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Dy. Commissioner of Income Tax- CC-45, Mumbai Versus Smt. Ravinder Kaur Bhatia and Vica-Versa

2016 (3) TMI 1014 - ITAT MUMBAI

Addition pertaining to interest income - Held that:- We are of the view that there is merit in the contention of the assessee that the period of “Jan – Dec” stated in the later part of the loose paper should relate to the calendar year 2001. Since the assessee is following cash system of accounting and since these figures have been claimed to have been noted by the broker, there is merit in the submission of the assessee that the broker has noted down the prospective interest income of the calen .....

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interpretation of the entries found noted in the loose paper. It is also a fact that the entries made in the loose paper have not been corroborated with any other material. There is no dispute that the money lending business was carried on by assessee’s spouse and it has been inherited by the assessee. Further, these transactions have been accepted to have been made through a broker and the receipt of ₹ 2.00 lakhs on 6.6.2000 supports the contentions of the assessee the amount of ₹ .....

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s and he has been working from the firm R.Ravinder & Co. also. Hence it is seen the loans were given as and when there was a demand and hence the claim of the assessee that the amount of ₹ 10.00 lakhs was also available with the assessee prior to 1.4.2000 is, in our view, finds merit. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete the addition of ₹ 22.00 lakhs.

Addition from her brother in law - Held that:- We notice that the se .....

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iated a sum of ₹ 20,25,000/- in settlement of loan obtained by him from State Bank of India. Thus, we notice that the brother in law of the assessee has indulged in the property transaction and it is claimed that the assessee later on lodged her claim over the sale consideration. Accordingly, in a family settlement, it is claimed that the brother in law of the assessee paid a sum of ₹ 28.50 lakhs to the assessee, which was shown as gift. Due to family dispute about the ownership of f .....

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CIT(A) in the peculiar facts and circumstances of the instant case. Accordingly, we set aside his order on this issue and direct the AO to delete the addition - Decided in favour of assessee - I.T.A. No.4434/Mum/2011, I.T.A. No.4469/Mum/2011, I.T.A. No.4470-to 4473 and 6432/Mum/2011 - Dated:- 12-2-2016 - SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER For The Revenue : Shri A K Kardam For The Assessee : Shri Hariom Tulsyan ORDER PER Bench: The cross-appeals filed b .....

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ef. The husband of the assessee had carried on money lending business under the name R.Ravinder & Co. and the same was inherited by the assessee after the demise of her husband. The revenue carried out search and seizure operations in the hands of the assessee on 05-10-2007 consequent to the search operations conducted in the case of Mukesh Choksey group. During the course of search operations, the assessee made a disclosure of ₹ 60.00 lakhs, which was later enhanced to ₹ 72.11 l .....

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tive years. 3. In assessment year 2001-02, the assessing officer has made the addition on the basis of a loose sheet found during the course of search and also added the bad debts claim put forth by the assessee during the course of assessment proceedings. The Ld CIT(A) confirmed the addition made on the basis of loose sheet, but deleted the addition relating to bad debts. Hence both the parties are in appeal in AY 2001-02. 4. In A.Y 2007-08, one more issue is being contested by the assessee, i. .....

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extracted in the assessment order as under:- 5.1 Assessee s Reply: Page 4 contains the account of Chhotu, a broker through which the assessee had been carrying out money lending business activities. Page 4 is written on two sides. ₹ 6.25lacs as referred to by you are in continuation to the back side of page 4 which we have marked as page 4A. 4B is the said page of which you are referring noting of interest to the tune ₹ 6.25 lacs. Since the said page 4B in continuation of side 4A, so .....

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s stated on page 4A advanced to various parties from the bank account of M/s R.R.Ravinder & Co. The amount of ₹ 8.5 1acs was duly refunded by the parties before 31.3.2001. However, no interest was paid. The total interest amount worked out for the period of 9 months was ₹ 1,14,750/- which was to be received from Mr. Chhotu. These details are also stated on page 4A. (i) The second figure of ₹ 67,080/- is the interest working for the period from 29.4.2000 to Dec.2000 on an am .....

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77; 12 lacs from January to December is ₹ 2,16,000/- which is for the period from 1.1.2001 to 31.12.2001. Only the months have been written, year has not been stated. Since the amount of interest on ₹ 12 lacs which have been earlier and interest upto Dec.2000 has been taken into account, so the interest figure ₹ 2,16,000/- is for 12 months will be for subsequent period only i.e.1.1.01 to 31.12.01. Similarly an interest figure of ₹ 1,20,000/- on ₹ 10 lacs from Januar .....

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g that interest on receipt basis which is also permissible under the Act. 6. The assessing officer did not accept the explanations given by the assessee and he proceeded to interpret the contents of the loose document as under:- 5.2 AO s findings : The contents of the bank side of page No.4 which is written by the assessee herself is given as under : 1.5(lakhs) 29.04.2000 to 29.12.2000 12,000 6.5(lakhs) 05.06.2000 to 05.12.2000 44,615 2(lakhs) 24.07.2000 to 24.12.2000 10,464 67,080 12 lakhs Inte .....

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the above details the following inferences are drawn: i) Principal amounts of ₹ 1.5 lakhs , 6.5 lakhs, 2 lakhs are given as cash loan on 29.04.2000, 05.06.2000, & 24.07.2000 respectively (1st day of interest period). Hence the total amount principal component of cash loan given comes to Rs, 10 lakhs. ii) It is specifically mentioned as under: 108000 Interest of 12 lakhs paid till Dec. 2000 67080 Interest of 10 lakhs paid till Dec. 2000 175080 It means that the assessee has given cash l .....

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e on 26/11/08 has stated that all efforts are being made to trace out Chhotu and he will be produced before the undersigned as soon as the person is traced out. Summons u/s 131 of the I.T.Act,1961 were issued to Manoj to attend personally. However, the summons were returned unserved since the assessee had left the place mentioned in the notice. Hence the genuineness of the aforesaid transactions could not be verified. 5.3 In view of the above discussion and findings, the addition which has resul .....

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est amounts:- 25.7.2000 to 30.3.2001 1,14,750 On 10 lakhs from April 2000 to December 2000 - 67,080 On 12 lakhs from July 2000 to December 2000 - 1,08,000 2,89,830 The assessee is disputing the addition made on the basis of following noting:- Int. of 12 lakhs from Jan - Dec 2,16,000 Int. of 10 lakhs from Jan - Dec 1,20,000 3,36,000 The Ld A.R submitted that the assessee is following cash system of accounting. He further submitted that the interest pertaining to the period upto December 2000 on t .....

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part of the loose paper. Accordingly, the Ld A.R submitted that the tax authorities are not justified in assessing the amount of ₹ 3,36,000/- as income of the assessee. 8. We heard Ld D.R on this issue. A careful perusal of the noting made in the loose paper shows that the interest amount of ₹ 67,080/- and ₹ 1,08,000/- pertain to a period ending December, 2000. Accordingly, we are of the view that there is merit in the contention of the assessee that the period of Jan - Dec sta .....

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to show that the assessee has received this interest income. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete the addition of ₹ 3,36,000/- pertaining to interest income. 9. With regard to the addition of principal amount of ₹ 12.00 lakhs and ₹ 10.00 lakhs both aggregating to ₹ 22.00 lakhs, the contention of the Ld A.R is that they cannot be considered to be the investment made during the year relevant to the assessment year 2001-0 .....

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77; 2.00 lakhs on 6.6.2000 and deduction of ₹ 1,08,000/- from this amount. 10. On the contrary, the ld D.R submitted that the entries found in the loose papers show that the amount of ₹ 22.00 lakhs has been advanced only during the year under consideration. 11. We have heard the parties on this issue and carefully perused the record. As observed by us in the earlier paragraphs, the question before us is about the interpretation of the entries found noted in the loose paper. It is als .....

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he fact that an amount of ₹ 1,08,000/- was shown as adjusted against the amount of ₹ 2.00 lakhs, meaning thereby the amount of ₹ 1,08,000/- pertain to the period prior to 6.6.2000, in which case, the corresponding principal amount of ₹ 12.00 lakhs should have been available prior to 1.4.2000. Further, it is seen that the broker Shri Chottu has deployed the amount of ₹ 10.00 lakhs on various dates and he has been working from the firm R.Ravinder & Co. also. Hence .....

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estimation of interest income and on perusal of the order of Ld CIT(A), we are of the view that the same does not call for interference. Accordingly, we confirm the order of Ld CIT(A) on this issue. 13. We shall now take up the appeal filed by the revenue, wherein the addition relating to bad debts claim of ₹ 15,68,000/- was deleted by Ld CIT(A). The Ld A.R submitted that the tax effect involved in the appeal of the revenue is less than ₹ 10.00 lakhs and hence the revenue is preclude .....

