TMI Blog2000 (2) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... on 17-7-1987. Some cash and gold ornaments were seized. 4. The Assessing Officer has made an addition of Rs. 31,31,165 being the income of the assessee from undisclosed sources. This addition has been made in addition to the disclosure of Rs. 6 lakhs in his return filed for the assessment year under consideration. The addition has been made on the basis of seized documents, item No. 30 of Annexure 12 found from the office premises of M/s. Sourashtra Industries, the proprietary concern of the assessee. This seized paper, is in the hand-writing of the assessee as admitted by him during the course of search and the same was written by him before Diwali 1986. On one side of the paper, total assets worth Rs. 25.5 lakhs belonging to him, as admitted by him, have been noted down. On the other side of the paper, details of loans advanced to various parties have been mentioned, which amount to Rs. 12,31,165. The Assessing Officer considered the entire amount of loans of Rs. 12,31,165 as unaccounted income of the assessee. He also has considered the amount invested in the assets mentioned on the reverse page of Item No. 30 of Annexure 12, as undisclosed income of the assessee except the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t given on 18-7-1987 in the month of November, 1987, and made the final disclosure of only Rs. 6 lakhs. The learned counsel also explained that at the back side of the seized paper, Item No. 30 of Annexure 12, the figure of Rs. 7,50,000 has been wrongly written, the actual figure is only of Rs. 75,000 and this is the value of the car which the assessee has purchased. He stated that the car registration No. 7962 has also been mentioned on the seized paper and this is the same car which the assessee has sold later on. He invited our attention to the sale documents of the car to support his contention. According to him, the figure of Rs. 4 lakhs mentioned in the paper pertained to the house purchased by the assessee. He also stated that the residential house purchased has been reflected in the books of account and has also been shown in the wealth-tax return. The learned counsel also invited our attention to pages 12 15 of the II paper book filed by him during the course of hearing. On page 12, the account pertaining to Maruti car (7962) has been filed whereas at page 15, the copy of the English translation of the letter written by Shri Bhanvarlal H. Shah to the assessee wherein Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account. In reply to Qn. No. 43, in his statement recorded on 18-7-1987, the assessee admitted and declared an amount of Rs. 20 lakhs under the provisions of section 132(4) of the Act. Rs. 10 lakhs, he declared in the name of his wife and the remaining Rs. 10 lakhs, he declared in his own name. He further clarified that the disclosure of Rs. 20 lakhs was not including the income earned from his business in the name of M/s. Saurashtra Industries and the business of his wife in the name of M/s. Saurashtra Brass Works and also stock of business of M/s. Saurashtra Engineers in which the assessee is a partner. He also stated that whatever differences of tax would come of these firms, he would pay the tax separately. He categorically stated that he was making this declaration without any pressure and at his own desire. This statement of the assessee is very relevant to ultimately determine his unaccounted income. This is the statement recorded during the course of search without any pressure and the same is the most reliable document to be used as evidence against the assessee. 10. In response to Qn. No. 44, in the statement recorded on 18-7-1987, the assessee has admitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed copy of the letter from Bhanvarlal H. Shah in which it has been mentioned : " . . . never accepted/taken any loan from Rajkotwalla Shri Laxmanbhai Patel or Saurashtra Industries by cheque or cash. On the contrary we used to keep them sometimes with Shri Laxmanbhai from our Bhavnagar transaction for safe custody." He further stated that he did not remember the exact amount or time or date due to non-availability of records. It is quite surprising that a person, who has advanced loans of Rs. 3,36,000 and Rs. 2,50,000 even does not remember the exact amount or date on which such loans were advanced. A shrewd business would never forget such financial transactions. What is more surprising is that he even does not know when such amounts were advanced and what was the exact amount advanced by him to the assessee. The total amount involved is about Rs. 6 lakhs and the story made out by the assessee does not appear to be convincing because the creditor would never forget such a huge amount of Rs. 6 lakhs. This is only a made-up story and an after-thought. But the fact remains that the assessee advanced loans to Bhanvarlal H. Shah which had been reflected in the seized pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d parties in cash or self-cheque. Here, it is established without any doubt that the assessee must be advancing some amount to Bhanvarlal H. Shah for purchases without bills and Bhanvarlal H. Shah must be making payments of unaccounted transactions to various parties at Ahmedabad. As has been explained by the assessee in his statement that he was making purchases from Ahmedabad parties, therefore, he must be making payments to such parties through Bhanvarlal H. Shah. Therefore, the assessee has correctly admitted, in his statement, as discussed above, that he was also advancing money to Bhanvarlal H. Shah and the same is confirmed by the fact that the first two entries in the first page of the seized paper are in the names of Shri Bhanvarlal H. Shah. There was specific need for the assessee to keep funds with Shri Bhanvarlal H. Shah for making payments to various parties at Ahmedabad but there was hardly any need for Bhanvarlal H. Shah to keep funds with the assessee. Therefore, the contention of the learned counsel for the assessee, during the course of hearing, that the first two entries on the seized paper pertain to deposits made by Bhanvarlal H. Shah with the assessee is witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould add up all the amounts together. When a particular document has been seized, during the course of search, the same has to be interpreted reasonably keeping in view the contents of such document. This document has been seized during the course of search. All the amounts mentioned on the first page have been added up. Therefore, the natural and logical interpretation is that the nature of all the amounts mentioned therein is identical. The assessee had also admitted in his first statement, as discussed above, that the entries in the paper seized pertain to his unaccounted transactions, i.e., such amounts had been advanced to various parties out of his unaccounted funds. Under the circumstances, the contention of the learned counsel is without any substance and the same is not acceptable. 