TMI Blog2011 (4) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... d order. 3. Rival contentions have been heard and records perused. 4. The facts, in brief, are that the assessee Shri Kulwant Singh is an individual mainly engaged in business of petrol pump in his proprietorship capacity under the name and style of M/s. Janta Sales and Service. In addition to income from petrol pump, the assessee also derives income from truck plying which was declared on presumptive basis and also agricultural income and income from house property. The assessee was regularly filing return wherein aforesaid income was disclosed in the return of respective years and tax was also paid thereon. A search was undertaken on the business and residential premises of the assessee on 02-11-2004, which was concluded on 04-11-2004. No incriminating material or evidence was found during the course of search or thereafter. Similarly, no undisclosed or disproportionate moveable/immovable assets were found during the course of search or thereafter. However, during the course of search, a sum of ₹ 70,00,000/- was surrendered by the assessee, from which he subsequently retracted on 18-11-2004 by filing an affidavit before Investigation Wing, as the same was stated to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the returns were filed were incorporated in the common notes enclosed to return for each assessment year. As per the said notes attached with the return filed, the additional income hypothetically estimated and disclosed in the different assessment years, was shown as above. The Assessment for the assessment year 1999-2000 was completed under section 143(3)/153A at the income of ₹ 2088591/- after making additions/disallowance as under.- Income as per statement of income ₹ 182184/- Add:- Unaccounted investment in plot B-3 in the Name of Culprit Kauri ₹ 122153/- Undisclosed income in the head of agriculture Income ₹ 69000/- Undisclosed income-used from SB A/c. of Janta Transport meant for Truck Expenses ₹ 633819/- Undisclosed Household expenditure ₹ 121153/- Addition on account of Marriage Expenses ₹ 500000/- Undisclosed Income deposited in the account Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled for. Here it is significant to bring on record that the AO has also made addition of the same amount of investment of ₹ 1,07,481/- as undisclosed income in the hands of assessee's daughter Smt. Kulpreet Kaur on substantive basis u/s 153C. The addition made in the hands of the assessee Shri Kulwant Singh tantamount to double addition. Without prejudice to this, the daughter of assessee Smt. Kulpreet Kaur has made investment in the said plot out of her own source of income from stitching and embroidery work and she has been filing her return of income since assessment year 1997-98 and has shown the above investment in plot in her return of income. She has been regularly assessed to tax. Wholesome evidence of stitching income of Smt. Kulpreet Kaur was filed in her case in the form of confirmation from some of the traders for whom she has been doing stitching and embroidery. Smt Kulpreet Kaur chose stitching and embroidery as a carrier and only to pursue the same, she left her further studies and for this purpose she took formal training from a lady running coaching classes for this purpose. Post marriage, Smt. Kulpreet Kaur was living with her parents at Bhopal because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be noted that the AO has wrongly added ₹ 1,22,153/- on account of investment in plot instead of the purported addition of ₹ 1,07,481/- in the computation part of his order at Pg. 23. In the circumstances, it is pleaded that the addition made by the AO needs to be nullified. 6. After considering assessee s submission, the ld. CIT(A) deleted the addition after having the following observations :- I have considered the observations of the AO and the submissions of the assessee. I am of the opinion that the addition made by AO was totally unwarranted. This is primarily due to the reason that similar addition has already been made by AO on substantive basis u/s 153C in the hands of assessee's daughter, Smt. Kulpreet Kaur, hence, no addition was warranted in the hands of the assessee because it shall tantamount to double taxation. Even otherwise, the addition was not called for because the same rested on mere conjectures and surmises. For making such addition, the burden was heavy on the AO to prove that the investment in the plot was assessee's fund. But then, nothing of the sort has been brought on record by the AO. Therefore, the addition of ₹ 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in hand. There is no change in the circumstances leading to higher/lower estimation of agriculture income by AO or any evidence supporting the action of the AO. In my view, on 15.54 acres of land, the agricultural income shown at ₹ 1,00,000/- is quite reasonable and justified. I also note that the estimation made by AO was quite arbitrary and without any basis considering that for the Assessment Year in hand, he has estimated agriculture income of ₹ 31,000/ - whereas, for the same land holding, he has estimated agriculture income of ₹ 50,000/- per year from the Assessment Year 2002-03, onwards. In view of the facts, circumstances, explanations of the AR and also judicial decisions on the subject, I am of the opinion that the interference made by the AO in the agricultural income returned by the assessee cannot be sustained. I therefore, delete the addition of ₹ 69,000/- made by AO and the agriculture income is treated at ₹ 1,00,000/- as disclosed by the assessee. The assessee gets a relief of ₹ 69,000/ - and in the process the appeal here also allowed. 