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2015 (5) TMI 385 - AT - Income TaxAssessment on the basis of sworn statement given u/s 132(4) - Held that - No substance in this contention. We have already noticed that the fact of providing accommodation bills came to light due to survey operations conducted at the premises of M/s Akruti Metals and Alloys Pvt Ltd. The statement taken from the director of the above said company was confirmed by the assessee in the statement taken from him u/s 132(4) of the Act as well as u/s 131 of the Act. It appears that the fact relating to accommodation bills also came to light during the course of search operations conducted in the case of M/s ABG Shipyard Ltd. Since the director of M/s Akruti Metals and Alloys Pvt Ltd had implicated the assessee and since the assessee has also accepted the same, in our view, the assessing officer was justified in placing reliance on the statement given u/s 132(4) of the Act. - Decided against assessee. Non incriminating material find during search - Held that - In the instant cases, the assessee has not filed return of income prior to the date of search and hence the returns of income filed in response to the notices issued u/s 153A become the original returns of income for all the years under consideration. Consequently the impugned assessments are to be considered as original assessments in the hands of the assessee. The assessing officer is entitled to examine all the issues, since these assessments shall not fall in the category of concluded assessments in the absence of original return of income filed u/s 139 of the Act. Accordingly, we reject this ground also.- Decided against assessee. Column no.7 of notice of demand issued u/s 156 of the Act was left blank and hence the said notice was invalid - Held that - The clerical errors would not vitiate the assessment orders and accordingly, we reject this ground also.- Decided against assessee. Additions made on account of low withdrawals made for household expenses - Held that - assessing officer has simply estimated the household expenses without bringing any other material on record. The submission of the assessee is that he was maintaining a simple life and further the money withdrawn from his wife s account was also used towards household expenses. Admittedly, the assessing officer did not consider the drawings made from the account of assessee s wife. Since the assessing officer has not brought any material to support the estimate made by him, in our view, the same should be considered to be baseless and hence the same cannot be sustained. At the same time, the assessee also could not convincingly explain that the drawings disclosed by him along with the drawings taken from his wife s account were sufficient to meet the expenses. Under these set of facts, we are of the view that this issue would meet the ends of justice in all the years under consideration, if the addition towards insufficient drawings is sustained to the extent as mentioned in order to take care of possible leakage, if any. Unexplained investments - Held that - assessing officer should either accept or reject the financial statements in toto and partial reliance on them is not justified. The additions may be made out of the said financial statements, if the assessing officer was not satisfied with the explanations of the assessee with regard to any of the items disclosed therein. Since the items assessed as unexplained investments in all the years under consideration has been duly disclosed in the financial statements and the sources thereof were also explained therein, we are of the view that the impugned additions are not warranted. Accordingly, we set aside the order of Ld CIT(A) on this issue in all the years under consideration and direct the assessing officer to delete the additions made under the head Unexplained investments representing Life insurance scheme payments, PPF payments, Loans and Shares. - Decided in favour of assessee. Unexplained cash credits - Held that - hile the assessee claims that the assessee did furnish the confirmation letter, the tax authorities state that the same was not furnished. In this regard, the Ld A.R invited our attention to the confirmation letter furnished in the paper book. Accordingly he contended that the observations made by the tax authorities are against the facts prevailing on record. Since the confirmation letter furnished by the assessee was omitted to be examined by the tax authorities, we are of the view that this issue requires fresh examination at the end of the assessing officer. Accordingly, we set aside the order of the Ld CIT(A) on this issue and restore the same to the file of the assessing officer for fresh examination. - Decided in favour of assessee for statistical purposes. Estimation of commission income on providing accommodation bills - Held that - A question may arise as to whether the deduction directed to be given in the preceding paragraph is valid, since the resultant assessed income of AY 2010-11 would become lower than the income returned by the assessee. The fact remains that the assessee did not visualise the addition relating to Commission income at the time of filing returns of income of the years under consideration and hence there was no occasion for him to claim deduction of the commission income. Since the commission income has been estimated by the tax authorities as well as by us, the aggregate amount of net commission income finally assessed should be given deduction in order to arrive at completeness. Addition of balance value of Jewellery/cash found at the time of search over and above that surrendered by the assessee - Held that - Though the entire value of jewellery has been assessed in AY 2010-11 in accordance with the provisions of the Act, however in practice, the jewellery is accumulated over the years. It is known to everyone that the rate of gold is rising consistently over the years. However, the value of jewellery has been assessed in AY 2010-11 by taking the rate prevailing in that year. Further, the Indian families normally own certain quantity of jewellery over the years. Considering all these facts, we are of the view that there is no justification in assessing the balance value of jewellery amounting to ₹ 10,29,020/-. With regard to the cash also, the assessing officer has not given credit for book balance. Considering the smallness of the amount, we are of the view that the addition of ₹ 30,200/- is also not warranted. Accordingly, we set aside the order of Ld CIT(A) on these two issues and direct the assessing officer to delete these additions. - Decided in favour of assessee.
