TMI Blog2015 (3) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, K.P. Shetty took copies of seized diary and admitted undisclosed income based on entries therein. In such circumstances, the plea taken by the assessee that the proceeding u/s. 153A are invalid and that the proper course would be to proceed u/s. 153C of the Act and therefore the impugned assessment order has to be held to invalid is a contention, which cannot be accepted and has no force or merit. We are also of the view that u/s. 292C of the Act, there is a presumption that the documents found in the possession or control of any person in the course of search, belongs to such person and contents of such document are true. In the light of the fact that the assessee owned the entries in the seized diary, the contents should be presumed to be true and it is for the assessee to show that all the entries in the seized diary does not represent income. The assessee having miserably failed to point out with reference to each of the entries in the seized diary as to how it does not give rise to income, the assessee cannot take a valid plea that he disowned the diary and therefore no reliance can be placed on the diary to make addition in the hands of assessee. - Decided against as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tty and Smt. Asha P. Shetty, another partner of the assessee and other seniors of Trishul Developers (the assessee). The questions and answers in this regard is reproduced for better appreciation of facts:- Q.No.3: I am showing you the pages 1 to 167 of the seized material marked A/VB/2 which was seized from your residence during the course of search proceedings under section 132 on 20.11.2009. Please go through the seized material and explain the contents of the seized material? Ans.: I have gone through the pages 1 to 167 of the seized material marked A/VB/2. These are the diaries most of which are written by me except pages 1 to 47 which were written by Miss Indira, office assistant. These pages contains the cheque and cash transactions written by me as told by Mr. Prakash Shetty, the Managing Director, Smt. Asha P Shetty and sometimes by the other seniors of Trishul Developers. I am not aware of the details of the transactions and only Mr. Prakash Shetty is aware of it. I had written what was told by the Mr. Prakash Shetty. 4. The Assessing Officer noticed that most of the transactions in the diaries were by cash and not accounted in the regular books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was seized from the residence of Shri. Vijay Kumar B on 20.11.2009. The seized material contains hand written pocket diaries written by Mr. Vijay Kumar B, Vice President (Infrastructure) of Goldfinch Hotels group and Ms Indira, office assistant. The entries in these pocket diaries are written by them. I will go through the diaries after taking Xerox copies and come back with detailed explanation as far as directly connected to my business income. Q.No.4: lam showing you the statement recorded from Mr. Vijay Kumar B(Vijay Bhat,) wherein he has stated that these diaries are written by him on your instructions and also on the instructions of his seniors. Please go through the statement and comment on it? Ans.: I have gone through the statement of Mr. Vijay Bhat and I have to go through the diary and which all entries which I had told, I will come and explain all the entries in two days. 7. Subsequently. Mr. K Prakash Shetty filed a letter dated 02.02.2010 admitting undisclosed income pertaining to certain cash payments made by him for purchase of lands, interest payments to some persons, etc. which were found written in the above seized material marked as A/VB/2. The undiscl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary. However, I do not remember the exact nature of these payments. I do not know the details of the persons to whom the payments are made and in what context. Q. No. 6: Who gives you the instructions to make the payments? Ans.: I used to get calls from the various persons working in the corporate office of M/s Trishul Developers. They used to tell me about the instructions given by the Managing Director to pay or receive money from various persons at Mangalore. I acted upon the instructions to receive or pay the amount. 10. Page 2 of the seized material marked as A/TD/34 contains a receipt account of a total sum of ₹ 10,13,68,000 during the F.Ys. 2008-09 and 2009-10 as under:- F.Y.2008-09 : ₹ 1,90,00,000/- F.Y.2009-l 0 : ₹ 8,23,68,000/- 11. During the statement recorded from Mr. Prasad Kumar, he was asked to explain the cash receipt in this page. He stated that the cash receipts of ₹ 10.13,68,000 were received from the head office of M/s Trishul Developers, Bangalore and that it has been paid to various persons as their instructions. His statement is reproduced hereunder:- Q.No.32: The pages 1 and 2 contains total receipts of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s during the search proceedings revealed that the total receipts were of 56,00,51,300/- and total payments were of 88,24,82,425/-. 9. During the course of assessment proceedings the diary entries were verified and it was found that only a few entries have been admitted by the assessee group. The circumstantial evidence and preponderance of probability suggests that the assessee has had numerous transactions which are in the nature of receipts and payments. 10. In view of the facts and the circumstances of this case and the type of diary entries available, it would be fair and reasonable to compute the difference in the receipts and payments and bring the same to tax. Accordingly, the following undisclosed incomes are being brought to tax: A.Y. Undisclosed Income brought to tax Admitted earlier 2004-05 Rs.11 1,50,000/- 2005-06 Rs.2, 14,00,000/- 2006-07 NIL ₹ 3,35,00,000/- 2007-08 NIL 2008-09 ₹ 2,40,26,395/- 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 09.08.2011, 09.08.2011 and 10.08.2011) in the name of M/s Trishul Developers which was a non existent entity is bad in law and deserves to be quashed. In this regard, the Assessing Officer has brought on record the following facts tabulated below :- 01 Date of search 20/11/2009 02 Date of takeover of firm by the company 01/02/2010 (as claimed by the appellant and not in knowledge of the Assessing Officer. 03 PAN of firm AAAFT9758G 04 PAN of company AADCT3672P 05 Date of issue of notice u/s 153A 25/04/2011 06 Date of filing Return of Income in response to Notice u/s 153A, A.Y:2004-05-09/08/2011, A.Y.2005-06-09/-8/2011, A.Y.2006-07-07/12/2011, A.Y. 2007-08-10/08/2011, A.Y.2008-09-10/08/2011, A.Y.2009-10-10/08/2011, (In name and status of firm M/s Trishul Developers) As could be seen from the above dates, the Return of Income in response to notice u/s 153A have been filed on 09/09/2011, and 07/12/2011, much after the takeover of the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishul Developers now M/s Trishul Buildtech Infrastructure Pvt Ltd. for clarification. However, it is to be considered that the entity in question i.e. M/s Trishul Developers had filed a return in the name of M/s Trishul Developers itself and not in the name of the then existing M/s Trishul Buildtech Infrastructure Pvt Ltd and the fact that the Assessing Officer had not been informed about the change in status of the entity. In the facts and circumstances of the case, where the appellant has filed a return itself in the said status, complied with the notices, received and understood the notices to have been intended for the said firm, the mere omission of not mentioning M/s Trishul Developers now M/s Trishul Buildtech Infrastructure Pvt Ltd instead of mentioning only M/s Trishul Developers in the notices issued and the order made do not negate the proceedings so made. 19. The CIT(A) relied on the provisions of section 170(1) of the Act and expressed the view that as per the aforesaid provisions, the predecessor has to be assessed in respect of income of the previous year, in which the succession took place upto the date of succession. He also held that the provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income Tax (OSD). Thus, the jurisdiction of the officer concerned is protected u/s 120(4) of Income Tax Act as well. It is also on record that the appellant has accepted the jurisdiction of the said promoted officer as Joint Commissioner of Income Tax and has appeared before him both prior and subsequent to his promotion with the knowledge of the promotion of the officer as Joint Commissioner of Income Tax and has therefore, accepted his jurisdiction over the case. This is evident from one of the letters of the appellant to the Assessing Officer (though undated as under). To The Joint Commissioner of Income Tax Central Circle 1(3) Bangalore. Sir, Ref. PAN-AAAFr9756G Sub: Assessment of our own AY (07-08) With reference to your further enquiry during assessment proceedings we wish to submit as follows - (1) Purchase of property at Kulai: We have purchased land from Srimati Umavati agricultural land at Kulai, Mangalore for sum of 1,066,000.00 paid in cash. Copy of RTC is enclosed showing that the land purchased is agricultural land. (2) Ledger extract of TDS accounts in respect of commission, professional charges, interest and contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up to the date of succession; (b) the successor shall be assessed in respect of the income of the previous year after the date of succession. (2) Notwithstanding anything contained in sub-section (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly. 25. It can be seen from the provisions of s. 170(1) that if there is a succession in the business of assessee, the predecessor has to be assessed in respect of income of the previous year in which succession took place upto the date of succession. The admitted factual position in the present case is that the conversion of Trishul Developers the partnership firm as a limited company by name TBIPL took place on 1.2.2010. Therefore, for A.Ys. 2004-05, 2005-06 2007-08, only Trishul Developers will have to be assessed. The provisions of s. 170(2) cannot be invoked for the simple reason that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above submission of the ld. counsel for the assessee and we are of the view that the same is without any merit. It is not in dispute that the assessee was subjected to a search u/s. 132 of the Act on 20.11.2009. As per the provisions of section 153A of the Act, the AO was duty bound to make an assessment for the six assessment years as referred to in section 153A of the Act. A.Ys. 2004-05, 2005-06 and 2007-08 are assessment years failing within the period contemplated u/s. 153A of the Act. The assessment to be done u/s. 153A is not dependent on any incriminating material being found during the course of search. There is no such requirement u/s. 153A. While concluding assessment u/s. 153A, the AO can take cognizance of any material relating to the assessee. As we have already seen, it is not in dispute that the diaries were written under his instructions and contains recordings of transactions. In fact, K.P. Shetty took copies of seized diary and admitted undisclosed income based on entries therein. In such circumstances, the plea taken by the assessee that the proceeding u/s. 153A are invalid and that the proper course would be to proceed u/s. 153C of the Act and therefore the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. Another submission made by the ld. counsel for the assessee was that on the entries in the seized diary showing total receipts to the extent of ₹ 56,00,51,300 and payments totaling ₹ 88,24,82,425, the Revenue authorities have proceeded to tax the difference between the receipts and payments made. According to him, such a method of determination of undisclosed income was not proper. In our view, the above submission of the ld. counsel for the assessee cannot be accepted. The assessee, amongst other things, was a property developer. The payments made by the assessee are not reflected in the regular books of account. They were held to be in addition to and over and above the business transactions of the assessee. The assessee has not explained the source as to how this expenditure (payments) were made. Therefore, addition u/s. 69C of the Act is called for. As far as the receipts are concerned, the AO has taxed the excess of expenditure over the receipts. We fail to see as to how such an approach adopted by the AO can be found fault with. We do not find any merits in the aforesaid submission made by the ld. counsel for the assessee. 32. We find no merits in these ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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