TaxTMI 
TaxTMI 
2016 (2) TMI 622
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.... Rs. 9,000/- was found in the premises of the assessee. Certain documents/loose papers were also found and seized in the course of the said search and seizure action. The AO issued notice u/s.158BC to the assessee on 15-09-1999. Since the assessee did not file the return of income, he was issued a questionnaire along with reminder for filing the return on 03-10-2000. Subsequently, the AO issued a notice u/s.142(1) to the assessee on 03-10-2000 along with a detailed questionnaire vide letter dated 03-10-2000. The assessee thereafter filed his return of income for the block period in Form 2B on 08-12-2000 by disclosing Rs. 12 lakhs as undisclosed income for the block period. A notice u/s.143(2) was issued to the assessee on 29-01-2001. The assessee in response to the said notice appeared before the AO and filed certain details. 4. The AO noted that the assessee is an individual and running a cable network at Kothrud, Pune in the name of the following concerns : 1. M/s. Snehal Communitations (Prop. of his wife Smt. Shailaja Patil. 2. Snehal Cable Communications Pvt. Ltd. (wherein the assessee is the Chairman He noted that the assessee is also having two proprietary concern....
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....ooks of accounts are lying, the assessee in his reply to Question No.24 stated that the returns filed for various assessment years were done by taking data directly from the computer in which all data in its regular course was being fed. 6. The assessee in his subsequent reply in the statement recorded u/s.132(4) on 26-02-1999 expressed his inability to produce the books of accounts for Snehal Communications and in his individual case as well. 7. Since the assessee was unable to produce the books of account and the books of account were not found during the course of search the AO analysed the various documents seized from the premises of the assessee during the course of search. After considering the explanations given by the assessee from time to time, the AO determined the undisclosed income of the assessee for the block period at Rs. 1,08,82,364/- being unexplained cash loans, unexplained business income on purchase and sale of land, unexplained cash credits and unexplained transactions for various assessment years of the block period. 8. In appeal the Ld.CIT(A), based on the arguments advanced by the assessee, gave part relief to the assessee. 9. Aggrieved with suc....
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....ngle addition of Rs. 12,00,000/- be deleted. 8. On the facts and in the circumstances of the case and in law the assessee denies his liability to pay interest u/s.158BFA(1) of the Act and same be deleted. 9. On the facts and in the circumstances of the case and in law no surcharge is leviable u/s.113 and it be held accordingly. 10. The appellant craves to leave, add/amend or alter any of the above grounds of appeal." 10. The assessee has also taken the following additional ground : "On the facts and in the circumstances of the case and in law the block assessment is vitiated in law inasmuch as the statutory and mandatory notice u/s.143(2) was not served in accordance with the proviso to that section but the said notice was served prior to the filing of the Return in F.2B. The lower authorities have not held the said return invalid. Since the provisions of proviso to S.143(2) have been violated the resultant assessment is bad in law, without jurisdiction and be cancelled." 11. The Ld. Counsel for the assessee referring to the additional ground submitted that the said ground is purely a legal ground and no fresh facts are required to be investigated. Relying on the ....
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.... in absence of issue of notice through RPAD with acknowledgement due. The CIT(A) had given a categorical finding that the notice u/s.158BC was issued on 15-09-1999 and served on the assessee by Registered post sent on 21-09-1999. It is addressed to Shri Sambhaji S. Patil as proprietor of a concern and thus is in his individual capacity. As per the said notice, the return of income was to be filed within 16 days of the service of the notice and the block period mentioned is upto 16-02-1999. In response to the said notice the assessee, in his individual capacity, had filed a return in Form 2B on 08-12-2000. Thus, the CIT(A) has held that the assessee has not only duly received the notice but has also filed return of undisclosed income for the relevant block period although the same was beyond the time given in the notice u/s.158BC. In view of the above, he held that the stand taken by the assessee about the criteria of the notice u/s.158BC is not acceptable. We do not find any infirmity in the order of the CIT(A) on this issue. Once the assessee has been served the notice and in compliance to the same the assessee has responded by filing the return, now he cannot take a ground that t....
