TaxTMI 
TaxTMI 
2010 (9) TMI 752
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....f the Big jos Group with which the assessee is connected, were searched. During the search, statement of the assessee was recorded under section 132(4) of the Income-tax Act. This statement reads as under :- "Q. I am explaining to you the provisions of Explanation 5 to section 271(1)(c) read with section 132(4) of the Income-tax Act. Do you want to avail this opportunity? A. I have understood the provisions. I want to avail this opportunity and declare income as under :- (a) There are total deposits of Rs. 92,65,700 in different companies towards share capital under different names as under :- Name of the company Financial Years 91-92 92-93 93-94 94-95 Beejay Traders 860,000....
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....-95. Different amount was spent by those persons (whose particulars are not available on record) in these years. However, as per the statement, these persons were paid the entire amount of Rs. 92,65,700 'in the current period' i.e., in the financial year 1994-95 (corresponding to assessment year 1995-96). The notice under section 148 was issued in respect of the assessment year 1994-95 (corresponding to financial year 1993-94). The 'Reasons to Believe' which form the basis for issuance of that notice read as under :- "During the course of search Smt. Bela Jain in her statement under section 132(4) of the Income-tax. Act admitted to have paid out unaccounted cash of Rs. 92,65,700 to certain people in exchange for cheques received from them ....
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....espect of this assessment year, he added an income of Rs. 23,50,000 giving following basis :- "As discussed in the separate assessment orders of the Big Jo's group of companies, the share capital introduced by those group of companies are primarily repaid in cash by the directors of the companies. The total capital paid by the directors are Rs. 23,50,000 for the simple reason that she is the director who had repurchased the share capitals from the bogus shareholders. The addition made on this ground is worked out to Rs. 23,50,000". As noted above in the statement, the assessee had mentioned in her statement that in respect of assessment year 1994-95, shares of Rs. 29,10,000 were purchased for which cash was paid in the assessment year 199....
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....the assessee had stated that she had paid the entire cash in the financial year 1994-95, that could not be believed. According to him, the Assessing Officer was right in his belief that a dummy subscriber would not subscribe without receiving the cash first. Therefore, even if the assessee had stated that entire cash for all these four years was paid only in the last year i.e., financial year 1994-95, the Assessing Officer could have assessed that cash must have been paid before subscribing the share capital by the dummy subscribers. Thus, according to the CIT (Appeal), issuance of notice for the assessment year 1994-95 in respect of shares subscriber relating to that year was valid. On merits, however, the CIT (Appeal) denounced the approa....
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....atement was accepted only to the extent that cash was paid. At the same time the part of the statement that this entire cash was paid in the financial year 1994-95 was not accepted. That could not be the basis of the issuing the notice under section 148 of the Act. If the statement was to be accepted on its face value, then according to that statement entire cash was paid in the financial year 1994-95 and, therefore, addition, if any, could have been made only in the assessment year 1995-96 and there was no reason for re-opening the assessment in respect of assessment year 1994-95. 8. After hearing the counsel for the parties, we are of the opinion that the approach of the Tribunal is without blemish. Section 132(4) of the Act reads as und....