TaxTMI 
TaxTMI 
2006 (1) TMI 184
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....ureau of Investigation (CBI) at the residential premises of the assessee situated at Mandi and Delhi on 16-8-1996 which commenced early in the morning. Later on, authorized officers of the Income-tax Department also joined the CBI with a warrant of authorization issued under section 132(1) apparently on the basis of information received from the CBI about the substantial cash found in the residential premises of the assessee and conducted the search and seizure operation under section 132. During the course of search conducted at the residence of the assessee at Mandi and Delhi by the CBI and Income-tax Department, substantial cash as well as other valuables were found besides some incriminating documents showing undisclosed investments/expenses made by the assessee. The cash found from Delhi residence of the assessee was seized by the Income-tax Department whereas the cash found at Mandi residence and initially seized by the CBI was subsequently requisitioned by the Income-tax Department on the next day under section 132A. Out of the incriminating documents found at the residential premises of the assessee, some of the documents were seized by the Income-tax Department whereas mos....
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....hi 29,90,000 (b) Nav Sansad Vihar 1,80 104 Interest income on initial deposits 14,900 (c) Orchard, Surath, Mandi 74,012 32,59,016 IV. Unexplained receipts/deposits/ investments recorded in seized Documents under section 69 48,86,40,368 V. Libel Suit Receipts and legal expenses 32,37,500 VI. Furniture fittings, etc. 25,00,000 VII. House Hold expenses 1,50,00,000 VIII. Foreign travel/Medical expenses 15,00,000 IX. Undisclosed investments/income in Dairy farm 15,00,000 Gross total income for the block period: 55,35,14,169 Less: Income already disclosed in the regular returns filed before the date of search 21,40,788 55,13,73,381 Aggrieved by the aforesaid order of the Assessing Officer passed under section 158BC, the assessee is in appeal before us. 3. In this appeal, as many as 24 grounds were originally raised by the assessee. However, the same having been found to be lengthy as well as of repetitive and argumentative nature, the learned counsel for the assessee has filed the revised grounds in th....
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....er. He also expressed his inability to give any details of income earned by him from the business of dairy or even of the investment made by him in the dairy till then. He also agreed that no dairy income was disclosed by him in the return of income filed till then. Despite specific opportunities, he also failed to give any details regarding the whereabouts of his employees whose names were stated to be appearing in the diary in abbreviated form to facilitate their identification as well as examination by the Assessing Officer. The Assessing Officer, therefore, did not accept the explanation of the assessee on the face of it and proceeded to examine and analyze the entries found recorded in the relevant seized diary on his own. 6. In his written reply dated 14-8-1997 filed before the Assessing Officer, it was stated by the assessee that the aforesaid diary as well as the other diaries found during the course of search are mere general scrap books used to make odd jottings concerning the orchard activities, petitions from people, information given by PA, briefings for meetings, lectures, etc., and the same did not contain reference to any financial activities. It was also stated ....
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....als taken on the corresponding pages of the diary. In this regard, he heavily relied on the statement of Shri C.K. Khemka who had not only admitted of having received the amounts from the assessee as interest bearing loans as appearing in the seized diary against his name written in abbreviated form as 'CK', but also deposited with the CBI subsequently an amount of Rs. 1.05 crores out of the balance claimed to be payable by him to the assessee. Thus, a total addition of Rs. 14,15,23,698 was made by the Assessing Officer to the undisclosed income of the assessee on the basis of entries found recorded in the diary seized by the CBI and identified as document No. 02/M-159/96. 8. Similarly, the Assessing Officer also proceeded to analyse and examine the other documents seized by the CBI representing diaries/note pads and on such analysis/examination, he came to a conclusion that the name found mentioned in the abbreviated form in other diary as 'N', 'NAT', and 'NATA' was the name of Shri Mahender Nahata, Managing Director of M/s. Himachal Futuristic Ltd., a company which had executed telecom contracts worth several crores of rupees during the tenure o....
