9911796707
TMI Blog1998 (11) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 1989-90 Rs. 75,563 Rs. 1,16,563 1990-91 Rs. 80,461 Rs. 1,23,461 1991-92 Rs. 53,981 Rs. 31,95,984 1992-93 Rs. 60,851 Rs. 1,18,851 1993-94 Rs. 2,47,332 Rs. 2,87,332 1994-95 Rs. 12,71,400 Rs. 14,48,512 1995-96 Rs. 12,75,385 Rs. 17,74,129 1996-97 Rs. 32,76,529 Rs. 38,07,015 1997-98 Rs. 1,08,19,344 Rs. 1,26,74,287 Till 18-12-1996 Total Rs. 1,72,61,405 (Sic) Rs. 2,37,14,690 ₹ 64,53,285 3. The addition made under various heads are challenged as under :- ADDITION ON ACCOUNT OF BENAMI INVESTMENT IN PROPERTIES AT BANGALORE 3.1 During the course of search, an agreement (Annexure A-1) was seized from the premises of the assessee. The agreement was between one, Mrs. Pushpa Rawal and Mrs. Kiran Mohan, elder sister of assessee's wife, Smt. Karuna Dhawan (alias Lali) and related to 9 shops in Shopping Arcade, TCM Road, Bangalore. As per the terms of the agreement, M/s Mandlia Developers were constructing Shopping Arcade at Bangalore and Mrs. Kiran Mohan had purchased 9 shops in the said Arcade for a total consideration of ₹ 31 lakhs. The agreement was signed by Mrs. Pushpa Rawal as Managing Director of M/s Mandlia Developers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing observations to justify the addition in the hands of the assessee :- "Even if, for a moment, it is presumed that the investment was made by Smt. Kiran Mohan and not by the assessee, the said agreement should have been kept with Smt. Kiran Mohan and could not have been recovered from the custody of the assessee during the search. Making undisclosed investment by paying so much unaccounted cash makes the deal shady and secret. The only available evidence for such undisclosed transaction can be a document signed by both the parties and only the genuine investor will keep it safely with him for any future eventuality." (vii)The presumption of correctness of entries under section 132(4A) was invoked by the learned Assessing Officer. He further observed that there was no evidence on record which might prove the financial capacity of Mrs. Kiran Mohan. Except stating that she was assessed at Delhi, no evidence of return or income was filed before him. (viii)The Assessing Officer also relied on anomalies and contradictions regarding destruction of copy of agreement from statement of Mrs. Pushpa Rawal and Mrs. Kiran Mohan. 3.3 Taking into account above circumstances with e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and oral evidence clearly establish that Mrs. Kiran Mohan invested sum of ₹ 31 lakhs in purchase properties at Bangalore on 29-2-1992. By no stretch of imagination and from the record, an inference can be drawn that the assessee invested ₹ 31 lakhs in purchase of shops. With utmost humility and respect, we say that the Assessing Officer did not make out any case to establish that the assessee is benami owner of properties in question or investment was made by him. Even suggestion to that effect was not made by the Assessing Officer while examining the witnesses. This is clear from the following questions put to Mrs. Pushpa Rawal and her answers :- "Q. 5. When the agreement was prepared and who had arranged the witnesses ? Ans. The agreement typed on stamp paper brought by Mrs. Kiran Mohan on which I put my signature. The witnesses at Srl. Nos. 2 & 3 of agreement were also brought by Mrs. Kiran Mohan. Q. 6. How many copies of the agreement were prepared ? Ans. There was only one original copy of the agreement. I was give a xerox copy and the original was retained by her. Q. 7. When the possession of these shops was given to Mrs. Kiran Mohan ? Ans. As the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned i.e. Mrs. Kiran Mohan, happens to be my sister who lives in Delhi, and she will own the papers. Q. No. 8 How do you get the business for the Dee Dee Edits ? (not relevant)" Evidently, the case is being made on the basis of "presumptions" under the Evidence Act. A layman not having knowledge of Evidence Act cannot reasonably be expected to say that presumptions raised against him/her in the question are wrong. But we do not know how when name of the purchaser is specifically recorded in the agreement, any presumption of ownership can be raised against the assessee. At any rate, above statement on oath rebuts the presumption and shifts the onus on the revenue to prove that the assessee was benamidar of the property and had made the investment. 6. As already noted, the revenue has not established that the assessee is in control and possession of the property. The statements of Mrs. Pushpa Rawal and Mrs. Karuna Dhawan on oath clearly establish the contrary. The conduct of the parties relating to the property has also not been examined to show that test laid down by their Lordships of the Honourable Supreme Court for holding a person benamidar is satisfied i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quot; 9. It is clear from the above that she did not deny having made payment to Mrs. Pushpa Rawal but took a stand that deal was cancelled and original agreement was torn off. The agreement seized might have been kept by Mrs. Rawal. This statement, of course, is against other material available on record and, therefore, cannot be accepted. 10. The third important related question raised by the Assessing Officer is that clear evidence of capacity of Mrs. Kiran Mohan to make the disputed investment was not shown. Against this, during the course of hearing, the learned counsel for the assessee brought to our knowledge assessee's letter dated 5-1-1998 filed before the Assessing Officer to the effect that Mrs. Kiran Mohan had made a disclosure under the Amnesty Scheme and that disclosure covers ₹ 31 lakhs in dispute. The above evidence clearly established the capacity of Mrs. Kiran Mohan to make investment in question. Our attention was also drawn to the copy of certificate accepting disclosure in the hands of Mrs. Kiran Mohan placed at page 45 of the paper book. As per the said certificate issued by the Commissioner of Income-tax, Delhi-VIII, New Delhi, Mrs. Kiran Mohan has di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above fact alone cannot be treated as conclusive or irrefutable to hold that the assessee as a benamidar of Mrs. Kiran Mohan. The relative importance of this fact is to be taken with other documentary and oral evidences available on record. Therefore, on consideration of all circumstances, we find it difficult to accept the case made out by the revenue. The possession of agreement has also been reasonably explained. Therefore, in our opinion, the Assessing Officer was not justified in making addition of ₹ 31,00,000 as 'income from undisclosed income'. The same is directed to be deleted. 12. In the next ground of appeal, the assessee has challenged the addition through disallowance of fees of ₹ 2,50,000 paid for acquiring membership of Otters Club. 12.1 The Assessing Officer was of the view that the assessee is a famous director and, therefore, he does not need membership of any club for professional or business purposes. He need not take anybody to the club as producers all around are always ready to take him to clubs. He, therefore, disallowed the fees paid and treated the same as 'Income from undisclosed sources'. 13. The learned counsel for assessee drew our atten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that the assessee earned substantial income only from assessment year 1994-95 onwards. Upto assessment year 1992-93, the income of the assessee ranged between ₹ 50,000 to ₹ 80,000 approximately. Having regard to the above figures, the withdrawals shown are quite reasonable. The Assessing Officer was not justified in applying the yard stick of latest year when income was shown at more than one crore in earlier years, when admittedly professional income ranged from ₹ 50,000 to ₹ 80,000. From assessment years 1993-94 onwards, the wife of assessee had also contributed to household withdrawals. If those figures are taken into account, the withdrawal cannot be said to be inadequate. Without material to show that the assessee made unexplained investment or incurred unexplained expenditure, we are unable to hold that assessee earned and spent undisclosed income. The addition made in the above background is deleted. 18. In the next ground of appeal, the assessee has challenged restriction of deductions under section 80RR to ₹ 5,72,000, ₹ 5,84,736 in place of ₹ 7,03,757 and ₹ 6,66,750 claimed by the assessee in assessment years 1994-95 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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