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The Asstt. Commissioner of Income-tax, Central Circle II (5) , Chennai Versus Shri T. Dhevanathan and Vica-Versa

2015 (8) TMI 764 - ITAT CHENNAI

Investment in share capital by the family members of the assessee - CIT(A) deleted part addition - Held that:- Assessing Officer is bound to follow the procedure prescribed for computing the undisclosed income for the block period. The CIT(A) found that the Assessing Officer has fully ignored the disclosure made by the respective family members under VDIS. He further found that the addition towards equity shares and share application money in the name of family members cannot be sustained. Accor .....

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,50,000/- also cannot be treated as undisclosed income for the block period. At the best, it may be assessable in the regular assessment provided the time limit is available under the statutory provisions. This Tribunal is of the considered opinion that the total investment made by the assessee and his family members to the extent of ₹ 3,62,14,950/- was not supported by any of the search material, therefore, the same cannot be treated as undisclosed income for the block period. Accordingly .....

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sidered opinion that the assessee might have deposited the money from the above said amount received from M/s Indian Telephone Industries Ltd. It is pertinent to note that no material was found during the course of search operation and what was available with the Assessing Officer is only the bank statement. The assessee has explained the receipt of ₹ 13,40,22,400/- from M/s Indian Telephone Industries Ltd. which was not disputed by the Assessing Officer. In the absence of any other materi .....

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opinion that the CIT(A) ought to have deleted the entire addition instead of restricting the same to ₹ 19,77,817/-. According, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the entire addition of ₹ 1,69,27,817/-. - Decided in favour of assessee.

Unexplained investment in M/s Dimka Petro Products Ltd - CIT(A) deleted addition - Held that:- From the order of the CIT(A) it appears that the dispute is with regard to land pur .....

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regard to payment made by the assessee to M/s IDL Industries Ltd would amount to double addition. Even the Assessing Officer has made addition only on the ground that the assessee has not maintained any proper accounts. The fact remains that the deposit made in the bank account was explained and the payments were made from the deposit made in the bank account by way of demand drafts and cheques. Therefore, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the additio .....

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of account by way of journal entry. Since the loan was received by way of cheque and the payment of interest to the extent of ₹ 1,08,000/- was also paid by way of cheque, this Tribunal is of the considered opinion that the payment of interest to the extent of ₹ 1,08,000/- cannot be treated as from undisclosed source of the assessee. Therefore, the CIT(A) has rightly deleted the addition.- Decided in favour of assessee.

Unexplained investment made in M/s Karishma Investment .....

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set aside and the Assessing Officer is directed to delete the addition of ₹ 5 lakhs towards investment made by the assessee in M/s Karishma Investment.- Decided in favour of assessee.

Cash payment to Shri Rakesh Sarin and transactions with S/Shri Thirunavukarasu and Karthikeyan and Jayaprakash - Held that:- This Tribunal is of the considered opinion that that the material found during the course of survey operation cannot be a basis for making addition for the block period conse .....

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cted to delete the addition of ₹ 28,36,000/- for the block period.

It is not in dispute that payment of ₹ 5,10,000/- was found by the Revenue authorities during the course of survey operation in the office of M/s Diksaat Transworld Ltd. No material was found during the course of search operation. In view of section 158BB(1), the Assessing Officer has to compute the undisclosed income for the block period on the basis of the material found during the course of search operat .....

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Held that:- This Tribunal is of the considered opinion that the investment of ₹ 53,17,300/- would have been made from the above said receipt. In the absence of any material to suggest that the assessee has earned any other income from any other sources, this Tribunal is of the considered opinion that making addition of ₹ 53,17,300/- is not called for. Apart from that, in view of the judgments of the Madras High Court in P. K. Ganeshwar (2008 (11) TMI 70 - MADRAS HIGH COURT ) and G. .....

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telecast rights of two feature films ‘Mustafa’ and ‘Dr. Ambedkar’. While considering the investment made by the assessee in production of the feature film, this Tribunal found that the assessee invested the same from the business receipts of ₹ 13,40,22,400/- received from M/s Indian Telephone Industries. The CIT(A) has confirmed the addition only to the extent of ₹ 2,25,000/-. This Tribunal is of the considered opinion that the assessee might have invested out of the business receip .....

