TaxTMI 
TaxTMI 
2021 (3) TMI 1194
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....as raised following grounds of appeal in the case of assessee namely Shri Nitin Agrawal vide IT(SS)A No.182/Ind/2019 for Assessment Year 2014-15 :- (1) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 5,00,00,000/- made by Assessing Officer on account of admission of additional income u/s 132(4) of the Income Tax Act,1961 (2) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 26,42,910/- made by Assessing Officer on account of unexplained cash of the Income Tax Act,1961 (3) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 24,88,216/- made by Assessing Officer on account of unexplained jewellery of the Income Tax Act, 1961 (4) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 50,00,000/- made by Assessing Officer on account of unexplained advances to Shri Lilwani of the Income Tax Act,1961 (5) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 10,00,000/- made by Assessing ....
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....ssessment proceedings Ld. A.O referred to the statement given by the assessee u/s 132(4) of the Act admitting additional income on account of various discrepancies noticed/incriminating material found during the course of search. Detailed submission filed by the assessee were considered. The statement given by the assessee u/s 132(4) of the Act was composite in nature referring to various discrepancies noticed during the course of search. Ld. A.O completed the assessment assessing income at Rs. 8,21,10,518/- after making following additions:- (i) Admission of additional income u/s 132(4) Rs. 5,00,00,000/- (ii) Unexplained cash Rs. 26,42,910/- (iii) Unexplained jewellery Rs. 48,01,948/- (iv) Unexplained advance to Shri Lilwani Rs. 50,00,000/- (v) Unexplained investment in watches Rs. 10,00,000/- (vi) Foreign travel expenses Rs. 2,00,000/- 7. Aggrieved assessee preferred appeal before Ld. CIT(A) and partly succeeded. 8. Now the Revenue is in appeal before the Tribunal. 9. As regards the common Ground No.1 pertaining to the addition made by the Ld. A.O based on the statement given u/s 132(4) of the Act and subsequently del....
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.....Y. 2013-14. I will declare the income in the income tax return as under: Swadesh Developers and Colonisers 5 crores Ss. V. Infra Developers 5 crores However, while filing the returns, the assessee retracted from the said surrender and filed the returns on the basis of the accounts which are duly audited. 1.In the course of the assessment proceedings all the information as required by the AO from time to time was furnished. The assessee is in the business of real estate, builders and developers. The assessee during the relevant period was developing a residential complex in the individual capacity and also in the firms in which he was a partner. The expense incurred on the purchase of land and construction expenses on the projects were the business expenses of the assessee. The assessee had maintained regular books of account in which all the expenses including the cost of construction were duly recorded. These books were presented before the AO during the course of assessment proceedings and were duly checked by him and no deficiency was found in the books of account or the records maintained. No evidence was found during the course of search or after....
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....not been made with reference to any loose paper seized during the course of search and was accordingly not in accordance with the provisions of section 132(4). The AO has failed to bring on record any specific instance of the assessee having earned any undisclosed income or having made any unexplained investment which could justify the addition under reference. The sole basis for making the addition is the statement made by one of the partners. The Ld. A.O. has made various additions for the documents found. Thus, all the loose papers and the investments have been considered by the A.O. and accordingly he has made the additions under various heads. After making the additions on the basis of various papers there remains no scope for making any furher addition on the basis of declaration made in the statement. It is humbly submitted that no incriminating material was found during the course of the search to show that the assessee has received any extra payment than mentioned in the books of accounts nor has incurred any extra expenditure on the construction of buildings, nor any paper/proof was found that the assessee has received any extra payment on sale of flats. No undis....
