TMI Blog2001 (12) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional 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 rejecting the prayer of the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of this document. The explanation of the assessee was that the paper was neither connected with him nor with any member of his family. The possession of this document was explained by saying that the paper belongs to Balwant Singh, proprietor of M/s. Baldev Saree Centre, who used to come to Satnam Singh as his friend and who might have left the paper. The specific reply submitted by the assessee in this regard to the AO, which is contained in his letter available at pages 12 to 15 of the paper book Vol. III, is also being extracted below: "Paper No.2 on the pad of Baldeo Saree Centre is in noway connected with either Sardar Satnam Singh or any of his family members. Sardar Baldeo Singh was the proprietor of M/s. Baldeo Saree Centre and 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nus has shifted to the AO to enquire with Baldeo Singh on address printed on this paper." 18. On behalf of the assessee, reliance was also place on various decisions including the following: (i) Dhirajpal Girdhari Lal vs. CIT (1954) 26 ITR 726 (SC); (ii) Dhakeshwari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 775 (SC); (iii) Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC); (iv) Umacharan Shaw Bros. vs. CIT (1959) 37 ITR 271 (SC); (v) Omar Salay Mohd. Sait vs. CIT (1939) 37 ITR 151 (SC); (vi) Rajmohan Saha vs. CIT (1964) 52 ITR 231 (Assam); (vii) United Patel Construction Co. vs. CIT (1966) 59 ITR 424 (MP); (viii) Gopi Nath vs. CIT (1955) 28 ITR 753 (All); (ix) CIT vs. R.Y. Durlabhji (1995) 211 ITR 178 (Raj); (x) CIT vs. Rameshwar 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 130; (4) Asstt. CIT vs. Shailesh S. Shah (1997) 59 TTJ (Mumbai) 574 : (1997) 63 ITD 153 (Mumbai); (5) Atul Kumar Jain vs. Dy. CIT (1999) 64 TTJ (Del) 786; and (6) CBI vs. V.C. Shukla Ors. (1998) 2 JT. 172 (SC). The learned counsel also submitted a brief synopsis on this issue which is part of Vol. III of paper book of the assessee and which is available at pp 1 to 11 in that paper book. 22. The learned senior Departmental Representative D.K. Snvastava, on the other hand, made detailed submissions to support the view and findings recorded by the AO and the learned CIT(A). According to him, the paper undoubtedly, belonged to the assessee. On issue relating to availability of the presumption under s. 132(4A), the contention of the learned senior Departmental Representative 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired himself to call Balwant Singh for any further enquiry. 27. In support of his argument, the learned senior Departmental Representative placed reliance on the following decisions: (a) AIR 1997 SC 2560; (b) CIT vs. S.M.S. Investment Corpn. (P) Ltd. (1994) 207 ITR 364 (Raj); (c) CIT vs. S.M.S. Investment Corpn. (1988) 73 CTR (Raj) 184 : (1988) 173 ITR 393 (Raj); (d) Pradip Chandu Lal Patel vs. P.G. Karode Anr. (1992) 105 CTR (Guj) 163 : (1992) 197 ITR 385 (Guj); and (e) 144 ITR 132 (sic). 28. We have carefully considered the entire material placed before us and the rival submissions. The undisputed fact is that the paper was found and recovered from possession of the assessee. The issue as to whether the document belonged to the assessee and contained deposit entries 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 R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a natural and probable conduct in the circumstances in which the assessee was placed. The failing and fallings of human memory are commonly known. Hence, if the assessee failed to give reply to the question relating to this document, at the time of search, then such conduct of the assessee could not be taken to be deliberate or evasive for concealing the truth because nobody can be expected to connect Such a past even of four years back if asked abruptly as human memory has its shortcoming. The assessee, later on disclosed that the paper belongs to Balwant Singh, the proprietor of Baldeo Saree Centre. According to the assessee, Balwant Singh, who was on friendly terms with him, might have left this paper at his place. In view of this version, the veracity of the statement could have been ascertained 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied these facts just by making a call on this phone. He did not do so. The address of Baldeo Saree Centre was clearly written on the paper, which is as under: 51/60 K.K.Garg Market, Ramganj, Naughra, Kanpur - 208 001. The AO could have sent an inspector or any of the employee of the Department or could have gone himself to verify the address and the name of the firm on this address, he did not prefer to do even that. The firm, namely, Baldeo Saree Centre might be an assessee, hence inquiry in respect of this firm could have been made by the AO from the concerned ITO also. (6) The conclusion of the AO that the figures noted on the loose papers disclosed the deposits by the assessee is not conclusively established, because the term "Jama" only has been mentioned. The so-called entries are not 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative also placed reliance on the decision of Rajasthan High Court in the case of CIT vs. S.M Investment Corpn., and the decision of Rajasthan High Court in the case of CIT vs., Investment Corpn. (P) Ltd. 32. We have considered the case laws cited by the learned senior Departmental Representative so far as the case of Pradeep Chandulal Patel is concerned, in that case, the Hon ble Gujarat High Court has held that the presumption under s. 132(4A) may be raised that the books of account, etc. belonged to the person in whose possession, they were found. The Hon ble Court has further observed that further presumption about the contents of such books of account being true and that the signature and other parts of such books of account or other document, which purported to be in the handwriting of any particular 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of view that the presumption has got a limited scope and is a rebuttable presumption. 36. So far as the point relating to onus and shifting of onus is concerned, it may be pointed out that after the rebuttal of the presumption, heavy onus lies on the Revenue to prove the nature and contents of the documents. In the case of Monga Metals (P) Ltd vs. Asstt. CIT, it was held that it was Revenue s onus first to prove that the arithmetical figure appearing on loose papers were receipts, were in the nature of sale of ingots and amounted to undisclosed income in the assessee s hands. In the case of Agrawal Motors, vs. Asstt. CIT (Jabalpur Bench of Tribunal), it was held that the registers found at the premises of the assessee during the course of search containing names of commission agents shall be presumed to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations: "The jottings in the seized diary must be considered in the light of the provisions of s. 158B(b) and 158BB. There is no scope for making addition on estimate on conjecture and surmises in block assessment. There must be material/evidence in possession of the AO to support the additions. The jottings in the seized diary must be interpreted in logical and realistic manner, after due consideration of the books of account, agreements/deeds and any other evidence and after examining the concerned parties and confronting the assessee to their statements and report of the Income-tax Inspector, etc. It would be wrong to make interpretation of the jottings in the seized diary in complete isolation of other material evidence etc. such interpretation in isolation may not stand the test of appeal. In the interest 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 Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of unexplained cash found with the assessee. 46. It may be pointed out that during the course of search, cash to the tune of Rs.2,63,330 was found. So far as the cash of Rs.30,000 is concerned, in his statement recorded under s. 132(4) at the time of search, the assessee explained that this sum was out of withdrawal from bank account. Later on, the version of the assessee was that this cash was owned by HUF of the assessee viz., Satnam Singh HUF. On behalf of the assessee, it was submitted that this amount has been shown in the cash flow statement of Satnam Singh HUF in asst. yr. 1996-97. it was also submitted that the said HUF has also filed returns of income for asst. yrs. 1996-97,1997-98 and 1998-99. The AO did not accept the version of the assessee and held that the cash of Rs.30,000 was unexplained income of the 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) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.13,770. 53. The assessee constructed property at 147 Safipur, Kanpur. The assessee filed valuation report. The approved valuer claimed 36 per cent deduction for various items on total cost of construction. After considering the relevant material as also the rates of CPWD and PWD the AO rejected the claim of the assessee. However, in appeal, the learned CIT(A) held that the deduction @ 20 per cent instead of 36 per cent claimed by the assessee will be reasonable. On this basis, the learned CIT(A) gave relief of Rs.36,553. Before us, the learned counsel for the assessee submitted that the entire deduction should have been allowed by the learned CIT(A). 54. We have carefully considered the entire matter. Since the assessee did not furnish full details, in support of his claim, the learned CIT(A) was justified in restricting the deduction at 20 per cent we, therefore, do not find any scope to interfere. 55. So far as the amount of Rs.13,770 is concerned, the assessee claimed deduction @ 5 per cent towards saving any cost on material purchased from sources. Since no evidence was furnished by the assessee in this regard, the total excess deduction claimed by the assessee as per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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