TMI Blog1998 (7) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal ground Nos. 16 and 31. Being legally permissible, the ld. Departmental Representative had no objection to the admission of the additional grounds of appeal and hence, we proceed to decide this appeal after hearing the ld. counsel for the assessee and the ld. Departmental Representative. 2. The first objection taken by the Id. counsel for the assessee is that the assessment is time-barred. He submitted that in this case the authorisations for searches at various places i.e. business premises of the assessee, his residence in Bombay and in his village were issued and executed on 30-10-95. He pointed out that as per section 158BE, the order has to be passed before the end of one year from the end of the month in which the last of the authorisations issued under section 132(1) (which is applicable to this case) was executed . Thus, this assessment should have been completed latest by 31-10-1996. But since it was completed on 31-12-1996, the order is barred by limitation and hence, it has to be cancelled. 3. The ld. counsel did not press ground Nos. 1 2 of the original grounds and hence, they are dismissed. 4. Before starting with each ground of appeal separately, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natures are only on the side. Both are undated and do not contain either the name of the lender nor the borrower and hence, Assessing Officer had no basis to presume that they represented loans given or taken by the appellant and represented assessee s undisclosed income. 8. Similarly, he argued, that the addition of ₹ 3,18,305 (challenged in ground No. 5) was made on the basis of a shred of paper found during the course of search (p. 69 of paper book). He pointed out that it only contains date 30-9-1995, monthly balance written in Kannad Bala which according to Shri Raheja means Balance 3,18,305; exp. 2,08,152. Below this is figure of 1,10,153 and below that again there is figure of 79,928. He stated that such pieces of papers were not too unusual to be found in restaurants and could not be ascribed to be assessee s account. Secondly, it showed only subtractions and no additions. Thirdly, it was a dumb document and could not be the basis of such huge additions. He referred to the Tribunal decision in the case of Ashwani Kumar v. ITO [1991] 39 ITD 183 (Delhi) where it is held that no additions can be made on the basis of such dumb pieces of papers. He asserted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he searches nor even diamonds of these weight/description were found during the search. The assessee had throughout denied the purchase of these diamonds and jewellery (assessee s statement recorded during search on 20-4-1995 p. 356 of paper book) and nobody s name appears on that paper nor is it in the handwriting of assessee nor any member of his family. He also referred to assessee s reply - p. 60 of paper book, para 3, where he had stated that nothing like that was purchased and nothing such was found and that it was only intended to be purchased for which the estimates were obtained. The ld. counsel pleaded that the addition made in this regard on the basis of presumptions, hypothesis and subjective inferences be deleted. 11. Ground No. 8 is against an addition of ₹ 22,52,219. The Id. counsel referred to page 6 of the Assessing Officer s order and pp. 79-80 of the paper book. He submitted that the assessee had explained that these were some notings pertaining to assessee s horse-racing activities and the amount of ₹ 10,762 showed that assessee had to pay that amount to Mr. Champakbhai (the bookie). Similarly, p. 80 showed that assessee had to pay ₹ 11,760. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper, photocopy of which is given on p. 92 of the paper book. It shows certain numbers written as under as reproduced by the Assessing officer in his asst. order. (We have seen the photo copy but the captions Amount and Date mentioned by the Assessing Officer in this order are not there nor are the totals 160 and 273.500 given in the order are given in that paper. The original, which is stated to be in the possession of the department, has not been produced before us)- Amount Date Amount Date 20 19-10-94 57 Kane 30 10 10 7-2-95 5 15.7 10 16-2-95 56,500 Kane 25 6-3-95 20 Hasin 20 24-3-95 85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned, in reply to Q. 11 (pp. 333-34 of the paper book) that this money belonged to one Shri Prakash Bhandari and as per the instructions of his father, was to be handed over to Shri Bhandari. Shri Raheja pleaded that this amount which has been added for the sake of addition should be deleted. 