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laim of bad debts before the AO during the course of assessment proceedings and it was not claimed in the return of income. Hence there was no necessity for the AO to make any addition when he rejected the claim put forth before him during the assessment proceedings. Hence, on merits also, the appeal of the revenue is required to be dismissed. We order accordingly. 15. The only issue urged in the appeals filed by the assessee for assessment years 2003-04 to 2006-07, which is also common in all t .....

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higher figure was offered out of confusion and later on, when the assessee prepared the profit and loss account on the basis of documents found during the course of search, it came to light that she has offered higher income than what was actually earned. However, the said contentions did not find favour with the AO and hence he added the difference cited above in various years. The Ld CIT(A) took the view that outstanding loans and advances justify the additional income offered by the assessee .....

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by him is wrong. In this regard, we may mainly refer to the decision rendered in the case of Pullangode Rubber Products Co. Ltd Vs. State of Kerala (91 ITR 18) and Nagubhai ammal (AIR 1956 SC 593) In the instant case, the assessee has rebutted the presumption by preparing the profit and loss account on the basis of the documents found during the course of search. It is a matter of fact that the tax authorities did not find any fault in the statement so prepared by the assessee. Accordingly, we .....

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A) has upheld the addition on presumptions, i.e., the first appellate authority has presumed that the addition is justified if the interest income is estimated at 18% on the loans and advances. It is pertinent to note that the assessee is following cash system of accounting and further there is no evidence or material to show that the assessee was always earning interest at 18% p.a.. On the contrary, the seized materials considered in AY 2001-02 show that the assessee was charging varying rate o .....

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side the order of Ld CIT(A) and direct the AO to delete the impugned addition made in the assessment years referred above. 19. Now we shall take up the appeal filed by the assessee for AY 2007-08, wherein following issues are being contested:- (a) The addition of interest income on the basis of disclosure made u/s 132(4) of the Act. (b) Assessment of gift amount as income of the assessee. 20. The first issue is identical to the issue considered in AY 2003-04 to 2006-07. The assessing officer ass .....

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on of ₹ 14,60,000/- determined by Ld CIT(A). 21. The next issue relates to the assessment of gift receipt of ₹ 28.32 lakhs as income of the assessee. The assessee produced a cash book before the AO, in which it is shown that a sum of ₹ 28.50 lakhs has been received as gift from Parvinder Singh Bhatia. Since the said receipt is not supported by any document, the AO proposed to assess the same u/s 68 of the Act. However, he did not add the same to the total income of the assessee .....

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was sold for a sum of ₹ 61.00 lakhs by brother in law of the assessee. It was stated that the assessee also claimed her right over the property and sale consideration. After a family settlement, she received a sum of ₹ 28.50 lakhs from her brother in law, who had sold the property. The sale transaction was done by her brother in law and the details of money transactions were found noted in the papers seized by the revenue. Accordingly, the assessee contended that the amount of ₹ .....

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nvited our attention to the documents filed in pages 18 to 40 of the paper book, which contains the details of the notices issued by the cooperative housing society to support this point. He submitted that the brother in law of the assessee sold the flat and appropriated a part of sale consideration to settle the loan taken by him from State Bank of India. He further submitted that the assessee also lodged claim over the sale proceeds, since the husband of the assessee is also one of the legal h .....

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no dispute with regard to the fact that the details relating to the money transaction in respect of Lokahandwala flat is available in seized records. The said paper is titled as Lokh. Flat . The entries noted down in the left hand side shows the receipt of ₹ 61.00 lakhs by way of cash and cheques. The entries noted in the right hand side shows disbursement of amounts to the tune of ₹ 32.67 lakhs and balance amount of ₹ 28.32 lakhs was shown below. A further noting that He gave .....

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ownership. He further submitted that he has been instructed that the transaction did not result in any capital gain in view of the indexation benefits and cost of transfer/improvements. He submitted that this fact was submitted in the letter furnished before Ld CIT(A). He submitted that the assessee received the amount on a family settlement and hence the same constitutes capital receipt in the hands of the assessee. 26. We have heard the parties and perused the record. We notice that the limite .....

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