TaxTMI 
TaxTMI 
2009 (1) TMI 944
X X X X Extracts X X X X
X X X X Extracts X X X X
....he learned Commissioner of income-tax (Appeals)-II, Agra has erred in law and on the facts of the case in deleting the addition of Rs. 11 Lakhs made under Section 68 on account of unexplained deposits in the name of M/s. Maheshwari Electronics (Prop. M/s. Radhey Lal Maheshwari) without properly appreciating the facts of the case. 4. That while deleting the addition of Rs. 11 lakhs learned Commissioner of Income-tax (Appeals)-ll, Agra has totally ignored the facts thai the depositor Sh. Radhey Lal failed to justify cash deposits in his cash book consequently, the assessee failed to justify the genuineness of the transaction and creditworthiness of the depositors. 5. That the learned Commissioner of Income-tax (Appeals)-II, Agra has erred in law and on facts of the case in deleting the addition of Rs. 6,65,000/- made under Section 69 on account of unexplained gifts allegedly taken by the assessee from his brother Sh. Ved Prakash Kapoor without properly appreciating the facts of the case. 6. That while deleting the addition of Rs. 6,65,000/- leaned Commissioner of Income-tax (Appeals)-II, Agra has totally ignored the facts that the alleged donor Sh. Ved Prak....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The Assessing Officer did not point out any discrepancy towards the construction carried by it. The assessee did not maintain any books of account in respect of this business. The same business was carried in the immediately preceding year also where profit rate of 12% on sales of Rs. 24,97,790/- had been accepted. There was thus no justification in deviating from the settled position by the Assessing Officer. If Ld. CIT(Appeals) corrected the error, he cannot be held wrong. 6. We have heard the parties and perused the material on record. Under the peculiar facts, the decision taken by the ld. CIT (A) does not call for any interference. The construction of the project under consideration was not complete during the year. In the immediately preceding year a profit rate of 12% on sales made during construction period itself had been accepted. No justifiable reasons have been advanced by revenue to deviate from the accepted position. It was not proper for the assessing officer to have disallowed 50% of expenses incurred on the project under construction. If the assessee did not maintain books of account and vouchers, the cost of construction can be established only when it is final....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re, summons/notices under Section 133(6) were sent to the addresses of the depositors as stated by Sh. Maheshwari. But any information has not been received from respective parties. Then summons dated 09.11.2004 and 01.12.2004 under Section 131 were also sent to Sh. Maheshwari requiring him to justify the above credits in his cash book but Sh. Maheshwari has not attended. In view of these facts and circumstances of the case, it is clear that the source of above deposits in the books of Sh. Maheshwari is not explained, so source of deposit of Rs. 30,000/- on 03.02.2001, Rs. 10,000/- & Rs. 50,000/- on 05.02.2001 and Rs. 4,50,000/- on 06.02.2001 in his bank account is also not explained. Therefore, it is concluded that the source of loan particularly loan of Rs. 6,00,000/- given by Sh. Radhey Lal Maheshwari on 07.02.2001 to Sh. Sarv Prakash Kapoor is also not explained. In the result, the source of loan given by Sh. Radhey Lal Maheshwari to Sh. Sarv Prakash Kapoor is not explained and is doubtful. Therefore, this amount was rightly added and deserves to be sustained. 10. The Ld. CIT(A) being satisfied that the depositor had appeared and admitted of making deposit with the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n furnished. Since the assessee did not produce the donor, the assessing officer was not satisfied with the genuineness of the gift. He, accordingly, added the same as income under Section 68 of the Act. 15. Before the ld. CIT(A), the assessee made following submissions: Rs.6,65,000.00 from Shri Ved Prakash Kapoor Shri Ved Prakash Kapoor has made the gift for Rs. 6,65,000 to assessee. The donor Ved Prakash Kapoor is real brother of the Assessee who has made the gift for Rs. 6,65,000.00 in the following manner: Rs.2,00,000.00 through cheque on 21.12.2000 which^was drawn at Allahabad Bank, same bank a/c No. 9732/433/168 Rs.4,65,000.00 through cheque on 28.2.2001 drawn at S.B.I, a/c No. 01190044590. He is a regular tax payer and assessed to tax by Income Tax Officer, Ward 1(4) under PAN AGMPK 2769G. Necessary evidence in respect of filing of return, computation of income, copy of bank a/c. The confirmatory letter of the gift given to assessee is also enclosed. 16. The ld. CIT(A) sought remand report on these submissions and required the AO to examine the donor. Accordingly, the Assessing Officer furnished his report as under: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een made out of natural love and affection which needed no special occasion. The transaction has been made through banking channels and there is nothing hanky panky about it. The donor is a man of means and the amount of gift drawn has been found to have direct nexus with the own income of the donor. The assessee had duly established the source, the solvency of the donor and his love and affection by his brother, who made him the gift under consideration. On the facts and circumstances of the case and in the absence of any cogent material having been brought on record by revenue to enable us to interfere with the findings reached by ld. CIT(A), it cannot be held that the cash credit was a receipt of an income nature. We, therefore, uphold the decision reached by ld. CIT(A) and finding no merit in grounds raised in appeal by revenue, the same stand rejected. 