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and he could not explain the source for purchasing jewellery to the extent of ₹ 1,35,000/-. Since the assessee himself admitted that he could not explain the source for purchase of jewellery to the extent of ₹ 1,35,000/-, for which receipt was found during search operation, this Tribunal do not find any infirmity in the orders of the lower authorities. Accordingly, the addition of ₹ 1,35,000/- towards purchase of jewellery is confirmed. - Decided against assessee.

P .....

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his Tribunal is of the considered opinion that the addition may be made in the regular course in the regular assessment. However, no addition could be made for the block period since it was not supported by any seized material found during the course of search operation. - Decided in favour of assessee.

Investment in Kottivakkan property - Held that:- There cannot be any addition for the block period as undisclosed income in view of the language employed by the legislature in section .....

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d during the course of search operation and the information which is relatable to the material found during the course of search operation. The Assessing Officer is not referring to any of the search material in the assessment order. It is also not the case of the Revenue that any material was found during the course of search operation. In those circumstances, this Tribunal is of the considered opinion that the same cannot be taken as undisclosed income for the block period. Accordingly, the or .....

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Rukmani Industries at ₹ 2,88,25,244/-. In other words, 2% of ₹ 2,88,25,244/- shall be treated as unexplained expenditure for the assessment year 2000-01. - Decided partly in favour of assessee.

Unexplained cash credit u/s 69A - Held that:- The assessee admittedly deposited ₹ 13,08,000/- in two bank accounts. A sum of ₹ 2 lakhs was deposited in Canara Bank on 21.9.2002 and another sum of ₹ 10 lakhs on 2.1.2003. With regard to cash deposit of ₹ 2 la .....

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f ₹ 3,08,000/-.

Now, coming to ₹ 10 lakhs, the CIT(A) found that the assessee has received a sum of ₹ 6,49,820/- in cash on sale of property on 11.12.2002. The CIT(A) found that the remaining balance or ₹ 3,50,180/- was not substantiated. The fact remains that the assessee’s wife Smt. D. Meenakshi also received a sum of ₹ 3,61,011/- on sale of the very same property on 11.12.2002 and Shri N. Pradeep Kumar has also received a sum of ₹ 9,89,169/-. The .....

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s Tribunal is of the considered opinion that the amount might have been used for making deposit in Canara Bank on 2.1.2003. Therefore, this Tribunal is of the considered opinion that the CIT(A) ought to have deleted the entire addition of ₹ 10 lakhs - Decided partly in favour of assessee. - I.T.(SS)A. No.18/Mds/2013, I.T.(SS)A. No.19/Mds/2013, I.T.A. No.1187/Mds/2013 - Dated:- 14-8-2015 - SHRI N.R.S. GANESAN AND SHRI A. MOHAN ALANKAMONY, JJ. For The Department : Shri N. Rengaraj, CIT, Shri .....

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. Shri N. Rengaraj, ld. Departmental Representative submitted that there was a search in the premises of the assessee on 5.12.2002 and several incriminating documents were found during the course of search operation. According to the ld. DR, the assessee was proprietor in M/s Rukmani Industries and M/s Telesystems International. The assessee was awarded contract by Government of India to take photographs for voters identity card. The Revenue authorities also found investment to the extent of  .....

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he assessee has not reported positive income and for the assessment year 2000-01 alone the income was shown to the extent of ₹ 23,22,093/-. For all other years in the block period the assessee returned loss in the business. The assessee made an attempt before the Assessing Officer to explain the source as if he has received contract from Government of India for taking photographs of the voters for preparing the identity cards. The Assessing Officer found that the assessee has not maintaine .....

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bers in whose names the investment was made are having very meager income and the substantial income is only from the assessee. The so called salary paid to the family members are only application of the assessee s income and not for the services rendered by the family members in their individual capacities. Referring to disclosure made by the assessee under Voluntary Disclosure of Income Scheme, 1997(VDIS), the ld. DR submitted that the assessee and his family members started acquiring the prop .....

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ial income. The brother of the assessee Shri T. Janardhanan is said to be looking after M/s Dheva Chemical Industries. The other brother of the assessee , Shri T. Thiagarajan is said to be looking after Win TV. Shri T. K. Thiruvengadan, father of the assessee, does not have any independent source of income of his own. According to the ld. DR, the assessee claimed before the lower authorities that the investment was made from the jewellery declared by the respective family members under VDIS. How .....

