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TMI Blog2012 (11) TMI 1169X X X X Extracts X X X X X X X X Extracts X X X X ..... work carried out in financial year 2001-02. 3. That the ld CIT(Appeals) has erred in confirming the addition of ₹ 59,193/- on account of household expenses against the addition of ₹ 86,193/- as made by the AO. 4. That notwithstanding the above grounds of appeal, the ld CIT(Appeals) was not justified in upholding additions in the assessment framed u/s 153A since no material was found during search leading to various additions made during the assessment proceedings. 5. That the addition in the aforesaid paras has been made against the facts and circumstances of the case and submissions made by us has not been considered properly. 6. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off." 3. Ld. 'AR' stated that all the grounds of appeal in ITA No.802 to 806 & 818/Chd/2012, for various assessment years are common in nature, except there being variation in figure of addition, made by the AO, on account of alleged job work and house-hold expenses etc. Ld. 'AR' filed written submissions, in the form of chart and placed reliance, on the decision dated 22.08.2012 of Chandigarh Bench in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the facts of the case, Paper Book filed by the assessee and reliance placed by ld. 'DR' on the decision of jurisdictional High Court. The first two grounds of appeal raised by the appellant-assessee are inter- connected. In the first ground of appeal, the appellant contended that CIT(Appeals), erred in confirming the addition of ₹ 54,000/-, made on account of certain alleged job work, based on the statement of the appellant recorded, on 7.8.2007, in the course of search operation u/s 132 of the Act. In Ground No. 2, appellant contended that no presumptions can be raised in respect of alleged job work, for the assessment year 2002-03. 6. A bare perusal of the assessment order, dated 19.12.2009, for the assessment year in question, passed u/s 143(3) read with section 153A of the Act reveals that the AO estimated income of the appellant from the alleged job work and consequently, made an addition of ₹ 54,000/-, to the income of the assessee, treating the same as unaccounted income from job work. The AO, made the impugned addition purely on the foundation of statement of the assessee recorded, on 07.08.2007, in the course of search operations. It would be pertine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the income of the assessee treating as income from job work not accounted for." 6(i) Before CIT(Appeals), the appellant submitted that no business of job work of jewellery was carried out by him, for which requisite place and infrastructure is required. It was contended that the addition is purely founded, on the statement made, in the course of search operation. The assessee also referred to contentions and recommendations of Raja Chelliah Committee to show that mere statement cannot be made the foundation of any addition, in the absence of any material to be brought on record. The instructions of CBDT contained in F.No. 286/203/IT(INV.) dated 11.03.2003 were also quoted, in the matter. The appellant also placed reliance on the decision such as Chief CIT V Pampathi (2009) 310 ITR 64 (Kar); Magnetic Intermediates P.Ltd. V ITO (2009) 310 ITR (AT) 237 (Ahd); CIT, Ranchi V Ravindra Kumar Jain & D.N.Upadhaya, JJ. Tax Appeal No. 22 2000 (R) April 29, 2011. In a nut-shell the appellant contended before the CIT(Appeals) that no addition can be made purely on the basis of statement, without its corroboration by way of cogent material. However, ld CIT(Appeals) upheld the addition, as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision relied upon by ld. 'DR' reveals that in that case, search was conducted, at the residence of the assessee. It was not in dispute that assessee had made a statement u/s 132(4) of the Act whereby a surrender of ₹ 2 lacs was made. Besides this, the assessee had admitted that he had earned commission on sales which was not disclosed in the return filed by him. Further, during search, certain sales documents were seized which bore the signatures of the assessee as well. These documents depicted total sale of ₹ 4,92,03,005/-. Therefore, in view of provisions of sub-section (4) & (4A) of section 132 of the Act, the AO was found by the jurisdictional High Court, as justified in drawing presumptions against the assessee and making the addition of ₹ 9,00,000/-. The Hon'ble jurisdictional High Court, further, pointed out that the onus was upon the assessee, to have produced cogent material, to rebut the presumptions, which he had failed to displace. However, in the present case, no such document, pertaining to earning of job work from jewellery was discussed and brought on record by both the AO and CIT(Appeals). Further, no declaration of any amount, on acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has not stated that he earned income from job work during the earlier asstt. years, including the asstt. year in question. The revenue has failed to demonstrate, by way of any material, brought on record, that the assessee appellant had earned job work, for the asstt. year in question. 8(i) The general rule is that 'onus of proof' is always on the party, who asserts a proposition or fact, which is not self- evident. In the present case, the AO presumes and asserts that the appellant has earned income, from job work, therefore, onus lies upon him, to prove the same, by bringing relevant corroborative and credible material, on record, before making the impugned addition. The assessee appellant has not made any surrender, in respect of income from job work and no document has been adduced by the revenue, to support its finding that assessee has earned income from job work, in the past asstt. years. 9. It is categorically held by the Hon'ble Apex Court in a plethora of decisions, that it is a well settled principle of law that revenue cannot decide, an issue, without proper facts and law, supporting its decision. A decision based on mere surmises, guess work or conjectures or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of ₹ 31,171.28 for 19 days, it was open to the officer to infer that the assessee had large-scale dealings outside the accounts. In such a situation, it was not possible for the officer to find out precisely the turnover suppressed and he could only make an estimate of the suppressed turnover on the basis of the material before him. So long as the estimate made by him was not arbitrary and had a reasonable nexus with the facts discovered, it could not be questioned. It was wrong to hold that the officer must have material before him to prove the exact turnover suppressed. In estimating any escaped turnover, it is inevitable that there is some guess-work. The assessing authority while making the best judgment assessment, no doubt, should arrive at his conclusion without any bias and on a rational basis. That authority should not be vindictive or capricious. If the estimate made by the assessing authority is a bona fide estimate and is based on a rational basis, the fact that there is no good proof in support of that estimate is immaterial. Prima facie, the assessing authority is the best judge of the situation. It is his best judgment and not any one else's. The High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Verma W/o Sh. Ram Sarup Verma ₹ 3 lacs for A. Y. 08.09 ( Mother of Sh. Naresh Kumar Verma.) Please give the bifurcation of surrender of ₹ 22 lacs i.e. on what account you have surrendered this amount and how this income has been derived by you ? Ans. I admit that I have surrender of ₹ 22 lacs for the A.Y. 2008-09 as per detail given below:- I On account of unexplained investment in the construction of house at ₹ 16,00,000/- Plot No. 94A, Guru Nanak Colony, Rajpura 11 On account of unexplained cash found from the residence during ₹ 2,00,000/- the course of search. III On account of unexplained Jewellery found from the residence ₹ 4,00,000/- during the course of search. Total surrender u/s 132(4) ₹ 22,00,000/- This income of ₹ 22 lacs has been derived from business transaction not recorded in the regular books of account. R.O.& A.C. Sd/- 30.8.07 " 12. It is evident from the above declaration, that no surrender has been made by the appellant in respect of the alleged income from job work. 13. The ld. 'DR' carried the Bench through the text of section 132(4) and 132(4A) of the Act, with a view to demonstrating the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive effect makes it clear that presumptions prescribed u/s 132(4A) of the Act would always be available even in regular assessment. Further, addition of the words "In any proceeding under this Act" in section 292C leaves no scope for any confusion on the issue and the legislative intent was made amply clear. The object of making the presumptions available to Income tax authorities, as to the books of account, other documents or assets found during the course of search belonging to the person from whose possession or control, the same have been found, to make the person to own such books of account, other documents or assets, so as to require him, to explain the nature and assets of such material found from his possession. The object is to place the burden, on the assessee, so that he may not be permitted to take the plea without cogent evidence that such material does not belong to him or he does not know how such material has come into his possession or contents thereof are incorrect. Such presumptions are in line with the principle contemplated under Indian Evidence Act. As per section 110 of Indian Evidence Act, 1872, burden of proof, as to the actual ownership of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence has been indicated in the asstt. order, while making the impugned addition. In view of this, the asstt. order must be speaking order i.e. it must disclose the basis and the corroborative material for making the addition. The addition cannot be based, on bare presumption but on the legitimate material from which a reasonable and natural inference, for making addition flows and the initial burden for finding and bringing such material on record, however slight, is on the revenue authority. The AO is not entitled to make a guess, without evidence, as it would certainly be a leap in the dark. In view of the above legal and factual discussions and having regard to the judicial precedents referred to in this order, we don't find any substance and merit in the findings of CIT(Appeals), in upholding the impugned addition. Hence, the findings of the CIT(Appeals), in the mater, cannot be upheld. The same are set aside. Thus, first two grounds of appeal, raised by the appellant are allowed. 15. In Ground No. 3, appellant contended that CIT(Appeals) erred in confirming addition of ₹ 59,193/- on account of household expenses against the addition of ₹ 86,193/-, as made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amily, to the tune of ₹ 27,000/- was considered in the matter, as such out of total addition of ₹ 86,193/-, an amount of ₹ 59,193/- is confirmed. 18. We have heard the rival submissions, facts of the case and the relevant records and found the findings of CIT(Appeals), in the matter, as not suffering from any infirmity. Hence, the ground of appeal is dismissed. 19. Ld. 'AR' stated that Ground Nos. 4, 5 & 6 are general in nature. In view of such assertions, these grounds of appeal are dismissed. 20. In the result, appeal of the assessee in ITA No.802/Chd/2012 is partly allowed. 21. ITA No.803/Chd/2012 (A.Y. 2004-05) The assessee has raised the following grounds of appeal : "1. That the learned CIT(A) has erred in confirming the addition of ₹ 60,000/- on account of certain alleged job work on the basis of statement recorded during the course of search on 7.8.2007. 2. That notwithstanding the above said facts, the year involved being financial year 2003-04, no presumption could be drawn in respect of alleged job work carried out in financial year 2003-04. 3. That the Ld. CIT (A) has erred in confirming the addition of ₹ 76,500/- on acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther to the tune of ₹ 31,500/- has not been taken into consideration. The AO's estimation of his expenses @ ₹ 12,500/- per month is not on the higher side especially when the expenses on the operation of atleast two air conditioners on daily basis for about a period of 5 to 6 months (Summers) would itself involved expenditure of ₹ 2500/- per month. The assessee has also not produced any evidence in the form of electricity bills even for the year 2007-08 to prove his claim that the air conditioners were being used a period of two months. In the circumstances the over all estimation by the AO at Rs, 1,50,000/- is fair and reasonable, however the contribution by the father/wife of the assessee to the tune of ₹ 31,500/- has to be .accounted for before working out the addition on this issue. As such out of total of ₹ 1,08,000/- an amount of ₹ 76,500/- is confirmed." 23(ii) Having regard to the fact-situation of the issue & findings of the lower authority, as also the relevant records, we don't find any infirmity in the findings of CIT(Appeals), in the matter, being fair and reasonable. Therefore, the same are upheld and ground of appeal of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings of the Bench, recorded in ITA 802/Chd/2012 for the assessment year 2002-03 are mutatis-mutandis applicable to these grounds of appeal. Accordingly, Grounds of appeal No. 1 & 2 are allowed. 29. In Ground No.3, appellant contended that CIT(Appeals) erred in confirming the addition of ₹ 76,880/- on account of household expenses as against the addition of ₹ 1,30,000/-. 29(i) We have heard the rival submissions, perused and considered the facts of the case and the relevant records. It is pertinent to reproduce herewith the findings of ld. CIT(Appeals), as contained in para 7 of the order, as under: "7. I have considered the basis of addition made by the AO and the submissions of the AR on the issue. It is seen that the AO has projected a lavish life style of the appellant on the basis of house hold goods like Air Conditioners/Geysers and ordinary car like santro. The conclusion of the AO based upon this flawed projection is therefore erroneous to that extent. It is also seen that the contribution made by his father to the tune of ₹ 53,120/- has not been taken into consideration. The AO's estimation of his expenses @ ₹ 13,333/- per month is not on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w household withdrawals to the tune of ₹ 88,000/-. The AO in this regard has observed that the assessee was found to be enjoying a lavish life style evidenced by luxury items like three Air Conditioners four Geysers and one Santro Car in his house and the assessee did not file the copies of bills of electricity. It was further observed by the AO that the assessee's children were studying in convent school and therefore considering the entire scenario the house hold expenses were estimated at ₹ 1,60,OOO/- except met by others leading to addition of ₹ 88,000/-." 34(ii) In para 6, the CIT(Appeals) has reproduced submissions made by the appellant on the issue in question, which is reproduced hereunder : "6, During the course of appellate proceedings the AR of the appellant submitted his arguments on the issue as under:- "The addition is also on the basis of same facts and circumstances and the Assessing Officer has not given the benefit of Rs, 28,000/- withdrawn by the wife of the assessee and the estimation of expense is without any cogent material. We rely on our earlier submissions." 34(iii) The CIT(Appeals) has discussed Ground Nos.3 & 4, perta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May 2005 and as per local enquiries made by the Assessing Officer and accordingly he had disallowed the cost of construction. iii. It is submitted that for construction of house it is not necessary to get the map approved since one can start the house without approval of Map and for that there is risk of penalty and demolition of existing structure. The assessee was continuously going to the Municipal Corporation office and as such initially the Map was got approved and later on it was got approved. There is evidence in the seized record in the shape of bills of construction material for the year 2004 and therefore since as per seized records the construction had started, the Assessing Officer was not justified in mentioning that no construction was carried out. The contention of the Assessing Officer that the assessee has disclosed further investment in the house to the tune of ₹ 16 Lacs in the Assessment Year 2008-2009 cannot not be said to a valid ground for disallowing the deduction, because the assessee may spent the amount from undisclosed sources and which amount was later on surrendered, but that does not mean that the se was not complete. iv) The AO has referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (A.Y.2007-08) 41. In this appeal, the Ground Nos. 1 & 2 raised by the appellant against the order of the CIT(Appeals) dated 10.05.2012, are similar as raised in ITA 802/Chd/2012 i.e. confirmation of addition of ₹ 66,000/- by the CIT(Appeals) on account of job work. Therefore, our findings given in ITA 802/Chd/2012 on this account, would apply to these two grounds also and accordingly, Ground Nos. 1 & 2 of this appeal are allowed. 41(i) In ground No. 3, appellant contended that CIT(Appeals) erred in confirming addition of ₹ 64,000/- on account of household expenses against addition of ₹ 80,000/- made by the AO. Similar issue has been considered and adjudicated in appeals adjudicated hereinbefore, at the appropriate place. The findings recorded by the CIT(Appeals), are reproduced hereunder : "7, I have considered the basis of addition made by the AO and the submissions of the AR on the issue. It is seen that the AO has projected a lavish life style of the appellant on the basis of house hold goods like Air Conditioners/Geysers and ordinary car like santro. The conclusion of the AO based upon this flawed projection is therefore erroneous to that extent. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined. As such addition to the tune of ₹ 50,000/-is confirmed." 42(ii)Having regard to the fact-situation of the issue and findings of the lower authority, as also the relevant records, we don't find any infirmity in the findings of the CIT(Appeals) and accordingly, the same are upheld and this ground of appeal of the appellant is dismissed. 43. Ground Nos. 6, 7 and 8 are general in nature and do not require separate adjudication. Accordingly, Ground Nos. 6 to 8 are dismissed. 44. In the result, appeal No. 806/Chd/2012 is partly allowed. ITA No. 818/Chd/2012 (A.Y. 2003-04) 45. In this appeal, ground Nos. 1 & 2 raised by the appellant are similar as raised in ITA 802/Chd/2012 i.e. confirmation of addition of ₹ 54,000/-, by the CIT(Appeals) on account of job work. Therefore, our findings given in ITA 802/803/Chd/2012 in the matter, would apply to these two grounds also and accordingly, Ground Nos. 1 & 2 of this appeal are allowed. 45(i) In ground No. 3, appellant contended that CIT(Appeals) erred in confirming addition of ₹ 64,000/- on account of household expenses against addition of ₹ 88,000/- made by the AO. We have considered the rival submissions an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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