TMI Blog1993 (11) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... want of satisfactory explanation from assessee regarding the nature of the paper and entries recorded thereon, the Assessing Officer believed that income chargeable to tax to the tune of Rs. 8,06,900 had escaped assessment. On the basis of this paper, the assessment was, therefore, reopened by the Assessing Officer after recording necessary reasons on5-1-1990. Consequently, a notice under section 148 was served on8-1-1990on the legal heir of the assessee who had in the meanwhile expired on10-8-1988. The assessee filed his return again returning a loss of Rs. 92. In the order of reassessment, assessee's income stands computed at Rs. 10,55,270. The assessee went in appeal before the learned CIT(A) also challenging the reopening of the assessment when it was submitted that the basis of reopening was the loose papers found at the time of search which according to the assessee did not belong to him and, therefore, the reopening of assessment was unjustified. This contention of the assessee was rejected by the learned CIT (Appeals). The assessee is in appeal. 4. Shri Ganeshan, the learned AR for the assessee submitted that the reopening of the assessment under section 147 was without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, Shri Ganeshan invited our attention to the judgment of Allahabad High Court in the case of Pushkar Narain Sarraf v. CIT [1990] 183 ITR 388. This apart Shri Ganeshan submitted that the presumption under section 132(4A) is a rebutable presumption and late Shri Suraj Bhan duly filed his sworn affidavit dated 22-12-1986 disowning the papers involved and the revenue has done nothing to controvert the contents of the affidavit of late Shri Suraj Bhan. According to Shri Ganeshan, the revenue did not even examine the late Shri Suraj Bhan till he died on 10-8-1988 when the search had taken place about two years earlier, i.e., on 29-8-1986. He submitted that the revenue has merely made the seized papers a pretence to reopen the proceedings which is not permissible under the law. Shri Ganeshan invited our attention to the ratio of Hon'ble Supreme Court in S. Narayanappa v. CIT [1967] 63 ITR 219 as also ITO v. Lakhmani Mewal Das [1976] 103 ITR 437. Shri Ganeshan also invited our attention to the judgment of the Hon'ble Supreme Court in the case of Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456. Thus, according to Shri Ganeshan, there is no material in the possession of the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lightly. It is also settled law that presumption under section 132(4A) is available for the limited purpose of proceeding under section 132 and no more in the case of Pushkar Narain Sarraf, it has been held that "we are clearly of the opinion that the presumption arising under section 132(4A) is available only in regard to and in the context of search and seizure. Sections 132 to 132B of the Income-tax Act, in our opinion, embody an integrated scheme laying down comprehensively the procedure for search and seizure and the power of the authorities making the search and seizure to order the confiscation of the assets under sub-section (4A) of section 132 applied only in relation to the provisional adjudication which is contemplated under sub-section (5) of section 132". The assessee on his part rebutted the presumption of ownership in the form of a sworn affidavit. The amended provisions of the section 147 provide for assessment of escaped income if the Assessing Officer "has reason to believe" that any income chargeable to tax has escaped assessment.... It is, therefore, to be seen as to whether the contents of Paper No. 97 could legitimately form the basis for the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnection with or a live link for the formation of the requisite belief." 7. Therefore, it is settled law that reasons to belief must be based on definite, specific, reliable and relevant information. In our view, the loose paper bearing No. 97 does not qualify to constitute an acceptable basis for reopening of assessment. We accordingly find substance in the submissions made by the learned AR for the assessee and hold that the reopening was without authority of law and consequently notice issued under section 148 deserves to be quashed as also the reassessment order. 8. On merit, the assessee is aggrieved with addition of Rs. 8,06,900 and Rs. 75,649. These are based on loose papers bearing Nos. 97, 95 and 96. We have already held that loose paper No. 97 has no probative value and, therefore, any addition made on the basis thereof deserves to be deleted. It is deleted. 9. As regards addition of Rs. 75,649 based on the loose paper Nos. 95 and 96, here again we find that the assessee in a sworn affidavit has denied any link whatsoever with these papers and the additions have been made by the Assessing Officer on the basis of presumption available under section 132(4A). We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , namely, M/s. Hanfred Co.,New York. The assessee opened a letter of credit with Oriental Bank of Commerce. The imports landed inIndiain February 1984. The Customs Authorities noted that while the import was for white wool waste as was also the declaration given by the assessee, the consignment, in fact, contained synthetic waste, which carried a higher incidence of customs duty as compared to the same on white wool waste. The Customs Authorities started investigations and issued summons to the Bankers of the assessee on5-7-1984and subsequently to the assessee on3-8-1984. The Customs Authorities also recorded the statements of Manager of the Clearing House Agency Mr. Kamal Aggarwal and Shri Vinod Kumar of the assessee on21st August, 1984. The Customs Authorities also carried out physical and laboratory tests of imports and found that the assessee had filed a misdeclaration of the contents of the imports which constituted an offence and rendered the goods liable to confiscation. The authorities gave necessary opportunity of being heard to the assessee who made written submissions on28th September, 1984denying that there had been any misdeclaration on his part. It was broadly submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the import made by the assessee was bona fide and made in the normal course of his business and the fact that the supplier supplied something different from the item indented for, would not render the claim of the assessee inadmissible, there being no independent evidence brought on record by the revenue, in support of rejection of claim of the assessee. The rejection is based entirely on the orders passed by the Customs Authorities. This is not permissible as the Assessing Officer ought to have been applied his own mind on the given set of facts and circumstances to find out as to whether the claim was admissible under the Income-tax Act or not. In our view, the claim is fully admissible as a business loss having been incurred during the normal course of assessee's business. We, therefore, delete the addition made. 13. The last grievance of the assessee is against disallowance of travelling expenses Rs. 2,000 and telephone expenses Rs. 1,500. The learned AR submitted that there was no justification for the disallowance since no non-business element is involved in the expenditure claimed. 14. We have heard both the parties. We find that no specifics have been pointed out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without knowing for certain as to whether the paper belonged to the assessee or not as also as to whether the entries represented debits or credits, the authorities below went on to make the impugned addition. This according to Shri Ganeshan is wholly impermissible under law. The learned DR supported the order of the learned CIT(A). 20. We have heard both the parties and have also perused the relevant record. In our order on assessee's ITA No. 7171/Del/92, we have already held that paper No. 97 has no probative value and, therefore, action of the Assessing Officer as also the learned CIT(A) in making any addition on the basis thereof is unjustified. The addition of Rs. 53,091 is, therefore, deleted. 21. The next grievance of the assessee is that the CIT(A) erred in not deleting the addition of Rs. 11,300 out of the total addition of Rs. 20,000 made by the Assessing Officer as income from undisclosed sources on account of investments made on Colour TV and VCR discovered at the time of search. The Assessing Officer made an addition of Rs. 20,000 being the unexplained investment on a Colour TV and a VCR. The matter was taken in appeal before the learned CIT(A) who noticed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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