TMI Blog2013 (11) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... the said party. The AO has further distinguish that in respect of other parties whenever the amount was received back then an entry to that effect was recorded in the diary. The assessee had informed that the money was paid near October / November 1994, which was received back around March /April, 1995. But according to AO, till the date of search i.e. on 21.9.1995, there was no entry of receiving the money back recorded in the seized diary. In the absence of proper proof, the AO had taxed the said sum as undisclosed income in the hands of the assessee. Assessee has not furnished any evidence which can fully substantiate that in fact assessee had received the amount back from the said party. This submission being not supported by any cogent evidence, therefore, not inclined to interfere with the findings of the lower authority - In view of Section 132(4) the presumption in that whatever recorded in the seized books is truly recorded. Validity of affidavits in the taxation matters - Assessee had furnished affidavits of both those persons before the AO. In the said affidavit they have only confirmed that in total a friendly loan of Rs.8,000/- was taken for a short period from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d nos.1 to 3 are reproduced below: "1. The order passed by the Assessing Officer is bad in law. The order is contrary to the provisions of law and the facts of your appellant's case. The order passed by the learned Assessing Officer be cancelled and/or suitably modified. 2. The AO erred in framing the order without following direction of the Income tax Appellate Tribunal. The assessing officer ought to have complied with directions of the Income Tax Appellate Tribunal. The order framed without following the directions is bad in law and be quashed. 3. The appellant submits that the assessment has been made by the assessing officer without affording any reasonable opportunity of being heard and further without providing copies of the materials, statements etc. and further without complying with the direction of the Hon'ble Income Tax Appellate Tribunal. The appellant submits that assessment be quashed. 3.1 The appellant submits that dates of hearing stated by the assessing officer at item no.13/page no.1 of the assessment order are incorrect and further observations made by him regarding non-compliance are also incorrect. The appellant submits that it be so held now." 2.1 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .5,67,990/-. At the first round of proceedings, a block assessment order was made u/s. 158BC and the total "undisclosed income" was assessed at Rs.51,78,641/-. In respect of the above ground, the observation of the AO was that as per the seized material marked as Annexure 'A-1' there was a diary and on page 01 of the said diary there was a payment of Rs.10.10 lacs with regard to land situated near Anjali Cinema. It was found that the payment was made to Sri Govind Bhai Patel. According to AO, in the statement recorded u/s132(4) vide a question no.28 the assessee had accepted the investment in the said land from undisclosed sources. According to AO even before ADI in a statement the assessee had once again reiterated his disclosure of the said investment in the land. The assessee had objected the addition on the ground that although the payment was recorded but the said deal was cancelled in respect of the said land. Since the deal was not materialized, therefore, according to assessee the entire amount was refunded back by Mr. Patel. However, the AO was not convinced and held that as per the diary found at the time of search it was mentioned that a payment of Rs.10.10 lac was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue department that on page 5 of the said diary there was a mention of payment of Rs.10.10 lac with regard to a land situated near Anjali Cinema. The payment was recorded in the name of Sri Govind Bhai Patel. Firstly; in a statement recorded under Section 132(4); and secondly; a statement made before the ADI; it was reiterated that the said amount was invested out of undisclosed sources in the land situated near Anjali Cinema. The only explanation of the assessee was that the said amount was received back from said party and that deal was cancelled. However, the AO had made a categorical finding that in the said diary there was no recording of money being received back. Further an another amount of Rs.50,000/- was paid as recorded at page no.5 of diary-1; thus the undisclosed investment as per A.O. was Rs.10,60,000/- 5.2 Having heard the submission of both the sides, we are of the considered opinion that that due to lack of any evidence supporting the contention of receiving the money back from the party, we hereby hold that the AO had rightly taxed the amount in the hand of the assessee. In view of Section 132(4) the presumption in that whatever recorded in the seized bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that those affidavits were nothing but self serving document hence cannot be relied upon in tax proceedings specially when there is no independent corroborative evidence. We find no force in this ground of the assessee. Hence dismissed. 7. Ground No.8 is reproduced below:- "8. The assessing officer erred in making addition of Rs.10,05,925/- alleging to be unaccounted investment in shares, debentures. The appellant submits that addition is contrary to the provisions of law and the facts in the case of the appellant. The addition be deleted. 8.1 The appellant submits that the addition of Rs.10,05,925/- representing the principal amount is arbitrary and not in consonance with the provisions of law. The appellant submits that no investment was made by the appellant and therefore the question of any addition does arise. The appellant submits that addition be deleted. 8.2 The appellant without prejudice to above submits that addition of Rs.10,05,925/- made by the assessing officer is excessive. The appellant submits that addition if any to be upheld be restricted to a nominal amount and the balance of the addition be deleted." 7.1 During the course of search unaccounted shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in the shares, but subject to set-off against the unaccounted declared income. 7.4 We have considered the rival submissions and examined the material placed on record. Out of the above four items, three of them can be considered for desired relief. But as far as the adjustment of Rs.5,60,000/- being the amount declared u/s 158 BC is concerned, we have noted already the claim of the assessee is that he had already declared Rs.5,60,000/- as "undisclosed income" in the return; stated to be representing investment in shares. So we hereby hold that the nature of disclosure in the said return is required to be ascertained first and if it is found correct, as alleged before us, then the AO is free to allow the adjustment. In respect of rest of the items; in our opinion the investment in the name of the deceased mother is monetarily trifle; therefore can be accepted. However in respect of the declaration in books, and an existence of a totaling error is concerned the same is allowable but subject to verification; therefore required to be ascertained by the AO. With these observations this ground is partly allowed in the terms indicated supra. 8. Ground No.9 is reproduced below. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and therefore the question of any addition does arise. The appellant submits that addition be deleted. 10.3 The appellant without prejudice to above submits that addition of Rs.10,75,000/- made by the assessing officer is excessive. The appellant submits that addition if any to be held be restricted to a nominal amount and the balance of the addition be deleted." 9.1 In the diary marked as A-1 there was a mention of "Mono Magnur" alongwith certain figures, reproduced by AO as 13.50 + 1.50 + 6.50 = 21.50 A + S 50%". The Revenue Department had deciphered the coded notings and held that "A" and "S" stand for Sri Ajay V. Bhatt and Sri Suresh Patel respectively. That fact was stated to be affirmed by those persons. The assessee was asked to explain that why 21.50 be not treated as investment in the ratio of 50% each. The assessee had contended that 10,000 equity share @ Rs.10/- each were allotted to one Sri Naresh Patel. An amount of Rs.2,15,000/- represented 'Service Charges' and only 50% was to be received only on sale of shares. It was thus contested that the alleged sum of Rs.21,50,000/- did not represent un-explained investment. However, the AO was not convinced and held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejudice to above that estimate household expenses and the addition of Rs.4,80,000/- are excessive. The appellant submits that addition of Rs.4,80,000/- be scaled down and appropriate relief be allowed. 11.2 The appellant without prejudice to above submits that the assessing officer ought to have allowed credit in respect of withdrawals by the appellant and his family members. The appellant submits that appropriate credit be directed to be allowed." 10.1 The allegation of the AO was that the household withdrawals shown by the assessee in the past for respective financial years did not commensurate with the standard of living. The AO has thereafter estimated the year-wise withdrawals from A.Y. 1986-87 to 1996-97 totaling Rs.4,80,000/- and taxed accordingly. 10.2 Having heard the rival submissions, we hereby hold that the impugned estimated addition being not emerging from the seized material therefore out of the clutches of "undisclosed income", hence following the precedent of Morarjee Gokuldas Spinning Weaving Co. (supra) this addition is hereby deleted. Ground is allowed. 11. Ground No.12 is reproduced below: "The assessing officer erred in adding Rs.15,24,274/- in fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was claimed to be Rs.9,40,055/-. Now the vehement contention is that the AO had allowed the set off only to the extent of Rs.42,47,278/-, therefore, the AO may be directed to grant set off of the balance amount. This legal proposition of the assessee is on the logic that a partner (i.e. assessee in appeal) having no other source from where an undisclosed income could have been earned and that the source of undisclosed income received was from the various firms, where he is a partner, which was thus invested by him in various undisclosed assets, thus legally allowed the benefit of set off. The amount invested in such undisclosed assets may not be treated as undisclosed income in to, but telescoping be allowed against the share of undisclosed income assessed in the cases of those firms. This argument appears to be logical that the undisclosed share of profit earned as a partner might have been invested towards undisclosed assets, the value of the same now held as undisclosed income in the hands of the assessee. We, therefore, deem fit to restore this matter back to the AO to first check the finally determined undisclosed income of each firm and then determine the share of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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