Income Tax Appellate Tribunal - Delhi
Amrish International,, vs Department Of Income Tax on 24 May, 2002
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : G: NEW DELHI
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER
AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
ITA No. 309/Del/2002
Assessment Year: 2006- 2007
ACIT Vs. Shri Prem Chand Goel,
Range-1, Moradabad. A-2, Lajpat Nagar, Moradabad.
(Appellant) (Respondent)
IT(SS)A No. 98/Del/2008
Block asstt. year : 1990-91 to 2000-2001
Shri Amrish Kumar Goel Vs. ACIT,
Late of Shri Prem Chand Goel, Range 1, Moradabad.
430, Civil Lines,
Moradabad,
Pin- 244001 (U.P)
(Appellant) (Respondent)
IT(SS)A No. 278/Del/2002
Block asstt. year : 1990-91 to 2000-01
DCIT, Range - II, vs. M/s. Amrish International,
Moradabad. Lajpat Nagar, Moradabad.
Appellant by : Shri Ramesh Chander, CIT DR
Respondent by : Shri Rajeev Saxena, Abhishak Verma,
Advocates
ORDER
PER I.C. SUDHIR, JUDICIAL MEMBER
2
ITA No. 309/Del/2002
ITA No. 98/Del/2008
& ITA No. 278/Del/2002
The revenue has questioned first appellate order on the following grounds :-
1. That the Ld. CIT(A) has erred in law and on the facts of the case in excluding the amounts of Rs. 18,000/- & Rs. 42,000/- from undisclosed income, which was added as undisclosed rental income.
2. That the Ld. CIT(A) has erred in law and on the facts of the case in excluding Rs. 1,02,000/- from undisclosed income, which was added as the investment not verifiable from balance sheet as on 31.3.1990.
3. That the Ld. CIT(A) has erred in law and on the facts of the case in deleting the addition of Rs. 5,24,080/-, which was made for payment of plot from out of books.
4. That the Ld. CIT(A) has erred in law and on the facts of the case in deleting the addition of Rs. 8,96,400/- made on account of undisclosed TDRs.
5. That the Ld. CIT(A) has failed to appreciate that the addition of Rs.
8,96,400/- was made on account of undisclosed TDRs being No. 202268 to 202272 while relief has been allowed on TDRs No. 202278 to 202282.
6. That the Ld. CIT(A) has erred in and on the facts of the case in deleting the addition of Rs. 89,733/- and Rs. 29,102/- which were made on account of undisclosed investment.
7. That the Ld. CIT(A) has erred in law and on the facts of the case in admitting the additional ground regarding chargeability of interest u/s 158BFA while the same ground of appeal was not admitted by the Ld. CIT(A) in the case of Amrish International vide his order No. 119 dated 24.5.2002 on the ground that this issue is not appealable wherein assessee is also a partners.
8. That the Ld. CIT(A) has erred in law and on the facts of the case in directing the AO to recalculate interest u/s 158BFA (1) after following the decision of Hon'ble M.P. Singh reported in 254 ITR 568. 3 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002
2. Heard and considered the arguments advanced by the parties and have gone through the orders of the authorities below as well as material available on record.
Ground No. 1
3. Relief of Rs. 18,000/- and Rs. 42,000/- by excluding the same from undisclosed income on account of rental income given by the Ld. CIT(A) has been questioned by the revenue. The AO had made addition of Rs. 18,000/- for the assessment year 1990-91 and Rs. 42,000/- for the assessment year 1991-92 on account of undisclosed income with this observation that the assessee had started filing of return of income from the assessment year 1992-93 onwards and that since no return of income was filed for the assessment years 1989-90, 1990-91, 1991-92 the computation of income furnished for these years for the block period is not acceptable.
4. In support of the ground Ld. DR has basically placed reliance on the assessment order, whereas the Ld. AR has tried to justify first appellate order in this regard.
5. Ld. DR pointed out that Ld. CIT(A) has deleted these additions accepting the plea made for set off for capital losses suffered in Financial Years 1989-90 and 1990-91 on sale of shares and land against this rental income and while doing so apart from relying on the provisions of section 71 has also drawn support from the decision of the Tribunal. He submitted 4 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 that for the years for which losses were claimed returns were not even filed and when it was so the claim for losses were not based on documents found during search and hence allowing set off against the income found during the search is not in accordance with provisions of law. The Ld. DR pointed out that while giving relief the Ld. CIT(A) has not even discussed the details of the decision of the Tribunal on which he has placed reliance.
6. Considering the above submissions we find that the AO had made additions in question with this finding that as per provision of section 71(3) the assessee is not entitled to set off losses against the income under the head 'capital gains' for the block return for the assessment years 1990-91 and 1991-92. The submission of the assessee before the Ld. CIT(A) remained that changes in section 71 of the Act made with effect from 1.4.1992 carries sufficient force and there is no case to agree with the view of the AO that the assessee was not entitled to have set off of losses against income under the head property income. Accepting this contention of the assessee the Ld. CIT(A) has held that the action of the AO in treating the rental income as income from undisclosed source is not maintainable. It was submitted that during the course of search at the premises of the assessee and his relatives and associates concern, several documents were seized, out of those documents page Nos. 3 & 4 of annexure A-4/I described the receipt of rent for the financial years 1989-90, 1990-91 and 1991-92 at Rs. 18,000/- and Rs. 24,000/- received and Rs. 18,000/- was to 5 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 be received. The further submission of the assessee remained that the assessee had several losses on sale of assets during the financial years 1989-90 and 1990-91 amounting to Rs. 52,450/- and Rs. 40,800/- on account of sale of flat and sale of shares, thus the total income computed according to the provisions of I.T. Act and after setting off the loss on sale of assets from the income from house property the income was much below the taxable limit. Hence the assessee was not required to file his return of income. It was also submitted that the provisions u/s 71(3) inserted w.e.f. 1.4.1992 was not applicable during the year. Reliance was also placed on the decision in the case of CIT vs. M.P. Ramchandra Nyer 241 ITR 832 (Kerala High Court). Accepting the above contention of the assessee the Ld. CIT(A) has deleted the addition of Rs. 18,000/- and Rs. 42,000/- in question.
