Shri Mahesh Agrawal, V. The ACIT 1 (2),

CO 129/IND/2008

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5304 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-09-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 07-11-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Assessee Lawyers: H P VERMA
• Keywords: Unexplained cash credit; Unexplained investment; Capital asset converted into stock in trade; Unexplained expenditure; Search and seizure; Salary income; Source of fund; Additional evidence; Notional interest
• Section: 143(3); 142(1); 153A; 68; 132; 28; 144

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C.SHARMA, ACCOUNTANT MEMBER PAN NO. : ADMPA4297N I.T.(SS)A.NO. 197 TO 201/IND/2008 A.YS. : 2000-01 TO 2005-06 ACIT, SHRI MAHESH CHAND AGRAWAL, 1(2), VS 216-217-218, NEW INDUSTRIAL AREA II, BHOPAL. MANDIDEEP, BHOPAL. APPELLANT RESPONDENT C.O.NO. 129/IND/2008 (ARISING OUT OF I.T.(SS) NO. 200/IND/2008) A.Y. : 2004-05 SHRI MAHESH CHAND AGRAWAL, ACIT, 216-217-218, NEW INDUSTRIAL AREA II, VS 1(2), MANDIDEEP, BHOPAL. BHOPAL. CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SHRI K.K. SINGH, SR. DR ASSESSEE BY : SHRI H.P. VERMA AND SHRI ASHISH GOYAL, C. A. - 2 - O R D E R PER R. C. SHARMA, A.M THESE ARE APPEALS FILED BY THE REVENUE AND CROS S OBJECTION BY THE ASSESSEE AGAINST THE ORDERS OF CIT (A) FOR THE ASSESSMENT YEARS 2000-01 TO 2005-06 IN THE MATTER O F ORDERS PASSED U/S 153A/143(3) OF THE INCOME-TAX ACT, 1961. 2. MORE OR LESS COMMON GROUNDS HAVE BEEN TAKEN IN ALL THESE APPEALS EXCEPT DIFFERENCE IN QUANTUM. 2.1 RIVAL CONTENTIONS HAVE BEEN HERD AND RECORDS PERUSED. 2.2 FACTS IN BRIEF ARE THAT THERE WAS A SEARCH AT AGRAW AL GROUP ,MECH & FAB AND GTV GROUP U/S 132 ON 16.9.200 5. VARIOUS ADDITIONS WERE MADE BY THE ASSESSING OFFICE R WHILE FRAMING ASSESSMENT U/S 153A. IN THE APPEAL FILED BE FORE THE CIT(A), VARIOUS ADDITIONS WERE DELETED AND SOME OF THE ADDITIONS WERE CONFIRMED. BOTH REVENUE AND ASSESSEE ARE IN APPEALS/CROSS OBJECTION BEFORE US. THE BASIC GRIEV ANCE OF THE LD. CIT DR IN ALL THESE CASES PERTAINS TO ASSESSEE S FAILURE TO FILE RETURN OF INCOME WITHIN TIME, THEREFORE, THE A O DID NOT FIND SUFFICIENT TIME TO ENQUIRE INTO THE MATTER. HE FURT HER SUBMITTED THAT EVEN THE QUESTIONNAIRE ISSUED WAS NO T PROPERLY REPLIED BY THE ASSESSEE AND THE AO WAS LEFT WITH NO OPTION BUT TO COMPLETE THE ASSESSMENT WITHOUT VERIFYING THE TH INGS. AS - 3 - PER THE LD. CIT DR, THE LD. CIT(A) HAS DISPOSED THE MATTER AND ALLOWED THE ASSESSEES APPEAL IN A SUMMARY MANNER A ND WITHOUT GIVING RELEVANT FINDINGS, THEREFORE, IT WAS SUBMITTED THAT THE ORDER OF LD. CIT(A) SHOULD BE SET-ASIDE AN D THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF AO FOR DECID ING AFRESH. 2.3 ON THE OTHER HAND, THE LD. AUTHORIZED REPRESENTATI VE DREW OUR ATTENTION TO THE RESPECTIVE DATES OF ISSUE OF NOTICES U/S 153A, U/S 143(2) AND 142(1) AND ALSO DATE OF IS SUE OF THE QUESTIONNAIRE AND THE RESPECTIVE REPLIES FILED BY T HE ASSESSEE. AS PER LD. AUTHORIZED REPRESENTATIVE, ALL THE FINAL ACCOUNTS AND RECORDS WERE BEFORE THE AO AND HE HAS MADE THE ASSESSMENT AS PROVIDED U/S 143(3) AND NOT U/S 144. BY HIGHLIGHTING THE RELEVANT DATES, THE LD. AUTHORIZED REPRESENTATIVE EMPHASIZED THAT THE DELAY WAS ATTRIB UTABLE TO THE LD. AO FOR WHICH THE ASSESSEE HAS BEEN MADE TO SUFFER UNREASONABLY AND HIGH PITCHED ASSESSMENTS WERE MADE . BY REFERRING TO THE VARIOUS ADDITIONS MADE BY THE ASSE SSING OFFICER, THE LD. AUTHORIZED REPRESENTATIVE CONTENDE D THAT GLANCE OF THE ADDITION ITSELF WOULD REVEAL THAT THE RE WAS NO REASON TO MAKE THE IMPUGNED ADDITIONS. THE ADDITION S WERE MADE AND THE LD. AO PREFERRED NOT TO GIVE ANY NOTIC E TO THE ASSESSEE BEFORE DOING SO. IN REPLY TO THE LD. CIT D RS REQUEST FOR RESTORING THE MATTER BACK TO THE FILE OF THE AO BY SETTING ASIDE ORDER OF CIT(A), THE LD. AUTHORIZED REPRESENT ATIVE CONTENDED THAT AN APPEAL WAS FILED AGAINST THE ORDE R OF AO BEFORE THE LD. CIT(A) IN DUPLICATE AND IN TURN A CO PY OF IT WITH - 4 - I.T.N.S. 51 WAS SENT BY HIM TO THE LD. AO. ONE OF T HE COLUMNS OF THE I.T.N.S. 51 IS WHETHER LD. AO WANTS TO APPEA R BEFORE THE LD. CIT(A). AGAIN WHEN CASES WERE FIXED BEFORE HEAR ING, ONE COPY OF SUCH NOTICE WAS SENT TO THE LD. AO. LD. AUT HORIZED REPRESENTATIVE ALSO INVITED OUR ATTENTION TO THE OR DER OF THE LD. CIT(A), WHEREIN HE HAS REQUISITIONED THE CASE RECOR DS FROM THE LD. AO. RECORDS WERE DULY SUPPLIED BY HIM. HOWEVER, THE AO DID NOT PREFER TO APPEAR BEFORE THE AO WHEN THE HEA RING WAS GOING ON. UNDER THESE CIRCUMSTANCES, THE ASSESSEE C ANNOT BE PENALIZED BY RESTORING THE MATTER BACK TO THE FILE OF THE AO IN SO FAR AS AFTER GIVING DETAILED FINDING, THE LD. CI T(A) HAS DELETED THE ADDITIONS WHICH WERE MADE BY THE ASSESSING OFFI CER WITHOUT GIVING COGENT REASONS. 