10. We have considered rival contentions and find from record that the assessee was ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount deposited in S.B. No. 3494 account of Allahabad Bank, Bairagarh at ₹ 32,557/-, in the name of Shri Harbinder Singh ₹ 20,000/-, deposit with Smt. Satinder Kaur. 14. In this connection, we found that the assessee was deriving income from petrol pump business and also from plying of truck, agricultural income and rental income. The assessee was maintaining regular books of account in respect of its petrol pump business and the same was duly audited, return for each of the years was filed alongwith audited balance sheet. The other income was disclosed by the assessee in the return, but the same were not incorporated in the regular books of account of petrol pump and were, in fact, utilized in making deposits in various bank account maintained in the name of the assessee and his other relatives. In addition to the regular bank account, the assessee was having account in SBI, Bairagarh and Allahabad Bank, Bairagarh. The income derived from agriculture, rent and from trucks were utilized in making deposit in above mentioned bank account. Since no books of account were required to be maintained in respect of its rental income, agricultural income and the income from tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d against income, hence to the extent of depreciation, cash out go will be less vis- -vis taxable income. As per cash flow statement submitted before AO, we found that the assessee was having sufficient overall cash balance available with him with reference to the cash flow statement filed before the AO and the various additions made by the AO on the ground that the assessee did not have sufficient cash balances are not tenable. 15. With regard to the availability cash, the assessee has furnished cash flow statement duly incorporating his income from petrol pump activities, agriculture, rent and truck plying on presumative basis. After verification of the cash flow statement, the ld. CIT(A) also recorded the finding that no evidence or material was found either during course of search or thereafter suggesting that these incomes were utilized by the assessee elsewhere in making any investment/expenditure other than those expenditure by the assessee in the cash flow statement. The ld. CIT(A) found that these cash income were utilized/rolled over in depositing the same into some of the Bank accounts in the name of the assessee and in some other names and in making some investment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... somewhere else by the assessee. Since the assessee has been earning huge cash income for agriculture, plot rent, house rent and presumptive income from truck plying since earlier years, the opening cash balance of ₹ 2.50 lakhs as on 1.4.1996 was reasonable, hence, we accept the same as opening cash balance. There was one objection of the AO that the assessee has deposited ₹ 1,65,000/- in the account of M/s. Janta Transport on 23.10.2003 by way of transfer from S. B. A/c No. 12129 pertaining to Shri Avneet Singh whereas in the Bank account of Shri Avneet Singh, it has specifically been mentioned that the above amount is transferred to the S. B. Account of Janta Transport Account No. 61075. In reply to it, the assessee has submitted that this query was put up in the case of son of the assessee, Shri Avneet Singh and it was explained to the AO that amount of ₹ 1.65 lakhs was not utilized at two places. Actually, aforesaid cheque was self cheques. Entry was made only once. Hence, there was no question of utilization of the same amount twice. The observation of the AO was conjectural only, which is proved from the fact that no addition was made by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t even during course of assessment, the assessee has clearly replied that Shri Gurudev Singh is an old regular income tax assessee having agricultural income/pension income and that entire investment in the said property was made by him and not by the assessee. We do not find any reason to interfere in the order of CIT(A) on this ground. 19. Following was the submission of the assessee with regard to the additions on account of house hold expenses, before the ld. CIT(A) :- As can be seen from the discussions dispersed in the entire body of order of the AO, the entire action of the AO impinges upon his mere ipse dixit about the personal expenditure not supported by any material or evidence. Our subsequent discussion shall prove that he has not discharged the heavy burden cast upon him by the provisions of Sec. 69C. It would be seen from the following facts and submissions brought on record that the action of the AO is totally unwarranted in law and on the facts of the case for the reasons set out here-in-below: First of all, it is humbly submitted that the methodology adopted by the AO to work out so-called unaccounted household expenses was totally wrong, impractical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imating household expenses at such abnormally higher figure neither any comparative case was brought on record by AO. (j) Addition was thus made simply on the basis of whims, surmises and conjectures. (k) Addition was thus made simply on the basis of whims, surmises and conjectures. (k) The AO has stated that the assessee is a reputed person in the society and maintaining high standard of life. The AO has also stated that the assessee had dog for safety of his house. As per him, assessee is having four air conditioners in his house and house is well decorated and furnished. In this regard, it is submitted that the assessee is a person of ordinary middle class leading a simple life. He nor any of his family members is member of any club nor holding any post in any social organization or institution nor do they have any pass port. They do not have maid servants and all the work are done by the family members only. As regards air-: conditioners, it is well known that now days the cost of ACs are at par with that of the coolers and the assessee has been very conservative in using the same thereby saving lot of electricity. The AO ignored that the total withdrawal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It will be of