DCIT, Coimbatore V. V.Muthulakshmi, Coimbatore

ITSSA 4/CHNY/2016

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 1665 (ITAT-CHENNAI)
• Duration Of Justice: 6 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 01-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 25-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Search and seizure; Principle of natural justice; Valuation report; Block assessment; Set aside
• Section: 132; 69C; 143(3); 133A; 250; 158BC; 72

Judgement Text

आयकर अपीलीय अिधकरण, ’सी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ŵी वी दुगाŊ राव Ɋाियक सद˟ एवं ŵी जी. मंजुनाथा, लेखा सद˟ के समƗ Before Shri V. Durga Rao, Judicial Member & Shri G. Manjunatha, Accountant Member आयकर अपील सं./I.T(SS).A. No.16/Chny/2015 Block Assessment Period: 1997-98 to 2003-04 (till 12.09.2002) Smt. V. Muthulakshmi, Prop. Vikram Hospital, 69, West Venkataswamy Road, R.S. Puram, Coimbatore 641 002. [PAN:ACSPM7238E] Vs. The Deputy Commissioner of Income Tax, Circle 1, Coimbatore 641 018. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) आयकर अपील सं./I.T(SS).A. No.04/Chny/2016 Block Assessment Period: 1997-98 to 2003-04 (till 12.09.2002) The Deputy Commissioner of Income Tax, Central Circle 3(i/c), Aayakar Bhavan, 63, Race Course Road, Coimbatore 641 018. Vs. Smt. V. Muthulakshmi, Prop. Vikram Hospital, 69, West Venkataswamy Road, R.S. Puram, Coimbatore 641 002. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) Assessee by : Shri R. Vijayaraghavan, Advocate Department by : Shri M. Rajan, CIT सुनवाई की तारीख/ Date of hearing : 08.06.2022 घोषणा की तारीख /Date of Pronouncement : 01.07.2022 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: Both the cross appeals filed by the assessee as well as the Revenue are directed against the order of the ld. Commissioner of Income Tax (Appeals) 18, dated 14.10.2015 relevant to the block I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 2 assessment period 1997-98 to 2003-04 (Till 12.09.2002). The Department has raised the following grounds: “1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2 The learned CIT (A) erred in deleting the addition of Rs. 66,70,000/- made by the Assessing Officer towards unaccounted investment in construction of building at Integral Ear Institute in the assessment made in the hands of the assessee. 2.1 The learned CIT(A) ought to have appreciated that the addition towards unaccounted investment in construction of building has rightly been made by the Assessing Officer in the hands of the assessee since the builder Shri. K Viswanathan has admitted that certain cash towards building construction was paid by Smt. V Muthulakshmi which are not recorded in the books of account (Para 10.10 of the Assessment Order). 2.2 The learned CIT(A) ought to have confirmed the above addition, in the hands of Smt. V. Muthulakshmi as the progressive payments made, of Rs. 66,70,000/- for the construction of that building as evidenced from seized material (No. SKM/Loose Sheets/S-03) was not accounted in any accounts and Smt. V. Muthulakshmi is the key person managing the affairs of family. 3. The learned CIT(A) erred in deleting the entire addition of Rs. 81,13,517/- made by the Assessing Officer on account of suppressed professional receipts claimed under agricultural income. 3.1 The learned CIT(A) ought to have upheld the addition of Rs. 81,13,517/- as there were sufficient evidences before the Assessing Officer indicating suppression of various Hospital receipts. 3.2 The learned CIT(A) erred in not appreciating the various aspects of estimate of agricultural income considered by the Assessing Officer and the statement of Dr. P.G. Visvanathan (Para 9.4.1 of the Assessment order) and the assessee herself admitting that a part of the undisclosed income from hospital may have been introduced as agricultural income and further admitting that agricultural income shown in their IT return is not fully genuine (Para 9.4.3. of Assessment Order). 3.3 The learned CIT(A) ought to have confirmed the addition of Rs. 81,13,517/- as the assessee and her family members have failed to substantiate the claim of agricultural income shown in the return of income for the block period with any material evidence to that extent. I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 3 3.4 The learned CIT(A) ought to have appreciated the fact that, the order of Hon'ble ITAT for Asst. Year 2003-04 in the assessee's own case, was rendered on an assessment where the estimation of agricultural income was not corroborated by any suppression of Hospital receipts as was done in the block assessment and accordingly the same cannot be relied upon to adjudicate the matter in the block assessment. 4 The learned CIT(A) erred in giving excess relief to the extent of Rs. 2,00,000/- by allowing the repairs & renovation expenditure of Hospital at Rs. 4,05,000/- in as much as the said expenditure and also the addition made in this regard were only for Rs. 2,05,000/-. 5. The learned CIT (A) erred in giving relief to the extent of Rs. 15,00,000/- out of addition of Rs. 31,00,000/- made by the Assessing Officer towards undisclosed investment in Sathy Farm. 5.1 The learned CIT(A) ought to have confirmed the entire addition of Rs. 31,00,000/- made u/s 69C of the IT Act towards undisclosed investment in Sathy Farm; having regard to the fact that the alleged payment was confirmed by the recipient and the assessee also admitted that unaccounted professional receipts were introduced under agricultural income. 6. The learned CIT(A) erred in deleting the addition of Rs. 48,000/- made on substantive basis and Rs. 19,08,050/- made on protective basis towards unaccounted investment in immoveable properties in the hands of the assessee. 6.1 The learned CIT(A) ought to have confirmed the addition on account of excess consideration paid towards immovable properties as the request for cross examination was not considered since the statements were recorded 11 years ago. 6.2 The learned CIT(A) erred in not appreciating the fact that the notings on the seized Diary in KGR/B&D/S-17 is indicative of excess consideration paid in cash in certain land transactions undertaken by the assessee. 7. The learned CIT (A) is not justified in deleting addition to the extent of Rs. 5,00,000/- out of the addition of Rs. 15,43,940/- made by the Assessing Officer towards unaccounted investment in the name of Shri. K. Viswanathan @ Kumar. 7.1 The learned CIT(A) is not justified in allowing relief of Rs. 5,00,000/- out of the addition of Rs. 15,43,940/- made by the Assessing Officer towards unaccounted investment in the name of Shri. K. Viswanathan @ Kumar, after accepting additional evidence produced by assessee during the appeal I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 4 proceedings without providing an opportunity to the Assessing Officer as required under the provisions of Rule 46A(3) of the IT Rule 1962. 8. For these grounds and any other grounds including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and .that of the Assessing Officer be restored.” 2. Brief facts of the case are that there was a search under section 132 of the Income Tax Act, 1961 [“Act” in short] in the case of Smt. Muthulakshmi group on 12.9.2002. Vikram Hospital is run by Smt. Muthulakshmi. assessee's husband, Dr.P.G.Visvanathan is a practicing 'ENT' surgeon in this hospital. The 'Integral Ear Institute' a trust formed in 1999, with Dr.P.G.Visvanathan as its author and other family" members as trustees, has been running a school for hearing impaired children at Pannimadai, near Coimbatore. Consequent to search, cash of ₹.10,00,000/- books of account and incriminating documents were seized. This group consists of the following family members: 1. Dr.P.G.Viswanathan, ENT Surgeon in Vikram Hospital 2. Mrs.Muthulakshmi, proprietor of Vikram hospital 3. Dr.(Miss) Anjana, daughter of the above, in-charge of Anjana Clinical Lab. 4. Dr.(Miss) Aruna, daughter of the above, in-charge of Aruna x-ray centre 5. Sri.Vikram, son of the above, in-charge of Vikram Audio Centre. 2.1 Upon issuance of notice under section 158BC of the Act by the Assessing Officer, the assessee has filed a return declaring 'NIL' I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 5 income, for the block period. During the pendency of assessment proceedings, writ petition was filed by the group and injunction obtained. Finally court order dismissing the writ has been received by the department on 18.2.2013. 2.2 During assessment proceedings, the AO found that the appellant group had generated huge unaccounted professional income and such unaccounted income was earned by way of collections from inpatients, outpatients, clinical lab and x-ray charges. The AO further found that major portion of this professional income which had been introduced in the garb of agricultural income was invested in construction of buildings, purchase of jewellery besides repairs and renovation. The Assessing Officer quantified the undisclosed income and computed the total income as under: 1. Undisclosed professional receipts figuring as inflated agricultural income 81,13,517 2. Unaccounted investment in IEI Buildings 66,70,000 3. Unaccounted investment in Sathy Farm 31,00,000 4(a) Unaccounted investment in immovable property on substantive basis 48,000 4(b) Unaccounted investment in immovable property on protective basis 19,08,050 5. Unexplained cash 10,00,000 6. Unaccounted investment in repairs/renovation 12,05,000 7. Unaccounted investment in jewellery 11,45,000 8. Unaccounted investment relating to K. Viswanathan @ Kumar 15,43,940 9. Total undisclosed income 2,47,33,507 Rounded off to 2,47,33,500 I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 6 On appeal, after considering the submissions of the assessee, the ld. CIT(A) partly allowed the appeal of the assessee. Against the deletion of the additions made by the Assessing Officer, the Department preferred further appeal before the Tribunal. Similarly, against confirmation of additions, the assessee preferred appeal before the Tribunal. 3. The first ground raised in the appeal of the Revenue relates to deletion of addition of ₹.66,70,000/- towards unaccounted investment in construction of building at Integral Ear Institute. By relying upon the grounds of appeal, the ld. DR has submitted that the builder Shri K. Viswanathan has admitted having received certain cash towards building construction, which was paid by the assessee and not recorded in the books of account. It was further submission that the assessee is the key person in managing the affairs of the family and the payment made by the assessee of ₹.66,70,000/- was not accounted in any accounts and thus, the ld. DR pleaded for reversing the order of the ld. CIT(A). 4. On the other hand, besides, strongly supporting the order passed by the ld. CIT(A), the ld. Counsel for the assessee has reiterated that the construction was carried out at the trust premises, which was not in dispute and the entire cost of construction of building has been accounted I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 7 in the books of the trust. Moreover, the sources for the same was also got reflected in the books of the trust and the assessee and prayed for confirming the order passed by the ld. CIT(A) on this issue. 5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. A search under section 132 of the Act was conducted on 12.09.2002 at the premises of M/s. Vikram Hospital as well as at the residential premises of the assessee located at 20, Guru Govind Singh Road, R.S. Puram, Coimbatore. In the assessment order completed under section 143(3) r.w.s. 158BC of the Act dated 17.04.2013, the Assessing Officer has noted that the Integral Ear Institute, a trust, was formed in the year 1999, with Dr. P.G. Visvanathan, assessee’s husband, as its author and the other family members as its trustees. The trust has constructed a school building for hearing-impaired children at Varapalayam Village near Pannimadai, Coimbatore and is also in the process of constructing (at the time of search) a ‘Mother & Child’ dormitory block for providing accommodation to the children undergoing treatment and their parents. The construction work on this project was done by Shri K. Viswanathan of M/s. Viswanathan & Co, a leading civil engineer of Coimbatore. During the course of search at the residence of Dr. P.G. Visvanathan/Smt. V. I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 8 Muthulakshmi on 12.09.2002, two sheets of paper were seized with a noting found on the sheet numbered as ‘3’ that the total value of the work done by M/s. Viswanathan & Co on the Integral Ear Institute building as on 06.08.2002 (excluding the cost of steel) was ₹.106 lakhs and the payment made to him till then was ₹.94.00 lakhs. Based on the notings, the Assessing Officer presumed that the figure ’66.7’ indicates the payment made in cash by the assessee to Shri K. Viswanathan. 5.1 On the date of search itself, a survey under section 133A of the Act was conducted at the business premises of M/s. Viswanathan & Co. and statement of Shri K. Viswanathan was also recorded. After considering the statement of Shri K. Viswanathan, and explanations offered by the assessee against the queries raised by the Assessing Officer, the Assessing Officer has observed that the legal presumption apart, evidence gathered in the form of depositions as well as concrete documents from Shri K. Viswanathan, the other party to the transactions, go to establish clearly that cash had passed hands in addition to the disclosed consideration. Shri K. Viswanathan has clearly stated that in respect of the IEI building construction, the amount received by him in cash till March, 2002 was about ₹.25 lakhs. As evident from the papers seized and recounted above, the amount in cash that had actually been I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 9 paid prior to the date of commencement of the search was ₹.66.7 lakhs. The Assessing Officer has also observed from the books of the Integral Ear Institute that these payments are not reflected in the accounts of the trust. Thus, the Assessing Officer has concluded that the cash payments made to the extent of ₹.66.7 lakhs by Smt. V. Muthulakshmi to M/s. Viswanathan & Co. are undisclosed income of the assessee and brought to tax. 5.2 After considering the submissions of the assessee, the ld. CIT(A) has observed as under: “Integral Ear Institute is a trust with appellant's husband as author and other family members as trustees. This built-up area is around 26,000 s.f., it contains school building and others. According to the appellant the expenditure accounted in the trust books is Rs.1,52,00,000/- @ Rs.580/ s.f. towards cost of construction. If the AO's version is to be believed Rs.1,50,00,000 + Rs.66,00,000=2,11,00,000/- is the total cost of construction.. If Rs.2,11,00,000/- is divided by 26000 s.f. the cost of construction per s.f. comes to Rs.811/- Further this is a factory type building utilized for education of deaf and dumb children. Going by the logic also the rate per s. F. was not in the range of Rs.800/- during the relevant period when the construction was made. Trust being a separate assessment entity, if at all the addition should have been made in the hands of the trust u/s.69. The AO before making the addition on account of unaccounted investment in construction should have referred the matter to Valuation Cell and should have proceeded further on the basis of valuation report. In the instant case the AO failed to do any of these exercises. In the, circumstances the action of the AO in making an addition is directed to be deleted. Hence, this ground of appeal is allowed.” 5.3 We have heard the rival contentions. After careful perusal of the assessment order and appellate order, we are of the considered opinion I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 10 that there is no clear cut evidence of having paid an amount of ₹.66.70 lakhs in cash by the assessee to the builder. There is no mention in the books of the assessee for such payment or in the books of the builder for receipt. The Assessing Officer presumed the figure mentioned in the loose sheet in lakhs, but why it should not be in crores or thousands. On presumption or assumption, the Assessing Officer cannot make addition. As observed by the ld. CIT(A), there is no dispute on the built-up area of around 26,000 sq.ft. contains school building and others. According to the assessee the expenditure accounted in the trust books is ₹.1,52,00,000/- @ ₹.580/- sq.ft. towards cost of construction. If the Assessing Officer’s version is to be accepted, the total cost of construction comes to ₹.2,11,00,000 [1,50,00,000 + 66,00,000]. If ₹.2,11,00,000/- is divided by 260000 sq. ft. the cost of construction per sq. ft. comes to ₹.811/-. What was constructed by the builder is a factory type building utilized for education of deaf and dumb children. As has been observed by the ld. CIT(A), there is no logic in assuming the rate per sq.ft. in the range of ₹.800/- during the relevant period when the construction was made. If at all the Assessing Officer has noted any differences that may have to be added in the hands of the trust and not in the hands of the assessee for the reason that the assessee is separate entity. Under the above facts I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 11 and circumstances, we find no infirmity in the order passed by the ld. CIT(A) on this issue. Thus, the ground raised by the Revenue is dismissed. 6. The next ground raised in the appeal of the Revenue relates to addition of ₹.81,13,517/- made on account of suppressed professional receipts claimed under agricultural income. In the assessment order, the Assessing Officer’s conclusion was based on the sworn statement of the assessee Ms. Muthulakshmi and the persons who are looking alter the agricultural operations viz., Shri Udayaumar and Shri K.Mahalingam. During the course of appellate proceedings, the submissions made by the assessee before the ld. CIT(A) are reproduced as under: "While on this subject it is also submitted that in the regular scrutiny assessment for 1997-98 the agricultural income as returned had been accepted by the then AO after thoroughly examining all aspects. Similarly in A.Y. 2003-04 the AO treated 70% of agricultural income as non- agricultural income. On appeal CIT(A) held that only 30% agricultural income could be treated as non-agricultural income. On further appeal ITAT held that on facts the agricultural income as returned is acceptable. The department has also accepted the judgment of the ITAT. To sum up in the earlier assessment agricultural income has been accepted and in the assessments subsequent to block years have all attained finality and in all these subsequent years up to the A. Y. 2010-11 the agricultural income as declared in the return has been accepted by the department after due scrutiny. In this background picking out the assessment coming under the block period for the purpose of disbelieving agricultural income is not a proper method to draw adverse conclusion. It is submitted that the agricultural sector is highly unorganized sector and keeping records like business activities is next to impossible in this sector. The payments for agricultural expenses and receipts for sale of agricultural produce are only by cash. Very seldom transactions are through banks. This fact is well known and accepted even under the I.T. Act." I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 12 6.1 After considering the submissions of the assessee, the ld. CIT(A) has observed as under: “I have gone through the discussions the AO made in the assessment order and the submissions made by the appellant. As pointed out by the appellant, in A.Y. 2003-04 the assessing Officer treated 70% of agricultural income as nonagricultural income. On appeal CIT(A) held that only 30% agricultural income could be treated as non-agricultural income. And further appeal ITAT held that on facts the agricultural, income as returned is acceptable. The department also accepted the judgement of the ITAT. I am of the view that the AO's conclusion that suppressed receipts have been introduced in the guise of inflated agricultural income is devoid of merits and not supported by any evidence found during the course of search. After taking into account all these aspects and as the Hon’ble ITAT has decided in favour of the appellant, on identical issue, I am allowing the appellant’s claim in regard to agricultural income. Hence this ground of appeal is allowed.” 6.2 Aggrieved, the Revenue is in appeal before the Tribunal. 6.3 We have heard the rival contentions. Before us, the ld. DR could not controvert the decisions of the ITAT in the assessment year 2003-04, wherein, the Tribunal has accepted the agricultural income as returned and the same was also accepted by the Department. Under the above facts and circumstances, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed. 7. The next ground raised in the appeal of the Revenue relates to excess relief given to the extent of ₹.2,00,000/- by allowing the repairs and renovation expenditure of hospital at ₹.4,05,000/- in as much the said expenditure and also the addition made in this regard were only for I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 13 ₹.2,05,000/-. We have carefully gone through the assessment order as well as order passed by the ld. CIT(A). In the assessment order at para 14.3 of page 38, the Assessing Officer has observed Under the caption “Unaccounted expenditure on repairs & renovation”, that the assessee has made unaccounted investment of ₹.10,00,000/- (₹. 2 lakhs + ₹.8 lakhs) on the hospital and residence buildings for repairs/renovation works. After considering the submissions of the assessee, in para 14.5 at page 39, the conclusion of the Assessing Officer are that “the entire amount is taxed in the hands of the assessee as the source of generation of the unaccounted receipts is mainly, the hospital of which the assessee is the proprietor ₹.12,05,000/- is accordingly taxed as the undisclosed income of the assessee” [last sentence of the para]. Moreover, in the computation of undisclosed income at para 20 in page 47, the amount mentioned in Sl. No. 6 “Unaccounted investment in repairs/renovation as discussed in Para 14 to 14.5 is stated as ₹.12,05,000/-. 7.1 On appeal, while sustaining the addition to the extent of ₹.8,00,000/- towards the expenditure incurred outside the books of account for the repair and renovation work at the residence of the assessee, the ld. CIT(A) has granted relief of ₹.4,05,000/- after I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 14 verification of extracts of the account copies furnished by the assessee. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue. Thus, the ground raised by the Revenue is dismissed. 8. The next ground raised in the appeal of the Revenue relates to relief given to the extent of ₹.15,00,000/- out of addition of ₹.31,00,000/- made towards undisclosed investment in Sathy Farm. In the assessment order, the Assessing Officer disallowed ₹.31,00,000/- being construction expenditure at Sathyamangalam Farm. On appeal, the assessee made detailed submissions and the same are reproduced as under: Undisclosed investment in the Sathy farm - Rs. 31,00,000/ a. As far as SathyThottam Expenses is concerned your assessee submits that as no bills were raised by Er.K.Viswanathan for this work no payment was made during the block period and if at all any payment has been made it is only after the block period and relevant for the AY 2003-04 which is beyond the block period. In as much as Mr.Viswanathan statement also clearly states that he has not raised the bill and he has only made request for release of payment by addressing a letter to Dr.P.G.Viswanathan, the assessee reiterates that no payment as mentioned in the slip has been made during the block period, hence no adverse inference be drawn on this count, as it goes out of the block period. o. Asked about the nature of work done at the Sathyamangalam farm of Smt. V. Muthulakshmi, Shri. K. Viswanathan stated that the construction of dams, causeways, approach roads, parking sheds, sump etc., was undertaken by him. To a question about the time schedule of payment of Rs. 31 lakhs received by him, Shri K. Viswanthan has stated that till March 2002 he would have received about 15-16 lakhs and the rest was paid to him subsequently. I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 15 p. Therefore, the entire payment made of Rs. 31 lakhs is taxed as the undisclosed income of the assessee u/s. 69C of the Act, since it is not reflected in the books of any of the family members/concerns. q. In this connection we wish to state that the "loose slips" as mentioned in AO's statement contain only some bare figures without any proper narration to show whether the figures in crores; lakhs; or thousands. The Assessing officer without any solid evidence seems to have proceeded on the basis of some loose sheets which cannot strictly be considered as "documents". r. Hence the addition may kindly be deleted.” 8.1 After considering the submissions of the assessee, the ld. CIT(A) has observed as under: It is seen that as per seized document No.SM/Loose Sheets/S3, there was noting that Shri K. Viswanathan builder has undertaken construction work to the extent of Rs.33,00,000/- and payment made to him up to date was Rs.31 lakhs. This was admitted by Shri Viswanathan in the sworn statement recorded from him. When this fact was put forth before the appellant during search, she admitted that Rs.31 lakhs was paid to him. Out of Rs.31,00,000/- Rs.15 lakhs was out of agricultural income and balance was out of undisclosed income. Accordingly the AO added Rs,31,00,000/-. The AO did so, because he has not accepted the theory of agricultural income. In the preceding para, I have deleted the addition made on account of agricultural income. To say the appellant has agricultural income. Hence to the extent amount was spent out of agricultural income, the appellant gets relief i.e. Rs.15,00,000/- and addition to the extent of Rs. 16,00,000/- is confirmed. Hence this ground is partly allowed.” 8.2 Aggrieved, the Revenue is in appeal before the Tribunal. 8.3 We have heard the rival contentions. In the assessment order, the Assessing Officer has noted that as per seized document No.SM/Loose Sheets/S3, there was noting that Shri K. Viswanathan builder has undertaken construction work to the extent of ₹.33,00,000/- and payment made to him up to date was ₹.31 lakhs. This fact was admitted by Shri I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 16 Viswanathan in the sworn statement recorded from him. When this fact was put forth before the assessee during search, she has admitted that ₹.31 lakhs was paid to him. Out of ₹.31,00,000/- ₹.15 lakhs was out of agricultural income and balance was out of undisclosed income. Since the Assessing Officer has not accepted any agricultural as income claimed by the assessee, ₹.31,00,000/- was added to the total income of the assessee. Since the ld. CIT(A) has accepted the agricultural income returned by the assessee in view of the decision of ITAT for the assessment year 2003-04, the payment of ₹.15 lakhs out of agricultural income was accepted and the ld. CIT(A) has sustained the balance amount of ₹.16,00,000/- was sustained. Since we have also accepted the agricultural income returned by the assessee hereinabove at para 6.2, we find no reason to interfere with the order passed by the ld. CIT(A) on this issue. Accordingly, the ground raised by the Revenue is dismissed. 9. The next ground raised in the appeal of the Revenue relates to deletion of addition of ₹.48,000/- made on substantive basis and ₹.19,08,050/- on protective basis towards unaccounted investment in immoveable properties in the hands of the assessee. In the assessment order, the Assessing officer has made an addition of ₹.19,08,050/- (on I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 17 protective basis) and Substantive basis of ₹.48,000/- on the ground that the assessee has paid on-money over and above the document value in respect of lands at Nanjundapuram, Coimbatore. The assessee in her deposition at the time of search operation has categorically asserted that the payments for lands were made only by way of Cheques and Demand drafts and denied the cash payments. Similarly Smt. Jothimani, who has assisted the assessee group in the acquisition of lands, has also denied in her sworn statement that no cash payments over and above the documented value have been made as stated in the order. However, the Assessing Officer made addition of ₹.48,000/- on substantive basis and ₹.19,08,050/- on protective basis towards unaccounted investment in immoveable properties. On appeal, after considering the written submissions, the ld. CIT(A) deleted the addition made by the Assessing Officer. 9.1 Aggrieved, the Revenue is in appeal before the Tribunal. 9.2 We have heard the rival contentions. In the assessment order, the Assessing Officer made addition on account of unaccounted investment in immovable property at ₹.48,000/- on substantive basis and ₹.19,08,050/- on protective basis. After reproducing the written I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 18 submission of the assessee and considering the seized materials on record, the ld. CIT(A) has observed under: “In respect of alleged on-money payment the AO has violated principles of natural justice by not providing due opportunity to the appellant to cross examine the vendors. The appellant further submitted that the AO erred in making an addition on account of unaccounted investment in immovable property at Rs.48,000/- on substantive basis and Rs.19,08,050/- on protective basis. I have gone through the written submissions and the assessment order, during search a diary (KGR/B&D/S-17) was seized. Based on the above seized material the AO observed payment of consideration in excess of document price in the transaction of immovable property purchases and worked out the on-money paid at Rs.19,56,050/- outside the books of account. Accordingly he added Rs.48,000 in the hands of appellant on substantive basis and Rs. 19,08,050/- on protective basis in the hands of family members. During the appellate proceedings I have examined the seized diary (copy produced, before me). This document indicates the name of seller, survey No. and amount paid. Except the name of Karuppaththal mentioned in the assessment order, no other name tallies with the seized material. Against the name of Karuppaththtal also the aci\.ia/ rate per acre mentioned is Rs.50,000/- as against the figure adopted by the AO at Rs.75,000/-. 1 have perused the seized diary, except Karuppaththal no other name appears. In the circumstances how the AO has arrived at the unaccounted investment in land by way of on money is not known. In addition to this, the appellant's contention is that all the payments to the land owners were paid only by DD. When the statements of the sellers were used behind the back of the appellant, her contention that an opportunity ought to have been given to the appellant to cross-examine them, has some force. The AO has not brought on record in the form of seized material or corroborative evidence to make this addition. Hence I am of the considered opinion that the addition made on this count is to be deleted. To say the addition of Rs.48,000/- made substantively in the hands of the appellant is deleted and there is no reason to make a protective addition of Rs.19,08,050/- in the hands of appellant and substantively in the hands of other family members. Accordingly the ground is allowed. 9.3 It is an admitted fact that the assessee has purchased the immovable property by making payment through banking channel. It also an admitted fact that when the Assessing Officer has taken into account I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 19 the statements of the sellers, the assessee was not afforded an opportunity of cross examine them. On perusal of the assessment order, we are of the opinion that the ld.CIT(A) has rightly observed that the Assessing Officer has not brought on record any corroborative evidence to make the addition. After examining the seized diary and considering the facts and circumstances, the ld. CIT(A) has deleted the addition of ₹.48,000/- made substantively in the hands of the assessee and also observed that there is no reason to make a protective addition of ₹.19,08,050/- in the hands of the assessee and substantively in the hands of other family members. Thus, we find no reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed. 10. The next ground raised in the appeal of the Revenue relates to deletion of addition of ₹.5,00,000/- out of the addition of ₹.15,43,940/- toward unaccounted investment in the name of Shri K. Viswanathan @ Kumar. In the assessment order, the Assessing Officer has noticed that Shri K. Viswanathan (also known as Kumar) is employed as driver-cum- assistant by Vikram Hospital (Prop. Smt. V. Muthulakshmi). A search was also conducted at his residence. The research resulted in finding various deposits and investment in the name of Viswanathan to the extent of I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 20 ₹.15,43,940/- made during the block period. The Assessing Officer proceeded to make the addition, as the salary earned by him was only ₹.3,000/- p.m. That being the case this investment should have been made out of money flown from the assessee group. So the Assessing Officer made an addition of ₹.15,43,940/- On appeal, after considering the submissions of the assessee, the ld. CIT(A) directed the Assessing Officer to restrict the addition to ₹.10 lakhs and partly allowed the ground raised by the assessee. 10.1 Aggrieved, the Revenue is in appeal before the Tribunal. 10.2 We have considered the rival contentions. In this case, it was the submission of the assessee before the ld. CIT(A) that while making addition, the Assessing Officer has overlooked the following details furnished during the course of assessment proceedings: a) While making additions the following have been overlooked by the Assessing officer. b) Housing loan from UC Housing amounting to Rs.1.30 Lakhs - the fact has been observed by the AO in the order but he failed to give credit for the same. c) Rs.1.50 Lakhs Fixed deposit in the joint names of his father and himself . d) Rental Income from flat was omitted to be considered. e) His household savings. f) Here also the AO has brushed aside the assessee's contentions and has not taken any steps to verify the entries which are fully supported by the necessary evidence. The addition being made on incomplete evidence is prayed to be deleted. I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 21 10.3 After considering the above submissions, the ld. CIT(A) has observed as under: “During the appellate proceedings the AR produced evidence that Shri Viswanathan himself has taken housing loan from LIC to the extent of Rs.1,30,000/- Rs.1,50,000 FD was in the name of his father and mother. They were also government servants and also deriving rental income from property. The AR submitted that the AO failed to consider these explanations and proceeded to make the addition. I have perused the evidence submitted before me by the appellant. I am of the view that up to the extent of Rs. 5 lakhs can be accepted as investment made out of their family's source. Balance Rs. 10,00,000/- is to be sustained. Accordingly the AO is directed to restrict the addition to Rs.10 lakhs. Hence this ground is partly allowed. 10.4 On perusal of the appellate order, it is clear that whatever details furnished by the assessee before the Assessing Officer during the course of assessment proceedings, were also furnished before the ld. CIT(A) and no fresh evidence was furnished by the assessee during the course of appellate proceedings warranting any opportunity to the Assessing Officer. Thus, we are of the considered opinion that there is no violation of the provisions of Rule 46A of the IT Rules. Moreover, after considering the evidences, which were not considered by the Assessing Officer, the ld. CIT(A) sustained the addition to the extent of ₹.10,00,000/- Thus, we find no reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed. 11. The first ground raised in the appeal of the assessee is with regard to confirmation of addition of ₹.10,00,000/- cash seized during the course I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 22 of search proceedings under section 132 of the Act. During the course of search cash amounting to ₹.10,82,850/- was found at the residence of Dr. Viswanathan & Smt. Muthulakshmi. During the search operation, it was stated by the assessee that the books of account of the concerns functioning at the hospital were not updated. They have been written up to August-end only. It was admitted by the cashier, Shri Narayanamurthy in his statement recorded on 12.9.2002 that the surgery charges collected by him was not entered in the register maintained by him and were handed over by him directly to Smt. Muthulakshmi. Further in her reply to Q.No.5 of her statement dated 17.9.2002 it was admitted by her that no receipts were issued. From the seized material, it is evident that there is considerable suppression of the hospital receipts. Under these circumstances, the assessing Officer has observed that the cash available at the residence cannot be stated to have been part of the cash recorded in the books and it represents the undisclosed income of the hospital. The assessee has sought to refute this inference by letter dated 31.8.2004 (Para 6) but the reply only asserts that the cash seized represents accounted collections. Again in the letter dated 23.3.2013 filed on 25.03.2013 the assessee took up the same stand and produced an extract of a purported cash book. In the absence of I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 23 supporting vouchers, the Assessing Officer could not verify the genuineness of the entries. The claim that the books were verified at the time of regular assessment for assessment year 2003-04 is a weak defense to account for the failure to produce the same in the present proceedings. As the hospital is the proprietary business of the assessee, this cash of Rs 10 lakhs is taxed in the hands of Smt. V.Muthulakshmi. 11.1 Before the ld. CIT(A), the assessee has submitted as under: Clarification/Explanation in respect of Addition relating to Unexplained Cash Rs.10 Lakhs a) The AO has surmised that Rs. 10,00,000/- which has been seized during the course of search proceedings as unexplained cash: b) A sum of Rs. 10 lakhs seized from the Assessee on 13 th September 2002 represents the cash balance as on that date accounted in the books. The cash collections of all the concerns are pooled in a single place and the total of cash balance is inclusive of Rs. 10 lakhs seized. c) In question No. 5 when queried (in sworn statement dated 17.09.2002) by listing the collection details of 01.09.2002 to 09.09.2002 as to whether any receipts have been given for the advance collected to the various patients and whether these type of collections are reflected in the day book maintained, the Assessee replied as under: “I was practically away from the city. These amounts have been received by my cashier on the given dates and handed over to my husband. Apparently it has been deposited in the bank to a certain extent and the balance was in the house. These amounts are not reflected in the books of accounts and no receipts have been issued till date for the same". I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 24 d) When in question No. 6 - a leading question is asked that in view of non-issue of the cash receipts for advance there is a presumption arisen that all the receipts are not accounted, the Assessee denied categorically that "the presumption is not correct. The above amounts are being accounted on the discharge when the bill is raised." e) Admission of the cashier that the surgery charges collected by him were not entered in the register maintained by him and that they were directly handed over to the Assessee. This admission of the cashier corroborates what has been stated by the Assessee in her statement and this cannot form the basis for the AO's surmise. f) It is submitted that the cash found in the residence of the Assessee represents only disclosed income. They constitute the collections made in the hospital either towards advance for surgery or other charges. These collections have been duly reflected in the books of accounts maintained by the Assessee. In view of the above it is submitted that the sum of Rs. 10 lakhs seized cannot be considered as undisclosed income of the Assessee. g) It may also be seen that after the search was over the Assessee later recorded all the available transactions in the books of various Assessees and the consolidated cash balance shows that Rs. 10 lakhs seized by the department is properly reflected in the books. The relevant cash book extract is enclosed herewith. h) Further it is mentioned that the books were examined and accepted by the Department for the AY 2003-04 in the scrutiny assessment for the AY 2003-04. i) Since at the time of raid, the accounts were maintained by the Assessee upto 31.08.2002 and no time was given to complete the transactions relating to period 01.09.2002 to 13.09.2002 could not be given the search party in the limited time frame. On the basis of bank transactions and vouchers the accounts were completed and it shows adequate availability of cash of more than Rs.10 Lakhs on the day of search. j) During the course of the Block Assessment proceedings, the cash book showing the cash balance has been provided to the Assessing officer. Here the AO has brushed aside the assessee's contentions, not questioned any entries thereon and has not taken any steps to verify the entries which are fully supported by the necessary evidence. The addition being made on incomplete evidence is prayed to be deleted. I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 25 k) It is also relevant to point out that the cash balance struck in the same cash book on 31.03.2003 has been carried forward as opening for 01.04.2003 and the same has been accepted in the Assessment year 2004-05. 11.2 After considering the submissions of the assessee, the ld. CIT(A) has confirmed the addition. 11.3 On being aggrieved, the assessee is in appeal before the Tribunal. 11.4 We have heard the rival contentions. It may be a fact that books were not updated. It is also a fact that the computerized receipts issued as and when payments are received from patients by the hospital. This being so, the receipts are automatically updated in the Tally accounting system. Therefore, the authorities below have observed that the assessee’s version that books are not updated is a bald explanation. Even admitting but not accepting the assessee’s version, she could have proved the cash availability vis-a-vis counterfoils of the receipts issued either before the Assessing Officer or before the ld. CIT(A). Having not done so, the ld. CIT(A) has confirmed the action of the AO in treating ₹.10,00,000/- as unaccounted cash is quite correct and stands sustained. Hence the ground raised by the assessee is dismissed. I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 26 12. The next ground raised in the appeal of the assessee is with regard to confirmation of unaccounted