2.4 WE HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE AND LD. SENIOR D.R. AND F IND FROM THE RECORD THAT THERE WAS A SEARCH AT AGRAWAL GROUP , MECH & FAB, AND GTV GROUPS U/S 132 ON 16.9.2005. NOTICE WA S ISSUED BY THE DEPARTMENT AFTER MORE THAN 6 MONTHS O F THE SEARCH U/S 153A. WE FOUND THAT IN ALL THE YEARS EXC EPT FOR ASSESSMENT YEAR 2006-07, NOTICE U/S 153A WAS ISSUED ON ALL THE ASSESSEES ON 22.3.2006, WHICH WAS SERVED ON THE ASSESSEE ON 25.3.2006. THEREAFTER, FORMAL NOTICE U/S 145(2) WAS ISSUED ON 13.6.2006 FIXING THE CASE FOR 20 TH JUNE, 2006. NOTICES U/S 143(2) AND 142(1) WAS ISSUED ON 31.8.2007 AND WAS S ERVED ON THE ASSESSEE ON 12.9.2007. WE FOUND THAT THIS IS AF TER MORE THAN ONE YEAR AND FOUR MONTHS AFTER FILING THE RETU RN. SUCH - 5 - NOTICE WAS ISSUED TO ALL THE ASSESSEES FALLING IN T HE SAME GROUP ON WHICH SEARCH WAS CONDUCTED. DETAILS WERE FILED B Y THE ASSESSEE ON 18.12.2007. HOWEVER, THE AO DID NOT RAI SE ANY QUERY AND COMPLETED THE ASSESSMENT U/S 143(3). HAD THE AO ANY GRIEVANCE WITH RESPECT TO NON-COOPERATION OF TH E ASSESSEE AND NON-FURNISHING OF THE RELEVANT DETAILS/INFORMAT ION CALLED FOR, HE SHOULD HAVE COMPLETED THE ASSESSMENT U/S 14 4 RATHER U/S 143(3). NOTICES U/S 143(2) & 142(1) WERE ISSUED AFTER MORE THAN ONE YEAR AND FOUR MONTHS AFTER FILING THE RETU RN. THE DELAY IS ATTRIBUTABLE TO THE AO FOR WHICH ASSESSEE HAS BEEN MADE TO SUFFER. AFTER GOING THROUGH THE ORDER OF TH E LD. CIT(A), WE FOUND THAT THE ADDITIONS WERE DELETED AFTER RECO RDING DETAILED FINDINGS. IN NONE OF THE APPEALS, THE REVE NUE HAS RAISED ANY GROUND WITH REGARD TO VIOLATION OF RULE 46A. IT IS NOT THE CASE OF THE DEPARTMENT THAT THE LD. CIT(A) RELIED ON DOCUMENTS WHILE DELETING THE ADDITION, WHICH WAS NO T MADE AVAILABLE TO THE AO OR WHICH WERE IN CONTRAVENTION OF RULE 46A. THEREFORE, THE ORDER OF THE LD. CIT(A) CANNOT BE SET-ASIDE AND MATTER CANNOT BE RESTORED TO THE AO FOR DECIDIN G AFRESH. 3. WE SHALL, FIRST, DECIDE THE APPEAL IN I. T.(SS) A.NO.197/IND/2008. THE FOLLOWING GROUNDS HAVE BEEN TAKEN IN THIS APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F - 6 - RS. 63,040/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF INTEREST PAID. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 22,27,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT/CREDIT IN M/S. MECH & FAB. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.1,72,991/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADDITION TO CAPITAL CREDIT UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961. 4. FACTS IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERA TION U/S 132(1)/133 WERE CARRIED AT THE ASSESSEES BUSIN ESS PREMISES AS WELL AS ASSOCIATE CONCERNS OF THE ASSES SEE AND OTHER FAMILY MEMBERS BELONGING TO THE SAME GROUP ON 16.9.2005. NOTICE U/S 153A WAS ISSUED ON 22.3.2006 REQUIRING THE ASSESSEE TO FILE RETURN IN THE PRESCR IBED FORM. THE RETURN WAS FILED BY THE ASSESSEE ON 1.6.2006 DE CLARING INCOME OF RS. 2,80,530/- FOR THE ASSESSMENT YEAR 20 00-01. THEREAFTER, THE AO ISSUED NOTICE U/S 143(2) ON 30 TH JUNE, 2006. QUESTIONNAIRES WERE ALSO ISSUED THEREAFTER ON 31.8.2007 REQUIRING THE ASSESSEE TO FILE THE RETURN AND ALSO REPLY TO THE QUERIES AND ALSO REPLY TO THE QUERIES RAISED IN THE QUESTIONNAIRE. THE AO NOTED THAT SHRI PRANAV PATHAK /ROHIT PATHAK, A.RS OF THE ASSESSEE ATTENDED ON 28.11.200 7 AND FILED - 7 - THE REPLY, WHICH WAS NOT COMPLETE. THE AO OBSERVED THAT THE ASSESSEE HAS TAKEN UNDULY LONG TIME IN FILING THE R ETURN AND ALSO RESPONDING TO THE NOTICE ISSUED U/S 142(1) AND 143(2). FROM THE RECORD WE FOUND THAT THE ASSESSEE FILED TH E RETURN IN COMPLIANCE TO NOTICE U/S. 153A ON 24-04-2006 . HOWE VER THE LD. ASSESSING OFFICER ISSUED A FORMAL NOTICE U/S. 1 43(2) EARLIER ON 13-06-2006 BUT DID NOT TAKE ANY ACTION FOR ABOUT A YEAR. HOWEVER, WHEN HE ISSUED A SECOND NOTICE U/S. 143(2 ) ALONGWITH QUESTIONNAIRE ON 31-08-2007, THE APPELLAN T FILED THE DETAILED REPLY WITH NECESSARY ANNEXURE TO ALL THE QUESTIONS AS APPEARING IN THE QUESTIONNAIRE AND THE LD. ASSESSI NG OFFICER DID NOT RAISE ANY FURTHER QUERIES AT ANY POINT OF TIME DURING THE ASSMT. PROCEEDINGS . THE LD. ASSESSING OFFICER HAS MADE A MENTION ABOUT FILING OF THE DELAYED RETURNS BY SOME OTHER PERSONS OF THE GROUP. BUT IT HAS NO CONCERN WITH TH E ASSESSEE. HOWEVER, THE LD. ASSESSING OFFICER MADE THE ADDITIO NS WITHOUT GIVING ANY OPPORTUNITY AND WITHOUT INVITING ANY OBJ ECTIONS FROM THE ASSESSEE . THE ORDER HAS BEEN PASSED BY TH E ASSESSING OFFICER WITHOUT PROVIDING ADEQUATE OPPORT UNITY TO THE ASSESSEE WHICH IS AGAINST THE PRINCIPLES OF NA TURAL JUSTICE. 5. WHILE FRAMING THE ASSESSMENT U/S 153A, THE AO NOTED THAT THE PERUSAL OF THE BALANCE SHEET FILED B Y THE ASSESSEE SHOWS ADDITION TO THE CAPITAL ACCOUNT OF R S. 2,44,991/- FOR WHICH THE ASSESSEE DID NOT FILE ANY DETAIL. THE AO ALSO STATED THAT THE PERUSAL OF THE OTHER DETAIL S FILED BY THE ASSESSEE AND THE INCOME STATEMENT DOES NOT DEPICT A NY - 8 - SOURCE, WHICH COULD JUSTIFY ADDITION TO THE CAPITAL , AS THE ASSESSEE HAD ONLY SHOWN GROSS INCOME AT RS. 72,000/ -. THE AO, THEREFORE, ADDED THE DIFFERENCE BETWEEN THE CAP ITAL ADDED AND THE INCOME DECLARED BY THE ASSESSEE AMOUNTING T O RS. 1,72,991/- ( RS. 2,44,991/- (-) RS. 72,000/-) AS IN COME FROM UNDISCLOSED SOURCES. 6. THE AO OBSERVED THAT THE MINOR SON OF THE ASSESSEE SHRI GAURAV AGRAWAL HAD SHOWN INTEREST INCOME OF RS . 2,90,420/- IN HIS RETURN OF INCOME, AS INTEREST ON DEPOSIT FORM M/S.MECH & FAB. AGAINST THE INTEREST INCOME ASSESSE D, THE ASSESSEE HAD CLAIMED INTEREST PAID TO OTHERS AT RS. 63,040/-, WHEREAS PERUSAL OF BALANCE SHEET/STATEMENT OF AFFAI RS FILED BY SHRI GAURAV AGRAWAL DID NOT REFLECT ANY LIABILITY O R ANY LOAN FOR WHICH INTEREST HAS TO BE PAID. ACCORDINGLY, INTERES T AMOUNTING TO RS. 63,040/- WAS DISALLOWED AND ADDED TO THE ASS ESSEES INCOME ON THE PLEA THAT THE ASSESSEE HAS MADE A WRO NGFUL CLAIM OF INTEREST EXPENDITURE. 