TaxTMI 
TaxTMI 
1999 (1) TMI 55
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....bsp; Found Seized Cash (Rs.) (Rs.) 226, Cycle Market, Jhandewalan (business 3,26,580 3,20,000 premises of PPC) New Delhi First floor, 64, Kalyanvihar (residence 2,18,450 2,00,000 of Sunil Vasudev, partner of PPC) Ground floor, 64, Kalyanvihari (residence 1,31,700 1,00,000 of Deshraj Vasudev, father of Sunil Vasudev and partner of M/s Syndicate Advertisers) Locker No. 157 of Deshraj Vashudev 3,81,400 3,81,400 50, Ishwar Colony, Delhi (residence of 5,38,160 4,87,700 Naresh Vasudev, partner of PPC) B-206, Derawalan Nagar, Delhi (residence 11,97,967 11,65,000 of Rajesh Vasudev & Mukesh Vasudev, partners of PPC)  ....
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....; Naresh Vasudev Sunil Vasudev Dinesh Vasudev Deepak Vasudev (5) M/s Syndicate Advertisers (Firm) Partners Rajesh Vasudev Deshraj Vasudev Mukesh Vasudev Avinash Vasudev Kiran Vasudev Satish Vasudev Surinder Vasudev Smt. Ramwati Vasudev 2.2 M/s Pioneer Publicity Corporation was constituted as back as October 1966 and other concerns as well as companies came to be formed by the members of the family of Deshraj Vasudev in 1985, 1987, 1992 and 1996, respectively. It would be seen that various firms and the companies are constituted or formed by the members of the family of Deshraj Vasudev. The business carried on by the group was that of advertising through the display of hoardings, etc. The various firms/companies maintain regular books of account in the shape of cash book, ledger, etc. as supported by bills and vouchers and the same were got audited wherever required. The firm/company and partners have filed returns and have been assessed in the past. 3....
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....see for the block period on account of inflation of expenses under the head "Painting charges". The learned counsel of the assessee has not contested the addition made on account of surrender of the painting amount of Rs. 4,12,038 and in this view of the matter and especially when the said expenses incurred were not found vouched or accounted for in the books of account, the addition made of Rs. 4,12,038 is held to be justified and the same is confirmed. 4. The next ground relates to the addition of Rs. 1,81,000. The AO noted from p. 139 of Annexure "A" to the Panchnama relating to the premises in Cycle Market, Jhandewalan Extn.New Delhi, that there was an agreement dt.1st March, 1995, between the assessee-firm and Shri Krishna Kumar to pay the site rent at Rs. 65,000 in cash besides Rs. 65,000 in cheque for the third floor roof of house No. 3173, Sector "C", Vasant Kunj,New Delhi. According to the assessee the payment made through cheque is verifiable from the books of account but the payment made by cash was not found recorded in the books of account and was thus not verifiable. The assessee-firm under these circumstances surrendered the cash payment amount of Rs. 65,000 as undi....
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....t or the receipt has also been suppressed as the assessee has suppressed the payment of rent for display of hoarding. According to the learned Departmental Representative it has been established from the incriminating documents seized that the assessee-firm had also indulged in suppressing of receipts. Unless it is established that all the receipts have been fully disclosed the claim made for such cash payment as revenue expenses cannot be allowed. He also pointed out that the facts of the case cited are distinguishable from that of the assessee-firm inasmuch as in those cases the receipt was not found suppressed whereas in the case of the assessee there has been found suppression of receipts. The learned Departmental Representative has, therefore, pleaded that the claim made on the facts and circumstances should not be allowed especially when the assessee has surrendered the amount during the course of assessment proceedings as payment out of undisclosed income and the revenue expenses as legitimately claimed stand allowed in the regular assessment made for the relevant assessment year. 4.3. We have carefully considered the facts and rival submissions. We find, on consideration o....
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....ourse of assessment proceedings and the assessee was required to explain. The assessee gave no explanation to such query made. The AO has further noted that no confirmation has been filed from Meghraj. The AO, therefore, treated Rs. 20,000 as income on cash basis and Rs. 35,000 on due basis and thus he treated the total amount of Rs. 55,000 as income from undisclosed sources. 5.1. It has been submitted by the learned counsel of the assessee that the cash book had not been written up to date as on the date of search but the fact remains that the amount of Rs. 20,000 was duly entered in the cash book as on 25th Sept., 1995, and, therefore, the amount was duly taken into consideration in the computation of income for the asst. yr. 1996-97 and the addition on account of same amount would tantamount to double addition. It is also claimed that confirmation from the concerned party was obtained and the same is placed in the paper-book No. 3. There is otherwise no evidence to prove that the sum of Rs. 35,000 was received by the assessee before the end of the block period and that there was no justification for making an addition of Rs. 35,000. Shri Meghraj in his confirmation has stated t....
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....ce 35,000 Received Amt. 20,000 15,000 ------ ------ Defence Colony 20' x 10' (One month) 9,000 Sewa Nagar 20' x 10' " 6,000 Bhogal 20' x 10' " 5,000 R.K. Puram 20' x 10' " 6,000 Add painting &nb....
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.... counsel for the assessee has not disputed the addition made on account of payment made to Paramount Publicity being unexplained but he has contested that it should have been allowed as revenue expenditure and in support he has placed reliance on (1995) 52 ITD 103 (Pat) and (1996) 52 TTJ (Pune) (TM) 207 : 217 ITR 1 (AT). It is further contended that the entire amount of Rs. 5,19,000 appear in the same document and nature of payment of Rs. 3,50,000 made by cheque and Rs. 1,69,000 made by cash are identical and the AO having allowed the deduction of Rs. 3,50,000 as revenue expenditure, there is no justification for not allowing Rs. 1,69,000 as deduction being revenue expenditure. The addition made of Rs. 1,69,000 as income from undisclosed source would thus get neutralised by the deduction on account of revenue expenditure. The addition made of Rs. 1,69,000, therefore, deserves to be deleted. The learned Departmental Representative relied on the order of the AO. 6.2 We have considered the facts and material on record. Admittedly, the payment made by cash of Rs. 1,69,000 to Paramount Publicity is not out of disclosed source and it is for this reason that the amount was surrendered by....
