Sri Madan Hada, Kanpur V. ACIT CC-ii, Kanpur

ITA 1387/LKW/1997

• Counselvise Citation: 138723714 RSA 1997
• Duration Of Justice: 16 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-01-2014
• Assessment Year: misc
• Appeal Filed On: 28-10-1997
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K GARG SHRI P K KAPOOR
• Keywords: Unexplained investment; Business income; Principle of natural justice; Source of fund; Valuation report; Block assessment
• Section: 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1387/ALLD/97 BLOCK PERIOD ENDING ON 03/09/96 SHRI MADAN HADA, 123/426, FAZALGANJ, KANPUR. VS. A.C.I.T., CENTRAL CIRCLE, KANPUR. (APPELLANT) (RESPONDENT) ITA NO.1388/ALLD/97 BLOCK PERIOD ENDING ON 03/09/97 SMT. SHARDA HADA, 123/426, FAZALGANJ, KANPUR. VS. A.C.I.T., CENTRAL CIRCLE, KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. K. GARG, ADVOCATE SHRI P. K. KAPOOR, C.A. RESPONDENT BY SHRI MANOJ KUMAR GUPTA , CIT, D.R. DATE OF HEARING 07/01/2014 DATE OF PRONOUNCEMENT 3 0 /01/2014 O R D E R PER A. K. GARODIA, A.M. BOTH THESE APPEAL S ARE FILED BY TWO DIFFERENT ASSESSEES I.E. SHRI MADAN HADA AND SMT. SHARDA HADA WHICH ARE DIRECTED AGAINST TWO ORDERS OF BLOCK ASSESSMENT COMPLETED BY THE ASSESSING OFFICER ON 30 TH SEPTEMBER, 97 FOR THE BLOCK PERIOD ENDING ON 03/09/96. BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE IN THE CASE OF SHRI MADAN HADA I.E. I.T.A. NO.1387/LKW/97. 2 3. GROUND NO. 1,2,3 AND 4 ARE REGARDING ADDITION PARTLY CONFIRMED BY LEARNED CIT(A) IN RESPECT OF JEWELLERY FOUND IN COURSE OF SEARCH, WHICH ARE AS UNDER: 1. THE LEARNED ACIT ERRED IN LAW IN ADDING RS.6,80,861/ - AS UNEXPLAINED INVESTMENT IN J EWELLERY (OUT OF RS.7,65,533/ - IN THE PRESENT CASE AS INCOME FOR ASSESSMENT YEAR 1 997 - 98. 2. THAT LEARNED ACIT SHOULD HAVE EXCLUDED A SUM OF RS,1,63,500/ - , OUT OF RS.6,80,861/ - , AFORESAID FROM CONSIDERATION IN THE PRESENT CASE AS THE SAME WAS PART VALUE OF THE JEWELLERY OF SMT. SARADA HADA FOUND FROM HER OWN BANK LOCKER AND IT, ACCORDI NG TO LAW, HAD TO BE DEALT WITH IN HER CASE. 3. THE LEARNED ACIT WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF SMT. RAJNI HADA, KM. BHAWANA HADA, SHRI GUNJAN HADA, SHRI DEEPAK HADA AND THE APPELLANT THAT THEY OWNED AND POSSESSED JEWELLERY OF THE VALUE OF R S.8,17,361/ - AND NOT MERELY OF RS.3,00,000/ - AS UNDERESTIMATED BY LEARNED ACIT PARTICULARLY WHEN THE STATEMENT OF THE CLAIMANTS WERE SUPPORTED BY AFFIDAVITS AND THERE WAS NO MATERIAL TO HOLD OTHERWISE OR COMPUTE THAT THE CLAIM WAS IMPROBABLE OR UNACCEPTABL E. 4. IN ANY CASE AND WITHOUT PREJUDICE TO THE FOREGOING GROUNDS, THE ESTIMATE OF LEARNED ACIT THAT THE ABOVE NAMED FIVE PERSONS OWNED AND POSSESSED JEWELLERY OF RS.3,00, 000 / - IS ARBITRARY, BASED ON WHIMS AND IS MUCH TOO LOW, SHORT AND UNREASONABLE, AND T HE ADDITION OF RS.5,17,361/ - ( OUT OF RS.6,80,864/ - ) IS UNSUSTAINABLE ON FACTS AND IN LAW. 4. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT OUT OF TOTAL JEWELLERY FOUND OF RS.13,15,533/ - , IT WAS EXPLAINED BY THE ASSESSEE THAT JEWELLERY TO THE EXTENT OF 4,13,500/ - WAS BELONGING TO HIS WIFE AND FURTHER AMOUNT OF RS.8,17,361/ - WAS BELONGING TO OTHER FAMILY MEMBERS OF THE ASSESSEE AND, THEREFORE, ONLY AN AMOUNT OF RS.84,672/ - MAY AT BEST BE CONSIDERED AS UNDISCLOSED INCOME IN THE PRESENT CASE. HE FURTHER SUBMITTED 3 THAT AGAINST TWO CLAIMS OF THE ASSESSEE FOR SET OFF OF RS.4,13,500/ - AND RS.8,17, 361/ - , THE RELIEF HAS BEEN ALLOWED TO THE ASSESSEE OF RS.2.50 LAC AND RS.3 LAC RESPECTIVELY, WHICH IS NOT JUSTIFIED. HE ALSO SUBMITTED THAT AFFIDAVITS OF THE ASSESSEE, HIS WIFE AND OTHER FAMILY MEMBERS ARE AVAILABLE AT PAPER BOOK PAGES 24 TO 35. 5. AS AG AINST THIS, IT WAS SUBMITTED BY LEARNED D.R. OF THE REVENUE THAT THE ASSESSING OFFICER HAS ALLOWED SUFFICIENT CREDIT ON THE BASIS OF THESE AFFIDAVITS O F THE WIFE OF THE ASSESSEE AND H IS FAMILY MEMBERS. REGARDING THE CLAIM OF THE ASSESSEES WIFE SMT. SHARD A HADA, HE SUBMITTED THAT AS PER PAGE 3 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS ALLOWED CREDIT TO THE EXTENT OF 50 TOLA OF JEWELLERY VALUED AT RS.2.50 LAC. HE FURTHER SUBMITTED THAT SIMILAR CREDIT HAS BEEN ALLOWED BY THE ASSESSING OFFICER OF RS .2 LAC IN RESPECT OF RAJANI HADA WHICH AMOUNTS TO 40 TOLA OF JEWELLERY BY THE SAME RATE. HE FURTHER SUBMITTED THAT SIMILAR CREDIT HAS BEEN ALLOWED FOR RS.50,000/ - IN RESPECT OF KM. BHAWNA HADA, RS.50,000/ - IN RESPECT OF SHRI MADAN HADA AND RS.50,000/ - IN RESPECT OF SHRI GUNJAN HADA TOTALING TO RS.5.50 LAC. HE SUBMITTED THAT THIS ESTABLISHES THAT SUFFICIENT CREDIT HAS BEEN ALLOWED BY THE ASSESSING OFFICER AGAINST THESE CLAIMS AND, THEREFORE, THE ASSESSMENT ORDER SHOULD BE CONFIRMED. 6. WE HAVE CONSIDERE D THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ASSESSMENT ORDER. IN OUR CONSIDERED OPINION, ALLOWING CREDIT OF 50 TOLA JEWELLERY IN RESPECT OF WIFE OF THE ASSESSEE AGAINST THE CLAIM OF THE ASSESSEE OF 948 GMS IS REA SONABLE . SIMILARLY IN RESPECT OF JEWELLERY OF RAJNI HADA, THE ASSESSING OFFICER HAS ALLOWED BENEFIT OF RS.2 LAC WHICH IS EQUAL TO 40 TOLA OF JEWELLERY. SIMILARLY, BENEFIT HAS BEEN ALLOWED OF RS.50,000/ - FOR KM. BHAWANA HADA AND RS.25,000/ - EACH FOR THE A SSESSEES MOTHER AND GUNJAN HADA, SON OF THE ASSESSEE. CONSIDERING THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT THE SUFFICIENT CREDIT HAS BEEN ALLOWED BY THE ASSESSING OFFICER IN 4 RESPECT OF JEWELLERY FROM EXPLAINED SOURCES IN THE A BSENCE OF ANY VALUATION REPORT OR WEALTH TAX RETURN HAVING BEEN FILED BY THESE ASSESSEES PRIOR TO DATE OF S EARCH . IF THE FAMILY MEMBERS OF THE ASSESSEE WERE HAVING JEWELLERY MORE THAN THIS AMOUNT THROUGH EXPLAINED SOURCES, THEN THEY MUST HAVE FILED WEALTH TAX RETURN FOR THE PERIOD PRIOR TO THE DATE OF S EARCH . HENCE, WE DO NOT FIND ANY BASIS TO INTERFERE IN THE ASSESSMENT ORDER ON THIS ISSUE. ACCORDINGLY GROUND NO. 1,2,3 & 4 ARE REJECTED. 7. GROUND NO. 5, 6 & 7 ARE REGARDING ADDITION MADE BY THE ASSESSING OFFICER OF RS.75,000/ - . THE GROUNDS ARE AS UNDER: 5. THE LEARNED ACIT HAS ERRED IN LAW AND ON FACTS IN ADDING RS.75,000/ - IN ASSESSMENT YEAR 1996 - 97 IN RESPECT OF INDIRA VIKAS PATRA AS UNEXPLAINED INVESTMENT IN THE PRESENT CASE IN SPITE OF HIS HAVING FOUND THAT MONEY WAS AVAILABLE WITH APPELLANT, HAVING BEEN DRAWN FROM HIS BANK ACCOUNTS TO PURCHASE THE SAID INDIRA VIKAS PATRA AND PURCHASE TOOK ADEQUATELY EXPLAINED. 