2004-VIL-264-ITAT-JDP
Income Tax Appellate Tribunal JODHPUR
ITA No. 8/Jd/2000
Date: 17.02.2004
RAMESHWAR LAL SONI
Vs
ASSISTANT COMMISSIONER OF INCOME-TAX
For the Appellant : U. C. Jain
For the Respondent : S. S. Mantri
BENCH
M. K. Chaturvedi (Vice President (As A Third Member)), S. R. Chauhan (Judicial Member) And B. L. Khatri (Accountant Member)
JUDGMENT
S. R. Chauhan (Judicial Member)
ITA Nos. 8/JDPR/2000 and 56/JDPR/2000 are cross appeals by assessee and revenue respectively, for the block period assessment years 1987-88 to 1997-98, directed against the order of CIT(A), Jodhpur dated 17-11-1999.
2. We have heard the arguments of both the sides and also perused the records including the w/s of the ld. A/R of assessee placed on record.
3. First we take up revenue’s appeal being ITA No. 56/JDPR/2000. Ground No. (i) of revenue disputes the deletion of addition of Rs. 2,00,391 on account of low withdrawals for house-hold expenses. The ld. D/R of revenue has relied on the orders of authorities below, contending that the Assessing Officer rightly made the addition in view of the standard of living of assessee with modern facilities. As against this, the ld. A/R of assessee has contended that no incriminating document was found as a result of search suggesting any household expenditure over and above that disclosed by the assessee. He has contended that the Assessing Officer made this addition on estimate made of his own, and without any basis. He has contended that the ld. CIT(A) rightly deleted the addition. He has relied on the decision of ITAT, Jaipur in the case of Shri Ram Raj Soni [ITSSA No. 6(JAI) of 1997 dated 31-8-1992], Lalchand Agarwal v. Asstt. CIT 21 TW 213 and Abdulgafar A. Nadiadwala v. Dy. CIT (2000) 75 ITD 394(Bom.).
4. We have considered the rival contentions, the relevant material on record as also the cited decisions. Considering all the facts and circumstances of the case, and in particular the fact that no incriminating evidence/material, suggestive of house-hold expenses higher than those declared by assessee, was found as a result of search, together with the legal position emanating from the above referred decisions, we find the addition made by Assessing Officer on estimate basis to be uncalled for and not justified and so the deletion thereof by the ld. CIT(A) to be quite proper. We, therefore, decline to interfere with the impugned order of ld. CIT(A) on this count.
5. Ground No. (ii) of revenue disputes the deletion of addition of Rs. 69,000 on account of unexplained investment in purchase of agricultural land from Shri Hukmi Chand, vide sale deed dated 18-9-1986.
6. Ground No. (iii) of revenue disputes the deletion of addition of Rs. 30,000 on account of unexplained investment in purchase of agricultural land, vide sale deed dated 21-1-1988.
7. Ground No. (iv) of revenue disputes the deletion of addition of Rs. 15,000 on account of unexplained investment in purchase of agricultural land, vide sale deed dated 17-12-1988.
8. Ground Nos. (ii) to (iv) are similar in nature and common arguments have been rendered thereon, so we are taking them up together for discussion/decision.
9. The ld. D/R of revenue has contended that these three additions have been made on the basis of evidence/documents found during search reflecting investment in purchase of agricultural land made by assessee. He has contended that the ld. CIT(A) deleted these additions without proper basis. He has supported the orders of Assessing Officer.
10. As against the above, the ld. A/R of assessee has contended that the documents, on the basis of which the Assessing Officer made these additions treating the assessee’s investment in purchase of agricultural land to be there, were not the original ones which were found at the assessee’s premises during search, but were only Xerox copies; and the same were only chain documents showing the link between the assessee’s seller and that seller’s predecessor in interest. He has contended that the Assessing Officer has made the addition of Rs. 69,000 on the basis of a Xerox copy of sale deed dated 18-9-1986 of agricultural land in Khasra No. 700 measuring 11 bighas and 17 biswas [copy on pgs. 52 to 56 PB] whereby Shri Narender Singh had sold the land to Gopal Das, Smt. Leela Devi, Smt. Gulabi Devi and 15 other persons, and had executed the said sale deed dated 18-9-1986 in favour of the said 18 persons mentioned therein. He has contended that the Assessing Officer made the addition of Rs. 15,000 on the basis of xerox copy of one sale deed dated 21-1-1988, copy of which is placed on pgs. 61 to 64 of PB, whereby one Smt. Gulabi Devi sold some portion of agricultural land to Manohar Lal and 5 other persons for Rs. 15,000. He has contended that the Assessing Officer made the addition of Rs. 15,000 on the basis of a xerox copy of sale deed dated 17-12-1988 executed by Smt. Leela Devi w/o Shri Gopal Das Machar for some portion of land in favour of Narayan and 7 other persons (pages 57 to 60 of PB). He has contended that so far as the assessee is concerned, the assessee purchased the land measuring 3,500 sq. yards, admittedly from one Shri Hukmichand @ Rs. 250 per sq. yard, in total for Rs. 8,75,000 out of which an advance of Rs. 3,10,000 were paid by assessee to Shri Hukmichand on execution of agreement for sale (page 50 of PB) by Shri Hukmichand in favour of assessee on 29-4-1995. He has contended that the assessee purchased only a portion of land being 3,500 sq. yards only out of the land being 11 bighas, 17 biswas sold by Shri Narendra Singh for Rs. 69,000 to Smt. Leela Devi, Smt. Gulabi Devi and others being 18 purchasers in all, through sale deed dated 18-9-1986 [pgs. 52-56 PB]. He has contended that if Assessing Officer’s stand was to be accepted and accordingly if the assessee had purchased the land measuring 11 bighas, 17 biswas from Narendra Singh on 18-9-1986 for Rs. 69,000 vide sale deed dated 18-9-1986 (Copy on page 52 to 56 of PB), there was no need for assessee to again enter into agreement to purchase a little portion (3500 sq. yard) of the said/same land on 29-4-1995 for Rs. 3,10,000 with Shri Hukmichand, who had agreed to sell a portion of land which had been purchased by his relatives Smt. Leela Devi and Gulabi Devi, and of the time of this agreement Sh. Hukmichand provided xerox copies to assessee to prove title of seller.
11. He has also contended that the department wants the Tribunal to restore the addition of Rs. 69,000 for the reason of assessee having made a surrender in respect of the said investment in his statement recorded under section 132(4) on 3-1-1997, but no such addition can be made on the basis of a surrender which is mistaken or incorrect. It has been contended that the Assessing Officer obtained a surrender from assessee in respect of a property which was never purchased by him. It has also been contended that if the Assessing Officer considers the purchase of said land [11 bighas, 17 biswas] by assessee on 18-9-1986 for Rs. 69,000 then the additions of Rs. 30,000, Rs. 50,000 and Rs. 3,10,000, as agitated in grounds of appeal Nos. (iii), (iv) and (xii)(a), in respect of the same land, on account of subsequent sales should not have been made on the basis of surrender obtained under section 132(4). It has been contended that the said surrender was obtained by the department from assessee on the basis of copies of the sale deeds, but the said copies of sale deeds nowhere suggest the assessee or his family members to be the purchasers thereby. It has been contended that the copies of the sale deeds were provided simply to prove the title of subsequent seller who agreed to sell a portion of land to assessee for which a sum of Rs. 3,10,000 was paid by assessee as advance, in respect of which the Assessing Officer has made an addition of Rs. 3,10,000 on the basis of advance. It has been contended that the assessee’s statement recorded under section 132(4) is neither voluntary nor factually correct and so the same deserves to be discarded. The ld. A/R of assessee has contended that these additions had rightly been deleted by CIT(A) as Xerox copies of sale deeds were given to support the ownership of persons who subsequently agreed to sell a portion of the land.
12. We have considered the rival contentions as also the relevant material on record. Undisputedly, the documents on the basis of which these three additions were made by Assessing Officer, were only xerox copies of three sale deeds found during search at assessee’s premises. No original sale deeds of the same were found in the possession of the assessee during search. The xerox copies also suggest sales in favour of other persons and not assessee. The Assessing Officer has not brought any convincing/cogent material/evidence on record to substantiate his finding regarding the investments through the said Xerox copies of sale deeds to have been made by assessee. In that view of the matter, considering all the facts and circumstances of the case, we find the deletion of these additions by ld. CIT(A) to be quite proper and justified. We, therefore, decline to interfere with the same.
13. Ground No. (v) disputes the deletion of addition of Rs. 68,000 made by the Assessing Officer on account of unexplained investment in money lending on the basis of Annexure A-21/10 [pg. 67 of PB] dated 16-2-1994. The ld. D/R of revenue has contended that the assessee could not explain this document properly and so the Assessing Officer had rightly made the addition. He has contended that the ld. CIT(A) deleted the same without proper basis. As against this, the ld. AR of assessee has relied on his w/s. In the w/s of assessee, it has been contended that in the said document (page 67 of PB) there is an account of Shri Chattar Singh and the narration shows that a sum of Rs. 68,000 was received by assessee from Shri Chattar Singh for making ornaments and out of this sum the assessee delivered gold ornaments worth Rs. 34,500, and a surplus i.e. credit of Rs. 33,500 remained in the account of Shri Chattar Singh with the assessee. It has been contended that the ld. CIT(A) correctly held that it was wrong to hold that the assessee had advanced a sum of Rs. 68,000 to Shri Chattar Singh and rather the paper clearly shows that the assessee received Rs. 68,000 from Shri Chattar Singh and out of that he delivered ornaments worth Rs. 34,500 and balance of Rs. 33,500 remained due to Shri Chatter Singh with the assessee.
14. We have considered the rival contentions as also the relevant material on record. From a bare perusal of the document as placed on pg. 67 of PB being Annexure A-21/10, it becomes clear that the assessee received Rs. 68,000 against which ornaments worth Rs. 34,500 were delivered and a balance of Rs. 33,500 remained due with assessee. A narration to the effect ‘rakmon ka’ [of ornaments] mentioned by the side of Rs. 34,500 is clearly visible. In that view of the matter, we find the plea of the assessee in this regard to be quite convincing, and to have rightly been accepted by the ld. CIT(A), and in turn, deletion rightly made. We find no fault therewith and so decline to make interference therein.
15. Ground No. (vi) of revenue disputes the deletion of addition of Rs. 50,000 on account of unexplained investment in purchase of plots in the names of Smt. Uma and Shri Shiv Prakash Soni. The ld. D/R of revenue has contended that the Assessing Officer made this addition on the basis of two sale deeds which were in favour of Smt. Uma w/o Shri Shiv Prakash and Shri Shiv Prakash Soni who were benami of assessee. He has contended that the said documents [pages 72 to 75 and 76 to 79 of PB] [pgs. 108 to 111 and 134 to 140 of Annexure 8] were found during search and so the addition was made by Assessing Officer on the basis of documents found during search. He has contended that the ld. CIT(A) deleted the addition wrongly as the documents, being the basis of addition, were found in the possession of assessee. He has relied on the orders of the Assessing Officer. As against this, the ld. AR of assessee has contended that no document, i.e., no original sale deed was found in the possession of assessee but only Xerox copies of the sale deeds were found which were there for the reason of having been given by owners of the properties [Shri Shiv Prakash Soni, sale deed of himself and his wife] to assessee for sale of the related properties by assessee, as the assessee also deals in real estate business. He has contended that the Assessing Officer added the amounts of these copies together with the amounts of chain documents though the same were not assessee’s purchases but were of customers. He has contended that no original document was found during search pertaining to the said document. He has also contended that the Assessing Officer has also admitted, in the assessment order, that during the course of search, the department found ‘photocopy’ of the sale deeds. It has been contended that mere availability of Xerox copies of registered sale deeds do not automatically prove that the investment was made by a person other than the person whose name is appearing in the registered sale deed. It has been contended that the Assessing Officer’s finding [pg. 13 of assessment order] to the effect that these sale deeds [pgs. 108 to 111 of Annexure A-8] show that the assessee purchased plot No. 4 of Khasra No. 21 at Nandi, Jodhpur, in the name of Shiv Prakash Soni for Rs. 25,000 on 13-8-1993 is not correct. It has been contended that the Assessing Officer’s above finding is incorrect as it is not based on any material/evidence. It has been contended that the above referred pages do not reveal that the assessee had purchased the plots in the names of Shri Shiv Prakash Soni and Smt. Uma w/o Shri Shiv Prakash Soni. It has been contended that the sole reason for making addition by Assessing Officer is that during the course of statement under section 132(4), the assessee made a surrender in respect of this investment, but the said statement was not voluntary and was recorded when the assessee was not well at all and the doctor was also called by the Authorized Officer because of the illness. It has been contended that it is settled law that the assessee has the right to prove that the statement obtained from him is factually incorrect; and that the assessee cannot be tied down to the statement which is apparently erroneous and obtained when the assessee was not in a proper position to make the statement. He has contended that in view of the above circumstances, the ld. CIT(A) correctly deleted the additions, as it could not be established from the Xerox copies that the assessee had invested money in purchase of the land in the names of Shri Shiv Prakash Soni and Smt. Uma w/o Shri Shiv Prakash. It has been contended that Shri Shiv Prakash was an existing assessee with the department. It has been contended that the Assessing Officer also made an addition in respect of land held by previous owner who sold the land to Shri Shiv Prakash and his wife, on pgs. 14 and 15 and that too on the basis of surrender.
16. We have considered the rival contentions as also the relevant material on record. From the perusal of record we find that the Assessing Officer has not brought on record any material/evidence suggestive and supportive of the view that the investments in purchase of the two plots in the names of two persons, namely, Shri Shiv Prakash Soni and Smt. Uma w/o Shri Shiv Prakash, were made by assessee and mere availability of photocopy of two sale deeds registered in the name of different persons being other than the assessee, at the assessee’s premises during search, can hardly be basis for attributing the investment to assessee and much more so when the assessee is a dealer in real estate business and the said photocopies are stated to have been given to assessee by Shri Shiv Prakash Soni for finding out customers for the said properties being in the name of Shri Shiv Prakash Soni and his wife. We, therefore, find the action of the ld. CIT(A) in deleting this addition to be quite justified and so we decline to interfere with the same.
17. Ground No. (vii) disputes the allowing of relief of Rs. 1 lakh out of addition of Rs. 3 lakhs made on account of unexplained expenses on marriage. Ground No. 3 of assessee in assessee’s appeal No. 08/JDPR/2000 is also related with this issue as the same disputes the sustenance of addition of Rs. 57,872 on account of marriages of assessee’s two daughters due to estimation of the same at Rs. 2,50,000 by ld. CIT(A) as against Rs. 1,92,128 shown by assessee. As these two grounds in cross appeals are mutually related and pertain to the same issue being in respect of expenditure incurred by assessee on marriages of his two daughters, we are taking up both these grounds together for discussion/decision.
18. The ld. D/R of revenue has contended that during the course of search, statements of assessee and his wife, Smt. Anand Kaur were recorded. He has contended that the assessee, in his statement, stated to have incurred expenses on marriages of his two daughters to the tune of Rs. 1½ to 2 lakhs per marriage. He has contended that on that basis of Assessing Officer made addition of Rs. 3 lakhs, but the ld. CIT(A) allowed relief of Rs. 1 lakh on estimate basis which is quite proper. Thus in respect of revenue’s ground No. (vii) the ld. D/R of revenue has contended the part deletion of addition made by Assessing Officer on account of marriage expenses to have been not justified.
19. As regards the assessee’s ground No. 3 disputing the sustenance of addition of Rs. 57,872 over and above Rs. 1,92,128, the D/R of revenue has supported the orders of both the authorities below. As against this, the ld. A/R of assessee has contended that assessee’s one daughter did love marriage and so no expenses were incurred by assessee on the said marriage. He has contended that it is only on the marriage of second daughter that the assessee gave something to his first daughter also. He has relied on his w/s. In the w/s of assessee, [pgs. 534 to 536 of PB] and the summarized submission [pg. 509 of PB], it has been contended that the Assessing Officer made this addition solely on the basis of statement of Smt. Anand Kaur, w/o assessee, [pg. 10 of PB], but the said statement was made only on the basis of memory and therein also she has stated that on the marriage of her daughter about Rs. 5 to 3 lakhs were spent. It has been contended that the only evidence found as a result of search shows the expenditure of Rs. 62,128 [pg. 228 of PB], in respect of washing machine, TV, Air Cooler; and no other evidence was found which would suggest any other expenditure over and above that found, that is, Rs. 1,92,128. It has been contended that it was explained to Assessing Officer that at the time of marriage of assessee’s second/younger daughter [Deepika], the assessee gave electric goods like BPL Washing Machine, Symphony Air Cooler and Audio Music System to his first/elder daughter [Suman] also, and the total cost of such electric goods, given to each daughter works out to Rs. 31,064, and the relevant bills and vouchers [Ex. A-11/57 to 65] were also found and seized at the time of search. It has been contended that the expenditure on reception, etc. were incurred only in respect of the second daughter for which the assessee declared an expenditure of Rs. 1,30,000 which was in addition to the expenditure of Rs. 62,128 incurred on items like TV, Refrigerator, Audio System, etc. purchased for both the daughters and thus the total expenditure aggregated to Rs. 1,92,128. It has been contended that as per seized material the evidence is only of an expenditure of Rs. 62,128. It has been contended that the estimate of expenditure at Rs. 3 lakhs by Assessing Officer and at Rs. 2.5 lakhs by the ld. CIT(A) is erroneous when, in fact, the expenditure on marriage was Rs. 1,92,128 which is duly declared/disclosed by the assessee and the source of such expenditure is duly supported by statement of income/expenditure/investment prepared by assessee on the basis of entire seized material for each year in the form of receipt and payment account and balance sheet of undisclosed assets [pg. 228 of PB].
