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TMI Blog2015 (2) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997, who while remaining the matter on this issue directed for making fresh assessment after examining and verifying each and every evidence produced by the assessee and after providing an adequate opportunity in respect of any material or evidences collected and used against the assessee while deciding the matter afresh. b) because he relied upon the evidence by way of statement recorded by his predecessor of Sh. Kulanand Bhartiyaya, copy of which was neither provided to the appellant nor who was called for cross examination, despite specific request. 3 That the ld. ACIT, Cir. 36(1) has erred in law as well as on facts in making an addition on account of unexplained cash amounting to Rs. 32,69,744/- out of the cash found amounting to Rs. 39,00,000/- which was belonging to Durga Singh & Sons (HUF) amounting to Rs. 19.50 lakhs and Lachman Singh & Sons (HUF) amounting to Rs. 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 Rs. 19.50 lakhs belonging to Lachman Singh & Sons (HUF) b) because he literally ignored the statement of Sh. Puran Singh during cross exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 1,36,04,412/-. The appellant being aggrieved, preferred an appeal before the Tribunal which was decided by an order dated 17.06.2009. As a result of the said order, additions aggregating to Rs. 66,76,300/- and Rs. 7,49,926/- were deleted and additions aggregating to Rs. 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 Rs. 1,14,11,732/- which has been later rectified by an order dated 11.1.2011 at Rs. 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 Rs. 11 lacs on account of unexplained investment in Himmatpur land b) Addition of Rs. 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 Rs. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Medical Officer does not find anyplace on the said noting, though the same is claimed to have been signed and attested by other person present, i.e. Shri Jagat 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 Rs. 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 Rs. 8,00,814/- in the said Bahi, which amount was made the basis to arrive at the cash at Rs. 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 Rs. 9,31,478/- claimed to have been taken out from Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her would retain the character of individual property in their hands, and if any share in agricultural income was being earned 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been estimated at nearly Rs. 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 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 Rs. 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 Rs. 11 lacs made in the Bahi. I therefore, hold that the sum of Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no details of the land is mentioned in the alleged "Bahi". In the 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 Rs. 1.45 lakh per annum approximately for the F.Y. 1994-95 for F.Y. 93-94, it has been estimated at nearly Rs. 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 Rs. 1.5 lacs from 5 acres of land, by means of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposits 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 Rs. 9,31,478/- claimed to be available in 1985, and increased to about Rs. 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 Rs. 39,27,840/- almost Rs. 33.50 laksh were found in the denomination of Rs. 500/-. This observation was confronted to Shri Jeevan Singh (brother of Shri Narain Singh), who claimed to have brought Rs. 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 Rs. 3 laksh in old currency notes of Rs. 100/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced 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 Rs. 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 Rs. 11 lakhs made by the assessee to Shri Kulanand Bharitya are found to be unexplained and treated as undisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 19.50 laksh and Rs. 11,00,000 d) In absence of allowing opportunity to cross examine to Kulanand Bhartiyaya and the evidence contrary to this statement by way of statement recorded of Sh. M.S. Rawat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a huge sum of money amounting to Rs. 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 Rs. 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 Rs. 9,31,478/- claimed to be available in 1984-85 increased to about Rs. 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 above, it was held in para 19.5 of the order as under: "19.5 Since various aspects of the matter including the points discussed hereinabove have not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rove 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, Krishna Nagar, Delhi and not at the ancestral premises of the assessee in village where the agricultural operations are carried out. He however held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f search. It was explained that the aforesaid cash was from the following sources: a) Rs. 19.50 lacs belonging to one Shri Lachhman Singh and sons with its Karta Shri Lal Singh; b) Rs. 19.50 lacs belonging to HUF Durga Singh and Sons, Bigger HUF of assessee's father. 18. The contention that sum of Rs. 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 Rs. 19.50 lacs from Durga Singh and Sons HUF, the assessee had contended that sum of Rs. 11 lacs paid to Shri Kulanand Bhartiyaya in the year 1994-95 was received back and was a part of money of Rs. 19.50 lacs received from M/s. Durga Singh & Sons and found with the assessee at the time of search..The Tribunal while examining the aforesaid claim in the order dated 17.6.2009 had held that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Before parting with this appeal, we say that even if the assessee's claim as to the source of money amount to Rs. 39,00,000/- is not accepted either n full or in part, the AO should give a benefit of Rs. 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 Rs. 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 Rs. 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 Rs. 39,00,000/- on account of cash found with the assessee at the time of search. We order accordingly." 21. During the fresh assessment proceedings, summons were issued to the three persons Shri Kishan Singh, Shri Paan Singh and Shri Puran Singh. In response to the summons, Shri Puran Singh appeared on 29.10.2010 and it was informed that Shri Kishan Singh and Shri Paan Singh coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 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 Rs. 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 Rs. 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 has taken documentary evidence for all such cash transactions, and therefore, the claim is found to be not substantiated. 9.4 Shri Lal Singh has tried to explain the source of Rs. 13.5 lakhs by the alleged three agreements to sale entered by him with so many different persons at different places for his agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al on record. We find from the material on record that assessee in a letter dated 27.12.2010 visa-vis the sum of Rs. 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 Rs. 19.50 Lakhs he also explained at page 476 there is an agreement of receiving Rs. 7 Lakhs from Sh Puran Singh and his brothers. At page 477 there is an agreement which Sh Yashwant Singh of receipt Rs. 3 Lakhs at page 478 there is an agreement with Sh Gyan Singh who paid Rs. 3.5 Lakhs. At Page 482 there is a receipt of cash from Sh Aggarwal Rice Mill, Ramnagar who paid Rs. 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which comes to 7.5 Acre (1 Hectare = Rs. 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 a letter to ADI explaining about the source of money in which he furnished documents in proof of agriculture produce and agriculture land by way of certificates and copies of Intkhab Khatoni, Khasara etc. He also filed proof of drawings of Rs. 5.05 Lakhs, three sale agreements, two purchase agreements, legal notice etc. This letter is placed at pages 525 & 526. During the course of assessment proceedings of Sh Narain S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 19.50 lacs was available with the appellant on the date of search. According to the appellant, Rs. 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 further doubted the source of investment of Shri Lal Singh with the appellant, which is contrary to record. Moreover, even Shri Puran Singh has appeared and stated on record that he had entered into an agreement with Shri Lal Singh for purchase of land. He has also stated that one of the brothers Shri Kishan Singh is deceased and Shri Paan Singh is in jail. No doubt, he explained regarding the earlier statement have been given under intoxicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 Sh Kulanand Bharatiya but the same was never enclosed or subsequently supplied to the assessee. Specific request to cross examine Sh Kulanand Bharatiya was also made. Request to summon him under section 131 and also to furnish statement of income declared and documents submitted by him with his income tax returns for AY 1996-97 along with evidence of filing said returns were sought. Copy of this letter placed at page 782 in the paper book filed before ITAT is also enclosed. During the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces 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 Rs. 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 Rs. 11 lacs is also available as evidence with the appellant to explain the source of availability of cash on the date of search with the appellant. Accordingly, the appellant is entitled to the benefit of Rs. 11 lacs and Rs. 1,23,250/- (85% of Rs. 1,45,000/-) being the agricultural income for the financial year 1995-96. Thus, the assessee is entitled to total benefit of Rs. 12,23,250/-. Accordingly, assessee is entitled to a relief of Rs. 31,73,250/-. The Assessing Officer has made addition of Rs. 32,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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