TMI Blog2015 (9) TMI 1357X X X X Extracts X X X X X X X X Extracts X X X X ..... fit from sale of each cassette by assessee. We find that the CIT (A) has referred to the statement of the assessee and has considered the cost of production of each video/audio cassettes, packing charges of each cassette and also the sale price and then estimated the profit at ₹ 5 per video cassettes and ₹ 3 per audio cassettes. After considering the facts of the case and the arguments of both the sides we are of the opinion that the estimate of income from production and sale of video /audio cassette by the CIT (A) is quite fair and reasonable. We therefore, uphold the same and reject the appeal filed by the assessee as well as Revenue on this count. Addition for low withdrawal of Household expenses - Held that:- CIT (A) has estimated the household expenditure of the same amount for all the five years i.e. for A.Y. 2002-03 to 2006-07. In our opinion with the increase in cost of living the estimation of same household expenditure for a period of 5 years cannot be said to be justified. We therefore, uphold the order of the CIT (A) so far as the issue of household expenditure is concerned for A.Y. 2002-03 & 2003- 04. In our opinion, it would be fair and reasonable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, whether the enough cash is available for investment in those assets needs verification at the hand of the A.O. We therefore set aside the order of the Authorities below on this point and restore the matter back to the file of the A.O. We direct him to verify the availability of cash with the assessee and if cash available with the assessee is more than the assets found then no addition would be made for unexplained investment in assets. We also direct him to allow adequate opportunity of being heard to the assessee while re-adjudicating this issue.- Decided in favour of revenue by way of remand. Addition u/s. 69 for unexplained cash and jewellery - CIT (A) deleted the addition - Held that:- CIT (A) has not deleted the addition made by the A.O. in respect of cash found and seized during the course of search but has only directed the A.O. to consider the availability of cash with the assessee, after considering the income in the preceding year. We do not find any infirmity in the above direction of the CIT (A). In fact, while considering the unexplained investment in the movable asset for A.Y. 2005-06 we have decided the issue with a similar direction. We therefore, uphold the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed by the assessee from the business of production of audio-video cassettes and the video shooting is not verifiable and therefore, result shown by the assessee as per Profit and loss account is rightly rejected by the A.O. by invoking provisions of Sec. 145 of the Act. After considering the facts of the case and the argument of the sides in our opinion the estimation of profit by the CIT (A) is quite fair and reasonable. Therefore, we do not find any justification to interfere with the same. Accordingly the assessee’s appeal for A.Y. 2002-03 to 2005-06 C.O. for A.Y. 2006-07 and appeal for A.Y. 2007-08 & 2008-09 are rejected. The Revenue’s ground No.,1 in both the years i.e. A.Y. 2005-06 and 2006-07 are also rejected.- Decided against revenue. Unexplained investment in respect of immovable property - CIT(A) deleted the addition - Held that:- So far as investment of ₹ 1 lac is concerned it was explained by the Ld. Counsel that the same is already reflected in the Balance Sheet. Morevoer, the assessed income of the assessee in this year and in the preceding year is much more than to finance for the investment of ₹ 1 lac. So far as the addition of ₹ 10,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted a search action against the assessee and his wife Smt. Geetaben H. Parmar on 10-09-2005 and seized various incriminating documents, cash and valuables. The investigation wing of the Income Tax Department subsequently initiated proceedings u/s. 132A of the Income Tax Act, 1961. As consequence of action u/s.132A conducted by the investigation wing of the Income Tax Department notices under section 153A were issued and served upon the assessee for A.Y. 2002-03 to 2007-08. The Assessee estimated the profit from the production and sale of audio and video cassettes for various years. His observation and the working is reproduced below for ready reference. At this juncture, it needs to be place on record that as stated earlier by his own admission the assessee has produced more than 40 video albums and more than 100 audio albums. Even the assessee has also failed to