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....e asst. yr. 1995-96 the assessee has shown total receipt of Rs. 5,16,10,522 and capital employed is of Rs. 1,07,57,836. The capital employed was thus found to be at 20 per cent of the turnover. The AO, therefore, worked out the unexplained investment in these transactions @ 20 per cent of the turnover which came to Rs. 7,20,575. The AO, therefore, apart from assessing the undisclosed income of Rs. 2,64,288 also made an addition of Rs. 7,20,575 on account of unexplained investment. The total addition made, therefore, comes to Rs. 9,84,863. 8.1. The learned counsel has made a submission that the addition of Rs. 2,64,288 is not contested in view of the fact that the same was surrendered before the AO by the assessee-firm. 8.2. As regards the addition of Rs. 7,50,575 it has been submitted that this addition is wholly uncalled for as according to him a sum of Rs. 1,51,133 was available as per the diary produced at the very beginning of the period being the difference between the opening balance of receipt and opening balance of payments amounting to Rs. 7,84,633 and Rs. 6,33,500, respectively. Further, during the period the assessee earned an income of Rs. 2,64,288 which again flowed ....
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....and the position obtained from accounts filed for various years we are of the considered view that there was involved no capital investment as such in the advertisement business done at Rs. 36,02,828. Moreover, an amount of Rs. 1,51,133 was available at the beginning of the period being the difference between the opening balance receipt and opening balance payments and the profit earned of Rs. 2,64,288 from such unaccounted business and this amount could be utilised for payment, if any required before the advertisement amount received from the clients. Moreover, the addition made on account of investment is only estimated and there is no material evidence as such found during the course of search to prove and establish that the assessee did make investment in such unaccounted business to the extent of Rs. 7,20,575 nor the AO has invoked the provisions of s. 69 which provides that where in the financial year immediately preceding the assessment year the assessee had made investment which are not recorded in the books of account, if any, maintained by him for any source of income and the assessee offers no explanation about the nature and source of investment or the explanation offer....
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....1995, to Diwali imprest account and the said amount was credited to the imprest Diwali account on25th Oct., 1995. Based on these entries it has been explained that the amount advanced to the partners and others was for expenses to be incurred on the occasion of Diwali at different business premises. According to the learned counsel a consolidated expenditure of Rs. 1,65,917 was incurred through cheque for payment of gift packs of dry fruits, etc. from M/s Roopak Pick & Pay,Ajmalkhan Road,New Delhi, as per the details given at pp. 584 to 587 of the paper-book. The expenses incurred relates to various transactions of the group and the details given are as under: Rs. Pioneer Publicity Corporation (assessee) 16-10-1995 50,000 &n....
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.... nor he has brought on record any material to disprove the correctness of the entries with regard to the availability of the cash balance. The learned counsel, therefore, pleaded that the addition, being not justified deserves to be deleted. 9.3. The learned Departmental Representative on the other hand, relied upon the order of the AO and further submitted that as per the incriminating documents seized the said amount was given to the partners and others and there was found no entry made in the regular books of account seized during the course of search. There is no valid explanation available about the source of such amount paid to the various persons and accordingly the addition made was fully justified being representing the unexplained expenditure. 9.4. We have considered the facts and rival submissions. Admittedly as per the seized documents an amount of Rs. 1,62,800 was given to the partners and others in cash. According to the learned counsel of the assessee this amount was placed in the Diwali imprest a/c and finally the payment was made on account of four concerns of the group through cheque mainly on 15th Oct., 1995, and small amounts on later dates on 5th Dec, 6th Dec....
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....ed the said amount of Rs. 80,000 as advance from undisclosed sources. The learned counsel of the assessee has admitted the recovery of the visiting card on the back side of which is written "Rajesh please give bearer Rs. 80,000". The learned counsel has pointed out that Rajesh Vasudev is one of the partners of the assessee-firm and in explanation before the AO the assessee has denied to have made any payment to any person on the basis of the visiting card and also contested that at best the visiting card contained only a request for making the payment but there was no evidence as to the payment having been actually made. He has contended before us that visiting card did not have any date and there was also no evidence of making any payment. The assessee-firm also did not have any dealings with Haryat of Insat and there was also no account of any kind appearing in the books of assessee-firm relating to Haryal or Tnsat. The learned counsel has further contended that the Department failed to examine Shri Haryal and also failed to bring on record any evidence in support of the contention that the actual payment was made. The conclusion of the AO is based simply on presumption and is, t....
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....ment thereon be assessed. 11.1. The learned Departmental Representative, on the other hand, relied upon the order of the AO. 11.2. We have considered the facts and rival submissions. It is evident from the facts given that assessee-firm did receive the said amount of Rs. 35,000 from M/s Manu Oil and the same is claimed to be on business account. It is claimed on behalf of the assessee that the whole amount be not taken as undisclosed income but there is no evidence or material produced either before the AO or before us to show the details of advertisement contract with Manu Oil and total amount involved, how much amount received was recorded in books and how much was kept out of books, how much expenses relating to such works were incurred and whether the same was fully accounted for in books and, if not, how much was not accounted. There are also no details given of expenses incurred if any, relating to the job done for which the assessee received Rs. 35.000. In the absence of any such details of evidence about the expenses incurred, the claim of the assessee is not acceptable and action of the AO in treating the receipt amount-of Rs. 35,000 as undisclosed income is confirmed. ....
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.... been made in the hands of that firm. As regards the payment of Rs. 1,23,000 there being no explanation offered about its source the amount was taken unexplained expenditure out of undisclosed income. 13.1 The learned counsel of the assessee has made a submission that it was admitted before the AO that both these payments were unaccounted. He has, however, contested before us on the ground that the assessee-firm was entitled for allowance of the said amount as revenue expenditure. He pointed out that the nature of the document would show that expenditure relates to the various advertising sites such as: (a) Greenpark site; (b) Patel Nagar site; (c) Azadpur site; (d) Punjabi Bagh site; (e) NOIDA site; (f) Dhaula Kuan site; (g) Africa Avenue site; (h) Kutub Hotel site. 13.2. The expenditure being related to various sites is of revenue nature and the same deserves to be allowed thereby neutralising the addition. 13.3. The learned Departmental Representative on the other hand, relied upon the order of the AO and contested such claim of neutralising the addition by treating the said payment as of revenue nature. 13.4. We have considered the facts and rival submissions. Thoug....
