C.Kishanlal, CHENNAI V. DCIT Central Circle 3(3), CHENNAI

ITA 2928/CHNY/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8754 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-04-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 30-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAILENDRA MAMIDIPCIT
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Sale consideration of property below Jantri Value; Search and seizure; Cost of acquisition; Reasonable cause
• Section: 50C; 234B; 143(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NOS.2928, 2929, 2930 & 2931/CHNY/2017 / ASSESSMENT YEARS :2006-07, 2006-07, 2006-07, 2012 -13 SHRI. C. KISHANLAL, NO.41/23, KUTCHERY ROAD, MYLAPORE, CHENNAI 600 004. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(3) CHENNAI 600 034. [PAN AAKPK 7263K] ./I.T.A. NO. 2932/CHNY/2017 / ASSESSMENT YEAR : 2006-2007. C. KISHANLAL & SONS (HUF) NO.41/23, KUTCHERY ROAD, MYLAPORE, CHENNAI 600 004. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(3) CHENNAI 600 034. [PAN AAAHK 4234L] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI. B. RAMAKRISHNAN, FCA /RESPONDENT BY : SHRI. SAILENDRA MAMIDI, PCIT. /DATE OF HEARING : 13-12-2018 ! /DATE OF PRONOUNCEMENT : 20-12-2018 ITA NOS.2928 TO 2932/17. :- 2 -: / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER APPEAL NOS. 2928/CHNY/2017 TO 2931/CHNY/2017 ARE OF THE ASSESSEE SHRI. C. KISHNANLAL IN HIS INDIVIDUAL STAT US, WHEREAS APPEAL NO.2932/CHNY/2017 IS OF M/S. C. KISHANLAL & SONS (HUF) STATUS WHEREIN SHRI. C. KISHANLAL IS THE KARTA. APPEAL IN ITA NOS.2928 TO 2931/CHNY/2017 ARE TAKEN UP FIRST FOR DISPOSAL. 2. OF THESE FOUR APPEALS, ITA 2928/CHNY/2017 IS DIREC TED AGAINST AN ORDER DATED 11.10.2017 OF LD. COMMISSION ER OF INCOME TAX (APPEALS)-19, CHENNAI, CONFIRMING CERTAIN ADDITIONS / DISALLOWANCES MADE BY THE LD. ASSESSING OFFICER IN THE ASSESSMENT DONE FOR ASSESSMENT YEAR 2006-2007. APPEAL NO.2929/CHNY/2017 IS AGAINST LEVY OF PENALTY OF A10,00,000/- U/S.271D OF THE INC OME TAX ACT, 1961 (IN SHORT THE ACT) FOR LOANS ACCEPTED IN CASH D URING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2006-2007, WHICH LEVY WAS CONFIRMED BY LD. COMMISSIONER OF INCOME TAX (APPEALS). APPEAL NO.2930/CHNY/2017 IS AGAIN LEVY OF PENALTY OF A3,00 ,000/- U/S.271E OF THE ACT ON REPAYMENT OF LOAN IN CASH FOR THE VER Y SAME ASSESSMENT YEAR, WHICH WAS ALSO CONFIRMED BY LD. COMMISSIONER OF INCOME TAX (APPEALS). APPEAL NO.2931/CHNY/2017 IS AN APPEAL A GAINST AN ORDER ITA NOS.2928 TO 2932/17. :- 3 -: DATED 11.10.2017 OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-19, CHENNAI CONFIRMING CERTAIN ADDITIONS/DISALLOWANCES MADE BY THE LD. ASSESSING OFFICER IN THE ASSESSMENT DONE FOR ASSES SMENT YEAR 2012- 2013. 3. GROUNDS TAKEN BY THE ASSESSEE IN ITS APPEAL ITA 2928/CHNY/2017 FOR ASSESSMENT YEAR 2006-07, COUNT T EN OF WHICH GROUNDS 1 AND 2 ARE GENERAL NEEDING NO SPECIFIC AD JUDICATION, WHEREAS GROUNDS 10 AND 11 ARE ON LEVY OF INTEREST U NDER SECTION 234A AND 234B OF THE ACT, WHICH ARE CONSEQUENTIAL IN NAT URE. 4. VIDE ITS GROUNDS 3 TO 5, ASSESSEE ASSAILS SUSTENANC E OF AN ADDITION OF A90,62,161/-.(ACTUAL FIGURE IT APPEARS IS A90,66,072/-) 5. FACTS APROPOS ARE THAT ASSESSEE, A PAWN BROKER, WAS SUBJECTED TO A SEARCH U/S.132 OF THE ACT ON 04.01.2 012. CONSEQUENT TO THIS, ASSESSEE WAS ISSUED NOTICES U/S.153A OF THE A CT FOR FILING HIS RETURNS. ASSESSEE IN THE RETURN FILED FOR THE IMP UGNED ASSESSMENT YEAR 2006-07, PURSUANT TO SUCH NOTICES, DECLARED A N INCOME OF A21,85,268/-. IT IS TO BE NOTED THAT THE INCOME DEC LARED WAS VERY SAME AS SHOWN IN THE REGULAR RETURN FILED ON 08.0 5.2007. DURING THE COURSE OF THE SEARCH, REVENUE STUMBLED UPON CERTAIN RECORDS RELATING TO A SUIT FILED BY ONE SHRI. DHARMENDRA BAFNA AND OTHERS BEFORE HIGH ITA NOS.2928 TO 2932/17. :- 4 -: COURT OF MADRAS. FROM SUBSEQUENT ENQUIRIES IT WAS LEARNED BY THE REVENUE THAT ASSESSEE HAD PAID A SUM OF A4,65,00,0 00/- TO SHRI DHARMENDRA BAFNA, WHO WAS THE MANAGING DIRECTOR O F A COMPANY CALLED M/S. SURANA CORPORATION LTD, AS AN INVESTM ENT IN THE GOLD TRADING BUSINESS CONDUCTED BY M/S. SURANA CORPORATI ON LTD. IT SEEMS ASSESSEE HAD REQUESTED SHRI. DHARMENDRA BAFNA TO CL OSE THE ACCOUNT AND RETURN THE MONEY, WHEREUPON LATTER CLAIMED THAT HE WAS ONLY A SUB-AGENT OF M/S. SURANA CORPORATION LTD AND THE MO NEY WAS DEALT BY THE DIRECTORS OF M/S. SURANA CORPORATION LTD. ASSES SEE WAS QUESTIONED BY THE REVENUE ON THE SOURCE FOR THE SUM OF A4,65,0 0,000/- ADVANCED BY HIM TO M/S. SURANA CORPORATION LTD THROUGH DHARM ENDRA BAFNA. ASSESSEE THEREUPON GAVE THE FOLLOWING AS THE SOURC E. (A) AMOUNT RECEIVED FROM 12 PERSONS BY CASH/ CHEQUE A1,50,06,232/- (B) SALE PROCEEDS OF JEWELS BELONGING TO THE RELATIVES A3,14,93,768/- 6. LD. ASSESSING OFFICER VERIFIED THE ABOVE CLAIM MADE BY THE ASSESSEE. NAME OF THE PERSONS FROM WHOM ASSESSEE HA D CLAIMED RECEIPT OF MONEY WERE AS UNDER:- ITA NOS.2928 TO 2932/17. :- 5 -: SL.NO NAME OF THE PERSON AMOUNT 1 C. KISHANLAL A6,56,232 2 B.K. VIMALCHAND A34,00,000 3 C. MADANLAL A50,000 4 SIVARAJAN NADAR A60,00,000 5 C. KISHANLAL & SONS (HUF) A7,00,000 6 V. SUVITHA A9,00,000 7 KANCHAN BAI A23,50,000 8 C. MADANLAL & SONS A50,000 9 JEEVARAJI NADAR A2,00,000 10 KALYANMALJI RANKA A2,00,000 11 C.KAMALCHAND A4,00,000 12 A. PUKHRAJI GULECHA A1,00,000 TOTAL A1,50,06,232 BASED ON THE EVIDENCE FILED BY THE ASSESSEE, LD. A SSESSING OFFICER