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2015 (4) TMI 903 - AT - Income TaxAppeal against validity of assumption of jurisdiction under section 153A - Additions in income on account of low house hold withdrawals & credit appearing in the capital account - Addition on account of waste material found - Held that - We find that as per this judgment of Hon'ble jurisdictional High Court in Dr. A.K.Bansal 2013 (4) TMI 366 - ALLAHABAD HIGH COURT , the issue involved in these grounds is squarely covered against the assessee. In this case, it was held by Hon'ble jurisdictional High Court that neither the Assessing Officer nor the appellate authority, can look into the validity of the search by calling for the warrant of authorisation and examining the records authorising search for the purpose of an enquiry whether the search was valid. Respectfully following this judgment of Hon'ble jurisdictional High Court, this issue is decided against the assessee and accordingly these grounds are rejected. We find that it is noted by Assessing Officer in the assessment order that this is the first year of business of Shri Ram Agencies but the assessee has shown opening balance of capital as on 01/04/2007 at ₹ 1,57,010/-. The Assessing Officer asked the assessee to explain the same along with the supporting documents regarding the source of opening capital and also to explain the source of ₹ 20,000/- introduced during this year. In reply, the assessee has furnished a copy of the capital account and has not provided any details regarding sources of fund. During the year, the assessee has shown cash deposit in his capital account of ₹ 20,000/- on 01/10/2007. No explanation has been given regarding the source of this cash deposit. Considering the facts, as discussed above, we do not find any reason to interfere in the order of CIT(A) because the assessee could not establish the source of this credit appearing in the capital account of the assessee. Also neither before CIT(A) nor before us, the assessee could show that there was any source of house hold expenses during the first half year of the present previous year. Under these facts, we do not find any reason to interfere in the order of CIT(A) on this issue also. - Decided against the assessee. Addition on account of waste material - We find that before the Assessing Officer, the assessee has given two explanations. First explanation was that the stock found in course of search was waste material and therefore, no addition is justified. The second explanation was that they valued the stock at ₹ 3,99,570/- and it was submitted that this may be treated as part of ₹ 60 lacs surrendered against the stock by Shri K. N. Singh Patel. After considering this submission, it was held by the Assessing Officer that the material found at the time of search is waste material or not cannot be verified at this stage and no such contention was raised earlier. Regarding the claim of ₹ 60 lac surrendered against stock, it is noted by the Assessing Officer that such surrender was made by him against the stock of Pal Pan Private Limited and in this manner, the Assessing Officer rejected both the explanations of the assessee and made the addition. On this issue, a clear finding is given by CIT(A) in Para 9.2.2 of his order that Shri K. N. Singh Patel is not related to the assessee and as per the provision of section 292C, the assessee was liable to explain the source of the stock found in his premises as he was the owner of the business. He has also given a finding that Shri K. N. Singh Patel has nowhere owned up the assets found in the premises of the assessee and no benefit of set off can be allowed against the amount surrendered by him as no such specific bifurcation appears to have been given by Shri K. N. Singh Patel. These findings of CIT(A) could not be controverted by Learned A.R. of the assessee and therefore, we do not find any reason to interfere in the order of CIT(A). - Decided against the assessee.
Issues Involved:
1. Assumption of jurisdiction under section 153A. 2. Addition on account of unexplained credit in the capital account. 3. Addition on account of low withdrawals for household expenses. 4. Addition on account of waste material of Harsingar Gutkha Pvt. Ltd. 5. Estimation of household expenses. Detailed Analysis: 1. Assumption of Jurisdiction under Section 153A: The appellant contested the validity of the Assessing Officer's jurisdiction under section 153A, arguing that the appellant should not have been treated as a person subjected to search under section 132(1). The appellant claimed that this issue should have been considered in the appeal. However, it was conceded by the appellant's representative that this issue is covered against the assessee by the judgment in CIT vs. Dr. A. K. Bansal [2013] 355 ITR 513 (All), which held that neither the Assessing Officer nor the appellate authority can examine the validity of the search. Consequently, the tribunal rejected these grounds. 2. Addition on Account of Unexplained Credit in the Capital Account: The appellant argued that Rs. 1.50 lakh credited to the capital account was a loan from the appellant's father, supported by a confirmation letter. The CIT(A) upheld the addition, noting that the appellant failed to establish the creditworthiness of the father and the genuineness of the transaction. The Tribunal concurred, finding no reason to interfere with the CIT(A)'s decision, as the appellant could not satisfactorily explain the source of the capital introduced. 3. Addition on Account of Low Withdrawals for Household Expenses: The Assessing Officer noted that the appellant showed total withdrawals of Rs. 1.72 lakh, with Rs. 1 lakh claimed as an investment under section 80C, leaving Rs. 72,000 for household expenses. The appellant did not show any withdrawals for the first six months of the year, leading the Assessing Officer to estimate additional household expenses for this period. The CIT(A) reduced the addition from Rs. 72,000 to Rs. 60,000, estimating monthly expenses at Rs. 10,000 instead of Rs. 12,000. The Tribunal upheld this decision, noting that the appellant could not provide an explanation for household expenses during the first six months. 4. Addition on Account of Waste Material of Harsingar Gutkha Pvt. Ltd.: The appellant contended that the stock found during the search was waste material and should be treated as part of the Rs. 60 lakh surrendered by Shri K. N. Singh Patel. The Assessing Officer rejected this explanation, noting that the surrender was against the stock of Pal Pan Private Limited. The CIT(A) found that Shri K. N. Singh Patel was not related to the appellant and had not owned up the assets found in the appellant's premises. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere. 5. Estimation of Household Expenses: For the assessment year 2009-10, the appellant showed total drawings of Rs. 2.38 lakh, with Rs. 1 lakh invested under section 80C, leaving Rs. 1.38 lakh for household expenses. The Assessing Officer noted that the appellant made no withdrawals for the first eight months and estimated household expenses at Rs. 12,000 per month, adding Rs. 96,000 for the first eight months. The Tribunal found this estimation reasonable and upheld the CIT(A)'s decision, as the appellant could not show any source for these expenses. Conclusion: Both appeals of the assessee were dismissed, with the Tribunal upholding the decisions of the CIT(A) on all grounds. The Tribunal found that the appellant failed to provide satisfactory explanations and evidence for the issues raised, resulting in the confirmation of the additions made by the Assessing Officer.
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