TMI Blog2013 (10) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition on the basis of loose papers – Held that:- Addition made by the AO are without any particulars or date or name etc. and, therefore, these are dump-papers and cannot be made the basis for addition. This finding of the ld.CIT(A) could not be controverted by the ld.DR of the Revenue by bringing any evidence on record to show that this essential information such as date, name or particulars are available on the seized paper on the basis of which the addition was made by the AO and, hence, the ground of revenue is rejected – Decided against the Revenue. Addition on account of cheque received from Mr. Bakshi - A cheque of Rs.50 lacs was given by Shri K.I.Bakshi of Bombay to the assessee for a loan @ 15%. The said cheque should never be encashed – Held that:- As per newspaper report, Shri K.I.Bakshi has already died during earthquake in Bhuj. Under these facts, in our considered opinion, no such addition is justified because the AO could not establish that any amount was received by the assessee from Shri K.I.Bhakshi or any amount was given by the assessee to Shri Bhakshi. - I.T(ss).A.No.374/Ahd/2002, I.T(ss).A.No.375/Ahd/2002 - - - Dated:- 24-9-2013 - Shri D. K. Tyagi An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted to the bank for obtaining loans. The Assessing Officer has made total addition of Rs.48,31,000/- after giving a set off of Rs.8 lakhs which was a documented price and was shared by the appellant and his wife. The appellant has submitted that the Assessing Officer has made the above addition arbitrarily because actual payments which are treated in the hands of the appellant were made by the original owner of the property. The appellant further clarified that the expenses on renovation were mixed with other expenses over the period of several years and hence the entire expenses should not be treated as incurred for the renovation of the bungalow. The appellant argued that the property was on rent, therefore, its cost could not be at Rs.30 lakhs. However, I have perused the arguments raised by the appellant and also looked in to the merits of the above addition. Looking to the explanation of the appellant regarding cost as well as renovation of the property addition of Rs.40 lakhs is sustained and remaining addition of Rs.8,31,000/- is deleted." 3. Now, the assessee is in further appeal before us for the part addition of Rs.40 lacs confirmed by ld.CIT(A), whereas the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. In addition to Rs.8 lacs already declared by the assessee, ld.CIT(A) had confirmed three addition on some different heads of Rs.10,56,530/-, Rs.3.74 lacs and Rs.53,258/- totaling Rs.14,83,788/-. The AO had determined the total value of the property at Rs.56.31 lacs and after deducting Rs.8 lacs being the disclosed amount, he had made an addition of Rs.48,31 lacs. Out of this addition of Rs.48.31 lacs, the ld.CIT(A) had allowed relief of Rs.8.31 lacs and confirmed the balance addition of Rs.40 lacs. In our considered opinion, in the facts of the present case, the total value of this property should be considered at Rs.38 lacs which is in between of value as per DVO and value as per A.O. and out of this, admittedly, payment of Rs.8 lacs was made by way of cheque/draft as per disclosure of the assessee and his wife. Hence, the toal payment in cash on account of this property has to be considered at Rs.30 lacs. Since the property in question is held jointly by the assessee and his wife, a total cash payment to be considered in the hands of the assessee cannot exceed Rs. 15 Lacs out of this total cash payment of Rs.30 lacs. Hence, we confirm the addition of this account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O of Rs.8 lacs and the assessee is in appeal before us for the part addition confirmed by ld.CIT(A) of Rs.3 lacs. The DR of the Revenue supported the assessment order, whereas it is submitted by the ld.AR of the assessee that the value of the property as per the valuation done by the DVO was only Rs.2.31 lacs and the amount declared by the assessee is Rs.2,00,700/- and since the valuation is an estimate only and is very close to the amount declared by the assessee, no addition is justified. 8. We have considered the rival submissions. We find that as per the report of the DVO regarding this property, this property was valued by him at Rs.2.31 lacs as against the value declared by the assessee of Rs.2,00,700/-. The AO has also mentioned regarding valuation report obtained by the assessee from registered valuer in respect of this property at Rs.39,63,800/-. Regarding this valuation report, it was explained by the assessee before the AO that the same was obtained for the purpose of obtaining the loan from the bank and, therefore, the same should not be relied upon. The AO has also ignored the valuation report of the registered valuer valuing this property at Rs.39,63,800/- because h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving finance or recovery of the same. The relevant portion of the appellant's explanation before the Assessing Officer is reproduced for the sake of clarity as under: "At the outset I wish to state that I am a sole proprietor of M/s.Punjab Motor, Ahmedabad basically doing the business of commission agency in the purchase and sale of old and new cars. The main source of income is in the form of commission received from the seller and purchaser of vehicles which are mostly four wheelers and two wheelers. Sometime, there are commissions when I arrange/tie up finance on behalf of the prospective customers either from the seller himself or through other sources. To the finance I am also standing as a guarantor for the loan amount taken by the purchaser as I am taking suitable security from the purchaser for arranging the required finance. I do not expect any income from this business because I consider it as a part of my business which in turn increases my clientele" The purpose of reproduction of the above version of the appellant is to ascertain the genuineness of transactions which will be discussed in the following pares. Now on the fact of the cheques of other parties which co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upported the assessment order, whereas the ld.AR of the Assessee supported the order of the ld.CIT(A). 14. We have considered the rival submissions. We find that for the recovery of loan of Rs.70,000/-, it was explained by the assessee that the same was arranged from the party of Baroda whose name and telephone number is mentioned on the seized paper itself. Regarding second amount of Rs.55,000/-, it was explained by the assessee that one Shri Jatin Advocate had issued the receipt of this amount to Shri I.K.Baxi and he has nothing to do with the affairs of the assessee. The ld.CIT(A) had deleted both these additions by observing that the AO has not carefully looked into these transactions. The ld.DR of the Revenue could not controvert this finding of the ld.CIT(A) and, hence, we decline to interfere with the order of the ld.CIT(A) on this issue also. Therefore, ground No.4 of Revenue's appeal is rejected. 15. Ground No.5 of Revenue's appeal which reads as under:- 5. The learned CIT(A) has erred in law and on facts in deleting the addition of Rs.3,17,500/- in respect of unaccounted money advanced to Jagdish Chavana Sweet Mart for the purchase of shop. 15.1. Brief facts regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue is misplaced because, in fact, the ld.CIT(A) has confirmed the addition of this amount and he has simply allowed set off of this amount against the addition of Rs.40 lakhs sustained by him on account of investment in bungalow. This addition was made by the AO and confirmed by ld.CIT(A) on this basis that these amounts were mostly in the form of credits and, therefore, the addition is sustained, but set off is allowed against the addition of Rs.40 lakhs on account of investment in bungalow. In our considered opinion, the ground raised by the Revenue has no merit because addition is already confirmed by ld.CIT(A) and set off allowed by him of this addition against addition sustained by him in respect of investment in bungalow cannot be faulted because this addition is on account of credit entries and addition in respect of bungalow is on account of debit entries and, therefore, the set off allowed by the ld.CIT(A) cannot be faulted without showing that this amount was used elsewhere and not in the bungalow. We, therefore, uphold the order of the ld.CIT(A) on this issue and this ground of Revenue's appeal is also rejected. 20. Ground No.7 of Revenue's appeal reads as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons are legal and documents are notarized before notary. Q-7- I show you page 1 of annexure A-31 of annexure A-36, which were seized from your office, there is an account of Bholabhai. I also saw you annexure A-2 in which there are cheques of Mahalaxmi Enterprise. Please refer this and tell us how much you given to Bholabhai and how much amount you have to recover from him? A-7- Bholabhai is my friend and I know him since last 15 years. We are residing in the same society. Because Mr.Bholabhai wanted to purchase car on installment basis, he has to put a proposal, quotation for the car, advance cheques and documents of the property for security. Being a middleman and responsibility of the loan lies on the appellant, the appellant has to obtain these documents for security. These are all transactions to car dealings only and not an account of finance. A-8- I show you page 1 of annexure A-31 and page 31 of the annexure A-36, please refer this and explain regarding credit 50 shop. A-8- This may be note regarding shop dealings. Sardarji is written on the page. There may be a talk on some Sardarji. Q-9- On back side of page 1 of annexure A-31, in which 10-08-98, 10- 09-98 and 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by Shri Bholabhia to the Assessing Officer. Extracts from these confirmations are reproduced as under: "I have appeared before your kind honour twice in response to said notices and explained the position. It is submitted for your record that Indubhai Dahyabhai Exhibitors Pvt.Ltd. is a Private Limited Company. It closed its cinema business long back and other business thereafter. The company is not doing any business operations for the last 6 to 7 years and is this Non-function company. We have checked up and there are no records or details showing any business dealings or transactions with M/s.Punjab Motors or Pradhan Singh Chhabra by the said company". (Extract from letter dated 29/05/2002 to the DCIT, Central Circle.1(2), Ahmedabad) "I have appeared before your kind honour twice in response to said notices and explained the position. It is submitted herewith a copy of my Income Tax return filed for the financial year 31.3.2000 (A.Y. 2000-2001) as desired by you. I also submit that I do not have any details of transactions with Shri Pradhan Singh Chhabra or Punjab Motors". (Extract from letter dated 29/05/2001 to DCIT, CC.1(2), Ahmedabad.) In view of the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in deleting the addition of Rs.56,96,060/- out of the total addition made of Rs.67,97,610/- in respect of unaccounted loans given by the assessee to various persons. Assessee's ground of appeal:- 3. On the facts and in the circumstance of the case, the Ld.CIT(A), has erred in not deleting the addition of Rs.11,01,550/- in respect of unexplained items contained in Para 35 of the assessment order of the Ld.A.O. even though it was fully explained. 23.1. Brief facts regarding this issue and the decision of the ld.CIT(A) is as per para-10.2 of his order which is reproduced below: "10.2 The second part of the addition relating to unexplained items is contained in Para 35 of the assessment order. The Assessing officer has made addition of Rs.67,97,610/- which include debit as well as credit entries. The appellant has explained the entries as under:- The appellant explained that most of the accounts were settled in the past. Some are dumb and rough papers. Perusal of the explanation given by the appellant indicates that Assessing Officer was not justified in making addition of debit entries which are either expenses or inflated figures due to decoding exercised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.50,000/- which could never be encashed. The particulars of properties given by Shri Bakshi were also false and in fact there was no such property in his name. It was further clarified by the appellant that Shri Bakshi even took a fiat car but never returned nor could be traced. It was gathered from newspaper report only that Shri K.I.Bakshi died during earthquake in Bhuj. Explanation of the appellant is further extracted as under: "It is respectfully submitted that Mr.Bharatbhai Bhatt has introduced Mr.K.I. Bakshi as a Industrialist and the Chairman and managing director of Dehyd Foods Ltd. at Bhuj and chairman of Sajawat Group of companies at Bombay and accordingly we were highly impressed. He has purchased costly premium cars though us ofter and often. In the meantime, he offered us to arrange loans at a cheaper from foreign countries. The appellant therefore paid him in advance commission to him and received cheques of Rs.50,00,000/- from him as a loan. Mr.Bakshi informed appellant that the loans shall be arranged within a fortnight and after a call from America to deposit the cheque. Thereafter Bakshi never turned up. Therefore it was a clear case of cheating with your app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, ground No.9 of Revenue's appeal is also rejected. 29. Ground No.10 of Revenue's appeal reads as under:- 10. The learned CIT(A) has erred in law and on facts in deleting the protective addition of Rs.7,50,000/- in respect of unaccounted advance paid to Sanjeev Rajiv Shukla. 29.1. Brief facts regarding this issue and the decision of the ld.CIT(A) is as per para-13 of his order which is reproduced below: "13. The Fifteenth ground of appeal is regarding an addition of Rs.7,50,000/- in respect of Sanjiv Rajiv mentioned in Para 38 of the assessment order. The appellant has submitted that the investment is not related to him but made by Smt.Mohinder Kaur Suri. The addition is made on protective basis. Facts of the case indicate that the Assessing Officer did not apply his mind properly because action was required to be taken in the hands of the concerned person. Addition can not be made on the basis of somebody else's paper lying with the appellant. In view of these facts addition of Rs.7,50,000/- is deleted." 30. The ld.DR of the Revenue supported the assessment order, whereas the ld.AR of the Assessee supported the order of the ld.CIT(A). 31. We have considered th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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