16. Ground No. 12 is against an addition of ₹ 4,99,580. During the course of search some documents were recorded from business premises. They included papers pertaining to a commercial-cum-residential building known as Santhana Towers , which the assessee was constructing in the village Padubidri in Karnataka. These papers indicated that the assessee had planned to charge 60% of the agreed money in white and 40 as on money . The assessee agreed to surrender the on money income for tax when the building was completed. Three of these papers showed on money at ₹ 1,78,560, ₹ 1,66,320 and ₹ 1,54,700 from three different persons. The Assessing Officer, added this amount as undisclosed income of the assessee because, according to him the assessee had not disclosed these amounts in his block period return of income. Shri Raheja referred to a note (p. 44 of paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause assessee would have got 100% depreciation or total deduction for these purchases. He further pointed out that on the paper at p. 386 the name golden crown which is another hotel run by assessee s wife, is given and hence, there was no legal basis for these additions in assessee s hands. 18. Ground No. 14 challenges the addition of ₹ 88,75,782 based on two pocket diaries found in the restaurants Shri Raheja referred us to pp.145-46 and pp. 153-174 which are photo copies of the pages of these diaries. He showed that each page (of Annexure 8 i.e. pp. 153-174) has one name. Under that there is one line written giving some figures on each page. Annexure A-4 (pp. 145-146) is another diary which has three written pages giving some names and amounts. On p. 1 of Annexure A-4 names Khatri and then Sivram Shetty and some cheque numbers are written. Against each one amount in lakhs are written which total upto ₹ 9 lakhs. Below them is written cash 1.5 and 8 . On p.1 of Annexure 8 is written as under: (p. 174 of PB) T.No. 1 42 17 B J.S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at ₹ 21.90 lakhs as on 31-3-94 and at p. 43 at ₹ 33.40 lakhs on 31-3-1995. With reference to Assessing Officer s allegation that one of the persons mentioned in the diary was assessee s partner, he submitted that this further proves that the diary belongs to same person who might have given loan to assessee and assessee s partner. He further argued that Bala may mean balances and not the name of any person. Finally, he submitted that the facts and circumstances show that this might be a diary which might have been left in the restaurant by someone, that it could not be correlated with the diary annexed 4 for interpreting that the figures are in lakhs. He prayed that this addition of ₹ 88,72,782 be deleted. 20. Ground No. 15 is against an addition of ₹ 28,11,600 which addition, again according to Shri Raheja, has been made on the basis of some papers which appear to be an exercise in totalling. Photo copies of these papers, which appear to be page of some diary for noting telephone numbers and addresses, are given on pp.175 to 191 of the PB. The originals have not been produced before us, which are stated to be in the possession of the Deptt. He submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d some loans. He has also stated that these diaries do not belong to him, that these entries were written by Ashok Shetty and that these books were not recovered from any particular place and out of 14 books, 5/6 belong to M/s. Nidhi Wines and had been admitted by them. The ld. counsel submitted that these diaries and the entries therein cannot be ascribed to assessee and his transactions and hence, the addition of ₹ 55,16,000 is to be deleted. 22. Ground Nos. 17, 18 and 20 are in respect of additions made on the basis of DVO s report. Ground No. 17 is regarding addition of ₹ 3,80,000 in respect of Hotel Shri Krishna Chhaya. Shri Raheja explained that these were new premises taken by assessee in Khar (Mumbai). The search had started on 30-10-1995 the DVO visited the premises in December 1995. Hence, his report is for period after the block period which ends on 30-10-1995 as per sec. 158B(a), which is the date of the commencement of the search. Hence, no addition can be made on the basis of DVO s report. On merits also, he explained that this was not a new hotel/restaurant but was taken over by assessee in a running condition and was only renovated by him which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they are supported by bills and vouchers and were shown in assessee s balance sheet ending on 31-3-1993. Yet, since the report of the Registered valuer was given estimating higher investment, the assessee had surrendered an amount of ₹ 12.5 lakhs to be assessed as undisclosed income. He further stated that nothing was found in the search to indicate that the assessee had, in fact, made higher investments than discussed. He urged that the additions made on the basis of guesswork by AO/VO should be deleted. 