Income Tax Appellate Tribunal - Jabalpur
Assistant Commissioner Of Income Tax vs Karodilal Agrawal. (Karodilal Agrawal ... on 17 December, 1993
Equivalent citations: (1994)50TTJ(JAB)393
ORDER
M. A. BAKSHI, J. M. :
We find it convenient to dispose of these three appeals by the Revenue for the asst. yrs. 1984-85 to 1986-87 as one appeal of the assessee and cross objection of asst. yr. 1986-87 by this consolidated order.
2. Briefly stating the fact on 12th Dec., 1985, there was a search and seizure operation under S. 132 in the residential premises of the assessee. During the course of search a diary and some loose papers were founded and seized by the Department. Statements of the assessee were recorded by the authorised officer during the search operation and by the Asstt. Director of Investigation on subsequent dates. An addition of Rs. 6,38,398 was made by the Assessing officer for the asst. yr. 1986-87 on the basis of the seized dairy and the statements of Shri Karodilal. The learned CIT(A) found that, in this case, summary appraisal under S. 132(5) had been made by the same Assessing Officer, who made the assessment in this case. The contention on behalf of the assessee that at the time of making a summary appraisal, the authorised officer may proceed in a summary manner, but while making assessment, he is duty bound to consider and apprise all the the relevant material that is placed on record. Reliance has been placed on the decision of the Supreme Court in the case of Pooranmal vs. Director of Inspection & Ors. (1974) 93 ITR 505 (SC). It has further been observed by the CIT(A) that appeal against the order under S. 132(5) had not been decided by the CIT(A) under S. 132(1) before the completion of the assessment. It has further been observed that it was quite natural for the officer to stick to his finding in the order under S. 132(5). Learned CIT(A) has held that though Karodilal Agarwal had stated at the time of the search that the jottings in the diary represented moneylending business carried on behalf of his mother-in-law, his statements in the course of proceedings under S. 132(5) and assessment proceedings under S. 143(3) that the jottings in the diary represented the activities of Shri Parasram Gupta, in the joint family, should have been examined carefully. Learned CIT(A) has further observed that a sum of Rs. 4,21,548 had been found and seized from the residence of Shri parasram Gupta, whereas a sum of Rs. 38,766 only was found and seized from the residence of Shri Karodilal Agarwal. He has also referred to the close relationship between Shri Parasram Gupta and Shri Karodilal Agrawal as partners and friends and the fact that Shri Parasram Gupta was a blind man wholly dependent on Shri Karodilal Agarwal. Learned CIT(A) has further observed that the jottings in the diary neither represented the books of account nor any documents. Therefore, presumption under S. 132(4A) was not available to the Department. It has further been observed that as per the diary, the availability of cash and outstanding as on Diwali 1984 of Rs. 4,50,821 had to be given due weightage-the assessment year involved in this case being 1986-87. The outstanding amount of Rs. 40,000, which was receivable from Shri Harbhajan Phoolchand Vishwakarma had been included in the figure of Rs. 5.98 lakhs worked out by the Assessing Officer. The learned CIT(A) has further pointed out that if the jottings in the dairy would give the idea of moneylending of Shri Karodilal Agrawal, then cash should have been found at the place of Shri Karodilal. In fact, the cash of Rs. 38,766 only had been found at the place of Shri Karodilal, whereas a sum of Rs. 4,31,000 and odd had been found at the residence of Parasram Gupta family. In the case of Parasram Gupta, it has been held that the business of moneylending and sarafi was being carried on by HUF. As such the addition on account of jottings in the diary was held to be not sustainable in law. The addition of Rs. 6,38,398 made by the Assessing Officer in conformity with the order passed under S. 132(5) was accordingly deleted.
3. We have heard the rival contentions. In the connected appeals in the case of Parasram Gupta and Parasram Gupta HUF, we have confirmed the finding of the learned CIT(A) about the existence of HUF in the case of Parasram Gupta and the carrying on of business of pawning and sarafi by HUF. The cash found at the premises of Parasram Gupta family has been held to belong to the HUF. Considering the totality of the and circumstances of this case, we are satisfied with the reasoning and reasoning and findings of the learned CIT(A), that no addition on the basis of jottings in the diary could validly be made in the case of Karodilal Agarwal. We, therefore, confirm the findings of the CIT(A) relating to the deletion of addition of Rs. 6,38,398.
4. Similarly, the addition on account of interest of Rs. 61,944 on the basis of the addition of Rs. 6,38,398 has rightly been deleted by the learned CIT(A). This is consequential to the above ground. We, therefore, see no merit in the appeal of the Revenue in this regard.
5. The only other issue involved in this appeal is relating to the findings of the CIT(A) that 30 tolas of gold ornaments silver coins and articles and cash of Rs. 9,000 out of Rs. 38,766 found during the course of search belonged to Smt. Gulabrani. The Assessing Officer had made an addition of Rs. 37,766 out of the cash of Rs. 38,766 found at the time of search. Besides, addition of Rs. 61,200 had been made on account of unexplained investment in gold ornaments and another addition of Rs. 10,000 on account of silver. The learned CIT(A) has deleted the addition of Rs. 9,000 out of cash available by holding that the same was belonging to one Smt. Gulabrani. Similarly, addition on account of gold ornaments and silver has been deleted by accepting the explanation of the assessee that these belonged to Smt. Gulabrani.
