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2016 (7) TMI 389 - AT - Income TaxDeduction u/s.80L - addition on account of FDR - Held that - As addition on account of FDR is concerned, we find the AO has made addition on the ground that the Fixed Deposit with Vijaya Bank was matured on 22-08-1995 and was transferred from Vijaya Bank OD Account No.8/95 but the assessee could not produce the details of the Fixed Deposit Receipt pertaining to F.Y. 1995-96. The assessee has also not explained the source of deposit in the yearly details of Fixed Deposit receipts with supporting evidence and material such as copy of statement of Vijaya Bank OD account etc. Further, the interest accrued on the said deposit is not ascertainable in absence of supporting evidence. We find merit in the submission of the Ld. Counsel for the assessee that the assessee being a Hawker cannot be expected to maintain details of such old deposits. Once the Fixed Deposit got matured, the assessee has surrendered the original deposit receipt to the bank and has not kept xerox copy of the same. When the assessee has given the details and considering the nature of business and status of the assessee, the AO could have and should have obtained the details from the Bank to find out the veracity of the statement. However, in the instant case, the AO has not made any such effort. The fact that credit of the maturity value of ₹ 1,66,820/- each of the 2 Fixed Deposit Receipts during F.Y. 1995-96 are not in doubt. The AO disbelieved the same on the ground that the source of deposit in the yearly details of Fixed Deposit Receipts has not been explained with supporting evidence and material. It is also a fact that in absence of full details kept by the assessee, the calculation of interest u/s.80L is also not possible. Considering the totality of the facts of the case, a lumpsum addition of ₹ 15,000/- for the block period on account of Fixed Deposit Receipt in the instant case in our opinion will meet the ends of justice. Therefore, out of the addition on account of Fixed Deposit made of ₹ 54,168/- as per para 9 of this order, we direct the same to be substituted at ₹ 15,000/-. The break- up of the same is for A.Y. 1997-98 ₹ 10,000/- and for A.Y.2000-01 ₹ 5,000/-. The AO shall accordingly recompute the income for different years of the Block Period. Addition of gifts received - as per revenue gift transactions are neither registered nor notarized and that there is no independent authority and/or third party witnessing the transactions and therefore such transaction has no legal support - Held that - Since the assessee in the instant case is a lady and belongs to the family of a Hawker and was not filing regular returns nor maintaining books of account, it is not expected of the assessee to make gift deeds for such petty gifts which have been received from the family members. Considering the totality of the facts of the case, nature of business and status of the assessee, we direct the AO to delete the addition of ₹ 50,000/- in A.Y. 200-01. Similarly, the amount of ₹ 85,000/- has been explained to be out of gifts from the husband of the assessee which has been disbelieved by the revenue authorities. It is also a fact that assessee has filed the return showing business income of ₹ 28,000/- for A.Y. 200-01 and ₹ 51,475/- for ₹ 2002-03. Since we have accepted the gift of ₹ 50,000/- in A.Y. 200-01, therefore, after considering the business income of ₹ 28,000/- for A.Y. 2000-01 and business income of ₹ 51,475/- in A.Y. 2002-03 which comes to ₹ 79,475/-. Even if the gift of ₹ 1,25,000/- from the husband is disbelieved, even then with nominal past savings the business income for A.Y. 2001-02 and 2002-03 almost explains the deposit of ₹ 85,000/-. Under these circumstances, we are of the considered opinion that no addition is called for in the instant case. Undisclosed cash deposits - Held that - Assessee belongs to a family of Hawkers selling Pooja Items, it is not expected of him to maintain such details which are usually maintained by assessees in regular business and taking help of lawyers and Chartered Accountants. The combined business income of the Modi group of cases show business income of ₹ 11,71,687/- for the block period whereas the total deposits during the block period is ₹ 9,45,000/- only. If the previous deposits are considered which were made prior to the block period, then the entire deposit of the group stands explained from the business income declared by various family members. Since various family members are staying together, it is possible that the parents keep the deposits in the name of their children. Considering the totality of the facts of the case, we are of the considered opinion that the deposit of ₹ 1 lakh by the assessee stands explained in the light of the cash flow statements and the details given. We therefore direct the AO to delete the addition
Issues Involved:
1. Determination of undisclosed income. 2. Credit for available cash flow for investments in Fixed Deposit Receipts (FDRs). 3. Additions to estimated business income. Detailed Analysis: Determination of Undisclosed Income: The Tribunal dealt with multiple appeals concerning the determination of undisclosed income for the block period 1997-98 to 2002-03. The cases involved various assessees who had made Fixed Deposits with Chintamani Nagari Sahakari Patsanstha Maryadit, Dhule. The primary issue was whether the sources of these investments were satisfactorily explained. The Assessing Officer (AO) initially determined the undisclosed income based on statements made during search operations and without giving due weight to the explanations provided by the assessees. The Tribunal had previously directed the AO to re-examine the facts and compute the undisclosed income based on factual positions rather than mere statements. Credit for Available Cash Flow for Investments in FDRs: The assessees argued that their business incomes and past Fixed Deposits should sufficiently explain the source of the FDRs. For instance, in the case of Late Prakashchand Nandlal Modi, the Tribunal noted that the AO did not give credit for the business income towards FDRs and directed a partial allowance of 25% of the business income towards the source of unexplained FDRs. The Tribunal also considered the maturity of earlier Fixed Deposits and the nature of the business (hawker selling Pooja items) to justify the sources of the investments. The Tribunal observed that the AO should have obtained details from the banks to verify the claims rather than disbelieving the assessees' explanations. Additions to Estimated Business Income: The AO had made various additions to the business income of the assessees for different assessment years. The Tribunal found these additions to be on the higher side and directed the AO to substitute the income excluding Fixed Deposits and deductions under section 80L and exemption limits. For instance, for A.Y. 1998-99, the Tribunal directed the income to be determined at ?55,000 instead of the AO's assessment of ?91,358. Similarly, the Tribunal reduced the additions for other years, considering the nature of the business and the status of the assessees. Specific Cases: - Late Prakashchand Nandlal Modi: The Tribunal directed a lumpsum addition of ?15,000 for the block period on account of Fixed Deposit Receipts, reducing the AO's addition of ?54,168. - Mahendra Prakashchand Modi: The Tribunal directed the AO to compute the business income at ?60,000 for A.Y. 2001-02 and ?65,000 for A.Y. 2002-03, and deleted the addition on account of FDR. - Savita Prakashchand Modi: The Tribunal directed the AO to delete the addition of ?50,000 for A.Y. 2000-01 and ?85,000 for A.Y. 2002-03, considering the business income and the nature of the gifts received. - Ratimohan Prakashchand Modi: The Tribunal directed the AO to delete the addition of ?1 lakh, explaining the deposit through the combined business income of the family. - Archana Prakashchand Modi: The Tribunal directed the AO to delete the addition of ?66,985, considering the business income declared during the block period. Conclusion: The Tribunal provided substantial relief to the assessees by re-evaluating the sources of investments in FDRs and reducing the additions made to their business incomes. The decisions emphasized the need for the AO to consider factual explanations and business nature rather than relying solely on statements made during search operations. The Tribunal's orders were aimed at ensuring a fair and just determination of undisclosed income, reflecting the assessees' actual financial status and business activities.
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