7. THE AO ALSO OBSERVED THAT PERUSAL OF ACCOUNT OF GAURAV AGARWAL ( SON OF THE ASSESSEE ) WITH M/S. ME CH & FAB INDUSTRIES FOR THE ASSESSMENT YEAR 1999-2000 SHOWS THAT HIS MINOR SON HAS CONTRIBUTED AMOUNT OF RS. 22,41,000/- ON 7.4.1999. AS PER AO, THE SOURCE OF THIS DEPOSIT REM AINED UNEXPLAINED AS NO DETAILS WHATSOEVER WERE FILED. AC CORDINGLY, THE SAME WAS ADDED IN ASSESSEES INCOME. - 9 - 8. THE ADDITION ON ACCOUNT OF INTEREST EXPENDITURE AMOUNTING TO RS. 63,040/- WAS DELETED BY THE LD. CI T(A) AFTER OBSERVING AS UNDER :- INTEREST PAYMENT HAS BEEN MADE BY SHRI MAHESHCHAND AGRAWAL TO M/S. PACIFIC CAPIAL MARKET AT RS. 48,754 /- AND BALANCE OF RS. 18,286/- TO SHRI ASHOK PATEL. THE C OPIES OF ACCOUNT OF BOTH OF THESE CREDITORS ARE ENCLOSED HER EWITH, WHICH HAVE BEEN SUBMITTED TO THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS. BOTH M/S. PACIFIC CAPITAL M ARKET AS WELL AS SHRI ASHOK PATEL ARE INCOME TAX PAYERS A ND ARE ASSESSED TO INCOME TAX. THE COPIES OF CONFIRMATION LETTERS FROM THESE PERSONS ARE ENCLOSED HEREWITH, WHICH HAV E BEEN FILED BEFORE THE AO. THESE CREDITS WERE REFLEC TED IN THE BALANCE SHEET OF MAHESH AGRAWAL AND THEY HAVE B EEN ACCEPTED AS GENUINE BY THE ASSESSING OFFICER AS NO ADDITION TOWARDS THE SAME HAS BEEN MADE IN THE HAND S OF THE APPELLANT. ONCE THE CREDIT INCLUSIVE OF INTERES T IS ACCEPTED AS EVIDENT FROM THE ASSESSMENT ORDER THERE IS NO JUSTIFICATION FOR THE DISALLOWANCE OF INTEREST. IT IS THEREFORE, REQUESTED THAT DISALLOWANCE OF INTEREST MADE BY THE ASSESSING OFFICER AT RS. 63,040/- MAY KINDLY BE REM OVED. SINCE THE EXPLANATION IS ACCEPTABLE, THIS GROUND IS ALLOWED. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND FROM RECORD THAT THE ASSESSEE HAS RETURNED RS. 2,27 ,420/- AS - 10 - INTEREST INCOME OF MINOR SON GAURAV IN HIS RETURN A GAINST WHICH FOLLOWING DEDUCTIONS WERE CLAIMED ON ACCOUNT OF INTEREST PAID:- (I) TO M/S. PACIFIC CAPITAL MARKET RS. 48,754/- PB -6 (II) TO MR. ASHOKA PATEL RS. 14,286/- PB 7 10. BOTH THESE CONCERNS ARE INCOME TAX PAYERS AND THESE CREDITS WERE ACCEPTED BY THE DEPARTMENT IN ASSESSEE S OWN CASE. LD. CIT(A) ALSO FOUND THAT COPIES OF ACCOUNTS OF BOTH THESE CREDITORS WERE SUBMITTED BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS AND THAT BOTH THE CREDITORS WERE INCOME TAX PAYERS AND ASSESSED TO INCOME TAX. COPIE S OF CONFIRMATION LETTERS OF BOTH THESE PARTIES WERE ALS O FILED BEFORE THE AO AND THAT CREDITS WERE DULY REFLECTED IN THE BALANCE SHEET OF MAHESH AGARWAL AND THEY HAVE BEEN ACCEPTED AS GENUINE BY THE ASSESSING OFFICER AS ACCEPTED BY THE LD. CIT(A).FUR IN THE GROUNDS OF APPEAL TAKEN BEFORE US AGAINST DELETION OF DISALLOWANCE OF INTEREST, NO GROUND HAS BEEN TAKEN BY THE DEPARTMENT TO THE EFFECT THAT ANY ADDITIONAL EVIDENCE HAS BEEN ACCEPTED BY THE LD. CIT(A) IN CONTRAVENTIO N OF RULE 46A. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTE RFERE IN THE FINDING RECORDED BY THE LD. CIT(A) RESULTING INTO D ELETION OF DISALLOWANCE OF INTEREST PAYMENT OF RS. 63,040/-. 11. THE ADDITION MADE ON ACCOUNT OF INVESTMENT IN M/S. MECH & FAB AMOUNTING TO RS. 22,27,000/- WAS DELETED BY THE LD. CIT(A) AFTER HAVING FOLLOWING OBSERVATIONS :- - 11 - THE AO FOUND THAT THERE IS A CREDIT OF RS. 22,41,000/- IN THE NAME OF MASTER GAURAV AGRAWAL IN THE BOOKS OF M/S. MECH & FAB INDUSTRIES. HE DID NOT RAISE ANY QUERIES DURING THE ASSESSMENT PROCEEDINGS AND TREATED THE WHOLE CREDIT OF RS. 22,41,000/- AS UNEXPLAINABLE AND MADE THE ADDITION TOWARDS THE SAME AT RS. 22,27,000/-. IN THIS CONNECTION, IT IS SUBMITTED THAT MASTER GAU RAV HAD THE DEPOSIT OF RS. 22,40,766/- WITH M/S. GAURAV FINANCE CORPN. ON CLOSING DAY OF 31.3.1999. SINCE THIS FIRM M/S. GAURAV FINANCE CORPN. WAS DISSOLVED ON 1.4.1999, THE DEPOSIT OF RS. 22,40,766/- WAS RETURNED TO SHRI GAURAV AGRAWAL THROUGH CHEQUE ON 6.4.1999 AS EVIDENT FROM HIS BANK ACCOUNT, WHICH WAS ALREADY ON RECORD. OUT OF THIS REFUND, MASTER GAURAV AGARWAL INVESTED THE AMOUNT OF RS. 22,41,000/- WITH M/S. MECH & FAB INDUSTRIES. ON THE ABOVE FACTS, IT MAY BE SEEN THAT ALL THE CREDIT OF RS. 22,41,000/- IS EXPLAINABLE. IN SUPPORT OF THE CLAIM OF THE APPELLANT, THE COPY OF DEED OF PARTNERSHIP AND COPY OF DISSOLUTION DEED FOR M/S. GAURAV FINANCE CORPN, STATEMENT OF INCOME AND BALANCE SHEET AND THE COPY OF THE ACK. RECEIPTS FOR HAVING FILED THE RETURNS FOR THE PERIOD ENDED ON 31.3.1999 RELEVANT TO ASSESSMENT YEAR 1999-2000 ARE ENCLOSED HEREWITH ALONGWITH THE COPY OF THE - 12 - BANK ACCOUNT OF M/S. GAURAV AGRAWAL. ON PERUSAL OF THE ABOVE SAID SUPPORTING PAPERS, IT MAY BE SEEN THAT THE CREDIT OF THE APPELLANT IN THE BOOKS OF M/ S. MECH & FAB INDUSTRIES IS EXPLAINABLE. SINCE THE AO HAS MADE THE ADDITION ON PRESUMPTIONS, WITHOUT VERIFYING THE FACTS, THIS STATE OF AFFAIRS HAD HAPP ENED AND AS SUCH REQUESTED FOR ITS REMOVAL. IT IS ALSO EMPHASIZED THAT NO MATERIAL HAS EITHER BEEN FOUND DURING THE COURSE OF THE ACTION U/S 132 OR DURING T HE POST INVESTIGATION ENQUIRIES, LINKING THE INTEREST PAID TO UNDISCLOSED INCOME OF THE APPELLANT. IN VIEW OF THE ABOVE, IT IS REQUESTED THAT THE ADDITION MADE AT RS . 