6. THE ADDITION OF RS.75,000/ - AFORESAID FOR INDIRA VIKAS PATRA IS UNJUSTIFIED AND UNTENABLE ON FACTS AND IN LAW IN THE ABSENCE OF ANY FINDING BY LEARNED ACIT THAT CASH WAS NOT AVAILABLE T O BUY THE SAME OR CASH WAS SOME HOW OR OTHERWISE USED OR DISPOSED OFF. 7. THE ADDITION OF RS.75,000/ - AFORESAID IS ARBITRARY AND ERRONEOUS BEING B ASED ON IRRELEVANT FACT OF TIME GAP BETWEEN WITHDRAWALS FROM BANK AND PURCHASES OF INDIRA VIKAS PATRA INSTEAD OF RELEVANT FACT OF AVAILABILITY OF CASH AT THE TIME OF PURCHASES OF INIDRA VIKAS PATRA. 8. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE TH AT THIS ADDITION WAS MADE BY THE ASSESSING OFFICER ONLY FOR THE REASON THAT THERE IS GAP BETWEEN THE DATE OF WITHDRAWAL FROM THE BANK AND DATE OF PURCHASE OF IVP. HE SUBMITTED THAT THIS ADDITION IS NOT JUSTIFIED. 9. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 5 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE HAS BEEN DISCUSSED BY THE ASSESSING OFFICER ON PAGE 4 & 5 OF THE ASSESSMENT ORDER. WE FIND THAT THE ASSESSING OFFICER HAS TREATED THE DEPOSITS IN TWO BANK ACCOUNT NO . 2190 WITH BANK OF BARODA AND 1511 WITH STATE BANK OF INDIA AS UNEXPLAINED INVESTMENT. AFTER THAT , IT WAS THE CLAIM OF THE ASSESSEE THAT IVP WERE PURCHASED OUT OF CASH WITHDRAWAL FROM THESE BANK ACCOUNTS. IN THIS REGARD, IT IS OBSERVED BY THE ASSESSING OFFICER THAT A SUM OF RS.1,10,165/ - WAS WITHDRAWAN BY THE ASSESSEE IN ASSESSMENT YEAR 1995 - 96 AND SUM OF RS.10,200/ - ONLY WAS WITHDRAWAN IN ASSESSMENT YEAR 96 - 97. HE ALSO OBSERVED THAT THE IVP IN QUESTION WERE PURCHASE D BY THE ASSESSEE IN THE ACCOUNTING P ERIOD RELEVANT TO ASSESSMENT YEAR 96 - 97. THEREAFTER HE HAS GIVEN A FINDING THAT THERE IS SUFFICIENT TIME GAP BETWEEN THE WITHDRAWALS MADE FROM THE BANKS AND INVESTMENT IN PURCHASE OF IVPS AND, THEREFORE, HE TREATED THE SAME AS UNEXPLAINED. IN OUR CONSIDE RED OPINION, WHEN THE ASSESSING OFFICER COULD NOT POINT OUT ANY OTHE R UTILIZATION OF CASH WITHDRAWAN FROM THESE TWO BANK ACCOUNTS IN ASSESSMENT YEAR 95 - 96, THE ASSESSEE SHOULD GET THE BENEFIT OF THE SAME AND, THEREFORE, IT SHOULD BE ACCEPTED THAT THE IVPS WERE PURCHASED OUT OF SUCH CASH WITHDRAWAL FROM THESE TWO BANK ACCOUNTS. HENCE, WE DELETE THIS ADDITION. TH ESE GROUND S ARE ALLOWED. 11. GROUND NO. 8 OF THE APPEAL IS AS UNDER: 8. LEARNED ACIT ERRED IN LAW AND ON FACTS I N ADDING RS.5,000/ - AS UNEXPLAINED INVESTMENT OF APPELLANT IN ASSESSMENT YEAR 1994 - 95, WHERE HE HIMSELF FOUND THAT SET MUTUAL FUND UNITS WERE IN THE NAME OF KM. BHAWANA HADA DULY DISCLOSED IN HER BALANCE SHEET ATTACHED TO RETURN OF INCOME FOR ASSESSMENT YEAR 1996 - 97 FILED BEFORE THE SEARCH AND ALSO FOUND THAT KM. BHAWANA HADA WAS HERSELF AN INDEPENDENT ASSESSEE. 12. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT OUT OF INVESTMENT OF RS.90,000/ - IN SHARES , I NVESTMENT OF RS.5,000/ - IS BELONGING TO KM. BHAW ANA HADA AND DUL Y DISCLOSED IN HE R BALANCE SHEET ATTACHED WITH THE 6 RETURN OF INCOME FOR ASSESSMENT YEAR 96 - 97 AND, THEREFORE, THE SAME SHOULD BE REDUCED FROM THIS ADDITION. WE FIND FROM THE ASSESSMENT ORDER ALSO THAT THIS CLAIM WAS MADE BEFORE THE A.O. ALSO THAT SINCE TH E INVESTMENT IN THE NAME OF KM. BHAWANA HADA IS DULY DISCLOSED IN HER BALANCE SHEET, NO ADDITION SHOULD BE MADE IN THE HANDS OF THE ASSESSEE ON THAT ACCOUNT. THIS ASSERTION OF THE ASSESSEE COULD NOT BE CONTROVERTED BY THE A.O. THEREFORE, WE DELETE THIS AD DITION. THIS GROUND IS ALLOWED. 13. GROUND NO. 9 & 10 OF THE APPEAL ARE INTERCONNECTED, WHICH READ AS UNDER: 9. THE LEARNED ACIT HAS ERRED ON FACTS AND IN LAW IN ADDING RS.2,50,000/ - IN ASSESSMENT YEAR 1994 - 95 BY ESTIMATING THE MARRIAGE EXPENSES OF THE SON OF APPELLANT TO HAVE BEEN SPENT BY THE APPELLANT AT RS.2,50,000/ - , WHERE THE EVIDENCES FOUND AND LED SHOWED ACT UAL EXPENDITURE SPENT BY THE APPELLANT TO BE NOT MORE THAN RS.60,000/ - . 10. THE ADDITION OF RS.2,50,000/ - AFORESAID IS ARBITRARY, CAPRICIOUS AND LACKS IN DETAILS AND PARTICULARS AND IS WHOLLY ERRONEOUS AND UNJUSTIFIED APART FROM BEING MUCH TOO HIGH, EXCES SIVE AND UNCALLED FOR. 14. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ADDITION IS BASED MERELY ON TWO BILLS FOR THE SUMS AGGREGATING TO RS.45,000/ - , THEREFORE, SUCH ADDITION IS NOT JUSTIFIED. 15. LEARNED D.R. OF THE REVENUE SUPPORTED T HE ASSESSMENT ORDER. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ASSESSMENT ORDER. WE ALSO FIND THAT AS PER THE ASSESSMENT ORDER PAGE 6, THE ASSESSING OFFICER IS REFERRING TO TWO BILLS OF RS.33,000/ - AND ODD O F HOTEL LAND MARK AND RS.11,000/ - AND ODD O F HOTEL MEERA INN IN CONNECTION WITH THE MARRIAGE CELEBRATION OF ASSESSEES SON SHRI GUNJAN HADA, WHICH WAS SOLEMNIZED IN MARCH 1994. THE ASSESSING OFFICER HAS ALSO NOTED THAT THE DETAILS OF MARRIAGE EXPENSES ARE STATED TO BE 7 NOT AVAILABLE WITH THE ASSESSEE. THE ASSESSING OFFICER HAS ALSO CONSIDERED THE ARGUMENTS THAT THE MARRIAGE OF THE ASSESSEES WON WAS NOT ARRANGED MARRIAGE BUT IT WAS A CONSEQUENCE OF WISHES OF HIS SON. SO A FTER NOTING THESE FACTS, THE ASSESSING OFFICER HELD THAT CONSIDERING THE REPUTATION OF THE ASSESSEE, THE EXPENSES OF MARRIAGE HAS TO BE ESTIMATED AT RS.2.5 LAC.. 17. WE FIND THAT WHILE EXPLAINING THE JEWELLERY ETC., THE ASSESSEE CLAIMED THAT THE ASSESSEE IS A VERY REPUTED FAMILY AND, THEREFORE, SUFFICIENT JEWELLERY WAS THERE WITH THE ASSESSEE. AT THE SAME TIME, WHILE EXPLAINING THE MARRIAGE EXPENSES, THE ASSESSEE IS DISPUT ING THE REASONABLE ESTIMATE OF THE ASSESSING OFFICER OF RS.2.5 LAC. ADMITTEDLY, ONL Y TWO BILLS OF RS.45,000/ - APPROX WERE FOUND BUT IN THE ABSENCE OF ANY DETAIL OF DISCLOSED EXPENSES ON ACCOUN T OF MARRIAGE OF ASSESSEES S ON, IT CANNOT BE SAID THAT SUCH EXPENSES HAS TO BE CONSIDERED ONLY TO THE EXTENT OF BILLS FOUND. WHEN TWO BILLS ARE F OUND AND THE ASSESSEE COULD NOT SHOW ANY EXPENSES ON ACCOUNT OF MARRIAGE HAVING BEEN ACCOUNTED FOR OUT OF REGULAR SOURCES OF INCOME, THE ASSESSING OFFICER HAS TO ESTIMATE THE EXPENSES AND CONSIDERING THE REPUTATION OF THE ASSESSEE, THE ESTIMATION OF THE AS SESSING OFFICER AT RS.2.50 LAC IS REASONABLE AND NOT EXCESSIVE. WE, THEREFORE, DECLINE TO INTERFERE IN THE ASSESSMENT ORDER ON THIS ISSUE. ACCORDINGLY, GROUND NO. 9 AND 10 ARE REJECTED. 