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TMI Blog2019 (1) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... lies with the gold jewellery declarations by the assessee and his family members in Wealth-tax returns/VDIS, save and except the additional income offered by the assessee in his return for the A.Y. 2006-07. In such a scenario, there can be no question of making any addition in respect of gold jewellery. Addition on protective basis - assessee claimed that out of total marriage expenses, a sum of ₹ 17,50,000/- was borne by Mr. Om Prakash Agarwal, Jalgaon, father of Trupti Agarwal, the daughter-in-law of the assessee - addition confirmed as assessee could not furnish any details/evidence of said expenses having been incurred by Mr. Om Prakash Agarwal - Held that:- In the assessment completed u/s.153C on 30-12-2008 in the hands of Om Prakash Agarwal, a copy of which has been placed on record, the AO accepted that sum of ₹ 17,50,000/- was withdrawn by Mr. Om Prakash Agarwal from his bank account, which was given to the assessee as his share of marriage expenses. Since the explanation of Mr. Om Prakash Agarwal has been accepted in his assessment completed u/s.153C, there can be no rationale in sustaining the addition of ₹ 17,50,000/- on protective basis in the hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock was found at the time of survey, the addition to that extent was required to be made. The contention of the assessee that higher gross profit was declared and such excess stock was shown in terms of the higher gross profit cannot be countenanced as the excess stock is required to be separately disclosed as income. We, therefore, approve the addition of ₹ 2,87,944/-. 42. As regards the remaining addition of ₹ 1,17,466/-, we hold that the same cannot be sustained because it represents nothing but difference in the tag price of excess stock as reduced by the cost price of such excess stock. It goes without saying that an addition can be made only for the amount of costs incurred on producing the stock and not the potential profit included in the tag price. We, therefore, sustain the addition of ₹ 2,87,944/- and delete the addition of ₹ 1,17,466/-. - ITA Nos.1648 & 1649/PUN/15, ITA Nos.1650 & 1651/PUN/15, ITA No.1652/PUN/15 - - - Dated:- 4-1-2019 - Shri R.S. Syal, Vice President And Shri Partha Sarathi Chaudhury, Judicial Member For the Appellant : Shri Kishor Phadke For the Respondent : Shri Sudhendu Das ORDER PER R.S.SYAL, VP : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 17,10,000/- [Rs.40,15,263 minus ₹ 23,05,263 (Rs.13,55,263 + ₹ 9,50,000)]. Thereafter, the AO proceeded to make addition in respect of items written on seized page no.3 against which no value was assigned. He attributed a sum of ₹ 5 lakhs to such investments and made an addition for this sum also. This resulted into a total addition of ₹ 22,10,000/- on account of unexplained investment in jewellery. The assessee remained unsuccessful before the ld. CIT(A). Aggrieved thereby, the assessee has approached the Tribunal. 4. We have heard both the sides and perused the relevant material on record. The authorities below have made additions of ₹ 22.10 lakhs on the basis of certain notings made on page nos. 2 and 3 of the seized documents. The assessee made a claim before the authorities below, including the AO, that the jewellery which was unexplained was promptly offered for taxation while the remaining jewellery was out of declaration made under VDIS/Wealth-tax returns. It is apparent from page 25 of the impugned order that actual total gold, silver and diamond jewellery found during the course of search was as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page nos. 2 and 3 of seized documents did not tally with the description of jewellery given in Wealth-tax returns/VDIS declaration notwithstanding the fact that the total weight of jewellery is tallying. The Revenue authorities have jettisoned the assessee s contention by holding that one-to-one match of the description of jewellery items is essential to claim credit against the declarations made in Wealth-tax returns/VDIS. In our considered opinion, this view point has no legal legs to stand on. So long as the total gold jewellery in weight found at the time of search matches with the earlier declarations made by the assessee in his Wealth-tax returns and VDIS, there can be no question of making any addition simply on the ground that the description of items in the list declared under Wealth-tax returns/VDIS is different from those actually found. If such is a position, then an inference has to be drawn that the items initially declared in Wealth-tax returns/VDIS were converted into the items of jewellery found at the time of search. A contrary stand can be taken only if the authorities demonstrate that the jewellery items given in the Wealth-tax returns/VDIS were over and abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. In the result, the appeal is partly allowed. Rajkumar B. Agarwal A.Y. 2006-07 10. The first issue raised in this appeal through Ground nos. 1 to 4 is against the confirmation of addition of ₹ 22,77,943/- by treating sale proceeds received on sale of shares of Prraneta Industries Limited (hereinafter referred to as PIL ) as `Income from other sources . 11. The facts apropos this issue are that the assessee declared short term capital gain of ₹ 22,02,745/- on sale of shares of PIL. The assessee was requested to substantiate the said claim by providing various details, such as, name of company, number of shares, date of purchase, purchase cost per share, total purchase cost, date of sale, sale price per share, total sale price etc. The assessee filed certain details, which have been reproduced on page 19 of the assessment order, claiming that he purchased 15000 shares of PIL on 03-09-2004 which were sold in two trenches of 1 lakh and 50000 shares. It was further explained that 15000 shares were purchased with face value of ₹ 10/- each and later on the face value of share was split to Re.1/- each and accordingly, the assessee was allotted 1,50,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeds of ₹ 22,77,943/- as undisclosed income. He further held that no broker would give accommodation entries to the assessee without any commission. He estimated commission @ 6% on sale proceeds of 1,50,000 shares and made a further addition of ₹ 136,677/-. The ld. CIT(A) sustained the addition by relying inter alia on two orders passed by the Mumbai Bench of the Tribunal, viz., ITO Vs. Shamin Bharwani ITA No. 4906/Mum/2011 dated 27-03-2015 and Usha Chandresh Shah Vs. ITO ITA No. 6858/Mum/2011 dated 26-09-2014, in both of which, the additions made under similar circumstances were confirmed by the Tribunal. The assessee is aggrieved by the confirmation of addition. 12. We have heard both the sides and gone through the relevant material on record. It is seen that the assessee claimed to have earned short term capital gain of ₹ 22,02,745/- in respect of sale of shares of PIL which were purchased for a paltry sum of ₹ 75,197/- and sold for ₹ 22,77,943/-. The AO, on verification of the credentials of PIL and other attending circumstances, observed that PIL was included in the list of penny stock companies in enquiries conducted by BSE and SEBI, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delete an addition, which is otherwise made on the solid bedrock of detailed enquiries. 13. At this juncture, it will not be out of place to refer to the judgment of the Hon'ble Supreme Court in CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC), in which the assessee claimed before the ITO that income of certain property should not be taxed in his hands as it was a trust property. The ITO rejected the claim and included the income in the hands of the assessee. The Tribunal affirmed the decision of the ITO, which was reversed by the Hon'ble High Court. Reversing the verdict of the Hon ble High Court, their Lordships noticed that though the assessee made a claim that income of the property was not his and produced conveyance executed in his favour and the deed of settlement executed by his wife, nearly about a year after the conveyance, however, when the ITO asked the assessee about the source from which his wife got the amount, apart from saying that it was sthridhan property, he failed to disclose any source from which his wife could have got the amount for purchasing the premises. In this backdrop of facts, the Hon'ble Supreme Court held that although the apparen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases. 16. In view of the factual and legal position discussed above, it is crystal clear that PIL is a penny stock company and the assessee obtained only accommodation entries in the garb of short term gain from transfer of shares of PIL, for which an appropriate addition has rightly been made and upheld by the authorities below. We, therefore, countenance the impugned order on this score. 17. Before parting with this issue, we want to record that the ld. AR has relied on certain decisions in which the additions made on account of accommodation entries got deleted. In the oppugnation, ld. DR has also relied on certain decisions, including those referred to in the impugned order, in which the addition on account of accommodation entries got confirmed. We are not separately referring to those decisions as the factual position prevailing in such case varies with the facts of the instant case as recorded above. Even a single slightest variation in the factual matrix of two apparently similar cases changes the entire complexion of the decision. As the factual panorama obtaining in the extant case is different from those relied on by the rival parties, we are, therefore, desisting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,700,000.00 405,000.00 Property at Deoghar 15% 4,940,857.00 741,128.50 Advance for Sathe Property 15% 8,151,330.00 1,222,699.50 Sun Hill Financial Services P.L. 15% 800,000,00 120,000.00 Veer Industries 15% 2,100,000.00 315,000.00 BRA Textiles Pvt. Ltd., 15% 29,627.00 4,444.05 Western Cements Products PL. 15% 17,200.00 2,580.00 Western India Tools Pvt. Ltd. 15% 13,000.00 1,950.00 Satish Ratilal Shah 15% 8,21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew taken hereinabove, we uphold the addition of ₹ 20,21,000/-. 27. As regards the addition of ₹ 1,21,260/-, being, commission paid by the assessee for arranging purchase and sale of shares of PIL, we order to restrict such addition to 2% instead of 6%. 28. The only other ground which survives in this appeal is against confirmation of disallowance of interest of ₹ 62,651/- on the ground that the assessee diverted interest bearing funds for non-business purposes. 29. The facts of this ground are also admittedly similar to those of Rajkumar Bansilal Agarwal for the A.Y. 2006-07. Following the precedent, we direct the AO to carry out investigation in the terms as stated above. 30. In the result, the appeal is partly allowed for statistical purposes. Bharat Rajkumar Agarwal - A.Y. 2004-05 -: 31. The only issue raised in this appeal is against the confirmation of addition of ₹ 4 lakhs made by the AO u/s.68 of the Act. 32. Succinctly, the facts of the case, are that the assessee claimed to have received gifts of ₹ 4 lakhs from Sharad Raj Mathur (Rs.1,50,000/-), Rashmi Mathur (Rs.1,50,000/-) and Ravi Vaid (Rs.1,00,000/-). The AO requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances, we do not find any reason to deviate from the impugned order. 34. In the result, the appeal is dismissed. Bharat Rajkumar Agarwal - A.Y. 2006-07 - 35. The first four grounds raised by the assessee are against confirmation of addition of ₹ 18,71,906/- made by the AO by treating sale proceeds on transfer of shares of PIL as income from other sources. 36. Both the sides are in agreement that the facts and circumstances of these grounds are mutatis mutandis similar to those in the case of Rajkumar Bansilal Agarwal for the A.Y. 2006- 07. Following the view taken hereinabove, we uphold the addition of ₹ 18,71,906/-. 37. Ground nos. 5 6 raised by the assessee are against the confirmation of addition of ₹ 1,112,314/- on account of commission paid. 38. We have already adjudicated similar ground in the case of Rajkumar Bansilal Agarwal for the A.Y. 2006-07 and ordered to restrict such addition to 2% instead of 6% as ordered by the authorities below. The same view is followed here as well and the grounds are partly allowed accordingly. 39. Ground No.7 is against the confirmation of addition on account of excess stock of ₹ 2,87,94 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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