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....ential premises of the assessee and the same came to the possession of the Income Tax Department through the Revenue Secretary to whom the copies of the said documents were forwarded by the Director of CBI. He invited our attention to a copy of the letter forwarded by the Director of CBI to the Revenue Secretary placed on record to support and substantiate his contention that the said documents were handed over by the Director of CBI to the Revenue Secretary who, in turn, handed over the same to the Income Tax Department without there being any requisition issued under section 132A. He contended that the said documents thus were neither found as a result of search conducted by the Income Tax Department under section 132(1) nor the same were requisitioned by the Income-tax Department under section 132A and therefore, no addition on the basis of the said documents could be made to the undisclosed income of the assessee for the block period as per the provisions of sub-section (1) of section 158BB. 10. The learned counsel for the assessee further submitted that only the cash of Rs. 2.45 crores was found and seized by the Income Tax Department from Delhi house of the assessee wherea....
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....effect from 1-7-1995 to contend that even 'such other material or information as are available with the Assessing Officer and relatable to the evidence found as a result of search' can also be used as evidence for computing the undisclosed income of the assessee for the block period. He contended that even though this amendment has been made after the completion of assessment in the present case, the same having been made applicable with retrospective effect from 1-7-1995, can be applied to all the pending assessment proceedings. Relying on the decision of Hon'ble Gujarat High Court in the case of CIT v. Mayur Foundation [2005] 274 ITR 562, he submitted that the Tribunal can take note of such retrospective amendment while disposing off the appeal filed against the assessment order since the appellate proceedings are considered as extension of the assessment proceedings. He also placed reliance on the decision of Hon'ble Kerala High Court in the case of CIT v. M.C. Jacob [1993] 203 ITR 972 in support of this contention. He contended that as a result of this amendment, the Assessing Officer can take into consideration the post-search enquiries as well as result thereo....
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....ee and the said diaries having substantial entries of cash were certainly relatable to the evidence found as a result of search under section 132(1) in the form of cash. The learned DR also contended that the whole purpose of action under section 132(1) or of issue of authorization under section 132A is to unearth the undisclosed money and this very purpose should not be allowed to be defeated by adopting a strict and literal interpretation of the relevant provisions especially when the relevant evidence i.e. the diaries seized by the CBI was received by the Department Officially through the office of the Revenue Secretary. 14. In the rejoinder, the learned counsel for the assessee submitted that the procedure prescribed under Chapter XIV-B is specially for the purpose of assessing the undisclosed income as a result of search and seizure operation and if there is no seizure, search is meaningless and Chapter XIV cannot be invoked. He submitted that such search has to be by the Income Tax authorities and the operation of similar nature by any other authority is of no relevance. He submitted that no doubt the material gathered by the other authorities can also be used as evidence ....
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....t be said to be relatable to the evidence found as a result of search and it is for the Assessing Officer to establish such direct relation or nexus. He contended that no such nexus has been established by the Assessing Officer between the diaries and the cash found and in the absence of the same, it cannot be contended now by the learned DR that the diaries were relatable to the cash found and seized during the course of search. 16. The learned counsel for the assessee further submitted that Rule 112 of the Income Tax Rules lays down procedure for recovery of evidence/documents found during the course of search and keeping in view the said Rule as well as the provisions of section 132(13), panchnama cannot be ignored. He submitted that the panchnama, in fact, records the events occurred during the course of search operation and when a remark "nil" was clearly indicated against the entry in the said panchnama about the books of account, document etc. found and not seized, the same was sufficient to show that except the loose documents of twelve Nos. seized by the Income Tax Department, no other document was found or seized by them from the residential premises of the assessee du....
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....nts and such other materials or information as are available with the Assessing Officer and relatable to such evidence. As held by the Hon'ble Delhi High Court in the case of CIT v. Ravi Kant Jain [2001] 250 ITR 141, special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income which has been detected as a result of search and its scope and ambit is limited in that sense to materials unearthed during search. Explaining further, Hon'ble Delhi High Court has observed that assessment for block period can only be done on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the Assessing Officer and relatable to the evidence found as a result of search. Hon'ble Delhi High Court further clarified that such evidence found as a result of search should be clearly relatable to section 132 or section 132A. 18. Having regard to the scope and ambit of block assessment under Chapter XIV-B as spelt out in the relevant provisions and further explained in the various judicial pronouncements including the decision of Hon'ble Delhi High C....
