TMI Blog1999 (1) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... , Jhandewalan (business 3,26,580 3,20,000 premises of PPC) New Delhi First floor, 64, Kalyanvihar (residence 2,18,450 2,00,000 of Sunil Vasudev, partner of PPC) Ground floor, 64, Kalyanvihari (residence 1,31,700 1,00,000 of Deshraj Vasudev, father of Sunil Vasudev and partner of M/s Syndicate Advertisers) Locker No. 157 of Deshraj Vashudev 3,81,400 3,81,400 50, Ishwar Colony, Delhi (residence of 5,38,160 4,87,700 Naresh Vasudev, partner of PPC) B-206, Derawalan Nagar, Delhi (residence 11,97,967 11,65,000 of Rajesh Vasudev Mukesh Vasudev, partners of PPC) --------- --------- 27,94,257 26,54,100 --------- --------- Jewellery Ground floor, 64, Kalyan Vihar (residence 95,856 Nil of Deshraj) First floor, 64 Kalyan Vihar (residence 1,60,044 Nil of Sunil Vasudev, partner of PPC) Punjab National Bank, locker of Sunil 23,793 Nil Vasudev, partner of PPC 50, Ishwar Colony, Delhi (residence of 7,37,950 4,07,952 Naresh Vasudev, partner of PPC) B-206, Derawalan Nagar, (residence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs was required to give bifurcation of the undisclosed income shown in the return for the block period but the assessee-firm in its reply dt.24th Oct., 1996, made a submission that in view of the further declaration of undisclosed income of the firm no cognizance of the amount declared at Rs. 26,71,850 be taken. As the assessee-firm had not given any details or bifurcation the AO proceeded to complete the block assessment on the basis of the incriminating material found and seized during the course of search and seizure operations and computed the undisclosed income at Rs. 85,97,447 in the order passed under s. 158BC of the IT Act, on 30th Oct., 1996. 3.2. The first effective ground taken is against an addition of Rs. 4,12,038 made on account of inflation of painting charges. The AO noted that during search operations a trial balance of assessee-firm as on31st March, 1995, was found and seized. The profit as per the trial balances came to Rs. 37,18,656 whereas as per the return filed for the asst. yr. 1995-96 the net profit was disclosed at Rs. 8,31,533. The assessee-firm was, therefore, through a questionnaire dt.12th Aug., 1995, was required to reconcile and in response the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment on the ground that the payment in question was of revenue nature. He, therefore, claimed that though on one hand the addition of Rs. 1,81,000 may be justified as income from undisclosed source, a corresponding deduction should have been allowed on account of revenue expenditure which the AO failed to do. In support he has placed reliance on the decisions in the cases of Nishant Housing Development (P) Ltd. vs. Asstt. CIT (1995) 52 ITD 103 (Pat) and Sharma Associates vs. Asstt. CIT (1996) 54 TTJ (Pune)(TM) 207 : (1996) 217 ITR 1 (AT). According to the learned counsel since the nature of expenditure incurred in cash as well as through cheque is similar and there was no dispute that it was of revenue nature and it was actually incurred the amount was allowable as revenue expenditure in view of the ratio of the decisions cited. The addition made would, therefore, stand neutralised by the allowance of the said amount as revenue expenses. He, therefore, pleaded that the addition made be deleted. 4.2. The learned Departmental Representative, on the other hand, strongly objected to the claim so made. He made a submission that as per the agreement discovered during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the same have been accounted for in the regular books of account. There is, however, probability that such unaccounted cash payments were adjusted by the assessee-firm against, the unaccounted receipts of advertisement charges. Moreover, the payments made through cheques has been duly debited in the books of account and also allowed while completing the regular assessments against the accounted receipts. 4.4. We have gone through the decisions cited on behalf of the assessee and we find that the facts in the present case are distinguishable in as much as in those cases the addition made on account of unexplained expenditure was held to be neutralised by allowance of the said amount as revenue expenditure but the receipt/income shown was not found suppressed whereas in the present case receipt/income has also been found suppressed in the various years involved in the block period. In this view to the matter we see no merit in the claim made and the addition made on account of unexplained expenditure under s. 69C is confirmed. 5. The next ground raised is against the addition made of Rs. 55,000 on account of undisclosed receipts. The AO noted from the seized documents as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relied upon the order of the AO and he further advanced arguments in support thereof. 5.3. We have carefully considered the facts and material available on records. The AO has admitted that the said Rs. 20,000 has been accounted for in the books of account produced during the course of assessment proceedings and the amount of Rs. 20,000 thus stand reflected in the accounts rendered for the accounting year relevant to the asst. yr. 1996-97 (till date of search) and accordingly no addition of the said amount of Rs. 20,000 is justified as that would amount to double addition. 5.4. As regards the addition of Rs. 35,000 it is admitted that the said amount was shown as due from Meghraj but the same being in dispute was outstanding as confirmed by Shri Meghraj, there is, however, nothing on record to show that the said amount of Rs. 35,000 was received by the assessee-firm before the date of search. We also note that the Revenue has not made any enquiry from Meghraj to ascertain whether the amount of Rs. 35,000 shown as due was over and above the amount of Rs. 20,000 paid in cash or the only amount due was of Rs. 55,000 and against that the assessee received Rs. 20,000 and as claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed payment on account of undisclosed income. The AO, therefore, accepted the payment made by cheque of Rs. 3,50,000 which have been accounted in the books of account but there being no explanation about the source he made an addition of Rs. 1,69,000 on account of undisclosed income for the block period. 6.1. The learned counsel for the assessee has not disputed the addition made on account of payment made to Paramount Publicity being unexplained but he has contested that it should have been allowed as revenue expenditure and in support he has placed reliance on (1995) 52 ITD 103 (Pat) and (1996) 52 TTJ (Pune) (TM) 207 : 217 ITR 1 (AT). It is further contended that the entire amount of Rs. 5,19,000 appear in the same document and nature of payment of Rs. 3,50,000 made by cheque and Rs. 1,69,000 made by cash are identical and the AO having allowed the deduction of Rs. 3,50,000 as revenue expenditure, there is no justification for not allowing Rs. 1,69,000 as deduction being revenue expenditure. The addition made of Rs. 1,69,000 as income from undisclosed source would thus get neutralised by the deduction on account of revenue expenditure. The addition made of Rs. 1,69,000, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f receipts and payments being of Rs. 2,64,288 only be taken as undisclosed income of the assessee-firm. The AO, however, noted that extent of investment in the transactions of Rs. 36,02,878 has to be separately taxed since every transaction involved investment and income. The AO further noted that in the regular return for the asst. yr. 1995-96 the assessee has shown total receipt of Rs. 5,16,10,522 and capital employed is of Rs. 1,07,57,836. The capital employed was thus found to be at 20 per cent of the turnover. The AO, therefore, worked out the unexplained investment in these transactions @ 20 per cent of the turnover which came to Rs. 7,20,575. The AO, therefore, apart from assessing the undisclosed income of Rs. 2,64,288 also made an addition of Rs. 7,20,575 on account of unexplained investment. The total addition made, therefore, comes to Rs. 9,84,863. 