18. GROUND NO. 11, 12 & 13 ARE AS UNDER: 11. THE ADDITION OF RS.4,41,338/ - IN DIFFERENT ASSESSMENT YEARS SPREAD OVER THE BLOCK PERIOD FOR ALLEGED UNDISCLOSED DOMESTIC EXPANSES IS WHOLLY IMAGINARY, ERRONEOUS , SPECULATIVE AND NOT BASED ON ANY MATERIAL OR EVIDENCE AND LEARNED ACIT ERRED IN LAW AND ON FACTS IN MAKING THE SAID ADDITION. 8 12. LEARNED ACIT WAS NOT JUSTIFIED IN MISSING TO NOTE AND FAILING TO APPRECIATE THAT NO ADDITION FOR ANY ALLEGED UNDISCLOSED EXPANSES COULD BE MADE UNDER THE ACT, UNLESS IT WAS FOUND AS A FACT THAT SUCH EXPENDITURE HAD BEEN INCURRED ON BASIS OF MATERIAL OR EVIDENCE, AS SUCH THE ADDITION OF RS.4,41,338/ - AFORESAID IS IN VIOLATION OF THE PROVISIONS OF THE ACT. 13. IN ANY CASE AND WITHOUT PREJUDICE TO OTHER GROUNDS THE ADDITION OF RS.4,41,338/ - SPREAD OVER THE BLOCK PERIOD IS MUCH TOO HIG H, EXCESSIVE AND UNCALLED FOR. 19. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ADDITION IS MADE BY THE ASSESSING OFFICER ON THE BASIS OF ESTIMATE ONLY WITHOUT THERE BEING ANY MATERIAL TO THAT EFFECT HAVING BEEN FOUND IN THE COURSE OF SEARCH AND, THEREFORE, SUCH ADDITION IS NOT JUSTIFIED. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ASSESSMENT ORDER. WE FIND THAT IN ASSESSMENT ORDER ON PAGE NO. 7, IT IS NOTED BY THE ASSESSING OFFICER THAT FROM ASSESSMENT YEAR 94 - 95, THE ASSESSEE IS PAYING RS.2,000/ - PER MONTH AS HOUSE RENT ITSELF. HE HAS ALSO NOTED THAT THE ASSESSEE WAS SUPPORTING A FAMILY OF FIVE SCHOOL GOING CHI LDREN. IN THE LIGHT OF THESE TWO FACTS, WHEN WE EXAMINE THE EXPENSES DISCLOSED BY THE ASSESSEE ON ACCOUNT OF HOUSE HOLD EXPENSES, WE FIND THAT THE SAME WAS RS.13,099/ - IN ASSESSMENT YEAR 87 - 88, RS.16,860/ - IN ASSESSMENT YEAR 88 - 89, RS.20,125/ - IN ASSESSME NT YEAR 89 - 90 AND RS.21,991/ - IN ASSESSMENT YEAR 90 - 91. FOR ASSESSMENT YEAR 91 - 92, THE ASSESSEE HAS DISCLOSED SUCH HOUSE HOLD EXPENSES AT RS.24,313/ - AND IN ASSESSMENT YEAR 92 - 93 AT RS.28,420/ - . IN ASSESSMENT YEAR 93 - 94 THE AMOUNT SHOWN IS RS.31,640/ - THE REAFTER, IN ASSESSMENT YEAR 94 - 95, THE ASSESSEE HAS SHOWN HOUSE HOLD EXPENSES AT RS.92,900/ - BUT AGAIN IN ASSESSMENT YEAR 95 - 96 THE SAME IS BELOW RS.50,000/ - . IN ASSESSMENT YEAR 96 - 97 THE ASSESSEE HAS SHOWN HOUSE HOLD EXPENSES OF RS.66,000/ - . IN THIS MAN NER, IN THE BLOCK 9 PERIOD OF 10 YEARS, THE ASSESSEE HAS SHOWN HOUSE HOLD EXPENSES OF RS.3,43,662/ - ONLY. CONSIDERING THE RENT PAYMENT OF RS.2,000/ - PER MONTH WITH EFFECT FROM ASSESSMENT YEAR 93 - 94 AND SUPPORTING OF FAMILY OF FIVE SCHOOL GOING CHILDREN SINC E 86 - 87 AND CONSIDERING THE STATUS OF THE ASSESSEE, IT HAS TO BE ACCEPTED THAT THE HOUSE HOLD EXPENSES SHOWN BY THE ASSESSEE FROM DISCLOSED SOURCES IS NOT SUFFICIENT. IT MAY BE THAT NO OTHER MATERIAL WAS FOUND IN COURSE OF SEARCH BUT THIS FACT HAS COME IN LIGHT THAT THE ASSESSEE IS SUPPORTING A FAMILY OF FIVE SCHOOL GOING CHILDREN AND PAYING HOUSE RENT OF RS.2,000/ - PER MONTH AND, THEREFORE, THESE FACTORS HAVE TO BE CONSIDERED AND IF THE SAME ARE CONSIDERED, IT HAS TO BE ACCEPTED THAT THE HOUSE HOLD EXPEN SES SHOWN BY THE ASSESSEE ARE NOT ADEQUATE CONSIDERING THE STATUS OF THE ASSESSEE. THE ASSESSING OFFICER HAS ESTIMATED THE EXPENSES OF THE BLOCK PERIOD AT RS.7.85 LAC. IN OUR CONSIDERED OPINION, THE SAME IS NEITHER EXCESSIVE NOR UNREASONABLE. HENCE, ON THIS ISSUE , WE DO NOT FIND ANY REASON TO INTERFERE IN THE ASSESSMENT ORDER. THESE GROUNDS ARE REJECTED. 