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Mahendra Prakashchand Modi and Others Versus ACIT, Circle-3 (1) , Dhule

Deduction u/s.80L - addition on account of FDR - Held that:- As addition on account of FDR is concerned, we find the AO has made addition on the ground that the Fixed Deposit with Vijaya Bank was matured on 22-08-1995 and was transferred from Vijaya Bank OD Account No.8/95 but the assessee could not produce the details of the Fixed Deposit Receipt pertaining to F.Y. 1995-96. The assessee has also not explained the source of deposit in the yearly details of Fixed Deposit receipts with supporting .....

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he assessee has given the details and considering the nature of business and status of the assessee, the AO could have and should have obtained the details from the Bank to find out the veracity of the statement. However, in the instant case, the AO has not made any such effort. The fact that credit of the maturity value of ₹ 1,66,820/- each of the 2 Fixed Deposit Receipts during F.Y. 1995-96 are not in doubt. The AO disbelieved the same on the ground that the source of deposit in the year .....

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made of ₹ 54,168/- as per para 9 of this order, we direct the same to be substituted at ₹ 15,000/-. The break- up of the same is for A.Y. 1997-98 ₹ 10,000/- and for A.Y.2000-01 ₹ 5,000/-. The AO shall accordingly recompute the income for different years of the Block Period. - Addition of gifts received - as per revenue gift transactions are neither registered nor notarized and that there is no independent authority and/or third party witnessing the transactions and .....

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in A.Y. 200-01. Similarly, the amount of ₹ 85,000/- has been explained to be out of gifts from the husband of the assessee which has been disbelieved by the revenue authorities. It is also a fact that assessee has filed the return showing business income of ₹ 28,000/- for A.Y. 200-01 and ₹ 51,475/- for ₹ 2002-03. Since we have accepted the gift of ₹ 50,000/- in A.Y. 200-01, therefore, after considering the business income of ₹ 28,000/- for A.Y. 2000-01 and bu .....

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Items, it is not expected of him to maintain such details which are usually maintained by assessees in regular business and taking help of lawyers and Chartered Accountants. The combined business income of the Modi group of cases show business income of ₹ 11,71,687/- for the block period whereas the total deposits during the block period is ₹ 9,45,000/- only. If the previous deposits are considered which were made prior to the block period, then the entire deposit of the group stand .....

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751/PN/2014, ITA No.752/PN/2014, ITA No.753/PN/2014, ITA No.754/PN/2014 - Dated:- 8-6-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee by : Shri Sunil Pathak For The Respondent : Shri Hitendra Ninawe PER R.K.PANDA, AM : The above batch of appeals filed by the respective assessees are directed against the separate orders dated 14-12-2014 of the CIT(A)-I, Nashik relating to the Block Period 1997-98 to 2002-03 (upto 17-09-2002). Since identical issues have been raised by these .....

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tha as under : 23-03-2002 Chintamani Nagari Sah. Pat Pedhi Maryadit, Dhule Rs.1,00,000/- 29-08-2001 -do- Rs.25,000/- 29-08-2001 -do- Rs.25,000/- 3. The source of investment was not satisfactorily explained by the assessee before the ADIT (Investigation), Nashik. Notice u/s.158BD dated 24-02-2003 was served on the assessee on 07-03-2003. The assessee filed return of income for the Block Period on 28-01-2005 disclosing total income of ₹ 3,17,700/-. The AO completed the assessment u/s.158BC(c .....

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stored the issue to the file of the AO with the following observation : 4.5 We have heard both the parties and perused the relevant facts of the case. We are of the opinion that the Revenue has merely relied upon the statement given during the search operations and no credit was given to the explanations offered by the assessee. In all fairness and in the interest of justice, we are of the opinion that the facts offered by the assessee must be examined in depth and the same must be given weighta .....

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losed income of the assessee for the block period after considering the factual position rather than on mere statement. While computing the undisclosed income, the AO shall reduce the income which is otherwise not subject to tax as per the law and also in view of the Rajasthan High Court Judgment in the case of Chain Sukh Rathi (supra). Accordingly, this part of the Ground is set aside. 5. The AO thereafter completed the assessment determining the undisclosed income of the assessee for the block .....

