Income Tax Appellate Tribunal - Hyderabad
Ramesh Watch Company, Hyderabad vs Assessee on 10 December, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A" : HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
AND
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
IT(SS)A.No. Block Period Appellant Respondent
1/H/2011 Ms. Shobha
R. Chugani,
Hyderabad
AAIPC3408Q
2/H/2011 Ms. Roshini
K. Chugani,
Hyderabad.
PAN
AGCPC4137C
3/H/2011 Shalu C.
Chugani,
Hyderabad.
PAN
AEYPC6858C
4/H/2011 Manish A.
Chugani, ACIT, Circle
1987-88 to Hyderabad. 10(1),
Hyderabad
1996-97 &
5/H/2011 Lakshman G.
01.04.96 to Chugani,
03.10.96 Hydeabad.
PAN
AAJPC5052H
6/H/2011 Gulabrai D.
Chugani,
Hyderabad
PAN
7/H/2011 Anitha C.
Chugani,
Hyderabad
PAN
2
IT(SS)A.No.1 to 15/Hyd/2011
Ms. Shobha R. Chugani and others, Hyderabad.
8/H/2011 Kunjbai G.
Chugani
Hyderabad
PAN
9/H/2011 Ramesh G.
Chugani,
Hyderabad
PAN
10/H/2011 Ashok G.
Chugani,
Hyderabad
PAN
11/H/2011 Late Chandru
1987-88 to G. Chugani,
L/R Rajesh G. ACIT, Circle
1996-97 & Chugani, 10(1),
01.04.96 to Hyderabad
PAN Hyderabad
03.10.96
12/H/2011 Kishore G.
Chugani,
Hyderabad
PAN
13/H/2011 Ramesh Sales
Corporation,
Hyderabad
PAN
AADFR9495D
14/H/2011 Ramesh
Watch
Services,
Hyderabad
PAN
AAJPC5052H
15/H/11 Ramesh
Watch
Company,
Hyderabad
PAN
AAJPC5052H
3
IT(SS)A.No.1 to 15/Hyd/2011
Ms. Shobha R. Chugani and others, Hyderabad.
For Assessee : Mr. S. Rama Rao
For Revenue : Mr. P. Somasekhar Reddy
Date of Hearing : 15.09.2014
Date of Pronouncement : .12.2014
ORDER
PER BENCH :
These are group of appeals filed by individual assessees and firms against the Orders of A.O. dated 29.12.2010. Originally, search and seizure operations were conducted under section 132 on 03.10.1996 in the residential and business premises of Mr. Gulab Rai Chugani and his family members. In the course of search, some incriminating documents were found and assessees also furnished various bank accounts and other details in the course of post-search enquiries. Survey operations were also conducted in the premises of the firms and inventory of stock was taken. Based on the findings in the search, assessments were completed under section 158BC/158BD in the group cases on 31.12.1997. Aggrieved by the assessment orders, assessees preferred appeal before the ITAT, as the appeals are directly rests with ITAT without the benefit of adjudication by CIT(A) as per the provisions then existing. The Tribunal vide its order dated 28.12.2006 restored the assessments to the A.O. observing as under :
"We have considered the submissions of the parties. Chapter XIVB was introduced with effect from 01.07.1995. The search in the present case was conducted on 03.10.1996 i.e., just a little over a year since the introduction of the new procedure. The assessments were completed about a year after the date of search i.e., some time in the later part of 1997. At least till that time and 4 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
even later many legal issues cropped up which remained in the grey area for a quite a long time. Much water has flown since then. Over the last decade, the law relating to block assessment has more or less been streamlined on the basis of experience and several judicial pronouncements. In this backdrop, while we view the submissions made by the learned counsel, we find them be quite true. As an illustration, one of the reasons given for making addition on account of unexplained cash is that '.....the withdrawals are so meager that the additional amounts drawn from the bank might have been totally spent away on domestic expenditure.......'. Now, such reasons can generally be taken in regular assessments only and not in block assessments. Again, addition for unexplained investment in Bombay flat by Lachman Chugani has been made on the basis of the DVO's report and not on the basis of any material found in the course of search. Similarly, the Assessing Officer has mentioned in the assessment order that the material seized throws a definite indication and evidence about the nature of transactions and involvement of the assessee in paying on-money to the vendor. But he fails to spell out or specify those seized material. Further, excess stock has been determined on the basis of estimating GP rate rather than on the basis of any material which may indicate purchases outside the books. There are numerous such examples, in all the assessment orders resulting into the determination of undisclosed income which may be far from being realistic. Accordingly, we feel it to be quite justified to restore the matter back to the file of the A.O. with the direction to reframe the assessments after giving the opportunity of being heard to the assessees. The assessees shall also be at liberty to adduce any evidence as deemed necessary. Considering the fact that the matters are very old, the A.O. shall not make roving enquiries which may be practically difficult for the assessee to explain and put them into undue hardship. In other words, the A.O. as far as possible confine himself to the additions already made in the present assessment orders. While making the reassessments, the A.O. shall keep in view the relevant provisions of law and the judicial pronouncements as well. Considering the fact that the matters are very old, the A.O. shall expedite the proceedings and pass the assessment orders as early as possible....."5
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
The Tribunal further decided vide order dt.22.06.2009 that:
"We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the undisclosed income has to be computed on the basis of the material found as a result of search or the information available with the A.O. and relatable to the evidence found during the course of search operation. This is the mandatory provision contained in Sec. 158BB(1) of the Income Tax Act. Therefore, the A.O. is bound to give a specific finding how the undisclosed income is relatable to the search material. In case the A.O. relies upon the information obtained during post-search enquiry, he has to give a specific finding how such information is relatable to the search material. In the absence of such finding in the assessment orders, as rightly submitted by the Ld. Counsel for the assessee and the learned departmental representative, in our opinion, the matter needs to be reconsidered by the A.O. in the light of the material found during the course of search operation. Accordingly, we set aside the orders of the lower authorities and remit the matter back to the file of the A.O. The A.O. shall examine the issue afresh and thereafter decide the issue in accordance with law after giving a reasonable opportunity to the assessee. We make it clear that the A.O. shall bring on record the entire facts and give a specific finding how the undisclosed income is relatable to the material found during the course of search. In case the A.O. relies upon the information obtained in the enquiry made after the search, he shall give a specific finding how such information is relatable to the material found during the course of search."
2. Consequently, the assessments were again completed under section 158BC/158BD determining the total income. In spite of clear directions if ITAT, additions made in the first round of assessments were repeated by the A.O. in the present orders as well. Since small additions are made which require verification by A.O., submissions of assessee along with necessary evidence filed before us were referred to the A.O. through the D.R. for verification and reporting on the factual aspects. ACIT, Circle 10(1), Hyderabad vide remand 6 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
report dated 10.07.2014 submitted through the CIT-DR-I, Hyderabad however, did not undertake any verification and sent the report with the remarks reiterating what was mentioned in the assessment order. It was the contention of assessee that many of the amounts were declared in the returns or have been shown in the wealth tax returns and sources for many of the funds were withdrawals from the firms or transfers from the bank accounts. Apart from that, on major additions detailed submissions were made. As stated above A.O. did not examine any of the issues but sent the same remarks as were made in the assessment order. The ITAT restored the matter earlier to the A.O. to specifically mention about the basis of search material while making such additions. In spite of clear directions, A.O. did not mention any of those things and repeated the same additions again without any verification. Even in remand through the DR, AO did not do any verification of evidence filed/ submissions made. In view of this, we are constrained to decide on the basis of submissions. These orders have been passed after considering assessee's submissions/ AOs remarks. We have heard the Ld. Counsel and Ld. D.R. and perused the evidence placed on record.
3. Search and seizure operations were conducted at the premises of Sri Gulab Rai Chugani and his family members residing at H.No.I-II-252/11A, Motilal Nagar, Secunderabad. The warrant of Authorisation u/s. 132 of the I.T. Act was issued in the name of Sri Gulab Rai Chugani. Another warrant of Authorisation was issued in the case of Sri Gulab Rai Chugani to search the premises of Sri Lachman G. Chugani at flat No.l, Balaji Nivas, P.G. Road, Secunderabad. The 7 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
search proceedings were initiated on 3.10.1996 and continued further on 18.10.1996 at both the places mentioned above. During the course of search and seizure operations, the authorities seized gold jewellery of the value of Rs.6,57,073 and Rs.18,60,756 out of the total value of Rs.57,55,091. The authorities also seized cash of Rs.5 lakhs out of cash found of Rs.5,72,165 at both the places. Survey u/s 133A were also conducted at the premises of (1) Ramesh Watch Services; (2) Ramesh Sales Corporation and (3) Ramesh Watch Company. The books of account of these concerns were seized during the course of search and seizure operations at the residential premises.
4. Assessments in all cases of assessees were completed either u/s 158BC or u/s 158BD. Primary contention of assessees are as the search proceedings were conducted at their residential premises and as they were searched under the provisions of Sec.132 of the IT. Act, assessments should have been completed u/s 158BC of the I.T. Act. In this regard, assessee submits that the High Court of Andhra Pradesh in the case of Dr. Ravindra Reddy, Hyderabad in ITIA No.35 of 2001 held that where a person is searched, the assessment is to be completed u/s 158BC of the LT. Act and not u/s 158BD. If the assessment u/s 158BC has to be completed only in the case of the persons against whom the search proceedings were initiated, then the assessment u/s 158BC can be completed in the case of Sri Gulab Rai Chugani alone and not in other members of the family. However, the Assessing 8 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
officer completed the assessment u/s 158BC in the cases of Mr. Ramesh G. Chugani and Lachman G. Chugani. In the circumstances, the assessment proceedings itself are invalid. The Assessing Officer also issued notices u/s 158BD to some of the minor children and completed the assessment u/s 158BD of the I.T. Act. The assessee, before the ITAT submitted that all the additions were made based on the deposits with bank accounts and that the said additions do not arise out of the seized material. The ITAT allowed the appeals and cancelled the said assessments made in the hands of the minors u/s 158BD of the I.T. Act.
5. Assessee submitted explanations with regard to the availability of cash; availability of stocks and gold jewellery besides explaining the deposits made with bank both in Savings Bank account and investment in fixed deposits. Major issues on which A.O. made additions is with reference to cash seized, jewellery inventoried, stocks found, gift received. However, A.O. made various additions on the basis of transaction in bank accounts and also denied the deduction claimed. These are dealt with as under.
6. As briefly stated above, there are search and seizure proceedings in the common residential premises of assessee. As briefly stated above, search was initiated in the case of Mr. Gulabrai Chugani, Mr. Lakshman Chugani and Mr. Ramesh Chugani and warrant of authorisation were executed in their names. Therefore, A.O. is correct in completing the proceedings under section 158BC in those three cases. In rest 9 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
of the cases A.O. has, in our opinion, correctly initiated the proceedings under section 158BD. The provisions of section 158BD are as under :
"158BD. Undisclosed income of any other person.--Where the AO is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132 or whose books of account or other documents or any assets were requisitioned under s. 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO shall proceed against such other person and the provisions of this Chapter shall apply accordingly."
Condition precedent for invoking a block assessment is that a search has been conducted under s. 132, or documents or assets have been requisitioned under s. 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under s. 132A or documents or assets have been requisitioned under s. 132A. Sec. 158BD, however, provides for taking recourse to a block assessment in terms of s. 158BC in respect of any other person, the conditions precedent where for are : (i) satisfaction must be recorded by the AO that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132 of the Act; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the AO having jurisdiction over such other person; and (iii) the AO has proceeded under s. 158BC against such other person. The conditions precedent for invoking the provisions of s. 158BD, thus, are required to be satisfied before the provisions of the said chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other 10 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
assets had been requisitioned under s. 132A of the Act. These principles are established by the decision of Hon'ble Supreme Court in the case of Manish Maheshwari vs. ACIT 289 ITR 341. In the present case, since the person searched happened to be only three persons, 158BC proceedings were correctly initiated in their cases. Whereas, in other cases, the matter pertains to proceedings under section 158BD only because they are not person searched against whom the warrant was not issued. However, incriminating material was present. Therefore, proceedings were correctly initiated in their cases. There is no objection that satisfaction has not been recorded in these cases. The only objection is that, since, they are also searched being the residents of the same premises, proceedings could have been initiated under section 158BC alone. This is not the law as provided under the Act and assessee's contentions cannot be accepted. Assessee relied on the decision of Hon'ble A.P. High Court in the case of Dr. Ravindra Reddy vs. ACIT, Hyderabad in ITTA.No.35 of 2001 dated 03.07.2013 for the proposition that since the assessees therein were covered by search proceedings under section 158BC could have been done. These propositions as canvassed by assessee cannot be accepted for the simple fact that in the case of Dr. Ravindra Reddy there was search in his own name. There is actually a finding by Hon'ble A.P. High Court. The finding is as under :
"The Ld. Counsel's contention that it is continuation of search conducted in the house of Dr. S.S. Reddy and it was not an independent one is not acceptable to the Court as we have found that two separate search warrants were issued. Therefore, where, it is a continuation or otherwise, hardly matters. The fact remains, that the search was conducted in the house of the appellant on the strength of separate warrants and material collected during the search and seizure was relied on during the block assessment. Therefore, it is incorrect that the search 11 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
was conducted for the block assessment. Therefore, this case, cannot be come within the purview of section 158BD."
Thus, as can be seen the facts in the above referred case are that there were independent warrants executed on Dr. Ravindra Reddy and on the strength of that fact, the Hon'ble A.P. High Court held that proceedings in 158BC could have been done but not proceedings under section 158BD. However, the present group of cases other than the above three persons, there were no warrants executed in their names even though they are residing in the same premises. Accordingly, proceedings under section 158BD were correctly initiated. In the light of the above, the objections raised by assessee on the issue of proceedings are not seriously considered as we have to examine the issue in the light of material impounded/seized in the course of search in order to justify various additions, that too being second round of appeal proceedings. Further, as already directed by ITAT, A.O. was specifically directed to examine and specify the search material or post-search enquiries consequent to the incriminating material seized, no such exercise was done by A.O. In fact, many of the additions made are with reference to bank accounts submitted by assessee which are already disclosed to the department. Moreover, some of the items like gifts received, jewellery brought to tax were already disclosed in the books of accounts or in the wealth tax returns. Even though it was specifically directed by ITAT, A.O. has not given any finding about the incriminating material seized in the course of search while repeating the additions.
6.1. The Hon'ble Delhi High Court in the case of CIT vs. Jupitor Builders P. Ltd., 287 ITR 287 has held that 12 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
assessment proceedings undertaken under Chapter XIVB are only in respect of undisclosed income, that is that income which has not been, or would have not been disclosed and which has been unearthed as a result of the search or requisition. It is evident from clauses(a) and (b) of section 158BB of the I.T. Act, 1961, that any assessment proceedings under Chapter XIVB, assessments completed under section 143 or 144 or 147 cannot be reopened. Consequently, those elements of income which already stand disclosed in the relevant assessment years fall within the block period must be excluded while computing the undisclosed income under the Act.
6.2. Likewise, in the case of CIT vs. Rajendrakumar 178 Taxman 208 (MP) (HC) the Hon'ble Madhya Pradesh High Court has held that where assessee has maintained regular books of accounts and the returns of income were filed regularly before the date of search and no incriminating documents were found during the course of search, addition on account of peak credit of former's account was beyond the scope of block assessment and liable to be deleted.
6.3 The Hon'ble Orissa High Court in the case of CIT vs. Utkal Alloys Ltd., 319 ITR 339 has held that where no incriminating documents found depicting sale or purchase outside the books and no defect found in the books of accounts maintained by assessee in regular course of business, no addition to the income of assessee as undisclosed income could be made merely on the basis of discrepancy worked out on estimation of stock. Keeping in view, these principles already laid down in the cases of block assessments, we examine each of the major issues.
13IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
6. A) AVAILABILITY OF CASH:
During the course of search and seizure operations the authorities found total cash of Rs.3,94,705 at the house of Gulab Rai Chugani. At Sri Lachman G. Chugani's residence cash of Rs.1,77,460 was found. In so far as the cash found with Sri Gulab Rai Chugani is concerned, the authorities seized cash of Rs.3,50,000 whereas from the premises of Sri Lachman G. Chugani Rs.1,50,000 was seized. The assessee, during the course of search and seizure operations initially declared an undisclosed income of Rs.7 lakhs. Later, explanation was filed before the authorities mentioning that such declaration was not correctly made.
6.A.2. The assessee and other family members were asked to explain the cash available at the residence and at the business premises of the concerns in which the family members are interested.
The assessee and other family members have explained the sources for the cash available as under :
a) It was submitted that the cash is either available at the residence where all the other family members except Lachman G. Chugani were staying or is available at the business premises.
Such amount found at the residences of Sri Gulab Rai Chugani and the business premises in which the persons are interested was Rs.5,72,165. It is submitted that the cash belonging to all the concerns and all the family members was kept at the residence. Thus, the 14 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
total of such cash available of Rs.5,72,165 is explained as under :
i) Cash books of 8 concerns including the negative balance in four of the concerns showed a balance Rs.1,46,988.
ii) Amounts drawn by the family members in the immediate past and was available with the family members as on the date of search.
10.06.1996 Indian Bank-Chandru Rs.25,000 10.06.1996 Indian Bank - Ramesh Rs.25,000 10.06.1996 Indian Bank - Gulab Rai Rs.25,000 10.06.1996 Indian Bank - Lachman Rs.25,000 27.08.1996 Indian Bank - Lachman Rs.25,000 17.09.1996 Indian Bank - Lachman Rs.25,000 10.08.1996 Indian Bank - Chandru Rs.25,000 10.08.1996 Grindlays bank Rs.25,000 26.03.1996 Grindlays - Gulab Rai Rs.25,000 16.08.1996 Grindlays Ashok Rs.25,000 16.08.1996 Grindlays - Kishore Rs.25,000 In this regard it was submitted that the bank account clearly indicate that the cash was withdrawn from the respective bank accounts on the dates mentioned. During the course of search, no information was found that the cash so withdrawn was spent for any other purposes. In view of the fact that the family members had withdrawn the cash and no expenditure was incurred upto the date of search, it was submitted that the cash was available as on the 15 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
date of search. In this regard the assessee relied on the decision of the Kerala High Court in the case of CIT Vs K. Sridharan reported in 201 ITR 1010 wherein it is held that if the amount is available in the past, the same has to be considered as available unless there is evidence to show that the same was spent. In this view of the matter, the amount of Rs.2,75,000 is to be considered as available with the assessee.
iii) An amount of Rs. 1 lakh was left with Smt. Roshini K. Chugani by her brother Sri Pavan Sadarangani of Mumbai. It was submitted that Sri Sadarangani visited Hyderabad for obtaining the Agency for the Fans manufactured by M/s PLF. As the said concern postponed the grant of agency the said Sri Sadarangani left the amount with Smt. Roshini K. Chugani. An amount of Rs.1 lakh was available at the premises of the assessee from the above source.
(iv) Mrs. Sunitha is the daughter of Sri Ramesh G. Chugani. Just before her marriage, an amount of Rs.1 lakh was withdrawn from her bank account with Development Co-op. Bank Ltd., Mumbai. She spent an amount of Rs.40 thousand from out of the said amount for her personal purposes. The balance of Rs.60,000 was in the house. Mrs. Sunitha left for UK immediately after her marriage and she did not return to India before the date of search and seizure operations were conducted. Therefore, the 16 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
amount of Rs.60,000 was available at the premises of the assessee.
v) It was submitted that there are in all 20 family members. Out of them 16 members are the Income-Tax assessees. The incomes derived include the property incomes and others. All the persons are staying together in the said house. Even if the available cash for each of the person were to be taken at Rs.2,000, an amount of Rs.40,000 would be available.
The aggregate of the items mentioned at S.No. (i) to (v) above works out to Rs.6,21,988.
6.A.3. The cash as per the search record shows an amount of Rs.5,72,165 and it was submitted before the Assessing officer that no addition on account of cash found at the residence of Sri Ghulab Rai Chugani be included.
6.A.4. The Assessing Officer did not accept the explanation and added the following amounts on account of either deficit cash or excess cash found:
a) Ramesh Watch company -(deficit cash) Rs.l,05,458 Ramesh Sales Corporation - (deficit
b) Rs. 23,638 cash)
c) Lachman G. Chugani (excess cash) Rs. 1,30,000
d) Ghulab Rai Chugani Rs. 70,000
e) Chandru G. Chugani Rs. 70,000
f) Kishore G. Chugani Rs. 70,000
g) Ashok G. Chugani Rs. 70,000
h) Ramesh G. Chugani Rs. 70,000 17 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
The Assessing Officer simply considered the admission made at the time of search without taking into consideration the retraction of the admission and the explanations submitted. In view of the above explanations, the Assessing Officer is not justified in making any such addition in the assessment.
6.A.5. Without prejudice to the above, it was submitted that the cash available at the business concerns as per the books of account duly considering the deficit cash amounted to Rs.1,46,988. If the Assessing Officer were to consider deficit cash separately, the positive balance of cash as per the books of account amounts to Rs.2,37,500. The Assessing Officer did not consider the amount available as per cash book.
6.A.6. With regard to the deficit cash it is explained clearly that the cash belonging to all the business concerns and the individuals being operated from the same premises i.e. the residence of Sri Gulab Rai Chugani. In such circumstances, the Assessing Officer should have considered the availability of cash. In so far as the addition u/s. 69 is concerned, the AO added Rs.70,000 each in the assessment of the brothers. Therefore, for the purpose of making addition u/s. 69 he accepted the explanation that the cash available belongs to all the family members but when there is a deficit cash balance with some of the concerns, the AO did not accept the explanation. In view of the above, it is submitted that the Assessing Officer should not have 18 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
made addition either on account of excess cash found during the course of search or deficit cash as per the books of account of the two of the business concerns mentioned above.
6.A.7. We have considered assessee's explanation and the action of A.O. in all orders. As far as excess cash available in the course of search is concerned, the cash is explainable as per the submissions made by assessee above. Considering that assessees have own cash balances, withdrawals and proper explanations for the monies available on the day to the extent of cash found on the day at Rs.5,72,165, assessees explanations are acceptable. However, the deficit cash in the firms will be dealt with separately when the issue is dealt with in respective appeals. Therefore, to the extent of cash availability on the day of search is concerned, assessee's explanation were acceptable. To that extent, individual additions made in individual hands are to be deleted.
6. B. ADDITION ON ACCOUNT OF GOLD JEWELLERY:
The authorities valued the gold jewellery found at the premises at Rs.57,31,287. For arriving at such value, the authorities valued the jewellery as on 19.10.1996 @ Rs, 5,150 per 10 grams of 24 carat gold.
All the assessees together have filed explanations on various occasions before the Assessing authorities and the ADIT. Assessees as a group explained the availability of the gold jewellery. The explanations submitted are as under:
19IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
(1) The gold jewellery available at the premises belongs to all the family members of Sri Gulab Rai Chugani, Sri Ramesh G. Chugani; Sri Lachman G.Chugani, Sri Chandru G. Chugani, Sri Ashok G. Chugani and Sri Kishore G. Chugani and their family members. All the family members except Lachman G. Chugani live together in one house.
(2) It was submitted that the following persons were filing the return of wealth upto and including assessment year 1992-93 and they admitted the gold jewellery even prior to 1.4.1986. The value as adopted in the assessment for the assessment year 1987-88 (as on 31.3.1987) are provided in the statement furnished. The aggregate value of the jewellery admitted was Rs.18,22,595. The market value of 24 carat gold as on 31.3.1987 was Rs.2,560 whereas the market value of 24 carat gold as on 31.3.1996 was Rs.5,150. If an adjustment is made taking into consideration the increase in the rate, the market value of the gold jewellery admitted would be Rs.36,46,107.
(3) It is further submitted that for the purposes of Wealth Tax the value of the gold jewellery is reduced by 15%. The actual value of the gold jewellery would, therefore, be (Rs.36,46,107 x 100/85=) Rs.42,89,538. This value is to be considered as admitted in the Wealth Tax returns as on 31.3.1987.
(4) During the course of search and seizure operations, the Income-Tax Authorities found Valuation reports in respect of gold jewellery belonging to the children and the value as per the said valuation reports as on the valuation dates mentioned there are as under :
20IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
S.No. Name of Date of Value Value as on the minor valuation (Rs.) 3.10.1996 (Rs.)
01. Sunitha R. 20.07.1986 26,651 64,137 Chugani
02. Veena R. 20.07.1986 24,839 59,776 Chugani
03. Namratha 31.03.1980 24,272 93,986 L. Chugani
04. Mona R. 20.07.1986 23,655 56,927 Chugani
05. Meena L. 31.03.1980 20,645 79,941 Chugani
06. Poonam L. 31.03.1980 24,097 93,308 Chugani
07. Reshma L. 31.03.1980 19,413 75,171 Chugani
08. Rajesh C. 21.07.1986 25,978 62,517 Chugani
09. Sachin C. 21.07.1986 21,870 52,630 Chugani
10. Rohit K. 31.03.1986 12,392 29,822 Chugani The details of gold jewellery held by Miss.
Lavina Mr. Sandeep, Mr. Rahul and Mr. Amit 25,000 are not available. On an estimate, the value of gold jewellery held by them is taken at Rs.25,000.
Total Rs.6,93,215 The market value as on 3.10.1996 by adjusting the value by increasing the rates was Rs.6,78,215. Therefore, the said value is to be considered as available with Smt. Anitha G. Chugani.
(5) It is submitted that Smt. Eswari S. Krishnani, mother of Smt. Anitha G. Chugani died on 7.12.1995. Anitha's brother Kumar Krishnani was in Hong Kong. Smt. Eswari S. Krishnani left 21 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
800 grams of gold jewellery listed hereunder :
i) Two pieces of gold chain/pendents
ii) Two pairs of gold bangles
iii) One piece of gold bracelet
iv) One set of gold necklace / ear rings
v) One set of gold diamond necklace and ear rings
vi) Two pairs of old ear rings
vii) Two pieces of gold and diamond rings
viii) Two pieces of gold guinnes
ix) One piece of gold dollar chain
x) One piece of gold dollar chain
xi) One piece of gold ounce coin These items were found at the premises of Smt. Anitha K. Chugani, wife of Lachman G. Chugani.
The assessee submitted copy of the letter of Sri Kumar Krishnani, brother of Smt. Anitha G. Chugani confirming the above facts. The value of the said 800 grams of gold jewellery as on 3.10.1996 was Rs.4 lakhs.
(6) Smt. Varsha Mirpuri, daughter of Sri Gulab Rai, who was staying outside India left 230.70 grams of gold jewellery with her father. The value of the said jewellery was Rs.94,657. A letter of confirmation of Smt. Varsha Mirpuri was submitted.
(7) It is submitted that Smt. Mohini Tahilram, wife of Sri Tahilram Tihamdas Thandani is the grand mother of Smt.Manisha A. Chugani left a deed of 22 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
settlement settling 376.3 grams of gold jewellery in favour of Smt.Manisha A. Chugani. The said gold jewellery was received by Smt. Manisha A. Chugnai on the death of Smt. Mohini Tahilram. The value of the said gold jewellery of 376.3 Grams was Rs.1,77,646.
(8) It is further submitted that there were four more members of the family i.e. Sandeep A.Chugani; Rahul Chugani, Amit Chugani and Miss Laveena. The probable gold jewellery available with them as per the CBDT circular is taken, the market value of such jewellery would be Rs.2,59,645.
The aggregate of the above mentioned items (1) to (9) are to be considered as explained gold jewellery and the value of the said gold would be Rs.58,99,700.
6.B.1 Besides, the assessee also submitted the explanations with reference to the weights and even as per the said explanation the jewellery available was properly explained. In the circumstances, it was submitted that the Assessing Officer is not justified in making any addition on this ground.
6.B.2. Considering the explanations and the documents placed on record along with wealth tax records and subsequent valuations, we are of the opinion that the jewellery available with assessees on the day of search are explainable and so separate additions in the individual hands does not arise.
23IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
6. C. ADDITION ON ACCOUNT OF STOCKS:
C.1. It was submitted that-
(1) There were eight different concerns which were covered u/s 133A of the I.T. Act on 03.10.1996 and there were five concerns at the premises of 127-128, Parklane, Secunderabad.
(2) A common list showing the stocks was prepared by the authorities for the five concerns which were carrying on different business activities at the said premises;
(3) The departmental authorities, while arriving at the value of the stocks considered the "tag price" and not the "cost price". There is difference between the cost price; sale price and the tag price. The tag price is the maximum price.
(4) The tag price is the price affixed to the article. Sale price is the price at which the article is sold after allowing discount etc. The cost price is the price at which the assessee purchases the goods.
(5) The authorities did not consider the watches received on consignment basis in spite of the fact that there were evidences to this effect. The good received on consignment were not paid for by the assessee and such cost cannot be considered.
(6) The profit element alone is reduced by the Assessing Officer without considering the fact that there is a difference between the sale price 24 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
and the tag price representing discounts etc. (7) It is also submitted that in the case of Clock Specialities, the sale price, cost price and tag price are separately provided where there is a variance between the cost price and sale price and the sale price and the tag price.
(8) The Assessing Officer also did not correctly work out the cost price;
6.C.2. As can be seen from the inventories and explanation given by assessee A.O. has not done proper verification of the tag price, sale price and cost price. Generally assessee values the stock at cost price or market price whichever is less in the books of accounts and this method of valuation is an approved method of valuation. There is no dispute that the inventory prepared by the department is on the tag price which is generally higher than the sale price and certainly more than the cost price. Assessee has provided the details to the A.O. but these are not accepted. In view of this, we are of the opinion that a separate addition on excess value of the stock does not arise unless there are excess pieces identified which are not inventoried. No such case was made out by A.O. that the quantitative tally is not matching. Therefore, we are of the opinion that addition of difference in price does not arise in these cases.
25IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
6. D. BANK ACCOUNTS:
In all the cases, Assessing Officer, during the course of assessment proceedings, called for the list of bank accounts and the sources for the deposits made. Assessees furnished such details with reference to each of the deposit made. Assessees also furnished the details of withdrawals effected from each bank account and the purpose of withdrawal. The Assessing Officer disbelieved some of the explanations and added the amounts.
6.D.1. In this regard, assessees submits as under:
(1) The bank accounts were furnished during the course of assessment proceedings along with explanations and do not emanate from the seized material;
(2) The bank accounts were all admitted in the Returns of Income and the Returns of Wealth (filed up to assessment year 1992-93) already filed. Therefore, they do not represent the undisclosed assets of assessees.
(3) Assessees have explained each of the deposit in detail. It was also stated that the books of account were maintained by the partnership firms, individual concerns and also by the individuals which were seized during the course of search and seizure operations. Such books of account were available with the Assessing Officer.26
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
(4) In so far as the interest from the bank accounts are concerned, the credits include the interest derived from SB account, interest credited to the SB account from out of the interests on FDRs. Assessee submitted that the amounts were admitted based on the credits in the bank accounts. Therefore, the assessee submits that no addition could have been made.
(5). It was submitted that the NSCs on their maturity were deposited in the bank account along with interest; whereas the interest was admitted in the returns of income filed. The entire amount of interest for all the six years was received at the time of realization. The Assessing Officer simply by verifying the regular returns of income and the amounts found credited in the statement of bank accounts furnished added the difference.
(6). The Assessing Officer also took into consideration the deposits made by the minors and the interest earned by them. In so far as the deposits in the bank accounts of the minors are concerned, such amounts were mostly received as a gift from Gulabrai G.Chugani, grand father or from others.
(7). It was also explained during the course of assessment proceedings that some of the minors' assessments were separately made u/s 158BD of the Act. All the additions made as undisclosed 27 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
incomes in the assessments of the minor children were deleted by the Hon'ble ITAT on the ground that the additions do not emanate from the seized material. It can be seen that in so far as the bank accounts are concerned, the assessee relies on the decision of the Hon'ble ITAT in the cases of the minors.
(8). There is also no information to the effect that the parents have deposited the amounts from out of their incomes in the bank accounts of the minors. Further, the provisions u/s 64(lB) were not applicable up to the assessment year 1993-94. Therefore, the deposits made into the bank account of the minors and the interest received by the minors from the said accounts are not assessable in the assessment of the parents while completing the assessments u/s. 158BD of the Act.
(9). In so far as the interest from the bank accounts are concerned, the Assessing Officer resorted to estimation of such interest from the FDRs; compared the earlier amounts with the income admitted in the returns of income filed and added the difference. This is not correct. The assessees submits that all the details were provided. They furnished all the details of the FDRs along with the matured value. The assessees also furnished the returns of income already filed which indicate the actual amount of interest credited to the respective bank 28 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
accounts and the FD account. Therefore, it is submitted that there is no difference and the Assessing Officer is not justified in making any such addition.
(10). The assessee, therefore, submits that the Assessing Officer should not have made any addition on account of the deposits made into the bank account particularly in view of the fact that the bank accounts were already disclosed to the department either in the returns of income or in the returns of wealth or in both.
6.D.2. As already discussed above, A.O. has made small-small additions in various years of the amounts which are credited into bank accounts. There is no incriminating material to consider those amounts in Block assessments. Assessees objections are that these bank accounts are subsequently furnished to A.O. The transactions therein are already accounted for. Many of the incomes have already been offered on accrual basis and many of the entries have been already disclosed to the department. These aspects which were factually to be verified were referred to A.O. but A.O. choose not to comment about individual entries but relied on the same explanation. We are of the opinion that majority of the additions made on this account does not survive. However, individual additions made in respective cases have been separately dealt with. Suffice to say, that the additions from explained sources or where assessee has furnished proper explanation are to be deleted.
29IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
6. E. ADDITIONS U/S 80CC, 80CCA & 80CCD The Assessing Officer made two different types of additions:
(1) The Assessing Officer found that there were deposits in the bank account representing matured value of the mutual funds and treated the same as the income of the assessee.
(2) Assessees claimed deductions u/s 80C or u/s 88 against payment of LIC, PPF, NSC and others.
The Assessing Officer is of the view that some were paid from out of the loan funds and not from the incomes and, therefore is of the view that the same are not allowable.
6.E.1 Assessees are objecting both these types of additions made by making following submissions :
1. It is submitted that such additions are to be made in view of the sections contained in Chapter VIA of the I.T. Act. At the relevant point of time, according to the computation of "undisclosed income" it is to be made the income in accordance with Chapter IV. Even at the time of completion of the assessments, the definition of the procedure for arriving at the "undisclosed income" was the same. When the provisions have clearly stated that income determined in accordance with Chapter IV, the Assessing Officer applied the provisions contained in Chapter VIA and made the additions. Assessees 30 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
submitted that such additions are not justified as the definition of the undisclosed income does not include the additions as contemplated in Chapter-VIA of the I.T. Act. The said provision is amended retrospectively by the Finance Act, 2002. However, at the time of completion of the original assessment the computation had to be confined to Chapter IV without considering Chapter VIA of the Act.
2. Without prejudice it is submitted that the claims were made in the returns of income and the amounts realized are credited in the bank account which were already disclosed to the department. The amounts can not be considered as undisclosed income as all the information concerning the claim and the refund are available with the authorities. Further, the addition made do not emanate from the seized material.
3. The matured values are normally received after five years and no such claims were made in the earlier past. It is submitted that the Assessing Officer added the entire amount. However, the amount claimed and allowed in the assessments were much lesser. Considering the above facts, assessees submits that such additions should not have been made by the Assessing Officer.
31IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
4. In so far as the claims for deduction ix] s 80C or 88 are concerned, it is submitted that the payments were made towards NSCs, PPF or LIC from the bank account. Assessees are depositing the income in the same bank account. In fact all the transactions are taking place through the bank account. Therefore, it can not be said that the amounts were not paid from taxed income.
5. It is submitted that the information is already available on record and the claims were made in the returns of income filed. At the relevant point of time, the provisions of Chapter VIA were not applicable for determining the undisclosed income.
6. It is submitted that in so far as 80C is concerned, 100% of the amount paid was not allowed but only part of the same was allowed in the respective year. The Assessing Officer, however, added the amounts deposited without considering the amounts claimed by the assessee or allowed by the Assessing Officer. It is submitted that all the individuals were having substantial income for making payments.
7. With regard to the claim u/s.88 of the Act, such claims were not from the gross total income of the assessee but the claim was from tax determined. The provisions u/s 158BC/158BD never contemplate the disallowance of tax relief claimed in the returns of income filed. They 32 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
contemplate determination of undisclosed income. Therefore, it is submitted that such additions could not have been made and the amounts should not have been treated as undisclosed.
6.E.2. These are various deductions claimed in the return but not allowed by A.O. on the pretext that the amounts are paid out of loan fund and not from incomes. This issue is no longer valid as what is important is whether assessee has invested in various schemes as approved under the Act from his funds and has incomes justifying the investments. Moreover there is no incriminating material to consider them in block assessments. In view of this, we are of the opinion that various disallowances/additions made in this count cannot be sustained.
6.F. ADDITION ON ACCOUNT OF GIFTS RECEIVED:
6.F.1 It is submitted that Smt. Varsha Mirpuri Jai Kumar is the daughter of Sri Gulab Rai Chugani. She is staying in Bangkok, Thailand. Herself and her husband Sri Jai Kumar are carrying on business in the same and style of "Tularam (Thailand) Co.
Ltd.,Thailand. Besides, they were having business activity at other places. She sent amounts to the bank account opened by her in India. Out of the amounts deposited in the said bank account she gifted amounts to the family members of Sri Gulab Rai Chugani. These amounts were received into bank accounts maintained in India through banking channels. The gifts were made to the family members through 33 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
cheques issued by her from her bank account in India. The said amounts were deposited with the respective bank accounts of the donees with Indian Bank. The said bank accounts were already admitted in the Wealth Tax returns and the interest from bank were admitted in the returns of income. During the assessment proceedings, the Assessing officer required the assessee to state the reasons as to why the said amounts should not be treated as undisclosed income. The assessee submitted detailed explanation before the Assessing officer. The said explanations were rejected by the Assessing officer and the Assessing officer treated the gifts received from her as the income of the assessees concerned. In this regard the submissions of the assessees are :
(1) An explanation for each of the item is submitted while filing the submissions in each case which may kindly be considered.
(2) Smt. Varsha Mirpuri Jai Kumar vide her letter dated 20.9.1997 confirmed that she gifted in all an amount of Rs.42,16,665. She also provided the bank account through which the amounts have been remitted into India.
(3) Copies of the cheques were also provided;
(4) She mentioned that she is carrying on the business in Bangkok and that the amounts were withdrawn from the business concern and were paid to her relatives in India. The said amounts were deposited in the bank account of Smt. Varsha Mirpuri in India in Foreign Exchange and the amounts were gifted to the donees through cheques.34
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
(5) The Assessing officer issued notice u/s 158BD of the I.T. Act to her. She furnished the return of income in respect of each of the deposit. The Assessing officer dropped the proceedings. Therefore, the assessee submitted that the assessee proved the genuineness of the gifts received, the confirmation that the amounts were received from the donor and also proved the source for the donor for making the gifts. The gifts were made through bank account which was disclosed to the department. Therefore, the assessee submits that no addition be made u/s 68 of the I.T. Act while completing the block assessment.
6.F.2 Considering the submissions of assessees with reference to the gifts also, it is found these are accounted transactions and proceedings initiated in the case of Smt. Varsha Mirpuri were dropped. Therefore, the monies transferred from her account, whatever may be the reason, is explainable as the source for the amounts received. Unless there is evidence that the amounts are assessee's own incomes, the gifts received from her cannot be brought to tax in individual hands, as that assessee has explanation for her source and amount have been withdrawn from the business concerns and also routed through banking channels. Moreover there is no incriminating material to justify addition in Block assessments. In view of this, additions in this also does not survive.
7. Coming to the individual cases of assessees, the grounds, explanations and findings are considered keeping the above discussion in mind. The reasons stated there in are in addition to the discussion above.
35IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
These are enclosed as Annexures to this order and these should be treated as part of this order.
8. Consequently, appeals of assessees are decided as under:
ITA.No. Block Name of Result
period Assessee
01/Hyd/2011 Ms. Shobha Partly
R. Chugani allowed
02/Hyd/2011 Ms. Roshini Partly
K. Chugani allowed.
03/Hyd/2011 Shalu C. Partly
Chugani allowed.
04/Hyd/2011 Manish A. Partly
Chugani allowed.
05/Hyd/2011 Lakshman Partly
G. Chugani allowed.
06/Hyd/2011 Gulabrai D. Partly
Chugani allowed
07/Hyd/2011 Ms. Anitha Partly
L. Chugani allowed
08/Hyd/2011 Kunjbai G. Partly
Chugani allowed
09/Hyd/2011 1987-88 to Ramesh G. Partly
1996-97 Chugani allowed
10/Hyd/2011 Ashok G. Partly
Chugani allowed
11/Hyd/2011 01.04.1996 Late Partly
to Chandru G. allowed
03.10.1996 Chugani
L/R. Rajesh
G. Chugani
12/Hyd/2011 Kishore G. Partly
Chugani allowed
13/Hyd/2011 Ramesh Partly
Sales allowed
Corporation
14/Hyd/2011 Ramesh Allowed
Watch
Services
15/Hyd/2011 Ramesh Partly
Watch allowed
Company
36
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Order pronounced in the open Court on 10.12.2014.
Sd/- Sd/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated 10th December, 2014.
VBP/-
Copy to
1. Ms. Shobha R. Chugani
2. Ms. Roshni K. Chugani
3. Shalu C. Chugani
4. Ms. Manisha K. Chugani
5. Mr. Lachman G. Chugani Mr.S. Rama Rao
6. Mr. Gulabrai D. Chugani Advocate 7. Ms. Anitha L. Chugani Flat No. 102
8. Mr. Kunjbai G. Chugani Shriya's Residency
9. Mr. Ramesh G. Chugani Road No.9
10. Mr. Ashok G. Chugani Himayatnagar
11. Mr. Chandru G. Chugani (late) Hyderabad.
12. Mr. Kishore G. Chugani
13. Mr. Ramesh Sales Corporation
14. Ramesh Watch Services
15. Ramesh Watch Company
16. ACIT, Circle 10(1), Hyderabad.
17. CIT, Hyderabad
18. D.R. ITAT "A" Bench, Hyderabad.
37IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Annexure-1.
IT(SS)A No.1/Hyd/2011 Ms. SHOBHA R.CHUGANI , Hyderabad Block period 1987-88 to 1996-97 and 01-04-1996 to 03-10-1996 ASSESSMENT YEAR: 1987-88 Ground Details of Explanation by assessee Remarks of the Decision No. & addition Assessing Officer in Amount the remand report.
added (Rs.) 1 to 7 & General in 55 nature
8. Cash The available opening cash An amount of In view of Rs.900 deposited balance was deposited in the Rs.900/- was the on 15-4- Indian Bank on 02-04-1986. deposited in cash in explanation 1986 is Indian bank account No. bank account No.6190 which was treated as 6190 clearly shows that the which the assessee not undisclose assessee deposited an could not explain. controverte d income. amount of Rs. 900/- on Hence treated as d by AO, 2.4.1986 itself. The deposit undisclosed income. the addition of Rs. 900/- appearing stands against date 15.4.1986 deleted.
represents the interest
received from SBI mutual
fund.
9. Addition Rs.5,000/- was transferred The A.O. found that In view of
Rs.5342 on account from Indian bank A/c there was a deposit of the
of short No.6190 to A/c No.8883. Rs.5,000/- on 5.1.87 explanation
declaration Rs.342/- is a part of interest in the joint bank a/c which was
of rental credited to the account by No.8883 in Indian not
receipts or the bank. They do not Bank with Smt. controverte
interest represent rent. The amount Anitha. The contention d by AO,
received. of Rs. 342/- was offered to of the assessee that the addition
tax in the asst. year 1987- the amount was stands
88. transferred from deleted
Indian Bank a/c
No.6190 was found to
be incorrect. Further,
an amount of
Rs.342/- was found
credited as interest
which was not
declared in return.
Therefore, the total
amount of Rs.5342/-
is treated as
undisclosed income.
38
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
10. Addition The assessee received a gift It was found from the As the Rs.20,000 treating of Rs.20,000/- from Sri Lal seized material that amount the gift Dayal Dasani, NRI, Gibraltor the Bank of Credit and was not received as on 19-1-1987. Letter of Commerce Gibraltor disclosed in undisclose confirmation was submitted authorized Bank of statements d income. (page No. 16) annexed to the India for payment of earlier, the explanation submitted (page Rs.20,000/- on same can No. 13 of the paper book). 19.1.87. The amount be This does not emanate from was neither declared considered the seized documents. The in regular return of in Block amount was received income nor the assessment through banking channels. assessee submitted . As the The bank account is gift tax return. occasion for disclosed to the department. Therefore, the amount gift is not Therefore, the addition is treated as explained, should not have been made undisclosed income. credit is while completing the confirmed assessment under sec. 158 as BD of the Act. unexplaine d.
ASSESSMENT YEAR: 1988-89
11. Addition This amount pertains to This amount of Since Rs.1392 on account interest from Indian Bank Rs.1392/- was not eligible for of short A/c No.8883 of Rs.582/- on declared by the deduction declaration 5-5-87 and Rs.811/- on 10- assessee in the regular u/s 80L of interest. 11-87. The appellant is I.T.return. Hence, amount entitled for 50% of the said treated as undisclosed stands amount and not the entire income of the deleted. amount. Even if the 50% assessee. were to be added the said amount would be deductible under sec. 80L of the Act.
Therefore, no addition need be made. The addition deleted.
ASSESSMENT YEAR: 1989-90
12. Interest With regard to Rs.2,573/-, (a)Assessee received Considering Rs.2,573 and the assessee submits that Rs.1515/- from a/c the Rs.4,800 deposit in Rs.600/- was received as 6190/- and Rs.1975/- explanation bank gift from Dayanand. Balance from a/c No.8883 but amounts account Rs.1973/- is interest on declared Rs.917/- only are deleted. treated as Indian Bank account in return. Hence undisclose No.8883. out of the interest balance of Rs.2573/- d income. of Rs. 1,973, the appellant is is treated as entitled only for 50% as the undisclosed income. balance 50% relates to b)Rs.4800/- cash Smt.Anitha. It is further deposited in a/c submitted that the addition No.6190 on 16-4-98. does not emanate from any Assessee's explanation seized material and hence that interest received 39 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
no addition can be made. from NSC is not Even otherwise, the said acceptable as interest amount would be exempt on NSC is paid at the under sec. 80L of the Act. time of maturity only.
With regard to the deposit of
Rs.4,800/, the interest
received on NSC was
deposited on 9-4-99
13. Addition Rent account statement was Rs.20,400/- was Entire Rent
Rs.1,200 on account filed before the Assessing deposited in Joint a/c can not be
of short Officer(page No. 13 of the No.8883. Assessee's added as
declaration paper book). It is not correct share is Rs.10,200/- the income
of rental. to say that rent is short but she declared is to be
shown. Further, the addition Rs.9000/- only as computed
does not emanate from the rental receipts in under the
seized material. return. Hence head house
Rs.1200/- is treated property.
as undisclosed income More over
of the assessee. amount is
correctly
disclosed as
explained.
Hence
deleted.
14. Addition This ground is already Rs.4800/- cash Deleted
Rs.4,800 treating explained at Srl.No.12 deposited in a/c 6190
the deposit above. on 16-4-98. Assessee's as explanation that undisclose interest received from d deposit. NSC is not acceptable as interest on NSC is paid at the time of maturity.
15. Addition The narration of this ground It was found that the As assessee Rs.45,000 on account is wrong. A copy of the note investments in NSC is eligible of short submitted before the have been met from for declaration Assessing Officer regarding borrowed funds or deduction of rental additions under Sec.80CCA from realization of u/s 80CCA receipt and 80 CCB is annexed for NSC of earlier years / 80CCB ready reference. In view of which were exempt the addition the detailed explanation from tax. Therefore, is deleted. submitted, the addition may the investments are Moreover kindly be deleted. The not from income the appellant claimed deduction chargeable to tax. immediate under sec. 80C of Rs. source of 45,000 and became eligible fund is not for deduction of Rs. 20,200. material so The claim was made in the long as 40 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
return of income filed. The assessee disallowance does not has income emanate from the seized to the material. Further, the extent of effective claim was only Rs. investment. 10,000. Therefore, the Addition Assessing Officer is not deleted. justified in making addition of Rs. 45,000. Further, the contention of the Assessing Officer that the amount was paid out of the loans is not justified. The appellant paid the amounts from the bank accounts and the incomes were also credited in the same bank account.
Therefore, the appellant
submits that the claim made
is justified and the
Assessing officer is not
justified in making any
addition.
ASSESSMENT YEAR: 1990-91
16. Addition The appellant admitted An amount of Entire Rent
Rs.3,600 on account rental income of Rs. 9,000 Rs.25,200/- was can not be
of short from the joint property in deposited in joint a/c added as
declaration the regular return of No.8883. Assessee's the income
of rent. income. The Assessing share is Rs.12,600/- is to be
Officer is of the view that but she declared only computed
there is suppression in the Rs.9000/- as rental under the
rental income. It is receipts in return filed. head house
submitted that there is no Therefore, the balance property.
such suppression and there of Rs.3600/- was More over
is no seized material to treated as undisclosed amount is
suggest that there is any income. correctly
suppression. Therefore, no disclosed as
addition can be made. A explained.
statement showing the Hence
receipt of rents year wise deleted
and the division among the
joint owners is submitted as
an annexure to the present
submissions.
17. Addition This amount was already Admitted in block Ground
Rs.5,400 on account admitted in the block return return. rejected.
of short of income. No further
declaration comments are offered of interest
18. Addition With regard to Rs.4,800/- Interest on NSC is Since Rs.4,800 holding the the same pertains to interest paid at the time of amounts 41 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
(19-4-89 deposits as received from NSC. maturity only. Hence are undisclose With regard to the addition the claim of the disclosed, Rs.2,700 d income. of Rs.2,700/-, no such entry assessee that these the same (20-4-89) exists in the bank account amounts pertains to are deleted.
With regard to Rs.2,400/- interest received from Rs.2,400 this represents the interest NSC is not acceptable.
(1-1-90) received from NSC.
No explanation from AO
about the entry in bank
account. Other amounts
accounted.
19. Addition The amounts were paid It was found that the As assessee
Rs.22,000 on account through bank account No. investments in PPF is eligible
of short 6190 with Indian Bank. All and Mutual fund have for
declaration the incomes of the appellant been met from deduction
of rental or receipts were also borrowed funds. u/s 80CCA
receipt credited to the said account. realization of NSC of / 80CCB
Therefore, the AO's earlier years which the addition
observation is not correct. were exempt from tax. is deleted.
Further, the said amounts Therefore, the Moreover
were claimed as deduction investments are not the
under sec. 80C and 80CC from income immediate
while filing the return of chargeable to tax. source of
income filed. The addition fund is not
does not emanate from the material so
seized material. Therefore, long as
such an addition should not assessee
have been made while has income
completing the assessment to the
under sec. 158 BD of the extent of
Act. It is further submitted investment.
that the claim made was Addition
only Rs. 10,000 under sec. deleted.
80CC and Rs. 880 under
sec. 80C of the Act.
Therefore, the Assessing
Officer is not justified in
making any such addition.
The stand of AO is not
justified. Hence deleted.
ASSESSMENT YEAR: 1991-92
20. Addition This amount pertain to Interest received from Since
Rs.1250 on ground interest received from bank bank a/c No.8883 is eligible for
of short account in the joint names added as the assessee deduction
declaration of the appellant and Smt. has not declared the u/s 80L
of rental Anitha Chugani. 50% of the same in return. amount
receipt. said amount is in the hands stands
of the asessee and the deleted
balance belongs to
Smt.Anita Chugani. It is
42
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
already explained that this amount represent interest received from bank account in the joint names of the assessee and Smt. Anitha Chugani. 50% of the said amount belongs to the assessee and the balance to Smt. Anitha Chugani. The assessee's share of interest has been offered to tax in the original return of income filed.
21. Addition The information is in the Rs.25,200/- deposited Entire Rs.3,600 on account annexure. It can be seen in Joint a/c No.8883. Rent can of short that there is no short Assessee's share is not be declaration declaration of rent and the Rs.12,600/- but added as of rental Assessing Officer is not declared only the income receipt. justified in making the Rs.9000/- as rental is to be addition. It is further receipts in the return computed submitted that such an under the addition is made purely on head house estimation and on property.
assumptions. There is no More over information in the seized amount is material. Therefore, no correctly addition should have been disclosed as made. However, without explained. prejudice, the appellant Hence submits that she possess deleted only 50% right in the said property and hence 50% of the amount after deducting the statutory deduction has to be treated as the income of the appellant. The details are furnished in the paper book furnished at page No.
54. Copy of the same is enclosed. There is no information in the seized material suggesting an addition.
22. Addition This amount was already Admitted in block Ground Rs.5,894 on the admitted in the block return return. rejected ground of filed. No further comments. undisclose d interest from NSC
23. Addition The narration of this ground It was found that the As Rs.12,000 on account is wrong and the appellant investments in PPF assessee is 43 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
of short is submitting a modified and Mutual fund have eligible for declaration ground for the year under been met form deduction of rental consideration which may borrowed funds or u/s 80CCA receipt/ kindly be considered. The from realization of / 80CCB dis- appellant submits that the NSC of earlier years the addition allowance claim for deduction was which were exempt is deleted. of claim made during the year in the from tax. Therefore, Moreover regular return of income. the investments are the Such an amount cannot be not from income immediate disallowed while completing chargeable to tax. source of the assessment under sec. fund is not 158 BD of the Act. Further, material so the appellant submits that long as she possessed the required assessee funds. Further, the reason has income for disallowance is not to the correct. Therefore, such an extent of addition cannot be made. investment.
Addition deleted.
ASSESSMENT YEAR: 1992-93
24. Addition The narration of the receipts Assessee received an Amount Rs.1500 on the is at pages 83-84 of the amount of Rs.3500/- being ground of paper book. The amount of from LIC Mutual fund. refund the short Rs. 2,000 represents Out of this she same declaration interest receipt and whereas declared only stands of LIC the balance of Rs. 1,500 Rs.2000/- in the deleted. Mutual received is mentioned as regular return of fund. refund. Therefore, the income. The balance of amount of Rs. 1500 cannot Rs.1500/- treated as be added as undisclosed undisclosed income of income. Further, the the assessee.
addition does not emanate from the seized material and cannot be considered as undisclosed income. The amounts are recorded in the bank accounts, which were disclosed to the department. Therefore, such an addition cannot be made.
25. Addition This amount pertain to An amount of Stand Rs.1,081 on the interest received from the Rs.4833/- was deleted for ground of joint account with Smt. received as interest reasons short Anitha. The submissions from bank a/c stated declaration made for the immediately No.8883 and 6190. earlier on of interest. preceding year may kindly Assessee declared only similar be considered. It is Rs.3752/- in the addition. submitted that only 50% of return. Therefore, the the said amount is balance of Rs.1081/- assessable in the hands of treated as undisclosed 44 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
the asessee and the balance income.
belongs to Smt.Anita
Chugani. It is further
submitted that such an
addition is subject to
deduction under sec. 80 L of
the Act.
26. Addition The narration of this ground It was found that the As assessee
Rs.15,000 on account is wrong. A revised ground investments in PPF is eligible
of short of appeal is submitted which and Mutual fund have for
declaration may kindly be considered. been met form deduction
of rental This represents investment borrowed funds or u/s 80CCA
receipt and claim made before the from realization of / 80CCB
Assessing Officer in the NSC of earlier years the addition
regular return of income which were exempt is deleted.
filed. Therefore and for the from tax. Therefore, Moreover
reasons submitted for the the investments are the
immediately preceding year, not from income immediate
the appellant submits that chargeable to tax. source of
the said addition should not fund is not
have been made while material so
completing the assessment long as
under sec. 158BD of the Act. assessee
has income
to the
extent of
investment.
Addition
deleted.
ASSESSMENT YEAR: 1993-94
27. Addition This amount pertains to An amount of Deleted for
Rs.1833 on account interest received from the Rs.18373/- was the reasons
of short joint account of the received as interest stated for
declaration appellant and Smt. Anitha. from bank a/c similar
of interest The appellant submitted a No.8883 and 6190. addition note for the immediately Assessee declared an above. preceding year in this amount of Rs.16540/-
regard.. only in the return.
Therefore, balance of
Rs.1833/- is treated
as undisclosed
income.
28. Addition This is admitted in the block Not pressed by the Ground
Rs.1512 treating return of income filed. This assessee. rejected
the ground of appeal is not
interest pressed. No further
received on comments.
mutual
fund as
undisclose
d income.
45
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
29 Addition This amount represents It was found that the As assessee Rs.40,000 on account investment in PPF and a investments in PPF is eligible of short claim was made under sec. have been met from for declaration 88 of the Act. This was not borrowed funds or deduction of rental claimed as a deduction from from realization of u/s 80CCA receipt/ the total income. This claim NSC of earlier years / 80CCB claim is only as a relief from the which were exempt the addition disallowed. tax payable. The Assessing from tax. Therefore, is deleted.
Officer is not justified in the investments are Moreover adding the said amount. not from income the Note submitted at Col. No. 4 chargeable to tax. immediate may kindly be perused. For source of the reasons stated therein, fund is not for the detailed explanation material so submitted for earlier years, long as the addition made may assessee kindly be deleted. has income to the extent of investment.
Addition deleted.
ASSESSMENT YEAR: 1994-95
30. Addition Rent is not short declared. A Rs.27,600/- deposits Entire Rs.1200 on account statement of rent received were made in Joint Rent can of short was already submitted a/c No.8883 which are not be declaration before the Assessing Officer against rental receipts. added as of rental (Page No.95 to 103 of the Assessee share is the income receipts. paper book.). The appellant Rs.13,800 but is to be is also submitting a copy of declared only computed the statement showing the Rs.12,600/- in the under the division of rent between the return. Therefore, head house appellant and Smt. Anitha Rs.1200/- is treated property.
Chugani. A verification of as undisclosed More over
the said figures would reveal income. amount is
that there is no undisclosed correctly
income. Rent is not short disclosed as
declared. explained.
Hence
deleted
31. Addition The Assessing Officer did Rs.20,804 and Receipts
Rs.11,966 on account not correctly work out the Rs.6010 interests were and
of short actual amount received. received from bank accrual
declaration The appellant admitted the a/c No.8883 and can not be
of bank accounts in the 6190. Assessee taxed at
interest/re returns of income filed. The declared only
the same
ntal amounts actually credited to Rs.14,848/- in the
receipts. the bank accounts were return. Therefore, time. Since
taken into consideration as balance of Rs.11,966/- assessee
interest while filing the is treated as accounts
return of income. There is undisclosed income. interest on
46
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
no short declaration of accrual interest for the year. It is basis, the further submitted that the explanatio addition does not emanate n is from the seized document accepted.
and the amount cannot be
Amount
considered as the
undisclosed income. deleted.
Further, the appellant
submits that the Assessing
Officer has no basis for such
working. .
32. Addition This amount represents Amount credited in Receipts
Rs.5210 on account interest from NSC. The said bank a/c No.6190 is and
of interest is admitted in the Rs.19010/- but she accrual
undisclose regular books of account declared Rs.13800/- can not be
d interest which may please be as interest from NSC. taxed at
from NSC perused. This amount The assessee simply
the same
represents interest from stated that this
NSC. represents NSC time. Since
interest. Therefore, the assessee balance of Rs.5210/- accounts is treated as interest on undisclosed income of accrual the assessee. basis, the explanatio n is accepted.
Amount deleted
33. Addition The narration of this ground It was found that the Deleted for Rs.40,000 on account is wrong and a modified investments have been the reasons of short ground is being submitted. met from borrowed stated declaration This amount represents funds or from earlier on of rental investment in PPF and a realization of NSC of similar receipt claim was made under sec. earlier years which issue.
88 of the Act. This was not were exempt from tax. claimed as a deduction from Therefore, the the total income. This claim investments are not is only as a relief from the from income tax payable. chargeable to tax.
34. Addition of The property consists of 5 Sri Ramesh Chugani The Rs.28,243 the different plots of 416.5 during search amounts registratio Sq.Yds. situated at Thokatta admitted in his sworn are n charges village, Secunderabad. statement that confirmed incurred These were purchased by additional as there is on Smt.Sobha R.Chugani consideration of Rs.1 incriminati acquisition alongwith 4 others. A lac was paid outside ng material. of plot at detailed note clearly books for 5 plots Explanation 47 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Thokatta mentioning the sources for which was offered as of assessee village, investment by the appellant undisclosed income. rejected. Secuderab was submitted before the Further an amount of ad Assessing Officer (PageRs.7760/- was spent No.43 and 44 of the paper towards registration book). The source for the charges outside books, investment is properlybut the same was not explained by the appellant declared by the and therefore, the addition assessee in her block may kindly be deleted. return. Therefore, the same is treated as undisclosed investment of the assessee.
35. Addition of No such addition is made by The ground is Ground Rs.27,760 the the Assessing Officer and redundant. rejected registratio hence the ground is n charges redundant. No further incurred comments.
on Balamrai property
36. Reg. The Assessing Officer Matter of record. Rejected as Charging completing completed the assessment stated in tax at the u/s 158BD. It is submitted the main 60%. assessmen that the appellant is staying order.
t u/s 158 at 1-11-252/1A, Motilal
BD and Nagar, Begumpet,
charging Hyderabad along with his
tax at father Sri Gulabrai Chugani.
60%. The Department issued a
warrant of authorization to
search the premises of Door
No.1-11-252/1A, Motilal
Nagar, Begumpet,
Hyderabad. This clearly
indicates that the premises
of the appellant was
searched and, therefore, the provisions u/s 158BC should have been applied.
The Assessing Officer completed the assessment u/s 158BD of the Act. It is submitted that the A.P. High Court in the case of Dr. Ravinder Reddy held that the provisions u/s 158BC were to be applied and not 158BD. As per the decision of the Hon'ble A.P. High 48 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Court, in the case of Dr.
Ravinder Reddy, the
provisions of Sec. 158BC
should have been applied in
this case instead of the
provisions of Sec. 158BD.
ASSESSMENT YEAR: 1995-96
37. Addition The total interest received Assessee received an Receipts
Rs.885 on account was Rs.12,428/- from A/c interest of Rs.13,316/- and accrual
of short No.6190 and 8883. The from bank a/c can not be
declaration same was returned. Further, No.8883 and 6190 but taxed at the
of interest. it is submitted that such an declared only same time.
addition cannot be made Rs.12429/- in the Since
while completing the return. Therefore, the assessee
assessment under sec. 158 balance amount of accounts
BD of the Act. The Assessing Rs.885/- is treated as interest on
Officer cannot treat this undisclosed income of accrual
amount as undisclosed the assessee. basis, the
income as the same was explanation
offered to tax in the original is accepted.
return of income filed. Amount
deleted
38. Addition The appellant offered Assessee received Since
Rs.15340 holding interest on mutual funds at Rs.26,200/-, amounts
that Rs. 3,500 in the return of Rs.16557/- and are
interest income filed. For all the Rs.12583/- on various reconciled
from SBI assessment years, the dates and stated that the addition
and LIC appellant offered such the amounts were stands
Mutual interest on accrual basis. received from LIC and deleted.
fund The Assessing Officer, on SBI mutual funds with
represent the other hand, arrived at principle amounts.
undisclose the amount realized and The interest so
d income. after deducting the principal received from these
amount added the difference investments works out
as interest. This is not to Rs.15340/- which
correct. Firstly, such was not declared by
interest cannot be taxed on the assessee in the
receipt basis and secondly regular IT return or
such an addition cannot be block return. Hence,
made while completing the treated as undisclosed
block assessment. Every income for the AY 95-
year the assessee is offering 96.
the interest on accrual
basis. The said interests
cannot be assessed to tax on
receipt basis.
39. Addition This consists of two fixed It was found by the AO AO accepts
Rs.55,000 on the deposits made during the that there was a debit part of
ground year under consideration. of Rs.33,000/- and deposit
that part of The Assessing Officer is of Rs.25,000/- through where as we
49
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
FDR not the view that such deposits cheques No.505619. are of the properly have no proper sources. In No details were opinion explained. this regard it is submitted provided with regard that that: to the person to sources for FDR No.415788 for whom the cheques the entire Rs.30,000/- dated 29-5-95 was issued, the addition was out of reinvestment of purpose of payment, made the FDR originally made by date of payment or the stands drawing amount from Indian realization etc. explained. Bank vide Ch.No.505618 Therefore, in the Hence dated 4-5-91 (page No. 106 absence of proper deleted. of the paper book). explanation the Similarly, FDR No.415787 investment in FDR for Rs.25,000/- dated 29-5- cannot be linked to 94 was also out of reinvest the withdrawal made. of the FDR originally Therefore, the purchased drawing amount investment is treated form Indian Bank vide as undisclosed ch.No.505619 dated 9-12- income.
91. (PageNo.106 of the paper book.) However, the Details of investment in the explanation of the bank deposits explaining the assessee regarding sources are furnished in the FDR with Grindlays paper book submitted at bank was accepted. Page No. 106, which may kindly be perused. Detailed note submitted at Col. No. 4 of this note may also be perused. The addition was not made by the Assessing Officer on a proper footing.
40. Addition The said amount represent Assessee received an Not part of Rs.30,000 on the the maturity value of the amount of Rs.20,000 seized ground mutual funds. Such an and Rs.10,000 from material. that the addition cannot be made LIC and SBI mutual Accepting amount while completing the funds. The amounts assessee represent assessment under sec. 158 were invested by the explanation the refund BD of the Act, particularly in assessee in LIC and deleted. of the view of the fact that all the SBI mutual funds in amount information is made the A.Y.91-92 and 92- claimed available in the returns of 93 and claimed deduction income filed. The appellant deduction u/s 80CCB. u/s 80CCA further submits that either The amounts received or 80 CCB at the time of filing the on investments are return of income in Form 2B taxable in the year of or at the time of completion receipt. Since, the of the assessment assessee has not proceedings the provisions offered in the return contained in Chapter VIA Hence, the amount of were applicable to the block Rs.30,000/- is treated 50 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
period assessment. The as undisclosed appellant claimed income.
deductions under sec. 80CC of Rs. 10,000 for the year 1990-01; Rs. 10,000 under sec. 80CCB for the assessment year 91-92; and Rs. 10,000 under sec.
80CCB for the assessment year 92-93. The appellant submits that the information was available on record. The information does not emanate from the seized material. Further, the amounts would be refunded only after a certain period and could not have been received during the year.
Therefore, the AO is not justified in making addition of Rs. 30,000. For the detailed reasons stated therein the addition cannot be made invoking the provisions of Sec. 158BD of the I.T. Act.
41. Addition A revised ground is It was found that the Deleted for Rs.40,000 on submitted for perusal. This investments have been the reasons Account of amount represents met from borrowed stated short investment in PPF and a funds or from earlier on declaration claim was made under sec. realization of NSC of similar of rental 88 of the Act. This was not earlier years which issue. receipt. claimed as a deduction from were exempt from tax.
the total income. This claim Therefore, the is only as a relief from the investments are not tax payable. The Assessing from income Officer is not justified in chargeable to tax. adding the said amount. A revised ground is submitted for perusal. This amount represents investment in PPF and a claim was made under sec. 88 of the Act.
This was not claimed as a deduction from the total income. This claim is only as a relief from the tax payable. The Assessing Officer is not justified in adding the said amount.
51IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
ASSESSMENT YEAR: 1996-97
42. Addition Bank interest short Assessee received total Receipts Rs.3324 on account declared. The interest from interest of Rs.16540/- and accrual of interest A/c No.6190 is Rs.2971/- from bank a/c can not be accrued on and from A/c No.8883 is No.8883 and 6190 taxed at the FDR. Rs.7370/-. It is submitted whereas declared only same time.
that 50% interest from Rs.13,306/- in the Since account No. 8883 only can return. Therefore, the assessee be considered for the balance of Rs.3324/- accounts appellant and the balance is is treated as interest on taxable in the assessment of undisclosed income. accrual Smt. Anitha. Therefore, no basis, the addition should have been explanation made by the Assessing is accepted.
Officer Amount
deleted
43. Addition This amount is deposited by The assessee claimed Deleted
Rs.17,000 on the withdrawing the amount that Smt.Sunitha, her accepting
ground from Andhra Bank A/c daughter has the
FDR was No.14211 belonging to Smt. transferred the explanation
not Sunitha, the appellant's amount from her of assessee
properly daughter. An explanation account. However, no
explained. furnished in this regard is at such withdrawal was
Page No.113 of the paper found in the account
book. The Assessing Officer of the daughter.
is not justified in making an Further, assessee is
addition, particularly while not having any
completing the assessment account in Andhra
under sec. 158 BD. The Bank.
addition does not emanate
from the seized material. In the absence of any
material evidence
regarding withdrawal
or transfer in the
account during the
period the amount is
treated as undisclosed
income.
44. Addition The addition of Rs.5,00,000 The donor had gifted a For the
Rs.500000 on the was made disbelieving the total amount of detailed
ground gifts received from around Rs.42 lacs to reasons
that the Smt.Varsha Jaikumar her brothers and given in
amount Mirpuri. This amount was relatives during the main order,
received received through Cheque block period. The addition
from dated 4-8-95. In this regard, assessee could not stands
Varsha it is submitted that these prove that the donor's deleted.
Meerpuri entries were made in the financial capacity was
is regular bank account and sufficient to make gift
undisclose the books of account. No repeatedly to her
d income. incriminating material was relatives. Moreover the
52
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
found during the course of assessee could not search and, therefore, no produce any IT return addition should have been copy of the relative nor made as undisclosed any balance sheet income. Without prejudice, during the course of the appellant submits that assessment Smt.Varsha Mirpuri is the proceedings.
resident of Bangkok, Thailand and she is the sister of the appellant. She maintained a bank account with Indian Bank, Secuderabad, a copy of which is submitted at page Nos.18 of the paper book.
The appellant filed bank account in India, letter of confirmation from Varsha Mirpuri. It is also confirmed by her that she deposited the amounts with the Indian Bank much earlier and she issued cheques in favour of the appellant and other brothers and the amount was withdrawn. Therefore, the donor is identified, sources are identified and she confirmed the fact that the amount was gifted by her. She also confirmed the fact that she gifted the amount through banking channel. The Assessing Officer issued a notice u/s 158BD to Mrs.Varsha Mirpuri proposing to tax the amount deposited into the said bank account and the said Smt.Varsha Mirpuri explained the source for such deposit and thereafter the proceedings u/s 158BD were closed. Therefore, the Assessing Officer is not justified in making addition u/s 68 of the Act.
45. Addition The narration of this ground It was found that the Deleted for Rs.50,000 on account is wrong. There is a mistake investments in PPF the reasons of short in the ground and a revised have been met from stated 53 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
declaration ground is being submitted. borrowed funds or earlier on of rental The appellant claimed the from realization of similar receipt relief under sec. 88 and not NSC of earlier years issue.
as a deduction from the which were exempt total income. Therefore, the from tax. Therefore, Assessing Officer cannot the investments are make such an addition in not from income the assessment made. The chargeable to tax. appellant claimed the relief under sec. 88 and not as a deduction from the total income. Therefore, the Assessing Officer cannot make such an addition in the assessment made.
46. Addition These additions are It was found that the Deleted for Rs.25,000 treating explained in the respective investments have been the reasons (1988-89) investment assessment years. There is met from borrowed stated Rs.45,000 s made in no information before to funds or from earlier on (1989-90) PPF as Assessing Officer to show realization of NSC of similar Rs.22,000 undisclose that the contributions were earlier years which issue. (1990-91) d income. made out of borrowed funds. were exempt from tax. Rs.12,000 The deposits into the PPF Therefore, the (1991-92) A/c. are explained in the investments are not Rs.15,000 respective asst. years. The from income (1992-93) additions made may please chargeable to tax.
Rs.40,000 be deleted. (1993-94) Rs.40,000 (1994-95) Rs.40,000 (1995-96) Rs.50,000 (1996-97) 47. Addition This deposit represents the The amount was Deleted Rs.61,050 holding proceeds received on credited to bank a/c accepting
that the maturity of the earlier FDRs No.6190 on 11.6.96. assessee amount for Rs.30,000/- and The assessee stated explanation. deposited Rs.25,000/-. A detailed that this was out of represents explanation was submitted maturity amount from undisclose at page No.106 of the paper LIC. However, the d income book. assessee could not produce any material evidence to prove that the amount represents the proceeds received on maturity from LIC.
Therefore, the amount is treated as undisclosed income.
54IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
48. Addition The said amount was The amount was Does not Rs.13,000 holding the deposited on 2-9-1996. The credited in the bank pertain to amount appellant maintained books account No.6190 on assessment deposited of account. The amount is 2.6.96. The assessee year, hence represents received from the joint bank stated that this was deleted. undisclose account No. 8883. Further transferred from a/c d income. such an addition cannot be No.8883. However, made while completing the there is no such debit assessment under sec. 158 entry in a/c No.8883. BD of the Act. The assessee The explanation of the submits that the previous assessee was found to year did not end by the date be incorrect. Hence, of search. Hence, this Rs.13,000/- is treated addition cannot be taken as undisclosed into consideration during income. the block assessment years.
49. Addition This amount was paid This amount Since it is Rs.35,000 on the through Indian Bank represents the money an advance ground account No. 6190 (page No. advanced to M/s through that the 90 of the paper book) The Mohd. Ismail & Sons. bank Advance bank account is disclosed to In the absence of any account given to the department. The explanation the and not Md.Ismail financial year did not end. amount is treated as pertaining & Sons is Therefore, the Assessing undisclosed income. to year undisclose Officer is not justified in under d income, making any addition. consideratio Further all the credits in the n , deleted Indian Bank are properly explained by the appellant and therefore, the Assessing Officer cannot treat the said amount as undisclosed income
50. Addition The assessee submitted a During search the For the Rs.423703 on the detailed explanation at Page jewellery of detailed ground of Nos.25 to 41 of the paper Rs.11,75,666 was reasons excess book. In view of the said found belonging to the stated in jewellery explanation, the addition assessee and her main order, may kindly be deleted. As husband Sri Ramesh. addition is stated in Col.4, a detailed The assessee declared deleted. explanation was furnished Rs.4,32,875 and her at page Nos. 25 to 41 of the husband declared paper book. The Rs.1,20,696 in their explanation offered is self- wealth tax returns for explanatory. In view of the the A.Y.92-93.
said explanation, the
addition made may kindly The assessee stated in
be deleted. paper book that her
minor daughters had
55
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
separate jewellery for themselves but it was found that they are not part of the wealth tax returns of the assessee. Considering the social status of the family, Rs.60,000 has been deducted from the excess jewellery.
The assessee did not
furnish any
quantitative details of
jewellery in the wealth
tax returns. Therefore,
the jewellery found
cannot be compared in
the quantitative way
and has to be based
on market value only.
51. Addition An amount of Rs.1,75,000 (i)Sri Ramesh Chugani Since
Rs.175000 on the was already admitted in the during search admitted by
ground block return of income. admitted in his sworn assessee,
that the Detailed explanation is statement that an but in a
payment submitted at Col. 4. For amount of Rs.9,90,000 different
made to the reasons stated therein, it was paid as on money year, AO is
RK is requested that the for 6 flats purchased directed to
Constructi addition made may kindly in the name of the accept the
on as the be deleted. assessee and her 5 same and
expenditur daughters-in-law. further
e incurred Further additional addition is
by the amount of Rs.60,000 deleted.
assessee. was admitted towards
fixtures to the flat
outside books of
accounts. Thus out of
total amount of
Rs.33333 The Assessing Officer Rs.10.50 lakhs the
mentions that he would share of the present
estimate the undisclosed assessee comes to
income at Rs.2,00,000 and Rs.1.75 lakhs.
further added Rs.33,333. In
this regard it is submitted
that the amount of
Rs.1,69,341 represents the The assessee admitted
material purchased by the the amount for AY 94-
builder and not by the 95 whereas the builder
assessee. Further, the Sri R.K.Surana
assessee offered an confirmed that the on
56
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
additional income of money was paid in FY Rs.1,75,000 to cover the 96-97.
deficiencies. They include the cost of material used in addition to the normal material used by the builder. There is no information in the seized material to the effect that the assessee incurred more than the amount offered plus the amount recorded in the books of account. The bills found during the search reveal that the bills were issued in favour of R.K. constructions. The amount paid by the appellant, to the extent not explained, was already admitted in the return of income filed. The balance of the amount was incurred by the builder.
Therefore, no addition should have been made.
52. Addition This ground is redundant as These grounds are Ground Rs.10,521 on account no such addition is made in redundant as no such rejected.
of interest the assessment order. No addition is made in accrued on further comments. the order. FDRs.
53. Addition These additions are already It was found that the Deleted for Rs.40,000 holding the explained in the respective investments have been the reasons (1994-95) investment assessment years. met from borrowed stated Rs.40,000 s made in funds or from earlier on (1995-96) PPF realization of NSC of similar Rs.50,000 represent earlier years which issue. (1996-97) undisclose were exempt from tax.
d income Therefore, the investments are not from income chargeable to tax.
57IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Annexuere-2 IT(SS)A.No.2/Hyd/2011 Smt. ROSHINI K.CHUGANI, Hyderabad Block period 1987-88 to 1996-97 and 01-04-1996 to 03-10-1996 ASSESSMENT YEAR 1987-88 Ground No. Details of Remarks of A.O. in Decision And addition Explanation Remand Report Amount added 1 to 4, 34A General in nature & 36.
5. Cash deposit The assessee deposited The assessee did not Considering Rs.9,200 in Indian Rs.900 on 2-4-87, have any surplus the Bank added Rs.6,500 on 18-8-87 and funds from earlier explanation as Rs.1800 on 10-11-87 years to be of assessee, unexplained. aggregating to Rs.9,200. deposited in the we hold During the year the bank and hence, the that appellant derived an amount of Rs.9,200 assessee income of Rs.44,976 remains had sources which includes the unexplained. for cash commission from money deposits. lending of Rs.11,726. It Moreover can be seen that the AO wrongly Indian Bank account was considered already disclosed to the in AY 87- department. In view of the 88. Hence fact that the appellant was deleted.
having incomes during the year and in view of the fact that the regular books are maintained by the appellant which were seized by the department, it was submitted that such an addition should not have been made by the Assessing Officer. In the remand report, the Assessing Officer simply says that the appellant does not have any surplus funds from the earlier years. The amounts do not relate to the year under consideration.
58IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
6 Addition This amount represents It was found from Since seized Rs.30,000 treating the gift received by the the seized material material gift receivedassessee from Lal Dayal that the Bank of itself as Dasan, a close relative of Credit and confirms undisclosed the assessee. Commerce Gibraltor credit from income. According to the Assessing authorized Bank of above Officer there was an India for payment of person the authorization from Bank Rs.30,000 on same can of Credit and Commerce 19/01/1987. The be accepted Gibraltor to make amount was neither as genuine. payment of Rs.30,000 to declared in regular Hence the assessee on 19-1-87. return of income nor deleted. This further reiterates the the assessee fact that the NRI Sri Lal submitted gift tax Dayal Dasani gifted an return. Therefore, amount of Rs.30,000 to the amount is the appellant herein. It treated as may please be seen that undisclosed income. the amount was gifted by the NRI and the payment was ordered from out of the country. Therefore, gift tax is not payable in India.
Otherwise, the Assessing Officer, when the details are furnished, could have initiated gift tax proceedings, but no such proceedings were initiated. It is further submitted that the gift is explained and the source of the receipt of the amount is clear from the seized material itself. Therefore, the appellant submits that the addition is not justified.
7. Addition as This amount was already The interest from Admitted Rs.13,773 undisclosed admitted in the block money lending and income. If income return filed. Hence, the bank interest there is under the addition may kindly be declared amounts to double head income deleted. Rs.13950 whereas addition AO from money the interest credited is directed lending. in the bank account to delete.
was Rs.27,723.
Therefore, the
difference of
Rs.13,773 is treated
as undisclosed
income.
59
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
8. Addition as The assessee paid Rs. It was found that Addition Rs.35,000 deemed 35,000 through Indian the investments stands income u/s Bank Account No. 7273 on have been met from deleted as 80C(ii)(b) of 21-3-1987. The appellant borrowed funds or assessee the I.T. Act. deposited all the incomes from realization of has own in the said bank account. NSC of earlier years funds and The amounts received which were exempt further, AO from the partnership firms from tax. Therefore, is not in which the appellant is a the investments are correct in partner are also deposited not from income adding the in the bank account. The chargeable to tax. amount of partnership incomes are investment taxable for the year under when the consideration. Therefore, it claim was is not correct to mention only for that the amount was not lesser from out of the income amount.
admitted. IN fact, the
amount was paid through
cheques drawn on the
Indian Bank account
No.7273 on 21.3.1987.
Further the appellant
claimed only Rs.20,200
inclusive of payment of
LIC of Rs.4985. Therefore,
the Assessing Officer is
not justified in making
such an addition of
Rs.35,000.
