Case Law Details

Case Name : Shri M.Balakrishna Hegde Vs DCIT (ITAT Bangalore)
Appeal Number : IT(SS)A No.138/Bang/2003
Date of Judgement/Order : 11/10/2019
Related Assessment Year :
Courts : All ITAT (6906) ITAT Bangalore (367)

Shri M.Balakrishna Hegde Vs DCIT (ITAT Bangalore)

The issue under consideration is whether AO is correct in considering the gift received by the assessee as unexplained gift and made addition u/s 68 when the Gift was received through banking channels?

In the present case, Assessee has received gifts. AO treated the same as unexplained credit under section 68 on the ground that assessee not able to prove the source and creditworthiness of donor. Assessee challenged this on the ground that money had come through banking channels hence it is genuine.

ITAT states that regarding these gifts, assessee could not establish the credit worthiness of the transaction and it is by now a settled position of law that the assessee has to establish identity and creditworthiness of the donor as well as genuineness of the transaction. Regarding 1st gift, deposit in question could not be properly explained even by donor in course of statement recorded by the AO u/s 131 and it is also noted by the AO that this deposit is not on account of conversion of dollars since the donor is NRI whereas other deposits of very smaller amount were on account of conversion of dollars. Hence, it has to be accepted that the creditworthiness of the donor and genuineness of the transaction is not established and under these facts, ITAT find no infirmity in the order of CIT (A) on this issue.

Regarding 2nd gift, it is true that donor could not be located because of his death but it is also true that donor was not related to the assessee in any manner. Merely because money has come through banking channels, genuineness of the transaction is not established, even if we accept that identity and credit worthiness is established. Gift to unrelated person is not a normal human behavior. No relationship with donor has been pointed out whether blood relationship or friendship or any other relationship. Similarly, in respect of 3rd gift, even correct address could not be brought on record by the assessee. This is also not shown that donor is related with assessee in any manner whether blood relationship, friendship or any other relationship. Hence, on this issue, regarding these three gifts, ITAT find no reason to interfere with the order of the CIT(A). Accordingly, appeal raised by assessee is dismissed.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal is filed by the assessee and the same is directed against the order of the CIT(A), Mangalore, HQ at Bangalore dated 19/9/2003 for the block period from 1/4/1989 to 28/6/1999. This appeal was earlier disposed of by the Tribunal as per its order dated 02/01/2009 and as per this Tribunal order, the appeal of the assessee was partly allowed. Against this Tribunal order, the assessee carried matter in appeal before Hon’ble Karnataka High Court and as per Judgment dated 20/1/2015, the Hon’ble Karnataka High Court has restored back the matter to the file of the Tribunal for a fresh decision. The Tribunal is required to examine the validity of search and if it is found to be valid, then the Tribunal has to go into the merit afresh.

2. In view of the directions of the Hon’ble Karnataka High Court, the appeal was again fixed for hearing on several dates and it was heard on 01/08/2019. In course of hearing, it was submitted that by the ld. AR of the assessee that the issue regarding validity of search had been raised by the assessee by way of additional grounds but now the assessee does not want to press the additional grounds and hence, the additional grounds may be rejected as not pressed. We hold accordingly and reject the additional grounds raised by the assessee as not

3. The ld. AR of the assessee submitted that the Tribunal Order dated 02/01/2009 has been rectified by the Tribunal in MP 37/Bang/2009 dated 09/09/2009 and as per the same, the Tribunal has restored back one issue to AO in respect of addition of Rs.92,800/- sustained by the Tribunal out of total addition made by the AO of Rs.1.95 lakhs on account of unaccounted payments to Mr. John D Souza. The Tribunal, in the MP order held that if any statement is going to be used against the assessee then the assessee has to be confronted, and the assessee has to be given an opportunity to cross examine the person concerned. The Tribunal noted that in the present case, such an opportunity has not been afforded and hence, the Tribunal held in the MP order that the addition of Rs.1.95 lakhs is restored back to the file of the AO for affording an opportunity to the assessee to cross examine John D Souza. He also filed fresh synopsis in respect of each of the grounds raised by the assessee before the Tribunal. The grounds raised by the assessee before the Tribunal are reproduced herein below:

“1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.