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d ₹ 23,672/- for A.Y. 1999-2000 on account of unexplained investment in FDRs. While the CIT(A) gave a relief of ₹ 20,432/- for A.Y. 1999-2000, an addition of ₹ 20,432/- has been made for A.Y. 2000-01 pursuant to his order dated 25/05/2006. As given in the facts, certain FDRs in Chintamani Nagari Sahakari Path Pedhi Maryadit, Dhule were found in the name of the appellant during search action u/s 132 of the Act in the case of the above patsanstha. The appellant has given a detail .....

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come towards investments in FDRs. In the facts and the circumstances of the case and also keeping in view the smallness of the tax involved and the number of years these cases have been pending in appeal [ since 2002], I am of the considered opinion that 25% of the business income could be allowed towards source of the unexplained FDRs for A.Y. 1997-98. This will meet the ends of the justice. Similarly a credit of ₹ 3,240/- [i.e. the net addition retained on account of unexplained FDR afte .....

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the undisclosed income at ₹ 1,25,539/- by not allowing the proper credit for the available cash flow for the investments in FDRs and by confirming the additions to the estimated business income. 2. The undisclosed income should be determined at Rs. NIL. 3. The appellant craves leave to Add/Alter/Amend/Delete any of the grounds of appeal. 8. The Ld. Counsel for the assessee submitted that the assessee is a Hawker selling Pooja items and does not maintain books of account. He has already di .....

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. Referring to page 66 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the following chart : Sr. No. A.Y. Income returned by the assessee before claiming deduction u/s.80L and exemption limit (Rs.) Income assessed by the AO excluding FDR and deduction u/s.80L and exemption limit (Rs. Addition to the income on estimate basis made by the AO (Rs.) Addition on account of FDR made by the AO (Rs.) 1 1997-98 51,700/- 51,700/- NIL 30,496/- 2 1998-99 50,858/- 91,358/ .....

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urt in the case of CIT Vs. A.N. Dyaneswaran reported in 297 ITR 135 he submitted that the Hon ble High Court in the said decision has held that items regarding which assessee had reasonable explanation cannot be assessable as undisclosed income. He submitted that since the assessee in the instant case is only a Hawker and has disclosed business income on account of selling of Pooja items the same should not have been enhanced by the AO. 11. So far as addition made by the AO to the undisclosed in .....

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i PN Modi MP Modi RP Modi AP Modi SP Modi Total Chintamani Patsanstha 150000 50000 150000 100000 100000 550000 Chhatrpati Agrasen 40000 140000 40000 20000 40000 280000 Lokmanya Patpedhi 20000 20000 20000 20000 20000 100000 Mata Madhavi Patsanstha 15000 15000 Total 210000 210000 210000 140000 175000 945000 12. Referring to page 59 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the details of business income shown in the block return filed by the respective f .....

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come disclosed by the various family members and fixed deposits made prior to the Block Period fully explains the various deposits made by the family members during the Block Period. He accordingly submitted that the addition made by the AO and sustained by the CIT(A) is uncalled for under the facts and circumstances of the case. 13. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). He submitted that the Ld.CIT(A) after considering the various detai .....

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he assessee in the instant case has not maintained any books of account and has filed the return of income for the block period, the details of which are already given at Para 9 of this order. We find the AO accepted the returned business income for A.Y. 1997-98 at ₹ 51,700/- but for the subsequent years he made certain additions, the details of which are already given at Para 9 of this order. In our opinion, under the facts and circumstances of the case, the addition on account of busines .....

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,262/- 56,262/- 60,000/- 58,821/- 71,321/- 60,000/- 62,154/- 66,099/- 65,000/- 15. So far as addition on account of FDR is concerned, we find the AO has made addition on the ground that the Fixed Deposit with Vijaya Bank was matured on 22-08-1995 and was transferred from Vijaya Bank OD Account No.8/95 but the assessee could not produce the details of the Fixed Deposit Receipt pertaining to F.Y. 1995-96. The assessee has also not explained the source of deposit in the yearly details of Fixed Depo .....

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erox copy of the same. When the assessee has given the details and considering the nature of business and status of the assessee, the AO could have and should have obtained the details from the Bank to find out the veracity of the statement. However, in the instant case, the AO has not made any such effort. The fact that credit of the maturity value of ₹ 1,66,820/- each of the 2 Fixed Deposit Receipts during F.Y. 1995-96 are not in doubt. The AO disbelieved the same on the ground that the .....

