TaxTMI 
TaxTMI 
2020 (6) TMI 803
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....both Individual and Bigger HUF. There was search and seizure action on the assessee. There exists appeals in this Tribunal filed by M. N. Navale Individual and HUF. The core issue in all these appeals relates to the existence of HUF, agricultural income of the HUF/holdings, capacity to earn agricultural income, source of the assets etc. Earlier, the appeal-HUF were heard by the Tribunal and issues are remanded to the Assessing Officer's file with certain directions vide the order of the Tribunal dated 15.11.2019. In these present set of appeals- Individual also, the issue of taking loans from the said M. N. Navale- HUF and the sources thereof is one of the common issues for adjudication. The said remand proceedings are still pending with the Assessing Officer. The time barring assessments with the Assessing Officer and the Lockdown of the Income Tax Office due to Covid-19 are stated to be the reasons for delay in completion of the said remand proceedings in the case of HUF. 3. Now, we proceed to adjudicate appeal-wise issues/grounds raised by the assessee in the following paragraphs. ITA No.701/PUN/2014 - A.Y. 1999-2000 4. Before us, ld. Counsel for the assessee read out t....
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....of the Act, ld. Counsel mentioned that the said entries were wrongly interpreted for taxing the said amount of Rs.1.83 lakhs in the year under consideration. There is reference to date on the paper and hence, there exists ambiguity on the year of taxation. On the said page, only "1998" is mentioned and no reference to month and date. 6. On hearing both the sides, we find relevant to extract the said para 8 and 9 of the assessment order for A.Y. 1999-2000 and the same are extracted hereunder :- "8. As mentioned in the foregoing paragraphs a search and seizure action was conducted on the premises of assessee. Several incriminating documents were seized from the assessee. As per page 8 of bundle no.4 seized from Shri M.N. Navale under panchanama dated 22/07/2005 the assessee has communicated to one Shri Masake Saheb regarding the amount of Rs. 1,83,000/ - due from him. This includes Rs. 1,00,000/- for which no details are given, Rs.25,000/- Cash loan and Rs.58000/- toward claim of traveling expense. As this amount is not appearing in the accounts of the assessee the assessee was requested to explain the same with its source of investment. In reply the assessee vide his let....
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....d. 8. Referring to ground no.2, ld. Counsel for the assessee mentioned that the said ground is not pressed. After hearing both the sides, the same is dismissed as not pressed. 9. Referring to grounds no.3, 4 and 5, ld. Counsel mentioned that the addition of Rs.10,37,000/- and Rs.1,50,000/- are relatable to the appeal of Sri M.N. Navale (Bigger HUF). In this regard, the ld. Counsel brought our attention to the order of the Tribunal in the case of Maruti Nivrutti Navale (Bigger HUF) vs. ACIT vide ITA No.367/PUN/2017 and others dated 15.11.2019 and submitted that the Tribunal already recognized the fact about the existence of agricultural lands, the agricultural activities of the certain lands and agricultural income in these cases. Further, ld. Counsel for the assessee submitted that the issue raised in grounds no.3 to 5 may be remanded to the file of the Assessing Officer in the light of the direction given by the Tribunal in assessee's own case (supra). Further, ld. Counsel mentioned that if the said direction of the Tribunal (supra) is implemented by the Assessing Officer, obviously, the assessee shall have some funds explain the sources. 10. On the other hand, the ld. DR....
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....ugh the details mentioned therein, by any standard it cannot be said that these papers have any relevance to the appellant. 2) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition without prejudice to ground no 1 the CIT (A) has erred in not appreciating the alternate condition that if at all any addition is legally warranted it can only be Rs 52,65,627/- that pertains to the Assessment year under consideration and as is evident from working made by Assessing Officer himself. 3) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 10,20,000/- instead of Rs 8,95,000/- which represents unsecured loan taken from M.N. Navale (Bigger HUF). 4) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 10,20,000/- instead of Rs 8,95,000/- on the ground that despite the admitted fact that HUF existed, according to him the said loan has not been explained satisfactorily without confronting this new reasoning to appellant and at the same time it is grossly incorrect and illegal. 5) On the facts and in the circumstances of case....
