C.KISHANLAL,CHENNAI vs. DCIT CENTRAL CIRCLE 3(3), CHENNAI

आदेश / O R D E R

PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER

Appeal Nos. 2928/Chny/2017 to 2931/Chny/2017 are of the

assessee Shri. C. Kishnanlal in his individual status, whereas appeal

No.2932/Chny/2017 is of M/s. C. Kishanlal & Sons (HUF) status

wherein Shri. C. Kishanlal is the Karta. Appeal in ITA Nos.2928 to

2931/Chny/2017 are taken up first for disposal.

Of these four appeals, ITA 2928/Chny/2017 is directed 2.

against an order dated 11.10.2017 of ld. Commissioner of Income Tax

(Appeals)-19, Chennai, confirming certain additions/ disallowances

made by the ld. Assessing Officer in the assessment done for

assessment year 2006-2007. Appeal No.2929/Chny/2017 is against

levy of penalty of �10,00,000/- u/s.271D of the Income Tax Act, 1961

(in short ‘’the Act’’) for loans accepted in cash during the previous year

relevant to assessment year 2006-2007, which levy was confirmed by

ld. Commissioner of Income Tax (Appeals). Appeal

No.2930/Chny/2017 is again levy of penalty of �3,00,000/- u/s.271E

of the Act on repayment of loan in cash for the very same assessment

year, which was also confirmed by ld. Commissioner of Income Tax

(Appeals). Appeal No.2931/Chny/2017 is an appeal against an order

ITA Nos.2928 to 2932/17. :- 3 -:

dated 11.10.2017 of ld. Commissioner of Income Tax (Appeals)-19,

Chennai confirming certain additions/disallowances made by the ld.

Assessing Officer in the assessment done for assessment year 2012-

2013.

2928/Chny/2017 for assessment year 2006-07, count ten of which

grounds 1 and 2 are general needing no specific adjudication,

whereas grounds 10 and 11 are on levy of interest under Section 234A

and 234B of the Act, which are consequential in nature.

Vide its grounds 3 to 5, assessee assails sustenance of an 4.

addition of �90,62,161/-.(Actual figure it appears is �90,66,072/-)

subjected to a search u/s.132 of the Act on 04.01.2012. Consequent to

this, assessee was issued notices u/s.153A of the Act for filing his

returns. Assessee in the return filed for the impugned assessment

year 2006-07, pursuant to such notices, declared an income of

�21,85,268/-. It is to be noted that the income declared was very

same as shown in the regular return filed on 08.05.2007. During the

course of the search, revenue stumbled upon certain records relating

to a suit filed by one Shri. Dharmendra Bafna and others before High

ITA Nos.2928 to 2932/17. :- 4 -:

Court of Madras. From subsequent enquiries it was learned by the

revenue that assessee had paid a sum of �4,65,00,000/- to Shri

Dharmendra Bafna, who was the Managing Director of a company

called M/s. Surana Corporation Ltd, as an investment in the gold

trading business conducted by M/s. Surana Corporation Ltd. It seems

assessee had requested Shri. Dharmendra Bafna to close the account

and return the money, whereupon latter claimed that he was only a

sub-agent of M/s. Surana Corporation Ltd and the money was dealt by

the directors of M/s. Surana Corporation Ltd. Assessee was questioned

by the Revenue on the source for the sum of �4,65,00,000/- advanced

by him to M/s. Surana Corporation Ltd through Dharmendra Bafna.

Assessee thereupon gave the following as the source.

(a) Amount received from 12 persons by cash/ cheque �1,50,06,232/-

(b) Sale proceeds of jewels belonging to the relatives �3,14,93,768/-

assessee. Name of the persons from whom assessee had claimed

receipt of money were as under:-

ITA Nos.2928 to 2932/17. :- 5 -:

Sl.No Name of the person Amount

1 C. Kishanlal �6,56,232

2 B.K. Vimalchand �34,00,000

3 C. Madanlal �50,000

4 Sivarajan Nadar �60,00,000

5 C. Kishanlal & Sons (HUF) �7,00,000

6 V. Suvitha �9,00,000

7 Kanchan Bai �23,50,000

8 C. Madanlal & Sons �50,000

9 Jeevaraji Nadar �2,00,000

10 Kalyanmalji Ranka �2,00,000

11 C.Kamalchand �4,00,000

12 A. Pukhraji Gulecha �1,00,000

Total �1,50,06,232

Based on the evidence filed by the assessee, ld. Assessing Officer

accepted the following out of the above.

a) C. Madanlal �50,000/- b) Sivarajan Nadar �49,40,160/- c) M/s. C. Madanlal & Sons �50,000/- d) M. Jeevaraj �2,00,000/- e) Kalyanmalji Ranka �2,00,000/- f) C. Kamalachand �4,00,000/- g) A.Pukhraji Gulecha �1,00,000/- 59,40,160/-

