Addition U/s. 69 cannot be made for investment out of Salary Received in Cash

Sri Sudipta Ghosh Vs DCIT (ITAT Kolkata)

The assessee had investments to the tune of Rs. 5,77,736/-. He explained these investments by submitting that the same were from salary savings. The ld. Assessing Officer found that the withdrawals from the assessee’s bank account is only Rs. 5,20,000/-. The difference of investment was added as unexplained investments. The assessee explains that part of the salary was always received in cash and it was only Rs. 1,38,505/-, which was received by way of cheque. It was also submitted that an investment of Rs. 3,35,000/- was given from the Bank Account maintained by the wife of the assessee but such bank account was not considered by the Assessing Officer. The assessee stated that he deposited the salary of Rs. 1,38,505/- in the joint account of the wife and had drawn Rs.3,35,000/- for making investments. Regarding the balance, it was explained that it was lying in the debit of the balance sheet of the wife. The assessee produced cash flow statement to explain the sources of deposit. It was also stated that the bank accounts of Abhishek Ghosh and A. Naug, the mother of Smt. Kajal Ghosh were declared in her returns.

The ld. D/R, could not controvert the arguments of the assessee that the amount to the extent of Rs.3,25,000/-, was gathered by way of drawings in the joint bank account and the balance amount of Rs.2,20,000/-, was made out of the salary received in cash.

Keeping in view the overall facts of the case and the capacity of the assessee, I am of the considered opinion that no addition is called for under the facts and circumstances of the case. When a person receives salary in cash, his claim that the investments were made from such salary, cannot be brushed aside.

FULL TEXT OF THE ITAT JUDGMENT

All these appeals are filed by the assessee directed against separate but identical orders of the ld. Commissioner of Income Tax (Appeals)-16, Kolkata, (hereinafter the ‘ld. CIT (A)’), passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 04/02/2016.

2. As the issues arising in all these appeals are common, for the sake of convenience, they are heard together and disposed off by way of this common order.

3. The assessee was the Chairman of Ordnance Factory. A search was conducted at his residence by the Central Bureau of Investigation (CBI) on 18/05/2009, and certain information, documents etc. disclosing investments were found. This information along with the list of seized articles and documents were sent to the Income Tax Department.

3.1. The wife of the assessee, Smt. Kajal Ghosh, is a Doctor in medicine and is an employee of the Government of West Bengal. She is an assessee having her own independent sources of income. The assets found were KVP’s, some of which stood in the name of Dr. Smt. Kajal Ghosh, the wife of the assessee. One of the KVPs stood in the name of the father-in-law of the assessee, Shri P K Naug, who was drawing pension and some other KVPs were in the joint names of Sri Sudipto Ghosh, the assessee and Smt. Kajal Ghosh. Assets were also found in the name of the mother-in-law of the assessee, Smt. A. Naug, wife of Shri P K Naug, as well as in the name of his major son, Shri Abhishek Ghosh and Shri Anirban Ghosh, who was then a minor. The Assessing Officer in his order passed u/s 143(3) of the Act, records that the assessee admitted that certain assets belonged to him and that the other assets do not belong to hm. Asset wise information were furnished to the Assessing Officer. Smt. Kajal Ghosh stated on oath that the assets which stood in her name belonged to her and was acquired from her own sources of income. It was submitted that she was in service under the Government of West Bengal, for the past several years and the investments were made from her savings. She submitted explanations in support of her contentions.

3.1.1. In the case of investment in the name of Shri P K Naug (father-in-law of the assessee), it was stated that the CBI, vide its order dt. 02/05/2011, which is placed at page 242 of the paper book, accepted that he had an independent source of income and the asset belonged to Shri P K Naug.

3.1.2. The assets in the name of Smt. A Naug, wife of Shri P K Naug, was said to have been acquired by her in 1984 and that she has an independent source of income and was not a subject matter of the CBI charge sheet. Her investments were also rooted through the account of Smt. Kajal Ghosh as Smt. Naug, was not having a Bank Account. The interest income from the joint accounts were assessed in the hands of Smt. Kajal Ghosh.

3.1.3. In the case of investment by the major son of the assessee Shri Abhishek Ghosh, it was submitted that these were taxed in the hands of Smt. Kajal Ghosh. In the case of the minor son, it was claimed that Shri Anirban Ghosh, had a definite source of income. The Assessing Officer added all the investments in the assets as unexplained investments in the hands of the assessee in all the assessment orders before us. He held that the assessee has made benami investments in the name of Smt. Kajal Ghosh, Smt. Abha Naug, Shri P K Naug, Shri Abhishek Ghosh & Shri Anirban Ghosh.