ASSESSMENT YEAR 1988-89
9. Addition For the assessment year The assessee could Amount
Rs.7,200 treating the 1988-89, the appellant not produce any stand
deposit in received commission from material in support deleted as
the bank as money lending of of the deposits in deposit in
unexplained. Rs.19,143 and also other bank account. bank
incomes. The amount Hence, treated as account is
deposited in money undisclosed income. from known
lending was only Rs.7,200. sources.
Therefore, it cannot be said that the deposit made into the bank account represents undisclosed income. Further the bank account is already disclosed for Wealth Tax Return (Page No.62 of the paper book). In view of the above, the appellant 60 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
submits that the ground may kindly be allowed.
10. Addition as The assessee paid Rs. It was found that Addition Rs.33,000 deemed 32,000 through Indian the investments stands income u/s Bank Account No. 7273 on have been met from deleted as 80C(ii)(b) of 17-2-1988 and a further borrowed funds or assessee the I.T. Act sum of Rs. 1,000 was paid from realization of has own in cash. The Assessing NSC of earlier years funds and Officer made an addition which were exempt further, AO of Rs.33,000/- being the from tax. Therefore, is not amount of NSCs claimed the investments are correct in in the regular return of not from income adding the income. There is no seized chargeable to tax. amount of material for making any investment such addition u/s 158BD when the of the Act. Out of claim was Rs.33,000, Rs.32,000 was only for paid through Indian Bank lesser account in which all the amount. incomes were deposited.
Therefore, it is not correct to say that the amounts represent borrowed funds.
It can also be seen that the appellant claimed only Rs.19,394 as deduction u/s 80C which includes LIC payment of Rs.4985.
ASSESSMENT YEAR 1989-90
11. Addition on The Assessing Officer It was found that Addition Rs.35,000 account of made an addition of the investments stands deemed Rs.35,000 being the have been met from deleted as income. amount of NSCs claimed borrowed funds or assessee in the regular return of from realization of has own income. The claim was NSC of earlier years funds and made under sec. 80C of which were exempt further, AO the Act. The amounts from tax. Therefore, is not were paid through Indian the investments are correct in Bank account. All the not from income adding the receipts were deposited in chargeable to tax. amount of the said bank account. investment The appellant claimed when the deduction of Rs. 20,200 claim was under the said section. only for The total income for the lesser year under consideration amount. amounted to Rs. 56,834.
Therefore, the Assessing Officer is not justified in 61 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
making any such addition.
ASSESSMENT YEAR 1990-91
12. Addition on According to the Assessing The interest earned Deleted for Rs.842 account of Officer, the appellant on bank account the reasons undisclosed derived interest from No.25164 with as interest from Andhra Bank account No. Andhra Bank was explained bank. 25164 and the same was not disclosed in the by assessee.
not accounted for. In this return. regard it is submitted that the appellant did not maintain any account with Andhra Bank. However, there is a Kiddy Bank account in the name of minor children - Laveena and Rohit. The interest derived is not includible as the provisions of sec.
64(1A) was made
applicable only from the
assessment year 1993-94.
Therefore, the said
amount cannot be treated
as the income of the
assessee.
13. Addition on The assessee submits that It was found that Addition
Rs.45,000 the ground for the year under the investments stands
of deemed consideration, the total have been met from deleted as
income. income aggregated to borrowed funds or assessee
Rs.62,017. The amounts from realization of has own
paid towards PPF was NSC of earlier years funds and
Rs.25,000 and towards which were exempt further, AO
SBI Mutual Fund was from tax. Therefore, is not
Rs.20,000 It cannot be the investments are correct in
said that the said amounts not from income adding the
were from the borrowed chargeable to tax. amount of
funds particularly in view investment
of the fact that the amount when the
were paid through Indian claim was
Bank account No.7273 in only for
which account the lesser
appellant deposited her amount.
income. The appellant
claimed a deduction of Rs.
20,200 considering the
payments to LIC; PPF and
interest on NSCs.
Therefore, the Assessing
Officer is not justified in
62
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
making such an addition.
It is further submitted
that the information was
already disclosed to the
department and cannot be
considered as the
undisclosed income.
14. Addition on The assessee submits that IN original Deleted for
Rs.6,000 account of during the year under assessment the the reasons
unexplained consideration she derived assessee tried to as
deposit in property income of explain the amount explained
bank. Rs.7,200. A flat was as interest received by assessee.
purchased during the year from NSC but
and was let out for rent of interest on NSC is
Rs.1800. The appellant not paid in piece
admitted 1/3rd share or meal and is paid on
Rs.7,200 during the year. maturity only.
The said amounts were Subsequently, the
deposited in the bank assessee referred to
account. Therefore, it is page 4 of paper book
not correct for the but it contains only
Assessing Officer to a note on interest on
mention that there is no FDR. Therefore, the
source for the amount. It amount is treated as
is also submitted that the undisclosed income.
appellant realized both
NSCs and the interest on
NSCs. Taking all these
factors into consideration
it is not correct for the
Assessing Officer to
mention that the amount
of Rs.6,000/- is not
explained by the
appellant. The bank
account is disclosed in the
Wealth Tax Return. (Page
65 of the paper book).
ASSESSMENT YEAR 1991-92
15. Addition as During the year the The assessee has Receipts
Rs.2,746 undisclosed interest derived was received interest and accrual
interest from Rs.1637 and the amount from a/c with Bank can not be
bank. was already disclosed to of India and Andhra taxed at the
the department. Therefore, Bank which has not same time.
it is not correct for the been disclosed in Since
Assessing Officer to make the return. assessee
addition of Rs.2746. accounts interest on accrual 63 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
basis, the explanation is accepted.
Amount deleted 16 Addition on The Assessing Officer The assessee Deleted for Rs.6,000 account of mentioned that such referred to page 4 of the reasons unexplained deposit was made with the paper book as deposit in Andhra Bank account. It where no such explained bank. is submitted that account explanation was by assessee.
No. 7273 is with Indian found.
Bank and the amount is
recorded in the books of
account. The appellant
also submits that the
account was disclosed to
the department and also
in the books of account.
Therefore, the Assessing
Officer is not justified in
making such an addition.
It is submitted that the
bank account was already
disclosed in the Wealth tax
Return.
17 Addition on This amount was already Amount already If there is
Rs.1,200 account of admitted in the block admitted in Block double
undisclosed return of income filed. return. addition,
income from the same
money stands
lending. deleted.
18 Addition on The assessee paid Rs. It was found that As assessee
Rs.25,000 account of 25,000 through Indian the investments is eligible
deemed Bank Account No. 7273 on have been met from for
income 28-2-1991 Rs. 10,000 borrowed funds or deduction
towards LIC and on from realization of u/s 80CCA
28/3/1991. Rs. 15,000 NSC of earlier years / 80CCB
towards PPF. The which were exempt the addition
appellant deposited all the from tax. Therefore, is deleted.
incomes in the said bank the investments are Moreover
account. The amounts not from income the
received from the chargeable to tax. immediate
partnership firms in which source of
the appellant is a partner fund is not
are also deposited in the material so
bank account. The long as
partnership incomes are assessee
taxable for the year under has income
consideration. Therefore, it to the
is not correct to mention extent of
that the amount was not investment.
64
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
from out of the taxable Addition income. Further it is deleted.
submitted that such
additions cannot be made
while completing the
assessment under sec.
158 BD of the Act.
ASSESSMENT YEAR 1992-93
19. Addition as The Assessing Officer Assessee has not Receipts
Rs.3,989 undisclosed mentioned that the declared interest and accrual
interest from appellant received Rs. received from a/c can not be
bank. 1837 from Bank of India. with Bank of India taxed at the
This is not correct. The and Andhra Bank. same time.
appellant received only Rs. Since
475 for the year under assessee
consideration. In so far as accounts
the Andhra Bank account interest on
is concerned, the accrual
appellant was not having basis, the
any such bank account. explanation
The appellant's minor is accepted.
children were having Amount
account with Andhra deleted
Bank. It is humbly
submitted that the
provisions of sec. 64(1A)
was not applicable for the
assessment year under
consideration. Therefore,
the Assessing Officer is
not justified in making
such an addition,
particularly in view of the
fact that such an addition
does not emanate from the
seized material. The
appellant admitted
Rs.1637 in the regular
return of income. It is
submitted that both the
Indian Bank account and
Bank of India account
were declared in the
Wealth Tax Return filed.
The appellant submits
that in so far as Andhra
Bank account is
concerned, it relates to the
minor children and the
65
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
provision u/s 64(1A) were not applicable for the A.Y. 1992-93. Therefore, no addition should have been made.
20. Addition on The assessee paid Rs. It was found that As assessee Rs.35,000 account of 25,000 through Indian the investments is eligible deemed Bank Account No.7273 on have been met form for income. 17-2-1992 Rs.10,000 borrowed funds or deduction towards SBI mutual funds from realization of u/s 80CCA and on 24-3-1992. Rs. NSC of earlier years / 80CCB 15,000 towards PPF. The which were exempt the addition appellant deposited all the from tax. Therefore, is deleted. incomes in the said bank the investments are Moreover account. The amounts not from income the received from the chargeable to tax. immediate partnership firms in which source of the appellant is a partner fund is not are also deposited in the material so bank account. The long as partnership incomes are assessee taxable for the year under has income consideration. Therefore, it to the is not correct to mention extent of that the amount was not investment.
from out of the taxable Addition income. deleted.
The said amount was paid towards SBI Mutual fund from Indian Bank account.
All the incomes of the assessee are deposited in the same account. In so far as payment to PPF of Rs.25,000 is concerned the same was claimed u/s 88 of the IT Act and not as a deduction from the income. Therefore, it is not correct for the Assessing Officer to add the amount of Rs.35,000.
ASSESSMENT YEAR 1993-94
21. Addition as The Assessing Officer Assessee has not Receipts Rs.5,516 undisclosed estimated the interest declared interest and accrual income from from bank account at Rs. received from three can not be bank. 19,396. It is humbly bank accounts. taxed at the submitted that the same time. Assessing Officer did not Since 66 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
provide details for such assessee figure. The appellant is accounts admitting interest in the interest on returns of income as and accrual when the interest is basis, the credited. Further, such an explanation addition does not emanate is accepted. from the seized material. Amount of Therefore, the Assessing difference Officer is not justified in only is to be making such an addition. taxed.
Further, it is submitted Ground
that interest from Indian partly
Bank is Rs. 1967 and allowed.
from Bank of India Rs.
254. The aggregate works
out to Rs. 2221. The
appellant admitted Rs.
1637. At best, the
Assessing Officer ought to
have considered the
balance alone.
22. Addition on The ground is not pressed Not pressed by the rejected
Rs.15,000 account of as such addition is not assessee.
undisclosed made in the assessment
interest from order.
FDR No further comments.
23 Addition as The assessee paid It was found that Deleted as
Rs.40,000 deemed Rs.40,000 through Indian the investments assessee
income Bank Account No.7273 on have been met from has source
24-2-1993 Rs.40,000 borrowed funds or of funds
towards PPF. The from realization of from this
appellant deposited all the NSC of earlier which years incomes in the said bank were exempt from income. account. The amounts tax. Therefore, the received from the investments are not partnership firms in which from income the appellant is a partner chargeable to tax.
are also deposited in the bank account. The assessee claimed deduction u/s 88 of the IT Act and not deduction from the income.
Therefore, the AO is not justified in treating the amount as undisclosed income for the year under consideration.
67IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
ASSESSMENT YEAR 1994-95
24. Addition on The amount was As verified from the Refund of Rs.20,200 account of refundable after a period Indian Bank investment deemed of 5 years and no claim account, an amount in earlier income. was made up to the of Rs.20,200/- is the year is not assessment year 1999- realization of SBI taxable 2000 and, therefore, it is mutual funds which unless not correct for the is taxable in the year claimed as Assessing Officer to treat of realization which deduction. the amount of Rs.20,200 the assessee has not Assessee as the income of the disclosed. explanation appellant. It is further is accepted. submitted that for the Amount assessment year 1990-91, deleted. a claim was made of Rs.12,000 being 50% of the SBI Mutual fund.
Similarly, a claim was made for Rs.10,000 for the assessment year 1991-92.
These amounts were not refunded by 1994-95 and, therefore, the Assessing Officer is not justified in making addition.
25 Addition on The assessee paid Rs. It was found that Amount Rs.40,000 account of 40,000 through Indian the investments stand deemed Bank Account No. 7273 on have been met from deleted income 1-2-1994 Rs. 40,000 borrowed funds or accepting towards PPF. The from realization of explanation appellant deposited all the NSC of earlier years of assessee. incomes in the said bank which were exempt account. The appellant from tax. Therefore, submits that she claimed the investments are relief under sec. 88 from not from income the tax payable and not a chargeable to tax.
deduction from the income. Therefore, the amount cannot be treated as undisclosed income of the appellant. Further, as submitted in col. 4, the amounts were paid from the bank account where the incomes were deposited. Therefore, the AO is not justified in mentioning that the amounts were paid from the loan funds.
68IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
26. Addition on The appellant admitted Receipts Rs.2744 account of Rs.31,556 in the return of (i) Assessee has not and accrual Rs.16,201. undisclosed income filed. The declared interest of can not be interest on appellant admitted the Rs.2744 received taxed at the FDR and aggregate of the interest from account with same time. bank credited by the banks to Andhra Bank. Since account. her accounts. The assessee Assessing Officer on the accounts other hand resorted to interest on estimation of interest. The ii) The assessee was accrual appellant humbly submits holding FDRs of basis, the that while completing the Rs.1,90,000 explanation assessment under sec.158 throughout the year is accepted. BD, the Assessing Officer and Rs.35,000 for Amount cannot make such an 10 months. The deleted addition on estimate basis interest component without reference to the works out to seized material. Therefore, Rs.26,300 The FDR the appellant submits that interest declared by the Assessing Officer is the assessee was not justified in making Rs.10099. Therefore, such an addition. the amount of Rs.6201 is the undisclosed income for the A.Y.1994-95.
ASSESSMENT YEAR 1995-96 27 Addition on In this regard, it is As verified from the Deleted Rs.11,683 account of submitted that in the Indian Bank accepting deemed earlier years no such account, an amount the income. claim was made except for for Rs.12,583 is the assessee the assessment year 1992- realization of LIC explanation.
93. Therefore, such an mutual fund which addition cannot be made. is taxable in the year Further, the provisions of realisation which contained in Chapter VIA the assessee has not were not applicable for the disclosed. assessment under sec.
158 BD both at the time of filing the return of income and at the time of completing of the regular assessment. The addition is also not emanated from the seized material.
Therefore, no such addition should have been made by the Assessing Officer.
69IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Rs.40,000 The assessee paid Rs. It was found that 40,000 through Indian the investments Bank Account No. 7273 on have been met from 25-2-1995 towards PPF. borrowed funds or The appellant deposited all from realisation of the incomes in the said NSC of earlier years bank account. The which were exempt amounts received from the from tax. Therefore, partnership firms in which the investments are the appellant is a partner not from income are also deposited in the chargeable to tax.
bank account. The partnership incomes are taxable for the year under consideration. Further it is submitted that such additions cannot be made while completing the assessment under sec.
158 BD of the Act
28. Addition on The Assessing Officer The assessee was Assessee Rs.17,766 account of merely estimated the holding FDRs of explanation undisclosed interest and added the Rs.1,00,000 accepted. If interest on same. The assessee on the throughout the year amounts FDRs other hand admitted the and Rs.55,000 for 6 are offered income on receipt basis. ½ months. The on receipt Therefore, the addition interest component basis the may kindly be deleted. works out to same may Rs.20,100. The FDR become interest declared by double the assessee was addition if Rs.7611. Assessee taxed on also received accrual interest on accounts basis.
with Indian Bank Deleted.
and Andhra Bank
amounting to
Rs.5277. Thus the
difference of
Rs.17,766 is the
undisclosed income
for the A.Y.1995-96.
29. Addition on The ground is not pressed Not pressed by the rejected
Rs.12,583 account of as no such addition is assessee.
undisclosed made by the Assessing
Income on Officer.
maturity of
mutual No further comments.
70
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
fund.
ASSESSMENT YEAR 1996-97
30. Addition on The Assessing Officer is of Assessee has not In a case Rs.1628 account of the view, that the declared interest where undisclosed appellant derived interest received from assessee interest from from Andhra Bank and Andhra Bank does not bank. such interest was not account. have disclosed. It is humbly account in submitted that the Andhra appellant did not maintain Bank, how any such account with amount was Andhra Bank. Therefore, taxable was the Assessing Officer is not not justified in making answered such an addition. by AO.
Amount stand deleted.
31 Addition on The Assessing Officer The assessee was Assessee Rs.12,000 account of estimated the interest holding FDRs of explanation undisclosed receivable from the fixed Rs.1,00,000 accepted. If interest on deposits. He considered throughout the year. amounts FDRs the fixed deposits held by The interest are offered the appellant jointly with component works on receipt the minors and others. out to Rs.12,000 basis the The appellant admitted which is the same may Rs. 1220 in the return of undisclosed income become income filed. The for the Assessment double appellant admitted the Year 1996-97 as the addition if aggregate of the interest same has not been taxed on credited by the banks to declared in the accrual her accounts. The return. basis. Assessing Officer on the Deleted. other hand resorted to estimation of interest. The appellant humbly submits that while completing the assessment under sec.
158 BD, the Assessing Officer cannot make such an addition on estimate basis without reference to the seized material.
Therefore, the appellant submits that the Assessing Officer is not justified in making such an addition.
71IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
32. Addition as The assessee paid It was found that Deleted as Rs.50,000 deemed Rs.50,000 through Indian the investments assessee income u/s Bank Account No.7273 on have been met from has source 80C 26-3-1996 towards PPF. borrowed funds or of funds The appellant deposited all from realization of from this the incomes in the said NSC of earlier years years bank account. Further it which were exempt income. is submitted that such from tax. Therefore, additions cannot be made the investments are while completing the not from income assessment under sec.158 chargeable to tax.
BD of the Act. The said
amount was claimed as a
deduction u/s 88 of the
I.T. Act and not as a
deduction from the
income.
ASSESSMENT YEAR 1997-98
33. Addition on It is submitted that the As per seized Amount
Rs.28,679 account of appellant and five others material purchase deleted as
undisclosed already admitted Rs. bills in the name of assessee
investment 10,50,000 as undisclosed R.K. Constructions admitted
in Pooja income on this account. the builder of the income on
Apartments The appellant submitted flat amounting to this issue
that Rs. 60,000 is towards Rs.1,72,076 were as
extra fittings and Rs. found from the explained.
9,90,000 towards extra residence which are
payments to the builder. for purchase of extra
The Assessing Officer fittings. No
added the amount of Rs. explanation was
1,75,000 as admitted by offered. Therefore,
the appellant. Besides, the 1/6th (6 flat owners)
Assessing Officer mentions which comes to
that certain bills for Rs.28,679 Share of
purchases made by R.K. the assessee is the
Constructions from undisclosed
Hemant Enterprises; Om investments.
Trading Company were
found and that such an
amount works out to Rs.
1,72,076. The Assessing
Officer added 1/6 of such
amount. In this regard, it
is submitted that the
purchases were effected by
R.K. Constructions. This
is evidenced from the
invoices found. The
appellant offered Rs.
72
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
9,90,000 as additional
payment to R.K.
Constructions, besides
accepting Rs. 60,000 for
additional fittings.
Therefore, the amount of
Rs. 1,72,076 has to be
telescoped with the
amount already offered by
the appellant. Therefore,
the appellant submits that
the Assessing Officer is
not justified in making
such an addition.
34. Addition as Without prejudice to the Sri Ramesh Chugani Since
Rs.1,75,000 undisclosed contention, it is during search admitted by
investment submitted that the admitted in his assessee in
in Pooja assessee offered an sworn statement block
Apartments amount of Rs.1,75,000 that an amount of period,
towards the amount paid Rs.9,90,000 was double
to the builders in excess of paid as on money for addition is
the price as per the 6 flats purchased in not
agreement. The said the name of the warranted.
amount was already assessee and her 5 AO is
admitted in the return of daughters-in-law. directed to
income.. As the assessee Further additional accept the
already offered the amount amount of amount
of Rs.1,75,000, the Rs.60,000 was declared as
addition may please be admitted towards such.
deleted. fixtures to the flat
outside books of
accounts. Thus out
of total amount for
Rs.10.50 lakhs the
share of the present
assessee comes to
Rs.1.75 lakhs.
The assessee
admitted the
amount for
A.Y.1994-95
whereas the builder
Sri R.K.Surana
confirmed that the
on money was paid
in F.Y.1996-97.
35. Reg. The Assessing Officer Matter of record. Rejected.
Charging completing completed the assessment
73
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
tax at 60% the u/s 158BD. It is
assessment submitted that the
u/s 158 BD appellant is staying at 1-
and 11-252/1A, Motilal Nagar,
charging tax Begumpet, Hyderabad
at 60%. alognwith his father Sri
GulabraiChugani. This
clearly indicates that the
premises of the appellant
was searched and,
therefore, the provisions
u/s 158BC should have
been applied.
74
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Annexure-3 IT(SS)A No.3/H/2011 Smt. SHALU C.CHUGANI Block period 1987-88 to 1996-97 and 01-04-1996 to 03-10-1996 Ground No. Details of Explanation Remarks of the AO Decision & Amount addition in Remand Report added 1 to 5 & 14 General in nature 6 Bank The amount of Rs.600 was Ground not pressed Rs.600 interest, already admitted in the by the assessee Rejected. (1992-93 mutual fund block return filed and interest and hence this ground is not FDR interest pressed.
are added as undisclosed income Rs.10,145 Appellant offered interest The total interest Since (1995-96) of Rs. 14,775 for the component credited working of assessment year 1994-95 to bank on FDR was AO is not and Rs. 11,132 for the Rs.26,561 whereas justified assessment year 95-96. the assessee has amount Therefore, the working admitted interest of stands made by the Assessing Rs.16,416 only. deleted. Officer is not correct. Therefore, the Further, the addition is difference of not emanating from the Rs.10145 is the seized material. undisclosed income Therefore, the Assessing for the A.Y.1995-96.
Officer is not justified in making such additions while completing the assessment under sec.
158 BD of the Act.
The Assessing Officer is of the view that fixed deposits made with various banks would yield interest of Rs.26,561. According to the Assessing Officer there were deposits of Rs.10,000, Rs.75,000 and Rs.25,000 on 02.06.1994 and Rs.10,000 on 07.02.1995 after which 75 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
there were realizations of
Rs.49,671 on 18.10.1994
and Rs.1,01,890 on
13.02.1995.The Assessing
Officer is of the view that
interest realized would be
Rs.26,561 and not
Rs.10,426 as admitted. It
is further submitted that
there is no possibility of
deriving an interest of
Rs.26,561 from out of the
deposits made of
Rs.1,20,000 as narrated
by the Assessing Officer.
In the circumstances, it is
submitted that the
Assessing Officer is not
justified in making any
addition on this ground.
7. Addition NSC of Rs.9,000 was Assessee deposited Deleted
Rs.9,900 treating the matured on 18-8-1996. cash of Rs.9000 on accepting
(1987-88) deposit in The principal amount of 18-8-86 and Rs.900 assessee
bank as Rs.9,000 along with on 2-4-86 and explanation
undisclosed interest earned of Rs.900 explained that they
income aggregating to Rs.9,900 are NSC interest
was deposited in the received. NSC
bank. Therefore, the interest is received
Assessing Officer is not on maturity only.
justified in making such Therefore, claim of
an addition. the assessee cannot
be accepted.
Rs.6,000 With regard to Rs.6,000 Assessee deposited Deleted
(1988-89) for the assessment year cash of Rs.6000 in accepting
1988-89, this amount Indian Bank assessee
represents partly the account and explanation
interest received from NSC explained that they
and partly cash deposit. are NSC interest
The appellant maintained received. NSC
books of account and the interest is received
same were seized. For the on maturity only.
year under consideration, Therefore, claim of
the income for the year the assessee cannot
under consideration be accepted.
amounted to Rs. 45,065.
Rs.6,000 With regard to Rs.6,000 Assessee deposited Deleted
(1989-90) for the assessment year cash of Rs.6000 in accepting
1989-90, this amount Indian Bank assessee
76
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
represents the interest account and explanation received from NSC and explained that they cash deposit. are NSC interest received. NSC interest is received on maturity only.
Therefore, claim of the assessee cannot be accepted.
Rs.2,700 With regard to Rs.2,700, These are interest Deleted (1990-91) this consists of the deposit from SBI mutual accepting made of Rs.1,000 on 16- fund which are not assessee 12-90 out of the interest declared by the explanation received from SBI Mutual assessee in the fund, Rs.600 on 12-3-90 return. No from out of interest from explanation was SB account and Rs.1,100 furnished. deposited on 28-03-90 from available cash in the books of account . (page No.84 of the paper book).
The facts as submitted are
not rebutted by the
Assessing Officer in his
remand report. Therefore,
the appellant submits that
the Assessing Officer is
not justified in making
any such addition.
Rs.6,000 With regard to Rs.6,000 Assessee deposited Deleted
(1990-91) for the assessment year cash of Rs.6,000 in accepting
1990-91, this amount Indian Bank assessee
represents the amount account and explanation
received on maturity of explained that they
NSC. For this reason and are NSC interest
for the reasons submitted received. NSC
in the earlier paragraph, interest is received
the Assessing Officer is on maturity only.
not justified in making Therefore, claim of
such an addition. the assessee cannot
be accepted.
Rs.1,800 The deposit of Rs.1800 in These are cash Deleted
(1991-92) the assessment year deposits in Indian accepting
1991-92 represents the Bank account for assessee
cheque received on which no explanation
maturity of the NSC. For explanation was
the reasons submitted given.
earlier, the said amount
77
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
cannot be treated as the undisclosed income.
8. Addition This amount represents It was found from Since seized Rs.20,000 disbelieving gift received by the the seized material material the gift assessee from Lal Dayal that the bank of confirms Dasani, a close relative of Credit and gift, the the assessee. The amount Commerce, same is was transferred from the Gibraltor authorized accepted account of the donor to Bank of India for and amount the assessee's account by payment of deleted. way of an authorization Rs.20,000 on issued by the donor to the 19/1/87. The Bank of Credit and amount was neither Commerce. The credit was declared in regular already recorded in the return of income books of account and, nor the assessee therefore, it cannot be submitted gift tax treated as the undisclosed return. Therefore, income of the assessee. A the amount is letter of confirmation from treated as the donor is at page 18 of undisclosed income. the paper book and the explanation is at page 17 of the paper book.
It was found from the
seized material that the
Bank of Credit and
Commerce, Gibraltor
authorized Bank of India
for payment of Rs.20,000.
Therefore, the Assessing
Officer is not justified in
making any such addition.
9. Addition on It is not correct to mention It was found that As assessee
Rs.8,024 account of that the amount of the investments is eligible for
(1987-88) undisclosed Rs.8024 was paid from have been met from deduction
income out of the borrowed funds. borrowed funds or u/s 80CCA
The bank account for the from realization of / 80CCB
financial year 1986-87 is NSC of earlier years the addition
at page No.83 of the paper which were exempt is deleted.
book. This consists of from tax. Therefore, Moreover
interest from SB account, the investments are the
interest from UTI and not from income immediate
amounts received form the chargeable to tax. source of
partnership firm in which fund is not
the appellant is a partner. material so
The amounts received long as
from partnership firms assessee
were taxable in the has income
78
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
relevant period.. During to the extent the year under of consideration the investment. appellant paid LIC of Addition Rs.5086 and NSC of deleted.
Rs.35,000. The amount of NSC was paid through Indian Bank; whereas the LIC of Rs.5,086 was paid through cheque. The income for the year under consideration was Rs.45,065. The claim u/s 80C was Rs.20,200. It is submitted that the Assessing Officer is not correct in arriving at the figure of Rs.8,024and in treating the same as undisclosed income. It is also submitted that the claim was made in the return of income and the details were already available in the records.
Therefore, the amount cannot be considered as the undisclosed income.
Rs.20,000 With regard to Rs.20,000 The assessee Considering (1988-89) (1988-89), the assessee purchased NSC for the assessee submits that cheque was Rs.20,000 and explanation issued to Post Master, referred to page 12 amount was Head Post Office, of paper book for deleted. Secunderabad towards explanation but no purchase of National explanation was Savings Certificate vide found in page cheques No.819465. The No.12. cheque was cleared on 8- 10-1987. (Page No.89 of the paper book).
Therefore, it is not correct to mention that the investment is not properly explained. It is further submitted that the amount was disclosed to the department and the addition does not emanate from any seized material.
Therefore, no such 79 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
addition should have been made by the Assessing Officer, while completing the assessment under sec.
158BD of the Act.
Rs.25,000 With regard to Rs.25,000 As found from the (1990-91) (1990-91), this transaction seized material Amount pertains to the husband of Rs.25,000 was deleted the assessee Late Sri deposited in the accepting Chandru Chugani. The fixed deposit a/c in assessee details furnished in this the Andhra Bank. explanation. regard are available at The investment was page No.149 of the paper made on 1.3.90 and book filed in the case of the assessee's late Sri Chandru Chugani. explanation that the As the transaction does investment was out not relate to the appellant of amount and as the transaction withdrawn on was already disclosed by 2.12.91 is not Sri Chandru Chugani, the relevant. Assessing Officer is not justified in making any such addition. It is also submitted that such an addition does not emanate from any seized material.
It was also explained that
a similar addition was
made in the assessment of
late Sri Chandru Chugani
and, therefore, the
appellant submitted that
Rs.25,000 cannot be
added in the assessment
of the appellant herein.
This addition is wrongly
made in the reassessment
made.
Rs.12,000 With regard to Rs.12,000 It was found that The
(1991-92) (1991-92), it is submitted the investments of immediate
that the appellant issued Rs.12,000 in PPF source of
cheque No. 8197819470 and LIC Mutual fund is not
for Rs.10,000 issued fund have been met material so
towards investment in LIC from borrowed long as
Mutual Fund and was funds or from assessee
cleared on 28-2-91 (page realization of NSC of has income
No. 89 of the paper book). earlier years which to the extent
Rs.2,000/- was paid were exempt from of
80
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
towards SBI mutual fund tax. Therefore, the investment. through cheque cleared on investments are not Addition 26-3-1991 from Indian from income deleted. Bank A/c No. 5330. chargeable to tax.
Rs.42,000 With regard to Rs.42,000 It was found that The (1992-93) (1992-93), investment of the investments of immediate Rs.10,000/- was made to Rs.42,000 in PPF source of SBI Mutual fund by and SBI Mutual fund is not withdrawing the amount fund have been met material so from Indian Bank on from borrowed long as 2/2/1992 vide cheque No. funds or from assessee 697304; Rs.25,000 was realization of NSC of has income invested in short term earlier years which to the extent fixed deposit on 9-12-91 were exempt from of paid through cheque tax. Therefore, the investment. No.697307 Indian Bank; investments are not Addition investment in PPF of from income deleted. Rs.32,000, was paid chargeable to tax.
through cheque
No.697305 of Rs. 2,000
and another sum of
Rs.30,000 was paid from
out of available cash. For
the assessment year
1992-93, the appellant
claimed deduction of
Rs.32,000 towards
payment of PPF u/s 88 of
the Act. She claimed
Rs.10,000 u/s 80CCB of
the Act. For the year
under consideration the
total income of the
appellant was Rs.71,398.
Rs.40,000 It is submitted that the It was found that Source of
(1993-94) investment of Rs.40,000 the investment of fund is not
(1993-94), was made from Rs.40,000 in PPF material so
out of the amount of have been met from long as
Rs.1,24,682 available with borrowed funds or assessee
her during the from realization of has income
assessment year inclusive NSC of earlier years to the extent
of amounts received on which were exempt of
maturity of NSCs, interest from tax. Therefore, investment.
on FDRs and mutual the investments are Addition
funds apart from opening not from income deleted.
cash balance. chargeable to tax.
Rs.20,000 The appellant claimed This is the amount Amount (1994-95) deduction of Rs. 10,000 realized from SBI deleted.
under sec. 80CC for the mutual fund which 81 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
assessment year 1990-01; is taxable in the Rs. 10,000 under sec. year of realization. 80CCB for the assessment The assessee has year 1991-92; Rs. 10,000 not declared the for the assessment year same in the return. 1992-93. The amount Hence, treated as deposited is refundable undisclosed.
only after 5 years.
Therefore, the amount
received during the year
cannot be treated as the
income as the same was
not claimed. Without
prejudice, it is submitted
that every year only an
amount of Rs. 10,000 was
claimed for three years.
Rs.40,000 With regard to Rs.40,000 It was found that Source of
(1994-95) (1994-95), the assessee the investment of fund is not
submits that there was an Rs.40,000 in PPF material so
amount of Rs.1,22,574 have been met from long as
standing to her credit borrowed funds or assessee
during the assessment from realization of has income
year inclusive of amounts NSC of earlier years to the extent
received on maturity of which were exempt of
NSCs, interest on FDRs from tax. Therefore, investment.
and mutual funds apart the investments are Addition
from opening cash not from income deleted.
balance. The investment chargeable to tax.
of Rs.40,000 was from out
of such credits. Hence, no
addition can be made.
Rs.10,000 The appellant did not The amount was Amount
(1995-96) claim any deduction of LIC received from LIC deleted
mutual fund or PPF or mutual fund on 17- accepting
NSC as there was no 10-94 which is explanation.
taxable income. Even chargeable to tax in
otherwise the claim would the year of receipt
have been u/s 88 and not
as deduction from the
income.
Rs.40,000 According to the Assessing It was found that Source of
(1995-96) Officer, the claim for the investments of fund is not
deduction of PPF is not Rs.40,000 in PPF material so
allowable as the amount have been met from long as
was not invested from out borrowed funds or assessee
of the income. from realization of has income
NSC of earlier years to the extent
82
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
The appellant did not which were exempt of claim any deduction of LIC from tax. Therefore, investment. mutual fund or PPF or the investments are Addition NSC as there was no not from income deleted. taxable income. Even chargeable to tax. otherwise the claim would have been u/s 88 and not as deduction from the income.
Rs.50,000 In this regard the It was found that deleted as (1996-97) appellant humbly submits the investments of addition can that during the year under Rs.50,000 in PPF not be made consideration, the gross have been met from on investment total income of the borrowed funds or made from appellant was Rs.49,236 from realization of known and also derived for the NSC of earlier years sources. immediately preceding which were exempt year. All the transactions from tax. Therefore, of the appellant were the investments are routed through the bank not from income account and the amounts chargeable to tax.
were paid through the same account. Therefore, it cannot be said that the amounts were not invested from out of the income earned. Further, the appellant submits that the appellant did not claim deduction from the income, and also not claimed tax relief under sec. 88 of the Act as no tax payable for the year under consideration.
Further, such an addition could not have been made, while completing the assessment under sec.
158 BD of the Act.
10. Addition as The cash deposit of Assessee made cash Addition Rs.10,000 undisclosed Rs.10,000 on 26-7-1986 deposits of deleted (1987-88) income in Ramesh Watch Services Rs.10,000 on accepting was made from out of the 20/06/86 with assessee cash available in the Ramesh Watch explanation. regular books of account. Service. The The fact can be verified assessee did not from the seized books. It is offer any submitted that the explanation.
83IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
amount is already
recorded in the books of
account (page 41 of the
paper book). Therefore,
such an addition cannot
be made while completing
the assessment under sec.
158 BD of the Act,
particularly, when no
seized material is
available.
ASSESSMENT YEAR 1996-97
11. Addition It was submitted that As found from the Deleted
Rs.27,000 treating the there was a deposit with seized material accepting
investment Kiddy Bank account of assessee invested explanation.
in FDR as Master Sachin from the Rs.27,000 on
unexplained year 1981. The amounts 26/3/96 in FDR in
were deposited from then Andhra Bank. The
and onward and the assessee explained
amount so withdrawn that the investment
was deposited into the FD is out of the
account. The Assessing amounts withdrawn
Officer in the remand from kiddy bank
report did not make any account from 1981
further comments. to 1996.
ASSESSMENT YEAR 1997-98
12. Further This is at para 7.ii of the Matter as per record AO is
Rs.33,333 addition on assessment order. Under directed to
account of this head, the Assessing correct the
investment Officer arrived at an clerical
in Pooja addition of Rs. 28,679, mistake. If
Apartments but added Rs. 33,333. already This is a clerical mistake admitted in the assessment order. double It is further submitted addition can that the appellant and five not be others already admitted made.
Rs. 10,50,000 as Ground undisclosed income on allowed. this account. The appellant submitted that Rs. 60,000 is towards extra fittings and Rs.
9,90,000 towards extra payments to the builder.
The Assessing Officer added the amount of Rs.
1,75,000 as admitted by the appellant. Besides, the 84 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Assessing Officer mentions that certain bills for purchases made by R.K. Constructions from Hemant Enterprises; Om Trading Company were found and that such an amount works out to Rs.
1,72,076. The Assessing Officer added 1/6 of such amount. In this regard, it is submitted that the purchases were effected by R.K. Constructions.
This is evidenced from the invoices found.
Therefore, the amount of Rs. 1,72,076 has to be telescoped with the amount already offered by the appellant.
The Assessing Officer did not make any further comments in the remand report.
13. Addition on The appellant submitted a During search the Deleted as Rs.8,05,968 account of detailed note in this jewellery of discussed in excess regard at pages 21-36. Rs.11,27,020 was main order.
jewelry found belonging to
the assessee and
her husband Sri
Chandru. The
assessee declared
Rs.1,33,072 and her
husband declared
Rs.83,770 in their
wealth tax returns
for the assessment
year 1992-93.
85
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Annexure-4 IT(SS)A No.4/H/2011 Smt. MANISHA A.CHUGANI Block period 1987-88 to 1996-97 and 01-04-1996 to 03-10- 1996 ASSESSMENT YEAR: 1987-88 Ground No. Details of Explanation Remarks of the A.O. Decision.
& addition in the remand
Amount report.
added (Rs.)
1, General in
45 &46 nature
2. Addition on The submission of the The assessee tried Deleted.
Rs.8,550 account of appellant is that the to explain the
unexplained addition does not amount as interest
deposit in emanate from the seized received from NSC
bank material and can not be but interest on NSC
account. treated as undisclosed is not paid in piece
income u/s 158BD of the meal and is paid on
I.T. Act. Secondly, the maturity only.
appellant submitted that
the amount of Rs.6750/-
was deposited into the
bank account from out of
the cash of Rs.1800
available in the books of
account and the balance
of amount, the amount
realized on maturity of
the NSCs. Therefore, the
Assessing Officer's
observations are not
correct.
3. Addition on This amount was already Interest received In case
Rs.10,193 account of admitted by the assessee from bank so
double
unexplained in the block return of Rs.13,991 whereas
interest from income filed. Therefore, the assessee addition was
SB A/c and no addition could be declared Rs.3798
made,
FDR made while completing only., the difference
the assessment under is added as deleted.
Sec. 158BC of the I.T. undisclosed income.
Act.
4. Addition on This amount was already The assessee In case
Rs.8,940 account of admitted by the assessee received interest
double
undisclosed in the block return of from money lending
interest from income filed. Hence the and UTI which is addition was
money Assessing Officer should taken as
86
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
lending and not have added the same undisclosed income made, UTI in the assessment for the block year.
deleted.
treating the same as undisclosed income.
5. Addition on Confirmation letter from It was found from since Rs.10,000 account of Lal Dayal Dasani, who the seized material confirmation gift from Lal stays in Gibralter, Spain that the Bank of Daya Dasani confirming the gift was Credit and was produced on 19-01-1987. Commerce Gibraltor available in (Page No.47 of the paper authorized Bank of book). The amount was India for payment of seized received through bank Rs.10,000 on 19-1- material DD. The addition is 87. The amount was made with reference to neither declared in itself, seized material and regular return of accepted.
therefore cannot be income nor the
treated as undisclosed assessee submitted Addition
income. gift tax return.
deleted.
Therefore, the
. amount is treated
as undisclosed
income.
6. Addition This amount represents Amount is credited Matter of
Rs.25,000 disbelieving the cheque received from in Bank of India
verification
the cheque Ramesh Watch Services account. In original
received from through Bank of India. assessment only. The
Ramesh Earlier, it was wrongly assessee stated that
same was
Sales mentioned as received it was received from
Corporation. from Ashok G.Chugani Ashok Chugani. deleted.
instead of Ramesh Watch Later, it was stated
Services. This fact was that the amount
already communicated was received from
vide letter dt.20-10-97 Ramesh Sales
vide Ack.No.542072 Corporation. In the
(Paper Book page No.11). absence of any
As the receipt of the supporting details
amount is properly the amount is
explained, the same treated as
should not have been undisclosed income.
considered as the
undisclosed income.
