TaxTMI 
TaxTMI 
2002 (9) TMI 251
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.... been computed. The returns for the assessment years 1989-90 and 1990-91 were not due and as such were not filed. As a result of search under section 132, the assessment for the assessment years 1981-82 to 1988-89 were reopened. In due course, the returns for all the eight years were filed in response to notice under section 148 of the Act. During the course of search, certain diaries were seized wherein various transactions were recorded. The assessee on the basis of said diaries had calculated his unaccounted and professional income and offered the same for taxation under section 132(4) of the Act. The books of account were not maintained by the assessee as per provisions contained in section 44AA read with rule 6F. 3. For the assessment year 1982-83, the assessee had filed his return of income declaring total income of Rs. 3,28,140. The assessment was completed under section 143(1) on total income of Rs. 3,28,140. The assessee made the disclosure of additional income of Rs. 1,84,000 under section 132(4) of the Act which he admitted to be his unaccounted professional receipts or unaccounted investments. The original assessment had been completed at a total income of Rs. 3,28,1....
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....e assessee had filed his return of income declaring total income of Rs. 2,82,380. The assessment was completed under section 143(1) on total income of Rs. 2,82,380. The assessee by way of statement under section 132(4) disclosed additional income for taxation of Rs. 2,56,000 which he admitted to be his unaccounted professional receipts or unaccounted investments. The assessment was reopened and was completed under section 143(3) read with section 147 determining the income of the assessee at Rs. 5,38,380. Thus, the assessee admitted the nature of the additional income. 6. The Assessing Officer in his order passed under section 271(1)(c) of the Act has observed that the assessee filed the revised returns after the detection of unaccounted income, therefore, proceedings under section 271(1)(c) were initiated by issuing show-cause notices to the assessee. In response to the show-cause notices, the assessee explained that the revised returns were filed voluntarily disclosing the additional income as per the declaration made under section 132(4) of the Act and the income as returned was the same as assessed under section 143(3) of the Act. It was submitted before the Assessing Office....
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....m, Explanation 5 is attracted only where during the course of search operation under section 132, the assessee is found to be the owner of any money, bullion, jewellery or other valuable articles or things and the assessee claims that such assets have been acquired by him by utilizing his undisclosed income. Thus, the Explanation would be attracted only in a case where assets are found. In the case of the assessee, only diaries and other incriminating material were found. Such diaries contained evidence regarding the undisclosed professional income of the assessee. Thus, according to the learned CIT(A), the provisions of Explanation 5 are not attracted. The learned CIT(A) has further stated that in order to get immunity, one of the condition is that undisclosed income should have been recorded in the books of account maintained by the assessee. The assessee is a professional. For professionals, the Board have prescribed, the books of account to be maintained in the prescribed manner in accordance with section 44AA read with Rule 6F. According to the CIT(A), diaries cannot be considered to be the books of account maintained in the prescribed manner. Thus, on this account also, the l....
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....ment diary containing consulting room appointments for the period from 1-1-1988 to 31-12-1988 written in the hand-writing of the assessee (compilation page 124). The learned counsel also invited our attention to compilation page 122 which is a page of the diary marked as file No.3. The learned counsel, therefore, contended that the diaries maintained by the assessee were his regular books of account. According to him, these diaries have been accepted by the Assessing Officer in toto. The learned counsel further argued that the books of account means commercial books. According to him, there was only one book of account i.e., the diary seized. The figures mentioned in the diary were date-wise and even the monthly totals were mentioned therein. Therefore, the learned counsel contended that the diary was capable for deriving income of the assessee. This diary was prepared for eight years and the same was maintained for that period. He referred to the decision of the Allahabad Bench of the Tribunal in the case of Shyam Biri Works (P.) Ltd. v. Asstt. CIT [2001] 70 TTJ (All.) 880 wherein the Tribunal held that "Assessee having disclosed large amount of undisclosed income in the statement....
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....or any source of income or such income is otherwise disclosed to the Chief Commissioner before the said date; or (2) He, in the course of search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in section 139(5), and also specified in the statement, the manner in which such income has been derived and pays the taxes together with interest, if any, in respect of such income. Thus, with the deeming provisions of Explanation 5, the assessee is fastened with the liability to penalty under section 271(1)(c) in cases where he explains that the acquisition of assets recovered in course of search is out of income of previous years which had already ended before the date of search or which is to end on or after the search but with the exception mentioned in sub-clauses (1) and (2) of Explanation. In the present case, the search action was carried out in the premises of the assessee on 8-7-1989. During the course of search....
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....wherever issued to the person and receipts in respect of expenditure incurred by the persons or, where such bills and receipts are not issued and the expenditure incurred does not exceed fifty rupees, payment vouchers prepared and signed by the person. A person carrying on medical profession shall, in addition to the books of account and other documents, specified in section 44AA read with rule 6F, keep and maintain the following namely- (i) A daily case register in form No. 3C; and (ii) An inventory under broad heads, as on the first and the last day of the previous year, of the stock of drugs, medicines and other consumable accessories for the purpose of his profession. 11. The assessee has not maintained the books of account as per the provisions of section 44AA read with rule 6F of the Income-tax Rules. We have gone through the copies of certain pages of the diary filed by the assessee in his compilations. In some pages, certain figures have been written and thereafter they have been scored off. On certain pages, there are over-writings of certain figures. Under these circumstances, we do not think that these types of written pages of the diary should be considered as ....
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....ction of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book ..... I think the term 'book' in section 34 aforesaid may properly be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for the purposes of section 34, and I have no hesitation in holding that unbound sheets of paper, in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of section 34. We must observed that the aforesaid approach is in accord with good reasoning an we are in full agreement with it. Applying the above tests it must be held that the two spiral notebooks (MR 68/91 and MR 71/91) and the two spiral pads (MR 69/91 and MR 70/91) are 'books' within the meaning of section 34, but not the loose sheets of papers contained in the two files (MRs 71/91 and 73/91)." The diaries seized from the premises of the assessee cannot be considered as bound books. Some of the pages of the....
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....t taxes. Accounting is called a language of business. Its aim is to communicate financial information about the financial results. This is not possible unless the main objectives of the books of account are to maintain record of business to calculate profit earned or loss suffered during the period of time, to depict the financial position of the business to portray liquidity position, to provide up-to-date information of assets and liabilities with a view to derive information so as to prepare profit and loss account and draw balance sheet, to determine income and source thereof. Thus, the term 'books of account' referred to in Explanation 5 must answer the above qualification. It cannot be understood to mean compilation or collection of sheets in one volume. The books of account referred to are those books of account which are maintained for the purposes of the Act and not the diaries which are maintained merely as man's private record, prepared by him as may be in accordance with his pleasure or convenience to secretly record secret, unaccounted, clandestine transactions not meant for the purposes of the Act, but with specific intention or desire on the part of the assessee to h....