Income Tax Appellate Tribunal - Chandigarh
Gurjit Singh, Mohali vs Assessee on 15 July, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIG ARH BENCH 'B', CHANDIG ARH
BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND
Ms. SUSHMA CHOWLA, JUDICI AL MEMBER
ITA No. 1169 & 1170/Chd/2012
Assessment Years : 2006-07 & 2007-08
Gurjit Singh V D.C.I.T. Central Circle I
H No. 748, PH 3B-I Chandigarh
Mohali
ANEPS 7778 N
ITA No. 1189 & 1190/Chd/2012
Assessment Years : 2006-07 & 2007-08
A.C.I.T. Central Circle I V Gurjit Singh
Chandigarh H No. 748, PH 3B-I
Mohali
ANEPS 7778 N
(Appellant) (Respondent)
Assessee by: Shri Rohit Goel
Department by: Shri Manjit Singh
Date of hearing 25.6.2014
Date of Pronouncement 15.7.2014
O R D E R
PER T.R. SOOD, A.M
These are cross appeals and are directed against the orders dated 13.9.2012 of the Ld CIT(A), Gurgaon. Some issues are common in thee appeals and these were heard together so they are disposed off by this common order for the sake of convenience.
ITA No. 1169/Chd/2012 - Gurjit Singh
2. In this appeal the assessee has raised the following grounds:
1. Th at a ut h or i t ies b e l o w h as er r ed in l aw a nd f ac ts i n fr a m i ng t h e as s es s m e nt wi t ho u t a ff or d i n g p r o p er o p p or t un i ty of be i n g h e ar d to th e ap p e ll a nt .
2. Th at au th or i ti es be l o w h as er r e d i n la w an d f ac ts to a pp o in t S pec i a l Au d it or i n an au t om at ic m a nn er w it ho u t c o ns i der i n g t h e f ac ts of th e c as e a nd c o ns eq u en t ly th e a p po i nt m en t of t h e au d it or is ba d i n l a w.2
3 Th at th e ap p o in t me nt of s p ec i a l au d it or is b ad i n l aw a nd is n ot i n ac c or d a nc e w i th t he s p ir i t o f l aw u n der t h e pr ov is i o n of s ec t io n 1 42( 2 A) of t he Ac t b ut o n ly t o g a in t i me f or c o mp l et i ng t he as s es s me n t w h ic h is bar r e d by l i m it a ti o n.
4 Th at L d. C IT( A) h as er r e d in la w an d f ac ts i n c o nf ir m in g a n ad d it i o n o f Rs . 1 0, 00 , 00 0 /- u /s 6 9 o n ac c o un t o f a l l eg e d t o b e pa i d as per p a g e 69 o f A 1 s e i ze d fr o m 74 8 , P h 3 B- 1, Mo ha l i f or pur c h as e o f pl o t i n Lu d h ia n a at Par k P l a za .
5 Th at L d. C IT( A) h as er r e d in la w an d f ac ts i n c o nf ir m in g a n ad d it i o n o f Rs . 3 5, 0 0, 00 0 /- u /s 6 9 o n ac c o un t o f a m o un t a l l eg e d to be pa i d to S hr i K .D . S ha r m a c o m pr is in g Rs . 8 ,0 0, 0 00 /- & Rs . 2 5, 0 0 ,0 0 0/-
an d Rs . 2, 0 0, 00 0 /- o n ac c o u nt o f d if f er e nc e i n to t al i n g. 6 Th at L d. C IT( A) h as er r e d in la w an d f ac ts i n c o nf ir m in g a n ad d it i o n of Rs . 1, 53 , 6 1, 0 19 /- u/s 69 on ac c ou n t of a mo u nt a l l e ge d t o b e pa i d as p er p a ges 1 0 9 t o 1 13 o f A 5 s e i ze d fr om 71 7, PH 3B - 1 , Mo h a li . 7 Th at L d. C IT( A) h as er r e d in la w an d f ac ts i n c o nf ir m in g a n ad d it i o n of Rs . 9 ,2 5, 0 00 /- u/s 6 9 o n ac c o un t o f a mo u nt a l l eg e d to b e pa i d as p er pa g e 6 5 of A 1 s e i ze d fr o m 7 48 , P H 3B - 1 , Mo h a li f or pur c h as e of U CO B a n k B u i ld i n g.
8 Th at L d. C IT( A) h as er r e d in la w an d f ac ts i n c o nf ir m in g a n ad d it i o n of Rs . 8, 12 , 62 1 /- u /s 68 o n ac c ou n t of a l l eg e d un ex p la i ne d c as h c r e d its c o mpr is i ng Rs . 1 26 2 1/- r ec e iv ed fr om Mo h i n der P a l S in g h v i de D D No . 6 72 2 04 dr a w n on O B C B ank an d Rs . 8, 00 , 00 0 /- r e c e iv e d fr o m K .D . S h ar ma v id e c h e qu e n o. 6 6 07 da t e d 3. 2 .2 0 06 .
9. Th at CIT ( A ) h as er r ed i n la w an d fac ts in c o nf ir m in g th e a dd i ti o ns of Rs . 4, 4 1, 9 02 /- u nd er s ec t i o n 68 on a c c ou n t of a l l eg e d u nex p la i ne d c as h c r ed i ts c om pr is i n g Rs . 4 4 19 0 2/- p a id t o A gg ar wa l St on e P u b l is h i n g In d ia .
10 . Th at CIT ( A ) h as er r ed i n la w an d fac ts in c o nf ir m in g th e a dd i ti o ns of Rs . 11 ,5 0 ,0 0 0/- o n ac c o u nt o f pay m e nts a ll e ge d t o be n o t r ec o r de d i n th e b o ok s i n r es p ec t of pay m e nts of Rs . 8 , 00 , 00 0/- t o a S upr e m e C ou r t A dv oc at e & Rs . 3 ,5 0 ,0 00 /- t o Ld . D. R. f or t h e Rev e nu e . S. Pr ad h a n. 11 . Th at CIT ( A ) h as er r ed i n la w an d fac ts in c o nf ir m in g th e a dd i ti o ns of R S. 6 5 ,6 5, 0 2 2/- a s u nex p l ai n ed r ec e i pt s as p er pa g es 1 21- 12 2 o f A nn ex ur e A- 5 s e i ze d fr o m 71 7, P h as e 3- B- 1 Mo ha l i r e la t in g to an ac c o u nt o f R. N. H i g hw ay s Pr iv at e L i m it ed .
12 . Th at l e ar ne d CI T( A) has e r r e d i n l aw an d fac ts i n n ot t ak i n g r e li a nc e o f e nt r i es r ec or d e d i n S up p le m e nt ar y C as h Bo ok pr od uc ed be f or e t h e CI T( A) a ft e r ad m it t in g t he s a me u/s 46 a( 1) ( d) a nd des p it e t he fac t th at As s es s in g o ff ic er h as c o nf ir m ed t he v er if ic at i on of de b i t/c r ed i t en tr ies r ec o r d e d i n th e s u p pl e m en tar y c as h b ook . "
3 Out of above, grounds No. 1 to 3 are not pressed before us, therefore same are dismissed as not pressed.
4 Ground No. 4 - After hearing both the parties we find that during search pg 69 marked as Annexure A was found and seized.
This document shows investment in various properties to the extent of Rs. 237.50 lakhs. It was pointed out that payment to the extent of Rs. 227.5 lakhs in respect of various properties have already been considered separately. For the last item of Rs. 10 lakhs it which was investment in a plot in Ludhiana at Park Plaza, Rs. 5 lakhs in 3 cheque was shown. The assessee was requested to give explanation for the sources of this property. In response it was explained that the assessee was planning to purchase this propert y but ultimately no transaction had taken place. Since no documentary evidence was furnished the Assessing Officer added a sum of Rs.10 lakhs to the income of the assessee.
5 On appeal certain details were filed which were sent for verification in remand proceedings by the Ld. CIT(A). The comments of the Assessing Officer and the assessee have been reproduced by the Ld. CIT(A) as under:
" D CIT in his c om m e nt s h as s t at ed as un d er :
As s es s e e h as c o n te nt ed th at he h as e nt er ed i nt o a v er b a l a gr e em e nt wi t h Mr . V i j ay P a l S in gh for b uy i n g a P l ot i n L u dh i an a , N ear P ar k P la za . As s es s e e h as pa i d a s um of Rs . 5, 00 , 00 0 /- on 19 .0 1 .2 0 06 i n c as h a n d Rs . 5, 0 0, 0 00 /- thr o ug h c he q ue N o. 5 6 73 0 5 d at ed 1 9 .0 1. 2 00 6 dr aw n or A nd hr a B ank 4 2 9. T he c h eq u e of Rs . 5, 0 0, 0 00 /- was no t enc as he d by t he s e ll er V i j ay Pa l S i n gh . Ho w ev er , th is d ea l was c a nc e l l ed a n d am ou n t o f Rs . 5 , 00 ,0 0 0/- adv a nc ed to V i jay Pa l S in g h was ad j us t e d i n h is a c c ou n t wi t h as s es s e e. As s e s s ee f ur t h er c o nt en de d t ha t pay m e nt of Rs . 5, 0 0, 00 0 /- was r ef l ec t ed in t h e s u pp l e me nt a r y c as h f lo w s t at e me nt .
W ith r eg ar d t o p ay me nt of Rs . 5, 00 , 00 0/ - c l a im e d t o h av e b ee n p a id ou t of f un ds av a il a b le as r ec o r d e d in s up p le m e nt ar y c as h bo ok , t h e en tr ies of Rs . 5, 0 0, 0 00 /- is d e b it ed i n t h e s u p p le m e nt ar y c as h b ook s , t h e de b it / c r ed i t e nt r i es in th is c as h b ook is v er i f ie d. Ho wev er , t he S up p l e me n tar y Cas h B ook n ow f il e d by as s es s e e is i n c on tr av e nt i on t o R u le 4 6 A of th e I.T . R u l es , 1 96 2 an d th e s am e m ay n o t b e ad m i tt ed as t an ta m o un t t o ad d it i o na l ev i d enc e. Th es e p ay m en ts we r e n ot r ec or de d i n t h e b ook s pr o d uc ed be fo r e s pec i a l a ud i tor a nd th er ef o r e t hes e am o un ts h av e b ee n r i gh t ly a dd e d b ac k as un ex p la i ne d inc o mes of t h e as s es s e e u /s 6 9 o f th e I.T . Ac t, 1 9 61 .
