Mrs Rachel Jofi, Bhopal V. The ACIT, 1(1), Bhopal

ITSSA 223/IND/2012

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8530 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 04-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: GIRISH AGARWAL S; H P VERMA MISS SAKSHI VERMA
• Keywords: Gift; Business income; Search and seizure; Salary income; Loose papers; Period of limitation; Time period of passing order
• Section: 69C; 153A; 147; 131; 68; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ABUPJ8883F I.T (SS) .A.NO. 222 TO 225 /IND/201 2 . A.Y. : 2001 - 02 , 2004 - 05 TO 2006 - 07 MRS.RACHEL JOFI, ACIT, D/O SHRI C .E.FER NANDES, VS 1(1), THROUGH ATTORNEY C.E.FERNANDES, BHOPAL. P/O M/S. ALIASONS INDUSTRIES, HOSHANGABAD ROAD, BHOPAL APPELLANT RESPONDENT PAN NO. : AACPF3486H I.T (SS) .A.NO. 335 TO 341 /IND/2012. A.Y. : 2001-02 TO 2007-08 MRS. EVERLYN FER NANDES, ACIT, 26/A, INDUSTRIAL AREA, GOVINDPURA, BHOPAL. VS 1(1), BHOPAL. APPELLANT RESPONDENT PAN NO. : ABMPJ2420Q I.T(SS).A.NO. 3 49 TO 35 5 /IND/2012. A.Y. : 2001-02 TO 2007-08 MRS. LEENA B.JOHN , ACIT, 8 - R,MIG - 1, PIPLANI RATNAGIRI, BHOPAL VS 1(1), BHOPAL. -: 2: - 2 APPELLANT RESPONDENT APPELLANT S BY : SHRI H.P.VERMA, MISS SAKSHI VERMA AND SHRI GIRISH AGARWAL, ADVOCATES RESPONDENT BY : SHRI R.A. VERMA, SR. DR DATE OF HEARING : 22 . 10 .2012 DATE OF PRONOUNCEMENT : 31 . 10 .201 2 O R D E R PER R. C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEARS 2001-02 TO 2006-07 AND 2001-02 TO 2007-08, IN THE MATTER OF ORDER PASS ED BY THE ASSESSING OFFICER U/S 153-C/153A/143(3) OF THE INCO ME-TAX ACT, 1961. 2. IN THE INSTANT APPEALS, ALL THE ASSESSEES ARE RELAT ED TO EACH OTHER I.E. FAMILY MEMBERS AND ORDERS WERE FRAM ED U/S 153C AND 153A IN CONSEQUENCE OF SEARCH CONDUCTED ON 15.11.2006 AT THE RESIDENTIAL PREMISES OF C. E. FE RNANDES AND EVERLYN FERNANDES AT THE BUSINESS OF GEI HAMON INDU STRIES -: 3: - 3 LIMITED AT BHOPAL. IN THE COURSE OF ASSESSMENT U/S 153C AND 153A, ADDITIONS WERE MADE BY TREATING SALARY INCOME AND HOUSE PROPERTY INCOME OFFERED BY THE ASSESSEE AS IN COME FROM OTHER SOURCES AND THE INCOME DECLARED UNDER THE HEA D INCOME FROM AGRICULTURE WAS NOT ACCEPTED BY THE A SSESSING OFFICER. BY DISALLOWING MAJOR PART OF AGRICULTURAL INCOME, THE ASSESSING OFFICER TREATED THE SAME AS INCOME FROM O THER SOURCES. 3. AS ALL THE ASSESSEES ARE RELATED TO EACH OTHER AND THE ADDITIONS WERE MADE BY THE ASSESSING OFFICER IN CON SEQUENCE OF THE SAME SEARCH HAVING BEEN CARRIED OUT ON 15.11 .2006, THEREFORE, ALL THE APPEALS WERE HEARD TOGETHER AND ARE NOW DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 4. THE ASSESSEE, MRS. RACHEL JOFI, HAS CHALLENGED FRAM ING OF ASSESSMENT U/S 153C BY STATING THAT NO DOCUMENT BELONGING TO THE ASSESSEE WAS FOUND DURING SEARCH, HENCE PROCEEDINGS U/S 153C COULD NOT BE INITIATED. LD. AU THORIZED REPRESENTATIVE REFERRED THE ASSESSMENT ORDER WHER EIN AT NO PLACE, THERE WAS ANY MENTION OF A PARTICULAR DOCUME NT OF -: 4: - 4 ASSESSEE FOUND AT THE PLACE OF SEARCH, IN SO, FAR A S, NOT A SINGLE DOCUMENT HAS BEEN REFERRED IN THE ASSESSMENT ORDER, WHICH COULD SUPPORT THE CONTENTION OF ASSESSING OFFICER T HAT AS PER CONDITIONS U/S 153C, THE DOCUMENT SHOULD BELONG TO THE ASSESSEE AND NOT ONLY RELATED TO THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE FURTHER CONTENDE D THAT AT PAGE 3, THE ASSESSING OFFICER HAS REFERRED LPS-6, W HICH REQUIRED INQUIRY REGARDING INVESTMENT IN HOUSE PROP ERTY MADE IN FINANCIAL YEAR 2003-04. AS PER LD. AUTHORIZED REPRESENTATIVE, THE HOUSE BELONGS TO C.E. FERNANDES AND THE TRANSACTION DID NOT RELATE TO THE ASSESSEE. 5. ON MERIT OF THE ADDITION, IT WAS CONTENDED THAT THE SALARY INCOME SHOWN BY THE ASSESSEE IN THEIR REGULA R RETURNS, WHICH WERE ALREADY FILED WITH THE DEPARTMENT BEFORE SEARCH, WAS TREATED BY THE ASSESSING OFFICER AS INCOME FROM THE OTHER SOURCES. OUR ATTENTION WAS DRAWN TO THE CHART IN TH E PAPER BOOK INDICATING DATE OF FILING OF RETURN AND ACKNOW LEDGEMENT NUMBER. AS PER THIS CHART, ALL THE RETURNS WERE FIL ED PRIOR TO THE DATE OF SEARCH AND MOSTLY WITHIN THE STIPULATED TIME PERIOD PRESCRIBED U/S 139(1) OF THE INCOME-TAX ACT, 1961. OUR -: 5: - 5 ATTENTION WAS ALSO INVITED TO THE BALANCE SHEET OF THE RELEVANT YEARS, WHICH INDICATED LOAN AMOUNT GIVEN TO THE REL ATIVES. 6. THE ASSESSEE HAS CHALLENGED ADDITION OF RS. 1,28,545/- SHOWN AS OPENING CAPITAL BALANCE IN THE ASSESSMENT YEAR 2001-02. ADDITION MADE ON ACCOUNT O F REPAYMENT OF LOAN DURING THE ASSESSMENT YEAR 2004-0 5, 2005- 06 AND 2006-07 WAS ALSO DISPUTED BY THE ASSESSEE ON THE PLEA THAT ASSESSING OFFICER HAS NOT OBJECTED GIVING OF L OAN IN EARLIER YEARS, THEREFORE, THERE IS NO JUSTIFICATION FOR MAK ING ADDITION IN RESPECT OF LOANS, WHICH WERE RETURNED DURING THESE YEARS. 7. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS A ND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 8. SO FAR AS FRAMING OF ASSESSMENT U/S 153C IS CONCERNED, WE FOUND THAT DURING THE COURSE OF SEARC H AT C.E. FERNANDES PREMISES, THE DOCUMENTS BELONGING TO ASS ESSEE WERE FOUND, THEREFORE, THERE IS NOTHING WRONG IN AS SESSING OFFICERS ACTION FOR FRAMING ASSESSMENT U/S 153C. I N THE RESULT, LEGAL GROUND RAISED IN ALL THE YEARS UNDER CONSIDERATION ARE HEREBY DISMISSED. -: 6: - 6 9. WITH REGARD TO ADDITION MADE ON ACCOUNT OF OPENING CASH BALANCE OF RS. 1,28,545/-, WE FOUND THAT THE A SSESSEE HAS FILED CASH FLOW STATEMENT, WHEREIN OPENING CASH BALANCE WAS SHOWN AS ON 1.4.2000 AMOUNTING TO RS. 1,28,545/ -. THE ASSESSEE IS A NRI AND DAUGHTER OF SHRI C. E. FERNAN DES, WHO IS ASSESSED TO TAX AT BHOPAL SINCE 1988-89 I.E. MUCH P RIOR TO THE ACTION U/S 132(1) CARRIED OUT BY THE DEPARTMENT ON 15.11.2006 AT THE RESIDENTIAL PREMISES OF THE FATHE R OF THE ASSESSEE. THE DETAILS OF THE INCOME RETURNED ORIG INALLY BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1989-90 TO 2007-08 ARE GIVEN HEREUNDER :- DATE OF A.V. RETURN ACKNOWLE - HEADS OF INCOME RETURNED FILINA DGEMENT INCOME 1989-90 31.08.1989 1227 SALARY, OTHER SOURCES 25515 1990 - 91 30.06.1990 123 SALARY, OTHER SOURCES 55279 1991-92 27.11.1991 SALARY, OTHER SOURCES & SHARE INCOME 153312 1992-93 13.01.1993 230 SALARY, OTHER SOURCES & SHARE INCOME 197719 1993 - 94 29.10.1993 2685 SALARY, OTHER SOURCES & SHARE INCOME 170342 SALARY, OTHER SOURCES, BUSINESS INCOME & 1994 - 95 3 1.10.1994 113 SHARE INCOME 223421 1995-96 SALARY, OTHER SOURCES, & SHARE INCOME 158463 1996 - 97 26.02.1997 5001 OTHER SOURCES 5 0 158 1997-98 07.01.1998 5550 HOUSE P ROP .& OTHER SOURCES 150191 1998 - 99 09.11.1998 4408 HOUSE PROP., OTHER SOURCES & DIVIDEND INCOME 165943 1999-00 30.06.1999 1565 HOUSE PROP., OTHER SOURCES & DIVIDEND INCOME . 173420 [ 2000 - 01 31.10.2000 3121 HP,CAPITAL GAIN,OTHER SOURCES 801998 -: 7: - 7 2001-02 30.11.2001 11121 OTHER SOURCES 486 2002-Q3 09.08.2002 34536 HOUSE PROP., OTHER SOURCES 82706 2003 - 04 20.09.2003 140009384 OTH ER SOURCES & HOUSE PROPERTY 90374 2004-05 27.10.2004 140013781 OTHER SOURCES & HOUSE PROPERTY 114818 2005-06 07.09 .2005 1400183'16 OTHER SOURCES 194 2006 - Q7 03.0 8 .2006 140015106 OTHER SOURCES 937 2007-08 31.07.2008 14 0014406 OTHER SOURCES 126 2008-09 30.07.2008 140013178 OTHER SOURCES & AGRICULTURE INCOME 49851 OTHER SOURCES, AGRICULTURE INCOME & DIVIDEND 2009 - 10 30.09.2009 140015449 INCOME 360822 10. THE RETURN SO FILED BY THE ASSESSEE WERE ACCEPTED B Y THE DEPARTMENT WITHOUT MAKING ANY ADDITION OR PRIMA FACIE ADJUSTMENT U/S 143(1). HOWEVER, DURING THE ASSESSME NT PROCEEDINGS U/S 153C, THE ASSESSING OFFICER TREATED OPENING CASH BALANCE FOR ASSESSMENT YEAR 2001-02 AS NOT EXP LAINED. THE CASH FLOW STATEMENT SO FILED BY THE ASSESSEE WA S IN TERMS OF REQUISITION OF THE ASSESSING OFFICER, HOWEVER, T HE ASSESSING OFFICER HAS OUT RIGHTLY DECLINED THE SAME BY OBSERV ING THAT CASH FLOW STATEMENT WAS PURPOSELY PREPARED. THERE I S NOTHING WRONG IN FILING THE CASH FLOW STATEMENT WHEN PRECIS ELY ASKED BY THE ASSESSING OFFICER TO EXPLAIN THE INVESTMENT MADE BY THE ASSESSEE. NO CONVINCING REASON WAS GIVEN BY THE ASS ESSING OFFICER FOR REJECTING THE CASH FLOW STATEMENT. WE F OUND THAT CASH FLOW STATEMENT WAS PREPARED AS PER THE INCOME RETURNED -: 8: - 8 IN THE EARLIER YEARS I.E. PRIOR TO THE SEARCH. NO P RECISE MISTAKE WAS POINTED OUT BY THE ASSESSING OFFICER IN THE OPE NING CASH BALANCE TAKEN IN THE CASH FLOW STATEMENT. KEEPING I N VIEW THE INCOME RETURNED BY THE ASSESSEE IN EARLIER YEARS, O PENING CASH BALANCE OF RS. 1,48,545/- SHOWN BY THE ASSESSEE WAS VERY REASONABLE. ACCORDINGLY, WE DO NOT FIND ANY JUSTIFI CATION FOR NOT ACCEPTING THE OPENING CASH BALANCE SHOWN IN THE CASH FLOW STATEMENT IN TERMS OF THE RETURNS FILED BY THE ASSE SSEE IN EARLIER YEARS. 11. THE ASSESSING OFFICER HAS ALSO MADE ADDITION IN RESPECT OF LOANS RETURNED TO THE ASSESSEE IN THE FO LLOWING YEARS :- A.Y. 2004-05 RS. 1,10,270/- A.Y. 2005-06 RS. 2,31,000/- A.Y. 2006-07 RS. 1,84,600/- 12. THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION AS PER CASH FLOW STATEMENT, AMO UNTS WERE SHOWN AS RECEIVED FROM FRIENDS AND RELATIVES. HOWEV ER, THE ASSESSING OFFICER DID NOT ACCEPT THE RETURN OF LOAN AND ADDED THE SAME IN ASSESSEES INCOME AND THE SAME WAS CONF IRMED BY THE LD.CIT(A). -: 9: - 9 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT THE ASSESSEE HAS SUBMITTED CASH FL OW STATEMENT AS REQUIRED BY THE ASSESSING OFFICER DURI NG THE PROCEEDINGS U/S 153C. THE ASSESSEE WAS ASSESSED TO TAX AT BHOPAL FROM THE YEAR 1988 ONWARDS AND THE AMOUNT OF LOAN SO GIVEN IN EARLIER YEARS WERE NOT DISTURBED BY THE AS SESSING OFFICER. THE ASSESSEE HAD ALSO SHOWN LOANS TO RELAT IVES AND FRIENDS AS UNDER :- AS ON LOAN AMOUNT TO OTHERS P .B. CLOSING CASH BALANCE IN HAND 31.03.2000 5,80,000 16 1,28,545 31.03.2001 5,80,000 18 1,87,326 31.03.2012 5,80,000 21 1,66,107 31.03.2003 5,80,000 23 1,66,107 31.03.2004 4,69,730 26 51,606 14. THE ASSESSEE HAD SUBMITTED NAMES OF THE PERSONS TO WHOM LOAN WAS GIVEN AND ALSO AFFIDAVITS. PERUSAL OF THE AFFIDAVITS FILED BY THE PERSONS CONFIRMED THE RECEI PTS OF THE LOANS AS WELL AS REPAYMENTS, BALANCE OUTSTANDING ET C. SO THAT SUCH DETAILS ARE INVARIABLY MENTIONED IN THESE AFFI DAVITS. KEEPING IN VIEW THE INCOME RETURNED BY THE ASSESSEE IN EARLIER -: 10: - 10 YEARS AND ALSO THE FACT THAT THE ASSESSEE HAS ADVAN CED PETTY LOANS FREE OF INTEREST TO FRIENDS AND RELATIVES, RE PAYMENT OF SUCH LOAN CANNOT BE OUTRIGHTLY REJECTED UNLESS SOME ADVERSE MATERIAL IS BROUGHT ON RECORD BY THE ASSESSING OFFI CER. THE AFFIDAVITS FILED BY THE LOAN CREDITORS CANNOT BE RE JECTED OUTRIGHTLY. IT IS ALSO NOT THE CASE OF ASSESSING OF FICER THAT SUMMONS WERE ISSUED TO THESE PERSONS AND THEY WERE EXAMINED BY THE ASSESSING OFFICER BEFORE OUTRIGHTLY REJECTING THE EXPLANATION OF THE ASSESSEE. WHEN AFFIDAVITS OF THE PERSONS CONCERNED WERE FURNISHED CONFIRMING THE RECEIPTS AS WELL AS THE REPAYMENT OF LOANS, THE ASSESSING OFFICER WAS N OT JUSTIFIED IN ARRIVING AT CONCLUSION CONTRARY TO THE CONTENTS OF AFFIDAVIT WITHOUT VERIFYING THE CONTENTS OF THESE AFFIDAVITS. IN THE INTEREST OF JUSTICE, WE RESTORE THIS GROUND TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH AFTER EXAMINI NG THE AFFIDAVITS FILED BY RESPECTIVE LOAN CREDITORS AND G IVING DUE OPPORTUNITY TO THE ASSESSEE. WE DIRECT ACCORDINGLY. -: 11: - 11 15. IN THE RESULT, THE APPEALS FILED BY MRS. RACHEL JOF I FOR THE ASSESSMENT YEARS 2001-02, 2004-05 & 2006-07 ARE ALLOWED IN PART. 16. IN CASE OF MRS. EVERLYN FERNANDES, ASSESSMENTS WERE FRAMED U/S 153A. IN THE CASE OF MRS. EVERLYN FERNAN DES, THE ASSESSEE IS AGGRIEVED FOR ISSUE OF NOTICE U/S 143(2 )(II) FOR THE ASSESSMENT YEAR 2001-02, 2002-03 AND 2007-08, ON TH E PLEA THAT NOTICE WAS SERVED AFTER THE LIMITATION PERIOD PROVIDED IN CLAUSE (II) OF SECTION 143(2) W.E.F. 1.4.2008. THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT NOTICE WAS R EQUIRED TO BE SERVED ON 30 TH JUNE, 2008 IN RESPECT OF RETURN FILED ON 4.6.2007 FOR THE ASSESSMENT YEAR 2001-02 AND 2002-0 3, WHEREAS NOTICE WAS ACTUALLY SERVED ON 25.10.2008 AN D 1.8.2008 FOR THE ASSESSMENT YEARS 2001-02 AND 2002- 03 RESPECTIVELY. IN RESPECT OF ASSESSMENT YEAR 2007-08 , AS PER LD. AUTHORIZED REPRESENTATIVE , THE RETURN WAS FILED ON 31.7.2007, AND THE TIME LIMIT FOR THE SERVICE OF NOTICE U/S 14 3(2) EXTENDED TO 31.12.2007, WHEREAS THE NOTICE WAS SERVED ON THE ASSESSEE ON 10.5.2008. BY CITING THE DECISION OF HON'BLE SUP REME COURT IN THE CASE OF SATPAL SETH, 325 ITR 3, WHEREIN SLP WAS -: 12: - 12 DISMISSED FOLLOWING THE DECISION IN THE CASE OF VIN OD KUMAR KULLER. IN THE WRITTEN SUBMISSIONS, IT WAS CONTENDE D THAT SERVICE OF NOTICE U/S 143(2) IS MANDATORY AND SINCE NOTICE WAS NOT SERVED WITHIN THE LIMITATION PERIOD, THE ASSESS MENT SO FRAMED U/S 153A DESERVES TO BE QUASHED. 17. IN RESPECT OF MERIT OF ADDITIONS, CONTENTION OF TH E LD. AUTHORIZED REPRESENTATIVE WAS THAT THE ASSESSEE WAS REGULARLY FILING RETURN DISCLOSING THE AGRICULTURAL INCOME, B UT THE ASSESSING OFFICER HAS DECLINED TO ACCEPT THE AGRICU LTURAL INCOME. THE ASSESSEE IS ALSO AGGRIEVED FOR THE ADDI TION MADE IN RESPECT OF GIFT RECEIVED ON MARRIAGE ANNIVERSARY AND VARIOUS OTHER OCCASIONS AS WELL AS ADDITIONS MADE ON ACCOUN T OF HOUSE HOLD EXPENSES AND THE ADDITIONS MADE U/S 68 IN RESP ECT OF SMALL LOANS TAKEN FROM FAMILY FRIENDS AND RELATIVES FOR WHICH CONFIRMATIONS AND AFFIDAVITS WERE FILED BEFORE THE ASSESSING OFFICER. 18. ON THE OTHER HAND, THE LD. SENIOR DR RELIED ON THE ORDER PASSED BY THE ASSESSING OFFICER AND CONTENDED THAT REQUIRED RELIEF HAS ALREADY BEEN GIVEN BY THE LD.CI T(A) AND ASSESSEE DOES NOT DESERVE ANY FURTHER RELIEF. -: 13: - 13 19. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. DURING THE COURSE OF ASSESSMENT, THE ASSES SING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE DETAIL S OF AGRICULTURAL INCOME. IT WAS SUBMITTED THAT THE ASSE SSEE WAS HAVING AGRICULTURAL LAND MEASURING 13.10 ACRES, WHI CH IS IRRIGATED AND SITUATED NEAR DAHOD DHAM CANAL AND TH E LAND WAS FERTILE AND PRODUCTIVE WHEREIN REGULAR TWO CROP S WERE TAKEN APART FROM TWO VEGETABLES. BY OBSERVING THAT NO SEPARATE AGRICULTURAL SALE BILLS WERE FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER DECLINED TO ACCEPT THE AGRICU LTURAL INCOME RETURNED BY THE ASSESSEE. HOWEVER, THE ASSES SING OFFICER HAS ESTIMATED AGRICULTURAL INCOME PER ACRE AT RS. 6,000/- AND ACCORDINGLY, ACCEPTED THE ASSESSEES CL AIM FOR RS. 78,600/-. FOLLOWING DIFFERENCES WERE ADDED BY THE A SSESSING OFFICER AS INCOME FROM OTHER SOURCES :- A.Y. AGRICULTURE INCOME SHOWN BY APPELLANT AGRICULTURE INCOME AS PER ASSESSING OFFICER ADDITION MADE 2001-02 4,50,000 78,600 3,71,400 2002-03 2,25,000 78,600 1,46,400 2003-04 1,70,000 78,600 1,36,400 2004-05 2,15,000 78,600 1,36,400 2005-06 1,70,000 78,600 91,400 2006-07 1,57,845 78,600 79,245 2007-08 1,62,365 78,600 83,765 -: 14: - 14 20. DURING THE APPELLATE PROCEEDINGS IT WAS SUBMITTED BEFORE THE CIT(A) THAT THE ASSESSING OFFICER MADE T HE ADDITION MAINLY ON ACCOUNT OF THE REASON THAT SUPPORTING VOU CHERS FOR THE EXPENSES INCURRED ON AGRICULTURAL OPERATIONS AN D ALSO FOR THE SALE OF THE CROPS WERE NOT PRODUCED. IN THIS CO NNECTION IT WAS SUBMITTED THAT AFTER SEARCH AND SEIZURE OPERATI ONS, ACTION U/S 147 WAS RESORTED IN RESPECT OF ASSESSMENT YEARS 2000-01 WHEREIN NET AGRICULTURE INCOME AMOUNTING TO RS. 1,9 5,000/- WAS DECLARED BY THE ASSESSEE AND ASSESSING OFFICER ACCEPTED ONLY RS. 78,600/- AS THE REASONABLE NET AGRICULTURE INCOME AND BALANCE AMOUNT OF RS. 1,16,400/- WAS ADDED AS I NCOME FROM UNDISCLOSED SOURCES. IT IS STATED THAT WHILE D ECIDING THE APPEAL AGAINST THE ORDER FOR ASSESSMENT YEAR 2000-0 1, THE HON'BLE CIT(A)-I, BHOPAL, ACCEPTED THE NET AGRICULT URE INCOME OF RS. 1,95,000/- FOR THE ABOVE MENTIONED ASSESSMEN T YEAR AND ADDITION OF RS. 1,16,400/- MADE BY THE ASSESSIN G OFFICER WAS DELETED. IT WAS ACCORDINGLY CLAIMED THAT THE AS SESSEE HAS DECLARED THE NET AGRICULTURE INCOME STRICTLY ON THE BASIS OF WHAT WAS ACTUALLY EARNED AND THEREFORE, THE ADCDITI ONS MADE BY THE ASSESSING OFFICER RESTRICTING THE INCOME @ R S. 6,000/- -: 15: - 15 PER ACRE AND MAKING ADDITION OF THE REMAINING AMOUN T AS INCOME FROM OTHER SOURCES IS HIGHLY UNJUSTIFIED AND , THEREFORE, THE ADDITIONS MADE BY THE ASSESSING OFFICER DESERVE S TO BE DELETED. 21. BY THE IMPUGNED ORDER, THE LD. CIT(A) ESTIMATED AGRICULTURAL INCOME AT RS. 10,000/- PER ACRE AGAINS T WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 22. WE HAVE CONSIDERED THE DOCUMENTS PLACED ON RECORD AND FOUND THAT THE ASSESSEE WAS REGULARLY OFFERING ITS AGRICULTURAL INCOME IN THE RETURNS FILED WITH THE D EPARTMENT EVEN PRIOR TO THE DATE OF SEARCH. AS PER DOCUMENTS PLACED ON RECORD, THE ASSESSEE WAS HAVING AGRICULTURAL INCOME AND WHICH WAS ACCEPTED BY THE ASSESSING OFFICER AND CIT (A). HOWEVER, THE ASSESSING OFFICER HAS ESTIMATED YIELD AT RS. 6000/- PER ACRE WHEREAS CIT(A) HAS TAKEN THE YIELD AT RS. 10,000/- PER ACRE. WE FOUND THAT IN THE ASSESSMENT YEAR 2000-01 ON THE SIMILAR FACTS AND CIRCUMSTANCES, THE AGRICULTURAL INCOME OFFERED BY THE ASSESSEE AT RS. 14,885/- PER ACRE WAS ACCEPTED BY THE CIT(A) AND NO FURTHER APPEAL WAS FILED. WE FOUND THAT THE ASSESSEE HOLDS 15.1 ACRES OF IRRIGATED -: 16: - 16 LAND OUT OF WHICH 13.1 ACRES IS ADJACENT TO NARMADA CANAL AND TO WHOLE DISTRICT OF RAISEN, TWO ACRES LAND WAS AT KERALA. THE ASSESSEE GETS TWO CROPS AND TWO SEASONS OF VEGE TABLES, IT IS NOW WELL KNOWN FACT THAT NARMADA BASIN LAND IS M ORE FERTILE AND IS COMPARABLE WITH THE LAND OF PUNJAB. THE FLUC TUATION IN THE YEARLY INCOME SHOWN BY THE ASSESSEE BASED ON NA TURAL CLIMATE VARIATIONS, VARYING MARKET RATES OF AGRICUL TURAL COMMODITIES ETC. THE LAND AT KERALA WAS ANCESTRAL L AND OF THE ASSESSEE AND WAS PRODUCING COCONUT, GARAM MASALA INGREDIENTS, COFFEE, COCO ETC. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES, IT WOULD BE REASONABLE TO ESTIMATE A GRICULTURAL INCOME AT RS. 14,000/- PER ACRE SUBJECT TO THE INCO ME OFFERED BY THE ASSESSEE, WHICHEVER IS LOWER. THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO RECOMPUTE AGRICULTURAL INCO ME AND ALLOW THE SAME UP TO THE EXTENT OF RS. 14,000/- PER ACRE OR ACTUAL INCOME OFFERED BY THE ASSESSEE ON ACCOUNT OF AGRICULTURE, WHICHEVER IS LOWER. WE DIRECT ACCORDIN GLY. 23. IN RESPECT OF GIFTS RECEIVED IN MARRIAGE ANNIVERSAR Y IN THE YEAR 2002, WE FOUND THAT AS PER THE LIST FURNIS HED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, TOTAL 285 PE RSONS -: 17: - 17 ATTENDED THE FUNCTIONS, OUT OF WHICH 84 WERE STAFF MEMBERS, 21 RELATIVES AND 180 FRIENDS. ON THIS FUNCTION, THE ASSESSEE HAS INCURRED EXPENDITURE OF RS. 80,000/-. THIS FACT WAS ACCEPTED BY THE ASSESSING OFFICER. HE REJECTED THE FACT OF GIVING THE GIFT BY THE PERSONS WHO ATTENDED THE PARTY. THE RE IS NO VALID JUSTIFICATION FOR OUTRIGHTLY REJECTING GIFTS RECEIVED BY THE ASSESSEE, WHICH IS A NORMAL FEATURE IN THE SOCIETY TO WHICH ASSESSEE BELONG. NUMBER OF RELATIVES/FRIENDS ATTEND ING THE PARTY OF MARRIAGE ANNIVERSARY WAS NOT DISPUTED BY T HE ASSESSING OFFICER. IT IS VERY UNREASONABLE TO CONTE ND THAT RELATIVES/FRIENDS/STAFF PEOPLE ATTENDING THE PARTY WOULD ATTEND EMPTY HANDED. KEEPING IN VIEW FINANCIAL AND SOCIAL STATUS OF THE ASSESSEE VIS--VIS RELATIVES/FRIENDS ATTENDING THE PARTY, WE DEEM IT REASONABLE TO ACCEPT AVERAGE GIFT OF RS. 1, 000/- FROM EACH PERSON. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO DELETE ADDITION TO THE EXTENT OF RS. 2,85,000/- (28 5 X 1000/-). 24. IN RESPECT OF ASSESSMENT YEAR 2002-03 TO 2007-08, T HE ASSESSEE HAS ALSO SHOWN SMALL AMOUNT OF GIFT AS HAV ING BEEN RECEIVED ON VARIOUS OCCASIONS, WHICH ARE AS UNDER : - -: 18: - 18 A.Y. GIFT REMARKS 2002-03 23400 ON VARIOUS OCCASIONS 2003-04 24500 ON VARIOUS OCCASIONS 2004-05 23600 ON VARIOUS OCCASIONS 2005-06 24800 ON VARIOUS OCCASIONS 2006-07 23500 ON VARIOUS OCCASIONS 2007-08 15100 ON VARIOUS OCCASIONS 25. ENTIRE AMOUNT WAS ADDED BY THE ASSESSING OFFICER. ASSESSEE BEING A LADY WAS IN RECEIPT OF SMALL GIFTS FROM PARENTS/FRIENDS ON VARIOUS FESTIVE AND OTHER OCCASI ONS CANNOT BE RULED OUT. KEEPING IN VIEW THE FINANCIAL POSITIO N OF THE ASSESSEE AS WELL AS HER SOCIAL STATUS AND FAMILY BA CKGROUND, IT WOULD BE REASONABLE TO ACCEPT GIFT OF RS. 6000/- PE R ANNUM. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 26. ADDITIONS WERE ALSO MADE BY THE ASSESSING OFFICER I N RESPECT OF BILLS OF SAREES AND GIFT ITEMS FOUND DUR ING COURSE OF SEARCH. DURING THE ASSESSMENT PROCEEDINGS, AS REGAR D TRANSACTIONS RECORDED ON SEIZED PAGES,IT WAS SUBMIT TED THAT IN -: 19: - 19 ORDER TO FULFILL THE COMMITMENT FOR SOCIAL SERVICE, THE ASSESSEE HELPED A FINANCIAL WEAK LADY MRS. SHERLY JOHN W/O J OHN A BY EXTENDING HER COOPERATION AND GIVING PERSONAL GUARA NTEE TO THE LOCAL TRADERS TO LEND GOODS SUCH AS SAREES, GIF T PACKETS, UTENSILS, CROCKERIES SO THAT SHE CAN BE ABLE TO RUN A STALL ON THE FORTHCOMING FESTIVAL SEASON AND EARNED SOME PRO FIT BY SELLING THE GOODS AND AFTER REALIZING THE SALE PROC EEDINGS THE PAYMENT BE MADE TO THE PARTIES. IT WAS FURTHER STAT ED THAT THE BILLS AND VOUCHERS WERE RELATED TO MRS. SHERLY JOHN BUT THE SAME REMAINED WITH THE ASSESSEE. AN AFFIDAVIT OF TH AT LADY WAS ALSO FURNISHED BEFORE THE ASSESSING OFFICER. 27. BY OBSERVING THAT SO CALLED FINANCIALLY WEAK LADY CANNOT AFFORD TO MAKE THESE PAYMENTS ON ACCOUNT OF PURCHASE OF THESE ITEMS. ADDITION WAS MADE U/S 69C OF THE IN COME-TAX ACT, 1961. 28. DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE BILLS FOUND DURING THE SEARCH AND SEIZURE FORMING THE PART OF LOOSE PAPERS WERE ATTRI BUTABLE TO PURCHASE OF SAREES, GIFTS, PACKETS, UTENSIL AND CRO CKERY IN BULK AND APPARENTLY NOT MEANT FOR THE PERSONAL OR DOMEST IC USE OF -: 20: - 20 THE ASSESSEE. FURTHER, THE VERY FACT THAT PURCHASE OF GIFT ARTICLES, SAREES AND UTENSILS RECURRED YEAR AFTER Y EAR IS ALSO INDICATIVE AND SUGGESTIVE OF THE FACT THAT THESE PU RCHASES WERE NOT MADE FOR THE PERSONAL USE OF THESE ARTICLES IN BULK BY THE ASSESSEE. IT IS STATED THAT THE ASSESSING OFFICER F AILED TO CONSIDER THE FACT THAT THE ASSESSEE ENJOYS REASONAB LY GOOD FINANCIAL STATUS AS WELL AS VERY GOOD SOCIAL STATUS BY VIRTUE OF HER ASSOCIATION AND INVOLVEMENT IN THE BUSINESS GRO UP AS A CHRISTIAN WAS WILLING FOR CHARITABLE WORKS AND SOCI AL ACTIVITIES. IT IS IN THIS BACKGROUND THAT THE ASSESSEE COME FOR WARD TO POOR AND NEEDY LADY OF THEIR COMMUNITY BY ALLOWING HER TO PUT UP A STALL NEAR THE FACTORY PREMISES WITH A VIEW TO ENABLE HER TO SALE THE SAREES, UTENSILS AND OTHER GIFT ITEMS T O THE PROSPECTIVE CUSTOMERS OF VARIOUS INDUSTRIAL HOUSES AND UNITS LOCATED IN INDUSTRIAL AREA. IT WAS STATED THAT SUCH PURCHASES WERE MADE BY MRS. SHERLY JOHN AND THAT THE PAYMENT ON ACCOUNT OF SUCH PURCHASES WERE TO BE MADE AGAINST T HE SALE PROCEEDS. THESE RELEVANT FACTS WERE ALSO STATED TO BE CONFIRMED BY MRS. SHERLY JOHN IN HER AFFIDAVIT WHICH WAS SUBM ITTED BEFORE THE ASSESSING OFFICER. IT IS STATED THAT THE ONLY GROUND -: 21: - 21 ON WHICH THE ASSESSING OFFICER DISBELIEVED THE EXPL ANATION OF THE ASSESSEE AND THE CONFIRMATION BY WAY OF AFFIDAV IT WAS THAT THE BANK A/C AND RETURN OF INCOME AS WELL AS NAME A ND ADDRESS OF PERSONS TO WHOM SHE HAS SOLD THE SAREES/ GIFT ITEMS WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER. IT IS STATED THAT THESE REASONS HAVE NO FORCE FOR THE SIMPLE REA SON THAT IF MRS. SHERLY JOHN WOULD HAVE ANY BANK ACCOUNT OR BAN K DEPOSITS OR SHE WOULD HAVE BEEN ASSESSED TO TAX, TH ERE WAS NO NEED FOR THE ASSESSEE TO STAND AS A GUARANTOR FOR T HE PURCHASES. IT IS ALSO STATED THAT AS REGARD THE NON -PRODUCTION OF MRS. SHERLY JOHN BEFORE THE ASSESSING OFFICER, T HE SAME WAS REQUIRED THROUGH THE ORDER SHEET ENTRY WHICH THE CO UNSEL USED TO SIGN ALONGWITH OTHER CASES AND THAT IT SKIPPED T HROUGH THE ORDER SHEET ENTRY WHICH THE COUNSEL USED TO SIGN AL ONGWITH OTHER CASES AND THAT IT SKIPPED THE ATTENTION OF TH E COUNSEL AND, THEREFORE, THAT LADY COULD NOT BE PRODUCED. IN THESE CIRCUMSTANCES, IT WAS CONTENDED THAT THE ADDITION M ADE ON THIS ACCOUNT IN ALL THE ASSESSMENT YEARS ARE BASED ON MERE ASSUMPTION AND SURMISES AND THE SAME DESERVES TO BE -: 22: - 22 DELETED. HOWEVER, THE CIT(A) DID NOT ACCEPT ASSESSE ES CONTENTION AND CONFIRMED THE ACTION OF THE ASSESSIN G OFFICER. 29. IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTATI VE THAT DURING THE COURSE OF SEARCH, INVENTORY OF HOUS E HOLD ARTICLES WAS PREPARED IN 7 SHEETS VIDE PANCHNAMA PL ACED AT PAPER BOOK PAGE NO.183. THE SHEETS WERE ALSO ENCLOS ED AT PAGE 184-190. THE SAREES ALLEGED TO BE PURCHASED BY THE ASSESSEE AND STATED TO BE VERY COSTLY DO NOT FIND P LACE IN THE INVENTORY. ACCORDINGLY, IT WAS PLEADED THAT ADDITIO N SO MADE BY THE ASSESSING OFFICER WAS NOT JUSTIFIED. 30. WITH RESPECT TO THE ADDITION OF RS. 1,34,658/- MADE IN THE ASSESSMENT YEAR 2001-02, IT WAS CONTENDED THAT VOUCHERS SO REFERRED BY THE ASSESSING OFFICER WERE DATED 16. 5.2002 AND THE SAME DOES NOT FALL IN THE PREVIOUS YEAR UNDER CONSIDERATION. 31. WITH RESPECT TO THE ADDITION MADE IN RESPECT OF LPS - 6/12, IT WAS CONTENDED THAT THIS WAS A HUGE PURCHAS E OF RS. 1,15,892/-, WHEREIN QUANTITY OF EACH ITEM WAS MORE THAN ONE IN THE ASSESSMENT YEAR 2002-03 AND ADDITION OF RS. 28,300/- WAS MADE WITH RESPECT TO THE LPS-5/50 TO 56 PLACED AT PAGE -: 23: - 23 165 TO 171 OF THE PAPER BOOK. IT WAS CONTENDED THAT SOME OF THE VOUCHERS DO NOT READ PROPER AND ARE DUMP DOCUME NTS AND THAT THESE VOUCHERS ARE AS UNDER :- VOUCHER NO. DATE P.B. 3219 14.06.04 171 3225 08.06.04 170 3231 09.06.04 169 3237 09.06.04 168 3255 09.06.04 166 32 59 -- 165 3261 06.06.04 167 32. ADDITION OF RS. 1,09,500/- WAS MADE IN THE ASSESSMENT YEAR 2003-04 WITH REFERENCE TO LPS-5/24- 25. IT WAS CONTENDED THAT THERE IS NO DATE PUT ON ANY PAPE R. OUR ATTENTION WAS INVITED TO PAPERS PLACED AT PAGE 158 AND 159 OF THE PAPER BOOK. ACCORDINGLY, IT WAS PLEADED THAT NO ADDITION CAN BE MADE IN ANY YEAR. 33. IN THE ASSESSMENT YEAR 2004-05 AND ADDITION OF RS. 55,575/- WAS MADE WITH REFERENCE TO THE LPS-5/59 TO 68. 34. IN VIEW OF THE ABOVE SUBMISSION, IT WAS CONTENDED T HAT A) THERE IS NO DATE ON MANY PAPERS. THEY CANNOT BE CONSIDERED IN ANY YEAR. -: 24: - 24 B) THERE ARE BULK PURCHASES WHICH IS NOT A NO RMAL COURSE IN NORMAL LIVING. C) A NUMBER OF SETS FOR THE SAME USE IS ALSO ABNORMAL D) THAT CONSIDERING THE SUBMISSIONS MADE ABOV E IT IS SUBMITTED THAT THE ADDITION MAY KINDLY BE DELETED . E) NAME OF ASSESSEE IS NOT MENTIONED IN ANY V OUCHER. NO INFERENCE ON SURMISES UNLESS CORROBORATED. ASS T. CIT V. SATYAPAL WASSAN (2007) 295 ITR (AT) 352 (JAB). 35. IT WAS ALSO CONTENDED BY THE LD. AUTHORIZED REPRESENTATIVE THAT EVEN IF ADDITION IS BEING MADE , IT IS COVERED BY THE AMOUNT OF RS. 30 LAKHS SURRENDERED B Y THE ASSESSEE, THEREFORE, NO SEPARATE ADDITION WAS WARRA NTED. 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT THE ADDITIONS WERE MADE IN RESPECT OF BILLS/VOUCHERS FOUND DURING THE COURSE OF SEARCH IN DICATING PURCHASE OF SAREES ETC. TO SUBSTANTIATE ITS CLAIM I T WAS SUBMITTED THAT SAREES WERE PURCHASED TO HELP A WEAK LADY MRS. SHERLYN W/O JOHN FOR EXTENDING COOPERATION GIV ING PERSONAL GUARANTEE TO THE LOCAL PERSONS TO LEND GOO DS SUCH AS SAREES, GIFT PACKS, UTENSILS ETC. SO THAT THE PERSO N CAN BE ABLE TO RUN IN THE FESTIVE SEASON AND EARN SOME PROFIT B Y SELLING THE -: 25: - 25 GOODS. AN AFFIDAVIT FROM SUCH LADY WAS ALSO FILED B EFORE THE ASSESSING OFFICER. WE ALSO FOUND THAT IN RESPECT OF ADDITIONS MADE IN THE ASSESSMENT YEAR 2002-03 WERE PERTAINING TO THE ASSESSMENT YEAR 2005-06, WE ALSO FOUND THAT ADDITIO N MADE IN THE ASSESSMENT YEAR 2005-06 WITH REFERENCE TO LPS/4 4 TO 48 COULD NOT BE CORRELATED TO ANY YEAR. PAPER MARKED L PS-5/48 IS DATED 11.4.2004. MANY OF THE PAPERS DO NOT INDICATE ANY DATE. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTA NCES OF THE CASE, WE RESTORE ALL THESE ADDITIONS BACK TO THE FI LE OF THE ASSESSING OFFICER FOR DECIDING AFRESH AFTER CONSIDE RING THE SHORTCOMINGS POINTED OUT BY THE ASSESSEE IN TERMS O F OUR ABOVE DISCUSSION. WE DIRECT ACCORDINGLY. 37. IN THE ASSESSMENT YEAR 2002-03, THE ADDITION OF RS. 1,75,250/- WAS MADE U/S 68. THE ASSESSEE HAS SHOWN LOAN AMOUNTING TO RS. 1,75,250/- FROM THE BELOW MENTIONE D 10 PERSONS. S.NO. NAME AMOUNT (RS.) 1 C.JOHN 18400 2 GILBERT ALBERT 15000 3 JOY STEAPHEN 19000 4 NOBERT A 19350 5 ROBERT ALBERT 18500 -: 26: - 26 6 SOFIA STEAPHEN 17000 7 SUNIL ALPHONSE 16000 8 S URESH ALPHONSE 18000 9 TRESA JOHN 16000 10 VALSALA JOHN 18000 TOTAL 175250 38. THE ABOVE AMOUNT WAS ADDED BY THE ASSESSING OFFICER U/S 68. 39. DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE AO ADDED THE ENTI RE CREDITS IN QUESTION AMOUNTING TO RS. L,75,250/- ON THE GROU ND THAT CONFIRMATION LETTERS DID NOT GIVE ANY DETAILS ABOUT CREDITWORTHINESS AND SOURCE OF INCOME OF THE LENDER S AS ALSO THEIR BANK STATEMENT AND RETURNS OF INCOME WERE NOT FURNISHED. IT 'VAS SUBMITTED THAT OUT OF 10 PERSONS 7 BELONG TO NATIVE PLACE OF THE ASSESSEE IN KERALA AND 3 REMAIN ING PERSONS BELONGING TO BHOPAL. IT IS FURTHER STATED THAT IF T HE AO WOULD HAVE ISSUED SPECIFIC LETTER TO THE ASSESSEE TO PROD UCE THESE PERSONS FOR EXAMINATION INSTEAD OF WRITING IN ROUTINE ORDER SHEET ENTRY ASKING THE ASSESSEE TO PRODUCE ALL THE CREDITORS, SPECIFIC COMPLIANCE WOULD HAVE BEEN MADE BY THE ASS ESSEE AT LEAST IN RESPECT OF ALL THE THREE PERSONS OF BHOPAL . AS REGARDING -: 27: - 27 7 PERSONS OF KERALA IT WOULD HAVE BEEN OTHERWISE IM PRACTICABLE TO BRING THE 7 PERSONS OF KERALA IN THE STIPULATED TIME LIMIT. IT IS FURTHER STATED THAT THE OLDER SHEET ENTRIES WERE SIGNED BY THE COUNSEL IN A ROUTINE MANNER AND THAT IN ANY CASE TH E LAPSE WAS ON THE PART OF THE COUNSEL AND THE SAME WAS UNINTENTIONAL. THE APPELLANT FURTHER SUBMITTED THAT THE AO COULD HAVE VERY WELL SUMMONED THOSE PERSONS FOR EXA MINATION U/S 131 WHICH THE AO HAS ALSO FAILED TO DO. FURTHER , AS THE AMOUNT INVOLVED IN ALL THESE CREDITS INDIVIDUALLY W ERE WELL UNDER RS. 20,000/- AND CONFIRMATIONS WERE BEFORE TH E AO, THEREFORE, THE AO WAS TOTALLY UNJUSTIFIED IN TREATI NG THE ENTIRE AMOUNT AS UNEXPLAINED ON THE PLEA THAT THE LENDERS BANK ACCOUNTS AND INCOME TAX RETURNS WERE NOT PRODUCED. IT IS CONTENDED THAT WITH THE FILING OF CONFIRMATION LETT ERS WITH FULL ADDRESSES OF THE PERSONS, THE ASSESSEE HAS DISCHARG ED HER ONUS AND IN THESE CIRCUMSTANCES THE AO NOT AT ALL J USTIFIED IN DISBELIEVING THE EXPLANATIONS CONFIRMATIONS IN RESP ECT OF CASH CREDITS. IT WAS THEREFORE, REQUESTED THAT THE ADDIT ION IN QUESTION MAY BE DELETED. THE CIT(A) DID NOT AGREE W ITH THE -: 28: - 28 ASSESSEES CONTENTION AND CONFIRMED THE ACTION OF T HE ASSESSING OFFICER. 40. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT THE ASSESSEE HAS FILED CONFIRMATIO N LETTER FROM THE RESPECTIVE CREDITOR OUT OF 10 PERSONS FROM WHOM LOAN WAS TAKEN, SEVEN BELONGS TO NATIVE PLACE OF ASSESSEE IN KERALA AND THREE REMAINING PERSONS BELONGED TO BHOPAL. HOWEVER , THE ASSESSING OFFICER HAS NOT ISSUED SUMMONS DIRECTLY T O THESE PERSONS FOR CALLING THEM AND EXAMINING THE CONFIRMA TION FILED BY THEM. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE VIS--VIS SUBMISSIONS FIL ED BEFORE THE FIRST APPELLATE AUTHORITY AND ALSO REITERATED B Y THE LD. AUTHORIZED REPRESENTATIVE BEFORE US, THIS ISSUE IS ALSO RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECID ING AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE AND IN TERMS OF OUR OBSERVATIONS MADE HEREINABOVE. 41. GROUND NO.5 IN ASSESSEES APPEAL RELATING TO ADDITI ON MADE IN THE ASSESSMENT YEAR 2002-03 AMOUNTING TO RS . 27,880/-, PERTAINS TO INTEREST INCOME EARNED BY THE ASSESSEE ON THE R.D. ACCOUNT MADE IN THE NAME OF GRAND DAUGH TERS. -: 29: - 29 SINCE THIS AMOUNT WAS UTILIZED BY THE ASSESSEE, THE REFORE, THE CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 27,880/- IN ASSESSEES HANDS AND NO INTERFERENCE IS REQUIRED . 42. LAST GRIEVANCE OF THE ASSESSEE RELATES TO ADDITION OF RS. 5,66,106/- ON ACCOUNT OF JEWELLERY FOUND DURING COU RSE OF SEARCH. 43. IN THIS REGARD, THE AO HAS OBSERVED THAT DURING THE SEARCH ACTION JEWELLERY WAS FOUND AT THE RESIDENCE OF MR. C.E. FERNANDESE AND THE ASSESSEE IN THEIR BEDROOM WEIGHI NG 1689.200 GRAMS AND IN THE LOCKER AT SBI, MAHAVIR NA GAR BRANCH, WEIGHING 1115.400 GRAMS. THE TOTAL JEWELLER Y WEIGHING 2804.600 GRAMS WAS VALUED FOR RS. 22,45,18 2/- BUT IT WAS NOT SEIZED. DURING THE ASSESSMENT PROCEEDING S THE ASSESSEE WAS REQUIRED TO SUBMIT DETAIL OF ACQUISITI ON OF JEWELLERY ALONG WITH DOCUMENTARY EVIDENCES AS ALSO THE SOURCE OF THE SAME. IT WAS SUBMITTED THAT THE ASSES SEE GOT MARRIED ON 25.09.1965 AND AS PER THE 'MALAYALI' CUS TOMS THE ASSESSEE AND HIS WIFE RECEIVED THE SAID JEWELLE RY AT THE TIME OF MARRIAGE AND ALSO ON VARIOUS OTHER OCCASION S FROM THEIR IN-LAWS, RELATIVES AND FRIENDS. SUCH JEWELLER Y WAS -: 30: - 30 APPROX. 2800 GRAMS. IT IS FURTHER STATED THAT IN TH E YEAR 1983, THE ASSESSEE OBTAINED ESTIMATES OF PREVAILING MARKET VALUE OF THE SAID JEWELLERY AND LATER ON IT WAS REC ORDED AS OPENING CAPITAL OF THE ASSESSEE AND HIS WIFE IN THE IR STATEMENT OF AFFAIRS FORMING PART OF IT RETURNS FUR NISHED BY BOTH THE PERSONS IN THEIR INDIVIDUAL RETURNS. IT IS ALSO STATED THAT THE JEWELLERY WAS REDESIGNED FROM TIME TO TIME . FURTHER JEWELLERY WEIGHING 130 GRMS WORTH RS. L,08,924/- WA S PURCHASED IN F. Y.2005-06 WHICH IS SHOWN IN THE STA TEMENT OF AFFAIRS OF THE ASSESSEE. IT WAS ACCORDINGLY STAT ED THAT THE ABOVE FACTS INDICATED THAT THE ASSESSEE AND HIS WIF E WERE HAVING GOLD JEWELLERY AND ORNAMENTS' MUCH PRIOR TO THE BLOCK PERIOD. DURING THE ASSESSMENT PROCEEDINGS THE ASSES SEE WAS REQUIRED TO SUBMIT DECLARATION OF VDIS 1997 AND ALS O WHETHER JEWELLERY INVENTORIED DURING THE COURSE OF SEARCH IS REFLECTED IN THE VDIS OR NOT. THE ASSESSEE SUBMITTE D THAT JEWELLERY DECLARED IN VDIS WAS SOLD OUT DURING RELE VANT FINANCIAL YEAR 2007-08 I.E. A.Y.2008-09. 44. DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT(A) , IT WAS SUBMITTED THAT ADDITION ON THIS ACCOUNT HAS BEE N MADE -: 31: - 31 BY THE AO BY ADOPTING THE MARKET VALUE AS ON THE RELEVANT TIME IN F.Y. 1995-96. IT IS STATED THAT SINCE THE APPELLANT HAS NOT ACQUIRED ANY JEWELLERY IN F. Y. 1995-96 OR THER EAFTER TILL THE PREVIOUS YEAR RELEVANT TO A.Y. 2007-08 AS IS CL EAR FROM ASSESSMENT ORDER ITSELF THEN ADAPTATION OF MARKET R ATE AS ON 1995-96 IS NOT CORRECT. IT IS STATED THAT THE APPEL LANT HAS NEVER CHANGED THE VALUE OF JEWELLERY OR HAD MADE ANY REVA LUATION OF THIS JEWELLERY WITH A VIEW TO INTRODUCE OR TO ENHAN CE THE CAPITAL. THE JEWELLERY WAS PURELY MEANT FOR PERSONA L WEARING AND NEVER MEANT FOR TRADING. IT IS STATED THAT THER E WAS NO JUSTIFICATION WHATSOEVER TO ADOPT THE MARKET VALUE AS PER THE RATES PREVAILED IN F. Y. 1995-96 AND SUCH ACTION OF THE AO WAS ARBITRARY UNFOUNDED AND OPPOSED TO THE FACTS. THE A PPELLANT HAS ALSO REFERRED TO JUDGEMENT OF HON'BLE HIGH COUR T OF DELHI IN THE CASE OF ASHOK CHADDHA. VS. ITO (2012) 69 DTR 82 WHEREIN, JEWELLERY WEIGHING 906 GRAM FOUND DURING T HE SEARCH WAS TREATED TO BE OF EXPLAINED NATURE KEEPING IN VI EW THE FACT THAT THE ASSESSEE BEING MARRIED LADY FOR LAST 25 YE ARS AND THAT JEWELLERY TO SUCH AN EXTENT CANNOT SAID TO BE SUBST ANTIAL. IT -: 32: - 32 WAS THEREFORE, REQUESTED AS THE ADDITION DESERVES T O BE DELETED. 45. BEING NOT SATISFIED WITH THE ASSESSEES EXPLANATION , THE CIT(A) CONFIRMED ASSESSING OFFICERS ACTION FOR ADD ITION OF RS. 5,66,101/- IN ASSESSEES HANDS. 46. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FROM THE RECORD, WE FOUND THAT JEWELLERY W EIGHING 2800 GMS. WERE ACQUIRED BY THE ASSESSEE BETWEEN THE FINANCIAL YEAR 1964 TO 1999-2000. DURING THE COURSE OF SEARCH, JEWELLERY WEIGHING 1689.200 GMS. WERE FOUND AT THE RESIDENCE, WHEREAS JEWELLERY WEIGHING 1115.400 GMS. WAS FOUND IN LOCKER, TOTAL OF THESE JEWELLERIES WORKS O UT TO BE 2804.600 GMS. HOWEVER, THESE JEWELLERIES WERE NOT S EIZED BY THE SEARCH PARTY. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HELD THAT HALF OF IT BELONGS TO T HE ASSESSEE AND HALF TO HER HUSBAND AFTER GIVING REBATE OF 130 GMS. PURCHASED IN FINANCIAL YEAR 2005-06, THE ASSESSING OFFICER WORKED OUT JEWELLERY AT 1272.300 GMS, WE FOUND THAT THE ASSESSEE WAS MARRIED ON 20.5.1965 AND SINCE THEN, S HE POSSESSES THE JEWELLERY AND ALSO ACQUIRED DURING TH E SAID 46 -: 33: - 33 YEARS. WE ALSO FOUND THAT AS ON 31.3.1983, THE RATE OF 10 GMS. OF 24 CT. WAS RS. 1800/-. ACCORDINGLY, THE VALUE OF JEWELLERY WEIGHING 2800 GMS. COMES TO RS. 5,04,000/-. IN RESP ECT OF GOLD ORNAMENTS WITH 20 % IMPURITIES, THE VALUE IS R S. 4,40,320/- AND THE ASSESSEE HAS REASONABLY SHOWN TH E VALUE OF JEWELLERY AMOUNTING TO RS. 2,59,880/- IN ASSESSE ES HANDS. THE ASSESSEE IS SHOWING VALUATION OF RS. 4,66,880/- WHICH COMES FOR JEWELLERY OF 21 CT. SINCE THE JEWELLERY W AS ACQUIRED BETWEEN THE PERIOD 1964 TO 1999-2000, THE AVERAGE R ATE OF JEWELLERY FROM 1965 TO 1966 WAS ADOPTED AT RS. 1412 /- PER 10 GMS. ACCORDINGLY, THE VALUE SHOULD BE WORKED OUT ON THE AVERAGE BASIS OF THE GOLD PRICE FROM 1965 TO 1996. THUS, THE WEIGHT OF JEWELLERY FOUND IN SEARCH AT 2804.600 GMS . IN PLACE OF JEWELLERY CLAIMED AT 2800 GMS. IS A VERY NEGLIGI BLE DIFFERENCE DUE TO WEIGHT, IMPURITIES ETC. ACCORDINGLY, NO ADDI TION WAS WARRANTED ON ACCOUNT OF JEWELLERY. WE DIRECT ACCORD INGLY. 47. BEFORE PARTING WITH THE MATTER, IT IS BEING MADE CL EAR THAT THE ASSESSEE CANNOT BE GIVEN BENEFIT OF AMOUNT OF SURRENDER MADE BY HER DURING COURSE OF SEARCH, IN S O FAR AS IN -: 34: - 34 THE RETURN FILED U/S 153A, THE ASSESSEE HAD NOT OFF ERED THE INCOME SURRENDERED DURING COURSE OF SEARCH. 48. IN THE RESULT, THE APPEAL OF MRS. EVERLYN FERNANDES , BHOPAL, IS ALLOWED IN PART IN TERMS INDICATED HEREI NABOVE. 49. IN CASE OF MRS. LEENA B. JOHN IN I.T(SS).A.NOS. 349 TO 355/IND/2012, THE ASSESSMENT HAS BEEN FRAMED U/S 15 3C. IN TERMS OF OUR OBSERVATION IN CASE OF MRS. RACHEL JOF I HEREINABOVE, THE GROUND TAKEN BY THE ASSESSEE HAS N O MERIT, ACCORDINGLY, DISMISSED. 50. IN THE ASSESSMENT YEAR 2001-02, THE ASSESSING OFFIC ER HAS ADDED AN OPENING BALANCE OF RS. 64,800/-. 51. FROM THE RECORD, WE FOUND THAT BEFORE THE DATE OF SEARCH, THE ASSESSEE HAS ALREADY FILED RETURN FOR T HE ASSESSMENT YEAR 2004-05 TO 2006-07. WE FOUND THAT T HE ASSESSEE IS A LADY FROM RICH FAMILY BACKGROUND. HER INVESTMENT AS ON 31.3.2001 IN THE FIRM M/S. B. ESSA R ENTERPRISES, BHOPAL, IN WHICH SHE WAS A PARTNER, WA S AT RS. 1,71,133/-. IT IS ALSO A GENERAL PRACTICE THAT LADI ES SAVE SOME MONEY OUT OF HOUSE HOLD EXPENSES AND MONEY GIVEN TO THEM FROM TIME TO TIME. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND -: 35: - 35 CIRCUMSTANCES OF THE CASE VIS--VIS THE AMOUNT OF I NCOME RETURNED IN EARLIER YEARS, IT WILL BE REASONABLE TO ACCEPT OPENING CASH BALANCE OF RS. 40,000 IN PLACE OF BALA NCE OF RS. 64,800/-. 52. THE ASSESSING OFFICER HAS ALSO MADE ADDITION IN RESPECT OF FOLLOWING GIFTS CLAIMED BY THE ASSESSEE :- ASSESSM ENT YEAR GIFT (RS.) 2001 - 02 18,000 2002 - 03 22,000 2003 - 04 22,500 2004 - 05 24,000 2005 - 06 28,000 2006 - 07 30,000 2007 - 08 6,000 THE ASSESSEE FURNISHED TO THE LD. ASSESSING OFFICER LIST OF PERSONS WHO GIFTED THE AMOUNT. AS THE GIFTS WERE IN CASH & COMPLETE ADDRESSES WERE NOT FURNISHED, THE LD. ASSE SSING OFFICER DID NOT BELIEVE THE EXPLANATION OF THE ASSE SSEE. 53. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 54. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT THE ASSESSEE HAS FURNISHED LIST OF DONORS -: 36: - 36 DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AS SESSEE WAS ENJOYING SOUND FINANCIAL AND SOCIAL STATUS AND BELONGING TO A BUSINESS GROUP. SHE MARRIED AND HAVING TWO CHI LDREN AND LIVING IN BHOPAL, SINCE LAST THREE DECADES. SHE WAS CLAIMING TO RECEIVE GIFTS ON VARIOUS FUNCTIONS, FESTIVE OCCASIO NS ETC. SMALL GIFTS TO LADY FROM HER INLAWS SIDE CANNOT BE OUTRIG HTLY DECLINED, WHICH IS A NORMAL FEATURE. ACCORDINGLY, WE DIRECT T HE ASSESSING OFFICER TO ALLOW THE GIFTS TO THE EXTENT OF RS. 6,0 00/- PER ANNUM FROM ASSESSMENT YEAR 2001-02 TO 2006-07. IN T HE ASSESSMENT YEAR 2007-08, THE ASSESSEE HAD SHOWN GIF T OF RS. 6,000/-, WHICH APPEARS TO BE REASONABLE. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITIO N MADE ON THIS ACCOUNT. WE DIRECT ACCORDINGLY. 55. THE GROUND TAKEN WITH RESPECT TO THE ADDITION MADE ON ACCOUNT OF CAPITAL GAIN VIDE GROUND NO.5 WAS NOT PR ESSED BY THE LD. AUTHORIZED REPRESENTATIVE, THE SAME IS, THE REFORE, DISMISSED IN LIMINE. 56. WITH RESPECT TO THE ADDITION OF RS. 36,000/- IN THE ASSESSMENT YEAR 2005-06 ON ACCOUNT OF REFUND OF ADV ANCES, WE FOUND THAT THE ASSESSEE COULD NOT SUBSTANTIATE H ER CLAIM -: 37: - 37 FOR REFUND OF THE ADVANCES MADE IN EARLIER YEARS BY PUTTING ON RECORD IN RELIABLE EVIDENCE. FURTHERMORE, THE FINDI NG RECORDED BY THE ASSESSING OFFICER AND CIT(A) COULD NOT BE DI SLODGED BY THE LD. AUTHORIZED REPRESENTATIVE BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE CONFIRM THE ACT ION OF THE CIT(A) FOR ADDITION OF RS. 36,000/- ON ACCOUNT OF R EFUND OF ADVANCES GIVEN BY THE ASSESSEE. 57. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE ALL OWED IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2012. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARM A) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST OCTOBER, 2012. CPU* 2531