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....state (P) Ltd. (1993) 46 TTJ (Bom) 143 : (1993) 45 ITD 473 (Bom); and (v) M.V. Mathews vs. ITO (1996) 46 TTJ (Coch) 353. 13.5 The learned counsel invited particular reference to the decision in the case of ITO vs. Pitamber Industries (P) Ltd. (1992) 42 ITD 373 (Del) wherein it was held that no addition could be made on the basis of a table diary belonging to a disgruntled employee. A reference was also made to the judgment of the Hon'ble Delhi High Court in the case of L.K. Advani in Cr. R.P. No. 265/1996 and as approved by the Hon'ble Supreme Court in the case of V.C. Shukla. In the Bombay High Court judgment reported in JT 1998 (Dal) SC 172 the provisions of s. 34 of the Evidence Act were interpreted and it was held that on the basis of entries in the diary of a third person no case can be made out. The learned counsel contested that in light of the above judgments cited, no addition could be made in the hands of the assessee-firm on the basis of the entries in the diary of a third person. It was also contested that there is no justification for presuming that the figure of "192" represented a sum of Rs. 1,92,000. However, in view of the confession made before the AO that a sum....
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.... to be found at the business premises of the assessee-firm and why the concerned officer has not come forward to own the diary and explain the nature of the entries recorded therein. There is thus nothing to prove that the diary belonged to a third person and not to the assessee-firm. The onus thus cast upon the assessee-firm to rebut the presumption has not been discharged. Under the circumstances we entirely agree with the AO that diary found and seized from its premises belonged to the assessee-firm and none else. As regards the nature of the entries we note that there is a figure of "192" recorded against the name of the assessee-firm and the assessee-firm during the course of assessment proceedings read the figure as "19200" and surrendered such amount as undisclosed income. The Department has, however, decoded the figure of "192" as 1,92,000 taking the given figure in thousand but there does not exist sufficient material to decode the figure "192" in thousand to read as "1,92,000" and, therefore, we do not see much merit in adopting the undisclosed income at Rs. 1,92,000. However, looking to the facts and amount confessed and surrendered by the assessee-firm we restrict the a....
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....er his report estimated the value of these properties at Rs. 20,98,907 as per following details: Rs. 225, Cycle Market, Jhandewalan Extn. 4,19,270 F-107, Jawahar Park 2,52,465 R-64, G.T. Karnal Road, Industrial Area 14,27,172 --------- &n....
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....t on the renovation as per details placed at pp. 436 and 437 of the paper-book. The property was thus originally purchased for Rs. 1,75,000 and further investment thereon was made on its renovation at Rs. 2,06,000. Thus, the total investment made in the property comes to Rs. 3,81,000. The learned counsel has pointed out that no incriminating document was found during the course of search which could justify the allegation for any undisclosed income being attributable to these properties and accordingly the present addition is outside the scope of Chapter XIV-B of the IT Act. Without prejudice to the main contention that the addition was without jurisdiction it was further contended by the learned counsel that no addition could be made simply on the basis of the valuer's report and in fact there was no justification for making any reference to the Valuation Cell and in support he placed reliance on the following decisions: (a) ITO & Ors. vs. Santosh Kumar Dalmia (1994) 121 CTR (Cal) 17 : (1994) 208 ITR 337 (Cal); (b) Bholanath Majumdar vs. CIT & Ors. (1997) 137 CTR (Gau) 198 : (1996) 221 ITR 608 (Gau); (c) HEH Nizam Jewellery Trust vs. Asstt. CIT (1997) 142 CTR (AP) 226 : (1997) ....
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....ive, therefore, urged that the addition made being fully justified be upheld. 14.6. We have carefully considered the facts and rival submissions. There is no dispute that the assessee-firm purchased G.T. Karnal property in 1991 and other two properties in 1994 relevant to the asst. yrs. 1992-93 and 1995-96 and the apparent consideration as recorded in the sale-deeds has been duly accounted for in its books of account. The assessee made further investment in renovation of Jhandewalan Extn. property and the same is also duly accounted for in the books of account. The AO, however, made a reference to the Valuation Cell under s. 131(1)(b) of the IT Act and the DVO in the report submitted valued the properties at the amount given above. The report sent by the DVO is in an advisory capacity and the same had been given without giving an opportunity to the assessee of being heard or without seeking reaction of the assessee about the proposed valuation, the same being not a statutory reference as is provided in s. 16A of the WT Act. The valuation report given is therefore, one-sided without considering the objection of the assessee-firm. The valuation made is only an estimate of the market....
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....or valid and the same is, therefore, directed to be deleted. 15. The next ground relates to the addition of Rs. 36,02,500 on account of peak credit for the block asst. yrs. 1989-90 to 1992-93. During the course of search a diary was found and seized. The diary contained cash receipts and payments of substantial amounts. The assessee was required to explain the nature of the entries made in the diary and in response it was admitted that the transactions recorded in the diary are totally outside the regular books of account and peak amount of the transactions has been considered as undisclosed income and offered in the return for the block period filed under s. 158BC. As mentioned earlier, the assessee failed to give the bifurcation of the undisclosed income shown in the return. The AO required the assessee to give working of the peak credit as claimed in the reply filed and in response the assessee in its reply, dt.24th Oct., 1996, gave the working of the peak as per which total addition called for was of Rs. 9,09,004 as per detail given below: ....
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....., 1993. During the course of hearing the Bench required the learned Departmental Representative to verify the correctness of the peak as worked out by the learned counsel of the assessee and to submit a report. The learned Departmental Representative in his report, dt.16th July, 1998, made a submission that as per direction of the Bench the said peak statement was sent to the AO for verification and he has reported that there are number of discrepancies in the assessee's peak statement. He has also pointed out certain discrepancies. He also submitted that it is not possible to prepare a peak list as the dates are not mentioned clearly against the amounts mentioned in the seized diary. According to the AO such discrepancies were pointed out to the assessee but the assessee also expressed its inability to prepare an exhaustive list of all the entries. The AO has further made a submission that as per the assessee's statement the peak drawn at Rs. 20,40,496 is not correct as it takes care only of positive peak. The negative peak which comes to Rs. 12,81,904 as on26th June, 1992, has been ignored by the assessee in its calculation and the same has been requested to be considered. 15.2....