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ly made the addition to the extent of ₹ 3,62,14,950/-. However, the CIT(A) found that if the investment by family members in the share of the company was bogus then it was free to proceed with the family members in respect of the income. The CIT(A) further found that the family members are assessed separately, therefore, the income and asset declared under VDIS cannot be ignored. The CIT(A) further found that the assessee himself made the investment to the extent of ₹ 1,62,50,000/-. .....

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tc., the CIT(A) confirmed the addition of ₹ 1,62,50,000/-. However, he deleted the addition to the extent of ₹ 1,99,64,950/-. The Revenue filed appeal against the deletion of ₹ 1,99,64,950/- and the assessee is in appeal against the confirmation of addition of ₹ 1,62,50,000/-. According to the ld. DR, in the absence of any material to show that the family members had any independent source of income, the CIT(A) ought to have sustained the entire addition of ₹ 3,62,1 .....

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NIL undisclosed income. However, the Assessing Officer made several additions even though there was no seized material found during the course of search operation. Referring to section 158BB of the Act, the ld. Counsel submitted that under the scheme of the Income-tax Act, 1961, undisclosed income for the block period could be computed only on the basis of material found during the course of search operation and information which is relatable to the material found during the course of search ope .....

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regard to the investment in M/s Diksaat Transworld Ltd. on the date of search. The assessee filed all the details as called for by the Assessing Officer. The Assessing Officer came to the conclusion that the family members of the assessee do not have any independent source of income even though all the family members of the assessee are independently assessed. Referring to the disclosure made by the family members under VDIS, the ld. Counsel submitted that the Assessing Officer ignored the enti .....

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he burden of proof is on the Revenue to show that the assessee made the investment in the name of respective family members. In the absence of any material found during the search operation, according to the ld. Counsel, the CIT(A) ought to have deleted the entire addition of ₹ 3,62,14,950/- instead of restricting the same to ₹ 1,99,64,950/-. 6. We have considered the rival submissions on either side and also perused the material available on record. Under the scheme of the Income-ta .....

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have also gone through the orders of the lower authorities. The Assessing Officer observed that lot of information relating to investment made in immovable properties and other financial transactions came to the light during the course of search operation. He has not referred to any of the seized material or information which is relatable to seized material for making the addition of ₹ 3,62,14,950/-. The Assessing Officer basically referred to the assessee s letter dated 10.12.2004 and 24. .....

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was seized by various other authorities like CBI, Central Excise, Sales Tax etc. the Assessing Officer found that any recovery of incriminating material by the investigation agencies have no relevance and do not help in any way during subsequent proceedings unless a proper mahazar was drawn evidencing the seizure of relevant material. The fact remains that during the course of search operation u/s 132A of the Act, no material was found with regard to investment made either by the assessee or by .....

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isclosed income for the block period. The CIT(A) found that the Assessing Officer has fully ignored the disclosure made by the respective family members under VDIS. He further found that the addition towards equity shares and share application money in the name of family members cannot be sustained. Accordingly, he deleted the addition to the extent of ₹ 1,99,64,950/-. The CIT(A) also failed to consider the provisions of section 158BB of the Act. The CIT(A) further found that the assessee .....

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provisions. This Tribunal is of the considered opinion that the total investment made by the assessee and his family members to the extent of ₹ 3,62,14,950/- was not supported by any of the search material, therefore, the same cannot be treated as undisclosed income for the block period. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the entire addition of ₹ 3,62,14,650/-. 9. The next issue arises for consideration is un .....

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ame was treated as undisclosed income for the block period. However, the CIT(A) found that the assessee has withdrawn ₹ 1,50,00,000/- from City Union Bank on 1.8.1997. There was a deposit of ₹ 1,61,50,000/- subsequently from 5.12.1997 to 18.12.1997. The CIT(A) found that the money withdrawn by the assessee to the extent of ₹ 1,50,00,000/- was utilized for making the deposits from 5.12.1997 to 18.12.1997. Since the assessee could not explain the deposit to the extent of ₹ .....

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on Bank. The assessee has withdrawn a sum of ₹ 3,05,00,000/- during the financial year 1997-98 and another sum of ₹ 10,00,000/- on 7.10.1998. According to the ld. Counsel, the assessee has received ₹ 13,40,22,400/- from M/s Indian Telephone Industries Ltd. The above payment was received during the financial years from 1996-97 to 1998-99. This is apparent from the assessment order at para 2.4 (page 3). The assessee explained before the Assessing Officer that the money received f .....

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e ld. Counsel submitted that deposit of such money in the bank account cannot be treated as undisclosed income for the block period. Referring to the assessment order, more particularly page 27, the ld. Counsel submitted that merely because the assessee hired the services of photographers of the neighbouring States, the Assessing Officer doubted the genuineness of withdrawal from the bank account. According to the ld. Counsel, the assessee has to make arrangement for taking photographs of the vo .....

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ers. The ld. Counsel further submitted that merely because the assessee was not maintaining balance sheet, there is no presumption that the assessee was earning any undisclosed income. The main source of income is from M/s Indian Telephone Industries Ltd. 12. We have considered the rival submissions on either side and also perused the material available on record. The Assessing Officer found that between 30.7.1997 and 26.3.1998 the assessee has deposited a sum of ₹ 4,64,50,000/- in City Un .....

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unexplained. The CIT(A) found that an amount of ₹ 1,50,00,000/- was withdrawn on 1.8.1997. A sum of ₹ 1,61,50,000/- was subsequently deposited during the period from 5.12.1997 to 18.12.1997. The assessee claimed before the CIT(A) that the amount withdrawn on 1.8.1997 was redeposited in the bank account. Accordingly, the CIT(A) found that the assessee has explained the source to the extent of ₹ 1,49,50,000/- and the assessee could not explain the balance of ₹ 19,77,817/-. .....

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has received ₹ 13,40,22,400/- from M/s Indian Telephone Industries Ltd. towards the contract awarded for taking photographs for preparing electoral identity cards, this Tribunal is of the considered opinion that the assessee might have deposited the money from the above said amount received from M/s Indian Telephone Industries Ltd. It is pertinent to note that no material was found during the course of search operation and what was available with the Assessing Officer is only the bank sta .....

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Ltd. Moreover, as observed by the CIT(A), the amount withdrawn to the extent of ₹ 1,50,00,000/- is also available with the assessee for deposits. Therefore, this Tribunal is of the considered opinion that the CIT(A) ought to have deleted the entire addition instead of restricting the same to ₹ 19,77,817/-. According, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the entire addition of ₹ 1,69,27,817/-. 13. The next issue arise .....

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₹ 15 laks on 21.11.1997. The assessee has paid another sum of ₹ 10 lakhs on 11.4.2001. The assessee has not maintained any books of account. The consolidated balance sheet was not filed by the assessee. Due to improper maintenance of books of account, according to the ld. DR, the Assessing Officer made the addition of ₹ 85 lakhs in respect of the investment made by the assessee in M/s Dimka Petro Products Ltd. 15. On the contrary, Shri N. Devanathan, ld. Counsel for the assess .....

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ain the accounts properly. According to the ld. Counsel, when the assessee explained the source of making investment and the payments were made by demand draft, there is no question of any addition as undisclosed income. The ld. Counsel further submitted that no material was found during the course of search operation. In the absence of any material found during the course of search operation, according to the ld. Counsel, the Assessing Officer cannot treat the investment as undisclosed income o .....

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s Bank. The deposit made in the account was already considered and it was found that the same was made from the business receipt of the assessee. Therefore, the CIT(A) found that making a further addition with regard to payment made by the assessee to M/s IDL Industries Ltd would amount to double addition. Even the Assessing Officer has made addition only on the ground that the assessee has not maintained any proper accounts. The fact remains that the deposit made in the bank account was explain .....

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. Departmental Representative submitted that during the course of search operation, a loose sheet was found and it was impounded. In one of the loose sheets, the assessee s transaction with M/s Mansi Mercantile Co. was found. The assessee apparently paid a sum of ₹ 1,08,000/- towards interest between 24.12.2001 to 24.3.2001. According to the ld. DR, the transaction as found in the loose sheet which was impounded relates to subsequent periods and the payment of interest of ₹ 1,08,000/ .....

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. Counsel further submitted that the loan was received from M/s Mansi Mercantile Co. through cheque and the interest payment was also made through cheque. The ld. Counsel further clarified that the entire payment was entered in the books of account by way of journal entry. Therefore, the CIT(A) has rightly deleted the addition of ₹ 1,08,000/-. 20. We have considered the rival submissions on either side and also perused the material available on record. It is not in dispute that the loan wa .....

