Income Tax Appellate Tribunal - Amritsar
Chaman Lal vs Asstt. Cit on 25 February, 2002
Equivalent citations: (2004)88TTJ(ASR)475
ORDER
N.K. Sam. A.M. This is an appeal filed by the assessee against the order passed by the Assistant Commissioner Cir. 1(1), Jalandhar, (assessing officer in short) dated 29-10-1996 under section 158BC(c) of the Income Tax Act, 1961 for the block period 1-4-1985 to 10-10-1995.
2. On 10-10-1995, a search and seizure operation was conducted at the business and residential premises of the assessee situated at main bazar, Apra and village Apra respectively. During the course of search certain books of accounts and documents were found and seized, notice under section 158BC(a) was issued on 2-1-1996 and served on the assessee on 8-1-1996 for filing the return of undisclosed income. Pursuant to the notice, the assessee filed the return for the block period on 10-6-1996. declaring undisclosed income at nil. In the aforesaid return, the assessee declared the income as already assessed for the assessment years 1986-87 to 1995-96 and estimated the income for the assessment year 1996-97 as per following details :
Asst. yr.
Income declared/assessed 1986-87 26,627 1987-88 20,340 1988-89 21,840 1989-90 30,954 1990-91 18,600 1991-92 30,960 1992-93 38,050 1993-94 43,340 1994-95 47,700 1995-96 52,140 1996-97 25,000 3,55,551 The assessment was framed by the assessing officer under section 158BC(c)/143(3) at an income of Rs. 10,13,222. In that income, already assessed/shown income in the returnat Rs. 3,27,629 was adjusted whereby the undisclosed income was assessed at Rs. 6,85,593. The quantum of the undisclosed income within the block periodwas computed by the assessing officer as under :
Asst. yr.
Returned income Addition Total 1986-87 30,144
-
30,144 1987-88 30,295 25,000 55,295 1988-89 36,400
-
36,400 1989-90 30,954 1,37,000 1,47,954 1990-91 18,600 1,40,000 1,58,600 1991-92 30,960 1,12,000 1,42,960 1992-93 38,050
-
38,050 1993-94 43,340
-
43,340 1994-95 47,700
-
47,700 1995-96 52,140 50,000 1,02,140 1996-97 25,000 1,65,639 1,90,639 Total 3,83,583 6,29,639 10,13,222 For the assessment year 1987-88, the assessing officer made the addition of Rs. 25,000 on account of foreign trip by the assessee to Singapore, for the assessment year 1989-90, the addition of Rs. 25,000 was made on account of foreign trip of the wife of the assessee and Rs. 1,12,000 on account of deposit in the Bank account No. 1691 in Oriental Bank of Commerce, Moron, jointly held by the assessee with his wife. In the assessment year 1990-91, a sum of Rs. 1,00,000 was added orf account of the marriage expenses of one daughter of the assessee and Rs. 40,000 on account of foreign trip by the wife of the assessee. In the assessment 1991-92, a sum of Rs. 1,00,000 was added on account of marriage of the daughter of the assessee arid Rs. 12,000 was added on account of foreign drafts received by the assessee. For the assessment year 1995-96, Rs. 50,000 was added on account of marriage of the son (wrongly mentioned in the assessment order as foreign trip). In the assessment year 1996-97, a sum of Rs. 1,36,839 was added on account of construction of shop, Rs. 20,000 on account of household goods and Rs. 8,800 on account of investment in merrigold leasing company. The assessee has filed the present appeal against the various additions made by the assessing officer and raised the following grounds :
"1. That the order of the Assistant Commissioner is against law, facts and circumstances of the present case.
2. That the addition on account of foreign trips has wrongly been made in the hands of the assessee at Rs. 25,000 for the assessment year 1987-88, Rs. 25,000 for the assessment year 1989-90 and Rs. 40,000 for the assessment year 1990-91.
3. That the addition on account of marriage expenses of the children has wrongly been made at Rs. 1,00,000 for the assessment year 1990-91, Rs. 1,00,000 for the assessment year 1991-92 and Rs. 50,000 for the assessment year 1995-96.
4. That the addition of Rs. 12,000 on account of foreign draft during the assessment year 1991-92 is against facts on record."
5. That the Assistant Commissioner has further erred in making an addition of Rs. 1, 12,000 on account of Bank deposit during the assessment year 1989-90.
6. That the addition of Rs. 1,36,839 on account of construction work during the assessment year 1996-97 is mong and baseless.
7. That the addition of Rs. 8,800 on the purchase of merrigold bonds during the assessment year 1996-97 is wrong.
8. That the addition of Rs. 20,000 on account of investment for the household articles during the assessment year 1996-97 is without any base and against facts on record.'
9. That the appellant requests for the acceptance of the returned income by deleting the impugned addition made in the declared income of the assessee.
10. That the appellant requests for leave to add or withdraw any ground before the appeal is heard and disposed of."
3. The assessee has also raised an additional ground which is reproduced hereunder "That the assessing officer should have assessed the correct income from the socalled undisclosed source. The income has been assessed in excess at Rs. 55,954 and the same may kindly be excluded from the total assessed income."
4. Shri P.N. Arora, advocate, the learned counsel for the assessee, submitted that while preparing grounds of appeal, this ground was inadvertently not taken in the memorandum of appeal. However, the same pertains to the facts available on the record, and , therefore, this ground may be admitted and -decided in accordance with law.
5. The learned Departmental Representative on the other hand, objected to the admission of the ground of appeal.
6. We do not see any merit in the said contention of the learned departmental Representative. The Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC) has clearly stated : "Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised."
In the instant case, the facts are already on the record and therefore, we do not see any force in this contention of the learned Departmental Representative that the additional ground raised by the assessee may not be admitted. In that view of the matter, we admit the additional ground raised by the assessee.
7. Ground Nos. 1, 9 and 10 raised by the assessee are general in nature, requiring no specific findings, therefore, these grounds are not discussed.
