TMI Blog2004 (4) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... ises of M/s Sunvin Industries (P) Ltd. in which the assessee is one of the two directors holding 50 per cent share. During the course of search, among other things, Indira Vikas Patras and Kisan Vikas Patras (IVPs and KVPs) worth Rs. 11,51,000 were found and seized. A statement was obtained from the assessee. A specific question was put to the assessee in the course of the statement being made. The question was that what was the source for the investment of Rs. 11,51,000 for acquiring IVPs and KVPs. In reply to the said question the assessee stated that the assessee or any of his family members were not able to explain the source of investment with any documentary evidence. The assessee also stated that, in such circumstances the amount of Rs. 11,51,000 was being offered for taxation in the respective assessment years. 6. But while filing the return in Form No. 2B the assessee stated that the investment in IVPs and KVPs to the extent of Rs. 6 lakhs were made out of the withdrawals made from the company M/s Sunvin Industries (P) Ltd. Clarification was sought from the assessee. The assessee stated that the IVPs of the face value of Rs. 5 lakhs was purchased on 23rd June, 1998 and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the entire investment value for taxation. The return is filed by the assessee after two years from the date of search. In between the long period the assessee had not made any attempt to correct his earlier statement by alerting the authorities that an amount of Rs. 6 lakhs was available from the funds of the company, M/s Sunvin Industries (P) Ltd. Only in the block return the assessee has stated that the sum of Rs. 6 lakhs was utilized for purchasing IVPs and KVPs out of the funds availed from the company. She, therefore, stated that the argument of the assessee is only a self-serving argument advanced at the fag end of the proceedings and, therefore, the explanation of the assessee cannot be accepted as an evidence. 10. The learned CIT further argued the issue in different legal perspective. She stated that if the argument of the assessee that he had received. Rs. 6 lakhs from M/s Sunvin Industries (P) Ltd. is to be accepted then the same should be treated as the income of the assessee under the provisions of s. 2(22)(e) of the IT Act, 1961, as dividend. She stated that the assessee is a director of the said company having 50 per cent shares which amounted to substantial i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the company M/s Sunvin Industries (P) Ltd. also belonged to the same period. Therefore, there is a clear proximity between the availability of funds with the company and the investment made by the assessee in IVPs and KVPs. In view of the proximity, the CIT(A) is justified in drawing the inference of nexus between the source of Rs. 6 lakhs from the company and the corresponding investment made by the assessee in NPs and KVPs. 13. Regarding the legal contention raised by the learned CIT, it is the case of the learned chartered accountant that s. 2(22)(e) will not be applicable in the present case. This is because the amount availed by the assessee from the company was not out of accumulated profits. An appropriation from accumulated profit alone will be considered for the provisions of s. 2(22)(e). There cannot be such a case here. Therefore, what is to be looked into is that cannot be a double taxation on the same amount, one in the hands of the company, and again in the hands of the assessee. He, therefore, submitted that I the order of the CIT(A) on this point is proper and justified. 14. We considered the matter in detail. Regarding the legal contention raised by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries (P) Ltd. and the investment made by the assessee in IVPs and KVPs. Therefore, we cannot object to the finding of the CIT(A) that there is a nexus between the amount available with the company and the investment made by the assessee. Therefore, we have to hold that the CIT(A) is justified in deleting the independent addition of Rs. 6 lakhs made in the hands of the assessee. We confirm the order of the CIT(A) on this point. 16. The next issue raised by the Revenue is that the CIT(A) has erred in holding the sum of Rs. 5 lakhs, added by the AO as part of the cash found and seized from assessee's residence in the course of search (sic). A sum of Rs. 15,13,900 was found at the time of search from the residential premises. At the time of search the assessee explained that the cash belonged to his family members and also to the business carried on by the family. He had also stated that it was not possible for him to give exact details as the books of account were not available with him. The assessee while filing the return of income explained that Rs. 5 lakhs belonged to M/s Sunvin Industries (P) Ltd. He had stated that this information was not furnished earlier as the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the limit of past accumulation usually found in such family. Moreover, as pointed out by the learned chartered accountant, what has been recorded at the time of search was the approximate value of the silver utensils and not the exact cost of acquisition. The cost of acquisition of utensils accumulated from the distant past would be much lower than the value adopted by the AO. We cannot say that the entire utensils were procured during the block period itself. Therefore, we find that the CIT(A) is justified in accepting plausible explanation offered by the assessee and in deleting the sum of Rs. 1 lakh. 19. All the grounds raised by the Revenue in this appeal are found to be unsustainable and as a result thereof. Revenue is not successful in its appeal. 20. Next we will consider the appeal filed by the assessee. The grounds raised by the assessee in this appeal read as below: "1. On the facts and in the circumstances of the case as well as law on the subject, learned CIT(A) has erred in confirming the action of the AO in making addition of Rs. 4,50,000 for alleged unexplained investment in furniture, renovation/interior decoration of residential premises. 2. On the fact a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat he must be given the telescoping benefit of Rs. 4,50,000 which was offered by his father in VDIS, 1997. It is also to be seen that the search has not made out any unimpeachable evidence against the assessee with reference to the exact quantum of cost of renovation expenses. Estimate has played its own role here also. Therefore, we have to accept the contention of the assessee that the credit for sum of Rs. 4,50,000 need to be given to the income offered by assessee's father in VDIS, 1997. 23. Therefore, we delete the addition of Rs. 4,50,000 24. The next point to be considered is Rs. 1,12,866 confirmed by the CIT(A). This amount was claimed by the assessee to be out of his sundry savings. Such contentions were made by the assessee in respect of many other items also. Such general explanation can't be accepted in the case of every addition. Therefore, we find that the CIT(A) is justified in confirming the addition of Rs. 1,12,866. Therefore, it is confirmed. 25. The assessee is partly successful in his appeal. 26. In the result, the appeal filed by the Revenue is dismissed and the appeal filed by the assessee is partly allowed. Order accordingly. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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