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....sp; Date Amount Page No. of P.R. Rs. 1. 8-8-1991 10,000 264 2. 8-8-1991 5,000 264 3. 11-11-1991 25,000 264 4. 8-8-1991 15,000 265 5. 22-10-1991 7,500 265 6. 8-8-1991 40,000 264 7. 31-3-1993 50,000  ....
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.... peak as per calculation given by the assessee-firm be adopted as against that adopted by the AO. 15.5. The learned Departmental Representative on the other hand, has relied upon the order of the AO. He has further submitted that the peak as drawn by the AO is as per the details furnished by the assessee-firm. The learned counsel of the assessee has given a lower figure both of negative and positive peaks drawn out of the same statement but the peak as given by the learned counsel of the assessee also suffers from wrong calculation. He, therefore, pleaded that the addition as made by the AO based on the peak drawn is fully justified. Moreover, admittedly the various entries found recorded in the diary have not been found recorded in the regular books of account and the same obviously represented the undisclosed transactions and the addition made based on the peak drawn is fully justified and the same deserves to be upheld. 15.6. We have given our careful thoughts to the facts, material available on records and rival submissions made before us. Admittedly, a diary containing entries relating to receipts and payments of substantial amounts in cash was found and seized during the co....
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.... Jan., 1993, at Rs. 21,34,918.20 on p. 269 of the paper-book. This peak represents the amount received. As mentioned above the peak drawn was of the entries recorded in the period from1st April, 1985, to27th Oct., 1995, and running into 36 pages from 259 to 294 of the paper-book. However, during the course of hearing before us the learned counsel of the assessee gave a peak statement for the period from 1st July, 1989,to 1st March, 1993, running into four pages and this statement shows a negative peak (net payment amount) at Rs. 12,81,904 as on 26th June, 1992, and a positive peak of Rs. 20,40,596 (net amount received) as on 4th Jan., 1993. There is thus wide difference between the peak statements as placed at pp. 259 to 294 and that filed before us during the course of hearing. It so appears the peak statement now filed during the course of hearing relates to the various entries recorded in a diary of Shri Rajesh Vasudeva, one of the partners. We also find from the paper book that at pp. 306 to 314 is given cash-flow statement. The diary of Rajesh Vasudeva for the period from 4th July, 1989, to 27th Oct., 1995, shows that there was a positive peak as on 4th Jan., 1993, of Rs. 23,5....
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....rged into positive peak during the financial year 1992-93 itself and accordingly no separate addition on account of negative peak is justified. The only peak which in our considered view deserves to be adopted for assessing the undisclosed income for the financial year 1992-93 is of Rs. 20,40,596. Since the assessee has already offered a peak amount of Rs. 9,09,004 in the financial year relevant to the asst. yr. 1990-91, 1991-92 and 1992-93, the balance amount of peak of Rs. 11,31,592 (Rs. 20,40,596-Rs. 9,09,004) deserves to be adopted as undisclosed income for the financial year relevant to the asst. yr. 1993-94. We order accordingly. 16. The next ground taken by the assessee-firm is against addition of Rs. 1,92,000 on account of unexplained payment made for the chit funds during the block period. The AO noted from p. 146 of Annexure A-23 to the Panchnama that the assessee-firm made a payment of Rs. 1,92,000 in chit fund during the block period. The assessee-firm admitted the payment made as unexplained and unaccounted. The AO, therefore, made an addition of Rs. 1,92,000 to the undisclosed income computed for the block period. The learned counsel of the assessee has not contested....
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....irm has not given the quantum of investment in such transactions. The AO noted that the maximum balance as per the bank statement is at Rs. 6,09,739 as on 24th October. He, therefore, treated and adopted the said amount as undisclosed investment in the said unit and therein he added the income at Rs. 61,487, worked out @ 5 per cent of the total turnover as offered by the assessee-firm. The AO thus made an addition of Rs. 6,71,226 in the total undisclosed income computed for the block period. 17.1 The learned counsel of the assessee made a submission that the assessee-firm has no grievance against the income adopted at Rs. 61,487 as business done in the name of Oriental Advertising Agency was accepted to be the business profit of the assessee-firm and it was not disclosed in the books of account. The estimate of profit at 5 per cent was also not contested. The learned counsel, however, contested the addition made of Rs. 6,09,739 on account of unexplained investment in the business. The learned counsel contended that the theory of peak is never applied to the trading transactions. He also pointed out with reference to the relevant document that there was regular rotation of the amou....
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....nce to support that the assessee-firm made unexplained investment to the extent of Rs. 6,09,739 in the name of Orient Advertising Agency. In the absence of any such material the undisclosed income computed on account of such unexplained investment is held to be outside the purview of Chapter XXIV-B. Undisclosed income computed on identical facts as considered in earlier grounds have been directed to be deleted and for similar reasons the addition made of Rs. 6,09,739 computed as undisclosed income is directed to be deleted. 18. The next ground relates to the undisclosed income computed at Rs. 6,72,613 on account of undisclosed income on account of investment in the account of M/s SPC. During the search certain documents relating to M/s SPC were found. When the assessee was required to explain the nature of the entries recorded therein, the assessee in its reply admitted that the entire receipts in the name of this party for the period6th Jan., 1987, to2nd Feb., 1988, totaling to Rs. 26,90,463 were unaccounted and admitted to be its own. It was prayed that profit thereon be adopted by applying a profit rate of 5 per cent thereon. The AO, however, proposed to work out the peak inves....