24. Ground No. 20 is against an addition of ₹ 5,27,000 which was made for alleged undisclosed investment in assessee s apartment. The ld. counsel referred to p. 36 of the paper book where a comparative chart has been given and claimed that if the discrepancies and differences pointed out by assessee are considered, nothing would remain for the additions. He pointed out that assessee had given explanation regarding investments in T.V. and interior decoration, etc. (pp. 360-61). Moreover, the flat belongs to 3 persons and even if there remains something unexplained, the entire addition cannot be made in the income of the assessee. 25. In ground No. 21 the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, there was no scope for making additions on the basis of these entries. Further, when the Assessing Officer was treating the income for assessment years 1994-95 and 1995-96 as undisclosed income, at least assessee should be given credit for the withdrawals/investments shown from those books of account. 28. Ground No. 23 is against addition of ₹ 5,50,000. Assessee s mother Smt. Jaljala Shetty had explained to the search party that she had agriculture income which was utilised for the construction of the Bungalow Shri Krishna Chhaya in village Bantakal. The Assessing Officer did not accept that and added this amount also to the income of the assessee. The ld. counsel referred to assessee s ground No. 18 where allegation of investment of more than ₹ 1 crore in the bungalow was challenged by the assessee. He drew our attention to p. 291 of paper book which is the statement of Smt. Jaljala and pointed out that the lady is 65 years old, she is uneducated/illiterate and had to affix her thumb impression for signatures and, yet, she had given all the details regarding the agricultural activities and income and there was no basis for this addition in assessee s income. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed. But if the Assessing Officer had required, that could also be confirmed. The Assessing Officer himself has written that finally the credit balance in this account was only ₹ 5,255 and hence, when assessee s investments were being added, and when assessee had confirmed all these loans, there was no basis for these additions. 32. Ground No. 27 is against an addition of ₹ 8,87,687 in the bank account in Syndicate Bank at Shirva village. The ld. counsel explained that these were total deposits of ₹ 13,56,687 in this account. The Assessing Officer accepted only ₹ 4.75 lakhs which were transferred from Syndicate Bank, Malabar Hill account and treated the entire balance as unexplained. The ld. counsel submitted that ₹ 4 lakhs were loan from Shetty Motor Stores (p. 43 of paper book) and two amounts of ₹ 1,99,493 and ₹ 1,99,493 was transfer of ₹ 2 lakhs each (after deducting commission) from Bank of India and Bank of Baroda. He submitted that no opportunity was given by the Assessing Officer to explain this and hence, these baseless additions deserve to be deleted. 33. Ground No. 28 is against addition of ₹ 12,00,000 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order. The Assessing Officer has added this amount merely with the observation Towards investment in flat No. 201 . Shri Raheja submitted that there was no discussion in the assessment order on this issue. However, he explained earlier a reference was made to this flat. He submitted that it belonged to assessee s brother, his nephew and niece were staying there and the statement of Ashok Shetty son of Krishna Shetty was recorded on 30-10-1995, that Shri Ashok Shetty had confirmed that the flat belonged to his father. Again, assessee had also confirmed in his statement dated 15-11-1995 that his brother Krishna Shetty had invested ₹ 5 lakhs in that flat. Hence, there was no basis for this addition. 37. Ground No. 31 is general regarding summary of additions of ₹ 2,02,71,726. 38. In ground No. 32 assessee has objected to the fact that besides the above mentioned additions of ₹ 2,02,71,726 the Assessing Officer had worked out on the basis of pure guess work that the assessee had generated undisclosed income of ₹ 2,29,94,048 from Shri Krishna Restaurant. He submitted, that the assessee had himself shown GP @ 46% to 58% from this restaurant which was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed. Hence, according to the ld. Departmental Representative the assessment was completed well in time and is not time-barred. The ld. Departmental Representative has filed before us a copy of Board s Circular dated 14-8-95 where this issue has been clarified. 40. Regarding the argument of assessee s counsel that the Assessing Officer could assess income only on the basis of material or evidence found during search, he submitted that according to section 158BB(1), in addition to the words like documents seized, books seized, evidence found, it also mentions information as are available with the Assessing Officer. This means that Assessing Officer can make additions on the basis of information also. The ld. D.R. heavily relied on the decision of the Tribunal in the case of Dr. Ashok K. Gandhi (copy filed), where additions made on the basis of low household expenses were sustained though no evidence or proof was found during the search. 