TMI Blog2005 (3) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us. 2. Ground No. 1 is general in nature, therefore, does not require any adjudication. 3. The 2nd ground relates to the addition of Rs. 3,76,062 on account of deficit stock found during the course of survey operation. The learned Authorised Representative submitted that this addition cannot be made in the block assessment under Chapter XIV-B since it is a special code of conduct for determining the undisclosed income on the basis of the material found during the course of search. Our attention was drawn towards the provision of s. 158BB and by referring to the amendment being made by the Finance Act, 2002, it was stated that the income has to be computed only on the basis of evidence found as a result of search or requisition of the books of account or other documents and such other material or information as are available with the AO and relatable to the material or evidence found as a result of search. The computation provision as laid down under s. 158BB(1) nowhere states that the material seized during the course of survey operation will be used against the assessee for making the additions even though no material during the course of search was found. In this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the books of account, other documents or any assets are requisitioned under s. 132A in the case of any person. The deficit stock has not been detected either during the course of the search under s. 132 or on the basis of the books of account or other documents seized under s. 132A. Had there been any intention of the legislature to make the addition on the basis of the survey operations conducted under s. 133A, s. 133A would have been included in s. 158BA. The material gathered during the course of survey operations may be used for the purpose of the addition made in the regular assessment, but no addition under this Chapter XIV-B can be made until and unless it is proved that the materials or informations so gathered are relatable to the evidence found as a result of search or requisition of books of account or documents. Our aforesaid view is duly supported by the case law relied on by the learned Authorised Representative as given hereinabove. The learned Departmental Representative could not bring on record any other case law, which had taken a contrary view. The judgments of the co-ordinate Bench are binding on us to maintain judicial discipline. We, therefore, respectfully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sum of Rs. 42,72,081, the AO took the view that a sum of Rs. 17,18,202 remained to be explained and the AO out of this reduced a sum of Rs. 4,50,000 and Rs. 1,78,831 paid to B. Aswini Kumar and N. Srinivasa Rao, respectively, and made the addition of Rs. 10,89,370 as an unexplained and unaccounted expenditure for the financial year 1994-95 by observing that this expenditure was not recorded in the regular books of account as on the top of the loose paper, it was mentioned "On Kharchulu". When the opportunity was given to the assessee, the assessee simply stated that to keep the proceedings in abeyance as the matter is pending before the Settlement Commission regarding the slips found at the premises of the assessee s husband. The AO also made the additions for the payments of Rs. Rs. 4,50,000 and Rs. 1,78,831 written on the same slip shown as paid to Sri B. Aswini Kumar and N. Srinivasa Rao. The AO in the absence of any explanation from the assessee added the same as unexplained investment by the assessee under s. 69A of the IT Act. The learned Authorised Representative contended that the matter pertaining to these additions was born out of a piece of paper which does not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure even if it is treated to be revenue expenditure, the assessee is also entitled for deduction, which will nullify the addition. For this proposition of law, our attention was drawn to the orders of the Settlement Commission in the case of B. Aswini Kumar, husband of the assessee, wherein the Hon ble Settlement Commission, while dealing with the unexplained expenditure, has observed as under: "It is submitted that the unaccounted expenditures incurred are revenue in nature and allowable as business expenditure. It is, therefore, argued that even if the addition has to be made under this Act, the same has to be allowed as a revenue expenditure and, therefore, this is merely an academic exercise. We have carefully considered this issue; the applicant offered GP of Rs. 10,68,260 on the unaccounted sales at M/s Bommana Exclusive, Visakhapatnam, and GP of Rs. 94,605 on the unaccounted sales of M/s Bommana Brothers, Visakhapatnam, as additional income. We agree with the contention that these monies would have been available to meet the unaccounted expenditure. Even otherwise, most of these expenses are revenue in nature and would be allowable deduction towards business expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of the loose paper seized. The loose paper does not have any date nor name nor name of the assessee or assessee s husband. The AO has treated this paper as belonging to the assessee ignoring the fact that presumption under s. 132, sub-s. (4A) is available only against the person from whose possession the document is found. There is no dispute that this paper was not found from the possession of the assessee but from the business premises of B. Aswini Kumar, the husband of the assessee. We have gone through the statement of the husband of the assessee recorded, copy of which is available at pp. 23, 26, 