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2006 (1) TMI 184 - AT - Income TaxBlock Assessment in search case - search and seizure operation - authorization issued u/s 132A - seized diaries - individual deriving income mainly from agriculture - Addition u/s 69A on account of unexplained cash found during the course of search - Whether the diaries in question can be considered as the evidence ?- HELD THAT:- As is evident from the aforesaid observation recorded by the CBI in their search list, the involvement of the Income Tax Department in the search and seizure operation initiated by CBI was mainly for the purpose of seizing the cash and there is nothing at least in the said search list prepared by them to show that the diaries in question were also found by the Income Tax officials during the course of their search conducted at the residential premises of the assessee u/s 132. We are of the view that the diaries in question could not be considered as the evidence found as a result of search u/s 132 or requisition u/s 132A nor the same could be said to be relatable to any evidence found as a result of search or requisition of books of account in terms of section 158BB(1). In that view of the matter, we hold that the same cannot be used as the basis to compute the undisclosed income of the assessee for the block period under Chapter XIV-B. The entire addition made by the Assessing Officer on the basis of the said diaries amounting thus is not sustainable in law and deleting the same, we allow the relevant grounds raised by the assessee in this regard. Addition u/s 69A on account of unexplained cash found during the course of search - As rightly contended by the learned DR before us, statements of Shri Sitaram Kesri and Shri Ahmed Patel were recorded by the Department merely to verify the veracity of the assessee's explanation as regards the cash found in his possession and the addition on account of the said cash was made by invoking the provisions of section 69A and not on the basis of the said statements. In that sense, the said deponents were not the witnesses of the Revenue and the addition having been made on account of unexplained cash not relying on the said statement but by invoking the provisions of section 69A, there was no legal requirement to allow an opportunity to the assessee to cross-examine the said deponents. Nevertheless, the copies of statements of Shri Sitaram Kesri and Shri Ahmed Patel were made available by the ADIT to the assessee immediately and despite having come to know about the contents of the said statements, nothing was brought on record by the assessee to support and substantiate his explanation that the cash found in his possession was belonging to Congress (I) Party. As mentioned by the Assessing Officer in his order, even the books of account of the Congress (I) Party were verified by the ADIT(Inv.) which revealed that no corresponding entries in respect of cash found in the possession of the assessee were appearing therein. It is thus clear that no satisfactory explanation in respect of cash found in his control and possession during the course could be offered by the assessee and there was a clear failure on his part to discharge the onus lay on him u/s 132(4A) read with section 69A. Thus, we are of the view that the presumption available to be drawn against the assessee u/s 132(4A) in respect of cash found in his control and possession was not successfully or satisfactorily rebutted by the assessee and there being no satisfactory explanation offered by him in respect of the said cash, the same was rightly added to his undisclosed income by the Assessing Officer invoking the provisions of section 69A. In that view of the matter, we find no infirmity in his impugned order on this issue and upholding the same, we dismiss ground No.3 of the assessee's appeal. Thus, the asset requisitioned u/s 132A in the aforesaid provisions, which are charging in nature, it appears that the omission of such assets in the provisions contained in sub-section (1) of section 158BB which are computation provisions, is inadvertent and since such inadvertent omission is giving rise to absurd results, we have to adopt the reasonable interpretation which is workable as held by Hon'ble Supreme Court in the case of J.H. Gotla [1985 (8) TMI 5 - SUPREME COURT]. Moreover, as per the provisions contained in sub-section (3) of section 132A, the assets requisitioned u/s 132A are treated as assets seized u/s 132(1) for the purpose of the provisions of sub-sections (4A) to (14) of section 132 as well as for section 132B. This deeming fiction created in section 132A(3) treats the assets requisitioned u/s 132A as assets seized u/s 132(1) and since this deeming fiction has to be extended to its logical end, the assets requisitioned u/s 132A could reasonably be treated as evidence found as a result of search conducted u/s 132(1) which could be a basis for computing the undisclosed income of the assessee for the block period as envisaged in section 158BB(1). We are, therefore, of the considered opinion that the assets requisitioned u/s 132A could very well be used as evidence for computing the undisclosed income of the assessee under Chapter XIV-B for the block period and the contention of the learned counsel for the assessee in this regard relying on the omission to specifically mention such assets as evidence to form the basis of computing the undisclosed income in section 158BB(1) is untenable and cannot be accepted. In the result, the appeal of the assessee is partly allowed.
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