TaxTMI 
TaxTMI 
2025 (4) TMI 1202
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....er Chapter-XIV were initiated for AYs 1999-2000 to 2004-05 separately. For the impugned assessment year, i.e. AY 2005-06, the case was taken up for scrutiny assessment by issuing notice u/s 143(2) of the Act, and thereafter assessment was framed making addition on various counts; part of which were deleted by ld. CIT(A). Aggrieved by the order of the ld. CIT(A), both the assessee and Revenue have come up in appeal before us. 3. At the outset itself, it was pointed out that several issues raised in both the assessee's appeal and the Department's appeal stand covered by the order of the ITAT in the case of the assessee itself for AY 2004-05, passed in ITA Nos. 2149 and 2408/Ahd/2008 dated 06.10.2023, and also by the order of the ITAT in the case of the assessee for AYs 2001-02 to 2003-04, passed in ITA Nos. 2406/Ahd/2008 and others vide order dated 09.10.2022. Copies of both the orders were placed before us. Taking cognizance of the same, we shall now proceed to adjudicate the present appeals before us. 4. We shall first deal with the Revenue's appeal in ITA No. 2548/Ahd/2008. 5. Ground No.1 raised by the Revenue reads as under:- "1. The CIT(A) has erred in law and ....
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....to be admitted, in the interest of justice, considering the difficulties faced by the assessee in producing the additional evidences relating to the cash creditors, capital introduced in the various partnership concerns and the period to which they related i.e. 7 assessment years which were very voluminous evidences requiring considerable time for collection. The ITAT also took note of the fact that the ld. CIT(A) has sought report of the Assessing Officer also on the additional evidences; therefore, found no infirmity in the order of the ld. CIT(A) admitting the additional evidences. 5.5 The ld. DR was unable to point out any distinction in facts from the order of the ITAT in Assessment Year 2004-05 .The issue raised in Ground No. 1 of the Revenue therefore stands covered by the order of the ITAT in AY 2004- 05, following which we uphold the order of the ld. CIT(A) admitting the additional evidences . Ground No.1 raised by the Revenue is dismissed. 6. Ground No.2 raised by the Revenue reads as under:- "2 The CIT(A)has erred in law and on facts in deleting the addition of Rs.4,67,78,446/- and Rs.3,28,02,305/- made under Section 68 of the Act on account of unexplained....
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....; Rs. 37,21,272/- ---------------------- Total : Rs. 4,67,78,446/- ----------------------" And, unexplained credits relating to deposits accepted allegedly from various parties in the various proprietorship concerns of the assessee listed above amounting in all to Rs.3,28,02,305/-. The list of the depositors in the various proprietorship concerns of the assessee so treated as unexplained in terms of Section 68 of the Act by the Assessing Officer is reproduced at page No.10 of the assessment order; thus, resulting in a total addition of Rs.7,95,80,751/- u/s 68 of the Act, which was deleted in entirety by the ld. CIT(A). 6.2 At the outset itself, ld. Counsel for the assessee pointed out that identical issue came up before the ITAT in assessee's appeal for AY 2004-05, wherein the ITAT upheld the order of the ld. CIT(A) deleting the entire additions so made. Our attention was drawn to paragraph Nos. 19-26 of the order in this regard. 6.3 We have gone through the order of the ITAT, as pointed out by the ld. Counsel for the assessee before us, and we have noted that in the AY 2004-05 also the issue of deletion o....
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....s filed by the assessee in this regard, and after appreciating the same and seeking a report from the Assessing Officer on the same in which no infirmity was pointed out by the Assessing Officer, he deleted the additions made. 6.5 In the present case also, we find from the order of the ld. CIT(A) that he admitted the additional evidences filed by the assessee relating to the source of capital and cash credits in the proprietorship concerns of the assessee, listing all documents filed by the assessee in each case at page Nos. 10 - 13 of its order in a tabular form. All the evidences were confronted to the Assessing Officer who, ld. CIT(A) noted, did not dispute the veracity or the authenticity of the evidence, and therefore on a holistic consideration of the issue, the ld. CIT(A) deleted the addition made u/s 68 of the Act. We have noted that the facts and circumstances relating to the impugned addition are identical to that in AY 2004-05 in the case of the assessee. 6.6 The ld. DR has been unable to point out any distinction in facts or even on law on this aspect before us. We, therefore, concur with the ld. Counsel for the assessee that the issue stands squarely covered by t....