ample importance to observe that the AO has treated household expenditure of ₹ 48,000/- in the past for A.Y.2001-02 in scrutiny assessment u/s 143(3) as adequate. It is note worthy that the assessee had shown withdrawal of ₹ 24,000/- as against which addition of ₹ 24,000/was made by the AO on account of low withdrawal aggregating it to ₹ 48,000/-. There is no change in circumstances relating to withdrawal for the year under consideration as compared to the past and moreover, as already submitted, no material was found during the search to show that there was drawing, which was not recorded by the assessee in the regular books of account. The AR has also relied on the following decisions: Mahesh Kumar Singhai, Vs. DCIT (2007) 9 ITJ 682 (Indore Tribunal) Narain Singh Bhati s. ACIT, 1991)40TTJ 381 (JP) CIT Vs. C.L. Khatri (2005) 4 ITJ 193 (MP) Ashok Kr. Jain Vs. DCIT, 32 ITC 527 (Indore ITAT) ACIT Vs. Surajbai, (2005) 4 ITJ 524 (Indore ITAT) Ramesh K.Shah Vs. DCIT (2004) 82 TTJ 827 (Bang.) Deenanath Agrawal Vs. ACIT (2004) 82 TTJ 689 (Agra) Abdul Gaffar A.Nadiawala Vs. DCIT (2001) 70 TTJ 462 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d since there is no change in the circumstances leading to higher estimation of house hold expenses, no addition is warranted. Keeping in to view the totality of the facts and circumstances and the standard of living of the assessee, we deem it reasonable to retain the addition to the extent of 25 % on account of lower house hold expenses shown by the assessee. This ground of Revenue s appeal is allowed in part. 22. On the same analogy the ground taken by the Revenue with regard to the deletion of house hold expenses in all the years are confirmed to the extent of 75%, resulting in upholding of addition to the extent of 25 % in all the years under consideration. 23. The AO has also made addition of ₹ 5 lakhs on account of marriage expenses. In the assessment order, the AO observed that expenditure on marriage of second daughter Smt. Kuldeep Kaur was not accounted for by the assessee, therefore, he estimated ₹ 5 lakhs having been incurred on account of marriage expenses in the assessment year 1999- 2000. 24. In this connection, submission of the assessee before the ld. CIT(A) was as under :- In this connection, it is submitted that observations of the AO ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rized Representative s submission, the ld. CIT(A) deleted the additions after having the following observations :- I have considered the assessee's submissions as well as the findings of AO. In my opinion, the addition was not warranted in this year because marriage of the daughter of the assessee, Kulpreet Kaur, was solemnized on 12-12-1999 falling in next A.Y. 2000-01 and not in the present A.Y. 1999-00 in hand. Even otherwise, the AO has not considered the marriage expenses shown by the wife of the assessee, Smt. Satinder Kaur and gift given by mother of assessee, Smt. Kulpreet Kaur. He also has not considered gift received from relatives and friends, as brought on record by the assessee. No evidence was recovered .during the course of search or even thereafter to prove that the assessee has incurred expenditure of ₹ 5,00,000/- on the marriage of his daughter. No details, evidence or basis has been given by the AO for his estimation. Under these circumstances, the addition made at ₹ 5,00,000/- cannot be sustained and it has to be deleted; the assessee gets a relief of ₹ 5,00,000/-, and t~ us the appeal is allowed. 26. We have considered the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied the same and did not point out any mistake or defect therein. The GP shown by assessee vis-a.- vis considered by AO in different years are given in the reply for individual Assessment Years. That, the assessee maintained a contemporaneous records of all business transactions, quantitative details of opening stock; purchases, sales and closing stock on even daily basis and this fact was duly placed on record during assessment proceedings. The survey was carried out at the Business premises and after the extensive investigation no incriminating material whatsoever was found. It was also submitted by the assessee that the sales rate has been declared by the Ministry of Petroleum from time to time and the assessee is bound to sell the controlled commodity of petroleum according to the rates decided and prescribed by the Ministry and he cannot charge extra rate other than that fixed by the Government and he had to follow the conditions and terms as per guidelines prescribed by the authorities and any violation or contravention of the same in running the outlet may result in termination of dealership. It is further submitted that the petrol pump has been regularly checked and monito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lteration in Petrol/Diesel are totally unfounded also for the reason that very stringent and strict qualitative and quantitative controls are exercised by Food and Civil Supplies Department and no adverse action has ever been taken by the said department against the assessee, as set out here in below. Even the supplier Govt Companies is very strict and carryout checks periodically on surprise basis as regards to quantity and quality. Some of the periodical inspection reports were also submitted before AO with our reply for A.Y.2005-06. The inspection reports clearly evidenced that: The variations between meter reading and dip stock taken on surprise visit was always well within the permissible limits. There was no excess stock found on any of the surprise visits. The quality of the products dealt in was always excellent and as per the norms of the company. Samples taken on surprise basis even meets requirements of quality 2796:2000 certification (a quality certification like ISI and ISO accreditation). As already submitted before the AO, his allegations are not warranted and are against the facts of the case also for the following reasons: No