ITA Nos.2928 to 2932/17. :- 6 -:

It is to be noted that out of the total sum of �60,00,000/- claimed by

the assessee to have been received from Shri. Sivarajan Nadar, a sum

of �49,40,160/- was accepted by the ld. Assessing Officer and balance

sum of �10,59,840/- alone was considered to be unexplained. The

claims which were not accepted by the ld. Assessing Officer were as

under:-

M/s. C. Kishanlal & Sons and C. Kishanlal �6,56,232 M/s. C. Kishanlal (HUF) �7,00,000 C. Shri Sivaraja Nadar �10,59,840 Shri. B.K. Vimal Chand �34,00,000 Smt. V. Suvetha �9,00,000 Smt. Kanchan Bai �23,50,000

Total �90,66,072/-

cited by the ld. Assessing Officer were as under:-

(i) M/s. C. Kishanlal & Sons �6,56,232/- - Though it was claimed

as cash balance held by the assessee, income returned by

the assessee from his business was only �2,20,000/- and

assessee could not have had cash of �6,56,232/- with him.

ITA Nos.2928 to 2932/17. :- 7 -:

(ii) M/s.C. Kishanlal & Sons (HUF) �7,00,000/- - Though

assessee claimed it as an advance received from HUF on

leasing an agricultural land, no details of the land so

leased were made available.

(iii) Shri. Sivaraja Nadar �10,59,840/- - Against the claim of the

assessee that he had received �60,00,000/- from Shri.

Sivaraja Nadar, as advance for purchase of land at Mangadu,

trial Balance as on 31.03.2006, reflected a sum of

�49,40,160/- only. Balance �10,59,840/- remained

unexplained.

(iv) Shri. B.K. Vimalchand �34,00,000/- - Shri. B.K. Vimalchand

was the son of the assessee, and had no sufficient funds in

his account. Income returned by Shri. B. K. Vimalchand for

impugned assessment year was only �1,65,818/-. Bank

account of Shri. B.K. Vimalchand reflected six deposits of

�5,00,000/- each on 19.09.2005 and a sum �30,00,000/-

was transferred on the very same date to assessee’s account.

There was no source shown for the deposits in the bank

account.

(v) Smt. V. Suvitha �9,00,000/- - Smt. V. Suvitha, daughter-in-

law of the assessee, though she had confirmed that she

had given �9,00,000/- to the assessee, she was only a

ITA Nos.2928 to 2932/17. :- 8 -:

housewife and her income was very low.

(vi) Smt. Kanchan Bai, �23,50,000/- - Though Smt. Kanchan Bai

who was assessee’s wife, confirmed the above payment to

the assessee, she also was only a housewife with very low

income.

Tax (Appeals) against the additions aggregating to �90,66,072/-

disbelieving the claim of receipt of loans/ advances, did not meet with

any success. Though the assessee argued that all the above loans

were reflected in the returns of the respective parties, ld. CIT(A) was

not appreciative of such contention.

assailing the orders of the lower authorities submitted that cash

balance of �6,56,232/- with the assessee ought not have been

disbelieved. According to him, assessee’s capital account balance as

on 01.04.2005 was �62,83,274/- and assessee had gross total income

of �10,64,876/- during the previous year relevant to assessment year

2006-2007. Thus, according to him, cash balance of �6,56,232/-

ought not have been disbelieved.

ITA Nos.2928 to 2932/17. :- 9 -:

received from Shri. C. Kishnalal & Sons (HUF), ld. Authorised

Representative submitted that the said amount was reflected in the

Trial Balance and return of income filed by the said HUF. As per the ld.

Authorised Representative, HUF had earlier advanced a sum of

�10,20,000/- to one Shri. M. Venkatachalam who had repaid it in two

installments during the relevant previous year. According to him, HUF

had advanced �7,00,000/- to the assessee out of the said amount.

received from Shri. Shivraj Nadar, contention of the ld. Authorised

Representative was that the said sum was duly reflected in the ledger

of the assessee. According to him, the sum of �10,59,840/- was

adjusted against agricultural land sold by the assessee as power

agent and after such adjustments the balance due to Shri. Shivraj

Nadar was �49,40,160/-. According to him, this did not deplete the

availability of �60,00,000/- with the assessee.

B.K. Vimalchand, ld. Authorised Representative submitted that the

amount was duly reflected in the return filed by Shri. B.K. Vimalchand

for assessment year 2006-07. According to him, Shri. B.K. Vimalchand

in the previous year relevant to assessment year 2005-06, had given

ITA Nos.2928 to 2932/17. :- 10 -:

a sum of �34,00,000/- to one Shri. Gopal Nayakar and one Shri. Ethiraj

which were refunded during the previous year relevant to the

impugned assessment year. Source according to the ld. Authorised

Representative, stood proved.

Smt. V. Suvitha, daughter-in-law of the assessee, contention of the ld.

