TaxTMI 
TaxTMI 
TaxTMI 
2008 (3) TMI 395
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....ord linking items or amount of these papers with the appellant. The addition is made on presumptions and surmises. 4. (a) Because, the authorities below have fallen in error of fact and in law in making and sustaining addition of Rs. 12,59,450 as 'undisclosed income'. Its source was fully proved by cogent evidence on records. Nothing was undisclosed income. The addition is liable to be deleted. (b) Because, the authorities below erred on facts and in law in adding explained cash of Rs. 12,59,450 which was verifiable with reference to material on records. Even otherwise, addition is not justified in assessee's hand. (c) Because, every reasoning and findings of the authorities below are baseless/frivolous and against the facts of the case. (d) Because, the learned CIT(A) erred in deciding the issue ex parte, the opportunity allowed was a mere formality looking to the facts of the case. The appellant craves your Honour's leave to add, amend, alter, and amplify either any or all the grounds of appeal either before or at the time of hearing with the kind permission of the Hon'ble Bench." 3. It was also submitted on behalf of the assessee that the assessee wishes to press additiona....
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....,470 1993-94 Rs. 71,5,00 Rs. 71,500 1994-95 Rs. 90,930 Rs. 90,930 1995-96 Rs. 97,628 Rs. 97,628 1996-97 Rs. 80,032 Rs. 80,032 1997-98 Rs. 1,29,790 Rs. 1,29,790 1998-99 Rs. 3,37,970 Rs. 3,37,970 1999-2000 Rs. 1,92,111 Rs. 1,92,111 2000-01 Rs. 2,12,258 Rs. 2,12,258" 8. The AO after issuing notice required the assessee to reconcile the material found and seized during the search operation at the residential premises, D-15 and C-55, Kamla Nagar, Agra. 9. With regard to the jewellery the assessee furnished the details of family members and jewellery disclosed during the wealth-tax assessment for asst. yr. 1985-86 as well as the certificate in support of the disclosure made in VDIS, 1997. Apart from this, the assessee also filed a photocopy of the F.I.R. lodged with S.H.O. Thana, New Agra against the Addl. Director IT (Inv.). An addition of Rs. 24,303 was made by the AO pertaining to the asst. yr. 2000-01 following the block period observing as under : "4.1 During the course of search Annex. A-11 loose sheet No. 71 was found and seized which contains the purchase of diamond jewellery, ring, top etc. worth Rs. 35,603 against which cash of Rs.- 15,000 has already been shown to h....
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....s. 21,466 + Rs. 43,753 + Rs. 7,575 totalling to Rs. 97,077 which have been made as unexplained investment in the purchase of jewellery made in the search conducted on the residential premises D-15, Kamla Nagar are not maintainable. It was submitted that these premises are occupied by the assessee, his wife Smt. Sheela Devi along with his two sons Shri Mukesh Agarwal and Shri Sanjay Agarwal and their wives Smt. Amita and Smt. Namita and also their children. 13. With respect to these specific documents which formed the basis of addition it was submitted that these were four rough sheets found at the residence. It was submitted that the assessee had submitted before the AO that these papers do not relate to him. Referring to the photocopies of these papers it was contended that these papers merely contain some noting about jewellery items and except for page No. 1 of the annexed pp. 1 to 4 none of the other documents even show whether these items were actually purchased or not. With respect to page No. 1 it was submitted that it also merely shows there a deduction of Rs. 15,000 which can be either money paid or any adjustment made. It was also contended that the paper appears to be m....
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....nts it was submitted the additions cannot be made in the hands of the assessee. It was contended that nothing has been brought on record by the Revenue despite these specific arguments addressed by the assessee on this aspect all along. Referring pp. 9 to 12 of the paper book which contain the photocopies of these documents, it was pointed out that these appear to be mere estimates and how they were relatable to the assessee is again not found mentioned either in these documents nor in the orders of the tax authorities. Neither the dates it was submitted to which these documents pertain are mentioned nor the year to which these are relatable. Similarly, the person who made this estimate nor the name for whom it was so estimated is available from the records. Despite argument on this aspect right from the assessment stage by the assessee it was submitted nothing has been brought on record by the tax authorities. No reasons it was contended have also been given to reject the consistent arguments of the assessee. The fact that the assessee has continuously been disowning these documents has also been disregarded by the tax authorities and emphasis is laid only on the fact that these d....
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....the tax authorities. 18. Having heard the rival submissions and perused the material available on record, it is seen that the argument advanced on behalf of the assessee right from the beginning as is evident from page No. 4 of the paper book which are written submissions advanced before the CIT(A) and on a perusal of the assessment order it shows that the assessee has repeatedly been contending that firstly these documents pertained to articles of usage of ladies as such are not relatable to the assessee on account of these specific facts. Apart from this the fact that the premises are jointly occupied by the assessee, his two sons along with their respective spouses and children is also the consistent stand. The fact that these premises are visited by different relatives over the years also cannot be disputed. Moreover, a perusal of paper book pp. 9 to 12 clearly brings out that no date is found mentioned in any of these documents, not only the person recording these documents is not known, the fact that for whom it is recorded is also not evidenced on a perusal of these documents and no effort has been brought on record by the tax authorities to address this aspect. Apart from ....
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....ta. The source will be explained by them. In question No. 3 it was further required to explain that Rs. 3,80,000, Rs. 2,64,000 and Rs. 2 lakhs were received on 15th Feb., 2000, 14th Feb., 2000 and 13th Feb., 2000, respectively and which is evident from the slips found in the respective bags and the said facts were also admitted by Smt. Sheela Devi, wife of the assessee that these amounts were received on the dates as stated in the preliminary statement, therefore, why the said amount of Rs. 7,64,000 may not be considered as undisclosed income. In reply to this, the assessee simply stated that the money was given by him to his wife on these dates but as regards Rs. 1,08,000 which was found from his room as per question No. 6 of the statement he is unable to explain. On the basis of statement the assessee was further required to explain the source of cash found Rs. 12,79,620 out of which Rs. 12 lakhs were seized. In reply dt. 27th Nov., 2001 vide para 2 the assessee has tried to prove the source of the cash found and seized during the search at his residence, D-15 Kamla Nagar, Agra and has filed photocopies of the cash books dt. 17th Feb., 2000 (Agarwal Iron Industries) opening balan....
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....unexplained and be added to the income of the assessee as undisclosed for the block period relevant to asst. yr. 2000-01. (Addition Rs. 12,79,620 in asst. yr. 2000-01)." 20. Aggrieved by this the assessee went in appeal before the CIT(A). Some of the arguments raised before the CIT(A) are being extracted hereunder for ready reference : "Ground of appeal No. 5 is against the addition of Rs. 12,79,620 as unexplained cash found in search. The Annex. C to Panchnama will show that the cash was found in 6 bags as under : Bag No. 1 - 3,00,000 Bag No. 2 - 2,64,000 Bag No. 3 - 2,00,000 Bag No. 4 - 1,08,000 Bag No. 6 - 20,170 --------- 12,79,620 --------- Vide explanation dt. 27th Nov., 2001 it was submitted that the cash belonged to different members of the family (Annexure pp. 6 to 9) as per main objection is that in the preliminary statement he had accepted availability of cash of Rs. 2 lakhs only. It is submitted that there is no provision under s. 132(1) for recording any preliminary statement. It is only the statement recorded under s. 132(4) which can be used in evidence. There is judicial opinion that even this statement should be considered keeping in view that atmosph....
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.... recovered from the room of Sanjay and Namita. This represents gifts received on festive occasion. -------------------------------------------------------------- Rs. 12,79,620 -------------------------------------------------------------- Except for certain alleged discrepancies in the preliminary statement and subsequent statements, the AO has not expressed any opinion as to why the cash found cannot be accepted as explained with reference to the cash balances in the regular books of account. The only observation in this connection is on p. 6 of the assessment order. Even otherwise during the course of block assessment, it has been found that the books of account are not reliable and considerable, activities are carried out outside the books, therefore, balance shown as per books also cannot be considered as very reliable. The appeals of block assessment of firm/HUF/company are also before your Honour. In these assessments, the AO has not held that the books of account maintained are not reliable. Even now the AO has not said that the books are not totally reliable. He only says that the books are not 'very reliable'. The AO has made additions for suppression in production....
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....ctual position borne out from the records has been completely ignored and the facts have wrongly been appreciated by the tax authorities. It was contended that the assessee had filed the return just 9 months after the search and till this time the assessee did not have the records which would enable him to prepare the accounts and get the accounts audited; accordingly in these circumstances the return was filed in whatever shape the assessee could file. It was his contention that this position of fact has deliberately been ignored by the Department and also has not been rebutted by them. However, by the time the assessment proceedings were taken up it was submitted that the assessee on the basis of documents made available by the Department was able to prepare the books of accounts and these books were produced before the AO. The books of account have been repeatedly seen by the AO who has rejected the same relying on the note given before M/s Das Cold Storage for the asst. yr. 2000-01 filed on 27th Nov., 2000 which is appearing at paper book page No. 44. Specific attention was invited to order in the case of Das Cold Storage (P) Ltd. wherein it was stated that on the receipt of th....
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....ase of M/s Das Cold Storage. However, while verifying the books of accounts it was submitted while giving the remand report to the CIT(A) the said AO for no stated reasons has taken a 'U' turn. In these circumstances, it was canvassed that the issue of computer and the books duly updated being in the computer which was seized stands established. 27. It was further submitted that the assessee has all along been contending that its books duly updated were in the computer which was seized and if for a moment it is presumed that the books were not there in the computer then it was contended it needs to be questioned as to why would the search party find it necessary to seize the computer. It was submitted that it cannot be accepted that the search party would resort to seizure without application of mind and in fact would indiscriminately seize anything and everything. It was further submitted that at the time of the search the assessee's statement was recorded wherein he has explained that the cash found represents cash of various other concerns where he has interests. This has been the consistent stand of the assessee right from the day of search and there is no finding available on....
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.... they were not available at the time of survey which was upheld by the CIT(A), it was submitted reversed by the Tribunal. Accordingly, in these circumstances, since the AO did not point out any defect in the books of account which were produced all along, the addition made was deleted by the Tribunal. Copy of the said order it was submitted is placed at paper book page Nos. 72 to 73. Reliance was also placed upon the judgment of the Allahabad High Court in the case of CST v. Shyam Lal & Co. [1984] 57 STC 31 (All), copy placed at pp. 74 to 78. Referring to the same, it was submitted that therein it was again held that adverse inference cannot be drawn against the assessee for not producing the books of account at the time of survey. The books of account cannot be rejected outright and the AO is required to scrutinize with care and caution the books of account when produced. Subsequently since no error was pointed out the addition made it was contended was held to be not maintainable. 29. It was argued that in the facts of the case where books of account were produced before the AO and the CIT(A) also.... books of accounts have repeatedly been scrutinized by the tax authorities all ....
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....the son of the assessee, it was submitted that Shri Mukesh Agarwal had sold land for Rs. 3,80,000 on account of which sale proceeds on different dates during 1999-2000 had been received by the son of the assessee much prior to the date of search. Referring to the written submission filed before the CIT(A), it was contended that in all, there were 7 sale deeds which were produced before the CIT(A) for perusal and on account of the said sale Shri Mukesh Agarwal had shown capital gain in the return of income filed for the asst. yr. 2000-01. The balance sheet and copy of the capital account for the said year were also placed before the CIT(A) as per paper book page No. 30 which it was stated was appearing in paper book p. 38 before the Bench. Accordingly, in these circumstances, it was submitted the action of the AO and the CIT(A) was not justified by simply taking the stand that the books of account were not produced for inspection at the time of survey. It was contended that it is the settled legal position that even if the books of account for any reason could not be produced during the survey they are not justified in rejecting the same for the said reason and these books of accoun....
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....e said date search was conducted upon the assessee and as per submissions no transactions took place. Similarly, with respect to the availability of Rs. 1,08,000 as cash balance from M/s Singhal Casting Co. wherein Shri Mukesh Agarwal, son of the assessee is proprietor, the AO comments that on 17th Feb., 2000 Rs. 1,25,240 was the opening balance of 17th Feb., 2000. Thus, the said amount was the closing balance of 15th Feb., 2000. Accordingly, Rs. 1,08,000 was easily available at the residence of the assessee which was jointly shared by him and his sons and spouses along with their children stands fully explained. Similarly, the amount of Rs. 2,64,000 explained to be the cash belonging to M/s Das Cold Storage which too is an income-tax assessee wherein the assessee and his sons were directors, the said sum is stated to have been received for payments to the parties from whom wood was purchased and the cash balance of the said concern even after this as on 17th Feb., 2000 as per paper book page No. 37 stood about Rs. 24,87,776.71. The amount of Rs. 3,87,350 also is explained from this source. In these circumstances, the AO was not justified in concluding that the opening balance of M....
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....he presence of computer literate people who can handle and obtain necessary information from these sensitive storage devices. After having seized the computer and retained it in its custody, the evidences relied upon by the assessee in its favour obtained from the printouts made available to the assessee in the case of M/s Das Cold Storage cannot be rejected merely on the ground that at the time of the survey these printouts were not available despite the fact that all the evidences were available to the AO and the CIT(A) and again restored to the AO for obtaining a remand report, it is seen that the assessee's case has been rejected simply for acts for which the assessee was not responsible. The fact that all the members of the assessee are subjected to tax and different concerns of the assessee are also subjected to tax and also keeping in mind the preliminary statement of Smt. Sheela Devi under s. 132(4) referred to by the tax authorities wherein it was stated that few bags recovered from her almirah and the bags had slips mentioning about Rs. 3,00,000, Rs. 2,64,000 and Rs. 2 lakhs in each bag further supports the case of the assessee especially keeping in mind the amount of men....
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....rdingly, ground No. 4 raised by the assessee is allowed. 35. With respect to the additional ground, the submission of the learned Authorised Representative was that the CIT(A) on facts was not justified in rejecting the ground of the assessee. Reliance was placed upon certain unpublished orders of the Agra Bench of the Tribunal and published order in the case of Om Prakash Sharma v. Dy. CIT [2004] 83 TTJ (Jp) 246 : [2004] 4 SOT 369 (Jp), copy of which is placed at paper book page Nos. 106 to 138. Relying upon the same, it was contended that proviso to s. 113 has increased the tax liability of the assessee and the same is not clarificatory in nature, as such, it cannot have a retrospective operation. Accordingly, the additional ground raised by the assessee should be allowed. 36. The learned Departmental Representative though placed reliance upon the impugned order could not distinguish the published and unpublished orders of the Tribunal. No contrary view of any other Bench of the Tribunal or any High Court also was referred to. Accordingly, respectfully following the orders of the Tribunal, the additional ground raised by the assessee is allowed. 37. In the result, the appeal f....
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....as already been shown to have been paid to the jeweller and after making some adjustment returned jewellery of Rs. 11,300, an amount of Rs. 9,305 remained still to be paid. The jewellery worth Rs. 24,303 was purchased and found unaccounted for. Vide notice dt. 14th March, 2002 the assessee was required to explain the said Annexure but he failed to explain the same. Therefore, an amount of Rs. 24,303 be added to the income of block period as undisclosed income relevant to the asst. yr. 2000-01 (Addition Rs. 24,303 in asst. yr. 2000-01). 4.2 Similarly Annex. A-41 loose sheet No. 111 dt. 6th Feb., 2000 contains the account of some gold ornaments purchased. The first entry is in respect of Kara and Kundals weighing 29,700 gms. purchased @ Rs. 4,550 per 10 gms. amounting to Rs. 13,513. The second entry is in respect of purchase of some other ornaments weighing 16.930 gms. amounting to Rs. 79,531 (Rs. 7,953) thus total Rs. 21,466 for such purchases was found unaccounted for. In reply to show-cause notice the assessee simply reiterated the same facts that the papers do not relate to him. Since incriminating document found and seized from his residence it was his duty to tell the contents....
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....uharmal v. CIT [1988] 70 CTR (SC) 88 : [1988] 172 ITR 250 (SC), wherein it was held as under: "(i) That what was meant by saying that the Evidence Act did not apply to proceedings under the IT Act, 1961, was that the rigour of the rules of evidence contained in the Evidence Act was not applicable; but that did not mean that when the taxing authorities were desirous of invoking the principles of the Evidence Act in proceedings before them, they were prevented from doing so. (ii) That all that s. 110 of the Evidence Act, 1872, did was to embody a salutary principle of common law jurisprudence, viz., where a person was found in possession of anything, the onus of proving that he was not its owner was on that person. This principle could be attracted to a set of circumstances that satisfy its conditions and was applicable to taxation proceedings. (iii) That the expression 'income' as used in s. 69A of the IT Act, 1961, had a wide meaning which meant anything which came in or resulted in gain." 7. From the perusal of the documents, it is proved that these are not dumb documents as there is specific mention on them of purchases of items of jewellery and also payment/adjustment of Rs.....
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....dition of Rs. 12,59,450 have been discussed by the AO in para 4.5 of his order, which reads as under : "4.5 During the search cash amounting to Rs. 12,79,620 was found at assessee's residence D-15, Kamla Nagar, Agra. In the preliminary statement, it was stated that an amount of Rs. 2 lakhs may be available at the time of search. In the final statement the assessee was asked to show cause why excess amount of cash found may not be considered as undisclosed income. In his reply to question No. 1, the assessee has stated that as regards Rs. 2 lakhs it has already been stated in the preliminary statement. As regards Rs. 3 lakhs which has been found from his and wife's room relates to cash balance of M/s Agarwal Iron Industries. Rs. 2,64,000 relates to purchase of wood for M/s Das Cold Storage (P) Ltd. In question No. 2 to the statement the assessee was further required to explain the remaining cash found i.e. Rs. 12,79,620 (-) Rs. 7,64,000 (=) Rs. 5,15,620. It was stated that Rs. 3,87,450 found from the room of Shri Mukesh Kumar and Smt. Amita Gupta and Rs. 1,08,000 further found from his room. Shri Mukesh and Smt. Amita Gupta will explain the source thereof Rs. 20,170 relates to the ....
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.... 2,64,000 stated to be cash belonging to M/s Das Cold Storage for purchase of wood also not matching with the preliminary statement given and the final statement of the assessee. In reply to questionnaire he has not been able to correlate the facts as per question No. 9 and the statement given at preliminary stage because there is variation that the three slips were written by his wife Smt. Sheela Devi and the amounts given were received from Shri Banwari Vakil and Shri Ram Avtar. More so opening balance of cash of M/s Agarwal Iron Industries and Singhal Casting Co. is not sufficient to meet the contention of the assessee. Even otherwise during the course of block assessment, it has been found that the books of accounts are not reliable and considerable, activities are carried outside the books, therefore balance shown as per the books also cannot be considered as very reliable. Therefore, in reply filed dt. 27th Nov., 2001 explaining the cash found and seized at D-15, Kamla Nagar, Agra belongs to M/s Agarwal Iron Industries. M/s Das Cold Storage (P) Ltd. and M/s Singhal Casting Co. is an afterthought story and is not acceptable. Therefore, entire amount of cash Rs. 12,79,620 found....
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.... enclosed -------------------------------------------------------------- Rs. 3,87,450 This belongs to M/s Das Cold Storage of which the assessee and Mukesh are directors. -------------------------------------------------------------- Rs. 2,64,000 Rs. 2,64,000 had been received from payment to parties from whom wood was purchased. The cash balance on 16.02.2000 was Rs. 31,44,334. Extract of cash book enclosed -------------------------------------------------------------- Rs. 2,00,000 This belongs to Shri Mukesh Agarwal who had sold lands for Rs. 3,80,000 on which sale proceeds were received on different dates during 1999-2000 (prior to date of search), these are seven deeds and produced for your Honour's kind perusal. The capital gains was shown in the return of income for asst. yr. 2000-01. -------------------------------------------------------------- Rs. 20,170 This was recovered from the room of Sanjay and Namita. This represents gifts received on festive occasion. -------------------------------------------------------------- Rs. 12,79,620 -------------------------------------------------------------- Except for certain alleged discrepa....
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....e books of accounts had not been audited. Therefore, no reliance can be placed on the books of accounts, which have not been subjected to verification by the audit. The learned JM has relied upon the case of CST v. Shyam Lal & Co. and has laid emphasis on the following extract of the said decision : "Though an adverse inference can be drawn against the assessee on his not producing the account books for inspection at the time of survey and he would also incur a liability of penalty for such action, it cannot be said that the account books must be rejected outright merely on the ground that the books were not produced for inspection at the time of survey. The assessing authority will have to scrutinize with great care and caution the account books when produced subsequently in support of his claim by the assessee and if any error is found in them, then in that event there would be justification for holding that they were not maintained properly or that they were subsequently manipulated and got prepared after the survey was done. But the account books cannot be rejected outright merely because they were not produced for inspection at the time of survey." 15. After perusal of the r....
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....y. In the case before us, the authenticity of the books produced subsequently, has not been proved, as these books of accounts had not been audited and these books had been written on the basis of loose papers and other information, which are not subjected to verification. The learned JM on the basis of the closing balance shown in these cash books had deleted the addition sustained by the learned CIT(A). The extract of cash book of Agarwal Iron Industries had been filed at p. 35 of paper book showing brought forward cash balance of Rs. 3,75,532-57 on 8th Feb., 2000 and the closing balance as on 15th Feb., 2000 after deduction of certain expenses incurred from 8th Feb., 2000 to 15th Feb., 2000 was shown at Rs. 2,90,505.52. The point as to how the cash was built up in this cash book had not been examined. It is important to examine the receipt side of the cash book of M/s Agarwal Iron Industries before relying upon the opening and closing balances. 19. In the case of M/s Singhal Casting Co. (paper book p. 36), brought forward cash had been shown at Rs. 1,79,055.27 as on 14th Feb., 2000 and after deduction of expenses incurred from 14th Feb., 2000 to 15th Feb., 2000, the closing bal....
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....or unexplained cash can be deleted on the basis of the books written after the date of search on the basis of loose papers, as the original cash books and documents contained in the computer had been damaged/corrupted ? (2) Whether this point should be restored to the file of the AO for verification of the receipts of the cash from the beginning of the accounting period till the date of closing balance shown by the assessee ? (3) Whether such addition can be deleted without verification of cash built up by the assessee shown in the books written after the date of search ? Smt. Diva singh, J.M. : 17th March, 2006 I am forwarding herewith the following questions on the points of difference under s. 255(4) in the abovereferred case for reference to the Hon'ble President with a request that they may be referred to the Third Member : Question No. 1 Whether in the facts and circumstances of the case, addition for unexplained investment in jewellery is maintainable ? Question No. 2 Whether in the facts and circumstances of the case, addition for unexplained cash found in the search should be restored for verification ? R.P. Garg, Vice President (As Third Member) : 16th Jan., 2008....
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....asons that Annex. A-43 pp. 4 and 5 contained details of purchase of jewellery worth Rs. 43,753 and Rs. 7,575 which also was not found accounted for and for which the assessee reiterated that it did not belong to him. 3. Aggrieved by these additions the assessee went in appeal before the CIT(A) and submitted that these premises were occupied by the assessee, his wife Smt. Sheela Devi along with his two sons Shri Mukesh Agarwal and Shri Sanjay Agarwal and their wives Smt. Amita and Smt. Namita and also their children. With respect to these specific documents which formed the basis of addition it was submitted that these were four rough sheets found at the residence. It was submitted that these papers do not relate to him. Referring to the photocopies of these papers it was contended that these papers merely contain some noting about jewellery items and except for page No. 1 of the annexed pp. 1 to 4, none of the other documents even show whether these items were actually purchased or not. With respect to page No. 1 it was submitted that that it merely shows a deduction of Rs. 15,000 which can be either money paid or any adjustment made. It was also contended that the paper appears t....
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....ged the initial onus and it is the assessee who could not rebut the presumption raised against him. 6. The learned Authorised Representative submitted that no addition in the assessment of the assessee Shri K.P. Agarwal, could not (sic) be made with (sic) as these documents did not belong to him. These are the records of jewellery items generally used by ladies. The premises were jointly occupied by the assessee and his wife along with the wives of his two married sons and their children and therefore the additions cannot be made in the hands of the assessee. These documents pointed out were mere estimates and how they were relatable to the assessee is again not established, either by these documents or by any finding of the tax authorities. No dates, nor the year to which these are relatable, are mentioned. Similarly, the person who made this estimate or the name of the person for whom it was so estimated is not established from the records. The assessee has continuously been disowning these documents and the mere fact that these documents were found during the course of search at the premises of the assessee is not conclusive. Reliance is placed upon the order in the case of D.A....
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....luable articles. He, therefore, submitted the AO has rightly assessed the investment in jewellery as unexplained income of the assessee. 8. Parties are heard and the rival submissions considered and the material available on record perused. It is true that the assessee has repeatedly been contending that these documents pertained to articles of usage of ladies but how can that lead to an inference that these articles cannot be purchased by the male members for their females. None of the female members claimed that these items belong to them or purchased by them. The premises might be jointly occupied by the assessee, his two sons along with their respective spouses and children but control was that of the assessee, he being the head of the family. As the documents were found in the course of search it is for the assessee to lead proof that they could be of the ladies or the relatives. Further, these can be said to pertain to the block period and the fact that no date is found mentioned in any or these documents or the person recording these documents are not known does not have any material fact so long they are found from the premises of the assessee. These documents record the p....
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....ability of cash of Rs. 2 lakhs only. In her statement, Smt. Sheela Devi had stated that bags were recovered from her almirah and that there were slips about Rs. 3 lakhs, Rs. 2,64,000 and Rs. 2 lakhs in each bag. Regarding the fourth bag, she stated that it had Rs. 50,000 which belong partly to her sister and partly to her and her children. Smt. Amita Agarwal, W/o Mukesh Agarwal stated that Rs. 3,87,450 found in her almirah belonged to her and her husband and about source she promised to state later on. The assessee stated that Rs. 3,00,000 is Rokar of Agrawal Iron Industries of which HUF is proprietor. The assessee is the Karta. Rs. 2,64,000 were for payment of wood of Das Cold Storage from whom wood was purchased Rs. 3,87,450 belongs to M/s Das Cold Storage of which the assessee and Mukesh are directors and Rs. 1,08,000 cash balance of Singhal Casting Co. of which Shri Mukesh Agarwal is proprietor. These were found in the room of Smt. Amita and Mukesh about which Mukesh gave explanation. Rs. 20,170 was recovered from the room of Sanjay and Namita and claimed to represent gifts received on festival occasion. The contention of the assessee is that except for certain alleged discrepa....
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....nd there stuck a difference of opinion between the two Members. The learned AM held that cash is not explained and required verification but the learned JM held otherwise and opined that no case for addition has been made out. 13. The assessee contends that funds were available prior to the date of search and their sources have been explained namely availability of Rs. 2,90,505 from M/s Agarwal Industries; Rs. 1,08,000 being cash balance form M/s Singhal Casting Co. wherein Shri Mukesh Agarwal son of the assessee is proprietor; Rs. 2,64,000 being cash belonging to M/s Das Cold Storage who is an income-tax assessee wherein the assessee and his sons were directors, the said sum is received for payments to the parties from whom wood was purchased and the cash balance of the said concern after this sum as on 17th Feb., 2000 stood about Rs. 24,87,776=71; Rs. 3,87,350 also is explained from this source. By the time the assessment proceedings were taken up the assessee on the basis of documents made available by the Department was able to prepare the books of accounts which were produced before the AO and have been duly seen by him. In the case of Das Cold Storage (P) Ltd., it is submitt....
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....urse of search and the information contained in the computer was found damaged/corrupted. The books of accounts have subsequently been prepared on the basis of certain loose papers. These books not audited and therefore, no reliance can be placed thereon. This is also, evident from the perusal of the record and remand report of the AO dt. 17th March, 2004. Even on operation of the computer on 27th March, 2000, only general register for the period 1st April, 1999 to 15th Feb., 2000 pertaining to M/s Agarwal Iron Industries was found. The return of M/s Das Cold Storage (P) Ltd. for the asst. yr. 2000-01 was filed on the basis of photocopies of seized material. During the course of search, no cash was found from the premises of M/s Das Cold Storage, M/s Singhal Casting Co. and M/s Agarwal Iron Industries. According to the assessee, all the three firms had opening balance of Rs. 35,60,000 as on 17th Feb., 2002 -- (i) M/s Agarwal Iron Industries Rs. 2,90,505; M/s Singhal Casting Co. Rs. 1,25,240 and M/s Das Cold Storage (P) Ltd. Rs. 31,44,336. As against this total of cash balance of Rs. 35,60,081, only Rs. 12,79,620 were found at the time of the search at the residence of the assessee.....
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....s available from M/s Agarwal Iron Industries and Rs. 2,64,000 were for payments of wood of M/s Das Cold Storage as such. The decision of CST v. Shyam Lal & Co. [1984] 57 TTJ (All) 31 (sic), support this view when it observes : "Though an adverse inference can be drawn against the assessee on his not producing the account books for inspection at the time of survey and he would also incur a liability of penalty for such action, it cannot be said that the account books must be rejected outright merely on the ground that the books were not produced for inspection at the time of survey. The assessing authority will have to scrutinize with great care and caution the account books when produced subsequently in support of his claim by the assessee and if any error is found in them, then in that event there would be justification for holding that they were not maintained properly or that they were subsequently manipulated and got prepared after the survey was done." 17. In the present case, however, the authenticity of the books produced subsequently had not been proved, as these books of accounts had not been audited. These books had been written on the basis of loose papers and other in....