i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normally low. (e) Unexplained adjustments at critical dates. (f) Suppression of part of sales. If any of the above is proved against assessee, it justifies rejection of books of account but in our case no suppression in sales or inflation in purchases had been detected by the AO. The accounts have been regularly maintained and are duly audited. The AO also has not established against the assessee any omission of investment or expenditure. The purchases and sales also have not been held to be unvouched. No detection of any unexplained adjustments at any critical dates have been found by AO. He has not rejected the books of account and it has not been brought on record by him that income of assessee cannot be properly deduced. Hence such arbitrary estimation made by AO is highly unjustifiable and against the legal standards. The assessee is relying on the following decisions wherein it was held that low profit without any other defect being found in the account books is not a sufficient ground for rejection of accounts. Moreover, since the AO has not rejected the books of account and has not given clear finding that the true profits could not be ascertained from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentions of the AO that there was a variation in the stock as per meter reading in the stock register and as per actual dip (stock on. physical verification), I find that here also the AO has not substantiated his findings. The assessee clearly explained to him that first of all stock as per actual dip, was started to be written on the stock register from financial year 2003-04 onwards on the oral instructions of Company officials, as otherwise, there was no requirement of doing so Illiterate employees of the assessee wrote the stock register and they have done lot of mistakes in writing the same. The assessee filed before the AO the amended and correct chart explaining that whatever variance was pointed out by him was practically not possible and it was only due to inadvertent mistakes of writing actual dip stock against earlier day's meter reading and the like. It was also explained that sometimes, the employees have written wrong quantity of actual dip stock and so on, as submitted by AR hereinabove. I note that the human mistakes in the amended chart were verified by the AO and the same were not disputed or disproved by him. I find myself in full agreement with these argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oil company. We also found that these reports were not taken cognizance by the Assessing Officer while making trading addition. Even we found that the assessee had requested the AO to call for report of the oil company regarding stringent qualitative and quantitative control exercise, but the AO totally ignored the same. Furthermore, the assessee had obtained the certificate from Oil Company and furnished the same before the AO, which clearly evidenced that no adverse action has been ever taken against the assessee for flouting the qualitative and quantitative norms fixed by the Oil Company. Keeping into view all these factual position, the ld. CIT(A) held that allegation of the AO that the assessee was resorting to adulteration has to be rejected. Even it was found by the CIT(A) that contention of the AO that there was a variation in the stock as per meter reading in the stock register and as per the physical verification, it was found that nothing was brought by the Assessing Officer either during survey or post survey inquiry to substantiate this finding. The ld. CIT(A) found that if any of the allegations put by the Assessing Officer was found correct, the dealership of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantitative details were filed before the AO, wherein no defect was found by the AO, accordingly, there was no basis of ad hoc addition of evaporation as given by the Assessing Officer. Thus, we do not find any infirmity in the order of the CIT(A) in deleting the ad hoc disallowance of ₹ 40,000/- on account of evaporation. 37. Similarly, the addition made on account of evaporation expenses in various years are deleted in terms of the finding recorded by the ld. CIT(A) in the respective orders. We have already discussed the issue in the assessment year 1999-2000, accordingly, we confirm the action of the ld. CIT(A) on account of deletion of addition on account of evaporation expenses in all the years under consideration. A.Y. : 2000-01 : 38. Most of the grounds raised in this year are common. Addition with regard to expenditure incurred and various deposit in the Bank account was deleted by the CIT(A) after having following observations :- This issue has been discussed by AO at page 13 para 6.11 of his order. On the basis of my decision imparting credence to the personal cash flow statement made by the assessee in ground No.5 as above, the following additions m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000/- and total payment made to the assessee so far was ₹ 3,50,000/-. It was also stated by him that they are having possession of the above shop. As per section 2(47) (v) of the IT Act, allowing of possession of any immovable property is treated as transfer. Since the assessee has given transfer of property, therefore it is treated that transfer is complete in all respects and assessee is liable to pay capital gains tax which is worked out as under: - Particular Year of purchase Amount. Purchase value of the shop F.Y 1997-98 (date of purchase- Rs.1,81,600/- Sales value of the shop F.Y 1999- 00 Rs.8,00,000/- Indexed Cost 181600 X 389 /331 Rs.2,13,421/- Capital Gain (LTCG) Rs.5,86,578/- Tax payable calculated separately after giving set off of on unabsorbed capital losses of ₹ 2,08,969/- as claimed in the original return for assessment year 1999-2000. Thus, long term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o get entire 1055 sq.ft. registered in its name, but since the assessee was owner of only 270 sq.ft., he declined registration of entire area of 1055 sq.ft. Thus, a dispute arose between the assessee and the buyer, hence the delay could not be completed. The assessee has also not given possession to the buyer. Under these circumstances, no capital gains arose to the assessee and he also agreed to pay tax as and when the sale will be completed. The assessee also asked the AO to confirm the facts from buyer by issuing notice u/s 131. Under these facts and circumstances, we do not find any infirmity in the order of the CIT(A) for deleting the addition made by the Assessing Officer on account of long term capital gain amounting to ₹ 3,77,609/-. 