TMI Blog2011 (12) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had the substantial agricultural income year after year and also disclosed additional income on account of interest income, the investment of Rs.57,908 - Rs.4,000 stands explained. This ground is decided against the Revenue. Regarding undisclosed investment in money lending business - (i) agricultural income; (ii) amounts withdrawal from NRE A/c of the assessee's son; (iii) Gifts received from NRIs; (iv) recoveries made from the debtors; and (v) Bond of Bank of India NRE A/c - After scrupulously examining the issue with reference to the AO's remand report, the ld. CIT (A) arrived at a conclusion in a well thoughtout manner that the addition of Rs.67.01 lakhs made u/s 69 of the Act as undisclosed investment in money lending business of the assessee was not justifiable. Since no rebuttal has been forth-coming from the Revenue side with any discreet documentary proof, we are of the considered view that the finding of the ld. CIT (A) requires to be sustained. Regarding agricultural land - Agricultural income of Rs.3- 4 lakhs per year - held that:- all the evidences related to holding of agricultural land and income thereon were very much available in the seized material - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding of agricultural land was not sufficient to prove the source of agricultural income. 3. The facts of the case, in brief, are that the assessee is an individual and was engaged in the business of financing for two wheelers and also carrying on money lending business for the last several years. There was an action u/s 132 of the Act in the residential-cum-business premises of the assessee on 21.1.2001 and consequence of which, the assessee was required to furnish his return for the block period spread over from 1.4.1990 to 23.1.2001. He had furnished his return of income on 28.2.2002 admitting a total undisclosed income of Rs.5,96,116/- which was, however, assessed at Rs.99,05,140/- by the ld. AO for the reasons set-out in his impugned order which is subject matter of appeal. 4. Aggrieved, the assessee took up the issues, among others, before the ld. CIT (A) for relief. After giving due weightage to the assessee's submissions, remand order of the ld. CIT(A) dated 29.12.2003, remand report of the ld. AO dt.26.3.2004 and also the comments of the assessee on the said report, the ld. CIT (A) had recorded her findings in her impugned order deleting some of the additions and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mention here that no documentary evidence was furnished to substantiate the contention of the assessee with regard to acquisition of gold jewellery. The assessee's argument that a portion of the jewellery was acquired out of agricultural income is not satisfactory and acceptable in view of the assessee's deposition in the statement recorded u/s 132(4) of the Act wherein he has stated that his agricultural income per year is Rs.15000/- to Rs.20000/- which hardly sufficient to meet his household expenses which is Rs.8000/- to Rs.10000/- p.m. thus, there is no force in argument of the assessee that a portion of the jewellery was purchased out of agricultural income and, hence, the same is rejected. It is a well known fact that at the time of marriage gold jewelleries are given as streedhan coupled with the social custom prevailing in the Patel community, gold jewellery of 20 tolas is considered as explained and remaining portion of jewellery is treated as acquired out of undisclosed income. Accordingly, a sum of Rs.2,60,057/- (976.300 gm minus 233.280 gm [20 x 11.664] = 743.020 gm x Rs.350 per gram = R.2,60,057/-] is treated as undisclosed investment of the assessee in the gold jewel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest income of Rs.5,96,116/-, the plea of the appellant that the same may be considered as acquired out of interest income has to be accepted. While allowing the telescoping of Rs.96,240/-, the AO is directed to delete the addition of Rs.32,60,057/-." 6.1 We have duly considered the assessee's explanation before the first appellate authority and the finding of the ld. CIT (A) on this point. At a glimpse of the assessment order, we find that the assessee had admitted undisclosed interest income of Rs.5,96,116/- as per return u/s 158BC of the Act which, as suggested by the Ld. CIT (A), requires to be accepted that the assessee must have acquired out of the said amount admitted u/s 158BC of the Act. Considering the reasonableness of the CIT (A), we decline to interfere with her finding on this score. It is ordered accordingly. II. Deletion of addition of Rs.57,908/- made on account of undisclosed investment in FDs: 7. The assessee, in his statement on oath, was required to produce evidence and source for the investment in shares and FDRs amounting to Rs.57,908/- unearthed during the search operation, however, he was unable to cite any satisfactory explanation. When the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and also disclosed additional income on account of interest income, the investment of Rs.57,908 - Rs.4,000 stands explained. This ground is decided against the Revenue. III. Deletion of addition of Rs.67,01,049/- made on account of undisclosed investment in money lending business: 8. It was the case of the ld. AO that during the course of search, incriminating documents unearthed indicated that the assessee was engaged in the money lending business, according to which, the debit balance of each of his clients and the out-standing loans against the clients worked out to Rs.67,01,049/- which was also accepted by the assessee in his statement u/s 132(4) of the Act. Accordingly, the same was added to his income as undisclosed investment after rejecting the lengthy explanation and details furnished by the assessee during the course of assessment proceedings. 8.1 The assessee carried the matter before the ld. CIT (A). The assessee had reiterated the submissions made before the ld. AO. The relevant submissions of the assessee as well as the findings of the ld. CIT (A) are extracted, for appreciation of facts, as under: "10.3......As can be seen from the above that first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 debtors (Rs.11,02,430/-) (f) Bond of Bank of India NRE A/c Rs.50,000/- 10.6. It is seen that in the assessment proceedings, the AO failed to examine the evidences places by the appellant on record, therefore, the case was remanded back to the file of the AO. On the basis of all the evidences and details available or placed on record, all the above sources are being examined as under: (a) Agricultural income: The issue has been discussed by me in detail in para 7, while deciding the ground No.3 of the appellant were found to be correct. On the basis of same discussion, it could be easily inferred that during the block period the appellant was having atleast 30 to 40 lacs net agricultural income and the assets found during the search, were either acquired prior to block period or finance by bank i.e., the house in Kabir Complex was acquired in 1998 by his son and the house in Alipur building was acquired 20 years ago. The care was financed by the bank. Since, during the block period, no major expenditure in the nature of personal was noticed or found, in view of preponderance of probabilities, it has to be held that at least 20 lacs was invested by the appellant in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a proof identity he has furnished Xerox copy of British Passport. He admitted in his statement that Rs,5,00,000/- was gifted to Shri Dhirajbhai on various dates from withdrawal from his bank account. In both the above cases, though there has been no documentary evidences regarding gift either by Shri Dilipbhai Amin or Shri Apabhai Patel, identity of the persons, capacity and their confirmation exists. The CIT (A) may kindly, therefore, decide the issue on merits.' As can be seen from the above that the AO has not doubted the identity and the credit worthiness of the alleged donor, however, it appears that in absence of gift deed etc., he has doubted the genuineness of gift. However, it is well settled position of law that if the assessee is able to prove the identity and creditworthiness of the donor, the statement has to be believed. In the present case, since the appellant has fulfilled the pre-requisite condition by producing the person along with the evidence of his source, the statement has to be accepted. Therefore, the AO is directed to accept the contentions of the appellant. In view of this source, the appellant is able to prove source of another Rs.20 lakhs of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- Shri Bhavarlal aged 35 years stated that he is doing business of selling kerosene on retail basis as a hawker. He admitted to have taken loan and stated to have repaid the same with interest. However, he could not produce any proof of document either for acceptance of loan and repayment of the same. (iii) Shri Kailashbhai Dhanbhai Bhatt alias Raval Rs.2,58,000/- Shri Kailashbhai aged 40 years has stated that he is doing the business of Exide Battery having turnover of Rs.5 to 7 lacs per annum As a proof of identification he has submitted Xerox copies of election commission identity card. He stated that Shri Dhirajbhai is his friend and whenever the fund was required for marriage or business purpose he used to loan from Shri Dhirajbhai. Further, he stated that due to cancellation of marriage ceremony Rs.200000 was returned back within 15 days. Xerox copy of receipt dated 30.12.2000 of Rs.200000/- issued by Shri Dhirbhai is submitted for verification. Further, he also stated that he has returned Rs.58000/- on 5.1.2001 to Shri Dhirjbhai. Xerox copy of receipt is also submitted as a proof of repayment. (iv) Shri Kadujibhai Dhulabhai Bardia Rs.92,800/- Shri Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s realization Rs.1.6 lacs 6 Withdrawal from NRE A/c No.7531 Rs.50,000 10.11 So, all the above amounts are sufficient to explain the cash deficit of Rs.48.73 lacs. It is even sufficient to explain the addition of Rs.67.01 lacs which is inclusive of interest income. Therefore, in view of the above facts and circumstances of the case, addition of Rs.67.01 lacs is not justified. The AO is thus directed to delete the addition of Rs.67.01 lacs." 8.2 We have duly considered the reasons recorded by the ld. CIT (A) in deleting the whopping addition of Rs.67.01 lakhs. The ld. CIT (A) had, in fact, analyzed the issue under distinctive heads such as (i) agricultural income; (ii) amounts withdrawal from NRE A/c of the assessee's son; (iii) Gifts received from NRIs; (iv) recoveries made from the debtors; and (v) Bond of Bank of India NRE A/c, besides, pointing out that the Ld. AO had failed to examine the evidences placed by the assessee on record during the course of assessment proceedings which culminated in remanding back the issue to the AO for examination and furnish his comments. After scrupulously examining the issue with reference to the AO's remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e loans given could not be explained (Para 7). 1) Shri Udesing Rathwa } They are already included in list of 2) Shri Dilipsinh Sinore } diaries as per annexure - I 3) Shri Pravin Baria alias Pappu Baria } 4) Shri Barkatali Khatri for Rs.33351/-: He has sold motorbike to assessee 5) Yogi Automobiles: As explained in para 2(a) above 9.2 Considering the assessee's submission, the ld. CIT (A) has observed that: "11.2. As can be seen that the appellant contended that it is as duplication of addition, as all the details of vehicle finance have been incorporated in the diary seized on the basis of which the appellant has worked out deficit of Rs.48.73 lacs. 11.3. In the appellate proceedings, the appellant was asked to identify such entries. He pointed out such entries where vehicle no., was also noted down in the diary (list enclosed herewith as Annexure 'A'). since, all these entries are identifiable from the seized diary, entries of which have already been taken care of in the working of Rs.48.73 (lacs), the addition of Rs.15 lacs have to be considered as duplicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated, the assessee, during the course of search operation, appears to have admitted that his agricultural income was Rs.15,000/- to Rs.20,000/- per year and that the land was acquired in Narmada Project 15 years back for which he had received Rs.3 lakhs as compensation. This fact has been disputed by the AO that the assessee has more agricultural lands which was apparent from 7/12 seized during search. It appears that on post search operation, i.e., on 25.1.2001, the assessee had filed an affidavit, the contents of which, among others, that 'on account of search and constant inquiry by officers, my wife was mentally upset and had attack of hysteria during the search in presence of officers.' To prove further that he was mentally disturbed, he reiterated before the ld. CIT (A), the sequence of which, are extracted as under: "[Para 5.2. of CIT(A)'s order] To prove further that appellant was (not) mentally disturbed at the time of search he drew my attention to the fact though the appellant was having 25 acre land for agriculture, document i.e., 7/12 of which have also been seized by the Department wherein the production of various crops are reflecting the appellant had stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.3. In this connection, it is seen that the AO has discussed this issue in details on pages 7 to 10. The observation and conclusion of the AO in this regard are reproduced below ........................................................................ 7.4 In the appellate proceedings, the appellant basically reiterated his submission which reads as under: Agricultural land holding: We enclose herewith copies of 7/12 or 8A relating to land held by assessee. These copies are taken from seized record. S. No Area Village Date Form 36 1-82-11 Zankharpura 13/7/91 8A 44 1-62-89 Zankharpura 13/7/91 7 3-05-54 Alikharva 28/2/90 7/12 10 0-10-12 Dhanakia 29/2/91 6 3 0-10-12 Dhanakia 60p 0-03-51 Dhanakia 05/2/97 7/12 9-74-29 All these lands were agricultural land. This was held by assessee even after 1985 which means over and above land acquired by Government for Narmada Project in 1985 assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e beginning of this case we have stasted that in the statement recorded u/s 132 (4), it is wrongly stasted that income from agriculture is Rs.15,000/- only. From the total area of land itself one can estimate that agricultural income of the family even before 30 - 40 years must be around Rs.1 or 2 lacs and in the period from 1980 onwards it must be around Rs.2 to 3 lacs every year. and this income was spent for maintenance of family and acquisition of assets etc.,' 7.6. As can be seen from the above that all the evidences related to holding of agricultural land and income thereon were very much available in the seized material. The AO while passing the assessment order has completely ignored the existence of seized records and had adopted the shortest route for making additions i.e., statement of the appellant. In the remand proceedings, the AO, after verification of seized material and submission of the assessee, has confirmed that as per seized material, the appellant is having 25 acres of agricultural land. For agricultural income, the certificate of Talati and Gram Sevak were furnished by the appellant before the AO. Since he has not commented upon adversely on these ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as mentioned at page no. 481 of the departmental paper book. Another salient feature is that the said lands are situated on or nearer to the river-bed with facility of plentiful water for irrigation uninterruptedly. This amply dispels the Revenue's apprehension that mere holding of agriculture land would not sufficient to prove the source of agricultural income. As rightly highlighted by the ld. CIT (A), the certificates of Talati and Gram Sevak were furnished by the assessee before the AO. Since the AO had not commented upon adversely on those certificates, the authenticity or otherwise of such certificates cannot be subjected to scanner. If the Revenue doubted the very bona-fide of such certificates appears to have been originated from the lower level authorities of the Revenue Department of the State Government, what prevented it to cross verify the veracity of such Certificates at that relevant time itself is a question and answer to it lies at its doorstep. 11.6 In an overall consideration of all the facts and circumstances of the issue as deliberated upon in the fore-going paragraphs, we are of the considered view that the ld. CIT (A) has, in fact, taken all the aspects i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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