TMI Blog2000 (9) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... re being discussed hereinafter. The first addition is regarding Rs. 7.90 lakhs which according to the Assessing Officer was received by the assessee from Shaw Wallace and Co. Ltd. This issue has been discussed by the Assessing Officer in para. 3 of his order. It has been mentioned therein that during the course of search at the residence of Sri Shyam Lutheria a box containing loose papers marked as annexure A-2 was seized. Sri Lutheria s residence was searched at Bombay. According to Sri Lutheria the papers were given to him by Sri Kishore Chhabria for safe keeping. Sri Chhabria admitted in his statement that he had given these papers to Sri Lutheria. According to the statement of Sri Lutheria, the papers contained some transactions of Shaw Wallace and Co. Ltd. Those were written by Sri Kishore Chhabria or by Sri P. R. Pandya, an ex-employee of Shaw Wallace and Co. Ltd. According to the noting of the loose papers and statement of Sri Lutheria the transactions of cash outside the regular books of account were being maintained by Sri T. S. Venkataswamy, Sri Gopalan and Sri Narayan Dadlani. Subsequently, the present assessee, i.e., Sri A. Sadasivam, as Vice President (Finance), came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in [2000] 74 ITD 298. The copy of the same has been placed on the record. On the other hand, Sri D. K. Ghosh, the learned Departmental Representative, has supported the action of the Assessing Officer and submitted that on the basis of the statement of Sri Pandya the addition was rightly made in the hands of the assessee. The assessee could not controvert the statement made by Sri Pandya during the assessment stage. Having heard both the sides and on a perusal of the material on record we find that a search was conducted in different places of the country in respect of Shaw Wallace and Co. Ltd. Some loose papers were found from the residence of Sri Lutheria at Bombay. Those papers were given to Sri Lutheria by Sri Kishore Chhabria of the company. In those papers some cash transactions outside the books of account were written. The papers were written by Sri Pandya, an ex-employee of the company. In his statement, Sri Lutheria has said that these affairs were being maintained by Sri Gopalan, Sri Venkatesan and thereafter, by Sri Srinivasan and Sri Sadasivam. According to the statement of Sri Pandya, he had given money to the assessee and that is the only ground for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity was allowed for September 22, 1997, for furnishing the documents. However, the assessee did not appear to file any document. Accordingly, the details of shares were mentioned by the Assessing Officer in his order and he held that the assessee could not explain regarding sale proceeds received from sale of shares and also failed to furnish explanation regarding purchase of shares. Hence, the entire sale proceeds were taken as undisclosed income of the assessee. Learned counsel on behalf of the assessee has submitted that the document marked AS-2 was found during the course of search. A copy of the said document has been annexed at pages 97 and 98 of the paper book. According to learned counsel, on a perusal of the said document it would be clear that it is not with regard to sale and purchase of shares but only speculations have been mentioned and most of the shares mentioned therein are unsold shares. The Assessing Officer without understanding the outcome of the document just prepared the list of shares and the total value of the same was treated as undisclosed income of the assessee which is not proper. Our attention was drawn to the statement of shares purchased by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97, written by the assessee no information was submitted by him because at that time he was at Bombay and accordingly he asked for some time for filing the details. The Assessing Officer allowed last opportunity on September 22, 1997. According to the Assessing Officer, the assessee did not file anything on that date, hence, ultimately, the assessment was framed on September 30, 1997. The assessee has filed before us a copy of the order sheet maintained by the Assessing Officer which goes to show that on September 11, 1997, the assessee appeared before the Assessing Officer and filed some documents containing bank statement. In the order sheet it has been mentioned that according to the statement of the assessee the entire transaction was duly reflected in the regular income-tax return and the case was adjourned to September 16, 1997, by the Assessing Officer on the same day. The Assessing Officer recorded the statement on oath, under section 131 of the Income-tax Act, of the assessee. It has been mentioned in the order sheet. According to the assessment order at paras 62 and 63, thereafter on September 15, 1997, the Assessing Officer served a notice on the assessee