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cannot be treated as from undisclosed source of the assessee. Therefore, the CIT(A) has rightly deleted the addition. 21. In assessee s appeal, the assessee has raised a ground with regard to addition of ₹ 5 lakhs towards investment made in M/s Karishma Investments. 22. Shri N. Rengaraj, ld. Departmental Representative submitted that the assessee is a partner in M/s Karishma Investments alongwith his wife Smt. D. Meenakshi. For the purpose of participating in the auction for allotment of .....

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f ₹ 10 lakhs on 24.6.2000, the ld. DR submitted that the payment was claimed to be made by M/s Dheva Investments & Finance. The Assessing Officer found that M/s Dheva s & Finance was engaged in hire purchase finance till 1996. Since the assessee has not maintained any proper accounts, the investment made could not be explained properly. Therefore, the Assessing Officer treated the entire amount of ₹ 15 lakhs as undisclosed income of the assessee. The CIT(A), however, found th .....

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hev Investment & Finance. When the CIT(A) found that the money was paid from the savings bank account of the assessee, he ought to have deleted the entire addition of ₹ 15 lakhs. However, the CIT(A) sustained the addition to the extent of ₹ 5 lakhs only on the ground that no cash flow statement was filed by the assessee. 24. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee was a partner in M/s Kari .....

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ny appeal against the deletion of ₹ 10 lakhs. However, the assessee has challenged the confirmation of addition of ₹ 5 lakhs. This Tribunal is of the considered opinion that when admittedly ₹ 5 lakhs was paid from savings bank account of the assessee maintained with Central Bank of India, the CIT(A) ought to have deleted the same. In the absence of any other material to show that the assessee has earned the money from undisclosed source, this Tribunal is of the considered opini .....

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during the course of search operation at the office of M/s Diksaat Transworld Ltd., the Revenue authorities found a diary. The assessee s transaction with Shri Rakesh Sarin between 24.4.1996 to 30.4.1996 was found in the diary. The Assessing Officer also found that the assessee has paid a sum of ₹ 10 lakhs in cash on 27.4.1996. The assessee explained before the Assessing Officer that transaction with Shri Rakesh Sarin was in respect of temporary financing activities. The assessee has also .....

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artmental Representative submitted that during the course of survey at the office of M/s Diksaat Transworld Ltd. it was found that the assessee has paid a sum of ₹ 10 lakhs in cash on 27.4.1996. The Assessing Officer found that there was an entry in the cash book of M/s Telesystems International for payment of ₹ 10 lakhs on 27.4.1996. Since the assessee could not explain the payment of ₹ 10 lakhs in cash to Shri Rakesh Sarin on 27.4.1996, according to the ld. DR, the CIT(A) has .....

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ee with Shri Rakesh Sarin. The question arises for consideration is whether the material found during the course of survey operation can be a basis for making addition for the block period consequent to the search operation. This Tribunal is of the considered opinion that in view of section 158BB(1) of the Act, the Assessing Officer is expected to confine himself only to the material found during the course of search operation and the information which is relatable to the material found during t .....

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dition. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the addition of ₹ 10 lakhs. 29. Now, coming to the transaction with Shri Thirunavukarasu and Shri Karthikeyan, the ld. Counsel submitted that the Assessing Officer found that the assessee entered into a transaction with Shri Thirunavukarasu and Shri Karthikeyan to the extent of ₹ 23,50,000/-. According to the ld. Counsel, this transaction was found during the course .....

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Shri Karthikeyan during the above said period. The Assessing Officer wanted material to show that the assessee mobilized funds from the public. Since the assessee handed over all the books of account to the subsequent incumbent of the office bearers, he was not in a position to produce the same before the Assessing Officer. 30. On the contrary, Shri N. Rengaraj, Ld. Dr submitted that the explanation of the assessee was that the party fund was paid to the extent of ₹ 28,36,000/- to Shri Th .....

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available on record. It is not in dispute that the assessee was State President of Bahujan Samaj Party . It is also not in dispute that Bahujan Samaj Party is a national political party. The political party used to collect money from the general public by way of donation to meet their expenditure for contesting the election. The assessee being the State President of the party, when the assessee claims that he handed over all the materials to the subsequent office bearers of the party, the Assess .....

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/s 132A of the Act. In other words, in view of section 158BB(1) of the Act, the Assessing Officer has to confine himself only to the material found during the course of search operation and he cannot make addition on the basis of material found during the course of survey operation. In view of the above, this Tribunal is of the considered opinion that the addition is unwarranted. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the ad .....

