TaxTMI 
TaxTMI 
2004 (10) TMI 316
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....ant especially when the third parties have explained the sources of investment. 4 The first appellate authority failed to consider that the appellant had offered to produce all the creditors in support of his claim of investment and, therefore, the first appellate authority is not justified in doubting the genuineness of the loan transactions. 5. The first appellate authority is not justified in sustaining the addition of Rs. 36,07,720 being the investment in M/s Visakha Precious Stones (P) Ltd. 6. The first appellate authority, in the alternative, should have restricted the additions to Rs. 18,69,000 being amount declared by the appellant under s. 132(4). 7. The first appellate authority failed to consider that income from Liquor Syndicate treated as share of profit is exempt from tax. 8. The first appellate authority is not justified in sustaining the addition of Rs. 2 lakhs being the share of income from Liquor Syndicate. 9. The first appellate authority is not justified in sustaining the levy of surcharge. 10. The appellant craves leave to add, amend or alter any of the above grounds at the time of hearing of the appeal" 3. During the course of hearing b....
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.... sources for the same. A. The above investments are made in the names of various persons including myself. However, some of the investments made in certain persons' names belongs to me only. Such investments are as detailed below: Name Unsecured Share Loan capital Rs. Rs. 1.Myself 4,49,820 87,500 2.B. Satyanarayana 1,28,520 25,000 3.Y. Suri Babu 2,57,040 50,000 4.Smt. B. Subhadramma 2,57,040 ....
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....ames of my family members. We have also invested Rs. 18.69 lakhs in various names in the form of unsecured loans and share capital in M/s Visakha Precious Stones (P) Ltd., all of which are not reflected in our books of account or in the returns of income filed by us. Apart from the above, we have earned Rs. 5 lakhs from our liquor business being run in the name of Pendurthy Ganesh Syndicate which is not reflected in the books of account. Accordingly, I am disclosing this amount of Rs. 30.29 lakhs as my unaccounted income for the block period. I promise to file the block returns admitting the same and I shall pay the taxes accordingly." 7. The assessee reiterated the aforesaid declaration vide p. 275 of the paper book by disclosing income of Rs. 2 lakhs in the IT return and binding thereto not to the following effect: "Income admitted roundly to compensate set off to telescope the addition of additions that may be made in the block assessment under any score or scores This income is admitted by the assessee to purchase peace with the Department to avoid protracted litigation." 8. The affidavit filed by the assessee for retraction (which) is appearing at pp. 113 to 115 of....
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....nfirmations of the various persons who had invested in the share capital and unsecured loans of the company as stipulated under paras 8 and 9 of the assessment order. The AO made the following additions in the undisclosed income returned by the assessee and completed assessment on an income of Rs. 49,67,720 under s. 158BC of the IT Act. "Additions: 1. Undisclosed income introduced in the form of share capital and unsecured loans in different names during the financial years relevant to the asst. yr.1997-98 as discussed in paras 7 to 10 of this order 36,07,720 2. Undisclosed income 'earned from share of profit of in liquor syndicate during the year 1999 as discussed in para numbers 11 to 13 of this order 5,00,000 3. Investments made in the names of assessee's brother, Sri P. Krishna Apparao, during the year relevant to t....
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....ssee, and in the case of the company, these investments were duly considered while framing the assessment under s. 143(3) of the IT Act. These investments, therefore, cannot be regarded to be the undisclosed income in view of the definition of the undisclosed income given under s. 158B(b) of the IT Act. The very basis of the information of the Department was investments recorded in the books of account of VPSP Ltd. in which the assessee was a director, therefore, the additions made OD the basis of the investments made as undisclosed income are outside the scope of Chapter XIV - B of the IT Act. Although the search and seizure has taken place in the premises of the assessee, but no material was found relating (to) this investments which may prove that all investments were made by the assessee and the same was undisclosed investment. The assessee even during the course of assessment proceedings filed the confirmations from the various parties who made the investments in the private limited company and whose investments were held to be the investments of the assessee. He (has) drawn our attention towards pp. 283 to 1223 of the paper book which show the confirmations from the variou....
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....d income; and the AO should rely upon the evidences gathered during the course of search or thereafter while framing relevant assessment order. In the case of the assessee no such evidences were obtained by the Revenue during the course of the search or while framing the assessment order. In the alternative, it was submitted that if the contention of the assessee regarding the admission having been obtained under coercion and pressure is not accepted, it is well accepted proposition of law that admission is not conclusive and the assessee is fully entitled to rebut and controvert the admission by adducing documents and evidence on record. For this, reliance was placed on the decision of Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. vs. State of Kerala & Anr. 1972 CTR (SC) 253 : (1973) 91 ITR 18 (SC) and in the case Swam Singh and Ratan Singh vs. State of Punjab AIR 1957 SC 637. wherein it has been held that a confession of an accused would need corroboration to convict the accused. Decision of the Delhi High Court in the case of S. Arjun Singh vs. CWT (1988) 73 CTR (Del) 37 : (1989) 175 ITR 91 (Del) was also referred for the proposition that an admission i....