7. Considering the above submission we do not find reason to interfere with the finding of the first appellate authority as there is no dispute that sub section (3) to section 71 of the I.T. Act was inserted w.e.f. 1.4.1992. Hence it was not applicable during the assessment years under consideration. Prior to insertion of the sub clause (3) the assessee was entitled to have such loss (on the sale of assets and shares) set off against the income. The decision in the case of CIT vs. M.P. Ramchandran Nyer (supra) also supports the case of the assessee wherein it was held that if the income for any previous year contains in the block period is below the 6 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 taxable limit it need not be included in the undisclosed income. The first appellate order in this regard is thus reasoned one. Hence it is upheld. Ground No. 1 is rejected.
Ground No. 2
8. The AO treated the investment in shares of Rs. 1,20,000/- as un explained investment in the assessment year 1990-91 which was questioned before the Ld. CIT(A). The Ld. CIT(A) being satisfied with the submission of the assessee has deleted the addition, which has been questioned before the Tribunal.
9. In support of the ground Ld. DR submitted that the page 3 of A-4 / 1 found during the course of search revealed investment in shares at Rs. 1,20,000/- in the name of Urmilla Goel, wife of the assessee, who was not assessed to tax. The assessee also failed to explain the availability of fund or the source of this investment, hence the AO was justified in making the addition. Before the Ld. CIT(A) the assessee changed the stand and came up with the explanation that this investment was out of withdrawal from the current account maintained with the firm Amrish International. Ld. CIT(A) without confronting the explanation with the AO, has deleted the addition. Ld. DR submitted further that it is not understandable as to why the sale proceedings were deposited in the saving bank account of the wife when the source of withdrawal was claimed out of the current account with the 7 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 firm. The date of withdrawal and the date of investment in shares was also not made available on record.
10. Ld. AR on the other hand tried to justify the first appellate order on the issue. He reiterated the submission made before the Ld. CIT(A). He submitted that the AO ignored this explanation of the assessee that investment was not made by Smt. Urmila Goel. The Ld CIT(A) verified the withdrawal from the firm Amrish International regularly assessed to tax and then sale proceedings of shares deposited in bank and has given the relief.
11. After having gone through the orders of the authorities below we find that the AO while making the addition as undisclosed investment has mentioned his observation from the balance sheet that neither there was withdrawal from capital account or from the personal capital account to ascertain the availability of the cash. The explanation of the assessee remained that the assessee had purchased shares of Varun Prakashan (P) Ltd. worth Rs. 1,02,000/- in the name of his wife Mrs. Urmila out of money withdrawn from his current account maintained with M/s. Amrish International who was regularly assessed to the income tax. These shares were later sold and the money received out of sale of these shares was deposited in the saving bank account of the assessee . It was further submitted that the details were given to the AO. The fact of the claimed drawing was verifiable from the accounts of M/s. Amrish International. Considering these material aspects of the issue, we are of the view that the 8 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 Ld. CIT(A) has rightly deleted the addition treating the same as disclosed. The same is upheld . Ground No. 2 is accordingly rejected. Ground No. 3
12. The AO treated the sum of Rs. 5,24,080/- as income from undisclosed sources on the basis of page No. 124 of A3/4 found during search. He concluded that the cost of the land purchased for construction of shop was Rs. 15,55,750/- whereas the purchase value mentioned in the deed was Rs. 5,84,353/- only plus stamp value of Rs. 94,249/-. The AO observed that extra payment of Rs. 4.60 lacs was made by Shri Amrish Kumar Goel out of books. From the detailed discussion made in the body of the order in the case of Shri Amrish Kumar Goel, he observed that on going through the entries in this account it was noticed that there was a debit of Rs. 4,50,000/- on 29.10.95 by cheque No. 407995. There was yet another entry of debit of Rs. 5 lac on 25.3.96 by cheque No. 407995 and also debit of Rs. 11,000/-.
13. The contention of the assessee against the action of the AO before the Ld. CIT(A) remained that the sale deed was a registered document and sale price as mentioned were paid by the assessee. There was no evidence to say that extra money was paid. In case the AO was not satisfied with the explanation of the assessee then she could have called the seller or have perused his account to ascertain the facts. Reliance was placed on the decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs. 9 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 Satinder Kumar 250 ITR 484 (P & H). Being satisfied with the submission the Ld. CIT(A) has deleted the addition.
14. In support of the ground Ld. DR has basically placed reliance on the assessment order. He submitted that the AO has made addition on the basis of analysis of page No. 108 to 121, 123 and 124 of annexure A-3/4 found and seized during the course of search. Page No. 123 clearly mentioned the total cost of plot of land to the assessee was Rs. 15,55,750/- whereas the sale deed showed it at Rs. 5,84,353/- + stamp at Rs. 94,249. Ld. CIT(A) while deleting the addition based on the sale of price mentioned in the sale / purchase deed has ignored page No. 123 relied by the AO. The Ld. DR submitted that Rs. 15,55,750/- was shown as cost at page 123 of the annexure. The Ld. CIT(A) was thus not justified to his finding purely on the basis of purchase / sale deed.
