Income Tax Appellate Tribunal - Chandigarh
Gurjit Singh, Mohali vs Assessee on 25 September, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIG ARH BENCH 'B', CHANDIG ARH
BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND
Ms. SUSHMA CHOWLA, JUDICI AL MEMBER
ITAs No. 1173 to 1177/Chd/2012
Assessment Years : 2004-05 to 2006-07, 2009-10 & 2003-04
Late Shri Pritam Singh Vs. D.C.I.T, Central Circle I
through L/R Gurjit Singh Chandigarh
H No. 748
Phase 3B-I
Mohali
AMNPS 8064P
ITAs No. 1193 to 1198/Chd/2012
Assessment Years : 2004-05 to 2009-10
A.C.I.T. Vs. Shri Pritam Singh
Central Circle I H No. 748
Chandigarh Phase 3B-I
Mohali
AMNPS 8064P
ITAs No. 1166 to 1168/Chd/2012
Assessment Years : 2003-04 to 2005-06
Shri Gurjit Singh Vs. D.C.I.T, Central Circle I
H No. 748 Chandigarh
Phase 3B-I
Mohali
ANEPS 7778N
ITAs No. 1187 & 1188/Chd/2012
Assessment Years : 2004-05 & 2005-06
A.C.I.T, Central Circle I Vs. Shri Gurjit Singh
Chandigarh H No. 748
Phase 3B-I
Mohali
ANEPS 7778N
(Appellant) (Respondent)
Assessee by: Shri Rohit Goel
Department by: Shri Amarveer Singh
Date of hearing 16.4.2014
Date of Pronouncement 6.6.2014
2
O R D E R
PER BENCH These are cross appeals and are directed against the orders dated 25.9.2012 of the Ld CIT(A)(C), Gurgaon. Some issues are common in these appeals which were heard together and are being disposed off by this consolidated order. 2 In this group of cases search was conducted on 11.6.2008. Later on special audit was also ordered and ultimately report of the special auditor was issued on 25.6.2011. Notice was accordingly issued on 27.7.2011 fixing the case on 1.8.2011. Assessment was completed on 25.8.2011. Therefore many details could not be filed. It was contended before the LD. CIT(A) that merely 23 days was available for filing of details which was not possible therefore many details were filed before the Ld. CIT(A) with a request to admit additional evidence.
3 The Ld. CIT(A) had admitted the additional evidence and referred the same to Assessing officer for remand verification. In this background most of the enquiries were conducted during appeal / remand.
4 I T A N o . 1 1 7 7 / C h d / 2 0 1 2 - A. Y 2 0 0 3 - 0 4 - L a t e S h r i P r i t a m Singh In this appeal the assessee has raised the following grounds:
"1 That authorities below has erred in law and facts in framing the assessment without affording proper opportunity of being heard to the appellant.
2 That authorities below has erred in law and facts to appoint Special Auditor in an automatic manner without considering the facts of the case and consequently the appointment of the auditor is bad in law.
3 That the appointment of special auditor is bad in law and is not in accordance with the spirit of law under the provisions of 3 section 142(2A) of the Act but only to gain time for completing the assessment which is barred by limitation.
4 That Ld. CIT(A) has erred in law and facts in confirming the additions of Rs. 15,000/- comprising Rs. 10,000/- on account of purchase of DD in cash and Rs. 5,000/- paid for purchase of DD for IELTS.
5 That Ld. CIT(A) has erred in law and facts in confirming an addition of Rs. 17,47,056/- being profit on contract payments of Rs. 20,53,687/- comprising Rs. 7,73,687/- received from PBIL Apex Consortium Ltd and a sum of Rs. 12,80,000/- received from GKS & Co. and DG Enterprises.
6 That Ld. CIT(A) has erred in law and facts in not taking reliance of entries recorded in supplementary cash book produced before the Ld. CIT(A) after admitting the same u/s 46A(1)(d) and despite the fact that Assessing officer has confirmed the verification of debit/credit entries recorded in the supplementary cash book."
5 Grounds No. 1 to 4 were not pressed before us, therefore same are dismissed as not pressed before us. 6 Ground No. 5 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that perusal of income and expenditure statement for the year shows following receipts which were shown as indirect receipts:
" P B I L Ap e x a nd Xe n Dr ai na ge o f R s. 6 ,7 3 ,6 8 7 / - an d Rs . 4 7 ,2 6 ,5 5 9 / - r esp ect i ve l y i n GM Co n str u ct io n Co .
M/ s P B I L Ap e x a t R s. 4 , 0 0 ,0 0 0 / - i n t he b o o ks o f Mat c hl es s As so cia te s M/ s P B I L Ap e x a t R s. 1 2 ,8 0 ,0 0 0 / - i n t h e b o o k s o f Ma tc hl es s As so ci ate s Against above receipts no expenditure were claimed. The assessee was asked to show cause as to why the above amounts should not be added back to the taxable income of the assessee because same was shown as indirect receipts and no expenditure were claimed. It was further noticed that following receipts were shown in profit and loss account:
"
Na me o f t h e Gr o s s t ur no ver Net p r o fi t I nd ir ec t Net p r o fi t fr o m co n cer n in co me b u si n es s cr ed i ted to P & L acco u n t Mat c hle s s 1 6 ,8 0 ,0 0 0 / - 1 8 ,6 3 ,3 4 0 / - 1 ,8 4 ,1 3 6 / - 1 6 ,7 9 ,2 0 4 / -
As so c ia te s ( i nter e st o n
FD R)
G.M. 5 4 ,0 0 ,2 4 6 / - 5 3 ,9 9 ,6 0 6 / - - 5 3 ,9 9 ,6 0 6 / -
Co n str u ct io ns ( s ho wn a s
Co . ind ir e ct
in co me s a nd no
4
exp e ns e s
cla i med )
P r ita m S i n g h 6 ,1 6 ,9 5 0 / - 3 ,3 4 ,4 9 3 / - 3 ,3 4 ,4 9 3 / - --
T o tal 7 0 ,7 8 ,8 1 0 / -
In this connection special auditor had observed that in the course of audit and books of accounts the assessee had not shown any expenses against these incomes. The Assessing officer further noted that in the return of income the assessee has shown income from business & profession at Rs. 605195/- whereas as per books of accounts the receipts are Rs. 7078810/-. Therefore according to the Assessing officer the assessee had under reported the income to the tune of Rs. 6473615/- and therefore this sum was added to the income of the assessee.
7 Before the Ld. CIT(A) it was mainly submitted that addition is made on the basis of statement of accounts prepared by the special auditor. It was pointed out that some wrong entries were made in the profit and loss account and therefore entire addition was not justified. It was pointed out that certain receipts from Drainage Division, Amritsar in the proprietary concern known as Matchless Associates were there. Most of these receipts were on account of earlier securities etc. 8 In respect of other receipts amounting to Rs. 2053687/- in the hands of G.M. Construction etc it was stated that for including these works the assessee had incurred expenses also which was mainly consisting of cash. The Cash was withdrawn from the banks which was not taken by the Special auditor. Supplementary cash book was maintained which gave correct 5 picture and had been verified by the Assessing officer during remand proceedings.
9 The Ld. CIT(A) after examining the submissions noted that Executive Engineer, Amritsar Drainage Division has certified that the payments were made in Assessment year 2003-04 but pertained to 1999-2000. Therefore in the absence of any other material addition on account of receipts from Executive Engineer, Drainage Div. Amritsar were deleted. However, the Ld. CIT(A) did not accept the theory of supplementary cash book and confirmed the addition of other receipts.
10 The Revenue has not filed any appeal against the addition which has been deleted by the Ld. CIT(A), therefore we are not required to discuss that aspect.
11 Before us, the Ld. Counsel for the assessee reiterated the submissions made before the Assessing officer and the Ld. CIT(A). He further submitted that a sum of Rs. 377687/- in the book profit G.M. Construction, said to have been received from PBIL Apex Construction Ltd. and the payment of Rs. 4 lakhs received in the books of Matchless Associates did not relate to construction payment and they were wrongly booked under the construction payment. In respect of construction payments it was submitted that it is not possible to earn 80 to 90% profit in construction jobs as reflected in profit and loss account prepared by special auditor who has not considered the expenses which were incurred in cash and such expenses were later incorporated in the supplementary cash book which was furnished before the Ld. CIT(A) as additional evidence. In fact such additional evidence was admitted before the LD. CIT(A). 6 In this regard he referred to page 9 of impugned order. He also referred to the remand report wherein the Assessing officer has verified the supplementary cash book. Therefore at best estimated profit should be taxed.
12 On the other hand, the Ld. D.R. for the Revenue strongly supported the order of Ld. CIT(A).
13 W e have gone through the rival submissions carefully in the light of material on record and relevant order. The main case of the Revenue is that the assessee has not maintained the books of account and that is why no such books were found during search or produced even during assessment proceedings. Further because of the complexities in the accounts the Assessing Officer ordered special audit. Entire addition in respect of the issue in this ground has been made on the basis of books prepared by special auditor. On the other hand, the case of the assessee is that special auditor had punched only the credit entries and has not considered the self withdrawals for recording expenses. That is why the profit has been reflected at 80 to 90% of the receipts by the special auditor. The assessee has further prepared a supplementary cash book which was submitted before the Ld. CIT(A) as additional evidence which incorporated the receipts as well as withdrawals in the respective years. In respect of this additional evidence it has been observed at page 9 of the Ld. CIT(A) as under:
" T her ef o r e c o ns id er i n g t h e f ac ts a nd c ir c u m s tanc es of th e c as e, a nd in a ll f a ir n es s , I h o ld t ha t t h e r e q u es t f or a dm i s s i on of a d d it i on a l e v i de nc e f il e d u /R u l e 4 6 A ( 1) ( d) des er v es t o be ac c ed e d t o be i n g n ec es s ar y f or d is p os al of th e a p p ea ls ( s ) o n m er its . H o we v er , t h e n at ur e of th e e v id e nc e in r es pec t of eac h of t he is s u es c o nc e r n e d is d is c us s e d r es p ec ti v e l y t h er e u nd er . As s uc h, th e a d d it i on a l e v i de nc e is al l o we d t o be adm i tt ed at t h is j u nc t ur e a nd th e a p pe a l of the as s es s e e is d i s pos e d on m er i ts of t h e c as e. "7
After making above observation the remand report was sent to the Assessing officer. Copy of the remand report has been enclosed at page 16 to 30 of the paper book and at page 28 & 29 relevant portion reads as under:
"With regards to receipts from PBIL Apex Consortium Ltd. amounting Rs. 777687/- and receipts of Rs. 290000/- from M/s G.K.S. & Co. and payment of Rs. 990000/- received from D.G. Enterprises, the assessee has contended that entire work don e is added as income whereas return of income was filed by applying a flat profit rate of 8% was declared on these payments. The contention of assessee that books of accounts produced before Special auditor were not complete as such expenditure are not reflected in Supplementary cash book can not be accepted. With regard to claim of expenses debited through supplementary cash too, the entries, the debit/credit entries in this supplementary cash book is verified. However, the supplementary cash book now filed by assessee is in contravention to Rule 46AS of the IT Rules, 1962 and the same may not be admitted as tantamount to additional evidence. These payments were not recorded in the books produced before special auditor and therefore these amounts have been rightly added back as unexplained incomes of the assessee u/s 69 of the IT Act, 1961."
The highlighted portion clearly shows that supplementary cash book has been verified. W e fail to understand that after making such verification how whole receipts were added to the income. It is not possible in case of various construction receipts to have 90-100% rate of profit which is shown in profit and loss account by special auditor which itself shows that contention of the assessee has merits.
14 However, at the same time there is no evidence before us to show that receipts of Rs. 377687/- in the hands of G.M. Construction Company proprietary concern and Rs. 4 lakhs in the hand of Matchless Associates were security receipts. Now admittedly these receipts do not relate to construction payment therefore whole of these amounts i.e. Rs. 777687/- is required to be added to the income.
15 As far as receipts of Rs. 12,80,000/- are concerned, we accept the plea that these are construction receipts and 8 therefore direct receipts and therefore direct the Assessing officer to apply Net profit rate of 8% on these receipts. Therefore this ground is partly allowed.
16 Ground No. 6 - The Ld. Counsel for the assessee submitted that initially at page 9 of the impugned order the Ld. CIT(A) has clearly admitted additional evidence but while giving relief the supplementary cash book was not accepted despite the fact that same was verified by the Assessing officer. Therefore this finding is not correct. 17 On the other hand, the Ld. D.R. for the Revenue supported the order of the Ld. CIT(A).
18 After considering the rival submissions and the material on record, we would like to point out that after verification of supplementary cash book Assessing officer should have given effect to consequential facts. However, in any case since we have already accepted the theory and this ground has become infructuous and we decline to adjudicate this ground in detail. 19 In the result, ITA No. 1177/Chd/2012 is partly allowed. 20 I T A N o . 11 73/ Ch d/ 2 01 2 - A. Y 2 0 04- 05 - Lat e Sh ri P ri tam Singh 21 In this appeal the assessee has raised the following grounds:
"1 That authorities below has erred in law and facts in framing the assessment without affording proper opportunity of being heard to the appellant.
2 That authorities below has erred in law and facts to appoint Special Auditor in an automatic manner without considering the facts of the case and consequently the appointment of the auditor is bad in law.
3 That the appointment of special auditor is bad in law and is not in accordance with the spirit of law under the provisions of section 142(2A) of the Act but only to gain time for completing the assessment which is barred by limitation.
4 That Ld. CIT(A) has erred in law and facts in confirming the additions of Rs. 10,35,813/- u/s 68 comprising Rs. 5,00,000/- from Hardeep Singh and Rs. 5,35,813/- from M.S. & Co.9
5 That Ld. CIT(A) has erred in law and facts in confirming an addition of Rs. 2,14,700/- being opening/closing work in progress as income for the year.
6 That Ld. CIT(A) has erred in law and facts in confirming the addition of Rs. 22,65,000/- treating total contract receipts of Rs. 22,65,000/- received from PBIL Apex Consortium Ltdl as income of the assessee for the year.
7 That Ld. CIT(A) has erred in law and facts in confirming the addition of Rs. 4,50,000/- being cash deposited for purchase of demand draft and shown in supplementary cash book.
8 That Ld. CIT(A) has erred in law and facts in not taking reliance of entries recorded in Supplementary cash book produced before the Ld. CIT(A) after admitting the same u/r 46A(1)(d) and despite the fact that Assessing officer has confirmed the verification of debit/credit entries recorded in the supplementary cash book."
22 Out of above grounds, grounds No. 1, 2 & 3 were not pressed before us, therefore same are dismissed as not pressed.
23 Further the assessee has moved an application for admission of additional evidence. In this application the order of Settlement Commission in case of K.D. Sharma and assessment order in case of S.P. Singh have been filed. It was pleaded that these two orders will explain many issues raised before the Tribunal and these orders came into existence after passing of the orders by the Assessing officer and the Ld. CIT(A) and that is why these are being filed by way of additional evidence. Since these documents would throw light on many issues, it was prayed that same may be admitted. 24 On the other hand, the Ld. D.R. for the Revenue opposed the submissions of the Ld. Counsel for the assessee. 25 After hearing both the parties we find that additional evidence is only in the form of orders passed by the Assessing officer and Settlement Commission. The orders have been passed after passing the assessment order and since the same have bearing on the issues required to be adjudicated before 10 us, therefore in the interest of justice this application is being allowed and assessment orders in case of S.P. Singh for various years and order of the Settlement Commission in case of K.D. Sharma is admitted.
26 Ground No. 4 - Since no evidence was filed during assessment proceedings therefore a sum of Rs. 2035832/- was added to the income of the assessee.
27 Before the Ld. CIT(A) it was submitted that accounts of certain parties were running accounts and special auditor has simply taken the credit entries without giving any benefit of the debit account of same parties. It was further stated that a sum of Rs. 536500/- was received from M.S & Co. out of which Rs. 436500/- was directly paid by this party against property No. BMM 373 Ph 11, Mohali which was purchased along with assessee and this party had 30% share in the said property. The balance of Rs. 1 Lakh was given on 27.11.2003 by bank draft. The Assessing officer made enquiries in respect of receipts during remand report but observed that reply given by Manjit Singh do not prove ingredients of Sec 68 of the Act. In the counter comments before the Ld. CIT(A) it was stated on behalf of the assessee that the Assessing officer has simply brushed aside this evidence without pointing out how the ingredients of Sec 68 were not fulfilled.
28 The Ld. CIT(A) confirmed this portion of the addition by observing that this contention was raised for the first time. There was another addition of Rs. 10.00 Lakhs received from S.P. Singh which was accepted by the Assessing officer during remand report and deleted by the Ld. CIT(A). Since Revenue has not filed any appeal against this deletion, this issue does 11 not require to be gone into in detail. Balance addition of Rs. 5 Lakh was same which was stated to be withdrawn from the bank by one Hardeep Singh who was stated to be an employee of the assessee. In the remand report the Assessing officer stated that no proof has been filed by the assessee to show the purpose of withdrawal and on the basis of this remand report, addition was confirmed by the Ld. CIT(A).
29 Before us, the Ld. Counsel for the assessee reiterated the submissions made before the Ld. CIT(A). He further pointed out that property No. BMM 373 Ph 11, Mohali was purchased for Rs. 29,10,000/- through auction. Money was to be paid in installments. Share of Manjit Singh was 30%. Manjit Singh paid a sum of Rs. 436500/- directly to PUDA on 27.11.2003 and Rs. 1 Lakh was paid later on. Balance of amount was paid to Gurjit Singh on the instructions of the assessee. All these issues were verified by the Assessing officer during remand proceedings and in response to enquiries u/s 133(6). Manjit Singh had filed a letter before the Assessing officer in response to query giving all these details (copy of which is available at page 62 of paper book). He has filed copy of account, acknowledgement of return and agreement showing share of property. Despite all these informations Revenue has not accepted the explanation which is not correct. 30 In respect of addition on account of cash of Rs. 5 lakh it was stated that this amount was withdrawn by Hardeep Singh who was an employee deputed at Gurdaspur. He also referred to page 41 of paper book which is copy of bank account in Punjab National Bank in the name of Matchless Associates which is a proprietary concern of the assessee and pointed out 12 that name of Hardeep Singh is clearly mentioned. This cash was handed over to the assessee firm. Hardeep Singh in response to the query has confirmed this fact vide letter dated 11.6.2012 to the Assessing officer and copy of the letter is placed at page 66 of the paper book.