22,27,000/- MAY KINDLY BE REMOVED. THE FACTS AS BROUGHT OUT BY THE AR REVEALED THAT TH E INVESTMENT HAS COME FROM THE SHARE OF THE MINOR FROM DISSOLVED FIRM M/S. GAURAV FINANCE CORPN. FOR INVESTMENT IN M/S. MECH & FAB INDUSTRIES, WHICH HAS HAPPENED IN THE YEAR 1999 AND AS SUCH THE AO IS NOT JUSTIFIED IN MAKING THIS ADDITION AND THUS T HIS GROUND OF THE ASSESSEE IS ALLOWED. 12. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUN D FROM RECORD THAT MINOR SON OF THE ASSESSEE MASTER G AURAV HAD BALANCE OF RS. 22,42,766/- AS ON 1.4.1999 IN FIRM M /S. GAURAV FINANCE CORPN. THE FIRM WAS ASSESSED WITH PA N NO. 18-100-FX-5260 AND THIS FIRM WAS DISSOLVED ON 1.4.1 999. THE DEPOSIT OF RS. 22,40,766/- WAS RETURNED TO GAURAV B Y CHEQUE - 13 - WHICH WAS DEPOSITED IN THE BANK ACCOUNT AND THIS AM OUNT ITSELF WAS DEPOSITED BY GAURAV IN MECH & FEB INDUS TRIES. THUS WHOLE TRANSACTION WAS DULY EXPLAINED AND NO INTERFERENCE IS REQUIRED FOR DELETION OF ADDITION B Y CIT(A). 13. ADDITION OF RS. 1,72,991/- U/S 68 WAS DELETED BY TH E LD. CIT(A) AFTER HAVING FOLLOWING OBSERVATIONS :- I HAVE SEEN THE ASSESSMENT ORDER AS WELL AS WRITTEN SUBMISSIONS OF THE AR. I FIND THAT APART FROM SALARY AT RS. 72,000/- THE ASSESSEE HAS ALSO RECEIVED THE SHARE INCOME FROM MECH & FAB INDUSTRIES, INCOME TAX REFUND AND INTEREST FROM SBI ETC., WHICH ARE EVIDENT FROM THE COPY OF BANK ACCOUNT AND THE COPY OF INCOME TAX RETURN ALREADY AVAILABLE BEFORE THE AO AND PRODUCED BEFORE ME. I FIND THAT OUT OF THE ADDITION TO THE CAPITAL ACCOUN T AT RS. 2,44,991/- NOT ONLY THE SALARY OF RS. 72,000/- BUT OTHER ITEMS OF RS. 1,72,991/- ARE ALSO EXPLAINABLE. ACCORDINGLY, I REMOVE THE ADDITION OF RS. 1,72,991/-. IN THE RESULT, THE APPELLANT GETS T HE RELIEF OF RS.1,72,991/- AND GROUND NO.4 OF THE APPEAL STANDS ALLOWED. 14. THE REVENUE IS IN FURTHER APPEAL BEFORE US. 15. IT WAS CONTENDED BY THE LD. CIT DR THAT NOTHING WAS EXPLAINED BEFORE THE AO AND THAT THE LD. CIT(A) HAS DELETED THE ADDITION WITHOUT CALLING ANY REMAND REPORT FROM THE AO. - 14 - 16. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND FROM RECORD THAT THE ASSESSEE WAS IN RECEIPT OF SHA RE INCOME FROM M/S. MECH & FEB AND IN ADDITION TO IT, HE WAS ALSO IN RECEIPT OF SALARY INCOME OF RS. 72,000/-. DURING TH E YEAR, THE ASSESSEE WAS IN RECEIPT OF INCOME TAX REFUND AND IN TEREST FROM SBI, WHICH CLEAR FROM THE BANK ACCOUNT AND COPY OF INCOME TAX RETURN ALREADY AVAILABLE IN THE RECORD OF THE D EPARTMENT. THUS, THE ADDITION MADE BY THE ASSESSING OFFICER WA S NOT JUSTIFIED. THE FINDING RECORDED BY THE LD. CIT(A) I S AS PER MATERIAL ON RECORD. NO GROUND HAS ALSO BEEN TAKEN B Y THE REVENUE FOR ANY EVIDENCE ACCEPTED BY CIT(A) FOR THE FIRST TIME IN CONTRAVENTION OF RULE 46A, WITHOUT GIVING OPPORT UNITY TO THE AO. THEREFORE, NO INTERFERENCE IS REQUIRED THEREIN. 17. IN THE RESULT, THE APPEAL IN I.T.(SS)A.NO. 197/IND/ 2008 IS DISMISSED. 18. NOW, WE SHALL TAKE UP APPEAL IN I.T.(SS).A.NO. 198/IND/2008. 19. GROUNDS TAKEN IN APPEAL BY REVENUE ARE REPRODUCED AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.7,38,002/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CAPITAL ADDITION U/S 68 OF THE INCOME-TAX ACT, 1961. - 15 - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.7,96,977/-MADE BY THE ASSESSING OFFICER 20. IN THIS YEAR, THE ADDITION WAS MADE ON ACCOUNT OF CAPITAL ADDITION MADE DURING THE YEAR AMOUNTING TO RS. 7,38,002/- AND ON ACCOUNT OF UNEXPLAINED CREDIT OF HUF AMOUNTING TO RS. 7,96,977/-. THE AO IN THE ORDER FR AMED U/S 153A OBSERVED THAT THE ASSESSEE HAS FILED BALANCE S HEET, WHICH INDICATE CAPITAL ACCOUNT AMOUNTING TO RS. 8,1 0,002/-. THE AO FURTHER NOTED THAT AS PER OTHER DETAILS FILE D AND INCOME STATEMENT INDICATING SOURCE OF FUND, ADDITIO N TO THE CAPITAL AMOUNTING TO THE TUNE OF RS. 72,000/- IS AL LEGED TO BE ARISING OUT OF SALARY INCOME OF RS. 72,000/- FROM G TV LIMITED. HE FURTHER STATED THAT TAKING A LIBERAL VIEW WITH R ESPECT TO THE SALARY, WHICH CAN BE ALLOWED TO BE CONTRIBUTED BY T HE ASSESSEE, REST AMOUNT OF RS. 7,38,002/- WAS TREATED AS UNEXPLAINED CAPITAL. 21. THE AO ALSO STATED THAT PERUSAL OF CAPITAL ACCOUNT WITH M/S. MECH & FAB SHOWS CREDIT OF RS. 4,60,000/- DATE D 1.4.2000 ON ACCOUNT OF SHRI BANSIDHAR AGRAWAL, HUF AND CREDIT OF RS. 2,64,977/- ON ACCOUNT OF MAHESH CHAND BANSIDHAR AGARWAL TOTALING TO RS. 7,24,977/-. HE FU RTHER STATED THAT OPENING BALANCE OF THE ASSESSEE DOES NO T REFLECT ANY AMOUNT DUE FROM THESE TWO HUFS NOR CLOSING BALA NCE SHEET DOES REFLECT ANY AMOUNT DUE FOR PAYMENT TO TH ESE HUFS. - 16 - HE, THEREFORE, HELD THAT THESE CREDITS ARE UNEXPLAI NED CREDIT IN THE CAPITAL ACCOUNT OF THE ASSESSEE. 22. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION OF RS. 7,38,002/- MADE ON ACCOUNT OF ADDIT ION TO THE CAPITAL ACCOUNT AFTER OBSERVING AS UNDER : I HAVE SEEN THE ASSESSMENT ORDER AND ALSO SUBMISSIONS OF THE AR. SINCE THERE IS NO CASH CREDI T OR INVESTMENT BY THE ASSESSEE THERE IS NO JUSTIFICATION FOR MAKING THE ADDITION TOWARDS THE AMOUNT TRANSFERRED FROM HUF ACCOUNT TO THE ACCOUNT OF APPELLANT IN THE BOOKS OF M/S. MECH & FAB INDUSTRIES. ACCORDINGLY,, THE ADDITION MADE AT RS. 7,96,977/- (CORRECTLY RS. 7,24,977/-) DIRECTED TO BE REMOVED. ACCORDINGLY, THE APPELLANT GETS THE RELIEF OF RS. 7,96,977/-. IN THE RESULT, GROUND NO. 4 IS ALLOWED. REVENUE IS IN FURTHER APPEAL BEFORE US 23. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO DID NOT RAISE ANY QUESTION ABOU T THE ADDITION IN CAPITAL ACCOUNT AT RS. 8,10,002/-, THE BREAK UP OF WHICH WAS AS UNDER :- SALARY FROM GTV, MANDIDEEP 72,000.00 MAHESHCHAND BANSIDHAR (HUF) 7,24,977.61 INTEREST ON SAVING BANK 571.25 - 17 - ACCOUNT INTEREST ON SBI BONDS 6,500.00 INTEREST ON IT REFUNDS 5,954.00 TOTAL 8,10,002.86 24. THE BREAK UP OF THE CAPITAL ACCOUNT CLEARLY INDIC ATE CREDIT OF RS. 72,000/- ON ACCOUNT OF SALARY FROM GT V, WHICH HAS ALREADY BEEN ACCEPTED BY THE ASSESSING OFFICER. IN ADDITION TO IT, THERE WAS CREDIT ON ACCOUNT OF SAVI NG BANK INTEREST OF RS. 571/-, INTEREST ON SBI BONDS RS. 65 00/-AND INTEREST ON I.T. REFUND RS. 5954/-. AT PAGE 3 OF TH E APPELLATE ORDER, THE LD. CIT(A) HAS DEALT WITH THE DETAILED B REAK UP OF THE CAPITAL ACCOUNT AND AFTER RECORDING DETAILED FINDIN G DELETED THE ADDITION OF RS. 7,24,977/- BY OBSERVING THAT AMOUNT WAS TRANSFERRED FROM HUF ACCOUNT TO THE ACCOUNT OF ASSE SSEE IN THE BOOKS OF M/S. MECH & FAB INDUSTRIES. ACCORDINGL Y, NO SEPARATE ADDITION WAS REQUIRED. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) FOR DELETING THE ADDITI ON AT RS. 7,38,002/-. 25. ADDITION OF RS. 24,977/- MADE BY THE ASSESSING OFFI CER ON ACCOUNT OF CREDIT IN THE NAME OF MAHESH CHAND BA NSIDHAR, HUF IN THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE B OOKS OF M/S. MECH & FAB. INDUSTRIES, WAS DELETED BY THE LD. CIT(A). 26. AGAINST THIS DELETION OF CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE US. - 18 - 27. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT DURING THE ASSESSMENT PROCEEDINGS, NO SEPARATE QUESTION WAS RAISED ABOUT CREDIT IN THE NAME OF HUF. MAHESH CHAND BANSIDHAR HUF WAS FOU ND TO BE REGULARLY ASSESSED AT PAN AACKN394-F AT AHMED ABAD BY THE I.T.O., 2(5). AS PER THE TRIAL BALANCE AS ON 31.3.2001 OF THE SAID HUF, AN AMOUNT OF RS. 7,24,977/- WAS TRANS FERRED TO SHRI MAHESH CHAND AGARWAL. IT WAS A GENERAL ENTRY I N THE BOOKS OF MECH & FAB. INDUSTRIES, WHICH DOES NOT BRI NG ANY UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. TH E LD. CIT(A) HAS ALSO RECORDED A CATEGORICAL FINDING TO T HE EFFECT THAT HE HAS SEEN THE ASSESSMENT ORDER AND THERE WAS CASH CREDIT FOR INVESTMENT BY THE ASSESSEE. THEREFORE, THERE IS NO JUSTIFICATION FOR MAKING ANY ADDITION TOWARDS THE A MOUNTS TRANSFERRED TO THE HUF ACCOUNT OF ASSESSEE IN THE B OOKS OF MECH & FAB INDUSTRIES. WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDING RECORDED BY THE LD. CIT(A). 28. GROUND NO.2 OF THE REVENUES APPEAL IS MISCONCEIVED IN SO FAR AS IT PERTAINS TO CREDIT ON ACCOUNT OF HU F AMOUNTING TO RS. 7,96,977/-, THIS ADDITION HAS ALREADY BEEN A GITATED IN GROUND NO.1. THE CORRECT AMOUNT OF DEPOSIT IS RS. 7 ,24,977/- FROM MAHESH CHANDRA BANSIDHAR (HUF). CIT(A) HAS ALS O DELETED THE ADDITION AFTER HAVING SAME OBSERVATION. 29. IN THE RESULT, THE REVENUES APPEAL IN I.T.(SS).A.N O. 198/IND/2010 IS DISMISSED. I.T.(SS).A.NO. 199/IND/2008 : - 19 - 30. GROUND TAKEN IN I.T(SS).A.NO. 199/IND/2008 ARE REPRODUCED AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 15,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE BANK ACCOUNT U/S 68 OF THE INCOME-TAX ACT, 1961. 31. IN THE ASSESSMENT YEAR 2003-04, THE ONLY GRIEVANCE OF REVENUE RELATES TO DELETION OF ADDITION OF RS. 15 L AKHS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CREDIT IN THE B ANK ACCOUNT OF THE ASSESSEE. IN THE COURSE OF ASSESSMENT U/S 15 3A, THE AO OBSERVED THAT A PERUSAL OF BANK ACCOUNT OF ASSESSEE SHOWS THAT THE ASSESSEE HAS RECEIVED CREDIT OF RS. 10 LAK HS DATED 25.11.2002 AND RS. 5 LAKHS ON 25.11.2002. BY STATIN G THAT THE ASSESSEE DID NOT FILE ANY EXPLANATION AS TO THE SOURCE OF THESE CREDITS AND ADDITION WAS MADE U/S 68. 32. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER :- THE COPY OF ACCOUNT OF THE ASSESSEE IN THE BOOKS O F GTV REVEALS THAT ALL THE AMOUNT OF RS. 15,00,000/- HAS TRANSFERRED FROM GTV. IT MAY FURTHER BE NOTED HERE THAT EITHER IN COURSE OF THE ACTION U/S 132 OR THERE AFTER THROUGH POST INVESTIGATION ENQUIRIES, NOTHING INCRIMINATING WAS FOUND, LINKING THE ABOVE TRANSACTIONS, WHICH WERE ALREADY IN BOOKS WITH - 20 - UNACCOUNTED NATURE. THE TRANSACTIONS ARE ALSO EXPLAINABLE. IN THE CIRCUMSTANCES, THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED AND HENCE, THE SAME IS ALLOWED. 33. AGAINST THE ABOVE DELETION, THE REVENUE IS IN FURTH ER APPEAL BEFORE US. 34. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF R S. 10 LAKHS AND RS. 5 LAKHS ON 25.11.2002 FROM M/S. GWALI OR TANKS VESSELS LIMITED, MANDIDEEP, A COPY OF ICICI BANK AC COUNT OF GTV WAS ALSO PLACED ON RECORD. THE LD. CIT(A) HAS DELETED THE ADDITION BY OBSERVING THAT EITHER IN THE COURSE OF SEARCH U/S 132 OR THEREAFTER POST INVESTIGATION INQUIRIES, NOT HING INCRIMINATING WAS FOUND LINKING THE ABOVE TRANSACTI ON, WHICH WAS ALREADY IN THE BOOKS OF THE ASSESSEE. SINCE IT WAS MERELY A TRANSFER ENTRY AND THE FINDING RECORDED BY THE LD. CIT(A) TO THIS EFFECT HAS NOT BEEN CONTROVERTED, WE DO NOT FIND AN Y REASON TO INTERFERE IN THE SAME. FURTHER NO GROUND HAS BEEN T AKEN BY THE REVENUE WITH REGARD TO VIOLATION OF RULE 46 BY THE LD. CIT(A) BY ACCEPTING ANY ADDITIONAL EVIDENCE WITHOUT CONTROVERTING THE SAME WITH THE AO. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). 35. IN THE RESULT, THE REVENUES APPEAL IN I.T.(SS).A.NO.199/ IND/2008, IS DISMISSED. I.T.(SS).A.NO. 200/IND/2008 & C. O. NO.129/IND/200 8 : - 21 - 36. GROUND TAKEN IN I.T(SS).A.NO.201/IND/2008 ARE REPRODUCED AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 6,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE BANK ACCOUNT U/S 68 OF THE INCOME-TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 25,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BENEFIT/PERQUISITE U/S 2(24)(IV) OF THE INCOME-TAX ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 5,95,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST FREE LOANS FROM M/S. POWER MECH LIMITED INDUSTRIES UNDER SECTION 2(24)(IV) OF THE INCOME-TAX ACT, 1961. 37. GROUND TAKEN IN CROSS OBJECTION IS REPRODUCED AS UNDER :-- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT TH E APPELLANT INCURRED THE UNEXPLAINED EXPENDITURE OF RS. 10,00,000/- IN THE MARRIAGE OF HIS DAUGHTER. 38. THE FACTS OF THE CASE IN BRIEF ARE THAT THE SEARCH WAS CONDUCTED AGAINST THE RESIDENTIAL PREMISES OF THE A PPELLANT ON - 22 - 16-09-2005. THE NOTICE U/S. 153A WAS ISSUED ON 22- 03-2006 , WHICH WAS SERVED ON THE APPELLANT ON 25-03-2006. THE ASSESSEE FILED THE RETURN ON 01-06-2006 SHOWING TH E INCOME AT RS.18,33,389/- , WHICH WAS THE SAME AS REFLECTE D IN THE RETURN FILED U/S. 139(1) EARLIER. THE LD. ASSESS ING OFFICER ASSESSED THE INCOME AT RS.1,2,139,639/- BY MAKING T HE ADDITIONS (A) TOWARDS UNEXPLAINED CREDIT IN THE B ANK ACCOUNT AT RS. 3,06,250/- AND (B) UNEXPLAINED EXPENDITURE ON MARRIAGE OF DAUGHTER AT RS. 1,00,00,000/-. 39. IN THE ASSESSMENT YEAR 2004-05, ADDITIONS WERE MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF CASH CREDIT IN THE BANK ACCOUNT AMOUNTING TO RS. 3,06,250/-, UNEXPLAINED IN VESTMENT OF RS. 1 CRORE ON ACCOUNT OF MARRIAGE OF DAUGHTER. 40. IN THE ORDER U/S 153A, THE AO STATED THAT A PERUSAL OF BANK ACCOUNT SHOWS THAT THE ASSESSEE HAS RECEIVED A SUM OF RS. 1.40 LAKHS ON 30 TH DECEMBER, 2003, AND RS. 1,66,250/- ON 9.2.2004. BY WRITING THAT THE ASSESSEE DID NOT FILE ANY EXPLANATION AS TO THE SOURCE OF THESE CREDITS, ADDI TION WAS MADE U/S 68 OF THE ACT. 41. THE AO ALSO OBSERVED THAT DURING THE YEAR, THERE WA S MARRIAGE OF ASSESSEES DAUGHTER. HE FURTHER STATED THAT AS PER BOOKS OF M/S. GTV AN AMOUNT OF RS. 14,88,790/- WAS BOOKED ON ACCOUNT OF BUSINESS PROMOTION CONFERENCE. AS PER AO, THESE EXPENSES ARE APPARENTLY BOOKED FOR THE PURPOS E OF MARRIAGE OF ASSESSEES DAUGHTER, MS.SMITA AGARWAL, EVEN THOUGH RECORDED IN THE BOOKS OF ACCOUNT AS BUSINESS - 23 - EXPENDITURE. CONSIDERING THE STATUS OF THE ASSESSEE , FAMILY CUSTOMS AND TRADITION, THE AO MADE AN ESTIMATED ADD ITION OF RS. 1 CRORE ON ACCOUNT OF UNDISCLOSED MARRIAGE EXPE NDITURE U/S 69C. 42. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION OF RS. 3,06,250/- ON ACCOUNT OF CAPITAL BY OBSERVING AS UNDER :- I HAVE SEEN THE BANK ACCOUNT AND FIND THAT THE AMOUNT OF RS. 1,40,000/- HAS BEEN TRANSFERRED FROM GTV. I ALSO FIND THAT THE APPELLANT HAS SHOWN THE INCOME FROM INSURANCE AT RS. 1,75,000/- IN HIS RETURN AGAINST WHICH THERE IS TDS OF RS. 8,750/- AND ACCORDINGLY, THE CREDIT OF RS. 1,66,250/- IN TH E BANK ACCOUNT OF THE ASSESSEE IS ACCEPTED AS EXPLAINED AND, ACCORDINGLY, I REMOVE THE ADDITION O F RS. 3,06,250/- MADE IN THE HANDS OF THE APPELLANT. IN THE RESULT, THE APPELLANT GETS THE RELIEF OF RS. 3,06,250/- AND GROUND NO.3 IS ALLOWED. 43. THE REVENUE IS AGGRIEVED AND IS BEFORE US AGAINST THE ABOVE DELETION. 44. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT THE ASSESSEE HAD RECEIVE D AN AMOUNT OF RS.1,40,000/- AND RS. 1,66,250/- ON 30.12 .2003 AND 9.2.2004 RESPECTIVELY AS PER THE BANK ACCOUNT. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE AO DID NOT RA ISE ANY - 24 - QUESTION ABOUT THE SAID CREDIT IN THE BANK ACCOUNT DURING THE ASSESSMENT PROCEEDINGS. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS RECEIVED THIS AMOUNT FROM M/S. GTV LIM ITED, THE COPY OF BANK ACCOUNT OF GTV FOR FINANCIAL YEAR 2002 -03 WAS ALSO PLACED ON RECORD. THE OTHER DEPOSIT OF RS. 1,6 6,250/- ON 9.2.2004 WAS THE INSURANCE COMMISSION, WHICH WAS SH OWN BY THE ASSESSEE AS INCOME FROM OTHER SOURCES IN THE RE TURN FILED BY HIM. THERE WAS ALSO TDS OF RS. 8,750/-, THEREFOR E, AFTER DEDUCTING THE AMOUNT OF TDS FROM THE GROSS AMOUNT O F INSURANCE COMMISSION, WHICH WAS AT RS. 1,75,000/-, NET COMMISSION INCOME WAS CREDITED IN THE ACCOUNT. THER E WAS A NET CREDIT OF RS. 1,66,250/- FOR WHICH CHEQUE WAS R ECEIVED AND DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. AFTE R VERIFICATION OF BANK ACCOUNT AND THE ACCOUNT OF M/S . GTV WHEREIN THIS AMOUNT WAS TRANSFERRED, THE LD. CIT(A) DELETED THE ADDITION. A FINDING HAS BEEN RECORDED BY THE LD . CIT(A) AT PAGE 3 OF HIS APPELLATE ORDER, RESULTING IN DELETIO N OF ADDITION OF RS. 3,06,250/-, NO INTERFERENCE IS REQUIRED, AS THE SAME IS AS PER MATERIAL AVAILABLE ON RECORD. 45. WITH REGARD TO THE ESTIMATED ADDITION OF RS. 1 CROR E ON ACCOUNT OF MARRIAGE OF THE DAUGHTER, THE LD. CIT(A) FOUND THAT PAYMENT OF RS. 13,85,004/- WAS MADE BY THE ASSESSEE TO M/S. HOTEL OBEROI TOWER, WHEREIN MARRIAGE OF THE ASSESSE ES DAUGHTER WAS SOLEMNIZED ALONGWITH BUSINESS CONFEREN CE OF GTV. THE LD. CIT(A), THEREFORE, OBSERVED THAT WHOLE AMOUNT OF RS. 13,85,004/- PAID TO HOTEL OBEROI CANNOT BE TREA TED AS - 25 - BUSINESS PROMOTION EXPENSES. HE TREATED RS. 5 LAKHS TOWARDS MARRIAGE EXPENDITURE, THEREFORE, ADDED THE SAME AS PERQUISITE FOR THE PURPOSE OF LEVY OF TAXES. THE LD. CIT(A) FU RTHER OBSERVED THAT IN ADDITION TO IT, THE ASSESSEE MIGHT HAVE INC URRED CERTAIN MORE EXPENDITURE TOWARDS MARRIAGE OF DAUGHTER AMOUN TING TO RS. 5 LAKHS. ACCORDINGLY, AN ADDITION OF RS. 10 LAK HS WAS RETAINED OUT OF RS. 1 CRORE MADE BY THE ASSESSING O FFICER ON ACCOUNT OF MARRIAGE OF THE DAUGHTER. THE REVENUE IS IN FURTHER APPEAL FOR THE DELETION OF ADDITION OF RS. 90 LAKHS , WHEREAS ASSESSEE IS IN APPEAL FOR RETAINING THE ADDITION OF RS. 10 LAKHS BY CIT(A) BY FILING A CROSS OBJECTION. 46. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM RECORD THAT THERE WAS A MARRIAGE OF ASSE SSEES DAUGHTER DURING THE YEAR. THE AO OBSERVED THAT MARR IAGE WAS SOLEMNIZED IN A FIVE STAR HOTEL AND THE RELEVANT EX PENDITURE WAS DEBITED IN THE BOOKS OF ACCOUNT OF GTV. THE LD. CIT(A) FOUND THAT EVEN THOUGH PAYMENT WAS MADE TO HOTEL OB EROI TOWER, WHERE NOT ONLY MARRIAGE WAS SOLEMNIZED, BUT BUSINESS CLIENTS OF THE ASSESSEE WERE ALSO INVITED, WHICH SE RVED BOTH THE PURPOSES OF BUSINESS AS WELL AS ATTENDING THE MARRI AGE. ACCORDINGLY, OUT OF TOTAL PAYMENT, HE DISALLOWED RS . 5 LAKHS AND ALSO MADE A SEPARATE ADDITION OF RS. 5 LAKHS TO WARDS OTHER EXPENDITURE LIKELY TO BE INCURRED BY THE ASSE SSEE. WE FOUND THAT NO INCRIMINATING MATERIAL WAS REFERRED B Y THE ASSESSING OFFICER, WHILE MAKING ADDITION ON ACCOUNT OF MARRIAGE EXPENSES. IT WAS MERE AN ESTIMATION. NOTHI NG WAS - 26 - FOUND DURING COURSE OF SEARCH OR THEREAFTER ON FURT HER INQUIRY. WITHOUT REFERRING TO ANY DOCUMENT AO ESTIMATED THE EXPENDITURE LIKELY TO BE INCURRED ON MARRIAGE. HOWE VER, THE AO HAS ALSO DISCUSSED THE STATUS OF THE ASSESSEE, W HICH WAS UNDISPUTEDLY FROM BUSINESS CLASS. THEREFORE, KEEPIN G INTO VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE VIS--VIS STATUS OF THE ASSESSEE, WE CONSIDER IT REASONABLE T O ESTIMATE THE EXPENDITURE OF MARRIAGE AT RS. 15 LAKHS AS AGAI NST RS. 10 LAKHS ESTIMATED BY THE LD. CIT(A). 47. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED IN PART, WHEREAS CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. I.T.(SS).A.NO. 201/IND/2008 : 48. THE FACTS OF THE CASE IN BRIEF ARE THAT THE SEARCH WAS CONDUCTED AGAINST THE RESIDENTIAL PREMISES OF THE A PPELLANT ON 16-09-2005. THE NOTICE U/S. 153A WAS ISSUED ON 22- 03-2006 , WHICH WAS SERVED ON THE APPELLANT ON 25-03-2006. THE APPELLANT FILED THE RETURN ON 01-06-2006 SHOWING T HE INCOME AT RS. 10,87,573/-, WHICH WAS THE SAME AS REFLECTE D IN THE RETURN FILED U/S. 139(1) EARLIER. THE LD. ASSESS ING OFFICER ASSESSED THE INCOME AT RS. 47,82,573/- BY MAKING TH E ADDITIONS (A) TOWARDS UNEXPLAINED CREDIT IN THE B ANK ACCOUNT AT RS. 6,00,000/- AND (B) TOWARDS ADDITION ON ACCO UNT OF PREMIUM ON FLAT AT RS. 25,00,000/- AND PRESUMED IN TT. ON INTT. FREE LOAN AT RS. 5,95,000/-. - 27 - 49. IN THE ASSESSMENT YEAR 2005-06, THE AO HAS MADE AN ADDITION OF RS. 6 LAKHS ON ACCOUNT OF CASH CREDIT I N THE BANK ACCOUNT U/S 68. AN ADDITION OF RS. 25 LAKHS WAS ALS O MADE ON ACCOUNT OF PERQUISITE U/S 2(24)(IV) OF THE ACT ON A CCOUNT OF INTEREST FREE LOAN, AN ADDITION OF RS. 5.95 LAKHS W AS ALSO MADE BY THE ASSESSING OFFICER ON THE PLEA THAT THE ASSES SEE HAS GIVEN INTEREST FREE LOAN TO M/S. POWER MECH INDUSTR IES LIMITED. 50. THE ADDITION MADE ON ACCOUNT OF CREDIT IN THE BANK WAS DELETED BY THE LD. CIT(A) AFTER HAVING THE FOLL OWING OBSERVATIONS :- I FIND FROM THE COPY OF A/S OF MAHESH AGRAWAL IN THE BOOKS OF GTV THAT RS. 6,00,000/- HAVE BEEN GIVEN TO GWALIOR TANK AND VESSELS THROUGH CHEQUE. THIS AMOUNT OF RS. 6,00,000/- IS EXPLAINABLE AND NO ADDITION U/S 68 IS CALLED FOR. ACCORDINGLY, I REMOVE THE ADDITION OF RS. 6 LAKHS AND ASSESSEE GETS RELIEF OF RS. 6 LAKHS. IN THE RESULT, THIS GRO UND IS ALLOWED. 51. REVENUE IS AGGRIEVED BY THIS ADDITION AND NOW BEFOR E US. 52. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT ASSESSEE HAD FILED THE R ETURN IN COMPLIANCE TO NOTICE U/S. 153A ON 01-06-2006 . HOWE VER THE LD. ASSESSING OFFICER ISSUED A FORMAL NOTICE U/S. 1 43(2) EARLIER ON 13-06-2006 BUT DID NOT TAKE ANY ACTION FOR ABOUT A YEAR. HOWEVER, WHEN HE ISSUED A SECOND NOTICE U/S. 143(2 ) - 28 - ALONGWITH QUESTIONNAIRE ON 31-08-2007, THE APPELLAN T FILED THE DETAILED REPLY WITH NECESSARY ANNEXURE TO ALL THE QUESTIONS AS APPEARING IN THE QUESTIONNAIRE AND THE LD. ASSESSI NG OFFICER DID NOT RAISE ANY FURTHER QUERIES AT ANY POINT OF TIME DURING THE ASSMT. PROCEEDINGS . THE LD. ASSESSING OFFICER HAS MADE A MENTION ABOUT FILING OF THE DELAYED RETURNS BY SOME OTHER PERSONS OF THE GROUP. BUT IT HAS NO CONCERN WITH TH E APPELLANT HOWEVER, THE LD. ASSESSING OFFICER MADE THE ADDITIO NS WITHOUT GIVING ANY OPPORTUNITY AND WITHOUT INVITING ANY OBJ ECTIONS FROM THE APPELLANT . THE ORDER HAS BEEN PASSED BY T HE ASSESSING OFFICER WITHOUT PROVIDING ADEQUATE OPPORT UNITY TO THE ASSESSEE WHICH IS AGAINST THE PRINCIPLES OF NA TURAL JUSTICE AS NARRATED HEREINABOVE. 