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Mrs. Sharma Tyagi, Prop. M/s. Tirupati Banquet Hall Versus The Income Tax Officer, Ward1 (1) , Muzaffarnagar

2017 (12) TMI 416 - ITAT DELHI

Unexplained investment from accumulated savings of agriculture income - Held that:- No agriculture income was shown in the return of income filed on issue of notice under section 142(1) of the Act. The assessee did not have any evidence of accumulation of past agriculture income. Merely because assessee was holding agricultural land holdings of 20 bigas would not prove that assessee earned any agricultural income or has any past savings so that to make any investment in the property. In the abse .....

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with the assessee, what were the source of funds gifted to the assessee and whether they had any capacity of giving such huge amount of gift to the assessee. Thus, the assessee failed to prove the basic ingredients of genuineness of gifts in the matter. It, therefore, appears that the assessee when cornered by the Revenue Department came up with an afterthought story to explain investment in property through the gifts from the relatives. Therefore, it is clear that gifts in the matter are not ge .....

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ruction of banquet hall. The A.O. shall re-decide this issue after giving reasonable, sufficient opportunity of being heard to the assessee. Ground No.4 of appeal of assessee is treated as allowed for statistical purposes. - ITA.No.348, 347 And 349 /Del./2015 - Dated:- 22-8-2017 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER For The Assessee : Shri Anil Jain, Advocate For The Revenue : Shri T. Vasanthan, Sr. D.R. ORDER All the appeals by assessee are directed against the different orders of Ld. CIT(A), .....

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and it was gathered that assessee was running a newly constructed banquet hall namely, M/s. Tirupati Palace at Indira Colony, G.T. Road, Muzaffarnagar. Since assessee was not assessed to tax, therefore, the A.O. issued notice under section 142(1) of the I.T. Act, requiring the assessee to furnish return of income. However, no compliance was made. Subsequently, the A.O. issued notice under section 148 of the Act. In response there to, assessee submitted that original return filed on 29th January .....

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2,55,000. The assessee in her written submissions admittedtax liability of ₹ 53,470 for A.Y. 2006-07. It was further submitted that investment in construction of banquet hall was at ₹ 28 lakhs and source of investment was explained as under : (i) Out of saving from agriculture income ₹ 3,00,000 (ii) Out of sale deed dated 18.11.2005 to Ramesho Devi ₹ 1,99,450 (iii) Withdrawal from saving bank account ₹ 2,62,000 (iv) Loan from bank ₹ 6,50,000 (v) Gift received .....

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77; 46,03,000 to the department nor any return of income was filed till the date of issue of notice under section 142(1) of the Act. 3.2. Regarding claim of source of investment from agricultural income at ₹ 3 lakhs, it was gathered by the A.O. that assessee had shown only agricultural holdings of 20 bigas. In the absence of any documentary evidence, the A.O. required the assessee to file copy of khatauni. Further, the A.O. also confronted the assessee of the fact that in the return of inc .....

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ted the A.O. to consider the same at ₹ 55,000. It was further submitted that the agricultural land was acquired on inheritance after the death of her husband on 19th December, 1999. As per the assessee, agricultural land was 20 bigas and as such, past savings from agriculture income stood explained and hence, could not be treated as unexplained investment in construction of banquet hall. 4. The A.O. however, noted that assessee has not filed return of income voluntarily but filed after iss .....

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e had claimed to have received gifts from the following persons : (i) Shri Yashvir Singh Tyagi, Rs.3,00,000 (ii) Shri Mukesh Tyagi Rs.1,00,000 (iii) Smt. Shashi Rs.3,00,000 (iv) Shri Karam Singh Tyagi Rs.6,00,000 5.1. The A.O. recorded the statement on oath of the donors. From the statements recorded on oath, it was gathered by the A.O. that donors failed to specify the date-wise amount paid to the assessee. Further, the aforesaid donors have never gifted any amounts previously. The assessee had .....

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. Copies of their land holdings and along with affidavits were furnished before the A.O. It was submitted that the donors in their statements on oath confirmed giving gifts to the assessee. The A.O. however, rejected the contention of assessee because investment in property was not disclosed to the department. Gifts were not voluntarily disclosed to the department. The assessee admitted investment in property only after issue of notice under section 142(1) of the Act. Th A.O. made addition of &# .....

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accepted the findings of the A.O. that no evidence has been produced for earning of agriculture income or past savings, but given a benefit of ₹ 55,000 to the assessee. Therefore, out of the addition of ₹ 3 lakhs, he has confirmed addition of ₹ 2,45,000. 5.4. As regards gifts, assessee reiterated the same submissions before the Ld. CIT(A). The A.O. in the remand report submitted that assessee failed to prove the creditworthiness of the donor and genuineness of the transaction .....

