Akshay Sarin, CHENNAI V. DCIT, CHENNAI

ITSSA 18/CHNY/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9215 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 24-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K RAVI
• Assessee Lawyers: DR M SRINIVASA RAO
• Keywords: Unexplained investment; Income from undisclosed sources; Peak credit; Source of fund; Block assessment
• Section: 143(3)

Judgement Text

, , IN THE INCOM E TAX APPELLATE TRIBUNAL , D BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T. (SS) A.NO . 1 8 /CHNY/20 14 BLOCK PERIOD 01.04.1996 TO 27.03.2003 SHRI AKSHAY SARIN, NO.15/4, MASILAMANI ROAD, BALAJI NAGAR, ROYAPETTAH, CHENNAI 600 014. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1) (I/C) , CHENNAI - 34. PAN: AD PPA2535A ( / APPELLANT) ( / RESPONDENT ) / APPELLANT BY : DR. M. SRINIVASA RAO, CIT / RESPONDENT BY : SHRI K.RAVI, ADVOCATE / DATE OF HEARING : 29.01 . 201 9 / DATE OF PRONOUNCEMENT : 28 . 0 3 .2019 / O R D E R PER A. MOHAN ALANKAMONY, AM : - THIS A PPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A) (C) - II, C HENNAI , DATED 24.09 .2014 IN ITA NO. 453/ 06 - 07 FOR THE BLOCK PERIOD 01.04.1996 TO 27.03.2003 PASSED U/S.250(6) R.W.S. 143(3) R.W.S. 158BC & 158B D OF THE ACT. 2 IT(SS)A NO.18/CHNY/2014 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN H IS APPEAL HOWEVER THE CRUXES OF THE ISSUES ARE THAT : - I . THE LD.CIT(A) HAS ERRED IN UPHOLDING THE FINDING OF THE LD.AO TH AT THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEARS FALLING WITHIN THE BLOCK PERIOD BEFORE THE DATE OF SEARCH. II . THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LD.AO AMOUNTING TO RS. 1,90,000/ - WITH RESPECT TO THE INVESTMENT MADE IN INSURANCE POLICIES WITH HDFC, RS.88,490/ - BEING THE INVESTMENT MADE IN SHARES, RS.1,57,423/ - BEING THE INVESTM ENT IN UTI, RS.37,500/ - BEING THE INVESTMENT IN SHARES OF AASHNA INVT. P. LTD., CITY UNION BANK & SUNDARAM FINANCE, RS.54,112/ - BEING THE FIXED DEPOSIT WITH ANDHRA BANK, RS.19,50,000/ - TOWARDS INVESTMENT IN RBI BONDS AND RS.,9,00,000/ - BEING THE INVESTMENT IN UTI, ICICI, IDBI & HDFC RELIEF BONDS , AS THE UNDISCLOSED INVESTMENT S/INCOME OF THE ASSESSEE. III . THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LD.AO AMOUNTING TO RS.1,18,000/ - TOWARDS CASH DEPOSIT IN SB ACCOUNT NO.5115 AND CURRENT ACCOUNT 3 IT(SS)A NO.18/CHNY/2014 NO.140 & 125 AND RS.8,10,656/ - TOWARDS R ECURRING D EPOSIT , AS THE UNACCOUNTED INVESTMENT OF THE ASSESSEE. IV . THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE LD.AO AMOUNTING TO RS. 8,50,000 / - AS THE UNDISCLOSED INVESTMENT OF THE ASSESSEE BEING THE UNACCOUNTED PRO - NOTES FOUND DURING THE COURSE OF SEARCH. V . THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE LD.AO AMOUNTING TO RS.2,00,955/ - BEING THE AMOUNT ADVANCED TO M/S. SHIBI TRAVELS AS UNEXPLAINED ADVANCE S . VI . THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE LD.AO AMOUNTING TO RS.2,50,000/ - BEING THE LOAN ADVANCED TO M/S. NADIADWALA GRANDSON AS UNEXPLAINED ADVANCE S . VII . THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE LD.AO AMOUNTING TO RS.1,50,000/ - BEING THE AMOUNT ADVANCED TO M/S. STATUS ENTERPRISES AS UNEXPLAINED ADVANCE S . VIII . THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE LD.AO AMOUNTING TO RS.2,93,51 7 / - ON ACCOUN T OF PROPERTY PURCHASED AT KAST HURBA NAGAR. 