3.2. On appeal, the ld. CIT(A), confirmed the same, though the assessee has pleaded that the incomes relatable to all these investment were explained by Smt. Kajal Ghosh and assessed to tax in her income tax assessment. The investments held by other persons in their names were also treated as investments of the assessee.

3.3. Aggrieved, the assessee is in appeal before us.

4. The ld. Counsel for the assessee, Shri S. M. Surana, submitted that the Assessing Officer has made an allegation that benami investments were made by the assessee in the names of Shri P K Naug, Smt. A Naug, Smt. Kajal Ghosh, Shri Abhishek Ghosh and Shri Anirban Ghosh. He submitted that it is well settled that the burden of proof lies on the person who alleges benami and that this burden of proof has not been discharged by the Assessing Officer. He relied on the following case-law:-

• Hon’ble Supreme Court in the case of D.S.P., Chennai vs. K. Inbasagaran, Appeal (crl.) 480 of 2002, Judgement dt. 07/12/2015.
• Hon’ble Allahabad High Court, CIT vs. Smt. Sadhna Devi, Varanasi, Income Tax Reference No. 196 of 1991
• Hon’ble Supreme Court, Krishnanand vs The State Of Madhya Pradesh AIR 1977 SC 796
• Allahabad High Court, Prakash Narain vs Commissioner Of Income-Tax: 1982 134 ITR 364

4.1. The ld. Counsel for the assessee filed a paper book enclosing therewith the assessment orders passed in the case of Dr. Smt. Kajal Ghosh and submitted that the assets in question and the income thereon, were assessed in the hands of Smt. Kajal Ghosh and argued that the same cannot be assessed once again in the hands of the assessee, as it would be a case of taxing the same income twice. It was further submitted that the same additions made in the assessments of the assessee were also made in the case of Smt. Kajal Ghosh, by the Assessing Officer and under those circumstances, the very same amount cannot be added in the hands of the assessee.

4.2. The ld. Counsel for the assessee took the bench through each addition in the case of the assessee and pointed out the same addition in the hands of Smt. Kajal Ghosh. He also pointed out addition where the CBI has accepted the explanation of the assessee and excluded the assets from the list in its charge sheet before the CBI Court. Evidence to this extent was filed.

4.3. The ld. D/R, on the other hand, submitted that this is a case where the CBI has filed a charge-sheet and the Assessing Officer as well as the ld. CIT(A) have taxed these assets in the hands of the assessee based on such charge-sheet. On a query from the Bench, as to whether, the very same assets and income therefrom were assessed in the hands of Smt. Kajal Ghosh, the wife of the assessee, the ld. D/R, could not controvert the factual submission made by the ld. Counsel for the assessee. On a further query from the Bench, as to how the same asset and income therefrom can be taxed twice, i.e. once in the case of Dr. Kajal Ghosh and at the same time in the hands of the assessee also, the ld. D/R, submitted that the asset belongs to the assessee and has been taxed by the Assessing Officer in the hands of the assessee. The ld. D/R, could not controvert the submissions of the assessee that the C.B.I. has excluded certain assets assessed in the hands of the assessee from the list of assets as alleged to have been belonging to the assessee, as it was satisfied that these assets do not belong to the assessee. He relied on the order of the Assessing Officer as well as that of the ld. CIT(A).

5. Heard rival contentions. On a careful consideration of the facts and circumstances of the case, perusal of the papers on record and the orders of the authorities below, as well as the case-law cited, I hold as follows:-

The Hon’ble Allahabad High Court, in the case of Prakash Narain vs Commissioner Of Income-Tax (supra), held as follows:-

16. In Jaydayal Poddar v. Bibi Hazra,AIR 1974 SC 171, it was laid down as under (p. 172):

“It is well settled that the burden of proving that a particular sale is benami and the  apparent purchaser is not the real owner, always rests on the person asserting it to be  so. This burden has to be strictly discharged by adducing legal evidence of a definite  character which would either directly prove the fact of benami or establish  circumstances unerringly and reasonably raising an inference of that fact. The essence of benami is the intention of the party or parties concerned ; and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rest on him ; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. The reason is that a deed is a solemn document prepared and executed after considerable deliberation, and the person expressly shown as the purchaser or transferee in the deed, starts with the initial presumption in his favour that the apparent state of affairs is the real state of affairs. Though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid test, uniformly applicable in all situations, can be laid down, yet in weighing the probabilities and for gathering the relevant indicia, the courts an usually guided by these circumstances : (1) the source from which the purchase money came; (2) the nature and possession of the property, after the purchase; (3) motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar; (5) the custody of the title deeds after the sale ; and (6) the conduct of the parties concerned in dealing with the property after the sale.

