TaxTMI 
TaxTMI 
2013 (1) TMI 137
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the assessee on the basis of not only the materials collected by the Special Audit Team during special audit but also the other materials relied upon by the Assessing authority for the first time? 3. Whether on the facts and in the circumstances of the case, the order of Tribunal is not liable to be set aside insofar as the following contentions which have been raised in the grounds of appeal and pressed in the course of the hearing before the Tribunal have not been adverted to or dealt with in the order under appeal? a) Advance to Vivek (Total Rs.3,00,000) Rs.1,50,000 b) FD with Canara Bank 1,65,000 c) Difference in cost of construction 5,19,000 d) Personal Expenses 1,94,000 e) Household articles 2,15,000 f) Deposits with Canara Bank 28,53,778 g) Investment in UTI 1,00,000 h) Gift to Master Vivek/Krishna Priya 1,20,000 i) Investment in Tamilarasi 52,500 j) Land at Thanjavur 2,13,000 k) Deposits in Tamilarasi 2,12,310 l) Interest suspense 4,23,460 m) Capital account credit 10,00,000 n) Credit in the name of Apna Finance 7,80,000 o) Credit in the name of Ashok Mehta 5,76,000 p) C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppointing the Special Auditor for carrying out the special audit. The issues specifically referred to the Special Auditor for his comments were as under:- 1. Whether the quantity of newsprint and art paper purchased and shown as consumed is commensurate with the No. of magazines produced including those to be supplied to the subscribers who have made interest free deposit. 2. Audit of quantitative tally of purchases consumption production and closing stock may be done. 3. Whether based on the various expenses booked is it possible to arrive at the no. of copies of each of the magazine actually printed for each year 4. Audit of the scheme by which the assessee has collected deposits for free supply of magazines and its viability. 5. The genuineness of the above scheme and /or collection of deposits reflected in the accounts in each year. 6. Audit report as to whether any of the loans have been used towards interest free advances or for other non-business. 3. The Special Auditor conducted the audit and forwarded his report to the assessee on 23.2.1998. The assessee in turn submitted the report to the Assessing Officer on 24.2.1998. It is seen from the narration i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der Section 80L and 80C and Section 88. According to the assessee in the course of hearing before the Tribunal, submissions were made both on the aspect of violations of principles of natural justice as well as on the merits of the assessment made under various heads. Yet, the Tribunal passed an order as though the assessee did not make any submissions on the merits of the assessment and considered the submissions only on the violation of principles of natural justice. In paragraph 9 of its order, the Tribunal rejected the contention of the assessee as to the violation of principles of natural justice in not affording sufficient opportunity. 6. The Tribunal held that the allegation on the violation of the principles of natural justice must be a matter of substance not of mere form. The Assessing Officer did follow the principle of audi alteram partem and as per the records, more than twenty opportunities were provided to the assessee to explain the case and the assessee had in fact attended the hearings through his representative. Hence, the Tribunal rejected the assessee's contention that the order was made in violation of the principles of natural justice. As far as the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Assessing Officer has to put the assessee on notice of any of the materials recovered at the time of such enquiries in order to submit his explanation. There are hardly any materials to show that the assessee was granted any such opportunity at the time of assessment or the the assessee was granted an opportunity to cross examine the persons from whom any statement was recorded against the assessee. 9. She further pointed out that the Special Auditor's report was given on 24.2.1998. As is evident from the preamble to the assessment order, the search was conducted on 24.9.1996. After the notice was served on the assessee under Section 158BC, there was transfer of the case to another Assessing Officer. The notice of assessment itself was issued only on 13.2.1998 which was received by the assessee on 19.2.1998. It is seen from the assessment order that except for the date of hearings noted in the assessment order, there were no opportunities granted to the assessee to substantiate his contentions. Thus, the Tribunal committed grievous error in holding that more than 20 opportunities were granted to the assessee by the Officer before finalising the assessment. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....T.K. Road, Madras 18 on 26.9.1996 during the course of action under Section 132 of the I.T. Act 1961. Sl.No. Name of the Bank Name of the Holder A/c No. and Branch 1 Indian Bank, Abiramapuram Tamilarasi Publications CA 872 2 -do- Tamilarasi Publications (P) Ltd., II Unit, Puthiaparavai CA 879 3 Canara Bank, Abiramapuram Tamilarasi Noolagam CA 1526 4 Indian Bank (Cheque Book No. 681601 to 681700) Tamilarasi OD 0026 5 Union Bank of India Nungambakkam Tamilarasi (Proprietor) 29043 5. Inventory of Bank A/c and other documents seized during the course of search under Section 132 of the IT Act, 1961 at Mr.M.Natarajan, No.H6/5 Kalashetra Colony, Arundale Beach Road, Besant Nagar on 24.9.96. 1. I.B. Abiramapuram Branch, Madras C.A. 872 and 879 M/s.Tamilarasi Publications (P) Ltd., and M/s.Tamilarasi 2. U.B.I. Nungambakkam A/c/No.29043 3. City Bank Card No. 540175001464002 Master Card Visa 493184901932009 4. Diners Club Card 36559003524017 5. American Express Card 376971869441008 6. L.I.C. Policy belonging to Mrs. N. Sasikala Policy No. 7504057 Rs.2,00,000 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns were not supported by any back-up vouchers. The affidavit further adds that none of the parties with their books of accounts, vouchers etc., were produced by the assessee and the affidavits filed by the assesseee from the so called parties were also totally unreliable on the ground that there was difference in signature and the affidavit being signed by other parties. 14. A reading of the affidavit as narrated above, thus makes no secret of the fact that the rejection of the claim of purchase of newsprint as an undisclosed income was not a subject matter flowing from the seized materials in the course of search conducted in the assessee's residence and business premises. A reading of the provisions on the Block assessment under Chapter XIV-B shows that Section 158B(b) defines "undisclosed income". Section 158BB gives the method of computation of undisclosed income of the block period. A reading of the said provision shows that the undisclosed income of the block period has to be necessarily assessed only on the basis of evidence found as a result of search or requisition of books of accounts or other documents and such other materials or information as are available wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te. The Assessing Officer also records that the assessee's representative appeared on various other dates and some of the details called for were furnished. It is a matter of record that the Special Audit report was given on 24.2.1998 and the objection was filed by the assessee on 25.2.1998. The assessment order herein was made on 13.3.1998. In the background of the filing of the Special Audit Report on 24.2.1998 and the assessee filing his objection on 25.2.1998, when we look at the next date of hearing, it fell on 5.3.1998 and immediately on 13.3.1998 the assessment order was made. The Revenue submitted during the course of proceedings before this court that voluminous records were seized from the assessee on 24.9.1996. In view of the fact that while the enquiry on the seized materials was in progress, simultaneously, the special audit was also proceeding on a reference made on 11.9.1997, we feel that the assessee should have been granted full opportunity to counter the materials gathered and relied on for the purpose of assessment as well as on the merits of the Special Audit Report submitted on 24.2.1998. 18. It is no doubt true that on 5.3.1998 after the submission o....