TaxTMI 
TaxTMI 
TaxTMI 
2001 (8) TMI 285
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....ted company engaged in handicraft export business. On17th Nov., 1995, a search under s. 132 was conducted on the assessee-company's business premises at S11, Green Park Extension,New Delhiand also at the residence of its director at X25, Hauz Khas New Delhi. During the course of this search and seizure operations, one of the documents (Annexure A-11) found at the aforesaid business premises inter alia contained a note, in tabular form, to the following effect: --------------------------------------------------------- From CT. Dated @ Amount Paid (1) (2) (3) (4) (5) (6) --------------------------------------------------------- Rs. Rs. &....
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....bsp; Cash 7-12-1994 6-1-1995 22-12-1994 5-1-1995 ------------------------------------------------------------ 3. It may also be mentioned that the aforesaid document also contained, in upper portion, a note giving details of investments in shares, amounting to Rs. 10,21,366.25, held in the names of Smt. Saroj Gupta, Shri Ashwin Gupta, Shri Sanjay Gupta. Smt. Rekha Gupta and Shri Ved Prakash. These details make it clear that payments for all those share investments were made by cheques. It is not in dispute that the persons in whose names investments were made in shares are connected with assessee-company, being direc....
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....the computer cannot be accepted. These entries seem to have been made by someone who is quite conversant in the use of computers. Moreover, these entries have been made in continuation and on the same page as entries pertaining to purchase of shares by various persons of the group. A perusal of papers from Apple Info. Tech. Div submitted by the assessee indicates that these relate to creating, and use of file in dbase III plus, whereas, all the unexplained entries have been made in a Word Processor e.g. Word Star etc. dbas, III plus files are used for managing databases and cannot be used for practicing typing and makes the type of tables with rows and figures as has been claimed by the assessee." 5. In any case, the assessee himself retracted the above statement and produced one Shri Babulal Shiv Bhagwan Goenka, a resident ofBombayand a relative of Shri Ved Prakash. This person was accompanied by Shri Ved Prakash, director of the company, to the AO's office. Shri Goenka, by way of prepared written submission which he brought with him, submitted that he is a member of Bombay Diamond Merchants Association and that he has been dealing in sale of diamonds, on commission basis, for la....
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....very ill-contrived fictional plot." Accordingly, the AO concluded that the assessee has not satisfactorily discharged the onus of proving that the entries do not pertain to the assessee, and, therefore, the AO added the entire sum of Rs. 14,88,784 as undisclosed income, being unexplained expenditure, of the assessee for the asst. yr. 1995-96 i.e. assessment year relevant to the previous year in which payments in question were made. 7. As regards the second addition of Rs. 3,12,784, during the course of search and seizure operations cash of Rs. 4,52,861 was found in assessee's office premises which, according to the assessee's written submission dt.17th Oct., 1996, filed before the AO, was explained as follows: Block assessees Ashvin Gupta 78,000 Sanjay Gupta 1,18,000 Saroj Gupta 94,000 Friends Overseas (P) Ltd. 22,784 Non block assesses Friends Overseas &....
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.... Cash found in assessee's premises 4,52,621 Less: being considered separately in the hands of the following assessees Friends Overseas 43,382 Intraco India 60,044 Ved Prakash & Sons HUF 36,411 1,39,837 ------ -------- Balance amount remaining unexplained 3,12,784 ....
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.... that Shri Ved Prakash is a person not connected with the assessee-company at all As a matter of fact, Shri Ved Prakash has all along attended to the assessment proceedings in connection with this block assessment and given necessary explanations from time to time. It was never the assessee's case that the document in question did not belong to the assessee-company or that the entries regarding expenditure aggregating to Rs. 14,88,754 were not made by employee of the assessee-company. Vide letter dt.7th Nov., 1996, the assessee categorically accepted that the entries in question were made by assessee-company's accountant, though the assessee gave some explanation for these entries which was later retracted by the assessee himself. On 15th Nov., 1996, the assessee again reiterated the same story and submitted that "an affidavit from Mr. Himanshu Jain (accountant of the company) could be enclosed which shall tantamount to the fact that figures in that page were imaginary figures which have by chance led to strange probabilities and problems for the assessee". Later on, however, this statement was retracted by the assessee-company and a new explanation was given Vide letter dt.26th No....
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....iends Overseas (P) Ltd. Sd/xx Ved Prakash Director I, the above named deponent, do hereby confirm the contents of above affidavit to be true and correct to the best of my information and belief. &....
