9911796707
TMI Blog2001 (11) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the assessee submitted that since a question of law is involved, permission for raising the same may be accorded. It was also contended that no fresh enquiry is needed in respect of additional ground as all the facts are already available on the records. The reliance was also placed on the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (1999) 157 CTR (SC) 249 : (1998) 229 ITR 383 (SC). 3.1. In his rival submissions, the learned Departmental Representative strongly opposed the admission of the additional ground and submitted that no such plea was taken before the AO so the additional ground should not be admitted. 3.2. We have heard the learned representatives of both the parties. It is noticed that the Legal question arises from the facts which are already on the record and nothing new is required. In view of that fact, we are of the view that the additional ground raised by the assessee deserves to be admitted. Keeping in view the ratio laid down by the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT wherein it has been held that: "Undoubtedly, the Tribunal has the discretion to al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42,019 and no basis of income/expenses shown had been furnished. The AO further noticed that during the course of search operations, a number of conveyance deeds in the form of sale deeds/agreement to sell/general power of attorney involving transfer of immovable property were found/seized from the possession of the assessee. According to the AO in property dealing, the brokerage commission was generally 2 per cent and if the consideration was of substantial amount then the brokerage commission was about 1 per cent. The AO observed that the possession of the conveyance deed by the assessee as a property dealer established that he was having vested interest in such deals. He accordingly, estimated the brokerage earned by the assessee in the following manner: Seizure memo No./page Description Date of document Amount Rs. Brokerage as above Rs. A-8/1 to 3 Sale deed 6-6-1990 1,20,000 2,400 @ 2% A-8/7 and 8 Agreement 22-10-1990 20-8-1990 5,97,246 2,94,795 11,945 @ 2% 5,896 @ 2% A-8/96 to 100 Agreement Oct/Nov. 1990 20,00,000 20,000 @ 1% A-8/236 and 237 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... items i.e. furniture and fixture and loan and advances amounting to Rs. 23,400 and Rs. 2,47,400 respectively remained undisturbed. It was argued that the assessment order of the AO for the asst. yr. 1990-91 was quashed and as such the assessee was in a position to spend the amount of Rs. 18,000 on account of household expenses and also Rs. 1,52,600 on account of price of plot and renovation. It was argued that the investment in plot and construction as well as household expenses were duly explained from the assets in the balance sheet and no addition was called for. It was also stated that the investment of Rs. 5,000 made in the multi-benefit scheme on 9th Jan., 1991 was made by the daughter of the assessee who was married in 1983. Accordingly, it was submitted that no addition was called for. The learned CIT(A) observed that there was no basis for considering that whatever was stated in the balance sheet as on 31st March, 1990 was correct and there was no detail/evidence to substantiate that the assessee was having loan and advances of Rs. 2,47,400 and cash in hand of Rs. 76,210 as on 31st March, 1990. He further observed that cash in hand as on 31st March, 1990 and 31st March, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee vide their reply dt. 12th March, 1996 in pursuance to the questionnaire dt. 8th Feb., 1996 issued by the AO clearly pointed out that though the said documents were found from the premises of the assessee but the assessee had no link with the same because those related to other persons and the assessee was not having any interest in the said transactions. It was also pointed out that the sons of the assessee S/Sh. Anil Kumar and Anoop Kumar were residing with the assessee and were also partner in the firm M/s Jai Bhagwati Traders, Jalandhar, to whom seizure memo A-9/1996 to 100 related. It was also pointed out that son of the assessee Sh. Anil Kumar was also carrying on the business of property dealing and was regularly assessed to income-tax and the documents found and seized vide memo No. A-8/7 and 8 were executed through Sh. Anil Kumar who was having power of attorney from S. Paramjeet Singh, Tejinder Singh and S. Amritpal Singh, who asked him to sell these plots on their behalf. But since the purchaser did not sign the documents because of the dispute of the railways, therefore, the said transaction did not mature and the unexecuted documents remained with the son of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laring an income of Rs. 23,820 which was assessed under s. 143(1) of the IT Act on 12th Feb., 1993 and during the processing of the return under s. 143(1), the AO accepted the gross receipt from the commission shown by the assessee at Rs. 42,019. It is also relevant to point out that the AO by his own calculations calculated the brokerage/commission at Rs. 55,241 but further enhanced the estimate at Rs. 75,000 and allowed a deduction @ 20 per cent on that estimated income. It is not clear how the AO considered that the assessee incurred expenses to the tune of 20 per cent of the total receipts. From the aforesaid discussions, it would be clear that the AO had not brought any concrete evidence/material to establish that the assessee in fact earned a commission of Rs. 75,000 during the course of its business which pertained to the property dealing. In that view of the matter, we are of the view that there was no justification in estimating the income of the assessee at Rs. 60,000 from the property dealing business. The learned CIT(A) while confirming the action of the AO also did not appreciate the facts of the case properly In that view of the matter, the action of the learned CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,00,232 2,00,232" It is also noticed that the assessee also furnished the balance sheet for the year ending 31st March, 1990 along with the return of income filed on 20th Nov., 1992 wherein the particulars furnished were as under: "Balance Sheet Rs. Rs. Old balance 3,42,652 Furniture and fixtures 23,400 Less: Drawings 15,000 Loan and Adv. 2,47,400 3,27,652 Cash in hand 76,210 Add: Net profit 19,358 3,47,010 3,47,010" A plain reading of the aforesaid balance sheet shows that the assessee was having a capital of Rs. 3,47,010 as on 31st March, 1990 which comprises of furniture and fixture, loan and advances and cash in hand to the tune of Rs. 23,400, Rs. 2,47,400 and Rs. 76,210 respectively. On perusing the assessment order for the asst. yr. 1990-91, it is noticed that the AO had observed as under: "As such on fairly basis by taking the furniture as being old and loan and advances without details as intangible, the cash in hand shown is treated to be unexplained inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court in the case of Anantharam Veerasinghaiah Co. vs. CIT, we are of the view that the AO was not justified in not considering the explanation of the assessee that the investment was made out of funds available to him as on 30th March, 1990. In that view of the matter, we are of the view that the learned CIT(A) was not justified in confirming the action of the AO for making the addition of Rs. 92,600. 9. As regards to the addition of Rs. 24,000 on account of household expenses, we are of the view that the authorities below have not given any cogent reason for estimating the household expenses at Rs. 24,000. On the other hand, the assessee explained vide its balance sheet dt. 31st March, 1991, that the household expenses amounting to Rs. 18,000 were met out, out of the business income amounting to Rs. 23,822. 9.1. As we have already held that the AO had not given any cogent reasons for estimating the household expenses at Rs. 24,000, we are of the view that there was no reason to make the addition in the hands of the assessee when the expenses were fully explained out of the capital of the assessee. 10. Another addition of Rs. 5,000 was made on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly disposed of. 13. Ground No. 4 relates to the levy of interest under ss. 234A and 234B of the Act. 13.1. The AO is directed to decide the issue in the light of the decision of the Hon'ble Supreme Court in the case of CIT vs. Ranchi Club Ltd. (2000) 164 CTR (SC) 200 : (2001) 247 ITR 209 (SC), in case if any, interest is leviable under ss. 234A and 234B of the IT Act. 14. Ground Nos. 1 and 5 are general in nature, hence no specific findings are required. 15. Additional Ground: The additional ground taken by the assessee in this appeal relates to the liability of legal heirs to the extent to which the estate is capable of meeting the liability. 15.1. Since we have deleted the additions on merits, therefore, this ground is of only academic nature and as such no specific findings are given. 16. ITA No. 249/Asr/1998 In this appeal, the assessee has raised following grounds: "1. That the order of the CIT(A) is against law and facts of the case. 2. That the CIT(A) has erred in not appreciating that the reason to initiate reassessment proceedings did not exist and consequently the proceedings initiated under s. 147 are without justification and case is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission at the time of transfer of property from one hand to another generally went unrecorded. According to him the possession of the conveyance deed as a property dealer established that the assessee had vested interest in such deal. Accordingly, he estimated the income as under: "Seizure memo No./page Description Date of Document Amount Brokerage as above A-8/96 to 100 Sale Deed 12-7-1991 43,48,750 43,487 @1 % A-8/103 and 104 Sale Agreement 31-1-1992 54,000 1,080 @2 % Brokerage 44,567 In the aforesaid manner, the AO calculated the gross commission earned by the assessee at Rs. 44,567. He further pointed out that it was fair to estimate gross income at Rs. 60,000 since the assessee had not produced accounts books/complete details. Thereafter, he allowed deduction @ 20 per cent on account of expenses and estimated the net income from property dealing at Rs. 48,000 as against the income disclosed by the assessee at Rs. 24,648. The AO further noticed that the assessee had shown an expenditure of Rs. 1,05,200 on account of construction of the hous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 48,000 from property dealing. In respect of another addition of Rs. 44,621, the learned CIT(A) had observed that the AO already allowed the benefit of opening cash in hand of Rs. 68,439 to the assessee and had considered the cash available at Rs. 46,579 (opening cash Rs. 68,439 - closing balance Rs. 21,860) and also the income of Rs. 48,000 from the commission. According to him, the addition of Rs. 44,621 (Rs. 1,39,200 - Rs. 48,000 - Rs. 46,579) was rightly made. He further pointed out that whatever was stated in balance sheet as on 31st March, 1991, was not correct state of affairs, particularly, when there was no detail/evidence to substantiate that the assessee was having loan and advances of Rs. 1,08,393 as on 31st March, 1991 and from that asset i.e. loan advances, the investment in the property and withdrawals for household expenses had been made. Accordingly, the addition of Rs. 44,621 was also upheld. As per above discussions, the learned CIT(A) confirmed the action of the AO in assessing the income at Rs. 92,621. 17.3. Being aggrieved, the legal heirs of the assessee are in appeal. The learned counsel for the assessee submitted that the AO had made the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to estimate the income of the deceased at Rs. 60,000. The learned counsel for the assessee vehemently argued that the AO himself calculated the gross income at Rs. 44,567 as against the gross income shown by the assessee at Rs. 43,892. But later on, the AO enhanced the estimated income at Rs. 60,000 and allowed the expenses @ 20 per cent thereby made the addition of Rs. 48,000. But the aforesaid addition was without any basis and merely based on the surmises and conjectures which is not tenable in the eyes of law. As regards to the investment amounting to Rs. 1,05,200 on account of house construction, the learned counsel for the assessee submitted that the investment was made out of the funds available with the assessee at Rs. 2,00,232 as per balance sheet dt. 31st March, 1991. It was also argued that the AO has not given any cogent reason for estimating the household expenses at Rs. 24,000 as against the household expenses shown by the assessee at Rs. 18,300. It was submitted that for the preceding year, the household expenses shown by the assessee were at Rs. 18,000 whereas for the year under consideration, the assessee had shown the household expenses at Rs. 18,300 which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, when Sh. Anil Kumar son of the deceased-assessee was also doing the business of property dealing. We also find some force in this contention of the learned counsel for the assessee that no commission is charged on sale agreement and the commission can only be charged when deal matures. It is also relevant to point out that the AO himself calculated the gross receipts from the brokerage at Rs. 44,567 but enhanced the same at Rs. 60,000. It is noticed that the AO had not given any cogent reason for allowing the deduction on account of expenses @ 20 per cent. In that view of the matter, it appears that the AO estimated the income from property dealing at Rs. 48,000 without any basis and the same deserves to be deleted. As regards, the investment in the money multiplier deposit amounting to Rs. 10,000 is concerned, it is an admitted fact that the investment was in the name of Smt. Soma Devi, wife of the deceased-assessee and the AO had not brought anything on record to establish that the assessee himself made the investment in the name of his wife particularly when the AO failed to verify the investment from Smt. Soma Devi. Accordingly, we are of the view that there was no justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes to the initiating of assessment proceedings under s. 147. At the same time, the additional ground taken by the assessee in this appeal relates to the liability of legal heirs to the extent to which the estate of the deceased is capable of meeting the liability. 20.1. Since we have deleted the additions on merits and, therefore, these two grounds are of only academic nature and as such no specific findings are given. 21. ITA No. 151/Asr/2000: Asst. yr. 1993-94 The Department has taken following grounds in this appeal: "1. That on the facts and in the circumstances of the case, the learned CIT(A) has erred in deleting the addition on account of brokerage income of Rs. 4,80,000." 21.1. The brief facts relating to this case are that the deceased-assessee late Sh. R.D. Sharma was a property dealer, a search and seizure operations took place at his residence on 26th March, 1993. A statement of late Sh. R.D. Sharma, was recorded under s. 132(4) in which a surrender of Rs. 5 lacs had been made. During the search operations, late Sh. R.D. Sharma developed pain in the chest and was shifted to the hospital where he expired on 31st March, 1993. The return for the financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he slip of papers, it was stated that the same might have represented the hypothetical calculation when either the prospective purchaser or prospective seller who were considering the prospective sale or purchase price. It was requested to the learned CIT(A) that the concerned parties should have been examined to arrive at truth about the agreements. In that view of the matter, the learned CIT(A) directed the AO vide letter dt. 9th June, 1998, to call for the purchasers and sellers whose names were reflected in the seized agreements to ascertain that late Sh. R.D. Sharma was party to those transactions and whether any brokerage was paid to him or not. In response to the aforesaid directions, the AO pointed out vide letter No. 443 dt. 14th Oct., 1999, that either the addresses of the parties were; not reflected in the seized documents or even names and addresses were not mentioned. However, the AO reported that in few cases where the names and addresses were mentioned summons were issued, but those were not complied with, only one Sh. Parveen Kumar appeared but he denied that any deal had matured in respect of agreements. When the learned counsel was confronted with the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar appeared but he denied that any deal had matured in respect of agreements. From the above discussed facts, it appears that the estimate of the AO was without any basis. In other words, the AO estimated the income at Rs. 4,80,000 on the basis of surmises and conjectures only. Considering the entire facts of the case, we are of the view that the learned CIT(A) was justified in deleting the addition made by the AO Accordingly, we are inclined not to interfere with the findings of the learned CIT(A). In that view of the matter, we find no merit on the ground raised by the Department. 22. Now, we take up appeal of the assessee in ITA No. 129/Asr/2000: asst. yr. 1993-94. The assessee has raised following grounds in this appeal: "1. That the order of the CIT(A) is against law and facts of the case. 2 That the CIT(A) has erred in concurring with the AO in making addition of Rs. 40,000 as investment in the shop, at Doaba College Chowk, Jalandhar, which had been made by the son of the deceased who is existing assessee and this investment has been considered in his case while framing his assessment under s. 143(3). 3. That the CIT(A) has erred in concurring with the AO in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement recorded under s. 132(4) and argued that no such statement was given by the deceased-assessee. Accordingly, it was submitted that the addition was made without any basis and the same deserves to be deleted. 24.3. In his rival submissions, the learned Departmental Representative strongly supported the orders of the authorities below. 24.4. We have heard both the parties and perused the material available on the records. On going through the statement recorded under s. 132(4), it is noticed that the AO asked the deceased-assessee eight questions [the statement under s. 132(4) is available at pp. 15 to 18 of the assessee's paper book]. None of the eight questions was related to the plot/shop situated at Doaba College Chowk, Jalandhar. Even nothing is mentioned in the statement that the deceased-assessee admitted having purchased one shop for Rs. 35,000. On that score alone, the addition made by the AO deserves to be deleted. 24.5. We have also perused the agreement, dt. 2nd Feb., 1993, in between Sh. Nand Kishore son of Shri Chanaya Lal and Shri Anoop Kumar son of Shri Ravi Dutt placed at p. 14 of the paper book, which clearly shows that the deal pertaining to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and one Shri Sushil Kumar Gupta son of Shri Mittar Pal, r/o H No. 322, Gali No. 6-A, Central Town, Jalandhar. It was submitted that the aforesaid agreement had remained incomplete as the same was not signed by the aforesaid Shri Sushil Kumar Gupta (the alleged purchaser). It was argued that the aforesaid property was a part of Khasra No. 9-11-12-30/2 bounded as under: East Others West Others North Road South Abadi was owned by one Sh. Kartar Chand s/o Sh. Diwan Chand, r/o B-IX/461, Santokhpura, Jalandhar. It was pleaded that the deceased-assessee was a property dealer to whom Sh. Kartar Chand (the owner) expressed his intention to sell the aforesaid property and asked the deceased-assessee to look for some customer, on that basis, the deceased-assessee got a customer namely Sh. Sushil Kumar Gupta, who was ready to purchase the said property @ Rs. 20,000 per Marla. The assessee made up his mind that instead of directly introducing the said purchaser to the seller Sh. Kartar Chand for which he would only be entitled to commission on the said transaction, the deceased-assessee decided to purchase the said property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the addition and consequently, the learned CIT(A) rightly upheld the action of the AO because no proper explanation was furnished before him. 25.5. We have heard the learned representatives of both the parties and also perused the material available on the records. It appears that the controversy related to the property measuring 1800 sq. ft. situated at Village Chack Husasna, Jalandhar which was part of Khasra No. 9-11-12-30/2 and was bounded on east and west by other, on north the road and south by Abadi. It is not in dispute that the property mentioned in the sale agreement in between Sh. R.D. Sharma, the deceased-assessee and Sh. Sushil Kumar Gupta, the alleged purchaser and in the sale deed No. 11482 in between Sh. Kartar Chand and Sh. Anil Kumar Tiwari was the same. It is also noticed that the agreement dt. 17th March, 1993, was not signed by Sh. Sushil Kumar Gupta, so it cannot be held that the said agreement was a complete agreement. It is also noticed that the same property i.e. plot measuring 1,800 sq. ft. (which was a part of Khasra No. 9-11-12-30/2) was sold by Sh. Kartar Chand on 18th March, 1993. It seems that the addition was made by the AO on the basis of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee submitted before us that the AO made the addition on the basis of diary marked as Annexure A-2 by placing reliance on page No. 5 wherein the said expenditures were mentioned. It was pleaded that the AO failed to adduce any further evidence to corroborate that the said annexure and the said notings pertained to the assessee. It was submitted that the notings in the said diary were not in the handwriting of the assessee. It was pointed out that the said diary was relating to the year 1989 and at page No. 10 the name of the assessee was reflected which stands as under: "Ravi Dutt Sharma, H.No. 148/A Aman Nagar, Jalandhar." The learned counsel further submitted that from the aforesaid notings it was clear that the diary did not belong to the assessee because no person would mention his own name and address in the list of the persons acquainted to him in his own diary. It was pointed out that at p. 6 of the said diary, it was noted that an amount of Rs. 700 was utilised towards liquor but the deceased-assessee was a staunch 'Brahamin' where one had to be a teetotaler not by choice rather by their religion which showed that the diary did not belong to the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he orders of the authorities below. 26.4. We have heard both the parties at length. After going through the various notings in the said diary seized by the Department which is placed at page Nos. 25 to 32 of the paper book, we are of the view that in the said diary some addresses were mentioned. It is not on the record whether the diary actually belonged to the deceased-assessee. It appears that proper explanation was not furnished before the AO. It was also the alternate contention of the learned counsel for the assessee that the expenditure mentioned at page No. 5 of the said diary were aggregating to Rs. 29,070 only and the assessee was in a position to meet out the same from his income disclosed by the legal heirs at Rs. 50,000 and out of the cash in hand available as on 1st April, 1992. Considering the entire facts of the present case and to meet the ends of natural justice, we think it appropriate to remand this issue back to the file of the AO with the direction to decide the same afresh. The AO is also directed to afford reasonable opportunity of being heard to the legal heirs of the deceased-assessee to defend their case. This ground of appeal is disposed of in the mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he two hands i.e. in the hands of the deceased-assessee as well as in the hands of his son namely Sh. Anil Kumar. The AO is directed to give an opportunity of being heard to the legal heirs of the assessee and the legal heirs are free to adduce any evidence in support of their contention. 28. The last ground raised by the assessee i.e. ground No. 6 relates to the addition of Rs. 25,000 by estimating household expenses. 28.1. The learned CIT(A) mentioned in his order as under: "(E) The AO had estimated the household expenses of the family at Rs. 25,000 taking into account that the family consisted of more than five members. Although, the AO had not made any separate addition for this taking into account the income from property but the estimate was disputed by the appellant in para 2(iv) of the grounds of appeal. Nothing was pointed out against the estimate of Rs. 25,000. Considering the facts of the case, the estimate of Rs. 25,000 for the whole year for the household expenses cannot be considered as excessive and the same is upheld." 28.2. We have heard the learned representatives of both the parties on this issue and also perused the order of the authorities below. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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