TaxTMI 
TaxTMI 
2021 (7) TMI 883
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....f unexplained investment in shares of Rs. 16,49,330/-." "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained bank deposits of Rs. 22,00,346/-." "On the facts and in the circumstances of the case, the Ld. CIT(A)erred in deleting the addition on account of unexplained expenditure ofRs. 3,17,530/-" " "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained investment of Rs. 20,79,110/-. "On the facts and in the circumstances of the ease, the Ld. C1T(A) erred in deleting the addition on account of unexplained investment in jewellery of Rs. 1 37,500/-" "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained deposits of Rs. 2,51,198/-/ "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained gifts of Rs. 25,96,077/-." "On the facts and in the circumstances of the case, the Ld. CIT( A) erred in deleting the addition on account of unexplained expenditure on fo....
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....al (in short 'the Tribunal') raising the grounds as reproduced above. 3. Before us, both the parties appeared through Video Conferencing facility. The assessee filed a paper-book in two Volumes, containing pages 1 to 212 and 213 to 474. 4. Before coming to various grounds raised by the Revenue, we may like to mention that the Revenue had raised additional ground before the Tribunal, wherein it was raised that order passed by the Learned CIT(A) is erroneous, as he had relied upon additional evidences, in contravention of Rule 46A of Income Tax Rules, 1962. This additional ground of the Revenue was rejected by the Tribunal on 05/10/2009. The relevant finding of the Tribunal vide order sheet dated 05/10/2009 is reproduced as under: "IT(SS) A Nos.81, 83 & 86/Del/2004: The revenue has filed an application through the Assessing Officer for impleading an additional ground of appeal in 1T(SS) A. Nos. 81. 83 & 86/Del/04 to the effect that the order passed by the Learned Commissioner is erroneous, as he has relied upon additional evidence, incontravention of Rule 46A of the Income-tax Rules, 1962. The learned counsel for the assessee has filed objection to th....
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....ot raise additional ground of appeal without the approval of the learned CIT(Appeals). In the face of above factual position, we do not deem it necessary to consider the other objections raised by the assessee in their written submissions. The additional grounds sought to be raised by the revenue in these appeals are hereby rejected." 4.1 Before us, the Ld DR again raised the issue of admissibility of additional grounds and that too without a copy of authorization to the Assessing Officer by the CIT (Administrative). The Ld DR was conveyed that the Revenue has not challenged the above finding of the Tribunal in higher appellate forum, which means the Revenue has accepted the above finding of the Tribunal and therefore, now can't aggrieved before us on the issue of admissibility of additional evidences by the Ld CIT(A) in alleged contravention of Rule 46A of Income-tax Rules, 1962. We accordingly, proceeded to adjudicate regular grounds raised by the Revenue in its appeal. 5. The ground No.1 raised by the Revenue relates to addition of unexplained cash of Rs. 1,52,150/-, which has been deleted by the Ld. CIT(A). 5.1 The facts qua the issue in dispute are that during search ....
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....e books of accounts of 'M/s Mahaan Foods Ltd' whereas cash of Rs. 1,15,412/-was only found physically at different premises belonging to the company. The difference in cash as per books and physically found was primarily due to the reason that cash was taken on imprest by Sh Suresh Garg , out of which he had given Rs. 5 lakh to the assessee during August/September 2000 for official purpose/expenses. This cash belonging to 'M/s Mahaan foods Ltd.' was part of Rs. 5 lakh received by the assessee and was partly kept in the locker No. 138 in Vijay bank. The assessee submitted that Mr Suresh Garg was authorized signatory for operating the bank account of 'M/s Mahaan Foods Ltd.' and used to take imprest from time to time for meeting cash expenses to be incurred on behalf of the company. It was submitted that imprest account was not maintained on computerised regular cash book but it was maintained manually. He further submitted that the combined day book of M/s Mahaan Dairies Ltd and M/s Mahaan Foods Ltd for the period from 28/08/2000 to 30/09/2000 was seized as Annexure A-129 from premises of the company, which shows a sum of Rs. 5,25,000/-given to Sh. Suresh Garg as Imprest on 7/09/2000....