No further comments.
7. Addition on This interest is earned on The assessee has Deleted
Rs.5,920 account of the deposit of Rs.50,000 earned interest from
accepting
undisclosed made with Ramesh Sales Ramesh Sales
interest from Corporation. This amount Corporation but has explanation.
Ramesh was deposited through not declared it in
Sales Cheque No.216506 dated the return.
87
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Corporation. 8-9-86 drawn on Indian Bank, Secunderabad. The interest received is admitted in the return of income. This fact was already brought to the notice of the Assessing Officer through letter dated 28-9-1997 (Page No.14 of the paper book).
The Assessing Officer should not have made the addition.
8. Addition The appellant filed the It was found that Deleted as Rs.35,000 representing sources of investment the investments addition can (NSC undisclosed and it was accepted by have been met from Investment) investment the Department. Further, borrowed funds or not be made in NSC. the assessee also from realization of on submitted note regarding NSC of earlier years additions u/s 80CCA and which were exempt investment 80 CCB, a copy of which from tax. Therefore, made from is available at Page No.13 the investments are of the paper book. In view not from income known of the above, the addition chargeable to tax.
sources.
may kindly be deleted.
The amount shown as deduction u/s 80CC is Rs.20,200. Further, it is not correct to mention that the realisation of NSC is not exempt from tax. The interest from NSC is a taxable amount and the deposit made in the NSC was from out of her income earlier.
ASSESSMENT YEAR: 1988-89
9. Addition on The interest on FDR of Assessee has not In case of Rs.750 account of Rs.750 was already disclosed interest of double unaccounted admitted in the block Rs.750 received interest on return filed. Therefore, against FDR. addition FDRs. the A.O. should not have amount made addition treating the same as undisclosed stand income.
deleted.
The amount was already admitted in the return of income filed.
88IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
10. Addition on The money lending The assessee was Deleted Rs.23,469 account ofbusiness was done found to have accepting undisclosed through her parents at brought in income from Madras. The said activity Rs.22,297 from explanation. money commenced during the undisclosed sources lending. financial year 1986-97 and increased the relevant for the circulating capital assessment year 1987- used in money
88. The initial capital of lending business.
Rs.47,750 was already
disclosed in the Wealth
Tax returns (Page No.78
of the paper book). The
interest derived of
Rs.14,031 was already
admitted in the regular
return of income.
Therefore, the Assessing
Officer is not correct to
make any further
addition. It is also
submitted that the above
is not emanated from the
seized documents.
11. Addition on The assessee received Assessee deposited Deleted
Rs.6,600 account of principal amount of cash in Indian Bank
accepting
unexplained Rs.5,000 on maturity of account on 14.8.87
deposit in NSC along with interest but the assessee did explanation.
bank. of Rs.1,600 aggregating not file any
Rs.6,600 on 16-4-87. The explanation. Hence,
said amount was treated as
deposited in the bank. undisclosed income.
(Page No.92 of the paper
book.) Hence, the
addition may please be
deleted.
As the assessee
submitted the
explanation now and as
the Assessing Officer did
not contradict the
explanation, the addition
may kindly be deleted.
12. Addition on The assessee submits It was found that Deleted
Rs.35,000 the plea that that the provisions of the investments
accepting
the Chapter VI were not have been met from
exemption applicable to the block borrowed funds or explanation.
claimed is assessment period both form realization of
not covered at the time of filing the NSC of earlier years
89
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
by Chapter return of income and at which were exempt
XIVB of the the time of completion of from tax. Therefore,
I.T. Act. the assessment. the investments are
Therefore, it should not not form income
be added. chargeable to tax.
The provisions of sec.
80CCA were introduced
only for the assessment
year 1989-90 and no
such provision was there
in the earlier years.
Therefore, the addition is
not justified.
ASSESSMENT YEAR: 1989-90
13. Addition The addition does not This amount Deleted
Rs.31,430 towards emanate from the seized represents fresh
accepting
interest on material. The Assessing introduction of
undisclosed Officer worked out the money in the money assessee
debtors. said figure based on the lending business.
explanation.
wealth tax and Income- No explanation as
tax returns filed. The furnished. Not part of
Assessing Officer took
seized
into consideration the
total debtors for the year material
under consideration,
also.
deducted the debtors for
the immediately
preceding year and
arrived at the difference.
Investment in money
lending are explained in
the return of income.
Books of account are
seized by the I.T.
Authorities and the
investment in money
lending is recorded in the
said books of account.
The same is properly
recorded in the books of
account. The assessee
already offered of interest
of Rs.36,790 from money
lending. The investments
made were admitted in
the wealth tax returns
filed. Therefore, this
90
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
amount can not
represent the undisclosed
income of the appellant
herein.
14. Addition on This amount was already This is interest on Admitted.
Rs.2,600 account of admitted in the block money lending
Incase
undisclosed return filed. Hence, the declared in block
interest from addition may please be return. double
money deleted. The A.O. should
addition,
lending. not have treated the
same as undisclosed stands
income.
deleted.
15. Addition on The assessee got refund The assessee Deleted as
Rs.23,450 account of of the principal amounts deposited cash of
the
undisclosed of two NSCs on maturity Rs.10,200 on
deposit in of the values of Rs.10,000 11.7.88 but could explanation
the bank. and Rs.13,450 not offer
is valid.
aggregating to Rs.23,450. explanation.
This amount was
deposited in the bank.
The details are furnished
at Page No.92 of the
paper book. The A.O.
wrongly mentioned the
page No. as 13 of the
paper book.
16. Addition as For the assessment year, It was found that Deleted as
Rs.35,000 undisclosed the total amount derived the investments
assessee has
investment was Rs.83,351. The have been met from
in PPF. payments towards NSCs borrowed funds or incomes
and LIC was Rs.40,015 from realization of
matching
and an amount of NSC of earlier years
Rs.20,200 was allowed as which were exempt the
deduction u/s 80C. This from tax. Therefore,
investments.
does not emanate from the investments are
the seized documents not form income
and the same is admitted chargeable to tax.
in the return of income
filed.
ASSESSMENT YEAR: 1990-91
17. Addition on This amount was Assessee declared In case of
Rs.1600 account of admitted in the block interest from
double
undisclosed return of income filed. mutual fund in the
interest from Hence, the addition may block return. addition
mutual fund. please be deleted. The
91
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Assessing Officer should deleted. not have resorted to the addition.
18. Addition on The Kiddy Bank account As found from the Not to be Rs.25,000 account of in Andhra Bank was seized material considered unexplained converted to FDR. Hence, Rs.25,000 was bank this bank deposit is deposited in the in block. deposit. properly explained. fixed deposit a/c in Explanation Details of the transaction the Andhra Bank. are available at page The investment was accepted. No.122 of the paper book made on 1-3-90 and Amount instead of 119 as the assessee's mentioned by the explanation that the deleted.
Assessing Officer. It is investment was out
submitted that the of amount
deposit made on 1.3.90 withdrawn on
was from out of the 2.12.91 is not
withdrawal from Kiddy relevant.
Bank account. Therefore,
the source of investment
is justified and the
addition may kindly be
deleted.
19&20 Addition on For the assessment year, It was found that Deleted as
Rs.35,000 account of the total amount derived the investments
assessee has
(PPF) undisclosed was Rs.87,229. The have been met from
investment payments towards borrowed funds or incomes
in PPF. accrued interest on NSCs from realization of
matching
and LIC was Rs.18060 NSC of earlier years
and an amount of which were exempt the
Rs.43,060 was allowed as from tax. Therefore,
investments.
deduction u/s 80C. This the investments are
does not emanate from not from income
the seized documents chargeable to tax.
and the same is admitted
in the return of income
filed.
ASSESSMENT YEAR: 1991-92
21. Addition on The amount was The assessee Rejected.
Rs.2,880 the ground of admitted in the block declared interest on
undisclosed return of income filed. UTI in the block
interest from Hence the A.O. should return.
UTI not have made the
addition. No further
comments.
22. Addition on Admitted in the block The assessee Rejected.
Rs.693 account of return of income filed. declared interest
92
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
undisclosed Hence, the addition from LIC mutual interest from needs to be deleted. fund in the block LIC Mutual Hence the A.O. should return.
Fund. not have made the
addition. No further
comments.
23. Addition on It is clearly explained The assessee Cheque
Rs.17,800 account of that the amount of deposited 17,800 in deposited,
unexplained Rs.17,800 credited Indian Bank a/c on but
deposit in the represents the cheques 16-4-90. The paper returned. No
bank. returned. A similar book does not addition is
cheques found issued contain any warranted.
(Page No.99 of the paper explanation. Hence
book). The Assessing deleted.
Officer is not justified in
mentioning that no
explanation was
submitted.
24. Addition on The amount claimed was It was found that Source of
Rs.58,000 account of admitted in the regular the investments fund is not
undisclosed return of income filed. have been met from material so
investment in For the year under borrowed funds or long as
PPF consideration, the total from realization of assessee has
income of the assessee NSC of earlier years income to
aggregated to which were exempt the extent of
Rs.1,02,047 and from tax. Therefore, investment.
exemption u/s 88 was the investments are Addition
claimed. The assessee not from income deleted.
did not claim any chargeable to tax.
deduction u/s 80C on
account of deposit made
with the LIC or accrued
interest or public
provident fund.
Therefore, the Assessing
Officer's observations are
not correct.
25. Addition on The interest on fixed The assessee Estimated
Rs.2105 account of deposits was offered for received Rs.5105 as
addition is
undisclosed assessment in the interest but
93
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
interest from returns of income declared only deleted. FDRs. regularly filed. The Rs.3,000 in the Assessing Officer regular return. estimated the interest at Rs. 5,105 against Fixed deposit of Rs. 25,000.
The working is made only on estimate basis.
ASSESSMENT YEAR: 1992-93
26. Addition on The Assessing Officer The assessee Not based on Rs.25,000 account of made an addition of Rs. invested in FDR on seized Rs.5,654 undisclosed 25,000 on the ground 2-12-91 in Andhra investment that there is no source Bank and explained material. in FDR and for investment of Rs. the investment as Even interest on 25,000. It was explained withdrawn from SB FDR. at page 119 of the paper account in Andhra assessee book that the said Bank. No such explanation amount was deposited by withdrawal was drawing from the bank found in such SB was account. The Assessing account.
acceptable.
Officer did not consider The assessee the explanation properly. received interest of Hence Further, the addition Rs.8650 on FDR but deleted.
does not emanate from declared only the seized material. The Rs.2996. Hence the Assessing Officer difference is treated estimated the interest on as undisclosed accrual basis at Rs. income.
5,654. This is not correct and further it is purely on estimate basis. The actual amount realized by the appellant was admitted in the return of income. Even otherwise, if the additional interest is added the same would also be covered by deduction under sec. 80L of the Act. Therefore, there is no undisclosed income.
27. Addition on The assessee disclosed It was found that Deleted as Rs.15,000 account of every proof with evidence the investments assessee has undisclosed and claimed the same as have been met from investment deduction. The Assessing borrowed funds or incomes in PPF. Officer is not correct in from realization of matching considering this issue NSC of earlier years under Chapter XIVB of which were exempt the the I.T. Act. In this regard from tax. Therefore, 94 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
a note submitted by the the investments are investments. assessee is at page No.13 not from income of the paper book. chargeable to tax.
ASSESSMENT YEAR: 1993-94
28. Addition on The appellant admitted The assessee Estimated Rs.1350 account of the interest income received interest of addition undisclosed correctly in the regular Rs.6450 against interest from return of income. The FDR but disclosed stands FDRs. Assessing Officer only Rs.5100 in deleted.
proceeded to estimate the regular return. interest income on the fixed deposits and arrived at a hypothetical amount.
This is not justified
particularly while
completing the
assessment under sec.
158 BC of the Act;
29. Addition This issue cannot be It was found that Deleted as
Rs.35,000 representing considered under the investments
assessee has
PPF. Chapter XIVB of the I.T. have been met from
Act. The amount paid borrowed funds or incomes
towards PPF was claimed from realization of
matching
as deduction u/s 88 of NSC of earlier years
the I.T. Act. Therefore, which were exempt the
the Assessing Officer from tax. Therefore,
investments.
should not have made the investments are
any addition. not from income
chargeable to tax.
ASSESSMENT YEAR: 1994-95
30. Addition on This issue cannot be This is the amount Return of
Rs.20,200 account of considered under realized from SBI
investment
deemed Chapter XIVB of the I.T. mutual fund which
income Act. The assessee is taxable in the can not be
received from disclosed every proof with year of realization.
taxed unless
mutual evidence and claimed the The assessee has
funds. same as deduction. The not declared the claimed as
Assessing Officer is not same in the return.
deduction
correct in considering Hence, treated as
this issue under Chapter undisclosed. earlier.
XIVB of the I.T. Act. In
Deleted as
this regard a note
submitted by the no such
assessee is at page No.13
claim was
of the paper book.
made in
95
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
The claim for deduction earlier years. should have been made for the assessment year 1989-90. It can be seen that no such claim was made by the assessee either in the assessment up to 1989-90 or 1990-
91. Therefore, the appellant submits that there is no justification in making addition of Rs.20,200. Further, the addition does not emanate from the seized material.
31. Addition on The assessee disclosed It was found that Deleted as Rs.40,000 account of every proof with evidence the investments assessee has undisclosed and claimed the same as have been met from investment deduction. The Assessing borrowed funds or incomes in PPF. Officer is not correct in from realization of matching considering this issue NSC of earlier years under Chapter XIVB of which were exempt the the I.T. Act. The from tax. Therefore, investments.
deduction towards PPF is the investments are made u/s 88 of the I.T. not from income Act and, therefore, the chargeable to tax.
Assessing Officer is not justified in making addition of Rs.40,000.
32. Addition on The appellant is The assessee Deleted Rs.6,666 account of admitting interest as received Rs.8900 accepting undisclosed credited by the bank to against the FDR but interest on the account of the declared only assessee FDRs. appellant. The Assessing Rs.2234 explanation.
Officer, on the other hand, estimated the probable interest and arrived at a higher figure and added the difference.
Such addition is not worked out with reference to the seized material.
There is no scope of estimations while completing the assessment under sec.
158 BD of the Act.
Therefore, the Assessing 96 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Officer is not justified in making such an addition.
ASSESSMENT YEAR: 1995-96
33. Addition on The assessee furnished This is the amount Return of Rs.10,000 account of proof with evidence and realised from LIC investment undisclosed claimed the same as mutual fund which deemed deduction in the original is taxable in the can not be income in return of income filed. year of realization.
taxed unless LIC Mutual The Assessing Officer is The assessee has Fund. not correct in considering not declared the claimed as this issue under Chapter same in the return.
deduction XIVB of the I.T.Act. The Hence, treated as claim for deduction undisclosed. earlier.
should have been made
Deleted as
for the assessment year
1990-91. It can be seen no such
that no such claim was
claim was
made by the assessee
either in the assessment made in
upto 1990-91 or 1991-
earlier years.
92. Therefore, the
appellant submits that
there is no justification in
making addition of
Rs.10,200. Further, the
addition does not
emanate from the seized
material.
34. Addition on The Assessing Officer It was found that Deleted as
Rs.40,000 account of considered this issue the investments
assessee has
undisclosed which is not covered by have been met from
investment Chapter XIVB. The borrowed funds or incomes
in PPF. addition made is unjust from realization of
matching
and arbitrary. The NSC of earlier years
assessee explained the which were exempt the
sources and claimed the from tax. Therefore,
investments.
deduction rightly. It is the investments are
submitted that the relief not from income
is allowed u/s 88 and not chargeable to tax.
as deduction from the
income.
35. Addition on The appellant admitted The assessee Deleted
Rs.8,408 account of interest income as and received Rs.8900
accepting
undisclosed when credited by the against the FDR but
interest from bank. The Assessing declared only assessee
FDRs. Officer merely estimated Rs.492
explanation.
the interest on fixed
97
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
deposits at an estimated
rate and arrived at the
difference. The addition
is not based on any
seized documents.
Therefore, the Assessing
Officer is not justified in
making such an addition.
ASSESSMENT YEAR: 1996-97
36. Addition on The assessee is The assessee Deleted
Rs.13,286 account of admitting income received Rs.18000
accepting
undisclosed whenever the amount is as interest but
interest on credited to the account. declared only assessee
FDR The Assessing Officer Rs.6169 in the
explanation.
merely estimated the regular return.
interest on fixed deposits
and arrived at the
difference. The addition is
not based on any seized
material or document.
Therefore, the Assessing
Officer is not justified in
making any such
addition.
37. Addition on The amount of Rs.17,536 As found from the Deleted
Rs.17,536 account of was included in the seized material
accepting
undisclosed aggregate amount assessee advanced
interest from admitted of Rs.62,716 in Rs.98,000 to Smt. assessee
money the block return of Devaki Vasudev. No
explanation.
lending income. A detailed note explanation was
business. submitted in this regard found in the paper
is at page No.14, para 4 book.
of the paper book
submitted.
The interest received from
Devaki Vasudev is part of
the interest income
admitted of Rs.62,716. It
is already explained that
the amount of Rs.98,000
given to Smt.Devaki
Vasudev was already
included in the money
lending capital of the
assessee (Page No.15 of
the paper book).
Therefore, no separate
98
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
addition is to be made.
38&39. Addition on The amount of Rs.98,000 As found from the Deleted Rs.98,000 account of given to Smt.Devaki seized material accepting advance Vasudev is included in assessee advanced made outside the money lending capital Rs.98,000 to assessee books of held by the assessee. The Smt.Devaki explanation.
account. details of money lending Vasudev. No
capital held by the explanation was
assessee were submitted found in the paper
at the time of original book.
assessment proceedings.
The details as submitted
in the letter dated 28-9-
97 at Page No.15, Para
No.8 of the paper book.
The total money lending
capital for the year
amounted to Rs.
3,70,000 and the said
amount of Rs. 98,000 is
included in the said
amount.
40. Addition on The said amounts were The donor had For the
Rs.5,00,000 account of received from the NRE gifted a total
reasons
undisclosed A/c of Smt.Varsha amount of around
deposits in Meerpuri. The Assessing Rs.42 lakhs to her discussed in
bank Officer is not correct in brothers and
main order
transferred holding that the amount relatives during the
from NRE of Rs.5 lakhs represents block period. The deleted.
A/c. undisclosed income for assessee could not
the assessment year prove that the
1996-97. donor's financial
capacity was
sufficient to make
gift repeatedly to
her relatives.
Moreover the
assessee could not
produce any IT
return, copy of her
relative nor any
balance sheet
during the course of
assessment
proceedings.
41. Addition on The appellant filed the It was found that Deleted as
Rs.50,000 account of sources of investment the investments
assessee has
undisclosed and it was accepted by have been met from
investment the Department at the borrowed funds or
99
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
in PPF. - time of original form realization of incomes assessment. Further, the NSC of earlier years matching assessee also submitted a which were exempt note regarding additions from tax. Therefore, the u/s 80CCA and 80 CCB, the investments are investments.
a copy of which is not from income available at Page No.13 of chargeable to tax. the paper book. In view of the above, the addition may kindly be deleted.
The claim for deduction
of amount towards PPF is
made u/s 88 of the I.T.
Act. Therefore, no
addition should have
been made by the
Assessing Officer.
ASSESSMENT YEAR: 1997-98
42. Addition on Para No.17 of the As per seized Since
Rs.28,679 account of assessment order. The material purchase assessee
undisclosed assessee already bills in the name of offered an
investment disclosed Rs.1,75,000 as R.K.Constructions, amount of
in Pooja undisclosed income. The the builder of the Rs. 175000,
Apartments Assessing Officer flat amounting to the same
mentions that he would Rs.172076 were can be
estimate the undisclosed found from the telescoped.
income at Rs.2,00,000 residence which are Further
and further add for purchase of addition is
Rs.33,333. In this regard extra fillings . No deleted.
it is submitted that the explanation was
amount of Rs.1,69,341 offered. Therefore,
represents the material 1/6th (6 flat owners)
purchased by the builder which comes to
and not by the assessee. Rs.28,679/-. Share
Further, the assessee of the assessee is
offered an additional the undisclosed
income of Rs.1,75,000 to investment.
cover the deficiencies.
43 & Addition on Para No.17 of the During search the For the
44. account of assessment order. The jewellery of detailed
Rs.2,62,552 excess assessee submits that the Rs.7,27,272 was explanation
jewelry entire family of Gulbrai found belonging to given and
G. Chugani own and the assessee and considered
possess gold jewellery. her husband Sri in main
The children of the Ramesh. The order, the
assessee possess assessee declared addition is
jewellery which are Rs.3,15,098 and her deleted.
100
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
valued by a Registered husband declared Valuer in 1980 and 1986. Rs.8678 in their The valuation made by wealth tax returns the assessing Officer as for the A.Y.92-93. on 18-10-1996 isThe jewelry declared erroneous when the as her wealth tax search was conducted on return is increased 3-10-1996 and the by 60,000 on previous year consists of account of 10 years from 1-4-1986 possession by the and ending on 3-10- children. 1996. The Assessing The assessee did Officer arrived at the not furnish any excess jewelry without quantitative details any basis. The entire of jewellery in the jewelry in possession of wealth tax returns. the assessee was Therefore, the declared. The Assessing jewellery found Officer included the cannot be compared jewelry belonging to in the quantitative others in the assessment way and has to be of the assessee which is based on market not correct. value only, the difference of which The assessee is the wife is taken as of Sri Ashok Chugani and undisclosed income. not Sri Ramesh Chugani.
The appellant submitted detailed note on the addition on account of jewelry which is at Page Nos.18 to 35 of the paper book. It was submitted clearly that the entire jewelry was disclosed to the department and, therefore, no addition need be made.
101IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Annexure -5 IT(SS)A No.5/H/2011 LACHMAN G.CHUGANI, Hyderabad Block period 1987-88 to 1996-97 and01-04-1996 to 03-10-1996 ASSESSMENT YEAR: 1987-88 Ground No. Details of Remarks of the Decision & addition Explanation A.O. in the Amount remand report.
added (Rs.) 1 to 5 & 40 General in --
nature 6 Addition on The assessee paid an As found from Deleted Rs.9,500 account of amount of Rs.9,500- to Sri the seized accepting amount Ganesh N.Takur on material assessee advanced 3/11/86. The assessee assessee explanation treating as submits that he purchased purchased AC undisclosed air conditioner and paid for Rs.9500 income. Rs.9,500 on 3-11-86 by the assessee withdrawing an amount of could not Rs.10,000 from Ramesh substantiate Watch Co., in which the the claim that assessee is a partner. The he had transaction is properly withdrawn accounted for in the books Rs.10,000 of account which are part from Ramesh of the seized material. The Watch Co.
Assessing Officer did not consider the explanation submitted and added the amount. A copy of the account of the appellant in the books of Ramesh Watch company are submitted.
7 Addition on The said amount was Ground is not Rejected Rs.1,076 account of short admitted in the block pressed admission of return of income filed and interest from hence the ground is not bank account. pressed.
No further comments as the amount of Rs.1076 was already admitted in the return of income in Form No.2B.
102IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
ASSESSMENT YEAR: 1988-89 8&9 Addition treating The assssee converted As found from Deleted Rs.28,200 the renewal of Kiddy Bank account No. the seized accepting Rs.10,560 fixed deposit as KAB516576 into FDR for annexure the the undisclosed Rs.28,200. The Assessing assessee explanation income. Officer added the amount purchased without considering the FDR in Andhra explanation. Further, the Bank in the addition is not based on name of his any seized material. minor daughter. The In the case of assessee could MeenaChugani, a separate not furnish assessment u/s 158 BD any supporting was already made. It is evidence for further submitted that the claim of there is no evidence in the savings in the seized material that the kiddy bank.
assessee invested the
amount from out of the
funds in the name of his
daughter. It is also
submitted that during the
year under consideration
the provisions of
Sec.64(1A) did not exist.
10 Bank deposit The bank deposit of Assessee Deleted
Rs.25,000 treated as Rs.25,000 was made on deposited cash accepting
undisclosed 20-6-87 from out of the in bank the
income. available cash in the books account with explanation
of account. It is a genuine Indian Bank
transaction recorded in the on 20-06-87.
books of account. The The paper
same can be verified from book does not
the books of account contain any
under the custody of the explanation.
department. The Assessing
Officer made the addition
without verifying the
availability of cash.
11. Amount received The addition of The donor had Deleted for
Rs.1,00,000 from NRE A/c of Rs.1,00,000 was made gifted a total the reasons
Smt. Varsha disbelieving the gifts amount of stated in
Saikumar received from Smt. around Rs.42 main order.
Mirpuri as Varsha Jaikumar lacs to her
undisclosed Mirpuri. In this regard, it brothers and
income. is submitted that these relatives
entries were made in the during the
103
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
regular bank account and block period. the books of account. No The assessee incriminating material was could not found during the course of prove that the search and, therefore, no donor's addition should have been financial made as undisclosed capacity was income. sufficient to make gift repeatedly to her relatives.
ASSESSMENT YEAR: 1989-90 12 Addition on This ground of appeal is The ground is Rejected Rs.2,31,600 account of redundant as no such redundant.
estimating the addition is made in the cost of purchase assessment order. of flat at Mumbai No further comments.
13. Bank deposit The said amount Assessee Deleted Rs.10,560 made from out of represents the amount deposited cash accepting (1990-91) the refund of received on maturity of in bank the NSC treated as NSC along with interest on account with explanation undisclosed 9-4-88 and was deposited Indian Bank income. into the bank account on 19-04-88.
No.6615 of the assessee in The paper
Indian Bank, book does not
Secunderabad. contain any
Explanation submitted explanation.
before the Assessing
Officer at the time of
original assessment is
page No.86 of the paper
book. It is further
submitted that the
addition is without
reference to any seized
document.
14. Accrued bank The FDR of Rs.28,200 Assessee has Deleted
Rs.3,384 interest and relates to Meena L. not declared accepting
interest escaped Chugani, D/o the interest on the
assessment appellant herein and a FDR of explanation
separate assessment Rs.28,200
under sec. 158 BD was purchased on
made. Further, the 3-3-88. The provisions of sec. 64(1A) paper book have no application for the does not year under consideration contain any and therefore no addition explanation.
104IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
should have been made by the Assessing Officer.
Assessment Year 1990-1991
15. Amount received The addition of The donor had Deleted for Rs.3,33,333 from Smt. Rs.3,33,333 was made gifted a total the reasons Varsha disbelieving the gifts amount of stated in Jaikumar received from Smt. Varsha around Rs.42 main order. Mirpuri treated Jaikumar Mirpuri. In this lacs to her as the income of regard, it is submitted that brothers and the assessee these entries were made in relatives the regular bank account during the and the books of account. block period. No incriminating material The assessee was found during the could not course of search and, prove that the therefore, no addition donor's should have been made as financial undisclosed income. capacity was sufficient to make gift repeatedly to her relatives.
16. Addition on the It is submitted that a Assessee Deleted Rs.7,800 plea that the Cheque No.630021 dated purchased accepting registration 16-3-90 for Rs.8,000 property at the charges of the drawn on Indian Bank, Parklane, explanation property at A/c No.6615 was issued Secunderabad Parklane, for registration charges. along with 4 Secunderabad Explanation submitted brothers for not accounted earlier during the course of Rs.4.60 lacs for. original assessment but the proceedings is at Page registration No.87 of the paper book. charges of Hence the addition may Rs.39,000 was kindly be deleted. not disclosed.
The assessee
share of
Rs.7,800 is the
undisclosed
investment.
17. Interest accrued This amount was admitted It is the Rejected.
Rs.1,800 from SBI Mutual in the block return filed by interest
fund treated as the assessee. Hence no received from
undisclosed separate addition need be SBI mutual
income. made by the Assessing fund admitted
Officer. in block
return.
105
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
18. Interest on CDS This amount represents Assessee has Rs.3,790 of Rs.3,790 the accrued interest on not declared Deleted treated as FDR of Rs.28,200. The interest on accepting undisclosed A.O. estimated the interest FDR of the income. at Rs.3,790 which is Rs.28,200 explanation incorrect. The addition did purchased on not emanate from any 3.3.88 which seized document. Further, continued this the deposit relates to year also. The Meena Chugani, the minor paper book daughter of the appellant. does not The provisions of sec. contain any 64(1A) were not applicable explanation.
for the said assessment
year and therefore cannot
be added in the
assessment of the
assessee.
Assessment Year 1991-92
19. Interest on CDS At para 19 of the It is the Rejected
Rs.3737 of Rs.3737 assessment order. This interest
treated as amount is admitted in the received from
undisclosed block return of income CDS admitted
income. filed. Therefore, addition in block
need not separately be return.
made and hence may be
deleted.
No further comments.
20. Interest on FDR The addition is not based Assessee has Deleted
Rs.4,244 accrued treated on any seized material and not declared accepting
as undisclosed is purely on estimate interest on the
income. basis. The provisions of FDR of explanation
sec. 64(1A) were not Rs.28,200
applicable for the year purchased on under consideration. 3.3.88 which continued this year also. The paper book does not contain any explanation.
21. Estimation of No such addition is made No such Rejected Rs.5,758 interest accrued in the assessment order addition.
on FDRs and hence the ground is redundant.
No further comments.
106IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Assessment Year 1991-92
22. Estimating the The addition is made These are FDR Estimated Rs.6,528 accrued interest purely on estimate basis interest not additions on FDRs without any reference to disclosed by can not be the seized material. There the assessee. made in is no basis for such figure. Block.
The appellant considered Assessee is
the interest received from offering on
all the deposits and accrual
admitted in the return of basis.
income filed The return of Addition
income is at page No. 121 deleted.
wherein the interest from
banks of Rs. 10068 was
already offered in the
regular return of income
filed. Therefore, no
addition to the undisclosed
income could be made.
Assessment Year 1993-94
23. Addition on It is submitted that it is This is Amount is
Rs.2,066 account of flat at Bombay being used assessee's maintenance
investment in as a guest house. During share in the cost. Deleted
Bombay flat. the course of the period all investment in accepting
the brothers used to visit Bombay flat. assessee
for their business The findings explanation.
purposes at Bombay. The are as per
expenditure incurred was seized
paid from time to time by material.
the persons using the
guest house. The
expenditure on visits to
Bombay was debited to the
business account and also
whenever personal visits
were made the same were
from the personal
drawings. Therefore, no
addition on this account
should be made.
24. Addition on The actual interest It is the Estimated
Rs.13,177 account of received is at page 91 of interest additions
interest escaped the paper book. The received from can not be
assessment interest on fixed deposits SB account made in
amounted to Rs. 12,721 and FDR. The Block.
and the appellant admitted assessee Assessee is
interest income of Rs. admitted offering on
12,975 in the return of Rs.12,925 only accrual
107
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
income submitted. in block return basis. Further, the account was whereas total Addition disclosed during the interest deleted. regular assessment received was proceedings and the Rs.26,152 addition is made on therefore the estimate basis without any balance of reference to the seized Rs.13,177 is material. treated as undisclosed income.
Assessment Year 1994-95
25. Addition on There is no seized material Assessee Deleted Rs.5,000 account of suggesting that the said advanced accepting undisclosed amount represents the Rs.50,000 to explanation income. undisclosed income. It is syndicate submitted that An amount marketing and of Rs.50,000 was given as received a loan to Syndicate Rs.55,000 Marketing in March, 1993. from it. The On 30-4-93 an amount of difference is Rs.55,000 was repaid by the interest Titan Board, a sister amount.
concern of Syndicate Marketing. The Assessing Officer presumed the excess repayment as interest. It can be seen that there is only one month gap and interest cannot be Rs. 5,000.
Therefore, the same cannot be treated as undisclosed income. It was submitted before the Assessing Officer that the amount of Rs.5,000 was payable to Syndicate Marketing. The amount of Rs.5,000 was not received as interest. In the circumstances, the amount can not be treated as the undisclosed income of the assessee.
26. Estimation of The addition is purely on Assessee Deleted Rs.9,778 interest on FDR estimate. The appellant received accepting and SB A/c admitted Rs.16374 in the interest from explanation 108 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
regular return of income. SB and FDR Further, an amount of account Rs.5,000 was admitted in amounting to Form 2B; the total being Rs.26152 but Rs.21,374 and, therefore, disclosed the Assessing Officer is not Rs.16734 in justified in making any the return. further addition. The total Therefore, interest received is balance Rs.21,374. It can be seen Rs.9788 is that the interest received treated as was only Rs.19016. (Page undisclosed No.90 of the paper book). income. Therefore, the Assessing Officer is not justified in making an addition of Rs.9778.
27. Interest received Para 22 of the assessment The amount is Rejected Rs.6,843 on NSC treated order. This amount is admitted in the as undisclosed admitted by the appellant block return. income. in the block return of income.
28. Amount received The appellant did not This is amount Deleted Rs.20,000 from Mutual claim 80CCA upto the received from accepting Fund treated as assessment year 1990-91. SBI mutual explanation the income of The amount is refundable fund as the assessee after a period of 5 years. maturity value The SB Mutual fund claim which should for deduction u/s 80CC be brought to was for the assessment tax.
year 1990-91. Therefore, the Assessing Officer is not justified in making an addition of Rs.20,000. It is further submitted that the said addition does not emanate from the seized documents.
29. Amount spent The assessee submits that This is Amount is Rs.5,404 on Bombay flat the expenditure was assessee's maintenance treated as incurred whenever either share in the cost. Deleted undisclosed the assessee or his investment in accepting income. brothers or his father Bombay flat. assessee visited Mumbai. It was The findings explanation are as per seized material.
109IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
submitted that the expenditure on such visits was incurred from the business activity over a period of time and if it is for personal purpose, the same is incurred from out of the drawings. This was not controverted by the Assessing Officer in his remand report. Therefore, the addition may kindly be deleted.
Assessment Year 1995-96
30. Interest on This amount was admitted Assessee rejected Rs.7,900 deposits with in the block return filed by received LIC Mutual the assessee. Rs.9000 as Fund treated as interest on LIC undisclosed No further comments. mutual fund income. but admitted only Rs.1100
31. Estimation of The appellant submits that These are FDR Deleted Rs.26,152 interest accrued the Assessing Officer interest not accepting on FDRs. merely resorted to an disclosed by explanation estimation of interest and the assessee arrived at the total interest of Rs.26,152 and added the entire amount. It can be seen from the return of income filed for the assessment year 1995-96 , the appellant offered an amount of Rs.1613 as the SB interest and FD. The bank account also clearly indicates that there are only two interests credited.
Therefore, no addition
should have been made by
the Assessing Officer (Page
No.92 of the paper book).
32. Undisclosed This is against the This is Amount is
Rs.3934 investment in expenditure made on the assessee's maintenance
Bombay Flat. maintenance of the share in the cost. Deleted
building at Mumbai. It is investment in accepting
submitted that it is flat at Bombay flat. assessee
Bombay being used as a The findings explanation
guest house. During the are as per
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course of the period all the seized brothers Sri Ramesh material.
Chugani, Sri LakshmanChugani, Sri ChandruChugani, Sri Kishore Chugani and Sri AshokiChugani and their father Sri GulabraiChugani used to visit for their business purposes at Bombay. The expenditure incurred ws paid from time to time by the persons using the guest house. The expenditure on visits to Bombay was debited to the business account and also whenever personal visits were made the same were from the personal drawings. Therefore, no addition on this account should be made.
The assessee submits that the expenditure was incurred whenever either the assessee or his father visited Mumbai. It was submitted that the expenditure on such visits was incurred from the business activity over a period of time and if it is for personal purpose, the same is incurred from out of the drawings. This was not controverted by the Assessing Officer in his remand report. Therefore, the addition may kindly be deleted.
Assessment Year 1996-97
33. Estimation of The appellant submits that These are FDR Rs.27,652 interest on the Assessing Officer interest not Deleted FDRs. merely resorted to an disclosed by accepting estimation of interest and the assessee explanation arrived at the total interest 111 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
of Rs.27,652 and added the entire amount. It can be seen from the return of income filed, the appellant offered interests received of Rs.823 and Rs.883 aggregating to Rs.1706.
The bank account also clearly indicates that there are only two interests credited.
34. Amount spent The assessee submits that This is Amount is Rs.2,140 on Bombay flat. the expenditure was assessee's maintenance incurred whenever either share in the cost. Deleted the assessee or his investment in accepting brothers or his father Bombay flat. assessee visited Mumbai. It was The findings explanation submitted that the are s per expenditure on such visits seized was incurred from the material. business activity over a period of time and if it is for personal purpose, the same is incurred from out of the drawings. This was not controverted by the Assessing Officer in his remand report. Therefore, the addition may kindly be deleted.
Assessment Year 1997-98
35. Addition on Department found cash of The cash For the Rs.1,30,000 account of Rs.1,77,460 at the found at the detailed unaccounted for premises of the appellant. assessee's explanation cash After allowing available premises was given and cash of Rs.47,460, the Rs.177460. considered Assessing Officer added The assessee in main Rs.1,30,000. In this regard explained the order, it is submitted that the same as addition is Ramesh Watch Enterprises previous deleted.
was having cash balance withdrawals
of Rs.82,798. This amount from Indian
was available with the Bank.
appellant. There were cash Rs.47460 was
withdrawals of Rs.25,000 accepted as
on 10.l6.96, Rs.20,000 on explained and
27.8.96 and Rs.25,000 on the balance of
17.9.96. The Assessing Rs.130000
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IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Officer did not deny the remains withdrawals of cash on unexplained.
these dates. Considering
the fact that the appellant
was having cash of
Rs.82,798/- in the books
of account of Ramesh
Watch Enterprises, a
proprietary concern and
cash withdrawn of
Rs.70,000. To this extent it
is to be considered as
explained.
36 Addition on No addition is made in the No such Rejected
Rs.1,25,000 account of assessment and hence is addition.
excess stock. redundant.
No comments.
37 Addition on This amount was admitted The assessee Rejected
Rs.30,000 account of by the assessee during the admitted
unexplained course of assessment Rs.30000 as
investment in proceedings. A separate undisclosed
Begumpet note submitted by the investment in
property assessee before the house at
Assessing Officer may Begumpet.
kindly be perused
38. Amount spent The assessee submits that This is Amount is
Rs.16,800 on Bombay flat the expenditure was assessee's maintenance
incurred whenever either share in the cost. Deleted
the assessee or his investment in accepting
brothers or his father Bombay flat. assessee
visited Mumbai. It was The findings explanation
submitted that the are as per
expenditure on such visits seized
was incurred from the material.
business activity over a
period of time and if it is
for personal purpose, the
same is incurred from out
of the drawings. This was
not controverted by the
Assessing Officer in his
remand report. Therefore,
the addition may kindly be
deleted.
39 Purchase of Flat The assessee submits that As per seized Since there
Rs.3,80,000 at Balaji Nivas he did not purchase the material there is no
said flat and there is no is agreement of evidence
proof that he paid the said sale for flat at that
113
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amount. The Assessing Balaji Nivas in assessee Officer mentioned that the which the purchased appellant is staying in a assessee is the said flat at Balaji Nivas for the staying for last property, the last three years without 3 years same is paying rent. There was an without paying deleted. AO agreement of sale and, any rent. The is free to therefore, the Assessing investment in make Officer mentions that an the flat is enquiries amount of Rs.3,80,000 Rs.3,80,000. and come to was invested by the a conclusion appellant. It is submitted whether the that the property was not property was purchased. The document purchased was not signed by any one later. either by the appellant or by the party concerned.
When the I.T. authorities sought a clarification with regard to the said paper, it was explained that the property continues in the name of Smt. Jyothi Bhavnani and was not purchased by the appellant herein. It is further submitted that the electricity bills are in the name of Smt. Jyothi Bhavnani. A letter of confirmation was also received from Jyothi Bhavnani vide letter dated 23.10.97. It was confirmed by her that she did not sell the property. When the assessee submitted a detailed explanation and the evidence from the vendor, Assessing Officer without examining the vendor and without any information to the effect that the agreement was executed and the amount was paid, he should not have made any addition.
Without prejudice, the appellant humbly submits that as per the agreement, the amount was payable in 114 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
installments of Rs.20,000 over a period of time and no time was fixed. No evidence with regard to payment of such installment of Rs.20,000 was available in the seized material. Therefore, the Assessing Officer is not justified in making any addition.
115IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Annexuere -6 IT(SS)A No.6/H/2011 GULABRAI D.CHUGANI , Hyderabad Block period 1987-88 to 1996-97 and 01-04-1996 to 03-10-
1996
ASSESSMENT YEAR: 1988-89
Ground No. Details of Remarks of the Decision
& addition Explanation A.O. in the remand
Amount report.
added (Rs.)
