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2016 (5) TMI 233 - ITAT KOLKATA

2016 (5) TMI 233 - ITAT KOLKATA - TMI - Additions of undisclosed FD - Held that:- 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 invest .....

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same has been taxed in their individual names on substantive basis. The ld. DR has not brought anything on record contrary to the 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.- 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 S .....

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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 lower authorities and ground of assessee is allowed.- Decided in favour of assessee.

Enhancing of interest income thou .....

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paper book where the copy of the assessment order was placed. The ld. DR at the time of hearing did not bring anything on record contrary to the submission of the assessee. We find that the addition of the interest income in the hands of the assessee will amount to double tax. - Decided in favour of assessee. - ITA No. 1904-1905/Kol /2012 - Dated:- 5-2-2016 - Shri Mahavir Singh, Judicial Member And Shri Waseem Ahmed, Accountant Member For the Appellant : Shri P. K. Mimmatsinghka, AR For the Resp .....

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me assessee, therefore they are clubbed and heard together and passing a consolidated order for the sake of convenience. First we take up ITA No. 1904/Kol/2012 for A.Y 02-03. 3. Assessee has raised following grounds of appeal:- (1) That under the facts & circumstances of the case, the intimation of preceding u/s. 147 read with Sec. 148 of the I.T. Act is vague, arbitrary, bad in law and beyond the provision of law and therefore reopening proceeding is liable to be quashed. (2) That under the .....

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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 addi .....

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on substantive basis at the hands of respective daughters. (7) The L d CIT(A) erred in adding the amounts of ₹ 4,82,953/- and ₹ 1,12,000/- once again in the hands of appellant in spite of the fact that similar additions were made in the hands of major daughters Neha Puri & Divya Puri, respectively, who were submitting their income tax returns independently and whose income have been held on substantive basis, and these two additions were deleted by their appellate authorities fo .....

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ome at the hand of the appellant will tantamount to double taxation. (9) The L d CIT(A) erred in enhancing the assessment by further adding interest incomes of ₹ 4,6,048/- and ₹ 64,552/- which is unjustified, arbitrary and beyond the provision of law, since the same has already been taxed in the hands of Amitra Puri, the wife. (10) The L d CIT(A) was wrong in relying upon the 2nd Remand Report dated 12/09/2012, which was framed without any detailed examination of the various document .....

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ral Government employee in Central Excise Department. There was a search operation conducted at the residence of assessee in Mumbai by the Central Bureau of Investigation (CBI for short) on dated 20-02-2002. As a result of search, various documents such as FDRs, TDRs, Bank passbook were seized 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 d .....

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tock Holding Corpn. 09.10.01 60,000 6 05.10.01 1561 page - do- 3,00,000 7 D-178 page 1485 GTBL 10.09.01 22005113386, 87, 88 40,000 40,000 40,000 40,000 8 D-139 page 1359 Indusind Bank 12.09.01 TDR No. 504340002 / 287625 1360 / 287626 42,000 42,000 9 D-169 A/c No. 0018910 HDFC 09.04.01 59,652 10 -do- 19368 59,652 11 D-206 LIC 04.06.01 P-1805 to 1812 dt. 15.06.01 61,907 12 D-419 DD.No. 36323, 316398 NIFT 28.06.01 09.01.02 D-395 31652 dt. 08.05.01 D-418/4 DD ₹ 500 25,000 55,000 30,000 13 D-15 .....

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4270, 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 65,381 Total 49,50,127 27,38,788 16,16,386 1,12,000 4,82,953 The AO found that the asses .....

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place to another during the proceedings of income tax therefore the assessee failed to attend the hearing. However the AO sought the clarification on the facts revealed from the seized documents. The assessee submitted a reply vide letter dated 10.03.2005 but no corroborative evidence was furnished in support of his claim. The assessee being a central govt. employee was posted at Raipur at the time of assessment so he could not attend the assessment proceedings personally to defend his case. At .....

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. CIT(A) has enhanced the income of the assessee as detailed below : vi) Income from interest 4,36,048.00 vii) Income from interest 64,552.00 Now let us take the specific grounds of appeal raised by the assessee 4. First ground raised by assessee in this is that Ld. CIT(A) erred in confirming the action of Assessing Officer by making an addition of ₹ 49,50,127/- on account of undisclosed investments / deposits in his bank. The AO during the course of assessment found that the income declar .....

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, 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 investment .....

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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 of Mrs. Amita Puri was the man of means. No gift deed was filed. The jewellery was never disclosed in the return of income or wealth tax return. 4) No declaration was filed under gold control Act. .....

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employee and Shri Dinesh Vyas in June-July, 2002, i.e., after the registration of R.C. against the assessee, his wife Smt. Amita Puri, and Shri Vinesh Vyas u/s. 120B, 104, 193 of IPC r.w.s. 13(2), 13(10)(e) of Prevention of Corruption Act, 1988, with the court of Special Judge, Patiala House Courts, New Delhi on 30.01.2004. 8) During the first round of appeal the then Ld. CIT(A) had issued summons to the principal officer of Shree Ambika Jewellers. However, the summons was not complied with. The .....

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ng Officer that the story of sale of jewerllery is only a concocted story and only an afterthought. The story of sale of jewellery has been floated by the appellant only to 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 emp .....

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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 a .....

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onfirm the additions on account of investment of ₹ 26,84,104/- for Asstt. Yr. 1997-98 and ₹ 54,87,706/- for Asstt. Yr. 2002-03. Being aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us. Shri P.K.Himmat Singhka Ld. Authorized Representative appearing on behalf of assessee and Shri Alak Nag, Ld. Departmental Representative appearing on behalf of Revenue. 6. We have heard rival contentions of both the parties and perused the materials available on record. L .....

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the assessee, his wife and one daughter - Neha Puri. The ld. AR drew our attention to pages 115 to 117 of the paper book where it was seen from the bank statement that a sum of ₹ 48,000.00 each were deposited in FD account in the above three names on dated 26.3.1999. These FD got matured on 27.03.2002 for gross amount of ₹ 68,459/- (Net after TDS ₹ 65,995/-) This FD was disclosed to the income tax department in the statement of affairs of Amita Puri as on 31.3.2001 at page 31 o .....

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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. Thi .....

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Bazar, Delhi which is placed on page 119 of the paper book. The amount of ₹ 112/-, 145/- & 8/- are interest received in SB a/c and tax has been paid by Amita Puri as a part of interest of ₹ 3705/- which is placed at page 28 of the paper book. As seen from Bank statement, ₹ 9,399/- relates to Vikas Cash Certificate (for short VCC) of Syndicate Bank 45546, VCC 45546 was invested for ₹ 35,000/- on 21.08.1998 which matured on 21.11.2001for ₹ 51,399/- which is placed .....

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was invested for ₹ 45,000/- on 08.05.1999 which is placed at page 122 and pre-maturely cashed on 11.03.2002 for ₹ 58,727/- amount credited in SB a/c. As seen from Bank statement, ₹ 19,586/- relates to VCC 47972, VCC 47972 was invested for ₹ 15,000/- on 06.05.1999 which is placed at page 123 of Paper Book and pre-maturely cashed on 11.03.2002 for ₹ 19,586/- amount credited in SB a/c. As seen from bank statement ₹ 42,630/- to VCC 56068,VCC 56068 for ₹ 42,0 .....

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C 47972 and ₹ 630/- relating to VCC 56068, were offered to tax by Amita Puri and assessed in her hands. Refer pages 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 .....

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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 to reverse the order of the lower authorities and assessee s ground is allowed. 8. Second issued raised by assessee is as regards to Ld. CIT(A) erred in confirming the action of .....

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rse of assessment proceedings of Mr. V.K. Puri the AO found several Investments/FDs in the name of assessee, his wife and his daughters which were not disclosed for the taxation purpose. The AO treated all the undisclosed investments/ FDs as the income of the assessee. Accordingly the AO opined that the income shown by the daughters of the assessee in actuality is the income of the assessee and it has just been routed through their accounts to avoid the tax liability. Therefore the AO added the .....

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e basis and the copy of the order is placed at page 63 of the Paper Book. Similarly the Hon ble ITAT Nagpur in the case of Divya Puri has treated the income in her own hand on substantive basis and the copy of the order is placed at page 104 of the Paper Book. On the other hand the ld. DR relied on the order of authorities below. 11.1 From the aforesaid discussion we find that income declared by the daughters of the assessee in their respective hand were taxed in the hands of the assessee on sub .....

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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 at .....

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sessment proceedings AO found from the seized documents that a sum of ₹ 16,16,386/- was invested in the name of Amita Puri, wife of assessee. The assessee has declared interest income for an amount of ₹ 86,171/- in his hands but provided no information of accrued interest on the amount found in the name of his wife. 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 .....

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rt. As the addition of undisclosed investments have been upheld, it is concluded that addition of the income earned on such investments is justified in law. Hence the addition of ₹ 2,68,410/- (for AY 97-98) and ₹ 1,61,638/- (for AY 02-03) made by Assessing Officer are confirmed. Further, on the basis of submissions before me, I am inclined to agree with the views of the AO that in accordance with the provisions of law three fourth of interest received from Company Deposits i.e. ͅ .....

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- by way of bank FD interest and a sum of ₹ 64,552/- by way of interest in Company deposits. With aforesaid direction the additions made by the Assessing Officer are confirmed for both the years. Accordingly, ground No. (viii) of the appeal of both years are dismissed. Being 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 discu .....

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,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 2002-03. In view of t .....

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al is that ld. CIT(A) erred in further enhancing the interest income of ₹ 4,36,048.00 and ₹ 64,552.00 though the same has already been taxed in the hands of Amita Puri - wife of the assessee. 18.1 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 asses .....

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interest income in the hands of the assessee will amount to double tax. Accordingly we reverse the order of the ld. CIT(A) and this ground of the appeal of the assessee is allowed. Coming to ITA No.1905/Kol/2012 for A.Y. 97-98. 19. Assessee has raised following grounds:- (1) That under the facts & circumstances of the case, the initiation of proceeding u/s. 147 read with Sec. 148 of the I.T Act is vague, arbitrary, bad in law and beyond the provision of law and therefore reopening proceedin .....

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amination 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 ban .....

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k accounts, despite all credits were explained & found consisting of TA, maturity of bank FD, loan from bank, GPF advance, transfer from one bank to another, etc. (6) That under the facts & circumstances of the case, the L d AO was wrong in estimating interest income ₹ 2,68,410/- @ 10% on the alleged investment of ₹ 26,84,104/- despite the fact that income was ordered to be determined by the ITAT, Mumbai on maturity of deposits in the hand of Mrs. Amita Puri where correspondi .....

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d remand report dated 12/-09/2012, which was framed without any detailed examination of the various documents & submissions and therefore suffers from injury, illegality and irrelevance. (9) That the L d CIT(A) erred in observing that additional evidence is not admissible despite paper books containing various documentary evidence were referred to the AO by him for examination in terms of the ITAT, Kolkata order dated 25/06/2010, thus rule 46A was complied with. 20. At the time of hearing Ld .....

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uch as FDRs, TDRs, Bank passbook were seized 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 minor daughters - Divya Puri and Neha Puri and details of such investment / deposits are tabulated reproduced below:- SL. No. Description Amount Shri V.K. Puri Smt. Amita Puri Kum. Divya Puri! Kum. Neha Puri 1 D-434 ICICI Banking Corpn. Ltd. Mumbai FD .....

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MR No. 133111, 12,13, 14 dated 23.08.96 11,000 11,000 11,000 11,000 7. D-581 Modern Syniex (I) Ltd. Jaipur FDSL 00652, 651, 653, 650 dt. 27.08.96 11,000 11,000 11,000 11,000 8. D-580 Modern Threade Ltd., Jaipur FD TL 810000 01, 02, & 03 Dtd. 04.09.96 11,000 11,000 11,000 11,000 9. D-667/VIP Industries Ltd., M9umbai FD 11219, 217,218, & 178 dated 07.09.96 11,000 11,000 11,000 11,000 10. D-562 Data Soft ware (ESSAR) Chennai WRNT No. 2488, 87, 86, 89 Dt. 25.09.96 6,110 6,110 6,110 6,110 11 .....

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a bank Tannand lane Bombay FDR LME 0818038 & 37 Dt. 23.10.96 50,000 50,000 17. D-219 Syndicate bank Dehradun Vikas Cash Certificate 232119, 20 Dtd. 29.10.96 50,000 50,000 18. D-586 Bharat Forgte Ltd. Pune 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 .....

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Bond Certificate No.55984 dt. 21.03.97 10,000 TOTAL 16,60,240 521,810 786,810 215,810 215,810 The AO found that the assessee has filed his return of income declaring income of ₹ 1,94,230/- for the relevant previous year. The AO observed huge difference between the income of assessee declared in the return and the investment / FD revealed from the seized documents. The AO also observed that the assessee did not attend the income tax proceedings at all and kept the matter lingering on one o .....

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reply admitting part of the investment but no evidence was furnished in support of his claim. The assessee being a central govt. employee was posted at Raipur at the time of assessment so he could not attend the assessment proceedings personally to defend his case. At the same time, assessment was getting time barred so AO had no alternate but to frame the assessment u/s 144 of the Act to the best of his judgment. Accordingly, AO framed the assessment under section 144 of the Act as under : i) .....

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ee 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 a .....

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at the father of Mrs. Amita Puri was the man of means. No gift deed was filed. The jewellery was never disclosed in the return of income or wealth tax return. 4) No declaration was filed under gold control Act. 5) The assessee Shri V.K. Puri never declared the said assets as per the CCS (Conduct) Rules, 1964. 6) Shree Ambika Jewelers was very small firm dealing in artificial jewellery and no such purchase of jewellery from Smt. Amita Puri was recorded in its books of accounts or its sales tax an .....

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, New Delhi on 30.01.2004 8) During the first round of appeal the then Ld. CIT(A) had issued summons to the principal officer of Shree Ambika Jewellers. However the summons was not complied with the appellant was also asked to produce him, however, he could not produce the principal officer before the then CIT(A). 22.1 In view of the above findings of the ld. CIT(A) upheld the action of AO by observing as under :- ….. I am of the considered view that this is a case where the appellant has .....

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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 allege .....

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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 .....

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erused the materials available on record. Ld. AR submitted two sets of paper books containing pages from 1 to 318 and also submitted written submission which runs from pages 1 to 45. Before us the ld. AR also submitted a chart in tabular form where the source of every FD and investment in respect of all the four persons i.e. assessee, his wife and two daughters was explained. For instance the AO added a sum of ₹ 15000.00x2= 30,000/- in the hands of the assessee as undisclosed income. But a .....

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.1996 page 309, all of UBI of Mumbai). The cash flow statement may be seen at page 283 of the paper book. The source of credits in these four SB accounts of UBI is given at page 234 of paper book. The total investment made in ICICI Bank on 26.04.1996 was at ₹ 1 lakh, which comprised these two FDs of ₹ 15,000/- each and two other FDs of ₹ 35,000/- each, which are not part of the present proceedings. Similarly the details of all the investment were duly explained in the submissio .....

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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 au .....

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s 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 assessee but there was no information of such income. So in the absence of any information, it was not possible to quantify the interest income with accuracy. Therefore AO presumed interest rate @ 10% and worked out interest income of ₹ 2,68,410/- and added to the total income of assessee. 26. Aggrieved, assessee pr .....

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fore me, I am inclined to agree with the views of the AO that in accordance with the provisions of law three fourth of interest received from Company Deposits i.e. ₹ 4,86,480/- needs to be added in the hands of Shri V.K.Puri along with bank FD interest of ₹ 6,70,567/- accordingly. Similarly for the same reasons the AO has suggested in the remand report that additions of ₹ 4,36,048/- on account of bank FD interest, and ₹ 64,552/- on account of interest on company deposits .....

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eferred second appeal before us. 27. We have heard both the parties and perused the materials available on record. Before us the ld. AR submitted that the assessee and all the members of his family maintain accounts on cash basis. Out of the total amount of ₹ 26,84,104/- the investments are only to the extent of ₹ 11,37,000/- 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 wa .....

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