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2022 (6) TMI 230 - AT - Income TaxAddition u/s 69A - Unexplained cash deposits - HELD THAT - We find that unless the Revenue authorities have any evidence that the above cash withdrawn from bank account has been used by the assessee for any other purpose, the credit for available cash withdrawn from her own bank account and subsequent redeposit in cash cannot be denied. In the present case, the learned CIT(A) has confirmed the disallowance for the reason that the assessee could not explain the reasons for earlier withdrawal of the cash from her bank account and subsequent redeposit. We find that because of this reason, the availability of cash in the hands of the assessee does not vanish. When assessee is submitting that she has not used that cash but redeposit, it is for revenue to prove that such cash has already been used by assessee. In view of this, the addition deserves to be deleted. Credit claimed to have been received from friends and relatives added in the hands of the assessee as assessee could not file the Permanent Account Number and confirmation of those relatives, admittedly, assessee did not furnish the confirmation and Permanent Account Numbers of the relatives - we find that assessee did not explain, who are those relatives and on what occasions those sums have been received. In any way, under the Provisions of Section 56(1)(v) of the Act, sum of money exceeding is only taxable. Though above provisions are applicable from 1/4/2005, but it can be used as a guide. Therefore looking at the facts and circumstances of the case, we find that out of addition, assessee deserves relief is considered as reasonable and hence, addition to that extent is deleted. Further, assessee is also entitled to the excess - Therefore, even otherwise, the addition is covered as expenditure. In view of this, the learned Assessing Officer is directed to delete the addition on account of deposited in the bank account. Thus, ground no. 1 of the appeal is allowed. Disallowing adhoc allowance under section 37(1) - HELD THAT - The assessee also did not deny that the complete third party evidences are not available with her. Accordingly, we do not find any infirmity in the order of the learned CIT(A) in confirming this disallowance. Accordingly, ground no. 2 of the appeal is dismissed. Addition under section 69C - During the course of search a loose paper pertaining to Orion Enterprises was found wherein the extra work was mentioned - HELD THAT - As submitted the copy of account of advance received from Mr. Manish Marwah for the above work by Orion Enterprises and also the copy of the invoice and agreement for work done. There is no evidence that the above work was done at the flat of the assessee. Admittedly, the seized document is on the letterhead of Orion Enterprises and not the assessee. Though assessee is one of the partners of Orion Enterprises, the overwhelming evidences submitted before the CIT(A) where the document is explained, this addition of ₹3,20,000/- on account of alleged repair work in the flat owned by the assessee cannot be made in her hands, when the income has already been offered in AY 2006-07 by Orion Enterprises undisputedly. In case of Orion enterprises, for this year it is merely advance received which culminated in to income in Ay 2006- 07. Ld Lower authorities neither examined the books of Orion enterprise nor examined Mr. Marwah and rejected evidences placed on record purely on guesswork . Further during search it was also not found that assessee has got any work done on renovation at her flat. Thus the addition was on rejection of evidences produced without examination and making additions on presumptions without evidences. Accordingly, we direct the learned Assessing Officer to delete the addition of ₹3,20,000/- under section 69C of the Act. Accordingly, ground of the appeal is allowed. Addition u/s 69B - Unexplained jewellery - HELD THAT - We find that jewellery has been found during the course of search from the possession of the assessee. The jewellery was inventorised. The claim of the assessee that this has been received as a gift from relatives and friends is not at all substantiated but merely remained a claim. In view of this we do not find any infirmity in the orders of the learned lower authorities in confirming the addition u/s 69B of the act after granting benefit of 500 g of gold jewellery to the assessee in terms of CBDT instruction number 1916. Accordingly, ground number 6 of the appeal is dismissed. Addition so made on the basis of the inventory of paintings made at the time of search - The inventory of the paintings are also produced before us. It is apparent that in most of the paintings the name of artist/painter Rouble Nagi is mentioned. It is stated before us that this is the name used by the assessee for her paintings. Most of the other paintings, the name of the artist is unknown. The valuation has been made by the revenue for each of the painting and there is no basis available that how the above paintings have been valued. Naturally if the paintings are made by the assessee herself, it cannot be added in the hence of the assessee u/s 69B of the act. In view of this we set-aside the whole issue back to the file of the learned assessing officer with a direction to the assessee to segregate each of the painting if made by her. The AO is directed to verify and reduce the addition to that extent. Further, the amount of printing already recorded in the books of accounts of the assessee should also be reduced from un accounted income u/s 69B of the act. The assessee is directed to produce such details before the learned assessing officer, which may be examined and issue may be decided afresh. Addition based on slips having noting of sale/purchase of jewelry which were seized at the time of search - The claim of the assessee is that all these slips belong to Anmol Jwellers and he would confirm their real nature of the transaction. Despite this statement, the learned AO did not summon Anmol Jwellers. In view of this, we set-aside the whole issue back to the file of the learned assessing officer with a direction to the assessee to produce Anmol Jwellers before the learned assessing officer and explain the purposes and content of the above slips. Merely stating that these are estimates will not serve the purpose unless, assessee proves the intent and purpose of preparing those estimates as well as the contents of receipt of money. Further assessee is also directed to show how the bill of sanjaykumar which is paid credit card of HDFC bank is found in possession of asseseee where bill is issued by Anmol Jwellers. On furnishing the above details, the learned AO may decide the above issue on its own merits.
