1. These are two appeals by the same assessee for consecutive assessment years viz., 1992-93 and 1993-94 are being disposed of by a common order for the sake of convenience and brevity.
2. This appeal by the assessee is directed against the order passed by the CIT(A) dt. 10th Sept., 2007.
3. Briefly stated, the relevant facts are that the assessee is a carpenter, who derived, income from work of carpentry and from interest, besides having agricultural income. He did not maintain regular books of accounts. A survey under Section 133A was conducted on 19th Nov., 1997 at his shop on the basis of a tax-evasion petition (TEP). It was found during this survey that he had invested Rs. 71,000 and Rs. 55,364 the relevant year, therefore, proceedings under Section 147/148 were initiated against him for three assessment years. The assessment order for asst. yr. 1992-93 was made on 18th March, 2002.
The AO made various additions including the addition of Rs. 71,000.
These additions were upheld by the learned CIT(A). The matter travelled upto Tribunal and in the first round Hon'ble Tribunal set aside the entire assessment order appeal vide order dt. 1st July, 2005 for asst.
yrs. 1992-93 and 1993-94. The Tribunal observed while restoring the issues that as per learned Authorised Representative the assessee was engaged in agricultural activities since long and was also carrying on nominal business as proprietor of M/s Balaji Timber Udhyog, near bus stand, Ladnun. The Hon'ble Tribunal felt it just to restore the entire matter back for de novo consideration after providing proper opportunity to the assessee. In the second round, the learned AO gave proper opportunity to the assessee, who submitted his case with the help of evidences. Various additions were repeated and these are the subject-matter of this appeal.
4. The first ground is general in nature. The second ground relates to sustained addition of Rs. 71,000. The facts apropos this ground are that the assessee had admitted having invested Rs. 71,000 in two plots purchased in his and his wife's names. The assessee apart from contesting the very admission and the statement has also filed affidavits of self and his wife in proof of the claim that the investments of Rs. 35,500, each, was made independently by them out of loans. Affidavits of Shri Babu Lal and Shri Shanti Prakash dt. 1st Dec., 2006 were filed in which they have admitted having given advances of Rs. 18,000 and Rs. 17,000 respectively and that these were received back by them. During the course of assessment proceedings, the statements of Shri Babu Lal and Shri Shanti Lal were also recorded.
Likewise Smt. Nani Devi w/o the assessee filed her affidavit dt. 1st Dec., 2006 stating that she had received sums of Rs. 15,000, Rs. 12,000 and Rs. 10,000 from Shri Seetaram, Shri Hemant Jangid and Shri Rameshwar Lal Jangid, respectively. The statements" of all the three persons were recorded by the learned AO. But still the AO did not agree and made an addition of Rs. 71,000 mainly because in the first round the assessee had not tendered these evidences and that an admission was made in this regard. On almost similar reasoning, the learned CIT(A) has also confirmed this addition.
5. I have heard rival submissions and have perused the available materials on record, carefully.
6. The learned Authorised Representative had assailed the very statement recorded on 4th Oct., 1996 by contending that it is not known as to who recorded these statements and that a certificate that these statements were read over and accepted by the deponent as true has been appended thereto which renders the entire statement untrustworthy. He has also contended that the answers themselves suggest that a rustic villager like the assessee cannot give such brilliant worded answers and they are not the answers of the assessee and that the questions are leading ones. On merits he has contended that when opportunity of explaining the sources was given to the assessee, he produced entire evidences which clearly established his case to disprove the alleged admission and as such no addition can be made. On the contrary, the learned Departmental Representative has contended that the statements of the assessee were properly recorded by the authority and the admissions made therein have to be taken as true. Regarding other evidences it was submitted that these were only afterthought and contained no truth. I have carefully cogitated the entire facts, evidences and the material placed before me. When the Hon'ble Tribunal has given a finding that no proper opportunity was given to the assessee and as such the matter was restored for fresh consideration, the Department has to consider the entire evidences tendered by the assessee in their correct perspective without doubting their veracity.