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....he detailed reasons given by us on similar ground discussed earlier the undisclosed income computed on account of unexplained investment of Rs. 5,38,093 is directed to be deleted. M/s. P.K. Advertising Services (P) Ltd. (ITA No. 6169/Del/1996): 19. The present appeal preferred by the assessee-company is directed against the block assessment made under s. 158BC and the only ground raised relates to undisclosed income computed and assessed at Rs. 1,55,000. 19.1 During the course of search, business premises of M/s. P.K. Advertising Services, a sister concern, was searched and certain loose papers relating to the assessee-company were found and seized therefrom. There was found a trial balance of the assessee-company as on 31st March, 1995, and therefrom the AO noted that there was a difference of receipt and expenses at Rs. 19,04,258 whereas as per the P&L a/c filed by the assessee-company along with its return for the asst. yr. 1995-96 profit was shown at Rs. 4,41,852. The assessee was required to explain such discrepancy and in reply it was explained that difference is mainly on account of the licence fee, site rent, display charges and canteen charges and in view of this the AO....
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.... 5,000 (2) Credit note of M/s Neelam Advertising & Marketing as discussed in para 3(b) 98,775 (3) Inflated expenses under the head site rent as discussed in para 3(c) 9,600 (4) Unexplained painting charges as discussed in para 3(d) 1,89,124 -------- &n....
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....y the AO as undisclosed income for the block period is confirmed. 21. The other point in dispute is with regard to the undisclosed income taken at Rs. 9,600. The AO noted from pp. 29-30 of Annexure A-17 seized that it was a computerised trial balance of the assessee-firm as on31st March, 1995. As per this trial balance the site rent and licence fee paid was at Rs 1,02,12,992 whereas as per the P&L a/c filed the total debit amount under this head was at Rs. 1,29,16,679. The assessee was required to explain the difference of Rs. 27,03,687 and in reply it was explained that in the trial balance there were heads like "Northern Railway", MCD, Caution Money, MCD Security, which were relatable to site rent. These amounts are shown as advances as per the terms of the contract and are adjustable against the site rent at the close of the financial year. The explanation so given by the assessee was found to be correct by the AO. However, the assessee could explain the expenses of only Rs. 26,94,087 under the head thereby leaving unexplained difference amount of Rs. 9,600. The AO treated the amount as bogus expenses and accordingly addition to the extent of Rs. 9,600 was made in the undisclos....
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....bsp; 1,50,000 (4) On account of bogus expenses determined on the basis of C-4/A-17 pp. 37 & 38 2,16,824 -------- Total : 5,53,824 -------- 2....
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....rtmental Representative on the other hand, relied upon the order of the AO and further contended that the diary in fact was found and seized from the premises of the assessee-firm and there is nothing to show in the diary that the said amount was paid as advance out of the cash balance of the said four firms on the relevant dates to their employees. The explanation thus offered by the learned counsel is not supported by any material. He, therefore, submitted that the amount was otherwise not found recorded in the regular books of the assessee nor there was any details of the accounts rendered by the said employees for the amount advanced as imprest money as claimed. The learned Departmental Representative, therefore, pleaded that on given facts and seized material the AO was fully justified in treating the peak amounts of Rs. 25,000 as undisclosed income of the assessee-firm. 22.4. We have considered the facts, rival submissions and material on records. Admittedly, the said diary was recovered and seized from the business premises of the assessee-firm and the entries recorded are of Rs. 84,000 and these are spread over a period27th May, 1995, to17th Oct., 1995. Peak of these amoun....
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....ng to the AO the peak of the amounts was apparently on pp. 82 and 83 and looking to the nature of the transactions and after the benefit of peak the AO computed on this count undisclosed income for the block period at Rs. 1,50,000. The learned counsel of the assessee has contended that the theory of peak is not applicable to the trading receipts. Moreover, how the amount of Rs. 1,50,000 is worked out by the AO is not clear. The highest figure between30th Nov., 1992, and23rd Dec, 1992, works out to Rs. 1,07,700 against which the AO estimated the peak at Rs. 1,50,000 without giving any reasons therefor. The learned counsel has, therefore, pleaded that from these peak trading receipts it would be fair and proper if profit therefrom is estimated by applying a profit rate of 5 per cent on the total amount of Rs. 4,57,107 which works out to Rs. 22,855. 23.1. The learned Departmental Representative on the other hand, relied upon the order of the AO and submitted that looking to the nature of the transactions and the same having not been accounted for in the books of account the AO was justified in taking the peak at Rs. 1,50,000 to work out the undisclosed income on that count. 23.2. We....
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....on 31st March, 1995, during search and on comparison of the trial balance with the regular P&L a/c the AO noted that as per the trial balance profit comes to Rs. 17,24,502 whereas profit as per the P&L a/c as shown in the return for asst. yr. 1995-96 was at Rs. 5,32,397. When confronted it was explained that the difference in profit is mainly on account of the figures of the amount adopted as licence fee and site rent. It was pointed out that as per the seized documents an amount of Rs. 8,60,795 is shown as advance to Northern Railway. This amount was in fact paid to the Northern Railway towards licence fee. Looking to the explanation offered about the outgoings no addition was made by the AO on account of the difference found. However, according to the AO examination of the trial balance revealed that the cash balance was at Rs. 2,99,551 whereas as per the balance sheet filed with the return the cash balance was only Rs. 2,727. This gave a difference in the cash balance at Rs. 2,96,824. It was explained on behalf of the assessee that the cash difference was on account of amount paid to Mukesh Vasudeva from time to time and on account of payment to provident fund which could not be....
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.... AO on p. 4 of the block assessment order. The diary seized contained entries relating to the payments received by the assessee group from Directorate of Health Services and Directorate of Advertising & Visual Publicity and certain amounts received were not found recorded in the regular books of account. While there were also found entries relating to certain payments amounting to Rs. 1,62,000 but nowhere it is mentioned that such payments represented the commission paid. Moreover, there are no details furnished of the advertising receipts against which such commission was paid. We have noted that the assessee as well as other concerns of the group have been found indulging in carrying on advertising business outside the books on substantial scale which account for unaccounted receipts as well as unaccounted payments. There is nothing to show that the advertising receipts on which such commission was paid have either been accounted for in the regular books of account or the same have been fully ascertained from the inter-relating material found during search and undisclosed income on this account has duly been computed in the block assessment. There being no such material and there....
