TMI Blog2011 (7) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... . A. Shankar and Lava, Advocates, for the respondent. JUDGMENT The judgment of the court was delivered by RAVI MALIMATH]. This appeal is by the Revenue being aggrieved by the order of the Tribunal wherein the appeals filed by the assessee we re partly allowed and the appeals filed by the Revenue were dismissed. 2 The late Sri H. R. Basavaraj was an assessee. Search and seizure were conducted under the provisions of section 132 of the Income-tax Act, 1961, at his residential premises and that of his associates. In the course of the search, receipts, agreements and other documents were found. His statement was recorded as well as of other concerned persons. During the course of the search by his letter dated March 4, 1998, he offered a total undisclosed income of Rs. 1.26 crores. Thereafter, a notice under section 158BC was issued to him. He filed the return of income for the block period on September 28, 1998, disclosing therein an undisclosed income of a sum of Rs. 34,51,960. During the pendency of the assessment proceeding he died on September 6, 1999, Accordingly, the Assessing Officer by his letter dated November 12, 1999, proposed to treat his wife, sons a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal is correct in law in deleting the admitted undisclosed income of Rs. 17.5 lakhs relating to investment in Normandy Distilleries representing cash paid by the assessee when such unaccounted investment is evident from the seized material, confirmed by the assessee in his statement on oath and offered for tax in the block return. (4) Whether there is evidence and material justifying the Income- tax Appellate Tribunal to delete the admitted undisclosed income of the sum of Rs. 17.5 lakhs relating to investment in Normandy Distilleries brought to taxation in the block assessment. (5) Whether the Tribunal is correct in law in confining the disclosed income declared in the block return to the sum of Rs. 5 lakhs as against the admitted undisclosed income of Rs. 6.15 lakhs relating to unaccounted investment purchased from Smt. Fatima Bai and others. (6) Whether the Income-tax Appellate Tribunal is justified in deleting an addition of Rs. 5 lakhs representing unaccounted loan advanced by the assessee to Sri H. N. Raghavendra which fact has been voluntarily admitted by the assessee by means of letter filed before the assessing authority and has also been offered as undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the relevant considerations and supportable on any evidentiary material as against the seized material and other related material considered and dealt with by the assessing authority as well as the appellate authority in sustaining such addition. (13) Whether the income-tax Appellate Tribunal s approach in deleting the said undisclosed income brought to tax is vitiated by element of perversity and subjectiveness. (14) Whether the income-tax Appellate Tribunal is justified in deleting the income of Rs. 13,51,130 brought to tax in the block assessment being the income admitted by the assessee in the returnfiled after the due date of filing of the return of income and also after the search conducted by the Department. (15) Whether the Income-tax Appellate Tribunal is right in holding that the capital gains in the assessee s case arising out of the sale of shares of M/s. Kurechermala Plantation Ltd., Kerala, brought to tax in the block assessment cannot be considered as undisclosed income. (16) Whether the Income-tax Appellate Tribunal s conclusion in its appellate order to the effect that the capital gains brought to tax in the assessee s case under the block assessment c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answered in A favour of the Revenue. 6. Sri A. Shankar, the learned counsel appearing for the respondents, contends that even though the undisclosed income was admitted by late Sri H. R. Basavaraj, the same can be allowed to be explained/redressed by the legal representatives. He contends that there can be no estoppel against the assessee. That he is entitled to contend that he is not liable to be taxed in law, even though admissions have been made. That the liability to tax is determined by law and not by admissions. 7. Heard counsel. Regarding questions Nos. 1 to 6, 12 and 13 8. These questions pertain to the deletion of the admitted undisclosed income of the assessee. Since they raise a common question of law, they are taken up for consideration together. 9 The learned counsel for the Revenue contends that the assessee has declared his undisclosed income. Having once admitted the undisclosed income it is not open for him to go behind the same. He further contends that notwithstanding the admitted amounts, the admission does not preclude the Revenue from assessing the said income. 10 On the other hand, the learned counsel for the assessee relies on CIT V. Mr. P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The admissions made cannot be retracted by the legal representatives of the person who made the admission. In the instant case, the admissions made by the late Sri H. R. Basavaraj cannot be retracted by his legal representatives on the various grounds that are sought to be urged. In view of the admissions made, the same become binding. It also binds the legal representatives. Even though the admissions are sought to be retracted not by the person who made it but, by the legal representatives, it would still amount to an admission and would bind the legal representatives. Section 159 of the Act postulates that the legal representatives are liable to pay such sums as the deceased would be liable to pay. That any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representatives and may be continued against the legal representatives from the stage at which it stood on the date of death. Therefore, in terms of section 159 the legal representatives get into the shoes of the deceased. 15. They are bound by the admissions made. Therefore, they cannot retract the admissions made. 16. In the case of Pullangode Rubber Produce Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to state on facts. The legal representatives of the deceased is a trust. It was, therefore, not possible for the trust to retract statements of fact made by the deceased Sri H. R. Basavaraj. Consequently, on facts, the legal representatives cannot retract the admissions made by late Sri H. R. Basavaraj. A retraction can be made only on an error of law and not on facts. 20. The computations have been made based on the search and seizure. They are not solely based on the admissions made. The admissions made have been considered only as a circumstance while computing the undisclosed income. Under these circumstance, the reasoning of the Tribunal is unsustainable. It is contrary to law. Therefore, we have no hesitation to hold that the Tribunal was not justified in deleting the admitted undisclosed income of the assessee. Accordingly, questions Nos. 1 to 6, 12 and 13 are answered in favour of the Revenue and against the assessee. Regarding question No. 7 (7) Whether the Income-tax Appellate Tribunal is justified in deleting an addition of Rs. 15 lakhs representing unexplained credit voluntarily admitted by the assessee in the letter filed before the assessing authority in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j. Under the provisions of Chapter XIV -B, the authorities are not computing or recomputing the income as a result of the search but only to compute the undisclosed income that has been found at the time of search. The explanation offered by the assessee was not corroborated by the persons mentioned by him. Hence, the assessing authority rightly treated it as undisclosed income. Under these circumstances, we are unable to support the view of the Tribunal that the addition of Rs. 15 lakhs is as a result of the examination of the balance-sheet in the course of block assessment proceedings. When the assessee-trust has offered the undisclosed income, the Tribunal grossly fell in error in holding that the addition of Rs. 15 lakhs is as a result of the examination of the balance-sheet. The Tribunal failed to notice that the admission was not made by the late Sri H. R. Basavaraj, but the legal representatives themselves. The finding recorded by the Tribunal is wholly unjust and opposed to the material available on record. Under these circumstances, we are of the considered view that the order of the Tribunal is erroneous and liable to be set aside. Accordingly, the question is answered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n No.9 (9) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in deleting the addition of Rs. 60 lakhs representing unexplained payments by the assessee to Sri Devaraj and Sri Bhatkal for acquiring the property when such position is evidenced from the seized material and whether the deletion so made by the Tribunal is based upon the relevant consideration and material to sustain such deletion. (a) On examination of the seized material it was noticed that the assessee has made a total payment of Rs. 2,48,00,000 to Sri Devaraj and Sri Bhatkal for the purchase of various properties under the Sai Krupa Project. Payments of Rs. 10 lakhs and Rs. 50 lakhs made on June 20, 1995, and on June 21,1995, respectively, to these two persons was mentioned, though the receipts in respect of such payments were not contained in the seized material. The Assessing Officer came to the view that while preparing the cash flow statement, the assessee had ignored these two payments on the ground that the receipts were not available and thus took into account the total admission of Rs. 1,88,00,000 as against Rs. 2,48,00,000. Accordingly, the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and the repayment of Rs. 25 lakhs advanced by the firm to the assessee on May 16, 1992. On considering the material the Assessing Officer considered the amount of Rs. 39,68,357 as a cash credit and brought the same to tax under the block assessment. The assessee contends that the addition was not based on material on record found during the course of search. That the said amount represents not only the outstanding balance but also that the further advance given by cheque is duly reflected in the books of account and has been confirmed by the parties. The Tribunal on considering the same deleted the addition. 27. The assessing authority held that the impugned amount of Rs. 39,68,357 stands credited as the amount received by the appellant on different dates as debited in the ledger account of M/s. HRB Trust in the seized books of account of the appellant. Hence, the assessing authority considered the same as cash credit. However, the assessing authority felt that the appellant has failed to explain the same. The appellant had claimed the undrawn profits pertaining to him after he retired from the said firm with effect from April 1, 1991. Further, the amount advanced by him for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference. Accordingly, the same is answered against the Revenue and in favour of the assessee. Regarding question No. 11 (11) Whether the Income-tax Appellate Tribunal is correct in law in deleting the undisclosed income of a sum of Rs. 8,16,000 made in the block assessment representing the appellant s benami investment in the purchase of land in the name of Sri H. M. Joshi and whether the Tribunal s approach in deleting this undisclosed income is based upon material and relevant consideration to sustain the deletion. 29. From the seized material the Assessing Officer noticed that the lands adjoining M/s. Gemini Distilleries were purchased in the name of Sri H. M. Joshi who was working in the group concerns of the assessee. It was contended that the impugned investments were made out of the borrowings of Rs. 6,80,000 given to him from M/s. Gemini Distilleries and the remaining balance from his own sources. The material on record would show that a sum of Rs. 6,80,000 was borrowed from Gemini Distilleries between May 20, 1993, and July 22, 1993. Even prior to the date of borrowing, Sri Joshi had already purchased four items of land on January 30, 1993, January 31, 1993, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal is right in holding that the capital gains in the assessee s case arising out of the sale of shares of M/s. Kurechermala Plantation Ltd., Kerala, brought to tax in the block assessment cannot be considered as undisclosed income. (16) Whether the Income-tax Appellate Tribunal s conclusion in its appellate order to the effect that the capital gains brought to tax in the assessee s case under the block assessment cannot be considered as undisclosed income is supportable in law being based on any valid reason, evidence and material when the assessing authority as well as the Appellate Commissioner have sustained the determination of the capital gains on the basis of relevant related facts, grounds and material as referred to in the respective orders. (17) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding the transfer of shares to be void despite the position that the shares have been transferred during the financial year 1996-97 and when the board of directors of the company have also ratified the transfer of shares and such transfer is recorded in the registers of the company. (18) Whether the Tribunal is correct in law in ..... 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