Laxman Das Keshwani, Agra V. A.C.I.T., Central Circle, Agra

ITA 350/AGR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0285 (ITAT-AGRA)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-11-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 20-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Unexplained investment; Gift; Rule of consistency; Source of fund; Additional evidence; Question of law
• Section: 153A; 234B; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NOS.349, 350 & 352/AGR/2012 ASSESSMENT YEARS: 2002-03, 2003-04 & 2006-07 RESPEC TIVELY SHRI LAXMAN DASS KESHWANI, VS. ASSTT. COMMISSION ER OF INCOME TAX, 92, SURYA NAGAR, AGRA. CENTRAL CIRCLE, AGRA. (PAN: ACWPK 4019 R). ITA NO.371/AGR/2012 ASSESSMENT YEAR: 2002-03 SHRI SHYAM SUNDER KESHWANI, VS. ASSTT. COMMISSIO NER OF INCOME TAX, 92, SURYA NAGAR, AGRA. CENTRAL CIRCLE, AGRA. (PAN: ABXPK 6646 A) ITA NO.342/AGR/2012 ASSESSMENT YEAR: 2002-03 SHRI NARENDRA KUMAR KESHWANI, VS. ASSTT. COMMISSI ONER OF INCOME TAX, 92, SURYA NAGAR, AGRA. CENTRAL CIRCLE, AGRA. (PAN: ABVPK 6826 C). ITA NOS.111 & 337/AGR/2012 ASSESSMENT YEARS: 2007-08 & 2002-03 RESPECTIVELY SHRI KAMAL KUMAR KESHWANI, VS. ASSTT. COMMISSION ER OF INCOME TAX, 92, SURYA NAGAR, AGRA. CENTRAL CIRCLE, AGRA. (PAN: ABRPK 3458 N). (APPELLANTS) (RESPONDENT) APPELLANTS BY : SHRI PANKAJ GARGH, ADVOCATE RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R . DATE OF HEARING : 21.12.2012 DATE OF PRONOUNCEMENT : 18.01.2013 ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 2 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THESE ARE APPEALS FILED BY DIFFERENT ASSESSEES. IT A NOS.349, 350 & 352/AGR/2012 HAVE BEEN FILED BY THE ASSESSEE AGAINS T THE ORDERS DATED 27.02.2012, 20.01.2012 & 27.01.2012 RESPECTIVELY PASSED BY THE LD. CIT(A)-I, AGRA IN THE CASE OF SHRI LAXMAN DASS KESHWANI. ITA NO.371/AGR/2012 HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 05.03.2012 PASSED BY THE LD. CIT(A)-I, AGRA IN THE CASE OF SHRI SHYAM SUNDER KESHWANI. ITA NO.342/AGR /2012 HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 05.03.2012 PASSED BY THE LD. CIT(A)-I, AGRA IN THE CASE OF SHRI NARENDRA KUMAR KESHWANI. ITA NOS.111 & 337/AGR/2012 HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 28.07 .2011 & 28.02.2012 RESPECTIVELY PASSED BY THE LD. CIT(A)-I, AGRA IN THE CASE OF SHR I KAMAL KUMAR KESHWANI. 2. LD. REPRESENTATIVES OF THE PARTIES SUBMITTED THA T SOME OF THE GROUNDS RAISED IN THESE APPEALS ARE BASED ON IDENTICAL SET OF FACT S. IN THE LIGHT OF THE FACT, WE PROCEED TO DECIDE THESE APPEALS BY THIS COMMON ORDE R. 3. GROUND NO.1(I) IS COMMON GROUND IN ALL THESE APP EALS. FOR KNOWING THE EXACT GROUND OF APPEAL, WE REPRODUCE THE GROUND NO. 1(I) FROM ITA NO.371/AGRA/2012 IN THE CASE OF SHRI SHYAM SUNDER K ESHWANI AS UNDER :- ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 3 1(I) BECAUSE THE PROCEEDINGS INITIATED U/S 153A OF THE ACT IS WRONG AND ILLEGAL AS NO PAPER, DOCUMENT OR ANY ADVERSE MA TERIAL RELATING TO THE RELEVANT YEAR WARRANTING ADDITION MADE BY THE A SSESSING OFFICER WAS FOUND DURING SEARCH. THE LD. COMMISSIONER OF I NCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER AS REGARDS INITIATION OF PROCEEDINGS U/S 153A OF TH E ACT. CONSIDERING THE FACTS OF THE CASE AND THE LEGAL POSITION THE AS SESSMENT IS LIABLE TO BE ANNULLED. LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN REJECTING THE APPELLANTS GROUND. 4. THE LD. AUTHORISED REPRESENTATIVE HAS NOT PRESSE D THIS COMMON GROUND OF ALL APPEALS, THEREFORE, THE SAME ARE DISMISSED AS N OT PRESSED. 5. THE ASSESSEE HAS FURNISHED ADDITIONAL EVIDENCES WHICH ARE SIMILAR TO THE ADDITIONAL EVIDENCES FILED IN GROUP CASE OF THE ASS ESSEE IN ITA NO.351/AGR/2012 AND OTHERS WHICH HAS BEEN ADMITTED BY US AFTER GIVI NG REASONS FOR ADMITTING THE ADDITIONAL EVIDENCES IN OUR ORDER DATED 28.12.2012. THE RELEVANT FINDING IS REPRODUCED BELOW :- 11. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND PERUSED RECORDS. THE ASSESSEE FILED ADDITIONAL EVI DENCES IN SUPPORT OF THE CONTENTIONS REGARDING ANNUAL VALUE OF THE PROPE RTIES. IN THE CASE UNDER CONSIDERATION, NEITHER THE A.O. HAS EXAMINED THE CASE IN THE LIGHT OF PROVISIONS OF SECTION 23 NOR ANY MATERIAL COLLECTED AND PUT ON RECORD. SIMILARLY, THE ASSESSEE ALSO DID NOT PRODU CE ANY EVIDENCE BEFORE REVENUE AUTHORITIES. THESE ADDITIONAL EVIDE NCES ARE ONLY RELEVANT EVIDENCE AND MATERIAL. THEREFORE, AFTER H EARING THE LD. REPRESENTATIVES OF THE PARTIES, THE ADDITIONAL EVID ENCES FILED BY THE ASSESSEE IN THE FORM OF DOCUMENTS RELATING TO MUNIC IPAL VALUATION ARE ADMITTED IN THE INTEREST OF JUSTICE. ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 4 6. FOLLOWING THE ABOVE ORDER, THE ADDITIONAL EVIDEN CES FILED IN ALL THESE APPEALS ARE ALSO ADMITTED. 7. GROUND NO.1(II), 2(I) & 2(II) IN THESE APPEALS A RE COMMON GROUNDS. FOR KNOWING THE EXACT GROUNDS, WE REPRODUCE GROUND NOS. 1(II), 2(I) & 2(II) FROM ITA NO.371/AGR/2012 IN THE CASE OF SHRI SHYAM SUNDER KE SHWANI AS UNDER :- 1(II) BECAUSE SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH FOR WARRANTING ADDITIONS MADE BY T HE ASSESSING OFFICER, THE ADDITIONS MADE IN THE RELEVANT PREVIOU S YEAR ARE WRONG, ILLEGAL AND DESERVES TO BE DELETED. 2(I) BECAUSE THE LD. CIT(A) HAS WRONGLY, ILLEGALLY AND ARBITRARILY CONFIRMED THE ADDITION OF RS.60,809/- MADE BY THE A SSESSING OFFICER U/S 23(4) OF THE ACT. 2(II) BECAUSE CONSIDERING THE FACTS OF THE CASE THA T THE PROPERTY COULD NOT BE LET OUT AND NO RENT WAS RECEIVED OR RE CEIVABLE, THE NOTIONAL RENT CANNOT BE ASSESSED, THE LD. COMMISSIO NER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION INSTEAD OF DELETING THE SAME. 8. THE AMOUNT OF ADDITIONS IN THESE APPEALS ARE AS UNDER:- ITA NO. A.Y. NAME OF ASSESSEE AMOUNT (RS.) 371/AGR/2012 2002-03 SHYAM SUNDER KESHWANI 60,809/- 349/AGR/2012 2002-03 LAXMAN DASS KESHWANI 52,174/- 350/AGR/2012 2003-04 LAXMAN DASS KESHWANI 52,174 352/AGR/2012 2006-07 LAXMAN DASS KESHWANI 52,174/- 342/AGR/2012 2002-03 NAGENDRA KUMAR KESHWANI 56,352/- 111/AGR/2012 2007-08 KAMAL KUMAR KESHWANI 67,629/- 337/AGR/2012 2002-03 KAMAL KUMAR KESHWANI 50,715/- ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 5 9. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH UN DER SECTION 132 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) WAS CARRIED O UT AT THE PREMISES OF THE ASSESSEES OF SHANKER GUTKA GROUP. DURING THE ASSES SMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE WAS HAVING SEVERAL HOUSE PROPERTIES. THE ASSESSEE DID NOT DISCLOSE INCOME FROM HOUSE PROPERTY IN RESPECT OF S OME OF THE PROPERTIES. THE A.O. CALCULATED THE ANNUAL LETTING VALUE APPLYING F ORMULA OF 7% INVESTMENT AND THE ADDITIONS WERE ACCORDINGLY MADE. THE CIT(A) CO NFIRMED THE ACTION OF THE A.O. 10. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT TH IS ISSUE IS IDENTICAL TO THE ISSUE DECIDED BY US IN THE GROUP CASE OF ITA NO.351 /AGR/2012 AND OTHERS IN THE CASE OF LAXMAN DASS KESHWANI, ORDER DATED 28.12.201 2 AND SIMILAR SUBMISSIONS WERE MADE AS HAD BEEN MADE IN THOSE APPEALS. 11. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED BY US IN ITA NO.351/AGR/2012 AND OTHERS IN THE CASE OF LAXMAN DASS KESHWANI, ORDER D ATED 28.12.2012. THE RELEVANT FINDING OF THE I.T.A.T., AGRA BENCH IS REP RODUCED AS UNDER :- 11. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND PERUSED RECORDS. THE ASSESSEE FILED ADDITIONAL EVIDENCES I N SUPPORT OF THE CONTENTIONS REGARDING ANNUAL VALUE OF THE PROPERTIE S. IN THE CASE UNDER ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 6 CONSIDERATION, NEITHER THE A.O. HAS EXAMINED THE CA SE IN THE LIGHT OF PROVISIONS OF SECTION 23 NOR ANY MATERIAL COLLECTED AND PUT ON RECORD. SIMILARLY, THE ASSESSEE ALSO DID NOT PRODUCE ANY EV IDENCE BEFORE REVENUE AUTHORITIES. THESE ADDITIONAL EVIDENCES ARE ONLY R ELEVANT EVIDENCE AND MATERIAL. THEREFORE, AFTER HEARING THE LD. REPRESE NTATIVES OF THE PARTIES, THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE IN THE F ORM OF DOCUMENTS RELATING TO MUNICIPAL VALUATION ARE ADMITTED IN THE INTEREST OF JUSTICE. 12. THE FIRST EFFECTIVE ISSUE IS IN RESPECT OF DETE RMINATION OF ANNUAL VALUE OF PROPERTIES. THE CASE OF THE A.O. IS THAT SECTIO N 23(4) OF THE ACT IS APPLICABLE IN THE CASE OF THE ASSESSEE. THE CIT(A) CONFIRMED THE VIEW OF THE A.O. ON THIS ISSUE. THE CASE OF THE ASSESSEE IS TH AT ACCORDING TO SECTION 23(1)(C) OF THE ACT, ANNUL VALUE OF THOSE PROPERTIE S ARE NIL. THE ASSESSEE RELIED UPON THE DECISION OF I.T.A.T., MUMBAI BENCH IN THE CASE OF PREMSUDHA EXPORTS P. LTD. VS. ASSISTANT COMMISSIONE R OF INCOME TAX, 295 ITR (AT) 341 (MUMBAI). THE SCHEME OF THE ACT TO LE VY TAX ON INCOME FROM HOUSE PROPERTY IS ON THE BASIS OF ANNUAL VALUE. TH E ANNUAL VALUE IS REQUIRED TO BE DETERMINED IN ACCORDANCE WITH SECTION 23(1)(A ), 23(1)(B) & 23(1)(C) OF THE ACT. THERE IS NO DISPUTE IN THE FACT THAT SECT ION 23(1)(B) OF THE ACT IS NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERA TION. NOW THE QUESTION REMAINS TO BE EXAMINED, WHETHER SECTION 23(1)(C) OF THE ACT IS APPLICABLE OR SECTION 23(1)(A) OF THE ACT. TO APPRECIATE THE ISS UE, WE WOULD LIKE TO REPRODUCE SECTION 23 WHICH READS AS UNDER:- [ANNUAL VALUE HOW DETERMINED. 23. (1) FOR THE PURPOSES OF SECTION 22 , THE ANNUAL VALUE OF ANY PROPERTY SHALL BE DEEMED TO BE (A) THE SUM FOR WHICH THE PROPERTY MIGHT REASONABL Y BE EXPECTED TO LET FROM YEAR TO YEAR; OR (B) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAUSE (A), THE AM OUNT SO RECEIVED OR RECEIVABLE; OR (C) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR A ND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY T HE OWNER IN ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 7 RESPECT THEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE : PROVIDED THAT THE TAXES LEVIED BY ANY LOCAL AUTHORITY IN RE SPECT OF THE PROPERTY SHALL BE DEDUCTED (IRRESPECTIVE OF THE PRE VIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH TAXES WAS INCURRED BY THE OWNER ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY OF THAT PREVIOUS YEAR IN WHICH SUCH TAXES ARE ACTUALLY PAID BY HIM. EXPLANATION.FOR THE PURPOSES OF CLAUSE (B) OR CLAU SE (C) OF THIS SUB- SECTION, THE AMOUNT OF ACTUAL RENT RECEIVED OR RECE IVABLE BY THE OWNER SHALL NOT INCLUDE, SUBJECT TO SUCH RULES 55 AS MAY BE MADE IN THIS BEHALF, THE AMOUNT OF RENT WHICH THE OWNER CANNOT REALISE. (2) WHERE THE PROPERTY CONSISTS OF A HOUSE OR PART OF A HOUSE WHICH (A) IS IN THE OCCUPATION OF THE OWNER FOR THE PURP OSES OF HIS OWN RESIDENCE; OR (B) CANNOT ACTUALLY BE OCCUPIED BY THE OWNER BY RE ASON OF THE FACT THAT OWING TO HIS EMPLOYMENT, BUSINESS OR PROF ESSION CARRIED ON AT ANY OTHER PLACE, HE HAS TO RESIDE AT THAT OTHER PLACE IN A BUILDING NOT BELONGING TO HIM, THE ANNUAL VALUE OF SUCH HOUSE OR PART OF THE HOUSE SHALL BE TAKEN TO BE NIL. (3) THE PROVISIONS OF SUB-SECTION (2) SHALL NOT APP LY IF (A) THE HOUSE OR PART OF THE HOUSE IS ACTUALLY LET DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR; OR (B) ANY OTHER BENEFIT THEREFROM IS DERIVED BY THE OWNER. (4) WHERE THE PROPERTY REFERRED TO IN SUB-SECTION ( 2) CONSISTS OF MORE THAN ONE HOUSE (A) THE PROVISIONS OF THAT SUB-SECTION SHALL APPLY ONLY IN RESPECT OF ONE OF SUCH HOUSES, WHICH THE ASSESSEE MAY, AT HIS OPTI ON, SPECIFY IN THIS BEHALF; ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 8 (B) THE ANNUAL VALUE OF THE HOUSE OR HOUSES, OTHER THAN THE HOUSE IN RESPECT OF WHICH THE ASSESSEE HAS EXERCISED AN OPTI ON UNDER CLAUSE (A), SHALL BE DETERMINED UNDER SUB-SECTION (1) AS I F SUCH HOUSE OR HOUSES HAD BEEN LET.] 13. FIRST WE TAKE UP THE MATTER WHETHER SECTION 23( 1)(C) IS APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION OR NOT. THE MUMBAI BENCH IN THE CASE OF PREMSUDHA EXPORTS P. LTD. VS. ASSISTANT COM MISSIONER OF INCOME TAX, 295 ITR (AT) 341 (MUMBAI) HAD OCCASION TO CONS IDER THE ISSUE. THE RELEVANT DISCUSSIONS AND FINDING OF I.T.A.T. MUMBAI BENCH ARE AS UNDER :- 11. DURING THE COURSE OF HEARING, THE REVENUE HAS RAI SED DISPUTE THAT THIS CLAUSE (C) CAN ONLY BE INVOKED IN THOSE C ASES WHERE THE PROPERTY WAS LET OUT IN EARLIER YEARS OR IN THE PRE SENT YEAR. WHEREAS, ACCORDING TO ASSESSEE, THE INTENTION OF LE TTING OUT OF PROPERTY IS TO BE SEEN FOR INVOKING CLAUSE (C) FOR COMPUTING THE ANNUAL LETTING VALUE OF THE PROPERTY. IT IS IRRELEV ANT WHETHER THE PROPERTY IS/WAS LET OUT. 12. NOW THE SOLE DISPUTE IS REGARDING THE INTERPRETAT ION OF THE WORDS PROPERTY IS LET IN THE ABOVE CLAUSE (C). ON E INTERPRETATION SUGGESTED BY THE LEARNED DR IS THAT THE PROPERTY SH OULD BE ACTUALLY LET OUT IN THE RELEVANT PREVIOUS YEAR. WE FIND THAT THIS INTERPRETATION IS NOT CORRECT BECAUSE AS PER THIS CLAUSE, THE PROP ERTY CAN BE VACANT DURING WHOLE OF THE RELEVANT PREVIOUS YEAR. HENCE, BOTH THESE SITUATIONS CANNOT CO-EXIST THAT THE PROPERTY IS ACT UALLY LET OUT ALSO IN THE RELEVANT PREVIOUS YEAR AND THE PROPERTY IN T HE SAME YEAR IS VACANT ALSO DURING WHOLE OF THE SAME YEAR. WE, THER EFORE, REJECT THIS CONTENTION OF THE LEARNED DR OF THE REVENUE. 13. THE SECOND INTERPRETATION SUGGESTED BY THE LEARNED DR IS THAT THE PROPERTY SHOULD BE ACTUALLY LET OUT DURING ANY TIME PRIOR TO THE RELEVANT PREVIOUS YEAR AND THAN ONLY, IT CAN BE SAID THAT THE PROPERTY IS LET AND THIS CLAUSE WILL BE APPLICABLE. NOW, WE EXAMINE THIS CONTENTION. FIRST OF ALL, WE FIND THAT THE TEN SE OF THE VERB USED PRIOR TO THE WORD LET IS PRESENT TENSE AND NOT PA ST TENSE. IT MEANS THAT THE PROVISIONS OF ABOVE CLAUSE TALK REGARDING THE RELEVANT PREVIOUS YEAR AND NOT OF ANY EARLIER PERIOD AND IF THAT BE SO, THIS CONTENTION OF LEARNED DR IS ALSO NOT ACCEPTABLE. SE CONDLY, WE FIND ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 9 THAT EVEN IF THIS CONTENTION OF LEARNED DR OF THE R EVENUE IS ACCEPTED, THE PROVISIONS OF THIS CLAUSE (C) CANNOT BE MADE APPLICABLE IN THE FIRST YEAR, WHEN THE PROPERTY IS ACQUIRED AND THE SAME REMAINED VACANT BECAUSE IT COULD NOT BE LET OU T FOR WANT OF TENANT. THIS IS SO BECAUSE THERE IS NO EARLIER PERI OD IN THAT CASE PRIOR TO THE START OF THE RELEVANT PREVIOUS YEAR. T HIS CANNOT BE THE UNSAID INTENTION OF THE LEGISLATURES THAT THE PROVI SIONS OF THIS CLAUSE ARE NOT BE APPLIED IN THE FIRST YEAR IF THE PROPERTY REMAINED VACANT FOR WHOLE OF THE FIRST YEAR IN SPITE OF EFFO RTS TO LET IT OUT. MOREOVER, IF THIS INTERPRETATION SUGGESTED BY THE L EARNED DR IS ACCEPTED, IT WILL LEAD TO DISASTROUS RESULT BECAUSE IN THAT EVENT, IF A PROPERTY WAS LET OUT IN ONE YEAR FOR ANY PERIOD, WH ICH CAN BE EVEN 1 MONTH, THAN AFTER THAT, SUCH PROPERTY WILL ENJOY THE BENEFIT OF THIS CLAUSE (C) FOR ANY NUMBER OF YEARS IF THE PROPERTY REMAINS VACANT EVEN IF THE SAME WAS NOT INTENDED TO BE LET OUT IN THE SUBSEQUENT YEARS INCLUDING THE RELEVANT PREVIOUS YEAR. 14. IN VIEW OF THE ABOVE DISCUSSION, THIS INTERPRETAT ION CAN LEAD TO A SITUATION, WHERE A PERSON HAVING SEVERAL PROPE RTIES AND ALL BEING LET OUT FOR 1 MONTH IN ANY ONE YEAR AS DISCUS SED ABOVE AND THEREAFTER REMAINED VACANT WITH NO INTENTION TO LET OUT IN SUBSEQUENT YEARS WILL ENJOY THE STATUS OF LET PROPE RTY IN ALL SUCH SUBSEQUENT YEARS AND WILL BECOME ELIGIBLE FOR BENEF ITS OF THIS CLAUSE IN ALL SUCH SUBSEQUENT YEARS WITHOUT ANY ACTUAL LET OUT IN THOSE YEARS AND EVEN WITHOUT ANY INTENTION TO LET OUT IN THOSE SUBSEQUENT YEARS. THIS CANNOT BE THE INTENTION OF LEGISLATURE. 15. WE HAVE SEEN THAT BOTH THE INTERPRETATIONS SUGGEST ED BY THE LEARNED DR OF THE REVENUE ARE NOT WORKABLE. NOW, WE HAVE TO SEE AS TO WHAT CAN BE THE CORRECT AND WORKABLE INTERPRE TATION OF THE WORDS PROPERTY IS LET IN THE ABOVE CLAUSE (C). FO R THIS, WE HAVE TO SEE AND EXAMINE AS TO WHETHER ACTUAL LETTING OUT IS MUST FOR A PROPERTY TO FALL WITHIN THE PURVIEW OF THIS CLAUSE BY SATISFYING THE REQUIREMENT OF WORDS PROPERTY IS LET PRESENT IN T HIS CLAUSE. IN THIS CONNECTION, WE HAVE NOTED ABOVE THAT ACTUAL LET OUT EVEN FOR A DAY IN THE PRESENT YEAR AND THE PROPERTY REMAINING VACA NT FOR WHOLE OF THE PRESENT YEAR CANNOT CO-EXIST. THIS TAKES US TO THE ALTERNATIVE THAT WE SHOULD EXAMINE AS TO WHETHER THE PROPERTY W AS ACTUALLY LET OUT FOR SOME PERIOD IN PAST I.E., PRIOR TO START OF THE RELEVANT PREVIOUS YEAR. IN THIS CONTEXT, FIRST WE EXAMINE AS TO WHETHER TO ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 10 SATISFY THE WORDS PROPERTY IS LET, ACTUAL LET OUT FOR SOME PERIOD IS NECESSARY. AT THIS JUNCTURE, WE EXAMINE OTHER SUB-S ECTIONS OF SECTION 23 AND WE FIND THAT SUB-SECTION (3) OF SECT ION 23 READS AS UNDER: (3) THE PROVISIONS OF SUB-SECTION (2) SHALL NOT APPLY (A) THE HOUSE OR PART OF THE HOUSE IS ACTUALLY LET DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR; OR (B) ANY OTHER BENEFIT THEREFROM IS DERIVED BY THE O WNER. 16. FROM THE ABOVE, WE FIND THAT HERE, THE LEGISLATURE S IN THEIR WISDOM HAVE USED THE WORDS HOUSE IS ACTUALLY LET. THIS SHOWS US THAT THE WORDS PROPERTY IS LET CANNOT MEAN ACTUAL LETT ING OUT OF THE PROPERTY BECAUSE HAD IT BEEN SO, THERE WAS NO NEED TO USE THE WORD ACTUALLY IN SUB-SECTION (3) OF THE SAME SECTION 2 3. REGARDING THE SCOPE OF REFERRING TO ACTUAL LET OUT IN PRECEDING P ERIOD, WE FIND NO FORCE IN THE CONTENTION OF THE DR, AS THE LEGISLATU RE HAS USED THE PRESENT TENSE. EVEN IF WE INTERPRET IT SO, IT MAY L EAD TO UNDESIRABLE RESULT BECAUSE IN SOME CASES, IF THE OWNER HAS LET OUT A PROPERTY FOR ONE MONTH OR FOR EVEN ONE DAY, THAT PROPERTY WILL A CQUIRE THE STATUS OF LET OUT PROPERTY FOR THE PURPOSE OF THIS CLAUSE FOR THE ENTIRE LIFE OF THE PROPERTY EVEN WITHOUT ANY INTENTION TO LET IT OUT I N THE RELEVANT YEAR. NOT ONLY THAT, EVEN IF THE PROPERTY WAS LET OUT AT ANY POINT OF TIME EVEN BY ANY PREVIOUS OWNER, IT CAN BE CLAIMED THAT THE P ROPERTY IS LET OUT PROPERTY BECAUSE THE CLAUSE TALKS ABOUT THE PROPERT Y AND NOT ABOUT THE PRESENT OWNER AND SINCE THE PROPERTY WAS LET OUT IN PAST, IT IS A LET OUT PROPERTY ALTHOUGH, THE PRESENT OWNER NEVER INTENDED TO LET OUT THE SAME. IN OUR CONSIDERED OPINION, IT IS NOT AT ALL R ELEVANT AS TO WHETHER THE PROPERTY WAS LET OUT IN PAST OR NOT. ACCORDING TO US, THESE WORDS DO NOT TALK OF ACTUAL LET OUT ALSO BUT TALK ABOUT T HE INTENTION TO LET OUT. IF THE PROPERTY IS HELD BY THE OWNER FOR LETTING OU T AND EFFORTS WERE MADE TO LET IT OUT, THAT PROPERTY IS COVERED BY THI S CLAUSE AND THIS REQUIREMENT HAS TO BE SATISFIED IN EACH YEAR THAT T HE PROPERTY WAS BEING HELD TO LET OUT BUT REMAINED VACANT FOR WHOLE OR PART OF THE YEAR. WE FEEL THAT THE WORDS PROPERTY IS LET ARE USED I N THIS CLAUSE TO TAKE OUT THOSE PROPERTIES FROM THE AMBIT OF THE CLAUSE I N WHICH PROPERTY ARE HELD BY THE OWNER FOR SELF-OCCUPATION I.E., SELF-OC CUPIED PROPERTY (I.E. SOP) BECAUSE EVEN INCOME ON ACCOUNT OF SOP, EXCLUDI NG ONE SUCH SOP OF WHICH ANNUAL VALUE IS TO BE ADOPTED AT NIL, IS ALSO TO BE COMPUTED UNDER THIS HEAD AS PER CLAUSE (A) OF SECTI ON 23(1) IF WE SEE ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 11 THE COMBINED READING OF SUB-SECTIONS (2) AND (4) OF SECTION 23. ONE THING IS MORE IMPORTANT BECAUSE WE FIND THAT WHERE THE LEGISLATURES HAVE CONSIDERED THAT ACTUAL LETTING OUT IS REQUIRED , THEY HAVE USED THE WORDS HOUSE IS ACTUALLY LET. THIS CAN BE SEEN IN SUB-SECTION (3) OF SAME SECTION 23. BUT IN CLAUSE (C) ABOVE, ACTUALLY LET WORDS ARE NOT USED AND THIS ALSO SHOWS THAT MEANING AND INTERPRET ATION OF THE WORDS PROPERTY IS LET CANNOT BE PROPERTY ACTUALLY LET OUT. IN OUR OPINION, IT TALKS OF PROPERTIES, WHICH ARE HELD FOR LETTING OUT HAVING INTENTION TO LET OUT IN THE RELEVANT YEAR COUPLED WITH EFFORTS M ADE FOR LETTING IT OUT. IF THESE CONDITIONS ARE SATISFIED, IT HAS TO BE HEL D THAT THE PROPERTY IS LET AND THE SAME WILL FALL WITHIN THE PURVIEW OF TH IS CLAUSE. 17. IN VIEW OF THIS INTERPRETATION OF THE WORDS PROPE RTY IS LET IN THE ABOVE CLAUSE (C), NOW WE EXAMINE THE FACTS OF T HE PRESENT CASE. IN THE PRESENT CASE, THE ASSESSEE IS A COMPANY. THE CO MPANY CAN HOLD A PROPERTY EITHER TO USE IT FOR ITS OWN BUSINESS OR T O LET OUT. IN THE PRESENT CASE, THERE WAS NO BUSINESS ACTIVITY AND TH ERE WAS NO INTENTION TO USE THE SAME FOR OWN BUSINESS. EVEN IF THAT IS T HERE, IN THAT EVENT ALSO, NO INCOME CAN BE ASSESSED UNDER THE HEAD 'INC OME FROM HOUSE PROPERTY' IN VIEW OF THE EXCLUSION IN SECTION 22. T HE OTHER POSSIBLE USE CAN BE TO LET OUT. 18. WE HAVE CAREFULLY EXAMINED THE MATERIAL PLACED ON RECORD AND WE FIND FROM THE MEMORANDUM OF ASSOCIATION THAT THE ASSESSEE IS ENTITLED TO PURCHASE THE PROPERTY FOR ITS LET OUT A ND TO EARN RENTAL INCOME. COPIES OF RESOLUTIONS OF BOARD OF DIRECTORS ARE ALSO PLACED BEFORE US IN BOTH THE CASES WHERE FROM IT IS EVIDEN T THAT ONE OF THE DIRECTOR WAS AUTHORIZED TO TAKE NECESSARY STEPS TO LET OUT THE PROPERTY IN QUESTION. THEY HAVE ALSO FIXED THE MONTHLY RENT AND THE SECURITY DEPOSITS OF BOTH THE PROPERTIES. CONSEQUENT TO THE RESOLUTIONS, THE ASSESSEE HAS APPROACHED TO VARIOUS ESTATE AND FINAN CE CONSULTANTS FOR LETTING OUT THE PROPERTIES AND THE REQUEST WAS ALSO DULY ACKNOWLEDGED BY THE ESTATE AND FINANCE CONSULTANTS. THE SERIES OF CORRESPONDENCE ARE PLACED BEFORE US TO DEMONSTRATE THE EFFORTS MADE BY THE ASSESSEE FOR LETTING OUT OF ITS PROPERTIES, BUT, UNFORTUNATELY DURING THE YEAR UNDER APPEAL, ASSESSEE COULD NOT GE T THE SUITABLE TENANT ON ACCOUNT OF HEFTY RENT AND SECURITY DEPOSI TS. THE CORRESPONDENCE EXCHANGED BETWEEN THE ASSESSEE AND T HE DIFFERENT PROPERTY CONSULTANTS ARE PLACED ON RECORD AT PAGE N OS. 31 TO 100. FROM THIS CORRESPONDENCE, IT IS, NOTICED THAT THE A SSESSEE HAS ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 12 APPROACHED VARIOUS PROPERTY CONSULTANTS TO LET OUT ITS PROPERTIES AND DURING THE YEAR, IT COULD NOT GET A SUITABLE TENANT . FROM A CAREFUL PERUSAL OF THESE DOCUMENTS, IT HAS BECOME EVIDENT T HAT DURING THE WHOLE YEAR, ASSESSEE MADE ITS CONTINUOUS EFFORTS TO LET OUT THE PROPERTIES AND UNDER THESE CIRCUMSTANCES, THIS PROP ERTY CAN BE CALLED TO BE LET OUT PROPERTY IN TERMS OF OUR OBSERVATIONS IN FOREGOING PARAS. SINCE THE PROPERTY HAS BEEN HELD TO BE LET OUT PROP ERTY, ITS ANNUAL LETTING VALUE CAN ONLY BE WORKED OUT AS PER SUB-CLA USE (C) OF SECTION 23(1) OF THE I.T. ACT AND ACCORDING TO THIS CLAUSE, THE RENT RECEIVED OR RECEIVABLE DURING THE YEAR IS NIL AND AS SUCH THE S AME BE TAKEN AS THE ANNUAL VALUE OF THE PROPERTY IN ORDER TO COMPUTE TH E INCOME FROM HOUSE PROPERTY. WE, THEREFORE, ORDER ACCORDINGLY. 19. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED . 14. AS REGARDS THE INTERPRETATION OF THE WORD PROP ERTY IS LET, THE ISSUE HAS BEEN DECIDED BY I.T.A.T., MUMBAI BENCH. CONSID ERING PRINCIPLE OF CONSISTENCY, WE FOLLOW THE ORDER OF CO-ORDINATE BEN CH. WE, THEREFORE, IN PRINCIPLE FOLLOW THE RATIO LAID DOWN BY THE I.T.A.T ., MUMBAI BENCH IN THE ABOVE CASE OF PREMSUDHA EXPORTS P. LTD. (SUPRA). H OWEVER, THE SAID ORDER IS DISTINGUISHABLE ON FACTS THAT IN THAT CASE THE A SSESSEE HAS TAKEN NECESSARY EFFORTS TO LET OUT THE PROPERTIES BUT IN THE CASE U NDER CONSIDERATION WE NOTICE THAT THE ASSESSEE DID NOT TAKE ANY EFFORTS FOR LETT ING OUT THOSE PROPERTIES. IN THIS REGARD, THE CIT(A) HAS RECORDED THE FINDING AT PAGE NO.21 OF HIS ORDER THAT THE LD. AUTHORISED REPRESENTATIVE DID NOT PROD UCE ANY EVIDENCE TO SHOW THAT ALL THE EFFORTS WERE MADE BY THE ASSESSEE DURI NG THE YEAR UNDER CONSIDERATION TO GET THIS PROPERTY LET OUT IN ORDER TO THE INTENTION OF THE ASSESSEE TO LET OUT THE PROPERTY. IT WAS SIMPLY ST ATED THAT THESE PROPERTIES HAVE BEEN LET OUT IN SUBSEQUENT YEAR. THERE IS NO CHANGE IN FACTS IN THIS REGARD AS THE ASSESSEE HAS FAILED TO FURNISH SUCH M ATERIAL OR EVIDENCE BEFORE US ALSO. THUS, THE SAID ORDER OF THE I.T.A.T., MUM BAI BENCH IS DISTINGUISHABLE ON FACTS AND A NIL ANNUAL VALUE CAN NOT BE TAKEN IN THESE CASES AS CLAIMED BY THE LD. A.R. BEFORE US. 15. NOW WE COME TO THE ISSUE WHETHER DETERMINATION OF ANNUAL VALUE IS IN ACCORDANCE WITH SECTION 23(1)(A) OF THE ACT. SECTI ON 23(1)(A) OF THE ACT PROVIDES THAT THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 13 TO LET FROM YEAR TO YEAR. THERE ARE VARIOUS CONSID ERATION WHICH ARE RELEVANT FOR DETERMINATION OF ANNUAL VALUE UNDER SECTION 23( 1)(A) OF THE ACT, OUT OF WHICH, ONE OF THE CONSIDERATION IS ANNUAL VALUE AS TAXED BY MUNICIPALITY OR LOCAL AUTHORITY FOR THE PURPOSE OF MUNICIPAL OR LOC AL TAX. IT IS RELEVANT TO NOTE THAT THE LOCAL AUTHORITY NORMALLY MAKES A PERI ODICAL SURVEY OF ALL THE BUILDINGS WITHIN ITS AREA FOR DETERMINING ANNUAL LE TTING VALUE FOR THE PURPOSE OF LEVY OF MUNICIPAL TAXES ON THOSE PROPERT IES. FOR THAT PURPOSE THE NORMAL PROCEDURE IS THAT THE SURVEYOR DETERMINES TH E GROSS RENT RECEIVABLE FROM THE PROPERTY AFTER TAKING INTO ACCOUNT ALL THE RELEVANT CIRCUMSTANCES. THE METHOD OF DETERMINATION OF ANNUAL MUNICIPAL VAL UATION MAY DIFFER IN CERTAIN MAJOR DETAILS IN CERTAIN MUNICIPALITIES BUT BY AND LARGE SUCH ANNUAL MUNICIPAL VALUATION REPRESENTS THE SUN FOR WHICH TH E PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR. H ENCE IN CASES WHERE THERE IS NO OTHER EVIDENCE, THE MUNICIPAL ANNUAL VALUATIO N WITH SUCH ADJUSTMENT AS MAY BE NECESSARY ON THE FACTS OF THE CASE WOULD BE RELEVANT FOR DETERMINING THE ANNUAL VALUATION UNDER SECTION 23 O F THE ACT. IN THE CASE OF C.J. GEORGE VS. CIT, 92 ITR 137 (KERALA), THE PLEA OF THE ASSESSEE WAS THAT THE RENT FOR WHICH THE PROPERTY HAD BEEN LET WAS HI GHER THAN THE SUM OF WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR AND HENCE THE RENT RECEIVED BY HIM SHOULD NOT BE RE GARDED AS ANNUAL VALUE OF THE PROPERTY AND THAT THE ANNUAL VALUE SHOULD BE DETERMINED AT A LOWER FIGURE. THE ASSESSEE PRODUCED A CERTIFICATE OF THE LOCAL AUTHORITY SHOWING THAT ANNUAL LETTING VALUE HAD BEEN FIXED AT LOWER F IGURE BY THE LOCAL AUTHORITY. THE TRIBUNAL REJECTED THE SAID CERTIFIC ATE AND ADOPTED THE FIGURE OF RENT ACTUALLY RECEIVED FOR DETERMINING THE ANNUA L VALUE. IT WAS HELD THAT THE TRIBUNAL HAD ERRED IN REJECTING THE CERTIFICATE PARTICULARLY WHEN THE LOCAL AUTHORITY HAD TAXED THE ANNUAL LETTING VALUE AFTER TAKING INTO CONSIDERATION THE FACT THAT THE PROPERTY HAD BEEN LET OUT AT HIGH ER RENT AND ALSO THE CIRCUMSTANCES IN WHICH IT HAD BEEN LET OUT AT HIGHE R RENT AND IT WAS AFTER CONSIDERING THE ENTIRE CIRCUMSTANCES THAT THE ANNUA L LETTING VALUE HAD BEEN FIXED AT A LOWER AMOUNT. IT WAS OBSERVED THAT THE CERTIFICATE OF LOCAL AUTHORITY FURNISHED PRIMA FACIE EVIDENCE TO SUSTAIN THE CONTENTION OF THE ASSESSEE THAT THE CONTRACTUAL RENT WAS IN EXCESS OF THE REASONABLE RENT THAT COULD BE EXPECTED FROM THE BUILDING AND THE CERTIFI CATE COULD BE RELIED ON TO DETERMINE AS TO WHAT WAS THE RENT THAT THE BUILDING COULD REASONABLY BE EXPECTED TO FETCH. THOUGH THIS DECISION PERTAINS T O OLD PROVISIONS OF SECTION 23 BUT THE RELEVANT CONSIDERATION IS THAT THE CERTI FICATE OF THE LOCAL AUTHORITY WAS CONSIDERED AS A PRIMA FACIE EVIDENCE FOR THE PU RPOSE OF DETERMINING ANNUAL VALUE UNDER SECTION 23 OF THE ACT. SIMILA R IS THE VIEW TAKEN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JAMNADAS P RABHUDAS VS. CIT, 20 ITR 160 (BOM.) WHERE MUNICIPAL VALUATION WAS TAKEN AS BASIS FOR ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 14 DETERMINING THE ANNUAL VALUE. THE HONBLE PATNA HI GH COURT IN THE CASE OF KASHIPRASAD KATARUKA VS. CIT, 101 ITR 810 (PATNA) W HEREIN IT WAS EMPHASIZED THAT THERE WAS PRESUMPTION THAT MUNICIPA L VALUATION AFFORDS AN INDICATION AS TO THE REASONABLE ANNUAL LETTING VALU E OF A BUILDING AND SUCH VALUATION COULD BE EITHER REDUCED OR ENHANCED ONLY ON THE BASIS OF OTHER MATERIALS PRODUCED ON RECORD FOR THE PURPOSE OF SUC H REBUTTAL. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. M.R. ALAGA PPAN, 164 ITR 690 (MAD.) WHEREIN IT HAS BEEN HELD THAT ANNUAL LETTING VALUE FIXED BY THE MUNICIPAL AUTHORITIES WAS HELD TO BE A RELEVANT CON SIDERATION FOR THE PURPOSE OF DETERMINATION OF ANNUAL LETTING VALUE OF THE PROPERTY FOR COMPUTING THE INCOME FROM HOUSE PROPERTY UNDER SECT ION 23 OF THE ACT. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. S.P . SHARMA, 122 ITR 675 (DELHI) WHEREIN IT HAS BEEN HELD THAT THE MUNICIPAL ASSESSMENT IS MADE BY FOLLOWING A CERTAIN PROCEDURE UNDER WHICH A PERIODI CAL SURVEY IS MADE OF ALL BUILDINGS AND ON THE BASIS OF SUCH SURVEY THE GROSS RENT RECEIVABLE FROM THE PROPERTY IS DETERMINED AND THEREAFTER VARIOUS TYPES OF SERVICES RENDERED ARE TAKEN INTO ACCOUNT AND THEN A FIGURE FOR THE PURPOS E OF ANNUAL MUNICIPAL VALUATION IS ARRIVED AT. IF SUCH AN ANNUAL VALUE H AS BEEN ASSESSED AT OR ABOUT THE RELEVANT TIME AND AFTER TAKING INTO CONSI DERATION ALL THE RELEVANT FACTORS AND IF THE FIGURES OF ACTUAL RENT ARE NOT A VAILABLE, THEN THE FIGURE OF ANNUAL VALUE DETERMINED FOR MUNICIPAL PURPOSE CAN B E PRESUMED TO BE THE CORRECT FIGURE OF ANNUAL VALUE AND CAN BE ADOPTED F OR INCOME TAX PURPOSES. 16. AS REGARDS THE JUDGEMENT OF HONBLE ALLAHABAD H IGH COURT RELIED UPON BY THE A.O. IN THE CASE OF SMT. RADHA DEVI DAL MIYA VS. CIT, 125 ITR 134 (ALL.), WE FIND THAT THE SAID JUDGEMENT IS DIST INGUISHABLE ON FACTS. THE SAID JUDGEMENT HAS CONSIDERED THE OLD PROVISIONS WH ERE SECTION 23(1)(C) OF THE ACT WAS NOT IN STATUTE. SECTION 23 OF THE ACT HAD SUBSTANTIALLY AMENDED W.E.F. 01.04.1993 BY INSERTING THE CLAUSE(C) OF SUB -SECTION (1) OF SECTION 23 WHEREIN IT HAS BEEN PROVIDED THAT IF THE PROPERTY I S LET OUT AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR A ND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE, THIS CLAUSE WAS NOT THERE. THEREFORE, THE ANNUAL V ALUE WAS TO BE DETERMINED IN ACCORDANCE WITH SECTION 23(1)(A) AND IN ACCORDAN CE WITH SECTION 23 (1)(B) OF THE ACT. THEREFORE, THE CIRCUMSTANCES WH ERE THE ANNUAL VALUE CAN BE NIL, AS CLAIMING BY THE ASSESSEE, THIS ASPECT OF THE MATTER HAS NOT BEEN CONSIDERED IN THE SAID JUDGEMENT OF THE HONBLE ALL AHABAD HIGH COURT IN THE CASE OF SMT. RADHA DEVI DALMIA (SUPRA). IN ADD ITION TO THE ABOVE AS STATED ABOVE THAT THE DETERMINATION OF ANNUAL VALUE UNDER SECTION 23 ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 15 DEPENDS UPON THE FACTS OF THE EACH CASE, IN THE CAS E OF SMT. RADHA DEVI DALMIYA (SUPRA), IT WAS FOUND THAT THE LETTING VALU E DETERMINED BY THE MUNICIPAL AUTHORITY WAS VERY LOW. THEREFORE, THE C OURT HAS CONFIRMED THE DETERMINATION OF ANNUAL VALUE BY THE REVENUE AUTHOR ITIES. THUS, THE A.O. AND THE CIT(A) BOTH HAVE ERRED IN STRAIGHT WAY APPL YING THE SAID JUDGEMENT IN THE CASE OF SMT. RADHA DEVI DALMIYA (SUPRA) WITH OUT MAKING ENQUIRIES OR EXAMINATIONS IN RESPECT OF DETERMINATION OF ANNUAL VALUE. IN THE CASE UNDER CONSIDERATION, NEITHER THE REVENUE AUTHORITIES HAVE TAKEN ANY STEPS NOR HAS THE ASSESSEE FURNISHED NECESSARY EVIDENCE IN RESPEC T OF DETERMINATION OF ANNUL LETTING VALUE. THEREFORE, THE SAID JUDGEMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SMT. RADHA DEVI DALMIYA ( SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION AND TH E SAME IS DISTINGUISHABLE. 17. IN THE LIGHT OF THE ABOVE DISCUSSIONS, IF WE CO NSIDER THE FACTS OF THE CASE AS STATED ABOVE THAT NEITHER THE REVENUE AUTHO RITIES NOR THE ASSESSEE HAS BROUGHT ON RECORD ANY MATERIAL OR EVIDENCE IN S UPPORT OF THE DETERMINATION OF ANNUAL VALUE OF PROPERTIES, HOWEVE R, THE ASSESSEE HAS FURNISHED EVIDENCE IN RESPECT OF ANNUAL VALUE DETER MINED BY MUNICIPAL/LOCAL AUTHORITY, AGRA NAGAR NIGAM IN SUPPORT OF ANNUAL VA LUE OF CONCERNED PROPERTIES. SUCH MATERIAL IS RELEVANT AND RELATED TO THE CONCERNED PROPERTIES AS PER DETAILED DISCUSSIONS MADE IN PARA GRAPH NO.15 OF THIS ORDER. THEREFORE, WE ARE OF THE VIEW THAT THE ANNU AL VALUATION TAKEN BY THE LOCAL AUTHORITY IS ONE OF THE BASIS UNDER THE PECUL IAR FACTS AND CIRCUMSTANCES OF THESE CASES FOR DETERMINING THE ANNUAL VALUE UND ER SECTION 23(1)(A) OF THE ACT. SINCE ADDITIONAL EVIDENCE IS ADMITTED BY US F IRST TIME, THEREFORE, THE A.O. IS DIRECTED TO VERIFY THE ANNUAL VALUATION DET ERMINED BY THE LOCAL AUTHORITY/AGRA NAGAR NIGAM AND DETERMINE THE ANNUAL VALUE FOR THE PURPOSE OF SECTION 23(1)(A) OF THE ACT IN ACCORDANC E WITH ANNUAL VALUE DETERMINED BY LOCAL AUTHORITIES. 18. BEFORE PARTING FROM THE MATTER, IT IS RELEVANT TO STATE THAT THE ANNUAL VALUE DETERMINED BY THE MUNICIPAL/LOCAL AUTHORITY H AS BEEN CONSIDERED IN THE CASE UNDER CONSIDERATION IS ONE OF THE BASIS OF DETERMINATION OF ANNUAL VALUE FOR THE PURPOSE OF SECTION 23(1)(A) OF THE AC T. UNDER THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION, AS NEITHER THE ASSESSEE NOR THE REVENUE HAS BROUGHT ON RECORD ANY OTHER MAT ERIAL BASED ON WHICH THE ANNUAL VALUE OF THESE PROPERTIES CAN BE DETERMI NED IN ACCORDANCE WITH SECTION 23(1)(A) OF THE ACT, THEREFORE, THE RATIO O F THIS ORDER IS NOT APPLICABLE ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 16 TO OTHER CASES AS ANNUAL VALUE UNDER SECTION 23 OF THE ACT IS TO BE DETERMINED IN ACCORDANCE WITH FACTS OF EACH CASE. 19. IN THE LIGHT OF ABOVE DISCUSSION, WE ARE SENDIN G BACK THE MATTER TO THE FILE OF A.O. WITH THE DIRECTION TO VERIFY THE ADDIT IONAL EVIDENCES FILED BY THE ASSESSEE IN THE FORM OF ANNUAL VALUE DETERMINED BY THE LOCAL AUTHORITY AND RECALCULATE THE ANNUAL VALUE OF THESE PROPERTIES UN DER SECTION 23(1)(A) OF THE ACT ON SUCH ADDITIONAL EVIDENCE AFTER PROVIDING REA SONABLE OPPORTUNITIES OF HEARING TO THE ASSESSEES. 