Income Tax Appellate Tribunal - Indore
Hitesh Mehta, Bhopal vs Assessee on 13 February, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARMA, A.M.
PAN NO. : ABFPM9882E
I.T(SS).A.Nos. 149 to 153/Ind/2012
A.Ys. : 2003-04 to 2007-08
Shri Hitesh Mehta, ACIT,
Bhopal vs 3(1),
Bhopal
Appellant Respondent
PAN NO. : ABFPM9683F
I.T(SS).A.Nos. 160 to 166/Ind/2012
A.Ys. : 2003-04 to 2009-10
Shri Sandeep Mehta, ACIT,
Bhopal vs 3(1),
Bhopal
Appellant Respondent
PAN NO. : AFSPM8170Q
I.T(SS).A.Nos. 268 to 273/Ind/2012
A.Ys. : 2003-04 to 2008-09
ACIT, Shri Surendra Mehta,
3(1), vs Bhopal
Bhopal
Appellant Respondent
PAN NO. : AFSPM8170Q
I.T(SS).A.Nos. 154 to 159/Ind/2012
A.Ys. : 2003-04 to 2008-09
Shri Surendra Mehta, ACIT,
Bhopal vs 3(1),
Bhopal
Appellant Respondent
PAN NO. : ABFPM9882E
I.T(SS).A.Nos. 206 to 212/Ind/2012
2
A.Ys. : 2003-04 to 2009-10
Shri Sanjay Mehta, ACIT,
Bhopal vs 3(1),
Bhopal
Appellant Respondent
PAN NO. : AFSPM8168A
I.T(SS).A.Nos. 167 to 172/Ind/2012
A.Ys. : 2003-04 to 2008-09
Smt.Priya Mehta, ACIT,
Bhopal vs 3(1),
Bhopal
Appellant Respondent
Assessee by : Shri Yeshwant Sharma, C.A.
Department by : Smt. Mridula Bajpai, CIT DR
Date of Hearing : 13.02.2013
Date of : 22.03.2013
pronouncement
ORDER
PER R. C. SHARMA, A.M.
HITESH METHA : I.T(SS).A.Nos. 149 to 153/Ind/2012 :
These are the appeals filed by the assessee against the order of CIT(A) dated 2.3.2012 for the assessment year 2003-04 to 2007-08 in the matter of order passed u/s 153A read with Section 143(3) of the Income-tax Act, 1961. 2 3
2. Rival contentions have been heard and records perused. There was search & seizure operation u/s 132(1) at the residential premises of the assessee at E-5/148, Arera Colony, Bhopal, on 30.5.2008. During course of search incriminating material was found on the basis of which assessments were framed u/s 153A in respect of all the years under consideration. The additions were made by the Assessing Officer on the basis of cash deposited in the Bank as well as agricultural income not accepted by the Assessing Officer and the same was treated as income from other sources.
3. By the impugned order, the ld. CIT(A) confirmed the action of Assessing Officer on account of treating agricultural income as income from other sources. However, additions made on account of cash deposited were deleted by the ld.CIT(A) by observing that cash deposited in the Bank is lower than the addition on account of agricultural income in all the years under consideration. Against the above order of CIT(A), the assessee is in further appeal before us. However, no appeals have been filed by the 3 4 Revenue with regard to deletion made on account of cash deposited in the Bank account.
4. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that during the course of assessment, the Assessing Officer found that the assessee was not carrying on agricultural activity himself. The Assessing Officer also found that original copy of lease agreements were not produced. After recording his reasons, he treated agricultural income as income from other sources. Same reasoning was given by Assessing Officer as given in the case of Arun Sehlot. Precise observation of Assessing Officer was as under :-
"1. The entire agriculture operation has been done on lease hold land only, No land owned by the assessee has been used for agriculture operation. As per the photocopy produced, the lease has been signed between the assessee and various farmers/landowners. Despite being asked specifically, the assessee did not produce the original agreement of the lease signed with the various farmers. The photocopy of a document which 4 5 has not been verified by any approved authority is not a valid document. This fact has been established in various cases and in various courts of this country. The assessee in his reply in point no. I stated that he " Shall submit the same to your good self no sooner these are located'. The Assessee however did not submit the original lease agreement till the end of assessment proceedings.
History of assessment proceeding u/s 143(3) or Raj Group of Industries for AY 2005-06:-
During the assessment proceedings of A Y 2005-06 for various companies (M/s Raj Homes Pvt. Ltd. M/s Minal Builders Pvt. Ltd., M/s Raj Events & Entertainment Pvt. Ltd.) in which Mr. Arun Sehlot is Director/Partner or has substantial interest), it was found that the companies have claimed agriculture income, shown to have done through lease agreements. The issue of agriculture income was enquired into by the ACIT-3(1) during the scrutiny proceedings u/s 143(3) for A.Y, 2005-06. To verify the authenticity of lease agreement, various fanners whose name appears in the lease agreements, provided by the various companies. were called. Majority of the fanners 5 6 appearing before the ACIT -3(1) during the assessment proceedings gave a statement on oath denying that they had ever given a lease to any of the Raj Group of companies Some of the farmers gave sworn affidavits duly notarized stating that they don't know Arun Sehlot. his family members or Raj Group of Industries and the lease agreements produced during the assessment proceedings are bogus. Faced with the truth the AR of Raj group of companies agreed to surrender the entire agriculture income exemption claimed and asked for the agriculture income to be treated as income from other sources vide a letter submitted to the office of AClT-3(l). Furth.er some of these farmers were cross examined by the counsel of the Raj Group of Industries during penalty proceedings u/s 271(1)(c) and even then, they denied giving any land on lease to Raj group of industries.
2. The Assessing Officer also recorded statement of these farmers on the basis of which he reached to the conclusion that the lease agreement alleged to be entered by the assessee with the farmers was untrue. Precise observation of Assessing Officer was as under :- 6 7
After the lease agreements were found to be untrue during assessment proceedings for A.Y.2005--06 for his various companies, the assessee was intentionally avoiding presenting original of the lease documents during the current assessment proceedings. This leads to the suspicion that the documents were not genuine and hence the assessee was unwilling to produce the forged documents.
It is note worthy to mention that during tile search and survey proceedings conducted on 30.05.2008 at all the premises of the assessee and his various companies original agriculture lease document were not found. Considering that the assessee his family members and the various company in which he has a director have signed annual lease contracts for a period A.Y. 2002-03 to 2007-08 with upto 10 Individual farmers per year it is surprising that no agreement was found during search and seizure operation nor have been produced by the assessee himself during the assessment proceedings. The assessee seems to be intentionally avoiding presenting such agreements. The assessee 7 8 also claims that he has shifted his office two or three times. He was asked the proof of such shifting which he was unable to provide.
In reply to question 27 (ii) of the questionnaire u/s 142(1) where the assessee was asked to produce land record book etc. the assessee vide point-2 of submission dated 12.08,2010 enclosed copy of Khasra Khatoni and Form P-II, as a Zerox copy. Again the original of the Khasra Khatoni and Form P-II was not produced and as such the authenticity of the submission made is doubtful. The Khasra Khatoni was submitted for various years. Both the Khasra Khatoni and Form P-II have the name of farmer on it and did not mention the name of assessee on it. None of the documents proved that the assessee has done agriculture operations on the above mentioned land, As a matter of fact the form P-II for various years e.g. F.Y. 2002-03 mentions that the farmer himself is doing agriculture operations on the said land. Similar facts exist for all the AY's. In reply to question 27 (iii) of the questionnaire U/S 142(1) where the assessee was asked to produce complete 8 9 location of the land the assessee gave an evasive reply saying that details of land are given in point no. 9 below. Going to point 9 of the assessee submission it was found that only the name of the village, Tehsil and District was mentioned no specific location of the land was provided. Despite being asked the assessee did not provide any such detail, probably with the view to prevent any field enquiry.
In reply to question 27(v) of the questionnaire u/s 142(1) where the assessee was asked to produce details of crop taken, expenditure Seed. fertilizer, pesticide, labour etc. the assessee replied vide point 8 of submission stated that evidences for expenditure in seed, fertilizer. pesticide, labour etc. are not readily traceable, Agriculture operation of the scale which the assessee claims to have done requires large amount of inputs. These have to bought on a regular basis and in large quantities. During the course of search and seizure operation held on assessee's premises as well as on various companies in which he is a director, no such bills 9 10 were found. If the assessee is doing such regular operations why can't be produce bills relating to various inputs which are required for agriculture. In reply to question 27(vi) of the questionnaire u/s 142(1) where the assessee was asked to produce details as to where the crop was sold with supporting evidence thereof, the assessee claimed that copy of Mandi receipt / sale bill was not readily traceable.
During the course of search and survey operation held conducted on 30.05.2008. on the various premises of the assessee his family members and various concerns in which he is a director etc. it was noticed that no sale bill related to agriculture sales was found. This is very surprising considering that assessee claimed to produce five different kinds of crops has sold them is various Mandis and has claimed Gross receipt of more than 10 Lac Rs. in various years during the assessment proceedings the assessee was repeatedly asked to produce various sale bills which he did not produced till the end of assessment Assessee however did produced an account statement of various sales in the following format:-
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S.No. Item Date Begs (sic. Rate Amount Total Place of sale SA Bags) For various assessment-years the place of sale was mentioned as follows:-
A.Y.2003-04 Krishi Upaj Mandi Samiti Udaipura Raisen, Krishi Upaj Mandi Sarniti Kareli, A.Y.2004-05 Krishi Upaj Mandl Samiti Udaipura Raisen, Krishi Upaj Mandi Samiti Tendukheda A.Y.2005-06 Krishi Upaj Mandi Samiti Udaipura Raisen, Local A.Y.2006-07 Krishi Upaj Mandi Samiti Udaipura Raisen, A.Y.2007-08 Krishi Upaj Mandi Samiti Ashta, Sehore, Local A.Y.2008·09 No detail submitted Register, Weighing Register for various months in which the assessee has claimed to make sales through the Mandis.
To understand the logic of sending summons a brief discussion on the process of sale operation of Mandi's is here by arranged in a flow chart format.
1. Farmers appear at the Gate of Mandi with his 11 12 agriculture produced. Is given a token and entry made in the Gate Register.
2. Farmers Goes to a counter where an employee of the mandi does open bidding on behalf of farmer and the highest bidder gets the right to procure.
The Mandi employee issues a voucher in, giving one copy to the farmer, one to the trader and one is kept for Mandi records. The vouchers contains name of farmer, trader, quantity, description and agriculture produce.
3. The Farmer and the trader then go to a Mandi - issued weighing scale where the produce is measured, another bill in triplicate is issued declaring the quantity of goods brought. The trader pays the farmer his dues as per the sale agreement and the Neelami Patrak.