2. The order passed by the learned A0 is in violation of the principles of natural Justice and therefore, the order requires to be annulled. Furthermore, the learned CIT(A) not justified in not disposing off this ground taken before him under the facts and in the circumstances of the appellant’s case.

3. Without prejudice to the above, the authorities below are not justified in making addition of Rs.55,000/- being the unexplained investment in residential flats under the facts and in the circumstances of the appellant’s case. They failed to appreciate that, the sum of Rs.55,000/- was paid by account payee cheque and from out of the unimpeachable resources of the appellant and the same did not constitute undisclosed income. The addition made is on an erroneous appreciation of law and facts of the appellant’s case and liable to be deleted.

4. The authorities below are not justified in making an addition of Rs. 19,000/- being the gift received by the appellant from one Sri Anil Hegde, which gift was received by account payee cheques and entries are also found in the diary seized during the course of search. The authorities below failed to appreciate that, the gift received did not constitute undisclosed income and there is no justification to make an addition in the block assessment. The addition made is on an erroneous appreciation of law and facts of the appellant’s case and liable to be deleted.

5 The authorities below are not justified in making additions of Rs. 1,30,000/- Rs. 1,00,000/- and Rs. 1,20,000/- being gifts received by appellant from Mr. P.V.Gangadhar, Mr. Oswal Pinto and Abbubakar respectively. They failed to appreciate that the gifts received were by account payee cheques and were supported by entries in the seized diary and therefore, the additions made are unjustified especially, when Sri Abbubakar appeared before the AO and confirmed the factum of giving the gift to the appellant. The additions made by the authorities below is on an erroneous appreciation of law and facts of the appellant’s case and liable to be deleted.

6. The authorities below are not justified in making additions of Rs.3,20,000/-, Rs.50,000/- and Rs.50,000/- being loans received by the appellant from Mr. Bhaskar Hegde, Mr.Maxim Lobo and Mr. Madhu Kumar respectively under the facts and in the circumstances of the appellant’s case. They failed to appreciate that, Mr.Bhaskar Hegde, is the appellant’s co-brother, who was residing in Bombay and monies were received from him by means of account payee cheque. Furthermore, they failed to appreciate that, Mr.Bhasar Hegde, also appeared before the O. and confirmed the advance made and therefore, the addition made is opposed to law and facts of the appellant’s case and therefore, liable to be deleted.

7. The authorities below are not justified in making an addition of Rs. 1,95,000/- as unaccounted payments made by the appellant in connection with purchase of land and building by the appellant’s wife from one Mr. John D’Souza under the facts and the circumstances of the appellant’s They failed to appreciate factually, no such payment was made to Mr. John D Souza other than the sale consideration as per the Sale Deed and that, the addition has been made on the basis of the said statement is bad in law and liable to be deleted.

8. The authorities below are not justified in making additions of Rs.71,000/- and Rs.50,000 being the alleged advances made by the appellant to Mr. Hameed of A.H. TIMBERS and JYOTHI APPARELS respectively, under the facts and in the circumstances of the appellant’s case. They failed to appreciate that, the appellant had discontinued money lending business in 1994 but, the said advances were made to Mr. Hameed of A.H. TIMBERS and JYOTHI APPARELS at the instance of one Sri T.Amin and that, no interest was collected on these advances. Furthermore, these advances given by the appellant to the aforesaid persons was also returned back and factually, as on the date of search, there was no amount outstanding. The addition made is purely on suspicion and surmise, assumptions and presumptions, and liable to be deleted.

