TMI Blog2016 (5) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... elied on the orders of authorities below. In view of above, we are inclined to reverse the order of the lower authorities and assessee’s ground is allowed.- Decided in favour of assessee. Addition of interest income being 10% of investment in the hands of his wife i.e. Amita Puri - Held that:- Out of the total amount of ₹ 26,84,104/- the investments are only to the extent of ₹ 6,09,171/- the rest are being receipts, expenditure and interest received. Tax has already been paid on the interest income received on the matured investments and this was offered to tax in the year such income was received, the details of which are given under the Chart for A/.Y. 2002-03 titled “TABULAR EXPLANATION OF INTEREST REFCEIVDED AND OFFERED TO TAX” which may be seen for AY 2002-03. In view of this, there is no question of payment of interest of ₹ 1,61,638//-. It is urged that this addition of interest may kindly be deleted. From the above we find that the wife i.e. Amita Puri of assessee has declared the income in her hand. The necessary details have also been furnished in the form of paper which is placed on record. In view of above we are inclined to reverse the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween maturity values of earlier investments to purchase the listed alleged investments, although the AO in the Remand Report dated 14/02/2011 at para 5 conducted detailed examination of various documents, evidence consequently recommended for deletion of the addition of ₹ 49,50,127/-. (3) The L d CIT(A) did not consider the repeated multiple additions, once in the relevant Asst. Year when such investments were purchased and again in the year of maturity when matured amounts were being deposited in the bank accounts. (4) The L d CIT(A) erred in confirming the addition made by the L d AO which was based on surmises, suspicion conjecture as evident from para 14 of the Asst. Order. (5) The L d CIT(A) erred in confirming the addition The L d AO (a) on the basis of non existent investments On the basis of investments listed twice in the Asst. Order. (6) The L d CIT(A) erred in confirming the addition made by the L d AO at the hands of the appellant being income declared by two major daughters of ₹ 3,63,470/- ₹ 1,74,109/- by Neha Puri Divya Puri, respectively (originally assessed on protective basis in daughters hand), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the search party which were handed over to the Department of Income Tax. The AO examined the seized documents and found various deposits, investments in the name of assessee, his wife, Amita Puri, his daughters Divya Puri and Neha Puri and details of such investment / deposits are tabulated and reproduced below:- Sl No. Description V.K.Puri Amita Puri Divya Puri Neha Puri 1 D-141 page 1521 UTI Bank Ltd. Pune, 30.06.01 31.03.02 65,995 65,995 65,995 2 Page 220 Syndicate bank Intt. 112/-, 9,399/-, 145, 65,286/-, 58,727/-, 19,586/-, 42,630/-, 8/-, from 09.07.01 to 21.03.02 1,95,893 3 D-299 Syndicate VCCC No.45546 01.12.01 42,000 4 D-331 DHFC Bank 01.04.01 to 31.03.02 5,27,489 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.05.01 78,417 78,417 20 D-156 page 1573 UTI Bank Ltd. 984263, 984270, 08.09.01 42,000 40,000 21 D-70 / D-71 page-1511 CBI C 250310, 309 TDR 30.04.01 40,000 40,000 22 Page 1321 Syndicate Bank 07.03.02 2,02,392 23 Page 1285 SBI Statement 01.04.01 to 31.03.02 A/c No. 031142, 140 42,892 5,91,401 42,892 24 D-187 The Cosmos Coop B. Ltd. page 1279 10.06.01 42,000 25 D-436 to 446, 448, 449 AND Deposits Union Bank of India 03.05.01 to 09.02.02 1,57,343 26 D-168 10.04.02 HDFC 1264 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment in the name of assessee, his wife and his two daughters for the amount of ₹ 49,50,127/-. The AO sought the clarification from the assessee for the source of investment. The assessee failed to attend the hearing but made a reply of the show cause notice. However the reply was not substantiated with the supporting evidence. In the present case the assessment was getting the time barred, so the AO had no alternate but to frame the assessment u/s 144 of the Act to the best of his judgment. Accordingly, AO treated the entire investment / deposit as unexplained income of the assessee and added the amount of ₹ 49,50,127/- to the income of assessee. 