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TMI Blog2020 (9) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case and in law, the ld. CIT(A) is justified in deleting the addition of Rs. 88,69,780/- made by A.O. on account of undisclosed expenditure u/s 69 on the basis of assessee offering the same income before the Hon'ble ITSC." 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. Rival contentions have been heard and record perused. The facts in brief are that a search was conducted on 18 July 2012 at the premises of assessee who belongs to Kandoi group, Jaipur. The assessee had filed original return of income on 15 July 2011 declaring total income of Rs. 10,88,740/-. Pursuant to notice issued u/s 153A, the assessee filed return of income declaring the income as originally declared. Before the assessment could be finalized the assessee filed an application before Settlement Commission on 4 March 2015. The Settlement Commission did not entertain the application by the assessee holding that "considering the facts of the case above, the issues emanating therefrom is discussed in foregoing pages, and judicial opinion as narrated in the earlier para, we are of the considered opinion that the applicants have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act as if no application under section 245C has been made. The combined reading of section 245 HA(2) and 245 HA(3) suggest that whereas the assessment has to be made in accordance with the provision of the act as if no application for settlement has been made, the AO is also entitled to use the material and information produced by the appellant before Hon'ble Settlement Commission as also the evidence recorded by the Hon'ble Settlement Commission. If the income is to be computed in accordance with the provision of law, the primary onus lies upon the AO to demonstrate that the appellant has earned certain income. There is no material before the AO to suggest that the appellant has an income from scrap trading. While computing the income if the AO is to use the material and information produced by the appellant before Hon'ble Settlement Commission as also the evidence recorded by the Hon'ble Settlement Commission, it suggests that before the Hon'ble Settlement Commission there was no information about the quantity of scrap sold, parties to which such scrap was sold, or any other evidence incidental to procurement, supply or transportation of such scrap during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order, the ld. CIT(A) has deleted the addition after observing as under: "8. On consideration of relevant facts and the arguments it is seen that the sole basis of addition is the declaration by the appellant before the settlement commission, the proceedings before which has abated. There is no finding by settlement commission that any income in the form of capital gain was earned by the appellant or any other material to suggest so. Even during course of regular assessment assessing officer has not brought on record which capital asset was sold, when it was acquired, to whom it is sold and for what consideration. The provisions contained for computation of capital gain requires that such capital gain is chargeable to tax in respect of transfer of a capital asset. Thus the least that is expected of the AO before bringing surcharge is that some capital asset which was owned by the appellant has been transferred during the year for certain consideration over and above the cost of acquisition thereof. In absence of any such material describing the nature of asset, year of acquisition, year of transfer, consideration accruing as a result of transfer, the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under appeal. However during the assessment proceedings the father of the assessee filed an affidavit stating that the on money of Rs. 2.43 crores received on sale of Arpit Nagar land by his family members being the assessee and two others was received by him and is responsible for the same income and liable to tax thereon. The assessee also filed similar affidavit stating that the on money on sale of Arpit Nagar land was received by his father and the amount was used by him therefore he is liable for taxation on the same. The affidavits of Shri Mangi Lal Kandoi and the assessee are extracted by the AO in the assessment order. Based on the affidavits referred above the AO did not make any addition in the hands of the assessee on account of receipt of on money on sale of Arpit Nagar land. However, the AO noted that before the Settlement Commission the assessee is stated to have made investment for purchase of property at N-21, 22 A, Hanuman Vatika, Vaishali Nagar, Jaipur. The assessee is stated to have earned on money of Rs. 2.43 crores on sale of plot at Arpit Nagar and out of the said on money claimed deduction u/ s 54F of Rs. 1.57 crores. Though the AO did not make any add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself is not taxable in the hands of the appellant as done by the assessing officer, the investment out of such capital gain cannot be considered in the hands of the appellant. It is also settled principle that the source and application of the income both cannot be taxed. In the present case the source of investment is the on money received on sale of plot at Arpit Nagar. The application is by way of payment of on money for acquisition of property at Hanuman Vatika, Vaishali Nagar, Jaipur. The source is Rs.2.43 crores whereas the application is of Rs.1.57 crores. The source is taxed in the hands of Shri Mangilal Kandoi. Therefore the application should also be explained by him and being less than the source no further addition is required to be made. The assessing officer cannot blow hot and cold simultaneously or can resort to approbate and reprobate. If one part of the statement is considered to be true, he cannot ignore the other part. Either the statement has to be accepted or rejected but in totality and not to the extent it suits the revenue. Various case laws relied by the learned counsel for the appellant in this regard are apt and applying the same it can be held that w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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