Authorised Representative was that the said amount was duly reflected

in the Income Tax return filed by her, and also corroborated by a

letter of confirmation.

Kanchan Bai, who was assessee’s wife, contention of the ld. Authorised

Representative was that Smt. Kanchan Bai was into pawn broking

business since 1972 and was a regular assessee . According to him, in

the tax return filed by her, the advance of �23,50,000/- given to her

husband was clearly reflected.

supporting the orders of the lower authorities submitted that assessee

could not properly explain the source of even one creditor. According

to him, each of the allged creditors were closely related to the

assessee and had only very negligible income. As per ld. Departmental

Representative, the claim of receipt of such amounts from close

ITA Nos.2928 to 2932/17. :- 11 -:

relatives was only a story made up by the assessee for justifying the

source of �4,65,00,000/- advanced by him to M/s. Surana Corporation

Limited.

orders of the authorities below. It is not disputed that total claim of

receipts of loans/ advances made by the assessee came to

�1,50,06,232/-, out of which ld. Assessing Officer had accepted the

evidence for �59,40,160 /- and made an addition of �90,66,072/-.

Breakup of the sum disbelieved by the ld. Assessing Officer is

reproduced at para 6 above. First item therein is a claim of the

assessee that �6,56,232/- had come out of his cash balance. Paper

book page No.109, which gives the capital account of the assessee

for the period 01.04.2005 to 31.03.2006, reflects opening balance of

�62,83,274.73 and closing balance of �89,11,499.75. Transactions in

this capital account do not show any amount to have been utilized for

effecting payment to M/s.Surana Corporation. If it had come out of the

cash balance, as claimed by the assessee, it would be definitely

reflected in his capital account. In the circumstances, we are not

inclined to accept the claim of the assessee that the sum of

�6,56,232/- came out of his capital account. The sum remains

unexplained, without source.

ITA Nos.2928 to 2932/17. :- 12 -:

assessee that a sum of Rs.7,00,000/- was received from C.Kishnalal &

Son (HUF), Income Tax return of the said HUF for assessment year

2006-07 is placed at paper book page 125. The said Income Tax

return has been filed on 23.02.2007 much prior to the date of search.

Trial Balance as on 31.03.2006, filed alongwith the said return, copy

of which is available at paper book page 127 clearly shows an

agricultural land advance of Rs.7,00,000/- paid to C. Kishanlal. In our

opinion, return of C.Kishnalal & Son (HUF) having been filed much

earlier to the date of search, there can be no reason to disbelieve the

advance shown in such return. It may be true that assessee could not

produce evidence for the advance paid by C.Kishnalal & Son (HUF) to

Shri. M. Venkatachalam in an earlier year, and returned by the latter

in the relevant previous year. However, it is clear from the Wealth

Tax return filed by C.Kishnalal & Son (HUF), copy of which is placed at

paper book pages 121 to 124, that the said HUF was having

agricultural land. In the circumstances, we are of the opinion that the

claim of receipt of Rs.7,00,000/- from C.Kishnalal & Son (HUF) ought

not have been disbelieved.

Rs.60,00,000/- from Shri. Shivraj Nadar, what we find is that ld.

Assessing Officer had accepted it, but for a sum of Rs.10,59,840/-.

ITA Nos.2928 to 2932/17. :- 13 -:

Ledger page of Shri. Shivraj Nadar in the books of the assessee is

placed at paper book page No.155. Sale agreement pursuant to which

such the sum was received by the assessee is placed at paper book

pages 152 and 153. Shri. Shivraj Nadar had confirmed the payment

through a letter dated 31.3.2006 placed at paper book page 154.

Said confirmation letter reads as under:-

S.SIVARAJA. No.159, Arcot Road, Porur, Chennai 600 116. Date: 31.03.2006.

CONFIRMATION I hereby confirm having advanced a sum of Rs.20,00,000/- on 28.09.2005, Rs.20,00,000/- on 30.09.2005 and Rs.20,00,000/- on 03.10..2005 in all total Rs.60,00,000/- paid to Shri. C.Kishanlal, residing at No.23, Kutchery Road, Mylapore, Chennai — 600 004 towards the purchase of Agricultural land at Mangadu Village, Sriperurnudur Taluk, After Sale of Rs.10,59,840/. adjusted in the advance. Balance Rs.49,40,160/- is Advance till date. Sd/- SIVARAJA PAN NO. ARNPS447OQ To Shri. C.Kishanlal No.2 3, Kutchery Road, Mylapore, Chennai —600 004.

Ledger page of Shri. Shivraj Nadar in the books of the assessee clearly

reflected all the above transactions. In our opinion, receipt of

ITA Nos.2928 to 2932/17. :- 14 -:

Rs.60,00,000/-has been duly shown in assessee’s books. Sum of

Rs.10,59,840/- was only an adjustment due to sale of land and this

did not result in depletion of the funds available with the assessee.

