RAMESH KUMAR JAIN, MUMBAI V. ACIT CEN CIR 2, MUMBAI

ITA 3515/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0617 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 09-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V K TULSIAN
• Keywords: Unexplained cash credit; Unexplained investment; Search and seizure; Salary income; Accommodation entries
• Section: 153A; 131; 68; 132; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM) . . , , ./ I.T.A . NO. 3512 & 3513 / MUM/ 2013 ( / ASSESSMENT YEAR S : 2004 - 2005 & 2005 - 06 ) ./ I.T.A. NO S . 351 8, 35 17 , 3516,35 15,3514 /MUM/ 2013 ( / ASSESSMENT YEAR S : 2006 - 07 TO 2010 - 11 ) SHRI RAMESH KUMAR JAIN, FLAT NO.702, 7 TH FLOOR, 13A, JAI SIDDHI VINAYAK BLDG., ADESHAR DADY STREET, CROSS LANE, C P TANK ROAD, MUMBAI - 400004. / VS. ASSTT.COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE - 2, 9 TH FLOOR, OLD CGO ANNEX BLDG, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : ADAPJ5347C / A SSESSEES BY SHRI V K TULSIAN / RE VENUE BY SHRI SANTOSH KUMAR / DATE OF HEARING : 2 6 .3 . 201 5 / DATE OF PRONOUNCEMENT : 22. 4. 201 5 / O R D E R PER B.R. BASKARAN (AM) ALL THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY LD CIT(A) - 36, MUMBAI AND THEY RELATE TO THE ASSESSM ENT YEARS 2004 - 05 TO 2010 - 11. SINCE MOST OF THE ISSUES URGED IN THESE APPEALS ARE IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. BEFORE PROCEEDING TO DEAL WITH THE ISSUES URG ED IN THESE APPEALS, WE PREFER TO NARRATE THE FACTS SURROUNDING THE CASE. THE REVENUE CARRIED OUT I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 2 SURVEY OPERATIONS IN THE BUSINESS PREMISES OF M/S AKRUTI METALS AND ALLOYS PVT LTD AND M/S DELITE TUBES & ALLOYS PVT LTD IN SEPTEMBER, 2008. DURING THE COU RSE OF SURVEY OPERATION, ONE OF THE DIRECTORS NAMED SHRI MUKESH JAIN AND THE C.A SHRI NIRMAL DOSHI ADMITTED IN THE STATEMENTS TAKEN FROM THEM THAT THE COMPANY CITED ABOVE IS PROVIDING ACCOMMODATION BILLS. IN THE SAID STATEMENT, THE DIRECTOR SHRI MUKESH JAI N CONFESSED THAT HE WAS ACTING AT THE BEHEST AND UPON THE INSTRUCTIONS OF THE ASSESSEE HEREIN. THE CHARTERED ACCOUNTANT ALSO SUBMITTED THAT HE CONDUCTED THE AUDIT ON THE BASIS OF TRIAL BALANCE ONLY, I.E., NO EVIDENCE REGARDING PURCHASE AND SALE OF GOODS W AS EXAMINED BY THE CHARTERED ACCOUNTANT ALSO. SUBSEQUENTLY, THE DEPARTMENT CARRIED OUT SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE ACT IN THE CASE OF M/S ABG SHIPYARD LTD AND GROUP CONCERNS ON 07.10.2009. ON THE VERY SAME DAY, THE ASSESSEE WAS ALSO SUBJ ECTED TO SEARCH OPERATIONS AND A STATEMENT U/S 132(4) OF THE ACT WAS TAKEN FROM THE ASSESSEE. AT THAT POINT OF TIME, THE ASSESSEE WAS FURNISHED WITH A COPY OF STATEMENT GIVEN BY SHRI MUKESH JAIN AND THE C.A SHRI NIRMAL DOSHI, REFERRED ABOVE. THE ASSESSEE ADMITTED THAT HE HAD USED THE ABOVE SAID CONCERNS FOR PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTIES ON RECEIPT OF NOMINAL COMMISSION. HE ALSO SUBMITTED THAT HE HAS SHARED PART OF COMMISSION TO THE ABOVE SAID PERSONS. SUBSEQUENTLY A STATEMENT WAS RE CORDED FROM THE ASSESSEE U/S 131 OF THE ACT ON 19.11.2009. IN THAT STATEMENT, HE ADMITTED THAT HE RECEIVED COMMISSION @ 0.2% ON THE VALUE OF ACCOMMODATION BILLS PROVIDED. 