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....t money with Sri Suresh Garg. According to him, in such circumstances the money found with the assessee has been correctly held as unexplained by the Assessing Officer. 5.7 The Learned Senior Counsel of the assessee, on the other hand, referred to relevant seized documents and relied on the finding of the Ld. CIT(A). According to him, the cash has been found available with the company and shown as imprest money given to Shri Suresh Garg in the documents seized and no other application of the said cash has been pointed out by the Department, therefore treating by the Assessing Officer of the cash found from the assessee, at least to the extent of cash available with the company in which assessee is director, is not justified. 5.8 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. There is no dispute as to the amount of total cash of Rs. 6,42,150/-found from the premises of the assessee and his wife. Location wise cash found has been stated in earlier paragraphs of this order. The dispute is regarding explanation of the source of the cash found. Out of the cash found of Rs. 6,42,150/-, cash of Rs. 1 lakh has alr....
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....ring the course of the search. This factual finding has not been disputed by the Revenue. The daybook has been maintained in regular course of the business and therefore evidentiary value of the same cannot be ignored. (ii) On the date of the search, cash in hand in cash book of M/s MFL at Paota Sahib was of Rs. 5, 40,401/-, whereas physical cash of Rs. 1, 15, 412/- was only found from the factory premises of M/s MFL and M/s MDL. Thus, there was a physical shortage of the cash at the premises of the companies. The revenue has not pointed out any other application of the cash, which has not been found physically. (iii) The assessee has explained transfer of money from Sri Suresh Garg to the assessee by way of supporting evidences, as listed in para 4.1(i), 4.1(j) and 4.1(l) of Ld. CIT(A). The Ld DR has not brought on record any documentary evidence including statements u/s 132(4) of the Act of the assessee, or sh Suresh Garg or personals of the company M/s MFL to contradict the claim of the assessee of transfer of money from sh Suresh Garg to the assessee. 5.11 Similarly, regarding the availability of Pin money and savings of Rs. 52,150/-, the assessee has expla....
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.... the assessee 36,500 shares of M/s 'MFL' dated 23/03/1995 and 1,28,433 shares of M/s 'MPL' dated 12/12/1998, all having face value Rs. 10, subscribed in the name of Mr Shamsher Prakash of USA, were found and seized. During assessment proceeding, the assessee filed certain documents to show that those shares were allotted in the name of Mr Shamsher Prakash. According to the Assessing Officer, the assessee has filed an unsigned permission of Reserve Bank of India (RBI) according to which 1,91,734 shares were allotted to him. According to the Assessing Officer, Sh Shamsher Prakash is a benami of the assessee and the shares have been acquired by the assessee investing his undisclosed foreign money parked and kept in foreign countries. Therefore, he held the investment in shares of Rs. 12,84,330/- in financial year 1998-99 and Rs. 3,65,000 in financial year 1994-95/-as undisclosed income of the assessee. 7.2 Before the Ld. CIT(A), the assessee submitted that Dr. Shamsher Prakash is a non-resident Indian based in USA , who is a childhood friend of assessee's father. He submitted that shares have been allotted after receipt of money through normal banking channels and after obtainin....
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....se shares, which according to the assessee is through proper banking channels. In our opinion, the action of the Assessing Officer in holding the shares as shares of the assessee and investment in the same as through undisclosed foreign income, is without any basis or documentary evidences. The Assessing Officer has even not attempted to examine the source of investment in the shares of the companies. The Assessing Officer has neither conducted any inquiries form Dr Shamsher Prakash. Before the Ld. CIT(A), the assessee has provided details of source of investment by Dr Shamsher Prakash and thus the assessee has discharged his onus. 7.6 In view of the above facts and circumstances, where source of investment has been duly explained through banking transaction from the account of Sh Shamsher Prakash, the investment in shares cannot be held as unexplained investment of the assessee. The finding of the Ld. CIT(A) on the issue in dispute is well reasoned and accordingly, we uphold the same. The ground No. 3 of the appeal of the Revenue is accordingly dismissed. 8. The ground No.4 of the appeal relates to addition of Rs. 22,00,346/- on account of deposit in City Bank, Singapo....
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....redits after 11th April, 2000 other than interest earned (US $ 202.47) were rotation of the same funds out USD 41957.83. (ii). While the assessee had made investments of USD 20850 and USD 20,000 on 10th April.2000 and 11th April,2000 respectively the terminology used by the bank was 'FT OUTGING INVESTMENT' in both the cases (page 224 of the paper book) These investments were either m fixed deposits with the said Citi Bank or in mutual funds, the custodian of which was the said bank. Page 219 of the paper book under the heading 'DECLARATION' clearly shows that the said Citi Bank was the custodian of the investment in Mutual Funds. (iii). Thereafter on 18th April/2000 when part of these investments were liquidated the terminology used by the bank, while crediting the account of the assessee, was 'FT INCOMING DISINVESTMENT(Page 224 of the paper book). At the time of deposit of USD 18,670 and USD 22,050 on 1st March 2000 and 29* March 2000) respectively, the terminology used by the bank FT INCOMING TT'(Page 223 of the paper book). Moreover on 11th April, 2020 when the assessee deposited USD 1,500 in the said bank the terminology used was 'PEP' (iv). This ....
