TMI Blog2012 (3) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs or at ₹ 24 lakhs no material is available before the lower authorities. The statement said to be recorded from the assessee refers to the period December, 2006 to January, 2007. According to the ld. representative, the assessee is in the seasonal business and it is for 4 to 5 months. That is why the assessee has shown ₹ 2. 06 crores. However, this explanation of the assessee that the business is a seasonal one was ignored by both the authorities below. Referring to the order of Commissioner of Income-tax(A), more particularly page 4, the ld. representative for the assessee submitted that in response to question No. 29, the assessee categorically stated that the business is a seasonal one and it is only for five months. Therefore, in the absence of any material to show that the assessee has carried on the business in the entire year, the estimation of commission for entire 12 months is totally unjustified. 4. On the contrary, Smt. Vijayaprabha, the ld. DR submitted that there was search in the premises of the assessee. As a consequence, in response to notice issued u/s 153A, the assessee filed return of income declaring total income at ₹ 25, 10, 590 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a day and computed commission earned for 50 days at ₹ 12, 35, 835 by adopting commission rate of ₹ 2, 000 per lakh. Thereafter, the assessing officer estimated the commission for the whole period, i. e. 365 days. However, the Commissioner of Income-tax(A) found that the assessing officer ought to have estimated the commission income with a gradual increase from the beginning of the business i. e. from financial year 2005-06 to the volume of the business indicated in the seized document during the last quarter of financial year 2006-07. The Commissioner of Income-tax(A) also found fault with the assessing officer for taking the commission @Rs. 2, 000 per lakh instead of ₹ 1, 500. Accordingly, the Commissioner of Income-tax(A) by adopting commission @ ₹ 1, 500 per lakh has estimated the commission income for the period 01-04-2006 to 30-06-2006 @ R. 3 lakhs. However, the Commissioner of Income-tax(A) increased the commission by ₹ 2 lakhs in each quarter and finally for the period 01-01-2007 to 31-03-2007 the commission income was estimated at ₹ 17 lakhs. Therefore, by adopting a different method of increasing the commission by ₹ 2 lakhs in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) which provides for computation of income of undisclosed income in respect of searches carried on upto 31-05-2003 is not applicable in respect of cases where search was carried on after 01-06-2003. In other words, the assessee was covered u/s 153A of the Act. Therefore, the provisions of section 158BB are not applicable to the case on hand. Section 158BB(1) clearly says that undisclosed income has to be computed on the basis of the evidence found during the course of search operation or information relatable to such evidence found during the course of search operation. This language was omitted by the legislature in section 153A. Section 153A requires the assessing officer to compute the income on the basis of the material available on record. The material may be found during the course of search operation or it may come to the possession of the assessing officer in the course of the assessment proceedings. Therefore, it may not be necessary for the assessing officer to confine himself to the material found during the course of search operation in a case where the income has to be computed u/s 153A of the Act in respect of search operation carried out on and from 01-06-2003. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e absence of any such corroborative material, this Tribunal is of the opinion that taking ₹ 1, 000 per lakh as commission would be reasonable in the facts and circumstances of the case. 9. The material found during the course of search operation shows the transaction from 01-12-2006 to 19-01-2007. There are 33 transactions in each day. For 50 days from 01-12-2006 to 19-01-2007 the transactions carried out by the assessee outside the books of account are supported by material found during the course of search operation. Therefore, this Tribunal is of the opinion that the assessing officer has correctly estimated the turnover of transactions at ₹ 6, 17, 91, 700 for 50 days. By taking the transactions as turnover for 50 days at ₹ 6, 17, 91, 700 the commission @Rs, . 1, 000 would come to ₹ 6, 17, 917. The total turnover as found in the seized material VKP-132 is ₹ 13, 01, 18, 879. The assessee was able to explain to the assessing officer to the extent of ₹ 6, 83, 90, 080. Therefore, for the period of 5 months from December to April, the total turnover was ₹ 13, 01, 18, 879. After deducting the turnover to the extent of ₹ 6, 83, 90, 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income-tax(A) is modified to that extent and the assessing officer is directed to take the income from commission business at ₹ 6, 17, 917 for the assessment year 2006-07. 12. The next issue arises for consideration is addition of ₹ 11 lakhs as unexplained cash credit from one Aboobaker, Poothayil. 13. Shri Mathew Joseph, the ld. representative for the assessee submitted that Aboobaker, Poothayil is a non resident Indian and the assessee used to obtain short term loan to honour Letter of Credit commitment of the bank. According to the ld. representative, Aboobaker, Poothayil availed a loan against fixed deposit on 12-08-2005 and issued a cheque for ₹ 11 lakhs to the assessee on the same day. The assessee has already filed the copy of the passbook and passport, to show the identity of the creditor, creditworthiness and genuineness of the transaction. During the appellate proceedings, the Commissioner of Income-tax(A) called for remand report from the assessing officer. The assessing officer, after examining the explanation of the assessee filed a remand report before the Commissioner of Income-tax(A) that the assessee has explained the credit s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact remains is that the creditor availed a loan from Dhanalaxmi Bank, Kuvattupuzha and gave it to the assessee by way of a cheque. Therefore, the source of cash credit as far as the assessee is concerned, stands established by the assessee. The assessee has also established the identity of the creditor by producing the copy of the passport and the bank statement. The creditworthiness of the creditor was established by proving that the loan was obtained by the creditor and it was given to the assessee. The very same loan amount was given to the assessee by cheque. Therefore, the genuineness also cannot be doubted. 16. We have also carefully gone through the judgment in the case of Apex Court in P Mohanakala (supra). In the case before the Apex Court, the assessee received several credits from a Non Resident Indian. The department made extensive enquiries and found that one individual has given a loan in two or three names. The department found that all the three persons were the same person. The creditor explained that his father was a driver with the assessee and therefore, he advanced the money. However, the revenue rejected the claim of the assessee on the ground that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount received by the assessee as advance / security deposit for parting with immovable property is a capital receipt. Therefore, it cannot be treated as income of the assessee. Therefore, we do not find any justification for making addition of ₹ 3 lakhs. Accordingly the orders of lower authorities are set aside and the addition of ₹ 3 lakhs is deleted. 20. The next ground of appeal is with regard to addition of ₹ 16, 19, 079 as unexplained investment in the building on the basis of the valuation report. 21. Shri Mathew Joseph, the ld. represenative for the assessee submitted that the construction of the building was done by the assessee. The assessee is a director in the construction company. Therefore, the assessee had experience in the field of construction. The assessee claimed 15% deduction for self supervision. The DVO valued the building at ₹ 40, 94, 461. At the time of valuation also, the building was not fully completed. According to the ld. representative, no incriminating material was found during the course of search operation. The assessment was based on the books of account. The books of account maintained by the assessee for construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The next ground of appeal is disallowance of ₹ 2, 25, 000 out of the agricultural income disclosed by the assessee. The assessee has more than 5 acres of agricultural land in his possession including rubber plantation. The assessing officer, without any application of mind, rejected the claim of the assessee. According to the ld. representative, the assessee claimed ₹ 3 lakhs as income from agricultural activities. However, the assessing officer estimated the income only at ₹ 75, 000 and rejected the claim to the extent of ₹ 2, 25, 000. In the absence of any material to disprove the claim of the assessee addition to the extent of ₹ 2, 25, 000 is not justified. 26. On the contrary, Smt. Vijayaprabha, the ld. DR submitted that mere land holding is not sufficient to earn agricultural income. According to the ld. DR, the assessee has to show that the agricultural income was earned by cultivating the land. Referring to the order of the assessing officer and the Commissioner of Income-tax(A), the ld. DR submitted that the assessee claimed before the lower authorities that he reared cows and sold milk which was also included in the agricultural income. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as estimated at ₹ 56 lakhs by the Commissioner of Income-tax(A) instead of the income estimated by the assessing officer to the extent of ₹ 90 lakhs. For the year under consideration there is no material available to show the total receipt of commission. No material is also available to show the total turnover. Therefore, we have to estimate the turnover on the basis of the material available for the assessment year 2006-07. For the assessment year 2006-07 the total turnover was ₹ 13, 01, 18, 879. The assessee entered in the books of account a turnover to the exent of ₹ 6, 83, 90, 080. For the year under consideration, no such material is available. However, the assessing officer has taken the turnover which was taken for assessment year 2006-07 and considering the transaction for 50 days @33 transactions a day, the assessing officer estimated the total commission for the whole year at ₹ 90 lakhs. As we have already discussed, the statement recorded from the assessee clearly shows that it was seasonal business for five months from December to April. Therefore, estimation of income for the whole year per se is not justified. The income has to be estimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of account of Bank of Baroda before the lower authority. During the remand proceedings, the assessing officer found that the amount was received from the account of Shri P. A. Abdulla to the assessee s account. The assessing officer has satisfied with the genuineness and the identity of the creditor as also the creditworthiness of the creditor. The assessing officer disallowed the claim of the assessee only on the ground that the assessee could not explain the credit of ₹ 27, 81, 481 in the account of Shri P. A. Abdulla. According to the ld. representative, ₹ 27, 81, 481 was in the capital gain account of P. A. Abdulla for which the assessee cannot give any explanation. Once the assessee has proved that the funds were given by his sister Smt. Silvy and brother in law Shri P. A. Abdulla, the source of Shri P. A. Abdulla for making the deposit in the capital account maintained in Bank of Baroda cannot be a reason for disallowing the claim in the hands of the assessee. 33. On the contrary, Smt. Vijayaprabha, the ld. DR submitted that the assessee has not explained the deposit made in the name of Shri P. A. Abdulla to the extent of ₹ 27, 81, 841. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndian Bank, Muvattupuzha. On the same day there was a cash deposit in his account. According to the ld. representative, this was out of the cash withdrawal from the NRO overdraft account with South Indian Bank. The lower authorities ignored the cash withdrawn from the NRO overdraft account. 37. On the contrary, Smt. Vijayaprabha, the ld. DR submitted that on the same day cash was deposited in the account of the creditor. Therefore, the assessing officer found that in all probability, the cash deposit on 22-05-2006 in the bank account of the creditor may be from assessee s own funds. 38. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, there was a cash deposit on. 22/05/2006, the date on which the cheque was issued. The assessee claims that there was a withdrawal from the NRO overdraft account of the creditor. This fact was not considered by the lower authorities. Therefore, this Tribunal is of the opinion that the matter needs to be examined as to whether there was any withdrawal from NRO overdraft account for the purpose of deposit. Since the revenue specifically claims that the assessee s money would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer held that the money deposited was the money of assessee himself and therefore, the addition was made. However, the ld. representative explained, that the assessing officer in his remand report, vide paragraph 2 has reported that the credit could be considered as explained as the amount was routed through banking channels and source was FCNR deposit. The Commissioner of Income-tax(A), ignoring the remand report furnished by the assessing officer, confirmed the addition, by placing reliance on the judgment of the Apex Court in the case of P Mohanakala (supra). The ld. representative submitted that the facts and circumstances of the impugned addition are identical to assessment year 2006-07 where a similar addition of ₹ 11 lakhs in the name of Shri Aboobaker Poothayil have been confirmed by the Commissioner of Income-tax(A) for the very same reasons. The ld. representative therefore, submitted that the decision arrived at therein may be made applicable to this year also. 43. On the contrary, Smt. Vijayaprabha, the ld. DR submitted that the assessee has to prove the identity of the creditor, creditworthiness and genuineness of the transaction. In this case, accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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