NISHA B PATRA,MUMBAI vs. ASST CIT CEN CIR 18 & 19, MUMBAI

आदेश / O R D E R Per Bench: All these appeals filed the assessees cited above and the Revenue are directed against the separate orders passed by learned CIT(A) in their respective hands. All the appeals except that filed by Shri Karan P Batra

S.No. Name of assessee Amount in dispute (for quantum appeal) in Rs. 1 Chaturbhuj T Batra 92,82,233 2 Varsha Batra, 4,80,000 3 Premkumar Batra 66,64,608 4 Karan Batra, 3,02,750 5 Nisha P Batra 4,48,275 The assessing officer mainly placed reliance on certain documents found during the course of search wherein the entries were found to have been 5 and other seven cases made in short form. The assessee gave some explanations with regard to those entries, but the assessing officer interpreted the same differently and accordingly concluded that the assessees have been declaring brokerage income only @ 50% and the balance amount was suppressed. Accordingly he added the equal amount of brokerage declared by the assessees in all the years covered by the search assessments.

“4. At the outset, it has been brought to our notice that the cases in hand are squarely covered by the decision of the Tribunal in the case of Shri Rajeev C. Batra in for the assessment year 2003-04, wherein similar addition made/confirmed

6 and other seven cases by the AO/CIT(A) on the basis of the same seized document has been deleted by the Tribunal and the findings of the Tribunal in para 6 of the said order is extracted hereunder:- “I have considered the rival submissions mad by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the paper book filed on behalf of the assessee. I find, the Assessing Officer relied on the order in the case of Shri C.B. Batra and held that the assessee is receiving 50% of the brokerage in cash which is unaccounted in the books. I find, the Assessing Officer has taken this view on the basis of seized documents with regard to two properties namely Regiland Flat in 5th' Floor and Flat at Sommerset Building. No independent enquiry from the purchasers has been made. I find, the CIT(A) had mentioned in para 11.1 of his order that 'at the outset it is to be mentioned that there is no clear cut evidence available to show that any cash component is involved in this transaction.' Further the submissions of the assessee before the CIT(A) that the seized document relating to the residential flat was a trade enquiry which was sold two years after and does not relate to Assessment Year 2003-04 could not be controverted by the ld.D.R. Further; the submission of the assessee before the CIT(A) that Flat at Sommerset Building has not been sold and the finding of the CIT(A) that there is no evidence to show that the transaction took place through the assessee also could not be controverted by the ld D.R. I find, in para 11.4 of the CJT(A)'s order; the Ld.CIT(A) has mentioned that he was convinced that these seized documents do not indicate any cash component of brokerage received by the assessee. I find despite giving this findings, which are reproduced elsewhere in this order; the CIT(A) sustained the addition on the ground that the appellant was not accounting the brokerage income correctly. This, in my opinion, is uncalled for. It has been held by various judicial pronouncements that presumptions and surmises, however, strong may be cannot be the basis for any addition. (Dhakeswari Cotton Mills Ltd. vs. CIT 26 ITR 775) in the instant case, there is no evidence on record to show that the assessee has received brokerage income on account of cash components. The CIT(A) has 7 and other seven cases already sustained the unexplained deposit of Rs.98,765/- and the assessee is not in appeal for the same before the Tribunal. It has also been held by the Ld. CIT(A) that the only income of the assessee is from brokerage. Therefore, when the unexplained deposits of Rs.98,765/- has been added and the only source of income of the assessee being brokerage and since the assessee being brokerage and since the assessee has not challenged the same, therefore, confirming the addition of Rs. 1 lakh made by the Assessing Officer on estimate basis and telescoping the same in my opinion is not justified. I therefore, set aside the order of the Ld. CIT(A) on this issue, The ground raised by the assessee is accordingly allowed. " 4.1 After considering the fact that similar additions of estimated brokerage made on the basis of the same document seized, has been deleted by the Tribunal, we are of the considered opinion that the impugned additions confirmed by the Ld.CIT(A), on estimate basis and telescoping the same is not justified in the cases of Shri Rajeev C. Batra and Shri Karan P. Batra. Therefore, we set aside the impugned orders of the Ld.CIT(A) in the said cases and the additions made/confirmed on this count stand deleted.”

8 and other seven cases Unaccounted brokerage M/s Vinita Estated - Rs.25,25,400/- Unaccounted brokerage of Chinar, Rajrishi And Powai properties - Rs.37,30,690/- The revenue is challenging the telescoping benefit granted by the Ld CIT(A). Since we have deleted the addition relating to Cash component of brokerage, the telescoping benefit given by Ld CIT(A) shall stand vacated and hence the appeal filed by the revenue shall become infructuous. Accordingly we dismiss the appeal filed by the revenue in the case of Chaturbhuj T Batra for AY 2007-08.