As s es s e e in h is c o un t er c o m me n ts h as s t at e d " Th e ad d it i on c o mpr i s e Rs . 5, 0 0, 00 0 /- in c as h a n d Rs . 5 , 00 , 00 0/- t hr o u gh c h eq u e N o . 5 6 73 0 5 d a te d 19 . 01 .2 0 06 dr aw n o n A nd hr a Ba nk 42 9 .T he l ear n ed DC IT h as ac c ep t ed th e c o nt e nt i on o f as s es s e e t o th e ex te nt of Rs . 5, 00 , 00 0/ - pa i d t hr o u g h c he q ue w h ic h w as n ot e nc as h e d. T h e Le ar n e d DC IT has v er i f i ed t he tr a ns ac t i on o Rs . 5 , 00 ,0 0 0/- p a id i n c as h a n d al l d e bi t an d c r e d it en tr ies i n s up p l em e nt ar y c as h b ook , h ow ev e r t h e l ear n ed off ic er h a d o b jec te d th e ad m is s i on of s u p p le m en t ar y c as h b ook u/r 4 6 A of t he I. T. Ru l es 19 6 2. T ha t o n t he is s ue of a d m is s io n o f a dd i t io n al doc u m en ts f i l ed f or th e f ir s t t i m e in a pp ea l a de t ai l e d c o m m en ts has a lr ea dy b ee n ma d e un d er a p p l ic a t io n u/s 46 A of t he I.T . R u l es 19 6 2. T h at o n t he is s ue o f ad m is s i on of ad d it i on a l d oc u m en ts f i l ed f o r th e f ir s t ti m e i n ap pe a l a de t ai l e d c o mm e nts h a s a lr ea dy b e en ma d e u n der a p p lic a t io n u / s 4 6 A an d j us t i f ic a t io n h as b ee n g iv en by as s es s e e th er e was n o s uf f ic i en t t im e af for d ed by AO t o r e p ly t he ab ov e tr a ns ac ti o n. T h e s o ur c e o f p ay m e nt has s i nc e be e n ex pl a i ne d a n d v er if i e d by l e ar n e d DC IT as s uc h t her e is no jus t if ic at i on in any ad d it i o n. "4
The Ld. CIT(A) agreed with the comments of the Assessing Officer and observed that since supplementary cash book was not admitted and accordingly addition of Rs. 10 lakhs was confirmed. 6 Before us, the Ld. Counsel for the assessee mainly submitted that the assessee was planning to purchase a plot in Ludhiana near Park Plaza and accordingly a sum of Rs. 5 lakhs vide cheque drawn on Andhra Bank was given to one Shri Vijaypal Singh and further a sum of Rs. 5 lakhs in cash was also paid which was duly reflected in the supplementary cash flow statement. In this regard to the detailed discussion which was made in this group of cases which have been adjudicated by the Tribunal in ITAs No. 1166 to 1168/Chd/2012. He also submitted that a supplementary cash book was already verified by the Assessing Officer wherein a sum of Rs. 5 lakhs paid to Shri Vijaypal Singh which has been adjusted later on.
7 On the other hand, the Ld. D.R for the revenue strongly supported the order of the Ld. CIT(A).
8 W e have considered the rival submissions carefully. Some of the appeals in this group under the title Late Shri Pritam Singh V DCIT and Shri Gurjit Singh V DCIT in ITAs No. 1173 to 1177/Chd/2012 and others were adjudicated earlier. There it was seen because of special audit report which was available very late and practically only one month's time was available to the assessee to reply to various queries which was not sufficient and therefore most of the evidences and explanation were filed before the Ld. CIT(A). Most of the additional evidence was admitted and sent for verification to the Assessing Officer. It would be pertinent to refer para 5.6 of the impugned order wherein additional evidence was admitted. The para reads as under:
" T her e for e c o ns i der i n g t he fac ts a nd c ir c u ms t a nc es of t h e c as e, an d i n a ll f a ir n es s , I h o ld t ha t t h e r e q u es t for a d m i s s i on o f a d d it i on a l ev i de nc e 5 fi l e d u/ Ru l e 4 6A ( 1) ( d) d es e r v es t o be ac c e de d t o, b e in g n ec es s ar y for d is p os al o f th e a pp e al ( s ) o n me r i ts . H ow ev e r , t h e na tu r e o f t h e ev i de nc e i n r es pec t o f e ac h of th e is s ues c o nc er n e d is dis c us s e d r es pe c tiv e ly th er eu n der . As s uc h, t he a dd i ti o na l ev id e nc e is a l lo w ed to be a dm i t te d a t th is j u nc t ur e a n d th e a pp e a l of t he as s es s ee is d is pos e d on m er i ts of t h e c as e . "
The above clearly shows that the Ld. CIT(A) has admitted additional evidence. Further certain entries were not incorporated by the special auditor particularly in respect of cash transactions which was incorporated later on in a supplementary cash book which was filed before the Ld. CIT(A) and was also remanded to the file of Assessing Officer for verification. In this regard it would be pertinent to see the comments of Assessing Officer which have given vide report dated 11.6.2012 (copy of which is available at pg 125 to 146 of paper book). Regarding this transaction of Rs. 10 lakhs the Assessing Officer has made following comments:
" As s es s e e has c on t en de d t h at he has e nt er ed i nt o a v er ba l a gr e em e nt wi t h Mr . V i j ay P a l S in gh for b uy i n g a P l ot i n L u dh i an a , N ear P ar k P la za . As s es s e e h as p a i d a s um o f R S . 5, 0 0, 00 0 / - o n 1 9 .1 . 20 0 6 in c as h an d RS . 5, 0 0, 0 00 /- thr o ug h c he q ue NO . 56 7 30 5 da te d 1 9. 1. 2 00 6 dr aw n of A nd hr a Ba nk 4 29 . T he c h e qu e of Rs . 5, 0 0, 0 00 /- w as n ot enc a s he d by th e s e l l er V i j ay P a l S i ng h . How ev er , th is d e a l was c anc e l le d a n d am o un t of R S . 5, 00 , 00 0 /- ad v anc e d to V ij ay P a l S in g h was ad j us t e d i n his ac c o u nt w it h as s es s e e . As s es s e e f ur t h er c o nt e nd e d t ha t pay m en t of Rs . 5, 0 0, 00 0 /- was r ef l ec t ed in t h e s u pp l e me nt a r y c as h f lo w s t at e me nt .
Wi t h re ga rd t o p ay m ent of R s. 5 ,0 0, 0 00 /- cl ai me d t o h a v e b ee n pa id out of f und s a va il ab l e as r e co rd ed in sup ple m ent ar y c as h bo o k, t he ent ri e s of Rs . 5, 0 0, 0 0 0/- i s de bit ed in t h e supp l em ent ar y c a sh book s , t he de bit /c r edi t ent ri es in t h is c a sh boo k is v e rif ie d. How e v er , t he Sup pl em ent a ry C a sh Boo k n ow f il ed by as se s se e i s in con t r a v ent ion t o Ru le 4 6 A of t he I .T . Ru l es , 19 6 2 and t he s am e m a y no t b e ad mit t ed as t ant am ount t o a ddit ion al ev id en ce . The s e pa ym ent s w e re not re co rd ed in t he boo k s p rod uc ed b ef o r e sp ec i al aud it o r and t he re f o re t he se a mount s ha v e b ee n rig ht l y add ed b a ck a s u ne xp l ain ed inc om es of t h e a ss e s se e u/ s 6 9 of t h e I .T. Act , 1 96 1."
The highlighted portion of above report clearly show that entry regarding cash payment of Rs 5 lakh recorded in the supplementary cash book was verified by the Assessing Officer. After this verification the Assessing Officer could have made further enquiry but in the absence of such enquiry he could not have simply brushed aside the same by stating that supplementary cash book has been 6 filed in contravention of Rule 46A. If the cheque of Rs. 5 lakhs is not encashed by the party and Rs. 5 lakhs cash paid to that party and adjusted later on and the source of cash is recorded in the supplementary cash book then it cannot be said that this investment has not been explained. Therefore we set aside the order of the CIT(A) and delete this addition.
9 Ground No. 5 - A f t e r h e a r i n g b o t h t h e p a r t i e s w e f i n d t h a t during search pages 114 to 120 were found and seized which was marked Annexure A5. These documents contain the reply filed by the assessee against the complaint of K.D. Sharma. It was noticed by the Assessing Officer that at page 115 in para 6, the assessee had stated that complainant issued two cheques for Rs. 8 lakhs and Rs. 25 lakhs for the short time dasti loan taken by K.D. Sharma. Therefore the assessee was requested to state how loan of Rs. 33 lakhs was given to K.D. Sharma including the explanation regarding sources. In response it was mainly stated that it was only a rough reply given against the complaint filed by K.D. Sharma.It was also stated that no such loan was given which would be clear from the statement of affairs and that is why same was not reflected in the statement of affairs. The Assessing Officer did not accept this submission and added a sum of Rs. 35 lakhs (actual figure should be RS. 33 lakhs) to the income of the assessee. 10 On appeal first of all it was submitted addition should be for Rs. 33 lakhs because two cheques involved a sum of Rs. 8 lakhs and Rs. 25 lakhs. Secondly the submissions made before the Assessing Officer were reiterated that it was a case of draft reply and it cannot be relied for making addition and some case law was also relied for this purpose.
711 The Ld. CIT(A) after examining the submissions referred to the comments of the Assessing Officer as well as the assessee and finally decided the issue vide para 14.2 which is as under:
"I have gone through the arguments of the Assessing Officer and the counter comments of the assessee. It is argued that Shri KD Sharma made no adverse statement to the Police or the Court. A statement either wise, before the Police has no legal validity as such. However, the statement before the Court has to be given the seriousness it deserves. In the cased in hand, it is observed that the statement of Shri KD Sharma before the Court has not been filed before the income-tax authorities. This articulation therefore cannot be taken seriously. Thus the presumption drawn by the Assessing Officer u/s 292C would have to be given credence. The addition made by the Assessing Officer is therefore correct and ought to be sustained. The assessee fails in this ground of appeal."
12 Before us. the Ld. Counsel for the assessee submitted that in fact K.D. Sharma had made certain investments along with the assessee and ultimately he had filed a complaint that he has loaned /invested an amount of RS. 14 crores with the assessee and his late father Shri Pritam Singh. In this regard after search on the premises of the assessee when certain documents were found with reference to K.D. Sharma, cases were also reopened in case of Shri K.D.Sharma and ultimately K.D. Sharma surrendered Rs. 12 crores before the Settlement Commission. In fact when the complaint was filed the assessee just made a reply which is only a draft reply (copy of which is available at page 32 to 38 of paper book). No evidence regarding giving of loan at Dubai was found at the time of search. Therefore addition could not be made merely on the basis of a draft reply.
13 On the other hand, the Ld. D.R. for the Revenue supported the order of the Assessing Officer and the Ld. CIT(A).
14 After considering the rival submissions we find that addition should have been made for Rs. 33 lakhs because two 8 chequess of Rs. 8 lakhs and Rs. 25 lakhs are mentioned in the draft reply. Further issue relating to investments etc. made by K.D. Sharma has come up for consideration of the Tribunal in the cases of Late Shri Pritam Singh and Shri Gurjit Singh (supra). It was noted in para 76 that K.D. Sharma had filed a FIR against the assessee group alleging investment to the extent of Rs. 13.8 crores. In fact K.D. Sharma has surrendered a sum of Rs. 12 crores when his cases were taken up before the Settlement Commission. therefore at best K.D. Sharma had given some loan and in criminal proceedings the assessee was trying to avoid criminal liability by taking various pleas. Therefore it cannot be taken as an evidence for assessee having given a loan. In this background we find that there is no merit for addition and accordingly we set aside the order of the CIT(A) and delete the addition.
15 Ground No. 6 - After hearing both the parties we find that page 109 to 113 of Annexure A were found and seized during search. Perusal of page 113 of document showed that the assessee has received a sum of Rs. 15406372/- and total payments made were shown at Rs. 15361019/-. The payments were made to Distt Revenue Officer and stamp duty etc. The documents basically depicted the transaction with regard to purchase of land. Since these investment were not reflected in the final statement of affairs, the assessee was asked to furnish the sources of these investments. In response it was mainly stated that documents pertain to M/s Radiant Empire Pvt Ltd. Since no evidence was filed to show that the documents pertain to the assessee, the Assessing Officer invoked the presumption u/s 292C and added the sum to the income of the assessee.
