9911796707
TMI Blog2020 (10) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee for Assessment Year 2008-09 to 2013-14 and withdrawals made, we are of the view that the cash found at assessee s residence is reasonable and explainable. We thus find no reason to interfere in the findings of Ld. CIT(A) and the same stands confirmed. Addition for unexplained opening balance of capital - HELD THAT:- Income shown in all these years has been offered to tax in the return of income and after subtracting the withdrawals for LIC premium, Income Tax, House loan interest and household expenses the resultant figure if cumulatively added and carry forward from Assessment Year 2008-09 onwards till the Assessment Year 2014- 15 the opening capital balance would have been ₹ 2,05,33,295/-. Assessee has taken the opening capital balance of ₹ 1,79,22,599/- which is less than the cumulative fund shown by the assessee in the chart. We thus in the given facts and circumstances of the case are of the view that Ld. CIT(A) has rightly appreciated the facts and deleted the addition as the assessee had duly explained the source of opening capital balance. Thus the finding of Ld. CIT(A) is confirmed and accordingly ground No.4 raised by the revenue sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry u/s 69B of the Income Tax Act, 1961. (3) On the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in deleting the addition of ₹ 1,35,500/- made by Assessing Officer on account of unexplained cash found. (4) On the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in deleting the addition of ₹ 1,79,22,599/- made by Assessing Officer on account of unexplained opening capital. 4. Ld. Departmental Representative vehemently argued on various grounds referring and relying on the findings of Ld. A.O and supporting the order of Ld. A.O. 5. Per contra Ld. Counsel for the assessee relied on the finding of Ld. CIT(A) as well as the written submission and documentary evidences placed in Paper Book dated 16.3.2020 running from page 1 to 93. 6. We have heard rival contentions and perused the records placed before us and carefully gone through the findings of both the lower authorities and the submissions made by Ld. Counsel for the assessee. 7. Through Ground No.1 Revenue has challenged the deletion of addition of ₹ 2,25,000/- made by the Ld. A.O u/s 69C of the Act on account of unexplained expenses incurred in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipts / bills in support of correctness of his claim regarding foreign travel expenses. Thus the details submitted by the assessee regarding foreign travel expenses are incomplete and also incorrect. (iii) The assessee's contention that the expenses are incurred by assessee's wife is also not supported by any proper and correct material evidence as the cash book submitted by her is incorrect as discussed above and also the income shown is without any basis and supporting documentary! evidences. considering these facts, the assessee's above contention is not acceptable. (iv) Thus it is clear that the assessee has not accounted any expenditure on his foreign travel and therefore the expenditure incurred on foreign travel is treated as unexplained expenditure of the assessee. In absence of specific details, the expenditure on foreign travels by the assessee is estimated on the basis of prevailing market rates in respective assessment years as under: Date of journey No. Of persons A.Y Estimated expenditure (Rs.) Expenditure shown (Rs.) U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... left Russia on 28.7.13 where after he landed at Delhi on 29.07.13. Thus the tour to Russia was a part of the tour to Uzbekistan and was undertaken within the period he was out of India. Thus there was a single tour against which the addition has been made twice. In this regards it is further submitted that up till 31.3.13 (A.Y 2013-14), the assessee has been filing his return of income u/s 44AD of the Act, a fact which is duly confirmed by the AO in Para 10 of his order and accordingly the assessee is not required to maintain any books of account. Thus the assessee has not maintained any books of account and in absence of any books of account it was not possible for the assessee to get the items of expenditure incurred by him during F.Y 2011-12 verified with the books. Thus the assessee could not have shown any specific withdrawal for such expense. It may however be mentioned that as per the details mentioned in Page 17 of the assessment order the income of the assessee during last 6 years up till 31.03.13 was ₹ 2,05,33295/- against which the value of total investment made by him as on 31.3.13 was ₹ 1,79,22,599/-. Thus the assessee had surplus of an amount of ₹ 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found to have incurred any expenditure in any financial year for which the assessee fail to explain the source to the satisfaction of the AO. It is well settled proposition of law that addition u/s 69C can-not be made on adhoc basis or on presumption. The assessee relies on the following judgments _(2009) 311 ITR 175 (Del HC) Sec 69C postulates that first of all the assessee must have incurred some expenditure there after if the explanation offered by the assessee about the source of such expenditure is not found satisfactory by the Assessing Officer the amount may be added to his income. There was nothing to snow that the expenditure was in fact incurred by the assessee. (2010) 3 ITR (Trib) 177 (Mum) ... Under the provisions of section 69C addition on account of any unexplained expenditure can be made only when the assessee has incurred any expenditure about which he has offered no explanation. The burden is on the revenue to show that the expenditure has actually been incurred which is not explained. (2009) 123 TT1 (Kol) (TM) 12 Apart from disbelieving the assessee's explanation. Assessing Officer has not brought on record any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was a partner and the expenses of ₹ 84,240/- were paid to M/s Creative Travels by the said firm and have submitted a copy of ledger account of the travel agent. It is however seen that the assessee has not explained the source of day today expenses incurred in cash on this tour which were not covered by the travel plan. It is also seen that the expense are incurred in June 2013 and the tour is undertaken in July 2013. It is seen that similar tours are priced at ₹ 53,990/- for Kazakistan and ₹ 63,815/- for Uzbekistan respectively by M/s. Make My trip / Thomas Kook which are well recognized travel agents as against which the AO has estimated the total expense of₹ 3,00,000/- and no basis for such estimation has been given. Considering all the above facts the addition made by the AO is on higher side and therefore, addition amounting to Rs, 50,000/- in AY 2012- 13 and Rs, 75,000/- in AY 2014-15 are Confirmed and appellant gets relief of ₹ 1,50,000/- in AY 2012-13 and ₹ 2,25,000/- in AY 2014-15. Therefore, appeal on this ground is Partly Allowed. 8. We have gone through the finding of Ld. CIT(A) and are of the view that a fair esti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. On the basis of this Instruction the assessee has computed permissible gold holding in respect of assessee and his family member and claimed that the jewellery found during the course of search is less than the permissible gold holding as per the CBDT's above instruction. In support of his submission the assessee has relied upon the decision of Hon 'ble Gujrat High Court in the case of Kialashaben Manharlal Chokshi Vs. CIT (2010) 322 ITR 411 (Gujrat), wherein it was held that the Boards instruction is also relevant in considering the assessee's explanation regarding the jewellery found during the course of search. The reliane placed by the assessee upon the CBDT Instruction No. 1916 dated 11/05/1994 is misplaced. The cited instruction is meant to be an administrative instruction for the guidance of the Authorized Officer at the time of search and seizure action regarding non-seizure of jewellery upto 500 gms for married woman and 100 gms for male member etc., given their sentimental attachment to it. However, non-seizure of jewellery does not imply that the jewellery is to be treated as explained in the assessment proceedings by the A. 0. As regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Silver total Locker No 267 Uco Bank 893.92 gram - 893.92 At residence 273.41 252 525.41 Total 1167.33 252 1419.33 It may be mentioned that the assessee is living along with his mother and the jewellery was found from the locker jointly owned by the assessee along with his wife. At the time of opening of the locker the assessee had specifically informed the search team that the jewellery in the locker belongs to the wife and her mother in law and this fact is duly mentioned in the statement recorded. It may be mentioned that in Instruction No 1916 dated 11.05.1994 the board has issued guidelines that In the case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family need not be seized.by virtue of instruction of the CBDT the assessee the assessee family was ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riage in the year 1960. She had given 15 tolas of gold ornaments to her daughter Ritaben at the time of her marriage in the month of March 1988. If the total jewellery found during the course of search is taken into consideration, in the light of instruction issued by the Board, any middle class Indian family may be having jewellery and gold jewellery to that extent. Hence addition can be made on that count . Similar view is also expressed by the Hon 'ble Karnataka High Court in the case of Smt. Pati Devi vs ITO (1999) 240 ITR 727(Kar). Under the circumstances as the gold found was much lower than the limits ascertained as per the circular of CBDT the addition made is requested to be deleted. 5.5.2 I have considered the facts of the case, plea raised by the appellant and findings of the AO. During the course of search total gold jewellery weighing 1167.33 grams and silver articles of 252 grams were found from bank locker and residence of the appellant. the appellant has claimed that the jewellery found during the course of search belongs to his wife and his mother who was staying with him. At the time of opening of the locker the assessee had specifically informe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and no addition was called for. Ld AR of the assessee has placed reliance on various case laws wherein courts have taken judicial notice of above-mentioned CBDT circular and allowed the relief to the appellant. These are:- Hon'ble Gujrat High Court in the case of Kialashben Manharlal Chokshi vs CIT (2010) 328 ITR 411 (Guj) Harakchand N Jain vis ACIT (1998) 61 TTJ 223(MUM) Hon'ble Karnataka High Court in the case of Smt. Pati Devi vs ITO (1999) 240 ITR 727(Kar). 5.5.3 Before embarking upon the discussion of issue at hand, I find it appropriate to reproduce the relevant extract from CBDT, circular no 1916 dt. 11.05.2014 reliance is placed on Circular no. 1916 of CBDT: Instruction No. 1916 (F.No. 286/63/93-IT(INVII), dated 11-5-1994, issued by the Central Board of Direct Taxes (,CBDT,) directs the income tax authorities, conducting a search, to not seize jewellery and ornaments found during the course of search of varying quantities specified in the instructions, depending upon the marital status and the gender of a person searched. The guidelines are issued to address the instances of seizure of jewellery of small quantity in the course of search op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained and treated 506.900 gms of jewellery as unexplained and, accordingly, made addition under section 69A - Whether collecting jewellery of 906.900 gms by a woman in a married life of 25 years in form of streedhan or on other occasions is abnormal - Held, no - Whether therefore, Assessing Officer was unjustified in treating only 400 gms as 'reasonable' and treating remaining jewellery as 'unexplained' - Held, yes - Whether, therefore, addition made was to be deleted - Held, yes [In favour of assessee] . In the case Smt. Pati Devi vs Income TaxOfficer and others Reported in 240 ITR -727 (Karnataka High Court) it has been held that: by referring to instruction no 1916 it was held that it is not the value which is considered but it is the weight which is considered reasonable looking to the social circumstances prevailing in the country. In the case of Harakchand N Jain v/s ACIT (1998) 61 TTJ 223(MUM) In which Hon 'ble Tribunal held that in the Indian society everyone receives gifts at the time of marriage other occasion. Therefore, keeping in view the number of family members we are of the view that further rebate of 500gms out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of 1550 grams is reasonable as prescribed in Board's circular 1916 as under:- In grams Bhupendra Viswkarma (Appellant) 100 Yogita Viswkarma (Appellant's wife) 500 Ms Sakshi (daughter of Appellant) 250 Master Sagar (son of the appellant) 100 Mr. B.R.Viswakarma (Father of the appellant) 100 Mrs. Dulari(mother of the appellant) 500 Total 1550 Grams As discussed earlier, It is, held that out of the total gold jewellery found in possession with the family of 1167.33 grams is quite reasonable and within permissible limits as per boards circular No 1916. As regards silver articles of 252 grams found during search it has to be held that looking to the nominal value of the articles(less than ₹ 10,000) and the status of the family no addition is justified. Thus, addition made by the AO amounting to ₹ 38,96,987/- made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to disbelieve the explanation furnished by the wife/assessee. Further every family holds some cash balance to meet its medical emergencies out of the past savings of the family members and holding a total cash balance of ₹ 135500/- in the family specially where the parents of the assessee both of whom are Senior Citizens does not warrant any addition. Under the circumstances the additions made is requested to be deleted. 5.6.2 Submission filed by appellant along with the details / material brought on record have been duly considered. Due consideration has been given to the findings arrived at in the assessment order. It is seen that the assessment in the case of Smt Yogita Vishwakarma wide of the appellant has been completed u/s 153A of the Act and the cash is hand found at the residence and locker was submitted to be belonging to her. Smt Yogita Vishwakarma has shown income from salary received through cheque and tuition and has also filed cash flow in support of her claim. The AO had rejected the cash flow statement furnished by Smt Yogita Vishwakarma on account of non furnishing of salary certificate (Form 16) and details of students to whom tuition was provided. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of ₹ 1,79,22,599/- observing as follows:- 5.7 Ground No 6 for A.Y. 2014-15: Through this ground of appeal, the appellant has challenged addition of ₹ 1,79,22,599/- treating the opening capital as on 01.04.13 as unexplained. The AO during the course of assessment proceedings found that the assessee upto AY 2013-14 has been showing income on estimated basis U/S 44AD of the Act and no regular books of accounts are maintained. However, from AY 2014-15 the assessee has submitted balance sheet with opening capital of ₹ 1,79,22,599/-. Therefore, the AO required the assessee to justify the opening balance in AY 2014-15. The AO after considering reply of the assessee did not find the same acceptable for the following reasons:- (i) The assessee has not maintained and submitted the date wise record for these years and therefore no verification of the assessee's above chart can be made. (ii) The chart submitted by the assessee does not contain the bank details wherein lot of transactions are made during the relevant period. (iii) The chart submitted by the assessee does not contain the details in respect of investments in land / immovable properties, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance of the respective years was considered as addition to the capital. As per this cross check sheet the assessee had earned a cumulative surplus of ₹ 20533295/-over the last six years as against which the total opening capital was considered at ₹ 17922599/- Thus it would be appreciated that the capital balance taken by the assessee was duly explained. However the AO disregarded the above factual status and made addition of the same after making various observations which along with the submissions of the assessee are given herein below: Sr. No. Observation of the AO Submissions of the assessee I Verification of the chart cannot be made The incomes and the expenses (excluding withdrawal for house hold exp) are readily verifiable from the ITR/Computation of income of various years. The investments made were verifiable from the purchase documents of asset and ledger accounts of associate concerns which were already verified by the AO in assessment of the respective firms and companies ii The chart d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign travel are not included in the chart The expenditure are claimed to have been incurred by the wife. Further the incremental capital was ₹ 2,05,33,295/- against which the capital considered is only ₹ 1,79,22,599/- As detailed above the observation of the AO are totally irrelevant and needs to be ignored. Further the opening capital taken by the assessee does not represent any inflow or out flow of funds and is only a journal entry thus cannot be added as income. The addition is made u/s 69 which is applicable when the assessee is found to have made any investment which is not recorded in the books of account. In the case under consideration none of the investment has been made during the year. Further the assessee has not maintained any books in the past years as the income was offered under the presumptive provisions. However all the investments made were duly recorded in the books of account of those firms in the respective years which were also assessed u/s 153A and books of accounts of those firms were duly verified by the AO. Thus the addition made is requested to be deleted. 5.7.2 Submission filed by appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 997434 1173761 2119113 145865 2502310 2917697 Exempted profit Ultimate Builder 0 145667 414466 1931542 Exempted profit CNP cost 38845 285130 821634 306829 Profit u/s 44AD 369815 267881 1235638 128404 Rental income 50400 86400 213313 149570 57600 180760 Interest income 4031 41898 144788 Capital gain 2313820 1594108 2177469 6116895 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as disclosed by him in his ITR/ITR of other firms in which he is a partner and ITR of the respective assessment year has already been accepted by the AO. Thereafter, deduction has been made for the expenses incurred by the assessee on the Income Tax, interest on House loan and estimated house hold expenses. After this deduction the net surplus earned by the assessee has been estimated and have been totaled for 6 years to calculate the cumulative surplus, Thus this chart was in the nature of income and expenditure account and thus there was no scope for details of the bank account, or the details of investments made, or the details of purchase of jewelry appearing in this chart and the observation of the AO in this regard are not relevant. The assessee admittedly was given an option under the Income Tax act, not to maintain the books of account and thus no adverse inference could have been drawn from his inability to submit date wise record for these years. The observation of the AO that withdrawals for house hold expenses shown by the assessee are very low does not carry any weight as he has not brought any material to substantiate that the assessee has incurred expenses more tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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