9 and other seven cases that the bills are generally prepared only after rendering the services. Despite the denial of transactions by both the concerned parties, the AO took the view that both the assessees and M/s Vinita Estates (P) Ltd are not coming out with truth. During the course of search such kind of proforma invoices prepared by the assessees were found and the explanations furnished by the assessee were not found to be satisfactory. Accordingly, the AO held that the income shown in the proforma invoices has been suppressed by the assessees and accordingly assessed the same.

10 and other seven cases on record to show that these assessees have received any money over and above that mentioned in the statement. By placing reliance on the decision rendered by Hon’ble Supreme Court in the case of Godhra Electricity company (225 ITR 746)(SC), the Ld A.R contended that the assessing officer could assess only the real income has accrued or received or deemed to have been accrued or received. He submitted that the assessing officer has not brought any material to show that the income stated in the proforma invoices has accrued to the assessees herein.

14.1 The facts relating to the first issue are stated in brief. During the course of search a document showing the details of certain transactions in respect of properties located in Chinar, Rajrishi, Powai and Kandivali was found. The details noted in the document were (a) extent of the flat; (b) the price per Sq.ft. of the flat and (c) some amount. The AO noticed that the amount stated in the paper works out to 2% of the value of the flat. Accordingly, the AO tabulated his workings of commission income in pages 84 and 85 of the assessment order and the aggregate amount of commission income was arrived as under:- Chinar, Rajrishi, Powai & Kandivili properties 53,88,740 Kandivili (another property) 15,60,000 ----------------- 69,48,740 ========= However, while making addition, the assessing officer took the aggregate amount as Rs.73,93,740/- resulting in enhanced addition by Rs.4,45,000/-.

14.2 Before Ld CIT(A), the assessee offered certain explanations and hence the first appellate authority called for a remand report from the AO. In the remand report, the assessing officer accepted that a sum of 12 and other seven cases Rs.32,18,050/- has been accounted for by the assessee and accordingly reported that credit for Rs.32,18,050/- needs to be given. The Ld CIT(A) also appreciated the casting error pointed by the assessee. Accordingly, he gave relief of Rs.36,63,050/- (Rs.32,18,050/- + Rs.4,45,000/-) and confirmed the balance amount of Rs.37,30,690/-.

14.3 The Ld A.R submitted that the assessee has accepted the addition on this account only to the extent of Rs.12,50,000/- over and above the amount of commission accounted for by the assessee. He submitted that the transactions in respect of Kandivali flats aggregating to Rs.17,63,000/- (Rs.100300+102700+1560000) did not fructify and hence the tax authorities are not justified in assessing the same. With regard to the balance amount of Rs.7,17,690/- (Rs.37,30,690 (-) 12,50,000 (-) 17,63,000), the Ld A.R submitted that the assessee did not realize the said commission even though the transactions relating to the same have been completed. Accordingly he submitted that the addition on this account should be restricted to Rs.12,50,000/-.

14.4 On the contrary, the Ld D.R submitted that the submissions made by the assessee with regard to the non-receipt of commission income and non-completion of the transactions are not supported by any material.

14.5 We have heard the parties on this issue and perused the record. We notice that the assessee has accepted the addition to the extent of Rs.12,50,000/-, out of the addition confirmed by Ld CIT(A). The assessee seeks deduction of the following amounts:- Transactions relating to Kandivili properties 17,63,000 Commission income not realized 7,17,690 The first item refers to the properties located in Kandivali area, the entries found in the seized document have been interpreted as under:-

13 and other seven cases (a)1180 Sq. ft. Rs.4250/- per sq.ft. = Rs.50,15,000/-@ 2% = 1,00,300 (b) 1180 Sq.ft. Rs.4325/- per Sq.ft. = Rs.51,03,500/-@ 2% = 1,02,700 (c)20000 sft @ Rs.3900/- per Sft = Rs.7.80 crores @ 2% = 15,60,000 14.6 A perusal of the above said three entries would show that the properties mentioned in (a) and (b) refer to specific properties, since the area of 1180 Sft support the same. However, the property mentioned in (c) is having an extent of 20000 sq.ft. and the same may not be referring to any specific property, since the area of 20,000 sq.ft. appears to be an estimated area. Before the AO, the assessee has submitted that all the three entries refer to a property under litigation, since the forest department has disputed the acquisition of land by filing a suit in the High Court and thereby the construction was stayed. We notice that the assessing officer has simply rejected the above said explanation of the assessee by placing reliance on the presumption provided in sec. 132(4A) of the Act. In the remand report submitted before the Ld CIT(A), the assessing officer has stated that he had deputed an Inspector to examine the claim of the assessee. However, the Inspector had reported that the assessee could not confirm that the amount of Rs.17,63,000/- refers to the disputed property. We notice that the assessee has filed a confirmation letter from the developer of land, wherein the developer has accepted the submissions made by the assessee.

