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2015 (8) TMI 508 - HC - Income TaxEstimation of sales - Tribunal held that the assessments, on estimation, were not permissible, on the face of the material, which was found during the search, and statement made by the assessee - Whether ITAT was justified in approving finding of the CIT (Appeals) for reaching to conclusion about estimate of sales from ₹ 7,59,000 to ₹ 5 lakhs only ? - Held that:- After the seizure on October 10, 1990, the chartered accountant of the assessee had sent a clarification on December 8, 1990, with regard to the surrender that the entire surrendered amount of ₹ 9,32,107 was coupled with the statement that the amount may be verified from the credits entered in the diaries. The chartered accountant clarified the statement, with an observation that the surrendered amount must be subject to the verification of the credits entered in the diaries and thereby reducing the amount surrendered to that extent. He had further explained that the amount worked out was on the peak investment, for which working had been done by arranging transactions entered in the diaries in historical sequence in a details statement. The statement included both the unexplained and surplus resulted from such transactions. The total unexplained investment, according to the chartered accountant, worked out to ₹ 6,13,080 as against ₹ 9,32,107 arrived by merely roughly adding the sums mentioned in diaries irrespective of it being a debit entry or credit entry. Further, surplus of cash according to working statement, comes to ₹ 1,52,407. Thus no force in the submission of Revenue that the surrender was unconditional, without any explanation, or that, the assessee had agreed, at that time to add the entire surrendered amount to his income. He had clearly mentioned that the amount surrendered, as reflected in the red and blue diaries, should be accounted, subject to the verification of credits entered in the diaries, and thereby, reducing the amount of surrender, to that extent. No error in the findings of the Tribunal, that the statements made during search, must be correlated with the records, which are found, and if there is any ambiguity, the explanation given by the assessee should be taken into consideration, before making the assessment. The legal position with regard to the undisclosed income from the diaries, does not need any elaboration, however, if the material found during the search, does not tally with the statement records, and that the statement is made subject to the material, which has been seized, a conscious effort should be made to consider the effect of the statement and to make an appropriate assessment by correlating the statements with due material. - Decided against revenue.
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