The above indicia are not exhaustive and their efficacy varies according to the facts of each case. Nevertheless No. 1, viz., the source whence the purchase money came, is by far the most important test for determining whether the sale standing in the name of one person, is in reality for the benefit of another.”

17. In Rai Bahadur Mohan Singh Oberoi v. CIT[1973] 88 ITR 53 (SC), relying on the decision in Sree Meenakshi Mills Ltd. v. CIT [1957] 31 ITR 28 (SC), it was laid down that a finding on the point as to whether a purchase was made benami or not, would be a finding of fact and if it is based upon some evidence, then such a finding cannot be interfered with by the High Court in a reference, The finding of benami in this case was, however, based on the earlier admissions of the assessee himself.

5.1. Thus, applying the propositions of law laid down in this case-law to the facts of the case, we hold that the burden of proof of proving benami is on the person who makes the allegation. In this case, it is the Assessing Officer, who has made the allegation that the investments in question are made by the assessee in benami names. Except for stating so, he has not brought out any evidence in support of this claim.

5.1.1. The judgement in the case of D.S.P., Chennai vs. K. Inbasagaran (supra), cited by the ld. Counsel for the assessee, I find that it has been held as follows:-

“The question is when the accused has provided satisfactorily explanation that all the money belonged to his wife and she has owned it and the Income-tax Department has assessed in her hand, then in that case, whether he could be charged under the Prevention of Corruption Act. It is true that when there is joint possession between the  wife and husband, or father and son and if some of the members of the family are  involved in amassing illegal wealth, then unless there is categorical evidence to believe,  that this can be read in the hands of the husband or as the case may be, it cannot be  fastened on the husband or head of family. It is true that the prosecution in the present case has tried its best to lead the evidence to show that all these moneys belonged to the accused but when the wife has fully owned the entire money and the other wealth earned by her by not showing in the Income-tax return and she has accepted the whole responsibilities, in that case, it is very difficult to hold the accused guilty of the charge. It is very difficult to segregate that how much of wealth belonged to the husband and how much belonged to the wife. The prosecution has not been able to lead evidence to establish that some of the money could be held in the hands of the accused. In case of joint possession it is very difficult when one of the persons accepted the entire responsibility. The wife of the accused has not been prosecuted and it is only the husband who has been charged being the public servant. In view of the explanation given by the husband and when it has been substantiated by the evidence of the wife, the other witnesses who have been produced on behalf of the accused coupled with the fact that the entire money has been treated in the hands of the wife and she has owned it and she has been assessed by the Income-tax Department, it will not be proper to hold the accused guilty under the prevention of Corruption Act as his explanation appears to be plausible and justifiable. The burden is on the accused to offer plausible explanation and in the present case, he has satisfactorily explained that the whole money which has been recovered from his house does not belong to him and it belonged to his wife. Therefore, he has satisfactorily accounted for the recovery of the unaccounted money. Since the crucial question in this case was of the possession and the premises in question was jointly shared by the wife and the husband and the wife having accepted the entire recovery at her hand, it will not be proper to hold husband guilty. Therefore, in these circumstances, we are of the opinion that the view taken by the High Court appears to be justified and there are no compelling circumstances to reverse the order of acquittal. Hence, we do not find any merit in this appeal and the same is dismissed.”

5.1.2. In the case of CIT vs. Smt. Sadhna Devi, Varanasi (supra), it has been held as follows:-

“It is well settled that the person who alleges that the particular property is benamidar of another person is to prove by cogent material and brought on record the material because the respondent is unable to explain the source of investment would not make the property as that belonged to another person, in the present case, namely, her husband.”