916 On appeal before the LD. CIT(A), the submissions made before the Assessing Officer were reiterated. Confirmation from Radiant Empire Pvt Ltd was also filed. The Ld. CIT(A) did not find force in the same and rejected the claim of the assessee by following observations:
" B e t h at as it m ay , I f i nd t ha t t h e c on f ir m a ti on , enc l os ed w it h as s es s e e 's wr i tt e n s u bm is s i on is s i g ne d by R an j it Ka ur , d ir ec t or a n d w i f e o f t h e as s es s e e, is u nd at e d, uns t am p ed a nd n ot e v en o n t h e le tt er he a d of th e c om p any . It is no t ev en a n aff i d av it . Mor eo v er , th e d oc u m en ts e nc los e d wi t h t he c o nf ir ma t io n ar e l o os e s h ee ts o f c e r ta i n ac c o un ts s ig n ed by t he Dir ec tor , w it h ou t a n y dat es n or s t a m p ed . Th e c o r r ec tn es s an d au t he nt ic i ty o f th e os t e ns ib l e s up p or t i ng d oc um e nts is t her e for e d is p ut a b le . I am th er e for e p er s u ad e d t o h o l d t ha t t he r e was no t hi ng th e n nor n ow t o h av e pr ev e nt e d th e as s es s e e fr o fi l i ng d oc u m en ts w h ic h c ou l d hav e s t o o d t he tes t of s c r ut i ny . Th us , th e a d di t i on m ad e by t he L d. As s es s i n g of f ic er o n th is is s u e in t he h a n ds of t he as s es s ee s ta n ds c on f ir me d. Ac c or d i n g ly , t h is gr o un d o f ap pe a l g o es a ga i ns t t h e as s es s e e. "
17 Before us. the Ld. Counsel for the assessee submitted that these papers were found from the premises of the assessee. In fact Smt. Ranjit Kaur who is the wife of the assessee, is the Director of Radiant Empire PVt Ltd and that is why the papers were kept by her. The papers depicted various advances made to the extent of Rs. 15361019/- and clearly pertained to Radiant Empire PVt Ltd. In this regard confirmation of Radiant Empire PVt Ltd was also furnished before the Assessing Officer (copy of which is available from pages 66 to 73 of the paper book). Despite this fact additions have been made in the hands of the assessee. When the papers do not belong to the assessee, no addition should have been made in the hands of the assessee.
18 On the other hand, the Ld. D.R. for the Revenue supported the order of the Ld. CIT(A).
19 After considering the rival submissions we find that the confirmation was filed before the Assessing Officer stating that pages 109 to 113 of Annexure A5 were found from the premises of Smt. Ranjit Kaur who is the director of Radiant Empire PVt 10 Ltd. In fact pages have been authenticated. In our opinion, the Assessing Officer should have made enquiries from Radiant Empire Pvt Ltd whether they have shown these transaction in their books and whether the same have no relation with the assessee. This has not been done. Therefore we set aside the order of the CIT(A) and remit this issue back to the file of Assessing Officer for reexamination of the issue after making enquiries from Radiant Empire PVt Ltd and then decide the issue in accordance with law.
20 Ground no. 7 - After hearing both the parties we find that page No. 65 of Ann A1 was sized from the premises of the assessee. The document showed certain details which have been noted by the Assessing Officer as under:
T he ab o v e d oc um e nt s ho ws t he f o l lo wi n g d et a ils "
A/c 30 6 0- 2 0 D- 0 4- 0 3. 0 6
21 6- t ot a l G ur j it 5 0% 28 + 6 0 +4 5 = 133 Nim r at 25 % 14 + 2 7 ½ = 41½ Dim p y 2 5% 14 + 2 7 ½ = 41 ½ = 216 S d/- ( V ij a y P a l S i n gh) A/c U CO Ba nk , N o . 3, S ec . 22 36 2 t ot a l Dim p y 37 ½ % - 37 ½ G ur j it 37 ½ % - 37 % 1, 0 0, 00 , 00 0 p a id Nim r at 25 % - 25 Shri Gurjit Singh - 2006-07 "
The document was shown to the assessee and certain questions were raised and relevant questions and answers have been reproduced by the Assessing Officer as under:
"Q 21 - I am showing you page No. 65 of Ann A! of the documents seized from your residence. Are these written in your hand? Please Explain the contents?
Answer - The first set of calculations refers to H No. 3060, Sec 20D, Chandigarh. It was written by Vijay Pal Singh and it also contains my signatures and signature of Nimrandeep Singh. This document was written on 4.3.2006. All of us bought this House for 2.16 crores. Out of this my share was 50% and I paid Rs. 1.33 crores. I will check the source of this payment and let you know.
The next set of calculations refers to property No. 3 at Sec 22, Chandigarh. All three of us bought this property for Rs. 3.62 crores. Out of this my shre was 37.5%. I will check th soruce of share and let you know.11
Further statement of Vijay Pal Singh s/o Late Sardar Amrit Singh r/o 3478, S 38-D, Chandigarh was recorded on 7.7.2008 at Aaykar Bhawan, Sec 2, Panchkula on oath u/s 131 of the Act. The above document was shown to him. The relevant extract his statements is reproduced below.
Question 3 - I am showing you page No. 65 of Ann A1 of documents seized from the residence of Gurjit Singh during the course of search at his residence on 11.6.2008. Pl explain the same?
Answer - I have written this document. It shows the amounts paid by me, Gurjit singh and Nimratdeep Singh for purchae of two properties as below:
(i) 3060, Sec 20D, Chandigarh bought for Rs. 2.16 crores. I paid Rs. 41.5 lakhs out of this.
(ii) Showroom No. 3, Sec 22, Chandigarh bought for Rs. 3,62 crores, out of which I have paid Rs. 37.5 lakhs. These amounts were paid during fy 2006-07.
Question 4 - Pl state the sources for thee payments? Answer - I wish to declare these sums (Rs. 41.5 lakhs + Rs. 37.5 lakhs = 79 Lakhs) as unaccounted income for the assessment year 2006-07. The declarations subject to no penalty and prosecution to be imposed upon me. I will revise the return of income for the year and submit it shortly."
On further enquiry it was explained by the assessee that the papers related to property No. 3060, Sec 20D, Chandigarh and the legal owner of the property was late Shri Pritam Singh who had 50% share in the property. The Assessing Officer noted that the statement recorded u/s 131 showed that payment of Rs. 133 lakhs was made by the assessee. Further perusal of the statement of affairs of Shri Pritam Singh showed that an amount of Rs. 139 lakhs was reflected.
Further there was another property No. SCF 3, Sec 22D, Chandigarh (UCO Bank building). It was stated that property was in adverse possession of UCO Bank and other persons and registration deed was not executed. The Assessing Officer noted that the assessee had admitted in the statement recorded u/s 131 on 16.6.2008 that payment of Rs. 135.75 lakhs was made. That statement was not retracted. However, final statement showed the investment of Rs. 126,50,000. 12 Therefore balance of Rs. 925,000 for which no sources was explained, was added to the income of the assessee. 21 On appeal some issues were referred back to the file of Assessing Officer in the assessment proceedings. In the remand proceedings it was contended that balance payment of Rs. 925,000/- was to be made at the time of registration of sale deed. In the meantime the seller had backed out from this deed and now the matter is pending before the District Court, Chandigarh for specific performance.
22 The Ld. CIT(A) after examining the submissions decided the issue vide para 11.2 which is as under:
" I h av e c a r e fu l ly c o ns id er ed t he r iv a l c on t en t io ns as we l l as t h e i mp u gn e d as s es s m en t or der . No d o ub t wh i l e r ec or d i n g t h e s ta te m en t u/s 13 1 , t he as s es s e e ha d s ta te d t h at h e w o ul d i nt i ma t e t he s o ur c e o f s har e , wh i l e ad m it t in g th e % of s h ar e in t he pr o pe r t y / t r a ns ac t i on . Ho wev er t h e as s es s e e h as no t d o ne s o ev e n a t th e r e ma n d s ta g e n or b ef o r e th e ap p e ll a te pr oc ee d i ngs wh er e in t he c o nt e nt i on is th a t no s uc h a mo u nt h ad be e n p a i d as th e s e ll e r ha d bac k e d ou t le a di ng t o as s es s ee f il i n g a c as e for s p ec if ic p er f or m an c e of a gr ee m en t i n th c o ur t o f Civ i l J u dg e , S en i or Div is i on , UT Ch a nd i g ar h . H ow ev er o n g o i ng thr o ug h t h e c o py of t he s u it ab l e, it is s ee n t ha t t h e s a me is u ns i g ne d a nd t h er e is no me n ti o n of th e C iv il Su i t n o, w h i c h is os te ns i bly da te d 13 . 1. 2 00 9. T hus t h e s a me c an n ot b e s a i d to b e a ut h en t ic . Fur t her on o ne h a n d t h e as s es s e e s t at es th at ac t u a l a m ou nt p a i d w as Rs . 1 66 . 50 l ak hs a n d b a la nc e o f Rs . 9 .2 5 l ak h w as no t pa i d, w h i le u /s 13 1 t he a m ou n t is Rs . 13 5 .7 5 l ak hs an d i n its e ar li er s u bm is s i on da t ed 9. 4 .2 0 12 wh ic h w as r em a nd e d, Rs . 12 6 .5 l ak hs is s t at e d to h a v e be e n pa i d . T hes e ar e c o ntr ad ic t io ns a pp ar e nt fr o m r ec or ds a n d bes i des n o c r e de nc e c an be g iv e n t o th e c o py of t he s u it ab l e f i le d i n s u p p or t o f i ts c l a im of n o m- f u lf i l l in g o f th e a gr ee m en t. Th us , o n t h e fac ts o f t h e c as e , I c o n fi r m th e ac ti o n of t he L d. A O . As s es s e e f ai ls in t h is gr o u n d of a p pe a l. "
23 Before us. the L d . C o u n s e l f o r t h e a s s e s s e e r e f e r r e d t o the document seized during search which is placed at page 74 of the paper book. He pointed out that document mentioned that total sum of Rs. 1,00,00,000/- was paid and amount paid by Gurjit Singh was Rs. 37.5 lakhs. In fact total property bearing No. SCF 3, Sec 22D, Chandigarh was purchased for total consideration of Rs. 3.62 crores and the share of the assessee was 37.5% which is clearly mentioned in the document itself. The assessee had paid a sum of Rs. 1265,0000/- reflected in the statement of affairs and balance of Rs. 925,000/- was still to be paid at the 13 time of registration of sale deed. He submitted that assessee has already filed for specific performance suit (copy of which is available at page 75 to 100 of paper book). Further the Ld. CIT(A) never questioned this fact during various hearings. 24 On the other hand, the Ld. D.R. for the Revenue supported the order of the Ld. CIT(A).
25 W e have considered the rival submissions carefully and find force in the submissions of the Ld. Counsel for the assessee. The perusal of suite filed for specific performance shows that at para 5, the assessee has claimed payment only at Rs. 126.5 lakhs which tallies with the payment which has been explained before the Assessing Officer. W hen the registration has not been done for the property it is obvious that some amount was to be paid at the time of registration and assessee has already filed a suite for specific performance. Therefore this plea should have been accepted. In these circumstances we set aside the order of the CIT(A) and delete the addition.