under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llace and Co. Ltd., for which fee of Rs. 3,600 per month was payable to Mrs. Revati. Copies of the letters dated March 25, 1992, and March 30, 1992, have been filed along with the paper book at pages 93 to 96. The details of the house rent allowance received by the assessee from his employer has been filed by Shaw Wallace and Co. Ltd. copy of which is available at page 92 of the paper book. The Assessing Officer for clarification of the issue recorded the statement of the assessee which is at page 23 of the paper book. It has been stated by the assessee that the assessee was entitled to 75 per cent. of the basic salary as house rent allowance. According to the assessee, the property was given to his wife by the assessee and the same was further leased out by his wife to Shaw Wallace and Co. Ltd. In reply to the question as to why the entire amount of Rs. 1,80,000 of house rent allowance should not be taxed in the hands of the assessee, it was stated by the assessee that the employer had valued the perquisites provided to the assessee and taxed the same as per the provisions of the Income-tax Act. Therefore, there is no reason for treating the amount of the house rent allowance as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion of the rent was retained by her and the balance was being paid by her to the assessee. It is a fact that the assessee used to offer the amount as income from house property. At para. 4.8 the Assessing Officer has mentioned that the assessee had wrongly shown the income as his income from house property and, according to him, the same should be treated as part of salary. Therefore, according to the Assessing Officer, it is undisclosed income. Under section 158B(b), the definition of undisclosed income includes any transaction entry in the books of account or money, bullion, jewellery, etc., which has not been or would not have been disclosed for the purpose of this Act. In the present case, it is an undisputed fact that the assessee used to disclose the amount by him as the house property income in the regular income-tax proceeding as found by the Assessing Officer. Therefore, in our opinion, the definition of undisclosed income cannot be applied in the present case. Further, the computation of undisclosed income of the block period under section 158BB is to be based on the evidence found as a result of search or requisition of the books of account or documents and such other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the fund the assessee had explained by letter dated September 2, 1997, before the Assessing Officer copy of which is at pages 104 and 105 of the paper book. From the said letter we find that initially the amount was financed by four persons, viz., Sri S. K. Bhattacharya, Sri A. K. Jain, Sri Laxminarain and Sri Shankar Murarka. At page 110 of the paper book, the assessee had mentioned the names of those persons, their addresses and the amount of loan given by them. Sri Bhattacharya expired in 1997. Sri Laxminarain, according to the assessee, returned from Malaysia and settled at Chennai. Sri A. K. Jain had already expired on August 22, 1996. Sri Murarka left service of Shaw Wallace and Co. Ltd. and thereafter there was no contact. According to the assessee since those persons were in urgent need of money the assessee had to borrow the amount of Rs. 1.5 lakhs from seven persons who are mostly relatives of the assessee. They had given money to the assessee ranging from Rs. 9,000 to Rs. 37,000. The details of their names are available in the letter dated September 2, 1997. The assessee had also mentioned their relationship in the said letter. The Assessing Officer has rightly said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtmental Representative has submitted that the certificate was issued on February 27, 1998, i.e., after framing of the block assessment. Therefore, the said material cannot be relied upon. Having heard both the sides we find that in one piece of paper found during search it was mentioned that the payment for lift was to be made between Rs. 30,000 and Rs. 35,000. Approximately 50 per cent. of the same was to be made in cash and the remaining portion by cheque. In the detailed break up of the expenses for flat and along with the regular return there was no mention that such payment was made by the assessee on account of lift. The contention of the assessee that due to delay in delivery of the flat the assessee did not pay the amount to promoter as per their understanding. This contention of the assessee appears to be reasonable because otherwise at least the portion of the amount which was to be paid through cheque would have been disclosed by the assessee. There is no other material in support of the finding recorded by the Assessing Officer that the amount was in fact paid by the assessee. In view of the aforesaid circumstances, we direct to delete the addition. 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