TMI Blog2002 (1) TMI 1264X X X X Extracts X X X X X X X X Extracts X X X X ..... the residence of the assessee 9/8, East Patel Nagar, the cash amounting to Rs. 77,200 was found. Another cash amounting to Rs. 5,45,000 was found from the premises 44/72, West Punjabi Bagh, New Delhi. The Assessing Officer added an amount of Rs. 5,69,000 as unexplained cash while completing the block assessment. In this connection the learned Authorised Representative argued that Rs. 69,000 were withdrawn from M/s. Remy Industries where the appellant is a partner and in support of this copy of cash book ledger account in the books of Remy Industries were placed on record. It was submitted before the Assessing Officer that the amount in question was remitted through courier on August 7, 1995. The Assessing Officer has not accepted the claim on the ground that theory of withdrawal of Rs. 69,000 from the books of Remy Industries is an afterthought and it has not been proved conclusively that any amount was sent by M/s. Remy Industries. The Assessing Officer also held the cash as unexplained on the ground that at the time of search Shri R. P. Monga himself surrendered Rs. 5,50,000 as unexplained cash in his statement recorded under section 132(4) of the Income-tax Act, 1961. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrender made by the Assessing Officer, this cash cannot be added in the hands of the appellant because neither it was found nor seized from the possession of the appellant. If at all this addition requires to be made, it can only be in the hands of Shri Anil Monga, the son of the appellant, and the other family concerns operating from that premises. We feel that the addition of this amount in the hands of the appellant is unjustified. We, therefore, sustain the addition of Rs. 40,000 alone and allow relief of Rs. 5,29,000. Next ground of appeal is in regard to addition of Rs. 39,62,000 under the head Unexplained investment in properties. During the course of search a loose paper at page No. 15 of annexure A 3 was found and seized. This document is placed at pages 189 and 190 of the paper book. This is a hand written letter by Shri Anil Monga to his father, the appellant, on the letter pad of AKM Engineering Industries. This reflects some difference between the father and the son in regard to the investment in the immovable property. Part of the contents of this letter reads, I do agree that you had given me the total amount to the tune of Rs. 30 lakhs from 1986, to December, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the father and the son and gives the details of each and every property where unexplained investment was made. This was found during the course of search and authenticity of this document is not being doubted or challenged. Now coming to the assessment under Chapter XIV-B, computation of undisclosed income of the block period has to be worked out under section 158BB which reads . . . on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the assessing . . . . . While making the addition of Rs. 39,62,000 the Assessing Officer had no other document or material in his possession except the letter written by Mr. Anil Monga. Under these circumstances and keeping in view the legal position we are of the opinion that the action of the Assessing Officer in making an addition of Rs. 39,62,000 instead of Rs. 30 lakhs is unjustified and unreasonable. Keeping in view the totality of the facts and circumstances of this case we restrict the addition to Rs. 30 lakhs only. The next ground of appeal taken by the appellant is against the addition of Rs. 1 lakh on account of unexpla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the return for block assessment period. We, therefore, uphold this addition. The next ground of appeal is regarding addition of Rs. 9,90,000 representing gifts received from various parties. In this connection, the learned Authorised Representative submitted that the amount of gift received by the assessee and various family members was disclosed by filing the regular assessment returns and also part of the balance-sheet filed along with the return of income much before the operations under section 132 started. It was, therefore, submitted that these items are not covered in the Chapter XIV-B while completing the block assessment and hence this addition is highly unjustified. It was also argued that even for the purpose of assessment under Chapter XIV-B this item was discussed in the case of various family members especially R. P. Monga Hindu undivided family and therefore this addition cannot be made at two different places because one source of income cannot be added in more than one hands. We have heard the rival parties and have also examined the documents relied upon. In this connection the Income-tax Appellate Tribunal order in the case of R. P. Monga and Sons (HUF) I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there the same requires to be explained by them and assessed in their hands and definitely not in the hands of the appellant. Under these circumstances we are of the considered opinion that this addition cannot be sustained. The result is that the appeal filed by the assessee is partly allowed. Smt. Diva Singh (Judicial Member). I have gone through the draft order of my learned Brother and after going through the same, I am unable to persuade myself to concur with a part of it for the reasons given hereafter. Before alluding to the difference of opinion, I would like to state that I concur with the reasons and finding of my learned Brother in para. 5 of the draft order whereby the addition made by the Assessing Officer to the extent of Rs. 40,000 has been sustained. I also concur with the reasons and finding given by my learned Brother from paragraphs 7 to 11 of the draft order pertaining to the addition made to the tune of Rs. 39,62,000 by the Assessing Officer and sustained to the extent of Rs. 30,00,000 in the proposed order. Paragraphs 12 to 14 of the draft order dealing with the addition of Rs. 1 lakh on account of unexplained investment on household items are also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . R. P. Monga, S/o. Late Shri Hari Chand Monga, R/o. Madan Gate, Aligarh, U. P. I am a partner in R. P. Locks Co. and M/s. Remy Industries. In M/s. R. P. Locks Co., I am representative of Anil Locks Ltd. Question No. 2 : What is your source of income ? Answer : I am a partner in the following firms : 1. Remy Industries 60 per cent. drawing salary of I do not know. 2. Anil Lock Ltd. I am a director and as regards to salary I do not remember. 3. I am not drawing any salary from R. P. Locks Co. I am representing Anil Locks Ltd. in this concern. 4. Property income from 44/72, Punjabi Bagh from M/s. Uttranchal Leasing Ltd., M/s. R. P. Lock Co., and M/s. Monga Sales Exports (P.) Ltd. I do not remember the monthly rent from this property. I am the 100 per cent. owner of this property. The plot of this property was purchased in 1974 for Rs. 27,000 measuring 1,100 sq. yards and it was constructed from 1980 to 1982 and the total cost of investment is recorded in the books of account. (emphasis supplied by us) 5. I am a proprietor of M/s. R. P. M. Industries, Noida. This concern is manufacturing lock parts like lever, locking bolts, keys, etc. Apart from the above I am having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the fact that the assessment should, under all circumstances, be made in the correct hands, the principle has been enunciated in the case of ITO v. Ch. Atchaiah [1996] 218 ITR 239 by their Lordships of the Supreme Court, track should not be lost of the fact that the assessee has himself come out to make a surrender on account of his family members and family concerns. Accordingly, the Assessing Officer is directed to come to a finding after ascertaining the fate of the assessments made in the hands of the family members and other related concerns. A perusal of the arguments put forth by the assessee before the Assessing Officer as well as before us shows that the assessee has tried to put forth a case that the amount pertains to M/s. Uttranchal Leasing Ltd. The books of account of M/s. Uttranchal Leasing Ltd. were neither found nor seized at the time of search. Nevertheless, the issue requires examination. Accordingly, the ground raised by the assessee pertaining to this addition is restored back to the Assessing Officer. Before parting, I would also like to address an argument put forth by the Authorised Representative of the assessee which has been stated at pages 2 and 3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch and seizure party to stop hunting for evidence and accept the surrendered amount. To ask the Revenue to substantiate the surrendered amount with corroborative evidence after a lapse of time would be a most unfair and inequitable approach. As then the case of the assessee would take the aura of promissory estoppel and be dictated by the principles of equity and justice. Nevertheless, the matter requires a composite approach to this composite surrender and thus deserves to be restored back to the file of the Assessing Officer to ascertain the fate of the appeals of the related family members and concerns and decide the issue in accordance with law. This would violate the principles of promissory estoppel and have very grave and serious consequences and ramifications. Similarly due to the aforementioned reasons, I am of the opinion that the issue pertaining to the addition of Rs. 8,25,000 on account of unexplained investment in jewellery also deserves to be restored back to the file of the Assessing Officer to decide after ascertaining the position of the assessments in the hands of the ladies on this count. The arguments before us that the jewellery does not belong to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the President has appointed me to express my opinion as Third Member on the same. 1. Whether, on the facts and circumstances of this case, would it be reasonable and justified to assess the cash seized from 49/72, Punjabi Bagh, where Mr. Anil Monga, son of the assessee, resides and M/s. Monga Sales Exports (P.) Ltd., M/s. Uttranchal Leasing Ltd. and M/s. R. P. Lock Co. are functioning in the hands of the assessee or the matter be restored to the file of the Assessing Officer ? 2. Whether, on the facts and circumstances of this case, the value of gold and silver ornaments of Rs. 8,75,000 be added in the hands of the assessee merely on the basis of statement recorded under section 132(4) of the Act where the assessee surrendered Rs. 20,00,000 out of which the ladies of the family have disclosed Rs. 11,75,000 as unexplained investment only or the matter be restored to the file of the Assessing Officer ? The relevant facts are that a search under section 132 of the Income-tax Act, 1961 (hereinafter referred to as the Act ), was carried out at the residence and business premises of the assessee and other related concerns which was concluded on August 9, 1995, and some incrimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence was to be added and the matter was set aside. This observation gave rise to the difference of opinion. The second difference of opinion between the learned Members occurred in respect of addition towards cost of jewellery. The assessee in his statement admitted that there was unexplained investment worth Rs. 20 lakhs made in the purchase of jewellery. He agreed to surrender this amount of Rs. 20 lakhs as undisclosed income. Before the Assessing Officer the plea of the assessee was that jewellery found at the time of the search belonged to Smt. Shakuntla Monga and Smt. Rati Monga. Addition of Rs. 11.75 lakhs had been made in the hands of these two ladies as undisclosed income and there was no other jewellery found at the time of search. The Assessing Officer admitted that already these two ladies had made disclosure of Rs. 11.75 lakhs jewellery as their undisclosed income but there remained difference of Rs. 8.25 lakhs out of disclosure made by the assessee in his statement that there was undisclosed jewellery worth Rs. 20 lakhs and that has not been explained and the Assessing Officer made the addition of Rs. 8.25 lakhs in the hands of the assessee. The assessee came in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, Chandigarh Bench, in the case of Smt. Neena Syal v. Asst. CIT [1999] 70 ITD 62 and that of the Income-tax Appellate Tribunal, Chandigarh Bench, in the case of Baldev Krishan Kapoor v. Asst. CIT [2000] 245 ITR (A. T.) 102 in which it was concluded on the basis of the reasoning of the hon'ble Supreme Court in the case of Nagubai Ammal v. B. Shama Rao, AIR 1956 SC 593 and other cases that admission by the assessee was not conclusive and once confession had been retracted by the assessee that could not form the basis for addition to income. Learned counsel further submitted that house No. 44/72, West Punjabi Bagh, was in occupation of three concerns, i.e., M/s. Uttranchal Leasing Ltd. ; M/s. R. P. Lock Co. and M/s. Monga Sales Exports (P.) Ltd., and the assessee being owner of the said property was deriving rental income. If any amount was found in that premises, the owner of the house could not be made liable to explain the source. Best person to explain were the tenants and in this case those tenants had given out the source of the amount available in that premises. In this connection my attention was drawn to page No. 156 of the paper book which is the explanation given by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed in the hands of the two ladies. The learned Judicial Member had made an issue, without any issue, by setting aside the matter to the file of the Assessing Officer when every thing is clear as to what ever jewellery was found in the search, the same stands assessed in the hands of the ladies from whose possession the same was found and seized and the statement of the assessee stands fully explained and that makes clear that there was no jewellery of Rs. 8.25 lakhs and the statement was mere on the basis of the estimate which proved false as per search. The addition was rightly deleted by the learned Accountant Member. The learned Departmental Representative as against it has placed reliance on the order of the learned Judicial Member and submitted that the addition could be made on the basis of the admission alone and for that reliance has been placed by the learned Departmental Representative on the decision of the Income-tax Appellate Tribunal, Mumbai Bench C , in the case of Surendra M. Khandar v. Asst. CIT [2001] 76 ITD 121 in which it was observed by the Bench that once the assessee agreed to offer peak of its accounts as undisclosed income then assessee cannot be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubai Ammal v. B. Shama Rao, AIR 1956 SC 593 have observed as under (page 599) : An admission is not conclusive as to the truth of the matters stated therein. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances under which it is made. It can be shown to be erroneous or untrue, so long as the person to whom it was made has not acted upon it to his detriment, when it might become conclusive by way of estoppel. This reasoning is fully applicable to the facts of the present case. The assessee no doubt made the composite surrender and later on came with the explanation that amount belonged to other concerns, but the Assessing Officer had not recorded any specific finding and thus the admission stands proved untrue to the extent of the explanation of Rs. 5.45 lakhs recovered from 44/72, West Punjabi Bagh, residence. Addition, if any, is to be made in the hands of the person who is in occupation of that premises and the learned Accountant Member was justified in observing that even if there is addition the same could be made in the hands of the son of the assessee who was looking after the three concerns which were carrying on their bus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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