41. Regarding reference to the case of Ashwani Kumar ( supra) made by the ld. authorised representative, Shri Jha referred to p.185 of the report where it is written As regards slip found. . . . . He argued that in that case there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in K.P. Varghese s case, here the Assessing Officer had gone by the opinion of the valuation officer. He further submitted during the search no supporting evidence to support the estimate of Registered valuer was found. 42. Regarding the cash credit additions, he referred to the decision in the case of CIT v. Biju Patnaik [1986] 160 ITR 674/ 26 Taxman 324 (SC) and submitted that in assessee s case nobody was produced to prove the genuineness, credit worthiness of the donors of the creditor trust. He also referred to the Supreme Court decision in the case of Sreelekha Banerjee v. CIT [1963] 49 ITR 112 , Roshan Di Hatti v. CIT [1997] 107 ITR 938 and CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 to support the case of the revenue. Further, referring to the case of CIT v. Jhaverbhai Bihari Lal Co. [1986] 160 ITR 634/[1985] 21 Taxman 238 (Pat.) at p. 641, he submitted that the burden of proving that earlier additions had been ploughed back, was on assessee. 43. Regarding ground No. 3 he argued that since there were no entries in account books, the Assessing Officer was justified in adding ₹ 55,950 to assessee s income. Similarly in the absence of any proof the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat was argued by the ld. counsel for the assessee. In the ground of appeal the assessee had only challenged the figure being decoded, but the addition being made was not challenged. The ld. counsel, on the other hand, argued that Kane and Jhinga represented variety of fish and on that basis the figure of ₹ 4,335 should be accepted. He submitted that the names as Jhinga or Kane hardly mattered. However, it could not be accepted that they represented only petty expenses of ₹ 4,335. 51. Regarding ground Nos. 11, 12 and 13, the ld. D.R. referred to and relied on the assessment order and submitted that the reasons and basis for additions given by Assessing Officer were just and plausible. 52. The ld. D.R. then dealt in detail with ground No. 14 where addition of ₹ 88,75,782 is challenged. He submitted that it was based on a pocket diary found in assessee s restaurant. He claimed that it was not found lying in the restaurant but was found in the office of the restaurant. According to him, this diary gives names of various persons in abbreviated form like J.S. i.e. the assessee, Bala who is assessee s joint venture partner, K.P. who is K.P. Shetty. He relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had never been showing income from agriculture in the past, assessee s claim in this period now could not be accepted. 56. For addition of ₹ 7,79,468 for low house-hold withdrawals (ground No. 25), the ld. D.R. strongly supported the order of the Assessing Officer and relied on the decision of the ITAT in the case of Dr. Ashok Gandhi (copy filed before us) to canvass that when addition of ₹ 4 lakhs in that case could be sustained when the household withdrawals were inadequate, in appellants case also it should be confirmed. 57. With reference to addition of ₹ 37,45,852 challenged in ground No. 26, the ld. D.R. submitted that the Assessing Officer had already been considerate in adding only ₹ 37,45,852 when the unexplained deposits in Bank were ₹ 54,15,852 because he himself gave allowance for the investments in house considered to be covered by withdrawals from these deposits. Similar arguments were taken by the ld. D.R. to support Assessing Officer s order with reference to ground No. 27. 58. Regarding the additions made by the Assessing Officer for allegedly getting tenancy rights by paying money amounting to ₹ 12,00,000 + ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izzas which may be only side attractions in assessee s restaurant. For other he relied on the order of the Assessing Officer. 60. In his rejoinder, the Id. counsel first took up the allegations of non-co-operation and non-filing of returns and required information in time. He submitted that the search was concluded on 28-12-1995. The assessee expected that the revenue would supply the copies of various documents, statements etc., seized during the search. But when they were not supplied, assessee made a request to the A.C.I.T. vide letter dated 26-2-1996 (p. 2 of PB) to supply these copies stating in the letter that a request for this had already been made to the ADI, copy of which was enclosed. But nothing was heard. Meanwhile assessee s father was ill and expired on 27-7-1996. Thereafter, again on 26-8-1996 through an authorised person and again on 29-8-1996 through assessee s C.A. (pp. 3 4) requests were made to supply copies of statements of six persons, including assessee s, which were recorded during the search. Yet, on 29-8-1996 the Assessing Officer issued the first notice and as recorded on p. 2 of the assessment order, the first inspection was allowed only on 13-9-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,690. 