8. Vide ground No. 2, the assessee is aggrieved by the addition on account of foreign trips at Rs. 25,000, Rs. 25,000 and Rs. 40,000 for the assessment years 1987-88, 1989-90 & 1990-91 respectively.
8.1. For making these additions, the assessing officer found that the assessee visited Singapore in July, 1986 and claimed that the total expenses were less than Rs. 10,000. According to the assessing officer, the assessee was allowed/issued US $ 500 for the visit to Singapore and no explanation had been given with regard to the source of expenses. Similarly, expenses were estimated at Rs. 25,000 for the visit of the wife of the assessee namely Smt. Dev Kumari to Singapore in November, 1988. The assessing officer made another addition of Rs. 40,000 by estimating the expenses of Smt. Dev Kumari who visited to UK in April, 1989.
8.2. The learned counsel for the assessee, Sh. P.N. Arora, submitted before us that the cost of the ticket to Singapore was Rs. 5,400 and the assessee had withdrawn a sum of Rs. 15,000 from his saving Bank a/c No. 1691 maintained with Oriental Bank of Commerce, Moron, on 5-5-1986 and again a sum of Rs. 10,000 from the aforesaid account was withdrawn on 4-7-1986. According to the learned counsel, the cost of US $ 500 at the relevant time was Rs. 10,000 and the assessee had withdrawn the same from his saving Bank account. He drew our attention towards page Nos. 16 & 17 of the paper book, in support of his contention that the amount was withdrawn from the Bank. As regards the cost of the ticket, he drew our attention towards page No. 75 of the paper book which is the photocopy of the ticket. The learned counsel for the assessee submitted that the assessing officer was not justified in making addition of Rs. 25,000 in respect of visit of the assessee to Singapore when the expenses required for that visit were properly withdrawn by the assessee from his saving Bank account. As regards to the visit of Smt. Dev Kumari wife of the assessee in November, 1988 to Singapore, it was submitted that at that time the cost of the ticket was Rs. 4,732 and the assessee had withdrawn a sum of Rs. 6,000 from Oriental Bank of Commerce on 27-9- 1988 (refer p. 76 of the paper book). It was also submitted that no currency was obtained from the Government for going to Singapore by the wife of the assessee. It was argued that during her visit to Singapore, the assessee's wife stayed with her brother and all the expenses during her stay at Singapore were met out by her brother. Accordingly, it was submitted that there was no justification in making the addition on account of the visit of Smt. Dev Kumari wife of the assessee in November, 1988. In respect of visit of Smt. Dev Kumari to UK during April, 1989, the learned counsel for the assessee submitted that the cost of the ticket to UK was about Rs. 12,000 which was obtained by withdrawing a sum of Rs. 15,000 on 5-4-1989 from the saving Bank a/c No. 1691 with the OBC jointly maintained by her and the assessee, and a reference was made to p. 22 of the paper book. It was also submitted that during her stay in UK. Smt. Dev Kumari stayed with her brother and had not incurred any expenses for her stay. The learned counsel for the assessee submitted an affidavit from Smt. Shanta Kumari wife of the brother of Smt. Dev Kumari, who confirmed that Smt. Dev Kumari stayed in UK with them. It was clarified that the aforesaid affidavit dated 1-10-2001 was obtained from Smt. Shanta Kumari who visited India on 17-8-2001 and due to that reason the same was not produced before the assessing officer. In the aforesaid premises, the learned counsel for the assessee contended that there was no occasion to make the additions in the hands of the assessee when the withdrawals from the saving Bank account were sufficient to meet out the expenditure incurred in respect of foreign visit.
8.3. In his rival submissions, the learned Departmental Representative Sh. S.J. Singh, submitted that the assessee had not proved on record that the amounts withdrawn from the O.B.C were utilised for the purposes of visit to foreign countries. It was also submitted that if the assessee had withdrawn the amounts from the Bank then why he had failed to disclose the source to the assessing officer. Accordingly, it was submitted that the assessee could not justify the source of expenditure but later on attempted to corelate the cash withdrawn from the Bank to justify the expenditure for the purchase of tickets, etc. The learned Departmental Representative emphasised that the assessing officer had no alternative but to estimate the expenditure on account of air-fare and other expenditure incurred during the visits to the foreign countries and was justified in making the additions because the assessee could not produce any evidence. It was also argued that averments made by the learned counsel for the assessee could not be accepted for the reasons that he could not prove that the withdrawals from the Bank on various dates, were in fact, used for the purchase of air tickets. It was also argued that the affidavit produced in India after a period of more than 10 years has no evidential value to prove that the wife of the assessee stayed with her brother and they incurred expenditure during her stay. It was contended that the explanation of the assessee is purely an afterthought and as such the evidences produced by the assessee are liable to be rejected.
8.4. We have heard both the parties at length and carefully gone through the material available on the record. In the instant case, it is evident from the copy of the passbook produced by the assessee that a sum of Rs. 15,000 was withdrawn on 5-5-1986 and also another amount of Rs. 10,000 was withdrawn on 4-7-1986. It is not the case of the assessing officer that the assessee has utilised the aforesaid amount of Rs. 16,000 withdrawn form the Bank for making investment elsewhere. It is also not in dispute that the assessee visited Singapore in July, 1986 and as per copy of the passbook placed at p. 72 of the paper book, the foreign exchange realised on 19-7-1986 was US $ 600 only. It is also an admitted fact that nobody is allowed to carry out the foreign exchange in excess of the permitted amount which is mentioned in the passport. The emigration department is very vigilant to see that the passenger is carrying only that foreign exchange which is mentioned in the passport. It is not disputed by the department. that the cost of the ticket was at Rs. 5,400 which is also clear from the photocopy of the air-ticket placed at p. 75 of the paper book. Considering the entire facts as discussed above, we are of the view that the assessing officer was not justified in making the addition of Rs. 25,000 on account of visit of the assessee to Singapore in the year 1986 i.e., in the assessment year 1987-88, when the assessee explained the full particulars duly evidenced by withdrawals from the Bank. As regards the visit of Smt. Dev Kumari to Singapore, in November, 1988 is concerned, the cost of the air-ticket at Rs. 4,732 is not disputed at any level. It is also not in dispute that a sum of Rs. 6,000 was withdrawn from the O.B.C on 27-9- 1988 which is apparent form the photocopy of the passbook placed at p. 21 of the paper book. This contention of the learned counsel for the assessee could not be denied that the expenses were met out by her brother during her stay in Singapore. It is customary in the society that the brother looks after her sister during her visit to him particularly when he is residing abroad. In that view of the matter, we do not find any justification on the part of the assessing officer in estimating the addition of Rs. 25,000 on account of visit of Smt. Dev Kumari to Singapore. Moreover, the assessing officer has not given any basis for estimating the expenses at Rs. 25,000 particularly when the assessee had shown a withdrawal of Rs. 6,000 to meet out the cost of the airticket amounting to Rs. 4,732. As far as foreign exchange utilised for the visit to Singapore is concerned, nothing is available on the record, particularly from the copy of the passport placed at p. 84 is not clear whether the foreign exchange of US $ 600 was withdrawn which is usually available to a person visiting abroad. For that reason, we setaside this limited issue to the file of the assessing officer to verify from the original copy of the passport whether any amount was withdrawn in foreign exchange for the visit in November, 1988 by Smt. Dev Kumari wife of the assessee. The assessee is free to produce any evidence/ material to explain the case in that regard.
As far as addition of Rs. 40,000 on account of the visit of Smt. Dev Kumari to UK in April, 1989 is concerned, it is not disputed that a sum of Rs. 15,000 was withdrawn by her from the joint saving Bank a/c No. 1691 with Oriental Bank of Commerce on 5-4-1989 and the visit to the UK was also in April, 1989. In that view of the matter, we do not find any logic in not considering the withdrawals to meet out the cost of the air-ticket.
As regards the expenditure on account of foreign currency is concerned, it is very much clear from the photocopy of the passport placed at p. 84 of the paper book that no foreign exchange was issued on 19-4-1989, i.e., on the date of the visit of Smt. Dev Kumari when no amount was carried by Smt. Dev Kumari to abroad. Then there was no question in estimating the expenses because the expenses can be incurred out of money which is in possession of a person and it is also an admitted fact that nobody can carry foreign exchange without mentioning in the passport. The contention of the learned counsel for the assessee is supported by the affidavit of Smt. Shanta Kumari who categorically submitted that during her visit to U.K. Smt. Dev Kumari stayed with them and she was looked after by them. In that view of the matter, we find no justification in estimating the expenses at Rs. 40,000 and making the addition in the hands of the assessee. The same deserves to be deleted. This ground of appeal is disposed of in the manner narrated above.
9. Vide ground No. 3, the assessee has challenged the addition of Rs. 1,00,000 in each of the asst. yrs, 1990-91 & 1991-92 on account of marriages of his daughters and Rs. 50,000 on account of marriage of his son in the asst. yr, 1995-96.
9.1. For making the additions, the assessing officer observed that the assessee performed the marriage of his two daughters and one son in the years 1989, 1990 and 1994 respectively and no expenses had been debited in the books of account on that account. It was claimed by the assessee before the assessing officer that the marriage were performed in a very simple manner and the expenses were made by him and his two sons. It was also claimed that the brothers and brothers-in-law of the assessee who were residing abroad helped him financially. However, the assessing officer estimated the expenses at Rs. 1,00,000 in the marriage of each daughter and Rs. 50,000 for the marriage of the son of the assessee and accordingly, the additions were made in the respective assessment years.
9.2. The learned counsel for the assessee submitted before us that the marriage of his first daughter was performed in October, 1989 and it was a very simple marriage. The assessing officer had relied on the seized document viz. Annex. A-2/9 which referred to the list of the persons to be invited on the marriage. It was argued that the list of other small articles mentioned in the papers seized was related to items which were intended, to be given at the time of marriage but they were not actually delivered and thus no cognizance of these dump papers can be taken and no addition can be made on the basis of such loose papers which do not convey any meaning. It was pleaded that it was not proved from anywhere that heavy amounts were spent on marriage. The reliance was placed on the decision of the Hon'ble Gujarat High Court in the case of CIT v. Murgesh Jaikrishna (2000) 245 TTR 38 (Guj). The learned counsel for the assessee further pointed out that the following amounts were withdrawn from the saving Bank account of the assessee maintained with the Oriental Bank of Commerce (reference was made to page Nos. 21 & 22 of the paper book) :
Date Amount 10-2-1989 20,000 11-2-1989 36,000 12-5-1989 20,000 26-11-1989 6,000 Accordingly, it was submitted that a sum of Rs. 82,000 was withdrawn by the assessee for the expenses of the marriage. It was also claimed that various gifts from relatives, friends and other well wishes of the family were received on the occasion of the marriage which the assessing officer had not taken into consideration.
As regards the marriage of second daughter, the learned counsel for the assessee submitted that it was a very simple marriage because the same was love marriage and was performed on 3-9-1990. It was submitted that no gift or dowry were given at the time of marriage and only small items required at the time of marriage were obtained by withdrawing the amount from thesaving Bank a/c No. 1691 maintained with the Oriental Bank of Commerce and a/c No. 14774 with Canara Bank. The details of the withdrawals were as under
Date Amount A/c No. 6-4-1990 10,000 14,774 9-6-1990 4,500 14,774 28-9-1990 18,000 1,681 It was claimed that on the occasion of the marriage of second daughter, very few people attended the marriage because the same was a love marriage and was performed without any punp and show. In respect of the marriage of the son of the assessee, the learned counsel submitted that the marriage was performed in October, 1994 which was very simple marriage. In support of his contention he referred to page Nos. 91 to 94 of the paper book which are the confirmation from Gram Panchanyat Sarpanch and the parents as wen as inlaws of the son of the assessee. It was also claimed that a sum -of Rs. 25,000 was withdrawn from the Canara Bank as per following details :
Date Amount Name of Bank & A/c 18-4-1994 15,000 Canara Bank & 10845 28-4-1994 10,000
-do- & 14774 It was also claimed that apart from the aforesaid withdrawals from the Canara Bank, a sum of Rs. 24,000 was withdrawn from the books of M/s Faquir Chand Chaman Lal in which the assessee was a partner in October, 1994. Reference was made to p. 123 of the paper book. It was argued that the marriage had to be performed very simple because the father of the girl unexpectedly expired and the whole family was in grief. The learned counsel further submitted that the jewellery at the time of marriage was given by the family members and which was very nominal. In support of his contention, the learned counsel submitted that at the time of search conducted on 10-10-1995, the total gold available with the assessee and his wife, his two sons and daughters-in-law was around 70 to 80 tolas and the same was not seized by the department. Accordingly, it was submitted that if the marriage had been performed lavishly, there would have been jewellery available in the residence of the assessee. The learned counsel for the assessee, further brought our attention towards page No. 11 of the paper book which was the reply of the assessee in response to the notice dated 6-5-1996 wherein vide para 2(b), it was stated as under :
"2(b) That as regards the marriage expenses of my two daughters and son is concerned, firstly, the marriate was very simple and the family expenses are met by all of us, i.e., myself and my two children. In addition to this my real brothers and my in-laws, mainly residing abroad also helped me financially."
On the basis of the aforesaid statement, it was claimed that the marriage were very simple and whole of the family contributed towards the expenses related to the marriage. The learned counsel further referred to page No. 114 of the paper book which was the statement recorded under section 132(4) and drew our attention towards the question raised by the assessing officer in respect of expenses of the marriage. The answer given by the assessee was as under "The total expenses of around Rs. 40,000 were incurred by me on the marriage of each two daughters and was withdrawn out of my capital from M/s Faqir Chand Chaman Lal. This is also to add that one of my elder brothers Shri Krishan Chand (now in Canada) and my brother-in-law (Sandu) Ramesh Chander also extended their help on these marriages. As regard the valuable articles including jewellery, my wife presented about 35 gms. of gold jewellery to each of the daughters on their marriage. I may also add that I also remained in England between 1961 to 1974 in employment until I started my business in 1980. 1 worked with my parental concern M/s Daulat Ram Faqir Chand, Apra."
It was vehemently argued that the jewellery was given out of old jewellery of the wife of the assessee to each of the daughters and no expenses were incurred for fresh purchases. The reliance was also placed on the decision of Tribunal, Bangalore Bench in the case of Asstt. CIT v. H.M. Sathyanarayana Setty (2001) 71 TTJ (Bang) 186. It was contended by the learned counsel for the assessee that the assessing officer has not pointed out anything on record to establish that the assessee incurred the expenses lavishly, so there was no justification in estimating the marriage expenses at Rs. 1 lac in the case of each daughter and Rs. 50,000 in the case of son. The learned counsel for the assessee submitted that the addition made by the assessing officer was based on surmises and conjectures and was not supported by any evidence. Hence the same deserves to be deleted.
9.3. In this rival submissions, the learned Departmental Representative supported the order of the assessing officer and also submitted that the assessee had not debited any expenditure incurred by him in his books of account and also not produced any evidence with regard of source of expenses in connection with the marriage ceremony. It was stated that from p. 30 of the paper book, it would be clear from the quantity of sweets that number of guests were sought to be around 500 because the quantity of sweets mentioned there was pakoras 25 kg., laddu 30 kg., mathi 31 kg., shakerpara 25 kg. and if 25 kg. pakoras were served to the guests and each guest consumed 50 gm.s. of pakoras then the number of guests were sought to be 500. Accordingly, it was submitted that the marriage ceremony was not a simple ceremony. He also drew our attention towards p. 29 of the paper book and contended that even on "shagun" of one of the marriages, the assessee had mentioned various items including A.C., scooter, two jewellery set, 12 bangles, rings, godrej almirah, etc. and on that basis it was contended that the marriage was not so simple as claimed by the assessee, He justified the assessing officer in estimating the expenses on the occasion of the marriages. It was also stated that the assessee never produced any evidence before the assessing officer despite of various opportunities.
9.4. We have heard both the parties at length and carefully gone through the orders of the (Assistant Commissioner Cir. 1(1), Jalandhar) assessing officer. In the instant case, it is not in dispute that the expenses were estimated by the assessing officer but no detail in respect of those was given. It is also noticed that the assessee had withdrawn a sum of Rs. 82,000 as referred above from saving Bank a/c No. 1691 with O.B.C. (Oriental Bank Of Commerce) (as mentioned at page Nos. 21 & 22 of the paper book). It is not the case of the assessing officer that the assessee had spent this amount for any other purposes. It is also noticed from the statement of the assessee under section 132(4) placed at page No. 114 of the paper book that the explanation in respect of valuable articles including jewellery was given that the same were presented by the wife of the assessee. This contention was not denied at any stage. It is also noticed that while estimating the expenses the assessing officer did not give the details of expenses on the basis of documents seized/found at the time of search. It is not the case of the assessing officer that marriages were performed lavishly. This contention of the assessee that his relatives who were residing abroad helped him at the time of marriages was also not denied. It is also not in dispute that the assessee withdraw a sum of Rs. 27,500 on the occasion of the marriage of the second Jaughter which was a love marriage. it is not the case of the assessing officer that many persons attended the marriage of second daughter and even the learned Departmental Representative referred to the list of the guests for the first marriage i.e., in respect of first daughter and said nothing for the marriage of second daughter. It is also not denied that the father of the girl who was married to the son of the assessee expired and due to that reason the ceremonies were performed very simple. This fact is also supported by the certificate of the Gram Panchayat Sarpanch and in-laws of the son of the assessee. It is noticed that a sum of Rs. 24,000 was withdrawn in the month of October, 1994 by the -assessee from the books of the firm M/s Faquir Chand Chaman Lal as per following details :
Date Amount 20-10-1994 4,000 22-10-1994 20,000 24,000 From p. 33 of the paper book, it is noticed that the sum of Rs. 10,000 was withdrawn on 29-4-1994 from the savings Bank account No. 14774 of the Canara Bank Apara, District Jalandhar and another sum of Rs. 15,000 was withdrawn on 18-4-1994 form the Canara Bank, account No. 10845 (refer to p. 38 of the paper book).
From the above narrated facts, it is noticed that the assessee withdrew a sum of Rs. 82,000 at the time of marriage of first daughter and Rs. 27,500 at the time of marriage of second daughter which was a love marriage and a sum of Rs. 49,000 for the marriage of son which was performed in a simple way due to the death of the father of the girl. It is also relevant to point out that the contention of the assessee that his relatives who were residing abroad helped him at the time of marriages was not denied by the assessing officer at the time of assessment proceedings. It is worth mentioning here that there is no other material on record which could prove this fact that the assessee had spent money lavishly at the time of marriages of his daughters and son, in fact, the assessing officer has not brought out any material on record to justify his action; even no basis has been given for estimating the expenses. On this score alone, the addition made by the assessing officer appears to be unjustified. In the instant case, the assessing officer never said that the items mentioned in the seized material, in respect of shagun items were given by the assessee to his daughters at the time of marriage. The Hon'ble Gujrat High Court in the case of CIT v. Murgesh Jayakrishna (supra) has observed that :
"The Commissioner (Appeals) found that there was no other evidence in the form of any notings regarding purchase of making of the ornaments; except the piece of paper found in the brief case, there was no other material to indicate that there was undisclosed investment in acquiring the ornaments. The Tribunal was right in holding that no addition could be made to the income of the assessee."
In the instant case also, the assessing officer has not brought anything on record to establish that the items mentioned in the seized documents were either purchased by the assessee or had given to his daughters at the time of marriages. In that view of the matter also, we are of the view that the assessing officer was not right in estimating the expenses on the occasion of the marriage. The learned counsel for the assessee also relied upon the following case laws :
(i) Monga Metals (P) Ltd. v. Asstt CIT (2000) 67 TTJ (All) 247
(ii) CIT v. Murgesh Jaykrishna (supra)
(iii) CIT v. Smt. Usha Tripathi (2001) 249 ITR 4 (All)
(iv) CIT v. Ravi Kant Jain (2001) 250 ITR 141 (Del)
(v) Dolly Farms & Resort (P) Ltd. v. Dy. CIT (2000) 74 TTD 147 (Del)(TM) In the decision of Tribunal Delhi 'A' Bench (Third Member) in the case of Dolly Farms & Resort (P) ITD v. Dy. CIT (supra), it has been held that :
"As a matter of fact, search and seizure is a serious invasion on the right of the subject. The search and seizure was really not known at earlier stages to common law. When it was for the first time introduced, it was confined only to stolen goods but its usefulness soon forced its recognition and its scope was from time to time extended. The provisions relating to search and seizure are intended to unearth the hidden or undisclosed income or property and bring it to taxation net. The objective of Chapter XIV-B is to get hold of evidence having bearing on the tax liability of a person which the said person is seeking to withhold from the assessing authority and to get hold of assets representing income believed to be undisclosed income. The word 'undisclosed income' is defined under section 158B(b). This provision of law relates to the branch of jurisprudence which affects some of the very important rights of a citizen. It is, therefore, to be narrowly watched, zealously guarded and never to be pressed beyond its true limits. It is risky to form presumption on the basis of the inadequate material. It is a trite law canonised in the well-known common law dictum "Fiat Justitia, ruat coelum" (Justice should be done even if the heaven falls).
In the instant case also, the presumption of the assessing officer are based on inadequate material. In other words, the basis of the assessing officer is not supported by any material or documentary evidence.
In the case of CIT v. Smt. Usha Tripathi (supra) the Hon'ble Allahabad High Court justified the Tribunal in deleting the addition made by the assessing officer by holding that :
"(a) that the provisions of section 145 of Income Tax Act, 196i, can be applied only after rejecting the books of account or documents found during the search as unreliable or on the ground that the true income cannot be deduced therefrom and that if the books of account or the documents found during the search are rejected, there is no question of any income or undisclosed income on the basis of such books of account or documents, which is a pre-requisite and only condition for computation of undisclosed income and (b) that under the provisions of sub-section (1) of section 158BB, the assessing officer was not justified in estimating the undisclosed income from April to December, 1995, for which there was no detail in any of the seized documents."
In the instant case also the assessing officer made the estimate but has not given any detail on the basis of the seized documents, hence the ratio laid down by the Hon'ble Allahabad High Court is also squarely applicable on the facts of the present case.
In the case of Asstt. CIT v. H.M. Sathyanarayana Setty (supra), the Tribunal Bangalore Bench held that :
"The departmental Representative has argued that the marriage cannot be performed with such a lesser amount in the family of a person of the status of the assessee. But he has not been able to substantiate contention with the support of any evidence. In the absence of any enquiries under the provisions of section 133A(5) and any questionnaire being issued to the assessee to ascertain the expenditure incurred for the marriage of his daughter, arbitrary addition of Rs. 1,20,000 without any legal or prudent basis is not justified in the eyes of law. The Commissioner (Appeals) is right in his findings and this addition cannot be sustained in the given circumstances of the case."
In the instant case, also, the assessing officer has not been able to substantiate his contention with the support of any evidence and also not asked the assessee any specific query to ascertain the expenditure incurred for the marriages of his daughters and son. The addition of Rs. 2,50,000 made by him is arbitrary, without any legal or prudent basis, so the same cannot be justified in the eyes of law.
On the basis of the aforesaid discussions, we are of the view that the assessing officer was not justified in estimating the expenses on the occasion of the marriages without any supporting evidence. On the other hand, the learned counsel for the assessee explained that the marriage were simple and the amounts were withdrawn from the Bank account as well as from the books of account where he was partner. In that view of the matter, we delete the addition made by the assessing officer and accordingly this ground of the assessee is allowed.
10. Vide ground No, 4, the grievance of the assessee relates to the addition of Rs. 12,000 on account of foreign drafts.
10.1. The assessing officer made this addition on account of foreign drafts dated 16-8-1990 and 21-8-1990 for Rs. 7,000 and Rs. 5,000 respectively. According to the assessing officer no explanation with regard to foreign remittances had been furnished and accordingly a sum of Rs. 12,000 was treated as assessee's unexplained investment for the assessment year 1991-92. It was claimed by the learned counsel for the assessee that the aforesaid drafts were received as shagun on the occasion of the marriage of daughter of the assessee on 3-9-1990 from the relatives who could not attend the marriage due to their personal reasons. It was argued that there was no reason for not accepting the submission of the assessee in this regard, when the entire transactions were routed through the Reserve Bank of India and, therefore, no addition was called for.
10.2. In his rival submissions, the learned Departmental Representative Sh, SJ Singh submitted that the assessee was receiving foreign remittance regularly so these two drafts cannot be considered as shagun received by the assessee on the occasion of the marriage of his daughters.
10.3. We have heard both the parties on this issue. It is noticed that the assessing officer made the addition by stating that the drafts received by the assessee amounting to Rs. 12,000 were his unexplained investment. We are unable to understand how the remittances received can be considered as investment. It is not the case of the assessing officer that the assessee invested any amount. On the other hand, the drafts were received by the assessee from the relatives residing abroad and it is not in dispute that the transactions were through Banking channel and it is not the case of the department that the assessee went to foreign countries and from there sent the drafts in his own name. The contention of the assessee cannot be disbelieved that the relatives sent the foreign drafts dated 16-8-1990 and 21-8-1990 for Rs. 7,000 and Rs. 5,000 respectively as shagun on the occasion fo the marriage of the daughter of the assessee. It is apparently clear that the drafts were dated 16-8-1990 and 21-8-1990. Both the dates were prior to the marriage of the daughter of the assessee which occurred on 3-9-1990. In that view of the matter, we find no justification to sustain the addition made by the assessing officer and accordingly, the same is deleted.
11. Vide ground No. 5, the assessee contended that the assessing officer erred in making an addition of Rs. 1,12,000 on account of Bank deposit during the assessment year 1989-90.
11.1. For making this addition, the assessing officer observed that the assessee was maintaining savings Bank a/c No. 1691 jointly with his wife of Smt. Dev Kumari in O.B.C. Moron and had not furnished any explanation with regard to the various credits in that account. He added a sum of Rs. 1, 12, 000 considering the same as the peak credit in April, 1988 and treated the amount of Rs. 1,12,000 as assessee's undisclosed income for the assessment year 1989-90.
11.2. The learned counsel for the assessee, Sh. P.N. Arora, submitted before us that the deposits in the said account represented small foreign remittances, income-tax refunds etc. and the assessee filed complete Bank accounts along with evidence of each deposit before the assessing officer. He drew our attention towards page Nos. 14 to 24 of the paper book and submitted that foreign remittances cannot be considered as undisclosed income of the assessee. He also relied on the decision of this Bench of the Tribunal in the case of S. Satnam Singh Nurmahal v. Income Tax Officer Ward-2, Phagwar, in ITA No. 947/Asr/1994 (assessment year 1990-91) order dated 1 1-6-2000. It was also submitted that it is not clear how the assessing officer calculated the peak credit because as per copy of the Bank pass-book, no such peak credit was there. It was submitted that the assessing officer considered the withdrawal by the assessee as peak credit and made the addition which is not supported by any evidence.
11.3. On the other hand, in his rival submissions, the learned Departmental Representative submitted that the assessee had not given any explanation regarding these credits and, therefore, in the absence of any explanation, the assessing officer was justified in making the addition.
11.4. We have heard both the representatives and also carefully gone through the material available on the record. From the copy of the passbook of savings Bank a/c No. 1691 maintained with O.B.C. Moron, placed at pp. 14 to 24 of the paper book, it is noticed that there are certain credit entries in the years 1987, 1988 and 1989. It is noticed that the credit balance of the assessee never touched the figure of Rs. 1,12,000 which the assessing officer considered as peak credit. It appears that for calculating the peak credit during the year 1988, the assessing officer considered the following withdrawals :
Dated Amount 6-4-1988 11,000 22-4-1988 95,000 27-9-1988 6,000 Total 1,12,000 It is also noticed from the copies of the passbook of a/c No. 1691 and also from the certificate issued by the manager, O.B.C. Moron dated 28-5-1996 and 4-5-1989 placed at page Nos. 42 to 43 and 44 respectively of the paper book filed by the assessee that various credits were there on account of foreign remittances. The details of few is given as under :
Cheque/draft No. & date Drawer Amt.
credited/date 269519 Income-tax 3,428 2-2-1984 4526750 19-6-1985 Canara Bank 7,000 10-9-1985 239884 6-11-1986 Kala Ram 6,000 24-1-1986 059196 30-11-1986 S.B. No. 2381 12,000 21-2-1986 4822690 18-3-1986
-
10,000 4-4-1986 0117502 15-3-1986
-
5,000 4-4-1986 076110 20-11-1986 Bank of Oman 2,000 23-5-1986 0310921 At. Rajhi Co. for currency 3,500 13-6-1986 24-5-1986 30061 14-6-1986 Emirate Income Co. (P) LTD.
7,000 11-7-1986 07-6166.139 Bank of Oman 5,000 9-7-1986 07-7127-103
-do-
5,000 318385 3-6-1987 Bindays Bank 31,275 24-6-1986 257926 14-6-1997 Habirb Bank Ltd.U.A.E. 3,000 17-7-1987 0749362 26-8-1987 Canadian Imp. Bo. Comm.
21,000 25-9-1987 4749458 7-3-1988
-do-
40,000 12-4-1988 4749431 4-3-1988
-do-
40,000 12-4-1988 3050858 24-9-1988 Ounsnotary Kanjhi Ex, Co.
6,000 12-7-1988 4749540 Canadian Imp. Bank of Commer.
10,000 16-11-1988 23-9-1988 4749569 26-11-1989
-do-
20,000 7-1-1989 532114 20-01-1989 I.O.B. 32,000 6-2-1989 918985 9-1-1989 R.R. Sharma 40,000 10-2-1989 1049866 30-7-1989 Knoli Abrahim Al Fardan 6,000 28-8-1989 348 R.K. Sharma 41,151 20-9-1989 420 28-9-1989 Satish Sharma 41,151 4809592 26-9-1989 R. Maliwas 5,000 3-11-1989 399976 12-5-1992 I/T Refund 5,240 26-6-1992 To whom it may concern 4-5-1989 It is certified that following amts have been credited in S/B 1691 a/c Chaman Lal Ghai & Dev Kumari as follows :
474958 12-4-1988 Canadian Imperial Bank 39,900 474951
-do-
39,900 301530858 12-7-1988 Parshotam Kanji Exchange 5,980 4749540 16-11-88 Canadian Bank 9,970 4749569 9-1-1989 Canadian Imperial Bank of Commerce 19,945 532176 6-2-1989 Faridabad 31,915 918925 10-2-1989 Canadian Bank 39,900"
From the aforesaid details given in the Bank certificate, it is clear that the assessee was receiving foreign remittances from the year 1986 onwards. The assessing officer did not dispute the remittances for the financial years 1987, 1989, 1992 & 1996. It is surprising to note that the assessing officer only picked the financial year 1988 for making the additions, although he accepted the foreign remittance for all other years. As we have already noted that the addition made by the assessing officer was not for the credit entries but on the basis of withdrawals by the assessee. The withdrawal of Rs. 95,000 on 22-4-1988 was shown for the purchase of car and a sum of Rs. 6,000 withdrawn on 27-9- 1988. We have already considered in respect of purchase of ticket for the visit of the wife of the assessee to Singapore while dealing with ground No. 2 raised by the assessee. It appears that the assessing officer had not appreciated the facts in right perspective. As we have already noted that the assessing officer did not disbelieve the credits in the account of the as9'essee but made the addition on the basis of the withdrawal considering the same as peak credit. It seems that the basis of the assessing officer for making the addition is without any material/evidence available on the record. Considering the totality of the facts and circumstances of the present case, we are unable to sustain the addition made by the assessing officer and the same deserves to be deleted.
12. Vide ground No. 6, the assessee challenged the addition of Rs. 1,36,839 on account of construction work during the assessment year 1996-97.
12.1. For making this addition, the assessing officer observed that as per seized documents contained in Annex. A-2/9, as per pp. 1 to 10 & 12, the assessee spent a total sum of Rs. 1,36,839 in the construction work, and since the assessee had not furnished any explanation for investment in the purchase of material and other connected expenses, the sum of Rs. 1,36,839 was treated as undisclosed investment for the assessment year 1996-97. Accordingly, the addition was made.
12.2. The learned counsel for the assessee submitted that the assessee purchased various items of raw material, etc. for the construction purposes on credit basis and thus the total amount has wrongly been added in the taxable income of the assessee. It was submitted that one shop was sold on 4-4-1995 for a sum of Rs. 1 lac and the amount was received in cash. It was claimed that the registration/sale deed was also seized by the department and the same is placed at p. 58 to 63 of the paper book. It was pointed out that the assessing officer had not considered that this amount was. available with the assessee for the construction purposes, although the sale deed was seized from the premises of the assessee. It was claimed that full explanation was given to the assessing officer vide reply dated 18-5-1996 in response to the notice dated 6-5-1996. It was claimed that the assessing officer did not appreciate the facts properly, so there was no justification in making the addition when most of the items required for the construction work were purchased on credit basis and moreover, a sum of Rs. 1 lac was available with the assessee which was received on account of the sale of shop on 4-4-1995. Accordingly, it was submitted that the assessing officer made the addition arbitrarily without considering the explanation of the assessee.
12.3. In his rival submissions, the learned Departmental Representative submitted that the assessee could not explain the source of this construction at the time of assessment proceedings despite the fact that various opportunities were allowed to him. It was further submitted that the claim of the assessee could not be accepted for the reasons that the assessee has not produced these details at the time of assessment proceedings and moreover, the assessee could not prove on record that the amount received on sale of property has been invested for the construction of the shop. Therefore, the assessing officer rightly made the addition Rs. 1,36,739 in the absence of any explanation to him.
12.4. We have heard both the parties at length. It appears that the assessing officer had not considered the material available on the record particularly the amount of Rs. 1 lakh received by the assessee on account of sale of the shop, copy of the registered sale deed is available at page Nos. 58 to 64 of the paper book. It is not in dispute that the assessee has sold the shop for Rs. 1 lakh on 4-4-1995. One of the claims of the assessee was that few of the items required for the construction work were on credit basis. This explanation of the assessee has also not been considered by the assessing officer. Considering the entire facts, as discussed above, we are of the view that proper opportunity should be given to the assessee to explain its case. In that view of the matter, we restore this issue to the file of the assessing officer to decide the same afresh after affording reasonable opportunity of being heard to the assessee. The assessee is also free to adduce any evidence in support of its claim before the assessing officer.
13. Ground No. 7 raised by the assessee relates to the addition of Rs. 8,800 on account of purchase of merrigold bonds during the assessment year 1996-97.
13.1. According to the assessing officer, the assessee invested a sum of Rs. 8,800 in the name of self and his wife on account of purchase of bonds of marrygold leasing company and no explanation with regard to the source of that investment was given. Accordingly, the addition of Rs. 8,800 was made.
13.2. Before us, the learned counsel for the assessee submitted that the investment in the aforesaid bonds were made by depositing a sum of Rs. 2,200 per month and the amount was paid by all the family members out of their savings and withdrawals from time to time. It was submitted that family of the assessee consists of five members out of which three are earning hands. So they were in a position to invest the money from their savings.
13.3. On the other hand, the learned Departmental Representative argued that no explanation was furnished before the assessing officer to prove the source of investment in the merrigold bonds and hence the assessing officer was justified in treating the amount of Rs. 8,800 as undisclosed income of the assessee.
13.4. We have heard both the parties and are of the view that the assessee could not produce any evidence before the assessing officer to justify his claim that the amount invested was out of his savings. No documentary evidence was produced to establish this contention that the amount was paid by all the family members out of their savings and withdrawals from time to time. In the absence of any evidence, we decline to interfere with the findings to the assessing officer. Accordingly, the addition of Rs. 8,800 is confirmed.
14. The next ground relates to the addition of Rs. 20000 on account of investment the household articles.
14.1. For making this addition, the assessing officer observed that during the course of search at the residential premises of the assessee certain household goods were found and the assessee was asked to explain the acquisition of those goods. The assessee submitted vide his letter dated 18-5-1998 that some of those goods were old ones and deck, colour TV and Washing machine were purchased by his brother and in-laws. It was claimed that the assessee had not spent any amount on the purchase of those articles. However, the assessing officer made the addition of Rs. 20,000 on the basis of estimate only and treated the same as undisclosed investment of the assessee for the assessment year 1996-97.
14.2. The learned counsel for the assessee submitted that washing machine was given as a gift by his brother-in-law who purchased the same on 27-9- 1986. He drew our attention towards p. 65 of the paper book. In respect of colour 'IV,.the learned counsel for the assessee submitted that the same was given by the wife of his real brother who brought it from abroad and paid the custom duty of Rs. 111.60 on that colour TV. In support of his contention, he drew our attention towards page No. 66 of the paper book which is the receipt for the custom duty paid on the colour TV. It was argued that the assessing officer nowhere mentioned that the assessee purchased the items in question during the year under consideration. It was contended that all the items were old items and were acquired from time to time and particularly the deck was purchased somewhere in 1982 for Rs. 500 only. In support of other items, it was submitted that the value of those items was less than Rs. 3,000 which were received free of cost as gift from his relatives. So there was no justification in making addition in the hands of the assessee on account of old items.
14.3. In his rival submissions, the learned senior departmental submitted that the assessee has not disclosed the ownership of those articles, so the assessing officer was justified in estimating the value of those articles of Rs. 20,000.
14.4. After hearing the learned representatives of both the parties and considering the material available on the record, we are of the view that the assessing officer was not justified in making addition because he has not established on record that the assessee in fact purchased those items during the year under consideration. There is some force in this contention of the assessee that the washing machine was given as gift by his brother-in-law and the same was purchased on 27-9- 1986, copy of the bill of purchase is placed at page No. 65 of the paper book. Similarly,, the colour TV in question was brought to India on 27-12-1988 by Mrs. Kamlesh wife of brother of the assessee and custom duty of Rs. 111.60 was paid on that colour TV.
From the aforesaid facts, it is clear that the washing machine as well as colour TV were not purchased during the year, so there was no occasion to consider the same as undisclosed investment of the assessee for the assessment year 1996-97. It is undisputed fact that the assessing officer nowhere mentioned that the assessee purchased the items in question during the year under consideration. In that view of the matter, we are unable to sustain the addition made by the assessing officer and the same deserves to be deleted and accordingly we allow this ground of assessee.
15. The assessee vide his addition ground stated that the income of the assessee was assessed in excess of Rs. 55,954.
15.1. It is stated that the assessee disclosed a sum of Rs. 3,55,551 as his income -for the block period 1-4-1985 to 9-10-1995 and the detail furnished is as under :
Financial year Asst. yr.
Income Net Income 1985-86 1986-87 Business income 26,627 26,627 1986-87 1987-88
-do-
20,340 20,340 1987-88 1988-89
-do-
21,840 21,840 1988-89 1989-90
-do-
30,954 30,954 1989-90 1990-91
-do-
18,600 18,600 1990-91 1991-92
-do-
30,960 30,960 1991-92 1992-93
-do-
38,050 38,050 1992-93 1993-94
-do-
43,340 43,340 1993-94 1994-95
-do-
47,700 47,700 1994-95 1995-96
-do-
52,140 52,140 1995-96 (Till 9-10-1995) 1996-97
-do-
25,000 25,000 3,55,551 It is noticed that the assessing officer had considered a sum of Rs. 3,27,629 towards the income already shown by the assessee. It appears that the assessing officer considered the income of following years wrongly :
Asst. yr.
Returned income as shown in form No. 2B Returned income as shown by the Assessing Officer Diff.
1986-87 26,627 30,144 3,517 1987-88 20,340 30,295 9,955 1988-89 21,840 36,400 14,560 1989-90 30,954 30,954
-do-
1990-91 18,600 18,600
-do-
1991-92 30,960 30,960
-do-
1992-93 38,050 38,050
-do-
1993-94 43,340 43,340
-do-
1994-95 47,700 47,700
-do-
1995-96 52,140 52,140
-do-
1996-97 25,000 25,000
-do-
3,55,551 3,83,583 28,032 On perusing the above figures, it is clear that the assessing officer considered the income disclosed by the assessee by mistake at Rs. 3,27,629. In that view of teh matter, we find substantial force in this ground of the assessee and restore the issue back to the file of the assessing officer and direct him to verify the figures from the return filed by the assessee and only after proper verification, the correct figures should be taken while computing the income of the assessee.
16. In the result, the appeal of the assessee is partly allowed as indicated above.