TMI Blog2005 (3) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, respectfully following the three judgments of Tribunal as has been relied by the learned Authorised Representative, delete the addition so made. The alternate plea of the assessee does not require any adjudication in view of the fact that we have allowed this ground of appeal of the assessee. In the result, the addition of Rs. 3,76,062 stands deleted. Unexplained expenditure and unexplained investment - In our opinion, onus is on the AO to prove that the transactions as stated in the loose paper which is not found from the possession of the assessee relate to the assessee, is more. The AO in this case has not discharged the onus and no addition can be made merely on the basis of surmises and conjectures, specially when part of the transactions were considered in the case of the assessee s husband. This is a settled law that a paper has to be read in toto, not in part. We, therefore, delete the additions. Thus, the ground No. 3 of the assessee is allowed. Addition u/s 69 - No iota of evidence was produced before us to support the affidavit. The affidavit cannot be taken by us as it is an additional evidence not before the authorities below. Thus, we do not find any substanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iage and other occasional functions. Therefore, we delete the addition of Rs. 25,000. Thus, in the result, the appeal of the assessee is partly allowed. - HON'BLE P.K. BANSAL, A.M. AND HEMANT SAUSARKAR, J.M. For the Appellant : C. Subrahmanyam, Adv. For the Respondent : D.B.R.V. Prasad, Adv. ORDER P.K. Bansal, A.M. 1. This appeal has been filed by the assessee against the block assessment order for the block period ending 2nd Feb., 1996, passed under s. 143(3) r/w s. 158BD of the IT Act. The assessee is a dealer in textiles and carrying on business under the proprietrix in the name and style of M/s Bommana Silk House at Srikakulam. A survey was conducted under s. 133A of the IT Act in the business premises of the assessee. The search has taken place on 2nd Feb., 1996, at the residence of the husband of the assessee, Sri B. Aswini Kumar. Block assessment was completed in the case of the husband of the assessee, Sri B. Aswini Kumar, vide order dt. 10th Feb., 1997. In consequence of the search at the place of Sri B. Aswini Kumar, notice under s. 158BD was issued in the case of the assessee on 9th Jan., 1997. The block return was filed declaring nil income. The assessment was com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, relied on the order of the AO and submitted that the addition has been made by the AO as the survey has taken place at the business premises of the assessee when the search operations were being carried on at the residence of the assessee s husband. 4. We have considered the rival submissions, perused the material on record. We find force in the submission of the learned Authorised Representative that no addition can be made on the basis of deficit stock found in the business premises during the course of survey action taken under s. 133A in the block assessment as it is outside the scope of Chapter XIV-B which deals with the assessment of undisclosed income as a result of search. Sec. 158BA reads as under: 158BA. (1) Notwithstanding anything contained in any other provisions of this Act, where after the 30th day of June, 1995, a search is initiated under s. 132 or books of account, other documents or any assets are requisitioned under s. 132A in the case of any person, then, the AO shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter. From the reading of the said section, it is expressly clear that under this Chapter, AO shall proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ini Kumar and sum of Rs. 1,78,831 is shown as paid to N. Srinivasa Rao, manager. After these details, there is a mention L.S. sales total Rs. 35,51,958. The statement under s. 132(4) was recorded from the husband of the assessee who has stated that notings at p. 14 represent total expenditure of Srikakulam unit in 1994-95. Subsequently, his statement on 22nd May, 1996, was recorded in reply to Q. No. 16, in which it was stated Most of the expenditures under the head salaries, shop rents, postage and advertisement are reflected correctly in the return. Part of the expenditure under the head staff sadar, bulbs, gifts, etc., are not reflected. The total expenses on this page excluding payments for purchases come to Rs. 10 lakhs approximately. The total expenditure claimed in the return of Bommana Silk House, Srikakulam, is Rs. 10 lakhs approximately under the similar heads and it is about Rs. 1 lakh in the case of Bommana Exclusive. Therefore, the expenditure under the heads bulbs, gifts. etc., has been claimed under different heads in the return. However, the total unaccounted expenditure on these papers would be about Rs. 3 lakhs for which income has already been disclosed in the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctures. The statement of other party is not binding and for this, reliance was placed in the case of Ashok Kumar Soni vs. Dy. CIT (2001) 72 TTJ (Jd) 323, the copy of which was filed before us as a printout from CTR Encyclopaedia. Our attention was drawn to pp. 23, 37, 38 of the paper book. No statement of the assessee regarding this loose paper was recorded. No question was asked from the assessee on this. In the alternative, it was submitted that the deficit stock sales of the assessee and her husband be telescoped against the unexplained expenditure. Hon ble Settlement Commission in the case of husband, B. Aswini Kumar, in its order at p. 6 while dealing with the excess stock has telescoped the same out of the sale proceeds of deficit stock pertaining to the business of assessee s minor son Master Prasad Sivani. When such is the case, it was requested to apply the same logic to the case of the assessee also. It is stated that the deficit stock of the assessee s minor son which is of Rs. 1,01,10,315, excess stock pertaining to the assessee s husband Rs. 50,79,624 were telescoped and, therefore, remains almost another sum of Rs. 50 lakhs which is to be telescoped for the subject un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his is the ratio