14.7 Thus, we notice that the Inspector deputed by the AO to verify the plot has accepted the fact that the land that is going to be developed was a forest land and the same was under dispute. However, he has simply stated that the assessee could not confirm that the entries found in the seized document relate to the very same land. On the contrary, the assessee has also filed a confirmation letter obtained from the developer

14 and other seven cases and the same has been ignored by the tax authorities. Thus, we notice that the assessing officer, by placing reliance on the suspicion of the Inspector, has recommended for confirming this addition and the Ld CIT(A) has also confirmed the same on the reasoning that the assessee has failed to show that the transactions did not materialize.

14.8 We notice that the assessee has identified the property located in Kandivali area, in respect of which the above said entries pertain to. He has furnished confirmation obtained from the developer to show that the said property could not be developed due to the litigation with the forest department. Thus, the assessee has shown that the said property was not developed at all and hence there is no question of sale of any flat and realization of any brokerage income. On the contrary, the assessing officer has recommended for addition of the brokerage income only on the reasoning that the assessee could not substantiate that the entries found in the seized document relate to the very same property. We notice that the assessing officer has not brought on record any material to show that the entries relate to a different property. The assessee has substantiated his explanation by producing a confirmation from the developer and the Inspector has also accepted the fact that the property was under dispute. Thus, we notice that the assessee has substantiated his claim and we find no reason to disbelieve the same. Hence we are of the view that the Ld CIT(A) was not justified in holding that the assessee has not adduced proper evidences to show that the transactions did not materialize. The presumption enshrined in sec. 132(4A) is a rebuttable presumption and, in our view, the assessee has rebutted the same. Accordingly, we are of the view that the Ld CIT(A) was not justified in confirming the addition of Rs.17,63,000/-.

15 and other seven cases 14.9 With regard to the claim of the assessee that he did not receive a sum of Rs.7,17,690/-, we notice that the assessee has not substantiated the said claim with evidences. In our view, the assessee should have atleast identified the property to which this commission relate and should have furnished the names and addresses of the parties who have defaulted in making commission payment to the assessee. Had the assessee filed these details, then the assessing officer could have made due enquiries to verify the submissions of the assessee. There should not be any doubt that the burden of proof to prove any claim for deduction lies upon the assessee. In our view, the assessee has failed to discharge the said burden and hence we have no other option, but to confirm the addition of Rs.7,17,690/-. In the result, the addition on this issue is confirmed to the following extent:- Addition accepted by the assessee 12,50,000 Income claimed to have been not received 7,17,690 ------------- 19,67,690 ======= The order passed by Ld CIT(A) on this issue stands modified accordingly and the assessing officer is directed to sustain the addition to the extent stated above.

14.10 The next issue contested by Shri Chaturbhuj T Batra relates to the addition of Rs.1.00 lakhs confirmed by Ld CIT(A) in respect of estimated household expenses. The assessing officer estimated the house hold expenses of the assessee and noticed that the amount drawn by the family members are less than the amount so estimated. Hence the AO made an addition of Rs.6,89,332/-. Before Ld CIT(A), the assessee furnished the details of drawings, which was found to be higher than that computed by the AO. The assessee also submitted that the expenses relating to vehicle, telephone and servant relate to business. After obtaining remand report

16 and other seven cases from the AO, the Ld CIT(A) expressed the view that there is no need to make further addition with regard to house hold expenses. However, Ld CIT(A) observed that the personal element involved in respect of vehicle, telephone and servant expenses cannot be ruled out and accordingly disallowed a sum of Rs.1.00 lakh out of these expenses.

14.11 We heard the parties on this issue and perused the record. We notice that the Ld CIT(A) has accepted the fact that the amounts withdrawn by the assessee and his family members for personal purposes have been wrongly computed by the assessing officer and he has further held that there is no requirement to make any addition. However, he has taken altogether different stand and has expressed the view that the expenses booked as business expenses shall have personal element and accordingly disallowed a sum of Rs.1.00 lakh on estimated basis. The Ld CIT(A) has not brought on record as to how much expenses was booked by the assessee as business expense, even though the assessing officer has accepted the entire amount of business expenses claimed by the assessee. However, there is some merit in the observations of the Ld CIT(A) that the personal element involved in respect of Vehicle and telephone expenses could not be ruled out. Accordingly, we modify the order of Ld CIT(A) on this issue and sustain the addition to the extent of Rs.20,000/- and in our view the same would meet the ends of justice. We direct the AO to sustain the addition accordingly 14.12 In the result, the appeal filed by Shri Chaturbhuj T Batra is partly allowed.