provide the details of the same such as name of the album, year of production, number of copies taken of each album year-wise. In absence of any details of albums produced and copies sold thereof, number of video albums produced is taken at 50 and number of copies sold thereof are taken as 9,00,000 copies on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in reply to question number 9 by the appellant, which is ₹ 5 to 8 for blank copy, copying charges of ₹ 0.50, packing and label charges. Thus cost is ₹ 12 and sale price is about ₹ 16/-. This is specially explained in reply to question No.4. Thus, the estimate made by the A.O. itself is not correct. Having regard to the position on facts, the estimate made by the A.O. is not correct. He has to take into consideration the fact as recorded in the statement of the appellant dated 14-8-2007 recorded u/s. 131 (1A), wherein, in reply to question No.9 the appellant has started that he had produced 5 to 6 lacs CDs of video albums and the cost of each blank CD was around ₹ 8 and copying charges was about ₹ 0.50 and it was sold by him to Shiv Video at the rate of about ₹ 16 per copy. Similarly, in respect of the audio album, he had specifically stated that he had produced about 2 lakh copies and cost of each blank CD was about ₹ 8 to 9 and that such CDs were sold for ₹ 12 per CD. Nothing contrary is pointed out by the Assessing Officer. Considering the above facts, I do not accept the working of estimated profit on video audio alb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven in A.Y. 2006-07, the A.O. has by passing rectification order, taken the income from this activity at ₹ 19,25,000/- as shown in the return. Therefore, out of the income of ₹ 36,00,000/-, as estimated hereinabove, ₹ 19,25,000/- is to be taxed in A.Y. 2006-07 and the balance income of ₹ 16,75,000/- is to be taxed in the hands of the appellant in the earlier years on the basis of the period during which the appellant has carried out this activity. As stated by the A.O. himself the business was started in January,2002 and, therefore, the Income during the A.Y. 2003-04 to 2004-05 is to be disturbed as under:- Assessment Year Amount (Rs.) 2003-04 3,73,600/- 2004-05 3,73,600/- 2005-06 8,50,000/- The A.O. is directed to recompute the income after taking into consideration the above figures. 5. For Assessment Year 2002-03, the CIT (A) deleted the entire addition of ₹ 2 lacs made by the Assessing Officer from the production and sale of video and audio business on the ground that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee recorded at the time of search. We agree with the finding of the CIT (A) that no justification was given by the A.O. for enhancing the sale of video album as well as audio album. CIT (A) has also reduced the estimate of profit from sale of each copy of video and audio album. Assessing Officer has estimated the profit from sale of each video album at ₹ 8 while from sale of audit album at ₹ 3. The CIT (A) estimated the profit from sale of video album at ₹ 5/- and audio album at ₹ 3/-. We have considered the arguments of both the sides and perused the order of lower authorities. The CIT (A) has pointed out from the statement of the assessee that the estimate of the profit by the A.O. was excessive. The A.O. has not given any proper basis or justification for the estimation of profit from sale of each cassette by assessee. We find that the CIT (A) has referred to the statement of the assessee and has considered the cost of production of each video/audio cassettes, packing charges of each cassette and also the sale price and then estimated the profit at ₹ 5 per video cassettes and ₹ 3 per audio cassettes. After considering the facts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily. However, at the same time we agree with the CIT (A) that the estimate of household expenditure by the A.O. is excessive. However, we find that the CIT (A) has estimated the household expenditure of the same amount for all the five years i.e. for A.Y. 2002-03 to 2006-07. In our opinion with the increase in cost of living the estimation of same household expenditure for a period of 5 years cannot be said to be justified. We therefore, uphold the order of the CIT (A) so far as the issue of household expenditure is concerned for A.Y. 2002-03 2003- 04. In our opinion, it would be fair and reasonable to estimate the household expenditure at ₹ 11,000/- per month i.e. ₹ 1,32,000/- per annum for A.Y. 2004-05 and 2005-06 and for A.Y. 2006-07 at ₹ 12,000/- per month i.e. ₹ 1,44,000/- per annum. We agree with the submission of the Ld. Counsel that the set off of the addition made to the business income is to be allowed while considering the addition for less household expenditure. Accordingly, we direct the A.O. to work out the availability of the cash with the assessee and if the availability of cash is sufficient to incur the household expenditure as estimated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty in the name of Smt. Geetaben H.Parmar and Smt. Maniben Parmar. This ground is identical to the ground raised by the Revenue in A.Y. 2003-04 and for the detailed discussion in paragraph-13 above we uphold the order of the CIT (A) on this point and reject the Revenue s ground of appeal. 