19. Grounds No. 8 & 9, being general, need no comments. 20. In the result, the appeal of the Revenue stands dismissed. 21. In assessee's appeal in ITA No. 93/Agr./2005, the grounds raised read as under: 1. That the authorities below have been arbitrary and unjust while sustaining the addition for Rs. 10,00,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ding gift of Rs. 10 lacs shown in the name of Shri Romit Kapoor: The assessee has shown receipt of gift of Rs. 10 lacs on 7.4.2000 from Shri Sanjeev Kumar Dagar s/o Shri Balram Singh Dagar, 56-A, Gali No. 2A, Durga Park Nasirpur, New Delhi. The gift was allegedly given by Shri Dagar to Shri Ramit Kapoor the minor son of the assessee. In order to ascertain the genuineness of gift, the assessee was required to produce Shri Sanjeev Dagar. Shri Dagar (aged about 35 years) is presently residing at 3137, 1st Floor, Seventh main, ESI Hospital Road, HAL, Stage-II, Indra Nagar, Bangalore. He was produced on 10.9.2004 and his statement on oath was recorded. In his statement he has deposed that during the period 91-96 he was doing export business of Maganese Ore in Goa. As per his statement, his turnover during 95-96 was around Rs. 3 crores and income has been stated in the tune of Rs. 2 lacs to 3 lacs per year. He has stated to be assessed to tax since 1994-PAN No. AELPD 5474 L. Income for the year 2000-01 till the year 03-04 has been stated to be between Rs. 1,50,000 to Rs. 2.25 lacs. From the year 1996 to 2001 he was doing the business of share transactions from his residence. Fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ater on. Finally, a question was asked from Shri Dagar to specify whether he had given any gift to his wife or children or had he received any gift from anybody in last 10 years? In reply to this question, Shri Dagar has stated that at the time of the birth of his daughter gift of gold items weighing 5 to 6 tolas was received from his father in law and thereafter no gift has been received. He has further stated that except the above gift of Rs. 10 lacs he has never given any gift to anybody. On 14.9.2004 Shri Dagar sent copy of purchase bills dt. 1/3/4.04.2000 of M/s. Shiva Sales, Naraina, Delhi. Then, notice under Section 133(6) dated 17.9.2004 along with copy of bills was sent to M/s. Shiva Sales. The prop. Of Shiva Sales Shri Rajesh Chaturvedi filed an affidavit deposing as under 1. That I was the prop. Of M/s. Shiva Sales, Y-254/1, 1st Floor, Loha Mandi, Naraina, New Delhi - 110028 2. That the firm was closed on 5.6.2002 3. That I do not know Mr. Sanjeev Dagar c/o Sanjeev Dagar & Co., 56A, Street No. 2A, Durga Park, Nasipur, New Delhi - 110045 and I had not sold an computers to him and I have not received any payment from him. 4. Tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble that a man who had never given any gift to any of his children, wife will suddenly give gift of Rs. 10 lacs without any occasion or without any other reasonable reason to a person who is already more wealthy and well to do than the donor. 4. If computers etc. were purchased by Shri Dagar on dt. 1st, 4th and 5th April, 2000 for establishing computer institute, then the question is that why had he sold the computers on 7.04.2000 without utilizing them at all. 4. Shri Dagar is not much acquainted with computer operations so it is also strange that for establishing a computer institute he had purchased computers worth Rs. 20 lacs at the first stage. 5. Though in his statement Shri Dagar has stated that he had never given any gift to anybody in last 10 years except the gift of Rs. 10 lacs given to Shri Romit Kapoor, from the information gathered from the Bank it is found that he had perhaps given two more amount of Rs. 5 lacs each to the family members (namely Ms. Ruchi Kapoor & Neelam Kapoor) of Shri Sarv Prakash Kapoor on 5.4.2000. 6. Summons sent at Bangalore, returned unserved so the address given by Sh. Dagar appears to false and incorrect. B....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... donor has appeared before the A.O. in response to the notice issued by the A.O. and admitted on oath that he has made the gift for Rs. 10.00 lacs to Master Romit Kapoor, minor son of Shri Sarv Prakash Kapoor out of natural love and affection. He has also stated in his statement before the A.O. that the gift was made on account of the facts that in the past, Shri Sarv Prakash Kapoor had supported the donor when he was facing the financial hardship and also left his parent and house. At that time nobody had supported nor helped him but only Shri Sarv Prakash Kapoor,who is brother in law of his close friend had supported and helped him like brother. At that time, Shri Sanjeev Kumar Dagar thought and decided that in future if Sarv Prakash Kapoor requires any type of help, he (Shri Dagar) will provide the help to his utmost efforts to Shri Kapoor. The Donor was of the view that he has to give the return of his love, affection and support extended by Shri Sarv Prakash Kapoor. On account of these sentiments and relations with Shri Sarv Prakash Kapoor, the Donor when came to know that Sarv Prakash Kapoor was facing little financial crisis on account of blockage of money in a construction ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....00 lacs on which there is no doubt because the cheque was issued from the a/c of M/s. G.K. Consultant Ltd. in support of genuine gift which the assessee's son has received. Your kind attention is invited towards the following facts: Assessee's son has received the gift by cheque. The transaction was made between the two bank a/cs one of the donor and another of the donee by which the amount has been transferred to the a/c of the assessee's son. The amount of Rs. 10.00 lacs which agar has made the gift was out of withdrawal by cheque from his bank a/c wherein the amount of Rs. 10.00 lacs was deposited on account of sale of computers to M/s. G.K. Consultant Ltd. which was credited in the bank a/c, the same amount has been transferred to the appellant's son as a gift. The amount received from M/s. G.K. Consultant Ltd. has been duly accepted by the firm that they have purchased the computers and issued the cheque for Rs. 10.00 lacs. The Donor Shri Sajeev agar has appeared before the A.O. and has accepted in his statement giving on oath before the A.O. that he has made the gift to Master Romit Kapoor, minor son of Shri Sarv Prakash Kapoor. The identity ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of selling the same and receiving any amount on their sale does not arise. The assessee's plea that M/s. Shiva Sales did not record the sale to donor in his books stood discarded as the onus to show this fact lay upon the appellant. He, therefore, drew an inference that the appellant, the alleged donor and Shri Subodh Gupta of G.K. Consultants have indulged in clandestine transaction. The ld. CIT(A) also stated that the transaction of sale of computers does not inspire any confidence in as much as the fact is that M/s. G.K. consultants, the party who had issued cheque to the donor for alleged purchase of computers from him has made huge deposits in cash in its bank account. The person operating the bank account of G.K. consultants and Shiva Sales were the same used for providing bogus entries to various persons. The ld. CIT (A) has also found that from the donor's bank account only three cheques have been issued and that too for gifts to the appellant's family members which was unbelievable under the circumstance that the donor did not have significant income. The capacity of the donor was not such as to enable him to make such large gifts of Rs. 20.00 lacs to the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 30. We have heard the parties and perused the entire material on record carefully. Under the peculiar facts of this case, the finding reached and decision arrived by Ld. CIT (Appeals) does not call for any interference. The alleged donor was neither related nor did he have any direct friendship with the appellant. There was no occasion of making gift to the appellant's son. The donor did not have capacity to make gift to the appellant's son for Rs. 10,00,000/- and other family members of equal amount as the source of making gift has been found to have a direct nexus with the Hawala operator Shri Subodh Gupta. The bank account of the person who operated the account of M/s. G.K. Consultants from whom he alleged to have made purchases of computers and M/s. Shiva Sales to whom alleged sale is claimed to have been made, were found operated by the same person used for giving accommodation entry only. There is thus proper application of mind by ld. CIT (Appeals) in forming his opinion that the transaction of gift is not genuine. The Ld. CIT (Appeals) also recorded the finding that the ratio of judgment rendered by apex court in the case of Sumati Dayal v. CIT applied squarely....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ingly, the issues on which discussion was sought was spelt out specifically in the following manner: Qua Grounds No. 1 & 2 of Revenue while confirming the relief reference has been made to the position immediately preceding assessment year; (1) However facts to this extent are not borne out from the orders of the tax authorities; (2) No evidence in support of the said fact is found in the Paper Book filed by the Assessee; (3) Nor reference to this extent is found in the log book; However if any such request was made by yourself on the Bench as per usual practice then also evidence to this extent is not on record. Accordingly you may reconsider the view taken in the absence of necessary evidence. Qua ground No. 4 to 7 in the Revenue's appeal I find myself not in agreement with the view taken. Accordingly you may like to reconsider the same or return the files alongwith the proposed order for proceeding as per law to the undersigned Sd/- 17.08.2007(2.30 P.M.) (J.M.) Ld. A.M. 3. However, despite the written communication also as per conventions no discussion took place and the proposed order instead was returned closing the discussio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n by the assessee towards the constant alutness of showing due care and attention by the Assessing Officer while considering the right of the assessee, the duties to be performed as a result thereof have been consistently missing on the part of the assessee. It would show the amount of participation/co-operation made by the assessee despite which the Assessing Officer continued to grant number of adjournments to the assessee to enable him to substantiate its claims. Aright vested in a person is corresponded with duty on the part of the person who claims the right. 9. Despite the casual and careless approach of the assessee, it would show that each and every adjournments of the assessee was treated fairly and judiciously by the A.O. However, the assessee in the facts of the peculiar case it is seen has abused the fair treatment afforded to him by the A.O. with gross contempt as despite the request for time it is seen that there was no bonafide intention on the part of the assessee to comply with requests for information and the process of law in fact was abused by him. Return of income was filed on 29.10.2001 declaring total income of Rs. 9,65,913/- and the same was proc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h stood mentioned at page 1 of the Assessment Order. In this background he records that the following information was required to be furnished by the assessee: During the course of assessment proceedings the assessee was asked vide notice Under Section 142(1) dated 24.12.2003 to