TaxTMI 
TaxTMI 
1998 (7) TMI 694
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 2 & 3 are stated to be clarificatory in respect of original ground Nos. 16 and 31. Being legally permissible, the ld. Departmental Representative had no objection to the admission of the additional grounds of appeal and hence, we proceed to decide this appeal after hearing the ld. counsel for the assessee and the ld. Departmental Representative. 2. The first objection taken by the Id. counsel for the assessee is that the assessment is time-barred. He submitted that in this case the authorisations for searches at various places i.e. business premises of the assessee, his residence in Bombay and in his village were issued and "executed" on 30-10-95. He pointed out that as per section 158BE, the order has to be passed before the end of one year from the end of the month in which the last of the authorisations issued under section 132(1) (which is applicable to this case) was "executed". Thus, this assessment should have been completed latest by 31-10-1996. But since it was completed on 31-12-1996, the order is barred by limitation and hence, it has to be cancelled. 3. The ld. counsel did not press ground Nos. 1 & 2 of the original grounds and hence, they are dismissed. 4. B....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ach of them, assessee's signatures are only on the side. Both are undated and do not contain either the name of the lender nor the borrower and hence, Assessing Officer had no basis to presume that they represented loans given or taken by the appellant and represented assessee's undisclosed income. 8. Similarly, he argued, that the addition of Rs. 3,18,305 (challenged in ground No. 5) was made on the basis of a "shred" of paper found during the course of search (p. 69 of paper book). He pointed out that it only contains date 30-9-1995, "monthly balance" written in Kannad "Bala" which according to Shri Raheja means "Balance" 3,18,305; exp. 2,08,152. Below this is figure of 1,10,153 and below that again there is figure of 79,928. He stated that such pieces of papers were not too unusual to be found in restaurants and could not be ascribed to be assessee's account. Secondly, it showed only subtractions and no additions. Thirdly, it was a 'dumb' document and could not be the basis of such huge additions. He referred to the Tribunal decision in the case of Ashwani Kumar v. ITO [1991] 39 ITD 183 (Delhi) where it is held that no additions can be made on the basis of such dumb pieces of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ywhere during the searches nor even diamonds of these weight/description were found during the search. The assessee had throughout denied the purchase of these diamonds and jewellery (assessee's statement recorded during search on 20-4-1995 p. 356 of paper book) and nobody's name appears on that paper nor is it in the handwriting of assessee nor any member of his family. He also referred to assessee's reply - p. 60 of paper book, para 3, where he had stated that nothing like that was purchased and nothing such was found and that it was only intended to be purchased for which the estimates were obtained. The ld. counsel pleaded that the addition made in this regard on the basis of presumptions, hypothesis and subjective inferences be deleted. 11. Ground No. 8 is against an addition of Rs. 22,52,219. The Id. counsel referred to page 6 of the Assessing Officer's order and pp. 79-80 of the paper book. He submitted that the assessee had explained that these were some notings pertaining to assessee's horse-racing activities and the amount of Rs. 10,762 showed that assessee had to pay that amount to Mr. Champakbhai (the bookie). Similarly, p. 80 showed that assessee had to pay Rs. 11,7....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2 of the paper book. It shows certain numbers written as under as reproduced by the Assessing officer in his asst. order. (We have seen the photo copy but the captions "Amount" and "Date" mentioned by the Assessing Officer in this order are not there nor are the totals "160" and "273.500" given in the order are given in that paper. The original, which is stated to be in the possession of the department, has not been produced before us)- Amount Date Amount Date 20 19-10-94 57 Kane 30 10 10 7-2-95 5 15.7 10 16-2-95 56,500 Kane 25 6-3-95 20 Hasin 20 24-3-95 85 10 22-4-95 25 10 23-5-95 5 SM 25 Hasin 10 20-10-94 160 273.500 The Assessing Officer observed that assessee's financial status is not so small that he shall record Rs. 20 or 10 and hence, he inferred that these are coded figures as at p. 71 of paper book (supra) and 3 zeros are missing and hence, the total amount is 1,60,000 + ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... surrender the "on money" income for tax when the building was completed. Three of these papers showed "on money" at Rs. 1,78,560, Rs. 1,66,320 