45. The addition of ₹ 1,01,500/- has been discussed by the Assessing Officer at page 21 of his order as under :- The assessee has shown unsecured loan in the name of following persons:- S1. No. Name of the person Amount l. Sh. Ganga Ram 15,000/- 2. Sh. Jairam Dhankani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned order, the ld. CIT(A) deleted the addition after having the following observations :- I have considered the submissions of the AR and the observations of the AO. There is no dispute that these loans have been owned up by the assessee and therefore, were incorporated in the memorandum cash flow statement submitted before AO. As rightly argued by the AR, this addition by AO also impinges on his non-imparting evidence to the personal cash flow statement. As I have imparted credence to the personal cash flow statement and since the assessee had sufficient overall cash available with him with reference to cash flow statement/cash rotation chart submitted before AO, the addition made by the AO requires to be deleted. Accordingly, I delete the addition of ₹ 1,01,500/- made by the AO. The assessee gets a relief of ₹ 1,01,500/and thus the appeal is allowed. 47. Rival contentions have been considered in view of our observations as noted above with regard to the cash flow statement submitted by the assessee, the assessee was having sufficient cash available with him. Accordingly, deletion of addition by CIT(A) was justified. A.Y. : 2001-02 : 48. Addition w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause of lot of new petrol pumps have come up in the area and it was from the Bank to get the business due to steep competition. The submission of the assessee before the CIT(A) was as under :- 1. At the time of assessment it was submitted by the assessee that in order to procure business, commission was paid to the driver of the heavy vehicle because lot of petrol pumps have come up and it is difficult to get business due to stiff competition. 2. The dealer cannot charge higher rate on the declared price of the petroleum rather he can allow commission to the drivers for boosting the sales for better profit. Because of this, the sales during the year have increased income arisen to the earlier ear as under: - A.Y. 2000-01 A.Y. 2001-02 (Present year) Sales 1,36,12,950/- 1,89,04,809/- Sales figure mentioned buy AO in his order at Pg.22 para 8 Page 21-22 Para 8 3. In this case, on the impugned issue of commission, the assessment was originally completed u/s 143(3) after due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him on account of profit from sale of lubricants. We do not find any infirmity in the direction of the ld. CIT(A). 54. Addition on account of cash deposit in the Bank account was deleted by the ld. CIT(A) after having following observations :- The Learned Commissioner of Income Tax (Appeals) observed that:- I find that this fundamental fact of availability of cash with the assessee out of the above streams of income have not been controverted or disproved by the AO. This is the basic fact which goes to the root of the matter coupled with the fact that once the availability of cash from undisclosed sources is accepted, the other issue equally important is utilization of the same. Here also, very heavy legal burden was on the AO, particularly in a case where action u/s. 132 took place, to prove that the money available with the assessee from the cash income earned (other than from petrol pump) and disclosed by him have been utilized elsewhere in some movable/immovable investment and expenditure, which have not been disclosed to the department. But, I find that the AO has failed in proving the money available with the assessee has been utilized elsewhere, other that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibly was not utilized elsewhere by the assessee for some investments/ deposits and the same was shown as withdrawal/household expenses and reduced from cash balance. Thus the same was only residual/adhoc figure and was therefore. Otherwise available with the assessee for utilization in to some other expenses/investment. The inter-head and intra-: head adjustment for utilization of cash income was permissible only to the extent the assessee had overall cash available with him---- lX. All other explanations of the assessee, as given in the aforesaid chart are found to be correct and acceptable. Since I have imparted due credence/reliability to the cash flow statement prepared by the assessee, all those additions made by the AO, which impinge upon and revolve around the shortage or availability of cash due to non-imparting credence to the cash flow statement of the assessee, shall get vacated for all the assessment years namely, A.Y. 1999-00 in hand to A.Y.2005-06, unless otherwise expressly stated by me, so long as the assessee has overall cash available with him.------- 55. In view of our discussion made hereinabove with regard to the cash flow statement furnished by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lerical mistakes. In the said chart, the variation between the stock as per reading and as per dip stock was well within the permissible limit of the oil companies. The said chart was duly verified by AO and he did not found any falsity or mistake therein. Kindly also refer our detailed submission in Ground No. 15 of A.Y. 1999-2000. 