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....- 12-9-1995 b/d 11,707" 25.1. When confronted it was explained that the assessee-firm earned a profit of Rs. 71,707 on the said transaction and the same is offered by the assessee-firm in the return of the block period filed as undisclosed income. When asked to explain the nature of the said entries and other details it was explained that the billing was an accommodation entry provided to M/s Baran International Ltd. Against the receipt of Rs. 12,61,500 from M/s Baran International Ltd., cheques of Rs. 11,91,000 were issued against which the assessee-firm received cash of Rs. 11,31,450 and out of this cash amounting to Rs. 10,94,000 was paid to M/s Baran International Ltd. and the remaining amount along with other credit entries aggregates to Rs. 71,707 which has been declared as undisclosed income in the return. The AO noted that names and addresses of the parties who have given cash to the assessee against cheques issued have not been given even though it was....
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....bsp; --------- Total: 11,91,000 --------- The assessee issued cheques worth Rs. 11,91,000 to these parties. Cheque No. Date Amount 074731 8-8-1995 3,13,500 074729 8-8-1995 3,18,000 074730 8-8-1995 2,92,500 074732 8-8-1995 2,67,000 &nbs....
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....ified on given facts and the same deserves to be deleted. 25.4. The learned Departmental Representative on the other hand, has placed heavy reliance on the order of the AO and has further submitted that the assessee has shown receipt of cash but the assessee neither produced any evidence about the source of such cash including the names and addresses of the parties from whom the amount is claimed to have been received and there being no sufficient evidence the AO was justified in rejecting the explanation offered and adopting the cash received as undisclosed income of the assessee-firm. 25.5. We have carefully considered the facts and rival submission. On going through the documents seized and the explanation offered it appears to be case of accommodation given and accommodation received and in the process the assessee has earned an income of Rs. 71,707. We also find that the transactions stand corroborated by the bank account in Vijay Bank which contained necessary details of the amounts of cheques and the particulars of the parties involved. Moreover, the AO has made the addition involved believing part of the document but the payment of cash shown has not been taken note of. I....
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....or ceremony as discussed in para 3.7 29,738 (8) Unexplained investment in UTI Rajlakshmi as discussed in para 3.9 15,000 (9) Unexplained payment to housing society as discussed in para 3.9 20,000 (10) Payment to committee as discussed in para 3.10 16,255 (11) Unexplained investment in pr....
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....and no notice under s. 143(2) has been issued. The assessment proceedings, therefore, stand concluded as provided in the Act. It was also contended that investment in the said property was disclosed and there was no paper or incriminating document or any evidence whatsoever found during the course of search on the basis of which inference could be drawn that the assessee suppressed the purchase consideration. It was also claimed that proceedings under s. 158BC are different from proceedings under s. 143(3) and the undisclosed income could be computed under s. 158BC only on the basis of evidence found during the course of search and since no incrementing paper was found during search and seizure indicating suppression of purchase consideration no adverse inference could be drawn in the block assessment proceedings. It was also claimed that the words used in s. 132(1)(c) are "which have not been or would not be disclosed" and since the assessee has disclosed the investment in the property no inference under s. 158BC could be drawn on the basis of the report of the Valuation Cell. 26.3. The explanation so offered was not found satisfactory. The AO noted that renovation in the propert....
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....e document found Manju Agarwal purchased the said property on17th June, 1983, for a consideration of Rs. 6,70,000. It was explained before the AO that no document or paper indicating payment over and above Rs. 4,25,000 was found during search and accordingly no adverse inference could be drawn. .The explanation so given was not accepted by the AO. He worked out its market value as on the date of search at Rs. 9,90,000 based on the cost inflation index over Rs. 6,70,000 for the period 1983-84 to 1989-90. The difference of Rs. 5,65,000 (Rs. 9,90,000 - 4,25,000) was treated by the AO as unexplained investment representing the undisclosed income. 26.6. The learned counsel of the assessee has submitted that reference made to one piece of paper at p. 10 of Annexure A-10 has nothing to do with this property and it does not also show as to which property it related and when was such expenditure incurred. He, therefore, contended that this is a dumb document and no adverse inference could be drawn to the investment made in property at B-206, Derawala Nagar. As regards the other property at Gujrawala town, the learned counsel explained that this property changed hands very frequently as is ....
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....expenditure was incurred. It is thus a dumb paper without giving necessary narration and particulars of the transactions and in our considered view no adverse inference could be taken based on such paper. Moreover, as mentioned above, no other incriminating document was found and seized during search establishing investment in the properties at an amount over and above that shown in the sale-deeds and account books. Moreover, the assessee has disclosed the investment made in both the properties in the returns filed. Copies of his assessment records for the asst. yrs. 1989-90 and 1993-94 and 1994-95 are placed at pp. 590 to 606 of the paper-book. Further, we have also considered the question of unexplained investment in respect of the three properties in the case of M/s Pioneer Publicity Corporation above and for the detailed reasons and case laws discussed therein and there being no evidence found on search about suppression of consideration in both the properties the additions made in respect of both the properties on account of undisclosed income are not held justified and the same are directed to be deleted. 27. The undisclosed income as given at item No. 5 above of Rs. 50,000 ....
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....owever, claimed that this amount was given out of the cash balance belonging to the four concerns of the group but there is no entry made in the books of account of the firms about the amount so advanced to Mr. Malik nor there is any details given about the back receipt of the amount from Mr. Malik. There is also no material to show that the assessee was keeping imprest money out of the cash balance of the various concerns in which he was a partner. There being no such evidence found the explanation offered is not considered to be tenable and accordingly we sustain the addition of Rs. 50,000 on account of such advance made from undisclosed income of the assessee. 28. As regards the item at 10 above, the AO noted from p. 32 of Annexure A-32 that the assessee made payment of Rs. 16,255 to committee. When confronted it was explained that such investment was made by the wife of the assessee out of her savings. The AO noted that his wife Smt. Sweaty has no source of income and is also not a regular assessee and the assessee could not link any withdrawal to such payment. The AO, therefore, treated the amount paid to the committee of Rs. 16,255 as unexplained income of the assessee. The ....
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.... (3) Unexplained investments in shares & UTI 24,940 (4) Unexplained investment in purchase of goods 11,710 (5) Unexplained investment in household expenses 25,000 (6) Other investment in Units 18,750 (7) Unexplained investment in Master Gain 18,000 (8) Unexplained cash deposit in S.B. a/c 15,000 30. Out of the above eight items the learned counsel has contested only two items at Sl. Nos. 1 and 8 above. The undisclosed income computed relating to other items has not been contested, the same having been surrendered before the AO. As regards the addition of Rs. 12,50,000 on account of unexplained investment in B-206, Derawala Nagar property, the facts are identical to that of Shri Rajesh Vasudeva and the learned representatives of the assessee as well as the Revenue also advanced arguments similar to ....
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.... Rs. (1) Unexplained investment in shares 2,07,000 (2) Unexplained investment in two air-conditioners 30,000 (3) Unexplained expenditure for stamp duty 32,190 (4) Unexplained cash 90,000 (5) Unexplained cash payment in purchase of property 1,00,000 33. Out of the five items of unexplained income, the income at item Nos. 1 to 4 have not been contested by the learned counsel of the assessee and the same is, therefore, confirmed. The c....
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....ayment of Rs. 2 lakh out of the savings bank account with Oriental Bank of Commerce, Paharganj. Necessary details of the payment made are placed at pp. 198 to 204 of the paper book. The assessee also made the payment out of his bank account with State Bank ofIndia. The learned counsel further submitted that the said document is a receipt prepared in advance but the payment was ultimately made by the co-owners through cheques/pay orders from the amounts lying in the bank account and there was, therefore, no need of payment of any cash of Rs. 1 lakh. It is also not the Revenue's case that the assessee paid any amount over and above the apparent consideration of Rs. 6 lakh shown in the sale documents. The learned counsel has, therefore, pleaded that the addition made of Rs. 1 lakh is, therefore, not justified and the same deserves to be deleted. 34.2. The learned Departmental Representative on the other hand, placed reliance on the order of the AO and advanced arguments in support thereof. 34.3. We have carefully considered the facts and submissions made. It is evident from the facts given that the said property was purchased for a consideration of Rs. 6 lakh by the assessee and two....
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....bsp; 3,40,000 (2) Unexplained expenditure in renovation of house 50,000 (3) Unexplained investment in FDRs and shares 2,53,040 (4) Unexplained expenditure in connection with the marriage of son 50,000 (5) Unexplained donations and payments 21,200 (6) Unexplained investment in household articles 1,45,000 -------- ....
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....vestment in purchase thereof for the block period as per details below: Rs. Three air-conditioners 45,000 Three colour TV 45,000 One VCR 15,000 One BPL 3 door refrigerator 15,000 One Micro-oven 15,000 One chandelier 10,000 37.1. The learned counsel of the assessee has made a submission that according to the assessee all these items are old household articles whereas the Department has estimated their value at current rates. He further contended that the assessee is a regular taxpayer for the last several yea....
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....; 1,98,160 (2) Unexplained investment in jewellery 4,07,952 (3) Unexplained investment in shares 14,000 (4) Unexplained investment in farm land 1,44,000 -------- Total: 7,64,112 -------- 39. Out of the four items of undisclosed in....
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....that extent was computed and assessed for the block period. 40.1. The learned counsel of the assessee has reiterated that the jewellery found was received by the lady at the time of her marriage and other ceremonial occasions like birthday of children and festivals and looking to the status of the family the jewellery found should be accepted in full. Further, in the alternative, the learned counsel pleaded that the same be treated as expenditure out of the income of cash available to the spouse portion out of the additions sustained in the cases of the firms in which their spouse are partners. It is also contended that during the course of search the lady was not found to be having any other source of income and she being only a housewife the only source of undisclosed income, if any, could be from what she got from her husband. 40.2. The learned Departmental Representative, on the other hand, relied upon the order of the AO. He further submitted that total gold ornaments found weighed 1,444.6 gms. and the Department was reasonable enough in accepting her claim at the time of search to the extent of 595.6 gms. and that was done in light of the Board's circular and status of the ....
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.... deduction of tax at source but the assessee failed to produce any certificate about the lottery amount awarded and the TDS from the concerned authority. The AO, therefore, treated the credit amount of Rs. 24,019 as undisclosed income. The learned counsel of the assessee reiterated before us that the amount involved was the proceed of lottery and TDS was deducted at source. But no evidence in support thereof has been filed before us also. Alternatively it has been submitted that the amount may be adjusted against the surplus income/cash available on account of undisclosed income computed in the case of M/s Pioneer Publicity Corporation. 42.1. The learned Departmental Representative on the other hand, supported the order of the AO. 42.2. We have considered the facts and submissions made. Admittedly there is no evidence in support of the claim that the amount represented the proceeds of lottery ticket and in the absence thereof we confirm the undisclosed income computed on this count at Rs. 24,019. As regards the alternative plea taken the same shall be considered separately along with the plea made in other cases of the group. Dinesh Vasudeva (ITA No. 6159/Del/1996) 43. The appe....
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..... Regarding the amount of Rs. 47,500, it has been submitted by the learned counsel that a sum of Rs. 50,000 has been surrendered by the assessee's father Shri Naresh Vasudeva on account of marriage expenses of the assessee and, therefore, the addition made amounts to double addition. Alternatively, he has claimed that the amount be treated as out of the surplus income/cash available with the firm. 45.1. We have considered the facts relating to the addition made on account of marriage expenses. The AO noted that certain documents were seized during the course of search showing expenses on ceremony prior to the marriage of the assessee as per the following details: Rs. Band 3,500 Tailor 5,950 Floor furnishing &nbs....
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.... Rs. (1) Unexplained investment in jewellery 62,736 (2) Investment in units of 2,000 units of Master Gain @ Rs. 10 each 20,000 (3) Investment in units of US-64 27,750 (4) Unexplained investment 25 convertible debentures of Videocon 5,000 (5) Unexplained investment in FDRs with Oriental Bank of Commerce 1,500 (6) Unexplained investment....