and Rs. 1,54,700 from three different persons. The Assessing Officer, added this amount as undisclosed income of the assessee because, according to him the assessee had not disclosed these amounts in his block period return of income. Shri Raheja referred to a note (p. 44 of paper book) and explained that, in fact, it was a joint venture with one Shri Vasudev Shetty who has 50% share with assessee. Shri Vasudev Shetty had confirmed in his statement dated 19-12-1995 and it was also seen from some papers (pp. 329-330 and 331 of paper book) that in fact this break up was 60% for without furnishings plus 40% with furnishing. He submitted that the statement of one of these persons Shri Ratnakar Suvarna was recorded by the department and he had confirmed that 60% of the amount was for the flat and another 40% was for furnishings. He submitted that copy of that statement has not supplied to the assessee and requested that it could be obtained and verified from the Deptt. Alternatively, he submitted that since the assessee had agreed in his stat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s Khatri and then Sivram Shetty and some cheque numbers are written. Against each one amount in lakhs are written which total upto Rs. 9 lakhs. Below them is written "cash 1.5" and "8". On p.1 of Annexure 8 is written as under: "(p. 174 of PB) T.No. 1 42 17 B J.S. 25 (Something illegible) 17 Bala P.2. K.P 10 Bala P.3 Atul Bhai 2 P.4 Sadasiv Motor Parts 1 and so on till p. 22 "Bala to pay" On the basis of these diaries the Assessing Officer presumed that assessee had taken loans of Rs. 9 lakhs by cheques and Rs. 9.5 lakhs in cash and had advanced loans of Rs. 88,75,782, which he added to assessee's income. For raising this presumption he mentioned in the order that since the entries in Annexure 4 are in 'lakhs' and since assessee cannot have transactions of small amounts of Rs. 1 or 10 or 25, these figures in Annexure 8 also represent "lakhs". The total of pp. 1 to 21 of Annexure 8 is Rs. 88,75,782 because the figure "1831-887" on p. 22 represents "Rs. 18,31,887" which Assessing Officer interpr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... He submitted that the assessee was not aware of any 'Chit Fund' referred to in the asst. order. He referred to Qs. 2 & 3 (pp. 63-66 of PB) and pointed out that the assessee had clearly reaffirmed in his statement dated 20-12-1996 that the diary did not belong to him or any member of his family or any employee and that he has stated so in his statement before the A.D.I. also. Shri Raheja argued that when this diary was found, the assessee was not in Bombay and if the diary really belonged to assessee in which he had recorded transactions of more than Rs. 28 lakhs, no one can believe that assessee should have kept such diary in the open in the restaurant. He urged that this baseless addition should be deleted. 21. At this stage, the ld. counsel took up the additional ground of Appeal 'B' which is against an addition of Rs. 55,16,000, which are cash credits and included in ground No. 16 of the original grounds of appeal. The Assessing Officer has dealt with this issue on p. 13, para 5.3(a) of his order. He referred to pp. 144-145 of the paper book. He submitted that p. 144 has 12 entries, 10 of which give cheque Nos. and full amounts. Assessee has accepted that these are loans rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....report itself at p. 195 (top) of the paper book. He submitted that the assessee had also stated at the time of search itself that assessee had spent about Rs. 1.5 lakhs on its renovation. This was also confirmed from the statement of Wagle the architect (p. 369 of PB). 23. Ground No. 18 is against an addition of Rs. 64,79,000 on the basis of allegations of assessee's undisclosed investment in assessee's Bungalow "Shri Krishna Chhaya" at his native village Bantakal, P.O. Shirva, Distt. Udipi in Karnataka. Shri Raheja stated that the Valuation Officer visited this place only on 4-12-96 and the assessment was completed on 31-12-96. This would indicate that there was hardly any time with the Valuation Officer to consider assessee's reply, to apply his mind, to give his report and for the Assessing Officer to apply his mind before adopting the valuation at Rs. 89,14,000 + Rs. 20,00,000 on his own estimate and making the huge addition of Rs. 64,79,000. He pointed out that assessee's objections are contained on pp. 27-29 and 31-33 of the PB. He argued that the report of the Valuation Officer was only in advisory capacity and not binding on the Assessing Officer; yet, the Assessing Offi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ged undisclosed investments in Hotel Shri Krishna. He submitted that the expenses/investments in the hotel were all supported with bills, but the DVO/AO never asked for them. He repeated that DVO's report is in advisory capacity and the Assessing Officer should have applied his mind. In the absence of this, the addition deserve to be deleted, particularly when here also the expenditure was on renovation (p. 35 of PB) in a running hotel. 