2. The allegation of AO that the assessee was doing mixing or adulteration was his pure speculation and personal presumptions because if the assessee was doing adulteration on such large scale, as alleged by AO, at least a single paper or evidence of purchase of solvent and kerosene have been recovered, during the search or even there after. Here it is noteworthy that it is a case of extreme step of search were every nook and corner of the business premises and residence of assessee was searched and after thorough and prolong action of search, even no iota of evidence for purchase of solvent and kerosene even of a single rupee was found; under these circumstances the action of the AO can only be termed as height of arbitrariness, punitiveness and grossly whimsical and nothing else. Such an action of the AO should fall from ground. 3. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law [see, Dhirajlal Girdharilal vs. CIT, (1954) 26 ITR 736 (Hon'ble Supreme Court) ; Dhakeshwari Cotton Mills Ltd vs. CIT, (1954) 26 ITR 775 (SC) ; Lalchand Bhagat Ambica Ram v. CIT, (1959) 37 ITR 288 ( S. C.) Umacharan Shaw Bros. vs. CIT, (1959) 37 ITR 271 ( S.C.); Omkar Salary Mohd. Sait v. CIT, (1959) 37 ITR 151 (S.C.). The jurisdictional High Court of M.P. I CIT vs. Achal Alloys Pvt.Ltd., 218 ITR 46 (MP) had also held that : Why should every exercise begin with mistrust or no trust ? Law lives on logic and hence any illogicality resting on suspicions/technical inferences must be spurned. In the following decision of jurisdictional High Court of M.P., though relates to block assessment, but it applies with equal force to the amended Law, in which, it was held as under :- On a perusal of amended and un-amended provisions and CBDT Circular, we are of the considered view that there has been no specific effect as far as this facet is concerned Emphasis has been given on the fact evidence must have been found during search and only thereafter, the question of gathering any information would arise based on search, inquiry. CIT vs. Khushalchand Nirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now we requested the AO to enquire form the oil company regarding quality and quantity of products sold by the assessee, but the same was not done by the Assessing Officer. Now we have obtained certificates from oil company proving that we maintain qualitative and quantitative controls and despite various surprise checks made by them, no deficiency of the sort was ever found and no action was ever taken your appellant. 60. By the impugned order, the ld. CIT(A) deleted the addition after having following observations :- I have considered the submissions of the AR and findings of AO. I find that the addition is made on unproved unilateral allegation of the AO primarily because as per the AO, there was variation in stock as per meter reading recorded in the Retail Outlet Sales Register vis- -vis stock as per dip (on physical verification ). He also alleged that the appellant was involved in doing adulteration. This issue has been dealt by me in detail while dealing ground no. 5 of A.Y. 1999-2000 because the issue had interconnection, interlacing and bearing on the issue of gross profit, for which, separate addition has been made by the Assessing Officer. In my decision, gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition. Since the issue has inter-action, inter-lacing and bearing on the issue of gross profit, for which separate addition has been made by the Assessing Officer we have followed the same reasoning. We found that the detailed reasoning has been given by the ld. CIT(A), while controverting the finding of the AO with regard to these allegations. The ld. CIT(A) has also recorded a finding that variation in stock as per the stock register and as per actual dip on physical verification was explained by the assessee by filing amended chart, which contained human error done by the illiterate staff of the assessee. The ld. CIT(A) also found that the AO has verified this amended chart and did not find any falsity therein. With regard to allegations regarding mixing of kerosene in the petrol, the ld. CIT(A) observed that not even a single rupee purchase of kerosene was found despite extreme step taken by the search party. The ld. CIT(A) also observed that it was a search case and had the assessee been involved in adulteration, something could have found either in the search proceedings or on subsequent inquiry. The finding recorded by the ld. CIT(A) at page 14 has not been controverted, we, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer, no addition was called for particularly in view of the fact that cash as per complete cash book was found to be positive which has not been disputed by AO. I therefore have no hesitation in deleting the addition made by the Assessing Officer on the basis of such short cut, as adopted by him. The addition of ₹ 17,64,996/- is therefore deleted. The appellant gets a relief of ₹ 17,64,996/- and the appeal stands allowed. 64. We have considered the rival contention and found that books of account found during course of survey was having incomplete entries, which was completed thereafter. The ld. CIT(A) found that variation was only due to the fact that some entries of the relevant period was not accounted for in the incomplete cash book found during survey. The ld. CIT(A) also found that during course of assessment, the assessee has explained the difference, entry by entry by producing both the books of account i.e. complete as well as incomplete. As per CIT(A), if the entries, which were subsequently accounted for in the incomplete books of account, were not found properly supported by the evidence or voucher only then some addition could have been warr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limb of his argument was that since out of the total 8,700 sq.ft. of plot agreed to be sold, major area of plot admeasuring 5,700 sq.ft. belong to Shri Gurudev Singh, father in-law of assessee,the amount of advance received should