TMI Blog2014 (10) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... y u/s 133(6) Matchless Associates had clearly mentioned the fact regarding purchase of property jointly with Pritam Singh i.e the assessee and the fact that M.S. & Co. kept 30% share - PAN number and acknowledgement of return etc. have been filed - Even the copy of agreement showing 30% share belonging to him has been filed – it could not be understood that after receiving the information no further enquiry has been made then such evidence cannot be ignored - this addition is not justified. Receipt of ₹ 5 lakh withdrawn by Hardeep Singh on various dates which becomes clear from the copy of the bank account placed - Hardeep Singh has clearly stated in his letter that he was employed by the assessee and was deputed to Gurdaspur site and the amounts were withdrawn from the bank and were handed over to Pritam Singh - clearly the assessee has discharged the onus which was put on the assessee and the AO has not made any further inquiry – the AO is not right to reject this evidence without further enquiry – the order of the CIT(A) is set aside – Decided in favour of assessee. Addition of opening/closing work in progress – Total contract receipts received from PBIL Apex Consort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Other details of payment through DD were also furnished. Even copy of the agreement was filed - PAN of R.K. Associates was not mentioned in the confirmation - Thus the assessee had clearly failed to discharge the onus. Sum of ₹ 3 lakhs received from G.M. Construction, only document filed is a letter from M.S. Alagh stating that he has purchased a truck and a jeep - Even PAN No is not mentioned in such letter - during hearing whether evidence in the form of transfer of vehicles by way of endorsement in the registration certification is there, the assessee showed inability to file such evidence - in respect of the transaction the assessee has not discharged his burden and the addition has been rightly made by the CIT(A) - Decided partly in favour of assessee. Validity of transaction - Cash withdrawal or cheque withdrawal – Held that:- The contention of the assessee is to be accepted that once additional evidence was accepted and during verification in the remand proceedings certain further documents were filed - all the evidences were filed including a certificate from bank - Certificate from the bank show that through cheque No. 252583 cash was withdrawn - This eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.6.2008. Later on special audit was also ordered and ultimately report of the special auditor was issued on 25.6.2011. Notice was accordingly issued on 27.7.2011 fixing the case on 1.8.2011. Assessment was completed on 25.8.2011. Therefore many details could not be filed. It was contended before the Ld. CIT(A) that merely 23 days was available for filing of details which was not possible therefore many details were filed before the Ld. CIT(A) with a request to admit additional evidence. 3. The Ld. CIT(A) had admitted the additional evidence and referred the same to Assessing officer for remand verification. In this background most of the enquiries were conducted during appeal / remand. 4. ITA No. 1177/Chd/2012 - A.Y 2003-04 - Late Shri Pritam Singh In this appeal the assessee has raised the following grounds: 1. That authorities below has erred in law and facts in framing the assessment without affording proper opportunity of being heard to the appellant. 2. That authorities below has erred in law and facts to appoint Special Auditor in an automatic manner without considering the facts of the case and consequently the appointment of the auditor is bad in law. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest on FDR) 16,79,204/ - G.M. Constructions Co. 54,00,246/ - (shown as indirect incomes and no expenses claimed) 53,99,606/ - - 53,99,606/ - Pritam Singh 6,16,950/ - 3,34,493/ - 3,34,493/ - - - Total 70,78,810/ - In this connection special auditor had observed that in the course of audit and books of accounts the assessee had not shown any expenses against these incomes. The Assessing officer further noted that in the return of income the assessee has shown income from business profession at ₹ 605195/-whereas as per books of accounts the receipts are ₹ 7078810/-. Therefore according to the Assessing officer the assessee had under reported the income to the tune of ₹ 6473615/- and therefore this sum was added to the income of the assessee. 7. Before the Ld. CIT(A) it was mainly submitted that addition is made on the basis of statement of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard he referred to page 9 of impugned order. He also referred to the remand report wherein the Assessing officer has verified the supplementary cash book. Therefore at best estimated profit should be taxed. 12. On the other hand, the Ld. D.R. for the Revenue strongly supported the order of Ld. CIT(A). 13. We have gone through the rival submissions carefully in the light of material on record and relevant order. The main case of the Revenue is that the assessee has not maintained the books of account and that is why no such books were found during search or produced even during assessment proceedings. Further because of the complexities in the accounts the Assessing Officer ordered special audit. Entire addition in respect of the issue in this ground has been made on the basis of books prepared by special auditor. On the other hand, the case of the assessee is that special auditor had punched only the credit entries and has not considered the self withdrawals for recording expenses. That is why the profit has been reflected at 80 to 90% of the receipts by the special auditor. The assessee has further prepared a supplementary cash book which was submitted before the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf shows that contention of the assessee has merits. 