investment in jewellery. During the search at the residence of the assessee and Dr. P.G. Visvanathan, the articles of jewellery available at the house and those brought from the bank lockers were inventorized (SKM/JIF dated 13.09.2002). As per this inventory, the total jewellery found was 4199 gms. When questioned about the sources for the same she replied that out of this 266 gms belonged to her sister Smt. Visa Arumugam, 408 gms her niece Smt. Renuka Kumarasamy and the rest was the traditional family jewellery (pl. refer to Q. No.9 of her statement dated 13.09.2002). The jewellery belonging to the family members were identified as under: SI. No. Name Quantity of Jewellery 1 Smt. Muthulakshmi 1271 gms. 2 Dr. Anjana Visvanathan 992 gms 3 Dr. Aruna Visvanathan 982 gms. 4 Shri Vikram 280 gms. TOTAL 3525 gms. Further, on 23.09.2002, the jewellery available in the other bank locker at Indian Bank, V.H, Road was also listed out (KGR/J/NS dated 23.09.2002). In this locker 104 gms of gold jewellery was found out of which, 72 gms. was claimed to belong to Smt. Muthulakshmi. Thus, the I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 27 total gold jewellery belonging to the family members found during the search is 3,627 gms. 12.1 After examining the wealth tax records of the family members, the jewellery declared in the wealth tax returns is as under: SI. No. Name Quantity of Jewellery 1 Smt. Muthulakshmi 376 gms. (46 sovereigns) -·-- 2 Dr. Anjana Visvanathan 240 gms. 3 Dr. Aruna Visvanathan 248 gms. . TOTAL 764 gms. From the above, the Assessing Officer has observed that there is clearly unexplained excess gold jewellery of 2863 gms. When questioned about the excess jewellery on 07.11.2002, Smt. Muthulakshmi replied that during the past several years, they have received gold jewellery gifts, inheritance as well as purchases and the details could only be submitted later. Even in the reply dated 08.04.2013 filed on 10.04.2013, the assessee claims that the jewellery was received as gifts on various occasions as per the prevailing customs of Gounder community to which she belongs without adducing any documentary evidence. The fact that the jewellery has been reflected in the W.T. return filed for the assessment year 2003-04 is of no consequence since the said return was filed after the search. In the circumstances the excess jewellery is to be I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 28 treated as having been acquired out of undisclosed income of the family. The Assessing Officer fairly worked out by taking average rate of ₹.400 and determined the unexplained investment in gold jewellery at ₹.11,45,000/- and brought to tax. 12.2 On appeal, before the ld. CIT(A) the assessee has filed the written submission by clarifying as under: “Clarification / Explanation in respect of Addition of Rs.11.45 Lakhs on account of alleged unaccounted investment in jewellery: a) The assessee and her family being a Gounder community, on various occasions such as Tonsuring ceremony of children (two girl children and one boy child), ear boring ceremony, puberty function had received gold ornaments periodically. It is a common knowledge that in the upper class Gounder community, during puberty function alone, the girls would receive gifts in the form of ornaments from their relatives. This practice is called as "Moi seer". b) The Assessing officer has not considered the status and social standing of the Assessee group while the deciding the quantum of jewellery held by them. Normally such highnetworth individuals families will have on a modest estimate jewellery to the extent of 3 to 4 kilograms as family inheritance. Even after taking into account the quantum of the gold jewellery held by the individuals their net wealth was below Rs.15 lakh limit. c) It is further submitted that in the wealth tax returns for the family members filed in respect of A.Y 2003-04, these jewellery items duly get reflected. d) As per the directions contained in the CBDT's Circular No.1916 dated 11.05.1994, an assessee can normally hold jewellery @ 500 grams per married lady, 250 grams per unmarried lady and 100 grams of gold per male member of the family. e) Considering the above facts the additions made may kindly be deleted.” I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 29 12.3 On being aggrieved, the assessee is in appeal before the Tribunal. 12.4 We have heard the rival contentions. During the course of search, jewellery found at the premises of the assessee and her family members amounting to 3,525 gms. During the course of assessment proceedings, the Assessing Officer had accepted 764 grams based on wealth tax returns filed. Accordingly, the Assessing Officer proceeded to make addition on account of unexplained investment in gold jewellery to the extent of 2863 gms for an amount of ₹.11,45,000/-. On appeal, the ld. CIT(A) has observed that these jewellery, stated to have been acquired over a period and also on various occasions like family functions like birth day, ear boring ceremony, etc., but the assessee was unable to substantiate with relevant evidence like drawings in the books of account and in the hands of family members. Therefore, the ld. CIT(A) confirmed the addition made by the Assessing Officer. When costly items like jewellery are offered during various family functions, there is a general practice to maintain “Moi Book” while receiving such gifts. However, the assessee has not produced any such record either before the Assessing Officer or before the ld. CIT(A), we are of the considered opinion that the addition made towards unaccounted investment in jewellery was rightly confirmed by the ld. CIT(A). Thus, we find no reason to interfere with the I.T(SS).A. No.16/Chny/15 & I.T.(SS) No. 4/Chny/16 30 order passed by the ld. CIT(A) on this issue. Accordingly, the ground raised by the assessee is dismissed. 13. In the result, the appeal filed by the Revenue and the assessee are dismissed. Order pronounced on the 01 st July, 2022 in Chennai. Sd/- Sd/- (G. MANJUNATHA) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 01.07.2022 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ (अपील)/CIT(A), 4. आयकर आयुƅ/CIT, 5. िवभागीय Ůितिनिध/DR & 6. गाडŊ फाईल/GF.