TaxTMI 
TaxTMI 
2013 (12) TMI 1767
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....assed is not a judicious order and thus deserves to be quashed. 2. That on the facts and in the circumstances of the case, the learned CIT(A) erred in not accepting the explanation offered by the assessee that the expenditure of Rs. 50,000/- incurred on the education of daughter, Ms. Shilpa Singh was borne by his father (Grand Father of Ms. Shilpa Singh). Thus, the findings are unjust, unfair and deserve to be quashed. 3. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition Rs. 1,39,087/- out of the total addition of Rs. 2,15,548/- and thereby giving relief of Rs. 76,461/- only for unexplained investment in the construction of house, without accepting the explanation offered by the assessee and without providing proper opportunity of being heard which is unjust, unfair and thus deserves to be deleted. 4. That on the facts and in the circumstances of the case, the charging of interest u/s. 234B of Rs. 73,883/- and u/s. 220(2) of Rs. 24,036/- after appeal effect is unjustified and not lawful. 5. That on the facts and in the circumstances of the case, the initiation of pe....
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....he construction of house, without accepting the explanation offered by the assessee and without providing proper opportunity of being heard which is unjust, unfair and thus deserves to be deleted. 3. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition Rs. 8,320/- being unexplained expenditure on the basis of LPS 3 without accepting the explanation offered by the assessee that this is the dumb document and not related with the assessee. Thus, the addition is unjust, unfair and deserves to be deleted. 4. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition of Rs. 26,500/-, Rs. 4,300/- and Rs. 3,656/- aggregating to Rs. 34,456/- being unexplained expenditure on the basis of LPS 3, without accepting the explanation offered by the assessee that this is the dumb document and not related with the assessee. Thus, the addition is unjust, unfair and deserves to be deleted. 5. That on the facts and in the circumstances of the case, the charging of interest u/s. 234B of Rs. 24,901/-, 234C of Rs. 225/- and u/s. 220(2) of Rs. 9,975/- is unjus....
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.... deserves to be quashed. 2. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition Rs. 57,500/- being unexplained expenditure on the basis of LPS 3 without accepting the explanation offered by the assessee that this is the dumb document and not related with the assessee. Thus, the addition is unjust, unfair and deserves to be deleted. 3. That on the facts and in the circumstances of the case, the charging of interest u/s. 234B of Rs. 7,065/-, 234C of Rs. 617/- and u/s. 220(2) of Rs. 3,638/- is unjustified. 4. That on the facts and in the circumstances of the case, the initiation of penalty proceedings u/s. 271(1)(c) is not justified. A.Y.: 2008-09: 1. That on the facts and in the circumstances of the case, the learned CIT (Appeals) erred in not considering that the assessment order passed u/s. 153A r.w.s. 143(3) of the Income Tax Act, 1961 is passed biasedly, in a hurried manner and without appreciating the fact and without considering the explanation offered by the assessee. Thus, the order passed is not a judicious order and thus deserves to be quashed. ....
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....ssessee that this is the dumb document and not related with the assessee. Thus, the addition is unjust, unfair and deserves to be deleted. 4. That on the facts and in the circumstances of the case, the charging of interest u/s. 234B of Rs. 5639/-, 234C of Rs. 1332/- and u/s. 220(2) of Rs. 5285/- is unjustified. 5. That on the facts and in the circumstances of the case, the initiation of penalty proceedings u/s. 271(1)(c) is not justified. SMT. SUDHA SINGH: A.Y. 2006-07: 1. That on the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the action of the AO that the notice issued u/s. 153C and the assessment completed u/s. 153C rws 153A is invalid and bad in law because there was no proper basis for issuing the notice u/s. 153C. 2. That on the facts and in the circumstances of the case, the learned CIT(A) erred in not considering the income from craft and painting work shown by the assessee in the regular return filed and disregarding the statement of affairs attached with the returns which is prepared on the basis of income and bank statement comprising all the investment made by ....