5.2. Hence, in the case on hand, the burden of proof that the wife, sons, father-in-law and mother-in-law are the benamidar of the assessee, lies on the Assessing Officer. This burden is not discharged. In the assessment order the Assessing Officer has under the head “benami of the assesse” in various year made additions without giving reasons as to how he came to a conclusion that these persons are the benamidars of the assessee. He only rejected the claim of the persons, but did not bring any positive evidence on record.

5.3. Be it as it may, I now consider the additions made in each of the year under appeal, separately on merits.

Assessment Year 2003-04

6. The only ground taken by the assessee is against the addition of Rs.1,50,000/- being investment in KVP, which is in the name of Smt. Kajal Ghosh, wife of the assessee.

6.1. The total investments in the name of Smt. Kajal Ghosh in KVP was Rs.3,40,000/-. The assessment of Smt. Kajal Ghosh was re-opened u/s 148 of the Act and this amount was added has her income in the assessment order dt. 29/12/2012. It was part of the larger addition made towards undisclosed investments. Before the Assessing Officer, Smt. Kajal Ghosh, explained that the investment of Rs.1,50.000/- was made by her from out of withdrawals from her PF Account. The Assessing Officer rejected this explanation as the ground given for withdrawals of PF was education of child.

6.1.1. I find that the assessment order passed in the case of Smt. Kajal Ghosh, was a substantive assessment. Even the interest on this investment was adder in her assessment. As already stated Smt. Kajal Ghosh is a Doctor by profession, working with the Government of West Bengal and she has explained the direct source of investment. In case there were some discrepancies, the issue can be only considered in the hands of Dr. Smt. Kajal Ghosh and not in the hands of the assessee. These investments and the interest income thereon, has been considered in the assessment of Dr. Smt. Kajal Ghosh, in a substantive manner, the same addition cannot be made in the hands of the assessee as this would tantamount to double taxation of the same income. Hence, I deleted this addition and allow this Ground of the assessee. In the result, appeal of the assessee is allowed.

7. Ground No. 1, is on the legal issue as to whether the AO has discharged the burden of proof that lay on him while holding that the assessee’s wife, minor & major sons, mother-in-law, father-in-law, are benamidars of the assessee.

Consistent with the view taken by us while disposing of the similar ground while adjudication I.T.A. No. 579/Kol/2016, for the Assessment Year 2003-04, we hold that the Assessing Officer has failed to discharge the burden of proof that lay on him to prove that the wife, father-in-law, mother-in-law and sons of the assessee were benamidars of the assessee. In the result, this ground of the assessee is allowed.

8. Ground No. 2, is regarding the addition of Rs.23,999/-, being interest on KVP, NSC and Savings Bank Account.

8.1. Out of this an interest of Rs.11,100/- is on the KVPs of Rs.1,50,000/-, which I have held as not sustainable in the hands of the assessee in my finding for the Assessment Year 2003-04. Thus, this addition of Rs.11,100/-, is hereby deleted.

There was a joint account in the name of the assessee’s wife as the first holder along with the assessee as the second holder. The opening balance on 01/04/2003, was Rs.49,298/- and the closing balance was Rs.1,00,080/-. Smt. Kajal Ghosh, has accepted that this account belongs to her and it was considered in the assessment of Smt. Kajal Ghosh. Under these circumstances, the addition of Rs.1,609/-, being interest in her Savings Bank Account, cannot be added in the hands of the assessee. Accordingly the same is deleted and this ground of the assessee is allowed.

8.1.1. Regarding the other two amounts, being interest on KVP of Rs.9,250/-, and NSC of Rs.2040/-, admittedly the KVP and NSC are belonging to the assessee. The assessee claims that these receipts were seized and no interest was realized by him till date and hence he could offer the same to tax on receipt basis.

I am of the considered opinion that this addition is rightly made by the Assessing Officer and sustained by the ld. CIT(A) as interest has accrued to the assessee on these two investments, which admittedly belonged to the assessee. The claim of the assessee that it is following receipt basis and hence cannot be taxed during the current year, is not accepted for the reason that, no method of accounting is followed by the assessee, who is only a salaried employee. Hence, we set aside this issue to the file of the Assessing Officer to calculate the interest accrued during this year only and bring it to tax. In the result, this ground of the assessee is allowed in part.