15. Ld. AR on the other hand tried to justify the order of the Ld. CIT(A). He reiterated the explanation made before the authorities below. He submitted that it was explained before the AO vide reply dated 7.8.2001 that the entries on the documents are working related to construction of shop on the land purchased by the assessee at Rampur Road, Moradabad and entered into a partnership firm in the name and style of M/s. Amrish International. Rs. 5,84,353/- was the price at which the land was purchased and Rs. 7 lacs was the expected cost of construction of the shop adding both the figures comes to Rs. 12,84,353/- which was the 10 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 expected cost of project for construction of shop. It was expected that all the shops can be sold for Rs. 15,55,750/- and when the expected cost of the project was deducted from the expected selling amount a profit of Rs. 2,71,397/- was expected out of whole transaction, which was round off to Rs. 2,72,000/-. Since the amount of expected profit was not that lucrative, that too without considering the expenses for registration of the sale deed at Rs. 5,020/- lawyer fees Rs. 3,000/- for obtaining income tax clearance certificates and other expenses, the planning was dropped and instead the firm was getting its factory premises constructed on this land.
16. The AO, without ascertaining the sale consideration from Shri Badrinath i.e the seller, has remained of the view that the land was purchased on an amount exceeding the sale consideration shown in the sale deed. Ld. CIT(A) was thus justified in deleting the addition with this finding that in absence of material evidence to contradict the sale consideration shown in the sale deed the AO was not justified to presume the sale value without ascertaining the fact from the seller etc.
17. On going through the orders of the authorities below we find that the AO has discussed the issue in detail at page Nos. 12 to 15 of the assessment order and has made the addition with this finding that Rs. 5,24,080/- must have been paid by the assessee from undisclosed sources. The very language of the assessment order suggests that this finding of the AO is based on assumption only. It is an established proposition of law that 11 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 for making addition u/s 69 B of the Act the onus lies on the revenue to establish that the source was undisclosed. There is no dispute that the AO was at liberty to ascertain the sale consideration from the seller Shri Badri , but he did not avail it and has made addition merely on the assumption that an amount to the tune of Rs. 5,10,000/- plus expenses of Rs. 14,080/- aggregating to Rs. 5,24,080/- must have been paid by the assessee from undisclosed sources. Under these facts and circumstances we are of the view that the Ld. CIT(A) has rightly deleted the addition with this finding that in absence of material evidence gathered by the AO to contradict the sale consideration shown in the registered sale deed there was no case to presume the sale value exceeding the sale consideration shown in the sale deed. The first appellate order in this regard is thus upheld. Ground No. 3 is accordingly rejected.
Ground No. 4
18. On the basis of page No. 120 of the computer print out showing 5STDRs of each valuing at Rs. 179280/- coming to Rs. 895400/- in total which was not shown by the assessee, the AO added Rs. 895400/- as undisclosed investment by the assessee. Being satisfied with the explanation of the assessee the Ld. CIT(A) has deleted the addition.
19. In support of the ground the Ld. DR submitted that during the course of search, the assessee was asked to furnish chart of FDRs / TDR. The assessee furnished a chart showing 14TDRs whereas page No. 120 of 12 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 the computer print showed 19 TDRs. In response to the letter of the assessee, the bank had also confirmed the existence of those 5TDRs. The Ld. CIT(A) has deleted the addition on the basis that the said TDRs were not belonged to the assessee. In this context the Ld. DR submitted that the Ld. CIT(A) while adjudicating the appeal has misdirected himself. The finding of the Ld. CIT(A) is erroneous because the AO did not make addition on account of TDRs Nos. 202278 to 202282. The addition made by the AO was on account of 5TDRs bearing Nos. 202268 to 202272. Thus the order of the Ld. CIT(A) is clearly contrary to the findings made by the AO.
20. Ld. AR on the other hand placed reliance on the first appellate order. He submitted that the AO did not notice that error was committed by the assessee in submitting the bearing numbers of FDRs / ITRs for which it cannot be punished. The numbers shown by the assessee belonged to others as noticed by the AO as well as SBI. The value of FDRs are correctly shown. He submitted that AO vide letter dated 3.5.2002 informed that as per certificate of SBI letter dated 2.5.1998, TDR bears nos. 202268 to 202272 dated 2.6.1998 and 202283 to 202291 dated 3.6.1998 of the face value of Rs. 1,79,082/- belonging to the assessee TDR Nos. 202278 to 202285 did not belong to assessee certified by the report and thus there was nothing as unexplained.
13ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002
21. We find that during the course of hearing of first appeal preferred by the assessee, the Ld. CIT(A) had asked comment of the AO on the above submission of the assessee. In compliance the AO vide his report dated 3.5.2002 had informed that TDR held by the assessee as per certificate by the State Bank of India (dated 2.5.2002) were bearing Nos. 202268 to 202272 dated 2.6.1998 and 202283 to 202291 dated 3.6.1998 of the face value (each) of Rs. 1,79,082/- belongs to the assessee. The assessee submitted that TDR bearing No. 202278 to 202285 did not belong to him. This fact was also certified by the report of the AO. It was submitted that TDR bearing Nos. 202278, 202279, 202280, 202281 and 202282 belong to Smt. Amla Gupta, Sakuntala, Smt. Komal and Vinod Kumar Gupta having amount of Rs. 11,593/-, Rs. 3446/- Rs. 4000/-, Rs. 12000/- and Rs. 11,131/-. Thus it was explained that there was no case to treat the value of these TDRs at Rs. 1,79,080/- as done by the AO. Keeping this fact in mind and that the bank has also certified only 35 STDR in the name of the assessee and TDR numbering 202278 to 202282 in the name of other persons, we are of the view that the Ld. CIT(A) was justified in coming to the conclusion that there remained nothing as unexplained and in the result in deleting the addition of Rs. 8,96,400/-. The same is upheld. Ground No. 4 is accordingly rejected.
