TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 1216
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....en documentary evidence was found at the time of search to show that part of it belonged to the appellants father, late mother and the minor children who were wealth-tax and income-tax assessees in the earlier years." 3. So far as Appeal No. 1135/2000 (Pragna R. Shah) and 1136/2000 (Priti Paras Shah) are concerned, besides Question A above, the appeal was admitted on the following additional substantial question of law: "(B) Whether on the facts and circumstances of the case and in law the Tribunal erred in rejecting the cash method of accounting followed by the assessee and substituting the mercantile method in relation to the accrued interest on loan advanced to the landlord?" Regarding Question No.A: 4. Briefly the facts leading to these appeals are as under: (a) The appellants/assessees are a part of the family group engaged in the business of trading in electronic items including its export to African countries. Besides the group also carries on the business of bill discounting. On 11 October 1996, a search and seizure operation under Section 132 of the Act was undertaken by the officers of the revenue at the residence and office premises of the appellants/assessees group....
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....mostly ladies items have been acquired by me and my family members within the last fourfive years. Some of the items might have been received by gifts also. However, since we do not have any supporting documentary evidence for the same in our possession, I hereby offer the value thereof approp., i.e. Rs. 4,60,000/- (Rs. Four Lakhs Sixty Thousand Only), as my additional income u/s. 132(4) of the Act I shall be paying the taxes thereon, in time as per law." Thus the aforesaid jewellery was also offered to tax as the appellant did not have any supporting documentary evidence to establish its purchase. (d) Thereafter on 30 November 1996, Mr. Paras Shah addressed a communication to the Additional Director of Income Tax seeking to explain the jewellery found in the possession of the group on 11 October 1996 and 14 November 1996 as under: "This copy of reports were handed over to ADIT Mr. Sanjay Mishra and Department Valuer Mr. Suresh Kapoor at the time of search on 11th Oct. 1996 at my residence. This we have already informed you earlier also. The valuation was done as at 31st March 1996, for filling Wealth-tax return on or before the due date. All our jewellery seized by department p....
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....eals on the above account were dismissed by the common impugned order. 8. Mrs. S. Jagtiani, the learned Counsel in support of the appeals submits as under: (a) The Assessing Officer as well as the Tribunal erred in having completely ignored the documentary evidence produced by the appellant. These documents show that the part of the allegedly undisclosed jewellery belonged to the appellants' father, late mother and their minor children as seen by valuation reports of jewellery in their possession. (b) The impugned order erroneously proceeds on the basis that Section 69A of the Act would apply to the facts of the present case. This by ignoring the documentary evidence in the form of documentary evidence of the jewellery in the name of various family members would clearly establish the source of the excess amount of jewellery found in their possession during the search. (c) In any view of the matter, once the appellant had produced the evidences that the jewellery belonged to their father and late mother, then the proper course for the Assessing Officer was to issue notice under Section 158BD of the Act to them. It is not open in such cases to assess jewellery belonging to ot....
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....into account the jewellery belonging to their father, late mother and valuation done of the family jewellery in July 1996. Moreover it is specifically stated in the statement on oath that the jewellery belonging to their late mother already stood distributed amongst the appellants. Further on 14 November 1996 when the bank locker was opened during the search process jewellery of approximately Rs. 4,60,000/- was found. The appellants on oath again stated that they are unable to produce any evidence about the purchase of the jewellery found and undertake to pay tax thereon. It was only much later i.e. on 30th November 1996 that the appellant wrote a letter to the Additional Director of Income Tax seeking to explain the jewellery seized by the department in particular the undisclosed jewellery found on 12 October 1996 and 14 November 1996 on the basis of valuation reports of the jewellery which they claim to be available at all times. It is very pertinent to note that letter dated 30 November 1996 addressed to the Additional Director of Income Tax does not indicate that they are retracting the earlier statements made on oath. Further it does not state that the statement made on 12 Oct....
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....ind that the authorities have proceeded on the basis of the statement made on oath under Section 132(4) of the Act declaring that the undisclosed jewellery belonged to them. These statements of oath has not been withdrawn and/or retracted by appellant at any point of time till date. Therefore, there is no occasion for the authorities to come to the conclusion that the undisclosed jewellery belongs to the father or late mother. Consequently issuing a notice under Section 158BD of the Act to the father and to the legal heirs of the late mother does not airse. 14. In the above view, there is no reason to examine various decisions cited by the appellants in support of the either Section 69A or Section 158BD of the Act. Accordingly, Question A as formulated is answered in affirmative i.e. against the appellants/assessees and in favour of the revenue. Regarding Question No. B : 15. During the course of the search operation, the officers of the revenue on 11 October 1996 found documents dated 13 August 1996 indicating Rs. 16 lacs and Rs. 34 lacs were given as construction loan to Mrs. Kausalya Bajaj and Mr. Kishor Bajaj. Clause 7 thereof reads as under: "the owner shall pay to the pro....
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....ssessment only applies to undisclosed income found during the course of a search. On the above basis, it was submitted that Question B as formulated be answered in favour of the appellant. 19. As against the above, Mr. Pinto, the learned Counsel for revenue in support of the impugned order urges: (a) The appellants/assessees did not follow the cash system of accounting i.e. receipt basis. In the present case, there is no evidence to indicate that the appellants/assessees were maintaining any account in writing so as to hold that they were following the cash system of accounting; and (b) The loan agreement dated 13 August 1992 was found during the search process under Section 132 of the Act. It was this loan agreement which led the revenue to conclude that as the appellants/assessees had not disclosed its income during the regular course of assessment, interest income earned by the appellant/assessees in terms of loan agreement dated 13 August 1992 is certainly an undisclosed income chargeable to tax for the block assessment period 1 April 1988 to 11 October 1996. In the above view, it is submitted that the Question B as formulated be answered in favour of the revenue. 20. We ha....