ACCEPTED THE FOLLOWING OUT OF THE ABOVE. A) C. MADANLAL A50,000/- B) SIVARAJAN NADAR A49,40,160/- C) M/S. C. MADANLAL & SONS A50,000/- D) M. JEEVARAJ A2,00,000/- E) KALYANMALJI RANKA A2,00,000/- F) C. KAMALACHAND A4,00,000/- G) A.PUKHRAJI GULECHA A1,00,000/- 59,40,160/- ITA NOS.2928 TO 2932/17. :- 6 -: IT IS TO BE NOTED THAT OUT OF THE TOTAL SUM OF A60, 00,000/- CLAIMED BY THE ASSESSEE TO HAVE BEEN RECEIVED FROM SHRI. SIVA RAJAN NADAR, A SUM OF A49,40,160/- WAS ACCEPTED BY THE LD. ASSESSING O FFICER AND BALANCE SUM OF A10,59,840/- ALONE WAS CONSIDERED TO BE UNE XPLAINED. THE CLAIMS WHICH WERE NOT ACCEPTED BY THE LD. ASSESSING OFFICER WERE AS UNDER:- M/S. C. KISHANLAL & SONS AND C. KISHANLAL A6,56,232 M/S. C. KISHANLAL (HUF) A7,00,000 C. SHRI SIVARAJA NADAR A10,59,840 SHRI. B.K. VIMAL CHAND A34,00,000 SMT. V. SUVETHA A9,00,000 SMT. KANCHAN BAI A23,50,000 TOTAL A90,66,072/- 7. REASONS FOR DISBELIEVING THE ABOVE CLAIMS OF LOA NS/ADVANCES, CITED BY THE LD. ASSESSING OFFICER WERE AS UNDER:- (I) M/S. C. KISHANLAL & SONS A6,56,232/- - THOUGH I T WAS CLAIMED AS CASH BALANCE HELD BY THE ASSESSEE, INCOME RETUR NED BY THE ASSESSEE FROM HIS BUSINESS WAS ONLY A2,20,000/- AND ASSESSEE COULD NOT HAVE HAD CASH OF A6,56,232/- WIT H HIM. ITA NOS.2928 TO 2932/17. :- 7 -: (II) M/S.C. KISHANLAL & SONS (HUF) A7,00,000/- - T HOUGH ASSESSEE CLAIMED IT AS AN ADVANCE RECEIVED FROM HU F ON LEASING AN AGRICULTURAL LAND, NO DETAILS OF THE LAND SO LEASED WERE MADE AVAILABLE. (III) SHRI. SIVARAJA NADAR A10,59,840/- - AGAINST T HE CLAIM OF THE ASSESSEE THAT HE HAD RECEIVED A60,00,000/- FROM SH RI. SIVARAJA NADAR, AS ADVANCE FOR PURCHASE OF LAND AT MANGADU, TRIAL BALANCE AS ON 31.03.2006, REFLECTED A SUM OF A49,40,160/- ONLY. BALANCE A10,59,840/- REMAINED UNEXPLAINED. (IV) SHRI. B.K. VIMALCHAND A34,00,000/- - SHRI. B.K . VIMALCHAND WAS THE SON OF THE ASSESSEE, AND HAD NO SUFFICIENT FUNDS IN HIS ACCOUNT. INCOME RETURNED BY SHRI. B. K. VIMALC HAND FOR IMPUGNED ASSESSMENT YEAR WAS ONLY A1,65,818/-. BAN K ACCOUNT OF SHRI. B.K. VIMALCHAND REFLECTED SIX DEPO SITS OF A5,00,000/- EACH ON 19.09.2005 AND A SUM A30,00,00 0/- WAS TRANSFERRED ON THE VERY SAME DATE TO ASSESSEES ACCOUNT. THERE WAS NO SOURCE SHOWN FOR THE DEPOSITS IN THE B ANK ACCOUNT. (V) SMT. V. SUVITHA A9,00,000/- - SMT. V. SUVITHA, DAUGHTER-IN- LAW OF THE ASSESSEE, THOUGH SHE HAD CONFIRMED THA T SHE HAD GIVEN A9,00,000/- TO THE ASSESSEE, SHE WAS ONLY A ITA NOS.2928 TO 2932/17. :- 8 -: HOUSEWIFE AND HER INCOME WAS VERY LOW. (VI) SMT. KANCHAN BAI, A23,50,000/- - THOUGH SMT. KANCHAN BAI WHO WAS ASSESSEES WIFE, CONFIRMED THE ABOVE PAYM ENT TO THE ASSESSEE, SHE ALSO WAS ONLY A HOUSEWIFE WITH VERY LOW INCOME. 8. ASSESSEES APPEAL BEFORE THE LD. COMMISSIONER OF IN COME TAX (APPEALS) AGAINST THE ADDITIONS AGGREGATING TO A90,66,072/- DISBELIEVING THE CLAIM OF RECEIPT OF LOANS/ ADVANC ES, DID NOT MEET WITH ANY SUCCESS. THOUGH THE ASSESSEE ARGUED THAT ALL TH E ABOVE LOANS WERE REFLECTED IN THE RETURNS OF THE RESPECTIVE PA RTIES, LD. CIT(A) WAS NOT APPRECIATIVE OF SUCH CONTENTION. 9. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE STRONG LY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBMI TTED THAT CASH BALANCE OF A6,56,232/- WITH THE ASSESSEE OUGHT NOT HAVE BEEN DISBELIEVED. ACCORDING TO HIM, ASSESSEES CAPITAL ACCOUNT BALANCE AS ON 01.04.2005 WAS A62,83,274/- AND ASSESSEE HAD GRO SS TOTAL INCOME OF A10,64,876/- DURING THE PREVIOUS YEAR RELEVANT T O ASSESSMENT YEAR 2006-2007. THUS, ACCORDING TO HIM, CASH BALANCE OF A6,56,232/- OUGHT NOT HAVE BEEN DISBELIEVED. ITA NOS.2928 TO 2932/17. :- 9 -: 10. ALLUDING TO THE SUM OF A7,00,000/- CLAIMED TO HAVE BEEN RECEIVED FROM SHRI. C. KISHNALAL & SONS (HUF), LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE SAID AMOUNT WAS R EFLECTED IN THE TRIAL BALANCE AND RETURN OF INCOME FILED BY THE SAI D HUF. AS PER THE LD. AUTHORISED REPRESENTATIVE, HUF HAD EARLIER ADVANCED A SUM OF A10,20,000/- TO ONE SHRI. M. VENKATACHALAM WHO HAD REPAID IT IN TWO INSTALLMENTS DURING THE RELEVANT PREVIOUS YEAR. A CCORDING TO HIM, HUF HAD ADVANCED A7,00,000/- TO THE ASSESSEE OUT OF THE SAID AMOUNT. 11. VIZ-A-VIZ, ADDITION OF A10,59,840/-, OUT OF A60,00, 000/- RECEIVED FROM SHRI. SHIVRAJ NADAR, CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT THE SAID SUM WAS DULY REFLE CTED IN THE LEDGER OF THE ASSESSEE. ACCORDING TO HIM, THE SUM OF A10,5 9,840/- WAS ADJUSTED AGAINST AGRICULTURAL LAND SOLD BY THE ASS ESSEE AS POWER AGENT AND AFTER SUCH ADJUSTMENTS THE BALANCE DUE T O SHRI. SHIVRAJ NADAR WAS A49,40,160/-. ACCORDING TO HIM, THIS DI D NOT DEPLETE THE AVAILABILITY OF A60,00,000/- WITH THE ASSESSEE. 12. COMING TO THE CLAIM OF ADVANCE OF A34,00,000/- FRO M SHRI. B.K. VIMALCHAND, LD. AUTHORISED REPRESENTATIVE SUB MITTED THAT THE AMOUNT WAS DULY REFLECTED IN THE RETURN FILED BY SH RI. B.K. VIMALCHAND FOR ASSESSMENT YEAR 2006-07. ACCORDING TO HIM, SHRI . B.K. VIMALCHAND IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005-06, HAD GIVEN ITA NOS.2928 TO 2932/17. :- 10 -: A SUM OF A34,00,000/- TO ONE SHRI. GOPAL NAYAKAR AN D ONE SHRI. ETHIRAJ WHICH WERE REFUNDED DURING THE PREVIOUS YEAR RELEVA NT TO THE IMPUGNED ASSESSMENT YEAR. SOURCE ACCORDING TO THE L D. AUTHORISED REPRESENTATIVE, STOOD PROVED. 