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.... Nitin Agrawal is one of the key person controlling the business of the group. Search was conducted at his residential premises also. During the course of search unexplained jewellery, unexplained cash, unexplained investment and advance were noticed. Thereafter statement u/s 132(4) of the Act of Shri Nitin Agrawal was taken wherein he accepted to offer additional income in the name of various business concerns as well as his individual name. In the instant appeal the impugned account of Rs. 5 crores each was surrendered by Nitin Agrawal in his own name as well as M/s S.V. Infra Developers. Ld. A.O thereafter during the course of assessment proceedings called for reply. Detailed submissions with regard to the discrepancies found during the course of search were filed. Ld. A.O concluded the assessment by making various additions under different heads in unexplained cash, unexplained jewellery, unexplained advance, unexplained investment and foreign travel expenses. Ld. A.O separately made addition of Rs. 5 crores for additional income offered in statement u/s 132(4) of the Act but not offered to tax in the return of income. 14. When the matter came before Ld. CIT(A) he deleted th....
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....ich is not quantified? It is also not mentioned as to whether the difference is on the positive side or negative side. Not having done so the mere statement made by the assessee, who was sick and under sedation, and without actual figures in hand to show that there was a difference, cannot be made the basis of making an addition to the returned income. Copy of the relevant pages of the Statement has been reproduced by the AO at Page no. 10 and 11 of the assessment order. The statement recorded does not speak about the quantity of the material found during the course of search. The inventory drawn during the course of search in respect to the material found is also not excessive. During the course of search no exercise has been done to arrive to the book stock value. 4.2.3 It is to be mentioned that Shri Nitin Agrawal had suffered a heart attack in the recent past. He was under medical observation and medication. His health deteriorated during the search operation which continued for three days. Doctor was called and as per Doctor's advice Shri Nitin Agrawal was kept under sedation. Medical certificate has been produced during the course of assessment proceedings. There....
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....MANHARLAL CHOKSHI vs. COMMISSIONER OF INCOME TAX (2008) 220 CTR (Guj) 138 : (2010) 328 ITR 411 : (2008) 174 TAXMAN466 : (2008) 14 DTR 257 Xxxxxx ..... xxxxx It is the case of the assessee that during the course of search & seizure, no incriminating material or undisclosed income or investments were found. It is stated that the assessee was under mental pressure and tired. Therefore, to buy peace of mind, he accepted and declared Rs. 5 crores during the course of search. It is also stated that the case laws as relied by the A.O. are not applicable on the facts of the present case. The Hon'ble Supreme Court rendered in the case of pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC), wherein the Hon'ble Court has held that admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandra kumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few ben....
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....ession of house is handed over to any customer. The volume of the material at site was also too small which cannot justify the undisclosed income of Rs. 5 crores. Ld. CIT(A) after appreciating the above stated facts concluded that the addition made was purely on the basis of the statement given u/s 132(4) of the Act and deserves to be deleted. 16. After going through the above finding of Ld. CIT(A)and the facts narrated/discussed in the preceding paras following two aspects needs to be considered. (1) In the case of Shri Nitin Agrawal surrender of income was made looking to various discrepancies noticed by the search team but at the time of completing the assessment Ld. A.O had made separate additions for all such discrepancies noticed/incriminating material found and addition was further made for the surrender of Rs. 5 crores. So whether such addition not corroborating with any incriminating material found during search and made purely on the basis of statement given u/s 132(4) of the Act was justified. (2) In the case of M/s S.V. Infra Developers also surrender was made for the alleged mistmatch in work in progress at project site vis-à-vis the figu....
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....hat the search was conducted on Signature Group including the assessee on 29.1.2014. Certain loose papers were seized. Additional income of Rs. 3,25,00,000/- (Rs. 25,00,000/- + Rs. 3,00,00,000/-) was offered for Assessment Years 2013-14 and 2014-15 respectively. However in the return of income filed post search u/s 153A of the Act such additional income of Rs. 25,00,000/- and Rs. 3,00,00,000/- was not offered in the return of income. During the assessment proceedings it was submitted that various loose papers and documents narrated by the Ld. A.O found during the course of search does not pertain to the assessee. Since there was no such incriminating material relating to the assessee found during the course of search relating to the addition in question the alleged addition was made purely on the basis of the statement given u/s 132(4) of the Act. 27. We also observe that in the assessment order as well as order of the first appellate authority there is no mention of any incriminating material having its nexus with the alleged income declared u/s 132(4) of the Act. The Ld. A.O has failed to prove on record any specific instance with support of incriminating materi....
