AI Drafter 
TaxTMI 
TaxTMI 
2025 (4) TMI 331
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....ed submissions of Mr.R.Sivaraman, learned counsel appearing for Mr.P.Ramesh Kumar, learned counsel on record for the appellants (legal heirs of the deceased first appellant) and Mr.Karthik Ranganathan, learned Senior Standing Counsel for the Revenue. 3. The substantial question admitted for consideration are as follows:- '1.Whether in the facts and circumstances of the case, the additions made under the block assessment should be only on the basis of evidence gathered during the course of search? 2.Whether in the facts and circumstances of the case, additions under the block assessment can be made solely on the basis of the statement recorded under Section 132(4) of the Income Tax Act, 1961, without any other material evidence to corroborate with? 3.Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal is right in upholding the addition made by the assessing officer on the issue of expenses incurred on construction of house property without giving credit for the expenses borne by the father of the appellant, when in fact, there was material available on record to demonstrate that a portion of the expenses was borne b....
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....Plots purchased at Ambika Nagar, Trichy Rs.80,880/- Rs.40,440/- 6 Purchase of four plots from Mannargudi Housing Co-operative Society Ltd. Rs.1,72,584/- Rs.1,72,584/- 8. Rent paid for the house property at No.26A, Arulananda Nagar, Tanjore Rs.48,000/- Rs.48,000/- 12 Estimated marriage expenses Rs.25,00,000/- Rs.12,50,000/- 8. The first issue relates to articles found in the course of search. The authority had sought the sources for the purchase of 21 articles that were found in the course of search. In some cases, seized materials had been found to indicate contradictions/discrepancies in the statement recorded/explanations tendered. One of the explanations tendered at the time of assessment was that those articles from part of the wealth tax returns and this submission has been eschewed, and rightly, on the premise that movable assets that are personal in nature would not form part of taxable wealth. 9. The assessing authority had valued the movables at a sum of Rs.3,25,000/- treating the same as undisclosed income of the assessee for assessment year (AY) 1997-98 under Section 69A of the Act. As far as the value of air conditioners i....
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....orn statement at the time of search. The explanation provided by the assessee was not accepted and examined. The valuables were purchased by the entire family and has been discussed in the statement filed along with the returns. The assessee's representative has not furnished any evidence that the valuables are reflected in the WT returns. The valuables found at the time of search are all movable properties and personal in nature and will not form taxable wealth. The assessee in his sworn statement recorded u/s 132(4) of the I.T.Act on the date of search has stated that one TV was received by him as gift at the time of marriage and 2 TVs were purchased by his father. His father-in-law has given him one TV as gift and another TV was purchased in the year 1994. In respect of the VCR, he has stated that they are old. He has stated that his father has purchased two refrigerators and one refrigerator was given to him at the time of marriage as a gift. The assessee's representative has not furnished the name and address of the person from whom he has received the TV and refrigerator as a gift. A perusal of the seized documents reveal that the assessee has purchased an Onida Colou....
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....B&D/S- _11. the assessee has paid Rs.19,00/- to Electricity Board for getting EB connection as per the noting of the assessee seized vide page No.112 of Ann/MC/B&D/S-11. He has accounted Rs.18.75 lakhs as the cost of construction of the property in the books. The above expenses as per the seized materials would not form part of Rs.18.75 lakhs for the following reasons. (i) The Seized materials vide exhibit MC/B&D/S-11 pages 82-84 indicate that the cost of marbles purchased is Rs.8,71,438/-. These marbles are purchased from Rajasthan. The assessee has purchased marbles for Rs.2,30,000/- from M/s.Pushpa Marbles as per the seized document MC/B&D/S-3. The marble value alone is Rs.11,01,438/-. (ii) If the laying (labour) charges are taken into account at the rate of Rs.220/- per sq.metre, the total investment in laying charges would be around Rs.1,93,600/-. (888 sq.m x 220) (iii) The total cost on marble and laying charges alone is Rs.12,95,038/- (8,71,438 + 2,30,000 + 1,93,600). (iv) If cement and other materials required for flooring is taken into account, the flooring charge could be easily taken at Rs.13.25 lakhs. Therefore the e....
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....rt of these expenses. These expenses were incurred out of my income.' 16. While so, the argument of the assessee at the time of assessment had been that the investment had been disclosed in the original returns of income and hence there should be no addition made on this account in the block assessment. No proof has been placed before us in this regard, and neither do the orders of the authorities indicate any proof placed before them. In the statement recorded on 25.09.1996, the assessee has admitted a sum of Rs.82 lakhs as undisclosed income in the property. 17. It is in the above facts and circumstances that the assessing officer proceeds to estimate the investment in the property. He takes into account the cost of construction as per Return dated 23.08.1995 at a sum of Rs.18.75 lakhs and brings to tax a sum of Rs.29.54 lakhs (as emanating from the seized materials) plus Rs.51.70 lakhs, in all an addition of Rs. 51,70,658/-, as undisclosed income for AY 1995-96 under Section 69 of the Income Tax Act. Incidentally, he had also referred the property to valuation and the District Valuation Officer had estimated the cost of construction at a sum of Rs.81,97,134/-. 18. A....
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....authority has also verified the purchase of clothing from a local store for a sum of Rs.23,000/-. As far as the appellant's wedding is concerned, he had stated that the expenditure on his marriage was of a sum of Rs.2 lakhs. The explanation tendered was that the expenditure was met out of agricultural income. 25. According to the appellant, there is no justification for any enhancement on this count and in this connection, he relies on the judgments of the Supreme Court (i) Bannalal Jat Constructions (P.) Ltd. v. Assistant Commissioner of Income-tax (264 Taxmann 5) (ii) Orma Marble Palace P. Ltd. v. Commissioner of Income-tax (267 Taxmann 165) and the decision of the Delhi High Court in the case of Smt.Dayawanti v. Commissioner of Income-tax (390 ITR 496). 26. The search in the present case was conducted on 24/25.09.1996 and the block period in question is 01.04.1996. Admittedly, the appellant had filed regular returns for all the years prior to search. No block return was filed in response to the notice under Section 158BC. A statement had been recorded under Section 132(4) of the Act establishing categorically that the returns filed initially are incorrect a....
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.... notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, such confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search & seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also. Assessing Officers should rely upon the evidence/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders.' 31. This is not a case where the appellant ha....
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....ments ultimately came to be made on the basis of the estimation of the assessing authority and such assessments were assailed by that assessee as being contrary to the mandate of Section 153A. The assessments were confirmed by the Supreme Court in the following terms: '23. We have already found that there is lack of material insofar as the prior years of the block period, but the same has been held to be inconsequential, in so far as the A.O being conferred with the power to make assessment in the best of his judgment. The AO was perfectly justified in carrying out an assessment on the best of judgment, making estimations on the basis of the materials recovered. As has been found in Hotel Meriya, it cannot be assumed that a dealer who practises suppression would retain the materials disclosing suppression, for long years; in the instant case a block period of 6 years. There is also no presumption insofar as the suppression having occurred only in the year in which the search was conducted. If at all, the presumption is otherwise insofar as the special procedure prescribed under Chapter XIV-B to assess undisclosed income for a block period, comprising of assessment year....