9 The authorities below are not justified in making an addition of Rs.5,000/- as the alleged advance made to KUMBLE ASSOCIATES under the facts and in the circumstances of the appellant’s case. They failed to appreciate that, the appellant had stood as a surety to one Sri Srinivas Prabhu of KUMBLE ASSIICIATES for a loan taken by him from M/s.Reachout Finance & Investments Pvt. Ltd., where the appellant was one of the Director and appellant had taken a cheque from KUMBLE. ASSOCIATES, as a security in the event of any default on the part Sri Srinivas Prabhu. The addition made considering the amount recorded in the said cheque as “advance” is purely on suspicion and surmise, assumptions and presumptions, and liable to be deleted.

10. The authorities below are not justified in assessing a sum of Rs.2,43,900/- as the unexplained cash credit disbelieving the explanation of the appellant that, the said sum was received from the appellant’s father-in-law. The authorities below failed to appreciate that, the appellant’s father-in-law had also appeared before the A.O. and confirmed the fact of providing the funds to the appellant and his capacity to make the advance and therefore, the rejection of the evidence tendered by the appellant’s father-in-law is purely on suspicion and surmise, assumptions and presumptions and the consequent addition made is liable to be deleted.

11. The learned CIT(A) is not justified in sustaining an addition of Rs.3,05,147/- out of a sum of Rs5,4,147/- made by the learned A.O. on account of insufficiency in drawings under the facts and in the circumstances of the appellant’s He failed to appreciate that, the appellant and his wife are given to frugal way of life and do not incur much expenditure and therefore, the drawings admitted by them are sufficient to meet their expenditure and consequently, no addon ought to have been made. Furthermore, the authorities below failed to appreciate that, no evidence was found during the course of search to justify estimate of household expenditure, as contained in the impugned orders and therefore the addition made is arbitrary and liable to be deleted.

12. The above additions made by the AO and sustained by the CIT(A) are contrary to evidence and purely on surmise, assumptions and presumptions and therefore liable to be deleted.

13. The authorities below failed to appreciate that the additions made by way of gifts and cash credits are all supported by evidence found and sei2ed during the course of search and therefore, they ought not to have relied upon the statement taken from the appellant by threat, coercion, undue influence and importunity which is very clearly discernable under the facts and under the circumstances of the appellant’s case.

14. The appellant denies himself liable to be charged to interest u/s 158BFA (1) which under the facts and circumstances of the case requires to be cancelled.

15. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant Humbly prays that the appeal may be allowed and justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”

4. In fresh synopsis filed by the assessee, the assessee has made submissions on grounds raised and instead of reproducing the synopsis, we are taking note of the arguments advanced in brief as per below:

5. Ground Nos.1 and 2 are general. Ground No.3 is in respect of addition of Rs.55,000/-on account of unexplained investment in residential flat. Regarding this ground, it has been submitted that this amount was paid through a bank account which was closed and hence, the assessee lost sight of the same while preparing th statement of affairs. But this amount was also out of explained sources and therefore, this addition is not justified. This issue has been discussed by the AO at pages 3 to 5 of the assessment order wherein it was noted by the AO that the AO had obtained information u/s 133(6) of the Act from the construction company viz., Horizon Constructions and as per the information received from the construction company, AO computed that total amount invested by the assessee in this residential flat at Rs.7,88,185/- whereas the assessee has disclosed only Rs.7,33,185/- and the AO made addition of balance amount of Rs.55,000/-. The AO has noted at page 5 of the assessment order that undervaluation of investment was pointed out to the assessee but the assessee has not given any clear explanation as to why lump sum figure is adopted. There is no discussion in the assessment order as to whether the reply received from the construction company was confronted to the assessee or not. Moreover, assessee is now explaining before the Tribunal that this amount of Rs.55000/- was paid from a different bank account which was closed and therefore, the assessee lost sight of the same while preparing statement of affairs and the ld. AR of the assessee submitted before us that this amount was also out of explained sources. Under these facts, we feel it proper to restore back this matter to the file of the AO for fresh decision. Hence, we set aside the order of the CIT(A) on this issue and restore this matter back to the file of the AO for fresh decision with a direction that he should confront the reply received from the construction company to the assessee and the assessee should also bring on record the details of the said closed bank account from which it is stated that this amount of Rs.55000/- was paid by the assessee and it is also a disclosed bank account. If the assessee is able to establish this claim, then no addition is justified. The AO should pass necessary order as per law as per above discussion after providing adequate opportunity of being heard to the assessee. Accordingly ground No.3 is allowed for statistical purposes.

