TMI Blog2015 (2) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... ture. We find from the details on record that agricultural income as per the certificates of Patwari for financial year 1986-87 upto financial year 1994-95 aggregates to ₹ 8,41,600/- and thus, out of the said sum an amount of ₹ 7,15,360/- can reasonably be assumed to be available with the appellant for investment for purchase of land from one Shri Kulanand Bhartiya. Accordingly, addition made of ₹ 7,15,360/- is deleted and balance sum of ₹ 3,84,640/- is upheld. - Decided partly in favour of assessee. Unaccounted cash - addition of ₹ 32,69,744/- out of the cash found as a result of search of ₹ 39,00,000/- - Held that:- Assessee had placed on record evidence in the shape of statement of Shri Mohan Singh Rawat, affidavit of Shri Govind Sharma to establish that there was refund by Shri Kulanand Bharatiya to the appellant of ₹ 11 lacs. The statement being relied upon by the revenue of Shri Kulanand Bharatiya was not confronted to the assessee despite his repeated request and accordingly, we hold that such a statement has to be excluded as such. In view of the above, we hold that sum of ₹ 11 lacs is also available as evidence with the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking an addition on account of unexplained cash amounting to ₹ 32,69,744/- out of the cash found amounting to ₹ 39,00,000/- which was belonging to Durga Singh Sons (HUF) amounting to ₹ 19.50 lakhs and Lachman Singh Sons (HUF) amounting to ₹ 19.50 lakhs. a) because he has not followed directions of the Hon ble ITAT at Para 20.1 of order dated 17.7.2009 in ITA No. 232/Del/1997 for deciding the issue relating to ₹ 19.50 lakhs belonging to Lachman Singh Sons (HUF) b) because he literally ignored the statement of Sh. Puran Singh during cross examination, who has produced the various evidences in support of his statement in original and furnish the copy thereof, while framing the assessment order c) because he was failed to notice that even after cross examination by the Assessing Officer Sh. Puran Singh confirmed about the transaction of purchase of land and about payment made to Sh. Lal Singh, his action ignoring such statement is against the basic principles of law. d) because he has also not followed the direction of Hon ble TIAT at para 19.4 and 19.5 even after finding the assets and income of late Sh. Durga Singh bearing character of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- were deleted and additions aggregating to ₹ 50 lacs approximately were restored to the file of the Assessing Officer. Pursuant to the above order, the Assessing Officer has framed the impugned order dated 30.12.2010 determining the undisclosed income at ₹ 1,14,11,732/- which has been later rectified by an order dated 11.1.2011 at ₹ 57,55,062/-. Thus, as a result of the above, following two additions have been made and have been disputed in the instant appeal: a) Addition of ₹ 11 lacs on account of unexplained investment in Himmatpur land b) Addition of ₹ 32,69,744/- on account of unexplained cash. 5. Ground No. 1 is general in nature and is therefore, dismissed. 6. Ground No. 2 of the Grounds of Appeal relates to addition of ₹ 11 lacs on account of unexplained investment in Himmatpur land under section 69 of the Act. 7. During the course of search pages 51 to 54 of Annexure A-19 were seized. These seized pages are four receipts showing that sum of ₹ 11 lacs was paid by the assessee to one Shri Kulanand Bhartiya for purchase of land at Himmatpur, Block Kashipur, Ramnagar Road, District Nainital. During the original proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Singh. We fail to understand the reasons as to why the name and signature of vital and main witness, viz. Medical Officer, is missing. It seems to be beyond any normal practice and normal human behavior. It is also not believable how such a huge sum of money amounting to ₹ 9,31,478/- was being kept in cash for years together till the death of assessee s father in 1985 and thereafter till 1994-95. At one point of time prior to the year 1984-95, the opening cash in hand was shown at ₹ 8,00,814/- in the said Bahi, which amount was made the basis to arrive at the cash at ₹ 9,31,478/- as on 6.7.1985. It has not been shown or explained as to how opening cash at 8,00,814/- was accumulated till that point of time out of alleged agricultural income after meeting annual family expenses. The AO has expressed his doubt on the genuineness of the Bahi. The assessee has not furnished the name and address of the concerned Medical Officer, in whose presence the money amounting to ₹ 9,31,478/- claimed to have been taken out from Almirah on 6.7.1985. We are, therefore of the view that merely on the basis of entry in alleged Bahi, it cannot be accepted that such a huge sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee from cultivating the land inherited from father, the same should have been declared by the assessee in his regular return of income and consequently should have been included in total income for rate purposes Without ascertaining the fact whether the land in question were ancestral property or self acquired property in the hands of deceased father, the question whether income from the land in question would retain the character of HUF income or individual income in the hands of his successors, i.e. the assessee and his brothers, cannot be answered. It is by now well settled that self acquired property, which devolved on a Hindu son/daughter, on the death of their father intestate, would be individual property I the hands of the son as contemplated under section 8 of Hindu Succession Act. 19.5 Since various aspects of the matter including the points discussed hereinabove have not been explained or examined or looked into, we find it just and proper to restore this issue back to the file of the AO for his fresh adjudication after allowing the assessee further opportunity to prove his case and to explain the matter. The AO may make such enquiry or verification or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the co-parceners of Durga Singh Sons HUF was examined u/s 131 on 21.9.1997. From the examination, the following facts emerged: a That the total land is about 100 nallies (approxi. 5 acrres) b That a part of land is a under Orchard, consisting of 100 trees of mangoes and 50 trees of naspati c All sales of agricultural produce are made on local market d That the land is situated in hilly terrain and lacks any modern means of irrigation 10.4 In view of the above facts, it is hard to believe that Durga Singh Sons HUF could have accumulated a cash in hand nearly 22 lacs from its agricultural operations. An income of ₹ 1.5 lacs from 5 acres of land by means of traditional agriculture is difficult to believe. The authenticity of Bahi is also open to doubt on account of the false entry of ₹ 11 lacs made in the Bahi. I therefore, hold that the sum of ₹ 11 lakhs paid by the assessee to Shri Kulanand Bhartiyaya is from unexplained sources. The same is treated as the income of the assessee u/s 69 of the I.T. Act for F.Y. 94-95 9. He thereafter, has further held as under: a) The above bahi was not a document found at the assessee s premis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier assessment order dated 30.9.1997 the O has observed that The Assessee has failed a large number of certificates from the village patwari in which the income of Durga Singh Sons, HUF has been estimated. In these certificates, the income of assessee estimated as ₹ 1.45 lakh per annum approximately for the F.Y. 1994-95 for F.Y. 93-94, it has been estimated at nearly ₹ 3 lakhs. In order to verify the correct position, Shri Jeevan Singh, one of the co-parceners of Durga Singh Sons HUF was examined u/s 131 on 21.9.1997. From the examination, the following facts emerged:- a) That the total land is about 100 nallis (aproxi. 5 acres b) That a part of land is a under Orchard, consisting of 100 trees of mangoes and 50 trees of naspati. c) All sales of agricultural produce are made on local market d) That the land is situated in hilly terrain and lacks any modern means of irrigation. In view of the above facts, it is hard to believe that Durga Singh Sons HUF could have accumulated a cash in hand nearly 22 lacs from its agricultural operations. An income of ₹ 1.5 lacs from 5 acres of land, by means of traditional agricultural is difficulty to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posits with companies since 1986-87 and even small money received as gift by his minor children immediately after their birth were invested in fixed deposits, NSC and KVP etc. as is evident from various documents and various bank accounts found during the course of search. Therefore, it is very difficult to believe that cash amount of ₹ 9,31,478/- claimed to be available in 1985, and increased to about ₹ 20 lakh till 1994-95, was kept in cash in house. f) Also, it is worth noting that as per the panchnama prepared at the assessee s premises during search on 25.9.1996 out of cash found of ₹ 39,27,840/- almost ₹ 33.50 laksh were found in the denomination of ₹ 500/-. This observation was confronted to Shri Jeevan Singh (brother of Shri Narain Singh), who claimed to have brought ₹ 19.50 lakhs to the assessee s premises from his village, in the statement recorded u/s 131(1A) by ADIT(Inv.). Bareilly on 21.9.1997 after search. As they claimed that this comprised their agricultural income since 1954 kept in the almirah in their village, he was at a loss to explain this and merely stated that his father Shri Durga Singh had left ₹ 3 laksh in old ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... photocopy of the affidavit was submitted and the original copy was never produced for verification. The assessee was given an opportunity vide letter dated 22.12.2010 (and received by the AR o the same date) to produce the aforesaid person to verify the contents of the affidavit by 27.12.2010. The assessee has failed to do so and instead is taking the please that the said medical officer is on tour. In the light of the above mentioned facts it can only be inferred that the said affidavit is only a self serving document. The contents of the affidavit can therefore not be given any credit or evidentiary value. 8.4 In view of the above discussion, discussions made in the earlier assessment order dated 30.9.1997 and the clear observations made by Hon ble ITAT New Delhi in its order dated 17.7.2009, the plea of the assessee relying on the ancestral Bahi for explaining the cash payment of ₹ 11 lakhs to Kulanand Bhartiyaya on different dates in F.Ys 1994-95 and cash claimed to be belonging to Durga Sing and Sons HUF (explained to be from agricultural income reflected in the above bahi ) is not found to be acceptable. Accordingly, the cash payments of ₹ 11 lakhs made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y was an HUF property. It was submitted that sufficient documentary evidence has been placed on record visa-vis the income earned by the Durga Singh and Sons HUF. 11. It was further submitted that the addition made is bad in law and requires to be deleted on the following grounds and replies: a) After accepting that land belongs to ancestors of Durga Singh, bearing character of ancestral property no addition was required to be made as conclusion drawn by the Hon ble ITAT was required to be made as conclusion drawn by the Hon ble ITAT was required to be followed. b) The evidence by way of reply made by the Gram pradhan along with supporting evidence, affidavit of Sh. S. P. Sharma (the Medical Officer) was sufficient to prove existence of bahi in absence of any contrary material collected by the AO the facts stated in response to the summon u/s 131 and by way of affidavit cannot be ignored. c) The existence of land revenue records, income certificates of Durga Singh Sons (HUF) answering the questions raised by the Hon ble ITAT were sufficient to accept existence of cash ₹ 19.50 laksh and ₹ 11,00,000 d) In absence of allowing opportunity to cross examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994-95. In view of the above, it was observed and held that merely on the basis of entry in alleged Bahi it cannot be accepted that a huge sum of money amounting to ₹ 9,31,478/- was kept in cash by the assessee s father as on 6.7.1985 out of alleged agricultural income after meeting all family expenses and thereafter, some money was continued to be kept in cash alongwith further money out of agricultural income of alleged HUF of subsequent years aggregating to ₹ 20,08,090/- till the year 1994-95 by the assessee and his brother. It was specifically held that the assessee is in regular habit of making investment in NSC, KVP/FD since 1986-87 and even small money received as gift by his minor children have been invested in fixed deposits and other instruments and therefore, it is very difficult to believe that cash amounting to ₹ 9,31,478/- claimed to be available in 1984-85 increased to about ₹ 20 lacs till 1994-95 was kept as cash in house. Apart from the above, doubts were also expressed as to how the land inherited by the assessee and his brother from their father on his death could be classified as property owned by alleged bigger HUF. In view of the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any in support of the said claim. Mere furnishing of affidavit of medical officer in the remand proceedings who too was not produced for examination cannot prove the genuineness of the said Bahi . The Tribunal in the earlier order, had further directed the Assessing Officer to also examine the nature of land and the allowability of the claim of availability of cash from the funds of the land held by Shri Durga Singh to explain the investment even in the absence of Bahi . We find that in the impugned order, the Assessing Officer on examination of the evidence on record, has concluded that the land held by Late Shri Durga Singh i.e. father of the appellant was ancestral land and therefore, the land measuring about 5 acres belongs to HUF of the father of appellant Durga Singh Sons HUF . The said HUF was deriving agricultural income year after year. The factum of ownership of land by the HUF and earning of income by the said HUF thus in our mind cannot be disputed. The Assessing Officer however has stated that the benefit of said cash available with the HUF cannot be granted to the assessee as the said cash has been found by the assessee s premises at B-5, Pandit Park Extension, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sult of search of ₹ 39,00,000/-. 17. In the original assessment order, the Assessing Officer had made addition of ₹ 39,27,840/- being cash found from the assessee at the time of search. It was explained that the aforesaid cash was from the following sources: a) ₹ 19.50 lacs belonging to one Shri Lachhman Singh and sons with its Karta Shri Lal Singh; b) ₹ 19.50 lacs belonging to HUF Durga Singh and Sons, Bigger HUF of assessee s father. 18. The contention that sum of ₹ 19.50 lacs belongs to one Shri Lachhman Singh Sons, HUF has not been accepted by the AO for the reason that Shri Kishan Singh, Shri Paan Singh and Shri Puran Singh in their statement recorded on 21.9.1997 and 22.9.1997 have denied having entered into any agreement to purchase the land from Shri Lachhman Singh Sons, HUF and paid any money in advance to said HUF and thus the source of money of Shri Lachhman Singh Sons HUF has not been proved and established. As regards the sum of ₹ 19.50 lacs from Durga Singh and Sons HUF, the assessee had contended that sum of ₹ 11 lacs paid to Shri Kulanand Bhartiyaya in the year 1994-95 was received back and was a part of mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te opportunity to the assessee to have his say in respect of any material or evidence collected by the AO and that may be used against the assessee while deciding the matter afresh. 20 Finally in para 21, it was held at pages 62 to 63 as under: 21 Before parting with this appeal, we say that even if the assessee s claim as to the source of money amount to ₹ 39,00,000/- is not accepted either n full or in part, the AO should give a benefit of ₹ 6,30,256/- which has been confirmed as undisclosed income of the assessee earned during financial year 1996-97 and 1995-96 as per seized papers, being the money that could be available with the assessee, to explain the cash found with the assessee. Once the undisclosed income of ₹ 6,30,256/- earned by the assessee is assessed to tax, no further addition on account of cash to that extent found with the assessee is called for when the said income of ₹ 6,30,256/- has not been utilized or any purposes. The AO shall take into consideration this aspect of the matter, while deciding afresh the addition of ₹ 39,00,000/- on account of cash found with the assessee at the time of search. We order accordingly. 21. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgaon. However as per the agreements to sell it is seen that the consideration agreed upon was ₹ 20 lacs t Sri Dharamvir and ₹ 11 lacs to Sri Samay Singh. Even if the stamp duty rates are taken to be at the rate of 10% the amount should not exceed ₹ 3410000/-. However cash in excess of ₹ 39 lacs were found at the residence of the assessee. It does not sound to reason that Shri Lal Singh, who allegedly was to contribute 50% of the agreed consideration for the above transaction (agreement to sale) would give much more than his share (which appears to be around ₹ 17 lakhs), all in cash advance, much before any agreed date for registry and without taking any receipt at all from Shri Narain Singh. Also he could not furnish any evidence for the cash advance of ₹ 50,000/- already made by him, as claimed by him, for entering into the above agreement, either from Narain Singh or from Shri Samay Singh. Shri Lal Singh, is claimed to be an educated agriculturist, and naturally would not have deposited such huge sum (after his alleged sale of agricultural land) with Narain Singh and not taken any documentary evidence of the same, especially when Narain Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee stated that the Assessing Officer has made the addition without considering the facts in true prospective and as such, the same is not tenable. The learned DR however relied upon the findings of the Assessing Officer and submitted that the addition has been correctly made. 24. We have considered the rival submissions and perused the material on record. We find from the material on record that assessee in a letter dated 27.12.2010 visa-vis the sum of ₹ 19.50 lacs received from Shri Lal Singh, Karta of Lal Singh and Sons HUF has stated as under: At the time of cross examination of Sh. Puran Singh, Sh. Lal Singh has also appeared and explained the source of 19.50 lakhs introduced by him details of which were furnished before your predecessor in the original assessment proceedings. Copies of these documents were furnished before the Hon ble ITAT in the Vol II of the paper book. He also explained that during the course of his statement recorded he admitted about the cash handed over to Sh Narain Singh. This statement was furnished at page 520-524 of the paper book already furnished before your good-self. About different sources of his money of ₹ 19.50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d incorrectly on the land owned by him. His conclusion at Para 3.2 of the assessment order that he owns 50 Nali of land in village Himmatpur, Nainital equivalent to 2.5 Acres and also that the land is hilly and does not have any permanent source of irrigation were totally wrong. He explained that in the statement recorded placed at pages 520-524, at Page 520 he explained about three hectare land at village Himmatpur which comes to 7.5 Acre (1 Hectare = ₹ 2,471 Acre). Hence, the land at Himmatpur is 7.5 Acres as against 2.5 Acre concluded by the AO. It is also explained that apart from this he owns 50 Nali at Ranikhet. Perhaps, your predecessor mixed these two statements hurriedly. Sh Lal Singh explained about earning 2.5 Lakhs per year as earning from agriculture as well as from orchards. The agriculture produce was also explained and orchards of Mango, Leechi and Guava were explained by him. During the statement he explained about the deal at Gurgaon and the advance money given by him. He also admitted and explained about receipt of money from various sources and the money handed over by him to Sh Narain Singh for purchase of land at Gurgaon. On 03-02-1997 Sh Lal Singh wrote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three agreements are entered with three brothers, the said fact cannot be considered to be improbable. We find that the Power of Attorney to Shri Puran Singh to execute sale of the property was granted by all the brothers and the said document was registered at the sub-registrar office at Haldwani on 01.06.1994 that is well before the search took place i.e. on 25.09.1996. So the said document and agreement to sale cannot be termed as fabricated and an afterthought and a cooked up story without any evidence to the contrary to suggest otherwise. In any case, the said fact is besides the issue. The only issue to be examined is whether ₹ 19.50 lacs was available with the appellant on the date of search. According to the appellant, ₹ 19.50 lacs had been made available by Shri Lal Singh out of his funds by Shri Lal Singh which fact has now been considered by him during assessment proceedings. In such circumstances, there can be no dispute as to the availability of the funds by Shri Lal Singh to Shri Narain Singh in light of the aforesaid statement recorded by the Assessing Officer, confirming the money having been made available to the appellant. The Assessing Officer has fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f refund with Shri Kulanand Bhartiya was rejected in the original assessment proceedings on the ground that Shri Kulanand Bhartiya had denied the refund to the appellant. We find that during the assessment proceedings, the assessee had specifically requested for making available the statement of Shri Kulanand Bhartiya which has been used as a basis to reject the aforesaid claim of the appellant. Infact, in reply dated 27.12.2010, it was specifically submitted as under: Since statement of Sh Kulanand Bharatiya was still not supplied nor it was supplied in the original proceedings. The assessee vide letter dated 10-09-1997 filed on 11-09-1997 requested to supply the copy of the statement of Sh Kulanand Bharatiya placed at Page 739 of the paper book. Copy of this request letter was also furnished to the Hon ble CIT, Delhi-VI. This letter is placed at page 739 of the paper book furnished to Hon ble ITAT. Copy of the same is hereby enclosed. The assessee again requested on 12-09-1997 at the time of hearing for furnishing the statement of Kulanand Bharatiya clarifying specifically that in the questionnaire dated 04-09-1997 it was mentioned about enclosing the copy of statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him. Further, no opportunity was granted to cross examine him. The Hon ble ITAT after appreciating the evidence furnished by us have given this direction that no evidence/or material collected by the AO be used against the assessee while deciding the matter afresh without giving opportunity to the assessee. During these fresh assessment proceedings also you have not provided copy of the statement recorded by Sh. Kulanand Bharatiya nor you have provided any opportunity to cross examine him hence these evidences collected by your predecessor on which no opportunity was provided may not be used against the assessee as per the direction of the Hon ble ITAT while ITAT deciding the issue of cash. 27. It is thus evident that assessee had placed on record evidence in the shape of statement of Shri Mohan Singh Rawat, affidavit of Shri Govind Sharma to establish that there was refund by Shri Kulanand Bharatiya to the appellant of ₹ 11 lacs. The statement being relied upon by the revenue of Shri Kulanand Bharatiya was not confronted to the assessee despite his repeated request and accordingly, we hold that such a statement has to be excluded as such. In view of the above, we hold tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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