4 IT(SS)A NO.18/CHNY/2014 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHOSE FATHER SHRI RAKESH SARIN WAS SEARCHED ON 27.03.2003 AND CONCLUDED ON 28.08.2003. THEREAFTER A NOTICE U/S.158BC R.W.S. 158BD WAS SERVED TO THE ASSESSEE ON 02.03.2005 REQUESTING THE ASSESSEE TO FILE HIS RETURN OF INCOME. SUBSEQUENTLY THE ASSESSEE FILED HIS RETURN OF INCOME ON 18.03.2005. THEREAFTER ASSESSMENT WAS COMPLETED U/S.143(3) R.W.S. 158BC & 158BD OF THE ACT V IDE ORDER DATED 28.02.2007 WHEREIN THE LD.AO MADE SEVERAL ADDITIONS WHICH WAS FURTHER SUSTAINED BY THE LD.CIT(A). 4. GROUND NO.2(I) : NON FILING OF INCOME TAX RETURNS : - DURING THE COURSE OF INVESTIGATION, IT WAS OBSERVED THAT THE ASSESSEE HAD MADE SUBSTANTIAL INVESTMENTS IN FIXED DEPOSITS, STDRS, RECURRING DEPOSIT, RBI RELIEF BONDS, ETC., AND ALSO HAD ADVANCED LOANS TO VARIOUS PARTIES. IT WAS EXPLAINED BY THE ASSESSEE THA T HE HAD DISCLOSED THE SAME IN HIS RETURN OF INCOME FOR ALL THE ASSESSMENT YEARS AND HE ALSO PRODUCED THE ACKNOWLEDGEMENTS FOR HAVING FILED THE RETURN OF INCOME. HOWEVER ON VERIFYING THE ACKNOWLEDGEMENTS SUBMITTED BY THE ASSESSEE, IT 5 IT(SS)A NO.18/CHNY/2014 WAS OBSERVED THAT THE ACKNOWLEDGEMENT NUMBER DID NOT PERTAIN TO THE ASSESSEE BUT TO DIFFERENT PERSONS. THEREFORE THE LD.AO OPINED THAT THE RETURNS FILED BY THE ASSESSEE ARE BOGUS TOWARDS WHICH THE ASSESSEE STRONGLY OBJECTED. ON APPEAL THE LD.CIT(A) HELD THE ISSUE IN FAVOUR OF T HE REVENUE BY RELYING ON VARIOUS DECISIONS OF THE HIGHER JUDICIARIES. 4.1 BEFORE US THE LD.AR REITERATED THE SUBMISSIONS MADE BEFORE THE LD.REVENUE AUTHORITIES THAT THE LAPSE ON THE PART OF THE REVENUE TO MAINTAIN PROPER RECORDS CANNOT DETERMINE THE RETUR NS FILED BY THE ASSESSEE TO BE BOGUS. THE LD.DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE LD.REVENUE AUTHORITIES. 4.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. THE LD.REVENUE AUTHORITIES HAD REJECTED THE ACKNOW LEDGEMENTS OF THE RETURNS FILED BY THE ASSESSEE BECAUSE IT DID NOT MATCH WITH THE RECORDS MAINTAINED BY THE LD.REVENUE AUTHORITIES. HOWEVER THE LD.REVENUE AUTHORITIES HAVE NOT CONDUCTED ANY INVESTIGATION ON THAT REGARD. THE LD.REVENUE AUTHORITIES ALSO OUGH T TO HAVE EXAMINED THE COPY OF THE RETURNS 6 IT(SS)A NO.18/CHNY/2014 FILED BY THE ASSESSEE THAT WAS PRODUCED BEFORE THEM AND THEREAFTER ARRIVED AT A PROPER CONCLUSION. FURTHER THE LD.REVENUE AUTHORITIES HAD NOT TAKEN ANY COERCIVE ACTION FOR THE ALLEGED FRAUD COMMITTED BY THE ASSESS EE. IN THIS SITUATION WE CAN NEITHER HOLD THE MATTER IN FAVOUR OF THE REVENUE NOR THE ASSESSEE. IT IS PERTINENT TO MENTION THAT ON THE IDENTICAL FACTS IN THE CASE OF THE ASSESSEES MOTHER SMT. RENU SARIN IN IT(SS)A NO.17/CHNY/2014 VIDE ORDER DATED 20.03.20 19 AND IN THE CASE OF THE ASSESSEES FATHER SHRI RAKESH SARIN IN IT(SS)A NO.66/CHNY/2007 VIDE ORDER DATED 11.03.2019 ALSO WE HAD EXPRESSED SIMILAR VIEW. CONSIDERING THESE FACTS WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE LD.AO FOR RS.6 ,29,226/ - IN THE BLOCK ASSESSMENT IS DEVOID OF MERITS BECAUSE THERE IS NO CONCLUSIVE FINDING BY THE REVENUE THAT THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEARS 1997 - 98 TO 2003 - 04. HENCE WE HEREBY DIRECT THE LD.AO TO DELETE THE AD DITION MADE BY THE LD.AO FOR RS.6,29,226/ - IN THE BLOCK ASSESSMENT. 