6. The next ground on which arguments are advanced by the ld. AR of the assessee in fresh synopsis is ground No.5 regarding gifts from various persons i.e. (a) Abbubakar Rs.1.20 lakhs (b) P.V. Gangadharan Rs.1.30 lakhs and (c) Oswal Pinto 1 lakh. Regarding gifts from Abbubakar of Rs.1.20 lakhs, it is stated in the fresh synopsis that this gift was received from Abbubakar by way of account payee cheque and it is supported by seized documents and entries in diary and therefore, it cannot be doubted. He also submitted that Abbubakar was employed in Libya and his salary was remitted in his NRI account and gift was made from said NRI account. It is also stated in the synopsis that Abbubakar was examined by the AO and he confirmed the gifts. It is submitted that under these circumstances, gift cannot be doubted. It is also submitted that at pages 125 to 133 of the paper book is the statement of the donor Abbubakar. The learned DR of the revenue supported the order of the CIT(A).

7. We have considered the rival submissions. We find that the issue regarding gifts from Abbubakar is discussed and decided by the AO at pages 6 to 8 of the assessment order. At page 6 of the assessment order, it is noted by the AO that in the meantime, Abbubakar was summoned and statement of oath u/s 131 was recorded from him on 1/6/2001. It was further noted that in the statement, Abbubakar has confirmed gift of Rs.1.20 lakhs made by him to the assessee. AO further noted that it was brought to the knowledge of Abbubakar that as per bank statement, there is a deposit of Rs.2.20 lakhs on 23/2/1994 and cheque for Rs.1.20 lakhs was issued in favour of the assessee on 24/2/1994 and on the same date, another cheque was issued by Abbubakar for a sum of Rs.1 lakh to some person whose identity is not revealed but as per AO, Abbubakar could not explain credits and withdrawals with reference to his own bank accounts. At page 6 of the assessment order, it is also noted by the AO that during the relevant period, Abbubakar was working in Libya. As per AO, except deposit of Rs.2.20 lakhs on 23/2/1994 other deposits are all small amounts and those deposits are on account of dollar conversion but this deposit of Rs.2.20 lakhs on 23/2/1994 is different and it is not on account of dollar conversion. AO noted that Abbubakar could not explain source of Rs.2.20 lakh specifically. Under these facts, this finding was given by the AO that this gift claim of Rs.1.20 lakhs from Abbubakar is nothing but undisclosed income of the assessee introduced in the name of Abbubakar.

7.1 Regarding second gift from Gangadharan of Rs.1.30 lakhs, it was noted by the AO at page 8 of the assessment order that summons was issued to Gangadharan on 23/5/2001 but the summon was returned unserved by the postal authorities with the reason that the said person had deceased and no longer alive. Under these facts, AO came to the conclusion that the assessee was not able to prove genuineness of the transactions since he could not produce bank account of Gangadharan to verify the nature and source. In respect of third gift of Rs.1 lakh from Oswal Pinto, it is noted by the AO at page 7 of the assessment order that summons were issued to Oswal Pinto on 8/6/2001 but the summons were returned unserved for the reason that address was insufficient. AO noted that the address furnished was given by the assessee and this fact was brought to the knowledge of the assessee. In reply, it was submitted by the assessee before the AO that correct address of Oswal Pinto is not known to the assessee and under these facts, the AO came to the conclusion that in absence of correct address of Oswal Pinto which should have been supplied by the assessee, the assessee failed to prove the genuineness of this transaction and this gift was held to be bogus. Regarding all these three gifts, learned DR of the Revenue supported orders of the authorities below.

