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2005 (11) TMI 175 - AT - Income TaxBlock Assessment - additions by way of income from chit business - whether the assessee can claim income of Rs. 4 lakhs as exempt on the principle of mutuality?- HELD THAT:- In the present case, it is seen that various persons contributing (to) the chits are availing the combined contributed sum for a lesser sum called chit and the surplus arising is distributed amongst the chit contributors. Thus, the contributors to the common fund and the participators in the surplus are same persons. Hence, the principles of mutuality are squarely applicable. Applying the ratio laid down by Hon'ble Supreme Court in the case of Bankipur Club Ltd. [1997 (5) TMI 392 - SUPREME COURT] as well as the Andhra Pradesh High Court in the case of Nataraj Finance[1987 (8) TMI 76 - ANDHRA PRADESH HIGH COURT], the income is not to be taxed but is to be exempted as the profit is made from oneself and not from others. AO as well as learned CIT(A) has taxed the sum of Rs. 4 lakhs merely because the assessee agreed for the same. It is settled law that there cannot be any concession against the provision of law. Even though the assessee admitted but is able to demonstrate that the income admitted is either not his income or that such amount is not chargeable to tax, the same cannot be brought to tax merely on admission. Thus, we hold that though the assessee admitted the income of Rs. 4 lakhs, yet it is clear that the income is not chargeable in view of the principle of mutuality and hence to be taken out of the purview of chargeable income under the Act. We accordingly delete the addition of Rs. 4 lakhs. Block Assessment - The income for the period 1990-91 to 1999-2000 as recorded in the books of account is Rs. 3,94,302. Similarly, the additional sales as per seized document and the profit from such additional sales is Rs. 1,09,110. The total of these two gives the figure of Rs. 5,03,412. The AO has not found such computation incorrect. It is settled law that undisclosed income can be computed only on the basis of material found as a result of search. We accordingly direct the AO to restrict the profit as proprietor of M/s Kusboo Enterprises to a sum of Rs. 5,03,412 instead of the sum of Rs. 6lakhs adopted. In the result, the appeal is partly allowed.
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