26. Ground No. 19 is against addition of Rs. 3,51,000 for alleged undisclosed investment in Santhana Towers (supra). He submitted that it was wrong to infer that assessee had made investment of Rs. 3,51,000 when the details were furnished by Vasudev Shetty, whose statement was recorded by Deptt. He pointed out that pp. 373 to 379 would show that Rs. 91,000 was invested by one Jaya Kalachur Shetty who is a different person, Rs. 6 lakhs by Vasudev Shetty and so on. Assessee had invested Rs. 60,000 by selling timber obtained from demolition of old house and not by sale of old house, as mentioned by the Assessing Officer. 27. Ground No. 22 is against an addition of Rs. 10,81,719. The Assessing Officer prepared a statement of assessee's investments....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ulture income was about Rs. 80,000 p.a. 29. Ground No. 24 is against addition of Rs. 4,50,000. The assessee has explained it with the help of purchase deed of the agricultural land which was purchased in 1974. But the Assessing Officer has added it because the assessee had not been showing income from agriculture. The ld. counsel submitted that assessee was under a bona fide belief that agricultural income was not taxable; but since he has proved the source, this amount may not be added to his income. 30. In ground No. 25, assessee has challenged the addition of Rs. 7,79,468 for alleged low withdrawals. Shri Raheja submitted that the assessee had shown his own withdrawals at about Rs. 4 lakhs in 10 years and the husband and wife together had withdrawals of Rs. 7,25,600 in this period. Hence, there was no justification or basis for estimation house hold expenses @ Rs. 20,000 p.m. He relied on the Tribunal decision in the case of Raj Kumar Jain v. Asstt. CIT [1994] 50 ITD 1 (All.) (TM) where it was held that in the absence of material or record for higher expenditure, the household expenses disclosed by assessee had to be accepted. 31. Ground No. 26 is against addition of Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y rights in BMC properties to two sons of assessee viz., Manohar J. Shetty and Mohan J. Shetty respectively. Shri Raheja submitted that both the tenants of BMC had transferred their tenancy rights with the approval of BMC and had stated that they had charged no money and, in fact, Shri R.R. Malsha had even sworn an affidavit and hence, the Assessing Officer could not make additions on the basis of presumptions and on the basis of Newspaper reports, that too in Accommodation Times which cannot be said to be a reputed paper. Further, the Assessing Officer had admitted that these were in favour of assessee's sons, who were majors, whose statements were recorded, and there could be no presumption that the investment was made by the assessee. Hence, he prayed that these additions should be deleted. 34. Ground No. 29 was not pressed being petty and hence, it is dismissed. 35. Ground No. 30 is against the observation of the Assessing Officer that credits in the name of M/s. Chandrashekhar Hegde Children Education Trust, amounting to Rs. 6 lakhs is not proved. The ld. counsel submitted that the Assessing Officer himself had written that assessee had filed confirmation from the Trust ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome while completing assessment under section 158BC of the I.T. Act. He submitted and argued that the Assessing Officer could not make an estimate; he had to assess the income only on the basis of evidence or material found in search. Further, even in the estimates the Assessing Officer had committed patent errors in as much as, while he had included Rs. 37,45,853 as income in computation of Rs. 2,02,71,726 on p. 38 of the assessment order, he had also included the same amount in expenditure on p. 42. Thus, according to the ld. counsel for the assessee even as per Assessing Officer's own working the addition could not have been more than Rs. 3,23,47,641 for which the ld. counsel has filed a computation of income which can be assessed on the basis of estimates of income made by the Assessing Officer and on the basis of expenditure and investments estimated by him. (b) In his reply the ld. Departmental Representative, while dealing with assessee's assertion that the assessment was time barred referred to section 158BE and para 1 of assessment order. He pointed out that the search continued till 20-12-1995 and hence, according to section 158BE, the assessment could be completed by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot the place where customers sit. This would show that the papers were found from the possession or control of the assessee and hence, the ratio of Ashwani Kumar's case (supra) does not apply. The ld. D.R. went ahead with the submissions that the legal presumption under section 132(4A) was in favour of the Deptt. and it was for the assessee to rebut it. The assessee could not get away merely by stating that he did not remember the events or details etc. He referred to the decision of the Supreme Court in the case of Sumati Dayal v. CIT [1995] 214 ITR 801/ 80 Taxman 89 where according to the D.R., the documents were not dumb but barking documents and, yet, the apex court relied on the circumstantial evidence and not on the documents. He submitted that the documents had to be seen in the light of the circumstances and not in themselves. Referring to the valuation report pertaining to ground Nos. 17, 18, 20 and 21 and assessee's argument that the opinion of the DVO was only advisory, he referred to the case of Smt. Amar Kumari Surana v. CIT [1997] 226 ITR 344/[1996] 89 Taxman 544 (Raj.) where DVO's valuation was upheld. He also referred to the decision in the case of K. P. Varghese v.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that he did not remember whose hundies they were. The assessee could have filled any name in them even if his signatures were as a witness, he has to prove who was the drawer and who was the drawee. 45. For the addition of Rs. 3,18,305, challenged in ground No. 5, the ld. D.R. submitted that the papers were found from the bed-room of the assessee and he has already argued for inferences to be drawn from the circumstances. 46. Regarding ground No. 6 pertaining to additions of Rs. 2,96,655 the ld. D.R. referred to para 4.3(a) on pp. 5-6 of the assessment order, which shows that initially the assessee accepted them to be donations and hotel expenses but later on contradicted himself and said that he did not remember what they were and then denied any connection of those papers with assessee or his business. Hence, if they were not found recorded in assessee's books of account, the revenue was justified in treating it as assessee's unaccounted income. 47. With regard to ground No. 7 challenging addition of Rs. 6,76,471 for diamond jewellery, he submitted that the slips found from assessee's bed-room gave the details upto 3 decimal points, making charges, weight etc. and hence....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... places, he submitted that it was only a memoranda record and not a formal accounts book and hence, each transaction has to be separately noted. As for the contention that the assessee was a heavy borrower and these could be the borrowings, he claimed that in that case the assessee should have proved the genuineness of these cash credits. 53. Regarding ground No. 15 for addition of Rs. 28,11,600 the ld. D.R. referred to para 5.5 of assessment order and pointed out that no details were furnished by the assessee, although some names could be clearly decoded as P.J. for Prafulla Shetty wife of assessee, Goal for Golden Crown restaurant run by assessee's wife etc. and hence, in the absence of satisfactory explanations coming from assessee, the Assessing Officer was justified in drawing presumptions against the assessee for making these additions. 54. For addl. ground B regarding Rs. 55,16,000, the ld. D.R. assailed that a perusal of pp. 144-145 of the P.B. filed by assessee would leave no doubt at all regarding the correctness of Assessing Officer's inferences and this addition. He claimed that the name of Ashok Shetty was written. He is the nephew of assessee and was also assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see. The only and inevitable conclusion is that it should have been done in return of some substantial amount of money, which in a posh locality like Nana Chowk in Mumbai, would have been the amount estimated by the Assessing Officer. He again referred to the case of Sumati Dayal (supra) and also to the decision in the case of CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) where the Supreme Court had held that the Departmental Officers could not be expected to work with blinkers on their eyes. Ground No. 29 has not been pressed and he had already dealt with contentions pertaining to Rs. 6 lakh loan from the Trust raised in ground No. 30. 59. Ground No. 31 is against the summary of additions with reference to which the additional ground 'C' for addition of Rs. 7,00,000 has been taken. The ld. D.R. submitted that house No. 201 was stated to be belonging to assessee's brother Shri Krishna Shetty. But he is living in the village. No details were given about it when they were asked. The search party found that the wall between the assessee's house and this house is broken, making the two into one big unit. There is nothing to show who and why broke the wall and met the expenditure. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ccount were maintained and the show-cause notice also required the assessee to explain the books of account. 62. Coming to the legality and validity of the order the Id. counsel referred to the decision of the Chennai Bench of ITAT in the case of Shanta Kumar c/o Kirti Kumar Kalidas & Co., a copy of which has been filed before us, and drawing our attention to para 9 of that order submitted that the Tribunal in that case had quashed the assessment order in a similar search case because the CIT had not given an opportunity of being heard to the assessee before approving the assessment order as required under section 158BG. So far its legality with the time limit was concerned, the Id. authorised representative argued that "execution" takes place once and not several times, e.g. sale or a person who is executed. He argued that the 'authorisation' was 'executed' as soon as it was served on the person whose premises were to be searched and thereafter it was only a procedural matter. He distinguished it from section 132(5) where the time limit started from the date of seizure, i.e. 120 days from the date on which the assets etc. were seized and not from the date when the 'authorisatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, assessee had made the disclosure equal to his amount estimated by the registered valuer. Regarding the loans he submitted that assessee was not required to prove the source of the credit. Once, assessee had given the names, addresses, GIR Nos. and confirmation letters from the creditors, except in one case he had discharged his onus. He submitted that the Assessing Officer in his questionnaire had never required the assessee to produce the parties. Regarding telescoping of income referred to by the Id. D.R. and cases e.g. CIT v. Tyaryamal Balchand [1987] 165 ITR 453/ 32 Taxman 64 (Raj.) he submitted that when assessee himself is surrendering certain amounts as his income from undisclosed sources, which is being assessed as such, there was no scope for making separate additions in respect of those amounts. Regarding additions for jewellery, he submitted, when in the entire searches no jewellery of that description was found, the department could not make additions on presumptions. As for income from races, if one part of assessee's statement that these transactions were about horse racing, was accepted there was no basis for rejecting other part of the same statement. With refere....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee and his failure to do so would invalidate the assessment order. He argued that if it were to be so interpreted then when action under section 132(1) (for search) is taken against the assessee, it would imply that before issue of authorisation of a search, the CIT should give assessee an opportunity of being heard, otherwise search proceedings would become invalid. 65. We have carefully considered the detailed and learned arguments advanced from both the sides with relevant references to the very comprehensive paper book, and have perused the orders of the Assessing Officer and the material on record. At the outset we may mention that we would be taking up the first ground of appeal pertaining to the legality of the assessment order at a later stage; first we would deal with various grounds of appeal challenging the additions made to assessee's declared income in the block period. However, we may observe that we find ourselves in full agreement with Shri Raheja inasmuch as the income under Chapter XIVB has to be computed as per section 158BB (1) on the basis of "evidence found as a result of search or requisition of books of accounts or documents and such other materia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee is applicable to the facts and circumstances of the case. 70. Similarly, the addition of Rs. 2,96,655 based on a similar paper is deleted for similar reasons are given in para 70 above. Accordingly ground No. 6 is allowed. 71. A careful consideration of arguments of Shri Raheja & Shri Jha lead us to conclude that the addition of Rs. 6,76,471 for alleged investments in diamond jewellery cannot be sustained. The first and foremost reason is that this is the case of a search in which assessee's residence, including residence in the native village were searched and no jewellery of this description was found. Hence, even if the worst presumption is drawn against the assessee on the basis of the papers found at his place, it may mean that assessee might have purchased the jewellery but might have also sold it and its proceeds, even if undisclosed income this Chapter XIVB, are put in other assets like bank deposits, or investments in buildings etc., which assessee has declared in his returns for the block period or which is covered by other additions made by the Assessing Officer. This addition is, therefore, deleted. Ground No. 7 is, thus, allowed. 72. The addition of Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... quick or regular succession. They are 19-10-1994, 7-2-1995, 16-2-1995, 6-3-1995, 24-3-1995, 22-4-1995. It cannot be believed that the fish would have been purchased at such long intervals. The assessee had admitted in his statement that they might represent some expenses. We are satisfied that this pertains to assessee's transactions and hence we agree with the Assessing Officer and the ld. D.R. and uphold the additions. This ground is dismissed. 75. Ground No. 11 regarding addition of Rs. 60,000 has to be allowed in assessee's favour when we consider that assessee's son Manohar had stated that this amount had to be handed over to someone and the name of "Prakash Bhandari" was written on the paper with which the amount of Rs. 55,000 was found in the bundle. This addition is deleted and the ground is allowed. 76. Next dispute is ground No. 12 is against the addition of Rs. 4,99,580 pertaining to investments and on money charged on sale of flats. We agree with the ld. D.R. that taking into account various similar cases which have come before us and several of which have been reported in various journals, we cannot keep our eyes closed to the practice of charging on money and h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....would become Rs. 18,31,88,700 and the figure of Rs. 3,70,782 would become Rs. 3,70,78,200. In that case the total of the transaction, excluding 1831.887 would not be 88,75,782 lakhs but would be about Rs. 4,25,82,200. It would be too naive to believe that a note book having transactions in about more than 22.56 crores would be lying unattended in the restaurant. The more plausible explanation is that "Bala" represents "balance" because except on p. 22, which appears to be the final page, it is written below the amount on page belonging to other persons, e.g. J.S. on p.1 and KP on p. 2. Thus it may show the balance; may be, of payment from or to them. However, since J.S. i.e. assessee's own name is there, it appears that the diary does not belong to assessee but to someone who has either given money or taken money from assessee. Since Bala '17' is written below '25' and since on the Top of p.1 "42" is written, it indicates that the assessee should have taken a loan of "42" out of which "25" is paid back by assessee and balance of "17" remains. Regarding decoding of these figures, looking to various names like "Francis", "Bajaganna" etc. on one side against whom .20 and .20 is writte....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., therefore, uphold Assessing Officer's view that this diary records the transactions of loans taken by assessee from various parties, only cheque transactions of which are recorded by the assessee in regular books/bank accounts and other loans are unrecorded and unexplained. We agree with the Assessing Officer that when "1.5" and "8" are written as cash and below the figures in lakhs, they are nothing but cash receipts of Rs. 1.5 lakhs and Rs. 8 lakhs respectively. Hence, this addition of Rs. 9.5 lakhs is confirmed. Similarly, in the absence of any explanation from assessee and in view the exact workings of interest amounts and period of interest noted in full figures the amounts of Rs. 10 lakhs and Rs. 5 lakhs in the name of Popular Automobile has to be upheld. Similarly, Rs. 3,50,000 in the name of 'Brother-in-law' is clearly written and has to be confirmed. However, the remaining 3 entries cannot be interpreted in the same manner. The figure of "3,00,000" on top of p. 3 of Diary is scored out, and even the calculation of "9000" supposed to be interest is scored out. Similarly, below that against "Bihari 15", the alleged figure of interest at Rs. 1,01,250 is scored out to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of Rs. 64,79,000 as undisclosed income of the assessee. In view of the ratio of decision in the cases cited by Shri Raheja, which we have already mentioned, we agree with him that it would not be reasonable to apply the Delhi Schedule rates in a remote village the address of which is given as under: Village Bantkal, P.O. Shirva, Disstt. Udipi, Karnataka. Moreover, it has been stated that the expenses were recorded in assessee's books of account and it has been shown in assessee's Balance - Sheet 1993. We also agree that assessee's surrender of Rs. 12.15 lakhs to bring its cost at par with the valuation of the two Registered Valuers, should not be interpreted to mean that the cost had not been correctly recorded or that he himself did not trust his valuers. We agree with Shri Raheja that instead of challenging the correctness of valuation of the Registered valuers, it was a better part of discretion to surrender an amount of Rs. 12.15 lakhs, apart from which there should have been no alternative available to the assessee. In this background, in our opinion, it would be reasonable to accept the valuation of the Bantkal Bungalow as estimated by the registered valuers. Of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....imber of his old house. However, no evidence for this claim is produced before us. We would, therefore, uphold the addition to the extent of Rs. 60,000 only. Assessee gets a relief of Rs. 2,91,000. Ground No. 19 is, thus, partly allowed. 