1 to 5 and General -- --
26&27 in nature
6 AdditionThe assessee filed the returns The assessee has Considering
Rs.2,585 treatingof income admitting the received interest of the
the bankinterest income of Rs. 3,634 Rs.2585 from explanation
interestThe assessee maintained Indian Bank a/c deleted.
as books of account. The said No.6906 which was
income. books of account were seized not declared in the
by the Department and they return. In the
are still in the custody of the absence of any
department. The bank explanation by the
accounts were disclosed to assessee the
the department. There is no amount is treated
seized material to suggest that as undisclosed
the said amount represents income.
undisclosed income.
ASSESSMENT YEAR: 1989-90
7. Addition Loan of Rs.10,000/- was given The findings as per Considering
Rs.10,000 treating to Sri N.G. Kumar on seized material is the
the 10/07/1988. During the that the assessee explanation
amount course of assessment advanced an deleted.
paid to proceedings itself it was amount of
N.G.Kum explained that the amount Rs.10,000 to Sri
ar on 1- was paid out of the cash K.G. Kumar on
7-88 as available in the books of 11/7/88. The undisclos account. Rs. 10,000 was paid assessee has not ed from out of the cash available. explained the income. An amount of Rs. 10,000 was source and simply withdrawn from the bank on said that the 22-4-1988. This can be amount is refund verified from the books of from Sri N.G. account seized. This Kumar. The information is available at explanation of the page No. 5 of the paper book assessee is self filed. contradictory.
116IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
ASSESSMENT YEAR: 1990-91
8. Addition There is no information before The rental receipts Considering Rs.18,042 treating the Assessing Officer to come deposited in the the to the conclusion that there Andhra Bank and explanation deposit was undisclosed with the Indian Bank deleted. with the assessee. The usual practice account bank as while letting out the house isRs.106550 undisclos properties is that advance whereas the net ed rent would be collected from rental receipt is income. the tenants. Details of the Rs.88,508 only as rent and rent advances per return. Thus received are furnished at Page the difference No. 5 of the paper book. amount of Hence the Assessing Officer is Rs.18,042 is not correct in correlating the treated as amounts deposited in the undisclosed banks with the actual rents income of the received. Further, the assessee. addition does not emanate from the seized materials.
The amounts were already recorded in the books of account and in the bank pass books. Hence the Assessing Officer was not justified in making the addition. Hence the same may kindly be deleted.
ASSESSMENT YEAR: 1991-92
9. Addition An amount of Rs.14,400 Assessee deposited Considering Rs.26,400 on the received from Ramesh Watch two amounts in the ground Enterprises through cheques Andhra Bank a/c explanation that the on 16-1-91 and Rs.12,000 totaling Rs.26,400 deleted. deposit received from Kishore Watch and the source was with Co., on 27-3-91 aggregating stated to be Andhra Rs.26,400 represent the bank transferred from Bank deposit. A perusal of the Ramesh Watch represent accounts of the above two Enterprises and s firms would reveal the facts as Kishore Watch Co.
undisclos state above. In the absence of
ed any debit entry in
income. the capital
accounts of the
assesee, the
amount of
Rs.26,400 is
treated as
undisclosed
income.
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ASSESSMENT YEAR: 1992-93
10. Addition The assessee withdrew an The assessee could Considering Rs.9,967 treating amount of Rs. 30,000 drawn not the the from Andhra Bank on 15-6- explain/furnish explanation amount 1991 and purchased any supporting deleted. credited travellers' cheques. The details to explain with cheques available without the amount Indian utilization were deposited in credited in Indian Bank on the bank account. The Bank a/c. Hence 30-3-92 assessee has furnished treated as as evidence to show that the undisclosed undisclos amount of Rs. 9,967 has been income of the ed credited into the Indian Bank assessee. income. Account through cheque.
ASSESSMENT YEAR: 1993-94
11. Addition It is not known how the The accrued Considering Rs.10,000 on Assessing Officer has arrived interest on FDR of the estimatin the accrued interest on FDR Rs.14,000 but the explanation g interest at Rs. 14,000. The assessee assessee has deleted. from has returned an amount of shown only fixed Rs. 8,628/- as interest from Rs.4,000 as deposits SB & FD from banks for the interest income in with asst. year under the return. Hence, bank consideration. The addition the balance is made by the Assessing Officer treated as was on presumption without undisclosed any basis. Hence the addition income. made may kindly be deleted.
ASSESSMENT YEAR: 1994-95 Income/Interest as No basis for
12. Addition Each item of the credit in the per regular return making Rs.9,453 on bank account is explainable. is Rs.146131 addition in account The details are submitted at whereas credit in Block. of excess page No.98 and 99 of the the bank account Hence credit in Paper Book. The details can is Rs.155584. Thus deleted.
the bank be verified from the books of there is excess treated account seized. The Assessing credit of Rs.9453 as Officer aggregated the which remained undisclos deposits made into the bank unexplained.
ed account and also aggregated
income. the receipts towards income
and the difference is held as
undisclosed income. The
Assessing Officer presumed
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IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
that the deposits represent income of the appellant, which is not correct. The basis for the Assessing Officer in arriving at such amount is not correct and hence the appellant submits that the addition may be deleted. In this regard, the appellant submits that the appellant maintained books of account, and the same were seized.
13. Estimatio It is not known how the The interest on No basis for Rs.22,019 n of Assessing Officer arrived at FDR comes to making interest Rs. 30,000 as the interest on Rs.30,000 whereas addition in accrued FDRs. In the return of the assessee Block. on FDRs income filed for the asst. Year declared the Hence under consideration, the interest of Rs.7981 deleted.
assessee admitted an amount only. of Rs. 13,555 as interest on fixed deposits but not Rs.
7981 as stated by the Assessing Officer. The addition is made on the presumption of the Assessing Officer without any basis.
Hence the same may kindly be deleted.
ASSESSMENT YEAR: 1995-96
14. Addition It is not known how the A.O. Income/interest as No basis for Rs.20,132 on presumed that the credits in per regular return making account the bank account should is Rs.99,923 addition in of excess represent the income of the whereas credit in Block. credit assessee. The correlation the bank account Hence from tried to be made by the A.O. is is Rs.164797. Thus deleted.
bank without any basis and without there is excess appreciation of proper facts. credit of Rs. 64874 The assessee maintained (?) which books of account and all the remained entries appearing in the bank unexplained. pass book were reflected in the books of account. The books of account are in the custody of the Department.
The addition is made purely on presumption without any basis. Hence it is requested that the addition made may kindly be deleted.
119IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
15. Addition The Assessing Officer admits Unexplained No basis for Rs.26,187 treating that the deposit of Rs. 25,000 deposit of making the was made through a Cheque Rs.25,000 in addition in deposit received from Ramesh Watch Grindlays Bank Block. on Co. Regarding the interest of along with interest Hence 1/1/95 Rs. 1187, it is submitted that of Rs.1187 deleted.
as for the asst. year under remained undisclos consideration, the assessee unexplained as no ed admitted an amount of Rs. supporting income. 11,207 representing interest material furnished.
on SB & FD accounts. The amount of Rs. 11207 include the amount of Rs. 1187.
When the Assessing Officer himself admits that the amount of Rs. 25,000 is received through a cheques and the source for receipt of the cheques is identified, the A.O. is not justified in treating the said deposit as and the interest earned thereon as undisclosed income of the appellant. Hence it is requested that the addition made may kindly be deleted.
16. Addition The Assessing Officer made This represents No basis for Rs.2,000 treating this addition without any unexplained cash making the basis and on presumptions. deposits in addition in deposit There is no material before Development Block. with the A.O. to establish that the Bank, Mumbai Hence Develop said amount represents deleted.
ment Co- unexplained cash deposit. operative The appellant submits that Bank, when the appellant was on Mumbai camp at Mumbai, he used to as the deposit the amount in the undisclos said bank account and utilize ed the same during his stay.
income.
17. Addition There is no basis for the The interest on No basis for Rs.7,000 on Assessing Officer to make this FDR comes to making estimatin addition. The assessee Rs.14000 whereas addition in g the himself offered an amount of the assessee Block. accrued Rs. 17,255 towards interest. declared the Hence interest On SB & FD a/c. Hence the interest of Rs.7000 deleted.
from Assessing Officer is not ;only. FDRs. justified in making this addition treating an amount 120 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
of Rs. 7,000 as undisclosed income. The Assessing Officer also did not state in the order of assessment as to how he estimated an amount of Rs.
14,000 towards interest and out of that only and amount of Rs. 7,000 was offered to tax. As the addition is made purely on surmises, the same my kindly be deleted.
18. Addition This ground is redundant as This ground is rejected Rs.10,000 on there is no such addition. redundant.
estimatin g the income from money lending.
ASSESSMENT YEAR: 1996-97
19. Addition According to the Assessing This represents the Cannot be Rs.17,749 treating Officer, the appellant sold a profit on sale of taxed, that the gain Maruthi car during the year Maruthi car. too in on sale of for a consideration of Rs. Block. car as 1,95,000 and whereas the Explanation the said car was purchased by the accepted.
income. appellant at a cost of Rs.
1,77,251. The Assessing Addition Officer is of the view that the deleted.
difference of Rs. 17,749 represents the taxable income. The car purchased is not a capital asset as the said car is for the personal purposes and is therefore, not a capital asset. Therefore, it cannot be taxed as capital gain. The Assessing Officer considered the cost of the car without considering the other expenditure like license fee paid; insurance paid and the cost of accessories. If such amounts are considered, there will not be any gain to the appellant.
121IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
20. Addition The Assessing Officer made This represents No basis for Rs.4,500 treating this addition without any unexplained cash making the basis and on presumptions. deposits in addition in amount There is no material before Development Block.
deposited the A.O. to establish that the Bank, Mumbai Hence
with said amount represents
deleted.
Develop unexplained cash deposit.
ment Co- Details of the deposit are
operative recorded in the books of
Bank, account which are in the
Mumbai custody of the Department.
as the
undisclos
ed
income.
21. Estimatio There is no basis for the The interest on No basis for
Rs.19,640 n of Assessing Officer to make this FDR comes to making
interest addition. The assessee Rs.24,000 whereas addition in
accrued himself offered an amount of the assessee Block.
from Rs. 17,255 towards interest. declared the
Hence
FDRs On SB & FD a/c. Hence the interest of
deleted.
Assessing Officer is not Rs.4,360 only.
justified in making this
addition treating an amount
of Rs. 19,640 as undisclosed
income. The Assessing Officer also did not state in the order of assessment as to how he estimated an amount of Rs.
24,000 towards interest and out of that only and amount of Rs. 4,360 was offered to tax. As the addition is made purely on surmises, the same my kindly be deleted.
22. Estimati The ground is redundant as This ground is rejected Rs.10,000 ng the no such addition is made by redundant income the Assessing Officer.
from
money No further comments.
lending
ASSESSMENT YEAR: 1997-98
23. Addition The appellant already This represents No basis for
Rs.2,000 treating submitted a note for the unexplained cash making
the assessment year 1995-96. deposits in addition in
amount The appellant submits that Development
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deposited the said explanation may Bank, Mumbai Block. with kindly be considered for the Hence Develop year under consideration also. deleted. ment Co-
op Bank, Mumbai as undisclos ed income
24. Addition According to the Assessing This represents the Cannot be Rs.13,108 on Officer, there is a profit on profit on sale of taxed, that account sale of Maruthi Car. The Maruthi car. too in of gain appellant purchased a car on Block.
on sale of 11-4-1996 for Rs. 2,35,000 Explanation
car and sold the same on
accepted.
17/7/1996 for a
consideration of Rs. 2,21,892 Addition
for a loss. The Assessing deleted.
Officer added the difference as profit.
the car which was sold during the year of account was used for the personal purposes of the appellant. It is not a capital asset of the assessee. Hence no capital gain arises on the sale of the car
25. Addition The Assessing Officer is of the During search total For the Rs.70,000 on view that there was deficit cash found was reasons account cash of Rs.70,000 in the Rs.5,60,000. Out stated in of cash. possession of the appellant of this cash main order, and added the same as the amounting to the addition undisclosed income. In this Rs.3,94,705 was is deleted.
regard, the appellant found at the submitted a detailed residence of explanation before the assessee and other Assessing Officer (Page No.22 family members. of the paper book).
The assessee could not explain the cash availability.
Therefore,
Rs.3,50,000 is
taken in the hands
of all male
members. The
proportionate
123
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share of the
assessee comes to
Rs.70,000
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Annexure-7 IT(SS)A No.7/H/2011 Smt.ANITHA L.CHUGANI, Hyderabad Block period 1987-88 to 1996-97 and 01-04-1996 to 03-10-1996 ASSESSMENT YEAR 1987-88 Ground No. Details of Remarks of the & Amount addition Explanation Assessing Decision added Officer in the Remand Report.
1-5 & 31, 33 General in
nature.
6. Addition This amount represent It was found
Rs.20000 holding that the gift received by the from the seized Confirmation
the amount assessee from Lal Dayal material that
available that it
received as Dasan, a close relative of the Bank of
gift from Sri the assessee through Credit and is a gift.
Lal Dayal D.D.No.000424 dt.19-1- Commerce
Cannot be
Dasani as the 87. According to the Gibraltor
undisclosed Assessing Officer there authorized Bank treated as
income. was an authorization of India for
unexplained
from Bank of Credit and payment of
Commerce Gibraltor to Rs.20,000 on credit. Hence
make payment of 19/1/87. The
deleted.
Rs.20,000 to the amount was
assessee on 19-1-87. neither declared This further reiterates in regular the fact that the NRI Sri return of income Lal Dayal Dasani gifted nor the assessee an amount of Rs.20,000 submitted gift to the appellant herein. It tax return. may please be seen that Therefore, the the amount was gifted by amount is the NRI and the payment treated as was ordered from out of undisclosed the country. Therefore, income.
gift tax is not payable in India. The Assessing Officer did not initiate gift tax proceedings.
The credit was already recorded in the books of account and, therefore, it cannot be treated as the undisclosed income of the assessee. In view of the above, the appellant 125 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
requests that the
addition be deleted.
7 Addition There is no deposit of Rs. This represents Since there is
Rs.5000 holding that 5,000 in the bank the amount
no deposit, not
the amount account of the assessee deposited in
deposited on 26/3/1987. Further, bank accounts. even date of
represents all the bank accounts of deposit stated the the assessee were undisclosed disclosed to the by AO, addition income. department and the is deleted books of account were seized during the course of search & seizure operations. Even otherwise this addition cannot be made under Sec. 158 BD of the Act without reference to the seized materials. It is submitted that the bank account was already disclosed to the department and therefore, cannot be considered as undisclosed income.
Assessment Year 1988-89 8 Addition Out of this, an amount of Amount Further Rs.14,663 holding that Rs.11,401 was already admitted in amount of the aggregate admitted in the block block return. Rs.3262 of the return filed. With regard already deposits in to the balance of returned the bank Rs.3,262/- is admitted in originally can represent the regular return of not be treated undisclosed income filed. Hence, this as undisclosed.
income. addition should be Deleted to that
deleted. extent
Assessment Year 1989-1990
9. Addition on The addition made by the Gross rental Deleted
Rs.1200 account of Assessing Officer does income declared
accepting
short not emanate from seized in return is
declaration of material. Rent received rs.9,000 assessee
rental was duly admitted in the whereas the
explanation.
receipts. return of income. No bank account
part of the rental income shows rental
has escaped assessment. receipts of
The appellant admitted Rs.20400.
the rent receivable for Assessee
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the year under holding is 50%. consideration. The Therefore, Assessing Officer is not suppression of justified in making the actual rent is addition of Rs. 1,200. Rs.1200.
Assessment Year 1989-90 9 Addition on The addition made by the Gross rental Deleted Rs.1200 account of Assessing Officer does income declared accepting short not emanate from seized in return is declaration of material. Rent received rs.9,000 assessee rental was duly admitted in the whereas the explanation.
receipts. return of income. No bank account part of the rental income shows rental has escaped assessment. receipts of The appellant admitted Rs.20400. the rent receivable for Assessee the year under holding is 50%. consideration. The Therefore, Assessing Officer is not suppression of justified in making the actual rent is addition of Rs. 1,200. Rs.1200.
Assessment Year 1990-91 10 Addition on The addition made by the Gross rental Deleted Rs.3,600 account of Assessing Officer does income declared accepting short not emanate from seized in return is declaration of material. Rent received Rs.9,000 assessee rental was duly admitted in the whereas the explanation.
receipts. return of income. No bank account part of the rental income shows rental has escaped assessment. receipts of A statement showing the Rs.25,200. receipt of rents year wise Assessee and the division among holding is 50% .
the joint owners is Therefore,
submitted as an suppression of
annexure to the present actual rent is
submission. Rs.3,600.
Assessment Year 1991-92
11 Addition on The addition made by the Gross rental Deleted
Rs.3,600 account of Assessing Officer does income declared accepting
short not emanate from seized in return is assessee
declaration of material. Rent received Rs.9,000 explanation.
rental was duly admitted in the whereas the
receipts. return of income. No bank account
part of the rental income shows rental
has escaped assessment. receipts of
A statement showing the Rs.12,600.
127
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
receipt of rents year wise Therefore, and the division among suppression of the joint owners is actual rent is submitted as an Rs.3,600 annexure to the present submissions.
12 Addition on This amount was already Assessee In case of
Rs.1750 account of admitted in the block received interest double
money return filed. Hence, the of Rs.6400 on addition, the
lending addition may be deleted. money lending same is
whereas the deleted.
interest shown
is Rs.4650.
13 Addition on This amount was already Admitted in Rejected
Rs.4520 account of admitted in the block block return.
money return of income for the
lending. assessment year 1992-
93.
Assessment Year 1992-93
14 Addition on This amount was already This represents Rejected
Rs.1109 the ground of admitted by the assessee the difference of
undisclosed in the block return of interest received
interest from income filed. from UTI and
UTI. that declared in
the return.
Assessment Year 1993-94
15 Addition on For the assessment year This represents Considering the
Rs.4,336 account of under consideration, the the amount explanation,
undisclosed assessee admitted a total credited in addition stands
credits in the income of Rs.53,569 on Andhra Bank deleted
bank which taxes were paid. a/c for which
account. From out of such income the assessee did
and other receipts of the not have any
minor, the assessee explanation.
deposited Rs. 4,336 in
the joint account
No.8136 maintained
along with her daughter
Miss. Seema in the
Andhra Bank. It is
submitted that the
appellant maintained
books of account and the
said books of account
were seized. The
addition is not based on
128
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
any seized material. The
assessee, therefore,
requests to delete the
addition. It is further
submitted that there is
no evidence to show that
such deposits represent
the undisclosed income
of the appellant.
Assessment Year 1994-95
16 Addition on This amount represents Matter of record. Claim made is
Rs.40,000 the ground investment in PPF and a
disallowed.
that the claim was made under
payment sec. 88 of the Act. This There is no
made to PPF was not claimed as a
justification.
represent the deduction from the total
undisclosed income. This claim is Hence deleted.
income. only as a relief from the
tax payable. The
Assessing Officer is not
justified in adding the
said amount.
Assessment Year 1995-96
17. Addition on The Assessing Officer As per the Considering the
Rs.1,30,000 the ground found that the appellant seized material
explanation,
that FDR not on various dates the assessee
properly deposited amounts had FDR of addition stands
explained. aggregating to Rs. Rs.1,97,177 in
deleted.
1,97,177 in the fixed Grindlays Bank.
deposits. According to There is no
the Assessing Officer, the withdrawals
appellant could explain from any bank
only Rs. 67,177 and the account for
balance of Rs. 1,30,000 purchasing
deposited is not properly FDRs.
explained. Therefore, the
Assessing Officer added
the said sum as the
undisclosed income. In
this regard, the appellant
submits that the fixed
deposits were already
disclosed to the
department. The addition
does not emanate from
the seized material.
Further, the appellant
129
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
clearly explained as to how the fixed deposits were made and also the sources for each of the deposit. With regard to source for the FDRs in the Grindleys bank, the assessee submits that -
(i) The FDR No.1336009 dated 25-3-95 for Rs.10,000 was deposited with the cash available with the appellant.
(ii) FDR No.1335809 dated 25-3-95 for Rs.25,000/- was renewal of the earlier deposit of Rs. 25,000 made on 7/1/1992 by drawing from the Indian Bank account.
(iii) For FDR No.1335500 dated 25-8-95 for Rs.40,000. The amount was drawn from Indian Bank vide cheques No.679310 and converted to FDR the face value of which is Rs.
47,177.
(iv) For FDR No.1336001 dated 07-08-1994 for Rs.10,000, the said deposit was made from the cash available.
(vi) For FDR No.1335802 dated 7-8-94 for Rs.25,000, the amount was drawn from Indian Bank vide cheques No.631799 and converted to FDR.
(vii) For FDR No.1335502 130 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
dated 22-9-94 for Rs.80,000, the amount was drawn from Indian Bank vide cheque No. 631792 on 9-12-1991 and converted to FDR.
The said amount was renewed.
The addition does not emanate from the seized material. The appellant further submits that all the material was provided during the course of assessment proceedings. Therefore, the Assessing Officer could not have made such an addition while completing the assessment under sec.
158 BD of the Act.
18 Addition on The said amount was These are Considering the Rs.22,000 the ground deposited with Andhra deposits in explanation, that the Bank a/c No. 8136 i.e., Andhra Bank deposits are joint account of the which remain addition stands not properly appellant with her minor unexplained.
deleted.
explained. child Seema. The deposit was made from the income earned by her besides the gifts received by her minor child. The appellant submits that the bank accounts were all disclosed to the department. Further, the Assessing Officer did not make such an addition with reference to any seized material. The assessee, therefore, requests to delete the addition.
19 Addition on There is no such receipt These are Considering the Rs.40,000 the ground during the year under amounts explanation, that the consideration. The received from amount appellant submits that the maturity of 131 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
credited in only an amount of Rs. mutual funds addition stands the SB 26,600 was received on deposits for deleted.
account 13-8-1994 out of which which deduction No.5289 Rs. 6,600 represents u/s 80 CCA and represent the interest which is 80 CCB was refund of the admitted regularly every claimed. The amount year. The same cannot deposits are claimed as be brought to tax again. taxable in the deduction Further, the appellant year of receipt. u/s 80CCA or claimed deduction of Rs.
80CCB 10,000 for the
assessment year 1990-
91 and no other amount
was claimed. The
addition does not
emanate from the seized
documents. Therefore,
the Assessing Officer is
not justified in making
such an addition
20. Addition on The addition made does Interest credited Reconciliation
Rs.10521 the ground not emanate from the in bank account of accrued
that out of seized material. It is is Rs.13,121 amounts and
the total submitted that the whereas the Received
interest of interest on mutual funds assessee amounts
Rs.13121 accrued during the declared an should have
derived from respective years was amount of been done by
mutual admitted. The interest Rs.2,600 only. AO. Amount
funds, relating to the year of The paper book can not be
Rs.10521 account is already does not contain taxed on
represent disclosed. The interest any explanation receipt basis
undisclosed received on maturity of the difference again. Hence
income. during the year cannot of Rs.10,521. deleted.
be the income of the year
under consideration.
The interest relating to
the year only can be
considered as income.
Therefore, the Assessing
Officer is not justified in
making such addition.
Assessment Year 1996-97
21 Addition on The addition of The donor had For the reasons
Rs.5,00,000 the ground Rs.5,00,000/- was made gifted a total
stated in main
that the disbelieving the gifts amount of
amount received from Smt. around Rs.42 order, addition
received from Varsha Jaikumar lacs to her
is deleted.
Varsha Mirpuri. No brothers and
Meerpuri is incriminating material relatives during
132
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
not proved. was found during the the block period.
course of search and, The assessee therefore, no addition could not prove should have been made that the donor's as undisclosed income. financial Without prejudice, the capacity was appellant submits that sufficient to Smt. Varsha Mirpuri is make gift the resident of Bangkok, repeatedly to Thailand and she is the her relatives.
sister-in-law of the
appellant. She
maintained a bank
account with Indian
Bank, Secunderabad, a
copy of which is
submitted at page
Nos.20 to 22 of the paper
book. The appellant filed
bank account in India,
letter of confirmation
from Varsha Mirpuri.
The Assessing Officer
issued a notice u/s
158BD to Mrs. Varsha
Mirpuri proposing to tax
the amount deposited
into the said bank
account and the said
Smt. Varsha Mirpuri
explained the source for
such deposit and
thereafter the
proceedings u/s 158BD
were closed.
22 Addition on The addition does not These Considering the
Rs.7489 the ground emanate from the seized represents
explanation
that the material. The deposits deposits in
deposits in were in the joint account Andhra Bank amount is
Andhra Bank of the appellant and her account
deleted.
represent daughter Seema. The No.8136.
undisclosed amounts were deposited
income. from the income derived
by her of Rs. 70,360 and
also from the gifts
received by the minor
daughter. Therefore, no
addition could have been
made by the A.O.
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IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
23. Addition The Assessing Officer is This amount Considering Rs.20,455 made on the of the view that deposit was deposited in the explanation ground that of Rs. 20,455 made by Indian Bank on the amount the appellant with Indian 14-11-95 for amount stand deposited in Bank on 14-11-1995 was which no deleted.
Indian bank not properly explained. withdrawal from is not It is submitted that the any other bank properly said amount was account as explained. received from the joint claimed by the account with Indian assessee was Bank a/c No. 8883 with found.
Sobha, w/o Ramesh. In
the said bank account,
the rent receipts from the
house property held
jointly are deposited. The
amounts are entered in
the books of account and
are admitted in the
return of income under
the head income from
house property. The
appellant maintained the
books of account and
such books of account
are seized and are in the
custody of the
department. Further, the
bank account is
disclosed to the
department and cannot
be considered as
undisclosed. The
addition does not
emanate from the seized
material. Therefore, the
Assessing Officer is not
justified in making an
addition.
24. Addition on There is no information It was found Since assessee
Rs.40,000 the ground before to Assessing that the has claimed in
(1994-95) that the Officer to show that the investments regular returns
Rs.40,000 investment contributions were made have been met can not be
(1995-96) made in PPF out of borrowed funds. from borrowed disallowed in
Rs.50,000 represent The deposits into the PPF funds or from Block.
(1996-97) undisclosed A/c. are explained in the realization of Moreover
income. respective asst. years. NSC of earlier assessee has
The additions made may years which incomes to
please be deleted. were exempt make
Further, it is submitted from tax. investments.
134
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
that for the years under Therefore, the Deleted.
consideration, the investments are
appellant claimed not from income
deduction under sec. 88 chargeable to
from the tax payable and tax.
not a deduction from the
income of the appellant.
Therefore, the Assessing
Officer is not justified in
making any addition on
this account.
25 Addition The Assessing Officer The interest Reconciliation
Rs.1584 considering worked the interest on accrued on FDR of accrued
(1994-95) the interest estimate basis, whereas is Rs.13,000 amounts and
Rs.6711 on FDR the appellant admitted whereas the Received
(1995-96) accrued as the interest as and when interest declared amounts
Rs.5476 the credited to the account of is Rs.7524 only. should have
(1996-97) undisclosed the appellant. These been done by
income. additions were already AO. Amount
explained in the cannot be
respective assessment taxed again.
years. Hence, no further Hence deleted.
explanation is submitted.
Assessment Year 1997-1998
26. Addition on The financial year did This represents Considering the
Rs.44107 the ground not expire. the deposits in
explanation
that the There is no information Indian Bank but
deposit in before the Assessing the assessee amount stand
Indian Bank Officer to prove that the could not
deleted.
is undisclosed fixed deposit in Indian explain the
income. Bank is from out of the source.
undisclosed sources.
The amount was
deposited in the bank
account. The fixed
deposits made of Rs.
25,000 and Rs,. 10,000
earlier on 22/9/1994 got
matured during the year
of account and was
deposited in the bank
account on 24-9-
1996.Hence the
Assessing Officer is not
justified in making the
addition. The same may
kindly be deleted. It is
further submitted that
135
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
the Assessing Officer is
not justified in making
any addition as
undisclosed income as
the said bank account
was already disclosed to
the department.
27 Addition on The assessee deposited This represents Can not be
Rs.2748 the ground Rs.1000 on 4-4-97; the deposits in
considered in
that the Rs.950 on 30-8-97 and Indian Bank
deposits Rs.798 on 1-12-98 in the account for the Block. Deleted.
amounting to Andhra Bank account assessee could
Rs.2748 No.8136. From the dates not explain the
represent of deposits, it is seen source.
undisclosed that the Assessing
income. Officer considered the
period beyond the block
period for assessment. It
is submitted that the
deposits were made after
the date of search and
cannot be considered for
assessment under sec.
158 BD of the Act.
28 Addition on The assessee submitted During search For the reasons
the ground a detailed note with the jewelry of stated in main
Rs.620460 that the regard to the alleged Rs.11,28,561/- order, the
excess excess jewellery which is was found addition stands
jewellery not available at page No.23 belonging to the deleted.
disclosed to 45 of the paper book. assessee and
In view of the detailed her husband Sri
submissions, the Lachman. The
assessee requests to assessee
delete the addition made. declared
Rs.2,79,198 and
her husband
declared
Rs.1,24,967 in
their wealth tax
returns for the
A.Y.92-93.
The assessee
stated that her
children had
separate jewelry
for themselves.
But it was found
that they are not
part of the
136
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
wealth tax
returns of the
assessee. The
assessee did not
furnish any
quantitative
details of jewelry
in the wealth
tax returns.
Therefore, the
jewelry found
cannot be
compared in the
quantitative way
and has to be
based on market
value only.
29. Addition of This addition is Sri Ramesh No evidence
Rs.28,243 the regarding Balamrai Chugani during expect
registration Property jointly search admitted statement.
charges. purchased by the in his sworn Assessee
assessee along with 4 statement that explained that
others. The assessee additional the purchase is
submitted a detailed note consideration of from a society
in this regard (Page Rs.1 lac was and paid by
No.50 of the Paper Book). paid outside cheques. Hence
In view of the detailed books for 5 plots deleted.
submissions in the note which was
as above, the assessee offered as
requests to delete the undisclosed
addition made. income.
Further, an
amount of
Rs.8243 was
spent towards
registration
charges outside
books. But the
same was not
declared by the
assessee in her
block return.
Therefore, the
same is treated
as undisclosed
investment of
the assessee.
30. Addition This amount was Amount
Rs.1,75,000 holding that admitted in the block admitted in the Rejected
the payment return of income. Hence, block return.
made to RK the addition shall be
137
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Construction deleted.
as the
expenditure .
incurred by
the assessee
30. Undisclosed It is submitted that the As per seized Even though
Rs.28679 investment in appellant and five others material the year of
Pooja already admitted Rs. purchase bills in admission
Apartments 10,50,000 as the name of R.K. differs, as
undisclosed income on Constructions, assessee
this account. The the builder of offered in
appellant submitted that the flat Block, further
Rs. 60,000 is towards amounting to addition is
extra fittings and Rs. Rs.1,72,076 deleted.
9,90,000 towards extra were found from
payments to the builder. the residence
The Assessing Officer which are for
added the amount of Rs. purchase of
1,75,000 as admitted by extra fittings. No
the appellant. Besides, explanation was
the Assessing Officer offered.
mentions that certain Therefore, 1/6th
bills for purchases made (6 flat owners)
by R.K. Constructions which comes to
from Hemant Rs.28,679 share
Enterprises; Om Trading of the assessee
Company were found is the
and that such an undisclosed
amount works out to Rs. investment.
1,72,076. The Assessing
Officer added 1/6 of
such amount. In this
regard, it is submitted
that the purchases were
effected by R.K.
Constructions. This is
evidenced from the
invoices found.
Therefore, the amount of
Rs. 1,72,076 has to be
telescoped with the
amount already offered
by the appellant.
32. Regarding The A.O. completed the Matter of record. Rejected.
Charging at completing assessment u/s.158BD.
60% assessment
u/s.158BD
and charging
tax at 60%.
138
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Annexure- 8 IT(SS)A No.8/H/20110 KUNJUBAI G.CHUGANI, Hyderabad Block period 1987-88.to 1996-97 and 01-04-1996 to 03-10-1996 ASSESSMENT YEAR: 1987-88 Ground No. Details of Explanation Remarks of AO in Decision addition Remand Report 1 to 4 & General in --
30,31 & 32 nature 5 Addition on The appellant Total cash Reconciliation Rs.5,500 account of maintained books of deposited in SB of receipts unexplained account. The bank A/c account was could have cash deposit. No.6191 is already Rs.30,500 and been reflected in the books of the assessee undertaken by account. The account is declared gross AO. However a regular one and the rental receipt of entire rent same was furnished Rs.25,500. The difference can during the course of difference of not be taxed assessment u/s 158BD. Rs.5,500 remains under income The Assessing Officer unexplained. from house sought clarification with property. regard to each of the Considering receipt and the appellant explanation furnished the same. deleted.
According to the Assessing Officer the amount Credited and explained as rent received aggregated to Rs.30,500 whereas the amount offered for assessment towards rent was only Rs.25,500. Therefore, the balance was added by the Assessing Officer.
It is submitted that the Assessing Officer's working is not correct.
The amount stated to be rent is not more than Rs.25,500. The aggregate of the receipts is Rs.78,717 (Page No.73 of the paper book) from which the opening balance of Rs.3191 and 139 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
the cash deposit of Rs.43661 and interest of Rs.3691 are to be reduced in which case the aggregate would not be more than Rs.30,500 as arrived by the Assessing Officer.
Further, such addition cannot be made while completing the assessment u/s 158BD of the I.T. Act.
The rental receipts were Rs. 25,500 only. The deposit of Rs. 30,500 include the rental receipts of Rs. 25,500. It can be seen from the bank account that even on 1-4-1986, an amount of Rs. 5,000 was received towards rent and in the first week itself, the appellant received Rs.
2,900 totaling to Rs.
7,900 and the said rent relates to the earlier year.
6 Addition According to the There is no Amounts Rs.38,450 treating the Assessing Officer, an explanation deposited are cash deposit amount of Rs.12,000, regarding cheques. as Rs.6,000, Rs.10,000 and cheques Considering undisclosed another Rs.10,000 were deposited in the the income. deposited in Account SB account. explanation No.6191. The Assessing Hence treated as the same is Officer found that an undisclosed. deleted. amount of Rs.12,000 was accepted as the undisclosed income and, therefore, the Assessing Officer arrived at a further addition of Rs.38,450. It is submitted that there is no such figure of Rs.12,000 in the bank account. It can be seen from page No.73 of the paper book that there 140 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
were deposits of
Rs.6,000, Rs.10,000 and
another Rs.10,000 into
the said bank account.
Out of the said amount,
Rs.12,000 was offered as
additional income. The
balance of the amount
represents as the
opening balance. As
submitted in the earlier
paragraphs, no such
addition could have been
made while completing
the assessment u/s
158BD of the I.T. Act,
particularly when no
information was found
during the course of
search and the bank
account was already
disclosed in the return of
income filed.
Assessment Year 1988-89
7&10 Addition on The interest credited by Interest credited No basis for
Rs.2,200 the ground the bank to the account in bank account making
undisclosed of the assessee is Rs. is Rs.3674 addition in
interest from 1475/- and the same has whereas he Block. Hence
bank account. been disclosed by the assessee declared deleted.
assessee in the return of an amount
income filed. It is not Rs.1474 only.
known how the The paper book
Assessing Officer arrived does not contain
at the figure of Rs. any explanation
3,674/-. The addition of the difference
made by the Assessing of Rs.2200
Officer does not emanate
from the seized material.
Hence it is requested
that the addition made
may be deleted.
8 & 11 Addition on For the asst. year under Credit in the No basis for
Rs.10,530 account of consideration, the account shows making
short assessee admitted an that assessee addition in
declaration of income of Rs. 41,100 received rent of Block. Hence
rental receipt. towards income from Rs.51630 deleted.
property. As per the whereas the
bank statement, the assessee declared
141
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same comes to Rs. Rs.41100 in the 32,575. The difference regular return.
is due to the fact that property income is offered to tax on accrual basis. It is not known how the Assessing Officer arrived at the figure of Rs. 51,630 as rent received. The details of the rent received were already furnished along with the return of income. The Assessing Officer did not find that such rent offered is less than the rent actually received. The difference is not arising out of the seized material. Hence the Assessing Officer is not justified in making the addition. The same may kindly be deleted.
Assessment Year 1989-90 9 Addition on For the asst. year under Credit in the SB No basis for Rs.11,430 account of consideration, the account shows making difference in assessee admitted an that assessee addition in receipt of income of Rs. 48,300 received rent of Block. Hence rental income. towards income from Rs.54330 deleted.
property. As per the whereas the bank statement, the assessee declared same comes to Rs. Rs.42,900 in the 44,850. The difference regular return. is due to the fact that property income is offered to tax on accrual basis. It is not known how the Assessing Officer arrived t at the figure of Rs. 54,330 .
The difference is not arising out of the seized material. Hence the Assessing Officer is not justified in making the addition. The same may kindly be deleted.
142IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Assessment Year 1990-91 12 Addition on This addition apparently The assessee No basis for Rs.567 account of seems to be wrong. The short declared making undisclosed interest credited of the bank interest addition in interest from Rs.1612 in the bank in the regular Block. Hence bank. account is admitted by return. deleted.
the assessee. As mentioned by the Assessing Officer there is no difference between the interest credited to the account and the interest admitted.
Therefore, no addition can be made. (page Nos.
77 of the paper book).
Assessment Year 1991-92 14 Addition on The assessee admitted Credit in the SB No basis for Rs.11,800 account of an amount of Rs. 50,400 account shows making short rental in the return of income that assessee addition in receipts. towards rent receipts. received rent of Block. Hence The amount of deposits Rs.62,200 deleted. towards rent recorded in whereas the the bank pass book are assesee declared Rs. 49,000 but not Rs. Rs.50,400 in the 62,200 as was adopted regular return. by the A.O. The amount of Rs. 50,400 is arrived at taking into consideration the rent receivable and received for the entire 12 months.
There is no information to the effect that the appellant possessed more properties than disclosed in the return of income or received more amount of rent than disclosed in the return of income. Therefore, no addition can be made by the Assessing Officer towards deficiency of rent. In so far as deposits are concerned, they are rental incomes but might not have been made in 143 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
the same year. In so far as the bank account is concerned, the same was disclosed in the return of income. The difference is not arising out of the seized material and, therefore, no addition can be made.
15 Addition This was already Admitted in block Rejected. Rs.3,131 representing admitted in the block return.
undisclosed return by the appellant. income from CDS.
Assessment Year 1992-93 15 Addition on This amount was already Admitted in block Rejected Rs.755/- account of admitted in the block return.
undisclosed return of income. Hence,
interest on the addition may kindly
LIC mutual be deleted.
fund.
16 Addition on This amount was already Admitted in the Rejected
Rs.4,547 the ground admitted in the block block return.
that the return of income. Hence,
interest on the addition may kindly
FDR is not be deleted.
disclosed.
17. Addition as The amount of Rs.3,057 This is the Considering
Rs.859 undisclosed admitted in the return of difference of the
interest from income towards Interest interest credited explanation,
bank. on S.B. A/c. includes in bank account amount
859. Hence there is no and the interest deleted
undisclosed income. The declared in the
addition may kindly be return.
deleted.
Assessment Year 1994-95
18. Addition on The amount of Rs. Credit in the SB No basis for
Rs.17,901 account of 68,301 adopted by the account shows making
short Assessing Officer that assessee addition in
declaration of towards deposit of rents received rent of Block. Hence
rental receipt. is incorrect. Actual Rs.68301 deleted.
deposits appearing whereas the
towards rent deposits in assessee declared
the bank pass book is Rs.50,400 in the
Rs. 50,500. The amount regular return.
offered to tax in the
return of income towards
144
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
rental income is Rs.
50,400. Hence the A.O. cannot make an addition on this count towards undisclosed income.
There is no information to the effect that the appellant possessed more properties than disclosed in the return of income or received more amount of rent than disclosed in the return of income. Therefore, no addition can be made by the Assessing Officer towards deficiency of rent. In so far as deposits are concerned, they are rental incomes but might not have been made in the same year. In so far as the bank account is concerned, the same was disclosed in the return of income. The difference is not arising out of the seized material and, therefore, no addition can be made.
19. Addition on The Assessing Officer The principal No basis for Rs.20,000 account of cannot make such an amount should making undisclosed addition while have been addition in income from completing the brought to tax in Block. Hence SBI Mutual assessment under sec. the year of deleted. funds. 158 BD of the Act maturity.
particularly when such an addition is not with reference to any seized material. A detailed note was submitted regarding additions under Sec.
80CCA & 80CCB, copy of which is available at Page No. 8 of the paper book. In this regard it is further submitted that except for the year 1990- 91, the appellant did not claim such a deduction 145 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
in the earlier years. The amount is refunded only after a period of 5 years and hence the amount allowed for the assessment year under consideration cannot be encashed for the year under consideration.
Further, the Assessing Officer allowed only Rs.
10,000 for the assessment year 1990-
91. In view of the above, the addition may kindly be deleted.
20 Addition on The ground is redundant Ground is Rejected Rs.9,407 account of as such an addition is redundant.
undisclosed not appearing in the income from assessment order. FDR 21 Addition on During the course of Sri Ramesh No evidence Rs.28,243 account of assessment proceedings Chugani during expect undisclosed itself the assessee search admitted statement. investment on submitted a note before in his sworn Assessee Balamrai the Assessing Officer statement that explained that property. wherein it was stated additional the purchase that the plots of land consideration of is from a were allotted by the coop. Rs.1 lac was paid society and society and the price was outside books for paid by fixed by the society. 5 plots at cheques. During the course of Thokatta village Hence deleted. search, no information which was offered concerning the payment as undisclosed to the society in addition income. Further, to the actual price was an amount of available. The seized Rs.8243 was documents show that the spent towards total expenditure was registration met by withdrawing the charges outside amount from the bank books. But the account. Further, when same was not the Assessing Officer declared by the wanted to make an assessee in the addition of Rs. 20,000 block return.
basing on the statement of the appellant, no other addition on account of registration charges should have been made by the Assessing Officer.
146IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Assessment Year 1995-96
22. Addition as This amount was already Admitted in the rejected Rs.2,583 Un-disclosed admitted in the block block return.
interest from return filed. Hence, the LIC Mutual same shall be deleted. fund.
23. Addition as The Assessing Officer The principal No basis for Rs.10,000 undisclosed cannot make such an amount should making investment in addition while have been addition in LIC mutual completing the brought to tax in Block. Hence fund. assessment under sec. the year of deleted.
158 BD of the Act maturity.
particularly when such an addition is not with reference to any seized material. A detailed note was submitted regarding additions under Sec.
80CCA & 80CCB, copy of which is available at Page No. 8 of the paper book. Kindly peruse the explanation submitted at Col. No.4.
24 Addition on The assessee deposited The assessee Considering account of Rs.1,80,000 in the fixed could not furnish the unexplained deposits by withdrawing any supporting explanation, fixed deposit. the amount from ANZ details to explain amount is Grindleys Bank A/c the investment in deleted No.133730 (out of FDR of Rs.2,70,000 drawn on Rs.1,80,000 18-8-1994 page No. 88 of the paper book). This has already been explained before the Assessing Officer (Page No.88 of the paper book).
The appellant sold land at Kapra and deposited Rs. 1,80,000 in ANZ Grindleys Bank. As the source is clearly explained, the addition may kindly be deleted.
147IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
25. Addition on The Assessing Officer The assessee No basis for Rs.8,944 account of arrived at such an declared interest making accrued addition on an estimate from SB and FDR addition in interest on basis. It is submitted amounting to Block. Hence FDRs. that the appellant offered Rs.13958, out of deleted.
interest of Rs. 13,958 in which Rs.12556 the return of income. is accrued The appellant humbly interest on FDR submits that such an whereas the addition cannot be made accrued interest while completing the on FDR works assessment under sec. out to Rs.21500. 158 BD of the Act. The The explanation appellant filed evidence of the assessee is for the sources in self explanatory.
making the bank
deposits. A copy of the
separate note submitted
before the Assessing
Officer is annexed.
Assessment Year 1996-97
26 Addition on During the course of This amount Money
Rs.35,000 account of assessment itself on represents the advanced can
(For A.Y. undisclosed 29.9.1997 the appellant money advanced not be
1997-98) investment in filed a letter before the to M/s Mohd. undisclosed
money A.O. wherein it has been Ismail & Sons. In income,
lending. stated that the assessee the absence of unless
has no account with any explanation unaccounted.
Canara Bank, R.P. Road, the amount is No such case
Secunderabad and the treated as here. Hence
cheques mentioned in undisclosed deleted.
the letter referred to by income.
the Assessing Officer
represents the cheques
issued by M/s. Mohd.
Ismail & Sons and in fact
the assessee issued a
cheques No. 125006 Dt.
18.6.1996 drawn on
Grindlays Bank,
Hyderabad. Hence no
part of the amount to be
treated as undisclosed
income. However,
without taking into
consideration the
submissions of assessee,
the A.O. made the
addition. The amount
has been paid to M/s.
Mohd. Ismail & Sons
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through banking
channels.
27. Addition on The assessee offered an The assessee No basis for
Rs.16,767 account of amount of Rs. 4,808 in declared interest making
undisclosed the return of income from FDR addition in
accrued filed. It is submitted that amounting to Block. Hence
interest the interest as credited Rs.4233 whereas deleted.
to the account is offered the accrued
in the regular return f interest on FDR
income. The estimation works out to
of interest on FDR at Rs. Rs.21,000.
21,000 is on Therefore, the
presumption basis. balance of
Hence it is requested Rs.16767 is
that the addition made treated as
may kindly be deleted. undisclosed
income.
Assessment Year 1997-98
28. Addition on It is submitted that the As per seized Admitted as
Rs.28,679 account of appellant and five others material income even
undisclosed already admitted Rs. purchase bills in though in a
investment in 10,50,000 as the name of R.K. different year
Pooja undisclosed income on Constructions, in Block.
Apartments. this account. The (the builder of the Double
appellant submitted that flat) amounting to addition if any
Rs. 60,000 is towards Rs.1,72,076 were stands
extra fittings and Rs. found from the deleted.
9,90,000 towards extra residence which
payments to the builder. are for purchase
The Assessing Officer of extra fittings.
added the amount of Rs. No explanation
1,75,000 as admitted by was offered.
the appellant. Besides, Therefore, 1/6th
the Assessing Officer (6 flat owners)
mentions that certain which comes to
bills for purchases made Rs.28,679. Share by R.K. Constructions of the assessee is from Hemant the undisclosed Enterprises; Om Trading investment.
Company were found and that such an amount works out to Rs.
1,72,076. The Assessing Officer added 1/6 of such amount. In this regard, it is submitted that the purchases were effected by R.K. Constructions. This is evidenced from the 149 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
invoices found. The
appellant offered Rs.
9,90,000 as additional
payment to R.K.
Constructions, besides
accepting Rs. 60,000 for
additional fittings.
Therefore, the amount of
Rs. 1,72,076 has to be
telescoped with the
amount already offered
by the appellant.
Therefore, the appellant
submits that the
Assessing Officer is not
justified in making such
an addition.
29 Addition on This amount was This ground is Rejected.
Rs.1,75,000 account of admitted in the block not pressed.
undisclosed return filed. Hence, the
income on ground is not pressed.
Pooja No further comments
Apartments.
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Annexure-9 IT(SS)A No.9/H/2011 RAMESH G.CHUGANI, Hyderabad Block period 1987-88 to 1996-97 and 01-04-1996 to 03-10-1996 ASSESSMENT YEAR: 1987-88 Ground No. Details of Explanation Remarks of Decision & Amount addition the Assessing added (Rs. Officer in the Remand Report.
1 to 8; 47 General in --
to 49 nature
9 Addition on the There is no such amount of The assessee How cheque
Rs.6,625 plea that there Rs.6,625 deposited with the deposited deposits can
is an Indian Bank. The bank cash of be
unaccounted account is disclosed to the Rs.3240 on unexplained
for deposit with department The appellant, 2.4.87 and cash deposit
the bank during the course of block rs.3385 on was not
assessment proceedings 24.7.86 explained by
furnished details of the bank through AO.
accounts; copies of the bank cheques. No Considering
accounts and details of the supporting the
deposits made. Further, the material explanation,
appellant maintained books submitted to amount
of account and the deposits the claim deleted.
are recorded in the books of that there
account. The amounts of Rs. were
3240 and Rs. 3385 are not withdrawals
appearing in the bank from Ramesh
statements. The Assessing Watch Co.
Officer did not comment
upon the explanation
submitted. Therefore, the
appellant submits that the
addition made may kindly
be deleted.
Assessment Year 1988-89
10 Addition on the The said deposit consists of These are Considering
Rs.12,840 plea that there interest on NSC of Rs.8,640 cash deposits the
is an and Cash deposit of in Indian explanation
unaccounted Rs.4,200. The cash available Bank addition
for deposit with in the books of account was account. No deleted.
the bank deposited in the bank. supporting
Hence the same cannot be evidence
treated as unexplained produced by
income. The deposits were the assessee.
explained. The Assessing
Officer did not contradict
151
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the submissions made.
11 Addition The addition of Rs.1,00,000 The donor For the Rs.1,00,000 treating the for the assessment year had gifted a reasons amount 1988-89 was made total amount stated in the received from disbelieving the gifts of around main order, his sister received from Smt.Varsha Rs.42 lacs to addition Smt.Varsha Jaikumar Mirpuri. No her brothers stands Jayakumar incriminating materials were and relatives deleted. Mirpuri as found during the course of during the undisclosed search and, The appellant block period. income. filed bank account in India, The assessee letter of confirmation from could not Varsha Mirpuri. It is also prove that confirmed by her that she the donor's deposited the amounts with financial the Indian Bank much capacity was earlier and she issued sufficient to cheques in favour of the make gift appellant and other brothers repeatedly to and the amount was her relatives. withdrawn. The Assessing Moreover the Officer issued a notice u/s assessee 158BD to Mrs. Varsha could not Mirpuri proposing to tax the produce any amount deposited into the IT return said bank account and the copy of her said Smt. Varsha Mirpuri relative nor explained the source for any balance such deposit and thereafter sheet during the proceedings u/s 158BD the course of were closed. asst.
Proceedings.
Assessment Year 1989-90
12. Addition This amount is the matured This is cash No basis for Rs.17,340 treating the value of the NSC i.e. deposited on making amount in the principal along with interest 9.4.88. addition in bank account received through cheque. Assessee Block. as unexplained Hence the source is stated that Hence investment. explained. Further, the this is deleted.
amount is deposited in the deposited by bank account already cheques disclosed to the department. received as Therefore, the said addition NSC interest.
cannot be made under sec. However,
158 BC of the Act. bank pass
book shows
that the
amount was
deposited in
152
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cash.
13 Addition The assessee submitted that As seen from No basis for Rs.16,200 holding that the the property was acquired the seized making property at by Ramesh Watch Co. and material, the addition in Khandoji Bazar was recorded in the books of assessee assessee represents account of the said purchased hands. unexplained company. Such information the property Property investment. was filed before the 1-6-230/2 at belongs to Assessing Officer on 15.9.97 Khandoji firm. Hence when the assessments were Bazar, deleted being done. The assessment Secunderaba of Ramesh Watch Co., a d for a partnership firm was also consideration completed u/s 158 BC along of Rs.15,000 with the assessment of the with appellant. The appellant registration stated that the said property charges of was acquired by Ramesh Rs.1200. Watch Company but no Assessee addition was made in the stated that said partnership firm. All the property these facts clearly indicate was acquired that the property was from Ramesh acquired by Ramesh Watch Watch Co. Co. and is not includable in But the the assessment of the records appellant herein. Copy of reveal there the Balance sheet of the are no partnership is submitted to sufficient show that the said asset was withdrawal disclosed by the said from Ramesh partnership firm. Watch Co. to fund the investment.
Therefore, an
amount of
Rs.16200 is
treated as
income.
14. Addition as The assessee admitted the The ground is Rejected.
Rs.30,000 unexplained same in the block return not pressed.
investment in filed. The ground is not Begumpet pressed.
property.
Assessment Year 1990-91 15 Addition The addition of Rs.3,33,333 The donor For the 153 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Rs.3,33,333 treating the for the assessment year had gifted a reasons amount 1990-01 was made total amount stated in the received from disbelieving the gifts of around main order, his sister received from Smt.Varsha Rs.42 lacs to addition Smt.Varsha Jaikumar Mirpuri. In this her brothers stands Jayakumar regard, it is submitted that and relatives deleted. Mirpuri as these entries were made in during the undisclosed the regular bank account block period. income. and the books of account. The assessee No incriminating material could not were found during the prove that course of search and, the donor's therefore, no addition financial should have been made as capacity was undisclosed income. sufficient to make gift repeatedly to her relatives.
16 Addition The assessee explained that As seen from No basis for Rs.7,800 holding that the an amount of Rs.8,000 was seized making registration drawn from the Indian Bank annexure the addition. charges in account No.5907; out of assessee Hence respect of which Rs.7,800 was spent purchased deleted. Parklane towards registration charges property at property was of the Parklane property. park-lane for not accounted Therefore, the Assessing Rs.4,60,000 for. Officer is not correct to along with mention that the amount of his co- Rs.7,800 is to be added. brother. The registration charges was not disclosed.
The 1/5th
share of the
assessee
works out to
Rs.7800
17. Addition The deposit amount of This is Explained
Rs.40,000 holding that the Rs.40,000/- made on 30-11- investment in source.
investment in 1990 represents cheques FDR wherein Hence
the fixed No.614572 dated the assessee deleted.
deposit is 28/11/1990 issued by explained
outside the Ramesh Watch Co. It is that the
books of further submitted that the amount of
account. Indian Bank account is Rs.40,000
reflected in the books of said was issued
concern. The books seized by Ramesh
by the I.T. Authorities are Watch Co. on
still in their custody. 28.11.90
154
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
which pertains to subsequent assessment years.
Assessment Year 1991-92
18. Addition by The appellant issued cheque No basis for Rs.12,000 disallowing during the previous year for addition.
claim purchase of the Mutual Hence made u/s funds. The said cheque is deleted. 80CCA. found debited in the bank account on 2-4-1991. The Assessing Officer is not justified in making the addition.
19 Addition on The Assessing Officer This amount No basis for Rs.7,800 account of presumed that there were is invested in making interest accrued deposits of Rs.40,000 and mutual fund. addition in not accepted by Rs.25,000 on 8.2.90. The The source of Block. the Assessing Indian Bank account for the investment Hence Officer. financial year 1989-90 is at remains deleted.
page No.122 of the paper unexplained
book. Rs.25,000 was as no
provided as a bank withdrawal is
guarantee on 8.2.90 and no seen from the
FD was made. Further, the bank
Assessing Officer presumed account. The
in the A.Y.1990-91 that accrued
there was a deposit of interest on
Rs.40,000 but was not FDRs of
disclosed in the return of Rs.40000
income. A separate addition and
of Rs.40,000 was made in Rs.25000
the said assessment year. It which has
was explained for 1990-91 not been
that there was no such disclosed by
deposit. Therefore, it is the assessee.
submitted that no deposits
were made on 8.2.90 either
Rs.40,000 or Rs.25,000.
Therefore, no interest is
accrued to the appellant on
the said dates.
Assessment Year 1992-93
20. Addition on With regard to the amount Rs.3000 is Estimated
Rs.3,000 account of of Rs.3,000 the same is admitted in addition can
155
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Rs.12,500 estimation of admitted in the block return the block not be made accrued interest filed. return as in Block on fixed interest from assessments deposits. With regard to the addition FDR. The . Hence of Rs.12,550 it is submitted accrued deleted.
that the Assessing Officer's interest in
presumption that there were FDR
deposits on 8.2.90 of amounting to
Rs.25,000 and Rs.40,000 Rs.1.85 lakhs
are not correct. The comes to
appellant admitted Rs.3776 Rs.12550
in the regular return of which has
income and Rs.3,000 in the not been
block return. Therefore, the declared by
Assessing Officer is not the assessee.
justified in making any
further estimation and
further addition of
Rs.12,550.
21 Addition on An amount of Rs.6,360 was These are Considering
Rs.87,208 account of deposited on 5-04-92 from deposits the
unexplained out of the amount of NSC made in explanation,
deposits with and interest received. Indian Bank amount
the banks. accounts on deleted as
The amount of Rs.13,430 different sources are
was deposited on 17-1-92, dates. The explained.
from out of the refund of paper book
earlier deposit. does not
contain any
With regard to Rs.3,000 explanation.
deposited on 3-2-92, the
amount represents the
cheque received on account.
A cheques for Rs.64,418
was received from FOBC
76037 on 5-3-92 and the
same was deposited. The
assessee, therefore,
explained the source. It is
further submitted that the
bank account is disclosed in
the returns of income and
returns of wealth filed. All
the entries are in the books
of account maintained and
seized by the department.
No material was found
during the course of search
and seizure operations.
156
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Therefore, no addition could have been made by the Assessing Officer.
22. Addition on The assessee issued a The assessee Considering Rs.50,000 account of cheuqe No. 697321 for Rs. credit the unexplained 1,00,000 in favour of Rs.1,50,000 explanation, credits in the Ramesh Watch company on in his capital amount books of 16-5-1991. The partnership account with deleted. account. firm recorded the amount of Ramesh the cheque in its books of Watch Co. account at Rs. 1,50,000. Rs.1 lakh Page 75 of the paper book. was credited In so far as the appellant is from the concerned, the amount paid bank is mentioned as Rs. account. The 1,00,000. It is a mistake in assessee the books of account of the could not partnership firm. The specifically transaction is a bank explain the transaction and not cash source of the transaction. The amount balance of was through cheque. The Rs.50,000 cheque is recorded in the bank account. The firm also recorded the receipt only as cheque received. Therefore, the amount cannot be considered as the undisclosed amount of the appellant. The appellant's accounts clearly indicate that the amount paid was only Rs. 1,00,000 through cheque and therefore, cannot be added in the assessment of the assessee.
23. Addition on This investment is through As found Considering Rs.10,000 account of Cheque No.697323 dated from the the unaccounted 14-9-91 from Indian Bank seized explanation, for investment A/c No.5907, Secunderabad material the deleted in money and hence the source is assessee lending. explained. The assessee advanced submits that cheques Rs.10,000 on No.697323 was issued on 24.9.91. No 24.9.91 but it was encashed debit was on 5.10.91 and, therefore, found in the the debit is recorded on bank account 5.10.91. It is not correct for as the the Assessing Officer to assessee 157 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
make any addition on this stated that
account. the amount
was paid
from the
bank
account.
Therefore,
Rs.10,000
remains
unexplained.
24. Addition on The Assessing Officer merely This is No basis to
Rs.12,550 account of estimated the interest and accrued make
accrued interest arrived at the addition interest on addition in
on FDR which is not justified. The FDR which Block.
Assessing Officer cannot has not been Deleted.
resort to estimation of declared by
interest receipt on the the assessee.
deposits made and make
any addition on the said
ground.
25. Addition on This is against the As per seized Not an
Rs.2066 account of expenditure made on the material the addition to
(1993-94) amount spent maintenance of the building assessee paid make in
Rs.5404 on Mumbai flat at Mumbai. It is submitted an amount of Block
(1994-95) maintenance that it is flat at Bombay Rs.75,303 to assessments
Rs.3934 being used as a guest housing . Hence
(1995-96) house. During the course of society, deleted.
Rs.2140 the period all the brothers Mumbai
(1996-97) used to visit for their along with
Rs.1515 business purposes at his brothers.
(1997-98) Bombay. The expenditure The
incurred was paid from time payments are
to time by the persons using unaccounted the guest house. The and expenditure on visits to represents Bombay was debited to the assessee's business account and also share for whenever personal visits different were made the same were years. from the personal drawings.
Therefore, no addition on this account should be made.
26 Addition on The appellant received an The assessee Receipt from Rs.89329 account of amount of Rs. 1,10,000 from received an Partnership deposit with the M/s Ashok and company, a amount of firm which is bank which is partnership firm in which Rs.1,10,000 accounted not disclosed. the appellant is a partner. from Ashok can not be 158 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
The Assessing Officer and considered mentions that there was Company in Block only a balance of Rs. 20,671 whereas his assessments and therefore, is of the view credit . Deleted. that Rs. 1,10,000 would not balance in be paid by the firm. The this firm was appellant is explaining the Rs.20671 receipts as recorded in the only. The bank accounts. The, paper book amounts of Rs. 1,00,000 did not and Rs. 10,000 were contain any explained as received from explanation.
M/s Ashok & Col., The books of the said firm were also seized by the department. The Appellant is one of the partners of the firm. The amount of Rs.
20,671 was as on 31-3-1992 and not as on 31-3-1993.
Afterwards there were business activities of the firm. Therefore, the Assessing Officer is not justified in considering the opening balance for the purpose.
Assessment Year 1993-94
27. Addition on This is admitted by the Admitted by Rs.2,873 account of assessee in the block return the assessee Rejected.
undisclosed filed. in the block
income. return.
28 Addition on It is submitted that An The assessee Liability can
Rs.5,000 account of amount of Rs.50,000 was paid not be
undisclosed given as a loan to Syndicate Rs.50,000 to income. Can
interest on Marketing in March, 1993. Titan Board not be
advance from On 30-4-93 an amount of and received considered
Titan Board. Rs.55,000 was repaid by back in Block.
Titan Board, a sister Rs.55,000. Hence concern of Syndicate The deleted Marketing. The excess difference of refund of Rs.5,000 needs to Rs.5,000 is be repaid to Titan Board. towards The Assessing Officer interest.
presumed the excess repayment as interest. It can be seen that there is only one month gap and 159 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
interest cannot be Rs.
5,000. Therefore, the same
cannot be treated as
undisclosed income. A
similar explanation was
submitted in the case of
Lakshman G. Chugani.
29 Estimation of A detailed explanation in Assessee did No basis to
Rs.34000 interest accrued this regard was submitted not disclose make
on deposits for the earlier years. The the interest addition in
said explanation may kindly on FDR of Block.
be considered for the year Rs.2,85,000. Deleted.
under consideration also. Therefore,
the interest is
treated as
undisclosed
income.
30 Addition on The assessee submits that The assessee No basis to make
addition in Block.
Rs.20000 account of the provisions of Chapter VI invested Deleted.
estimating the were not applicable to the Rs.20,000
interest earned block assessment period u/s 80CCA
on mutual both at the time of filing the and received
funds. return of income and at the maturity
time of completion of the value of
assessment. It is further Rs.20,160 on
submitted that the addition 13.4.92.
can be made u/s 158BD Maturity
only in respect of amount shall
undisclosed income arising be brought to
out of seized documents. tax.
Without prejudice, it is
submitted that the appellant claimed Rs.20,000 u/s 80CCA for the assessment year 1990-91 and no amount was claimed at any time earlier. Therefore, these amounts could not be treated as the income of the appellant.
31. Addition on the This ground is not pressed This ground Rejected. Rs.13,500 ground that as the Assessing Officer did is redundant.
there is not make such an addition.
unexplained
deposit with
Ramesh Sales
Corporation.
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32. Addition on A note on accrued interest This is the No basis to Rs.34,000 account of on fixed deposits was interest make estimating the submitted by the assessee accrued on addition in interest on on 7-12-1997, a copy of FDR which is Block. FDRs. which is annexed. In view of treated as Deleted.
the detailed explanation undisclosed submitted for the earlier income. years, the addition may please be deleted.
33. Addition The assessee submits that This amount No basis to Rs.20,000 treating the the provisions of Chapter VI was received make amount were not applicable to the from SBI addition in received from block assessment period mutual fund Block. SBI Mututal both at the time of filing the and not Deleted.
Fund return of income and at the declared in
time of completion of the the return of
assessment. income.
The appellant started
claiming deduction u/s
80CCA from the assessment
year 1990-91. Refunds
would have been received
only from 1995-96 but not
earlier. Therefore, the same is not to be considered as income. Further, for the assessment year 1991-92, Rs.12,000 was claimed and for the assessment year 1992-93, Rs.15,000 was claimed. For the assessment year 1993-94, no claim was made u/s 80CCA. For the assessment year 1994-95 also no claim was made.
Therefore, the appellant
claimed Rs.27,000 alone for
the assessment years 1992-
93 and 1993-94.
Assessment Year 1995-96
34 Addition as The Assessing Officer This is the No basis to
Rs.24500 undisclosed arrived at the amount on capital make
investment in estimate basis without invested in addition in
money lending taking the facts into Money Block.
consideration. There is no lending Deleted.
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information even from the activity on seized documents that the which the assessee has any assessee has investment in money declared an lending. For the assessment interest of year under consideration, Rs.5400. The the appellant did not admit assessee has any money lending income. not explained the The assessee submits that investment cheque was issued for on which the Rs.20,000 on 9.11.94 and interest has for Rs.5,000 was issued on been earned.
6.3.95. The appellant also
issued further cheques.
Therefore, the Assessing
Officer is not correct to say
that the appellant did not
invest in money lending.
35 Addition being The assessee submits that This amount All receipts
Rs.20000 the amount the provisions of Chapter VI was received can not be
received from were not applicable to the from SBI income. AO
SBI Mutual block assessment period mutual fund has not
Fund. both at the time of filing the and not established
return of income and at the declared in that amount
time of completion of the the return of is taxable.
assessment. Therefore, it income. Assessee
should not be added. It is explanation
further submitted that the accepted.
addition can be made u/s Amount
158BD only in respect of deleted.
undisclosed income arising
out of seized documents.
This amount does not
emanate out of the seized
documents. The bank
accounts were already
shown in the books of
account; in the return of
income and in the Return of
Wealth. Therefore, no
addition should have been
made.
Without prejudice, it is
submitted that the
appellant claimed Rs.20,000 u/s 80CCA for the assessment year 1993-94 and no amount was claimed 162 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
at any time earlier.
Therefore, these amounts
could not be treated as the
income of the appellant.
For the assessment year
1990-91, the appellant
claimed deduction of
Rs.10,000 u/s 80C. Earlier,
the appellant did not make
any claim u/s 80CCA.
36 Addition This amount was already Amount Rejected
Rs.5400 holding that admitted in the block return admitted in
there is any filed. Hence no addition the block
interest not need be made. return.
disclosed.
37 Addition on the The Cheque deposited for This is the The cheques
Rs.38653 ground that the Rs.38,653 was dishonoured credit entry received by
credits in the and not cleared. Hence the in bank a/c the appellant
bank account said amount was not No.5907 on were
are not credited to the account of 18.08.94. dishonoured explained. the assessee. Hence there The paper and, are no credits in the bank book does therefore, the account which are not not contain amount of explained. Therefore, the any Rs.38,653 amount should not be explanation was both added. on this credit debited and entry. credited in the bank account. The Assessing Officer ought not to have made such an addition in Block.
deleted.
38. Addition on The appellant submits that Assessee did Estimation Rs.28000 account of the Assessing Officer merely not disclose cannot be estimation of estimated the interest the interest resorted to in interest on fixed receivable and arrived at the on FDR of Block deposits said figure. The appellant Rs.2,35,000. assessments accrued. submitted a detailed Therefore, without explanation for the earlier the interest is incriminating assessment years, which treated as material. may kindly be considered undisclosed Hence for the year under income. deleted. consideration also. A note 163 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
on accrued interest on fixed deposits was submitted by the assessee on 7-12-1997, a copy of which is annexed.
In view of the details
submitted therein, the
addition may please be
deleted.
Assessment Year 1996-97
39 Addition on The cash deposit with the This is cash No basis for
Rs.20150 account of cash bank of Rs.20,150 was from deposit on making
deposit in the out of the regular business 9.9.95 in addition in
bank account activity of the assessee. The bank a/c Block.
undisclosed. assessee maintained proper No.5907. The deleted
books of account and such assessee
books of account were could not
seized by the department. specifically
This amount can be seen in explain the
the books of account which source of this
are seized and still under amount.
the custody of the I.T.
authorities. Further, the
bank account is admitted in
the return of income
submitted. The information
does not emanate from the
seized documents.
Therefore, the said amount
cannot be added as the
income of the appellant.
40 Addition on A detailed explanation was Assessee did No basis for
Rs.23530 account of already submitted for the not disclose making
estimation of earlier years, which may the interest addition in
interest on kindly be considered for the on FDR o Block.
FDRs. year under consideration Rs.2,35,000. deleted also. The appellant submits Therefore, that the AO arrived at the the interest is difference only on estimate treated as basis, without any basis. undisclosed Therefore, the appellant income. submits that such an addition cannot be made under sec. 158 BD of the Act.
41 Addition on The interest accrued of This is the No basis for Rs.10481 account of Rs.10,481 was from the interest making 164 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
interest on FDR FDR No.1338002 received from addition in not disclosed. maintained jointly by the FDR of Block.
assessee along with his wife Rs.99,900. deleted Smt. Sobha R. Chugani. The The interest said interest received of was not Rs.10,481 was duly declared in admitted in the return filed the regular by her for the assessment return. year 1996-97. An explanation submitted in this regard is at page No.141of the paper book.
Assessment Year 1997-98
42. Addition on The Assessing Officer is of During the For the Rs.70000 account of the view that there was an search total reasons undisclosed excess cash of Rs.70,000 in cash found income. the possession of the was stated in appellant and added the Rs.5,60,000.
main order, same as the undisclosed Out of this income. In this regard, the cash addition on appellant submitted a amounting to the issue of detailed explanation before Rs.3,94,705 the Assessing Officer vide was found at cash found Note filed on 17-09-1997 the residence stands which is at page 33 of the of assessee paper book. It is submitted and other deleted. that if the cash as per the family various cash books and members. cash withdrawal in the The assessee immediate past were taken could not into consideration there explain the would not be any deficiency cash in cash. An explanation was availability.
submitted in the case of Therefore,
Ashok G. Chugani and the Rs.3,50,000
said explanation may kindly is taken in
be considered for the the hands of
appellant also. all male
members.
The
proportionate
share of the
assessee
comes to
Rs.70000
43 Addition on This ground of appeal is not This ground Rejected.
Rs.64,82 account of pressed as no such addition is not
deficit cash is made. pressed.
165
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
44 Addition on the This ground of appeal is not This ground Rejected. Rs.231600 ground that pressed as no such addition is not additional is made. pressed.
amount is
invested in
acquiring
Mumbai flat.
45 Addition The building material was This is the Considering
Rs.110733 holding that purchased by the appellant value of the
there is with explainable sources. sanitary explanation
investment in An amount of Rs.80,000 equipments amount was
purchase of was paid through cheques found at the deleted.
material No.223715 dt.27-9-1996 residence of
drawn from Grindleys Bank, the assessee.
copy of which was already The assessee
submitted (Page No.11 of could not
the paper book). Another furnish
amount of Rs.30,733 was supporting
also paid on 27-09-1996 material in
through Credit card. Hence respect of the
the said investment is investment.
genuine and not
undisclosed. Hence, the
addition needs to be
deleted. .
46. Addition on The said expenditure was As per seized Incriminating
Rs.6,000 account of incurred on 2-10-1996 annexure, material
medical which was a holiday. On the the amount available.
expenditure very next day the was spent on Source not
held authorities entered the medical explained.
undisclosed. premises. Therefore, the expenses. Ground
Assessing Officer ought to The assessee rejected.
have excluded the addition. could not
explain the
source.
166
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
IT(SS)A No.10/H/2011 ASHOK G.CHUGANI, Hyderabad Block period 1987-88 to 1996-97 and 01-04-1996 to 03-10-1996 ASSESSMENT YEAR: 1987-88 Ground No. Details of Explanation Remarks of Decision addition the Assessing Officer in the Remand Report.
1 to 5 , 35 & General in --
41 nature.
Ground
No.35 is not
arise at all
as the
amount is
not correct.
6 Addition on The Bank account No.8520 These are
Rs.20,860 the plea relates to Master Rohit deposits in Deleted
that the K.Chugani, son of Sri Kishore bank account
accepting
appellant's G.Chugani. The amounts are with Indian
minor son explained in the assessment bank in the assessee's
Master of Sri Kishore Chugani and no name of Minor
explanatio
Rahul addition is made in the said son Master
maintained case. The said account does Rahul. The n.
bank not relate to the appellant's deposits were
account minor son and hence cannot found during
No.8520 be considered in the the course of
with Indian assessment of the appellant. search and is
Bank. The covered under
AO added It is explained that the block
the amount amount found deposited in assessments.
deposited the account of Master Rohit,
into the son of Sri Kishore Chugani
said bank and does not belong to Master
account. Rahul, son of the assessee.
As the bank account does not
belong to the assessee or his
minor son, the addition is not justified.
167IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
7. Addition on There is no such credit in the These are No basis Rs.6,338 the ground said account. The opening interest for that de- balance was Rs. 34,628and received from making posits were interest of Rs.285.50 is Andhra Bank addition. made with further credited. The said account Deleted. Andhra account is shown for the No.10153 and Bank purpose of Wealth tax and is are small account included in the wealth return deposits, No.10153 filed. The said interest is totaling and interest included in the total interest Rs.6,338 for was admitted of Rs. 22407. which no derived. explanation was furnished.
Assessment Year 1988-89
8 Addition on The amount represents This is
Rs.1,767 the ground interest from Andhra Bank interest
No basis
that 10153. The said interest is credited in
interest is included in the amount Andhra Bank for
not added. admitted of Rs. 4,389 in the account
making
return of income. The account No.10153
is declared for wealth tax. totalling addition.
Further, no material was Rs.1,767 for
Deleted.
found during the course of which no
search and seizure explanation
operations. Therefore, no was
addition need be made by the furnished.
Assessing Officer.
9 Addition on Addition of Rs.2,339 These are No basis
Rs.2,339 the ground represents interest derived by interest
for
that Master Rahul. It is submitted credited in the
interest is that the provisions u/s name of minor making
not added. 64(1A) have no application for so9n for
addition.
the assessment year 1988-89. which no
It is made applicable w.e.f. the explanation Deleted.
assessment year 1993-94 and was
hence no addition could be furnished.
made for the assessment year
under consideration.
Assessment Year 1989-90
10 Addition of The provisions u/s 64(1A) These are
Rs.4,015 interest have no application for the interest
No basis
relating to assessment year under
credited in the
minor son consideration and therefore, name of minor for
Master the addition is not justified.
son for which
making
Rahul (at no
para 14.1 of It is further submitted that explanation addition.
168
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
the there was no seized material was Deleted. assessment based on which such addition furnished.
order.) was made.
11 Addition This addition was accepted by
Rs.30,000 representin the assessee during the Ground not Rejected.
g course of assessment pressed.
investment proceedings and hence the
in ground is not pressed.
Begumpet
flat.
Assessment Year 1990-91
12 Addition The assessee submits that the These
Rs.43,680 representin Indian Bank account is shown represent
g the in the books of account. No deposits cash
amounts material was found during the and cheque in No basis
deposited course of search. The deposits Indian Bank
for
with Indian were already disclosed in the account for
Bank on books of account and do not which the making
various represent undisclosed income. assessee did
addition.
dates. Therefore, no addition could not offer any
be made while completing the explanation. Deleted.
assessment under sec. 158BC
of the Act.
It was submitted before the
Assessing Officer that an
amount of Rs.10,680/-
represents the matured value of the NSC as noted in the show cause letter dated 8-7-
97 (Page 159 of the paper book). The balance deposits made of Rs.3,000 on 28-8-89, Rs.5,000 on 29-8-89 and Rs.25,000 on 4-10-89 represents the cash deposits from out of the cash available. Therefore, no addition should have been made.
13. Addition With regard to the interest of These are Rs.17,612 representin Rs.4,386 with Indian Bank of deposits in Accounted g the Master Rahul, Rs.6,430 and bank account already interest with Andhra Bank of Master with Indian credited in Sandeep and Rs.2,000. They bank in the and Indian represent the interest on name of Minor offered.
Bank, minors' account. As son Master Andhra submitted, the provisions u/s Rahul and Hence, Bank by the 64(1A) have no application up Sandeep. The deleted.
assessee to the assessment year 1993- deposits were 169 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
and 94 and hence the amounts found during
assessee's should not have been added. the course of
son Master search and is
Rahul and Interest of Rs.3464 was covered under
Sandeep. credited and the said amount block
was already offered in the assessments. income tax return. Hence no addition can be made.
With regard to interest from Andhra Bank A/c No.10153 of Rs.3396, the same was already offered in the return of income.
14. Addition As submitted earlier, the These are Rs.12,339 representin provisions u/s 64(1A) have no deposits in No basis g interest application for the assessment bank account credited in year 1991-92. Hence no with Indian for Indian addition can be made. bank in the making Bank and name of Minor Andhra son Master addition.
Bank in the Rahul and
Deleted.
accounts of Sandeep. The
Rahul and deposits were
Sandeep. found during
the course of
search and is
covered under
block
assessment.
15. Addition This was already admitted in Admitted in
Rs.3,131 representin the block return (page Nol. Block return. Rejected
g 107 of the paper book) by the
undisclosed appellant and hence no
income addition could be made by the
from CDS. Assessing Officer.
Assessment Year 1992-93
16 Addition According to the Assessing These are
Rs.7803 representin Officer, the interest from deposits in No basis
g the Indian Bank A/c No. Rs.8864 bank account
for
amount was short declared by with Indian
deposited Rs.1386 and the balance bank in the making
and interest amount of Rs. 6417 name of Minor
addition
credited in represents the interest arising son Master
Indian to the minor children. Rahul and in block.
Bank and Sandeep. The
Deleted.
Andhra In this regard, it is submitted deposits were
170
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Bank by that the interest difference of found during Master Rs.1386 does not represent the course of Rahul and interest from Indian Bank. search and is Master The said amount represents covered under Sandeep. interest received from block outsiders on loans. The assessments. appellant admitted Rs.1386 in the return of income as a part of money lending income of Rs. 41,236. Further, no information was found during the course of search and seizure operations so as to enable the Assessing Officer to make such an addition under sec. 158 BC of the Act.
In so far as the interest arising to the minors is concerned, it is submitted that the provisions u/s 64(1A) have no application for the year under consideration and the said amounts cannot be added to the income admitted.
Assessment Year 1993-94
17. Addition The appellant offered an Admitted in Rs.1386 representin amount of Rs. 1653 on this Block return Rejected g interest account in the block return of on CD income. Hence no addition account in can be made.
Indian Bank
18. Addition on The said amount includes These are Rs.13,389 account of Rs.2829 being interest on PPF deposits in Eligible amount deposit in the name of the bank account amounts received minor Master Sandeep. This is with Indian from Sri exempt u/s 10(15) of the bank in the under S.Mallayya I.T.Act and cannot be added. name of Minor various being the son Master refund of The appellant already Rahul and sections advance admitted Rs.1653in From 2B Sandeep. The cannot be at the time of filing the return. deposits were found during considere Indian Bank A/c No.8520 the course of d as does not belong to the search and is appellant. The same relates to covered under undisclos Sri Kishore G.Chugani. The block 171 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
amount of Rs.3755 cannot be assessments. ed. Hence, added.
deleted In so far as PPF is concerned, except an the same is exempt u/s 10(15) amount of and can not be added.
Rs.195 In so far as Andhra Bank admitted.
A/c No.13082 is concerned, it is submitted that no information was found during the course of search and hence no addition could be made. Further, Chapter VI was not within the scope of assessment under sec. 158 BC at the time of completion of assessment and hence the addition cannot be made.
Without prejudice, only
Rs.195/- can be added and
not Rs.1695/- in view of
Sec.10(32) of the I.T.Act.
Interest from Andhra Bank
Rs. 523 cannot be added as it
is less than Rs.1500.
19. Addition on This is against the As per seized No basis
Rs.2066 account of expenditure made on the material the
for
undisclosed maintenance of the building assessee paid
investment at Mumbai. It is submitted an amount of making
in Mumbai that it is flat at Bombay being Rs.75,303 to
addition
flat. used as a guest house. During housing
the course of the period all the society, in Block.
brothers and their father Sri Mumbai along
Deleted.
Gulabrai Chugani used to with his
visit for their business brothers. The
purposes at Bombay. The payments are
expenditure incurred was paid unaccounted
from time to time by the and
persons using the guest represents
house. The expenditure on assessee's
visits to Bombay was debited share for
to the business account and different
also whenever personal visits years.
were made the same were
from the personal drawings.
Therefore, no addition on this account should be made.
172IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Assessment Year 1994-95
20. Addition on In this regard the assessee The principal Deleted Rs.20,000 the ground humbly submits that these amount accepting that amounts are refunded after a should have deduction period of 5 years and no claim been brought assessee's u/s 80 CCA was made prior to 1991. to tax in the explanatio and 80 CCB Therefore, no addition can be year of earlier made. Further, no addition maturity. n. claimed has can be made where the to be amounts were disclosed in the withdrawn. return of income. This amount does not emanate from any seized material and, therefore, no addition can be made while completing the assessment under sec. 158 BC of the Act. It is further submitted that according to the provisions of Sec. 158 BB as they stood at the time of completing of assessment, the undisclosed can be arrived at only under the heads of income in Chapter IV of the Act and not under any other chapter. Therefore, the Assessing Officer is not justified in making such an addition.