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....zed weighing 130.7 gms. was in excess of 500 gms. The AO treated the said jewellery as unexplained representing the undisclosed income of Rs. 62,736. 47.1. The learned counsel of the assessee reiterated before us that the said jewellery represented her Istridhan as it was received by her at the time of her marriage and other ceremonial occasions like birthdays of children and festivals and looking to the status of the family no addition was called for. In the alternative it has been submitted that the amount be treated as expenditure out of surplus income/cash available to the spouse partner out of the additions sustained in the case of the firms in which the spouse is partner. It was also claimed that during the course of search the assessee was not found to be having any other source of income and that she being only a housewife the only source of undisclosed income, if any, could be from what she got from her husband. The learned counsel also submitted that other additions sustained on account of assets acquired be also set off against the surplus funds generated out of the additions made in the cases of the firms. 47.2. The learned Departmental Representative on the other han....
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....rendered before the AO. We accordingly confirm the addition made on this count. 48.2. As regards the undisclosed income computed relating to investment in jewellery the facts in brief are that during the course of search gold jewellery weighing 791.5 gms. valued at Rs. 3,88,838 was found in possession of the assessee and out of that 268 gms. valued at Rs. 1,37,370 was seized. When required to explain the source of acquisition of the jewellery found it was submitted that she got married on 10th Dec, 1982, and the jewellery was received in presents from her parents, in-laws, other relatives and friends on marriage and also on birthdays of her to children. It was also claimed that the jewellery found is within the permissible limit as per Board's circular of 1994. The AO noted that the assessee is not a wealth-tax assessee and as per the circular for non-wealth-tax assessee the jewellery of 500 gms. could be treated as explained in the case of married ladies. Since the authorised officer on his own accepted and released the jewellery of 527 gms. at the time of search and the assessee failed to give any evidence about the source of acquisition of the total jewellery the seized jewelle....
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....sp; Rs. 1. Unexplained investment in Master Gain 20,000 2. Unexplained investment in Units Scheme of US-64 44,520 3. Unexplained contribution to the policies of Peerless General Finance Company 28,880 -------- Total: 93,400 &nbs....
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....s count and the undisclosed income computed for the block period at Rs. 28,880 is accordingly sustained. 52.4. M/s Pioneer Publicity Corporation has raised ground No. 3 as under: "3. That on the facts and circumstances of the case the learned AO failed to give the benefit of telescoping the investments made by its partners out of the alleged undisclosed income of the assessee-firm, particularly when no evidence was found during the course of search and seizure operations to the effect that the partners had no source of income other than the share profit. 3.1 That on the facts and circumstances of the case, the learned AO grievously erred is not setting off of the alleged undisclosed expenditure against the alleged undisclosed receipts and also failed to give the benefit of rotation on account of turnover and profits relating to such transactions while making an addition on the ground of alleged undisclosed investment" 52.4.1 During the course of assessment proceedings in the case of Pioneer Publicity Corporation the assessee-firm filed a cash flow statement and claimed that since the firm has disclosed the peak credits in the diaries, etc. which covered the cash found from resi....
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.... | -------------------------------- | | Sh. Deshraj Vasudeva Sh. Ved Prakash (Wife Smt. Ranjit Rani) (Wife Smt. Pushpa Vasudeva | | ---------------- --------------- | ....
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....| | | | | Sh. Mukoah Vasudeva ----------------- | | (Wife Smt. Anju Vasudeva) | | | | | | Pankaj Dinesh Dipak | Nakul (Son) | | Meenal (Daughter) ....
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.... partners namely, Sunil Vasudeva, Naresh Vasudeva and Deshraj Vasudeva. These entries show a complete interconnection and interchange of the amounts between the partners. The learned counsel has further contended that during the course of search proceedings no evidence was found to show that the partners were engaged in another business except that of the firms/companies. It has also been contended that the ladies of the family were merely housewives and they did not have any independent source of their own. 52.7. The learned counsel has, therefore, contended that the partners should get the benefit of cash generated as a result of undisclosed income earned and assessed in the hands of the firms and such income added in the hands of the firms should be treated as available to the partners to explain the unexplained investment/expenditure in their individual hands of their wives and children. The learned counsel in this connection has made a reference to the judgments in the cases of Anantha Ram Veer Singhania & Co. vs. CIT (1980) 16 CTR (SC) 189 : (1980) 123 ITR 457 (SC) and Kantilal & Bros. vs. Asstt. CIT (1995) 51 TTJ (Pune) 513 : (1995) 52 ITD 412 (Pune). The learned counsel ha....
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....nbsp; 27,94,257 PB TT/51 Less Cash explained 8,19,117 PB TT/20 --------- Balance..... 19,75,140 --------- Less: Cash surrendered 9,19,560 PB TT/10 Balance in dispute 10,55,580 --------- Balance &nbs....
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....and the company are separate entities. They have carried on independent advertisement business and books of account have been maintained separately for each firm and the company. The partners of the firm have contributed their individual capital to each firm and they have also taken the shareholding of the company from their individual resources. Books of account have been audited and based on the accounts maintained they have filed their returns separately and they were also assessed as such. The income earned each year has been divided among the partners and credited to their individual accounts and they have been utilising their share income according to their individual needs. Though the firms have been functioning for the last several years but no material evidence was ever brought on record to show that management and control was common for all the firms and the company and there was interconnection, interlacing in management and funds and had there been such a situation the income of all the firms and the company would have been assessed by the Revenue as AOP comprising of the various members of the family. 52.9. As regards the diaries and documents found, the learned Depar....
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....his reason that the Revenue has all along treated them separate entities and no effort was ever made to club their income and assess the same as one unit in the status of AOP formed of various family members. The learned counsel of the assessee has made a reference to the diary found written and in possession of Rajesh Vasudeva and Mukesh Vasudeva and certain transactions seem to appear in the names of Naresh Vasudeva and Sunil Vasudeva but we find that all the four are partners in the main firm Pioneer Publicity Corporation in whose hands the undisclosed income on such diaries and documents have been assessed in the block assessment and they have also not made claim at any stage that the said transactions as found recorded in the said diaries and documents related to any concern other than Pioneer Publicity Corporation. The learned counsel has placed reliance on various decisions for the preposition that a partnership collectively known as firm has no legal existence apart from its partners and it is a compendium name to describe its partners. There is no dispute so far as such proposition is concerned but since all the firms are constituted by the members of the same family it do....