It is correct that from the perusal of the statement of the assessee it is not clearly established as to who recorded these statements. The assessee has written a letter to the AO in this regard (copy of letter is placed at PB 65 to 66). From the copy of assessment order for asst.
yr. 1993-94 placed at PB 41, it is noticed that the AO himself has reduced the amount of admission, meaning thereby, the statement was not accepted as sacrosanct by the Department itself. Now coming to other evidences, it is the case of the assessee that the plot was purchased out of loan amounts received from two persons, namely, Shri Babu Lal and Shri Shanti Prakash. These loans are stated to have been given earlier and the recovery was utilised in making investment in the purchase of land. Both these persons were examined by learned AO. Both have confirmed the plea taken by the assessee. The assessee has also filed his duly sworn-in-affidavit to that effect. No other evidences are brought on record by the AO. It seems that a TEP was the result of this action. Both the authorities below have ignored the evidences produced by the assessee without disproving them and have heavily relied on the statement dt. 4th Oct., 1996, that the investment of Rs. 71,000 was made out of unrecorded income. The assessee does not maintain any books of accounts. His reference books in statement are found to refer to the books of his father. When the entire evidences are analysed it is found that the assessee being an agriculturist and a small carpenter, has aptly discharged his onus to prove the impugned investment. When the AO has not accepted the amount of investment stated in assessee's statements for asst. yr. 1993-94, it means he himself has not stuck to them in toto. A statement has to be adhered to but it is always open to the maker to disprove the same with the help of positive evidences. The cumulative effect of the manner in which statement was recorded coupled with the positive evidences go to establish that the admission was not correct. As a result, this addition has to be deleted by accepting the source of investment, as revealed from the evidences tendered by the assessee. Therefore, ground No. (2) of this appeal is allowed.
7. Next issue as contained in ground Nos. (3) and (4) relates to addition of Rs. 55,364 made on account of unexplained investment in the well (Kuwa). The facts of this issue are that in his statement recorded on 4th Oct., 1996, the assessee had stated that this amount was spent out of his unrecorded income and the amounts were not withdrawn from his regular cash book. For the detailed reasons as mentioned by the AO in his order, addition of Rs. 55,364 was made, which was also confirmed by the learned CIT(A).
8. I have heard rival submissions and have perused the available materials on record, carefully.
9. It is found that the learned CIT(A) has confirmed this addition on the basis of the finding given by the Hon'ble Bench while deciding the case of Shri Jeth Mal Jangid vide order dt. 9th May, 2005, in which it was observed that on the basis of the statement of Shri Ghanshyam Jangid, no addition can be made in the hands of his father, Shri Jeth Mal Jangid and that this amount could be considered in this assessee's hands. I have gone through the Tribunal order (supra). The Bench has nowhere observed that this amount has to be added in this assessee's hand. It "could be" considered in his case but it would admit plausible explanations if any given. These additions travelled upto the Tribunal, in assessee's case and the Tribunal has set aside the same for fresh consideration. In his written submission at p. 13, the learned Authorised Representative has submitted in point (iv) as under: (iv) That without any prejudice to the aforesaid submissions, it is further submitted that Shri Jeth Mal Jangid himself submitted a written explanation with regard to the aforesaid amount of Rs. 55,364 before the then learned AO during the course of his own assessment proceedings for the asst. yr. 1992-93 which is being reproduced hereinunder: 2. That regarding the amount of Rs. 55,364 as referred to in your notice, my humble submissions are as follows: (i) That even at this old age of 83 years, I tried my best to find out the books of accounts and related records for the financial year 1992-93, but I failed. My books of accounts and related records were being handled by many persons, namley, my son, Ghanshyam, my grandson Babulal, my advocate, Mr. Manmohan Jalan, my accountant, Shrichand. It appears to me that the books of accounts and related records for the financial year 1991-92 have been misplaced/lost during the course of handling thereof by these persons; (ii) That so far as my memory is concerned, I don't remember that during the year under consideration I spent a huge amount of Rs. 55,364 for Kuwa account; and if I spent such a huge amount, I must have got the same recorded in my books of accounts. From the very language of question No. 4 of my son's statements as were recorded in the context my proprietorship business, namely, M/s Baluram Jethmal on 4th Oct., 1996, it is clear that the amount in question was recorded in my books of accounts. What was being asked was source of the investment thereof. Regarding this aspect, I need to submit that if the investment was recorded in my books of accounts more specifically in the cash book, its corresponding sources also must have been shown in the receipt side of the same cash book. It is well known that amounts of payments/expenses are recorded in the payment side of the day-to-day cash book. On receipt side of the cash book, day-to-day opening cash balances and receipts are recorded. Thus, the day-to-day payments/expenses are made out of opening cash balances of the days concerned and various receipts of the days concerned. In view of these well-settled accounting procedures, your good self would appreciate that if the aforesaid investment was recorded (as it is apparent from the aforesaid query No. 4) in my books of accounts, obviously the same were made out of the sources were not recorded in the books of accounts. Therefore, it can be inferred that my son's aforesaid statement was result of some mistake either on his part or on the part of the person who recorded his statements or on the parts of the both. It was also possible that my son was unduly tense and, therefore, he could not explain the aforesaid simple facts of accounting to the person who recorded his statements. In view of these facts, my son's statements cannot be taken as true and correct. His such statements cannot be made a valid base for assessing that amount as my income which I did not earn.
