DCIT Range 8(3), Mumbai V. Mr. Vijay C. Parekh, Mumbai

ITSSA 397/MUM/2004

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8074 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-08-2011
• Assessment Year: misc
• Appeal Filed On: 16-06-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D EVI SINGH
• Keywords: Gift; Business income
• Section: 143(3); 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI. BEFORE SHRI R.V.EASWAR, PRESIDENT & SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER IT(SS) NO.397/MUM/2004 ( BLOCK PERIOD 01.04.1989 TO 21.02.1999) THE DEPUTY COMMISSIONER OF INCOME TAX, RANGE 8(3), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400 020. VS. SMT. KISHORI V.PAREKH L/H OF LATE VIJAY C.PAREKH, 12, ESTEE APARTMENT, FLAT NO.13A, SAIBABA NAGAR, BORIVALI(W), MUMBAI-400 092. PAN: CIRCLE 8(3) (APPLICANT) (RESPONDENT) & IT(SS) NO.382/MUM/2004 ( BLOCK PERIOD 01.04.1989 TO 21.02.1999) SMT. KISHORI V.PAREKH L/H OF LATE VIJAY C.PAREKH, 12, ESTEE APARTMENT, FLAT NO.13A, SAIBABA NAGAR, BORIVALI(W), MUMBAI-400 092. PAN: CIRCLE 8(3) VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, RANGE 8(3), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400 020. (APPLICANT) (RESPONDENT) REVENUE BY : SHRI DEVI SINGH, CIT DR APPELLANT BY : NONE DATE OF HEARING : 11.08.2011 DATE OF PRONOUNCEMENT : 07.09.2011 O R D E R PER R.V.EASWAR, PRESIDENT: THESE ARE CROSS APPEALS RELATING TO THE BLOCK PERIOD 1.4.1989 TO 21.12.1999. THEY ARIS E OUT OF THE ASSESSMENT MADE UNDER SECTION 158BC READ WITH SECTI ON 143(3) OF THE INCOME TAX ACT ON 31.01.2002. 2. THE ASSESSEE IS AN INDIVIDUAL AND AT THE RELEVAN T TIME WAS A DIRECTOR OF M/S. RAMA SYNTHETICS LTD. THESE APPE ALS ARISE OUT OF THE SEARCH ACTION CONDUCTED UNDER SECTION 13 2 ON IT(SS) NOS.38 2 & 397/MUM/2004 2 21.12.1999 IN THE OFFICE PREMISES OF THE ABOVE COMP ANY AS ALSO IN THE RESIDENTIAL PREMISES OF THE ASSESSEE. 3. WE FIRST TAKE UP THE APPEAL FILED BY THE DEPARTM ENT FOR CONSIDERATION. THE ONLY GROUND TAKEN IS AS FOLLOWS: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN RESTRICTING THE ADDITION ON ACCOUNT OF UNDISCLOSED INCOME OF THE ASSESSEE TO RS.20,77,827/- AS AGAINST RS.69,26,088/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME UPTO A.Y.1996-97. IN THE ASSESSEES APPEAL, IN GROUND NO.2 THE ASSESS EE HAS QUESTIONED THE ADDITION OF RS.20,77,827/- SUSTAINED BY THE CIT(A) OUT OF THE TOTAL ADDITION OF RS.69,26,088/- MADE BY THE ASSESSING OFFICER. SINCE BOTH THE GROUNDS ARISE OUT OF THE COMMON FACTS, THEY ARE DISCUSSED TOGETHER AT THIS J UNCTURE. 