Issues Involved:
1. Validity of assessments based on statements under Section 132(4) of the Act. 2. Justification of assessments without incriminating material from search operations. 3. Validity of notice of demand under Section 156 of the Act. 4. Additions due to low withdrawals for household expenses. 5. Additions under "Unexplained Investments". 6. Addition of unexplained cash credits. 7. Estimation of commission income on providing accommodation bills. 8. Double assessment of income and investments. 9. Addition of balance value of jewellery/cash found during the search. Detailed Analysis: 1. Validity of Assessments Based on Statements Under Section 132(4) of the Act: The assessee contended that the tax authorities were unjustified in making assessments based on sworn statements under Section 132(4) of the Act without corroborative material. The Tribunal found no substance in this contention, noting that the fact of providing accommodation bills was confirmed by the director of the implicated company and the assessee himself in statements recorded under Sections 132(4) and 131 of the Act. The Tribunal upheld the reliance on the statements under Section 132(4) of the Act. 2. Justification of Assessments Without Incriminating Material from Search Operations: The assessee argued that the search did not reveal incriminating material, thus the additions should be quashed. The Tribunal rejected this argument, distinguishing the case from PACL India Ltd., noting that the assessee had not filed returns prior to the search, making the returns filed in response to notices under Section 153A the original returns. Therefore, the assessments were considered original, allowing the AO to examine all issues. 3. Validity of Notice of Demand Under Section 156 of the Act: The assessee claimed the notice of demand was invalid due to a blank column. The Tribunal dismissed this ground, stating clerical errors do not vitiate assessment orders. 4. Additions Due to Low Withdrawals for Household Expenses: The AO made additions for low household expense withdrawals. The Tribunal found the AO's estimates baseless due to lack of supporting material and acknowledged the assessee's simple lifestyle and additional withdrawals from the wife's account. The Tribunal reduced the additions, sustaining minimal amounts to cover possible leakage. 5. Additions Under "Unexplained Investments": The AO assessed various investments as unexplained, rejecting the financial statements but using details therein for assessments. The Tribunal found this approach inconsistent, ruling that the AO should accept or reject the financial statements in toto. The Tribunal directed the AO to delete the additions for investments disclosed in the financial statements, as their sources were explained. 6. Addition of Unexplained Cash Credits: The AO added Rs. 10.23 lakhs as unexplained cash credits for a loan from Deetel Securities P Ltd., citing lack of substantiation. The Tribunal noted a discrepancy regarding the confirmation letter's submission and remanded the issue to the AO for fresh examination, considering the lapse of time. 7. Estimation of Commission Income on Providing Accommodation Bills: The AO estimated commission income at 1.50%, while the assessee admitted to 0.20% and later 0.25%. The Tribunal found no basis for the AO's higher rate and adopted 0.25% as reasonable. Considering shared commission and expenses, the Tribunal estimated net commission income at 0.10%. 8. Double Assessment of Income and Investments: The Tribunal noted that assessing both income and investments resulted in double assessment, which is not allowed. The Tribunal directed the AO to grant deduction of aggregate commission income against the jewellery investment income offered in AY 2010-11. 9. Addition of Balance Value of Jewellery/Cash Found During the Search: The AO assessed the balance value of jewellery and cash found during the search. The Tribunal found merit in the assessee's contention regarding customary holdings and rising gold prices. The Tribunal directed the AO to delete the additions for the balance value of jewellery and cash. Conclusion: The Tribunal partly allowed the appeals, modifying the assessments and directing the AO to make adjustments as per the detailed analysis, ensuring no double assessment and considering the assessee's explanations and customary practices. The order was pronounced in the open court on 22nd April 2015.
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