From the above explanation it is observed that the source of this amount, was recorded in the books of assessee's father Shri Jeth Mal Jangid. But the AO has simply relied on the "admission" of Shri Ghanshyam Jangid, this assessee. What the Tribunal has observed is that this statement can bind only the maker and not a third party. The above explanation of the assessee is self-speaking and leads me to delete this addition from the hands of Shri Ghanshyam. The Department was to look for other evidences. When the investment was claimed as recorded in assessee's father's books of accounts as per the explanation of Shri Jeth Mal Jangid, how could it be added on the basis of the admission of Shri Ghanshyam. This addition is also deleted being baseless.
10. The next ground of this appeal relates to charging of interest under Sections 234A and 234B of the Act. Since the charging of interest is mandatory but it admits consequential relief I allow consequential relief to the assessee.
11. In the result, the appeal for asst. yr. 1992-93 is partly allowed.
ITA No. 807/Jd/2007; Asst. yr. 1993-94 12. This appeal by the assessee is directed against the order passed by the CIT(A) dt. 9th Oct., 2007.
13. The first ground is general in nature and needs no adjudication.
The second and third ground relate to addition of Rs. 1,00,000 (Rs. 1 lakh) on account of unexplained investment in the construction of a building on the plot owned by the assessee and his wife.
14. The facts of this issue are that in the same statement dt. 4th Oct., 1996, it was admitted that Rs. 2 lakhs had been invested in financial year 1992-93 in the construction of a room purchased (sic) on 2nd Dec., 1991. However, the AO himself has restricted this addition of Rs. 1 lakh after not accepting this statement as totally correct.
During the fresh assessment proceedings the assessee explained that in fact during financial year 1992-93, the permission to do construction was granted by the Executive Officer, Municipality, Ladnun on 23rd Sept., 1994. The copies of approval letter, receipt and the approved map were furnished to the learned AO. These are enclosed at PB 15 to 18 before this Bench. Thus, it was pleaded that the admission is neither voluntary nor correct according to the available facts and the evidences.
15. I have heard rival submissions and have perused the available materials on record, carefully.
16. In the initial portion of the assessment order, the AO has mentioned that during the course of assessment proceedings for asst.
yr. 1998-99, it was found that out of undisclosed income the assessee had invested Rs. 2,00,000 during the year under consideration towards construction of building. This finding is only based on the statement of the assessee recorded on 4th Oct., 1996. However, the AO made addition of Rs. 1,00,000 only. During fresh assessment proceedings, the assessee clearly submitted that there was no construction activity during financial year 1993-94 (sic). From the certificate of the municipality it is clearly established that the permission to construct the room was granted on 23rd April, 1993 only. Before that no construction could be carried out. It is not the case of the AO that the room was already constructed prior to getting approval from the Executive Officer of the municipality, Ladnun on 23rd Sept., 1994.
Generally approval is granted prior to the construction and these facts have been proved on record by the assessee. There is no evidence on record which can controvert the above contention of the assessee. From the action of the AO itself it is proved that the version of the assessee recorded on 4th Oct., 1996 was not correct as there were four plots owned by different persons. By drawing support from our findings given with regard to earlier grounds, which were also based on the statement of the assessee and after deeply examining the statement and the written submission of the assessee, I am in conformity with the submission made by learned Authorised Representative. As a result, the impugned addition of Rs. 1,00,000 is hereby deleted.
In the result, ITA No. 798 is partly allowed and ITA No. 807 is allowed.