8.1. The learned counsel has made a submission that the addition of Rs. 2,64,288 is not contested in view of the fact that the same was surrendered before the AO by the assessee-firm. 8.2. As regards the addition of Rs. 7,50,575 it has been submitted that this addition is wholly uncalled for as according to him a sum of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced at p. 459 of the paper-book that the assessee-firm has fixed assets in the shape of office premises and certain godowns where hoardings, etc. are prepared and kept before and after the display at the selected site and as on 31st March, 1996, such fixed assets are of Rs. 36,20,835. Therefore, looking to the nature of business and the position obtained from accounts filed for various years we are of the considered view that there was involved no capital investment as such in the advertisement business done at Rs. 36,02,828. Moreover, an amount of Rs. 1,51,133 was available at the beginning of the period being the difference between the opening balance receipt and opening balance payments and the profit earned of Rs. 2,64,288 from such unaccounted business and this amount could be utilised for payment, if any required before the advertisement amount received from the clients. Moreover, the addition made on account of investment is only estimated and there is no material evidence as such found during the course of search to prove and establish that the assessee did make investment in such unaccounted business to the extent of Rs. 7,20,575 nor the AO has invoked the provisions of s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel of the assessee has made a submission that the assessee-firm has placed on records copies of relevant pages of cash book and the same are available at pp. 27 to 31 of the paper-book. While making a reference to these papers the learned counsel of the assessee has shown that a sum of Rs. 1,62,800 was debited on4th Oct., 1995, to Diwali imprest account and the said amount was credited to the imprest Diwali account on25th Oct., 1995. Based on these entries it has been explained that the amount advanced to the partners and others was for expenses to be incurred on the occasion of Diwali at different business premises. According to the learned counsel a consolidated expenditure of Rs. 1,65,917 was incurred through cheque for payment of gift packs of dry fruits, etc. from M/s Roopak Pick Pay,Ajmalkhan Road,New Delhi, as per the details given at pp. 584 to 587 of the paper-book. The expenses incurred relates to various transactions of the group and the details given are as under: Rs. Pioneer Publicity Corporation (assessee) 16-10-1995 50,000 6-12-1995 1,768 P.K. Adve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve bank accounts. It shows that the payments for expenses incurred on Diwali and subsequent dates were not out of any such Diwali imprest a/c in cash but the said payments were made directly by the various concerns of the group through cheque from their respective bank accounts. Moreover, if the said total amount of Rs. 1,62,800 was placed in the Diwali imprest a/c that could have been done by the various concerns directly out of their cash balances and there was no need or necessity of showing the cash payment to the said partners and others in cash of amount totaling to Rs. 1,62,800. Further, though the assessee has shown that there was a cash balance as on 4th Oct., 1995, with various concerns at Rs. 3,18,644.47 but there is no material brought on record to show how much amount was given by each concern for the purpose and how that was finally accounted for in their books of account. Having regard to these facts the explanation offered on behalf of the assessee does not repose much confidence to believe that the said amount was spent on purchase of gift packs for Diwali nor there is shown any co-relation between the total expenses shown as incurred on 1,65,917 by various concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also pointed out that the AO has not indicated under which s. 68 or 69 the addition is made. The onus was on the Revenue as held in the case of Sunder Agencies vs. Dy. CIT. He further submitted that the presumption under s. 132(4A) was not available in respect of ss. 68 and 69 and for this purpose reliance has been placed on the decisions Pushkar Narain Sarraf vs. CIT (1990) 86 CTR (All) 110 : (1990) 183 ITR 388 (All) and Raj Pal Singh Ram Autar vs. ITO (1991) 39 TTJ (Del) 544. The learned counsel has, therefore, pleaded that the addition made is wholly unjustified and the same deserves to be deleted. 10.1. The learned Departmental Representative on the other hand, has relied upon the order of the AO and advanced arguments in support thereof. 10.2. We have carefully considered the facts and rival submissions. Admittedly there was found a visiting card of Shri Haryal, Director of Tnsat at the business premises of the assessee-firm during the course of search on the back side of which Rajesh Vasudev partner was asked to pay Rs. 80,000 to the bearer of the card. There is, however, no document found and seized at the time of search to show that the amount of Rs. 80,000 was paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Rs. 1,10,500 on account of unexplained commission payment. The AO noted that back side of seized document at p. 2 of Annexure A-2 of the diary shows payment of commission of Rs. 1,10,500 and when confronted it was admitted that such payment was made by P.K. Advertisement Services but since the diary pertained to the assessee-firm the payment of Rs. 1,10,500 as commission was held to be made by the assessee-firm. The AO accordingly made an addition of Rs. 1,10,500 on account of commission payment from undisclosed income. 12.1. The learned counsel of the assessee has made a submission before us that there is no dispute that the amount was paid outside the books of account as commission and the AO was fully justified to add this amount as income from undisclosed source but having accepted this fact that it was on account of the payment on commission, the expenditure incurred was of revenue nature and the same should have been allowed from the total income and in support he placed reliance on the decision reported in (1995) 52 ITD 103 (Pat) and (1996) 52 TTJ (Pune) (TM) 207: (1996) 217 ITR 1 (AT). 12.2. The learned Departmental Representative justified the addition made and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such payment made relates to various sites obtained for display of hoardings but he has not brought on record any material to show that the advertising charges received for such hoardings have been fully accounted for in the regular books of account and in the absence of any such material and for the detailed reasons given for similar claim in respect of other grounds the addition made being from undisclosed income is held fully justified and the same is upheld. 13.4.1. The next ground taken by the assessee is against an addition of Rs. 1,52,000 on account of unexplained expenditure. The AO has mentioned that small diary was seized from the business premises of the assessee-firm. The diary contained entries relating to payments of Rs. 1,92,000 during the period3rd March, 1992, to21st Dec, 1992. When confronted it was explained that this diary belonged to a Government Officer and it contained details of payments made by the assessee-firm. Page 20 of the diary contained the name of the assessee-firm written as "PPC" and payments of Rs. 1,92,000 were shown for the aforesaid period. When confronted it was explained on behalf of the assessee-firm that the figure is not 1,92,000 but i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the undisclosed income the learned counsel has not contested the addition to that extent, without prejudice to the main contention that no such payments were even made and there is no evidence brought on record by the AO to prove that any such payments were made. According to the learned counsel owner of the diary was not examined and handwriting of the author of the diary was also not proved. No corroborative evidence was brought on record to support the entries in the diary. 