31 On the other hand, the Ld. D.R. for the Revenue strongly supported the order of the Assessing officer and the Ld. CIT(A).
32 After considering the rival submissions and the material on record, we find that the matter was remanded to the Assessing officer and the Assessing officer has made enquiries. In response to the query u/s 133(6) Matchless Associates had clearly mentioned the fact regarding purchase of property jointly with Pritam Singh i.e the assessee and the fact that M.S. & Co. kept 30% share. PAN number and acknowledgement of return etc. have been filed. Even the copy of agreement showing 30% share belonging to him has been filed at page 35 of the paper book. W e fail to understand that after receiving this information no further enquiry has been made then such evidence cannot be ignored. Therefore we are of the opinion that this addition is not justified. 33 Similarly as far as addition on account of receipt of Rs. 5 lakh has been made this amount has been withdrawn by Hardeep Singh on various dates which becomes clear from the copy of the bank account placed at page 41 of the paper book. Hardeep Singh has clearly stated in his letter (copy of which is available at page 66 of paper book) that he was employed by the assessee and was deputed to Gurdaspur site and the amounts were withdrawn from the bank and were handed over 13 to Pritam Singh. Therefore clearly the assessee has discharged the onus which was put on the assessee and the Assessing Officer has not made any further inquiry. Therefore in our opinion, the Assessing officer is not right to reject this evidence without further enquiry. Accordingly we set aside the order of the Ld. CIT(A) and delete the addition of Rs. 10,35,813/-.
34 Ground No. 5 & 6 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that assessee had received a sum of Rs. 2964462/- comprising of receipts in Matchless Associates amounting to Rs. 1600174/- and in G.M. Construction amounting to Rs. 1579700/- which further comprised Rs. 214700/- as opening work progress. W hole of these receipts except for profit shown by the assessee amounting to Rs. 61757/- was added to the income. On appeal action of the Assessing officer has been confirmed by the Ld. CIT(A).
35 In respect of the amount of Rs. 214700/- it was submitted that this is the figures of opening work in progress. In this regard he referred to the income and expenditure statement placed at page 73 of the paper book.
36 On the other hand, the Ld. D.R. for the Revenue strongly relied on the orders of Assessing officer and the Ld. CIT(A). 37 After considering the rival submissions and the material on record, we find that the income and expenditure account which is available at page 73 clearly show that opening stock of Rs. 214700/- closing stock is also shown at Rs. 214700/-. Therefore there is no justification in addition of opening stock which has been shown as closing stock and accordingly we set 14 aside the order of the Ld. CIT(A) and delete the addition of Rs. 214700/-.
38 Ground No. 6 - After hearing both the parties we find that as noted above while adjudicating ground No. 5 the Assessing officer has made addition of Rs. 2902705/-. This comprised various amounts and closing stock of Rs. 214700/-. 39 Before the Ld. CIT(A) it was pointed out that Rs. 1579700/- was credited in the books of G.M. Construction which comprised following items:
GM Co n str u ct io n Co .
2 9 .0 5 .2 0 0 3 P B I L AP EX C ON SO RT I UM LT D 2 9 5 ,0 0 0 .0 0 2 5 .0 6 .2 0 0 3 P B I L AP EX C ON SO RT I UM LT D 1 2 0 ,0 0 0 .0 0 2 5 .0 6 .2 0 0 3 P B I L AP EX C ON SO RT I UM LT D 1 0 0 ,0 0 0 .0 0 2 5 .0 6 .2 0 0 3 P B I L AP EX C ON SO RT I UM LT D 3 0 0 ,0 0 0 .0 0 2 5 .0 6 .2 0 0 3 P B I L AP EX C ON SO RT I UM LT D 5 5 0 ,0 0 0 .0 0 T OT AL 1 3 ,6 5 ,0 0 0 .0 0 Op e ni n g W o r k -i n - P r o gr es s 2 ,1 4 ,7 0 0 .0 0 1 5 ,7 9 ,7 0 0 .0 0 The amount of Rs. 1600174/- were shown in the books of Matchless Associates and comprised of the following amounts:
3 0 .0 4 .2 0 0 3 DR AI N AGE DI VI SI ON AM RI T S AR 7 0 0 ,1 7 4 .0 0 2 9 .0 5 .2 0 0 3 P B I L AP EX C ON SO RT I UM LT D 2 5 0 ,0 0 0 .0 0 2 5 .0 6 .2 0 0 3 P B I L AP EX C ON SO RT I UM LT D 1 5 0 ,0 0 0 .0 0 0 4 .0 8 .2 0 0 3 P B I L AP EX C ON SO RT I UM LT D 4 5 0 ,0 0 0 .0 0 0 6 .0 8 .2 0 0 3 P B I L AP EX C ON SO RT I UM LT D 5 0 ,0 0 0 .0 0 T OT AL 1 ,6 0 0 ,1 7 4 .0 0 It was pointed out that as far as sum of Rs. 1365000/- received from PBIL Apex Consortium Ltd (in short PBIL), same consist of construction receipts Rs. 214700/- pertain to opening and closing work in progress which we have discussed above while adjudicating ground no. 5. Similarly sum of Rs. 9 lakhs shown in Matchless Associates comprised of construction receipts received from PBIL. The balance of Rs. 700174/- was the payment received on account of work which was executed in 15 Assessment year 1999-2000. The Ld. Counsel for the assessee raised the same contentions that the expenses were not booked which was ultimately booked in supplementary cash book which was verified by the Assessing officer.
40 The Ld. CIT(A) deleted the addition in respect of old payments received against the work of drainage Div, Amritsar amounting to Rs. 700174/-. However, other additions were confirmed because of the reasons given in case of Assessment year 2003-04 for similar additions.
41 Before us, both the parties made similar submissions as made in respect of ground No. 5 in ITA No. 1177/Chd/2012 for Assessment year 2004-05.
42 After considering the rival submissions and the material on record, we find force in the submissions of the Ld. Counsel for the assessee. It is clear that for example in G.M. Construction case against the payment of Rs. 1579700/-, Net profit is shown at Rs. 1364715/- which is almost 90% which is not possible in construction business. Therefore we are satisfied with the reasoning that the expenses were booked in the supplementary cash book which was verified by the Assessing officer during remand report in Assessment year 2003-04. Therefore we set aside the order of the Ld. CIT(A) and direct the Assessing officer to apply rate of profit at 8% in respect of receipts of Rs. 2265000/- (Rs. 1365000 + Rs. 900000/-) and delete the addition made on account of construction receipts.
43 Ground No. 7 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that assessee has received various amounts from S.P. Singh 16 totaling to Rs. 1405223/-. It was mainly stated that except for Rs. 450,000/- which was wrong entry that the amounts were received as gift from the son of the assessee, S.P. Singh. The Assessing officer did not accept because there was no evidence before him and accordingly made addition of Rs. 1405223/-.
44 Before the Ld. CIT(A), it was submitted that entry for Rs. 4,50,000/- was wrongly made and in fact it pertains to transaction of purchase of property in plot No. 4B, Mohali along with S.P. Singh. Against this demand draft was got made for Rs. 4,50,000/- which was wrongly taken as received from S.P. Singh. Since on the same day a sum of Rs. 4,50,000/- from S.P. Singh was received, so this mistake was committed. In fact this DD was purchased out of cash and same was added in the supplementary cash book. In respect of other amounts relevant evidence was filed and the same has been accepted by the Ld. CIT(A) and addition amounting to Rs. 955223/- was deleted by the Ld. CIT(A) against which the Revenue is in appeal.
45 The Ld. CIT(A) did not accept the explanation for Rs. 450000/- because according to her theory of supplementary cash book was in contravention of rule 46A.
46 Before us, the submissions made before the Ld. CIT(A) were reiterated. Reference was made to the remand report wherein supplementary entries are stated to be verified by the Assessing officer.
47 On the other hand, the Ld. D.R. for the Revenue strongly supported the order of the Ld. CIT(A).
1748 After considering the rival submissions and the material on record we find force in the submissions of Ld. Counsel for the assessee. As observed in Assessment year 2003-04 in ITA No. 1177/Chd/2012 the supplementary cash book was originally admitted by the Ld. CIT(A) and sent for remand report. In the remand report which has been placed at page 49 to 66 relevant comments in respect of this entry are incorporated at page 54 and reads as under:
"With regard to payment of Rs. 450000/- claimed to have been paid out of funds available as recorded in supplementary cash book, the entries of Rs. 450000/- is debited in the supplementary cash books, the debit/credit entries in this cash book is verified. However, the supplementary cash book now filed by assessee is in contravention to Rule 46A of IT Rules, 1962 and the same may not be admitted as tantamount to additional evidence. T hese pa ym ents were not recorded in the books produced before special auditor and therefore these amounts have been rightly added back as unexplained incomes of the assessee u/s 69 of IT Act, 1961."
Highlighted portion clearly show that entry in respect of Rs. 450000/- was verified by the Assessing officer. If the Assessing officer had any further doubt he should have made further enquiry but he could not simply reject this evidence. Therefore we set aside the order of the Ld. CIT(A) and delete the addition of Rs. 450000/-.
49 Ground No. 8 - This issue has already been decided by us while adjudicating ITA No. 1177/Chd/2012 for Assessment year 2003-04 vide para 18 wherein this ground was held to be infructuous and following the same we hold this ground to be infructuous.
50 In the result, ITA No. 1173/Chd/2012 is partly allowed. 51 I T A N o . 11 74/ Ch d/ 2 01 2 - A. Y 2 0 05- 06 - Lat e Sh ri P ri tam Singh 52 In this appeal the assessee has raised following grounds: 18
"1 That authorities below has erred in law and facts in framing the assessment without affording proper opportunity of being heard to the appellant.
2 That authorities below has erred in law and facts to appoint Special Auditor in an automatic manner without considering the facts of the case and consequently the appointment of the auditor is bad in law.
3 That the appointment of special auditor is bad in law and is not in accordance with the spirit of law under the provisions of section 142(2A) of the Act but only to gain time for completing the assessment which is barred by limitation.
4 That Ld. CIT(A) has erred in law and facts in confirming the additions of Rs. 13,50,000 u/s 68 comprising Rs. 3,00,000/- received from M.S. Alagh, Rs 8,50,000/- from R.K. Associates and Rs. 2,00,000/- from Sharma Associates.
5 That LD. CIT(A) has erred in law and facts in confirming a disallowance of Rs. 50,000/- on account of Life Insurance Premium paid despite the fact that such expense has not been allowed as an expenditure."
53 Grounds No. 1 to 3 and 5 were not pressed before us, therefore same are dismissed as not pressed before us. 54 Ground no. 4 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that special auditor has made observations that following amounts were found to have been received from various parties and are shown in the table below:
Pritam Singh Credit Debit Balance Gurjit Singh 545,615 2997730 - Sharma Associates 200,000 Nil 200,000
M/s Matchless Associates (Prop. Pritam Singh) R.K. Associates 450,000 Nil 450,000 Executive Engineers 1,087,717 1,087,717 0 Amritsar Drainage R N Highways 425,000 1600000 -
M/S GM Construction (Prop. Pritam Singh)
M.S. Alagh 300,000 Nil 300,000
19
R.K. Associates 400,000 Nil 400,000
Total 3,408,333 1350000
Special auditor had asked the assessee to file confirmation along with balance sheet etc of the said parties which was not filed. During assessment proceedings no evidence was filed, therefore this sum of Rs. 1350000/- was added to the income of the assessee u/s 68 of the Act.
55. Before the Ld. CIT(A) certain documents were filed which were sent for remand report. The Assessing officer during remand proceedings made certain enquiries in respect of certain documents which were filed but Assessing officer observed that such documents do not prove genuineness of credits. The Ld. CIT(A) following these comments confirmed the addition.
56. Before us, the Ld. Counsel for the assessee submitted that a sum of Rs. 2 lakhs was received from Sharma Associates vide cheque no. 810359 as unsecured loan and during enquiries by the Assessing officer during assessment proceedings in response to query u/s 133(6) confirmation was filed by Sharma Associates (copy of which is placed at page 50 of the paper book). In respect of sum of Rs. 450000/- and Rs. 4 lakhs received from R.K. Associates it was stated that the assessee had jointly purchased property No. BMM 373 Ph 11, Mohali along with Ms. Ravinder Kaur proprietor of R.K. Associates from PUDA. A sum of Rs. 450000/- and Rs. 4 lakh for 25% share in the above property was paid by R.K. Associates. The Assessing officer has already issued a letter u/s 133(6) in response to which she has confirmed these 20 amounts and relevant documents which are at page 86 to 89 of paper book. In respect of last item of Rs. 3 lakhs it was submitted that this amount was received from M.S. Alagh for purchase of one Mohindra Jeep NO. PBJ 1001 and truck No. PNP 9951. Against this the Assessing officer has conducted enquiries and in response to which documents were field (copy of which is available at page 90 & 91 of paper book). 57 On the other hand, the Ld. D.R. for the Revenue strongly supported the order of the Ld. CIT(A).
58 W e have gone through the rival submissions carefully. As far as a sum of Rs. 2 Lakh is said to have received from Sharma Associates the assessee has filed a copy of confirmation (copy of which is available at page 50 of paper book) copy of account is sent by the assessee to Sharma Associates in which Mahinder Sharma has simply signed. PAN No. has also been given. The Assessing officer has not made any enquiry. Once the depositor has given the confirmation and PAN, if the Assessing officer had any doubt he should have conducted further enquiry and could not have rejected this evidence without any further enquiry. Therefore we are of the opinion that the assessee has discharged the burden of proving the genuineness of this transaction of Rs. 2 lakhs. 59 In respect of a sum of Rs. 4.50 lakhs and Rs. 4 lakhs received from R.K. Associates, in response to the enquiry by the Assessing officer a letter was written by R.K. Associates in which it was clearly stated that they were having 25% share in property No. BMM 373 Ph 11, Mohali which was purchased through auction. Other details of payment through DD were also furnished. Even copy of the agreement was filed. 21 However, PAN of R.K. Associates was not mentioned in the confirmation. Thus the assessee had clearly failed to discharge the onus and therefore we direct the Assessing Officer to confirm this addition of Rs. 8.50 lakhs. 60 As far as a sum of Rs. 3 lakhs received from G.M. Construction is concerned, only document filed is a letter from M.S. Alagh stating that he has purchased a truck and a jeep. Even PAN No is not mentioned in such letter. We have asked the Counsel for the assessee during hearing whether evidence in the form of transfer of vehicles by way of endorsement in the registration certification is there, Counsel for the assessee showed inability to file such evidence. Therefore we are of the opinion that in respect of this transaction the assessee has not discharged his burden and this addition has been rightly made by the Ld. CIT(A) and we confirm the same. 61 To conclude out of total addition of Rs. 1350000/- u/s 68 we allow relief in respect of Rs. 2.00 Lakhs from Sharma Associates. Other receipts of Rs. 1150,000/- (Rs. 850,000/- from R.K. Associates and Rs. 3 lakhs received from M.S. Alagh is not found to be genuine and therefore that addition is being confirmed. Therefore this ground is partly allowed. 62 In the result, ITA No. 1174/Chd/2012 is partly allowed. I T A N o. 11 75/ Ch d/ 2 01 2 - A. Y 2 00 6-07 - L ate S hri Pri t am Si n gh 63 In this appeal the assessee has raised the following grounds:
"1 That authorities below has erred in law and facts in framing the assessment without affording proper opportunity of being heard to the appellant.
2 That authorities below has erred in law and facts to appoint Special Auditor in an automatic manner without considering the 22 facts of the case and consequently the appointment of the auditor is bad in law.
3 That the appointment of special auditor is bad in law and is not in accordance with the spirit of law under the provisions of section 142(2A) of the Act but only to gain time for completing the assessment which is barred by limitation.
4 That Ld. CIT(A) has erred in law and facts in confirming the additions of Rs. 9,50,000 u/s 68 on account of amount received from Sharma Associates.
5 That LD. CIT(A) has erred in law and facts in confirming an addition of Rs. 4,00,000/- being cash withdrawal by cheque through Sarabjit Singh holding the same is cheque withdrawal and not a cash withdrawal.
6 That Ld. CIT(A) has erred in law and facts in confirming the addition of Rs. 1,02,97,500/- u/s 68 on account of amount received from TRN Land Developers Private Limited.
7 That Ld. CIT(A) has erred in law and facts in confirming the addition of Rs. 93,35,846/- holding under reported profit on contract payments of Rs. 1,10,70,110/-.
8 That Ld. CIT(A) has erred in law and facts in not taking reliance of entries recorded in Supplementary cash book produced before the Ld. CIT(A) after admitting the same u/r 46A(1)(d) and despite the fact that Assessing officer has confirmed the verification of debit/credit entries recorded in the supplementary cash book."
64 Out of above grounds, grounds No. 1,2, & 3 were not pressed before us, therefore same are dismissed as not pressed before us.
65 In this case the assessee has filed an application for admission of following documents:
(i) Order of Settlement Commission - Pg 1 to 10 of application
(ii) Copy of reasons recorded in the case of S.P. Singh by the D.C.I.T Internal Taxation Pg 11-12 It was stated that these documents were obtained by the assessee after the order was received from Ld. CIT(A). It was further stated that the assessee has raised many loans from K.D. Sharma and who has surrendered these amounts before the Settlement Commission. Therefore this document is relevant. Similarly the reasons recorded for reopening of the 23 assessment in the case of S.P. Singh are relevant because S.P. Singh happens to be son of the assessee from whom various amounts were received as loan/gift. The Ld. Counsel for the assessee made a prayer that since these documents are relevant they may be admitted.
