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Chaturbhuj T Batra and Other Versus Asstt. Commissioner of Income Tax-Central Circle 18 and 19, Mumbai and Others and Vica-Versa

2016 (1) TMI 1091 - ITAT MUMBAI

Addition made to the brokerage income - these assesses have received part of brokerage income in cash and did not disclose the same - Held that:- Additions confirmed by the Ld.CIT(A), on estimate basis and telescoping the same is not justified.

Addition made on the basis of proforma invoice - Held that:- As already noticed that the Ld CIT(A) has confirmed this addition only on the reasoning that the assessees have suppressed receipts by receiving them by way of cash. In the earlier pa .....

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(A) on this issue and direct the AO to delete the addition made on this issue in the hands of the three assessees

Addition in respect of estimated household expenses - Held that:- CIT(A) has accepted the fact that the amounts withdrawn by the assessee and his family members for personal purposes have been wrongly computed by the assessing officer and he has further held that there is no requirement to make any addition. However, he has taken altogether different stand and has express .....

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hicle and telephone expenses could not be ruled out. Accordingly, we modify the order of Ld CIT(A) on this issue and sustain the addition to the extent of ₹ 20,000/- and in our view the same would meet the ends of justice. We direct the AO to sustain the addition accordingly

Investment in diamond and gold jewellery - Held that:- It is pertinent to note that the bills pertaining to the year 1978 were sought to be verified in the year 2008, i.e., after expiry of about 30 years. I .....

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me of donors etc. However, one can note that receiving of gifts at the time of festivals and functions is quite common. Further, the assessees herein have also filed income tax returns over the years. Hence, on a conspectus of the matter, we are of the view that the addition on account of diamond jewellery may be restricted to ₹ 1.50 lakhs and we are of the view that the same would meet the ends of justice. Accordingly, we modify the order of Ld CIT(A) on both the issues referred above and .....

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ted against the separate orders passed by learned CIT(A) in their respective hands. All the appeals except that filed by Shri Karan P Batra are related to the assessment year 2007-08. The appeal filed by Shri Karan P Batra relates to the assessment year 2004-05. Since some of the issues urged in these appeals are identical in nature, they were heard together and are being disposed of by this common order for the sake of convenience. 2. The facts relating to the case are set out in brief. These a .....

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ed the appeals on the issues, where relief was granted by Ld CIT(A). 3. The first common issue urged by all the assessees relate to the addition made to the brokerage income by holding that these assesses have received part of brokerage income in cash and did not disclose the same. The addition made by the AO under this head is tabulated below, for the sake of convenience:- S.No. Name of assessee Amount in dispute (for quantum appeal) in Rs. 1 Chaturbhuj T Batra 92,82,233 2 Varsha Batra, 4,80,00 .....

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Accordingly he added the equal amount of brokerage declared by the assessees in all the years covered by the search assessments. 4. In the appellate proceedings, the Ld CIT(A) confirmed the addition, but granted telescoping benefit against certain other additions. The revenue is aggrieved by the telescoping benefit so given by the Ld CIT(A). 5. We notice that this issue has been considered in the case of these assessees by the co-ordinate bench of Tribunal in other years. We notice that SMC benc .....

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Nos. 7038 to 7043/Mum/2010 - AY 2001-02 to 2006-07) and Shri Premkumar T Batra (ITA Nos. 8058 to 8063/Mum/2010 - AY 2001-02 to 2006-07). The relevant observations made by the co-ordinate bench in the common order dated 25.04.2014 passed in the above cited group cases are extracted below:- 4. At the outset, it has been brought to our notice that the cases in hand are squarely covered by the decision of the Tribunal in the case of Shri Rajeev C. Batra in ITA No.7772/Mum/2010 for the assessment ye .....

