TMI Blog2003 (1) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... zed from B-11/3, Jhilmil, Shahdara was not accounted for in the regular books maintained by the assessee. It was also noted that J.K. Aggarwal, partner of the firm had admitted in his statement recorded under section 132(4) that such cash represented business income of the firm for the current year. Since this income was not disclosed in the block return, the assessee was asked to show-cause as to why such cash should not be considered as undisclosed income in the block period. The assessee vide his letter dated12-8-1996submitted that this cash was received on trust from various business associates but the same was offered as business income since unsupported by any evidence. Accordingly, it was prayed that this amount may be included in the income of the firm. The Assessing Officer, considering the provisions of section 158B(b) and the fact that this sum was not recorded in the regular books of account, held that this cash had not been and would not have been disclosed as income of the assessee in the regular books of account. Accordingly, this amount was included in the total undisclosed income for the block period. 4. Regarding 19 slips, it was found on the basis of panchnama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer made the addition of Rs. 27,27,052 on the basis of amounts written on slip Nos. 2, 3,10 to 14, 16, 18 19, addition of Rs. 71,06,918 on the basis of figures written on slip No. 15 and ad hoc addition of Rs. 2 lakhs on the basis of other slips on which no figure was mentioned. Thus, the total addition of Rs. 1,00,33,970 was made on account of unexplained slips. 6. The Assessing Officer also made addition of Rs. 2,09,841 on account of unexplained stock found from the aforesaid premises. 7. Aggrieved by the aforesaid additions made by Assessing Officer, the assessee has challenged the same by filing this appeal before the Tribunal. 8. Regarding the addition of Rs. 36,46,545 on account of unexplained cash, it has been fairly admitted by the assessee's counsel that this amount was found from the almirah kept at B-11/3, Jhilmil, Shahdara which was not accounted in the regular books of account kept by the assessee. Further, he has assailed the order of Assessing Officer by contending that if the assessee makes the statement under section 132(4) to the effect that the cash found represents the current income for the period ending the date of search and the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of recorded transaction. Therefore, it cannot be said that assessee would have disclosed this amount. According to him, this income falls within the ambit of section 158B(b). 10. After hearing both the parties, we do not find force in the contention of the learned counsel for the assessee. As rightly pointed out, Chapter XIVB contains special provisions for assessing the undisclosed income found as a result of search carried out after30th June, 95. It is the settled rule of interpretation that such provisions overrides the general provisions. Therefore, the general provisions of assessment contained elsewhere in the Act, would not be applicable for determining and assessing the undisclosed income unless such provisions are made applicable by virtue of any provision contained in Chapter XIVB. Section 158BF provides that the provisions of section 271(1)(c) for levy of penalty for concealment of income would not be applicable in respect of undisclosed income determined under this chapter. Therefore, in our opinion, recourse to the provisions of Explanation 5to section 271(1)(c) cannot be taken for determining the scope of undisclosed income. Chapter XIVB contains special provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inasmuch as the time prescribed for filing of the return had not expired as the previous year itself had not ended and further the period for making advance tax payment was still available. We are not convinced with such arguments of the learned counsel for the assessee. Undisputedly, the regular books of account were maintained by the assessee for recording the income from disclosed sources. Whatever income was intended to be disclosed was duly entered in such regular books of account. Admittedly, such cash was over and above the cash shown in the regular books maintained by the assessee. Such cash was also found in a separate almirah kept at a place different from the place where the regular business of manufacturing was carried on. From the same almirah certain slips were also found along with such cash which also do not find place in the regular books of account. The manner in which such cash was generated was also not disclosed by the assessee in his statement under section 132(4). There are two possibilities i.e. either such cash was generated out of the unaccounted transactions of the business carried on by the assessee or from some other activities unconnected with such bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel for the assessee has vehemently challenged the same by raising various submissions. Firstly, it was submitted that these slips were found from the premises which is neither owned nor belonged to the assessee. Therefore, it cannot be said that these slips were found from the possession and control of the assessee as mentioned in section 132(4A). According to him, before drawing any adverse inference, it must be established that such slips were under the control of the assessee and intended to be possessed by him as held by the Tribunal in the case of Ashwani Kumar v. ITA [1991] 39 ITD 183 (Delhi). Proceeding further, it was submitted that presumption under section 132(4A) can be raised only for the limited purpose i.e. for section 132(5) proceeding as held by the Hon'ble Delhi High Court in the case of Daya Chand v. CIT [2001] 250 ITR 327. Secondly, it was submitted that all these slips were dumb documents without any narration and consequently, no addition could be made on the basis of such slips. In support of this proposition, he again relied on the decision of Tribunal in the case of Ashwani Kumar as well as the Third Member decision in the case of S.P. Goel v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer himself has mentioned that double addition could not be made but the same was being made as the assessee had not owned such slips. He has also submitted that ad hoc addition of Rs. 2 lakhs on the basis of the slips of which no narration is given, is simply on suspicions. In view of these submissions, it was prayed that such addition may be deleted. 14. On the other hand, the learned Sr. DR has vehemently defended the action of Assessing Officer. Firstly, he submitted that the fact that cash and 19 slips were found from the almirah under the lock and key kept at the premises B-11/3, Jhilmil, Shahdara, is not in dispute. He also drew our attention to the panchnama to point out that these slips were strapped with cash with rubber band. The fact that certain stocks were also found from this premises is also not in dispute. Further, the premises is owned by three male partners and husband of lady partner of the assessee firm. In these circumstances, it was pleaded that it could not be argued by the learned counsel for the assessee that such slips did not belong to the assessee or were not found from the possession and control of the assessee. Once, it is shown that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court in the case of CIT v. Best Co. (P.) Ltd. [1966] 60 ITR 11 wherein at page 18 it was explained as under: 'At this stage the question of burden of proof raised at the Bar may be noted. In Commissioner of Income-tax v. Chari Chari, this court observed: "....it must in the first instance be observed that it is for the revenue to establish that a particular receipt is income liable to tax......" We may point out, as some argument was advanced on the question of proof, that this court did not lay down that the burden to establish that an income was taxable was on the revenue was immutable in the sense that it never shifted to the assessee. The expression "in the first instance" clearly indicates that it did not say so. When sufficient evidence, either direct or circumstantial, in respect of its contention was disclosed by the revenue, an adverse inference could be drawn against the assessee if he failed to put before the department, material which was in his exclusive possession. This process is described in the law of evidence as shifting of the onus in the course of a proceeding from one party to the other. There is no reason why the said doctrine is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge, it may be clarified that words "possession and control of the assessee" has to be understood as explained by the Tribunal in the case of Ashwani Kumar at page 193 wherein it was held as under: "In order to attract the presumption under section 132(4A) the first requirement is that the document should be found in possession or control of the assessee. In this, case, the revenue has been saying that the document was found inside the shop of the assessee. However, there is nothing in the orders of the authorities below to show that the slip was in possession and control of the assessee. Everything physically present inside the shop of a person may not be in the person's control and possession. For proving possession it is necessary to show that the person concerned had the intentio possessendi. In this case nothing of that sort is pointed out by the authorities below." 18. In the present case, unlike the case of Ashwani Kumar, 19 slips were found from the safe custody of the assessee along with the cash of Rs. 36 lakhs and odd from an almirah kept at B-11/3, from where stock of copper strips and wire, grease, furnace oil etc. were found, strapped with cash by rubber band thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 15 and the addition of Rs. 2 lakhs has been made on ad hoc basis in respect of the remaining slips on which no amount is mentioned. 21. As far as addition of Rs. 2 lakhs is concerned, we are of the view that no addition was warranted on mere suspicion. Suspicion, howsoever grave, is not the substitute for the evidence. Since the remaining slips did not contain any amount, the same can be treated only as dumb document on the basis of which no addition can be made on the decision of Tribunal in the case of Ashwani Kumar and S.P. Goel. Accordingly, the addition of Rs. 2 lakhs is hereby deleted. 23. Regarding the other slips, we have already drawn adverse inference to the effect that such slips related to the transaction of unaccounted business of the assessee. The main slip is slip No. 15 on the basis of which addition has been made. Being the most important slip, its contents are reproduced below: 500 X 45 = 22500 7106918 50 X 13 = 650 4076001 20 X 24 = 480 ----------- 10 X 54 = 540 3030917 05 X 63 = 315 ----------- 01 X 33 = 33 'Safe' ----- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sushil J., Sunil J. and Rawat respectively. So on the basis of these slips, it is held that assessee had unaccounted cash of Rs. 21,04,718 (Rs. 20,71,000 + Rs. 9,200+ Rs. 24,518) and the various amounts aggregating Rs. 9,26,000 were due to the assessee from the above persons as on 21-8-1995 and consequently, the addition for the entire amount of Rs. 71,06,000 could not have been made on the basis of this slip. 24. As far as other slips are concerned, it is noted that certain amounts are mentioned against certain names, details of which are given below: ----------------------------------------------------------------------- S.No. Parchi No. Name Amount ----------------------------------------------------------------------- 01 2 J.K. Aggarwal 1,00,000.00 02 3 Sushil Jain 3,95,000.00 03 10 Ved Metal 5,85,000.00 04 11 Sunil Jain 2,46,115.00 05 12 Vinod Tempo 2,00,000.00 06 13 Madhu Wire 3,44,745.00 07 14 Vinod T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat assessee must have recovered the cash due from Sushil J. and Ved Metal appearing on slip No. 15. If such cash is added then total cash available on the date of search would come to Rs. 36,65,718 which is very nearer to the cash found. That means the sum of Rs. 50,200 might have remained unrecovered from Mr. Rawat. That means the total addition which could have been made on the basis of these slips would only to the extent of Rs. 37,15,918 (Rs. 36,65,718 + Rs. 50,200) as against Rs. 1,00,33,970 made by the Assessing Officer. Since we have already held that these slips and cash found from the safe custody of assessee related to undisclosed business of the assessee, we further hold that above addition has to be set off against the addition of Rs. 36,45,575 on account of unexplained cash sustained by us. The Assessing Officer himself has accepted this legal position at page 10 of the assessment order but separate additions were made by him because the assessee disowned these slips. In view of the above discussion, we restrict the addition on account of these slips to Rs.69,373 (Rs. 37,15,918 - Rs. 36,46,545). The order of the Assessing Officer is, therefore, modified accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that it was actually scrap and there is no dispute between the assessee and the Assessing Officer on this account. Even the scrap is in the form of strips which are very small in size and the learned DR cannot make out a new case. 28. After hearing both the parties, we are of the view that this issue requires fresh adjudication after considering the relevant facts. The learned DR has not been able to point out as to how the furnace was quantified as 67CM in the tank. As far as scrap is concerned, there is no dispute between the parties and the Assessing Officer himself has considered such scrap as copper scrap. However, it is not clear on what basis the rate of Rs. 150 per kg. was taken by the Assessing Officer. We further agree with the learned counsel for the assessee that if the scrap is generated out of the manufacturing activity of the assessee then it has to be accounted for only at the time of sale. However, this plea can be accepted only if the assessee had disclosed either the sale of such stock in the regular books of account for assessment year 1996-97 or declare the same in the closing stock for such year. This fact requires verification. If the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