22. GROUND NO. 14, 15 AND 16 ARE INTERCONNECTED, WHICH READ AS UNDER: 14. THE APPELLANT ADOPTS THE GROUNDS OF APPEAL OF PRAVESH CASTINGS PRIVATE LIMITED IN RESPECT OF THE PROTECTIVELY INCLUDED ALLEGED UNDISCLOSED INCOME OF RS.2,54,70,045/ - IN THE PRESENT CASE AND THE SAID GROUNDS ARE ATTACHED HERETO. 15. THE LEARNED ACTT ERRED IN LAW AND ON FACTS IN NOT HOLDING THAT THE FINALLY DETERMINED UNDISCLOSED INDUSTRIAL INCOME ON THE BASIS OF AND IN RESPECT OF THE SEIZED MATERIAL DETERMINED IN CASE OF PRAVESH CASTINGS P. LTD., BEING DEDUCTIBLE TO THE EXTENT OF 100% THEREOF, THE QUESTION OF ITS INCLUSION ON PROTECTIVE BASIS IN ANY OTHER HAND CANNOT ARISE AS NO TAX IS CHARGEABLE ON SUCH INCOME UNDER THE ACT. 16. THE LEARNED ACIT ERRED ON FACTS AND IN LAW IN INCLUDING ON PROTECTIVE BASIS THE ALLEGED INCOME OF RS.1,71,28,028/ - IN THE PRESEN T CASE WHERE THE APPELLANT HAS NO CONNECTION WITH THE SAME. 10 23. THE LD. COUNSEL FOR THE ASSESSEE, SHRI. S. K. GARG, ADVOCATE HAS STATED THAT IN THESE CASES , ADDITION ON ACCOUNT OF BUSINESS INCOME WAS MADE IN THE HANDS OF THE ASSESSEES ON PROTECTIVE BASIS WHEREAS SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF M/S PRAVESH CASTINGS PVT. LTD., IN WHICH THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL, BUT IT WAS DISMISSED ON ACCOUNT OF NON - APPEARANCE ON BEHALF OF THE ASSESSEE. HOWEVER, M/S PRAVESH CASTINGS PVT. LTD. MOVED AN APPLICATION UNDER SECTION 154 OF THE INCOME - TAX ACT, 1961 FOR BENEFIT OF DEDUCTION UNDER SECTION 80IA OF THE ACT. THAT APPLICATION WAS DISM ISSED BY THE ASSESSING OFFICER, AGAINST WHICH ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) HAS ALSO DISMISSED THE APPEAL OF THE ASSESSEE. 24. THEREAFTER AN APPLICATION UNDER SECTION 154 OF THE ACT WAS MOVED BEFORE THE LD. CIT(A) A ND THE LD. CIT(A) HAS RECTIFIED HIS OWN ORDER AND ISSUED DIRECTION TO THE ASSESSING OFFICER TO ALLOW BENEFIT OF DEDUCTION UNDER SECTION 80IA OF THE ACT AGAINST THE BUSINESS INCOME DETERMINED ON ACCOUNT OF SUBSTANTIVE ADDITION, VIDE HIS ORDER DATED 17.9.200 9. 25. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT SINCE SUBSTANTIVE ADDITION WAS CONFIRMED IN THE HANDS OF M/S PRAVESH CASTINGS PVT. LTD., NO ADDITION ON PROTECTIVE BASIS IS SUSTAINABLE IN THE HANDS OF THE ASSESSEE. 26. ON A CAREFU L PERUSAL OF THE FIGURES IN THE ASSESSMENT ORDER IN THE CASE OF SHRI MADAN HADA VIS - A - VIS M/S PRAVESH CASTINGS PVT. LTD., WE NOTICE SOME DISCREPANCIES THEREIN AND IT IS NOT CLEAR FROM THE ORDERS IN BOTH THE CASES WHETHER THE ENTIRE BUSINESS INCOME, WHICH W AS ADDED ON SUBSTANTIVE BASIS IN THE HANDS OF M/S PRAVESH CASTINGS PVT. LTD., AND CONFIRMED BY THE LD. CIT(A) IN THE HANDS OF M/S PRAVESH CASTINGS PVT. LTD. AND THEREAFTER BENEFIT OF CLAIM UNDER SECTION 80IA OF THE ACT WAS ALLOWED, IS THE SAME WHICH WAS A DDED ON 11 PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THIS MATTER SHOULD GO BACK TO THE