66 On the other hand, the D.R. for the Revenue opposed the submissions.
67 After considering the rival submissions and the material on record, we are satisfied with the reasons given by the Ld. Counsel for the assessee. In any case these are orders of various income tax authorities and they cannot be fabricated documents, therefore same were admitted.
68 Ground No. 4 & 6 - These two grounds are being taken together because the Assessing officer has adjudicated these issues through common paras.
69 After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that the amounts were found to be received by the assessee which was reflected in the balance sheet but no confirmations were filed when the same were asked by the special auditor, therefore the Assessing officer issued show cause notice that why these amounts should not be treated as income of the assessee u/s 68 of the Act. The details of the amounts are as under:
Pritam Singh Gurjit Singh 2,120,000 61,60,230 Pritam Singh & 525,610 Sons Radiant Empire 1,000,000 0 1,000,000 Pvt. Ltd.
TRN Land 10,297,500 0 10,297,500
Developers
R.N. Highways 2,850,165 3,00,00,00
M/s Matchless Associates (Prop. Pritam Singh )
Joginder Singh 2,494,490 0 2,494,490
24
Sharma 950,000 0 950,000
Associates
Rajat Minerals 6,720,690 8336840 -
Pvt. Ltd
M/s GM Constructions (Prop. Pritam Singh ) K. D. Sharma 3,369,565 68,48,595 0
- 30,328,020 1,47,41,990 (The amount of Rajat Minerals Pvt. Ltd include work done payments of Rs. 42,21,515/-, which has been considered separately. Amount of Rs. 33,69,565 from K D Sharma has been considered separately) Since the assessee did not fulfill the basic ingredients of Sec 68 of the Act, these amounts were added to the income of the assessee by making addition of Rs. 14744990/-.
70 On appeal detailed submissions were made and certain documents were also filed, therefore the LD. CIT(A) sent the matter to the Assessing officer for remand proceedings for verification of certain issues. Addition on account of credit in the name of Radiant Empire amounting to Rs. 10lakhs, Jagir Singh Rs. 2494492/- were deleted on the basis of remand report, therefore no further discussion is required since the Revenue has filed no appeal against these deletions.
71 In respect of addition amounting to Rs. 10297500/- in the name of TRN Land Developers Private Ltd (in short TRN) following comments were given by the DCIT in the remand report:
As s es s e e h as c o n te n de d t h at a s u m of r s . 1, 02 ,9 7 ,5 0 0/- fr o m M/s TRN La n d D ev e lo p er s Pr iv at e L im i te d was r ec e i v ed d ur i ng t he y e ar . O ut o f ab ov e, a s um o f Rs . 15 , 97 ,5 0 0/- w as p a id v i de DD No . 10 5 48 dr aw n on P un j a b & Si n d Ba nk o n 2 0 .0 1. 2 0 06 a ga i ns t a p r o p er ty p ur c h as ed by L a te S h. Pr it a m S i n gh ( P l ot 37 4, P h as e - X I, Mo h a l i) a nd B a la nc e of Rs . 87 0 00 0 0/- ( c o m pr is in g Rs . 2 2, 00 , 00 0/- v i de C h no 4 82 0 4 d at ed 24 . 01 .2 0 06 dr a wn o n P un j a b & S in d h B ank , Rs . 4 0, 0 0, 0 00 /- v i de Ch N o 48 2 05 d at ed 24 . 01 .2 0 06 dr aw n o n P u n ja b & Si n d Ba nk & Rs . 25 0 00 0 0/-
v i de Ch No . 48 2 09 d at ed 0 1. 0 3. 20 0 6 dr a wn on P u nj a b & S i n d Ba n k ) was d ir ec t ly pa i d by M/s T RN L an d Dev e l op er P Lt d. t o As hok K u m ar a ga i ns t a pr o per ty p ur c h as e d by L at e Sh . P r i t am S in g h ( # 3 06 0, S ec t o r - 2 0, Ch a nd i ga r h .
25The Assessing officer had further pointed out that balance sheet as on 31.3.2006 of the said company was also filed which clearly depicts that a sum of Rs. 10297500/- was paid to Apex Exports Proprietor Gurjit Singh.
72 The Ld. CIT(A) did not find force in the submissions and decided the issue against the assessee vide following paras:
I hav e c o ns id er e d t h e r ep or t of t h e AO as w e ll as t h e s u bm is s i o ns of t h e as s es s e e . Th e c om p any T NR ( s u pr a) , wh er e in t h e d au g ht er - i n- l a w of t h e as s es s ee S mt . Ra n j it K a ur is a Dir ec tor , i n i t s r es p o ns e t o r e q uis i t io n u n der s ec t i o n 1 3 3( 6) da te d 11 .0 6 .2 0 12 h as ex p l a in e d as b e lo w:
...... .T ha t in f ac t ou r c o mp a ny h as r ec e iv ed a s um of Rs . 2, 0 5, 00 , 00 0/ - fr om Mr . K. D. S har m a o f O r is s a as adv a nc e a nd ou t of t his a s u m of Rs . 1, 0 2, 97 , 50 0/ - w as pa i d t o Pr i ta m S i ng h a nd h is as s oc i at es as t e mp or ar y adv a nc e . I n fac t, th e a mo u nt was r ec ov er a bl e by Pr i ta m S i ng h a nd h is s o n G ur ji t S i ng h fr o m o th er bus i n es s c o nc e r ns o f K. D. S har m a e tc . T h e am o un t w as g iv en as te m por ar y a dv anc e t o G ur j it S i n gh o n t he d ir ec t i o ns of K .D . S har m a w h o has d ep os it ed f un ds w it h t h e s a id c o m pa ny ti l l th e ac c o u nts o f G ur j it S i n gh ar e s e tt l ed a n d r e pa i d by K .D . Sh ar m a fr o m t he r es p ec t iv e c onc er ns wh er e th e a mo u nt w as p ay a b le t o G ur j it S in g h. T h at in t he m ea n t i me , a d is p u te has ar is e n a m o ngs t K. D. S h ar ma h is bus i nes s c o nc er ns a nd G ur j it S i ng h an d h is fa m i ly m e m ber s a n d T RN L an d Dev e lo p er s P r iv at e Li m i te d. A n F IR was l od g e d by K .D . S har m a ag a ins t G ur j it S i ng h an d h is f a mi ly me m b er s , w h er e K D Sh ar ma h ad c la i m ed th at th e a m ou n t de p os it ed w it h T RN w as a m ou n t p a id to f a m ily m e mb er s of G ur j i t S in g h. T h e m at te r is pe n d in g in t h e c o ur t of C iv i l J u d ge s e ni or Div is i on C h a nd i gar h .
It is f ur th er r e lev a nt t o me n t io n t h at n o b us i n es s w as t r a ns ac t ed i n TRN L a nd D ev el o pe r s Pv t. L td . ex c ep t for r ec e i pt o f fu n ds fr o m K. D. S har m a a nd tr a n s fer o f f un ds i n f av o u r of G ur j it S in g h a nd h is fa m i ly m em b er s ... .
Th e AO i n h is c o m m en ts h as p o i nt ed ou t th at th e c o m pa ny h a d fur n is h e d a c opy o f b a l anc e s he e t as o n 3 1. 03 . 20 0 6 w h ic h r e f lec ts th e s u m as p a id to A pex Ex por ts , pr op . S h. G ur j it S in g h. T h e ba l a nc e s he e t is f o un d t o b e u na u d it ed an d th e ex pl a n at i on giv e n u/s 13 3( 6) , as a for es a id , c a nn ot b e th er e for e ac c e pt e d a t fac e v a lu e. Th e s o ur c e of t h e m o n ey h a s no t b e en s u it a b l y s ubs t an t ia te d . T he c o mp a ny T NR h as t h e da u gh t er - in- l aw o f t h e as s es s e e as o n e o f th e d ir ec tor s as ev id e nt fr o m th e s i gn a tor y t o th e i nf or ma t i on s u p p li ed t o t he AO . W he n t he a d d it i on h as b e en ma d e u /s 6 8, i t is c l e ar t ha t th e p r i m ar y o n us is o n t h e as s es s e e to pr ov e t he t hr ee in gr e d i en ts o f i de nt i ty , c r ed it w or t h in es s a n d ge n u in e nes s of t he tr a ns ac t i on an d o n ly ther e af t er do es t h e bur d e n s h i ft t o t h e AO . H er e, i t is no t un d er s to o d as t o w hy s uc h a hu g e s u m of Rs . 2 , 05 , 00 , 00 0/- is os t e ns i b ly s ho w n as pa i d t o t h e c om p any by o ne K D S har m a, an d o n h is a pp ar e nt d ir ec t i o ns , t h e c om p any in t ur n a dv a nc es Rs . 1. 0 2 l ak hs t o th e as s es s e e . T h us c ons i d er in g th e g am u t o f th e c as e a n d th e in t er - t w in i n g o f th e tr a ns ac t i ons w i th o ut a ny s hr ed of ev i de nc e is h e ld t o b e fa l l ac i o us . Th e as s es s ee is th er ef or e he l d n ot to h av e d is c har g ed th e b ur de n c as t up o n h im to s ubs t an t ia te th e g e nu i ne n es s o f t he c r ed i t. I n o th er w or ds th e ac ti o n of t h e AO is u p he l d. "26
In respect of addition amounting to Rs. 950000/- said to have been received from Sharma Associates by transfer of funds the Assessing officer in his remand report stated that a copy of return was filed by Mohinder Sharma Proprietor Sharma Associates but the same did not prove the ingredients of Sec
68. In his comments the assessee has stated that it is not clear that which ingredients were not complied and if the Assessing officer had any doubt he should have asked the assessee to file further documents. The Ld. CIT(A) did not find force in the submissions and observed that these submissions are being put forth for the first time and cannot be considered authentic and therefore this addition was confirmed.
73 Before us, the Ld. Counsel for the assessee referred to pg 77 of paper book which was the information given by TRN during assessment proceedings where loan of Rs. 10297500/- was confirmed. In the meantime K.D. Sharma has filed an FIR (copy placed on record) in which it was stated that he has given a sum of Rs. 13,28ncrores to the assessee group and because of the FIR and search in case of assessee, his statement was also recorded. In the statement Shri K.D. Sharma clearly stated that Gurjit Singh induced him to make various investments and ultimately on the basis of FIR, K.D. Sharma had surrendered a sum of Rs. 12 crores. He further submitted that Pritam Singh i.e the assessee has received a sum of Rs. 10297500/- from TRN as unsecured loan. Out of this amount a sum of Rs. 1597500/- was paid vide DD No. 10548 on 20.1.2006 against the property Plot No. 374 Phase IX, Mohali purchased by the assessee and balance of Rs. 87 27 lakhs comprising three cheques, was directly paid to TRN against the property purchased by the assessee No. 3060, Sector 20, Chandigarh. He referred to a copy of account of this company and the books of the assessee which is placed at page 42 of paper book. He submitted that this company was regularly assessed to income tax and PAN was also furnished before the Assessing officer because he has made investment in TRN where the assessee's daughter-in-law was Director. Once the source in the hands of the depositor has been explained in view of the order of Settlement Commission these additions could not have been made particularly because during remand proceedings, TRN had confirmed giving these advances. In respect of a sum of Rs. 950000 received from Sharma Associates it is submitted that Sharma associates had filed confirmation in response to enquiry made by Assessing officer u/s 133(6) and copy of the same is enclosed at page 44 of the paper book. Confirmation clearly show that even PAN of Mohinder Sharma proprietor of Sharma Associates was also there. Money was given because the assessee had purchased property jointly in PUDA auction for a consideration of Rs. 6520000/- wherein share of Sharma Associates was 15%. Total share came to 150000/- which was paid by this party. It was further submitted that the Ld. CIT(A) wrongly confirmed this addition by observing that these documents were not given earlier. Once additional evidence was admitted under rule 46A, same has to be considered and acted upon. 74 On the other hand, the Ld. D.R. for the Revenue strongly relied on the order of Ld. CIT(A).
2875 After considering the rival submissions and the material on record, we find force in the submissions of the Ld. Counsel for the assessee that once additional evidence was admitted and same was sent for remand proceedings and during assessment proceedings Sharma Associates confirmed having paid a sum of Rs. 950000/- and even PAN was given then either the Assessing officer should have accepted the same or made further enquiries. Evidence can not be brushed aside simply because it is filed late therefore we set aside the order of the Ld. CIT(A) and delete the addition of Rs. 950000/-. 76 As far as addition on account of TRN is concerned we find force in the submissions of the Ld. Counsel for the assessee. In response to the enquiry made during assessment proceedings TRN has stated vide letter dated 11.6.2012 as under:
Da te d : 11 . 06 .2 0 12 To, De p uty C o mm is s i on er of I nc om e Tax Ce ntr a l C ir c le - I CH AN DI G AR H S ir , S ub : I nf or ma t io n u /s . 13 3( 6) o f th e I nc o m e Tax Ac t i n t he c as e of Pr it a m S i ng h P le as e r e fe r to y o ur le tt er d a te d 1- 6- 2 0 12 wh er e in y ou hav e s ta te d th a t Pr it a m S in g h has c la i m ed tr a ns ac t i on w it h o ur c om p any . T he f o l lo w i ng des ir e d i nf or m at i on is g iv en for y our pur p os e:
1. Th e tr a ns ac t i on w i t h Pr it a m S i ng h w h er e i n a s um o f Rs .
1, 0 2, 97 , 50 0/ - w as p a id t o Pr it a m S in g h is c o nf ir m ed a n d a c on f ir me d c o py of ac c ou n t is a tt ac h e d.
2. Th at in f ac t ou r Co mp a ny h as r ec e iv e d a s um of Rs . 2, 0 5, 00 , 00 0/ - fr o m Mr . K. D . S h ar ma of O r is s a as Adv a nc e a nd ou t of t his a s u m of Rs . 1, 0 2, 97 , 50 0/ - w as pa i d t o Pr i ta m S i ng h a nd h is b us i nes s as s oc ia tes as te m por ar y A dv a nc e. I n f ac t , t h e am o un t was r ec ov er ab l e by Pr it a m S in g h an d his s o n G ur j i t S in g h fr o m o th er b us in es s c onc er ns of K. D. Sh a r m a etc . T h e am o un t 29 was giv e n as te m por a r y adv a nc e to G ur j it S i ng h o n t h e d ir ec t i ons of K .D . S har m a wh o has d e pos i te d fu n ds wi t h t h e s ai d c o mp a n y ti l l th e ac c o u nts o f G ur ji t S in g h ar e s e tt l e d a n d r ep a i d by K .D . S har m a fr o m t he r e s pec t iv e c o nc er ns w her e t he a m o un t wa s pay a b le t o G ur j i t S i n gh . Th a t i n th e me a n t im e , a d is pu t e h a s ar is e n am o ngs t K. D. Sh ar m a h is bus i n es s c onc er ns a n d G ur j i t S in g h a n d h is fa m i ly me m b er s a nd T RN La nd Dev e lo p er s P Lt d. A n F IR was l o dg e d by K .D . Sh ar m a a g a ins t G ur je e t S in g h a n d h is fa m i ly m em b er s , wh er e K D S h ar ma ha d c l a i me d t ha t t he a mo u nt de p os it ed w it h T RN w as a m ou n t p a id to f a m ily m e mb er s of G ur j i t S in g h. T h e m at t er is pe n d in g in th e C o ur t of C iv i l J u d g e S e ni or Div is i on C h a nd i gar h .
It is f ur th er r e lev a nt t o me n t io n t h at n o b us i n es s w as t r a ns ac t ed i n TRN L a nd D ev e lo p er s Pv t L td . ex c ep t for r ec e i pt of f un ds fr o m K. D. S har m a a nd tr a n s fer o f f un ds i n f av o u r of G ur j it S in g h a nd h is fa m i ly m em b er s .
3. Th e C om p any is hav i n g P A N A AC CT5 0 0 1D . No Inc o me T ax r et ur n w as f il e d as a d is pu te h as ar is e n a mo ngs t t h e s har e ho l d er s an d d ir ec t or s o f t h e c o mp a ny a n d s ui t is p e n d in g in c o ur ts . A c o py of Ba l anc e Sh e et is at tac h ed f or y o ur k i n d p er us a l. Th ank i n g Y ou , Y our s Tr u ly , For m T R N La n d Dd ev e l op er s Pr iv a te L i m it e d S d /-
Dir ec tor Above clearly show that TRN had confirmed the fact of giving advance to Pritam Singh i.e. the assessee. Source in the hands of the TRN was by way of deposits received from K.D. Sharma who has lodged an FIR against the assessee group alleging that the investment to the extent of Rs. 13,85 crores were made with assessee group. In fact K.D. Sharma had surrendered a sum of Rs. 12 crore and therefore sources in the hand of the TRN stand explained. Once the source of investment and PAN was available and if the Assessing officer still had doubt then he should have asked the assessee or that party to furnish further papers. The detailed evidence cannot be brushed aside particularly because of the fact that the depositor had already paid taxes and sources stand explained in the hands of the assessee. Therefore we set aside the order of the Ld. CIT(A) and delete the addition of Rs. 10297500/-. 30 77 Ground No. 5 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that special auditor has observed that from perusal of books of accounts it was found that there was some withdrawal from bank which was shown as cash withdrawal. Details are as under:
Centurion Bank of Punjab 25945 Pritam Singh Date Particular Amount 27.07.2005 Sarabjit Singh 4,00,000 Total 4,00,000 Special auditor has further observed that this bank transaction was cheque payment but wrongly shown as cash in hand.
Since the assessee failed to file any explanation during assessment proceedings this amount was added to the income of the assessee.
78 On appeal it was contended that this amount was withdrawn by Sarabjit Singh vide bearer cheque No. 252583 on behalf of the assessee and after withdrawal cash was handed over the assessee. Certificate from bank was also filed. W hen the matter was sent for remand verification the Assessing officer simply stated that these details were not filed during assessment proceedings. The assessee in his comments reiterated the submissions made earlier and pointed out that objection of the Assessing officer is not justified once additional evidence has been admitted by the Ld. CIT(A) and sent to him for verification.
79 The Ld. CIT(A) did not find force in the submissions because Sarabjit Singh was a domestic help in the residence of 31 the assessee and therefore the contentions could not be accepted without further evidence.
80 Before us the Ld. Counsel for the assessee reiterated the submissions made before the Ld. CIT(A) and emphasized that if any further evidence was required the Assessing officer should have demanded the same. He also referred to the bank certificate wherein it is clearly clarified that cash was withdrawn vide cheque no. 252583 (copy placed at page 46 of paper book).
81 On the other hand, the Ld. D.R. for the Revenue relied on the order of the Ld. CIT(A).
82 After considering the rival submissions and the material on record, we find force in the submissions of the Ld. Counsel for the assessee. Once additional evidence was accepted and during verification in the remand proceedings certain further documents were filed. The Assessing officer in his comments has stated as under:
" As s es s e e h as c o nt e nd e d t h at a n a d di t io n of Rs . 4, 0 0, 0 00 /- w a s ma d e by AO " c he q ues pay m en ts b ut ar e wr o n g ly s h ow n i n b ook s of ac c o u nt a s c as h i n ha n d " i n b a nk ac c ou n t No . 2 59 4 5 w it h Ce nt ur i on B ank o f P u n ja b. I t was f ur t h er c on t en d ed by As s es s e e t h at Mr . S ar a b j it Si n gh h as wi t hdr a wn Rs . 40 0 00 0 /- v i d e b e ar e r c h no . 25 2 58 3 dr a w n o n C e n tur i on B ank of P un j ab A /c No. 2 54 9 45 on b e ha l f o f as s es s e e an d a ft er wi t hdr a wa l h a nd e d ov er th e c as e to as s es s ee . A c er t if ic at e fr om B ank is a ls o f i l ed t o c l ar ify t h a t am o un t w it h dr a w n w as b ear er c h e qu e.
To v er ify t he c o nt e nt i on o f as s es s e e n o tic e u/s 1 33( 6) was is s ue d to S ar a b j it S i n gh w ho h as f i l ed a r e p ly an d c opy o f t h e s am e is f i l ed . As th es e de ta i ls w er e no t f i le d d ur in g th e c o ur s e of as s es s me n t pr oc e ed i n gs as s uc h th e s a m e s ho u ld n o t be ac c e pt e d at t h is s t a g e. "
Above clearly show that all the evidences were filed including a certificate from bank (copy placed at page 46 of the paper book). Certificate from the bank show that through cheque No. 252583 cash was withdrawn. This evidence cannot be brushed 32 aside by simply saying that cash was withdrawn through Sarabjit Singh who is only a domestic help. If the Revenue had any doubt the Assessing officer should have made further enquiry during assessment proceedings therefore we set aside the order of the Ld. CIT(A) and delete the addition of Rs. 4 lakhs.
83 Ground No. 7 - After considering the rival submissions and the material on record, we find that during assessment proceedings the Assessing officer noticed that there were certain credits in the books of accounts of the assessee which are shown as under:
Name of the Gross Net Profit Indirect Net profit Concern Turnover Income from credited to business P&L account Matchless 42,21,515/- 36,81,683/- 21,309/- 36,60,374/-
Associates (interest on
FDR)
G.M. 68,48,595/- 66,35,947/- - 66,35,947/-
Construction
Co.
Pritam 9,88,421/- 8,35,107 8,35,107 -
Singh
Total 1,02,96,321/-
(The above gross turnover includes figures of work done from Rajat Miniers Pvt Ltd at Rs. 4221515/- and Rs. 3369565/- from K.D. Sharma which were not considered in para above).
Here again the issues remain same that the receipts were on account of construction turnover. From above table it becomes clear that there cannot be a net profit of Rs. 3681683/- against turnover of Rs. 4221515/- i.e. high profit of 85%. In fact this issue has been adjudicated in Assessment year 2003-04 which we have adjudicated in favour of the assessee vide para Nos.13 to 15.33
84 In the present case also the facts and contentions are identical to the facts and contentions in Assessment year 2003-04 in ITA No. 1177/Chd/2012. Following that order we decide this issue in favour of the assessee. In this case the gross receipts are Rs. 10296321/- on which Assessing Officer is directed to charge profit @ 8% and delete the addition amounting to Rs. 9335846/-.
85 After considering the rival submissions and the material on record, we would like to point out that after verification of supplementary cash book Assessing Officer should have given effect to consequential facts. However, in any case since we have already accepted the theory and this ground has become infructuous and we decline to adjudicate this ground in detail. 86 In the result, ITA No. 1175/Chd/2012 is partly allowed. 87 I T A N o . 11 76/ Ch d/ 2 01 2 - A. Y 2 0 09- 10 - Lat e Sh ri P ri tam Singh 88 In this appeal the assessee has raised the following grounds:
"1 That authorities below has erred in law and facts in framing the assessment without affording proper opportunity of being heard to the appellant.
2 That authorities below has erred in law and facts to appoint Special Auditor in an automatic manner without considering the facts of the case and consequently the appointment of the auditor is bad in law.
3 That the appointment of special auditor is bad in law and is not in accordance with the spirit of law under the provisions of section 142(2A) of the Act but only to gain time for completing the assessment which is barred by limitation.
4 That Ld. CIT(A) has erred in law and facts in confirming the additions of Rs. 24,54,000/- being cash withdrawal by cheque through Dalip Singh holding the same is cheque withdrawal and not a cash withdrawal.
5 That Ld. CIT(A) has erred in law and facts in confirming an addition of Rs. 5,21,024/- on account of undisclosed investment in jewellery.
6 That Ld. CIT(A) has erred in law and facts in confirming the addition of Rs. 2,00,000/- on account of amount credited in the bank account."34
89 Out of above grounds , grounds No. 1 to 3 & 6 were not pressed before us, therefore same are dismissed as not pressed.
90 Ground No. 4 - After hearing both the parties we find that during assessment proceedings the Assessing Officer noticed that special auditor had examined the books of accounts and found that there were some withdrawal from bank which was shown as cash withdrawal as per following detail:
Centurion Bank of Punjab 18735 Pritam Singh Date Particular Amount 05.05.2008 Dalip Singh 8,54,000 08.05.2008 Dalip Singh 7,00,000 21.05.2008 Dalip Singh 9,00,000 Total 24,54,000 Special auditor had further observed that these payments are cheque payments. In response to the query raised by the Assessing officer the assessee failed to file any plausible explanation. Therefore the Assessing officer added a sum of Rs. 2454000/- to the income of the assessee.
91 Before the Ld. CIT(A) it was submitted that Dilip Singh was one of the employee of the assessee and had withdrawn various amounts on various dates on behalf of the assessee and in this regard a certificate from HDFC Bank (since Centurion Bank has merged with HDFC) was filed. The Assessing officer rejected these evidences in the remand proceedings by observing that these details were not filed during the course of assessment proceedings. The assessee in his comments simply reiterated the submissions and 35 emphasized that a certificate from Dalip Singh was filed in response to the proceedings u/s 133(6).
92 The Ld. CIT(A) did not find force in the submissions because confirmation letter was not dated and further same was not supplemented by any evidence and therefore confirmed the addition.
93 Before us, the submissions made before the Assessing officer and CIT(A) were reiterated. It was pointed out that bank certificate should have been trusted. 94 On the other hand, the Ld. D.R. for the Revenue strongly supported the order of the Ld. CIT(A).
95 W e have gone through the rival submissions carefully and find that copy of the certificate from HDFC bank is available at page 48 of the paper book which clearly show that following amounts were withdrawn. The certificate reads as under:
Dat ed: 0 2 .0 5 .2 0 12 To w h om so ev e r it ma y con c er n Th is is t o c er ti fy t ha t we ar e h o l di n g i n th e na m e of Mr . Pr it a m S i ng h Ac c o u nt no . 1 10 0 01 0 00 1 8 73 5 0 ( 13 0 71 5 7 00 0 25 4 5) w it h o ur br a nc h f o l lo w in g c h eq u es wer e p a id fr o m ac c ou n t as p er de t ai ls :
CH EQ U E NO . DA T E A MO U NT MO D E O F P AY ME N T 80 6 88 2 05 / 05 /0 8 8, 5 4, 00 0 .0 0 Cas h W i th dr aw a l s e lf / B ear er 80 6 88 4 08 / 05 /0 8 7, 0 0, 00 0 .0 0 Cas h W i th dr aw a l s e lf / B ear er 80 6 88 1 20 / 05 /2 0 08 9, 0 0, 00 0 .0 0 Cas h W i th dr aw a l s e lf / B ear er 80 6 88 7 04 / 09 /0 8 1, 0 0, 00 0 .0 0 Cas h W i th dr aw a l s e lf / B ear er
Th is l et te r is is s u ed o n th e r e q ues t of ac c o u nt h o l der .
For H DFC Ba nk L td .
Y our s F a it hf u l ly Sd/-
(Authorised Signatory) 36 Above clearly show that various amounts have been withdrawn by cash. The amount has been withdrawn from same account which was doubted by the special auditor. In our opinion, it does not make difference that who has withdrawn the amount.
Once the bank has certified that cash has been withdrawn then same cannot be added to the income because it does not matter who has gone to the bank to withdraw the cash.
Therefore we set aside the order of the Ld. CIT(A) and delete this addition.
96 Ground no. 5 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that jewellery valued Rs. 1423406/- was found from the residence of the assessee and Smt. Amrit Kaur. Detail of jewellery is as under:
Sl.No. Date of Name of the Gross Amount(Rs.) seized assessee and weight in premises gms.
1. 27.06.2008 Shri Pritam Singh 1040.790 Rs, & Smt. Amrit Kaur, 12,52,726/-
Locker No. 387, Punjab & Sind Bank, Phase 5, Mohali
2. Do Shri Pritam Singh 142.250 Rs.
& Amrit Kaur, 1,70,680/-
Locker No. 64,
Canara Bank,
Phase 7, Mohali
Total 1183.04 Rs.
14,23,406/-
In response to a query it was mainly stated that jewellery was negligible and was received by the assessee at the time of marriage and birth of his children from his parents and from his 37 in-laws. Further reliance was placed on the instructions issued by CBDT vide Instruction No. F.286/63/93-IT(Inv)-11 dated 11.5.1994. The Assessing officer accepted jewellery of 750 gms in view of the instructions of the CBDT and added the balance jewellery of 433 gms as unexplained income. 97 On appeal, it was mainly submitted that family of the assessee consist of (1) Pritam Singh (assessee), (2) Mrs. Amrit kaur (wife), (3) Gurjit Singh (son), Mrs. Ranjit Kaur (daughter- in-law) and (5) Ravnit Kaur (grand daughter). It was submitted that jewellery relate to these five persons and Surinderpal Singh Oberoi and Smt. Maninder Kaur wife of S.P. Singh Oberoi. It was pointed out that Surinderpal Singh was residing in Dubai and 731.50 gms of jewellery directly relate to him for which relevant vouchers from Dubai were also found during search. Surinderpal Singh has purchased this jewellery on different dates and copy of the same is available in the paper book.
98 The Ld. CIT(A) rejected these contentions mainly vide para 13.3 which are as under:
" B e t ha t as it m ay , i n th e pr es en t c as e , t he r e ma n d r e p or t of t h e AO on th e as s es s e e ' s u bm i s s i on i nd ic at es th at to ta l j ew e l ler y fo u nd w as 27 7 9. 9 8 gms a n d ap ar t fr o m th a t, j ew e l le r y we i gh i n g 73 1 .5 0 g ms r e la te d to S hr i S P S in g h as per p ur c h as e v o uc her s s ei ze d . T h us i t is a pp ar e nt th at t he L d. AO h ad a lr e a dy g iv e n d u e be n ef i t as p er t h e b oar ds Ins tr uc t io ns an d has a c c ep t ed th e s o ur c e o f inv es tm e nt t o o. He nc e, I d o no t t h ink t h er e is a ny ne e d t o i nt er f er e w it h th e c o nc lus i o ns dr aw n by th e Ld . AO . "
99 Before us, the Ld. Counsel for the assessee reiterated the submissions made before the Ld. CIT(A) and further submitted that jewellery in case of Surinderpal Singh as well as other 38 family members, has not been allowed as per instructions of the Board.
100 On the other hand, the Ld. D.R. for the Revenue relied on the order of the Ld. CIT(A).
101 After considering the rival submissions and the material on record, we find that total jewellery found during search was as under:
That following jewelery was found during the course of search:
Gurjit Singh 1596.94 gm
Pritam Singh 1183.04 gm
2779.98 gm
Undisputedly out of this some jewellery weighing 731.500 gms was belonging to Surinderpal Singh and his family who is son of the assessee and residing in Dubai. In fact there was some dispute whether credit has been given for that jewellery or not however, undisputedly fact remains that the jewellery weighing 731.50 gms relates to him because along with this jewellery vouchers showing purchase of this jewellery in Dubai were also found. Further once this jewellery belonging to Surinderpal Singh is reduced and further credit in terms of Board Instruction is allowed then position becomes as under:
Total jewellery found 2779.987 gm Less Jewellery belonging to him 731.500 gm Net jewellery 2048.480 gm
Further credit required to be given for married female is 500 gm each, unmarried female at 250 gm and male members at 100 gm. Therefore credit would be as under:39
Mrs. Amrit Kaur w/o Pritam Singh 500 gm
Mrs. Ranjit Kaur w/o Gurjit Singh 500 gm
(son)
Ms. Ravnit Kaur (grand daughter of 250 gm
Pritam Singh and daughter of Gurjit
Singh
Pritam Singh and Gurjit Singh @ 200 gm
100 gm
1450 gm
Therefore net jewellery which is required to be added because no explanation is available is 598.48 gms. This jewellery is required to be added in the hands of Pritam Singh and Gurjit Singh. Since this issue has been considered jointly no details have been furnished before us for individual jewellery and therefore we hold that out of this jewellery weighing 298.48 gms should be added in the hands of the assessee and balance 300 gms should be added in the hands of Gurjit Singh (since those appeals are also being adjudicated through this order).
This proposal was accepted by the Ld. Counsel for the assessee. Accordingly we set aside the order of the Ld. CIT(A) and direct the Assessing officer to make addition on account of jewellery weighing 298.48 gms in case of the assessee. 102 In the result, ITA No. 1176/Chd/2012 is partly allowed. 103 I T A N o. 11 93/ Ch d/ 2 01 2 - A. Y 2 00 4-05 - Re ve nu e a ppeal 104 In this appeal the Revenue has raised the following grounds:
" ( i) W het her th e L d. CIT ( A) is j us t i f ie d i n la w a nd on fac ts i n d e l et i n g th e ad d it i o n o f Rs . 9, 55 , 22 3/- o n ac c o u nt o f g i ft r ec eiv e d f r o m S h. S . P. S in g h w he n as s es s e e fa i l ed t o pr ov e th e g en u in e nes s o f t he g i ft ?
( i i) W het her on f ac ts an d c ir c u ms t anc es o f t he c as e C IT( A) w as j us t if i e d in ac c e pt i ng t he g e nu i n en es s of a g if t fr o m N on R es id e nt In d ia n ( NR I) br ot h er o f t he a s s es s e e , i n t ot a l d is r e gar d t o t h e r a ti o la i d d ow n by th e Ho n 'b l e S u pr e m e Co ur t in t he c as e of C IT Vs . P R G a n ap a thy ( 2 01 2
- TI O L - 76 - SC - IT) t h at th e as s es s e e has t o s h ow n ad e q u ac y o f fu n ds i n th e h an ds o f f or e i g n d on or f or af or e s a id g i ft d o na t io n ?
( i i i) W het her on fac ts o f t he c as e a dv e r s e an d r eb u tt ab l e pr es u mp t io n s ho u l d hav e b ee n d r aw n a bo u t ge n u in e n es s of t he gi ft w h e n th e 40 as s es s e e ov er a p er i o d o f s ev e n As s es s me n t Y e ar s has r ec e iv e d a t ot a l s um of Rs . 6, 6 7, 05 , 84 8/- c r or es as gi ft ? "
105 After hearing both the parties we find that during assessment proceedings the Assessing officer observed that special auditor has noticed various credits in the name of Surinderpal Singh Oberoi who is the son of the assessee. Confirmation from Surinderpal Singh was submitted before the special auditor but special auditor observed that source in the hands of Surinderpal Singh were not explained. Certain documents were filed before the Assessing officer including a letter from Surinderpal Singh in which it was confirmed that he has given a sum of Rs. 54974186/- between the period 7.10.2002 to 1.1.2009. It was also certified that Surinderpal Singh had made certain gifts to the assessee. Computation sheets of income in respect of Suridnerpal Singh showing income of Rs. 23376309/- for Assessment year 2010-11 was also filed. Bank statement of RAK Bank were also filed. It was observed that source of income for Assessment year 2010-11 was beyond the period under consideration. Further the assessee had not filed Foreign Inward Remittances certificate. It was also observed that normally when the amount is received from outside India the same should be credited through authorized dealer only and if the assessee has filed the bank account from a Bank which is not authorized dealer then the amount could not be given except through authorized dealer. In this background and further discussion the amount received during the year was not accepted and addition of Rs. 1405223/- was made in the hands of the assessee.
41106 Before the Ld. CIT(A) certain documents were filed which were sent for verification during remand proceedings. In the remand report Assessing officer again reiterated that in the absence of FIR's these credits have not been established by the assessee. The assessee also gave certain comments. The Ld. CIT(A) after examining this issue decided the same in favour of the assessee.