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....aid servants of 469.6 gms, valued at Rs.2,57,824/-, was treated as unexplained in the absence of any substantiation of the same. For the balance jewellery found at residence, the explanation of the assessee was accepted by the Assessing Officer. 7.2 The ld. CIT(A), however, treated 1150 gms of jewellery acceptable out of the total jewellery found with the assessee of 2477 gms (1141 gms+ 1336gms), in terms of Board's instruction No. 1916 dated 11.05.1994 attributing 500 gms to wife, 100 gms to assessee and 250 gms for unmarried daughter and 100 gms each to two minors of the assessee. He also treated 496 gms of jewellery explained as belonging to the maids, dismissing the contradiction in the statement of the wife and the assessee as not being unusual since the husband, he found, was usually not aware and updated with the ever-changing status of the wife's jewellery and her habit of safekeeping jewellery of others. As for the jewellery found in locker, he held that only 866.9 gms remained unexplained (2477gms -1150gms-496gms). This jewellery valued at Rs.5,99,531/- was treated by the ld. CIT(A) as unexplained finding merit in the findings of the Assessing Officer that the evidence....
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.... the assessee and his spouse, with the assessee attributing the jewellery belonging to the family and his spouse attributing it to maid servants. The ld. CIT(A) has found this contradictory stand to be not unusual, noting that husbands are generally unaware of the status of the jewellery available with the wives and about their habits of safekeeping jewellery of others. The ld. CIT(A) has found the explanation to be plausible. We do not find any infirmity in this finding of the ld. CIT(A). We agree with the Ld.CIT(A) that it is not unusual for the ladies of the house to be generally aware of the status of the jewellery and being in the habit of safe keeping the jewellery of others and the men being generally unaware in respect of these matters. Also pertinent is the fact noted by the Ld.CIT(A) that the spouse of the assessee identified all the items of the jewellery belonging to the maid servants even at the time of search, which was indicated from the relevant panchnama. In view of the same, we see no reason to interfere in the order of the ld. CIT(A) treating the jewellery of 496 gms, valued at Rs.2.57 lakhs, as duly explained. The order of the ld. CIT(A) deleting the addition, t....
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....lt with at paragraph Nos. 27-35 of the order. The relevant portion of the order was pointed out to us wherein the ITAT had noted the fact of sufficiency of own funds for making the impugned advance and the proposition of law settled in this regard that no disallowance is called for where sufficient own interest free funds are available for making interest free advances, as laid down by the Hon'ble Apex Court in the case of CIT Vs. Reliance Industries Ltd., 410 ITR 466 (SC). 8.5 The ld. DR was unable to distinguish the decision of the ITAT in AY 2004-05 - both the facts and on law. In view of the same, we concur with the ld. Counsel for the assessee that the issue stands squarely covered by the order of the ITAT in the assessee's own case for AY 2004-05, following which we hold that the disallowance made by the Assessing Officer of interest expenses amounting to Rs.4,48,988/- has been rightly deleted by the ld. CIT(A) after appreciating all evidences filed by the assessee. Ground No.4 raised by the Revenue is thus dismissed. 9. Ground No. 5 raised by the Revenue reads as under:- "5. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 19,86,805/....
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....ee no infirmity in the order of the ld.CIT(A) and concur with him that the AO misread and misinterpreted the facts and figures noted in the Trading and P&L account. As explained by the assessee, the Trading and Profit & Loss account reflected expenses incurred by the AO in its construction business, which resulted in completed stock as well as in-completed stock of building, the in-completed stock being reflected as WIP; the completed stock either sold and reflected as sales and remaining unsold reflected as stock, in its trading account. There is no anomaly absolutely in its facts and figures, and there was no reason absolutely for the AO to hold that the entire expenses incurred on construction needed to be reflected as WIP. The addition made, therefore, on account of undervaluation of the WIP, has been correctly held by the ld.CIT(A) to be entirely baseless, and has been rightly deleted by the ld.CIT(A). Further, we agree with the ld.CIT(A) that despite going through the entire books of the accounts of the assessee, not a single anomaly was noted by the AO vis-à-vis purchases, expenses and even figure of sales and stock reflected by the assessee. There was no reason absol....
