TMI Blog2011 (6) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... n those issues. i) Introduction of ₹ 69,37,732/- in the books of the assessee from M/s. Jupiter Commercial Corporation. ii) cash brought in by the assessee from Adoni to Pune and taken back. iii) Gifts of ₹ 39,00,000/- received by the assessee from various HUFs. iv) Transactions on pages 5,6 and 8 of seized material at Annex. P 3. The learned CIT failed to appreciate that a. the issues' on which he considered the assessment order erroneous and prejudicial to the interest of revenue were considered by the A.O during the course of block assessment proceedings after examining the facts of the case and the submissions of the assessee thereon and hence, the assessment order should not have been considered erroneous and prejudicial to the interest of the revenue. b. the additions on 'the issues' raised by the CIT were beyond the scope of block assessment. as the material facts in regard thereto were already disclosed by the assessee / the connected person before the search to the dept. in the returns filed and entries recorded in regular books. Hence, the assessment order for the block period could not be considered as e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any addition. According to the assessee, JCC is a partnership firm assessed at Bangalore wherein the assessee is also a partner. According to the assessee, the cash has been shown as received from JCC in the books of the assessee only when there is insufficient cash balance in the books of the assessee. The CIT observed that the Assessing Officer has not applied his mind on the issue and ignored certain factual aspects and hence, he has directed the Assessing Officer to consider the issue afresh. 3.2 According to the assessee, CIT has failed to appreciate that no addition can be made in respect of the amount received from JCC in the block assessment. The amount received from JCC was duly reflected in regular books prior to search and no incriminating material was found during search to warrant the above addition. It was submitted that the transaction with JCC was questioned by the Assessing Officer in the original assessment vide letter dated 8-7-2003 which has been placed at pages 301 to 307 of the paper book. 3.3 Further, in the course of assessment proceedings, the assessee had explained the same to the Assessing Officer along with necessary evidences as referred in page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per book filed on behalf of the assessee. Further, during the assessment proceedings, the assessee has produced all records, documents to explain the cash received from JCC as detailed in pages 313 to 460 of the paper book filed on behalf of the assessee. The assessee has also made detailed submissions before the Assessing Officer vide his letter dated 14-8-2003, a copy of the same is placed at pages 457 to 460 of the paper book claimed to be certified before the Assessing Officer. The copy of order sheet has been enclosed at pages 211 to 215 of the paper book to establish that the cash was received from JCC had been verified by the Assessing Officer during the assessment proceedings and he has accepted the same after analyzing the evidences put forward on behalf of the assessee. Thus, the Assessing Officer has verified the issue and accepted the claim of the assessee. In this background, CIT was not justified in invoking the provisions of section 263 of the Act on this issue. 4. Next issue is with regards to cash brought in by the assessee from Adoni to Pune. This issue has been discussed by the CIT in para 10 to 12 of his order. Facts relating to this issue are that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86 of the paper book filed on behalf of the assessee. 4.3 It was further submitted that the department has issued notices u/s 158BD to various persons to whom the assessee had given loans out of the cash deposited in the said bank account. The department has taken contrary stands in those cases wherein the amount deposited in the said bank account is taxed as income of the persons to whom the loans is given by the assessee. Accordingly in view of the department s stand in those cases, the addition in this case was not justified. Our attention was invited to the satisfaction note forwarded by the Assessing Officer in respect of the other persons (pages 491 to 502 of the paper book. The assessee has also referred to the decision of the tribunal in the case of Shri Atul Bhagat in IT(SS) A No. 32/PN/1998 for the block period 1987-88 to 1997-98) dated9-3-2001 placed at pages 503 to 512 of the paper book. 4.4 The assessee submitted that the statement of the assessee was recorded on 9-3-2000 and detailed investigation was made by the Assessing Officer in assessment proceedings and no addition was made as referred in pages 513 to 5`17 of the paper book filed on behalf of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tten a letter to the Chief CIT in this regard and requested to issue necessary directness for reopening the cases of the other persons as referred in pages 300-300A of the paper book. Thus, the issue was examined by the Assessing Officer as discussed above and so the CIT was not justified in invoking the provisions of section 263 on this issue. 5. Next issue is with regards to gifts received of ₹ 39.00 lakhs from various HUF. The brief facts of this issue are that the assessee claimed to have received various gifts from the members of HUF to the tune of ₹ 39.00 lakhs. All these gifts were received prior to search and duly recorded in the books of accounts of the assessee as can be seen from pages 41 to 58 of the paper book filed on behalf of the assessee. Further, the HUFs have submitted their balance sheets, capital account along with the returns prior to search and had categorically mentioned about the gifts being made to the assessee. Details are mentioned on pages 65 to 194 of the paper book filed on behalf of the assessee. However, the CIT has stated that the HUFs are bogus entities and hence the gifts received by the assessee are also bogus. The CIT had doubted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Radhasoami Satsang Vs. CIT (1992) 193 ITR 321 (SC) and Bombay High Court decision in the case of H. A. Shah Co. Vs. CIT and Excess Profits tax, Bombay City (1956) 30 ITR 618 (Bom). In this background, it was submitted that the addition of ₹ 39.00 lakhs does not constitute undisclosed income and the CIT was not justified in directing the Assessing Officer to make the addition. Without prejudice to the above, it was submitted that the proposed additions are not justified at all. First of all, it was submitted that the gifts received by the assessee are from 39 HUFs out of which only 12 HUFs were having credit account with the assessee. Further, it was submitted that the gifts were made by the HUFs to the assessee in recognition of the fact that the assessee over the years was mainly spending the amounts on household expenses for the benefit of all the family members. Accordingly, they thought of reciprocating the assessee s obligation by giving him the above gifts. There is nothing wrong in such approach. Secondly, all these transactions are fully accounted for in the books before the search. The gifts made to the assessee were nothing as compared to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pages 513 to 517 of the paper book filed on behalf of the assessee. Thus, the Assessing Officer has verified the issue of gifts and has not made any addition. In this regard, the CIT was not justified in revising the order on this account. More over the CIT has directed to make the addition on this account which is also contrary to the settled legal position on the issue. No incriminating material was found during the course of search and addition cannot be made on presumptions. Without prejudice to above, we find that it can be made in the regular assessment in the case of assessee as well as the HUFs. The department has accepted the genuineness of the gifts in question. Once the department has taken a particular stand, there was no reason to adopt a different stand in block assessment. In view of this factual position andlegal discussions, CIT is not justified in directing the Assessing Officer to make the addition u/s.263. 6. The next issue is with regards to transactions as found on pages 5, 6 and 8 of the seized material which has been referred in paras 28 to 40 of the CIT s order. The facts in this regard are that during search, certain pages relating to M/s. Alimchand To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and has accepted the claim of the assessee. Thus, the CIT was not justified in revising the order on this issue. Learned DR supported the order of CIT on this issue and submitted that the Assessing Officer has not analyzed the issue. So, the order of the Assessing Officer on this account is erroneous as well as prejudicial to the interest of revenue. 6.2 We find that during search, certain pages relating to M/s. Alimchand Topandas Oil Industries Ltd., were found with the assessee wherein certain transactions on pages 5,6 and 8 were found in the seized material. The stand of the assessee is that he was a director in the said company till March 2000 and therefore, certain papers were found with him. These papers have been placed at pages 469 to 473 of the paper book. In this regard, it was explained to the Assessing Officer that these notings pertained to the company and therefore, there was no reason to make any addition in the assessee s hands on the basis of the said loose papers. During the original assessment proceedings, the assessee had explained the details of the papers found and the Assessing Officer was satisfied with the submissions put forward on behalf of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iter Commercial Corporation. ii. cash brought in by the assessee from Adoni to Pune and taken back. 3 The learned CIT failed to appreciate that a. 'the issues' on which he considered the assessment order erroneous and prejudicial to the interest of revenue were considered by the A.O during the course of block assessment proceedings after examining the facts of the case and the submissions of the assessee thereon and hence, the assessment order should not have been considered erroneous and prejudicial to the interest of the revenue. b. the additions on 'the issues' raised by the CIT were beyond the scope of block assessment. as the material facts in regard thereto were already disclosed by the assessee / the connected person before the search to the dept. in the returns filed and entries recorded in regular books. Hence, the assessment order for the block period could not be considered as erroneous and prejudicial to the interest of the revenue. c. Just because the A.O. has discussed certain issues in the assessment order for the block period but did not make additions relating thereto as they were not warranted in the assessment u/s 158B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the Assessing Officer to consider the issue afresh. 9.1 The stand of the assessee was that the CIT failed to appreciate that no addition can be made in respect of the amount received from JCC in the block assessment. The amount received from JCC was duly reflected in the regular books prior to search and no incriminating material was found during search to warrant any addition. Further, the transaction with JCC was questioned by the Assessing Officer in the original assessment vide letter dated 8-7-2003 placed at pages 23 to 340 of the paper book filed on behalf of the assessee. In the course of assessment proceedings, the assessee had duly explained the same to the Assessing Officer along with necessary evidences placed at pages 165 to 167 of the paper book. Further, in the course of assessment proceedings, the assessee had produced all records, documents, etc. to explain the cash received from JCC placed at pages 31 to 164 of the paper books). The copy of order sheet is placed at pages 17 to 22 of the paper book from which it was clear that the issue of cash received from JCC is clearly verified by the Assessing Officer. After taking into consideration the submissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 211 to 215 of the paper book showed that the cash was received from JCC had been verified by the Assessing Officer during the assessment proceedings and he has accepted the same after analyzing the evidences put forward on behalf of the assessee. Accordingly, the order of CIT on this issue be quashed. While on theother hand, thelearned DR supported theorder of the CIT on this issue. 9.3 After going through the rival submissions and material on record, we find that the Assessing Officer has verified the issue and accepted the claim of the assessee. In this regard CIT was not justified in invoking the provisions of section 263 of the Act. In similar set of circumstances, we have set aside the order of CIT in the case of Ramanlal Shah vide para 3 of this order. Facts being similar, so following same reasoning, order of CIT on this issue is set aside. 11. The next issue is withs regards to cash brought in by the assessee from Adoni to Pune. The relevant facts are that the assessee had been giving loans to business concerns in Pune. For that the purpose, the assessee opened bank account No. 1728 in Bank of India, Pune. It was explained on behalf of the the assessee that he used t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the department has issued notices u/s 158BD to various persons to whom the assessee had given loans out of the cash deposited in the said bank account. The department had taken contrary stands in those cases wherein the amount deposited in the said bank account was taxed as income of the person to whom the loan is given by the assessee. Accordingly, in view of the department s stand in those cases, the addition in this case is not justified in the present case. Our attention was invited to the satisfaction note forwarded by the Assessing Officer in respect of the other persons as per pages 317 to 336 of the paper book. Reliance was also placed on the decision of the Tribunal in the case of Atul Bhagat (supra). Further, the Assessing Officer had written a letter to Chief CIT regarding this issue and requested him to issue necessary directions for opening the cases of the other persons as per pages 300-300A of the paper book filed in the case of Ramanlal Sha. It was therefore, submitted that the issue was duly examined by the Assessing Officer and hence the CIT was not justified in invoking the jurisdiction u/s 263 of the Act. On the other hand, learned DR supported the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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