4. The trader takes the goods out of mandi after paying 2% Mandi tax on the total purchase. A copy of the total purchase and Mandi tax paid on it, is submitted to the Mandi office, entered in a register and the bill preserved by the Mandi Office for records. 12 13
Going by the above discussion it is clear that if a farmer sells through a mandi his name will appear on the a. entry gate register, b. on the Nilami Register, c. on the Nilami document, and d. on the weighing register All Mandis in M.P. region diligently maintain these records specially the Nilami Register and Nilami Patrak, "
5. Before the CIT(A), the assessee furnished additional evidence under Rule 46A in the form of original lease agreements, original affidavits of farmers, original affidavits of assessee affirming deriving of agricultural income, original Khasra, Khatauni and Form No. P-2 which are placed on page 234-257 of the paper book and original receipt of payment of lease rent which was placed at page 232 to 457 of the paper book. However, the CIT(A) did not admit it on the plea that these were not produced before the Assessing Officer despite opportunity. The ld. CIT(A) 13 14 confirmed the addition by endorsing the findings given by the Assessing Officer.
6. It was argued by the ld. Authorized Representative that the documents produced before the CIT(A) goes to the root of the issue to explain to agricultural income earned by the assessee. He further submitted that in assessee's own case for the assessment year 2003-04, scrutiny assessment was framed u/s 143(3) wherein agricultural income returned by the assessee at Rs. 5,59,383/- were accepted by the Assessing Officer to the extent of Rs. 5,48,820/-. He further contended that even in assessment year 2004-05, the assessment was framed u/s 143(3) i.e. under scrutiny scheme, wherein agricultural income of Rs. 7,02,100/- shown by the assessee were fully allowed by the Assessing Officer. As per ld. Authorized Representative, even in the block return, the assessee has offered the same agricultural income, which were already offered in the regular return which was accepted by the Assessing Officer u/s 143(3), accordingly, disallowance of entire agricultural income by the Assessing Officer and treating the same as income from other sources were not justified.
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7. Rival contentions have been heard and records perused. We had also gone through the additional documents filed before the CIT(A) under rule 46A.
8. With regard to agricultural income declared by the assessee, the observation of the Assessing Officer for decline of assessee's contention regarding agricultural income was that the assessee had not shown agricultural income up to assessment year 2000-01. That assessee was mainly in the business and also having salary income, therefore, it is unlikely to have time for agricultural operation. The Assessing Officer declined the claim also by observing that only photocopy of lease agreements were filed and not the original lease agreements. The thrust of Assessing Officer for declining the assessee's claim was also based on the surrender of agricultural income made by three group companies in the assessment year 2005-06, namely, Raj Homes Private Limited, Minal Builders and Raj Event and Entertainment Private Limited. The Assessing Officer observed that these companies have surrendered agricultural income in the assessment year 2005-06, therefore, claim of other assessees belonging to same group 15 16 with respect to the same nature of income cannot be accepted. The Assessing Officer also observed that some farmers, were cross examined by counsel of Raj Group of Industries during penalty proceedings u/s 271(1)(c), wherein they have denied having any land given on lease. The Assessing Officer stated that photocopy of khasra, khatauni and form P-II were filed and the assessee did not produce original of these certificates, hence authenticity of these documents were doubtful. The Assessing Officer also stated that bills of expenditure like seeds, fertilizers, pesticides, labour and other related details like transportation warehouse etc. were not filed. We found that the CIT(A) broadly confirmed the observation of the Assessing Officer. To overcome the findings of Assessing Officer, the assessee has filed documents under rule 46A before the CIT(A), but he declined to accept the same on the plea that despite opportunity, the assessee did not produce these documents before the Assessing Officer. The CIT(A) further observed that during the assessment year 2008-09 very nominal agricultural income was shown, therefore, the assessee's claim of agricultural income in earlier years 16 17 cannot be accepted. It was also observed by CIT(A) that all the Directors in business reside in Bhopal, while agricultural land was situated at a distant area.
9. After going through the reasoning given by the Assessing Officer and CIT(A) for decline of deduction and after verifying the additional evidence filed before the CIT(A) under rule 46A, we found that the assessee has filed original lease agreements before the CIT(A). One of the reasons given by the Assessing Officer for decline was that original lease agreement was not produced. It was submitted by the assessee that due to change in office address, the original lease agreements were not traceable during the relevant point of time, therefore, they were filed before the CIT(A). The other reason given by the Assessing Officer was that original khasra, khatauni and form P-II was not filed, therefore, claim of agricultural income cannot be accepted. Before the CIT(A), the assessee has filed original khasra, khatauni and form no. P-II to substantiate its claim of agricultural income but the same were not accepted. Before the CIT(A), the assessee has filed original khasra, khatauni and form P-II to substantiate its claim of 17 18 agricultural income and same are placed at page 230 to 457 of the paper book. The assessee has also filed original receipts of payment of lease rent, which are placed at page 230 to, 457 of the paper book. We found that assessee was prevented by sufficient cause for not submitting the same before Assessing Officer, since these documents were misplaced due to shifting of office. If assessee could file photocopy before the Assessing Officer, he could file original also, as filed before the CIT(A). The assessee by not filing these documents before the Assessing Officer cannot spoil his case. Since these documents were necessary to determine the correct nature of income having been offered by the assessee, the CIT(A) was not justified in not accepting these documents which goes to the root of the issue. After accepting the documents filed under rule 46A, the CIT(A) could have called for remand report from the Assessing Officer and after considering the same he should have arrived at correct conclusion with regard to the nature of income offered by the assessee. As per record, the claim of assessee was that the agricultural operation of the assessee was being looked after by Ajab Singh, who was employed by 18 19 the assessee. Inspite of making request to Assessing Officer and CIT(A), the none of the authorities have called Ajab Singh to verify the work undertaken by him and correctness of agricultural income having been earned by the assessee. We also found that conclusion of Assessing Officer was more influenced by the surrender of agricultural income by three group companies. Through the documents placed on record, it was clarified by the assessee that farmers, who have declined to give loan to the assessee were of different villager and the land was also situated at different location. As the farmers from whom land was taken by the assessee was different from farmers, who have given land to the three companies, which have surrendered their claim of agricultural income, therefore, no fruitful purpose was serve by relying on the statement of those farmers, who had given land to these three companies and not the assessee before us. We found that in the assessment year 2005-06, three group companies had surrendered their agricultural income, because farmers of those companies had given adverse statement to the effect that they had not given land to the companies and do not know their directors. As per ld. 19 20 Authorized Representative , these farmers became hostile and were misled under intimidation. We found that the assessee have already declared agricultural income much prior to the search right from assessment year 2001-02. In the assessment year 2003-04 and 2004-005, there was scrutiny assessment order, wherein agricultural income of Rs. 4,99,400/- during the assessment year 2003-04 was accepted by the Assessing Officer at Rs. 4,70,790/-. Similarly, in the assessment year 2004-05, the assessee's case was decided u/s 143(3) and agricultural income of Rs. 8,52,569/- was accepted at Rs. 8,20,530/-. Thus, in both the scrutiny assessments keeping in view the land taken on lease, agricultural income at Rs. 9000/- per acre was accepted by the Assessing Officer. When in the scrutiny assessment, the income has been accepted, without giving cogent reasoning, the same cannot be declined. Since original and Xerox copy of lease agreements are same, no reason for assessee not to submit original before the Assessing Officer, if he could submit it before CIT(A). Similar is the position with regard to khasra, khatauni and form P- II. Even in absence of original lease agreement and khasra 20 21 khatauni, the Assessing Officer could make inquiry even on photocopy. The assessee had furnished addresses of all the farmers, the farmers in the agreement are residents of village and full address was given. Many summons were served as per the observation of the Assessing Officer himself, but no effective efforts were made to ensure about the farmers presence. Even a request was filed by the assessee before the Assessing Officer to summon farmers u/s 131. The assessee has also requested the Assessing Officer to summon Mr.Ajab Singh Raghuvanshi who was taking care of assessee's agricultural activity and its sales realization etc. However, Mr. Ajab Singh was not called for. Copy of khasra issued by Patwari confirming the production of crop was filed before the Assessing Officer which has not been disproved by him. It was also contention of ld. Authorized Representative that statement of mandi persons which were recorded behind the back of the assessee, hence cannot be used against him, as the same were not confronted to him. For this purpose reliance was placed on the decision of Hon'ble Supreme Court in the case Kishan Chand Chelaram, 125 ITR 713. Ld. Authorized 21 22 Representative also clarified that there is no practice of mentioning names of Bataidar/lessee on the khasra, khatauni and form P-II, because this at times has given rise to plethora of civil suits being filed by the bataidar/lessee for ownership of land due to cultivation done by them for longer period. Hence, not mentioning the name of lessee, bataidar in khasra , khatauni and form no. P-II cannot be viewed against the assessee. Thus, the observation of Assessing Officer in this regard do not carry much force. He further submitted that it was duly stated before the Assessing Officer that entire agricultural operation on the land were done by Mr. Ajab Singh Raghuvanshi, Bazar Mohalla, Village Deori, Tahsil Udaipur, Distt. Raisen. Mr. Ajab Singh was given imprest and he used to pay sale proceeds to the assessee. As the entire work was being taken care of by Ajab Singh Raghvanshi, the assessee did not know the purchaser of the crop. The intermediary sold the crop and gave money and mandi receipts to assessee, therefore, as per ld. Authorized Representative , there was no reason for assessee to doubt the mandi receipts given by him.
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10. In view of the above discussion, we restore the matter of agricultural income in all the years under consideration to the file of Assessing Officer for deciding afresh after considering the documents filed before CIT(A) under rule 46A, which goes to the root of the issue. We direct accordingly.
11. With regard to the legal ground taken by the assessee u/s 153A, it was argued by the ld. Authorized Representative that no incriminating documents were found during search, therefore, assessment so framed u/s 153A was not justified in view of the decision of the I.T.A.T. Special Bench in the case of Alcargo Global Logistic Limited (supra).
12. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that during the course of search receipts of deposits of cash in bank was found, therefore, plea taken by the assessee that no incriminating material was found, does not survive. Accordingly, we confirm the action of Assessing Officer for framing assessment u/s 153A in view of the fact 23 24 that incriminating documents was found during course of search.
13. In the result, the appeals for all the years are allowed in part for statistical purposes .
SANDEEP MEHTA : I.T(SS).A.Nos. 160 to 166/Ind/2012 :
14. These are the appeals filed by the assessee against the order of CIT(A) dated 2.3.2012 for the assessment years 2003-04 to 2009-10 in the matter of order passed u/s 153A read with Section 143(3) of the Income-tax Act, 1961.
15. Rival contentions have been heard and records perused. There was search at the assessee's residential premises at E-5/148, Arera Colony, Bhopal, on 30.05.2008. After recording reasons, the Assessing Officer issued notices u/s 153A. During the course of assessment, additions were made on account of cash and jewellery so found. The Assessing Officer also made addition by not accepting agricultural income returned by the assessee and the same was treated as income from other sources. The Assessing Officer also made addition on account of cash deposited in the Bank account in the all the years under consideration. 24 25
16. By the impugned order the ld. CIT(A) deleted addition on account of cash and jewellery found during search and cash deposited in bank account, and Revenue is not in appeal before us.
17. After having the same observation as in the case of Hitesh Mehta (supra), the Assessing Officer made addition on account of agricultural income. Before the CIT(A), the assessee filed additional evidence in the form of original lease agreement, notarized copy/agreements, which are placed at page 131 - 135 of the paper book. Original affidavits of farmers which are placed at pages 456 to 507 of paper book, notarized copy of affidavits of farmers which are placed at page 456 to 507, original khasra, khatauni and form no. P-II which are placed at page nos. 131 to 351 of the paper book. The assessee also filed original receipts of payment of lease rent which are also placed in the paper book. However, the CIT(A) did not admit the same on the ground that these were not filed before the Assessing Officer despite opportunity and are without sufficient cause. By endorsing the Assessing Officer's view, the CIT(A) confirmed the action of the Assessing Officer for treating agricultural 25 26 income as income from other sources against which the assessee is in further appeal before us.
18. The ld. Authorized Representative reiterated the submission as discussed in the case of Arun Sahlot and further contended that the assessee have already offered agricultural income in the assessment years 2003-04 and 2004-05 which were accepted by the Assessing Officer under scrutiny assessment. In the assessment year 2003- 04, agricultural income was offered at Rs. 5,67,000/- out of which agricultural income of Rs. 4,71,330/- were accepted by the Assessing Officer u/s 143(3) assessment. Similarly, in the assessment year 2004-05, agricultural income of Rs. 6,66,600/- returned by the assessee were accepted in scrutiny assessment in total without making any disallowance. In the assessment year 2003-04, we found that agricultural income has been accepted @ Rs. 9000/- per acre whereas in the assessment year 2004-05 it works out to be Rs. 8383/- per acre. Following the same reasoning given hreinabove in the case of Hitesh Mehta (supra), we restore this ground in all the years to the file of Assessing 26 27 Officer for deciding afresh after considering additional evidence filed before the CIT(A). We direct accordingly.
19. With regard to legal ground taken by the assessee for framing assessment u/s 153A, we do not find any justification in so far as incriminating documents in the form of cash deposit slips in the Bank was found during course of search.
20. With regard to cash deposited in Bank account, the CIT(A) deleted the addition to the extent of agricultural income and contract receipts, which was treated by the Assessing Officer as income from other sources in the assessment year 2003-04, 2005-06, 2006-07 and 2007-08. However, in the assessment year 2004-05, an addition of Rs. 53,400/- was retained. Similarly, for assessment year 2008-09, an addition of Rs. 5,96,266/- and in assessment year 2009-10 an addition of Rs. 8000/- was retained against which the assessee is in further appeal before us. However, the Revenue has not filed any appeal against the addition deleted by the ld.CIT(A) in assessment year 2003- 04, 2005-06 to 2007-08. Precise observation of CIT(A) was as under :-
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"7.4 I have examined the matter. The additional evidences submitted before me not considered for deciding the issue due to the reason given above. The facts or the cash deposit made in various bank accounts were deposit during the course or search hence the appellants pled that the impugned addition is not based on any material found during the course of search is not valid. During the hearing I have examined the source of all deposits both above Rs. 50000/- and below Rs. 50000/-. Before the Assessing Officer the appellant has claimed that the cash deposits made in these bank accounts were out of agriculture income and contract receipt. In this appeal order the additions on account or agriculture income and contract receipt have been confirmed, In the appellants case the ratio laid in ACIT Vs. Kulwant Singh and others IT(SS) 57 to 63/Ind/2008 (Indore ITAT) is directly applicable. The unaccounted income claimed as agriculture income and contract receipt have been brought to tax hence taxing the cash deposited in the bank to the extent or 28 29 additions confirmed will amount to double addition. In view of the above, It is held that the addition made on account of cash deposits made in bank account is to be reduced by the additions confirmed on account or claim or agriculture income and contract receipt. The amount or addition for various years is reduced as under:
A.Y. Addition on Amount of Amount of
account of Addition confirmed
Cash confirmed on addition on
deposit account of account of
agricultural cash
income and deposit in
contract bank
receipt
2003-04 150000 567000 Nil
2004-05 720000 666600 53400
2005-06 450000 534258 NIL
2006-07 605000 886893 NIL
2007-08 12000 1317377 NIL
2008-09 640000 43734 596266
2009-10 8000 0 8000
21. Against the above order of CIT(A), assessee is in further appeal before us.
22. We have considered the rival submissions and found from record that the following additions were made on account of cash deposit wherein credit for agricultural income and contract receipt was given by CIT(A) as under :- 29 30
A.Y. Addition on Amount of Amount of
account of Addition confirmed
Cash confirmed addition
deposit on account on
of account of
agricultural cash
income and deposit in
contract bank
receipt
2003-04 150000 567000 Nil
2004-05 720000 666600 53400
2005-06 450000 534258 NIL
2006-07 605000 886893 NIL
2007-08 12000 1317377 NIL
2008-09 640000 43734 596266
2009-10 8000 0 8000
23. It is clear from the above chart, which has been given at page 53 of the CIT(A)'s order that there was addition of Rs. 25,85,000/- on account of cash deposit during the assessment years 2003-04 to 2009-10. However, we found that during the assessment year 2003-04 to 2009-10 agricultural income and contract receipts which are allowed as set off against the cash deposit works out to be Rs. 40,15,862/-. Thus, the income accepted by the CIT(A) was much more than the cash deposited. To find out the correctness of additions retained by the ld.CIT(A), we work out the cumulative position of cash in hand in the form of income from agriculture and contract receipt vis-à-vis cash deposited in the Bank account in respective years. 30 31
24. The working given below clearly indicate that in each year there was sufficient cash balance, which was used for deposit in Bank account. Accordingly, we do not find any justification for addition so retained by the ld.CIT(A) in the assessment year 2004-05, 2008-09 and 2009-10 :-
A.Y. Addition Cumulative Amount of Cumulative on balance of Addition balance of account cash confirmed cash of Cash deposited on account available deposit of agricultural income and contract receipt 2003-04 1,50,000 1,50,000 5,67,000 5,67,000 2004-05 7,20,000 8,70,000 6,66,600 12,33,600 2005-06 4,50,000 13,20,000 5,34,258 17,67,858 2006-07 6,05,000 19,25,000 8,86,893 26,54,751 2007-08 12,000 19,37,000 13,17,377 39,72,128 2008-09 6,40,000 25,77,000 43,734 40,15,862 2009-10 8,000 25,85,000 0 40,15,862
25. Further, we also found that the assessee has clearly demonstrated availability of cash out of agriculture and contract receipts as well as out of withdrawal from the other Bank account so as to explain deposit of cash in the respective years. Accordingly, the addition retained by the ld.CIT(A) are deleted.
26. With regard to contract receipts, we found that no satisfactory explanation was given by assessee with regard 31 32 to nature of income. Accordingly, Assessing Officer was justified in adding entire contract receipts of Rs. 1,50,000/-
in assessment year 2004-05, Rs. 1,50,000/- in assessment year 2005-06 and Rs. 1,50,000/- in assessment year 2006- 07 in assessee's income. Accordingly, we confirm the action of CIT(A) in this regard.
27. In the result, the appeal of the assessee is allowed in part.
SURENDRA MEHTA : I.T(SS).A.Nos. 154 to 159/Ind/2012 Revenue's appeals : I.T(SS).A.Nos. 268 to 273/Ind/2012:
28. These are the cross appeals filed by assessee and Revenue against the order of CIT(A) dated 1st March, 2012, for the assessment years 2003-04 to 2008-09.
29. Rival contentions have been heard and records perused. Facts in brief are that the assessee is a Director of Raj Homes Private Limited. On 30.05.2008, search and seizure under Section 132(1) was conducted at his residential premises at E-3/10, Arera Colony, Bhopal. During the course of search documents and information relating to the assessee were found. After recording the 32 33 reasons the Assessing Officer issued notice u/s 153A. In response to the assessee filed the return of income of various years.
30. During the course of assessment, additions were made by the Assessing Officer on account of agricultural income, cash deposited in Bank account and contract receipts.
31. By the impugned order the additions made on account of cash deposited in bank account were deleted for the assessment years 2003-04 to 2007-08, however, the addition made for assessment year 2008-09 was reduced from Rs. 5,00,000/- to Rs. 4,76,832/-. Precise observations of CIT(A) are as under :-
" 7.4 I have examined the matter. The additional evidences submitted before me not considered for deciding the issue due to the reason given above. The facts or the cash deposit made in various hank accounts were deposit during the course or search hence the appellants pled that the impugned addition is not based on any material found during the course of search is not valid. During the hearing I have examined the source of all deposits both above Rs. 50000/- and 33 34 below Rs. 50000/- The appellant has claimed before the A.O, that the cash deposits made in these bank accounts were out of agriculture income and contract receipt. In this appeal order the additions on account or agriculture income and contract receipt have been confirmed, In the appellants case the ratio laid in ACIT Vs. Kulwant Singh and others IT(SS) 57 to 63/Ind/2008 (Indore ITAT) is directly applicable. The unaccounted income claimed as agriculture income and contract receipt have been brought to tax hence taxing the cash deposited in the bank to the extent or additions confirmed will amount to double addition. In view of the above, It is held that the addition made on account of cash deposits made in bank account is to be reduced by the additions confirmed on account or claim or agriculture income and contract receipt. The amount or addition for various years is reduced as under:
Assessment Addition on Amount of Addition Amount of year account of confirmed on account confirmed addition Cash of agriculture income on account of cash deposit and contract receipt deposit in bank A.Y.2003-04 252000 366300 Nil A.Y.2004-05 305000 324600 Nil A.Y.2005-06 251000 278950 Nil A.Y.2006-07 150000 442950 Nil 34 35 A.Y.2007-08 450000 530624 Nil A.Y.2008-09 500000 23168 476832
32. Additions were made by Assessing Officer in respect of agricultural income giving the same reasoning as given in case of Hitesh Mehta. By the impugned order, CIT(A) confirmed the addition and assessee is in further appeal before us.
33. It was argued by the ld. Authorized Representative that no incriminating material was found during course of search indicating income having not been earned out of agriculture. He further submitted that not even a single farmer denied that they have not given land on lease to the assessee. He further invited our attention to the scrutiny assessment framed u/s 143(3), wherein agricultural income offered in the assessment year 2003-04 amounting to Rs. 3,66,300/- was accepted by the Assessing Officer at Rs. 3,40,560/-. Similarly, in the assessment year 2004-05, the agricultural income returned by the assessee at Rs. 3,24,600/- was accepted by the Assessing Officer at Rs. 3,14,370/-. Our attention was also invited to copy of additional documents filed before the CIT(A), which included, inter alia, original lease agreements, original 35 36 affidavits of farmers, original affidavits of assessee, original khasra and khatauni and form P-II, placed at page 87 to 250 of the paper book. Original receipts of payment of lease rent. As per ld. Authorized Representative , all these documents go to the root of the issue and since there was change in the office premises, these documents were misplaced and, therefore, filed before the CIT(A), which goes to the root of the issue for deciding assessee's claim of agricultural income.
34. We have considered the rival submissions and have gone through the orders of the authorities below and also have gone through the additional evidence filed before the CIT(A) and also reasons given by the Assessing Officer for decline of assessee's claim of agricultural income. We had also perused scrutiny assessment order for assessment year 2003-04 and 2004-05, wherein assessee's claim for agricultural income was accepted @ Rs. 9000/- per acre. In view of the reasoning given hereinabove in the case of Hitesh Mehta, the matter for all the years under consideration are restored back to the file of Assessing Officer for deciding afresh after considering additional 36 37 evidence filed before the CIT(A) which goes to the root of the issue.
35. The assessee is also aggrieved for adding the entire amount of contract receipts in the income of assessee in place of taxing it at 8% on presumative basis.
36. We have considered the rival submissions and found from record that the assessee has offered 8 % of contract receipt as its income. The assessee had shown entire amount of contract receipt as having been deposited in the Bank account, which were utilized to support the source of expenditure/payment. However, inspite of giving opportunities, the assessee could not tell the name of parties from whom contract receipts were received and the nature of contract. Even before us, nothing could be brought on record by the ld. Authorized Representative to persuade us to accept that the receipts were in the nature of contract on which 8% profit rate can be applied. Accordingly, we confirm the action of the Assessing Officer for treating entire contract receipts as assessee's income in the assessment year 2005-06 as assessee's income. 37 38
37. The additions have also been made by the Assessing Officer in the assessment years 2003-04 to 2008-09 in respect of cash deposited in the Bank account.
38. By the impugned order by considering agricultural income and contract receipts in the form of cash available with the assessee, the CIT(A) deleted the addition in assessment year 2003-04 to 2007-08 after observing that sufficient cash was available with the assessee in respect of respective years, which was much more than the cash deposit in Bank account. In the assessment year 2008-09, the ld. CIT(A) confirmed the addition of Rs. 4,76,842/- by observing that cash deposited in the Bank account was more than the contract receipt and agriculture income shown at Rs. 23,168/-. Precise observation of CIT(A) was as under :-
" 7.4 I have examined the matter. The additional evidences submitted before me not considered for deciding the issue due to the reason given above. The facts or the cash deposit made in various hank accounts were deposit during the course or search hence the appellants pled that the impugned addition is not based on any material found during the course of search is 38 39 not valid. During the hearing I have examined the source of all deposits both above Rs. 50000/- and below Rs. 50000/- The appellant has claimed before the A.O, that the cash deposits made in these bank accounts were out of agriculture income and contract receipt. In this appeal order the additions on account or agriculture income and contract receipt have been confirmed, In the appellants case the ratio laid in ACIT Vs. Kulwant Singh and others IT(SS) 57 to 63/Ind/2008 (Indore ITAT) is directly applicable. The unaccounted income claimed as agriculture income and contract receipt have been brought to tax hence taxing the cash deposited in the bank to the extent or additions confirmed will amount to double addition. In view of the above, It is held that the addition made on account of cash deposits made in bank account is to be reduced by the additions confirmed on account or claim or agriculture income and contract receipt. The amount or addition for various years is reduced as under:
Assessment Addition on Amount of Addition Amount of year account of confirmed on account confirmed addition Cash of agriculture income on account of cash deposit and contract receipt deposit in bank A.Y.2003-04 252000 366300 Nil A.Y.2004-05 305000 324600 Nil A.Y.2005-06 251000 278950 Nil A.Y.2006-07 150000 442950 Nil 39 40 A.Y.2007-08 450000 530624 Nil A.Y.2008-09 500000 23168 476832
39. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that before the Assessing Officer assessee has furnished cash flow chart indicating availability of cash on the respective dates of deposits. In the source of fund, the assessee has indicated the income out of agriculture, contract receipt and also withdrawals from other bank account. We found that cash so available with the assessee on the respective dates were much more than the cash deposited in the respective Bank accounts in various years. Thus, the cash deposited in the Bank have come out of the over all cash available in cash book on the particular date. Thus, as per cash flow every deposit of cash in the bank account was explained through overall availability of cash in the cash book of the particular date. Even as per the chart given by the ld.CIT(A) at page 53 of his appellate order, we found that total amount of cash deposit in all the six years worked out to be at Rs. 19,08,000/- against which cash available with the assessee on account of agriculture and 40 41 contract receipts works out to be at Rs. 19,65,918/- which is more than cash deposit in the Bank account. Even if we take only this chart of the CIT(A), we found that position of cumulative cash as at the beginning of the year vis-à-vis cumulative cash deposited in bank account, we found that every year there was sufficient cash balance available, the details of which are as under :-
Assessment Addition on Cumulative Amount of Cumulative year account of balance of cash Addition balance of Cash deposit deposited confirmed on cash available account of agriculture income and contract receipt A.Y.2003-04 2,52,000 2,52,000 3,66,300 3,66,300 A.Y.2004-05 3,05,000 5,57,000 3,24,600 6,90,900 A.Y.2005-06 2,51,000 8,08,000 2,78,950 9,69,850 A.Y.2006-07 1,50,000 9,58,000 4,42,276 14,12,126 A.Y.2007-08 4,50,000 14,08,000 5,30,624 19,42,750 A.Y.2008-09 5,00,000 19,08,000 23,168 19,65,918
40. In view of the above, no addition is warranted even in assessment year 2008-09. Accordingly, appeals of Revenue on this issue in all the years are dismissed, whereas appeal of assessee is allowed.
41. The Assessing Officer has also made addition of Rs. 1 crore in the assessment year 2008-09 on account of marriage of daughter Alka Mehta.
41 42
42. The facts or the case in brief are that the marriage of appellant daughter Ku. Alka with Shri Amit was solemnized on 18.01/2008 Vrindavan garden. Hoshangabad Road. Bhopal. Many dignitaries attended the marriage. The A.O. held that the marriage expenses were suppressed and he made addition of Rs.1 crore on account or unaccounted expenditure for marriage on protective basis and made substantive addition of Rs.1,00,02,000/- in case of Shri Arun Sahlot on this account.
43. Before the Assessing Officer, the assessee claimed that the expenses of marriage was done by him and submitted a cash flow statement and a ledger of Alka Mehta marriage expanse account. The perusal of the ledger a/c showed that on various dates he mentioned cash contribution from Mr. Hitesh Mehta and others to justify the source of expenditure in the marriage ceremony. E.G. on 15.01.2008 he mentions cash received from one S. Mehta for marriage expenses, however, in his cash book such entry finds no mention. In the reverse, he shown in the cash book an expenditure of Rs. 4,00,000 for marriage expenses, however in the ledger of the marriage expenses account no show expenditure finds any mention. The cash book itself is not true as the various 42 43 cash entries in the books have been claimed as agriculture income, which as per discussion above have already been found to be bogus. No confirmation of various cash receipts and payments reflected in the cash book has been provided by the assessee despite being asked specifically to do so. The cash book has been produced post search and is only an afterthought to justify various cash amounts which has been claimed to have been received/paid by assessee from various sources. The assessee himself is not of the stature to organize a marriage of this scale.
44. After making detailed inquiry, the Assessing Officer estimated cost of marriage at Rs. 1,00,02,000/- and added the same in assessee's income as unexplained expenditure. The submission of the assessee before the CIT(A) was as under :-
"No addition is warranted in view of impropriety of asstt. Challenged by us in earlier Ground. 2 particularly as- No material was founded or brought on record for subject addition
ii) Addition has been made substantively in the heads of 43 44 Mr. Arun Sahlot and protectively in the hands of the assessee.
iii) Mr. Arun Sahlot is maternal uncle of girl Alka. Most of the payments for marriage were made by father shri Surendra Mehta and brother of Alka Mr. Hitesh Mehta who live in Bhopal. Only a sum of Rs. 50,000/- was contributed by Mr. Arun Sahlot. That is why Mr.Arun Sahlot could not give details of expenditure on the marriage of his niece, as duly informed to the AO by him as under in the reply dated 20.12.2010:
"Point No. 32 / questionnaire dtd. 17.06.2010 As regards expenses on the marriage of Alka Mehta (my niece - sister's daughter) estimated by your goodself at Rs. 1 Crore, it is submitted that yourself's estimation is grossly incorrect and without any basis. I have nowhere stated in my statement during search that expenses on Alka's marriage were done only by me. In fact, expenses on Alka's marriage were done by his father shri Surendra Mehta in which some of relatives like me also contributed. Hence details of expenses on the marriage of Alka Mehta may be explained only by his father Shri Surendra Mehta. I contributed Rs. 44 45 50000/- towards marriage expenses which are duly accounted for in my capita a/c enclosed as Annexure. We, however, employed staff of Raj Homes group to assist in the marriage functions."
The staff-people of Raj Homes were deployed to see that the arrangements made in the marriage ceremony were adequate and do not suffer from any deficiency so as to not to bring any disrepute to the parents of the girl as well as to the assessee.
v) No basis or evidence of such conjectural estimation was given by AO.
vi) Assessee, father of girl, duly explained before Assessing Officer, during the course of assessment proceedings, by way of detailed books of accouts / statement, all head wise expenditure done on the marriage of his daughter Alka to the extent of Rs. 18,47,557/- (excluding jewellery being stridhan of assessee's wife late Smt. Badami Bai gifted to daughter weighing 220.900 gm) which has not been disproved or disputed by the Assessing Officer.
This fact of explanation filed by assessee has been stated by Assessing Officer at Pg. 33 Para 2 of his 45 46 order.
Other than the individual details given in the summary, the expenses on remaining heads / items have been debited in Misc expenses a/c to the extent of Rs. 6,84,190/-, included in the total amount spent, as above.
vii) Disbelieving the said statement of expenditure / books of account, the ld. Assessing Officer without any material, on the basis of surmises, conjectures and estimate, has computed expenses as given in his assessment order which would have been incurred by the assessee. The total of aforesaid estimate adds upto Rs. 1,00,00,000/- (Rs. One Crore). It is submitted that the assessee does not have such worth which would made him to spent the expenses to the extent estimated by the Assessing Officer. The capital account of the assessee being filed in this submission evidences this. There is no evidence that assessee has taken any loan from outside to incur the expenses beyond his capacity. It is normal human conduct that a person would not make him money less or insolvent for incurring marriage 46 47 expenses of his girl. It is also not humanly possible to maintain the record of the expenses incurred on various functions of the ceremony taking place in the course of marriage: to explain such details is humanly impossible. But then, the assessee even submitted available bills of most of the items before Assessing Officer alongwith detailed books of accounts / statement for marriage expenses which have not been disproved or disputed by the Assessing Officer.
viii) His arbitrariness is proved from the fact that he has not even reduced the expenses of Rs. 18, 47,557/- (excld. Jewelery) done by assessee while making addition.
ix) In fact, AO already had already made up his mind arbitrarily to make addition of Rs.1,00,00,000/- in the hands of the assessee and Mr. Arun Sahlot which is proved from the fact that even before starting to touch upon the issue, he had pre-decided imaginary figure of Rs. 1,00,00,000/- alleged to have been spent by the assessee. This is clear from his first query way back dated 17.06.2010 vide point no 32 in the case of Arun 47 48 Sahlot (as mentioned at Pg.32/para 1 of his order) estimating exp. At Rs. 1,00,00,000/- hereby he had already made up his mind though he has stated to have summoned owners of Hotel Vrindavan Palace and Hotel Mark as late as on 14th Dec. 2010.
x) His estimation of no of guests is purely imaginary and arbitrary. Even his so- called estimation for nos. Of guests have been varying as can be seen from his observations at Pg. 29/Para 2.1. (3000-4000 persons), Pg. 31/Point 5(vi) j(Reception dinner @ 190/- for 3500 persons amounting to Rs. 6,65000/-) and at Pg. 34/Para 2 (upto 3000 people had attended the marriage ceremony). Similar variations are perceptible while making guess of nos. of guests at other places.
xi) It is clear from above that the ld Assessing Officer had predetermined mind of making addition of Rs.1,00,00,000/- on this issue without any verification or investigation. The same is proved from the totally imaginary figures given by him in his calculation without any basis or evidence which even a layman cannot digest.
48 49
xii) Actually, we asked the Assessing Officer to provide basis of his claim of expenditure of Rs. 1,00,00,000/- which he did not provide. In order to justify his wild estimation, he chose to do back- calculation of various imaginary figures to stretch it to cross his predetermined borderline of Rs. 1,00,00,000/-.
xiii) Reception was actually arranged for 1200 persons only which is supported by payment made to caterer M/s. Bhandary caterers, Appollo Square 206 & 215 & IInd Floor Opp. Narain Kothi 7/2 Race Course Road, Indore (M.P.) through Cheque. Bill of the caterer with complete address was given to the AO. The caterer has not been examined by AO; he has nowhere stated that he has been paid for 3000-4000 persons. The caterer was paid for cooking charges, supervision charges, supply of service-waiters, crockery etc. All raw material like grocery, provisions and other food items etc. were given by us.
xiv) Number of Baratis could never be and were not 1500 as stated by AO. Barat came from Poona (Maharashtra) by train. Expenses on transportation was done by 49 50 bridegroom family. Baratis from Poona (Maharashtra) were only 30-35 persons.
xv) Half road traffic, as stated by AO, was due to regular traffic during wedding seasons on the Hoshangabad road where the venue is situated. This road remains jammed during wedding seasons as most of the wedding Halls / wedding gardens are situated on this road only.
xvi) Outside guests were around 10-12 in number, most of the relatives of the assessee are local, in Hotel Mark, 10 rooms were booked alonwith room in the Hotel Vrindavan which as per the practice in vogue of wedding lawns / gardens was included in the package of Rs. 84,270/- paid to hotel Vrindavan. We also have locally two spacious houses of relatives. All the baratis / guests were housed in these Hotels and houses. No other hotel was booked and the booking of only two hotels was proved from Hotel hiring charges ledger a/c and garden with decoration expenses ledger a/c in the marriage expenses books of accounts filed and explained before A.O. The estimation of 100 no. of 50 51 outside guest by AO is unilateral and without any basis. There is no evidence brought by AO on record regarding staying of 100 no. of outside guests in Hotels. It is a pure guess work. Moreover, as per settled law, any vague, imaginary and hypothetical statement of third party behind the back of assessee can not be relied upon, as done by AO, unless the same is confronted to the assessee and proper and fair opportunity is given to rebut the same. But the same was not done.
xvii) Lighting arrangement in the lawn was part of the fixed facilities provided by hotel including the bridge permanently made by the hotel itself. The hotel charged fixed amount for providing lawn fully decorated by them alongwith rooms only as part of the package in vogue. A sum of Rs.84,270/- was paid to Hotel Vrindavan through Cheque.
xviii) Payment to the dance group was made to the extent of Rs. 60,000/- as per bill filed before AO xxi) No evidence was found during search or brought on record by the AO that assessee has incurred expenses 51 52 to the extent arbitrarily estimated by AO which have not been recorded in the books of accounts. Had the assessee incurred such huge expenses out of books, at an iota of evidence of even a paltry expenses could have been found during search. But there is not even a whisper of it in the order of A.O. xxii) Neither the assessee nor any or the party related with marriage function has ever stated or affirmed incurring of such huge expenses by assessee to the extent arbitrarily estimated by AO.
xxiv) As regards AO's observation at Pg. 33/Para 2, relating to Rs. 4,00,000/- withdrawn in cash on 15.01.2008 but stated to have not been shown in the cash book, the same is duly shown in the cash book as withdrawal filed before AO and corresponding amount is duly shown as receipt / inflow in the cash book of marriage expenses Relied on:
"We have to keep in mind that the assessee was married for more than 25-30 years. The jewellery in question is not very substantial. The learned counsel 52 53 for the appellant / assessee is correct in her submission that it is a normal custom for woman to receive jewellery in the form of " stree dhan" or on other occasions such as birth of a child etc. Collecting jewellery of 906.900 grams by a woman in a married life of 25-30 years is not abnormal. Furthermore, there was no valid and / or proper yardstick adopted by the Assessing Officer to treat only 400 grams as "reasonable allowance" and treat the other as "unexplained". Matter have been different if the quantum and value of the jewellery found substantial. We are, therefore, of the opinion that the findings of the Tribunal are totally perverse and far from the realities of life. In the peculiar facts of this case we answer the question in favour of the assessee and against the revenue thereby deleting the aforesaid addition of Rs. 3,87,364/-."
Ashok, Chadha Vs. ITO (2011) 202 Taxman 395 (Delhi HC) In case of search in the case of Anandilal V. ACIT (2004) 86 TTJ 1135 (Indore), Gold 53 54 jewelleries were explained by ladies through Affidavits. The Hon'ble Tribunal held as under
(head note):
"Gold ornaments found during search- Assessee explained that various gold
ornaments belonged to unmarried members of the joint family of the assessee and his brother with whom he was residing and to the ladies married into the family Affidavits filed by the parents of said two ladies explaining the gold found from their possession unless rebutted cannot be disbelieved it is customary to gift ornaments to children on festival occasions in Hindu families of status Explanation furnished by the assessee does not appear to be unreasonable having regard to the size of the family as well as the status of the family (Besides, no document has been found during the search indicating recent acquisition of these gold ornaments by the assessee- Thus the addition in this regard deleted."
In view of above circumstances, and for want of supporting material by the AO of the estimate so made by him, the addition made may kindly be quashed and 54 55 the version of the assessee based on details furnished by him may kindly be accepted by yourhonour."
45. By the impugned order, the CIT(A) held that expenditure was incurred by the assessee and not by Arun Sahlot. After considering various evidences filed by the assessee to support the actual expenditure incurred by assessee and taking into account the estimation made by the Assessing Officer, he determined marriage expenditure at Rs. 40 lakhs. After reducing the expenditure shown by the assessee, the balance addition was upheld by the CIT(A).
Thus, the CIT(A) deleted addition in the hands of Arun Sehlot, which was made on substantive basis but confirmed the addition in the hands of the assessee who is father of Ku.Alka. Precise observation of the CIT(A) was as under :-
"8.4 I have examined the issue. The appellant is businessman. He is brother in law of, Shri Arun Sahlot, who is publishing a news paper called Raj express. Shri Sahlot is very active in social-political circle of M.P. It appears that the marriage got publicity due to the fact that it was 55 56 marriage of the daughter of Shri Sahlot's sister. These reasons are not adequate and sufficient to hold that the marriage was solemnized by Shri Sahlot. The bride's father himself is an established businessman. As per Indian customs, brides father and father's family bears the expenses for marriage of daughter. The appellant has claimed that he and his brother have borne the expenses of marriage. In these circumstances the appellant is accountable for expenses done on marriage and not Shri Sahlot.
8.5 The appellant has shown total expenses on marriage at Rs.1,84,557/- The expenses incurred for jewellery is not included in this amount. It is claimed that no jewellery has been purchased for the marriage and jewellery given was the one accumulated over years. The A.O. has estimated the expenses but the estimate is not supported by any material. The A.O. has stated that barat procession consist or 1500 members and 56 57 reception was arranged for 3000-4000 persons. The appellant has claimed that Vrindavan gardens, the venue of reception cannot accommodate so many persons and that it has capacity to accommodate only 400 persons. It is also slated by the appellant that the barat had come from Maharashtra hence it was not feasible to bring 1500 baratis from Maharashtra. After examining the issue it is found that neither the estimate made by the A.O. nor the detail or expenses submitted by the appellant is reliable. In these circumstances the only way possible to arrive at a decision is the estimation of various, expenses after considering all material on record. The appellants claim that no jewellery is purchased for giving to the bride and the bridegroom is not plausible. This shows that the major part of jewellery given to the bride and the bridegroom are purchased from unaccounted sources. The unaccounted expenditure on account of purchase or jewellery is estimated at 57 58 Rs.10,00,000/- keeping in view the socio- economic stature of the appellant and his family. The expenditure on all other items is estimated at Rs.3000000/- The appellant has shown expenditure of Rs. 1847557/- The total expenditure on marriage is determined at Rs. 4000000/- After reducing the expenses shown at Rs.1847557/- the unaccounted expenditure is determined at Rs.2152443/- In view of the above the amount of addition of Rs. 1 crore is reduced to Rs.2152443 and is confirmed on substantive basis in hands of the appellant. "
46. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that on the basis of Video shootings and local inquiry, the Assessing Officer has estimated marriage expenditure at Rs. 1 crore. The assessee has furnished details of actual expenditure incurred by him amounting to Rs. 18,47,557/-. By considering the reasons given by the Assessing Officer for estimating the marriage expenses, the ld. CIT(A) determined marriage expenditure at Rs. 40 lakhs. 58 59 While estimating marriage expenditure of daughter, the gifts given by the relative and close friend attending the marriage cannot be brushed aside. Even as per the findings recorded by the Assessing Officer various relatives and respectable persons of the society attended the marriage, a reasonable gift ranging from Rs. 500/- to Rs. 1000/- by such relatives family friends cannot be overlooked and ,therefore, keeping in view the number of guests attending the function and totality of facts and circumstances of the case, we modify the order of CIT(A) and the marriage expenditure estimated by the ld.CIT(A) at Rs. 40 lakhs is reduced to Rs. 35 lakhs. Accordingly, the Assessing Officer is directed to retain the addition after considering the actual expenditure shown by the assessee amounting to Rs. 18,42,557/-. We direct accordingly.
47. Revenue is also in appeal before us with respect to the addition deleted by the ld.CIT(A) on account of cash deposit in the Bank account. As discussed hereinabove, the assessee was having sufficient cash available as per the cash flow chart given before the Assessing Officer. We do not 59 60 find any infirmity in deleting the addition by CIT(A), in respect of cash deposit in the bank account.
48. In the result, appeals of assessee are allowed in part, whereas appeals of Revenue are dismissed. SANJAY METHA : I.T(SS).A.Nos. 206 to 212/Ind/2012 :
49. These are the appeals filed by the assessee against the order of CIT(A) dated 1st March, 2012, for the assessment years 2003-04 to 2009-10 in the matter of order passed u/s 153A read with Section 143(3) of the Income-tax Act, 1961.
50. Rival contentions have been heard and records perused. There was search at the assessee's residential premises at E5/148, Arera Colony, Bhopal. During the course of search, some incriminating documents were found. After recording reasons, the Assessing Officer issued notices u/s 153A in compliance to which the assessee filed return on income.
51. The Assessing Officer made addition in respect of agricultural income declared by the assessee in the assessment years 2003-04 to 2008-09 on the same reasoning as given in case of other group assessee, the 60 61 Assessing Officer treated agricultural income as income from other sources. By the impugned order, the CIT(A) confirmed the addition.
52. We have considered the rival submissions and found from record that to substantiate the claim of agricultural income, the assessee has filed additional evidence under rule 46A before the CIT(A) in the form of original leased agreement, original affidavits of farmers, original affidavits of assessee, original khasra, khatauni and form P-II which are placed at page 102 to 382 of the paper book. The assessee has also filed original receipts for payment of lease rent. However, the CIT(A) did not admit the same on the ground that these were not filed before the Assessing Officer despite opportunity and or without sufficient cause. It was argued by ld. Authorized Representative that these documents were misplaced due to shifting of office and that the assessee gained nothing by not filing the documents before the Assessing Officer as nobody would like to spoil his own case. He also invited our attention to the scrutiny assessment order framed by the Assessing Officer for the assessment year 2003-04 and 2004-05 wherein agricultural 61 62 income of Rs. 5,86,500/- offered for the assessment year 2003-04 was accepted at Rs. 4,93,830/-. In the assessment year 2004-05, the assessee has returned agricultural income of Rs. 6,08,100/-, which were accepted by the Assessing Officer while framing assessment u/s 143(3). Thus, the agricultural income offered at Rs. 10,690/- per acre in the assessment year 2003-04 was accepted at Rs. 9000/-, whereas agricultural income of Rs. 8532/- per acre in the assessment year 2004-05 was accepted by the Assessing Officer on the very same figure. Following the reasoning given by us in the case of Hitesh Mehta (supra), the matter is restored back to the file to the Assessing Officer for all the years under consideration for deciding afresh after considering additional evidence filed by the assessee.
53. The Assessing Officer has also made addition in respect of investment in house No. E-3/4, Arera Colony, Bhopal in the assessment year 2006-07 to 2009-10 10.1 The facts of the case in brief are that the appellant have taken a lease hold plot of land at E-3/4, Arera colony, Bhopal from Bhopal Municipal Corporation. As per the lease 62 63 agreement the appellant had paid Rs.98,00,000/- and annual lease was to be paid at Rs. 4,90,000/- The A.O. held that out of premium paid at Rs.98,00,000/- the source of Rs. 23,00,000/- was not explained hence he made the addition of Rs.23,00,000/- in A.Y. 2006-07. He also found that the appellant has not explained the source of payment of lease rent of Rs. 4,90,000/- for assessment during the previous years relevant to assessment year 2007 -08 to 2009-10. The A.O. got valuation of the property clone and made addition on account of the difference between the cost of construction assessed by the DYO and cost of construction shown by the appellant. On this issue the A.O. made following additions:
i) On account of unexplained payment or premium = Rs. 23,00,000/- in A Y 2006-07.
ii) On account of unexplained payment of lease rent:
A.Y. 2007-08 4,90,000/-
A.Y. 2008-09 4,90,000/-
A.Y. 2009-10 4,90,000/-
iii) On account of unexplained investment for cost of construction:63
64
A.Y. 2006-07 34,930/-
A.Y. 2007-08 4,53,611/-
A.Y. 2008-09 35,12,768/-
A.Y. 2009-10 27,26,711/-
54. Before the CIT(A), the submission of the assessee was as under :-
1. ) Assessee purchased a plot at E-3/4, Arera Colony, Bhopal in joint name with his wife Mrs. Seema Mehta. The land was purchased from Bhopal Development Authority at premium of Rs.98,00,000/ and annual rent of Rs.
4,90,000/.
2. The cost of plot, cost of construction and loan from HDFC (taken in four names) for purchasing /constructing this house was distributed equally and shown in the balance sheets filed before AO of followings and as submitted before him during assessment :
Name of the Amount Payment Total Remark
assessee/ shown in made by
appellant B/S Rs. Raj Homes
directly
Sanjay 67,42,262/- 2,50,000/- 69,92,262/- Letter dtd.
Mehta- 20.12.2010
assessee before AO
Copy at Pg.
597
Letter dtd.
23.12.2010
64
65
before AO
Copy at Pg.
600
Sandeep 67,42,262/- 2,50,000/- 69,92,262/- -"-
Mehta-
brother
Seema Mehta- 67,42,262/- 2,50,000/- 69,92,262/- -"-
wife of
assessee
Priya Mehta - 67,42,262/- 2,50,000/- 69,92,262/- -"-
wife of
Sandeep
Mehta
Total 2,69,69,048/- 10,00,000/- 2,79,69,049/-
investment
3. The said loan from HDFC was disbursed in different installments. Prior to the entire disbursal of the loan, investment in the house was made from various sources like _ I. From Raj Homes Pvt. Ltd through cheques II. Personal bank account of Sanjay Mehta (assessee) through cheques III. Personal bank account Sandeep Mehta brother of assessee through cheques etc.
4. All the money received were through cheques, either it is by way of loan or contribution by Sanjay Mehta or Sandeep Mehta or payments from Raj Homes Pvt. Ltd.
All these bank accounts wherefrom money were received either of assessee Sanjay Mehta or brother Sandeep Mehta were duly disclosed before AO. Ledger of bank accounts of Raj Homes Pvt. 65 66 Ltd. were in seized records with A 0.
5, Similarly, almost all the payments (except for some small amounts) were made through cheques and this fact was clearly submitted before AO repeatedly and no payments were made out of books.
All these bank accounts were duly disclosed before AO / available in seized records with AO, as above.
6. No undisclosed bank accounts were found. Assessee filed cash flow statement to AO, in a summary form, to explain the source of investment However, due to enormous pressure of making compliance of around 60-70 search cases at a time of the group before AO, inadvertently the staff of the assessee filed incorrect details of sources and expenses before AO; though it were only through cheques and in totality it was correct which is clear from the facts that total investment shown to have been made by these four persons was correctly shown at Rs. 2,79,69,049/-. Ld. AO has also referred total investment at Rs. 2,79,69,049/- as per table given at page 35, para 3.1 of his order. As soon as this mistake came to our notice, we immediately filed a letter to the AO on 27.12.2011 ( asstt. order dtd. 30.12.2011) bringing out this fact and prayed for giving only one days time to 66 67 furnish correct details of the investment. We categorically stated that :
"Regarding Investment in house no. E-3/4, Arera Colony, Bhopal :
As regards to investment in house no. E-3/4, Arera Colony, Bhopal, it is submitted as under:
1. There was lot of pressure on the staff of accounts deptt. for making compliance of frequent & pending queries of the individuals of the group. (Due to this enormous pressure, they have again not reported proper figure of investment vis-a-vis source of that house, which is deep[y regretted.
2. All the payments for the construction of the house have been made only through cheques from declared and disclosed bank accounts. All the entries in the said banks are from declared sources of income. All your above assessees, and for that matter none of the assessee in the group, has got any undisclosed bank account. Further, none of your assessee has any undisclosed source of income.
3. Kindly allow us only one days time to enable us to prepare revised books of accounts containing detailed source of investments, payments and oblige.
4. Payments have been made through cheques for purchase of 67 68 land as well as for construction exps. through various small-
small entries scattered in different assessment years from the different bank a/cs of Raj Homes Pvt. Ltd., Sanjay Mehta & others.
5. Even there are mistakes in the figures and year of investment & expenses earlier reported. There are other mistakes also. But we assure you, Sir, that all are human, clerical and unintended mistakes due to heavy load of work, by our accounts staff people only.
6. However, source of investment into land is as under :-
Land cost 98,00,000/-
98,00,000/-
Copy of bank Source
above a/cs are
enclosed as Paid to Collector, Bhopal directly through ICICI cheque-
Annexure -
Chq. No. 624860 30.08.2005 50,00,000/-
Chq. No. 624862 30.08.2005 23,50,000/- 73,50,000/-
Paid by
Sandeep Mehta 14,50,000/-
SBI Govindpura Chq.
No. 338840
Raj Homes Chq. 04.08.2005 5,00,000/-
No. 15593
68
69
Raj Homes Chq. 04.08.2005 5,00,000/- 24,50,000/-
No. 15594
Total 98,00,000/-
We reiterate our most humble prayer to allow us only one days time to prepare minute details because, as stated above, various small-small entries have routed through many bank account of Raj Homes Pvt. Ltd., Sanjay Mehta & others and tracing those entries is taking time. But we assure you Sir, all payments have been made through cheques and out of disclosed sources only and there is not even a single penny of undisclosed investment in to that house.
In case yourhonour allows us only one days time, the accounts staff of the group shall be highly obliged because otherwise they will have to bear brunt of any adverse inference drawn by yourhonour due to their human, clerical &:
unintentional personal mistake, as above. Sir, if we are allowed only day's time, we will also make pending submissions, if any, as our counsel is heavily hard pressed and working day and night in replying & preparing for detailed and frequent queries for individuals of the group. Kindly, 69 70 therefore, grant only one day's adjournment and oblige"
8. However, the Ld. AO ignored our request and made the addition ignoring the fact that investment in to the said house was duly disclosed in the balance sheet filed before him of his four assessees, as above. He even ignored this fact brought by us before him during assessment.
9. We are enclosing herewith-detailed books of accounts for the said house no. E -3/4 at along with application u/r 46A. As per the said books/cash flow, investment in the said house and as valued by DVO are as under:
Cost of Land Cost of Construction Total As per DVO 98,00,000/- 2,07,51,909/- 3,05,51,209/- As per assessee 98,00,000/- 1,81,69,049/- 2,79,69,049/- Difference - 25,82,860/- 25,82,160/-
Thus, the difference was within permissible limits, and hence no addition was required.
10. The detailed books of accounts clearly evidence :
Yearwise Sources.
Yearwise investment.
Payments for construction of house matching with bank loans and various amounts deposited in the bank 70 71 account.
Linking withdrawls from all bank accounts with payments made.
Ledger account of Sanjay Mehta in the books of Raj Homes (as appearing in the seized records of Raj Homes Pvt. Ltd. with AO) In the case of Sanjay Mehta (assessee):
Copy of balance sheet of Sanjay Mehta as already filed before AO showing yearwise investment in house .
Copy of Pass Book of Bank accounts where from money was withdrawn by him.
In the case of Sandeep Mehta:
Copy of balance sheet of Sanjay Mehta as already filed before AO showing yearwise investment in house .
Copy of Pass Book of Bank accounts where from money was withdrawn by him.
In the case of Seema Mehta :
Copy of balance sheet of Sanjay Mehta as already filed before AO showing yearwise investment in 71 72 house .
Copy of Pass Book of Bank accounts where from money was withdrawn by her.
In the case of Priya Mehta :
Copy of balance sheet of Sanjay Mehta as already filed before AO showing yearwise investment in house .
Copy of Pass Book of Bank accounts where from money was withdrawn by her.
All withdrawals from personal Bank accounts linked each entry in case of:
Sanjay Mehta .
Sandeep Mehta Seema Mehta Priya Mehta Receipts from Raj Homes linked each entrywise. Loan received from HDFC Bank linked entrywise from their bank statement.
12. Purchase of land :
As regards additions of Rs. 23,OO,OOO/- made by the AO on account of purchase of land, source of investment of entire amount 72 73 of Rs. 98,OO,OOO/- in to land was explained to AO wide above letter dated 24.12.2010 filed on 27.12.2010 (assessee order is dated 30.12.2010) along with evidence as under :
Land cost 98,00,000/-
98,00,000/-
Source
Paid to Collector, Bhopal directly through HDFC cheque Chq. No. 624860 30.08.2005 50,00,000/- Pg. 976-977 Chq. No. 624862 30.08.2005 23,50,000/- 73,50,000/- Pg. 976-977 Paid by Sandeep Mehta, 14,50,000/- Pg.603 SBI Govindpura Chq. No. 338840 Raj Homes, Chq.No. 04.08.2005 5,00,000/- Pg. 978 155393 Raj Homes, Chq.No. 04.08.2005 5,00,000/- 24,50,000/- Pg. 978 155394 Total 98,00,000/-
In view of above, the source of investment for purchase of land was duly explained to AO along with evidence and hence the addition made by the AO of Rs. 23,00,000/--was not required on facts and hence be kindly deleted by yourhonour.
13. As a regards investment into construction of house, we are 73 74 enclosing hereabove, all the sources of receipts of money and payment which are through cheques and hence no additions are required even for the cost of construction particularly in view of the fact that difference in the valuation done by DVO is less than permissible limit of 15%.
Regarding addition for annual lease rent: AO made addition on account of a alleged payment of annual lease rent @ Rs. 4,90,000/- for these years totaling to Rs. 14,70,000/- on the ground that he would have had to pay on annual rent for AY 2007-08, 2008-09 and 2009-10. First of all, no such detail of annual lease rent was asked by AO. Further, the addition was wrong and based on presumption only as the assessee has actually not made any payment of lease rent during the bIock period. Such payment was infact made only on 17th March, 2011 through cheque. enclosed with application u/r 46A. Complete bills, vouchers produced before AO: The assessee produced complete bills, vouchers and all supporting for construction of said house in original before AO. The bagful of original bills & voucher were lifted from the office of the Ld. AO on 14.03.2011. "
74 75
55. It was argued by the ld. Authorized Representative that the assessee has furnished complete details of expenditure incurred on acquisition of plot as well as construction made thereon. Bills of all major expenditure were submitted before the Assessing Officer and all the major payments were made by account payee cheques which were reflected in the assessee's books of account and other persons from whom the amount was taken. The cost of land was Rs. 98 lakhs for which payment was made to Collector vide cheque no. 624860 dated 30.8.2005 Rs. 50 lakhs, vide cheque no. 624862 dated 30.8.2005 Rs. 23.50 lakhs, total of which works out to Rs. 73.50 lakhs. A sum of s. 40.50 lakhs. A sum of Rs. 40.50 lakhs was given by Sandeep Mehta out of his SBI Govindpura Branch vide cheque No. 338840. Further two cheques were issued by Raj Homes dated 4.8.2005, amounting to Rs. 5 lakhs each. Copy of Bank account and account of these persons were also enclosed and placed in the paper book.
56. Our attention was also invited to the details of cost of plot, cost of construction, loan from HDFC, which was taken 75 76 in four names, for purchasing/construction of this house. The respective investments were shown in the balance sheet of 4 persons viz. Sanjay Mehta, Sandeep Mehta, Sima Mehta, Priya Mehta, total amounts shown in the balance sheet worked out at Rs. 2,69,69,048/-. A sum of Rs. 10 lakhs was paid by Raj Homes directly. Thus, the total investment of Rs. 2,79,69,049/- was shown. As per the details filed before the lower authorities, the assessee has incurred the expenditure, prior to loan disbursement by HDFC from Raj Homes Private Limited, personal bank accounts of family members. The thrust of ld. Authorized Representative's argument was that entire detail was furnished before the lower authorities, which could not be properly appreciated before arriving at a conclusion. On the other hand, the ld. Senior DR relied on the orders of lower authorities.
57. We have considered the rival submissions and found from record various details filed by the assessee before the CIT(A). We found that the assessee has filed complete details of expenditure incurred for acquisition of land as well as for construction of building. The source of fund was out of loan 76 77 from HDFC from Raj Homes. The investment was debited in the books of account of four persons, namely, Sanjay Mehta, assessee, amounting to Rs. 69,92,262/-, Sandeep Mehta, brother - Rs. 69,92,263/-, Sima Mehta, wife of assessee was Rs. 69,92,262/-, Priya Mehta - Rs. 69,92,262/-. Thus, the total investment works out to Rs. 2,79,69,049/-. We found that all the payments so received were through cheques, which were either in the form of loan or contribution by other family members or payment from Raj Homes Private Limited. The assessee has furnished bank account of all these family members and also bank account of Raj Homes Private Limited before the lower authorities to substantiate the source of fund. Not only the amount was received through cheque, but the expenditure on account of house was mainly through cheques. Even a cash flow statement was filed before the Assessing Officer in summary form to explain the source of investment, wherein some inadvertent mistake was pointed out by the Assessing Officer. Immediately thereafter, the assessee has filed a letter to the Assessing Officer on 27.12.2011 alongwith assessment order dated 30.12.2011 and prayed for giving 77 78 one day time to furnish the correct details of investment. However, as the assessment was time barred, the Assessing Officer did not give the time and completed the assessment. It appears that due to paucity of time, the details furnished regarding source of fund and the investment made in the house property could not be properly appreciated by the lower authorities. There also appears to be some lacuna on the part of the assessee to clarify the mistakes in cash flow statement. Keeping in view the substantial interest of justice, we restore this issue in all the years under consideration to the file of Assessing Officer for deciding afresh after considering the details so filed before the lower authorities as discussed hereinabove. The assessee is at liberty to file evidence to substantiate the cost incurred on the construction and the respective mode of payment alongwith source of fund. We direct accordingly.
58. The Assessing Officer has also made addition on account of cash deposit made in Bank account in various years. By the impugned order, the ld. CIT(A) deleted the addition in assessment year 2003-04, 2005-06, 2006-07 and 2007-08. However, part of additions were retained in 78 79 assessment year 2004-05 amounting to Rs. 2,01,400/- in assessment year 2008-09 Rs. 9,10,673/-. Precise observation of the CIT(A) was as under :-
"7.4 I have examined the matter. The additional evidences submitted before me are not considered for deciding the issue due to the reason given above. The facts of the cash deposit made in various bank accounts were discovered during the course of search hence the appellants plea that the impugned addition is not based on any material found during the course of search is not valid. During the hearing I have examined the source of all deposits both above Rs.50000/- and below Rs.50000/- .Before the A.O. the appellant has claimed that the cash deposits made in these bank accounts were out of agriculture income and contract receipt. In this appeal order the additions on account of agriculture income and contract receipt have been confirmed. It is not found that the cash available out of undisclosed income was invested elsewhere. In the appellants case the ratio laid in ACIT Vs. Kulwant Singh and others IT(SS) 57 TO 63/IND/2008 (Indore ITAT) is directly applicable. The unaccounted income claimed as agriculture income and contract receipt have been brought to tax hence taxing the cash deposited in the bank to the extent of availability of cash on account of additions confirmed will amount to double addition.
In view of the above, it is held that the addition made 79 80 on account of cash deposits made in bank account is to be reduced by the additions confirmed on account of claim of agriculture income and contract receipt and that the source of balance amount deposited in bank is not explained. The amount of addition for various years is reduced as under:
Assessment year Amount of Addition Addition on Amount of confirmed confirmed on account account of Cash addition on account of of agriculture income deposit cash deposit in bank and contract receipt A.Y.2003-04 586500 437000 Nil A.Y.2004-05 608100 + 185000 994500 201400 A.Y.2005-06 610443 345000 Nil A.Y.2006-07 1031887 810000 Nil A.Y.2007-08 996780 68000 Nil A.Y.2008-09 93527 1004200 910673 In view of the above the amount of additions on account of cash deposit for A.Y.s 2003-04, 2005-06 to 2007-08 are deleted and addition for A. Y. 2004-05 is reduced to Rs.201400/- and the addition for A.Y. 2008-09 is reduced to Rs.910673/-."
59. Against the above order of CIT(A), both assessee and Revenue are in appeal before us.
60. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that before the Assessing Officer, the assessee has filed cash flow statement indicating source of fund on the respective date of deposit in the Bank account. As per 80 81 the cash flow statement, the assessee was having sufficient cash balance available with him for deposit in the Bank account. On each day of deposit. However, the CIT(A) while confirming part of addition in assessment year 2004-05 and 2008-09 did not take into account the funds available with assessee out of withdrawals made from other bank account. Accordingly, no additions were warranted in any of the years under consideration.
However, while considering availability of fund, the CIT(A) has only considered income from agriculture and contract receipts. The ld. CIT(A) observed that in the assessment year 2004-05, total cash available was Rs. 7,93,100/- against which assessee has deposited a sum of Rs. 9,94,500/-. Accordingly, the addition of Rs. 2,01,400/- ( Rs. 9,94,500/- (-) Rs. 7,93,100/-) was made. Similarly, in the assessment year 2008-09, the ld. CIT(A) found that cash deposit in the Bank was more by Rs. 9,10,673/- as compared to the cash available in the form of agriculture income and contract receipts. Even if we see independently, the chart printed at page 56 of CIT(A)'s order, the total availability of cash out of agricultural income and contract receipt right from 81 82 assessment year 2003-04 to 2008-09 was Rs. 14,12,273/- against which the assessee has deposited cash of Rs. 36,58,700/-. Thus, the available cash even without taking into account the withdrawals made by the assessee from other bank account, which he has duly incorporated in his cash flow statement, was more than the cash deposited in the Bank account. Following is the cumulative chart of cash, which clearly indicate that cash available at the beginning of each year was much more than the cash deposited in the respective years. Accordingly, no addition is warranted in any of the assessment years under consideration.
Revised modified chart is as under :-
Assessment Amount of Cumulative Addition Cumulative balance of balance of year Addition cash on cash confirmed on deposited account of available account of Cash agriculture deposit income and contract receipt A.Y.2003-04 5,86,500 5,86,500 437000 4,37,000 A.Y.2004-05 6,08,100 + 13,79,606 994500 14,31,500 1,85,000 A.Y.2005-06 6,10,443 19,90,043 345000 17,76,500 A.Y.2006-07 10,31,887 30,21,930 810000 25,86,500 A.Y.2007-08 9,96,780 40,18,710 68000 26,54,500 A.Y.2008-09 93,527 41,42,237 1004200 36,58,700 82 83
61. In view of above, no addition is warranted in respect of deposit of cash in any year under consideration. In the result, ground taken by assessee is allowed, whereas appeal of revenue is dismissed.
62. With regard to contract receipt of Rs. 85,000/- in the assessment year 2004-05, the assessee has offered 8 % profit on presumative scheme. However, the Assessing Officer confirmed entire addition of contract receipt on the plea that the assessee could not substantiate the nature of income. By the impugned order, the CIT(A) confirmed the addition. In view of the reasoning discussed in the case of other group of assessee Shri Sandeep Mehta, we confirm the action of CIT(A) for treating the entire contract receipts as assessee's income.
63. The Assessing Officer has also made addition in respect of foreign travel expenditure incurred by the assessee but not shown in the books of account in the assessment years 2004-05 & 2007-08 to 2009-10. The facts of the case in brief are that the appellant has made various visits during the previous year relevant to A.Y.s in dispute. The .A.O. estimated expenditure for these visits and 83 84 asked the appellant to show cause as to why addition for expenditure totaling to Rs. 14,65,000/- should not be added. The appellant did not submit reply to the show cause, hence the A.O. made the following addition for unaccounted expenditure:
A.Y. 2004-05 60000/-
A.Y. 2007-08 600000/-
A.Y. 2008-09 615000/-
A.Y.2009-10 190000/-
The Assessing Officer has observed and mentioned in his order regarding various details in different assessment years regarding foreign visits of Mr. Sanjay Mehta. The assessee was asked the details of expenses in such travel and was asked to produce bills and vouchers of expenses incurred in the travel. He was also asked to explain the source of expenditure in the above mentioned journeys abroad. The assessee claimed that the travel done with his family was done by self while the rest of the trips were sponsored by various organizations like Zee TV, ESPN etc. The Assessing Officer asked as to why such trips have been sponsored by such organizations as trips to foreign countries are usually expensive. Regarding the travels done by self 84 85 and family the assessee gave chart of expenditure. However, he did not provide any bill or vouchers about the travel agency from whom flight tickets have been b ought. He did not provide any original hotel receipts of the places in which he had stayed and did not produce any details of expenditure. The Assessing Officer was forced to do an approximation of the expenditure on the said trip and arrived at an expenditure figure of Rs. 14,65,000/-. Assuming to be his expenditure on various foreign trips and considering that no reply explaining the source of expenditure has been given why should it not be treated as unexplained.
However, the assessee did not provide any reply tiff the end of assessment proceedings. Accordingly following amounts are being added to the income of the assessee for various AY as per the year in which such amounts were spent:
A.Y.2004-05: Rs.60,000 A.Y.2007-08:Rs.6,00,000 A.Y.2008-09:Rs.6,15,000 A.Y.2009-10:Rs.1.90,000
64. By the impugned order, the ld. CIT(A) confirmed the addition.
85 86
65. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that inspite of giving opportunities, the assessee could not substantiate source of expenditure incurred on foreign travel in various year under consideration. After making detailed inquiry and recording detailed findings, the Assessing Officer has made the addition which was further fortified by the ld.CIT(A). Even before us, nothing could be brought on record by the assessee to persuade us to deviate from the findings recorded by the lower authorities. We, therefore, confirm the action of CIT(A) for the additions made on account of foreign travel in the assessment year 2004-05 at Rs.60,000/-, 2007-08 at Rs.6,00,000/-, 2008- 09 at Rs. 6,15,000/- and 2009-10 at Rs.1,90,000/-. PRIYA MEHTA : I.T(SS).A.Nos. 167 TO 172/IND/2012 :
66. These are the appeals filed by the assessee against the order of CIT(A) dated 2.3.2012 for the assessment years 2003-04 to 2009-10, in the matter of order passed u/s 153A read with Section 143(3) of the Income-tax Act, 1961.
67. First common issue relates to agricultural income offered by the assessee which was treated by the Assessing 86 87 Officer as income from other sources. After giving the same reasoning as given in other assessees as discussed hereinabove. By the impugned order, the CIT(A) confirmed the addition giving the same reasoning as in the case of other assessees. It was argued by the ld. Authorized Representative that to substantiate the agricultural income, additional documents were filed before the CIT(A) in the form of original lease agreements, original affidavits of farmers, notarized copy of lease agreement original khasra-
khatauni and form P-II, original receipts of payment of lease rent. All these documents are placed at pages 94 to 294 of the paper book. It was further argued by the ld. Authorized Representative that agricultural income offered in assessment years 2003-04 & 2004-05, much prior to the date of search were accepted by the Department under scrutiny assessment u/s 143(3), accordingly, decline for assessee's claim for entire agricultural income was not justified.
68. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that by repeating the same reasoning as given 87 88 in other assessees, the Assessing Officer has made the addition and CIT(A) has confirmed the same. We have already discussed in detail hereinabove in case of Hitesh Mehta, where the issue has been restored back to the file of Assessing Officer. Following the same reasoning as given in the case of aforesaid assessees, this issue is restored back to the file of Assessing Officer in all the years under consideration.
69. The Assessing Officer has also made addition on account of cash deposited in the Bank account. By the impugned order, the CIT(A) deleted the addition except the assessment years 2004-05 and 2008-09 by observing that agricultural income and contract receipt was available to the assessee for deposit in the Bank account. Precise observation of CIT(A) was as under :-
"7.4 I have examined the matter. The additional evidences submitted before me not considered for deciding the issue due to the reason given above. The facts or the cash deposit made in various bank accounts were deposit during the course or search hence the appellants pled that the impugned 88 89 addition is not based on any material found during the course of search is not valid. During the hearing I have examined the source of all deposits both above Rs. 50000/- and below Rs. 50000/-. Before the Assessing Officer the appellant has claimed that the cash deposits made in these bank accounts were out of agriculture income and contract receipt. In this appeal order the additions on account or agriculture income and contract receipt have been confirmed, In the appellants case the ratio laid in ACIT Vs. Kulwant Singh and others IT(SS) 57 to 63/Ind/2008 (Indore ITAT) is directly applicable. The unaccounted income claimed as agriculture income and contract receipt have been brought to tax hence taxing the cash deposited in the bank to the extent or additions confirmed will amount to double addition. In view of the above, It is held that the addition made on account of cash deposits made in bank account is to be reduced by the additions confirmed on account or claim or agriculture income and contract receipt. The amount or addition for various 89 90 years is reduced as under:
A.Y. Amount of Addition on Amount of
Addition account of confirmed
confirmed on Cash deposit addition on
account of account of
agricultural cash
income and deposit in
contract bank
receipt
2003-04 389000 240000 Nil
2004-05 499425 535000 35575
2005-06 511530 441000 NIL
2006-07 815639 535000 NIL
2007-08 1075397 631100 NIL
2008-09 38720 1300000 1261280
In respect of addition of Rs.1300000/- for A.Y.2009-10, it is found that in the assessment order, the A.O. has not given any description of cash deposits in the A.Y. 2008-09 but in the computation he has made addition of Rs. 1300000/- on account of cash deposit in bank. It shows that the addition of Rs.1300000/- in A.Y. 2009-10 is inadvertently made in the computation. In view of these facts the addition of Rs.1300000/- in A.Y. 2009-10 is deleted.
5.5 In the result the additions for A.Y. 2003-04, 2004-05 to 2007-08 are deleted and the addition for A.Y. 2004-05 is reduced from Rs.535000/- to 90 91 Rs.35575/- and addition for A.Y. 2008-09 is reduced from 1300000/- to Rs.1261280/-."
70. The Revenue is not in appeal for deletion of addition, however, the assessee is in appeal for assessment years 2004-05 to 2008-09 wherein addition has been sustained by the ld.CIT(A).
71. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that before the lower authorities, the assessee have filed cash flow statement giving availability of cash out of agricultural income, contract receipts and withdrawals from other bnak. However, while sustaining addition, the CIT(A) has only considered the cash available through agricultural income and contract receipts. We found that as per cash flow statement, the assessee was having sufficient cash balance on each day of deposit. Even total of income declared by assessee during assessment years 2003-04 to 2008-09 as per chart given by CIT(A) at page no. 48 is more than total cash deposited in bank account during the assessment years 2003-04 to 2008-09. Accordingly, no 91 92 addition is warranted on account of cash deposited in bank account.
72. In the result, this ground of assessee in assessment years 2004-05 and 2008-09 is allowed.
73. In the result, the appeal of the assessee is allowed in part.
74. A common ground has been taken regarding charging of interest u/s 234B in case of all the aforesaid assessees in all the years under consideration.
75. Plea of ld. Authorized Representative was that in view of the decision of I.T.A.T. Mumbai Bench in the case of Datamatics Limited vs. ACIT, (2008) 299 ITR 286 (A.T.) (Mum. I.T.A.T.), where there was no default on the part of the assessee in payment of advance tax, no interest was liable u/s 234B in regular assessment. Following was the precise observation of the Bench :-
"The charging of interest u/s 234B is mandatory. Mandatory does not mean that it is mandatory under all circumstances. It is mandatory when the conditions are fulfilled. The condition is that the assessee should have defaulted. A reading of 92 93 Section 234B(3) makes it clear that where, as a result of an order of order of reassessment or re- computation u/s 147 or Section 153A, the amount on which interest was payable under sub Section (1) is increased, the assessee shall be liable to pay simple interest at the rate of one percent. The Section further makes it clear that first of all there should be a default on the part of the assessee in the regular assessment and the assessee should have been held liable to pay interest u/s 234B.In that case, if there was reassessment or re-
computation u/s 147 or 153A, the liability of the assessee is increased and not otherwise. In the instant case, there was no default on the part of the assessee, in paying the advance tax. For the first time, the dispute arose consequent to the reassessment done u/s 143(3) read with Section 147, interest could not be charged u/s 234B."
76. It was further argued that in view of the decision of Kerala High Court in the case of B.Lakshmikanthan , (2011) 198 Taxman 485, interest should be charged on incremental 93 94 income only i.e., additional income assessed u/s 153A as compared to the income determined u/s 143(1)/143(3).
77. We have considered the rival contentions. In view of decision of Kerala High Court in the case of Lakshmikanthan (supra), we direct the Assessing Officer to recompute the interest u/s 234B which provides that where original assessment completed u/s 143 is revised either u/s 147 or u/s 153A, then interest for non-payment or short payment of advance tax is payable only for the period mentioned in Section 234B(3) which provides for interest from the date of completion of regular assessment u/s 143(1) till the date of completion of reassessment. The Assessing Officer is directed accordingly.
78. A common issue has been taken in the case of all the assessees to allege that assessments framed in individual capacity was not justified. We have considered the rival submissions and found from record that a warrant was issued authorizing search in case of all the individuals. Neither any AOP was existing nor any warrant was issued in the name of AOP, therefore, no search was possible in the case of AOP, which did not exist. Since the warrant have 94 95 been issued in the individual cases, the assessments have been properly done in the capacity of individuals. Accordingly, we do not find any infirmity in the order of Assessing Officer for making assessments in individual capacity rather than in capacity of AOP. In the result, ground taken by all the assessees in all the years under consideration are dismissed.
79. In the result, the appeals of assessee are allowed in part in terms indicated hereinabove.
This order has been pronounced in the open court on 22nd March, 2013.
sd/- sd/-
(JOGINDER SINGH) (R. C. SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 22nd March, 2013.
CPU*
183213
95