9. Ground No. 3 is on the addition of Rs.3,00,736/-, on account of unexplained investments

9.1. The assessee had investments to the tune of Rs.5,77,736/-. He explained these investments by submitting that the same were from salary savings. The ld. Assessing Officer found that the withdrawals from the assessee’s bank account is only Rs.5,20,000/-. The difference of investment was added as unexplained investments. The assessee explains that part of the salary was always received in cash and it was only Rs.1,38,505/-, which was received by way of cheque. It was also submitted that an investment of Rs.3,35,000/- was given from the Bank Account maintained by the wife of the assessee but such bank account was not considered by the Assessing Officer. The assessee stated that he deposited the salary of Rs.1,38,505/- in the joint account of the wife and had drawn Rs.3,35,000/- for making investments. Regarding the balance, it was explained that it was lying in the debit of the balance sheet of the wife. The assessee produced cash flow statement to explain the sources of deposit. It was also stated that the bank accounts of Abhishek Ghosh and A. Naug, the mother of Smt. Kajal Ghosh were declared in her returns.

9.2. The ld. D/R, could not controvert the arguments of the assessee that the amount to the extent of Rs.3,25,000/-, was gathered by way of drawings in the joint bank account and the balance amount of Rs.2,20,000/-, was made out of the salary received in cash.

9.3. Keeping in view the overall facts of the case and the capacity of the assessee, I am of the considered opinion that no addition is called for under the facts and circumstances of the case. When a person receives salary in cash, his claim that the investments were made from such salary, cannot be brushed aside. Thus, this addition is deleted and Ground No. 3 of the assessee is allowed.

10. Ground No. 4 is against the addition of Rs.64,000/-, on account that the assessee has shown low drawings.

10.1. I find that the assessee has declared household expenses of Rs.98,000/-, for the entire year, which comes to a monthly average of Rs.9,000/-. The assessee explained that he gets a rent free accommodation as well as a free car for transportation from his employer and that his wife has shown Rs.12,000/- as drawings in her books of accounts. The ld. Assessing Officer estimated the monthly expenditure at Rs.14,500/-.

In my view, the quantum of expenditure disclosed by the assessee towards drawing for household expenses is reasonable. The addition made by the Assessing Officer is on ad-hoc basis. Hence, I deleted the same on the ground that this is devoid of merit. In the result this ground of the assessee is allowed.

11. Ground No. 5, relates to an addition of Rs.1,38,505/-, on the ground that Smt. Kajal Ghosh has shown to have received Rs.1,38,505/-, from the assessee.

11.1. The Assessing Officer was of the opinion that this amount was found in two places. He made the addition. In view of my decision while adjudicating Ground No. 3, for this very Assessment Year, this addition is deleted as devoid of merit.

12. Ground No. 6, relates to an addition of Rs.74,029/-, being an amount of deposit in Bank Account No. 5178, belonging to Smt. Abha Naug, mother-in-law (of the assessee).

12.1. The copy of the Bank Account is placed at pages 104 to 110 of the paper book. Smt. Abha Naugh received rental income every month. I find that there is no deposit of Rs.27,294/- on 28/01/2014 as alleged by the Assessing Officer. The balance is a continuous rental deposit of Rs.4,200/- p.m. Smt. Abha Naugh passed away on 30t^h August, 2002 and her husband Shri P K Naug and Smt. Kajal Ghosh, declared 50 per cent each of this income in their return’s of income. On these facts, which could not be controverted by the ld. D/R, this addition is of Rs.74,029/- is hereby deleted and Ground No. 6 of the assessee is allowed.

13. Ground No. 7, is on the addition of Rs.6,00,000/- and interest of Rs.16,000/-thereon, which is made by Shri P K Naug, who is the father-in-law of the assessee. The father-in-law explained the source of his investment. The assessee at page nos. 239 & 244 of the paper book filed a copy of the judgment of the C.B.I. Court, wherein these investments were explained. The Court had accepted the explanation given to Shri P K Naug that these deposits were made from out of sale proceeds received by him on sale of a house. In fact, the C.B.I., Court records that the I.O. and the ld. Special P.P., have agreed that Shri P K Naug has furnished supporting documents in respect of the deposits and MIS Accounts bearing Nos. 500879 & 502023, and that they have no objection if these two MIS Accounts along with corresponding RD Accounts, are realized. On these facts, this addition has to be necessarily be deleted. In the result, this ground of the assesse is allowed.

14. Ground No. 8, relates to the addition of Rs.5,27,845/-, being unexplained investments made by the assessee in the name of his son, Sri Abhishek Ghosh.

