TMI Blog2012 (9) TMI 827X X X X Extracts X X X X X X X X Extracts X X X X ..... and of the assessee. The assessee, her husband and HUF were withdrawing sufficient amounts in all the five assessment years under consideration. Therefore appeal decides in favour of assessee. - ITA No. 2788 & 2790/Mum/2009 - - - Dated:- 20-6-2012 - SHRI D.K. AGARWAL, AND SHRI RAJENDRA, JJ. Revenue by : Shri A.C. Tejpal, DR Assessee by : Shri Satish Modi ORDER PER BENCH, Following common grounds of Appeal, for both the assessment years, were filed by the Assessing officer (AO) challenging the order dated 23.01.2009 of the CIT(A) XX, Mumbai - 1. The learned CIT(A) has erred in facts and in law and in the circumstances of the case in directing to assess the income generated through sale of shares under the head Capital Gain and allow the various deduction/exemption on the same as per provisions of the Act as against the additions made by the A.O. as unexplained cash credits uls.68 of the Act. 2. The learned CIT(A) has erred in directing to delete the addition in respect of household withdrawal. 3. The learned ClT(A) has erred in facts and in law and in circumstances of the case in not appreciating the facts that entire transaction giving rise to capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned above were sham/ arranged transactions and that the entire sale proceeds recorded in books of accounts of the assessee group, including the assessee, represented unexplained cash credits. Date wise particulars of returns of income filed and assessed u/s 153A of the Act, in respect to appeals filed by the assessee are as under : AY Returned Income Dt. of filing return Dt. Service of notice Assessed income Dt.of order 2004-05 1.08 Crores 31.8.2000 14.11.2007 l.11 Crores 31.12. 07 2006-07 74.8lakhs 31.8.2000 10.09.2007 143(2)notice 1.01 Crores 31.12.07 2.1. As mentioned earlier during the assessment proceedings AO made addition to the income of appellant on two accounts-first on account of sale proceed of equity shares of various companies and second on account of low household drawings. The year-wise details of additions made are as under : AY Addition on a/c. of unexplained investment Addition on a/c. of low withdrawal Total 2004-05 95.26 lakhs 1.2 lakhs 96.46 lakhs 2006-07 82.86 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manipulated and that the ultimate source of funds credited in the account of the appellant was unexplained. AO also held that the cash deposits at different stages in brokers account and other accounts, from which cheques had been received by the appe1lant, conclusively proved the authenticity of the statement of Shri Manoj Agarwal. AO also relied on the disclosure of Rs.31 Crores made by Shri Dilbagh Rai Arora, father-in-law of the appellant. Finally AO held that the unaccounted money generated through the sale of panmasala / Gutkha was routed in the books of account of the assessee in the form of entries of LTCG . 2.3. Assessee preferred an appeal before the First Appellate Authority (FAA).He decided the issue in favour of the assessee. While deciding the appeal he relied upon the orders of the CIT(A) -I, Kanpur (dated 16.06.2008) passed in the cases of the other group members and their HUFs. FAA held that the enquiry report called for u/s 133(6) of the Act nowhere proved that the cash deposited in the bank accounts of certain third parties belonged to the appellant. Regarding the second enquiry reports of the Investigation Wing, Kolkata, forwarded to the office of the FAA by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the orders of the AO. AR relying upon the order of the FAA submitted that all the facts and circumstances were identical in all the group cases so far as ground of appeal no.1 was concerned, that the shares of various companies, brokers, banks and stock exchanges thorough which transactions had taken place were common in almost all the other group cases, that entire addition was primarily made on the basis of statements of Shri Manoj Agarwal or Shri R.N. Agarwal recorded u/s 131 of the Act by the DDIT (Inv.),Unit- II (4) New Delhi, that appellant had filed all the necessary documentary evidences to establish her claim of LTCG available with her, that contract notes, bills for purchases and sales of shares, statements of account by most of the brokers, transfer confirmation letters received from the companies, quotations of share prices at the stock exchange, demat account showing the holding of the shares etc. were produced by the appellant, that all the transactions undertaken by the appellant with the respective brokers for this purpose were through regular banking channels and by way of account payee cheques only, that the AO without examining /appreciating these facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the AO and as such there is no challenge to the purchase of the shares. All these shares had been sold through the brokers who were registered members of stock exchange and at the price prevailing in the market on that particular point of time. The payments for purchase and sale made are through normal banking channels which are found to be recorded in her regular books of account. We are of the opinion that source of source is not required to be proved by the appellant. Both the broker concerns were existing entities who had regularly transacted with the broker namely M/s Stanly Securities Ltd. The transactions regarding sale of shares as noted above were duly confirmed by the said broker. Therefore, we fully agree with the views of the FAA that under the given facts and circumstances, the appellant has duly discharged the onus cast on her. In this regard A Bench of Lucknow ITAT(supra) has held as under : We have considered the submissions of both tile parties and carefully gone through the materials available on record. In the instant case, it is not in dispute that the assessee made the purchase in the financial year 1998-99 and those purchases were disclosed in the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, no such opportunity was provided for the reasons best known to the Assessing Officer. Furthermore, the Assessing Officer did not record the statement of Shri R.N Agarwal himself, the said statement was recorded by the Investigation Wing but it was not brought on record in which circumstances the statement was recorded at the back of the assessee and was used against assessee without providing any opportunity to rebut or to cross examine Shri R.N. Agarwal. It is well settled that nobody should be condemned unheard as per tile dictum Audi Alterrain Portem, however in the instance case the statement has been used against the assessee without affording opportunity to cross examine the person, who made the statement, which, in our opinion, is against the principles of natural justice and is not justified. In the instance case, it has not been rebutted at any stage that the sale proceeds of the shares had not been duly accounted for in the books of accounts and those sale proceeds were not received through banking channels. The Assessing Officer did not examine or question the bank account from where those sale proceeds were transferred to the assessee s account, so there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the premises of the appellant during the search which according to the AO revealed the lavish life style of the appellant. The AO further noted that the appellant had shown insufficient household drawings considering the life style of the appellant and the properties held by her. AO held that the appellant was having a high standard of living and the drawings disclosed in her returns of income filed for the AYs. under appeal were inadequate and accordingly made estimated additions as mentioned at paragraph no 2.1 of the page 3 of the order. 3.1. Assessee preferred an appeal before the FAA who held the appellant family has shown household withdrawals of Rs.55.65lakhs for the various assessment years under appeal, that the appellant s family consisted of three persons for the initial two assessment years and thereafter of four persons, that search action did not establish that the various members of appellant had incurred household expenses which were not reflected in their regular books of accounts, that addition made by the AO was purely on estimated basis, that no details, evidence or basis for the same were brought on record by the AO, that primarily the household drawings were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f other members of the group assessed at Kanpur. For this purpose, the AR relied upon the various judicial pronouncements of Pradeep C.Patel (58 TTJ 409- Ahd.),M.P. Mallaiwal(10SOT319-Hyd), Brijial (TTJ 374-Jodh),C.L. Khatri (147 Taxman 652) (MP). 3.3. We have heard rival submissions. It is found that while making additions to the income of the assessee AO had considered withdrawal made by the assessee only-he completely ignored the withdrawals made by the husband of the appellant. From the chart prepared by the FAA (Para-3.1)it is clear that the assessee, her husband and HUF were withdrawing sufficient amounts in all the five assessment years under consideration. Cases relied upon by the AR also support the stand taken by the FAA. In our opinion withdrawal amounting to Rs.19.36 lakhs(Rs.10.32 for AY 2003-04 and Rs.9.04 lakhs for AY 2006-07)for a family of three/four members for the period under consideration is sufficient. As the addition made by the AO on account of low household withdrawal are on ad hoc basis and the deletion of the same by the FAA is on sound footings, we uphold the order of the FAA in this regard. Ground Nos. 2 and 6 are also decided against the AO. As, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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