5. Aggrieved, assessee preferred an appeal before Ld. CIT(A) where the assessee submitted that the investments and fixed deposits which have added in the assessment year 2002-03 are from the proceeds of the earlier year investments which were originally invested during the period September 1992 to January 1995. It was further submitted by the ld. AR that the source of making the investment during the period from September 1992 to January 1995 was the sale proceeds of 20 Kg gold and 197 Kg. silver. The wife of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... save himself from the provisions of Anti Corruption Law after detection of his undisclosed assets by the CBI. He has been a senior officer of Custom and Central Excise service, Govt. of India. The gold and silver items as claimed to have been sold were never disclosed, either before the Income Tax Department or before the employer Department. The failure on the part of the appellant and his wife in not disclosing the investment to concerned authorities shows bogus nature of sale of jewerllery. The fraudulent nature of the bills fabricated for the alleged sale of jewellery has also been established. The alleged sale of gold and silver items goes to the root of source of investment and the appellant has never been able to substantiate it. When the root of the source of the funds itself is unexplained, its reinvestment in the form of cash in the several banks and companies is false and unrealiable. The appellant has also tried to save himself by creating a design to shift his income in the hands of his wife, Smt. Amita Puri. It is well settled principle of law that if income belongs to A , it ought to be taxed in the hands of A , not in the hands of B unless A is minor. Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48000 27.3.99 27.3.02 68489 S. No.1 The AO of Amita Puri has already accepted the investments of ₹ 48,000/- each in the names of Amita Puri and V.K. Puri as belonging to Amita Puri and has charged interest in both cases in the hands of Amita Puri, which has been confirmed by Ld. CIT(A) and the Tribunal and implemented by the Department. Refer serial Nos. 66 and 67 at page 27 in which interest on two FDs in the name of V.K. Puri Mrs. Amita Puri were included on cash basis by Amita Puri and included in computation of income at page 23 and same referred to order of ACIT at pages 50 to 52 of assessee s paper book. This amount in the name of Neha Puri has been held by the Ld. CIT(A) Raipur as belonging to her and the interest income on this investment of ₹ 48,000/- has been taxed in her hands on substantive basis, which has been upheld by the appellate authority. This amount was also added by AO to the income of Neha Puri for AY 2002-03 as investment being from undisclosed source. Such addition was deleted by Ld. CIT(A), Raipur vide order dated 05.11.2007. Same referred to pages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22to 27 50 to 53 ( See Sl. No. 10, 63 to 63 at page 26-27.Interest amount of ₹ 13,727/- from VCC No. 47977 (which was in the name of Neha Puri was offered to tax by Neha Puri at Sl. No.2 page 55, in the computation of income and was assessed in her hands, interest income of ₹ 3,03,470/- was held by the Ld. CIT(A), Raipur as assessable on substantive basis in the hands of Neha Puri refer at page 63 of Ld. CIT(A) order. Similarly the details of all the investment were duly explained in the submission of the assessee which is placed on record. On the other hand the ld. DR relied on the order of authorities below. 7. From the aforesaid discussion we find that the AO has made various additions of undisclosed FD in the hand of the assessee by framing the assessment under section 144 of the Act. The AO got the information of undisclosed FD/investment as a result of search of CBI at the premises of the assessee. All the addition were confirmed by the ld. CIT(A). However before us the ld. AR has submitted all the necessary supporting documents justifying the source of the investment/ FD that they were carried forward from the earlier years. In view of above we are inclined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he argument of ld. AR. and simply relied on the orders of authorities below. In view of above, we are inclined to reverse the order of the lower authorities and assessee s ground is allowed. 12. Third issue in this appeal of assessee is as regards to Ld. CIT(A) erred in confirming the action of Assessing Officer in adding the amounts of ₹ 4,82,953/- and ₹ 1,12,000.00 once again in the hands of assessee in spite of the fact that similar additions were made in the hands of both the daughters of assessee though their (daughters) returns filed independently and income have been held on substantive basis. 13. At the outset, the ld. AR submitted the above income belonging to the daughters of the assessee has been assessed in their individual hands on sustentative basis and our attention was invited on pages 57-63 73-77 where the ld. CIT(A), Raipur order copies are placed. In view of above we are inclined to reverse the order of the lower authorities and ground of assessee is allowed. 14. Forth issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of AO by making the addition of interest income of ₹ 1,61,638/- being 10% of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us. 17. We have heard both the parties and perused the materials available on record. Before us the ld. AR submitted that in the chart discussed above, the investments have been shown as amounting to ₹ 16,16,386/- in the hands of mita Puri . The AO has added estimated interest on accrual basis @ 10% of ₹ 1,61,638/-. In this context, it is firstly submitted that the assessee and all the members of his family maintain accounts on cash basis and drawn our attention to the order of ITO 31(3), Kolkata in respect of Amita Puri at pages 50-53 of paper book-1 for A.Y 2002-03. Secondly, out of the total amount of ₹ 26,84,104/- the investments are only to the extent of ₹ 6,09,171/- the rest are being receipts, expenditure and interest received. Tax has already been paid on the interest income received on the matured investments and this was offered to tax in the year such income was received, the details of which are given under the Chart for A/.Y. 2002-03 titled TABULAR EXPLANATION OF INTEREST REFCEIVDED AND OFFERED TO TAX which may be seen at pages 296-301 of paper book-II for AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged investments, although the AO has stated in the remand report dated 14/02/2011, at para 3 thereof, that he conducted detailed examination of various documents and evidence contained in the paper book consequently recommended for deletion of the addition of ₹ 26,84,104/- (3) That the L d CIT(A) erred in confirming the addition of ₹ 63,860/-, ₹ 19,160/- ₹ 26,547/- aggregating ₹ 1,09,567/- (and being part of ₹ 26,84,104/-) listed at serial 6 8 of part 2 of Tabular Chart made in the Asst. Order, despite the AO having found in remand report that these were non existent bank accounts. (4) That the L d CIT(A) erred in ignoring addition mistake ₹ 4,98,800/- in the Asst. Order, as the addition should have been ₹ 21,85,304/- instead of ₹ 26,84,104/- comprising all alleged investments bank deposits listed in the 144 / 147 order. (5) That the L d CIT(A) was wrong in confirming the addition of ₹ 10,23,864/- (but excluding salary), as part of ₹ 26,84,104/- being made by the AO on the basis of entire credit summation in those alleged bank accounts, despite all credits were explained found consistin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Shri V.K. Puri Smt. Amita Puri Kum. Divya Puri! Kum. Neha Puri 1 D-434 ICICI Banking Corpn. Ltd. Mumbai FD No. 045123 24 Dt. 26/04/1996 15,000 15,000 2. D-293 Syndicate Bank, Connaught Circle N. Delhi FX 57212 23 Dt. 06/05/1996 25,000 50,000 3. D-504 Saurashtra Cement Ltd., Mumbai 6000066, 67, 68, 69 Dt. 24.07.96 11,000 11,000 11,000 11,000 4. D-582 Modern Terry Threada Ltd., Jaipur FDTL 81000, 01, 02, 03 Dated 12.08.96 11,000 11,000 11,000 11,000 5. D-531 Cromption Greaves Mumbai 767074, 86, 98, 767103 Ddt. 21.08.96 11,000 11,000 11,000 11,000 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000279, 280, 281 282 Dt. 30.10.96 11,000 11,000 11,000 11,000 19. D-542 Clariant India Ltd. Mumbai CF 800100104, 101, 800099 Dt.31.10.96 11,000 11,000 11,000 11,000 20. D-541 Kirloskar Pncunatic Co. Ltd. A 64996, 97, 98 655020 Dt. 11.11.96 11,000 11,000 11,000 11,000 21. D 308 PNB Dehradum FD 2559 Dt. 14.03.97 50,000 22. D-557 Zee Telefilm Ltd. FD 6000157, 156, 155, 154 Dt. 25.03.97 11,000 11,000 11,000 11,000 23. D-621 IL FS Ltd. Mumbai, FD 00144548, 459, 460, 461 Ddt. 31.03.97 11,000 11,000 11,000 11,000 24. D-620 Bharat Petroleum Corpn. Ltd. Mumbai TD No. 636793, 795, 796 797 D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated the entire investment / deposit as unexplained income of the assessee and added to the amount of ₹ 26,84,104/- to the income of assessee. 22. Aggrieved, assessee preferred an appeal before Ld. CIT(A) where the assessee submitted that the investments and fixed deposits which have added in the assessment year 1997-98 are from the proceeds of the earlier year investments which were originally invested during the period September 1992 to January 1995. It was further submitted by the ld. AR that the source of making the investment during the period from September 1992 to January 1995 was the sale proceeds of 20 Kg gold and 197 Kg. silver. The wife of the assessee, Mrs. Amita Puri received the gold and silver from her father Mr. Inder Sain Puri. However the ld. CIT(A) disregarded the claim of the assessee by observing as under : 1) No evidence was produced before the AO to establish the nexus or immediate connection between maturity value and primary/ original investment. 2) The appellant failed to substantiate the sources of funds wherefrom the original investment was made or investment made from his disclosed sources of income. 3) No evidence that the father o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of the bills fabricated for the alleged sale of jewellery has also been established. The alleged sale of gold and silver items goes to the root of source of investment and the appellant has never been able to substantiate it. When the root of the source of the funds itself is unexplained, its reinvestment in the form of cash in the several banks and companies is false and unrealiable. The appellant has also tried to save himself by creating a design to shift his income in the hands of his wife, Smt. Amita Puri. It is well settled principle of law that if income belongs to A , it ought to be taxed in the hands of A , not in the hands of B unless A is minor. Income must be taxed in the hands of the person to whom it has accrued and to whom it really belongings. Therefore, the appellant cannot be allowed to take shelter behind the income of any other person. In absence of any disclosure of assets/income in IT/WT returns, the claim of the appellant regarding sale of gold and silver items cannot e accepted. If it is accepted then any person can be able to convert his black money into white by just claiming that he has sold gold and silver without producing any documentary evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us the ld. AR has submitted all the necessary supporting documents justifying the source of the investment/ FD that they were carried forward from the earlier years. It was also submitted by the ld. AR that the total of all the undisclosed investment is coming for an amount of ₹ 21,85,304/- and not ₹ 26,84,104/-. The ld. AR also prayed for the rectification of the mistake which is placed on page 352 to 359 of the second paper book. In view of above we are inclined to reverse the order of the lower authorities and assessee s ground is allowed. 25. Sixth issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of AO by making the addition of interest income of ₹ 2,68,410/- being 10% of investment of ₹ 26,84,104/- in the hands of his wife i.e. Amita Puri. During the course of assessment proceedings AO has added a sum of ₹ 26,84,104.00 as undisclosed investment but the assessee did not offer any interest income in the year under consideration. As the above investment has been included as undisclosed income of the assessee, therefore the interest accrued on such investment also needs to be included in the income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails of which are given under the Chart for A/.Y. 1997-98 titled TABULAR EXPLANATION OF INTEREST REFCEIVDED AND OFFERED TO TAX which may be seen at pages 336-343 of paper book-II for AY 1997-98. In view of this, there is no question of payment of interest of ₹ 2,68,410/-. It is urged that this addition of interest may kindly be deleted. From the above we find that the addition of the above said amount of ₹ 26,84,104.00 has been deleted in the first issue raised by the assessee. Similarly and in view of above we are inclined to reverse the order of the lower authorities and ground of assessee is allowed. 28. The seventh issue raised by assessee in this appeal is that ld. CIT(A) erred in further enhancing the interest income of ₹ 4,86,480/- and ₹ 6,70,567/- though the same has already been taxed in the hands of Amita Puri wife of the assessee. 28.1 The ld. CIT (A) has enhanced the interest income in the hands of the assessee for the deposits made in the FD and in the company deposit on basis of remand report received from the AO. This interest income was not disputed by the AO at the time of assessment. However the ld. AR of the assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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