1. These two cross-appeals--one by the assessee and the other by the Revenue--arise out of the order passed by CIT(A) on 20th Sept., 2005 in relation to the asst. yr. 2001-02.
2. First four grounds of the assessee's appeal were not pressed by the learned Authorised Representative. These, therefore, stand dismissed.
3. Fifth ground is against the confirmation of addition of Rs. 15,97,334 made under Section 68 of the Act.
4. Briefly stated the facts of the case arc that the assessee continued to derive income as sub-broker from dealing in shares in his proprietorship concern called as M/s S.S. Securities. Survey under Section 133A was carried out in the business premises of the assessee on 6th Nov., 2000. Cash book was found to have been written upto 31st Oct., 2000. After taking into account the incomings and outgoings from 1st Nov., 2000 to 6th Nov., 2000, the cash balance as per cash book was worked out at Rs. 23,069 as against cash on physical verification found at Rs. 20,031, thereby leaving shortage in cash at Rs. 3,038. In the course of survey, computerized cash book was examined and cash transactions amounting to Rs. 19,51,980 were noticed. Vide question No.12 of the statement of the assessee recorded on 6th Nov., 2000, he was asked to explain the amount deposited in cash of Rs. 19,79,500 in the name of various customers. The assessee stated that he would submit explanation about the cash deposits. In response to summons under Section 131 the assessee attended the office on 7th Nov., 2000 and vide his letter of the same dated offered additional income of Rs. 10 lakhs on account of cash credits in the customers account totalling Rs. 19,79,500. Advance tax was also paid. Return of income was furnished on 29th Dec, 2001 at Rs. 1,93,270 in which the income of Rs. 10 lakhs surrendered vide letter dt. 7th Nov., 2000 was not declared. On being called upon to explain the reasons for not showing such surrendered income in the return, the assessee initially challenged the jurisdiction of the AO and also stated that the survey proceeding were carried out in an highly objectionable manner and surrender of Rs. 10 lakhs was not voluntary but was obtained forcibly. The AO examined the accounts one by one wherein cash was credited. For example, he considered the account of Smt. Yashoda Maheshwari w/o Shri Govind Maheshwari and noted cash credit entries of Rs. 3,25.000 spread over 10 dates. The assessee filed confirmation from this lady. She was, however, not produced despite request made by the AO. In her confirmatory letter dt. 8th Nov., 2000, Smt. Yashoda Maheshwari stated that the payments were made to the assessee in connection with the purchase and sales of shares. Since she was not assessed to tax and confirmation was without evidence of source of income, the AO held the cash credit of Rs. 3,25,900 appearing in her account as unexplained and accordingly made addition under Section 68. Similar position is prevailing about the other customers, the detail of which is as under:Sl. No. Name of the person who purchased and sold Amount added through the assessee under Section 681.
Smt. Yashoda Maheshwari 3,25,9002.
ShriM.R. Bhandari 2,15,0003.
Shri Phool Chand 4,90,5004.
Shri Dinesh Kotwal 20,0005.
Shri Basudeo Tuwanl 1,00,0006.
Shri Sidarth Bhansali 1,00,0007.
Mahaver Chand Kumbhat 1,18,5008.
Hemendra Phophaliya 30,0009.
Nakul Dharmawat 24,63410.
Ram Kishore Bhansali 12,80011.
Smt. Prabha Devi Sancheti 20,00012.
Smt. Rambha Devi Rathi 1,25,00013.
Shri Dilip Jain 15,000 Total ------------ The AO, therefore, made total addition of Rs. 15,97,334 under Section 68 of the Act. No relief was allowed in the first appeal.
5. We have heard the rival submissions and perused the relevant material on record. It is noted that the assessee initially agreed for surrendering Rs. 10 lakhs on 7th Nov., 2000 but did not offer the said amount for taxation in the return of income. Even though the AO has taken note of these facts in the assessment order, but he also chose to ignore the said surrender and made addition of Rs. 15.97 lakhs by discussing the merits of the case. Thus it is clear that the surrender made during the course of survey was retracted by the assessee and also not acted upon by the Revenue authorities. Such surrender is liable to be ignored. We now proceed to decide he applicability or otherwise of Section 68 on the merits.
6. First creditor is Smt. Yashoda Maheshwari on whose account an addition of Rs. 3,25,900 was made and confirmed. She is stated to be the customer who had purchased and sold several shares through the assessee. Copy of her complete account is available at p. 118 of the assessee's PB, relevant part of which is reproduced as hereunder:__________________________________________________________________________________________| Date | Narration | Debit | Credit ||___________|______________________________________|__________________|__________________||05.04.2000 |Being cash received from | | 60,000.00 || |Yashoda Maheshwari | | ||08.04.2000 |Sett No. BIA/2000001 | | 74,177.00 ||11.04.2000 |Being cash received from | | 50,000.00 || |Yashoda Maheshwari | | ||15.04.2000 |Sett No. BIA/2000002 | 8,000.00 | ||17.04.2000 |Being cash received from | | 1,35,000.00 || | Yashoda Maheshwari | | ||19.04.2000 |Being cash received from | | 20,000.00 || |Yashoda Maheshwari | | ||21.04.2000 |Being cash received from | | 15,000.00 || |Yashoda Maheshwari | | ||22.04.2000 |Sett No. BIA/2000003 | 2,22,524,00 | ||20.05.2000 |Sett No. BIA/2000002 | 4,200.00 | ||27.05.2000 |Being cash received from | | 17,000.00 || |Yashoda Maheshwari | | ||29.05.2000 |Being cash received from | | 1,53,520.00 || |Yashoda Maheshwari | | ||03.06.2000 |Sett No. BIA/2000009 | 1,53,520.00 | ||10.06.2000 |Sett No. BIA/20000010 | | 1,24,091.00 ||17.06.2000 |Sett No. BIA/20000011 | | 12,925.00 ||21.06.2000 |Being cash paid on account | 60,000.00 | ||24.06.2000 |Sett No. BIA/20000012 | 15,389.30 | ||01.07.2000 |Sett No. BIA/20000013 | 8,22,550.95 | ||08.07.2000 |Sett No. BIA/20000014 | | 20,083.60 ||15.07.2000 |Sett No. BIA/20000015 | | 944.65 ||19.07.2000 |Being cash received from | | 5,000.00 || |Yashoda Maheshwari | | ||22.07.2000 |Sett No. BIA/20000016 | | 3,627.75 ||24.07.2000 |Being cash received from | | 10,000.00 || |Yashoda Maheshwari | | ||29.07.2000 |Sett No. BIA/20000017 | 3,399.10 | ||05.08.2000 |Sett No. B1A/20000018 | 8,285.00 | ||12.08.2000 |Sett No. BIA/20000019 | 4,719.00 | ||19.08.2000 |Sett No. BIA/20000020 | 2,720.10 | ||26.08.2000 |Sett No. BIA/20000021 | | 7,397.37 ||30.08.2000 |Being cash paid on a/c | 50,000.00 | ||02.09.2000 |Sett No. BIA/20000022 | | 2,470.75 ||05.09.2000 |Being cash paid on a/c | 50,000.00 | ||09.09.2000 |Sett No. B1A/20000023 | | 2,704.00 ||16.09.2000 |Sett No. BIA/20000024 | 4,198.00 | ||23.09.2000 |Being cash received from Yashoda | | 10,000.00 || |Maheshwari | | ||23.09.2000 |Sett No. BIA/20000025 | 21,192.00 | ||30.09.2000 |Sett No. BIA/20000026 | 22,667.50 | ||07.10.2000 |Sett No. BIA/2000G027 | | 21,447.85 ||14.10.2000 |Sett No. BIA/20000028 | 14,369.00 | ||21.10.2000 |Sett No. B1A/20000029 | 28,766.15 | ||30.03.2001 |Being cash received on a/c | | 16,42,642 || | |__________________|__________________|| | | 7,56,200.10 | 7,58,031.61 |_________________________________________________________________________________________|| |Closing balance as on 31.3.2001 | 1831.91 Cr ||________________________________________________________________________________________| From the above account it can be seen that the assessee received cash on some occasions from her and on certain other occasions payment was received through cheques. There are transactions of settlement also, details of which follow at p. 119 onwards of the assessee's PB. For example, the first credit entry of Rs. 74,177 of settlement No.BIA/2000001 represents shares of Shyam Telecom, Reliance Petroleum purchased and sold by the assessee during the settlement period. As against the total sales made by the assessee in this settlement period at Rs. 4,38,383, the assessee purchased shares of Rs. 3,64,206 thereby leaving balance of Rs. 74,177 which has been credited on 8th April, 2000 in her account. Similarly, p. 120 is detail of shares of Infotech against which the assessee had to receive Rs. 8,000 which has been shown against the date 15th April, 2000. In the like manner, p. 124 of the PB is the detail of account for the purchase made at Rs. 1,41,900 and sales made for this party at Rs. 2,65.991 thereby leaving the amount payable at Rs. 1,24,091 which has been shown as credit against the date 10th June, 2000. In the like manner, all the transactions against which the narration has been given 'settlement' show the amount receivable or payable by the assessee on account of transactions of purchase and sale of shares entered on the direction of Smt. Yashoda Maheshwari and the net balance whether receivable or payable has been debited or credited accordingly. In this way, pp. 156 to 168 of the PB shows total purchase of shares on behalf of Smt. Yashoda Maheshwari at Rs. 87.92 lakhs and total sale of shares at Rs. 84.80 lakhs during the year. From time to time the assessee kept on receiving payment from his customers so as to keep himself safe as regards the transactions entered into by him on their behalf. Apart from certain cash receipts of Rs. 3,25,900, the assessee also received payments through cheques from Smt. Yashoda, which find duly reflected in the copy of account extracted above. The AO has chosen to make addition under Section 68 only in respect of cash receipts. The learned CIT(A) failed to appreciate the fact that the AO had not disputed the transactions of purchase and sale of shares in respect of his customers. No only that, the assessee earned brokerage on such purchase and sale of shares which has been duly assessed by the Revenue, it is true that the onus probandi to prove the genuineness of the transaction is on the assessee. In this respect the facts have to be seen in totality. The doctrine of approbate and reprobate prohibits the Revenue authorities from blowing hot and cold in the same breath thereby accepting one part of the transaction and treating the other part as incorrect. When the account has been accepted, the transactions of purchase and sale of shares by the assessee on behalf of the assessee's customers have also not been doubted, amounts received through cheques have also not been disputed, how can the authorities make addition under Section 68 in respect of only cash receipts. It is further noted that the AO had made addition of Rs. 3,25,900 in this case. When the debit and credit transactions are seen, net balance of credit in this account is only a paltry sum of Rs. 1,831. If the contention of the Revenue is accepted that the sum of Rs. 3,25,900 represents the assessee's own income from undisclosed sources, then the balance in this account would become debit by almost similar amount which cannot be the case in this line of busines.
7. It is the common submission of both the sides that the other 12 parties in respect of which addition has been made and confirmed also represent the same type of transactions in which only cash receipts have been added under Section 68 leaving intact the payments received through cheques and also accepting the transactions of purchase and sale of shares. Under these circumstances, we are of the considered opinion that the learned CIT(A) was not justified in. sustaining this addition. We, therefore, order for the deletion of this addition.
8. Ground Nos. 6 and 7 of the assessee's appeal and all grounds of the Revenue's appeal deal with the addition made on account of liaison commission, salary, telephone expenses, conveyance expenses, expenses on research and consultancy fees, etc.
9. Both the sides arc in agreement that the facts and circumstances of these grounds are similar to those of the immediately preceding year, namely 2000-01 which finally travelled to the Tribunal. Copy of the said order passed by the Tribunal vide order dt. 9th Aug., 2007 in ITA No. 611/Jd/2004 has been placed at p. 108 onwards of the assessee's PB.The learned Authorised Representative fairly conceded that the grounds raised by him would stand dismissed and those in Revenue's appeal would also not be accepted in the light of the order passed by the Tribunal in the preceding year. The learned Departmental Representative candidly accepted the position stated on behalf of the assessee.
10. In view of the common submissions, we dismiss the grounds raised by the Revenue in its appeal and ground Nos. 6 and 7 of the assessee's appeal also.
11. Remaining grounds of the assessee's appeal about levy of interest are consequential and disposed of accordingly.
12. In the result the appeal of the assessee is partly allowed and that of the Revenue is dismissed.