TMI Blog2008 (4) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case the assessee has not claimed any deduction of any expenditure and therefore, there is no question of not allowing any part of that expenditure, as deduction. Thus, the finding arrived at in this regard, by the learned CIT(A), and the ld Tribunal cannot be said to be wrong. Accordingly answered in favour of the assessee, and against the Revenue. Unexplained investment u/s 69 - From a reading of the order of the ld Tribunal it is clear that the whole thrust of the order is that the assessee was having sufficient cash balance on the relevant dates inasmuch as on 13th May, 1998, the cash balance is Rs. 4,85,334, then on 14th May, 1998 the cash balance is Rs. 5,33,290, and then on 15th May, 1998, the cash balance is 5,78,545, and then from 15th to 19th it is static, at figure Rs. 5,78,545. This figure obviously exceeds Rs. 3,88,000, but then the million dollar circumstance which has been considered by the learned AO and the learned CIT(A) is that if the existing cash balance has been used for purchasing gold bars, obviously the available cash balance would have decreased, while it has not so decreased, and thus the only possible conclusion is that the gold bars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Tribunal was legally justified in dismissing the appeal filed by the Department in respect of additions made by the AO within the meaning of Section 40A(3) of the Act, which were deleted by the learned CIT(A)? 3. The facts, in brief are that the assessee submitted return of his income, which was processed under Section 143(1)(a). However, since survey proceedings were conducted under Section 133A, therefore, the case was taken up in the scrutiny, and a notice was issued under Section 143(2). Then, for the present purposes it would suffice to say, that on 2nd June, 1998, the customs authorities conducted a personal search of the assessee's son Lalit Kumar, while he was on his way from Ahmedabad to Jodhpur, and in that search the customs authorities found 15 foreign made gold bar biscuits valuing Rs. 7,35,000, total weighing 1759.750 gms., which were confiscated. Likewise, a bill No. 2666 dt. 14/19th May, 1998, for 8 gold bar biscuits, valuing Rs. 3,88,000 total weighing 933.120 gms., was also found in the personal search. Since the controversy relates to these two items only, we have referred the facts regarding these items only. 4. The assessing authority found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the addition, as warranted by the provisions of Section 40A(3), and the assessee replied on 7th March, 2002, contending that son was minor at the time of statement. However, gold biscuits have been assumed to have been purchased on his behalf, and no entry having been passed in the books of account, and thus both, the purchase and sale are out of books, therefore, profits on the transaction be added as per gross profit rate according to the books. This reply was not accepted, and it was considered that the assessee has admitted that the transactions took place on his behalf and that there was sufficient cash balance available with the assessee in his books of account, then from out of that withdrawal of this amount of Rs. 3,88,000 is not recorded, and thus it was found to be unexplained investment made by the assessee for purchase of 8 gold biscuits. According to Section 69 it was deemed to be the income of the assessee for the financial year relevant to the assessment year in question, and since the transaction of the so-called unrecorded purchase has been made on behalf of the assessee by way of cash payment, for which purchase bill has been issued, by invoking provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,47,000 and Rs. 77,600, had been set aside. 6. Aggrieved of this order, both the parties, being the assessee and the Revenue, filed appeals before the learned Tribunal. The assessee challenged the addition of Rs. 3,88,000 to his income, while the Revenue challenged the deletion of the addition made under Section 40A(3). 7. The learned Tribunal, while dealing with the contention about deletion of Rs. 3,88,000, has found that so far as the first limb of the argument of the assessee that the addition cannot be made in the hands of the assessee because the bill relates to Lalit Kumar, the son of the assessee, and the statement made by Lalit Kumar cannot be relied because he was minor at the time of making the statement, and in such circumstances the statement taken cannot be said to be free from ambiguity. It was found that it is true that Lalit Kumar was minor at the time when he made statement, wherein he admitted that certain amount of gold biscuits were purchased and the same were sold further on behalf of his father. It is also true that this addition has been made only on the basis of statement of Lalit Kumar and also the bill found from his pocket, which was in his own n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was never recorded by the Department, but the statement was recorded only by the customs department. The AO has not made any investigation, and thus there is no evidence to support the suppressed sale. Then, it was assumed that the assessee never admitted that these gold biscuits were purchased by him, and the Department has not tried to link the bill in a proper perspective with the assessee, and the assessment has been done on the basis of presumptions. Then, it was considered that for making this addition under Section 69, which is evident from the letter dated 18th Feb., 2002, which was written by the ITO to the assessee, wherein it was proposed to make this addition as unexplained investment in stock-in-trade. According to which, it appears, only the profit ventured out to this transaction has to be added, and not the entire amount of purchase which has been added in this case. Then it was found that sufficient cash balance was available with the assessee, but he did not record the withdrawal of this amount, while the assessee is required to explain the investment as per provisions of Section 69, but this explanation or the proof is not as stringent as an assessee is require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch expenditure shall not be allowed as a deduction: Provided that where an allowance has been made in the assessment for any year not being an assessment year commencing prior to the 1st day of April, 1969, in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year the assessee makes any payment in respect thereof in a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft, the allowance originally made shall be deemed to have been wrongly made and the AO may recompute the total income of the assessee for the previous year in which such liability was incurred and make the necessary amendment, and the provisions of Section 154 shall, so far as may be, apply thereto, the period of four years specified in Sub-section (7) of that section being reckoned from the end of the assessment year next following the previous year in which the payment was so made: Provided further that no disallowance under this sub-section shall be made where any payment in a sum exceeding twenty thousand rupees is made otherwise than by an account payee cheque drawn on a bank or acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd source of the investment, or the explanation offered by him is not, in the opinion of the AO, satisfactory, the value of the investment may be deemed to be the income of the assessee of such financial year. Here, in the present case, with respect to this amount of Rs. 3,88,000, the assessee had taken varying stands, viz., that the bill is in the name of his son, when the statement of Lalit Kumar was recorded, he was minor, obviously meaning thereby as if he has nothing to do with the investment, and in the other breathe, it is contended that it may be deemed to have been purchased on behalf of the assessee, and no entry having been passed in the books of account, then it is admitted that purchase and sale both are out of books of account and therefore, only profit of the transaction should be added. This obviously means that the assessee admits the transaction to have been made on his behalf, and as is clear from the statement of Bhupati Bhai and Govind Bhai that it was a cash transaction. That being the position, since the investment made of Rs. 3,88,000, in purchase of 8 gold bar biscuits is not recorded in the books of account, and no explanation is coming forth from the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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