Income Tax Appellate Tribunal - Indore
Fatte Guru Govind Singh & Co., Burhanpur vs Assessee on 19 December, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARMA, A.M.
PAN NO. : ADAPS7929R
I.T(SS).A.Nos. 321 to 327/Ind/2012.
A.YS. : 2003-04 to 2009-10
Shri Biswa Mitra Singh, Dy. CIT,
87, Chankyapuri, vs. 1(1),
Chunnabhatti, Bhopal.
Kolar Road,
Bhopal
Appellant Respondent
PAN NO. : BFBPS2092K
I.T(SS).A.Nos. 319 & 320/Ind/2012.
A.YS. : 2006-07 & 2009-10
Smt. Sudha Singh, Dy. CIT,
87, Chankyapuri, vs. 1(1),
Chunnabhatti, Bhopal.
Kolar Road,
Bhopal
Appellant Respondent
Appellants by : Shri Prakash Jain, C. A.
Respondent by : Smt. Mridula Bajpai, CIT DR
Page 1 of 73
I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012
Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10
2
Date of Hearing : 19.12.2013
Date of : 31.12.2013
pronouncement
ORDER
PER R. C. SHARMA, A.M.
These are the appeals filed by the assessees against the order of CIT(A) dated 27.4.2012 for the assessment years 2003-04 to 2009-10 in the matter of order passed u/s 153A read with Section 143(3) of the Income-tax Act, 1961.
2. Following grounds have been taken by the different assessees in different assessment years.
BISWA MITRA SINGH :
A.Y. 2003-04 1 That on the facts and in the circumstances of the case, the learned CIT (Appeals) erred in not considering that the assessment order passed u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 is passed biasedly, in a hurried manner and without appreciating the fact and without considering the explanation offered by the assessee. Thus, the order passed is not a judicious order and thus deserves to Page 2 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 3 be quashed.
2. That on the facts and in the circumstances of the case, the learned CIT(A) erred in not accepting the explanation offered by the assessee that the expenditure of Rs. 50,000/- incurred on the education of daughter, Ms Shilpa Singh was borne by his father (Garand Father of Ms Shilpa Singh). Thus, the findings are unjust, unfair and deserve to be quashed.
3. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition Rs. 1,39,087/- out of the total addition of Rs. 2,15,548/-and thereby giving relief of Rs.
76,461/- only for unexplained investment in the construction of house, without accepting the explanation offered by the assessee and without providing proper opportunity of being heard which is unjust, unfair and thus deserves to be deleted. Page 3 of 73
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4. That on the facts and in the circumstances of the case, the charging of interest u/s 234B of Rs. 73,883/- and u/s 220(2) of Rs. 24,036/- after appeal effect is unjustified and not lawful.
5. That on the facts and in the circumstances of the case, the initiation of penalty proceedings u/s 271(1)(c) is not justified.
A. Y. : 2004-05 :
1. That on the facts and in the circumstances of the case, the learned CIT (Appeals) erred in not considering that the assessment order passed u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 is passed biasedly, in a hurried manner and without appreciating the fact and without considering the explanation offered by the assessee. Thus, the order passed is not a judicious order and thus deserves to be quashed.
2. That on the facts and in the circumstances of the Page 4 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 5 case, the learned CIT(A) erred in not accepting the explanation offered by the assessee that the expenditure of Rs. 50,000/- incurred on the education of daughter, Ms Shilpa Singh was borne by his father (Garand Father of Ms Shilpa Singh). Thus, the findings are unjust, unfair and deserve to be quashed.
3. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition Rs. 1,45,775/- out of the total addition of Rs. 2,25,882/- and thereby giving relief of Rs.
80,107/- only for unexplained investment in the construction of house, without accepting the explanation offered by the assessee and without providing proper opportunity of being heard which is unjust, unfair and thus deserves to be deleted.
4. That on the facts and in the circumstances of the case, the charging of interest u/s 234B of Rs. 55.475/-, 234C of Rs. 375/- and u/s 220(2) of Rs. Page 5 of 73
I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 6 19,806/- is unjustified.
5. That on the facts and in the circumstances of the case, the initiation of penalty proceedings u/s 271(1)(c) is not justified.
A.Y. 2005-06 :
1. That on the facts and in the circumstances of the case, the learned CIT (Appeals) erred in not considering that the assessment order passed u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 is passed biasedly, in a hurried manner and without appreciating the fact and without considering the explanation offered by the assessee. Thus, the order passed is not a judicious order and thus deserves to be quashed.
2. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition Rs. 42,578/- out of the total addition of Rs.
65,935/- and thereby giving relief of Rs. 23,357/- only for unexplained investment in the construction Page 6 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 7 of house, without accepting the explanation offered by the assessee and without providing proper opportunity of being heard which is unjust, unfair and thus deserves to be deleted.
3. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition Rs. 8,320/- being unexplained expenditure on the basis of LPS 3 without accepting the explanation offered by the assessee that this is the dumb document and not related with the assessee. Thus, the addition is unjust, unfair and deserves to be deleted.
4. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition of Rs. 26,500/-, Rs. 4,300/- and Rs. 3,656/- aggregating to Rs. 34,456/- being unexplained expenditure on the basis of LPS 3, without accepting the explanation offered by the assessee that this is the dumb document and not related with the assessee. Thus, the addition is unjust, unfair and Page 7 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 8 deserves to be deleted.
5. That on the facts and in the circumstances of the case, the charging of interest u/s 234B of Rs. 24,901/-, 234C of Rs. 225/- and u/s 220(2) of Rs. 9,975/- is unjustified.
6. That on the facts and in the circumstances of the case, the initiation of penalty proceedings u/s 271(1)(c) is not justified.
A.Y. 2006-07 :
1. That on the facts and in the circumstances of the case, the learned CIT (Appeals) erred in not considering that the assessment order passed u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 is passed biasedly, in a hurried manner and without appreciating the fact and without considering the explanation offered by the assessee. Thus, the order passed is not a judicious order and thus deserves to be quashed.
Page 8 of 73
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2. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition of Rs. 78,895/- out of the total addition of Rs. 1,28,407/- thereby giving the relief of Rs. 49,512/- being unexplained expenditure on the basis of LPS 3, without accepting the explanation offered by the assessee that this expense was borne by Ms. Shilpa Singh, daughter of the assessee and has shown the same separately a purchase of gold ornament, in the statement of affairs filed with the return. Thus, the addition is unjust, unfair and deserves to be deleted.
3. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition Rs. 25,350/- and Rs. 34,500/- aggregating to Rs. 59,850/- being unexplained expenditure on the basis of LPS 3 without accepting the explanation offered by the assessee that this is the dumb document and not related with the assessee. Thus, Page 9 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 10 the addition is unjust, unfair and deserves to be deleted.
4. That on the facts and in the circumstances of the case, the charging of interest u/s 234B of Rs. 26,840/-, 234C of Rs. 567/- and u/s 220(2) of Rs. 11,771/- is unjustified.
5. That on the facts and in the circumstances of the case, the initiation of penalty proceedings u/s 271(1)(c) is not justified.
A.Y. 2007-08 :
1. That on the facts and in the circumstances of the case, the learned CIT (Appeals) erred in not considering that the assessment order passed u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 is passed biasedly, in a hurried manner and without appreciating the fact and without considering the explanation offered by the assessee. Thus, the order passed is not a judicious order and thus deserves to be quashed.
Page 10 of 73
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2. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition Rs. 57,500/- being unexplained expenditure on the basis of LPS 3 without accepting the explanation offered by the assessee that this is the dumb document and not related with the assessee. Thus, the addition is unjust, unfair and deserves to be deleted.
3. That on the facts and in the circumstances of the case, the charging of interest u/s 234B of Rs. 7,065/- , 234C of Rs. 617/- and u/s 220(2) of Rs. 3,638/- is unjustified.
4. That on the facts and in the circumstances of the case, the initiation of penalty proceedings u/s 271(1)(c) is not justified.
A.Y. : 2008-09:
1. That on the facts and in the circumstances of the case, the learned CIT (Appeals) erred in not considering that the assessment order passed u/s Page 11 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 12 153A r.w.s. 143(3) of the Income Tax Act, 1961 is passed biasedly, in a hurried manner and without appreciating the fact and without considering the explanation offered by the assessee. Thus, the order passed is not a judicious order and thus deserves to be quashed.
2. That on the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the addition Rs. 1,74,000/- being unexplained investment in purchase of land on substantive basis without accepting the explanation offered by the assessee and without appreciating the fact that this land belongs to Ms. Shilpa Singh, daughter of the assessee and the assessee has no relation whatsoever for purchase of the said land.
3. That on the facts and in the circumstances of the case, the charging of interest u/s 234B of Rs. 17,609/-, 234C of Rs. 1135/- and u/s 220(2) of Rs. 10,890/- is unjustified.
4. That on the facts and in the circumstances of the Page 12 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 13 case, the initiation of penalty proceedings u/s 271(1)(c) is not justified.
A.Y. : 2009-10 :
1. That on the facts and in the circumstances of the case, the learned CIT (Appeals) erred in not considering that the assessment order passed u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 is passed biasedly, in a hurried manner and without appreciating the fact and without considering the explanation offered by the assessee. Thus, the order passed is not a judicious order and thus deserves to be quashed.
2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in rejecting the additional grounds of appeal regarding the objection of the assessee challenging the issue of notice u/s 153A for the reason that the notice u/s 153A can be issued for filing return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to previous Page 13 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 14 year in which search was conducted or requisition is made.
In this case being search was conducted on 30.05.2008, the notice u/s 153A can be issued for assessment year 2003-04 to 2008-09. Thus, the notice u/s 153A issued for assessment year 2009-10 is wrong and the assessment order framed u/s 153A is prima facie void ab initio.
3. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in sustaining the addition of Rs. 3320/-, ( related to Smt. Sudha Singh and reflected in her statement of affairs), Rs. 4085/- and Rs. 87,900/- aggregating to Rs. 95,305/- being unexplained expenditure on the basis of LPS3 without accepting the explanation offered by the assessee that this is the dumb document and not related with the assessee. Thus, the addition is unjust, unfair and deserves to be deleted.
4. That on the facts and in the circumstances of the case, the charging of interest u/s 234B of Rs. 5639/-, Page 14 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 15 234C of Rs. 1332/- and u/s 220(2) of Rs. 5285/- is unjustified.
5. That on the facts and in the circumstances of the case, the initiation of penalty proceedings u/s 271(1)(c) is not justified.
SMT. SUDHA SINGH :
A. Y. 2006-07:
1. That on the facts and in the circumstances of the case, the learned CIT (A) erred in confirming the action of the AO that the notice issued U/S 153C and the assessment completed u/s 153C rws 153A is invalid and bad in law because there was no proper basis for issuing the notice u/s 153C.
2. That on the facts and in the circumstances of the case, the learned CIT(A) erred in not considering the income from craft and painting work shown by the assessee in the regular return filed and disregarding the statement of affairs attached with the returns which is prepared on the basis of income and bank Page 15 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 16 statement comprising all the investment made by the assessee during the year.
3. That on the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the addition of Rs. 34,035/- being unexplained investment in the purchase of shares, without considering the explanation offered by the assessee and without considering the fact that the same was reflected in the statement of affairs filed by the assessee, which was prepared on the basis of income earned during the year.
4. That on the facts and in the circumstances of the case, initiation of penalty proceedings u/s 271(1)(c) is unjustified.
A.Y. 2009-10
1. That on the facts and in the circumstances of the case, the learned CIT (A) erred in holding that the notice u/ s 153C was correctly issued without considering the facts of the case and without Page 16 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 17 considering that as provided u/s 153C, notice can be issued for filling the return of income in respect of each assessment year falling within six assessment year immediately preceding the assessment year relevant to the previous year in which such search conducted or requisition is made. In this case being the search was conducted on 30.05.2008, the notice u/ s 153C should be issued for A Y 2003-04 to 2008- 09 thus, the notice u/ s 153C for A Y 2009-10 is wrong and the assessment order framed u/ s 153 C is prima-facie void ab intio.
2. That on the facts and in the circumstances of the case, the learned CIT (A) erred in holding that the income from Craft and Painting work, though shown in the return and accepted also but being the return was filed subsequent to search, cannot justified explaining the unaccounted assets or expenditure.
Page 17 of 73
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3. That on the facts and in the circumstances of the case, the learned CIT (A) erred in issuing the notice for enhancement of the income and thereafter adding Rs.2,57,760/- being cash found at the time of search without accepting the explanation offered by the assessee and without accepting the facts that the accumulated cash was generated out of the income earned during this year and in earlier years and was duly reflected in the statement of affairs filed along with the return for this year as well as for earlier years. Thus, the addition is unjust, unfair and bad in law and thus deserves to be deleted.
4. That on the facts and in the circumstances of the case, the charging of interest u/s 234B o Rs. 12,682/- and u/s 220(2) of Rs. 2,556/- after appeal effect is unjustified.
3. Rival contentions have been heard and records perused. The brief facts of the case are that the assessee Shri Biswa Mitra Singh is an individual derives income from salary Page 18 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 19 as G.M., MPLUN. In this case, action u/s 132 of Income-tax Act, 1961, was carried out at residential premises of the assessee at 87, Chanakyapuri, Chunabhatti, Kolar Road, Bhopal, on 31.05.2008. In view of search case, the case was centralized with DCIT-1(1), Bhopal and notice u/s 153A dated 16.07.2010 were issued to the assessee to file the returns for assessment year 2003-04 to 2008-09. The assessee filed returns as per detail as under :-
A.Ys. Income from Income Income Deduction Agricultural Exempt Total Date of filing salary from from other under income income income of return house sources Chapter VI-A u/s 10 property 2008-09 497156 -1430 137233 100000 10000 9000 532960 5.3.2010 2007-08 438930 -13831 78581 100000 10000 2857 403680 5.3.2010 2006-07 403461 -11080 39731 100000 10000 1632 354272 5.3.2010 2005-06 356297 -26973 70911 100000 10000 3384 378758 5.3.2010 2004-05 305775 -31110 38856 100000 10000 3066 292040 5.3.2010 2003-04 233684 -10145 38856 100000 10000 1625 238317 5.3.2010
4. As regards assessment year 2009-10, the assessee has filed his return on 10.07.2009 u/s 139 of Income-tax Act, 1961, and it was stated that the return already filed may be treated as the return filed u/s 139. Subsequently, notices u/s 143(2) of Income-tax Act, 1961, as also 142(1) were also issued alongwith detail questionnaire and assessments wren Page 19 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 20 completed on 31.12.2010 and income was assessed as under
:-
A.Y. Assessed income
2003-04 553870
2004-05 607920
2005-06 577470
2006-07 616560
2007-08 519880
2008-09 1266840
2009-10 1349870
5. In the different assessment years, common grounds are taken by the assessee, therefore, all these appeals were heard together and are now decided by this consolidated order.
6. In the assessment order passed u/s 153 A r.w.s. 143(3) there were various addition out of which the CIT(Appeals) give part relief and in some of the grounds relief was not given.
Besides others additions in different years there was a common and major addition for unexplained expenditure in the construction of house. The assessee has constructed his residential house at 87, Chankyapuri, Chuna Bhatti, Kolar Road, Bhopal. The construction was started in the assessment year 2003-04 and was completed in the year 2005-06. The total amount of Rs. 6,92,135/- was invested in the Page 20 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 21 construction of house. The Assessing Officer referred the case to the Valuation Officer and the valuation officer has submitted his report which was supplied to the assessee on 30.12.2010 though the assessment was getting time barred on 31.12.2010 itself. As per the valuation officer, the valuation was made at Rs. 11,99,500/- and the difference of the valuation of Rs. 5,07,365/- was added in different years as under:
A.Y. Addition Relief by Balance
CIT Addition
(Appeals)
2003-04 215548 76461 139087
2004-05 225882 80107 145775
2005-06 65935 23357 42578
507365 179925 327440
7. The Assessing Officer has also made addition on account of unexplained expenditure relating to education of daughter Ms.Shilpa Singh amounting to Rs. 50,000/-.
8. On legal issue, it was argued by the ld. Authorized Representative that with respect to both the additions i.e. investment in construction of house and education of daughter, no incriminating material was found, therefore, no Page 21 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 22 assessment was required to be framed u/s 153A. As per ld. Authorized Representative, in case, there was a search conducted in case of the assessee the AO shall assess or reassess the total income of six assessment years immediately preceding assessment year relevant to the previous year in which the search was conducted. The section also provided that assessment or reassessment relating to the said six assessment years pending on the date of initiation of search would abate". In the present case the original return of income was filed on 19th September, 2003. and no notice u/s 143(2) had been issued. Therefore , assessment had become final and was not pending and therefore, there was no question of abatement. In such a case, no addition could be made unless there was some incriminating material found during the course of search. Since no incriminating material was found during the course of search, no addition could be made legally u/s 153A of the Act in cases where assessment was not pending as held in the case of Jai Steel (India) Vs. ACIT (2013) 259 CTR (Raj.) 281. In the instant case the Hon'ble Rajasthan High Court held as under:- Page 22 of 73
I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 23 Page 291 para 25 " In the firm opinion of this court from a plan reading of the I provision along with the purpose and purport of the said provision. Which is intricately linked with search and requisition U/S 132 and 132A of the ACT, it is apparent that:-
(a) The assessments or reassessment which stand abated in terms of second proviso to section153A of the Act, the AD acts under his original jurisdiction, for which, assessment have to be made;
(b) regarding other cases, the addition to the income has already been assessed, the assessment will be made on the basis of incriminating material and\
(c) In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made; "
Page 294 para 29 & 30 The argument of the Ld.Counsel that the A.O. is also free to disturb, income, expenditure or deduction de hors, the incriminating material, while making assessment u/s 153A of the Act is also not borne out from the scheme of the said provision which as noticed Page 23 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 24 above is essentially in context of search and / or requisition.
The provisions of SS153A to 153C cannot be interpreted to be a further innings for the AD and/ or assessee beyond provisions of section 139 (return of income) , 139(5) (revised return of income) ,. 147 (income escaping assessment) and 263 (revision of orders) of the Act., The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word " assess' have been used in the context of abated proceedings and 'reassess' has been used for completed assessment proceedings. which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessary support the interpretation that for the complicated assessment the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. Page 24 of 73
I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 25 i. CIT V/s Anil Kumar Bhatia (2012) 211 Taxman 453(Delhi) ii. CIT V/s Jayaben Ratilal Sorathia Tax Appeal No. 914 of 2012 order dated 02.07.2013 (Guj.) iii. CIT Vis M/s Carpet Palace Income Tax Appeal Defective No. 67 of 2013 , order dated 09.07.2013 (All.).
iv. Jai Steel (India) Vs. CIT (2013) 259 CTR (Raj.) 281, All cargo Global Logistics Ltd. Vs. DCIT (2012) 137 ITD 287 (Mum) Special Bench, v. MGF Automobiles Ltd VS. ACIT Cent Circle-7, New Delhi ITA Nos.4212 & 4213 IDEL/2011 order dated 28.06.2013 vi. K.P.Ummer Prop. Star Re-Rolling Mill Vs. DC IT, CC, Trichure, vii. Arun Sehlot ,Bhopal Vs. ACIT , 3(1), Bhopal IT(SS) viii. A.Nos. 186 to 192/Ind/2012 order dated 30th April, 2013.
ix. Gurinder Singh Bawa DC IT , ITA Nos. 2075 & 2669 Page 25 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 26 (MUM.) of 20 10 order dated 16.11.2012.
x. ACIT(CC)-45, Mumbai Vs. M/s Pratibha Industries Ltd, Mumbai ITA Nos. 2197 to 2199/Mum/2008 order dated 19.12.2012.
xi. Shree Yamuna Proteins, Dahod Vs. ACIT, CC-l, Baroda IT(SS) A Nos.227 to 232/Ahd/201O order dated 18.10.2012.
xii. ACIT Vs. Saif Yeast Co. Pvt Ltd.,ITA No. 4230/Ind/2011 order dated 18.10.2012, xiii. ACIT Central Circle XXVII, Kolkata VS. Hindustan Storage & Distribution Co., Ltd., IT(SS) A. No.135/KoI./2011 order dated 04.08.2012. xiv. Shankar R.Jhunjhunwala ,Aurangabad Vs. ACIT Cen, Circle,Aurangabad ITA No. 225/PN/11 order dated 31st July, 2012.
xv. Hiren N Patel, Mumbai Vs. ACIT , CC-lO,Mumbai , ITA No. 39 to 41/Mum/2010 order dated 12.10.2012.
xvi. Atithi N. Patel, Mumbai Vs. ACIT, Cen. Circle -10, Mumbai ITA No. 43/Mum/2010 order dated Page 26 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 27 22nd August, 2012 xvii. Bhagaram P.Mali Vis ACIT (OSD 1) Central Range-7, Mumbai, ITA Nos. 786 & 787 /Mum/2013.
xviii. Ganesh Grains Ltd Vs. DCIT Central Circle-V, Kolkata,ITA No. 176/Ko1/2012 order dated 19.04.2013 xix.DCIT ,Central Circele-3,Hyderabad V/s Kishore Sons Detergents Pvt Ltd.ITA No. 18171 to 1820/12 order dated 27/09/2013 xx.Kusum Gupta Vis DCIT ,Central Circle -15, New Delhi ITA Nos. 4873/Del/2009 order dated 28.03.2013. xxii.ACIT Central Circle-4, New Delhi Vis PACL India Ltd., ITA No/2637/DEL/2010 order dated d 12/07/2013. xxii.M/s Tarannum Zaar Khan Vis ACIT, CC-43 , Mumbai ITA Nos. 5888 to 5890/Mum/2009 order dated 12.07.2013. xxiii. ACIT Central Cricle, Agra V/s Vacmet Packaging (India) Pvt Ltd ITA No. 405 & 406/Agra/2012 order dated 14.12.2012 xxiv. Vee Gee Industrial Enterprises New Delhi Vis ACIT ,Central Circle-l,Faridabad ITA No. 1/De1/2011 Page 27 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 28 order dated 12/07/2013
9. It was vehemently argued by the ld. Authorized Representative that as per judicial pronouncement laid down by Hon'ble Rajasthan High Court, Delhi High Court, Gujarat and Allahabad High Courts and also I.T.A.T. Special Bench in the case of Allcargo Global Logistic Limited, no addition was warranted u/s 153A, when undisputedly no incriminating material was found during course of search.
10. The ld. Authorized Representative also placed reliance on the decision of Jurisdictional High Court in the case of Vrijlal Manilal & Company, 127 ITR 512, in which the Hon'ble Court held as under :-
Page 4 para 5
5. The further question, however, is whether we can, in the reference before us, differ from the view taken by the Madras High Court especially when in the meantime two other High Courts, namely, Andhra Pradesh and Calcutta, have dissented from the view taken in Sali Maricar's case (supra) [See Kashiram vs. ITO Page 28 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 29 (1977) 107ITR 825 (AP) : TC 9R.667 and Gunny Exporters Pvt. Ltd. vs. ITO (1976) TLR 603 (Cal)).
This question was not argued and examined by the Bombay High Court in Godavaridevi's case (supra). The decision of the Madras High Court which was the only relevant decision at the time when the Tribunal decided the appeal was binding on the Tribunal but that decision is not binding on us. The question referred to us is whether the Tribunal was "right in law" in cancelling the penalty. The relevant law which the Tribunal ought to have applied has remained unchanged, for the rulings of the different High Courts dealing with the validity and effectiveness of s. 140A(3) are merely expositions of that law. As we are required to decide whether, in law, the Tribunal was right in deciding as it did, we have necessarily to examine whether the ruling of the Madras High Court, which was followed by the Tribunal, Page 29 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 30 correctly laid down the law. The learned counsel for the assessee submitted that as the Madras ruling was the only ruling available at the time when the Tribunal decided the appeal and as the Tribunal was bound to follow that ruling, the Tribunal was right in cancelling the penalty and we cannot examine the question whether that ruling correctly laid down the law. We are unable to agree with this argument. As already explained by us, we have to decide whether the Tribunal was right in law in cancelling the penalty. The relevant law has remained unchanged. The Madras ruling is merely an exposition of that law and as that ruling is not binding on us, we can ourselves see as to what is the correct legal position. The High Court, in dealing with a reference, is not pinned down to the rulings available or the interpretation in vogue at the Page 30 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 31 time when the Tribunal decided the case and it is the High Court's duty to answer the point of law referred after taking into account all relevant material up-to-date. It is true that the question relating to the constitutional validity of a provision of the Act cannot ordinarily be examined in a reference but the position is different when, as in the instant case, the constitutional validity has already been examined by three High Courts under Art. 226 and one of them has declared the provision to be invalid. In the circumstances of the instant case, it is not possible to decide the reference without going into the question of the constitutional validity."
11. The ld. Authorized Representative also invited our attention to the assessment order itself to show that no incriminating material was referred by the Assessing Officer as Page 31 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 32 fond during course of search on the issue of construction of house for educational expenses of daughter.
12. In respect of addition on account of investment in construction of house, we found that vide order dated 29.12.2010, the AVO has determined the cost at Rs. 11,99,500/-. The assessee had shown investment during construction period at Rs. 6,92,155/-. Thus, an addition of Rs. 5,07,365/- ( Rs. 11,99,500/- - Rs. 6,92,135/- was made by the Assessing Officer . By the impugned order, the ld. CIT(A) allowed relief of 15% for the difference in C.P.W.D. rate and local P.W.D. rate, which amounted to Rs. 1,79,925/-, thus, the addition of Rs. 3,27,440/- was confirmed by the ld.CIT(A) for which the assessee is in further appeal before us. After going through the material placed on record, we found that the Lower authorities have not allowed credit for payment of Rs. 2,12,531/- made to the six parties for which affidavits were filed. We also found that reminder letters for payment were also placed on record. As per the affidavits the actual payment was made by account payee cheques and the respective parties have acknowledged rendering of Page 32 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 33 services/materials for the house and also accepted receipt of payment through cheques. Keeping in view documentary evidence placed on record and totality of facts and circumstances of the case, we direct the Assessing Officer to give credit for Rs. 2,12,531/- incurred by the assessee and actually paid through account payee cheques. After giving credit for payment of Rs. 2,12,531/- there remains an addition of Rs. 1,14,909/-. We found that for the rate difference between CPWD rates and local PWD rates, the ld. CIT(A) has allowed relief of 15 % only. The decisions of various Courts as cited by ld. Authorized Representative indicate that for such rate difference, deduction is to be allowed between 30 to 40%. In the case of Abdul Rahim, 258 ITR 714, Madras High Court held that deduction of 25 % for difference in CPWD rates and local PWD rates, 15 % for self supervision and element of profit of contractor and 11 % for cost of services provided in the building is reasonable. I.T.A.T., Indore Bench in the case of Shri Jag Mohan Jaiswal, 10 ITJ 187, held as under :-
"The ld. CIT(A) has granted further deduction of 30% on account of difference in CPWD rates and local Page 33 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 34 rates, self-supervision and for material directly purchased by the assessee. Considering the totality of the facts and circumstances noted above, it would be reasonable and appropriate that instead of deduction of 30% granted by the ld. CIT(A) the deduction to the assessee should be granted at 40% in all."
13. Similarly, in the case of Rajeev Mewara vs. ITO, I.T.A.T., Indore Bench vide its order dated 27th March, 2009, in I.T.A.No. 234/Ind/2007 held that the rate difference between the CPWD and local PWD, deduction of 30% should be allowed and apart from on account of contractors' profit, use of own infrastructure, further deduction of 20 % is to be allowed.
14. In view of the above judicial pronouncements and applying the same to the facts and circumstances of present case, it will be quite reasonable to allow deduction of 25 % on account of rate difference between CPWD and local PWD/ self supervision/ direct procurement of material at a cheaper rate. After allowing deduction of 25 %, no addition will survive. Accordingly, we direct the Assessing Officer to delete the Page 34 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 35 addition made on account of cost of construction of the house, in different assessment years under consideration.
15. We found that an addition of Rs. 50,000/- was also made by the Assessing Officer on account of education expenses of daughter Ms. Shilpa Singh. From the record, we found that during the assessment year in question the assessee's Daughter Ms.Shilpa Singh was studying in Birla Institute of Technology, Ranchi (Jharkhand) where the parents of the assessee, namely, Shri Ramgovind Singh and Smt. Rajkishori Devi, were residing. It was submitted before the Ld.A.O. that the education expenses of Daughter were borne by the assessee's father. In support of this contention an affidavit of assessee's father also filed. The Ld.A.O. rejected the affidavit by stating that the same is illegible and filed on 29.12.2010 when case is going to be barred by limitation and made the addition of Rs. 50,000/-.The Ld.CIT(A) confirmed the addition on the ground that in the statement recorded during the course of search the assessee and his wife admitted that the educational expenses of Daughter is borne by them , but during the course of assessment proceeding a new plea was Page 35 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 36 put up that same was borne by father of assessee Shri Ram Govind Singh.
16. Argument of ld. Authorized Representative was that the statement given during the course of search was under
mental tension, exertion and coercion by ignoring the fact that till XIIth Standard, the assessee borne her educational expenses and thereafter her grand father Shri Ram Govind Singh, who is residing at Ranchi, where Ms. Shilpa Singh was studying, had borne the expenses. It was also claimed that father of the assessee was having sufficient means to meet out her educational expenses. Evidence regarding source of income of Shri Ram Govind Singh having income from pension, agricultural income and rental income was also furnished.
17. There is no denial of the Indian culture in hindu family that where grand children are residing with their grand portents, the living expenditure and educational expenditure are normally borne by grand parents. In the instant case before us, an affidavit of father Shri Ram Govind Singh was also filed during course of assessment proceedings itself, but Page 36 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 37 the Assessing Officer did not accept the same by stating that the same is filed only on 29.12.2010 and it was not possible for him to verify contents of the affidavit. In this regard, the fact regarding educational expenses was first time, asked by the Assessing Officer only on 7.12.2010, and at the same time, it was clarified that same was borne by his father Shri Ram Govind Singh and when the Assessing Officer asked to file the supporting evidence, the assessee has duly filed affidavit of his father, who at the relevant time was aged 74 years. The affidavit filed was duly sworn in the presence of witness and nothing was brought on record by the ld. Assessing Officer to disbelieve the affirmation made in the affidavit.
18. After considering the material and documentary evidence as placed on record, we are of the opinion that expenses on education of daughter was borne by her grand father with whom she was living. When an affidavit is filed by the assessee and it neither cross examined on that point nor he was called upon by the Department to produce any documentary evidence, assessee may assume that income tax authorities are satisfied with the affidavits, a sufficient proof Page 37 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 38 on the point in question, as held in L. Sohanlal Gupta, 33 ITR 786 (Alld). The same proposition is followed by the Jurisdictional High Court in the case of CIT Vs. STI Extrusion (P) Ltd (2011) 333 ITR 269 and held as under:-
" Having considered the contention of the appellant we find that the Tribunal has taken note of judgment of this Court in the case of CIT vs. Rathi Finlease Ltd. (2008) 215 CTR (MP) 429 : (2008) 2 DTR (MP) 31 as also the various judgments of the Supreme Court as well as Delhi High Court and has held that though it is the duty of the assessee to establish the genuineness of the credits but in the present case the assessee has duly established the identity and source of credits. The Tribunal has also held that once the identity and source of the subscribers of the shares are established no addition can be made under s. 68 of the IT Act. The assessee having duly furnished the names, age, address, date of filing the application of shares, Page 38 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 39 number of shares of each subscriber there was no justification for the AD for making the impugned addition because once the existence of the investors/share subscribers is proved, onus shifts on the Revenue to establish that either the share applicants are bogus or the impugned money belongs to the assessee itself We also find that after filing of the affidavits of the said subscriber the appellant at no stage of the proceedings sought any opportunity to rebut the said affidavits. "
19. In the instant case before us, considering the hindu culture, when the grand parents are well to do and their grand children were residing with them, they themselves bear the living and educational expenditure of grand children. The grand parents were residing at Ranchi where the daughter of assessee was studying, naturally her expenditure will be borne by the grand father for which affidavit was also filed by grand father Shri Ram Govind Singh. Considering the totality of facts and circumstances of the case vis-à-vis statement recorded u/s 132(4), which even though a good evidence, but its Page 39 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 40 reliability depends on the facts of the case and surrounding circumstances as held by the Jharkhand High Court in the case of Shri Ganesh Trading Company vs. CIT, 257 ITR 159, wherein it was held as under :-
"page 162 para 6 Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the assessee. The statement on oath of the assessee is a piece of evidence as per section 132(4) of the Income Tax Act and when there is incriminating admission against himself, then it is required to be examined with due care and caution. In the judgment of Kailashben Manharlal Chokshi (supra), the Division Bench of Gujarat High Court has considered the issue in the facts of that case and found the explanation given by the assessee to be more convincing and that was not considered by the authorities below. Here in this case also, no specific reason has been given for rejection of the assessee's contention by which the assessee has retracted from his Page 40 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 41 admission. None of the authorities gave any reason as to why Assessing Officer did not proceed further to enquire into the undisclosed income as admitted by the assessee in his statement under section 132(4) infact situation where during the course of search, there was no recovery of assets or cash by the Department. This fact also has not been taken care of and considered by any of the authorities that in a case where there was search operation, no assets or cash was recovered from the assessee, in that situation what had prompted the assessee to make declaration of undisclosed income of Rs.20 lacs. Mere reading of statement of assessee is not the assessment of evidentiary value of the evidence when such statement is self- incriminating. Therefore, we are of the considered opinion that in the present case, a wrong inference had been drawn by the authorities below in holding that there was undisclosed income to the tune of Rs.20 lacs. "
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20. In view of the above discussion, we do not find any merit for the addition of Rs. 50000/- made on account of educational expenses of Ms. Shilpa Singh. Accordingly, we direct to delete the same.
21. In the assessment year 2004-05, an addition of Rs. 1,39,087/- was sustained by the CIT(A) on account of construction of house. We found that out of total investment of Rs. 9,04,666/- and the construction of house, a sum of Rs. 6,92,135/- was paid during the construction period i.e. financial year 2002-03 to financial year 2004-05 and out of the balance, an amount of Rs. 2,12,531/-, Rs. 17,515/- was paid on 10.12.2007 and balance amount was paid by account payee cheque in the month of November and December, 2010.
22. The details of amount paid along with necessary evidence filed before the ld. Assessing Officer are as under :-
Name of the Party Amount Date of Cheque Evidence Payment No. Filed Mr.Rajesh Jaetpuriya,Bhopal 75147.75 26/11/2010 872014 Affidavit M/s. Furniture & 31000/- 30/11/2010 041284 Affidavit Furniture,Bhopal Page 42 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 43 M/s V.L.Enterprises,Bhopal 48,875/- 20/12/2010 041286 Affidavit M/s Amar Jeet Singh 35,494/- 30/11/2010 041285 Affidavit Sethi.Bhopal M/s Valliant Fixture and 17,515/- 10/12/2007 137820 Confirmation Chemicals (India), Indore & Receipt M/s Siddharth Associates 4,500/- 20/12/2010 137830 Affidavit
23. From the record, we found that the assessee has started residing in house financial year 2002-03 and house was shown as self occupied property from assessment year 2003-04. Both the lower authorities have not accepted the payment of Rs. 2,12,531/- paid in November and December, 2010. We found that not only during the course of assessment proceedings itself but also before the DVO, the assessee has disclosed the said fact and provided the details. Before the CIT(A), the assessee has also filed affidavit of five creditors. However, no weightage was given to the affidavit. Page 43 of 73
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24. The issue has been discussed in detail in paras 8 & 9. Considering the reasoning given therein, we have directed to give deduction of 25% on account of rate difference/self supervision etc. After considering deduction of 25 %, no addition will survive. Accordingly, we direct the Assessing Officer to delete the addition so made.
25. In the assessment year 2005-06, an addition of Rs. 8320/- was made on account of unexplained expenditure on the basis of LPS-3. In this regard, we found that during the course of search certain loose papers were found and seized from the premises of the assessee, on the basis of LPS-3 which is related to purchase of Sarees by wife of assessee Smt. Sudha Singh from Agarwal Sarees addition of Rs. 8,320/- were made and confirmed by ld. CIT(A). It was explained before the ld. Assessing Officer that assessee's wife is a regular income tax payer and before search. She has filed the return of income for the assessment year 2006-07 and 2007-08 on 4.12.2006 and 23.07.2007 respectively by showing the income from craft and painting and the returns for the assessment year 2003-04 to 2005-06 was not filed before the search due to the reason Page 44 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 45 that her income was below taxable limit. The ld. Assessing Officer has not accepted the contention of the assessee by stating that after the assessment year 1996-97 no return of income was filed before the search, thus, same could not accepted. However, the ld. CIT accepted that the return for the assessment year 2006-07 and 2007-08 showing income from craft and painting were filed before the search after verifying the acknowledgement for filing of returns of these years. However, he allowed credit for income from craft and painting work in cash only in respect of income shown in the return filed prior to search and specific withdrawal made from the Bank a/c.
26. From the record, we found that statement of Smt. Sudha Singh was also recorded during course of search, wherein she stated that she is having income from painting work. At page 34 & 35 of the statement so taken, if clearly indicates that Smt. Sudha Singh was having income from painting and craft work. Even the search party did not doubt the assessee's source of income from craft and painting. In view of these statements recorded during course of search, Page 45 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 46 there is no reason to doubt the same. Thus, the Assessing Officer and CIT(A) was not right in doubting wife's income from craft and painting. With regard to the contention of the ld. Assessing Officer and ld. CIT(A) that the credit for the income from craft work and painting will be allowed only if the return of income is filed before the search, we found that Smt. Sudha Singh has not filed here return for the assessment year 2003- 04 to 2005-06 prior to the search for the simple reason that here income was below taxable limit and as per the decision of Jurisdicitonal high Court in the case of CIT vs. Vimla Khatri, 288 ITR 168 and CIT vs. Smt. Maya Chotrani, 288 ITR 175, it was held that the total income of those assessment years in which the return was not filed before the search as same was below the taxable limit. The income of that year shall not be treated as undisclosed income. Reliance is also placed on the latest decision of Punjab and Haryana High Court in the case of CIT vs. V.P. Singh, (2013) 357 ITR 681.
27. We have considered rival contentions. Since LPS-3 represent purchase of saree, addition if any is required to be considered in the hands of Smt. Sudha Singh and not in the Page 46 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 47 hands of assessee. Accordingly, we direct the Assessing Officer to consider the same in the case of Sudha Singh. We direct accordingly.
28. In respect of assessment year 2008-09, return was due on 31st March, 2009, whereas search was carried out in the assessee's premises on 30.5.2008. Thus, question for filing the return for the assessment year 2008-09 before the date of search does not arise.
29. In view of the above facts that the return of income of Smt. Sudha Singh for the assessment years 2003-04 to 2005- 06 was below taxable limit, hence she had not filed her return of income prior to search. Thus the credit for cash available in the statement of affairs in respect of the income from Craft and Painting work for these years are liable to be allowed.
30. An addition of Rs. 34,456/- was also made on the basis of LPS-3, details of which were as under :-
Page No. Name of Particular Date Amount Related to the concern 04 Rough Gold 02/05/2004 26,500/- No Name Paper 66 Sarees Sarees 09/05/2004 4,300/- Uma Shankar Pateria 12 Sneh Gold 09/05/2004 3,656/- Uma Kumar Shankar Page 47 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 48 Kanhaiyalal Pateria Total Rs. 34,456/-
31. In this regard, it was contended that LPS-3 was an estimate which will be clear from the said loose paper itself. On the said loose paper neither the name of purchaser or seller is given. Moreover on these loose paper no where it is mentioned that it is related to purchase of Gold Article. The fact that it is not related to Gold Article also prove from the fact that in the financial year 2004-05. The rate of gold was Rs. 606/- to Rs. 618/- which can be verified from the rate given in the V.J. Mehta Ready Reckoner. The calculation given on the said loose paper is also not correct which will be clear from the fact that if we multiply 43.100 x 560 the same works out to Rs. 24,136/- instead of Rs. 26,500/- on the said loose paper no where it is mentioned that Rs. 24,500/- is paid and Rs. 2,000/- is outstanding as presumed by the ld. Assessing Officer and ld. CIT(A). Thus, it is nothing but a dump document and the addition is made only on the basis of assumption and presumption.
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32. It was contention of ld. Authorized Representative that on LPS-3, no name is given but same is owned by Shri Uma Shankar Pateria for which he has filed an affidavit dated 24.7.2010 before the ld. Assessing Officer ( refer page 51 of compilation for assessment year 2009-10) and his statement was also recorded by the ld. Assessing Officer on 6.12.2010 which is on page 35 & 36 of the compilation for the assessment year 2005-06.
33. It was further submitted that these loose papers were owned by Uma Shankar Pateria and his affidavit is not rebutted by the ld. Assessing Officer even after recording the statement which is evident from its statement itself. Reliance was placed on the decision of I.T.A.T., Amritsar Bench in the case of Hanuman Poddar, 98 TTJ 705, wherein it was held that if addition on the basis of jottings and loose papers found during course of survey operation, when the name of any assessee did not appear on these papers and there is no material or evidence on record to corroborate that these entries represent undisclosed income, investment or expenditure of assessee, no addition is warranted. Reliance Page 49 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 50 was also placed on the judgment of Jodhpur Bench of I.T.A.T. in the case of Suresh Vyas, 113 TTJ 337, wherein it was held that figures written on a plain paper without any detail or narration could not be treated as undisclosed income of the assessee.
34. In view of the reasoning given in para 27, we direct the Assessing Officer to consider the said documents in the hands of Smt. Sudha Singh and not in the hands of assessee Shri B. M. Singh. If the Assessing Officer finds that sufficient funds were available in the hands of Smt. Sudha Singh, no addition is warranted.
35. In the assessment year 2006-07, an addition of Rs. 78,895/- was upheld by the ld.CIT(A) out of addition of Rs. 1,28,407/- made by the Assessing Officer on the basis of LPS-
3.
36. It was contended by the ld. Authorized Representative that during the course of search certain loose papers were found and seized from the premises of the assessee, on the basis of LPS-3 page 13,3, 12, 10 & 11, 8 & 9, the ld. Assessing Officer has made addition of Rs. 1,28,407/- out of which the Page 50 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 51 ld. CIT(A) confirmed the addition of Rs. 78,095/- and allow the relief of Rs. 49,512/- on this ground that no specific withdrawal have been made by the assessee or his wife or daughter from the bank. It was explained before the Ld. Assessing Officer that assessee's wife is a regular Income Tax payer and before search she has filed Return of Income for the assessment year 2006-07 and 2007-08 on 04.12.2006 and 23.07.2007 respectively by showing the Income from Craft and Painting and the Returns for the Assessment Year 2003-04 to 2005-06 was not filed before the search due to the reason that her income was below Taxable Limit and similarly assessee's daughter Ku. Shilpa Singh has also not filed her return of income prior to the search as her income was also below the taxable limit. The Ld. Assessing Officer has not accepted the contention of the assessee by stating that after the assessment year 1996-97 no return of income was filed before the search, thus same could not be accepted, he also doubted the assessee's source of income from painting and assessee's daughter's source of income from Architectural work and thereby refused to accept the Income from painting of Page 51 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 52 assessee's wife and daughter from Architecture work which were received in cash and considered the said income in the Statement of Affairs.
37. It was further submitted by the ld. Authorized Representative that the Ld.CIT accepted that the return for the assessment year 2006-07 and 2007-08 showing income from craft and painting were filed before the search after verifying the acknowledgement for filing of returns of these years, but he had not accepted the income of assessee's daughter from Architectural work and he allowed credit for Income from Craft and Painting work received in cash only in respect of income shown in the return filed prior to search by his wife and specific withdrawal made from the Bank A/c similarly in the case of assessee' daughter he has not accepted the income from Architectural work received in cash by his daughter. It is submitted that the Ld. A.O. and so also Ld. CIT(A) before rejecting the claim of Smt. Sudha Singh that she is having income from Craft and painting work might have not gone with the statement of Sudha Singh recorded during the course of search on 30.05.2008. if your honour's will go through the Page 52 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 53 same you will find that Smt. Sudha Singh in her statement recorded during the search clearly stated that she is having income from painting work kindly refer to page 33 to 38 of compilation for the assessment year 2009-10.
38. We have carefully gone through the statement recorded u/s 132(4) from the questionnaire and their reply given by Smt. Sudha Singh, there is no doubt that the wife of the assessee was having income from painting and craft work, which the search party has also not doubted.
39. It was also argued by the ld. Authorized Representative that the Ld. Assessing Officer and Ld CIT (A) doubted her income from Architectural work on the ground that the statement of Bipin Bhai C. Patel and prafull H. Rawal Were recorded u/s 131 and they refused to give such type of payment to Ms. Shilpa Singh. In this regard it was submitted that subsequent to the assessment assessee referred the statement and certificate of Bipin Bhai C. Patel and Prafull H. Rawal to the Hand writing Expert Shri R. A . Upadhyay, Advocate who vide report dated 24.06.2011 confirmed that the signature made on certificate and on statements recorded were Page 53 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 54 of the same person. The report of hand writing expert is available on page no. 34 to 43 of the compilation for the assessment year 2006-07. From the said report of the Hand writing Expert it is clear that either they have denied issuance of certificate for the simple reason that they have not made the entries in their books of accounts or their statement are taken by giving a undue pressure. This fact shows that the income from Architectural work shown by Ms. Shilpa Singh in her return of income filed in response to notice u/s 153A is genuine. As to the contention of the Ld. Assessing Officer and Ld. CIT(A) that the credit for the income from Craft work and Painting in case of Smt. Sudha Singh and Architectural work in case of Ms. Sudha Singh will be allowed only if the return of income is filed before the search. In this regard it is submitted that Smt. Sudha Singh has not filed her return for the assessment year 2003-04 to 2005-06 and Ms. Shilpa Singh for any of year prior to the search for the simple reason that their income was below taxable limit and as per the decision of Jurisdictional High Court in the case of CIT Vs. Vimal Khatri 288 ITR 168 and CIT Vs. Smt. Maya Chotrani 288 ITR 175 it Page 54 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 55 was held that if income in those assessment years in which the return was not filed before the search below the Taxable limit. The income of that year shall not be treated as undisclosed income. Reliance is also placed on the latest decision of Punjab and Haryana High Court in the case of CIT Vs. V.P.Singh (2013) 357 ITR 681.
40. In view of the above discussion, since the return of Smt.Sudha Singh for the assessment years 2003-04 to 2005- 06 was below taxable, hence, they had not filed their return of income prior to search. However, credit for the funds available in the statement of affairs in respect of income earned from craft and painting work of Smt. Sudha Singh should be allowed. After allowing the same, the addition of Rs. 78,895/- should be considered in the hands of Smt. Sudha Singh. We direct to delete this addition in assessee's hands.
41. An addition of Rs. 25,350/- aggregating of Rs. 59,850/- was made on the basis of LPS-3 details as under:-
(Page 50 of the A.O's order) Page Name of the Particular Date Amount Related to No. Concern 13 Rough Paper Gold 11.09.2005 25,350/- No name estimation Page 55 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 56 only 16 Rough Paper Gold 11.01.2006 34,500/- No name estimate only Total Rs. 59,850/-
42. It was submitted by the ld. Authorized Representative that on these loose papers it is clearly mentioned that these are estimates only. Name of the buyer and seller is also not mentioned nor these loose papers are signed by anybody, thus these are dump documents and do not carry any weightage. If the assessee or his family member could have purchased the goods mentioned in these documents they had necessarily taken the signature of the seller because in the case of Gold Articles there is always problem regarding the purity and in the absence of name of the seller and his signature the assessee could not lunched his claim of purity, hence these documents could not be said to pertained to any real transaction. Thus, the same is dump document and do not have any evidently value.
43. On the other hand, the CIT DR relied on the observation made by the lower authorities and contended that it was a dump document, therefore, the addition was correctly made by the Assessing Officer.
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44. In the assessment year 2007-08, an addition of Rs. 57,500/- was made on the basis of LPS-3. The said loose paper is related to purchase of 23 carat 91.6 Kada Pair, the weight is mentioned as 52.380 grams and rate is not mentioned. The total value is mentioned as Rs. 57,880/- and below that it is mentioned that Rs. 57,500/-. After going through minutely we found that the said item was related to family i.e. assessee's wife Smt. Sudha Singh and daughter Ms. Shilpa Singh, who were also assessed u/s 143(3)/153C so if any addition is warranted, the same is required to be considered in the hands of these ladies. We direct accordingly.
45. In the assessment year 2008-09, an addition of Rs. 1,74,000/- was made on account of unexplained investment in purchase of land by assessee's daughter Ms. Shilpa Singh. In this regard it was submitted by Ld. AR that the assessee's daughter Ms. Shilpa Singh purchased Agricultural Land measuring .094 hectares at Gram Kaushalpura for Rs. 1,50,000/- from Shri Saiyed Iftekhar Ali resident of Idgah Hills, Tehsil Hujur, Bhopal on 15.05.2007. Page 57 of 73
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46. It was further submitted that assessee's daughter Ms. Shilpa Singh is regular Income Tax payer and filed her return of income for the assessment year 2008-09 on 16.07.2008 i.e. within statutory time limit and the purchases of said land along with registration expenses is duly appearing in her return of income kindly refer to page 34 to 37. The payment is also made by Ms. Shilpa Singh by her Bank Account. And her assessment was also completed u/s 143(3)/153C of the I.T.Act,
47. Further contention of ld. Authorized Representative was as under :-
"The assessee has also informed to his employer that his daughter Ms.Shilpa Singh who is a qualified Architect is purchasing Agricultural Land at Village Kaushalpura which is about 20 kms away from Bhopal for a considering of Rs. 1,50,000/- . the amount is paid by her through cheque from her Saving Bank Account and the payment for purchase of Agricultural Land is also made by assessee's daughter Ms.Shilpa Singh by cheque No. 180868 Page 58 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 59 dated 07.05.2007 from her saving bank account held with State Bank of Indore T.T.Nagar Branch, Bhopal. The whole ambiguity arises with the fact that in the original registered sale deed the consideration is mentioned at Rs. 1,50,000/- and there is no cutting in the said document while in the certified copy of the document collected by the department from office of Sub Registrar there is a cutting and overwriting and the figure of consideration and thereby it is made at Rs. 3,24,000/- by overwriting and the same is certified by the seller.
It is submitted that if there is any overwriting or cutting in the Sale Deed at the time of registration, in that case the registering Authority i.e. Sub Registrar certified the same and mentioned that there is a cutting and over writing in the document while in the original document as well as in the copy of conveyance deed there is no such certification which is evident from the statement of Sub Registrar recorded in Departmental Inquiry Committee. The copy of said Page 59 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 60 statement is available on page 61 and 62 of the compilation.
It is also submitted that the Circle rate of Agricultural Land purchased by the assessee's daughter Ms. Shilpa Singh at the relevant time was Rs. 1,44,800/- which is evident from the letter dated 20.08.2009 returned by the District Registrar to the assessee's daughter and available on page 63 of the compilation. Moreover, during the course of assessment proceeding the assessee filed affidavit of the witnesses of the sale deed namely Noman Ali and Tahabbur Mohammad Khan inter alia stating that the agreement of sale between Ms.Shilpa Singh and Saiyed Iftekhar Ali was held in presence of them for the consideration of Rs. 1,50,000/-. Moreover, these witnesses were examined by the Ld. A.O. on oath and they have clearly stated that in front of them only cheque of Rs. 1,50,000/- was given by the buyer to the seller . The copy of affidavit of these witnesses are available on page 47 and 48 of the compilation and the copy of their Page 60 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 61 statement is paste by the Ld.A.O. on page 45 to 48 of the Assessment Order.
The Ld.A.O. has neither examined to the registering Authority nor to the seller to bring the truth in this regard otherwise the fact regarding that the consideration of only Rs. 1,50,000/- is paid will be clear to the Ld. A.O. during the course of assessment proceedings itself. But as the Ld. A.O. was bank upon to make high peach assessment with the object to create a substantial demand against the assessee he had not examined them."
48. The ld. CIT DR relied on the orders of lower authorities and contended that unexplained investment in purchase of land was found during course of search, therefore, addition of Rs. 1,74,000/- was correctly made by the Assessing Officer, which was confirmed by the ld.CIT(A).
49. We have considered the rival contentions and have gone through the statement recorded during the course of search. We found that from the statement of Sub Registrar and so also witnesses and the affidavit of witnesses it is Page 61 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 62 clear that the assessee's daughter has purchased the Agricultural land for a consideration of Rs. 1,50,000/- which is mentioned in original sale deed supported by the letter of Sub Registrar that at the relevant time the circle rate of land in question was Rs. 1,44,800/-. Accordingly, we direct to delete the the addition so made in the hands of assessee.
50. In the assessment year 2009-10, an addition of Rs. 95,305/- was made on the basis of LPS-3, which was confirmed by the ld.CIT(A).
It was contended by the ld. Authorized Representative That during the course of search certain loose papers were found and seized from the premises of the assessee, on the basis of LPS-3 page 1, 2 & 3 the Ld.A.O. has made addition of Rs. 95,305/- and same is confirmed by the Ld.CIT(A) . The details of loose papers are as under:-
Name of the Particular Date Amount Related to Concern 1 Bahuran Saree No date 3,320/- Appearing in i statement of affairs of Smt.Sudha Singh
2. Rough Paper Gold No date 2,470/- Estimate on Rough Paper Page 62 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 63
3. Rough Paper Gold No date 88,848/ Related to some
-
Tiwari of Indore Now our page wise submission is as under:-
1. Page No. 1 is a bill of Bahurani Saree , Bhopal in respect of purchases of Saree for Rs.3,320/- by assessee's wife Smt. Sudha Singh which is out of her withdrawal of Rs. 58,279/-
duly appearing in her statement of affairs which is available on compilation page 42.
2. Page No.2 this is a rough paper which do not contain name of any buyer or seller no it is signed by anyone moreover the name of item is also not mentioned, but the Ld. A.O. presumed that it is related to purchase of some gold articles. However on going through the ready reckoner it is found that at the relevant time the rate of gold in financial year 2008-09 varied between Rs. 12,125/- to Rs. 15,105/- and in the paper four items were mentioned, thus with any stretch of imagination it could not be said that it is related to purchase of gold ornaments . Therefore the same is a dump document.
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51. Loose paper no. 3 relates to purchase of some gold ornaments the total value is worked out at Rs. 88,848/- and after deducting discount of Rs. 948/the net amount is mentioned at Rs. 87,900/-. On the foot of the loose paper name of Shri Tiwari of Indore is mentioned . However, the Department has inventorized all gold ornaments belonged to assessee and his family members whether lying at resident or in locker and no such item was found which is evident from the valuation report of approved registered valuer available on page no. 26 to 30 of compilation for the assessment year 2007-
08. In the interest of justice, we direct the Assessing Officer to consider afresh addition of jewellery in the hands of Sudha Singh who is separately assessed, keeping in view above discussion.
52. Reliance was placed by the ld. Authorized Representative on the following judicial pronouncements :-
(a) ITO Vs Hanuman Poddar & Ors (2005) 98 TTJ (Asr) 705, In the instant case it was held that addition jottings on loose paper found during survey operation-entries Page 64 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 65 found on loose papers recovered from the premises of the assessee, when the name of any assessee did not appear on these papers and there is no material or evidence on record to corroborate that these entries represent undisclosed income, investment or expenditure of the assessee's .Addition deleted.
(b) Suresh Vyas Vs. Asstt. CIT (2008) 113 TTJ (Jod-Trib) 337.
In the instant case it was held that figures written on seized plain paper without any detail or narration could not be treated as undisclosed income of the assessee.
53. We have considered the rival submissions and found from record that LPS-3 indicate purchase of jewellery, which is ladies items and related to assessee's wife Smt. Shilpa Singh and daughter Ms. Shilpa Singh, who are separately assessed u/s 143(3)/153C. Accordingly, we direct the Assessing Officer to consider the legitimacy of such addition in the hands of ladies. However, no addition is warranted in the hands of assessee. We direct accordingly.
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I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 66 SMT. SUDHA SINGH :
54. Facts in brief are that during the course of search certain loose papers were found and seized from the premises of the assessee, on the basis of LPS-3 which is related to purchase of Sarees b y wife of assessee Smt. Sudha Singh from Agrawal Sarees addition of Rs. 8320/- were made and confirmed by the ld.CIT(A). The Assessing Officer issued notice u/s 153C for the assessment years 2003-04 to 2009-
10. It was explained before the ld. Assessing Officer that assessee's wife is a regular income tax payer and before search she has filed the return of income from the assessment year 2006-07 and 2007-08 on 04.12.2006 and 23.07.2007 respectively by showing the income from craft and painting and the returns for the assessment years 2003-04 to 2005-06 were not filed before the search due to the reason that her income was below taxable limit. The ld. Assessing Officer has not accepted the contention of the assessee by stating that after the assessment year 1996-97 no return of income was filed before the search, thus, same could not be accepted. The addition so made was confirmed by the ld.CIT(A). Page 66 of 73
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55. During search, cash amounting to Rs. 3,29,707/- was found, out of this cash amounting to Rs. 2,57,760/- belonged to the assessee, since it was found from her almirah. During appellate proceedings, the ld. CIT(A) enhanced assessment by Rs. 2,57,760/- in respect of cash found during course of search. Assessee is in further appeal before us against these additions.
56. With respect to the legal ground regarding framing of assessment u/s 153C, when no incriminating material was found during course of search, contention of ld. Authorized Representative were same as narrated hereinabove, in case of B. M. Singh. With respect of merit of addition, we found that the ld. CIT(A) accepted that the return for the assessment year 2006-07 and 2007-08 showing income from craft and painting were filed before the search after verifying the acknowledgment for filing of returns of these years. However, the ld. CIT accepted that the return for the assessment years 2006-07 and 2007-08 showing income from craft and painting were filed before the search after verifying the acknowledgment for filing of returns of these years. However, he allowed credit for Page 67 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 68 income from craft and painting work in cash only in respect of income shown in the return filed prior to search and specific withdrawal made from the Bank account.
57. It is clear from the above chart that for assessment years 2003-04 to 2005-06, which falls prior to search, the assessee has not filed any return of income, because her income was below taxable limit. Hon'ble Jurisdictional High Court in the case of CIT vs. Vimla Khatri, 288 ITR 168, and in case of Smt. Maya Chotrani, 288 ITR 175, has held that the total income of those assessment years in which the return was not filed before the search on the plea that such income was below taxable limit, the income of that year shall not be treated as undisclosed income. Reliance is also placed on the latest decision of Punjab and Haryana High Court in the case of CIT vs. V.P. Singh, (2013)357 ITR 681. Respectfully following the proposition laid down by Jurisdictional High Court, we do not find any justification in the action of lower authorities for not giving credit for income of these years.
58. While framing the assessment, the Assessing Officer has made addition on account of unexplained investment of Page 68 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 69 Rs. 34,035/- in purchase of sarees. From the record, we found that the contention of the ld. Assessing Officer and ld. CIT(A) that the credit for the income from craft work and painting will be allowed only if the return of income is filed before the search, we found that Smt. Sudha Singh has not filed her return for the assessment years 2003-04 to 2005-06 prior t the search for the simple reason that her income was below taxable limit. In view of the above facts that the return of income of Smt. Sudha Singh for the assessment years 2003-04 to 2005-06 was below taxable limit, hence she had not filed her return of income prior to search. Thus, the credit for cash available in the statement of affairs in respect of the income from craft and painting work for these years are liable to be allowed and consequent there the addition of Rs. 8320/- confirmed by the ld. CIT(A) on account of purchase of sarees is directed to be deleted.
59. While framing assessment u/s 153C, the Assessing Officer did not accept the statement of affairs. An addition of Rs. 34,456/- was made on the basis of LPS-3, the details of which are as under :-
Page 69 of 73
I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 70 Page No. Name of Particular Date Amount Related to the concern 04 Rough Gold 02/05/2004 26,500/- No Name Paper 66 Sarees Sarees 09/05/2004 4,300/- Uma Shankar Pateria 12 Sneh Gold 09/05/2004 3,656/- Uma Kumar Shankar Kanhaiyalal Pateria Total Rs. 34,456/-
60. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that the assessee was having income from painting and craft work, which are duly supported by her statement recorded u/s 132(4). As discussed above, we do not find any merit in the action of lower authorities for declining assessee's income from painting and craft work in the statement of affairs filed before the lower authorities, the assessee had shown withdrawals at Rs. 58,450/- out of her income. The said withdrawal includes purchase of sarees to the tune of Rs. 34,035/- and the balance withdrawal was for other expenses. Since source of expenditure was available, we do not find any merit in the addition made by the Assessing Officer. The Assessing Officer is directed to delete the same. Page 70 of 73
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61. With regard to enhancement of assessment by Rs. 2,57,760/- by the ld.CIT(A) in respect of cash found during course of search, we found that out of cash available as on 30.5.2008, amounting to Rs. 3,24,055/-, cash amounting to Rs. 2,57,760/- was explained. However, the CIT(A) has doubted the income from painting and craft work shown for the assessment year 2008-09 at Rs. 1,71,000/- and Rs. 50,000/- for the period 1.4.2008 to 3.5.2008. In view of our observation made hereinabove, regarding income earned by the assessee out of art and craft work during earlier years and no return of income was filed because of the reason that income was below taxable limit, the credit for such income cannot be denied in view of the decision of Jurisdictional High Court in the case of Smt. Vimla Khatri (supra) and Smt. Maya Chotrani (supra). It was held by the Jurisdictional High Court that when the income is below taxable limit, the assessee is not obliged to file the return, accordingly, such income cannot be treated as undisclosed income of the assessee. Thus, after giving credit for such income earned during the assessment year 2003-04 to 2009-10, no addition will survive on account Page 71 of 73 I.T(SS).A.Nos. 321 to 327 and 319 & 320/Ind/2012 Shri Biswa Mitra Singh and Smt. Sudha Singh, Bhopal A.Ys. 2003-04 to 2009-10 and 2006-07 and 2009-10 72 of cash of Rs. 2,57,760/- found, in so far as the same is explained out of income earned during these years. The A.O. is, accordingly, directed to delete the same.
62. With regard to painting and craft work income shown in the assessment years 2008-09 and 2009-10, the ld. CIT(A) has doubted the impugned income shown, however, he has stated that the assessee is having some source of income. From the observation of CIT(A) it was found that these loose papers were owned by Uma Shankar Pateria and his affidavit was not rebutted by the ld. Assessing Officer even after recording the statement which is evident from its statement itself.
63. As discussed hereinabove, the income from art and craft work was wrongly declined by the ld.CIT(A). The lower authorities were not justified in making the addition of cash so explained out of art of craft work. Accordingly, we direct the Assessing Officer to delete the addition of Rs. 2,57,760/- made by the ld.CIT(A).
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64. In the result, the appeals of the assessee are allowed in part in terms indicated hereinabove.
This order has been pronounced in the open court on 31st December, 2013.
Sd/- sd/-
(JOGINDER SINGH) (R. C. SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 31st December, 2013.
CPU*
20.12
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