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2016 (5) TMI 1157

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..... d each item, this amount to double jeopardy which is not permissible. Looking at the entirety of circumstances and fact that the assessee enhanced his surrender from ₹ 3,50,42,961/- to ₹ 9,38,50,009/-; the fact that the balance sheet reflects the sum total of his transactions as on 01.04.2008, it is not justifiable to add the totals of both the balance sheets. On verification of both the balance sheets it emerge that the one filed for income tax purposes is part of and incorporated in the one found during the course of survey. Therefore, in our considered view, the addition of ₹ 2,13,15,248/- as excess liabilities has been rightly deleted by ld. CIT(A). His order on this issue is upheld - Decided against revenue Addition of interest income - Held that:- Shri Rajendra Ji Was debtor who has squared up his account with the assessee as on 01.04.2008. Ld. DR could not dispel such factual findings. Further it is found that assesee’s cash balance as per balance sheet is ₹ 18,20,852/- and this amount being the interest income of the assessee during the year has been included in this cash balance on the basis of which the surrender has been made. In our considered .....

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..... assessee and Revenue have raised the following grounds in respective appeals. ITA No. 827/JP/2011 A.Y. 2008-09 (Assessee Appeal ) 1 On the facts and in the circumstances of the case, the ld. CIT(A) has grossly erred in upholding an addition of ₹ 32,43,730/- made by the AO by alleging the same as undisclosed investment in purchase of property in the name of assessee's son Shri Narain Agarwal. 1.1 That the ld. CIT(A) has further erred in ignoring various submissions made and evidences adduced and also by ignoring the income admitted and declared by the assessee, thus the addition of ₹ 32,43,730/- so confirmed by ld. CIT(A) deserves to be deleted. ITA No. 1042/JP/2011 A.Y. 2008-09 (Revenue ) Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) is justified in deleting :- (i) The addition of ₹ 2,13,15,248/- made by the AO on account of excess liabilities. (ii) The addition of ₹ 3,45,000/-made by the AO on account of unaccounted loans. (iii) The disallowance of ₹ 31,065/- made by the AO out of motor car expenses and depreciation on car by applying u/s 38(2) of the I.T. Act on accoun .....

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..... y the Assessing Officer and sufficient opportunity was given to the A.R. in this regard. The CIT (A)-I, Jaipur has also mentioned this fact in the appellate order that the assessee did not discharge his onus to the extent that he did not verify the liabilities appearing in the duplicate balance sheet in order to claim the set off these liabilities. Still the common liabilities were worked out between both the balance sheets. The fact that there was no common asset except that of jewelers association of ₹ 25,000/-, cannot be overlooked alongwith the fact that there are some common names on the liabilities side with different amounts. Therefore, only on the basis of the liabilities side, it cannot be concluded that the balance sheet filed with the original return is incorporated in the duplicate balance sheet. On the basis of the assets side, it can be clearly established that the duplicate balance sheet has been maintain in addition to the regular balance sheet. Still the relief of deducting common liabilities of ₹ 1,06,68,208/- was given to the assessee on the basis of the directions issued by the then Additional CIT, Range1,Jaipur u/s 144A. Hence, the common liabilitie .....

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..... 09/- for A.Y. 2008-09 and ₹ 40,00,000/- in A.Y. 2009-10 which is practically more than double than the surrendered income. This demonstrates that assessee was guided by bona fide impression to come out with clean hands, cooperate with the department and pay due taxes thereon. The enhanced additional income so admitted included the income attributable to entries in the papers including the Ann. 24 impounded during the course of survey. It contained the details of the transactions disclosed in the regular return along with intermixed unaccounted assets and liabilities. Assessee by letter dated 14.09.1010, filed during the course of assessment proceedings, suo motu increasing the additional income, furnished all relevant details and working of the undisclosed income which is placed on PB 14-15. The assessee thus discharged his onus to effectively explain the working of additional income. Consequently the burden then shifted on the department to rebut the working by cogent reasoning, facts and working. The revenue has not rebutted the assessee s explanation and working in any meaningful and cogent manner. In this eventuality ld. CIT(A) has rightly upheld assessee s version. Thus .....

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..... ly identified. Thus Ld. AO instead of being objective about working and entry specific used the convenient course of making sweeping, general and used following presumptive terms to make double addition: presuming that there was some overlapping of the amount against the head stock in both the balance sheets . O ne can t again move to the assets side which would be akin to going rounds in circles unnecessarily Thus there is neither factual basis nor cogency of reasons to take a presumptive inference that the regular Balance Sheet is separate and Annexure A-24 represents only unaccounted assets and liabilities and added it separately. From the observation of the Ld. AO relevant question which arises and remains unanswered is : - If Ann-24 is a separate balance sheets are different and not combined one would a single entry find place in one balance sheet or in both the balance sheet? Ld. AO herself found common names/entries amounting to ₹ 1,06,68,208/- which find place in both the balance sheets. It demonstrates that the accounted and unaccounted balance sheets are interdependent, intermixed and complimentary to each. The sole incriminating paper PB7 .....

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..... dus operandi of the assessee admitted by him during course of survey regarding maintaining records of all his transactions separately. From there he entered some transactions in the books of accounts maintained as per his convenience, for the purpose of the income tax department. 4.12 In view of the fact that the assessee has surrendered the amount as per the balance sheet showing the sum total of his transactions as on 01.04.2008, it is not rational nor justifiable as per accounting principles to add the totals of both the balance sheet. Particularly when it is clear on verification of both the balance sheets that the one filed for income tax purposes is incorporated in the actual one found during the course of survey. Therefore, the addition of ₹ 2,13,15,248/- is directed to be deleted. In the circumstances, it is submitted that ld. CIT(A) has accorded the relief after appreciating all the relevant factual aspects, evidentiary nature of impounded documents, accounting principles, sec. 144A directions etc. his orders deleting above deletion deserves to be upheld. 4.5 Reliance for these propositions is placed on following judicial precedents:- CIT Vs. S. Kh .....

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..... er contends that the assessee is an ordinary business person neither well worse and nor a technical expert on the intricacies of Income Tax Laws, a suo motu excess disclosure in revised return than agreed in survey demonstrates the assessee s positive attitude to improve on his inadvertent mistakes made in not keeping his record properly. Instead of appreciating all these facts and even before assessment suo motu declaring more undisclosed income than agreed during survey, department has unjustifiably made the assessee a victim of TAX TERRORISM . Such tactics have been recently deprecated by Hon ble PM and FM. CBDT has carved out assessee s charter of rights to be abided by revenue authorities during assessments, survey and search which is duly published in print, electronic media as well as CBDT s national portal. It has been declared that the income tax authorities have to act strictly in accordance with charter while exercising their powers including Survey And Search action. To buttress his arguments, Ld. Counsel in written submissions has referred to the speech given by the Hon ble Finance Minister on the floor of Parliament in this behalf, while proposing to simplify the pro .....

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..... authorities under the Act. A fortiori, clarificatory circulars issued by the Central Board of Direct Taxes may also be taken into consideration for the purpose of construction of the statute. 2. 259 ITR 51 Kerala State Industrial Dev. Corpn. Ltd. Vs. CIT (SC) Interpretation of taxing statutes Finance Minister s speech before Parliament while introducing bill Can be relied on to throw light on object and purpose of provisions. 3. 273 ITR 305 CIT Vs. Durgesh Oil Mills (All.) Circular CBDT Circular binding on Income Tax Authorities. It is well settled that the circular issued by the Central Board of Direct Taxes is binding on authorities. 4. 291 ITR 172 CIT Vs. Ashok Kumar Soni (Raj.) Admission in statement during search Not a conclusive proof of fact and can always be explained Retracted statement of assessee Second statement to be read together to evaluate weight of admission for appreciating evidence. 5. 328 ITR 384 CIT Vs. Dhingra Metal Works (Delhi) Survey- discrepancy in stock and cash-Addition on basis of statement made during survey-Assessee later contending that statement incorrect and that discrepancy reconciled as It was a mistake-state .....

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..... ee as on 01.04.2008. 6.5 Since, the cash balance of the assessee in this balance sheet is ₹ 18,20,852/- compared to that reflected in the balance sheet filed with income tax return initially being ₹ 6,57,897/-, it is held that this amount being the interest income of the assessee during the year has been included in this cash balance on the basis of which the surrender has been made. Therefore, the impugned addition of ₹ 3,45,000/- is directed to be deleted. 5.4 Since, the additional income offered at ₹ 9,38,50,009/- is computed on the basis of a document prepared at the end of the previous year relevant to assessment year under appeal and the loose paper under reference contained the entries prior to the end of the previous year, thus the same stood covered in the memoranda state of affairs as at 31.03.2008 and any further addition is not warranted. It is therefore, contended by ld. counsel that the Ld. CIT(A) has rightly deleted the addition and thus the order of Ld. CIT(A) deserves to be uphold on this score. 6.1 Apropos revenue ground no.3, it is contended that ld. AO disallowed ad hoc 20% out of following expenses for possible personal use whic .....

