2025 (6) TMI 618 - AT - Income Tax

Validity of reopening of assessment - approval u/s. 151 for reopening of the cases was incorrectly taken from Director General of Income Tax (DGIT) instead of taking it from Principal Chief Commissioner of Income Tax (PCCIT ) - HELD THAT - As per Notifications of CBDT regarding the jurisdiction over the Central charge cases we are of the considered opinion that the sanction u/s 151(ii) of the Act was rightly accorded by the DGIT in these cases who was having jurisdiction over the Central charge. The objection taken by the assessee against the reopening on account of incorrect approval u/s 151 of the Act is rejected. Reopening for A.Ys. 2013-14 to 2015-16 was time barred for the reason that no notice for these years could have been issued under the old provisions of the Act - AO had recorded the satisfaction for escapement of income to the extent of Rs. 50 Lakhs or more in the relevant assessment years which was represented in the form of asset. The contention of the assessee that no asset was found and that no addition was made in respect of asset is not found correct. As per the definition of asset as appearing in section 149 of the Act as well as in section 153A of the Act the asset includes not only immovable property but also shares securities loans advances deposits in bank accounts etc. AO had recorded specific satisfaction that the assessee had received cash payments in excess of Rs. 50 lakhs in the F.Ys. 2011-12 to 2016-17. These cash receipts were recorded in the seized diaries (Annexure A-3 to A-8) and were represented in the form of loans and advances. Even if no cash was physically found the evidence for receipt of cash was recorded in the seized diaries. In fact the seized diaries reflected that the assessee was meticulously maintaining the records of transactions carried out by him and from the details and explanation as furnished by the assessee it was evident that the amount escaping assessment was exceeding the threshold limit as provided u/s. 149(1)(b) of the Act. These cash receipts were appearing in the form of loans advances and were therefore included in the definition of asset . Thus the condition of income escaped assessment being in the form of asset was duly satisfied in the reason as recorded by the AO. We therefore do not find any merit in the objection of the assessee in respect of the reopening on the ground of satisfaction of asset in the reasons recorded. Since the condition stipulated in 4 th Proviso to section 153A of the Act was duly satisfied; the reopening done by the AO for the A.Y.2013-14 to 2015-16 was perfectly in order and was not barred by limitation. Proceeding was initiated by the JAO and not by FAO - This being a search case the jurisdiction was assigned to Central charge which was not covered under the Faceless Assessment Scheme. Therefore the proceedings were rightly initiated by the JAO in this case. As rightly held by the Ld. CIT(A) the CBDT vide Notification in F No. 370153/7/2023 TPL dated 20/02/2023 had clarified that JAO was not bereft of jurisdiction over a particular assessee. Further as fairly admitted by Ld. Sr. Counsel this issue has been decided against the assessee in the case of Talati Talati LLP 2024 (10) TMI 1282 - GUJARAT HIGH COURT Therefore the objection of the assessee in respect of the proceeding being initiated by JAO is rejected. Addition on the basis of seized documents by rejecting the submission of the assessee that the notings in the seized diary do not pertain to or belong to the assessee - The entries appearing in the seized diaries had to be read in its entirety. When the cheque entries appearing in the seized diaries and documents were recorded in the books of accounts/bank of the assessee the other entries should also have to be considered in the hands of the assessee only. Therefore the AO had rightly rejected the subsequent plea of the assessee and other family members that the diary belonged/pertained to HUF/joint family business. The contention of the assessee that the family members were not confronted with the seized diaries had no relevance. Even if the seized diaries were not confronted with the family members they would have been aware about the HUF business if it was actually carried on. None of the family members in their statements recorded during the search had stated that there was a common HUF/joint family business which was being looked after by the assessee. Such a plea was just an after-thought made without any substantive evidence and was rightly rejected by the ld. CIT(A). Thus contention of the assessee that the notings in the seized diaries do not pertain to / belong to the assessee is rejected. The ground taken by the assessee regarding ownership of the seized documents is dismissed. Determination of profit on the basis of seized diaries (Tally Books) - The assessee had himself admitted that Tally Books results were based on best possible judgement by taking into account the entries recorded in the seized documents and his own memory; and the correctness of such book results couldn t have been verified. When the assessee had himself submitted that the seized diaries were not in the form of systematic books of accounts neither they were maintained following any accounting principle the correctness of the profit as per Tally Books which was arrived at after omitting certain entries of seized diaries and by including extraneous entries based on memory was doubtful and couldn t have been adopted. Under the circumstances the AO had no option but to work out the profit on the basis of various ledgers as appearing in the seized diaries. Considering the peculiar facts of the case that the profit or loss appearing in the seized diaries were based on entries which were not systematic and not based on any accounting principle and the profit was derived by the assessee in Tally Books by considering extraneous entries and also tinkering with the data as appearing in the seized diaries and documents; the reliance as placed by the