TaxTMI 
TaxTMI 
2016 (7) TMI 311
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....contentions raised and re-determined undisclosed income of Rs. 91,50,130/-. While doing so, he made same additions as were made at the time of earlier assessment proceedings. Against the said order of assessment, assessee filed the present appeal. 2. Consequent to search operations on 31-01-1996, assessee had filed return for the block period on 06-12-1996 admitting undisclosed income of Rs. 4,00,000/- as under: AY. Total income returned Original return of income Undisclosed Income 1986-87 to 1991-92 NIL NIL NIL 1992-93 4,44,400 44,400 4,00,000 1993-94 NIL NIL NIL 1994-95 NIL NIL NIL 1995-96 NIL NIL NIL 1996-97 NIL NIL NIL Total: 4,00,000 3. Since direct appeal was provided to ITAT at that time, assessee raised the following grounds in the appeal: 1. The order of the Assessing Officer is erroneous, unjust and contrary to the facts of the case; 2. The order of the Assessing Officer is not within time provided under the I.T. Act. 3. The Assessing Officer erred in holding that there is any undisclosed income in respect of the followin....
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....of assessment proceedings. He further submitted that the facts were already disclosed in the return of income filed before the search. No evidence was found during the course of search. AO is not justified in making the addition of Rs. 1,51,241/-. The addition does not emanate from search material. It is submitted that assessee was having source of income upto 31-03-1991 and that the amount of Rs. 1,51,241/- could have been accumulated from out of the said source. This fact was accepted by the AO while completing the original assessment on 31-01-1997. 3.4. As far as addition made by AO for gifts received by assessee for Rs. 6,07,852/-, Ld. Counsel submitted that on the occasion of the marriage, an amount of Rs. 4,00,000/- is concerned, the same was admitted by assessee in the return of income filed. 3.5. Ld. Counsel further submitted that gifts received by wife of assessee Smt. Uma of Rs. 2,03,460/- were admitted by her in the return of income filed in response to notice u/s. 158BD. The same should not have been added in the assessment of assessee. AY. 1993-94: 4. AO made an addition for investments in Ushodaya Oil Producers for an amount of Rs. 5,21,180/- which consist....
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.... Counsel submitted that the same cannot be added in the assessment of assessee. The partnership firm Ushodaya Oil Producers filed the returns of income. Assessee is not a partner of the said partnership firm. There is no evidence to show that the income derived by the partnership firm belong to assessee, except the presumption of AO. Ld. Counsel urged that the profit cannot be added in the assessment of assessee. 5. As far as investment in Balaji Oil Producers of Rs. 20,000/- is concerned, Ld. Counsel submitted that assessee admitted the investment amount of Rs. 20,000/- made by him. There was an opening balance of Rs. 4,90,496/- and agricultural income of Rs. 1,25,000/-. The amount was paid to Balaji Oil Producers and assessee was having sufficient funds on that date. Therefore, the AO was not justified in holding that Rs. 20,000/- represents the undisclosed income of assessee. The addition was made based on the receipts and payments account and not based on seized material. 6. As far as investment in chit funds is concerned, Ld. Counsel submitted that the investments for an amount of Rs. 4,250/- in Orugallu Chit Fund and Rs. 9,600/- in Pramida Chit Funds were made by assess....
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....four persons and plot in the name of Sri V. Dayakar for Rs. 65, 262/-, is concerned, Ld. Counsel submitted that there is no evidence during the course of search that the investment was made by the assessee. 8.1 Ld. Counsel submitted that investment in purchase of plot at Mill Premises for Rs. 1,91,583/- was also made jointly by Smt.V.Uma, Y.Mallaiah, M.Arunkumar and V.,Chandra Mohan. The documents found during the course of search show that the property was purchased by all the four persons. He submitted that there is no evidence during the course of search that the investment was made by the assessee. 8.2 With regard to the plot in the name of Sri V.Dayakar for Rs. 65,262/- is concerned, it is submitted that the investment was made from out of his own sources. 9. As far as the alleged investments in chits, which consists of receipt from Orugallu Chit Fund of Rs. 20,000/- and from Pramida Chit Funds of Rs. 65,000/- are concerned, Ld. Counsel submitted that this is not an investment as this amount does not represent investment but represents the receipt from Orugalla Chit Fund of Rs. 20,000/- and from Pramida Chit Funds of Rs. 65,000/-. He submitted that the said amounts of....
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....rned, Ld. Counsel submitted that this amount is shown in the Receipts Cotton Cor oration. and Payments account. AY 1996-97 14. As regards the investments in shares of Ushodaya Agro Products, which consists of investment in shares of Ushodaya Agro Products in the name of the assessee of Rs. 19,000/- and in the name of V. Chandra Mohan of Rs. 11,32,000, are concerned, Ld. Counsel submitted that the investment by the assessee is for Rs. 19,000/-. This amount is shown in the Receipts and Payments account. The Assessing Officer added Rs. 11,32,000/- invested by Sri V.Chandra Mohan. As submitted earlier, Mr.V.Chandra Mohan is assessed to tax. 15. As regards investment in purchase of property, which is made in acquisition of 489 sq.yds. jointly in the names of Smt. Uma, Y. Mallaiah, M. Arunkumar and V. Chandra Mohan, is concerned, Ld. Counsel submitted that this investment is Smt.Uma, Y.Mallaiah, M.Arunkumar made in acquisition of 489 and V.Chandra Mohan for acquisition of sq.Yds. jointly in the names the property of 489 Sq.Yds. The Smt. Uma, Y.Mallaiah, investment was not made by the assessee. There is no evidence in the seized material to show that the investment was made by th....
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....41/- and Gift received of Rs. 6,07,852/- were found to be not genuine. With regard to the opening cash balances, it was explained that the assessee and his wife had agricultural lands of 9 acres and the source for the balance is savings from the agricultural income. However, no documentary evidence was furnished regarding the ownership of lands, crops grown, sales made, expenses incurred etc. As regards the gifts received, it was explained that the gifts were received by his wife on 10th and 11th marriage anniversaries from the close relatives, but they are resisting to confirm the gifts. Thus, the assessee could not substantiate the gifts with necessary evidence except furnishing with the list of donors. Hence, the amounts were added as undisclosed income of the assessee. 5. For the assessment year 1993-94, the investment in the share capitals of firms, Ushodaya Oil producers and Balaji Oil Producers and investment in chits were added when the assessee could not furnish necessary and reasonable evidence. On enquiry, it was found that the alleged partners in these firms, viz, Smt. M. Vijaya Lakshmi and Sri V. Chandra Mohan are the benamis of the assessee who had no means t....
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....proceed u/s 158BC against such other person. As can be seen from the provisions of section 158BD, there should be books of account, documents or any assets, which have seized or requisitioned in the search in an assessee case. As can be seen from the orders passed by the AO, there was no search material or incriminating material, other than the reports of the survey disclosing deficit or excess stock and cash found in the absence of books of account. Being the case, where no incriminating material was found and particularly in the assessee's case, when the proceedings are initiated u/s 158BD, the scope of reassessment/assessment in this case is restricted. 17.1 The case law on the subject and on the provisions of Chapter XIV-B are very clear that only the undisclosed income which was found consequent to the search i.e. which has not been or would not have been disclosed for the purpose of the Act or any expense, deduction or allowance claimed under this Act, which is found to be false, can be brought to tax in the block period. 17.2 As briefly stated above and contentions reiterated by assessee in the submissions, assessee has filed returns of income before the so-called surv....