ASSESSING OFFICER TO VERIFY THE FIGURES OF ADDITION MADE ON PROTECTIVE BASIS IN THE CASE OF SHRI MADAN HADA AND THE SUBSTANTIVE ADD ITION MADE IN THE HANDS OF M/S PRAVESH CASTINGS PVT. LTD. IF ON VERIFICATION , IT IS NOTICED THAT THE ENTIRE BUSINESS INCOME ON WHICH ADDITION WAS MADE ON SUBSTANTIVE BASIS IN THE HANDS OF M/S PRAVESH CASTINGS PVT. LTD., IS THE SAME AMOUNT IN THE CASE OF S HRI MADAN HADA, THE ADDITION CANNOT BE MADE IN THE HANDS OF SHRI MADAN HADA ON PROTECTIVE BASIS. WE ORDER ACCORDINGLY. 27. SO FAR AS ADDITION ON PROTECTIVE BASIS RELATING TO BUSINESS INCOME OF M/S MONGA METALS (P) LTD. IS CONCERNED, THE LD. COUNSEL FOR TH E ASSESSEE HAS STATED THAT IN THE HANDS OF M/S MONGA METALS (P) LTD. , THIS ADDITION WAS DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 30.6.1999 IN ITA NO. 1377/ALLD/1994. THE TRIBUNAL HAS ALSO LAID DOWN A FORMULA FOR COMPUTING THE UNDISCLOSED INCOME, IF AT ANY STAGE , ADDITIONS ARE CONFIRMED ON SUBSTANTIVE BASIS IN THE HANDS OF M/S MONGA METALS (P) LTD. UNDER THESE SITUATIONS, THE ADDITION ON PROTECTIVE BASIS CAN BE EXAMINED IN THE HANDS OF SHRI MADAN HADA INDEPENDENTLY. THE LD. COUNSEL FOR THE ASSESSEE HA S FURTHER CONTENDED THAT SINCE THE TRIBUNAL HAS LAID DOWN A FORMULA FOR COMPUTATION OF UNDISCLOSED INCOME, THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER FOR RE - COMPUTING THE UNDISCLOSED INCOME, IF ANY, IN THE HANDS OF SHRI. MADAN HADA AS PER FORMULA LAID DOWN BY THE TRIBUNAL IN PARA 45 OF ITS ORDER DATED 30.6.1999. 28. THE LD. D.R. HAS ALSO AGREED TO THIS PROPOSITION. WE ACCORDINGLY RESTORE THIS ADDITION OF RS. 1,71,28,028 / - MADE ON PROTECTIVE BASIS IN RESPECT OF M/S MONGA METALS (P) LTD. MADE IN THE CASE OF SHRI. MADAN HADA I.E. THE ASSESSEE - APPELLANT TO THE ASSESSING OFFICER FOR RE - COMPUTATION OF THE UNDISCLOSED INCOME AS PER FORMULA LAID DOWN BY THE TRIBUNAL IN THE CASE OF M/S MONGA METALS (P) LTD. IN PARA 45 OF ITS ORDER DATED 30.6.1999. 12 29. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 30. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE IN THE CASE OF SMT. SHARDA HADA IN I.T.A. NO.1388/ALLD/97. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED ACIT ERRED IN LAW AND ON FACTS IN ADDING AS UNDISCLOSED INCOME IN RESPECT OF THE PROPERTY NOT OWNED BY THE APPELLANT, THE AMOUNT OF RS.58,187/ - AND RS.10,208/ - IN ASSESSMENT YEAR 1993 - 94 AND 1994 - 95 RESPECTIVELY. 2. THE VIEW OF THE LEARNED ACIT THAT THE PLOT. NO.21, BLOCK CJ, SECTOR II, BIDHAN NAGAR, WEST BENGAL OR/ AND STRUCTURES AND CONSTRUCTIONS THEREON WERE OWNED AND BELONG TO THE APPELLANT IS CONTRARY TO FACTS, ERRONEOUS AND BASED ON MISINTERPRE TATION OR UNDERSTANDING OF THE SEIZED MATERIAL AND THE ADDITION OF RS.68,395 / - AFORESAID I S UNJ USTIFIED. 3. THE AVERM ENT OF LEARNED ACIT THAT IN THE BALANCE SHEET OF APPE L LANT RS . 7,69, 614/ - APPEAR I N G AS INV E STM E NT IN T H E AFORESAID PROPERTY IS CONTRARY TO FACTS ON RECORD AND BASED ON HIS MERE SAY, PARTICULARITY WHERE THE SAME APPEARS DEBITED TO THE ACCOUNT OF DR. B HOLA NATH CHAKRA B ORTY AND NOT TO ANY PROPERTY ACCOUNT. 