Income Tax Appellate Tribunal - Delhi
Acit, Central Circle-13,, vs Sh. Sanjeev Goyal,, on 28 June, 2021
IN THE INCOME TAX APPELLATE TRIBUNAL,
DELHI BENCH: 'E' NEW DELHI
BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER
AND
SHRI KULDIP SINGH, JUDICIAL MEMBER
[Through Video Conferencing]
IT(SS)A No.81/Del/2004
Block Period: 01.04.1990 to 03.11.2000
ACIT, Vs. Shri Sanjeev Goyal,
Central Circle-13, D-17, Panchsheel Enclave,
New Delhi New Delhi
PAN :AAKPG9780B
(Appellant) (Respondent)
Appellant by Ms. Pramita M. Biswas, CIT(DR)
Respondent by Sh. C.S. Aggarwal, Sr. Advocate
Sh. R.P. Mall, Advocate
Date of hearing 12.04.2021
Date of pronouncement 28.06.2021
ORDER
PER O.P. KANT, AM:
This appeal by the Revenue is directed against order dated 31/12/2003 passed by the Learned Commissioner of Income-tax (Appeals)-I, New Delhi [in short 'the Ld. CIT(A)'] for block period from 01/04/1990 to 03/11/2000 raising following grounds:
GROUNDS OF APPEAL "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained cash of Rs.1,52,150.2
IT(SS)A No.81/Del/2004 "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained source of foreign exchange of Rs.3,96,484/-."
"On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained investment in shares of Rs. 16,49,330/-."
"On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained bank deposits of Rs.22,00,346/-."
"On the facts and in the circumstances of the case, the Ld. CIT(A)erred in deleting the addition on account of unexplained expenditure ofRs.3,17,530/-" "
"On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained investment of Rs.20,79,110/-.
"On the facts and in the circumstances of the ease, the Ld. C1T(A) erred in deleting the addition on account of unexplained investment in jewellery of Rs. 1 37,500/-"
"On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained deposits of Rs.2,51,198/-/ "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained gifts of Rs.25,96,077/-."
"On the facts and in the circumstances of the case, the Ld. CIT( A) erred in deleting the addition on account of unexplained expenditure on foreign travel of Rs. 8,83,276/-."
"On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on account of unexplained investment in household hoods of Rs.2,52,500/-
2. Briefly stated facts of the case are that during relevant period , the assessee who is an individual, was director of "
Mahaan" group of companies including 'M/s Mahan Foods Ltd.'( MFL) ,'M/s Mahan Proteins Ltd.' (MPL) and 'M/s Mahaan Dairy Ltd.' (MDL). A search and seizure operation under section 132(1) 3 IT(SS)A No.81/Del/2004 of the Income-tax Act, 1961 (in short 'the Act') was carried out on 03/11/2000 at the premises of group companies and the assessee along with bank lockers owned by the assessee and his family members. The premises searched included residence of the assessee located at W-79, Greater Kailash Part-I, New Delhi;
factory and office premises of M/s Mahaan Proteins Ltd. and M/s Mahaan Foods Ltd. located at Village- Tonehera, Kosi Kalan Distt. Mathura (Uttar-Pradesh) and 78/3, 2nd Floor, Janpath, New Delhi respectively. In search proceedings, unexplained cash, jewellery, incriminating loose papers etc. was found and seized. Consequent to search action, a notice under section 158BC of the Act ( i.e. under provisions in operation during relevant period ) was issued on 01/08/2001 and in response the assessee filed a return of income for the block period (i.e. 01/04/1990 to 13/11/2000) on 24/09/2001 declaring following undisclosed income of ₹ 19,57,000/-:
(i) Unexplained deposits in assessee's Rs. 18,50,000 bank account No.6-354230-001 in Citi Bank ,Singapore
(ii) Unexplained cash Rs.1,00,000/-
(iii) Unexplained investment in Microwave oven Rs. 7000/-
Total Rs.19,57,000/-
3. During block assessment proceeding, the assessee was asked to explain source of income for investment in cash, jewellery etc. and also asked to explain various transactions recorded in documents seized. After providing opportunity of being heard to the assessee, the Assessing Officer in assessment order dated 29/11/2002 assessed total undisclosed taxable 4 IT(SS)A No.81/Del/2004 income at ₹ 1,28,72,501/-. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who allowed the appeal of the assessee by way of the impugned order dated 31/12/2003. Aggrieved with the order of the Ld. CIT(A), the Revenue is in appeal before the Income-Tax Appellate Tribunal (in short 'the Tribunal') raising the grounds as reproduced above.
3. Before us, both the parties appeared through Video Conferencing facility. The assessee filed a paper-book in two Volumes, containing pages 1 to 212 and 213 to 474.
4. Before coming to various grounds raised by the Revenue, we may like to mention that the Revenue had raised additional ground before the Tribunal, wherein it was raised that order passed by the Learned CIT(A) is erroneous, as he had relied upon additional evidences, in contravention of Rule 46A of Income Tax Rules, 1962. This additional ground of the Revenue was rejected by the Tribunal on 05/10/2009. The relevant finding of the Tribunal vide order sheet dated 05/10/2009 is reproduced as under:
"IT(SS) A Nos.81, 83 & 86/Del/2004:
The revenue has filed an application through the Assessing Officer for impleading an additional ground of appeal in 1T(SS) A. Nos. 81. 83 & 86/Del/04 to the effect that the order passed by the Learned Commissioner is erroneous, as he has relied upon additional evidence, incontravention of Rule 46A of the Income-tax Rules, 1962.
The learned counsel for the assessee has filed objection to the application of the revenue. It is pleaded by the assessee that the appeals were filed in 2004 and they were posted on the Board for regular hearing on 15.6.2006, thereafter hearing was adjourned on a number of occasions and application for impleading additional ground of appeal has been filed in June, 2008 i.e. almost after four years of institution of appeals. It is further pleaded that an order of the First Appellate Authority can be challenged on the grounds approved by the Commissioner as provided in section 253(2) of the 5 IT(SS)A No.81/Del/2004 Act. The revenue has not filed copy of any such approval granted by the Commissioner for raising additional ground of appeal. Thus, Assessing Officer himself alone cannot raise the additional ground. The assessee has further contended that additional ground sought to be raised is not purely a legal ground, hence revenue cannot be permitted to raise the ground at this belated stage. On the other hand, learned DR contended that the issue involved at present is about the admission of grounds whether it involves factual issue or not would be considered while adjudicating the issue raised in the additional ground on merit. According to the learned DR, unless revenue is permitted to raise this ground for consideration on merit all other attending circumstances exhibiting the investigation of facts or involvement of delay in raising such ground are irrelevant. These can be entertained when ground is admitted for adjudication on merit.
We have heard the rival contentions and gone through the record carefully. Section 253(2) provides that if the Commissioner had any objection to any order passed by the First Appellate Authority under sec. 154 or under sec. 250 of the Act then he may direct the Assessing Officer to appeal to the HAT against that order. In every appeal of the Department along with the ground of appeal, approval of the Commissioner is also annexed by the revenue. In the present appeals also, the original grounds of appeals have been raised by the Assessing Officer after obtaining approval from the Commissioner. We have directed the learned DR to file approval of Commissioner if any for raising additional ground of appeal. Even after granting more than a year's time, learned DR was unable to file the approval of the Commissioner in support of the additional ground of appeal raised by the revenue. The revenue cannot raise additional ground of appeal without the approval of the learned CIT(Appeals). In the face of above factual position, we do not deem it necessary to consider the other objections raised by the assessee in their written submissions. The additional grounds sought to be raised by the revenue in these appeals are hereby rejected."
4.1 Before us, the Ld DR again raised the issue of admissibility of additional grounds and that too without a copy of authorization to the Assessing Officer by the CIT (Administrative). The Ld DR was conveyed that the Revenue has not challenged the above finding of the Tribunal in higher appellate forum, which means the Revenue has accepted the above finding of the Tribunal and therefore, now can't aggrieved before us on the issue of 6 IT(SS)A No.81/Del/2004 admissibility of additional evidences by the Ld CIT(A) in alleged contravention of Rule 46A of Income-tax Rules, 1962. We accordingly, proceeded to adjudicate regular grounds raised by the Revenue in its appeal.
5. The ground No.1 raised by the Revenue relates to addition of unexplained cash of ₹ 1,52,150/-, which has been deleted by the Ld. CIT(A).
