TMI Blog2004 (2) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... notice. In absence of determination of appellant s status, the notice under s. 158BC issued by the AO was illegal and any consequential action to such notice was also illegal. The reliance was placed on the decisions in Monga Metals (P) Ltd. vs. Asstt. CIT (2000) 67 TTJ (All) 247, V.V.S. Alloys Ltd. vs. Asstt. CIT (2000) 68 TTJ (All) 516, Madan Lal Agarwal vs. CIT (1983) 32 CTR (All) 179 : (1983) 144 ITR 745 (All) and Rama Devi Agarwalla Ors. vs. CIT (1979) 117 ITR 256 (Cal). The learned counsel further stated that even if the appellant has complied with the notice issued by the AO, no concession of law could be granted to the Department. The reliance was placed on the decision reported in CIT vs. National Insurance Co. of India (1981) 20 CTR (Cal) 226 : (1981) 127 ITR 54 (Cal). Opposing the admission of the additional grounds of appeal, the learned Departmental Representative stated that once the return of income was filed in response to notice under s. 15BC of the Act and the appellant has complied with various notices issued during the course of assessment proceedings under Chapter XIV-B, the same cannot be challenged now. It was also stated that all the case law relied on by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e residential and business premises of the assessee on21st Nov., 1996. During search, a promissory note for Rs. 5 lakhs accepted by M/s Naza Bhai, Jewellers, was found and seized. Certain other documents were also found. In his statement under s. 132(4) of the Act, the appellant surrendered a sum of Rs. 12 lakhs for taxation on account of following items: (i) Rs. 7,00,000 Cash (ii) Rs. 3,00,000 Jewellery (iii) Rs. 1,80,000 On money received on the sale of flat. 9. During assessment proceedings when the AO asked the assessee to explain the nature of promissory note of Rs. 5 lakhs, it was stated that a sum of Rs. 5 lakhs was given to M/s Naza Bhai, Jewellers, on25th June, 1996, for making a diamond set. As cash was given, the promissory note of Rs. 5 lakhs was obtained from M/s Naza Bhai, Jewellers. It was stated that M/s Naza Bhai, Jewellers, made the diamond set worth Rs. 3 lakhs and delivered the same to the appellant along with Rs. 2 lakhs in cash on9th Nov., 1996. As the appellant was not present in his house at that time, the promissory note could not be returned back to M/s Naza Bhai, Jewellers, and the same remained with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted. On the other hand, learned Departmental Representative supported the order of the AO. 12. We have considered the rival submissions. Even going by the submissions that it was normal practice to obtain promissory note before advancing the loan or giving the amount for making neckless set, it is quite uncommon that even after returning the money/jewellery, the borrower will not take back the promissory note accepted by it. The promissory note is a letter of credit on the basis of which a suit for recovery could be filed. No prudent person will allow such promissory note to be remaining with the lender. Even when the lender and borrower both were very close to each other, then the question of giving/taking promissory note would not have arisen. Looking to the surrounding circumstances, we hold that giving a promissory note was only a concocted story and no importance could be attached to such statement. 13. However, we agree with the submissions of the learned counsel to the effect that as the appellant has surrendered a sum of Rs. 7 lakhs in cash for taxation, no separate addition would be warranted if the amount of promissory note was covered by the surrender of amount. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has sold the jewellery owned by the appellant s father for about Rs. 2.50 lacs in July, 1995 and the other assets for Rs. 2 lakhs. He also confirmed that about Rs. 35,000 were left in cash by appellant s father. He also confirmed that these amounts were given as donation toShriNakodaTemple. The learned counsel stated that the submissions of the appellant were corroborated by the witness and, therefore, the AO was not justified in making the addition. It was further stated that similar statement was given by the appellant before the AO a few days after the search and seizure operation and, therefore, it cannot be said that the submission of the appellant was an afterthought. Under these circumstances, the addition made by the AO deserves to be deleted. On the other hand, learned Departmental Representative supported the order of the AO. 17. We have considered the rival submissions. Even if somebody goes by the statement of the appellant that his father has left a will in which he has desired that the sale proceeds of moveable assets held by him should be donated to the particular institution atleast the genuineness of such will has to be established. The will is neither registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany, the employer, was also filed stating that its executives were required to return the unutilised foreign currency to the company. It was also confirmed that the foreign exchange was issued to the appellant for business purposes. However, the AO did not find any force in the appellant s contention and added the same to the income of the appellant under s. 69A/10(14) of the Act. This addition has been challenged before us. 19. It is argued by the learned counsel that on17th Dec., 1996, the appellant wrote to the Reserve Bank ofIndiathat in the month of September, he has drawn the following exchanges: TC Currency Total US $ 5,430 -- 5,430 UKPounds 900 -- 900 DM 550 -- 550 FF 3,000 -- 3,000 20. He also informed that he has returned toIndiaon13th Oct., 1996, and the unutilised foreign exchanges were as under: TC Currency Total US $ 2,500 370 2,870 UKPound -- 260 260 DM 50 -- 50 FF 1,000 70 1,070 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 1,000 French francs were surrendered as confirmed vide letter dt.16th Sept., 1998. Similarly, the other currencies and traveller cheques were also surrendered to the bank. From the details and reconciliation filed by the appellant, it is seen that all the foreign currencies which were seized by the Department have been surrendered by the appellant to the banks. As mentioned earlier, the employer has certified that the foreign exchanges were allowed to the appellant for its business purposes. The appellant has also furnished the details of foreign currencies spent and unspent. From these details, it is clear that the appellant has not made any investment in the acquisition of the foreign currencies. We, therefore, hold that the AO was not justified in making addition of Rs. 4,27,021 as undisclosed income of the assessee. The addition made by the AO is deleted. 24. Ground No. 5 relates to the addition of Rs. 4,07,438 on account of undisclosed investment in jewellery, whereas the ground No. 6 related to the addition of Rs. 20,000 on account of undisclosed investment in silver utensils. During search and seizure operation, the assessee was found to be in the possession of jewellery ..... X X X X Extracts X X X X X X X X Extracts X X X X
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