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e assessee is receiving 50% of the brokerage in cash which is unaccounted in the books. I find, the Assessing Officer has taken this view on the basis of seized documents with regard to two properties namely Regiland Flat in 5th' Floor and Flat at Sommerset Building. No independent enquiry from the purchasers has been made. I find, the CIT(A) had mentioned in para 11.1 of his order that 'at the outset it is to be mentioned that there is no clear cut evidence available to show that any ca .....

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ook place through the assessee also could not be controverted by the ld D.R. I find, in para 11.4 of the CJT(A)'s order; the Ld.CIT(A) has mentioned that he was convinced that these seized documents do not indicate any cash component of brokerage received by the assessee. I find despite giving this findings, which are reproduced elsewhere in this order; the CIT(A) sustained the addition on the ground that the appellant was not accounting the brokerage income correctly. This, in my opinion, i .....

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ppeal for the same before the Tribunal. It has also been held by the Ld. CIT(A) that the only income of the assessee is from brokerage. Therefore, when the unexplained deposits of ₹ 98,765/- has been added and the only source of income of the assessee being brokerage and since the assessee being brokerage and since the assessee has not challenged the same, therefore, confirming the addition of ₹ 1 lakh made by the Assessing Officer on estimate basis and telescoping the same in my opi .....

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d Shri Karan P. Batra. Therefore, we set aside the impugned orders of the Ld.CIT(A) in the said cases and the additions made/confirmed on this count stand deleted. 6. In the instant year also, the assessing officer has made the impugned addition on the basis of very same documents. Accordingly, consistent with the view taken by the co-ordinate bench of the Tribunal, we hold that the assessing officer has made the impugned addition without bringing any credible material on record. Accordingly, we .....

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shi And Powai properties - ₹ 37,30,690/- The revenue is challenging the telescoping benefit granted by the Ld CIT(A). Since we have deleted the addition relating to Cash component of brokerage, the telescoping benefit given by Ld CIT(A) shall stand vacated and hence the appeal filed by the revenue shall become infructuous. Accordingly we dismiss the appeal filed by the revenue in the case of Chaturbhuj T Batra for AY 2007-08. 8. The next common issue that arises in the case of Shri Chaturb .....

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states (P) Ltd were found. The assessees submitted that they did not receive the payments against the said proforma invoices, since the relevant sales did not fructify. It was submitted that the bills were prepared and kept in record for memory purpose. It was also submitted that these assessees are following cash system of accounting and hence the income, if any, will be accounted only upon receipt of cash. 9. The AO examined the director of M/s Vinita Estates (P) Ltd, who submitted that his co .....

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ee were not found to be satisfactory. Accordingly, the AO held that the income shown in the proforma invoices has been suppressed by the assessees and accordingly assessed the same. 10. In the appellate proceedings, the Ld CIT(A) confirmed the addition mainly on the reasoning that the assessees have suppressed the brokerage income received by way of cash. 11. We heard the parties on this issue and carefully perused the record. The admitted fact is that both the assessees as well as M/s Vinita Es .....

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ed the hands. At the time of hearing, the Ld A.R submitted that the relevant invoices are undated, unsigned and did not bear the acknowledgement of M/s Vinita Estates (P) Ltd. He further submitted that the director of the above said company as well as the accountant of the above said company has denied the transactions. He further submitted that the statement of actual brokerage given by M/s Vinita Estates (P) Ltd to the assessees herein was furnished to the AO and the assessing officer has not .....

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ncome stated in the proforma invoices has accrued to the assessees herein. 12. Thus, we notice that the assessing officer has made the addition by disbelieving the statements given by the assessees and M/s Vinita Estates (P) Ltd and also without bringing any material on record to show that the said statements are against the facts. There should not be any doubt that it would be difficult for anyone to prove a negative fact. As already noticed that the Ld CIT(A) has confirmed this addition only o .....

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his addition in the hands of the three assessees mentioned above. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete the addition made on this issue in the hands of the three assessees mentioned above. 13. We notice that the appeal filed by Shri Karan P Batra, the above said two common issues only have been agitated. Since we have decided boththe above said issues in favour of the assessee, the appeal filed by Shri Karan P Batra stands allowed. 14. Now we .....

