TMI Blog2014 (11) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... grandson – Held that:- Assessee contended that the estimate was made without any basis and without considering that father would have incurred the expenses and moreover relatives from the maternal side would also have contributed to the expenses - The AO has made whole of the addition in the hands of the assessee which is not justified – thus, the addition is reduced at ₹ 2.50 lacs – Decided partly in favour of assessee. Addition on account of 89 liquor bottles found at the residence of the assessee – Held that:- During the assessment proceedings, the assessee had claimed that he is a non drinker and bottles were accumulated over a period of years as part of gifts from friends and relatives and since he was non drinker, the bottles kept on accumulating - he had only purchased 12 bottles for an amount of ₹ 14,400/- which was a small amount keeping in view his withdrawals - since the assessee was staying in a joint family consisting of his son and daughter in law and moreover all bottles cannot be said to have been purchased in one year and the existence of so many bottles can only point out to the fact that these must have been accumulated over a period of time – the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of loan. Ld. CIT(A) has confirmed the denial of such deductions claimed by observing similar findings in each year. For the sake of convenience, the findings of Ld. CIT(A) for Assessment Year 2006-07 are reproduced below: 5.1 I have carefully considered the submissions of the assessee and the impugned order. The assessee contended that the plot purchased was a house property for which a loan of ₹ 32 lakhs was taken from ICICI as evidenced by the bank certificate and that, the property was also rented out. On the other hand the AO, in para3.1 states that spot enquiry was conducted and that the plot in question was a vacant plot on which some construction was carried on. It was therefore held by the AO that the property was not being utilized for residential purpose as no rent agreement or rentals were put forth. I find that the loan was taken on 31.12.2005 ( disbursement date) while the entire sale consideration of ₹ 36,00,000/- was paid vide cheques dated 04.10.2005 of ₹ 5 lakhs and ₹ 7.5 lakhs through HDFC Bank Faridabad while ₹ 23,50,000/- was paid vide cheques dated 25.11.2005 of ICICI Bank, Faridabad. These payments are evident at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was declared as income from house property. It was submitted that name, address, PAN of the tenant were provided to the A.O. and therefore, the assessee had completed his part of onus. It was further submitted that the assessee had purchased a house property with the help of housing loan form ICICI bank on which interest was paid and also repayment was made. In support of his arguments, the Ld. A.R. took us to page 47 to 63 of the paper book where a copy of sale deed was placed. Our specific attention was invited to paper book page 49, wherein the fact of construction of building on the said plot was mentioned. At page 64 where a certificate issued by ICICI bank was placed wherein it was mentioned that assessee had availed a loan of ₹ 32 lacs for purchase of said property. Ld. A.R. also took us to page 61 where a copy of electricity bill for the above said property was placed. Page 62 was also referred to by Ld. A.R. to substantiate that water connection was also there in the said property. In view of all these documents, it was argued that it was not a plot as held by Ld. CIT(A) as electricity and water connection cannot be given on a vacant plot. Therefore, he argued that f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d rival parties and have gone through the material placed on record. We find that the assessee had purchased the property on 25th day of November 2005 for a total consideration of ₹ 36 lacs for which he had made payment of ₹ 36 lacs in the form of 3 cheques for ₹ 5 lacs, ₹ 7.50 lacs and ₹ 23.50 lacs vide cheques dated 04.10.2005, 04.10.2005 and 25.11.2005. These facts are mentioned on the copy of the sale deed itself which is placed at pages 50-52 and these findings also support findings of Ld. CIT(A). ICICI Bank disbursed the amount of ₹ 32 lacs on 31.12.2005 which is apparent from paper book page 63 where a copy of letter issued by ICICI bank is placed. Therefore, the loan taken by assessee from ICICI bank cannot be said to be taken for the purpose of purchase of the said property as the said property was already purchased on 25.11.2005 and full payment of consideration was already paid as is apparent from the copy of the sale deed. One of the factors which was taken into account by Ld. CIT(A) is that assessee had not utilized borrowed funds for acquisition of property. These facts are verifiable from the copy of sale deed itself. Therefore, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is the approximate expenditure incurred on that function. On being asked again to explain the source of expenses it was merely submitted that 'it was a small party organized at Marriot Welcome on 07.10.2006 and the expenses on this account were meted out by maternal side of the child and cash gifts received from the guests . It was therefore the AO's case that the contention as evident from the statement were contradictory and considering the social status and assessee himself having sufficient sources of his own, the contention that the expenses of the function was organized by the maternal side and gifts received from guests was found not acceptable. I find that the AO's arguments have some strength. The undisputed fact is that the birthday party was held in a five star. That the AO asked the assessee twice to explain the expenses incurred but the bill was stated not traceable. In this backdrop, mere offering of ₹ 50,000/- towards the expenses is not really justifiable. No doubt additions should not be made on estimates basis but in this case the undisputed facts do not go in favor the assessee. Hence considering the facts and circumstances of the case I a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to cover the investment in these liquor bottles in the absence of any sort of corroboration. It was therefore imperative on the part of the assessee to clarify the position so that the Ld AO is able to come to a finding. This has not been done. No doubt the brands of the liquor bottles has not be elucidated but I find that the AO has mentioned that some of the bottles are high value as expensive as ₹ 10,000/- per bottle while other cost between ₹ 1500/- to ₹ 5000/- . Hence I am strongly inclined to hold that the addition of ₹ 2,22,500/- on this account is fair as the average rate has been taken at ₹ 2500/- per bottle. Consequently the assessee fails on this ground of appeal. 13. Before us, Ld. A.R. submitted that the assessee was living along with his son and daughter in law and the whole addition has been made in the hands of the assessee which is not justified. It was further submitted that whisky bottles were accumulated over the years and were purchased out of withdrawals made by the assessee during various years and, therefore, the entire value of the bottles cannot be added in the hands of the assessee in one year specifically keeping in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. It was further submitted that there was no material to show the adjustment between 01.11.2009 to 06.11.2009. He further argued that assessee vide letter dated 30.11.2010 had submitted that reconciliation of cash book will be filed but there is no evidence as to when reconciliation was filed. So, it was argued that matter should be reverted back to the A.O. for readjudication. 19. Ld. A.R. on the other hand referred to paper book page 5 where reconciliation of cash found was placed and also relied upon para 6 page 6 of the Ld. CIT(A) s order in the case of Action Construction Co. and submitted that addition on account of excess cash found was explained to Ld/. CIT(A) and Ld. CIT(A) has held that there was no excess cash as the cash was explained as per books of accounts. 20. As regards C.O. filed by the assessee, the Ld. A.R. submitted that entire cash found at the common residence cannot be added in the hands of assessee and moreover, it was submitted that reconciliation statement, and statements recorded u/s 132(4) cannot be ignored. Ld.D.R. however reiterated his submissions. 21. We have heard the rival parties and have gone through the material placed on record. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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