14.1. The bank account of Sri Abhishek Ghosh, was rooted through the statement of accounts of Smt. Kajal Ghosh, and his bank balance was taken as her bank balance in the balance sheet. Smt. Kajal Ghosh, owned up these deposits and has shown the source of the deposits in the assessment year as Smt. Kajal Ghosh’s. The said bank account in the name of Sri Abhishek Ghosh, and interest income thereon was considered in her return of income. Sri Abhishek Ghosh, is a major son and has independent sources of income. Under these circumstances, as the deposits in the bank account and the interest income thereon are considered in the assessment of Smt. Kajal Ghosh, making an addition again in the case of the assessee would tantamount to double taxation of the same amount. Thus, this addition is hereby deleted and Ground No. 8 of the assessee is allowed.

15. Ground No. 9, relates to the addition of Rs. 72,105/-, as unexplained investments made in the name of the minor son, Sri Anirban Ghosh.

15.1. It was explained that the sources of deposit made by Sri Anirban Ghosh, was out of maturity of fixed deposits. Smt. Kajal Ghosh, as also accounted for this amount. Thus, this addition cannot be made in the name of the assessee for this assessment year, as the sources has been explained as out of maturity of fixed deposits from earlier years. Thus, this ground of the assessee is allowed.

16. Ground No. 10, relates to the addition of Rs. 42,412/-as unexplained cash transactions based on two cash memos.

16.1. These cash memos were in the name of Smt. Kajal Ghosh. In my view, the addition cannot be made in the name of the assessee as Smt. Kajal Ghosh, is a separate assessee and this expenditure incurred by her should be considered in her assessment. In the result, I.T.A. No. 580/Kol/2016, Assessment Year: 2004-5, is allowed in part.

17. Ground No. 1, is on the legal issue, as to whether the AO has discharged the burden of proof that lay on him while holding that the assessee’s wife, minor & major sons, mother-in-law, father-in-law, are benamidars of the assessee.

17.1. Consistent with the view taken by me while disposing of the appeal for the assessment year 2003-04, I adjudicate this issue in favour of the assessee.

18. Ground No. 2 is on the addition of Rs.44,936/-, being interest on KVP, NSC and SB Account. The facts are identical to Ground No. 2 for the Assessment Year 2004-05. Consistent with the view taken by me therein, I hold that interest of Rs. 11,850/-on KVP and interest income of Rs.1,609/-, on the bank account in the name of Smt. Kajal Ghosh, cannot be added in the hands of the assessee. Hence the same is deleted. The other 2 amounts being interest on KVP of Rs.9,875/- & 13,004/-, and interest on NSC of Rs.2,615/- and MIS of Rs. 5,000/-, belonging to the assessee are rightly brought to tax in the hands of the assessee. Hence this ground of the assessee is allowed in part.

19. Ground No. 3 is on an addition of Rs. 503,576/- as unexplained investment. The assessee has explained the source as salary received in cash and the loan amount from his wife Smt. Kajal Ghosh. These sources were disclosed in the cash flow statement. The sources for explained the above investments were explained. I find no reason to reject this submission of the assessee. Hence I delete this addition and allow Ground No. 3 of the assessee.

20. Ground No. 4, is on the issue of law drawings. This issue is similar to Ground No. 4 for the assessment year 2004-05. Consistent with the view taken therein, I delete this addition and allow the ground of the assessee.

21. Ground No. 5, relates to an addition of Rs. 25,000/-, as benami investment in the name of Smt. Kajal Ghosh.

21.1. The AO committed a mistake in his tabulation as the amount of Rs. 25,503/-was received by cheque; due to this mistake this addition has been made. Hence the same is deleted and Ground No. 5 of the assessee is allowed.

22. Ground No. 6, relates to an addition of Rs. 575,149/-for the deposits in the bank account No. 5178 of Smt. Abha Naug, the mother-in-law the assessee. This is similar to the addition dealt by me while disposing off Ground No. 6 for the Assessment Year 2004-05. Consistent with the view taken by me therein, I delete this addition and allow the Ground No. 6 of the assessee.

23. Ground No. 7, relates to the addition of Rs. 198,000/-, being investment made in the name of Sri P K Naug, the father-in-law of the assessee. This ground is similar to Ground No. 7, for the assessment year 2004-05. Consistent with the view taken therein and for the same reasons, this addition is deleted and the ground of the assessee is allowed.