85. It is seen that the addition of Rs. 10,81,719 challenged in ground No. 22 is total of two figures - Rs. 1,22,719 for Assessment Year 1994-95 and Rs. 9,59,000 for Assessment Year 1995-96. They were claimed to be assessee's withdrawals and as at p. 39 of the paper book were stated to be withdrawals for business, and not for personal drawings. The Assessing Officer has added these amounts because the assessee did not file his returns of income for these two years and hence, they could not be verified. We have seen that since assessee had not filed his returns of income for these two years, he has himself treated income of Rs. 7,02,712 for the Assessment year 1994-95 and Rs. 6,31,159 for Assessment year 1995-96 as his undisclosed income as per provisions of section 158BB(1)(c). When the whole income of these years has been treated as "undisclosed income" there is, we feel, no justification, for further adding the amounts withdrawn from the books....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d on two operations of assessee's wife, would normally lead to the belief that the assessee's family should be incurring expenses of Rs. 20,000 p.m. However, we notice that Assessing Officer's description includes these expenses and the education of assessee's son in the Medical College on the basis of facts as they stood at the time of search. It cannot be said that the assessee should have been incurring similar expenses in all the 10 years of the block period. We have also considered that the price index was much lower in 1985-86 (relevant for Assessment year 1986-87) and should have increased gradually. We would, therefore, consider it reasonable if assessee's average expenditure for the family is reduced by about Rs. 5,000 p.m. out of which assessee's shares, as per Assessing Officer's bifurcation would be Rs. 2,500 on this basis, we would allow a relief of Rs. 3,20,000 to the assessee in round figures. Thus, ground No. 25 is, partly allowed. 89. The next ground No. 26 is regarding addition of Rs. 37,45,852. We agree with assessee's ld. counsel that the action of the Assessing Officer is not consistent. There is no reason why he should not have accepted the genuineness of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ose rights for himself or has made any payments to acquire the rights in the name of his major sons. In this background, the arguments of the ld. D.R. to the effect that it is a common knowledge that huge amounts are being paid to acquire tenancy rights and his reference to the Supreme Court decisions in the cases of Durga Prasad More ( supra) and Sumati Dayal (supra) lose all their relevance. We, therefore, do not consider it necessary to give our decision on other arguments advanced before us. We hold that these amounts of Rs. 12,00,000 and Rs. 20,00,000 cannot be added in the hands of the assessee on the facts and in the circumstances brought before us. These additions totalling Rs. 32,00,000 are, therefore, deleted. Ground No. 28 is allowed. 92. Ground No. 29 was not pressed and hence, it is dismissed. 93. Ground No. 30 regarding cash credits of Rs. 6 lakhs in the name of Chandrashekhar Hegde Children's Trust has to be decided in assessee's favour. The assessee has filed before us a copy of the confirmation of this loan from that Trust (p. 327 of PB) giving its PAN, address and argued that payments have been received through cheques, giving their dates. We agree with t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e figure of Rs. 4,57,79,396 being computation of undisclosed income on expenditure, investments and deposits basis is higher than that figure computed on the basis of "undisclosed income" and higher figure has to be chosen, he is likely to revert to this figure if after the reliefs given by us the figure of computation on the basis of "undisclosed income" becomes higher. We would, therefore, deal with this ground specifically : we may state even at the cost of repetition that not only the language of section 158B(1) and section 158BB(1) is clear but by now a large number of Tribunal decisions have been reported to the effect that the undisclosed income under this Chapter has to be determined on the basis of evidence, documents, material and information found during search. Section 158BA(1) starts with the non obstante clause excluding the operation of all other provisions of the Income-tax Act for computation of income. Section 158BB(2) permits application of provisions of sections 68, 69, 69A, 69B and 69C but not of proviso to sub-clause 145(1) or application of section 145(2). The "information" is not what the ld. DR wanted us to accept i.e. any imaginary or unfounded informat....