15. Another ground of the Revenue s appeal for A.Y. 2004-05 is with regard to the deletion of addition of ₹ 2,25,000/- made by the A.O. for unexplained investment in the payment of Insurance Premium. CIT (A) deleted the addition with the following finding:- 7.2. I have considered the assessment order and the above submissions. On perusal of the details submitted along with the submissions by the appellant, it is noticed that the following amounts are reflected in the balance sheet of Gitaben, wife of the appellant for the year under consideration as payment in respect of policy of the appellant s sons. Policy No. Amount. 00777446 ₹ 45,000/- 00778503 ₹ 45,000/- Thus, these amounts are reflected in the balance sheet of Gitaben, appellant s wife ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter in respect of certain policies. He has also recorded the finding that these two payments of ₹ 45,000/- each were already recorded in the books of Smt. Gitaben. Here also the CIT (A) has directed the A. O. to verify these facts and then delete the addition. 17. We do not find any infirmity in the above directions of the CIT (A) the same is sustained and this ground of the revenue is rejected. 18. For Assessment Year 2005-06 in the assessee s appeal one more ground is raised that is with regard to the addition of ₹ 5,88,355/- sustained by the CIT (A) in respect of unexplained investment in movable assets. The facts of the case are that the A.O. made the addition of ₹ 5,88,355/- in respect of purchases of following movable assets:- Nature of assets Date of acquisition Cost/Investment Camera 29-10-2004 ₹ 2,75,000/- Computer 26-02-2005 ₹ 8,000/- Computer 30-03-2005 ₹ 40,900/- Furniture 01-08-2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered by us for A.Y. 2003-04 and for the detailed discussion in paragraph -13 the order of the CIT (A) on this point is sustained. 21. The only other ground in the Revenue s appeal or A.Y. 2005-06 is with regard to the deletion of addition of ₹ 3,95,000/- made by the A.O. for unexplained investment in the payment of Insurance Premium. The identical issue is considered by us while deciding the Revenue s appeal for A.Y. 2004-05.In this year also the CIT (A) has recorded the finding that actual payment is only ₹ 1,95,000/- which is claimed to have been recorded in the books of Smt. Maniben H. Parmar. He has observed that Smt. Maniben Parmar is assessed to tax separately and A.O. may consider this investment in the case of Smt./ Maniben, if he finds it necessary. In respect of other payment he has recorded the finding that it is only the welcome letter in respect of other policies. In this regard also he has directed the A.O. to consider the details and after verification delete the addition. We do not find any infirmity in this direction of the CIT (A). Therefore, we uphold the order of the CIT (A) in this regard and reject the Revenue s ground against the deletion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committed within the meaning of that section. 23. On appeal, the CIT (A) set aside the issue of addition for unexplained cash with the following direction: 6.2. I have considered the assessment order and the above submissions. In so far as the jewellery found is concerned, the appellant has explained that the weight of jewellery found was 1064.650 gms. As against which the jewellery as per the Circular, which could be considered was 1400 gms. The various benches of ITAT, Ahmedabad has considered this issue and held that the assessee should be given credit for the jewellery held as per the Circular . Accordingly, as the jewellery found is less than the weight envisaged in instruction No.1916, the addition of ₹ 8,50,609/- is directed to be deleted. 24. Thus we find that the CIT (A) has not deleted the addition of ₹ 23,00,000/- made by the A.O. in respect of cash found and seized during the course of search but has only directed the A.O. to consider the availability of cash with the assessee, after considering the income in the preceding year. We do not find any infirmity in the above direction of the CIT (A). In fact, while considering the unexplained investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings. Therefore, in our opinion CIT (A) has rightly considered the above circular and deleted the above addition made by Assessing Officer. 27. The another ground raised by the Revenue for A.,Y. 2006-07 is with regard to reduction of the addition of ₹ 13,61,000/- made by the A.O. for unexplained investment in immovable property to ₹ 2,61,000/-. A.O. made the addition of ₹ 13,61,000/- with the following findings in the assessment order: Investment in immovable properties. During the course of assessment proceedings, assessee was specifically required to furnish details of various immovable assets purchased during the previous year relevant to assessment year under consideration. In response to this specific query, assessee vide letter dated 25-08-2009 provided the details of assets acquired during the various years. These details reveal that during the year under consideration, assessee had made purchases of immovable assets as detailed herein under:- Nature of assets Property in the name of Date of acquisition. A.Y. Cost/Investment. Shop No.19, R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s inclusive of ₹ 5,50,000/-. We therefore, find no justification to interfere with the order of the Ld. CIT (A) on this point. Assessment Year 2007-08 2008-09. 30. The first common ground in both the year is against the estimation of the income from the business of production and sale of audio/video cassettes and video shooting. For A.Y. 2007-08, the assessee disclosed the income of ₹ 1,04,423/-and for A.Y. 2008-09 at ₹ 2,07,550/-. Assessing Officer rejected the trading result disclosed by the assessee on the ground that the assessee did not produce any books of account and accordingly he estimated the profit at ₹ 3 lac and ₹ 5 lac respectively for A.Y. 2007-08 and 2008-09. 31. On appeal, the CIT (A) upheld the rejection of books of account but he reduced the estimate of profit made by the A.O. He estimated the income of ₹ 2 lac for A.Y. 2007-08 and ₹ 3 lac for A.Y. 2008- 09.The Revenue has accepted the order of the CIT (A), while the assessee is in appeal against the addition sustained by the CIT (A). After considering the facts of the case and the arguments of both the sides we do not find any infirmity in the order of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004-05 1,43,925 2,50,000 2,00,000 2005-06 2,40,718 3,50,000 3,00,000 2006-07 2,40,539 4,00,000 3,00,000 2007-08 2,10,824 4,00,000 3,00,000 2008-09 2,28,008 4,50,000 3,00,000 34. The assessee has challenged the addition sustained by the CIT (A) in all the years either by way of appeal or by way of Cross objection. The Revenue has challenged the reduction in the estimate of income by the CIT (A) only in A.Y. 2005-06 and 2006-07. 35. We have heard both the parties and perused the material placed before us. Admittedly the assessee has not maintained the regular books of account for all the years under consideration. Therefore, the business profit disclosed by the assessee from the business of production of audio-video cassettes and the video shooting is not verifiable and therefore, result shown by the assessee as per Profit and loss acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in such property. Hence, the addition of ₹ 1,00,000/- is not justified. The same is deleted. So far as the addition ofRS.10,01,000/- is concerned, the contention of the appellant is that the said loose paper does not contain any date and it was a rough calculation and that no such property was acquired for ₹ 10,01,000/-. On perusal of the copy of seized papers furnished by the appellant, I find that no such specific calculation appear and no specific asset is referred to in such calculation so as to presume that the appellant has made any investment in the property during the year to that extent of ₹ 10,01,000/-. The addition is, therefore, directed to be deleted. 38. After considering the facts of the case and the arguments by both the sides we do not find any infirmity in the order of CIT (A). So far as investment of ₹ 1 lac is concerned it was explained by the Ld. Counsel that the same is already reflected in the Balance Sheet. Morevoer, the assessed income of the assessee in this year and in the preceding year is much more than to finance for the investment of ₹ 1 lac. So far as the addition of ₹ 10,01,000/- is concerned it was rei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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