We are of the opinion that assessee has substantiated the claim of

receipt Rs.60,00,000/- in full.

B. K. Vimalchand. What we find is that the Auditor of Shri. B. K.

Vimalchand had given a confirmation to the ld. Assessing Officer, copy

of which is available at paper book page 149 and it read as under:-

RICABCHAND&CO., . Phone:25387313 Chartered Accountants No.121,N.S.C.BOSE ROAD, M.GOUTAMCHAND JAIN,B.COM., F.C.A Sowcarpet, Chennai-6000079 Date :11.03 2014 The Assistant Commissioner of Income Tax, Central Circle III (3), Chennai- 600034.

Sir Ref: Shri.C.Kishanlal, PAN : AAKPK 7263 K/2006-2007 Sub : Source for money advanced by Shri,B.K.Vimalchand to Shri.C.Kishanlal- regarding.

With reference to above and we state that Shri.B.K,Vimalchand has deposited a sum of Rs.3000000/- by way of cheque during the ass.year 2006-2007 with Shri C.Kishanlal. The source for above deposited made by Shri.B.K.Vimaichând is out of refund by Agriculture land advance of Rs.3400000/- which was made by him during the asst.year 2005-2006.We are herewith enclosing the financial statement of Shri B.K.Vimalchand relating

ITA Nos.2928 to 2932/17. :- 15 -:

to asst.year 2005-06. We are also herewith enclosing intimation of 143(1) of the I T.Act of relating to asst.year 2005-2006 and 2006-2007 of Shri.B.K.Vimalchand as well as his Bank statement for year ended 31.03.2006. We hope the above will clarify the matter regarding source of money advanced by Shri.B.K.Vimalchand to Shri.C.Kishanlal during the asst.year 2006-07. Thanking you Yours Faithfully, For RICAB CHAND & CO., Chartered Accountants End: 1. Financial Statement of Shri.B.K.Vimalchand relating to asst.year 2005-06. 2. Xerox copy of intimation B.K.Vimalchand relating to asst,year 2005-06 & 2006-07. 3. Xerox copy of Bank Statement of Shri.B.K.Vimalchand for the period 01.04.2005 to 3 1.03.2006.

The confirmation letter clearly indicate that Shri. B. K. Vimalchand was

an assessee and filing Income Tax return regularly. The amounts

were given through cheques. It is true that there were deposits

aggregating to Rs.30,00,000/- in the bank account of Shri. B. K.

Vimalchand on 19.09.2005 and the sum of Rs.30,00,000/- was given

by Shri. B. K. Vimalchand to the assessee on the very same day.

However, nothing has been brought on record by the Revenue to show

that credits in the bank account of Shri. B. K. Vimalchand had come

out of the funds of the assessee. That apart, the trial Balance as on

31.03.2006 of Shri. B. K. Vimalchand filed alongwith his return for

assessment year 2006-07, placed at paper book page 146 clearly

show a sum of Rs.31,61,400/- in the credit of Shri. C.Kishnalal.

ITA Nos.2928 to 2932/17. :- 16 -:

Shri. B. K. Vimalchand had filed his return for assessment year 2006-

07 on 19.10.2006 much earlier to the date of the search and

acknowledgment is placed at paper book page 142. In such

circumstances, we are of the opinion that there was no reason to

disbelieve the loan of Rs.30,00,000/- received from Shri. B. K.

Vimalchand.

Rs.9,00,000/- received from Smt. V. Suvitha, daughter-in-law of the

assessee, we find that Smt. V. Suvitha had filed her Income Tax return

for assessment year 2006-07 on 19.10.2006. Acknowledgement has

been placed at paper book page 156. Trial balance of Smt. V. Suvitha

as on 31.03.2006 placed at page book page 158 reflected an

agricultural loan advance of Rs.9,00,000/- to Shri. C. Kishnalal. In such

circumstances, conclusion of the Revenue that Smt. V. Suvitha had no

sufficient income to give an advance of Rs.9,00,000/- to the assessee

cannot be accepted. Just because Smt. V. Suvitha had total income

of Rs.1,38,088/- only for the impugned assessment year, we cannot

say that Smt. V. Suvitha did not have the wherewithal to give a loan

of Rs.9,00,000/- to the assessee.

