TMI Blog2014 (8) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... s upheld and the grounds of the assessee on the issue of unexplained expenditure incurred on foreign trips are rejected. Addition of unexplained investment in property – Held that:- There is no evidence as to the person in whose hands the unexplained investment was assessed on substantive basis, the CIT(A) treated the protective addition made in the hands of the assessee, as a substantive one - It is settled principle of law that any income has to be assessed in the hands of right person - the land on which the building was constructed as in the name of assessee’s mother, right person to be assessed in respect of unexplained investment in the construction, was assessee’s mother and not the assessee, and it on this ground only that the AO, has made only protective addition in the assessment of the assessee - merely because the assessee is in exclusive possession and enjoyment of the property, it cannot be said that he is the person in whose hands substantive addition is due - on purchase bills and other papers, often, for the convenience of delivery of material, easy identification etc., instead of exposing the woman, names of head of family or other prominent male members of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06-07 31.3.2007 2,05.070 4,05,070 2007-08 31.3.2008 2,70,430 5,70,430 2008-09 - - 3,79,540 3. Assessments were completed under S.143(3) read with S.153A for the assessment years 2003-04 to 2008-09 and under S.143(3) for the assessment years 2009-10. In the course of assessments thus completed for assessment years 2003-04 to 2008-09, the Assessing Officer noticed that the assessee was engaged in the business of arranging purchase and sale of pearls and precocious stones on commission basis, and his passport revealed that he made numerous visits to China and Hongkong. As per the statement of the assessee recorded on 15.5.2008, assessee had visited China and Hongkong about 5 to 6 times in a year for and on behalf of some companies based in Mumbai and Jaipur, which are trading in pearls, gems, precious and semiprecious stones, etc. for the purpose of selecting items as per their requirement. It was also stated by the assessee that those companies were paying the assessee not only commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2,40,000 was shown as the closing balance. 5. The Assessing Officer opined that except for the above self serving and contradicting ledgers of M/s. Ganesh Narayan Co., the assessee could not furnish any name/address of any other firm on whose behalf commission business in pearls was claimed as done and foreign travels were claimed as undertaken. 6. Assessee further claimed before the Assessing Officer that he had admitted gross commission of ₹ 8,24,984 for the assessment year 2007-08 and net income of ₹ 2,44,3386 had been offered to tax after deducting expenditure of ₹ 5,80,598 towards foreign travel and incidental expenditure. Since no break up of such expenditure could be furnished, though called for specifically, the Assessing Officer opined that in the absence of any substantiating material in support of the expenditure claimed or the basis for the estimated commission, the assessee could not have been considered as having discharged the onus of explaining the sources and substantiating the expenditure. 7. Dealing with the claim of the assessee that foreign travel expenditure were borne by the customers, the Assessing Officer noted that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture, he found no justification to interfere with the view taken by the Assessing Officer, since he has adopted the same as per the tariff prevailing at the relevant time. He however, found the incidental expenditure estimated by the Assessing Officer to be slightly on a higher side. He estimated the incidental expenditure at ₹ 4,000 per day for assessment years 2003-04 to 2005-06; at ₹ 5,000 per day for assessment years 2006-07 and 2007-08 and at ₹ 6,000 per day for assessment years 2008-09, and accordingly, gave a relief of ₹ 33,000 for assessment year 2003-04; ₹ 93,000 for assessment year 2004-05, ₹ 1,77,000 for assessment year 2005-06, ₹ 70-,000 for assessment year 2006-07; ₹ 1,45,000 for assessment year 2007-08; ₹ 96,000 for assessment year 2008-09 and ₹ 6,000 for assessment year 2009-10. 10. Still aggrieved, assessee preferred the present appeals before us on this issue. 11. The learned counsel for the assessee, reiterating the contentions urged before the Revenue authorities submitted that since the assessee has offered the net income for assessment on estimate basis, taking into account all the expenditure in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reliefs granted by the CIT(A) for the years under appeal is quite reasonable, and there is no justification for any further relief from out of the additions sustained by the CIT(A) on account of daily expenditure incurred by the assessee for the days spent abroad in each of these years. We accordingly uphold the orders of the CIT(A) on this issue, and the grounds of the assessee in these appeals, on the issue of unexplained expenditure incurred on foreign trips in the years under appeal, being devoid of merit, are rejected. 14. There is one more issue in the appeal of the assessee for assessment year 2008-09, viz. ITA 1158/Hyd/2013, wherein the grievance of the assessee relates to an addition of ₹ 74,22,385 made on account of unexplained investment in property . 15. Facts in brief are that it was noticed that the building at 21-3-75, Chelapura, Hyderabad, where the assessee had been residing belonged to his mother. Investment in the construction of the said house was reflected in the return of his mother, who was residing and being assessed at Jaipur. It was observed that the land whereupon the said building was constructed admeasured 438 sq. yards and had a total b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered as substantive addition only and dealt with accordingly. For this reason and also looking to the factual aspects of the matter, including the fact that the property was under exclusive possession and enjoyment of the assessee, notwithstanding the fact that the property stood in the name of his mother, held that the addition made in this behalf has to be treated as substantive. 17. Aggrieved, assessee is in second appeal before us on this issue. 18. The learned counsel for the assessee, reiterating the contentions urged before the Revenue authorities, submitted that the CIT(A) was not justified in treating the protective addition made in the hands of the assessee, as a substantive one. On the merits of the matter, he submitted that the property in question stands in the name of the mother of the assessee, and as such, any addition on account of unexplained investment in the construction of the property has to be considered in the first place in the assessment of the owner, i.e. assessee s mother. Merely because the assessee is in possession or enjoyment of the property, or some of the bills for material, etc. were in assessee s name, it cannot be concluded that the unexp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessed in respect of such investment, and the person, in whose hands protective addition has been made, is the right person to be assessed in respect of such investment. Further, merely because the assessee is in exclusive possession and enjoyment of the property, it cannot be said that he is the person in whose hands substantive addition is due. Even the other facts, such as, bills for material, etc. are in the name of the assessee, do not clinch the issue, against the assessee, because assessee s mother being a lady, and may be even aged and not staying locally, it is quite possible that the assessee has played key role in the construction of the property, on behalf of his mother. Further, on purchase bills and other papers, often, for the convenience of delivery of material, easy identification etc., instead of exposing the woman, names of head of family or other prominent male members of the family are mentioned. In any event, Revenue has not brought on record any clinching evidence, to conclude that the unexplained investment has indeed been made by the assessee only. For all these reasons, we do not agree with the view taken by the CIT(A), in treating the addition made on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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