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n on account of Fixed Deposit made of ₹ 54,168/- as per para 9 of this order, we direct the same to be substituted at ₹ 15,000/-. The break- up of the same is for A.Y. 1997-98 ₹ 10,000/- and for A.Y.2000-01 ₹ 5,000/-. The AO shall accordingly recompute the income for different years of the Block Period. Grounds raised by the assessee are accordingly partly allowed. 16. In the result, the appeal filed by the assessee is partly allowed. ITA No.750/PN/2014 (Mahendra Prakashc .....

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dition after appeal effect is as under : Sr. No. A.Y. Income returned by the assessee before claiming deduction u/s.80L and exemption limit (Rs.) Income assessed by the AO excluding FDR and deduction u/s.80L and exemption limit (Rs. Addition to the income on estimate basis made by the AO (Rs.) Addition on account of FDR made by the AO (Rs.) 1 1997-98 48,956/- 48,956/- NIL 2 1998-99 48,338/- 48,338/- NIL 3 1999-2000 55,064/- 55,064/- NIL 4 2000-01 58,497/- 58,497/- NIL 20,432/- 5 2001-02 57,038/- .....

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20. Grounds raised by the assessee are as under : 1. The CIT(A) erred in determining the undisclosed income at ₹ 56,607/- by not allowing the proper credit for the available cash flow for the investment in FDRs and by confirming the additions to the estimated business income. 2. The undisclosed income should be determined at Rs. NIL. 3. The appellant craves leave to Add/Alter/Amend/Delete any of the grounds of appeal. 21. After hearing both the sides we find, the details of addition after .....

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35,661/- NIL NIL 6 2002-03 51,475/- 51,475/- NIL 85,000/- 2,06,436/- 2,06,436/- NIL 1,35,000/- 22. We find the only addition made by the AO is addition of amount of ₹ 1,35,000/- on account of Fixed Deposit. From the copy of the assessment order, we find the addition relates to A.Y. 200-01 and 2002-03 amounting to ₹ 50,000/- and ₹ 85,000/- respectively. The deposit in Fixed Deposits of ₹ 50,000/- was explained to be out of gift of ₹ 20,000/- from MP Modi, ₹ 20 .....

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e family of a Hawker and was not filing regular returns nor maintaining books of account, it is not expected of the assessee to make gift deeds for such petty gifts which have been received from the family members. Considering the totality of the facts of the case, nature of business and status of the assessee, we direct the AO to delete the addition of ₹ 50,000/- in A.Y. 200-01. Similarly, the amount of ₹ 85,000/- has been explained to be out of gifts from the husband of the assesse .....

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he husband is disbelieved, even then with nominal past savings the business income for A.Y. 2001-02 and 2002-03 almost explains the deposit of ₹ 85,000/-. Under these circumstances, we are of the considered opinion that no addition is called for in the instant case. The grounds raised by the assessee are accordingly allowed. ITA No.752/PN/2014 (Ratimohan Prakashchand Modi) : 24. Grounds raised by the assessee are as under : 1. The CIT(A) erred in determining the undisclosed income at ͅ .....

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limit (Rs.) Income assessed by the AO excluding FDR and deduction u/s.80L and exemption limit (Rs. Addition to the income on estimate basis made by the AO (Rs.) Addition on account of FDR made by the AO (Rs.) 1 1997-98 10,074/- Clubbed in Father 2 1998-99 10,871/- Clubbed in Father 3 1999-2000 11,905/- 11,905/- 11,905/- 4 2000-01 44,131/- 44,131/- NIL 1,00,000/- 5 2001-02 53,071/- 53,071/- 53,071/- 6 2002-03 56,454/- 56,454/ 56,454/- 1,86,506/- 1,65,561/- NIL 1,00,000/- 26. The major addition is .....

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or which the claim of transaction has no legal support. 27. Since we have already mentioned in the preceding paragraphs that assessee belongs to a family of Hawkers selling Pooja Items, it is not expected of him to maintain such details which are usually maintained by assessees in regular business and taking help of lawyers and Chartered Accountants. The combined business income of the Modi group of cases show business income of ₹ 11,71,687/- for the block period whereas the total deposits .....

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h by the assessee stands explained in the light of the cash flow statements and the details given. We therefore direct the AO to delete the addition. The grounds raised by the assessee are accordingly allowed. ITA No.753/PN/2014 (Archana Prakashchand Modi) : 28. Grounds raised by the assessee are as under : 1. The CIT(A) erred in determining the undisclosed income at ₹ 21,197/- by not allowing the proper credit for the available cash flow for the investment in FDRs and by confirming the ad .....

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