15.1 In respect of diamond jewellery Shri Chaturbhuj T Batra, the husband of the assessee submitted that jewellery worth Rs.5.00 lakhs was received as gifts on family functions and the remaining jewellery of Rs.4,37,010/- was received by Smt. Varsha Batra from her father. The assessee furnished certain bills supporting the claim of purchase of diamond jewellery by her father. However, the AO rejected those bills by suspecting about the veracity of the same. The gold jewellery weighting 991 grams were found during the course of search. The AO gave credit of 530 grams and took that 461 grams was not explained. The alleged unexplained jewellery was valued at Rs.3,67,878/- and the same was added by the AO. The AO made additions on substantive basis in the hands of Smt. Varsha Batra and on protective basis in the hands of Shri Chaturbhuj T Batra. The Ld CIT(A) confirmed the additions made in the hands of Smt. Varsha Batra and accordingly deleted the protective addition made in the hands of Shri Chaturbhuj T Batra.

15.2 We heard the parties and perused the record. We notice that the gold and diamond jewellery were essentially claimed to have been accumulated over the years. However, the tax authorities did not accept the claim fully in respect of diamond jewellery. However, in respect of gold jewelly, the said explanation was partially accepted and the credit was given to the following extent:- Varsha Batra 280 gms. Maya Batra 100 gms. Chaturbhuj T Batra 75 gms. Rajeev Batra 75 gms.

18 and other seven cases First of all, it is not understandable as to why the entire alleged unexplained jewellery was added in the hands of Smt. Varsha Batra alone, when there are other family members assessed to tax. In any case, we notice that the assessing officer has made the addition without accepting the claim of the assessee that the jewellery was accumulated over the years. It is a known fact that the jewellery invariably forms part of investment plan in every Indian house hold and it also invariably form part of every festival, marriage and other family functions. Hence the claim of the assessee that the jewellery was accumulated over the years could not be altogether ruled out. The circular no.1916 dated 05-05-2014 also supports the said view. However, it is pertinent to note that the said circular was issued in the context of seizure to be made, yet the fact remains that the jewelleries remain integral part of living of Indians. In fact, the tax authorities have also accepted the said fact and hence they have given credit to the extent of 530 gms., of gold jewellery. However, we are of the view that the credit given by the tax authorities appear to be very low vis-à-vis the status of the assessees herein. We notice that gold jewellery found was 991 grams and we are of the view that holding of jewellery to that extent by the assessees herein appear to be reasonable. Accordingly, we are of the view that there is no necessity to make any addition in respect of gold jewellery. In respect of diamond jewellery, we notice that the claim of the assessee that jewelleries worth Rs.4,37,010/- was received at the time of her marriage was rejected only on the reasoning that the bills produced in support of the said claim was not reliable. It is pertinent to note that the bills pertaining to the year 1978 were sought to be verified in the year 2008, i.e., after expiry of about 30 years. It would be difficult for anyone to establish the genuineness of the bill after the expiry of about 30 years. Further offering of jewellery at the time of marriage is an established custom in this country. Hence, we are 19 and other seven cases of the view that there is no reason to suspect the said claim put forth by the assessee. With regard to the claim of the assessee that diamond jewelleries worth Rs.5.00 lakhs were received on various occasions, we notice that the assessee has failed to furnish the details of functions, festivals, name of donors etc. However, one can note that receiving of gifts at the time of festivals and functions is quite common. Further, the assessees herein have also filed income tax returns over the years. Hence, on a conspectus of the matter, we are of the view that the addition on account of diamond jewellery may be restricted to Rs.1.50 lakhs and we are of the view that the same would meet the ends of justice. Accordingly, we modify the order of Ld CIT(A) on both the issues referred above and direct the AO to sustain the addition relating to diamond jewellery to Rs.1.50 lakhs and delete the addition relating to gold jewellery.

15.3 In the result, the appeal filed by Smt. Varsha Batra is partly allowed.

17.2 At the time of hearing, the Ld A.R did not press the grounds relating to the issues mentioned as (b), (c) and (d) supra. Accordingly these grounds are dismissed as not pressed.

17.3 In the result, the appeal filed Shri Premkumar T Batra is partly allowed.

21 and other seven cases benefit given by Ld CIT(A) gets automatically vacated. Accordingly, the appeal of the revenue is liable to be dismissed. Even otherwise, the tax effect involved in respect of this addition is less than Rs.10.00 lakhs and hence the appeal of the revenue is liable to be dismissed on that count also, in view of the recent circular no.21/2015 dated 10-12-2015 issued by the CBDT.

22 and other seven cases Rs.10,000/- in value and the aggregate value of the same works out to Rs.48,907/-. By considering these factual aspects, we are of the view that the addition on account of unexplained jewellery may be restricted to Rs.50,000/- and the same would meet the ends of justice. We order accordingly. The order of Ld CIT(A) stands modified accordingly.