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....Virasha Infrastructure 225 225 Total 450 10 M/s Sainath Colonizers Pvt. Ltd 110 110 11 Shri Anil Kered Khilwani 40 40 Total 150 30. From the above we find that in the case of M/s Ultimate Builders also additional income was surrendered in the statement given u/s 132(4) of the Act for which the addition was made by the Ld. A.O without corroborating it with any incriminating material and the addition was confirmed by Ld. CIT(A). When the matter travelled before this Tribunal the addition of Rs. 2.25 crores was deleted by this Tribunal observing as follows:- "9. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments referred to and relied by both the parties. The sole grievance of the assessee raised in Ground No.1 of the instant appeal is against the order of Ld. CIT(A) confirming the addition of Rs. 2,25,00,000/- made by the Ld. A.O on account of undisclosed income surrendered during the course of search by the partner of the assessee firm. 10. At the cost of repetition we would like to recite and recapitulate the facts once mo....
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.... 29.1.14 to 31.1.2014 no cash or unrecorded assets was found, no incriminating material was found and no income was offered to tax in the statement recorded u/s 132(4) of the Act of the person found to be in the possession and control of the books of premises. Relevant questions asked about the loose paper found were duly replied in the statement. 12. Ld. Counsel for the assessee further contended that since the search in the case of assessee was concluded on 31.1.2014 the alleged statement of the partner Mr. Vipin Chouhan taken on 02.02.2014 cannot be construed as a statement given during the course of search u/s 132(4) of the Act so far as relating to the assessee since the search in its case already concluded on 31.1.2014. He further submitted that no incriminating material was found during the course of search and as held by Hon'ble Tribunal in the latest decision in the case of ACIT(1) vs. Sudeep Maheshwari (supra) that "no addition was called for which has been made merely on the basis of the statement without correlating the disclosure made in the statement with the incriminating material gathered during the course of search". 13. So the contention of the L....
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....s initiated on 29.1.2014 and concluded on 31.1.2014 by a authorised officer for the assessee which is verifiable from the Panchanama framed by the search team. The statement of Mr. Vipin Chouhan was taken on 02.02.2014 by another authorised officer and this date is after the conclusion of the search in the case of the assessee on 30.01.2014. 18. There may have been some force in the contention of the revenue authorities if the statement u/s 132(4) of the Act was taken during the course of search at the assessee's premises or during the continuation of search, the statement may have been recorded on other places but the fact is that so far as the assessee M/s. Ultimate Builders is concerned the search concluded on 31.01.2014 and before the conclusion of the search no surrender of undisclosed income was made in the statement recorded u/s 132(4) of the Act by the persons available at the assessee's business premises. 19. As regards the statement of Mr. Vipin Chouhan given on 02.02.2014 is concerned, we find that this statement contains the surrender for various group concerns and not specifically for the assessee M/s. Ultimate Builders. Reference was also given to ot....
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....so stated that the case laws as relied by the A.O. are not applicable on the facts of the present case. The assessee has relied on the decision of the Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC), wherein the Hon'ble Court has held that admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were being run by assessee, assessee could not be basis for making the assessee liable for tax and the assessee retracted from such admission and revenue could not furnish any corroborative evidence in support of such evidence. It was further urged by the assessee that admission should be based upon certain corroborative evidences. In the absence of corroborative evidences, the admission is merely a hollow statement. We have given our thought....
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.... filed after search, the income of Rs. 20 lacs surrendered by Shri Sheo Kumar Kejriwal was not declared by the assessee-firm. On being asked to explain the reason for not showing the surrendered amount in the returns, it was submitted by the assessee that declaration made by the partner was misconceived and divorced from real facts. It was contended that the declaration was made after persuasion, which, according to the learned counsel for the assessee, Shri Binod Poddar, in fact, was because of coercion exerted by the search officers. In explanation, it was submitted that the firm or the individual had no undisclosed income. The assessee's said retraction was not accepted by any of the authorities below on the ground that the statement given by the assessee appears to be voluntarily given statement disclosing undisclosed income of Rs. 20 lacs. According to the learned counsel for the assessee, Shri Binod Poddar, the Assessing Officer had full jurisdiction to proceed for further enquiry and could have collected evidence in support of alleged admission of undisclosed income of the assessee. 6. We are of the considered opinion that statement recorded under section 132(4) of ....
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.... of ratio laid down in various judgments referred above including one in the case of ACIT(1) Vs. Sudeep Maheshwari (supra) decided by us wherein also we, after referred various judgments of Hon'ble High Courts have held that additions cannot be sustained merely on the basis of statement given during the course of search without correlating the addition with the incriminating seized material. Therefore the decision relied by Ld. Departmental Representative laying down the ratio that addition can be made even on the basis of statement given during the course of search u/s 132(4) of the Act irrespective of the fact whether any incriminating material is found or not, will not support Revenue in the instant case. 26. In the given facts and circumstances of the case and respectfully following the judgements and decisions referred above we find that firstly the statement given by Mr. Vipin Chouhan u/s 132(4) of the Act on 02.02.2014 cannot be considered as the statement given u/s 132(4) of the Act in the instant case of the assessee firm since the search action in case of assessee was concluded on 31.1.2014 by the Authorised Officer. Secondly as regards to other business conc....
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....eting the addition of Rs. 5 crores each in the case of Shri Nitin Agrawal and M/s S.V. Infra Developers needs no interference and the same is confirmed. In the result common Ground No.1 raised by Revenue in the case of Shri Nitin Agrawal and M/s S.V. Infra Developers vide IT(SS)A No.182/Ind/2019 and ITA No.657/Ind/2019 respectively stands dismissed. 20. Now we take up the remaining grounds of the Revenue's Appeal No. IT(SS)A No.182/Ind/2019 in the case of Shri Nitin Agrawal. With regard to Ground No.2 top 6 revenue has challenged the following additions deleted by Ld. CIT(A). Ground No. Particulars Amount 2 Unexplained cash Rs. 26,42,910/- 3 Unexplained jewellery Rs. 24,88,216/- 4 Unexplained advance to Shri Lilwani Rs. 50,00,000/- 5 Unexplained investment in watches Rs. 10,00,000/-. 6 Unexplained foreign travel expenses Rs. 1,00,000/- 21. For all the above stated grounds Ld. Departmental Representative vehemently argued supporting the order of Ld. A.O and prayed for confirming the additions made by Ld. A.O. 22. Per contra Ld. Counsel for the assessee supported the finding of Ld. CIT(A) and also argued refrring to follo....
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....itin Agrawal has also advanced the similar loan. The statement of the assessee was recorded. In the statement recorded on 10/01/2014, the assessee admitted that he has advanced cash to Shri Dinesh Lalwani for purchase of floor adjacent to the office of the assessee. Subsequently, this transaction was cancelled. It was further stated that on cancellation of the agreement two cheques were given by the party for repayment of the advance. On the request of the party two cheques were given by them. The party however, stopped the payment of these cheques which were found during the course of search. During the course of the post search enquiry, a statement of Shri Dinesh Lalwani was recorded on 27/05/2014 and 22/07/2014. In the statement Shri Dinesh Lalwani stated that they had purchased 6 duplex flats in the building of the assessee for a consideration of 6 crores which were registered on 31/03/2013. He further stated that 1 crore is required to be paid. He stated that post dated cheques were issued for renovation of the six duplex flats. Since the renovation was not completed within the time, they stopped the payment. It was submitted before the Id. A.O. that the asse....