6. The assessee had filed confirmatory letters and affidavit of Smt. Gulabrani claiming that 30 tolas of gold ornaments, some silver and cash of Rs. 9,000 belonged to her. Her statement had also been recorded by the Assessing Officer. The Assessing Officer by taking some answers in segregation from the statement of Smt. Gulabrani held that the claim by her was not in order. The learned CIT(A) has held that if the statement of Smt. Gulabrani is read as a whole, it becomes crystal clear that Smt. Gulabrani was the owner of the gold ornaments, silver ornaments, silver coins and cash of Rs. 9,000. The learned CIT(A) has pointed out that it would be a wild imagination to presume that an illiterate widow of 70 years old could come to the rescue of the appellant, when she had no relation with the assessee. It has further been observed that the Assessing Officer had examined the lady and she has answered all the questions in simplicity. It has accordingly been held that her claim regarding the ownership of ornaments and cash could not have been brushed aside.
7. We have heard the rival contention and agree with the reasoning and findings of the learned CIT(A) in this regard. On the one hand, there is evidence to support the claim made by the assessee; on the other hand, there is nothing, but suspicion. It is well established principle of law that suspicion how so far strong it may be, does not take the place of proof. On consideration of evidence on record, we are satisfied that the CIT(A) was justified to delete the addition of Rs. 61,200 on account of gold ornaments, Rs. 10,000 on account of silver and Rs. 9,000 on account of cash.
8. In the result the appeal of the Revenue is dismissed.
9. For the asst. yrs. 1984-85 and 1985-86, common ground involved is relating to deletion of addition of Rs. 1 lakh on account of unexplained investment in moneylending business and interest thereon at Rs. 30,000 for each year.
10. Addition of Rs. 1 lakh and Rs. 30,000 had been made for each year on the basis of findings in the asst. yr. 1986-87, which was based on the jottings in the diary found at the time of search. The CIT(A) has deleted the addition of Rs. 6,38,398 made for asst. yr. 1986-87. The addition on account of interest of Rs. 61,944 has also been deleted. We have confirmed his findings.
11. For asst. yrs. 1984-85 and 1985-86, the additions have also been deleted as a consequence of finding in asst. yr. 1986-87. We, therefore, see no merit in the appeals of the Revenue. The appeals are dismissed.
12. We now take up the appeal of the assessee.
13. The first ground of appeal is relating to the addition of Rs. 28,766, out of the cash found at the time of search. A sum of Rs. 38,766 had been found at the time of the search out of which addition of Rs. 37,766 had been added as income from undisclosed sources of the assessee. The CIT(A) has deleted an addition of Rs. 9,000 as belonging to one Smt. Gulabrani. The explanation of the assessee regarding the remaining amount that the same belonged to his wife has not been accepted. Since no evidence has been produced by the assessee to support the claim made before the Assessing Officer or before the appellate authorities regarding the source of income of the wife of the assessee, the addition in our view was rightly made. The addition Rs. 28,766 is accordingly confirmed.
14. The second ground of appeal is relating to the addition of Rs. 22,000 assessed as income from commission. The learned CIT(A) has not recorded any finding in regard to this addition. Similar addition had been made for the asst. yrs. 1984-85 and 1985-86. The learned CIT(A) vide para 6 of his order for those assessment years has restored the matter to the file of the Assessing Officer with the following directions :
"6. This ground of appeal in both the appeals is that there was no justification in adding the amount of Rs. 22,000 in each year on the basis of an alleged entry in the diary seized. There is no discussion in this matter in the assessment order. The learned counsel argued that the assessee was asked to explain the entry. I have already considered the diary while deciding the appeal for asst. yr. 1986-87. Certain personal entire by Shri Karodilal Agrawal cannot be ruled out completely. The learned Assessing Officer has not explained the nature of entry or narration of the entry. As such, this particular issue, in respect of both the appeals, is restored to the file of learned Assessing Officer for fresh determination. He will allow reasonable opportunity to the assessee. For statistical purposes, this ground is allowed for both the appeals."
15. Instead of remitting the issue to the file of the CIT(A), we consider it reasonable to remit this issue to the file of the Assessing Officer with the direction to follow the same directions issued by the CIT(A) for asst. yrs. 1984-85 and 1985-86 reproduced above for this year also and decide the issue afresh accordingly.
16. In the result the appeal of the assessee is partly allowed.
17. In the cross-objection of the assessee, the first and second grounds of appeal are similar as in the appeal of the assessee. We have decided these two grounds as above.
18. The only other ground is relating to the interest S. 215. It is claimed that interest charged is unjustified and uncalled for. We are not addressed on this ground of cross-objection. We have perused the orders and do not find any apparent infirmity in the levy of interest under S. 215. We, therefore, declined to interfere.
19. In the result, the appeals of the Revenue are dismissed, appeal of the assessee is partly allowed and cross-objection is partly allowed.