63. For the estimate of income from restaurant he clarified that it was renovated in 1993 after which its capacity and income had increased. This would mean that not only the estimate was highly exaggerated but that it could not be uniformly spread over for 10 years period. Regarding places of discovery of various slips of paper diaries etc., he submitted that neither it was correct nor was there any evidence to show that they were found from the room or office or restaurant of the Hotel etc. He referred to assessee s reply to Qs. 10 11 on p.150 of paper book where assessee has specifically told the search party that these books including diaries A-4 and A-8 were discovered from room No. 8 of the 1st floor of the Hotel where people coming from his village to Bombay stay. Regarding presumption under section 132(4A), he submitted that the presumption is against such person from whom they have been discovered and not against the assessee. In this case the assessee was not present when these documents, diaries etc., were discovered by the search party. He claimed that no person K.P. Shetty is known to the assessee. Regarding the case of Smt. Amar Kumari Surana (supra) he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank account was unaccounted but its sources of deposits were accounted for, being from Bombay. Regarding tenancy rights, he submitted that if the tenancy rights carried so much of value, why did BMC, the land-lord, kept quite and not claim more money for permitting the transfer. Moreover, admittedly, the tenancy rights were taken by the major sons of assessee and not the assessee and hence, no addition could be made in the case of the assessee. Regarding flat No. 201, he submitted that Shri Krishna Shetty is assesssee s brother and the wall was broken to enable brothers to live together. If the Assessing Officer required confirmation it could have been obtained from assessee s brother. 64. Since the ld. authorised representative had taken up some new points in the rejoinder, the ld. D.R. sought permission to answer them, which was allowed. He referred to p. 351 of P.B. where in reply to Q. 2 assessee himself has stated that he had not maintained books of account for Hotel Shri Krishna. Regarding objection and Chennai ITAT decision quashing the order for no opportunity being given by the CIT before approving the order, he submitted that as per the scheme of the I.T. Act, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of silver-ware valued at current rate deserves to be deleted looking to the status and income of assessee s family including the agricultural income. Ground No. 3(b) is, thus, allowed. 68. We have looked at the Hundies . Since neither the name of the drawer is signed or given nor of the drawee, assessee s signature as witness do not prove that the assessee had either taken or given some hundi loans against them. In fact, even if the assessee fills the name of any person either as drawer or as drawee or both, he cannot enforce recovery of money from anybody. This addition of ₹ 1,00,000 is deleted. Ground No. 4 is, thus, allowed. 69. The addition of ₹ 3,18,305 has been made on the basis of a piece of paper found in the restaurant. A perusal of various statements of assessee and assessee s nephew Ashok Shetty shows that when the search started at various premises, assessee was not in Bombay but in Tirupathi. Hence, this paper cannot be said to have been found from the possession or control of the assessee. Hence, even if at all the provisions of section 132(4A) are applicable to assessment of income under Chapter XIVB, no presumption to the effect that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horse racing could not be in paisas is accepted, as rightly pointed out by assessee s counsel, even then the figures are as 1076216 and 1176003 which would again be such odd figures as would not represent horse-race winnings, and that the figures in paisas could be on account of some tax charges on the tickets on percentage basis. Therefore, we hold that though the additions may be upheld as no satisfactory explanation has been given by the assessee, the amount may be put at ₹ 22,522.19P against ₹ 22,52,219 added by the Assessing Officer. Thus, ground No. 8 is partly allowed. 73. In ground No. 9 the addition of ₹ 5 lakhs has been challenged. Whereas we agree with the ld. counsel for the assessee that this whole amount cannot be added in assessee s hands, we are unable to agree that it should not be related to assessee. The paper has been found at the premises of the assessee and an amount of ₹ 1 lakh is shown deducted from ₹ 4,31,360 against which assessee s name is written. This would show that assessee had received ₹ 1 lakh which he is not able to explain. Hence, addition of an amount of ₹ 1 lakh is upheld. The assessee gets a reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partly allowed. 77. Regarding the addition of ₹ 3,72,600 for alleged purchase of crockery, we agree with the submissions of the ld. counsel for the assessee that the papers on the basis of which this addition has been made, can at best be said to be some estimates. In fact, as mentioned by us while dealing with the arguments in para 17 of this order, on one side of the paper Golden crown is written and some figures totalling to ₹ 1,41,450 is given with some dates. On the other side of the paper some description of different type of crockery items is given with rates. Thus, firstly it cannot be said that these were purchases made by the assessee. Secondly, no such crockery was found during the search. Lastly, even if the worst inferences are drawn, the name Golden Crown which is stated to be the restaurant of assessee s wife, would establish that it does not pertain to assessee. Accordingly, ground, No. 13 is allowed. 78. We have given our anxious consideration to ground No. 14 pertaining to addition of ₹ 88,75,782. We have applied our minds to the rival submissions. While we find a lot of substance in the explanations and arguments given by the ld. coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has objected to the addition of ₹ 28,11,600 which is again based on some figures found noted in a Diary we find that there is nothing to show that this diary was found from the possession or control of the assessee. Secondly, the assessee has denied it twice, including during the search before ADI also, where he stated that the Diary did not belong to him or any member of his family or any employee. We have already mentioned that the original, which is in the possession of the Deptt., has not been produced before us. From the photo copies, we cannot agree with the ld. DR that its entries clearly prove that they belong to assessee because when we see these photo copies, we do not find them to be so clear except some dates written in a vertical columns and some illegible scribblings. Hence, we are not prepared to accept that these represent assessee s undisclosed income to the tune of ₹ 28,11,600. We have also taken not of the argument that the assessee was not in Bombay when this diary was discovered. There is nothing to prove the exact place from where it was discovered. We are of the opinion, that this is nothing but a dumb-diary and, in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very likely that the cash loans should have been either received or repaid through Ashok Shetty. Consequently, while we confirm the additions of ₹ 9.5 lakhs + ₹ 15 lakhs + ₹ 3.5 lakhs being cash loans in the list and loans in the names of Popular Automobiles and Brother-in-law = ₹ 28,00,000 and also uphold the disallowance of interest thereon, we delete the additions of ₹ 3 lakhs + ₹ 15 lakhs + ₹ 7.5 lakhs = ₹ 25,50,000 and the interest thereon. Accordingly, this additional ground No. B is partly allowed. We do not agree with the ld. counsel for the assessee that if the assessee had really taken these loans, he should have accounted for them so as to enhance the cost of his hotel. As stated by the Assessing Officer, if the loans are from undisclosed sources, which the assessee does not want to or cannot disclose, he cannot show them to increase the capital cost of his hotel. 81. Regarding the addition of ₹ 3,80,000 alleged to be investment in the Shri Krishna Chhaya restaurant in Khar, we agree with the arguments of Shri Raheja. There is nothing to show that when the assessee has himself declared an investment in reno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould also like to re-emphasis what we had stated in para 4 of this order that while assessing the income under this Chapter XIVB, there is little scope for determining the undisclosed income on the basis of presumptions, hypotheses and estimates. In our opinion, the valuation given by the DVO is nothing more than this. There is no such evidence document or information found during search which would entitle the Assessing Officer to estimate the investment in the bungalow at ₹ 1,09,00,000 lakhs against ₹ 44,35,000 declared by he assessee including his declaration of undisclosed income invested in it. Accordingly, ground No. 18 is allowed. 83. For similar reasons as are given in para Nos. 82 83 above, the estimated additions of ₹ 5,27,000 challenged in ground No. 20 and ₹ 11,46,000 challenged in ground No. 21 for alleged undisclosed investments in renovation of assessee s residential flat Blue Bird and Hotel Shri Krishna respectively, are directed to be deleted. We may mention that while reaching these decisions we have taken into account the facts mentioned in the grounds of appeal and arguments of Shri Raheja also. Accordingly, ground Nos. 20 and 21 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement of assessee s mother Smt. Jaljala Shetty. We find no rational basis for Assessing Officer s rejection of her statement that she does have agricultural income. We have gone through the statement of Smt. Jaljala Shetty recorded on 30-10-1995 i.e. the day search started. It appears to have been recorded in the village and it cannot be believed that an uneducated lady, 65 years of age, could have been tutored to give such a confident, clear and detailed statement as she has done. In fact, we feel that in the atmosphere and circumstances in which her statement was recorded by the search party, even well-educated and knowledgeable persons should have faltered. Her statements exude confidence and it has to be accepted that she does have agricultural income, the specific details of which she knows. Hence, the addition of ₹ 5,50,000, being her contribution from her agricultural income in the construction of the bungalow in the village etc., has to be deleted. Ground No. 23 is thus allowed. 87. However, assessee s explanation to exclude ₹ 4,50,000 as his agricultural income cannot be accepted. Even if it is accepted that he did have agricultural income, since he had nev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion to the assessee. The question is not of giving concession but deciding the genuineness of the cash credits hence we order that all the cash credits involved in this amount of ₹ 37,45,852 except ₹ 1,45,000 in the name of Esszee Marketing be accepted as genuine. We would restore the issue of deciding the genuineness of the cash credit of ₹ 1,45,000 in the name of Esszee Marketing to the file of the Assessing Officer to give assessee a fresh opportunity to prove its genuineness and to decide it afresh. Accordingly, while assessee gets a relief of ₹ 36,00,852, the question of deciding the genuineness of cash credit of ₹ 1,45,000 in the name of Esszee Marketing is set aside to be decided afresh. Accordingly, ground No. 26 is partly allowed. 90. Regarding Ground No. 27 challenging an addition of ₹ 4.57 lakhs, we are of the opinion that it would be in the interest of justice if we accept the reasonable suggestion of Shri Raheja that the assessee may be given a fresh opportunity to explain the deposits in the bank account in the Shirva Village, which he has sought to explain before us, as he claims that sufficient time was not given to him to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lete the addition. Ground No. 30 is, thus, allowed. 94. In Addl. ground No. C the ld. counsel for the assessee explained, that assessee has objected to the addition of ₹ 7 lakhs for alleged undisclosed investment in flat No. 201. We find that the contention of the ld. counsel is correct that there is no discussion or basis given for this addition. The Assessing Officer has only written Towards investment in flat No. 201 ₹ 7,00,000. On this basis alone the addition deserves to be deleted. Yet, the ld. counsel has reimposed his arguments with the material on record to the effect that both assessee and his nephew had separately stated that this flat belongs to Shri Krishna Shetty brother of assessee and father of Ashok Shetty. There is no evidence or material to show that this house was purchased by assessee or is registered in his name. Hence, this addition of ₹ 7,00,000 which has been incorporated in the list of alleged unexplained expenditure on p. 38 of assessment order is deleted. This Addl. Ground No. C is also allowed. 95. In our opinion, ground No. 31 challenging the computation of income at ₹ 2,02,71,726 is otiose, and it is not proper to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aurant being a very popular one fully crowded on all days, running from 7. A.M to 1. A.M. in the Morning, average amount of bill per seat etc. is substantiated with any document of piece of evidence or material found during search. We would, therefore, hold that even if the computation of undisclosed income on the basis of unexplained expenditure, investments and deposits works out to less than estimated income from the restaurant, the income estimated by the Assessing Officer has to be ignored. Thus, while on the one hand we direct that the estimate of income from Hotel Shri Krishna at ₹ 2,29,94,048 be cancelled, on the other we direct that the total undisclosed income under Chapter XIVB in assessee s case shall be assessed on the basis of the provisions contained in that chapter and from the assessment done by the Assessing Officer which is challenged before us there shall be deleted the amounts which have been directed to be deleted by us, and in respect of which relief has been given by us. 97. In the light of what we have mentioned above in para 97 above, ground No. 33 becomes infructuous and is dismissed as such. 98. Now coming to assessee s objection regard ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