Ground No. 5 14 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002
22. In this ground the additions of Rs. 89,733/- and Rs. 29,102/- made on account of unexplained investment in FDRs deleted by the Ld. CIT(A) has been questioned by the revenue.
23. In support of the ground the Ld. DR has basically placed reliance on the assessment order. He pointed out that the AO observed that the FDRs worth Rs. 89,733/- and Rs. 29,102/- were not included in the chart furnished in respect of the FDRs. Regarding the FDRs worth Rs. 89,733/- it was argued before the AO that these are owned by HUF and was made before the block period. But assessee failed to furnish evidence qua the creation of HUF or about the income of HUF. Similarly about the FDR of Rs. 29,102/-, the AO noticed that it was out of the original investment in FDR of Rs. 10,000/- made on 25.10.1991 in wife Urmila Goel 's name who was not having any independent source of income. The Ld. CIT(A) has deleted the addition on the basis that they were reflected in the bank account on various dates. Similar was the observation by the AO qua the other FDR of Rs. 29,102/-. The Ld. DR submitted that the relief given by the Ld. CIT(A) is without taking note of the submission as made before the AO. Simply because the transaction is out of bank account, was not right in saying that in such circumstances they do not become undisclosed despite that in the books of accounts they were not even recorded. The Ld. CIT(A) ought to have appreciated that before accepting the changed explanation comments of AO was called for.
15ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002
24. Ld. AR on the other hand placed reliance on the first appellate order. He submitted that initially investments of Rs.8,000/- in FDR was made on 23.9.1976 and of Rs. 5,000/- was made on 23.9.1981 which were renewed from time to time. He submitted that in support a copy of bank letter dated 14.9.1999 was filed to this effect that FDR of Rs. 5,000/- was made on account of 23.9.81 and later on renewed from time to time. Similarly the FDRs of Rs. 8,000/- was renewed from time to time. Since the initial investment in these FDRs is much prior to block period and the FDRs were duly recorded in the bank w.e.f 23.9.81 and 23.9.76. these cannot be treated as undisclosed income. It was submitted that the other FDR in the name of wife was also recorded in the bank account.
25. Considering the above submissions we find that there was substance in the explanation of the assessee hence considering the same the Ld. CIT(A) was justified in deleting the addition made by the AO on account of undisclosed income. The same is upheld. Ground No. 5 is accordingly rejected.
Ground No. 6
26. The revenue has questioned first appellate order on the ground that the Ld. CIT(A) was not justified in directing the AO to recalculate interest u/s 158BFA(1) in view of the decision in the case of Khemchand v. Deputy Commissioner of Income-tax [2002] 254 ITR 568 (MP).
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27. The contention of the Ld. DR that there was no plea from assessee's side that there was any delay in providing him the copies of the seized documents. The Ld. CIT(A) was thus not justified in directing the AO to calculate the interest if chargeable under the law without examining the averment of the assessee and without ascertaining the relevancy of the documents requested but not supplied by the department qua the filing of the return of income.
28. The Ld. AR on the other hand placed reliance on the first appellate order in this regard and on the decision cited before him. He submitted further that it is an established proposition of law that in case delay in supply of the relevant documents is not attributable to the assessee, the assessee cannot be penalized which payment of interest for the delayed period of supply of the document to enable the assessee to file return of income in compliance to the notice. Considering the above submission we find substance in the above argument of the assessee which is also supported by the cited decision in the case of Khemchand vs. DCIT (supra) we thus do not find the reason to interfere with the first appellate order in this regard as in the first appellate order, the Ld. CIT(A) has specifically mentioned that copies of all the material were not supplied to the assessee in the month of June, 1991. Hence the period of filing the return was extended up to the date of giving copies of seized material and interest if 17 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 any be charged w.e.f. June 2001. Under these circumstances and keeping in mind we are of the view that applying the ratio laid down by the Hon'ble High Court in the above cited case the Ld. CIT(A) has rightly remanded the matter back to the file of the AO to recalculate the interest if chargeable under the law as per the said decision of the Hon'ble High Court. The action of the Ld. CIT(A) in this regard is thus upheld. The ground No. 6 is accordingly rejected.
29. Consequently appeal is dismissed.
IT(SS) A No. 98/D/2008
30. The assessee has questioned first appellate order on the following grounds :-
1. That order of the learned C.l.T (Appeals), Bareilly confirming the addition of Rs. 34,600/- made by the Assessing Officer on account of unexplained investment a/c deposit is contrary to law and the facts of the case.
2. That order of the learned C.I.T (Appeals), Barei11y confirming the addition of Rs. 56,501/- made b the Assessing Officer on account of unexplained investment in immovable property is contrary to law and the facts of the case.
3. That order of the learned C.I.T (Appeals), Bareilly confirming the addition of Rs. 25,000/- made by the Assessing Officer on account of unexplained investment in immovable property is contrary to law and the facts of the case.
4. That order of the learned C.I.T (Appeals), Bareilly confirming the addition of Rs. 10,000/- made by the Assessing Officer on account of unexplained investment in immovable property is contrary to law and the facts of the case.18 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002
5. That order of the learned C.I.T (Appeals), Barei11y confirming the addition of Rs. 31,855/- made by the Assessing Officer on account of unexplained investment in jewellery is contrary to law and the facts of the case.
6. That order of the learned C.I.T (Appeals), Barei1ly confirming the addition of' Rs. 1,46,630/- made by the Assessing Officer on account of unexplained cash is contrary to law and the facts of the case.
31. Heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon.
Ground No. 1
32. In this ground the assessee has questioned addition of Rs. 34,600/- made on account of unexplained investment sustained by the Ld. CIT(A).
33. In support of the ground the Ld. AR submitted that the authorities below failed to appreciate the explanation of the assessee that the amount was received through draft in account No. 165 SBI Moradabad as a return of advance. He submitted that the amount was paid to one Shri Raj Pal against purchase of land for the assessment year 1987-88 but the deal did not mature and in consequence the amount was returned in the assessment year 1990-91.
34. The Ld. DR on the other hand tried to justify the orders of the authorities below with this submission that the assessee did not furnish any evidence in support of the above explanation hence the authorities below 19 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 were justified in making and sustaining the addition in question.
35. Having gone through the orders of the authorities below we do not find reason to interfere with the first appellate order as admittedly the onus was lying upon the assessee to establish the genuineness of its claim that the amount was received through draft was actually return of advance cancellation of the deal with Shri Raj Pal got entered into 1987-88 against the purchase of land. The first appellate order in this regard is thus upheld. Ground No. 2
36. The AO made addition of Rs. 56,501/- u/s 69C of the Act on account of unexplained investment in immovable property which has been sustained by the Ld. CIT(A).
37. In support of the ground Ld. AR submitted that the authorities below have failed to appreciate the explanation of the assessee furnished in this regard that three sale deeds were executed for the consideration of Rs. 1,13,000/- in the name of the father of the assessee, Rs. 83,000/- in favour of his wife and Rs. 48,000/- in favour of his son respectively. It was explained that Shri Amrish Goel (son) was separately assessed by the AO and no addition was made in his hands. Since the sale deed was in favour of Shri Amrish Goel the assessee was not required to explain.
38. The Ld. DR on the other hand placed reliance on the orders of the authorities below.
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39. On having gone through the orders of the authorities below we find that the AO has dealt with the issue as under in para No. 7.1 page 11 of the assessment order, reproduced hereunder :-
As per A/5 page 41 to 43, titled as "DAKHAL NAMA" entered into between S/Shri Sundar Singh, Rameshwar Singh and Prem Pal Singh S/O Shri Hodal Singh R/O VilI. Chaudharpur, Moradabad and the assessee on 21.9.90 in respect of land dealing measuring 0.14 dismal, 0.34 dismal, 7.60 dismal and 15.15 dismal aggregating 23.23 dismal( Khasra No. 888/10-, 889/A, 888/7 and 889 respectively) situated at Vill. Chaudharpur for a sum of Rs. 2,52,150/-. This 'Dakhal Nama' is co-related with A3/2, page no. 1 to 11 and page no. 17 to 22 containing two Registered Purchase Deed in respect of four lands under consideration. These two purchase deeds were ( registered before the SR, Moradabad on 26/10/1990 for a consideration of RS.1,11 ,900/-(80,000+ 31,900) and Rs.82,040/-
(65,000+ 17,040) and stamp value at Rs.2,19,675/- and Rs. 1,17,500/- respectively. From the facts it is evident that the actual cost of these plots are of Rs. 2,52,501/- as against sale proceed mentioned in the registered deed at Rs.1,93,940/-. On examination of assessment records it revealed that the assessee has shown these plot of lands at Rs.1,96,000/- in the balance sheet filed for the first time as on 31/3/95 and balance sheet filed during block assessment proceedings ,as on 31/3/1991. This fact was confronted to the authorised representative of the "assessee to explain this variation. No satisfactory reply has been offered except simply stated that the no extra cost has been paid. Since the documents recovered from the possession of the assessee, the onus goes on the shoulder of the assessee to prove it which he has failed to do so. Therefore, it is clearly established that the assessee has actually incurred RS.2,52,150/-. The extra amount paid to the tune of Rs.56,501/- is treated as expenses incurred from out of books and the same is treated as assessee's undisclosed income u/s 69C of the Income tax Act for assessment year 1991-1992.
40. When we consider the above finding of the AO upheld by the Ld. CIT(A) we are of the view that there is substance in the contention of the assessee that when Shri Amrish Goel was separately assessed by the AO 21 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 document relating to Shri Amrish Goel found during the course of search was to be explained by Shri Amrish Goel . We thus set aside the matter to the file of the AO to examine the contention of the assessee in this regard and decide the issue afresh after affording opportunity of being heard to the assessee. The ground is thus allowed for statistical purposes. Ground No. 3 & 4
41. The additions of Rs. 25,000/- and Rs. 10,000/- on account of unexplained investment in immovable property sustained by the Ld. CIT(A) has been questioned.
42. In support of the grounds, the Ld. AR submitted that the authorities below have failed to appreciate the explanation of the assessee that the advance of Rs. 25,000/- paid on 14.10.1994 to one Mohammad Hazi for land settled for Rs. 30,000/- but the deal was not maintained and the amount was received back on 27.10.1994. Advance of Rs. 10,000/- paid for the land settled for Rs. 1,50,000/- documents of which were found. The above advances were paid through firm M/s. Amrish International which was separately assessed by the AO. On cancellation of the deal the amount was returned and deposited. In support the assessee had furnished letter dated 7.8.2001.
43. Ld. DR on the other hand tried to justify the orders of the authorities below. He submitted that onus always lies upon the claimant to establish genuineness of its claim to which the assessee has thoroughly failed to. 22 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002
44. On going through the orders of the authorities below in this regard we find that the AO has dealt with the issue in para Nos. 7.2 and 7.3 at page Nos. 11 & 12 of the order and the Ld. CIT(A) has simply upheld the action of the AO after discussing the explanation of the assessee at page 5 para No. 8 of the first appellate order. We fully concur with the finding of the AO that in absence of evidence in support of the above explanation that the money in question was returned due to cancellation of the agreement to purchase the land i.e. subject matter of page 40 of annexure A-7, the explanation of the assessee cannot be accepted. In consequence the AO has rightly made the addition in question sustained by the Ld. CIT(A). The grounds are accordingly rejected.
