AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (5) TMI 564
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....allenged the orders of Commissioner of Income Tax (CIT) passed under Section 263 of the Income Tax Act („the Act for brevity). Since both the orders under Section 263 of the Act were passed for these two assessment years under identical circumstances, the facts narrated hereinafter would cover both these assessment years. 4. A search under Section 132 of the Act was carried out in JMD Group on 16.12.2003. Since the assessee was a close associate of Mr. Sunit Bedi, MD of JMD Group, search was also carried out at the residence of assessee. However, his two concerns, viz., M/s In-Style Exports (Proprietary concern) and M/s In-Style Exports Pvt. Ltd. (company in which he was a Director) were not covered under search/survey. During the search, a sum of Rs. 62,30,300/- was found from the residence of the assessee. In the statement recorded during search, the assessee offered a sum of Rs. 61.30 lacs for taxation as his undisclosed income for assessment year 2003-04. 5. Subsequently, the assessee filed his return for the assessment year 2003-04 declaring income of Rs. 1,57,24,780/-. The assessment was framed by the Assessing Officer (AO) under Section 153(3)/143(3) of....
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....sessment Years are set aside since the assessee has offered part of the said cash in A.Y. 2004-05." 7. The assessee filed appeals before the Tribunal challenging the aforesaid order in respect of these two assessment years. The Tribunal has set aside the aforesaid order of the CIT. According to the Tribunal, the AO had examined the issue and had even considered the statement of the assessee recorded on 27.05.2005. The assessee had furnished the cash book of both of his concerns and had explained the cash found at the time of search/survey except a sum of Rs. 21 lacs. The cash in hand which was available as per books of accounts, in the two concerns of the assessee was Rs. 36,95,720/- and after excluding this cash, the remaining was only Rs. 25,34,580/-. The assessee had offered of Rs. 21 lacs for the taxation in the year 2004-05 and thus, only a sum of Rs. 4,34,580/- remained to be explained. It was explained by the assessee as cash as per his own books. According to the Tribunal, after examining the claim of the assessee verifying the same from the books of accounts, the AO had accepted the claim of the assessee, though there was no mention of the same in the assessment ord....
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....l in the same manner as a Judicial Officer is supposed to write the judgments. At the same time, it cannot be ignored that huge cash of Rs. 62,30,300/- was found at the time of search and on that date, the assessee had surrendered a sum of Rs. 61.30 lacs and offered the same for tax. However in his income tax return, the assessee had offered a sum of Rs. 21 lacs only against the surrendered amount of Rs. 61.30 lacs at the time of search. In such a scenario, there should have been at least a brief discussion recording a satisfaction on the explanation offered by the assessee. We are constrained to make this observation because of two very important features, which we note in this case. These are: First, keeping cash of Rs. 62.30 lacs, part of which belongs to his sole proprietorship firm, but another part to a private limited company of which he is the Director, at residence, may raise certain doubts. Though in his letter dated 07.01.2004, he had stated that he had kept the cash at his residence in safe custody, however, this aspect needed to be properly examined. Secondly, before the Tribunal, the assessee had given an explanation that cash in hands in the books of ....
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....dertake the exercise by itself satisfying about the explanation tendered by the assessee which it could not do. When the CIT passed the orders under Section 263 of the Act, at this stage he was only required to find out as to whether the income has escaped assessment and the order is prejudicial to the interest of Revenue. We would like to reproduce the following aspects highlighted by the CIT in the orders: "5. From the contents of the above statement thefollowing inferences could be made: 5.1 In contradiction of his earlier statement recorded during the search on 16.12.2003 wherein Sh. Ashok Logani could not explain the source of cash found at his residence and surrendered Rs. 61,30,300/- for taxation. He had subsequently tried to explain the cash as belonging to his two business concerns. He could not adduce any evidence to show that the cash found at his residence belonged to his business concerns. Thus, the letter filed by his subsequently, explaining the cash found at his residence is just an afterthought. 5.2 It may again be mentioned that none of the business premises was covered at the time of search. Hence, no actual verification of the cash lying at these premises has....
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....n Sub-section (4) of Section 132 of the Act. It does not change the substantive provision of the Act; nor does it lay down a different method of using the statement recorded under Sub-section (4) of Section 132 of the Act. It permits interrogation of persons not only in relation to the books of account, etc., found as a result of the search but also on any other matter relevant for any proceeding under this Act. In this view of the matter, we hold that the authorised officer had the power to record statements on oath on all matters pertaining to the suppressed income. The statement cannot be confined only to the books of account. If a partner of the firm came forward to disclose about non-entry of the excess stock in the registers during the course of the search, there is no reason why the Income-tax Officer shall not make use of it even though there is no actual verification of the stock. The Tribunal has clearly found that the statement was made voluntarily. It observed that the best and independent evidence in the matter would have been that of the two witnesses to the search, who are traders in the same locality. The assessee had not obtained any statement or affidavit from the....
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....he orders under consideration are such as are not in accordance with law and in consequence whereof, the lawful revenue due to the State has not been realized or cannot be realized. The well settled principle in considering the question as to whether an order is prejudicial to the interests of the Revenue or not is to address oneself to the question whether the legitimate revenue due to the exchequer has been realized or not or can be realized or not if the orders under consideration are allowed to stand. For arriving at this conclusion, it becomes necessary and relevant to consider whether the income in respect of which tax is to be realized has been subjected to tax or not if it is subjected to tax, whether it has been subjected to tax at the rate at which it could yield the maximum revenue in accordance with law or not. If the income in question has been taxed and legitimate revenue due in respect of that income had been realized, though as a result of an erroneous order having been made in that respect, the Commissioner cannot exercise the powers for revising the order u/s. 263 merely on the basis that the order under consideration is erroneous. If the material in that re....