TMI Blog2000 (7) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs.8 lakhs on account of share capital receipt; (7) Addition of Rs.40,73,700 on account of membership deposits; (8) Addition of Rs.5 lakhs towards an estimated income; (9) Refusal to allow deduction for a loss of Rs.26,83,800 as per the income-tax returns. 3. The assessee filed a Paper Book consisting of 151 pages listing the documents and the information contained therein along with the certificate which reads as under: "This is to certify as under: 1. That the papers at Serial Nos. 1 to 11 of the paper book are the copies of Panch Nama prepared by the Search party on 16-9-1995 in connection with a search on the premises of the Appellant on 15-9-1995. 2. That the papers at Serial Nos. 13 to 22 of paper book are the copies of the letters submitted by the appellant or its director Shri G.S. Chhabra to the concerned income-tax authorities. 3. That the papers at pages 25 to 29 are the copies of seized documents. 4. That the papers at Serial Nos. 33 to 41, 95 to 121 and 151 are the copies of the letters and evidences submitted to the Assessing Officer during the course of assessment proceedings." 4. The learned Departmental Representative brought to the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cument. In any case Page 30 is the only typed statement of the list of unsecured loans as attached with the balance-sheet as on the period ending15th September, 1995. 7. Pages 96-97 contained the ledger account of Mr. Palvinder Singh. The information in respect of Mr. Palvinder Singh along with other parties was given to the Assessing Officer vide letter dated 10-9-1996 as appearing on Page 108 of the Paper Book. On an understanding that the information stood furnished to the Assessing Officer, the same was included in the Paper Book. Vide letter dated16-9-1996at page 108 of the Paper Book the details regarding the amounts received from certain parties including Mr. Palvinder Singh as submitted to the Assessing Officer. Under mistaken impression that the copy of account of Shri Palvinder Singh was submitted to the Assessing Officer, the same was submitted before the Tribunal. 8. Page 98 contained statement of accounts of assessee in M/s. Aggarwal Gases. This was submitted to the Assessing Officer on27th September, 1996under instructions from CIT. The Papers are placed by the DCIT on separate file instead of assessment file. This statement stands confirmed by Shri S.K. Gupta, CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t does not necessarily involve (3) and never involves (4). The place of (4) is in fact taken by administrative action, the character of which is determined by the Minister's free choice." 13. The extent of judicial power exercised by the Tribunal is determined under the Act under which it has been constituted. The dispute between the parties has to be adjudicated upon in accordance with the provisions of the Income-tax Act. This presupposes that the issues have to be resolved as per law and not in any other manner. Rules have been framed prescribing the procedure for the functioning of the Bench and to facilitate rendering the justice in the speedier and best possible manner. In this context, we may refer to a particular Rule 18 relating to preparation of Paper Book etc. This reads as under: "Preparation of paper books, etc. 18. (1) If the appellant or the respondent, as the case may be, proposes to refer or rely upon any document or statements or other papers on the file of or referred to in the assessment or appellate orders, he may submit a paper book in duplicate containing such papers duly indexed and paged at least a day before the date of hearing of the appeal with pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Helmore v. Smith (No. 2) [1886] 35 Ch. D. 436,455: as stated in the Delhi Judicial Service Association v. State of Gujarat [1991] 4 SCC 406. While interpreting the expression their Lordships have held "the definition of criminal contempt is wide enough to include any act by a person which would tend to interfere with the administration of justice." 14. In this context we find that as regards documents 117 to 120 the assessee has furnished affidavit of Shri S.K. Gupta, counsel explaining the circumstances under which the documents came to be placed in the Paper Book. The assessee also made a request to produce Mr. Gupta for examination. There is no material with us to either disbelieve the version or show that the statement made is false. Coming to document on page 30, the same was only translated version of the information already on record. The filing of the same in no manner would have advanced the case of the assessee and as such no mala fide could be attributed to the assessee. The documents filed on pages 96 97 are merely copies of the ledger account. Since these are verifiable from the records available with the department no mala fide intention could be attributed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d furnish the information as required by the Assessing Officer. In fact on many occasions the assessee attended the office with the purpose of taking the photocopies of the documents but was denied the facility on the ground that the instructions of the seniors had to be taken in this regard. This apart, there was a common notice issued to 8 assessees who appeared before the DCIT on17-9-1996and asked for the clarification in regard to the specific queries raised against the specific assessees. On25-9-1996the letter was submitted to the CIT seeking appointment on certain issues contained in the draft order. The assessee also appeared before the CIT on27-9-1996in connection with the draft assessment as made by the DCIT. The circumstances under which the assessment was framed would clearly show that while the assessee was denied proper opportunity of hearing, the assessment framed was without taking into consideration the material available on record. The learned DR in this respect drew our attention to the number of hearings given by the Assessing Officer in this respect and non-compliance on the part of the assessee. It was stated that as mentioned in the assessment order vide lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as raised from time to time. Insistence was also made for producing the books of account of M/s. Green Land Farms and M/s. Rubina Pvt. Ltd. which were not made available by the assessee. These facts clearly showed that the proper and adequate opportunity was not allowed to the assessee to represent its case fully before the Assessing Officer. It would be pertinent to point out that a consolidated notice was issued in respect of 8 parties by the Assessing Officer in respect of which the clarification had to be sought as to the specific queries pertaining to a particular assessee. In the aforesaid background the additional grounds is raised are admitted. 19. We would now discuss the preliminary objection raised by the assessee in regard to the assessment framed under section 158BC of the Act. Chapter XIVB relates to a special procedure for assessment of search cases. Section 158B defines what is meant by undisclosed income. It is an income which would not have been disclosed for the purposes of the Act. As held in the case of Sunder Agencies v. Dy. CIT [1997] 63 ITD 245 (Mum.) assessment under the section could only be made in respect of undisclosed income. The aforesaid income i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no question of making an addition under the head 'undisclosed income' under Chapter XIVB of the Act. 23. The learned DR on the other hand, submitted that a sum of Rs. 2,31,000 clearly represents the expenditure as would be evident from the remarks against the figures as reflected in Annexure Al. This could not be therefore, substituted for the membership deposits for which separate addition is called for. Since the expenses and the receipts fall under different heads, the addition was rightly made. 24. We have carefully considered the rival submissions. The reading of the documents show that while entries on page 6 are in respect of the amounts received from various persons as mentioned therein, pages 7 8 relate to the expenses incurred as is evidenced from the word 'paid to'. The description bearing the expenses also is suggestive of the same. On page 8 are recorded certain entries which again are of the same nature. This is indicative from the word 'to give' against amount of Rs. 11,400 and 'to pay' against amount of Rs. 12,850 at the end. 25. Running total on page 6 has first been worked out to Rs. 1,87,300, subsequently an amount of Rs. 95,000 standing in the names of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f page 7 we find that the expenses have been mentioned against various items namely Vodka, Desu Bhatta, Seth Lamp House, Petrol, Petrol (Palvinder), car scooter, electricity, commission etc. These total upto Rs. 1,07,100 as against Rs. 1,06,400 mentioned which has been carried over to the back side of page 7. The amounts have been totalled up to Rs. 1,75,900. On page 9 there are further notings to the tune of Rs. 1,02,850 (Rs. 1,01,400 + Rs. 1,450). There are contra entries of Rs. 20,000 against one of which the name of Baldev appear. The net balance after deducting Rs. 90,000 has been struck at Rs. 12,850 against which narration appears 'to pay'. This totals upto Rs. 2,78,750 (Rs. 1,75,900 + Rs. 1,02,850). When rounded up these work out to Rs. 2,79,000. Since against aforesaid amount no description appears and its mention finds its place on page 9 of the Annexure which comes after page 7 8, the only logical deduction could be that the amounts have its link in the expenses as mentioned. After deducting (Rs. 13,500 + Rs. 20,000 + Rs. 14,500) the amount works out to Rs. 2,3 1,000. The latter has been bifurcated into two parts namely Rs. 1,15,000 + Rs. 1,16,000. The former represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck assessment. In this context we however note that the documents reads as under: *** Rs. "Palvinder Singh 8,80,000 6,50,000 Rs. 2,30,000 2,30,000 = 34,500 2,30,000 = 34,500 = 2,64,500 1,20,000 1,44,500 To take from Palvinder." The above would show that addition if any called for is to the extent of Rs. 6,50,000 + Rs. 34,500. This is also in case the same is not recorded in the books which is the contention of the assessee. Before us there is no material to verify the fact either way. In any case the addition to be considered was to be at Rs. 6,50,000 + Rs. 34,000 = Rs. 6,84,000. 30. The next contention relates to addition of Rs. 50 lakhs made on account of five cheques. Addition as made by the Assessing Officer was with the following observations:-- "The Coy. M/s. Dolly Farms Resorts (P.) Ltd. reed. an amount of Rs. 50 Lacs from M/s. Goel Gases (P.) Ltd. into its A/c No. 5915 with Canara Bank, Nehru Place, New Delhi as under: ***** 1-5-1994 Ch. No. 46130 on PNBSansad Marg,N.D.10,00,000 20-5-1994 Ch. No. 461390 on PNBSansad Marg,N.D.10,00,000 24-5-1994 Ch. No. 461391 on PNBSansad Marg,N.D.10,00,000 7-6-1994 Ch. No. 461479 on PNBSansad Marg, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was not so the next step was to verify from the party. Whether these entries were made to accommodate the party as mentioned by the assessee. If it were so the assessee merely acted as a post office and the amounts were not used by him in any manner in his business. In the circumstances no addition could be made in his hands in case the assessee's explanation is found to be verifiable. If so, the addition would stand deleted. 31. This brings us to another addition made at Rs. 9,3.5,000. It was contended that the addition made is in respect of credit balances lying to the account of the following parties in the books of account of the company for the year ending31st March, 1995: ***** Sl No. Particulars Amount (Rs.) L. F. No. Year i. Rubina Leasing Finance 1,35,000.00 92 1993-94 Credit Private Limited. ii. Handlooms House, Naraina, 50,000.00 9 1 1994-95 New Delhi . iii. Trikuta Leasing Pvt. Ltd. (a) Account No. 1 80,666.00 1994-95 (b) Account No. 11 1,72,334.00 1995-96 (c) Account No. III 2,50,000.00 Received on2-9-1995accounted in 1995-96 iv. Sonika Creations 83,000.00 8 V. Jasleen Leasing Pvt. Ltd. (a) Account No. I 1,05,670.00 Exhibited in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (Rs.) (a) During the year 1993 (upto31-3-1994) 3,75,000.00 (b) During the year 1994-95 17,12,000.00 (c) During the year 1995-96 (1-4-199519,86,700.00 to15-9-1995) Total 40,73,700.00 **** The Assessing Officer has not verified the aforesaid position and proceeded to make addition on the ground that the same constituted income of the assessee and that too for the block period as confirmations in this regard were not filed. The assessee's submission that sufficient opportunity was not allowed, was not considered. In this context, we would like to state that the question whether the entries are of revenue or capital nature or are in the nature of refundable securities can only be addressed to after having ascertained whether the same are reflected in the books of account or not. If these are reflected in the books of account the field of enquiry would lay in the course of regular assessment otherwise in block assessment. The nature and source of funds are then to be gone into. The issue in respect of mutuality or are fundable deposits to be found out and on the ascertainment of facts vis-a-vis the contract with the members the nature of income if assessable is to be deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the copy of which has been furnished before us it is also clear that in addition to the membership register, ledgers and cash books pertaining to the period 1993 to 1995 have been seized by the authorities. The books include stock register, credit/deposit record, receipt book, daily sale register and other loose papers. Before proceeding under the aforesaid section the first issue to be decided wag whether these entries in the books are the ones which are maintained in the normal course and are recorded prior to date of search within the meaning of section 158BA of the Act or not. In case of former the entries recorded therein cannot be considered for the purpose of framing assessment for the block period. This basic and vital exercise has not been done by the Assessing Officer and the assessment has been framed without giving adequate opportunity to the assessee. In absence of the latter there is no other recourse left but to restore the matter back to the file of the Assessing Officer as indicated in the discussion above. While doing so the Assessing Officer is required to give proper and effective opportunity to the assessee of being heard. In the course of such hearing, he is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in making an addition of Rs. 9,35,000 (wrongly mentioned Rs. 11,75,003) on the ground that the appellant had not furnished the confirmation certificates of the parties in respect of certain amounts. In fact, the DCIT never called for any confirmation except that on the last day of the proceedings when there was little time left for finalisation of order by him asked the appellant that confirmation should have been filed. 7. That the learned DCIT has erred in making an addition of Rs. 8,00,000 on account of share capital received from Mr. Palvinder Singh Rs. 2,00,000 and from Mr. Kanwarjeet Singh Rs. 6,00,000 on the ground that no confirmation certificates were furnished. 8. That the learned DCIT has erred in making an addition of Rs. 40,73,700 on account of membership deposits are revenue receipts and not the liability as contended by the appellant and also on the ground that the confirmations of the members from whom the deposits were received have not been furnished. 9. That the learned DCIT has erred in making an addition of Rs. 5,00,000 on the basis of an estimated income for the period 1-4-1995 to 15-9-1995 by rejecting the books as they were alleged to be incomplete a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the memorandum of appeal filed in due time, so in the interest of justice these should be allowed and taken as part of grounds of appeal already filed as these involve point of law and legal ground can be raised at any stage. Therefore, it was submitted for allowing additional grounds of appeal. 7. The learned DR while opposing this move of the assessee has Pleaded that since earlier this application was not pressed by previously engaged counsel of the assessee and no specific reasons has been given in the application for allowing additional grounds of appeal, so application of the assessee deserves to be dismissed. 8. I have heard rival submissions, perused the record, gone through the application of the assessee for additional grounds of appeal. After considering the arguments of both the sides, I find though no specific reason has been given for not originally incorporating these two grounds in the memorandum of grounds of appeal filed with the appeal papers which contain other grounds yet in the interest of justice and grounds being on legal issues, I allow them to be raised and this would form part of the memorandum of grounds of appeal and considered as ground Nos. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause in furnishing such confirmations which are to be received from other parties. The transactions related to the earlier years, while the assessment was completed on27-9-1996. Thus the applicant has been prevented by sufficient cause in submitting the following evidences: (i) Confirmations from Shri Kanwarjit Singh Bansi (ii) Confirmations from M/s. Jasleen Leasing (P.) Ltd. (iii) Confirmations from M/s. Handloom Cottage (iv) Confirmations from M/s. Goel Gases Ltd. Photocopies of the above confirmation are enclosed. PRAYER It is, therefore, respectfully prayed that this Hon'ble Tribunal may kindly be pleased to admit the aforesaid evidences under the enabling powers vested in it by section 254 of the Income-tax Act, 1961 read with Rule 29 of the Appellate Tribunal Rules, 1963 and the issues involved in the appeal may kindly be adjudicated on the basis of the aforesaid and other evidences, and justice rendered to the applicant." 9.1 Assessee has enclosed 4 photocopies of following documents: (1) Letter dated23-9-1997of one Mr. Tony Bansi alias Kanwarjit Singh (Tony) Bansi: (2) Letter dated10-9-1996addressed to Palvinder Singh Managing Director of M/s. Jasleen Leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stand of the assessee that for one of these letters assessee was prevented by sufficient cause in submitting this document before Assessing Officer during the assessment proceedings and moreover no material was furnished to show that this was produced before Assessing Officer or CIT as contended and endorsement on letter dated 10-9-1996 (Annexure B) even cannot be said to be confirmation because Shri Palvinder Singh, Managing Director of Jasleen Leasing (P.) Ltd. has given an assurance to the assessee that he would furnish the information mentioned in the letter without putting name, address, signatures and permanent account number, ward/circle etc. after recording confirmation of the transaction as suggested by the assessee as these places have been kept blank. Therefore, in view of facts and circumstances and after going through the application of the assessee, arguments as advanced by both the sides, I am of the considered view that assessee has not been able to make out a case for admission of additional evidence as neither evidence sought to be adduced is primary evidence nor letter dated 10-9-1996 marked as Annexure B can be held to be even photocopy of the confirmation l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for personal hearing and the consideration of the submissions. It was submitted that there could not be any mala fide intention on the part of the then counsel in making their own statement about the aforesaid order as the same could not have helped him in any manner as the decision on the addition as made by DCIT had to be on merits and no prudent counsel would try to fabricate the evidence or make a wrong statement which would not have been in his interest. The fact that the said letters could not be located or traced out by the office of the Commissioner would not show that these were not given. The letter dated27-9-1996was submitted to the Commissioner personally and this fact stands recorded on the office copy of the letter available with the assessee. 13. As regards documents at page 30 of the paper book, it was submitted that same relates to information which is in the form of letter to the DCIT vide which the assessee brought to the notice of the Assessing Officer that confirmation of these parties in respect of their unsecured loans have been called for. It was stated that there was no fresh information contained in the documents and this page is the only typed statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n points. The affidavit of Shri S.K. Gupta, Chartered Accountant is self-serving document without furnishing any evidence or material to support the same. So no cognizance could be taken to accept the theory put forth by the counsel of the assessee when facts are totally different. It was also submitted that certification done on the paper book filed is false and this action of assessee and his counsel amounts to contempt of the Tribunal (Court) for which action requires to be taken besides ignoring these documents which were actually not filed before the Assessing Officer and assessee on the pretext of having filed before Assessing Officer has sought to file the copies thereof. 18. I have considered the submissions as made before the Bench by both the sides. The Tribunal is a final fact finding authority and has to act judicially. The extent of judicial power exercised by the Tribunal is determined under the Act under which it had been constituted. The dispute between the parties has to be adjudicated upon in accordance with the provisions of Income-tax Act which presupposes that issues have to be resolved as per law. Rules have been framed prescribing the procedure for function ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration the facts as given and the documents as appended in the paper book. The framing of the aforesaid rule pre-supposes the correctness of the statement as well as those of the documents. This is necessary for administration of justice. Though the Tribunal is not a court in a strict sense of the terms yet it has all the trappings of the court as held by their Lordships of the Supreme Court in the case of Bharat Bank Ltd., Under certain circumstances, if so required, the High Court can be moved for contempt of court which as per the common law definition is an act or omission committed to interfere with the due administration of justice as have been held by Hon'ble Supreme Court in the case of Delhi Judicial Service Association. While interpreting the expression their Lordships have held 'the definition of criminal contempt is wide enough to include any act by a person which would tend to interfere with the administration of justice." 20. In this context, I find that as regards document at pages 30, 96, 97, 98, 117 to 120 and 151 are concerned, none of these documents were filed before the Assessing Officer. The arguments advanced in this respect and affidavit filed by Shri S.K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the undisclosed income. The entries as recorded in the regular books of account which are otherwise available for the scrutiny of the department cannot be termed as undisclosed income as understood within the meaning of the said section. In view of the above document, the other grounds as raised are discussed hereafter. 23. The facts as per assessment order in this case are like this that search and seizure operation was conducted on15-9-1995under section 132(1) of the Income-tax Act and same was concluded on16-9-1995. Notice under section 158BC of the Income-tax Act dated23-11-1995was issued to the assessee-company which was duly served upon the assessee on28-11-1995but assessee has not made any compliance. Notice under section 142(2) of the Income-tax Act dated19-2-1996issued for asking the assessee to furnish the return in the prescribed Form No. 2B for the disclosed and undisclosed income of the block period. None attended on the date fixed in the said notice. Another notice under section 142(1) dated25-4-1996issued for6-5-1996which also remained uncomplied with. On25-4-1996a letter was also sent to the assessee to appear in the office of Assessing Officer on or before2-5-199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments/papers with the books of account as to complete the pending assessment for the block period. On29-8-1996Shri Chhabra attended but again did not furnish any reply to the said questionnaire dated30-7-1996and requested for further adjournment and case was adjourned to2-9-1996. Again Shri Chhabra attended on4-9-1996requested for adjournment and case adjourned on9-9-1996. On 10-9-1996 Shri S.K. Gupta, CA attended and he has filed the power of attorney and return of income for the block period declaring the undisclosed income as nil He has also furnished the letter with annexure in reply to this office letter dated 4-7-1996 and a questionnaire dated 30-7-1996 and the case was partly discussed and assessee was further asked to furnish the followings: (i) Confirmations of loans A/cs (ii) Land purchased (iii) Addressee of all the club members (iv) To furnish the remaining reply of the said letter, and he was asked to attend the office on12-9-1996to cross-examine with the books of account and seized documents etc. and also to produce Shri G.S. Chhabra on the date for recording the statement on the various points as per the questionnaire dated4-7-1996and30-7-1996to verify wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the explanation offered by the assessee was not accepted as it was supported by documentary evidence. Hence the total amount of Rs. 2,31,000 was added to the income of the assessee. 25.1 Aggrieved by this assessee has come up in appeal and it was submitted that this amount of Rs. 2,31,000 was on account of cash available with Shri G.S. Chhabra and balance Rs. 26,000 in the name of Wadhwa and further to this it was submitted that page 9 of Annexure A would show that brought forward balance mentioned was Rs. 2,79,000 from which after deducting Rs. 13,500, Rs. 20,000 and Rs. 14,500 the net amount was arrived at Rs. 2,31,000. This in turn was bifurcated into Rs. 1,15,000 representing cash and out of the remaining Rs. 1,16,000, Rs. 90,000 were shown against GS and Rs. 26,000 against membership. It was also submitted that the paper in question was undated and unsigned scribbling which contain bifurcated figure of Rs. 2,31,000 and details were not in any way related to any expenses or income and DCIT has unnecessarily concluded that the figures related to expenses and since they are not incorporated in the books and same have been included in the assessment. So in all fairness, this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt which were very much available with the Assessing Officer. It was submitted that before addition could be made on this account, it would be necessary to show that amount was intended to be not disclosed and was not reflected in the books of account otherwise the same has to be considered in the regular assessment which is independent of block assessment. In reference to Annexure A-1 at page 13, it was submitted that addition, if any, is called for to the extent of Rs. 6,50,000 and Rs. 34,500 and this is also in case same is not recorded in the books which is the contention of the assessee. Before the Bench, no material was placed to verify the fact as stated in earlier part. 31. The learned DR while relying upon the basis and reasoning as given by Assessing Officer has pleaded that nothing was placed on record to substantiate the plea taken by the assessee and rather confusing argument has been advanced by the counsel for the assessee without any basis or material. Therefore, in view of facts and circumstances, it was pleaded that addition of Rs. 15,30,000 has rightly been made and order of Assessing Officer requires to be confirmed. 32. After having heard both the sides, pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On the same day payment was made to M/s. Goel Gases Ltd. vide five cheques of Rs. 10 lacs each as under: **** Ch. No. 23929 Rs. 10 lacs Ch. No. 23930 Rs. 10 lacs Ch. No. 23926 Rs. 10 lacs Ch. No. 23927 Rs. 10 lacs Ch. No. 23928 Rs. IO lacs **** The above transaction has not in any way benefited the company. No income of any sort was earned on the same. No other transaction was done in account No. 1499 PNB Ghaziabad except above transaction." 35. The Assessing Officer observed that assessee tried to prove that money in fact was never utilised by him and since the money was returned, therefore, it has no impact on its books of account. The Assessing Officer considered the explanation of the assessee and noted that assessee did not file any confirmation from the parties concerned nor did he produce the copy of books. No explanation from the party from whom this amount was alleged to have been taken and paid has been filed. Under these circumstances sum of Rs. 50 lacs was taken as unexplained income of the assessee and added to its income. 36. In appeal assessee submitted that Assessing Officer made this edition on the ground that no confirmation in this respect w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries are Gurcharan Diwan Rs. 14,500, Sanjay Khullar Rs. 12,000, Sanjay Khullar Rs. 50,000. Certain entries on the back of pages 7 amounting to Rs. 1,75,200. Further on page 8 certain totals on month to month and party to party basis amounting to Rs. 2,31,000 and then further Rs. 1,28,500. From this it was clear that assessee has merely tried to divert the attention from the main issue. Even otherwise the assessee has not been able to reconcile the entries amounting to Rs. 1,39,000 with records. Under the circumstances, the plea of the assessee that the entries have been explained is not acceptable and the sum of Rs. 4,18,000 is added to the income of the assessee being unexplained investment. 40. In appeal assessee's explanation at the first instance was that scribble as made represent membership deposit which work out to Rs. 1,39,000 and not Rs. 4,18,000. According to assessee's counsel these are totally reflected in the books of account. It was also submitted that as regards Rs. 4,18,000, nowhere the Assessing Officer has indicated the working of the same as such it is not known as to how the amount has been arrived at. In any case the close reading of the document would show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the assessee accepted the confirmations from M/s. Amir Chand and M/s. BoltanIndiatotalling to Rs. 3 lacs as these were found to be in order. Since no confirmation in respect of other parties had been filed despite various adjournments granted to the assessee. However, at this stage assessee asked the Assessing Officer to call the parties and examine under section 131 of the Income-tax Act. When at the very beginning it was made clear by Assessing Officer that as it is time barring assessment, therefore, assessee should not only produce the confirmiations but also the parties for verification. But the assessee as per Assessing Officer sought adjournments on one ground or the other. Under the circumstances, at this stage this request of the assessee cannot be acceded to and the addition of Rs. 9,35,000 was made as assessee has not been able to discharge the onus with respect to following parties: ***** Rs. Rubina Leasing Credits (P.) Ltd. 1,35,000 Handloom Cottage 50,000 Out of Rs. 10,50,000 assessee could explain Rs. 3 lacs so balance of Rs. 7,50,000 stood unexplained. **** 44. In appeal, it was submitted that in fact learned Assessing Officer did not call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. ***** 50. The assessee was asked to explain and file the confirmation but, as noted by Assessing Officer, for a long time the assessee had chosen to remain silent after filing the details and no confirmation were filed. Finally on16-9-1996the assessee filed confirmations in respect of Sh. G.S. Chhabra and Mrs. Dolly Chhabra. In respect of others, the assessee again took the plea that they may be summoned under section 131 of the Act. The Assessing Officer noted that attitude of the Director of the company has been most uncooperative inasmuch as in spite of issuing summon under section 131 many a time they either did not attend the proceedings or attended many days after the date on which they found convenient to attend. Under these circumstances at this stage the request of the assessee cannot be acceded to as the case is getting time barred on 30-9-1996, Since the first questionnaire was issued to the assessee day back in the month of July, 1996 he should have been duty bound to inform about real state of affairs. At this stage it is nothing but seems to be a device to gain more time and under the circumstances the request of the assessee is rejected as the assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on temporary membership was being credited to the reserve account. There was no annual subscription chargeable on the life membership. The assessee has collected a sum of Rs. 40,73,700 as membership deposits. The assessee was asked as to why this amount should not be treated as his revenue receipt in view of the fact that the amount received is not to be refunded to the members as also in view of the fact no annual subscription is being charged from the members who have life membership. In reply thereto the assessee stated that since the amount is to be refunded hence represents a liability and since it is a liability it cannot be treated as income. The assessee further stated that the member acquires a right of enduring nature to use the facilities of the club throughout his life. The life membership is transferable and hence the same cannot be treated as income. Moreover, it being credited to reserve account, therefore, it cannot be used for any other purpose and therefore, the same can be a capital receipt only. I do not agree with the contention of the assessee. First of all, the assessee has no liabilitv to return the amount and the only exception is when the club is closed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are reflected in the books of account the field of enquiry would lay in the course of regular assessment otherwise in the block assessment. The nature and source of funds are then to be gone into. The issue in respect of mutuality or refundable deposits was not found out by Assessing Officer so his action is unjustified in treating this as income of the assessee. It was pleaded for restoring the matter back to the file of Assessing Officer to ascertain the nature of the receipts etc. and pass a fresh order after consulting the books of account lying with the Department. 58. The learned DR while relying upon the orders of Assessing Officer has pleaded for confirmation of his order. It was submitted that since membership fee is a non-refundable deposit, it is the income of the assessee and Assessing Officer has rightly charged it as undisclosed income. 59. After having heard the rival submissions, perusing the record and going through the details to which attention of the Bench was drawn. I am of the considered view that since these are membership deposits which are non-refundable, Assessing Officer was justified in treating it as undisclosed income and his action is confirmed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der reference, Assessing Officer had no option but to make the addition on estimated basis. Same needs to be confirmed. 63. After having heard both the sides, perusing the record and going through the orders of Assessing Officer, I am of the considered view that while making this addition Assessing Officer has not placed any concrete material or evidence to arrive at the estimate finally made for determining the income. After considering the arguments of both the sides and facts and circumstances of the case, I am of the view that so far as this ground is concerned, the order of Assessing Officer is set aside and restore back on the file of Assessing Officer with a direction that he will decide this issue afresh after giving due opportunity to the assessee. 64. The last ground relates to not allowing deduction of adjustment of returned and partly assessed loss of Rs. 26,83,800 as per income-tax return for the block period 1994-95 to 1996-97 (upto15-9-1995). In appeal it was submitted that assessee filed the return for the block period from assessment year 1994-95 to 1996-97 (upto15-9-1995) showing as accumulated loss of Rs. 26,83,800 as detailed below: ***** Loss for 1994-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tocopies of the documents but was denied the facility on the ground that the instructions of the seniors had to be taken in this regard. This apart, there was a common notice issued to 8 assessees who appeared before the DCIT on17-9-1996and asked for the clarification in regard to specific queries raised against the specific assesses. On25-9-1996the letter was submitted to the CIT seeking appointment on certain issues contained in the draft order. The assessee also appeared before the CIT on27-9-1996in connection with the draft assessment as made by the DCIT. The circumstances under which the assessment was framed would clearly show that while the assessee was denied proper opportunity of hearing, the assessment framed was without taking into consideration the material available on record. The learned DR in this respect drew our attention to the number of hearings given by the Assessing Officer in this respect and non-compliance on the part of the assessee. It was stated that as mentioned in the assessment order vide letter dated25-4-1996the assessee was to appear in the office on or before2-5-1996as well as on18-6-1996for taking the photocopies of the seized material. He was asked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied upon. Shri Sharma vehemently argued that there exist no difference of opinion between the two Members so far as the question of following the principle is concerned. It was pointed out that the learned Accountant Member followed the principle throughout the order that once transaction is reflected in the books of account regularly maintained and found to be so - such transaction cannot form the subject-matter of any addition of undisclosed income in the block period. 3. In arriving at the aforesaid conclusion the learned Accountant Member followed the principle enunciated by the Tribunal in the case of Sunder Agencies. The Tribunal held in this case that section 158BA does not provide a licence to Revenue for making roving enquiries connected with completed assessment. It is beyond the power of the Assessing Officer to review completed assessments unless some direct evidence comes to his knowledge as a result of search which indicates clearly the factum of undisclosed income. The scheme of Chapter XIV does not give power to Revenue to draw presumption in regard to undisclosed income. Dealing with the dimension of Chapter XIV, the Tribunal held that within the pale of this Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that the Tribunal is a final fact finding authority. The extent of judicial power exercised by the Tribunal is determined under the Act under which it had been constituted. The dispute between the parties has to be adjudicated upon in accordance with the provisions of the Income-tax Act which presupposes that the issues have to be resolved as per law. Rules have been framed describing the procedure for functioning of the Bench and to facilitate rendering the justice in the speedier, judicious and best possible manner. He, therefore, examined all the related issues in the light of the material which was available at the time of hearing. Learned Accountant Member first identified the principles and then decided the issues on the touch-stone of those principles. I find no difference of opinion in regard to the principles followed by the two Members. However, because of the non-availability of certain informations, learned Accountant Member set aside the order and restored the same to the file of the Assessing Officer whereas the learned Judicial Member decided the issues on the basis of available material. 7. As a matter of fact, search and seizure, is a serious invasion on the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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