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found during the course of search operation, according to the ld. Counsel, there cannot be any addition. 33. On the contrary, Shri N. Rengaraj, ld. DR submitted that during the course of survey operation at the office of M/s Diksaat Transworld Ltd. the Revenue authorities found payment of ₹ 5,10,000/- by the assessee to one Shri Jayaprakash. Though the assessee explained before the Assessing Officer that it was a reimbursement of expenses incurred by Shri Jayaprakash, the copies of the ac .....

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nd during the course of search operation. In view of section 158BB(1), the Assessing Officer has to compute the undisclosed income for the block period on the basis of the material found during the course of search operation and the information which is relatable to the material found during the course of search operation. Therefore, this Tribunal is of the considered opinion that the material found during the course of survey operation cannot be a basis for making any addition. In view of the a .....

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ssessee never claimed himself as proprietor. According to the ld. Counsel, the proprietor of M/s Dimka Productions is one Shri T. Thiagarajan. During the course of production of the film, funds were transferred to M/s Dimka Productions. The ld. Counsel further submitted that M/s Dimka Productions has now submitted the details of source of funds for making investment in the film production. According to the ld. Counsel, the Assessing Officer himself found that in view of improper maintenance of b .....

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the transaction a settlement was arrived at on 22.1.1001. In the absence of any material, the CIT(A) came to the conclusion that the assessee was the de facto proprietor of M/s Dimka Productions. This being the block assessment, according to the ld. Counsel, there is no question of any de facto ownership in the absence of any material. According to the ld. Counsel, the proprietorship concern of the assessee M/s Telesystems International contributed a sum of ₹ 9,91,000/-. Apart from that t .....

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the assessee is the de facto owner. The ld. DR further submitted that the assessee contributed ₹ 36,91,600/- during the period 4.9.1998 to 25.3.1999. M/s Telesystems International has contributed ₹ 6,76,900/-. Another sum of ₹ 3,15,000/- was received from one Shri Srikanth on 18.9.1998 and 3.3.1999. The assessee has not admitted any positive income for the assessment year 1999-2000. Shri T. Thiagarajan filed his return of income for the assessment year 1998-99 admitting income .....

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he loose sheet found during the course of survey operation discloses the payment made to film artists and other expenses incurred in the production of feature film. The total expenditure appears to be ₹ 50,25,763.50. The assessee has also spent another sum of ₹ 3 lakhs. The assessee himself admitted during examination on 7.10.2003 that he was the proprietor of the concern. The capital account of M/s Dimka Productions shows that is if the funds were received from Shri T. Thiagarajan, .....

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f the assessee. In the earlier part of the order, while considering the deposit made by the assessee in City Union Bank, this Tribunal found that the assessee has received a sum of ₹ 13,40,22,400/- from M/s Indian Telephone Industries Ltd. being the business receipt for the contract awarded to him for taking photographs for preparing the electoral identity cards. So, this money is available with the assessee in various forms in various accounts. Therefore, this Tribunal is of the considere .....

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ation, no addition can be made towards undisclosed income for the block period. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the addition of ₹ 53,17,300/-. 39. Now coming to the addition of ₹ 2,25,000/- towards telecast rights, the ld. Counsel submitted that the assessee has received ₹ 2 lakhs from Shri P. G. Srikanth for telecast rights. However, the Assessing Officer found that the purchase of telecast rights w .....

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greements for getting telecast rights of the film Dr. Ambedkar . Since the payment was not evidenced by way of search material, according to the ld. Counsel, it cannot be added for the block period. 40. On the contrary, Shri N. Rengaraj, ld. Departmental Representative submitted that though the Assessing Officer has not made any reference about the seized material, while making addition of ₹ 3 lakhs, the Revenue authorities during the course of search operation found a loose sheet which sh .....

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by the assessee in production of the feature film, this Tribunal found that the assessee invested the same from the business receipts of ₹ 13,40,22,400/- received from M/s Indian Telephone Industries. The CIT(A) has confirmed the addition only to the extent of ₹ 2,25,000/-. This Tribunal is of the considered opinion that the assessee might have invested out of the business receipts of ₹ 13,40,22,400/- from Indian Telephone Industries. Therefore, no addition is called for. Accor .....

