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2015 (7) TMI 567 - ITAT DELHI

2015 (7) TMI 567 - ITAT DELHI - TMI - Addition under section 69A - CIT(A) deleted the addition - Held that:- Assessing Officer was not justified in making addition u/s 69A of the Act by treating the seized cash as unexplained money of the assessee. On careful consideration of the assessment order and impugned order of the CIT(A), we have no hesitation to hold that the Assessing Officer did not appreciate the explanation and evidence submitted by the assessee rather he ignored some important fact .....

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o notice was issued to the assessee for the first date of hearing that was 05.12.2011 and the assessee approached the Assistant Registrar of ITAT, New Delhi firstly on 28.02.2012 and requested to provide copy of Form No.36 along with grounds of appeal raised by the Revenue. The assessee subsequently filed reminder/applications on 03.10.2013, 22.02.2013 and 05.03.2013 with the same request which was finally redressed on 13.03.2013 when the Assistant Registrar, ITAT, Delhi directed to provide copy .....

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4) of the Act would be reckoned only after receipt of complete notice along with copies of Form No.36 and grounds of appeal of the Revenue which is on 13.03.2013 in the present case. Hence, thus cross objection filed on 04.04.2013 cannot be alleged and held as time barred. Accordingly, legal objection of the Revenue is dismissed.

Understatement of sale consideration of the property situated at 9/100, Shastri Gali, Vishwas Nagar, Shahdra, Delhi - CIT(A) deleted the addition - Held that .....

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re an agreement with the conclusion of the authorities below, the estimate made by the Assistant Valuation Officer has not been demolished and rebutted by the assessee with the quite plausible explanation or acceptable evidence, therefore, view taken by the Assessing Officer and upheld by the CIT(A) is justified and we are unable to see any infirmity or any other valid reason to interfere with the same on account of addition of ₹ 1.77 lakh made by the AO.

At the same time, we fu .....

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orted in (1967 (4) TMI 18 - SUPREME Court), CIT Vs. Gillanders Arbuthoot & Co (1972 (9) TMI 13 - SUPREME Court), K.P. Varghese Vs. ITO (1981 (9) TMI 1 - SUPREME Court), CIT Vs. Shivakami Co. (1986 (3) TMI 2 - SUPREME Court ) and CIT Vs. Godawari Corpn. Ltd. (1992 (9) TMI 3 - SUPREME Court) and ratio of these decisions is that unless there is evidence that more than what was stated in the sale deed, was received no higher price or value can be taken to be the basis for computation of capital gain .....

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eleted addition - Held that:- The confusion arose before the AO due to incompleteness in the facts and details submitted before the AO which were subsequently explain by way of filing details submission, statement of Bank account and other relevant details during first appellate proceedings. Admittedly, the assessee offered long term capital gain to the extent of ₹ 3,47,817/- on the sale of 10,000 shares of M/s J.V. Industries Pvt. Ltd. which were sold to M/s Nirman Securities Ltd. and the .....

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ny other valid reason to interfere with the impugned order in this regard and we upheld the same - Decided against revenue.

Addition in the hands of the assessee holding that Shri Ashish Jain was a minor - unexplained source of repayment of advance to Shri Vinod Kumar Jain against the sale agreement - CIT(A) deleted addition - Held that:- When the amount of gift was routed through banking channels from donor Smt. Kaushalya Jain to donee Shri Ashish Jain which was further advanced as l .....

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repayment of advance to Shri Vinod Kumar Jain against the sale agreement is not sustainable. We are unable to see any infirmity, perversity or any other valid reason to interfere with the same - Decided against revenue.

Unaccounted receipt of cash claimed to have been received from Sheel Kumar Jain - CIT(A) deleted addition - Held that:- When admittedly Shri Sheel Kumar Jain was expired on 02.11.2005 prior to finalization of assessment order on 19.12.2006 then it was not possible for .....

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threshold that without making any enquiry examination of verification and proceeded to make addition of ₹ 3,00,000/- without bringing doubt any sustainable allegation or incriminating material against the assessee and the same was rightly deleted by the first appellate authority with the aforesaid disallowances and conclusion. We decline to interfere of the conclusion of the CIT(A) on this issue - Decided against revenue.

Rejection of books of accounts - Enhancement of income of .....

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377; 16,96,788/- applying difference of GP rate of 4.1% calculated on the basis of average of GP rate of immediately preceding three assessment years, we note that since the rejection of books of account have not been found to be sustainable then the Assessing Officer cannot be held as justified in making the addition by applying difference in GP rate of 4.1% on the basis of average of preceding three years and addition in this regard cannot be held as sustainable and in accordance with law in a .....

