TMI Blog2002 (3) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to the total consignment value of Rs. 88,45,624 involved in six debit notes as to whether the same had been imported by Canon Steel Pvt. Ltd., and if so, how the same had been accounted for and disposed of. (ii) The claim of the assessee that he had sold goods worth Rs. 78.82 lakhs in small bits in cash and also needed to be properly authenticated. (iii) The assessee should be given opportunity of being heard in respect of seized page 37 of annexure A4. (iv) The assessee s claim that the jewellery said to have been purchased from undisclosed sources had disclosed in the wealth-tax return, needs verification and reconciliation. In the reassessment proceedings, the Assessing Officer passed the order on March 30, 1999, wherein addition of Rs. 60 lakhs had been made under the head Income from other sources . This addition was based on a document which was seized during the course of search conducted at the premises of the assessee in Delhi. Aggrieved by the addition of Rs. 60 lakhs, the assessee filed an appeal before the Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) confirmed the addition made by the Assessing Officer. Search and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer also rejected the explanation of the assessee that the unaccounted cash of Rs. 60 lakhs and other amounts pertaining to October 13, 1992, which was not readable due to punching hole had been channellised through the consignment account. During the course of reassessment proceedings, the assessee filed the following explanation : This paper is nothing except planning and planning is linked with marriage of my daughter, Monika, through matrimonial consultants/ agents. Keeping in view the trend in the society, I found that there was good proposals of status families but subject to marriage expenses one crore or more therefore I was planning on the paper during September/ October 1992. Keeping in view the ideas of various matrimonial consultants/agents I started purchasing more jewellery as well as property for Monika during the year 1993. It will not be out of place to mention that the jewellery referred in the page was already in possession of my wife and myself and in the Hindu undivided family which I told the agents during the discussion. It will also not be out of place to mention that now-a-days to have good marriage proposals of status families, the consultants w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax (Appeals) supported the findings of the Assessing Officer and has stated that Shri S. P. Goyal was in the possession of Rs. 60 lakhs and he had incurred an expenditure of Rs. 31,21,400 from September 26, 1992, to October 25, 1992. The learned Commissioner of Income-tax (Appeals) has further stated that the assessee had not been able to prove that Rs. 60 lakhs were available with him as on September 26, 1992, and the same represented amounts withdrawn by him from disclosed sources of income. The learned Commissioner of Income-tax (Appeals) has also stated that the assessee was also purchasing jewellery in the form of gold and diamond jewellery and silver articles from known sources of income in anticipation of his daughter s marriage. The learned Commissioner of Income-tax (Appeals) referred to the decision of the Calcutta High Court in the case of Debi Burman v. CIT [1994] Tax Law Reports 452, 456, wherein it has been held that the onus clearly lies on the assessee to prove that the entries ostensibly showing receipt of on-money in cash are not real receipts. She has further stated that the contention of the assessee that the Department must prove the existence of cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch books of account were produced before the Assessing Officer. He also explained that the goods which were sent to the assessee by M/s. Canon Steels Pvt. Ltd., were kept and dealt through M/s. Shivganga Warehousing Corporation and the said file pertaining to such goods was a part of seized records. Learned counsel contended that the sales bills/memos and names of the buyers were produced before the Assessing Officer during the course of assessment proceedings. Thus, the goods received by the assessee were evident from the records of M/s. Shivganga Warehousing Corporation and the same were sold as per the books of the assessee. Thus, according to learned counsel, the assessee was expecting cash of Rs. 60 lakhs sometime back in the month of September, 1992, but later on instead of cash, the assessee was sent goods for sales, mostly imported by M/s. Canon Steels Pvt. Ltd. Learned counsel also pointed out that no such jewellery or amount mentioned on the seized paper had been found during the course of search operation in the residence of the assessee. All the cash, jewellery, stock, etc., found at the time of action under section 132 of the Act was fully explained and the same also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not file any information in response to this letter. He contended that the explanation filed by the assessee regarding the goods imported by M/s. Canon Steels Pvt. Ltd., was false. He further pointed out that the explanation filed by the assessee regarding the marriage of his daughter at the time of reassessment proceedings was contradictory to his explanation filed during the course of original assessment proceedings. According to him, there was no mention of the marriage of his daughter in the explanation filed regarding the seized paper during the course of the original assessment but the explanation filed during the course of reassessment proceedings pertain to the marriage of his daughter. Therefore, he contended that the explanation filed during the course of reassessment proceedings was contradictory to the explanation filed during the course of original assessment. The learned Departmental Representative reiterated the findings of the Assessing Officer that the planning for expenses cannot be retrospective. Hence, according to him, the explanation filed by the assessee is without any substance and does not prove that the assessee was actually planning for the marriage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the assessee was called for only during the course of regular assessment proceedings. The assessee filed explanation that the paper was nothing except planning and that planning was linked with the marriage of his daughter, Monika. He stated that during September/October 1992, he was planning on this paper keeping in view the ideas of various matrimonial consultants/agents. He also explained that he started purchasing more jewellery as well as property for Monika during the year 1993. He explained that the jewellery referred in the page was already in possession of his wife, himself and the Hindu undivided family. Thus the assessee filed the explanation regarding the seized paper. The Department rejected the explanation given by the assessee and made the addition on the presumption that the assessee was having undisclosed cash of Rs. 60 lakhs on September 26, 1992. The basis of addition is a seized paper on which cash of Rs. 60 lakhs and other jewellery items have been mentioned. There appears to be some substance in the explanation of the assessee. The assessee was planning to arrange the funds for the marriage of his daughter. He wanted to withdraw Rs. 60 lakhs from fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llery during the course of search proceedings which had been mentioned in the seized paper. The jewellery found during the course of search was fully explained and the same also tallied with the records of the Department. Therefore, notings on the seized paper do not indicate the actual transactions. The paper in question does not indicate that any transaction had ever taken place or the cash was available with the assessee because it does not contain any information as to what was the nature of the transactions. The Department did not bring any evidence on record to corroborate to the allegation that the assessee had entered into any transaction or the assessee was actually in possession of Rs. 60 lakhs. The Department also could not lay its hand on any evidence regarding the investment of Rs. 60 lakhs in any assets or in sales of any property or goods for Rs. 60 lakhs out of the books. The Department also did not bring on record any corroborative evidence to show that the assessee was actually possessing Rs. 60 lakhs cash on September 26, 1992. The Department could neither find this cash during the course of search proceedings nor any evidence supporting the contention that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot take the place of proof. There was no material on record on the basis of which the Assessing Officer and the learned Commissioner of Income-tax (Appeals) can come to the conclusion that the entries made in the paper was not a planning for the marriage of the daughter of the assessee. The Allahabad High Court in the case of Pushkar Narain Sarraf [1990] 183 ITR 388 relied upon by learned counsel for the assessee has laid down that section 132(4A) does not override the provisions of section 68. The presumption arising under sub-section (4A) of section 132 of the Income-tax Act, 1961, applies only in relation to the provisional adjudication which is contemplated under sub-section (5) of section 132. Section 132(5) provides for estimation of undisclosed income or the calculation of the amount of tax on the income so estimated and the determination of the amount of interest payable or the amount of penalty imposable in a summary manner. For this limited purpose, the Legislature has provided under section 132(4A) that the books of account, other documents, money, bullion, jewellery or other valuable articles seized from the possession of the assessee shall be presumed to belong to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not bring on record any independent evidence to prove that the assessee was having cash of Rs. 60 lakhs available on September 26, 1992. Entries on the seized paper were relevant only for corroborative evidence. The Department should have brought on record some independent evidence as to the trustworthiness of the entries necessary to fasten liability on the assessee. Keeping in view the facts and circumstances of this case and the various cases mentioned above, we are of the considered opinion that the addition made of Rs. 60 lakhs by the Assessing Officer and confirmed by the Commissioner of Income-tax (Appeals) is not justified. The addition made is, therefore, deleted and the order of the learned Commissioner of Income-tax (Appeals) is reversed. In the result, the appeal is allowed. M. A. Bakshi (Vice-President).-On going through the order proposed by my learned Brother, I am unable to persuade myself to agree to the proposed view. It is a search and seizure case. In the original assessment, the Assessing Officer had made addition of Rs. 78,82,775 on account of consignment sales. An addition of Rs. 60 lakhs was also found to be warranted on the basis of the entries m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely on the basis that in assessment year 1994-95, the consignment sales have been accepted by the Assessing Officer. The Assessing Officer has conveniently ignored the fact that on the date of search, no entry was found in the books of M/s. Canon Steels Pvt. Ltd. relating to the consignment of goods and transportation through M/s. Shivganga Warehousing Corporation. Though the Assessing Officer has not made any addition in respect of the consignment sales, yet, the addition of Rs. 60 lakhs which is the subject matter of dispute in this appeal is connected with the claim of the assessee relating to the consignment sales. It is, therefore, necessary to consider this aspect of the matter. Moreover, my learned Brother has referred to the findings of the Assessing Officer and gave his approval to the said findings. I, not being satisfied, record my dissent and hold that the Assessing Officer has not proceeded to make the fresh assessment order in the spirit of the directions of the Commissioner of Income-tax (Appeals). I am, therefore, unable to subscribe to the view of my learned brother in regard to the manner of assessment made by the Assessing Officer. Now, coming to the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nent to note that the foundation for the addition of Rs. 60 lakhs is the entries made in a diary and not the loose papers. The issue as to whether diary can be construed as books of account is now well-settled by the decision of the case of V. C. Shukla [1998] 3 SCC 410. Since their Lordships of the hon'ble Supreme Court have held that the entries made in a diary shall be construed as entries made in the books of account, I am of the firm view that the provisions of section 68 are clearly attracted in respect of the entries made in the diary. Applying the provisions of section 68, the burden is upon the assessee to explain the entries in the diary to the satisfaction of the Assessing Officer. The Assessing Officer has not been satisfied with the explanation given by the assessee. The Commissioner of Income-tax (Appeals) has also not been convinced with the explanation of the assessee relating to the entries in the diary. In these circumstances, the addition of Rs. 60 lakhs made by the Assessing Officer is justified in the light of the provisions of section 68 of the Income-tax Act. Reference may also be made to the decision of the hon'ble Supreme Court in the case of Chuharmal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. Bakshi (Judicial Member).-In view of the difference of opinion between the two Members, the following point of difference is referred to the hon'ble President, Income-tax Appellate Tribunal under section 255 of the Income-tax Act for nominating the Third Member : Whether, on the facts and in the circumstances of the case, the Assessing Officer was justified in making the addition of Rs. 60 lakhs on the basis of the entries made in the diary found during the course of search ? Order of Third Member V. Dongzathang (President).-The following point of difference was referred to me under section 255(4) of the Income-tax Act, 1961 : Whether, on the facts and in the circumstances of the case, the Assessing Officer was justified in making the addition of Rs. 60 lakhs on the basis of the entries made in the diary found during the course of search ? The assessee is an individual. His previous year is the year ending on March 31, 1993. The return of income was filed declaring total income of Rs. 34,270. The Assessing Officer, however, completed the assessment on a total income of Rs. 79,17,040. The Assessing Officer in this case made an addition of Rs. 78,82,775 on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He was making a plan to buy jewellery, silver utensils, etc., against payment of consignment sales account M/s. Canon Steels Pvt. Ltd. The Assessing Officer, however, did not accept the claim. According to him, the paper in question is a page of diary of November 15, 1992. That shows that it was written on November 15, 1992. The entries pertain to dates and period prior to the date of writing on November 15, 1992. Therefore, the same cannot be quoted as planning and planning cannot be made with retrospective effect but for the future. According to him the date of receipt of the amount and the expenses were of definite dates and, therefore, the same cannot be said to be of planning. He, therefore, held that the sum of Rs. 60 lakhs and other amount pertaining to entries of October 13, 1992, which was not legible due to punching hole have been intended to be channellised through the consignment account which stands rejected. He, therefore, rejected the explanation. However, keeping in view the fact that the addition of Rs. 78,82,775 has been already made in case of the assessee no separate addition was made on this point. Aggrieved by the said order, the assessee took up the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Having admitted that the said paper was in his own handwriting and such document being found from his own premises, the onus was on him to prove that the entries showing receipt of own money in cash are not real receipts. The learned Commissioner of Income-tax (Appeals) also fully concurred with the view taken by the Assessing Officer that the entries made on September 26, 1992, that if one is planning to spend an amount in the future, one does not write expenses from September 26, 1992, to October 25, 1992. One could not give the details of jewellery in terms of specific weight and in odd numbers. The learned Commissioner of Income-tax (Appeals), therefore, held that the only conclusion which can be drawn is that as on September 26, 1992, the assessee was in possession of Rs. 60 lakhs and he had incurred an expenditure of Rs. 31,21,400 from September 26, 1992, to October 25, 1992, as recorded in the paper. It is also held by the learned Commissioner of Income-tax (Appeals) that the Department was not required to prove the existence of cash particularly when the entries in the diary were admittedly in his own handwriting which is sufficient evidence to prove that the entries and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 132(4A) does not override the provisions of section 68 and the presumption arising under sub-section (4A) of section 132 of the Act applies only for the purpose of provisional adjudication which is contemplated under sub-section 5 of section 132 of the Act. Reliance was placed by him on the decision of the Delhi Tribunal in the case of S. K. Gupta [1999] 63 TTJ 532. Reliance also was placed on the decision of the hon ble Supreme Court in the case of V. C. Shukla [1998] 3 SCC 410 for the proposition that entries in the books of account shall not alone be sufficient evidence to charge any person with liability. Entries found if relevant are only corroborative evidence. Reference was also made to the decision of the Ahmedabad Bench of the Tribunal in the case of Prarthana Construction (P.) Ltd. [2001] 70 TTJ 122 wherein it was held that it is a settled proposition as held by various judicial authorities that rigours of the rules of evidence contained in the Evidence Act were not applicable to income-tax proceedings. Having regard to the above ratio, he held that the Revenue would not be justified in resting its case on the loose papers and documents found from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thana Construction (P.) Ltd. v. DCIT [2001] 70 TTJ 122 (Ahd.) would not be applicable to the facts of the present case. The foundation for the addition of Rs. 60 lakhs in this case is the entries made in a diary and not the loose papers. The issue as to whether the diary can be construed as books of account is now well settled by the decision of the case of V. C. Shukla [1998] 3 SCC 410. Since their Lordships of the hon ble Supreme Court held that the entries made in a diary shall be considered as entries made in the books of account, he was of the view that the provisions of section 68 are clearly attracted in respect of the entries made in the diary. He, therefore, held that the addition of Rs. 60 lakhs made by the Assessing Officer is justified in the light of the provisions of section 68 of the Act. The Judicial Member, further cited the decision of the hon ble Supreme Court in the case of Chuharmal v. CIT [1988] 172 ITR 250 for the proposition that when a person is found in possession of anything the onus of proving that he was not its owner was on that person. Having regard to the above facts, he held that no corroborative evidence would be necessary in view of the specific p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely clear as to what are books and what are not books at paragraph 18 of the judgment as follows (page 425) : 18. Book ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as book for they can be easily detached and replaced. In dealing with the word book appearing in section 34 in Mukundram v. Dayaram, AIR 1914 Nag 44 ; 10 Nag LR 44, a decision on which both sides have placed reliance, the court observed : In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to be movable in the sense of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book. . . . I think the term book in section 34 aforesaid may properly be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of planning is more probable. The Assessing Officer did not give any concrete proof to reject the explanation offered by the assessee. The hon ble Vice-President (Judicial Member) expressed his doubt about the acceptance of the findings given by the Assessing Officer in regard to the consignment sales. However, that issue has been concluded and it is no more a point for discussion or debate at the stage of second appeal. Mere doubt about that finding will not change the facts that the sales were genuine. The Tribunal can only proceed on the basis and give a specific finding in regard to the entry of September 26, 1992, at page 37 of annexure A4. The learned Accountant Member fully analysed and found that there was no supporting evidence to hold that the entry represents hard cash. He could not find any evidence to show that the assessee invested in any movable or immovable property. On the basis of these findings, he held that the addition was on mere suspicion without any corroborative evidence. This finding is in order. Lastly, the hon ble Vice-President (Judicial Member) also cited the decision of the hon ble Supreme Court in the case of Chuharmal v. CIT [1988] 172 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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