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....date of peak credit has not been considered for addition by the assessee. 8.4 The Learned Senior Counsel of the assessee, on the other hand, relied on the order of the Ld. CIT(A) and submitted that amount withdrawn from the account was invested for a specific instruments and sale proceeds of those specific instruments were again re deposited in the same bank account and therefore undisclosed income declared by the assessee of peak balance of US dollar 41,957.83 is justified. 8.5 We have heard rival submission of the parties on the issue in dispute. The typed version of bank statement of the 'CitiBank, Singapore' reproduced by the assessee on paper-book page 408 (also on page 221 of the paper book) is extracted as under: 8.6 The assessee has also filed copies of monthly bank statement of the bank account from March, 2000 to October, 2000, which are available on page 222 to 230 of the paper-book. On perusal of the above bank statements, it is evident that the first three credit of USD 1,200, USD 18,670 and USD 22,050 from 23/02/2000 to 29/03/2000 respectively, in the account are by way of deposit and incoming telegraphic transfer (TT). These credits have been included by ....
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....und to be credited as a result of liquidation of earlier investment made out of the same bank statement, then following the peak balance theory no addition could be made to the extent of original investment amount in such mutual funds etc. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. Accordingly, this ground of the appeal of the Revenue is allowed for statistical purposes. 9. The ground No. 5 of the appeal relates to addition on account of unexplained expenditure of Rs. 3,17,530/-, which has been deleted by the Ld. CIT(A). 9.1 The facts in brief qua the issue in dispute are that page 9 of Annexure A-3 seized from the residence of the assessee reflected expenditure of Rs. 3,17,530/- which included noting such as "57,683/- Tin Plate" and 43,197 /- spoons". The assessee explained that those papers did not pertain to him and might have been left over by some customers/suppliers. According to the Assessing Officer, this explanation was not sufficient to rebut the presumption provided in law that documents found from the assessee belongs to him. The LearnedAssessing Officer therefore held the amount as unexplained expenditure of....
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....e ground of the appeal of the Revenue accordingly dismissed. 10. The ground No.6 of the appeal relates to addition of Rs. 20,79,110/-on account of unexplained investment, which has been deleted by the Ld. CIT(A). 10.1 The facts in brief qua the issue in dispute are that a loose paper has been found from the residence of the assessee, which has been inventorised as page 14 of Annexure A-3. This loose paper indicated certain amounts against different dates. It was explained by the assessee before the AO that the amount represented investment made by Dr Shamsher Prakash ( a NRI) in shares of M/s Mahaan Proteins Ltd. The Assessing Officer rejected this contention of the assessee holding that permission for investment in shares given by RBI was unsigned and DR Shamsher Prakash claimed investment of Rs. 19,17,340/-as against investment of Rs. 20,79,110/-recorded in the loose paper. According to the Assessing Officer the investment/expenditure recorded in concerned loose paper was different from alleged investment by Dr Shamsher Prakash. Before the Ld. CIT(A), the assessee filed detailed of date -wise money remitted by DR Shamsher Prakash and submitted that total Rs. 21, 17, 340/....
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....as under: (d) The money remitted by Dr. Shamsher Prakash details as under:- S. No. Date of Remittance as per FIRC Amount in FC (US $) Amount in INR received by MPT Amount as mentioned in the page 14 of Annex A-3 Date on the said page 1. 26.11.92 40000 1224450 1198500 27.11.92 2 27.11.92 2000 59880 60000 28.11.92 3. 18.03.93 5000 164110 159600 01.03.93 4. Transfer from NRO a/c on 01.03.93 - 75000 75000 01.03.93 5. 19.05.93 5000 156300 154500 13.03.93 6. 07.01.93 10000 312600 306500 02.01.93 7. Transfer from NRO a c on 02.01.93 - 125000 125000 02.01.93 Total 21117340 2079100 10.6 On perusal of the above reconciliation, we find that first two dates mentioned in the loose paper is date next to what mentioned as remittance date. The amounts of these two dates are also approximately matching. The date and amount mentioned against NRO in the loose paper is matching exactly with the remittance from NRO account received in the bank account of M/s Mahaan Protein Ltd. In our opinion, matching of the d....