have gone to Shri Gurudev Singh and not to wife of the assessee Smt. Satinder Kaur. He also stated that in his statement u/s 132(4), the assessee had specifically accepted the amount of ₹ 6,00,000/- as his undisclosed income and he never stated that his wife had received such amount. As regards the surrender of ₹ 6,00,000/- included in total surrender of ₹ 70,00,000/- made by appellant, I find that the appellant has already retracted form the total surrender of ₹ 70,00,000/- on the ground that the same was done under coercion and intimidation and that whatever income will come after verification of papers and documents, the same shall be declared in the return of income. In my opinion, since the surrender was not made or quantified with reference to any documents or evidence, the same has no evidentiary value because even otherwise the same stands retracted later on. Hence this limb of the argument of AO loses its significance. Mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Shri Gurudev Singh pursuant to sale agreement found during the course of search have been utilized by them elsewhere for some other purposes. For this proposition, I am fortified by the decision of CIT v. Kulwant Rai, (2007) 163 Taxman 585 ( Delhi HC) cited by the appellant. In view of this, I am of the considered opinion that the addition made by AO cannot be sustained because the same is resting solely on his suspicion and surmises not supported by any cogent evidence, and hence I am constrained to delete the same. The appellant gets a relief of ₹ 6,00,000/- and the appeal is allowed. 67. We have considered the rival contention and found that search took place at the assessee s premises on 2.11.2004, wherein original agreement of sale dated 29.10.2004 was found and seized. This agreement clearly contained the fact of giving cash advance of ₹ 6 lakhs to the assessee against the proposed sale of plot. The ld. CIT(A) has also recorded a finding that during course of search original agreement to sale was found for selling 3,000 sq.ft. of plot registered in the name of wife of assessee, Smt.Satinder Kaur and 5700 sq.ft. in the name of Gurudev Singh, father in-law o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount, the AO made the addition. In this regard, reply of the assessee was that aforesaid cheques was given by Shri Ramesh Sharma as security deposit against further purchase of diesel/petrol. Even at the time of search, this statement was recorded. No money receipts or hundies were recovered to support the AO s observation that the assessee has given loan to Shri Ramesh Sharma. Even after search, no corroborative material was brought on record to support this allegation of the AO. The AO has also not examined Shri Ramesh Sharma to unearth the truth despite the request of the assessee to issue summon to him u/s 131. In view of this factual position, we do not see any reason to interfere in the order of ld. CIT(A) for deleting the addition. 71. The other grounds taken by the Revenue in all the other assessment years under consideration are the same, for the reasons discussed by us hereinabove, while dealing with assessment years 1999-2000, 2000-01 and 2001-02, we confirm the action of the CIT(A) except with respect to the addition made on account of house hold expenses and expenditure on commission payment 72. With regard to the cross objection filed by the assessee on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax (Appeals) failed to appreciate the ground raised by the assessee. 77. For the assessment year 1999-00 the Assessing Officer completed the assessment u/s 153C wherein various additions were made on account of agricultural income, cash credit, interest expenses, cash credit of Shri Kulwant Singh, low gross profit, cash deposited in S.B. Account No. 6864 and disallowance of certain expenses. 78. By the impugned order, after giving detailed findings with respect to each and every addition, the learned Commissioner of Income Tax (Appeals) deleted some of the additions/disallowance and the revenue is in further appeal before us and assessee has also filed cross objections. 79. The assessee has also taken a ground before us with regard to legality of assumption of jurisdiction u/s 153C of the Act. It was contended by the ld. Counsel for the assessee that no satisfaction was recorded by the Assessing Officer in case of searched person, Shri Kulwant Singh, to the effect that no document was found during the course of search which indicates undisclosed income of the assessee. He further contended that assumption of power by the Assessing Officer u/s 153C of the Act for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 40,000/- was made on account of agricultural income. This ground is the same as dealt with in the case of Shri Kulwant Singh for the assessment year 1999-00. As the facts are the same, we follow the same reasoning and conclusion as arrived at by us in the case of Shri Kulwant Singh. 84. In the result, this ground of the revenue stands dismissed. 85. The next issue relates to deletion of addition of ₹ 2,53,500/- on account of unexplained cash credit. The observation of the Assessing Officer was that the assessee has simply furnished stereo-type confirmation and PAN. Accordingly, he added the amount in the assessee s income. 86. By the impugned order, the learned Commissioner of Income Tax (Appeals) has deleted the addition after having the following observations :- The submissions of the AR and the observations of the A.O. have been duly considered by me. In my opinion, the additions made by the A.O. is not called for and hence cannot be sustained. This is because first of all no material was found during search or brought on record by the A.O. thereafter that these credits are non-genuine or these are the funds of appellant circuitously introduced as cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax (Appeals). 