TaxTMI 
TaxTMI 
2021 (7) TMI 883
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.... 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 foreign travel of Rs. 8,83,276/-." "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting ....
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....e 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 the application of the revenue. It is pleaded by the assessee that the appeals were filed in 2004 and they were posted on the Board for regular hearing on 15.6.2006, thereafter ....
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....ised 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 action at the residence and lockers of the assessee and his wife i.e. Smt. Saloni Goyal, cash of Rs. 2,42,150/- was found from residence, Rs. 3,90,000/- was found from locker at Vijay Bank owned ....
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.... 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. According to the assessee this amount included Rs. 2,00,000/- belonging to M/s Mahaan Foods Ltd. 5.5 Regarding flow of money from Suresh Garg to the assessee, it was explained that Suresh Garg travelled to Delhi/Kosi Kalan for attendin....
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....d 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 already been treated by the assessee as unexplained and same has been offered for tax in the return of income filed for the block assessment, so the explanation of source of cash is with regard to balance amount of Rs. 5,42,150/- is only need to be examined. The assessee ....
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....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 explained with the help of cash flow statement supported by assessment orders of assessee, his wife and their HUF, copies of their respective balance sheets and their cash withdrawal as reproduced by the Learned CIT(A) in para 4.1(m) of the impugned order. 5.12 In view of above facts and circumstances....
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....n 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 obtaining due permission from RBI /other authorities. The assessee filed a copy of RBI permission dated 23/09/1998, FIRC showing remittance of US dollar 62,000 etc. The assessee filed an affidavit from Dr. Shamsher Prakash stating that he was the owner of the said shares. During the course of assessment proceeding, the assessee also ....
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....he 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, Singapore, which has been deleted by the Learned CIT(A). 8.1 The facts qua the issue in dispute are that during the course of search certain documents were seized, which indicated opening of bank account by the assessee in 'CitiBank Singapore' and deposit of money therein, which was not disclosed for the purpose of Income-tax in India. In the said bank total dep....
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....ere 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 shows that whenever fresh funds were deposited in the said bank the terminology used clearly stated that the same and whenever old investments (kept in custody of the said bank) were liquidated, either in part or in full, the terminology again clearly stated the same. (v). Similarly, on 11* July.2000 the terminology used by the bank at the time of credit of USD 12,438 was also FT INCOMING DIS....
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....k 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 the assessee for working out of peak balance. The interest amount of USD 37.83 credited in March 2000 has also been included for computing peak balance. Regarding two amounts of USD 20,850/-and USD 20,000 withdrawn on 10th and 11th April, 2000 respectively, the assessee has claimed before the Learned CIT(A) that same were invested in mutual funds scheme or fixed deposits operated by the 'CitiBank'. The assessee has referred to narration....
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....o. 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 the assessee and added the same to undisclosed income. The Ld. CIT(A) deleted the addition of observing as under: "13. I have perused the copy of the seized document. The seized document does not indicate that any actual expenditure of Rs. 3,17,530/- has been incurred by the appellant. There are no corroborating details on this document to lead to this conclusion. Only some figures have been written and totaled up. As such the document in qu....
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....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/-has been remitted by him into the account of M/s Mahaan proteins Ltd, which is slightly higher than the amount of Rs. 20,79,100/- recorded in the loose paper under reference. The assessee also submitted that M/s Mahan Protein Ltd. had applied to RBI for issuing share worth Rs. 20,78,990/- to Dr Shamsher Parkash on repatriable basis. In view of the submissions the Ld. CIT(A) deleted the addition observing as under: "15. I have considered the facts of the case. There is no indica....
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....0 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 date and amount of investment from NRO account establish that other entries in the loose paper are also related to investment by Dr Shamsher Parkash, because in case of other entries in loose paper , the amount are approximately equivalent to INR ( Indian rupees ) equivalent of amount remitted by Dr Shamsher Prakash. In our opinion, the assessee has discharged his onus of rebutting the presumption by the Assessing Officer under section 132(4A) of the act. We also find that the Assessing Officer has not been able to identify any other investment made by the assessee desp....
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....hase 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 name of the jeweller and corresponding purchase bills if any before making addition in the hands of the assessee on the basis of this loose paper. In our opinion, the Assessing Officer has squarely failed in bringing any such documentary evidence and thus no addition can be made without evidence of actual purchase of jewelry by the assessee. Even if we presume for a moment that the jewelry listed in the loose paper was purchased by the assessee, same is than included in the list of the jewelry found from the premises, and therefore no separate addition on the basis of this loose paper is r....
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....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 unexplained gifts of Rs. 25,96,077/-. 13.1 The brief facts qua the issue in dispute are that the Assessing Officer observed gift received by his minor daughters and son from Sh. Shamsher Prakash during the block period and in absence of any details of gifts received filed by the assessee, the Assessing Officer made addition for Rs. 18,96,077/- in financial year 95-96 and addition of Rs. 7 lakh in financial year 98-99 corresponding to the block period. Before the Ld. CIT(A) the assessee submitted that all the documents in support of gift along with bank certificate and affidavit of the donor were filed before the Assessing....
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....ties 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 (b) any income based on entry in the books of accounts, or other documents are transaction, which has not been disclosed in the regular return of income filed or (c) any expense, deduction or allowance which is found to be false. 13.5 We find that gifts received were appearing in books of accounts and disclosed for the purpose of Income-tax return by the assessee and no incriminating material much less any material related to such gifts was found during the course of the search . The Ld. CIT(A) has relied on the decision of the Hon'ble Delhi High Court in the case of Ravi Kant Jain (supra), wherein it is held that block assessment is not....
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....e 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 of Smt. Saloni Goyal.The cost of hi Europe- Delhi ticket in the F.Y 99-00 was Rs. 34,000/-.For assessee and three family members unexplained expenditure on tickets alone is Rs. 1,36,000/- which is added to the undisclosed income of die assessee for the F.Y 1999-00. (e) No explanation regarding expenditure on boarding and lodging expenses incurred by assessee's family members during foreign visits has been furnished. The total period of stay abroad in different countries is 54 (fifty four) days .The unexplained boarding and lodging expenses are estimated at Rs. 5,94,000/- at a very reasonable estimate of average cost of USD 250 (1USD = Rs. 44/-) per day and an addition of Rs. 2,75,000/- in F.Y 98-....
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.... 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) ".................................................................. (b) "undisclosed income" includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act, or any expense, deduction or allowance claimed under this Act which is found to be false." 14.5From the above , it is evident that legislature has included any expense under undisclosed income if same is found to be false. But in the instant case, no documents or any material was found during the cours....
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....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 perused the relevant material on record. A list of the items, explanation of the assessee before the Assessing Officer, and the addition made by the Assessing Officer have been summarized by the Ld. CIT(A) in para 24.1(a) , which is reproduced as under: "24.1 The submission of the appellant relating to this ground of appeal are as under:- (a) The learned assessing officer has made the following additions to the undisclosed income of the assessee Item Sourced as explained by the asessee Amount of Addition made to undisclosed income (Rs.) i) Camera Digital Zoom-1 Purchased for Rs. 5.000 in F.Y. 1999-00 out of drawings 20,000 ii) Digital Diary (Sharp) Purchased in F.Y. 1986- 87 for Rs. 1,200 1,500 iii) Palm III C Purchased out ....
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....k). -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 out of cash withdrawals from bank and consequent cash available with the assessee during financial year 1996-97 for Rs. 3,000 (page 323 of the paper book). -Learned assessing officer has accepted the value of Minolta Camera (7000) model for Rs. 7,000. Model (400) being a less expensive model will not cost the same. -Purchase separately reflected in the cash flow statement for F.Y. 1996-97 filed during the block assessment proceedings (page 395 of the paper book). -Return of income accepted by the Income-tax department (page 37 of the paper book). v) 3 Air Conditioners (Make-National): Addition Rs. 75,000 -Purchased in F. Y. 98-99 & 2000-01 by M's. Mahaan Proteins Limited. -Copies of bills & ledger account filed during block assessment proceedings (page 396-397 of the paper book). -Place of installation mentioned on the bills to be W-79, Greater Kailash-I, New Delhi, which is the residence of the assessee also used as office of M/....
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....eedings (page 402 of the paper book). -Copy of relevant extracts of fixed assets register of M/s. Mahaan Proteins Limited showing location to be at W-79, Greater Kailash- I, New Delhi, the residence cum office of the assessee. (Page 317 of the paper book). xii) Microware oven MN-500 (Nobel): Addition Rs. 8,000 -.Assessee purchased for Rs. 7,000 in F.Y. 92-93. -This was offered for taxation in block period return of income. -Learned assessign officer has not given any basis for arriving at the cost of Rs. 15,000. -Even if we agree (although not admitted) that on the date of search the price was Rs. 15,000, this in no way explains the cost in F.Y. 92-93 i.e., when the asset was acquired by theassessee. xiii) VCR National Digital: Addition Rs. 12,000 -Purchased for Rs. 8,000 in F.Y. 1996-97 by the assessee out of cash available with him. -Cash flow statement for F.Y. 96-97 filed during the cousre of block assessment proceedings separately shows purchase of this asset (page 395 of the paper book). -Household drawings filed by way of cash flow statement. Learned assessing officer did not find the drawings insufficient. -Learned assessing officer has not brought o....