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ence of any material, the CIT(A) confirmed the addition of ₹ 1,35,000/-. According to the ld. Counsel, being block assessment, in the absence of any search material, the Assessing Officer cannot make any addition. 44. On the contrary, Shri N. Rengaraj, Ld. Departmental Representative submitted that the Revenue authorities found two bills dated 31.1.1999 for purchase of jewellery during search operation. On examination, the assessee admitted that he purchased jewellery by paying cash and so .....

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e for purchasing jewellery to the extent of ₹ 1,35,000/-. Since the assessee himself admitted that he could not explain the source for purchase of jewellery to the extent of ₹ 1,35,000/-, for which receipt was found during search operation, this Tribunal do not find any infirmity in the orders of the lower authorities. Accordingly, the addition of ₹ 1,35,000/- towards purchase of jewellery is confirmed. 46. The next ground of appeal is with regard to purchase of industrial land .....

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he money received from M/s Indian Telephone Industries Ltd. Since no material was found to support the addition made by the Assessing Officer, according to the ld. Counsel, this amount cannot be treated as undisclosed income for the block period. 48. On the contrary, Shri N. Rengaraj, Ld. Departmental Representative submitted that the assessee has purchased a piece of land measuring 0.76 Acres in Industrial Estate at Ambatur. The assessee claimed before the Assessing Officer that he paid ₹ .....

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considered the rival submissions on either side and also perused the material available on record. Admittedly, no material was found during the course of search operation with regard to purchase of property at Ambattur. Section 158BB(1) of the Act clearly says that unless and until there is a material found during the course of search operation, there cannot be any undisclosed income for the block period. The Assessing Officer, on the basis of the information furnished during the course of asse .....

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xt ground of appeal is with regard to investment of ₹ 2,08,133/- in Kottivakkan property. 51. Shri N. Devanathan, ld. Counsel for the assessee submitted that assessee s wife, Smt. D. Meenakshi purchased 13.5 centrs of land for ₹ 4,50,000/- on 11.2.1197. Out of this, she sold 5.5 cents of land for ₹ 1,50,000/- on 29.1.2001. Similarly, the assessee s sister Smt. Kamala purchased 13.5 cents of land for ₹ 4,50,000/- and sold 11 cents of land for ₹ 4 lakhs on 23.9.2000. .....

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amala, sister of the assessee, the CIT(A) found that she was staying separately. Accordingly, in respect of investment made by the assessee s wife to the extent of ₹ 2,08.153/- was added as undisclosed income for the block period. 52. On the contrary, Shri N. Rengaraj, Ld. Departmental Representative submitted that the assessee s sister Smt. Kamala purchased 13.5 cents of land on 11.12.1997 and sold 11 cents of land on 23.9.2000. The claim of the assessee that his sister purchased the prop .....

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rom that, Smt. D. Meenakshi, assessee s wife is also an independent assessee. If at all, the assessee s wife could not explain the source of making investment, addition could be made in the hands of the assessee s wife and definitely not in the hands of the assessee. Similarly, Smt. Kamala could not explain the source for purchasing the property, addition has to be made in the hands of the above said Smt. Kamala. In the absence of any material found during the course of search operation, this Tr .....

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issue is with regard to investment made in the name of children. 55. Shri N. Devanathan, ld. Counsel for the assessee submitted that the Assessing Officer made addition of ₹ 1,54,500/- being the fixed deposit stands in the name of the children and shares in the name of the children. The Assessing Officer, without any discussion in the assessment order, made addition of ₹ 1,54,500/- on the ground that the same was not disclosed in the regular assessment. According the ld. Counsel, no .....

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, the Assessing Officer has taken the same as undisclosed income of the assessee for the block period. The assessee made an attempt to explain before the CIT(A) that the children received gifts. However, in the absence of any material to support the claim of receipt of gifts, the CIT(A) confirmed the addition. 57. We have considered the rival submissions on either side and also perused the material available on record. The Assessing Officer has to compute the undisclosed income for the block per .....

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, this Tribunal is of the considered opinion that the same cannot be taken as undisclosed income for the block period. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the addition of ₹ 1,54,500/-. 58. In the result, the appeal of the Revenue in I. T.(SS)A. No.18/Mds/2013 is dismissed and the appeal of the assessee in I. T.(SS)A. No.19/Mds/2013 is partly allowed. 59. Now, coming to the regular assessment for the assessment year .....