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....interest of Rs.3,90,37,346/- being the interest on above FDs is brought to tax on receipt basis since the last mentioned date in each of the paper clearly indicate that these FDs have finally been matured in FY 99/00 relevant to assessment year 2000/01. Penalty u/s 271(1)(c) is separately initiated." 16. The CIT(A), as per discussion given in para 3.14 and 3.15 of the order of the CIT(A), confirmed the action of the Assessing Officer. For the sake of completeness, the said para 3.14 and 3.15 of the order of the CIT(A) are extracted hereunder :- "3.14 In this regard, the appellant has relied upon the judgment of Hon. Allahabad High Court in the case of Rajpal Singh Avatar 288 ITR 498. However, the case of the appellant is distinguishable on facts. In that case, the documents in question were found in the debris lying in the shop. The writings in the document were in English and it was the submission of the assessees that none of them knew the language. Moreover, in that case what the AO had brought to tax in the hands of the appellant was not the interest amount but the principal whereas there was a clear factual finding that in the seized documents the full year's inter....
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....d that loose papers and diaries are not the books of accounts. 19. We have heard both the sides on this limited issue, legal issue and the controversy relate to the ownership of the seized papers. As per the argument of the ld. Counsel for the assessee, the seized documents/papers do not belong to the assessee. In the absence of name of the assessee on the documents, the questions are raised about the belongingness of the papers to the assessee. On these issues, within the meaning of ambit of the presumption, in our considered view, the Revenue has failed to question the assessee during the search proceedings. It is not the case of the Revenue that there was any investigation into these papers. No question is raised/asked while recording the statement of the assessee during the search action in this aspect. Therefore, considering the incompleteness of the proceedings of the Revenue to these papers, in our considered view, the addition of Rs.3,90,37,346/- made by the Assessing Officer appears to be premature. Thus, the matter should be travelled to the file of the Assessing Officer for one more round of investigation/recording of statement. It is necessary to establish the relata....
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....gard, ld. Counsel for the assessee submitted that this issue has to be remanded to the file of the Assessing Officer for fresh adjudication in the light of the order of the Tribunal in the case of M. N. Navale (HUF) (supra). In other words, the arguments of both the parties on these grounds are similar to that of the grounds no.3, 4 and 5 of the appeal in ITA No.701/PUN/2014 for the assessment year 1999-2000. Thus, our decision in grounds no.3, 4 and 5 of the appeal in ITA No.701/PUN/2014 for the assessment year 19992000 shall apply mutatis mutandis to these two grounds no.1 and 2 of this present appeal. Accordingly, the grounds no.1 and 2 are allowed for statistical purposes. 25. In the result, the appeal of the assessee in ITA No.703/PUN/2014 for the assessment year 2001-02 is allowed for statistical purposes. ITA No.704/PUN/2014 - A.Y. 2002-03 26. The grounds of appeal raised by the assessee in this appeal are as under :- "1) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 28,50,000/- which represents unsecured loan taken from MN Navale (Bigger HUF). 2) On the facts and in the circumstances of case t....
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....CIT(A) also confirmed the addition made by the Assessing Officer without appreciating all the facts relating to the property. There is no dispute on these facts. The only dispute is with reference to the monthly rent. It is the case of the assessee that at the relevant point of time i.e. A.Y. 2002-03, the property was let out to Sunind Private Limited and the applicability of monthly rent is Rs.30,000/- only. In the subsequent year 2004 onwards, the property is rented to STES with the applicable rent of Rs.75,000/- and this applicable Rs.75,000/- is born out of the records. Therefore, the addition of Rs.5,40,000/- made by the Assessing Officer in the assessment year 2002-03 is not correct. We find the dates and the lease deed are relevant and the rental agreement between the assessee and the STES. This aspect was not raised before the lower authorities as pointed out by the ld. DR for the Revenue. In all fairness, therefore, we are of the opinion that this issue requires re-verification of facts relating to the date of letting out of property to the assessee and the date of rent to STES in 2004. Considering the fact that the seized paper or lease deed does not contain the date or t....
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....fresh adjudication in the light of the order of the Tribunal in the case of M. N. Navale (HUF) (supra). In other words, the arguments of both the parties on these grounds are similar to that of the grounds no.1 and 2 of the appeal in ITA No.704/PUN/2014 for the assessment year 2002-03. Thus, our decision in the grounds no.1 and 2 of the appeal in ITA No.704/PUN/2014 for the assessment year 2002-2003 shall apply mutatis mutandis to these two grounds no.1 and 2 of this present appeal. Accordingly, the grounds no.1 and 2 are allowed for statistical purposes. 34. Ground no.3 relates to the addition of Rs.5,40,000/- on account of difference in rent received relying on noting found recorded on the loose papers seized during the search and seizure action. In other words, the arguments of both the parties on these grounds are similar to that of the ground no.3 of the appeal in ITA No.704/PUN/2014 for the assessment year 2002-03. Thus, our decision in the grounds no.3 of the appeal in ITA No.704/PUN/2014 for the assessment year 2002-2003 shall apply mutatis mutandis to this ground no.3 of this present appeal. Accordingly, the grounds no.3 is allowed for statistical purposes. 35. Refer....
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....tment made in purchase of the property situated at village Charoli overlooking the fact that said property has not been purchased by the appellant at all and further overlooking the clinching evidence filed to the effect that the said property has been actually purchased by the Sinhgad Technical Education Society. 6) On the facts and in the circumstances of case and without prejudice to the above ground No 13 the CIT(A) has erred in relying on notings found recorded on the seized loose paper which have no evidential value and is a dumb document. 7) On the facts and in the circumstances of case and without prejudice to the above Ground No.13 CIT(A) has erred in holding that the unexplained investment is made by the appellant without bringing on record any corroborative evidence including the confirmation of the vendor Shri Shivajirao Kadam or by recording his statement to buttress his view that on money has been paid either by the appellant or the Sinhgad Technical Education Society. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice." 38. Referring to ground no.1, ld. Counsel for the asses....
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....ent of Rs.4,56,005/-. The disputed investment is only Rs.1,51,338/-. Considering the extent of withdrawal available on records, the addition of Rs.1,00,000/- shall be reasonable. We direct the Assessing Officer accordingly. Thus, this ground no.3 is partly allowed. 44. Grounds no.4 to 7 relates to the addition of Rs.70,00,000/- relying on the seized papers. The Assessing Officer incorporated the same and held that the assessee paid cash for purchase of flat. In this regard, ld. Counsel for the assessee brought our attention to the additional ground raised by the assessee in the assessment year 2003-04 vide ITA No.705/PUN/2014 and mentioned that this issue pertains to the said additional ground which may be remanded to the file Assessing Officer. Further, ld. Counsel for the assessee submitted that there is need of adjudication of this issue raised in grounds no.4 to 7 of this appeal. Considering the same, we are of the opinion that this issue should be adjudicated along with additional ground raised by the assessee in assessment year 2003-04 vide ITA No.705/PUN/2014. We direct accordingly. Thus, the grounds no.4 to 7 are allowed for statistical purposes. 45. In the result, th....
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....ri Society belonging to M. N Navale (Bigger HUF) be taken as its income on verifying its ownership and if it is found that the said property does not belong to HUF the rental income be considered as that of appellant. 9) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 594000/- in respect of difference of cost paid for acquiring the land at Kusgaon Lonavala, Bunglow at Navsahyadri and NDA property belonging to M. N Navale (Bigger HUF) which claim be examined by Assessing Officer and if found that the said property belongs to Bigger HUF the income should be included as income of said HUF otherwise the income should be considered as that of appellant. 10) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 49,834/- on account of rent and interest from Sunny System Pvt Ltd in respect of advance given by M.N Navale (Bigger HUF) which claim be examined by Assessing Officer and if found that the said income belongs to bigger HUF the said income be included as income of said HUF otherwise the income should be considered as that of appellant. 11) On the facts and ....
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....s raised by the assessee in their appeals for the assessment years 1999-2000 to 2003-04 vide ITA Nos.701 to 705/PUN/2014. Accordingly, for the stated reasonings, ground no.1 and ground nos.5 to 11 are allowed for statistical purposes. 48. Ground no.2 relates to the addition of Rs.10,50,000/- loans given by the assessee to M/s Srujan Fitness Pvt. Ltd.. At the outset, ld. Counsel for the assessee mentioned that this is a case where the addition is made without examining the contents of the seized papers. It is the case of the assessee that it is not a direct case of giving loan to M. N. Navale (Individual). These papers were taken as security for some loan related issues to be obtained STES. There is some problem with the title of lands acquired by STES to match the acquittal loss in future. This kind of arrangement is made by taking an affidavit for some of Rs.10,00,000/- for STES. 49. On the other hand, the case of the Revenue is that the seized page No.20 of the Paper Book is a case of providing loans for interest to the said persons and, therefore, the contents of confirmation given at page 23 of the Paper Book is merely a case of afterthought. 50. After hearing both the....
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....igures, ld. AR for the assessee submitted that it is obviously settled legal proposition that wherever there is Rent Control Act in operation the reliable values determines the deemed fair market value of the rent is ALV of the property and other methods such as percentage of the investment etc cannot be determined. In this regard, ld. Counsel for the assessee filed a written submission and relied on the judgement of the Hon'ble Bombay High Court in the case of Smita Ambani, 323 ITR 104 for the proposition. The properties under value should be adopted as deemed rental value as the property is covered by the Rent Control Act. 54. After hearing both the sides, we are of the opinion that the Assessing Officer should be directed to apply the said Jurisdictional High Court's judgment in the case of Smita Ambani (supra) and after examining the facts of the case with that of Smita Ambani (supra), pass a speaking order. The Assessing Officer shall grant reasonable opportunity of being heard to the assessee in accordance with set principles of natural justice. Thus, this ground no.3 is allowed for statistical purposes. 55. Ground no.4 relates to the addition of Rs.3,90,000/- i.e. diff....
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..... 59. As per the ld. AR for the assessee, this part of addition was attributable to the enhancement of income made by the CIT(A) in the assessment year 2004-05. Grounds no.4, 5, 6, 7 of the appeal in ITA No.1059/PUN/2014 for the assessment year 2004-05 are related to these grounds. 60. After hearing both the sides and considering the identical arguments of both the parties on these grounds which are similar to that of the grounds no.4, 5, 6, 7 of the appeal in ITA No.1059/PUN/2014 for the assessment year 2004-05, our decision in the grounds no.4, 5, 6, 7 of the appeal in ITA No.1059/PUN/2014 for the assessment year 2004-05 shall apply mutatis mutandis to this ground nos.13 to 16 of this present appeal. Accordingly, the grounds no.13 to 16 are allowed for statistical purposes. 61. In the result, the appeal of the assessee in ITA No.1060/PUN/2014 for the assessment year 2005-06 is partly allowed for statistical purposes. ITA No.1061/PUN/2014 - A.Y. 2006-07 62. The grounds of appeal raised by the assessee in this appeal are as under :- "1) On the facts and in the circumstances of the case the CIT (A) has erred in sustaining the order passed by the Assessing Off....
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....e addition of Rs 7,37,000/- on the ground of unexplained investment in purchase of certain properties and relying on the erroneous information that the cost of those properties is Rs 1,27,67,000/- while the payments supported is only of Rs 1,20,30,000/- and in the process has overlooked the fact that there is no such unexplained investment as the entire cost of Rs 1,27,67,000/- stands supported and reflected in the books of accounts. 8) On the facts and in the circumstances of the case the CIT (A) has erred in not appreciating the fact that the land situated at Kusgaon is purchased by M.N Navale Bigger HUF and has further erred in sustaining the addition of Rs 1,20,000/- which represents the difference in valuation made by approved valuer and cost actually paid overlooking the established practice that the fact that difference being less that 10% it deserves to be ignored. 9) On the facts and in the circumstances of the case the CIT (A) has erred in sustaining the addition of Rs 23,13,000/- for the cash deposited in bank and explained that the same is received from MN Navale (Bigger HUF) the identity and creditworthiness of which are not in dispute besides the gen....
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....said order of the Tribunal, ld. Counsel for the assessee brought our attention to the said addition of Rs.10,15,22,340/- and submitted that the allegation of the Revenue about the taxation of collections of donation amounting to Rs.10,15,22,340/- was not approved, the addition was deleted and the ground was allowed in favour of the assessee. The contents of para 116 to 118 of the said order of the Tribunal in the case of Sinhgad Technical Education Society (supra) are relevant in this regard. 67. On hearing both the sides on the fate of this decision in the case of Sinhgad Technical Education Society (supra), we are of the opinion that the contents of the said para 116 to 118 are relevant and for the completeness of this order the same are extracted as under :- "116. We find the Assessing Officer while passing the assessment order in the case of Mr. M.N. Navale has referred to the details of seized documents and has corrected the arithmetical error and concluded that the amount of donation comes to Rs.10,15,22,340/- (as against RS.22,04,31,020/- held by him in the assessment order). From the various details furnished by the assessee in the paper book we find the amounts....
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....ps at Rs. 2,38,77,000. The assessee had booked 35 shops as on the date of search. Because of the difference in rates as mentioned in the seized paper and the books of account, the Assessing Officer calculated the on-money. The Commissioner (Appeals) and the Tribunal held that on the basis of the loose papers no addition could be made. On appeal : Held, dismissing the appeal, that from the beginning the assessee was stating that the notings appearing in the diary were rough estimates and estimation was made for submission to the bank for obtaining a loan from the bank. The inference of the Assessing Officer that the assessee had received on-money, i.e., the differential amount as shown in the seized diary and the books of account, was merely based on suspicion and surmises and there was no material to support the conclusion of the Assessing Officer that the assessee had in fact received any on-money. The Assessing Officer had no evidence with him to support his conclusion. The assessee has worked out the floor-wise rate of the shop on the seized paper but it was not possible that every shop could be sold at that price and while selling the shops, many purchasers may pay adv....
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....d for statistical purposes. WTA No.05/PUN/2014 - A.Y. 2005-06 71. The grounds of appeal raised by the assessee in this appeal are as under :- "1) On the facts and in the circumstances of case the CIT (A) has erred in directing the Assessing Officer that on ascertaining the available funds with M.N Navale (Bigger HUF) to the extent these cover the assets claimed as belonging to HUF, the same should be excluded from the net wealth of appellant The assets claimed as belonging to Bigger HUF are: a. Residential Flat at Flat No. 101, 102 Building No. D,S. No. 59, 1st Floor, at Kumar Parisar Kothrud, Pune - Valued at Rs. 12,05,000/- b. Residential Bungalow at Navsahyadri Soc. Karve Nagar, Pune - Valued at Rs. 52, 76,510/- c. Farm House at NDA Road, Pune - Valued at Rs. 63,30,000/-. d. Flat at Meera Co.Op.-Hsg. Society Oshiwara, Jogeshwari (W) Mumbai - Valued at Rs. 25,51,510/-." The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice." 72. Briefly stated the relevant facts include that the assessee filed the return of income declaring total wealth of Rs.6,82,6....
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....ted 14.01.2016 (supra) are extracted hereunder :- "5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The existence of the HUF has been accepted by the Co-ordinate Bench of the Tribunal in ITA No. 149/PN/2010 (supra). Therefore, there is no dispute about the existence of HUF any more now. The only issue is, Whether the assets listed hereinabove are to be included in the net wealth of the individual or the HUF. The ld. AR has submitted that all the assets mentioned above are incorporated in the list of assets in the partition decree awarded by the Civil Court, Pandharpur. However, the said partition decree has not been placed before us by either of the sides. The Commissioner of Wealth Tax (Appeals) has remitted the file back to Assessing Officer with the following observations: "16.4 I have given careful consideration to all the relevant facts and the submissions made on behalf of the appellant. Upon perusal of the appellate orders passed by me in the appellant's I-T case for assessment year 2005-06 and 2006-07, it is found that in respect of all the above mentioned properties, base....