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TMI Blog2001 (12) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... lled grounds of appeal (as concised) was additional grounds and an application was also kept in the paper book on page No.3 for admitting this additional ground. Vide order dt. 15th Feb., 2001, the additional ground (Ground No.1) of the concised ground was admitted. This ground runs as under: "Because the block assessment order dt. 29th Oct., 1999, as has been impugned in the present appeal, stands wholly vitiated because of non-issuance of notice under s. 143(2) and the same is liable to be held as nullity." 5. The hearing was concluded on 11th Sept., 2001. The assessee filed another paper book on 14th Sept., 2001. In this paper book also adopting a similar device, a petition containing additional grounds No. 7 to 10 were kept with a prayer that these additional grounds should be dealt with and decided as additional grounds. This application, was decided by the Bench after inviting objections from the Department and after hearing the learned counsel for the assessee as well as the learned senior Departmental Representative. A detailed order dt. 15th Oct., 2001, was passed by the Bench and the prayer for admitting these additional grounds was rejected. The order of the Bench for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued a notice under s. 158BC, dt. 25th Feb., 1999, to the assessee. In compliance to this notice, the assessee filed return disclosing undisclosed income of Rs. 7,04,820 for the block period from asst. yr. 1988-89 to asst. yr. 1998-99 (corresponding to accounting period ending upto 17th Oct., 1997). 10. The AO after considering the investment in the house of the assessee, the loose papers found during the course of search and other relevant material, computed the undisclosed income of the assessee at Rs. 23,10,108. The assessee had surrendered income of Rs.7,04,813 during the course of search and assessment proceedings. Hence, the remaining income (unexplained) was taken at Rs.16,05,395. The year-wise break up of total income, returned income, surrendered income (unexplained) income and total undisclosed income is given below: Asst. yr. Total Income Returned Income Surrendered Income Unexplained Income as in para Total undisclosed Income 1988-89 31,000 26,000 5,000 -- 5,000 1989-90 25,130 25,130 -- -- -- 1990-91 1,22,621 30,890 10,000 81,731 91,731 [para 9(iv)] 1991-92 1,91,510 46,410 1,45,100 -- 1,45,000 1992-93 1,97,145 53,050 83,163 56,287 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd used to come to Sardar Satnam Singh as his friend and this paper might have left by him and mixed with other papers of Sardar Satnam Singh and later on was found and seized at the time of search. Sardar Baldeo Singh is the best person to explain the same. Since the paper relates to March, 1993, and for the last many years Sardar Satnam Singh has neither met him nor Sardar Baldeo Singh has referred about this paper, hence it is very difficult for Sardar Satnam Singh to explain the nature of entries of this paper." 16. The AO, however, held that since the assessee could not support his contention, the deposits entries of Rs. 13,50,000 mentioned on the paper remained unexplained. Accordingly, he treated the amount of Rs.13,50,000 as unexplained income of the assessee from undisclosed resources for the asst. yr. 1993-94, falling in the block period ending on 17th Oct., 1997. 17. In appeal, before the learned CIT(A), the assessee challenged the addition of Rs. 13,50,000. Before him also, the assessee attempted to explain the position in relation to this document. In his written submission made before the learned CIT(A) a copy of which is available at pp 53 to 70 of the paper book o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh (1933) 1 ITR 94 (PC); (xi) Seth Nathu Ram Munna Lal vs. CIT (1954) 25 ITR 216 (Nag); and (xii) CIT vs. Chamlal Dhingra (1994) 121 Taxation 273 (All). 19. The learned CIT(A) considered the arguments of the assessee, but rejected the same by assigning various reasons. According to him, even if the paper belonged to M/s. Baldeo Saree Centre, the assessee had to prove it by producing the proprietor of M/s. Baldeo Saree Centre, who could have explained the entries contained therein ad since the assessee could not produce the said proprietor of M/s., Baldeo Saree Centre, nor Balwant Singh, came forward to claim the authorship of the entries on the said paper, the AO was justified in treating the unexplained entries as unexplained and deemed income of the assessee. The learned CIT(A) distinguished the decision of Allahabad High Court in the case of Nathu Ram Premchand vs. CIT (1963) 49 ITR 561 (All) on facts and held that the same is not applicable in the case of the assessee. The argument of the assessee that the loose paper is not covered in the definition in the "books of account" was also rejected by the learned CIT(A). 