7.2 Regarding these three gifts, it is submitted in the fresh synopsis that genuineness of these gifts cannot be doubted as there is no material disproving the receipt of gift. He also submitted that these gifts are supported by entries recorded in diary which was seized and is in possession of the department. All the monies have been received by account payee cheques proving receipt of the gifted amount. It is submitted that gift deeds were also seized. It is pointed out that the material relied upon by the department is the admission of the assessee at the time of search on 28/6/1999 to come to conclusion that these transactions are bogus. It is further submitted that the contention of the assessee that the statement was taken by coercion and undue influence at the time of search and cannot be the basis of making addition. It is also submitted by the ld. AR of the assessee that the assessee has retracted the said statement on 21/3/2001 on several points and on many of these points, no addition was made by the AO. Hence, this admission that the statement was given on the date of search cannot be entirely relied upon. The learned DR of the revenue supported the order of the revenue.

8. We have considered rival submissions. We find that regarding these three gifts, assessee could not establish the credit worthiness of the transaction and it is by now a settled position of law that the assessee has to establish identity and creditworthiness of the donor as well as genuineness of the transaction. Regarding Abbubakar, deposit of Rs.2.20 lakhs in question could not be properly explained even by Abbubakar in course of statement recorded by the AO u/s 131 and it is also noted by the AO that this deposit is not on account of conversion of dollars whereas other deposits of very smaller amount were on account of conversion of dollars. When the deposit of Rs. 2.20 Lacs in the bank account of Abubaker could not be explained by Mr. Abubaker and such deposit is not on account of dollar conversion as other deposits, it has to be accepted that the creditworthiness of the donor and genuineness of the transaction is not established and under these facts, we find no infirmity in the order of CIT (A) on this issue.

Regarding gift from P.V. Gangadharan, it is true that he could not be located because of his death but it is also true that P.V Gangadharan was not related to the assessee in any manner. Merely because money has come through banking channels, genuineness of the transaction is not established, even if we accept that identity and credit worthiness is established. Gift to unrelated person is not a normal human behavior. No relationship with Gangadharan has been pointed out whether blood relationship or friendship or any other relationship. Similarly, in respect of Oswal Pinto, even correct address could not be brought on record by the assessee. This is also not shown that Oswal Pinto is related with assessee in any manner whether blood relationship, friendship or any other relationship. Hence, on this issue, regarding these three gifts, we find no reason to interfere with the order of the CIT(A). Accordingly, ground No.5 is rejected.

9. In ground No.6, the assessee is disputing two additions of Rs.50,000/- each being loan from Maxim Lobo and Madhukmar. This issue has been discussed by the AO at pages 12 & 13 of the assessment order. At page 12, it is stated by the AO that in course of statement recorded from the assessee on 28/6/1999, it was admitted by the assessee that this loan of Rs.50,000/- from Madhukumar is bogus. But in the block return filed by the assessee, this was not added as income. The statement of Madhukumar was recorded on 30/6/1999 to gather truth about genuineness of the loan transaction. It is also noted that in reply to a specific query posed to Madhukar as to whether he had advanced any sum of money with any of the concern of the assessee, he had stated that he has not given any amount to the assessee. It was further noted by the AO that in fact, Madhukar is an employee working with assessee and earning approximately Rs.2000/- p.m. Under these facts, AO held that this loan is bogus and added the same as income of the assessee. Regarding loan of Rs.50,000/- from Maxim Lobo, it was stated by the AO at page 13 of the assessment order that an attempt was made to find out the fact from Lobo himself about genuineness of the loan transaction but the notice server could not locate the address for the reason that the address furnished was insufficient. AO further noted that this fact was brought to the knowledge of the assessee who, in his reply stated that he does not have any more clues about his address apart from what he had given. In view of these facts, AO came to conclusion that genuineness of the transaction was not proved by the assessee. He made addition of this amount also. It is by now settled position of law that in respect of addition u/s 68 in respect of cash credit, the assessee has to establish three ingredients i.e. identity of the creditor, credit worthiness of the creditor and genuineness of the transaction. Regarding loan from Madhukumar, he has in fact denied about any loan to assessee and he was an employee with assessee only with a monthly salary of Rs.2000 per month. Regarding Maxim Lobo, assessee could not provide even correct address. Hence, we are satisfied that the assessee could not establish identity of both these creditors and their credit worthiness and genuineness of the transaction and hence, on this issue also, we find no reason to interfere with the order of the CIT(A). Accordingly, ground No.6 is also rejected.