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e years the G.P. rate of 5% of turnover would be most appropriate and justified. Hence, we direct the AO to adopt 5% of G.P. rate and calculate the disallowance accordingly. Accordingly, Ground Nos. 7 & 7.1 of the revenue are restored to the file of the AO for the limited purposes as directed above. - Decided partly in favour of revenue for statistical purposes. - ITA No.4396/Del /2011,CO No.64/Del /2013 - Dated:- 6-7-2015 - Shri R.S. Syal and Shri Chandra Mohan Garg, JJ. For the Petitioner : Sr .....

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umstances of the case, the Ld CIT(A) has erred in deleting the addition of ₹ 25,75,000/- made by the AO under section 69A of the I T Act, 1961. 2.1 The learned CIT(Appeals) has erred in ignoring the finding of the AO that the evidence and explanation put forth by the assessee in support of the sources of cash of ₹ 25,75,000/- seized by the excise authorities and repayment of advances received against sale agreements was not only clearly an after thought but also inherently defective. .....

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made by the account of under statement of sale consideration of property situated at 9/100, Shastri Gali, Vishwas Nagar, Shahdara, Delhi. 4. On the facts and in the circumstances of the case, the Ld CIT(A) has erred in deleting the addition of ₹ 5,00,000/- made by the AO on account of unaccounted source of repayment of advance against sale agreements. 5. On the facts and in the circumstances of the case, the Ld CIT(A) has erred in deleting the addition of ₹ 5,00,000/- made by the AO .....

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he Ld CIT(A) has erred in holding that the books of accounts of the assessee were rejected by the AO without any finding on the "correct or completeness" of the accounts. 3. The sole ground of cross objection of the assessee reads as under:- 1. That on the facts of the case and under the law, the ld. CIT(A) has erred in not deleting the addition of ₹ 1,77,000/-. Ld. AO had replaced the figure of actual sale consideration in respect of property bearing no.9/100, Shastri Gali, Vish .....

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ized by the Central Excise Authorities. Subsequently, in due course of process and time, the Central Excise Authorities had failed to make out any case against the assessee or his sole proprietary concern M/s Jain Metal Works in regard to said cash amount which was seized from the business premises of the assessee. Later on, the said cash of ₹ 25,75,000/- was requisition by the Income Tax Department on 19.09.2006. 5. The Assessing Officer issue notice u/s 153A of the Income Tax Act, 1961 ( .....

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ietary sold amounting to ₹ 6,77,000/- income from undisclosed sources amounting to ₹ 5,00,000/- unexplained receipt of cash from Shri Sheel Kumar Jain amounting to ₹ 3,00,000/- addition on account of no GP rate amounting to ₹ 16,96,788/- much as disallowance of general expenses amounting to ₹ 7,500/-. Aggrieved assessee preferred an appeal before the CIT(A) which was partly allowed on all the issues except part confirmation of addition of ₹ 1,77,000/- in respe .....

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of the CIT(A) and written synopsis of the assessee filed before us. The Ld. Departmental Representative (DR), supporting the action of the AO submitted that the AO was quite justified in making addition in regard to the unexplained money/seized cash of ₹ 25.75 lakh u/s 69A of the Act. The Ld. DR further contended that despite of adequate opportunity were given to the assessee to submit said original receipt, but the same was not submitted during the assessment proceeding. The Ld. DR furth .....

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agreement was cancelled on account of nonpayment of instrument by Shri Sheel Kumar Jain and not because the assessee Shri Sushil Kumar Jain could not get the property vacated from his sister. Ld. DR took us through the relevant part of the assessment order and vehemently contended that the Assessing Officer established made out that the explanation offered by the assessee was not satisfactorily with regard to source of cash found in his possession thus, third limb of Section 69A was satisfied a .....

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orted the conclusion of the CIT(A) and submitted that the assessee had furnished complete evidence in support of availability of cash of ₹ 25,75,000/- which was seized by the Central Excise Authorities, before the AO during assessment proceeding. The Ld. counsel of the assessee vehemently contended that the Assessing Officer did not appreciate the explanation and evidences of the assessee and proceeded to make the addition u/s 69A of the Act without any reasonable basis and justified reaso .....

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e CIT(A) while granting relief to the assessee on this issue, therefore, the addition was rightly found to be not sustainable by the CIT(A). 8. On careful consideration of the above submissions at the very outset, we note that the Assessing Officer firstly proceeded to dispute amount of cash seized as unexplained money of the assessee on the basis of that advanced money received on account of sale/purchased of property are always routed through account payee cheque/draft. On this conclusion of t .....