Issues Involved:
1. Addition under Section 69A of the Income Tax Act. 2. Disallowance under Section 37(1) of the Income Tax Act. 3. Addition under Section 69C of the Income Tax Act. 4. Addition under Section 69B of the Income Tax Act. Issue-Wise Detailed Analysis: 1. Addition under Section 69A of the Income Tax Act: - AY 2003-04: The assessee contested additions of ?2,69,736/- and ?1,30,000/- under Section 69A for unexplained cash deposits. The Tribunal found that the assessee had sufficient cash withdrawals and sales to justify the deposits and directed the deletion of these additions. - AY 2004-05: The addition of ?3,83,000/- was contested. The Tribunal noted that the cash deposits were from known sources, including bank withdrawals, and directed the deletion of this addition. - AY 2005-06: The Tribunal deleted the addition of ?8,35,300/- as the deposits were from known sources, including cash withdrawals and sales. - AY 2006-07: The Tribunal deleted the addition of ?50,000/- as the deposits were from known sources, including cash withdrawals and sales. - AY 2007-08: The Tribunal deleted the addition of ?5,15,000/- as the deposits were from known sources, including bank withdrawals. The addition of ?6,31,790/- was remanded for examination of the taxability of dividend and mutual fund income. The addition of ?4,00,000/- for fixed deposits was also remanded for verification. - AY 2008-09: The Tribunal deleted the addition of ?34,00,000/- as the seized documents did not conclusively prove the possession of such amounts. The addition of ?15,89,027/- was deleted as the outstanding labor charges were not substantiated. The addition of ?8,84,792/- was deleted as the amounts were from known sources, including mutual fund redemption and bank transfers. The addition of ?9,00,000/- was deleted as the seized documents did not conclusively prove the transactions. The addition of ?1,17,164/- was not contested. - AY 2009-10: The addition of ?4,00,000/- was remanded for verification of the gift received from relatives. The addition of ?90,00,000/- was deleted as the property transaction did not materialize, and there was no evidence of possession of such amounts. 2. Disallowance under Section 37(1) of the Income Tax Act: - AY 2003-04: The disallowance of ?44,249/- was upheld as the assessee agreed to the adhoc disallowance and could not provide complete third-party evidence. - AY 2006-07: The disallowance of ?2,63,743/- was reduced to 10% of the total expenditure, excluding depreciation and motorcar interest, resulting in a disallowance of ?82,635/-. - AY 2007-08: The disallowance of ?6,92,293/- was reduced to 10% of the total expenditure, excluding depreciation and motorcar interest, resulting in a disallowance of ?1,04,052/-. - AY 2009-10: The disallowance of ?4,57,300/- was reduced to 10% of the total expenditure, excluding depreciation and motorcar interest. 3. Addition under Section 69C of the Income Tax Act: - AY 2004-05: The addition of ?3,20,000/- for flat renovation was deleted as the seized documents pertained to a client's quotation, not the assessee's expenditure. 4. Addition under Section 69B of the Income Tax Act: - AY 2007-08: The addition of ?24,92,000/- for unaccounted investments in office premises and fixed deposits was deleted as the seized documents pertained to a property sale transaction, not an acquisition. - AY 2009-10: The addition of ?12,80,000/- for jewelry was deleted as the seized documents did not conclusively prove the transactions. The addition of ?3,83,000/- for jewelry remaking was upheld as the assessee could not explain the notings. The addition of ?1,36,900/- for luxury items was upheld as the assessee could not substantiate the gifts. The addition of ?18,67,098/- for jewelry was upheld after granting benefit for 500g of gold. The addition of ?19,76,500/- for paintings was remanded for verification of personal and commercial paintings. The addition of ?66,34,555/- for jewelry transactions was remanded for verification with the jeweler. Conclusion: The Tribunal provided relief to the assessee by deleting or remanding several additions under Sections 69A, 69B, and 69C, while upholding some disallowances under Section 37(1). The judgments emphasized the need for concrete evidence and proper verification of claims.
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