10. Regarding ground No.7 in respect of confirmation of 92,800/- out of total amount of Rs.1.95 lakhs, the Tribunal has already restored the matter back to the file of the AO for fresh decision as per Tribunal order in MP No.37/Bang/2009 dated 9/9/2009. Hence, in the present proceedings also, we restore the matter back to the file of the AO for fresh decision with a direction that he should provide the assessee an opportunity to cross-examine John D Souza because it is settled position of law that if any statement is going to be used against the assessee, such statement should be confronted to the assessee and if the assessee likes to cross examine the person who gave the statement, the assessee should be given an opportunity to cross examine the person concerned. Hence, ground No. 7 is allowed for statistical purposes.

11. Ground No.8 is regarding two additions of Rs.50,000/- each in respect of two blank cheques of Rs.50,000/- each from H. Timbers and Jyothi Apparels. Regarding these two additions, it is stated by the AO at page 21 of the assessment order that regarding these two blank cheques found in course of search, it was stated by the assessee that the assessee has advanced money to these two parties out of pigmy collections made by the assessee from various parties. It was also stated that advance was returned subsequently and no interest was paid by the parties. Regarding one cheque of Rs.50,000/- of A. H. Timbers found in course of search, it was submitted by the assessee before the AO that he has given loan of Rs.40,000/- to T. Amin for which T. Amin had given guarantee by issuing bearer cheque. AO referred to statement of Tukaram Ameen recorded u/s 131 on 13/7/1999 wherein he has stated that he has taken a loan of Rs.50,000/- as against Rs.40,000/- stated by the assessee at interest rate of 4% per month. This submission was brought to the knowledge of the assessee by the AO and the AO stated in the assessment order that in spite of this, assessee did not have anything to say by filing reconciliation or rebut the evidence given by him in the form party’s own statement. In the synopsis filed before us also, it is stated by the ld. AR of the assessee that these advances were given by the assessee out of pigmy collections made by the assessee from various parties and hence, source of these two advances by the assessee is explained. Regarding source of advances, general statement is made that the same is out of pigmy collections from various parties without giving even any one name of such parties and hence, on this issue also, we find no reason to interfere with the order of the CIT(A). Accordingly, ground No.8 is also rejected.

12. Regarding ground No. 9, the issue in dispute is regarding addition of Rs.35000/- being advance to M/s.Kumble Associates. On this issue, discussion by the AO is at pages 21 to 23 of the assessment order. On this issue, it was submitted by the assessee before the AO that this cheque was given by Mr. Srinivas Prabhu towards standing as a surety. It was also submitted that no advance was given to him. Page 23 of the assessment order has stated that no party would issue any cheque without any supporting transactions. Before us, no confirmation has been brought on record from M/s Kumble Associates in support of the contention of the assessee that this cheque was given by them without any loan given by the assessee to him or any other person. Hence, we find no reason to interfere with the order of the CIT(A) on this issue also. Accordingly, ground No. 9 is also rejected.

13. Ground No.10 is regarding addition of Rs.2,43,900/- in respect of deposit in KSRTC. At page 23 of the assessment order, AO stated that slip of paper was found in course of search which showed that a sum of Rs.2,43,900/- was received by the assessee from KSRTC by crossed cheque during financial year 1998-99. This was shown to the assessee to explain the contents of the slip and the nature of refund of money received from KSRTC. In reply, it was submitted by the assessee before the AO that the assessee’s father-in-law Raghava Hegde had made payment towards EMD and security deposit of Rs. 243,900/- for tender for canteen at KSRTC, Bangalore Puttur. It was also submitted that since assessee was in line of restaurant business, bid was made in the name of the assessee but bidding was unsuccessful and KSRTC refunded the deposit made of Rs.2,43,900/-. Refund was in the name of the assessee because the Bid was made in the name of the assessee. It was also submitted before the AO that the amount was not refunded to Raghava Hegde because at that point of time, house construction was going on and the assessee’s father-in-law agreed to give this amount towards construction of house out of love and affection towards his daughter. The AO, at page 24 has stated that this submission of the assessee is not acceptable because father-in-law of assessee, Raghuram Hegde and never stated at any time during the course of his statement recorded on 12/4/2001 and 4/5/2001 that he had made said payment on behalf of his son-in-law. No evidence has been brought on record before us in support of this contention that this amount was deposited by the father-in-law of the assessee with KSRTC and on refund of that amount from KSRTC, this was gifted by his father-in-law to the assessee. In absence of any evidence in support of this contention, we find no reason to interfere with the order of the CIT(A) on this issue also. Accordingly, ground No.10 is also rejected.

14. Next ground is ground No.11 regarding addition of Rs.1.50 lakhs in respect of insufficient drawings. The AO had discussed this issue at page 24 of the assessment order. The AO had noted yearwise drawings shown by the assessee and Mrs. J. Hegde and in the next page of the assessment order, the AO noted about payments made by the assessee towards telephone charges and club bills. The AO also noted that in addition to telephone expenses, club expenses and normal household expenses, the assessee also made expenses for house warming ceremony for residential house at Kadiri. On page 26 of the assessment order, it is also noted by AO that it was pointed out by the AO to the assessee that assessee’s club bills for financial year 1998-99 exceeded total withdrawals including his wife’s withdrawals during that year. AO, asked the assessee to explain if there were any other source from which assessee was meeting the balance of expenditure. In reply, it was stated by the assessee before AO that his monthly expenditure is Rs.3,000 to Rs. 5,000 per month and he was meeting the same out of his drawings only and not from any other source. Regarding expenses towards house warming, it was submitted that by assessee before the AO that only a few family members were invited and the total expenses were about Rs. 15,000/- although it was noted that as per the statement of assessee’s wife, minimum 100 persons including relatives and friends had been invited for function. AO estimated the expenses of the assessee at Rs.6,500/- p.m. for entire block period. In this manner, he worked out expenses of Rs.7,99,500/-. Total drawing shown by the assessee and his wife is Rs.2,65,353/- and shortage of Rs.5,34,147/- was added. We find that the assessee himself has admitted before AO that his monthly expenses are around Rs3,000 to Rs.5,000/- per month and the AO has estimated such monthly expenses at Rs.6,500/- per month and computed total expenses during block period of 123 months at Rs.7,99,500/- without making any separate addition in respect of house warming party. As per details of club expenses noted by the AO at page 25 of the assessment order, such club expenses are Rs.31,944/- during October 1998 to March 1999 and in addition to that, telephone expenses of about Rs.1500/- p.m. during February 1996 to May 1999 as per details noted by the AO at page 25 of the assessment order. Under these facts, estimation of monthly household expenses of Rs.6500/- per month during block period is not excessive/unreasonable and hence, on this issue also, we find no reason to interfere with the order of the CIT(A). Accordingly, ground No.11 is also rejected.

15. Regarding ground No.14 being interest u/s 158BFA (1), it is stated by the assessee that this issue is consequential. No argument has been advanced in respect of any other ground and hence, remaining grounds are rejected as not pressed before us in the present proceedings.

16. In the result, the assessee’s appeal is partly allowed for statistical purposes in the terms indicated above.

Order pronounced in the open court on 11th October, 2019.

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