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TMI Blog2015 (11) TMI 1878X X X X Extracts X X X X X X X X Extracts X X X X ..... l having been found during the course of search seizure action under section 132(1)? - We find that it was held by Hon'ble Allahabad High Court in the case of Raj Kumar Arora [ 2014 (10) TMI 255 - ALLAHABAD HIGH COURT] that the reasons given by the Tribunal that no material was found during search cannot be sustained and it is also held by Hon'ble Allahabad High Court that the Assessing Officer has the power to reassess the income of the assessee not only for the undisclosed income which was found during search but also with regard to the material that was available at the time of original assessment. Respectfully following this judgment of Hon'ble Allahabad High Court, we hold that there is no merit in ground and the same is also rejected. Addition of sums as had been borrowed from various persons - HELD THAT:- This is undisputed fact that as per the assessment order, it is held by the A.O. that deduction being interest on this very loan is allowable and he made addition of only ₹ 83,058/- after reducing this amount from the amount of ₹ 2.40 Lacs brought to tax by him as notional interest on loan given by the assessee of ₹ 20 Lacs. We are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also find that this finding is also given by learned CIT(A) that even as per the seized material, receipt of ₹ 1.50 lac is seen. This receipt of ₹ 1.50 lac has been duly shown by the assessee in its income but the Assessing Officer has stated that the receipts from Gopalaya has to be considered at ₹ 6 lac without giving any basis for such estimation. Considering these facts, we find no reason to interfere in the order of CIT(A). Ground No. 1 is rejected. Addition on account of interest accrued from ICICI Bond - HELD THAT:- We find that this addition has been deleted by learned CIT(A) on the basis that as per Notification No.F.4(9)-W M of 2003 dated 13/03/2003 reported interest on 6.5% savings bonds 2003 is tax exempt. In view of this factual and legal position, no interference is called for in the order of CIT(A) on this issue. Accordingly, ground No. 2 is rejected. Unexplained cash payment - CIT-A deleted the addition admitting the additional evidence produced before him during the course of appellate proceedings - whether it is violation of Rule 46A of the IT Rule 1962 and without affording any opportunity to the AO or calling for a remand report? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at (a) the appellant could not have been treated to be the person subjected to search under section 132(1); and (b) in any case, the appellant stood assessed for the assessment year 2002-03 and there being no assessment related proceedings pending for the said assessment year, the assessment made earlier could not be treated to have abated; the Assessing Officer was not validly vested with the jurisdiction to issue notice under section 153A and make second assessment in pursuance thereof. 2. BECAUSE view which is contrary to the pleading as above, as has been taken by CIT(A) is wholly erroneous and illegal too. 3. It was submitted by Learned A. R. of the assessee that these grounds are not pressed. Accordingly, these grounds are rejected as not pressed. 4. Ground No. 3 4 are inter-connected, which read as under: 3. BECAUSE on a due consideration of the facts and circumstances of the case, particularly that (a) the appellant had duly filed the return , by stating that the return filed earlier be treated to be the return filed in compliance with the notice under section 153A; (b) the return filed in the said manner, even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions. We find that the judgment of Hon'ble Allahabad High Court in the case of Rajeev Sharma (supra) is in the context of assessment u/s 147 whereas the judgment of Hon ble Delhi High Court in the case of Ashok Chaddha (Supra) is in the context of assessment u/s 153A and in this judgment, it was held that the requirement of issue and service of notice u/s 143(2) is not applicable in the assessment made in compliance to notice u/s 153A. We also find that in the case of Rajeev Sharma (Supra), the decision of Hon'ble Allahabad High Court is in favour of the assessee but the same is in the context of section 147 of the Act. We have already considered both these judgments in a case and have decided the issue against the assessee by following the judgment of Hon'ble Delhi High Court and the judgment of Hon'ble Allahabad High Court in the case of Rajeev Sharma (Supra) was not followed because this judgment is in the context of section 148 assessment and not assessment u/s 153A. No other judgment has been brought to our notice by Learned A. R. of the assessee which is in the favour of the assessee and is in the context of assessment u/s 153A of the Act. Therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court that the Assessing Officer has the power to reassess the income of the assessee not only for the undisclosed income which was found during search but also with regard to the material that was available at the time of original assessment. Respectfully following this judgment of Hon'ble Allahabad High Court, we hold that there is no merit in ground No. 5 and the same is also rejected. 12. Ground No. 6 to 10 are inter-connected, which read as under: 6. Because the CIT(A) has erred in law and on facts in upholding the addition of sums aggregating ₹ 20,00,000/- as had been borrowed from various persons as per particulars given below: Sl.No. Name of the lenders Amount Date of (Rs.) borrowing 1. Smat Rubber P. Ltd. 5,00,000 19/07/2000 2. Raj Kumar Agarwal 2,00,000 19/07/2000 3. Chandra Sekhar Agarwal 2,00,000 19/07/2000 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is allowable and after allowing deduction for the same, he made addition of the net amount of ₹ 83,058/-. He further submitted that although it is held by learned CIT (A) that notional interest of ₹ 2.40 Lacs brought to tax by the A.O. was not justified and he deleted the same and as a consequence, the interest paid on this loan ₹ 156,942/- stands capitalized as no deduction for it was claimed by the assessee but still the fact remains that as per the A.O., deduction of this interest expenditure on this loan of ₹ 20 Lacs was accepted by the A.O. as allowable and therefore, he cannot say that this loan is unexplained and make addition thereof u/s 69. Learned DR of the revenue supported the orders of the authorities below. 13.1 We have considered the rival submissions. We find force in the submissions of the learned AR of the assessee. This is undisputed fact that as per the assessment order, it is held by the A.O. that deduction of ₹ 156,942/- being interest on this very loan of ₹ 20 Lacs is allowable and he made addition of only ₹ 83,058/- after reducing this amount from the amount of ₹ 2.40 Lacs brought to tax by him as notional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis for holding that the house hold withdrawal shown by the assessee is not sufficient. Hence, we delete this addition of ₹ 15,000/-. This ground is allowed. 17. In the result, the appeal of the assessee stands allowed partly. 18. Now we take up the appeal of the assessee for assessment year 2002-03 i.e. I.T.A. No.347/Lkw/2013. 19. Ground No. 1 to 5 are as under: 1. BECAUSE on the facts and circumstances of the case, particularly that (c) the appellant could not have been treated to be the person subjected to search under section 132(1); and (d) in any case, the appellant stood assessed for the assessment year 2002-03 and there being no assessment related proceedings pending for the said assessment year, the assessment made earlier could not be treated to have abated; the Assessing Officer was not validly vested with the jurisdiction to issue notice under section 153A and make second assessment in pursuance thereof. 2. BECAUSE view which is contrary to the pleading as above, as has been taken by CIT(A) is wholly erroneous and illegal too. 3. BECAUSE on a due consideration of the facts and circumstances of the case, particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... line as in the case of Smt. Shaila Agarwal. 21. We have considered the rival submissions. We find that the issue raised by the assessee in these grounds regarding non-issue of notice u/s 143 (2) is decided by us in A.Y. 2001 02 against the assessee as per Para No. 7 above. The second issue about non finding of incriminating material in search is identical to the issue raised in the appeal of Smt. Shaila Agarwal. In the case of Smt. Shaila Agarwal, this issue was decided against the assessee and therefore, on similar line, in the present case also, this issue is decided against the assessee. For the purpose of ready reference, relevant Para from the tribunal order in the case of Smt. Shaila Agarwal is reproduced below 14. We have considered the rival submissions. We find that it was held by Hon'ble Allahabad High Court in the case of Raj Kumar Arora (supra) that the reasons given by the Tribunal that no material was found during search, cannot be sustained since it is held by Hon'ble Allahabad High Court that the Assessing Officer has the power to reassess the returns of the assessee not only for the undisclosed income which was found during search but also with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Para 24 25 of the synopsis filed by the assessee as under: 24. While dealing with almost similar scheme earlier launched by State Bank of India, which was named as Resurgent India Bond, RIB for short the Hon'ble Allahabad High Court in the case of Kanchan Singh vs. CIT reported in (2009] 221 CTR 0456 held that in view of the fact that such bonds could be purchased only by NRls against the foreign currency, (as is the case here) the source of money for the purchase of the bond being US $, is outside India. The bonds being transferable were transferred in favour of the assessee by non-resident. Therefore, no addition could be made in the hands of the donnee. A copy of the said judgment is enclosed and kind attention of your honous is invited to paras 22 and 23 thereof, which are reproduced hereunder:- 22. The reasons for arriving at a conclusion are as follows: 1. Four Resurgent India Bonds of 10,000 US dollars each were purchased on 1st Oct., 2003 on the application of Sri K.C. Kapadia, which is established from the application sent by the Chief Manager, SBI, NRI Branch, Mumbai. 2. Such bonds could be purchased only by NRI against the foreign cur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the identity of Sri K.C. Kapadia. 23. In the facts and circumstances and the reasons given above, we are of the view that there is no reason to doubt the genuineness of the gift by Sri K.C. Kapadia to the assessee. In any view of the matter, the assessee was able to establish the nature and source of the money. The nature and source of the money found deposited in the bank account of the assessee were the maturity amounts of the four bonds which were purchased by Sri K.C. Kapadia on 1st Oct., 1998. Therefore, so far as year under consideration is concerned, the nature and source are fully established. There is no evidence to show that the deposit in the bank account was the income from other sources of the assessee for the year under consideration. Copy of said judgment is enclosed and marked as Annexure-II hereto. 25. From a perusal of the said case law, it will be seen that case there is a striking similarity of facts as have been discussed in Para 21, 22 23 above. 18.1 As per the above paras, it is seen that this issue is covered in favour of the assessee by the judgment of Hon'ble Allahabad High Court rendered in the case of Kanchan Singh (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer, such house hold withdrawal should be ₹ 4.50 lac but no separate addition was made by him on this basis that addition on account of suppressed income from Gopalaya is made and therefore, no separate addition is made for low house hold withdrawals. Since the CIT(A) has deleted the addition made by Assessing Officer on account of Gopalaya of ₹ 480,000/-, CIT(A) has held that an addition of ₹ 15,000/- on account of low house hold withdrawals will meet the ends of justice. He submitted that there is no basis indicated by CIT(A) for upholding the addition of ₹ 15,000/- and therefore, the same should be deleted. Learned D. R. of the Revenue supported the order of learned CIT(A). 28. We have considered the rival submissions. We find that the assessee has shown house hold withdrawal of ₹ 3.62 lacs. The same was estimated by Assessing Officer at ₹ 4.50 lac but CIT(A) has although agreed with the estimate of the A.O. about household expenses of ₹ 4.50 Lacs, but he confirmed the addition of only ₹ 15,000/- by saying that the family has many earning members. But neither the Assessing Officer nor the CIT(A) has given any basis for ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t took place on 17th October, 2006, as per particulars given herein below : Sl. No. Places subjected to search Warrants in the names of (i) M/s. Banarsi Mishthan Bhandar (P) Ltd., 26/72, Birhana Road, Kanpur M/s. Banarasi Misthan Bhandar (P) Ltd., S/Shrj Jeevan Kumar Agarwal, Smt. Lalmani Agarwal Rajeev Agarwal (ii) M/S. GRS Jewellers, 59/44, Birhana Road, Kanpur M/s. GRS Jewellers, Jeevan Kumar Agarwal, Smt. Shaila Agarwal, Rajeev Agarwal Sanjeev Agarwal. (iii) 7/130, Swaroop Nagar, Kanpur M/s. Banarasi Mishthan Bhandar (P) Ltd., M/s. GRS Jewellers, Jiwan Kumar Agarwal, Smt. Lalmani Agarwal, Rajeev Agarwal Sanjeev Agarwal. various additions as have been made in the assessment order dated 31.12.2008 (as have been sustained in terms of the appellate order dated 25.02.2013 under appeal) were liable to be deleted. 32. It was fairly agreed by both the sides that these grounds are identical to the grounds rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in any manner any prejudice to the pleas raised in ground no. 9, the appellant reiterates his contention that source of the said payment (even after treated to have been made during the financial year 2004-05 relevant to the assessment year 2005- 06), stood fully proved from funds available with the appellant and his family members as per information available on record and accordingly the addition made/sustained by the authorities below is wholly erroneous. 9. BECAUSE the loose paper referred to in the assessment order merely contains projection of expenditure likely to be incurred, which is entirely different from the expenses actually incurred and accordingly the, addition of ₹ 1,25,000/- as had been made/sustained by the authorities below stands vitiated. 36. Learned A. R. of the assessee reiterated the same contentions which were raised before CIT(A) whereas Learned D. R. of the Revenue supported the orders of the authorities below. 37. We have considered the rival submissions. We find that the Assessing Officer has made an addition of ₹ 13.50 lac on the basis that as per a hand written signed agreement between the assessee and Shri Ashok Dayal (pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But on subsequent dates, the cash balance as per cash book has fallen and the minimum balance was ₹ 3,95,885/- on 03/03/2005 as can be seen on page No. 43 of the paper book. In the cash of HUF also, the balance has gone down. Under these facts, the assessee does not deserve any benefit on this account because, the cash balance has fallen down on later dates and therefore, if the same cash was used for paying ₹ 6.25 Lacs, then from where the subsequent payments were made as noted in the cash books. Moreover, even for the lowest balance in cash books after search date, the assessee says that this much cash was available with him on that date after the search date. Then how it can be accepted that the same cash was used to pay ₹ 6.25 lacs before search date. Hence, this ground is rejected. 40. Ground No. 10 is as under: 10. BECAUSE the CIT(A) has erred in law and on facts in sustaining the addition of ₹ 20,000/- in the hands of the appellant on account of alleged low withdrawals for meeting household expenses. 41. It was submitted by Learned A. R. of the assessee that the Assessing Officer has held in the assessment order that for a family o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding is also given by learned CIT(A) that even as per the seized material, receipt of ₹ 1.50 lac is seen. This receipt of ₹ 1.50 lac has been duly shown by the assessee in its income but the Assessing Officer has stated that the receipts from Gopalaya has to be considered at ₹ 6 lac without giving any basis for such estimation. Considering these facts, we find no reason to interfere in the order of CIT(A). Ground No. 1 is rejected. 48. Ground No. 2 is as under: 2. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of ₹ 4,67,921/- on account of interest accrued from ICICI Bond by ignoring the facts and material brought on record by the AO. 49. Learned D. R. of the Revenue supported the order of Assessing Officer whereas Learned A. R. of the assessee supported the order of learned CIT(A). 50. We have considered the rival submissions. We find that this addition has been deleted by learned CIT(A) on the basis that as per Notification No.F.4(9)-W M of 2003 dated 13/03/2003 reported in [2003] 260 ITR 306 (Statute), interest on 6.5% savings bonds 2003 is tax exempt. In view of this factual and legal position, no interfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and without assigning any logical reason. 55. We have considered the rival submissions. We find that as per the facts noted by CIT(A) on page No. 12 13 of his order, the assessee was owning the property situated at 128, Mall Road, Kanpur in co-ownership with his wife Smt. Shaila Agarwal and two sons namely Rajeev Agarwal Sanjeev Agarwal. The respective shares of income of the three coowners are regularly shown in their respective returns and the same are being accepted also. On the same basis, the assessee had shown the income falling to his 1/4th share at ₹ 10,970/- subject to statutory deduction of ₹ 3,291/-, resulting into a taxable income of ₹ 7,679/-. As against this, the Assessing Officer assessed the income from property at ₹ 18,000/- on account of this and various other properties. Regarding other properties, it was submitted that the property situated at 7/130, Swaroop Nagar, Kanpur is in self-occupation and therefore, no income is assessable in the hands of the owner. The second property at Arya Nagar was an open plot of land and the property constructed thereon was sold and income earned on such sale was shown as Long Term Capital Gain a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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