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2016 (6) TMI 165 - ITAT CHANDIGARH

2016 (6) TMI 165 - ITAT CHANDIGARH - TMI - Unexplained purchase of diamond pins, jewellery and jewellery sets - Held that:- From the above findings of the CIT(A), it is clear that jewellery in dispute was found recorded in the perosnal cash book of Shri N.K. Sharma and therefore, the Ld. C IT(A) has categorically held that no separate addition in the hands of the assessee company can be made. The Ld. C IT(A) observed that in the case of the individual in this group of cases, he had accepted cash .....

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ompany. Considering the above facts, we do not see any infirmity in the order of CIT(A) on this issue - Decided against revenue

Addition on account of payment made to Sh. Jagdeep Singh from undisclosed sources - assessee contended that it was prevented by sufficient cause from producing the copy of statemtent of Shri Jagdeep Singh due to paucity of time since the assessment proceedings were taken up in November 2009 and the records were not traceable, thus the assessee requested the C .....

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being heard to the Assessing officer. The submissions together with the additional evidence submitted by the assessee were sent to the Assessing officer by CIT(A) for comments and after receiving the comments of the Assessing officer, the CITa has adjudicated the issue in accordance with law.

CIT(A) has correctly observed that the issue whether any amount was paid on behalf of the company to Shri Jagdeep Singh has to be considered in the context of the pending civil litigation between .....

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he case of Shri Jagdeep Singh. We fully agree with this observation of the CIT(A) that in fact no actual payment either in cash or in cheuqe had been made at all. In this regard, the statement of Shri Jagdeep Singh was recorded by the Assessing officer is relevant; wherein Shri Jagdeep Singh had categorically stated that no amount was actually borrowed from the assessee company as the entire deal for the purchase of land went into civil dispute before the Court. From the answer to Q.No.6 of the .....

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#39;ble Vice President And Ms. Rano Jain, Accountant Member For the Appellant : Sh. Manoj Mishra For the Respondent : Sh. Sudhir Sehgal ORDER Per H. L. Karwa, VP This appeal filed by the Revenue is directed against the order of C IT(A)-I, Ludhiana dated 23.8.2012 relating to assessment year 2006-07. 2. Ground No. 1 of the appeal reads as under:- 1. That Ld. CIT(A) has erred both in law and on facts in deleting the addition made by the AO amounting to ₹ 1700/- on account of unexplained purc .....

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39;) Act was conducted on 16.10.2007. Notice u/s 153A of the was issued to the assessee on 6.6.2008. Subsequentl y, statutory notices were also issued to the assessee which were served upon the assessee. During the course of search at the residential premises of the directors of the assessee company, documents numbering 96 & 97 of Annexure A-1 dated 18.11.2005 containing details of purchases of jewellery set of ₹ 1,34,000/- (weight 158.880 gms) were siezed. The bill No. 3311 dated 18.1 .....

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yet another document No. 99 of Annexure A-1 dated 19.11.2005 containing details of purchases of jewellery set of ₹ 48,000/- (weight 56.80 gms) was seized. The bill No. 3314 dated 19.11.2005 was issued by M/s Talwar Sons, Jewellers in the name of M/s N.K. Sharma Enterprises. The assessing officer issued a show cause notice to the assessee stating as to why ₹ 1,34,000/-, ₹ 1700/- and ₹ 48,000/- should not be added to the income treating the same as unexplained. The notice w .....

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e contended that the diamond pins were purchased by Shri Narinder Kumar Sharma, one of the directors of the assessee company on his personal account. It was also explained that Shri N.K.Sharma being at a good reputational post and being in the business of real estate for a long time, he is a known personality in the market Also, the name of the assessee company under consideration was on his name i.e M/s N.K. Enterprises, so sometimes the sellers mistakenly issued the bills in the name of the as .....

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ssessing officer, the C IT(A) held as under:- "20. I have considered the basis of addition made by the AO and the of the AR on the issue. The Assessing Officer has rejected the explanation given by the appellant during appellate proceedings by making reference to the suspect nature of cash flow statement. I have already held in the case of the individual in this group of cases that the cash flow statement prepared by the appellant is based upon the bank deposits and withdrawals as well as v .....

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ery which obviously should normally be in the hands of individual stands recorded in the personal cash book of Sh. N.K. Sharma and therefore no separate addition in the hands of company which has similar name could be made. The addition made is therefore directed to be deleted." 5. We have heard the rival submissions. From the above findings of the CIT(A), it is clear that jewellery in dispute was found recorded in the perosnal cash book of Shri N.K. Sharma and therefore, the Ld. C IT(A) ha .....

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ithdrawals /deposits. The Ld. CIT(A) concluded that the jewellery was found recorded in the personal cash book of Shri N.K. Sharma, and therefore, no separate addition can be made in the hands of the company. Considering the above facts, we do not see any infirmity in the order of CIT(A) on this issue. We may also add here that there is nothing on record to to controvert the categorical findings given by the C IT(A) on this issue. Accordingly, we uphold his order and reject ground No.1 of the ap .....

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Sh. Yadwinder Sharma had given money through cheque then he would have enclose copy of the bank account showing bank balance and withdrawal during that period, therefore, the story of transaction by cheque cooked by the assessee is rejected and it is treated that Sh. Yadwinder Sharma paid ₹ 1 crore on behalf of the company in cash to Sh. Jagdeep Singh from undisclosed sources, therefore, added to the income. Copy of affidavit of Sh. Yadwinder Sharma enclosed as per Annexure 'A"&# .....

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on of addition of ₹ 1 crore made by the Assessing officer on account of payment made to Shri Jagdeep Singh form undisclosed sources. Vide ground No.3 of the appeal the Revenue has also challenged the action of the CIT(A) in deleting the addition by admitting additional evidence at the appellate stage. We will dispose off both the grounds of appeal, together in succeeding paragraphs. 8. The facts relating to this issue are that the Assessing officer made the addition of ₹ 1 crore on a .....

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/o village Lohgarh, N.A.C. Zirakpur, Tehsil Dera Bassi, Distt. S.A.S. Nagar (Mohali) do hereby solemnly affirm and declare as under :- 1. That I am permanent resident of village Lohgarh, N.A.C Zirakpur, tehsil Dera Bassi, Distt. .A.S, Nagar (MohaJi) and I am engaged in the business of real estate in the area of Zirakpur and its adjoining areas. 2. That I am full time director of M/s N.K Sharma enterprises Ltd. & other companies of N.K Group of companies. 3. That Narinder Kumar Sharma (N.K Sh .....

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05, plaintiff and approached me to give him amount of ₹ 10000000/- as the same was required by the plaintiff for purchasing land at village Bhabat from Jagdish Arora and others. 6. That keeping in view our long relations and friendship I had paid ₹ 10000000/- in the last week of April, 2005 to plaintiff to enable him to get the sale deed executed-and registered from Jagdish Arora & Others regarding land situated at village Bhabat. 7. That aforesaid money of ₹ 10000000/- had .....

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our, but later on I came to know that the person i.e., Jagdish Arora and others with whom the plaintiff had entered into two agreements to purchase the land, have refused to execute and register the sale deed in the name of plaintiff. 9. The detailed account statement and balance sheet of M/s N.K. Sharma Enterprises Ltd. where I am the Director, as on 31-3-2005 and 31-3-2006 are Ex.P-3 and P4.1 identify my signatures on Ex. P-3 and 4 and I also identify the signatures of my brother N.K Sharma th .....

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action by cheque was made between Sh. Jagdeep Singh and Yadwinder Sharma. He further observed that from paras 6 & 7 of the affidavit, it is clear that ₹ 1 crore was paid to Shri Jagdeep Singh in cash in the last week of April 2005 and returned in cash in first week of May 2005. The Assessing officer further noted that Shri Yadwinder Sharma also enclosed with the affidavit a copy of cash book for 9.4.2005 showing cash in hand of ₹ 92,95,344/- to prove the availability of cash. Acc .....

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ssing officer added a sum of ₹ 1 crore to the total income of the assessee. 9. On appeal, the C IT(A) deleted the addition, observing as under:- "29. I have considered the basis of addition made by the AO and the arguments of the AR on the issue as well as the comments of the Assessing Officer in the remand report and of the appellant in the rejoinder. The issue whether any amount had been paid on behalf of the company to Sh. Jagdeep Singh has to be seen in the context of civil disput .....

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ase the impugned real estate sought the help of his family friend Sh. Yadwinder Sharma who agreed and actually did file an affidavit wherein the availability of amount of ₹ 1 crore was agreed to be available for Sh. Jagdeep Singh. It is in this context that the copy of cash book of the appellant company as on 19/4/2005 had been filed as enclosure of the affidavit by Sh. Yadwinder Sharma before the civil court. It meant that on the given date the company had sufficient cash balance as per t .....

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ar that it meant to support the case of Sh. Jagdeep Singh and no actual either in cash or in cheque had been made at all. Further it is pertinent to appreciate that the Assessing Officer during the course of assessment proceedings had recorded the statement of Sh. Jagdeep Singh with reference to this issue wherein Sh. Jagdeep Singh clearly stated that no amount was actually borrowed from the appellate company as the entire deal for the purchase of land when into civil dispute before the court. T .....

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. 133950 drawn on HDFC Bank, Zirakpur dated 25/4/2005 from M/s N.K. Sharma Enterprises (P) Ltd. Actually Sh. N.K. Sharma is my very close friend and we have the family relations with each other. The cheque as received by me was returned within 10 days to Sh. Yadwinder Sharma due to some dispute, registration of plot could not executed. The perusal of proceedings conducted by the Assessing Officer in terms of enquiries done from Sh. Jagdish Singh make it clear that no consequential action was tak .....

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observed that during the appellate proceedings before the C IT(A), the assessee submitted copy of the statement made by Shri Jagdeep Singh in response to the summons issued to him by the Assessing officer u/s 131 of the Act. In this regard the assessee contended that it was prevented by sufficient cause from producing the copy of statemtent of Shri Jagdeep Singh due to paucity of time since the assessment proceedings were taken up in November 2009 and the records were not traceable and according .....

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t the assessee has failed to explain the source of sum of ₹ 1 crore. Accordingly, the Assessing officer asked the CIT(A) to uphold the addition of Rs. One crore. In our opinion, ground No.3 of the Revenue's appeal is without any merit and deserves to be rejected. There was no violation of Rule 46A of the I.T Rules, by the C IT(A). According to Ld. C IT(A), the assessee was prevented by sufficient cause from producing the statement of Shri Jagdeep Singh, recorded u/s 131 of the Act befo .....

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ctly observed that the issue whether any amount was paid on behalf of the company to Shri Jagdeep Singh has to be considered in the context of the pending civil litigation between Shri Jagdeep Singh and Shri Jagdish Arora. It is apparent from the records that Shri Jagadish Arora had filed a suit before the Additional Civil Judge, Derabassi to seek forfeiture of the amount which he had received from Shri Jagdeep Singh to the tune of ₹ 50 lakhs in respect of a deal they had entered into for .....

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