ITA Nos.2928 to 2932/17. :- 17 -:

Smt.Kanchan Bai, wife of the assessee. Here also we find that

Smt.Kanchan Bai had given a confirmation which reads as under:-

Kanch Bai No.23, Kutchery Road, Mylapore, Chennai —600 004. Date: 31.03.2006 CONFIRMATION I hereby confirm having advanced a sum of Rs.25,40,000/- ( Rupees Twentyfive Lakhs Forty Thousand ) (Details as below ) to Shri. C.Kishanlal, residing at No.23, Kutchery Road, Mylapore, Chennai — 600 004 towards lease advance for Agricultural land situated at No.41, Laxmipuram Village, Sri-perumpudur Taluk, Thiruvallur District comprised in Survey no. 23/4A of an extent 0 acre 31 cents, Survey no. 59/1A1 of an 0 acre 02 cents, Survey no. 59/1B2 of an extent 0 acre 07 cents, Survey no. 59/2A1 of an extent 0 acre 26 cents, Survey no. 34/3B of an extent 0 acre 28 cents, Survey no. 34/3A of an extent 0 acre 04 cents, Survey no. 30/2 of an extent 0 acre 02 cents, Survey no. 28/1 of an extent 0 acre 59 cents, and Survey no. 28/2 of an extent 0 acre 58 cents and Agricultural Land situated at No. 49, Veeraragavapuram Village, Tiruttani Taluk, Thiruvallur District comprised in Survey No. 219/2A of an extent 0 acre 91 cents, Survey No. 220/1 of an extent 1 acre 25 cents and Survey No. 170/15 of an extent 0 acre 86 cents. 18.10.2005 23,50,000.00 24.03.2005 Further Advance 1,90,000.00 Total Rs. 25,40,000.00 Sd/- KANCHAN BAI PAN NO. AAIPK6835H To Shri. C.Kishanlal No.23, Kutchery Road, Mylapore, Chennai — 600 004.

Source for the above amount was given by her through a letter dated

13.11.2013 placed at paper book page No.165. This letter read as

under:-

ITA Nos.2928 to 2932/17. :- 18 -:

Date: 13.11.2013. Kanchan Bai, No 23, Kutchery Road, Mylapore, Chennai—600 004. To The Assistance Commissioner of Income Tax, Central Circle —III (3) Chennai-600 034. Sir, Ref: PAN.No: AAIPK 6835 H / 2006-07 Sub: Income Tax assessment —assessment year 2006-07.Details of for Agri.Land / Plot given by me. With reference to the above, I state that I have given a sum of Rs.2540000/- (Rs. 23,50,000 on 18/10/2005 and Rs 1,90,000 on 24/03/06) as security / margin money to Shri C Kishan Lal by way of cash for leasing out the agriculture land measuring 2.17 acres at Agaraharam Village,Poonamalee Taluk,Thiruvallur District and measuring Acres at Veeraghavapuram, Agri.Land measuring 1.45 acres at Mangadu Village and 2.39 acres at Padamatikhandriga village sullurpet mandal as per entered with him. The Lease was terminated and the amount was received back by me by way of Cheque as follows: cheque No Date Amount 488319 11.05.2010 440000.00 982781 15.09.2010 700000.00 982782 15.09.2010 600000.00 982783 15.09.2010 400000.00 982784 15.09.2010 400000.00 Total 2540000/- I hope the above will explain the details of security / margin money. Thanking you, Yours faithfully. Sd/- (Kanchan Bai)

Smt.Kanchan Bai was an assessee and had filed her return for

assessment year 2006-07 on 31.10.2006. Trial Balance of

ITA Nos.2928 to 2932/17. :- 19 -:

Smt.Kanchan Bai as on 31.03.2006 clearly reflected an agricultural

land advance of Rs.25,40,000/- paid by her to

Shri. C. Kishnalal. Hence in our opinion, there was no reason to

disbelieve the advance of Rs.23,50,000/- claimed to have received

been from Smt.Kanchan Bai.

delete the additions made by the lower authorities with regard to the

following loans/advances claimed by the assessee.

M/s. C. Kishnalal & Sons : Rs.7,00,000/-

Shivraj Nadar : Rs.10,59,840/-

B.K. Vimalchand : Rs.30,00,000/-

V.Suvitha : Rs.9,00,000/-

Kanchan Bai : Rs.23,50,000/-

Balance addition is sustained. Grounds 3 to 5 are treated as partly

allowed.

�3,14,93,768/- made disbelieving the claim of sale proceeds of

jewellery belonging to his relatives.

ITA Nos.2928 to 2932/17. :- 20 -:

investment of Rs.4,65,00,000/- made by the assessee with M/s.

Surana Corporation was partly explained by the assessee as coming

out of sale proceeds of jewels of relatives. Assessee had stated before

the ld. Assessing Officer that proof for sale of jewellery aggregating to

�3,14,93,768/- belonging to his family members, were handed over to

Shri. Saravana Prabhu, Inspector of Police, Egmore, when a police

complaint was filed by the assessee against M/s. Surana Corporation.

However, it seems assessee was unable to furnish any confirmation or

acknowledgment for handing over the bills to the police authorities. As

per the ld. Assessing Officer, Superintendent of Police, CB-CID, had

informed through his letter dated 27.01.2014 that no such bills were

handed over by the assessee. Claim of the assessee before ld.