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....ccounts and documents were found which were inventorised as Annexure-B and certified copies of items Annexure B-12, B-13, B-16 and B-42 were taken by survey team. The assessee was asked to explain incorporation of the transactions noted in these impounded documents in the books of accounts and to reconcile them with the books. The assessee submitted that these papers related to booking money received from the members of the scheme Sahjanand Avenue which was organized and developed by Sahjanand Enterprise. The assessee contended that all transactions noted therein were recorded in the regular books of accounts and demonstrated the same with few illustration to the Assessing Officer. The Assessing Officer, however, on closer scrutiny of the copies of accounts noted that all the transactions were not recorded in the books of the assessee. He scrutinized the copies of accounts of the different purchasers with the details of amounts received from them in the documents so noted and found that the assessee had suppressed sales to the extent of Rs.2,08,11,956/-. Annexure-B to the assessment order is the working of the suppression of sales so worked out by the Assessing Officer. The Assessi....
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....hese amounts have been incorporated in subsequent assessment years and to don't constitute suppressed receipts as assumed by the A.O. 16.1 In pages 1 to 9 of the paper book filed for AY 2005-06 the appellant has given details of the block (flat No.) member, amounts received from the member between A.Y. 2004-05 to J.K. 2005-07, the balance due, if any. Invariably the amount(s) received from the member(s) is much more than the amount considered by the A.O. as suppressed receipts from the corresponding member(s). Thus the receipts as per books of account, from a member during the period relevant to A.Y. 2004-05 to 2006-07 was more than the amount considered by the A.O and so the question of suppression didn't arise. The A.O has not been able to make out a case of premium/on money payment by members also. Thus the receipts considered as suppressed, are already incorporated in the disclosed overall receipts. The addition made by the A.O. is therefore not sustainable and is deleted." 10.3 Before us, ld. DR relied on the order of the Assessing Officer while the ld. Counsel for the assessee has relied upon the order of the ld. CIT(A). 10.4 We have heard the contentio....
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....y noted that the total transactions during the year with Shri Vikas Shah come to the tune of Rs.84,50,000/- for which no explanation was given by the assessee, and accordingly added the same to the income of the assessee. 11.2 The ld. CIT(A) deleted the addition noting that the Assessing Officer has made these additions based on statement of Shri Vikas Shah and documents found from him which were never confronted to the assessee, that the Assessing Officer had relied on the unconfronted/unvalidated statement of Shri Vikas Shah and partly on the statement of the office bearers and authorized signatory of the two societies which were also not confronted to the assessee. He also noted that apart from the documents seized from Shri Vikas Shah, no related documents found during search. The ld. CIT(A) also noted that Shri Vikas Shah, in its explanation, had admitted that he had camouflaged his own receipts by using the name of 'Amrish Kaka'. That his credibility was not reliable. The ld. CIT(A) also noted the documents did not contain the name of the assessee and even the initials in the documents had no nexus with the assessee's name or even nick-name. He accordingly held that the ad....
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.... Rs.77,02,238-. The AO took the cost of construction, as determined by the DVO and taking this as the basis for 31.3.2004, he determined the cost of construction as at the end of each preceding year, and in the same ratio. Accordingly, the cost of construction as per the valuation report as on 31.3.2004 for the impugned year i.e. Asst.Year 2004-05 was taken at Rs.4,17,830/-, and noting the cost of construction disclosed by the assessee for the year at Rs.1,85,894/-; the difference of Rs.2,31,936/- was added to the income of the assessee as unexplained investment in the residential house during the year. Similarly, in respect of investment made in Hotel Neelkanth, the DVO determined the cost of construction as on 31.3.2004 at Rs.28,49,084/- while the assessee showed cost of construction of Rs.4,82,349/-. The difference in the cost of construction of Rs.23,66,735/- was treated as undisclosed investment in this property in the absence of any information furnished by the assessee to justify its cost of construction in the property. 9. The ld.CIT(A) reduced the addition on account of unexplained investment in the residential house from Rs.2,31,936/- to Rs.2,00,599/- allowing ad....