laid down by the decision of the Patna Bench of the Tribunal in the case of Nishant Housing Development (P) Ltd. vs. Asstt. CIT (1995) 52 ITD 103 (Pat); by the Allahabad Bench of the Tribunal in the case of Ruby Builders vs. ITO (1999) 63 TTJ (Ahd) 202 as well as the case of CIT vs. Western Estates (1994) 122 CTR (Cal) 21 : (1994) 209 ITR 343 (Cal). As for the issue whether the proviso to s. 69C prohibiting such deduction is clarificatory in nature or not, we follow decision of the Bombay Bench of the Tribunal in the case of DGP Windsor (India) Ltd. vs. Dy. CIT (2002) 74 TTJ (Mumbai) 291 : (2003) 84 ITD 641 (Mumbai) and hold that the amendment is prospective in nature. Thus, the expenditure, if at all, is to be added under s. 69C, has also to be allowed as revenue expenditure. In the result, no addition whatsoever would survive on account of unexplained investment. In view of the aforesaid submissions, it was submitted that the additions of Rs. 10,89,370 and Rs. 6,28,831 must be deleted. The learned Departmental Representative, on the other hand, relied on the order of the AO. We have considered the rival submissions carefully, gone through the case law relied on. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that during the course of the search at the residence of the husband of the assessee, Sri Aswini Kumar, a loose paper bundle was seized vide BAK/14 which contains the evidence of unaccounted sales and purchases at Srikakulam at pp. 17 to 30. The AO was of the view that this represents the cash purchases and cash sales totalling to Rs. 1,25,266 and Rs. 1,40,796, respectively. The AO was of the view that as per p. 22, dt. 15th May, 1994, the assessee introduced a capital of Rs. 1 lakh. The assessee submitted before the AO that she got married in January, 1993, and the said sum was invested out of the marriage gifts. The AO did not agree with the same, but an affidavit to that extent was filed before us. The learned Authorised Representative submitted that there was no corroborative evidence available with the AO that this money was not out of the saving. No addition for the same should be made in the income of the assessee. The learned Departmental Representative, on the other hand, relied on the order of the AO and vehemently submitted that since the husband of the assessee has stated that this paper belongs to the assessee and the assessee has also by explaining the source of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and s. 132A. Making the disallowance under s. 40A(3) relates to the computation of the income under the regular assessment. The disallowance under s. 40A(3) has been made on the basis of the entries in the regular books of account. The entries recorded in the regular books of account cannot be said to have not been disclosed by the assessee. Such disallowance may be made by the AO while making regular assessment, but not under the block assessment. We, therefore, delete the disallowance of Rs. 1,24,463 by relying on the judgment of Tribunal in the case of Janta Tiles vs. Asstt. CIT. Thus, this ground of the appeal has been accepted. 9. Ground No. 7 relates to the addition of Rs. 5,45,560 being the value of 1,186 gms. gold to be the unexplained jewellery found at the time of search. The brief facts relating to this ground are that during the course of search operation at the residence of the father-in-law of the assessee at Rajahmundry, gold jewellery to the extent of 1,538 gms. was treated by the AO belonging to the assessee. The AO noted it further that 148 gms. gold jewellery was found during the course of search at the residence of the assessee. The assessee has not filed any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return, but no gold was inventorised in his name. The AO did not agree with the submission of the assessee but made the addition. The learned Authorised Representative before us submitted that there was no excess gold which was an undisclosed one. He has submitted the following chart of the family members who were staying with the assessee s father-in-law, Sri B. Durga Prasada Rao. There was a marriage occasion to be solemnised on 11th Feb., 1996. The total jewellery as was inventorised by the Revenue and as was shown in the WT return of the various members are given as under: S. No. Names Gold weight as per return Gold weight as physically found Difference 1. B. Naga Vijaya Laxmi 321 grams (93.94) 1,354 grams + 1,033 gms. 2. D/Gowri 400 grams (92.93) 331 grams - 69 gms. 3. B.D. Sasikala 1,987 grams 2,092 grams + 105 gms. 4. B. Swarna Rekha -- 1,538 grams + 1,538 gms. 5. B. Durga Prasada Rao 1,937 grams (91.92) -- - 1,937 gms. Total 4,645 grams 5,315 grams 670 gms. (excess) On the basis of the said table, it was submitted that the excess gold of 1,186 gms. as arrived at by the AO belongs to assessee s father-in-law, B. Durga Prasada Rao, which has declared 1,937 gms. jewellery in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery. This is a fact that B. Durga Prasada Rao was having the jewellery measuring 1,937 gms. and the said jewellery was disclosed in his IT return. B. Durga Prasada Rao has also stated before the AO that he has given the jewellery to his daughter-in-law for wearing the same. But, the AO without bringing any evidence to the contrary rejected explanation of the father-in-law. When the joint families are putting together, this is quite natural that all the members of the family may take the jewellery from each other and wear the same. Under these facts and circumstances, we are of the view that for ascertaining the undisclosed jewellery of the family, the jewellery as disclosed by B. Durga Prasada Rao measuring 1,937 gms. should also be considered by the AO. The total jewellery found from the family was 5,315 gms., while the total jewellery disclosed by all the members of the family was 4,645 gms. Under these circumstances, the total excess jewellery found was 670 gms. By allowing credit for 500 gms. as has been allowed by the AO as the assessee was not a wealth-tax assessee in view of the instruction of the CBDT, we are of the firm opinion that the undisclosed jewellery remains ..... X X X X Extracts X X X X X X X X Extracts X X X X
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