3. THE ASSESSEE DID NOT FILE RETURN OF INCOME U/S 139 OF THE ACT FOR ANY OF TH E YEARS UNDER CONSIDERATION. CONSEQUENT TO THE SEARCH OPERATIONS, THE AO ISSUED NOTICES U/S 153A OF THE ACT AND THE ASSESSEE FILED RETURNS OF INCOME IN RESPONSE TO THE SAME. IN ALL THE RETURNS, THE ASSESSEE DISCLOSED INCOME FROM SALARY AND INCOME FROM OT HER SOURCES. FROM AY 2006 - 07 ONWARDS, THE ASSESSEE DISCLOSED COMMISSION INCOME ALSO AS HIS BUSINESS I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 3 INCOME. THE ASSESSEE ALSO ATTACHED HIS CAPITAL ACCOUNT AND BALANCE SHEET ALONG WITH THE RETURNS OF INCOME. IN THE STATEMENT TAKEN FROM THE ASSESSEE U/S 1 32(4) OF THE ACT, HE HAD STATED THAT HE DOES NOT MAINTAIN BOOKS OF ACCOUNT. HENCE, THE ASSESSING OFFICER TOOK THE VIEW THAT THE FINANCIAL STATEMENTS NOW FILED ALONG WITH THE RETURN OF INCOME ARE ONLY AN AFTERTHOUGHT. HENCE HE TOOK THE VIEW THAT THE SOURC ES FOR THE INVESTMENTS STATED IN THE FINANCIAL STATEMENTS ARE NOT RELIABLE. ACCORDINGLY HE PROCEEDED TO ASSESS BOTH THE INCOME AS WELL AS OUTGOINGS AS INCOME OF THE ASSESSEE IN EACH OF THE YEARS, IN ADDITION TO ASSESSING THE INCOME RETURNED BY THE ASSESSE E. THE WITHDRAWALS SHOWN BY THE ASSESSEE IN THE SAID FINANCIAL STATEMENTS TOWARDS HOUSEHOLD EXPENSES WERE FOUND TO BE LOW BY THE AO. HENCE HE ESTIMATED THE HOUSEHOLD EXPENSES IN EACH OF THE YEAR AND ASSESSED THE DIFFERENCE AS INCOME OF THE ASSESSEE. 4 . IN ASSESSMENT YEAR 2004 - 05, THE ASSESSEE HAD SHOWN LOAN OF RS.10,23,000/ - OBTAINED FROM M/S DEETEL SECURITIES P LTD. THE ASSESSING OFFICER ASSESSED THE SAME AS INCOME OF THE ASSESSEE U/S 68 OF THE ACT. 5. DURING THE COURSE OF SEARCH OPERATION, CASH AND JEWELLERY AMOUNTING TO/VALUED AT RS.3,80,200/ - AND RS.88,76,750/ - WAS FOUND. THE ASSESSEE SURRENDERED A SUM OF RS.78,47,730/ - AND OFFERED THE SAME AS HIS INCOME IN ASSESSMENT YEAR 2010 - 11. HOWEVER, THE ASSESSING OFFICER ASSESSED THE A SUM OF RS.10,59 ,220/ - OUT OF THE REMAINING INVESTMENTS/CASH, AS UNEXPLAINED INCOME OF THE ASSESSEE IN AY 2010 - 11. 6. THE ASSESSEE DECLARED COMMISSION INCOME FROM AY 2006 - 07 ONWARDS. HOWEVER, THE ASSESSEE EXPRESSED HIS INABILITY TO FURNISH THE NECESSARY DETAILS. HENCE, THE ASSESSING OFFICER TOOK THE VIEW THAT THE AGGREGATE AMOUNT OF DEPOSITS FOUND IN THE ABN AMRO BANK ACCOUNT OF M/S AKRUTI METAL AND ALLYS PVT LTD REPRESENTS THE TURNOVER OF THE ASSESSEE. THOUGH THE ASSESSEE SUBMITTED IN THE LETTER DATED 12.12.11 FILED B EFORE I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 4 THE AO THAT HE WAS GETTING COMMISSION @ 0.25%, THE AO TOOK THE VIEW THAT THE ASSESSEE SHOULD BE EARNING COMMISSION INCOME @ 1.50%. ACCORDINGLY HE ESTIMATED THE COMMISSION INCOME @ 1.50% OF THE AGGREGATE AMOUNT OF DEPOSITS MADE IN THE ABOVE SAID BANK ACCOUNT IN EACH OF THE YEAR AND ASSESSED THE SAME AS INCOME OF THE ASSESSEE. 7. THE LD . CIT(A) CONFIRMED ALL THE ADDITIONS MADE BY THE ASSESSING OFFICER IN ALL THE YEARS UNDER CONSIDERATION AND HENCE THE ASSESSEE HAS FILED THESE APPEALS BEFORE US. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSING OFFICER HAS ASSESSED THE INCOME DECLARED BY THE ASSESSEE AND ALSO ASSESSED COMMISSION INCOME ESTIMATED BY HIM. HAVING ASSESSED THE INCOME, THE ASSESSING OFFICER HAS ALSO PR OCEEDED TO ASSESS THE CASH OUTGOINGS BY WAY OF INVESTMENTS ALSO. THERE SHOULD NOT BE ANY DOUBT THAT THE SAME WOULD RESULT IN DOUBLE ASSESSMENT OF SAME INCOME. FURTHER, WE NOTICE THAT THE ASSESSING OFFICER HAS REJECTED THE FINANCIAL STATEMENTS FILED ALONG WITH THE RETURNS OF INCOME, BUT USED THE DETAILS AVAILABLE THEREIN FOR THE PURPOSE OF ASSESSMENTS. BESIDES THE ABOVE, AS STATED ABOVE, THE ASSESSING OFFICER HAS ESTIMATED THE HOUSEHOLD EXPENSES AND ASSESSED THE DIFFERENCE BETWEEN THE AMOUNT SO ESTIMATED BY HIM AND THE AMOUNT SHOWN BY THE ASSESSEE IN THE FINANCIAL STATEMENTS, WHICH WAS REJECTED BY HIM. THUS, IT IS SEEN THAT THE ASSESSING OFFICER HAS PARTIALLY ACCEPTED THE FINANCIAL STATEMENTS AND HENCE THERE IS INCONSISTENCY IN THE APPROACH ADOPTED BY THE ASSESSING OFFICER. 9. IN ALL THE YEARS, THE ASSESSEE HAS TAKEN CERTAIN LEGAL ISSUES. THE FIRST ISSUE WAS THAT THE TAX AUTHORITIES WERE NOT JUSTIFIED IN MAKING ASSESSMENT ON THE BASIS OF SWORN STATEMENT GIVEN U/S 132(4) OF THE ACT, SINCE THE SAME WAS N OT CORROBORATED WITH ANY OTHER MATERIAL. WE DO NOT FIND ANY SUBSTANCE IN THIS CONTENTION. WE HAVE ALREADY NOTICED THAT THE I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 5 FACT OF PROVIDING ACCOMMODATION BILLS CAME TO LIGHT DUE TO SURVEY OPERATIONS CONDUCTED AT THE PREMISES OF M/S AKRUTI METALS AND ALL OYS PVT LTD. THE STATEMENT TAKEN FROM THE DIRECTOR OF THE ABOVE SAID COMPANY WAS CONFIRMED BY THE ASSESSEE IN THE STATEMENT TAKEN FROM HIM U/S 132(4) OF THE ACT AS WELL AS U/S 131 OF THE ACT. IT APPEARS THAT THE FACT RELATING TO ACCOMMODATION BILLS ALSO CAME TO LIGHT DURING THE COURSE OF SEARCH OPERATIONS CONDUCTED IN THE CASE OF M/S ABG SHIPYARD LTD. SINCE THE DIRECTOR OF M/S AKRUTI METALS AND ALLOYS PVT LTD HAD IMPLICATED THE ASSESSEE AND SINCE THE ASSESSEE HAS ALSO ACCEPTED THE SAME, IN OUR VIEW, THE ASSESSING OFFICER WAS JUSTIFIED IN PLACING RELIANCE ON THE STATEMENT GIVEN U/S 132(4) OF THE ACT. ACCORDINGLY, WE REJECT THIS LEGAL GROUND. 10. ANOTHER MAJOR LEGAL GROUND URGED BEFORE US WAS THAT THE SEARCH OPERATIONS DID NOT REVEAL ANY INCRIMINATING MAT ERIAL AND HENCE ALL THE ADDITIONS MADE IN THESE ASSESSMENTS ARE LIABLE TO BE QUASHED. IN THIS REGARD, THE LD A.R PLACED RELIANCE ON THE ORDER DATED 20 - 06 - 2013 PASSED BY DELHI BENCH OF ITAT IN THE CASE OF PACL INDIA LTD (ITA NO.2637/DEL/2010). HOWEVER, A PERUSAL OF THE SAID ORDER WOULD SHOW THAT THERE IS DIFFERENCE IN THE FACTS OF THE SAID CASE VIS - - VIS THE CASES UNDER CONSIDERATION. IN THE INSTANT CASES, THE ASSESSEE HAS NOT FILED RETURN OF INCOME PRIOR TO THE DATE OF SEARCH AND HENCE THE RETURNS OF INC OME FILED IN RESPONSE TO THE NOTICES ISSUED U/S 153A BECOME THE ORIGINAL RETURNS OF INCOME FOR ALL THE YEARS UNDER CONSIDERATION. CONSEQUENTLY THE IMPUGNED ASSESSMENTS ARE TO BE CONSIDERED AS ORIGINAL ASSESSMENTS IN THE HANDS OF THE ASSESSEE. WHEREAS, IN THE CASE OF M/S PACL INDIA LTD (SUPRA), THE ASSESSEE HAD FILED ORIGINAL RETURNS OF INCOME U/S 139(1) OF THE ACT AND THE PERIOD FOR ISSUING NOTICE U/S 143(2) OF THE ACT HAD EXPIRED BY THE TIME SEARCH TOOK PLACE IN THE HANDS OF THE ABOVE SAID ASSESSEE. UNDE R THESE SET OF FACTS, THE TRIBUNAL HELD THAT THE CONCLUDED ASSESSMENTS (I.E., THOSE ASSESSMENTS WHERE THE PERIOD FOR ISSUING NOTICES U/S 143(2) OF THE I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 6 ACT HAD EXPIRED) CAN BE DISTURBED ONLY ON THE BASIS OF INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH. SINCE THE IMPUGNED ASSESSMENTS ARE THE ORIGINAL ASSESSMENTS IN THE HANDS OF THE ASSESSEE, IN OUR VIEW, THE ASSESSEE CANNOT TAKE SUPPORT OF THE DECISION RENDERED BY THE DELHI BENCH OF TRIBUNAL. IN OUR VIEW, THE ASSESSING OFFICER IS ENTITLED TO EXAMINE ALL THE ISSUES, SINCE THESE ASSESSMENTS SHALL NOT FALL IN THE CATEGORY OF CONCLUDED ASSESSMENTS IN THE ABSENCE OF ORIGINAL RETURN OF INCOME FILED U/S 139 OF THE ACT. ACCORDINGLY, WE REJECT THIS GROUND ALSO. 11. ANOTHER LEGAL GROUND URGED BY T HE ASSESSEE IS THAT THE COLUMN NO.7 OF NOTICE OF DEMAND ISSUED U/S 156 OF THE ACT WAS LEFT BLANK AND HENCE THE SAID NOTICE WAS INVALID. IN OUR VIEW, THE CLERICAL ERRORS WOULD NOT VITIATE THE ASSESSMENT ORDERS AND ACCORDINGLY, WE REJECT THIS GROUND ALSO. 12 WE SHALL NOW DEAL WITH THE GROUNDS URGED ON MERITS. THE ASSESSEE IS CHALLENGING THE ADDITIONS MADE ON ACCOUNT OF LOW WITHDRAWALS MADE FOR HOUSEHOLD EXPENSES. THE ADDITIONS MADE BY THE AO ARE TABULATED AS UNDER FOR THE SAKE OF CONVENIENCE. ASSESSM ENT YEAR DRAWINGS ESTIMATED BY THE AO DISCLOSED BY THE ASSESSEE ADDITION MADE 2004 - 05 3,00,000 60,000 2,40,000 2005 - 06 3,30,000 60,000 2,70,000 2006 - 07 3,60,000 50,000 3,10,000 2007 - 08 3,90,000 47,600 3,42,400 2008 - 09 4,20,000 40,000 3,80,000 2009 - 10 4,50,000 1,05,800 3,44,200 2010 - 11 4,80,000 48,000 4,32,000 13. WE HEARD THE PARTIES ON THIS ISSUE. AS NOTICED EARLIER, THE ASSESSING OFFICER HAS GIVEN SET OFF OF THE DRAWINGS DISCLOSED BY THE ASSESSEE IN THE FINANCIAL STATEMENTS, EVEN THOUGH HE HAD REJECTED THEM. HOWEVER, WE NOTICE THAT THE ASSESSING OFFICER HAS SIMPLY ESTIMATED THE HOUSEHOLD I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 7 EXPENSES WITHOUT BRINGING ANY OTHER MATERIAL ON RECORD. THE SUBMISSION OF THE ASSESSEE IS THAT HE WAS MAINTAINING A SIMPLE LIFE AND FURTHER THE MONEY WITHDRA WN FROM HIS WIFES ACCOUNT WAS ALSO USED TOWARDS HOUSEHOLD EXPENSES. ADMITTEDLY, THE ASSESSING OFFICER DID NOT CONSIDER THE DRAWINGS MADE FROM THE ACCOUNT OF ASSESSEES WIFE. SINCE THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL TO SUPPORT THE ESTIMAT E MADE BY HIM, IN OUR VIEW, THE SAME SHOULD BE CONSIDERED TO BE BASELESS AND HENCE THE SAME CANNOT BE SUSTAINED. AT THE SAME TIME, THE ASSESSEE ALSO COULD NOT CONVINCINGLY EXPLAIN THAT THE DRAWINGS DISCLOSED BY HIM ALONG WITH THE DRAWINGS TAKEN FROM HIS W IFES ACCOUNT WERE SUFFICIENT TO MEET THE EXPENSES. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THIS ISSUE WOULD MEET THE ENDS OF JUSTICE IN ALL THE YEARS UNDER CONSIDERATION, IF THE ADDITION TOWARDS INSUFFICIENT DRAWINGS IS SUSTAINED TO THE FOLLOWI NG EXTENT IN ORDER TO TAKE CARE OF POSSIBLE LEAKAGE, IF ANY. ASST. YEAR ADDITION SUSTAINED 2004 - 05 10,000 2005 - 06 15,000 2006 - 07 20,000 2007 - 08 25,000 2008 - 09 30,000 2009 - 10 35,000 2010 - 11 40,000 WE ORDER ACCORDINGLY. THE ORDER OF LD CIT(A) ON THIS ISSUE STANDS MODIFIED ACCORDINGLY AND THE ASSESSING OFFICER IS DIRECTED TO SUSTAIN THE ADDITION TOWARDS INSUFFICIENT DRAWINGS TO THE EXTENT STATED IN THE TABLE GIVEN ABOVE. 