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TMI Blog2019 (10) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... has to go into the merit afresh. 2. In view of the directions of the Hon'ble Karnataka High Court, the appeal was again fixed for hearing on several dates and it was heard on 01/08/2019. In course of hearing, it was submitted that by the ld. AR of the assessee that the issue regarding validity of search had been raised by the assessee by way of additional grounds but now the assessee does not want to press the additional grounds and hence, the additional grounds may be rejected as not pressed. We hold accordingly and reject the additional grounds raised by the assessee as not pressed. 3. The ld. AR of the assessee submitted that the Tribunal Order dated 02/01/2009 has been rectified by the Tribunal in MP No.37/Bang/2009 dated 09/09/2009 and as per the same, the Tribunal has restored back one issue to AO in respect of addition of Rs. 92,800/- sustained by the Tribunal out of total addition made by the AO of Rs. 1.95 lakhs on account of unaccounted payments to Mr. John D Souza. The Tribunal, in the MP order held that if any statement is going to be used against the assessee then the assessee has to be confronted, and the assessee has to be given an opportunity to cross examine the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount payee cheques and were supported by entries in the seized diary and therefore, the additions made are unjustified especially, when Sri Abbubakar appeared before the AO and confirmed the factum of giving the gift to the appellant. The additions made by the authorities below is on an erroneous appreciation of law and facts of the appellant's case and liable to be deleted. 6. The authorities below are not justified in making additions of Rs. 3,20,000/-, Rs. 50,000/- and Rs. 50,000/- being loans received by the appellant from Mr. Bhaskar Hegde, Mr.Maxim Lobo and Mr. Madhu Kumar respectively under the facts and in the circumstances of the appellant's case. They failed to appreciate that, Mr.Bhaskar Hegde, is the appellant's co-brother, who was residing in Bombay and monies were received from him by means of account payee cheque. Furthermore, they failed to appreciate that, Mr.Bhasar Hegde, also appeared before the A.O. and confirmed the advance made and therefore, the addition made is opposed to law and facts of the appellant's case and therefore, liable to be deleted. 7. The authorities below are not justified in making an addition of Rs. 1,95,000/- as unacco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of providing the funds to the appellant and his capacity to make the advance and therefore, the rejection of the evidence tendered by the appellant's father-in-law is purely on suspicion and surmise, assumptions and presumptions and the consequent addition made is liable to be deleted. 11. The learned CIT(A) is not justified in sustaining an addition of Rs. 3,05,147/- out of a sum of Rs. 5,4,147/- made by the learned A.O. on account of insufficiency in drawings under the facts and in the circumstances of the appellant's case. He failed to appreciate that, the appellant and his wife are given to frugal way of life and do not incur much expenditure and therefore, the drawings admitted by them are sufficient to meet their expenditure and consequently, no addon ought to have been made. Furthermore, the authorities below failed to appreciate that, no evidence was found during the course of search to justify estimate of household expenditure, as contained in the impugned orders and therefore the addition made is arbitrary and liable to be deleted. 12. The above additions made by the AO and sustained by the CIT(A) are contrary to evidence and purely on surmise, assumptions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived from the construction company was confronted to the assessee or not. Moreover, assessee is now explaining before the Tribunal that this amount of Rs. 55000/- was paid from a different bank account which was closed and therefore, the assessee lost sight of the same while preparing statement of affairs and the ld. AR of the assessee submitted before us that this amount was also out of explained sources. Under these facts, we feel it proper to restore back this matter to the file of the AO for fresh decision. Hence, we set aside the order of the CIT(A) on this issue and restore this matter back to the file of the AO for fresh decision with a direction that he should confront the reply received from the construction company to the assessee and the assessee should also bring on record the details of the said closed bank account from which it is stated that this amount of Rs. 55000/- was paid by the assessee and it is also a disclosed bank account. If the assessee is able to establish this claim, then no addition is justified. The AO should pass necessary order as per law as per above discussion after providing adequate opportunity of being heard to the assessee. Accordingly ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 2.20 lakh specifically. Under these facts, this finding was given by the AO that this gift claim of Rs. 1.20 lakhs from Abbubakar is nothing but undisclosed income of the assessee introduced in the name of Abbubakar. 