29 of the paper book. The total of the loose paper is Rs. 42,72,081, out of which, the AO has reduced a sum of Rs. 25,53,818 treating that these relate to the transactions for the purchases made by M/s Bommana Exclusive, proprietorship concern of B. Aswini Kumar, but, treated part of the transaction relating to the assessee. In our opinion, the loose paper found and seized has to be read in toto. It cannot be read as partly belonging to the husband of the assessee and partly belonging to the assessee. The AO, in our opinion, has not brought out any cogent evidence or material on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the onus was on the assessee to prove the source of investment made. We have considered the rival submissions carefully and have gone through the material evidence produced before us. We find that the assessee has also accepted that she has made an investment on 5th May, 1994, of Rs. 1 lakh. In view of the provision of s. 69 which lays down a rule of evidence, the onus is on the assessee to prove the source of such investment. The assessee no doubt has filed an affidavit before us without seeking permission to produce the additional evidence. The affidavit has been filed by the assessee during the course of the hearing. The affidavit simply stated that this money has been invested by the assessee out of the gifts received in small amounts from the friends and relatives on marriage and several other auspicious occasions. No iota of evidence was produced before us to support the affidavit. The affidavit cannot be taken by us as it is an additional evidence not before the authorities below. Under these facts and circumstances, we do not find any substance in the submission of the learned Authorised Representative. In our opinion, the onus was on the assessee to prove the sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted as under: "During the s. 132 operation in the residential premises of Sri B. Durga Prasada Rao, the IT Department took inventory of gold. Bommana Durga Prasada Rao on 2nd Feb., 1996, held up at Cuddapah. He allowed his unmarried daughter and eldest daughter-in-law to wear his jewellery. If that is taken into account, there will not be excess. The letter from Bommana Durga Prasada Rao is submitted herewith." The assessee also relied on the statement of Sri Durga Prasada Rao given on 16th May, 1996 and 12th June, 1996. Sri B. Durga Prasada Rao states in his letter as under: "The IT Department made s. 132 operation to the business premises as well as my residential premises on 2nd Feb., 1996. On 2nd Feb., 1996, I was held up at Cuddapah. There also the IT Department conducted similar raid. I am an income-tax and wealth-tax assessee and in my WT return, I declared a gold jewellery of 1,937 gms. The Inspecting Officer during the s. 132 operation, noted the jewellery of various members of the family and I allowed my unmarried daughter, Bommana Naga Vijayalaxmi, and my eldest daughter-in-law, Bommana Swarnarekha, to wear the jewellery which belongs to me. At the time of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the said table, it was submitted that the excess gold of 1,186 gms. as arrived at by the AO belongs to assessee s father-in-law, B. Durga Prasada Rao, which has declared 1,937 gms. jewellery in his WT return. Our attention was drawn towards pp. 53 and 54. Page 54 contains the computation of total wealth and shows 1,937 gms. jewellery valued @ Rs. 946 per 10 gms. while p. 53 consists of the wealth-tax assessment order passed under s. 16(3). Thus, the learned Authorised Representative submitted that if the jewellery of the whole family members as was shown in the WT return and as was physically found is considered, there will be only an excess of 670 gms., and if 500 gms. is allowed in the hands of the assessee, Smt. Swarna Rekha, not being wealth-tax assessee as has been allowed by the AO, the deficit would be only of 170 gms., and thus it was submitted in the alternate that at the most 170 gms. of jewellery can be added in the hands of the assessee. The learned Departmental Representative, on the other hand, relied on the order of the AO. We have considered the rival submissions carefully and find from the assessment order that the AO did not accept the stand of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing credit for 500 gms. as has been allowed by the AO as the assessee was not a wealth-tax assessee in view of the instruction of the CBDT, we are of the firm opinion that the undisclosed jewellery remains only 170 gms., we, therefore, set aside the order of the AO and reduce the addition from Rs. 5,45,560 to Rs. 78,200 by valuing 170 gms. @ Rs. 460 per gm. as has been taken by the AO. Thus, this ground of appeal of the assessee is partly allowed and the addition to the extent of Rs. 78,200 is sustained. 10. The 8th ground relates to the addition of Rs. 25,000 towards deposit certificates at the time of search operation. Brief facts relating to the addition are that at the residence of B. Aswini Kumar, money multiplier deposit certificates, dt. 31st March, 1994, were found with face value of Rs. 25,000. When asked for the source for this investment, the assessee stated that the same were purchased out of the marriage gifts. The AO made the addition stating that since the assessee has not filed any evidence for the gifts received, therefore, the explanation of the assessee cannot be accepted. The learned Authorised Representative before us submitted that it is customary in Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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