Ground No. 5
45. The AO made addition of Rs. 31,855/- on account of unexplained investment in jewelery which has been sustained by the Ld. CIT(A).
46. In support of the ground the Ld. AR submitted that the cash found and purchase of jewellery was out of the amount of sale proceeds of agriculture produce. He submitted that during the course of search 566.400 gms of gold jewellery, 2 gold coins, 4.007 KG of silver and 125 silver coins were found. He submitted that in the case of son Shri Amrish Goel (son) no addition was made by the AO after being set aside by the Tribunal following the CBDT circular. The Ld. AR submitted that the family consists of 23 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 assessee, his wife Smt. Urmila Goel his son Shri A.K. Goel, Smt. Alka Goel daughter in law and their two kids. The jewellery was found in respect of both Shri A.K. Goel and assessee. He explained that part of the jewellery was purchased from the withdrawals made from M/s. Amrish International during the block period and part of the jewellery was acquired on different occasions i.e. marriage, inheritance and gift. Silver coins were acquired by the family on the occasion of different festivals which is customary in Hindu family giving the following break up, the Ld. AR submitted that the gold ornaments recovered from the assessee's premises being 566.400 grams :-
P.C. Goel A.K. Goel Total Gold ornaments (Grms) 566.400 849.100 1415.500 Gold coins (Nos.) 2 2 4 Silver (Kgs) 4.007 1.367 5.374 Silver coins (Nos.) 125 40 165
47. After narrating the status of the family, he pointed out that as per CBDT circular No. 1916 dated 11.5.94 a married lady of a family is allowed to have 500 grams of jewellery and 100 grams per male member is allowed for the purpose of seizure. Thus no adverse inference can be drawn. Besides silver wares of 4.007 kg and 125 coins were found. Silver coins have been explained to have been acquired on different festival. Hence no adverse inference can be drawn. Silver wares of 4.007 kg found has been valued on higher side. We find that the AO has also taken care of the CBDT circular dated 11.5.94 while considering the issue and has only treated the 24 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 silver ware of 4.007 kgs as unexplained in view of source shown by the assessee for the investment. He has taken the value of the silver at Rs. 7950/- per kg as on the date of search working out to be worth Rs. 31,855/-. We thus find that the assessment order in this regard is reasoned one and does not call any interferenceh. Ld. CIT(A) has thus rightly upheld the addition. The ground is accordingly rejected.
Ground No. 6
48. The action of the Ld. CIT(A) in confirming the addition of Rs. 1,46,630/- made by the AO on account of unexplained account has been questioned.
49. In support of the ground the Ld. AR submitted that assessee's source of agricultural income was never disputed during the course of assessment proceedings hence there was no reason to reject the explanation of the assessee that the jewellery was purchased from cash available and the amount found represented sale value of agricultural produce.
50. The Ld. DR on the other hand tried to justify the orders of the authorities below, with this contention that they were justified in their action in not accepting the explanation of the assessee in absence of evidence in support.
51. Considering the above submission we fully concur with the submission of the Ld. DR that in absence of evidence in support genuineness of an 25 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 explanation furnished by the assesee was rightly rejected by the authorities below.
52. Ground No. 6 is accordingly rejected.
In the result appeal is partly allowed.
ITA No. 278/D/2002
53. The revenue has questioned first appellate order on the following grounds :-
1. That the Ld. CIT( Appeals) has erred in law and on the facts of the case to delete the addition of Rs. 59,80,201/- Rs.84,64,549/- & Rs.
55,49,139/- made in block period on account of excess of assets over liabilities u/s 69 of the I. T. Act 196 1.
2. That the Ld. CIT(Appeals) has failed to consider before allowing relief that the assessee did not maintain proper & regular books of account as is evident from the fact that assessee did not produce any bill/Voucher or any other supporting documents.
3. That the Ld. CIT(Appeals) has erred in law and on the facts of the case on observing that the appellant firm assessment for AYs 96-97 and 97-98 have been completed u/s 143( 3) and income for A. Y.98- 99 has been completed u/s 143(1) of the I.T.Act 1961 & no question arise to include the income of these years in block period when on1y undisclosed income has been taken in block period.
4. That the Ld. CI T( A) has erred in law and on the facts in observing that under no provision, the Assessing Officer is empowered to pick one set of figures from one source and another set of figures from different source while the Assessing Officer made additions only on the basis of difference between the cash as per computerised print and shown with regular return of income.
5. That the Ld. CIT(Appeals) has erred in law and on the facts of the case in deleting the addition of Rs. 2,14,140/- which was made on account of unexplained cash found during search.
26ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002
6. That the Ld. CIT( Appeals) has admitted an additional evidence regarding availability of cash of Rs. 2 Lakhs from sale of land as per Balance sheet of Shri P.C.Goel which it in contavantion of Rule 46A of I. T.Rules,1962 as the Assessing Officer has allowed reasonable opportunity to the assessee.
7. That the Ld. CIT(Appeals) has failed to consider that the assessee tried to explain the cash of Rs. 2,14,140/- as per provisions balance sheet prepared as on 3.8.99 but it failed to give any evidence in support of it.
54. We have heard and considered the arguments advanced by the parties in view of the orders of the authorities below material available on record and the decisions relied upon.
Ground No. 1 to 4
55. The action of the Ld. CIT(A) in deleting the additions of Rs. 59,80,201/-, Rs. 84,64,549/- and Rs. 55,49,139/- made by the AO on account of excess of assets over liabilities has been questioned by the revenue.