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.... the advances were given for the purchase of the property in cash. There was a sufficient cash balance available with the assessee. The statement of Shri Dinesh Lalwani is totally unreliable and no evidence has been put up to corroborate the evidence. The duplex flats were registered in January 2013 and the possession was handed over. There is no evidence to show that the assessee was asked to renovate the house. No person will give any post dated cheque for the renovation of the newly constructed house. The cancellation agreement of the premises duly signed by the party and the cheques given by them which are mentioned in the agreement clearly prove that the cheques were issued for the repayment of the advance given. The fact is further strengthened that subsequent cheques were issued replacing the earlier cheques. The assessee's version is further proved that the complaint was filed in the Magistrate's Court for dishonouring the cheque which is pending. In view of the above, it is humbly submitted that the Id. CIT(A) was justified in deleting the addition. The order of the Id. CIT(A) may upheld. Ground No.5 Deletion of addition of Rs.I0,OO,OOO/-....
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...., the appellant has challenged the addition of Rs. 26,42,910/- on account of unexplained cash. During the course of search cash amounting to Rs. 26,42,910/- was found out of which Rs. 25,00,000/- was seized. The AO during the course of assessment proceedings required the assessee to explain the acquisition of the cash found during the course of search. The assessee in reply submitted that the cash found physically is completely matched with books of accounts. 4.3.1 The appellant during the course of appellate proceedings submitted that cash amounting to Rs. 26,42,910/- was found from residential premises and sum of Rs. 3,16,630/- was found from official premises. The appellant has been maintaining combined cash balance for all the units run by him and submitted reconciliation of cash found during the course of search. 4.3.2 I have considered the factual matrix of the case, plea raised by the appellant and findings of the AO. The appellant before the AO as well as before me has filed reconciliation statement of cash found during the curse of search and in support has filed copies of cash books. The relevant extract of reconciliation statement is as under:-....
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....entities running under the business group but they all are inter connected and controlled by some common persons of which one is Shri Nitin Agrawal. In the reconciliation statement cash balance as per the books is stated at Rs. 87,82,341/-. Revenue has not confronted this fact. The assessee has stated that the cash in hand found during the course of search from his residence was part of the cash in hand of the group. There is no contrary finding by Ld. A.O to the figures narrated in the reconciliation statement about the cash balance in books of business concern named therein. Under these given facts where the cash in hand available in books is much more than the cash found during the course of search and the same has been rightly explained in the reconciliation statement, we find no justification in the addition made by Ld. A.O for unexplained cash and Ld. CIT(A) has rightly deleted the addition and the finding is thus confirmed. Ground No.2 of Revenue's appeal No. IT(SS) No. 182/Ind/2019 stands dismissed. 26. As regards Ground No.3 for the addition for unexplained jewellery at Rs. 24,88,216/-, following jewellery was found/ seized at the residence and locker of the asses....
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....reply before the AO submitted that the wife of assessee has been filing wealth tax return and has duly shown 735 grms of gold jewellery and item wise details will be submitted later on. The AO after considering reply of the assessee did not find the same acceptable for the following reasons:- 1.The assessee has not submitted any item wise details of the above jewellery found from residence and locker even though he has stated in reply that the list of jewellery explaining the source of each purchase or gift received shall be provided shortly. Till date the assessee has not furnished any such details. II. The assessee has also not submitted any confirmation of other family members and relatives of the assessee to prove that the jewellery has been gifted by them to the assessee and his wife. Even, till date the assessee has failed to furnish such details like name and address of the person who has gifted the jewellery, date of receipt of such gift etc. IlI. The assessee has also not submitted any evidence which could substantiate the assessee's claim that the jwellery belongs to gift received at the time of his marriage and thereafter. IV As re....
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....have been noticed by the CBDT. A common approach is suggested in situations where search parties come across items of jewellery for strict compliance by the authorities. The CBDT directed that 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. Besides, this the above jewellery includes stri-dhan of the assessee's wife and jewellery of assessee. 4.4.3 The law with respect to quantity of jewellery and ornaments which would generally be held by the family members of an assessee has gone through huge litigations. Boards' instruction no 1916 dated 11th may 1994 which lays down guidelines for seizure of jewellery and ornaments has also been interpreted by various courts and tribunals. * In the case Commissioner of Income Tax vs Ratanlal Vyaparilal Jain {(2010) 235 CTR 0568: (2010) 45 DTR 0290; ( 2011) 339 JTR 0351J it has been that: "Instruction no. 1916, dt 11th may 1994 which lays down guidelines for seizure of jewellery in the course of search takes into account the quantity of ....
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.... lady, collecting jewellery in the form of stri-dhan or buying jewellery on other important occasions is very normal and common in Hindu families. This depends to a large extent on the status and income of the family. In this case the appellant's status is reflected from the regular returns of income filed. ii). The A.O's findings has no merit that the appellant has not submitted any material evidence to substantiate her claim regarding jewellery received as gift at the time of marriage. At the time of marriage jewellery is given as gift by close relatives and friends and a person giving a gift of jewellery does not attach the bill of purchase. iii). During the last 10 to 15 years the prices of gold have gone up many folds. The valuation of jewellery was done at the time of search. It would be proper to consider the weight of the jewellery rather than the valuation on the date of search. The jewellery which is part of stri-dhan and also acquired at an earlier date would have been acquired at a price much lower than the value arrived at tbe time of search on account of valuation. iv). The A.O has not mentioned any specific material found during the....
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....ted in the circular stands explained. Thus, the approach adopted by the Tribunal in considering the extent of jewellery specified under the said circular to be a reasonable quantity, cannot be faulted with. In the circumstances, it is not possible to state that the Tribunal has committed any legal error so as to give rise to a question of law. " In the case Commissioner of Income Tax vs M.S Agrawal (HUF) [(2008) 76 CCH 0802 MPHC: (2008) 11 DTR 0169 (MP)] where it has been held; "In the case at hand, the AO has not connected any undisclosed income with anything that has come in search and seizure. The AO has himself recorded with regarded with regard to the NRI gifts that the assessee had denied of having made any compensatory payments. He has also found that the statements recorded of the donor were not clear and he has not specifically mentioned anything about the gifts made to the assessee. The AO has proceeded with regard to the onus on the assessee to prove the genuineness of the transaction and on that basis, he has held it to be nongenuine. But the fact remains that no nexus has been established with any document or evidence collected durin....
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....his wife Smt. Mamta Agarwal is hereby, deleted and balance addition of Rs. 23,13,732/- is Confirmed. Therefore, appeal on this ground is Partly Allowed. 28. From perusal of the above finding of Ld. CIT(A) we observe that he has rightly considered the wealth tax return submitted by the assessee during year 1991-92 and 1992-93 and also considered the Instruction No.1916 of CBDT dated 11.5.1994 and after referring to settled judicial precedents has confirmed the addition of Rs. 23,13,732/- out of the total addition of Rs. 48,01,948/- made by the Ld. A.O. Since the revenue authorities has failed to bring any other material contrary to the finding given by Ld. CIT(A) and considering the fact that the assessee has filed wealth tax and assessed as well as considering the limit of jewellery of 500 grms for female and 100 grams for male member provided in CBDT Instruction No.1916 dated 11.5.1994, we find no reason to interfere in the finding of Ld. CIT(A) duly supported by judicial precedence deleting the addition of Rs. 24,88,216/-. Thus Ground No.3 of the Revenue's appeal vide IT(SS)A No.182/Ind/2019 is dismissed. 29. As regards Ground No.4 deleting the addition of Rs. 50 lakhs on a....
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....alance in the books of group concerns to cover up the alleged cash advance given to Shri Dinesh Lilwani. The finding of Ld. CIT(A) is reproduced below:- 4.6 Ground No. 8:- Through this ground of appeal, the appellant has challenged the addition of Rs. 50,00,000/- in A.Y. 2014-15 on account of unexplained advance to Shri Lilwani. During the course of search it was found that Shri P. Raju has advanced sum of Rs. 50 lakhs to Shri Dinesh Lilwani partner of "Shrimati Big Saree Mall" and two cheques dated 15.12.2013 of Rs. 25 lakhs each were found and seized in the name of P. Raju which were issued by M/s Shrimati Big Saree Mall. When confronted to Shri P Raju he stated that cheques were issued against loan given in cash to Shri Dinesh Lilwani partner of M/s Shrimati Big Saree Mall and similarly another loan of Rs. 50 lakhs has been given by Shri Nitin Agarwal to Shri Dinesh Lilwani. Statement of Shri Dinesh Lilwani was recorded on oath on 27.05.2014 and 22.07.2014, wherein he stated that 6 duplexs were purchased at project Palace Orchad, Kolar road, Bhopal and registries ere done on 31.03.20\3, however, the duplexes are still under construction. The six duplexes were purchased ....
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....ngs submitted that the AO has relied upon the statement of Shri Dinesh Lilwani against the appellant and no opportunity of cross examination was provided. The appellant further submitted that a suit in respect of the said sum of Rs. 50 lakhs is still pending in the Bhopal Court and in support has filed necessary evidences. 4.6.2 I have considered the facts of the case, evidences on record and findings of the AO. This is an undisputed fact that Shri P Raju in his statement recorded on oath has stated that he and the appellant has given loan of Rs. 50 lakhs each to Shri Dinesh Lilwani, partner of Mls Shrimati Big Saree Mall without interest. Shri P Raju further submitted that the said loan has not been received back by the appellant. Thereafter, statement of appellant was also recorded on oath on 30.01.2014 wherein, it was explained that an advance of Rs. 50 lakhs in cash was given to Shri Dinesh Lilwani for purchase of floor adjacent to head office, however, the transaction did not materialized and Shri Dinesh Lilwani gave two cheques ofRs. 25lakhs each dated 15.12.2013 in the name ofShri P Raju which were also seized as page no 85 & 87 of LPS-1. Shri P Raju deposited the c....
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....CIT 125 ITR 713 (SC) has held that adverse inference cannot be drawn against the assessee from the statement of third parties. Similarly, Ld. AR of the assessee has relied upon the decision of Hon'ble High Court in the case of CIT VIs. Indrajit Singh Suri (2013) 33 Taxmann 281 (Guj.) that where additions were made on the basis of statements of persons who were not allowed to be cross examined by the appellant, additions were not sustainable. It is a serious flaw on principles of natural justice which renders the order a nullity. It is also very important to notice that the AO has overlooked statement of two persons i.e. Shri P Raju and Shri Nitin Agarwal and has relied upon statement of Shri Dinesh Lilwani. Further, the AO ought to have considered the fact that the case of the appellant for advancing loan to Shri Dinesh Lilwani is still pending in court and the matter can only be decided in best when the order of the court is pronounced. 4.6.4 In view of the above discussion, the AO was not justified in making addition of Rs. 50,00,000/- on account of loan to Shri Dinesh Lilwani and therefore, addition made by the AO amounting to Rs. 50,00,000/- is Deleted. Therefore, ....
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....nt during the course of appellate proceedings submitted that the AO has erred in not referring the matter to an expert who would clearly ascertain the correct value of these duplicate Chinese watches. Further, there is no documentary evidence by way noting on passport for carrying valuable watches or a customs clearance because the watches were all duplicate and of no significant value. 4.7.2 I have considered the facts of the case, submissions filed and findings of the AO. The AO during the course of assessment proceedings observed that the assessee has purchased watches worth Rs. 10,00,000/- without referring the matter to a valuer/expert who could have ascertained the correct value of the watches. The addition made by the AO is solely on estimate, assumption and presumption basis. The AO has grossly erred in making addition simply on the basis of guess work, assumption and presumption. It is well settled that no addition can be made as a leap in the dark. The AO is not entitled to make a guess without evidence. The assessment of any particular year cannot be based on mere suspicion or bare guess, but on a legitimate material from which a reasonable inference of....