24. Ground No. 8, relates to the addition of Rs. 2,330,240/-, as deposits in the bank account of Sri Abhishek Ghosh, the major son of the assessee. The assessing officer made a total mistake. The aggregate total is Rs. 14,87,585/-. Similar addition made for the assessment year 2004-05 was deleted by me while adjudicating Ground No. 8, in that year. Consistent with the view taken therein and for the very same reasons, I delete this addition and allow this ground of the assessee.

25. Ground No. 9, relates to an addition of Rs. 1022/-, as unexplained investments being interest in SB Account of the minor son of the assessee, Sri Anirban Ghosh.

25.1. The income of the minor son of the assessee up to Rs. 1500/- need not be added to the income of the assessee. As this amount of interest in question is below Rs. 1500/-, I delete this addition and allow this ground of the assessee.

26. Ground No. 10, relates to an addition of Rs. 1 lakh/-being loan and gift received by Smt. Kajal Ghosh. As this amount was considered by the Assessing Officer of Smt. Kajal Ghosh in her assessment, the same cannot be brought to tax in the hands of the assessee. Hence this addition is deleted the ground of the assessee is allowed.

27. In the result, T.A. No. 581/Kol/2016, Assessment Year: 2005-06, is allowed in part.

28. Ground No. 1, is on the legal issue, as to whether the AO has discharged the burden of proof that lay on him while holding that the assessee’s wife, minor & major sons, mother-in-law, father-in-law, are benamidars of the assessee.

Consistent with the view taken by me while disposing of the appeal for the assessment year 2003-04, I adjudicate this issue in favour of the assessee.

29. Ground No. 2 is on the addition of Rs.77,877/-, being interest on KVP, NSC and SB Account. The facts are identical to Ground No. 2 for the Assessment Year 2004-05 & 2005-06. Consistent with the view taken by me therein, I adjudicate this issue partly in favour of the assessee.

30. Ground No. 3, relates to the addition of Rs. 67,850/-, as unexplained investments.

30.1. The assessee, as in the earlier years has explained the source of investments as salary and bank withdrawals. While the AO accepted this explanation partly, he made an addition of Rs. 67,850/-. I am of the view that the assessee has sufficiently explained the sources of investments. Hence I delete this addition and allow this ground of the assessee.

31. Ground No. 4, relates to an addition on account of law drawings. Consistent with the view taken while disposing of Ground Number 4 for the earlier Assessment Years 2004-05 & 2005-06, I delete this addition and allow Ground No. 4 of the assessee.

32. Ground No. 5, relates to an addition of Rs.10,899/-, on account of deposits in the bank account number 5178 of Smt. Abha Naug, mother-in-law the assessee. 32.1. Similar addition is deleted by me while disposing of Ground No. 6, for the Assessment Year 2005-06. Consistent with the view taken therein for the very same reasons, I delete this addition and allow Ground No. 5 of the assessee.

33. Ground No. 6, relates to an addition of Rs. 60,000/- being interest on MIS made in the earlier year by Sri P K Naug, the father-in-law the assessee.

33.1. As the investments themselves were held as not belonging to the assessee while disposing of the issue in the earlier assessment years, the interest accrued thereon cannot be added in the hands of the assessee. Thus, this ground of the assessee is hereby allowed.

34. Ground No. 7, relates to the addition of Rs. 587,740/-as unexplained investments in the account of the major son of the assessee, Sri Abhishek Ghosh. 34.1. Similar additions for assessment years 2004-05 and 2005-06 were deleted while disposing off Ground No. 8 in those assessment years. Consistent with the view taken therein and for the very same reasons, this addition is hereby deleted and this ground of the assessee is allowed.

35. Ground No. 8, is regarding an addition of Rs. 54,937/-as unexplained investments in the account of the minor son of the assessee, Sri Anirban Ghosh. The assessee explained the source of deposit as NTS scholarship by cheque, Mamraj Agarwal Rashtriya Puraskar for rank in ISC exam, another NTS Scholarship by cheque and cash deposit by elder brother, Sri Abhishek Ghosh, from his NRI Account. As the sources are sufficiently explained, the addition made herein is deleted and Ground No. 8 of the assessee is allowed.