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....n law, since it was based on reference made to the DVO, which was illegal and not in accordance with law. In view of our above discussion, ground no.3 raised by the assessee is allowed." 12.2 The ld. DR was unable to distinguish the decision of the ITAT in AY 2004-05. In view of the same, we concur with the ld. Counsel for the assessee that the issue stands squarely covered by the order of the ITAT in the assessee's own case for AY 2004-05, following which we uphold the order of the ld. CIT(A) restricting the addition of Rs.17,23,126/- to Rs.14,90,312/- and Rs.8,44,032/- to Rs.5,61,655/- in respect of unexplained investment in Swaminarayan Residence and Hotel Nilkanth respectively. Accordingly, ground No.8 raised by the Revenue is dismissed. Ground No.8 raised by the Revenue is dismissed. 13. Ground No. 9 raised by the Revenue reads as under:- "9. The CIT(A) has erred in law and on facts in deleting the addition of Rs.76,139/- made on the basis of a seized document paper no.50 of Annexure A-7 without considering the entries on the document as well as the findings of the Assessing Officer. 13.1 Ground No. 9 raises the issue of deletion of addition by the ld. CIT....
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....o. Hence addition made was frivolous. On careful consideration and perusal of the confirmation, it is seen that the appellant had discharged the primary onus and the explanation given was not disproved by the A.O. Shri Jasubhai was a resident of USA, since 27 years and got his house at Tapan Society renovated and submitted the details for verification of contractors rate in these facts, the addition made was not sustainable and is deleted." 13.3 The ld. DR, before us, was unable to controvert the factual finding of the ld. CIT(A) that the notings in the document pertained to Tapan Society with which the assessee had nothing to do in any manner, nor the findings of the ld. CIT(A) that that there was no entry in the document to suggest the involvement of the assessee. It is only that the document was found at his office when searched. Further, the ld. DR has been unable to controvert the fact noted by the ld. CIT(A) that the confirmation filed by Jasubhai who acknowledged the document as pertaining to him for work carried out in his flat by his society and having nothing to do with the assessee, was not refuted by the Assessing Officer in the remand report. In view of the....
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....T(A) during appellate proceedings which were confronted to the Assessing Officer for his report on the same and the Assessing Officer did not dispute the same. The ld. CIT(A) noted that the association had clarified in the confirmation that the amount of Rs.11.11 lakhs had been collected from its members for registration and the balance Rs.4,15,455/- was kept to made future maintenance expenses. Considering the same, the ld. CIT(A) deleted the addition of Rs.4,15,455/-. His findings in this regard are at paragraph No. 25(b) of his order as under:- "25 (b) In respect of the addition of Rs.4,15,455/- on basis of document 99/Annexure A-7, it was argued that the entries therein pertained to the members of New Neelkanth Non Trading Association and then confirmation was being obtained. The A.O. however, didn't wait for it nor did he directly enquire from this NTC. It was for the A.O. to disprove the explanation giver. which he didn't do but acted on a conjecture. The confirmation has now been filed as additional evidence and has not been disputed by the A. O in his remand report. It has been clarified by the NTC that the amount of Rs.11.11 lakh was collected from members....
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....No. A-201 was mentioned in the document itself, but the Assessing Officer made no effort to confirm from the flat owner about the nature of the document whether it was an estimate or a bill. Considering all of the above, he deleted the addition made of Rs.1,14,298/-. His findings in this regard are at paragraph No. 25(d) of his order as under:- "25 (d) In respect of the addition of Rs.1.14.298/- on basis of page 158/Annexure X-2, it was pointed out that the citation given by the A.O. doesn't exist. Further the A.O. didn't act on the request to confirm facts directly from the member that it was only an estimate. If the explanation was doubted the A.O could have examined the member at the time of assessment/furnishing remand report. Even alternatively, it was incorporated in the receipts of Rs. 13.04 lakhs shown in concern M/s.Ghanshyam Builders in A.Y. 2005-06. On careful consideration of the details/contentions, it is seen that addition of Rs.3,54,273/- has already been sustained apart from the disclosed receipts. The explanation has not been disproved by the A. O. and in such a scenario, the suspicion of the A.O. of the prevailing practice of writing '....