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....he case, the charging of interest u/s. 234B of Rs. 12,682/- and u/s. 220(2) of Rs. 2,556/- after appeal effect is unjustified. 2. Rival contentions have been heard and records perused. The brief facts of the case are that the assessee Shri Biswa Mitra Singh is an individual derives income from salary as G.M., MPLUN. In this case, action u/s. 132 of Income-tax Act, 1961, was carried out at residential premises of the assessee at 87, Chanakyapuri, Chunabhatti, Kolar Road, Bhopal, on 31.05.2008. In view of search case, the case was centralized with DCIT-1(1), Bhopal and notice u/s. 153A dated 16.07.2010 were issued to the assessee to file the returns for assessment year 2003-04 to 2008-09. The assessee filed returns as per detail as under:- 3. As regards assessment year 2009-10, the assessee has filed his return on 10.07.2009 u/s. 139 of Income-tax Act, 1961, and it was stated that the return already filed may be treated as the return filed u/s. 139. Subsequently, notices u/s. 143(2) of Income-tax Act, 1961, as also 142(1) were also issued alongwith detail questionnaire and assessments wren completed on 31.12.2010 and income was assessed as under:- 4. In the different assessm....
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....ce no incriminating material was found during the course of search, no addition could be made legally u/s. 153A of the Act in cases where assessment was not pending as held in the case of Jai Steel (India) vs. ACIT (2013) 259 CTR (Raj.) 281. In the instant case the Hon'ble Rajasthan High Court held as under:- Page 291 para 25 In the firm opinion of this court from a plan reading of the provision along with the purpose and purport of the said provision. Which is intricately linked with search and requisition u/s. 132 and 132A of the ACT, it is apparent that:- (a) The assessments or reassessment which stand abated in terms of second proviso to section 153A of the Act, the AD acts under his original jurisdiction, for which, assessment have to be made; (b) regarding other cases, the addition to the income has already been assessed, the assessment will be made on the basis of incriminating material and, (c) In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made; Page 294 para 29 & 30 The argum....
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....0th April, 2013. ix. Gurinder Singh Bawa DC IT, ITA Nos. 2075 & 2669 (MUM.) of 2010 order dated 16.11.2012. x. ACIT(CC)-45, Mumbai vs. M/s. Pratibha Industries Ltd., Mumbai ITA Nos. 2197 to 2199/Mum/2008 order dated 19.12.2012. xi. Shree Yamuna Proteins, Dahod vs. ACIT, CC-1, Baroda IT(SS)A Nos. 227 to 232/Ahd/201O order dated 18.10.2012. xii. ACIT vs. Saif Yeast Co. Pvt. Ltd., ITA No. 4230/Ind/2011 order dated 18.10.2012, xiii. ACIT Central Circle XXVII, Kolkata vs. Hindustan Storage & Distribution Co., Ltd., IT(SS) A. No. 135/Kol./2011 order dated 04.08.2012. xiv. Shankar R. Jhunjhunwala, Aurangabad vs. ACIT Cen, Circle, Aurangabad ITA No. 225/PN/11 order dated 31st July, 2012. xv. Hiren N. Patel, Mumbai vs. ACIT, CC-10, Mumbai, ITA No. 39 to 41/Mum/2010 order dated 12.10.2012. xvi. Atithi N. Patel, Mumbai vs. ACIT, Cen. Circle-10, Mumbai ITA No. 43/Mum/2010 order dated 22nd August, 2012 xvii. Bhagaram P. Mali vs. ACIT (OSD 1) Central Range-7, Mumbai, ITA Nos. 786 & 787/Mum/2013. xviii. Ganesh Grains Ltd. vs. DCIT Central Circle-V, ....
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....ifferent High Courts dealing with the validity and effectiveness of s. 140A(3) are merely expositions of that law. As we are required to decide whether, in law, the Tribunal was right in deciding as it did, we have necessarily to examine whether the ruling of the Madras High Court, which was followed by the Tribunal, correctly laid down the law. The learned counsel for the assessee submitted that as the Madras ruling was the only ruling available at the time when the Tribunal decided the appeal and as the Tribunal was bound to follow that ruling, the Tribunal was right in cancelling the penalty and we cannot examine the question whether that ruling correctly laid down the law. We are unable to agree with this argument. As already explained by us, we have to decide whether the Tribunal was right in law in cancelling the penalty. The relevant law has remained unchanged. The Madras ruling is merely an exposition of that law and as that ruling is not binding on us, we can ourselves see as to what is the correct legal position. The High Court, in dealing with a reference, is not pinned down to the rulings available or the interpretation in vogue at the time when the Tribunal decided the....
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....nd that for the rate difference between CPWD rates and local PWD rates, the ld. CIT(A) has allowed relief of 15 % only. The decisions of various Courts as cited by ld. Authorized Representative indicate that for such rate difference, deduction is to be allowed between 30 to 40%. In the case of Abdul Rahim, 258 ITR 714, Madras High Court held that deduction of 25 % for difference in CPWD rates and local PWD rates, 15 % for self supervision and element of profit of contractor and 11 % for cost of services provided in the building is reasonable. I.T.A.T., Indore Bench in the case of Shri Jag Mohan Jaiswal, 10 ITJ 187, held as under:- The ld. CIT(A) has granted further deduction of 30% on account of difference in CPWD rates and local rates, self-supervision and for material directly purchased by the assessee. Considering the totality of the facts and circumstances noted above, it would be reasonable and appropriate that instead of deduction of 30% granted by the ld. CIT(A) the deduction to the assessee should be granted at 40% in all. 12. Similarly, in the case of Rajeev Mewara vs. ITO, I.T.A.T., Indore Bench vide its order dated 27th March, 2009, in I.T.A. No. 234/In....
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.... educational expenses. Evidence regarding source of income of Shri Ram Govind Singh having income from pension, agricultural income and rental income was also furnished. 16. There is no denial of the Indian culture in Hindu family that where grand children are residing with their grand portents, the living expenditure and educational expenditure are normally borne by grand parents. In the instant case before us, an affidavit of father Shri Ram Govind Singh was also filed during course of assessment proceedings itself, but the Assessing Officer did not accept the same by stating that the same is filed only on 29.12.2010 and it was not possible for him to verify contents of the affidavit. In this regard, the fact regarding educational expenses was first time, asked by the Assessing Officer only on 7.12.2010, and at the same time, it was clarified that same was borne by his father Shri Ram Govind Singh and when the Assessing Officer asked to file the supporting evidence, the assessee has duly filed affidavit of his father, who at the relevant time was aged 74 years. The affidavit filed was duly sworn in the presence of witness and nothing was brought on record by the ld. Assessing ....
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....t was also filed by grand father Shri Ram Govind Singh. Considering the totality of facts and circumstances of the case vis-à-vis statement recorded u/s. 132(4), which even though a good evidence, but its reliability depends on the facts of the case and surrounding circumstances as held by the Jharkhand High Court in the case of Shri Ganesh Trading Company vs. CIT, 257 ITR 159, wherein it was held as under:- page 162 para 6 Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the assessee. The statement on oath of the assessee is a piece of evidence as per section 132(4) of the Income Tax Act and when there is incriminating admission against himself, then it is required to be examined with due care and caution. In the judgment of Kailashben Manharlal Chokshi (supra), the Division Bench of Gujarat High Court has considered the issue in the facts of that case and found the explanation given by the assessee to be more convincing and that was not considered by the authorities below. Here in this case also, no specific reas....
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....so filed affidavit of five creditors. However, no weightage was given to the affidavit. 23. The issue has been discussed in detail in paras 8 & 9. Considering the reasoning given therein, we have directed to give deduction of 25% on account of rate difference/self supervision etc. After considering deduction of 25 %, no addition will survive. Accordingly, we direct the Assessing Officer to delete the addition so made. 24. In the assessment year 2005-06, an addition of Rs. 8320/- was made on account of unexplained expenditure on the basis of LPS-3. In this regard, we found that during the course of search certain loose papers were found and seized from the premises of the assessee, on the basis of LPS-3 which is related to purchase of Sarees by wife of assessee Smt. Sudha Singh from Agarwal Sarees addition of Rs. 8,320/- were made and confirmed by ld. CIT(A). It was explained before the ld. Assessing Officer that assessee's wife is a regular income tax payer and before search. She has filed the return of income for the assessment year 2006-07 and 2007-08 on 4.12.2006 and 23.07.2007 respectively by showing the income from craft and painting and the returns for the assessmen....
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....Sudha Singh and not in the hands of assessee. Accordingly, we direct the Assessing Officer to consider the same in the case of Sudha Singh. We direct accordingly. 27. In respect of assessment year 2008-09, return was due on 31st March, 2009, whereas search was carried out in the assessee's premises on 30.5.2008. Thus, question for filing the return for the assessment year 2008-09 before the date of search does not arise. 28. In view of the above facts that the return of income of Smt. Sudha Singh for the assessment years 2003-04 to 2005-06 was below taxable limit, hence she had not filed her return of income prior to search. Thus the credit for cash available in the statement of affairs in respect of the income from Craft and Painting work for these years are liable to be allowed. 29. An addition of Rs. 34,456/- was also made on the basis of LPS-3, details of which were as under:- 30. In this regard, it was contended that LPS-3 was an estimate which will be clear from the said loose paper itself. On the said loose paper neither the name of purchaser or seller is given. Moreover on these loose paper no where it is mentioned that it is related to purchase of Gold Arti....
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....tion is warranted. 34. In the assessment year 2006-07, an addition of Rs. 78,895/- was upheld by the ld. CIT(A) out of addition of Rs. 1,28,407/- made by the Assessing Officer on the basis of LPS-3. 35. It was contended by the ld. Authorized Representative that during the course of search certain loose papers were found and seized from the premises of the assessee, on the basis of LPS-3 page 13, 3, 12, 10 & 11, 8 & 9, the ld. Assessing Officer has made addition of Rs. 1,28,407/- out of which the ld. CIT(A) confirmed the addition of Rs. 78,095/- and allow the relief of Rs. 49,512/- on this ground that no specific withdrawal have been made by the assessee or his wife or daughter from the bank. It was explained before the Ld. Assessing Officer that assessee's wife is a regular Income Tax payer and before search she has filed Return of Income for the assessment year 2006-07 and 2007-08 on 04.12.2006 and 23.07.2007 respectively by showing the Income from Craft and Painting and the Returns for the Assessment Year 2003-04 to 2005-06 was not filed before the search due to the reason that her income was below Taxable Limit and similarly assessee's daughter Ku. Shilpa Singh has....
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.... Prafull H. Rawal were recorded u/s. 131 and they refused to give such type of payment to Ms. Shilpa Singh. In this regard it was submitted that subsequent to the assessment assessee referred the statement and certificate of Bipin Bhai C. Patel and Prafull H. Rawal to the Hand writing Expert Shri R.A. Upadhyay, Advocate who vide report dated 24.06.2011 confirmed that the signature made on certificate and on statements recorded were of the same person. The report of hand writing expert is available on page No. 34 to 43 of the compilation for the assessment year 2006-07. From the said report of the Hand writing Expert it is clear that either they have denied issuance of certificate for the simple reason that they have not made the entries in their books of accounts or their statement are taken by giving a undue pressure. This fact shows that the income from Architectural work shown by Ms. Shilpa Singh in her return of income filed in response to notice u/s. 153A is genuine. As to the contention of the Ld. Assessing Officer and Ld. CIT(A) that the credit for the income from Craft work and Painting in case of Smt. Sudha Singh and Architectural work in case of Ms. Sudha Singh will be al....
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.... document, therefore, the addition was correctly made by the Assessing Officer. 43. In the assessment year 2007-08, an addition of Rs. 57,500/- was made on the basis of LPS-3. The said loose paper is related to purchase of 23 carat 91.6 Kada Pair, the weight is mentioned as 52.380 grams and rate is not mentioned. The total value is mentioned as Rs. 57,880/- and below that it is mentioned that Rs. 57,500/-. After going through minutely we found that the said item was related to family i.e. assessee's wife Smt. Sudha Singh and daughter Ms. Shilpa Singh, who were also assessed u/s. 143(3)/153C so if any addition is warranted, the same is required to be considered in the hands of these ladies. We direct accordingly. 44. In the assessment year 2008-09, an addition of Rs. 1,74,000/- was made on account of unexplained investment in purchase of land by assessee's daughter Ms. Shilpa Singh. In this regard it was submitted by Ld. AR that the assessee's daughter Ms. Shilpa Singh purchased Agricultural Land measuring .094 hectares at Gram Kaushalpura for Rs. 1,50,000/- from Shri Saiyed Iftekhar Ali resident of Idgah Hills, Tehsil Hujur, Bhopal on 15.05.2007. 45. It was fur....
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....le on page 63 of the compilation. Moreover, during the course of assessment proceeding the assessee filed affidavit of the witnesses of the sale deed namely Noman Ali and Tahabbur Mohammad Khan inter alia stating that the agreement of sale between Ms. Shilpa Singh and Saiyed Iftekhar Ali was held in presence of them for the consideration of Rs. 1,50,000/-. Moreover, these witnesses were examined by the Ld. A.O. on oath and they have clearly stated that in front of them only cheque of Rs. 1,50,000/- was given by the buyer to the seller. The copy of affidavit of these witnesses are available on page 47 and 48 of the compilation and the copy of their statement is paste by the Ld. A.O. on page 45 to 48 of the Assessment Order. The Ld. A.O. has neither examined to the registering Authority nor to the seller to bring the truth in this regard otherwise the fact regarding that the consideration of only Rs. 1,50,000/- is paid will be clear to the Ld. A.O. during the course of assessment proceedings itself. But as the Ld. A.O. was bank upon to make high peach assessment with the object to create a substantial demand against the assessee he had not examined them. 47. The ld.....
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....r deducting discount of Rs. 948/the net amount is mentioned at Rs. 87,900/-. On the foot of the loose paper name of Shri Tiwari of Indore is mentioned. However, the Department has inventoried all gold ornaments belonged to assessee and his family members whether lying at resident or in locker and no such item was found which is evident from the valuation report of approved registered valuer available on page No. 26 to 30 of compilation for the assessment year 2007-08. In the interest of justice, we direct the Assessing Officer to consider afresh addition of jewellery in the hands of Sudha Singh who is separately assessed, keeping in view above discussion. 51. Reliance was placed by the ld. Authorized Representative on the following judicial pronouncements:- (a) ITO vs. Hanuman Poddar & Ors. (2005) 98 TTJ (Asr) 705. In the instant case it was held that addition jottings on loose paper found during survey operation-entries found on loose papers recovered from the premises of the assessee, when the name of any assessee did not appear on these papers and there is no material or evidence on record to corroborate that these entries represent undisclosed income, investme....
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....ng course of search, contention of ld. Authorized Representative were same as narrated hereinabove, in case of B.M. Singh. With respect of merit of addition, we found that the ld. CIT(A) accepted that the return for the assessment year 2006-07 and 2007-08 showing income from craft and painting were filed before the search after verifying the acknowledgment for filing of returns of these years. However, the ld. CIT accepted that the return for the assessment years 2006-07 and 2007-08 showing income from craft and painting were filed before the search after verifying the acknowledgment for filing of returns of these years. However, he allowed credit for income from craft and painting work in cash only in respect of income shown in the return filed prior to search and specific withdrawal made from the Bank account. 56. It is clear from the above chart that for assessment years 2003-04 to 2005-06, which falls prior to search, the assessee has not filed any return of income, because her income was below taxable limit. Hon'ble Jurisdictional High Court in the case of CIT vs. Vimla Khatri, 288 ITR 168, and in case of Smt. Maya Chotrani, 288 ITR 175, has held that the total income o....
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..../- and the balance withdrawal was for other expenses. Since source of expenditure was available, we do not find any merit in the addition made by the Assessing Officer. The Assessing Officer is directed to delete the same. 60. With regard to enhancement of assessment by Rs. 2,57,760/- by the ld. CIT(A) in respect of cash found during course of search, we found that out of cash available as on 30.5.2008, amounting to Rs. 3,24,055/-, cash amounting to Rs. 2,57,760/- was explained. However, the CIT(A) has doubted the income from painting and craft work shown for the assessment year 2008-09 at Rs. 1,71,000/- and Rs. 50,000/- for the period 1.4.2008 to 3.5.2008. In view of our observation made hereinabove, regarding income earned by the assessee out of art and craft work during earlier years and no return of income was filed because of the reason that income was below taxable limit, the credit for such income cannot be denied in view of the decision of Jurisdictional High Court in the case of Smt. Vimla Khatri (supra) and Smt. Maya Chotrani (supra). It was held by the Jurisdictional High Court that when the income is below taxable limit, the assessee is not obliged to file the return....