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at there was written agreement of sale between the assessee and the said purchasers M/s JMW (India) Pvt. Ltd. and this fact was confirmed by the Director of the company before the authorities below. Since the property was pre occupied by the sister of the assessee who could not be vacated, therefore, the deal was cancelled and the said intended purchasers company had taken its advanced money back. In this situation, transaction cannot be held as fake transaction. It is pertaining to note that bo .....

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ation, the AO wrongly hold that the said purchasers did not produce the books of account and thus the treatment and source of the said advanced could not be independently verified. 9. We are also an agreement with the contention of the assessee that M/s JMW (India) Pvt. Ltd., and M/s J.V. Industries (P) Ltd. , father and brothers of the assessee are separately assessed to income tax and merely because the transaction occurred between two companies having Directors who are relating to each cannot .....

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ought because there is no bar of having property transactions between the family members or blood relative of the Income Tax Act or any other provision of the effective legislation. The assessee stand before the AO was that the said agreement with the said company was cancelled on the account of his family to get property from his sister, which was not accepted by the AO by holding that past history/conduct of the assessee clearly established that the assessee was complete command and authority .....

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tionship of their sister, the assessee could not deny her request and therefore, the agreement to sale was cancelled. The explanation offered by the assessee was wrongly rejected by the AO and the CIT(A) rightly considered the said explanation and we are unable to see any perversity or infirmity or any other valid reason to interfere with the same. The CIT(A) rightly considered the evidence submitted by the assessee to support this fact that the property was possessed by his sister Smt. Pratibha .....

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en submission on behalf of the appellant, the findings of the Assessing Officer and the facts on record. The main contention of the appellant is that complete evidences in support of the availability of cash of ₹ 25,75,OOOJwere furnished before the Assessing Officer. The contention of the appellant and the supporting evidences furnished on behalf of the appellant have not been rebutted by the Assessing Officer. Simply because the Assessing Officer was not able to make necessary verificatio .....

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032 & (b) from Mls lain Metal Works under debit to the proprietor's capital accounts were available before the date of survey by the central excise Department conducted on 22.02.2004 and there was sufficient cash balance in the possession of the appellant on the date of survey. It is observed that the observations and findings of the Assessing Officer have been satisfactorily rebutted on behalf of the appellant. 11. On the basis of foregoing discussion, we reach to a logical conclusion t .....

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g relief to the assessee and in deleting the impugned addition of ₹ 25.75 lakh made by the AO u/s 69A of the Act. Accordingly, Ground No. 2 to 2.2 of the Revenue are dismissed and view taken by the CIT(A) in this regard. Gound No.3 of the Revenue and sole ground of the cross objection of the assessee 12. It would be appropriate to address the legal objection of the Ld. DR that the C.O. No.64/Del/2013 of the assessee is time barred as the assessee received notice of hearing for 05.12.2011 a .....

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n stipulated time period, therefore, the objection filed by the assessee after lapse of prescribed limitation period are time barred and the same may kindly be dismissed. 13. Replying to the above, Ld. counsel of the assessee drawn our attention towards applications of the assessee first dated 28.02.2012, second application dated 03.10.2012, third application dated 22.02.2013 and fourth application dated 05.03.2013 and submitted that neither any notice for the date and hearing for 05.12.2011 nor .....

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nded that after several efforts and four applications, assessee got the copy of Form No.36 along with grounds of appeal raised by the Revenue on 13.03.2013 and after perusing the same the assessee decide to file cross objection and the same were filed on 04.04.2013 within prescribed time limit as per Section 253(4) of the Act. Ld. counsel further pointed out that Section 253(4) of the Act enable the assessee to file cross objection, if any, not against the notice but against Form No.36 and groun .....

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an appeal against the order of the Deputy Commissioner (Appeals)] or, as the case may be, the Commissioner (Appeals)] has been preferred under sub- section (1) or subsection (2) by the other party, may, notwithstanding that he may not have appealed against such order or any part thereof, within thirty days of the receipt of the notice, file a' memorandum of cross- objections, verified in the prescribed manner, against any part of the order of the Deputy Commissioner (Appeals)] or, as the cas .....

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be disposed of by the Tribunal as if it were an appeal filed within prescribed limit as time specified in sub Section (3) or sub Section 3A of Section 253 of the Act. We also note that this enabling provision provides a right to the opposite party against whom appeal have been preferred either by the AO or by the assessee not withstanding that he may not have filed any appeal against such order or any part thereof. 16. The main essence of this provision is that the time limitation of thirty days .....

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unds of the appellant the respondent would not be able to file his cross objection against the order or any part of the order. 17. In the present case, from careful perusal of the appeal record of ITA No.4396/Del/2011 viz. appeal of the Revenue, we note that the appeal was filed on 03.10.2011 and case was fixed for first hearing on 05.12.2011. From the record, we also see that no notice was issued to the assessee for the first date of hearing that was 05.12.2011 and the assessee approached the A .....

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s objection on 04.04.2013. In this situation, we are of the view that when the assessee has established that no notice along with copies of Form No.36 and grounds of appeal of the Revenue were served upon the assessee and the assessee could get copies of Form No.36 and grounds of the Revenue after restless efforts only on 13.03.2013 then the time limit prescribed in Section 253(4) of the Act would be reckoned only after receipt of complete notice along with copies of Form No.36 and grounds of ap .....

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n of ₹ 6,77,000/- made by the AO on account of understatement of sale consideration of the property situated at 9/100, Shastri Gali, Vishwas Nagar, Shahdra, Delhi. Ld. DR pointed out that the Assessing Officer rightly observed that payment of alleged gift by Mrs. Kaushalya Jain to Shri Ashish Jain and subsequent transfer of money by Shri Ashish Jain to present assessee who in turn had used the money to repay advance was nothing but a still modus operandi to pay adequate consideration for p .....

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ion declared by the assessee and therefore, the same was rightly treated as undisclosed income of the assessee by the AO. 19. The Ld. DR also contended that the assessee shown sale of property No.9/100 Shastri Gali, Vishwas Nagar, Delhi with a consideration of ₹ 8,00,000/- of which long term capital gain was also declared but as per report of Assistant Valuation Officer dated 17.10.2006 the fair market value of the said property was valued at ₹ 9.77 lakh. The Ld. DR further contended .....

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without any justified reason and basis and therefore, the impugned order in this regard may be set aside by restoring that of the AO. 20. The Ld. counsel of the assessee replied that the AO has failed to adduce any evidence on record in support of understatement of sale consideration by the assessee in respect of addition of ₹ 5,00,000/-. Ld. counsel further submitted that the CIT(A) wrongly held that estimate of Assistant Valuation Officer has not been controverted by the assessee with an .....

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ched less consideration then the fair market value prevailing at the time of transaction. 21. The Ld. counsel further pointed out that Assistant Valuation Officer rejected the arguments of the assessee without affording the due opportunity of hearing to the assessee to explain the position, therefore, the addition of ₹ 1.77 lakh made by the AO and upheld by the CIT(A) is not sustainable without bringing out any material or evidence against the assessee to show that the assessee had actuall .....

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ce or material to support this allegation of understatement of sale consideration by the assessee of ₹ 5,00,000/-, therefore, the impugned order in this regard is correct. The Ld. counsel finally submitted that the addition of ₹ 1.77 lakh upheld by the CIT(A) is not sustainable and the same should be deleted allowing the cross objection of the assessee. 22. Ld. DR also placed rejoinder to the aforesaid submission of the assessee and submitted that the assessee did not produce any evi .....

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deration of above submission, we note that the CIT(A) granted relief for the assessee with the following observations and conclusion:- 7.1 I have considered the written submission on behalf of the appellant, the findings of the Assessing Officer and the facts on record. It has been the case of A.O. that the consideration shown by the appellant was not the real consideration, but this has been done without bringing on record any evidence direct or inferential in support of the same. It is a trite .....

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nds which suggest that the consideration exceeded the amount shown in the document. Reliance is placed on the decisions of the Supreme Court in CIT v. George Henderson Co Ltd(1967) 66 ITR 622(SC), CIT v . Gillanders Arbuthnot & Co (1973) 87 ITR 407(SC), K.P. Varghese v. ITO(1981) 131 ITR 597(SC), CrT V. Shivakami Co. (P) Ltd. (1986) 159 rTR 71 (SC) and CIT Vs. Godawari Corpn. Ltd. (1993) 200 ITR 567 (SC), wherein it has been held that unless there is evidence that more than what was stated, .....

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ression 'the full value of consideration' as contemplated in section 48 of the Act does not have any reference to the market value but only to the consideration referred to in the sale deeds or other supporting evidences as the sale price of the assets which have been transferred. 7.2 In the instant case, the Asstt. Valuation Officer had estimated the fair market value of the impugned property at ₹ 9,77,000/-, as if the property was vacant and without any encumbrance. It is also ob .....

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of understatement of the sale consideration by the assessee in respect of the addition of ₹ 5,00,000/-. However, the estimate made by the Asstt. Valuation Officer has also not been rebutted by the appellant with any explanation or evidence. In view of the aforesaid discussion, the AO is directed to adopt the sale consideration ofthe impugned property at the figure of ₹ 9,77,000/- as estimated by the Asstt. Valuation Officer against the value of ₹ 8,00,000/- shown by the appella .....

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market value of the property sold. The Assessing Officer, on receipt of report vide dated 17.10.2006 of the Assistant Valuation Officer raised a query to the assessee showing his attention as to why the balance of ₹ 1.77 lakh may not be treated as undisclosed income resulted by understatement of sale consideration. The assessee submitted that the property was sold by a person who was already pre occupied as tenant, therefore, he could get less consideration in comparison to the fair market .....

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From careful reading of assessment order as well as order of the CIT(A) he further observed that the assessee has not submitted any evidence in support of this contention that the property was sold to a person who was already occupying the property in issue as tenant and there were court cases and other dispute under which the property was sold to the person who was already in possession of the property and, therefore, the assessee got less consideration in comparison to the fair market value. I .....

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ame time, we further observed that the Assessing Officer made addition of ₹ 5,00,000/- by treating a gift of ₹ 5,00,000/- as a part of sale consideration in respect of impugned property. The CIT(A) observed that AO has failed to adduce cogent evidence and record in support of understatement of sale consideration by the assessee in respect of said addition of ₹ 5,00,000/-. The Ld. counsel of the assessee has placed reliance on the judgments of Hon ble Apex Court in the cases of .....

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ring any evidence against the assessee to establish of record that there was understatement of sale consideration by the assessee by ₹ 5,00,000/- which was received by the assessee in the garb of gift in the name of Shri Ashish Jain son of assessee. Accordingly, Ground No.3 of the Revenue and sold ground of cross objection being devoid of merits are dismissed. Ground No.4 of the Revenue 27. The Ld. DR Departmental Representative submitted that the AO observed that the assessee had received .....

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dvance to M/s JMW (India) Pvt. Ltd. . The Ld. DR contended that the AO after holding so correctly held that no payment has been received by the assessee from M/s J.V. Industries Pvt. Ltd. and the amount of ₹ 5,00,000/- was rightly added to the total income of the assessee. Ld. DR further pointed out that the CIT(A) deleted the said addition without any basis and cogent reason, therefore, the impugned order may be set aside by restoring that of the AO on this issue. 28. The Ld. counsel of t .....

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shares of M/s J.V. Industries Pvt. Ltd to M/s Nirman Securities Ltd. The Ld. counsel of the assessee further pointed out that the assessee had received sale consideration of ₹ 5,00,000/- on 18.03.2004 through account payee cheque and this fact was rightly gets and considered by the CIT(A) while granting relief to the assessee. 29. From careful consideration of rival submission and perused the relevant material placed on record before us, from the vigilant reading of impugned order we note .....

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ares of M/s J.V. Industries (P) Ltd. to M/s Nirrnan Securities Ltd. and had received the sale consideration of ₹ 5,00,000/- on 18.03.2004 through account payee cheque. On perusal of the bank statement relating to the savings bank account No.38694, it is found that an amount of ₹ 5,00,000/- has been received on 18.03,2004. It is also observed that the appellant has declared long terms capital gain to the extent of ₹ 3,47,817/- on sale of 10000 shares of M/s J.V. Industries (P) L .....

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e against sale agreements is not sustainable on facts and in law and the same is deleted. As a result, Ground of appeal No. 6 is allowed. 30. In view of above, from the assessment year, we note that the Assessing Officer observed that the assessee had received amount of ₹ 5,00,000/- from M/s J.V. Industries Pvt. Ltd. The Assessing Officer observed from the details submitted by the assessee and vide reply dated 08.09.2006 along with explanation that credit and debit entries appearing in the .....

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Pvt. Ltd. We further observed that by way of submitting confirmation of the purchasers, Bank account and other details the explanation of the assessee remain uncontroverted that the 10,000 shares of M/s J.V. Industries Pvt. Ltd. were sold to M/s Nirman Securities Ltd. who in turn made payment of ₹ 5,00,000/- to the assessee as sale consideration through vide Cheque No.043132 dated 17.03.2004, confirmation from M/s Nirman Securities Ltd. is available at page 34 of paper book of the assessee .....

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impugned addition. The Ld. Counsel finally submitted that it is undisputed that the assessee had received ₹ 5,00,000/- through Account Payee Cheque No.043132 dated 17.03.2004, on 18.03.2004 from M/s Nirman Securities Ltd. as sale consideration against sale at 10,000 shares of M/s J.V. Industries Ltd. and such transaction was recorded in the books of account of the assessee and assessee had shown long term capital gain of ₹ 3,47,817/- on this transaction which was also offered to tax .....

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M/s J.V. Industries Pvt. Ltd. which were sold to M/s Nirman Securities Ltd. and the assessee received sale consideration through account payee cheque which was also credited to his saving Bank account. Under above noted facts and circumstances, we are an agreement with the conclusion of the CIT(A) that the assessee satisfactorily explained the source of ₹ 5,00,000/- and its further used for repayment of advance against sale agreement and in this situation addition made by the AO was rightl .....

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no assessable income during the period under consideration. The Ld. DR further pointed out that, despite of adequate opportunities, Smt. Kaushalya Jain did not respond to the summon issue to her u/s 131 of the Act and in this situation the AO rightly held that impugned amount was actually given by her to the assessee through his minor son Shri Ashish Jain as a part of undisclosed sale consideration of the property sold to her by the assessee in the garb of gift. The Ld. DR also contended that th .....

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t from that sister of the assessee viz. Mrs. Kaushalya Jain who was alleged to occupying his property against the wishes of the assessee. The Ld. DR finally contended that in the totality of the facts and circumstances, the Assessing Officer was right in dismissing the explanation of the assessee and making addition in this regard to the total income of the assessee. Ld. DR further pointed out that the CIT(A) deleted the said addition without any justified reason or basis, therefore, impugned or .....

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it was not fair on the part of the AO to presume that the assessee repaid property advance of ₹ 5,00,000/-to Shri Vinod Kumar Jain out of his undisclosed sources. The Ld. counsel vehemently contended that when the assessee submitted entire details and explanation supporting with documentary evidence before the AO and established this fact that Shri Ashish Jan actually received a gift of ₹ 5,00,000/- from Mrs. Kaushalya Jain and this amount was further given as loan by Shri Ashish Ja .....

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sessed to income tax. Ld. counsel for the assessee finally contended that the Assessing Officer made addition without properly considering an appreciating the explanation and evidence of the assessee and the same were rightly considered by the first appellate authority and the CIT(A) rightly held that impugned addition was not sustainable in law. 34. On careful consideration of above submission from the impugned order, we note that the CIT(A) grant relief to the assessee with the following obser .....

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ere made by account payee cheques. In view of these pieces of evidence, it was not fair on the part of the Assessing Officer to presume that the assessee repaid property advance of ₹ 5,00,000/- to Shri Vinod Kumar Jain out of undisclosed sources. The burden of proving this fact was on the Assessing Officer and the Assessing Officer has not made any verification either from the the bank or from the ward/ circle where Smt. Kaushalaya Jain was assessed to income-tax. Under the circumstances, .....

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; 5,00,000/-. When the Assessing Officer asked the assessee to explain the source, the assessee replied that he received loan of ₹ 5,00,000/- from his minor son Shri Ashish Jain and the source of amount in the hands of Shri Ashish Jain was a gift from his aunt Smt. Kaushalya Jain. The assessee submitted all related documents, bank account, bank statement confirmation etc. before the AO to establish the creditworthiness of the donor and genuineness of the transaction. But this explanation w .....

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levant evidence such as Bank statement confirmation of the respective party and explaining all facts then onus was obviously shifted to the Assessing Officer to controvert explanation and evidence submitted by the assessee to support his stand. On vigilant reading of the relevant part of the assessment order in this context, we note that the Assessing Officer dealt this issue at Pages 27 to 29 of the assessment order wherein it was held that the explanation of the assessee in this regard is not .....

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ed by the assessee by way of filing detailed explanation and supporting evidence. In totality of the facts and circumstances discussed above, we note that the Assessing Officer adopted a subjective approach with a pre determined mind that the assessee made repayment of advance to Shri Vinod Kumar Jain amounting to ₹ 5,00,000/- out of his income earned from undisclosed sources. Then the Assessing Officer with an intention to establish said subjective conclusion picking up loan transaction b .....

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to Shri Ashish Jain. When the Assessing Officer could not found any adverse material or evidence to doubt the creditworthiness of Smt. Kaushalya Jain and genuineness of the transaction of the gift then he proceeded to take assistance from this fact that there were harsh relation between the assessee and her sister Smt. Kaushalya Jain due to possession of some property against the Will of the assessee. Noticing this fact, the AO held that in these circumstances, in no situation would an illegal o .....

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Ld. counsel of the assessee that illegal occupation Smt. Kaushalya Jain gave a impugned gift to the minor son of assessee out of love and affection and with an intention to improve the veracity of relation and to clear all the clouds which spread over the relation between the families of real brother and sister due to property dispute. The facts can be evaluated and analyzed in both the ways either as stated by the Ld. DR or as contended by the Ld. counsel of the assessee but for making addition .....

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ole criteria for making addition in this regard. 39. In our considered view when the amount of gift was routed through banking channels from donor Smt. Kaushalya Jain to donee Shri Ashish Jain which was further advanced as loan to the assessee, then it may also be presumed that the gift was given by Smt. Kaushalya Jain to the minor son of the assessee out of love and affection and also to clear the clouds and bitterness in the relations between with her brother i.e. the assessee. Under above not .....

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dingly Ground No.5 of the Revenue is dismissed. Ground No.6 40. Apropos Ground No.6, Ld. DR submitted that the CIT(A) has erred in dleting the addition of ₹ 3,00,000/- made by the AO on account of unaccounted receipt of cash claimed to have been received from Sheel Kumar Jain. The Ld. DR took us through relevant operative part of the assessment order and submitted that during the course of assessment proceeding the AO noted that the assessee had entered into another agreement to sale the p .....

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his sister and registry was to be executed in favour of Shri Sheel Kumar Jain. The Ld. DR further pointed out since the said receipt of cash of ₹ 3,00,000/- could not be independently verified, therefore, the assessee was asked to explain the situation by way of order sheet noting dated 09.11.2006 and assessee filed reply vide dated 13.11.2006 by stating that the advance money had been repaid by the assessee to Shri Sheel Kumar Jain on 19.12.2003 in cash out of withdrawal made form M/s Jai .....

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by the assessee were not signed by the alleged purchasers Shri Sheel Kumar Jain and there were no independent evidence to show that money has been returned by the assessee to Shri Sheel Kumar Jain. The Ld. DR submitted that the assessee miserably failed to discharge his onus to explain the source/creditworthiness/genuineness of the alleged receipt of ₹ 3,00,000/- from Shri Sheel Kumar Jain hence the same was rightly added to the total income of the assessee. 42. Supporting impugned order t .....

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ecessary verification then explanation and evidences of the assessee cannot be rejected at threshold. The Ld. counsel of the assessee further pointed out that the assessee submitted his capital account before the authorities below which was self speaking that the assessee withdrew ₹ 3,00,000/- from his capital account with his proprietary firm M/s Jain Metal Works and the capital account of the assessee was debited with the same amount which was withdrawn on 19.12.2003. The Ld. Counsel sub .....

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le for the assessee to produce Late Shri Sheel Kumar Jain during assessment proceeding. The Assessing Officer could have verified the factum of repayment of advance to Shri Sheel Kumar Jain by examining and verifying the statement of accounts inter alia the capital account of the assessee with his sole proprietary firm M/s Jain Metal Works but instead of making any further enquiry examination or verification the Assessing Officer rejected the explanation and supportive evidence of the assessee a .....

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; 7.1 of the Revenue 44. The Ld. DR supporting the action of the AO submitted that the books maintained by the assessee were deficient as they do not reflect the true and correct particular of the income of the assessee company. The Ld. DR further pointed out that the Assessing Officer after detailed deliberations rightly held that the assessee intentionally under declared/understated/suppressed his income in his books of account, therefore, the same were rightly rejected by the AO. The Ld. DR f .....

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dition of ₹ 16,96,788/-. The Ld. DR vehemently contended that during the first appellate proceeding the CIT(A) deleted the said addition without any justified reason merely on the ground that the books of accounts and financial results of the assessee cannot be rejected only on the sole basis that particulars expenses claimed by the assessee remain unverified. The Ld. DR submitted that there was a sharp decrease in the GP rate of the assessee in the financial period under consideration in .....

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books of account and deleting the impugned addition made by the AO on account of low GP ratio. Therefore, the impugned order may be set aside by restoring that the AO. 45. The Ld. counsel of the assessee submitted a copy of the Form 3CB of M/s Jain Metal Works, a proprietary firm of the assessee, for the financial year ended on 31.03.2004 and submitted that the Assessing Officer was not correct in rejecting the books of account and financial results of the assessee merely because some expenses c .....

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with the audited report prepared by the competent auditor u/s 44AB of the Act then sharp decrease in the GP rate due to extraneous reasons beyond control of the assessee does not attracted any addition in any manner. The Ld. counsel of the assessee submitted that there were huge fluctuations in the rates of metal in the metal market during the financial period under consideration. The Ld. counsel also submitted that when the books of account of the assessee and financial results therefrom are su .....

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ter revolves around rejection of assessee's books of accounts by the Assessing Officer. In the case of Dhakeswari Cotton Mills Ltd. V. CIT (1964) 26 ITR 775 (SC) the Hon ble Supreme Court had decided that once the books of accounts of the assessee are rejected then the profit has to be estimated on the basis of proper material available. However, the A.O. is not entitled to make a pure guess & make estimation without reference to any evidence or any material at all. There must be somethi .....

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ssee's accounts, the Calcutta High Court's judgment in the case of Ashoke Refractories (I') Ltd. V. CIT [2005] 279 ITR 457 is relevant. In the said case. the Hon ble High Court held that in order to reject the accounts, the Assessing Officer has to come to an opinion that the income cannot be properly deduced from the accounts so maintained. In order to arrive at such conclusion, it must be shown thatthe Assessing Officer has taken into consideration relevant factors and not omitted .....

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id not dispute the method of accounting followed by the assessee and compliance of the accounting standard. The main reasons for making trading addition are that according to the AO, the appellant has not been able to adequately justify the significant and alarming drop in G.P. rate in the year under appeal as compared with the preceding assessment years. The Assessing Officer has not pointed out any specific defect or discrepancy in the books of accounts. Admittedly, the assessee had been maint .....

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f accounting adopted by him was such that true profits of the assessee cannot be deduced therefrom. It is also significant to mention that the record of production was checked by the Directorate General of Central Excise Intelligence which carried out search and seizure operation on the premises of M/s Jain Metal Works, the proprietorship concern of the appellant on 22.02.2004 and there has not been any adverse comments from the said Central Excise authorities. All these materials show that the .....

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xpense. But, that by itself cannot be a ground for rejection of accounts as a whole. In this context, reliance is placed on the decision of Delhi High Court in CIT vs Paradise Holidays (2010) 195 Taxman 291 (Del): 48 DTR (Del) 349. 11.3 The assessing authority has to look into the substance of the situation and decide the matter in such a manner that neither is put to unreasonable liability nor the assessee is subjected to unreasonable hardship. No doubt it is not only the right but also the dut .....

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High Court in the case of St. Teresa's Oil Mills v. State of Kerala [1970] 76 ITR 365 and by the Assam High Court in the case of Tolaram Daga v. CIT [1966] 59 ITR 632. Accounts regularly maintained in the course of business have to be taken as correct unless there are strong and sufficient reasons to indicate that they are unreliable and incorrect. The AO has to prove satisfactorily that the books of accounts are unreliable or incorrect or incomplete before he can reject the accounts and th .....

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oceed on judicial principles. If evidence is produced by the assessee in support of its return it should be accepted unless it is rebutted by admissible evidence and not by mere hearsay. 11.4 Thus for all these reasons and as the assessee has produced sufficient material justifying its claim and as it has repelled the contentions advanced by the Assessing Officer with cogent material and evidence, I am of the considered view that on the facts and in the circumstances of the case, the Assessing O .....

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rom vigilant reading of relevant operative part of the impugned order, we note that the Assessing Officer proceeded to reject books of account on the basis of his observations in Para 5 to 8 of the assessment order and held that books of account maintained by the assessee or are deficient as they do not reflect the true and correct particulars income of the assessee company. From careful reading of the assessment order, we note that the Assessing Officer had not issued any show cause notice to t .....

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the Central Excise Department at the business premises of the assessee wherein cash of ₹ 25.75 lakh was seized and finally Central Excise Department could not make out any case on the basis of seized cash which was subsequently requisitioned by the Income Tax Authorities and proceeding u/s 153A of the Act were initiated. From Para 9 of the assessment order, we clearly see that the Assessing Officer rejected the books of account merely on the basis of his conclusion in Paras 5 to 8 of the .....

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assessee as a whole. As per provision of Section 145(3) of the Act, the Assessing Officer is empowered to reject the books of account and financial results of the assessee if he is not satisfied about the correctness or completeness of the accounts of the assessee or where the method of accounting prescribed in sub section (1) has not been regularly followed by the assessee or the income has not been computed in accordance standards notified under Sub section (2) of the Act. It is relevant to no .....

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tified and cogent basis and the rejection of books of account AO was rightly dismissed by the CIT(A). Turning to the issue of addition of ₹ 16,96,788/- applying difference of GP rate of 4.1% calculated on the basis of average of GP rate of immediately preceding three assessment years, we note that since the rejection of books of account have not been found to be sustainable then the Assessing Officer cannot be held as justified in making the addition by applying difference in GP rate of 4. .....

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