TaxTMI 
TaxTMI 
2026 (3) TMI 1288
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....ted during the course of search and seizure, notice under Section 158 BC of Income Tax Act, 1961 (hereinafter referred to as "IT Act") was issued to each of them and enquiry was conducted. Block assessment for the Assessment years 01-04-1997 to 23-05-2003 was made by the Assessing Officer, based on the materials recovered during the course of seizure. The Assessing Officer had opined that the house property purchased by the brothers showing sale value as Rs. 14 lakhs was infact, worth more than Rs. 1,50,00,000/- and a payment of Rs. 61,69,000/- proved through the loose sheets recovered during the search. Further, for 3032 grams of gold jewellery kept in their house, the source was unexplained. That apart, for silver and diamonds found in the residential premises was not disclosed in their wealth tax returns. Hence, those jewellery were held as business stocks investment from undisclosed income. 2. The contention of the assessees that the loose sheets recovered from their premises neither contained any signature nor were written by the buyer (assessee) or by the vendor and therefore, in the absence of corroborative materials, it is not reliable, was negatived by the Assessing Off....
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....e and the same. The appeals were partly allowed with the following observations:- "(a) The appellant could not prove nature and source of payment of cash amounting to Rs. 18094448 ( Rs 3143959 - Rs 1334502) for purchase of property. Therefore addition to the extent of Rs 1809448 is confirmed. 1/3rd share of the appellant in this undisclosed investment works out to Rs. 603150/-. The Assesssing Officer is directed to treat the undisclosed income of the appellant for the assessment year 2000-2001 falling within the Block Period at Rs 603150/- and the balance amount is directed to be deleted. b) The plea of the appellant regarding telescoping of excess jewellery is rejected because of lack of any documentary evidence in this regard. Since the excess jewellery was owned by the mother (Smt.Saroja) and her three sons and their families, the share of excess jewellery in the hands of the appellant in the total excess works out to Rs: 2,97,344 being 1/4th share of the appellant in the total excess jewellery found at the time of search and the sources of which could not be satisfactorily explained by the appellant. Therefore the addition to the extent of Rs 2,97,344/- is con....
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....s/2008 T.C.A.No: 1400/2009 7 N.Mohanraj I.T (SS)A.No:57/Mds/2008 (Dept. Appeal) T.C.A.No: 1401/2009 11. At the time of admitting the appeals, T.C.A.No:1395 to T.C.A.No:1399 of 2009 on 04.01.2010, in T.C.A.No:1395 of 2009, T.C.A.No:1396 of 2009 and T.C.A.No:1398 of 2009, this Court has framed the following Substantial Question of Law:- "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the jewellery kept at home cannot form part of business stock? 12. In T.C.A.No:1397 of 2009, the Court has framed the following Substantial Questions of Law:- "(1)Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in setting aside the order of the CIT(A) on the issue of telescoping of deficit in the explained cash for making payment towards purchase of property (2)Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in not allowing telescoping of explained cash till the date of search, while making addition on account of undisclosed income for purchase of property? ....
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....ntries found in the loose sheets are unworthy of any reliance. Presumption under Section 132(4A) of the IT Act cannot be drawn to the facts of the case, when sale of the property was for a consideration of Rs. 14 lakhs only and the same is not controverted by the seller. (b)The stock in trade kept in the residence has erroneously been held as investment from undisclosed income. Just because the jewels were in single piece, the authorities have declined to take it as business stock. The said reason is not sustainable and logic. Traders keeping valuable stocks in residence is not uncommon. (c)The Commissioner of Income Tax (Appeal) had rightly held that there was actual deficit of cash balance available for the concern period for which necessary telescoping should be granted. Whereas the Tribunal erred in setting aside the order of the CIT (A) on the issue of telescoping of deficit in the explained cash for making payment towards purchase of property. The Tribunal ought to have allowed telescoping of explained cash for making payment towards purchase of the property, till the date of search. (d) In the civil suit by the assessee against the seller for enfor....
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....his works out to Rs. 6,000/- x 3180 sq.ft. = Rs. 1,90,80,000/-. This shows that the worth of property is not Rs. 14 lakhs but near about Rs. 2 crores. As per the assessment, based on these un-controverted documents, the valuation been made and tax imposed for the undisclosed income, which the assessees failed to prove the source. 21. The dispute between the assessees and the seller was on a different context. The pleading of the assessees in their suit is different from the plea before the Department. From the loose sheet, it is evident that, after detailing the payment of Rs. 1 lakh as advance and Rs. 14 lakhs in the sellers loan account, Further, sum of Rs. 68,950/- as house tax on behalf of sellers and a sum of Rs. 40,68,950/- paid towards sale consideration. The suit filed before the Additional Subordinate Judge is entirely on a different context. The claim by the assessees that the Civil Court had confirmed that the vendor has agreed to sell the property for Rs. 14 lakhs, while considering whether the suit filed by the assessees against the sellers was maintainable and the assessees were entitled to the relief sought in the suit, cannot be taken as a bar for proceedings in ....
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..... Whereas, under the Income Tax proceedings, the books of account as well as the records maintained contemporaneously found in contradiction/variation/omission/addition, in view of Section 132 (4) and (4 A ) of the Act, 1961, it is the onus of the assessees to explain. 27. Point regarding the probative value of spiral note book/loose sheets, which contains details about money transaction, came up for consideration before the Hon'ble Supreme Court, in a criminal case widely known as "Jain Hawala Dairy case" (CBI -vs- V.C.Shukla and others reported in 1998 (3) SCC 410). The Hon'ble Supreme Court, after elaborate discussion on the expressions like 'Account', 'Books of Account' and 'regularly kept' employed in Section 34 of the Indian Evidence Act, 1872, in the context of criminal prosecution, had observed as below:- "24. It cannot be gainsaid that the words "account", "books of account", "business" and "regularly kept" appearing in Section 34 are of general import. Necessarily, therefore, such words must receive a general construction unless there is something in the Act itself, such as the subject-matter with which the Act is dealing, or th....
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....ssessees admit the recovery of loose sheets during the search process. They admit all the payments, which are reflected in their books of account, but deny the payments which are not reflected in their account. This un-accounted payment is termed as undisclosed investment by the Department and the source of the investment as undisclosed income. To prove the contrary, the assessees had failed to produce evidence, but only plead that those entries are not in their hand writing, but admit that it may be written by their Accountant. The vague denial is not sufficient to shift the onus of proof. To rebut the statutory presumption, the assessees are bound to place evidence to probablise the falsehood in the entries. In this case, the assesses had miserably failed to discharge the burden. Therefore, we hold the substantial questions of law in respect of the probative value of the entries found in the loose sheets in favour of the Department. 31. In respect of the question regarding the excess jewellery found in the residential premises, it is purely a question of fact and not a substantial question of law. The accounts maintained by the individual as well as the partners of the busines....