26 Grounds No. 8 & 9 - After hearing both the parties we find that during assessment proceedings the Assessing Officer noticed that there were various credits for which confirmation were not filed as demanded by special auditor and therefore show cause notice was issued that why these amounts should not be added to the income of the assessee. The details of the various credits is as under:
G ur j it Si n gh 20 0 5- 06 Cr e d its De b its B al a nc e Ra d ia n t 32 0 00 0 0 - 32 0 00 0 0 Em pir e L td .
RN Hi g h wa ys 24 9 80 0 5 52 0 00 0 0 - P vt . L td . G ur ik ba l S. 10 0 00 0 0 10 0 00 0 0 B hu l l ar S h. KD 24 0 00 0 0 80 0 00 0 16 0 00 0 0 14 S har m a Mo h i nd er Pal 12 6 21 0 12 6 21 S in g h A pex Ex p or t Am r it Ka ur A pex Ex por ts 10 0 00 10 0 00 B ar b i l B ik as D e v 50 0 00 0 0 0 50 0 00 0 0 G ur iq b a l 15 0 00 0 0 0 15 0 00 0 0 S in g h J og i n der 10 0 00 0 0 0 10 0 00 0 0 S in g h P at i a la Ma tc hl es s 42 5 00 0 0 42 5 00 0 As s oc i a tes Pr it am S i ng h 30 0 00 0 0 45 8 77 7 .2 5 25 4 12 2 2 O b er o i R N Hi g h wa ys 50 0 00 0 50 0 00 0 0 P vt Lt d S ur ya PV C 36 0 00 0 0 0 36 0 00 0 0 Pr od uc t Hi tk ar i 42 0 00 0 0 42 0 00 0 0 0 T r ader s P or t T r us t 20 0 00 0 20 0 00 0 0 A gg ar wa l 44 1 90 2 0 44 1 90 2 St o ne P ol is h i ng I n d A ir par k 22 5 00 0 22 5 00 0 0 In ter n at i o na l tr a v e l a ge n t M/s Ap ex In ter n at i o na l Co ns tr uc ti o n ( Pr op . G ur j i t S in g h RN Hi g h wa ys 26 8 53 0 0 26 8 53 0 Lt d M/s Pr i tam S in g h & So ns ( Pr op G ur j i t S in g h) Pr it am S i ng h 20 8 80 0 52 5 61 0 T ota l 29 6 89 8 58 20 5 89 2 75
Since no documentary evidence to prove the genuineness of above credits was furnished, even before the Assessing Officer a sum of Rs. 20589275/- was added to the income of the assessee u/s 68 of the Act.
27 On appeal before the Ld. CIT(A) various documents and explanations were filed which were sent for remand report. After considering the same the Ld. CIT(A) deleted various additions and confirmed the following additions :
S/Shri K.D. Sharma Rs. 8 lakhs Mohinderpal Singh Rs. 12621/-
15
Aggarwal Stone Polishing
Industries Rs. 441902/-
The revenue has not filed any appeal against deletion of addition in respect of other items and therefore we are not giving details of those additions.
28 As far as the addition on account of K.D. Sharma and Mohinderpal Singh are concerned, the Ld. CIT(A) confirmed the same by following paras:
" In v i ew of t h e f in d i ng s of t h e As s es s i ng O ff ic er a t r e m an d s t a ge , Rs . 8 l ak hs b ei n g a do u b le a d d it i on , ,t h e s am e is de l et e d. As r eg ar ds th e ba l a nc e R s . 8 l ak hs , th e ex pl a n at i on o f t h e as s es s e e is t o o fa r f etc he d . I d o n ot un d er s t a nd th e pr u d e nc y of s uc h i nt er wi n ed tr a ns ac t i o n w hi l ed th er e a p pe ar s t o b e n o d o ub t a b ou t t he i de nt i ty of Sh r i K. D. S har m a t he g e nu i n en es s a n d c r ed i tw or th i nes s of t h e tr a ns ac t i on is i n do ub t. O n us w as on t he as s es s e e to pr ov e th e s a me . H enc e t he a dd i t io n is s s t t o t he ex te nt of Rs . 8 l ak hs .
"Having seen the facts and circumstances , I uphold the stand of the Assessing Officer as the documents filed is a copy of the ledger account with a photo copy of the DD. While the identity, the genuineness and credit worthiness of Mohinder Pal Singh, remain unproved the assessee has also not come up with any cogent clarifications. The addition is confirmed."
29 Before us. in respect of Shri K.D. Sharma the arguments made in respect of ground no. 5 were reiterated. It was further pointed out that two cheques were received from K.D. Sharma out of which one cheque was already added along with addition of Rs. 35 lakhs (actual figure was Rs. 33 lakhs which has been agitated through ground no. 3) and which was deleted by the Ld. CIT(A) being double addition. In respect of remaining Rs. 8 lakhs contention raised in respect of ground No. 5 were reiterated. In respect of addition of Rs. 12621/- it was mainly submitted that this amount was received as advance and Assessing Officer had made certain enquiries and the assessee has confirmed this amount before the Assessing Officer and copy of these documents is available at page 101 to 105 of paper book.
1630 On the other hand, the Ld. D.R. for the Revenue strongly supported the order of Ld. CIT(A).
31 After considering the rival submissions we find that as far as addition of Rs. 8 lakhs on account of Shri K.D. Sharma is concerned, the same principle is applicable which we have adjudicated in respect of ground no. 5 because K.D. Sharma has filed FIR against the assessee claiming that a sum of Rs. 13.85 crores was advanced to the assessee and his family and has also surrendered a sum of Rs. 12 crores before the Settlement Commission and therefore this addition is being deleted on the same principle as decided by us while deciding ground No. 5. As far as addition of Rs. 12621/- is concerned, from the documents filed in paper book it becomes clear that the Assessing Officer has made enquiries u/s 133(6) from this person and in response he has filed confirmation as well as copy of account and agreement showing that he has purchased certain properties jointly. Mohinderpal Singh has given his PAN also therefore full explanation was available with the Assessing Officer and in case he was not satisfied then the Assessing Officer should have made further enquiries and addition could not be made by brushing aside the evidence filed before him without conducting further enquiries for addition of Rs. 812621/- in ground no. 8 is deleted.
32 In respect of ground no. 9 it was submitted by the Ld. Counsel for the assessee that certain bills were found in the name of Aggarwal Stone Polishing Industries. In fact these purchases were made through cash memos by paying cash but they were wrongly entered by the special auditor as credit bills. These entries were later on reflected in the supplementary 17 cash book which was verified by the Assessing Officer, therefore these additions could not have been made. 33 On the other hand, the Ld. D.R for the revenue strongly supported the order of the Ld. CIT(A).
34 After considering the rival submissions we find that debit entry for payment of cash to Aggarwal Stone Polishing Industries was incorporated and the supplementary cash book and has been verified by the Assessing Officer. Relevant portion of the remand report is at page 144 of the paper book and reads as under:
"With regard to payment ofRs. 441902/- claimed to have been paid out of funds available as recorded in supplementary cash book, the entries of Rs. 441902/- is debited in the supplementary cash book, the debit / credit entries in this cash book is verified. However, the supplementary cash book now filed by assessee is in contravention to Rule 46A of IT Rules, 1962 and the same may not be admitted as tantamount to additional evidence. These payments were not recorded in the books produced before special auditor and therefore these amounts have been rightly added back as unexplained incomes of the assessee u/s 69 of IT Act."
The above clearly shows that the amount has been shown as cash payment which has been verified by the Assessing Officer. Once the additional evidence was admitted by the Ld. CIT(A) and was verified bythe Assessing Officer then the same cannot be rejected after verification, therefore we find no merit in this addition and delete the same.
35 Ground No. 10 - After hearing both the parties we find that pages 224 & 72 - 88 of A3 and pages 99, 101 & 102 of A6 seized from H No. 748, Ph. 3B1, Mohali. According to the Assessing Officer these documents clearly indicate that payment of certain sums and details have been extracted by him as under:
.
Sl. Name Amount
No.
1 Supreme Court Advocate 8,00,000
2 Siddeshwar Minerals 10,00,000
3 Serazzudin & Co. 54,87,000
18
4 Dr. S. Pradhan 42,50,000
5 Shri Hari Industries Pvt. Ltd. 26,00,000
6 Joginder Singh 10,00,000
7 Mahavir Packers 20,00,000
TOTAL 1,71,37,000
Out of above according to special auditor following payments
were not entered in the books of account.
Sl.No Name Amount
1 Supreme Court 8,00,000
Advocate
2 Dr. S. Pradhan 42,50,000
3 Mahavir Packers 20,00,000
TOTAL 70,50,000
It was also noticed that as per these documents investment of Rs. 26 lakhs was made in M/s Shree Hari Indusries Ltd.
Since the assessee did not file any documentary evidence an amount of Rs. 96,50,000/- (Rs. 70,50,000 + Rs. 26 lakh) was added to the income of the assessee.
36 Various documents and details were filed beforethe Ld. CIT(A) and in turn the Ld. CIT(A) sent the same for remand verification. After examining the remand report etc. the Ld. CIT(A) deleted various additions and confirmed only addition of Rs. 8 lakh paid to Supreme Court, Advocate and Rs. 3,50,000/- in cash paid to Shri S. Pradhan. Since the revenue has not filed any appeal against the deletion, therefore we are not discussing them in detail.
37 As far as addition of Rs. 8 lakhs paid to Supreme Court, Advocate, the Ld. Counsel for the assessee contended that this amount was paid to Advocate in relation to maters of Apex Exports, Gurjit Singh, Surinderpal Singh, K.D. Sharma etc. This amount was also incorporated in supplementary cash book 19 which was verified during remand proceedings by the Assessing Officer and relevant portion of the remand report is placed at page 130. Similarly payments to Dr. S. Pradhan totalled to Rs. 42,50,000/- was paid out of which a sum of Rs. 39 lakhs was paid by cheques and was deleted by the Ld. CIT(A). Balance of Rs. 3,50,000/- was paid in cash and incorporated in the supplementary cash book which was verified by the Assessing Officer and the relevant portion is at page 131 of paper book. He submitted once having admitted the additional evidence same cannot be rejected later on after verification.