assessee on the various decisions has become otiose. Since the AO had worked out the profit on the basis of the entries in the seized ledgers these decisions will be relevant and considered in the context of entries appearing in those ledgers while examining the specific additions. The ground taken by the assessee regarding determination of profit on the basis of reconstructed seized document (Tally Books) is dismissed. Addition on account of Interest (Shree Vyaaj Khaate) - After setting off the debit entries with the credit entries the AO had made addition for net interest of Rs. 11, 36, 95, 718/- only. It is thus found that the expenditure incurred by the assessee for earning of the interest income as recorded in the ledger account was already allowed set off by the AO. Under the circumstances we do not find any merit in the ground as taken by the assessee. No evidence has been not brought on record to substantiate that the assessee had incurred any other expenditure for earning of the interest income as recorded in the seized diaries. Therefore we do not find any mistake in the order of the AO and the ground as taken by the assessee is dismissed. Addition on account of Land Trading - seized diaries one Jamin Trading account was appearing which has been reproduced in the assessment order - addition sustained @ 15% by the ld. CIT(A) - HELD THAT - Since the average profit rate in the land dealings as per the seized documents was 13.14% the presumptive rate of 8% could not have been applied in this case. The assessee himself had worked out the average percentage of profit at 13.14% on the basis of the Jamin trading ledgers in the seized diaries in the rejoinder to the remand report of the AO. At the same time the ld. CIT(A) also has not given any reason for estimating the profit @ 15% when the average profit rate as per seized document was 13.14% only. All the factors of passive investment no overhead expense etc. were already taken into account in the average profit rate as reflected in the seized document. Therefore it will be reasonable to estimate the profit of Jamin/land trading account by applying the average profit rate of 13.14%. Accordingly the AO is directed to work out the profit from Jamin/land trading by applying the average profit rate of 13.14% on the total credits received during the year. Addition on account of Share Trading - HELD THAT - The submissions of the assessee that the frequency of the transactions was high is found to be apparently correct. Considering the totality of facts of the case we deem it appropriate to restrict the addition in respect of profit from share trading by applying presumptive rate of 8% as specified u/s.44AB of the Act. The said section also provides that the income can be computed @ 6% where the amount of total turnover or gross receipt was received by account payee cheque or bank draft or by use of electronic mode. Since the assessee had not fulfilled this condition the profit rate @ 6% cannot be applied in this case. Accordingly the AO is directed to re-compute the income from share trading by applying net profit rate of 8% on the total credits of share trading during the year. Addition on account of Maal Khaate - HELD THAT - In the seized diaries the assessee had maintained a ledger of Maalkhaate/Shri Maalkhaate which according to the AO reflected net profit received from a trading activity - HELD THAT - The provision of Section 44AD of the Act gives a guideline for computing profit and gain of business on presumptive basis. As per that section profit rate of 8% is required to be applied on the total turnover or gross receipts. However the said section is applicable only in respect of turnover or gross receipt of Rs.1 Crore earlier which was increased to Rs.2 Crores w.e.f. 01.04.2017. The turnover of the assessee in all the years was much higher than the limit as specified in the Act for application of presumptive rate. Further the assessee has also not explained the nature of actual trading activities carried on by it. Considering the much higher turnover of the assessee and the nominal debit entries appearing in this ledger account it will be reasonable to estimate the income of the assessee @ 10% of the total credits in the Maalkhaate ledger as appearing in the seized diaries. Accordingly the AO is directed to re-compute the income from trading activities as recorded in Maalkhaate ledger by applying net profit rate of 10%. Addition on account of peak credit u/s.69A r.w.s. 115BBE - seized diaries under one trading - HELD THAT - The nature of entries in the different ledger accounts might be divergent and working out the peak by merging all the accounts might result in gross distortion of profit. The apprehension of the AO that since the nature of each individual ledger account was not established the peak worked out by merging the ledger accounts would result in nominal income due to rotation of funds was quite genuine and not unfounded. In the absence of any explanation about the nature of transactions carried out in the residual ledger accounts the AO had rightly worked out the peak for individual ledger accounts separately. Accordingly the addition of peak amount as worked out by the AO in the A.Y. 2012-13 is upheld. Second grievance of the assessee in this regard is that the Revenue did not allow set off of the income finally determined till the preceding year with the peak as determined in the individual years - The request of the assessee is that the benefit of telescoping of income already taxed in the earlier year should be allowed towards unexplained investment as worked out on the basis of peak value. This request of the assessee is found to be reasonable. Since the income taxed till the preceding year was available with the AO the set off for the same has to be allowed with the peak amount for the subsequent year. Accordingly the Revenue is directed to allow the benefit of telescoping of income already taxed in the earlier year(s) with the peak addition of the subsequent year(s). As is natural no benefit of telescoping can be allowed in the first year i.e. in A. Y. 2012-13 but has to be considered in the subsequent years. Accordingly the ground taken by the assessee for allowing benefit of telescoping of income already taxed in the earlier year with the peak addition of the following year(s) is allowed. Disallowance of Commission Other Expenses - In respect of receipts as appearing in the ledgers land trading account share trading account Maal Khaate account etc. only net profit rate has been applied to work out the income and the entire receipts as appearing in the seized diaries were not brought to tax. When the income is estimated by applying net profit rate all the expenses are deemed to have been allowed and this principle is categorically enunciated in Section 44AD of the Act. Even in the case of other ledger accounts the gross receipt has not been considered as income but only peak of the transactions have been worked out to estimate the profit and unexplained investment in the business. Considering these facts the assessee could not have been allowed the deduction for expenses of commission and other expenses as appearing in the seized diary as the income was not worked out on gross basis considering all the entries as appearing in the seized diary. Deduction for bad debt written off as irrecoverable by the assessee in the Tally Books which was not allowed by the AO - HELD THAT - CIT(A) had rightly upheld that twin condition of writing off the bad debts as irrecoverable in the seized diaries as well as offering such debts as income in the earlier years was not satisfied and therefore the deduction was not admissible. Though the assessee has contended that the bad debt pertained to sarafi business and there was no requirement for such debts to be considered as income in the earlier years no evidence was brought on record that all the bad debts pertained to sarafi business only. The assessee was carrying on multiple activities and therefore it cannot be presumed that all the bad debts pertained only to sarafi business. Thus it can t be held that the entire claim of bad debt was in respect of money-lending business only. Be that as it may the fact remains that no bad debt was found written off in the seized diaries. Therefore the claim for deduction of bad debt was rightly disallowed by the AO in the current year. We do not find anything wrong with the decision of Ld. CIT(A) on this issue and therefore his order on this issue is upheld. Addition on account of accrued interest - DR submitted that when the entries for accrued interest were duly recorded in the seized diaries the AO had rightly made the addition - HELD THAT - There was neither accrual nor receipt of interest income even though an entry to the effect of notional interest was made in the seized diaries. Under the circumstances the income cannot be said to have resulted in this case. And if income doesn t result at all there cannot be a tax; even though in book-keeping an entry is made about a hypothetical income which doesn t materialize. As held in the case of UCO Bank 1999 (5) TMI 3 - SUPREME COURT that transferring the doubtful debt to an interest suspension account and not treating it as profit until actually received was in accordance with accounting practice. The interest pertaining to doubtful loans was not considered as real income in the year in which it accrued but only when it was realized. From the facts as discussed by the ld. CIT(A) in detail in his order we don t find any real income accruing to the assessee. Further when the interest actually realized by the assessee was already taxed following the cash system of accounting no addition could have been made in respect of notional interest on accrual basis. We therefore do not find anything wrong with the findings and the decision of the Ld. CIT(A) on this issue. The deletion of addition made by the AO in respect accrued interest is therefore upheld. The ground taken by the Revenue is dismissed. Quantification of the negative peak balance - HELD THAT - When the diaries for the earlier years were seized the cash balance available for the prior period had to be taken into account to correctly work out the negative peak balance. By not doing so the Revenue has not correctly assessed the income for the subsequent years in respect of negative peak balance. Therefore the Revenue is directed to consider the opening cash balance as on 01.04.2011 as per the seized diaries for the earlier years and thereafter re-compute the negative peak balance for the subsequent years. For this purpose the matter is set aside to the Jurisdictional AO who should allow an opportunity of being heard to the assessee and should confront the assessee with the revised working of the negative cash balance. The addition in this respect should be made in the years in which negative cash balance is found as per the revised working. Determination of profit in the land trading account - Revenue is directed to work out the profit in the land trading account by applying the average rate of 13.14% only on the credits in the land trading account. The grounds taken by the Revenue are devoid of merit and are dismissed. Addition in respect of entries in miscellaneous category - AO found that a large number of entries couldn t be placed under any of the identified categories and no clarification was given by the assessee in this regard - HELD THAT - CIT(A) had rightly considered the peak credit in respect of the transactions of miscellaneous category (other than the entries taken to identified respective heads) and accordingly confirmed the addition to that extent. Accordingly addition of Rs. 33, 83, 370/- as proposed by the AO in the remand report was confirmed by the ld. CIT(A). The proposed addition of Rs. 13, 14, 035/- in respect of the receipt from family members was not upheld by the ld. CIT(A) for the reason that the same was found to be protective in nature. The Revenue has been unable to controvert the findings as given by the ld. CIT(A).

Summary

Issues Presented and Considered

The core legal questions considered by the Tribunal in these appeals arising from search and seizure proceedings under section 132 of the Income Tax Act ("the Act") for Assessment Years (AY) 2013-14 to 2021-22 include:

• Validity and jurisdictional competence in sanctioning reopening of assessments under section 151 and issuance of notices under section 148 of the Act;
• Whether reopening of assessments for AYs 2013-14 to 2015-16 was barred by limitation under section 149 of the Act, especially in light of provisos to section 153A relating to search cases;
• Ownership and applicability of seized handwritten diaries and documents as evidence against the assessee, including whether entries pertain to the assessee individually or to a Hindu Undivided Family (HUF) or group;
• Appropriateness of determining income based on entries in seized diaries versus reconstructed accounts prepared by the assessee (Tally Books), and the reliability of such reconstructed accounts;
• Validity of various additions made by Assessing Officer (AO) and confirmed by Commissioner of Income Tax (Appeals) [CIT(A)] on account of:
• Interest income recorded in seized ledgers;
• Profit estimation on land trading (Jamin Trading accounts);
• Profit estimation on share trading;
• Income from "Maalkhaate" ledger;
• Additions on account of peak credits in various ledgers under section 69A read with section 115BBE;
• Disallowance of commission and other expenses recorded in seized diaries;
• Disallowance of bad debts claimed by the assessee;
• Additions on account of negative peak cash balances;
• Deletion of additions on account of notional/accrued interest entries;
• Approach towards "miscellaneous category" entries in seized diaries.
• Whether principles of natural justice or legality of search proceedings were violated.

Issue-wise Detailed Analysis

1. Validity of Reopening and Jurisdictional Sanction (Sections 148 and 151)

Legal Framework and Precedents: Section 151 of the Act prescribes the specified authorities competent to accord sanction for issuance of notice under section 148. For cases where more than three years have elapsed from the end of the relevant assessment year, sanction must be accorded by the Principal Chief Commissioner or Principal Director General, or where none exists, by the Chief Commissioner or Director General. Jurisdiction over the case is fundamental to the validity of sanction. The Tribunal analyzed recent judicial pronouncements, including decisions from Madras, Delhi, and Bombay High Courts, which emphasize the necessity of jurisdictional competence in sanctioning reopening.

Court's Reasoning and Findings: The assessee challenged the reopening on grounds that sanction was granted by Director General of Income Tax (DGIT) (Investigation), Ahmedabad, instead of the Principal Chief Commissioner of Income Tax (PCCIT), Ahmedabad, who was functional at the relevant time. The Tribunal examined CBDT notifications delineating jurisdiction, observing that PCCIT had jurisdiction only over Chief Commissioner charges, whereas DGIT (Investigation) had jurisdiction over Central charge cases, including the present case. Thus, PCCIT did not have jurisdiction over DGIT or Central charge cases, rendering PCCIT incapable of sanctioning the notice. Consequently, sanction by DGIT was valid and reopening was not vitiated.

Application of Law to Facts: The Tribunal held that jurisdictional competence is sine qua non for sanction. Since DGIT had jurisdiction over the Central charge case, the sanction accorded by DGIT was valid. The facts were distinguished from cited precedents where sanction was granted by an authority lacking jurisdiction.

Conclusion: The reopening notices issued under section 148 were valid and not illegal or void-ab-initio.

2. Limitation on Reopening for AYs 2013-14 to 2015-16 (Section 149 and Proviso to Section 153A)

Legal Framework: Section 149 restricts issuance of notice under section 148 beyond prescribed time limits unless certain conditions are met, including income escaping assessment represented in the form of an "asset" exceeding Rs. 50 lakhs. The fourth proviso to section 153A restricts reopening in search cases unless the AO possesses evidence revealing escaped income represented as asset.

Court's Reasoning: The assessee contended that no asset was found during search to justify reopening for AYs 2013-14 to 2015-16. The Tribunal examined the reasons recorded by AO, which detailed unaccounted cash receipts recorded in seized diaries for financial years 2011-12 to 2016-17 aggregating to nearly Rs. 9.93 crores, exceeding the threshold. The definition of "asset" under the Act includes cash, loans, advances, deposits, shares, and securities. The Tribunal held that cash receipts evidenced in seized diaries constituted assets within the meaning of the Act, satisfying conditions for reopening.

Conclusion: Reopening for these years was not barred by limitation and was valid.

3. Initiation of Proceedings by Jurisdictional AO (JAO) vs Faceless AO (FAO)

The assessee challenged initiation by JAO instead of FAO. The Tribunal noted that Central charge cases, including search cases, are excluded from the Faceless Assessment Scheme. Jurisdictional High Court had ruled against the assessee on this point. The Tribunal upheld the initiation by JAO as valid.

4. Ownership of Seized Diaries and Documents

Legal Framework: For additions based on seized documents, ownership and relevance to the assessee must be established. The burden lies on the AO to prove that entries pertain to the assessee.

Court's Interpretation and Findings: The assessee contended that seized diaries belonged to the entire family (HUF) or group and not individually to the assessee. The Tribunal examined the statement recorded under section 132(4), seized diaries, and other evidence. It was found that diaries were in the assessee's handwriting, found at his residence, and contained entries of transactions with family members and others, but no separate HUF business or group entity was reflected. No bank or demat accounts of HUF were produced. The assessee's own statement during search confirmed ownership of entries. The Tribunal rejected the afterthought plea of HUF ownership, holding that entries belonged to the assessee individually.

Conclusion: Additions based on seized diaries were validly made in the hands of the assessee.

5. Determination of Income on Basis of Seized Diaries vs. Tally Books

Legal Framework: Income must be computed based on reliable books of accounts or evidence. Reconstructed accounts prepared post-search must be credible and verifiable.

Court's Reasoning: The assessee prepared Tally Books based on seized diaries and memory, claiming these reflected true profit and loss. The AO and CIT(A) rejected these as unreliable due to omission of certain entries, inclusion of extraneous entries, and lack of adherence to accounting principles. The Tribunal upheld this rejection, reasoning that seized diaries were not systematic books of accounts and Tally Books were not fully based on seized data, thus unreliable for income determination.

Conclusion: Income was correctly determined on the basis of entries in seized diaries and ledgers, rejecting the Tally Books.

6. Additions on Specific Heads

a) Interest Income (Shree Vyaaj Khaate)

The AO made addition of net interest income recorded in seized ledgers. The assessee claimed expenditure against interest income. The Tribunal found that AO had already allowed set-off of debit entries against credit entries in interest ledger, and no additional expenditure evidence was furnished. The addition was upheld.

b) Land Trading (Jamin Trading Account)

The AO estimated profit at 35% on credits in land trading account; CIT(A) reduced it to 15%. The assessee argued for further reduction to 8% under presumptive taxation (section 44AD), citing passive investment and lack of overheads. The Tribunal noted the AO's lack of basis for 35%, and CIT(A)'s acceptance of average profit of 13.14% as per seized documents. Considering passive investment and no overheads, the Tribunal directed AO to apply 13.14% profit rate on credits for income computation.

c) Share Trading

AO applied 20% profit on share trading credits; CIT(A) reduced to 10%. The assessee argued for further reduction due to frequent trading and volatility. The Tribunal observed no basis for AO's 20%, and that shares were traded in quick succession with no delivery evidence. It directed income to be computed at 8% profit rate on credits, consistent with presumptive taxation principles.

d) Maal Khaate

AO treated entire credit as income; CIT(A) held ledger contained both debit and credit entries and estimated profit at 20%. The Tribunal found 20% profit too high given turnover and lack of explanation by assessee. It directed income computation at 10% profit rate on credits in Maal Khaate ledger.

e) Peak Credit Addition (Section 69A read with Section 115BBE)

AO made addition on peak credit in various residual ledgers separately. The assessee requested merging ledgers for peak credit computation and telescoping of income taxed in earlier years. The Tribunal held that merging without explanation of ledger nature could distort income, thus upheld AO's approach of individual ledger peak computation. However, it allowed benefit of telescoping, directing AO to adjust peak credit additions in subsequent years by set-off of income taxed in earlier years.

f) Disallowance of Commission and Other Expenses

Expenses recorded in seized diaries were disallowed. The Tribunal held that since income was estimated on net profit basis applying presumptive rates, expenses could not be allowed separately as they are deemed included in profit estimation.

g) Bad Debts

The assessee claimed deduction for bad debts written off in Tally Books. The Tribunal found no evidence of bad debts written off in seized diaries for relevant years. Tally Books were prepared post-search and not reliable. The Tribunal held that deduction under section 36(1)(vii) requires bad debts to be written off in accounts of relevant previous year, which was not satisfied. Deduction was rightly disallowed.

h) Negative Peak Cash Balance

The AO computed negative peak cash balance additions taking opening balance as nil from AY 2012-13 onwards, ignoring earlier years' seized diary entries. The Tribunal held that seized diaries for earlier years must be considered to correctly compute negative peak. It set aside assessments for relevant years for re-computation allowing assessee opportunity to be heard and confront revised computations.

i) Notional/Accrued Interest

AO added accrued interest entries recorded on mercantile basis. CIT(A) deleted these additions holding them to be notional entries without actual receipt or accrual. The Tribunal upheld deletion, applying principles from Supreme Court decisions that income tax cannot be levied on hypothetical income without real accrual or corresponding liability. Actual interest received was already taxed on cash basis, and double taxation was avoided.

j) Miscellaneous Category Entries

AO treated large unexplained credit entries as income. CIT(A) analyzed and segregated entries into identifiable heads (land trading, share trading, interest, etc.) and confirmed addition only on residual unexplained peak credits. The Tribunal upheld CIT(A)'s approach, emphasizing that entire receipts cannot be taxed as income and only undisclosed income can be taxed.

7. Other Grounds

Grounds challenging legality of search and violation of natural justice were not pressed and dismissed.

Significant Holdings

"The jurisdiction of the specified authority over the case, is sine qua non for according approval u/s 151 of the Act... Merely because a PCCIT was located in Ahmedabad, he could not have given the approval for reopening of the cases, unless he was having jurisdiction over the case."

"Income chargeable to tax amounting to Rs. 9,93,31,948/- represented in form of an asset is more than Rs. 50,00,000/- from F.Ys. 2011-12 to 2016-17... These cash receipts were appearing in the form of loans and advances and were, therefore, included in the definition of 'asset'."

"The entries appearing in the seized diaries had to be read in its entirety... When the cheque entries appearing in the seized diaries and documents were recorded in the books of accounts/bank of the assessee, the other entries should also have to be considered in the hands of the assessee only."

"When the assessee had himself submitted that the seized diaries were not in the form of systematic books of accounts neither they were maintained following any accounting principle, the correctness of the profit as per Tally Books, which was arrived at after omitting certain entries of seized diaries and by including extraneous entries based on memory, was doubtful and couldn't have been adopted."

"The addition on the basis of cash system as well as on the basis of mercantile system, will result in double taxation... No addition could have been made on account of interest following the cash system of accounting as well as the mercantile system of accounting."

"Income-tax is a levy on income... If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a 'hypothetical income', which does not materialise."

"What can be taxed is the undisclosed income and not the entire undisclosed receipts."

Final Determinations

• Reopening notices and assessments under sections 148 and 147 were valid and not barred by limitation.
• Seized diaries and documents belonged to the assessee individually; additions based on them were justified.
• Income determination based on entries in seized diaries was appropriate; reconstructed Tally Books were unreliable.
• Additions on interest income, land trading, share trading, Maal Khaate, and peak credits were upheld with directions for reasonable profit rates (e.g., 13.14% for land trading, 8% for share trading, 10% for Maal Khaate).
• Deduction for expenses recorded in seized diaries disallowed as income was computed on net profit basis.
• Bad debts claimed were disallowed due to lack of evidence of write-off in relevant years.
• Negative peak cash balance additions were set aside for re-computation considering earlier years' seized diary entries.
• Additions on notional/accrued interest were deleted as such income was hypothetical and not realized.
• Additions on miscellaneous category were restricted to unexplained peak credits after segregation.
• Grounds on legality of search and natural justice violations were dismissed.