TMI Blog1999 (12) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the AO the assessee is in appeal before us. Seven grounds have been raised. The same are discussed and disposed of as follows: 3. Ground No. 1 reads as under: "On the facts and in the circumstances of the ease, the AO has gravely erred in making the addition of the various amounts received by the appellant's four children on different occasions being customary receipts or presents, treating the same as bogus gifts. The details of these additions are: ----------------------------------- Financial year Amount ----------------------------------- 1995-96 (Part) 1,500 1994-95 3,500 1993-94 8,701 1992-93 9,150 1991-92 9,500 1990-91 9,250 1989-90 10,500 1988-89 10,404 1987-88 12,200 1986-87 11,000 1985-86 5,500 ------ 91,205 ----------------------------------- 4. The assessee has four children namely 1. Miss Dimple (daughter) 2. Mr. Umesh (son) 3. Mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the rival submissions and perused the facts on record. We find great force in the submissions of the learned counsel. It is customary in Hindu society that children do get gifts on birthdays, on festive occasions and on family social functions. It is noted that the amounts of gifts are so petty that there is no reason to disbelieve the gifts received as is clear from the details of gifts received by the children that each child has received gifts every year ranging from Rs. 1,500 to Rs. 3,000 only. It is also noted that the four children have agricultural income and this agricultural income has been accepted by the AO. We have perused the details of agricultural income shown at p. 3 of the paper book and note that the agricultural income is taken at net amount after paying petty expenses, if any, incurred by the children from time to time. Taking into consideration all these facts, we see no justification for the impugned addition. The same is accordingly deleted. This ground accordingly succeeds. 8. Ground No. 2 relates to the addition on account of unexplained investments in purchase of agricultural lands. The yearwise details of additions made and challenged are as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the document. The AO however, refused to accept their statements made in the cross-examination and made the addition of Rs 1,36,470 as undisclosed income. Thus, the total addition made was Rs. 20,46,052. 9. Shri S.N. Doshi, the learned counsel for the assessee submitted that as regards the value prescribed or the stamp duty, it has limited purpose of collecting the stamp duty and it cannot mean that actual price paid has to be the same. He submitted that actually there was a proposal in the Union Budget of 1998-99 of amending s. 48 to the effect that for the purpose of computing capital gain the consideration received shall be substituted by the value adopted for stamp duty, if such value is higher than the consideration received. However, on having realised the correct position with respect to determination of such values by the different State Governments under different guidelines, the Finance Minister had quite rightly cancelled this proposal while getting passed the Finance Act, 1998. The learned counsel further submitted that the price stated in the document is the actual price based on negotiation and on taking into accounts innumerable factors such as adverse title to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on record. So far as the addition of Rs. 19,09,582 on account of alleged excess paid over the document price is concerned, the same is legally not tenable in view of Rajasthan High Court judgment in the case of Krishna Kumar Rawat Ors. vs. Union of India Ors. (1995) 123 CTR (Raj) 61 : (1995) 214 ITR 610 (Raj) at p. 628, Madras High Court judgment in the case of CGT vs. R. Jawahar (1996) 133 CTR (Mad) 119 (1996) 217 ITR 59 (Mad) and the decision of the Supreme Court in the case of Jawajee Nagnatham vs. Revenue Divisional Officer, Adilabad A.P. Ors. (1994) 4 SCC 595 and in the case of U.P. Jal Nigam vs. M/s Kalra Properties 1996 AIR 1170 (SC). Moreover, out of the above, additions of Rs. 99,000 for asst. yr. 1991-92 and Rs. 6,89,000 for asst. yr. 1992-93 are bad in law because the same were not proposed in the draft assessment submitted for the approval to the CIT and accordingly, the assessee never got an opportunity to put his case before the Revenue authorities. 12. As regards the addition of Rs. 1,36,470 is concerned, the same has been made by the AO on the basis of statements of the vendors recorded at the back of the assessee. Such statements recorded at the back of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 27th Sept., 1996 wherein, she categorically stated that she never received any on money from any wholesale distributor including the assessee. The AO relied on her original statement and made an addition of Rs. 4,17,830 in the asst. yr. 1994-95 and Rs. 4,36,630 in the asst yr. 1995-96. 14. Shri S.N. Doshi, the learned counsel for the assessee submitted that there is no justification for the impugned addition. As Mrs. S.N. Godbole has categorically stated that she had never collected any on money from the wholesalers and that her original statement was recorded under tremendous mental pressure brought on her by the tax officials. Further, she has not been able to collect the on money from the assessee. The learned counsel further submitted that there is no record or evidence found and seized from her premises at the time of search which could substantiate the collection of such on money. The learned counsel further submitted that as per the assessee, whatever on money he collected from his retail customers for and on behalf of the manufacturer had been paid to the manufacturer and that this does not give rise to any income much less the undisclosed income. This factual positio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th July, 1996, Shri J.R. Agarwal had collected on money. Later on, the Departmental Representative submitted that Smt. S.N. Godbole retracted from her original statement but since in the original statement, Smt. Godbole has made a spontaneous statement, the same should be preferred over her subsequent statement. 16. We have considered the rival submissions and perused the facts on record. The question for our consideration is whether the assessee paid 'on money' on its purchase of country liquor from M/s S.N. Products. If yes, whether the assessee is entitled to deduction of the same under s. 37. It has been admitted by the assessee in his statement under s. 132(4) recorded on 16th Oct., 1995, in answer to question No. 7 that he had paid the 'on money' to M/s S.N. Products on the purchases of country liquor at the rate of Rs. 10 per box. A copy of the statement is placed on pp. 93 to 95 of the Departmental paper book. Smt. S.N. Godbole, proprietress of M/s. S.N. Products has also accepted this fact in her statement recorded under s. 132(4) on 21st Sept., 1995. In answer to question No. 13 it has been specifically admitted by her that she was charging on money from her customers i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and agricultural cash Rs. 1,00,000. 19. Ground No. 5 is with respect to the addition of Rs. 2,38,597 on account of suppression of sales. Though this addition is objected by the assessee for the reasons explained on pp. 7 and 8 of the paper book but during the course of hearing before us, the learned representative of the assessee submitted that this addition of Rs. 2,38,597 be considered as covered in the declaration of cash of Rs. 2,90,000 for asst. yr. 1996-97 otherwise this addition of Rs. 2,38,597 would amount to double addition. Therefore, ground No. 4 stands restricted only to the addition of Rs. 2,38,597 out of the total addition of Rs. 6,15,900 and therefore, excess of Rs. 6,15,900 over Rs. 2,38,597 i.e. Rs. 3,77,303 remains and this addition was not pressed. Accordingly, this addition of Rs. 3,77,703 would stay. It was conceded by the learned Departmental Representative that the addition of Rs. 2,38,597 was a double addition. 20. After hearing both the sides, we delete the addition of Rs. 2,38,597 and the remaining addition of Rs. 3,77,703 is confirmed. This ground accordingly succeeds in part. 21. In ground No. 6, the assessee has challenged the addition of Rs. 4,35 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO. 25. We have considered the rival submissions. We do not find much force in the submission of the learned counsel for the assessee. The assessee had offered a sum of Rs. 15.00 lakhs in his statement under s. 132(4) which was given on estimate basis. However, after verification of the facts the offer was retracted to Rs. 13,15,000. Since there is no material on record that the assessee had invested any amount over and above Rs. 13,15,000 we accept the retraction to this extent. However, there is no material on record to suggest that undisclosed income pertained to agricultural income. In his statement under s. 132(4) the assessee never stated that he had received money outside the books of accounts from agricultural activities. In our opinion, he has conveniently stated that the sum of Rs. 2.50 lakhs related to agricultural income. In the absence of any material on record, this submission of the assessee cannot be accepted. Accordingly, an addition of Rs. 2.50 lakhs is hereby sustained on this account. 26. Ground No. 7 pertains to the addition of gifts aggregating to Rs. 2 lakhs received from one Mrs. Chhaya N. Shah, a non-resident Indian. During the course of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft assessment order placed on record. He, therefore, submitted that since the assessee did not get an opportunity to explain this issue before the CIT who approved the draft assessment order, there is no justification for the impugned addition. At this stage, the learned Departmental Representative filed copies of correspondence between the Asstt. CIT and the CIT and submitted that the CIT had approved the proposed addition. He further submitted that the gifts were not at all genuine as held by the AO in his assessment order. 28. After considering the rival submissions of the parties, we are unable to accept the legal submission of the learned counsel for the assessee that the addition was illegal on the ground that the same was not proposed in the draft assessment order. The material produced before us by the learned Departmental Representative shows that after an opportunity given by the CIT the assessee was given an opportunity to explain the gifts from NRI. It was only after the explanation of the assessee that the fresh draft assessment order was approved by the CIT. Accordingly this submission of the assessee is rejected. 29. Coming to the merits, we find that Mrs. Chhaya ..... 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