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TMI Blog1998 (1) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... of stock of gold. He has also erred and not justified in making the addition on account of deficiency in drawings especially estimating the same by varying it from the amounts mentioned in the pre-assessment notice. According to Sri Sreedharan, the addition on account of deficiency in drawings in unwarranted. He has also submitted that the assessee is not the owner of the building and as such he ought not to have included any income from the property other than that declared by her. Lastly, he submitted to delete the additions made by the AO. 4. The learned Departmental Representative, Sri Shaji P. Jacob submitted that the valuation per gram of stock of gold, the addition on account of deficiency in drawings and the value of the building as also the value of the building in the names of the assessee are proper. Therefore, the learned Departmental Representative argued at length on treating the credits in the names of the abovesaid persons as the undisclosed income of the assessee. The rival submissions will be referred to wherever necessary. 5. So far as the addition of the cash credits in the names of Sri Kochunni alias Scaria, Sri K.C. George and M.D. Thomas are concerned, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned his income was per month. He has mentioned that the above amounts were given to the assessee out of love and affection. 8. Sri K.C. George confirmed the advance of Rs. 40,000 to the assessee in the confirmation letter dt. 4th Nov., 1996. He has stated that he give financial assistance of Rs. 40,000 to the assessee, who is his sister-in-law. He stated that the payment was by a cheque from him savings bank account with Catholic Syrian Bank Ltd., Thrissur, the cheque No. being 374/89. This payment was during the period ended 31st March, 1992. He has not stated anything about the source of his income to make the advance. 9. Similar is the case with Sr. M.D. Thomas, who had alleged to have advanced a sum of Rs. 7,000 to the assessee by way of financial assistance during the year ended 31st March, 1994. He had only stated that the advance was out of his savings. 10. The AO issued a letter dt. 4th Dec., 1996 to the assessee calling upon her to furnish explanation and source for the amounts in the following assessment years: Asst. yr. Amount (Rs.) 1986-87 15,253 1987-88 15,217 1988-89 46,495 1989-90 22,800 1990-91 1,11,000 1991-92 4,36,431 1992-93 98,420 1994- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Kuri companies. In the absence of proper explanation for this expenditure, the balance of the above amounts totalling Rs. 3,05,974 was proposed to be included as unexplained investment made during the relevant period. He has also called upon the assessee to produce proof regarding the genuineness of the loans or evidence for not including the said loans in her income. He has further called upon the assessee to produce the creditors for his examination. 13. The assessee furnished explanation by her reply dt. 5th Dec., 1996,. According to her, her father, Sri P.V. Kochunni alias Scaria made payments as follows: Asst. yr. Amount (Rs.) 1986-87 13,253 1987-88 15,217 1988-89 16,495 1989-90 22,800 The above were the alleged payments made by the assessee's father on her behalf towards contributions to Good Shepherd Chits during the years ended 31st March, 1986, 31st March, 1987, 31st March, 1988, 31st March, 1989, and 31st March, 1990. He had filed confirmation letters. According to the assessee, she received loan of Rs. 30,000 from her brother-in-law, Sri P.A. George by a cheque from his savings bank account No. 764 with the United Commercial Bank, Karukutty. Sri P.A. Geor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized records to warrant an estimation of additional income to the extent of Rs. 10,00,000 from business. She mentioned that if any addition is considered to be made on account of unaccounted sales, only the profit thereon can be estimated and added. 16. Regarding the difference in the gold ornaments found at the time of search, it was the contention of the assessee that 2,316.400 grams was the difference and not 2,108.667 grams mentioned in the letter of the AO. According to the assessee, the difference of 2,316.400 grams consisted of 1,609 grams of new ornaments and 707.400 grams of old gold ornaments. The rate of Rs. 469 per gram of gold adopted by the AO, according to the assessee, was the selling price. She had further stated that the amount which can be assessed towards unexplained investment is the cost price of gold only. The gross profit declared by the assessee amounted to Rs. 27,96,727 on total sales of Rs. 1,20,36,237 for the asst. yr. 1996-97, the relevant accounting period ended 31st March, 1996. The gross profit on the sales worked out to 23.24 per cent. Therefore, the assessee requested the AO to adopt the rate of Rs. 360 per gram i.e., 469 x 76.76 per cent. She re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to tax, the total income is to be mentioned against that previous year." The learned counsel for the assessee relied on the decision of the Nagpur Bench of the Tribunal in the case of Kasturchand Baid vs. Asstt. CIT (1997) 58 TTJ (Nag) 253. The Nagpur Bench of the Tribunal held that the AO could not treat the assessee's income as undisclosed income under s. 158BB of the IT Act, simply because the assessee had not filed the return of income for the year when the income was below the taxable limit. The contention of the learned counsel has to be considered subject to the assessment made by the AO even after considering no withdrawals or low withdrawals, the income from property and the subscriptions made to Kuries. The total income from these sources, that is investment in Kuries, no withdrawals or low withdrawals and property income may exceed the basic exemption limit, but again we are not concerned with it because the AO has made the assessment of investments in Kuries in some of the assessment years of the block period. Therefore, we need not go beyond the assessment made by the AO. The AO assessed the unaccounted investment in Kuries at Rs. 12,253 and Rs. 15,217 in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xceeds the exemption limit for the asst. yrs. 1986-87, 1987-88 and 1990-91. Hence it is taxable. The AO was right in taxing the income of these years also. 25. The assessee purchased a property in Trichur during the year ended 31st March, 1988. The said property consists of shops and rooms let out to different parties. The assessee's husband has occupied one such shop room. He was paying rent to the assessee. The income from this property was Rs. 3,333 for the asst. yr. 1988-89 and Rs. 8,000 for the asst. yrs. 1989-90 and 1990-91. It was alleged that due to some dispute over the title to the said building, the assessee did not get rent after the asst. yr. 1990-91. However, the assessee failed to substantiate her claim regarding the dispute over the title to the property. The assessee is the owner of the building, which is not disputed. It would be incorrect to say that the rental income should not be assessed in her hands because of alleged dispute. The annual rental value is assessed on the basis of rent received from the let out property. The income has been assessed after allowing the outgoings such as municipal tax, vacancy, if any, etc. The estimation of income from this pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-97. 28. What remains to be considered now is whether the addition made on account of undisclosed stock of gold and the rate per gram of the said gold stock is justified or not. It is not in dispute that during the search unaccounted gold stock of 2,316.400 grams had been seized. It can be safely inferred that this unaccounted gold represented valuables acquired from the undisclosed income of the assessee. The assessee's manager, Sri K.O. Anto was present at the time of search, but he had utterly failed to explain the ownership and presence of this gold in the business premises of the assessee. The said manager stated that he was not able to explain the difference in the stock of gold. This gold was found in the pocket of Sri Anto and was attached from his possession. If accounted gold would have been there, the manager, Sri Anto would not have kept the gold hidden in his pocket. The only inference that can be drawn is that this stock of gold was unaccounted in the books and hence the value of which is to be included in the income of the assessee. 29. The assessee valued this gold at the alleged cost price of Rs. 360 per gram. This stock of gold is considered as having been pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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