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....- is deleted." 11.2 Before us, the learned DR relied on the finding of the Assessing Officer and submitted that the Assessing Officer was not required to substantiate regarding the well-known practice of the jewellers of issuing rough estimate slips against actual sales . On the contrary, the Learned senior Counsel of the assessee relied on the finding of the Learned CIT(A). 11.3 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. Here the issue before us is whether the document support the transaction of actual purchase or it is a mere estimate without any actual purchase. For ready reference, a scanned copy of the relevant document, which is available on page 235 of the paper-book is reproduced as under: 11.4 On perusal of the above document, we find that no where it is mentioned that those items of the jewelry have been actually purchased by the assessee. There is no mention of any payment made by the assessee also. The addition cannot be made only on the basis of the existence of alleged well-known practice presumed by the Learned Assessing Officer. The Assessing Officer was required to bring on record n....
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.... asset or belong to some other person and in failure to do so, the Assessing Officer is justified in making the addition. 12.3 We have heard rival submission of the parties on the issue in dispute. The addition has been made on the basis of a loose paper found from the residence of the assessee, a photo copy of which available on page 236 of the paper-book, which is reproduced for ready reference: 12.4 On perusal of the above paper, we find that there is no mention of the name of the assessee. On this paper card No. has been mentioned as 8496. The document is on the letterhead of some bank having name as "Bank One". The Assessing Officer has not carried out any enquiry from the relevant bank and ascertained to whom this card or the transaction relates. Making addition on the basis of incomplete information, only on the basis of the guess work is not justified in cases of search assessment. We do not find any infirmity in the finding of the Learned CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground of the appeal of the Revenue is accordingly dismissed. 13. The ground No. 9 of the appeal relates to deletion of the addition on account of unexpla....
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.... the case in view, it is held that the addition made has not been substantiated and the said addition of Rs. 18,96,079/- in financial year 1995-96 and Rs. 7,00,000 - for financial year 1998-99 are deleted." 13.2 Before us, the Learned DR relied on the order of the Assessing Officer and submitted that no documents were filed before the Assessing Officer. According to her, the affidavit of Sh. Shamsher Prakash, his salary certificate etc. are in the nature of additional evidence. 13.3 The Learned Counsel of the assessee, on the other hand, relied on the finding of the Learned CIT(A). 13.4 We have heard submission of the parties on the issue in dispute and perused the relevant material record. The Learned CIT(A) has held that under the block assessment addition for the undisclosed income has only to be made as per section 158BA(2) of the Act along with Explanation thereof. The undisclosed income has been defined in section 158BC of the Act, according to which, the undisclosed income includes: (a) assets like money, bullion, jewellary etc. found during the course of the search and source of which is not explained or disclosed in regular return of income filed or ....
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....000 to 06.06.2000. (c) Regarding expenditure on visits to USA and Tanzania etc. it is stated that they were met by M/s. Ace International a firm where assessee is a partner. Copies of "Director Foreign Travelling Exp." Account , Foreign Travelling Expenses account and capital account of Smt. Saloni Goyal in the books of M/s. Ace International have been furnished. These ledger accounts reflect expenses for tickets only.Total expenses on account of tickets of Saloni Goyal is Rs. 1,53,276/-. In the absence of any reply from the assessee it is reasonably assumed that the assessee has also accompanied his family on these visits. Accordingly, unexplained travelling expenses by the assessee are taken at Rs. 1,53,276/- and an addition of Rs. 1,18,553 in F.Y. 98-99 and Rs. 34,723 in F.Y 2000-01 is made to the undisclosed income of the assessee. (d) Regarding travel to Europe, it is stated that tickets were received as complements by her husband , Sh. Sanjeev Goyal, since he is a frequent flyer. As already stated above no- explanation regarding foreign travel have been furnished by assessee who is claimed to be a frequent flyer in the course of block assessment proceedings ....
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....appellant has furnished the details of the person who had incurred the expenses. The expenses of the assessee himself have been accounted for in the books of M s Mahaan Proteins Ltd. The addition made by the A.O. on account of estimated boarding and lodging expenses is only on presumption and cannot be sustained. In these circumstances, it is held that the addition of Rs. 8,83,276/- in aggregate in different assessment years made by the Assessing Officer is unjustified and the same is deleted." 14.3 Before us, the Learned DR relied on the order of the Assessing Officer, whereas the learned Counsel of the assessee relied on the finding of the learned CIT(A). 14.4 We have heard rival submission of the parties on the issue in dispute and perused the relevant metal on record. It is settled law that addition under block assessment can be made for undisclosed income only as laid down under section 158BA(2) of the Act read with explanation thereof. The undisclosed income has been defined in section 158B (b) as under: "158B. In this Chapter, unless the context otherwise requires,- (a) ".................................................................. ....
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....gital diary, TV, Air-conditioner, music system, fax machine, VCR, Fridge, microwave etc. The Assessing Officer estimated market value of these goods and source of investment thereof except one or two items, was held to be unexplained and accordingly, made addition of Rs. 2, 52, 500/- . The Ld. CIT(A), however, rejected the finding of the Assessing Officer on the ground that value of the goods adopted by the Assessing Officer was not based on any material. According to the Ld. CIT(A), the Assessing Officer has not taken into consideration the household withdrawal by the assessee in different financial years and also the documentary evidence of expenditure incurred for those goods, which were found recorded in the accounts of M/s Mahaan food Ltd and M/s Mahaan proteins Ltd. The Ld. CIT(A) deleted the addition made by the Assessing Officer on this ground. 15.2 Before us, the learned DR relied on the order of the Learned Assessing Officer. On the other hand, the Learned Senior Counsel of the assessee relied on the submission of the assessee before the Learned CIT(A) and finding of the Ld. CIT(A). 15.3We have heard rival submission of the parties on the issue in dispute and per....
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.... separately in cash flow statement for the F.Y. 1999-2000submitted during assessment proceedings (page 392 of the paper book). -Assessment in the case of assessee completed u's 143(3) for assessment year 2000-01 vide order dtd. 31.03.03 and no addition has been madetherein on any account (including household drawings). ii) Digital Sharp diary: Addition Rs. 1,500 -Purchase by assessee in F. Y. 86-87 for Rs. 1,500. -Assessee ownsa Palm Organisor which is a much improved version of a digital diary'. A palm organisor has all the functions of a digital diary and much more. This palm organisor was purchased in F.Y. 98-99 and as such digital diary was purchased much earlier. iii) Palm Organisor: Addition Rs. 8,000 -Purchased for Rs. 8,000 out of cash withdrawls from bank during F.Y. 1998- 99 and consequent cash available with the assessee (page 323 of the paper book). -Purchase separately reflected in cash flow statement for F. Y. 1998-99 (page 393 of the paper book). -Return of income accepted by the Income-tax department. iv) Camera Minolta (400): Addition Rs. 7,000 -Purchased by assessee o....
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....the paper book). -Cash flow statement of relevant period filed showing purchase of household items separately. (Page 393 of the paper book). -Income-tax return of the assessee for A. Y. 98- 99 accepted by the Income-tax department. ix) Colour TV 21" (Optonica): Addition Rs. 14,000 -Purchased in F. Y. 88-89 for Rs. 8,000 by the assessee. -Optonica was brand of Ms. Kalvani Sharp Ltd. M/s. Kalvani Sharp Ltd. stopped being a leading player of TVs manufacturer in early nineties. -Optonica as a TV brand was popular upto late eighties only. x) LG-Fridge Model 412 MVF: Addition Rs. 33,000 -Purchased by Ms. Mahaan Proteins Limited in F. Y. 2000-01. -Copy of invoice and ledger account filed during course of block assessment proceedings (page 400 to 401 of the paper book). -The invoice shows the place of delivery to be assessee's residence at W-79, Greater Kailash-I, New Delhi. xi) Godrej Fridge 400 Lt.: Addition Rs. 25,000 -Purchased by M/s. Mahaan Proteins Limited for Y. 95-96. -Copy of invoice and ledger account tiled during the course of block assessment procee....
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.... in the books of accounts of companies in which assessee is director, the source of investment stands explained and hence , no addition for unexplained source can be made in the hands of the assessee. In view of the above, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. 16. In the result, the appeal of the Revenue is allowed partly statistical purposes. Order pronounced in the open court on 28th June, 2021 ============= Document 1 Citibank Account Date Particulars Withdrawal Deposit Ealance 23-Feb-00 Amount deposited ✓1,200.00 1.200.00 01-Mar-00 Amourt deposited 18.670.00 19.570.00 29-Mar-00 Amount deposited 22.050.00 41.920.00 31-Mar-00 Interest received 10-Apr-00 Amour withdrawn 11-Apr-00 Amount deposited ✓37.83 20.850.00 21.107.83 1,500.00 22.607.83 11-Apr-00 Amount withdrawn 20 000.00 2.607.83 18-Apr-00 Amourt deposited 29-Apr-00 Interest received 31-May-00 Interest received 30-Jun-00 Interest received 16.953.00 19.560.83 35.52N 19.596.35 33.75 19.530.10 32.72 19 562.82 11-Jul....