TaxTMI 
TaxTMI 
2016 (1) TMI 981
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....f Income Tax (Appeals), Kolhapur dated 16.04.2002 relating to block assessment period 1989-90 to 1998-99 passed under section 158BC(c) of the Income-tax Act, 1961 (in short "the Act"). 3. In this appeal, the assessee has raised the following Concise Grounds of Appeal :- "1) On the facts and in the circumstances of the case the Ld. CIT(A) erred in making addition of Rs. 7,44,000/- u/s 69B as unexplained investment in respect of the plot No.194/8 at Waliwade treating it as undisclosed income of the Appellant. 2) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the addition of Rs. 1,25,000/- u/s 69B as unexplained investment in respect of the barracks at C.S. No.2904 at Waliwade purchased by the Appellant's son and treating it as undisclosed income of the Appellant. 3) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming Rs. 2,07,764/- as initial investment and Rs. 78,892/- as G.P. in respect of certain transactions which was assumed to be undisclosed sales and thereby treating Rs. 2,86,656/- as undisclosed income of the block period. 4) On the facts and in the circumstances of t....
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.... various persons by father (deceased) as unexplained cash credit and treating it as undisclosed income of the appellant though action was taken against father u/s 158BD of the Act. 13) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the levy of interest u/s 158BFA(1)." 4. The Ground No. 1 of appeal relates to addition towards unexplained investment in Plot No.194/8 at Waliwade Kolhapur for a sum of Rs. 7,44,000/-. 4.1 The relevant facts are culled out below:- 4.2 The assessee is engaged in wholesale cloth business at Gandhinagar under the name and style of "M/s Amrutlal & Company". The assessee was subjected to search and seizure action under section 132 of the Act and accordingly block assessment for the period beginning from assessment year 1989-99 upto 1998-99 were carried out under section 158BC(c) of the Act by the Assessing Officer vide its order dated 27.09.2000. The search was conducted on the business and residential premises of the assessee on 08.09.1998. Books of account, documents, loose papers were found and seized during the course of search action. 4.3 At the time of search in the premises of the Assessee, an ....
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....p; 4.6 The Assessing Officer thus, calculated assessee's unexplained investment in the above plot at Rs. 7,44,000/- under section 69B of the Incometax Act and added the same to be undisclosed income of the block period. 4.7 The Assessee assailed the order the AO on many grounds before the CIT(A). The Assessee contended that no addition can be made only on the basis of some statement made during the course of search unless some concrete evidence is found. The following decisions have been relied upon by them : * ACIT vs. Govindan (63 TTJ 271) (Bang); * Nagindas Dahyabhai Patel vs. ACIT (104 Taxman 80) (Ahd); * J. K. Narayanan (HUF) (242 ITR 45) (Mad Trib); * Kairoos M Bhaya (100 Taxman 165) (Mum); * Jagdish Chand Gupta (58 ITD 142) (Chd); * Pushpa Vihar (48 TTJ 389) (Bom) 4.8 Further, The Assessee submitted that the 'Sanchakar Patra' seized by the department from the Assessees' premises is not a valid document because it does not bear signatures of the assessee and his brother. It has been submitted that the land belonged to one Shri Powar and family and the Khubchandanis were only middlemen. The plot of land o....
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....ssessing Officer as well as the detailed submission made on appellant's behalf. It is not disputed that the Sanchakar Patra i.e. the agreement to sale was recovered from the premises of the appellant and, therefore, the relevance of the document in appellant's case cannot be changed. Further, the contents of the seized documents were unambiguous. Furthermore, there was an admission by the appellant made under section 132(4) of the Incometax Act. It has been held by various Courts that the admission made under section 132(4) is an important piece of evidence, which can be used against the appellant during the course of Assessment proceedings. 22. It is further seen in this case that this statement made by the appellant was not withdrawn till the assessment of the appellant for the block period was taken up. The first such retraction took place in assessee's submission before the Assessing Officer on 11/08/2000. Therefore, the Assessing Officer was justified in relying on the seized document, and the statement of the appellant made under section 132(4), which were retracted much later i.e. about two years from the date of recording, which can only be considered as an afterth....
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....nt to be effective, only sellers of the property are required to sign. It is further seen that the document has been witnessed by two persons and the same witnesses have also signed the purchase deed made subsequently in December, 1993. It is also no correct to say that addition has been made only on the basis of admission. 25. Further, argument made on behalf of the appellant that the report of Valuation is binding on the Assessing Officer is also not correct because only when the matter is referred by the Assessing Officer to the Valuation Officer under section 55A of the Income-tax Act for capital gain purposes only then the advise of the Valuation Officer is binding on the Assessing Officer. In the present case, the addition has been made by the Assessing Officer not on account of the capital gain but towards unexplained investment. In these circumstances, the Valuation Officer's report was only advisory to the Assessing Officer, who has gone ahead with the determination of the investment of the appellant in the plot on the basis of the seized document from the appellant's premises. 26. In any case, the Valuation Officer only advised the Assessing Officer rega....
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....hat an appeal is only continuation of the assessment proceedings and therefore the ITAT can take cognizance of the amendment with retrospective effect. Subsequent to the hearing, the Ld. AR filed certain judicial decisions vide covering letter dated 22-09-2015 to support its contentions. 6. In the light of these contentions, the Ld. AR pleaded that the action of the CIT(A) in confirming the order of the AO on this score is patently wrong and deserves to be set aside and relief as sought as per Grounds taken be allowed. 7. We have carefully considered the rival contentions, orders of the authorities below & perused case laws cited. 7.1 The main plank of the arguments on behalf of the Assessee is that the document found in the course of search namely 'Sanchakar Patrika' is unsigned by the Assessee and thus just a mundane and extraneous piece of paper not intended to be acted upon. It does not thus yield any evidentiary value. The next limb of argument is that the statement recorded under S. 132(4) during the course of search has been retracted. Notwithstanding, the evidentiary value of the statement stands rebutted by the valuation report of the deptt. valuer itself. 7.2 ....
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....initial admission made under section 132(4) was incorrect. Such belated and bald retraction is not capable of casting any aspersion on the original statement. While giving the statement, the deponent Assessee having special knowledge of the facts and privy to impugned document made assertions to this effect. In the absence of any proved allegation of coercion etc. or any other material circumstances adequate to impeach the true and voluntary character of the statement, the contents of the statement which endorses the hand written document seized is to be necessarily deemed to be sacrosanct. We have to bear in mind that the impugned statement of the assessee to this effect induced the department to deintensify the entire process of the further investigation though search. It is because of such statement that too on oath that the deptt. altered its position and closed further investigation on the issue. The provision of S. 132(4) is plain and simple. The authorized Income Tax official is entitled to examine any person on oath who is found to be in possession or control of such documents etc. and any statement made by such person during such examination may thereafter be used in 'evid....
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....stion of applicability of S. 142A with retrospective effect or otherwise is only academic in the present case. 7.5 We have also weighed the fact that the sellers in its Statement in survey proceedings under S. 133A of the Act have endorsed the version of the Assessee. The statement of seller is not before us. Nevertheless, we do not find any substance in such purported statement which is contrary to written document signed by them. Also, the statement recorded under S. 133A does not have the same legal sanctity qua the statement recorded under S. 132(4). 7.6 In the totality of facts and circumstances, We concur with the findings of the CIT(A) and hence not inclined to interfere. 7.7 In the result, Ground No. 1 of the appeal of the Assessee is dismissed. 8. At the time of hearing, Ground No.2 is not pressed and accordingly the same is dismissed as "Not Pressed". 9. Ground No. 3 of the appeal pertains to addition of Rs. 2,07,764/- towards estimated 25% initial investments by AO on unaccounted sales of Rs. 9,09,919/- as per seized diary. 9.1 The relevant facts are that a small 'Mahaveer Diary No. 3' was seized, which contained unaccounted sales of the Assessee from 1....
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....reproduced below for ready reference :- "36. The appellant had purchased a plot of 4670 sft. of R.S. No.194/9 at Valiwade, Kolhapur on 05/07/94 from Shri Ashok T Khubchandani and Shri Ghanshyam T. Khubchandani. The sale deed was executed in the names of assessee's minor son Master Amrutlal M Wadhwa and his brother's minor son Master Anilkumar R Wadhwa for total consideration of Rs. 60,000/-. It is next to the same plot for which an agreement to sale was discovered during the course of search indicating the sale price @ Rs. 65/- per sft. It appears that the original agreement of sale was for 30492 sft. out of which 28000/- was sold vide sale deed dated 22/12/93 for plot no.194/8. Since this plot also was adjoining to the plot no.194/9, the Assessing Officer took the rate of Rs. 65/- per sft. for working out the investment of the appellant. 37. The Assessing Officer was of the view that the Sanchakar Patra discovered at the time of search covered the two transactions i.e. the sale of 28000 sft. in December, 1993 and subsequent sale of 4670 sft. on 05/07/94 and, therefore, she rightly has treated the appellant's investment in the plot @ Rs. 65/- per sft. Moreover, th....
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....ention on the ground that during the course of search, statement of brother of the Assessee was recorded wherein it was stated that no silver articles were sold by the family during the block period. Such statement recorded during the statement brought necessary evidence for taking up the transaction as undisclosed income of the Assessee. 11.2 We are unable to agree with the findings of the CIT(A). It is admitted position that no incriminating document showing any unaccounted sale or investment has been found. The entries already recorded in the books cannot be source of addition / disallowance in block assessment. Some flippant or sweeping statement covering such larger block period by other members of the family without anything more cannot, in our view, override tangible book entry and grant jurisdiction to the AO under block assessment. The addition made on this score by the AO is therefore not sustainable. 11.3 In the result, Ground No. 5 is allowed. 12. Ground no. 6 & 7 are not pressed by the Ld. AR for the assessee in the course of hearing. Accordingly, the same are not adjudicated and treated as dismissed. 13. Ground No. 8 relates to addition of Rs. 1,08,157/- a....
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.....R. Textiles to be a benami concern of the Assessee in which wife of the Assessee is a benami partner on behalf of the Assessee. The premise for holding so is that in the light of statement recorded under S. 132(4), the wife has no knowledge of the business being in her name and is not privy to any details like name of the employee or any understanding of business. 15.2 We observe that the impugned Partnership firm is being separately assessed and grievances arising out of block assessment are also being adjudicated in this consolidated appeal. 15.3 In the light of facts narrated by the CIT(A) in para 84 to 91 of its orders, We find that it is admitted position that wife of the Assessee has contributed initial capital and the firm is backed by partnership deed in writing. The return of income of the partnership firm has been filed and has been assessed. Mere absence of personal knowledge of the business in which a person is a partner cannot make him or her a benami of the person doing the business for the firm. There is nothing to prevent a person to contribute capital and carry on business with the help of others. In our view, the finding of benami is based on irrelevant con....
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....ned deposit and making addition on protective basis in the hands of the Appellant even though the substantive addition is made in the case of Murlidhar Wadhwa. 5) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming addition of value of 135 gms. of gold out of the total 546 gms. owned by the family, as undisclosed investment, and thereby, treating it as undisclosed income of Rs. 57,645/-. 6) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the action of the A.O. in treating D.R. Textiles a partnership firm as Benami firm of the Appellant and his brother and making addition in respect of Rs. 1,70,066/- (Rs.1,63,428/- + Rs. 6,638/-). 7) On the facts and in the circumstances of the case and in law was not justified in not directing the A.O. to give full set off of the additions made in the income as well as the investments." 21. The facts concerning the various grounds are pari-materia with the facts in Murlidhar Radhomal Wadhawa, ITA No.964/PN/2002 (supra). Hence, the reasonings noted in the case of other Assessee in ITA No.964/PN/2002 will apply mutatis-mutandis to this assessee. Ground....
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.... No.194/9 :- B. Erred in confirming the addition of Rs. 1,76,000/- as unaccounted income for sale of plot at R.S.No.194/9 purchased by Shri Rameshlal R. Wadhawa and Shri Murlidhar R. Wadhawa. 1. Erred in arriving Rs. 1,76,000/- as additional consideration received by the Appellant only on basis of the following entries found in the "Mahavir Diary" maintained by the co-purchaser Shri Murlidhar R. Wadhawa. Rs. 26,000/- 26/01/1994. Rs. 1,50,000/- 22/03/1994. Rs. 1,76,000/- 2. In Shri Murlidhar R. Wadhawa's case, only these amounts are mentioned as amounts spent on Plot No.194. There is no specific mention as having spent these amount on plot No.194/9. The Wadhawa brothers had purchased another plot at R.S. No.194/8 on 12/12/1993, therefore, this amount might have been in respect of development of Plot No.194/8 and not towards purchase price of Plot No.194/9. 3. Erred in farfetched conclusion that Rs. 1,76,000/- is towards sale proceeds of Plot No.194/9. 4. Erred in not accepting the departmental Valuation Report for calculation of capital gains as was accepted by his predecessor in case of Shri Rameshlal R....
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....rice is mentioned at Rs. 1,24,000/-. 3. Erred in not accepting the departmental Valuation Report for calculation of capital gains as was accepted by his predecessor in case of Shri Rameshlal R. Wadhawa and Shri Murlidhar R. Wadhawa, for ascertaining market price on the date of sale. 4. Erred in not considering the existing market rates of the surrounding plots in Gandhi Nagar, Kolhapur which were much lower than the price mentioned in the Agreement to sell. 5. Without prejudice to the above, should have appreciated that in any case no addition could have been made on the basis of the "Sanchkar-Patra" which was found in the premises of Shri Murlidhar R. Wadhawa and hence no adverse inference could have been drawn in the Appellant's case. Reg. : Transaction of Plot No.194/9 :- B. Erred in confirming the addition of Rs. 1,76,000/- as unaccounted income for sale of plot at R.S.No.194/9 purchased by Shri Rameshlal R. Wadhawa and Shri Murlidhar R. Wadhawa. 1. Erred in arriving Rs. 1,76,000/- as additional consideration received by the Appellant only on basis of the following entries found in the "Mahavir Diary" maintained by the co-pu....
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....3 relating to block period 1989-90 to 1999-2000 passed under section 158BD r.w.s. 158BC(c) of the Act. 32. In this appeal, the assessee has raised the following Grounds of Appeal :- "On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals)-1, Pune - 1. Erred in confirming the interest charged u/s 158-BFA(1). 2. a) Erred in directing to treat Rs. 1,61,671/- on account of purchases from M/s K.C. Shah & Co. as undisclosed income on protective basis. b) As the income of Rs. 1,61,671/- was considered in the case of Shri Murlidhar R. Wadhawa and Shri Rameshlal R. Wadhawa on substantive basis the Learned C.I.T(A)-1, Pune erred in directing to treat the same on protective basis. c) Contrary to the observation made in the Asstt. Order of Shri Murlidhar R. Wadhawa and Shri Rameshlal R. Wadhawa the Appellant is no more BENAMI Entity as separate Assessment is framed u/s 158BD r.w.s. 158BC(c) and registration has been granted. Therefore, the Learned C.I.T.(A)-1, Pune should have taken independent view to consider the facts and should have directed to delete the addition of Rs. 1,61,671/-. 3. Erre....
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....treated by the Assessing Officer as benami of Wadhawa brothers and added the impugned income in the hands of the partners on substantive basis. Accordingly, he proposed protective assessment in respect of the aforesaid income in the hands of the assessee firm. During the course of hearing, the Ld. Authorized Representative on behalf of the assessee, inter-alia, raised legal ground by way of additional grounds and submitted that satisfaction under section 158BD has not been recorded as mandated by law and therefore the entire action is without jurisdiction and therefore void abinitio and is required to be cancelled. He, therefore, submitted on facts that the addition has been wrongly made towards goods return which have no impact on the profitability of the assessee firm. As regards, holding the assessee firm as benami of Wadhawa brothers, his submissions in respect of grounds of appeal No.10 in ITA No.964/PN/2002 applies mutatis-mutandis. 35. The Ld. Departmental Representative for the Revenue relied upon the orders of the authorities below. 36. We have carefully considered the rival submissions and the orders of the authorities below as well as satisfaction note dated 21.09.....