91. In the result, the appeal for the assessment year 1999-00 is dismissed. A.Y. 2000-01- 92. The additions on account of agricultural income amounting to ₹ 40,000/-, unexplained cash credit of ₹ 1,28,000/-, gross profit addition of ₹ 3,99,238/-, disallowance of expenses on account of evaporation amounting to ₹ 37,992/- are the same as discussed by us in the case of Shri Kulwant Singh for the assessment year 1999.00. We respectfully follow our same reasoning and decision in the case of Shri Kulwant Singh for the assessment year 1999-00 in respect of these grounds and confirm the action of the learned Commissioner of Income tax (Appeals). 93. Similarly, the disallowance of interest on cash credit has already been dealt with in the assessee s case for the assessment year 1999-00. As the facts are the same, we follow our decision in the assessee s own case for the assessment year 1999-00 and confirm the action of the learned Commissioner of Income tax (Appeals) in deleting the disallowance of interest paid on these credits. 94. The addition of ₹ 4,40,000/- on account of unexplained cash credit from Jamuna Prasad and Shri Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has proved the availability of funds on the relevant dates. 99. Similarly, the addition of ₹ 1,40,000/- on account of capital introduced by the assessee in M/s Janta Sales Services was deleted by the learned Commissioner of Income tax (Appeals) by relying upon the cash flow statement furnished by the assessee. As the overall cash flow statement indicating availability of cash has been accepted by the learned Commissioner of Income tax (Appeals), which has not been controverted, we do not find any reason to interfere with the order of the learned Commissioner of Income tax (Appeals) for such deletion of addition of ₹ 1,40,000/-. A.Ys. 2002-03, 2003-04, 2004-05 and 2005-06: 100. The deletion of addition on account of agricultural income, interest expenses, gross profit addition, disallowance of evaporation expenses, amount deposited as capital, amount deposited in SB account ₹ 6668/- have already been discussed by us in earlier year. As the facts are the same and detailed findings have been given by the learned Commissioner of Income tax (Appeals), we confirm his action. 101. The next ground for the assessment year 2002-03 relates to deleting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous years is duly covered by the reasoning given by CIT(A) with regard to correctness of cash flow statement submitted by the assessee before the lower authorities in the case of Shri Kulwant Singh in the assessment year 1999-00 and also in the case of this assessee. Respectfully following the same, we confirm the action of the learned Commissioner of Income tax (Appeals) in deleting the addition made on account of cash deposited in bank account which was duly explained in the cash flow statement furnished by the assessee. 107. In the result, all the appeals of the revenue in the case of Satinder Kaur are allowed in part, in terms indicated hereinabove. 108. With regard to the cross objection filed by the assessee wherein part of the disallowances/additions retained by the ld. CIT(A) has been challenged, nothing was brought to our notice by the ld. Authorized Representative to persuade us to deviate from the findings given by the ld. CIT(A), we, therefore, do not see any merit in the cross objection filed by the assessee. Accordingly, cross objections in all the years under consideration are dismissed. I.T(SS).A.Nos.56/Ind/2008 C.O.No.37/Ind/2008 : 109. This is an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing confirmatory letters/affidavits in support of the fact that money belonged to them. In the confirmation letters/affidavits, complete address, cheques numbers GIR/PAN numbers were also mentioned. The ld. CIT(A) has deleted the same by observing that by furnishing all these documents before the AO, the assessee has proved the identity and capacity and genuineness of the loans and, thus, the initial onus cast on him was fully discharged. The ld. CIT(A) further observed that the assessee cannot be expected to prove the source of the source. This finding of CIT(A) is as per material on record and do not require any interference. 115. Addition made on account of low gross profit, evaporation expenses are the same as dealt with in case of Shri Kulwant Singh in the assessment year 1999-2000. Following the same reasoning and conclusion, we confirm the action of the CIT(A) for deleting the addition on account of gross profit and evaporation expenses. 116. With regard to addition on account of conveyance and general expenses amounting to ₹ 30,000/-, which has been deleted by the ld. CIT(A), we find that personal element in such expenses cannot be ruled out. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur in which no books of account are maintained. On verification of bank account No.19007532 Allahabad Hamidia Road of Smt. Harbans Kaur Prop. M/s. Janta Traders filed alongwith the return for the above assessment year, no transfer of amount to Smt. Kulpreet Kaur or M/s. Fill Fly was found. 122. Contention of the assessee before the lower authorities was that personal cash flow statement was prepared only for memorandum purpose and non inclusion of the above amount of ₹ 1,15,450/- may be due to over sight of the accountant in preparation of the same. In any case, since the assessee had sufficient cash available with her with reference to cash flow statement, no addition was called for on this account. 123. The ld. CIT(A) has confirmed the addition. We found that the assessee was unable to produce any evidence in support of its claim. We, therefore, do not see any reason to interfere in the addition so made by the Assessing Officer for which assessee could neither substantiate this stand either before the CIT(A) or before the Tribunal. 124. In the result, the appeal of the Revenue is allowed in part where as the Cross objection filed by the assessee is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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