4. IN THE COURSE OF THE SEARCH, DUPLICATE BOOKS OF ACCOUNT WERE FOUND FROM THE ASSESSEES PREMISES. THE ASSESS ING OFFICER HAS ANALYSED THE SAME IN PARA 7.1 OF THE ASSESSMENT ORDER. HE HAS ALSO REFERRED TO THE ASSESSEES STATEMENT RECOR DED ON THE DAY OF SEARCH. IN ANSWER TO QUESTION NO.7, THE ASSE SSEE STATED THAT THE DUPLICATE BOOKS BELONGED TO ONE MR. RAMESH MEHTA, WHO WAS SELLING THE YARN TO BIWANDI PARTIES. MR. RA MESH MEHTA HAD LEFT FOR DUBAI AND THE AMOUNT DUE TO HIM BY THE BIWANDI PARTIES WAS COLLECTED BY THE ASSESSEE ON HIS BEHALF AND THEREFORE THE BOOKS WERE LYING WITH THE ASSESSEE. IT WAS THUS POINTED OUT BY THE ASSESSEE THAT THE BOOKS DID NOT BELONG TO HI M NOR WERE THEY WRITTEN BY HIM. IN AN ATTEMPT TO VERIFY THE AS SESSEES STATEMENT, THE ASSESSING OFFICER ASKED HIM TO PRODU CE MR. RAMESH MEHTA BUT HE COULD NOT BE PRODUCED BECAUSE H E WAS OUT OF INDIA FOR THE LAST FIVE YEARS HAVING LEFT FO R DUBAI. THE ASSESSING OFFICER WAS NOT SATISFIED AND ACCORDING T O HIM SINCE THE BOOKS WERE SEIZED FROM THE ASSESSEES PREMISES, IT WAS FOR IT(SS) NOS.38 2 & 397/MUM/2004 3 THE ASSESSEE TO SHOW THAT THEY DID NOT BELONG TO HI M. KEEPING THIS IN VIEW THE ASSESSING OFFICER MADE AN ADDITION OF RS.50,06,155/- IN RESPECT OF THE ASSESSMENT YEAR 19 98-99 FALLING WITHIN THE BLOCK PERIOD, ON THE BASIS OF S ALES RECORDED IN THE DUPLICATE SET OF BOOKS MARKED A3. ON THE BASIS OF THE BOOK MARKED A4, AN ADDITION OF RS.19,19,933/- WAS ALSO M ADE AND TOGETHER THE ADDITION AMOUNTED TO RS.69,26,088/-. W HILE MAKING THE ADDITION, THE ASSESSING OFFICER ALSO REM ARKED THAT EVEN IF THE ASSESSEE TAKES THE PLEA THAT ONLY GROSS PROFIT ON THE SALES CAN BE ADDED, THAT WOULD ALSO HAVE NO CREDIBI LITY BECAUSE IN THAT CASE THE INVESTMENT IN THE PURCHASE OF THE ITEMS WILL HAVE TO BE ADDED WITH THE CONSEQUENCE THAT THE INVE STMENT AND THE GROSS PROFIT WOULD BE EQUIVALENT TO THE SALES T URNOVER WHICH WAS BEING ADDED. IN OTHER WORDS, ACCORDING TO THE A SSESSING OFFICER, THERE WOULD BE NO DIFFERENCE IN THE AMOUNT OF ADDITION EVEN IF THE ASSESSEE ASKS THAT ONLY GROSS PROFIT ON THE SALES CAN BE ADDED. 5. THE ASSESSEE OBJECTED TO THE ADDITION AND FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) HAS DEALT WITH THIS I SSUE AT PAGES 11 TO 13 OF HIS ORDER IN DETAIL. BEFORE THE CIT(A), THE ASSESSEE REPEATED HIS SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND POINTED OUT THAT HE WAS ACTING ONLY AS A BROKER ON BEHALF OF SHRI RAMESH MEHTA IN RESPECT OF THE SALES MADE TO B IWANDI PARTIES AND WAS THEREFORE ENTITLED ONLY TO BROKERAG E. HE ALSO FURNISHED THE NAMES OF THE BIWANDI PARTIES AS WELL AS THE SALES MADE TO EACH OF THEM. ALTERNATIVELY, IT WAS ARGUED THAT ONLY THE UNDISCLOSED INCOME CAN BE TAXED IN THE BLOCK ASSESS MENT PROCEEDINGS AND THE ENTIRE SALES CANNOT BE ASSESSED AS UNDISCLOSED INCOME WITHOUT DEDUCTING THE COST OF TH E SALES. ACCORDING TO HIM THERE WAS EVIDENCE IN THE SEIZED M ATERIALS TO SHOW THE COST OF PURCHASES AND IN ANY CASE THE GROS S PROFIT RATE IT(SS) NOS.38 2 & 397/MUM/2004 4 IN YARN BUSINESS WAS ONLY 2%. IT WAS SUBMITTED THAT THE BROKERAGE DUE TO THE ASSESSEE WAS ONLY 1%. 6. THE CIT(A) WOULD APPEAR TO HAVE OBTAINED A REMAN D REPORT FROM THE ASSESSING OFFICER. ACCORDING TO TH E CIT(A) THE REMAND REPORT WAS MERELY A REPETITION OF THE POINTS MADE IN THE ASSESSMENT ORDER. 7. AFTER CONSIDERING THE SUBMISSIONS MADE BEFORE HI M AS WELL AS THE REMAND REPORT, THE CIT(A) RECORDED THE FOLLOWING FINDINGS:- A) THERE IS NO EVIDENCE TO SUPPORT THE ASSESSEES PLEA THAT THE BOOKS OF ACCOUNT SEIZED FROM HIS PREMISES DID N OT BELONG TO HIM, BUT BELONGED TO SHRI RAMESH MEHTA, W HO HAD MIGRATED TO DUBAI. B) SINCE THE BOOKS WERE FOUND IN THE ASSESSEES PREMIS ES, IT WAS THE ASSESSEES ONUS TO SHOW THAT THEY DID NOT B ELONG TO HIM, BUT THIS ONUS HAS NOT BEEN DISCHARGED. C) THE ASSESSING OFFICER WAS THEREFORE JUSTIFIED IN PR INCIPLE IN MAKING THE ADDITION. D) HOWEVER, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING THE ENTIRE AMOUNT OF RS.69,26,088/-. THERE CANNOT B E ANY SALES WITHOUT PURCHASES. EVEN IN THE ENTRIES RECORD ED IN THE DUPLICATE BOOKS OF ACCOUNT THE SALES WERE SHOWN TO HAVE BEEN MADE OVER A PERIOD OF FIVE MONTHS FROM MA Y TO SEPTEMBER, 1997. THE ASSESSEE, CONSIDERING HIS MEAN S, CANNOT BE SAID TO HAVE INVESTED THE ENTIRE AMOUNT O F RS.69,26,088/- AT ONE TIME TO EFFECT THE SALES. E) EVEN THOUGH THERE IS NO EVIDENCE OF ROTATING AND CIRCULATING CAPITAL, CONSIDERING THE FACT THAT IT I S IMPROBABLE FOR THE ASSESSEE TO HAVE INVESTED THE EN TIRE AMOUNT AT ONE GO, AND CONSIDERING THAT SOME CREDIT SHOULD BE GIVEN FOR ROTATION OF THE CAPITAL IN THE COURSE OF THE FIVE MONTHS PERIOD, 25% OF THE TOTAL SALES CAN BE IT(SS) NOS.38 2 & 397/MUM/2004 5 REASONABLY SAID TO REPRESENT THE INVESTMENT MADE BY THE ASSESSEE FOR EFFECTING THE SALES. THIS CAME TO RS.17,31,522/-. THIS CAN BE HELD TO BE UNDISCLOSED INVESTMENT. F) THE PROFIT ON THE SALES SHOULD ALSO BE ADDED AS UNDISCLOSED INCOME. SUCH PROFIT CAN BE REASONABLY ESTIMATED AT 5%(NET PROFIT) SINCE NORMAL GROSS PROF IT OF 12.5% IS CONSIDERED REASONABLE IN YARN BUSINESS. THEREFORE, THE GROSS PROFIT TO BE ADDED WILL BE RS.3,46,305/-. THUS THE TOTAL ADDITION TO BE SUSTAI NED IS RS.20,77,827/-. ON THE BASIS OF THE ABOVE FACTS, THE CIT(A) REDUCED THE ADDITION TO RS.20,77,827/- . 