TaxTMI 
TaxTMI 
2004 (10) TMI 19
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....ividual) designated as the Director of the Company, Subba Reddy (HUF) and Rajini Reddy, wife of Subba Reddy. 3. There was a search in the premises of the assessee under Section132 of the Income Tax Act, 1961 on February 23, 1996. In the course of the search the following documents were seized : (i) Statement of accounts prepared by one V.C. Gupta, Executive Director (Finance) of the company, relating to the settlement of accounts to the outgoing Director Subba Reddy and his group; (ii) Work Sheet prepared by Chartered Accountants Giri and Prabhakar, which was taken into consideration for settling the accounts of the outgoing Director Subba Reddy and his Group ; (iii) Paper showing negotiation with buyers for purchase of flats. 4. Concededly, except the three documents referred to above, there was no other seizure of cash, bullion, jewellery or other articles or things of value during the time of search. 5. Based on the above materials, the Assessing Officer, ....
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....ccountants were prepared only for the purpose of settling their shares payable to the outgoing Director Subba Reddy and his group as the settlement of shares to an outgoing Director could not be indefinitely postponed and had to be worked out based on the entire value of the project; and therefore, the said documents would not themselves be considered as a conclusive evidence that the assessee had received the entire sale consideration from the purchasers. 9. According to the assessee, the Assessing Officer ought to have taken all relevant factors into consideration, namely, the actual receipts of sale consideration from the purchasers by way of cheques or cash before the date of search as well as the amount received as income generated by such sale subsequent to the date of search, which were in fact shown in the returns duly filed by the assessee as well as the tax paid for the same for the subsequent period. 10. The assessee referring to the fact that except the three documents referred to above, there was no other seizure of ....
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....akhs in the Enclave Project when no material regarding collection of excess sale price or unaccounted expenditure has been found by the Department ? (iv) Whether on the facts and in the circumstances of the case, the Tribunal ought to have concluded that the seized material was merely an estimate of the profit that might be earned out of the project and in the absence of any specific material to show that the appellant had earned more income than accounted no undisclosed income can be seized in the hands of the appellant in respect of the said project? (v) Whether on the facts and in the circumstances of the case, the Tribunal ought to have clarified that the amount of Rs.385.00 lakhs constitute the total profit before tax out of the project during the block period and the profits already offered by the appellant should have been excluded ? (vi) Whether on the facts and in the circumstances of the case the Tribunal ought to have taken into account the profit already offered by the appellant....
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.... would only amount to evasion from payment of tax. 17. Per contra, Mr. P.P.S.Janardhana Raja, learned counsel for the assessee forcefully contends that it is admitted that except the documents seized at the time of search, there was no seizure of cash, bullion, jewels or other things of value. In other words, the only materials available for estimating the undisclosed income or the documents seized at the time of search as referred to above, those documents were prepared only for the purpose of settling the accounts of the outgoing Director, Subba Reddy, and his group. In normal business practice, much less in the real estate business, the over all value of the project has to be worked out while settling the accounts to the outgoing Director, irrespective of the receipt of the entire sale consideration from the purchasers on the date of retirement of the outgoing Director. Therefore, these documents cannot themselves be a basis for....
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.... was any material to show that the company accepted cash payment. On the other hand, the explanation offered by the assessee that they received cheques towards sale consideration of the 85 per cent. of the building sold and that was reflected in the income tax returns while paying income tax for the subsequent years deserves consideration. Therefore we are not able to appreciate that the documents seized from the premises of the assessee at the time of search as referred to above is a conclusive proof to arrive at the undisclosed income. 23. The expression 'undisclosed income' has been defined in Section 158 B(b) of the Income Tax Act to include income based on entries in the books of account or other materials seized from the premises of the assessee at the time of search. In the instant case, even though the documents seized at the time of search would at best be considered in our opinion as prima facie material, since except the said documents there was no seizure of money, bullion....