TMI Blog2003 (11) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... llers,South Extn. Part-I,New Delhiand M/s Rama Jewellers, Dariba,Delhifrom whom interest income has been received. The net accretion to assessee s assets on account of deposits with these firms amounted to Rs. 13,81,819. The assessee has disclosed income from interest from banks, and from these deposits aggregating to Rs. 1,72,334 and thus net accretion resulted is Rs. 12,09,436. This was treated as income from undisclosed sources which came to be assessed under the head as income from other sources and assessment was completed at Rs. 13,74,770 on protective basis with the remarks that without prejudice to the right of the Department to assess the same income in the hands of his father/natural guardian or any other person who may be found to be the actual owner of the income on investigation. 4. Shri Deepak Malhotra prop. M/s Rama Jewellers, NDSE, Part-1,New Delhihas been assessed by the Asstt. CIT, Circle-12,New Delhiat an income of Rs. 62,68,450. The AO vide para 9 of his order has stated that the learned CIT(A) has recorded finding that his son has received gift of Rs. 12,80,000 from NRI a/c No. 3147 of Punjab Sind Bank, Safdarjung, New Delhi. This gift has been received fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asst. yr. 1990-91 and 1991-92. The original acknowledgements for which were also given to the learned CIT(A). These were neither found fabricated nor as subterfuge. No such finding has been recorded. The returns are duly stamped bear number and signature of the office of the IT Department. The learned CIT(A) relied only on the internal report and remained silent on the document, which in original was available with him. Adverse inference therefore could not have been drawn. Even though the assessee had taken an objection before the AO regarding jurisdiction vide his letter dt.2nd Nov., 1992copy placed at assessee s paper book p. 12, the ITO proceeded in completing the assessment without disposing the application before him for transfer of record and the learned CIT(A) upheld the validity of the jurisdiction. Such decision of the learned CIT(A) is erroneous and needs to be set aside. 7. On merit the issue involved is for addition of Rs. 12,09,436 and enhancement thereof to Rs. 12,80,000 as unexplained investment for accretion in investment in M/s Rama Jewellers. The learned CIT(A) vide para 3.3 of his order has recorded the version of the assessee that the protective assessment ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act upon the request to summon the donor and as such it was not permissible in law to draw an adverse inference without summoning or examining the donor. Reliance has been placed on the apex Court decision in the case of CIT vs. Orissa Corporation (P) Ltd. (1986) 52 CTR (SC) 138 : (1986) 159 ITR 78 (SC) and in the case of Nathu Ram Prem Chand vs. CIT (1963) 49 ITR 561 (All). 9. It was further contended that the learned CIT(A) has gone wrong in saying that the assessee has not furnished any evidence to indicate that NRE a/c 3147 belong to Shri Sudhir Gupta of the given address despite the fact that banker certificate showing the nomenclature of the account was duly furnished before him. It is not in dispute that the account is of NRE and as per Banking Regulation Act, it cannot be opened by a person who is resident inIndia. There is no material to suggest that the appellant is owner in law. Merely on suspicion and surmises basis no presumption can be drawn that the said NRE a/c was that of the assessee. 10. The assessee had identified the donor and fixed consideration to show that gift was received out of natural love and affection and through banking channel. The amounts there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment and the nature and source thereof which had came from the bank account of Master Abhinav Malhotra. No protective addition could have been made in his hands. It was also contended that money is not found to have come from the sources of his father Shri Deepak Malhotra and he cannot be said to be the ultimate beneficiary as the interest thereon has been paid to Master Abhinav Malhotra on the liability in his hands. The addition for un-explained investment in the firm thus cannot be made in the hands of Shri Deepak Malhotra on substantive basis particularly when the amount had come from the bank account belonging to Master Abhinav Malhotra and part of the receipt stood already admitted by the Department itself. It was, therefore, prayed that the addition needs to be deleted from both the hands. 13. In counter reply the learned Departmental Representative strongly objected to the question of jurisdiction as raised by the learned counsel for the assessee. Master Abhinav Malhotra was validly assessable under the jurisdiction with the AO, New Assessee Circle-7(1)New Delhi. This was a newly created circle and the record did not reveal existence of returns claimed to have been file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all that what the authorities are required to do. In case the departmental enquiry revealed that there are no returns on the record of the Revenue but acknowledgements in original thereof were available, it was for the Revenue to have brought such an enquiry to the logical conclusion by finding out as to how and under what circumstances such returns have vanished from the record without taking entry thereof and also fixed the responsibility of its official. For any lapses on the part of departmental officials, assessee s claim of lack of jurisdiction could not have been brushed aside without showing that the acknowledgements are fabricated or procured. The learned CIT(A) did not record any such finding. Under such circumstances, without reading anything to the disadvantage of the assessee, essentially the filing of returns for which original acknowledgements were on record, the learned CIT(A) had to be accepted. Learned counsel has also explained that the return for the impugned year came to be filed in New Assessee Circle 7(1),New Delhi, because all the returns in that year were centrally received at one place. This fact has not been denied by the Revenue. The assessee is also fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een received as a gift from Shri Sudhir Gupta is his own account or otherwise. The bankers had also issued a certificate which confirmed the correctness of particulars of receipt supported by the appellant. Once it is established that the monies have come from NRE a/c and there is no contrary evidence in possession of the Revenue, it was not permissible to draw any adverse inference. The NRE a/c has sufficient balance wherein the monies as found earlier also had come in foreign exchange. No doubt could thus be raised about the capacity of the donor to make such a gift unless he had examined or the enquiries made. The receipt of the amount is evidenced by a letter written by the donor and placed on the record of the Revenue by the assessee. This letter had not been found false or fabricated. Under such circumstances, the veracity of the assessee that the amount has actually been received as a gift cannot be doubted.. The receipt of the sum of Rs. 12,80,000 by Master Abhinav Malhotra has essentially to be accepted as genuine gift received from Shri Sudhir Gupta which otherwise also was covered by the immunity granted under the Remittances of Foreign Exchange Investment in Foreign B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with direction to enhancement in the hands of Master Abhinav Malhotra as well as on protective basis and in the hands of Shri Deepak Malhotra on substantive basis are directed to be deleted. 18. In ITA No. 2753/Del/96 ground Nos. 1 to 6 in assessee s appeal and in ground No. 1 in ITA No. 3939/Del/94 of Revenue s appeal the common issue relates to the trading addition of Rs. 16,34,429 and ground Nos. 7 and 8 in assessee s appeal are stated merely the observations for which no additions have been made but such findings are un-called for. All these grounds being common are taken up together. 19. The AO made trading addition of Rs. 16,34,429. The learned CIT(A) however deleted the addition of Rs. 12,88,400 and sustained the balance addition of Rs. 3,48,629 wrongly mentioned in the ground by the assessee as Rs. 3,47,849. Prayer to amend this ground was also allowed. The Revenue is in appeal for the relief of Rs. 12,88,400 given by the learned CIT(A) while the assessee has challenged the sustenance of addition of Rs. 3,48,629. 20. The assessee s counsel Shri Agarwal contends that the learned CIT(A) has found as a matter of fact that the sales have been estimated at Rs. 85 lakhs wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apex Court decision in the case of Chainrup Sampath Ram vs. CIT (1953) 24 ITR 481 (SC). 21. The learned counsel besides relying on written submissions before learned CIT(A) placed at assessee s paper book p. 196 has also made reference to the GP rate chart placed at assessee s paper book when compared to the sales in the earlier years and a note was also appended to such GP chart filed with the return. The increase in wholesale sales have resulted into earning of lower profit by the assessee. Furthermore when the results of the appellant are compared with the results of other persons in the similar trade for the same assessment year and the profit rate is less of such other traders like Mehra Sons, copies of which have also been filed and stand accepted by the Department, no addition was warranted. 22. On the other hand, the learned Departmental Representative while opposing the pleas raised by the learned counsel for the assessee further contends that the relief given by the learned CIT(A) to the assessee is not in conformity with the facts and circumstances of the case. The learned CIT(A) vide para 4.3 has already recorded a finding that there are certain discrepancies in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed in the year under consideration. The assessee has explained and reconciled what are alleged as defects. 24. The AO has also sent report to the written submissions filed before the learned CIT(A) which are contained at assessee s paper book p. 189 and the assessee has given rejoinder thereto. Copy placed at p. 196. The reasoning given also stands narrated in the letter written to the learned CIT(A), copy placed at p. 165 onwards with a special reference to p. 167. It was, therefore, contended that there is no merit in the ground taken by the Revenue and assessee s ground needs to be allowed. 25. We have heard the parties with reference to the material available on record. There is no consistency in the basis of valuation of closing stock. The learned CIT(A) has recorded a finding that there is no undervaluation of closing stock. Both opening and closing stock stand properly accounted for. The purchases are also fully vouched. There is no discrepancy found. The learned CIT(A) after verification of the entire facts and after making complete analysis came to the conclusion that estimation of sales at Rs. 85 lakhs as against the sales of Rs. 69.03 lakhs disclosed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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