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....ly added Rs.1.5 lakhs to the income of the assessee. 16.2 Ld. CIT(A) agreed with the Assessing Officer that the document was not a dumb document and had been rightly interpreted by the Assessing Officer as representing transactions in cheque and cash against entries of "50" noted in the document. He further found that the entry against which "CHQ" was noted was accounted for in the books of the assessee for Rs.50,000/-. Therefore, he agreed with the Assessing Officer that the other two entries of "50" also represented Rs.50,000/-. The ld. CIT(A) accordingly deleted the entry pertaining to cheque, which was found accounted for in the books of the assessee; while the entries alleged to be pertaining to cash were confirmed by him. The Revenue is aggrieved by the deletion of entries of Rs.50,000/- by the ld. CIT(A). 16.3 Before us, the ld. DR was unable to controvert the factual finding of the ld. CIT(A) that the entry of Rs.50,000/- in cheque was found accounted for in the books of the assessee. We see no reason, therefore, to interfere in the order of the ld. CIT(A) deleting the addition of Rs.50,000/-. The ground of appeal No. 12 of the Revenue's appeal is thus dismissed. G....
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....his order were clarified by the appellant as under: "From the perusal of the copy of account of Unique Enterprise the A.O observed that there was no single payment of Rs. 75000 to Unique Enterprise. The A.O. himself has mentioned that there is one payment of Rs.25000 & six payments of Rs.50000/-. However, the A.O. has lost sight of the fact that payment of Rs.25000 & Rs.50000 total Rs. 75000/-. As regards the Ashok Chantarwala, prop. Of Meghani Corporation the A.O. has stated that there is not a single payment of Rs.20 lacs nor can various payments be reconciled to Rs 20.00 lacs and hence the explanation of the appellant cannot be accepted. Now from the copy of account so furnished can be seen that the payments upto the date of search is about Rs.19.56 lacs which is more or less in agreement with the amount of Rs 20.00 lacs as stated in the loose paper. As regards the payment of Rs.1.00 lac to Akirma the A.O. has observed that the payment in question has been made subsequent to search and hence not acceptable. From the copy of account of account so furnished the advance payment was Rs.92700 and new bill was raised against the appellant of Rs.1.98 lacs. Thus, there was an o....
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....his ground is with respect to the deletion of addition of Rs.60 lakhs made by the Assessing Officer on the basis of the document, page 36 of Annexure-A1, seized from the residence of the assessee. The assessment order reveals that the Assessing Officer noticed from the said document that it pertained to cash payment received on different dates noted therein. The total amount of receipt, as per the Assessing Officer, worked out to Rs.63 lakhs. When the assessee was asked to explain the said document and its accounting treatment given in its books, the assessee contended that the document was primarily a rough note of the receipts of the flats booked by different concerns of the assessee and they were all duly entered in the books of accounts. To corroborate this assertion, copies of accounts of such parties were enclosed. It was also pointed out that the entries totaling to Rs.33 lakhs had been incorrectly totalled by the Assessing Officer as Rs.38 lakhs. Further, it was pointed out that for the entry of Rs.25 lakhs, no date, name or narration was written, and therefore was dumb entries. For the other entries, the assessee contended that they were all correlated with the books of ac....
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....oks of account. Copies of account of the members of the scheme(s) of these concerns, namely Pushpaben, Kusumben, Geetanjali, Bhajansingh, Meenaben, Pradeep Sanghví, were also enclosed with the reply. la para (in) on page 4 of this reply dated 12/12/2006, (copy of letter filed with paper bock for A.Y. 2005-06) the individual entries in the impugned document(s) were reconciled with corresponding entries in relevant books of account. These receipts totaled Rs.33 lakhs and not Rs.38 lakhs erroneously taken by the A.O. The other entry of Rs.25 lakhs was a dumb figure against which no name/scheme/narration was noted. In fact, this entry was solitary, stand alone entry which possibly represented a proposed expenditure, requirement, etc. The A.C. has rejected the explanation/evidence filed by simply stating that the dates on which amounts are credited are post search date(s) i.e. after 9/2/2005. The A.O., has without any basis, presumed that the receipts were received before search. In fact, the copy of account reveal the following situation. Sr. No. Name of member Name of firm Amount Remarks 1 Pushpaben Patel Sahjanand Enterprises 550000 An amount of R....
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....es of the aforementioned concern(s) were entitled to deduction u/s.80IA/80IB of the Act and it would defy logic to conceal such receipts. The appellant would therefore have no motive to conceal these receipts. In case the addition(s) were still to be sustained then corresponding relief u/s 80IA/80IB was also to be provided. Decisions reported in 140 Taxman 81(Del), 77 ITD 522 (Pune), 67 TTJ 602(CHD), 81 Taxman 164, were cited in support of this contention." 18.3 The findings of the ld. CIT(A) deleting the addition are at paragraph No.26.4 of his order as under:- "25.4. The contentions/details on record/reply of appellant dated 12/12/2006 etc. were carefully perused. It is seen that the appellant had offered credible explanation in respect of the entries in the impugned document and had furnished relevant evidence in form of copies of account. The A.O has not made out a case that these receipts were over and above the agreed consideration and/or constituted undisclosed premium. The details filed during the assessment proceeding/additional evidence has not been examined / rebutted / disproved in either the assessment order or the remand report dated 23/4/2008, which is du....
