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Shri Ramesh Kumar Jain Versus Asstt. Commissioner of Income Tax

Assessment on the basis of sworn statement given u/s 132(4) - Held that:- No substance in this contention. We have already noticed that the fact of providing accommodation bills came to light due to survey operations conducted at the premises of M/s Akruti Metals and Alloys Pvt Ltd. The statement taken from the director of the above said company was confirmed by the assessee in the statement taken from him u/s 132(4) of the Act as well as u/s 131 of the Act. It appears that the fact relating to .....

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he assessee has not filed return of income prior to the date of search and hence the returns of income filed in response to the notices issued u/s 153A become the original returns of income for all the years under consideration. Consequently the impugned assessments are to be considered as original assessments in the hands of the assessee. The assessing officer is entitled to examine all the issues, since these assessments shall not fall in the category of “concluded assessments” in the absence .....

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fficer has simply estimated the household expenses without bringing any other material on record. The submission of the assessee is that he was maintaining a simple life and further the money withdrawn from his wife’s account was also used towards household expenses. Admittedly, the assessing officer did not consider the drawings made from the account of assessee’s wife. Since the assessing officer has not brought any material to support the estimate made by him, in our view, the same should be .....

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possible leakage, if any.

Unexplained investments - Held that:- assessing officer should either accept or reject the financial statements in toto and partial reliance on them is not justified. The additions may be made out of the said financial statements, if the assessing officer was not satisfied with the explanations of the assessee with regard to any of the items disclosed therein. Since the items assessed as “unexplained investments” in all the years under consideration has been .....

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ash credits - Held that:- hile the assessee claims that the assessee did furnish the confirmation letter, the tax authorities state that the same was not furnished. In this regard, the Ld A.R invited our attention to the confirmation letter furnished in the paper book. Accordingly he contended that the observations made by the tax authorities are against the facts prevailing on record. Since the confirmation letter furnished by the assessee was omitted to be examined by the tax authorities, we a .....

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nce the resultant assessed income of AY 2010-11 would become lower than the income returned by the assessee. The fact remains that the assessee did not visualise the addition relating to Commission income at the time of filing returns of income of the years under consideration and hence there was no occasion for him to claim deduction of the commission income. Since the commission income has been estimated by the tax authorities as well as by us, the aggregate amount of net commission income fin .....

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value of jewellery has been assessed in AY 2010-11 by taking the rate prevailing in that year. Further, the Indian families normally own certain quantity of jewellery over the years. Considering all these facts, we are of the view that there is no justification in assessing the balance value of jewellery amounting to ₹ 10,29,020/-. With regard to the cash also, the assessing officer has not given credit for book balance. Considering the smallness of the amount, we are of the view that the .....

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re directed against the separate orders passed by Ld CIT(A)-36, Mumbai and they relate to the assessment years 2004-05 to 2010-11. Since most of the issues urged in these appeals are identical in nature, they were heard together and are being disposed of by this common order, for the sake of convenience. 2. Before proceeding to deal with the issues urged in these appeals, we prefer to narrate the facts surrounding the case. The revenue carried out survey operations in the business premises of M/ .....

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d that he conducted the audit on the basis of Trial Balance only, i.e., no evidence regarding purchase and sale of goods was examined by the Chartered Accountant also. Subsequently, the department carried out search and seizure operations u/s 132 of the Act in the case of M/s ABG Shipyard Ltd and group concerns on 07.10.2009. On the very same day, the assessee was also subjected to search operations and a statement u/s 132(4) of the Act was taken from the assessee. At that point of time, the ass .....

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n @ 0.2% on the value of accommodation bills provided. 3. The assessee did not file return of income u/s 139 of the Act for any of the years under consideration. Consequent to the search operations, the AO issued notices u/s 153A of the Act and the assessee filed returns of income in response to the same. In all the returns, the assessee disclosed income from Salary and income from other sources. From AY 2006-07 onwards, the assessee disclosed commission income also as his business income. The a .....

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sess both the income as well as outgoings as income of the assessee in each of the years, in addition to assessing the income returned by the assessee. The withdrawals shown by the assessee in the said financial statements towards household expenses were found to be low by the AO. Hence he estimated the household expenses in each of the year and assessed the difference as income of the assessee. 4. In assessment year 2004-05, the assessee had shown loan of ₹ 10,23,000/- obtained from M/s D .....

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the assessee in AY 2010-11. 6. The assessee declared commission income from AY 2006-07 onwards. However, the assessee expressed his inability to furnish the necessary details. Hence, the assessing officer took the view that the aggregate amount of deposits found in the ABN AMRO bank account of M/s Akruti Metal and Allys Pvt Ltd represents the turnover of the assessee. Though the assessee submitted in the letter dated 12.12.11 filed before the AO that he was getting commission @ 0.25%, the AO to .....

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ice that the assessing officer has assessed the income declared by the assessee and also assessed commission income estimated by him. Having assessed the income, the assessing officer has also proceeded to assess the cash outgoings by way of investments also. There should not be any doubt that the same would result in double assessment of same income. Further, we notice that the assessing officer has rejected the financial statements filed along with the returns of income, but used the details a .....

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the assessee has taken certain legal issues. The first issue was that the tax authorities were not justified in making assessment on the basis of sworn statement given u/s 132(4) of the Act, since the same was not corroborated with any other material. We do not find any substance in this contention. We have already noticed that the fact of providing accommodation bills came to light due to survey operations conducted at the premises of M/s Akruti Metals and Alloys Pvt Ltd. The statement taken fr .....

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ified in placing reliance on the statement given u/s 132(4) of the Act. Accordingly, we reject this legal ground. 10. Another major legal ground urged before us was that the search operations did not reveal any incriminating material and hence all the additions made in these assessments are liable to be quashed. In this regard, the ld A.R placed reliance on the order dated 20-06-2013 passed by Delhi bench of ITAT in the case of PACL India Ltd (ITA No.2637/Del/2010). However, a perusal of the sai .....

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he case of M/s PACL India Ltd (supra), the assessee had filed original returns of income u/s 139(1) of the Act and the period for issuing notice u/s 143(2) of the Act had expired by the time search took place in the hands of the above said assessee. Under these set of facts, the Tribunal held that the Concluded assessments (i.e., those assessments where the period for issuing notices u/s 143(2) of the Act had expired) can be disturbed only on the basis of incriminating materials found during the .....

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d urged by the assessee is that the Column no.7 of notice of demand issued u/s 156 of the Act was left blank and hence the said notice was invalid. In our view, the clerical errors would not vitiate the assessment orders and accordingly, we reject this ground also. 12 We shall now deal with the grounds urged on merits. The assessee is challenging the additions made on account of low withdrawals made for household expenses. The additions made by the AO are tabulated as under for the sake of conve .....

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n though he had rejected them. However, we notice that the assessing officer has simply estimated the household expenses without bringing any other material on record. The submission of the assessee is that he was maintaining a simple life and further the money withdrawn from his wife s account was also used towards household expenses. Admittedly, the assessing officer did not consider the drawings made from the account of assessee s wife. Since the assessing officer has not brought any material .....

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wings is sustained to the following extent in order to take care of possible leakage, if any. Asst. Year Addition Sustained 2004-05 10,000 2005-06 15,000 2006-07 20,000 2007-08 25,000 2008-09 30,000 2009-10 35,000 2010-11 40,000 We order accordingly. The order of Ld CIT(A) on this issue stands modified accordingly and the assessing officer is directed to sustain the addition towards insufficient drawings to the extent stated in the table given above. 14. The next issue contested by the assessee .....

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statements, he assessed all the above said items as income of the assessee. We have also earlier noticed that the assessing officer has assessed the income declared by the assessee, which was included in the financial statements. Further, the assessing officer has given credit for the drawings disclosed in the financial statements. Hence, it is seen that the assessing officer, after having rejected the financial statements, has again considered the same for making assessment of income and also .....

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ned investments in all the years under consideration has been duly disclosed in the financial statements and the sources thereof were also explained therein, we are of the view that the impugned additions are not warranted. Accordingly, we set aside the order of Ld CIT(A) on this issue in all the years under consideration and direct the assessing officer to delete the additions made under the head Unexplained investments representing Life insurance scheme payments, PPF payments, Loans and Shares .....

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68 of the Act, which stood confirmed by Ld CIT(A). According to the AO, the assessee had stated in his covering letter that the confirmation letter was attached, but the same did not find place in that document. Before us, the Ld A.R submitted that the assessee had furnished confirmation letter obtained from the above said creditor and hence the tax authorities are not justified in assessing the amount without considering the confirmation letter. On the contrary, the Ld D.R strongly supported th .....

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rd. Since the confirmation letter furnished by the assessee was omitted to be examined by the tax authorities, we are of the view that this issue requires fresh examination at the end of the assessing officer. Accordingly, we set aside the order of the Ld CIT(A) on this issue and restore the same to the file of the assessing officer for fresh examination. The assessing officer, while examining this issue, should also keep in mind about the difficulties that may be faced by the assessee in furnis .....

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of 1.50%. A perusal of the assessment orders would show that the assessing officer has not brought on record any material or basis which enabled him to adopt the rate of 1.50%. The AO has also not examined the beneficiaries of the accommodation bills to ascertain the rate of commission. Further, the assessee has submitted that the commission income earned was shared by him and two others. The said fact was also not considered by the assessing officer. 18. The assessee, in his contentions as wel .....

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ssee did earn any commission income. This contention of the assessee is also liable to rejected, since the assessee himself accepted the fact of receipt of commission twice, viz., once in the statement taken from him and again in the letter furnished before the assessing officer. 19. Now the question that arises is with regard to the quantum of commission income. Since the assessee himself has confirmed the rate of commission as 0.25% and since the AO has not properly substantiated the rate of 1 .....

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timated at 0.10% and in our view, the same would meet the ends of justice. Accordingly, we modify the order of Ld CIT(A) in respect of this issue in all the years under consideration and direct the assessing officer to work out the addition towards commission income in the lines discussed supra. 20. We have earlier noticed that the assessing officer has assessed both the income as well as investment. We have also noticed that the same would result in double assessment of same income, which is no .....

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e would have received the commission income every year. We find merit in the reasoning given by the assessing officer. Accordingly, we are of the view that he is justified in holding that the commission income is assessable every year. However, since the said income has culminated into jewellery investment, we are of the view that the cumulative commission income finally assessed from AY 2006-07 to 2010-11 after giving effect to our order, should be given deduction against the income offered tow .....

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t of same income, which is not contemplated under the Income tax Act. Accordingly, we direct the assessing officer to grant deduction of aggregate commission income assessed by him in AY 2006-07 to 2010-11. 21. A question may arise as to whether the deduction directed to be given in the preceding paragraph is valid, since the resultant assessed income of AY 2010-11 would become lower than the income returned by the assessee. The fact remains that the assessee did not visualise the addition relat .....

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h over and above that surrendered by the assessee. Though the search officials found cash of ₹ 3,80,200/- and jewellery worth ₹ 88,76,750/-, the assessee surrendered only a sum of ₹ 78,47,730/-. Hence the assessing officer assessed to the extent of ₹ 10,29,020/- towards jewellery and a sum of ₹ 30,200/- towards cash as unexplained income of the assessee. The Ld CIT(A) also confirmed the same. 23. Before us, the Ld A.R submitted that the assessee is married and is ha .....

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