12. SINCE THE FACTS ARE IDENTICAL, WE FOLLOW THE AB OVE ORDER OF I.T.A.T., AGRA BENCH AND IN THE LIGHT OF THAT WE ARE SENDING BACK THE ISSUE IN ALL THESE APPEALS TO THE FILE OF A.O. WITH IDENTICAL DIRECTIONS. 13. ONE MORE COMMON GROUND I.E. GROUND NO.3 RAISED IN THESE APPEALS PERTAIN TO GIFT RECEIVED BY THE ASSESSEE. TO KNOW THE EXACT G ROUND OF APPEAL, THE GROUND NO.3 RAISED BY THE ASSESSEE IN ITA NO.371/AGR/2012 IS RE PRODUCED AS BELOW:- 3. BECAUSE THE LD. COMMISSIONER OF INCOME TAX (APP EALS) HAS WRONGLY AND ILLEGALLY CONFIRMED THE ADDITION OF RS. 3,00,000/- MADE BY THE ASSESSING OFFICER U/S. 69A OF THE I.T. ACT FOR SO CALLED UNEXPLAINED GIFT. IN CONFIRMING THE ADDITION THE LD. COMMISSIO NER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN REJECTING THE APPELL ANTS SUBMISSION AND THE FACTS OF THE CASE. 14. THE AMOUNT INVOLVED IN DIFFERENT CASES ARE AS U NDER :- ITA NO. A.Y. NAME OF ASSESSEE AMOUNT (RS.) ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 17 371/AGR/2012 2002-03 SHYAM SUNDER KESHWANI 3,00,000 /- * 349/AGR/2012 2002-03 LAXMAN DASS KESHWANI 90,000/- 350/AGR/2012 2003-04 LAXMAN DASS KESHWANI 47,654/- 352/AGR/2012 2006-07 LAXMAN DASS KESHWANI 34,550/- (CORRECT FIGURE IS RS.11,350/-) 342/AGR/2012 2002-03 NAGENDRA KUMAR KESHWANI 3,00,000/- * 111/AGR/2012 2007-08 KAMAL KUMAR KESHWANI 55,571/- * 337/AGR/2012 2002-03 KAMAL KUMAR KESHWANI 1,49,860/ - 15. THE LD. AUTHORISED REPRESENTATIVE HAS NOT PRESS ED THE GROUND NO.3 IN ITA NOS.349, 350 & 352/AGR.2012 IN THE CASE OF SHRI LAX MAN DASS KESHWANI AND IN ITA NO.337/AGR/2012 IN THE CASE OF SHRI KAMAL KUMAR KESHWANI. THEREFORE, THE SAME ARE DISMISSED AS NOT PRESSED. * GROUND NO.3 IN THE CASE OF SHRI SHYAM SUNDER KESH WANI, SHRI NAGENDRA KUMKAR KESHWANI & SHRI KAMAL KUMAR KESHWANI IN ITA NOS.371, 342 & 111/AGR/2012 RESPECTIVELY ARE DECIDED ALONG WITH IN DIVIDUAL GROUND OF RESPECTIVE APPEAL. 16. NOW WE ARE TAKING UP THE GROUNDS OTHER THAN COM MON GROUNDS RAISED IN THESE APPEALS AS UNDER :- ITA NO.371/AGR/2012 A.Y. 2002-03 SHYAM SUNDER KESHWANI ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 18 17. GROUND NOS.1 & 2 ARE COMMON GROUNDS WHICH HAVE BEEN DECIDED AS ABOVE. 18. GROUND NOS.3, 4, 5 & 6 ARE REPRODUCED AS UNDER :- 3. BECAUSE THE LD. COMMISSIONER OF INCOME TAX (APP EALS) HAS WRONGLY AND ILLEGALLY CONFIRMED THE ADDITION OF RS. 3,00,000/- MADE BY THE ASSESSING OFFICER U/S. 69A OF THE I.T. ACT FOR SO CALLED UNEXPLAINED GIFT. IN CONFIRMING THE ADDITION THE LD. COMMISSIO NER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN REJECTING THE APPELL ANTS SUBMISSION AND THE FACTS OF THE CASE. 4. BECAUSE THE LD. COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE AD DITION OF RS.22,800/- MADE BY THE ASSESSING OFFICER FOR SO CA LLED UNEXPLAINED INVESTMENT IN PURCHASE OF WASHING MACHI NE. CONSIDERING THE FACTS OF THE CASE THE ADDITION BEIN G WRONG AND ILLEGAL DESERVES TO BE DELETED. 5. BECAUSE THE LD. CIT(A) HAS ERRED IN LAW IN CONFI RMING THE ASSESSING OFFICERS ACTION AS REGARDS CHARGING OF I NTEREST U/S 234A, 234B AND 234C OF THE ACT. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, A LTER, MODIFY OR DELETE ANY OR ALL OF THE GROUNDS OF APPEAL BEFORE O R AT THE TIME OF HEARING. 19. GROUND NO.3 PERTAINS TO ADDITION OF RS.3,00,000 /- MADE BY THE A.O. ON ACCOUNT OF GIFT. DURING THE ASSESSMENT PROCEEDINGS , THE A.O. ON PERUSAL OF BANK ACCOUNT NO.4381 OF THE ASSESSEE IN J & K BANK, HING KI MANDI, AGRA FOUND THAT AN AMOUNT OF RS.3,00,000/- HAS BEEN CREDITED ON 12. 01.2002. THE ASSESSEE HAS SHOWN SUCH RECEIPTS AS GIFT. BEFORE THE A.O. THE A SSESSEE ONLY SUBMITTED THAT GIFT WAS RECEIVED FROM CENTURY GENERAL TRADING, EST DUBA I. ON ACCOUNT OF NON- ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 19 FURNISHING OF REQUIRED DETAILS, THE A.O. HAS MADE A DDITION OF RS.3,00,000/- UNDER SECTION 69A OF THE ACT. 20. THE CIT(A) CONFIRMED THE ORDER OF A.O. AFTER CO NSIDERING THE STATEMENT OF DONOR RECORDED ON OATH BY THE A.O. ON 24.02.2012. THE ASSESSEE PRODUCED THE DONOR ON THAT DATE I.E. 24.02.2012. THE GIFT CLAIM ED TO HAVE BEEN RECEIVED FROM SHRI HARISH KUMAR VARYANI, R/O. DUBAI. THE A.O. SU BMITTED REPORT TO THE CIT(A) VIDE LETTER DATED 24.02.2012 WHEREIN THE A.O. INFOR MED THAT SHRI HARISH KUMAR VARYANI ACCEPTED THAT HE MADE THE GIFT TO THE ASSES SEE. THE CIT(A) HELD THAT THOUGH THE DONOR HAS ACCEPTED GIVING OF THE GIFT TO THE ASSESSEE BUT HE COULD NOT PRODUCE THE SUPPORTING DOCUMENTARY EVIDENCE TO SHOW THE SOURCE OF HIS FUND FROM WHERE HE ISSUED THE GIFT DRAT WHICH WAS MADE IN EMI RATES INDIA INTERNATIONAL EXCHANGE. THE CIT(A) FOUND THAT THE SOURCE OF GIVI NG GIFT REMAINED UNEXPLAINED. THE CIT(A) FURTHER NOTICED THAT THOUGH IN THE STATE MENT THE DONOR STATED THAT HE WAS KEEPING HIS SAVINGS IN HIS BANK ACCOUNT BUT HE COULD NOT PRODUCE HIS BANK ACCOUNT FROM WHERE THE AMOUNT WAS WITHDRAWN FOR MAK ING BANK DRAFT. THE CIT(A) HELD THAT THOUGH THE ASSESSEE WAS ABLE TO ES TABLISH THE IDENTITY OF THE DONOR, BUT FAILED TO ESTABLISH THE CREDITWORTHINESS OF THE DONOR. THE CIT(A) RELIED UPON THE JUDGEMENT OF HONBLE DELHI HIGH COURT IN T HE CASE OF SAJJAN DASS & SONS VS. CIT, 264 ITR 435 (DELHI) WHEREIN THE HONB LE DELHI HIGH COURT WHILE CONSIDERING THE CASE IN WHICH GIFT WAS RECEIVED BY THE ASSESSEE THOUGH BANKING ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 20 CHANNEL FROM A NON-RESIDENT, LAID IMPORTANCE ON THE CAPACITY OF THE DONOR FOR MAKING THE GIFT. APART FROM ESTABLISHING THE IDENT ITY OF THE DONOR, IT HAS BEEN HELD IN THE SAID CASE THAT CAPACITY OF DONOR MAKING THE GIFT AND IT HAD ACTUALLY BEEN RECEIVED AS GIFT WAS TO BE ESTABLISHED. THE CIT(A) ALSO RELIED UPON THE ORDER OF I.T.A.T., DELHI BENCH IN THE CASE OF D.C. RASTOGI V S. ACIT, 57 ITD 296, WHEREIN IT HAS BEEN HELD THAT IT IS COMMON KNOWLEDGE THAT HAVALA BUSINESS IS IN VOGUE IN INDIA AND ELSEWHERE AND THE MERE FACT THAT MONEY HA D BEEN RECEIVED IN INDIA IN FOREIGN EXCHANGE FROM ABROAD WOULD NOT BE SUFFICIEN T TO ABSOLVE THE ASSESSEE OF THE BURDEN OF ESTABLISHING THE IDENTITY, AS WELL AS FINANCIAL CAPACITY OF THE DONORS AND GENUINENESS OF THE GIFTS. THE CIT(A) HAS ALSO REFERRED THE ORDER OF I.T.A.T. AGRA BENCH IN THE CASE OF SMT. SATYAWATI SINGHAL VS . ITO IN ITA NO.04/AGR/2006, ORDER DATED 27.04.2007 WHEREIN THE AGRA BENCH HAS F ILED ORDER OF DELHI BENCH AND HELD THAT MERELY BECAUSE THE ALLEGED GIFT WAS RECEI VED THROUGH BANKING CHANNELS IS NOT A CONCLUSIVE PROOF FOR DISCHARGE OF ONUS RELATI NG TO GENUINENESS OF THE TRANSACTION. THE CIT(A) HAS ALSO CONSIDERED THE AS SESSEES CONTENTION THAT ADDITION OF GIFT CANNOT BE MADE IN SEARCH ASSESSMEN T WHICH WAS DECLARED IN REGULAR RETURN FILED BY THE ASSESSEE AFTER IT WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. 21. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T THE ASSESSEE HAS DISCHARGED THE BURDEN REGARDING IDENTITY, CREDITWOR THINESS AND GENUINENESS OF THE TRANSACTION OF GIFT. LD. AUTHORISED REPRESENTATIVE REITERATED THE SUBMISSIONS ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 21 WHICH WERE MADE BEFORE THE CIT(A). HE HAS ALSO REL IED UPON VARIOUS DECISIONS WHICH HE RELIED UPON BEFORE THE CIT(A) WHICH ARE AS UNDER :- I) ITA NO.53/A/2004 FOR A.Y. 2000-01 IN THE CASE OF M/S NITIN SARASWAT, C/O. AMERICAN INSTITUTE OF ENGLISH LANGUAGE, AGRA V S. ADDL. CIT RANGE (1), AGRA. II) MS. MAYAWATI VS. DCIT (2008) 19 SOT 460 (DEL) III) ACIT VS. MANOJ KUMAR SEKHRI (2004) 3 SOT 166 ( ASR) IV) ITAT, BANGALORE BENCH IN THE CASE OF ITO VS. N. SUNITHA, REPORTED IN (2001) 70 TTJ (BANG.) 27. 22. THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMI TTED THAT THE DONOR APPEARED BEFORE THE A.O. AND STATEMENT WAS ALSO RECORDED ON OATH. IN THE STATEMENT, THE DONOR CLEARLY ADMITTED THAT HE HAS GIVEN GIFT TO TH E ASSESSEE. 23. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, RELIED UPON THE ORDER OF CIT(A). 24. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE ISSUE RELATING TO GIFT HAS BEEN CONSIDERED IN D ETAIL BY THE I.T.A.T., AGRA BENCH IN THE CASE OF SHRI ALOK AGRAWAL IN ITA NOS.49 & 39 /AGR/2011, ORDER DATED 04.04.2012. THE RELEVANT FINDING OF I.T.A.T., AGRA BENCH IS REPRODUCED AS BELOW:- 11. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. IN THE CASE UNDER CONSIDERATION THE ISSUE IS IN RESPECT OF GIFT OF ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 22 RS.15,40,000/- FROM YOUNGER SISTER OF THE ASSESSEE. TO EXAMINE THE ISSUE LET US SEE WHAT IS MEANING OF THE GIFT. THE ORDINARY M EANING OF THE GIFT IS A TRANSFER BY ONE PERSON TO ANOTHER OF ANY EXISTING M OVABLE OR IMMOVABLE PROPERTY MADE VOLUNTARILY OR WITHOUT CONSIDERATION OF MONEY OR MONEY WORTH. IN LEGAL EFFECT, THERE CANNOT BE A GIFT WI THOUT A GIVING AND TAKING. THE GIVING AND TAKING ARE THE TWO CONTEMPORANEOUS R ECIPROCAL ACTS WHICH CONSTITUTE A GIFT. IN ORDER TO MAKE A VALID GIFT, THERE MUST BE PERFECT KNOWLEDGE IN THE MIND OF THE PERSON MAKING THE GIFT OF THE EXTENT OF THE BENEFICIAL INTEREST INTENDED TO BE CONFERRED, AND O F WHICH MAKING IT. DONOR GIVES GIFT IN MONEY OR MONEYS WORTH AND TAKING LOV E AND AFFECTION FROM DONEE. TO EXAMINE THE ISSUE FROM POINT OF VIEW OF T HE PROVISIONS OF INCOME TAX ACT WE ARE TO SEE THE NATURE OF THE TRANSACTION . GIFT, ITS NATURE IS CREDIT IN THE HANDS OF THE DONEE BECAUSE DONEE CREDITED GI FT AMOUNT HIS/HER CAPITAL ACCOUNT AND BEING TREATED AS OWN MONEY/CAPITAL. NOR MALLY SUCH CREDIT ENTRY IN CAPITAL ACCOUNT CAN BE MADE ONLY OF THE TRANSITI ON WHICH HAS BEEN PROCESSED THROUGH THE PROVISIONS OF THE INCOME TAX ACT. IT APPEARS FROM READING OF SECTION 68 OF THE ACT THAT WHENEVER A SU M IS FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE THEN, IRRESPECTIVE OF THE COLOUR OR THE NATURE OF THE SUM RECEIVED WHICH IS SOUGHT TO BE GI VEN BY THE ASSESSEE, THE INCOME-TAX OFFICER HAS THE JURISDICTION TO ENQUIRE FROM THE ASSESSEE THE NATURE AND SOURCE OF THE SAID AMOUNT. WHEN AN EXPL ANATION IN REGARD THERETO IS GIVEN BY THE ASSESSEE THEN, IT IS FOR TH E INCOME-TAX OFFICER TO BE SATISFIED WHETHER THE SAID EXPLANATION IS CORRECT O R NOT. IT IS IN THIS REGARD THAT ENQUIRIES ARE USUALLY MADE IN ORDER TO FIND O UT AS TO WHETHER, FIRSTLY THE PERSONS FROM WHOM MONEY IS ALLEGED TO HAVE BEEN RE CEIVED ACTUALLY EXISTED OR NOT. SECONDLY DEPENDING UPON THE FACTS OF EACH CASE, THE INCOME-TAX OFFICER MAY EVEN BE JUSTIFIED IN TRYING TO ASCERTAI N THE SOURCE OF THE DEPOSITOR, ASSUMING HE IS IDENTIFIED, IN ORDER TO D ETERMINE WHETHER THAT DEPOSITOR IS A MERE NAME LENDER OR NOT. BE THAT AS IT MAY, IT IS CLEAR THAT THE INCOME-TAX OFFICER HAS JURISDICTION TO MAKE ENQUIRI ES WITH REGARD TO THE NATURE AND SOURCE OF A SUM CREDITED IN THE BOOKS OF ACCOUNT OF AN ASSESSEE AND IT WOULD BE IMMATERIAL AS TO WHETHER THE AMOUNT SO CREDITED IS GIVEN THE COLOUR OF A LOAN OR A SUM REPRESENTING THE SALE PRO CEEDS OR EVEN RECEIPT OF GIFT. THE USE OF THE WORDS ANY SUM FOUND CREDITED IN THE BOOKS IN SECTION 68 INDICATES THAT THE SAID SECTION IS VERY WIDELY W ORDED AND AN INCOME-TAX OFFICER IS NOT PRECLUDED FROM MAKING AN ENQUIRY AS TO THE TRUE NATURE AND SOURCE THEREOF EVEN IF THE SAME IS CREDITED AS GIFT . WHAT IS CLEAR, HOWEVER, IS THAT SECTION 68 CLEARLY PERMITS AN INCOME-TAX OFFIC ER TO MAKE ENQUIRIES WITH REGARD TO THE NATURE AND SOURCE OF ANY OR ALL THE S UMS CREDITED IN THE BOOKS OF ACCOUNT OF THE COMPANY IRRESPECTIVE OF THE NOMEN CLATURE OR THE SOURCE INDICATED BY THE ASSESSEE. IN OTHER WORDS, THE TRUT HFULNESS OF THE ASSERTION OF ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 23 THE ASSESSEE REGARDING THE NATURE AND THE SOURCE OF THE CREDIT IN ITS BOOKS OF ACCOUNT CAN BE GONE INTO BY THE INCOME-TAX OFFICER. THERE IS NO QUARREL WITH THE PROPOSITION THAT A MERE IDENTIFICATION OF THE D ONOR AND SHOWING THE MOVEMENT OF THE GIFT AMOUNT THROUGH BANKING CHANNEL S IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE GIFT AND SINCE THE CLA IM OF A GIFT IS MADE BY THE ASSESSEE THE ONUS LIES ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE DONOR BUT HIS CAPACITY TO MAKE SUCH A GIFT. THE ASSESSEE IS REQUIRED TO PROVE THREE IMPORTANT CONDITIONS, NAMELY, (I) THE IDENTITY OF T HE CREDITOR, (II) THE CAPACITY OF THE CREDITOR TO ADVANCE THE MONEY, AND (III) THE GENUINENESS OF THE TRANSACTION. WHAT EVIDENCE WOULD BE SUFFICIENT TO E STABLISH THE SAID CONDITIONS OR WHAT MATERIAL WOULD BE RELEVANT IN A PARTICULAR CASE, WOULD DEPEND ON THE FACTS OF EACH CASE. THERE CANNOT BE ONE GENERAL GUIDING YARDSTICK IN THE MATTER. 11.1 THE ASSESSEE HAS FURNISHED SOME MATERIAL/ EVIDENCE LIKE BANK ACCOUNT, COPY OF PASSPORT, GIFT LETTER AND OTHERS, TO APPRECIATE THOSE MATERIAL/EVIDENCES WE WOULD LIKE REFER ONE OF THE J UDGMENT OF THE APEX COURT IN THE CASE OF CIT V DURGA PRASAD MORE 82 ITR 540 (SC) WHEREIN THE COURT HELD THAT SCIENCE HAS NOT YET INVENTED ANY IN STRUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT O R TRIBUNAL. THEREFORE, THE COURTS AND TRIBUNALS HAVE TO JUDGE THE EVIDENCE BEF ORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES. IT HAS BEEN FURTHER H ELD AS UNDER:- IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REA L UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF T HOSE RECITALS, OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND R ELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVAD E TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUT ED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEF T WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE P RESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS. ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 24 11.2 THE APEX COURT IN THE CASE OF COMMISSIONER O F INCOME-TAX V. P MOHANAKALA 291 ITR 278 (SC) HAS LAID DOWN CERTAIN G UIDELINES IN RESPECT OF THE GENUINENESS OF A GIFT. IN THIS CASE FOLLOWI NG QUESTIONS HAVE BEEN ANSWERED BY THE HIGH COURT IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE: (A) WHETHER, IN THE FACTS AND CIRCUMSTANCES, THE INCOME-TAX APPELLATE TRIBUNAL WAS CORRECT IN LAW TO ACCEPT THE PRINCIPLE OF PREPONDERANCE OF PROBABILITIES IN HOLDING THAT THE CLAIM OF THE A PPELLANT THAT THE SUM OF RS. 15,62,500 RECEIVED HIM BY WAY OF GIFTS THROU GH NORMAL BANKING CHANNELS WAS NOT GENUINE AND THAT IT WAS LIABLE TO BE ASSESSED UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 ? (B) WHETHER, IN THE LIGHT OF THE LAW ESTABLISHED AND BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED INCOM E-TAX APPELLANT TRIBUNAL IS LEGALLY JUSTIFIED IN CONCLUDING THAT BU RDEN OF PROOF CAST ON THE APPELLANT UNDER SECTION 68 OF THE INCOME-TAX AC T, 1961 HAS NOT BEEN DISCHARGED AND THE INGREDIENTS FOR INVOKING SE CTION 68 OF THE INCOME-TAX ACT ARE PRESENT? (C) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CONCLUSION OF THE TRIBUNAL THAT THE CLAIM OF GIFT IS NOT GENUINE IS REASONABLE AND BASED ON RELEVANT MATERIAL AND NOT PERVERSE ? 11.3 THE DISPUTE IN ALL THESE APPEALS RELATES TO TH E ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF SEVERAL FOREIGN GIF TS STATED TO HAVE BEEN RECEIVED BY THE ASSESSEES FROM ONE COMMON DONOR NAM ELY SAMPATH KUMAR. THE GIFTS RECEIVED WERE FROM ONE ARIAVAN THOTAN AND SUPROTOMAN. IT IS DURING THE ENQUIRY BY THE REVENUE IT IS ASSERTED TH AT THEY WERE THE ALIASES OF SAMPATHKUMAR. THESE GIFTS WERE MADE TO A. SRINIVASA N AND HIS WIFE, SMT. S. KALAVATHY, HIS SON, S. BALAJI MANIKANDAN AND TO ONE OF HIS BROTHERS, RAJENDRAN AND SMT. MOHANAKALA.IN ALL THE AGGREGATE GIFTS RECEIVED BY THE ASSESSEES IS TO THE EXTENT OF RS.1,79,27,703. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OFFERED BY THE RESPECTIVE AS SESSEES THAT THE AMOUNT OF CREDIT IS A GIFT FROM NRI AND PROCEEDED TO ADD IT A S THE INCOME OF THE ASSESSEES FROM UNDISCLOSED SOURCES. THE CREDIT ENTR IES HAVE BEEN MADE DURING THE PERIOD FROM JULY 8, 1992 TO OCTOBER 19, 1995. THERE IS NO DISPUTE THAT THE PAYMENTS WERE MADE BY INSTRUMENTS ISSUED B Y A FOREIGN BANK AND CREDITED INTO THE RESPECTIVE ASSESSEES ACCOUNT BY NEGOTIATION THROUGH A BANK IN INDIA. MOST OF THE CHEQUES SENT FROM ABROAD WERE DRAWN ON CITIBANK, N.A. SINGAPORE. THE ASSESSING OFFICER DEA LT WITH THE CONTROVERSY ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 25 AS REGARDS THE CASH CREDIT ENTRIES RECEIVED FROM TH E FOREIGN DONOR. HE NOTICED THAT THE GIFTS HAVE BEEN SENT IN THE NAME O F ARIAVAN THOTTAN AND RECEIVED BY A. SRIN IVASAN AND OTHERS WHO ARE ALL H IS FAMILY MEMBERS. EACH ONE OF THEM IS AN INDIVIDUAL ASSESSEE. ALL THE ASSE SSEES WERE SUMMONED AND THEIR STATEMENTS HAVE BEEN RECORDED BY THE ASSESSIN G OFFICER. SRINIVASAN WHO IS THE KEY PERSON IN HIS STATEMENT SAID THAT HE KNEW SAMPATHKUMAR FOR THE LAST 20 YEARS AND HE HAD BEEN HELPING SAMPATHKU MAR PRIOR TO 1985 BY PAYING RS. 100 TO 200 EVERY MONTH AS HE HAD NO SOUR CE OF INCOME TO GET HIMSELF EDUCATED. SAMPATHKUMAR IN HIS OWN STATEMENT STATED THAT HE WAS IN INDONESIA UP TO THE YEAR 1992 AND EMPLOYED AS AN EN GINEER. THEREAFTER, HE SHIFTED TO ENGLAND AND STARTED CONSULTANCY PROFESSI ON THERE. LATER IN THE END OF THE YEAR 1994-95, HE JOINED NEW CENTURY MACHINE RY LTD., CHESHIRE, SK 16 4XS AND BECAME ITS DIRECTOR IN 1996. IT IS IN H IS STATEMENT THAT HE IS PAYING TAXES IN ENGLAND FROM HIS INCOME EARNED IN E NGLAND. AS FAR AS HIS INDIAN INCOME IS CONCERNED, HE STATED THAT HE FILED THE RETURNS FOR THE ASSESSMENT YEARS 1996-97 AND 1997-98 BEFORE THE INC OME-TAX OFFICER, WARD 1(4), CBE ONLY ON OCTOBER 23, 1997. HIS INVESTMENT IN INDIAN COMPANIES ACCORDING TO HIM WILL BE AROUND RS. 5 CRORES AND MA DE OUT OF HIS INCOME EARNED IN THE FOREIGN COUNTRIES. HE DID NOT REVEAL THE DETAILS OF HIS BANK ACCOUNT IN INDIA AND STATED THAT HE WOULD BE SUBMIT TING THE DETAILS THROUGH HIS AUDITOR WHICH HE DID NOT. EXCEPT THE SELF SERVI NG STATEMENT THERE IS NO MATERIAL EVIDENCE AS REGARDS HIS FINANCIAL STATUS. HE STATED FROM 1972-73 HE KNEW SRINIVASAN, RAJENDRAN AND THEIR FAMILIES. HIS FATHER WAS A TAXI DRIVER, AND WAS VERY POOR. SRINIVASAN AND HIS FAMILY MEMBER S WERE SUPPORTING HIM WHEN HE WAS IN INDIA. TO A POINTED QUERY AS TO WHET HER THERE IS ANY EVIDENCE TO SHOW THAT HE WAS ALSO KNOWN BY ANY OTH ER NAME OTHER THAN SAMPATHKUMAR, HE STATED THAT NO EVIDENCE. ONLY MR. SRINIVASAN USED TO CALL ME AS SUPROTOMAN. 11.4 THE ASSESSING OFFICER IN THE CIRCUMSTANCES CAM E TO THE CONCLUSION THAT THE GIFTS THOUGH APPARENT ARE NOT REAL AND ACC ORDINGLY TREATED ALL THOSE AMOUNTS CREDITED IN THE BOOKS OF THE ASSESSEE AS TH E INCOME OF THE ASSESSEE. ON APPEAL THE COMMISSIONER OF INCOME-TAX CONCLUDED THAT THE STORY SET UP BY THE ASSESSEE IS UNACCEPTABLE AND HARD TO BELIEVE AND THE PREPONDERANCE OF PROBABILITIES, THE COMMON COURSE OF HUMAN LIVING S POINT TO THE CONTRARY. THE APPEALS WERE ACCORDINGLY DISMISSED. THE ITAT C ONCURRED WITH THE FINDINGS AND CONCLUSIONS ARRIVED AT BY THE ASSESSIN G OFFICER AND THE COMMISSIONER OF INCOME-TAX. THE TRIBUNAL NOTICED TH AT THE LETTERS EXCHANGED BY THE PER- SON WHO HAD SENT FOREIGN EXC HANGE TO THE ASSESSEE ONLY INDICATE THAT THERE IS NO LOVE AND AFFECTION B ETWEEN THEM AND THAT HE IS CLEARLY MATERIALISTIC AND HIS STATEMENT OF ACCEPTIN G A RECIPROCATION IS ALSO ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 26 AN INDICATION TO THE FACT THAT HE IS NOT DOING ANYT HING FREE BUT CLEARLY THE COMPENSATION WAS A ROUNDABOUT MANNER OF SHOWING OF HE HAVING BEEN COMPENSATED EITHER IN INDIA OR ABROAD. THE TRIBUNA L ALSO TOOK NOTE OF THE VARIOUS OTHER ATTENDING CIRCUMSTANCES AND FOUND IT DIFFICULT TO ACCEPT THE EXPLANATION OFFERED BY THE ASSESSEE. THE HIGH COUR T CAME TO THE CONCLUSION THAT THE REASONS ASSIGNED BY THE TRIBUNAL AND OTHER AUTHORITIES ARE IN THE REALM OF SURMISES, CONJECTURES AND SUSPICIONS . . . THE AUTHORITIES UNDER THE ACT HAVE FAILED TO DRAW THE ONLY CONCLUSION THAT IS POSSIBLE LEGALLY AND LOGICALLY. 11.5 THE APEX COURT HELD AS UNDER :- EXPLANATION OFFERED WAS NOT SATISFACTORY. THE ASSE SSEES DID NOT TAKE THE PLEA THAT EVEN IF THE EXPLANATION IS NOT ACCEPTABLE THE MATERIAL AND ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD DO NOT JUSTIFY THE SUM FOUND CREDITED IN THE BOOKS TO BE TREATED AS A RECEIPT OF AN INCOME NATURE. THE BU RDEN IN THIS REGARD WAS ON THE ASSESSEES. NO SUCH ATTEMPT HAS BE EN MADE BEFORE ANY AUTHORITY. ALL THE DECISIONS CITED AND R EFERRED TO HEREINABOVE ARE REQUIRED TO BE APPRECIATED AND UNDE RSTOOD IN THE LIGHT OF THE LAW DECLARED BY THIS COURT IN SUMA TI DAYAL [1995] SUPP 2 SCC 453. WHETHER THE HIGH COURT WAS JUSTIFIED IN INTERFERIN G WITH THE CONCURRENT FINDING OF FACT ARRIVED AT BY ALL TH E AUTHORITIES INCLUDING THE TRIBUNAL? THE ASSESSING OFFICER FOUND THAT ALL THE SO-CALLED GIFTS CAME FROM ARIAVAN THOTAN AND SUPROT OMAN. THE ASSESSEES DID NOT DECLARE THAT THEY ARE THE ALIASES OF SAMPATHKUMAR. IT IS ONLY AN AFTERTHOUGHT THEY HAVE COME FORWARD WITH THE SAID PLEA. THE ASSESSING OFFICER A LSO FOUND THAT THE GIFTS WERE NOT REAL IN NATURE. VARIOUS SUR ROUNDINGS CIRCUMSTANCES HAVE BEEN RELIED UPON BY THE ASSESSIN G OFFICER TO REJECT THE EXPLANATION OFFERED BY THE ASSESSEES. THE COMMISSIONER OF APPEALS CONFIRMED THE FINDINGS AND CONCLUSION DRAWN BY THE ASSESSING OFFICER. THE TRIB UNAL SPEAKING THOUGH ITS SENIOR VICE PRESIDENT CONCURRED WITH THE FINDINGS OF FACT. THE FINDINGS IN OUR CONSIDERED OP INION ARE BASED ON THE MATERIAL AVAILABLE ON RECORD AND NOT O N ANY CONJECTURES AND SURMISES. THEY ARE NOT IMAGINARY AS SOUGHT TO BE CONTENDED. ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 27 RELYING ON THE DECISIONS OF THIS COURT IN BEJOY GOP AL MUKHERJI V. PRATUL CHANDRA GHOSE, AIR 1953 SC 153 AND ORIENT DISTRIBUTORS V. BANK OF INDIA LTD. AIR 1979 SC 867, SHRI IYER, LEARNED SENIOR COUNSEL CONTENDED THAT TH E ISSUE RELATING TO THE PROPRIETY OF THE LEGAL CONCLUSION T HAT COULD BE DRAWN ON THE BASIS OF PROVED FACTS GIVES RISE TO A QUESTION OF LAW AND, THEREFORE, THE HIGH COURT IS JUSTIFIED IN INTERFERING IN THE MATTER SINCE THE AUTHORITIES BELOW FAILED TO D RAW A PROPER AND LOGICAL INFERENCE FROM THE PROVED FACTS. WE AR E UNABLE TO PERSUADE OURSELVES TO ACCEPT THE SUBMISSION. THE FI NDINGS OF FACT ARRIVED AT BY THE AUTHORITIES BELOW ARE BASED ON PROPER APPRECIATION OF THE FACTS AND THE MATERIAL AVAILABL E ON RECORD AND SURROUNDING CIRCUMSTANCES. THE DOUBTFUL NATURE OF THE TRANSACTION AND THE MANNER IN WHICH THE SUMS WERE FOUND CREDITED IN THE BOOKS OF ACCOUNTS MAINTAINED BY TH E ASSESSEE HAVE BEEN DULY TAKEN INTO CONSIDERATION BY THE AUTH ORITIES BELOW. THE TRANSACTIONS THOUGH APPARENT WERE HELD T O BE NOT REAL ONES. MAY BE THE MONEY CAME BY WAY OF BANK CH EQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION BUT THAT ITSELF IS OF NO CONSEQUENCE. NO QUESTION OF LAW MUCH LESS ANY SUBSTANTIAL QUEST ION OF LAW HAD ARISEN FOR CONSIDERATION OF THE HIGH COURT. THE HIGH COURT MISDIRECTED ITSELF AND COMMITTED AN ERROR IN DISTURBING THE CONCURRENT FINDINGS OF FACT. 11.6 DELHI HIGH COURT IN THE CASE OF RAJEEV TANDON VS. ACIT, 294 ITR 488 (DELHI) HELD AS UNDER :- HAVING HEARD LEARNED COUNSEL FOR THE ASSESSEE, WE FIND THAT THE TRIBUNAL CONSIDERED THE ENTIRE CASE LAW ON THE SUBJECT INCLUDING SEVERAL DECISIONS OF THE SUPREME COURT AN D THIS COURT. REFERENCE HAS BEEN MADE TO CIT V. DURGA PRA SAD MORE [1971] 82 ITR 540, WHEREIN THE SUPREME COURT OBSERV ED THAT THE TAXING AUTHORITIES WERE ENTITLED TO LOOK INTO T HE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REAL AND FACTUAL POSI TION. SIMILARLY, THIS COURT IN SAJAN DASS AND SONS V. CIT [2003] 264 ITR 435 TOOK THE VIEW THAT NOT ONLY MUST THE ASSESS EE ESTABLISH THE IDENTITY OF THE DONOR AND HIS CAPACITY TO MAKE THE GIFT, BUT HE MUST ALSO ESTABLISH THAT THE AMOUNT RECEIVED BY HIM WAS IN FACT A GIFT. ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 28 WE MAY NOTE THAT VERY RECENTLY, THE SUPREME COURT D EALT WITH A SOMEWHAT SIMILAR SITUATION IN CIT V. P. MOHA NAKALA [2007] 291 ITR 278. WHILE DEALING WITH SECTION 68 OF THE ACT, THE SUPREME COURT HELD THAT : (I) THERE HAS TO BE A CREDIT OF THE AMOUNT IN THE B OOKS MAINTAINED BY THE ASSESSEE. (II) SUCH CREDIT HAS TO BE OF A SUM DURING THE PREV IOUS YEAR. (III) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDIT FOUND IN THE BOOKS, OR IF THE ASSESSEE OFFERS AN EXPLANATION THEN, IN THE OPINION OF THE A SSESSING OFFICER, IT IS NOT SATISFACTORY. IT IS ONLY THEN THAT THE SUM SO CREDITED MAY BE CHA RGED TO INCOME-TAX AS THE INCOME OF AN ASSESSEE. THE SUPREME COURT CONSIDERED THE EXPRESSION THE ASSESSEE OFFERS NO EXPLANATION AND OBSERVED THAT W HAT IT MEANS IS THAT THE ASSESSEE OFFERS NO PROPER, REASON ABLE AND ACCEPTABLE EXPLANATION IN THE OPINION OF THE ASSESS ING OFFICER, FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL A VAILABLE ON RECORD. 11.7 PUNJAB& HARYANA HIGH COURT IN THE CASE OF YASH PAL GOEL V. CIT(A), 310 ITR 75 (P&H) UNDER THE CIRCUMSTANCES HE LD THAT GIFT TRANSACTION WAS NOT GENUINE. THE COURT ALSO OBSERV ED AS UNDER:- THE SO-CALLED GIFT SET UP BY THE APPELLANT WAS NOT BONA FIDE TRANSACTION. THE UNSCRUPULOUS USE EVERY GIMMI CK TO AVOID PAYING INCOME-TAX. IF THE STATE EXCHEQUER IS MADE THE TARGET OF DECEIT AND THE REVENUE COMES DOWN, THE DEVELOPMENT OF THE COUNTRY WILL BE A CASUALTY. IT IS REPREHENSIBLE TH AT SAME CITIZENS SPEND ON LITIGATION AND UNNECESSARILY BRIN G MATTERS BEFORE COURTS THAN TO PAY TAX ON THEIR INCOME. THE TENDENCY NEEDS TO BE DISCOURAGED AND CURBED. THIS COURT IS CONSTRAINED TO FEEL THAT THE DEPARTMENT OF INCOME-TAX HAS UNNEC ESSARILY BEEN DRAGGED IN THIS LITIGATION AND THE TIME OF THE COURT HAS ALSO BEEN WASTED. THEREFORE, RS.30,000/- IS IMPOSE D AS COSTS ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 29 ON THE APPELLANT. THE AMOUNT SHALL BE DEPOSITED BY THE APPELLANT WITHIN 45 DAYS FROM TODAY FAILING WHICH T HE INCOME- TAX AUTHORITIES SHALL RECOVER IT FROM HIM AS ARREAR S OF INCOME- TAX. 11.8 IN THE LIGHT OF ABOVE LAW LAID DOWN BY T HE APEX COURT IN THE CASE OF CIT V DURGA PRASAD MORE 82 ITR 540 (SC), IN THE CAS E OF COMMISSIONER OF INCOME-TAX V. P MOHANAKALA 291 ITR 278 (SC) AND OT HER DECISIONS AS DISCUSSED ABOVE IF WE CONSIDER THE FACTS OF THE CAS E UNDER CONSIDERATION AND THE SURROUNDING CIRCUMSTANCES, PREVAILING PRACTICE/ CUSTOMS IN THE SOCIETY, WE FIND THAT IN THE CASE UNDER CONSIDERATION CLAIM OF THE ASSESSEE TO RECEIVE GIFT FROM YOUNGER SISTER WHICH IS AGAINST WHOLE PHI LOSOPHY, TRADITION AND RECOGNIZED SOCIAL CUSTOM AND RELIGIOUS. IN INDIA IT IS OLD AGE ACCEPTED FACT THAT ELDER BROTHER NEVER TAKES ANYTHING FROM HIS YO UNGER SISTER, EVEN DRINKING WATER FROM HIS YOUNGER SISTER. RELATION OF BROTHER AND SISTER IS HOLLY RELATION AND BROTHER IS ALWAYS PROTECTING SIS TER AN ALL ASPECT OF THE MATTER INCLUDING FINANCIAL MATTER BUT GIFT FROM YOU NGER SISTER IS AN UNUSUAL CIRCUMSTANCES WHICH IS UNBELIEVABLE. IT MAY BE AN O LD CUSTOMS BUT THIS CONCEPT HAS TO TAKE INTO CONSIDERATION FOR PEACEFUL , AND GRACE FULL RUNNING OF A CIVIL SOCIETY AND IF SOME HAS TRIED TO DEMOLISH S UCH ACCEPTED SOCIAL CUSTOM SUCH ACTION IS REQUIRED TO QUASH AT THE FIRST SAGE ITSELF, OTHERWISE EXISTENCE OF CIVIL SOCIETY ITSELF WILL BE IN DANGER. A CONSENT O F SUCH ACTION OF A PERSON CANNOT BE GIVEN WHILE RECORDING FACTS OF THE CASE F OR THE PURPOSE OF EVEN IN INCOME TAX PROCEEDING. THE CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT THE ASSESSEE HAS FURNISHED NECESSARY EXPLA NATION AND EVIDENCE BEFORE THE ASSESSING OFFICER, CONTRARY TO THAT, THE ASSESSING OFFICER NOTED IN HIS ORDER THAT NO EVIDENCE WAS FURNISHED. THE CIT( A) SURPRISED TO NOTE THAT EVEN SUCH A SIMPLE EXPLANATION THAT THE AMOUNT WAS GIFTED BY THE ASSESSEES SISTER WAS NOT POINTED OUT TO THE ASSESSING OFFICER NOR SUCH EXPLANATION WAS FURNISHED BEFORE THE ASSESSING OFFICER. RULE 10 OF ITAT RULES PROVIDES THAT WHERE A FACT WHICH CANNOT BE BORNE OUT BY, OR IS CO NTRARY TO, THE RECORD IS ALLEGED, IT SHALL BE STATED CLEARLY AND CONCISELY A ND SUPPORTED BY A DULY SWORN AFFIDAVIT. THE ASSESSEE DID NOT FILE SUCH SW ORN AFFIDAVIT STATING THAT THE ASSESSING OFFICER HAS RECORDED CONTRARY FACTS I N HIS ORDER. NOT ONLY THIS, BUT IT IS ALSO FACT THAT THE ASSESSEE FAILED TO FUR NISH ANY EVIDENCE TO SUPPORT THAT THESE DOCUMENTS WERE FILED BEFORE THE ASSESSIN G OFFICER. HOWEVER, IN THE INTEREST OF JUSTICE, WHATEVER PAPERS WERE FILED IN PAPER BOOK AND POINTED OUT BY THE LD. AUTHORISED REPRESENTATIVE, IF WE CON SIDER IT ON MERIT, ON PERUSAL OF COPY OF STATEMENT OF SYNDICATE BANK ACCO UNT OF ALIGARH MAIN BRANCH WHICH HAS BEEN PLACED AT PAGE NO.8 OF ASSESS EES PAPER BOOK, IT HAS BEEN NOTICED THAT CREDIT BALANCE IN THE SAID ACCOUN T UP TO 09.07.2005 WAS ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 30 RS.13,582/-. ON 15.10.2005, IT IS MENTIONED AS CLO SE TRF-VCC 42493 RS.9,06,167/-. NEXT ENTRY IS DATED 09.11.2005 NARR ATING CLOSE TRF-VCC 42551 RS.3,07,744/-. NEXT ENTRY IS DATED 17.11.200 5 CLG RS.17,770/-, THEN ENTRY DATED 19.11.2005 CLG RS.2,96,949.26, THEN ENT RY DATED 02.01.2006 TO ALOK AGARWAL CHEQUE NO.869326 RS.15,40,000/- SHOWN AS DEBIT AMOUNT. AFTER THAT DEBIT AMOUNT OF RS.15,40,000/-, THE BALA NCE AMOUNT REMAINED IN THE BANK ACCOUNT WAS RS.2,212.82. ON A PERUSAL OF PAGE 11 OF THE PAPER BOOK WHERE SUPPORTING DOCUMENT FROM SYNDICATE BANK IN RESPECT OF VIKAS CASH CERTIFICATE HAS BEEN PLACED, IT HAS BEEN NOTIC ED THAT THE DATE OF MATURITY OF THE SAID VCC WAS 10.10.2005 FOR RS.9,07 ,067/- WHICH HAS BEEN CREDITED IN ASSESSEES SAVINGS BANK ACCOUNT ON 15.1 0.2005 RS.9,06,167/-. THE OTHER VCC OF WHICH COPY HAS BEEN PLACED AT PAGE NO.10 OF ASSESSEES PAPER BOOK WHICH BEARING NO.33339 36160, THE DATE O F MATURITY OF THIS VCC WAS 07.11.2004 FOR RS.3,07,589/- WHEREAS IN BANK AC COUNT THE ENTRY IS DATED 09.11.2005 VCC 42551 FOR RS.3,07,744/-.. IN THIS E NTRY, NEITHER THE DATE OF MATURITY NOR THE VCC OR AMOUNT IS TALLIED AS PER TH E ENTRY IN S.B. ACCOUNT AND A COPY OF VCC WHICH HAS BEEN PLACED IN THE PAPE R BOOK AT PAGE 10. THE ASSESSEE DID NOT POINT OUT ANY EXPLANATION IN R ESPECT OF THESE DISCREPANCIES. IN RESPECT OF ENTRY DATED 17.11.200 5 FOR RS.17,770/-, IT WAS EXPLAINED THAT IT WAS INCOME TAX REFUND BUT NO EVID ENCE HAS BEEN FURNISHED. THE ASSESSEE HAS FAILED TO EXPLAIN ENTRY OF RS.2,96 ,949.26 DATED 19.11.2005. HOWEVER, THE ASSESSEE POINTED OUT THAT THIS IS OUT OF MATURITY AMOUNT FROM UNIT TRUST OF INDIA OF WHICH COPY PLACED AT PAGE NO .9 OF ASSESSEES PAPER BOOK. ON PERUSAL OF PAGE NO.9 OF PAPER BOOK, WE NO TICED THAT THE UNIT WHICH WAS AMOUNTING RS.96,949.26 OF WHICH ISSUE DAT E IS 07.11.2005 AND VALID UPTO 06.01.2006. SIMILARLY, OTHER UNIT OF RS .1,00,000/- OF WHICH ISSUE DATED IS 07.11.2005 AND VALID UPTO 06.01.2006. DAT ES AND AMOUNTS OF THE SAID UNITS DO NOT MATCH WITH THE ENTRY SHOWN IN S.B . ACCOUNT DATED 19.11.2005. FROM THE ABOVE FACTS NOTED AND ON PERU SAL OF RELEVANT RECORDS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF RS.15,40,000/- WHICH WAS ALLEGEDLY STATED TO BE GIVEN AS GIFT TO THE ASSESSEE. THE ASSESSEE HAS ALSO FAILED TO FURNISH THE COMPLETE CIRCLE OF ALL THESE TRANSACTIONS THAT WHEREFROM ORIGINAL MONEY CA ME TO THE ACCOUNT OF SMT. ANJALI CONSUL WHICH WAS INVESTED IN UNITS AS W ELL AS IN BANKS IN THE FORM OF FIXED DEPOSITS AND OTHERS. UNLESS THE ASSE SSEE FURNISHES THE COMPLETE CHAIN OF FUNDS OR MONEY THAT THE MONEY REC EIVED BY SMT. ANJALI CONSUL, NRI, WAS IN ACCORDANCE WITH RESERVE BANK OF INDIA PROCEDURES, SMT. ANJALI CONSUL BEING NRI AND STRICT RULES ARE T O BE COMPLIED WITH FOR SENDING MONEY TO INDIA BY ANY NRI OR OTHERS, THE AS SESSEE HAS FAILED TO POINT OUT ANY SINGLE PAPER THAT THE ORIGINAL INVESTMENT M ADE BY SMT. ANJALI CONSUL IN THE UNITS AND F.D. IN BANKS WERE CAME FRO M OUT OF INDIA IN ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 31 ACCORDANCE WITH RULES AND REGULATIONS FRAMED BY THE RESERVE BANK OF INDIA. IN ABSENCE OF SUCH MATERIAL, IT CANNOT BE HELD THAT THE ORIGINAL AMOUNT INVESTED BELONGS TO SMT. ANJALI CONSUL AND IN FACT THE AMOUNT GIFTED WAS FROM OUT OF INDIA. EVEN OTHERWISE, CONSIDERING THE FACT THAT THIS MAY BE THE INVESTMENT IN UNITS AND FD OUT OF INCOME EARNED IN INDIA, SUCH EXEMPTION OR EXPLANATION IS ALSO NOT ACCEPTABLE. THE REVENUE AU THORITIES HAS NOTED THAT THE DONOR SMT. ANJALI CONSUL IS FILING RETURN SHOWI NG MEAGER AMOUNT OF INCOME. FOR EXAMPLE, IN ASSESSMENT YEAR 2006-07, I T WAS RS.36,564/- ONLY. THUS, THE GIFT OF RS.15,40,000/- CANNOT BE SAID TO BE GIVEN BY SUCH MEAGER INCOME. CAN IT BELIEVABLE FACT THAT A YOUNGER SISTER RECEIV ED HER OLD INVESTMENT ON MATURITY AND GIVE ENTIRE MONEY AS GIF T HER ELDER BROTHER. AFTER THE AMOUNT GIFTED, RS.15,40,000/-, THE BALANC E AMOUNT REMAINED IN THE BANK ACCOUNT WAS RS.2,212.82THUS THERE ARE REASONS TO BELIEVE THAT THE GIFT IS