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....20. In appeal the Ld.CIT(A) gave certain relief to the assessee and sustained addition of Rs. 4,75,000/- which are unrecorded by observing as under : "10.3 I have gone through the statement on oath of the appellant u/s.132(4) and u/s. 131 as well as perused the seized papers which were produced before me by the assessing officer and copies of which along with explanation have been submitted by the appellant as well. Copies of the explanation of the appellant along with photocopies of the relevant seized papers is given in Annexure-3 to this appellate order. After going through all this information on record, I have to hold that the decision arrived at by the assessing officer in this regard is not based on proper appreciation of the facts and the evidence available. Infact, there is no circumstantial evidence available on record and no attempt whatsoever has been made by the assessing officer to gather any evidence from Mr.Jugal Soni, Mr.Shriram Soni or Kumbres or any other person who is mentioned in the loose papers which are basically rough jottings on small pieces of papers and do not lead us to the type of conclusion arrived at by the appellant specially in the light of the ....
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....the appellant and has not been rebutted by the appellant at later stage, the details of unrecorded sale has not been received by the appellant is required to taken over and above the recorded consideration. In the statement on oath u/s. 132(4) dated 17.02.1999, which was recorded in an elaborate manner wherein the appellant has admitted the total receipts from the sale of plots of land of Rs. 25,70,000/-, out of which the following amounts are unrecorded: F.Y.1993-94 Rs.1,80,000 F.Y.1994-95 Rs. 20,000 F.Y.1995-96 Rs.2,75,000 Rs.4,75,000 The appellant also admitted that these money has been utilized by him for business purposes and to pay back his outstanding loans. In this manner, while this addition of Rs. 4,75,000/- is required to be made as business income from the land details, the appellant would be given a telescopic benefit in the light of unexplained investment in repayment of loans made as well. All in all, ground no.29 is accordingly only partly applicable in favour of the appellant and as such with these observations no further comment is required to be made on the same. However, the addition of Rs. 15,57,000/- made a....
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....nd the notice u/s.158BC(c) was issued on 15-09-1999. The assessee filed the return in Form 2B on 08-12-2000 and the notice u/s.142(1) was issued on 03-10-2000. Subsequent to the issue of notice u/s.142(1) the AO issued notice u/s.143(2) on 23-11-2000 which is before filing of the return. Relying on various decisions he submitted that the notice u/s.158BC is not a mere procedure. The AO acquires jurisdiction to initiate block assessment only on issue of notice. Failure to comply with the provisions of section 143(2) cannot be taken lightly and the action of the AO in not complying with the said provisions cannot be justified. He further submitted that notice was not issued through RPAD. Relying on various decisions he submitted that a notice sent under certificate of posting and not by registered post would not amount to proper service of notice. He accordingly submitted that since the notice u/s.143(2) was issued prior to the filing of the return and the manner of service of notice was also improper, therefore, the entire assessment proceedings should be held as void ab-initio. 28. The Ld. Departmental Representative on the other hand submitted that after the assessee filed the ....
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....mistake by the AO, however, the same cannot make the entire assessment proceedings invalid since a fresh notice u/s.143(2) has been issued by the AO after filing of the return in Form 2B by the assessee. The notice was duly served on the assessee and the assessee had participated in the assessment proceedings. Things would have been different had the AO not issued a fresh notice u/s.143(2) after the return was filed. Under these circumstances, the various decisions relied on by the Ld. Counsel for the assessee are not applicable to the facts of the present case and are distinguishable. In view of the peculiar facts and circumstances of the present case the additional ground raised by the assessee is accordingly dismissed. ITA No.132/PN/2004 : 30. Ground of appeal No.1 by the Revenue reads as under : "1. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in admitting the appeal for the second time without appreciating the fact that the assessee had filed the block return on 08-12-2000 and had delayed payment of undisputed tax liability by more than 2 years without any reasonable cause and hence there was no ground whatsoever for condonation of delay." ....
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....fter considering the remand report the Ld.CIT(A) deleted the addition made by the AO. While doing so, he noted that it is not possible to work out from the seized diary about the figure which total up to Rs. 24,24,428/- and the only basis of addition was the statement recorded u/s.132(4) of the Act. Although the AO was required to verify each and every entry made in the diary numbers 38, 39 and 46 with respect to the books of account and other charts relating to cash flow statement submitted by the assessee during the assessment proceedings as well as before the appeal proceedings, the CIT(A) noted that the AO in the remand report has mentioned that those entries in the diaries have been verified and found to be properly entered in the cash flow statement with certain minor variations. The CIT(A) further noted that the seized diaries not only contain the loans and deposits taken or given by the assessee but also have details of other activities of the assessee related to the business of his wife as well as the Pvt. Ltd. company. The figures which were worked out at the time of search and the statement u/s.132(4) are treating the diaries as if they contain mainly the business activi....