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....was asked to explain the contents of the same, in response to which he stated that the document was a register maintained by employees as rough notings; that the receipts of April 2004 and May 2004 noted by the Assessing Officer was incorrect and as per the document itself the figures came to be far less than that noted by the Assessing Officer. It was pointed out while the Assessing Officer had noted the document to reveal receipts of April 2004 at Rs.7,59,000/-, the correct amount as per the document was Rs.1,87,000/-. Similarly, while as per the Assessing Officer the document revealed receipts of Rs.105,610/- for May 2004, the correct amount was Rs.1,16,500/-. The assessee further pointed out that the receipts, as per his books, for these two months was higher than that recorded in the impugned document being Rs.1,54,020/- and Rs.1,53,357/- respectively for the month of April and May 20004. The AO, however, held that the assessee was only feigning ignorance about the correctness of the total in the document since the entries were quite legible and were segregated amount-wise or date-wise. The Assessing Officer admitted that the receipts shown in the books for February and March ....
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.... appeal is allowed." 19.3 The ld. DR was unable to controvert the factual findings of the ld. CIT(A) to the effect that the Assessing Officer had taken incorrect total depicted in the document pertaining to the month of April and May 2004 at Rs.7.59 lakhs and Rs.1.05 lakhs as opposed to the correct total of Rs.1.87 lakhs and Rs.1.16 lakhs respectively. In view of the same, we do not find any infirmity in the order of the ld. CIT(A) holding that the Assessing Officer, therefore, had proceeded on an incorrect premise that the assessee had suppressed receipts of hotel business for the month of April and May 2004; and therefore his rejection of books of accounts u/s 145(3) of the Act and estimation of income for the entire year was not tenable in law or even on facts. Even otherwise, the document revealed data only for two months pertaining to the impugned year i.e. April and May 2004, and even for the sake of argument,though it has been found to be incorrect by the ld. CIT(A), the figures noted in the seized document are taken to be correct, the Assessing Officer cannot resort to extrapolation of this data for the entire year in the absence of any material found during search perta....
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.....2 Before the ld. CIT(A), the assessee contended that all the documents had been seized from a third party of which the appellant was neither a shareholder nor a director. The proprietor of Shree Hari Builders, he pointed out, is not the assessee. He further contended that the Assessing Officer did not make any direct inquiries then and also did not provide adequate opportunity to the assessee to furnish the requisite details. Accordingly, the assessee furnished additional evidence by way of balance-sheet of Shree Hari Builders, copy of return of income, confirmation of Shri Rajubhai Vaghela - which were all confronted to the Assessing Officer who did not refute nor give any adverse findings with respect to the additional evidences filed. The ld. CIT(A) also noted that Shree Hari Builders had disclosed Rs.1.25 crores as receipts during the year as opposed to the amount attributed by the Assessing Officer to the project Neelkanth-II from the impounded document amounting to Rs.99.94 lakhs. Noting that Shree Hari Builders had accounted for more than the receipts noted in the impounded documents and considering the fact that Shree Hari Builders had disclosed all the amounts in its book....
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....e of the assessee on account of unexplained investment in various luxurious items found at the time of search in the residence of the assessee being 20 sofas, colour TV sets, 8-10 Air Conditioners, superior fixtures and fittings, imported fridges, steam chamber, screen projectors, etc. The Assessing Officer estimated the value for these items to be Rs.38,02,054/- and noting that the assessee had disclosed investment in furniture to the tune of Rs.13.02 lakhs, he accordingly made addition of the difference, amounting to Rs.25 lakhs, in the assessment order framed. The Assessing Officer, while dealing with the issue of jewellery found in the locker of the assessee which the assessee had explained as having purchased during the year from one Mahendra & Co. and paid out of withdrawals from his capital account, had held the evidences filed by the assessee in this regard being purchase bill of Mahendra & Co. to be bogus, and accordingly he treated the source of investment in jewellery to be unexplained and added the same to the income of the assessee. While doing so, he noted in his order that the withdrawals made from his capital account were surely not used for investment in jewellery,....