53. IN THE COURSE OF ASSESSMENT AN ADDITION WAS MADE BY THE ASSESSING OFFICER IN RESPECT OF CREDIT FOUND IN THE BANK ACCOUNT AMOUNTING TO RS. 6 LAKHS ON 20 TH OCTOBER, 2004. THE LD. CIT(A) DELETED THE ADDITION AFTER OBSERVING THA T THIS AMOUNT WAS GIVEN BY CHEQUE. HE ALSO VERIFIED THE COPY OF A CCOUNT OF M/S. MAHESH AGRAWAL IN THE BOOKS OF GTV GIVEN TO GW ALIOR TANKS AND VESSELS THROUGH CHEQUE, SINCE IT WAS MERE LY A BANK TRANSFER AND THE FINDINGS RECORDED BY THE LD. CIT(A) AT PAGE 3 HAS NOT BEEN CONTROVERTED, WE DO NOT FIND AN Y REASON TO INTERFERE IN THE SAME. 54. WITH REGARD TO ADDITION OF RS. 25 LAKHS U/S 2(24)(I V), THE AO FOUND THAT M/S. GWALIOR TANK VESSELS HAD DEP OSITED RS. 50,00,000/- WITH M/S. LAKE VIEW DEVELOPERS FOR PURCHASE - 29 - OF FLAT AT MUMBAI. THE SAID FLATS WERE ULTIMATELY P URCHASED BY THE ASSESSEE ON 10.7.2004 BY PAYING CONSIDERATION O F RS. 2,10,00,000/- FOR WHICH IT WAS ORIGINALLY BOOKED. T HE AO FOUND THAT IN THE SPAN OF ABOUT THREE YEARS, THERE MUST HAVE BEEN APPRECIATION IN THE RATES OF FLATS AND ACCORDI NGLY, HE ESTIMATED THE APPRECIATION AT RS. 25,00,000/-. SINC E THE ASSESSEE HAD PURCHASED THE FLAT FOR THE ORIGINAL VA LUATION OF RS. 2,10,00,000/- HE ESTIMATED THE PREMIUM AT RS. 25,00,000/- AND MADE THE ADDITION TOWARDS THE SAME U/S 2(24)(IV) OF THE INCOME-TAX ACT, 1961. 55. THE LD. CIT(A) DELETED THE SAID ADDITION BY OBSERVI NG AS UNDER :- I FIND THAT IN FACT THE FLAT WAS BOOKED ON 31.3.20 04 BY GTV BUT IT HAS BEEN PURCHASED BY THE ASSESSEE ON 10.7.2004 AND NOT 10.7.2007 AS OBSERVED BY THE ASSESSING OFFICER. I AGREE WITH THE AR THAT THERE COULD NOT BE ANY PREMIUM WITHIN THE SHORT PERIOD OF THREE MONTHS AND IT IS QUITE POSSIBLE THAT GTV WAS UNABLE TO MANAGE THE NECESSARY FUNDS. I HOLD THAT THERE WAS NO PREMIUM AND THAT THE APPELLANT DID NOT GET ANY BENEFIT FROM THE COMPANY, WHILE PURCHASING THE FLAT. ACCORDINGLY, THE AO IS DIRECTE D TO REMOVE THE ADDITION OF RS. 25,00,000/-. IN THE RESULT, THE APPELLANT GETS THE RELIEF OF RS. 25,00,000/- AND THUS THIS GROUND OF THE APPEAL STANDS ALLOWED. - 30 - 56. AGGRIEVED BY THE SAID DELETION, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 57. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND FROM RECORD THAT GTV HAD BOOKED THE FLAT ON 31.3.20 04 AND THE ASSESSEE PURCHASED THE SAME ON 10 TH JULY, 2004. WHEN THE GTV BOOKED THE FLAT, THEY DID NOT HAVE SUFFICIE NT FUND, THEREFORE, THE ASSESSEE CAME FORWARD AND ARRANGED F OR A LOAN OF RS. 1.50 CRORES FROM ICICI BANK AND PURCHASED TH E FLATS. NO MATERIAL WAS INDICATED BY THE ASSESSING OFFICER THA T THERE WAS ANY APPRECIATION IN THE VALUE OF FLAT WITHIN SUCH A SHORT DURATION. FURTHER, NO INCRIMINATING MATERIAL WAS FO UND DURING THE COURSE OF SEARCH INDICATING ANY EXTRA PAYMENT M ADE FOR SUCH FLAT, WHICH WAS UNRECORDED. ACCORDINGLY, WE DO NOT FIND ANY JUSTIFICATION FOR THE ADDITION MADE BY THE ASSE SSING OFFICER U/S 2(24)(IV). THE LD. CIT(A) HAS DELETED THE SAME AFTER HAVING OBSERVATION AT PAGE 4 OF HIS APPELLATE ORDER, WHICH REMAINED UNCONTROVERTED. ACCORDINGLY, WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF LD. CIT(A) FOR DELETING THE ADDITION O F RS. 25 LACS ON ACCOUNT OF ADDITION MADE BY THE ASSESSING OFFICE R ON ACCOUNT OF PERQUISITE U/S 2(24)(IV) OF THE INCOME-T AX ACT, 1961. 58. NEXT GRIEVANCE RELATES TO DELETION OF ADDITION OF R S. 5,95,000/- ON ACCOUNT OF NOTIONAL INTEREST ON FREE LOAN FROM M/S.POWER MECH INDUSTRIES, WHICH WAS TREATED BY THE ASSESSING OFFICER AS PERQUISITE U/S 2(24)(IV). THE AO STATED THAT THE ASSESSEE HAS OBTAINED THE LOAN OF RS. 59,5 0,000/- - 31 - FROM M/S. POWER MECH INDUSTRIES IN THE UNIT OF GTV LIMITED. THE AO TREATED THE 10 % OF THE SAME AS THE BENEFIT AND ACCORDINGLY, MADE THE ADDITION OF RS. 5,95,000/- U/ S 2(24)(IV) OF THE INCOME-TAX ACT, 1961. 59. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING THAT THE TRANSACTION TOOK PLA CE ON THE LAST DATE OF FINANCIAL YEAR 2004-05 AND AS SUCH ACC RUAL OF ANY BENEFIT IS NEGLIGIBLE. 60. THE REVENUE IS AGGRIEVED BY THIS DELETION AND IS BE FORE US. 61. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT THE LOAN OF RS. 59.50 LAKHS WAS GIVEN TO THE ASSESSEE ON 30 TH MARCH,2005, AT THE FAG END OF THE FINANCIAL YEAR. NO BENEFIT OR PERQUISITE COULD BE SAID TO HAV E ACCRUED TO THE ASSESSEE DURING FINANCIAL YEAR UNDER CONSIDERAT ION. THE LD. CIT(A) HAS ALSO VERIFIED COPY OF ACCOUNT OF MAHESH AGARWAL IN THE BOOKS OF M/S. POWER MECH INDUSTRIES AND AFTER R ECORDING FINDING AT PAGE 4 OF THE APPELLATE ORDER, HE DELETE D THE ADDITION. WE DO NOT FIND ANY INFIRMITY FOR SUCH DEL ETION. 62. IN THE RESULT, THE APPEAL OF THE REVENUE IN I.T.(SS).A.NO.201/IND/2008 IS DISMISSED. - 32 - 63. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISPO SED OF IN THE MANNER INDICATED HEREINABOVE, WHEREAS CRO SS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2010. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED :30 TH NOVEMBER,2010. CPU* 2530