38 On the other hand, the Ld. D.R for the revenue strongly supported the order of the Ld. CIT(A).
39 After considering the rival submissions we find force in the submissions of the Ld. Counsel for the assessee. Payment of Rs. 8 lakhs was verified by the Assessing Officer and the relevant portion at page 130 reads as under:
" W ith r eg ar d t o p ay m e nt of Rs , 8, 00 , 00 0/ - c l a im e d t o h av e b ee n p a id ou t of f un ds av a il a b le as r ec o r d e d in s up p le m e nt ar y c as h bo ok , t h e en tr ies of Rs . 8, 00 , 00 0/ - is d eb i te d i n t he s u p p le m en t ar y c as h b o o k s , t h e de b it /c r ed i t en tr ies i n t h is c as h bo ok is v er i fi e d. H ow ev er , t he S up p l em e nt ar y Cas h B ook n ow f i le d by as s es s e e is i n c o n tr av e nt i on t o Ru l e 4 6 A o f t he I.T . Ru l es , 19 6 2 a n d t he s am e may no t b e ad m i tt ed as ta nt a mo u nt t o ad d it i o n a l ev i d enc e . T hes e p a y me n ts w er e n ot r ec or de d i n th e b o ok s pr o duc e d b ef or e s p ec ia l au d i tor an d t h er ef or e t hes e a mo u nts hav e b ee n r i g ht ly a d d ed b ac k as u n ex p l a in ed inc o mes o f th e as s es s e e u/s 6 9 o f th e I .T. Ac t , 19 6 1. "
Similarly issue of Rs. 3,50,000/- was verified by the Assessing Officer and the relevant portion of remand report at page 131 reads as under:
" W ith r eg ar d t o p ay m e nt of Rs . 3, 50 , 00 0/ - c l a im e d t o h av e b ee n p a id ou t of f un ds av a il a b le as r ec o r d e d in s up p le m e nt ar y c as h bo ok , t h e en tr ies of Rs . 3, 5 0, 00 0 /- is d eb i te d i n th e s u pp l e m en t ar y c as h b o ok s , t h e de b it / c r ed i t e nt r i es in th is c as h b ook is v er i f ie d. Ho wev er , t he S up p l e me n tar y Cas h B o ok no w fi l e d b y as s es s e e is in c o ntr av e n ti o n to R u le 4 6 A of t he I.T . R u l es , 1 96 2 an d th e s am e m ay n o t b e ad m i tt ed as t an ta m o un t t o ad d it i o na l ev i d enc e. Th es e p ay m en ts we r e n ot r ec or de d i n t h e b ook s pr o d uc ed be fo r e s pec i a l a ud i tor a nd th er ef o r e t hes e am o un ts h av e b ee n r i gh t ly a dd e d b ac k as un ex p la i ne d inc o mes of t h e as s es s e e u /s 6 9 o f th e I.T . Ac t, 1 9 61 . "20
Additional evidence was initially admitted by the Ld. CIT(A) and was sent for verification. The Assessing Officer has verified these entries. After verification this evidence cannot be rejected, therefore Accordingly we set aside the order of the CIT(A) and delete this addition.
40 Ground no. 11 - After hearing both the parties we find that page 121 and 122 of Annexure A5 were loose papers showing various receipts and payments. Total of these receipts was Rs. 14245125/-. On enquiry it was stated that the assessee was one of the Directors of R.N. Highway Pvt Ltd. and the papers did not relate to the assessee in the independent capacity and relate to that organization. Since no documentary evidence was filed to explain these entries a sum of Rs. 14364022/- was added to the income of the assessee. 41 On appeal various documents and explanations were filed which was sent for verification. After considering remand report and the explanations the Ld. CIT(A) deleted the addition of Rs. 78 lakhs on account of R.N. Highways Pvt Ltd. Against this deletion the revenue has not filed any appeal therefore we are not going into the details. The balance amount of Rs. 6565022/- was stated to have been paid out of supplementary cash book. This was confirmed by the Ld. CIT(A) by observing that supplementary cash book is an after thought.
42 Before us, the Ld. Counsel for the assessee submitted that not only certain receipts have been received but some payments have also been made. Since papers did not belong to the assessee, at best only peak credit could have been added.
43 On the other hand, the Ld. D.R for the revenue strongly supported the order of Assessing Officer.
2144 After considering the rival submissions we find that the documents pertained to R.N. Highways Pvt Ltd. and the Ld. CIT(A) has already accepted the entries upto Rs. 78 lakhs then in respect of balance transactions only peak credit could have been added. Copy of the account has been placed a t page 29 to 31 of the paper book and shows various receipts and payments. Therefore we set aside the order of the Ld. CIT(A) and remit the matter back to the file of Assessing Officer with a direction to examine the account of R.N. Highways Pvt Ltd and make addition on the peak theory basis. 45 Ground No. 12 - Both the parties were heard. 46 After considering the rival submissions we find that that this issue was also raised in other group of cases in case of Late Shri Pritam Singh and Shri Gurjit Singh (supra). This issue was adjudicated vide para 18 which h reads as under:
After considering the rival submissions and the material on record, we would like to point out that after verification of supplementary cash book Assessing officer should have given effect to consequential facts. However, in any case since we have already accepted the theory and this ground has become infructuous and we decline to adjudicate this ground in detail."
Following the above we are of the opinion that no discussion is required to be made in respect of this ground.
47 In the result, appeal of the assessee in ITA No. 1169/Chd/2012 is partly allowed.
ITA No. 1170/Chd/2012 - Gurjit Singh 48 In this appeal the assessee has raised the following grounds:
"1 Th at a ut h or i t ies b e l o w h as er r ed in l aw a nd f ac ts i n fr a m i ng t h e as s es s m e nt wi t ho u t a ff or d i n g p r o p er o p p or t un i ty of be i n g h e ar d to th e ap p e ll a nt .
2. Th at au th or i ti es be l o w h as er r e d i n la w an d f ac ts to a pp o in t S pec i a l Au d it or i n an au t om at ic m a nn er w it ho u t c o ns i der i n g t h e f ac ts of th e c as e a nd c o ns eq u en t ly th e a p po i nt m en t of t h e au d it or is ba d i n l a w.
3 Th at th e ap p o in t me nt of s p ec i a l au d it or is b ad i n l aw a nd is n ot i n ac c or d a nc e w i th t he s p ir i t o f l aw u n der t h e pr ov is i o n of s ec t io n 1 42( 2 A) of t he Ac t b ut o n ly t o g a in t i me f or c o mp l et i ng t he as s es s me n t w h ic h is bar r e d by l i m it a ti o n.22
4 Th at L d. C IT( A) h as er r e d i n l aw a n d fa c ts in c on f ir m i n g th e ad d it i o n of Rs . 6 0, 0 0 ,0 0 0/- u /s 6 8 o n ac c ou n t o f a l le g ed u n ex p la i ne d c as h c r ed i ts r ec eiv e d f r o m K. D. S har m a.
5 Th at L d. C IT( A) h as er r e d i n l aw a n d fa c ts in c on f ir m i n g th e ad d it i o n of Rs . 5 6, 0 0 ,0 0 0/- u /s 6 8 o n ac c ou n t o f a l le g ed u n ex p la i ne d c as h c r ed i ts r ec eiv e d f r o m M/s T RN L a nd D e v e lo p er s Pv t Lt d.
6 Th at L d . CIT( A) has e r r e d i n l aw an d f ac ts i n m ak i n g a n a dd i t io n by tr e at i n g i nv es tm e nt i n I nd l s h ed N o . 1 01 & 10 2 , Ba d d i o f Rs . 5, 0 0, 00 0 /- as u nex p l ai ne d .
7 Th at L d . CIT( A) has e r r e d i n l aw an d f ac ts i n m ak i n g a n a dd i t io n of Rs . 9 ,4 6 ,0 4 3/- as ex c es s pr of it on r ec e i pts o f Rs . 1 46 4 01 7 1/ - fr o m A pex I nt er n at i on a l ( Du b ai ) an d B h us h a n P o wer L t d bas e d u po n t he i nc o m p le te s t a te m en t of ac c o un ts .
8 Th at L d . CIT( A) has e r r e d i n l aw an d f ac ts i n m ak i n g a n a dd i t io n of Rs . 1 0, 0 0, 00 0 /- as un ex p la i ne d inc o me o n ac c ou nt of i nv es t m en t n ot s ho w n in b o ok s i n r es pec t of inv es t m en t i n S hr e e H ar i I n dus tr ies Pv t L t d as p er p ag es 36- 3 7 of A nn ex ur e A1 a nd pa g e 6 3- 6 5 o f An n e x ur e 2 s e i ze d fr om 74 8, P h 3 B- 1, Mo ha l i .
9. Th at CI T( A) h as er r e d i n la w a nd f ac ts in n ot t ak in g r e l i anc e o f en tr ies r ec or d e d i n s up p l em e nt ar y c as h b ook pr o d uc e d b ef or e th e L d. CIT( A) a ft er a dm i tt i ng th e s a me u /s 46 A( 1) ( d) an d d es p i te t he f ac t t h at As s es s i n g of f ic er h as c o nf ir m ed t he v er i f ic at i on o f d eb i t/c r ed i t en tr ies r ec o r d e d i n th e s u p pl e me n tar y c as h b o ok . "
49 Out of above, Grounds No. 1 to 3 were not pressed therefore we dismiss the same as not pressed.
50 Grounds No. 4 & 5 - After hearing both the parties we find that during assessment proceedings the AO noticed that special auditor has observed that certain amounts were received by the assessee on various dates. Confirmations were not filed. The details of the amount is as under:
A pp ex Ex p or t Idc o l F er oc r om e 25 0 00 0 0 25 0 00 0 0 0 & a l lo ys Lt d.J as u p des h Si n gh 27 0 00 0 0 27 0 00 0 0 0
Ma t hc l es s 11 7 00 0 0 0 11 7 00 0 As s oc i a tes Pr it am S i ng h 20 0 00 0 0 13 7 40 7 5 62 5 92 5 O b er o i R. N. H i g h wa ys 16 0 31 1 0 60 0 00 15 4 31 1 0 P vt . L td . S h. S ur i nd er P a l 53 8 00 0 0 0 53 8 00 0 0 S in g h T RN L an d 56 0 00 0 0 0 56 0 00 0 0 De v e lo p er s P vt . Lt d. Har is h C ha n der 13 2 50 0 0 13 2 50 0 0 0 E lec tr ic it y 66 7 56 4 0 66 7 56 4 S ec ur i t y (MD NE S CO ) K D S h ar m a 10 0 00 0 0 11 1 00 0 0 0 S er aj u dd i n & C o. 12 4 82 4 00 12 4 82 4 00 0 S id d es h war 10 0 00 0 0 10 0 00 0 0 0 M in er a ls P vt . L td . A pex I nt t ( D ub a i) 13 4 01 7 1 13 4 01 7 1 0 23 B hus h an P o wer 13 3 00 0 00 13 3 00 0 00 0 Lt d. S ar oj i n i Pr ad h a n 35 4 13 9 6 39 0 00 0 0 0 M/s A P EX INT E RN AT IO NA L CO N ST RU CT IO N ( P RO P. G URJ IT SI NG H) J as u p des h Si n gh 20 0 00 0 0 20 0 00 0 0 0 K. D. S har m a 60 0 00 0 0 0 60 0 00 0 0 R. N. H i g h wa ys 30 5 60 0 0 29 3 23 8 4 39 2 14 6 Lt d. S ar it a De v i 20 0 00 0 0 20 0 00 0 0 0 M/s S ur in d er P a l S in g h O ber o i ( Pr op . G ur j i t S in g h) R. N. H i g h wa ys 13 0 00 0 0 0 13 0 00 0 0 P vt . L td . M/s Pr it am Si ng h & So ns ( Pr op . G ur j it Si n gh ) Pr it am S i ng h 34 8 00 0 34 8 00 T O T AL 79 6 75 1 11 21 6 60 5 45
In response to the query by Assessing Officer it was stated that special auditor has considered only credit amounts but has not given any benefit against the debit amount. The Assessing Officer observed that since the assessee has failed to file any documentary evidence to prove the genuineness of these transaction and therefore a sum of Rs. 216,60,545/- was added to the income of the assessee.
51 Before the Ld. CIT(A), certain documents and explanations were filed which were sent for verification in the remand proceedings. After considering remand report and explanations the Ld. CIT(A) deleted various additions. The Ld. CIT(A) confirmed the addition only in respect of K.D. Sharma - Rs. 60 lakhs and TRN Land Development Pvt Ltd - Rs. 50 lakhs.
52 Before us, the Ld. Counsel for the assessee made identical arguments as were made in case of other group of appeals in case of Late Shri Pritam Singh and Gurjit Singh (supra) as well as other grounds in assessment year 2006-07 in respect of K.D. Sharma. 24 53 On the other hand, the Ld. D.R for the revenue strongly supported the order of Assessing Officer.
54 After considering the rival submissions we find that that issue regarding addition on account of TRN Land Development Pvt Ltd was adjudicated vide para 76 of ITA No. 1173/Chd/2012 which is as under:
"A s f a r a s a d d i t i o n o n a c c o u n t o f T R N i s c o n c e r n e d w e f i n d f o r c e in the submissions of the Ld. Counsel for the assessee. In response to the enquiry made during assessment proceedings TRN has stated vide letter dated 11.6.2012 as under:
Da te d : 11 . 06 .2 0 12 To, De p uty C o mm is s i on er of I nc om e Tax Ce ntr a l C ir c le - I CH AN DI G AR H S ir , S ub : I nf or ma t io n u /s . 13 3( 6) o f th e I nc o m e Tax Ac t i n t he c as e of Pr it a m S i ng h P le as e r e fe r to y o ur le tt er d a te d 1- 6- 2 0 12 wh er e in y ou hav e s ta te d th a t Pr it a m S in g h has c la i m ed tr a ns ac t i on w it h o ur c om p any . T he f o l lo w i ng des ir e d i nf or m at i on is g iv en for y our pur p os e:
1. Th e tr a ns ac t i on w i t h Pr it a m S i ng h w h er e i n a s um o f Rs .
1, 0 2, 97 , 50 0/ - w as p a id t o Pr it a m S in g h is c o nf ir m ed a n d a c on f ir me d c o py of ac c ou n t is a tt ac h e d.
2. Th at in f ac t ou r Co mp a ny h as r ec e iv e d a s um of Rs . 2, 0 5, 00 , 00 0/ - fr o m Mr . K. D . S h ar ma of O r is s a as Adv a nc e a nd ou t of t his a s u m of Rs . 1, 0 2, 97 , 50 0/ - w as pa i d t o Pr i ta m S i ng h a nd h is b us i nes s as s oc ia tes as te m por ar y A dv a nc e. I n f ac t , t h e am o un t was r ec ov er ab l e by Pr it a m S in g h an d his s o n G ur j i t S in g h fr o m o th er b us in es s c onc er ns of K. D. Sh a r m a etc . T h e am o un t was giv e n as te m por a r y adv a nc e to G ur j it S i ng h o n t h e d ir ec t i ons of K .D . S har m a wh o has d e pos i te d fu n ds wi t h t h e s ai d c o mp a n y ti l l th e ac c o u nts o f G ur ji t S in g h ar e s e tt l e d a n d r ep a i d by K .D . S har m a fr o m t he r e s pec t iv e c o nc er ns w her e t he a m o un t wa s pay a b le t o G ur j i t S i n gh . Th a t i n th e me a n t im e , a d is pu t e h a s ar is e n am o ngs t K. D. Sh ar m a h is bus i n es s c onc er ns a n d G ur j i t S in g h a n d h is fa m i ly me m b er s a nd T RN La nd Dev e lo p er s P Lt d. A n F IR was l o dg e d by K .D . Sh ar m a a g a ins t G ur je e t S in g h a n d h is fa m i ly m em b er s , wh er e K D S h ar ma ha d c l a i me d t ha t t he a mo u nt de p os it ed w it h T RN w as a m ou n t p a id to f a m ily m e mb er s of G ur j i t S in g h. T h e m at t er is pe n d in g in th e C o ur t of C iv i l J u d g e S e ni or Div is i on C h a nd i gar h .
It is f ur th er r e lev a nt t o me n t io n t h at n o b us i n es s w as t r a ns ac t ed i n TRN L a nd D ev e lo p er s Pv t L td . ex c ep t for r ec e i pt of f un ds fr o m K. D. S har m a a nd tr a n s fer o f f un ds i n f av o u r of G ur j it S in g h a nd h is fa m i ly m em b er s .
3. Th e C om p any is hav i n g P A N A AC CT5 0 0 1D . No Inc o me T ax r et ur n w as f il e d as a d is pu te h as ar is e n a mo ngs t t h e s har e ho l d er s an d d ir ec t or s o f t h e c o mp a ny a n d s ui t is p e n d in g in c o ur ts . A c o py of Ba l anc e Sh e et is at tac h ed f or y o ur k i n d p er us a l. 25 Th ank i n g Y ou , Y our s Tr u ly , For m T R N La n d Dd ev e l op er s Pr iv a te L i m it e d S d /-
Dir ec tor Above clearly show that TRN had confirmed the fact of giving advance to Pritam Singh i.e. the assessee. Source in the hands of the TRN was by way of deposits received from K.D. Sharma who has lodged an FIR against the assessee group alleging that the investment to the extent of Rs. 13,85 crores were made with assessee group. In fact K.D. Sharma had surrendered a sum of Rs. 12 crore and therefore sources in the hand of the TRN stand explained. Once the source of investment and PAN was available and if the Assessing officer still had doubt then he should have asked the assessee or that party to furnish further papers. The detailed evidence cannot be brushed aside particularly because of the fact that the depositor had already paid taxes and sources stand explained in the hands of the assessee. Therefore we set aside the order of the Ld. CIT(A) and delete the addition of Rs. 10297500/-."
Therefore following the same logic we delete this addition. Similarly addition on account of K.D. Sharma is deleted because he has already surrendered Rs. 12 crores and has filed FIR against the assessee stating that he has advanced a sum of Rs. 13.85 crores to the assessee and his family members and therefore sources stand explained. Accordingly we set aside the order of the CIT(A) and delete these two additions.
55 Ground No. 6 - After hearing both the parties we find that during assessment proceedings the AO noticed that assessee has purchased a property being Shed No. 101-102 at Baddi and following payments were made:
'P a g e 7, p ar a 12 o f th e i mp u gn e d as s es s m e nt or d er d ea ls w it h p u r c has e of t he pr o pe r ty fo r w h ic h a n a mo u nt o f R s . 7 6 ,5 0, 0 0 0/- w as p a id o n v ar io us d a te , w hic h i nc lu d es a n a mo u nt of RS . 5, 0 0, 0 00 /- p a id i n c as h wh ic h w as as p er s ei ze d ma t er ia l , c o nt a in i ng no da t e. Th e As s es s in g O ff ic er p r oc e ed e d t o ad d bac k Rs . 5 l ak hs as u n ex p l a i ne d as t h e o t her am o un ts w er e f o un d r e f lec te d i n t he f i na nc i al s t a te m en ts of t h e as s es s e e. Th e s u b m is s i o ns of th e as s es s e e d ur in g ap p ea l was r e ma n de d t o th e As s e s s i ng O f f ic er . "
The assessee has shown investment in respect of this property at Rs. 71,50,000/-. Special auditor had observed that no sources have been explained for balance payment. The Assessing Officer further 26 observed that since assessee has not been able to explain the sources of balance payment of Rs. 5 lakhs, therefore this sum was added to the income of the assessee.
56 On appeal, the addition was confirmed by the Ld. CIT(A) vide para 8.2 which is as under:
" I hav e c ar ef u l ly c ons i der e d th e r iv a l s u bm is s i ons . It is un d is pu te d th at th e s e i ze d d oc u m e nt c on ta i n ed de t ai ls of pay m en t o f Rs . 7 6. 5 l ak hs i nv es te d i n in d l s he d No . 10 1 an d 1 02 . T h ou g h as s es s e e h as fu r n is h e d on ly o n e a gr e em e nt t o s el l i n r es p ec t of p l ot n o. 1 0 1 inc l u di n g t he f u ll an d f i na l p ay me n t v i d e a gr e e me n t m ad e o n 27. 1 1. 2 00 7 f or Rs . 4 0 l ak hs th e s a me is i n c o ntr a d ic t i on w it h th e s e i ze d ma t er i a l wh ic h r e fl e c ts t h e i nv es tm e nt f or t he y ea r e n di n g 31 .3 . 20 0 7 w h ic h inc l ud es t h e i nv e s tm e nt i n s he d n o. 1 02 . Th e as s es s e e has n o w c o me u p w it h th e ex p la n at i on as r eg ar d th e a d di t io n o f Rs . 5 lak hs , as be i n g th e d if fe r e nc e be tw ee n t he s um r e f lec t ed i n t h e f i na nc i al s t at e me nt v i z- a- v i z t h s e i ze d ma t er i a l t ha t th e s e l le r has bac k e d ou t o f t h e d ea l . H ow e v er , t h e c opy of t he c i v i l s u it fi l e d i n s up p or t of its c l ai m has c er ta i n s h or t c o m in gs in s o f ar as it d oes no t me nt i o n t he c iv i l s it n o n or any s i g na t ur e t ho u gh th e doc u me n t is os t e ns i b ly d at e d 2. 7. 2 01 0 . In f ac t it is a ls o no t ev id e nt i f th e s u i t if f i l ed has b e e n ad m it t ed . I n v i ew of t he s hor t c o m i ngs e l uc id a te d n o c r e de nc e c an be g iv e n to t h e s am e . Fur t h er th e r e li a nc e i n th e c as e of Ve d Pr ak as h C ha u dh ar y d oes no t h ol d e i th er as t he f ac ts is d is t i n gu is ha b l e . He nc e c o ns i der i n g t h e f ac ts a n d c ir c ums t a nc es t he is s u e at h a nd , th e ad d it i o n of Rs . 5 l ak hs is c on f ir m e d. "
57 Before us, the Ld. Counsel for the assessee submitted that the issue is identical to the same issue raised in assessment year 2006- 07 in respect of ground No. 7. In fact balance payment was still to be made because the property has not been registered in the name of the assessee and the assessee had already filed suite for specific performance (copy of which is available at page 51 to 56 of paper book).
58 On the other hand, the Ld. D.R for the revenue strongly supported the order of the Ld. CIT(A).
59 After considering the rival submissions we find that if registration of the property has not taken place and some amount is still shown to be payable then that amount cannot be added. therefore following our decision in para No. 25 for assessment year 2006-07, we delete this addition.
60 Ground No. 7 - After hearing both the parties we find that during assessment proceedings the AO noticed that the assessee had shown receipts of Rs. 14640171/- from Apex International Dubai 27 and Bhushan Power Ltd in the books. It was further noted tht the assessee claimed that these receipts pertain to assessment year 2006-07 but were shown in assessment year 2007-08. Therefore same were considered in assessment year 2007-08 only. Since the assessee had shown expenditure of Rs. 12962119/- therefore profit was assessed at Rs. 1678052/-.
61 On appeal certain explanation and documents were filed which were sent for verification in remand proceedings. The comments of the Assessing Officer and counter comments of the assessee have been reproduced by the Ld. CIT(A) as under:
" R e ma n d Re p or t o n t h e is s ue is as b e lo w As s es s e e has c o nt e nd ed t ha t t ot a l tur n ov er of Rs . 1, 4 6, 4 0, 1 71 /- r e la tes to th e y ear u nd er c ons i der at i o n a n d by m is t a k e t he s a me w as i nc l u de d in th e i nc o m e at t he t i m e of f i li n g of r e t ur n f o r As s es s me n t y ear 2 00 6- 0 7. As s es s e e h as inc l ud ed a f la t ne t pr of it of 5 % an d i nc o m e at Rs . 7, 3 2, 00 9 /- w as r et ur n e d i n As s es s me nt y e ar 20 0 6- 0 7 wh ic h is m or e t ha n ac t u al pr o f it e ar ne d a g a ins t th is s a l e t ur n ov e r .
As s es s e e has f ur t h er c on t en te d th at h e do e s no t hav e any o b jec t i on i f pr o f it d is c los e d i n As s es s m e nt y ea r 20 0 6- 07 am o u nt i ng to Rs . 7, 3 2, 00 9 /- is r e duc e d fr om t he pr o f its fo r A Y 20 0 6- 07 a n d inc l u de d i n Inc o me o f As s es s m en t y e ar 20 0 7- 0 8 .
As s es s e e h as f ur t h er c ont e n de d t ha t as per s ta te m e nt o f ac c ou n ts c om p l et e ex p e nd i tur e s wer e no t de b it e d a nd as s uc h pr o fi t as per t ha t pr o f it an d los s ac c o u nt w as a p pe ar i ng at Rs . 1 6 ,7 8, 0 52 /- . He f ur t h er c on t en d ed t ha t d if fer e nc e o f Rs . 9 46 ,0 4 3/- i n t h e pr o f it d ec lar e d i n A Y 20 0 6- 07 an d inc o m e de ter m i ne d i n A Y 20 0 7- 08 is d e b it e d i n t he s up p l em e nt ar y c as h f l ow s t at e me n t.
In t his r eg ar d it is s u bm i tt e d t h at as s es s ee h as s ho w n 5% pr of i t on Rs . 1, 4 6, 40 , 17 1/ - a m ou nt i ng to Rs . 7 32 0 09 /- in As s es s m e nt y ear 2 0 06- 0 7. Th e r ec e i pt of Rs . 14 64 0 17 1 /- p er ta i ns t o A s s es s m e nt y e ar 2 0 07 - 08 as s uc h t h e pr of it is to be as s es s ed in A Y 20 0 7- 08 on ly .
In s o far as t he c o nt e nt i on o f t h e as s e s s ee t ha t d if fer e nc e of Rs . 9, 4 6, 04 3 /- ( Rs . 1 6, 7 8, 05 2 /- 7 ,3 2 ,0 0 9/- ) i n t h e pr o fi t d ec l ar e d i n A Y 20 0 6- 07 an d inc o me de t er m i ne d in A Y 2 00 7- 0 8 is de b it e d i n t he s u pp l em en t ar y c as h f lo w s t at e m en t is n o t ac c ep t ab l e as t he ex pe ns es of Rs . 1, 2 9, 62 , 11 9/ - w as f ou nd to b e d eb i t ed i n t he b ook s of ac c ou nts of t h e as s es s e e. W it h r e g a r d t o p ay m e nt of e x pe n d it ur e of Rs . 9 , 46 , 04 3 c l ai m e d to h av e b e en pa i d o ut o f fu n d s av a i la b le as r ec or de d i n s up p l em e nt ar y c as h b ook , th e e nt r i es o f r S . 8 ,4 6, 0 4 3/- is d e b it e d i n t he s up p l em e nt ar y c as h b ook s , t h e d e bi t/ c r e di t en tr ies i n t h is c as h b ook is v er if i ed . Ho w ev er , th e s up p le m e nt ar y Cas h B ook n o w f i l ed by as s es s e e is i n c on tr av e nt i o n t o Ru l e 4 6 A o f t he I.T . R u les , 1 9 62 an d t h e s a me m ay no t b e ad m it t ed as t a nt a mo u nt t o ad d it i o na l ev id e nc e . Th es e pa y me n ts wer e n o t r ec or de d in th e b ook s pr od uc ed be for e s pec i a l a ud i t or a n d th er ef or e t h es e a m o u nts h av e be e n r i gh t ly a dd e d bac k a s un ex p la i ne d i nc o m es of t h e as s es s ee u/s 6 9 o f th e I. T. A c t. 1 9 61 .
As s es s e e in h is c o u nt er c om m en ts h as c on t en d ed th a t o ut of Rs . 16 , 78 ,0 5 2/- a s u m o f Rs . 7, 3 2, 00 9 /- w as i nc lu d ed i n As s es s m e nt y e ar 20 0 6- 07 by As s es s e e an d t he s am e w as ac c ep t ed by le ar n ed D CIT .28
W ith r ef er enc e t o b a l anc e t h e l e ar ne d D CI T has v er if i e d t he pa y me n ts pa i d in c as h a nd r o ut e d t hr ou g h s u pp l e me n t ar y C as h b ook a l on g wi t h a l l de b it a nd c r ed i t e nt r i es i n s u p p le m en t ar y c as h bo ok , h ow ev er t he l ear n ed of f ic e r h a d o b j ec t ed th e ad m is s i on of s up p l em e nt ar y c as h b o ok u/r 4 6 A of t he I .T. Ru l es 19 6 2. Th a t on th e is s u e of a d mis s i on o f ad d it i o na l doc u me n ts fi l ed for th e f ir s t ti m e i n ap p ea l a d et a i le d c om m e nts h as a lr ea dy b ee n m ad e u n de r a p pl ic at i o n u/s 4 6 A a nd j us t if ic at i o n h as be e n g iv e n by as s es s ee t her e was n o s u ff ic i en t t i me af for d ed by As s es s in g off ic er t o r e ply t h e a bov e tr a ns ac t io n. T h e s our c e of p ay m e nt h as s i nc e be e n ex p l a in e d a n d v er if i ed by l ear n ed D CIT as s uc h t h er e is n o j us t i fi c at i on in any a d d it i on . "
62 The Ld. CIT(A) thereafter observed that in assessment year 2006-07 the assessee had raised additional ground in respect of these receipts claiming that profit belong to assessment year 2007- 08 and the said additional ground was admitted and addition of Rs. 732009/- was deleted in assessment year 2006-07 therefore income has to be enhanced accordingly. The contention that the additional expenditure was claimed in supplementary cash book and was rejected by observing that it was an after thought. 63 Before us, the Ld. Counsel for the assessee submitted that additional expenditure was shown in the supplementary cash book which has been accepted by the Assessing Officer during remand proceedings on verification of supplementary cash book. Therefore at best reasonable profit can be assessed on these receipts. 64 On the other hand, the Ld. D.R for the revenue strongly supported the order of Ld. CIT(A).
65 After considering the rival submissions we find force in the submissions of the Ld. Counsel for the assessee. Once additional evidence has been admitted and supplementary cash book has been verified then same cannot be rejected without pointing out further defect. Therefore we set aside the order of the CIT(A) and direct the Assessing Officer to assess profit @ 8% on the receipts of Rs. 14640171/-.
66 Ground No. 8 - After hearing both the parties we find that during assessment proceedings the AO noticed that perusal of 29 annexure A2 pages 63 to 65 shows expenditure for installation of crushed amounting to RS. 26719372/-. In the statement the assessee admitted that 50% of this crusher being run under the name and style of Shree Hari Industries Pvt Ltd belong to the assessee and the assessee has incurred 50% of the expenditure. It was further admitted that total expenditure by the assessee on this crusher was RS. 16,451,000/-. However, perusal of trial balance and balance sheet of Apex (proprietary concern of the assessee) revealed that upto the year ending 31.3.2008 the assessee has shown investment only to Rs. 15,451,000/-. Since the assessee had shown Rs. 10 lakhs less investment this was added to the income of the assessee.
67 On appeal certain explanation/documents were filed before the Ld. CIT(A). After verification of remand report though the Assessing Officer verified the expenditure but observed that supplementary cash book filed now is an after thought and refused to accept the same. The Ld. CIT(A) on the basis of this comment, confirmed the addition.
68 Before us, the Ld. Counsel for the assessee reiterated the submissions which were made in respect of other issues wherein supplementary cash book was verified by the Assessing Officer. He referred to page 100 where in the remand report the Assessing Officer has clearly verified this expenditure. 69 On the other hand, the Ld. D.R for the revenue strongly supported the order of the Ld. CIT(A).
70 After considering the rival submissions we find that in the remand report relevant observations of the same is available at page 100 which reads as under:
" W it h r eg ar d to p ay m en t of Rs . 10 , 00 ,0 0 0/ - c l a i me d to h av e b e en p a i d ou t of fu n ds av a i l ab l e as r ec or d ed i n s u pp l e me n tar y c as h bo ok , th e en tr ies of Rs . 1 0, 0 0, 0 00 /- is de b it e d i n t he s up p l em e nt ar y c as h b ook t h e de b it / c r e d it en tr ies in th is c as h bo ok is v er i f ie d. H o wev e r , th e 30 s up p l em e nt ar y c as h b ook n o w f i l ed by as s es s e e is i n c o ntr av en ti o n t o Ru l e 46 A o f th e IT R u les , 19 6 2 an d th e s am e m ay no t b e ad m i tt ed as ta nt a mo u nt t o a dd i ti o na l ev i de nc e. T h es e pay m en ts w er e n o t r e c or d e d i n t he bo ok s pr o d uc ed b ef or e s p ec ia l a ud i tor a nd th er ef or e th es e am o un ts h av e be e n r i gh t ly a dd e d bac k as un ex p la i ne d i nc o mes of t he as s es s e e u/s 69 o f IT Ac t , 1 96 1 . "
The above clearly shows that the Assessing Officer has verified only Rs. 10 lakhs. In our opinion, after having admitted additional evidence and after having verified the particular entries, the revenue cannot take stand that filing of supplementary cash book was an after thought. Therefore in our opinion, this addition deserves to be deleted and accordingly we set aside the order of the CIT(A) and delete this addition.
71 Ground no. 9 - After considering the rival submissions we find that that this issue was also raised in other group of cases in case of Late Shri Pritam Singh and Shri Gurjit Singh. This issue was adjudicated vide para 18 which h reads as under:
After considering the rival submissions and the material on record, we would like to point out that after verification of supplementary cash book Assessing officer should have given effect to consequential facts. However, in any case since we have already accepted the theory and this ground has become infructuous and we decline to adjudicate this ground in detail."
Following the above we are of the opinion that no discussion is required to be made in respect of this ground.
72 In the result, appeal of the assessee in ITA No. 1170/Chd/2012 is partly allowed.
ITA No. 1189/Chd/2012 - Revenue appeal 73 In this appeal the revenue has raised the following grounds:
"1 Whether the Ld. CIT(A) is justified in law and on facts in deleting the addition of Rs. 30,50,597/- on account of gift received from S.P. Singh when assessee failed to prove the genuineness of the gift?
2 Whether on the facts and circumstances of the case the Ld. CIT(A) was justified in accepting the genuineness of a gift from Non Resident Indian (NRI) brother of the assessee, in total disregard to the ratio laid down by the Hon'ble Supreme Court in the case of CIT V P.R. Ganapathy, (2012-TIOL-76-SC-IT) that the assessee has to show adequacy of funds in the hand of foreign donor for aforesaid gift donation?31
3 Whether on the facts and circumstances of the case adverse and rebuttable presumption should have been drawn about genuineness of the gift when the assessee over a period of seven assessment years has received total sum of Rs. 48648199/- crores as gift and another sum of Rs. 9480000/- as loan?
4 Whether the Ld. CIT(A) on the facts and circumstances of this is justified in law and facts in deleting the disallowance of Rs. 209503/- on account of expense on interest paid on loan against FDR claimed against interest income from other sources in violation of section 57(iii)?"
74 Grounds No. 1 to 3 - After hearing both the parties we find that during assessment proceedings the AO noticed that the assessee has received gifts of various sums totaling to Rs. 3050597/- from Shri S.P. Singh. On enquiry copy of the confirmation from assessee's brother Shri S.P. Oberoi stating that these amounts were given as gifts, were filed. However, he rejected the claim because the source etc. was not property proved by the assessee.