36. Ground No. 9, relates to an addition of Rs.1,78,000/-, as unexplained cash transactions.

36.1. The assessee claimed that no transactions or assets were found in the seized material, a list of which is that pages313 to 314 of the paper book based on which this addition was made. In other words, the basis of this addition is not known. The ld. D/R, could not point out the basis on which this addition was made. Hence I delete the same and allow Ground Number 9 of the assessee.

37. In the result, T.A. No. 582/Kol/2016, Assessment Year: 2006-07, is allowed in part.

38. Ground No. 1, is on the legal issue, as to whether the AO has discharged the burden of proof that lay on him while holding that the assessee’s wife, minor & major sons, mother-in-law, father-in-law, are benamidars of the assessee.

Consistent with the view taken by me while disposing of the appeal for the earlier Assessment Years, I adjudicate this issue in favour of the assessee.

39. Ground No. 2 is on the issue of addition of Rs.70,492/-, being interest on KVP, NSC and SB account. The facts are identical to Ground No. 2 for the Assessment Years 2004-05, 2005-06 & 2006-07. Consistent with the view taken by me therein, I delete the interest of KVP and SB of Rs.18,900/- and Rs.2242/-. The other addition is not disputed. If this interest has been brought to tax in the earlier assessment years on the ground that the assessee has to be taxed on accrual basis, then no further interest can be brought to tax in this year as it would tantamount to double taxation. Hence this issue is set aside to the file of the Assessing Officer for fresh adjudication in accordance with law.

40. Ground No. 3, relates to the addition of Rs. 208,000/-, for low drawings.

40.1. The facts of this ground are similar to that of Ground No. 4 for the Assessment Year 2004-05. Consistent with the view taken by me while disposing of the same, I delete this addition and allow Ground No. 3 of the assessee.

41. Ground No. 4, relates to the addition of Rs. 3,015,003 being the investment made by Smt. Kajal Ghosh, in the flat on the basis of a memo of consideration in the sale deed.

41.1. I find that this investment has been admitted by Smt. Kajal Ghosh, as belonging to her from the assessment order of Smt. Kajal Ghosh. The money for the payment was made through the bank account of State Bank of India, AE Market Branch, Kolkata, which belongs to Smt. Kajal Ghosh. The source of investments that declared by Smt. Kajal Ghosh. The amount of Rs. 12 lakhs/-, was paid from a housing loan and Rs. 150,000 was paid from the bank account of Sri Abhishek Ghosh & Smt. Kajal Ghosh. The instalments of the housing loans are being paid by Smt. Kajal Ghosh, from an existing bank accounts. On these facts, I hold that the addition is bad in law. Hence, I delete the same and allow Ground No. 4 of the assessee.

42. Ground No. 5, relates the addition of Rs. 6,42,410/-, for the deposits made in the bank account of the mother-in-law of the assessee, Smt. Abha Naug. For the very same reasons that are cited by me for deleting the similar additions for the earlier assessment years, I delete this addition and allow Ground No. 5 of the assessee.

43. Ground No. 6, relates to an addition of Rs. 334,845/-being investments made by Shri P K Naug. This includes Rs. 48,000/-being interest on earlier investments. Consistent with the view taken by me in the earlier Assessment Years and for the very same reasons I delete this addition and allow this ground of the assessee.

44. Ground No. 8, relates to the addition of Rs. 20,902/-, as unexplained investments in the case of the major son Sri Abhishek Ghosh.

44.1. In this case, the bank account of Sri Abhishek Ghosh, the bank account of Sri Abhishek Ghosh, was covered by the statement submitted by Smt. Kajal Ghosh, and the bank balance was taken by her in her balance sheet. The source of deposit in this bank account were explained by her in the assessment. The interest on this bank account was declared as her income. The Assessing Officer of Smt. Kajal Ghosh, has not disputed the statement of Smt. Kajal Ghosh, on this issue. As the same cannot be brought to tax in the hands of two different assessees, I delete this addition and allow Ground No. 8 of the assessee.

45. Ground No. 9, is on the addition of Rs. 1,30,000/-on the ground that the assessee has received incremental loan from his minor son, Sri Anirban Ghosh. The assessee submitted that he has not received any such loan from his son. There is no discussion on the same in the assessment order. The ld. D/R, could not point out the material, on basis of which this addition has been made by the Assessing Officer. Hence, I delete this addition and allow this ground of the assessee.

46. In the result, T.A. No. 583/Kol/2016, Assessment Year: 2007-08, is allowed in part.

Kolkata, the 31^st day of January, 2018