13. VIZ-A-VIZ, THE SUM OF A9,00,000/- CLAIMED AS RECEIV ED FROM SMT. V. SUVITHA, DAUGHTER-IN-LAW OF THE ASSESSEE, C ONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT THE SAID AMOUNT WAS DULY REFLECTED IN THE INCOME TAX RETURN FILED BY HER, AND ALSO CORROBORATED BY A LETTER OF CONFIRMATION. 14. ADVERTING TO CLAIM OF RECEIPT OF A23,50,000/- FROM SMT. KANCHAN BAI, WHO WAS ASSESSEES WIFE, CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT SMT. KANCHAN BAI WAS INTO P AWN BROKING BUSINESS SINCE 1972 AND WAS A REGULAR ASSESSEE . A CCORDING TO HIM, IN THE TAX RETURN FILED BY HER, THE ADVANCE OF A23,50 ,000/- GIVEN TO HER HUSBAND WAS CLEARLY REFLECTED. 15. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTING THE ORDERS OF THE LOWER AUTHORITIES SUBM ITTED THAT ASSESSEE COULD NOT PROPERLY EXPLAIN THE SOURCE OF EVEN ONE CREDITOR. ACCORDING TO HIM, EACH OF THE ALLGED CREDITORS WERE CLOSELY RELATED TO THE ASSESSEE AND HAD ONLY VERY NEGLIGIBLE INCOME. AS PE R LD. DEPARTMENTAL REPRESENTATIVE, THE CLAIM OF RECEIPT OF SUCH AMO UNTS FROM CLOSE ITA NOS.2928 TO 2932/17. :- 11 -: RELATIVES WAS ONLY A STORY MADE UP BY THE ASSESSEE FOR JUSTIFYING THE SOURCE OF A4,65,00,000/- ADVANCED BY HIM TO M/S. SU RANA CORPORATION LIMITED. 16. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTE D THAT TOTAL CLAIM OF RECEIPTS OF LOANS/ ADVANCES MADE BY THE ASSESSEE CA ME TO A1,50,06,232/-, OUT OF WHICH LD. ASSESSING OFFICER HAD ACCEPTED THE EVIDENCE FOR A59,40,160 /- AND MADE AN ADDITION O F A90,66,072/-. BREAKUP OF THE SUM DISBELIEVED BY THE LD. ASSESSING OFFICER IS REPRODUCED AT PARA 6 ABOVE. FIRST ITEM THEREIN I S A CLAIM OF THE ASSESSEE THAT A6,56,232/- HAD COME OUT OF HIS CAS H BALANCE. PAPER BOOK PAGE NO.109, WHICH GIVES THE CAPITAL ACCOUNT OF THE ASSESSEE FOR THE PERIOD 01.04.2005 TO 31.03.2006, REFLECTS O PENING BALANCE OF A62,83,274.73 AND CLOSING BALANCE OF A89,11,499.75. TRANSACTIONS IN THIS CAPITAL ACCOUNT DO NOT SHOW ANY AMOUNT TO HAVE BEEN UTILIZED FOR EFFECTING PAYMENT TO M/S.SURANA CORPORATION. IF IT HAD COME OUT OF THE CASH BALANCE, AS CLAIMED BY THE ASSESSEE, IT WOULD BE DEFINITELY REFLECTED IN HIS CAPITAL ACCOUNT. IN THE CIRCUMSTAN CES, WE ARE NOT INCLINED TO ACCEPT THE CLAIM OF THE ASSESSEE THAT T HE SUM OF A6,56,232/- CAME OUT OF HIS CAPITAL ACCOUNT. THE S UM REMAINS UNEXPLAINED, WITHOUT SOURCE. ITA NOS.2928 TO 2932/17. :- 12 -: 17. COMING TO THE SECOND ITEM WHICH IS THE CLAIM OF T HE ASSESSEE THAT A SUM OF RS.7,00,000/- WAS RECEIVED F ROM C.KISHNALAL & SON (HUF), INCOME TAX RETURN OF THE SAID HUF FOR AS SESSMENT YEAR 2006-07 IS PLACED AT PAPER BOOK PAGE 125. THE SAID INCOME TAX RETURN HAS BEEN FILED ON 23.02.2007 MUCH PRIOR TO THE DATE OF SEARCH. TRIAL BALANCE AS ON 31.03.2006, FILED ALONGWITH THE SAID RETURN, COPY OF WHICH IS AVAILABLE AT PAPER BOOK PAGE 127 CLEAR LY SHOWS AN AGRICULTURAL LAND ADVANCE OF RS.7,00,000/- PAID TO C. KISHANLAL. IN OUR OPINION, RETURN OF C.KISHNALAL & SON (HUF) HAVING BEEN FILED MUCH EARLIER TO THE DATE OF SEARCH, THERE CAN BE NO REAS ON TO DISBELIEVE THE ADVANCE SHOWN IN SUCH RETURN. IT MAY BE TRUE THAT ASSESSEE COULD NOT PRODUCE EVIDENCE FOR THE ADVANCE PAID BY C.KISHNAL AL & SON (HUF) TO SHRI. M. VENKATACHALAM IN AN EARLIER YEAR, AND RE TURNED BY THE LATTER IN THE RELEVANT PREVIOUS YEAR. HOWEVER, IT IS CLE AR FROM THE WEALTH TAX RETURN FILED BY C.KISHNALAL & SON (HUF), COPY OF WHICH IS PLACED AT PAPER BOOK PAGES 121 TO 124, THAT THE SAID HUF WAS HAVING AGRICULTURAL LAND. IN THE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE CLAIM OF RECEIPT OF RS.7,00,000/- FROM C.KISHNALAL & SON (HUF) OUGHT NOT HAVE BEEN DISBELIEVED. 18. COMING TO THE THIRD ITEM WHICH IS A CLAIM OF ADVAN CE OF RS.60,00,000/- FROM SHRI. SHIVRAJ NADAR, WHAT WE F IND IS THAT LD. ASSESSING OFFICER HAD ACCEPTED IT, BUT FOR A SUM OF RS.10,59,840/-. ITA NOS.2928 TO 2932/17. :- 13 -: LEDGER PAGE OF SHRI. SHIVRAJ NADAR IN THE BOOKS OF THE ASSESSEE IS PLACED AT PAPER BOOK PAGE NO.155. SALE AGREEMENT P URSUANT TO WHICH SUCH THE SUM WAS RECEIVED BY THE ASSESSEE IS PLA CED AT PAPER BOOK PAGES 152 AND 153. SHRI. SHIVRAJ NADAR HAD CONFIRME D THE PAYMENT THROUGH A LETTER DATED 31.3.2006 PLACED AT PAPER BOOK PAGE 154. SAID CONFIRMATION LETTER READS AS UNDER:- S.SIVARAJA. NO.159, ARCOT ROAD, PORUR, CHENNAI 600 116. DATE: 31.03.2006. CONFIRMATION I HEREBY CONFIRM HAVING ADVANCED A SUM OF RS.20,00,000/- ON 28.09.2005, RS.20,00,000/- ON 30. 09.2005 AND RS.20,00,000/- ON 03.10..2005 IN ALL TOTAL RS.6 0,00,000/- PAID TO SHRI. C.KISHANLAL, RESIDING AT NO.23, KUTCH ERY ROAD, MYLAPORE, CHENNAI 600 004 TOWARDS THE PURCHASE OF AGRICULTURAL LAND AT MANGADU VILLAGE, SRIPERURNUDUR TALUK, AFTER SALE OF RS.10,59,840/. ADJUSTED IN THE ADVANC E. BALANCE RS.49,40,160/- IS ADVANCE TILL DATE. SD/- SIVARAJA PAN NO. ARNPS447OQ TO SHRI. C.KISHANLAL NO.2 3, KUTCHERY ROAD, MYLAPORE, CHENNAI 600 004. LEDGER PAGE OF SHRI. SHIVRAJ NADAR IN THE BOOKS OF THE ASSESSEE CLEARLY REFLECTED ALL THE ABOVE TRANSACTIONS. IN OUR OPINI ON, RECEIPT OF ITA NOS.2928 TO 2932/17. :- 14 -: RS.60,00,000/-HAS BEEN DULY SHOWN IN ASSESSEES BOO KS. SUM OF RS.10,59,840/- WAS ONLY AN ADJUSTMENT DUE TO SALE OF LAND AND THIS DID NOT RESULT IN DEPLETION OF THE FUNDS AVAILABLE WITH THE ASSESSEE. WE ARE OF THE OPINION THAT ASSESSEE HAS SUBSTANTIA TED THE CLAIM OF RECEIPT RS.60,00,000/- IN FULL. 19. FOURTH ITEM IS A CLAIM OF RS.30,00,000/- RECEIVED FROM SHRI. B. K. VIMALCHAND. WHAT WE FIND IS THAT THE AUDITOR OF SHRI. B. K. VIMALCHAND HAD GIVEN A CONFIRMATION TO THE LD. ASSE SSING OFFICER, COPY OF WHICH IS AVAILABLE AT PAPER BOOK PAGE 149 AND IT READ AS UNDER:- RICABCHAND&CO., . PHONE:[phone] CHARTERED ACCOUNTANTS NO.121,N.S.C.BOSE ROAD, M.GOUTAMCHAND JAIN,B.COM., F.C.A SOWCARPET, CHENNAI-6000079 DATE :11.03 2014 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III (3), CHENNAI- 600034. SIR REF: SHRI.C.KISHANLAL, PAN : AAKPK 7263 K/2006-2007 SUB : SOURCE FOR MONEY ADVANCED BY SHRI,B.K.VIMALCH AND TO SHRI.C.KISHANLAL- REGARDING. WITH REFERENCE TO ABOVE AND WE STATE THAT SHRI.B.K, VIMALCHAND HAS DEPOSITED A SUM OF RS.3000000/- BY WAY OF CHEQUE DURING THE A SS.YEAR 2006-2007 WITH SHRI C.KISHANLAL. THE SOURCE FOR ABOVE DEPOSITED M ADE BY SHRI.B.K.VIMAICHND IS OUT OF REFUND BY AGRICULTURE LAND ADVANCE OF RS.3400000/- WHICH WAS MADE BY HIM DURING THE ASST. YEAR 2005-2006.WE ARE HEREWITH ENCLOSING THE FINANCIAL STATEMENT OF SHRI B.K.VIMALCHAND RELATING ITA NOS.2928 TO 2932/17. :- 15 -: TO ASST.YEAR 2005-06. WE ARE ALSO HEREWITH ENCLOSIN G INTIMATION OF 143(1) OF THE I T.ACT OF RELATING TO ASST.YEAR 2005-2006 AND 2006-2007 OF SHRI.B.K.VIMALCHAND AS WELL AS HIS BANK STATEMENT F OR YEAR ENDED 31.03.2006. WE HOPE THE ABOVE WILL CLARIFY THE MATT ER REGARDING SOURCE OF MONEY ADVANCED BY SHRI.B.K.VIMALCHAND TO SHRI.C.KIS HANLAL DURING THE ASST.YEAR 2006-07. THANKING YOU YOURS FAITHFULLY, FOR RICAB CHAND & CO., CHARTERED ACCOUNTANTS END: 1. FINANCIAL STATEMENT OF SHRI.B.K.VIMALCHAND RELAT ING TO ASST.YEAR 2005-06. 2. XEROX COPY OF INTIMATION B.K.VIMALCHAND RELATING TO ASST,YEAR 2005-06 & 2006-07. 3. XEROX COPY OF BANK STATEMENT OF SHRI.B.K.VIMALCH AND FOR THE PERIOD 01.04.2005 TO 3 1.03.2006. THE CONFIRMATION LETTER CLEARLY INDICATE THAT SHRI. B. K. VIMALCHAND WAS AN ASSESSEE AND FILING INCOME TAX RETURN REGULARLY. THE AMOUNTS WERE GIVEN THROUGH CHEQUES. IT IS TRUE THAT THERE WERE DEPOSITS AGGREGATING TO RS.30,00,000/- IN THE BANK ACCOUNT OF SHRI. B. K. VIMALCHAND ON 19.09.2005 AND THE SUM OF RS.30,00,0 00/- WAS GIVEN BY SHRI. B. K. VIMALCHAND TO THE ASSESSEE ON THE VE RY SAME DAY. HOWEVER, NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT CREDITS IN THE BANK ACCOUNT OF SHRI. B. K. VIM ALCHAND HAD COME OUT OF THE FUNDS OF THE ASSESSEE. THAT APART, THE T RIAL BALANCE AS ON 31.03.2006 OF SHRI. B. K. VIMALCHAND FILED ALONGWIT H HIS RETURN FOR ASSESSMENT YEAR 2006-07, PLACED AT PAPER BOOK PAGE 146 CLEARLY SHOW A SUM OF RS.31,61,400/- IN THE CREDIT OF SHR I. C.KISHNALAL. ITA NOS.2928 TO 2932/17. :- 16 -: SHRI. B. K. VIMALCHAND HAD FILED HIS RETURN FOR ASS ESSMENT YEAR 2006- 07 ON 19.10.2006 MUCH EARLIER TO THE DATE OF THE SE ARCH AND ACKNOWLEDGMENT IS PLACED AT PAPER BOOK PAGE 142. IN SUCH CIRCUMSTANCES, WE ARE OF THE OPINION THAT THERE WAS NO REASON TO DISBELIEVE THE LOAN OF RS.30,00,000/- RECEIVED FROM SHRI. B. K. VIMALCHAND. 20. COMING TO THE FIFTH ITEM WHICH IS A CLAIM LOAN OF RS.9,00,000/- RECEIVED FROM SMT. V. SUVITHA, DAUGH TER-IN-LAW OF THE ASSESSEE, WE FIND THAT SMT. V. SUVITHA HAD FILED HE R INCOME TAX RETURN FOR ASSESSMENT YEAR 2006-07 ON 19.10.2006. ACKNOWLE DGEMENT HAS BEEN PLACED AT PAPER BOOK PAGE 156. TRIAL BALANCE OF SMT. V. SUVITHA AS ON 31.03.2006 PLACED AT PAGE BOOK PAGE 158 REFLE CTED AN AGRICULTURAL LOAN ADVANCE OF RS.9,00,000/- TO SHRI. C. KISHNALAL. IN SUCH CIRCUMSTANCES, CONCLUSION OF THE REVENUE THAT SMT. V. SUVITHA HAD NO SUFFICIENT INCOME TO GIVE AN ADVANCE OF RS.9,00,00 0/- TO THE ASSESSEE CANNOT BE ACCEPTED. JUST BECAUSE SMT. V. SUVITHA HAD TOTAL INCOME OF RS.1,38,088/- ONLY FOR THE IMPUGNED ASSESSMENT Y EAR, WE CANNOT SAY THAT SMT. V. SUVITHA DID NOT HAVE THE WHEREWIT HAL TO GIVE A LOAN OF RS.9,00,000/- TO THE ASSESSEE. ITA NOS.2928 TO 2932/17. :- 17 -: 21. SIXTH ITEM IS A CLAIM OF LOAN OF RS.23,50,000/- RE CEIVED FROM SMT.KANCHAN BAI, WIFE OF THE ASSESSEE. HERE ALSO W E FIND THAT SMT.KANCHAN BAI HAD GIVEN A CONFIRMATION WHICH READ S AS UNDER:- KANCH BAI NO.23, KUTCHERY ROAD, MYLAPORE, CHENNAI 600 004. DATE: 31.03.2006 CONFIRMATION I HEREBY CONFIRM HAVING ADVANCED A SUM OF RS.25,40, 000/- ( RUPEES TWENTYFIVE LAKHS FORTY THOUSAND ) (DETAILS AS BELOW ) TO SHRI. C.KISHANLAL, RESIDING AT NO.23, KUTCHERY ROAD, MYLAPORE, CHENNAI 600 004 TOWARDS LEASE ADVANCE FOR AGRICULTURAL LAND SITUATED AT NO. 41, LAXMIPURAM VILLAGE, SRI-PERUMPUDUR TALUK, THIRUVALLUR DISTRICT COMPRISE D IN SURVEY NO. 23/4A OF AN EXTENT 0 ACRE 31 CENTS, SURVEY NO. 59/1A1 OF AN 0 ACRE 02 CENTS, SURVEY NO. 59/1B2 OF AN EXTENT 0 ACRE 07 CENTS, SURVEY NO. 59/2A1 OF AN EXTENT 0 ACRE 26 CENTS, SURVEY NO. 34/3B OF AN EXTENT 0 ACRE 28 CENTS, SURVEY NO. 34/3A OF AN EXTENT 0 ACRE 04 CENTS, SURVEY NO. 30/2 OF AN EXTENT 0 ACRE 02 CENTS, SURVEY NO. 28/1 OF AN EXTENT 0 ACRE 59 CENTS , AND SURVEY NO. 28/2 OF AN EXTENT 0 ACRE 58 CENTS AND AGRICULTURAL LAND SITUAT ED AT NO. 49, VEERARAGAVAPURAM VILLAGE, TIRUTTANI TALUK, THIRUVAL LUR DISTRICT COMPRISED IN SURVEY NO. 219/2A OF AN EXTENT 0 ACRE 91 CENTS, SUR VEY NO. 220/1 OF AN EXTENT 1 ACRE 25 CENTS AND SURVEY NO. 170/15 OF AN EXTENT 0 ACRE 86 CENTS. 18.10.2005 23,5 0,000.00 24.03.2005 FURTHER ADVANCE 1,90,000.0 0 TOTAL RS. 25,40,000.00 SD/- KANCHAN BAI PAN NO. AAIPK6835H TO SHRI. C.KISHANLAL NO.23, KUTCHERY ROAD, MYLAPORE, CHENNAI 600 004. SOURCE FOR THE ABOVE AMOUNT WAS GIVEN BY HER THROUG H A LETTER DATED 13.11.2013 PLACED AT PAPER BOOK PAGE NO.165. THIS LETTER READ AS UNDER:- ITA NOS.2928 TO 2932/17. :- 18 -: DATE: 13.11.2013. KANCHAN BAI, NO 23, KUTCHERY ROAD, MYLAPORE, CHENNAI600 004. TO THE ASSISTANCE COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III (3) CHENNAI-600 034. SIR, REF: PAN.NO: AAIPK 6835 H / 2006-07 SUB: INCOME TAX ASSESSMENT ASSESSMENT YEAR 2006-07 .DETAILS OF FOR AGRI.LAND / PLOT GIVEN BY ME. WITH REFERENCE TO THE ABOVE, I STATE THAT I HAVE GI VEN A SUM OF RS.2540000/- (RS. 23,50,000 ON 18/10/2005 AND RS 1,90,000 ON 24/ 03/06) AS SECURITY / MARGIN MONEY TO SHRI C KISHAN LAL BY WAY OF CASH FO R LEASING OUT THE AGRICULTURE LAND MEASURING 2.17 ACRES AT AGARAHARAM VILLAGE,POONAMALEE TALUK,THIRUVALLUR DISTRICT AND MEASURING ACRES AT V EERAGHAVAPURAM, AGRI.LAND MEASURING 1.45 ACRES AT MANGADU VILLAGE A ND 2.39 ACRES AT PADAMATIKHANDRIGA VILLAGE SULLURPET MANDAL AS PER E NTERED WITH HIM. THE LEASE WAS TERMINATED AND THE AMOUNT WAS RECEIVED BA CK BY ME BY WAY OF CHEQUE AS FOLLOWS: CHEQUE NO DATE AMOUNT 488319 11.05.2010 440000.00 982781 15.09.2010 700000.00 982782 15.09.2010 600000.00 982783 15.09.2010 400000.00 982784 15.09.2010 400000.00 TOTAL 2540000/- I HOPE THE ABOVE WILL EXPLAIN THE DETAILS OF SECURI TY / MARGIN MONEY. THANKING YOU, YOURS FAITHFULLY. SD/- (KANCHAN BAI) SMT.KANCHAN BAI WAS AN ASSESSEE AND HAD FILED HER RETURN FOR ASSESSMENT YEAR 2006-07 ON 31.10.2006. TRIAL BALAN CE OF ITA NOS.2928 TO 2932/17. :- 19 -: SMT.KANCHAN BAI AS ON 31.03.2006 CLEARLY REFLECTED AN AGRICULTURAL LAND ADVANCE OF RS.25,40,000/- PAID BY HER TO SHRI. C. KISHNALAL. HENCE IN OUR OPINION, THERE WA S NO REASON TO DISBELIEVE THE ADVANCE OF RS.23,50,000/- CLAIMED TO HAVE RECEIVED BEEN FROM SMT.KANCHAN BAI. 22. BASED ON THE DISCUSSIONS IN PARA 16 TO 21 ABOVE, WE DELETE THE ADDITIONS MADE BY THE LOWER AUTHORITIES WITH REGARD TO THE FOLLOWING LOANS/ADVANCES CLAIMED BY THE ASSESSEE. M/S. C. KISHNALAL & SONS : RS.7,00,000/- SHIVRAJ NADAR : RS.10,59,840/- B.K. VIMALCHAND : RS.30,00,000/- V.SUVITHA : RS.9,00,000/- KANCHAN BAI : RS.23,50,000/- BALANCE ADDITION IS SUSTAINED. GROUNDS 3 TO 5 ARE T REATED AS PARTLY ALLOWED. 23. VIDE IT GROUNDS 6 & 7, ASSESSEE ASSAILS AN ADDITION OF A3,14,93,768/- MADE DISBELIEVING THE CLAIM OF SA LE PROCEEDS OF JEWELLERY BELONGING TO HIS RELATIVES. ITA NOS.2928 TO 2932/17. :- 20 -: 24. AS ALREADY MENTIONED BY US AT PARA 5 ABOVE, SOURCE FOR THE INVESTMENT OF RS.4,65,00,000/- MADE BY THE ASSESSE E WITH M/S. SURANA CORPORATION WAS PARTLY EXPLAINED BY THE ASS ESSEE AS COMING OUT OF SALE PROCEEDS OF JEWELS OF RELATIVES. ASSES SEE HAD STATED BEFORE THE LD. ASSESSING OFFICER THAT PROOF FOR SALE OF J EWELLERY AGGREGATING TO A3,14,93,768/- BELONGING TO HIS FAMILY MEMBERS, WE RE HANDED OVER TO SHRI. SARAVANA PRABHU, INSPECTOR OF POLICE, EGMOR E, WHEN A POLICE COMPLAINT WAS FILED BY THE ASSESSEE AGAINST M/S. S URANA CORPORATION. HOWEVER, IT SEEMS ASSESSEE WAS UNABLE TO FURNISH AN Y CONFIRMATION OR ACKNOWLEDGMENT FOR HANDING OVER THE BILLS TO THE PO LICE AUTHORITIES. AS PER THE LD. ASSESSING OFFICER, SUPERINTENDENT OF POLICE, CB-CID, HAD INFORMED THROUGH HIS LETTER DATED 27.01.2014 THAT N O SUCH BILLS WERE HANDED OVER BY THE ASSESSEE. CLAIM OF THE ASSESSEE BEFORE LD. ASSESSING OFFICER WAS THAT HIS FAMILY MEMBERS HAD I N THEIR RESPECTIVE WEALTH TAX RETURNS SHOWN THE JEWELLERY OWNED BY T HEM AND THEREFORE THE SALE OF SUCH JEWELLERY BY HIM WAS GEN UINE. HOWEVER, THE LD. ASSESSING OFFICER WAS OF THE OPINION THAT T HERE WAS NOTHING ON RECORD TO PROVE THE SALE OF SUCH JEWELLERY. THE CLAIM WAS DISBELIEVED AND AN ADDITION OF A3,14,93,768/- WAS M ADE. THE SAID ADDITION WAS CONFIRMED BY THE LD. COMMISSIONER OF I NCOME TAX (APPEALS) AS WELL. ITA NOS.2928 TO 2932/17. :- 21 -: 25. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE STRON GLY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBMI TTED THAT COPIES OF THE BILLS FOR SALE OF THE JEWELLERY WERE GIVEN TO T HE CRIME BRANCH POLICE, IN CONNECTION WITH THE CHEATING CASE FILED BY THE ASSESSEE AGAINST SHRI. DHARMENDRA BAFNA AND M/S. SURANA COR PORATION LTD. ACCORDING TO HIM, OWNERSHIP OF THE JEWELLERY BY TH E RELATIVES OF THE ASSESSEE WAS NOT DISPUTED BY THE LOWER AUTHORITIES . SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT CONFIRMA TIONS WERE AVAILABLE FROM EACH OF THE RELATIVES WHO HAD GIVEN THE JEWELLERY AS DEPOSIT WITH THE ASSESSEE. ACCORDING TO HIM, LOWER AUTHORITIES FELL IN ERROR IN DISBELIEVING THE SALE OF JEWELLERY CLAIMED BY THE ASSESSEE. 26. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONGL Y SUPPORTING THE ORDERS OF THE LOWER AUTHORITIES SUBM ITTED THAT LETTER FROM SUPERINTENDENT OF POLICE WENT AGAINST THE ASS ESSEE. ACCORDING TO HIM, THE SUPERINTENDENT OF POLICE HAD CLEARLY ST ATED THAT ASSESSEE HAD NOT HANDED OVER ANY BILLS FOR SALE OF JEWELLERY TO SHRI. SARAVANA PRABHU, INSPECTOR OF POLICE. 27. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. DECLARATIONS FILE D BY THE ASSESSEE FROM HIS RELATIVES WITH REGARD TO THE JEWELLERY DE POSITED BY THEM WITH THE ASSESSEE ARE PLACED AT PAPER BOOK PAGES 174 TO 189. RESIDENTIAL ITA NOS.2928 TO 2932/17. :- 22 -: ADDRESS GIVEN BY ALL SUCH PERSONS AS ARE KUTCHERY ROAD, MYLAPORE. RESIDENTCE NUMBERS GIVEN ARE NEW NO.43 (OLD NO.24) AND NEW NO.41 (OLD NO.23) EXCEPT FOR THE DECLARATIONS OF SH RI. C. KAMAL CHAND AND SMT. K. SUSILA. IN OTHER WORDS ALMOST ALL SUC H PERSONS WERE RESIDING AT OLD NO.23 OR OLD NO. 24 OF KUTCHERY RO AD, MYLAPORE. PANCHANAMA PREPARED AT THE TIME OF SEARCH PLACED AT PAPER BOOK PAGE NO.28 INDICATE THE PLACE OF SEARCH AS OLD NO. 23, KUTCHERY ROAD. IT IS NOT DISPUTED BY THE REVENUE THAT THE PERSONS FROM WHOM ASSESSEE HAD CLAIMED RECEIPT OF GOLD ORNAMENTS AS D EPOSITS WERE ALL HIS CLOSE RELATIVES. IN THE CRL. M.P. NO.7934/15 FI LED BY THE INSPECTOR OF POLICE BEFORE HONBLE PRINCIPAL DISTRICT AND SESSIO NS JUDGE, CHENNAI PLACED AT PAPER BOOK PAGES 207 TO 214 IN CONNECTION WITH THE CASE FILED BY THE ASSESSEE, IT IS STATED BY THE SAID O FFICER AS UNDER AT PARA 8:- 8. I SUBMIT THAT INVESTIGATION DONE BY THE CS CID DISCLOSES THE FOLLOWING FACTS: I. LAKSHMI CHAND BAFNA WHO IS THE PATERHAL UNCLE OF TH E ACCUSED PINKU @ BAFNA. THE DE FACTO COMPLAINANT KIS HANLAL WAS INTRODUCED TO THE ACCUSED DURING THE MONTH OF O CTOBER 2005 AT R.B. JEWELRY, SITUATED IN NO.1411 8, VEERA PPAN ST., SOWCARPET, CHENNAL BY LAKSHMICHAND BAFNA. II. THE PETITIONER /ACCUSED CONSPIRED TOGETHER WIT H INTENT TO CHEAT THE DE FACTO COMPLAINANT WITH DISHONEST INTE NTION REPRESENTED AND INDUCED THE DE FACTO COMPLAINANT DU RING OCTOBER 2005 AT CHENNAI TO ENTER INTO THE GOLD TRAD E BUSINESS TO EARN MORE PROFIT THROUGH THEM FOR THE U SE OF THE TRUST CREATED BY THE DE FACTO COMPLAINANT. ITA NOS.2928 TO 2932/17. :- 23 -: III. THE DE-FACTO COMPLAINANT COLLECTED FUNDS IN T HE FORM OF CASH AND JEWELS FROM THE RELATIVES FOR INVESTING TH E AMOUNT IN GOLD TRADE BUSINESS AND DECIDED TO USE THE PROFIT FOR THE COMPOUND WALL ERECTION AT THE TRUST AT SULURPET. IV. THE DE-FACTO COMPLAINANT COLLECTED RS. 39,37,9 10)- BY WAY OF CASH AND JEWELS FROM ONE VIMAL CHAND, RS. 53,51,930/- BY MORTGAGING THE LAND AND JEWELS FROM TMT. KANCHAN BAI, RS. 70 LAKHS WORTH OF JEWELS FROM TMT. PREMA BAI, RS. 40 LAKHS BY CASH AND JEWELS FROM TR. KAMAL CHAND, RS. 36 LAKHS BY WAY OF JEWELS FROM TMT. TR. ABAYAKU MAR, RS. 17 LAKHS BY CASH AND JEWELS FROM SUSILA BAI, RS. 40 LAKHS BY MORTGAGING THE LAND AND JEWELS FROM TMT, SUVITHA, R S. 31 LAKHS BY WAY OF JEWELS FROM TMT.SASIKALA, RS. 2 LAK HS BY CASH FROM TI. JEEVARAJ, RS. 2 LAKHS BY CASH FROM TR. KAL YANMAL, RS. ONE LAKH BY CASH FROM TR. PUKKIRAJ, RS. 7 LAKHS WORTH OF JEWELS FROM SELVI PRIYANKA AND HIS OWN FUNDS. THUS IN ALL HE HAS COLLECTED RS. 4.65 CRORES. THE DOCUMENTS COLLEC TED DURING INVESTIGATION ALL ARE VOUCHED THE SOURCE FOR THE BY THE DE- FACTO COMPLAINANT. V. THE DE-FACTO COMPLAINANT ENTRUSTED THE ABOVE SAI D RS. 4.65 CRORES TO THE PETITIONER I ACCUSED IN BETWEEN 06-10-2005 AND 17-11-2005 IN SEVERAL OCCASIONS AT R.B. JEWELLE RY, SOWCARPET, CHENNAI, BELIEVING THE VERSION OF THE AC CUSED. FURTHER ON 05-10-2005 AS GENUINE THAT MORE PROFITS WOULD BE RETURNED IF INVESTED IN GOLD TRADE. THE DE-FACTO CO MPLAINANT WOULD NOTHAVE PARTED THE ABOVE SUM BUT FOR THE DISH ONEST INDUCEMENT MADE BY THE PETITIONER / ACCUSED. THE DE -FACTO COMPLAINANT WAS ALSO MADE TO BELIEVETHAT THE BUSINE SS WILL BE DONE BY FOLLOWING THE NORMS IN PRACTICE SUCH AS OBTAINING TRADE ORDER AGREEMENT FROM THE INVESTORS, EXECUTION OF TRADE ORDER, FURNISHING, EXECUTION ORDER, EXECUTION TIME AND DATED, GOLD PRICE ETC. BUT THEY DID NOT ENTERTAIN THE GOLD BUSINESS AND NOT EVEN RETURN THE PRINCIPAL AND PROFIT AMOUNT . THUS THE PETITIONER I ACCUSED DISHONESTLY INDUCED THE DE-FAC TO COMPLAINANT TO PART WITH RS. 4.65 CRORES TO THEM AN D THEN CHEATED THE DE-FACTO COMPLAINANT. IN OUR OPINION, THE ABOVE CLEARLY INDICATES THAT D OCUMENTS COLLECTED DURING INVESTIGATION WERE VOUCHED FOR THE SOURCE FOR INVESTED AMOUNT. THERE IS NO CASE FOR THE REVENUE THAT DURIN G THE COURSE OF SEARCH, ANY OF THE JEWELLERY DEPOSITED BY THE CLO SE RELATIVES WITH THE ITA NOS.2928 TO 2932/17. :- 24 -: ASSESSEE, WERE FOUND OR WERE AVAILABLE. IF IT WA S STILL WITH THE ASSESSEE OR SUCH RELATIVES, WHO WERE ALL LIVING WI TH THE ASSESSEE OR IN THE VERY NEXT DOOR, IT WOULD HAVE BEEN FOUND BY TH E INSPECTING OFFICIALS. ADMITTEDLY, NOTHING OF THE SORT WAS F OUND. AS MENTIONED BY US, DECLARATIONS OF THE RELATIVES PLACED AT PAP ER BOOK PAGES 174 TO 204 HAS NOT BEEN DOUBTED BY THE LOWER AUTHORITIES. THEIR DOUBT IS ON CLAIM OF THE ASSESSEE THAT SUCH JEWELLERY WAS SOLD BY THE ASSESSEE. IN OUR OPINION, REPORT FILED BY THE INVESTIGATING OFFI CER BEFORE PRINCIPAL DISTRICT AND SESSIONS JUDGE WHEN SEEN ALONG WITH T HE FAILURE OF THE REVENUE TO FIND ANY SUCH JEWELLERY AT THE TIME OF S EARCH, CLEARLY INDICATE THAT THE JEWELLERY DEPOSITED BY THE CLOS E RELATIVES WITH THE ASSESSEE WERE SOLD BY THE LATTER. PREPONDERANCE OF PROBABILITY, IN OUR OPINION, IS ON THE SIDE OF THE ASSESSEE. WE ARE OF THE OPINION THAT THE CLAIM OF THE ASSESSEE THAT A SUM OF A3,14,93,768/- HAD COME OUT OF SALE PROCEEDS OF JEWELLERY DEPOSITED BY HIS RELATIV ES WITH HIM, OUGHT NOT HAVE BEEN DISBELIEVED. ADDITION OF A.3,14,93,7 68/- STANDS DELETED. GROUNDS 6 & 7 OF THE ASSESSEE STAND ALLOWED. 28. VIDE ITS GROUNDS 8 & 9, GRIEVANCE OF THE ASSESSEE I S ON AN ADDITION OF A14,98,780/- MADE UNDER THE HEAD LONG T ERM CAPITAL GAINS. 29. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSE E HAD SOLD TWO PLOTS AT MANGADU FOR A SALE CONSIDERATION OF A3,59,680/- AND ITA NOS.2928 TO 2932/17. :- 25 -: PAID CAPITAL GAINS THEREOF. ACCORDING TO HIM, LD. ASSESSING OFFICER HAD APPLIED SECTION 50C OF THE ACT AND SUBSTITUTED THE GUIDELINE VALUE AND MADE AN ADDITION OF A14,98,780/-. ACCORDING TO HIM, SECTION 50C OF THE ACT OUGHT NOT HAVE BEEN APPLIED ON THE SALE OF THE LAND. 30. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 31. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. LD. ASSESSING OF FICER HAS GIVEN A CLEAR FINDING THAT ACTUAL SALE EFFECTED BY THE ASS ESSEE WAS TEN PLOTS AND ITS GUIDELINE VALUE CAME TO A16,71,475/-. AFTE R GIVING ALLOWANCE FOR INDEXED COST OF LAND OF A1,72,695/-, LD. ASSE SSING OFFICER HAD COMPUTED THE CAPITAL GAINS AT A14,98,780/-. ASSESSE E HAD THROUGH HIS LETTER DATED 14.03.2014 AGREED FOR ADOPTION OF THE GUIDELINE VALUE U/S.50C OF THE ACT. HAVING AGREED FOR ADOPTING GUI DELINE VALUE, WE ARE OF THE OPINION THAT ASSESSEE CANNOT NOW TAKE A GRIEVANCE THAT SUCH SECTION WAS WRONGLY APPLIED. THUS, WE DO NOT FIND ANY MERITS IN GROUNDS 8 & 9 OF THE ASSESSEE. THESE GROUNDS ARE DI SMISSED. 32. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.2931/CHNY/2017, WHICH IS DIRECTED AGAINST AN ORD ER DATED 11.10.2017 OF LD. COMMISSIONER OF INCOME TAX (APPEA LS)-19, CHENNAI FOR ASSESSMENT YEAR 2012-2013. ITA NOS.2928 TO 2932/17. :- 26 -: 33. ASSESSEE HAS ALTOGETHER RAISED TEN GROUNDS OF WHICH GROUNDS 1 & 2 ARE GENERAL NEEDING NO SPECIFIC ADJUDICATION AND GROUNDS 9 & 10 ARE ON LEVY OF INTEREST UNDER SECTION 234A & 234B O F THE ACT WHICH ARE CONSEQUENTIAL IN NATURE. 34. VIDE ITS GROUNDS 3 & 4, ASSESSEE IS AGGRIEVED ON AN ADDITION OF A3,22,948/- CONSIDERED AS UNEXPLAINED CASH. 35. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT CASH O F A4,50,000/- WAS FOUND AT THE TIME OF SEARCH ON 04.0 1.2012. HOWEVER, ACCORDING TO HIM, THIS WAS PROPERLY EXPLAINED THROU GH CASH BOOKS MAINTAINED BY THE ASSESSEE. ACCORDING TO HIM, THE MAIN CASH BOOK AS ON 31.12.2011 REFLECTED CASH BALANCE OF A3,11,722/- , BUT THIS WAS NOT CONSIDERED. ACCORDING TO HIM, IF THIS WAS CONSIDERE D, THE DEFICIT WOULD COME DOWN TO A11,226/- ONLY. 36. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT MAIN CASH BOOK CLAIMED BY THE ASSESSEE WAS NEVER FO UND AT THE TIME OF SEARCH. ACCORDING TO HIM, IT CANNOT BE RELIED UP ON. 37. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTED THAT CASH OF A4,50,000/- WAS FOUND AT THE TIME OF SEARCH. PAWN R EGISTER FOUND AT THE TIME OF SEARCH REFLECTED CASH BALANCE OF A1,27, 052/- ONLY. IN THE CIRCUMSTANCES, WE ARE OF THE OPINION THAT LOWER AU THORITIES WERE ITA NOS.2928 TO 2932/17. :- 27 -: JUSTIFIED IN IGNORING ANY OTHER BOOKS PRODUCED BY THE ASSESSEE AT A LATER STAGE. THE ADDITION OF A3,22,948/-, IN OUR O PINION WAS RIGHTLY MADE. GROUNDS 3 AND 4 OF THE ASSESSEE STAND DISMISS ED. 38. VIDE ITS GROUNDS 5 & 6, ASSESSEE IS AGGRIEVED ON AN ADDITION OF A1,26,76,768/- CONSIDERED AS UNEXPLAINED INVESTM ENT IN SILVER BARS. 39. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AT THE TIME OF SEARCH 325.334 KGS OF SILVER IN THE FORM OF SILVER BARS WERE FOUND AND SEIZED BY THE DEPARTMENT. ACCORDING TO HIM, OUT OF THE ABOVE 325.334 KGS, 243.784 KGS BELONGED TO ASSESSEES MOT HER. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT ASSES SEES MOTHER, SMT. SAYA BAI HAD DECLARED SUCH SILVER UNDER VDIS SCHEM E IN 1997. HOWEVER, ACCORDING TO HIM, THIS WAS DISBELIEVED BY THE LOWER AUTHORITIES FOR NON AVAILABILITY OF EVIDENCE FOR CO NVERSATION OF SILVER- WARE TO SILVER BARS. ACCORDING TO HIM, ASSESSEE OU GHT HAVE BEEN GIVEN CREDIT FOR THE SILVER ALREADY DECLARED BY HIS MOTHE R. 40. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT BARS FOUND AT THE TIME OF SEARCH WERE IMPORTED AND ASSESSEE COULD NOT SHOW THAT SILVER UTENSILS WERE CONVERTED INTO IMPO RTED BARS. 41. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTED THAT SILVER WEIGHING 243.784 KG WERE DECLARED BY ASSESSEES MOTHER UNDER VDIS SCHEME ITA NOS.2928 TO 2932/17. :- 28 -: IN 1997. IT MAY BE TRUE THAT THE SILVER-WARE WAS DECLARED IN THE VDIS RETURN AS HOUSE HOLD ARTICLES. HOWEVER, IT IS NOT DISPUTED THAT SMT. SAYA BAI MOTHER OF THE ASSESSEE LIVED WITH THE ASSESSEE TILL HER DEMISE. CLAIM OF THE ASSESSEE IS THAT HIS FATHER HA D CONVERTED THE SILVER ARTICLES TO SILVER BARS WHICH WERE FOUND AT THE TIME OF SEARCH. IN OUR OPINION, IF ASSESSEE HAD WITH HIM ANY SILVER-W ARE OTHER THAN THE SILVER BARS, IT WOULD HAVE DEFINITELY COME TO THE N OTICE OF THE SEARCH OFFICIALS AT THE TIME OF THE SEARCH. IT IS NOT DIS PUTED THAT ASSESSEES MOTHER AND FATHER LIVED WITH THE ASSESSEE. HENCE P REPONDERANCE OF PROBABILITY IS THAT THE BARS FOUND AT THE TIME OF SEARCH WAS REPRESENTED BY CONVERSION OF SILVER-WARE OF ASSESSE ES MOTHER. WE ARE OF THE OPINION THAT OUT OF 325.334 KGS OF SILVE R BARS FOUND AT THE TIME OF SEARCH, ASSESSEE SHOULD BE GIVEN CREDIT FOR 243.784 KGS OWNED BY HIS MOTHER. WE THEREFORE SET ASIDE THE ORDERS O F THE LOWER AUTHORITIES AND REMIT THE ISSUE BACK TO THE LD. AS SESSING OFFICER FOR GIVING RELIEF TO THE ASSESSEE PROPORTIONATE TO THE VALUE OF 243.784 KG OF SILVER OUT OF TOTAL 325.334 KGS FOUND AT THE TIM E OF SEARCH. GROUNDS 5 & 6 OF THE ASSESSEE ARE TREATED AS PARTLY ALLOWED . 42. VIDE ITS GROUNDS 7 & 8, GRIEVANCE OF THE ASSESSEE I S THAT AGRICULTURAL INCOME OF A89,174/- WAS NOT ACCEPTED BY THE LOWER AUTHORITIES. ITA NOS.2928 TO 2932/17. :- 29 -: 43. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AGRICU LTURAL INCOME OF A89,174/- WAS EARNED FROM 3.26 ACRES OF L AND OWNED BY THE ASSESSEE. ACCORDING TO HIM, PROOF OF OWNERSHIP OF THE LAND WAS FILED BEFORE LOWER AUTHORITIES. AS PER THE LD. AUT HORISED REPRESENTATIVE, ASSESSEE HAD SHOWN AGRICULTURAL L AND IN HIS WEALTH TAX RETURNS FILED PRIOR TO THE DATE OF SEARCH. ACCO RDING TO HIM, THE CLAIM OF AGRICULTURAL INCOME WAS UNJUSTLY DISALLOW ED. 44. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THERE WAS NO DETAILS OR EVIDENCE GIVEN BY THE ASSE SSEE FOR EARNING ANY AGRICULTURAL INCOME. 45. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTED BY THE REVENUE THAT ASSESSEE OWNED 3.26 ACRES OF LAND. IT MIGHT BE TRU E THAT ASSESSEE WAS UNABLE TO PRODUCE EVIDENCE FOR AGRICULTURAL CU LTIVATION AND EARNING OF AGRICULTURAL INCOME. NEVERTHELESS, WE CANNOT SAY THAT ASSESSEE COULD HAVE EARNED NO AGRICULTURAL INCOME FROM A HOLDING OF 3.26 ACRES OF LAND. WE ARE OF THE OPINION THAT ASS ESSEE OUGHT HAVE BEEN GIVEN CREDIT OF AGRICULTURAL INCOME AT THE RA TE OF A5,000/- PER ACRE. ACCORDINGLY, WE RESTRICT THE ADDITION TO A72 ,874/-. GROUNDS 7 & 8 OF THE ASSESSEE ARE PARTLY ALLOWED. ITA NOS.2928 TO 2932/17. :- 30 -: 46. NOW, WE TAKE UP APPEALS OF THE ASSESSEE IN ITA NOS .2929 & 2930/CHNY/2017 WHICH ARE AGAINST LEVY OF PENALTY U/ S.271D AND 271E OF THE ACT RESPECTIVELY. 47. LD. ASSESSING OFFICER HAD LEVIED THE PENALTY SINCE ASSESSEE HAS ACCEPTED LOANS IN EXCESS OF A20,000/- IN CASH, AGGREGATING TO A10,00,000/- FROM SIX PERSONS AND REPAID A3,00,000/ - IN CASH TO TWO PERSONS. LD. ASSESSING OFFICER TOOK A VIEW THAT ASS ESSEE HAVING VIOLATED SECTION 269SS AND SECTION 269T OF THE ACT LEVY OF PENALTY U/S.271D AND 271E OF THE ACT WAS CALLED FOR . PENA LTY OF A10,00,000/- WAS LEVIED U/S.271D OF THE ACT AND A3,00,000/- WAS LEVIED U/S.271E OF THE ACT, WHICH WERE CONFIRMED BY LD. COMMISSIONER O F INCOME TAX (APPEALS) ON THE APPEALS OF THE ASSESSEE. 48. WE HAVE HEARD THE RIVAL COUNSEL. WE FIND THAT ASSE SSEE COULD NOT GIVE ANY REASONABLE GROUND FOR ACCEPTING LOANS IN CASH AND REPAYING LOANS IN CASH. THOUGH ASSESSEE ARGUED BEF ORE LOWER AUTHORITIES THAT AMOUNTS WERE RECEIVED AS ADVANCE A GAINST SALE OF AGRICULTURAL LAND, NO EVIDENCE TO SUBSTANTIATE SU CH CLAIM WAS PRODUCED. IN THE ABSENCE OF ANY REASONABLE CAUSE F OR ACCEPTING LOANS IN CASH AND REPAYING LOANS IN CASH, WE ARE OF THE OPINION THAT THERE WAS CLEAR VIOLATION OF SECTION 269SS AND SECTION 26 9T OF THE ACT. LEVY ITA NOS.2928 TO 2932/17. :- 31 -: OF PENALTY U/S.271D AND 271E IN OUR OPINION WAS JUS TIFIED. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. 49. THIS LEAVES US WITH THE APPEAL OF THE ASSESSEE M/S. KISHANLAL & SONS (HUF) IN ITA NO.2932/CHNY/2017 FOR ASSESSMEN T YEAR 2006- 2007. 50. NINE GROUNDS ARE TAKEN BY THE ASSESSEE OF WHICH GRO UNDS 1 & 2 ARE GENERAL NEEDING NO SPECIFIC ADJUDICATION. G ROUNDS 8 & 9 ARE ON LEVY OF INTEREST U/S.234A AND 234B OF THE ACT, WHIC H ARE CONSEQUENTIAL IN NATURE. 51. GROUNDS 3 TO 7, ASSAIL AN ADDITION MADE FOR CAPITA L GAINS ON SALE OF JEWELLERY, AND WHAT IS CLAIMED AS ERRONEO US COMPUTATION OF COST OF ACQUISITION OF THE JEWELLERY. 52. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT ASSESS EE -HUF HAD GIVEN JEWELLERY WEIGHING 604.800 GMS TO SHRI. C. KISHANLAL AS DEPOSIT. ACCORDING TO HIM, HUF HAD NEVER REQUIRED S HRI. C. KISHANLAL TO SELL SUCH JEWELLERY. AS PER THE LD. AUTHORISED REP RESENTATIVE, SHRI. C. KISHANLAL HAD SOLD THE JEWELLERY WITHOUT THE KNOWLE DGE OF HUF. THUS, ACCORDING TO HIM, CAPITAL GAINS ARISING ON SUCH S ALE COULD NOT HAVE BEEN TAXED IN THE HANDS OF THE HUF. IN ANY CASE AC CORDING TO HIM, WHILE COMPUTING THE LONG TERM CAPITAL GAINS, COST OF ACQUISITION WAS TAKEN AT 50% WHICH WAS INCORRECT. ACCORDING TO HIM, THE HUF HAD ITA NOS.2928 TO 2932/17. :- 32 -: DECLARED SUCH JEWELLERY IN ITS WEALTH TAX RETURNS FROM ASSESSMENT YEARS 2001-02 ONWARDS. AS PER THE LD. AUTHORISED R EPRESENTATIVE, COST OF JEWELLERY HAD TO BE RECKONED CONSIDERING THE VA LUE AS ON DATE OF ACQUISITION OF SUCH JEWELLERY BY THE HUF. 53. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES 54. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. CONTENTION OF TH E LD. AUTHORISED REPRESENTATIVE IS THAT SHRI. C. KISHANLAL HAD SOLD THE JEWELLERY GIVEN TO HIM BY THE HUF WITHOUT THE PERMISSION OF THE HUF . WE ARE AFRAID, WE CANNOT ACCEPT THE CLAIM OF THE ASSESSEE. THIS I S DUE TO THE REASON THAT SHRI. C. KISHANLAL TO WHOM THE JEWELLERY WAS G IVEN WAS THE KARTHA OF THE ASSESSEE (HUF). HENCE, HE CANNOT SAY THAT HE WAS UNAWARE OF THE SALE OF JEWELLERY. HENCE, GROUND OF THE ASSESSE E ASSAILING THE ADDITION MADE LONG TERM CAPITAL GAINS IS DISMISSED . HOWEVER VIZ-A-VIZ, COST OF ACQUISITION, IT IS AN ADMITTED POSITION THA T LD. ASSESSING OFFICER HAD CONSIDERED SUCH COST AT 50% OF THE SALE VALUE. CONTENTION OF THE ASSESSEE IS THAT THE JEWELLERY WHICH WAS SOLD WAS REFLECTED IN THE WEALTH TAX RETURN OF THE HUF FROM ASSESSMENT YEAR 2 001-02. WE DIRECT THE LD. ASSESSING OFFICER TO VERIFY THIS CLA IM OF THE ASSESSEE AND CONSIDER THE COST SHOWN BY THE ASSESSEE IN THE WEA LTH TAX RETURN FOR ASSESSMENT YEAR 2001-02, FOR THE PURPOSE OF COMPU TING THE LONG ITA NOS.2928 TO 2932/17. :- 33 -: TERM CAPITAL GAINS. GROUNDS 3 TO 6 ARE DISMISSED W HEREAS GROUND NO. 7 IS ALLOWED FOR STATISTICAL PURPOSE. 55. TO SUMMARIZE THE RESULTS, APPEALS OF THE ASSESSE E IN ITA NOS.2928, 2931 AND 2932/CHNY/2017 ARE PARTLY ALLOW ED, WHEREAS ITS APPEALS IN ITA NOS.2929 AND 2930/CHNY/2017 ARE DI SMISSED. ORDER PRONOUNCED ON THURSDAY, THE 20TH DAY OF DECE MBER, 2018, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:20TH DECEMBER, 2018 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF