TaxTMI 
TaxTMI 
2002 (2) TMI 352
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..... garage A 6.55 cheque ------- 10.65 cash .55 cheque II Actual paid" During the course of statement recorded under section 132(4), when confronted with this paper, Dr. Tanna spontaneously submitted as under: "Q. No. 7: Particularly I would like to show you back side of loose paper bearing Sr. No. 61 of Annexure A-1. Kindly go through it and explain to me the contents thereof?" Ans.: "It is very simple. I have to pay by cheque a sum of Rs.6.55 lacs as per agreement for purchase of flat at Pune from Somerset Developers. Some of the instalments have gone through my bank account. I have paid a sum of Rs.10.65 lacs as cash from my professional income not recorded as yet in my books of account and I wish to admit the same as my admitted concealed income." In his Block assessment completed by the Dy. CIT, Special Range-26, Mumbai, Dr. Tanna surrendered Rs.10.65 lakhs. T....
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.... contact with Mr. Bachhubhai and took him to the office of Somerset Developers. When he was shown loose paper No. 61, he admitted that telephone No. 655892 (written on the said paper) which belonged to M/s. DSAF was given by him to Mr. Bachhubhai as his contact number. From the statement of Shri Prakash, the learned Assessing Officer concluded "From the above discussion, it is clear that entries on this paper have some direct as well as indirect nexus with the sale of flat by the assessee to Dr. D.D. Tanna. No doubt various other entries are also recorded on this paper including those of amounts as well as area of flats but then only those entries are being considered for the purpose of block assessment which are found related to purchase of flat by Dr. Tanna. While the assessee discussing various entries has dismissed them as not relating to him, I am of the opinion that transaction which has been admitted by Dr. Tanna in his statement during the course of search pertain to the purchase of flat by him from the assessee." Reliance was placed by the assessee on the judgment of the Bombay High Court in the case of Addl CIT v. Miss Lata Mangeshkar[1974]97 ITR 696. The Assessing Office....
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.... stamp duty purposes may not have any relation to the prevailing market rates which are normally substantially higher than the approved rates." 4. Dr. Sunil Pathak, the learned counsel for the assessee submitted that there is no justification for the impugned addition in the hands of the assessee-firm. His first submission is that the papers seized are not indicating in any manner that Dr. Tanna paid any such amount to the assessee. For this, following important aspects were highlighted by the learned counsel: (a) The seized paper is an undated and unsigned loose paper admittedly not in the handwriting of Dr. Tanna or his wife. The said paper refers to three flats and none of the areas of such flats as mentioned in the paper tallies with that of the flat sold to Dr. Tanna by the assessee-firm. (b) The paper mentions so many figures in cash and it is not known how the Assessing Officer adopted this figure of Rs.10.65 lakhs as on-money paid for the flat. (c) The total of all the figures is Rs.25.62 lakhs and it is not known on what basis the Assessing Officer selected only a sum of Rs.10.65 lakhs as on-money paid and did not adopt the entire sum of Rs.25.62 lakhs as on-money havi....
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....e of the seized paper, the learned D.R. submitted that the paper does refer to the price of three flats and the figures in the middle portion refer to this particular flat. These notings were more in the nature of proposals and really the entries which go to the root of the controversy are on the back page which are self evident and which were duly admitted by Dr. Tanna in a spontaneous way during the course of statement under section 132(4). The learned D.R. further stated that Dr. Tanna is a leading Doctor, hence he must be an intelligent person and it is not expected that he would hand over so much of money to Mr. Bachhubhai or Mr. Prakash, the middleman. He would himself hand over the same to the assessee. Thus, he argued that it can be safely said that the assessee only has received this money. He further submitted that if it is the case of the assessee that Shri Bachhubhai has taken the money, the assessee should have produced him. Having not done that, the assessee cannot take up such a contention. The learned D.R. further submitted that Dr. Tanna's Affidavit was produced before the CIT only a few days before the assessment was getting time barred. Thus, no cognizance can be....
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....is neither prepared by him nor by his wife. It is significant to point out that although Dr. Tanna, at the time of raid, is alleged to have admitted that cash amount of Rs.10.65 lakhs was paid by him, he had subsequently retracted the said statement on the ground that it was given under coercion and pressure. Dr. Tanna's wife was summoned before the Assessing Officer and both Mrs. Tanna and Dr. Tanna's Chartered Accountant, Mr. Ghabawalla categorically denied payment of any cash amount for purchase of the flat. 8. As rejoinder, Shri Naresh Kumar, the learned senior D.R. submitted that the seized paper forms part of record. it had two sides and the same was given to the assessee. In fact the whole controversy lay around the seized paper as a whole and particularly reverse side of the paper and now the learned counsel cannot say that is a fresh piece of evidence. First of all, the learned counsel did not produce this paper in his paper book and it was only when he (DR) produced the seized paper in original, the learned counsel chose to make a flimsy argument that the reverse side of the paper is a new piece of evidence. The loose paper as a whole was part of the seized record. It wa....
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....e fulcrum point on which the whole case revolves and it is too much to say that such vital evidence on which the authorities below based their conclusions was not shown to the assessee. From the reading of the order of the Assessing Officer and the note of the CIT, it is very clear that the seized paper with both sides was confronted to the assessee. We accordingly reject the argument of the learned counsel that the back side of the seized paper is a new piece of evidence and the same should not be admitted. 10. The argument of the learned counsel that the seized paper is an undated and unsigned loose paper admittedly not in the handwriting of Dr. Tanna or his wife is unreliable piece of evidence, has no legs to stand. It is an established fact that the seized paper was found during the course of search at the premises of Dr. Tanna and he owned up and on the basis of this seized paper, he also surrendered a sum of Rs.10.65 lakhs in his block assessment. No doubt, the seized paper is undated and unsigned and even if it is admitted that it is not in the handwriting of Dr. Tanna or his wife, it is a vital piece of evidence which was duly admitted by Dr. Tanna as belonging to him and ....
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....eized. On the basis of certain entries recorded in the ledger which related to payment of amounts to Miss Lata Mangeshkar in respect of which no receipts were issued, the Assessing Officer made additions in the case of Miss Lata Mangeshkar. The additions were confirmed by the AAC, however, the same were deleted by the ITAT. A Reference filed by the department before the Bombay High Court was rejected after appreciating various facts and circumstances of the case and it was held that there were serious infirmities in the evidences presented by the department. While rejecting department's Reference, the Bombay High Court held that mere entries in the accounts regarding payments to the assessee was not sufficient as there was no guarantee that the entries were genuine. The Hon'ble Bombay High Court, inter alia, observed that the statement of Shri N. Vasudev Menon could not carry the case of the department as he had no personal knowledge of the actual payments made to the assessee Miss Lata Mangeshkar. Regarding the testimony of Shri C.S. Kumar, the Bombay Manager of M/s Vasu Films, it was pointed out that he used to receive amounts from Madras from out of which he used to make disburs....
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....ision of the ITAT, Pune Bench in the case of Bala Prasad R. Lokamanyawar is also not relevant to the facts of the present case. In that case, there was discrepancy in the sales recorded in the books of the assessee and corresponding figures found to have been recorded in the books of third person. In the circumstances, it was held by the I.T.A.T. that "Simply because in the books of a stranger assessee's name comes and the entry narrates that there were certain sales effected by the assessee, it will be unwise to tax the assessee on such infirm material i.e. the books of a third party." In the present case, the facts clearly show that the paper pertained to the transaction between Dr. Tanna and the assessee and the figure of Rs.10.65 lakhs was also found recorded and Dr. Tanna admitted having paid this amount to the assessee and also surrendered the same in his block assessment. Obviously, no prudent person would voluntarily subject himself to substantial tax burden unless he knows that he did earn undisclosed income. Accordingly, we hold that the decision of the I.T.A.T, Pune Bench, in the case of Bala Prasad R. Lokamanyawar is not applicable to the facts of the present case. 16.....
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....uld be applicable in its case. The fact that this amount was also the undisclosed amount of Dr. Tanna and has been disclosed by him as such does not preclude it from being taxed in the hands of the assessee. The judgment of the Calcutta High Court referred to supra and relied upon by the learned counsel does not lay down the principle that undisclosed income can be taxed in the hands of only one person, especially when the facts suggest that the undisclosed income of one person is also the receipt of another and has not been disclosed in the hands of the latter as well as in this case (M/s Dhunjibhoy Stud & Agricultural Farms). In the case before us, even if the income belongs to Dr. Tanna, the payment of the same amount to the assessee would amount to a receipt in the hands of the assessee, which would be taxable under Chapter-XIV-B and there would be justification to issue notice under section 158BC/BD. 20. It may also be mentioned that the Madras High Court in the case of Thanthi Trust v. Asstt. Director of Income-tax[1999] 238 ITR 635 has held that the judgments and orders of Courts and Tribunals cannot be construed or interpreted like Acts of Parliament or as Mathematical The....
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....ings (para 9 of the order). By recording such finding, he has rejected the contention of Mr. Pathak, learned counsel for the assessee, that the back side of the loose paper is a fresh evidence, since it has been shown for the first time before the Tribunal by the senior D.R. and it was never shown to the assessee either by the Assessing Officer in the assessment proceedings or by the CIT in the course of discussion before approval. By raising this contention, the learned counsel for the assessee had prayed that such new evidence should not be taken into consideration while deciding the issue on merits. The finding of fact has been recorded by him in the following words: "From the reading of the order of the Assessing Officer and that of the CIT, it is very clear that the seized paper with both sides was confronted to the assessee. We accordingly reject the argument of the learned counsel that the back side of the seized paper is a new piece of evidence and the same should not be admitted." 27. The order of assessment is well as Note of the CIT have been gone through by me very carefully. There is nothing either in the assessment order or in the Note of the CIT on the basis of whi....
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....ted 29-7-1998 also deal with only details on front side of the loose paper and there is no whisper about the jottings made on back side of the loose paper. This also shows that even the CIT was not aware of such jottings. 28. It was for the first time that the back side of the loose paper was brought to the notice of the Tribunal by the senior D.R. in the course of his reply to the arguments of the learned counsel for the assessee. Admission of this evidence was seriously objected to by Mr. Pathak in his arguments as well as in the written Note copy of which is placed on record. Para 14 of the said Note states as under: "14. In reply to D.R.'s submissions, it was submitted by Shri Pathak that first of all, the alleged back side of the paper No. 37 which is produced by the DR. is fresh evidence. The alleged back side of paper No. 37 was neither shown to the appellants nor a xerox copy was furnished to the appellants and the appellants had no opportunity to deal with the notings made thereon. The appellants had given exhaustive comments on paper No. 37 (the front side of the loose paper) and if a copy of the back side had been given to the appellants, they would have definitely dea....
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....d be taken into account as evidence. But before the I.T. authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine the manager of the bank with reference to the statements made by him." Proceeding further, it was observed at page 722 as under: "We are clearly of the view that the letters dated 18-2-1955, and 9-3-1957 did not constitute any material evidence which the Tribunal could legitimately take into account for the purpose of arriving at the finding that the amount of Rs.1,07,350 was remitted by the assessee from Madras, and if these two letters are eliminated from consideration, it is obvious that there was no material evidence at all before the Tribunal which could support this finding." In view of the above discussion, it is held that back side of the loose paper cannot be considered as an admissible evidence/material and, consequently, is excluded for consideration on merits. 30. Before coming to the merits of the case, it would be useful to refer to the settled legal position that what is apparent is real state of affairs and the o....
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....asic principles of Evidence Act are applicable to the tax proceedings. Reference can be made to the Supreme Court judgment in the case of Chuharmal v. CIT [1988] 172 ITR 250. Since Dr. Tanna was neither examined by the Assessing Officer, nor the assessee was allowed an opportunity to cross-examine, in my opinion, the information used by the Assessing Officer suffers from serious infirmity and, therefore, in law cannot be used against the assessee as an evidence. Non-compliance of the natural justice has weakened the case of the Revenue. The statement of Dr. Tanna under section 132(4) and the loose paper found from his possession might have evidentiary value in the assessment of Dr. Tanna, but as far as the assessment in the case of third party is concerned, it has no evidentiary value, unless such information stands to the test of cross-examination. In the case of Miss Lata Mangeshkar it was held by the Bombay High Court that entries in the books of third party were corroborative evidence and could not be used against the assessee unless supported by direct evidence. Since direct evidence in that case suffered from infirmities, the High Court upheld the finding of the Tribunal tha....
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....closed income. In response to the said summons, Dr. Tanna through his Chartered Accountant replied vide letter dated 11-6-1998 wherein it was categorically stated that he had not paid any 'on money' in respect of the flat purchased from this assessee and the amount of Rs.10.65 lakhs was offered just to avoid prolonged litigation and to buy peace. These correspondences appear at pages 61 to 67 of the paper book. Probably because of such specific denial, the Assessing Officer did not examine Dr. Tanna and conveniently did not refer to this factual aspect in the assessment order. In view of this factual aspect, it can be said that the information obtained by the Assessing Officer remained un-corroborated by direct evidence and, therefore, no addition could be made. 34. Even assuming for the sake of argument that the Assessing Officer was entitled to consider the aforesaid information as admissible material, still in my view, the said information does not lead to the conclusion that the assessee had received the sum of Rs.10.65 lakhs from Dr. Tanna. The front page of the loose paper refers to the area of the flat at 1140 sq.ft. while the flat purchased by Dr. Tanna was of a different ....
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.... is also to be noted that Dr. Tanna had referred to the payment of Rs.6.55 lakhs by cheque. That too does not tally with the amounts received by the assessee as per the books. The agreed consideration as per the Agreement was Rs.6 lakhs, while actual receipt by the assessee (including interest) by cheque was Rs.6,03,600. If the figure of cheque payment does not tally with the figure of receipt by the assessee, then the question of attributing payment of Rs.10.65 lakhs to the assessee does not arise. Further Dr. Tanna has retracted from the statement in his assessment proceedings by specifically denying such payments to the assessee. He had also denied this fact vide letter dated 11-6-1998 addressed to the present Assessing Officer appearing at page 61 of the paper book. Therefore, the veracity of the informations received by the Assessing Officer cannot be said to have been established. 36. Even assuming for the sake of argument that back side of the loose paper was admissible material, even then, I am of the view that no addition can be made. It is pertinent to note that on the back side two names are written, viz. K.M. Associates and Somerset Developers (village). It is interes....
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.... Assessing Officer was justified in making addition of Rs.10.65 lakhs as undisclosed income?" 2. The facts of the case are that the assessee is a firm dealing in the business of construction and sale of flats. The assessee has undertaken construction of a project on the land at Wanowrie. The construction of flats at Wanowrie has been undertaken in two phases, i.e. Phase-I by the name May Fair Developers and Phase-II by the name of Somerset Developers. 3. On 2-11-1995, a search action under section 132 of the Income-tax Act, 1961 was conducted at the premises of one Dr. D.D. Tanna in Mumbai. Certain documents were found and seized from his. possession, in which it was found that Dr. Tanna had purchased Flat No. 122 on the second floor from Phase-II of the assessee's construction at Wanowrie, viz. Somerset Developers, vide agreement dated 17-9-1994, according to which the purchase price was fixed at Rs.6.55 lakhs. In this search, a loose paper, which was marked as Paper No. 37, was seized. The backside of this paper had the following contents: ------------------------------------------------------------------- "Somerset Developers - (village) ....
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....13-8-1997 declaring undisclosed income at NIL. 4. During the course of assessment proceedings, the assessee submitted before the Assessing Officer that no cash payment of Rs.10.65 lakhs was received by it from Dr. D. Tanna. Rather, the flat had sold at a price recorded in the agreement and the payment had been received through cheque, which is duly recorded in the accounts. While explaining the entries recorded on loose paper No. 61, the assessee, vide its reply dated 26-2-1997 which was filed during the course of regular assessment for assessment year 1994-95, stated that the figure of Rs. 1 lac with remarks 'Now cheques' is not correct as under the agreement for sale, Dr. Tanna had paid to the assessee the initial deposit of Rs.50,000 which was acknowledged in the receipt at the end of the agreement and Dr. Tanna had given second cheque of Rs.50,000 which had been appropriated towards balance consideration payable by Dr. Tanna. As regards the figure of Rs.57,000 with the remarks 'Second cheque' it was explained that the same had been received by the assessee from Dr. Tanna. Regarding the figure of Rs.10.65 lakhs appearing on loose paper No. 61, it was contended that no such pay....
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.... Rs.10.65 lakhs was assessable in the hands of the assessee as undisclosed income. 5. The Assessing Officer prepared a draft assessment order and sent it to the Commissioner of Income-tax for approval, who, after giving an opportunity of being heard to the assessee, approved the order of the Assessing Officer, vide detailed Note dated 29-7-1998, which formed Annexure to the assessment order. Before the CIT, besides the reliance placed on the decision of the Bombay High Court in the case of Miss Lata Mangeshkar, the assessee had further placed reliance on the following two decisions: 1. V.C. Shukla's case 2. Bala Prasad R. Lokmanyawar's case. The CIT, in his note, distinguished the facts of the assessee's case from the facts of the cases cited before him and held that the ratio laid down in the above cases was not applicable to the facts of the present case. While concluding he held that the paper pertained to the transaction between the assessee and Dr. Tanna, the figure of Rs.10.65 lakh is was found recorded and Dr. Tanna admitted having paid this amount to the assessee and also surrendered the same in his assessment. He concluded that no prudent person would voluntarily subje....
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....ore the Assessing Officer has denied that any on-money was paid. 8. Dr. Sunil Pathak, the learned counsel for the assessee further submitted that Mrs. Tanna in her statement, appearing at page 56 of the paperbook, had confirmed that the handwriting in page 37 is neither her's nor of her husband, Dr. Tanna. Both the Tannas have also confirmed that no on-money was paid to the assessee for the flat in question. Attention of the Bench was invited to the Affidavit of Dr. Tanna, dated 28-7-1998 filed before the CIT wherein he has stated that he had not paid any on money to the assessee. Besides this argument, reliance was placed on the decision of the Bombay High Court in the case of Miss Lata Mangeshkar V.C. Shukla and Bala Prasad R. Lokmanyawar. 9. On the other hand, the learned Sr. Departmental Representative, Shri Naresh Kumar, had supported the order of the Assessing Officer as approved by the CIT, vide his note dated 29-7-1998. He produced original seized documents, of which the Bench has made an Annexure to its order. He pointed out to the Bench that the learned counsel for the assessee has filed only the photocopy of the front page of the seized paper and had omitted to file th....
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....ns were given by the learned Sr. Departmental Representative as to why the Assessing Officer and the CIT had not referred to it at all or why they did not cross-examine the assessee with regard to the back side. According to the learned counsel for the assessee, it was a new piece of evidence. It was further submitted that the back side of the paper No. 37 cannot be tendered as evidence unless the authenticity thereof or the contents thereof are proved by applying the principles of Evidence Act. The learned counsel for the assessee had attacked the contents of the paper No. 37, both on the front page and the back side. He emphasised that Dr. Tanna had categorically stated in para 4 of his Affidavit filed before the CIT that the said note is neither prepared by him nor by his wife and he has retracted from the statement having admitted making of cash payment of Rs.10.65 lakhs on the ground that it was given under coercion and pressure. It was submitted that Dr. Tanna's wife was summoned before the Assessing Officer and the Chartered Accountant, Mr. Ghabawalla, of both Mrs. Tanna and Dr. Tanna, had categorically denied the payment of any cash amount for the purchase of the flat in qu....
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....ich was duly admitted by Dr. Tanna as belonging to him and on the basis of entries made on the back side of this paper, Dr. Tanna offered a sum of Rs.10.65 lakhs as undisclosed income (being cash component of the purchase price of the flat). He has also observed that there is no evidence to establish that the admission was made by Dr. Tanna under any pressure or coercion. Accordingly this argument of the learned counsel for the assessee was also rejected. The learned Accountant Member further observed that it does not appeal to commonsense that a leading Doctor would pass on a sum of Rs.10.65 lakhs to a middleman and not to the assessee-firm. Accordingly he rejected the argument of the learned counsel that either Mr. Prakash or Mr. Bachhubhai might have pocketed the sum of Rs.10.65 lakhs. The learned Accountant Member also rejected the reliance placed by the learned counsel on the affidavit of Dr. Tanna filed before the CIT by stating that it is an established legal position that the first statement recorded during course of search has greater evidentiary value and the subsequent retractions have to be ignored. In this connection, reference was made to the decision of the Hon'ble S....
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....ppears that perhaps even the Assessing Officer was not aware of the alleged jottings on the back side of the loose paper. He has also observed that the written submissions of the assessee before the CIT as well as the note of the CIT also dealt with only details on front side of the loose paper and there is no whisper about the jottings made on back side. Thus he held that it was for the first time that the back side of the loose paper was brought to the notice of the Tribunal. He observed that in order to counter the objection of the learned counsel for the assessee, the revenue could have filed at least the Affidavit of the Assessing Officer, which it had failed to produce. In the light of the attendant circumstances, the learned Judicial Member held that the contents of back side of the loose paper were never disclosed or shown to the assessee, either by the Assessing Officer or by the CIT. 17. Having held that back side of the loose paper was never shown to the assessee, the learned Judicial Member held that there was gross violation of principles of natural justice and, consequently, the back side of the loose paper has to be excluded from consideration on merits, since it ca....
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....al Member observed that the statement of Dr. Tanna recorded under section 132(4) and the loose paper found from his possession might have evidentiary value in the assessment of Dr. Tanna, but as far as the assessment in the case of a third party is concerned, it has no evidentiary value, unless such information stands to the test of cross-examination. According to him the decision of the Bombay High Court in the case of Miss Lata Mangeshkar is applicable to the facts of the present case. He further observed that in view of the decision of the Punjab & Haryana High Court in the case of Chiranji Lal Steel Rolling Mills and the decision of the Apex Court in the case of Central Provinces Manganese Ore Co. Ltd., no assessment can be made merely on the information received from other authorities. 20. The learned Judicial Member has also observed that Dr. Tanna in response to the summons issued by the Assessing Officer had replied categorically stating that he had not paid any on-money in respect of the flat purchased from the assessee and the amount of Rs.10.65 lakhs was offered just to avoid prolonged litigation and to buy peace. He has also discussed the jottings on the front page of ....
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....ing conclusively proves that the entire deal was done, negotiated and completed by Mr. Bachhubhai on behalf of Dr. Tanna. He also pointed out that the cheque payment mentioned in the paper did not tally with the actual payment. It was pointed out that in her statement Mrs. Tanna had confirmed that the handwriting on page No. 37 is neither her's nor of her husband, Dr. Tanna. Both Tannas have confirmed that no on-money was paid to the assessee. It was pointed out that in the Affidavit filed before the CIT, Dr. Tanna had confirmed that no on-money was paid by him to the assessee. The main argument of Dr. Sunil Pathak, the learned counsel for the assessee, was that the alleged back side of the paper No. 37 was neither shown to the assessee nor a xerox copy of the same was ever provided to it and thus the assessee had no opportunity to meet the notings made therein. The assessee had given exhaustive comments on paper No. 37 (the front side of the loose paper) and if a copy of the back side had been given to it, it would have dealt with the same. The learned counsel for the assessee pointed out that this fact is corroborated by another circumstance that the back side of the paper does n....
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....on was invited to the statement of Dr. Tanna recorded immediately after the search under section 132(4) and it was pointed out that Dr. Tanna was confronted with the back side of the loose paper No. 37, which will be clear from the question and the answer given by Dr. Tanna as under: "Q. No. 7: Particularly, I would like to show you back side of loose paper bearing Sr. No. 61 of Annexure A-I. Kindly go through it and explain to me the contents thereof. Ans. It is very simple. I have to pay by cheque a sum of Rs.6.55 lakhs as per agreement for purchase of flat at Pune from Somerset Developers. Some of the instalments have gone through my bank account. I have paid a sum of Rs.10.65 lakhs as cash from my professional income not recorded as yet in my books of account and I wish to admit the same as my admitted concealed income." Thus, it was submitted that the back side of the paper was put before Dr. Tanna and it was in the knowledge of the assessee during the proceedings before the CIT. So it is incorrect to say that the back side of the disputed paper was not in the knowledge of the assessee. It was pointed out that there is all possibilities that the back side of the paper was w....
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....ssessee, which did not have any evidentiary value. Under these circumstances, it was submitted that the learned Accountant Member was right in sustaining the addition. 24. I have considered the rival submissions and have gone through the material available on record. The facts in this case are not in dispute that a search action under section 132 of the Act was taken place at the premises of Dr. Tanna in Mumbai in which the impugned loose paper, which is marked at paper No. 37, was seized. Back side of this paper contains certain entries, The evidence and the statement on record show that on the front-side of the paper there are entries relating to three flats, whereas on the back side of the paper there is an entry relating to purchase of the flat by Dr. Tanna from Somerset Developers, a division of the assessee. It is also not in dispute that on the date of search, i.e. 2-11-1995, Dr. Tanna's statement was recorded, inter alia, with reference to the back side of the loose paper No. 37 and he has admitted with reference to question No. 7 that the back side of the loose paper, bearing serial No. 61 of Annexure A-I, pertains to the purchase of a flat at Pune from Somerset Developer....
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....e whether the loose paper No. 37 (both sides) is in the handwriting of Dr. Tanna or not. In reply, the learned counsel for the assessee, Dr. Sunil Pathak, stated that the piece of paper may be in the handwriting of Dr. Tanna, though from the records I find that Mrs. Tanna and her Chartered Accountant, Mr. Ghabawalla, have stated that the jottings in this impugned paper is not that of Dr. Tanna. Since the learned counsel for the assessee did not dispute that the handwriting in the loose paper is that of Dr. Tanna, it is clear that the handwriting on both the sides of this paper, if compared, seems to be of one person and that of Dr. Tanna. Therefore, taking into consideration the statement of Dr. Tanna and the fact that the handwriting in loose paper No. 37 is not denied as that of Dr. Tanna, it is established that this paper reveals that the entries made therein related to the purchase of the flat by Dr. Tanna from the assessee for which a sum of Rs.10.65 lakhs was paid in cash, which was the concealed income of Dr. Tanna. Dr. Tanna had surrendered this amount of Rs.10.65 lakhs and had also paid the tax thereon. When the proceedings for block assessment were initiated, the Assessin....
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....nt before the search party of the department, who are not police officers. Therefore, the admission made by Dr. Tanna at the time of search is admissible against the assessee. 28. Looking to the aspect of the matter from another angle, I find that Dr. Tanna is a famous doctor of Mumbai. While making a statement it is not expected of a person highly educated and highly placed in the society to make a statement without realising its implications. It is also found that there is no allegation of coercion or pressure for making a statement by Dr. Tanna at the time of search and this allegation has also not been made before the Assessing Officer. It is only after three years before the CIT by way of an Affidavit that Dr. Tannia made the allegation, which according to the CIT, was a self-serving document and has been made after legal consultation and when the proceedings had been started against the assessee. Under these circumstances, I am of the opinion that the conclusion arrived at by the learned Accountant Member that the back side of the paper was confronted to the assessee is clear from the record and it is an admissible piece of evidence against the assessee. 29. In Chuharmal's ....
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....t to the knowledge of the assessee and an Explanation was sought. Therefore, to say that an opportunity has not been given to the assessee is incorrect. The duty was to inform the assessee about the existence of such evidence against it, which the Assessing Officer has discharged. Therefore, in my view, the principles of natural justice are not violated. 31. Now the question arises whether any addition can be made based on the back side of the loose paper seized from Dr. Tanna. Section 158BD of the Act provides that if during the course of search made under section 132 of the Act, any books of account or other documents or assets are found belonging to any other person, which disclosed concealed income of such other person, that material can be used against such other person. In the present case, the statement of Dr. Tanna made at the time of search that he had paid Rs.10.65 lakhs in cash out of his undisclosed income for the purchase of tile flat from the assessee and the fact that the flat, in fact, was purchased from the assessee, goes to establish that this amount was paid for the purchase of the flat in cash to the assessee. A report was published by the National Institute of....