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....een rejected, for the detailed reasons set out in the impugned assessment order, by the AO. Unlike a real person, a company does not have the physical existence but a document found in its business premises though with one of its directors, through whom the company functions, can be reasonably said to have been seized from the company, particularly when such a director does not dispute that the document does not belong to the company and his dispute is confined to the claim that some of the entries as not related to the assessee-company. In the case before us, it is an admitted fact that entries in dispute were actually made by an employee of the company. In view of these peculiar facts, we see no substance in the technical objection of the assessee-company that the Annexure A-11 is not relevant to the assessee and that the AO, for this reason alone, should not have made addition in the hands of the assessee-company. The assessee-company, through its director, has already made a sworn statement that the document is found in business premises of the assessee-company and that entries in dispute were made by its employee. Once it is an admitted position that the Annexure A-11 is a doc....
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....p; ------ 102.72 18,496 ------------------------------------------------------------ It has been further stated that to keep the exact details of the deal, Shri Goenka had requested Shri Himanshu Jain, accountant of the assessee-company, to type the above transactions arid give the printout back to Shri Goenka. The stand of the assessee was that since these entries are now admitted and explained by the aforesaid Shri Goenka, no adverse inference need be taken in the hands of the assessee-company. 15. We may first reproduce some of the AO's questions and replies thereto by Shri Goenka, as recorded in his statement on26th Nov., 1996. Q. No. 5. Have you ever undertaken any other trading of diamonds etc. apart from this one occasion? Ans. No. This transaction was done by me on commission basis. I have not done any such transaction again or before. Q. No. 9. To whom did you sell the diamonds? Ans. I do not remember their names as the matter is already two years old, Q. No. 15. You have just stated that you did ki....
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.... details, we reject the same. We have already seen that the assessee has given untrue explanations, even supported by admittedly false affidavits, that the disputed entries in Annexure A-11 are imaginary figures. When confronted with this fact, Shri Ved Prakash in his recorded disposition dt.26th Nov., 1996, admitted as follows: "I was quite worried about the entries and initially I suspected that my accountant, who was learning, could have typed out these things which he was practicing on the computer. Later on I discover the name of Babulal ji and on contacting him I found out the truth." 17. We may, in this regard, refer to the dictum known as 'falsus in uno, falsus in omnibus' (false in one thing, false in everything) which has been referred to, with approval, by the Hon'ble Calcutta in the case of Amal Kumar Chakraborty vs. CIT (1994) 207 ITR 376 (Cal). In this case, Hon'ble Calcutta High Court has observed that, "Here, we go by the dictum 'falsus in uno, falsus in omnibus'. Though applicable in criminal law, it is a sound principle to apply in taxation when the matter is one of finding of fact on the basis of statements of witness and their judicial evaluation. It is seen t....
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....ted entries belong to Shri Goenka and support the action of the AO in coming to the conclusion that "even this version of the assessee should only be treated as last desperate measure to evade the responsibility cast by law and he has at best managed a very ill-contrived fictional plot." 18. We may now turn to the judicial precedents relied upon by the assessee. As far as the orders passed by the co-ordinate benches in the cases of Ved Prakash Sanjay Kumai vs. Asstt. CIT (2000) 66 TTJ (Chd) 442 and Suman Dhanji Zalte vs. Asstt. CIT (2000) 68 TTJ (Pune) 273 are concerned, these cases pertain to the proceedings under s. 158BD and, accordingly, ratio of these cases has no application in assessment under s. 158BC which is impugned in appeal before us. It cannot be in dispute that where search has been conducted under s. 132, the block assessment is to be completed under s. 158BC of the Act, The question of AO's satisfaction, for the purposes of s. 158BD, is only applicable for the cases where the undisclosed income belongs to a person other than the person with respect to whom search under s, 132 was made. Since, in the case before us, search was conducted on the assessee-company, we ....
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....cument, termed as Annexure A-1, are true. In any event part of entries are properly explained by the assessee while the remaining entries unambiguously indicate expenditure of Rs. 14,88,784 on account of certain purchases. As far as the judgment of Hon'ble Supreme j Court, in the case of Daulat Ram Rawat Mull is concerned, it has no application on the facts of this case which relate to statutory presumption under s. 132(4A) of the IT Act. 20. In view of our above finding that the explanations given by the assessee-company, about the entries in Annexure A-11 extracted in para 2 of this order, are not satisfactory, and in view of the presumption under s. 132(4A) of the IT Act, we support the AO's action of making an addition of Rs. 14,88,754 on account of unexplained expenditure. 21. We now take up the addition of Rs. 3,12,784 made by the AO on account of 'unexplained cash' found at the time of search. One of the pleas of the learned counsel of the assessee is that the above addition does not take into account the additions separately made in the hands of other block assessees, on account of cash found from the assessee-company's premises and claimed to be belonging to these block ....