16. Regarding the entries in the second page of the seized document, the assessee has explained that the first 15 items are small amounts. The 16th item of Rs. 7,50,000 is actually Rs. 75,000 and the same is actually cost of the Maruti car which he had purchased though, later on, the same has also been sold. Regarding this, the learned counsel, during the course of hearing, produced before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. An amount of Rs. 15,000 has been mentioned against "Vahan". The assessee's explanation that the same has been mentioned in the books of M/s. Saurashtra Industries is not acceptable because the assessee is owning five vehicles as per his statement recorded on 18-7-1987. Therefore, it cannot be said that the same vehicle is mentioned in the books of account of M/s. Saurashtra Industries. This amount is, therefore, treated as the unexplained funds of the assessee. 22. Regarding gold of the value of Rs. 2 lakhs, the assessee has not given any explanation. Therefore, this has also been acquired out of unaccounted funds of the assessee. 23. So far as the amount of Rs. 2,50,000 is concerned, the assessee has stated that the plot was purchased on 28-11-1985 for Rs. 80,555. This has been credited in the books of account. The assessee, in his statement recorded on 18-7-1987 in the factory, has also stated (On. No. 21) that "Pan Katie Plot" has been shown in the books. But what is important to note here is that the assessee has shown the value in the seized paper at Rs. 2,50,000 but the actual value shown in the books is only Rs. 80,855. Therefore, it can be safely presumed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------ 10,50,000 --------------------- 22,81,165 -------------------- 28. In addition to the concealed income of Rs. 22,81,165 computed above, the assessee also disclosed the following concealed income, in his statement under section 132(4) recorded on 18-7-1987 (Qn. No. 44) which has not been reflected in the seized paper : Rs. (i) Geeta Apartments 50,000 (ii) National VCR purchase 12,000 (iii) Amount found from house and also from locker 1,10,000 (iv) Gold of 108 Tolas 76,000 (Rs. 2,00,000 has been mentioned in the seized paper which is considered above. The total amount disclosed is Rs. 2,76,000) (v) Marriage : Sudhaben 25,000 (vi) Construction of factory 50,000 (vii) Plot of land purchased 1,00,000 (viii) Sundry 27,000 ------------------- 4,50,000 ------------------ Thus, the total concealment of the assessee amounts to Rs. 27,31,165 (Rs. 2,81,165 plus Rs. 4,50,000). 29. The amount of Rs. 27,31,165 is fully supported with the specific disclosure made by the assessee during the course of search under section 132(4) recorded on 18-7-1977 (Qn. No. 44). The assessee further stated that the disclosure of Rs. 20 lakhs does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lot Rs. 3,50,000 (v) Value of factory building Rs. 6,50,000 (vi) Gold found during search (unaccounted) Rs. 2,76,000 (vii) Advances made to various parties Rs. 11,81,165 (viii) Fixed deposits (daughter's name) Rs. 50,000 (ix) Cash found during search Rs. 1,10,000 (x) Flat in Geeta apartment Rs. 50,000 (xi) Plot of land purchased Rs. 1,00,000 ---------------------------- Rs. 32,67,165 --------------------------- In addition to the above assets, the assessee has spent huge amount on renovation of flats, purchase of new furniture, marriage and on construction of factory. 31. The assessee is having a factory in the name of M/s. Saurashtra Industries. He is also a partner in the firm of M/s. Saurashtra Engineers which is making oil engine parts and solid blocks. The assessee also used to do business of land and buildings. His wife is carrying on business in the name of Saurashtra Brass Works. In addition to the above assets and business concerns, the assessee was owning five different types of vehicles at the time of search. He is also owning 20 acres of land and a house at Chharanadar (Dhoraji). The assessee must also be owning movable and immovable properties w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it is incorrect and the assessee should be given a proper opportunity to show that the books of account do not disclose the correct state of facts." We do not understand how this case is relevant to the facts of the present case. The above case is regarding the books of account and the apex court held that the assessee should be given an opportunity to show that the books of account do not disclose the correct state of facts. In the present case, the assessee made the disclosure under section 132(4) during the course of search which is not ad hoc but the same is quite specific. Each item of disclosure is supported by the corresponding asset and such assets have also been reflected in the seized paper. Therefore, the disclosure is factual and the assessee has not been left with any chance to say that the disclosure was made under erroneous impression or misconception of law. III. Chander Mohan Mehta's case ITAT, Pune Bench : We are, respectfully, in agreement with the findings of the ITAT, Pune Bench in the above case. The Pune Bench has held "If the loose papers seized do not indicate the names of the assessee, such loose papers cannot be used against the assessee unless th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent case. In the present case, the disclosure is fully supported by the evidence collected during the course of search. The assessee has also admitted specifically, in his statement, that the income has been earned out of the unaccounted transactions which he was having with various parties. VI. Srinivasa Ultrasound Scanning Centre v. Asstt. CIT [1998] 61 TTJ (Bang.) 619. wherein the Bangalore Bench of the ITAT has held : "Entry on a loose paper found in bank locker cannot lead to an incontrovertible evidence that R. who owned the locker, had withdrawn the noted amount from the locker. Even if it was so, bank locker had no connection with the income of assessee-firm. Addition cannot be made in the hands of firm." In the present case, the entries in the seized paper have been fully linked with the various assets acquired by the assessee out of his unaccounted funds. The assessee has also made categorical admission in his statement recorded under section 132(4). Therefore, the facts of the case are different from the facts of the case decided by the ITAT, Bangalore Bench mentioned above. 33. In view of the detailed discussion above, we are of the opinion that the computat ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