8. ON A CAREFUL CONSIDERATION OF THE ORDERS OF THE DEPARTMENTAL AUTHORITIES AND THE ARGUMENTS OF THE D EPARTMENT (ASSESSEE DID NOT APPEAR), WE ARE OF THE VIEW THAT NO STRONG GROUNDS HAVE BEEN MADE OUT FOR DISTURBING THE WELL CONSIDERED DECISION OF THE CIT(A). HE IS RIGHT IN HOLDING THAT THE ASSESSEE DID NOT DISCHARGE THE ONUS OF SHOWING THAT THE DUPL ICATE SET OF BOOKS SEIZED FROM HIS PREMISES DID NOT BELONG TO HI M. AS REGARDS THE QUANTUM OF THE ADDITION, HE HAS APPLIED THEORY OF PROBABILITY THAT CONSIDERING THE ASSESSEES MEANS H E WAS NOT CAPABLE OF INVESTING THE ENTIRE COST OF PURCHASES F OR EFFECTING THE TURNOVER OF RS.69,26,088/- IN ONE GO. THIS IS ALSO SUPPORTED BY THE FACT THAT SALES WAS SPREAD OVER A FIVE MONTHS P ERIOD. THEREFORE, THE SALE PROCEEDS WOULD BE SUFFICIENT TO TAKE CARE OF THE SUBSEQUENT PURCHASES FOR MAKING SUBSEQUENT SALE S AND ONLY THE INITIAL INVESTMENT WOULD REQUIRE TO BE ADD ED. THIS LINE OF APPROACH OF THE CIT(A) CANNOT BE FAULTED HAVING REGARD TO THE BUSINESS PRACTICES. HIS ESTIMATE OF 25% BEING THE I NITIAL INVESTMENT ALSO APPEARS TO BE REASONABLE. HE HAS AL SO RIGHTLY ADDED THE NET PROFIT OF 5% HAVING REGARD TO THE FAC T THAT THE IT(SS) NOS.38 2 & 397/MUM/2004 6 GROSS PROFIT OF 12.5% IS REASONABLE IN THIS LINE OF BUSINESS. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT THE DE CISION OF THE CIT(A) REQUIRES NO INTERFERENCE ESPECIALLY WHEN NO MATERIAL OR EVIDENCE HAS BEEN BROUGHT BEFORE US TO DISTURB THE SAME. WE ACCORDINGLY CONFIRM HIS DECISION ON THIS POINT AND DISMISS THE GROUND TAKEN BY THE DEPARTMENT. THUS, THE APPEAL O F THE DEPARTMENT IS DISMISSED. 9. TURNING TO THE ASSESSEES APPEAL, WE HAVE ALREAD Y SEEN THAT IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED TH E ADDITION OF RS.20,77,827/- SUSTAINED BY THE CIT(A). WE HAVE ALR EADY DISCUSSED THE FACTS RELATING TO THIS ISSUE IN THE D EPARTMENTS APPEAL. FOLLOWING THE SAME LINE OF REASONING, WE HO LD THAT THE ASSESSEE IS ENTITLED TO NO FURTHER RELIEF AS HE HAS FAILED TO SHOW THAT THE TURNOVER DID NOT BELONG TO HIM OR THAT THE BOOKS OF ACCOUNT SEIZED FROM HIS PREMISES DID NOT BELONG TO HIM BUT BELONGED TO MR. RAMESH MEHTA. BEFORE US ALSO NO EVI DENCE HAS BEEN ADDUCED IN SUPPORT OF THE ASSESSEES PLEA. IN FACT, THE ASSESSEE HAS NOT APPEARED BEFORE US DESPITE A NUMBE R OF OPPORTUNITIES GIVEN TO HIM AS THE ORDER SHEET ENTRI ES SHOW. 10. AS REGARDS THE QUANTUM OF ADDITION ALSO, FOR TH E REASONS STATED IN THE PRECEDING PARAGRAPHS WHILE DISPOSING OF THE DEPARTMENTS APPEAL WE DO NOT SEE ANY SCOPE FOR REL IEF TO THE ASSESSEE. ACCORDINGLY WE UPHOLD THE ADDITION OF RS. 20,77,827/- AND DISMISS GROUND NO.2 FILED BY THE ASSESSEE. 