2016 (10) TMI 254 - AT - Income Tax

Addition on account of undisclosed investment in Rolex Watch - Held that - We find no justification to interfere with the order of the ld. CIT(A) on this issue. The clerical mistake is proved from the fact that as per Annexure A-3, the items Rolex Watch ( ₹ 4 lakhs) and Mont Blanc pen (Rs. 1 lakhs) were inventorised by the search party and surrender of additional income was made only to these items. On this Annexure, there is no mention of any purchase or conversion of jewellery. The ld. CIT(A) has also found that in the statement of affairs, drawings for undisclosed expenses already treated as income, have also been mentioned in the capital account and that under this head expense for conversion and purchase of jewellery for Sunita Beriwala at ₹ 5 lacs has separately been mentioned. We, therefore, find that the disclosure of income for ₹ 1,01,05,976/- made by the assessee at the time of search has been adhered to and the investment in Rolex Watch for ₹ 4 lacs and for Mont Blanc pen for ₹ 1 lac (total ₹ 5 lacs) has been shown as part of the undisclosed income. There being no contrary material on record, we confirm the findings reached by the ld. CIT(A) on this issue. Accordingly, ground No. 1 of the appeal of the Revenue is dismissed. Unaccounted cash payment to other family group - notings on different pages of memorandum of family settlement, sized from the residence of Sh.Vinit Beriwala, has made aforesaid addition - Held that - No statement has been recorded of the person (s) from whose possession these documents were found. The ld. CIT(A) has categorically mentioned that there has been no addition to income in hands of either Sh. Vineet Beriwala or Sh. SS Beriwala for A.Y.2006-07 based on the narration found made on the seized papers or that they have anywhere declared the receipt of payments from the assessee. There is nothing on record to contradict the findings of the ld. CIT(A) that no cash for ₹ 7,33,50,000/- or a lesser amount found at any of the premises of Sh. Vineet Beriwala or Sh. SS Beriwala , nor any details of any investment/ expenditure having been made out of this supposed amount of ₹ 7,33,50,000/- were found in search on Sh. Vineet Beriwala or Sh. SS Beriwala. Thus there being no corroborative evidence found in search or post search investigation to substantiate the fact that the appellant has made unaccounted cash payment for ₹ 7,33,50,000/- to Sh. Vineet Beriwala or Sh. SS Beriwala during the year, the assumption of payment of cash derived from alleged paper seized cannot be supported. Therefore, ld. CIT(A) has rightly deleted the addition. The ld. CIT(A) has also recorded the findings on legal aspect of the case also, inasmuch as the alleged paper was not found from the possession of assessee and there was no corroborating evidence to show that the said papers seized from third party belong to the assessee. He has also relied on several decisions of Hon ble Higher courts. The Revenue has not brought any material on record contrary to the findings reached by the ld. CIT(A) on this aspect also. We accordingly, do not find any justification to interfere with the findings reached by the ld. CIT(A) on this issue - Decided against revenue Addition on account of low house hold withdrawals - Held that - The assessee s wife has also apart from the cash drawings of ₹ 60,000/- made a separate withdrawal of ₹ 2,94,156/- as LIC premium ; ₹ 33,677/- for school fees etc. Therefore, the ld. CIT(A) has rightly observed that if the consolidated drawings of the assessee and his wife of ₹ 9,12,878/- is taken into consideration, it cannot be said that there was low household withdrawals. Besides this, the assessee has also shown drawings for undisclosed expenses, which has been treated as income for the year amounting to ₹ 34,61,000/-. Moreover, no addition can be made u/s. 153A unless there are certain documents or material found in the search to support the view of the AO regarding low household withdrawals. However, no such material is brought by the Revenue to our notice. Therefore, in our considered opinion, no case is made out by the Revenue for making addition of ₹ 1,17,428/- on account of low withdrawals. There being no contrary material from the side of Revenue, we uphold the conclusion reached by the ld. CIT(A) on this count.

Summary

Issues Involved:
1. Deletion of addition of ?5,00,000/- made by the Assessing Officer under section 69B of the Income Tax Act, 1961 on account of unexplained investment.
2. Deletion of addition of ?7,33,50,000/- made by the Assessing Officer on account of undisclosed income.
3. Deletion of addition of ?1,17,428/- made by the Assessing Officer on account of low household withdrawal.

Issue-wise Detailed Analysis:

1. Deletion of addition of ?5,00,000/- made by the Assessing Officer under section 69B of the Income Tax Act, 1961 on account of unexplained investment:

The Assessing Officer (AO) added ?5,00,000/- as unaccounted investment in a Rolex watch based on the original surrender by the assessee. The AO noted that the assessee, in his statement of affairs for the period ending 31.03.05, disclosed an additional income spent on converting and purchasing jewelry for his wife, not on the Rolex watch. The CIT(A) found that the disclosure of ?1,01,05,976/- made during the search included the investment in the Rolex watch and Mont Blanc pen. The CIT(A) accepted the explanation that the description error in the capital account was clerical and directed the deletion of the addition.

The Tribunal upheld the CIT(A)'s decision, noting that the clerical mistake was evident from the annexure and the statement of affairs, confirming the investment in the Rolex watch and Mont Blanc pen as part of the undisclosed income. Therefore, the ground of appeal by the Revenue was dismissed.

2. Deletion of addition of ?7,33,50,000/- made by the Assessing Officer on account of undisclosed income:

The AO made the addition based on seized documents (Annexure A-1, pages 1 to 109) from the residence of Sh. Vinit Beriwala, which related to a family settlement. The AO inferred that the assessee paid ?7,33,50,000/- to Vinit Beriwala and Shyam Sunder Beriwala. The CIT(A) found that these documents did not bear the assessee's signature or handwriting and were not seized from his possession. The CIT(A) noted that the presumption under sections 132(4A) and 292C of the IT Act could not be applied as the documents did not belong to the assessee.

The Tribunal agreed with the CIT(A), citing the lack of corroborative evidence and the legal requirement that the documents must belong to the assessee for proceedings under section 153C. The Tribunal noted that no statements were recorded from the persons in possession of the documents, and no cash or investments were found to substantiate the alleged payments. Consequently, the addition was not sustainable, and the ground of appeal by the Revenue was dismissed.

3. Deletion of addition of ?1,17,428/- made by the Assessing Officer on account of low household withdrawal:

The AO added ?1,17,428/- due to low household withdrawals by the assessee. The CIT(A) observed that the assessee and his wife made significant withdrawals for school fees, LIC premiums, and other expenses, totaling ?9,12,878/-. Additionally, the assessee disclosed drawings for undisclosed expenses amounting to ?34,61,000/-. The CIT(A) noted that no material was found during the search to support the AO's view of low household withdrawals.

The Tribunal upheld the CIT(A)'s decision, finding no contrary material from the Revenue to justify the addition. The Tribunal agreed that the consolidated drawings and disclosed expenses were sufficient, and no addition could be made under section 153A without supporting documents or material from the search. Therefore, the ground of appeal by the Revenue was dismissed.

Conclusion:

The Tribunal found no merit in the Revenue's appeal and sustained the CIT(A)'s order, dismissing the appeal. The judgment was pronounced in the open court on 24.08.2016.