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located in Chinar, Rajrishi, Powai and Kandivali was found. The details noted in the document were (a) extent of the flat; (b) the price per Sq.ft. of the flat and (c) some amount. The AO noticed that the amount stated in the paper works out to 2% of the value of the flat. Accordingly, the AO tabulated his workings of commission income in pages 84 and 85 of the assessment order and the aggregate amount of commission income was arrived as under:- Chinar, Rajrishi, Powai & Kandivili propertie .....

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ngly reported that credit for ₹ 32,18,050/- needs to be given. The Ld CIT(A) also appreciated the casting error pointed by the assessee. Accordingly, he gave relief of ₹ 36,63,050/- (Rs.32,18,050/- + ₹ 4,45,000/-) and confirmed the balance amount of ₹ 37,30,690/-. 14.3 The Ld A.R submitted that the assessee has accepted the addition on this account only to the extent of ₹ 12,50,000/- over and above the amount of commission accounted for by the assessee. He submitted .....

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account should be restricted to ₹ 12,50,000/-. 14.4 On the contrary, the Ld D.R submitted that the submissions made by the assessee with regard to the non-receipt of commission income and non-completion of the transactions are not supported by any material. 14.5 We have heard the parties on this issue and perused the record. We notice that the assessee has accepted the addition to the extent of ₹ 12,50,000/-, out of the addition confirmed by Ld CIT(A). The assessee seeks deduction of .....

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.6 A perusal of the above said three entries would show that the properties mentioned in (a) and (b) refer to specific properties, since the area of 1180 Sft support the same. However, the property mentioned in (c) is having an extent of 20000 sq.ft. and the same may not be referring to any specific property, since the area of 20,000 sq.ft. appears to be an estimated area. Before the AO, the assessee has submitted that all the three entries refer to a property under litigation, since the forest .....

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e assessee could not confirm that the amount of ₹ 17,63,000/- refers to the disputed property. We notice that the assessee has filed a confirmation letter from the developer of land, wherein the developer has accepted the submissions made by the assessee. 14.7 Thus, we notice that the Inspector deputed by the AO to verify the plot has accepted the fact that the land that is going to be developed was a forest land and the same was under dispute. However, he has simply stated that the assess .....

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ransactions did not materialize. 14.8 We notice that the assessee has identified the property located in Kandivali area, in respect of which the above said entries pertain to. He has furnished confirmation obtained from the developer to show that the said property could not be developed due to the litigation with the forest department. Thus, the assessee has shown that the said property was not developed at all and hence there is no question of sale of any flat and realization of any brokerage i .....

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pted the fact that the property was under dispute. Thus, we notice that the assessee has substantiated his claim and we find no reason to disbelieve the same. Hence we are of the view that the Ld CIT(A) was not justified in holding that the assessee has not adduced proper evidences to show that the transactions did not materialize. The presumption enshrined in sec. 132(4A) is a rebuttable presumption and, in our view, the assessee has rebutted the same. Accordingly, we are of the view that the L .....

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sessee filed these details, then the assessing officer could have made due enquiries to verify the submissions of the assessee. There should not be any doubt that the burden of proof to prove any claim for deduction lies upon the assessee. In our view, the assessee has failed to discharge the said burden and hence we have no other option, but to confirm the addition of ₹ 7,17,690/-. In the result, the addition on this issue is confirmed to the following extent:- Addition accepted by the as .....

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he amount drawn by the family members are less than the amount so estimated. Hence the AO made an addition of ₹ 6,89,332/-. Before Ld CIT(A), the assessee furnished the details of drawings, which was found to be higher than that computed by the AO. The assessee also submitted that the expenses relating to vehicle, telephone and servant relate to business. After obtaining remand report from the AO, the Ld CIT(A) expressed the view that there is no need to make further addition with regard t .....