13.6. The learned Departmental Representative has relied upon the order of the AO and had further submitted that the said diary was found and seized from the business premises of the assessee-firm. Though the assessee claimed that the diary belonged to a government officer but neither the officer was identified nor any officer came forward to own the said diary. There is, therefore, nothing on record to establish and prove that the said diary belonged to a third person and not to the assessee-firm. The assessee has also surrendered an amount of Rs. 19,200 and impliedly the assessee-firm has owned the diary. Since the diary belonged to the assessee and not to any other party the ratio of the various deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 14. The next ground raised relates to addition of Rs. 6,95,907 on account of unexplained investment in property. During the course of search the Department found documents relating to the purchases of the following properties at the apparent consideration shown against each. Rs. 225, Cycle Market, Jhandewalan Extn., New Delhi. 3,78,000 F-107, Jawahar Park 75,000 R-64, G.T. Karnal Road 9,50,000 --------- 14,03,000 --------- 14.1. The AO made a reference to the Valuation Cell for estimating the extent of investment in these properties. The DVO as per his report estimated the value of these properties at Rs. 20,98,907 as per following details: Rs. 225, Cycle Market, Jhandewalan Extn. 4,19,270 F-107, Jawahar Park 2,52,465 R-64, G.T. Karnal Road, Industrial Area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as found during the course of search which could justify the allegation for any undisclosed income being attributable to these properties and accordingly the present addition is outside the scope of Chapter XIV-B of the IT Act. Without prejudice to the main contention that the addition was without jurisdiction it was further contended by the learned counsel that no addition could be made simply on the basis of the valuer's report and in fact there was no justification for making any reference to the Valuation Cell and in support he placed reliance on the following decisions: (a) ITO Ors. vs. Santosh Kumar Dalmia (1994) 121 CTR (Cal) 17 : (1994) 208 ITR 337 (Cal); (b) Bholanath Majumdar vs. CIT Ors. (1997) 137 CTR (Gau) 198 : (1996) 221 ITR 608 (Gau); (c) HEH Nizam Jewellery Trust vs. Asstt. CIT (1997) 142 CTR (AP) 226 : (1997) 226 ITR 111 (AP); and (d) CIT vs. Jawahar Mills Ltd. (No. 2) (1997) 142 CTR (AH) 306 : (1997) 226 ITR 330 (All). 14.3. As regards F-107,JawaharParkproperty, it has been explained that this property was purchased on27th June, 1994, for a consideration of Rs. 75,000. The purchase consideration of the property was duly disclosed in the balance shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded in the sale-deeds has been duly accounted for in its books of account. The assessee made further investment in renovation of Jhandewalan Extn. property and the same is also duly accounted for in the books of account. The AO, however, made a reference to the Valuation Cell under s. 131(1)(b) of the IT Act and the DVO in the report submitted valued the properties at the amount given above. The report sent by the DVO is in an advisory capacity and the same had been given without giving an opportunity to the assessee of being heard or without seeking reaction of the assessee about the proposed valuation, the same being not a statutory reference as is provided in s. 16A of the WT Act. The valuation report given is therefore, one-sided without considering the objection of the assessee-firm. The valuation made is only an estimate of the market value of the property on given facts and it does not represent or prove the actual amount paid by the assessee-firm to the vendors concerned. 14.7. As per the scheme of Chapter XIV-B, undisclosed income of the block period based on the evidence found as a result of search and such other material or information as are available with the AO is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to explain the nature of the entries made in the diary and in response it was admitted that the transactions recorded in the diary are totally outside the regular books of account and peak amount of the transactions has been considered as undisclosed income and offered in the return for the block period filed under s. 158BC. As mentioned earlier, the assessee failed to give the bifurcation of the undisclosed income shown in the return. The AO required the assessee to give working of the peak credit as claimed in the reply filed and in response the assessee in its reply, dt.24th Oct., 1996, gave the working of the peak as per which total addition called for was of Rs. 9,09,004 as per detail given below: Rs. Financial year 1989-90 5,20,000 Financial year 1990-91 2,66,054 Financial year 1991-92 1,22,950 -------- 9,09,004 -------- 15.1 The AO did not find such peaking working as correct and accordingly he was not satisfied for the reason that in the working given the assessee has not worked out the peak credit for financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k which comes to Rs. 12,81,904 as on26th June, 1992, has been ignored by the assessee in its calculation and the same has been requested to be considered. 15.2. The learned counsel of the assessee in the rejoinder filed has pointed out that there is no discrepancy as such in the statement given. He has then proceeded to meet the so-called discrepancies pointed out by the learned AO in the peak statement. As regards the receipt of Rs. 3,68,000 claimed to be not shown in the peak, he submitted that the said amount in fact represented the payments and not receipts and the same has duly been accounted in the peak statement prepared. The relevant entries are as under: Date Amount Page No. of paper-book where the Rs. peak statement is placed 29-1-1991 3,00,000 262 29-1-1991 16,000 262 12-12-1991 12,000 265 10-1-1992 20,000 265 13-2-1992 20,000 265 -------- 3,68,000 -------- 15.3. The other objection is that the payment of Rs. 7,500 is not reflected in the peak statement. It is explained that this is not payment but is an income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncorrect calculation adopted by the AO and the same being not correct the resultant amount of peak both positive and negative is as a consequence incorrect. He has also submitted that the AO ignored large number of entries as he took into account hardly 59 transactions as against 635 transactions included in the chart placed at pp. 259 to 294. The learned counsel of the assessee has further submitted that the negative as well as positive peak as per their calculation comes to Rs. 33,22,500 (Rs. 20,40,596 + 12,81,904). He has further made a mention that according to the peak chart filed and placed at pp. 259 to 294 of the paper book negative peak worked out to Rs. 10,13,764.30 as on 3rd July, 1992, and adding thereto the positive peak of Rs. 21,34,918.20 the total peak would come to Rs. 31,48,682.50 as against the peak adopted by the Revenue at Rs. 36,02,500. The learned counsel of the assessee has, therefore, submitted that calculation of the peak as adopted by the AO is not correct and the same cannot be relied upon. He, therefore, made a submission that the peak as per calculation given by the assessee-firm be adopted as against that adopted by the AO. 15.5. The learned Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im there was only one payment of Rs. 1 lakh on 16th Aug., 1992. The peak for the period, according to the AO, therefore worked out to Rs. 36,02,500. 15.8. We have gone through the peak statement prepared by the assessee and placed at pp. 259 to 294 and we find that on3rd July, 1992, there was a negativepeakofRs.10,13,764.30 and it thus represented the peak of the payments made. There is a positive peak as on4th Jan., 1993, at Rs. 21,34,918.20 on p. 269 of the paper-book. This peak represents the amount received. As mentioned above the peak drawn was of the entries recorded in the period from1st April, 1985, to27th Oct., 1995, and running into 36 pages from 259 to 294 of the paper-book. However, during the course of hearing before us the learned counsel of the assessee gave a peak statement for the period from 1st July, 1989,to 1st March, 1993, running into four pages and this statement shows a negative peak (net payment amount) at Rs. 12,81,904 as on 26th June, 1992, and a positive peak of Rs. 20,40,596 (net amount received) as on 4th Jan., 1993. There is thus wide difference between the peak statements as placed at pp. 259 to 294 and that filed before us during the course of hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly to September, 1992 and after recovering the payment the peak of the amount received subsequently would be around only Rs. 7,58,692. Having regard to the above position the peak adopted by the AO for the period July, 1992 to October 1992 at Rs. 36,02,500 is not held to be correct. It is not correct to claim that addition should be made both on account of positive peak and negative peak as the negative peak get merged into positive peak during the financial year 1992-93 itself and accordingly no separate addition on account of negative peak is justified. The only peak which in our considered view deserves to be adopted for assessing the undisclosed income for the financial year 1992-93 is of Rs. 20,40,596. Since the assessee has already offered a peak amount of Rs. 9,09,004 in the financial year relevant to the asst. yr. 1990-91, 1991-92 and 1992-93, the balance amount of peak of Rs. 11,31,592 (Rs. 20,40,596-Rs. 9,09,004) deserves to be adopted as undisclosed income for the financial year relevant to the asst. yr. 1993-94. We order accordingly. 16. The next ground taken by the assessee-firm is against addition of Rs. 1,92,000 on account of unexplained payment made for the chit f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -firm and the deposit represented the total turnover. The assessee-firm offered that the profit thereof be estimated at 5 per cent of the turnover for assessment. According to the AO it was also admitted in the case of M/s. P.K. Advertising Services (a sister concern) that Oriental Advertising Agency is a unit of the assessee-firm and the transactions made in its name are unaccounted. According to the AO the assessee-firm has not given the quantum of investment in such transactions. The AO noted that the maximum balance as per the bank statement is at Rs. 6,09,739 as on 24th October. He, therefore, treated and adopted the said amount as undisclosed investment in the said unit and therein he added the income at Rs. 61,487, worked out @ 5 per cent of the total turnover as offered by the assessee-firm. The AO thus made an addition of Rs. 6,71,226 in the total undisclosed income computed for the block period. 17.1 The learned counsel of the assessee made a submission that the assessee-firm has no grievance against the income adopted at Rs. 61,487 as business done in the name of Oriental Advertising Agency was accepted to be the business profit of the assessee-firm and it was not disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover and at this rate the income comes to Rs. 61,487. The assessee-firm has not contested the income adopted from the said business at Rs. 61,487. The addition thus made to the extent of Rs. 61,487 in the undisclosed income computed is therefore, confirmed. 17.4. As regards the addition of Rs. 6,09,739 we note that the AO has taken the same as unexplained investment in its business. There is, however, no material evidence to support that the assessee-firm made unexplained investment to the extent of Rs. 6,09,739 in the name of Orient Advertising Agency. In the absence of any such material the undisclosed income computed on account of such unexplained investment is held to be outside the purview of Chapter XXIV-B. Undisclosed income computed on identical facts as considered in earlier grounds have been directed to be deleted and for similar reasons the addition made of Rs. 6,09,739 computed as undisclosed income is directed to be deleted. 18. The next ground relates to the undisclosed income computed at Rs. 6,72,613 on account of undisclosed income on account of investment in the account of M/s SPC. During the search certain documents relating to M/s SPC were found. When the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.3. The learned Departmental Representative on the other hand, advanced arguments in support of the order of the AO on the issue. 18.4. We have considered the facts and rival submissions. Admittedly there is no material found and seized during the course of search proving investment in such business at Rs. 5,38,093 and in the absence of such material there arises no question of explaining any such investment. Moreover, for the detailed reasons given by us on similar ground discussed earlier the undisclosed income computed on account of unexplained investment of Rs. 5,38,093 is directed to be deleted. M/s. P.K. Advertising Services (P) Ltd. (ITA No. 6169/Del/1996): 19. The present appeal preferred by the assessee-company is directed against the block assessment made under s. 158BC and the only ground raised relates to undisclosed income computed and assessed at Rs. 1,55,000. 19.1 During the course of search, business premises of M/s. P.K. Advertising Services, a sister concern, was searched and certain loose papers relating to the assessee-company were found and seized therefrom. There was found a trial balance of the assessee-company as on 31st March, 1995, and therefrom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. (1) Unexplained receipt from M/s Sanjay Publicity as discussed in para 3(a) 5,000 (2) Credit note of M/s Neelam Advertising Marketing as discussed in para 3(b) 98,775 (3) Inflated expenses under the head site rent as discussed in para 3(c) 9,600 (4) Unexplained painting charges as discussed in para 3(d) 1,89,124 -------- Total : 3,02,499 -------- 20.1. The learned counsel of the assessee has not contested the additions at SI. Nos. 2 and 4 above as the same were surrendered during the proceedings before the AO. As regards addition of Rs. 5,000 at item No. 1 above, the AO noted from pp. 80 to 86 of a note book seized that there were certain receipts shown to have been received by the assessee-firm. On scrutiny the AO found that all the receipts are verifiable from the regular books of account except the receipt of Rs. 5,000 from M/s Sanjay Publicity on5th March, 1988. When confronted it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO treated the amount as bogus expenses and accordingly addition to the extent of Rs. 9,600 was made in the undisclosed income computed. The learned counsel of the assessee has not seriously contested the amount so debited as undisclosed income. The learned counsel, however, claimed that this generated availability of cash with the assessee-firm at Rs. 9,600 and the same be set off against the undisclosed income/expenditure. Similarly, though the other two items of additions of Rs. 98,775 and Rs. 1,89,124 were surrendered before the AO and the same were not contested but the learned counsel of the assessee contended that the sum of Rs. 98,775 was an amount on a credit note received from M/s Neelam Advertising and Marketing and this amount was not credited in the regular books of account. However, the amount might have been received subsequently outside the books of account on the basis of the said note, therefore, to that extent cash was generated for which the assessee is entitled to set off. Similarly, with regard to the sum of Rs. 1,89,124 it has been claimed that this being an inflation in expenses the cash was generated to the extent of Rs. 1,89,124 outside the books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two firms and one company of the group namely, M/s. Delhi Advertising Service, M/s. P.K. Advertising Services (P) Ltd. and the assessee-firm. The AO further noted that perusal of the diary would show that the amount relates to only one concern and although the name of the concern was mentioned, the same has to be treated as belonging to the assessee-firm as it was found and seized from its business premises. The AO mentioning the entries recorded in the diary noted that the total amount involved is of Rs. 84,000. However, he only adopted thepeakofRs.25,000 as undisclosed income. 22.2. The learned counsel has made a submission that the amount was advanced to the employees of the following concerns of the group: M/s Pioneer Publicity Corporation; M/s P.K. Advertising Service; M/s Delhi Advertising Service and M/s P.K. Advertising Services (P) Ltd. He further argued that on the date of advance there was sufficient cash balance as per the books and this fact has not been disputed by the AO. The cash books were duly produce before the AO and he found no fault therein. Apparently there was no justification for making addition of Rs. 25,000. He, therefore, contended that the addition m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved otherwise and to do so the onus is on the assessee-firm. No such onus has been discharged either before the AO or before us by leading any evidence. We under the circumstances treat the peak amount of Rs. 25,000 as undisclosed income of the assessee-firm and addition made to that extent is confirmed. 23. Regarding the addition of Rs. 1,50,000 the AO noted that an exercise book was found and seized from the business premises of the assessee-firm and when confronted about the nature of the entries it was explained that this exercise book contained payments received from the customers. As regards the cash transactions contained at pp. 80 to 87 of the exercise book it was explained that this is memoranda record for amounts paid and received back from the employees and the same are not verifiable from the regular books of account. The said cash transactions as found recorded were of the nature of receipt and payment and since the same were not found verifiable from the regular books of account all the transactions were taken as outside the books of account. Summary of payments as given in the assessment order gives the total amount of Rs. 4,57,107 and these relate to the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords as well as the paper-book filed to indicate g.p. rate disclosed by the assessee-firm. However, in the case of Pioneer Publicity Corporation the g.p. rate declared for various years is as under: Asst. Yr. G.P. rate 1993-94 12% 1994-95 12% 1995-96 11.5% 1996-97 14% 1997-98 15% 23.4. The learned counsel has suggested estimation of the income by applying a profit rate of 5 per cent but no basis therefor is given and accordingly in our opinion it would be reasonable if the profit rate is estimated by applying a profit rate of 12 per cent looking to the trading results declared by the sister concern Pioneer Publicity Corporation and on this rate the profit is worked out to Rs. 54,800. We, therefore, sustain the undisclosed income on this account to the extent of Rs. 54,800. The assessee gets a relief of Rs. 95,200 (Rs. 1,50,000 - Rs. 54,800). 24. As regards the addition of Rs. 2,16,824 the facts are that there was found a trial balance of the assessee-firm as on 31st March, 1995, during search and on comparison of the trial balance with the regular P L a/c the AO noted that as per the trial balance profit comes to Rs. 17, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit shown by way of inflating the expenses to the extent of Rs. 2,16,824 and the same has been admitted by the learned counsel of the assessee. In this view of the matter we sustain the addition made of Rs. 2,16,824. The question of set off in light of the objections raised will be considered separately at the appropriate stage. 24.4. As regards the addition of Rs. 1,62,000 surrendered during the course of assessment, the learned counsel of the assessee has submitted that it was done wrongly. It was claimed that the amounts in question were on account of payment of commission outside the books of account. Therefore, while on one hand the addition should be made as income from undisclosed source, on the other hand deduction should be allowed on account of revenue expenditure nullifying the addition. The learned Departmental Representative however strongly objected to the suggestions so made. 24.5. We have considered the facts in this behalf. The facts relating to the addition of Rs. 1,62,000 have been discussed by the AO on p. 4 of the block assessment order. The diary seized contained entries relating to the payments received by the assessee group from Directorate of Health ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led as undisclosed income. When asked to explain the nature of the said entries and other details it was explained that the billing was an accommodation entry provided to M/s Baran International Ltd. Against the receipt of Rs. 12,61,500 from M/s Baran International Ltd., cheques of Rs. 11,91,000 were issued against which the assessee-firm received cash of Rs. 11,31,450 and out of this cash amounting to Rs. 10,94,000 was paid to M/s Baran International Ltd. and the remaining amount along with other credit entries aggregates to Rs. 71,707 which has been declared as undisclosed income in the return. The AO noted that names and addresses of the parties who have given cash to the assessee against cheques issued have not been given even though it was specifically asked to do so. Moreover, the claim of the assessee about the receipt1 of cash of Rs. 10,94,000 against cheques issued of Rs. 11,94,000 was not found supported by any evidence. On these facts the AO treated the explained cash as on31st Aug., 1995, of Rs. 11,31,450 as undisclosed income for the block period. 25.2. The learned counsel of the assessee had made a submission that the assessee-firm issued bogus bills on account of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Vijay Bank showing particulars of the parties and the amounts of cheques. He has further contended that it was not open to the AO to rely upon the same document for receipt of Rs. 11,31,450 but ignore the fact of payment of Rs. 10,94,850 to M/s Baron International Ltd. There existed sufficient corroboration to the explanation given in the documents seized from where it is self-evident that on the one hand cash of Rs. 11,31,450 was received and credited and cash of Rs. 10,94,850 was debited. According to the learned counsel it is but natural that when the cash is received against the cheques no corroboration would be coming either oral or otherwise. The documents in question itself constitute sufficient evidence for the transactions involved and entries made in the seized documents cannot be disbelieved in view of the Tribunal's decision in the case of T.S. Kumaraswami vs. Asstt. CIT (1998) 65 ITD 188 (Mad). The learned counsel further argued that in any case it is not open to believe one set of document and ignore the other set. The learned counsel, therefore, pleaded that the addition made on the given document is not justified on given facts and the same deserves to be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000 (6) Unexplained investment in household articles as discussed in para 3.6 74,665 (7) Cash expenses for ceremony as discussed in para 3.7 29,738 (8) Unexplained investment in UTI Rajlakshmi as discussed in para 3.9 15,000 (9) Unexplained payment to housing society as discussed in para 3.9 20,000 (10) Payment to committee as discussed in para 3.10 16,255 (11) Unexplained investment in property at 182, Gujrawala town as discussed in para 3.11 5,65,000 --------- Total : 27,54,458 --------- 26.1. The learned counsel of the assessee has contested only the undisclosed income mentioned at Sl. Nos. 1, 5, 10 and 11 above and the remaining items of undisclosed income was surrendered before the AO and accordingly the same has not been contested. The learned counsel has, however, made a claim with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty is much higher than that disclosed and accordingly it was got valued from the DVO. The AO has further noted that during the course of search a paper as placed at SI. No. 10 of Annexure A-10 was found and this contained details of investment and construction totaling to Rs. 17,40,000. Apart from this working some other works were also written but no figure there against were mentioned. According to the AO the investment in the property was more than Rs. 17,40,000. Looking to these facts the reference to the DVO was made and as per the report of the DVO the actual investment is found to be much higher. Though the assessee had denied that the said papers belonged to him or the construction/renovation expenses mentioned therein related to this house but this is supported by the valuation report. According to the AO the assessee surrendered a sum of Rs. 50,000 on account of unexplained expenditure in the property and this makes clear that renovation work was carried out after its purchase and before the date of search. 26.4. The assessee also objected to the valuation made at Rs. 36,64,369. The AO also noted that certain work in the property such as plaster of paris work, floori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... habitation. There is cluster of jhugi jhopri around this property generating all kinds of filth, pollution and stinking all around. The property was sold by the landlady as a distress sale owing to such adverse factors and it was for this reason that though the lady purchased the property five years back for Rs. 6,70,000 it was sold for Rs. 4,25,000. 26.7. The learned counsel has further submitted that there is otherwise no material evidence found and seized during the course of search to indicate and prove that the assessee invested any amount in both the properties over and above than that disclosed in the sale-deed and accounts. Moreover, both the properties are claimed to have been shown in the returns already filed much before the search and assessments thereon have also been completed. It is, therefore, contended that on such facts and circumstances no undisclosed income could be computed on account of unexplained investment in the property within the meaning of Chapter XIV-B and accordingly the same deserves to be deleted. 26.8. The learned Departmental Representative, on the other hand, had relied upon the order of the AO and has further submitted that looking to the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 10,000 which the total loan amount would become Rs. 50,000. When confronted it was explained that this advance was made by the assessee out of the cash held by him as imprest money on behalf of various firms. It was also claimed that the amount was received back after a month. The AO did not find such explanation as acceptable as no evidence could be furnished in support of such claim nor by way of verification from the books of the firms. According to the AO there was no confirmation filed from Shri K.L. Malik about the back payment of the amount after a month. The learned counsel has made a submission that the amount was advanced from cash balance of various firms which was kept with him. The various firms of the group had the cash balance available as on4th June, 1994, as per details below: Rs. P.K. Advertising Services 43,334 Delhi Advertising Service 77,734 Pioneer Publicity Corporation 8,640 P.K. Advertising Service (P) Ltd. 38,606 27.1. According to the learned counsel, the cash balance available with the four concerns was sufficient enough to advance Rs. 50,000 to Shri Malik, According to the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and other firms. 28.1. The learned Departmental Representative, on the other hand, relied upon the order of the AO. 28.2. We have considered the facts and submissions made. It so appears that committee payments were made in small amounts each month and on the date of search total payment made was at Rs. 16,255. The explanation offered was that this came out of the savings or pin money of his wife. There may be truth in such claim. Ladies normally make savings out of the monthly amount received for household expenses and they also receive gifts either personally or in the names of their children on auspicious occasions. The monthly payments may be petty and the total amount is also not very substantial. In this view of the matter we accept the explanation offered that the amount came out of the savings of wife of the assessee and the addition made on this count is directed to be deleted. Mukesh Vasudeva (ITA No. 6157/Del/1996) 29. This appeal, preferred by the assessee, is against the block assessment order passed under s. 158BC of the IT Act on30th Oct., 1996, determining the undisclosed income at Rs. 19,52,400. The undisclosed income so computed is comprised of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 15,000. There is no evidence produced to show that the amount came out of the savings of his wife. The amount also cannot be out of the marriage gifts as the assessee got married two and half years before the date of deposits. However, had the amount been out of savings of his wife the deposit would have been in her name and not in the name of the assessee. Admittedly, the amount has not come out of any explained source of income. Under the circumstances, the addition made of Rs. 15,000 is confirmed. The question of set off against the surplus income/cash available from various concerns would, however, be considered separately. Sunil Vasudeva (ITA No. 6156/Del/1996) 32. The appeal preferred by the assessee is directed against the order of the AO passed under s. 158BC of the IT Act on30th Oct., 1996, determining the undisclosed income at Rs. 4,59,190. The undisclosed income so computed in comprised of the following: Rs. (1) Unexplained investment in shares 2,07,000 (2) Unexplained investment in two air-conditioners 30,000 (3) Unexplained expenditure for stamp duty 32,190 (4) U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g bank account with State Bank ofIndia, Jhandewala, and Dinesh Vasudeva made the payment of Rs. 2 lakh out of the savings bank account with Oriental Bank of Commerce, Paharganj. Necessary details of the payment made are placed at pp. 198 to 204 of the paper book. The assessee also made the payment out of his bank account with State Bank ofIndia. The learned counsel further submitted that the said document is a receipt prepared in advance but the payment was ultimately made by the co-owners through cheques/pay orders from the amounts lying in the bank account and there was, therefore, no need of payment of any cash of Rs. 1 lakh. It is also not the Revenue's case that the assessee paid any amount over and above the apparent consideration of Rs. 6 lakh shown in the sale documents. The learned counsel has, therefore, pleaded that the addition made of Rs. 1 lakh is, therefore, not justified and the same deserves to be deleted. 34.2. The learned Departmental Representative on the other hand, placed reliance on the order of the AO and advanced arguments in support thereof. 34.3. We have carefully considered the facts and submissions made. It is evident from the facts given that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21,200 (6) Unexplained investment in household articles 1,45,000 -------- Total: 8,59,240 -------- 36. Out of the six items of undisclosed income item at Sl. Nos. 1 to 5 were not contested by the learned counsel of the assessee and accordingly the same are confirmed. The learned counsel, however, raised a plea for necessary adjustment thereof against the surplus income shown in the case of M/s Pioneer Publicity Corporation. This aspect will be dealt with separately. 37. As regards the sixth item about the addition of Rs. 1,45,000 on account of unexplained investment in household articles, the facts in brief are that during the course of search a list of valuable household articles was prepared from his residence and these articles included three air-conditioners; colour TV; refrigerators; microoven, etc. When confronted it was explained that out of three air-conditioners found two were purchased in the financial year 1980-81 but no evidence in support of such claim was produced. Regarding colour TV BPL, three-do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no evidence produced in support of such claim. The withdrawal shown by the assessee for a family of five members below Rs. 25,000 before the asst. yr. 1991-92 is not considered sufficient enough to acquire these items out of savings therefrom. Admittedly, purchase of these items have not been accounted for nor there is separate withdrawals shown for their purchase. In the absence of any evidence about the period of their purchase the same are deemed to have been acquired as on the date of search out of undisclosed income under the provisions of s. 69A of the IT Act. The valuation adopted by the AO is also considered to be reasonable for each item. We on these facts see no infirmity in the order of the AO and the undisclosed income computed at Rs. 1,45,000 on this count is sustained. The question of its adjustment against the surplus cash/income from Pioneer Publicity Corporation shall be dealt with separately. Smt. Avinash Vasudeva (ITA No. 6163/Del/1996). 38. The appeal preferred by the assessee is directed against the order of the AO passed under s. 158BC of the IT Act on30th Oct., 1996, determining the undisclosed income at Rs. 7,64,112. The undisclosed income so com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and custom and practice to which the family belongs and facts and circumstances of the case. It was, therefore, argued that the assessee got married in October, 1972 when the market rate of gold jewellery was very low. The AO further noted that in view of Board's circular the authorised officer on his own allowed the gold jewellery of 595.6 gms. at the time of search and it would be fair to allow the benefit of jewellery released. He, however, treated the jewellery seized of Rs. 4,07,952 as unexplained and undisclosed income to that extent was computed and assessed for the block period. 40.1. The learned counsel of the assessee has reiterated that the jewellery found was received by the lady at the time of her marriage and other ceremonial occasions like birthday of children and festivals and looking to the status of the family the jewellery found should be accepted in full. Further, in the alternative, the learned counsel pleaded that the same be treated as expenditure out of the income of cash available to the spouse portion out of the additions sustained in the cases of the firms in which their spouse are partners. It is also contended that during the course of search the lad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO on examination of the saving bank account of the assessee observed that there was a credit entry of Rs. 24,019 on 16th Sept., 1989, and when required to explain its source it was explained that the credit amount is the proceed of the lottery ticket after deduction of tax at source but the assessee failed to produce any certificate about the lottery amount awarded and the TDS from the concerned authority. The AO, therefore, treated the credit amount of Rs. 24,019 as undisclosed income. The learned counsel of the assessee reiterated before us that the amount involved was the proceed of lottery and TDS was deducted at source. But no evidence in support thereof has been filed before us also. Alternatively it has been submitted that the amount may be adjusted against the surplus income/cash available on account of undisclosed income computed in the case of M/s Pioneer Publicity Corporation. 42.1. The learned Departmental Representative on the other hand, supported the order of the AO. 42.2. We have considered the facts and submissions made. Admittedly there is no evidence in support of the claim that the amount represented the proceeds of lottery ticket and in the absence thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he has claimed that the amount be treated as out of the surplus income/cash available with the firm. 45.1. We have considered the facts relating to the addition made on account of marriage expenses. The AO noted that certain documents were seized during the course of search showing expenses on ceremony prior to the marriage of the assessee as per the following details: Rs. Band 3,500 Tailor 5,950 Floor furnishing 11,056 Tent 15,090 Payment to Mohan Sons 11,900 ------ Total 47,446 ------ Rounded up Rs. 47,500 45.2 The AO further noted that the vouchers found relating to these expenses were in the name of the assessee. When confronted it was explained that these expenses are covered by the undisclosed income of his father Naresh Vasudeva. It was also contended that the expenses incurred cannot be considered in his hands as in Hindu society it is the responsibility of the father to make the expenses in the marriage of his children. Such explanation offered was not accepted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ewellery weighting 130.7 gms. valued at Rs. 62,736 was seized. When required, to explain the source of acquisition of the jewellery it was explained that the jewellery belonged to the assessee as her Istridhan and the same were received as presents on her marriage. The assessee was not found to be a wealth-tax assessee, her wealth being below the taxable limit. When further asked to give evidence about its acquisition, it was contended that the total weight of the jewellery does not exceed the permissible limit as prescribed by the Board in its circular issued inl994. The AO noted that as per the Board's circular jewellery upto 500 gms. got accepted and the jewellery seized weighing 130.7 gms. was in excess of 500 gms. The AO treated the said jewellery as unexplained representing the undisclosed income of Rs. 62,736. 47.1. The learned counsel of the assessee reiterated before us that the said jewellery represented her Istridhan as it was received by her at the time of her marriage and other ceremonial occasions like birthdays of children and festivals and looking to the status of the family no addition was called for. In the alternative it has been submitted that the amount be tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 48.2. As regards the undisclosed income computed relating to investment in jewellery the facts in brief are that during the course of search gold jewellery weighing 791.5 gms. valued at Rs. 3,88,838 was found in possession of the assessee and out of that 268 gms. valued at Rs. 1,37,370 was seized. When required to explain the source of acquisition of the jewellery found it was submitted that she got married on 10th Dec, 1982, and the jewellery was received in presents from her parents, in-laws, other relatives and friends on marriage and also on birthdays of her to children. It was also claimed that the jewellery found is within the permissible limit as per Board's circular of 1994. The AO noted that the assessee is not a wealth-tax assessee and as per the circular for non-wealth-tax assessee the jewellery of 500 gms. could be treated as explained in the case of married ladies. Since the authorised officer on his own accepted and released the jewellery of 527 gms. at the time of search and the assessee failed to give any evidence about the source of acquisition of the total jewellery the seized jewellery worth Rs. 1,37,270 was treated as unexplained in the hands of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess General Finance Company 28,880 -------- Total: 93,400 -------- 51. The undisclosed income relating to first two items were surrendered before the AO and accordingly the same have not been contested by the learned counsel of the assessee. The action of the AO in this respect is, therefore, confirmed. 52. As regards the addition of Rs. 28,880 the facts are that during the course of search policies of Peerless General Finance Company of Rs. 20,000, Rs. 20,000 and Rs. 10,000 were found. The annual premium in respect of these policies was at Rs. 2,818. The assessee was required to explain the source of the premium paid and in reply it was explained that the payments were made by the assessee from withdrawals made from Pioneer Publicity Corporation. The AO noted that there was no link established of the premium paid with the withdrawal shown from the firm. The AO further noted that all the policies are of March, 1984 and the unexplained premium paid in ten years was worked out at Rs. 28,880 and the same was tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners and also their investment, accordingly no addition be made in the hands of partners. The AO, however, rejected the claim so made observing as under: "I have examined the submissions of the assessee and fail to agree with them. Firstly, because the amounts for which the assessee has made surrenders do not relate to the case of assessee only, secondly, because the date of investments by the partners do not match with these cash flow chart and thirdly regarding the cash found at the time of search and seizure action the statements of the partners were recorded but none of the partners stated that the cash relates to the assessee or other firms of the group. The assessee has also not been able to establish that the cash outside the books available has been utilised in the investments by the partners. The diaries and other papers found do not have any indication that moneys shown to have been advanced have fully been recovered and was available on the date of search with the partners as cash-in-hand or their investment. No benefit in this regard can therefore, be given to the assessee or its partners as claimed. The disclosure made by other concerns like M/s P.K. Advertising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily is given at pp. 399 and 400 of the paper-book. This would show that all the partners in the firm are only family members and director of the private limited company M/s P.K. Advertising Service (P) Ltd. are also members of the family and the entire share capital of the company is held by the family members only. The learned counsel further contended that in the eyes of general law a firm is not a person. A partnership which is collectively known as a firm has no legal existence apart from its partners and it is merely a compendium name to describe its partners and for such proposition the learned counsel has referred to the following decisions: (1) Narayanappa vs. Bhaskara Krishnappa AIR 1966 SC 1300; (2) R.M. Chidambaram Pillai vs. CIT (1970) 77 ITR 494 (Mad); (3) P.M. Bharucha Co. vs. ITO (1969) 74 ITR 513 (Guj); (4) CIT vs. A.W. Figgies Co. (1953) 24 ITR 405 (SC); (5) CIT vs. R.M. Chidambaram Pillai 1977 CTR (SC) 71 : (1977) 106 ITR 292 (SC); (6) CIT vs. Sant Lal Arvind Kumar (1981) 25 CTR (Del) 207 : (1982) 136 ITR 379 (Del); (7) Malabar Fisheries Co. vs. CIT (1979) 12 CTR (SC) 415 : (1979) 120 ITR 49 (SC); (8) Bist Sons vs. CIT (1979) 8 CTR (SC) 152 : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,02,500 made by the AO in the case of Pioneer Publicity Corporation demonstrating the fact that transactions pertaining to more than one concern are noted in the seized documents. Attention has also been invited to the block assessment orders in the case of P.K. Advertising Services wherein the document No. C-4/A-1 shows that the advance made to the employees of the firms of this group appeared in the same document i.e., M/s. Delhi Advertising Service; P.K. Advertising Service; P.K. Advertising Service (P) Ltd. and Pioneer Publicity Corporation. The learned counsel has, therefore, pleaded that on given facts and case laws the AO was not justified in rejecting the claim made in this behalf. 52.7.1. The learned counsel has also pointed out as per pp. 407 and 408 of the paper-book that the overall position for consideration and set off would emerge as follows: Rs. Rs. Income surrendered 62,43,640 PB TT/5 (a) Deduct: Investments and expenses 34,55,589 PB TT/12 --------- Balance...... 27,88,041 PB TT/9 (b) Adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterlacing in management and funds and had there been such a situation the income of all the firms and the company would have been assessed by the Revenue as AOP comprising of the various members of the family. 52.9. As regards the diaries and documents found, the learned Departmental Representative submitted that the said diaries and documents were written by the partners of the firm Pioneer Publicity Corporation and business transactions recorded therein related to the said firm and it was for this reason that undisclosed income on that account has been computed based on such diaries and documents in the case of Pioneer Publicity Corporation and there is no objection raised in this behalf in the grounds of appeal of the said firm. The learned Departmental Representative, therefore, submitted that no such benefit as claimed could be given in the hands of the various members with respect to the various assessee's assets as acquired by them from undisclosed income. He, therefore, contended that the claim made in this behalf has rightly been rejected by the AO and the finding given by him deserves to be upheld. 51.10. We have carefully considered the facts, material available on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned but since all the firms are constituted by the members of the same family it does not mean that existence of all the firms has merged for the reason that their partners come from the same family. The claim of the assessee in fact challenges the very existence and genuineness of the firms while there is no material evidence in existence to support such claim. We on facts and circumstances discussed do not find favour with the reasoning and claim made by the learned counsel of the assessee and are not inclined to disturb the status of the firms even for limited purpose of assessing the undisclosed income computed. 52.12. We find that the main firm M/s Pioneer Publicity Corporation and its associate concerns and the company do business of advertisement. They charge fees and incur expenses on taking the site on rent commission, preparation and painting of hoardings and their display at the site taken. The material seized shows that the firms particularly Pioneer Publicity Corporation indulged in suppressing the amount charged from the customers and also suppressing the expenses incurred on site rent, commission, preparation of hoardings, etc. It would be seen from the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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