TMI Blog2012 (8) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax Act,1961 (in short 'the Act'). Both the appeals are being taken up together for the sake of convenience and brevity. 2. The assessee, in ITA No. 343/Chd/2012, has raised the following grounds of appeal : 1. That the Worthy CIT (A) has erred in confirming the action of the Assessing Officer with regard to the application of Section 153C and thereby finally framing the assessment U/s 153A of the Income Tax Act, 1961. 2. That notwithstanding the ground of appeal No.1 above, the Worthy CIT (A) has erred in restricting the addition of ₹ 11,500/- of 1/5th of Car and Vehicle expenses against addition of ₹ 14,090/- of 1/4th of car and telephone expenses made by the Assessing Officer. 3. That the Worthy CIT (A) has erred in holding deemed rental value of Shop No. 2 Railway Road, Rajpura @ ₹ 36,000/- P.M. as per para 8 (a) of the order by not considering the fact that the shop is being used as godown for the purpose of business for keeping wooden packing and Misc.items and as an evidence, photograph of the same had filed. 4. That the Worthy CIT (A) has erred in holding the deemed rental value of Residential House at Islam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. That the appellant craves leave to add or amend any grounds of appeal before the appeal is finally heard or disposed off. 3. In Ground No.1, appellant contended that CIT(A) erred in confirming the action of the AO with regard to the application of Section 153C and thereby framing the assessment u/s 153A of the Act. Ld. CIT(A), on appreciation of the legal and factual position of the case, and after considering several case-laws, upheld the findings of the AO, as is evident from para 29 of the appellate order. The relevant findings of the CIT(A), are reproduced hereunder: 29. I have considered the AR's arguments and remand report of the AO. The provisions of section 153A first proviso expressly provide for reassessment of six assessments preceding the year of search and there is no restriction imposed in the language of the Section to restrict the AO to only issues arising out of documents/assets found/seized during the .course of search operation. Once the search warrant is executed in the case of the assessee, the application of section 153A leading to reopening of six assessment years preceding the year of search becomes automatic. The AO in such a si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. In Ground No.4, assessee contended that CIT(A) erred in upholding the deemed rental value of the residential house at Islampura, near Rajpura, ignoring the fact that house is in a dilapidated condition and is not fit for use as residence. The appellant placed reliance on certain decisions before the CIT(A), such as; Shyam Sunder Behl V Addl. CIT (2006) 99 TTJ 1147 (Asr-Trib), Mandeep Jain V DCIT ) 2011) 43 SOT 288 (Chd-Trib) and ACIT V Dr. Amrit Lal Adlakha (2006) 105 TTJ (Asr-Trib) 271. Having regard to the findings of the AO as well as that of CIT(A), in the light of submissions filed by the appellant, rental income cannot be assessed in respect of such a house which is not fit for living for human beings, as the house was in a dilapidated condition and no electricity and water conditions were available in that house. 10. In view of the above identical fact-situation, in respect of Ground No.6, the same is allowed, as that house is not in a condition to be used for human beings. 11. In Ground No.5, the assessee contended that CIT(A) erred in upholding the deemed rental value of shop at Main Bazar, Mohinder Ganj, Rajpura, as per para 8(f) of the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 40A(1)(b) of the Act. This ground raised by the assessee pertains to an addition of ₹ 6,18,383/- made by the AO, on account of disallowance of discount given to M/s Verma Electronic (P) Ltd. The AO found that discount had been debited for the first time, even though assessee was in the business for a long time. It was further brought on record that assessee and his wife, are Directors of M/s Verma Electronic (P) Ltd., i.e. recipients of the discount and therefore, the payment made by the assessee was covered u/s 40A(2)(b) of the Act. The finding of the AO, as reproduced by the CIT(A), reveals that there is no basis for allowing discount to the sister concern as the sale was started from 30.4.2012 and made sales of ₹ 19,80,230/- upto 2.5.2002. However, M/s Verma Electronic (P) Ltd. did not make any payment to the assessee till 1.5.2002 and later on, payment of ₹ 60,000/- only was made to the assessee. Therefore, above facts prove that the discount allowed to the assessee, neither was cash discount, as the payments were not made within reasonable time, nor it was a trade discount, as the same was to be deducted from the bill itself. The AO, has bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plained share application money introduced into the capital of the company M/s Verma Electronics Pvt. Ltd. treating the same not made by the assessee but by some other persons. 2 The Ld. CIT(A) has erred both in law and on facts in the deleting the addition of ₹ 1,90,000/- made on account of unexplained investment by ignoring the fact that this was not explained during the assessment proceedings. 3 The Ld. CIT(A) has erred both in law and on facts in deleting addition of ₹ 1800/- and ₹ 3,88,356/- on difference in accounts of M/s Videocon Appliances and M/s Videocon International Ltd. as compared to the accounts of the assessee, which assessee had failed to reconcile during the assessment proceedings. 4 The Ld. CIT(A) has erred both in law and on facts in deleting addition of ₹ 60,000/- made on account of salary to technical persons for which no justification was filed by the assessee. 5 The Ld. CIT(A) has erred both in law and on facts in deleting addition of ₹ 60,000/- made on account of unexplained loan received from Vipan Kumar (HUF), for which no explanation was given by the assessee during the assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000/ given by Mrs. Usha Rani as share application money in Verma Electronics (P) Ltd. as assessee's income is absolutely absurd as the assessee has neither made the share application nor it is the case of M/s Verma Electronics (P) Ltd. So by no stretch of imagination share application given by Mrs. Usha Rani to M/s Verma Electronics (P) Ltd. can be treated as assessee's income. The addition made by the AO is deleted. Further AO made an addition of ₹ 1,90,000/- being assessee's share application money given to M/s Verma Electronics (P) Ltd.,__for which the assessee had filed the copy of account of loan outstanding in the books of the company i.e. Verma Electronics (P) Ltd. and the said amount had been withdrawn to use as share application money. The AO during the course of remand proceedings has not controverted the factual submissions of the assessee in this regard and it becomes clear that the assessee had given detail explanation regarding the source of share application money and addition made by the AO is without any basis. The addition is therefore directed to be deleted. 20(iii) As the impugned amount has been contributed by the sister of the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and various other valuable items were also found from the residence of the assessee. The assessee was enjoying very lavish life and belongs to rich family carrying on business of jewellery and electronics known s M/s Verma Jewellers, M/s Verma Electronics M/s Verma Electronics (P) Ltd. During the course of discussion in the assessment proceedings, the assessee was required to file the copies of the bills of electricity of residence, but he avoided that he did not retain the bills of electricity. Averagely one A.C. consume electricity of ₹ 2000 per month and runs averagely five months, while the assessee was using three A.Cs. The children of the assessee were also studying in convent schools. The assessee shown household expenses ₹ 81118/- and paid tuition fee of children ₹ 10,OOO/- in addition to other expenses, therefore, after taking into consideration the standard of living of the assessee the house hold expenses of the assessee are estimated Rs; 2,20,OOO/- per annum except met by others, which are very reasonable and difference ₹ 1,35,882/- (2,20,000-84,118) is added to the income of the assessee. 21(ii) Having regard to the fact- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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