11. SO FAR AS GROUND NO.1 IS CONCERNED, THE ASSESS EE HAS STATED THAT THE PROCEEDINGS INITIATED BY ISSUE OF N OTICE DATED 9.5.2000 BY THE ASSESSING OFFICER AND THE RETENTION OF BOOKS WERE ACTS IN EXCESS OF THE AUTHORITY CONFERRED ON H IM BY THE ACT. THIS GROUND CANNOT BE ACCEPTED. AS HELD BY THE CIT( A) THE SEARCH TOOK PLACE ON 29.12.1999 BUT ONE LOCKER IN D ECCAN MERCHANT CO-OPERATIVE BANK LIMITED REMAINED TO BE S EARCHED ON THAT DAY. IT WAS SEARCHED ON 20.01.2000. AS PE R SECTION IT(SS) NOS.38 2 & 397/MUM/2004 7 158BE, AN ORDER UNDER SECTION 158BC CAN BE PASSED W ITHIN TWO YEARS FROM THE END OF THE MONTH IN WHICH THE LAST O F THE AUTHORISATIONS FOR SEARCH UNDER SECTION 132 WAS EXE CUTED, IN A CASE WHERE A SEARCH WAS INITIATED ON OR AFTER 1.1.1 997. IN THE ASSESSEES CASE THE SEARCH WAS INITIATED ON 29.12.1 999 AND THE LAST OF THE AUTHORISATION WAS EXECUTED ON 20.01.200 0. THE ASSESSMENT UNDER SECTION 158BC COULD BE COMPLETED O N OR BEFORE 31.01.2002. THE ASSESSMENT FOR THE BLOCK PER IOD WAS COMPLETED BY ORDER DATED 31.01.2002 WHICH IS WELL W ITHIN TIME. THEREFORE THE CONTENTION TAKEN IN GROUND NO.1, WHIC H IS TO THE EFFECT THAT THE ASSESSMENT IS BARRED BY TIME, IS WI THOUT MERIT. THE GROUND IS DISMISSED. 12. GROUND NO.3 IS AGAINST VARIOUS ADDITIONS WHICH ARE DISCUSSED BELOW:- (I) THE FIRST ADDITION IS OF RS.3,30,000/- OUT OF T HE CASH AT THE RESIDENCE AND IN THE LOCKER. THE CASH OF RS.3,1 0,000/- WAS FOUND IN THE LOCKER NUMBER 197 IN DECCAN MERCHANT C O- OPERATIVE BANK LTD. WHICH WAS SEARCHED ON 20.01.200 0. A SUM OF RS.77,070/- WAS FOUND IN THE RESIDENCE DURING TH E SEARCH. AS REGARDS THE CASH FOUND IN THE RESIDENCE, IT WAS EXP LAINED THAT RS.25,070/- WAS THE ASSESSEES PERSONAL CASH AND TH E BALANCE OF RS.52,000/- BELONGED TO THE COMPANY IN WHICH THE ASSESSEE WAS A DIRECTOR. HOWEVER THIS WAS THE EXPLANATION GI VEN AT THE TIME OF ASSESSMENT PROCEEDINGS, WHEREAS IN THE COUR SE OF THE SEARCH THE EXPLANATION WAS DIFFERENT. AT THAT TIME, IT WAS STATED THAT RS.26,000/- BELONGED TO A COMPANY BY NAME M/S. DEWDROP IMPEX PVT.LTD. AND THE BALANCE CASH BELONGED TO THE ASSESSEE. IN VIEW OF THIS CONTRADICTION WE ARE UNABLE TO FIND FAULT WITH THE DEPARTMENTAL AUTHORITIES. THE CIT(A) HAS HOWEVER GI VEN CREDIT FOR SOME CASH ARISING OUT OF PAST SAVINGS AND SMALL GIFTS. HE HAS ESTIMATED THE SAME AT RS.57,070/-. THUS HE CONFIRME D THE IT(SS) NOS.38 2 & 397/MUM/2004 8 ADDITION OF RS.20,000/- OUT OF THE CASH OF RS.77,07 0/- FOUND IN THE RESIDENCE. WE UPHOLD THE SAID DECISION. (II) AS REGARDS THE CASH OF RS.3,10,000/- FOUND IN THE LOCKER, THE ASSESSEE HAS EXPLAINED THAT RS.2,75,000/- BELON GED TO HIS WIFE AND RS.35,000/- REPRESENTED HIS PAST SAVINGS. THERE WAS HOWEVER NO EVIDENCE TO SHOW THAT ASSESSEES WIFE EA RNED ANY INCOME