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.... diaries in question were also found by the Income Tax officials during the course of their search conducted at the residential premises of the assessee under section 132. 22. Before us, the learned DR has contended that the diaries in question were very much lying in the premises of the assessee when the officials of the Income Tax Department commenced their operation under section 132 and therefore, the said diaries must have been found by them also going by the preponderance of probability. We, however, find it difficult to accept this contention of the learned DR because if the same is accepted, anything and everything which was lying at the premises searched under section 132 would be deemed to have been found during the course of search. In our opinion, there cannot be such a presumption because a search operation to find out the evidence is essentially a physical act and the same has to be performed specifically. There is no scope for assumptions and presumptions nor anything can be implied in the matter of ascertaining the findings of a search operation. Such findings cannot be ascertained on the basis of preponderance of probabilities especially when all the events occu....
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....pies of the said panchnamas are placed on record before us by the assessee as well as by the Revenue and a perusal of the panchnama drawn in respect of search and seizure operation conducted at the residential premises of the assessee at Mandi shows that only one bundle of loose papers containing twelve pages was found and seized by the department as per Annexure-A. It is important to note here that in the said panchnama, entries were made by the search team against the columns describing the evidence/material found but not seized. In this regard, Annexure-2 and Annexure-3 were prepared by them giving details of list of valuables including jewellery found during the course of search which had not been seized by them and a reference of these Annexures was made against the entry relating to other valuable articles or things found but not seized. However, against the entry relating to books of account and documents found but not seized, a remark 'NIL' was specifically given clearly indicating that there were no books of account or documents which had been found by the search team but not seized. Similarly, in the panchnama prepared at the Delhi residence of the assessee, '....
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....while completing an order under section 158BC, the Assessing Officer can make assessment of the entire undisclosed income that comes to his notice during the course of proceedings under section 158BC. He can make assessment of only that undisclosed income which has a direct nexus with the search proceedings in the case of the assessee. It was further held by the Tribunal that there are two elements to be satisfied so as to be treated as undisclosed income for the purposes of Chapter XIV-B i.e., the factum of nondisclosure should be existing, and the said non-disclosure on the part of the assessee should have been blown out as a result of search or requisition of books etc. In the case of Essem Intra-Port Services (P.) Ltd. v. Asstt. CIT [2000] 72 ITD 228 (Hyd.), similar contention as raised by the DR before us was raised on behalf of the Revenue and it was held by the Hyderabad Bench of ITAT that even though "undisclosed income" is defined in an "inclusive" manner, the scope and extent of the term "undisclosed income" for the purposes of Chapter XIV-B is contingent upon the fact that the undisclosed income should borne out of material/evidence found as a result of search or requisi....
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.... relevant diaries were forwarded by the CBI Director to the Revenue Secretary due to the effect or as the outcome of the action by the Income Tax Department under section 132. As a matter of fact, there is not even any reference to such action in the said letter. It is also pertinent to note that the said photocopies were forwarded by the CBI Director to the Revenue Secretary with a request that Income Tax, Enforcement Directorate and Customs may also C give helping hand in the investigation. The investigation so referred to was the investigation being done by the CBI and the help was sought from the concerned three Government departments including Income Tax as well as Enforcement Directorate and Customs. It is worthwhile to note here that there is nothing to show that there was any search by the Enforcement Directorate or the Customs authorities. However, still the photocopies of D the relevant diaries were sought to be made available to them to give helping hand to the CBI in their investigation which again goes to show that the photocopies of diaries forwarded by the CBI Director to the Revenue Secretary had nothing to do with the action of the Income Tax Department under secti....
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....t, when it decides any proceedings, has to apply such retrospectively amended law as if it were in force at all material times. The question, however, is whether the diaries in question were relatable to any evidence found as a result of search under section 132 or requisition of books of account etc. under section 132A. In this regard, it is observed that the loose sheets containing twelve pages only were seized by the Income Tax Department from the residential premises of the assessee at Mandi besides cash of Rs. 2.45 crores seized from Delhi house. Further, cash of Rs. 1.16 crores seized by the CBI from Mandi House of the assessee was subsequently requisitioned by the Department under section 132A. In addition to this seizure and requisition, some valuables such as jewellery, furniture items etc. were found but not seized by the Income Tax Department as mentioned in the panchnamas as well as annexures to the said panchnamas. As pointed out by the learned counsel for the assessee before us, the aforesaid loose sheets containing twelve pages seized by the Income Tax Department were not at all used as evidence for the computation of undisclosed income of the assessee and this posit....
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....e of search, the assessee was out of country on a tour to USA and UK along with his wife. His daughter Smt. Ritu Sharma, however, was present at his residence situated at 12, Safdarjung Lane, New Delhi. In her statement recorded during the course of search under section 132(5), Smt. Ritu Sharma, daughter of the assessee pleaded complete ignorance about the cash found from the residence of the assessee under lock and key which, in fact, was recovered only after breaking open the said locks. She, however, confirmed that nobody had come to the house after the assessee left on 4-8-1996 for USA/UK to deliver any cash. After his return from abroad, the assessee was arrested and put in Tihar Jail, New Delhi. In the room of Jail Superintendent, his statement was recorded on 9-10-1996wherein he stated that the cash found from his residence was not available when he and his wife left India for visit to USA and UK. However, in another statement recorded subsequently on 30-10-1996, 1-11-1996 and 4-11-1996, he retracted the statement given on9-10-1996stating that the same having been given by him in a perplexed state of mind should not be taken cognizance of. In the said statement, he admitted ....
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....ible as evidence for using the same against the assessee. 37. The learned counsel for the assessee pointed out from the relevant document placed in his paper book that the cash of Rs. 1.16 crores found and seized by the CBI from the Mandi House of the assessee was requisitioned by the Income Tax Department only on 17-8-1996. In this regard, he contended that the said date i.e., 17-8-1996 dearly falls outside the block period ending on 16-8-1996 as taken by the Assessing Officer in his order under section 158BC and therefore, the addition on account of the said cash treating the same as unexplained could not be made in the impugned assessment since the date of requisition of the said cash i.e., 17-8-1996 was not covered in the block period. He also contended that all the additions including the addition on account of alleged unexplained cash have been made by the Assessing Officer in the block assessment without a specific reference to a particular assessment year and the additions so made are, therefore, not sustainable on this count also. 38. The learned counsel for the assessee also invited our attention to the provisions of sub-section (1) of section 158BB and submitted th....
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.... show that the assessee had any other source of income from which the investment found to be made by him during the course of search including the cash could have been made, the only reasonable inference which can be drawn going by the charge-sheet of the CBI that the said investment including cash was made by the assessee from the amount accepted as bribe or illegal gratification. He contended that if this allegation is to be accepted, the entire investment including cash representing income of the assessee from bribe or illegal gratification would be liable for confiscation leaving the assessee with no income from this source. He also contended that the Government has an overriding title over the assets of the assessee including cash found during the course of search if the same are held to be made out of bribe/illegal gratification and since the loss on account of such confiscation is deductible against the income from bribe, there will be no income left with the assessee which can be taxed as his undisclosed income in the block assessment. 40. The learned DR, on the other hand, submitted that a different stand was taken by the assessee in the matter of cash found from his re....
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....pport of this contention, he also cited the decision of Hon'ble Madras High Court in the case of CIT v. K.T.M.S. Mohamood [1997] 228 ITR 113. Reliance was also placed by him on the decision of Hon'ble Bombay High Court in the case of Gordhandas Hargovandas v. CIT [1980] 126 ITR 560 wherein relevance and significance of section 69A was elaborately discussed. He also pointed out that the cash found during the course of search was stated to be belonging to the Congress (I) Party by the assessee only before the ADIT (Inv.) and no such stand taken by him before the Assessing Officer. He contended that the assessee thus was clearly failed to explain satisfactorily the cash found in his possession during the course of search and the addition made by the Assessing Officer treating the said cash as unexplained by invoking the provisions of section 69A read with section 132(4A) was fully justified. 42. As regards the contention of the learned counsel for the assessee that the cash found at the Mandi residence of the assessee having been requisitioned by the Income Tax Department from the CBI only on 17-8-1996, the same was outside the block period ending on 16-8-1996, he pointed o....
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.... of search being bribe/illegal gratification received by the assessee as alleged by the CBI, the same is liable to be confiscated by the Government leaving the assessee with no income on this count, he contended that the addition on account of cash is made by the Assessing Officer under section 69A treating the said cash as unexplained due to failure of the assessee to explain the source thereof. He submitted that the source of the said cash thus has been treated as unexplained and the addition is made under section 69A without any reference whatsoever to the allegations made by the CBI in their charge-sheet. His contention, therefore, was that the assessee cannot claim any deduction against the said addition made under section 69A and in any case, there being nothing brought on record by the assessee to show that the cash has been finally confiscated by the Government in the block period, no such deduction even otherwise could be allowed to the assessee. 44. In the rejoinder, the learned counsel for the assessee submitted that the block period having already been determined by the Assessing Officer, the same cannot be changed subsequently as contended by the learned DR. He also....
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....t was belonging to his political party i.e., Congress (I). We will deal with this explanation of the assessee later on at the appropriate stage. It is, however, suffice to note here that the possession of cash found from his residence at New Delhi and Mandi was accepted by the assessee in his statement recorded on oath on in very clear terms and there was no retraction of the said statement by the assessee. During the course of assessment proceedings, it was, however, pleaded by the assessee in the letter filed before the Assessing Officer that the cash in question was not found from his control and possession and the same being not owned by him, he could be called upon to explain the same nor the same could be added in his hands. This simple averment made by the assessee, however, was not sufficient to retract the statement made by him on oath successfully in the absence of any evidence to support and substantiate the same. Moreover, such averment made by the assessee was not reliable in view of the different stand taken by him at different stage as held by Hon'ble Calcutta High Court in the case of Amal Kumar Chakraborty. It is also pertinent to note here that the said statem....
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....to be the income of the assessee from bribe/illegal gratification by the Assessing Officer. It was not even the assessee's case at any stage that the source of the said cash was the amount received by him as bribe/illegal gratification and no such attempt whatsoever was made by him to explain the said cash found from his residence. It is no doubt true that the allegation levelled by the CBI against the assessee, as is apparent from their charge sheet, was about the disproportionate wealth amassed by him by corrupt and illegal means or by otherwise abusing his official position as a public servant. However, it is also true that the case of the Revenue against the assessee was never based on such allegation as is evident from the order of the Assessing Officer as well as the submissions made by the learned DR before us. As a matter of fact, addition in respect of the said cash was made by the Assessing Officer under section 69A treating the same as unexplained since there was a failure on the part of the assessee to explain the source thereof. In these circumstances, the plea put-forth by the learned counsel for the assessee for treating the said cash as the income of the assesse....
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....the second. The second payment is merely an obligation to pay another a portion of one's own income, which has been received and is since applied. The first is a case in which the income never reaches the assessee, who even if he were to collect it, does so, not as part of his income, but for and on behalf of the person to whom it is payable." 49. In the present case, the diversion is sought to be claimed by overriding title in respect of income stated to be earned from bribe/illegal gratification and since this source itself is illegal, the doctrine of diversion of the said income by an overriding title involving legal obligation cannot be applied at all. This is so because there cannot be such obligation on the recipient of such income to divert the same to any third party before it reaches his hands and the confiscation of the amount of such income will always be an event occurring after receipt of such income by the assessee and that too to the extent of availability at the relevant time subject to allegation of bribe/illegal gratification being proved in the Court of Law. The contention of the learned counsel for the assessee based on the rule of diversion of income by ....
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....ficer was fully aware, the addition under section 69A was required to be made with reference to the said date i.e., 16-8-1996. We therefore have no hesitation to hold that the said addition made by the Assessing Officer was squarely covered in the block period ending on16-8-1996. Even the presumption available to be drawn against the assessee under section 132(4A) supports this view whereby any money found in, the possession or control of any person in the course of a search is presumed to belong to such person and if the assessee fails to rebut the said presumption satisfactorily and successfully, he is treated as owner of such cash and such ownership relates back to the date when the said cash was found in his possession or control. 51. The learned counsel for the assessee has also contended before us that the cash found from the Mandi house of the assessee was seized by the CBI and not by the Income Tax Department. He has submitted that the cash so seized was subsequently requisitioned by the Income Tax Department under section 132A which was not permissible going by the provisions contained in sub-section (1) of section 158BB which specifically provide that only the evidence....
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....ons of this Act, whereafter the 30th day of June, 1995 a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of any person, then, the Assessing Officer shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter." "132A. (1) Where the [Director General or Director] or the [Chief Commissioner or Commissioner], in consequence of information in his possession, has reason to believe that- (a) ................ (b) ................ (c) any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then, the [Director General or Director] or the [Chief Commissioner or Commissioner] may authorise any [Joint Director], [Joint Commissioner], [Assistant Director [or Deputy Director], [Assistant Commissioner [or Deputy Commissioner] or Income-ta....
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....o its logical end, the assets requisitioned under section 132A could reasonably be treated as evidence found as a result of search conducted under section 132(1) which could be a basis for computing the undisclosed income of the assessee for the block period as envisaged in section 158BB(1). We are, therefore, of the considered opinion that the assets requisitioned under section 132A could very well be used as evidence for computing the undisclosed income of the assessee under Chapter XIV-B for the block period and the contention of the learned counsel for the assessee in this regard relying on the omission to specifically mention such assets as evidence to form the basis of computing the undisclosed income in section 158BB(1) is untenable and cannot be accepted. 55. This leaves us with only one aspect of this issue relating to the addition made on account of cash found during the course of search under section 69A and that is whether the addition so made by the Assessing Officer was justified on merits or not. As already observed, the cash was found from the residential premises of the assessee situated at New Delhi, and Mandi during the course of search. The possession of the ....
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....ow an opportunity to the assessee to cross-examine the said deponents. Nevertheless, the copies of statements of Shri Sitaram Kesri and Shri Ahmed Patel were made available by the ADIT to the assessee immediately and despite having come to know about the contents of the said statements, nothing was brought on record by the assessee to support and substantiate his explanation that the cash found in his possession was belonging to Congress (I) Party. As mentioned by the Assessing Officer in his order, even the books of account of the Congress (I) Party were verified by the ADIT(Inv.) which revealed that no corresponding entries in respect of cash found in the possession of the assessee were appearing therein. It is thus clear that no satisfactory explanation in respect of cash found in his control and possession during the course could be offered by the assessee and there was a clear failure on his part to discharge the onus lay on him under section 132(4A) read with section 69A. 57. In the case of Churamal, it was held by the Hon'ble Supreme Court that the possession of the wrist-watches having been indubitably found with the assessee, the onus was on him to prove on evidence....
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....e it comes to Rs. 1,50,000 per month. The minor variation may be due to estimation of expense and also fluctuations over a period of time. Further document No. 01/M-158/96 reveals various household expenses recorded by Smt. Ram Devi which total upto Rs. 7,51,200. In response to the show cause notice proposing an addition of Rs. 1.50 crores to the income of the assessee on account of household withdrawals a reply dated 18-8-1997 was filed in which Rs. 44.72 lakhs were declared under the various sub-heads without the accompanying evidences. Further vide this office letter dated 19-8-1997 attention of the assessee was drawn to the amount of withdrawals shown based on estimates and guess work. Again a reply was filed on 21-8-1997 in which it was explained that household withdrawals declared are not based on guess work but still assessee failed to file any evidence in support of the same. For e.g. Assessee failed to show as to the drawings declared are out of withdrawals from which bank account and what expenses have been incurred. The assessee in his annual statement of affairs has declared nominal withdrawals per annum and without correlating them as to when and how they have been wit....
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....ly stating that all foreign visits expenses were borne by the Government. Unexplained investments and income from dairy activity at Mandi The assessee filed a reply dated 18-8-1997 in response to the show-cause notice proposing an addition of Rs. 15 lakhs on account of unexplained investments and income from dairy activity at Mandi, in which it was stated that dairy activity is actually run by his wife Smt. Ram Devi. This stand of the assessee is actually an about turn of the position taken during the course of post search enquiries by the Investigation Wing. In his statement recorded before ADIT (Inv.) Shri Sukh Ram admitted a number of times that dairy activity is run by him since 1960 and income therefrom has not been disclosed to the Income Tax Department before the date of search. He also admitted having 30 to 35 Jersy/Holstein Cows at his dairy farm for which even a declaration has been filed in the P.M.O. by the assessee in 1987-88 and 1988-89 acknowledging at that time about having 25 Jersy/Holstein Cows. In view of the above, the stand taken by the assessee is not accepted since no evidence in support of the same has been furnished and i....
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.... of ITAT deleted the additions based on conjectures and surmises or estimates and presumption not supported by any evidence, documents etc. found as a result of search. In the case of Ramesh Chand Modi, the Jaipur Bench of ITAT has held that no addition can be made in the block assessment simply on the basis of estimates and surmises without there being any evidence found as a result of search. In the case of CIT v. Rajendra Prasad Gupta [2001] 248 ITR 350, Hon'ble Rajasthan High Court held that although the Assessing Officer has jurisdiction to make best judgment assessment in the proceedings under Chapter XIV-B, he has no power to make estimation of income de hors the evidence found as a result of search. It was also held by the Hon'ble Rajasthan High court that the block assessment under section 158BC is to be framed in the light of material that comes to the possession of the assessing authority during the course of search. To the similar effect is the decision of Hon'ble Calcutta High Court in the case of CIT v. Ashim Krishna Mondal [2004] 270 ITR 160 wherein the order of the Tribunal deleting the addition by the Assessing Officer on estimated basis without there b....