7.1 Regarding second gift from Gangadharan of Rs. 1.30 lakhs, it was noted by the AO at page 8 of the assessment order that summons was issued to Gangadharan on 23/5/2001 but the summon was returned unserved by the postal authorities with the reason that the said person had deceased and no longer alive. Under these facts, AO came to the conclusion that the assessee was not able to prove genuineness of the transactions since he could not produce bank account of Gangadharan to verify the nature and source. In respect of third gift of Rs. 1 lakh from Oswal Pinto, it is noted by the AO at page 7 of the assessment order that summons were issued to Oswal Pinto on 8/6/2001 but the summons were returned unserved for the reason that address was insufficient. AO noted that the address furnished was given by the assessee and this fact was brought to the knowledge of the assessee. In reply, it was submitted by the assessee before the AO that correct address of Oswal Pinto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsion as other deposits, it has to be accepted that the creditworthiness of the donor and genuineness of the transaction is not established and under these facts, we find no infirmity in the order of CIT (A) on this issue. Regarding gift from P.V. Gangadharan, it is true that he could not be located because of his death but it is also true that P.V Gangadharan was not related to the assessee in any manner. Merely because money has come through banking channels, genuineness of the transaction is not established, even if we accept that identity and credit worthiness is established. Gift to unrelated person is not a normal human behavior. No relationship with Gangadharan has been pointed out whether blood relationship or friendship or any other relationship. Similarly, in respect of Oswal Pinto, even correct address could not be brought on record by the assessee. This is also not shown that Oswal Pinto is related with assessee in any manner whether blood relationship, friendship or any other relationship. Hence, on this issue, regarding these three gifts, we find no reason to interfere with the order of the CIT(A). Accordingly, ground No.5 is rejected. 9. In ground No.6, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A). Accordingly, ground No.6 is also rejected. 10. Regarding ground No.7 in respect of confirmation of Rs. 92,800/- out of total amount of Rs. 1.95 lakhs, the Tribunal has already restored the matter back to the file of the AO for fresh decision as per Tribunal order in MP No.37/Bang/2009 dated 9/9/2009. Hence, in the present proceedings also, we restore the matter back to the file of the AO for fresh decision with a direction that he should provide the assessee an opportunity to cross-examine John D Souza because it is settled position of law that if any statement is going to be used against the assessee, such statement should be confronted to the assessee and if the assessee likes to cross examine the person who gave the statement, the assessee should be given an opportunity to cross examine the person concerned. Hence, ground No. 7 is allowed for statistical purposes. 11. Ground No.8 is regarding two additions of Rs. 50,000/- each in respect of two blank cheques of Rs. 50,000/- each from A.H. Timbers and Jyothi Apparels. Regarding these two additions, it is stated by the AO at page 21 of the assessment order that regarding these two blank cheques found in course of searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, ground No. 9 is also rejected. 13. Ground No.10 is regarding addition of Rs. 2,43,900/- in respect of deposit in KSRTC. At page 23 of the assessment order, AO stated that slip of paper was found in course of search which showed that a sum of Rs. 2,43,900/- was received by the assessee from KSRTC by crossed cheque during financial year 1998-99. This was shown to the assessee to explain the contents of the slip and the nature of refund of money received from KSRTC. In reply, it was submitted by the assessee before the AO that the assessee's father-in-law Raghava Hegde had made payment towards EMD and security deposit of Rs. 243,900/- for tender for canteen at KSRTC, Bangalore Puttur. It was also submitted that since assessee was in line of restaurant business, bid was made in the name of the assessee but bidding was unsuccessful and KSRTC refunded the deposit made of Rs. 2,43,900/-. Refund was in the name of the assessee because the Bid was made in the name of the assessee. It was also submitted before the AO that the amount was not refunded to Raghava Hegde because at that point of time, house construction was going on and the assessee's father-in-law agreed to give this amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out expenses of Rs. 7,99,500/-. Total drawing shown by the assessee and his wife is Rs. 2,65,353/- and shortage of Rs. 5,34,147/- was added. We find that the assessee himself has admitted before AO that his monthly expenses are around Rs. 3,000 to Rs. 5,000/- per month and the AO has estimated such monthly expenses at Rs. 6,500/- per month and computed total expenses during block period of 123 months at Rs. 7,99,500/- without making any separate addition in respect of house warming party. As per details of club expenses noted by the AO at page 25 of the assessment order, such club expenses are Rs. 31,944/- during October 1998 to March 1999 and in addition to that, telephone expenses of about Rs. 1500/- p.m. during February 1996 to May 1999 as per details noted by the AO at page 25 of the assessment order. Under these facts, estimation of monthly household expenses of Rs. 6500/- per month during block period is not excessive/unreasonable and hence, on this issue also, we find no reason to interfere with the order of the CIT(A). Accordingly, ground No.11 is also rejected. 15. Regarding ground No.14 being interest u/s 158BFA (1), it is stated by the assessee that this issue is co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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