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..... h entry, quantify each and make separate addition for each. It is very unjustified to add the surrender and further add each item, this amount to double jeopardy which is not permissible. Looking at the entirety of circumstances and fact that the assessee enhanced his surrender from ₹ 3,50,42,961/- to ₹ 9,38,50,009/-; the fact that the balance sheet reflects the sum total of his transactions as on 01.04.2008, it is not justifiable to add the totals of both the balance sheets. On verification of both the balance sheets it emerge that the one filed for income tax purposes is part of and incorporated in the one found during the course of survey. Therefore, in our considered view, the addition of ₹ 2,13,15,248/- as excess liabilities has been rightly deleted by ld. CIT(A). His order on this issue is upheld, this ground of revenue is dismissed. 7.1 Apropos second revenue ground in the entire survey proceedings, statement there is no reference to any coded figures. Ld. CIT(A) has rendered clear finding of fact that these entries appear to be of interest because the date has been mentioned regularly for a two month period for the same amount. Ld. CIT(A) has cited exam .....

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..... 5; संबंधित कागजात हैं, जो कि नियमित पुस्तकों में दर्ज नहीं हैं इस बारे में अपना स्पष्टीकरण दें। उत्तरः मैंने उक्त सभी loose papers व नोट बुक आदि को देख लिया है इनमें से बहुत से कागजों का अभी स्पष्टीकरण नहीं दे पा रहा हूँ  .....

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..... 6; नियमानुसार आयकर अदा करने के लिए समर्पित करता हूँ। इसी प्रकार वित्तिय वर्ष 2008-09 में मैं. अग्रवाल एंड कम्पनी में सर्वे की कार्यवाही के दौरान पाए गए अघोशित स्टाक रू. 2,94,99,247/-, नगद उधार के पेटे रू. 29,00,000/- मकान के निर्माण में कि& .....

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..... 344;े यह बयान मैं. अग्रवाल एंड कम्पनी के प्रोपराईटर श्री बंशीधर अग्रवाल के समक्ष जो मेरे पिता हैं कि सहमति से दिए हैं इसके पेटे मैं श्री बंशीधर अग्रवाल द्वारा मैं. अग्रवाल एंड कम्पनी के पांच चैक अग्रिम कर (वित्त .....

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..... . During survey qua some loose papers including page 5 of Exhibit A-14 assessee son, in reply to question No. 18 of the statement categorically stated that these entries related to the purchases of plot of land in his own name for a total consideration of ₹ 45,40,200/-. Similarly in reply to question No. 23 he further admitted in this behalf an amount ₹ 30,40,200/- as his undisclosed investment. Ld. AO instead arbitrarily made an addition of ₹ 32,43,730/- in this behalf in the hands of assesse, without refuting the son NLA s clear statement admitting income in his hands in this behalf. Ignoring the copious material available on record, ld. AO arbitrarily made the addition in question without citing any cogent reason for not relying on the son s statement on oath by observing as under in the assessment order: The fact that this purchase of plot was made out of funds available outside the books of assessee and is not reflected in the surrendered income as per the revised return of the assessee, the same is added to the income of the assessee. Ld. AO conveniently lost sight of the fact that impugned investment was owned by son by a sworn statement which fo .....

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..... ds of assessee on surmises. There is no merit in sustaining the addition on the basis of AO s vague observation that: The fact that this purchase of plot was made out of funds available outside the books of assessee and is not reflected in the surrendered income as per the revised return of the assessee, the same is added to the income of the assessee. Since the impugned investment was owned by son by an uncontroverted sworn statement, there is no reason to expect assessee to offer or tax it in his hands. Thus there is no substance in inferring or assuming that assessee went back on his statement. In view of these facts and circumstances we hold that revenue has failed to substantiate that undisclosed investment is made by assesse based on any cogent evidence, reason or logic. 9.5 Since we are deleting the addition on merits, there is no necessity to adjudicate the alternative claim put forth by the assessee. The grounds raised by assesse in this behalf are accordingly allowed. Hence, revenue s appeal no. ITA/1042/11 is dismissed and that of assessee no. ITA/827/JP/2011 is allowed. Assessee appeal- ITA No. 104/JP/2014 Consequential Penalty 271 (1) (c) 10.1 .....

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