20. Thus as regards the revenue’s ground, the ld. A/R of assessee has supported the ld. CIT(A)’s impugned order in according a relief of Rs. 1 lakh out of the addition of Rs. 3 lakhs made by the Assessing Officer. As regards the assessee’s ground No. 3, the ld. A/R of assessee has thus contended that the total expenses incurred by assessee on marriages of two daughters was of Rs. 1,92,128 and so the addition of Rs. 57,872 sustained by ld. CIT(A) on estimate basis to be without any justification and deserving to be deleted.
21. We have considered the rival contentions as also the relevant material on record. Considering all the facts and circumstances of the case as also the fact that there was no celebration of the function at the time of marriage of assessee’s first/elder daughter which, though, was there only at the time of marriage of assessee’s second/younger daughter, the reduction of addition from Rs. 3 lakhs made by Assessing Officer to Rs. 2,50,000 by ld. CIT(A) cannot be found fault with and is considered to be quite justified according of relief of Rs. 50,000 on account of cash in flow of Rs. 50,000 by way of receipt from Shri Mahendra Singh too, is found to be quite proper and justified. In that view of the matter the ld. CIT(A)’s order in restricting the net addition to Rs. 2 lakhs on account of marriage expenses is quite proper, suffering from no infirmity and is justified.
22. However, the assessee’s claim for relief of Rs. 57,872, as agitated in ground No. 3 in assessee’s appeal, is found to have no merit, inasmuch as the addition of Rs. 2,50,000, and after giving credit of Rs. 50,000 received from Shri Mahendra Singh, the net addition of Rs. 2 lakhs is found to be quite proper and justified as discussed above. Thus in view of our above discussion, the assessee’s ground No. 3 fails and so also the revenue’s ground No. VII fails.
23. Ground No. VIII of revenue disputes the deletion of addition of Rs. 50,000 on account of unexplained investment in purchase of land, based on Annex. A-6/pages 10 to 12.
24. Ground No. 2(VI) of assessee (in ITA No. 8/JDPR/2000) disputes the non-allowing of set off/credit of Rs. 1,50,000 out of receipt of sale proceeds of agricultural land from Shri Bhabhoota Ram.
25. The assessee had agreed to purchase agricultural land and paid a sum of Rs. 50,000 to Shri Abdul Khan during assessment year 1995-96. The assessee sold this entire land in parts to Shri Gajaram, Shri Poonaram and Shri Bhabhoota Ram from whom he alleged to have received Rs. 1 lakh, Rs. 3 lakhs and Rs. 4 lakhs (2 instalments of Rs. 2 lakhs each) respectively, and this sale money is stated to have been received by assessee prior to the payment of Rs. 4.5 lakhs by him to Shri Abdul Khan. The Assessing Officer accepted Rs. 4 lakhs by way of proceeds by Shri Gajaram and Shri Poonaram and so allowed credit to the extent of Rs. 4 lakhs and thereby made the addition of balance payment of Rs. 50,000 (out of Rs. 4.5 lakhs). The ld. CIT(A) considered the sale deed to have been registered in favour of shri Bhabhoota Ram accepted the assessee’s plea regarding receipt of sale proceeds from Shri Bhabhoota Ram as well, and in our considered opinion, rightly so. Considering all the facts and circumstances of the case we find no fault with the impugned order of ld. CIT(A) in accepting the receipt of sale proceeds by assessee from Shri Bhabhoota Ram as well and according the credit of Rs. 50,000 in respect of balance payment of Rs. 50,000 (out of Rs. 4,50,000) by assessee to Shri Abdul Khan; and in this regard we agree with the discussion/conclusion made by ld. CIT(A) in para 18.2 on page 28 of his order. We, therefore, decline to interfere with the same.
26. As regards assessee’s ground No. 2(VI) we find that the receipt of sale proceeds by assessee from Shri Bhabhoota Ram having been accepted and credit of Rs. 50,000 out of one instalment of Rs. 2 lakhs having been accorded by way of set off in respect of the balance payment of Rs. 50,000 (out of the total payment of Rs. 4.50 lakhs by assessee to Shri Abdul Khan), the assessee’s claim for allowing him the benefit of set off in respect of Rs. 1,50,000 (receipt of instalment of Rs. 2 lakhs minus set off of Rs. 50,000) can hardly be denied justifiably. We order accordingly. Ground No. 2(VI) of assessee thus succeeds.
27. Ground No. IX of revenue disputes the deletion of addition of Rs. 3,21,000. This addition was made by Assessing Officer on the basis of back side of Annex. A-16/page 20, available on the back side of page 494 of paper book. The ld. DR of revenue has contended that the Assessing Officer has made elaborate discussion on page 29 of his order and thereby he has made the addition on the basis of page 20 of Annex. A-16. He has relied on the Assessing Officer’s order. As against this, the ld. AR of assessee has contended that page 20 of Annex. A-16 (page 495 of PB) is only a rough draft of the sale agreement which was finally prepared and typed being Annex. A-16/page 20, placed on pages 496 to 498 of paper book. He has contended that the advocate used to prepare rough drafts of documents on used papers. He has contended that Annex. A-16/page 20 was used for preparing draft of the final sale agreement being Annex. A-16/page 10 (496 to 498 of Paper Book) and so the back side of Annex.-16/page 20 (back side of page 495 of PB) has no significance inasmuch as this side of paper book (back side of Annex. A-16/page 20) being already used and as such, being rough on the other side of this paper i.e. Annex. A-16/page 20 (page 495 of PB) was used for preparing rough draft of sale agreement of which the final sale agreement Annex. A-16/page 10. It has been contended that thus no addition need appropriately be made in respect of any rough noting on a rough paper, the blank side of which is being used for preparing rough draft due to the practice of the advocate using used (with one side blank) papers for the purpose. It has been contended that even otherwise, the back side of Annex. A-16/page 20 (back side of page 495 of PB) is page 2 of a photocopy of sale deed executed by Shri Hari Singh Rajput in favour of Shri Ghewar Ram Jat and neither in favour of assessee nor in favour of any member of assessee. As such, from the perusal of record we find that no material/evidence to support the Assessing Officer’s conclusion regarding there having been any investment of Rs. 3,21,000, the sale price or of Rs. 21,000 being the advance in respect of the plot, the subject matter of sale deed contained in page 2 of the photocopy, being the back side of Annex. A-16/page 20. We, therefore, find the addition to be uncalled for and in turn, the deletion thereof by ld. CIT(A) to be justified. We, therefore, decline to interfere with the same.
28. Ground No. X of revenue disputes the deletion of addition of Rs. 75,000 made by Assessing Officer in assessment year 1996-97 on account of payment to Sh. Ibrahim (and 9 other persons, Abdul Rahman etc.) for purchase of agricultural land measuring 10 Bighas. Revenue’s ground No. XXI disputes the deletion of addition of Rs. 18,58,000 made by Assessing Officer in assessment year 1997-98 on account of unexplained investment in purchase of agricultural land measuring 45 Bighas. As both these grounds are interrelated so we are taking them up together for the sake of convenience.
29. That ld. DR of revenue has contended that the Assessing Officer has made these two additions of Rs. 75,000 and Rs. 18,58,000 on the basis of document found in the possession of assessee during search and the same disclosed payment of Rs. 75,000 by assessee to Sh. Ibrahim and of investment of Rs. 18,58,000, in purchase of agricultural land. He has contended that the payment/investment is evidenced by seized documents, and so the Assessing Officer had rightly made the additions. He has contended that the ld. CIT(A) has deleted these additions without sound basis and without properly appreciating the facts. He has relied on the orders of Assessing Officer.
30. The ld. AR of assessee has contended that the assessee had originally agreed to purchase 100 Bighas of agricultural land from Maqbul Hussain (for short M.H.) @ Rs. 45,000 per Bigha of Khasra No. 6 in village Desuria and paid a sum of Rs. 1 lakh as advance on 16-5-1995, vide receipt on page 43 P.B. He has contended that the sale agreement in respect of above 100 Bighas of land was entered into between assessee (R.S.) and M.H. on 19-5-1995 (pages 444 to 447 P.B.). He has contended that afterwards the agricultural land to be purchased by assessee was reduced from 100 Bighas to 75 Bighas, and ultimately the assessee purchased 51 Bighas only from M.H., the power of attorney holder in respect of 51 Bighas of Khasra No. 6 in village Desuria. It has been contended that Ibrahim and others, the original/real owners of land, had originally executed power of attorney (for short, P/A) in favour of Bundu Khan (Also mentioned as Bindu Khan), (for short B.K.) the power of attorney holder of 31 persons/real owners for 31 Bighas, placed on pages 437 to 441 of P.B. He has contended that B.K., the P/A holder of 31 persons, agreed to sell 31 Bighas of land of Khasra No. 6 in village Desuria to M.H. @ Rs. 35,000 per bigha as per Exh. A-20/page 6, placed on page 442 of P.B. He has contended that M.H., who was also P/A holder of other persons in respect of agricultural land of Khasra No. 6 in village Desuria, agreed to sell 100 Bighas of land of same Khasra @ Rs. 45,000 per bigha to assessee, who paid a sum of Rs. 1 lakh as advance on 16-5-1995 to M.H. vide Exh. A 10/page 30 (page 443 P.B.). He has contended that sale agreement in respect of the above was entered into between M.H. and assessee (R.S.) on 19-5-1995 (pages 444 to 447 PB). He has contended that the assessee claimed to have paid Rs. 22,96,000 to M.H. for 51 Bighas @ Rs. 45,000 per bigha although seized documents (Exh. A-10 pages 22 to 25, 26 to 29) (pages 443 to 447, 448 to 451 of P.B.) showed payment of only Rs. 19,10,000 as detailed at serial No. 6 on page 513 of P.B. He has contended that the Assessing Officer has already considered the payment of Rs. 22,96,000 and made addition in respect of the same as discussed on pages 17 to 22 of assessment order. He has contended that Shri M.H., to escape his own liability of tax, managed agreement of sale coupled with P/A from real owners of land in favour of assessee or in favour of person whose name has been left blank. He has contended that M.H. obtained the following documents from original owners in respect of same land in favour of assessee and also in favour of person leaving the name blank to enable the assessee to avoid himself from the transaction :
a. Agreement to sell by Ibrahim and 9 other persons showing sale of 10 bighas for Rs. 75,000 (for registration purposes). P.B. Pages 452 to 455.
b. Receipt of Rs. 75,000 by the same 10 persons. (P.B. page 456).
c. Receipt of actual consideration of Rs. 4,50,000 for 10 bighas (P.B. page 457).
d. Power of attorney of 10 persons leaving blank the name of person in whose favour the sale deed was executed. (P.B. 458 to 463)
e. Agreement to sell by same 10 persons leaving blank the name of person in whose favour the sale agreement was executed showing same consideration of Rs. 75,000 for registration as shown in sale agreement in which the name of the assessee was given (P.B. page No. 464/466).
31. He has contended that in respect of 18 bighas of land M.H. obtained another agreement of sale leaving the name of person/purchaser blank from 17 persons, the original owners, in respect of land he had agreed to sell to the assessee, of Khasra No. 6 and the value amount received was shown at Rs. 1,23,000 for 18 bighas (pages 468 to 477 P.B.).
32. He has contended that for the balance 23 bighas of land which M.H. had agreed to sell to the assessee, M.H. obtained the following documents from original owners :
(a) Agreement to sell by 23 persons for 23 bighas showing sale consideration of Rs. 1.75 lakhs for registry purpose (P.B. pages 479 to 485).
(b) Power of attorney leaving the name of person blank for 23 bighas (P.B. pages 486 to 491).
(c) Received from 8 persons out of 23 persons named in agreement appearing at P.B. pages 479 to 484 showing actual receipt of Rs. 3.6 lakhs for 8 bighas @ 45,000 (P.B. page 492).
(d) Another receipt of Rs. 3.6 lakhs from 8 persons out of 23 persons showing actual receipts of Rs. 3.6 lakhs for 8 bighas @ 45,000. (P.B. page 493).
(e) For balance of 7 persons out of 23 persons named in agreement appearing at P.B. pages 479 to 485 for 7 bighas @ 45,000 per bighas for Rs. 3.15 lakhs (P.B. Page 394).
33. He has thus contended that on entire payment of Rs. 22,96,000 Sh. M.H. brought two agreements of sale in respect of 10 bighas from same 10 persons, (i) one in favour of assessee (i.e. assessee and his wife Smt. Anand Kaur) (pages 452 to 455) and (ii) another in favour of person without mentioning the name of purchaser to enable assessee to resell (pages 464 to 467 P.B.), for registration purposes, in respect of 10 bighas of land, out of 51 Bighas, for Rs. 75,000, each, from the owners of land on whose behalf he was acting as a P/A holder.
34. He has contended that similarly Shri M.H., the P/A holder got the receipts, agreement to sell and P/A from respective actual owners in respect of their shares in the land, in favour of assessee, that is for 18 Bighas from 17 persons and for 23 Bighas from 23 persons.
35. The ld. AR of assessee has accordingly contended that since the Assessing Officer has already considered the entire transaction of 51 Bighas separately and made an addition of Rs. 22,96,000 (pages 17 to 22 of assessment order), no further/separate addition in respect of the same transaction was justified and so the ld. CIT(A) rightly deleted the above two additions.
36. We have considered the rival contentions as also the relevant material on record. From the perusal of record we find that the assessee purchased 51 Bighas of land through M.H. the P/A holder, who himself had entered into an agreement for purchase of the said land with B.K., the earlier P/A holder of 31 persons, the real owners, for 31 Bighas. The land is the same as that of Khasra No. 6 in Village Desuria. The record also reveals that M.H. managed sale agreements, payment receipts and P/A etc. from respective real owners in respect of their shares in favour of assessee, and also in favour of purchasers with their names blank. We find the assessee’s plea substantiated from record as there is a sale agreement of 10 Bighas by 10 original/real owners in favour of assessee, though sale consideration stated to be so mentioned for stamp duty purposes, (pages 452 to 455), and other sale agreement from 18 Bighas by 17 original/real owners, with name of purchaser left blank, for sale consideration of Rs. 1,23,000 though this figure is stated to have been mentioned for registration purposes (page 468 to 475 PB), and the third sale agreement by 23 real owners for 23 bighas, with the name of purchaser left blank, showing sale consideration of Rs. 1,75,000 though the amount shown is stated to have been for registration proposes (pages 479 to 485). We also find P/A by 10 real owners for 10 bighas (pages 458 to 463 PB) and P/A by 23 persons for 23 Bighas (pages 486 to 491 PB) and payment receipt by 17 real owners for 18 Bighas (page 476 PB and the same also on page 148 PB), all leaving the name of purchaser blank. These sale agreements and P/A plus receipt bring the aggregate of land to 51 Bighas (10 + 18 + 23 = 51). When an addition of Rs. 22,96,000, for the said 51 Bighas of land, having been purchased by assessee from M.H.; the P/A holder, has already been made, so obviously there is no justification for making any further/separate additions of Rs. 75,000 and of Rs. 18,58,000 on the basis for documents by original owners; on whose very behalf the P/A holder M.H. made the sale of 51 Bighas to the assessee for Rs. 22,96,000. In that view of the matter, considering all the facts and circumstances of the case, we find the impugned order of ld. CIT(A) in making the above deletions to be quite proper and justified and suffering from no infirmity. We, therefore, decline to interfere with the same.
37. Revenue’s ground No. XI disputes the deletion of addition of Rs. 1,50,000 out of Rs. 8,51,000 made by Assessing Officer on account of payments made by assessee to Smt. Poosi Bai, towards agreement for purchase of 23 Bighas, 5 biswas land for Rs. 13,20,812. The ld. DR of revenue has referred to page 17 of Assessing Officer’s order and contended that the document was found during search, Annexure A-10/Pages 20, 21. He has relied on his same arguments as raised by him on ground No. IX.
38. As against the above the ld. AR of assessee has contended that the assessee had agreed to purchase agricultural land belonging to Smt. Poosi Bai and her son on behalf of Malla Ram, and made a total payment of Rs. 7,01,000 (pages 185 to 191 PB). It has been contended that Smt. Poosi Bai belongs to Scheduled Caste, and her land was not transferable to non-Scheduled Caste persons, and so the agreement was cancelled on 8-6-1998 (pages 117 to 119 PB). It has been contended that the total payment made was of Rs. 7,01,000 and not of Rs. 8,51,000 till 18-12-1995. It has been contended that from the cancellation deed (pages 117 to 119, PB) also it is proved the total payment to Smt. Poosi Bai was of Rs. 7,01,000 which was returned on 8-6-1998 on account of cancellation of agreement. He has contended that the sustenance of addition of Rs. 7,01,000 is being challenged in assessee’s appeal [vide ground No. 3(ii)(b)] and that the ld. CIT(A) rightly deleted the addition of Rs. 1,50,000.
39. We have considered the rival contentions, as also the relevant material on record. From the perusal of record we find that as per the details of payment to Smt. Poosi Bai from 31-3-1995 to 18-12-1995 (pages 186 to 189 of PB) as detailed on page 515 (serial No. 1 of submission) of PB. In the impugned order of ld. CIT(A) it has been observed that it was explained by assessee that no payment was made on 6-5-1995 but that the receipt dated 6-5-1995 refers only to the payment made by assessee on 20-4-1995. The ld. CIT(A) considered the assessee’s submission alongwith the facts of the case and came to the conclusion that the assessee had paid only a sum of Rs. 7,01,000 and so he deleted the addition of the remaining amount of Rs. 1,50,000. Considering the rival contentions, the discussions made by ld. CIT(A) as also the facts, we find the deletion of addition of Rs. 1,50,000 by ld. CIT(A) to be quite proper and justified. Accordingly we decline to interfere with the same.
