TMI Blog1998 (11) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee had declared the concealed income of Rs. 3,50,000 in the case of the firm, M/s Kamal Auto Consultant including the cash found at the time of search. Further it was also ascertained from the State Bank of India that the assessee had purchased travellers cheques as under: Rs. 12-5-1981 30,000 9-5-1981 30,000 13-6-1981 29,000 6-7-1981 30,000 21-7-1981 30,000 -------- Total 1,49,000 -------- The AO noted that during the course of assessment proceedings the assessee filed letter dt. 22nd March, 1991, regarding the addition made to his total income for asst. yr. 1981-82 to 1988-89 vide order dt. 9th Nov., 1987, under s. 132(5) of the Act. The assessee's reply relevant to present controversy was as under: "Alleged investment in term of traveller's cheques totalling Rs. 1,49,000. In making this assessment, the ITO appears to have relied on some information collected behind the back of your applicant and that the ITO has not at all given any opportunity for rebutting the same as provided for in the opening part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased by the assessee in his own name. The CIT(A), therefore, concluded that these travellers cheques were purchased by the assessee in his individual capacity and further he failed to explain the source of amount investment in these travellers cheques. According to the CIT(A), the AO was justified in treating the amount of Rs. 1,49,000 as unexplained and added the same to total income of the assessee. Consequently, the addition was confirmed by the CIT(A). 5. Before us, Shri P.F. Jain, C.A. the learned counsel for the assessee reiterated the submissions made before the authorities below. His further contention was that the travellers cheques of different dates were purchased in the regular course of business dates were purchased in the regular course of business of M/s Kamal Auto Consultant, wherein the assessee is a partner. According to Shri P.F. Jain the travellers cheques were not purchased by the assessee in his individual capacity as it has been alleged by the IT authorities. Shri P.F. Jain submitted that there was a search at the residential premises of the assessee as well as the business premises of M/s Kamal Auto Consultant (hereinafter referred to as M/s KAC) on 14th J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the regular course of the business of the firm, wherein the assessee is a partner. He, therefore, submitted that the addition in the hands of assessee is not justified. 7. Shri P.F. Jain, the learned counsel for the assessee further submitted that the AO has not considered the reply filed by the assessee vide his letter, dt. 17th March 1990. In the said letter, it was submitted by the assessee that he had not done any personal business, all the transactions done pertained to the firm only. Accordingly to Shri Jain in the assessment order dt. 25th March, 1991, the AO has simply reproduced the objections raised by the assessee under s. 132(11) of the Act. He also submitted that the addition made by the AO is without any basis. 8. The next contention of the learned counsel for the assessee was that for the assessment year under consideration the AO issued a notice under s. 148 of the Act on 28th March, 1989, which was served upon the assessee on 30th March, 1989. The assessee filed his return on 20th March, 1990, and the assessment order was passed on 25th March, 1991. According to the learned counsel for the assessee, the opening para of the assessment order shows that the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative the assessee had never raised such a plea before the authorities below. The assessee had never questioned as to whether the AO had obtained the requisite sanction from the Chief CIT or the CIT. According to the learned Departmental Representative the assessee cannot raise such plea for the first time before the Tribunal. He, therefore, submitted that the travellers cheques were never purchased by the firm, M/s KAC but these cheques were purchased by the assessee out of his own unexplained source of income and, therefore, the addition in the hands of the assessee was justified. 10. We have considered the rival submissions and have also perused the entire material available on record. It is relevant to point out that the decisions cited at the Bar were also duly considered by us. It is an undisputed fact that the assessee is a partner in firm M/s KAC. The Department conducted a search at the residential premises of the assessee on 14th July, 1987. During the course of search proceedings, the authorised officer had recorded the statement of the assessee under s. 132(4) of the Act. The following questions and answers are worth noticing: Q. No. 1. Give your name, address ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -do- -do- Nanki Sachumal 500 -do- -do- Chandar Sachumal 500 -do- -do- Vency Sachumal 500 -do- -do- -do- 500 -do- 30-11-1984 Jetu Sachumal 500 B'bay Motor Co., Jodhpur. -do- Vishali Sachumal 500 -do- ------------------------------------------------------------ Ans: The above scooter etc. were registered for and on behalf of and out of the income of Kamal Auto Consult. From the above questions and answers, it is abundantly clear that right from the start of the search operation, at the residential premises of the assessee as well as business premises of the firm i.e. 14th July, 1987, the assessee in his statement recorded under s. 132(4) by the authorised officer, spontaneously stated that his only source of income is share of profits from M/s KAC. There is no dispute that the said firm came into existence in the year, 1980 and the business of the firm was that of selling scooters, rickshaws on commission basis. It is also an admitted fact that during the course of search a disclosure of Rs. 3,50,000 was made in the case of the firm for calendar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee from the date of search was stating that he had not done any personal business, all the transactions done pertained to the firm only. The books of accounts of the firm were lying with the Department since 1986. The assessee vide his reply dt. 17th March, 1990, had made a detailed reply to letter dt. 19th Feb., 1990 issued by the Asstt. CIT (Inv.) Cir. 1(1), Ahmedabad whereby the details for travelers cheques were asked for from the assessee. The assessee in his said reply submitted that the business transaction had been reflected in the books of accounts of the partnership firm, M/s KAC It was also submitted that the said fact may be verified from the books of the firm, which were seized by the Department. However, the authorities below have not cared to verify this aspect of the matter that whether the transactions relating to these travellers cheques were reflected in the books of accounts of M/s KAC. The assessee categorically stated before the authorities below that these cheques were drawn out of the funds of customers and on behalf of them at the relevant time and to the best of his knowledge the commission income earned was also recorded in the books of the said fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... summary manner to the best of his judgment and the action taken or orders made under s. 132(5) are really in the nature of interlocutory orders. On the other hand, there is specific procedure prescribed for the assessment to be made under s. 143(3) of the Act. In our view, the AO was not justified solely relying on the order passed under s. 132(5) of the Act. The AO has not discussed the other relevant objections raised by the assessee during the course of assessment proceedings, he has also not appreciated the fact that from the date of search it has been claimed by the assessee that he had not purchased any travellers cheque out of his own fund. In such circumstances, the burden of proving that the assessee was the person who had purchased the travellers cheques in question, was on the taxing authority. The AO has not given any cogent reason while making the addition. In our view there is substantial force in the above contention of the learned counsel for the assessee that the above addition in the hands of the assessee was not proper and justified. Further, more, there is no material on record to suggest that the assessee had purchased the travellers cheques in question out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant to state that it is well settled that s. 148 of the Act does not envisage the need to disclose reason(s) for the relief, nor it can be read into it as a requirement of natural justice. No adjudication of rights or determination resulting in consequence to the assessee is involved at the stage of issuing notice. The only requirement in law for initiating proceedings under s. 148 is that there must be reasons to justify the plea that there is escapement or suppression of income. In our considered opinion the requirement of recording of reasons for initiating action for reassessment are only administrative in character, and, therefore, it is not necessary to disclose the material to the assessee at the stage of issuing notice under s. 148 of the Act. At this stage it can safely be presumed that the AO had also obtained the sanction of the higher authorities as per the provisions of law. According to Illustration (e) to s. 114 pf the Indian Evidence Act, the Court may presume that judicial and official Acts have been regularly performed. The presumption attached to the correctness of official records cannot be taken away merely by assumption of suggestions raised in doubts. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