5.1 The facts qua the issue in dispute are that during search action at the residence and lockers of the assessee and his wife i.e. Smt. Saloni Goyal, cash of Rs.2,42,150/- was found from residence, ₹ 3,90,000/- was found from locker at Vijay Bank owned by Smt. Saloni Goyal and ₹ 10,000 was found from locker at Central Bank of India held jointly by the assessee and his wife. In this manner total cash of Rs.6,42,150/- was found from the assessee and his wife. Before the Assessing Officer, source of this cash was explained by the assessee as under :
(i) ₹ 4,90,000/-was withdrawn from bank account of the company, namely, 'M/s Mahaan Foods Ltd.' on three dates ( i.e. Rs 1,50,000/- on 7/08/2000; Rs 1,50,000/- on 12/08/2000 and Rs. 2,00,000/- on 7/09/2000), which was received by the assessee from the company through Sh. Suresh Garg.
(ii) ₹ 50,150/- was 'Pin money' of assessee and his wife accumulated over the years.
(iii) ₹ 1 lakh was offered to tax in the block return filed by the assessee.7
IT(SS)A No.81/Del/2004 5.2 Above explanation of the assessee was not accepted by the Assessing Officer due to following reasons:
(i) All the cash withdrawals from bank account of M/s Mahan Foods Ltd were tallied with the 'cash book' of the said company, which was seized during the course of the search, and deposits corresponding to withdrawal are found duly recorded. But, the same cash book, does not show any withdrawal by Sh Suresh Garg on corresponding dates, thus there is no question of handing over of cash by Sri Suresh Garg to the assessee.
(ii) No details of household expenses and other evidences justifying saving of cash as 'Pin money' were filed by the assessee. The assessee and his wife were maintaining bank accounts and the fact that cash was not deposited shows that it was undisclosed in nature.
5.3 The Assessing Officer held cash of ₹ 3,90,000/- as unexplained in the hands of wife of the assessee as same was found from the locker in her name and the balance unexplained cash of ₹ 1,52,150/-was held as undisclosed income of the assessee relevant to financial year 2000-01 (up to the date of the search).
5.4 Before the Ld. CIT(A), the assessee gave detailed submission supporting withdrawal of money by Sri Suresh Garg and handing order of the same to the assessee. It was submitted that on the date of the search on 14/09/2000 cash in hand of ₹ 5,41,401/-
8IT(SS)A No.81/Del/2004 was found recorded in the books of accounts of 'M/s Mahaan Foods Ltd' whereas cash of ₹ 1,15,412/-was only found physically at different premises belonging to the company. The difference in cash as per books and physically found was primarily due to the reason that cash was taken on imprest by Sh Suresh Garg , out of which he had given ₹ 5 lakh to the assessee during August/September 2000 for official purpose/expenses. This cash belonging to 'M/s Mahaan foods Ltd.' was part of ₹ 5 lakh received by the assessee and was partly kept in the locker No. 138 in Vijay bank. The assessee submitted that Mr Suresh Garg was authorized signatory for operating the bank account of 'M/s Mahaan Foods Ltd.' and used to take imprest from time to time for meeting cash expenses to be incurred on behalf of the company. It was submitted that imprest account was not maintained on computerised regular cash book but it was maintained manually. He further submitted that the combined day book of M/s Mahaan Dairies Ltd and M/s Mahaan Foods Ltd for the period from 28/08/2000 to 30/09/2000 was seized as Annexure A-129 from premises of the company, which shows a sum of ₹ 5,25,000/-given to Sh. Suresh Garg as Imprest on 7/09/2000. According to the assessee this amount included Rs. 2,00,000/- belonging to M/s Mahaan Foods Ltd. 5.5 Regarding flow of money from Suresh Garg to the assessee, it was explained that Suresh Garg travelled to Delhi/Kosi Kalan for attending official meeting and therefore he handed over the cash to the assessee. It Was also explained that cash was kept with the assessee for taking a godown on rent by M/s Mahaan foods Ltd at Kosi/Kalan, being director of the company. The 9 IT(SS)A No.81/Del/2004 availability of Pin money was also explained by way of the cash flow statements of assessee, his wife and his HUF. After considering submission and documentary evidences filed by the assessee, the Ld. CIT(A) deleted the addition observing as under:
"I have considered the facts of the case. It is noted that in the seized day book viz. Annexure A-129, there is a clear mention of Rs.5,25,000/- given to Shri Suresh Garg as 'imprest on 7/9/2000. The physical cash available during the time of the search at Paonta Shahib office and factory was Rs. 1,15,412/- whereas the cash in hand as per the books of Ms Mahaan Foods Ltd. was Rs.5,41,401/-. The difference in cash found and that recorded in the cash book was explained to be the cash taken on imprest by Shri Suresh Garg. The imprest balance with Shri Suresh Garg is duly recorded in the combined day book maintained by the cashier of M/s Mahaan Dairies Ltd. and M/s Mahaan Foods Ltd. This day book was seized during the search and showed imprest balance available with Shri Suresh Garg, and the balance recorded against Shri Suresh Garg are sufficient to cover the amount given to the appellant. Since the availability of cash funds cannot be doubted, because the seized day book shows receipt of imprest amounts and balances of Shri Suresh Garg, the addition of cash of Rs. 1,52,150/- in the hands of the appellant is not justified and the same is deleted."
5.6 Before us, the Learned DR submitted that records found during the course of search might explain availability of the cash as imprest money in the hands of Sh. Suresh Garg, but no evidences have been found in the course of the search of giving such imprest money to the assessee. According to him, no such explanation was given in the statement recorded during course of search proceeding and thus Department was prevented from verification of the availability of the imprest money with Sri Suresh Garg. According to him, in such circumstances the money found with the assessee has been correctly held as unexplained by the Assessing Officer.
10IT(SS)A No.81/Del/2004 5.7 The Learned Senior Counsel of the assessee, on the other hand, referred to relevant seized documents and relied on the finding of the Ld. CIT(A). According to him, the cash has been found available with the company and shown as imprest money given to Shri Suresh Garg in the documents seized and no other application of the said cash has been pointed out by the Department, therefore treating by the Assessing Officer of the cash found from the assessee, at least to the extent of cash available with the company in which assessee is director, is not justified.
5.8 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. There is no dispute as to the amount of total cash of ₹ 6,42,150/-found from the premises of the assessee and his wife. Location wise cash found has been stated in earlier paragraphs of this order. The dispute is regarding explanation of the source of the cash found. Out of the cash found of ₹ 6,42,150/-, cash of ₹ 1 lakh has already been treated by the assessee as unexplained and same has been offered for tax in the return of income filed for the block assessment, so the explanation of source of cash is with regard to balance amount of ₹ 5,42,150/- is only need to be examined. The assessee and his wife has explained source of this amount as partly from imprest money received from 'M/s Mahaan Foods Ltd (MFL), Paonta Sahib (Himachal Pradesh)' and Rs. 52,150/- as Pin money and saving of the assessee and his wife over the years. Regarding the imprest money, it was explained before the Assessing Officer that Sh. Suresh Garg, authorized signatory of MFL withdrawn cash of ₹ 1,50,000/-on 07/08/2000; cash of ₹ 11 IT(SS)A No.81/Del/2004 1,50,000/-on 12/08/2000 and cash of ₹ 2 lakh on 07/09/2000 from MFL and this same money was given to the assessee on next day. Before the Ld. CIT(A), the assessee filed additional evidences to explain evidence in support of money withdrawn by Sh. Suresh Garg from MFL and money handed over by Sri Suresh Garg to the assessee. In the case of MFL cash-in-hand on the date of the search (i.e. 14/09/2000) as per cash book was of ₹ 5, 41, 401/- but physical cash of ₹ 1,15,412/- was only found from the common office of the factory/ premises of MFL and other companies, in which the assessee is director. The assessee explained before the Learned CIT(A) that the difference in cash as per books and physically found was primarily due to the cash taken on Imprest by Sh Suresh Garg and out of which he had given ₹ 5 lakh to the assessee in August/September 2000 for the purpose of official expenses. The assessee has explained that this Rs. 5 lakh received from Mr. Suresh Garg was partly kept in locker No. 138 and partly at his residence.
5.9 The Assessing Officer has rejected the explanation mainly on the ground that there is no mention of withdrawal of imprest money by Sh. Suresh Garg in the cash book of M/s MFL maintained on computer, which was seized during the course of search proceedings.