Assessing Officer was that his family members had in their respective

Wealth Tax returns shown the jewellery owned by them and

therefore the sale of such jewellery by him was genuine. However,

the ld. Assessing Officer was of the opinion that there was nothing on

record to prove the sale of such jewellery. The claim was

disbelieved and an addition of �3,14,93,768/- was made. The said

addition was confirmed by the ld. Commissioner of Income Tax

(Appeals) as well.

ITA Nos.2928 to 2932/17. :- 21 -:

assailing the orders of the lower authorities submitted that copies of

the bills for sale of the jewellery were given to the Crime Branch

Police, in connection with the cheating case filed by the assessee

against Shri. Dharmendra Bafna and M/s. Surana Corporation Ltd.

According to him, ownership of the jewellery by the relatives of the

assessee was not disputed by the lower authorities. Submission of

the ld. Authorised Representative was that confirmations were

available from each of the relatives who had given the jewellery as

deposit with the assessee. According to him, lower authorities fell in

error in disbelieving the sale of jewellery claimed by the assessee.

supporting the orders of the lower authorities submitted that letter

from Superintendent of Police went against the assessee. According to

him, the Superintendent of Police had clearly stated that assessee

had not handed over any bills for sale of jewellery to Shri. Saravana

Prabhu, Inspector of Police.

orders of the authorities below. Declarations filed by the assessee

from his relatives with regard to the jewellery deposited by them with

the assessee are placed at paper book pages 174 to 189. Residential

ITA Nos.2928 to 2932/17. :- 22 -:

address given by all such persons as are Kutchery Road, Mylapore.

Residentce numbers given are New No.43 (Old No.24) and New

No.41 (Old No.23) except for the declarations of Shri. C. Kamal Chand

and Smt. K. Susila. In other words almost all such persons were

residing at Old No.23 or Old No. 24 of Kutchery Road, Mylapore.

Panchanama prepared at the time of search placed at paper book

page No.28 indicate the place of search as Old No.23, Kutchery Road.

It is not disputed by the Revenue that the persons from whom

assessee had claimed receipt of gold ornaments as deposits were all

his close relatives. In the Crl. M.P. No.7934/15 filed by the Inspector of

Police before Hon’ble Principal District and Sessions Judge, Chennai

placed at paper book pages 207 to 214 in connection with the case

filed by the assessee, it is stated by the said officer as under at para

8:-

ITA Nos.2928 to 2932/17. :- 23 -:

iii. The De-facto Complainant collected funds in the form of cash and jewels from the relatives for investing the amount in Gold Trade business and decided to use the profit for the compound wall erection at the Trust at Sulurpet. iv. The De-facto Complainant collected Rs. 39,37,910)- by way of cash and jewels from one Vimal Chand, Rs. 53,51,930/- by mortgaging the land and jewels from Tmt. Kanchan Bai, Rs. 70 lakhs worth of jewels from Tmt.Prema Bai, Rs. 40 lakhs by cash and jewels from Tr. Kamalchand, Rs. 36 lakhs by way of jewels from Tmt. Tr. Abayakumar, Rs. 17 lakhs by cash and jewels from Susila Bai, Rs. 40 lakhs by mortgaging the land and jewels from Tmt, Suvitha, Rs. 31 lakhs by way of jewels from Tmt.Sasikala, Rs. 2 lakhs by cash from Ti. Jeevaraj, Rs. 2 lakhs by cash from Tr. Kalyanmal, Rs. One lakh by cash from Tr. Pukkiraj, Rs. 7 lakhs worth of jewels from Selvi Priyanka and his own funds. Thus in all he has collected Rs. 4.65 crores. The documents collected during investigation all are vouched the source for the by the de- facto complainant. v. The De-facto Complainant entrusted the above said Rs. 4.65 crores to the petitioner I accused in between 06-10-2005 and 17-11-2005 in several occasions at R.B. Jewellery, Sowcarpet, Chennai, believing the version of the accused. Further on 05-10-2005 as genuine that more profits would be returned if invested in gold trade. The De-facto Complainant would nothave parted the above sum but for the dishonest inducement made by the petitioner / accused. The De-facto Complainant was also made to believethat the business will be done by following the norms in practice such as obtaining trade order agreement from the investors, execution of trade order, furnishing, execution order, execution time and dated, Gold Price etc. But they did not entertain the gold business and not even return the principal and profit amount. Thus the Petitioner I accused dishonestly induced the De-facto Complainant to part with Rs. 4.65 crores to them and then cheated the de-facto complainant.

In our opinion, the above clearly indicates that documents collected

during investigation were vouched for the source for invested

amount. There is no case for the Revenue that during the course of

search, any of the jewellery deposited by the close relatives with the

ITA Nos.2928 to 2932/17. :- 24 -:

assessee, were found or were available. If it was still with the

assessee or such relatives, who were all living with the assessee or in

the very next door, it would have been found by the Inspecting

Officials. Admittedly, nothing of the sort was found. As mentioned

by us, declarations of the relatives placed at paper book pages 174 to

204 has not been doubted by the lower authorities. Their doubt is on

claim of the assessee that such jewellery was sold by the assessee. In

our opinion, report filed by the Investigating Officer before Principal

District and Sessions Judge when seen along with the failure of the

Revenue to find any such jewellery at the time of search, clearly

indicate that the jewellery deposited by the close relatives with the

assessee were sold by the latter. Preponderance of probability, in our

opinion, is on the side of the assessee. We are of the opinion that the

claim of the assessee that a sum of �3,14,93,768/- had come out of

sale proceeds of jewellery deposited by his relatives with him, ought

not have been disbelieved. Addition of �.3,14,93,768/- stands deleted.

Grounds 6 & 7 of the assessee stand allowed.

addition of �14,98,780/- made under the head long term capital gains.

sold two plots at Mangadu for a sale consideration of �3,59,680/- and

ITA Nos.2928 to 2932/17. :- 25 -:

paid capital gains thereof. According to him, ld. Assessing Officer had

applied Section 50C of the Act and substituted the guideline value and

made an addition of �14,98,780/-. According to him, Section 50C of

the Act ought not have been applied on the sale of the land.

supported the orders of the lower authorities.

orders of the authorities below. Ld. Assessing Officer has given a

clear finding that actual sale effected by the assessee was ten plots

and its guideline value came to �16,71,475/-. After giving allowance

for indexed cost of land of �1,72,695/-, ld. Assessing Officer had

computed the capital gains at �14,98,780/-. Assessee had through his

letter dated 14.03.2014 agreed for adoption of the guideline value

u/s.50C of the Act. Having agreed for adopting guideline value, we

are of the opinion that assessee cannot now take a grievance that

such Section was wrongly applied. Thus, we do not find any merits in

grounds 8 & 9 of the assessee. These grounds are dismissed.

No.2931/CHNY/2017, which is directed against an order dated

11.10.2017 of ld. Commissioner of Income Tax (Appeals)-19, Chennai

for assessment year 2012-2013.

ITA Nos.2928 to 2932/17. :- 26 -:

1 & 2 are general needing no specific adjudication and grounds 9 & 10

are on levy of interest under Section 234A & 234B of the Act which are

consequential in nature.

of �3,22,948/- considered as unexplained cash.

�4,50,000/- was found at the time of search on 04.01.2012. However,

according to him, this was properly explained through cash books

maintained by the assessee. According to him, the main cash book as

on 31.12.2011 reflected cash balance of �3,11,722/-, but this was not

considered. According to him, if this was considered, the deficit would

come down to �11,226/- only.

main cash book claimed by the assessee was never found at the time

of search. According to him, it cannot be relied upon.

orders of the authorities below. It is not disputed that cash of

�4,50,000/- was found at the time of search. Pawn register found at

the time of search reflected cash balance of �1,27,052/- only. In the

circumstances, we are of the opinion that lower authorities were

ITA Nos.2928 to 2932/17. :- 27 -:

justified in ignoring any other books produced by the assessee at a

later stage. The addition of �3,22,948/-, in our opinion was rightly

made. Grounds 3 and 4 of the assessee stand dismissed.

of �1,26,76,768/- considered as unexplained investment in silver bars.

search 325.334 kgs of silver in the form of silver bars were found and

seized by the Department. According to him, out of the above

325.334 kgs, 243.784 kgs belonged to assessee’s mother. Contention

of the ld. Authorised Representative was that assessee’s mother, Smt.

Saya Bai had declared such silver under VDIS scheme in 1997.

However, according to him, this was disbelieved by the lower

authorities for non availability of evidence for conversation of silver-

ware to silver bars. According to him, assessee ought have been given

credit for the silver already declared by his mother.

bars found at the time of search were imported and assessee could not

show that silver utensils were converted into imported bars.

orders of the authorities below. It is not disputed that silver weighing

243.784 kg were declared by assessee’s mother under VDIS scheme

ITA Nos.2928 to 2932/17. :- 28 -:

in 1997. It may be true that the silver-ware was declared in the

VDIS return as house hold articles. However, it is not disputed that

Smt. Saya Bai mother of the assessee lived with the assessee till her

demise. Claim of the assessee is that his father had converted the

silver articles to silver bars which were found at the time of search. In

our opinion, if assessee had with him any silver-ware other than the

silver bars, it would have definitely come to the notice of the search

officials at the time of the search. It is not disputed that assessee’s

mother and father lived with the assessee. Hence preponderance of

probability is that the bars found at the time of search was

represented by conversion of silver-ware of assessee’s mother. We

are of the opinion that out of 325.334 kgs of silver bars found at the

time of search, assessee should be given credit for 243.784 kgs owned

by his mother. We therefore set aside the orders of the lower

authorities and remit the issue back to the ld. Assessing Officer for

giving relief to the assessee proportionate to the value of 243.784 kg

of silver out of total 325.334 kgs found at the time of search. Grounds

5 & 6 of the assessee are treated as partly allowed.

agricultural income of �89,174/- was not accepted by the lower

authorities.

ITA Nos.2928 to 2932/17. :- 29 -:

income of �89,174/- was earned from 3.26 acres of land owned by

the assessee. According to him, proof of ownership of the land was

filed before lower authorities. As per the ld. Authorised

Representative, assessee had shown agricultural land in his Wealth

Tax returns filed prior to the date of search. According to him, the

claim of agricultural income was unjustly disallowed.

there was no details or evidence given by the assessee for earning

any agricultural income.

orders of the authorities below. It is not disputed by the Revenue that

assessee owned 3.26 acres of land. It might be true that assessee

was unable to produce evidence for agricultural cultivation and

earning of agricultural income. Nevertheless, we cannot say that

assessee could have earned no agricultural income from a holding of

3.26 acres of land. We are of the opinion that assessee ought have

been given credit of agricultural income at the rate of �5,000/- per

acre. Accordingly, we restrict the addition to �72,874/-. Grounds 7 & 8

of the assessee are partly allowed.

ITA Nos.2928 to 2932/17. :- 30 -:

2930/CHNY/2017 which are against levy of penalty u/s.271D and 271E

of the Act respectively.

has accepted loans in excess of �20,000/- in cash, aggregating to

�10,00,000/- from six persons and repaid �3,00,000/- in cash to two

persons. Ld. Assessing Officer took a view that assessee having

violated Section 269SS and Section 269T of the Act levy of penalty

u/s.271D and 271E of the Act was called for . Penalty of �10,00,000/-

was levied u/s.271D of the Act and �3,00,000/- was levied u/s.271E of

the Act, which were confirmed by ld. Commissioner of Income Tax

(Appeals) on the appeals of the assessee.

could not give any reasonable ground for accepting loans in cash and

repaying loans in cash. Though assessee argued before lower

authorities that amounts were received as advance against sale of

agricultural land, no evidence to substantiate such claim was

produced. In the absence of any reasonable cause for accepting loans

in cash and repaying loans in cash, we are of the opinion that there

was clear violation of Section 269SS and Section 269T of the Act. Levy

ITA Nos.2928 to 2932/17. :- 31 -:

of penalty u/s.271D and 271E in our opinion was justified. We do not

find any reason to interfere with the orders of the lower authorities.

& Sons (HUF) in ITA No.2932/CHNY/2017 for assessment year 2006-

2007.

& 2 are general needing no specific adjudication. Grounds 8 & 9 are on

levy of interest u/s.234A and 234B of the Act, which are consequential

in nature.

sale of jewellery, and what is claimed as erroneous computation of

cost of acquisition of the jewellery.

had given jewellery weighing 604.800 gms to Shri. C. Kishanlal as

deposit. According to him, HUF had never required Shri. C. Kishanlal to

sell such jewellery. As per the ld. Authorised Representative, Shri. C.

Kishanlal had sold the jewellery without the knowledge of HUF. Thus,

according to him, capital gains arising on such sale could not have

been taxed in the hands of the HUF. In any case according to him,

while computing the long term capital gains, cost of acquisition was

taken at 50% which was incorrect. According to him, the HUF had

ITA Nos.2928 to 2932/17. :- 32 -:

declared such jewellery in its Wealth Tax returns from assessment

years 2001-02 onwards. As per the ld. Authorised Representative, cost

of jewellery had to be reckoned considering the value as on date of

acquisition of such jewellery by the HUF.

the orders of the lower authorities

orders of the authorities below. Contention of the ld. Authorised

Representative is that Shri. C. Kishanlal had sold the jewellery given

to him by the HUF without the permission of the HUF. We are afraid,

we cannot accept the claim of the assessee. This is due to the reason

that Shri. C. Kishanlal to whom the jewellery was given was the Kartha

of the assessee (HUF). Hence, he cannot say that he was unaware of

the sale of jewellery. Hence, ground of the assessee assailing the

addition made long term capital gains is dismissed. However viz-a-viz,

cost of acquisition, it is an admitted position that ld. Assessing Officer

had considered such cost at 50% of the sale value. Contention of the

assessee is that the jewellery which was sold was reflected in the

Wealth Tax return of the HUF from assessment year 2001-02. We

direct the ld. Assessing Officer to verify this claim of the assessee and

consider the cost shown by the assessee in the Wealth Tax return for

assessment year 2001-02, for the purpose of computing the long

ITA Nos.2928 to 2932/17. :- 33 -:

term capital gains. Grounds 3 to 6 are dismissed whereas ground No. 7 is allowed for statistical purpose.

Sd/- Sd/- (एन.आर.एस. गणेशन)) (अ�ाहम पी. जॉज�) (N.R.S. GANESAN) (ABRAHAM P. GEORGE) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai �दनांक/Dated:20th December, 2018 KV आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF