undisclosed advances made by the assessee on the basis seized documents. (iii) Addition of Rs. 49,160/- on account of interest income earned on advance of Rs. 25,00,000/- on presumption basis. (iv) Addition of Rs. 1,91,200/- as undisclosed advance. (v) Addition of Rs. 97,65,444/- out of total addition of Rs. 2,09,63,520/- for jewellery found during the course of search by treating the same as unexplained. Aggrieved with the order of the Ld. CIT(A) the assessee as well as the revenue have preferred appeals before the ITAT. 37. With regard to addition of Rs. 15.00 lacs on account of income surrendered by the assessee before the Settlement Commission on account of scrap business, the ld. CIT(A) has deleted the same after following his appellate order for the A.Y. 2011-12 dated 04/09/2018 wherein the ld. CIT(A) has held as under: "5. I have considered the relevant facts and the argument advanced. I find that during the course of search no material is found which suggests that the appellant was carrying on scrap trading business. The income was declared before the settlement commission only to fulfill the requi....
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.... use the material and information produced by the assessee before settlement commission as also the evidence recorded by the settlement commission, finding of the settlement commission reveals that before the settlement commission there was no information about the quantity of scrap sold, parties to which such scrap was sold, or any other evidence incidental to procurement, supply or transportation of such scrap during the period under consideration. Thus the finding of settlement commission is that no such income in the form of scrap trading is found to have been earned. As rightly argued by the ld. counsel for the appellant that when there is no material either before assessing officer or before settlement commission that the appellant has earned the income, and since the assessing officer has no other evidence to suggest that any income from scrap trading accrued to the appellant, the addition made solely on the basis of application filed before settlement commission is not sustainable. Just as the assessee has admitted before settlement commission of having earned the income without any basis, the appellant has also denied before assessing officer having earned such income. The....
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....he hands of Sh. Mange Lal Kandoi is shown at an amount of Rs. 67.50 lacs and Rs. 127.50 lacs in the hands of Raj Kumar Kandoi. 11.3 The applicants were questioned about the basis of disclosure of the above income and the manner of earning such income. Counsel for applicants stated during the course of hearing that certain seized documents indicated trading in scrap business and earning therefrom. The Commission examined these seized documents specially page numbers 49 of AS3 (PB No.173), and also referred to page No.181 and 182 of the Paper Book filed with the settlement application in case of Raj Kumar Kandoi as pointed out by counsel of the applicants. On examination of these documents, the Commission is of the view that these are only indicative of some trading in scrap. In some of the documents the quantities are mentioned but there are no details as to whom these were sold and there is no way that any income can be estimated from such limited transactions. To pointed queries in this regard, it was conceded that these are only limited documents and at best only an estimate can be made. In fact the applicants in their reply received on 14/09/2016, stated that "the income from ....
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....o substantiate the quantum of income from scrap business as disclosed in the application before Settlement Commission. In view of the aforesaid facts, the ld. CIT(A) concluded that it is established beyond doubt that the assessee did not have any such income from scrap business as disclosed before the Settlement Commission. The income was so disclosed by the previous counsel of the assessee just and just to get the application admitted by hook or by crook. The scheme of the previous counsel failed, the Settlement Commission did not accept the income from scrap business and rejected the application. 39. The ld. CIT(A) in the impugned order given a categorical finding that no evidence was found during the course of search to justify the disclosure of income from scrap business. The A.O. also has not quoted or referred to any document found during search with respect to income from scrap business. No addition could have been made u/s 153A unless the same is linked with the material found during search. In view of these facts, the ld. CIT(A) concluded that the addition made by the A.O. is uncalled and deserves to be deleted. The detailed finding given by the ld. CIT(A) has not been c....
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....g cannot take the place of evidence. 44. Similarly, addition of Rs. 1,66,185/- on account of notional interest was deleted by the ld. CIT(A) after having the similar observation and the findings. We found that while deleting the impugned addition of notional interest, the ld. CIT(A) has deliberated on various judicial pronouncements as referred to in his order and after applying the proposition of law laid down therein to the facts of instant case and concluded that the addition so made on account of notional interest is not warranted. 45. Ground No. 5 of the revenue's appeal relates to deletion of similar addition of Rs. 2,06,257/- made by the A.O. on account of interest earned on undisclosed advance of Rs. 12.41 lacs. The reasoning given by the ld. CIT(A) for deleting the addition is same as narrated above. Following the reasoning given by the ld. CIT(A) in his order, we do not find any reason to interfere in the finding so recorded for deleting the addition on account of notional interest. 46. The ld. CIT(A) has also deleted the addition of Rs. 4.00 crores made by the A.O. on account of unexplained transaction. We have considered the rival contentions and found from the recor....
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....ed, on behalf of all the members of the family a lump sum disclosure of 4 crores is made. This includes the unrecorded trade transaction, investment in jewellery and trade or personal transaction of undisclosed income of the family members which is not known will cover up the entire disclosure of 4 crores. I therefore note that the disclosure is a lump sum disclosure without any specific reference to any particular amount of undisclosed income and the nature thereof. When the appellant explained during assessment proceedings that the surrender was lump sum, vague and without considering relevant material, the AO sustained the addition because the assessee had declared the unaccounted income in statement recorded during search. However he has not brought out any entry on any of the above referred seized material to hold that the same contains any undisclosed income. In the entire assessment order, no correlation is established between the entries recorded in the seized material with the above referred disclosure of 4 crores. Just as the assessee had admitted during search of having undisclosed income, in the same breath during assessment proceedings he has declared not to have earne....
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....r the proposition that statement recorded under section 132(4) have great evidentiary value and cannot be discarded if retracted after longtime. In my considered opinion, the said judgment is distinguishable on facts. In the present case though there is statement of the appellant, the statement do not relate the amount of disclosure with the respective entries of the seized material. Though the question was specific with reference to the seized material, the admission is lump sum without narrating the entries thereon and the amount of such entry. Thus once again the addition is purely on the basis of admission of the appellant without any reference to any specific nature of entry in the seized material with description thereon. 17.3 Here it is pertinent to note the provision relating to search u/ s. 132 and assessment u/ s.143. The provision of section 132 entitles the authorized officer to conduct a search and record the statement of the person in possession of the money, bullion, jewellery or other valuable article or things or books of accounts or documents found during search. It is also provided that the person in possession of such material can be examined on oath and the s....
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....his also makes it clear that, though the statement recorded during the course of search can be used in evidence in assessment proceedings, yet the same cannot be the sole basis for computing the income in regular assessment proceedings. Since the assessment U/s 143 is to be made after hearing such evidences as the assessee may produce and such other evidence as the assessment officer may require is specified points, and after taking into account all relevant material which he has gathered, the A.O. shall make an assessment of the total income. Since the primary onus to tax any income is upon the revenue and since the A.O. failed to bring out any such material for taxing the income of Rs. 4.00 crores, in our considered opinion the same is not sustainable on the facts of the case as also in law. Having examined the seized material, it is not discernible as to how such material demonstrates that the assessee has earned the income of Rs. 4.00 crores. 48. The detailed finding so given by the ld. CIT(A) in para 17 to 17.3 while deleting addition of Rs. 4.00 crores, has not been controverted by the ld DR by bringing any positive material on record, accordingly, we do not find any reason ....
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....ms of gold and remaining 300 grams has been treated as unexplained of the value of Rs. 8,85,000/-. 52. Furthermore, the assessee has disclosed 189.620 carats of gold in wealth tax and IT returns as against 373.620 grams found during search. Thus 184 grams remained to be explained. The assessee had pleaded that considering the status of family, number of family members, traditions in the traditional marwadi family more credit required to be given of the diamond found during search. In view of the submission of the assessee the Ld. CIT(A) has given credit of 25% of 184 carats of diamond which remained unexplained. Thus 46 carat of diamond has further been treated as explained and balance 138 carats of diamond of the value of Rs. 37,13,994/- was treated as unexplained. The silver weighing 39 kg has been treated as explained by the Ld. CIT(A) with respect to the status of the family and traditions. In view of the aforesaid facts the Ld. CIT(A) has sustained addition of Rs. 97,65,444/- (885000+3713994+5166450 [surrendered by the assessee]) totaling to Rs. 97,65,444/-. 53. A detailed finding has been recorded by the ld. CIT(A) for upholding the addition of Rs. 97,65,444/-. The precise ....
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....jewellery is to be made in the hands of the appellant herein. Accordingly addition of Rs.2,09,63,501 was made which is now challenged in appeal before me. Appellant's submissions : 19. The ld. counsel for the appellant submitted as under. "The addition has been made with respect to the alleged unexplained investment in gold and diamond and silver jewellery. The following jewellery was found at the residence of Shri Mangi Lal Kandio: - (i) Gold jewellery 7936.779 grams (ii) Diamond 373.62 carats (iii) Silver 39.75 kilograms The above jewellery was valued for a sum of Rs. 2,41,67,236/-. Against this jewellery benefit has been given of Rs. 32,03,735/- on account of jewellery declared in the income tax returns for the Assessment Year 2013-14 by Shri M.L. Kandio of Rs. 3,48,475/-, Smt. Savitri Kandio of Rs. 8,41,500/-, Smt. Sadhana Anand Singhal of Rs. 7,29,760/-, Shivani Kandoi of Rs. 5,98,316/- and Sneh Narendra Kandoi of Rs. 6,85,684/- all totaling to Rs. 32,03,735/-. Thus the Ld. Assessing Officer made addition of the remaining amount of Rs. 2,09,63,501/- (24167236-3203735). During the course of assessment proceedings the assessee submitted following reply: - ....
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....x assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need to be seized. (ii) In the case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 gms. per married lady 250 gms per unmarried lady and 100 gms. per male member of the family, need not be seized. (iii) The authorized officer may having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. This should be reported to the Director of Income-tax/Commissioner authorising the search all the time of furnishing the search report. (iv) In all cases, a detailed inventory of the jewellery and ornaments found must be prepared to be used for assessment purposes." As per this circular benefit has to be given to the extent of 500 gms. per married lady 250 gms per unmarried lady and 100 gms. per male member of the family. Accordingly a chart was submitted to the Ld. Assessing Officer which is produced above and after following the board circular only 2403 grams remained as ....
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....is is for the reason that in view of CBDT instructions No. 1916 dated 11th of May 1994, jewellery declared in wealth tax returns are not required to be seized. Also if a person is not liable to wealth-tax, jewellery and ornaments to the extent of 500 gms for married lady, 250 gms. For unmarried lady and 100 gms. For a male member of the family need not be seized. The instruction also extends to consider the status of the family and customs and practices of the community to which the family belongs as also other circumstances of the case for exclusion of large quantity of jewellery and ornaments from seizure. Though the circular refers only to non-seizure of jewellery, it should also be considered as applicable while considering the explanation of the person to consider whether the jewellery etc. found are to be considered as explained or unexplained for the purpose of assessment. If as per the circular, the jewellery is not required to be seized, it would imply that to that extent the possession of jewellery is deemed to be explained by either declaring in wealth tax returns, or by usage and custom, or by the status of the family as also custom and practices of the community to whi....
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....ady and 100 gms. per male member of the family, need not be seized and it does not speak about the questioning of the said jewellery from the person who has been found with possession of the said jewellery. However, the Board, looking to the Indian customs and traditions, has fairly expressed that jewellery to the said extent will not be seized and once the Board is also of the express opinion that the said jewellery cannot be seized, it should normally mean that any jewellery, found in possession of a married lady to the extent of 500 gms. 250 gms. per unmarried lady and 100 gms per male member of the family will also not be questioned about its source and acquisition. At the time of wedding, the daughter/daughter-in-law receives gold ornaments jewellery and other goods not only from parental side but in-laws side as well at the time of 'Vidai' (farewell) or/and at the time when the daughter-in-law enters the house of her husband. Thereafter also, she continues to receive some small items by various other close friends and relatives of both the sides as well as on the auspicious occasion of birth of a child whether male or female and the CBDT, looking to such customs preva....
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....e wealth tax returns but the weight of such jewellery declared in wealth tax returns to be considered as explained. Even while considering the value declared in the books of accounts as explained, the assessing officer has erred in adopting the amount shown in the balance sheet. While considering the jewellery as explained or unexplained, the assessing officer should have gone by the weight of such jewellery or if any description is available in respect of such jewellery to consider whether the same is explained or not. For both these purposes, i.e. jewellery declared in wealth tax return and jewellery declared in balance sheet, the assessee will correlate the jewellery found with that declared in the either wealth tax returns or in the balance sheet and the weight of such jewellery shall be excluded for considering whether the same is a explained or unexplained. As per the appellant, the jewellery declared either in wealth tax returns or in books of accounts is 3421.779 gms. of gold jewellery, 189.62 carats of diamond jewellery and 16.75 Kg of silverware. 22. The appellant has filed following chart before the AO and has owned up 2112 gms of gold as undisclosed income of the appe....
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.... return of income. Also drawing made are significant over a period of time. Considering the status and standing of family and also the traditional milieu I am of the view that about 25% of 184 carat can be treated as explained on estimate. Thus 46 carat is treated as unexplained and 138 carat of diamond will be subjected to taxation. Next question arises at what value 138 carat will be taxed. Perusal of all the valuation report drawn during the course of search shows that per carat diamond value ranges fromRs. 10,000 in most cases to Rs.1,75,000 (refer item no. 15 in the jewellary annexure JF1(c) drawn at the bedroom of Smt. Savitri Kandoi). An exercise was undertaken to compute avarrage value of diamond from all the jewellary inventories 85 average value computed. As per this the average value diamond comes out to be Rs.26913 per carat. The tabulation is given below for ready reference: Ann Found from Total carat of diamond Total value (Rs.) Av (Rs. ) JF1 Bedroom of Smt. Sadhana W/o Sh. Anand Singhal 41.9 Ct. 519000 12386 JF1(c) Bedroom of Smt. Savitri Kandoi 23.5 1465000 62340 JF1 (a) Bedroom of Smt. Savitri Kandoi 86.35 4849750 56163 JF1(....
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....e question of considering the same as unexplained does not arise. Merely stating that there are certain discrepancies in the books of accounts and hence the entire cash remains unexplained, is not acceptable. If the assessing officer has any reason to doubt the correctness of the entries, to that extent the same may be discarded but discarding the entire books of accounts as incorrect will not justify the addition. How much is the cash receipts recorded on 15 July 2012 and after discarding such receipts how much cash still remains is not worked out by the assessing officer. When the appellant filed reconciliation during the course of assessment, the total cash was worked out at Rs.1,34,68,974. No comment is made by the assessing officer as to whether the same is correct or not. Only the entries which are incorrect can be discarded but rest of the entries should have been accepted. At any rate since the cash found during course of search is much less than the same shown as per books of accounts of various other concerns, the appellant cannot be held to possess any unexplained cash. If the discrepancy is in the books of accounts of certain concerns, the same can be appropriately cons....
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....in books are more as against cash found physically. This was so because certain payments were still to be accounted for in the books of accounts. Considering the submission of the assessee the Ld. CIT(A) deleted the addition. The Ld. CIT(A) has held that for small discrepancies in the books of accounts and overwriting the books cannot be rejected unless it is established that discrepancies in overwritings established manipulation and fraud. The Ld. CIT(A) has also held that as the cash stood accounted for in the books of accounts, section 69A could not be invoked. 57. We further found that during the course of search the cash was found from various places was Rs. 5639819/- which included the following:- (i) Rs. 4335800/- from the residence of the assessee (ii) Rs. 894000/- from D-91, Amba Bari, Jaipur (iii) Rs. 40000/- KMPL (iv) Rs. 242000/- GITS (v) Rs. 47000/- Desert Inn The A.O. has treated the entire amount of Rs. 56,39,819/- as unexplained and has made the addition to the income of the assessee. The A.O. did not consider the reply of the assessee given in question no. 28 58. We have gone through the reply of the assessee, the perusal of reply of the assessee state....
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....s to be able to lead evidence in rebuttal or to cross examine witness who have given evidence against him. It also means that the assessee should be given a reasonable time and opportunity to produce such evidence as he may consider necessary. (iii) In the following it was held that the Assessing Officer can make enquiries to gather material privately and confidentially. He can also summon witnesses and record their statement in the presence of the assessee or even behind his back. However the substance of any information sought to be used against the assessee, should be put to him and he should have fare opportunity. It is upto the assessee to avail of it, constant with the principal of natural justice, to rebut the same. (a) Chiranji Lal Steel Rolling Mills Vs. CIT (1972) 84 ITR 222 (P&H) (b) Namasivayam Chettiar (S.N.) Vs. CIT (1960) 38 ITR 579 (SC) (c) Abdul Razak Vs. CIT (1935) 3 ITR 361 (Pat) (d) Balasubramanian (P.N.) Vs. ITO (1978) 112 ITR 512 (AP) (e) Bagsu Devi Bafna Vs. CIT (1966) 62 ITR 506 (Cal) (f) Cashmir Vastralaya Vs. CIT (1978) 112 ITR 630 (Pat)" 60. Considering the detailed finding so recorded by the ld. CIT(A) as quoted above, we do not find any r....
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.... reference to annexure A-4, A-5 and A-6 and was asked to prepare a separate annexure 'A'. The assessee surrendered a sum of Rs. 8.60 Crores on account of advances, in this annexure 'A'. It is on the basis of this surrender of advances that the aforesaid addition of Rs. 2,55,00,000/- has been made bifurcating the surrender in relevant Assessment Years. 66. It is pertinent to mention here that during the course of search, surrender was taken from the assessee not only with respect to advances so made and found as per seized material but also on account of other seized document and on account of sale of Arpit Nagar land. We found that the assessee has surrendered a sum of Rs. 2.43 crores in the A.Y. 2011-12 on account of sale of Arpit Nagar land, addition of which was made by the A.O. and confirmed by the ld. CIT(A) in the A.Y. 2011-12. We have also upheld the addition of Rs. 2.43 crores on account of income earned on sale of Arpit Nagar land in the A.Y. 2011-12. However, in the A.Y. 2012-13, the department has made addition on account of advances amounting to Rs. 5,68,50,000/- alleged to be given by the assessee. We found that the amount of disclosure made by the ass....
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....fore this required deletion. In the assessment order on page no. 12 in para 7.2.2 the assessee has submitted that above Rs. 49,24,000/- is part of 8.6 Cr. surrendered by the assessee on the basis of Annexure-AS- 4, 5, 6. Therefore this required deletion. This addition was made on the basis of Annexure- A-1 Page no. 5 for the amount of Rs. 17 Lacs + 30 Lacs + 2.24 Lacs in the order on page 12 in para 7.2.2. The assessee has stated as under : - "In explanation to Rs. 17 lacs, 30 lacs and 2.24 lacs it is provided that these amounts pertain to the loans and advances given to the aforementioned parties which have been received back by the assessee. Further, it is humbly submitted that such advances have been sourced out of own money surrender of Rs. 8.6 crore in earlier paras. Therefore, no addition can be made in this regard. Further, the Income of Rs. 2.24 lacs have been received from the sale of scrap which has already been included in 8.6 crores... " The amount of Rs. 4,50,000/- is also part of surrendered of Rs. 5,68,50,000/- surrendered for the year under consideration. In the assessment order on page no. 11 in para 7.2.2 the assessee has submitted that above Rs. Rs. 25,00....