5.10 But in our opinion, the availability of cash to explain the source of cash found can be substantiated from following:
(i) That Ld. CIT(A) has recorded the finding of the fact in para 5 of the impugned order that imprest balance of Rs. 5.00 lakhs with Sri Suresh Garg is duly recorded in the combined daybook of M/s MDL 12 IT(SS)A No.81/Del/2004 and MFL maintained by the cashier , which has been seized during the course of the search. This factual finding has not been disputed by the Revenue. The daybook has been maintained in regular course of the business and therefore evidentiary value of the same cannot be ignored.
(ii) On the date of the search, cash in hand in cash book of M/s MFL at Paota Sahib was of ₹ 5, 40,401/-, whereas physical cash of ₹ 1, 15, 412/-
was only found from the factory premises of M/s MFL and M/s MDL. Thus, there was a physical shortage of the cash at the premises of the companies. The revenue has not pointed out any other application of the cash, which has not been found physically.
(iii) The assessee has explained transfer of money from Sri Suresh Garg to the assessee by way of supporting evidences, as listed in para 4.1(i), 4.1(j) and 4.1(l) of Ld. CIT(A). The Ld DR has not brought on record any documentary evidence including statements u/s 132(4) of the Act of the assessee, or sh Suresh Garg or personals of the company M/s MFL to contradict the claim of the assessee of transfer of money from sh Suresh Garg to the assessee.
13IT(SS)A No.81/Del/2004 5.11 Similarly, regarding the availability of Pin money and savings of ₹ 52,150/-, the assessee has explained with the help of cash flow statement supported by assessment orders of assessee, his wife and their HUF, copies of their respective balance sheets and their cash withdrawal as reproduced by the Learned CIT(A) in para 4.1(m) of the impugned order.
5.12 In view of above facts and circumstances, we do not find any reason not to accept availability of cash in the hands of the assessee and his wife to explain the cash of Rs.5,42,150/-, out of which addition of ₹ 1,52,150/- has been made in the hands of the assessee. The order of the Learned CIT(A) on the issue in dispute is well reasoned and accordingly, we uphold the same. The ground No. 1 of the appeal of the Revenue is accordingly dismissed.
6. The ground No.2 of the appeal of the Revenue relates to addition of unexplained foreign exchange of ₹ 3,96,884/-, which has been deleted by the Learned CIT(A). The addition has been further reduced to ₹ 36,564/- by the Assessing Officer under section 154 of the Act. Before the Ld. CIT(A), the assessee explained source of US$ 911 found from his residence as under:
(i) Unspent amount of USD 111, out of foreign currency acquired by the assessee from an Authorised dealer for travel abroad in relation to business trip of M/s MFL and MPL.
(iii) $ 800 represented money left by one Mr. Satwant Singh Parley, UK resident , we personal friend of the assessee.14
IT(SS)A No.81/Del/2004 6.1 The Ld. CIT(A) considered the above submission of the assessee, which is supported by the affidavit and passport papers of Sri Satwant Singh. Before us the Revenue has failed to point out any error in the finding of the Ld. CIT(A) on the issue in dispute except the issue of the additional evidences, which has already been dealt by the Tribunal in order sheet dated 05/10/2009. In our opinion, the assessee has discharged his onus of explaining the source of currency found from his premises and the Revenue has not pointed out any fault in the evidences filed by the assessee. In such circumstances, we uphold the finding of the ld CIT(A) on the issue of dispute. Accordingly, this ground of the appeal of the Revenue is dismissed.
7. The ground No. 3 of the appeal relates to addition of ₹ 16,49,330/-on account of unexplained investment in the shares, which has been deleted by the learned CIT(A).
7.1 The facts qua the issue in dispute are that during the search at the residence of the assessee 36,500 shares of M/s 'MFL' dated 23/03/1995 and 1,28,433 shares of M/s 'MPL' dated 12/12/1998, all having face value ₹ 10, subscribed in the name of Mr Shamsher Prakash of USA, were found and seized. During assessment proceeding, the assessee filed certain documents to show that those shares were allotted in the name of Mr Shamsher Prakash. According to the Assessing Officer, the assessee has filed an unsigned permission of Reserve Bank of India (RBI) according to which 1,91,734 shares were allotted to him. According to the Assessing Officer, Sh Shamsher Prakash is a 15 IT(SS)A No.81/Del/2004 benami of the assessee and the shares have been acquired by the assessee investing his undisclosed foreign money parked and kept in foreign countries. Therefore, he held the investment in shares of Rs. 12,84,330/- in financial year 1998-99 and ₹ 3,65,000 in financial year 1994-95/-as undisclosed income of the assessee.
7.2 Before the Ld. CIT(A), the assessee submitted that Dr. Shamsher Prakash is a non-resident Indian based in USA , who is a childhood friend of assessee's father. He submitted that shares have been allotted after receipt of money through normal banking channels and after obtaining due permission from RBI /other authorities. The assessee filed a copy of RBI permission dated 23/09/1998, FIRC showing remittance of US dollar 62,000 etc. The assessee filed an affidavit from Dr. Shamsher Prakash stating that he was the owner of the said shares. During the course of assessment proceeding, the assessee also provided address of Dr. Shamsher Prakash to the Assessing Officer. According to the assessee, no attempt was made by the Assessing Officer to verify the facts from Dr. Shamsher Prakash. The assessee submitted that onus of establishing whether the transaction is a benami, is on the Assessing Officer, which he has not discharged and merely on surmises and conjecture, made the addition. 7.3 The Learned CIT(A) deleted the addition observing as under:
"I have considered the facts of the case. The explanation furnished by the appellant is supported by the permission letter from the Reserve Bank of India, which contains the signature of the authorized signatory on the reverse of the page. The appellant has 16 IT(SS)A No.81/Del/2004 also filed copies of bank drafts and FIRCs in support of investment in shares made by Shri Shamsher Prakash. Copies of share applications filed by Dr. Shamsher Prakash and the affidavit of this party have been filed. The documentary evidences available on record clearly show the fact of investment in shares by Dr. Shamsher Prakash. The onus of establishing a benami transaction is on the assessing authority. In these circumstances of the case, it has not been established that the appellant is the benami owner of the shares in question. On the other hand, the documentary evidences furnished indicate the correctness of the explanation regarding investment in shares by Dr. Shamsher Prakash. Accordingly, the addition of Rs. 16,49,330/- is deleted."
7.4 We have heard rival submission of the parties on the issue in dispute. The Assessing Officer has held the investment in shares in the name of Dr. Shamsher Prakash, which were found from the residence of the assessee, as benami investment of assessee. The Assessing Officer has concluded only on the basis of a copy of RBI permission, which according to him was unsigned. The Ld. CIT(A), however has noted that signature of the Authorised Signatory was on the reverse side of the page. 7.5 Further, the Learned Assessing Officer has not examined the source of investment in those shares, which according to the assessee is through proper banking channels. In our opinion, the action of the Assessing Officer in holding the shares as shares of the assessee and investment in the same as through undisclosed foreign income, is without any basis or documentary evidences. The Assessing Officer has even not attempted to examine the source of investment in the shares of the companies. The Assessing Officer has neither conducted any inquiries form Dr Shamsher Prakash. Before the Ld. CIT(A), the assessee has provided details of source of investment by Dr Shamsher Prakash and thus the assessee has discharged his onus.
17IT(SS)A No.81/Del/2004 7.6 In view of the above facts and circumstances, where source of investment has been duly explained through banking transaction from the account of Sh Shamsher Prakash, the investment in shares cannot be held as unexplained investment of the assessee. The finding of the Ld. CIT(A) on the issue in dispute is well reasoned and accordingly, we uphold the same. The ground No. 3 of the appeal of the Revenue is accordingly dismissed.
8. The ground No.4 of the appeal relates to addition of ₹ 22,00,346/- on account of deposit in City Bank, Singapore, which has been deleted by the Learned CIT(A).
8.1 The facts qua the issue in dispute are that during the course of search certain documents were seized, which indicated opening of bank account by the assessee in 'CitiBank Singapore' and deposit of money therein, which was not disclosed for the purpose of Income-tax in India. In the said bank total deposit of US dollar 92,058.33 was appearing as deposit during the period 23/02/2000 to 13/10/2000. The assessee offered peak balance of US dollar 41,957.834 of this account for tax in the return for the block period. However according to the Assessing Officer, seized paper indicated instruction for investment of US$ 20,000 for a period of 17 month and therefore same could not have been available for re-deposit. The Assessing Officer did not accept peak balance theory of the assessee and he treated entire deposit of US dollars 92,053.33 equivalent to Indian ₹ 40,50,346/-as undisclosed income of the assessee and after subtracting the income of ₹ 18,15,000/-already offered by the assessee in the 18 IT(SS)A No.81/Del/2004 return of block period, he made addition for the balance amount of ₹ 22,00 346/-to the income declared for block period. 8.2 Before the Ld. CIT(A), the assessee submitted that withdrawals from said account were made only for the purpose of specific investment in mutual funds/deposits , which were controlled by the 'CitiBank' and the amount received on maturity/sale of those mutual fund investment/deposits was re- deposited in the bank account. He also submitted that till the date of the search i.e. 14/09/2000 deposit of US dollar 73,051.30 was only appearing in the bank account. The Ld. CIT(A) accepted the contention of the assessee of peak balance and deleted the addition observing as under:
"11. I have considered the facts of the case. The deposits in the bank account after 14/9/2000 cannot be considered in the block assessment, which has to be limited to the period ending with date of commencement of search, i.e. 14/9/2000. Moreover, the bank statement shows that deposits on subsequent dates after 11/4/2000 were related to debits in the same account on 10/4/2000 and 11/4/2000. This point has been further explained by the appellant in written submission as under:-
(i) The assessee had offered peak credit of USD 41957.83 as his undisclosed income in the block period return of income. Further credits after 11th April, 2000 other than interest earned (US $ 202.47) were rotation of the same funds out USD 41957.83.
(ii). While the assessee had made investments of USD 20850 and USD 20,000 on 10th April.2000 and 11th April,2000 respectively the terminology used by the bank was 'FT OUTGING INVESTMENT' in both the cases (page 224 of the paper book) These investments were either m fixed deposits with the said Citi Bank or in mutual funds, the custodian of which was the said bank. Page 219 of the paper book under the heading 'DECLARATION' clearly shows that the said Citi Bank was the custodian of the investment in Mutual Funds.
19IT(SS)A No.81/Del/2004
(iii). Thereafter on 18th April/2000 when part of these investments were liquidated the terminology used by the bank, while crediting the account of the assessee, was 'FT INCOMING DISINVESTMENT(Page 224 of the paper book). At the time of deposit of USD 18,670 and USD 22,050 on 1st March 2000 and 29* March 2000) respectively, the terminology used by the bank FT INCOMING TT'(Page 223 of the paper book). Moreover on 11th April, 2020 when the assessee deposited USD 1,500 in the said bank the terminology used was 'PEP'
(iv). This shows that whenever fresh funds were deposited in the said bank the terminology used clearly stated that the same and whenever old investments (kept in custody of the said bank) were liquidated, either in part or in full, the terminology again clearly stated the same.
(v). Similarly, on 11* July.2000 the terminology used by the bank at the time of credit of USD 12,438 was also FT INCOMING DISINVESTMENT'(Page 227 of the paper book).
(vi). The above submissions make it clear that the credits of USD 16,953 and USD 12.438 were out of investments made earlier with the same bank.
(vii). The procedure adopted by Citibank. Singapore was that whenever investments were liquidated the proceeds of the same were credited to the bank account of the assessee. If the assessee wanted to withdraw funds from he had to withdraw funds from'though the savings bank account.
It is thus noted that between 31/3/2000 and 14/9/2000, there are two credits of USD 16,953 on 18.4.2000 and USD 12,438 on 11.7.2000. The narration against these credits, 'FT incoming disinvestment' clearly indicates that these credits are in respect of earlier investments out of the bank account which have been termed as 'FT outgoing investment'. Thus the total investment to be considered is USD 41957.83 as on 31.3.2000 which has already been surrendered by the appellant in the block return. The remaining credits represent flotation of same funds as were already in the account as on 31.3.2000. Hence, further addition on account of unexplained deposits is not called for. Accordingly, the addition of Rs.22,0,346/- is deleted.
Ground No. 5 relates to addition of Rs.3,17,530/- on account of alleged unexplained expenditure recorded on page 9 of Annexure A-
3. In the assessment order, the addition has been made on the ground that the document was seized from the residence of the 20 IT(SS)A No.81/Del/2004 assessee and the assessee's explanation that this paper did not pertain to him was not acceptable."
8.3 Before us, the Learned DR submitted that in absence of any evidence of re-deposit of the same money which was withdrawn, addition has to be made for total deposit and not on the basis of the peak credit theory. She referred to the typed version of the bank statement available in assessee's paper book (page 408) and submitted that deposit of US dollar 1500 and interest received after the date of peak credit has not been considered for addition by the assessee.
8.4 The Learned Senior Counsel of the assessee, on the other hand, relied on the order of the Ld. CIT(A) and submitted that amount withdrawn from the account was invested for a specific instruments and sale proceeds of those specific instruments were again re deposited in the same bank account and therefore undisclosed income declared by the assessee of peak balance of US dollar 41,957.83 is justified.
8.5 We have heard rival submission of the parties on the issue in dispute. The typed version of bank statement of the 'CitiBank, Singapore' reproduced by the assessee on paper-book page 408 (also on page 221 of the paper book) is extracted as under:
21IT(SS)A No.81/Del/2004 8.6 The assessee has also filed copies of monthly bank statement of the bank account from March, 2000 to October, 2000, which are available on page 222 to 230 of the paper-book.
On perusal of the above bank statements, it is evident that the first three credit of USD 1,200, USD 18,670 and USD 22,050 from 23/02/2000 to 29/03/2000 respectively, in the account are by way of deposit and incoming telegraphic transfer (TT). These credits have been included by the assessee for working out of peak balance. The interest amount of USD 37.83 credited in March 2000 has also been included for computing peak balance.
22IT(SS)A No.81/Del/2004 Regarding two amounts of USD 20,850/-and USD 20,000 withdrawn on 10th and 11th April, 2000 respectively, the assessee has claimed before the Learned CIT(A) that same were invested in mutual funds scheme or fixed deposits operated by the 'CitiBank'. The assessee has referred to narration of those entries as "FT OUTGOING INVESTMENT" in bank statement, which was presented before the Ld. CIT(A), a copy of which is available on page 224 of the paper-book. Regarding, credit of 1500 USD appearing on 11/04/2000, the assessee submitted before the Ld. CIT(A) that it was in the nature of the deposit. We find that This amount is certainly not out of the withdrawals, but same has not been included for the purpose of peak balance. Regarding credits of USD 16,953 and USD 12,438 appearing on 18/04/2000 and 11/07/2000 respectively, the assessee has claimed the same as proceeds of liquidation of investment made earlier on the 10th and 11/04/2000, but no evidence in support has been filed except reference of banks terminology of "FT INCOMING DISINVESTMENT" in the bank statement. The assessee has also not disclosed the amount of income earned in liquidation of so- called investment. The assessee has also not included the interest income of USD 35.52, USD 33.75 , USD 32.72, USD 46.90 and USD 53.58 credited respectively on 29/04/2000, 31/05/2000, 30/06/2000, 31/07/2030 01/08/2000. The interest for the period from 01/09/2000 to 14/09/2000 ( till the date of search) has also not been computed. In view of all the observation, we are of the opinion that the disclosure made by the assessee on the basis of the peak balance theory need further verification. It is the onus of the assessee to substantiate its claim of entries of 23 IT(SS)A No.81/Del/2004 investment in fixed deposits or mutual funds and reinvestment of liquidation of the same in the bank statement under reference. In view of the above facts and circumstances, we feel appropriate to restore this matter to the file of the Assessing Officer for examining application of the peak balance theory and addition to be made for deposits in the bank statement on the basis of the documentary evidences which would be furnished by the assessee before him. If the amount of USD 16, 953 and USD 12, 430 8R are found to be credited as a result of liquidation of earlier investment made out of the same bank statement, then following the peak balance theory no addition could be made to the extent of original investment amount in such mutual funds etc. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. Accordingly, this ground of the appeal of the Revenue is allowed for statistical purposes.
9. The ground No. 5 of the appeal relates to addition on account of unexplained expenditure of ₹ 3,17,530/-, which has been deleted by the Ld. CIT(A).
9.1 The facts in brief qua the issue in dispute are that page 9 of Annexure A-3 seized from the residence of the assessee reflected expenditure of ₹ 3,17,530/- which included noting such as "57,683/- Tin Plate" and 43,197 /- spoons". The assessee explained that those papers did not pertain to him and might have been left over by some customers/suppliers. According to the Assessing Officer, this explanation was not sufficient to rebut the presumption provided in law that documents found from the assessee belongs to him. The LearnedAssessing Officer therefore held the amount as unexplained expenditure of the assessee and 24 IT(SS)A No.81/Del/2004 added the same to undisclosed income. The Ld. CIT(A) deleted the addition of observing as under:
"13. I have perused the copy of the seized document. The seized document does not indicate that any actual expenditure of Rs.3,17,530/- has been incurred by the appellant. There are no corroborating details on this document to lead to this conclusion. Only some figures have been written and totaled up. As such the document in question has to be treated as a dumb document incapable of leading to any inference of unaccounted income. Accordingly, the addition is deleted."
9.2 Before us, the learned DR relied on the order of the Assessing Officer and submitted that the seized document clearly reflects expenditure on various items, and therefore, it was the onus of the assessee to explain the said expenditure and failure to do so the Assessing Officer has correctly made addition. 9.3 The Learned Senior Counsel of the assessee, on the other hand, relied on the finding of the Ld. CIT(A) and submitted that without any corroborating evidence brought on record, addition on the basis of the loose documents found was unjustified. 9.4 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. For ready reference, a scanned copy of the said loose paper found from the residence of the assessee is reproduced as under:
25IT(SS)A No.81/Del/2004 9.5 From the above document, it is evident that narration of the items includes Tin plates, spoons, Singh etc. but the document does not speak whether the number(s) represent quantity or currency. In our opinion, even if we presume that this document belongs to the assessee and the assessee has failed to rebut presumption under section 132(4A) of the Act, but the document nowhere reflects whether it is a purchase of the goods or merely estimate. The document is not a bill of purchase andit mentions only certain items/name and certain figures against them. The document is dumb as far as indication of purchase or investment 26 IT(SS)A No.81/Del/2004 by the assessee or the number as currency. In our opinion, to treat those figures as purchase or investment by the assessee, is based on the presumption, without any corroborating evidence, and therefore Ld. CIT(A) is justified in deleting the addition. We accordingly uphold the finding of the Learned CIT(A) on the issue in dispute. The ground of the appeal of the Revenue accordingly dismissed.
10. The ground No.6 of the appeal relates to addition of Rs.
20,79,110/-on account of unexplained investment, which has been deleted by the Ld. CIT(A).
10.1 The facts in brief qua the issue in dispute are that a loose paper has been found from the residence of the assessee, which has been inventorised as page 14 of Annexure A-3. This loose paper indicated certain amounts against different dates. It was explained by the assessee before the AO that the amount represented investment made by Dr Shamsher Prakash ( a NRI) in shares of M/s Mahaan Proteins Ltd. The Assessing Officer rejected this contention of the assessee holding that permission for investment in shares given by RBI was unsigned and DR Shamsher Prakash claimed investment of ₹ 19,17,340/-as against investment of ₹ 20,79,110/-recorded in the loose paper. According to the Assessing Officer the investment/expenditure recorded in concerned loose paper was different from alleged investment by Dr Shamsher Prakash. Before the Ld. CIT(A), the assessee filed detailed of date -wise money remitted by DR Shamsher Prakash and submitted that total ₹ 21, 17, 340/-has been remitted by him into the account of M/s Mahaan proteins 27 IT(SS)A No.81/Del/2004 Ltd, which is slightly higher than the amount of ₹ 20,79,100/- recorded in the loose paper under reference. The assessee also submitted that M/s Mahan Protein Ltd. had applied to RBI for issuing share worth ₹ 20,78,990/- to Dr Shamsher Parkash on repatriable basis. In view of the submissions the Ld. CIT(A) deleted the addition observing as under:
"15. I have considered the facts of the case. There is no indication on the seized document that any investment has been made by the appellant. If such have been the case, it should have been established where and how the alleged investment had been made by the appellant. On the other hand the appellant's explanation that the figures roughly correspond to the investment made by Dr.Shamsher Prakash is reasonable. The presumption as made by the A.O. in the assessment order cannot be drawn in the absence of specific material regarding undisclosed investment. In these circumstances, the addition of Rs.20,79,110/- is not warranted and the same is deleted."
10.2 Before us, the Learned DR relied on the order of the Assessing Officer and submitted that investment in question reflected in loose paper is different from the alleged investment by Dr. Shamsher Prakash as data-wise amounts remitted are not exactly matching with the amount recorded in the loose paper. 10.3 On the other hand, the Learned Senior Counsel of the assessee relied on the finding of the Ld. CIT(A) and submitted that Department has not been able to pinpoint any other investment corresponding to the amount recorded in loose papers, even after carrying out a thorough search of his residential and office premises and thus, the Assessing Officer is not justified in rejecting the contention of the assessee based on documentary evidences.
28IT(SS)A No.81/Del/2004 10.4 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. For ready reference, scanned copy of the loose paper in question, is reproduced as under:
29IT(SS)A No.81/Del/2004 10.5 The assessee has claimed that those amount represents remittances made by Dr. Shamsher Prakash in the bank account of M/s Mahhan Proteins Ltd (which was earlier known as LACTO Proteins Ltd). A reconciliation statement filed by the assessee before the Ld. CIT(A) as reproduced in para 14.1(d) of the impugned order, is extracted as under:
(d) The money remitted by Dr. Shamsher Prakash details as under:-
S. Date of Amount Amount in Amount Date
No. Remittance in FC INR as on
as per FIRC (US $) received menti- the
by MPT oned in said
the page page
14 of
Annex A-
3
1. 26.11.92 40000 1224450 1198500 27.11.92
2 27.11.92 2000 59880 60000 28.11.92
3. 18.03.93 5000 164110 159600 01.03.93
4. Transfer from - 75000 75000 01.03.93
NRO a/c on
01.03.93
5. 19.05.93 5000 156300 154500 13.03.93
6. 07.01.93 10000 312600 306500 02.01.93
7. Transfer from - 125000 125000 02.01.93
NRO a c on
02.01.93
Total 21117340 2079100
10.6 On perusal of the above reconciliation, we find that first two dates mentioned in the loose paper is date next to what mentioned as remittance date. The amounts of these two dates are also approximately matching. The date and amount 30 IT(SS)A No.81/Del/2004 mentioned against NRO in the loose paper is matching exactly with the remittance from NRO account received in the bank account of M/s Mahaan Protein Ltd. In our opinion, matching of the date and amount of investment from NRO account establish that other entries in the loose paper are also related to investment by Dr Shamsher Parkash, because in case of other entries in loose paper , the amount are approximately equivalent to INR ( Indian rupees ) equivalent of amount remitted by Dr Shamsher Prakash. In our opinion, the assessee has discharged his onus of rebutting the presumption by the Assessing Officer under section 132(4A) of the act. We also find that the Assessing Officer has not been able to identify any other investment made by the assessee despite carrying out thorough search of his residential and official premises. In the circumstances, the finding of the Ld. CIT(A) on the issue in dispute is well reasoned and we uphold the same.
Accordingly, the ground raised by the Revenue is dismissed.
11. The ground No. 7 of the appeal relates to addition of unexplained investment in jewelry amounting to ₹ 1,37,500/- made by the Assessing Officer, which has been deleted by the Learned CIT(A).
11.1 The brief facts qua the issue in dispute are that during the course of search action at the residence of the assessee, a loose paper containing some amount against rough estimate by the jeweller has been found, which is inventorised as page 34 of annexure A-9. According to the assessee it was rough estimate given by some jeweller but jewelry was not purchased. However in view of the Assessing Officer, it was the practice of the jewellers to 31 IT(SS)A No.81/Del/2004 note actual sales as estimates and besides, the document also shows value of jewelry as ₹ 1,38,447/-and sales tax at the rate of 1% extra , thereafter , final price to be paid has been shown as ₹ 1,37,5000/-. According to the Assessing Officer, it was actually purchase of jewelry and therefore he made addition of ₹ 1,37,500/-. The Ld. CIT(A) deleted the addition of observing as under:
"17. I have considered the facts of the case. Since the seized document itself indicates that it is a rough estimate, a finding cannot be given that the amount mentioned on this page represents any actual expenditure made by the assessee. The information given on this page is also not verifiable, as neither the particulars of jeweler nor the date of the note is recorded. Accordingly, the addition has been made only on the basis of a presumption which is not permissible under law. The addition of Rs.1,37,500/- is deleted."
11.2 Before us, the learned DR relied on the finding of the Assessing Officer and submitted that the Assessing Officer was not required to substantiate regarding the well-known practice of the jewellers of issuing rough estimate slips against actual sales . On the contrary, the Learned senior Counsel of the assessee relied on the finding of the Learned CIT(A).
11.3 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. Here the issue before us is whether the document support the transaction of actual purchase or it is a mere estimate without any actual purchase. For ready reference, a scanned copy of the relevant document, which is available on page 235 of the paper-book is reproduced as under:
32IT(SS)A No.81/Del/2004 11.4 On perusal of the above document, we find that no where it is mentioned that those items of the jewelry have been actually purchased by the assessee. There is no mention of any payment made by the assessee also. The addition cannot be made only on the basis of the existence of alleged well-known practice presumed by the Learned Assessing Officer. The Assessing Officer was required to bring on record name of the jeweller and corresponding purchase bills if any before making addition in the hands of the assessee on the basis of this loose paper. In our opinion, the Assessing Officer has squarely failed in bringing any such documentary evidence and thus no addition can be made without evidence of actual purchase of jewelry by the assessee.
Even if we presume for a moment that the jewelry listed in the 33 IT(SS)A No.81/Del/2004 loose paper was purchased by the assessee, same is than included in the list of the jewelry found from the premises, and therefore no separate addition on the basis of this loose paper is required. In view of the above facts and circumstances, the finding of the Learned CIT(A) on the issue in dispute is upheld. The ground of the appeal of the Revenue is accordingly dismissed.
12. The ground No. 8 of the appeal relates to addition of ₹ 2,41,198/- on account of unexplained deposit, which has been deleted by the Learned CIT(A).
12.1 The facts in brief qua the issue in dispute that according to the Assessing Officer the loose paper No. 25 of Annexure found from the residence of the assessee is a slip of "Bank one" showing balance of USD 5709 on 03/06/2000. The assessee explained that the paper relates to account maintained with Citi Bank for which the assessee has already offered peak balance in the return of income. This contention of the assessee was not accepted by the Assessing Officer and according to him this was a separate investment and therefore he made addition of equivalent Indian ₹ 2,51,198/-. The Ld. CIT(A) deleted the addition of observing as under:
"19. I have considered the facts of the case. There is no indication on the seized document itself that the alleged bank account belongs to the assessee. Neither name nor account number is mentioned on the document. As such it cannot be held that the appellant has made an unexplained investment of Rs.2,51,198/- and cannot be imposed with tax liability on the said amount. Since no specific grounds have been given in the assessment order for treating the amount as unexplained investment by the assessee, the addition of Rs.2,51,198/- is deleted."34
IT(SS)A No.81/Del/2004 12.2 Before us, the Learned DR submitted that before the Learned CIT(A) the assessee denied of paper belonging to him. According to the Learned DR, the burden of proof was on the assessee that the amount was the part of the disclosed asset or belong to some other person and in failure to do so, the Assessing Officer is justified in making the addition.
12.3 We have heard rival submission of the parties on the issue in dispute. The addition has been made on the basis of a loose paper found from the residence of the assessee, a photo copy of which available on page 236 of the paper-book, which is reproduced for ready reference:
35IT(SS)A No.81/Del/2004 12.4 On perusal of the above paper, we find that there is no mention of the name of the assessee. On this paper card No. has been mentioned as 8496. The document is on the letterhead of some bank having name as "Bank One". The Assessing Officer has not carried out any enquiry from the relevant bank and ascertained to whom this card or the transaction relates. Making addition on the basis of incomplete information, only on the basis of the guess work is not justified in cases of search assessment.
We do not find any infirmity in the finding of the Learned CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground of the appeal of the Revenue is accordingly dismissed.
13. The ground No. 9 of the appeal relates to deletion of the addition on account of unexplained gifts of ₹ 25,96,077/-. 13.1 The brief facts qua the issue in dispute are that the Assessing Officer observed gift received by his minor daughters and son from Sh. Shamsher Prakash during the block period and in absence of any details of gifts received filed by the assessee, the Assessing Officer made addition for ₹ 18,96,077/- in financial year 95-96 and addition of Rs. 7 lakh in financial year 98-99 corresponding to the block period. Before the Ld. CIT(A) the assessee submitted that all the documents in support of gift along with bank certificate and affidavit of the donor were filed before the Assessing Officer, however he did not deem it necessary to ask any further questions. Before the Learned CIT(A), the assessee again filed all the documents in support of the claim of the gift. The Ld. CIT(A) deleted the addition of observing as under:
36IT(SS)A No.81/Del/2004 "I have considered the facts of the case. It is noted that the addition made is not legally tenable as no material or evidence regarding the gifts receipt being unexplained was found as a result of the search can be made. As mentioned in section 158BA(2), explanation thereof the block assessment is' in addition to the regular assessment. It has also been held in the case of CIT Vs.Ravi Kant Jain, 250TTR 141 that block assessment has to be based on evidence found during the search and is not meant to be a substitute for regular assessment. Even on the facts of the case, the addition is unwarranted as the assessee has discharged the onus regarding receipt of gifts. The affidavit of Dr.Shamsher Prakash, his salary certificate, particulars of professional activities and copies of FIRCs bank certificates have been filed by the assessee to support the claim of gifts. It is noted that the assessee vide letter dt.25/11/2002 had filed confirmations from Dr.Shamsher Prakash, his affidavit and copies of FIRCs, bank drafts etc. in support of the claim of gifts. As such it cannot be said that the assessee had not furnished any explanation during the assessment proceedings. The appellant has further explained that the issue regarding gifts received from Dr.Shamsher Prakash has also been considered by the Hon'ble ITAT in the case of M/s Mahaan Proteins Ltd.for assessment year 1996- 97 (ITA No. 589 Del 99) and the addition made on account of bogus gift was deleted. Considering "these facts and circumstances of the case in view, it is held that the addition made has not been substantiated and the said addition of Rs.18,96,079/- in financial year 1995-96 and Rs. 7,00,000 - for financial year 1998-99 are deleted."
13.2 Before us, the Learned DR relied on the order of the Assessing Officer and submitted that no documents were filed before the Assessing Officer. According to her, the affidavit of Sh.
Shamsher Prakash, his salary certificate etc. are in the nature of additional evidence.
13.3 The Learned Counsel of the assessee, on the other hand, relied on the finding of the Learned CIT(A).
13.4 We have heard submission of the parties on the issue in dispute and perused the relevant material record. The Learned CIT(A) has held that under the block assessment addition for the undisclosed income has only to be made as per section 158BA(2) 37 IT(SS)A No.81/Del/2004 of the Act along with Explanation thereof. The undisclosed income has been defined in section 158BC of the Act, according to which, the undisclosed income includes:
(a) assets like money, bullion, jewellary etc. found during the course of the search and source of which is not explained or disclosed in regular return of income filed or
(b) any income based on entry in the books of accounts, or other documents are transaction, which has not been disclosed in the regular return of income filed or
(c) any expense, deduction or allowance which is found to be false.
13.5 We find that gifts received were appearing in books of accounts and disclosed for the purpose of Income-tax return by the assessee and no incriminating material much less any material related to such gifts was found during the course of the search . The Ld. CIT(A) has relied on the decision of the Hon'ble Delhi High Court in the case of Ravi Kant Jain (supra), wherein it is held that block assessment is not substitute for regular assessment. We do not find any error in the order of the Learned CIT(A) in following decision of the Hon'ble jurisdictional High Court. The Learned CIT(A) has also relied on the order of the Tribunal in the case of Mahaan Proteins Ltd in ITA No. 589/del/99, wherein addition for gifts received from Dr Shamsher Prakash has been deleted. In view of the above facts and circumstances, we do not find any error in the order of the 38 IT(SS)A No.81/Del/2004 Learned CIT(A) on the issue in dispute and accordingly uphold the same. The ground of the appeal of the Revenue is dismissed.
14. The ground No. 10 of the appeal relates to addition on account of unexplained expenditure on foreign travel amounting to ₹ 8,83,276/-.
14.1 The Assessing Officer in para 12 of the assessment order has made addition on this account observing as under:
"12.Unexplained Expenditure on Foreign Travel
(a) Vide notice u/s 142(1) dated 22.03.2002 assessee was specifically required to file details of foreign tours made and the sources of funds and expenditure thereon. As no reply was filed notice dated 08.11.02 assessee was again required to file details of expenses on foreign travelling by himself and family members. No reply has been filed during the block assessment proceedings.
Therefore expenses on foreign travel by I assessee are being estimated as per information available on record a§J discussed below.
(b) In the block assessment proceedings of Smt. Saloni Goyal, wife of the assessee, details of foreign visits by her and minor children have been filed as follows : to USA from 14.06.1998 to 08.07.1998, to France and Germany from 11.09.1999 to 20.09.1999 and Tanzania, Kenya and UAE from 19.05.2000 to 06.06.2000.
(c) Regarding expenditure on visits to USA and Tanzania etc. it is stated that they were met by M/s. Ace International a firm where assessee is a partner. Copies of "Director Foreign Travelling Exp." Account , Foreign Travelling Expenses account and capital account of Smt. Saloni Goyal in the books of M/s. Ace International have been furnished. These ledger accounts reflect expenses for tickets only.Total expenses on account of tickets of Saloni Goyal is Rs. 1,53,276/-. In the absence of any reply from the assessee it is reasonably assumed that the assessee has also accompanied his family on these visits. Accordingly, unexplained travelling expenses by the assessee are taken at Rs.1,53,276/- and an addition of Rs.1,18,553 in F.Y. 98-99 and Rs. 34,723 in F.Y 2000-01 is made to the undisclosed income of the assessee.
(d) Regarding travel to Europe, it is stated that tickets were received as complements by her husband , Sh. Sanjeev Goyal, since 39 IT(SS)A No.81/Del/2004 he is a frequent flyer. As already stated above no- explanation regarding foreign travel have been furnished by assessee who is claimed to be a frequent flyer in the course of block assessment proceedings of Smt. Saloni Goyal.The cost of hi Europe- Delhi ticket in the F.Y 99-00 was Rs. 34,000/-.For assessee and three family members unexplained expenditure on tickets alone is Rs. 1,36,000/- which is added to the undisclosed income of die assessee for the F.Y 1999-00.
(e) No explanation regarding expenditure on boarding and lodging expenses incurred by assessee's family members during foreign visits has been furnished. The total period of stay abroad in different countries is 54 (fifty four) days .The unexplained boarding and lodging expenses are estimated at Rs.5,94,000/- at a very reasonable estimate of average cost of USD 250 (1USD = Rs.44/-) per day and an addition of Rs. 2,75,000/- in F.Y 98-99-- Rs.1,10,000/- in F.Y 99-00 and Rs.2,09,000/- in F.Y 2000-01 is made to the undisclosed income of the assessee."
14.2 The Ld. CIT(A) has deleted the addition of observing as under:
"23. I have considered the facts of the case. First of all, the addition is legally untenable as it is based on the query raised during the assessment proceedings, without there being any recovery of incriminating evidences regarding unexplained expenditure on foreign visits. A block assessment cannot be a substitute for regular assessment as held in the case of CIT Vs. Ravi Rant Jain, 250ITR
141. Addition towards income in a block assessment has to be made only on the basis of evidence found during the search, or inquiries made in relation to material found during the search itself, hi the facts of the case, no incriminating h evidences regarding unexplained expenditure on foreign visits was found. Even otherwise, the appellant has reasonably explained that there is no case for considering any unexplained expenditure on foreign travel. The assessee's expenses on visits to USA and Tanzania have been recorded in the books of accounts of M/s Mahaan Proteins Ltd. 'The expenses of the assessee's wife for the / visit to Europe wrongly estimated by the A.O. as the ticket issued by the Airline was under
their Frequent Flight Scheme on which no cost was incurred. Copy of the said airline tickets has been placed on record. It is also clear from the copy of the passports of the assessee's children that they did not accompany the assessee on this trip. As such the presumption of any expenses on their account is not justified. Regarding boarding and lodging expenses, the appellant has furnished the details of the person who had incurred the expenses. The expenses of the assessee himself have been accounted for in the 40 IT(SS)A No.81/Del/2004 books of M s Mahaan Proteins Ltd. The addition made by the A.O. on account of estimated boarding and lodging expenses is only on presumption and cannot be sustained. In these circumstances, it is held that the addition of Rs.8,83,276/- in aggregate in different assessment years made by the Assessing Officer is unjustified and the same is deleted."
14.3 Before us, the Learned DR relied on the order of the Assessing Officer, whereas the learned Counsel of the assessee relied on the finding of the learned CIT(A).
14.4 We have heard rival submission of the parties on the issue in dispute and perused the relevant metal on record. It is settled law that addition under block assessment can be made for undisclosed income only as laid down under section 158BA(2) of the Act read with explanation thereof. The undisclosed income has been defined in section 158B (b) as under:
"158B. In this Chapter, unless the context otherwise requires,--
(a) "..................................................................
(b) "undisclosed income" includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act, or any expense, deduction or allowance claimed under this Act which is found to be false."
14.5From the above , it is evident that legislature has included any expense under undisclosed income if same is found to be false. But in the instant case, no documents or any material was found during the course of search, which could suggest the expenses incurred on foreign travel as false. The finding of the Learned Assessing Officer is based on enquiry during the 41 IT(SS)A No.81/Del/2004 assessment proceeding only. In the circumstances, the finding of the Learned CIT(A) that addition could be made in block assessment only on the basis of the evidence found during the course of the search or inquiries made in relation to material found during the course of the search, is justified, which is also supported by the binding precedents of Hon'ble Delhi High Court in the case of Ravi Kant Jain (supra). Further, the Ld. CIT(A) has also held that the assessee has discharged onus of explaining the source of the expenditure, which has been incurred mostly by the business concerns, in which assessee is director. Further, foreign travel expenses in relation to his wife/family has been added by the Assessing Officer on the basis of presumption that wife/family must have travelled along with the assessee during foreign visit. In our opinion, no such addition could be made merely on the basis of presumption without bringing any evidence on record. In view of these facts and circumstances, we uphold the finding of the Ld. CIT(A) on the issue in dispute. The ground of the appeal of the Revenue is accordingly dismissed.
15. The ground No. 11 of the appeal relates to addition of ₹ 2,52,500/-on account of unexplained investment in household goods.
15.1 During the course of search proceedings, a list of household goods available at the residential premises was prepared in the form of Annexure A-5 to "Panchnama" dated 14/09/2000. The list includes Camera, digital diary, TV, Air-conditioner, music system, fax machine, VCR, Fridge, microwave etc. The Assessing Officer estimated market value of these goods and source of investment thereof except one or two items, was held to be 42 IT(SS)A No.81/Del/2004 unexplained and accordingly, made addition of Rs. 2, 52, 500/- . The Ld. CIT(A), however, rejected the finding of the Assessing Officer on the ground that value of the goods adopted by the Assessing Officer was not based on any material. According to the Ld. CIT(A), the Assessing Officer has not taken into consideration the household withdrawal by the assessee in different financial years and also the documentary evidence of expenditure incurred for those goods, which were found recorded in the accounts of M/s Mahaan food Ltd and M/s Mahaan proteins Ltd. The Ld. CIT(A) deleted the addition made by the Assessing Officer on this ground.
15.2 Before us, the learned DR relied on the order of the Learned Assessing Officer. On the other hand, the Learned Senior Counsel of the assessee relied on the submission of the assessee before the Learned CIT(A) and finding of the Ld. CIT(A). 15.3We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. A list of the items, explanation of the assessee before the Assessing Officer, and the addition made by the Assessing Officer have been summarized by the Ld. CIT(A) in para 24.1(a) , which is reproduced as under:
"24.1 The submission of the appellant relating to this ground of appeal are as under:-
(a) The learned assessing officer has made the following additions to the undisclosed income of the assessee 43 IT(SS)A No.81/Del/2004 Item Sourced as Amount of Addition explained by the made to asessee undisclosed income (Rs.)
i) Camera Digital Zoom-1 Purchased for Rs. 20,000 5.000 in F.Y. 1999-
00 out of drawings
ii) Digital Diary (Sharp) Purchased in 1,500
F.Y. 1986- 87
for Rs. 1,200
iii) Palm III C Purchased 8,000
out of
drawings
Organiser in
F.Y. 1998-99
iv) Camera (Minolta) 400 Purchases in 7,000
F.Y. 1996-97
out of
drawings
v) 3 ACs (National) Purchases in 75,000
F.Y. 99-00
for
Rs.80,700/-
by Mahaan
Proteins Ltd.
vi) Aiwa Compact Music Purchase in 11,000
System F.Y. 99-00
for Rs.11,600
by M/s.
Mahaan
Proteins Ltd.
vii) Fax Machine (Toshiba) Purchased in 30,000
F.Y. 94-95 by
M/s.
Mahaan
Foods Ltd.
for Rs.
30,000
viii) VCR (Sony) Purchased in 8,000
F.Y. 97-98
for 6,500 out
of drawings
ix) Colour TV , 21" Purchased in 14,000
(Optonica) F.Y. 88-89
44
IT(SS)A No.81/Del/2004
for Rs.8000
x) LG Fridge 412 MVF Purchased in 33,000
F.Y. 99-00
for Rs.33,000
by M/s.
Mahaan
Proteins Ltd.
Xi) Godrej Fridge 400 Lt. Purchased in 25,000
F.Y. 95-96 by
M/s Mahaan
Proteins Ltd.
for Rs.18,500
xii) Microwave Oven MN- Purchased in 8,000
500 (Nobel) F.Y. 1992-93
for Rs. 7000
and offered
for tax in
block period
return of
income
xiii) VCR National Digital Purchased in 12,000
1997 for
Rs.8,000/-
out of
drawings.
Total Rs. 2,52,500
15.3 The assessee has explained source and amount of
investment in goods, which Ld. CIT(A) has reproduced in impugned order as under:
"Specific submissions on each item of addition are as under:-
i) Camera Digital Zoon - 1 : Addition Rs. 20,000
-Purchased for Rs. 5,000 in F.Y. 1999-2000 out of cash available with the assessee (page 323 of the paper book).45
IT(SS)A No.81/Del/2004
-Purchase of household items aggregating to Rs. 40,000 shown separately in cash flow statement for the F.Y. 1999-2000submitted during assessment proceedings (page 392 of the paper book).
-Assessment in the case of assessee completed u's 143(3) for assessment year 2000-01 vide order dtd. 31.03.03 and no addition has been madetherein on any account (including household drawings).
ii) Digital Sharp diary: Addition Rs. 1,500
-Purchase by assessee in F. Y. 86-87 for Rs. 1,500.
-Assessee ownsa Palm Organisor which is a much improved version of a digital diary'. A palm organisor has all the functions of a digital diary and much more. This palm organisor was purchased in F.Y. 98-99 and as such digital diary was purchased much earlier.
iii) Palm Organisor: Addition Rs. 8,000
-Purchased for Rs. 8,000 out of cash withdrawls from bank during F.Y. 1998- 99 and consequent cash available with the assessee (page 323 of the paper book).
-Purchase separately reflected in cash flow statement for F. Y. 1998-99 (page 393 of the paper book).
-Return of income accepted by the Income-tax department.
iv) Camera Minolta (400): Addition Rs. 7,000
-Purchased by assessee out of cash withdrawals from bank and consequent cash available with the assessee during financial year 1996-97 for Rs. 3,000 (page 323 of the paper book).
-Learned assessing officer has accepted the value of Minolta Camera (7000) model for Rs. 7,000. Model (400) being a less expensive model will not cost the same.
-Purchase separately reflected in the cash flow statement for F.Y. 1996-97 filed during the block assessment proceedings (page 395 of the paper book).
-Return of income accepted by the Income-tax department (page 37 of the paper book).
v) 3 Air Conditioners (Make-National): Addition Rs. 75,000
-Purchased in F. Y. 98-99 & 2000-01 by M's. Mahaan Proteins Limited.
-Copies of bills & ledger account filed during block assessment proceedings (page 396-397 of the paper book).
46IT(SS)A No.81/Del/2004
-Place of installation mentioned on the bills to be W-79, Greater Kailash-I, New Delhi, which is the residence of the assessee also used as office of M/s. Mahaan Proteins Limited.
-Authenticity of bills not doubted by the learned assessing officer.
vi) Aiwa Compact Music System: Addition Rs. 11,000
-Purchased by Mahaan Proteins Limited in F. Y. 99-00 for Rs. 11,600.
-Copy of invoice indicating address filed before learned assessing officer during block assessment proceedings (page 398 of the paper book).
-Copy of relevant ledger account of M/s. Mahaan Proteins Ltd. showing capitalisation of this asset filed during block assessment proceedings. (Page 401 of the paper book).
-Learned assessing officer is factually wrong in saying that ledger account not filed.
vii) Fax Machine (Toshiba): Addition Rs. 30.000
-Purchased by M/s. Mahaan Foods Limited in F. Y. 94-95.
-Copy of invoice showing purchase by M/s. Mahaan Foods Limited and ledger account of the company filed before learned assessing officer (page 399 of the paper book).
-The make/model of fax machine found, matcheswith that on the invoice.
-Copy of relevant extracts of fixed assets register of Mahaan Foods Limited showing location to be at assessee's residence cum office is being filed (page 316 of the paper book).
viii) VCR (Sony): Addition Rs. 8,000
-Purchased by assessee in F.Y. 97-98 out of cash available with him, for Rs. 6,500 (page 323 of the paper book).
-Cash flow statement of relevant period filed showing purchase of household items separately.
(Page 393 of the paper book).
-Income-tax return of the assessee for A. Y. 98- 99 accepted by the Income-tax department.
ix) Colour TV 21" (Optonica): Addition Rs. 14,000 47 IT(SS)A No.81/Del/2004
-Purchased in F. Y. 88-89 for Rs. 8,000 by the assessee.
-Optonica was brand of Ms. Kalvani Sharp Ltd. M/s. Kalvani Sharp Ltd. stopped being a leading player of TVs manufacturer in early nineties.
-Optonica as a TV brand was popular upto late eighties only.
x) LG-Fridge Model 412 MVF: Addition Rs. 33,000
-Purchased by Ms. Mahaan Proteins Limited in F. Y. 2000-01.
-Copy of invoice and ledger account filed during course of block assessment proceedings (page 400 to 401 of the paper book).
-The invoice shows the place of delivery to be assessee's residence at W-79, Greater Kailash-I, New Delhi.
xi) Godrej Fridge 400 Lt.: Addition Rs. 25,000
-Purchased by M/s. Mahaan Proteins Limited for Y. 95-96.
-Copy of invoice and ledger account tiled during the course of block assessment proceedings (page 402 of the paper book).
-Copy of relevant extracts of fixed assets register of M/s. Mahaan Proteins Limited showing location to be at W-79, Greater Kailash- I, New Delhi, the residence cum office of the assessee.
(Page 317 of the paper book).
xii) Microware oven MN-500 (Nobel): Addition Rs. 8,000
-.Assessee purchased for Rs. 7,000 in F.Y. 92-93.
-This was offered for taxation in block period return of income.
-Learned assessign officer has not given any basis for arriving at the cost of Rs. 15,000.
-Even if we agree (although not admitted) that on the date of search the price was Rs. 15,000, this in no way explains the cost in F.Y. 92-93 i.e., when the asset was acquired by theassessee.
xiii) VCR National Digital: Addition Rs. 12,000
-Purchased for Rs. 8,000 in F.Y. 1996-97 by the assessee out of cash available with him.
48IT(SS)A No.81/Del/2004
-Cash flow statement for F.Y. 96-97 filed during the cousre of block assessment proceedings separately shows purchase of this asset (page 395 of the paper book).
-Household drawings filed by way of cash flow statement. Learned assessing officer did not find the drawings insufficient.
-Learned assessing officer has not brought on record the basis of arriving at the cost of this asset."
15.4 The assessee has explained year of investment, amount of investment and source thereof. We observed that Learned Assessing Officer has simply rejected the claim of the assessee of year and amount of the investment and valued at current market price. Each item must have been having detail of manufacturing and their year of sale could have been easily verified from the respective manufacturer or distributor or dealer of those goods. No attempt has been made by the Assessing Officer for verifying the year of purchase of these goods by the assessee and has simply valued the price of the goods at current market value. In some cases , the assessee has also supported investment by way of the bills , which are also not been accepted by the Assessing Officer . The Learned Assessing Officer has also not considered the household withdrawal of the assessee and his family members. The year -wise household withdrawal of the assessee, has been reproduced by the ld CIT(A) in para 24.1(e ) of the impugned order. Further, where investment is recorded in the books of accounts of companies in which assessee is director, the source of investment stands explained and hence , no addition for unexplained source can be made in the hands of the assessee. In view of the above, we do not find any error in the order of the Ld. 49 IT(SS)A No.81/Del/2004 CIT(A) on the issue in dispute and accordingly we uphold the same.
16. In the result, the appeal of the Revenue is allowed partly statistical purposes.
Order pronounced in the open court on 28th June, 2021 Sd/- Sd/-
(KULDIP SINGH) (O.P. KANT)
JUDICIALMEMBER ACCOUNTANTMEMBER
Dated: 28th June, 2021.
RK/-(DTDS)
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar, ITAT, New Delhi