14. However, at the same time there is no evidence before us to show that receipts of ₹ 377687/- in the hands of G.M. Construction Company proprietary concern and ₹ 4 lakhs in the hand of Matchless Associates were security receipts. Now admittedly these receipts do not relate to construction payment therefore whole of these amounts i.e. ₹ 777687/- is required to be added to the income. 15. As far as receipts of ₹ 12,80,000/- are concerned, we accept the plea that these are construction receipts and therefore direct receipts and therefore direct the Assessing officer to apply Net profit rate of 8% on these receipts. Therefore this ground is partly allowed. 16. Ground No. 6 - The Ld. Counsel for the assessee submitted that initially at page 9 of the impugned order the Ld. CIT(A) has clearly admitted additional evidence but while giving relief the supplementary cash book was not accepted despite the fact that same was verified by the Assessing officer. Therefore this finding is not correct. 17. On the other hand, the Ld. D.R. for the Revenue supported the order of the Ld. CIT(A). 18. After con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further the assessee has moved an application for admission of additional evidence. In this application the order of Settlement Commission in case of K.D. Sharma and assessment order in case of S.P. Singh have been filed. It was pleaded that these two orders will explain many issues raised before the Tribunal and these orders came into existence after passing of the orders by the Assessing officer and the Ld. CIT(A) and that is why these are being filed by way of additional evidence. Since these documents would throw light on many issues, it was prayed that same may be admitted. 24. On the other hand, the Ld. D.R. for the Revenue opposed the submissions of the Ld. Counsel for the assessee. 25. After hearing both the parties we find that additional evidence is only in the form of orders passed by the Assessing officer and Settlement Commission. The orders have been passed after passing the assessment order and since the same have bearing on the issues required to be adjudicated before us, therefore in the interest of justice this application is being allowed and assessment orders in case of S.P. Singh for various years and order of the Settlement Commission in case of K.D. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. All these issues were verified by the Assessing officer during remand proceedings and in response to enquiries u/s 133(6). Manjit Singh had filed a letter before the Assessing officer in response to query giving all these details (copy of which is available at page 62 of paper book). He has filed copy of account, acknowledgement of return and agreement showing share of property. Despite all these informations Revenue has not accepted the explanation which is not correct. 30. In respect of addition on account of cash of ₹ 5 lakh it was stated that this amount was withdrawn by Hardeep Singh who was an employee deputed at Gurdaspur. He also referred to page 41 of paper book which is copy of bank account in Punjab National Bank in the name of Matchless Associates which is a proprietary concern of the assessee and pointed out that name of Hardeep Singh is clearly mentioned. This cash was handed over to the assessee firm. Hardeep Singh in response to the query has confirmed this fact vide letter dated 11.6.2012 to the Assessing officer and copy of the letter is placed at page 66 of the paper book. 31. On the other hand, the Ld. D.R. for the Revenue strongly sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the income and expenditure statement placed at page 73 of the paper book. 36. On the other hand, the Ld. D.R. for the Revenue strongly relied on the orders of Assessing officer and the Ld. CIT(A). 37. After considering the rival submissions and the material on record, we find that the income and expenditure account which is available at page 73 clearly show that opening stock of ₹ 214700/- closing stock is also shown at ₹ 214700/-. Therefore there is no justification in addition of opening stock which has been shown as closing stock and accordingly we set aside the order of the Ld. CIT(A) and delete the addition of ₹ 214700/-. 38. Ground No. 6 - After hearing both the parties we find that as noted above while adjudicating ground No. 5 the Assessing officer has made addition of ₹ 2902705/-. This comprised various amounts and closing stock of ₹ 214700/-. 39. Before the Ld. CIT(A) it was pointed out that ₹ 1579700/- was credited in the books of G.M. Construction which comprised following items: GM Construction Co. 29.05.2003 PBIL APEX CONSORTIUM LTD 295 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 5 in ITA No. 1177/Chd/2012 for Assessment year 2004-05. 42. After considering the rival submissions and the material on record, we find force in the submissions of the Ld. Counsel for the assessee. It is clear that for example in G.M. Construction case against the payment of ₹ 1579700/-, Net profit is shown at ₹ 1364715/- which is almost 90% which is not possible in construction business. Therefore we are satisfied with the reasoning that the expenses were booked in the supplementary cash book which was verified by the Assessing officer during remand report in Assessment year 2003-04. Therefore we set aside the order of the Ld. CIT(A) and direct the Assessing officer to apply rate of profit at 8% in respect of receipts of ₹ 2265000/- (Rs. 1365000 + ₹ 900000/-) and delete the addition made on account of construction receipts. 43. Ground No. 7 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that assessee has received various amounts from S.P. Singh totaling to ₹ 1405223/-. It was mainly stated that except for ₹ 450,000/- which was wrong entry that the amounts were received as gift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en rightly added back as unexplained incomes of the assessee u/s 69 of IT Act, 1961. Highlighted portion clearly show that entry in respect of ₹ 450000/- was verified by the Assessing officer. If the Assessing officer had any further doubt he should have made further enquiry but he could not simply reject this evidence. Therefore we set aside the order of the Ld. CIT(A) and delete the addition of ₹ 450000/-. 49. Ground No. 8 - This issue has already been decided by us while adjudicating ITA No. 1177/Chd/2012 for Assessment year 2003-04 vide para 18 wherein this ground was held to be infructuous and following the same we hold this ground to be infructuous. 50. In the result, ITA No. 11 73/Chd/201 2 is partly allowed. 51. ITA No. 1174/Chd/2012 - A.Y 2005-06 - Late Shri Pritam Singh 52. In this appeal the assessee has raised following grounds: 1. That authorities below has erred in law and facts in framing the assessment without affording proper opportunity of being heard to the appellant. 2. That authorities below has erred in law and facts to appoint Special Auditor in an automatic manner without considering the facts of the case and consequently t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said parties which was not filed. During assessment proceedings no evidence was filed, therefore this sum of ₹ 1350000/- was added to the income of the assessee u/s 68 of the Act. 55. Before the Ld. CIT(A) certain documents were filed which were sent for remand report. The Assessing officer during remand proceedings made certain enquiries in respect of certain documents which were filed but Assessing officer observed that such documents do not prove genuineness of credits. The Ld. CIT(A) following these comments confirmed the addition. 56. Before us, the Ld. Counsel for the assessee submitted that a sum of ₹ 2 lakhs was received from Sharma Associates vide cheque no. 810359 as unsecured loan and during enquiries by the Assessing officer during assessment proceedings in response to query u/s 133(6) confirmation was filed by Sharma Associates (copy of which is placed at page 50 of the paper book). In respect of sum of ₹ 450000/- and ₹ 4 lakhs received from R.K. Associates it was stated that the assessee had jointly purchased property No. BMM 373 Ph 11, Mohali along with Ms. Ravinder Kaur proprietor of R.K. Associates from PUDA. A sum of ₹ 450000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee during hearing whether evidence in the form of transfer of vehicles by way of endorsement in the registration certification is there, Counsel for the assessee showed inability to file such evidence. Therefore we are of the opinion that in respect of this transaction the assessee has not discharged his burden and this addition has been rightly made by the Ld. CIT(A) and we confirm the same. 61. To conclude out of total addition of ₹ 1350000/- u/s 68 we allow relief in respect of ₹ 2.00 Lakhs from Sharma Associates. Other receipts of ₹ 1150,000/- (Rs. 850,000/-from R.K. Associates and ₹ 3 lakhs received from M.S. Alagh is not found to be genuine and therefore that addition is being confirmed. Therefore this ground is partly allowed. 62. In the result, ITA No. 11 74/Chd/201 2 is partly allowed. ITA No. 1175/Chd/2012 - A.Y 2006-07 - Late Shri Pritam Singh 63. In this appeal the assessee has raised the following grounds: 1. That authorities below has erred in law and facts in framing the assessment without affording proper opportunity of being heard to the appellant. 2. That authorities below has erred in law and facts to appoint Specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since these documents are relevant they may be admitted. 66. On the other hand, the D.R. for the Revenue opposed the submissions. 67. After considering the rival submissions and the material on record, we are satisfied with the reasons given by the Ld. Counsel for the assessee. In any case these are orders of various income tax authorities and they cannot be fabricated documents, therefore same were admitted. 68. Ground No. 4 6 - These two grounds are being taken together because the Assessing officer has adjudicated these issues through common paras. 69. After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that the amounts were found to be received by the assessee which was reflected in the balance sheet but no confirmations were filed when the same were asked by the special auditor, therefore the Assessing officer issued show cause notice that why these amounts should not be treated as income of the assessee u/s 68 of the Act. The details of the amounts are as under: Pritam Singh Gurjit Singh 2,120,000 61,60,230 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 15,97,500/- was paid vide DD No. 10548 drawn on Punjab Sind Bank on 20.01.2006 against a property purchased by Late Sh. Pritam Singh (Plot 374, Phase - XI, Mohali) and Balance of ₹ 8700000/- (comprising ₹ 22,00,000/- vide Ch no 48204 dated 24.01.2006 drawn on Punjab Sindh Bank, ₹ 40,00,000/- vide Ch No 48205 dated 24.01.2006 drawn on Punjab Sind Bank ₹ 2500000/-vide Ch No. 48209 dated 01.03.2006 drawn on Punjab Sind Bank) was directly paid by M/s TRN Land Developer P Ltd. to Ashok Kumar against a property purchased by Late Sh. Pritam Singh (#3060, Sector - 20, Chandigarh. The Assessing officer had further pointed out that balance sheet as on 31.3.2006 of the said company was also filed which clearly depicts that a sum of ₹ 10297500/- was paid to Apex Exports Proprietor Gurjit Singh. 72. The Ld. CIT(A) did not find force in the submissions and decided the issue against the assessee vide following paras: I have considered the report of the AO as well as the submissions of the assessee. The company TNR (supra), wherein the daughter-in-law of the assessee Smt. Ranjit Kaur is a Director, in its response to requisition under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inter-twining of the transactions without any shred of evidence is held to be fallacious. The assessee is therefore held not to have discharged the burden cast upon him to substantiate the genuineness of the credit. In other words the action of the AO is upheld. In respect of addition amounting to ₹ 950000/- said to have been received from Sharma Associates by transfer of funds the Assessing officer in his remand report stated that a copy of return was filed by Mohinder Sharma Proprietor Sharma Associates but the same did not prove the ingredients of Sec 68. In his comments the assessee has stated that it is not clear that which ingredients were not complied and if the Assessing officer had any doubt he should have asked the assessee to file further documents. The Ld. CIT(A) did not find force in the submissions and observed that these submissions are being put forth for the first time and cannot be considered authentic and therefore this addition was confirmed. 73. Before us, the Ld. Counsel for the assessee referred to pg 77 of paper book which was the information given by TRN during assessment proceedings where loan of ₹ 10297500/-was confirmed. In the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er considering the rival submissions and the material on record, we find force in the submissions of the Ld. Counsel for the assessee that once additional evidence was admitted and same was sent for remand proceedings and during assessment proceedings Sharma Associates confirmed having paid a sum of ₹ 950000/- and even PAN was given then either the Assessing officer should have accepted the same or made further enquiries. Evidence can not be brushed aside simply because it is filed late therefore we set aside the order of the Ld. CIT(A) and delete the addition of ₹ 950000/-. 76. As far as addition on account of TRN is concerned we find force in the submissions of the Ld. Counsel for the assessee. In response to the enquiry made during assessment proceedings TRN has stated vide letter dated 11.6.2012 as under: Dated: 11.06.2012 To, Deputy Commissioner of Income Tax Central Circle - I CHANDIGARH Sir, Sub: Information u/s. 133(6) of the Income Tax Act in the case of Pritam Singh Please refer to your letter dated 1-6-2012 wherein you have stated that Pritam Singh has claimed transaction with our company. The following desired information is given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee or that party to furnish further papers. The detailed evidence cannot be brushed aside particularly because of the fact that the depositor had already paid taxes and sources stand explained in the hands of the assessee. Therefore we set aside the order of the Ld. CIT(A) and delete the addition of ₹ 10297500/-. 77. Ground No. 5 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that special auditor has observed that from perusal of books of accounts it was found that there was some withdrawal from bank which was shown as cash withdrawal. Details are as under: Centurion Bank of Punjab 25945 Pritam Singh Date Particular Amount 27.07.2005 Sarabjit Singh 4,00,000 Total 4,00,000 Special auditor has further observed that this bank transaction was cheque payment but wrongly shown as cash in hand. Since the assessee failed to file any explanation during assessment proceedings this amount was added to the income of the assessee. 78. On appeal it was contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted at this stage. Above clearly show that all the evidences were filed including a certificate from bank (copy placed at page 46 of the paper book). Certificate from the bank show that through cheque No. 252583 cash was withdrawn. This evidence cannot be brushed aside by simply saying that cash was withdrawn through Sarabjit Singh who is only a domestic help. If the Revenue had any doubt the Assessing officer should have made further enquiry during assessment proceedings therefore we set aside the order of the Ld. CIT(A) and delete the addition of ₹ 4 lakhs. 83. Ground No. 7 - After considering the rival submissions and the material on record, we find that during assessment proceedings the Assessing officer noticed that there were certain credits in the books of accounts of the assessee which are shown as under: Name of the Concern Gross Turnover Net Profit Indirect Income credited to P L account Net profit from business Matchless Associates 42,21,515/- 36,81,683/- 21,309/-(interest on FDR) 36,60,374/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2A) of the Act but only to gain time for completing the assessment which is barred by limitation. 4. That Ld. CIT(A) has erred in law and facts in confirming the additions of ₹ 24,54,000/- being cash withdrawal by cheque through Dalip Singh holding the same is cheque withdrawal and not a cash withdrawal. 5. That Ld. CIT(A) has erred in law and facts in confirming an addition of ₹ 5,21,024/- on account of undisclosed investment in jewellery. 6. That Ld. CIT(A) has erred in law and facts in confirming the addition of ₹ 2,00,000/- on account of amount credited in the bank account. 89. Out of above grounds , grounds No. 1 to 3 6 were not pressed before us, therefore same are dismissed as not pressed. 90. Ground No. 4 - After hearing both the parties we find that during assessment proceedings the Assessing Officer noticed that special auditor had examined the books of accounts and found that there were some withdrawal from bank which was shown as cash withdrawal as per following detail: Centurion Bank of Punjab 18735 Pritam Singh Date Particular Amount 05.05.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06884 08/05/08 7,00,000.00 Cash Withdrawal self/Bearer 806881 20/05/2008 9,00,000.00 Cash Withdrawal self/Bearer 806887 04/09/08 1,00,000.00 Cash Withdrawal self/Bearer This letter is issued on the request of account holder. For HDFC Bank Ltd. Yours Faithfully Sd/- (Authorised Signatory) Above clearly show that various amounts have been withdrawn by cash. The amount has been withdrawn from same account which was doubted by the special auditor. In our opinion, it does not make difference that who has withdrawn the amount. Once the bank has certified that cash has been withdrawn then same cannot be added to the income because it does not matter who has gone to the bank to withdraw the cash. Therefore we set aside the order of the Ld. CIT(A) and delete this addition. 96. Ground no. 5 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that jewellery valued ₹ 1423406/- was found from the residence of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source of investment too. Hence, I do not think there is any need to interfere with the conclusions drawn by the Ld. AO. 99. Before us, the Ld. Counsel for the assessee reiterated the submissions made before the Ld. CIT(A) and further submitted that jewellery in case of Surinderpal Singh as well as other family members, has not been allowed as per instructions of the Board. 100. On the other hand, the Ld. D.R. for the Revenue relied on the order of the Ld. CIT(A). 101. After considering the rival submissions and the material on record, we find that total jewellery found during search was as under: That following jewelery was found during the course of search: Gurjit Singh 1596.94 gm Pritam Singh 1183.04 gm 2779.98 gm Undisputedly out of this some jewellery weighing 731.500 gms was belonging to Surinderpal Singh and his family who is son of the assessee and residing in Dubai. In fact there was some dispute whether credit has been given for that jewellery or not however, undisputedly fact remains that the jewellery weighing 731.50 gms rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of a gift from Non Resident Indian (NRI) brother of the assessee, in total disregard to the ratio laid down by the Hon'ble Supreme Court in the case of CIT Vs. P R Ganapathy (2012 TIOL 76 SC IT) that the assessee has to shown adequacy of funds in the hands of foreign donor for aforesaid gift donation? (iii) Whether on facts of the case adverse and rebuttable presumption should have been drawn about genuineness of the gift when the assessee over a period of seven Assessment Years has received a total sum of ₹ 6,67,05,848/- crores as gift ? 105. After hearing both the parties we find that during assessment proceedings the Assessing officer observed that special auditor has noticed various credits in the name of Surinderpal Singh Oberoi who is the son of the assessee. Confirmation from Surinderpal Singh was submitted before the special auditor but special auditor observed that source in the hands of Surinderpal Singh were not explained. Certain documents were filed before the Assessing officer including a letter from Surinderpal Singh in which it was confirmed that he has given a sum of ₹ 54974186/- between the period 7.10.2002 to 1.1.2009. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2010-11 was completed later on and he field a copy of the same. Since the Revenue has already verified the fact of gifts given by Surinderpal Singh in these Assessment years and therefore addition has been correctly deleted by the Ld. CIT(A). While concluding he strongly supported the order of the Ld. CIT(A). 109. We have gone through the rival submissions carefully and find that the Ld. CIT(A) has decided this issue vide para 8.1 which is as under: I have carefully considered the submissions of the assessee, the remand report and the impugned assessment order. Certain facts are found undisputed viz. that Shri SP Singh is the son of the assessee and is an NRI, based in Dubai; that the amounts were received from SP Singh as revealed from the bank accounts and are reflected in the Trial Balance and Balance Sheet of the assessee. Importantly, the creditworthiness as well as the identity of the person has not been disputed either. The only apparent doubt in the mind of the Ld. AO is the genuineness of the transactions claimed by the assessee and his son as gifts, besides the non-filing of FIRCs. In connection with the nature of the receipt, the assessee has in his su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re it becomes clear that source of gifts stand explained. therefore reasoning given by the LD. CIT(A) for deleting this addition, is totally correct and accordingly we confirm the order of the Ld. CIT(A). 111. In the result, appeal of the Revenue in ITA NO. 1193/Chd/2012 is dismissed. 112. ITA No. 1194 Chd 2012 - A.Y 2005-06 - Revenue appeal 113. In this appeal the Revenue has raised the following grounds: (i) Whether the Ld. CIT(A) is justified in law and on facts in deleting the addition of ₹ 42,16,458/- on account of gift received from Sh. S.P. Singh when assessee failed to prove the genuineness of the gift ? (ii) Whether on facts and circumstances of the case CIT(A) was justified in accepting the genuineness of a gift from Non Resident Indian (NRI) brother of the assessee, in total disgregard to the ratio laid down by the Hon'ble Supreme Court in the case of CIT Vs. P R Ganapathy (2012-TIOL-76-SC- IT) that the assessee has to show adequacy of funds in the hands of foreign donor for aforesaid gift donation ? (iii) Whether on facts of the case adverse and rebuttable presumption should have been drawn about genuineness of the gift when the assessee ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the order of the Assessing officer. 119. On the other hand, the Ld. Counsel for the assessee strongly supported the impugned order. 120. After considering the rival submissions we find that the Ld. CIT(A) has noted the comments of Assessing officer and counter comments of the assessee which are as under: Assessee has contended that a sum of ₹ 5,68,913/- from Smt. Ranjit Kaur (Daughter in Law of assessee) having PAN- ASPPK9215N, out of which ₹ 23297/- paid by Ranjit Kaur to Mr. A.K. Sawhney vide Ch No. 981356 drawn on Oriental Bank of Commerce dated 02.07.2004 on behalf of Late Sh. Pritam Singh Balance amounting ₹ 545616/- was paid by way of direct transfer of FDR maturity in A/c No. 495 with Canara Bank maintained by Late Sh. Pritam Singh on 10.01.2005. It was further contended that Smt. Ranjit Kaur wife of Gurjit Singh is also assessed with your office and subject to search. On verification, the contention of the assessee is found to be correct. However, a perusal of assessment record of Smt. Ranjit Kaur showed that vide questionnaire dated 02.08.2011, Smt. Ranjit Kaur was asked to furnish the details of gifts made / received during the year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.2004 vide ch no. 191243 drawn on Canara Bank and balance amounting ₹ 6,59,410/- was given by Amrit Kaur by way of direct transfer of FDR maturity in A/c No. 495 with Canara Bank maintained by Late Sh. Pritam Singh on 10.02.2005. On verification, the contention of the assessee is found to be correct. However, a perusal of assessment record of Smt. Amrit Kaur showed that vide questionnaire dated 02.08.2011, Smt. Amrit Kaur was asked to furnish the details of gifts made / received during the year. Smt. Amrit Kaur filed reply to the above questionnaire vide her reply dated 27.11.2010 but no such claim of having made the gift to the assessee was furnished by Smt. Amrit Kaur. Assessee in his counter comments has stated. The learned DCIT has accepted the contention of assessee as such there is no justification in any addition on this account. Thereafter she decided the issue as under: The Ld. AO in the remand report, after verification had submitted that the contention of the assesse was found to be correct. His only objection was that the donor during the course of her own assessment proceedings had made no such claim of gifting any amount to her husband. Be that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the books of accounts and statement of affairs it was noted that the assessee has received following amounts from his wife, Smt. Amrit Kaur: S. No Date Particulars Amount 1 22.8.2005 Punjab National Bank 145139 transferred from a/c No. 4741 Punjab National Bank 66,481 66,481 This amount was shown as gift but no evidence to substantiate the same was filed before the Assessing officer and therefore this amount was added to the income of the assessee. 128. On appeal certain documents were filed which was sent for verification during assessment proceedings. The comments of the Assessing officer and the assessee have been noted by the Ld. CIT(A) as under: The Ld. AO in the remand report, after verification had submitted that the contention of the assessee was found to be correct. His only objection was that the donor during the course of her own assessment proceedings had made no such claim of gifting any amount to her father-in-law. Be that as it may these tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft from Non Resident Indian (NRI) brother of the assessee, in total disregard to the ratio laid down by the Hon'ble Supreme Court in the case of CIT Vs. P R Ganapathy - (2012-TIOL-76-SC- IT) that the assessee has to show adequacy of funds in the hands of foreign donor for aforesaid gift donation ? (iii) Whether on facts of the case adverse and rebuttable presumption should have been drawn about genuineness of the gift when the assessee over a period of seven Assessment Years has received a total sum of ₹ 6,67,05,848/- crores as gift ? (iv) Whether the Ld. CIT(A) on facts and circumstances of this is justified in law and on facts in deleting the addition of ₹ 13,76,836/- on account of money received from Smt. Amrit Kaur when assessee failed to prove the genuineness of the gift ? 136. Grounds No. 1 to 3 - After hearing both the parties we find that the issues raised through these grounds are identical to the issues raised in ITA No. 1193/Chd/201 2. Since the facts of the case and the contentions of both the parties are identical to the issues raised in ITA No. 1193/Chd/2012 for Assessment year 2004-05, following that order we have decide these issues against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of ground no. 4 we decide this issue against the Revenue. 142. In the result, appeal of the Revenue in ITA No. 1197/Chd/2012 is dismissed. ITA No. 1198/Chd/2012 - A.Y 2009-10 - Revenue 143. In this appeal the assessee has raised the following grounds: (i) Whether the Ld. CIT(A) is justified in law and on facts in deleting the addition of ₹ 278,79,676/- on account of gift received from Sh. S.P. Singh when assessee failed to prove the genuineness of the gift ? (ii) Whether on facts and circumstances of the case CIT(A) was justified in accepting the genuineness of a gift from Non Resident Indian (NRI) brother of the assessee, in total disregard to the ratio laid down by the Hon'ble Supreme Court in the case of CIT Vs. P R Ganapathy (2012-TIOL-76-SC- IT) that the assessee has to show adequacy of funds in the hands of foreign donor for aforesaid gift donation ? (iii) Whether on facts of the case adverse and rebuttable presumption should have been drawn about genuineness of the gift when the assessee over a period of seven Assessment Years has received a total sum of ₹ 6,67,05,848/- crores as gift ? (iv) Whether the Ld. CIT(A) on facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic manner without considering the facts of the case and consequently the appointment of he auditor is bad in law. 3. That the appointment of special auditor is bad in law and is not in accordance with the spirit of law under the provisions of section 142(2A) of the Act but only to gain time for completing the assessment which is barred by limitation. 4. That LD. CIT(A) has erred in law and facts in confirming the additions of ₹ 19,39,238/- u/s 68 on account of alleged unexplained cash credits comprising ₹ 13,95,000/- from PBIL Apex Consortium Ltd and ₹ 544238/- from G.,M. Hirer. 5. That the LD. CIT(A) has erred in law and facts in confirming the disallowance u/s 40A(3) of the Act amounting to ₹ 2,73,544/- 6. That Ld. CIT(A) has erred in lower authorities and facts in not taking reliance of entries recorded in supplementary cash book produced before the Ld. CIT(A) after admitting the same u/s 46A(1)(d) . and despite the fact that Assessing officer has confirmed the verification of debit/credit entries recorded in the supplementary cash book. 149. Out of above grounds, grounds No. 1,2,3 6 were not pressed before us, therefore these grounds ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said company. However, since the confirmation and PAN was also not filed, the credit could not be accepted. 152. Before the Ld. CIT(A) in counter comments to the remand report, it was stated that these transactions were verified by the Assessing officer and the Assessing officer has accepted that ultimately net balance of ₹ 51205/- was recoverable from the said company. Since the Assessing officer did not make any further enquiry, therefore addition was not justified. 153. In respect of other sum of ₹ 544238/- stated to have been received from G.M. Hirer it was claimed before the Ld. CIT(A) that these amounts were received in the following concerns: i GM Hirer ₹ 4,00,000/- received in the hands of Gurjit Singh ii GM Hirer ₹ 1,34,238/- received in the hands of M/s Suridnerpal Singh iii GM Hirer ₹ 10,000/- received in the hands of M/s Pritam Singh Sons ₹ 5,44,238/- 154. The Assessing officer during remand proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urinderpal Singh. Copy of the running account was filed (copy of which is available at page 13 to 15 of paper book). The company had sufficient capital. In this regard reference was made to page 16 which is copy of the report from ROC showing that said company had paid up capital of ₹ 7.99 crores. It was further contended that the Assessing officer has accepted running accounts because addition has been made only of the peak amount which means that other transactions have been accepted by the Assessing officer. 158. On the other hand, the Ld. D.R. for the Revenue submitted that identity, credit worthiness and genuineness of the party has not been proved. The assessee has failed to prove the credit. It is wrong to say that the Assessing officer has applied peak theory because the Assessing officer has basically made addition of balance outstanding in the firm. Merely existence of high amount of share capital does not prove anything. No details of PBIL were filed. 159. We have gone through the rival submissions carefully. As far as various amounts received from G.M. Hirer are concerned, no doubt the confirmation from one Mohinder Singh has been filed but at the same time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.4.2003 By opening balance 125000 1.4.2003 To S.P. Singh Prop Gurjit Singh being Amount TRF Journal 1 125000 125000 125000 Date Particularls Vch Type Vch No Debit Credit 3.4.2002 Buy Andhra Bak A/C No. 50384 REceipt 1 2000000 9.4.2002 To Andhra Bank A/C No. 50384 Payment 2 1500000 20.5.2002 To Andhra Bank A/C No 50384 Payment 14 130000 25.5.2002 To Andhra Bank A/c No. 50384 Payment 15 550000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, therefore the Assessing officer invoked provisions of section 40A(3) and 20% of cash expenses amounting to ₹ 273144/- was disallowed. 162. On appeal before the Ld. CIT(A) it was mainly submitted that the assessee has returned income u/s 44AD and this contention was accepted by the Assessing officer also, therefore there was no scope for further disallowance in view of the provisions of section 44AD. 163. The Ld. CIT(A) did not accept this contention and confirmed the addition. 164. Before us, the submission made before the Ld. CIT(A) were reiterated and it was pointed out that Sec 44AD specifically provides that no further disallowances are possible u/s 28 to 43C where income of the assessee is returned u/s 44AD and therefore disallowance was not justified. 165. On the other hand, Ld. D.R. for the Revenue strongly supported the order of the Ld. CIT(A). 166. After considering the rival submissions and the material on record, we find that relevant portion of 44AD reads as under: (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced before the CIT(A) after admitting the same u/s 46A(1)(d) and despite the fact that AO has confirmed the verification of debit / credit entries recorded in the supplementary Cash Book. 169. Out of above grounds, grounds No. 1 to 3 and 5 were not pressed before us and therefore these are dismissed as not pressed. 170. Ground No. 4 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that special auditor had noted certain credits were there in the balance sheet for which no confirmation etc was filed. Therefore the Assessing officer gave a show cause notice why these amounts should not be added. Copy of the ledger account was filed and it was submitted that special auditor has taken into account all the credits during the year without giving any benefit of debits in such accounts. The Assessing officer noticed the details of such accounts as under: Gurjit Singh 2004-05 R N Highways Pvt Ltd 400000 400000 M S Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not prove the ingredients of s. 68 . It is very difficult to understand as to which ingredient is not proved as explanations put forth by M.S. Co. is self explanatory. That in case AO needs further clarification he was free to ask from Manjit Singh which he chooses not to do. As such there is no justification in confirming any addition on this account. iii. G M HIRER ₹ 300000/- DCIT in has comments has stated that Assessee has contended that M/s. Surinder Pal Singh has received a sum of ₹ 3,00,000/- during the year from M/s. G.M. Hirer Prop. Mahender Sharma son of Nitya Nand Sharma PAN ALNPF0611P A reply to notice u/s 133(6) was filed alongwith copy of account a copy of return has been filed by one Shri Mohinder Sharma, Porp. M/s G.M. Hirer. The documents filed by Sh. Mohinder Sharma do not prove the ingredients of s.68. Therefore, the claim of assessee can not be accepted. Assessee in his counter comments has stated that The learned DCIT has issued notice u/s. 133(6) to M/s. G.M. Hirer who has explained the transactions with the assessee as an amount as amount paid for purchase of Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A along with installments. That I was having 30% share in the property under consideration and a part of money amounting ₹ 436,500/- was directly deposited with PUDA on 27/11/2003 and a sum of ₹ 1,00,000/- was paid to Pritam Singh Oberoi. That subsequent payment of ₹ 2,00,000/- was paid on 28.01.2004 drawn on my ICICI Bank A/c No. 005805000292, similarly ₹ 2,90,000/- was paid on 19.11.2004 to Bikas Deb on the directions of Pritam Singh and as such total amount of ₹ 10,26,500/- was paid on account of 30% share in the property under consideration. Copy of confirmation has also been filed. No doubt the conformation is only initialed but it cannot be said that it is not signed. Copy of agreement for purchase of property jointly with Pritam Singh has also been filed and copy of return has also been filed. In our opinion, when these documents are considered together then it seems that M.S. Co. has filed proper confirmation. In case the Assessing officer had any doubt he should have made further enquiry and in the absence of such further enquiry this evidence cannot be brushed aside and addition cannot be made without any further enquiry. Therefore we d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed as not pressed. 179. In this year the assessee has moved an application for admission of additional evidence. The Ld. Counsel for the assessee referred to the application and pointed out that copy of reasons recorded for reopening of the assessment of S.P. Singh Oberoi as well as his assessment order for Assessment year 2005-06 is being filed as additional evidence because same was on 28.2.2013 i.e. after passing the impugned order. This order is relevant because gifts and loans received from S.P. Singh were verified in his own case by the Revenue and found to be correct. This being a assessment order only, therefore in the interest of justice this evidence can be admitted. 180. On the other hand, the Ld. D.R. for the Revenue opposed the submissions. 181. After considering the rival submissions and the material on record, we find that this is very relevant evidence and is only an assessment order passed by the department. The order came into existence only after passing of impugned order and therefore same is being admitted in the interest of justice. 182. Ground No. 4 - After hearing both the parties we find that during assessment proceedings the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable at pg 28 29 of paper book). Further details were also given showing nature of the credit as well as copy of the agreement showing joint investment (copy available at page 53 to 55 of paper book). 186. In respect of credit of ₹ 171500/- it was stated that this amount was recoverable from this party which becomes clear from the balance sheet of Pritam Singh Sons (copy available at page 37 of the paper book) and he has repaid the money. 187. On the other hand, the Ld. D.R. for the Revenue strongly supported the order of Ld. CIT(A). 188. After considering the rival submissions and the material on record, we find that as far as credit of ₹ 290000/- from M.S. Co. same has been explained during enquiry made in assessment proceedings. In the explanation it is stated as under: 1. That I have jointly purchased one property in Bulk Material Market popularly known as BMM 373, Phase-11, Mohali through PUDA auction in the name of Pritam Singh Oberoi. The property was purchased in consideration of ₹ 29,10,000/- auction price to be paid in installment. The interest is to be paid to PUDA along with installments. That I was having 30% share in the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan? (iv) Whether the Ld. CIT(A) on facts and circumstances of this is justified in law and on facts in deleting the addition of ₹ 1,00,000/- u/s 68 on account of alleged unexplained cash credit from Shri Surinder Pal Singh? (v) Whether the Ld. CIT(A) is justified in law and on facts in deleting the disallowance of ₹ 196,011/- on account of expenses on interest paid on loan against FDR claimed against interest income from other soruces in violation of sectiohn 57(iii)? 192. Ground No. 1 to 4 - After hearing both the parties we find that the issues raised through these grounds are identical to the issues raised by the Revenue in ITA No. 1193/Chd/2012 in case of Late Shri Pritam Singh which we have adjudicated in above paras. Since the facts of the case and the contentions of both the parties are identical to the issues raised in ITA No. 1193/Chd/2012 for Assessment year 2004-05, following that order we have decide these issues against the Revenue. 193. Ground No. 5 - After hearing both the parties we find that during assessment proceedings the Assessing Office noticed that the assessee has claimed interest expenses amounting to ₹ 196011/- against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these FDRs for business purposes then such expenditure has to be allowed. Since there were no business receipts in this particular year i.e. why the Assessing officer has not accepted this contention. But we are of the opinion that loan was obtained for business purposes such interest has to be allowed. Accordingly we confirm the order of the Ld. CIT(A). 198. In the result, Revenue appeal in ITA No. 1187/Chd/2012 is dismissed. ITA No. 1188/Chd/2012 -A.Y 2005-06 - Revenue 199. In this appeal the Revenue has raised the following grounds: (i) Whether the Ld. CIT(A) is justified in law and on facts in deleting the addition of ₹ 1490000/- on account of gift received from Sh. S.P. Singh when assessee failed to prove the genuineness of the gift? (ii) Whether on facts and circumstances of the case CIT(A) was justified in accepting the genuineness of a gift from Non Resident Indian (NRI) brother of the assessee, in total disregard to the ratio laid down by the Hon'ble Supreme Court in the case of CIT Vs. P R Ganapathy (2012-TIOL-76-SC- IT) that the assessee has to show adequacy of funds in the hands of foreign donor for aforesaid gift donation? (iii) Whether on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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