14. THE NEXT ISSUE CONTESTED BY THE ASSESSEE IN ALL THE YEARS IS IN RESPECT OF ADDITION MADE UNDER THE HEAD UNEXPLAINED INVESTMENTS. WE I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 8 HAVE EARLIER NOTICED THAT THE ASSESSEE HAD FURNISHED FINANCIAL STATEMENTS ALONG WITH THE RETURNS OF INCOME FILED FOR THE YEARS UNDER CONSIDERATION. THE ASSESSEE HAD DISCLOSED THE PAYMENTS MADE TOWARDS LIFE INSURANCE PREMIUM SCHEMES, PUBLIC PROVIDENT FUND SCHEMES. BESIDES, THE ASSESSEE HAD ALSO DISCLOSED CERTAIN LOANS AND ADVANCES AND INVESTMENT IN SHARES. SINCE THE ASSESSING OFFICER REJECTED THE FINANCIAL STATEMENTS, HE ASSESSED ALL THE ABOVE SAID ITEMS AS INCOME OF THE ASSESSEE. WE HAVE ALSO EARLIER NOTICED THAT THE ASSESSING OFFICER HAS ASSESSED THE INCOME DECLARED BY THE ASSESSEE, WHICH WAS INCLUDED IN THE FINANCIAL STATEMENTS. FURTHER, THE ASSESSING OFFICER HAS GIVEN CREDIT FOR THE DRAWI NGS DISCLOSED IN THE FINANCIAL STATEMENTS. HENCE, IT IS SEEN THAT THE ASSESSING OFFICER, AFTER HAVING REJECTED THE FINANCIAL STATEMENTS, HAS AGAIN CONSIDERED THE SAME FOR MAKING ASSESSMENT OF INCOME AND ALSO FOR ASSESSING INSUFFICIENT DRAWINGS. IN OUR V IEW, THE SAID APPROACH OF THE ASSESSING OFFICER IS NOT JUSTIFIED. WE ARE OF THE VIEW THAT THE ASSESSING OFFICER SHOULD EITHER ACCEPT OR REJECT THE FINANCIAL STATEMENTS IN TOTO AND PARTIAL RELIANCE ON THEM IS NOT JUSTIFIED. THE ADDITIONS MAY BE MADE OUT O F THE SAID FINANCIAL STATEMENTS, IF THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATIONS OF THE ASSESSEE WITH REGARD TO ANY OF THE ITEMS DISCLOSED THEREIN. SINCE THE ITEMS ASSESSED AS UNEXPLAINED INVESTMENTS IN ALL THE YEARS UNDER CONSIDERATIO N HAS BEEN DULY DISCLOSED IN THE FINANCIAL STATEMENTS AND THE SOURCES THEREOF WERE ALSO EXPLAINED THEREIN, WE ARE OF THE VIEW THAT THE IMPUGNED ADDITIONS ARE NOT WARRANTED. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE IN ALL THE YEARS UN DER CONSIDERATION AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITIONS MADE UNDER THE HEAD UNEXPLAINED INVESTMENTS REPRESENTING LIFE INSURANCE SCHEME PAYMENTS, PPF PAYMENTS, LOANS AND SHARES. I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 9 15. THE NEXT ISSUE URGED BY THE ASSESSEE IN ASSESSMENT YE AR 2004 - 05 RELATES TO THE ADDITION OF RS.10.23 LAKHS RELATING TO UNEXPLAINED CASH CREDITS. ON NOTICING THAT THE ASSESSEE HAS SHOWN LOAN AMOUNT OF RS.10.23 LAKHS AS OUTSTANDING AGAINST THE NAME OF DEETEL SECURITIES P LTD, THE ASSESSING OFFICER ASKED THE ASSESSEE TO SUBSTANTIATE THE SAME. ACCORDING TO THE AO, THE ASSESSEE DID NOT FURNISH NECESSARY DETAILS AND HENCE HE ASSESSED THE ABOVE SAID AMOUNT AS INCOME OF THE ASSESSEE U/S 68 OF THE ACT, WHICH STOOD CONFIRMED BY LD CIT(A). ACCORDING TO THE AO, THE ASSESSEE HAD STATED IN HIS COVERING LETTER THAT THE CONFIRMATION LETTER WAS ATTACHED, BUT THE SAME DID NOT FIND PLACE IN THAT DOCUMENT. BEFORE US, THE LD A.R SUBMITTED THAT THE ASSESSEE HAD FURNISHED CONFIRMATION LETTER OBTAINED FROM THE ABOVE SAID CREDIT OR AND HENCE THE TAX AUTHORITIES ARE NOT JUSTIFIED IN ASSESSING THE AMOUNT WITHOUT CONSIDERING THE CONFIRMATION LETTER. ON THE CONTRARY, THE LD D.R STRONGLY SUPPORTED THE ORDER OF THE LD CIT(A). 16. THUS, WE NOTICE THAT THERE IS DIFFERENCE BETWEEN THE PA RTIES WITH REGARD TO THE FACTS RELATING TO THIS ISSUE. WHILE THE ASSESSEE CLAIMS THAT THE ASSESSEE DID FURNISH THE CONFIRMATION LETTER, THE TAX AUTHORITIES STATE THAT THE SAME WAS NOT FURNISHED. IN THIS REGARD, THE LD A.R INVITED OUR ATTENTION TO THE CON FIRMATION LETTER FURNISHED IN THE PAPER BOOK. ACCORDINGLY HE CONTENDED THAT THE OBSERVATIONS MADE BY THE TAX AUTHORITIES ARE AGAINST THE FACTS PREVAILING ON RECORD. SINCE THE CONFIRMATION LETTER FURNISHED BY THE ASSESSEE WAS OMITTED TO BE EXAMINED BY THE TAX AUTHORITIES, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXA MINATION. THE ASSESSING OFFICER, WHILE EXAMINING THIS ISSUE, SHOULD ALSO KEEP IN MIND ABOUT THE DIFFICULTIES THAT I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 10 MAY BE FACED BY THE ASSESSEE IN FURNISHING THE DETAILS IN VIEW OF LAPSE OF ABOUT 11 YEARS. 17. THE NEXT COMMON ISSUE THAT ARISES IN AY 2006 - 07 TO 2010 - 11 RELATES TO THE ESTIMATION OF COMMISSION INCOME ON PROVIDING ACCOMMODATION BILLS. WE EARLIER NOTICED THAT THE ASSESSEE HAD DECLARED THE COMMISSION INCOME @ 0.20% IN THE STATEMENT TAKEN FROM HIM. HOWEVER, IN THE LETTER FILED BEFORE T HE ASSESSING OFFICER, THE COMMISSION INCOME WAS DECLARED @ 0.25%. HOWEVER, THE ASSESSING OFFICER HAS ESTIMATED THE COMMISSION INCOME BY ADOPTING THE RATE OF 1.50%. A PERUSAL OF THE ASSESSMENT ORDERS WOULD SHOW THAT THE ASSESSING OFFICER HAS NOT BROUGHT O N RECORD ANY MATERIAL OR BASIS WHICH ENABLED HIM TO ADOPT THE RATE OF 1.50%. THE AO HAS ALSO NOT EXAMINED THE BENEFICIARIES OF THE ACCOMMODATION BILLS TO ASCERTAIN THE RATE OF COMMISSION. FURTHER, THE ASSESSEE HAS SUBMITTED THAT THE COMMISSION INCOME EAR NED WAS SHARED BY HIM AND TWO OTHERS. THE SAID FACT WAS ALSO NOT CONSIDERED BY THE ASSESSING OFFICER. 18. THE ASSESSEE, IN HIS CONTENTIONS AS WELL AS IN THE GROUNDS OF APPEAL OF ALL THE YEARS, HAS SUBMITTED THAT HE WAS NOT ALLOWED THE OPPORTUNITY OF CROS S EXAMINING THE DIRECTOR OF M/S AKRUTI METAL & ALLOYS P LTD AND THE CHARTERED ACCOUNTANT. HOWEVER, WE NOTICE THAT NO PURPOSE WILL BE SERVED IN PROVIDING CROSS EXAMINATION, SINCE THE ASSESSEE HIMSELF HAS CONFIRMED THEIR STATEMENTS TWICE. HENCE, WE DO NOT FIND ANY MERIT IN THIS CONTENTION. THE ASSESSEE ALSO CONTENDED THAT THE DEPARTMENT DID NOT UNEARTH ANY MATERIAL TO SHOW THAT THE ASSESSEE DID EARN ANY COMMISSION INCOME. THIS CONTENTION OF THE ASSESSEE IS ALSO LIABLE TO REJECTED, SINCE THE ASSESSEE HIMSE LF ACCEPTED THE FACT OF RECEIPT OF COMMISSION TWICE, VIZ., ONCE IN THE STATEMENT TAKEN FROM HIM AND AGAIN IN THE LETTER FURNISHED BEFORE THE ASSESSING OFFICER. I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 11 19. NOW THE QUESTION THAT ARISES IS WITH REGARD TO THE QUANTUM OF COMMISSION INCOME. SINCE THE ASSESSEE HIMSELF HAS CONFIRMED THE RATE OF COMMISSION AS 0.25% AND SINCE THE AO HAS NOT PROPERLY SUBSTANTIATED THE RATE OF 1.50% ADOPTED BY HIM, WE ARE OF THE VIEW THAT THE FACTS AND CIRCUMSTANCES OF THE CASE WARRANT THAT THE RATE OF COMMISSION SHOULD BE ADOPTED @ 0.25%, IN THE ABSENCE OF ANY OTHER EVIDENCE TO THE CONTRARY. FURTHER THE ASSESSEE HAS STATED THAT HE HAS SHARED THE COMMISSION INCOME WITH TWO OTHERS. FURTHER IT CANNOT BE DENIED THAT CERTAIN OTHER EXPENSES ARE ALSO REQUIRED TO BE INCURRED. AC CORDINGLY, BY CONSIDERING ALL THESE RELEVANT FACTORS, WE ARE OF THE VIEW THAT THE NET COMMISSION INCOME SHOULD BE ESTIMATED AT 0.10% AND IN OUR VIEW, THE SAME WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, WE MODIFY THE ORDER OF LD CIT(A) IN RESPECT OF THIS ISSUE IN ALL THE YEARS UNDER CONSIDERATION AND DIRECT THE ASSESSING OFFICER TO WORK OUT THE ADDITION TOWARDS COMMISSION INCOME IN THE LINES DISCUSSED SUPRA. 20. WE HAVE EARLIER NOTICED THAT THE ASSESSING OFFICER HAS ASSESSED BOTH THE INCOME AS WELL AS IN VESTMENT. WE HAVE ALSO NOTICED THAT THE SAME WOULD RESULT IN DOUBLE ASSESSMENT OF SAME INCOME, WHICH IS NOT ENVISAGED IN THE INCOME TAX ACT. AS PER THE RECORD, WE NOTICE THAT ALL THE INCOME EARNED BY THE ASSESSEE HAS CULMINATED INTO THE INVESTMENT MADE I N JEWELLERY. WE HAVE ALSO NOTICED THAT THE ASSESSEE HAS OFFERED A SUM OF RS.78,47,730/ - AS HIS INCOME IN AY 2010 - 11. IN VIEW OF THE SAME, THE ASSESSEE HAS CONTENDED BEFORE THE ASSESSING OFFICER THAT THE COMMISSION INCOME SHOULD ALSO BE ASSESSED IN THAT Y EAR ONLY. THE ASSESSING OFFICER HAS REJECTED THE SAID CLAIM ON THE REASONING THAT THE ASSESSEE WOULD HAVE RECEIVED THE COMMISSION INCOME EVERY YEAR. WE FIND MERIT IN THE REASONING GIVEN BY THE ASSESSING OFFICER. ACCORDINGLY, WE ARE OF THE VIEW THAT HE I S JUSTIFIED IN HOLDING THAT THE COMMISSION INCOME IS ASSESSABLE I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 12 EVERY YEAR. HOWEVER, SINCE THE SAID INCOME HAS CULMINATED INTO JEWELLERY INVESTMENT, WE ARE OF THE VIEW THAT THE CUMULATIVE COMMISSION INCOME FINALLY ASSESSED FROM AY 2006 - 07 TO 2010 - 11 AFTER GIVING EFFECT TO OUR ORDER, SHOULD BE GIVEN DEDUCTION AGAINST THE INCOME OFFERED TOWARDS INVESTMENT MADE IN JEWELLERY. WE FIND SUPPORT FOR OUR VIEW ON THE FOLLOWING REASONS: - (A) INVESTMENT MADE IN JEWELLERY CAN BE ASSESSED ONLY TO THE EXTENT OF UNEXPLA INED AMOUNT. SINCE THE COMMISSION INCOME FORMS A SOURCE FOR THE AMOUNT INVESTED IN JEWELLERY, THE SOURCES TO THE EXTENT OF AGGREGATE COMMISSION INCOME STANDS EXPLAINED. HENCE THE BALANCE AMOUNT OF INVESTMENT ALONE CAN BE ASSESSED AS INCOME OF THE ASSESSE E. (B) ASSESSMENT OF INCOME AS WELL AS INVESTMENT RESULTS IN DOUBLE ASSESSMENT OF SAME INCOME, WHICH IS NOT CONTEMPLATED UNDER THE INCOME TAX ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO GRANT DEDUCTION OF AGGREGATE COMMISSION INCOME ASSESSED BY H IM IN AY 2006 - 07 TO 2010 - 11. 21. A QUESTION MAY ARISE AS TO WHETHER THE DEDUCTION DIRECTED TO BE GIVEN IN THE PRECEDING PARAGRAPH IS VALID, SINCE THE RESULTANT ASSESSED INCOME OF AY 2010 - 11 WOULD BECOME LOWER THAN THE INCOME RETURNED BY THE ASSESSEE. TH E FACT REMAINS THAT THE ASSESSEE DID NOT VISUALISE THE ADDITION RELATING TO COMMISSION INCOME AT THE TIME OF FILING RETURNS OF INCOME OF THE YEARS UNDER CONSIDERATION AND HENCE THERE WAS NO OCCASION FOR HIM TO CLAIM DEDUCTION OF THE COMMISSION INCOME. SIN CE THE COMMISSION INCOME HAS BEEN ESTIMATED BY THE TAX AUTHORITIES AS WELL AS BY US, THE AGGREGATE AMOUNT OF NET COMMISSION INCOME FINALLY ASSESSED SHOULD BE GIVEN DEDUCTION IN ORDER TO ARRIVE AT COMPLETENESS. I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 13 22. THE LAST ISSUE RELATES TO THE ADDITION OF BALANCE VALUE OF JEWELLERY/CASH FOUND AT THE TIME OF SEARCH OVER AND ABOVE THAT SURRENDERED BY THE ASSESSEE. THOUGH THE SEARCH OFFICIALS FOUND CASH OF RS.3,80,200/ - AND JEWELLERY WORTH RS.88,76,750/ - , THE ASSESSEE SURRENDERED ONLY A SUM OF RS.78,47,730/ - . HENCE THE ASSESSING OFFICER ASSESSED TO THE EXTENT OF RS.10,29,020/ - TOWARDS JEWELLERY AND A SUM OF RS.30,200/ - TOWARDS CASH AS UNEXPLAINED INCOME OF THE ASSESSEE. THE LD CIT(A) ALSO CONFIRMED THE SAME. 23 . BEFORE US, THE LD A.R SUBMITTED THAT THE ASSESSEE IS MARRIED AND IS HAVING TWO DAUGHTERS. HE SUBMITTED THAT THE TAX AUTHORITIES HAVE NOT GIVEN ANY DEDUCTION TOWARDS THE OLD JEWELLERIES, WHICH IS NORMALLY HELD BY INDIAN FAMILIES. HE FURTHER SUBMITTED THAT THE CBDT CIRCULAR ENVISAGES A HOLDING OF 500 GRAMS OF GOLD BY LADIES AND 250 GRAMS OF GOLD BY MALE MEMBERS. HE SUBMITTED THAT THE VALUE OF JEWELLERY SURRENDERED BY THE ASSESSEE WAS MORE, IF CREDIT FOR THE ABOVE SAID LIMIT IS GIVEN. ACCORDINGLY HE SUBMITTED THAT THE ASSESSMENT OF BALANCE AMOUNT OF JEWELLERY IS NOT JUSTIFIED. WITH REGARD TO THE CASH, THE LD A.R SUBMITTED THAT THE ADDITION OF RS.30,200/ - IS ALSO NOT WARRANTED, SINCE THE BOOK BALANCE WAS NOT CONSIDERED BY THE ASSESSING OFFICER. 24. THE LD D.R STRONGLY DEFENDED THE ORDER OF LD CIT (A). HOWEVER, WE FIND MERIT IN THE CONTENTIONS OF THE LD A.R. THOUGH THE ENTIRE VALUE OF JEWELLERY HAS BEEN ASSESSED IN AY 2010 - 11 IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, HOWEVER IN PRACTICE, THE JEWELLERY IS ACCUMULATED OVER THE YEARS. IT IS KNOW N TO EVERYONE THAT THE RATE OF GOLD IS RISING CONSISTENTLY OVER THE YEARS. HOWEVER, THE VALUE OF JEWELLERY HAS BEEN ASSESSED IN AY 2010 - 11 BY TAKING THE RATE PREVAILING IN THAT YEAR. FURTHER, THE INDIAN FAMILIES NORMALLY OWN CERTAIN QUANTITY OF JEWELLERY OVER THE YEARS. CONSIDERING ALL THESE FACTS, WE ARE OF THE VIEW THAT THERE IS NO I.T.A. NO. 3512/MUM/2013 AND OTHER SIX APPEALS 14 JUSTIFICATION IN ASSESSING THE BALANCE VALUE OF JEWELLERY AMOUNTING TO RS.10,29,020/ - . WITH REGARD TO THE CASH ALSO, THE ASSESSING OFFICER HAS NOT GIVEN CREDIT FOR BOOK BAL ANCE. CONSIDERING THE SMALLNESS OF THE AMOUNT, WE ARE OF THE VIEW THAT THE ADDITION OF RS.30,200/ - IS ALSO NOT WARRANTED. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THESE TWO ISSUES AND DIRECT THE ASSESSING OFFICER TO DELETE THESE ADDITIONS. 25 . IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. THE AB OVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22ND APR , 2015 . 22 ND APR , 2015 SD SD ( / AMIT SHUKLA ) ( . . / B.R. BASKARAN) / JUDICIAL MEMB ER / ACCOUNTANT MEMBER MUMBAI: 22ND APR ,2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT( A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI