TaxTMI 
TaxTMI 
2004 (9) TMI 580
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....f shares from Mr. Prem though he denied any payment to the assessee. The addition should be deleted. 3. The learned Assessing Officer erred in law and on facts in considering a sum of Rs. 56,260 as undisclosed income on account of interest receivable on shares sale to Mr. Prem though he denied to have made any such payment. The addition should be deleted. 4, 5 & 6. The learned Assessing Officer erred in law and on facts in considering the following amounts as undisclosed investment though the said amounts were fully covered by the undisclosed income offered by the assessee for taxation as per peak chart. Thus, the addition should be deleted. Assessment years Amount (Rs.) Assessment year 1995-96 33,225 Assessment year 1996-97 3,06,450 Assessment year 1997-98 6,05,129 7. The learned Assessing Officer erred in law and on facts in considering a sum of Rs. 6,57,129 as undisclosed income for the funds introduced by the assessee in an undisclosed business the source of which was his undisclosed income in the earlier years as offered for taxation and sale of declared shares belonging to his wife outside the books of account. Thus, the addition should be del....
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....ments. However, on examination of the books of account of the assessee and M/s. Rainbow Industry, a family concern, it was found that the transactions appearing in the seized material were not found recorded in the books either of the assessee or M/s. Rainbow Industry. The assessee vide his reply dated 13-11-1997 stated before the Assessing Officer that business of selling compound and PVC films in personal capacity was started in the month of June, 1996 and the cash received and cash paid entries recorded in these cash books pertained to transactions of cash received on sale and cash paid for purchases respectively. Besides sales/purchases transactions, the details of expenses were also appearing in these cash books. The assessee had also furnished a P&L Account prepared on the basis of transactions recorded in the seized cash books for the period between 1-6-1996 and 5-11-1996 and stated that the P & L Account so prepared reflected net profit of Rs. 3,94,073 which has been declared as undisclosed income for the block period. The Assessing Officer on perusal of the ledger also prepared on the basis of entries in the seized cash books revealed that while computing the net profit of....
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....paid back into N.C. Daga (Hol) account. Therefore, the assessee's claim that cash received and cash paid out of N.C. Daga (Hol) account represents sale and purchase transactions is not acceptable. N.C. Daga (Hol) account is in fact an Uchant Account, which is used for introducing money into the unaccounted business when there is a shortage of funds and for taking out money, when there is surplus. The total sale and purchase figures out of N.C. Daga (Hol) account, which are in fact money introduced and taken out of the business, are as under : N.C. Daga (Hol) Account (Rs.) Purchases 71,66,303 Sales 68,88,266 2,78,037 The Assessing Officer, therefore, held the above difference as the surplus profit which the assessee has taken out from the unaccounted business and the same is, therefore, added to the total undisclosed income of the assessee for the financial year 1996-97 in addition to the profit declared in the undisclosed income for the block period. 5. From the balance sheet prepared as on 6-11-1996 on the basis of seized cash books it was seen that there was an opening balance of Rs. 6,57,129 which was a....
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....ares (60,000) (2,02,643) 30-11-1995 Tyres (1,950) (2,04,593) 30-3-1996 Shares (42,000) (2,46,593) 30-3-1996 Pawel Kakkar (Loan Given) (50,000) (4,06,593) 30-3-1996 Ajay Kakkar (Loan Given) (1,10,000) (4,06,593) 2-4-1996 B.L. Sipani (Loan Received) 1,00,000 (3,06,593) 20-4-1996 Sale of 2050 Reliance Shares 4,26,400 1,19,807 @ Rs. 208 out of books purchased from Date Particulars Amount Balance Mrs. Sushila Daga 30-4-1996 Manjeet (Loan Given) (1,53,000) (33,193) 30-4-1996 Yogesh (Loan Given) (3,45,000) (3,78,193) 31-5-1996 Trading Business of cash trfd. (99,129) (4,77,322) 16-8-1996 Shares (1,000) (4,78,322) 16-8-1996 Shares (7,000) (4,85,322) * (4,85,322) From the above chart the Assessing Officer observed that the assessee has receiv....
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....ey kept by you' and 'payment received' and when confronted, Shri Prem could not give any satisfactory reply and merely stated that no payment was made by him. There is inherent contradiction in the statement of the assessee and it cannot be believed that the assessee received no payment from Shri Prem and yet the assessee recorded phrases like 'payment received'. The Assessing Officer, therefore, concluded that the assessee had made unexplained investment by way of advancement of loans to Shri Prem to earn interest. Accordingly, the total investment of Rs. 19,15,304 alongwith the interest accrued thereon @ 3% p.m. which comes to Rs. 2,33,967 aggregating to Rs. 21,49,271 was added to the total undisclosed income for the financial year 1990-91. 8. Pages 60 to 63 of Annexure A-13 showed certain transactions regarding shares purchased and sold as well as interest account details and the name of Shri Prem was again written on top of page 63. When asked to explain, the assessee furnished the following explanation : "Pages 60 to 63 seized vide Annexure A-13 from the residence of the assessee are in respect of transaction with some Prem. It has already been stated that the assessee e....
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.... seized from the residence of Shri Sudhir Thakran showed the details of payments received by certain persons and so also details of certain expenses which were written in coded form. Shri N.C. Daga was shown these pages pertaining to entry against the name of Shri N.C. Daga-40 which has been decoded as Rs. 40,000 based on the details of expenses like rent, electricity, telephone on the said page and asked to explain the receipt of this Rs. 40,000. The assessee in his reply dated 17-11-1997 denied to have received any payment in respect of these transactions, which was not acceptable to the Assessing Officer. He observed that Shri Daga is closely related to Shri Pradeep Singh and is a director in one of the companies of Shri Pradeep Singh. As the payment has not been accounted for in the books of account, the same was treated as unexplained receipt and added to the total undisclosed income. 10. During the course of search operation gold jewellery (net) weighing 3197 gms. was found. When asked, the assessee reconciled the same as under : As per Wealth Tax Return Gold in gms. (Net Weight) N.C. Daga (31-3-1987) 1519.200 164.050 Sushila Daga (31-3-1982) ....
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....im, the explanation that there was cash in hand of Rs. 21,887 in the unaccounted cash books in respect of which addition has already been made was acceptable. However, the explanation in respect of his son Rahul Daga advancing Rs. 20,000 was not acceptable because according to the Assessing Officer had his son advanced any cash to him, then it could have been recorded in the books of account, which was not the case. Similarly, explanation regarding assessee's daughter give Rs. 70,000 to his wife was also not accepted as the Assessing Officer found there was contradiction in the explanation. Further, regarding the difference of Rs. 1,163 as no explanation was given, the same was also considered for addition. Resultantly, an addition of Rs. 91,163 being Rs. 20,000 + Rs. 70,000 + Rs. 1,163 was treated as unexplained cash and added to the total undisclosed income for the financial year 1996-97. 12. Now we will proceed to deal with various grounds taken in the appeal. The first ground is general which will be disposed of with the disposal of other specific grounds taken in the appeal. 13. The second ground of appeal pertains to alleged investment of Rs. 34,00,771 in shares and fin....
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.... noting 'kept by you' on the said sheet. This is clearly an indication to show that no benefit was accrued to the assessee. Further, as per the trade practice in share business, margins are given only where there is no actual delivery and transactions are recorded or settlement at any future date. It is strange to find out from the assessment order that the Assessing Officer ultimately concluded that the sale consideration of shares was retained by the addressee. In this connection, the learned counsel questioned the evidentiary value of the entries found in a loose sheet. He, thus, contended that the scribbling on the loose sheet found should be ignored as it has no authenticity or evidentiary value in the eyes of law. He further contended that if at all the paper has to be relied upon, it has to be done in toto not that whatever suits to the department is accepted and whatever does not fit into the needs of the department is ignored. Further, if the loose sheets seized showed that the assessee was not benefited in any manner, then it has to be accepted, even if it results into no taxability because no tax can be thrusted on the assessee if it is not due from him. In the present c....
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.... any payment. On a query from the Bench, whether these facts were brought to the notice of the Assessing Officer, the learned counsel for the assessee contended that when Mr. Prem denied to have made any payment to the assessee before the Assessing Officer, since the Assessing Officer did not raise any further query, that could be seen from the assessment order also, the assessee was under the impression that the Assessing Officer was satisfied with the submissions made before him and, therefore, did not realize that any further explanations were necessary. Since the assessee expired on 14-4-2003, after the completion of the assessment, nothing more can be furnished about a third with whom only the assessee (deceased) was in contact with. He strongly contended that no corresponding investments or documentary evidence was found suggesting earning of such income. Whatever, undisclosed investments or income were found, were, in fact, disclosed to the department voluntarily in the return of undisclosed income filed. He finally argued that the impugned additions were merely based on pure presumptions and surmises that the scribbling might be representing certain source of income. This, ....
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....ceived by the assessee. Accordingly, we delete the same and ground 3 of the assessee also succeeds. 18. Grounds fourth, fifth and sixth challenge the action of the Assessing Officer in considering Rs. 33,251, Rs. 3,06,450 and Rs. 6,05,129 as undis- closed income in the block period on account of peak investments made as per the figures worked out by him in the table on page 4 of the assessment order in addition to the undisclosed income offered by the assessee at Rs. 4,88,965 on the basis of peak credits. Here again the additions were based on the entries available on a loose sheet. The learned counsel for the assessee contended that besides, the two amounts, the peak worked out by the Assessing Officer is incorrect because of two totalling errors as on 30-4-1996 by Rs. 1,00,000 (less) and on 15-3-1994 by Rs. 72 (more). On merits, the learned counsel contended that the Assessing Officer cannot belief the contention of the assessee that the amount of Rs. 4,22,145 given by the assessee to his wife on 31-3-1992 was returned by her on 1-4-1993 so as to exclude the amount from the working of peak credits merely on the ground that the unaccounted cash books seized did not contain the ....
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....should be deleted. 19. The learned departmental representative contended that the assessee is duty bound to file evidence in support of his claim, which is not discharged with. He contended that the onus is on the assessee to substantiate the claim and by making submissions, he onus is not discharged. He placed heavy reliance on the order of the Assessing Officer. However, he fairly conceded that the totalling difference of Rs. 99,928 needs to be deleted from the addition. 20. In the rejoinder, the learned counsel contended that in search and seizure cases not every evidence is found or seized but circumstantial evidence plays vital role for determination of facts and if they support the contention of any of the parties, then the same have to be accepted. 21. We have considered the rival submissions and perused the material available on record. We find merit in the contention of the assessee that in search cases not every evidence is found, but the circumstantial evidence plays a vital role. Here, in the present case, nothing valuable was found in possession of the assessee so as to make an addition, except some entries in some loose papers. So, when speak about the eviden....
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.... sources and assessed it accordingly. 23. The learned counsel for the assessee contended that the Assessing Officer did not appreciate the source of the said investment and made the addition without confronting the assessee about the same. He furnished a consolidated balance sheet as on 6-11-1996 in the paper book at page 86 (which was compiled on the basis of pages 3, 31 and 87 of the paper book and which were stated to have been filed before the Assessing Officer to contend that the opening capital of Rs. 7,57,129 as appearing on page 31 being the balance sheet submitted to the assign officer has been revised as Rs. 5,37,672 and the difference is only of Rs. 1,19,457. The learned counsel attributed the difference to the fact that the assessee had a sum of Rs. 4,26,400 available with him in cash from sale of 2050 equity shares of Reliance Industries. Out of the above, a sum of Rs. 3,03,300 was invested in shares leaving a balance of Rs. 1,23,100 for investment in the said business as on 1-6-1996 and out of this, a sum of Rs. 1,19,457 was invested in the said business leaving a balance of Rs. 3,643. This balance of Rs. 3,643 was part of cash in hand. The learned counsel argued t....
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.... a sum of Rs. 40,000 was shown as paid to some Mr. Daga. The learned counsel for the assessee contended that the addition has been made on pure surmises and conjectures. There can be any person by the name Daga. There is no specific mention about the assessee. Shri Sudhir Thakran never stated that he had given any money to the assessee. The addition was made only because the appellant was known to Shri Pradeep Singh and was a director in his company. The learned DR relied on the order of the Assessing Officer. Upon consideration of the rival submissions and on perusal of the material available on record. We do not see any merit in the addition firstly because, the said loose paper was not seized from the premises of the assessee. The loose paper does not specifically mentions the name of the assessee, nor the person, from whom the paper was seized admitted to have paid any money to the assessee. Accordingly we delete the addition of Rs. 40,000. Ground 8 of the appeal is allowed. 26. The last ground pertains to addition of Rs. 1,84,400 made on account of unexplained gold jewellery of Rs. 349.900 gms. The learned counsel contended that jewellery weighing 2847.300 gms. was accepted....