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larly, in the case of Shri Mukesh Tyagi the donor did not make any withdrawals for making gift to the assessee. Therefore, in the absence of the same, addition of ₹ 72,000 was confirmed. 5.5. During the course of appellate proceedings, it was gathered that the difference between the figures of investment in construction of banquet hall as per report of DVO and as per approved valuer s report was worked out to ₹ 3,24,467 (Rs.12,18,467 (-) ₹ 8,94,000). Therefore, assessee was ask .....

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on of ₹ 2,45,000 out of addition of ₹ 3 lakhs made by the A.O. as unexplained investment from accumulated savings of agriculture income. Learned Counsel for the Assessee did not submit any evidence of earning of any agriculture income by the assessee in assessment year under appeal. No agriculture income was shown in the return of income filed on issue of notice under section 142(1) of the Act. The assessee did not have any evidence of accumulation of past agriculture income. Merely .....

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7; 1,50,000 and ₹ 72,000 on account of gifts received from Shri Karan Singh Tyagi and Shri Mukesh Tyagi. The assessee submitted that affidavits of the donors along with their bank accounts have been filed and their statements have been recorded by the A.O. in which they have confirmed giving of gifts to the assessee. However, both the donors have failed to specify the date-wise amount paid during the examination/recording of the statements. Therefore, genuineness of the transactions could .....

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have stated that they have agriculture income out of which they are maintaining their family. Therefore, assessee failed to prove their creditworthiness and genuineness of the transaction in the matter. No source of gifts have been filed. Even no gift deed have been executed for giving any gift. No occasion of the gifts date-wise has been explained. Thus, there is nothing on record to show as to what was the financial capacity of the donors and the creditworthiness of the donors, what kind of re .....

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s in the matter are not genuine. Gifts are arranged affairs of the assessee. The assessee failed to prove the creditworthiness of the donors and genuineness of the gifts in the matter. The additions were rightly made by the authorities below. I rely upon the decision of Hon ble Delhi High Court in the case of CIT vs. Anil Kumar 292 ITR 552, decision of Hon ble Supreme Court in the case of CIT vs. P. Mohan Kala 291 ITR 278, decision of Punjab & Haryana High Court in the case of Yashpal Goel v .....

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for the purpose of ascertaining the value of construction, rates of UP PWD may be applied, which authorities below have failed to apply in the matter. Learned Counsel for the Assessee relied upon the decision of Hon ble Allahabad High Court in the case of CIT vs. Raj Kumar182 ITR 436 in which the Tribunal while fixing the cost of construction, has taken into consideration various factors i.e., the rates to be applied for the purpose of estimation of cost of construction and applied UP PWD rate .....

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taining the cost of construction of investment in construction of banquet hall. The A.O. shall re-decide this issue after giving reasonable, sufficient opportunity of being heard to the assessee. Ground No.4 of appeal of assessee is treated as allowed for statistical purposes. 9. Ground No.5 is challenging the reopening of assessment under section 148 of the I.T. Act, which is not pressed by the Learned Counsel for the Assessee. Therefore, ground No.5 of appeal of assessee is dismissed. 10. In t .....

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that assessee could not furnish any details and evidence to establish the genuineness of such cash deposits. The assessee submitted that some of them were gifts from his brother and nephews which have not been accepted. Therefore, the Ld. CIT(A) confirmed the addition. During the course of hearing, Learned Counsel for the Assessee, could not explain the source of deposit of ₹ 2,15,000. Therefore, no interference is called for. Ground No.2 of appeal of assessee is accordingly dismissed. 12 .....

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eer Singh (nephew) of ₹ 1 lakhs, to that extent, the addition was deleted. In the absence of any other evidence, gifts of ₹ 4,11,000 was confirmed. 12.1. Learned Counsel for the Assessee submitted that the issue is same as has been considered in A.Y. 2008-09. Following the reasons for decision for A.Y. 2008-09, I dismiss this ground No.3 of appeal of assessee. 13. On ground No.4, assessee challenged the addition of ₹ 80,100 out of addition of ₹ 2,34,000. Regarding additio .....

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ssessee did not produce any evidence of source to explain the addition of ₹ 80,100. Even assessee did not explain this addition before Ld. CIT(A). Therefore, in the absence of any evidence, the addition of ₹ 80,100 is confirmed. This ground No.4 of appeal of assessee is dismissed. 14. On ground No.5, the assessee challenged the addition of ₹ 4,63,906 being difference on account of investment in cost of construction of banquet hall as per DVO report. 14.1. In A.Y. 2008-2009, it .....

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