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TMI Blog2016 (8) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The Revenue has filed its appeal ITA No.301/Ahd/2013 against order dated 27.11.2012 passed by the CIT(A)-II Ahmedabad in case no. CIT(A)-II/CC-4/35/2011-12 deleting section 271(1)(c) penalty of Rs. 10,40,070/-. 3. We come to rival pleadings first. The assessee's sole substantive grievance in assessment years 2000-01 to 2005-06 involving six corresponding appeal challenges action of both the lower authorities in adding accrued interest sums of Rs. 11,35,158/-, Rs. 12,31,127, Rs. 15,44,925/-, Rs. 16,35,907/-, Rs. 11,88.292/- & Rs. 11,39,572/-; respectively thereby treating FDRs of Rs. 1,76,46,465/- found/seized in the course of search to be his investments. Last assessment year 2006-07 involves two appeals. The assessee raise four substantive grounds in its quantum appeal ITA No.446/Ahd/2010 in assailing four additions of unexplained cash and interest income on fixed deposits hereinabove, un-reconciled expenses and the one pertaining to conditional disclosure amounting to Rs. 9,48,000, Rs. 9,56,181/-, Rs. 11,85,758/- and Rs. 67,80,000; respectively. The Revenue's penalty appeal on the other hand seeks to revive penalty amount of Rs. 10,40,700/- imposed by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account the disclosure made by the assessee, either due to disallowance of expenses or deduction otherwise then to the extent of disclosure made by the assessee, the addition be telescoped against the total disclosure and no separate addition be made again. Further, the tax remaining if any in relation to the amount not specifically identified against the amount of disclosure then such surplus amount of disclosure may kindle be treated as retracted and tax paid thereon may be refunded to the assessee and accordingly, the tax paid at this stage by the assessee may be treated as under protest and in anticipation of identifying unaccounted asset in its present form by the Assessing Officer in the course of assessment proceedings. The above disclosure may kindly be considered on logical and judicial interpretation of the definition of income under the Act and as per the normally accepted, interpreted, implemented and understood principals of income in commercial parlance as also based on the judicial pronouncements of various authorities on the subject matter." 8. The Revenue seeks to take advantage of the assessee's additional income offered without even considering the above extr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence collected in support of the said disclosures. We find that their lordships accepted retraction since the statement was recorded in very much odd hours. It has been held thereafter that the additions in question are not sustainable since no material evidence supporting the same are forthcoming. It is further evident that this case law pertains to a search conducted well before the Board's circular (supra) quoted therein. When we apply this ratio vis-à-vis facts before us, it is apparent that there is no incriminating material or evidence available with the Revenue which could support the impugned addition. 15. The next case law is DCIT vs. Shri Vivekanand Sharma ITA 1748/Kol/2012 decided on 01-08-2014. This search is dated 26-023- 2010 followed a disclosure statement u/s. 132(4) on 06-05-2010 subsequently retracted on 02-09-2011 i.e. almost one and half years thereafter. The learned co-ordinate bench quotes absence of specific material evidence supporting the disclosure statement for deciding the issue against the Revenue. We have afforded the Revenue due opportunity to point out any distinction on facts or law. It is unable to do so. 16. We have given thoughtful c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt under section 132(4) of the Act. The search party seized only a part of the above cash sum amounting to Rs. 3,09,200/-. The Assessing Officer sought to add the entire amount in assessee's hands. The assessee on the other hand stated that his sister Ms. Rekhaben Zariwala was the actual owner thereof qua the above returned sum in course of search itself amounting to Rs. 6,38,800/-. The Assessing Officer in assessment order dated 31.12.2007 invoked section 69A of the Act for the following reasons:- "a. These cash were found from one place of residence, thus establishing that these cash did not belong to different persons/concerns, but one person/entity. If the cash belonged to separate concerns, these would have been kept in separate places for identification and convenience. b. Huge cash balances are kept at banks and not partners/directors' residence, as that creates unsafe atmosphere at the residences also. Only unaccounted cash are kept at residence, on account of non-deposition in banks. c. It is not acceptable that the sister of the assessee, a lady would be in possession of huge amount of cash of Rs. 6,38,800/-. The said lady does not have any independent source of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of Rs. 6,38,800/-. He builds up his case as per panchnama entries at page no.106 of the paper book to this effect. The assessee takes us to Ms. Rekhaben's affidavit at page no.31 of the paper book. He thereafter files a reconciliation chart qua balance sum of Rs. 3,10,000/- as under :- Name of concern Op. Bal. As on 01.04.05 Cash Transactions in Bank Cash sales or receipts from debtors up to 13.12.05 Expenses & withdrawals (Net) upto 13.12.2005 Closing Balance as on13.12.2005 Withdrawals Deposits Hariom Jari Ind. 3,47,415 3,16,000 4,240 4,240 4,10,176 _________ 2,53,239 Vigneshwar Fabrics 1,47,790 2,92,000 0 0 3,85,330 54,460 Total 4,95,205 6,08,000 4,240 4,240 7,95,506 3,07,699 14.1 The assessee pleads in the course of hearing that his date-wise details of bank withdrawals, corresponding receipts followed by relevant bank statements make it clear that both the lower authorities have erred in adding the impugned sum of Rs. 9,48,000/- in is hands. 15. The Revenue strongly supports the impugned addition to seek confirmation thereof. 16. We have heard rival submissions. The assessee strongly relies upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se FDRs pertain to assessment years 1997-98 and 1998-99. There is no dispute that 128 different persons are the actual investors therein. The assessee succeeded in producing 42 of them in the course of assessment. They all supported his case thereby claiming themselves to be the actual owners of the FDRs in question. Assessing Officer treated all of them as assessee's benamidars on the following counts:- "From the above discussion, the following points emerge: 1. FDRs were found and seized during the search and seizure operations in the constructive possession and control of the assessee; 2. In the statement recorded during the search and seizure operations and in post-search proceedings, the assessee failed to explain the source of acquisition of the FDRs and admitted that these are held in an unaccounted manner; 3. No person approached the Department for release of the FDRs during the intervening period of 2 years (December 2005 to December 2007), thereby conclusively establishing that the FDRs do not belong to anyone else; 4. The assessee failed to explain the source of FDRs during the course of search assessment proceedings and kept silent on the issue for a period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs worth Rs. 1.76 crores and failure to rebut the statutory presumption under Section 292C and 132(4A) of the Act of ownership, it is taken that the FD Receipts amounting to Rs. 1.76 crores belong to the assessee, and are liable to be added u/section 69 of the Income Tax Act, 1961 as deemed income of the assessee." 19. The Assessing Officer observed in Assessment Order that source assessment year of all these FDR investment fell beyond the purview of search assessment periods assessment year 2000-01 onwards. He accordingly added interest accrued thereupon in assessee's hands in all the seven impugned assessment yeas from 2000-01 to 2006-07 in question. The CIT(A) affirms the same. 20. We have heard rival submissions. Relevant records as well as lower authorities' findings stand perused. There is no dispute so far as the relevant facts are concerned. These FDRs are in the names of 128 investors. The relevant assessment years thereto fell beyond the search assessment scope. The search party found and seized all the relevant documents from the assessee's residence. Both the lower authorities treated the same as assessee's unexplained investment for the reasons extracted hereinabove. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.4 and 5-21 and 22-23 and 24, in loose paper file inventorised vide Annexure A/3, expenses of Rs. 1,57,069/- and Rs. 68,000/- and 52,302/- respectively, have been found. The same aggregating to Rs. 2,77,371/- have been admitted to be unaccounted and unexplained. As per as per Page No. 46 in loose paper file inventorised vide Annexure A/3, unaccounted purchases of Rs. 55,720/- have been made. As per as per Page No. 137 in loose paper file inventorised vide Annexure A/3, unaccounted purchases of Rs. 11,500/- have been made. As per as per Page No.96-97, 141-144 in loose paper file inventorised vide Annexure A/3, expenses of Rs. 34,225/-, Rs. 78.430/- and Rs. 2,43,942/- and Rs. 2,91,550/- have been made on labour charges for construction expenditure on Damwala Compound in unaccounted manner. As per as per Page No.47 in loose paper file inventorised vide Annexure A/3, unaccounted expenses of Rs. 1,38,020/- have been made on construction and repairing." 22. The assessee claimed that the said purchases were made by Shri Nagindas Lapadia being at the helm of affairs using the firm's names. The Assessing Officer rejected this explanation inter alia by holding that the said firm stoo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions. The Central Board of Direct Taxes i.e. the CBDT has already issued a Circular dated 10.03.2003 to this effect. We accordingly accept assessee's contention with a caveat that this additional income disclosure of Rs. 67.80 lakhs is to be simultaneously read along with other notes to the accounts in the returned as extracted as above and this sum is to be adjusted against the final taxable income to be computed as per law. This fourth substantive ground is accepted for statistical purposes. The Assessing Officer is directed to adjust this amount against the total taxable income determined after finalising consequential proceedings. 25. This appeal ITA No.446/Ahd/2010 is partly allowed. 26. Now we come to the remaining Revenue's appeal ITA No.301/Ahd/2013 seeking to revive section 271(1)(c) penalty of Rs. 10,40,070/- as imposed by the Assessing Officer in A.Y. 2006-07 on account of various additions i.e. accrued interest on FDRs of Rs. 9,56,181/-, cash sum addition of Rs. 9,48,000/- and Rs. 11,85,758/-; respectively. The AO treated all these additions as an act of concealment of taxable income under the above stated statutory provisions. 27. The CIT(A) relies on Hon'ble Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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