107 Before us, the Ld. D.R. for the Revenue strongly supported the order of Assessing officer.
108 On the other hand, the Ld. Counsel for the assessee submitted that Shri Surinderpal Singh son of the assessee was living in Dubai and is an NRI. Pursuant to a search on the assessee, even the cases of Surinderpal Singh were reopened specifically to verify the gifts made by Surinderpal Singh. In this regard he referred to an application for admission of additional evidence filed in Assessment year 2005-06 in ITA No. 1174/Chd/2012 wherein copy of reasons recorded for reopening as well as assessment order of Surinderpal Singh by Dy Director (International Taxation) has been submitted. He pointed out that assessment for Assessment year 2005-06 was reopened particularly to verify the gifts made by Surinderpal Singh to the assessee. Assessment for Assessment year 2006-07 and 2007-08 were not reopened and assessment for Assessment year 2009-10 has also been completed and copy of the assessment order is filed at page 36 to 39 of the paper book. Even assessment order for Assessment year 2010-11 was completed later on and he field a copy of the same. Since the Revenue has already verified the fact of gifts given by Surinderpal Singh in these Assessment years and therefore 42 addition has been correctly deleted by the Ld. CIT(A). W hile concluding he strongly supported the order of the Ld. CIT(A). 109 W e have gone through the rival submissions carefully and find that the Ld. CIT(A) has decided this issue vide para 8.1 which is as under:
" I h av e c ar e f ul ly c o ns id er ed t he s u b m is s i ons o f t h e as s es s ee , th e r e ma n d r e p or t a nd th e i m p ug n ed as s es s m en t o r d er . C er t a in f a c ts ar e fo u nd un d is pu te d v i z. th at S hr i S P S in g h is th e s o n o f t he as s es s ee an d is a n N RI , b as e d i n Du b ai ; t h at t h e a m ou nts wer e r ec e iv e d fr o m SP S in g h as r ev e a le d fr o m t h e b a nk ac c o u nts an d ar e r e f lec t ed i n t he Tr ia l B al a nc e an d Ba l an c e S h ee t of t h e as s es s e e. I m por t an t l y , th e c r ed i tw or th i nes s as we l l as t h e i d en t ity of t h e p er s o n h as n ot b e e n d is p ut e d e it h er . T he o n ly ap p ar en t d ou bt in th e m i nd o f t he L d . A O is t h e ge n u in e nes s o f t he tr a ns ac t io ns c l a i me d by t he as s es s e e an d h is s on as g if ts , b es i des th e n o n - fi l i ng of F IR Cs . In c on n ec t i on w it h t he na tur e o f th e r ec e ip t, t h e as s e s s ee has in h is s u b m is s i o ns s t at ed t h at i n th e as s es s m e nt pr oc ee d i ngs for A Y 2 00 9- 1 0, t h e DC IT , In t er n at i on a l tax at i o n, Ch a n di g ar h has ac c e pt ed t h e g i ft as ge n u in e . T he L d AO is s i le n t o n t h is ma tt er ex c e p t s t at i ng t ha t t h e c er t if ic at e ob ta i n ed fr o m Du b ai as we l l as av a i l ab i l ity of s u ff ic i en t f u nds w it h S ur in d er Pa l S i ng h do es no t pr ov e t he pu r pos e of r em i tt a nc e . B e t ha t as it m ay , as r eg ar ds th e n a tur e of t h e r e m it t anc e, i t is c l ear th a t t he i nc o m e- t ax au th or it i es c an n ot tak e tw o s t a nd s for th e s a me tr a ns a c ti o n. O nc e t h e g i ft ha s be e n he l d t o b e g e nu i n e, th er e c a n be n o d is p ut e th at t he s a m e w i l l h av e t o be ac c e p te d as ge n u in e i n t h e ha n d o f th e as s es s e e . T he as s es s ee fur th er has dis c h ar ge d h is on us c as t u po n h i m by pr o duc i n g th e o r de r of as s es s m e nt o f S hr i. S . P. S in g h da t ed 3 0 .1 2 . 20 1 1 for A Y 2 00 9- 10 P as s e d by t he DD IT, In te r n a ti o na l T ax at i on , C ha n d ig ar h. T h us , I ac c e pt t h e c on t en t io n o f th e as s e s s ee an d t he g r o u nd o f ap p ea l is a ll o we d . "
Thus from above it becomes clear that the Revenue has already accepted the fact of giving gifts by Shri Surinderpal Singh. W e have already admitted the application for additional evidence in ITA No. 1174/Chd/2012 in case of assessee. Relevant portion of reasons recorded for reopening of the assessment reads as under:
"The assessee S.P. Singh has given gifts of Rs. 4216458/- to his father Shri Pritam Singh and Rs. 1490000/- to his brother, Gurjit Singh during the year. The assessee has not field income tax return for Assessment year 2005-06. Entire amount has been remitted by him from UAE. Thus the source of gift of Rs. 5706458/- (Rs. 4216458 + Rs. 1490000) made by the assessee needs to be verified with respect to the capacity to make such huge gifts and this expenditure remains unexplained. As a result I have reason to that this income of Rs. 5706458/- has escaped taxation and the case needs to be opened u/s 147."43
110 After issuing notice u/s 148 on the basis of above noted reasons the assessment was ultimately completed u/s 143(3) r.w.s. 148 in case of Shri Surinderpal Singh vide order dated 28.2.2013 for Assessment year 2005-06 in which it is clearly mentioned that the gifts given by Surinderpal Singh to Pritam Singh and Gurjit Singh were verified. It is also accepted in the assessment order that Surinderpal Singh is an NRI and running many business organizations and assessable income in India was nil. Therefore it becomes clear that source of gifts stand explained. therefore reasoning given by the LD. CIT(A) for deleting this addition, is totally correct and accordingly we confirm the order of the Ld. CIT(A).
111 In the result, appeal of the Revenue in ITA NO. 1193/Chd/2012 is dismissed.
112 I T A N o. 11 94/ Ch d/ 2 01 2 - A. Y 2 00 5-06 - Re ve nu e a ppeal 113 In this appeal the Revenue has raised the following grounds:
" ( i) W hether th e L d. CIT ( A) is j us t if ie d i n la w a nd on f ac ts i n d e l et i n g th e a dd i t io n of Rs . 4 2 , 16 , 45 8/- on ac c o u nt o f gif t r ec ei v e d f r om Sh. S. P . S in g h wh e n as s es s e e f ai l ed t o pr o v e th e g en u in e nes s of t he g if t ?
( i i) W hether on f ac ts an d c ir c um s tanc es of t he c as e C IT ( A) was j us t if i e d i n ac c e p ti n g t he ge n ui n en es s of a g if t f r om No n Res i de n t In d ia n ( NR I) br o th er o f the as s es s e e, i n t ot a l d is gr eg ar d t o t h e r a t i o l a i d do wn b y th e Ho n ' bl e S upr em e C ou r t i n th e c as e of CIT Vs . P R G a na p at h y ( 2 01 2- T I O L- 76- S C- IT ) th at t he as s es s e e has t o s ho w ad e qu ac y of f un ds i n th e h a nds of f or e i gn do n or f or af or es a i d g if t do n at i on ?
( i i i) W hether on f ac ts of t he c as e a d ve r s e an d r eb u tt ab l e pr es um pt io n s ho u l d ha v e b ee n d r a wn a bo u t ge n u in e n es s of t he gif t wh e n th e as s es s e e o ver a p er i o d of s e ve n As s es s m en t Ye ar s has r ec e i ve d a t ot a l s um of Rs . 6, 6 7, 05 , 84 8/- c r or es as gif t ?
( i v) W hether t he L d. C IT ( A) o n f ac ts a n d c ir c um s tanc es of t h is i s j us t if i e d i n l a w an d o n f ac ts in de l et i n g t he ad d it i o n of Rs . 5 , 68 ,9 13 /- o n ac c o u nt of m on e y r ec e i ve d f r om Sm t. R anj i t Ka ur wh e n as s es s e e f ai l e d to pr o v e th e g e nu i n en es s of t h e g if t ?
( v) W hether th e L d. CIT ( A) is j us t if ie d i n la w a nd on f ac ts i n d e l et i n g th e a d d it i on of Rs . 7, 76 , 41 0/- o n ac c o un t o f m one y r ec e i v e d f r o m Sm t. Am r it Ka ur wh e n as s e s s ee f a i le d t o pr o ve t h e g en u in e nes s of t h e g if t ?"44
114 Grounds No. 1 to 3 - This issue is identical to the issues raised in ITA No. 1193/Chd/2012 for Assessment year 2004-
05. Since the facts and contentions are same, therefore following that order we confirm the deletion of gifts received by the assessee from Surinderpal Singh.
115 Ground no. 5 - After hearing both the parties we find that during assessment proceedings the Assessing officer noticed that a few credits were found in the books of the assessee from Smt. Ranjit Kaur (daughter-in-law):
Sr . N o. Da te P ar t ic u lar s Am ou nt
1. 02 . 07 .2 0 04 P a ym e nt m ad e b y Ra n j it Ka ur t o A K 23 , 29 7
S ah n e y f or c ons t.
2. 10 . 01 .2 0 05 B y C an ar a B a nk - 4 95 b e in g m atur i t y 5, 4 5, 61 6 of FD R m a de in R a nj i t K a ur 5, 6 8, 91 3 Initially special auditor asked for various details of the gifts which were not given to the auditor. Assessing officer further observed that perusal of the assessment recorded by Smt. Ranjit Kaur showed that she was asked to furnish the details of the gifts made during the year but she had replied that no gifts were made by her. In this background a sum of Rs. 560913/- was added to the income of the assessee.
116 On appeal various documents were filed and the same was sent for verification in the remand proceedings. The details were found to be correct during remand proceedings by the Assessing officer but he insisted that in view of her reply the gifts could not be accepted.
117 The Ld. CIT(A) did not accept this position and allowed relief.
118 Before us. the Ld. D.R. for the Revenue supported the order of the Assessing officer.
45119 On the other hand, the Ld. Counsel for the assessee strongly supported the impugned order.
120 After considering the rival submissions we find that the Ld. CIT(A) has noted the comments of Assessing officer and counter comments of the assessee which are as under:
" As s es s e e has c o nt e n de d th a t a s um of Rs . 5, 6 8, 9 13 /- f r om Sm t. Ra nj it K aur ( D au g ht er i n La w of as s es s e e) ha v i n g P AN- A S P P K 92 1 5N , o ut of wh ic h Rs . 2 3 29 7/- pa i d b y Ra nj it K a ur to M r . A. K . S a wh ne y v i d e Ch N o. 98 1 35 6 dr a wn o n O r ie nt a l B ank of C om m er c e d at ed 02 .0 7 .2 0 04 on b e ha lf of L at e Sh . Pr it am S in gh & B a l anc e am oun t i ng Rs . 5 4 56 1 6/- was p a id b y wa y of d ir ec t tr a ns f er of FDR m at ur it y i n A / c No . 4 9 5 wit h C a nar a B a nk m aint a i ne d b y La t e S h. Pr it am Si ng h o n 10 .0 1. 2 00 5 . It was f ur th er c on t en d ed t h at Sm t. Ra nj it K a ur wif e of G ur j i t S i n gh is a ls o as s es s e d wi t h yo ur of f ic e a n d s u bj ec t to s ear c h.
" O n ver if ic a t io n , t h e c on t en t io n of t h e as s es s e e is f o un d t o be c or r ec t . Ho we v er , a p er us a l o f as s es s m en t r ec or d of Sm t. R a nj i t K au r s ho we d th at v i d e q u es t i on n a ir e d a te d 02 .0 8 .2 0 11 , S m t. Ra nj i t Ka ur was a s k ed t o f ur n is h t h e d e ta i ls of g if ts m ad e / r ec e i ve d dur i n g t h e ye ar . Sm r . Ra nj it K aur f i l ed r ep l y t o th e a bo v e q u es t i on n a ir e v id e h er r e p l y dat e d 27 . 11 .2 0 10 b ut no s u c h c l a im of ha v in g m ad e t h e g if t t o t h e as s es s e e was f ur nis h e d b y Sm t. R anj i t K aur ."
As s es s e e i n h is c o un ter c om m ents h as s ta te d " T h e le ar n ed DC IT has ac c e p te d t he c o nt en t i on of as s es s e e as s u c h t her e is n o j us t if ic at i on i n an y a d d ic t i on on t h is a c c ou n t. "
Thereafter she decided the issue as under:
" T he L d. A O in t he r e m and r ep or t, af t er ve r if ic at i o n h a d s ubm it te d t h at th e c on t en t io n of t h e as s es s e e was f ou nd t o be c or r ec t. H i s o nl y obj ec t i o n was t h at t h e d on or d ur i ng t h e c o ur s e of her o wn as s e s s m ent pr oc e e di n gs h a d m ad e no s uc h c la im of g if t i ng a n y am oun t t o he r f ath er - i n- l a w. B e t ha t as it m a y t hes e tr a ns ac t io ns ha d be e n v er if i e d b y t he L d. AO . H e nc e I d o n ot th i nk it m ater i a l t h at t he ad d it i o n s ho u ld b e s us ta i ne d bec a us e t h e d on or ha d m ade no s uc h c la im in h er as s e s s m ent pr oc e e di n gs . T h e r e l a ti o ns h i p b et we e n in t h e as s es s e e an d t he d on or is a ls o no t i n dis p ut e. He nc e t he on l y is s u e l ef t is t he ge n u in e nes s / pur p os e of tr a ns ac t io n a nd in v ie w of th e f ac t t h at i t is wi th i n t h e c l os e f am il y, t he ad d it i o n is th er ef or e de l et e d. "
Above clearly show that once the gifts have been correctly reflected in the accounts and the details of the cheques etc. were found to be correct by the Assessing officer then there was no scope for denying the same and the Ld. CIT(A) has correctly accepted the pleadings of the assessee. Therefore we confirm the order of the Ld. CIT(A).
46121 Ground No. 5 - In case of gifts from Smt. Amrit Kaur, addition was made on the same footing and similar contentions were raised before the Ld. CIT(A) as in case of Smt. Ranjit Kaur. This addition was also deleted by the Ld. CIT(A) on similar reasoning as in case of Smt. Ranjit Kaur. Even before us both the parties made similar contentions as in case of Smt. Ranjit Kaur.
122 After considering the above submissions the LD. CIT(A) has noted the comments of the Assessing officer and the counter comments of the assessee as under:
" As s es s e e h as c o nt e s te d t ha t as s es s e e has r ec e i v e d a s um of Rs . 77 6 41 0 /- f r om Sm t Am r it Ka ur (W if e of As s es s e e) h a v i ng P AN- A A M PO - 72 9 1- D , O ut of wh ic h Rs . 1 7 00 0/ - was g i v en b y Sm t Am r it K aur o n 15 . 05 .2 0 04 v id e c h no . 1 9 12 4 2 dr a wn on C a nar a B a nk to C har a nj i t S i ng h on b eh a lf of L at e S h. Pr it am Si n g h, a s um o f Rs . 1 00 0 00 /- was g i v en b y Am r it K au r o n 26 .0 8 .2 00 4 v i de c h no . 19 1 24 3 dr a wn o n C a nar a B a nk an d ba l a nc e am ou nt i ng R s . 6 ,5 9, 4 10 /- was g i v en b y Am r it Ka ur b y wa y of d ir ec t tr ans f er of F DR m atur i t y i n A/c No . 4 95 wi t h C an ar a B a nk m aint a i ne d b y L a te Sh . Pr it am S i ng h o n 1 0. 0 2. 2 00 5.
O n v er if ic at i o n, t he c on t en t io n of t h e as s e s s ee is f o un d t o be c or r ec t . Ho we v er , a p er us al of as s es s m e nt r ec or d of Sm t. Am r it K au r s h o wed th at v i de q ues t io n na ir e d at e d 0 2. 0 8. 2 01 1 , Sm t. Am r i t Ka ur was as k ed t o f ur n is h th e de t ai ls of g if ts m ade / r ec e i ve d dur i ng th e ye ar . Sm t. Am r it K aur f i l ed r ep l y t o th e a bo v e q u es t i on n a ir e v id e h er r e p l y dat e d 27 . 11 .2 0 10 b ut no s u c h c l a im of ha v in g m ad e t h e g if t t o t h e as s es s e e was f ur nis h e d b y Sm t. Am r i t K aur ."
As s es s e e i n h is c o u nt er c om m ents h as s t a t ed . " T h e l e ar n e d D CI T has ac c e p te d t he c o nt en t i on of as s es s e e as s u c h t her e is n o j us t if ic at i on i n an y a d d it i on on t h is ac c ou n t."
Thereafter she decided the issue as under:
" T he L d . A O i n th e r e m and r ep or t, af ter v er if ic at i o n h a d s u bm it te d t h at th e c on te n ti o n of th e a s s es s e wa s f o un d t o b e c o r r ec t. H is o n l y obj ec t i on was th a t t h e d o no r d ur i ng th e c o ur s e of h er o wn as s es s m en t pr oc e ed i n gs ha d m ad e no s uc h c la i m of gif ti n g a n y am ou nt to h er hus b an d. B e th at as it m a y t hes e tr a ns ac t i ons h a d be e n v er if i ed b y th e L d. A .O . H e nc e I d o no t th i nk it m ater i a l t ha t th e a dd i ti o n s ho u l d be s us ta i n ed b ec au s e t h e do n or h ad m ade no s uc h c la im i n h er as s es s m ent pr oc e ed i ng s . T he r e la t io ns h ip b et we e n i n t h e as s es s e e a n d t he d o nor is u n dis p ut e d. T h e c r ed i t wor t hi n es s an d th e i d en t it y of t h e d on or is a ls o no t i n di s pu t e. He nc e t h e on l y is s u e l ef t is th e g en u in e n es s / pur p os e of tr ans ac t i on a n d i n v ie w of t he f ac t t ha t it is wi th i n t h e c l os e f am il y, t h e a d d it i on is th er ef or e de l et e d. "
Above clearly show that once the gifts have been correctly reflected in the accounts and the details of the cheques etc. 47 were found to be correct by the Assessing officer then there was no scope for denying the same and the Ld. CIT(A) has correctly accepted the pleadings of the assessee. Therefore we confirm the order of the Ld. CIT(A).
123 In the result, appeal of the Revenue is dismissed. 124 I T A N o . 1 1 9 5 / C h d / 2 0 1 2 - AY 2 0 0 6 - 0 7 - R e v e n u e 125 In this appeal the Revenue has raised the following grounds:
"1 Whether the Ld. CIT(A) is justified in law and on facts in deleting the addition of Rs. 155,50,000/- on account of gift received from Shri S.P. Singh when assessee failed to prove the genuineness of the gift.
2 Whether on facts and circumstances of the case LD. CIT(A) was justified in accepting the genuineness of a gift from Non Resident Indian (NRI) brother of the assessee, in total disregard to the ratio laid down by the Hon'ble Supreme Court in the case of CIT Vs. P.R. Ganapathy, 2012-TIOL-76-S.C -IT) that the assessee has to show adequacy of funds in the hands of foreign donor for aforesaid gift donation?
3 Whether on facts of the case adverse and rebuttable presumption should have been drawn about genuineness of the gift when the assessee over a period of seven Assessment year s has received a total sum of Rs. 667,05,848/- crores as gift."
126 After hearing both the parties we find that the issues raised through these grounds are identical to the issues raised in ITA No. 1193/Chd/2012. Since the facts of the case and the contentions of both the parties are identical to the issues raised in ITA No. 1193/Chd/2012 for Assessment year 2004- 05, following that order vide para 109 to 111 we have decided these issues against the Revenue.
127 Ground No. 4 - After hearing both the parties we find that from the books of accounts and statement of affairs it was noted that the assessee has received following amounts from his wife, Smt. Amrit Kaur:
S Date Particulars Amount
48
No
1 22.8.2005 Punjab National Bank 145139 66,481
transferred from a/c No. 4741
Punjab National Bank
66,481
This amount was shown as gift but no evidence to substantiate the same was filed before the Assessing officer and therefore this amount was added to the income of the assessee. 128 On appeal certain documents were filed which was sent for verification during assessment proceedings. The comments of the Assessing officer and the assessee have been noted by the Ld. CIT(A) as under:
" T he L d . AO in t h e r e ma n d r e po r t , af ter v er if ic at i o n ha d s u b m it te d th a t th e c on t en t io n of t h e as s es s e e w as f ou nd t o be c or r ec t. H i s o nly ob j ec t i o n was t h at t h e d on or d ur i ng t h e c o ur s e of h er o w n as s e s s me n t pr oc e e di n gs h a d ma d e no s uc h c la i m of g if t i ng a ny am o un t t o he r fa th er - i n- l a w. B e t ha t as it m ay t hes e tr a ns ac t io ns ha d be e n v er if i e d by t he L d. AO . H e nc e I d o n ot th i nk it m a ter i a l t h at t he ad d it i o n s ho u ld b e s us ta i ne d bec a us e t h e d on or ha d m a de no s uc h c la i m i n h er as s e s s me n t pr oc e e di n gs . T h e r e l a ti o ns h i p b et w ee n in t h e as s es s e e an d t he d on or is a ls o no t i n dis p ut e. He nc e t he on ly is s u e l ef t is t he ge n u in e nes s / pur p os e of tr a ns ac t io n a nd in v ie w o f th e f ac t t h at i t is w i th i n t h e c l os e fa m i ly , t he ad d it i o n is th er ef or e de l et e d. "
129 The Ld. CIT(A) after examination of the same allowed relief and deleted this addition.
130 Before us. the Ld. D.R. for the Revenue supported the order of Assessing officer.
131 On the other hand, the Ld. Counsel for the assessee supported the impugned order.
132 After considering the rival submissions we find that this issue has been decided by the Ld. CIT(A) as under:
" Th e As s es s in g o ff ic er i n t he r em a nd r ep or t af t er v er if ic at i on ha d s ub m it t ed t ha t t h e c o nt e nt i on of t he as s es s ee w as f o un d t o b e c or r ec t . His o n ly ob j ec t i o n w as t h at t he d o nor d u r i ng t he c o ur s e of h er ow n as s es s m e nt pr oc ee d in gs ha d m a de n o s uc h c l ai m o f g i ft i ng a ny a mo u nt 49 to h er h us b a n d. Be t ha t as i t m ay t h es e tr ans ac ti o ns h a d be e n v er if i ed by t he As s es s i n g o f fic er . He nc e I d o n ot t h i nk i t m at er i a l t ha t t he ad d it i o n s h o u ld b e s us ta i ne d b ec a us e t h e d o nor h a d m a d e n o s uc h c l ai m i n h er as s es s me n t pr oc e e di n gs . T he r e la t io ns hi p b et we e n i n t h e as s es s e e a nd th e d o nor is u n d is p ut e d. T he c r ed i t w or t h in es s an d t h e i de nt i ty of t h e do n or i s a ls o no t i n d is pu te . H enc e t he o n ly is s u e l ef t is th e ge n u in e nes s / pu r pos e of tr ans ac t io n a nd i n v i ew of t he f ac t th at i t is w it h in t h e c l os e f a m i ly , t h e ad d it i o n is t her ef or e de l e te d. "
133 We find nothing wrong with the order of the Ld. CIT(A) because the Assessing officer has himself accepted that the contention of the assessee was correct. Accordingly we confirm the order of the Ld. CIT(A).
134 In the result, appeal of the Revenue in ITA No. 1195/Chd/2012 is dismissed.
I T A N o . 1 1 9 6 / C h d / 2 0 1 2 - AY 2 0 0 7 - 0 8 - R e v e n u e 135 In this appeal the Revenue has raised the following grounds:
" ( i) W het her th e L d. CIT ( A) is j us t i f ie d i n la w a nd on fac ts i n d e l et i n g th e a dd i t io n o f Rs . 2 8 , 73 , 79 8/- on ac c o u nt o f g if t r ec eiv e d fr om Sh . S. P . S in g h w he n as s es s e e fa i l ed t o pr ov e th e g en u in e nes s o f t he g i ft ?
( i i) W het her on f ac ts an d c ir c u ms t anc es o f t he c as e C IT( A) w as j us t if i e d in ac c e pt i ng t he g e nu i n en es s of a g if t fr o m N on R es id e nt In d ia n ( NR I) br ot h er o f t he a s s es s e e , i n t ot a l d is r e gar d t o t h e r a ti o la i d d ow n by th e H on 'b l e Su pr e me Co ur t in t h e c as e of C IT Vs . P R G a n ap at hy ( 2 0 12- TIO L- 7 6- S C- IT) t ha t t he as s es s e e has to s ho w a d e qu ac y of f u nd s in t he ha n ds of f or e ig n d o nor f or af or es ai d g i ft d o n at i on ?
( i i i) W het her o n f ac ts o f t h e c as e adv er s e a nd r e bu tt a b le pr es u mp t io n s ho u l d hav e b e en dr aw n a bo ut ge n ui n en es s o f t he gi ft w h en th e as s es s ee ov er a per i o d of s ev en As s es s m e nt Ye ar s h as r ec e iv e d a t o ta l s u m of Rs . 6, 6 7, 05 , 84 8/ - c r or es a s g i ft ?
( iv ) W het her th e L d. CIT ( A) o n f ac ts a nd c ir c u ms t a nc es of t h is is j u s ti f ie d in l aw a n d o n f ac ts in de l et i ng th e a d di t io n o f R s . 13 , 76 , 83 6/- on ac c o un t o f mo n ey r ec eiv e d fr o m S mt . A mr it K a ur w h en as s es s e e fa i l e d t o pr ov e t he ge n u in e nes s o f t he gi f t ? "
136 Grounds No. 1 to 3 - After hearing both the parties we find that the issues raised through these grounds are identical to the issues raised in ITA No. 1193/Chd/2012. Since the facts of the case and the contentions of both the parties are identical to the issues raised in ITA No. 1193/Chd/2012 for Assessment year 2004-05, following that order we have decide these issues against the Revenue.
50137 Ground No. 4 - Through ground No. 4 the Revenue has raised the issue of gifts received from Smt. Amrit Kaur which has been deleted by the Ld. CIT(A) on the basis of remand report which is identical as in Assessment year 2006-07 in ITA No. 1195/Chd/2012, therefore following that order in respect of ground no. 4 we decide this issue against the Revenue. 138 In the result, appeal of the Revenue in ITA No. 1196/Chd/2012 is dismissed.
I T A N o . 1 1 9 7 / C h d / 2 0 1 2 - A. Y 2 0 0 8 - 0 9 - R e v e n u e 139 In this appeal the assessee has raised the following grounds:
" " ( i) W het her t h e Ld . CI T( A) is jus t if i ed in la w an d o n f ac ts i n de l et i n g t he a dd i t io n of Rs . 15 2 ,3 3, 6 9 3/- on ac c ou n t o f g i ft r ec e iv e d fr o m Sh . S . P. S in g h wh e n as s es s ee f a i le d t o pr ov e t h e ge n u in e nes s o f t he gi f t ?
( i i) W het her o n fac ts an d c ir c ums t anc es of t he c as e C IT( A) was j us t if i e d i n ac c ep t in g t he ge n ui n e nes s o f a g if t fr om N o n R es i d en t In d ia n ( N RI) br ot h er of th e as s es s e e , i n t ot a l dis r e gar d t o t h e r a ti o l ai d d o wn by th e H o n 'b le Su pr e me Co ur t i n th e c as e o f CI T Vs . P R G an a pa thy ( 2 0 12- TI O L- 76- S C- I T) t h at t he as s es s e e has t o s h o w ad e qu ac y o f f u nds in t he h a nds o f for e i gn d on or f or af or es a i d g if t do n at i on ?
( i i i) W het her on fac ts o f th e c as e a dv er s e an d r eb ut t ab l e pr es u m pt i on s h o u ld h av e b e e n dr a w n ab o u t ge n ui n e nes s o f th e g if t wh e n th e as s es s e e ov er a p er io d o f s ev en As s es s m e nt Y e ar s has r ec e iv e d a to t al s um of Rs . 6, 6 7, 05 , 84 8 /- c r or es as g if t ?
( iv ) W het her th e Ld . C IT( A) on fac ts an d c ir c u ms t a nc es of t his is j us t i f ie d in la w a n d o n fac ts i n d e l et i n g th e a d d it i on of Rs . 20 , 32 ,6 3 2/- o n ac c o u nt o f m on ey r ec e iv e d fr om Sm t. A mr i t K a u r wh e n as s es s e e fa i l e d to pr ov e th e g e nu i n en es s of t h e g if t ? "
140 Grounds No. 1 to 3 - After hearing both the parties we find that the issues raised through these grounds are identical to the issues raised in ITA No. 1193/Chd/2012. Since the facts of the case and the contentions of both the parties are identical to the issues raised in ITA No. 1193/Chd/2012 for Assessment year 2004-05, following that we have decide these issues against the Revenue.
51141 Through ground No. 4 the Revenue has raised the issue of gifts received from Smt. Amrit Kaur which has been deleted by the Ld. CIT(A) on the basis of remand report which is identical as in Assessment year 2006-07 in ITA No. 1195/Chd/2012, therefore following that order in respect of ground no. 4 we decide this issue against the Revenue.
142. In the result, appeal of the Revenue in ITA No. 1197/Chd/2012 is dismissed.
I T A N o . 1 1 9 8 / C h d / 2 0 1 2 - A. Y 2 0 0 9 - 1 0 - R e v e n u e 143 In this appeal the assessee has raised the following grounds:
" ( i) W het her t h e Ld . CI T( A) is jus t if i ed in la w an d o n f ac ts i n de l et i n g t he a dd i t io n of Rs . 27 8 ,7 9 ,6 7 6/- on ac c ou n t o f g i ft r ec e iv e d fr o m Sh . S . P. S in g h wh e n as s es s ee f a i le d t o pr ov e t h e ge n u in e nes s o f t he gi f t ?
( i i) W het her o n fac ts an d c ir c ums t anc es of t he c as e C IT( A) was j us t if i e d i n ac c ep t in g t he ge n ui n e nes s o f a g if t fr om N o n R es i d en t In d ia n ( N RI) br ot h er of th e as s es s e e , i n t ot a l dis r e gar d t o t h e r a ti o l ai d d o wn by th e H o n 'b le Su pr e me Co ur t i n th e c as e o f CI T Vs . P R G an a pa thy ( 2 0 12- TI O L- 76- S C- I T) t h at t he as s es s e e has t o s h o w ad e qu ac y o f f u nds in t he h a nds o f for e i gn d on or f or af or es a i d g if t do n at i on ?
( i i i) W het her on fac ts o f th e c as e a dv er s e an d r eb ut t ab l e pr es u m pt i on s h o u ld h av e b e e n dr a w n ab o u t ge n ui n e nes s o f th e g if t wh e n th e as s es s e e ov er a p er io d o f s ev en As s es s m e nt Y e ar s has r ec e iv e d a to t al s um of Rs . 6, 6 7, 05 , 84 8 /- c r or es as g if t ?
( iv ) W het her th e Ld . C IT( A) on fac ts an d c ir c u ms t a nc es of t his is j us t i f ie d in la w a n d o n fac ts i n d e l et i n g th e a d d it i on of Rs . 23 , 44 7/- o n ac c o u nt of m on ey r ec eiv e d fr om S m t. Ra n j it K a ur wh e n as s es s e e fa i l e d to pr ov e th e g e nu i n en es s of t h e g if t ?
( v .) W het her t h e Ld . CI T( A) is jus t if i ed in la w an d o n f ac ts i n de l et i n g t he ad d it i o n of Rs . 3 ,0 0, 0 0 0/- o n ac c ou n t o f m on ey r ec e iv e d fr o m S mt. A mr it K a ur w h en as s es s ee f ai l e d t o pr ov e th e ge n u in e nes s o f t he gi f t ? '
144 Grounds No. 1 to 3 - After hearing both the parties we find that the issues raised through these grounds are identical to the issues raised in ITA No. 1193/Chd/2012. Since the facts of the case and the contentions of both the parties are identical to the issues raised in ITA No. 1193/Chd/2012 for Assessment 52 year 2004-05, following that order we have decide these issues against the Revenue.
145 Ground No. 4 - This issue is identical to the issue of gifts received from Smt. Amrit Kaur because here again the Assessing officer has accepted the contention in the remand report but still gift amounting to Rs. 23497/- was not accepted because Smt. Ranjit Kaur has not stated in her statement that such gift was given. The Ld. CIT(A) allowed relief on the basis of remand report by holding that merely because Smt.Ranjit Kaur did not mention about this gift during her statement would not prove anything when the documents clearly show the fact of gift. Therefore following our reasoning given for acceptance of gift in case of Smt. Amrit Kaur in Assessment year 2006-07 and 2007-08 we confirm the order of the Ld. CIT(A). 146 Ground No. 5 - Through this ground the Revenue has raised the issue of gifts received from Smt. Amrit Kaur which has been deleted by the LD. CIT(A) on the basis of remand report which is identical as in Assessment year 2006-07 in ITA No. 1195/Chd/2012, therefore following that order in respect of ground no. 4 we decide this issue against the Revenue. 147 In the result, appeal of the Revenue in ITA No. 1198/Chd/2012 is dismissed.
ITA No. ITA No. 1166/Chd/2012 - A.Y 2003-04 - Gurjit Singh 148 In this appeal the Revenue has raised the following grounds:
"1 That authorities below has erred in law and facts in framing the assessment without affording proper opportunity of being hear to the appellant.
2 That the authorities below has erred in law and facts to appoint special auditor in an automatic manner without considering 53 the facts of the case and consequently the appointment of he auditor is bad in law.
3 That the appointment of special auditor is bad in law and is not in accordance with the spirit of law under the provisions of section 142(2A) of the Act but only to gain time for completing the assessment which is barred by limitation.
4 That LD. CIT(A) has erred in law and facts in confirming the additions of Rs. 19,39,238/- u/s 68 on account of alleged unexplained cash credits comprising Rs. 13,95,000/- from PBIL Apex Consortium Ltd and Rs. 544238/- from G.,M. Hirer.
5 That the LD. CIT(A) has erred in law and facts in confirming the disallowance u/s 40A(3) of the Act amounting to Rs. 2,73,544/-
6 That Ld. CIT(A) has erred in lower authorities and facts in not taking reliance of entries recorded in supplementary cash book produced before the Ld. CIT(A) after admitting the same u/s 46A(1)(d) . and despite the fact that Assessing officer has confirmed the verification of debit/credit entries recorded in the supplementary cash book."
149 Out of above grounds, grounds No. 1,2,3 & 6 were not pressed before us, therefore these grounds are dismissed as not pressed before us.
150 Ground No. 4 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that there were certain credits in the various proprietary concerns of the assessee as below:
Gurjit Singh Credit Debit Balance
PBIL Apex Consortium Ltd 125000 125000
GM Hirer 400000 Nil 400000
M/s Surinder Pal Singh Oberroi
(Prop Gurjit Singh)
GM Hirer 134238 Nil 134238
PBIL Apex Consortium Ltd 1259171 1259171 0
Jaswant Singh & Co 250000 250000 0
Parkash Singh & Co 210000 210000 0
Drainage Div, Ludhiana 1510320 1510320 0
M/s Pritam Singh & Sons (Prop
Gurjit Singh)
GM Hirer 100000 Nil 10000
PBIL Apex Consortium Ltd 5160418 3890418 1270000
Punjab Urban Planning Dev 200000 200000 0
Authority
RR Paul 400000 400000 0
Draiange Div, Amritsar 190278 190278 0
Total 9939425 1939238
54
Since the assessee did not file any confirmation and other evidences therefore a sum of Rs. 1939238/- was added to the income of the assessee.
151 On appeal before the Ld. CIT(A) various details were filed which were sent for remand report. In the remand report the Assessing officer noted that the assessee has claimed that these were running accounts and ultimately net balance of Rs. 51205/- is recoverable from the said company. However, since the confirmation and PAN was also not filed, the credit could not be accepted.
152 Before the Ld. CIT(A) in counter comments to the remand report, it was stated that these transactions were verified by the Assessing officer and the Assessing officer has accepted that ultimately net balance of Rs. 51205/- was recoverable from the said company. Since the Assessing officer did not make any further enquiry, therefore addition was not justified. 153 In respect of other sum of Rs. 544238/- stated to have been received from G.M. Hirer it was claimed before the Ld. CIT(A) that these amounts were received in the following concerns:
i GM Hirer Rs. 4,00,000/- received in the hands of Gurjit Singh ii GM Hirer Rs. 1,34,238/- received in the handsa of M/s Suridnerpal Singh iii GM Hirer Rs. 10,000/- received in the hands of M/s Pritam Singh & Sons Rs. 5,44,238/-
154 The Assessing officer during remand proceedings issued a notice u/s 133(6) to G.M. Hirer to file confirmation for these transactions as well as to file PAN and return of income. In response confirmation of Mohinder Sharma proprietor G.M. 55 Hirer was filed but the Assessing officer observed that this does not prove any thing.
155 The Ld. CIT(A) after examining the submissions confirmed the addition of Rs. 13,95,000/- on account of amount received from PBIL Apex Consoritum Ltd. because complete address, PAN and other remand details as well as confirmations were not filed. In respect of addition of Rs. 544238/- the Ld. CIT(A) observed that confirmation of Mohinder Sharma was without signatures of Mr. Sharma and therefore these amounts were also added.
156 Before us, the Ld. Counsel for the assessee submitted that the assessee has received following amounts from G.M. Hirer in following concerns:
G.M. Hirer - Rs. 400000/- received in the hands of Gurjit Singh G.M. Hirer - Rs. 134238/- received in the hands of Surinderpal Singh G.M. Hirer - Rs. 10,000/- received in the hands of Pritam Singh and Sons - Rs. 544238/-
A sum of Rs. 4 lakhs was on account of purchase of truck and confirmation in this respect was filed before the Assessing officer. (copy of which is placed at page 27 of the paper book).
A sum of Rs. 134238/- received in the hands of Surinderpal Singh was on account of security deposit with the said company and this should have been decided in favour of the assessee. Similarly in case of Rs. 1 lakh received in the hands of Pritam Singh and Sons was on account of security deposit with the said firm on 31.3.2002.The security was Rs. 224600/-
and the amount was recovered on account of security deposit.
In this regard he referred to various papers at page 44 to 52 of 56 the paper book. He also contended that once the amount was received through cheque then same could have been accepted and in this regard he relied on the decision of Hon'ble Punjab and Haryana High Court in case of CIT Vs. Amarchand, ITA No. 243 of 2011.
157 In respect of amount received from PBIL Apex Consortium it was submitted that the assessee was acting as Director in this company which was having office at 409-410, Padma Tower, Rajendra Place, New Delhi. Various transactions took place in the name of Gurjit Singh and his proprietary concern, Pritam Singh & Sons and Surinderpal Singh. Copy of the running account was filed (copy of which is available at page 13 to 15 of paper book). The company had sufficient capital. In this regard reference was made to page 16 which is copy of the report from ROC showing that said company had paid up capital of Rs. 7.99 crores. It was further contended that the Assessing officer has accepted running accounts because addition has been made only of the peak amount which means that other transactions have been accepted by the Assessing officer.
158 On the other hand, the Ld. D.R. for the Revenue submitted that identity, credit worthiness and genuineness of the party has not been proved. The assessee has failed to prove the credit. It is wrong to say that the Assessing officer has applied peak theory because the Assessing officer has basically made addition of balance outstanding in the firm. Merely existence of high amount of share capital does not prove anything. No details of PBIL were filed. 57 159 W e have gone through the rival submissions carefully. As far as various amounts received from G.M. Hirer are concerned, no doubt the confirmation from one Mohinder Singh has been filed but at the same time there is no evidence to show that the assessee has sold the truck for Rs. 4 lakh. There is no evidence to show that the assessee has purchased the truck (which could have been sold) and same was reflected in the balance sheet of the assessee and in the absence of this evidence, this entry cannot be accepted. Similarly for other two entries the contentions regarding security cannot be accepted in the absence of evidence that such security was really outstanding and for what purpose the security was given. All these aspects have not been explained before the Assessing officer or the Ld. CIT(A) or even before us. As far as the contention that once the assessee has received the amount through cheque then same has to be allowed, cannot be accepted. Hon'ble Punjab and Haryana High Court in case of CIT Vs. Amarchand (supra) was concerned with a case where the Tribunal has deleted the addition of Rs. 3311510/-. The assessee was a partnership firm engaged in the trading in iron steels as well as trading of bicycles. It has shown credit totaling to Rs. 7286519/- as on 31.3.2007 from 18 persons. The detail of creditors was called for which was examined by the Assessing officer. The Assessing officer came to conclusion that the identity of the creditors was proved but he was not satisfied with the credit worthiness and genuineness of transactions of 15 creditors and thus made addition of Rs. 3311510/-. All the creditors were found to be income tax payee, therefore observation of Hon'ble High Court that the reason 58 was given for source of sources and the fact that the payment was received through cheque was sufficiently proved. Therefore the case is totally distinguishable on facts. 160 As far as addition of Rs. 1395000/- is concerned, copy of account filed at page 13 to 15 clearly show that the amounts have been regularly taken and given. Copy of account during the year reads as under:
Date Particulars Vch T ype Vch No Debit Credit 10.3.2003 By City Receipt 13 125000 Bank 5- 125000 0502/3- 184
To closing 125000
balance 125000 125000
1.4.2003 By 125000
opening
balance
1.4.2003 To S.P. Journal 1 125000
Singh
Prop
Gurjit
Singh
being
Amount
TRF
125000 125000
Date Particularls Vch T ype Vch No Debit Credit
3.4.2002 Buy Andhra REceipt 1 2000000
Bak A/C No.
50384
9.4.2002 To Andhra Pa ym ent 2 1500000
Bank A/C
No. 50384
20.5.2002 To Andhra Pa ym ent 14 130000
Bank A/C No
50384
25.5.2002 To Andhra Pa ym ent 15 550000
Bank A/c
No. 50384
5.6.2002 To Andhra Pa ym ent 17 200000
Bank A/C
No. 50384
7.6.2022 By Andhra Receipt 5 850000
Bank A/c
No. 50384
19..7.2002 To Andhra Pa ym ent 23 1500000
Bank A/C
No. 50384
Ch No.
0797754
1.8.2002 To Interest Receipt 6 1510418
due by
Andhra Bank
A/C No.
50384 Ch
59
No. received
from Pbil
1.11.2002 By Andhra Receipt 14 300000
Bank A/C
No. 50384
To closing 3890418 5160418
balance 1270000
5160418 5160418
1.4.2003 By opening Journal 3 1270000
balance
1.4.2003 To S.P. Journal 3 1270000
Singh Prop
Gurjit singh
Being PBIL
balance
THEREFORE
to M/s SP
Singh
1270000 1270000
The above clearly show that the amounts have been taken for some purpose because the assessee was also director there.
Further admittedly the amounts have been finally paid and ultimately there is a debit balance of Rs. 15205/- therefore in our opinion, this seems only a current account and this addition is not justified. Accordingly we set aside the order of the Ld. CIT(A) and delete the addition of Rs. 1395000/- out of total addition of Rs. 1939238/- made in respect of credits. 161 Ground No. 5 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that a lump sum expenses of Rs. 1489957/- claimed by the assessee in the books of accounts included lump sum cash payment of Rs. 1365722. No reply was filed, therefore the Assessing officer invoked provisions of section 40A(3) and 20% of cash expenses amounting to Rs. 273144/- was disallowed.
162 On appeal before the Ld. CIT(A) it was mainly submitted that the assessee has returned income u/s 44AD and this contention was accepted by the Assessing officer also, 60 therefore there was no scope for further disallowance in view of the provisions of section 44AD.
163 The Ld. CIT(A) did not accept this contention and confirmed the addition.
164 Before us, the submission made before the Ld. CIT(A) were reiterated and it was pointed out that Sec 44AD specifically provides that no further disallowances are possible u/s 28 to 43C where income of the assessee is returned u/s 44AD and therefore disallowance was not justified. 165 On the other hand, Ld. D.R. for the Revenue strongly supported the order of the Ld. CIT(A).
166 After considering the rival submissions and the material on record, we find that relevant portion of 44AD reads as under:
(1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession".
(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed :"
Plain reading of above provision clearly show that once the income is assessed u/s 44AD then there cannot be any further disallowance u/s 28 to 43C. Similarly no further allowance can be given u/s 30 to 38, therefore allowances like depreciation are not separately allowable if income is assessed u/s 44AD.
Therefore in view of this provisions,, in our opinion, once the income has been assessed u/s 44AD then further disallowance should not have been made. Accordingly we set aside the order of the Ld. CIT(A) and delete this addition.61
167 In the result, appeal of assessee in ITA No. 1166/Chd/2012 is partly allowed.
I T A N o . 1 1 6 7 / C h d / 2 0 1 2 - A. Y 2 0 0 4 - 0 5 - G u r j i t S i n g h 168 In this appeal the assessee has filed the following grounds:
" 1. Th at a ut h or i t ies b e l o w h as er r ed in l aw a nd f ac ts i n fr a m i ng t h e as s es s m e nt wi t ho u t a ff or d i n g p r o p er o p p or t un i ty of be i n g h e ar d to th e ap p e ll a nt .
2. Th at au th or i ti es be l o w h as er r e d i n la w an d f ac ts to a pp o in t S pec i a l Au d it or i n an au t om at ic m a nn er w it ho u t c o ns i der i n g t h e f ac ts of th e c as e a nd c o ns eq u en t ly th e a p po i nt m en t of t h e au d it or is ba d i n l a w.
3. Th at th e ap p o in t me nt of s p ec i a l au d it or is b ad i n l aw a nd is n ot i n ac c or d a nc e w i th t he s p ir i t o f l aw u n der t h e pr ov is i o n of s ec t io n 1 42( 2 A) of t he Ac t b ut o n ly t o g a in t i me f or c o mp l et i ng t he as s es s me n t w h ic h is bar r e d by l i m it a ti o n.
4. Th at CIT ( A ) h as er r ed i n la w an d fac ts in c o nf ir m in g th e a dd i ti o ns of r s . 5, 0 0, 0 00 /- u n d er s ec t io n 6 8 o n ac c ou n t of a l le g ed un ex p la i ne d c as h c r ed i ts c o mpr is i ng Rs . 2, 0 0, 0 00 /- fr o m M. S . & C o mp a ny a nd Rs . 3, 0 0, 00 0 /- fr o m G . M. Hir er .
( pa r a 2 3 p a ge 9 - 1 0 o f As s es s m e nt or d er ) ( pa r a 9 pa g e 13 - 1 7 o f CIT( A) or d er ) 5 Th at l e ar ne d CI T( A) has e r r e d i n l aw an d fac ts i n n ot t ak i n g r e li a nc e o f e nt r i es r ec or d e d i n S up p le m e nt ar y C as h Bo ok pr od uc ed be f or e th e C IT( A) af te r ad m it t in g t h e s a m e u /s 4 6 A( 1) ( d) an d des p i te t h e fac t t ha t AO has c o nf ir m ed th e v er if ic at i on of d eb i t / c r e di t en tr ies r ec o r d e d i n th e s u p pl e me n tar y C as h B o ok . "
169 Out of above grounds, grounds No. 1 to 3 and 5 were not pressed before us and therefore these are dismissed as not pressed.
170 Ground No. 4 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that special auditor had noted certain credits were there in the balance sheet for which no confirmation etc was filed. Therefore the Assessing officer gave a show cause notice why these amounts should not be added. Copy of the ledger account was filed and it was submitted that special auditor has taken into account all the credits during the year without giving any benefit of debits in such accounts. The Assessing officer noticed the details of such accounts as under: 62
Gurjit Singh 2004-05 R N 400000 400000 Highways Pvt Ltd M&S Co. 200000 0 200000 Appex Export Sh. 100000 0 100000 Surinder Pal Singh M/s Surinder Pal Singh Oberoi ) Prop. Gurjit Singh) GM Hizer 300000 300000 PBIL Apex 6652545 6703750 -
Consortium Total 7652545 600000 He further noted that since the basic ingredients of Sec 68 were not complied therefore a sum of Rs. 6 lakhs was added to the income of the assessee.
171 On appeal before the Ld. CIT(A) certain further documents were filed which were sent for remand report. The Ld. CIT(A) deleted the addition of Rs. 1 lakh on account of gifts received from S.P. Singh against which appeal has been filed by the Revenue and therefore we shall discuss this issue while adjudicating the appeal of the Revenue. In respect of other two items the contents of the remand report and counter comments of the assessee are noted by the Ld. CIT(A) as under:
DCIT in his comments has stated that i. M.S. & COMPANY Rs. 2,00,000/-
Assessee has contended that a sum of Rs. 2,00,000/- was received from M.S. & Co. during the year from Manjit Singh son of Raj Singh Porp M.S. & Co. PAN AQPPS6409Q 63 " A reply to notice u/s 133(6) was filed alongwith copy of account & a copy of return has been filed by one Shri Manjit Singh, Prop. M.S. & COMPANY. The documents filed by Shri Majit Singh do not prove the ingredients of s. 68. Therefore, the claim of assessee can not be accepted."
Assessee in his counter comments has stated that " The documents were filed by one Manjit Singh Prop M.S. & Co. do not prove the ingredients of s. 68". It is very difficult to understand as to which ingredient is not proved as explanations put forth by M.S. & Co. is self explanatory. That in case AO needs further clarification he was free to ask from Manjit Singh which he chooses not to do. As such there is no justification in confirming any addition on this account.
iii. G M HIRER Rs. 300000/-
DCIT in has comments has stated that Assessee has contended that M/s. Surinder Pal Singh has received a sum of Rs. 3,00,000/- during the year from M/s. G.M. Hirer Prop. Mahender Sharma son of Nitya Nand Sharma PAN ALNPF0611P A reply to notice u/s 133(6) was filed alongwith copy of account & a copy of return has been filed by one Shri Mohinder Sharma, Porp. M/s G.M. Hirer. The documents filed by Sh. Mohinder Sharma do not prove the ingredients of s.68. Therefore, the claim of assessee can not be accepted.
Assessee in his counter comments has stated that " The learned DCIT has issued notice u/s. 133(6) to M/s. G.M. Hirer who has explained the transactions with the assessee as an amount as amount paid for purchase of Mahindra Tractor. The copy of Income Tax return was filed by Mohinder Sharma.
The learned officer has simply remarked in his comments that " The documents were filed by Sh. Mohinder Sharma do not prove the ingredients of s. 68". It is very difficult to understand as to which ingredient is not proved as explanations put forth by G.M.Hirer is self explanatory. That in case AO needs further clarification he was free to ask from Mohinder Sharma Prop. G.M. Hirer which he chooses not to do. As such there is no justification in confirming any addition on this account".
The Ld. CIT(A) thereafter observed that in case of credit of Rs.
2.00 lakh from M.S. & Co. in the confirmation there are no signatures and therefore confirmation was not accepted and this amount added to the income of the assessee. In case of credit of Rs. 3 lakhs from G.M. Hirer again confirmation was 64 without signatures and therefore this amount was added to the income of the assessee.
172 Before us, the Ld. Counsel for the assessee submitted that in respect of credit of Rs. 2 lakhs from M.S. & Co. the Assessing officer has made enquiries u/s 133(6) and his conformation and other documents were filed before the Assessing officer (copy available at page 36 to 40 of paper book). In respect of a sum of Rs. 3 lakhs received from G.M. Hirer it was pointed out that enquiry was made by the Assessing officer against which a reply was also filed vide reply dated 2.6.2012 (copy available at page 41 of the paper book). It was submitted that a sum of Rs. 3 lakh was paid by G.M. Hirer on account of purchase of Mohindra Tractor Make 495 with Jack No. PBJ 2141 (14X7X2) Model 1998. No further enquiries have been made, therefore this amount should have been accepted.
173 On the other hand, the Ld. D.R. for the Revenue strongly supported the order of the Ld. CIT(A).
174 After considering the rival submissions and the material on record, we find that in response to the enquiry u/s 133(6) Manjit Singh on behalf of M.S. & Co. explained the nature of money given as under:
" 1. Th at I h av e j oi n tly p ur c has e d o n e pr op er ty i n B u lk Ma ter i a l Mar k et po p u lar ly k n ow n as B M M 3 7 3, P has e- 11 , M oh a l i t hr ou g h PU D A a uc t i on i n th e n am e o f Pr it a m S i n gh O ber o i. T he pr o per ty was pur c h as e d i n c ons i d er a t io n of Rs . 2 9, 1 0, 00 0 /- a uc t i o n pr i c e t o b e p a id i n i ns ta l l me nt . Th e in te r es t is t o b e pa i d to P UD A a l on g wi t h ins ta l l m en ts . Th a t I was hav i n g 3 0% s h ar e i n th e pr o p er ty u nd er c ons i d er a t io n an d a par t of mo n ey a mo u nt i ng Rs . 4 36 , 50 0/- w as d ir ec t ly d ep os it e d w i t h PU DA o n 27 / 11 /2 0 03 a n d a s u m of Rs . 1, 0 0, 00 0 /- w as pa i d to Pr it am S i ng h O b er o i . Th at s ubs e q ue n t p ay m e nt of Rs . 2, 0 0, 0 00 /- w as p a i d o n 28 . 01 .2 0 04 dr a w n o n my IC IC I B a nk A /c No . 00 58 0 50 0 02 9 2, s im i l a r ly Rs . 2, 9 0, 00 0 /- w as p a i d on 1 9. 11 . 20 0 4 t o Bik as D eb o n t he d ir ec t i ons of Pr it a m Si n gh a nd as s uc h to t al a mo u nt of Rs . 10 ,2 6 ,5 0 0/- was p a id on ac c o u nt o f 3 0% s h ar e i n th e pr o per ty u nd er c ons i d er a t io n . "65
Copy of confirmation has also been filed. No doubt the conformation is only initialed but it cannot be said that it is not signed. Copy of agreement for purchase of property jointly with Pritam Singh has also been filed and copy of return has also been filed. In our opinion, when these documents are considered together then it seems that M.S. & Co. has filed proper confirmation. In case the Assessing officer had any doubt he should have made further enquiry and in the absence of such further enquiry this evidence cannot be brushed aside and addition cannot be made without any further enquiry. Therefore we delete the addition. As far as a sum of Rs. 3 lakh received from G.M. Hirer is concerned, no doubt enquiry has been conducted by the Assessing officer and Mohinder Sharma on behalf of G.M. Hirer has replied that this money was paid on account of purchase of Mohindra Tractor. No PAN etc, has been given. Further there is no evidence before us to show that the assessee owned this tractor. No evidence for transfer of registration of this tractor has been furnished before the Assessing officer or CIT(A) or even before us. Therefore we are of the opinion that this addition has been correctly made and accordingly we confirm the same. Thus this ground is partly allowed by holding that the addition of Rs. 2 lakh from M.S. Co, should be deleted and addition of Rs. 3 lakh from G.M. Hirer should be confirmed.
175 On the other hand, the Ld. D.R. for the Revenue strongly relied on the order of the Ld. CIT(A).
176 In the result, appeal of the assessee in ITA No. 1167/Chd/2012 is partly allowed.
I T A N o . 1 1 6 8 / C h d / 2 0 1 2 - A. Y 2 0 0 5 - 0 6 - G u r j i t S i n g h 66 177 In this appeal the assessee has raised following grounds:
" 1. Th at a ut h or i t ies b e l o w h as er r ed in l aw a nd f ac ts i n fr a m i ng t h e as s es s m e nt wi t ho u t a ff or d i n g p r o p er o p p or t un i ty of be i n g h e ar d to th e ap p e ll a nt .
2. Th at au th or i ti es be l o w h as er r e d i n la w an d f ac ts to a pp o in t S pec i a l Au d it or i n an au t om at ic m a nn er w it ho u t c o ns i der i n g t h e f ac ts of th e c as e a nd c o ns eq u en t ly th e a p po i nt m en t of t h e au d it or is ba d i n l a w.
3. Th at th e ap p o in t me nt of s p ec i a l au d it or is b ad i n l aw a nd is n ot i n ac c or d a nc e w i th t he s p ir i t o f l aw u n der t h e pr ov is i o n of s ec t io n 1 42( 2 A) of t he Ac t b ut o n ly t o g a in t i me f or c o mp l et i ng t he as s es s me n t w h ic h is bar r e d by l i m it a ti o n.
4. Th at CIT ( A ) h as er r ed i n la w an d fac ts in c o nf ir m in g th e a dd i ti o ns of Rs . 4 61 5 00 /- u n der s ec t i on 68 on ac c o u nt of a l l e ge d u ne x p l a in e d c as h c r ed i ts c om pr is i ng R s . 2 , 90 ,0 0 0/- fr o m M. S . & Co m pa ny a nd Rs . 17 5 50 0 /- fr o m Ba l u S i ng h J a m ad ar . "
5 Th at l e ar ne d CI T( A) has e r r e d i n l aw an d fac ts i n n ot t ak i n g r e li a nc e o f e nt r i es r ec or d e d i n S up p le m e nt ar y C as h Bo ok pr od uc ed be f or e th e C IT( A) af te r ad m it t in g t h e s a m e u /s 4 6 A( 1) ( d) an d des p i te t h e fac t t ha t AO has c o nf ir m ed th e v er if ic at i on of d eb i t / c r e di t en tr ies r ec o r d e d i n th e s u p pl e me n tar y C as h B o ok . "
178 Out of above grounds, grounds No. 1 to 3 and 5 were not pressed therefore same are dismissed as not pressed.
179 In this year the assessee has moved an application for admission of additional evidence. The Ld. Counsel for the assessee referred to the application and pointed out that copy of reasons recorded for reopening of the assessment of S.P. Singh Oberoi as well as his assessment order for Assessment year 2005-06 is being filed as additional evidence because same was on 28.2.2013 i.e. after passing the impugned order.
This order is relevant because gifts and loans received from S.P. Singh were verified in his own case by the Revenue and found to be correct. This being a assessment order only, therefore in the interest of justice this evidence can be admitted.
180 On the other hand, the Ld. D.R. for the Revenue opposed the submissions.67
181 After considering the rival submissions and the material on record, we find that this is very relevant evidence and is only an assessment order passed by the department. The order came into existence only after passing of impugned order and therefore same is being admitted in the interest of justice.
182 Ground No. 4 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that various credits were found to be appearing in the books of accounts. The details of the same are as under:
"
Gurjit Singh 2004-05 Credit Debit Balance R N Highways Pvt Ltd. 300000 0 300000 Apex Export Pritam Singh Oberoi 1520000 0 1520000 MS & Co. 290000 0 290000 M/s Pritam Singh & Sons (Prop. Gurjit Singh) Pritam Singh 139200 0 139200 Balu Singh Jamadar 171500 0 171500 TOTAL 2420700 2420700 183 Since confirmation etc. was not filed, therefore a sum of Rs. 2420700/- was added to the income of the assessee. 184 During assessment proceedings out of above addition on account of Pritam Singh amounting to Rs. 1520000/- and Rs. 139000/- was deleted by the Ld. CIT(A) against which no appeal has been filed by the Revenue. Therefore we are not discussing this issue. Other two additions amounting to Rs. 290000/- on account of M.S. & Co. and Rs. 171500/- on account of Balu Singh Jamadar were confirmed by the LD. CIT(A) by following the reasons given in A.Y 2004-05 and also 68 the comments of the Assessing officer during assessment proceedings.
185 Before us, the Ld. Counsel for the assessee submitted that enquiries were made by the Assessing officer from M.S. & Co. u/s 133(6) and copy of the account was confirmed by M.S. & Co. in respect of such enquiry (copy available at pg 28 & 29 of paper book). Further details were also given showing nature of the credit as well as copy of the agreement showing joint investment (copy available at page 53 to 55 of paper book). 186 In respect of credit of Rs. 171500/- it was stated that this amount was recoverable from this party which becomes clear from the balance sheet of Pritam Singh & Sons (copy available at page 37 of the paper book) and he has repaid the money. 187 On the other hand, the Ld. D.R. for the Revenue strongly supported the order of Ld. CIT(A).
188 After considering the rival submissions and the material on record, we find that as far as credit of Rs. 290000/- from M.S. & Co. same has been explained during enquiry made in assessment proceedings. In the explanation it is stated as under:
" " 1. Th at I h av e j o in t ly pur c h as ed o ne pr o p er ty i n B u lk Ma ter i a l Ma r k e t po p u lar ly k n ow n as B M M 3 7 3, P has e- 11 , M oh a l i t hr ou g h PU D A a uc t i on i n th e n am e o f Pr it a m S i n gh O ber o i. T he pr o per ty was pur c h as e d i n c ons i d er a t io n of Rs . 2 9, 1 0, 00 0 /- a uc t i o n pr i c e t o b e p a id i n i ns ta l l me nt . Th e in te r es t is t o b e pa i d to P UD A a l on g wi t h ins ta l l m en ts . Th a t I was hav i n g 3 0% s h ar e i n th e pr o p er ty u nd er c ons i d er a t io n an d a par t of mo n ey a mo u nt i ng Rs . 4 36 , 50 0/- w as d ir ec t ly d ep os it e d w i t h PU DA o n 27 / 11 /2 0 03 a n d a s u m of Rs . 1, 0 0, 00 0 /- w as pa i d to Pr it am S i ng h O b er o i . Th at s ubs e q ue n t p ay m e nt of Rs . 2, 0 0, 0 00 /- w as p a i d o n 28 . 01 .2 0 04 dr a w n o n my IC IC I B a nk A /c No . 00 58 0 50 0 02 9 2, s im i l a r ly Rs . 2, 9 0, 00 0 /- w as p a i d on 1 9. 11 . 20 0 4 t o Bik as D eb o n t he d ir ec t i ons of Pr it a m Si n gh a nd as s uc h to t al a mo u nt of Rs . 10 ,2 6 ,5 0 0/- was p a id on ac c o u nt o f 3 0% s h ar e i n th e pr o per ty u nd er c ons i d er a t io n . "
Copy of the confirmation of the account as well as agreement for making investment jointly has also been filed before the 69 Assessing officer. However, we find that in the confirmation PAN is not there, therefore in our opinion, the source cannot be accepted and accordingly we confirm the order of the Ld. CIT(A).
189 Similarly the amount of Rs. 171500/- was recoverable from Balu Singh Jamadar. This fact becomes clear from balance sheet which is placed at page 37 of the paper book where this amount is shown outstanding. Once the amount was outstanding then no addition can be made when the same was received back because then it cannot be said to be a fresh credit and accordingly we set aside the order of the Ld. CIT(A) and delete this addition also.
190 In the result, appeal of the assessee in ITA No. 1168/Chd/2012 is partly allowed.
I T A N o . 1 1 8 7 / C h d / 2 0 1 2 - A. Y 2 0 0 4 - 0 5 - R e v e n u e 191 In this appeal the Revenue has raised following grounds:
" ( i) W het her th e L d. CIT ( A) is j us t i f ie d i n la w a nd on fac ts i n d e l et i n g th e a dd i t io n o f Rs . 2 6 74 0 00 /- o n ac c o un t of gi ft r ec e iv ed fr o m S h. S. P . S in g h w he n as s es s e e fa i l ed t o pr ov e th e g en u in e nes s o f t he g i ft ?
( II) W het her on f ac ts an d c ir c u ms t anc es o f t he c as e C IT( A) w as j us t if i e d in ac c e pt i ng t he g e nu i n en es s of a g if t fr o m N on R es id e nt In d ia n ( NR I) br ot h er o f t he a s s es s e e , i n t ot a l d is r e gar d t o t h e r a ti o la i d d ow n by th e H on 'b l e Su pr e me Co ur t in t h e c as e of C IT Vs . P R G a n ap at hy ( 2 0 12- TIO L- 7 6- S C- IT) t ha t t he as s es s e e has to s ho w a d e qu ac y of f u nd s in t he ha n ds of f or e ig n d o nor f or af or es ai d g i ft d o n at i on ?
( II I) W het her on fac ts o f t he c as e a dv e r s e an d r eb u tt a lb e pr es u mp t io n s ho u l d hav e b ee n d r aw n a bo u t ge n u in e n es s of t he gi ft w h e n th e as s es s e e ov er a p er i o d o f s ev e n As s es s me n t Y e ar s has r ec e iv e d a t ot a l s um o f Rs . 4 8 64 8 19 9 / - c r or es as g if t an d a no t her s u m o f Rs . 9 4 80 0 00 /- as l oa n ?
( iv ) W het her t he L d. C IT ( A) o n f ac ts a n d c ir c ums t anc es of t h is i s j us t if i e d i n l aw an d o n fac ts in de l et i n g th e ad d it i o n of Rs . 1 ,0 0 ,0 00 /- u /s 68 o n ac c ou n t o f a l le g ed u nex p la i n ed c as h c r ed i t fr o m S hr i Sur i n d er Pa l S in g h ?
( v .) W het her th e L d. CIT ( A) is j us t i f ie d i n la w a nd on fac ts i n d e l et i n g th e dis a l lo w anc e of R s . 1 9 6, 01 1 /- o n ac c o un t of ex p e ns es o n i nt er es t pa i d o n lo a n ag a i ns t FD R c la i m ed a g a ins t in te r es t i nc o m e f r o m ot h er s or uc es i n v io l at i on of s ec t io h n 57 ( i i i) ? "70
192 Ground No. 1 to 4 - After hearing both the parties we find that the issues raised through these grounds are identical to the issues raised by the Revenue in ITA No. 1193/Chd/2012 in case of Late Shri Pritam Singh which we have adjudicated in above paras. Since the facts of the case and the contentions of both the parties are identical to the issues raised in ITA No. 1193/Chd/2012 for Assessment year 2004-05, following that order we have decide these issues against the Revenue. 193 Ground No. 5 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that the assessee has claimed interest expenses amounting to Rs. 196011/- against the income from interest on FDR. He has observed that interest was not paid for earning interest and accordingly query was raised in this regard. No reply was given and therefore a sum of Rs. 196011/- was added to the income of the assessee.
194 On appeal before the LD. CIT(A) it was mainly submitted that interest on FDR relates to Pritam Singh and Sons proprietary concern which was doing business of civil construction. The FDRs were purchased from business funds for obtaining bank guarantee for execution of contract. No FDR was purchased during the year. The interest on FDR was declared as income of business which has been accepted by the Assessing officer. Therefore interest paid against loan is required to be netted out and in this regard reliance was palced on the decision of Hon'ble Supreme Court in case of ACG Associated Capsules Pvt Ltd. Vs. CIT, 343 ITR 89.(S.C). 195 The Ld. CIT(A) accepted this contention and deleted the addition.
71196 Before us, the submissions made before the Ld. CIT(A) were reiterated. It was further submitted that income was returned as business income and in this regard reference was made to computation of income (copy placed at page 14 & 15 of paper book). He also referred to pg 48 to 61 and pointed out that in this year there was no business which become clear from copy of profit and loss account (pg 48 of paper book). The total FDR were for Rs. 41.63 lakhs and loans from FDR is 26.05 lakhs. Assessee's own capital was Rs. 27.25 lakhs. All the FDRs are made from earlier years. These FDRs were purchased for commercial purposes i.e. for obtaining bank guarantee etc. and the loan against FDRs was used for construction business. Thus clearly the interest on FDRs was business income against which interest paid, if any, has to be allowed in the absence of any business receipts during the year. He again relied on the decision of ACG Associated Capsules Pvt Ltd. Vs. CIT (supra) and CIT Vs. Shri Ram Honda Power Equip, 289 ITR 475 (Delhi).
197 W e have gone through the rival submissions carefully and find that admittedly the income from interest on FDR was returned as income from business and has also been assessed as income from business. Further FDRs were purchased for the purpose of obtaining bank guarantee etc. for construction business i.e. against business purposes. If any loan has been taken against these FDRs for business purposes then such expenditure has to be allowed. Since there were no business receipts in this particular year i.e. why the Assessing officer has not accepted this contention. But we are of the opinion that 72 loan was obtained for business purposes such interest has to be allowed. Accordingly we confirm the order of the Ld. CIT(A). 198 In the result, Revenue appeal in ITA No. 1187/Chd/2012 is dismissed.
I T A N o . 1 1 8 8 / C h d / 2 0 1 2 - A. Y 2 0 0 5 - 0 6 - R e v e n u e 199 In this appeal the Revenue has raised the following grounds:
" " ( i) W het her t h e Ld . CI T( A) is jus t if i ed in la w an d o n f ac ts i n de l et i n g th e a d di t io n of Rs 1 4 90 0 0 0/- o n a c c ou n t of g i ft r ec e iv e d fr o m Sh . S. P . S i n g h w he n as s es s e e f a il e d t o pr ov e t h e ge n u in e nes s o f t he gi f t ?
( II) W het her o n fac ts an d c ir c ums t anc es of t he c as e C IT( A) was j us t if i e d i n ac c ep t in g t he ge n ui n e nes s o f a g if t fr om N o n R es i d en t In d ia n ( N RI) br ot h er of th e as s es s e e , i n t ot a l dis r e gar d t o t h e r a ti o l ai d d o wn by th e H o n 'b le Su pr e me Co ur t i n th e c as e o f CI T Vs . P R G an a pa thy ( 2 0 12- TI O L- 76- S C- I T) t h at t he as s es s e e has t o s h o w ad e qu ac y o f f u nds in t he h a nds o f for e i gn d on or f or af or es a i d g if t do n at i on ?
( i i i) W het her on fac ts o f th e c as e a dv er s e an d r eb ut t a lb e pr es u m pt i on s h o u ld h av e b e e n dr a w n ab o u t ge n ui n e nes s o f th e g if t wh e n th e as s es s e e ov er a p er io d o f s ev en As s es s m e nt Y e ar s has r ec e iv ed a t ot a l s um o f Rs . 4 8 64 8 19 9 /- c r or es as gi ft a n d an o th er s u m o f Rs . 9 4 80 0 00 /- as lo a n ?
( iv ) W het her t h e Ld . CI T( A) is jus t if i ed in la w an d o n f ac ts i n de l et i n g t h e d is a l l ow a nc e o f Rs . 1 9 3, 14 6 /- o n ac c o u nt o f ex p e ns es on i n ter es t p a i d on l oa n a ga i ns t FD R c l ai me d a ga i ns t i n ter es t i nc o m e fr o m o t her s o u r c es i n v i o la t io n o f s ec ti o n 5 7( i i i) ? "
200 Grounds No. 1 to 3 - After hearing both the parties we find that the issues raised through these grounds are identical to the issues raised in ITA No. 1193/Chd/2012. Since the facts of the case and the contentions of both the parties are identical to the issues raised in ITA No. 1193/Chd/2012 for Assessment year 2004-05, following that order we have decide these issues against the Revenue.
201 Ground No. 4 - This issue is identical to the issue raised in ground No. 5 by the Revenue in ITA No. 1187/Chd/2012, A.Y 2004-05 which has been adjudicated by and following the same we decide the issue against the Revenue.
73202 In the result appeal of the Revenue in ITA No. 1188/Chd/2012 is dismissed.
203 In the result, all the appeals of assessee and Revenue are disposed off in the following manner:
ITA No. Name of the party Result 1177/Chd/2012 Assessee Partly allowed 1173/Chd/2012 Assessee Partly allowed 1174/Chd/2012 Assessee Partly allowed 1175/Chd/2012 Assessee Partly allowed 1176/Chd/2012 Assessee Partly allowed 1193/Chd/2012 Revenue Dismissed 1194/Chd/2012 Revenue Dismissed 1195/Chd/2012 Revenue Dismissed 1196/Chd/2012 Revenue Dismissed 1197/Chd/2012 Revenue Dismissed 1198/Chd/2012 Revenue Dismissed 1166/Chd/2012 Assessee Partly allowed 1167/Chd/2012 Assessee Partly allowed 1168/Chd/2012 Assessee Partly allowed 1187/Chd/2012 Revenue Dismissed 1188/Chd/2012 Revenue Dismissed
Order pronounced in the open court on 6.6.2014 Sd/- Sd/-
(SUSHMA CHOWLA) (T.R. SOOD) JUDICI AL MEMBER ACCOUNTANT MEMBER Dated: 6.6.2014 SURESH
Copy to: The Appellant/The Respondent/The CIT/The CIT(A)/The DR