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....e.f. 1st June, 2002. In this case, the search has taken place on 21st Dec., 1999, therefore, no surcharge can be levied. When the Bench painted out that this issue is pending before the Special Bench, Hyderabad, for adjudication, the learned Authorised Representative was fair enough to concede and requested this Tribunal that this ground of appeal can be kept in abeyance and be disposed of as and when the Special Bench decides this issue, as a finding to this effect may be given in the order so that assessee or Revenue can file miscellaneous petition before this Tribunal. 17. The learned Departmental Representative, on the other hand, merely relied on the order of the CIT(A). 18. We have carefully considered the rival submissions and also gone through the facts and evidences on record as contained in the paper book filed before us during the course of hearing. We have also gone through the legal luminaries cited before us. In our view, there are following three basic issues which are to be decided for disposal of ground Nos. 1 to 6: (i) Whether the statement given by the assessee on 10th Feb., 2000, can be regarded to be the one recorded under s. 132(4) of the IT Act? (....
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....ellery or other valuable article or thing, or; (ii) Any income based on any entry in the books of account or other documents or transactions; (iii) Such money, bullion, jewellery, valuable article, thing, entry in the books of account or other documents or transactions represents wholly or partly income or property; (iv) Which has not been or would not have been disclosed for the purposes of this Act. From the aforesaid analysis of the definition, it clearly emerges that if any asset or any income as recorded in the books or documents has been disclosed or intended to be disclosed to the IT authorities, this would be outside the pale of undisclosed income as defined under cl. (b) as above. 19. We may next refer to s. 158BB which provides for computation of undisclosed income of block period. The section expressly and unequivocally provides that the undisclosed income has to be computed "on the basis of evidence found as a result of search... and such other materials or information as are available with the AO and relatable to such evidence". The expression "relatable to such evidence" has been inserted by the Finance Act, 2002, retrospectively, w.e.f. 1st July, 1995.....
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....roceedings initiated against such person under the Act. The question of examining any person by the authorised officer arises only when he finds such person in possession of any undisclosed asset or books of account. But in this case, it is an admitted fact that on the days of search the Department was not able to find any unaccounted money, unaccounted bullion nor any valuable article or things nor any documents or any such incriminating material either from the premises of the company or from the premises of the assessee. Even the statement from the assessee admitting the income was also recorded subsequent to the search. Therefore, such statement is outside the ambit of s. 132(4). Our aforesaid view has also been duly supported by another judgment of Hon'ble Andhra Pradesh High Court in Asstt. CIT vs. Yeera Nagabhusanam (1998) 144 CTR (AP) 467 : (1997) 226 ITR 843 (AP). We are, therefore, of the view that the investment in the various names in the form of unsecured loan in M/s VPSP who was a regular assessee cannot possibly be treated as gathered within the limited scope and purview of undisclosed income under the block assessment. On this legal ground alone, the impugned additi....
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....uly disclosed in the audited balance sheet of the company. The AO has examined these unsecured loans and share capital under S. 68 only when he could know through the regular books of account of the company. Thus, from these facts it is explicitly evident that the investments in the share capital and unsecured loans were duly disclosed and accounted for in the books of the company, in which the assessee was a director. These transactions cannot be considered as secret, hidden or concealed. In our opinion, these investments are outside the definition as contained under S. 158B(b), and cannot be assessed under this chapter. Proceedings under this chapter cannot be a substitute of proceedings under ss. 148 or 143(3). Our aforesaid view is duly supported by the decision in the case of Sunder Agencies vs. Dy. CIT (1997) 59 TTJ (Mumbai) 610 : (1997) 63 ITD 245 (Mumbai). 24. We also find force in the submission of the learned Authorised Representative that the additions were already made in the regular assessment in the books of the company and cannot be added again treating to be undisclosed income in the hands of the assessee. On this ground also, the impugned addition in the bloc....
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.... doubt, heavy onus lies on the assessee to refute and controvert the admission at the time of search operation. In the instant case before us, documents and evidence filed by the assessee during the course of assessment proceedings before the AO to which the reference has been made, amply established that this statement of the assessee was not recorded during the course of search proceedings and, therefore, cannot be regard to be an important piece of evidence. Even then, the assessee filed ample evidence by way of confirmations from the various parties who has invested the fund and also their source of investment from whom the parties have taken loan for investment purposes. 28. Not only this, the assessee has also requested the AO during the course of the assessment proceedings that if the AO desires he can produce the respective persons. The AO ignoring all these evidences, merely relied on the statement recorded on 10th Feb., 2000 (not during the course of search proceedings) and made the additions in the hands of the assessee. The AO even did not bother to issue summons or to call the parties to verify genuineness of the transactions of advancing the loans by the various pa....