NOT THE REAL. THE TRANSACTIONS THOUGH MAY BE AP PARENT BUT CANNOT HOLD TO BE REAL. THE ASSESSEE RELIED UPON ON A GIFT LETTER THAT TOO IS IN DOUBT FULL, IT WILL BE VERY EASY TO MAKE SELF-SERVING GIFT LETTER EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. THE GIFT LETTER E XECUTED ON A LETTER HEAD OF HOTEL, HOTEL RAJHANS HOW DONOR AND DONEE BOTH WERE AVAILABLE ON SAME PLACE IN INDIA ON 15.12.2005, NO RELEVANT SATISFACT ORY EXPLANATION IS ON RECORD. THEREFORE, IF ALL THAT AN ASSESSEE WHO WANT S TO EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVAD E TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APP ARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLIN KERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F THE RECITALS MADE IN THOSE DOCUMENTS. IN SUCH TYPE OF CASES RECIPIENTS M ADE CASH PAYMENTS OR INCURRED EXPENDITURES ON BEHALF OF NRI WHILE THE NR I VISITED INDIA AND AGAINST THAT AMOUNT RECEIVED THROUGH DDS. OR CHEQUE S IN INDIA. UNDER THE CIRCUMSTANCES IT IS NOT UNREASONABLE TO TAKE NOTE O F THE COMMON PHENOMENON THAT GIFT RECEIVED IN THIS MANNER IS COM MON MODE OF MONEY LAUNDERING. UNDER THE ALLEGED CIRCUMSTANCES GIFT RE CEIVED BY THE ASSESSEE IS NOT A GENUINE GIFT. WHEN GIFT IS NOT GENUINE, THE A DDITION U/S 68 IS WARRANTED. FURTHER, AS SAID ABOVE THOSE TWO ELEMENTS ARE ESSEN TIAL IN THE GIFT, GIVING AND TAKING. IN THE CASE UNDER CONSIDERATION, THE A SSESSEE HAS FAILED TO ESTABLISH SECOND PART OF THAT ELEMENT I.E. GIVING A NY LOVE AND AFFECTION TO DONOR AS DISCUSSED ABOVE. ONE OF THE ASPECTS OF THE GIFT IS THAT UNLESS IT IS IN FAVOR OF A RELATIVE, A DISPOSITION CAN BE SAID TO O PERATE AS A GIFT ONLY IF IT CAN BE SHOWN TO CONTAIN SOME ELEMENT OF BOUNTY. THE BUR DEN IS ON THE ASSESSEE TO PROVE SOME ELEMENT OF BOUNTY. BUT THE ASSESSEE H AS FAILED IN THIS REGARD. THE BURDEN IS ON ASSESSEE THAT NOT ONLY MUST THE AS SESSEE ESTABLISH THE ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 32 IDENTITY OF THE DONOR AND HIS CAPACITY TO MAKE THE GIFT, BUT HE MUST ALSO ESTABLISH THAT THE AMOUNT RECEIVED BY HIM WAS IN FA CT A GIFT. THE ASSESSEE FAILED TO DISCHARGE HIS DUTY IN THIS REGARDS. IN TH E CASE OF CIT V. P. MOHANAKALA [2007] 291 ITR 278, THE SUPREME COURT CO NSIDERED THE EXPRESSION THE ASSESSEE OFFERS NO EXPLANATION AND OBSERVED THAT WHAT IT MEANS IS THAT THE ASSESSEE OFFERS NO PROPER, REASON ABLE AND ACCEPTABLE EXPLANATION IN THE OPINION OF THE ASSESSING OFFICER , FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. WE F IND THAT THE ASSESSEE HAS FAILED TO FURNISH EXPLANATION AS REQUIRED IN THIS R EGARDS. HERE IT IS TO RELEVANT TO REFER OBSERVATION OF PUNJAB & HARYANA H IGH COURT IN THE CASE OF YASH PAL GOEL V. CIT(A), 310 ITR 75 (P&H) WHERE THE COURT OBSERVED THAT THE SO-CALLED GIFT SET UP BY THE APPELLANT WAS NOT BONA FIDE TRANSACTION. THE UNSCRUPULOUS USE EVERY GIMMICK TO AVOID PAYING INCOME-TAX. IF THE STATE EXCHEQUER IS MADE THE TARGET OF DECEIT AND TH E REVENUE COMES DOWN, THE DEVELOPMENT OF THE COUNTRY WILL BE A CASUALTY. IT IS REPREHENSIBLE THAT SAME CITIZENS SPEND ON LITIGATION AND UNNECESSARILY BRING MATTERS BEFORE COURTS THAN TO PAY TAX ON THEIR INCOME. THE TENDEN CY NEEDS TO BE DISCOURAGED AND CURBED. THE COURT IS CONSTRAINED T O FEEL THAT THE DEPARTMENT OF INCOME-TAX HAS UNNECESSARILY BEEN DRA GGED IN THIS LITIGATION AND THE TIME OF THE COURT HAS ALSO BEEN WASTED. TH E ABOVE OBSERVATION OF THE COURT IS FULLY APPLICABLE TO THE FACTS OF THE C ASE UNDER CONSIDERATION. IN THE LIGHT OF ABOVE DISCUSSIONS AND UNDER THE CIRCUM STANCES OF THE CASE WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS RIGHTLY MADE THE ADDITION U/S 68 OF THE ACT AS GIFT WAS NOT A GENUINE GIFT AND THE C IT(A) RIGHTLY CONFIRMED THE ACTION OF THE AO IN THIS REGARD. 25. IN THE SAID ORDER, IT HAS BEEN HELD THAT THE GI FT TRANSACTION HAS ALSO TWO WAY TRANSACTIONS I.E. GIVING AND TAKING. IN ORDER TO M AKE A GENUINE GIFT THERE MUST BE A PERFECT KNOWLEDGE IN THE MIND OF THE PERSON MAKING THE GIFT OF THE EXTENT OF THE BENEFICIAL INTEREST INTENDED TO BE CONFERRED, AND O F WHICH MAKING IT. THE DONOR GIVES GIFT IN MONEY OR MONEYS WORTH AND TAKING LOV E AND AFFECTION FROM DONEE. THE REQUIREMENTS OF GENUINE GIFT ARE IDENTITY, CRED ITWORTHINESS AND GENUINENESS OF THE TRANSACTION. FOR THE PURPOSE OF A GENUINE GIFT , IT IS ALSO REQUIRED TO BE SEEN THAT ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 33 WHETHER THE DONOR HAS RECEIVED LOVE AND AFFECTION F ROM THE DONEE. FOR ESTABLISHING GENUINENESS OF THE GIFT, IT IS ALSO RE QUIRED TO BE ESTABLISHED THAT HEART OF THE DONOR IS SO GENEROUS TO GIVE SUCH GIFTS. TH US, THE EXAMINATION OF GENUINENESS OF THE GIFT DEPENDS UPON THE FACTS OF T HE PARTICULAR CASE. IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS FAILED TO EST ABLISH THAT DONOR WAS HAVING CAPACITY TO GIVE SUCH GIFT AS RELEVANT DOCUMENTS AN D BANK ACCOUNTS WERE NOT PRODUCED. THE ASSESSEE HAS ALSO FAILED TO ESTABLIS H THAT THE HEART OF THE DONOR WAS SO GENEROUS TO GIVE SUCH GIFT. THE ASSESSEE HAS AL SO FAILED TO ESTABLISH THAT HOW THE DONOR HAS RECEIVED LOVE AND AFFECTION FROM THE DONE E TO THE ASSESSEE. WHEN THE ASSESSEE HAS FAILED TO ESTABLISH THE ABOVE THINGS, IT CANNOT BE HELD THAT THE GIFT TRANSACTION WAS GENUINE ONE, PARTICULARLY UNDER THE CIRCUMSTANCES AS OBSERVED BY THE I.T.A.T., DELHI BENCH IN THE CASE OF D.C. RASTO GI VS. ACIT THAT HAVALA BUSINESS IS IN VAGUE IN INDIA. THEREFORE, MERE APP EARING OF THE DONOR BEFORE THE A.O. AND CONFIRMING THAT THE GIFT IS GIVEN IS ALSO NOT SUFFICIENT EVIDENCE. IN THE LIGHT OF ABOVE DISCUSSION, WE FIND THAT THE GIFT OF RS.3,00,000/- WAS NOT GENUINE GIFT. THE ASSESSEE HAS FAILED TO PROVE THE CAPACIT Y OF THE DONOR ALSO. WE, THEREFORE, CONFIRM THE ORDER OF CIT(A) ON THE ISSUE . 26. GROUND NO.4 PERTAINS TO ADDITION OF RS.22,800/- MADE BY HE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF WASHING MA CHINE. ON SEARCH OF ASSESSEES PREMISES, A DOCUMENT PLACED AT PAGE NO.2 3 OF ANNEXURE-B4 WAS FOUND ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 34 WHICH WAS A PURCHASE BILL NO.184 DATED 10.11.2001 F OR RS.22,800/- ISSUED BY M/S. IFB INDUSTRIES LIMITED, GHAZIABAD. THE ASSESSEE PU RCHASED ONE AUTOMATIC WASHING MACHINE. THE ASSESSEE DID NOT FURNISH ANY SPECIFIC EXPLANATION REGARDING SOURCE OF THAT INVESTMENT. THE ADDITION MADE BY TH E A.O. HAS BEEN CONFIRMED BY THE CIT(A). 27. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. IDENTICAL ISSUE HAS BEEN DECIDED BY US IN ITA NO.34 7/AGR/2012 FOR A.Y. 2007-08 IN THE CASE OF SHRI NARENDRA KUMAR KESHWANI, ORDER DATED 28.12.2012. THE RELEVANT FINDING OF THE I.T.A.T., AGRA BENCH IS REP RODUCED AS UNDER :- 29. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE FIND THAT THE CIT(A) CONFIRMED THE ADDITION AS THE BILL WAS FOUND AT THE TIME OF SEARCH AND THE AS SESSEE DID NOT FURNISH ANY EXPLANATION. THE ASSESSEE HAS FAILED T O EXPLAIN THE SOURCE OF THE SAID AMOUNT EXCEPT GENERAL SUBMISSION THAT I T HAS BEEN PURCHASED OUT OF HOUSEHOLD WITHDRAWALS. SINCE WE H AVE DELETED THE ADDITION ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWALS W HICH WAS MADE BY THE A.O. ON ADHOC AND ESTIMATION BASIS WITHOUT A NY BASIS AND SINCE THIS ADDITION IS SUPPORTED BY THE BILL WHICH WAS FO UND AT THE TIME OF SEARCH, IN THE LIGHT OF THE FACT, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF CIT(A). ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 28. SINCE THE FACTS ARE IDENTICAL, WE FOLLOW THE AB OVE ORDER OF I.T.A.T., AGRA BENCH AND IN THE LIGHT OF THAT, WE CONFIRM THE ORDE R OF CIT(A) ON THE ISSUE. ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 35 29. GROUND NO.5 PERTAINS TO CHARGING OF INTEREST UN DER SECTION 234A, 234B & 234C OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE. THE A.O. IS DIRECTED ACCORDINGLY. 30. GROUND NO.6 IS GENERAL IN NATURE REQUIRE NO IND EPENDENT FINDING. ITA NO.342/AGR/2012 A.Y. 2002-03 NARENDRA KUMA R KESHWANI 31. GROUND NOS.1 & 2 ARE COMMON GROUNDS WHICH HAVE BEEN DECIDED AS ABOVE. 32. GROUND NO.3 PERTAINS TO ADDITION OF RS.3,00,000 /- ON ACCOUNT OF UNEXPLAINED GIFT. 33. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE RECEIVED GIFT OF RS.3,00,000/-. THE ASSESSEE FAILED TO PRODUCE EVIDENCE BEFORE THE A.O. THEREFORE, THE A.O. MADE ADDITION OF RS.3,00,000/-. THE ADDITION MADE BY TH E A.O. HAS BEEN CONFIRMED BY THE CIT(A) ON THE GROUND THAT THOUGH IN THE STATEME NT RECORDED BY THE A.O. THE DONOR HAS ACCEPTED GIVING THE GIFT TO THE ASSESSEE BUT HE COULD NOT PRODUCE THE SUPPORTING DOCUMENTS OR EVIDENCE TO SHOW THE SOURCE OF FUND OF GIFT. THIS ISSUE IS IDENTICAL TO THE ISSUE DECIDED IN THE CASE OF SHYAM SUNDER KESHWANI IN ITA NO.371/AGR/2012 VIDE PARA NOS.24 & 25 OF THIS ORDER . FOLLOWING THE DISCUSSION ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 36 MADE IN THE SAID PARAGRAPHS OF THIS ORDER, WE CONFI RM THE ORDER OF CIT(A) ON THE ISSUE. 34. GROUND NO.4 IS IN RESPECT OF CONFIRMING THE ADD ITION OF RS.6,857/- OUT OF ADDITION OF RS.24,000/- MADE BY THE A.O. ON ACCOUNT OF HOUSE HOLD EXPENSES. 35. THE A.O. MADE THE ADDITION OF RS.24,000/- ON AC COUNT OF LOW HOUSE HOLD WITHDRAWALS, AFTER ESTIMATING THE TOTAL HOUSE HOLD EXPENSES OF THE FAMILY AT ONE SEVENTH SHARE OF THE ASSESSEE. THE CIT(A) RESTRICT ED IT TO RS.6,857/-. 36. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. IDENTICAL ISSUE HAS BEEN DECIDED BY US IN THE GROUP OF CASE OF SHRI LAXMAN DASS KESHWANI & OTHERS IN ITA NO.351/AGR/2012 AND OTHERS , ORDER DATED 28.12.2012. THE RELEVANT FINDING OF I.T.A.T. IS REPRODUCED AS U NDER:- 21. AFTER HEARING THE LD. REPRESENTATIVES OF THE PA RTIES, WE NOTICE THAT THE A.O. MADE ADDITION ON ACCOUNT OF HOUSE HOLD EXPENSE S ON PRESUMPTION BASIS. IT IS ADMITTED FACT THAT DURING THE COURSE OF SEARCH NO INCRIMINATING MATERIAL WAS FOUND IN RESPECT OF HOUSE HOLD EXPENSE BASED ON WHICH ADDITION CAN BE MADE. THE CIT(A) ALSO, ON THE BASI S OF PRESUMPTION, FOUND THAT THE A.O. HAS ESTIMATED EXCESS HOUSE HOLD EXPEN DITURE. HE, THEREFORE, ALLOWED THE PART RELIEF. THE CIT(A) FOUND THAT THE A.O. HAS MADE EXCESS ESTIMATION OF HOUSE HOLD EXPENSES. THE ASSESSEE FU RNISHED THE FOLLOWING CHART IN SUPPORT OF THE CONTENTION THAT REASONABLE HOUSE HOLD EXPENSES HAVE BEEN SHOWN IN ALL THE YEARS :- DETAILS OF HOUSE HOLD EXPENSES/WITHDRAWALS ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 37 NAME OF PERSONS 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 200 8-09 1 JITENDRA KUMAR KESHWANI 18000 (NARENDRA PRODUCTS) 19500 (NARENDRA PRODUCTS) 29000 (NARENDRA PROD) RENT 220000 BANK 25000 BANK 40000 (NARENDA PRODUCT) 14000 BANK 2 JAGDISH KESHWANI 12000 SUR. INCOME 50000 RENT 89000 RENT 30000 RENT 25000 BANK 120000 K.S.60000 SSF 60000 180000 VT 120000 SSF 60000 3 SHYAM SUNDER KESHWANI 26000 SALARY NARENDRA PROD. 22000 SALARY NARENDRA PROD 37000 SALARY NARENDRA/RENT 30000 RENT 290000 BANK 68000 SSF 96000 SSF 4 MAHENDA KUMAR KESHWANI 71000 (NARENDRA PRODUCTS) 112000 NP 72000 BANK 40000 180000 NP/RENT 44000 (NARENDRA PRODUCTS) 46000 SALARY NARENDRA PROD 96000 SSF/SALARY 125000 VARSHA TRA 5 NARENDRA KUMAR KESHWANI 81000 NARENDRA PROD 39000 NARENDRA PROD 36000 NARENDRA PROD 60000 NARENDRA PROD 60000 NARENDRA PROD 120000 NARENDRA PROD 180000 NARENDRA/PROP 6 LAXMAN DASS KESHWANI 74000 NARENDRA PROD 65000 NARENDRA PROD 65000 NARENDRA PROD 70000 NARENDRA PROD 55000 NARENDRA PROD 127000 NARENDRA PROD 36000 NARENDTRA PROD 7 KAMAL KUMAR KESHWANI 120000 KAMAL STORE 34000 KS TRADING 120000 K.S. TRADING 120000 KSTRADING 200000 K.S.TRADING 180000 KSTRADING 200000 8 HARDEVI KESHWANI 30000 30000 30000 30000 36000 60000 60000 4,32,000 3,71,500 5,86,000 6,04,000 7,37,000 8,11 ,000 8,91,000 ESTIMATED BY A.O. 6,00,000 6,00,000 9,00,000 9,00,0 00 12,00,000 12,00,000 12,00,000 ESTIMATED BY CIT(A) 4,80,000 4,80,000 6,00,000 7,20 ,000 8,40,000 9,60,000 10,80,000 22. ON A PERUSAL OF THE ABOVE COMPARATIVE POSITION OF DIFFERENT YEARS HOUSE HOLD EXPENSES, WE FIND THAT THE ESTIMATION MA DE BY THE A.O. ON ACCOUNT OF HOUSE HOLD EXPENSES ARE ARBITRARY. THE CIT(A) HAS ALSO SUSTAINED THE ADDITION ON THE BASIS OF ARBITRARY ES TIMATION. IN A.Y. 2003-04 THE ASSESSEE HAS SHOWN HOUSE HOLD EXPENSES OF RS.3, 71,500/-, WHEREAS THE CIT(A) HAS ESTIMATED AT RS.4,80,000/-. THE ADDITIO N OF RS.8,500/- HAS BEEN SUSTAINED IN A.Y. 2003-04. SIMILARLY, IN A.Y. 2008 -09 THE CIT(A) HAS ESTIMATED THE HOUSE HOLD EXPENSES AT RS.10,80,000/- AGAINST THE HOUSE HOLD EXPENSES SHOWN BY THE ASSESSEE AT RS.8,91,000/-. T HE ADDITION OF RS.1,89,000/- HAS BEEN SUSTAINED BY THE CIT(A). TH E FACTS OF THE CASE REGARDING FAMILY STATUS AND OTHER FOR A.Y. 2003-04 AND 2008-09 ARE SAME WHEREAS THE ADDITION SUSTAINED IN A.Y. 2003-04 WAS RS.8,500/- AND IN A.Y. 2008-09 IT WAS RS.1,89,000/- WHICH CLEARLY ESTABLIS HES THAT THE ESTIMATION MADE BY THE REVENUE AUTHORITIES ON ACCOUNT OF HOUSE HOLD EXPENSES ARE ARBITRARY WITHOUT ANY BASIS PARTICULARLY UNDER THE CIRCUMSTANCES WHERE ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 38 DURING THE COURSE OF SEARCH NO SUCH MATERIAL WAS FO UND IN THIS REGARD. FURTHER, WE CONFIRMED THE ADDITIONS IN RESPECT OF B ILLS RELATED TO HOUSE HOLD APPLIANCES WHICH WERE FOUND AT THE TIME OF SEARCH I N ITA NO.103/AGR/2012 FOR A.Y. 2002-03, ITA NO.105/AGR/2012 FOR A.Y.2005- 06, ITA NO.355/AGR/2012 FOR A.Y. 2005-06 & ITA NO.347/AGR/2 012 FOR A.Y. 2007-08 WHILE DECIDING SEPARATE GROUNDS OF THOSE APPEALS IN SUBSEQUENT PARAS OF THIS ORDER. IN THE LIGHT OF THE FACTS, THE ARBITRARY AD DITION MADE ON ACCOUNT OF HOUSE HOLD EXPENSES ARE NOT SUSTAINABLE. WE, THERE FORE, DELETE THE ADDITION MADE BY THE A.O. AND SUSTAINED BY THE CIT(A). 37. SINCE THE FACTS ARE IDENTICAL, WE FOLLOW THE AB OVE ORDER OF I.T.A.T., AGRA BENCH AND IN THE LIGHT OF THAT, WE DELETE THE ADDIT ION OF RS.6,857/- SUSTAINED BY THE CIT(A). 38. GROUND NO.5 PERTAINS TO CHARGING OF INTEREST UN DER SECTION 234A, 234B & 234C OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE. THE A.O. IS DIRECTED ACCORDINGLY. 39. GROUND NO.6 IS GENERAL IN NATURE REQUIRE NO IND EPENDENT FINDING. ITA NO.111/AGR/2012 A.Y. 2007-08 KAMAL KUMAR KESHWANI 40. GROUND NOS.1 & 2 ARE COMMON GROUNDS WHICH HAVE BEEN DECIDED AS ABOVE. 41. GROUND NO.3 OF THIS APPEAL IS REPRODUCED AS UND ER:- ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 39 3. (I) BECAUSE THE LD. CIT(A) HAS WRONGLY, ILLEGAL LY AND ARBITRARILY CONFIRMED THE ASSESSING OFFICERS ACTIO N AS REGARDS REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF SA LES IGNORING THE APPELLANTS SPECIFIC SUBMISSION AND FACTS OF TH E CASE. (II) BECAUSE CONSIDERING THE FACTS OF THE CASE THE ESTIMATION OF SALES AND THE ADDITION OF RS.2,08,436/- ON ACCOU NT OF EXTRA PROFIT ON ESTIMATED SALES IS WRONG AND ILLEGAL. TH E LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION INSTEAD OF DEL ETING THE SAME. 42. BRIEF FACTS OF THE CASE ARE THAT DURING THE COU RSE OF SEARCH IN THE PREMISES OF THE RESIDENCE OF SHRI KAILASH MAHESHWARI WHO IS ACC OUNTANT OF THE ASSESSEE AND MAINTAINING THE BOOKS OF ACCOUNTS, SOME LOOSE PAPER S AND OTHER DOCUMENTS WERE FOUND AND SEIZED AS PER LP-1 TO 3 AND ANNEXURE A-1 TO A-23. THE DETAILS OF ANNEXURE HAVE BEEN RECORDED BY THE A.O. IN HIS ORDE R. THESE SEIZED PAPERS WERE TORN SALE BILLS OF M/S. K.S. TRADING CO. WHICH IS P ROPRIETARY CONCERN OF THE ASSESSEE. THESE BILLS WERE RELATING TO SALE OF GUT KA & PAN MASALA. THE TOTAL SALES, OF WHICH DETAILS HAS BEEN NOTED BY THE A.O., WAS RS .18,49,050/-. THE A.O. FOUND THAT THE ASSESSEE DID NOT RECORD THE SAID SALE IN T HE BOOKS OF ACCOUNT. THE A.O., AFTER REJECTING THE BOOKS OF ACCOUNT, CALCULATED TH E SALES OUT OF BOOKS ON THE BASIS OF TORN SALE BILL FOUND WHICH WERE PERTAINING TO ON E MONTH I.E. MARCH, 2007. ON THE BASIS OF THE SAID ONE MONTHS SALE, THE A.O. E STIMATED THE SALE FOR HE ENTIRE YEAR AT RS.4.00 CORE INCLUDING DISCLOSED SALES OF R S.1,48,33,919/-. THE A.O. APPLIED 2% PROFIT RATE WHICH HAS BEEN SHOWN BY THE ASSESSEE ON RS.2.5 CRORES WHICH THE A.O. HAS ESTIMATED SALES ON ACCOUNT OF GU TKA, KHAINI ETC. OF DIFFERENT ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 40 VARIETIES AND CALCULATED THE G.P. OF RS.5,00,000/- AGAINST RS.2,91,564/- SHOWN BY THE ASSESSEE. THE A.O. MADE ADDITION OF RS.2,08,43 6/-. THE CIT(A) HAS CONFIRMED THE ORDER OF A.O. 43. THE CONTENTION OF THE ASSESSEE WAS THAT THE A.O . HAS WRONGLY REJECTED THE BOOKS OF ACCOUNT. THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE WERE DULY AUDITED AND MAINTAINED IN THE COMPUTER AS INFORMED BY THE ACCOUNTANT SHRI KAILASH MAHESHWARI DURING THE COURSE OF SEARCH. 44. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT TH E VOUCHERS WERE NOT FOUND FROM THE PREMISES OF THE ASSESSEE. IT WAS FOUND FR OM THE RESIDENCE OF THE ACCOUNTANT. THEREFORE THERE IS NO QUESTION OF ESTI MATION OF SALE IN THE HANDS OF THE ASSESSEE. HOWEVER, THE LD. AUTHORISED REPRESENTATI VE MADE ALTERNATE SUBMISSION THAT THE A.O. HAS WRONGLY REJECTED THE BOOKS OF ACC OUNTS INVOKING SECTION 145(3) OF THE ACT. THE LD. AUTHORISED REPRESENTATIVE WHIL E MAKING SUBMISSION ON MERIT SUBMITTED THAT THE A.O. HAS WRONGLY ESTIMATED THE S ALE OF RS.2.4 CRORE WHEREAS AT THE WORST BILLS FOUND WERE ONLY FOR ONE MONTH OF WH ICH TOTAL IS RS.18,49,000/-. 45. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, RELIED UPON THE ORDER OF THE CIT(A). ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 41 46. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. AS REGARDS REJECTION OF BOOKS OF ACCOUNT, WE CONFIR M THE ORDER OF CIT(A). WE NOTICE THAT DURING THE COURSE OF SEARCH UNACCOUNTED CASH AND UNACCOUNTED STOCK WERE FOUND WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. SOME TORN BILLS WERE ALSO FOUND RELATING TO SALE OF THE ASSESSEE FROM TH E PREMISES OF THE ACCOUNTANT. THOSE TORN BILLS WERE NOT ACCOUNTED FOR IN THE BOOK S OF ACCOUNT. THESE ARE SUFFICIENT MATERIAL TO HOLD THAT THE A.O. HAS RIGHT LY INVOKED SECTION 145(3) OF THE ACT TO REJECT THE BOOKS OF ACCOUNT. WE, THEREFORE, CONFIRM THE ORDER OF CIT(A) ON THIS ISSUE. 47. IN RESPECT OF MERIT OF THE CASE, WE DO NOT FIND SUBSTANCE IN THE SUBMISSION OF THE ASSESSEE THAT THE TORN BILLS FOUND AT THE TIME OF SEARCH FROM THE RESIDENCE OF THE ACCOUNTANT IS NOT LIABLE TO BE ADDED IN THE HANDS O F THE ASSESSEE. THIS CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE IN VIEW OF THE FA CT THAT THE ACCOUNTANT IS AN EMPLOYEE OF THE ASSESSEE AND MAINTAINING BOOKS OF A CCOUNT. THEREFORE, THE TORN BILLS FOUND FROM THE RESIDENCE OF THE ACCOUNTANT PE RTAINING TO BUSINESS ACTIVITIES OF THE ASSESSEE, THEREFORE, THE A.O. HAS CORRECTLY HEL D THAT THESE TORN BILLS PERTAINED TO THE BUSINESS OF THE ASSESSEE. HOWEVER, WE FIND FOR CE IN THE SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE THAT THIS IS A CASE OF SE ARCH AND ADDITION CAN BE MADE ON THE BASIS OF MATERIAL FOUND AT THE TIME OF SEARCH. IN THE CASE UNDER CONSIDERATION, THE TORN BILLS FOUND WAS OF RS.18,49,000/-. THE A. O. HAS MULTIPLIED AND ESTIMATED ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 42 THE SALE FOR THE ENTIRE YEAR ON THE BASIS OF THESE TORN BILLS FOUND ONLY FOR ONE MONTH I.E. MACH AS THERE IS NO EVIDENCE OR MATERIAL FOUND AT THE TIME OF SEARCH THAT THE ASSESSEE WAS INDULGED IN MAKING SALES OUT OF BOOKS OF ACCOUNT THROUGHOUT THE YEAR. IN THE ABSENCE OF SUCH MATERIAL FOUND AT THE TIME O F SEARCH THE SALE CANNOT BE ESTIMATED ON THE BASIS OF TORN BILLS FOUND FOR A MO NTH AT THE TIME OF SEARCH. WE ARE, THEREFORE, OF THE VIEW THAT AT THE MOST THE UN ACCOUNTED SALES CAN BE TAKEN AS RS.18,49,000/- AND APPLYING 2% PROFIT RATE ON WHIC H THE CALCULATION OF PROFIT COMES TO RS.36,980/-. ADDITION TO THE EXTENT OF RS .36,980/- IS WARRANTED. WE, THEREFORE, CONFIRM THE ADDITION TO THE EXTENT OF RS .36,980/- AND DELETE THE BALANCE AMOUNT OF ADDITION OUT OF TOTAL ADDITION MADE BY TH E A.O. OF RS.2,08,436/- AND RELIEF OF RS.1,71,456/- IS ALLOWED. WE ACCORDINGLY MODIFY THE ORDER OF CIT(A) AND CONFIRM THE ADDITION OF RS.36,980/-. 48. GROUND NO.4 (WRONGLY MENTIONED AS GROUND NO.3 I N GROUNDS OF APPEAL) PERTAINS TO ADDITION OF RS.21,286/- OUT OF ADDITION OF RS.55,571/- MADE BY THE A.O. ON ACCOUNT OF HOUSE HOLD EXPENSES. 49. THE FACTS OF THE GROUND IS IDENTICAL TO THE FAC TS OF THE GROUND DECIDED IN ITA NO.342/AGR/2012 IN THE CASE OF SHRI NARENDRA KUMAR KESHWANI VIDE PARAGRAPH NOS.36 & 37 OF THIS ORDER. FOLLOWING THE SAID DISC USSION, THE ADDITION OF RS.21,286/- SUSTAINED BY THE CIT(A) IS DELETED. ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 43 50. GROUND NO.5 (WRONGLY MENTIONED AS GROUND NO.4 I N GROUNDS OF APPEAL) IS IN RESPECT OF CHARGING OF INTEREST UNDER SECTION 234A, 234B & 234C OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE. THE A.O. IS DIRECTED A CCORDINGLY. 51. GROUND NO.6 (WRONGLY MENTIONED AS GROUND NO.5 I N GROUNDS OF APPEAL) IS GENERAL IN NATURE REQUIRES NO INDEPENDENT FINDING. 52. ONE MORE COMMON GROUND RAISED IN THESE APPEALS PERTAINS TO ADDITION ON ACCOUNT OF HOUSEHOLD EXPENSES. THE DETAILS OF SUCH ADDITION MADE BY THE A.O. AND SUSTAINED BY THE CIT(A) ARE AS UNDER :- ITA NO. ADDITION MADE BY THE A.O. ADDITION SUSTAINED BY THE CIT(A) 337/AGR/2012 24,000/- 6857/- 349/AGR/2012 24,000/- 6857/- 350/AGR/2012 32,643/- 15,500/- 352/AGR/2012 66,142/- 14,714/- 53. THIS ISSUE HAS BEEN DECIDED IN ITA NO.342/AGR/2 012 IN THE CASE OF SHRI NARENDRA KUMAR KESHWANI VIDE PARAGRAPH NOS.36 & 37 OF THIS ORDER. IN THE LIGHT OF THE SAID DISCUSSION, WE DELETE THE ADDITIONS SUS TAINED BY THE CIT(A). ITA NOS.349,350,352,371,342,111 & 337/AGR/2012 44 54. ONE MORE COMMON GROUNDS RAISED IN THESE APPEAL PERTAIN TO CHARGING OF INTEREST UNDER SECTION 234A, 234B & 234C OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE. THE A.O. IS DIRECTED ACCORDINGLY. 55. OTHER GROUNDS RAISED ARE GENERAL IN NATURE REQU IRE NO INDEPENDENT FINDING. 56. IN THE RESULT, ALL THE APPEALS FILED BY THE ASS ESSEE ARE PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY