TMI Blog2004 (1) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... ut considering the relevant material and facts of the case. ( iii )The ld. Assessing Officer erred in making an addition of Rs. 50,000 on account of repairs carried out in the house. The loans stated to be taken for repairs were separately added to the income and this resulted in addition of the same amount twice. ( iv )The ld. Assessing Officer erred in making an ad hoc addition of Rs. 25,000 on account of investment in shares without bringing any specific evidence as to the investment on record. ( v )The ld. Assessing Officer erred in not accepting the explanation regarding cash deposit in the bank account and thereby erred in making an addition of Rs. 1,89,462." 3. An additional ground of appeal has been raised vide letter dated 28-5-2003 which is as under: "On the facts and circumstances of the case and in law, the learned Assessing Officer erred in making addition on account of loans and interest thereon of Rs. 87,300 in the block period in spite of the fact that no incriminating material was found relating to these items during the search and these transactions of loans and interest thereon were duly disclosed in the regular returns filed before the date of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in considering the question so raised in all its aspects. He must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. While permitting the assessee to raise an additional ground, the Appellate ACIT should exercise his discretion in accordance with law and reason." It may be mentioned that the powers of the ITAT regarding admission of additional ground of appeal or even admission of a new issue raised for the first time have been clearly defined in the Supreme Court decision in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 . Further, relevant cases on this issue are the Bombay High Court decision in the case of Baby Samuel v. Asstt. CIT [2003] 262 ITR 385 and the Bombay High Court Full Bench decision in the case of Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351 . Since the additional ground of appeal raised by the assessee raises purely a legal issue which can be decided on the basis of material already available on record, the additional ground is admitted and will be dealt with on merits in due course. 6. The ground Nos. 1 and 2 can be dealt with simultaneo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... travel etc. are not recorded in the exercise book. The Assessing Officer estimated the household expenses at Rs. 10,000 per month for the previous year relevant to the assessment year 1995-96 and for the five months in the previous year relevant to the assessment year 1996-97. For all the preceding assessment years i.e. 1986-87 to 1994-95, the Assessing Officer resorted to certain estimates on household expenses as per the details given at page 6 of the assessment order. On the above basis, the cumulative addition of Rs. 2,39,100 was made which is spread over different assessment years falling within the block period. The ld. counsel invited our attention to the notings in the exercise book, copy of which is compiled at pages 41 to 48 of Paper Book - II. The ld. counsel pointed out that expenses on clothing and medical treatment have been duly recorded in the exercise book and that it contains full record. The ld. counsel also contended that a block assessment under section 158BC can be framed only on the basis of some incriminating material/document and undisclosed asset found during the course of search. Though no evidence has been found during the course of search, the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the Assessing Officer was not justified in making addition on alleged withdrawals in the entire block period applying the yardstick of the later years when income and withdrawals have gone up. ( iii ) Raj Kumar Jain v. ACIT [1994] 50 ITD 1 (All.) (TM) - It was held that if the Department alleged that household expenses were higher than that shown by the assessee, the onus was on the Department to show that it was so: that in the absence of any material brought on record the assessee s version of household expenses could not be discarded and therefore the addition made had to be deleted. ( iv ) Samrat Beer Bar v. ACIT [2000] 75 ITD 19 (Pune) (TM) - In this case a diary was found during search which contained details of suppressed sales for a particular period. Based on that, the Assessing Officer estimated similar suppression for the remaining period in the block period and made additions. Deleting such additions, the Tribunal held that in the instant case the only material available was the diary which contained entries for a particular period relating to sale of liquor not disclosed to the Department; that there was no indication anywhere in the seized recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of electricity bill, school fees etc. are nowhere reflected and therefore it is clear that the record of household expenses is not complete. It is argued that the Assessing Officer has made fair and reasonable estimate and that even if the exercise book was relevant for the assessment years 1995-96 and 1996-97, the Assessing Officer can resort to make estimates for the entire block period. For this proposition, the ld. CIT DR relied on the ITAT, Pune (TM) decision in the case of Khopade Kisan Rao Manik Rao v. Asstt. CIT [2000] 74 ITD 25. The ld. CIT DR specifically invited our attention to the observations made by the ld. Third Member, which are reproduced below from the Headnote: "Section 158BC( b ) provides the manner of assessment of undisclosed income. It provides that the assessment is to be made in the manner laid down in section 158BB and the provisions of sections 142, 143(2) (3) and 144 shall so far as may be apply. Section 158BB provides that the undisclosed income of the block period shall be computed in accordance with the provisions of Chapter IV on the basis of evidence found as a result of search or requisition of books of account or documents and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from section 143(3) that the Assessing Officer can base his assessment not only on the evidence found during the course of the search but also on the material gathered by him." 9. We have carefully considered the rival submissions vis-a-vis the facts of the case and in the light of the cases cited before us. As mentioned above, the grounds 1 and 2 are inter-connected and first we deal with ground No. 2 which pertains to addition on account of estimation of household expenses, since our finding with regard to this ground will have an impact on the first ground of appeal which agitates the addition of Rs. 90,000 on account of unexplained cash found during the course of search. It must be mentioned that the assessment which is known as block assessment under section 158BC of the IT Act is in respect of the undisclosed income of the assessee. The term undisclosed income has been defined in clause ( b ) of section 158B of the IT Act. It is an establish legal position that determination of undisclosed income should be based upon some assets, documents, material etc. found during the course of search. Section 158BB authorizes the Assessing Officer to compute undisclosed income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise book was available which was found and seized during the course of search. Even though, the entire period of these two assessment years is not covered by the exercise book, the details recorded in the exercise book give a fair idea of the quantum of expenses the assessee was incurring during the relevant period to meet the household expenses of the family. We, therefore, uphold the action of the Assessing Officer in estimating the household expenses for these two assessment years. Coming to the reasonableness of the estimates made by the Assessing Officer, we find that the expenses have been estimated at the rate of Rs. 10,000 per month. From the details in the exercise book, which have been reproduced above, it is seen that the expenses recorded range between Rs. 5,713 to Rs. 8,666 per month. It is also true that some heads of expenditure like payment of rent, school fee, electricity bills etc., are not reflected in the exercise book. Therefore, in our view, the estimate of Rs. 10,000 per month made by the Assessing Officer is fair and reasonable and does not call for any interference. However, for all the earlier assessment years, there is no basis for any estimation, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest thereon were surrendered by the assessee vide letter dated 23-8-1996 subject to the condition that the Assessing Officer would accept that this amount was available for meeting the expenses of furniture and fixture and no separate addition will be made. It is submitted that the expenses of Rs. 50,000 estimated by the Assessing Officer on account of repairs and furnishing in the house should have been covered by the addition made on account of the loan and there is hardly any justification for a separate addition. The ld. DR supported the order of the Assessing Officer. After considering the factual position, we hold that no separate addition of Rs. 50,000 is justified. A copy of the letter dated 23-8-1996 is compiled at page 13 of PB-1 and the relevant portion of this letter is reproduced below: "That so far as loans borrowed by me are concerned, I beg to submit that due to short period of time available at my disposal to comply with further requirements in this behalf. I hereby offer the said loan amounts together with interest thereon for addition to my income for the said block period so as to get peace of mind. Please note that I am not keeping well and mentally at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93-94 18,500 94-95 40,500 95-96 30,800 96-97 10,000 1,89,462 The assessee sought to explain that these deposits are from out of the withdrawals made from the partnership firms and also claimed that a sum of Rs. 30,000 was received by his wife from her parents. In the absence of any evidence whatsoever, the Assessing Officer treated the entire sum of Rs. 1,89,462 as undisclosed income for various assessment years as per the details given above. The ld. counsel reiterated the same arguments before us and further submitted that the aforesaid deposits included deposits of Rs. 31,300 in the bank account of assessee s wife, Smt. Vaijayanti and deposits of Rs. 65,000 in the bank account of assessee s minor son, Sumit. The details of these deposits are available at page 15 of PB-I. It is contended before us that the assessee s wife and minor son are independent individuals and no addition can be made in the case of the assessee. It is also submitted that the assessee s wife and minor son received gifts from time to time on social occasions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awal of Rs. 25,000 on 30-12-1994. Accordingly, the Assessing Officer is directed to reduce the addition of Rs. 30,800 for the assessment year 1995-96 to Rs. 20,800. Appeal No. 07: 15. As already mentioned above, search and seizure action was simultaneously carried out at the joint residence of Shri Satish R. Gupta and his son Mr. Amit S. Gupta. The facts have already been discussed in detail while dealing with the appeal in the case of Shri Satish R. Gupta. In the present appeal of Shri Amit S. Gupta, the ground Nos. 5 and 6 are admitted to be general in nature and therefore are not required to be dealt with. 16. The ground Nos. 1 to 4 are as under: ( i )The ld. Assessing Officer erred in making an addition of Rs. 24,360 on account of cash deposits in the bank account without accepting the explanation of the assessee. ( ii )The ld. Assessing Officer erred in making an addition of Rs. 41,250 on account of income shown in the regular return filed. ( iii )The ld. Assessing Officer erred in making additions of Rs. 5,100, Rs. 4,081 and Rs. 566 on account of bank interest income for the assessment years 1993-94, 1994-95 and 1996-97. ( iv )The ld. Assessing Officer err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income which was declared on estimate basis in the return of income. The advocate has also signed the order sheet to that effect. The Assessing Officer treated the income of Rs. 41,250 as undisclosed income for the block period, assessable in the assessment year 1995-96, with the following observations at page 4 of his order: "In view of the factual position, as per order sheet entry dated 13-8-1996, the assessee agreed for the addition of Rs. 41,250 as undisclosed income which is clearly reflected in the assessee s balance sheet as on 31-3-1995. In view of the fact that no entries regarding the brokerage income were found at the time of search, no adjustment can be made for the return of income for assessment year 1995-96, as envisaged by the provisions of section 158BB(1)( d )." 20. We have heard both the parties on the relevant issue and in our view the sum of Rs. 41,250 has been rightly treated by the Assessing Officer as assessee s undisclosed income. The addition is on agreed basis and further as per the relevant provisions of law. The same is, therefore, confirmed. 21. The ground Nos. 3 and 4 are inter-connected. The assessee had income from bank interest as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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