5. GROUND NO.2(II) : ADDITION OF RS. 1,90,000/ - WITH RESPECT TO THE INVESTMENT MADE IN INSURANCE POLICIES WITH HDFC, RS.88,490/ - BEING THE INVESTMENT MADE IN SHARES, RS.1,57,423/ - 7 IT(SS)A NO.18/CHNY/2014 BEING THE INVESTMENT IN UTI, RS.37,500/ - BEING THE INVESTMENT IN SHARES OF AASHNA INVT. P. LTD., CI TY UNION BANK & SUNDARAM FINANCE, RS.54,112/ - BEING THE FIXED DEPOSIT WITH ANDHRA BANK, RS.19,50,000/ - TOWARDS INVESTMENT IN RBI BONDS AND RS.,9,00,000/ - BEING THE INVESTMENT IN UTI, ICICI, IDBI & HDFC RELIEF BONDS AS UNDISCLOSED INVESTMENTS / INCOME: - ON THE IDENTICAL ISSUE AND ON THE SAME FACTS, THIS BENCH OF THE TRIBUNAL HAD DELETED THE ADDITIONS IN THE CASE OF ASSESSEES MOTHER SMT. RENU SARIN IN IT(SS)A NO.17/CHNY/2014 AND IN THE CASE OF THE ASSESSEES FATHER SHRI RAKESH SARIN IN IT(SS)A NO.66/CHNY/20 07. IN THE CASE OF SMT. RENU SARIN, THIS BENCH OF THE TRIBUNAL HAS OBSERVED AS UNDER: - DURING THE COURSE OF SEARCH IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE HAD MADE INVESTMENTS IN VARIOUS BONDS, SHARES, PATRAS, INSURANCE POLICIES ETC., AMOUNTING TO RS.84,53,375/ - , RS.45,75,000/ - AND RS.4,27,500/ - . IT WAS EXPLAINED BY THE ASSESSEE THAT THE INVESTMENTS WERE FULLY ACCOUNTED AND DISCLOSED IN THE RETURN OF INCOME. HOWEVER SINCE THE LD.AO HAD REJECTED THE CLAIM OF THE ASSESSEE THAT SHE HAS FILED HER RETURN OF INCOME, THE LD.AO TREATED THE SAME AS THE UNACCOUNTED INCOME/INVESTMENT OF THE ASSESSEE AS THE SOURCE WAS NOT EXPLAINED. ON APPEAL THE LD.CIT(A) AGREEING WITH THE VIEW OF THE LD.AO CONFIRMED THE ADDITION. ON PERUSING THE FACTS OF THE CASE, WE DO NOT FI ND ANY JUSTIFICATION IN THE ORDER OF THE LD.REVENUE AUTHORITIES. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAD PRODUCED THE RETURN FILED BY HER BEFORE THE LD.AO, HOWEVER THE LD.AO HAD REJECTED THE SAME BECAUSE IN THE REVENUE RECORDS NO SUCH RETURN WAS FILED . FOR THE ABOVE STATED REASONS THE LD.AO ALSO DID NOT VENTURE INTO EXAMINE THE RETURN FILED BY THE ASSESSEE OR TO EXAMINE THE SOURCE OF INVESTMENT DISCLOSED IN THE RETURN OF INCOME. IT IS PERTINENT TO MENTION THAT IT WAS THE PRIMARY DUTY OF THE LD.AO TO EX AMINE THE DISCLOSURE MADE IN THE RETURN OF INCOME ALONG WITH THE AMOUNT OF TAX PAID BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEARS AND ALSO TO EXAMINE THE SOURCE OF FUNDS FLOWING THROUGH THE BANK ACCOUNTS FOR MAKING THE INVESTMENTS AND THEREAFTER ARR IVED AT AN APPROPRIATE CONCLUSION. BUT IN THE CASE OF THE 8 IT(SS)A NO.18/CHNY/2014 ASSESSEE IT APPEARS THAT NO SUCH EXERCISE WAS CARRIED OUT. ON APPEAL THE LD.CIT(A) ALSO CONFIRMED THE ORDER OF THE LD.AO BY SIMPLY AGREEING WITH THE VIEW OF THE LD.AO. IN THE IDENTICAL SITUATION, IN THE CASE OF ASSESSEES HUSBAND SHRI RAKESH SARIN IN ITA NO.66/CHNY/2007 FOR THE BLOCK ASSESSMENT YEARS 199 - 97 TO 2002 - 03 AND PART OF 2003 - 04, THIS BENCH OF THE TRIBUNAL VIDE ORDER DATED 11.03.2019 HAD OBSERVED IN PARA NO.16.3 THAT, THE LD.AOS FINDINGS WI TH RESPECT TO THE RETURN OF INCOME FILED BY THE ASSESSEE TO BE BOGUS AND FALSE, DO NOT CARRY MUCH WEIGHT, BECAUSE FROM THE MATERIALS ON RECORD, IT WAS EVIDENT THAT, NO LEGAL ACTION WERE INITIATED AGAINST THE ASSESSEE FOR HAVING PRODUCED SUCH BOGUS RETURN O F INCOME BEFORE THE LD.REVENUE AUTHORITIES, IS ALSO RELEVANT IN THE CASE OF THE ASSESSEE BECAUSE THE FACTS ARE SIMILAR. FURTHER IN THE CASE OF THE ASSESSEES HUSBAND SHRI. RAKESH SARIN THE LD.CIT(A) HAD GRANTED RELIEF BY DELETING THE ADDITION ON THIS ISSUE . SINCE IN THE CASE OF THE ASSESSEE ALSO THE LD.REVENUE AUTHORITIES HAD FAILED TO EXAMINE THE EVIDENCE PRODUCED BY THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION MADE IS NOT SUSTAINABLE. MOREOVER AT THIS STAGE, IT WOULD BE IMPRACTICABLE TO R EMIT THE MATTER BACK TO THE FILE OF LD.AO FOR DE - NOVA CONSIDERATION AS THE MATTER RELATES TO THE BLOCK PERIOD 1997 - 98 TO 2002 - 03 WHEREIN THE FACTS HAD OCCURRED BEYOND 20 YEARS AGO. THEREFORE WE HEREBY DIRECT THE LD.AO TO DELETE THE ADDITION MADE FOR RS.84, 53,375/ - , RS.45,75,000/ - AND RS.4,27,500/ - TOWARDS INVESTMENT IN SHARES, BONDS, PATRAS, ETC., RBI BONDS AND HDFC STANDARD LIFE INSURANCE. SINCE THE FACTS AN D THE ISSUE BEING SAME, THE DECISION RENDERED IN THE CASE OF THE ASSESSEES FATHER SHRI RAKESH SARIN AND MOTHER SMT. RENU SARIN HOLDS GOOD IN THE CASE OF THE ASSESSEE ALSO AND ACCORDINGLY WE HEREBY DIRECT THE LD.AO TO DELETE THE ADDITION OF RS.1,90,000/ - WITH RESPECT TO THE INVESTMENT MADE IN INSURAN CE POLICIES WITH HDFC, RS.88,490/ - BEING THE INVES TMENT MADE IN SHARES, RS.1,57,423/ - BEING THE INVESTMENT IN UTI, RS.37,500/ - BEING THE INVESTMENT IN SHARES OF AASHNA INVT. P. LTD., CITY UNION BANK & SUNDARAM FINANCE, RS.54,112/ - BEING THE FIXED DEPOSIT 9 IT(SS)A NO.18/CHNY/2014 WITH ANDHRA BANK, RS.19,50,000/ - TOWARDS INVESTMENT IN RBI BONDS AND RS.,9,00,000/ - BEING THE INVESTMENT IN UTI, ICICI, IDBI & HDFC RELIEF BONDS. 6. GROUND NO.2(III): ADDITION OF RS.1,18,000/ - TOWARDS CASH DEPOSIT IN SB ACCOUNT & CURRENT ACCOUNT AND ADDITION OF RS.8,10,656/ - TOWARDS RECURRING DEPOSIT: - DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE HAD DEPOSITED CASH IN HIS BANK ACCOUNT FOR RS.1,18,000/ - AND RS.8,10,656/ - IN RECURRING DEPOSIT ACCOUNT DURING THE BLOCK PERIOD. THE LD.AO ADDED THE SAME TO THE UN DISCLOSED INCOME OF THE ASSESSEE BECAUSE THE TRANSACTIONS WERE NOT ACCOUNTED IN THE ASSESSEES BOOKS OF ACCOUNTS. THE LD.AO FURTHER OBSERVED THAT THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME BEFORE THE DATE OF SEARCH. ON APPEAL THE LD.CIT(A) CONFIRMED T HE ORDER OF THE LD.AO BY AGREEING WITH HIS VIEW. IN SIMILAR SITUATION HEREIN ABOVE, WE HAVE DELETED THE ADDITION MADE BY THE LD.AO BECAUSE THE LD.AO HAD FAILED TO EXAMINE THE RETURN FILED BY THE ASSESSEE AND THE EXPLANATION SUBMITTED. THEREFORE THE SAME DE CISION HOLDS GOOD FOR THIS ISSUE ALSO. ACCORDINGLY AS WE HAVE HELD IN THE CASE OF THE ASSESSEES 10 IT(SS)A NO.18/CHNY/2014 MOTHER SMT. RENU SARIN IN IT(SS)A NO.17/CHNY/2014 AND IN THE CASE OF THE ASSESSEES FATHER SHRI RAKESH SARIN IN IT(SS)A NO.66/CHNY/2007 WE HEREBY DIRECT THE L D.AO TO DELETE THE ADDITION MADE FOR RS.1,18,000/ - TOWARDS UNEXPLAINED CASH DEPOSIT IN BANK ACCOUNT & RS.8,10,656/ - TOWARDS RECURRING DEPOSIT. 7. GROUND NO.2(IV ): ADDITION OF RS. 8,50 ,000/ - TOWARDS PRO - NOTES: - DURING THE COURSE OF SEARCH CERTAIN PRO - NOT ES WERE FOUND IN THE ASSESSEES PREMISES AND SINCE NO EXPLANATION COULD BE OBTAINED FROM THE ASSESSEES FATHER SHRI RAKESH SARIN WHO WAS UNAVAILABLE AT THAT TIME AND THE MANAGER WHO WAS PRESENT, THE LD.AO ADDED THE AGGREGATE OF THE SAME AS THE UNDISCLOSED INVESTMENT OF THE ASSESSEE SINCE THEY WERE NOT ACCOUNTED IN THE BOOKS OF ACCOUNT. ON THE IDENTICAL ISSUE AND FACTS, THIS BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEES MOTHER SMT. RENU SARIN IN IT(SS)A NO.17/CHNY/2014 AND IN THE CASE OF THE ASSESSEE S FATHER SHRI RAKESH SARIN IN IT(SS)A NO.66/CHNY/2007 HELD THE ISSUE IN FAVOUR OF THE ASSESSEE. IN THE CASE OF THE ASSESSEES FATHER THIS BENCH OF THE TRIBUNAL HAD OBSERVED AS UNDER: - 11 IT(SS)A NO.18/CHNY/2014 7.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERI ALS ON RECORD. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT THE PRO - NOTES WERE INCOMPLETE IN ALL ASPECTS AND THEREFORE PRESUMPTION CANNOT BE MADE THAT THE ASSESSEE HAD LEND MONEY THOUGH THERE IS SOME AIR OF DOUBT. MOREOVER PEAK CREDIT CONCEPT MAY ALSO BE APPLICABLE IN THE CASE OF THE ASSESSEE DUE TO ROTATION OF ADVANCES AND REPAYMENTS. IT APPEARS THAT THE LD.AO HAS NOT EXAMINED THOSE ASPECTS. THERE IS EVERY PROBABILITY THAT IF SUCH EXERCISE WOULD HAVE BEEN CARRIED OUT THE SOURCE OF THE AMOUNT UTILIZED I N THE FINANCE BUSINESS WOULD HAVE BEEN EXPLAINABLE AS THE AMOUNT UTILIZED IN THE BUSINESS WOULD HAVE BEEN MUCH LESS THAN THE ADDITION MADE BY THE LD.AO. THEREFORE ADHOC ADDITION OF THE AMOUNT MENTIONED IN THE ENTIRE PRO - NOTES IS NOT JUSTIFIABLE. FURTHER T HE LD.AO HAS ALSO NOT MADE ANY INVESTIGATION IN THE MARKET TO FIND OUT WHETHER ANY AMOUNT BORROWED FROM THE ASSESSEE WAS PENDING TO BE RETURNED TO THE ASSESSEE. FURTHER THE LD.AO HAD ALSO NOT MADE PROPER INVESTIGATION FROM THE BORROWERS. WHEN THE LD.AO HAS NOT MADE ANY INVESTIGATION ON THIS REGARD ADDITION MADE ONLY ON THE BASIS OF PRESUMPTION IS NOT JUSTIFIABLE. MOREOVER THERE IS NO CORROBORATIVE EVIDENCE TO SUPPORT THE CASE OF THE LD.AO. EVEN BEFORE US THE LD.DR WAS NOT ABLE TO SUCCESSFULLY CONTROVERT TO THE FINDINGS OF THE LD.CIT(A). THE DECISION CITED BY THE LD.DR IS ALSO NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCE OF THE CASE OF THE ASSESSEE. THE ASSESSEE HAS ALSO EXPLAINED VARIOUS SITUATIONS WHEREIN SUCH DOCUMENTS ARE ACCUMULATED IN THE PREMISES OF TH E ASSESSEE. THE LD.DR COULD ALSO NOT FURNISH ANY MATERIALS TO REJECT THE EXPLANATION OFFERED BY THE ASSESSEE. HENCE WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) ON THIS REGARD. THUS THIS GROUND IS ALSO DECIDED IN FAVOUR OF THE A SSESSEE. SINCE THE FACTS AND THE ISSUE BEING SAME, THE SAME DECISION HOLDS GOOD IN THE CASE OF THE ASSESSEE ALSO AND ACCORDINGLY WE HEREBY 12 IT(SS)A NO.18/CHNY/2014 DIRECT THE LD.AO TO DELETE THE ADDITION OF RS.8,50,000/ - MADE TOWARDS UNACCOUNTED PRO - NOTES. 8. GROUND NO.2(V) : A DDITION OF RS.2,00,955/ - BEING THE AMOUNT ADVANCED TO M/S. SHIBI TRAVELS AS UNEXPLAINED ADVANCES: - DURING THE COURSE OF THE SEARCH IT WAS OBSERVED THAT THE ASSESSEE HAD PURCHASED BRITISH AIRWAYS TICKET FOR A SUM OF RS.2,00,955/ - FROM M/S. SHIBI TRAVELS, CASH RECEIPT NO.002. ON QUERY IT WAS EXPLAINED THAT THE ASSESSEE HAD ADVANCED A SUM OF RS.1,00,000/ - TO M/S. SHIBI TRAVELS PVT. LTD., AGAINST WHICH A TICKET FOR US WAS OBTAINED AS COLLATERAL SECURITY FROM THEM WHICH WAS SEIZED BY THE REVENUE. IT WAS FURTHER EXPLAINED THAT IN CASE THE TR AVEL AGENT WAS NOT ABLE TO REPAY THE MONEY LEND THEN THE ASSESSEE COU LD SURRENDER THE TICKET TO THE AIRLINES AND CLAIM REFUND. IT WAS FURTHER SUBMITTED THAT SINCE THE TRAVEL AGENT M/S. SHIBI TRAVELS FAILED TO RETURN THE MONEY, THE ASSESSEE HAD APPROACHED THE BRITISH AIRWAYS FOR CANCELLATION AND REIMBURSEMENT OF THE TICKET W HICH WAS REJECTED BY THE BRITISH AIRWAYS STATING THAT ONLY THE TRAVEL AGENT COULD CLAIM THE REFUND. IT WAS FURTHER EXPLAINED THAT S UBSEQUENTLY THE MONEY WAS REPAID BY M/S. SHIBI 13 IT(SS)A NO.18/CHNY/2014 TRAVELS PVT. LTD., AND THE TICKET WAS RETURNED TO THE ASSESSEE . HOWEVER THE LD .AO REJECTED THE EXPLANATION TENDERED BY THE ASSESSEE AND ADDED THE AMOUNT OF RS.2,00,955/ - BEING THE COST OF THE TICKET TO THE INCOME OF THE ASSESSEE. ON APPEAL THE LD.CIT(A) HAS HELD THAT NO MA TERIALS OR EVIDENCE WAS RECORDED TO ESTABLISH THE CORRECT NAT URE OF TRANSAC TION OR AS TO HOW AND WHERE THE AMOUNT WERE ACCOUNTED IN THE BOOKS OF ACCOUNTS. THEREFORE HE SUSTAINED THE ORDER OF THE LD.AO. 8.1 AT THE OUTSET WE DONT FIND ANY MERIT IN THE ORDER OF THE LD.REVENUE AUTHORITIES ON THIS ISSUE. THE ASSESSEE H AD EXPLAINED THE TRANSACTION AS ADVANCE OF RS. 1,00,000/ - EXTENDED TO M/S. SHIBI TRAVELS AGAINST COLLATERAL SECURITY OF A TICKET TO US. THESE FACTS C OULD HAVE BEEN CONFIRMED AND VERIFIED BY THE LD.REVENUE AUTHORITIES FROM M/S . SHIBI TRAVELS WHICH THEY HAVE FAILED TO DO SO. HENCE WE DO NOT FIND ANY MERIT IN THE FINDINGS OF THE LD.REVENUE AUTHORITIES WHO HAD SIMPLY REJECTED THE EXPLANATION OFFERED BY THE ASSESSEE WITHOUT VERIFYING THE FACTS. HENCE WE HEREBY DIRECT THE LD.AO TO DELETE THE ADDITION FOR RS.2,00, 955/ - IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED INVESTMENT. 14 IT(SS)A NO.18/CHNY/2014 9. GROUND NO.2(V) : ADDITION OF RS.2, 50,000 / - BEING THE AMOUNT ADVANCED TO M/S. NADIADWALA GRANDSON AS UNEXPLAINED ADVANCES: - DURING THE COURSE OF SEARCH PROCEEDINGS IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE HAD ADVANCED RS.2,50,000/ - TO M/S. NADIADWALA GRANDSON ENTERTAINMENT. ON QUERY IT WAS EXPLAINED THAT THE SAME WAS REFLECTED IN THE NAME OF M/S.ADLAB FILM LTD. HOWEVER TH E LD.AO REJECTED THE SUBMISSION OF THE ASSESSEE AND ADDED THE AMOUNT OF RS.2,50,000/ - TO THE INCOME OF THE ASSESSEE BY STATING AS FOLLOWS IT IS SEEN FROM THE ACCOUNT THAT THE ASSESSEE HAS DRAWN MONEY FROM THE ACCOUNT OF ADLAB ALSO WHICH IS REFLECTED IN HI S ACCOUNT. THIS IS NOT THE RIGHT METHOD ACCOUNTING SHOWING THE RECEIPT IN A DIFFERENT CONCERNS NAME. THEREFORE, THE TRANSACTION IS TREATED AS ACCOUNTED AND TAXED. ON APPEAL THE LD.CIT(A) HAS HELD THAT NO MATERIALS OR EVIDENCE WAS RECORDED TO SHOW THE COR RECT NATURE OF TRANSACTION OR AS TO HOW AND WHERE THIS AMOUNT WERE ACCOUNTED IN THE BOOKS OF ACCOUNTS. THEREFORE HE SUSTAINED THE ORDER OF THE LD.AO. 15 IT(SS)A NO.18/CHNY/2014 9.1 WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LD.AO. FROM THE ABOVE FACT S IT APPEARS THAT THE ASSESSEE HAD EXPLAINED BEFORE THE LD.REVENUE AUTHORITIES THAT THE AMOUNT ADVANCE D TO M/S.NADIADWALA GRANDSON ENTERTAINMENT FOR RS.2,50,000/ - ON BEHALF OF M/S. ADLAB FILM LTD., WAS OMITTED TO BE RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE . HOWEVER ON REPAYMENT OF THE LOAN OF RS.2,50,000/ - BY M/S. ADLAB FILM LTD. , IT WAS RECORDED IN THE NAME OF M/S. ADLAB FILM LTD. . THESE FACTS COULD HAVE BEEN VERIFIED BY THE REVENUE FROM BOTH M/S. NADIADWALA GRANDSON ENTERTAINMENT AND M/S. ADLAB FILM LTD. HOWEVER T HE LD.REVENUE AUTHORITIES HAD FAILED TO DO SO. IT IS ALSO ADMITTED FACT THAT THE BOOKS OF THE ASSESSEE WERE INCOMPLETE. IN THIS SITUATION, WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LD.REVENUE AUTHORITIES FOR ADDING THE AMOUNT OF RS.2,50,000/ - AS THE INC OME OF THE ASSESSEE. HENCE WE HEREBY DIRECT THE LD.AO TO DELETE THE SAME. 1 0. GROUND NO.2(V) : ADDITION OF RS. 1 , 50,000 / - BEING THE AMOUNT ADVANCED TO M/S. STATUS ENTERPRISES AS UNEXPLAINED ADVANCES: - 16 IT(SS)A NO.18/CHNY/2014 IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE HAS ADVANCED RS.1,50,000/ - TO M/S. STATUS ENTERPRISES ON 27.11.1999. ON QUERY IT WAS EXPLAINED BY THE LD.AR THAT THE AMOUNT IS RECORDED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE. HOWEVER ON VERIFICATION, IT WAS REVEALED THAT NO SUCH ENTRY WAS PASSED IN THE BOOKS OF THE ASSESSEE. THEREFORE THE LD.AO ADDED THE AMOUNT OF RS.1,50,000/ - IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED INVESTMENT. ON APPEAL THE LD.CIT(A) HAS HELD THAT NO MATERIALS OR EVIDENCE WAS RECORDED TO SHOW THE CORRECT NATURE OF TRANSACTION OR AS TO HOW AND WHERE THIS AMOUNT WERE ACCOUNTED IN THE BOOKS OF ACCOUNTS. THEREFORE HE SUSTAINED THE ORDER OF THE LD.AO. 10.1 SINCE NEITHER THE LD.AR NOR THE ASSESSEE SUBMITTED ANY EXPLANATION BEFORE US ON THIS ISSUE, WE DO NOT HAVE ANY OTHER OPTION BUT TO CONFIRM THE ADDITION MADE BY THE LD.REVENUE AUTHORITIES ON THIS ISSUE . ACCORDINGLY WE HEREBY CONFIRM THE ADDITION MADE FOR RS.1,50,000/ - AS UNEXPLAINED ADVANCE. 17 IT(SS)A NO.18/CHNY/2014 11. GROUND NO.2(VIII): ADDITION OF RS.2,93,517/ - ON ACCOUN T OF PROPERTY PURCHASED AT KAST HURBA NAGAR : - IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE HAD PURCHASED PROPERTY AT KASTHURBA NAGAR FOR A SUM OF RS.2,93,517/ - DURING THE PREVIOUS YEAR 1996 - 97. ON QUERY IT WAS EXPLAINED THAT THE AMOUNT WAS DEBITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE . HOWEVER ON VERIFYING THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2001, SUCH DISCLOSURE OF INVESTMENT WAS NOT FOUND. THEREFORE THE LD.AO ADDED THE AMOUNT OF RS.2,93,517/ - TO THE INCOME OF THE ASSESSEE. BEFORE THE LD.CIT(A) IT WAS EXPLAINED BY THE ASSESS EE THAT THE PROPERTY WAS PURCHASED BY THE ASSESSEE WHEN HE WAS A MINOR DURING THE ASSESSMENT YEAR 1997 - 98. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE HAD OPENING CAPITAL BALANCE AS ON 31.03.1997 OF RS.5,69,000/ - AND THE FAMILY HAD FURTHER DISCLOSED A SUM O F RS.34.0 1 LAKHS IN THE VDIS SCHEME 1997, AND T HE ASSESSEE HAD FURTHER BORROWING OF RS.42,00,000/ - AS ON 31.03.20012. IT WAS THEREFORE PLEADED THAT THERE WOULD BE NO SCOPE FOR ADDITION OF RS.2,93,517/ - IN THE HANDS OF THE ASSESSEE. HOWEVER THE LD.CIT(A) HA S OPINED THAT THE SOURCE OF INVESTMENT IN THE PROPERTY HAS NOT BEEN EXPLAINED AND HENCE THE INVESTMENT IN THE PROPERTY IS 18 IT(SS)A NO.18/CHNY/2014 UNACCOUNTED. THE LD.CIT(A) THEREAFTER UPHELD THE ORDER OF THE LD.AO IN THE CASE OF THE ASSESSEE ON PROTECTIVE BASIS AND DIRECTED THE L D.AO TO MAKE SIMILAR ADDITION ON SUBSTANTIVE BASIS IN THE CASE OF THE ASSESSEES FATHER SHRI RAKESH SARIN. THE LD.CIT(A) FURTHER OBSERVED THAT THE INCOME DISCLOSED UNDER THE VDIS SCHEME OR THE BORROWINGS OF RS.42 LAKHS AS ON 31.03 .2002 DOES NOT CORRELATE W ITH THE INVESTMENTS MADE AND THE INCOME DISCLOSED UNDER VDIS. THE LD.CIT(A) FURTHER OBSERVED THAT THE ASSESSEE DID NOT FURNISH ANY DETAILS OF THE DISCLOSURE MADE UNDER THE VDIS SCHEME. HENCE THE LD.CIT(A) SUSTAINED THE ORDER OF THE LD.AO. 1 1 .1 ON PERUSI NG THE ORDER OF THE LD.CIT(A), WE FIND THAT THE LD.CIT(A) HAS REJECTED THE SUBMISSION OF THE ASSESSEE WITH RESPECT TO THE SOURCE OF INVESTMENT ARISING FROM THE VDIS DISCLOSURE AND BORROWINGS BY STATING THAT IT HAS NO CORRELATION WITH THE INVESTMENT MADE IN THE PROPERTY PURCHASED AT KASTHURBA NAGAR. FURTHER THE LD.CIT(A) HAS REJECTED THE RETURN OF INCOME FILED BY THE ASSESSEE BY STATING IT TO BE BOGUS WITHOUT FURTHER INVESTIGATION. WHEN THE FACTS BEING SO, W E DO NOT FIND ANY MERIT IN THE OBSERVATION OF THE L D.CIT(A) WHEN HE HAS ONLY INVESTIGATED THE 19 IT(SS)A NO.18/CHNY/2014 MATTER PARTIALLY . THERE IS ALSO NO FINDING BY THE REVENUE AS TO WHAT INVESTMENT WAS MADE FROM THE VOLUNTARY DISCLOSURE. THE DISCLOSURE IN THE VDS SCHEME IS ALSO NOT UNDER CHALLENGE. IN THIS SITUATION WE DO NOT FIND ANY MERIT IN THE ADDITION MADE BY THE LD.AO WHICH IS FURTHER SUSTAINED BY THE LD.CIT(A) ON THE ISSUE . HENCE, WE HEREBY DIRECT THE LD.AO TO DELETE THE ADDITION MADE FOR RS.2,93,517/ - TOWARDS THE PURCHASE OF PROPERTY AT KASTHURBA NAGAR I N THE HANDS OF T HE ASSESSEE. 12 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. O RDER PRONOUNCED ON THE 28 TH MARCH , 2019 AT CHENNAI. SD/ - SD/ - ( ) (DUVVURU R.L REDDY) / JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER / CHENNAI, / DATED 28 TH MARCH , 2019 RSR / COPY TO: 1. / APPELLANT 2. /RESPONDENT 3. ( ) / CIT(A) 4. / CIT 5. / DR 6. / GF