40. Revenue’s ground No. XII disputes deletion of addition of Rs. 25,25,000 made by Assessing Officer on account of investment in land due to payment made to 6 persons namely :
|
Shri Ugam Raj |
Rs. 7,75,000 |
|
Shri Bhaboot Ram |
Rs. 1,50,000 |
|
Shri Poona Ram |
Rs. 50,000 |
|
Shri Mithalal Sharma |
Rs. 10,00,000 |
|
Shri Lachi Ram |
Rs.2,50,000 |
|
Shri Bhanwar Lal |
Rs. 3,00,000 |
|
Total: |
Rs. 25,25,000 |
The ld. DR of revenue has referred to page 17 of Assessing Officer’s order and contended that the incriminating documents (Annexure A-10/Pages 20 to 21) were found in the possession of assessee during search containing the investment in purchase of land made by assessee which he did not satisfactorily explain. He has contended that the Assessing Officer had rightly made the addition on the basis of seized material whereas the ld. CIT(A) deleted the addition to the extent of Rs. 25,25,000 without properly appreciating the facts of the case. He has relied on the Assessing Officer’s order. As against this, the ld. AR of assessee has contended that the Assessing Officer had made the following additions in respect of agreement for purchase of agricultural land and plot : -
|
Name |
Amount |
Assessing Officer Order on Page |
|
Shri Hukmi Chand: |
Rs. 3,10,000 |
17 |
|
Shri Maqbul Hussain: |
Rs. 22,96,000 |
17 to 22 |
|
Shri Abdul Khan: |
Rs. 6,95,000 |
18 |
|
smt Pooshi Bai: |
Rs. 8,51,000 |
27 to 29 |
|
Smt. Draupadi: |
Rs. 22,000 |
29 to 30 |
|
Total: |
Rs. 41,74,000 |
|
He has contended that the assessee was dealing in purchase and sale of agricultural land and plot etc. and the modus operandi adopted by assessee, as evident from the seized documents was that he first used to make an agreement to purchase land, and to advance a token money; and obtain a P/A to sale the land; and the assessee used to enter into agreement for resale of land and used to collect money from the purchaser and to pass over the same to the seller.
41. He has contended that the assessee explained before both the authorities below that in respect of the land the assessee agreed to purchase from M.H. for Rs. 22,96,000, from Abdul Khan for Rs. 10,75,000 and from Smt. Pooshi Bai (on behalf of Shri Malla Ram) to whom a sum of Rs. 7,01,000 was paid, the assessee received the following amounts, as advance on resale, from the following persons : -
(I) In respect of land purchased from M.H.
|
i. |
Shri Ugmaram Soni: |
10,00,000 |
|
ii. |
Shri Mithalal Sharma: |
10,00,000 |
|
iii. |
Shri Bhanwarlal: |
3,00,000 |
|
iv. |
Shri Lachi Ram: |
2,50,000 |
|
|
Total |
25,50,000 |
(II) In respect of land purchased from Abdul Khan :
|
i. |
Shri Bhabhuta Ram: |
3,50,000 |
|
ii. |
Shri Poona Ram: |
3,50,000 |
|
iii. |
Shri Gaja Ram: |
1,00,000 |
It has been contended that out of assessee’s claim for Rs. 43,60,000 the ld. CIT(A) accepted the assessee’s claim for Rs. 25,25,000 received on resale (in addition to Rs. 4 lakhs accepted by Assessing Officer) as detailed below:
|
|
|
(Rs.) |
|
i. |
Shri Ugmaram Soni: |
7,75,000 |
|
ii. |
Shri Mithalal Sharma: |
10,00,000 |
|
iii. |
Shri Bhanwarlal: |
3,00,000 |
|
iv. |
Shri Lacha Ram: |
2,00,000 |
|
v. |
Shri Bhabhuta Ram: |
2,00,000 |
|
vi. |
Shri Poona Ram: |
3,50,000 |
|
vii. |
Shri Gaja Ram: |
1,00,000 |
|
|
Total: |
29,25,000 |
|
|
Less : Already Accepted by AO: |
4,00,000 |
|
|
Further accepted by ld. CIT(A): |
25,25,000 |
42. As regards the assessee’s claim of having received Rs. 10 lakhs from Sh. Ugmaraj Soni and others, it has been contended that out of 51 Bighas of agricultural land which the assessee had agreed to purchase from M.H., the assessee agreed to sell 20 Bighas of land to Sh. Ugamram and others for Rs. 12 lakhs @ Rs. 60,000 per Bigha and received a sum of Rs. 7,75,000 in cash and Rs. 2,25,000 by account payee cheque. It has been contended that in fact after the above agreement of resale the prices of agricultural land declined sharply, and so Shri Ugamram Soni was not interested in making the balance payment of Rs. 2 lakhs and getting the documents registered and rather insisted for return of Rs. 10 lakhs advanced by him and on assessee’s failure. Sh. Ugamraj lodged on F.I.R. (pages 105 to 112 of PB) against assessee at Udai Mandir Police Station, Jodhpur. It has been contended that the ld. CIT(A) treating the transaction of resale to Shri Ugamram Soni to be genuine and allowed the credit of Rs. 7,75,000 received by assessee in cash which the assessee utilized for making payment to M.H., though he did not allow the credit in respect of the amount which the assessee received subsequently by account payee cheque on 23-9-1995. The ld. AR of assessee has relied on the order of ld. CIT(A).
43. As regards the amount of Rs. 10 lakhs received from Shri Mitha Lal the ld. AR of assessee has contended that the assessee agreed to sell (resell) 20 bighas of agricultural land out of 51 bighas which the assessee had agreed to purchase from M.H. It has been contended that Sh. Mitha Lal confirmed the payment of Rs. 10 lakhs to assessee before Assessing Officer and also filed a copy of the sale agreement and receipt issued by assessee (pages 405 to 406 PB). It has been contended that the sale deed also stands executed in his favour. It has been contended that the ld. CIT(A) was justified in accepting the source of receipt of Rs. 10 lakhs from Sh. Mitha Lal which was utilized by assessee in making payment to M.H. and the same is appearing in balance sheet on p. 229 of PB.
44. It has been contended that the assessee received a sum of Rs. 2,50,000 from Shri Lacharam and Rs. 3 lakhs from Shri Bhanwarlal for sale of 5 bighas and 67 bighas respectively out of land which the assessee had agreed to purchase from M.H. It has also been contended that the assessee filed necessary evidence before Assessing Officer, and the same is appearing in balance sheet and receipt and payment account on page 229 of PB. It has been contended that the sale deed also stands registered in their names.
45. As regards the land the assessee agreed to purchase from Shri Abdul Khan, it has been contended that the assessee showed the same to have been sold to Shri Gajaram, Shri Poonaram and Shri Bhabhuta Ram for Rs. 1,40,000, Rs. 4,00,000 and Rs. 4,00,000 respectively, and executed/registered the sale deed as a P/A holder (pages 87 to 104 PB). It has been contended that out of a total amount of Rs. 8 lakhs claimed by assessee to have been received out of Rs. 9,40,000 till date of search, the Assessing Officer accepted the assessee’s claim to the extent of Rs. 4 lakhs, being Rs. 1 lakh from Sh. Gajaram and Rs. 3 lakhs from Shri Poonaram (page 28 of assessment order) whereas the ld. CIT(A) has accepted the claim to the extent of Rs. 6,50,000 as received as against the claim of Rs. 8 lakhs, and as such the assessee is further claiming credit for Rs. 1,50,000 in assessee’s appeal.
46. It has been contended that the assessee has produced all necessary evidences with respect to the amount received on resale of land by assessee which include the following :
i. Receipt and payment account and balance sheet (PB Page 228).
ii. Copy of Registered Sale Deed (P.B. Pages 87 to 104).
iii. Statement of Purchaser (P.B. Pages 314 to 328).
iv. Copy of FIR (P.B. Pages 105 to 112).
v. Letter to Assessing Officer (P.B. Pages 113 to 116).
It has been contended that the ld. CIT(A) was justified in deleting the addition of Rs. 25,25,000. The ld. AR has thus supported the orders of ld. CIT(A) in respect of the above deletion.
47. We have considered the rival contentions as also the relevant material on record. From the perusal of record we find that the factum of receipt of Rs. 7,75,000 from Shri Ugamram Soni stands corroborated by allega- tions in FIR (P106 to 107, PB) as also by assessee’s explanation (page 113 of PB) furnished vide assessee’s letter dated 7-12-1992 placed on pages 113 to 116 of PB. As regards assessee’s receipts on resale from Shri Mithalal, Shri Bhanwarlal and Shri Lacha Ram, the same get corroborated by their respective statements as placed on pages 318, 323 and 325 of PB together with the reflection of the same in balance sheet as placed on page 229 of PB. Similarly, as regards assessee’s receipts on resale from Shri Bhabhuta Ram, Shri Poonaram and Shri Gajaram the same stand corroborated by their respective statements on pages 327, 316 and 314 respectively, together with the sale deeds in their favour as placed on pages 99 to 104, 93 to 98, and 87 to 92 of PB respectively.
48. As such, considering all the facts and circumstances of the case together with the modus operandi of assessee in dealing with these transactions of ‘purchase of agricultural land and plot etc. by entering into an agreement of purchase with sellers and thereby advancing token money to them, and the assessee entering into agreement for sale of such land with purchasers by entering into resale agreement with them and taking advances from them and passing over the same i.e., (advances so received) to the sellers of assessee, as also the evidence placed on record in the form of confirmations of respective purchases and sale deeds in their favour, we are of the view that the ld. AR of assessee has been able to substantiate his contention that the assessee received the resale proceeds from various purchasers from assessee and utilized the same in making payments to assessee’s sellers. In that view of the matter we find the deletion of addition of Rs. 25,25,000 by ld. CIT (A) to be quite proper and justified and suffering for no informity. We, therefore, decline to interfere with the same.
49. Revenue’s ground No. XIII disputes the deletion of addition of Rs. 80,000 made on account of unexplained cash found at the time of search. The ld. DR of revenue has referred to pages 3 and 4 of the assessment order and contended that out of a cash of Rs. 82,250 found at assessee’s business premises the Assessing Officer rightly treated the sum of Rs. 80,000 as unexplained and so rightly made the addition of the same in assessment year 1997-98 under section 690A of the Income-tax Act. He has contended that the ld. CIT(A) deleted the same without properly appreciating the facts. He has thus relied on the orders of the Assessing Officer.
50. As against the above the ld. AR of assessee has contended that the authorized officer found cash of Rs. 82,250 at shop run by assessee under the name of "M/s. Anand Mangal Abhushan". It has been contended that the books of account of M/s. Anand Mangal Abhushan were found and seized during search vide Exh. B-1 and B-2, and the cash balance as per seized books works out to Rs. 82,250 as on 3-10-1997 (page 234 PB). The ld. AR of assessee has contended that the ld. CIT(A) was satisfied with the explanation of assessee after going through the seized books of M/s. Anand Mangal Abhushan and treated the cash found at search as explained with reference to the seized record. He has contended that the ld. CIT(A) rightly deleted the addition.
51. We have considered the rival contentions as also the relevant material on record. From the perusal of record we find that the ld. CIT(A) has, after considering the facts of the case together with the contentions raised before him, concluded that the assessee has duly explained the cash and that Exh. B-1 showed that the assessee had received cash from different customers for supplying gold ornaments and on the date of search the assessee had executed all such orders and thus the assessee was left with sufficient cash balance which was found at the business premises on the date of search. As such, considering all the fact and circumstances of the case together with the explanatory contention of the ld. AR of assessee as also the lucid discussion of the ld. CIT(A) we agree with the ld. CIT(A) on this count as the same are quite justified. We, therefore, decline to interfere with the same.
52. Ground No. XIV of revenue disputes the deletion of addition of Rs. 1,00,563 made by Assessing Officer on account of gold ornaments found during search. The ld. DR of revenue has contended that this addition has been made on account of gold ornaments found at the residence and shop of assessee during search. He has referred to pages 6 and 7 of Assessing Officer’s order. He has contended that the assessee explained that 218 grams of gold ornaments belonged to customers but the assessee did not furnish names and addresses of the customers and so the Assessing Officer had rightly made the addition in respect of the whole of the gold ornaments. He has relied on Assessing Officer’s order.
53. As against the above, ld. AR of assessee has contended that as per seized record Exh. B-1 the assessee has received gold ornaments weighing 218 grams from customers for making new ornaments. It has also been contended that the assessee had started the shop "M/s. Anand Mangal Abhushan " on 20-10-1996 and the search was conducted on 3-1-1997. It has also been contended that at the time of search the department found/seized books of account of M/s. Anand Mangal Abhushan. It has been contended that on the basis of seized books of account the assessee has prepared the balance sheet. It has been contended that the ld. CIT(A) rightly accorded partial relief in respect of 218 grams of gold which was provided by customers for making new ornaments. It has also been contended that regarding the addition sustained by ld. CIT(A) in respect of remaining 362 grams the assessee is disputing the same in assessee’s appeal. It has also been contended that the relief granted by CIT(A) is based on seized documents and the same is in confirmity with the decision of this Bench in the case of Shri Suraj Prakash Soni rendered on 27-5-2002 in ITA No. 506/JDPR/99 vide its para 17 on pages 6 and 7 of the order (pages 568, 569 of PB).
54. We have considered rival contentions as also the relevant material on record. Considering all the facts and circumstances of the case including the fact that the receipt of 218 grams of gold by assessee from customers stands corroborated by entries in the seized books (customer’s register) and also respectfully following the above-mentioned decision of this Bench in the case of Suraj Prakash Soni, we find the action of ld. CIT(A) in deleting the above addition to be quite proper and justified, and we find no fault therewith. Accordingly, we decline to interfere with the same.
55. Ground No. XV of revenue disputes the deletion of addition of Rs. 6,50,000 made in assessment year 1997-98 on the basis of slips containing valuation of ornaments. The ld. DR of revenue has contended that the Assessing Officer made this addition on the basis of Annexure A-11/page 75 to 78. He has referred to page 25 of Assessing Officer’s assessment order and contended that the above addition had been rightly made by Assessing Officer but the ld. CIT(A) accorded relief to assessee without sound reasons. He has relied on the orders of Assessing Officer.
56. As against the Assessing Officer the ld. AR of assessee has contended that the Assessing Officer made this addition on the basis of Annexure A-11 pages 75 to 78, which, according to Assessing Officer, contains the details of ornaments manufactured by assessee for different persons, namely, Smt. Prakash, Smt. Nirupa, Smt. Bhuri Devi, Smt. Anju and Smt. Seema. He has contended that these purchases relate to rough valuation/estimate of gold ornaments. He has contended that this rough valuation/estimate was got prepared from assessee by a highly placed Government official (presently, DIG of Police) in respect of gold ornaments belonging to various members of his family, as he intended to know the rough value held by his family members and to put the slips of rough valuation in their respective boxes for placing those boxes/ornaments in the locker in the bank. He has contended that the assessee simply valued the ornaments, and as per these slips the assessee neither manufactured ornaments, nor sold/purchased the same; nor such ornaments were found at the time of search. He has contended that normally such slips are not required to be preserved but the assessee preserved the rough valuation slips thinking that he may be asked in future about the said valuation by the said customer. He has contended that whatever gold ornaments were found were duly considered by Assessing Officer separately and there was no logic/basis for making this addition, so this addition of Rs. 6,50,000 on account of investment in purchase of gold ornaments, are not in existence. He has contended that the ld. CIT(A) rightly deleted this addition for the reasons discussed in para 27.2 on page 55 of his appellate order. It has also been contended that it is an established facts that ornaments are made after receipt of gold price from customers. It has also been contended that similar addition were also made by CIT(A) in the case of Shri Suraj Prakash Soni, the brother of assessee, and ITAT, Jodhpur has approved the order of CIT(A) deleting such addition, vide para 30 on page 13 of Tribunal’s order dated 27-5-02 in ITA No. 506/JDPR/99 (Page 575 of PB).
57. We have considered the rival contentions the relevant material on record as also the referred case. From the perusal of record we find that complete details of customer i.e., his name and designation, posted at Jodhpur, being already available on record but the Assessing Officer made no efforts to verify the assessee’s contentions by examining the said customer. In the situation, considering all the facts and circumstances of the case, together with the elaborate/explanatory contentions of the ld. AR of assessee, as also the lucid discussion made by the ld. CIT(A) in his appellate order, and respectfully following the above-mentioned decision of this Tribunal, we find no justification for the above addition in assessee’s hands, and in turn, we find no fault with the impugned order of ld. CIT(A) in deleting the same. Accordingly, we decline to interfere with the ld. CIT(A)’s impugned order.
58. Ground No. XVI disputes the deletion of addition of Rs. 1,40,720 made on account of estimated profit @ 30% on sale of gold ornaments of Rs. 4,69,068 and job charges in assessment year 1997-98. The ld. DR of revenue has contended that this addition has been made on the basis of seized documents Annexure B-1/pages 1 to 5, 8, 15 to 16, 18 to 24. He has referred pages 37 and 38 of Assessing Officer’s order and contended that the Assessing Officer rightly made the addition in respect of profit on sale of gold ornaments and job charges on the basis of documents found during search. He has relied on Assessing Officer’s order.