AS BEAUTICIAN, A CLAIM IT WAS TO BE FILED BY THE ASSESSEE. THE ASSESSEES WIFE WOULD APPEAR TO HAVE FILED RETU RNS OF INCOME SHOWING THE INCOME FROM THE ABOVE PROFESSION BUT TH EY WERE ALL FILED ONLY ON 21.03.2002 MUCH AFTER THE DATE OF SEA RCH AND THEREFORE NO CREDENCE WAS GIVEN BY THE DEPARTMENTAL AUTHORITIES. WE ARE UNABLE TO FIND FAULT WITH THEM. WE THEREFORE CONFIRM THE ADDITION OF RS.3,10,000/- FOUND IN THE LOCKER. THUS THE ADDITION OF RS.3,30,000/- IS CONFIRMED. (III) THE NEXT ADDITION CHALLENGED IS THE INVESTMEN T OF RS.1,00,000/- IN FIXED DEPOSIT IN THE NAME OF DAUGH TER MS. MITALI V.PAREKH. ACTUALLY THERE WERE TWO FIXED DEPO SITS OF RS.50,000/- EACH. THE RECEIPTS WERE FOUND DURING TH E SEARCH. THE DEPOSITS WERE MADE ON 14.07.1999. ACCORDING TO THE ASSESSEE THE AMOUNTS REPRESENTED GIFTS RECEIVED BY MS. MITALI AT THE TIME OF HER BIRTHDAY AND THEREAFTER FROM TIM E TO TIME DURING AUSPICIOUS OCCASION AND FESTIVALS LIKE DIWAL I, RAKSHABANDHAN, BHAI BHUJ ETC. THE DEPARTMENTAL AUTH ORITIES HAVE REJECTED THE ASSESSEES CLAIM ON THE GROUND TH AT HE DID NOT DISCLOSE THESE RECEIPTS IN HIS RETURN OF INCOME WH ICH HE OUGHT TO HAVE, AS PER SECTION 64(1A). ON A CONSIDERATION OF THE FACTS OF THE CASE AND THE ASSESSEES EXPLANATION, WE ARE OF THE VIEW THAT THE ASSESSEES EXPLANATION CANNOT BE FULLY THROWN O UT AS IMPOSSIBLE. IT IS CUSTOMARY FOR MINOR CHILDREN TO R ECEIVE GIFTS DURING FESTIVE OCCASIONS AND BIRTHDAY ETC. HOWEVER IN THE ABSENCE OF ANY CLINCHING EVIDENCE, WE CONSIDER IT P ROPER TO HOLD THAT A SUM OF RS.50,000/- OUT OF THE SUM OF RS.1,00 ,000/- CAN IT(SS) NOS.38 2 & 397/MUM/2004 9 BE CONSIDERED REASONABLY AS GIFTS AND PRESENTS RECE IVED BY MINOR DAUGHTER. WE ACCORDINGLY UPHOLD THE ADDITION OF RS.50,000/-. (IV) THE NEXT ADDITION IS THE INVESTMENT MADE IN KI SAN VIKAS PATRAS AND TERM DEPOSIT IN THE NAME OF DAUGHTER MS. FALGUNI V.PAREKH. HERE ALSO THE EXPLANATION OF THE ASSESSEE IS THAT THE INVESTMENT REPRESENTED GIFTS AND PRESENTS RECEIVED BY DAUGHTER. HOWEVER NO EVIDENCE WAS ADDUCED IN SUPPORT OF THE E XPLANATION AND HENCE THE CIT(A) REJECTED THE SAME. WE FIND THA T RS.95,000/- WAS INVESTED IN KVP AND RS.25,000/- EAC H IN BANK DEPOSIT AND NATIONAL SAVING CERTIFICATE. THE CIT(A) HAS SUSTAINED THE ENTIRE ADDITION OF RS.1,45,000/- THOU GH IN GROUND NO.3 THE ASSESSEE HAS ASSUMED THAT ONLY RS.45,000/- HAS BEEN SUSTAINED. BE THAT AS IT MAY, IT IS DIFFICULT TO A CCEPT THE ASSESSEES PLEA THAT THE ENTIRE AMOUNT OF RS.1,45,0 00/- REPRESENTED GIFTS AND PRESENTS RECEIVED BY THE DAUG HTER. HOWEVER, AS IN THE CASE OF MS. MITALI, THE PROBABIL ITY OF THE DAUGHTER MS. FALGUNI V.PAREKH ALSO RECEIVING GIFTS AND PRESENTS