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f M/s Rukmani Industries and M/s Telesystem International, the assessee claimed an expenditure of ₹ 4,14,17,166/- and ₹ 2,07,95,334/- respectively. The expenditure to the extent of ₹ 28,82,543/- was unvouched in the case of M/s Rukmani Industries. The auditors could not verify the correctness and completeness of the accounts maintained by the assessee . Therefore, the Assessing Officer disallowed the unvouched expenditure on estimation basis to the extent of ₹ 1.25 crores .....

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to the ld. Counsel, as per the guidelines issued by the CBDT, the Assessing Officer cannot take up the case for scrutiny. The entire disallowance of ₹ 1.25 crores was made by the Assessing Officer on the basis of suspicion, surmises and presumption. The ld. Counsel further submitted that unless and until the assessee incurred an expenditure of ₹ 2,88,25,244/- he could not have completed the project at all. According to the ld. Counsel, the CIT(A) ought to have allowed the entire cla .....

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#8377; 11,04,120/- as income from M/s Rukmani Industries and another sum of ₹ 13,31,686/- as income from M/s Telesystems International. Another sum of ₹ 23,43,217/- was received in respect of M/s Rukmani Industries. The Assessing Officer found that majority work was done in assessment years 1996-97 and 1997-98 as far as M/s Telesystems International is concerned. The Assessing Officer has also found that since the work was completed in assessment year 1999-2000 itself no amount was r .....

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d paid the salary. In those circumstances, producing vouchers for payment of the salary is not practically possible. Internal vouchers are available on record. This was admitted by the Assessing Officer in the assessment order. It is not the case of the Assessing Officer that it could not be verified by him. The case of the Assessing Officer is that the auditors are not able to certify the correctness and completeness of the accounts maintained by the assessee. This Tribunal is of the considered .....

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ure would meet the ends of justice. Accordingly, the orders of the lower authorities are modified and the Assessing Officer is directed to estimate the unexplained expenditure at 2% of the total expenditure claimed in M/s Rukmani Industries at ₹ 2,88,25,244/-. In other words, 2% of ₹ 2,88,25,244/- shall be treated as unexplained expenditure for the assessment year 2000-01. 63. Now coming to the claim of the assessee that the Assessing Officer has no authority to select the return for .....

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e for assessment year 2003-04, Shri N. Devanathan, ld. Counsel for the assessee submitted that the Assessing Officer made addition of ₹ 13,08,000/- towards unexplained cash credit u/s 69A of the Act. According to the ld. Counsel, the entire deposits in the bank were made out of the collections of sundry debtors, refund of deposit and sale of property at Puzhal. The explanation of the assessee, according to the ld. Counsel, was not even considered by the lower authorities. Since the assesse .....

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gkong Bank, the Assessing Officer found a cash deposit of ₹ 2 lakhs on 21.9.2002 and another cash deposit of ₹ 10 lakhs on 2.1.2003 at Canara Bank. Similarly, the assessee has deposited cash of ₹ 1 lakh and ₹ 8,000/- on 10.4.2002 and 24.7.2002 respectively in Hongkong Bank. The assessee claimed before the Assessing Officer that he sold a property on 11.12.2002 out of which a sum of ₹ 10 lakhs was deposited in Canara Bank on 2.1.2003. After perusing the documents, th .....

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assessee that the same was deposited on 2.1.2003 appears to be reasonable. Hence, the CIT(A) accepted the same. However, in respect of the balance amount of ₹ 3,50,180/- in the absence of any explanation, the CIT(A) has confirmed the same. Similarly, in respect of the deposit of ₹ 2 lakhs in Canara Bank, the CIT(A) has accepted the explanation of the assessee to the extent of ₹ 99,500/- out of the collection from sundry creditors of ₹ 46,100/- , realization of loans and a .....

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nara Bank on 21.9.2002 and another sum of ₹ 10 lakhs on 2.1.2003. With regard to cash deposit of ₹ 2 lakhs on 21.9.2002, the CIT(A) found that the assessee deposited ₹ 99,500/- from sundry debtors collection of ₹ 46,100/-, out of realization of loans and advances and another sum of ₹ 3000/- from refund of deposits. The balance of ₹ 3,08,000/- was confirmed by the CIT(A). The assessee could not substantiate the deposit of ₹ 3,08,000/- in Canara Bank on 21 .....

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