75 On appeal the Ld. CIT(A) deleted the addition vide para 16.2 which is as under:
"I have carefully considered the submissions of the assessee, the remand report and the impugned assessment order. Certain facts are found undisputed viz. that Shri SP Singh is the brother of the assessee and is an NRI, based in Dubai, that the amounts were received from SP Singh as revealed from the bank accounts and are reflected in the trial balance and balance sheet of the a e. Importantly the creditworthiness as well as the identity of the person has not been disputed either. The only apparent doubt in the mind of the Assessing Officer is the genuineness of the transaction claimed by the assessee and his brother as gifts, besides the non-filing of FIRCs. In connection with the nature of the receipts, the assessee has in his submissions stated that in the assessment proceedings for assessment year 2009-10, the DCIT, International Taxation, Chandigarh has accepted the gift as genuine. The Assessing Officer is silent on this matter except stating that the certification obtained from Dubai as well as availability of sufficient funds with Surinder Pal Singh does not prove the purpose of remittance. Be that as it may, as regards the nature of the remittance, it is clear that the income-tax authorities cannot take two stands for the same transaction. Once the gift has been held to be genuine, there can be no dispute that the same will have to be accepted as genuine there can be no dispute that the same will have to be accepted as genuine in the hands of the assessee. The assessee further has discharged his onus cast upon him by producing the order of assessment of Shri SP Singh dated 30.12.2011 for assessment year 2009-10 passed by the DDIT, International Taxation, Chandigarh. Thus I accept the contention of the assessee and the ground of appeal is allowed."
76 Both the parties were heard.
77 After considering the rival submissions we find that that this issue is identical to the issue raised by the Revenue in ITA 32 No. 1193/Chd/2012 in case of Late Shri Pritam Singh and Gurjit Singh (Supra) which is of the same group. Both the parties agreed that the issue is identical to the issue agitated in Revenue's appeal in ITA NO. 1193/Chd/2012. W e find that this issue was adjudicated vide para 109 to 110 which are as under:
109 We have gone through the rival submissions carefully and find that the Ld. CIT(A) has decided this issue vide para 8.1 which is as under:
" I h av e c ar e f ul ly c o ns id er ed t he s u b m is s i ons o f t h e as s es s ee , th e r e ma n d r e p or t a nd th e i m p ug n ed as s es s m en t o r d er . C er t a in f a c ts ar e fo u nd un d is pu te d v i z. th at S hr i S P S in g h is th e s o n o f t he as s es s ee an d is a n N RI , b as e d i n Du b ai ; t h at t h e a m ou nts wer e r ec e iv e d fr o m SP S in g h as r ev e a le d fr o m t h e b a nk ac c o u nts an d ar e r e f lec t ed i n t he Tr ia l B al a nc e an d Ba l an c e S h ee t of t h e as s es s e e. I m por t an t l y , th e c r ed i tw or th i nes s as we l l as t h e i d en t ity of t h e p er s o n h as n ot b e e n d is p ut e d e it h er . T he o n ly ap p ar en t d ou bt in th e m i nd o f t he L d . A O is t h e ge n u in e nes s o f t he tr a ns ac t io ns c l a i me d by t he as s es s e e an d h is s on as g if ts , b es i des th e n o n - fi l i ng of F IR Cs . In c on n ec t i on w it h t he na tur e o f th e r ec e ip t, t h e as s e s s ee has in h is s u b m is s i o ns s t at ed t h at i n th e as s es s m e nt pr oc ee d i ngs for A Y 2 00 9- 1 0, t h e DC IT , In t er n at i on a l tax at i o n, Ch a n di g ar h has ac c e pt ed t h e g i ft as ge n u in e . T he L d AO is s i le n t o n t h is ma tt er ex c e p t s t at i ng t ha t t h e c er t if ic at e ob ta i n ed fr o m Du b ai as we l l as av a i l ab i l ity of s u ff ic i en t f u nds w it h S ur in d er Pa l S i ng h do es no t pr ov e t he pu r pos e of r em i tt a nc e . B e t ha t as it m ay , as r eg ar ds th e n a tur e of t h e r e m it t anc e, i t is c l ear th a t t he i nc o m e- t ax au th or it i es c an n ot tak e tw o s t a nd s for th e s a me tr a ns a c ti o n. O nc e t h e g i ft ha s be e n he l d t o b e g e nu i n e, th er e c a n be n o d is p ut e th at t he s a m e w i l l h av e t o be ac c e p te d as ge n u in e i n t h e ha n d o f th e as s es s e e . T he as s es s ee fur th er has dis c h ar ge d h is on us c as t u po n h i m by pr o duc i n g th e o r de r of as s es s m e nt o f S hr i. S . P. S in g h da t ed 3 0 .1 2 . 20 1 1 for A Y 2 00 9- 10 P as s e d by t he DD IT, In te r n a ti o na l T ax at i on , C ha n d ig ar h. T h us , I ac c e pt t h e c on t en t io n o f th e as s e s s ee an d t he g r o u nd o f ap p ea l is a ll o we d . "
Thus from above it becomes clear that the Revenue has already accepted the fact of giving gifts by Shri Surinderpal Singh. We have already admitted the application for additional evidence in ITA No. 1174/Chd/2012 in case of assessee. Relevant portion of reasons recorded for reopening of the assessment reads as under:
"The assessee S.P. Singh has given gifts of Rs. 4216458/- to his father Shri Pritam Singh and Rs. 1490000/- to his brother, Gurjit Singh during the year. The assessee has not field income tax return for Assessment year 2005-06. Entire amount has been remitted by him from UAE. Thus the source of gift of Rs. 5706458/- (Rs. 4216458 + Rs. 1490000) made by the assessee needs to be verified with respect to the capacity to make such huge gifts and this expenditure remains unexplained. As a result I have reason to that this income of Rs. 5706458/- has escaped taxation and the case needs to be opened u/s 147."
110 After issuing notice u/s 148 on the basis of above noted reasons the assessment was ultimately completed u/s 143(3) r.w.s. 148 in case of Shri Surinderpal Singh vide order dated 28.2.2013 for Assessment year 2005-06 in which it is clearly mentioned that the gifts given by Surinderpal Singh to Pritam Singh and Gurjit Singh were verified. It is also accepted in the assessment order that Surinderpal Singh is an NRI and running many business organizations and assessable income in India was nil. Therefore it becomes clear that source of gifts stand explained. therefore reasoning given by the LD. CIT(A) for deleting this addition, is 33 totally correct and accordingly we confirm the order of the Ld. CIT(A)."
Following the above we decide this issue against the revenue. 78 Ground No. 4 - After hearing both the parties we find that the assessee has claimed interest expenses amounting to Rs. 209503/- against the income from interest on FDRs. He did not allow this expenditure because interest was not paid for earning interest.
79 On appeal the addition was deleted by the Ld. CIT(A) by observing that FDRs were purchased from business funds and in the earlier years and no FDR was purchased during the year. In this respect she followed the decision of Hon'ble Supreme Court in case of ACG Associated Capsules Pvt Ltd V CIT, 343 ITR 89.
80 Both the parties were heard.
81 After considering the rival submissions we find that that identical case came up for in assessee's case in appeal filed by the Revenue in ITA No. 1187/Chd/2012 which has been adjudicated through consolidated order in case of Late Shri Pritam Singh and Gurjit Singh (supra) vide order dated 6.6.2014. This issue was considered and decided vide para 196-197 which are as under:
196 Before us, the submissions made before the Ld. CIT(A) were reiterated. It was further submitted that income was returned as business income and in this regard reference was made to computation of income (copy placed at page 14 & 15 of paper book). He also referred to pg 48 to 61 and pointed out that in this year there was no business which become clear from copy of profit and loss account (pg 48 of paper book). The total FDR were for Rs. 41.63 lakhs and loans from FDR is 26.05 lakhs. Assessee's own capital was Rs. 27.25 lakhs. All the FDRs are made from earlier years. These FDRs were purchased for commercial purposes i.e. for obtaining bank guarantee etc. and the loan against FDRs was used for construction business. Thus clearly the interest on FDRs was business income against which interest paid, if any, has to be allowed in the absence of any business receipts during the year. He again relied on the decision of ACG Associated Capsules Pvt Ltd. Vs. CIT (supra) and CIT Vs. Shri Ram Honda Power Equip, 289 ITR 475 (Delhi).
197 We have gone through the rival submissions carefully and find that admittedly the income from interest on FDR was returned as income from business and has also been assessed as income 34 from business. Further FDRs were purchased for the purpose of obtaining bank guarantee etc. for construction business i.e. against business purposes. If any loan has been taken against these FDRs for business purposes then such expenditure has to be allowed. Since there were no business receipts in this particular year i.e. why the Assessing officer has not accepted this contention. But we are of the opinion that loan was obtained for business purposes such interest has to be allowed. Accordingly we confirm the order of the Ld. CIT(A)."
Following above we decide this issue against the revenue. 82 In the result, appeal of the Revenue in ITA No. 1189/Chd/2012 is dismissed.
ITA No. 1190/Chd/2012 - Revenue appeal83 In this appeal the revenue has raised the following grounds:
"1 Whether the Ld. CIT(A) is justified in law and on facts in deleting the addition of Rs. 17113602/- on account of gift received from S.P. Singh when assessee failed to prove the genuineness of the gift?
2 Whether on the facts and circumstances of the case the Ld. CIT(A) was justified in accepting the genuineness of a gift from Non Resident Indian (NRI) brother of the assessee, in total disregard to the ratio laid down by the Hon'ble Supreme Court in the case of CIT V P.R. Ganapathy, (2012-TIOL-76-SC-IT) that the assessee has to show adequacy of funds in the hand of foreign donor for aforesaid gift donation?
3 Whether on the facts and circumstances of the case adverse and rebuttable presumption should have been drawn about genuineness of the gift when the assessee over a period of seven assessment years has received total sum of Rs. 48648199/- crores as gift and another sum of Rs. 9480000/- as loan?
4 Whether the Ld. CIT(A) on the facts and circumstances of this is justified in law and on facts in deleting the addition of Rs. 5380,000/- u/s 68 on account of alleged unexplained cash credit from Surinder Pal Singh?
5 Whether the Ld. CIT(A) is justified in law and facts in deleting the disallowance of Rs. 170889/- on account of expense on it paid on loan against FDR claimed against interest income from other sources in violation of section 57(iii)?"
84 Ground No. 1 to 4 - This issue is identical to the issue raised by the revenue in assessment year 2006-07 as well as earlier years which has been decided above in para No.77. Following the same we decide this issue against the revenue. 85 Ground No. 5 - This issue of allowing the expenditure of interest by the Ld. CIT(A) is identical to the issue raised in Ground No. 4 of ITA No. 1189/Chd/2012 which has been 35 decided by above para No. 81. Following the same we dismiss the appeal of the revenue.
86 In the result, both the appeals of the assessee are partly allowed and both the appeals of the revenue are dismissed.
Order pronounced in the open court on 15.7.2014 Sd/- Sd/-
(SUSHMA CHOWLA) (T.R. SOOD)
JUDICI AL MEMBER ACCOUNTANT MEMBER
Dated: 15.7.2014
SURESH
Copy to: The Appellant/The Respondent/The CIT/The CIT(A)/The DR