56. In support of the ground the Ld. DR submitted that in an action carried out u/s 132 of the Act computers were seized and its print outs were taken which disclosed huge discrepancies in trial balance, cash book, ledger etc. The assessee had admitted that no manual accounting was done. During the course of assessment also basic records like bills, vouchers etc. were not produced. Comparison of the figures so obtained from computer revealed startling discrepancies (expenses figures etc.) and the results so obtained were not tallying with the results shown in the 27 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 returns. Difference in cash balances were found. While balances as per return were less but as per the computer print out it was more and the differences were as under :-
As on 31.3.96 Rs. 59,80,201
As on 31.3.97 Rs. 81,34,620/-
As on 31.3.98 Rs. 55,49,139/-
57. Ld. DR submitted that despite being specifically asked regular books were not produced by the assessee. The contention of the assessee remained that the data in the hard disc had corrupted. The assessee however failed to explain as to how generation of data as on specific dates was possible when the data had corrupted or effected by virus. Further how the data revealed by hard disc is corrupted was also not proved. The AO noticed that generally the returns for these years were also filed very late at times after the delay of 17 months. After analyzing the factual position the AO made additions in question u/s 69 of the Act. The Ld. CIT(A) has however deleted the additions with this observation that AO had added all the amounts which were withdrawn from the bank. While observing so the Ld. CIT(A) has just gone by the submissions of the assessee and disregarded the data thrown up by the computer seized. It was for the assessee to pin point the specific reasons for discrepancies betweens the cash balances as shown by the computer data vis a vis returns of income 28 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 filed. Thus the assessee had failed to discharge its onus and if at all there was any doubt the AO ought to have been confronted or the matter should have been remanded to the AO for his specific comments.
58. Ld. AR on the contrary tried to justify the first appellate order on the issue. He referred the copies of different documents and written submissions addressed to the first appellate authority, placed on record in the shape of paper book filed on behalf of the assessee containing page Nos. 1 to 60 of the paper book.
59. Considered the arguments advanced by the parties in view of orders of the authorities below and material available on record. The assessee a partnership firm was carrying on the business of manufacturing and exports of Indian handicrafts. Premises of the assessee firm was searched u/s 132 of the Act on 3.8.99. The accounts of the assessee firm were being maintained regularly on computer and back up of the same was taken on floppy disk. At the time of search hard disc of the computer was affected by the virus and the cash payment file was destroyed. The back up floppy disc alongwith the computers were seized by the department . The assessee firm requested the AO to restore the data from floppy disc vide its letter dated 9.7.2001. The contention of the assessee remained that the AO framed the assessment u/s 158 BC after restoring the accounts contained in the floppy disk. The additions of Rs. 59,80,201/-, Rs. 84,64,549/- and Rs. 55,49,139/- made u/s 69 of the Act for the block period on account of 29 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 excess of assets over liabilities was further questioned by the assessee before the Ld. CIT(A) on the basis that print out taken from the virus affected seized computers were not the regular books of accounts of the assessee firm and as requested by the assessee AO should have restored the data from the floppy disk as in regular practice the assessee used to take back up of data stored in the hard disk at floppy. It was pointed out that the undisclosed income as defined u/s 158B of the Act has to be assessed under chapter IVB of the Act. It was contended that while framing the block assessment u/s 158BC undisclosed income detected at a result of search can be taxed only on the basis of the material found during the course of search. Reliance was also placed on the following decisions :-
1. CIT vs. Shambhulal C. Bachkaniwala (2000) 245 ITR 488
2. N.R. Paper and Board Ltd. vs. DCIT 234 ITR 733
60. The further contention of the assessee remained that the AO was not justified in recomputing the total income of the assessee for the various assessment years in the block assessment, for which regular assessment was required to be made u/s 143(3) of the Act. It was submitted that expenses incurred during the course of business of the assessee firm and personal drawings of the partners were strictly met out from the cash withdrawn from the bank account of the assessee firm and was being mentioned in the computer print outs. Since cash payment files were damaged due to virus in the computer and cash payments were not found 30 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 recorded therein whole of the cash withdrawn in self by the firm is appearing therein as cash in hand. The difference between the expenses and personal drawings of the partners as stated in the financial statements and have recorded in the computer print outs was exactly equal to the difference of cash in hand as shown in the financial statement and computer print out. It was submitted that the sole source of income as shown in the final accounts filed with the department alongwith the return of income and in the seized material as well were export sales, Export incentives in addition to the interest accrued in foreign currency TDRs. The assessee had furnished the figures of export sales for the financial year ending on 31.3.1996, 31.3.1997 and 31.3.1998 as per profit and loss account and as per seized material. The figures were similar and there was no change. Similar was the position with regard to computer draw backs.
61. Further contention of the assessee remained that during the course of search on 3.8.99 cash in stock worth Rs.214140/- and Rs. 70,000/- were found in addition to 15.87 kg silver from the premises of the assessee firm. It was stated that the AO had not included the income for the period 1.4.99 to 3.8.99 since all the transactions relating to this period were recorded in the books of accounts produced before the AO and the AO was satisfied about the genuineness of the books of accounts. It was also fortified from the fact that the AO had found the stock and silver to be properly recorded in the books of accounts and that was the sole reason that no addition was 31 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 made on this account. Regarding the cash found it was submitted that the AO had observed that the explanation offered at this stage was evasive and after thought and hence the same was having no force.
62. It was argued further that it is an established position that the closing balance of cash in hand for the preceding year has to be taken as opening balance of the succeeding year. However the closing balance of cash of the preceding year as adopted by the AO differs from the opening balance of cash of the succeeding year. Para No. 5 of the assessment order was referred, to support the contention of the assessee that the AO has taken the cash balance as per computer print as on 31.3.1996, 31.3.1997 and 31.3.1998 at Rs. 60,13,080/-, Rs. 81,72,879/- and Rs. 55,89,624/- respectively. Thus the closing balance as on 31.3.1996 at Rs. 60,13,080/- be restricted as opening balance as on 1.4.1996 at Rs. 60,13,080/- whereas the AO has adopted the figure of Rs. 32,879.45 . Similar position was there for other years.
63. Taking into consideration the above discussed submission and having gone through the orders of the authorities below, we are of the view that the Ld. CIT(A) has rightly given the relief. For a ready reference para No. 5 of the first appellate order is being reproduced hereunder :-
"5. I have carefully considered the submissions of the counsel and have perused the order framed by the Assessing Officer. The Assessing Officer has practically added all the amount which was withdrawn from the Bank account stating that this amount has not been utilized for incurring the expenses in the business. The Assessing Officer has not been able to pin 32 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 point the source where from the expenses have been met out. The appellant was withdrawing money from time to time from the bank to meet out the expenses. The withdrawals were made either in the name of self or in the name of partner of the firm and the same amount have been utilized for meeting out the expenses. Had the Assessing Officer relied the figures contained in computer prints out true then all the figures contained therein had to be considered while determining the undisclosed income of the appellant. Under no provisions contained in chapter XIVB of the Act the AO is empowered to pick one set of figures from one source and another set of figures from different source. In the case of Samrat Beer Bar vs. ACIT (2001) ITR (AT) 0001 wherein it was held that the evidence gathered by the authorized officer u/s 132 alongwith the other material seized, marked or inventoried would be available before the AO when he exercise his power to assessee the undisclosed income. This evidence found and material available should be the basis for computing the undisclosed income. In the very scheme of a block assessment any guess work or estimate is excluded from the reckoning. This position however be different. If there is inherent evidence in the seized material itself to show that the seized material is not the complete record of unaccounted transactions or where there are indications to show that the appellant had certain other record of unaccounted transactions which was not unearthed in the course of search.
The Assessing Officer has accepted the part of the entries from a particular place i.e print out taken from the computer and part of the entries from the books of account seized. The print out taken from the computer was not full and complete. The Assessing Officer should have tired to make it full and complete and only then, if discrepancies found addition could be made. Simply the additions made of the amounts withdrawn from the Bank without stating the fact where this money gone. The normal practice of the business is to withdraw the amount from the bank to meet out the expenses i.e. business expenses etc. and this is the peculiar case where I am finding that the money withdrawn from the Bank has been added as income without pin pointing the reasons. The Assessing Officer is also debarred by virtue of Explanation (B) to the section 158BA of the I.T Act from making the additions as the total undisclosed income relating the block period shall not includes the income assessed in any regular assessment as income of the block period. In the case of the appellant firm assessment for the AYs. 96-97 and 97-98 ahs been completed u/s 143(3) and income for the AY 98-99 has been completed u/s 143(1) of the Act hence no question arise to including the income of these years in the Block period. With regard to cash found at the time of search, it is noticed from the Balance sheet of PC Goyal for the year ending on 31.3.99 that a sum of Rs. 2 lacs represent the sale value of land and the 33 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 balance remaining out of cash withdrawn from the Bank. Thus from what have been discussed above and the fact the withdrawals from the Bank were made by the firm either in the name of self or by the partner are not disputed by the AO and expenditure in connection with business activities were met out from these. Therefore the entire additions made on the presumption basis are not maintainable and liable to be deleted. As such the additions amounting to Rs. 59,80,201/-, 84,64,549/-, 55,49,139/- and Rs. 2,14,140/- made in block period (supra) are deleted. The appeal is allowed with a total relief of Rs. 2,01,08,0290/-."
64. We fully concur with the Ld. CIT(A) that AO was not justified in making the addition of all the amounts which were withdrawn from the bank account alleging that these amounts were not utilized for incurring the expenses in the business without pin-pointing the source wherefrom the expenses have been met out. It is also correct to observe by Ld. CIT(A) that if the AO had relied upon the figures contained in computer print out then all the figures containing therein had to be considered while determining the undisclosed income of the assessee. We also agree with the finding of the Ld. CIT(A) that the AO should not have included the income of the years in question in the block period which had been assessed in the assessment framed u/s 143(3) of the Act for the assessment years 1996-97 and 1997-98 and shown in the return of income filed for the assessment year 1998-99 processed 143(1) of the Act. Regarding the addition of Rs. 2,14,140/- i.e. cash found during the course of search the Ld. CIT(A) has given finding that in the balance sheet of Shri P.C. Goel for the year ending on 31.3.1999 a sum of Rs. 2 lac represented 34 ITA No. 309/Del/2002 ITA No. 98/Del/2008 & ITA No. 278/Del/2002 the sale value of land and the balance remaining was out of cash withdrawn from the bank. It was submitted that the withdrawal from the bank were made by the firm either in the name of self or by the partner which was not disputed by the AO and expenditure in connection with business activity were met out from these. Considering these material aspects of the fact we are of the view that Ld. CIT (A) was justified in deleting all the additions questioned in ground Nos. 1 and 5 of the appeal. The remaining grounds are in support of these main grounds. The first appellate order in this regard is thus upheld. Ground Nos. 1 to 8 are accordingly rejected.
65. In the result appeal is dismissed.
The order is pronounced in the open court on 16th December, 2013.
sd/- sd/-
(T.S. KAPOOR) ( I. C. SUDHIR )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated 16th December, 2013
Veena
Copy of order forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR
By Order
Assistant Registrar, ITAT