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TMI Blog2012 (11) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... 27.08.2001. Thereafter several hearings took place and eventually by block assessment order dated 31.12.2001, the assessee's total undisclosed income was computed at Rs. 3,69,27,587/-. This consisted of several additions as undisclosed income as follows:- S.No. Details of additions as per annexures Amount Asstt. Year 1 As per Para 1 of annexure 8,269,600 94-95 2 As per Para 2 " 18,213,900 96-97 3 As per Para 3 " 4,335,737 97-98 4 As per Para 4 " 6,108,350 97-98 Total 36,927,587 3. The assessment order itself does not contain the break-up or other details of the additions and these are all appended to the assessment order as annexure. The assessee filed an appeal to the CIT (Appeals) who restricted the addition to Rs. 2,67,87,137/- on the basis that this amount represented the peak investment made by the assessee in different construction projects undertaken by it. The benefit of telescoping was given to the assessee, which resulted in a relief of Rs. 1,01,39,950/-. 4. The assessee and the Revenue filed cross appeals to the Income Tax Tribunal ("Tribunal", for short) and by order dated 2.3.2007, the Tribunal allowed the appeal of the assessee and dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer for furnishing a remand report. When the remand report was filed, the assessee too filed a rejoinder. The sum and substance of the assessee's objections were that there was no independent evidence or material on the basis of which additions could be made in respect of each of the properties. It was submitted further that the Assessing Officer had failed to appreciate the effect of all the documents found during the search. According to the assessee, the undisclosed income was computed by the Assessing Officer by merely looking into the documents and the entries therein on selective basis and by ignoring those entries which were in favour of the assessee. It was thus contended that relevant material which was gathered during the search itself was ignored, which vitiated the entire block assessment order. 7. This submission was considered by the CIT (Appeals) and dealt with in the following manner by him: - "7.10 I have examined the reply of the appellant and submissions of the AO and facts of the case carefully. I find that the additions have been made by the AO on the basis of various documents which were seized from the resident and premises of the appellant firm. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h other, thus giving benefit of telescoping to the assessee. It was also submitted that by applying the rule of telescoping the Assessing Officer ought to have assessed only the peak amount of undisclosed income. The assessee even calculated the peak profit/investment, again without prejudice, at Rs. 2,11,40,737/-. This aspect of the matter was also sent to the Assessing Officer for his response with a direction to him to comment on the accuracy of the peak amount as worked out by the assessee. The Assessing Officer in his report dated 17.7.2003 stated that the plea of telescoping or the peak theory was put forth by the assessee for the first time before the CIT (Appeals) and it would amount to a fresh piece of evidence which should not be admitted. The assessee disputed the comment of the Assessing Officer by pointing out to the CIT (Appeals) that it is only on the basis of the materials brought on record that the alternative plea of telescoping or peak investment was being projected before the CIT (Appeals) which was not a fresh piece of evidence, but was only an alternative plea on the basis of materials already on record. 9. The CIT (Appeals) rejected the objection of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n were the actual investment made by the assessee and the actual sale proceeds received by the assessee. c) No corroborative evidence of the writings or notings found in the loose papers was found during the search. d) There was no doubt that the seized documents did contain certain figures pertaining to the four housing projects undertaken by the assessee in the course of its business. e) The Revenue has merely relied upon the correlation between the projects executed by the assessee and the difference in the cost of land and investment in construction and the price at which the properties were sold as revealed in the seized document on the one hand and as recorded in the books of accounts of the assessee, on the other. This correlation alone is not sufficient to justify the impugned addition. 11. For the conclusion that the correlation established by the Revenue between the seized material and the books of accounts alone was not sufficient to justify the additions, the Tribunal gave the following reasons:- i) Firstly, the documents in question were seized from the residential premises of one of the partners (V.K. Narang) of the assessee firm. When his statement was recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to examine the purchasers of the property to find out if they had paid any consideration over and above what was recorded by the assessee in its books of accounts etc., were fatal to the merits of the Revenue's stand in the block assessment proceedings. In this view of the matter, the Tribunal cancelled the entire addition of Rs. 3,69,27,587/-. 14. On a careful consideration of the rival contentions and on a fair reading of the order of the Tribunal, we are of the view that its order cannot be sustained. While cancelling the entire addition of Rs. 3,69,27,587/- the Tribunal found fault with the Assessing Officer for not carrying out certain procedural steps which according to the Tribunal were vital for validity of the additions. Further, the Tribunal has also held that the presumption about the genuineness and truth of the contents of the documents seized, as provided in Section 132(4A), was not available to the Assessing Officer in the assessment proceedings. The judgment of the Supreme Court in the case of P.R. Metrani (supra), no doubt held that the presumption was not available to the Assessing Officer while completing the assessment and that it was limited to the prior proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding loose papers on which notings or scribblings have been made. While commenting on the seized documents, the Tribunal contradicted itself by first observing that it cannot be stated that the figures in the papers were the actual investment or the actual sale proceeds and thereafter, in the very next sentence, stating that the seized documents "did give out certain figures regarding the four projects that the assessee had undertaken in the course of his business." If the seized papers did in fact contain figures relating to the four projects which were admittedly undertaken by the assessee, we do not see how the Tribunal could hold that the Revenue could not rely on the correlation between the position shown by the seized documents and what has been recorded by the assessee in its books of account. The Tribunal does not dispute that there existed a correlation; but it yet held that the correlation alone was not sufficient to make the impugned additions. This observation was sought to be supported by some reasons. We have already summarized them. An examination of those reasons shows that they are far from convincing. The Tribunal held on the basis of the judgment of the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the presumption under Section 132(4A) was not available to the Assessing Officer on the basis of the seized documents, but merely because the partners were not examined by the Assessing Officer at the time of the assessment, it cannot be stated that no reliance can be placed on them for the purpose of making additions. 17. As to the corroboration sought by the Tribunal in support of the seized documents, it is not an inviolable rule applicable to all situations and to all cases that every seized document should be corroborated before any addition can be made based on it. If calculations and computations have been made in the seized documents in such a manner that its probative value and genuineness cannot be doubted, nothing prevents the Assessing Officer from making additions on the basis of such documents despite the absence of any corroboration. It must be remembered that in such cases it is difficult to obtain corroboration, particularly of the type contemplated by the Tribunal. The Tribunal observed that corroboration could have come in the form of a valuation of the property by the Departmental Valuation Officer or from the purchasers of the property who could have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e surface, probe deeper and draw the appropriate inferences which accord with the normal course of human conduct and probabilities. It is again true that merely because the appellate Court would have reached a different conclusion on the same evidence, interference with the findings of the fact of the lower Court would not be justified. Even if we approach the impugned order of the Tribunal keeping in mind the above well settled principles, we are afraid we cannot resist the need to remand the matter to the Assessing Officer for a denovo consideration of the assessment. 20. Counsel for the assessee submitted that a paper book was submitted to the Tribunal along with detailed written submissions on the basis of which the Tribunal had arrived at its decision and therefore, no useful purpose would be served by remanding the proceedings over again. The problem lies in the approach of the Tribunal, as we have pointed out, to the evidence unearthed during the search. It failed to note while arriving at its decision that procedural irregularities committed by the Assessing Officer do not invalidate the additions; if necessary, the proceedings have to be directed to be completed over agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above terms, with no order as to costs. 22. In ITA No.583/2012, the respondent assessee is one Urmila Lodhi. In the block assessment made under Section 158BC for the block period 1.4.1989 to 17.12.1999, additions of Rs. 12,71,000/- and Rs. 5,62,000/- were made and the assessment was completed on a total undisclosed income of Rs. 18,33,000/-. The addition of Rs. 12,71,000/- was made on the basis of Annexure- A1 seized from the residence of Virender Narang, partner of M/s. Sonal Constructions on the ground that this amount represented on-money received by the assessee from Virender Narang as sale consideration of a property belonging to the assessee. The addition of Rs. 5,62,000/- was made on the ground that the assessee received consideration in kind from Virender Narang for superstructure, basement and ground floor. Both the additions were made under Section 69A of the Act for the assessment year 1994-1995 comprised in the block period. 23. The assessee filed an appeal to the CIT (Appeals) and by way of an additional ground challenged the basis of the assessment on the ground that the provisions of Section 158BC were wrongly invoked, since no search warrant was issued in the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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