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....perties. 66. As mentioned by the Assessing Officer in his assessment order, it was found by him during the course of post-search enquiries that the assessee has made substantial investment in the following immovable properties: (i) D-42, Kaushambi, Ghaziabad. (ii) Flat at Nav Sansad Vihar Society, Dwarka, New Delhi. (iii) Apple Orchard at Village Surath, Mandi. (iv) Land at Kotadhar. The Assessing Officer required the assessee to explain the source of funds utilized for making the aforesaid investments. In reply filed on 19-8-1997, it was submitted by the assessee that the investment of Rs. 27.64 lakhs (excluding interest on loan) was g made in the property being D-42, Kaushambi, Ghaziabad, out of which, a sum of Rs. 10 lakhs was contributed by his wife Smt. Ram Devi. The investment claimed to be made by his wife Smt. Ram Devi to the extent of Rs. 10 lakhs was not considered by the Assessing Officer in the assessee's hands. However, his explanation about having invested a sum of Rs. 17.64 lakhs in the said property was not accepted by the Assessing Officer in the absence of satisfactory evidence to support and substantiate the same. He,....
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....es in question. He has contended that the additions made by the Assessing Officer on this issue merely on the basis of post-search enquiries without there being any evidence found as a result of search were beyond the scope of the block assessment. The learned DR, on the other hand, has not been able to dispute this position except pointing out that the entries found recorded in the seized document No. M-161/96 were also relied upon by the Assessing Officer in support of the addition of Rs. 29.90 lakhs made on account of unexplained investment made by the assessee in the immovable property being D-42, Kaushambi, Ghaziabad. However, as already held by us in the preceding paragraphs of this order, the said diary seized by the CBI from the residence of the assessee could not be considered as evidence found as a result of search conducted under section 132. It, therefore, follows that there was no evidence found as a result of search under section 132 or requisition made under section 132A on the basis of which, the additions in question on account of unexplained investment in the immovable properties were made by Assessing Officer. The said additions thus were made merely on the basis....
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....e was not eligible for such exemption. In these circumstances, the examination of the assessee's claim for exemption was the subject-matter of regular assessment and not the block assessment. As held by the Hon'ble Calcutta High Court in the case of Bhagwati Prasad Kedia v. CIT [2001] 248 ITR 562, the Assessing Officer was not entitled to question the loan duly disclosed by the assessee in his regular return of income during the course of block assessment proceedings since the same was a subject-matter of regular assessment. Explaining further, Hon'ble Calcutta High Court observed that a composite reading of the relevant provisions contained in Chapter XIV-B makes it crystal clear that the Legislature thought it fit to make a distinction between the block assessment and the regular assessment and the Assessing Officer, therefore, was wrong in holding that the sum featured in the regular books of account can be taxed in the block assessment. It was also observed by the Hon'ble Calcutta High Court that the Assessing Officer while dealing with the regular assessment is free to examine the veracity of the return as well as the claims made by the assessee with regard to ....
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.... section 68 treating the same as unexplained. 72. Before us, the learned counsel for the assessee has challenged this addition made by the Assessing Officer under section 68 by raising two-fold contentions. His first contention was that this addition made by the Assessing Officer was not based on any evidence found as a result of search but the same was based entirely on the post-search enquiries made by the Assessing Officer during the course of assessment proceedings. Secondly, he has contended that all the seven bank accounts wherein the credits in question were found to be appearing, had been disclosed by the assessee in his regular returns of income filed before the search by way of declaring the interest received on the said saving bank accounts. He has also filed a statement showing the details of such declaration and a perusal of the same clearly shows that all the seven bank accounts were duly disclosed by the assessee in his returns of income filed regularly before the date of search by declaring interest earned on the said accounts mentioning specifically the details of account number, name of the bank as well as branch. As already discussed in the earlier part of thi....