TMI Blog2007 (9) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of recording of his statement. (2) deleting the addition in respect of rental income, maintaining that the same is assessable in the hands of Mrs. Krishna Jolly, ignoring that entire investment in the impugned property was made by M/s. K.L. Jolly Sons (HUF)." 4. In IT(SS) A. No. 133/Delhi/2004 the revenue has taken ground No. 1 for challenging the deletion of addition of Rs. 10 lakhs on account of gift and of Rs. 1 lakh on account of premium as also for deletion and of Rs. 1,86,325 on account of another gift and of Rs. 18,632 on account of premium relating to that gift. 5. Ground No. 2 has been taken against the deletion of addition of Rs. 6,54,662 made by the Assessing Officer in respect of difference in the valuation of property No. B-205, Second Floor, Greater Kailash-I, New Delhi, ignoring the valuation report of DVO. 6. In the cross-objection No. 234/Delhi/2006 the assessee (HUF) has also challenged the validity of assessment proceedings initiated under Chapter XIV-B of the Income-tax Act. IT(SS) A. No. 132/Delhi/2004 CO No. 233/Delhi/2006 7. Wherever the assessee has challenged the order of the Assessing Officer and that of the learned Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 1996-97, 1997-98 and 1998-99. It also contains details of interest paid to M/s. K.L. Jolly Sons (HUF) and funds borrowed for investment in the house property. On the basis of these documents, it was submitted that firstly, it was not undisclosed income of the assessee and secondly, the addition could not be justified in the case of the assessee because the same income had already been considered in the case of another assessee. 10. The learned DR on the other hand, justified the order of the Assessing Officer. It was submitted by him that simply because regular assessment was made under section 143(3) in the case of the assessee in earlier year, it does not mean that the entire income was disclosed by the assessee. According to him if something requires deep scrutiny and that scrutiny was not done, then it would not mean that the income or details thereof were disclosed. 11. In rejoinder the learned counsel for the assessee further explained that the gift of Rs. 10 lakhs was received in financial year 1993-94 which was credited by bank on 13-4-1994 as is evident from the statement of bank. In this regard our attention was invited to the bank statement of the assessee of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had explained the entire facts including the amount of gift and the name of donor etc. A portion of the assessment order which is reproduced below clearly brings out these facts: "During the course of assessment proceedings vide Order Sheet entry, dated 16-3-1998, the assessee was asked to explain the credit entry of Rs. 10 lakhs (dated 13-4-1994) in his bank statement. In response to this the assessee filed a letter, dated 16-3-1998, in which he explained that the credit of Rs. 10 lakhs was received in the financial year 1993-94 i.e. assessment year 1994-95. The cheque was deposited on 24-3-1994 and the credit for the same was given by the Bank on 13-4-1994. This amount was nothing but a gift received from Dr. D.P. Parwal, a Non-Resident Indian, Bombay. On 18-3-1998, the assessee filed a letter from Dr. D.P. Parwal in support of this contention. In view of this the submission of the assessee that the credit of Rs. 10 lakhs is a gift, is accepted. After discussion, the returned income is accepted." 14. From the above observations it is clearly established that the gift of Rs. 10 lakhs was accepted as genuine in the assessment order made for assessment year 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble CIT(A), XV vide his orders in cases of Mr. Dalip Jolly, Mrs. Shoba Jolly, Mr. Pradeep Jolly and Mrs. Neena Jolly has been pleased to allow the gifts from the same donor, Dr. D.P. Parwal to the above named family members." 16. Before the Commissioner of Income-tax (Appeals) also the assessee had raised this objection by making submission in his letter dated 16-4-2003 available at pages 63 to 66 of the Paper Book. The relevant portion of this letter is as under: "In fact the issue as to the gifts received by the assessee-HUF from Dr. Parwal of Jaipur NRI was examine by the learned Assessing Officer in this very case for assessment year 1995-96 in which the gifts were received by the assessee-HUF from Dr. Parwal. After making thorough enquiry and investigation into the matter and taking into account the material the gift was accepted as genuine and order passed accordingly in the case of the HUF while framing regular assessment under section 143(3) of the Income-tax Act for assessment year 1995-96. No grounds existed for taking proceedings under section 158BD of the Act to assume any undisclosed income in respect of NRI gifts from Dr. Parwal in whose case the ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer with regard to the silver articles and utensils which came to be detected during the above search. However, the Tribunal found that all the above-mentioned articles have been declared by the assessee in the return of wealth. The said return has been duly assessed. Under the above circumstances, the Tribunal was right in coming to the conclusion that the assessee has disclosed the value of the said articles in the wealth-tax return, which was accepted by the department and, therefore, the additions made by the department on the ground of undisclosed income was erroneous. In the present matter, the assessee had disclosed the above jewellery in his returns. The said returns were processed. The said returns were duly accepted. In the circumstances, Chapter XIV-B has no application to the facts of the case. For the above reasons, question Nos. 1 and 2 are answered in the affirmative, i.e. in favour of the assessee and against the department." 20. In the case of Bhagwati Prasad Kedia v. CIT [2001] 248 ITR 562 , where the Hon ble Calcutta High Court has pointed out to the distinction between the block assessment and the regular assessment by making reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence which goes to the root of the matter and the other is on the basis of the causes shown by the assessee where the Assessing Officer is free to accept the justification shown or reject the same. The said two types of cases cannot be treated at part. Hence, we hold that the Assessing Officer was not entitled to question the said loan in block assessment which is a subject-matter of the regular assessment. Hence, the Assessing Officer was wrong in holding that the said sum can be taxed in block assessment although the same featured in the regular books of account. Similarly, the Tribunal also committed error in upholding the decision of the Assessing Officer." 21. The issue relating to the meaning and scope of undisclosed income has been dealt with in detail by the Hyderabad Bench of ITAT in the case of Essem Intra-port Services (P.) Ltd. v. Asstt. CIT [2000] 72 ITD 228 . In that case the Bench has explained the block assessment proceedings as follows: "Chapter XIV-B lays down special procedure for assessment in search cases. The special procedure set out in Chapter XIV-B is a separate set of rules, by itself. For the purposes of this Chapter, the term undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that income or property, etc. because those materials are already available, even in the absence of any recourse to search operations under section 132." 22. On examination of the provisions of section 143 and other provisions relating to regular assessment as well as provisions relating to Chapter XIV-B, following proposition can be culled out: (1)If an item of income or expenditure has already been subjected to regular assessment, then the same cannot be re-examined in the block assessment unless some incriminating or adverse material is found during the course of search. (2)There should be positive factum of non-disclosure on the part of the assessee. Such a non-disclosure should have been detected as a result of search. 23. In the case of CIT v. Ravi Kant Jain [2001] 250 ITR 141 , the Hon ble Delhi High Court has emphasized the need that in block assessment scope and ambit is limited to the material unearthed during the course of search. The observations of the Hon ble Court are as under: "Block assessment under Chapter XIV-B of the Income-tax Act, 1961, is not intended to be a substitute for regular assessment. Its scope and ambit is limited in that sense t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified in law. 26. So far as the next item of income which is about the rental income is concerned, about this item also the contention of the assessee was that the same was disclosed to the department. In this regard before the learned Commissioner of Income-tax (Appeals) following plea was taken by the assessee: "The issue as to the ownership of the property and the rental income being shown in the hands of Smt. K. Jolly and interest income being shown by the assessee-HUF are all relevant facts for regular assessment. There is no incriminating material found on search to support the revenue s case for taking action under section 158BD of the Income-tax Act. Proceedings under section 158BD are not to be based on any assumptions, surmises or conjectures. In the absence of there being any tangible evidence or material to show that the property in question belonged to the HUF and not to Smt. K. Jolly who is the real and beneficial owner, the proceedings under section 158BD regarding that property also has to be dropped in the interest of justice and fair play. The assessee s case is also supported by the finding given by the learned Commissioner of Income-tax (Appeals) in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 lakhs plus Rs. 1 lakh totalling Rs. 11 lakhs and on account of income from house property at Rs. 9,500 + Rs. 80,705 + Rs. 47,500 cannot be sustained. Thus total undisclosed income worked out by the Assessing Officer under section 158BD for the assessment years covered under the block period at Rs. 12,37,705 is to be deleted because in view of our finding recorded above, the block assessment order cannot be upheld as there as no undisclosed income which was to be computed in the hands of the assessee on the facts and in the circumstances of the case. 30. Since block assessment order is held to be invalid and unjustified in law, all the additions made in the assessment order against the assessee are to be deleted. Consequently the ground taken by the assessee in the cross-objection stands allowed. 31. In the result, the cross-objection is allowed. IT(SS) A. No. 132/Delhi/2004 32. Since we have deleted the additions by allowing the cross-objection in favour of the assessee, we are not required to deal with the grounds of revenue taken in this appeal on merits. However, we deem it proper to consider the grounds of appeal on merits also. 33. In ground No. 1 the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft, but the Assessing Officer did not place any credence on this letter. Before the Assessing Officer the assessee also submitted that the gift was accepted by the Assessing Officer in assessment year 1995-96 while framing assessment order under section 143(3). It was pointed out that bank statement and letter from Dr. Parwal regarding the gift was submitted to the Assessing Officer during the course of regular assessment and the same was accepted by him. The Assessing Officer rejected this contention also by observing that there was a lot of difference in circumstantial evidence while passing order under section 143(3) for assessment year 1995-96 and after the date of search. He thus rejected the submissions of the assessee that gift was accepted by the Assessing Officer and therefore, the same should be treated as disclosed income. 37. Thus the Assessing Officer made addition of Rs. 10 lakhs by treating the gift as bogus and as undisclosed income of the assessee in the garb of gift. He also added 10 per cent of the amount of gift as premium/consideration paid from undisclosed sources called gift. 37.1 The Assessing Officer also made addition of Rs. 9,500, Rs. 80,705 and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1994-95. 40. In appeal before Ld. Commissioner of Income-tax (Appeals), the first argument of the assessee was that the gift received by the assessee of Rs. 10 lakhs having already been disclosed and considered from the point of view of taxability in the regular assessment under section 143(3) in the case of the assessee for assessment year 1995-96, no legal valid proceedings can be taken in the hands of the assessee in the proceedings under section 158BD read with section 158BC of the Act. 41. The assessee also challenged the addition by submitting that the Assessing Officer has not properly appreciated the evidence and has drawn erroneous conclusion. In support of the arguments the assessee placed reliance on the following decisions: (1) R.K. Syal v. Asstt. CIT [2000] 66 TTJ (Chd.) 656. (2) ITO v. N. Sunitha [2001] 70 TTJ (Bang.) 27. (3) Monga Metal (P.) Ltd. v. Asstt. CIT [2000] 111 Taxman 175 (All.) (Mag.). 42. In appeal before the learned Commissioner of Income-tax (Appeals) the assessee also made detailed submissions in order to prove the identity and creditworthiness of the donor and the genuineness of the transaction. The assessee also place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax (Appeals) and has supported the order of the Assessing Officer. He pointed out that it is improbable and unnatural conduct on the part of the donor to give gift of Rs. 10 lakhs to assessee although he was not even knowing the names of the family members of the donee. He also placed reliance on the order of ITAT in the case of Chroma Business Ltd. v. Dy. CIT [2004] 4 SOT 214 (Kol.) and on the decision of Hon ble Supreme Court in the case of Sumati Dayal v. CIT [1995] 214 ITR 801 . Regarding subsequent letter written by the donor to the ADI, Jaipur, it was submitted by him that the earlier statement recorded on 22-9-1997 was the correct and true version which has been rightly considered by the Assessing Officer. 45. The contention of the learned counsel for the assessee was that the Assessing Officer has totally ignored the subsequent letters of the donor and has not dealt with the same in the assessment order properly. According to the learned counsel, no incriminating material was found during the course of search to show that the gift was bogus and whatever documents were found, were only corroborative to the genuineness of the gift. He further submitted that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ameshwar Lal Parwal Respect of Star Mansion, 18/F, Flat 4, Kowloon, Hong Kong do hereby confirm that I had given an amount of Rs. Ten lakhs by way of Gift to M/s. K.L. Jolly Sons (HUF) through cheque No. 365503, dated 21-3-1994 drawn on SBI, NRI Branch, Bombay from my NRE Account No. 3317. I was an NRI since last 23 years when the above gift was given by me. Name : D.P. Parwal Sd/- Signature." 48. On closer examination of these documents it is found that this documentary evidence only support the case of the assessee. No incriminating document of any kind was found during the course of search to indicate or to create any doubt regarding the identity of the donor or the genuineness of the transaction. The assessee has also furnished copy of Cheque No. 365503, dated 21-3-1994 for Rs. 1,000,000 of State Bank of India, NRI Branch, Bombay in favour of M/s. K.L. Jolly Sons (HUF) issued by Dr. D.P. Parwal which is at page 83 of the Paper Book. 49. The assessee has also placed on record letter of Dr. Parwal written to ADIT, Jaipur, dated 11-11-1997 available at page 4 of the Paper Book. In this letter he has made reference to the discussion on 22-9-1997 in reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roof that the payment was received on NRI Account of Dr. Parwal, letter of Dr. Parwal dated 30-8-1999, 13-9-1999. On the basis of this documentary evidence, it was submitted that the identity, creditworthiness of the donor is proved and genuineness of the gift is established. 51. In the letter dated 28-4-2003 the inaccuracies which appeared in the statement of Dr. Parwal recorded by the ADIT, Jaipur were also explained and certified by narrating circumstances. A relevant portion of this letter is being reproduced here as under: "( i )That Dr. D.P. Parwal s identity is clearly established as he appeared in person before the Ld. Assessing Officer and categorically confirmed having given gifts to the family members of the assessee-firm from his own NRE A/c. ( ii )That Dr. D.P. Parwal has creditworthiness, financial status and the financial capacity (both in Hongkong and in India) to give gifts to the Jolly family. ( iii )That Dr. D.P. Parwal had his own finds in his own Bank A/cs. In Hongkong from where he gave gifts by A/c payee cheques to the Jolly family. ( iv )That Dr. D.P. Parwal has himself established the long linkage, relationship, love and affection for Jolly fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l evidence in confirmation and in support of the assessee s case proving the genuineness of these gifts from Dr. D.P Parwal to the assessee to the hilt. He further provided documentary evidence that the gifts given to Jolly family members are from his own funds in his own NRE A/c. He also submitted documentary evidences to prove that he submitted his own funds from his own Bank A/cs. In Hongkong to his own NRE A/c in SBI, Bombay (NRI Branch) from where A/c payee cheques of gifts amounts were issued by him to members of the Jolly family. Furthermore, this very gift from the donor, Dr. D.P. Parwal has been already accepted in the case of the assessee in assessment year 1995-96 under section 143( 3 ). Even the Hon ble CIT(A)-XV vide his orders in case of Mr. Dalip Jolly, Mrs. Shobha Jolly, Mr. Pradeep Jolly and Mrs. Neena Jolly has been pleased to allow the gifts from the same donor, Dr. D.P. Parwal to the above named family members. It is also submitted that as per section 5(1)( iib ) of Gift-tax Act, the gifts from NRE Account are exempt from gift-tax and as per this sub-section, relation between donor and donee is not required. The jurisdictional Hon ble Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y incriminating material collected by the Assessing Officer during the assessment proceedings which goes to create doubt about the genuineness of the gift. 54. The only and main material taken into consideration by the Assessing Officer is the statement recorded by the ADIT, Jaipur. This statement was recorded by him during post search enquiry as is evident from the observation of the Assessing Officer in 3rd sentence of Para 4 at Page 2 of the assessment order, which is as under: "During the post search proceedings, the Income-tax Department, Jaipur has recorded the statement of Dr. Parwal. In his report the ADIT, Investigation-2, Jaipur has stated that the claim of Dr. Parwal that he is a close friend of Jolly family and the gift was made due to friendship is doubtful...." From the above portion of the assessment order it is clear (1) that during post search proceedings the ADIT, Investigation-2, Jaipur recorded the statement of Dr. Parwal; (2) that after recording statement he sent a report to the Assessing Officer; and (3) that the reasons and the purpose or the background in which the ADIT, Investigation-2, Jaipur examined Dr. D.P. Parwal during post search proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments; and ( d )issuing commissions. (1A) If the Director General or Director or Joint Director or Assistant Director or Deputy Director or the authorized officer referred to in sub-section (1) of section 132 before he takes action under clauses ( i ) to ( v ) of that sub-section, has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons, within his jurisdiction, then for the purposes of making any enquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income-tax authority." 57. In the case of Arjun Singh v. Asstt. Director of Income-tax (Investigation) [2000] 246 ITR 363 the Hon ble Madhya Pradesh High Court has dealt with the scope and ambit of the powers given to the two categories of officers. The Hon ble High Court has observed as under: "The purpose of the power under sub-section (1) of section 131 of the Income-tax Act, 1961, is in aid of actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search and seizure under section 132 of the Act. Such a power under section 131(1A) cannot be exercised for the purpose of reopening of an assessment under section 147." On going through the above decision, it is clear that sub-section (1A) of section 131 enables the officers of the department to conduct pre-search enquiries. Regarding the requirement of section 131(1A) the Hon ble High Court has observed as under: "The other requirement under sub-section (1A) of section 131 of the Act is that the authorities/officers mentioned therein in whose jurisdiction the income is alleged to have been concealed or is likely to be concealed, must have reason to suspect which in fact, is a condition precedent for the exercise of power and such reason or suspicion must be based on tangible material on the record and legally cognizable and not merely some hearsay accusation, conjectures and surmise." 58. Thus the power can be exercised under section 131(1A) of the Act for conducting investigation or enquiry relating to undisclosed income or property by any person or class of persons on the basis of reason to suspect that any income is concealed or likely to be concealed. As provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and represented his undisclosed income." In that case, during the course of search conducted at the premises of the assessee documents of certain monetary transaction such as advancement of loan by the assessee and also income by way of interest were found. On asking question the assessee explained that the account belonged to his daughter S but in her statement she denied to have any transaction with the assessee. On the basis of the statement of S, the Assessing Officer concluded that the assessee had earned income from undisclosed sources and accordingly added the amount of loan and interest to the income of the assessee. The Commissioner (Appeals) set aside the order of the Assessing Officer. On appeal by the revenue, the ITAT upheld the order and held that the Assessing Officer had taken into account the statement of S and had utilized the same against the assessee but the fact remained that the said statement was recorded behind the back of the assessee and no opportunity was given to him to cross-examine her. This view of ITAT was upheld by the Hon ble Delhi High Court and the appeal of the revenue was dismissed. 61. In the instant case also firstly in the statement reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has examined the issue in the case of Nek Kumar v. Asstt. CIT [2004] 141 Taxman 313 . In that case the donor has given affidavit and also filed a declaration that she had given gift to the assessee. There being no material evidence to show that the money was deposited by the assessee or by any relative in the bank from where it came back to the assessee, it was held that the gift could not be treated as non-genuine. 65. In the case of ITO v. Kailash Chand Bansal [2003] 129 Taxman 112 (Delhi) (Mag.), the ITO added the amounts of gifts received by the assessee on the ground that the assessee had failed to prove ingredients of love and affection and there was absence of any relationship between the donor and the donee. ITAT, Delhi Bench C observed that the assessee had adduced all necessary evidence in the form of gift deeds, affidavit of donor, bank s confirmation and copies of NRE bank accounts. On these facts, it was held that initial burden which lay upon the assessee had been discharged and the same was shifted to the Assessing Officer who had failed to bring sufficient material on record to disprove the gifts in question. The deletion of addition by the CIT was u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions cannot be interfered with. 69. So far as the addition of Rs. 1 lakh made on account of premium paid for obtaining the gift is concerned, there is no material on record to prove that any amount was paid by the assessee directly or indirectly as premium for obtaining the gift. In absence of any such material, the addition cannot be justified. We, therefore, uphold the findings of the learned Commissioner of Income-tax (Appeals) on this count also. 70. The learned AR had also brought to our notice the order of Dy. Director, Directorate of Enforcement, Delhi Zonal Office, 10-A, Jam Nagar House, Akbar Road, New Delhi rendered in the case relating to in contravention of section 9(1)( a ) and section 9(1)( a ), read with section 64(2), of FERA, 1973. Vide order dated 17-3-2005 the Directorate of Enforcement has exonerated the assessee and other family members against charges labeled against them. The relevant observations of the concerned authority are as under: "...The other evidences relied upon in the Show Cause Notice i.e., the cheques and bank accounts statements made available by the Banker are not in any way a deciding factor on the genuineness or otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Krishna Jolly. The Assessing Officer made addition of Rs. 9,500, Rs. 80,705 and Rs. 47,500 on account of income from house property in the hands of the assessee for assessment years 1996-97, 1997-98 and 1998-99. Before the learned Commissioner of Income-tax (Appeals) while challenging the addition, it was proved that the property was purchased by Smt. Krishna Jolly and she had acquired the legal title and the ownership of the property. It was further submitted that since the funds are arranged from HUF it cannot be said that the property belongs to the HUF particularly when the owner who borrowed the funds was paying the interest. The details of interest paid for funds borrowed from HUF were also submitted before the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) after considering the reasoning given by the Assessing Officer and the submissions of the assessee, deleted the addition by observing as under: "It is factually correct that the entire finances of Rs. 30 lakhs for purchase of property by Mrs. Krishna Jolly has been arranged from the HUF i.e., appellant. I agree with the ld. Counsel that merely on the grounds that funds h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese additions made by the Assessing Officer. C.O. No. 234/Delhi/2006 75. The assessee has filed cross objection by taking following ground: "That the order of CIT(A) upholding the validity of proceedings insofar as they relate to gifts and investment in property bearing No. B.205, Greater Kailash-I, are bad in law being beyond the scope of Chapter XIV-B of the Income-tax Act, 1961 and also contrary to the ratio of judgments reported." 76. In support of the ground of cross objection, the contention of the learned counsel for the assessee before us was that the gift of Rs. 10 lakhs was received by the assessee from Dr. D.P. Parwal on 5-11-1993 i.e., in assessment year 1994-95 by cheque. It was pointed out that the assessment for assessment year 1994-95 was completed under section 143(3) on 22-2-1996. The learned counsel made reference to the documentary evidence and in particular to the bank passbook to show that the assessee had made FDR of Rs. 10 lakhs on 17-11-1993 by debiting to the bank account No. 6424 with the Central Bank of India out of the gifted amount. It is further shown that the interest of Rs. 42,000 earned from the said FDR prepared out of the gifted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said FDR at Rs. 42,000 stood declared and income therefrom was accordingly assessed by the department prior to the date of search. Hence, it cannot be said that the gift remained undisclosed. We have dealt with this matter in detail while dealing with a similar issue in the cross objection in the case of M/s. K.L. Jolly Sons (HUF) and since the facts of this case are virtually similar, following the same reasoning, we allow the ground taken in the cross objection in this case also by holding that the proceedings under section 158BD are bad in law being beyond the ambit and scope of Chapter XIV-B of the Income-tax Act, Accordingly cross objection stands allowed. IT(SS) A. No. 133/Delhi/2004 (Revenue s Appeal) 80. Since we have deleted the additions by allowing the cross objection in favour of the assessee, we are not required to deal with the grounds of revenue taken in this appeal on merits. However, as these grounds were argued before us, we deem it proper to consider the grounds of appeal on merits also. 81. Ground No. 1 has been taken by the revenue in this appeal to challenge the deletion of addition of Rs. 10 lakhs on account of gift and Rs. 1 lakh being premium ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition of Rs. 1,86,325 and premium of 10 per cent Rs. 18,632 as gift received from Dr. Parwal including the premium, the Assessing Officer has not made any detailed discussion in the body of the assessment order. The entire discussion pertains to the gift of Rs. 10 lakhs but in the final paragraph the Assessing Officer included the amount of Rs. 1,86,325 in the amount of Rs. 10 lakhs making the total gift at Rs. 11,86,325 from Dr. Parwal and treated the same as bogus as undisclosed income of the assessee and further added 10 per cent as premium on the above gift. The appellant has challenged that the gift of Rs. 1,86,325 was received during the Immunity Period for assessment year 1992-93 and the same has been duly disclosed in the return and assessed. Even in his remand report submitted on 16-12-2003 vide letter No. ACIT/Cir. 23(1)/03-04/262 the Assessing Officer has not controverted the stand of the appellant pertaining to the gift of Rs. 1,86,325. The Appellant s claim that as per banker s certificate dated 18-12-1991 and 6-1-1992 the gift was received during the Immunity Period under the Immunity Scheme, 1991. In view of the fact that the gift of Rs. 1,86,325 was receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny amount through Hawala for procuring the gift. This order therefore, also supports the version of the assessee and goes against the stand of the department. In view of the above and on the entirety of the facts and circumstances of the case, the ground taken by the revenue in the appeal deserves to be rejected. Consequently this ground is rejected. 88. Ground No. 2 taken by the revenue challenges the deletion of addition of Rs. 6,54,662 made by the Assessing Officer on account of difference in the valuation of property bearing No. B-205, Second Floor, Greater Kailash-I, New Delhi. On the basis of Annexure A-12, the Assessing Officer noted the undisclosed investment of the Assessing Officer in property at B-205, Second Floor, Greater Kailash-I, New Delhi. The seller of the property was Shri Ram Kumar Mehra and the buyer was the assessee. Sale consideration was disclosed at Rs. 48 lakhs. The assessee was required to filed documentary evidence along with the investment made in the said property. The assessee filed valuation from Private Valuer valuing the property at Rs. 48 lakhs. It was submitted that the property was purchased for Rs. 48 lakhs by registered sale deed dated 28- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted and the assessment order, I find that this addition has apparently been made only on the basis of a Valuation Report. No other evidence of any unexplained investment has been mentioned by the Assessing Officer, I am in agreement with the appellant that a reference to the VO in the present case was beyond the scope of section 55A of the Act and further that the addition is not based on any evidence found during the search or any material gathered which could be relatable to such evidence. In any case, valuation made by the VO is a subjective valuation and the difference of less than 15 per cent between the valuation made and the amount declared by the appellant cannot be the basis of making an addition on a/c of unexplained investment. The decision of the ITAT cited by the appellant are also squarely on the issue and in favour of the appellant. Considering the above, the addition of Rs. 6,13,746 is deleted. The facts of the case of the appellant are exactly the same and similar. I agree with the detailed reasoning and the conclusion drawn by the Ld. CIT(A) in the case of Sh. Dalip Jolly (Individual). The Assessing Officer has not brought any material on record which was fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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