21 Addition At the time of filing the return
These are
Rs.11,431 treating the of income in Form 2B, the deposits in Deleted
interest provisions u/s 64 were not bank account
for the
derived by considered for block period with Indian
the minor assessment. Even at the time bank in the reasons
sons as of completing the first
name of Minor
given by
undisclosed assessment, no such
son Maste
income. provision existed in 158B of Rahul and assessee.
the I.T.Act. Therefore, such Sandeep. The addition cannot be made. deposits were found during Further, the amount of the course of Rs.3169 PPF interest is search and is exempt u/s 10(15) of the Act covered under and hence cannot be added. block assessment.
Indian Bank A/c No.8520 does not belong to Master Rahul but belongs to Master Rohit s/o Kishore G. Chugani 173 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
and hence cannot be added in the assessment of the appellant.
In so far as the Andhra Bank A/c No.13082 (interest of Rs.
2,781), 14170 (Rs. 2423) are concerned, the Assessing Officer has to allow Rs. 1500 each exemption and the balance of Rs. 2,592 can only be considered. Even this amount cannot be added as according to the provisions existing at the relevant point of time, income determined under Chapter IV only can be considered and not under other chapters.
22 Addition on This is against the As per seized
Rs.5404 the ground expenditure made on the material the
No basis
of maintenance of the building assessee paid
undisclosed at Mumbai. It is submitted an amount of for
investment that it is flat at Bombay being Rs.75,303 to
making
in Mumbai used as a guest house. During housing
flat. the course of the period all the society, addition.
brothers and their father Sri Mumbai along
Deleted.
Gulabrai Chugani used to with his
visit for their business brothers. The
purposes at Bombay. The payments are
expenditure incurred was paid unaccounted
from time to time by the and
persons using the guest represents
house. The expenditure on assessee's
visits to Bombay was debited share for
to the business account and different
also whenever personal visits years.
were made the same were
from the personal drawings.
Therefore, no addition on this account should be made.
Assessment Year 1995-96 23 Addition of The Assessing Officer This amount Rs.20,000 the amount disbelieved the receipt of represents a As received Rs.20,000 from Md. Ismail credit entry in explained from and added the same to the Indian Bank Md.Ismail income admitted. The account the refund against appellant submits that the No.8864 on 174 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
loan dated bank account No.8864 was 13-4-94 for of earlier 13-4-94. already disclosed. No material which the advance was found during the course assessee of survey. It is submitted that could not by cheque in the bank account on 30- furnish any accepted.
08-93 an amount of explanation. Rs.20,000 was given through Amount cheques. The same was deleted.
refunded now. The payment
was through cheques and the
receipt also is through
cheques. Therefore, no
addition should have been
made.
24 Addition The Assessing Officer is of the
Rs.25,000 treating the view that the deposits of amounts Rs.15,000 and Rs.10,000 on deposited 23-09-94 and 7-6-94 in the with the bank account are not Indian explained. The appellant Bank as maintained regular books of undisclosed account. During the year, the income. income earned amounted to Rs.1,65,000/-. From out of the incomes, the said deposits were made. There is also no seized material and, therefore, no addition should have been made.
25 Addition The assessee submitted Rs.20,000 being detailed explanation in deposit with column No.4. A cheque was Indian issued to Sri Md. Ismail on Bank on 20.3.1995 for Rs.20,000 and 20-03-95 the said was debited on the said date at page No.90 of the Paper Book. As the cheque was not encashed by Md.
Ismail, the said amount was
returned back as a credit in
the bank account on the same
date. Therefore, it is not a
separate receipt. The
Assessing Officer is not
correct to mention that the
amount of Rs.20,000 remains
unexplained. It is in fact
cheque issued but not
encashed.
175
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
26 Addition The assessee submits that the The principal No basis Rs.14,000 treating the provisions of Chapter VI were amount for & interest not applicable to the block should have making Rs.12,883 from LIC assessment period both at the been brought addition.
mutual time of filing the return of to tax in the Deleted. fund as income and at the time of year of undisclosed completion of the assessment. maturity. income. Therefore, it should not be added.
It is further submitted that the addition can be made u/s 158BD only in respect of undisclosed income arising out of seized documents. This amount does not emanate out of the seized documents. The bank accounts were already shown in the books of account; in the return of income and in the Return of Wealth. Therefore, no addition should have been made.
Without prejudice, it is submitted that the appellant claimed Rs.10,000 u/s 80CCA for the assessment year 1991-92 and no amount was claimed at any time earlier. Therefore, these amounts could not be treated as the undisclosed income of the appellant.
A detailed explanation was submitted in column No.4.
The appellant submitted that the provisions of Sec.158BD have no application to the said amount and in the alternative, it was also submitted that only an amount of Rs.10,000 was allowed for the assessment year 1991-92 u/s 80CCA and, therefore, an amount of Rs.26,883 cannot be added.
27. Addition These amounts include Rs.20,674 treating the interest on PPF of Rs. 5,482 amount of which are exempt u/s 10(15) 176 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
interest of the Act.
credited in
Indian In so far as Rs.13479 is
Bank and concerned, it is in respect of
Andhra bank account No.8520 of
Bank as Rohit s/o Kishore G. Chugani
undisclosed and cannot be added in the income. assessment of the appellant.
The account of Master Rahul at page No.101 shows the amount of Rs.NIL and no amount can be added.
In so far as the interest derived by Master Sandeep is concerned, the interest is Rs.1713and it cannot be added. Out of this amount Rs.1500 is to be allowed as deduction u/s 10(32) of the Act. Further, no material was found during the course of search and hence cannot be treated as undisclosed income.
28. Addition on This is against the As per seized Rs.3,934 account of expenditure made on the material the undisclosed maintenance of the building assessee paid investment at Mumbai. It is submitted an amount of in that it is flat at Bombay being Rs.75,303 to Mumbai used as a guest house. During housing property. the course of the period all the society, brothers and their father Sri Mumbai along Gulabrai Chugani used to with his visit for their business brothers. The purposes at Bombay. The payments are expenditure incurred was paid unaccounted from time to time by the and persons using the guest represents house. The expenditure on assessee's visits to Bombay was debited share for to the business account and different also whenever personal visits years. were made the same were from the personal drawings.
Therefore, no addition on this account should be made.
177IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
29 Addition This ground is not pressed as Ground not Rs.25,099 holding that no such addition is made. pressed. Rejected there is any undisclosed income in respect of rents received.
Assessment Year 1996-97 30 Addition of Interest from B.K. Enterprises As per the Rs.45,000 Rs.45,000 is already admitted in the seized Accepting on account regular return of income filed material of for the assessment year 1996- assessee assessee's undisclosed 97 (page No.122 of the paper doing money explanatio income book). Details of the loans lending though the and interest were also business at n amount credits are submitted at pages No.69, 71, Chennai. The is deleted.
entered in 73 & 75 of the paper book and assessee has the books of the interest received from Mr. not declared account Chandrasekhara Setty is also capital of and disclosed to the department. Rs.45,000 in represent It is submitted that the the return.
the assessee was not filing
amounts Balance Sheet along with the
repaid by returns of income filed and
the said was only admitting incomes
concern. as derived by him. Therefore,
the Assessing Officer is not
correct to mention that the
capital of Rs.45,000 is not
shown in the return of
income. It is humbly
submitted that up to the
assessment year 1992-93, the Wealth Tax returns were filed and the loans given were already admitted for wealth tax purpose. However, from the Asst. year 1993094, all such assets are exempt and no return of wealth was filed. This fact was stated and it was submitted that the AO is not correct to make addition of Rs.45,000 to the income admitted.
31. Addition on It is submitted that As per seized Rs.22,889 the ground Rs.22,889 represents interest material, this Accepting that it received by the appellant's represents 178 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
represents wife Smt. Manisha Chugani. interest on assessee's interest A copy of the return of income money lending explanatio received. filed by her is also submitted. business The net income after which has n amount expenditure was already been only is deleted.
offered by her in her return of partly income. Therefore, the declared. Assessing Officer's further comment is not correct.
32. Addition It is submitted that an As per seized Rs.58,000 holding that amount of Rs.58,000 in all material the Accepting the amount was given to Devaki Vasudev assessee has advanced to by the appellant's wife and given assessee's Devaki not by the appellant. The said temporary explanatio Vasudev information was furnished loan to Devaki and before the Assessing Officer but could not n amount received by vide letter dated 28-09-1997 furnish any is deleted.
way of cash by Smt. Manisha Chugani. supporting represent The said amount was material to the advanced by the appellant's show that the undisclosed wife through DK Enterprises amount was income. to Devaki Vasudev. Therefore, advanced the Assessing Officer is not through B. K. justified in making any Enterprise but addition in the assessment of not through the appellant. assessee.
33. Addition on It is submitted that the These are No basis Rs.52,590 the ground Assessing Officer is referring deposits in for that the to Account No.8528. The said bank account amounts account does not belong to with Indian making were Master Rahul, son of the bank in the addition.
credited appellant. It relates to Master name of Minor with Indian Rohit, son of Sri Kishore son Master Deleted. Bank G.Chugani. Therefore addition Rahul. The account of should not have been made in deposits were Master the assessment of the found during Rahul. appellant herein. the course of search and is covered under block assessments.
34. Addition on No such addition is made by Ground is not Rejected.
Rs.27,701 account of the Assessing Officer and pressed by the
undisclosed hence this ground is not assessee
income in pressed.
the rents
received
179
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Assessment Year 1997-98
36. Addition on The Assessing Officer is of the During search Rs.70,000 account of view that there was an excess total cash For the undisclosed cash of Rs.70,000 in the found was detailed income, possession of the appellant Rs.5,60,000.
being cash and added the same as the Out of this reasons
found at undisclosed income. In this cash
stated in
the time of regard, the appellant amounting to
search. submitted a detailed Rs.3,94,705 main
explanation before the was found at
order, the
Assessing Officer vide Note the residence
filed on 17-09-1997 which is of assessee addition
at pages 40 to 42 of the paper and other
of
book. It is submitted that if family
the cash as per the various members. The unexplain
cash books and cash assessee
ed cash is
withdrawal in the immediate could not
past were taken into explain the deleted.
consideration, there would not cash
be any deficiency in cash. availability.
Therefore
Rs.3,50,000 is
taken in the
hands of all
male
members. The
proportionate
share of the
assessee
comes to
Rs.70,000.
37. Addition This is against the As per seized No basis
Rs.1515 treating the expenditure made on the material the
for
payments maintenance of the building assessee paid
made to the at Mumbai. It is submitted an amount of making
Co- that it is flat at Bombay being Rs.75,303 to
addition.
operative used as a guest house. During housing
Society for the course of the period all the society, Deleted.
maintenanc brothers and their father Sri Mumbai along
e of the Gulabrai Chugani used to with his
building as visit for their business brothers. The
undisclosed purposes at Bombay. The payments are
income. expenditure incurred was paid unaccounted
from time to time by the and
persons using the guest represents
house. The expenditure on assessee's
visits to Bombay was debited share for
to the business account and different
also whenever personal visits years.
were made the same were
from the personal drawings.
180
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Therefore, no addition on this account should be made.
38. Addition on The Assessing Officer is of the Assessee is Rs.3,00,000 arriving at view that there was excess proprietor of For the the excess stock of Rs.3,00,000 and Clock Ads stock found added the same by applying International reasons during the the provisions u/s 69 of the during search stated in course of I.T. Act. It is submitted that stock was search the Assessing Officer arrived valued at the main at the stock by considering Rs.4,85,537.
order the
the difference between The assessee
maximum retail price on the remained addition
items of stock available and silent during
is deleted.
the stock as per the books. assessment
The appellant reconciled the proceedings.
difference. It was submitted that the maximum retail price include the total discount, the profit and other expenses. A statement is prepared and annexed to the paper book at page No.67. It can be seen that the cost as per the bills is much less than the MRP rate and, therefore, the Assessing Officer should not have made an addition.
During the course of
assessment proceedings a
detailed explanation was
provided mentioning that the authorities have taken into consideration the tagged price and not the cost price.
Therefore, if the cost price is adopted there will not be any difference as explained by the assessee.
39. Addition The addition of Rs.1,00,000 Rs.4,33,000 holding that for the assessment year 1988- the 89 and Rs.3,33,000 for the amounts assessment year 1990-91 received were made disbelieving the from Smt. gifts received from Smt. Varsha Varsha Jaikumar Mirpuri. In Jaikumar this regard, it is submitted Mirpuri that these entries were made represent in the regular bank account the and the books of account. The undisclosed said bank account is admitted 181 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
income. in the returns of income filed.
No incriminating materials were found during the course of search and, therefore, no addition should have been made as undisclosed income.
Without prejudice, the appellant submits that Smt. Varsha Mirpuri is the resident of Bangkok, Thailand and she is the sister of the appellant.
She maintained a bank account with Indian Bank, Secunderabad, a copy of which is submitted at page Nos.48 to 50 of the paper book. The appellant filed bank account in India, letter of confirmation from Varsha Mirpuri. It is also confirmed by her that she deposited the amounts with the Indian Bank much earlier and she issued cheques in favour of the appellant and other brothers and the amount was withdrawn. Therefore, the donor is identified, sources are identified and she confirmed the fact that the amount was gifted by her. She also confirmed the fact that she gifted the amount through banking channel.
The Assessing Officer issued a notice u/s 158BD to Mrs. Varsha Mirpuri proposing to tax the amount deposited into the said bank account and the said Smt. Varsha Mirpuri explained the source for such deposit and thereafter the proceedings u/s 158BD were closed. Therefore, the Assessing Officer is not justified in making addition u/s 68 of the Act for both the assessment years. . Copies of the same are submitted for perusal.
182IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
40. Regarding The Assessing Officer Matter of Rejected. Charging tax completing completed the assessment record.
at 60% the u/s. 158BD.
assessment
u/s.158BD
and
charging
tax at 60%.
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Annexure-11.
IT(SS)A No.11/H/2011 Late CHANDRU G.CHUGANI . HYDERABAD Block period 1987-88 to 1996-97 and01-04-1996 to 03-10-1996 ASSESSMENT YEAR: 1988-89 Ground No. Details of Explanation Remarks of the Decision & Amount addition Assessing Officer in added the remand report.
1to 5 and 41 General in --
nature
6. Additions The assessee submits that The donor had For the
Rs.1,00,000 holding that the Smt. Varsha is the sister of gifted a total
detailed
(1988-89) amounts the assesee. She has amount of around
Rs.3,33,333 received from necessary funds to pay the Rs.42 lakhs to her reasons
(1990-91) Smt. Varsha assessee and she brothers and
stated in
Jaikumar confirmed the fact of relatives during the
Mirpuri providing the amounts to block period. The the main
represent the the assessee. The addition assessee could not
order,
undisclosed of Rs.1,00,000 was made prove that the
income. disbelieving the gifts donor's financial addition
received from Smt. Varsha capacity was
is
Jaikumar Mirpuri. In this sufficient to make
regard, it is submitted that gift repeatedly to deleted.
these entries were made in her relatives.
the regular bank account Moreover the
and the books of account. assessee could not
No incriminating material produce any IT
was found during the return copy of her
course of search and, relative nor any
therefore, no addition balance sheet
should have been made as during the course of
undisclosed income. assessment
proceedings.
Assessment Year 1989-90
7. Addition on This amount of Rs.30,000 Amount admitted in Rejected
Rs.30,000 account of was already admitted in the block return.
investment in the block return filed.
Begumpet flat. Hence the addition is to be
deleted.
Assessment Year 1990-91
8. Addition on The assessee submits that The amount No basis
Rs.15,000 account of funds for depositing these represents deposits
for
(2-8-1989) deposits in amounts are available with in Indian Banks for
Rs.25,000 Indian Bank him. A perusal of the which no making
(4-10-89) represent books of account seized by explanation was
addition
undisclosed the Department would offered by the
income. reveal the fact. Hence, the assessee.
184
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
addition may please be in block.
deleted. The appellant Hence further submits that the Indian Bank account is deleted. admitted in the returns of income and the returns of wealth. The additions do not emanate from the seized material. The appellant maintained books of account. The receipts and payments are recorded in the books of account. The bank account is disclosed to the department. The appellant admitted an amount of Rs.
91,563. Further, the appellant carried on business activity in the name of Clock Specialities.
Further, the appellant is also partner in two other firms. Therefore, the Assessing Officer is not justified in making such an addition while completing the assessment under sec. 158 BD of the Act.
9. Addition on The said deposit was The assessee has No expla- Rs.25,000 account of made in the account of made investments nation of amounts Master Sachin. in FDR in Andhra source. deposited Bank for which no Hence represent the details were confirme undisclosed submitted regarding d. income the gift received.
Assessment Year 1991-92
10. Addition on The assessee submits that The amount was No basis Rs.50,000 account of an amount of Rs.50,000/- credited in Indian for credit in Indian was drawn on 17-09-1990 Bank on 17.09.90 making Bank represent from M/s Clock Specialists for which the addition. the undisclosed and deposited the same in explanation was Hence income. the account of the insufficient. deleted.
assessee vide cheque No. 33306879. The explanation submitted at para 1 of the letter dated 185 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
29-10-1997 may kindly be perused. Therefore, the said amount cannot be considered as undisclosed amount.
Assessment Year 1992-93
11. Addition on The said amount of Admitted in the Rejected Rs.1000 account of Rs.1,000 was already block return.
difference in the admitted in the block interest. return filed. Hence the addition may kindly be deleted.
Assessment Year 1993-94
12. Addition The assessee humbly As per seized Consideri Rs.75,000 treating the submits that the evidence material this ng the amount of receipt of the amount is amount was explanati received from available in the seized received from on Sri Sanjy Sood material itself and the said Sanjay Sood on amount as undisclosed information was brought 23.7.92. The deleted. income. to the notice of the transaction is not Assessing Officer. Sri reflected in the Sanjay Sood is an NRI. He return. The drew an amount of assessee had Rs.1,10,000 from ANZ received cash Grindlays bank by using advances of 4267 his credit card. Out of this US$ from Grindlays an amount of Rs.75,000 Bank on the same was given to the assessee. day. Sri Sanjay Sood submitted letter of confirmation on 23-07-1992 to this effect and the same is annexed to the Assessment order.
The said letter of confirmation was found during the course of search and seizure operations. It is mentioned clearly that the appellant is a good friend of the donor; that he was issuing a cheque for Rs. 75,000 as a gift to the appellant herein and that the said amount was from out of his bank account.
It is the submission of the appellant and Mr. Sood 186 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
paid the amount of Rs.
75,000 to the appellant as the appellant promised the provide the said funds for the treatment of his uncle.
Therefore, the money was neither recorded in the books of account of the appellant nor shown as the cash receipt. It is an amount received to meet the medical expenditure of Mr. Sood's uncle.
Therefore, the said amount cannot be treated as the income of the appellant.
13. Addition on This is against the As per seized No basis Rs.2066 account of expenditure made on the material the for undisclosed maintenance of the assessee paid an making investment in building at Mumbai. amount of addition.
Bombay flat. Rs.75,303 to Hence,
housing society, deleted.
Mumbai along with
his brothers. The
payments are
unaccounted and
represents
assessee's share for
different years.
Assessment Year 1994-95
14. Addition There are two credits An amount of Accepting
Rs.2,00,000 holding that the aggregating to Rs. Rs.4,31,000 was assessee'
amount paid 2,00,000 from M/s found deposited in s
back by M/s Syndicate Marketing. It is Indian Bank explanati
Syndicate submitted that two account on different on,
Marketing amounts of Rs.1,00,000 dates. The assessee addition
represents the each were deposited in the could not furnish deleted.
undisclosed Indian Bank account on any supporting
income. 5/6/93 and 7-7-93. These material in respect
amounts represent return of his explanation.
of the earlier payments.
The appellant, on
3/4/1993, as Proprietor of
Clock Specialists advanced
Rs.1 lakh each by two
cheques bearing
Nos.056115 and 066116
to Sri Venkatrami Reddy
of Syndicate Marketing
187
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
and was recorded in the books of account of Clock Specialists. The appellant received back the amount from Syndicate Marketing into his personal account.
The said amounts were
paid to the account of
Clock Specialists
immediately.
Further, the books of
account were found and
were seized by the
department. The amounts
were initially paid through
bank account and were
returned through bank
account. Therefore, it
cannot be considered as
undisclosed income.
Both receipts and
payments were recorded at
ledger folio No.10 of the
Clock Specialities. Page
No.63 of the paper book.
Therefore, the Assessing
Officer is not justified in
mentioning that the
appellant did not file any
explanation.
15. Addition The said amount was There are deposits Accepting
Rs.2,00,000 holding received from Mrs. Veena made on 29.11.93 assessees
that the amount R. Chugani. (a) and 21.1.94 in explanati
received from 29/11/1993 Rs. 1,00,000 Indian Bank on,
Smt.VeenaR.Ch and 21-1-1994 Rs. account for which addition
ugani represent 1,00,000). The amount explanation was not deleted.
the was paid by Mrs. Veena R. found correct.
undisclosed Chugani through Cheque
income. No.1512951 dated
27/11/1993 and were
deposited in the bank
account.
16. Addition The assessee submits that The assessee could Accepting
Rs.10,000 holding that the on 17-11-1993 a sum of not furnish any assessees
amount Rs.10,000/- was received supporting evidence explanati
received from from S. Mallaiah. This in respect of on
188
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Sri S.Mallaiah represents return of advance given to Sri addition as the amount advanced to Sri S. S. Mallaiah. deleted. undisclosed Mallaiah vide Cheque income. No.630020 dated 28-1-92.
The withdrawals made from the bank account for the said period is at page 90 of the paper book. It can be seen from the said page 90 that the appellant paid an amount of Rs.
10,000 to Shri Mallayya
and the present receipt is
only a repayment of the
amount. Therefore, the
Assessing Officer is not
justified in making such
an addition.
17. Addition The appellant deposited The assessee stated No basis
Rs.21,000 holding that the cash of Rs.21,000. It is that this is out of for
deposit submitted that the bank return of share making
represent the account was disclosed to application money addition.
undisclosed the department. The which is not Hence,
income. addition is not made based acceptable as the deleted.
on any seized material. share application
Therefore, the Assessing money if any would
Officer should not have have been returned
made such an addition, by cheques by the
particularly in view of the company.
fact that the appellant
maintained books of
account and disclosed the
bank account to the
department.
18. Addition The assessee submitted This is the amount No basis
Rs.20,000 holding that the note regarding additions realized from SBI for
refund received u/s 80CCA and 80 CCB, a mutual fund which making
represent the copy of which is available is taxable in the addition.
refund of the at Page No.65 of the paper year of realization. Hence,
amounts book. Further it can be deleted.
claimed as seen that for the
deduction u/s assessment year 1990-91,
80CCA and the appellant claimed
80CCB deduction under sec.
80CC and not 80CCA or
80CCB of the Act. The
provisions of sec. 80CC
were omitted with effect
from 1-4-1993 and are not
189
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applicable for the year
under consideration.
Further, the addition is
not made with reference to
any seized material.
Therefore, the Assessing
Officer is not justified in
making any addition.
19. Addition on This is against the As per seized No basis
Rs.5,404 account of expenditure made on the material the for
undisclosed maintenance of the assessee paid an making
investment in building at Mumbai. amount of addition.
Mumbai flat. Rs.75,303 to Hence,
housing society, deleted.
Mumbai along with
his brothers. The
payments are
unaccounted and
represents
assessee's share for
different years.
Assessment Year 1995-96
Ground Addition on It is submitted that the Interest on FDR No basis
No.20. account of appellant disclosed the received amounts to for
Rs.5,888 accrued interest fixed deposits to the Rs.9256 whereas making
on FDRs department. The interest the amounts addition.
represent as and when accrued to declared is Rs.3368 Hence,
undisclosed the appellant is being only. deleted.
income. admitted in the return of
income filed. During the
year the amount derived
from deposits was already
admitted. The Assessing
Officer is not justified in
arriving at the interest on
fixed deposits at Rs. 9256
and in making an addition.
Ground Addition It can be seen from page Interest from LIC No basis
No.21. holding that the 93 of the paper book that mutual fund for
Rs.2,583 interest from the interest on LIC Mutual received amounts to making
LIC mutual fund is only Rs. 900 and Rs.3483 whereas addition.
fund represent was correctly accounted in the amounts Hence,
the undisclosed the return of income. The declared is Rs.900 deleted.
income. amount of Rs. 12,583 was only.
received on 17-10-1994
and the said amount is
realization of the Net asset
190
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
value. The balance would be declared as income from time to time. The Assessing Officer is not justified in making such an addition.
Ground Addition on The assessee submitted a This is the amount No basis No.22. account of note regarding the addition realized from SBI for Rs.25,000 undisclosed made by applying the and LIC mutual making (27-6-94) income received provisions of sec.80CCA fund which is addition. Rs.10,000 on maturity of and 80CCB, a copy of taxable in the year Hence, (17-10-94) mutual fund. which is available at page of realization. deleted.
No.65 of the paper book. It is submitted that the information is available on record. There is no seized material relevant for such additions. Further the provisions of Chapter VIA were not applicable for completion of the assessment under section 158BD both at the time of filing the return of income and at the time of completion of the assessment proceedings.
Further, for the year under consideration, the assessee admitted income at Rs. NIL. It is submitted that after making the addition of Rs.35,000, the total income would work out to Rs. NIL. Therefore, there is no undisclosed income for the year under consideration. In view of the above, the addition may kindly be deleted.
Ground Addition The deposit of Rs. 9,000 These are deposits No basis No.23. holding that represents a receipt in Bank a/c for Rs.9,000 the amount through cheque from East No.6936 for which making deposited on West. This is a part of the no explanation was addition. 25-10-1994 business transaction and submitted. Hence, represent is entered in the regular deleted. undisclosed books of account. The income. amount was received through cheque. Further, 191 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
the bank account is
disclosed to the
department and therefore,
no such addition can be
made by the Assessing
Officer.
Ground Addition The Assessing Officer These are deposits No basis
No.24. holding that the found that a sum of Rs. in Bank account for
Rs.27,350 amount 27,350 was deposited in No.6936 for which making
deposited on Indian Bank account and no explanation was addition.
21-11-94 treated the said sum as submitted. Hence,
represent the undisclosed income of deleted.
undisclosed the appellant. It is
income. submitted that the bank
account is disclosed to the
department. The appellant
maintained books of
account. He carried on
various activities and the
amount deposited is a part
of the disclosed receipt.
There is no seized material
suggesting that the said
amount represents the
undisclosed income.
Therefore, the Assessing
Officer is not justified in
making such an addition.
Ground No. Addition on The assessee issued As per the seized No basis
25. account of cheque No.347157 dated material assessee for
Rs.20,520 purchase of 6-1-95 for allotment of invested in shares. making
shares on shares of Surendra The assessee addition.
Ground Nos. 6/1/95 Securities. The said explained the same Hence,
28, 29, 34 represent cheque dated 6-1-95 must are through Indian deleted.
Rs.1600 undisclosed have been presented for Bank account which
each. income. collection subsequently. was not found on
The said were allotted to verifying the bank
the assessee. Hence the account.
purchase of shares is
genuine and addition on
this account is not
warranted. The said
cheque along with others
is debited on 27.5.95.
Ground Addition The assessee submits that These are deposits No basis
No.26. holding that the this amount was not in bank account for
Rs.12,883 amount claimed by the assessee as with Indian Bank in making
represent the deduction u/s 80CCA or the name of Minor addition.
undisclosed 80CCB as the said son Master Sachin. Hence,
income. certificate was purchased The deposits were deleted.
by his son from out of his found during the
192
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
income. Even Mr. Sachin course of search did not claim the said and is covered amount as deduction from under block his total income under assessments. those sections. Therefore, the Assessing Officer is not correct in making such an addition.
Ground Addition on This is against the As per seized No basis No.27. account of expenditure made on the material the for Rs.3,934 undisclosed maintenance of the assessee paid an making investment in building at Mumbai. amount of Rs.75303 addition.
Bombay flat. to housing society, Hence,
Mumbai along with deleted.
his brothers. The
payments are
unaccounted and
represents
assessee's share for
different years.
Assessment Year 1996-97
Ground Addition It is submitted that there Assessee has not No basis
Nos.29 & 30. holding that the is no basis for arriving at disclosed the for
Rs.31,364 interest on FDR the interest received by the interest on FDR in making
is undisclosed appellant. It is further Grindlays bank. The addition.
income. submitted that the bank capital account does Hence,
account; the fixed deposits not reflect any deleted.
were all disclosed to the details on the
department. Whenever the interest.
interest is credited, the
appellant is admitting
such interest in the return
of income filed. Therefore,
no addition can be made
particularly when there is
no seized material
suggesting that such
income represents the
undisclosed income.
Therefore, the said
addition may kindly be
deleted.
Ground Addition on The Assessing Officer is of The assessee No basis
No.31. account of the view that an amount of received 50527 as for
Rs.25,527 estimation of Rs.50,527 was deposited maturity value of making
interest on in FDR out of which an FDR in addition.
193
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
FDRs. amount of Rs.25,000 Andhra Bank. Hence, represent the original Rs.25000 was taken deleted.
deposit and the balance as undisclosed in
amount is added. This is AY 1990-91 and
not correct as the balance is
appellant was offering undisclosed income
income from deposits every for 1996-97.
year commencing from the
assessment year 1990-91.
It can be seen that interest
of Rs.11,624 was offered
for the assessment year
1991-92, Rs.18,064 was
offered for the assessment
year 1992-93, Rs.20,432
was offered for the
assessment year 1993-94,
Rs.9192 was offered for
the assessment year 1994-
95 and Rs.3368 was
offered for the assessment
year 1995-96. Taking all
these factors into
consideration, the
Assessing Officer is not
justified in making any
addition.
Ground Addition on In this regard the As per seized No basis
No.32 account of appellant already material he for
Rs.2,140 undisclosed submitted a detailed assessee paid an making
investment in
explanation for the amount of addition.
Bombay flat.
preceding assessment Rs.75,303 to Hence,
years and the said housing society, deleted.
explanation may kindly be Mumbai along with
considered for the year his brothers. The
under consideration also. payments are
unaccounted and
represents
assessee's share for
different years.
Ground Addition The said amounts were The donor had For the
No.33 holding that the received from the NRE A/c gifted a total detailed
Rs.5,00,000 gift received amount of around reasons
194
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
from Varsha is of Smt. Varsha Meerpuri. Rs.42 lacs to her stated in
undisclosed brothers and main
income. relatives during the order,
block period. The the
assessee could not amount
prove that the is
donor's financial accepted
capacity was and
sufficient to make addition
gift repeatedly to is
her relatives. deleted.
Moreover the
assessee could not
produce any IT
return copy of her
relative nor any
balance sheet
during the course of
assessment
proceedings.
Assessment Year 1997-98
Ground Addition on The Assessing Officer is of During search total For the
No.35. account of the view that there was an cash found was detailed
Rs.70,000 undisclosed excess cash of Rs.70,000 Rs.5,60,000. Out of reasons
income in the possession of the this cash stated in
appellant and added the amounting to the main
same as the undisclosed Rs.3,94,705 was order,
income. In this regard, the found at the the
appellant submitted a residence of amount
detailed explanation before assessee and other is
the Assessing Officer vide family members. accepted
Note filed on 17-09-1997 The assessee could and
which is at page 33 of the not explain the cash addition
paper book. It is submitted availability. is
that if the cash as per the Therefore, deleted.
various cash books and Rs.3,50,000 is
cash withdrawal in the taken in the hands
immediate past were taken of all male
into consideration there members. The
would not be any proportionate share
deficiency in cash. It is of the assessee
submitted that four of the comes to Rs.70,000.
brothers are residing at
195
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the same place; that the
business concerns
organized by the said four
brothers and the
partnership firms in which
they are interested are all
keeping the cash at a
place; that the cash
belonging to all the other
family members i.e., the
father, mother, wife,
children and others was
also available. Therefore,
the appellant submitted a
detailed note in this
regard. The appellant
submits that a further
note was submitted in the
case of the other brothers.
Considering the
explanations submitted,
the appellant requests that
the addition may kindly be
deleted.
Ground Addition on This is against the As per seized No basis
No.36. account of expenditure made on the material the for
Rs.1515 investment in maintenance of the assessee paid an making
Bombay flat. building at Mumbai. amount of addition.
Rs.75,303 to Hence,
housing society, deleted.
Mumbai along with
his brothers. The
payments are
unaccounted and
represents
assessee's share for
different years.
Ground Addition on The Assessing Officer is During survey stock For the
No.37. account of not justified in making this was valued at detailed
Rs.38,890 excess stock addition without providing Rs.1,31,759 reasons
found the inventory of the stocks
whereas the stock stated in
obtained at the time of
survey u/s 133A o the I.T. as per books is the main
Act. The explanation Rs.92,890. The order, 196 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
submitted by the assessee assessee could not the vide letter dated 25-9-97 is prove the difference amount at Para 2, page No.14 of in stock. is the paper book. It is accepted further submitted that the authorities considered the and sale price and deducted addition the gross profit. In this is regard, the appellant deleted.
humbly submits that there is a huge variation between the sale price;
and tagged price. The tag price and the sale price is not the same. Details are submitted at page 82 of the paper book. It can be seen that when the tagged price is Rs. 225, the sale price is Rs. 150. The difference is the discount allowed at the time of sale.
Such discount has to be excluded from the tagged price. Further, the appellant humbly submits that the authorities did not find any difference in the purchases; sales; purchase cost or the sale price.
Therefore, the authorities cannot make any addition on account of difference in the closing stock. Further, the authorities did not find any purchases outside the books of account or sales outside the books of account. There is also no difference in the quantum of stock. Therefore, the Assessing Officer is not justified in making any addition on this account.
The appellant filed separate written submissions with regard to the addition on account of difference in stocks. The same may please be 197 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
considered and the
addition may please be
deleted.
Ground Addition on This is against the As per seized No basis
No.38 account of expenditure made on the material assessee for
Rs.16,800. investment in maintenance of the paid Rs.34,000 making
Bombay flat building at Mumbai. towards registration addition.
and Rs.70,000 to Hence,
the housings society deleted.
and also Rs.50,000
for the purchase of
furniture. These
amounts were not
disclosed. The
assessee share
comes to Rs.16,800.
Ground Regarding The Assessing Officer Matter of record. Rejected.
No.39 & completing completed the assessment
40. the assessment u/s 158BD.
Charging tax u/s 158 BD at 60% and charging tax at 60% 198
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Annexure-12 IT(SS)A.No.12/H/2011 KISHORE G.CHUGANI, Hyderabad Block period 1987-88 to 1996-97 and 01-04-1996 to 03-10-1996 ASSESSMENT YEAR: 1987-88 Ground Details of Explanation Remarks of the Decision No. & addition Assessing Amount Officer in the added. Remand Report.
Ground General in --
No.1 to 4, nature
58&59
Ground Addition It is submitted that the refund of Assessee No basis for
No.5. holding the NSC was received during deposited cash making
Rs.3,600 that the March, 1996 and was credited in of Rs.3,600 in addition in
amount bank account on 2.4.1986. Indian Bank block.
deposited Therefore, it was submitted that account and Explanation
on 2-4-86 the amount of deposit is from explained that accepted.
represent maturity value of the NSC which they are NSC Amount
undisclose includes interest. It is also interest deleted.
d income. submitted that the bank account received. NSC
with Indian Bank was already interest is
disclosed to the department. received on
Considering all the facts, the maturity only.
appellant submits that the Therefore, claim
amount cannot be treated as the of the assessee
undisclosed income. It does not cannot be
emanate from the seized material. accepted.
The bank account was disclosed both for Income-tax and Wealth tax purposes. Therefore, the deposits made cannot be considered as the undisclosed amounts.
Ground Addition It is not correct for the Assessing This represents No basis for No.6. on the Officer to mention that cash deposits in making Rs.6,499 ground explanation was not submitted by Indian bank a/c addition in that the the appellant. It was clearly No.8520 which block. amounts stated that an amount of Rs. is in the name Explanation deposited 4,855 was received as gift by of Master Rohit. accepted. by Master Master Rohit and was deposited Assessee has Amount Rohit in his bank account. The seized not given any deleted. represent material does not indicate that the specific undisclose amount was deposited by the explanation d income. appellant in the bank account of with supporting Master Rohit. Further, the evidences.
199IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
amount was not Rs.6,499/- but was only Rs.4,855/-. For the relevant assessment year the provisions of sec. 64(1A) are not applicable and therefore, the income assessable in the assessment of the minor cannot be brought to tax in the assessment of the parent.
Ground Addition The actual interest on SB account This represents Explanation No.7. on is only Rs. 1,650 and not Rs. the interest accepted. Rs.3,940 account of 3,940. It is submitted that the credited in Amount undisclose opening balance was only Rs. Indian bank a/c deleted. d interest 76,061 and there is no possibility No. 6801 and to earn interest of Rs. 3,940. In Andhra Bank so far as the interest from Andhra A/c No.10089. Bank is concerned, the said Paper book does account is in the name of Rohit, not contain any the minor son of the appellant. explanation. The provisions of sec. 64(1A) have no application for the year under consideration. Further, it is submitted that there is no such interest in the said bank account even as per the show cause letter dt. 29-8-1997 page No. 119 of the paper book. The Bank Accounts were already disclosed to the Department.
Ground Addition At page No.12 of the paper book, Assessee could No basis for No.8. on account the appellant submitted the not furnish any making Rs.10,000 of amount explanation before the Assessing explanation for addition.
deposited officer. Copy of the cash book is the cash deposit Hence, with at page No.53. On 18.7.1986, an of Rs.10,000 in deleted. Indian amount of Rs.10,000/- was Indian bank Bank on deposited with Indian Bank from account. 19-7-86 Kishore Watch company account (page No.57 of the cash book). The appellant further submits that the books are impounded by the department. Without verifying the cash book, the Assessing Officer mentions that no explanation was submitted. This is not justified. The assessee also filed a copy of the cash book at page No.53 of the paper book.
Therefore, it is submitted that the 200 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Assessing Officer is not justified in making such an addition.
Assessment Year 1988-89 Ground Addition An explanation was submitted in This represents No basis for No.9(a) on account column No.4. The amount of cash deposits in making Rs.10,000 of amount Rs.10,000 represents gift received Indian bank a/c additions in plus deposited through bank and cheque was not No.8520 which block. Rs.1238 by Master cleared. Therefore, the amount of is in the name Explanation Rohit Rs.10,000 cannot be added. It is of Master Rohit. accepted. represent submitted that the cheque not Assessee has Amount undisclose cleared cannot be said to be not given any deleted. d income. received by the appellant. specific Therefore, the amount cannot be explanation considered for assessment. The with supporting other amount of Rs. 1,238 also evidences. represents the amount belonging to Master Rohit. This is exempt u/s 10(32) of the I.T. Act as the same is less than Rs.1,500 and also because the provisions of Sec.64(1A) have no application for the year under consideration.
Ground Addition The appellant submits that the This represents No basis for No.9(b) holding amount of Rs. 20,000 was cash deposits in making Rs.26,500 that the received by his daughter Laveena Indian bank a/c addition in amount and was deposited with her bank No.8520 which block. deposited account. The balance of Rs.6,500 is in the name Explanation by Miss also was a gift received by her. of Miss accepted. Laveena The amount of Rs.20,000 was Laveena. Amount represent drawn from the account of Sri Assessee has deleted. undisclose Gulab Rai, the father of the not given any d income. appellant and the grandfather of specific the done, on 7.3.1988 from his explanation bank account No.10385 with with supporting Andhra Bank. The balance of the evidences. amount also represents the gift received from other family members. There is no evidence that these amounts were deposited by the appellant herein. Further, the provisions of Sec.64 (1A) were not applicable for the year under consideration and, therefore, the minor's income cannot be added to the parents income.
Ground Addition The amount of Rs.12,000 Assessee No basis for No.10. on account represents deposit made from out deposited cash making 201 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Rs.12,000 of deposit of the maturity value of the NSC. of Rs.12,000 in addition in in the It can be seen that every year, the Indian Bank block. bank appellant is investing in NSCs account and Explanation treated as towards end of March. The explained that accepted. undisclose matured value was received and they are NSC Amount d income. the same was deposited into the interest deleted.
bank account. It is also received. NSC submitted that the Indian Bank interest is account was already disclosed to received on the department and, therefore, the maturity only.
same cannot be treated as Therefore, claim
undisclosed income. of the assessee
cannot be
accepted.
Ground Addition The amount of Rs.10,000 was As per seized Explanation
No.11. on account advanced to Amba Picture Palace material accepted.
Rs.10,000 of amount through cheques and Rs.5,000 assessee Amount
paid to each on 24-8-87 and 25-8-87 the advanced to deleted.
Amba amounts were drawn from Indian Amba Picture
Picture Bank Account No.6801 and, Place.
Palace. therefore, it cannot be considered
as the undisclosed income. The Bank accounts were disclosed to the Department.
Assessment Year 1989-90 Ground Addition The amount of Rs.12,000 The assessee No basis for No.12. on the represents deposit made from out could not making Rs.12,000 ground of the maturity value of the NSC. produce any addition in that the It can be seen that every year the details to the block. deposit in appellant is investing in NSCs argument that Explanation Andhra towards end of March. The the amount was accepted. Bank is matured value was received and received from Amount undisclose the same was deposited into the NSC. deleted. d income. bank account. It is also submitted that the Indian Bank account was already disclosed to the department and, therefore, the same cannot be treated as undisclosed income.
Ground Addition The amount was deposited from This represents Explanation No.13. treating out of the gifts received from Sri cash deposits in accepted. Rs.20,000 the Gulab Rai on 1.3.1989 and was bank a/c Amount amount deposited in her bank account. It No.11311 which deleted. deposited is not correct to say that there is is in the name by Miss no specific explanation of Miss Laveena as particularly when the assessee Laveena. undisclose submitted that the amount was Assessee has d income. gifted by Sri Gulab Rai Chugani not given any 202 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
through cheque drawn on Andhra specific Bank, Prakash Nagar branch, explanation Hyderabad on 1.3.1989 and when with supporting Sri Gulab Rai Chugani is also evidences. assessed to tax by the same Assessing Officer. Therefore, it is not correct to add the said amount as the undisclosed income.
Ground Addition This amount was already admitted Admitted in the Rejected No.14. treating in the block return filed by the Block return.
Rs.30,000 the assessee and hence the ground is
investment not pressed.
in
Begumpet
property as
undisclose
d.
Ground Addition This ground is redundant and This ground is Rejected
No.15. treating does not arise of the assessment redundant.
Rs,10,811 the order.
Rs.6,707 interest
received by
the
assessee's
sons and
daughters
as
undisclose
d income.
Assessment Year 1990-91.
Ground Credit in The amount of Rs.12,000 Assessee No basis for
No.16 Indian represents deposit made from out deposited cash making
Rs.12,000 Bank of the maturity value of the NSC. of Rs.12,000 in addition in
treated as It can be seen that every year the Indian Bank block.
undisclose appellant is investing in NSCs account and Explanation
d income. towards end of March. The explained that accepted.
matured value was received and they are NSC Amount
the same was deposited into the interest deleted.
bank account. It is also received. NSC
submitted that the Indian Bank interest is
account was already disclosed to received on
the department and, therefore, the maturity only.
same cannot be treated as Therefore,
undisclosed income. claim of the
assessee
cannot be
accepted.
203
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Ground Addition It can be seen that for the year Assessee No basis for No.17. on account under consideration interest from received making Rs.659 of SB account of Rs.8,087 and interest from addition in undisclose interest on units of Rs.3,996 Units block. d income. aggregating to Rs.12,083 is amounting to Explanation admitted. The total interest as per Rs.4655 but accepted. bank account No. P-109 works out declared only Amount to Rs.10,129. Therefore, it cannot Rs.3996 in deleted. be said that correct amount of the return.
interest was not admitted.
Further, all these facts were already on record and it cannot also be said that this represent undisclosed income within the meaning of Sec.158BD of the I.T. Act.
Ground Amount The Assessing Officer mentions Assessee No basis for No.18. deposited that no explanation was submitted could not making 30,021 in PPF by the assessee. It is humbly furnish any addition in account by submitted that out of Rs.30,021, explanation block. Master an amount of Rs.20,000 deposited for the cash Explanation Rohit and was not cleared and hence cannot deposits accepted. Miss be treated as a credit. The amounting to Amount Laveena amount of Rs.3,586 represents Rs.30,021 in deleted.
represent interest derived by the assessee's Andhra Bank
undisclose son Master Rohit and this cannot in the name
d income. be added as the provisions of of Rohit and
Sec.64(1A) are not applicable for Laveena
that year. In spite of the
explanation, the Assessing Officer mentions that no specific information was filed. It is not justified. It is humbly submitted that in view of the explanation submitted the addition may kindly be deleted.
Another amount of Rs. 4,400 also represents interest derived by Master Rohit and was credited to the bank account of Master Rohit. This cannot be treated as the income of the appellant in view of the fact that the provisions of sec. 64(1A) were not applicable for the year under consideration.
Another amount of Rs. 2035 is stated by the Assessing Officer to be the deposit in the account of Laveena, daughter of the appellant.
204IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Firstly such amount is not in the said bank account vide show cause letter dt. 29-8-1997. Even otherwise, the interest and other incomes derived by her cannot be included in the assessment of the appellant in view of the fact that the provisions of sec. 64(1A) were not applicable for the year under consideration.
Ground Addition Para 15.iii of the assessment order. Admitted in Rejected No.19. holding This amount is admitted in the Block return.
Rs.2,459 that the block return. No addition should
interest have been made by the assessing
derived officer.
from
mutual
funds is
undisclose
d income.
Ground Addition Rs.659 was already explained in Assessee No basis for
No.20. on account detail at ground No.17. The same received making
Rs.659 of accrued explanation may kindly be interest from addition in
interest considered. Units block.
amounting to Explanation
Rs.4,655 but accepted.
declared only Amount
Rs.3,996 in deleted.
the return.
Ground Addition The amount of Rs.2,000 was paid No No basis for
No.21. on account from out of the cash available explanation making
Rs.2,000 of towards PPF and was claimed in was found in addition in
undisclose the return of income filed. the paper block.
d deposit Therefore, this cannot be book as Explanation
in PPF considered as undisclosed income. claimed by the accepted.
made on assessee Amount
behalf of deleted.
Master
Rohit.
Assessment Year 1991-92
Ground Addition Para No. 16.i of the assessment The interest No basis for
No.22. on the order. The Assessing Officer held amount is not making
Rs.9,354 ground that the total interest derived from declared in addition in
that the the interest on CDs amount to the I.T. block.
total Rs.9254 (Page No-110 of Paper Return. Explanation
interest Book) and the said amount accepted.
derived on represents the undisclosed income Amount
205
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
CDS as against the amount declared of deleted. represents Rs.5430. CDS is exempt from the undisclose Income tax. Hence no addition may d income. be made.
Ground Addition The appellant submitted that The assessee No basis for No.23. holding withdrawn on 29.9.1990 from could not making Rs.20,000 that the Canara Bank, Secunderabad and furnish specific addition in amount was deposited with Indian Bank on details block. deposited 22.10.1990. The Assessing Officer regarding the Explanation with simply mentions that no specific source of the accepted. Indian details were filed. This is not credit. Amount bank on correct as all the details of the deleted.
22-10-90 bank account were provided and
represents the books of account are with the
undisclose department.
d income.
Ground Addition Para No. 16.iii of the assessment This represents No basis for
No.24. on the order. These deposits in minors' deposits in making
Rs.38,673 ground of bank accounts consists of gift bank A/c addition in
undisclose received of Rs.20,000/- on 28-4-90 No.11311 block.
d deposits from Gulabrai G. Chugani, gift of which is in the Explanation
in minor's Rs.5,800/- on 17-7-90 from name of Miss accepted.
bank relatives, Rs.1,735/- towards Laveena. Amount
accounts. interest received from bank Assessee has deleted.
account on 7-9-90, gift of not given any
Rs.9999/- received from Gopal Das specific
vide D.D.No.19086 dt.30-7-90, gift explanation
of Rs.9999/- received from Shanthi with
Gopal Das vide cheque No.493167 supporting
dated 30-7-90, gift of Rs.5400/- evidences.
from relatives on 1st birth day of Miss Laveena, Rs.1,205/- interest from Bank, and gift of Rs.2800/- from relatives. The above amounts were deposited in the bank accounts of the minor children as the amounts were received by them. It is further submitted that the provisions of sec. 64(1A) have no application for the assessment year under consideration. There is no seized material to show that the amounts were paid by the appellant from out of his own funds. Hence the said amount cannot be added as the undisclosed income of the appellant. No comment is made by the AO in remand report.
206IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Ground Addition Para 16.v of the assessment order. Admitted in the Rejected No.25. holding The said amount was admitted in block return Rs.2,000 that the the block return of income filed.
interest derived from mutual funds represent undisclose d income.
Ground Addition The amount of Rs.2,000 was paid This represents No basis for No.26. holding towards PPF in the name of Master deposits in PPF making Rs.2,000 that the Rohit. This was from out of the a/c which is in addition in amount cash available and was deposited the name of block. deposited for claiming exemption u/s 88 of Master Rohit. Explanation in the the I.T. Act. Therefore, this Assessee has accepted. name of amount cannot be treated as the not given any Amount the minors undisclosed income. specific deleted.
represent explanation
the with supporting
undisclose evidences.
d income.
Ground Addition No such addition is made in the No such Rejected
No.27. holding assessment order and hence the addition.
Rs.30,000 that the ground does not subsist. Hence, the
investment ground is
in mutual redundant.
funds as
undisclose
d income.
Ground Addition No such addition is made in the No such Rejected
No.28. on account assessment order and hence the addition.
Rs. 20,000 of ground does not subsist. Hence, the
unexplaine ground is
d deposit redundant.
in the
bank
Assessment Year 1992-93
Ground Estimation This ground is redundant as no No such Rejected
No.29. of interest such addition is made in the addition. Hence Rs.20,000 from assessment order. the ground is Savings redundant.
Bank account of Indian bank and 207 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Andhra Bank Ground Addition of Para 17.iv of the assessment order. As per seized No basis for No.30 the The addition is only Rs. 15,000. material making Rs.15,000 amount According to the Assessing Officer assessee addition in advanced the amount advanced to Shri advanced this block. to Sri Mahendra Kumar represents amount on Explanation Mahendra undisclosed income. In this regard 25/3/91 to accepted. Kumar it is submitted that the said Mahendra Amount amount was advanced to Sri Kumar and the deleted. Mahendra Kumar from the books same has been of Kishore Watch company. The stated to be same may be seen from the books withdrawn from of account impounded during the Kishore Watch course of search and seizure Co. The operations. The Assessing Officer, assessee could without verification of the seized not furnish any documents added the amount of supporting Rs. 15,000 as the undisclosed evidences. income. Further, this does not emanate from the seized material and hence no addition could be made.
Ground Addition The interest earned by Miss These are No basis for No.31 on account Laveena of Rs.3,581/- from out of interest earned making Rs.3,581 of interest the Savings Account and in Indian Bank addition in earned by Rs.3,375/- received by Master a/c No.8520 in block. minor Rohit. They cannot be added as the name of Explanation children. the provisions of sec. 64(1A) were Master Rohit accepted.
not applicable for the assessment and SB a/c Amount year under consideration and as No.11311 in the deleted. the same are exempt from tax u/s name of Miss 10(15) and 10(32) of the I.T. Act. Laveena. These amounts were not declared in the regular or block return.
Ground Addition The amount of Rs.2,000 was paid This represents No basis for No.32 on account towards PPF in the name of Master PPF deposits in making Rs.2,000 of deposit Rohit. This was from out of the the name of addition in in PPF cash available and was deposited Master Rohit. block. account of for claiming exemption u/s 88 of Assessee has Explanation Master the I.T. Act. Therefore, this not given any accepted. Rohit. amount cannot be treated as the specific Amount undisclosed income. The addition explanation deleted.
is not based on any seized with supporting
material. evidences.
Ground Addition The said amount is admitted in the Assessee Rejected
No.33. holding the block return of income and hence received interest Rs.600 interest no addition be made. from LIC 208 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
received Mutual fund
from LIC Rs.1255 but
mutual declared Rs.755
fund as in the block
undisclose return.
d.
Ground Addition In para 17.ii the Assessing Officer The assessee No basis for
Nos.34, on account arrived at addition of Rs. 5,888 and has FDRs in making
35. of the said amount was already Andhra Bank. addition in
Rs.5,888 undisclose admitted in the block return of The accrued block.
Rs.21,299 d deposit income. interest works Explanation
in Andhra The balance of interest is worked out to accepted.
Bank out by the Assessing Officer from Rs.20,000; Amount
the date of investment. The whereas the deleted.
appellant was declaring interest on assessee
accrual basis every year and the disclosed
Assessing Officer for the year Rs.4589 only in
under consideration worked out the block
interest on both accrual and return.
receipt basis. The correct amount Therefore the
works out to Rs. 10,477 (page No. difference of
78 of the paper book) and Rs.15411 along
therefore, no addition should have with the
been made by the Assessing interest received
Officer. Further, the appellant from Indian
admitted such interest as per the Bank account
books of account. Therefore, the of Rs.5888 is
Assessing Officer should not have treated as
treated the amount as the undisclosed
undisclosed income. All the details income.
were submitted in the regular return of income. The Assessing Officer merely arrived at the figures on presumptions and without reference to the seized material. Assessment Year 1993-94 Ground Addition This amount represents the This amount is No basis No.36. holding principal and interest received on credited in for making Rs.10,600 that the maturity of NSC on 11-6-92. The Indian Bank SB addition in NSC details in this regard can be a/c. Assessee block. interest is verified from the books of account relied upon a Explanatio undisclose available with the Department. The letter n d income addition is not based on any seized dt.7/12/97 but accepted.
document. The Assessing Officer no such letter Amount added on the ground that the NSC was produced deleted. would be refunded only through for verification. cheques. The said presumption is not correct and earlier, cash was paid by the Post Offices. The amounts so received were credited 209 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
in the regular books of account. Without verifying the books of account, the Assessing Officer added the said amount as undisclosed income. Further, the amount is deposited with Indian Bank a/c No. 6801 which is disclosed to the department. Hence no such addition can be made.
Ground Addition According to the Assessing Officer, The accrued No basis No.37. towards the estimated interest on deposits interest on for making Rs.37,173 accrued works out to Rs. 55,000. There is FDR works out addition in interest no basis for the working made by to Rs.55,000 block.
the Assessing Officer. In fact the whereas the Explanatio appellant maintained books of assessee n account and as per the books, the admitted accepted. actual amount of interest on SB interest of Amount and FD worked out to Rs. 28,062 Rs.17,927 only deleted. and the same is admitted in the in the return. return of income. The Assessing Therefore, the Officer is not correct in working out difference is the the interest at Rs. 55,000. The undisclosed appellant filed evidence for the income. sources in making the bank deposits. With regard to accrued interest on FDR of Rs.21,299 a separate note submitted before the Assessing Officer are at Page No.52 of the paper book. Hence, the Assessing Officer may please be directed to delete the addition. It is further submitted that the addition did not emanate from the seized material. All the material facts were disclosed to the department and hence no addition to the undisclosed should have been made by the Assessing Officer.
Ground Addition Para No. 18.iv of the assessment As per seized No basis No.38. holding order. The FDRs to the extent of material the for Rs.131000 that the Rs.1,31,000 consists of renewal of assessee had making FDRs to 3 different existing FDRs. Of FDRs in addition the extent Rs.40,500, Rs.40,500 and Indian Bank in block.
of Rs.50,000 The sources for the said
in the name of Explanati
Rs.131000 deposits are clearly explained at
not Srl.Nos.4,5 and 6, Page No.130 of Sri Kishore & on
properly the paper book. It was submitted Smt. Roshni. accepted.
explained in the explanation that the FDRs The assessee Amount
210
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
represent renewal of deposits. could not deleted. Therefore, the appellant explained explain the that no addition should be made. source for the However, the Assessing Officer original FDRs.
mentioned that the original deposits were not explained and hence added the same. It is humbly submitted that when the deposits were not made during the previous year and they represent only the renewals, the Assessing Officer is not justified in making any addition.
Ground Addition The amount of Rs.7,201 includes This represents No basis No.39. holding credit of Rs.3,180 to the PPF PPF deposits in for making Rs.7201 that the account of the assessee's minor the name of addition in payments son. In so far as interest amount Master Rohit. block. made by of Rs.3,180 is concerned, the same Assessee has Explanatio Master is exempt u/s 10(15) of the I.T. not given any n Rohit for Act. The amount was invested specific accepted. claiming from out of the bank account explanation Amount deduction No.8520 of Master Rohit with with supporting deleted. u/s 88 Indian Bank, Secunderabad (page evidences. represent No.137 of the paper book). There undisclose were no credits in the said bank d income. account during the financial year relevant for the assessment year under consideration. Therefore, the appellant submits that there were sources for the minor son being the balance in the said bank account and, therefore, the appellant submits that the Assessing Officer is not justified in making any such addition. From Page-130 of Paper Book (Sl.No:4,5&6) it can be seen that the original deposits were made on 9/2/86 i.e., prior to Block Period.
Assessment Year 1994-95 Ground Addition The appellant submits that for the This is the All receipts No.40. on the first time, the claim u/s 80CC of amount realized are not Rs.20,000 ground Rs.10,000 was made for the from SBI taxable.
that assessment year 1990-91. The mutual fund Hence, deduction said amount is realizable after a which is taxable deleted. u/s 80 period of five years. Therefore, no in the year of CCA and claim was made prior to the year realization. 80 CCB 1990-91. Even for the assessment 211 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
earlier year 1990-91, the appellant claimed claimed only Rs. 10,000 as has to be deduction u/s 80CC and no claim withdrawn. was made either u/s 80CCA or 80CCB of the I.T. Act. The addition does not eminent from the seized material. All the material was available with the Department.
Ground Addition The Assessing Officer arrived at The assessee is No basis No.41. on account interest on FDRs purely on in possession of for making Rs.59,868 of accrued estimate. This is not justified while FDR of addition in interest. completing the assessment u/s Rs.5,46,480. block.
158BC of the I.T. Act. The The accrued Explanatio appellant already admitted an interest works n income of Rs. 6,501 towards out to Rs.65577 accepted. interest on FDRs. The said whereas the Amount amount was realized during the assessee deleted. year under consideration and the declared Assessing Officer is not justified in Rs.5709 only. making any further addition in this regard particularly, in view of the fact that the addition is not based on seized documents. Further the AO merely totaled the FDRs listed without considering the life of FDRs.
Ground Addition As per the Assessing Officer, this
This represents No basis
No.42. on account deposits
amount consists of three items - in for making
Rs.5,311 of (1) Rs.3058 is not appearing inbank a/c addition in
undisclose the account No.8520 of Master No.8520 and block.
d interest Rohit. (2) Interest amount of 11311 which is Explanatio
in minors Rs.253 also is not appearing in the
in the name of n
account. account of Miss Laveena (3) Only
Master Rohit accepted.
Gift received of Rs.2,000 is and Miss Amount
appearing in her account. The AO Laveena. deleted.
did not contradict the submissions Assessee has made and hence the addition maynot given any please be deleted. specific explanation with supporting evidences.
Ground Addition The ground is redundant and does No such Rejected No.43. on account not emanate of the order of addition. Hence Rs.3,546 of Minors assessment. the ground is PPF A/c redundant.
Ground Addition The appellant submits that for the This is the No basis No.44. holding first time, the claim u/s 80CC of amount realized for making Rs.20,000 that the Rs.10,000 was made for the from SBI addition in 212 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
refund assessment year 1990-91. The mutual fund block. represent said amount is realizable after a which is taxable Explanatio the refund period of five years. Therefore, no in the year of n of the claim was made prior to the year realization. accepted. amount 1990-91. Even for the assessment Amount claimed as year 1990-91, the appellant deleted. deduction claimed only Rs.10,000 as u/s 80 deduction u/s 80CC and no claim CCA and was made either u/s 80CCA or 80 CCB 80CCB of the I.T. Act.
Ground Addition This ground is redundant as no The ground is Rejected. No.45. on the such addition is made. redundant Rs.10,413 ground that Registratio n charges for purchase of Bowenpall y property not declared.
Assessment Year 1995-96 Ground Addition The Assessing Officer arrived at The net No basis for No.46. on account interest on FDRs purely on holding of making Rs.32,262 of accrued estimate. This is not justified while FDR is addition in interest. completing the assessment u/s Rs.30458. The the block.
158BC of the I.T. Act. The accrued Explanation appellant already admitted interest works accepted. Rs.7,738 towards interest on out to Amount FDRs. The said amount was Rs.40,000 deleted. realized during the year under whereas the consideration and the Assessing assessee Officer is not justified in making declared only any further addition in this regard Rs.7738. particularly, in view of the fact that the addition of Rs.32,262 is not based on seized documents.
Detailed explanation is submitted in column No.4.
Ground Addition The ground is redundant as no This ground is Rejected No.47 disbelievin such addition is appearing in the redundant. Rs.25,099 g rental assessment order.
income.
Ground Addition This consists of Rs. 4,079 in the This No basis for No.48. on account account of Rohit; Rs. 657 in the represents making Rs.10,727 of account of Laveena; cash deposit of deposits in addition in 213 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
undisclose Rs. 3,951 in the account of Rohit bank a/c the block. d interest and Rs. 2,040 in the PPF account No.8520 and Explanation and PPF of Laveena. The amounts 11311 and accepted. contributio represent deposits made into the PPF a/c which Amount n of respective accounts and the is in the name deleted. minors. interest arising out of the said of Master accounts. In so far as deposits Rohit and with PPF are concerned, the said Miss Laveena. deposits are from out of the cash Assessee has available with the appellant and for not given any the purpose of claiming deduction. specific The interest on PPF is exempt from explanation tax. In so far as deposits in the with bank accounts are concerned, the supporting said amounts are deposited from evidences. the known sources of the minor children. The interest cannot be added as the same is less than Rs. 1,500 each. Therefore, it is not correct for the Assessing Officer to have made the addition even after explanations were submitted. It is also submitted that the additions do not emanate from the seized documents. Therefore, the appellant requests that the addition may kindly be deleted.
Ground Addition For the assessment year 1990-91, The assessee No basis for No.49. holding an amount was claimed u/s 80CC has received making Rs.10,000 that there of the I.T Act and not u/s 80CCD 12582 in addition in is refund of the I.T. Act. Therefore, it is not Indian Bank the block. from LIC correct for the Assessing Officer to a/c 6801 from Explanation Mutual make any addition. LIC mutual accepted.
fund. fund which is Amount
maturity deleted.
amount form
investment
u/s 80 CCD.
The principal
amount is to
be brought to
tax in the year
of maturity.
Assessment Year 1996-97
Ground Addition It was submitted that an amount of This No basis for
No.50. holding Rs.30,000 was invested on represents the making
Rs.31,184 that the 18.11.1995 in FDRs by maturity addition in
214
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
credit on transferring the amount from amount of block. 18-3-96 Account No.6801 through cheque FDR. The Explanation represents No.571645. The maturity value assessee accepted. undisclose was deposited on 18.3.1996. This could not Amount d income. cannot be treated as the income of furnish the deleted.
the appellant. original FDR
purchased on
18-11-95.
Ground Addition This amount is admitted in the Amount is Rejected
No.51. holding return of income in Form 2B and admitted in
Rs.22,800 that the hence the ground is not pressed. the return.
amount
represent
the
undisclose
d income.
Ground Addition The appellant is admitting on The net No basis for
No.52. on the interest as and when credited by holding of making
Rs.10,682 ground of the bank. Further, the deposits FDR is addition in
accrued made into the bank account and Rs.1,13,790. block. interest. the other accounts were all The accrued Explanation disclosed to the department. The interest works accepted. Assessing Officer arrived at the out to Amount difference on estimate and on Rs.13,000 deleted. presumptions. Therefore, the whereas the addition cannot be made. The assessee appellant filed evidence for the declared only sources in making the bank Rs.2,318 deposits. With regard to accrued interest on FDR of Rs.21,299/- a separate note submitted before the Assessing Officer are at Page No.52 of the paper book. Hence, the Assessing Officer may please be directed to delete the addition.
Ground Addition The Assessing Officer held that the This No basis for No.53 on account payments made by the assessee's represents making Rs.12,558 of son Master Rohit A/c No.1913147 deposits in addition in undisclose PPF interest Rs.12,558/- from out bank a/c block. d PPF of the known sources of the income No.8520 and Explanation contributio for the purpose of claiming 11311 and accepted. n and deduction u/s 88 of the I.T. Act PPF a/c which Amount bank represents the undisclosed income. is in the name deleted. interest of The amount was paid from out of of Master minors. the known sources of income. The Rohit and interest is on PPF is exempt from Miss Laveena. tax. The amount was disclosed to Assessee has the department. Therefore, the not given any addition may kindly be deleted. specific explanation 215 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
with supporting evidences.
Assessment Year 1997-98
Ground Addition The Assessing Officer is of the view
During search For the
No.54. on that there was an excess cash oftotal cash detailed
Rs.70,000 account of Rs.70,000 in the possession of the
found was reasons
undisclose appellant and added the same as Rs.5,60,000. stated in
d income. the undisclosed income. In this Out of this main part of
regard, the appellant submitted a cash the order, detailed explanation before the amounting to the addition Assessing Officer vide Note filed on Rs.3,94,705/- of 17-09-1997 which is at pages 47 to was found at unaccounted 50 of the paper book. It is the residence cash was submitted that if the cash as per of assessee deleted.
the various cash books and cash and other withdrawal in the immediate pastfamily were taken into consideration there members. The would not be any deficiency in assessee cash. A detailed note in this regard could not is submitted in the case of Ashok explain the G. Chugani and the same may cash kindly be considered in the case of availability.
the appellant also. During the Therefore hearing a separate submission was Rs.3,50,000 is made which may be considered. taken in the hands of all male members. The proportionate share of the assessee comes to Rs.70,000 Ground Addition This is against the expenditure As per seized No basis for No.55. treating made on the maintenance of the material the making Rs.16800 the building at Mumbai. assessee paid addition in payments an amount of block.
made to Rs.75,303 to Explanatio
the Co- housing
n accepted.
operative society,
Society for Mumbai along Amount
maintenan with his deleted.
ce of the brothers. The
building as payments are
undisclose unaccounted
d income. and
represents
assessee's
share for
216
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
different years.
As per seized material assessee paid Rs.34,000 towards registration and 70,000 to the housing society and also Rs.50,000 for the purchase of furniture.
These amounts were not disclosed.
The assessee share comes to Rs.16,800 Ground Addition The Assessing Officer is of the view The For the No.56. on arriving that there was excess stock of valuation of detailed Rs.116257 at the Rs.1,16,257 and added the same stock was reasons excess by applying the provisions u/s 69 done on tag stated in stock of the I.T. Act. It is submitted that price and main part found the Assessing Officer arrived at the thereafter of the during the stock by considering the difference course of between maximum retail price on the cost price order, the search the items of stock available and the of the stock addition is stock as per the books. The was arrived deleted. appellant reconciled the difference. at by It was submitted that the reducing the maximum retail price include the gross profit discount, the profit and other @7% as expenses. A statement is prepared declared by and annexed to the paper book at the assessee page No.67. It can be seen that the in preceding cost as per the bills is much less years. Thus than the MRP rate and, therefore, the Assessing Officer should not the excess have made an addition. In this stock was regard the note submitted by the arrived at. assessee may please be perused. During the hearing a separate submission was made which may be considered.
217IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Ground Addition The addition of Rs.1,50,000 for the The donor had For the No.57. holding assessment year 1988-89 and gifted a total detailed 1,50,000 that the Rs.3,33,333 for the assessment amount of reasons (1988-89) amounts year 1990-91 were made around Rs.42 stated in 3,33,333 received disbelieving the gifts received from lacs to her main part of (1990-91) from Smt. Smt. Varsha Jaikumar Mirpuri. In brothers and the order, Varsha this regard, it is submitted that relatives the addition Jaikumar these entries were made in the during the is deleted. Mirpuri regular bank account and the period. The represent books of account. No incriminating assessee the materials were found during the could not undisclose course of search and, therefore, no prove that the d income. addition should have been made as donor's undisclosed income. It is submitted financial that the information available at capacity was the time of search shows that the sufficient to amounts were received from her make gift much earlier; such amounts were repeatedly to deposited into her bank account; her relatives. that the amounts so deposited Moreover, the were transferred to the bank of the assessee appellant and such bank accounts could not were already admitted in the return produce any of income filed by the appellant. IT return copy Without prejudice, the appellant of her relative submits that Smt. Varsha Mirpuri nor any is the resident of Bangkok, balance sheet Thailand and she is the sister of during the the appellant. She maintained a course of bank account with Indian Bank, assessment Secunderabad, a copy of which is proceedings. submitted at page Nos.48 to 50 of the paper book. The appellant filed bank account in India, letter of confirmation from Varsha Mirpuri. It is also confirmed by her that she deposited the amounts with the Indian Bank much earlier and she issued cheques in favour of the appellant and other brothers and the amount was withdrawn.
Therefore, the donor is identified, sources are identified and she confirmed the fact that the amount was gifted by her. She also confirmed the fact that she gifted the amount through banking channel. The Assessing Officer issued a notice u/s 158BD to Mrs. Varsha Mirpuri proposing to tax the amount deposited into the said 218 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
bank account and the said Smt. Varsha Mirpuri explained the source for such deposit and thereafter the proceedings u/s 158BD were closed. Therefore, the Assessing Officer is not justified in making addition u/s 68 of the Act for both the assessment years. The AO is not justified in mentioning that the donors IT particulars are not filed. The A.O. issued notice u/s-158BD and dropped the proceedings on receipt of Return of Income.
219IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Annexure-13 IT(SS)A No.13/H/2011 RAMESH SALES CORPORATION, HYDERABAD Block period 1987-88 to 1996-97 and01-04-1996 to 03-10-1996 ASSESSMENT YEAR: 1997-98 Ground Details of Explanation Remarks of No. & addition the Assessing Decision Amount Officer in the added. Remand Report.
1&3 General --
in
nature.
2. Addition During the course of search The total cash While
Deficit made proceedings Sri Ramesh Chugani as per books accepting
cash of holding and his father Sri Gulabrai on the date of the
Rs.26,638. that Chugani declared an amount of search in sources for
there was Rs. 7,00,000 as undisclosed cash respect of the excess
deficit of the entire family. This four firms of cash with
cash in declaration was made taking into this group members
the consideration deficit cash found was of family,
books of in the premises of the assessee Rs.2,00,816 the deficit
a/c. and other sister concerns. Sri However, cash cash in
Ramesh Chugani agreed for the of Rs.67,865 books of
disclosure as he was not having was only account
the assistance of the books of found during cannot be
account at the time of declaration. search. Sri accepted.
However, as soon as the copies of Ramesh It means
books of account were made Chugani in that
available to the assessee, the his statement assessee
correct position with regard to the stated that an has
availability of cash was arrived at amount of sources
and it was found that there was Rs.5.6 lakhs outside the
no deficit cash as was arrived at is unexplained books for
in the books of account. A cash on spending
detailed note on the availability of account of money in
cash with the assessee was entire family the books
submitted before the Assessing members of account.
Officer while completing the found at the Hence, the
original assessment. The residences. amount of
Assessing Officer did not take into There was deficit is
consideration the contents of the also deficit confirmed.
Note submitted but proceeded to cash in the Ground
add an amount of Rs. 26,638 as business rejected.
deficit cash found during the concerns as
course of search proceedings and well.
added the same in the Therefore, he
220
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
assessment. The present declared total Assessing Officer, while amount of completing the re-assessment also Rs.7 lakhs as did not appreciate the contents of undisclosed the Note but proceeded to cash of the complete the assessment adding entire family. the amount of Rs. 26,638 in the During the assessment. The Note submitted assessment before the Assessing Officer at the proceedings time of completion of the original he denied the assessment is at page Nos. 9 of declaration the paper book. Further, deficit made during cash cannot not be considered for the search. addition u/s 69 of the Act. The assessee tried to linkup The addition is resorted to by the the deficit Assessing Officer only on the cash to the basis of the note submitted by the excess cash assessee before the Assessing found in the Officer. residence. The assessee The appellant submits that in could not view of the detailed explanation explain any no addition can be made. Further, reasons for in the case of the assessee the the deficit authorities found deficit cash cash.
which cannot be treated as the Therefore, the
undisclosed income. deficit cash is
treated as
undisclosed
income.
221
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Annexure-14 IT(SS)A No.14/H/2011 RAMESH WATCH SERVICES. Hyderabad Block period 1987-88 to 1996-97 and01-04-1996 to 03-10-1996 ASSESSMENT YEAR: 1997-98 Ground Details of Remarks of the No. & addition Explanation Assessing Officer Decision Amount in the Remand added. Report.
1&4 General in - - -
nature
2&3 Addition With regard to the The valuation of For the detailed
Rs.88428 made addition of Rs. 88,428 stock was done on reasons made
holding towards the alleged tag price and in the main part
that there excess stock found during thereafter the cost of the order, the
was the course of search price of the stock addition on
excess proceedings, it is was arrived at by account of
stock with submitted that the reducing the gross excess stock is
the officials of the profit @7% as deleted.
assessee. department, while taking declared by the
inventory of the stock assessee in
available at the premises preceding years.
of the appellant valued Thus the excess
the stock at Rs. stock was arrived
42,21,968. The stock at.
belongs to four concerns
situated in the same
premises i.e Ramesh
Watch Co.; Kishore Watch
Co.; Ramesh Watch
Enterprisers and Ramesh
Watch Services. The total
value of the stock as per
the stock registers
belonging to the above
four concerns was valued
at Rs. 34,37,336 and
arrived at an excess stock
of Rs. 4,89,095. From
out of this, the value of
proportionate excess
stock as belonging to the
assessee was arrived at
Rs. 88,428. While
arriving at the excess
stock, the authorities
222
IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
took into consideration the sale price/tag price of each of the article and deducted therefrom an estimated gross profit of 7% at the excess stock at Rs. 88,428.
In this connection it is submitted that the valuation of closing stock by the authorities is erroneous inasmuch as the tag price include the profit, the discount and other incidental expenses . It is the principle that closing stock has to be valued either at cost price or market price whichever is less. Hence the authorities while taking inventory should have adopted the rate of closing stock at cost price, which would always be lower than the tag price. Hence the valuation of closing stock by the authorities is erroneous and contrary to the principles of valuation of stock. A detailed note with regard to the valuation of closing stock was submitted by the assessee before the assessing officer during the original assessment proceedings which is at page Nos. 13 to 18 of the paper book filed in the case of Ramesh Watch Co. may kindly be perused. While rejecting the contention of the assessee that gross profit rate should be adopted at 10%, the assessing officer without assigning any reasons adopted the gross 223 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
profit rate at 7%. He did not specify the basis on which he arrived at the gross profit rate at 7%.
It is further submitted that the authorities did not find any purchases or sales outside the books of account. There is also no difference in the quantity of stock. But the difference is only with reference to valuation of the stocks. The authorities also did not find any undisclosed purchases or undisclosed sales during the course of search. Even, the valuation of the stock is not correctly made in view of the explanation submitted above.
Therefore, no addition can be made.
Therefore, the appellant submits that there is no excess stock available and no addition should have been made by the assessee.
224IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
Annexure-15 IT(SS)A No.15/H/2011 RAMESH WATCH CO. Hyderabad Block period 1987-88 to 1996-97 and01-04-1996 to 03-10-1996 ASSESSMENT YEAR: 1997-98 Ground Details of Remarks of No. & addition Explanation the Assessing Decision Amount Officer in the added. Remand Report 1&4 General - - -
in nature 2&3 Addition During the course of The total While accepting the Rs.105458 made search proceedings Sri cash as per sources for excess Rs.198083 holding Ramesh Chugani and books on the cash with members of that there his father Sri Gulabrai date of family, the deficit cash was Chugani declared an search in in books of account deficit amount of Rs. 7,00,000 respect of the cannot be accepted. It cash in as undisclosed cash of four firms of means that assessee the books the entire family. This this group has sources outside of a/c. declaration was made was the books for spending and there taking into Rs.2,00,816. money in the books of was consideration deficit However accounts. Hence, the excess cash found in the cash of amount of deficit is stock premises of the assessee Rs.67,865 confirmed. Ground with the and other sister was only rejected. appellant. concerns. Sri Ramesh found during Chugani agreed for the search. Sri disclosure as he was not Ramesh having the assistance of Chugani in the books of account at his statement the time of declaration. stated that However, as soon as the an amount of copies of books of Rws.5.6 account were made lakhs is available to the unexplained assessee, the correct cash on position with regard to account of the availability of cash entire family was arrived at and it members was found that there found at the was no deficit cash as residences. was arrived at in the There was books of account. A also deficit detailed note on the cash in the availability of cash with business 225 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
the assessee was
concerns as
submitted before the well.
Assessing Officer while Therefore, he completing the original declared total assessment. The amount for Assessing Officer did nots.7 lakhs as take into consideration undisclosed the contents of the Note cash of the submitted but entire family.
proceeded to add an During
amount of Rs.
assessment
1,05,458/- as deficit proc3edings
cash found during the he denied the
course of search
declaration
proceedings and added made during
the same in the
the search.
assessment. The
The assessee
present Assessingtried to link
Officer, while completingup the deficit the re-assessment also cash to the did not appreciate the excess cash contents of the Note but found in the proceeded to complete residence.
the assessment adding The assessee
the amount of Rs. could not
1,05,458/- in the
explain any
assessment. The Note reasons for
submitted before the the deficit
Assessing Officer at the cash. time of completion of theTherefore, original assessment is atthe deficit page Nos. 9 to 12 of the cash is paper book. treated as undisclosed It is clearly explained income. that as to why the cash deficit/excess should not be added. The reasons as explained in the said note may kindly be considered.
It is submitted that deficit cash cannot be added as income u/s 69 of the Act.
With regard to the addition of Rs. For the detailed 1,98,083/- towards the reasons made in the alleged excess stock The valuation main part of the order, 226 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
found during the course of stock was the addition on of search proceedings, it done on tag account of excess is submitted that the price and stock is deleted.
officials of the thereafter the department, while cost price of taking inventory of the the stock was stock available at the arrived at by premises of the reducing the appellant valued the gross profit @ stock at Rs. 42,21,968. 7% as The said stock belongs declared by to four concerns the assessee situated in the same in preceding premises i.e Ramesh years. Thus Watch Co.; Kishore the ex-stock Watch Co.; Ramesh was arrived Watch Enterprisers and at.
Ramesh Watch Services.
The total value of the stock as per the stock registers belonging to the above four concerns was valued at Rs.
34,37,336 and arrived at an excess stock of Rs.
4,89,095. From out of this, the value of proportionate excess stock as belonging to the assessee was arrived at Rs. 1,98,083. While arriving at the excess stock, the Assessing Officer taken into consideration the value of the stock as per tag price and reduced there from an estimated gross profit of 7%. The Assessing Officer thus arrived at the cost. After deducting the stock as per books arrived at the difference.
In this connection it is humbly submitted that the valuation of closing stock by the Assessing Officer is erroneous inasmuch as the tag 227 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
price include the profit, the discount and other incidental expenses . It is a primary principle that the closing stock has to be valued either at cost price or at market price whichever is lower. Hence the officials of the department, while taking inventory should have adopted the rate of closing stock at cost price, which is lower than the tag price.
Hence the valuation of closing stock by the assessing officers is erroneous and contrary to the principles of valuation. A detailed note with regard to the valuation of closing stock was submitted by the assessee before the assessing officer during the original assessment proceedings which is at page Nos. 13 to 18 of the paper book. While rejecting the contention of the assessee that gross profit rate should be adopted at 10%, the assessing officer without assigning any reasons adopted the gross profit rate at 7%. He did not specify the basis on which he arrived at the gross profit rate at 7%.
The appellant submitted a detailed explanation at Page Nos.13-18 which may kindly be considered.
The appellant submitted the inventory of stock as 228 IT(SS)A.No.1 to 15/Hyd/2011 Ms. Shobha R. Chugani and others, Hyderabad.
obtained by the department. It can be seen that the authorities adopted sale price for arriving at the value of stock. This is not correct. The cost price is available in the books of account seized by the authorities. The Assessing Officer did not consider - a) the discounts allowed while selling the goods; b) the gross profit was adopted @ 7% whereas the gross profit is about 10% and c) the stock received for consignment sale was not excluded. It is further submitted that the authorities did not find any purchases or sales outside the books of account. There is also no difference in the quantity of stock. But the difference is only with reference to valuation of the stocks. The authorities also did not find any undisclosed purchases or undisclosed sales during the course of search. Even, the valuation of the stock is not correctly made in view of the explanation submitted above. Therefore, no addition can be made. Therefore, in view of explanation, the addition worked out by the Assessing Officer is not justifiable.