59. As against the above, the ld. AR of assessee has contended that the assessee opened the shop under the name and style of M/s. Anand Mangal Abhushan on 20-10-1996 and maintained regular books. It has been contended that the accounting period had not expired on the date of search being 31-1-997, and so the Assessing Officer was in error in considering the income on the basis of entries recorded in seized books pertaining to the period 20-10-1996 to 3-1-1997 on the basis of Annexure B-1 as income from undisclosed sources. It has been contended that the total job charges for the said period worked out to Rs. 26,029 and the same was duly shown by assessee in the computation of income. It has been contended that the Assessing Officer applied profit rate of 30% on the total amount of Rs. 4,69,068 received by assessee from customers between the period 20-10-1996 to 3-1-1997 and made the addition of Rs. 1,40,720. It has been contended that the addition is totally unfounded and uncalled for as there is no evidence on record to establish that the assessee earned profit at 30% on the amount received from customers for making the ornaments. It has been contended that the assessee’s earned income was only of job charges received by assessee and the same are duly accounted for in the books maintained by assessee. It has been contended that the ld. CIT(A) was perfectly justified in deleting this addition. It has also been contended that the issue is covered in assessee’s favour by the decision of ITAT, Jodhpur in the case of Suraj Prakash Soni, the brother of assessee vide paras 35 and 36 on pages 14 and 15 (Pages 576 and 577 of PB) of Tribunal’s order dated 27-5-02 in ITA No. 506/JDPR/99.
60. We have considered the rival contentions, the relevant material on record as also the referred decision. Considering all the facts and circumstances of the case, the explanatory contentions of the ld. AR of assessee as made in his W/S and detailed discussion made by ld. CIT(A) in para 27.2 on page 55 of his appellate order and respectfully following the above referred decision of this Tribunal, we agree with the conclusion drawn by ld. CIT(A) in holding this addition made by Assessing Officer to be uncalled for and in turn deleting the same. As such, we find no fault with the impugned order of the ld. CIT(A) on this count and so we decline to interfere with the same.
61. Ground No. XVII of revenue disputes the deletion of addition of Rs. 20,000 made by Assessing Officer in assessment year 1997-98 on account of gold ornaments on the basis of slip found during search. Similarly ground No. XVIII of revenue disputes the deletion of addition of Rs. 1,19,920 made by Assessing Officer in assessment year 1997-98 on account of Chandra Haar on the basis of slip found during search. As these two grounds are inter-related and involved common points so we are taking them up together for our discussion. The ld. DR of revenue has contended that these additions were rightly made by Assessing Officer on the basis of seized material found during search. He has relied on the orders of Assessing Officer. As against this the ld. AR of assessee has contended that the Assessing Officer made these additions on the basis of slip found during search relating to manufacturing of ornaments, but no such ornaments were found. He has contended that since the Assessing Officer has considered the entire issue of gold actually found at shop so there was no justification for Assessing Officer to make addition on the basis of each slip relating to manufacturing of gold ornaments, and as such, the ld. CIT(A) rightly deleted the addition. It has also been contended that it is clear from the seized record that ornaments are made on the basis of orders and the persons/customers who want to get the ornaments manufactured either deliver gold or value of gold and thus there is no need for the assessee to employ his own capital in the purchase of gold on behalf of customer. He has contended that this issue is covered in assessee’s favour by a decision of ITAT, Jodhpur rendered on 27-5-2002 in the case of assessee’s brother, Shri Suraj Prakash Soni in ITA No. 50-6/JDPR/99 vide para 29 on pages 12 and 13 of Tribunal’s order (574 and 575 PB).
62. We have considered the rival contentions, the relevant material on record, as also the referred decision. From the perusal of record we find that the ld. CIT(A) has considered the relevant facts and duly discussed the various aspects of the issue and noted that there was no evidence found as a result of search showing that the assessee made any investment in purchase of gold which was utilized in manufacturing of the gold ornaments of customer Shri Hari Ram and of the necklace Chandra Haar weighing 20 tolas and so he deleted these two additions holding the same to have been made by Assessing Officer merely on the basis of assumption and presumption. As such, considering all the facts and circumstances of the case, the explanatory contentions made by ld. AR of assessee, the lucid discussion made by ld. CIT(A), and respectfully following the above-mentioned decision of this Tribunal we find these two additions made by Assessing Officer to be not justified and uncalled for and, in turn, deletion made by ld. CIT(A) to be quite proper and justified. We, therefore, decline to interfere with the same.
63. Ground No. XIX of revenue disputes the deletion of addition of Rs. 1,61,000 made by Assessing Officer for assessment year 1997-98 on account of investment in proprietary business in the name and style of M/s. Anand Mangal Abhushan. The ld. DR of revenue that the assessee started the aforesaid shop and made initial capital investment in the same. But the assessee could not explain the source of initial investment of capital in the shop i.e., in the stock of this proprietary business. He has contended that the Assessing Officer rightly made the addition. He has relied on the orders of Assessing Officer.
64. The ld. AR of assessee has contended that the assessee disclosed in the financial statement prepared on the basis of seized material an initial capital investment of Rs. 1,61,000 in the shop named M/s. Anand Mangal Abhushan and that the Assessing Officer made this addition on the basis of the said disclosure. He has contended that when the Assessing Officer has made the addition in respect of each item found at the shop M/s. Anand Mangal Abhushan and so the addition having already been made on the basis of assets, no further addition can be made on the basis of liability side of balance sheet separately. It has been contended that no addition can be made on the basis of assets as well as balance sheet of the same period as the assets side of balance sheet stands explained from liability side on balance sheet. It has been contended that since the Assessing Officer considered each and every asset, he cannot consider the liability side separately for addition.
65. We have considered the rival contentions as also the relevant material on record. From the perusal of record we find that the ld. CIT(A) has observed that the Assessing Officer was not justified in making this addition because the Assessing Officer had already made addition on account of unexplained gold ornaments and silver found at the shop; and that the said additions have been confirmed by him and that the same are more than Rs. 1,61,000. He has also observed that the said addition on account of investment made by assessee is not called for because the amount introduced by assessee in the business must have been utilized therein. The ld. CIT(A) accordingly deleted this addition. As such, considering all the facts and circumstances of the case as also the contentions raised by the ld. AR of assessee, and the discussions made by the ld. CIT(A), we find the above addition made by Assessing Officer to be uncalled for and not justified and in turn, the deletion thereof by ld. CIT(A) to be quite proper and justified. We, therefore, decline to interfere with the same.
66. Ground No. XX of revenue disputes the deletion of addition of Rs. 5,11,950 made by Assessing Officer on account of investment in money lending business in assessment year 1997-98. The ld. DR of revenue has referred to pages 10 and 11 of Assessing Officer’s order and contended that the assessee has admitted in his statement recorded under section 132(4) at the time of search on 3-1-1997 about his investment of Rs. 8 to 10 lakhs in money lending and accordingly he surrendered Rs. 10 lakhs on account of unexplained investment in money lending. He has contended that the Assessing Officer, therefore, rightly made the above addition of Rs. 5,11,950. He has thus supported the order’s of Assessing Officer.
67. As against the above, the ld. AR of assessee has contended that the authorized officer prepared inventory J/p1 (page 4 of PB) in respect of money lending debtors and it was found that the total investment in money lending was to the tune of Rs. 1,11,000 only. It has been contended that the Assessing Officer had made the addition of Rs. 4,88,050 in the preceding year on the basis of slips found (though amounts were received and ornaments were released/returned) and made the further addition of Rs. 5,11,950 to make the total of investment in money lending at Rs. 10 lakhs for the reason that the assessee had surrendered Rs. 10 lakhs in his statement recorded at the time of search. The ld. AR of assessee has contended that the ld. CIT(A) deleted the addition for the reason that in spite of search there is no evidence to substantiate the investment of Rs. 10 lakhs in money lending by assessee; and the total investment by assessee in money lending as on the date of search, was of Rs. 1,11,000 only out of which Rs. 90,000 were advanced in the year under appeal; whereas the addition on account of debtors in the preceding year was confirmed by ld. CIT(A) to the extent of Rs. 4,88,050. It has been contended that there having already been made an addition of Rs. 4,88,050 in money lending debtors, whereas no such debtor were found at the time of search and so the investment of Rs. 90,000 made in the year is covered by the amount recovered from past additions on account of money lending. He has contended that the learned CIT(A) deleted the entire addition of Rs. 5,11,950 as no addition can be made without material/evidence as also when corresponding pledged items were found. He has contended that at the time of search the authorized officer obtained surrender of Rs. 10 lakhs in respect of money lending advances despite there being no such assets/debtors, and so the addition cannot be made simply on the basis of such surrender. He has relied on the following decisions :
Pullangode Rubber & Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18(SC)
CIT v. Bharat General RL-Insurance Co. Ltd. (1971) 81 ITR 303
Alapati Venkata Ramiah v. CIT (1965) 57 ITR 185.
68. We have considered the rival contentions the relevant material on record as also the cited decisions. As regards surrender of Rs. 10 lakhs in respect of money lending advances, it has been contended that at the time of search the Authorized Officer obtained a surrender on the basis of papers found and seized during search, irrespective of the fact that the same were rough papers, xerox copies of documents obtained from previous owners, who agreed to sell land to assessee, xerox copies obtained from customer for sale of their land, duplicate copies, and the documents obtained by P/A holder from original owners in respect of sale agreement by P/A holder. It has been contended that the surrender so obtained is factually incorrect and does not reflect correct investment by assessee. It has been contended that the assessee has, while filing his return for the block period, taken into account all the actual transactions done by him, the investment made and funds received back on resale of such land. He has relied on a number of decisions including the following:
Pullangode Rubber & Produce Co. Ltd.’s case (supra)
Bharat General RL-Insurance Co. Ltd.’s case (supra)
Alapati Venkata Ramiah’s case (supra)
In Pullangode Rubber & Produce Co. Ltd.’s case (supra) the Hon’ble Supreme Court has held that:
"An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect."
In Bharat General RE-Insurance Co. Ltd.’s case (supra) it has been held that:
"It is true that the assessee itself had included that dividend income in its return for the year in question but there is no estoppel in the I.T. Act and the assessee having itself challenged the validity of taxing the dividend during the year of assessment in question it must be taken that it had resiled from the position which it had wrongly taken while filing the return."
In Alapati Venkata Ramiah’s case (supra), the Hon’ble Supreme Court has held that :
"That the assessee cannot be tied down to an inadvisably made wrong statement. It was further held by their Lordships that the function of the ITO being a quasi judicial authority is to estimate the income on the basis of material and not on the basis of alleged allegation or wrong admission."
The legal position emanating from the above citations is that the surrender made by an assessee in a statement recorded during search under section 132(4) may not justifiably be conclusively decisive as to the making of addition as an income of assessee, and the assessee being not finally tied down therewith inasmuch as the assessee can explain the correct factual position suggestive of the incorrectness of the surrender, or the fact of the same having been made mistakenly, and in turn, calling for no addition as an income of assessee for there being no corresponding assets/expenditure to justify the same. As such, considering all the facts and circumstances of the case, the settled legal position, the rival contentions as discussed above, together with the discussions made by learned CIT(A), particularly, in para 32.2 on page 61 of his appellate order, we find the addition made by Assessing Officer to be uncalled for, and in turn, the deletion thereof by learned CIT(A) to be quite proper and justified. We, therefore, decline to interfere with the same.
69. Ground No. XXII of revenue disputes the deletion of addition of Rs. 4,14,000 made by Assessing Officer on account of investment in purchase of land from Sh. Tara Chand in Assessment Year 1997-98. The learned DR of revenue has contended that this addition has been made regarding investment in purchase of land and that he relies on his same contentions as made in respect of a similar ground being ground No. XXI pertaining to the purchase of land. His contentions as raised on ground No. XXI had been that the seized documents reveal purchase of agricultural land by assessee and so the Assessing Officer rightly made addition on account of investment in purchase of agricultural land. As such, the learned DR of revenue has supported the orders of Assessing Officer.
70. As against the above, the learned AR of assessee has contended that vide para No. iii on page 621 of P.B./W/S. that the seized record shows a payment of only Rs. 3,21,000 by three persons and so the learned CIT(A) rightly sustained the addition of Rs. 1,07,000 and deleted the addition of Rs. 4,14,000 . It has further been contended (vide para iv on page 621 of PB) that at the direction of learned CIT(A) the Assessing Officer summoned Sh. Kailash Chand Jajoo who also confirmed the above fact vide his letter dated 3-2-1999 (page 410 PB) and admitted that the original agreement was lying with him whereas Shri Rameshwar Lal Soni (assessee) had only a xerox copy with him. It has been contended that Shri Kailash Chand Jajoo also stated that he was assessed to tax and share of each partner in investment was the same of Rs. 1,07,000 and the same is appearing in his books of account. It has been contended that the learned CIT(A) rightly made the above deletion.
71. We have considered the rival contentions as also the relevant material on record. The sale agreement which the assessee made for purchase of this land belonging to Maha Mandir Charam Utpadak Sahakari Samiti Ltd., Jodhpur through its secretary Shri Tara Chand on 19-7-1996, as placed on pages 192 to 194 of P.B. clearly reveals that the second party therein comprises of three partners being (i) Shri Rameshwar Lal Soni (ii) Shri Inderchand Jajoo, and (iii) Shri Kailash Chand Jajoo and that a sum of Rs. 3,21,000 was paid as advance by the above second party to the first party (seller) towards purchase of land. The assessee’s letter to DCIT, Jodhpur dated 6-9-1999 (page 409 PB) asking him to verify the factum of assessee’s investment being of only of Rs. 1,07,000 in this transaction and the balance having been made by Shri Kailash Chand Jajoo and Shri Inder Chand Jajoo, who purchased the land in partnership with the assessee, together with explanatory letter of Shri Kailash Chand Jajoo to DCIT, Jodhpur dated 3-9-99 (page 410 PB) corroborate the assessee’s plea. In the letter of Sh. Kailash Chand Jajoo (page 410 PB) it has been specifically mentioned that he (Kailash Chand Jajoo) and his brother, Shri Inder Chand Jajoo and Shri Rameshwar Lal Soni together purchased this land and that each one of the aforesaid three persons gave/contributed a sum of Rs. 1,07,000 out of the total payment of Rs. 3,21,000. It has also been mentioned that he is an I.T. assessee and his G.I.R. No. has also been mentioned therein. From the perusal of record we find that the learned CIT(A) has elaborately considered the issue in its various aspects in the light of material/evidence on record and has found that the remaining payment of Rs. 2 lakhs was not made before the date of search as there was no evidence in the seized record to support the conclusion that it is the assessee who made the payment of Rs. 3,21,000. As such, considering all the facts and circumstances of the case together material available on record including, in particular, the evidence referred to and discussed above, we find the assessee’s investment in this transaction of purchase of land from Shri Tara Chand to be only of Rs. 1,07,000. Accordingly the Assessing Officer’s addition of Rs. 5,21,000 is found to be uncalled for and not justified; and the deletion of Rs. 4,14,000 by learned CIT(A) to be quite proper and justified. We, therefore, decline to interfere with the same.
72. Ground No. XXIII disputes the deletion of addition of Rs. 10 lakhs made by Assessing Officer on account of alleged investment in properties on the basis of statement of assessee recorded under section 132(4). The learned DR of revenue has contended that the assessee had made a surrender of Rs. 10 lakhs at the time of search vide his statement recorded under section 132(4) and had admitted the investment of Rs. 10 lakhs in the land transactions. He has contended that the Assessing Officer made this addition on the basis of assessee’s own surrender. The learned DR has, in this regard,referred to page 22 of PB containing the above surrende admission in the assessee’s statement. He has referred to page 42 of Assessing Officer’s order and relied on the orders of Assessing Officer.
73. As against the above, the learned AR of assessee has contended that at the time of search the authorized officer obtained surrender from assessee in respect of all kinds of papers including chain of documents including duplicate copies, rough papers and xerox copies of documents pertaining to the previous owner who had agreed to sale the land to assessee as also the xerox copies obtained from customers for sale of their land and also the documents obtained by P/A holder from original owner in respect of the sale agreement by P/A holder. He has contended that in addition to the above the Assessing Officer further obtained the additional surrender of Rs. 10 lakhs as their investment in land transaction despite there being not an iota of evidence supportive of any transaction having been done by assessee over and above those contained in papers found as a result of search. It has also been contended that the surrender was obtained when the assessee was not mentally fit and was under the influence of injection which was a pain killer; and surrender was not supported by any document/evidence; and so the learned CIT(A) was justified in deleting the addition and the order of CIT(A) suffers from no infirmity particularly when the Assessing Officer had not only made addition in respect of real transactions but also in respect of duplicate copies, chain of documents etc. It has been contended that the learned CIT(A) was justified in deleting the addition for the reason that the surrender is factually incorrect and not supported by any material/evidence found as a result of search, and that the deletion is supported by the cited decisions. The learned AR of assessee has relied on the decisions referred to and discussed above in respect of surrender while dealing with ground No. XX of revenue.
74. We have considered the rival contentions, the relevant material on record as also the cited decisions. We find force and substance in the contentions of the learned AR of assessee. From the perusal of record it is revealed, as has also been found by learned CIT(A) in para No. 36.2 on page 69 of his appellate order that no evidence was found and seized as a result of search on the basis of which it could be stated that the assessee had made unexplained investment to the extent of Rs. 10 lakhs. Specific additions based on specific evidence/material found as a result of search have already been made separately; and so no further addition can justifiably be made merely on the basis of a surrender when the same stands retracted and the assessee is stated to have not been feeling well and being, in particular, under the influence of injection and thus not being in a medically fit state to make the statement; and the tension/stress due to the long drawn process of search may also not be deniable; and when there is no material on record to support/justify the surrender. In that view of the matter considering all the facts and circumstances of the case we find the conclusion drawn by the learned CIT(A) to be quite proper and justified. We, therefore, decline to interfere with the same.
