TaxTMI 
TaxTMI 
2003 (11) TMI 272
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....ading of silver ornaments on commission basis and his earnings are of Rs. 1200 per month. No valuables were found during the course of search. However, the loose papers and diaries marked as Annexs. SA-1, DNA-2, SSA-2, SSA-3 and SSA-4 were seized. The loose papers in Annex. DNA-2 related to the appellant Shri Deena Nath Agarwal and pertain to the period 1994-95. In the case of Shyam Sunder Agarwal, who is brother of the appellant residing in the same premises, action under s. 132 was also taken and in that case appeal has been decided by this Bench in ITA No. 5550/Del/1996 on 29th Aug., 2003. During the course of assessment proceedings for the block period, notice under s. 158BC(a) of the IT Act was issued to the appellant on 6th Nov., 1995, which was served on him on 15th Nov., 1995, wherein, the assessee was required to file the return of undisclosed income for the block period 1st April, 1985 to 1st Sept., 1995. The assessee filed return for the block assessment on 8th March, 1996 declaring nil undisclosed income as under: Previous year Asst. yr. Total Income including undisclosed Income Return/assessed income 1. 2. 3. 4. 1st 1986-87 17,700....
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....59) as a result of search and other material or the information as are available with the AO. With reference to the above, the AO held that the assessee is not entitled for any other claim of exemption, rebate or deduction for the block period. Therefore, the computation of undisclosed income furnished by the assessee/appellant is not acceptable and thus, the claim of estimated expenses of Rs. 32,026 was disallowed and the gross total income was assessed to tax at income of Rs. 51,277 for the asst. yr. 1995-96. 9. During the course of hearing before us, the learned counsel for the assessee vehemently argued that in view of the provisions of sub-s. (2) of s. 44AA, the assessee is not liable to maintain the books of account. Therefore, the expenditure of Rs. 32,026 should have been allowed as according to him under the provisions is of IT Act, the gross profit cannot be taxed. It is only the net profit required to be taxed. He further argued that as per the provisions of s. 158BB(1), the undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed in accordance with Chapter IV containing in s. 28 t....
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....e instant case, out of gross total income of Rs. 51,277, the estimated expenditures claimed at Rs. 32,026 remained only at 63 per cent. 12. On the other hand, the learned Departmental Representative argued that no doubt the GP cannot be taxed, but simultaneously reasonableness of the expenditures has to be seen. The learned Departmental Representative further argued that the claim is made on the basis of memory and human memory is too short to recollect the expenses pertaining to the period 1st April, 1994 to 31st March, 1995 at the time of assessment proceedings held in the year 1996. He further argued that entire business activities were carried out at Mathura, as seized documents do not indicate purchase and sales outside the city of Mathura. Therefore, travelling expenses of Rs. 14,400, hotel expenses of Rs. 4,060 and the payment to helper of Rs. 9,000 are highly excessive. 13. During the course of hearing before us, the learned counsel for the assessee furnished a paper book containing 131 pages and photo copies of seized records in total number 69 pages, which are placed on record. The learned counsel has drawn our attention to page 10 of the photo copy of seized docume....
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....45 kg. net (In the assessment order, it is mentioned that the assessee stated that the purity of silver is @ 60 per cent, but the learned counsel for the assessee outrightly denied and claimed the purity @ 40 per cent). It is further mentioned in the assessment order that if as per seized paper No. 4 of Annex. DNA-2 and also admitted by the assessee, pure silver of 4.471 kg. was returned during the period 1st April, 1995 to 26th June, 1995, then balance remained at 9.074 kg. net. No entry after 26th June, 1995 is made in said seized paper nor any silver was found during the course of search on 4th Sept., 1995. Therefore, the AO concluded that the silver of 9.074 kg. was sold by the assessee during the asst. yr. 1996-97, which in terms of value at 6,820 per kg. comes to Rs. 61,885 and thus Rs. 61,885 was added in asst. yr. 1996-97. 19. The learned counsel argued that the GP taken by the AO in recasted trading account at 6.878 kg. is pure silver of 100 per cent tunch while the other are silver ornaments having purity of only 40 per cent. Therefore, the trading account has not been correctly recasted. The learned counsel further submitted that the opening balance of 12.077 kg. is g....
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.... No. 3 is that the Asstt. CIT was not correct to impose tax on the income, which is below the taxable limit. 24. The contention of the learned counsel for the assessee is that the income below the taxable limit cannot be taxed in the block assessment, which includes undisclosed income. In support of his submissions, he relied on the decision of Tribunal, Indore Bench, in the case of Smt. Sita Devi Daga vs. Asstt. CIT (1999) 63 TTJ (Ind) 72, wherein it has been held that the income below the taxable limit in any assessment year does not form the part of undisclosed income under s. 158BB. 25. The learned counsel for the assessee also placed reliance on the decision of Tribunal, Nagpur Bench (SMC) reported in Taxman Magazine Vol. 94 p. 226 [Kasturchand Baid vs. Asstt. CIT] wherein the facts and decision of Tribunal, Nagpur Bench are as under: "The assessee's income for the asst. yr. 1995-96 was exempt upto Rs. 35,000. The income attributable to the asst. yr. 1995-96 had been determined by the AO at Rs. 34,703, which was below the taxable limit. Under s. 139(1), the assessee was not required to file the return for the asst. yr. 1995-96. For the subsequent assessment years, the....
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....oceedings, the assessee deposed that the amount was received back from Smt. Urmila Devi to whom he advanced the loan on 25th Nov., 1994 through demand draft and the demand draft was purchased in cash from his outstanding recoveries. According to the AO, the assessee failed to give the details of recoveries. The AO asked to explain the purpose for which it was used after withdrawing from the bank on 16th May, 1995. 30. The assessee explained that the same was advanced to other parties, but he could not give the names of those parties. The AO mentioned in the assessment order that at one side the assessee claimed to be a man of no means and on the other side, he is advancing the amount of Rs. 52,750. Thus, he considered the same as undisclosed income and added in the period relevant to the asst. yr. 1995-96. 31. The learned counsel for the assessee at the outset argued that the bank statement was not found during the course of search but it was gathered by the AO from the assessee during the course of assessment proceedings. Hence, no cognisance should be given to such bank statement, as this was not the information gathered during the course of search. In support of his submis....
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....the learned counsel, this was the amount received back from Smt. Urmila Devi by bank draft, which was advanced to her by the assessee on 25th Nov., 1994. The assessee has also filed photo copy of return of income for the asst. yr. 1989-90, which is at p. 16 of the paper book and intimation under s. 143(1)(a) by the Department at p. 15, photo copy of return of income for the asst. yr. 1990-91 at p. 14 and intimation slip at p. 13, similarly, return of income for the asst. yr. 1991-92 at p.12 and intimation slip at p. 11. All these returns were filed by assessee and the assessee was assessed before conducting search at the premises of the assessee. The learned counsel in his written submission at para 3 has mentioned as under: "The appellant has already filed return before action under s. 132(1) was taken, the details are as under: Asst. yr. Asst. yr. Commission income (Rs.) Interest income (Rs.) Total income (Rs.) Remark 1986-87 10,500 7,200 17,700 Return filed on 25.6.1986 1987-88 --- --- --- Return not filed being non-taxable as it is not accepted by the Deptt. 1988-89 --- --- --- ------do------ 1989-90 ....