9911796707
TMI Blog1997 (7) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... tt. Order) (b) Transaction in trial balance as not property explained 2,50,10,548 (Para8) (c) Unexplained expenses 75,000 (Para10) (d) Unaccounted expenses 67,000 (Para12) (e) Unexplained expenses 95,000 (Para15) (f) Cash receipt and expenses 250 (Para17) (g) Cash receipt and expenses 20,680 (Para17.1) (h) Unaccounted payments 11,700 (Para18) (i) Unaccounted receipts and payments 1,09,478 (Para19) (j) Expenses 1,60,000 (Para21) (k) Payments against vacation of flat 50,000 (Para22) (l) Unexplained cash receipts and expenses 1,23,899 (Para24) (m) Unexplained cash receipts and expenses 12,200 (Para24) (n) Unexplained cash receipts and expenses 25,704 (Para24.2) (o) Purchase of land 50,000 (Para25) (p) Transaction regarding purchase of property 37,55,316 (Para26.1) Total 2,97,16,768 3. Shri O.P. Sapra, the learned authorised representative for the assessee submitted that the AO has made a number of additions on the basis of mere presumption by invoking the provisions of s. 132(4A) of the Act. He submitted that presumption available under s. 132(4A) is only for the limited purpose of proceedings under ss. 132(5) and 132(11) and cannot be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , shall be presumed to be belonging to such person and the contents of books of accounts, documents shall also be presumed to be true. He submitted that provisions of s. 132(4A) are equally available to the Revenue while framing regular assessment. He submitted that the provisions cast a burden on the assessee to rebut the aforesaid statutory provisions of s. 132(4A) and such a rebuttal is not available merely by denial on the part of the assessee but it has to be rebutted on the basis of some cogent material or evidence, which is lacking in this case. He, therefore, submitted that the AO rightly made the impugned additions. The learned Departmental Representative also addressed on merits of various additions made by the AO. 4. We have heard the learned representatives at length and have carefully gone through the records/paper-book filed by both the parties. Before considering and deciding on merits of individual addition, we are of the considered view that the proposition as canvassed by the learned authorised representative for the assessee Shri Sapra, that presumption under s. 132(4A) is available only for the limited purpose of s. 132(5)/132(11) and not for the purpose of fra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of accounts or such expenditure is not fully recorded in the books of accounts, if any, maintained by the assessee, as to whether such unrecorded expenditure represented personal expenditure or pertained to business. 4.2 It is now in the light of aforesaid principles of law that we have to examine various items treated as undisclosed income of the appellant as challenged before us. 5. The first addition is of Rs. 1,50,000. Connected with this addition is an addition of Rs. 11,700. These additions were based on page 51 of Annexure 1 of the seized documents. It was explained that the assessee is not connected with this document and entries thereon do not indicate any link thereof with the assessee. The explanation rendered was found unacceptable and the AO added the amounts. 5.1 The learned authorised representative, Shri Sapra, reiterated the above submissions before us also. Having heard the learned representatives of the parties and after going through the document in question, there is no doubt in our mind that the assessee is directly linked with the transactions recorded with page 79 of the paper-book clearly indicating the name of the assessee "Devenderji" and also of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight be that 7,800 were to be paid later on or might have been short, but receipts in round figure might have been obtained. It means that the said entry of Rs. 16,72,000 is also tallied with above supporting documents. 8.3.2 Shri Kanwar Sain Aggarwal was a tenant on 1st floor of G-42,GreenParkwho had surrendered his tenancy right for total consideration of Rs. 17.01 lacs excluding cost of furniture at Rs. 50,000 and was paid Rs. 1.60 lacs till16th Oct., 1995vide two receipts placed at Sl. Nos. 75 and 76 of Annexure A (Metro Locker). It appears that out of Rs. 17.01 lacs only Rs. 4,00,000 were outstanding as on 9th Nov., 1995 and balance might have been paid and hence, Rs. 4,00,000 balance was shown as liability in credit side of trial balance. 8.3.3 'A/c GAM 06 Madan S-7 A/c' shows debit balance of Rs. 4,000.00 (coded in two digits). Smt. Madhu Madan was a tenant in S-7,GreenPark, who had been paid a part payment of Rs. 4,00,000 (coded as 4,000.00) for vacation of her portion against total consideration of Rs. Lacs. 8.3.4 On the basis of above tallied entries it is conclusively proved that the amounts had been coded in two digits in the trial balance which reflect the true stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O, which was found recorded in the account books seized during search and the AO himself has accepted the same and, therefore, no room was left for any suspicion on the part of the AO. Similarly, with regard to the surrender of tenancy right of Kanwar Sain Aggarwal, a tenant of first floor of G-42, Green Park, for total consideration of Rs. 17.01 lacs, the AO had acted on surmises/conjectures when he says that it appears) that out of Rs. 17.01 lacs only Rs. 4.00 lacs were outstanding on 19th Nov., 1995, and the balance might have been paid and hence, Rs. 4.00 lacs was shown as liability in the TB. Shri Sapra drew our attention to assessee's explanation vide para 5 of his letter dt.26th Aug., 1995, and also to letter dt. 28th Aug., 1996, by which the assessee explained that his brother Kailash and Sanjeev Gupta were the owners of the said property and complete details of the payments of Rs. 2,10,000 actually paid were furnished and this explanation has been accepted by the AO himself vide para 22.1 of the assessment order in the following words: "22.1 However, it is verified that the assessee did not get vacant possession of the said property and Shri Kanwar Sain Aggarwal still rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of final bills on imprest account. Sometimes there are petty pay-offs for liaison work, entertainment for which no supporting vouchers are available, though incurring of such expenditure is necessary in the nature of assessee's business. This imprest account was sorted out and ledgerised in regular books of accounts from time to time on settlement of an account for expenditure on imprest account. Shri Sapra further took us through various items appearing in the computerised TB along with supporting documentary evidence also photocopies of imprest ledger which has been seized, as Annexure A2, along with TBs, copies of relevant pages placed at pages 110 to 129 of the paper book and impressed upon us that various figures indicated in the TBs were not at all codified figures. He submitted that an insignificant and unintentional mistake as punching Rs. 47.23 instead of Rs. 4,723 could not afford a valid basis for the monumental addition made when, on the other hand, other figures as supported by evidence on record indicated an altogether different picture. This, according to him, is not justified. According to him, an insignificant mistake could not entitle the AO to make the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of T.B. against account "Green Park Flat G. Pal" it was explained in the course of arguments that the same represented expenditure incurred by the assessee on account of commission and other incidental expenses in respect of purchase of property from Gopal Kapoor mentioned in TB as GPAL, the owner of the property. It is also pertinent to point out here that on the one hand the AO is treating all the items appearing in the trial balance as outside the account books and at the same time has tried to compare/tally with the recorded transaction as per seized books. This is self-contradictory. (iii) As regards Kanwar Sain Aggarwal, a tenant of FF of G-42, Green Park, the AO has himself recorded a finding in para 22.1 that he has verified that the assessee did not get vacant possession of the said property and Kanwar Sain still retains the property and that there is no other evidence by which it can be verified that some more payments have been made by the assessee. After having recorded such a categorical finding the AO was not justified to assume that of amount of Rs. 17.01 lacs, only Rs. 4.00 lacs was outstanding as on 9th Nov., 1995, and the balance might have been paid, as observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kot. This remains uncontroverted before the AO, as also before us. Therefore, the affidavit has to be accepted as correct. This demolishes AO's basis of inference against the assessee when he made the addition under discussion. (b) In TB on9th Nov., 1995, there is debit of Rs. 10,000.00 in the account of Sushil Rattan, which has been treated as Rs. 10 lacs by the AO following his assumption that a decimal has been inserted to hoodwink the Department. A perusal of paper book page 116, which is imprest ledger account of this very party, revealed that it represents balance b/d Rs. 5,000 plus Rs. 2,900 representing purchase of cement vide Bill No. 34784, dt.23rd June, 1995, besides certain other expenses. A copy of this bill is at page 33 of PB and shows that it was issued by M/s Dasmal Gian Chand, B-25, Prahlad Market, Karol Bagh, in respect of 20 bags of non-levy ACC cement @Rs. 145 per bag or Rs. 2,900. Now here is documentary evidence as seized from the assessee which again demolishes the basis adopted by the AO in making the impugned addition under dispute. Sushil Rattan is admittedly a contractor working for the assessee. He is assessed to income-tax by the same AO, as observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved back from Kanwar Sain, as discussed earlier, which again lends support to assessee's case against allegation of codification of figures by the AO. (h) Rs. 4,000.00 on credit side of TB dt.6th April, 1995, in the name of Manju as on30th Sept., 1995and9th Nov., 1995. Manju has filed her affidavit before the AO confirming having advanced this amount to the assessee. She is regularly assessed to income-tax in Ward 19(4),New Delhi, GIR No. 14088. This remains uncontroverted. 10.1A Same is the position with regard to Rs. 2,541.14 appearing on credit side of TB on9th Nov., 1995, against BPA Loan A/c. Braham Prakash Agarwal has confirmed this. He has filed his affidavit; he is assessed to tax [Ward 20(6)]. 10.2 Such examples can be multiplied. Therefore, the facts mentioned above supported by documentary independent evidence have neither been disapproved nor controverted by the Revenue. 10.3 On a careful analysis of facts and circumstances as also evidence on record, as discussed above, we agree with the learned authorised representative for the assessee, Shri Sapra, that there was no conclusive instance available with the AO with the exception of Rs. 47.23, as mentioned in para 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being a search case and the assessee having not been in a position to explain all the debit/credit entries, we hold that while the AO was not justified to take totals of TB as on 30th Sept., 1995, because the later TB of 9th Nov., 1995 which tallied at Rs. 1,99,559.58 only, the following entries aggregating to Rs. 11,541.14 stand accepted and the balance of Rs. 1,88,018 represents undisclosed income of the assessee: "Manju 4,000.00 BPA Loan A/c 2,541.14 Ku. Suman 4,000.00 Titu 1,000.00 . 11,541.00 Therefore, we uphold addition of Rs. 1,88,018 only out of addition of Rs. 2,52,00,000 made by the AO. 11. Next addition is of Rs. 75,000 on the basis of a paper, i.e., page No. 13 of Annexure A6. The addition was made with the following observations : "Unaccounted expenses Rs. 75,000 The seized paper shows sundry expenses for different items like Mithai, cloth, milk curd totalling to Rs. 75,000. These expenses are also not reflected in the regular books of accounts and there is no satisfactory reply why these expenses are not recorded in the regular books of accounts, therefore, the same are treated to have been incurred out of his undisclosed income from undisclosed sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources and is added in the undisclosed income for the block assessment purposes for block period." 13.1 Shri Sapra took us through copy of the above seized paper. This paper is captioned "Estimate" and contains details of various expenses under the head "Electricity charges in respect of Shop No. 2, Royal Jewellers, M-15, GK-I, New Delhi upto 31st March, 1995" wherein details of units of electricity consumption, its rate, reading and the total has been worked out at Rs. 32,500. Below this account there is another account under the caption "final account" which contains certain figures with narrative like, Goggals, MCDE Pack, Telephone bill, etc., and this account also includes aforesaid Rs. 32,500, total coming to Rs. 95,000. This has been reduced to Rs. 70,000 on account of a cheque for Rs. 25,000, the net receivable being shown at Rs. 70,000. 13.2 Before the AO the assessee in his letter dt.1st Aug., 1996, explained that these are only the estimates in connection with negotiations with the tenant, Royal Jewellers, but the transaction did not take place. There is another seized paper where the same entries stand recorded under the head "Account of Shri Raj Kumar" owner of Roya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment stand recorded in the books of the company. Regarding interest of Rs. 14,306, it is explained that the said company was asked to pay 24 per cent per annum coming to Rs. 14,306. However, the company paid 17 per cent. 16.2 Parties are heard. There is no doubt that the assessee did not file any evidence in support of recording of expenditure of Rs. 95,165 in the books of the company of which he is a director. Therefore, addition of Rs. 95,165 is held justified. 16.3 However, addition of Rs. 14,306 being interest is not justified, since the AO has on verification accepted the genuineness of the loan and interest thereon @ 17 per cent, as provided in the books of the company. there is, therefore, no material to hold that the interest charged was 24 per cent when actually 17 per cent was paid. Relief Rs. 14,306. 17. Rs. 1,60,000. This is based on page 73-74 of Annexure A-1. The AO has observed as under: "Expenses to the tune of Rs. 1,60,000 These papers are relating to sundry expenses to the tune of Rs. 10,600 on some specific occasion with respect to the items like sweets, dry fruit, etc. delivered through their driver and other persons. These amounts are not recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000, though made, is not found recorded in books of accounts. On these facts and under these circumstances, we hold the addition made is justified. The addition is confirmed. 19. Addition of Rs. 1,23,899 is based on Annexure A-1, page 85-87. The AO took the view that expenditure recorded in the seized paper are not recorded in regular books of the assessee. He treated the same as representing assessee's undisclosed income. 19.1 Shri Sapra, the learned authorised representative, pointed out that Sushil Ratan Gupta is the proprietor in M/s SRG Construction and was doing repair work for M/s Tulec Buildwell (P) Ltd., which owns property No. 18A, Shanker Market and also in respect of Karol Bagh property of M/s Shagun Developers Pvt. Ltd., where the assessee is director in both the concerns. Sushil Rattan Gupta, according to Shri Sapra, used to come to the assessee with details of estimated expenditure for repairs/construction work either estimated or actually incurred and pages 89, 91 and 93 were the details of such repairs and are in the hands of Shri Sushil Rattan Gupta. He submitted that nothing was done by Shri Sushil Rattan for the appellant as explained in letter dt.1st Aug. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and no satisfactory explanation is submitted. Therefore, Rs. 50,000 is treated to have been paid out of his undisclosed income from undisclosed sources and is added in the undisclosed income for block assessment purposes for the block period (Addition Rs. 50,000)." 22.1 The learned authorised representative argued that the above addition has been made on the basis of an unsigned and undated agreement to sell between the owner of agricultural land at village Kanwarshika, Shri Ashok Kumar Agarwal and Smt. Shanti Devi, who is mother-in-law of assessee's brother Shri S.K. Gupta. In the course of assessment proceedings, a letter of Shanti Devi, dt.1st Nov., 1996was filed before the AO denying to have purchased the land in question. The AO has himself noted in para 22 as above that the property is still in possession of Shri Ashok Agarwal and no registration has been executed in Shanti Devi's favour. As such we find no ground justifying the addition made. It is deleted. 23. Next addition is of Rs. 37,55,316. This is based on seized paper pages 98-99 of Annexure A-45 with the following observations: "Page 99 bears the caption per month and first column gives regarding certain nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties on rent. But the discussion/planning could not be given effect so far. The property at Serial No. 1 appears to be 18A, Shanker Market,Connaught Place, which was purchased for Rs. 8,10,000 as per registered sale deed and is duly entered into the books of account. It is still lying vacant. As regards the property K-52,GreenPark,New Delhithe assessee acted only as an estate agent and got a commission of Rs. 22,000. However, the property deal was partly financed by the assessee and a payment of Rs. 16.80 lakhs was made to the owner which was ultimately recovered from the buyer of the property. Since the property was sold out, there was no question of earning any rent. As regards Shivalik, the assessee has nothing to do with it as the property is owned by Shri Dinkar Consultant. He is a regular taxpayer. The assessee being an estate agent, the matter regarding renting out of the property appears to have been discussed. I understand that no deal has materialised so far and the property is still lying vacant." 23.1B. Yet by another letter dt.1st Nov., 1996, the assessee had reiterated before the AO that the rough jottings had no relevance to any transaction actually entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h material has been brought on record and, therefore, it cannot be said that the Revenue has discharged its onus under s. 69 of the IT Act. In reply the learned Departmental Representative supported the AO. 23.2 We have heard the learned representatives at length and have also seen copy of the document in question and explanation given by the assessee. We are in agreement with Shri Sapra that in the absence of any material, much less evidence on record to establish that the properties indicated in the seized paper, are owned by assessee and stood let out thereby yielding a rent of Rs. 12 lakhs in the hands of the assessee, could not be assumed and assessed as his income. It is not established nor is there any evidence that the properties belonged to the assessee and he has let them out yielding the alleged income. Regarding Rs. 37,55,316 we agree with Shri Sapra that they are jottings which could not, per se, be held out against the assessee and the amount added as his income when the explanation offered by the assessee has not been controverted. The inference drawn by the AO against the assessee is not supported by any material/evidence. We, therefore, delete addition of Rs. 37,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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