75. In the result, revenue’s appeal No. 56/JDPR/2000 is dismissed.
76. Now we take up assessee’s appeal being ITA No. 08/JDPR/2000. Ground No. 1 of assessee has not been pressed by learned AR of assessee during arguments and so the same is dismissed accordingly.
77. Ground No. 2 disputes the learned CIT(A)’s order in not allowing credit of set off in respect of the following amounts :
(i) Amount withdrawn from the books of HUF3,11,081 lying seized & utilized for various investments.
(ii) Amount received back on cancellation of agreement & recycled in the business :
(a) From Shri Hukmi Chand 3,10,000
(b) Smt. Poosi Bai 7,01,000
(c) Shri Ram Dayal 51,00010,62,000
(iii) Amount received from Shri Ugam Raj Soni by account payee cheque 2,25,000
(iv) Difference on A/c of money lending debt actually found & addition sustained by CIT(A) 3,78,050
(v) Amount received as advance against agreement to sale of 3 plots 2,00,000
(vi) Amount received from Bhabhoot Singh 1,50,000
Total 23,26,131
78. Ground No. 2(i) pertains to an amount of Rs. 3,11,081 stated to have been withdrawn by assessee from the books of HUF lying seized with the department, and utilized in acquisition of various assets and making investments. The learned AR of assessee has contended that the assessee is a Karta of HUF M/s. Mangilal Rameshwarlal Soni, which is doing the business of money lending and manufacturing of gold ornaments. He has contended that the books of account maintained by HUF were found and seized at the residence of assessee as also of his brother Shri Suraj Prakash Soni. He has contended that the assessee, in the capacity of Karta of HUF, withdrew an amount of Rs. 3,11,081 from HUF from the Assessment Year 1993-94 to the date of search as detailed below:
|
Assessment Year |
Amount |
|
1993-94 |
10,200 |
|
1994-95 |
74,776 |
|
1995-96 |
74,950 |
|
1996-97 |
49,245 |
|
1-4-96 to 3-1-97 |
1,01,900 |
|
Total |
3,11,081 |
He has contended that the aforesaid amounts withdrawn from the books of HUF are verifiable from the books of HUF. He has contended that the above withdrawn amount was invested by assessee in his books as an individual and the assets were acquired and money was rotated in the business of assessee. It has been contended that while making the addition in respect of investment, the credit of the above amount withdrawn from the HUF, constituting a source for acquisition of assets, is required to be given.
79. It has been contended that the assessee prepared balance sheet of entire investment with the source and the Assessing Officer could not establish that any of the investment found as a result of search did not tally with the balance sheet, but the Assessing Officer did not consider the above issue. It has been contended that the learned CIT(A) did not accept the contention of the assessee on the ground that no link was established between the amount withdrawn from HUF and the amount invested by the assessee. It has been contended that during the course of appellate proceedings before the learned CIT(A) the assessee filed a detailed letter (pages 392 to 404 of PB) showing final investment as on the date of search in respect of the entire block period and the expenditure incurred for the block period and also explained the source thereof.
80. The learned AR has also contended that while computing the undisclosed income as per seized record, income has to be estimated on the basis of assets acquired and expenditure incurred; and the total of expenditure has to be reduced from the source available to the assessee. It has been contended that since the authorities below have made separate additions in respect of each and every investment as well as expenditure incurred on construction and marriage, etc. the authorities below ought to have allowed the credit for the source which is verifiable from seized record. It has been contended that there being no evidence with the department that the amounts so withdrawn were utilized for any other purpose than the investment/expenditure in respect of which separate additions have already been made by the Assessing Officer, the non-allowing the assessee’s claim for set off of Rs. 3,11,081 is not justified. The learned A/R of assessee has also contended that similar relief was allowed by ITAT, Jodhpur in the case of assessee’s brother Shri Suraj Prakash Soni in ITA No. 492/JU/99 decided on 27-5-2002 vide para 51 of internal page 26 of Tribunal’s order [pg. 62 of PB]. As against this, the learned D/R of revenue has contended that the assessee has not been able to prove the withdrawals from HUF and so the assessee’s claim has rightly been disallowed and the addition rightly made. He has relied on the orders of authorities below.
81. We have considered the rival contentions, the relevant material on record as also the cited decision. Before we proceed to discuss and consider the factual merits of assessee’s claim for allowing the benefit of telescopy/set off/credit for various amounts/funds whether having been received by assessee, or having resulted from other additions (intangible), against sustained additions on account of unexplained expenditures/investments/assets, we may consider the very basic concept involved in assessee’s aforesaid claim, for the sake of convenience/clarity and to avoid any fussy confounding or misconception. When, in the case of a block assessment, or for that matter, an assessment of the block period comprising of a number of years, say 10 years or so, there are some unexplained expenditures/investments/assets and addition is made on account thereof, then though the assessee may not have been able to account for the exact source of incurring the said expenditure or making the said investment or acquiring the said asset, yet the assessee can seek to avoid the making of the said additions separately by showing that some amount/income was available with him which could have been utilized for the purpose, despite there being no evidence supportive of the actual/exact utilization as just pleaded. In other words, when in a block assess- ment, additions are made/sustained in respect of all unexplained expenditures/investments/assets found as on the date of search, the same implies the unexplained outgoings of assessee during the block period. Accordingly, if the assessee is able to show inflow of money, that is receipts/incoming with him during the block period, whether by way of income as disclosed in the books, or by way of undisclosed income resulting from intangible addition, the same will constitute source of money/fund available with the assessee for utilization by way of recycling/rotating in further investments, and thus for making expenditure/investment or for acquiring the asset which the Assessing Officer has found as unexplained and has, in turn, made addition in respect thereof, unless the above-mentioned receipts are found to have been used/exhausted in incurring some other expenditure/investment or in acquiring some other asset, for which the Assessing Officer has not made addition, whereagainst the aforesaid receipts (inflows) stand adjusted.
82. Intangible additions, i.e. additions other than those which are made on account of tangible/perceivable objects/items/assets also result in income to the assessee, for the simple reason that the income, for which these (intangible) additions are made, not having their tangible/perceivable objects/items/assets for which the same could have been utilized by way of incurring expenditure/investment therein; addition on account of suppressed profit (trading addition) or inflated/bogus expenditure, may be cited as example of the same. The income, or for that matter, the undisclosed income, resulting from intangible additions is available with assessee as much a real income as any other income, or for that matter, the disclosed income, earned by assessee. Such a resultant income (undisclosed income), being available with assessee, for incurring expenditure or making investment or for acquiring an asset, thus legally constitutes a source available with assessee. Accordingly, when some addition is sought to be made on account of some unexplained expenditure/investment/asset, that is when a tangible addition is sought to be made, the assessee can successfully plead and avoid separate/independent addition in respect thereof by showing the availability of income with him resulting from intangible addition. This is what is implied by telescoping tangible addition into intangible addition or allowing the benefit/credit of income resulting from intangible addition against tangible addition, i.e. the addition on account of tangible expenditure/investment/asset, which, though, is sought to be made, but is avoided and is not made separately/independently due to the benefit of telescopy or set off or credit being available on account of the income resulting from intangible addition being available with assessee. For the above view, we may find support from the judicial decision in Anantharam Veerasinghaiah & Co. v. CIT (1980) 123 ITR 457(SC) and CIT V. Tyaryamal Bal Chand (1987) 165 ITR 453(Raj.). In Other words the legally settled position comes to this that when all the outgoings of the block period are considered and taxed specifically, the incomings/receipts of the block period, implying the availability of money with assessee, so as to constitute source of expenditure/investment to that extent, have to be considered for determination of undisclosed income of the block period.
83. In the above context, we may also note that in the case of a block assessment, wherein the assessment of the whole block period is made, when additions are made for the block period on the basis of all investments, expenditures, and assets found to have been incurred or acquired during the block period, and which have remained unexplained in respect of their direct source, the assessee may justifiably claim and may well be treated as duly entitled to the benefit of telescopy/set off/credit of all such amounts of inflow whether by way of receipts or by way of undisclosed income resulting from intangible additions of the block period and thus being available with assessee and which amount/income could be utilized by the assessee for incurring the expenditure or making the investment or acquiring the asset found and remaining unexplained as on the date of search. The assessee will be entitled to the above- mentioned benefit even though the assessee may not be able to establish a direct/live link/nexus of the said resultant undisclosed income with the unexplained expenditure/investment/asset. It may be no less funny to realize that when direct link of source of an expenditure/investment/asset is established, the same can hardly be treated as unexplained. Obviously, and understandably too, the benefit of aforesaid telescopy/set off/credit of the said resultant undisclosed income is given only when the expenditure/investment/asset is found as unexplained due to any direct source of the same having not been established, so as to avoid separate and independent addition on account of the said expenditure/investment/asset, which, though remains unexplained, yet because the assessee has some undisclosed income available with him, having resulted from intangible additions. For allowing the aforesaid benefit, in our view, a direct/live link/nexus, date-wise or otherwise, of the resultant undisclosed income with the unexplained expenditure/investment/asset need hardly justifiably be insisted upon, and suffice it to show that the same has an indirect nexus or to express it, with more accuracy and better exactness, that the same may have a probable nexus, and that the said intangible addition precedes the unexplained expenditure/investment/asset, for which separate/independent tangible addition is being sought to be made by the Department and which the assessee seeks to avoid on the basis of the benefit of telescopy/set off/credit of income, being available with assessee, having resulted from intangible addition.
84. From the perusal of record of the case in hand it is revealed that specific withdrawals on specific dates from HUF is available on pages 307 to 311 of Paper Book No. 1 and the same is based on seized books of HUF. These withdrawals are of the following amounts :
|
Amount |
Balance Sheet Page of PB |
Receipt and Payment Account Page of PB |
|
Rs. 49,245 |
229 |
230 |
|
Rs. 1,01,900 |
231 |
233 |
|
Rs. 10,200 |
226 |
226 |
|
Rs. 74,776 |
227 |
227 |
|
Rs. 74,950 |
228 |
228 |
|
Total Rs. 3,11,071 |
|
|
Thus the year-wise withdrawal of amount by assessee from HUF is well established from the assessee’s receipt and payment account (pages 226 to 228, 230, 233 PB No.1) and balance sheet [pgs. 226, 228, 231 of PB No.1] which were prepared on the basis of seized books of account; and the said withdrawal from the books of HUF is verifiable from the seized books of account of HUF (Pages 307 to 311, PB No.1) wherein the date-wise withdrawals by assessee from the books of HUF have been shown; and these withdrawals have nowhere been disputed by Assessing Officer or CIT(A). Though the aforesaid withdrawal may not be linked with specific investment but nonetheless constitutes understandably an obvious source of investment; and there is no evidence of the said amount of withdrawals from HUF having been utilized for any other purpose. Besides, a perusal of date-wise detailed charts, as placed on pages 122 to 127 of PB No. 6 reveals the following position:
(i) The withdrawal of Rs. 10,200 from HUF was made between 5-1-1993 to 24-3-1993, in Assessment Year 1993-94 and so it was available for utilization towards three items of investment/expenditure incurred between 12-2-1993 to 31-3-1993 as reflected on page 122 (RHS).
(ii) The withdrawal of Rs. 74,776 between 27-4-1993 to 31-3-1994 (page 123 PB No. 6) was available for utilization towards first seven items of investment/expenditure incurred between 28-5-1993 to 6-1-1994 as detailed on RHS of page 123 of PB No. 6.
(iii) The withdrawal of Rs. 74,950 between 23-4-1994 to 28-12-1994 in Assessment Year 1995-96 as mentioned at serial No. 4 on page 125 of PB No. 6, was available for utilization towards various items of investment/expenditure mentioned against serial Nos. 4 and 5, detailed on RHS of page 125 PB No. 6.
(iv) The withdrawal of Rs. 49,245 (serial No. 11 of page 127 of PB No. 6) between 20-4-1995 to 31-3-1996 in Assessment Year 1996-97 was available for utilization towards various items of investment/expenditure mentioned against serial Nos. 11, 12 and 13 as detailed on page 127 PB No. 6.
(v) The withdrawal of Rs. 1,01,900 (serial No. 12) between 6-5-1996 to 23-12-1996 in Assessment Year 1997-98 (page 127 PB No. 6) was available for utilization towards various items of investment/expenditure mentioned against serial No. 13 as on 3-1-1997 in Assessment Year 1997-98.
85. As such, considering all the facts and circumstances of the case, as also the legal position emanating from the judgments of the Hon’ble Supreme Court and of the Hon’ble Rajasthan High Court, as discussed above, together with the ratio decidendi of the above-cited decision of this Bench, we are of the opinion that in view of the source, for acquisition of assets to the extent of Rs. 3,11,081, being the withdrawal from HUF, having been established, the assessee is entitled to get the benefit of set off/credit of the said amount against sustained additions.
86. Ground No. 2(ii) of assessee disputes the non-allowing of credit/set-off of Rs. 3,10,000, Rs. 7,01,000 and Rs. 51,000, being the amounts received by assessee back from his sellers with whom the assessee had entered into purchase agreements but subsequently the said transactions having been cancelled, the assessee had received the amount of advance back from (a) Shri Hukmi Chand, (b) Shri Possi Bai and (c) Shri Ram Dayal/Smt. Rajkumari respectively; the issue pertaining to each of the said three sellers of the assessee has been agitated in ground Nos. (ii)(a), (ii)(b) and (ii)(c) of ground No. 2. It has been contended that the assessee had also made this claim in his financial statement prepared on the basis of seized record but the Assessing Officer and the learned CIT(A) failed to consider the issue. It has been contended that the benefit of recycling was allowed by the Tribunal in the case of Shri Rameshchand Modi 21 TW 508 [Pgs. 64, 82 of PB filed in ITA No. 8/JU/2000].
87. As regards the issue agitated in ground No. 2(ii)(a) for set-off of Rs. 3,10,000, being the amount received back by assessee from Shri Hukmi Chand (page 50 PB). It has been contended that the assessee had entered into an agreement for purchase of land with Shri Hukmi Chand on 30-4-1995 and the assessee paid Rs. 85,000 to Shri Hukmi Chand on that date and paid a further sum of Rs. 2,25,000 on 4-8-1995. It has been contended that this payment of Rs. 3,10,000 (Rs. 85,000 + Rs. 2,25,000) has been accepted by Assessing Officer on page 17 of assessment order. It has been contended that the period of completion/compliance of the agreement was of 6 months. It has been contended that Shri Hukmi Chand was not the real owner but was the P/A holder of his relatives and friends and at whose instructions Shri Hukim Chand cancelled the agreement on 30-9-1995 and returned the money to the assessee in the same Financial Year 1995-96 as has been clearly shown in receipt and payment account for Assessment Year 1996-97 on pg. 230 of PB No.1. It has also been contended that it is also evident from the above receipt and payment account [pg. 230 of PB No.1] that the amounts so recovered from Shri Hukmi Chand was utilized in other investments. It has been contended that the Assessing Officer made addition in respect of each and every asset on the basis of date of advance, he ought to have given credit in respect of the above amount received back by assessee from Shri Hukmi Chand, or else it will amount to double addition. It has also been contended that the Assessing Officer did not consider the issue and even failed to summon Shri Hukmi Chand for which the assessee had made specific requests by his letters [para iv on pg. 360 and para ii on pg. 363 of PB No.1]. It has been contended that in spite of search, no document was found suggestive of sale of land by Shri Hukmi Chand to assessee or any of his family members. It has been contended that the assessee has raised his claim specifically in ground No. (ii)(b) [pg. 393 of PB No. 1]. It has been contended that as the assessee utilized the amount received back from Shri Hukmi Chand for making other investments, and so the assessee is entitled to the credit of the same. It has been contended that the assessee’s claim is supported by the decision of this Bench in the case of Suraj Prakash Soni [Pg. 62 of PB] and the decision of ITAT, Jaipur in the case of Rameshchand Modi [pgs. 64 and 82 of PB].
88. Regarding ground No. 2(ii)(b) pertaining to assessee’s claim for allowing credit/set off in respect of refund of Rs. 7,01,000 from Smt. Poosi Bai to the assessee, the learned A/R of assessee has contended that the assessee had agreed to purchase land from Smt. Poosi Bai and her sons on behalf of Shri Malla Ram and paid a sum of Rs. 7,01,000 received by assessee from Malla Ram on 9-4-1995 as is evident from Balance Sheet on page 229 of PB, and the same has also been shown in receipt and payment account [pg. 230 of PB]. It has been contended that Smt. Poosi Bai belongs to Scheduled Caste family and there was a ban on transfer of land by a Scheduled Caste member to a non-Scheduled Caste person and the ban having not been withdrawn, the agreement was cancelled [pgs. 117 to 119 of PB] and the amount was returned by from Smt. Poosi Bai to Sh. Malla Ram as is evident from the endorsement/receipt contained on back of first page of deed of cancellation of agreement of sale (back side of page 117 of PB), an affidavit of Sh. Malla Ram as placed on pages 426 to 428 of PB, showing payment of Rs. 7 lakhs to assessee with dates of payments on page 427. It has been the assessee’s plea that as separate addition of Rs. 7 lakhs with hands of assessee has been made in respect of investment of Rs. 7 lakhs by assessee in purchase of land from Smt. Poosi Bai, the assessee has claimed this set off of Rs. 7 lakhs (of which the source of receipt is Shri Malla Ram) against the said addition of Rs. 7 lakhs made for payment by assessee to Smt. Poosi Bai.
89. It has been contended that a specific claim in respect of the above was made before the Assessing Officer and the CIT(A) but the authorities below failed to give any specific finding thereon as the learned CIT(A) failed to decide the issue raised before him in ground No. 2 (ii)(b) before him so the same amounts to rejection of the ground by CIT(A) and the Tribunal is expected to decide the issue on merits. It has been contended that the Assessing Officer made the additions on the basis of investments. It has been contended that the assessee is entitled to relief of set off of Rs. 7,01,000 from the total additions made on account of investments as this amount received by assessee from Shri Malla Ram was utilized in investment. It has been contended that the copy of cancellation deed, statement of affairs of Sh. Malla Ram along with his affidavit were furnished before learned CIT(A). It has been contended that there is no evidence on record contrary to the assessee’s claim and suggestive of the fact that the land was actually purchased and the sale deed was executed in favour of assessee or any other member. He has placed reliance on the decision of this Bench in the case of Suraj Prakash Soni (page 62 of PB).
90. As regards the issue involved in ground No. 2(ii)(c) pertaining to Sh. Ram Dayal/Smt. Rajkumari, the learned AR of assessee has contended that the assessee had entered into an agreement to purchase a house belonging to Sh. Ram Dayal for Rs. 9 lakhs on 25-7-1996 through his P/A holder Smt. Rajkumari. It has been contended that the assessee having not been able to manage the balance amount, the agreement was cancelled and the amount was refunded to the assessee and the same was utilized by him for making other investments. It has been contended that this position was explained to Assessing Officer vide para 11 on page 355 of PB. It has been contended that during the assessment proceedings, the Assessing Officer conducted enquiry from Smt. Rajkumari wherein she confirmed the assessee’s version as is evident from page 39 of the assessment order.
91. The learned AR of assessee has contended that this claim was raised before CIT(A) vide ground No. 12(f)(vi) and detailed submissions were made vide para (vi) on page 389 of PB as also vide page 393 of PB, but the learned CIT(A) gave no finding on this issue and as such, it amounts to rejection of the same by the learned CIT(A). It has been contended that the above advance having been received back by assessee and utilized for making investments in other assets, the assessee is entitled to relief of set off of Rs. 51,000. He has relied on the decision of ITAT, Jaipur Bench in the case of Ramesh Chand Modi 21 Tax World 508 (para 48 page 529 of PB).
92. As against the above, the learned DR of revenue has, in respect of ground No. 2(ii)(a)(b)(c), contended that the assessee was not able to explain these three receipts and so the action of the authorities below is right in not allowing the credit/set off of the above receipts as claimed by assessee. He has relied on the orders of the Assessing Officer.
93. We have considered the rival contentions, the relevant material on record, as also the cited decisions. In the case of Suraj Prakash Soni this Bench has, vide para 51 on page 26 of its appellate order (page 62 of PB), directed the Assessing Officer to allow, after verification, the benefit of telescopy against additions made on account of unexplained investment etc. Similarly, in 21 Tax World 508 ITAT, Jaipur has, vide para 48 on page 529 (page 82 of PB), directed the Assessing Officer to give adjustment for rotation, recycling, reinvestment, purchases on credit, and telescoping one into another. From the perusal of record, considering all the facts and circumstances of the case, we find it established that the assessee received a sum of Rs. 3,10,000 back from Sh. Hukmi Chand to whom the assessee had paid, by way of advance, towards the purchase agreement. In the instant case we find that the said amount of Rs. 3,10,000 has also been reflected in the Receipt and Payment Account (LHS) on page 230 of PB, the correctness of which has not been disputed/doubted by Assessing Officer The above fact is also corroborated by the assessee’s explanation as furnished in para 12 (middle portion) on page 342 of PB (internal page 6 of assessee’s letter) and in paras 29(b), (c) on internal page 12 of the letter (page 348 of PB) as also by para 4 on internal page 2 of assessee’s letter (page 360 PB), para (iv) on internal page 2 of assessee’s letter (page 393 of PB) and para No. 1 (top) on page 364 of PB which also reveal that the assessee did make a specific request to Assessing Officer to call/summon Sh. Hukmi Chand for verification of the fact of cancellation of purchase agreement and refund of advance by him to the assessee but the Assessing Officer made no efforts and took no steps for the purpose. In the above situation, the agreement having not been fulfilled, the amount obviously was received back by assessee (page 230 PB). In that view of the matter, considering all the facts and circumstances of the case and taking a circumspect view of the entire fact situation, we find the above receipt of Rs. 3,10,000 by assessee from Sh. Hukmi Chand to have been established.
94. As regards assessee’s claim for credit/set off of Rs. 7,01,000 being the advance received back by assessee from Smt. Poosi Bai the assessee’s plea regarding the said transaction having been effected by assessee on behalf of Sh. Malla Ram has not been accepted by Assessing Officer, nor by learned CIT(A). As a result, this transaction is treated to have been entered into by assessee on his own behalf with Smt. Poosi Bai. However, as regards the factum of receipt back of the said amount by assessee from Smt. Poosi Bai, though the same may have been established by the cancellation deed (pages 117 to 119 of PB), but the said amount of Rs. 7,01,000 having been received back by assessee from Smt. Poosi Bai on 8-6-1998, the same was obviously not available with the assessee for reinvestment in other assets upto 3-1-1997, the date of search, and so the assessee is not entitled to the benefit of set off in respect of this amount.
95. As regards the assessee’s agreement for purchasing the house of Sh. Ram Dayal through P/A holder Smt. Rajkumari, the same is also found to have been cancelled and the assessee received back his advance of Rs. 51,000 from the seller party, and the said amount so received back has also been reflected in the balance sheet (LHS) on page 233 of PB as also in para 4 on internal page 2 of assessee’s letter (page 393 of PB). We may also note that the Assessing Officer accepts on page 39 of assessment order that this transaction could not be finalized, that is the agreement was cancelled as admitted by Smt. Rajkumari before Assessing Officer. So on cancellation of agreement the amount of Rs. 51,000 was received back by assessee on 31-12-1996 (Assessment Year 1997-98) as a normal consequence; and the Assessing Officer does not mention any denial by her of the return of money to assessee. However, it is revealed from record that despite the specific issues pertaining to the amounts of Rs. 7,00,000 and Rs. 51,000 received back from Smt. Poosi Bai and Smt. Rajkumari/Sh. Ram Dayal respectively, having been raised in appeal before CIT(A), the issues have not been decided by the learned CIT(A) in his impugned appellate order and so the same amounts to rejection of assessee’s claim in respect of the above two amounts by him.
96. In view of our above discussion, we find it established that the assessee received back the above-mentioned two amounts of Rs. 3,10,000 and Rs. 51,000 from his two intended sellers, namely Sh. Hukami Chand and Sh. Ram Dayal/Smt. Rajkumari due to cancellation of assessee’s purchase agreements with them, and so the said amounts having become available with the assessee as source for reinvestment in other assets including items mentioned against serial Nos. 8 to 10 (page 127 of PB No. 6) being between 26-6-1996 and 20-7-1996 (as regards Rs. 3,10,000), and against addition mentioned as item No. 2 (Rs. 73,256) of serial No. 13, being on 3-1-1997, the assessee is entitled to benefit of credit/set off of the same against additions, made on the basis of unexplained source/investment/asset. In this regard we find support from this Tribunal’s decision rendered in the case of Suraj Prakash Soni (page 62 of PB) and the decision of ITAT, Jaipur in Ramesh Chand Modi’s case (supra). We, therefore, direct the Assessing Officer to accord the aforesaid benefit of set off/telescopy of the amounts of Rs. 3,10,000 and Rs. 51,000, against sustained additions. However, the assessee’s plea for set off/telescopy in respect of 7 lakhs received back by assessee from Smt. Poosi Bai is not acceptable as has already been found by us above.
97. Ground No. 2(iii) of assessee disputes the non-allowing of credit/set off of Rs. 2,25,000 received by assessee from Sh. Ugam Ram Soni by account payee cheque. The plea of the assessee has been that the assessee sold 20 bighas of land, out of 51 bighas, which he had purchased from Maqbool Hussain, to Ugam Ram Soni and received Rs. 10 lakhs in all from him, out of which Rs. 7.75 lakhs were received in cash and Rs. 2.25 lakhs were received by account payee cheque. The learned AR of assessee has contended that the learned CIT(A) accepted the assessee’s plea regarding Rs. 7.75 lakhs and gave credit/benefit of the same but did not accept the assessee’s plea that the amount of Rs. 2,25,000 received by cheque was also utilized for making payment for purchase of land for the reason of his holding that it was not established from the debit entry in the bank account of assessee that this amount was utilized by assessee towards purchase of agricultural land, i.e. for payment to Maqbool Hussain. In our considered opinion, the specific utilization of specific amount was not necessary for allowing the benefit of set off against additions inasmuch as the said amount of Rs. 2,25,000 was undeniably received by assessee as the cheque was deposited by assessee in his bank account on 23-9-1995 (page 420 PB) and the amount was credited in his bank account wherefrom Rs. 40,000 were withdrawn on 28-09-1995 (page 420 PB) and Rs. 1,85,000 on 11-10-1995 (page 420 PB) and so the same was available with the assessee for utilization/investment in other assets including first item of addition of Rs. 3,22,910 as mentioned against serial No. 13 (page 127 PB 6); and the recycling of funds being there. The source to the above extent having been established, the assessee deserves to get the benefit of set off/telescopy to that extent inasmuch as overall additions are being made in assessee’s hands on the basis of assets, i.e. investment in gold and silver etc. as on the date of search, being 3-1-1997. So the money withdrawn by assessee from Bank after depositing the above cheque in his bank, the same constituted a source available with assessee for reinvestment/recycling in the block period for which the Assessing Officer had made separate addition. We may well observe here, in the relevant context, that in case of there being unexplained expenditure/investment/asset, amounting to outflow of fund, when there is also a corresponding inflow of fund, resulting from intangible addition, there seems to be no understandable reason as to why the former be not telescoped into the letter. We, therefore, direct the Assessing Officer to allow the assessee the benefit of set off/telescopy of Rs. 2,25,000 against sustained additions. We order accordingly.
98. Ground No. 2 (iv) of assessee disputes the non-allowing of set off/credit of Rs. 3,78,050 (correct figure being Rs. 3,77,050) being the difference of actual money lending debtors of Rs. 1,11,000 as on the date of search and the addition of Rs. 4,88,050 sustained by learned CIT(A) on the basis of advances, against additions made for acquisition of assets. The learned AR of assessee has contended that at the time of search money lending debtors were found to the extent of Rs. 1,11,000 as is evident from Annexure J-1 of Panchnama (page 4 of PB) whereas the learned CIT(A) sustained the addition, on account of advances to money lending debtors at Rs. 4,88,050, on the basis of advances in the preceding years. It has been contended that since actual money lending on the date of search was to the extent of Rs. 1,11,000 only, the same shows that the assessee had recovered a sum of Rs. 3,77,050 (Rs. 4,88,050 minus Rs. 1,11,000) from the debtors, which was available with assessee, and constituted a source, and the assessee utilized the same for further investment in other assets found date of search, for which separate additions have been made on investment/asset basis and so the assessee is entitled to the benefit of set off/credit/telescopy of the same against additions. He has relied on the decision of this Bench in the case of Suraj Prakash Soni (supra) in the case of Ramesh Chand Modi (supra) decided by ITAT, Jaipur. As against this the Learned DR of revenue has contended that the receipt of Rs. 3,78,000 by assessee and recycling of the same has not been proved. He has relied on the orders of authorities below.
99. We have considered the rival contentions as also the relevant material on record. From the perusal of record we find that the addition of Rs. 4,88,050 in the years preceding to Assessment Year 1997-98 of the block period made by Assessing Officer stands sustained by learned CIT(A) and not disputed by assessee in appeal before the Tribunal, and so the question of assessee having proved or not, the receipt of the same loses significance. In that view of the matter considering all the facts and circumstances of the case, as also the fact that the same was available with assessee for further utilization against other assets, including the last two items of additions of Rs. 2,45,000 and Rs. 3,00,000 out of the additions mentioned against serial No. 5 (page 125 PB No. 6), we direct the Assessing Officer to allow the assessee benefit of set off/credit/telescopy of Rs. 3,77,050 against sustained additions.
100. Ground No. 2(v) as framed originally in the ground of appeal in the memo of appeal disputes the non-allowing of credit in respect of Rs. 2 lakhs, but the learned AR of assessee has amended/revised this ground in summarized grounds contained in assessee’s paper book on pages 1 to 4. This ground of appeal, as it finally stands amended/revised, and also as discussed in the W/S of learned AR of assessee, disputes the non-allowing of credit of set off of the balance sum of Rs. 50,000, on the basis of slip being Annexure A-11/page 79 (page 86 of PB). The learned AR of assessee has contended that in fact Sh. Mehendra Singh, Jagirdar intended to have the ornaments prepared for the marriage of his daughter and for this purpose he had left Rs. 50,000 at assessee’s residence along with the said slip and also promised therein to further pay Rs. 50,000. He has contended that the Assessing Officer treated this amount as advance made by assessee and so made the addition which stands confirmed by the learned CIT(A). He has contended that on the basis of treatment given by authorities below in respect of this slip the assessee deserves/set off of Rs. 1 lakh on the basis of this slip. He has contended that the benefit of set off to the extent of Rs. 50,000 has already been given by learned CIT(A) in the marriage expenses of assessee’s daughter but similar benefit in respect of balance Rs. 50,000 which the assessee received from Sh. Mahendra Singh as promised in the slip has not been given, which should be given. Considering the facts and circumstances of the case, we find the plea of learned AR of assessee to be not tenable inasmuch as we do not find any material/evidence on record to substantiate the same; and it has not been established that the assessee did receive back the balance amount of Rs. 50,000 from Sh. Mahendra Singh as promised in the slip (page 86 of PB). In that view of the matter we find no fault with the impugned order of learned CIT(A) in not according relief in respect of the balance amount of Rs. 50,000 on the basis of this slip (page 86 of PB) which was promised to be paid subsequently by Sh. Mahendra Singh in the slip. We, therefore, decline to interfere with the impugned order of learned CIT(A) on this count.
101. Ground No. 2(vi) disputes the non-allowing of benefit of set off/credit/telescopy of Rs. 1,50,000 alleged to have been received by assessee from Sh. Bhabhoot Singh. The learned AR of assessee has contended that the assessee resold the land purchased from Sh. Abdul Khan and Sh. Dawood Khan and others (to Sh. Gajaram, Sh. Poona Ram and Sh. Bhabhoot Ram) and the sale deeds in their favour were also executed (pages 99 to 104 of PB). It has been contended that the learned CIT(A) accepted a sum of Rs. 50,000 (out of Rs. 2 lakhs) as having been received by assessee from Sh. Bhabhoot Singh and allowed the credit of Rs. 50,000 only whereas the assessee having received Rs. 2 lakhs from Sh. Bhabhoot Singh during Assessment Year 1995-96, the learned CIT(A) ought to have allowed set off of the balance sum of Rs. 1.5 lakhs also which was utilized in other investments as is appearing in balance sheet on page 228 of paper book. As against this, the learned DR of revenue has contended that the assessee is claiming credit of Rs. 1.5 lakhs but the assessee has not been able to substantiate his explanation which has not been proved and so the same has not been proved.
102. We have considered the rival contentions as also the relevant material on record. From the perusal of record we find that the assessee’s plea has been that he received a total sum of Rs. 6 lakhs from Sh. Gajaram, Sh. Poonaram and Sh. Bhabhoot Ram (Bhabhoot Singh), the receipt from Sh. Bhahbhoot Ram having been of Rs. 2 lakhs. The assessee’s receipt from Shri Bhabhoot Ram to the extent of Rs. 50,000 stands accepted and benefit of set off in respect of the same stands allowed. Thus the benefit of Rs. 4,50,000 which includes a sum of Rs. 50,000 received by assessee from Shri Bhabhoot Singh, stands accepted and allowed, being the amount returned to assessee, which the assessee had earlier given to assessee’s seller Sh. Abdul Khan and others, However, the assessee having received a sum of Rs. 2 lakhs from Sh. Bhabhoot Singh in Assessment Year 1995-96, as is revealed from record, and the same having been available with the assessee for further utilization in investment/expenditure including the third item of addition of Rs. 1,50,000 mentioned against serial No. 5 (page 125 PB No. 6), and the assessee having been allowed the benefit of credit of Rs. 50,000 only, so the assessee justifiably deserves the benefit of set off of the balance sum of Rs. 1.5 lakhs also. We direct the Assessing Officer accordingly.
103. Ground No. 3 disputes the addition of Rs. 57,872 (wrongly mentioned as Rs. 97,872 in the memo of appeal) has already been discussed/decided by us above against the assessee, while deciding revenue’s ground No. (vii).
104. Ground No. 4 disputes the addition of Rs. 1 lakh on account of loan by assessee to Sh. Mahendra Singh. The learned AR of assessee has contended that the assessee has not made any advance to Sh. Mahendra Singh and that Sh. Mahendra Singh, an erstwhile Jagirdar, intended to get the ornaments manufactured for marriage of his daughter and for that purpose he paid a sum of Rs. 50,000 and promised to further pay a sum of Rs. 50,000. As against this the learned DR of revenue has relied on the orders of authorities below.
105. In our considered opinion the related slip (page 86 of PB) does not make any mention of the facts pertaining to manufacturing of the ornaments for marriage of daughter of Sh. Mahendra Singh. As such, there is no material on record to substantiate the assessee’s plea. Accordingly, we find no fault with the impugned order of authorities below in making/sustaining this addition.
106. Ground No. 5 of assessee disputes the sustaining of addition of Rs. 1,66,991 on account of gold ornaments found at the shop in Assessment Year 1997-98.
107. Ground No. 6 disputes the addition of Rs. 1,84,734 (Rs. 73,256 + Rs. 1,11,478) made by Assessing Officer on account of silver ornaments and utensils found at the residence and the shop in Assessment Year 1997-98.
108. The learned AR of assessee has contended that both of these additions, made in respect of gold and silver, found at the residence and shop of the assessee, are not justified inasmuch as all the assets of assessee found during search stand explained by receipt/liability shown in assessee’s balance sheet (page 234 of PB).
109. Regarding the addition pertaining to gold, the learned AR of assessee has contended that at the time of search gold ornaments weighing 580 grams were found at the shop, as per panchnama J-1/page 1 (page 6 of PB). He has contended that 218 grams were received from customers as is evident from seized books (page 234 of PB) and that 362 grams (580 grams minus 218 grams) are explainable from seized books, which show advances received from customers, creditors and capital investment by assessee. He has contended that the learned CIT(A) accepted the assessee’s claim regarding 218 grams having been received from customers, but sustained addition of Rs. 1,66,991 for 362 grams. It has been contended that the balance sheet (page 234 of PB) has been prepared on the basis of seized record, and the same explains the source of acquisition of 362 grams and so there was no justification for learned CIT(A) to sustain the addition of Rs. 1,66,991. As against the above, the learned DR of revenue has supported the orders of authorities below.
110. Regarding the addition pertaining to silver, the learned AR of assessee has contended that the Assessing Officer has made an addition of Rs. 73,256 in respect of silver items found at residence and treated as unexplained and an addition of Rs. 1,11,478 in respect of silver items found at the shop. He has contended that this total addition of Rs. 1,84,734 is uncalled for in view of the balance sheet (page 234 of PB) prepared on the basis of seized record.
111. We have considered the rival contentions as also the relevant material on record. From the perusal of record we find that the assessee has furnished the relevant balance sheet on page 234 of PB, which is stated to have been prepared on the basis of seized books of the shop (M/s. Anand Mangal Abhushan). In the said balance sheet a sum of Rs. 1,25,262 has been shown as advances received from customers for manufacturing of ornaments, as per Annexure B-1. In the said Annexure B-1 (page 391 of PB) the amount received from various customers, as advance from customers for making ornaments is shown at Rs. 1,01,947 instead of Rs. 1,25,262 (page 234 of PB) and the balance amount of about Rs. 24,000 is not understandable from the said Account/Balance Sheet. From perusal of assessee’s Receipt, Payment and Investment Account (RHS, as placed on page 233 of PB), we find the amount of Rs. 1,61,000 received by assessee from his individual balance sheet and invested in the shop M/s. Anand Mangal, and this investment has been shown as receipt in the shop in balance sheet (page 234 of PB) and so the same is found to be correct. Two amounts of Rs. 1 lakh and Rs. 65,000 stated to be loans taken by assessee from Shri Pema Ram and Smt. Anand Kaur by cheque and are reflected in balance sheet (LHS) on page 234 is supported by assessee’s personal Bank Account (Page 420 of PB) from where the assessee has withdrawn and then invested in the shop M/s. Anand Mangal. As such on considering the assessee’s balance sheet (page 234 of PB) and reducing the liability/receipt figure by Rs. 24,000 (Rs. 1,25,262 minus Rs. 1,01,947) the difference regarding receipt of advances from customers, the receipt (liability) comes to Rs. 4,21,000 (Rs. 4,45,000 minus Rs. 4,21,000). As such the receipts in the balance sheet (page 234 of PB) being less by Rs. 24,000 from assets (RHS of balance sheet on page 234 of PB). In the circumstances, an addition of Rs. 24,000 is found to be sustainable in respect of gold and silver, as the remaining assets stand explained by liability/receipt side (LHS) of the balance sheet as placed on page 234 of PB.
112. Ground No.7 disputes the addition of Rs. 74,554 made by Assessing Officer on account of investment in the purchase of shop in the name of assessee’s wife Smt. Anand Kaur. The learned AR of assessee has contended that Smt. Anand Kaur is regularly assessed to I.T. in her own right, and her identity, as taxpayer, has never been disputed. He has contended that computation of income and balance sheet of Smt. Anand Kaur are placed on pages 274 to 305 of PB. It has been contended that Smt. Anand Kaur purchased the shop for Rs. 75,554 and the said shop is reflected in her balance sheet (page 275 of PB). It has been contended that she also owns assets to the extent of Rs. 4,80,340 including this shop; and this shop is registered in her name. As against the above, the learned D.R. of revenue has contended that his addition has rightly been made by Assessing Officer and sustained by learned CIT(A). He has supported the orders of authorities below.
113. We have considered the rival contentions as also the relevant material on record. Smt. Anand Kaur, the wife of assessee, is an independent assessee under I.T. Act and this shop, is registered, in her name, and has been duly reflected in her balance sheet. Besides, there is not an iota of evidence on record to show the said purchase of shop, and in turn the investment therein having been made by assessee. In the circumstances we find no justification for making the addition in assessee’s hands for investment in the purchase of this shop in assessee’s wife’s name. We, therefore, delete this addition.
114. Ground Nos. 8 and 9 have not been pressed by the learned AR of assessee, so the same are dismissed accordingly.
115. In the result, this appeal of assessee being ITA No. 8/JDPR/2000 is allowed in part as indicated above.
Per Khatri -I have carefully perused the order of the learned Judicial Member in ITA No. 8(JDPR)2000 for the block period 1987-88 to 1997-98, but I have not been able to persuade myself to agree with the conclusions contained in the draft order of the learned Judicial Member.
2. In ground No. 2 the appellant disputes that the learned CIT(A) erred in not allowing credit of set off of the following amounts:
|
(i) Amount withdrawn from the books of HUF lying seized & utilized for various investment |
Rs. 3,11,081. |
|
|
(ii) Amount received back on cancellation of agreement and recycled in the business: |
|
|
|
|
(a) From Shri Hukmi Chand |
3,10,000 |
|
|
(b) Smt. Poosi Bai |
7,01,000 |
|
|
(c) Shri Ram Dayal |
51,000 |
|
|
|
Rs. 10,62,000 |
|
(iii) Amount received from Shri Ugam Raj Soni by account payee cheque |
Rs. 2,25,000 |
|
|
(iv) Difference on account of moneylending debt actually found and addition sustained by the CIT(A) |
Rs. 3,78,050 |
|
|
(v) Amount received as advance againstagreement to sale of 3 plots |
Rs. 2,00,000 |
|
|
(vi) Amount received from Bhabhoot Singh |
Rs. 1,50,000 |
|
|
|
Rs.23,26,131 |
|
Ground No. 2.1
The learned Judicial Member opined in para 84 at page 49 of the order that the appellant was entitled to get the benefit of set off/credit of Rs. 3,11,081 withdrawn from the cash book of the HUF in the hands of the appellant in his individual capacity against the sustained addition. For the purpose he relied on the following judgment:
1. Anantharam Veerasnghaiah & Co.’s case (supra)
2. Tyaryamal Balchand’s case (supra)
In the case of Anantharam Veerasnghaiah (supra) it was held that when an "intangible" addition is made to the book profits during an assessment proceeding, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee. That income although commonly described as "tangible" is, as much a part of his real income as that disclosed by his account books. It has the same concrete existence. It could be available to the assessee as the book profits could be. In the case of Tyaryamal Bal Chand (supra) it was held that a trading addition of Rs. 18,117 would be sufficient to cover any unexplained income to the extent of cash credit Rs. 16,950. The facts of these two judgments are different and the decisions are also on different grounds. In the case before us the appellant is asking for allowing of benefit of availability of cash against the sustained addition.
3. The learned AR has also relied upon the case of Suraj Prakash Soni (supra) decided by this Bench through its order 27-5-2002 vide para 51 at page 26 in I.T.A. No. 492/JP/1999. The facts in the case before us and the facts in the case of Surat Prakash Soni (supra) are different. In that case the appellant had filed specific chart showing specific withdrawals from the cash book on specific dates and with specific utilization i.e. for investment in the house property. This issue had been restored to the Assessing Officer with a direction to check the availability of cash withdrawn from the account of HUF for investment in the house property and the Assessing Officer was directed not to allow any benefit, if any mistake found regarding specific withdrawal and specific utilization in the house property. In the present case, as in the case of Suraj Prakash Soni (supra) cash book of HUF had not been produced before us which is lying seized with the department. The facts of this case and that of Shri Suraj Prakash Soni are identical to the extent that the amount of Rs. 3,11,081 had been withdrawn from the cash book of the HUF which is to be verified by the Assessing Officer from the cash book lying in his custody. In that case there was specific utilization for investment in the house property. The learned AR has failed to establish live-link between withdrawal and the investment. Besides, the Assessing Officer has not verified this fact from the cash book lying seized in the case of the HUF. This issue requires investigation of facts that the withdrawal of money on specific date and the investment of cash in specific asset on specific date. In my opinion this issue requires reconsideration/readjudication by the Assessing Officer. This issue can be restored to the Assessing Officer for verification on the above noted points.
4. Ground No. 2 (iii): The appellant disputes non-allowing of credit/set off of Rs. 3,10,000, Rs. 7,01,000 and Rs. 51,000. In this case the specific receipt of money had not been proved from the cash book or bank pass book or from the seized document. In this case the onus was on the assessee to prove the receipt of money and not on the Assessing Officer. First of all, there is no proof of receipt of money from these persons and secondly there is no proof of withdrawal from particular source on specific date and also utilization in specific asset on specific date. Reliance was placed on the order of ITAT, Jaipur Bench in the case of Ramesh Chand Modi, 21 TW 508. The facts in the case of Ramesh Chand Modi are different and distinguishable. In that case the Assessing Officer was asked to give adjustment for rotation, recycling, reinvestment and to work out the peak credit while making additions. In the case before us there is no evidence of rotation or recycling or reinvestment and there is no evidence for receipt of money and subsequent utilization in reinvestment/expenditure on specific date. Therefore, no benefit of availability of cash can be given on this ground.
5. Ground No. 2(iii): The assessee disputes the non-allowing of credit/set off of Rs. 2,25,000 received from Shri Ugam Raj Soni by account payee cheque, but I am of the opinion that the learned CIT(A) had rightly held that it was not established from the debit entry in the bank account of the assessee that the amount was utilized by the assessee towards purchase of agricultural land. Therefore, no benefit of Rs. 2,25,000 received from Shri Ugam Raj Soni can be allowed.
6. Ground No. 2(iv): The assessee disputes the non-allowing of set off/credit of Rs. 3,78,050, being the difference of actual money lending debtors of Rs. 1,11,000 as on the date of search and the addition of Rs. 4,88,050 sustained by the CIT(A) on the basis of the advances, against additions made for acquisition of assets. The learned AR of the assessee has contended that at the time of search money lending debtors were found to the extent of Rs. 1,11,000 whereas the learned CIT(A) sustained the addition on account of advances to money lending debtors at Rs. 4,88,050 on the basis of advances in the preceding year. It was contended that since actual money lending on the date of search was to the extent of Rs. 1,11,000 only, the same shows that the assessee had recovered a sum of Rs. 3,77,050 (Rs. 4,88,050 minus Rs. 1,11,000) from the debtors which was available with the assessee and constituted a source and the assessee utilized the same for further investment in other assets. I am of the opinion that no benefit of availability of cash of Rs. 3,77,050 can be given as the appellant had not given any proof of recovery from the debtors and neither it can be proved on the basis of seized documents that any recovery was made from the debtors. For allowing benefit of availability of cash, specific source with date of receipt, specific date of withdrawal and specific date of investment are required. This may be a case of bad debts or the case where no proof regarding recovery of debt is on record.
7. Ground No. 2(v): Amount received as advance against sale of 3 plots Rs. 2,00,000
Ground No. 2(v) disputes the non-receipt of Rs. 2,00,000. The learned AR disputed the credit of set off of balance sum of Rs. 50,000 on the basis of slip being Annexure A-II/page 79. The learned CIT(A) confirmed the order of the Assessing Officer and did not allow any relief to the assessee. This ground has rightly been rejected.
8. Regarding Ground Nos. 3 & 4, I am of the opinion that right conclusion had been arrived at.
9. Ground No. 5 Addition of Rs. 1,66,991 on account of gold ornaments found at shop. In para 26.2. at pages 52 to 53, the CIT(A) had given a finding wherein he observed that the appellant had been able to explain satisfactorily the acquisition of gold to the extent of 218 gms. and he held that addition on account of gold ornaments weighing 362 gms. because the appellant did not furnish any explanation in respect of such gold ornaments. As per balance sheet prepared by the appellant there is no correlation between realization of money and purchase of gold ornaments. Bill for purchase of gold ornaments had not been produced. No source of acquisition with bill of purchase and the date has been explained. Therefore, I agree with the view of the learned CIT(A) that no relief can be allowed to the appellant.
10. Ground No. 6 Addition of Rs. 1,84,734 on account of Silver. I agree with the view of the learned CIT(A) expressed in para 31.1 at page 59 of his order. For the reasons discussed in Ground No. 5, the appellant is not entitled to any relief.
11. Ground No. 7 Addition of Rs. 74,554 on account of unexplained investment in purchase of shop in the name of Smt. Anand Kanwar. I agree with the view of the learned CIT(A) expressed in para 33.2 at pages 62 and 63.
ORDER UNDER SECTION 255(4) OF INCOME-TAX ACT, 1961
In ITA No. 08/JDPR/2000, in the case of Rameshwarlal Soni, for the block period 1987-88 to 1997-98, the learned A.M. has passed a separate order, wherein he has given his dissenting decision on a number of grounds, which after signing of all the pages by him was received by me vide his D.O. Letter dated 24-7-2003.
The relevant facts as also the related evidence have already been mentioned/discussed in the main order.
The relevant grounds together with decision of JM and AM thereon are summarized as under:
|
Ground No. with amount claimed for set-off/credit |
J.M. decision with para |
A.M. decision with para |
Ramarks |
|
2(i) Rs. 3,11,081 |
Allowed, para 84 |
Restored to A.O, para 3 |
|
|
2(ii) |
|
|
|
|
(a) Rs. 3,10,000 |
Allowed, para 92 |
Not allowed, para 4 |
|
|
(b) Rs. 7,10,000 |
Not allowed, para 93 |
-do- |
|
|
(c) Rs. 51,000 |
Allowed, para 95 |
-do- |
|
|
2(iii) Rs. 2,25,000 |
Allowed, para 96 |
Not allowed, para 5 |
|
|
2(iv) Rs. 3,78,050 |
Allowed, para 98 |
Not allowed, para 6 |
|
|
2(v) Rs. 50,000 |
Not allowed, para 99 |
Commented ';rightly rejected';, para 7 |
|
|
2(vi) Rs. 1,50,000 |
Allowed, para 101 |
-- |
|
|
Ground No. with amount claimed for set-off/credit |
J.M. decision with para |
A.M. decision with para |
Ramarks |
|
3 Rs. 97,872 |
Not allowed, para 102, r/w 22 |
Commented "right conclusion", para 8 |
Correct amount is Rs. 57,872 |
|
4 Rs. 50,000 |
Not allowed, para 104 |
-do-, para 8 |
|
|
5. Rs. 1,66,991 |
Allowed partly (sustained Rs. 24,000) para 110 |
Not allowed, para 9 |
|
|
6. Rs. 1,84,734 |
-do- |
Not allowed, para 10 |
|
|
7. Rs. 74,554 |
Allowed, para 112 |
Not allowed, para 11 |
|
In view of the dissenting order of learned AM the following question is referred for the decision of 3rd Member with a request to the Hon’ble President, I.T.A.T. to please appoint a third member for deciding the same -
Ques. Whether in the facts and circumstances of the case the assessee-appellant entitled to get the benefit of set-off/credit telescopy in respect of the amounts contained in ground Nos. 2(i), 2(ii)(a), 2(ii)(c), 2(iv) and 2(vi), 5, 6 and 7 ?
Third Member Order
Per Shri M.K. Chaturvedi, Vice President. -These appeals came before me as a third Member to express my opinion on the following question :
"Whether in the facts and circumstances of the case the assessee- appellant entitled to get the benefit of set off/credit telescopy in respect of the amounts contained in ground Nos. 2(i), 2(ii)(a), 2(ii)(c), 2(iv) and 2(vi), 5, 6 and 7?"
2. At the outset Shri U.C. Jain, ld. Counsel for the assessee sought permission to raise the following additional ground :
"That on the facts and in circumstances of the case and in law the assessment order passed by the Ld. Assessing Officer under section 158BC of Income-tax Act, 1961 on 28-1-1999 is barred by limitation as per provisions of section 158BE(1)(a) and as such the same is liable to be quashed."
3. Reliance was placed on the decision of the Third Member rendered in the case of Goodyear India Ltd. v. ITO (2000) 73 ITD 189(Delhi) (TM). In this case the Ld. Third Member has held that interest of justice and fair play demands that when the fact had come to notice before conclusion of a case, it must be duly considered and appropriately decided. This observation was not made in the context of section 255(4). If the Members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority. If the Members are equally divided they shall state the point or points on which they differ, and the case shall be referred by the President of the Tribunal for hearing on such point or points by one or more of the other Members of the Tribunal, and such point or points shall be decided according to the opinion of the majority of the Members of the Appellate Tribunal who have heard the case, including those who first heard it. The mandate of the section prescribes that only point of difference would be referred to a Third Member and the issue on which there is difference will be adjudicated according to the decision of the majority. As such it is beyond the ken of section 255(4) to elongate the scope of the appeal. I therefore decline to accept the prayer made by the Ld. Counsel for raising the additional ground.