furnish the following information: (i) Confirmed copy of a/c of parties with complete mailing address to whom sales/purchases have been made exceeding Rs. 50,000/- (ii) Details of opening and closing stock and basis of valuation of work in progress of raw material consumed and work completed. The assessee was required to produce the stock register. (iii) Bills in respect of material purchased and in respect of expenses made during the relevant previous year. (iv) Name and mailing address of parties from whom material purchased exceeding Rs. 20,000/-. (v) A sum of Rs. 24,222/- has been paid to ADA as development fee. Complete details of property, sanctioned plan by ADA with man and mention upto what stage the construction was completed during the relevant previous year, (vi) Confirmed copy of a/c in the case of sundry creditors, (vii) Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The net profit shown by the assessee against the sales is about 12%. The AO without appreciating the facts that the assessee has invested the amount of Rs. 13,85,522.00 towards the construction of the building, has disallowed 50% out of the above amount and added the same towards the income. The action of the AO is incorrect, illegal and against the principle of accountancy. In fact the assessee has made the investment towards the construction of building at Rs. 13,85,522.00 out of which sold the building to the extent of Rs. 4,60,000.00 as against the AO has made the addition at Rs. 6,92,760.00. The A O has not pointed out any discrepancy towards the construction made by the assessee. The AO has considered that the assessee has made the expenditure to the extent of Rs. 13,85,522.00 of which 50% has been disallowed by him. The reasons recorded by the AO are baseless and also incorrect. The assessee is not maintaining any books of accounts in respect of above business. Last year too, the same business was done and sales to the extent of Rs. 24,97,790.00 were declared against which the net profit was shown at Rs.2,95,926.00 which is also 12%. Last year assessee has invested ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t no details despite sufficient opportunity were placed before the A.O. and the A.O. has also not disallowed the expenditure completely and has in fact passed a very reasonable order himself giving relief and benefit of doubt to the assessee by allowing 50% of the expenditure claimed which the assessee could never prove. In these facts it was stated that the reliance placed by the assessee only on the impugned order as such was misplaced as the action of the CIT (A) in relying upon the P & L account whose very basic primary and supporting documents could not be produced has been challenged by the Revenue. On facts it was stated that the claim of the correctness of the expenses incurred could never be substantiated. No reason has been given by the CIT (A) to address as to why the same be ignored or how the A.O. in the peculiar facts has erred to make a disallowance. It was further submitted that no discussion has taken place in the impugned order the disallowance made by the A.O. is either excessive or unreasonable. It was emphasised that the A.O. has specifically put the assessee to notice that the details of opening and closing stock and basis of valuation of work in progress of r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....antiated. Thus it was argued that evidently and admittedly there was no supporting vouchers of the material purchased. In these circumstances, looking at the extent of queries made by the A.O. and the opportunities granted which remained un-replied it was submitted by the learned D.R. that before the CIT(A) it was consciously for first time mentioned that books of account in respect of the above business were not there. The said submission in these peculiar facts it was argued was not bonafide at this belated stage. Moreover, on this aspect it was his submission no specific finding has been given by the CIT (A) who has instead taken the entire issue in an entirely different direction. It was the submission of the Ld. D.R. Shri Ambesh that the Revenue is aggrieved in the manner in which the issue was considered by the CIT (A) who has ignored the glaring deficiencies discussed at length by the A.O. on the basis of material placed before him has taken an entirely different line to grant relief to the assessee without addressing how relevant facts on record of the A.O. can be ignored and how oral submissions of the assessee can be accepted. It was argued on facts that the 50% disallowa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion immediately preceding assessment year; (1) However facts to this extent are not borne out from the orders of the tax authorities; (2) No evidence in support of the said fact is found in the Paper Book filed by the Assessee; (3) Nor reference to this extent is found in the log book; However if any such request was made by yourself on the Bench as per usual practice then also evidence to this extent is not on record. Accordingly you may reconsider the view taken in the absence of necessary evidence. 20. Referring to the exchange of written notes amongst the Members it is admittedly the position that strictly speaking specific arguments on these lines were never addressed before the Bench and the Assessment Order for the immediately preceding A.Y. referred to was also not available in the files nor was it filed subsequently. Thus, the stand was neither substantiated before the CIT(A) nor before the Bench. The fact is not disputed despite the exchange of notes and is an admitted position as no denial thereon is on record. These facts were specifically put in writing to my brother colleague which have been reproduced in 1st para of order sheet dated 17.08.2007 of the dissent orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....portunities granted by the A.O. which have not been utilised by the assessee in a bonafide manner the assessee has also not given the information/particulars of the material which is necessarily available with him i.e. the approved sanction plan by Agra Development Authority which was specifically called forth by the A.O. Similarly, the increase in investment claimed etc. by the assessee has not been demonstrated. The fact that the assessee has claimed loans and gifts advanced to him and his minor son are all facts on record and have to be appreciated and taken into consideration so as to understand the bonafide of the assessee standing before the Tribunal. The macroposition so brought forth by the assessee's conduct and nature of sources to justify the investments claimed cannot be ignored and treated in isolation. The circumstantial evidence in terms of the principles laid down by the Apex Court in the case of Sumati Dayal, the genuineness of the transaction the principles laid in the context of the same in the case of Durga Prasad More, cannot be ignored thus a view ignoring the relevant findings in the Assessment Order in the face of the facts set out on record cannot be ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the A.O. in the manner the CIT (A) would want to interpret them. Especially since the CIT (A) also on facts has not made any attempt to call forth for the facts in regard to the same and thereafter give his independent finding thereon with the reasoning that on account of the facts so examined by him the addition made on an estimate by way of a disallowance in the expenses claimed made by the A.O. in regard to which the books of accounts were never produced by the assessee the addition so made is not warranted for the XYZ reasons. This critical finding based on reasoning which itself is rested on facts to be independently examined and set out in the order is completely missing and in fact the CIT (A) without touching the facts and appreciating the due care and attention given by the A.O. while considering the rights of an assessee has proceeded without making a reference to relevant material and has instead rushed in haste to arrive at a finding without due care and attention to the facts of the case. The issue is of a recurring nature and this is a typical situation wherein on account of the specific care and attention of the A.O. ad-hocism ought not to be resorted to. While grant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oduced as under: The assessee has claimed interest of Rs. 1,30,017/- against the rental income on a/c of interest paid on loan for construction of building. The assessee has claimed deduction of interest of Rs. 1,30,017/- against the total income on account of interest paid on loan for construction of building. As per details of loans and deposits from parties as on 31.3.2001, Rs. 11,00,000/- and Rs. 3,00,000/-have been received from M/s Maheshwari Electronics and Shri Ashok Kumar Maheshwari respectively apart from loans from other parties during the relevant previous year. From the details of land and plots it is seen that no addition on account of construction of property during the year has been reflected. The assessee was required to give year wise details of investments with loan in the building, date and mode, name and person with complete postal address, rate of interest and relationship from whom loan taken and amount of interest and to produce source of repayment of loan and necessary supporting documentary evidences i.e. Bills etc. to prove the creditworthiness and genuineness of loan transactions. The assessee has also shown a sum of Rs. 9,80,000/- as loan recei....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... identity, source and genuineness of the transaction stood proved. However, in regard to the loan from Shri Radhey Lal Maheswari allegedly of Rs. 11.00 Lakhs he confirmed the view taken in the Assessment Order. For ready reference para 4.2 of the impugned order is reproduced hereunder: (4.2) Since the AO had made the addition on the ground that the depositors were not produced before him for examination, the matter was remanded to him vide order dated 27.07.2004 passed Under Section 250(4) of the Act. Vide this order, the AO was asked to examine the persons and submit the report accordingly. The AO in compliance has submitted the following report vide his letter dated 13.12.2004: Loan from Sit. Ashok Maheshwari - loan of Rs. 3,00,000/- Loan from Sh. Radhey Lal Maheshwari - loan of Rs. 11,00,000/-. Sh. Radhey Lal Maheshwari has stated that he had given loan of Rs. 5 lacs on 24.01.2001 and Rs. 6 lacs on 07.02.2001 out of his bank account number 132 in Jammu Kashmir Bank Ltd., Hing ki Mandi, Agra. As regards source of loan he has stated that he had received an amount of Rs. 29 lacs in November and December, 2000 on account of sale of his land at Nal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that the loan was given out of the sale proceeds and not from the cash deposits shown in the cash book. According to him, the loan was given by cheque, the creditor was assessed to tax and had admitted the loan and had also explained the source of giving the same, the AO was not justified in treating the same as unexplained. 28. On the basis of the above, the addition of Rs. 3 lakhs and Rs. 11 lakhs was deleted by him in para 4.4 which reads as under: (4.4) On careful consideration of the matter, lam of the view that the appellant deserves to succeed. As regards the loan of Rs. 3 lacs from Shri Ashok Maheshwari, the AO in the above remand report has accepted the same. In a view of the above report of the AO this addition is deleted. As regards the loan of Rs. 11 lacs shown from Shri Radhey Lal Maheshwari, in my opinion the appellant has approved its genuineness. Not only the depositor appeared before the AO during the remand proceedings but also satisfactorily explained the source of giving the same. The AO has not been able to controvert the appellant's claim that the loan was given out of Rs. 29 lacs received on the sale of plot. The AO's observatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly explained the source of giving the loan of Rs. 11.00 Lakhs. The said finding since is contrary to record. It was his submission that the CIT (A) has thereafter has next based his finding next on the fact that the A.O. has not been able to controvert the assessee's claim that the amount was advanced out of Rs. 29.00 lakhs received by the person on the sale of plot by the said person. It was the submission of the learned D.R. that it was not for the A.O. to controvert but for the assessee to prove that the loan of Rs. 29.00 Lakhs was from the receipts supposedly received by the said person from the sale of plot. Referring to para 4.3 of the impugned order it was his submission that despite the finding of fact adverse to the assessee in the Remand Report which was confronted to the assessee by the CIT(A) a perusal of para 4.3 of the impugned order would show that the assessee did not make any effort to show that the deposits were from the alleged receipt of cheques for the alleged sale of plot of the creditor on the contrary the assessee reiterated the submissions made earlier as such no new fact after the Remand Report was argued nor any new argument was advanced to show that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... what was the basis of this conclusion and what are the facts which have been taken into consideration by the CIT (A) have been left unaddressed the conclusion as such it was argued is arbitrary as no reasoning based on facts have been discussed so as to address this aspect has been discussed in the order. These admittedly have not been set out by the CIT (A) and he has without going through the requirements of a speaking order has rushed in haste to accept the argument of the assessee without caring to refer to any reasons, facts or arguments. The decision as such it was argued is arbitrary and should not be upheld. 32. Accordingly, on the basis of these facts it was his submission that the impugned order granting relief to the assessee to the extent of Rs. 11.00 Lakhs is perverse on facts and the addition made by the A.O. deserves to be upheld. 33. Learned A.R. on the other hand has relied upon the impugned order. Reliance has also been placed on the Paper Book filed on behalf of the assessee so as to contend that there is a direct nexus with the loan advanced. 34. On a careful consideration, of the entire facts, arguments as canvassed before us and as are brought out in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in the impugned order would show that the explanation offered by the assessee has not been accepted by the A.O. as such the finding of the CIT (A) is contrary to material available on record. Further the CIT (A) also does not care to discuss date-wise the availability of funds from the alleged sale receipts of the plot and accepts the arguments of the learned AR in rejoinder to the Remand Report without caring to discuss the same first. The said action cannot be sustained in law. The merit of a conclusion can be appreciated only if the reasoning discussed therein is substantiated by facts. If facts are left unaddressed the reasoning that the explanation is acceptable is a conclusion based on no reasoning. Accordingly, the finding at page 7 is held to be perverse on facts as relief without addressing the facts has been given by the CIT (A). Further the reasoning adopted by the CIT (A) that the A.O. has not controverted the facts even legally is not correct. Thus, in the peculiar facts and circumstances of the case it was not for the A.O. to controvert the claim of the assessee since the claim of the assessee as per the material available on record was not demonstrated by the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een upheld by the Tribunal in the proposed order in the cross appeal of the assessee with which I am in concurrence. 39. However, in regard to the gift of Rs. 665 lakhs which has been accepted by the CIT (A), the Revenue is in appeal before the Tribunal. 40. The discussion by the A.O. in regard to the gifts from the two donors is made alongwith the other gifts claimed by the assessee as having been received by his minor son in the following manner (the dissent as observed, however, is confined only to the gift allegedly received from Shri Ved Prakash Kapoor): As per copy of capital a/c enclosed with the return of income the assessee has shown a sum of Rs. 2,00,000/- and Rs. 4,65,000/- as gifts taken on 21.12.2000 and 28.2.2001 from Sh. Ved Pprakash Kapoor. A sum of Rs. 10,00,000/- has also been shown as two gifts received rupees 5 lacs each on 7.4.2000 which was cleared on 29.4.2000 in the name of Master Romit Kapoor from Shri Sanjay Kumar Dagar. Out of the total amount of gifts received by master Romit Kapoor the assessee has shown a sum of Rs. 9,80,000/- as loan from master Romit Kapoor. Confirmation of gifts has been furnished. The assessee was asked to p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... S.B.I, a/c No. 01190044590. He is a regular taxpayer and assessed to tax by Income Tax Officer, Ward 1(4) under PAN AGMPK 2769G. Necessary evidence in respect of filing of return, computation of income, copy of bank a/c. The confirmatory letter of the gift given to assessee is also enclosed. 44. In view of the fact that donors were not produced in the assessment proceedings the CIT(A) vide Remand Order dated 27.07.2004 required the A.O. to examine the donor and to submit the report accordingly. 45. In response to the said Order, the A.O. submitted his report dated 13.12.2004. The relevant portion is found reproduced in page 12 and 13 of the impugned order which read as under: Gift from Ved Prakash Kapoor - Rs. 6,65,000/- Shri Ved Prakash was produced on 30.8.2004. He is real brother of assessee. He derives Rental income from letting out his premises to SBI, Moti Katara and shops to other tenants. Income is Rs. 1 lac from shops and Rs. 5 lacs from SBI, Moti Katra, Agra. He is assessed to tax in Wd. 1 (4), Agra. He has stated that he had given gifts of Rs. 2 lacs on 21.12.2000 out of his bank a/c No. 9032 in Allahabad Bank, Moti Katra, Agra ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee from the person who is his real brother. Considering the facts of the case, I am of the view that the gift under reference is genuine and, therefore, no adverse inference can be drawn. The gift has been received by cheque, the donor is assessed to tax and he has creditworthiness to give the same. Admittedly the gift has been given from the rent received by the donor and the securities received from the tenants. There is a direct nexus between the rent and security receipt and the payment of gift. It is also seen that Shri Ved Prkash Kapoor has annual income of more than Rs. 6.65 lacs. There is a close relationship between the donor and the donee. As stated before, the donor is real brother of the assessee. Considering these facts, since the identity and capacity of the donor has been proved so also the genuineness of the gift, in m opinion, the AO's action in treating the same as unexplained cannot be sustained. The addition of Rs. 6,65,000/- made by him is, therefore, deleted. 48. Aggrieved by this, the Revenue is in appeal before the Tribunal. 49. It was submitted by the learned D.R. that as in the earlier grounds herein also finding facts has been recorded by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....been made to give a factual finding that there is a direct nexus of the availability of funds with the gift. Merely because Shri Ved Prakash has an annual income of more than Rs. 6.65 lakhs i.e. the total amount of gifts the gift has been accepted by the CIT (A) on the hypothesis that entire annual income has been gifted by a brother to a brother who is financially better off. It was his submission that the A.O. has specifically addressed in the order that the assessee's financial position was much better than the brother making the gift. Thus, the fact that this brother who compared to the assessee was financially not as well off gifted his entire annual income to the financially more sound brother becomes a very important and significant fact coupled with another significant fact on record that he has never made any gift to his own immediate family of wife and children. It was reiterated that there is no evidence on record to show the actual availability of funds at the relevant point of time with Shri Ved Prakash Kapoor i.e. the donor. The A.O. it was submitted has given very categoric finding that the donor Shri Ved Prakash Kapoor has never given any gift to his children or....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... material on record to lead to the conclusion that there is a direct nexus between the rent and security received by the donor and the payment of gift the CIT (A) was not justified in deleting the addition. The other fact taken into consideration i.e. the close relationship between the donor and the donee as the two were brothers in the face of admitted facts brought on record by the A.O. reproduced in the impugned order that the donee as compared to the donor was financially better placed, coupled with the fact as argued by the ld. D.R. that the factum of close relationship existed in the case of his immediate family also namely his wife and children who had never been given any gifts. In this background making a gift to his financially more well off brother more so without any reason or occasion especially brought out in the Remand Report by the A.O. has been left unaddressed by the CIT (A). Accordingly, it is seen that the CIT (A) has been in undue haste to rely merely on the factum of donor being an assessee and identifiable as a brother of the donee in regard to gift through banking channel, ignoring the other facts brought out in the Assessment Order so as to address the issu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee about the nature and source of sums found credited in the books is not satisfactory, there is prima facie, evidence against the assessee in regard to the receipt of money. The burden is on the assessee to rebut the same and if he fails to rebut it, it can be held against the assessee that it was a receipt of an income nature. Their Lordships while examining foreign gift made by the instruments issued by foreign banks and creditor to the respective accounts of the assessee have held the burden is on the assessee to take that the plea that even if the explanation is not acceptable the material and attending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature. In the facts of the present case the assessee has agreed having received gift of the stated amount and the only evidence which was placed in its favour is factum of gift accepted by the donor having been made through the banking channels and the identity of the donor as income tax assessee. However, the fact that whether at the relevant point of time he actually had the stated amounts available with him from the stated sources in the relevant bank ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s Prakashwanti Palace engaged in the construction work. He is also a builder. Return of income was filed declaring a total income of Rs. 9,65,913/-. The case was selected for scrutiny and the notices Under Section 143(2)/142(1) were issued from time to time. In the pre-assessment notice, the assessee was asked to furnish the following information: (i) Confirmed copy of a/c of parties with complete mailing address to whom sales/purchases have been made exceeding Rs. 50,000/-. (ii) Details of opening and closing stock and basis of valuation of work in progress of raw material consumed and work completed. The assessee was required to produce the stock register. (iii) Bills in respect of material purchased and in respect of expenses made during the relevant previous year. (iv) Name and mailing address of parties from whom material purchased exceeding Rs. 20,000/-. (v) A sum of Rs. 24,222/- has been paid to ADA as development fee. Complete details of property, sanctioned plan by ADA with map and mention upto what stage the construction was completed during the relevant previous year. (vi) Confirmed copy of a/c in the case of sundry ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tails and accepted the cash credit in the name of Ashok Kumar Maheshwari. Accordingly, the addition of Rs. 3 lakhs stood deleted by the learned CIT (A). As regards Rs. 11 lakhs, the learned CIT (A) opined that the depositor appeared before the AO during the remand proceedings and also satisfactorily explained the source of those credits given to the assessee. The assessee claimed that the loan was given out of Rs. 29 lakhs received on the sale of plot. The learned CIT (A) was of the view that the assessee had satisfactorily explained the sources of the credits of Rs. 11 lakhs and he deleted the addition. 6. Copy of the capital account was examined by the AO wherein it was found that the assessee had shown Rs. 6,65,000/- as gifts taken on two different dates from Shri Ved Prakash Kapoor. Another sum of Rs. 10 lakhs was also claimed to be gift in the name of Master Romit Kapoor from Shri Sanjay Kumar Dagar. The assessee was asked to furnish the confirmation of gifts which was furnished and he was asked to prove the genuineness and creditworthiness of the donors with supporting evidence. The assessee was asked to produce Shri Ved Prakash Kapoor and Shri Sanjay Kumar Dagar. As the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of unverifiable construction expenses without properly appreciating the facts of the case. 2. That the learned Commissioner of Income-tax (Appeals)-II, Agra is not justified in accepting the entire construction expenses of Rs. 13,85,522/- without appreciating the fact that the assessee has never produced the supporting evidence in respect of construction expenses either during assessment proceedings or during appellate proceedings. 3. That the learned Commissioner of Income-tax (Appeals)-II, Agra has erred in law and on facts of the case in deleting the addition of Rs. 11 lakhs made under Section 68 on account of unexplained deposits in the name of M/s Maheshwari Electronics (Prop. M/s Radhey Lal Maheshwari) without properly appreciating the facts of the case. 4. That while deleting the addition of Rs. 11 lakhs learned Commissioner of Income-tax (Appeals)-II, Agra has totally ignored the facts that the depositor Sh. Radhey Lal failed to justify cash deposits in his cash book, consequently the assessee failed to justify the genuineness of the transactions and creditworthiness of the depositors. 5. That the learned Commissioner of Income-tax (Appea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Counsel for the assessee, on the other hand, strongly justified the order of the learned AM and relied upon the discussions made in the order of the learned CIT (A) as well as the order of the learned AM. 13. I have carefully gone through the entire records including the rival contentions and I am of the opinion that the order of the learned AM requires to be sustained. After all, there is no justification for disallowing 50% of the expenses that are debited to the construction business expenses. The learned CIT (A) has come to a correct conclusion that the profit rate of 12% declared by the assessee was quite reasonable. Even if the books were to be rejected Under Section 44AD , the assessee could have been assessed only at 8%. It is this reason which prompted the learned CIT (A) to delete the addition. The learned AM has appreciated the fact that the construction of the project under consideration was not complete during the year. In the immediately preceding year, a profit of 12% on sales made during the construction period has been accepted by the Revenue. It is these reasons which prompted the learned AM to uphold the order of the learned CIT (A) deleting the disallowance....
X X X X Extracts X X X X
X X X X Extracts X X X X
....I, accordingly, concur with the findings of the learned AM. 16. As regards the next issue, it was argued by the learned DR that the view of the learned JM should be upheld. Having regard to the fact that merely because the transactions are routed through bank channel, it does not mean that the transactions deserve to be accepted as held by Hon'ble Delhi High Court in the case of Sajan Dass and Sons v. CIT - 264 ITR 435. The learned Counsel for the assessee, on the other hand, strongly supported the findings of the learned AM in the light of the discussions contained in the order of the learned CIT(A). 17. I have carefully gone through the records and contentions taken by both the parties in respect of the issue in dispute. In my view, the addition of gift received from Shri Ved Prakash Kapoor cannot be made. Gifts have been received by the assessee from the person who is assessee's real brother. The gifts have been received by cheque, the donor is assessed to tax and he has sufficient creditworthiness to give the gift to the extent given. Admittedly, the gifts have been given by the donor out of the rent and securities received from the tenant. Shri Ved Prakash Kapoor....