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....antial evidence available on record and no attempt has been made by the AO to gather any evidence from Shri Jugal Soni, Shri Shriram Soni or the Kumbre's or any other person as mentioned in the loose papers. He has also given a finding that the AO in the computation of undisclosed income had made certain apparent double additions. After considering the various submissions made by the assessee and after considering the remand report the Ld.CIT(A) has deleted the above 2 additions. The Ld. Departmental Representative could not controvert the findings given by the CIT(A). Therefore, in absence of any contrary material brought to our notice against the order of the CIT(A) we find no infirmity in his order deleting the above 2 additions. Accordingly, the order of the CIT(A) on this issue is upheld and the grounds raised by the Revenue are dismissed. 38. Ground of appeal No.6 by the Revenue reads as under : "6. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in holding that the addition of Rs. 15.50 lakhs sustained by him on account of repayment of loans would take care of the amount of Rs. 11.74 lakhs without any evidence to interlink the two transactions." ....
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....en taken from sonis and, therefore, makes an addition of Rs. 11,74,000/- as 'undisclosed income'. The original amount of Rs. 15 lakhs treated as cash loan is itself an imagination and, therefore, giving credit of Rs. 3,26,000/- from this figure and sustaining an addition of Rs. 11,74,000/- itself is imaginary. " 16.1 After considering the facts of the case, I have to hold that the addition of Rs. 11,74,000/- is not at all justified and the same is directed to be deleted. The grounds of appeal Nos. 22 to 26 are accordingly allowed in favour of the appellant." 40. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 41. After hearing both the sides we do not find any infirmity in the order of the CIT(A). The factual finding given by the Ld.CIT(A) could not be controverted by the Ld. Departmental Representative. Since the order of the CIT(A) is based on proper appreciation of the seized documents, therefore, in absence of any contrary material brought to our notice by the Ld. Departmental Representative, we do not find any infirmity in the same. Accordingly, the order of Ld.CIT(A) on this issue same is upheld and the ground raised by the Revenue....
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....uslori by demand draft of Rs. 4 lakhs on 11-02-1998. Certificate from Shri Ganesh Bank of Kurundwad Ltd. Kothrud, Pune was also submitted by the assessee before the CIT(A). It was further submitted that when the AO was categorically stating in the assessment order that the assessee was not maintaining any books of account, then in such a situation it was not possible on his part to make addition u/s.68. 46. Based on the arguments advanced by the assessee the Ld.CIT(A) deleted the addition by observing as under : "12.2 I have examined the facts of the case and the position of law In this regard. Shri.P.S.Puslori and the appellant were competitors and adversaries in their cable network business. The appellant has admitted that he had taken loan in cash from Shri.P.S.Puslori and Shri.P.S.Puslori has admitted the position as per the information submitted by the appellant. The assessing officer did not confront the appellant with the information collected at his back from Shri.P.S.Puslori and as such it is fatal defect in the decision making process of the assessing officer. The additions made are, therefore, liable to be deleted. Ground nos. 16 and 17 are allowed in favour of the....
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....nt thereof. In appeal the Ld.CIT(A) based on the basis of submissions made and arguments advanced by the assessee directed the AO to delete the addition of Rs. 1,71,761/- made u/s.68. However, he directed the AO to make addition of Rs. 1,01,506/- u/s.69 of the Act in absence of any plausible explanation given by the assessee towards the repayment. The relevant observation of the CIT(A) at Para 14.1 and 14.2 of the order read as under : "14.1 This issue is also a subject matter of question no.50 of the statement u/s.131 wherein certain pages of seized bundle no.6 have been referred to by the assessing officer and the appellant has once again submitted that these represent loans raised against the gold ornaments. The assessing officer has however simply stated after recording the statement on oath of the appellant u/s.131 refuting the admission u/s.132(4) of the I.T. Act, 1961 that the appellant has not been able to satisfactorily prove the genuineness of the loans taken and therefore treated as unexplained cash credit in terms of section 68 of the I.T. Act, 1961. The assessing officer has also not accepted the claim of the appellant that the maximum amount of loan taken was Rs. 9....
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....f any contrary material brought to our notice by either side we do not find any infirmity in the order of the CIT(A). Accordingly, the same is upheld and the ground raised by the assessee as well as the Revenue are dismissed. 53. Ground of appeal No.9 by the Revenue and ground of appeal No.6 by the assessee are as under : "9. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in giving relief of Rs. 5 lakhs out of the total addition of Rs. 20.50 lakhs merely on the ground that cheque was issued in the name of Mrs. Patil without appreciating the fact that the business was being handled by Mr. S.S. Patil and ignoring fact that the assessee admitted the said unaccounted amount in the statement u/s.132(4). 6. On the facts and in the circumstances of the case and in law the Ld.CIT(A) was not justified in confirming the addition of Rs. 15,50,000/- out of total addition made by the A.O. of Rs. 20,50,000/- by treating them as loans taken on the strength of blank cheques issued and seized in search action. In view of proper explanation offered the Ld.CIT(A) ought to have deleted the entire addition of Rs. 20,50,000/- from the block assessment." 54. In ground ....
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....s. 15,50,000/- is to be sustained out of Rs. 20,50,000/- (Relief of Rs. 5,00,000/-) on facts as well as in view of the legal position brought out in later paragraphs." 57. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 58. After considering the rival arguments made by both the sides, we do not find any infirmity in the order of the CIT(A) sustaining an amount of Rs. 15,50,000/- out of Rs. 20,50,000/- made by the AO. The Ld. Counsel for the assessee could not controvert the factual findings given by the CIT(A). The decision of the Chennai Bench of the Tribunal in the case of ACIT Vs. M.N. Rajendran reported in 33 ITCI 666 relied on by the Ld. Counsel for the assessee is not applicable to the facts of the present case. The Ld. Departmental Representative also could not point out any error in the order of CIT(A) giving relief of Rs. 5 lakhs. Ground raised by the assessee as well as the Revenue are accordingly dismissed. 59. Ground of appeal No.10 by the Revenue reads as under : "10. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the addition of Rs. 4,94,275/- being peak credit in the account of S.R. Kulkarni....
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....on 10.12.1997 and this explanation was given by the appellant in his submission dated 07.02.2001 before the assessing officer. This amount of Rs. 60,000/- was paid to Mr.Mankar on behalf of Mr.S.R.Kulkarni and has been confirmed by Shri. S.R.Kulkarni later on. Similar is the position of the amounts received from Karan Cable on 06.08.1997 and advance against sale of land reflected therein. In such a situation, no addition on this account is required to be made on merits. Even otherwise, as has been pointed out by the appellant, addition on account of undated cheques having already been made, separate addition on this account is not called for. In this connection, it would be relevant to point out that the assessing officer has somehow not properly considered the submissions of the appellant on record while arriving at decisions, which has been done mainly on the basis of the statement u/s.132(4). This is not the right method to be employed in working out the undisclosed income for the block period. The shortcomings of the assessing officer, which has been pointed out by the appellant in his submission dated 22.07.2003 are as under and have been closely and minutely examined by me be....
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....sing a loan of Rs. 45,000/- which itself was also repaid on 14.03.1997. On 14.03.1997, fresh loan of Rs. 91,000/- was taken which was repaid on 10.08.1997 by paying interest of Rs. 3,676/- The A.O. disbelieving the assessee's statement added Rs. 1,71,561/- as an undisclosed income u/s.68 even though it is the finding of the A. O. that no books of account have been maintained. Explanation dt.07.02.2001, item No.7 deals with regards to loans taken from Karan Cable 1994-95 to 1997-98, Kishor Gayatri 1996-97 to 1998-99, S. R. Kulkarni 1996-97 to 1998-99, Baba Shaikh 1997-98 to 1998-99. The AO. has recorded his findings that blank cheques have been taken back as repayments have been made. These repayments have been made from out of undisclosed income. Karan Cable Rs. 1,40,000/- Entire account has been squared off by repayment by crossed account payee pay order No.14671 of Rs. 4, 00,000/-. But still A O. has made separate addition as undisclosed income of Rs. 4,00,000/- in his para no.8 of assessment order. S.R.Kulkami - Rs. 9,29, 100 + Rs. 37,000 Here also AO says that the repayment has been made in cash from out of undisclosed sources in lieu of blank unsigned cheque....