4. Apropos the question referred for the consideration of the Third Member, it was further stated that on ground No. 2(iii) there existed a difference of opinion between the Members but inadvertently that difference is not projected in the question. Similarly in regard to ground No. 2(vi) there exists no difference between the Ld. members. The Ld. Accountant Member did not comment on this ground still it is projected in the difference.
5. My attention was adverted to the decision of the Tribunal rendered in the case of Khopade Kisanrao Manikrao v. Asstt. CIT (2000) 74 ITD 25 (Pune) (TM). In this case it was held that the jurisdiction of Third Member is not limited to the language of the questions framed in the reference but it extends to the entire sums and substance of opinion on the specified points. The questions are framed in accordance with rules for identifying the dispute but it is a well settled principle of law that rules cannot restrict the scope of powers conferred under the statute. Therefore, the rules do not have the effect of curbing the powers of Third Member conferred upon him under section 255(4).
6. Having regard to the precedent and after hearing both the parties on the point, I am inclined to agree with the Ld. Counsel that ground No. 3(iii) on which there existed a difference of opinion is to be adjudicated, despite the fact that it is not specifically mentioned in the question. Similarly ground No. 2(vi) is not to be decided by Third Member as because Ld. Accountant Member did not make any comment on this aspect, as such there is no dispute on the view taken by the Ld. Judicial Member.
7. Now, I propose to adjudicate the issues contained in ground numbers 2(i), 2(ii)(a), 2(ii)(c), 2(iv), 3(iii), 5, 6 and 7.
8. Ground No. 2(i) pertains to the allowability of Rs. 3,11,081.
9. I have heard the rival submissions. It was submitted by Shri Jain that assessee is an individual. He was also Karta of HUF by the name Mangial Rameshwar Dayal Soni. HUF was engaged in the business of money lending and manufacturing of gold ornaments. Assessee did not maintain books of account. HUF did maintain books of account. From the books of HUF, found and seized at the residence of the assessee, as also of his brother Suraj Prasad Soni, it revealed that assessee withdrew Rs. 3,11,081 from the account of HUF. It was submitted by the Ld. Counsel that the money withdrawn from the books of HUF was utilized for making various investments. The total withdrawal from the HUF beginning from 1993-94 till the date of search amounted to Rs. 3,11,081. Search was conducted on 3rd January, 1997. This amount was said to be invested in the assets. Money was rotated in the business. Assessee prepared balance sheet of entire investment. Revenue authorities declined to give credit of this amount, in explaining the investments, as because assessee did not establish nexus between the amount withdrawn from HUF and the investments made. Addition was made on final investment as on the date of search in respect of the entire block period and also in respect of the expenditure incurred in the block period.
10. It was contended that while computing the undisclosed income as per seized records, income has to be estimated on the basis of assets acquired and expenses incurred; and the total of expenditure has to be reduced from the source available to the assessee. Revenue authorities made separate additions in respect of each and every investment as well as in respect of expenditure, viz. construction of house, marriage etc. Nothing was found at the time of search indicating that amount withdrawn were utilized for any other purposes. Investments and expenditures detected at the time of search were explained with reference to the withdrawals.
11. In the case of Pipush Kumar O. Desai v. CIT (2001) 247 ITR 568(Guj.) a search was conducted at the residence of the assessee. Cash and jewellery found at the time of search were seized. Assessing Officer concluded that since jewellery was not recorded in the books of account and the assessee had not explained the same, it was liable to be included in the income of the assessee. Hon’ble High Court has held that since the assessee had given sufficient details with regard to the source from which the jewellery was purchased and with regard to the cash inflow and since the Tribunal had not considered the genuineness of the relevant statements and documents pertaining to the same, the addition to the income of the assessee was not justified. In the present case also we find that genuineness of the statement regarding withdrawal was not doubted. This fact was substantiated with reference to the HUF record. In a block assessment when separate additions are made for each investment and expenditure, reduction should be made to the extent assessee explained the availability of funds.
12. When the Assessing Officer estimates assessee’s income returned at Rs. X, at a figure of X+Y, he proceeds on the basis that while Rs. X are in the books, Rs. Y are with the assessee outside the books. Having assessed on larger amount, he cannot at the same breath, say that Rs. Y did not in fact exist because they did not appear in the books. Investments made in particular accounting year may be explained to have proceeded from earlier out of book additions. Hon’ble Supreme Court in the case of Anantharam Veerasinghaiah & Co. (supra) has held that when the intangible addition is made to the book profits during an assessment proceeding, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee. That income, although commonly described as "intangible", is as much part a real income as that disclosed by his account books. It has the same concrete existence. It can be available to the assessee as the book profits could be.
13. Reference was also made to the decision of the Hon’ble Jurisdictional High Court rendered in the case of Dhandia Jewellers v. CIT (1995) 214 ITR 712, 715 (Raj.). In this case it was held that secret profits or undisclosed income of an assessee earned in earlier assessment year can constitute a fund, though concealed, from which the assessee made withdrawal subsequently. The Hon’ble High Court followed its earlier decision rendered in the case of Tyaryamal Balchand (supra).
14. In the case of Ramesh Chand Modi v. Asstt. CIT [IT (SS) A No. 11 (JP.) of 1997] Tribunal held that while making addition for unrecorded sales, adjustment for rotation, recycling, reinvestment, telescoping, credit purchases, peak credit etc. should be given.
15. The Ld. Judicial Member has held that benefit of telescoping should be given to the assessee in respect of the amount withdrawn from HUF. He examined this issue with reference to the block assessment. In block assessment, when additions are made in respect of unexplained investment, expenditure etc. detected on the date of search, all the unexplained outgoing and incoming should be considered. If the assessee explains inflow of money during the block period as disclosed or undisclosed income resulting from tangible or intangible addition it will reflect the availability of fund. Utilization can be explained with reference to recycling, rotation in further investment. As such the benefit of telescoping/set off credit should be allowed.
16. Ld. Accountant Member has held that in the case of Suraj Prasad Soni [IT Appeal No. 492 (JP.) of 1999] the issue was restored to the Assessing Officer with direction to examine the availability of cash withdrawn from the account of HUF for investment in house property. It was stated that facts of the present case are identical with that of Shri Suraj Prasad Soni as such the amount of Rs. 3,10,081 withdrawn from the cash book of the HUF should be verified. The matter was restored to the file of the Assessing Officer for verification.
17. Each case depends on its own facts, and a close similarity between one case and another is not enough, because even a single significant detail may alter the entire aspect. In deciding such cases, one should avoid temptation, as said by Cardozo, by matching the colour of one case against the colour of another. In the case of Suraj Prasad Soni (supra) the telescoping was claimed against the cost of construction of house. In the present case telescoping is claimed not against any particular item but in general. As such in my opinion the text and context is different.
18. If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. When total income has to be estimated on the basis of assets acquired and expenses incurred, it necessarily enjoins the Assessing Officer to reduce the expenditure from the source available to the assessee. Having regard to the facts I am inclined to agree with the view taken by the Ld. Judicial Member on this count.
19. Next issue relates to the allowability of credit/set off of Rs. 3,10,000 and Rs. 51,000 being the amount received from Hukami Chand and Smt. Ram Dayal/Smt. Raj Kumari.
20. I have heard the rival submissions. Shri Jain submitted that assessee had entered into purchase agreement. In pursuance to the said agreement the aforesaid amounts were received. Sale could not be executed. Assessee got back the amount from Hukami Chand and Smt. Ram Dayal/Smt. Raj Kumari. Assessee made this claim in the financial statement prepared on the basis of seized record. Agreement with Hukami Chand was entered into on 30-4-1995. Assessee paid Rs. 85,000 to Hukami Chand on that date and made a further payment of Rs. 2,25,000 on 4-1-1995. The payment of Rs. 3,10,000 to Hukami Chand was accepted by the Assessing Officer. The period of compliance of agreement was six months. Hukami Chand was not the real owner. He was holding power of attorney in respect of the property. At the instance of the owner Hukami Chand revoked the agreement on 30-9-1995 and returned money to the assessee in the Financial Year 1995-96. Shri Jain submitted that the amount so recovered from Hukami Chand was utilized in other investments. There is absolutely nothing on record to indicate that assessee had purchased that property for which the advance was made. Assessing Officer made addition in respect of each and every asset on the basis of date of advance. Credit in respect of amount received back was not given back to the assessee. As such there was double addition. Assessee did make specific request to call Hukami Chand. Letter in this regard is appended in the paper book No. 1 at page 360. During the course of search no suggestive documents were found indicating any transaction with Hukami Chand. On this factual backdrop it was alleged that assessee is entitled to the credit of the said sum, which he received back from Hukami Chand.
21. Learned Accountant Member stated in the order that the specific receipt of money evidencing the payment back was not produced. Onus was on the assessee to prove the receipt of money. There is no proof of receipt from the person and there is no proof of withdrawal from the particular source on specific date and also utilization in specific asset on specific date.
22. It is pertinent to note that assessee is not maintaining books of account. The transaction was not routed through the bank. As such it was not possible on the part of the assessee to produce the cash book or bank pass book to prove the veracity of the transaction. Indisputedly assessee did advance this money for the purchase of property. Assessing Officer accepted this fact. It is also correct that during the course of search no material was found indicating the purchase of property. Advance was made for the purpose of purchase. Property was not purchased. Therefore, it can be assumed that the money advanced by the assessee towards the purchase consideration was given back to the assessee.
23. Same reasonings were applied in the context of Smt. Raj Kumari. Smt. Raj Kumari was the holder of power of attorney in respect of house of Ram Dayal. Smt. Raj Kumari admitted before the Assessing Officer that due to the cancellation of agreement, amount was returned back to the assessee. I, therefore, find no justification in rejecting the contention of the assessee on this count. I concur with the findings of Ld. Judicial Member.
24. Next issue relates to the allowability of credit/set off of Rs. 2,25,000 alleged to be received by the assessee from Shri Ugam Raj Soni.
25. I have considered the rival submissions. Assessee purchased 51 Bighas of land from Shri Maqbool Husain. Out of this he sold 20 Bighas to Shri Ugam Raj Soni for a consideration of Rs. 10,00,000. Assessee received Rs. 7,70,000 in cash and Rs. 2,25,000 by account payee cheques. CIT(A) accepted the receipt of Rs. 7,70,000 and credit for the same was duly given but the fact that assessee did receive Rs. 2,25,000 by cheques and utilized the same for making payment for purchase of land was not accepted by the CIT(A). CIT(A) held that assessee did not establish debit entry in the bank account to prove that the money was utilized towards purchase of agricultural land. Ld. JM held that the specific utilization of the amount was not necessary for allowing the benefit of set off against additions inasmuch as the said amount was undeniably received by the assessee by cheques and it was deposited in the bank account. With drawal of Rs. 20,000 on 28-9-1995 and Rs. 1,85,000 on 11-10-1995 also appeared in the bank records. As such it is evident that recycling was possible. Assessee did establish the source protanto. On this factual finding Ld. JM extended the benefit of telescopy in regard to that amount. This was considered as source available with the assessee for reinvestment in block period for which the Assessing Officer made separate addition. As such he directed the Assessing Officer to allow telescopy in respect of Rs. 2,25,000. Ld. AM has not given any reasoning for differing with the Ld. JM. He simply relied on the opinion of CIT(A) and denied the benefit of telescoping to the assessee.
26. Assessee did receive Rs. 2,25,000 by cheques is not a disputed fact. This was proved with reference to the bank records. Withdrawals also did appear in the bank account against the said deposit. Therefore, it cannot be said that availability of Rs. 2,25,000 was doubtful. I have perused the various reasoning adduced by Ld. JM for allowing the claim. In my opinion Ld. JM took a correct view in the matter. As such I agree with him on this count.
27. Next issue relates to the allowability of credit in respect of Rs. 3,77,050 being the amount of difference projected on the basis of search material.
28. I have heard the rival submissions in the light of material placed before me. At the time of search some loose slips were found. On the basis of those slips addition to the tune of Rs. 4,88,050 was made. It was alleged that these slips represent the money lending debtors. The list of money lender debtors was also found at the time of search. As per that list actual money lending debtors were to the tune of Rs. 1,11,000. It was clarified that the assessee used to give loan against pledge of ornaments. This fact was established with reference to the records. The details of lending depositors appeared on the inventory appended on page No. 4 of the paper book No. 1. The modus operandi was explained by the learned counsel. On getting the money back, assessee used to return the pledged ornaments. The borrowers were concerned with their pledged items as such the slips used to loose significance subsequent upon returning the pledged items. Many a times these were not collected by the borrowers. Resultantly they were lying in possession of the assessee. Assessing Officer at page 9 of the order reproduced the list of the names of the persons to whom the advance were made. Sr. No. 17(a) reads as under : Ugam Raj Ji, amount advanced Rs. 60,000 dated 14-9-1996. In the remark column it is stated; "against security of Timania @ 24%. Shri Jain submitted that the item of jewellery namely Timania was not found at the time of search. This clearly indicates that the pledged ornament was returned back after the receipt of money. The slip was not collected by Shri Ugam Raj Soni. As such it was lying with the assessee. The list of debtor was also found at the time of search which clearly indicates that the actual debtors were to the tune of Rs. 1,11,000. This fact is also supported by the Panchnama. CIT(A) sustained the addition on account of advance to money lending debtors at Rs. 4,88,050. The actual money lending on the date of search was to the extent of Rs. 1,11,000 only. It is, therefore, abundantly clear that assessee did recover Rs. 3,77,050 from his debtors. The amount so recovered was available with the assessee. It constituted a source. It was utilized for investment in other assets found on the date of search for which Assessing Officer made separate addition. On this factual finding, Learned Judicial Member allowed to the assessee, the benefit of telescopy of Rs. 3,77,050 against the sustained addition.
29. Ld. Accountant Member opined that for allowing benefit of telescopy, it is sine qua non, to point out specific source with date of receipt, specific date of withdrawal and specific date of investment. This may be a case of bad debts or the case where no proof regarding recovery of proof is on record.
30. There is absolutely no material on record to indicate that the amount as advanced by assessee became bad debts. More so when the loans are made against pledge of ornaments the possibility of bad debt is not there. The dictum of approbate and reprobate prescribes that one cannot play hot and cold in the same stream. Assessing Officer accepted the fact of loan advanced by the assessee to the extent of Rs. 4,88,050. From the Panchnama it is clear that as on the date of search, money lending debtors were to the tune of Rs. 1,11,000 only. From this it can be concluded that assessee did receive Rs. 3,78,050 back from the debtors. The presumption of bad debt is not possible under the circumstances. Various reasoning adduced by Learned Judicial Member in this context are very much in consonance of principles of justice. As such I agree with his decision on this count.
31. Next issue in respect of ground Nos. 5 and 6 relate to the sustaining of addition of Rs. 1,66,991 on account of gold ornaments found at the shop in assessment year 1997-98 and addition of Rs. 1,84,734 on account of silver ornaments and utensils found at the residence and the shop in assessment year 1997-98.
32. I have heard the rival submissions. Shri Jain vehemently contended that these additions were made on jejune reasonings. All the assets of the assessee found during search stand explained by receipt/liability shown in assessee’s balance sheet. At the time of search gold ornaments weighing 518 grams were found at the shop as per Panchnama. Out of this 280 grams were received from customers. This fact is evident from seized books. 362 grams were explained with reference to the seized books which reflects advance received from customers, creditors and capital investment by assessee. CIT(A) accepted this claim in regard to 218 grams received from customers but sustained the addition in respect of 362 grams amounting to Rs. 1,66,991. Assessee did prepare balance sheet with reference to the seized record. Source of acquisition of 360 grams was duly explained in the balance sheet.
33. In regard to the addition in silver account, Assessing Officer made addition of Rs. 73,256 for silver items found at the residence and Rs. 1,11,478 in respect of silver items found at the shop.
34. I have perused the balance sheet, which is appended at page 232 of the paper book. This balance sheet was prepared on the basis of seized books found at the shop "Anand Mangal". This proprietary firm of the assessee was started on 20-10-1996. Balance sheet was prepared till the date of search i.e. upto 3-1-1997. Assessee did explain the stock of silver ornaments and gold ornaments with reference to the said balance sheet. Ld. Judicial Member examined the items stated in the balance sheet. It was found that receipt in the balance sheet was less by Rs. 24,000 from assets. In these circumstances an addition of Rs. 24,000 was found to be sustainable in respect of gold and silver. Remaining assets were explained with reference to the liability, as such addition was deleted. After perusing the conflicting orders passed by the Ld. Members, I am of the opinion that the Learned Judicial Member took a correct view on this count. As such I concur with his decision on this issue.
35. Last issue relates to the addition of Rs. 74,554 made by Assessing Officer on account of investment in the purchase of shop in the name of assessee’s wife Smt. Anand Kaur.
36. I have heard the rival submissions. I have noted that Smt. Anand Kaur is regularly assessed to Income-tax. Her identity as taxpayer is not disputed. Computation of income and balance sheet of Smt. Anand Kaur was placed on record. Shri Jain submitted that Smt. Anand Kaur purchased the shop for Rs. 74,554. This was duly reflected in her balance sheet, which is appended at page 275 of paper book No. 1. She owns the assets to the extent of Rs. 4,80,340 including the shop. This shop is registered in her name. There is absolutely no iota of evidence on record to demonstrate that said purchase of shop, and in turn the investment therein was made by the assessee. The Learned Accountant Member in this regard simply agreed with the view of the CIT(A). No independent view is expressed by him on this issue. I am inclined to agree with the reasoning given by Learned Judicial Member. As such I concur with him on this count.
37. The matter will now go before the regular Bench for deciding the appeals in accordance with the opinion of the majority.
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