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has further held that there is no requirement to make any addition. However, he has taken altogether different stand and has expressed the view that the expenses booked as business expenses shall have personal element and accordingly disallowed a sum of ₹ 1.00 lakh on estimated basis. The Ld CIT(A) has not brought on record as to how much expenses was booked by the assessee as business expense, even though the assessing officer has accepted the entire amount of business expenses claimed by .....

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. In the appeal filed by Smt. Varsha Batra, following individual issues are being contested:- (a) Investment in diamond jewellery 9,37,010 (b) Investment in gold jewellery 3,67,878 15.1 In respect of diamond jewellery Shri Chaturbhuj T Batra, the husband of the assessee submitted that jewellery worth ₹ 5.00 lakhs was received as gifts on family functions and the remaining jewellery of ₹ 4,37,010/- was received by Smt. Varsha Batra from her father. The assessee furnished certain bills .....

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ve basis in the hands of Shri Chaturbhuj T Batra. The Ld CIT(A) confirmed the additions made in the hands of Smt. Varsha Batra and accordingly deleted the protective addition made in the hands of Shri Chaturbhuj T Batra. 15.2 We heard the parties and perused the record. We notice that the gold and diamond jewellery were essentially claimed to have been accumulated over the years. However, the tax authorities did not accept the claim fully in respect of diamond jewellery. However, in respect of g .....

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ssessee that the jewellery was accumulated over the years. It is a known fact that the jewellery invariably forms part of investment plan in every Indian house hold and it also invariably form part of every festival, marriage and other family functions. Hence the claim of the assessee that the jewellery was accumulated over the years could not be altogether ruled out. The circular no.1916 dated 05-05-2014 also supports the said view. However, it is pertinent to note that the said circular was is .....

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ng of jewellery to that extent by the assessees herein appear to be reasonable. Accordingly, we are of the view that there is no necessity to make any addition in respect of gold jewellery. In respect of diamond jewellery, we notice that the claim of the assessee that jewelleries worth ₹ 4,37,010/- was received at the time of her marriage was rejected only on the reasoning that the bills produced in support of the said claim was not reliable. It is pertinent to note that the bills pertaini .....

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hat diamond jewelleries worth ₹ 5.00 lakhs were received on various occasions, we notice that the assessee has failed to furnish the details of functions, festivals, name of donors etc. However, one can note that receiving of gifts at the time of festivals and functions is quite common. Further, the assessees herein have also filed income tax returns over the years. Hence, on a conspectus of the matter, we are of the view that the addition on account of diamond jewellery may be restricted .....

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lescoping benefit given by the Ld CIT(A). The Ld CIT(A) had confirmed the addition relating to cash component of brokerage and gave telescoping benefit against the addition relating to diamond and gold jewellery, since the income generated would be available to make investments. In the preceding paragraphs, we have deleted the addition relating to cash component of brokerage and sustained the addition relating to diamond and gold jewellery to the extent of ₹ 1.50 lakhs. Hence both the issu .....

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s contesting following individual issues:- (a) Addition towards household expenses - ₹ 1.00 lakh (b) Addition towards unexplained bank deposits - ₹ 1.00 lakh (c) Addition towards unexplained cash deposits - ₹ 0.65 lakh (d) Addition relating to sundry loans and advances - ₹ 9.20 lakhs 17.1 The first issue relates to the addition made by the AO towards house hold expenses. The addition made by the AO was reduced to ₹ 1.00 lakh by Ld CIT(A). We have considered an ident .....

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d Shri Premkumar T Batra is partly allowed. 18. In the appeal filed by the revenue in the case of Shri Premkumar T Batra, the revenue is contesting the telescoping benefit given by the Ld CIT(A). Since we have decided all the issues individually, the telescoping benefit given by Ld CIT(A) gets automatically vacated. Accordingly, the appeal of the revenue is liable to be dismissed. Even otherwise, the tax effect involved in respect of this addition is less than ₹ 10.00 lakhs and hence the a .....

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