20. Before us, the learned counsel for the assessee, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative was that presumption raised under this provision is a rebuttable presumption, but the assessee failed to rebut the presumption. According to him, even in a case of retracted confession, the confessional statement binds the person making it unless the retraction is based on cogent material, in support of his contention, the learned senior Departmental Representative placed reliance on the decision of Hon'ble Supreme Court of India in the case of Surjit Singh Chhabra vs. Union of India AIR 1997 SC 2560. He also placed reliance on the decision of Allahabad High Court in the case of Pushkar Narain Saraf vs. CIT (1990) 86 CTR (All) 110 : (1990) 183 ITR 388 (All). 23. The next submission of the learned senior Departmental Representative was that presumption under s. 132(4A) is (sic not) only available in regard to and in the context of search and seizure and since Chapter XIV-B deals with search cases, the presumption can be raised in assessment proceedings of search case. The learned senior Departmental Representative after referring to the questions of law referred to in the case of Pushkar Narain Saraf, stated that in that case the questions were decided in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries pertaining to the transactions of deposits relating to the assessee is a disputed issue. 29. Before taking up the disputed issues as mentioned above, we consider it proper to point out certain facts relating to the nature and contents of the document, namely, the loose paper LP-32, whichever as follows: (a) The documents relate to March, 1993, as against 2nd and 3rd notings of Rs. 7,60,000 and Rs. 5,00,000 the dates noted are 25th March, 1993, and 29th March, 1993, respectively. The document was found during the course of search which was conducted on 17th Oct., 1997, i.e., after a period of four and a half years. (b) It could not be ascertained or determined as to in whose writing the notings are made on this paper. (c) The contents of transactions recorded in this paper have not been independently connected or co-related with any transaction relating to the assessee. (d) The document is on the letterpad of Baldeo Saree Centre, 51/10 K.K. Garg Market, Ramganj, Naughra, Kanpur" but none relating to that concern of firm was produced or appeared to verify the handwriting and contents of the documents. In view of the above-mentioned aspects relating to the loose paper, we p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scertained by making enquiry as to whether there existed any concern in the name and style of Baldeo Saree Centre and as to whether Balwant Singh was its proprietor or not. This enquiry could have been conducted by the AO himself even if the assessee was not able to establish these facts. (3) It is true that the assessee could not produce Balwant Singh to whom the loose paper according to him belonged. However, on account of his non-production, the liability of the assessee has been wrongly fixed by the AO. It may be pointed out that under the circumstances pertaining to this matter, it was quite possible in natural way that Balwant Singh might have not agreed to appear before the AO just with a view to avoid apprehended harassment by the Departmental authorities. There may be a strong reason for this avoidance on the part of Balwant Singh, if the paper really belonged to him, because had he owned the paper, then he could have been made liable on the basis of jottings on this paper. Under such circumstances the helplessness and failure of the assessee in producing him before the AO, should have been viewed. However, after clear denial of the assessee recording the authorship of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referable to any admitted or proved transaction of deposits. Dates against the figures reveal that these have been made either in different hand or on different occasions. Since the document was not sealed after its seizure and was kept in the custody of the Departmental authorities the chances of subsequent notings as pointed out by the assessee in his written submissions, cannot be ruled out. In any case, the loose paper and entries contained therein do not go to prove that these relate to undisclosed income of the assessee. (7) In view of the peculiar facts of this matter and particularly after the discharge of onus by the assessee which lay upon him to explain the contents of this documents, the AO was under a legal obligation either to corroborate the contents of this documents with the transactions of the assessee by independent material or by occular or documentary testimony or connect this paper with the proprietor of Baldeo Saree Centre, The AO only asked the assessee to produce Balwant Singh and on his inability to do so, he closed the matter and fastened liability on him. It may be pointed out that it could not be proved or established that the document was in the hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icular person or which may reasonably be assumed to have been signed or to be in the handwriting of any particular person, or in that person's handwriting. It may also be pointed out that the case of Pradeep Chandulal Patel related to penalty matter and the facts of that case are distinguishable from the facts of the present case. So far as the case of S.M.S. Investment Corporation, is concerned, the Hon'ble High Court observed in that case that the seizure of the documents from the premises of the assessee raises a presumption, but even assuming that such a presumption arose, the same was a rebuttable presumption relating to a question of fact. So far as the present case is concerned, the assessee had rebutted the presumption by categorically pointing out that the loose papers seized from the premises related to the proprietor of M/s. Baldeo Saree Centre, on whose pad, the notings were made and after this, the burden shifted to be Revenue. 33. In the case of S.M.S. Investment Corporation, also, the Hon'ble Rajasthan High Court held that the presumption under s. 132(4A) of the Act is a rebuttable presumption. 34. The issue relating to the scope of presumption under s. 132(4) came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be belonging to commission agents and not to the assessee and addition cannot be made on the ground that the assessee made payment to the bank officials for sanction of loans. In the case of Asstt. CIT vs. Shailesh S. Shah, the Tribunal Mumbai Bench after referring to various decisions held, that it is a Revenue's onus, before assessing any receipt as taxable income; to prove that the receipt in the hands of the recipient is income and this can be proved or established only on the basis of some material or evidence. In support of this conclusion, reliance was placed by the Mumbai Bench of Tribunal on the following decisions: (1) Lalchand Gopaldas vs. CIT (1963) 48 ITR 324 (All); (2) Addl. CIT vs. Netar Krishna Sehgals (P) Ltd. (1983) 34 CTR (Del) 376 : (1983) 141 ITR 681 (Del); and (3) Bedi & Co. (P) Ltd. vs. CIT (1983) 144 ITR 352 (Kar). 37. It may be pointed out that the decision of Kerala High Court in the case of Bedi & Co. was upheld by the Hon'ble Supreme Court of India in the case of CIT vs. Bedi. 38. The real crux of the issue is as to whether the uncorroborated loose paper can be taken as a sole basis for the determination of undisclosed income. Learned CIT(A) has ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of justice and fairplay and in order to arrive at the fair and just conclusions, both the parties must play their role and discharge their respective duties, responsibility and adequately. The assessee must co-operate with the AO to explain the jottings in the seized diary and furnish supporting evidence to meet fair and just conclusion." 40. In the case of Atul Kumar Jain the Delhi Bench of Tribunal also considered this issue in detail. After referring various decisions, the Bench made following observations: "6.6 If we consider the said piece of paper seized during search in light of the definition of the word "document" as given in the Indian Evidence Act and General Clauses Act and truthfulness of the contents thereof in light of the aforecited decisions of the Hon'ble Supreme Court, we find that the said paper contains jottings of certain figures by the same does not describe or express the substance of any transaction and even if the said paper has been seized from the possession of the assessee the contents thereof are not capable of describing the transactions the way the AO has deciphered them without support of corroborative evidence of the parties attributed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The learned CIT(A) also upheld the findings of the AO. 47. Before us, the learned counsel for the assessee, S.K. Garg, repeated the argument made by the assessee before the AO and the Departmental authorities. He also made reference to the decision of Supreme Court of India in the case of Ananth Ram Veera Singhaniah & Co. vs. CIT (1980) 16 CTR (SC) 189 : (1980) 123 ITR 457 (SC). On the other hand, the learned senior Departmental Representative placed reliance on the order of the CIT(A). According to him, the assessee, subsequently made improvement. The learned senior Departmental Representative also submitted that the assessment of HUF was completed under s. 143(1) of the Act and after the date of search. 48. We have carefully considered the facts and circumstances relating to this addition. The assessee explained the availability of the cash in his statement under s. 132(4). If this cash related to HUF, then the assessee who himself was Karta of HUF could have stated in his statement that the cash belonged to HUF. The assessee, on the other hand, disclosed other sources, viz., the withdrawal, from the bank account and when this explanation could not be substantiated, h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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