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TMI Blog1998 (10) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... es) (ii) Bogus 5,42,21,070 91-92 to 96- Last para on p. 22 to share 97 1st para on p. 30 holdings read with Annexure D. (iii) Loans 1,40,71,250 92-93 to 94- Paras 14 & 16 on pp. advanced by 95 & 95-96 38 and 39 various Companies/ firms (iv)Consoli- 8,91,86,382 89-90 to 96-97 Pages Nos. 30 to 43 dated undis- read with Annexure E. closed income of various companies (v) Sales 86,90,314 93-94 & 94-95 Para 9 on page 34 made by B.P. and subsequent Marketing Ltd. Paras on p. 35. (vi) Aggre- 1,39,16,170 87-88 to 96-97 Running 1st para on gate of Bank p. 21 read with deposits/ Annexure B-2. credits in bank accounts of the members of appellant and others in Benaras State Bank Ltd. (vii) Aggr- 2,25,31,068 91-92 to 96-97 Para (G) on pp. 19, egate of 20 and 21 read with deposit in Annexure (B-3) and respective (B-4). bank accounts of unaccounted a/c holders, being clients of the appellant. (viii) Aggr- 80,75,145 94-95 & 95-96 Last para on page 20 egate of and subsequent deposits/ paras on p. 21. credits in bank account of one Sh. Mukesh Gupta. (ix) Loan 15,00,000 94-95 On p. 34 advanced by B.P. Marketing (P) Ltd. (x) Undis- 85,29,890 89-90, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and without applying his mind independently, (b) The learned CIT X,Delhihad not afforded an opportunity of being heard to the appellant before giving his approval. (c) Principles of natural justice have been violated." 3. The assessee also filed application under r. 29 of the Income-tax Appellate Rules for admission of additional evidence which reads as under: "Most respectfully submitted that the following fresh evidence is being filed in the paper book: ------------------------------------------------------------- Sr. Nature of documents Page Nos. of No. paper book ------------------------------------------------------------- 13. Affidavits from the directors/promoters (a) Shri Shanti Kr. Agarwal, Garg Polymers 289-292 (P) Ltd. (b) Sh. Ashok Kumar Aggarwal, G.P.K. Marketing 293-295 (c) Sh. Ashutosh Aggarwal, Alankit Finsec. Ltd. 296-301 (d) Sh. Adesh Goel, Prathistha Images (P) Ltd. 302-304 (e) Sh. Manoj Tayal, B.P. Marketing Ltd. 305-309 (f) Sh. Shyam Sunder Garg, Leher Chemicals 310-312 (P) Ltd. (g) Sh. Praveen Chandra, Sital Developers 313-314 (h) Sh. Vijay Singh, Indradhan Agro Products Ltd. 315-319 (i) Sh. Umesh Kumar Shukla, Real Overseas (P) Ltd. 320- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essional assignments for corporate and non-corporate clients. This included various companies as also the concerns promoted by the relatives and the friends. Since a few concerns were managed by the persons who were inexperienced the assessee rendered assistance relating to the management and the carrying on of his business affairs. In 1991 the family concern was formed known as M/s Alankit Assignments (P) Ltd. This was promoted by the relatives and friends of the assessee. He became director of the aforesaid company. The company raised share capital from the year 1991 to 1996 and in the financial year 1995-96, the scope of the activities was enlarged. Searches were conducted on the business premises of the assessee at 234, Cycle Market, Jhandewalan Extension and 205, 206, 204, 245 & 1003, Anarkali Market, Jhandewalan Extension, New Delhi. The residential premises of the assessee were also searched and certain documents and the account books as well the records of other companies were seized. From the date of search i.e.,19th April, 1996, till12th June, 1996the learned ADI recorded the statement of Shri Alok Agarwal and the records were with the Intelligence Wing of the Department. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ives. The assessee failed to produce shareholders in these companies and no one was there at the addresses given in the share application forms and as per the statements recorded under s. 131 of the Act. As per the Inspector's report, the shareholders were not men of means. The fact that the share certificates of various companies were found at the premises of the assessee and the share as well the blank documents bearing signatures of the shareholders showing a receipt of shares clearly showed that these were benamidars of the assessee. The assessee refuted all the allegations as levelled against it. It was explained that the assessee rendered managerial assistance to these companies because they require it for which the fees were charged. Since they were in constant need of advice, for the purpose of convenience the registered office was given as that of the assessee's office. There was sufficient documentary evidence available other than the seized material and as brought to the notice of the AO that the assessee was acting in his professional capacity for these companies. It is in this context that the affidavits of the promoters now placed are for admission under r. 29 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H.S. Rizvi who should have been examined instead of the assessee. From the statement of Shri Surender Garg it is clear that nowhere he mentioned that the money for purchase of shares came from the assessee. Shri Vinay Gupta on the other hand is an advocate and has funds to invest the money. The statements of other parties reflect similar position. As to the placement of share certificates in the premises of the assessee, the same were maintained in his professional capacity and as such no adverse inference could be drawn. The AO brought no material on record to show that the usufruct of these companies was enjoyed by the assessee. In any case the question whether the income of these companies which are held to be benamidars of the assessee could be brought to tax in the hands of the assessee, has since been decided by the Tribunal in the case of Parakh Foods Ltd. vs. Dy. CIT (1998) 64 ITD 397 (Pune). Apart from this while making the addition of Rs. 19 crores and odd, the AO has not only made an addition on account of share capital money but also the investment made out of the same. In a process double addition has been made which needs to be examined. 5. Coming to the second addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seized diary of the assessee. The fact that the assessee noted the market value of certain properties could not show that the same belonged to the assessee. His explanation on this account should have been accepted or subjected to further probe. Since there was no conclusive evidence brought on record, the addition could not be sustained. The additions made at Rs. 4 lakhs on account of advances through Shri N.N. Goyal, Rs. 9,75,000 on account of commission of M/s Lehar Chemicals (P) Ltd. Rs. 20 lakhs on account of unexplained investment in the names of children, Rs. 20 lakhs on account of undisclosed children's savings, Rs. 2 lakhs on account of VB treating it as balance with Vijaya Bank, Rs. 42,350 on account of unexplained cash, Rs. 1,44,365 on account of unexplained investment in diamonds, Rs. 57,102 on account of unexplained investment in jewellery, Rs. 1 lakh on account of unexplained investment in silver, etc. were all made on the material for which the assessee was not allowed the rebuttal in the sense that proper opportunity was not allowed to meet the allegations. Summing up the arguments it was stated that since the assessee was denied proper opportunity to meet the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed to tax were assessed in the hands of the assessee, deposits of third parties who were stated to be unconnected with the assessee were added in his income on the basis of the information collected at the back of the assessee and without confronting him the same. The information so collected had to be confronted to the assessee and opportunity be allowed to rebut the same. The assessment framed under the present section has to be in respect of income which is undisclosed. The expression has been defined in s. 158BA and has to be construed as such. The AO is not permitted to go beyond the material discovered as a result of search and to make roving enquiries in order to rope in certain income which apparently belongs to somebody else. This apart, we find that the additions as made tantamounts to double addition inasmuch as that not only the amount reflected as share capital has been brought to tax even the investment made out of the same has also been added. No attempt has been made to link two in case the addition was called for on account of share capital income which is the starting point of the contribution of amounts. Further the assessee's statement that even the income wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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