TMI Blog2004 (12) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... aces on the basis of documents not relating to the appellant (but alleged to be relating to the wife of the appellant) though the appellant and his wife had agreed that any adverse material in the case of the wife of the appellant be considered in the hands of the appellant. All such additions made in the case of the appellant are illegal. 3. That the learned AO erred in making certain adverse observations at various places in the assessment order, by ignoring or wrongly rejecting the explanations given by the assessee/appellant and by resorting to conjectures and surmises. 4. That the assessment order passed by the learned AO is against law and facts of the case. Asst. yr. 1986-87 5. That the learned AO erred in estimating an additional income of Rs. 1,488 in the cases of the appellant on the basis of certain entries in the books of account of M/s Tarachand Sat Pal, Patiala, by holding that this amount is an unexplained cash credit for the asst. yr. 1986-87. Asst. yr. 1987-88: Nil Asst. yr. 1988-89 6. That the learned AO erred in estimating an additional income of Rs. 32,892 in the cases of the appellant on the basis of certain entries in the books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... si, relating to M/s Parveen Traders (belonging to the wife of the appellant), by holding that this amount is an unexplained. (d) Rs. 62,000 on account of certain FD accounts in the name of the appellant in Oriental Bank of Commerce, Baharanpur, by holding that this amount is an unexplained investment. Asst. yr. 1992-93. 10. That the learned AO erred in estimating an additional income of Rs. 53,586 in the case of appellant for the asst. yr. 1992-93 as below: (a) Rs. 2,304 being estimated interest income on the FDR of Rs. 62,000 (considered in the asst. yr. 1991-92). (b) Rs. 2,087 by estimating suppressed purchases of Rs. 20,869.70 on the basis of certain entries in the books of account of M/s Rajan Fire Works Factory, Shivkasi, and by assuming that the aforesaid purchases have been sold by applying a profit rate of 10 per cent on the aforesaid amount of Rs. 20,869.70. (c) Rs. 49,195 on account of certain entries in the bank a/c No. 1262 in the Punjab Co-operative Bank Ltd., Saharanpur, by holding that this amount is an unexplained investment. Asst. yr. 1993-94. 11. That the learned AO erred in estimating an additional income of Rs. 6,15,789 in the case of appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g suppressed purchases of Rs. 47,114 on the basis of certain entries in the books of M/s Radhika Amoreces Industries, Shivakasi, relating to M/s Parveen Traders (belonging to the wife of the appellant) and by assuming that the aforesaid purchases have been sold by applying a profit rate of 15 per cent on the aforesaid amount of Rs. 47,144. (c) Rs. 1,19,940 being estimated interest income on the assumed loans on the basis of certain entries on p. 58 of the seized diary marked Annex. A-1/21. (d) The learned AO has erred in making an addition of Rs. 6,05,150 on account of alleged payment to Sri Kaileshwari Fire Works, Sivakasi, as unexplained investment on the basis of copy of accounts obtained from the above party. The addition has been set off against the addition of undisclosed income for the earlier years. (e) The learned AO has erred in making an addition of Rs. 72,908 on account of construction in office building as unexplained investment on the basis of valuation of the DVO. The addition has been set off against the addition of undisclosed income for the earlier years. Asst. yr. 1995-96 13. That the learned AO erred in estimating an additional income of Rs. 30,730 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,000 on account of alleged payment to M/s We Two Fire Works by M/s Praveen Traders, as unexplained investment on the basis of copy of accounts obtained from the above party. The addition has been set off against the addition of undisclosed income for the earlier years. (i) The learned AO has erred in making an addition of Rs. 7,000 on account of alleged receipt from M/s Sham Sunder Co., Moga, by M/s Praveen Traders, as unexplained investment on the basis of copy of accounts obtained from the above party. The addition has been set off against the addition of undisclosed income for the earlier years. (j) The learned AO has erred in observing to make an addition on account of investment required for unrecorded purchases on which profit has been estimated as per ground Nos. 13 (a), 13(b) and 13(c) but no addition has been quantified as the same is covered from the additions of undisclosed income for the earlier years. (k) The learned AO has erred in making an addition of Rs. 40,000 on account of cash deposited in account No. 12 with O.B.C. Shekhpura, Kadian. The addition has been set off against the addition of undisclosed income for the earlier years. (l) The learned AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the AO though called for accounts of different parties, but no right to cross-examine has been given and that AO cannot make roving post-search enquiries if there is no seized material available on record. The learned counsel for the assessee relied upon decision of Delhi High Court in the matter of CIT vs. Ravikant Jain (2001) 167 CTR (Del) 566 : (2001) 250 ITR 141 (Del) and order of Chennai Bench of Tribunal in the matter of P.K. Ganeshwar vs. Dy. CIT (2004) 91 TTJ (Chennai) 970 : (2002) 80 ITD 429 (Chennai). The learned counsel for the assessee further submitted that since no material found in search to suggests whether any sale or purchase has taken place outside the books of account, therefore, application of GP rate on presumption is bad in law. He has further submitted that AO cannot make addition in the block assessment in respect of deposits and FDRs which were not found during the course of the search, but, found in the post-search enquiries made from the bank. He has further submitted that the bank accounts or FDRs were not collected from the assessee as well as same were not in the handwriting of the assessee. He has further submitted that AO cannot make a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reliable. The learned Departmental Representative relied upon Dhondiram Dalichand vs. CIT (1971) 81 ITR 609 (Bom) and CIT vs. K.Y. Pilliah Sons (1967) 63 ITR 411 (SC). The learned Departmental Representative submitted that seized material is filed in the paper book submitted by the Department. He has further submitted that additions are not made on the basis of search/seized material and thereafter post-search enquiry was conducted to verify the same and explanation of the assessee was called for in this regard, however, assessee did not reply satisfactorily, therefore, additions are justified. The learned Departmental Representative further submitted that on the basis of bank counterfoils seized during the course of the search AO made enquiries from bankers and assessee was given opportunity to explain the bank accounts and copies of the third parties, but the assessee failed to explain the material collected during the search. The learned Departmental Representative taken us briefly to the additions made and submitted that additions are justified in the matter. The learned Departmental Representative relied upon findings of the AO. The learned Departmental Representative, las ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not have been disclosed for the purpose of this Act. (iii) or any expenses, deduction or allowance claimed under this head, which is found to be false. Sec. 158BB(1) provides for computation of undisclosed income of the block period and is reproduced as under: "The undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed, in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the AO and relatable to such evidence." 7. We, after considering the above provisions, are of the opinion that even if there is an amendment in the above sections, the scheme or purpose of enacting Chapter XIV-B has not undergone a major change in the sense that the block assessment pertaining to a number of years remains distinct from assessment under s. 143(3) pertaining to a single assessment year. The block assessment could be made in respect of undisclosed income if during the block period undisclosed income is recovered as a result of evidence found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Bombay High Court in the case of CIT vs. Vinod Danchand Ghodawat (2000) 163 CTR (Bom) 432 : (2001) 247 ITR 448 (Bom) observed: "Where the value of the gold and silver articles and jewellery had been disclosed in the assessee s wealth-tax return which was accepted by the Department. Held, that Chapter XIV-B of the IT Act, 1961, had no application to the facts of the case and the addition made by the Department on the ground of undisclosed income was erroneous." 9. The Hon ble Calcutta High Court in the case of Bhagwati Prasad Kedia vs. CIT (2001) 167 CTR (Cal) 336 : (2001) 248 ITR 562 (Cal) observed: "The Explanation to s. 158BA of the IT Act, 1961, makes it clear that the legislature thought it fit to make a distinction between the block assessment and the regular assessment. In the case of regular assessment, the AO is free to examine the veracity of the return as well as the claims made by the assessee, whereas the undisclosed income is taxed by way of block assessment as a result of search and seizure. The logic behind the two different modes of assessment is that concealment of income and claiming deduction or exemption in respect of a disclosed income cannot be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 610 : (1997) 63 ITD 245 (Mumbai), Tribunal, Mumbai Bench B , held as under: "Sec. 158BA of the IT Act, 1961 Search and seizure Block period 1st April, 1985 to 16th Nov., 1995 Whether within pale of Chapter XIV-B assessment could be made only in respect of undisclosed income and such undisclosed income must come as a result of search Held, yes Whether s. 158BA does not provide a license to Revenue for making roving enquiries connected with completed assessment and is beyond power of AO to review assessments completed unless some direct evidence comes to knowledge of Department as a result of search which indicates clearly factum of undisclosed income Held, yes Whether scheme of Chapter XIV-B gives power to revenue to draw presumption in regard to undisclosed income Held, no Assessee claimed 1 to 1.5 per cent out of total sales as sales promotion expenses During search proceedings a book called gift register was seized from assessee s business premises Gift register related to sale promotion expenses In earlier assessment proceedings covering block period in question, such expenses were disclosed and disallowances were made Neither any incriminating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd mainly for financial year 1995-96 (3) Diary belonging to Ashish and Sravan Chopra which contains the details regarding the business of the assessee. (4) Total cash of the Rs. 7,53,485 was found at the business premises out of which Rs. 7 lakhs were seized as per annexures. (5) Inventory of the stock during search was also prepared and total stock of Rs. 8,49,239 was found at the factory premises and godown of the assessee which was not seized. The assessee is running proprietary concern in the name of M/s Subhash Fire Works, Gangoh, Ambala Link Road, Saharanpur. One more business firm in the proprietorship of Smt. Praveen Rani Chopra in the name and style of M/s Praveen Traders is also doing business in the family of the assessee. The affairs of this business were also being looked after mainly by the assessee. This fact was accepted by Smt. Praveen Chopra in her statement recorded during the search. It has been requested by the assessee, Sri Subash Chopra, that as he was looking after whole business, all unexplained transactions should be considered in his hand. Similar request was also made by Smt. Praveen Chopra. The AO in view of the admissions made by the above parties cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he regular books of account. In fact, modus operandi was to substantially under-invoice, sales to outside station parties and to make substantial cash sales outside the books of accounts. The various loose papers, bank accounts and diary showed that the practice was being adopted by the assessee regularly since past year. The learned Departmental Representative further submitted that the additions made by the AO in the assessment order may be divided into following categories: (1) Unaccounted sales outside books of account. (2) Unexplained cash introduced by assessee in the purchases made outside books of account. (3) Profit earned on undisclosed sales. (4) Unexplained money in purchase of movable assets like vehicle FDRs, etc., in the name of family members (wife). (5) Unexplained monies introduced by assessee in his bank accounts. (6) Loans given by assessee to different parties from undisclosed sources. (7) Extract of capital required to make undisclosed sales. (8) Unexplained investment in construction of office building. (9) Unexplained investment in construction of godown by M/s Praveen Traders. The learned Departmental Representative denied that any such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er XIV-B of the IT Act. 16. In this appeal, the Revenue Department during the course of the search recovered incriminating evidence from the assessee showing undisclosed income from the names of various parties dealing with the assessee and loose papers. Rough estimate, etc. were also found along with the bank counter, foils which show that the assessee had not entered those transactions in the regular books of account which were also seized during the course of the search proceedings. The Revenue Department on analyzing the regular accounts book, dealers call reports and seized material, i.e., diary and loose paper and bank counterfoils, etc. was of the view that the assessee had been making unaccounted sales and purchase outside the books of account as well as made undisclosed investments. The Revenue Department also came to know that the assessee had got undisclosed investment in the purchase of the FDRs, etc. On the basis of the seized material, the AO issued various statutory show-cause notices to the assessee and the assessee filed replies before the AO. The AO on the basis of the seized material made enquiries from different parties who had dealings with the assessee which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to assessee only. The AO, therefore, taken all the undisclosed investments and considered in the hands of the assessee only which were seized during the course of the search. These findings of the AO have not been challenged before us. Therefore, the finding of the AO becomes final on this point. 17. The learned counsel for the assessee during the course of the arguments filed summary of the common grounds of appeals issue-wise which is related to different grounds and both parties have argued this appeal issue-wise as is submitted by the learned counsel for the assessee. Therefore, we propose to take various grounds of appeal which are the issues raised in the summary of the common grounds of the appeal for the purpose of disposal of this appeal. 18. The learned counsel for the assessee submitted that ground Nos. 1 to 4 are general in nature and, therefore, the same do not call for any finding. Now, we take up the remaining grounds as under issue-wise. 19. Issue No. 1: The learned counsel for the assessee submitted that in the block assessment, AO cannot make addition on sole basis of some differences in copies of accounts obtained from third parties under s. 133(6). It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he concerned party has shown the payment through pay order, but the assessee claimed it to be by cash. The discrepancy was not clarified, therefore, AO rightly treated this amount to be undisclosed income. No interference is called for and addition is, therefore, confirmed. 22. Ground No. 7(a): During the course of the enquiries, account of assessee in the books of M/s Radhika Amorces, Shivkasi, was received which shows that the assessee had made payment of Rs. 55,000 by bank draft on 3rd Feb., 1989, whereas no corresponding entry was found in the books of account of the assessee. The assessee explained this discrepancy and submitted that the entry shown in the books of account of the assessee are correct. The reply of the assessee was not accepted by the AO as the enquiry from the bank clearly reveals that the draft was purchased on 10th Dec., 1988, from Vijaya Bank, Saharanpur, which was made payable in Madurai Branch and the purchase of the draft has not been denied by the assessee in his reply. The AO was, therefore, of the view that this clearly shows that the assessee s explanation in this regard is false and Rs. 55,000 have been introduced by the assessee in his business f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account of the assessee. In reply to the show-cause notice, assessee submitted that goods sent by the party were not useful and, therefore, return back, however, no evidence was laid to prove the contention. Therefore, AO directed to make addition of Rs. 17,010. It is an admitted fact that assessee obtained the goods from the aforesaid party, but according to the assessee the same were returned, but, no evidence was filed by the assessee in this regard. The concerned seller has shown payment in his books of account as well as recorded sales to assessee. Therefore, these incriminating materials clearly suggest that assessee has made unaccounted purchase and made unexplained investment. Therefore, the addition is confirmed. 25. Ground No. 8(f): During the course of the enquiries, copies of the account of M/s Praveen Traders were obtained in the books of account of M/s Radhika Amorces, Shivakasi. The account received from party was that the assessee deposited Rs. 15,000 on 20th May, 1989, whereas the books of account of M/s Praveen Traders show Rs. 40,000 deposited on 18th Oct., 1989. The discrepancy was not clarified by the assessee and it was merely stated that entries in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de on the basis of explanation called on seized material, but, the fact remains that there is only difference of 7 days in showing the payment. The transaction has been shown by the assessee in the books of account and was disclosed in the relevant asst. yr. 1991-92 in the accounts of the assessee. Therefore, the same cannot be said to be payment made out of undisclosed income. This addition cannot be made in block assessment under Chapter XIV-B. We, accordingly, delete the addition. 28. Ground No. 10(b): During the course of the enquiries, account of assessee in the books of account of M/s Rajan Fire Works Factory, Shivkasi, was obtained which shows that the assessee has made purchases from the party by bill No. 74 for Rs. 20,869.70ps. on 25th June, 1991, for which cash payment of the same amount has been made. No corresponding entry was found in the books of account of the assessee. The assessee explained before the AO that goods cannot be brought in Uttar Pradesh without Form No. 31 of the ST Department. Accordingly, information given by parties was wrong. The explanation of the assessee was not accepted by the AO as no further evidence has been given by the assessee in this r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee before the AO. Therefore, it was taken that payments were made from unexplained sources. Similarly, assessee has deposited total payment of Rs. 4,51,000 on 16th March, 1993, 20th March, 1993 and 23rd March, 1993, by way of different drafts of different denominations as per the account received from the aforesaid party. In this regard, the assessee has not been able to give any satisfactory explanation. He has claimed that the payment is Rs. 3,51,000 instead of Rs. 4,51,000. The AO found the claim of the assessee factually wrong as the total of the various drafts sent is Rs. 4,51,000. The assessee also claimed that on 27th March, 1993, M/s Sri Kaileshwari Fire Works has debited Rs. 51,000 in his account which has reduced the net payment. The AO found the claim of the assessee as correct and, therefore, the net payment made by the assessee in the month of March was Rs. 4 lakhs and the total payment made by the assessee to the aforesaid party is Rs. 4,75,000 which was found to be unexplained investment made by the assessee from undisclosed sources. No separate addition was made on account of unexplained investment and undeclared profit, and the unexplained fund available with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as probably written 30th Jan., 1993, instead of 30th March, 1993, and there is no difference in the purchases made. Assessee further submitted that it appeared that there is a mistake while noting down this amount in the ledger of the party. However, AO did not accept explanation of the assessee and accordingly payment of Rs. 2,83,140 was taken unexplained and unexplained investment in the business. However, no separate addition was made because of the availability of the amount on account of additions under different heads. We find that purchases have been shown in the books of account though payments are made on different dates that do not prove that it was unexplained investment outside books of account. On similar issues, we have deleted different additions. We, accordingly, delete this addition also. 32. Ground No. 12(d): The assessee account in the books of M/s Sri Kaileshwari Fire Works, Shivkasi, shows that an amount of Rs. 5,80,000 has been paid by the assessee by way of different bank drafts and cash on 13th Sept., 1993, 14th Sept., 1993 and 23rd Sept., 1993. The total of these payments comes to Rs. 5,80,000. Also on 14th March, 1994, assessee has deposited Rs. 25,150 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that payment made by assessee through cheque is correct. However, AO treated it to be unexplained payment and made the addition. However, no separate addition was made as unexplained fund was available because of addition on different heads. The learned counsel for the assessee submitted that payment is made by cheques. Therefore, the explanation of the assessee is to be accepted. We find force in the submission of the learned counsel for the assessee as the concerned party has shown payment by cheques, but, in fact assessee has made payment by cheques of the aforesaid purchase. Purchase is shown as well as payment through cheques is shown, therefore, explanation of the assessee is liable to be accepted in the ordinary course of the business. No adverse inference can be drawn against the assessee and moreso, since the transaction is shown in the books of account, therefore, it cannot be treated to be unexplained investment or undisclosed income of the assessee. As a result, this addition is deleted. 34. Ground No. 13(f): During the course of the enquiries, accounts of M/s Praveen Traders in the books of account of M/s Ravindra Fire Works Industries and Ravindra Fire Works, Sivak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al drafts Nos. 390 to 404, the numbers written by the party in his books of account were the printed number, whereas, the numbers given by the bank were serially numbered of the drafts which were written on drafts issued by handwritten. On analysis of the draft application slips, photocopies of which were called under s. 133(6), clearly indicates that handwritings on the draft application slips are of Shri Ashish Chopra and Subhash Chopra as the handwritings on these draft applications slips is the same as were found in the documents seized during the course of the search which were in the handwritings of Shri Ashish and Subhash Chopra or the employees of the assessee, who use to issue the bills. 36. The other drafts were purchased from Vijaya Bank. Enquiries were also made from this bank and the same position was found as above. The assessee was asked to explain why the amount of the total of the drafts purchased from the Bank of India totaling to Rs. 5 lakhs and other drafts found deposited in the account of M/s Pappin Brothers, the total of which is Rs. 1,10,000 be not treated as the unexplained investment and be added to the income of the assessee Assessee merely replied that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dwriting available on record. Therefore, comparison made by the AO could be taken into consideration as the same is legally admissible under law. The assessee merely denied the handwriting which is not sufficient to rebut the finding of the AO. We, accordingly, do not find any justification to interfere in the findings of the AO. We maintain his finding and dismiss this ground of the appeal of the assessee. 37. Ground No. 13(g): The assessee s account in the books of Standard Fire Works was also received as a result of enquiry which shows that the assessee had made payments to the party of Rs. 4,075 on 7th June, 1994, and Rs. 2,11,575 on 20th June, 1994. These entries could not be co-related with the entries found in the books of account of the assessee. In the books of account of the assessee, assessee has made payment to the party on 24th March, 1994, of Rs. 1,24,091 by cheque. The assessee was asked to clarify the discrepancy. However, assessee has stated that payment made by the assessee and shown in the books of account is correct. The addition was however made by AO. No separate addition was made because of availability of the undisclosed funds because of different addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. Considering the above discussion and various additions above, the issue No. 1 is partly decided in favour of the assessee. 41. Issue No. 2: The learned counsel for the assessee submitted that in the block assessment AO cannot make addition on the basis of assumed sales/purchases on the sole basis of difference in copies of the accounts obtained from different parties under s. 133(6) and estimate the gross profit. On this issue, the learned counsel for the assessee submitted the chart showing the various additions on the basis of estimation of the gross profit. Ground No. Amount of addition(Rs.) GP estimation 8 (c) 1,700 10 % 10 (b) 2,087 10 % 12(a) 54,225 15 % 12(b) 4,714 10 % 13 (a) 28,000 10 % 13 (b) 644 10 % 13 [CIT (A)] 2,086 10 % 42. The learned counsel for the assessee submitted that there is no material found in the search to suggest whether any sale or purchase has taken place for the amount alleged by the AO. He has further submitted that no addition can be made on presumptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in which it was held that ITO need not make an explicit statement to the effect that profit made cannot be properly deduced from the accounts of the assessee. It is sufficient if his order has the effect of impliedly recording such findings. Therefore, we do not find any merit in the statement of the learned counsel for the assessee that no GP rate can be estimated in the block assessment. However, we find that for the GP rates as estimated by AO on different heads as mentioned above ranging from 10 per cent to 15 per cent, AO has not given any basis whatsoever for making difference in the GP rates. Assessee is stated to have shown GP rate of 6.8 per cent and AO has directed to apply 10 per cent to 15 per cent GP rates. Therefore, there is no justification to apply GP rate of 15 per cent on ground 12(a) mentioned above. The GP rate of 10 per cent appears to be reasonable and, therefore, considering the rule of consistency, we direct the AO to apply GP rate of 10 per cent on the grounds mentioned above upon which main addition is sustained. We may also clarify that since the GP addition is based upon addition on different heads, therefore, the addition would be sustained by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO during the course of the search and as such AO was justified in sustaining the additions. Now, we take the different additions on merits. 45. Ground No. 7(b): During the course of the enquiry from the bank an account No. 1869 in Vijaya Bank, Saharanpur, was found in the name of the assessee. In that account an amount of Rs. 2 lakhs was deposited by cash on 5th Nov., 1988. From this account, various drafts issued to different parties were purchased. The assessee was asked to explain the entries in respect of bank account. Assessee submitted that this amount is not related to him and he is not in a position to explain the entries. Further enquires from the bank were made. The account opening form and the draft application slips through which the drafts were purchased and also the deposit slips through which amounts of Rs. 2 lakhs were deposited have been called from the bank. It has been found by the AO that account is in the name of M/s Subhash Fire Works, Gangoh Road, Saharanpur, and the person authorized to operate account was Sri Hariom. The name and address shown in this account is same to that of the assessee. AO also found that handwriting on the papers to be the same of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk. The assessee merely denied the FDRs. On enquiry from the bank, it was revealed that money has been deposited by assessee in the bank account in the aforesaid FDRs and the handwriting was also found of the assessee as well as of his son. This addition is based upon the list of papers seized from the premises of the assessee during search. Therefore, AO made the addition. Nothing is argued on this issue before us except merely denying of having any FDRs in the name of the assessee. Considering the finding of the AO and that the additions are based upon enquiries conducted by the AO on the basis of search material, we do not find any justification to interfere in the order of the AO. This addition is, therefore, confirmed and this ground of appeal of the assessee is dismissed. 48. Ground No. 10(a): AO made the addition of Rs. 2,304 being interest on the aforesaid FDRs upon which ground 9(d) is taken. Since we have confirmed the addition on ground 9(d), therefore, this addition is also confirmed. As a result, this ground of the appeal of the assessee is rejected. This issue is decided against the assessee and in favour of the Department. 49. Issue No. 4: The learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of the search to show that assessee made undervaluation in the cost of construction of the building, that is, office building, office godown and godown. Similarly, AO on examination found that assessee has basement which was full of water. Addition of Rs. 1,20,000 was made on ground No. 11(g). The assessee explained that basement is old one which is not in use as it was closed and because of the water collected in the basement, therefore, it was never in use. On this issue also, there is no seized material available on record to show that assessee made any undisclosed investment in the construction of the basement. AO found that walls are old one and only on the basis of observation by the valuation department, AO came to opinion that there is an investment in the basement. There is no denial that s. 142A is introduced retrospectively by which reference could be made by AO to the Department Valuation Officer. But, such reference could only be made during the pendency of the proceedings. However, the present proceeding under assessment is the block assessment under Chapter XIV-B and the addition could be made only on the basis of undisclosed income found as a result of evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and made the addition of Rs. 12,550. Similar submission is reiterated by counsel for assessee before us. However, fact remains that the assessee could not correlate any entries with the bank account to that of any parties with whom assessee had dealing. Therefore, the contention of the assessee is rejected and the addition is confirmed. 52. Ground No. 8(e): During the year, Kinetic Honda scooter has been purchased in the name of Smt. Praveen Chopra which has not been disclosed in the books of account. The source of investment in the purchase of the scooter has been explained by assessee being "Istridhan" of Smt. Praveen Chopra. Since, Smt. Praveen Chopra was regular assessee and the amount of investment in scooter was not shown to the Department, therefore, AO treated it undisclosed expenditure and made the addition. The learned counsel for the assessee submitted that investment in the scooter is shown in the books of account in the financial year 1989-90. Copy of the ledger account is filed at p. 275 of the paper book. The learned Departmental Representative submitted that assessee has changed his version before the Tribunal. However, considering the fact that scooter is also sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns the transaction, related to the business of the assessee. AO found that at p. 58, it is the account of M/s Nandalal Mahavir Prasad to whom loan of Rs. 8,33,000 has been given by the assessee, out of which Rs. 6 lakhs were received back on various dates during the year and balance is outstanding. The AO noted the entries in the assessment order and found that interest is also to be charged on that ground. The AO on the basis of seized material and vague reply of the assessee was of the view that Rs. 8,33,000 are held to be unexplained money found in the possession of the assessee which has been given by him to M/s Nandalal Mahavir Prasad as loan. However, no addition is made of the full amount and addition is made in a sum of Rs. 1,76,332 as unexplained funds were available because of action on other issues. The learned counsel for the assessee submitted that there is no corroborative evidence to the diary. No evidence of loan given is found and that there had been no dealing and the AO has made addition mainly on presumptions. The learned counsel for the assessee relied upon the reply filed before the AO. On the other hand, the learned Departmental Representative submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Fire Works (2) p. 24, M/s Shiv Co. (3) p. 24, different parties of Batala (4) p. 27, different other parties (5) p. 29, Shri Harbancilal (6) p. 36, Shri Mohanlal Ravikumar (7) p. 37, M/s Pushpa Traders (8) p. 37, Shri Vinod (9) p. 39, Vinod Trader (10) p. 39, M/s Pushpa Traders (11) p. 39, D.R. Gupta (12) Receipt from R.D. Makheeja, at pp. 40, 41, 42 (13) M/s Ahuja General Store, at p. 40, (15) Bansilal, at p. 41 (16) P. 41 Krishnalal Sons (17) p. 42, Bahadur and Amit Store (18) p. 43, entries of different parties and in the name of Subhash General Store (19) p. 44, account of Batala and Topendas and Shakti General Store (20) p. 45, 46, 47 different amounts have been received from different persons (21) p. 48, Bansilal (22) p. 48, again account of the parties says the amount outstanding (23) p. 49, Khem Chand and Jaswanth Dihatti (24) p. 50, Makho (25) p. 54, noting of the purchase from STP Ltd., (25) p. 58, purchase from Radhik Amorces. The AO noted all the details in the assessment year from pp. 14 to 21 which are not repeated here for the sake of brevity. The AO on the basis of the transaction recorded in the diary worked out the total sales outside the books, which came t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Works was obtained. On 6th April, 1994, deposit of Rs. 60,000 has been mentioned. These entries are not found in the books of account of the assessee. It is stated on that the amount received from the party that entry has been squared up on the same day. These entries are not found in the books of account of the assessee and assessee could not offer any explanation. Therefore, it was treated undisclosed income. However, no separate addition was made because of undisclosed funds available on other additions. The learned counsel for the assessee submitted that no seized material was recovered on this issue. The learned Departmental Representative also could not specify. Therefore, this addition is deleted. 60. Ground No. 13(j): This addition is based upon ground Nos. 13(a), 13(h), 13(I), 13 (b) and (c) and as such the AO shall be guided by different findings on these issues while giving set off on issue of the ground 13(j). 61. Ground No. 14(a): The AO on the basis of seized material and considering the fact that the assessee had sales outside the books of account and that huge cash was available with the assessee and stock was found short, was of the view that the assessee had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade as undisclosed funds were available because of addition on different issues. The learned counsel for the assessee submitted before us that car was registered in other s name originally and no material was found during search to show that assessee was benami owner of the car. The investment in the car in a sum of Rs. 2,50,000 is also shown to the Department. Therefore, learned counsel for the assessee submitted that merely because original owner of the car was not found is no ground to make the addition in the hands of the assessee. The learned Departmental Representative, on the other hand, submitted that the estimate is reasonable and relied upon the findings of the AO. We do not agree with submission of the learned Departmental Representative that addition is justified in the matter. The assessee stated to have purchased secondhand car and no material was found during the course of the search to show that assessee has made any investment from undisclosed funds in the car. Since no material was found during the course of the search, therefore, the addition on account of value of the car in the block assessment is not permissible. The addition is, therefore, deleted. As a resul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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