Arun Gupta, Hyderabad V. ACIT, Cir-6(1), Jogipet

ITA 750/HYD/2011

• Counselvise Citation: 75022514 RSA 2011
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 27-04-2011

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. ASHA VIJAYA RAGHAVAN, JUDICIAL MEMBER AND SHR I AKBER BASHA, ACCOUNTANT MEMBER ITA NO.750/HYD/2011 ASSESSMENT YEAR 2008-09 M/S ARUN GUPTA, HYDERABAD (PAN ACWPG 9807 B) VS THE ACIT, CIRCLE 6(1), JOGIPET APPELLANT RESPONDENT ITA NO.749/HYD/2011 ASSESSMENT YEAR 2008-09 M/S.PUSHPA GUPTA, HYDERABAD (PAN AAEEPG 6161N) VS THE ACIT, CIRCLE 6(1), JOGIPET APPELLANT RESPONDENT ITA NO.1179/HYD/2011 ASSESSMENT Y EAR 2008-09 THE ACIT, CIRCLE 6(1), HYDERABAD VS M/S ARUN GUPTA, HYDERABAD. (PAN ACWPG 9807 B) APPELLANT RESPONDENT ITA NO.1178/HYD/2011 ASSESSMENT Y EAR 2008-09 THE ACIT, CIRCLE 6(1), HYDERABAD VS M/S PUSHPA GUPTA, HYDERABAD. (PAN AAEEPG 6161N) APPELLANT RESPONDENT APPELLANT BY : SHRI K.C. DEVDAS RESPONDENT BY : SHRI D.D. GOYAL DATE OF HEARING : 21.9.2011 DATE OF PRONOUNCEMENT : 31.10.2011 ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 2 ORDER PER ASHA VIJAYA RAGHAVAN, J.M. THESE FOUR APPEALS PREFERRED BY THE ASSESSEE AS W ELL AS THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) IV, HYDERABAD DATED 31.3.2011 AND PERTAINS TO THE ASSES SMENT YEAR 2008-09. ITA NO.750/HYD/2011 : 2. BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SEARCH OPERATION AT THE RESIDENTIAL-CUM-BUSINESS PREMISES OF SHRI. ARUN GUPTA SITUATED AT A-108, JOURNALIST COLONY, JUBILEE HILLS, HYDERABAD ON 14.12.2007. DURING THE COURSE OF SEARCH OPERATI ONS, SWORN STATEMENTS WERE RECORDED FROM SHRI. ARUN GUPTA AND HIS WIFE SMT. PUSHPA GUPTA AND ALSO VARIOUS DOCUMENTS, PAPERS WER E SEIZED AT THE TIME OF SEARCH. SUBSEQUENT TO THE SEARCH NOTICES U NDER SECTION 153A OF THE ACT WERE ISSUED IN THE CASE OF THE ASSESSEE AND HIS WIFE SMT. PUSHPA GUPTA. IN RESPONSE TO THE SAID NOTICES, THE ASSESSEE SUBMITTED RETURNS OF INCOME FOR VARIOUS ASSESSMENT YEARS. SOME ADDITIONAL INCOMES WERE DISCLOSED IN THE RETURNS FI LED IN RESPONSE TO NOTICE UNDER SECTION 153A FOR SOME ASSESSMENT YEARS . 3. THE ASSESSING OFFICER MADE SOME ADDITIONS DUR ING THE ASSESSMENT PROCEEDINGS. AGGRIEVED BY THE ADDITIONS MADE FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSEE CAME UP APPEA L BEFORE THE ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 3 CIT (A). THE CIT (A) PARTLY ALLOWED THE APPEAL AND WHILE DOING SO, THE CIT (A) SUSTAINED ADDITION OF RS.11,54,260/- AND DE LETED THE BALANCE ADDITIONS OUT OF THE FOLLOWING ITEMS CLAIMED IN THE HANDS OF THE ASSESSEE AND HIS WIFE SMT. PUSHPA GUPTA: A) SALE OF SCRAP AT PADMARAO NAGAR RS.3,73,000/- B) SALE OF SCRAP AT JEDIMETLA RS.4,50,000/- C) DIFFERENCE OF SALE PROCEEDS OF GOLD JEWELLERY BY SMT. LATE LAXMI RS.44,500/- BAI D) WITHDRAWAL OF FDRS AND LOANS AGAINST FDRS RS.2,87,760/- ------------------ TOTAL RS.11,5 5,260/- ============ 4. THE CIT(A) ALSO SUSTAINED THE ADDITIONS OF RS.2 9,13,526/- OUT OF THE TOTAL EXPENDITURE OF RS.58,27,053/- BEING 50 % ADDED IN THE HANDS OF THE ASSESSEE TOWARDS UNEXPLAINED EXPENDITU RE INCURRED IN PERFORMING THE MARRIAGE. AGGRIEVED BOTH THE ASSES SEE AND THE DEPARTMENT ARE IN APPEAL BEFORE US. 5. IN ITA NO.750/HYD/2011, THE ASSESSEE SHRI ARUN GUPTA RAISED THE ADDITIONAL GROUNDS WHICH ARE AS FOLLOWS: 1. WITHOUT PREJUDICE TO THE GROUNDS RAISED EARLIER : ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 4 I) THE ORDER OF THE CIT(A), HYDERABAD IN ESTIMATING THE MARRIAGE EXPENSES AT RS.58,69,000 AS AGAINST RS.53,66,900 ES TIMATED BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. II) THE ORDER OF THE CIT(A) HYDERABAD IN DETERMININ G THE MARRIAGE EXPENSES OVER AND ABOVE THE RECORDED EXPENSES AT RS .13,45,893 FOR WHICH CREDIT WAS GIVEN BY THE ASSESSING OFFICER AMOUNTS TO ENHANCEMENT OF ASSESSMENT WITHOUT GIVING AN OPPORTU NITY AND THEREFORE CREDIT FOR THE SUM OF RS.13,45,893/- IS T O BE ALLOWED. 6. WE FIND THAT THE ASSESSING OFFICER AT PARA 4.5 OF THE ORDER HELD AS FOLLOWS: THUS, CONSIDERING THE SUM TOTAL AT RS.53,66,900/- ENTERED ON DIFFERENT PAGES OF THE SEIZED DIARY AND ALSO CONSID ERING THE ABOVE FIGURES INDICATE THAT THE TOTAL EXPENDITURE INCURRE D FOR THE MARRIAGE WAS AT RS.1,30,00,000/-. EVEN IF IT IS CONSIDERED THAT THE ASSESSEE HAS MADE A ROUGH ESTIMATE OR PROBABLE EXPENDITURE T O BE INCURRED FOR PERFORMING THE MARRIAGE OF HIS DAUGHTER, THERE SHOU LD BE A MARGINAL DIFFERENCE IN THE TOTAL EXPENDITURE ACTUALLY INCURR ED. SUCH DIFFERENCE SHOULD BE ABOUT 10 TO 20%. HOWEVER, AS AGAINST THE FIGURES FOUND IN THE DIARY AS BROUGHT OUT ABOVE, THE ASSESSEE HAS AD MITTED THE MARRIAGE EXPENDITURE AT RS.13,45,893/- WHICH IS ALM OST 10% OF THE PROBABLE EXPENDITURE MENTIONED IN THE SEIZED DIARY. THIS IS MOST ILLOGICAL CONSIDERING THE STYLE AND FASHION IN WHIC H MARRIAGE WAS PERFORMED BY THE ASSESSEE. ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 5 7. THE ASSESSING OFFICER FURTHER ENUMERATED MARRIA GE CEREMONIES PERFORMED ON VARIOUS DAYS AND THEREAFTER HELD AS FO LLOWS: CONSIDERING THE OVERALL FACTS OF THE CASE, THE EXP LANATION OFFERED BY THE ASSESSEE IS NOT ACCEPTABLE AND THE EXPENDITU RE INCURRED FOR PERFORMING THE MARRIAGE IS CONSIDERED AT RS.1,30,00 ,000/- OUT OF WHICH ONLY AN AMOUNT OF RS.13,45,893/- WAS ADMITTED IN TH E BOOKS OF ACCOUNTS OF THE ASSESSEE AND HIS WIFE. THEREFORE, THE DIFFERENCE OF RS.1,16,54,107/- IS TREATED AS UNEXPLAINED EXPENDIT URE AND THE SAME IS BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE AND HIS WIFE SMT. PUSHPA GUPTA EQUALLY AT RS.58,27,053/- EACH U/S 69C OF THE IT ACT. 8. THE CIT (A) HELD AT PARA 13.9. AS FOLLOWS: ON THE OTHER HAND, LOOKING AT THE STYLE IN WHICH TH E ENTIRE MARRIAGE WAS PERFORMED, AS ALSO THE SEIZED DOCUMENT S AND OTHER CIRCUMSTANTIAL EVIDENCE, AND IN THE ABSENCE OF DISC LOSURE OF SUCH EXPENSES BY THE ASSESSEE, IT IS CONCLUDED THAT THE EXPENSES AS PLANNED AND MENTIONED IN THE DIARY, WERE INDEED INC URRED BY SHRI ARUN GUPTA AND SMT. PUSHPA GUPTA. ACCORDINGLY, THE EXPENSES OF RS.58,69,900/- SPECIFICALLY ENUMERATED IN THE SEIZE D DIARY, ARE CONSIDERED AS EXPENSES INCURRED OUT OF THE UNDISCLO SED SOURCES, OVER AND ABOVE THE RECORDED EXPENSES OF RS.13,45,893/-. THE SAME ARE THEREFORE REQUIRED TO BE BROUGHT TO TAX IN THE HAND S OF SMT. PUSHPA GUPTA AND SHRI ARUN GUPTA EQUALLY AT RS.29,34,950/- EACH U/S 69C OF THE IT ACT. RESTRICTING THE ADDITION OF RS.58,2 7,053/- TO RS.29,34,950/- THEREFORE THE GROUND TAKEN BY THE AS SESSEE ON THIS ISSUE IS PARTLY ALLOWED. ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 6 9. WE FIND THAT THE ORDER OF THE CIT (A) THAT HE HAS ARRIVED AT THE FIGURE OF RS.58,69,000/- BY TAKING THE ITEM / HEAD WISE EXPENDITURE IN THE SEIZED DIARY OF THE ASSESSEE (PA RA 13.6 OF CIT(A) ORDER) AND FURTHER THE CIT(A) HAS OBSERVED IN PARA 13.4 OF HIS ORDER AS FOLLOWS: ACCORDINGLY THE ASSESSING OFFICER REJECTED THE EXP LANATION OF THE ASSESSEE. HOWEVER WHILE NOTING THE PAGEWISE TOTAL OF THE EXPENSES IN THE DIARY CAME TO RS.53,66,900/- (SIC), HE HAS OPINED THAT THE ACTUAL EXPENDITURE WAS RS.1,30,00,000/- AS REFL ECTED FROM THE SEPARATE NOTINGS ON PAGE NO. 42 . WE HAVE ALSO NOTED THE ARGUMENT OF THE LEARNED DEPARTMENTAL REPRESENTATIVE, WHILE C OUNTERING THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE SHOULD HAVE BEEN GIVEN AN OPPORTUNITY WHILE ENHANCING THE AMOUNT FROM RS.5 3,66,900/- TO RS.58,69,000/- BY THE CIT(A), THAT THERE IS ACTUALL Y NO ENHANCEMENT AND ONLY A MISTAKE ON PART OF THE A.O TO NOTE CORRE CTLY THE AMOUNT IN THE SEIZED DIARY OF THE ASSESSEE FOR WHICH AN OPPOR TUNITY OF HEARING IS NOT ESSENTIAL. HENCE THE FIRST ADDITIONAL GROUND OF APPEAL IS DISMISSED. 10. WITH RESPECT TO THE SECOND ADDITIONAL GROUND O F APPEAL, THE ASSESSING OFFICER AFTER A THOROUGH EXAMINATION OF THE FACTS AND CIRCUMSTANCES DETERMINED THE EXPENDITURE TO BE INCU RRED AT RS.1.30 CRORES AND FURTHER SET OFF THE DIFFERENCE AT RS.13, 45,893/- WHICH WAS ADMITTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE A ND HIS WIFE. THEREFORE, THE CIT (A) ERRED IN NOT GIVING CREDIT F OR THE AMOUNT OF RECORDED EXPENSES AT RS.13,45,893/-. HENCE WE ALLO W THE SECOND ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE . ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 7 11. IN GROUND NO. 2, THE FIRST ISSUE RAISED BY THE ASSESSEE IS TOWARDS THE ADDITION OF SALE OF SCRAP AT PADMA R AO NAGAR AT RS.3.73 LAKHS AND AT JEDIMETLA AT RS.4.50 LAKHS. T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E HAD MAINTAINED PROPER BOOKS OF ACCOUNTS AND P&L ACCOUNT FOR EVERY YEAR AND ALSO HAD PROPERLY MAINTAINED THE CONSTRUCTION ACCOUNT FO R THE PROPERTY CONSTRUCTED AT JUBILEE HILLS. HENCE THE LEARNED CO UNSEL CONTENDED THAT BOTH THE ASSESSING OFFICER AND THE CIT (A) MIS BELIEVED THE ASSESSEES CLAIM THAT SCRAP HAD BEEN SOLD FOR AN AM OUNT OF RS.3.73 LAKHS AND ON THE GROUND THAT NO EVIDENCE WAS FILED BEFORE THEM. THE LEARNED COUNSEL POINTED OUT THAT AT PAPER BOOK 2 AT PAGES 1-8 PROOF OF BUILDING CONSISTING OF 1400 SQ.FT. IS AVAILABLE AND FROM PAPER BOOK 3 PAGES 3-4, ONE CAN FIND OUT THAT THE BUILDING IS NO MORE IN EXISTENCE AND HENCE THE SAME WAS DEMOLISHED AND THI S WOULD BE ENOUGH DOCUMENTARY EVIDENCE TO SUPPORT THE CLAIM OF THE ASSESSEE THAT THE SCRAP EXISTED AND THE SAME WAS SOLD. 12. IN GROUND NO.2, THE SECOND ISSUE WITH REFERENCE TO THE SALE OF FACTORY BUILDING AT JEDIMETLA, THE LEARNED COUNSEL POINTED OUT AT PAGES 23-24 BEING THE SALE RECEIPTS AT PB 3. TH E LEARNED COUNSEL ALSO TOOK US THROUGH PB 2 WHERE THE MACHINERY LIST WAS ENUMERATED AND THE COUNSEL SUBMITTED THAT THERE WAS NO MACHINE RY SOLD ALONG WITH THE FACTORY BUILDING. THEREFORE, THE SUM OF R S.4.50 LAKHS WERE THE PROCEEDS OUT OF THE MACHINERY. 13. EVEN THOUGH THE LEARNED COUNSEL WAS NOT ABLE TO PRODUCE THE DEMOLITION CERTIFICATE WITH RESPECT TO THE SALE OF SCRAP AT JUBILEE HILLS, ENOUGH EVIDENCE HAS BEEN PRODUCED, F ROM A CAREFUL ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 8 READING OF THE SCHEDULE OF THE PROPERTY SOLD. SIMI LARLY, IN THE CASE OF MACHINERY, THE EXPLANATION OF THE COUNSEL IS TO BE CONSIDERED. IN THESE CIRCUMSTANCES, WE DELETE THE ADDITIONS OF RS. 3.73 LAKHS (PADMARAO NAGAR) AND RS.4.50 LAKHS (JEDIMETLA) MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT (A). 14. IN GROUND NO.2, THIRD ISSUE IS THE DIFFERENCE OF SALE PROCEEDS OF GOLD JEWELLERY BY SMT. LATE LAXMI BAI. THE LEARNED COUNSEL POINTED OUT AT PAGES 5-6-7 AT PB 3 AND POIN TED OUT THAT PAGE 6 WAS NOT CONSIDERED. WE FIND THAT FUNDS WERE AVAI LABLE AND THE ISSUE AS TO WHETHER THE JEWELLERY BELONGS TO M/S PU SHPA GUPTA OR LATE LAXMI BAI IS NOT RELEVANT AND HENCE A SUM OF R S.4,71,700/- WHICH WAS AVAILABLE HAS NOT BEEN CONSIDERED BY THE LOWER AUTHORITIES. WE SET ASIDE THE ISSUE TO THE FILE OF THE A.O TO VE RIFY THE SAME AND DECIDE IN ACCORDANCE WITH LAW. 15. IN GROUND NO.2, THE FOURTH ISSUE IS THE WITHDRAWAL OF FDRS AND LOANS AGAINST FDRS. 16. THE CIT(A) HELD AS FOLLOWS: 8.4 SO FAR AS THE ISSUE OF INVESTMENT OF RS.72,78, 291/-, OUT OF WITHDRAWALS OF FDS AND LOANS AGAINST FDRS IS CONCER NED, THE ASSESSING OFFICER, IN HIS REMAND REPORT DATED 1.3.2 011 HAS SUBMITTED THAT OUT OF THE TOTAL CLAIM OF RS.77,78,291/-, THE APPELLANT HAS BEEN ABLE TO EXPLAIN THE SOURCES TO THE TUNE OF RS.69,90 ,531/-. WITH REGARD TO THE BALANCE OF RS.2,86,760/- IT WAS SUBMITTED TH AT AS PER THE APPELLANT THE SAME REPRESENTED CASH PROCEEDS RECEIV ED ON MATURITY OF ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 9 DEPOSITS WITH POST OFFICE. HOWEVER, THIS CLAIM COUL D NOT BE SUBSTANTIATED BY SUPPORTING DOCUMENTS. ACCORDINGLY, IT HAS BEEN SUBMITTED THAT OUT OF THE TOTAL AMOUNT CLAIMED AS I NVESTED OUT OF WITHDRAWALS OF FDS AND LOANS AGAINST FDRS, RS.69,90 ,531/- MAY BE CONSIDERED AS EXPLAINED 17. WITH REGARD TO RS.2,86,760 THE ASSESSEE EXPLAI NED THAT THE SUM REPRESENTED CASH PROCEEDS RECEIVED ON MATUR ITY OF DEPOSIT WITH POST OFFICE, BUT THE SAME WAS NOT PROVED WITH DOCUMENTARY EVIDENCE. HENCE WE SET ASIDE THIS ISSUE TO THE FILE OF THE A.O TO DECIDE AFTER GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE T O PRODUCE EVIDENCE TO SUBSTANTIATE HIS STAND . 18. GROUND NO.3 IS THAT THE CIT(A) IS WRONG IN SUSTAINING THE ADDITION OF RS.29,13,526 OUT OF TOTAL EXPENDITURE O F RS.58,27,053 BEING 50% ADDED IN THE HANDS OF THE ASSESSEE TOWARD S UNEXPLAINED EXPENDITURE INCURRED IN PERFORMING THE MARRIAGE, TH E ASSESSING OFFICER AT PARA 4.5 OF THE ORDER HELD AS FOLLOWS: THUS, CONSIDERING THE SUM TOTALS AT RS.53,66,900/- ENTERED ON DIFFERENT PAGES OF THE SEIZED DIARY AND ALSO CONSID ERING THE ABOVE FIGURES INDICATE THAT THE TOTAL EXPENDITURE I NCURRED FOR THE MARRIAGE WAS AT RS.1,30,00,000/-. EVEN IF IT IS CO NSIDERED THAT THE ASSESSEE HAS MADE A ROUGH ESTIMATE OR PROBABLE EXPENDITURE TO BE INCURRED FOR PERFORMING THE MARRI AGE OF HIS DAUGHTER, THERE SHOULD BE A MARGINAL DIFFERENCE IN THE TOTAL EXPENDITURE ACTUALLY INCURRED. SUCH DIFFERENCE SHO ULD BE ABOUT 10 TO 20%. HOWEVER, AS AGAINST THE FIGURES FOUND I N THE DIARY ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 10 AS BROUGHT OUT ABOVE, THE ASSESSEE HAS ADMITTED THE MARRIAGE EXPENDITURE AT RS.13,45,893/- WHICH IS ALMOST 10% O F THE PROBABLE EXPENDITURE MENTIONED IN THE SEIZED DIARY. THIS IS MOST ILLOGICAL CONSIDERING THE STYLE AND FASHION IN WHICH MARRIAGE WAS PERFORMED BY THE ASSESSEE. 19. THE ASSESSING OFFICER FURTHER ENUMERATED MARR IAGE CEREMONY ON VARIOUS DAYS AND THEREAFTER HELD AS FOL LOWS: CONSIDERING THE OVERALL FACTS OF THE CASE, THE EXP LANATION OFFERED BY THE ASSESSEE IS NOT ACCEPTABLE AND THE EXPENDITU RE INCURRED FOR PERFORMING THE MARRIAGE IS CONSIDERED AT RS.1,3 0,00,000/- OUT OF WHICH ONLY AN AMOUNT OF RS.13,45,893/- WAS A DMITTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND HIS WIFE. THEREFORE, THE DIFFERENCE OF RS.1,16,54,107/- IS TREATED AS UN EXPLAINED EXPENDITURE AND THE SAME IS BROUGHT TO TAX IN THE H ANDS OF THE ASSESSEE AND HIS WIFE SMT. PUSHPA GUPTA EQUALLY AT RS.58,27,053/- EACH U/S 69C OF THE IT ACT. 20. THE CIT(A) HELD AT PARA 13.9. AS FOLLOWS: ON THE OTHER HAND, LOOKING THEIR STYLE IN WHICH TH E ENTIRE MARRIAGE WAS PERFORMED, AS ALSO THE SEIZED DOCUMENT S AND OTHER CIRCUMSTANTIAL EVIDENCE, AND IN THE ABSENCE O F DISCLOSURE OF SUCH EXPENSES BY THE ASSESSEE, IT IS CONCLUDED THAT THE EXPENSES AS PLANNED AND MENTIONED IN THE DIARY, WER E INDEED INCURRED BY SHRI ARUN GUPTA AND SMT. PUSHPA GUPTA. ACCORDINGLY, THE EXPENSES OF RS.58,69,900/- SPECIFI CALLY ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 11 ENUMERATED IN THE SEIZED DIARY, ARE CONSIDERED AS E XPENSES INCURRED OUT OF THE UNDISCLOSED SOURCES, OVER AND A BOVE THE RECORDED EXPENSES OF RS.13,45,893/-. THE SAME ARE THEREFORE REQUIRED TO BE BROUGHT TO TAX IN THE HANDS OF SMT. PUSHPA GUPTA AND SHRI ARUN GUPTA EQUALLY AT RS.29,34,950/- EACH U/S 69C OF THE IT ACT. RESTRICTING THE ADDITION OF RS.58,27,0 53/- TO RS.29,34,950/- THEREFORE THE GROUND TAKEN BY THE AS SESSEE ON THIS ISSUE IS PARTLY ALLOWED. 21. AGGRIEVED THE ASSESSEES ARE ON APPEAL. BOTH T HE AO AND CIT(A) HAS ESTIMATED THE EXPENDITURE ON MARRIAGE BA SED ON THE ENTRIES IN THE DIARY. WHILE THE AO ADDED THE ENTIRE ENTRIES IN THE DIARY, THE CIT (A) RESTRICTED THE ADDITION TO RS. 5 3,66,900/- BEING THE SUM OF SPECIFIC ENTRIES. IT IS THE CONTENTION OF TH E ASSESSEE THAT THE ENTRIES WERE PROBABLE EXPENDITURE TO BE INCURRED DU RING MARRIAGE. THE ENTRIES IN THE DIARY MAY OR MAY NOT REPRESENT T HE ACTUAL EXPENDITURE AND HENCE WITHOUT ANY CORROBORATING EVI DENCE ESTIMATES OF THE AO AND THE CIT(A) CANNOT BE ACCEPTED . ON TH E OTHER HAND EVEN IF THE ENTRIES IN THE DIARY ARE ONLY A ROUGH ESTIMA TE OF PROBABLE EXPENDITURE ON MARRIAGE AS SUBMITTED BY THE ASSESSE E, IT IS DIFFICULT TO IMAGINE THAT WHILE THE ESTIMATED EXPENDITURE IS AROUND RS. 130 LAKHS, THEY WERE ABLE TO ECONOMISE AND ACTUALLY COM PLETED THE MARRIAGE SPENDING ONLY RS. 13 LAKHS. IN THE ABSENCE OF ANY EVIDENCE OR PARTICULARS OF SPECIFIC EXPENDITURES FROM BOTH S IDES, WE FEEL THAT INTEREST OF JUSTICE WILL BE SERVED IF WE ESTIMATE T HE EXPENDITURE INCURRED BY THE ASSESSEES ON THEIR DAUGHTERS MARRI AGE AT RS. 30,00,000/- AND 50% OF THE SAME AMOUNTING TO RS. 1 5,00,000/- ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 12 SHALL BE CONSIDERED AS EXPENDITURE INCURRED BY EACH OF THE ASSESSES ON THIS ACCOUNT. ADDITIONS WILL BE WORKED OUT ACCOR DINGLY. 22. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.749/HYD/2011 : 23. GROUND NO. 1 IS A GENERAL GROUND. 24. GROUND NO. 2 READS AS FOLLOWS: THE CIT(A) WITHOUT CONSIDERING PROPER FACTS, EVID ENCE AND MATERIAL ON RECORD SUSTAINED THE ADDITION TOWARDS T HE VALUATION OF CLOSING STOCK AT RS.57,01,189/- WHICH IS NOT CORREC T AND THE SAME MAY BE DELETED 25. THE FACTS ARE AS FOLLOWS: DURING THE COURSE OF SEARCH OPERATION, IT WAS OBSE RVED THAT NO BOOKS OF ACCOUNTS OR STOCK REGISTER HAD BEEN MAINTA INED FOR THE BUSINESS OF DESIGNER SAREES CARRIED ON BY THE ASSSE SEE THROUGH HER PROPRIETARY CONCERN. ON THE DAY OF SEARCH, A P HYSICAL INVENTORY OF THE STOCK OF THE DESIGNER SAREES WAS T AKEN, WHEREBY THE NUMBER OF SAREES FOUND WAS 868. IT WAS NOTICED THAT OUT OF THE SAME, ONLY PART OF THE STOCK OF SAR EES CONTAINED PRICE TAGS, IN RESPECT OF THE REMAINING SAREES W ITHOUT PRICE TAGS, THE ASSSESEE PROVIDED THE COST OF THE SAREES , ONLY ON THE ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 13 BASIS OF HER MEMORY. ACCORDINGLY, THE VALUATION OF STOCK WAS DONE AT RS 34,96,680/- AS UNDER: DESCRIPTION NO. OF SAREES AMOUNT SAREES WITH PRICE TAGS 250 15,11,760 SAREES WITHOUT PRICE TAGS 618 19 ,84,920 TOTAL 868 34,96,680 26. SINCE IT WAS FELT THAT THERE WAS NO BASIS FOR THE VALUES STATED BY THE ASSESSEE FOR THE SAREES WITHOUT PRIC E TAGS, THE STOCK OF THE SAREES WAS KEPT UNDER PROHIBITORY ORDERS. LATE R, IN THE SUBSEQUENT SEARCH PROCEEDINGS ON 27.12.2007, SRI AR UN GUPTA SUBMITTED THAT THE COST OF THE SAREES WITHOUT PRIC E TAGS WAS RS 23,35,901/- AS AGAINST RS 19,84,920/- STATED EARLIE R. HOWEVER, HE COULD NOT FURNISH ANY BASIS OR EVIDENCE FOR ARRIVIN G AT SAID PRICE ALSO. THEREFORE, THE STOCK OF SAREES WITHOUT PRICE TAGS WAS VALUED ON THE BASIS OF AVERAGE PURCHASE PRICE OF THE LAST 3 MONTH S PRIOR TO THE DATE OF SEARCH, ON THE BASIS OF FIRST IN FIRST OUT (FIFO ) METHOD. THEREBY, THE VALUE OF STOCK OF THE SAREES WITHOUT PRICE TAG S WAS ARRIVED AT RS 43,82,029/- IT WAS NOTICED FROM THE SEIZED MATERIAL , ANNEXURE A/SHP/PO/01 DATED 20.12.2007 AND A/SHP/PO-101 DATED 7.2.2008 THAT THE PURCHASE PRICE OF MOST OF THE DESIGNER SAR EES RANGED FROM RS 20,000/- TO RS 60,000/- HOWEVER THE ASSESSEE IN HER VALUATION HAD VALUED NONE OF THE SAREES IN THE SAID RANGE. CONSID ERING THESE FACTS, ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 14 THE VALUE OF THE STOCK OF THE SAREES WAS ARRIVED AT RS. 58,93,789/- DURING THE COURSE OF SEARCH, AS UNDER: DESCRIPTION NO. OF SAREES AMOUNT SAREES WITH PRICE TAGS 250 15,11,760 SAREES WITHOUT PRICE TAGS 618 43,82,029 TOTAL . 868 58,93,789 27. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSSESEE WAS REQUIRED TO FURNISH DETAILS REGARDING THE VALUE OF SAREES AS ON THE DATE OF SEARCH, ALONG WITH EVIDENCE, AND ALSO TO FURNISH THE BOOKS OF ACCOUNTS OF M/S SHRI HARI PARIDHAN. IT WA S CONTENDED THAT THE STOCK OF SAREES WITHOUT PRICE TAGS HAD BEEN V ALUED BY THE DEPARTMENT AT A VERY HIGH VALUE. THE ASSSESEES AU THORIZED REPRESENTATIVE SUBMITTED A DETAILED STATEMENT OF P URCHASES FROM JULY, 2007 UP TO THE DATE OF THE SEARCH, WHEREIN TH E VALUE OF 1092 SAREES WAS WORKED OUT AT RS. 43,82,029/- WHICH GAVE AN AVERAGE RATE OF ASSESSORS 3,069/- PER SAREE. AT THE SAID RATE, T HE ASSSESEE VALUED THE 618 SAREES WITHOUT PRICE TAG AT RS.23,35,901/ - WITH REGARD TO THE SAREES WITH PRICE TAG, THE ASSSESEE CLAIMED T HAT THE COST SHOULD BE TAKEN AFTER REDUCING THE PROFIT MARGIN OF 40%. THE ASSSESEE, THEREFORE, VALUED THE STOCK OF SAREES AS UNDER: DESCRIPTION NO. OF SAREES AMOUNT SAREES WITH PRICE TAGS (RS 15,11,760 GP @ 40% RS.604754) 250 9,07,006 ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 15 SAREES WITHOUT PRICE TAGS 618 23,35,901 TOTAL 868 32,42,907 28. THE ASSESSING OFFICER NOTED THAT THE ASSSE SEE COULD NOT FURNISH THE BOOKS OF ACCOUNT FOR VERIFICATION, DESP ITE A SPECIFIC REQUIREMENT IN THIS REGARD. BESIDES, HE FELT THAT THE CLAIM OF GROSS PROFIT MARGIN OF 40% WAS NOT ACCEPTABLE, AS THE GRO SS PROFIT ADMITTED BY THE ASSSESEE FOR THE A.Y. 2008-09 WAS 12.74% ONL Y. HE THEREFORE, VALUED THE SAREES WITH PRICE TAGS AFTER REDUCING THE GROSS PROFIT @ 12.74% ONLY FROM THE TOTAL AS PER THE PRICE TAGS AND ARRIVED AT THE VALUE OF RS 13,19,160/-. 29. WITH REGARD TO THE VALUE OF THE SAREES WI THOUT PRICE TAGS IT WAS CONTENDED BY THE ASSSESEES AUTHORIZED REPRE SENTATIVE THAT IF THE VALUE OF 618 SAREES IS ADOPTED AT RS 43,82,029/ - AS PER THE VALUATION DONE DURING THE COURSE OF SEARCH ON FIFO BASIS, THE AVERAGE PRICE PER SAREE WOULD WORK OUT TO RS 7,090/ - AS AGAINST THE SAME, THE VALUE OF STOCK OF SAREES WITHOUT PRICE T AGS VARIED BETWEEN RS 900/- TO RS. 28,200/-. HE THEREFORE, REQUESTED T HE ASSESSING OFFICER TO ADOPT THE AVERAGE PRICE AT RS 3,069/- AN D ACCEPT THE VALUATION OF SAREES WITHOUT PRICE TAGS AT RS 23,3 5,901/- THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTIONS OF THE ASSSESEE, AS HE OPINED THAT THE FIFO METHOD, IS AN ACCEPTED METH OD AND THE VALUATION, AS ADOPTED AT THE TIME OF SEARCH, WAS TA KEN FOR ARRIVING AT THE VALUE OF STOCK OF SUCH SAREES. THE TOTAL VALUE OF THE STOCK OF SAREES WAS THEREFORE ARRIVED AT AS UNDER: ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 16 DESCRIPTION NO. OF SARE ES AMOUNT SAREES WITH PRICE TAGS AFTER GP (RS.15,11,760 GP @ 12.74% RS 1,92,600 ) 250 13,19,160 SAREES WITHOUT PRICE TAGS AS ADOPTED AT THE TIME OF SEARCH ON FIFO METHOD 618 43,82,029 TOTAL 8 68 57,01,189 30. ACCORDINGLY, THE ASSESSING OFFICER WORKED OUT THE VALUE OF THE STOCK SAREES FOUND DURING THE COURSE OF SEAR CH AT RS 57,01,189/- THE ASSESSING OFFICER OPINED THAT THE V ALUE OF THE STOCK AS PER THE BOOKS OF ACCOUNTS, AS ON THE DATE OF SEA RCH, WAS NOT KNOWN. ACCORDINGLY, THE ENTIRE VALUE OF STOCK OF S AREES WAS TREATED AS UNACCOUNTED AND ASSESSED IN THE HANDS OF THE ASS SESEE UNDER SEC 69 OF THE I.T. ACT. 31. AGGRIEVED BY THE ORDER OF THE A.O THE ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT (A) 32. THE AUTHORIZED REPRESENTATIVE OF THE ASSSESEE SUBMITTED BEFORE THE CIT(A) THAT FOR THE AYS 2007-08 AND 2008 -09., THE BOOKS OF ACCOUNTS OF THE ASSSESEES BUSINESS WERE AUDITED U/ S 44AB OF THE ACT. THE ASSSESEE FILED HER RETURNS OF INCOME ON T HE BASIS OF SUCH AUDITED ACCOUNTS. IT WAS SUBMITTED THAT WHILE THE S EARCH WAS CONDUCTED ON 14.12.2007, RETURNS OF INCOME, UP TO A ND INCLUDING THE ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 17 ASSESSMENT YEAR 2006-07, HAD BEEN FILED BY THE ASSS ESEE AND HER FAMILY MEMBERS BEFORE THE SAID DATE. 33. THE REPRESENTATIVE OF THE ASSSESEE SUBMITT ED THAT WHILE LIFTING THE PROHIBITORY ORDERS, THE DEPARTMENTAL AU THORITIES HAD VALUED THE STOCK OF SAREES WITHOUT PRICE TAGS AT RS. 43, 82,029/- HOWEVER, AS THE ASSSESEE WAS NOT SATISFIED WITH THE VALUATIO N OF 618 SAREES WITHOUT PRICE TAGS AT RS 43,82,029/- ANOTHER VALU ATION REPORT WAS MADE BEFORE THE INCOME TAX AUTHORITIES DURING THE C OURSE OF SEARCH ITSELF, AS PER WHICH THE VALUE OF SUCH SAREES WAS W ORKED OUT AT RS, 23,35,901/- HE POINTED OUT THAT A COPY OF THE SAM E IS PLACED AT PAGE NOS. 107 & 108 OF THE PAPER BOOK. IT WAS ALSO SUBMITTED THAT AFTER DEDUCTING THE PROBABLE PROFIT MARGIN IN RESPE CT OF THE VALUE OF SAREES WITH PRICE TAGS, THE TOTAL VALUE OF THE ST OCK OF 868 SAREES WAS RS, 82,42,967/-. 34. IT WAS SUBMITTED THAT AS PER THE INVENTOR Y PREPARED BY THE INVESTIGATION WING WHILE LIFTING THE PROHIBITOR Y ORDER, THE VALUATION OF SAREES WITHOUT PRICE TAGS HAD BEEN D ONE ON THE BASIS OF PURCHASE BILLS OF THE LAST THREE MONTHS, FURNISHING THE DETAILS OF THE LAST THREE MONTHS PRIOR TO THE DATE OF SEARCH, THE REPRESENTATIVE SUBMITTED THAT THE ASSSESEE HAD PURCHASED A TOTAL O F 1092 SAREES FOR RS 39,41,279/- WHICH GAVE AN AVERAGE PRICE OF RS 3, 609/- PER SAREE, WHEREAS THE ASSSESEE VALUED 618 SAREES WITHOUT PRI CE TAGS AT RS.3,773/- AS AGAINST, THIS THE VALUATION ADOPTED I N THE ASSESSING OFFICERS VALUATION REPORT IS RS 7,090/- PER SAREE, WHICH IS NOT AT ALL CORRECT. THE REPRESENTATIVE OF THE ASSSESEE ALSO SU BMITTED THE PURCHASE BILLS OF THE LAST 3 MONTHS, CONTENDING THA T THE VALUATION ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 18 DONE BY THE ASSSESEE IS CORRECT AND FAIR, WHEN COMP ARED WITH THE BOOKS OF ACCOUNTS. ACCORDINGLY, IT WAS SUBMITTED T HAT THE ADDITION OF RS 57,01,189/- BE DELETED. 35. THE CIT(A) HELD AS FOLLOWS: I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE ASSSESEE, SO FAR AS THE VALUATION OF SAREES WITH PRICE TAGS IS CONCERNED, THE ASSESSING OFFICER FOUND THAT THE ASSSESEE HAD ADMIT TED GROSS PROFIT FOR THE AY 2008-09 @ 12,74% ONLY. ON THE OTHER HAND, T HE ASSSESEE HAD NOT BEEN ABLE TO JUSTIFY AS TO WHY THE VALUE OF SU CH STOCK SHOULD BE TAKEN AFTER CONSIDERING THE GP ELEMENT OF 40%. SINC E, THE CONCLUSION OF THE ASSESSING OFFICER IS SUPPORTED BY THE RECORDS OF THE ASSSESEE ITSELF, I DO NOT FIND ANY INFIRMITY IN ADOPTION OF VALUE OF STOCK OF 250 SAREES WITH PRICE TAGS AT RS, 13,19,160/- AFTER C ONSIDERING THE PROFIT ELEMENT @ 12.74% IN THE TOTAL PRICE TAG VALUE OF RS 15,11,760/-. IT IS ALSO SEEN THAT A STATEMENT IN THIS REGARD WAS RECORDED FROM SRI ARUN GUPTA ON 27.12.2007 ITSELF, WHEREIN HE WAS REQUIRED TO FURNISH THE VALUE OF THE STOCK OF DESIGNER SAREES K EPT UNDER PROHIBITORY ORDERS, WHICH WERE WITHOUT PRICE TAGS AFTER RECONCILIATION WITH THE PURCHASE BILLS. HE WAS ALS O REQUIRED TO FURNISH COMPLETE DETAILS OF THE PURCHASE BILLS AND THE NAMES OF THE PARTIES BESIDES THE BASIS FOR ARRIVING AT THE V ALUE THEREOF AT RS 23,35,901/- HOWEVER SRI GUPTA ONLY STATED THAT H E WILL REFER TO THE PURCHASE BILLS AND PRODUCE THE COMPLETE DETA ILS WITHIN 3 DAYS. THE AUTHORIZED OFFICER THEREAFTER DREW HIS A TTENTION TO THE ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 19 VALUATION MADE BY THE DEPARTMENT AT RS 43,82,029/- STATING THAT THE SAME WAS PREPARED ON THE BASIS OF FIRST IN AND FIRST OUT METHOD AND ON THE BASIS OF THE PURCHASE BILLS OF LA ST THREE MONTHS. HE REQUIRED SRI GUPTA TO EXPLAIN AS TO WHY THE VALUE SHOULD NOT BE TAKEN AT RS, 43,82,029/- AS AGAINST R S 23,35,901/- ARRIVED AT BY HIM, WHICH HAD NO SCIENTI FIC BASIS. IN RESPONSE, SRI GUPTA ONLY STATED THAT HE WILL RECONC ILE THE SEIZED PURCHASE BILLS, COPIES WHEREOF HAD BEEN SUPPLIED TO HIM AND FURNISH COMPLETE DETAILS BY 31.12.2007. SIMILARLY, HE ALSO STATED THAT HE WILL RECONCILE THE VALUATION OF SARE ES WITH PRICE TAGS WITH THE PURCHASE BILLS OF THE LAST 3 MONTHS. FROM THE ASSESSMENT ORDER IT IS CLEAR THAT EVEN DUR ING THE ASSESSMENT PROCEEDINGS, THE ASSSESEE WAS ONCE AGAIN REQUIRED TO FURNISH THE REQUIRED DETAILS/ EVIDENCE TO SUBSTA NTIATE THE CONTENTION REGARDING THE VALUE OF THE SAREES WITHO UT PRICE TAGS . HOWEVER, THE ASSSESEE ONLY ARGUED THAT IF THE VALUE OF 618 SAREES IS TAKEN AT RS 43,82,029/- THE AVERAGE PRICE FOR SAREE WOULD WORK OUT TO RS 7,090/- WHEREAS THE VALUE VARI ES BETWEEN RS 900/- TO RS 28,200/- HE THEREFORE ONLY REQUESTED THAT THE AVERAGE PRICE SHOULD BE ADOPTED AT RS 3,069/- DURING THE COURSE OF APPELLATE PROCEEDINGS, IT WAS NOTICED THAT THERE WAS SUBSTANTIAL DIFFERENCE IN THE RATE ADOPTE D BY THE DEPARTMENT AND THE ASSSESEE IN THE TWO INVENTORIES PREPARED ON 27.12.2007. FOR EXAMPLE, IT WAS SEEN THAT THE RATE FOR 13 JIGGLING SAREES WAS TAKEN AT RS 20,861/- IN THE I NVENTORY PREPARED BY. THE DEPARTMENT, WHEREAS THE ASSSESEE H AD ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 20 ADOPTED THE RATE OF RS 3,343/- ONLY. SIMILARLY, 58 PRINTED WITH WORK SAREES WERE VALUED AT THE RATE OF RS 2,461/- EACH ONLY BY THE ASSSESEE, WHEREAS THE AUTHORIZED OFFICER HAD V ALUED THOSE AT THE RATE OF RS. 14,970/- PER SAREE. IN VIEW OF THESE DISCREPANCIES, THE ASSSESEE WAS AGAIN REQUIRED TO E XPLAIN THE BASIS OF ADOPTING THE VALUE FOR RS 3,343/- AND RS. 2,461/- STATED ABOVE., BESIDES THE OTHER VALUES TAKEN BY HI M IN THE INVENTORY. HOWEVER, DESPITE BEING GIVEN MORE THAN S UFFICIENT OPPORTUNITY IN THIS REGARD THE ASSSESEE HAS FAILED TO SUBSTANTIATE THE BASIS FOR ADOPTING THE ABOVE OR TH E OTHER RATES IN THE INVENTORY PREPARED BY HIM/HER. FROM THE FACTS DISCUSSED ABOVE, IT IS CLEAR THAT TH E ASSSESEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE CONTENTION THAT T HE VALUE OF THE SAREES WITHOUT PRICE TAGS WAS RS 23,35,901/- ONLY . WHILE THE ASSSESEE GROSSLY FAILED TO SUBSTANTIATE HER CONTENT ION THAT THE VALUE OF SAREES WITHOUT PRICE TAGS WAS RS 23,35,9 01/- UNDER THE CIRCUMSTANCES, THE VALUE OF SAREES WITH OUT PRICE TAGS FOUND DURING THE COURSE OF SEARCH HAS BEEN RIGHTLY TAKEN AT RS 43,82,029/- ONLY. SINCE THE ASSSESEE ADMITTEDLY HA D NOT MAINTAINED ANY BOOKS OF ACCOUNTS IN RESPECT OF THE SAREE BUSINESS, ALL OF SUCH STOCK HAS RIGHTLY BEEN CONSID ERED AS UNACCOUNTED AND ASSESSED U/S 69. 36. WE HAVE GONE THROUGH THE FACTS OF THE CASE AND APPRECIATED THE ARGUMENTS OF THE LEARNED COUNSEL SH RI.K.C.DEVDAS ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 21 AND THE SUBMISSIONS MADE BY THE LEARNED DEPARTMENTA L REPRESENTATIVE SHRI.D.D.GOYAL. 37. THE CIT (A) HAS OBSERVED THAT WHEN THE STATEME NT WAS RECORDED FROM SHRI. ARUN GUPTA ON 27.12.2007, HE WA S REQUIRED TO FURNISH THE VALUE OF STOCK OF DESIGNER SAREES KEPT UNDER PROHIBITORY ORDERS WHICH WERE WITHOUT PRICE TAGS AFTER RECONCIL IATION WITH THE PURCHASE BILLS. HE WAS ALSO REQUIRED TO FURNISH COM PLETE DETAILS OF THE PURCHASE BILLS AND THE NAMES OF THE PARTIES, BESIDE S THE BASIS FOR ARRIVING AT THE VALUE THEREOF AT RS.23,35,901/- . S HRI. GUPTA STATED THAT HE WILL REFER TO THE PURCHASE BILLS AND PRODUC E THE COMPLETE DETAILS WITHIN 3 DAYS. WHEN IT WAS POINTED OUT TO HIM THAT THE VALUATION MADE BY THE DEPARTMENT WAS AT RS.43,83,02 9/- AGAIN SHRI.GUPTA ONLY STATED THAT HE WILL RECONCILE THE S EIZED PURCHASE BILLS, COPIES OF WHICH HAD BEEN SUPPLIED TO HIM, AN D FURNISH COMPLETE DETAILS BY 31.12.2007. SIMILARLY HE ALSO STATED THA T HE WILL RECONCILE THE VALUATION OF SAREES WITH PRICE TAGS WITH THE PURCHASE BILLS OF THE LAST THREE MONTHS. IN VIEW OF THE DISCREPANCIES IN THE RATE ADOPTED BY THE DEPARTMENT AND THE ASSESSEE, DESPITE SUFFICIENT OPPORTUNITY HAVING BEEN GIVEN TO THE ASSESSEE IT APPEARS THAT H E HAS FAILED TO SUBSTANTIATE THE BASIS FOR ADOPTING THE RATES IN TH E INVENTORY PREPARED BY HIM. 38. IN THESE CIRCUMSTANCES, WE DEEM IT PROPER AND JUST TO CONFIRM THE ESTIMATION MADE BY THE ASSESSING OFFICE R, WHICH WAS CONFIRMED BY THE CIT [A], IN RESPECT OF THE VALUE O F THE STOCK OF 250 SAREES WITH PRICE TAGS AT RS, 13,19,160/- AFTER C ONSIDERING THE PROFIT ELEMENT @ 12.74% IN THE TOTAL PRICE TAG VALUE OF RS 15,11,760/-. ON ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 22 THE SAME RATIONALE, THE AVERAGE PRICE OF THE SAREES WITH PRICE TAGS WORKS OUT TO RS.5,277/- PER SAREE, WE DIRECT THE AS SESSING OFFICER TO VALUE THE STOCK OF 618 SAREES WITHOUT PRICE TAGS AT THE AVERAGE PRICE OF THE SAREES WITH PRICE TAGS. BY DOING SO, THE V ALUE OF THE STOCK OF 618 SAREES WORKS OUT TO RS.32,61,186/- AS AGAINST R S.43,82,029/- ADOPTED BY THE ASSESSING OFFICER AND CONFIRMED BY T HE CIT [A] AND RS.23,35,901/- ARRIVED BY THE ASSESSEE. ACCORDINGL Y, THE ENTIRE VALUE OF STOCK OF SAREES WORKS OUT TO RS.45,80,346/- WHI CH IS TO BE TREATED AS UNACCOUNTED AND IS TO BE ASSESSED IN THE HANDS O F THE ASSSESEE UNDER SECTION 69 OF THE ACT, AS AGAINST RS.57,01,18 9/- ADOPTED BY THE ASSESSING OFFICER AND RS.32,43,907/- ARRIVED BY THE ASSESSEE. IN THE RESULT, THE GROUND RAISED BY THE ASSESSEE ON TH IS ISSUE IS PARTLY ALLOWED. 39. GROUND NO. 3 IS THAT THE CIT(A) IS NOT CORRECT IN SUSTAINING THE ADDITION OF RS.8,09,721/- BEING THE GIFTS RECEIVED FROM THE MOTHER OF THE ASSESSEE. 9.1 THE ASSESSING OFFICER NOTED THAT THE APPELLANT HAD ADMITTED HAVING RECEIVED GIFTS FROM HER MOTHER, SMT .LAXMIBAI ON A REGULAR BASIS FROM 1.4.2002 ONWARDS AS UNDER: 9.2 THE ASSESSING OFFICER NOTED THAT THE APPELLANT HAD FILED HER ORIGINAL RETURN OF INCOME FOR THE A.Y 2002-03 T O 2006-07 EARLIER, WHICH DID NOT REFLECT ANY SUCH GIFTS. IT W AS NOTED FROM THE COPIES OF THE BANK ACCOUNTS OF THE APPELLANTS DECEASED MOTHER THAT SHE WAS REGULARLY RECEIVING RENTAL INCO ME, WHICH WAS BEING WITHDRAWN THROUGH SELF CHEQUES. THE WIT HDRAWALS ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 23 MADE BY SMT.LAXMIBAI THROUGH SELF CHEQUES WERE CLAI MED BY THE APPELLANT AS GIFTS RECEIVED FROM MOTHER. THE CLAI M OF THE APPELLANT WAS NOT ACCEPTED BY THE ASSESSING OFFICER , AS HE OPINED THAT THE MOTHER COULD HAVE GIVEN GIFTS TO HE R DAUGHTER THROUGH CHEQUES AND THERE WAS NO NECESSITY TO WITHD RAW CASH FOR THE SAME. BESIDES, IT WAS NOTICED THAT PART OF THE GIFTS RECEIVED IN THE YEAR 2006-07 AND THE ENTIRE GIFTS R ECEIVED IN THE YEAR 2007-08 WERE THROUGH CHEQUES, WHICH WERE DULY REFLECTED IN THE BANK STATEMENTS, AS ALSO THE RETURNS OF INCO ME FILED BY LATE SMT.LAXMIBAI. 9.3 THE ASSESSING OFFICER NOTED THAT DURING THE FIN ANCIAL YEAR RELEVANT TO THE A.Y.2008-09, THE APPELLANT HAD ADMI TTED GIFTS FROM MOTHER IN CASH AT RS.4,27,000/-, BESIDES ANOTH ER GIFT OF RS.3,82,521/- RECEIVED ON THE OCCASION OF MARRIAGE OF HER DAUGHTER. FURTHER, THE APPELLANT HAD ADMITTED GIFTS OF RS.42,000/- THROUGH CHEQUES. ACCORDINGLY, OUT OF TH E TOTAL GIFTS SHOWN AS RS.8,51,721/-, THOSE OF RS.42,000/- ONLY W ERE RECEIVED THROUGH CHEQUES, WHILE THE BALANCE WAS IN CASH. HE OPINED THAT THE APPELLANT HAD NOT BEEN ABLE TO PROD UCE ANY OTHER EVIDENCE IN SUPPORT OF THE CLAIM OF GIFTS RECEIVED IN CASH, EXCEPT FOR CONTENDING THAT LATE SMT.LAXMIBAI WAS REGULARLY ASSESSED TO TAX AND HAD SUFFICIENT INCOME TO OFFER SUCH GIFTS. ACCORDINGLY, THE ENTIRE CASH GIFTS OF RS.8,09,721/- WAS TREATED AS N ON GENUINE 40. BEFORE THE CIT (A) IT WAS SUBMITTED BY THE A.R THAT THE MAIN REASON FOR CONSIDERING THE GIFTS AS NON-GENUIN E WAS BECAUSE THE SAME WAS RECEIVED IN CASH. THE LEARNED A.R SUBMITTE D THAT THERE ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 24 WAS NO DISPUTE THAT LATE SMT.LAKSHMI BAI WAS RECEIV ING RENTAL INCOME AND WAS MAKING WITHDRAWALS THROUGH SELF CHEQ UES AS EVIDENCED BY HER RETURNS OF INCOME AND BANK STATEME NTS FOR THE ASSESSMENT YEARS 2002-03 TO 2008-09. THE LEARNED RE PRESENTATIVE OF THE ASSESSEE ALSO STATED THAT LATE.SMT.LAKSHMI BAI WHO EXPIRED ON 2.4.2008 HAD TWO SONS AND THE ASSESSEE IS HER ONLY SURVIVING DAUGHTER. BESIDES SHE USED TO STAY WITH THE ASSESSE E AND WAS PRESENT WITH HER EVEN AT THE TIME OF SEARCH. IT WA S FURTHER SUBMITTED THAT IT WAS ONLY THE ASSESSEE SMT.PUSHPA GUPTA WHO LOOKED AFTER THE WITHDRAWAL FROM THE BANK AND OTHER FINANCIAL MATTER S OF HER MOTHER LATE SMT.LAKSHMI BAI. THE LEARNED A.R FOR THE ASSES SEE FURTHER SUBMITTED THAT THE ENTIRE AMOUNT WAS RECEIVED AS GI FT BY THE ASSESSEE FROM HER MOTHER AND INVESTED IN FDRS FROM TIME TO TIME. THIS FACT WAS ALSO MENTIONED TO THE INVESTIGATION WING AT THE TIME OF SEARCH WITH REFERENCE TO THE INVESTMENTS IN HOUSE PROPERTY . 41. THE LEARNED A.R FURTHER SUBMITTED THAT MERELY BECAUSE THE GIFTS WERE MADE IN CASH IT CANNOT BE CONSIDERED AS NON-GENUINE . FURTHER THERE IS AN AVERMENT BY SMT.LAKSHMI BAI BEF ORE HER DEATH IN THE FORM OF AN AFFIDAVIT STATING THE SHE WAS REGULA RLY GIVING MONIES TO THE ASSESSEE OUT OF HER INCOME AND THE ASSESSEE HAS ALSO BEEN DISCLOSING THE GIFTS IN HER STATEMENT OF ACCOUNTS F ILED ALONG WITH THE RETURNS OF INCOME REGULARLY. 42. THE CIT(A) OBSERVED AS FOLLOWS: HOWEVER, IT CAN BE CLEARLY OBSERVED FROM THE AFFID AVIT OF LATE SMT.LAXMIBAI THAT THOUGH SHE CONFIRMED THAT SUBSTAN TIAL ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 25 AMOUNTS WERE BEING PASSED BY HER TO THE APPELLANT O N SEVERAL OCCASIONS, NO SPECIFIC DETAILS OF THE AMOUN TS SO GIVEN OR GIFTED COULD BE GIVEN BY HER. THE AFFIDAVIT SO MADE IS, THEREFORE, OF A VERY GENERAL NATURE AND CANNOT BE A CCEPTED AS AN EVIDENCE FOR THE SPECIFIC GIFTS. IN FACT, THE FA CT THAT LATE SMT.LAXMIBAI WAS AN INCOME TAX ASSESSEE AND WAS HAV ING SUBSTANTIAL FUNDS/INCOME, ONLY ESTABLISHES HER CREDITWORTHINESS AND HER IDENTITY. HOWEVER, IT IS C LEAR THAT THE APPELLANT HAD RECEIVED THE AMOUNTS, SHOWN AS G IFTS FROM HER, IN CASH ONLY. THEREFORE, THE GENUINENESS OF S UCH GIFTS HAS NOT BEEN ESTABLISHED AT ALL, AS IT CANNOT BE CO NCLUSIVELY PROVED THAT SUCH MONIES HAD FLOWED TO THE APPELLANT ON ACCOUNT OF THE CLAIMED GIFTS ONLY. THE ADDITION O F RS.8,09,721/- IS THEREFORE UPHELD AND GROUND NO. 3 IS DECIDED AGAINST THE APPELLANT 43. HENCE, THE CIT(A) CONFIRMED THE ADDITION OF RS.8,09,721/- MADE BY THE A.O. AGGRIEVED THE ASSESS EE IS IN APPEAL BEFORE US AND REITERATED THE SUBMISSIONS MADE BEFOR E THE LOWER AUTHORITIES. 44. WE FIND THE DEPARTMENT HAS NOT BROUGHT IN ANY MATERIAL TO CONTROVERT THE STATEMENT OF THE ASSESSEE THAT TH E AMOUNTS WHICH WERE RECEIVED IN CASH AS GIFTS HAS BEEN INVESTED BY THE ASSESSEE IN FDRS FROM TIME TO TIME. IN THESE CIRCUMSTANCES TH E CREDITWORTHINESS AND IDENTITY OF THE DONOR HAVING B EEN ACCEPTED BY THE CIT(A), WITH RESPECT TO THE GENUINENESS OF SUCH GIFT THE BENEFIT OF DOUBT SHOULD BE GIVEN TO THE ASSESSEE AND THEREFORE WE DELETE THE ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 26 ADDITION CONFIRMED BY THE CIT(A) AND MADE BY THE AO FOR A SUM OF RS.8,09,721/-. 45. HENCE THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 46. GROUND NO. 4 RAISED BEFORE US READS AS FOLLOWS THE CIT(A) OUT OF TOTAL ADDITION OF RS.42,43,368/- MADE BY THE AO, SUSTAINED THE ADDITION OF RS.11,54,260/- AND DE LETED THE BALANCE ADDITIONS OUT OF THE FOLLOWING ITEMS EQUALLY IN THE HANDS OF THE ASSESSEE AND HER HUSBAND SHRI.ARUN.GUPTA A) SALE OF SCRAP AT PADMARAO NAGAR RS.3,73,000/- B) SALE OF SCRAP AT JEDIMETLA RS.4,50,000/- C) DIFFERENCE OF SALE PROCEEDS OF GOLD JEWELLERY BY SMT. LATE LAXMI RS.44,500/- BAI D) WITHDRAWAL OF FDRS AND LOANS AGAINST FDRS RS.2,87,760/- ------------------ TOTAL RS.11 ,55,260/- ============ 47. WE FIND THAT THIS ISSUE HAS BEEN DEALT WITH IN THE CASE OF ARUN GUPTA AT PARAS 11-17 IN ITA NO.750/HYD/2011 HE REIN ABOVE AND THE SAME DECISION IS APPLICABLE TO THIS APPEAL ALSO. ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 27 48. WITH REGARDS GROUND NO.5 THAT THE CIT(A) IS WRONG IN SUSTAINING THE ADDITION OF RS.29,13,526 OUT OF TOTA L EXPENDITURE OF RS.58,27,053 BEING 50% ADDED IN THE HANDS OF THE AS SSESEE TOWARDS UNEXPLAINED EXPENDITURE INCURRED IN PERFORMING THE MARRIAGE, THIS ISSUE HAS BEEN DEALT WITH IN THE CASE OF ARUN GUPTA AT PARAS 18-21 IN ITA NO.750/HYD/2011 HEREIN ABOVE AND THE SAME DECIS ION IS APPLICABLE TO THIS APPEAL ALSO. 49. IN THE RESULT, THIS APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO 1179/H/2011 DEPARTMENTAL APPEAL IN THE CAS E OF SHRI ARUN GUPTA: 50. THE FIRST ISSUE IN THE REVENUE APPEAL IS AGAIN ST REDUCTION OF ESTIMATED EXPENSES INCURRED IN THE MARRIAGE OF T HE ASSESEES DAUGHTER OF RS.1,30,00,000/- TO RS.5869900/-. IN TH E ASSESSEE APPEAL WE HAVE HELD IN THE ASSESSEES APPEAL, THAT DUE TO LACK OF EVIDENCE REGARDING EXPENDITURE, IT IS FAIR TO ESTIM ATE THE EXPENDITURE ON MARRIAGE TO RS.30 LAKHS. ACCORDINGLY, WE HAVE H ELD THAT THE ASSESSEE SHARE OF EXPENDITURE SHOULD BE TAKEN AT RS .15 LAKHS AS AGAINST 50% OF RS.1345893/- SHOWN BY THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE CANNOT ACCEPT THE CONTENTION OF THE REVENUE THAT EXPENDITURE ON MARRIAGE SHOULD BE TAKEN AT RS.1,30, 00,000/-. IN THIS VIEW OF THE MATTER, THE APPEAL OF THE REVENUE IS DISMISSED. ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 28 51. THE NEXT GROUND OF APPEAL IS REGARDING ACCEPTA NCE BY CIT(A) OF R.6990531/- UTILIZED IN INVESTMENT FOR PU RCHASE OF PROPERTY AS BEING FROM THE WITHDRAWAL OF FDRS AND LOAN TAKEN AGAINST FDRS. 52. THE CIT(A) IN PARA 7.4 DEALT WITH SOURCES OF I NVESTMENT OF RS.7278291/- AND HAS HELD THAT THE ASSESSING OFFICE R IN THE LETTER DATED 01.03.2011 HAS SUBMITTED THAT OUT OF THE TOTA L CLAIM OF RS.7278291/- THE ASSSESEE EXPLAINED THE SOURCE TO T HE TUNE OF RS.6990531/- THEREFORE, THE CIT(A) BASED ON THE REM AND REPORT OF THE ASSESSING OFFICER DATED 01.03.2011 HAS DELETED THE ADDITION OF RS.6990531/- AS BEING UNEXPLAINED INVESTMENT. THIS BEING SO, WE CANNOT UNDERSTAND HOW THE REVENUE CAN COME ON APPEA L AGAINST THIS ISSUE. THE CONTENTION OF THE REVENUE IS THAT THE A SSESSEE HAS NOT EXPLAINED THE SOURCE OF FDRS HAS NEVER BEEN PART OF ASSESSMENT ORDER OF THE CIT(A), WE ARE ALSO NOT SURE THAT FDRS ARE MADE FOR THE FIRST TIME IN THIS YEAR AND CARRY FORWARD FROM THE EARLIER YEARS. THUS, WE ARE INCLINED TO AGREE WITH THE DECISION OF THE C IT(A) IN DELETING THE ADDITION OF RS.6990531/- AS UNEXPLAINED INCOME. 53. IN THE RESULT THE APPEAL OF THE DEPARTMENT IS DISMISSED. ITA NO 1178/H/2011 APPEAL BY THE REVENUE IN THE CAS E OF PUSHPA GUPTA: ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 29 54. IN THIS APPEAL OF THE REVENUE TWO ISSUES WERE RAISED BY THE REVENUE WHICH ARE (A) REDUCTION OF ESTIMATED EX PENDITURE INCURRED IN THE MARRIAGE OF THE ASSESSEES DAUGHTER FROM RS.1,30,00,000/- TO RS.58,69,900/- AND (B) DELETION OF RS.6990531/- AS UNEXPLAINED INVESTMENT. THIS BEING IDENTICAL TO THE ISSUE RAISED BY THE REVENUE IN THE CASE OF HUSBAND IN ITA NO 1179/H /2011 FOLLOWING OUR ORDER IN THE ABOVE APPEAL WE HOLD THAT EXPENDIT URE INCURRED BY THE ASSESSEE IN THE MARRIAGE OF HER DAUGHTER CAN BE REASONABLY ESTIMATED AT RS.30,00,000/- AND THE ASSESSEES SHAR E OF THE SAME SHOULD BE TAKEN AT RS.15 LAKHS. 55. AS REGARDS DELETION OF RS.6990531/- AS UNEXPLA INED INVESTMENT, THE CIT (A) IN PARA 7.4 DEALT WITH SOUR CES OF INVESTMENT OF RS.7278291/- AND HAS HELD THAT THE ASSESSING OFF ICER IN THE LETTER DATED 01.03.2011 HAS SUBMITTED THAT OUT OF THE TOTA L CLAIM OF RS.7278291/- THE ASSSESEE EXPLAINED THE SOURCE TO T HE TUNE OF RS.6990531/- THEREFORE, THE CIT (A) BASED ON THE RE MAND REPORT OF THE ASSESSING OFFICER DATED 01.03.2011 HAS DELETED THE ADDITION OF RS.6990531/- AS BEING UNEXPLAINED INVESTMENT. THIS BEING SO, WE CANNOT UNDERSTAND HOW THE REVENUE CAN COME ON APPEA L AGAINST THIS ISSUE. THE CONTENTION OF THE REVENUE IS THAT THE A SSESSEE HAS NOT EXPLAINED THE SOURCE OF FDRS HAS NEVER BEEN PART OF ASSESSMENT ORDER OF THE CIT(A), WE ARE ALSO NOT SURE THAT FDRS ARE MADE FOR THE FIRST TIME IN THIS YEAR AND CARRY FORWARD FROM THE EARLIER YEARS. THUS, WE ARE INCLINED TO AGREE WITH THE DECISION OF THE C IT (A) IN DELETING THE ADDITION OF RS.6990531/- AS UNEXPLAINED INCOME. ITA NOS.749, 750/H/2011 & ITA NO.1178 & 1179/2011 S/SMIT. PUSHPA GUPTA & OTHERS 30 56. IN THE RESULT THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON :31.10.2011 SD/- (AKBER BASHA) SD/- (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST OCTOBER, 2011 COPY FORWARDED TO: 1. SHRI ARUN GUPTA, H.NO.A-108, JOURNALIST COLONY, JU BILEE HILLS, HYDERABAD. 2. SMT. PUSHPA GUPTA, H.NO.A-108, JOURNALIST COLONY, J UBILEE HILLS, HYDERABAD 3. THE ACIT, CIRCLE 6(1), JOGIPET 4. THE CIT(A) IV, HYDERABAD 5. THE CIT, HYDERABAD 6. THE DR, ITAT, HYDERABAD NP/