DURING FESTIVAL AND OCCASIONS LIKE BIRTH DAY ETC. CANNOT BE RULED OUT. WE ESTIMATE SUCH GIFTS AT RS.50,000/-. ACCORD INGLY WE HOLD THAT THE AMOUNT OF RS.25,000/- EACH HELD AS BA NK DEPOSIT AND NATIONAL SAVINGS CERTIFICATE MAY BE TREATED AS EXPLAINED. THE BALANCE OF RS.95,000/- INVESTED IN KVP IS SUSTA INED. (V) THE NEXT GROUND IS AGAINST THE ADDITION OF RS.2 5,154/- AS DEPOSITED IN THE NAME OF MS. FALGUNI V.PAREKH. AFTE R GOING THROUGH THE FACTS RELATING TO THIS ISSUE, WE SEE NO REASON TO INTERFERE. 13. IN THE RESULT, GROUND NO.3 IS PARTLY ALLOWED. 14. GROUND NO.4 IS DIRECTED AGAINST THE ADDITION O F RS.1 LAKH. THIS REPRESENTS RS.50,000/- INVESTED IN KVP IN THE NAME OF IT(SS) NOS.38 2 & 397/MUM/2004 10 MS. MITALI AND RS.25,000/- INVESTED IN NSC IN THE N AME OF MS. FALGUNI AND RS.25,000/- INVESTED IN THE NAME OF WIF E IN NSC. ALL THESE INVESTMENTS WERE MADE IN APRIL, 1997. THE ASSESSEE HAD ASKED FOR TELESCOPING SOME ADDITIONS SUCH AS C ASH FOUND, WITH OTHER ADDITIONS MADE AS BUSINESS INCOME. THE C IT(A) ACCEPTED THE SAME IN PRINCIPLE AND GAVE APPROPRIATE RELIEF EXCEPT THE ABOVE AMOUNT OF RS.1 LAKH. HE FOUND THAT INVESTMENT OF RS.1 LAKH WAS MADE IN APRIL, 1997 WHE REAS THE SALES RECORDED IN THE SEIZED BOOKS COMMENCED FROM M AY, 1997 ONLY AND THEREFORE THE ADDITION OF RS.1 LAKH COULD NOT BE TELESCOPED INTO THE ADDITION MADE ON THE BASIS OF T HE RECOVERY OF THE DUPLICATE SET OF BOOKS DURING THE SEARCH. WE AR E UNABLE TO FIND FAULT WITH THE DECISION OF THE CIT(A). THE SAM E IS UPHELD AND GROUND NO.4 IS DISMISSED. 15. THE 5 TH GROUND IS AGAINST THE ADDITION OF RS.39,720/- REPRESENTING INTEREST ON INVESTMENTS HELD IN THE NA ME OF THE ASSESSEES DAUGHTERS AND WIFE. THE ADDITION HAS BEE N MADE ON ACCRUAL BASIS, WHEREAS THE CONTENTION OF THE ASSESS EE IS THAT HE WAS FOLLOWING THE CASH BASIS OF ACCOUNTING. THE CIT (A) HAS REJECTED THE ASSESSEES CLAIM AS WITHOUT MERIT. AFT ER GOING THROUGH THE REASONS FOR HIS DECISION, WE SEE NO REA SON TO INTERFERE. THE ADDITION IS UPHELD AND THE GROUND IS DISMISSED. 16. GROUND NO.6 IS GENERAL AND REQUIRES NO DECISIO N. 17. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. 18. TO SUM UP, THE IT(SS) NO.397/MUM/2004 IS DISMIS SED AND IT(SS) NO.382/MUM/2004 IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 7 TH DAY OF SEPTEMBER, 2011 SD/- SD/- (B.RAMAKOTAIAH ) ( R.V.EASWAR ) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED THE 7 TH SEPTEMBER, 2011. SOMU IT(SS) NOS.38 2 & 397/MUM/2004 11 COPY TO : 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT-VIII, MUMBAI. 4. THE CIT(A)-XXIX, MUMBAI 5. THE DR C BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR, I.T.A.T, MUMBAI