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.... appeal filed by the assessee i.e. ITA No. 2150/Ahd/2008. 24. The ground No.1 taken by the assessee reads as follows:- "1. The learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance made by the A.O. of Rs. 5835/ for the alleged excess depreciation claimed by the appellant." 24.1 The issue raised in above ground relates to disallowance of depreciation amounting to Rs.5835/- confirmed by the ld. CIT(A). The assessee had claimed depreciation @ 25% on electrical installation and fittings installed in hotel buildings, while the authorities below had held the applicable rate of depreciation on the same to be 15%. Accordingly, the excess claim of Rs.5,835/- has been denied to the assessee. 24.2 Before us, the contention of the ld. Counsel for the assessee was that the issue is squarely covered in favour of the assessee by the decision of the Hon'ble Jurisdictional High Court in the case of CIT Vs. Express Resorts & Hotels Ltd, reported in [2015] 56 taxmann.com 171 (Gujarat) - Copy of the same was placed before us. Referring to the same, it was pointed out that the Hon'ble High Court in the said case had categorically held that electrical in....
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....sed by the assessee was at Rs.32,541/- as against the cost of construction estimated by the DVO at Rs.8,76,573/- - i.e. a difference of Rs.8,44,032/- in the impugned year. As such, the total addition came to be Rs.25,67,156/- in respect of Swaminarayan Farm Residence and Hotel Neelkanth. The same was confirmed by the ld. CIT(A). 26.2 The ld. Counsel for the assessee pointed out that this issue came up for consideration before the ITAT in the preceding year, i.e. AY 2004-05 and was decided in favour of the assessee. Our attention was drawn to the order of the ITAT in ITA No. 2149/Ahd/2008 at paragraph Nos. 7-11 of the order as under:- "7. Taking up the said ground, the ld.counsel for the assessee contended that the issue/grievance of the assessee against order of the ld.CIT(A) was in relation to confirmation of addition made to the income of the assessee on account of unexplained investment in property, under section 69B of the Act, amounting to Rs.20,26,120/- . Drawing our attention to the facts of the case from page nos.27 to 31 of para-(d) of the assessment order, the ld.counsel for the assessee pointed out that the impugned addition related to investment in two prope....
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....l Neelkantha, similar deduction of 15% was allowed in the estimated cost of construction; thus reducing unexplained investment made during the impugned year from Rs.23,66,736/- to Rs.18,25,521/- . 10. The argument of the ld.counsel for the assessee before us was that determination of cost of construction was referred to the DVO by the AO without rejecting the books of accounts of the assessee, which he pointed out has been categorically held by the Hon'ble Apex Court in the case of Sargam Cinema, 328 ITR 513 (SC) to be not in accordance with law. He further pointed out that identical reference made in the case of Sanjay H. Thakkar, brother of the assessee, was deleted by the ITAT, finding the same to be based on an invalid reference to DVO, on the basis of the decision of the Hon'ble Apex Court in the case of Sargam Cinema (supra). This decision of the ITAT he pointed out was confirmed by the Hon'ble jurisdictional High Court also. Our attention was drawn to the order of the ITAT in the case of Sanjay H. Thakkar, in IT(SS)A.No.849/Ahd/2010 dated 18.1.2016 and judgment of the Hon'ble High Court confirming the finding of the ITAT in Tax Appeal No.832 of 2016 ....
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....5. The addition, therefore, is directed to be deleted. Ground No. 3 raised by the assessee is thus allowed. 27. Ground No. 4 raised by the assessee reads as under:- "4. The learned Commissioner of Income Tax (Appeals) has erred in confirming the addition to the extent of Rs.5,99,531/- for the alleged unaccounted investment in jewellery found from the locker belonging to Smt. Kanaklata U. Thakkar and Ramesh Sachdev and from residence." 27.1 The issue raised in above ground relates to addition made to the income of the assessee on account of investment in jewellery found from the locker and residence amounting to Rs.5,99,531/- held to be unexplained by the Assessing Officer and confirmed by the ld. CIT(A). 27.2 The facts relating to this issue have been brought out in Ground No.3 of the Revenue's appeal. For the sake of brevity and convenience, the facts are being restated here, being that 1336gms of jewellery valued at Rs.8,52,355/- was found in the locker of the assessee and 1441gms of jewellery valued at Rs.2,57,824/- was found at the residence of the assessee, which was treated as unexplained and added to the income of the assessee. The ld. CIT(A) gave the as....
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....rom unexplained sources. 28.2 The ld. CIT(A) restricted the same to Rs.7,67,000/-giving the benefit of telescoping from the admitted cash withdrawals of Rs.9.33 lacs made by the assessee which were found by the Assessing Officer to have been utilized for purchase of luxuries and personal items out of its books. Further, the ld. CIT(A) held that, on a holistic consideration, it would be justified to estimate the total expenditure on household items at Rs.30 lakhs and noting that the assessee had disclosed expenditure to the tune of Rs.13 lakhs, he estimated the unaccounted expenditure at Rs.17 lakhs and after giving the benefit of telescoping of Rs.9.33 lakhs, he treated the remaining amount of Rs.7.67 lakhs as unexplained expenditure in furniture and household items. His findings in this regard are at page No. 29.4 of the order as under:- "On perusal of the details/contentions of the A.O., it is apparent that the expenses disclosed by the appellant, at Rs. 13 lakhs were not adequate. There is no evidence that the disclosed household withdrawals were also to an extent which could justify these acquisition. On a holistic consideration, it would be justified to estimate th....
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.... of unexplained investment in these assets and the ld. CIT(A) has been fair enough in scaling down the valuation of the assets made by the Assessing Officer from Rs.38 lakhs to Rs.30 lakhs, and further giving the benefit of telescoping against the same. The ld. Counsel for the assessee was unable to point out any perversity in the valuation attributed by the ld. CIT(A) to these items at Rs.30 lakhs. Further the decision relied by the ld. Counsel for the assessee before us in the case of Balbir Singh Sekhon (supra), we find, is of no assistance since the findings of the ITAT of the said case was to the effect that where no reasons have been assigned to valuation of household expenses at higher amount, the addition is not sustainable. In the present case, however, there are valid reasons for making addition on account of unexplained investment. The articles found at the residence of the assessee being far more than that recorded in the books of the assessee. Therefore, in view of the above, the addition confirmed by the ld. CIT(A) to the tune of Rs.7.67 lakhs as undisclosed investment in valuables is, therefore, upheld. Ground of appeal No. 5 raised by the assessee is dismissed. ....
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....ons and we see no reason to interfere in the order of the ld. CIT(A) confirming the addition of Rs.1 lakh on the basis of page No.41 of Annexure A9 seized from the assessee. The ld. CIT(A) has analyzed the document and found the same to be corroborated with a cheque entry in the books of the assessee. He has noted that there were three figures of "50" written in the document against two of which "C" was written and against one "CHQ" was written. The name of one Shri Rasikbhai Patel was also found mention in the document. The ld. CIT(A) noted that the payment of Rs.50,000/- by cheque was accounted for in the books of the assessee and, therefore, he read the rest of the figures also as representing Rs.50,000/- and the code "C" was to be representing cash. The addition was confirmed to the extent of Rs.1 lakh accordingly treating the notings to be either receipts or payments - both unaccounted in the books of the assessee. The ld. Counsel for the assessee has been unable to controvert the above facts and findings of the ld. CIT(A) with any convincing argument. In view of the same, we uphold the order of the ld. CIT(A) confirming the addition of Rs.1 lakh made to the income of the asse....
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....isions cited/details on record were perused carefully. It is seen from the chart prepared by the A.O. (page 26 of his order) that the purchaser party and godown numbers purchased by them, amounts paid by them, were specified. The receipts from these parties as entered in regular books was also specified by the AO and difference in receipts as per impugned document and as recorded was computed. The appellant has not refuted the fact that the godowns were constructed/sold to the specified parties which also appear as its customers. The nexus is therefore clearly established. The analogy for other assessment years does not apply in view of the direct and immediate nexus to the admitted business activity of godown construction and sales to these persons. Thus there is no infirmity in the action of the AO in making the addition of the differential total amount. Further as no credible explanation has been offered, the addition of Rs.66,42,935 is sustained and confirmed. The related ground of appeal is therefore dismissed." 30.3 Before us, the ld. Counsel for the assessee was unable to controvert the factual finding of the ld. CIT(A) that the data found in the seized document page 28 o....