4. IN ANY CA S E AND WITHOUT PRE J UDICE TO OTHER G ROUND S THE VALUATION OF THE AFORESAID PROPERTY AT RS.4,77,009/ - I S MUCH TOO HI G H, EXCESSIVE A ND CANCELLED FOR. 5. THE ADDITION OF RS. 7,6 5 , 533 / - ON PROTECTIVE BA S IS IN TH E P RESENT CA S E FOR ALLE G ED UNEX P LAINED OR UNDISCLOSED JEWELLERY IS WHO L LY ERRONEOUS, UNJUSTIFIED AND UNSUSTAINABLE ON FACTS AND IN LAW. 6. THE ENTIRE ORNAMENT AN D J EW E LLERY FOUND OWNED AND BE LONGING TO THE APPELLANT HAVIN G BEEN EXPLAINED SATISFACTORILY AND REASONABLY, NO ADDITION FOR ANY UNDISCLOSED INVESTMENT IN JEWELLERY WAS TENABLE ON FACTS AND IN LAW IN THE PRESENT CASE. 13 7. THE ASSESSMENT IS CONTRARY TO FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 31. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF REPORT OF THE D.V.O. BUT THE SAME IS NOT JUSTIFIED. HE FURTHER SUBMITTED THAT AS PER THE D.V.O., THE VALUE WAS ADOPTED AT RS.4,77,000/ - WHEREAS THE ASSESSEE HAS ALREADY SHOWN THE VALUE AT RS.4,08,614/ - AND FOR THIS SMALL DIFFERENCE OF RS.68,395/ - ON ESTIMATE OF THE D.V.O., NO ADDITION IS JUSTIFIED IN BLOCK PROCEEDINGS. 32. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 33. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS ADMITTED BY THE ASSESSING OFFICER ALSO THAT INVESTMENT ON ACCOUNT OF CONSTRUCTION HAS BEEN DISCLOSED BY THE ASSESSEE TO THE EXTENT OF RS.4,08,614/ - . IT IS ALSO SEEN THAT THE PROPERTY WAS PURCHA SED BY THE ASSESSEE FROM DR. BHOLA NATH CHAKRABORTY ALTHOUGH NO PURCHASE DEED WAS EXECUTED AND ONLY A WILL WAS EXECUTED BY HIM IN FAVOUR OF THE ASSESSEE BUT THIS IS A FACT NOTED BY THE ASSESSING OFFICER THAT THE PAYMENT OF RS.3.61 LAC WAS MADE BY THE ASSES SING OFFICER TO SHRI BHOLA NAGH CHAKRABORTY. T HE ASSESSING OFFICER HAS GOT D.V.O. REPORT REGARDING COST OF CONSTRUCTION WHICH WAS ESTIMATED BY THE D.V.O. AT RS.4.77 LAC. THE ASSESSING OFFICER HAS REDUCED THE CONSTRUCTION COST AS PER THE BALANCE SHEET OF THE ASSESSEE AT RS.4,08,614/ - AND MADE THE ADDITION OF RS.68,395/ - . IN OUR CONSIDERED OPINION, SUCH ADDITION IS NOT JUSTIFIED FOR THE REASONS THAT OUT OF THE TOTAL CONSTRUCTION FOR WHICH COST IS ESTIMATED BY D.V.O. AT RS.4.77 LAC, IT MAY BE THAT SOME PORT ION WAS CONSTRUCTED BY THE OWNER I.E. SHRI BHOLA NATH CHAKRABORTY, THE VALUE OF WHICH STANDS INCLUDED IN THE PAYMENT OF RS.3.61 LAC MADE BY THE ASSESSEE. T HE SECOND REASON IS THIS THAT ACTUAL EXPENDITURE AND ESTIMATION OF D.V.O. WILL ALWAYS HAVE SOME DIFFE RENCES AND THE DIFFERENCE IS LESS THAN 15% OF THE VALUATION DONE BY THE D.V.O. , ADDITION IS NOT JUSTIFIED. I F 15% OF THE VALUE ADOPTED BY D.V.O. OF RS.4.77 LAC IS REDUCED FROM SUCH VALUE THEN THE BALANCE AMOUNT IS ONLY 14 RS.40 5 ,4 5 0/ - AS AGAINST THE VALUE DIS CLOSED BY THE ASSESSEE AT RS.4,08,614/ - . FOR SUCH SMALL DIFFERENCE, THE ADDITION IS NOT JUSTIFIED ON THE BASIS OF ESTIMAT ED VALUE. WE, THEREFORE DELETE THE SAME. 34. IN THE RESULT, THIS APPEAL OF THE ASSESSEE STANDS ALLOWED. 35. IN THE COMBINED RESUL T, THE APPEAL OF THE ASSESSEE IN THE CASE OF MADAN HADA IS PARTLY ALLOWED WHEREAS IN THE CASE OF SMT. SHARDA HADA , THE APPEAL IS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 T H JANUARY, 2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR