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2015 (11) TMI 403 - ITAT CHENNAI

2015 (11) TMI 403 - ITAT CHENNAI - TMI - Unexplained credit u/s.68 - Out of 6000 persons only 14 of them have given confirmation saying that they have given deposit - Assessing Officer considered 15% deposit as genuine and the balance he considered as unexplained income - Held that:- In the present case, the Assessing Officer had given ample of opportunity at various level to prove the genuineness of the deposits. Inspite of this, the assessee failed to prove the genuineness of the deposits. In .....

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efit from this business. Such benefit needs to be made eligible to tax within the meaning of section 28(i). Alternatively, it was proposed that the assessee can be assessed under section 41(1) of the Act for the cessation of liability. The assessee did not respond to the proposal. As such, the Assessing Officer included the sum as the undisclosed income of the assessee for the assessment year 1996-97 in the light of the definition of undisclosed income contained in section 158B(b) of the Act. No .....

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f the assessee. Accordingly, this ground of the appeal of the assessee is rejected.- Decided against assessee

Fixed deposits in Canara bank treated as undisclosed income - Held that:- There are entries for E65,000/- for the assessment year 1987-88 and E1,00,000/-for the assessment year 1992-93. Being so, we direct the Assessing Officer to give due credit to the tune of E1,65,000/- only. This ground of the appeal of the assessee is partly allowed.

Difference in cost of const .....

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d income - Held that:- The addition is only based on estimation and there is no seized material available on record to suggest the personal expenses. Being so, we delete the addition made by the Assessing Officer on this count.- Decided against revenue

Purchase of E2,15,000/- as household articles which was treated as undisclosed income - Held that:- There is no seized material found during the course of search suggesting this addition. The addition is made only on estimation basis ho .....

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ive assessments years. Being so, it is treated as undisclosed income of the assessee. This ground of the appeal of the assessee is dismissed. - Decided against assessee

Unaccounted investment of E1,00,000/- for the assessment year 1991-92 - Held that:- This amount of E1,00,000/- was reflected in the cash flow statement for the year ending 31.03.1991. Accordingly, this ground of the appeal of the assessee is allowed. - Decided against revenue

Unexplained Gift payment - Held .....

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osed income - Held that:- This amount of E52,500/- was reflected in the cash flow statement for the year ended 31.03.1992. Being so, the addition cannot be made. Hence, we delete the addition made by the Assessing Officer. Accordingly, this ground of the appeal of the assessee is allowed. - Decided against revenue

Purchase of land at Thanjavur treated as undisclosed income - Held that:- These amounts reflected in the cash flow statement at E1,24,000/-as on 31.3.1992 and E89,000/- as o .....

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to appreciate the argument of the assessee counsel. This ground of the appeal of the assessee is rejected.- Decided against assessee

Unexplained credits which was treated as undisclosed income - Held that:- The Assessing Officer has given ample of opportunities to prove the identity, genuineness and creditworthiness of the transactions. Whenever any amount found credited in the books of account of the assessee in the previous year relevant to the assessment year, it is the duty of the .....

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ment. In our opinion, the credit card payments cannot be considered as explained. Being so, this addition is sustained. This ground of the appeal of the assessee is rejected.- Decided against assessee

Undisclosed investment in jewellery - Held that:- In the cash flow statement for the year ending 31.03.1996, this amount of E2,00,000/- was not reflected in the cash flow statement filed before us. Being so, the addition of E2,00,000/- is sustained. This ground of the appeal of the asses .....

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ture incurred and decide the issue afresh and if there is no seized material in respect of this addition, the Assessing Officer cannot make addition on this count. This issue is remitted back to the Assessing Officer for fresh consideration. This ground of the appeal of the assessee is partly allowed for statistical purposes. - I.T(SS)A No.06/Mds/2013 - Dated:- 30-9-2015 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER For The Appellant : Shri. T. Vasudevan, Advoc .....

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le computing the total undisclosed income of the block period. 1 Purchase of newsprint from capital market : 7,50,000/- 2 Advance to Vivek : 1,50,000/- 3 FD with Canara Bank : 1,65,000/- 4 Difference in cost of construction : 5,19,000/- 5 Personal expenses : 1,94,000/- 6 Household articles : 2,15,000/- 7 Deposits with Canara Bank : 28,53,778/- 8 Investment in UTI : 1,00,000/- 9 Gift to Master Vivek/Krishnapriya : 1,20,000/- 10 Investment in Tamilarasi : 52,500/- 11 Land at Thanjavur : 2,13,000/- .....

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: 8,947/- f. Depreciation disallowed : 4,60,000/- g. Donation : 1,500/- h. Disallowance under sec. 40A(3) : 1,33,365/- i. Scan Tech u/s.41(1) : 67,055/- 17 Unexplained investment in jewellery : 2,00,000/- 18 Foreign tour expenses : 31,42,000/- (3) The learned Assessing Officer erred in treating the amounts as undisclosed income of the assessee for the block period asst. years 1987-88 to 1997-98 (upto 24.09.1996). Further the ld. Authorised Representative for assessee filed additional grounds bef .....

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on of additional grounds The petitioner has filed the grounds of appeal in which grounds were raised on the merits of the additions made in the assessment, apart from general ground on legality of additions. In the course of preparation of the appeal, it was noticed that a specific ground on the issue of approval u/s.158BG for the various additions made in the assessment is also required. It is submitted that the since this is a legal issue and goes to the root of the matter, the petitioner may .....

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see 3. First of all, we deal with the additional grounds raised by the ld. Authorised Representative for assessee. As seen from the above extract of the additional grounds and petition for admission of additional grounds, these are signed by the advocate for the assessee namely Shri. T. Vasudevan. Now the question before us, whether the additional ground filed by the ld. Authorised Representative for assessee is maintainable or not. What are the procedures for filing additional ground was discus .....

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ence either on points specified by them or not specified by them, the Tribunal for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced . Further, whatever rule is applicable for filing the appeal before the Tribunal is also applicable for filing additional grounds. Thus sec. 253(6) of the Act prescribes that appeal to the Tribunal shall be filed in the prescribed form and shall be verified in t .....

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l relates is more than one hundred thousand rupees but not more than two hundred thousand rupees, one thousand five hundred rupees, (c) where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than two hundred thousand rupees, one per cent. of the assessed income, subject to a maximum of ten thousand rupees : (d) where the subject matter of an appeal relates to any matter, other than those specified in clauses (a), (b) and (c), five hundred r .....

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l be signed by the person specified in sub-rule(2) of rule 45). (2) A memorandum of cross-objections under sub-section (4) of section 253 to the Appellate Tribunal shall be made in form No.36A(and where the Memorandum of cross-objection is made by the assessee, the form of memorandum of crossobjections, the grounds of cross-objections and the form of verification appended thereto shall be signed by the person specified in sub-rule (2) of rule 45) The Rule 45(2) reads as under:- The form of appea .....

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ground is maintainable or not. We came across judgment of Jurisdictional High Court in the case of P. Kuttikrishna Nair vs. I.T.A.T., Madras and Another, (34 ITR 540). In that case, whether the Tribunal can consider the Miscellaneous Petition suo motu and the Tribunal, in exercise of its own powers, can verify the mistake whether pointed out by the D.R. or on its own. This decision of the jurisdictional High Court pertains to the old Income-tax Act of 1922 where rectification by the Tribunal is .....

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y to argue the case. He is not competent to sign the appeals, Co-objections, grounds and additional grounds before the Tribunal as per the provisions of the Act. As per section 140 of the Income Tax Act, the following person could sign the appeals, co-objections, grounds and additional grounds before the Tribunal. a) in the case of an individual, (i) by the individual himself; (ii) where the individual is absent from India, by the individual concerned or by some person duly authorised by him in .....

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b-clause (ii) or subclause (iv), the person verifying the return holds a valid power of attorney from the individual to do so, which shall be attached to the return ; (b) in the case of a Hindu undivided family, by the karta, and, where the karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family; (c) in the case of a company, by the managing director thereof, or where for any unavoidable reason such managing director is not .....

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shall be verified by the liquidator referred to in sub-section (1) of section 178 ;(b) where the management of the company has been taken over by the Central Government or any State Government under any law, the return of the company shall be verified by the principal officer thereof ; (cc) in the case of a firm, by the managing partner thereof, or where for any unavoidable reason such managing partner is not able to verify the return, or where there is no managing partner as such, by any partn .....

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uch chief executive officer is known as secretary or by any other designation) ; (e) in the case of any other association, by any member of the association or the principal officer thereof; and (f) in the case of any other person, by that person or by some person competent to act on his behalf. The procedure for filing of additional grounds is at par with the filing of appeal and the rules framed under ITAT Rules for filing of appeal will also apply to additional ground also. The IT Rules, 1962, .....

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Assessing Officer, as the case may be. If additional ground filed before the Tribunal by the assessee or the Assessing Officer, the same can be considered, subject to the provisions of law. The only interested persons in the result can file the additional ground and the Tribunal has to act on representation made to it by the assessee or by the Department, i.e. through Assessing Officer only who is party to the appeal. The assessee or the Assessing Officer has a right just like a party to draw t .....

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of appeal was made by any agent of the assessee or for the Revenue and not by the assessee or the Assessing Officer, it cannot be held that the appeal or any application filed is a valid appeal or application. Further, as per the ITAT Rules, 1963, filing of additional grounds equates the procedure for filing of appeal with that of these applications. As far the assessee is concerned, the appeals are to be signed by the assessee and none other than the assessee. This additional ground of the ass .....

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ness. This business was commenced in the accounting period 1992-93. Prior to that upto 15.11.1988 he was employed with Tamil Nadu Government as Deputy Director, Information department. During the previous year relevant to assessment years 1990-91 to 1992-93. It was stated that he did not have any major income earning activity. There was a search in the case of the assessee on 24.09.96 u/s 132 of the Income-tax Act, 1961. His residence in Kalashetra colony and the business premises at No. 84, TTK .....

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he return he admitted a total undisclosed income of E3,80,000. Subsequently notice u/s 143(2) was issued on 09.09.1997. In response to this notice u /s.143(2) and other notices, assessee s representative appeared and filed some of the details called for. After hearing the assessee s representative and after going through the books of account, seized documents, statements, letters etc. filed by the assessee and on behalf of the assessee and also relying on the Special Audit Report u/s 142(2A) fur .....

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vour of Revenue. Against the ITAT Order, the assessee preferred further appeal to the High Court and the High Court vide its order in Tax Case Appeal NO.1172 of 2005 dated 19.07.2012 held as under: (i) On the major addition of purchase of newsprints amounting, to E.2,35,30,767 the High Court held as under:- assessment in respect of genuineness of the newsprint purchases has to be excluded from the block assessment procedure and it can only be considered under regular assessment. . (ii) In respec .....

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ons of the High Court, fresh opportunity was given to the assessee by the Assessing Officer to file his submissions, with reference to the block assessment order passed on 13.03.1998, vide letter dt. 04.12.2012. The letter was also served on the assessee on 07.12.2012. The case was posted for hearing on different dates by Assessing Officer and the assessee s representative appeared before Assessing Officer on the following dates viz. 14.12.2012, 07.01.2013, 28.01.2013, 05.02.2013 and 19.02.2013. .....

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all minor issues and that due to lapse of time, there are no further details available. No written submissions were also made in respect of those issues before Assessing Officer. Accordingly, considering the submissions made during the assessment proceedings, the assessment order was passed by Assessing Officer within the three months time limit from the date of receipt of the order by Assessing Officer as directed by the High Court. During the course of this High Court remand proceedings before .....

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E2,500/- for which one of the magazines were given free of cost as along as deposit was not withdrawn, who has given E2,500/- two magazines were given free of cost. This deposits will not bear any interested and the assessee was asked to explain from whom it had received the deposits. Further, there was reference to the Special Audit u/s.142(2A) of the Act, and the report of the Special Auditor is as under:- 3.1 These deposits said to have been received from various vasagar vattams (appears to .....

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ual receipts (ii) Depositors registers (Vasagar vattam) are made available for the purpose of checking and verification and the publication did not appear to have maintained any depositor-wise summary at all. 3.3 This deposit control account in General Ledge has not been in agreement with the breakup of location wise accounts maintained relating to the financial years 1994-95 and 1995-96, the details are as under:- VASAGAR VATTAM DEPOSIT Year ended accounts in As per control A/c. As per location .....

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,30,000/-(2.5.95) 1,42,500/- (29.7.95) 1,66,300/-(24.2.96) 2,00,000/-(24.2.96) 8,38,800 17,74,500 3.5 We understand that these subscribers (who have paid deposits from various locations) are sent with the weekly/fortnightly copies of Tamilarasi Puthiaparvai by means of lorries/its own van etc. However, this statement could not be corroborated by any documents and no such despatches appear to have taken place at all. This is in view of our below mentioned findings in respect of despatches of both .....

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s to Vasagar Vattams (though stated to have been sent by lorries/their own vans). We could not check/verify such despatches at all. iv). Further, the manuscript copy (manuscript copy-please see EXHIBIT 11- kept herewith of the details of despatches for November 1997 also did not evidence the despatches to the Subscribers Nasagar vattams. 3.6 To summarise the publication did not appear to have followed any of the Internal Control aspects/ maintenance 6f basic records (as mentioned below) in order .....

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e amount of deposit has been accounted for as received in cash which do not confirm to any Internal Control norms in spite of the fact that the subscribers being located all around the state. 4.4 The remarks quoted above are quite revealing. The entire deposits running to more than E147 lakhs are stated to be received in cash except for a negligible amount of E3.5 lakhs which is stated to be received by way of drafts from Thirunelveli and Madurai. This is strange considering the fact that these .....

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epositors registers were not made available for the purpose of checking and verification. Assessee has not maintained any depositor wise summary also. It is reported that E17,74,500/- has been refunded to various depositors. The names and addresses of the persons to whom it is returned is not furnished. Receipts for the refunds stated to have been issued have also not been produced either to the auditor of before the AO. In short assessee does not know the names or have a record of the persons t .....

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s effected in November, 1997. As per this manuscript. 6027 copies have been dispatched but none of it is for the alleged depositors. The details of despatches furnished by the Special auditor are as under: Central : 1853 Egmore : 1785 City Agent : 750 H.B. Stall : 215 Postal : 377 Free copies : 100 Office copies : 50 Subscription & Extra : 896/- 6027/- 1). Since how long are you a reader/subscriber to the above magazine. 2. Whether you are subscribing to both the magazines. 3). Mode of subsc .....

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e by which you get the magazines ie., directly from the magazine office by post. courier service etc. or through local agents. 9). Who canvassed for this subscription. 4.6 A number of these letters sent to the addresses furnished by the assessee were returned unserved by the postal authorities for the reason that there is no such addressee. A list of such addresses was also enclosed as Annexure-I to the Block Assessment Order. It is a clear indication that the claim made by the assessee that the .....

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that they would get these two magazines from the next month free. They have added that they received no magazines till date and also denied having made any deposit. What is to be remembered in this context is that, these letters were spontaneous and without persuasion from any body. (A list of such names was also enclosed as Annexure-II to the original Block Assessment Order.) Based on the above, the Assessing Officer observed that the claim made by the assessee regarding receipt of deposits is .....

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then Assessing Officer for making enquiries. Since the letters have come from various places, like Madurai, Dindugal, Vellore, Palani etc. the local officers of Income Tax Department in these places were requested to make enquiries about the genuineness of the letters and also to ascertain whether such persons were in receipt of the magazines. Here also, the enquiries revealed that these persons in whose names letters were received are not real and genuine depositors. Everyone of them who were c .....

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such enquiries were also enclosed as Annexure III to the Block Assessment Order. 4.8 Vide his letter dated 13.02.98, the result of these investigation including Annexure I to III mentioned above, were made available to the assessee for his comments by the then AO. The assessee was specifically asked by Assessing Officer to produce necessary proof about the genuineness of the scheme. Inter alia, he was asked to furnish details and proof regarding a) Printing of sufficient number of copies of the .....

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ing, dispatch and distribution of the magazines. 4.9 As per this letter dated 13.12.1998, it was proposed by Assessing Officer that if no objections are received from the assessee on or before 26.02.98, it would be presumed that he has no objections to the proposal to treat the amount of _1,47,86,860/- as the undisclosed income. 4.10 In response the assessee filed his submissions before Assessing Officer on 10-03-98 raising objections like the letters would have returned because the depositors h .....

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e requested for the copy of complete list of annexures I, II and III annexed to the earlier assessment order dated 13.03.1998 and also seized materials specifically the seized document no. RLN/ B & 0/17 & 18 containing the stereo typed letters confirming the Deposit. Annexure I contains name of the persons where letters were returned unserved . Annexure II contains names of the persons where deposits were denied. Annexure III contains a mix of both types, namely where the letters could n .....

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magazines by depositing life-term membership fee of E2,500/-. The assessee also filed the Id. proof and the address proof of these persons. After these were filed by the assessee, vide our letter dated 12.02.2013 before Assessing Officer, the assessee was directed to produce all the persons mentioned in his earlier letters, for personal examination by the undersigned on 19.02.2013. The assessee also produced 9 persons. The details of the persons produced are as under: PERSONS PRODUCED BY THE ASS .....

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ajan Annex. I Notice returned unserved 16 No No Not produced G. Selvam Annex. II Denied the deposited 2 No No Not produced K. Kumaravel Annex. I Notice returned unserved 15 No No Not produced Smt. Rajathy Annex. I Notice returned unserved 26 No No Not produced 4.12 Out of the above list of persons, 6 of them confirmed that they have indeed subscribed to the magazines. 2 persons, namely Shri.T.Chandran and Shri R.Venkataraman confirmed their earlier statement wherein they had denied having made a .....

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d subscribed to the magazines. To summarize, out of about 100 persons to whom letters were issued as brought out in the original assessment order, at that time only 8 persons have confirmed having deposited the money as seen from in para 4.20 of the assessment order dated 1303.1998. Now, during the remand proceedings, a further 6 persons only have confirmed having deposited the money. In respect of others the assessee was neither able to get the current address nor he could produce them for pers .....

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ne out of the 6000 odd persons for personal examination, the ground reality is that the assessee could produce only 9 persons now out of which also only 6 have confirmed. Under the circumstances, after going through the records, on examining the details filed by the assessee and also taking into account the elaborate findings of the earlier Assessing Officer, as extracted in paragraph 4(k) above, the Assessing Officer was satisfied that the assessee is not able to give proper explanation in resp .....

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o account the other factors, it would be reasonable to treat a portion of these deposits as genuine. Going by the small no. Of persons who have confirmed the deposits to the satisfaction of the department, it was considered that it would be fair and proper to treat 15% of the total deposits as genuine and accordingly out of the total amount of E1,47,86,860/- and amount of E22,18,029/- is treated as genuine and the balance amount of E1,25,68,831/- is treated as unexplained credit u/s.68. Against .....

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ed unserved since those persons had shifted their residence or some had not given accepted to have participated in the deposit scheme of assessee. It was submitted that the enquiry launched after a lapse of time would normally be at variance since many distancing themselves. Further, the details of responses were also not available to assessee to counter the negative statement of those persons. The assessee had in fact filed confirmation letters as to participation in the deposit scheme from sub .....

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of the remaining deposits on an estimated basis was only arbitrary and based on surmises and conjectures. In a block assessment, the Assessing Officer should have seen that there is no scope or estimated additions and disallowances. Having accepted the scheme in it was pertinent to note that the Tribunal in ITA Nos.1130/Mds/2003, 1151-1154/Mds/2002, dated 30.11.2007 had considered a similar deposit in a group case and accepted the claim of the assessee. Hence, it was submitted that there was no .....

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ave collected the impugned deposits from 6000 persons. The Assessing Officer gave ample of opportunity to get confirmation from the parties from whom the deposits were collected. Out of 6000 persons only 14 of them have given confirmation saying that they have given deposit. Hence the Assessing Officer considered 15% deposit as genuine and the balance he considered as unexplained income of the assessee. Before us, the assessee submitted that the issue has to be decided in favor of the assessee i .....

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t appellate authority worked out the percentage 1.5% to give relief to the assessee. It is pertinent to note that the assessee hs claimed to have collected Scheme Deposits from 2250 persons and filed complete details of the names and address of the depositors. We find that that the Commissioner of Income Tax (Appeals) accepted these deposits as genuine because the statements were obtained behind the back of the assessee without giving an opportunity of being heard. Therefore, we are of the view .....

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tatistical purposes. Since, w have set aside identical issue in the assessee s appeal. The Revenue s appeals are dismissed. In the present case, the Assessing Officer had given ample of opportunity at various level to prove the genuineness of the deposits. Inspite of this, the assessee failed to prove the genuineness of the deposits. In our opinion, no useful purpose will be served by remitting the issue back to the file of the Assessing Officer for fresh consideration. Hence, the order of the A .....

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26.08.1995, the assessee s account for purchase of newsprint has been credited by (E7,50,000/-) towards News Print return by Capital Market. Enquiries were made with capital market regarding this transaction. In their letter Dated 25.2.98 M/s. Capital Market while confirming the delivery of newsprint to the assessee on 21.7.94 denied having received back the news print on 26.8.95. As per entries made in their books of accounts of the assessee along with their letter M/s. Capital Market had sent .....

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rming certain job work or the cost of the news print till the date of the letter. All this information collected from M/s. Capital Market along with a copy of the letter dated 25.2.98 was furnished to the assessee by Assessing Officer vide letter dated 27.2.98. In this letter, it was proposed that since M/s. Capital market has denoted having received back the stock the entry passed by the assessee in his books on 26.8.95 it appears that the assessee did not propose to return the stock but at the .....

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Subsequently time was granted till 6.3.98 on assessee s representative request in this regard by Assessing Officer. The response to the letter dated 27.2.98 on this issue. finally came in a letter dtd.07.8.98 tiled on 09.3.98. In this letter he has stated that the paper was returned to M/s. Capital Market through one Mr. L. Raju.L-33. Raj Bhawan Colony, Check Post,Chennai-42. He has also enclosed copy of letter dated 26.8.95 purported to be from the said Mr. Raju. However it is stated that Mr.Ra .....

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y of mind between the parties and since this is not there in the given situation assessee is not liable for being taxed on this. The Assessing Officer do not agree with this contention. For taxing a benefit it was not necessary to have an agreement between the parties. What is to be seen is whether the assessee has received a benefit with or without the agreement or consent from the other party. In this case if the claim regarding return of the papers is not correct, the assessee has gained a be .....

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e submitted that the Assessing Officer unilaterally relied on the version of capital market. Whereas, one, Raju had acted as the medium through which the newsprint was returned and he had also filed a confirmations letter dated 26.08.1995 from Raju. Statement of Raju was rejected without even examining him. No case for addition in assessee s hands and no benefit had accrued to assessee u/s.28(iv) as stated by the Assessing Officer. 6.3 The ld. Departmental Representative relied on the orders of .....

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sing Officer that the assessee has not made any submissions before the Assessing Officer. The Assessing Officer having no option passed the assessment order on 28.02.2013. Before us, the assessee placed reliance confirmation letter from Mr. Raju on 26.08.1995 returning this newsprint. Being so, the findings of the Tribunal of the earlier occasion holds good, wherein it was held as under:- 23. Next issue relates to the addition of E7,50,000/- on account of purchase of newsprint from M/s. Capital .....

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ivery of newsprint to the assessee on 21.07.1994 denied having received back the newsprint on 26.08.1995. It was made clear that M/s. Capital Market did not receive the newsprint or its cash equivalent of E7.5 lakhs. It was categorically stated by M/s. Capital Market that they have never got back either 24.5 tons of newsprint given to Tamilarasi Publication for performing certain job work or the cost of the newsprint. From this the Assessing Officer concluded that the assessee did not propose to .....

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of the assessee for the assessment year 1996-97 in the light of the definition of undisclosed income contained in section 158B(b) of the Act. No particular argument was advanced in his regard at the time of hearing. Order was contested on the ground of opportunity. Having heard both the parties and after perusing the records, we uphold the order of the Assessing Officer on this count. Being so, there is no change of circumstances to take different view. Accordingly, we confirm the addition made .....

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considerable agricultural income for the family has been explained earlier available for expenses apart from other receipts reflected in the cash flow statement. 7.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 7.4 We have heard both the parties and perused the material on record. The assessee filed cash flow statement. We have gone through the cash flow statement. Which is reproduced herein below. CASH FLOW STATEMENT 7.5 We find there is no entry with regar .....

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ssessee had invested E75,000/- and E 1,00,000/- for the assessment years 1987-88 and 1992-93 respectively by way of Fixed Deposit in Canara Bank. The sources for this deposit has not been explained, though as per Assessing Officer dated 2.7.1997 the assessee had been specifically asked to furnish the details regarding the source of these deposits. The assessee replied vide letter dated 2.9.1997 which was in continuation of his reply dated 7.8.1997, the assessee stated that this deposit would be .....

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atement filed by the assessee. The Assessing Officer s mere summary rejection of it cannot be a ground to hold that the amount invested is the undisclosed investment of the assessee. 8.3 The ld. Departmental Representative relied on the order of the Assessing Officer. 8.4. We have heard both the parties and gone through the cash flow statement. There are entries for E65,000/- for the assessment year 1987-88 and E1,00,000/-for the assessment year 1992-93. Being so, we direct the Assessing Officer .....

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amount of E26.50 lakhs during 31.3.95 and E18.25 lakhs during the year ended 31.3.96. No books of accounts are maintained by the assessee in respect of the house construction. For the purpose of evaluating the cost. of construction of this property, a reference was made to the Valuation officer of the Department. The Valuation officer in his report has estimated the cost of construction at E49.94 lakhs. Thus between the value estimated by the Valuation officer and the cost admitted there is a di .....

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s in appeal before us. 9.2 The ld. Authorised Representative for assessee submitted that reference to DVO for estimating the cost of construction in proceedings u/s.158BC is wrong. As per the Sec. 158BB, it was held that the undisclosed income of the block period shall be the aggregate of TI of the previous year falling within the block period computed in accordance with the provisions of the Act, on the basis of evidence found as a result of search or requisition of books of accounts or other d .....

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oticed that the difference in rates would be 15% and also a margin of 10% to be given for self-supervision vide Abdul Rahim vs ITO 258 ITR 714 (Mad HC), CIT vs. Gajalakshmi 331 ITR 216 (Mad. HC). If these aspects are considered then the cost of construction returned by the assessee is correct and needs to be accepted. Further, the board in its Circular No.96 dated 25.12.1972 while explaining the newly inserted sec 55A has accepted that 15% difference is acceptable margin between the cost determi .....

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d on the DVO report and the variation between the amount shown by the assessee for construction and the DVO report which is less than 10.4% and there is no seized material reflecting this addition. Being so, we are inclined to delete the addition. This ground of the appeal of the assessee is allowed. 10. The next ground raised by the assessee is with regard to E1,94,000/-being the personal expenses which was treated as undisclosed income by the Assessing Officer. 10.1 The facts of the case are t .....

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e had no ostensible source of income. The query stands not answered before the Assessing Officer inspite of giving a number of opportunities to do so. The gross income of E21,000/-, admitted by the assessee in the block return represents interest on fixed deposits with Canara Bank for the assessment year 1990-91. This amount of interest has not been admitted withdrawn. Hence, even this amounts is not available for his personal expenses. Therefore, the personal expenses has been met by the assess .....

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ssee is in appeal before us. 10.2. The ld. Authorised Representative for assessee submitted that the Assessing Officer has merely estimated the expenses and made the addition without any search material to this effect. It was settled law that there cannot be any estimate of UDI unless there are material found in search warranting such an estimate. The assessee has shown drawings in the cash flow as well as the years in which the regular returns were filed. Further, source for the personal expens .....

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lete the addition made by the Assessing Officer on this count. This ground of the appeal of the assessee is allowed. 11. The next ground raised by the assessee is with regard to purchase of E2,15,000/- as household articles which was treated as undisclosed income by the Assessing Officer. 11.1 The facts of the case are that during the course of search the assessee was found to be in possession the following household articles: 1. Soni Colour TV26 : 1No. 2. Soni Colour TV24 : 1No. 3. Soni Colour .....

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e Assessing Officer. Hence, the estimated value of these items of household articles is included as the undisclosed income of the assessee by Assessing Officer for the assessment year 1997-98 comprised in the block period. Estimated Value Rs 1. Soni Colour TV26 : 1No. 30,000/- 2. Soni Colour TV24 : 1No. 25,000/- 3. Soni Colour TV18 : 1No. 20,000/- 4. Pioneer Audio Set : 1 No. 20,000/- 5. CD-CDS Laser jet : 1 No. 20,000/- 6. National AC 1 Ton : 2 Nos. 30,000/- 7. General Split A/c : 1 No. 50,000/ .....

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l as the years in which the regular returns were filed. A mere summary rejection of it cannot be a ground to hold that the amount invested is the undisclosed investment of the assessee. 11.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 11.4 We have heard both the parties and perused the material on record. There is no seized material found during the course of search suggesting this addition. The addition is made only on estimation basis hoping that they wer .....

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and 1996-97. 12.1 The facts of the the assessee has a savings Bank accountNo.23573 with Canara Bank; Abhiramapuram Branch. In this account during the assessment years 1991-92, 1992-93, 1993-94, 1994-95, 1995-96 and 1996-97 the assessee has made a total deposit of E2,73,795/-, E2,00,378/, E14,21,862/-, E1,35,843/-, E1,10,700/-, E7,47,000/- respectively. The department vide letter dated 2.7.97, the assessee was asked to explain the source of funds for the deposits in this account. The assessee sta .....

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62/-, 1,22,843/-, 11,00,700/- and E7,47,000/-. But none of these confirmation letters are possible for verification. Hence this explanation are rejected by Assessing Officer. The Assessing Officer treated E28,53,778/- as undisclosed income of the assessee. Against this, the assessee is in appeal before us. 12.2 The ld. Authorised Representative for assessee submitted that the assessee has shown drawings in the cash flow statement as well as the years in which the regular returns were filed. Furt .....

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supported by confirmation letters which were rejected without any examination. 12.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 12.4. We have heard both the parties and perused the material on record. In the cash flow statement these deposits was not reflected in the respective assessments years. Being so, it is treated as undisclosed income of the assessee. This ground of the appeal of the assessee is dismissed. 13. The next ground raised by the assessee i .....

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ntative for assessee submitted that the source for the UTI investment of E1,00,000/- is traceable in the cash flow statement filed by the assessee. A mere summary rejection of it cannot be a ground to hold that the amount investment is the undisclosed income of the assessee. 13.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 13.4 We have heard both the parties and perused the material on record. This amount of E1,00,000/- was reflected in the cash flow statem .....

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. The source for this gift has not been explained. Vide department letter dated 02.07.1997, the assessee was asked to give the details and source thereof. The assessee has not explained the source for making this gift nor has given explanation. Therefore, the Assessing Officer treated E1,20,000/- as undisclosed income of the assessee. Against this, the assessee is in appeal before us. 14.2 The ld. Authorised Representative for assessee submitted that explanation were given regarding the source a .....

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icer. 14.4 We have heard both the parties and perused the material on record. These gifts are reflected in the cash flow statement for the financial year ending 31.03.1992 for E20,000/-, 31.03.1993 for E20,000/-. 31.3.1994 for E25,000/-, 31.03.1995 for E25,000/- and 31.03.1996 for E30,000/-, totaling to E1,20,000/-. Being so, we find that the assessee has explained this expenditure and accordingly, this addition is deleted. This ground of the appeal of the assessee is allowed. 15. The next groun .....

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sessee has not explained the source. Hence, the Assessing Officer treated E52,500/- as undisclosed income of the assessee. 15.2 The ld. Authorised Representative for assessee submitted the explanation is given regarding source of fund in the cash flow statement. The reason given by the Assessing Officer to discredit the cash flow statement is arbitrary and merely based on surmises. 15.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 15.4 We have heard both the .....

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the case are that the assessee purchased a land on 10.2.92 and 10.05.1992 in Parisutham Nagar, Thanjavoor at an admitted cost of E1,24,000/- and E89,000/- for the assessment years 1992-93 and 1993-94. The assessee was directed to explain the source of this investment vide department letter dated 02.07.1997. However, the assessee has not explained the source, and hence the Assessing Officer treated E2,13,000/- as undisclosed income of the assessee. Against this, the assessee is in appeal before u .....

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1.3.1992 and E89,000/- as on 31.03.1993. Being so, the additions are deleted as the assessee has explained the investments. This ground of the appeal of the assessee are allowed. 17. The next ground raised by the assessee is with regard to deposit in Tamilarasi for E2,12,310/- which was treated as undisclosed income by the Assessing Officer for the assessment year 1993-94. 17.1 The facts of the case are that the assessee s capital account is credited with a sum of E2,12,310/- and the source for .....

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Departmental Representative relied on the orders of the Assessing Officer. 17.4 We have heard both the parties and perused the material on record. An amount of E2,12,000/- was reflected in the cash flow as on 31.03.1993. Being so, the addition cannot be made. Hence, we delete the addition made by the Assessing Officer. Accordingly, this ground of the appeal of the assessee is allowed. 18. The next ground raised by the assessee is with regard to interest suspense account of E4,23,460/- for the as .....

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a debit balance in the books of the assessee. The assessee has claimed deduction in respect of proportionate amount for two assessment years as an expenditure. The Assessing Officer went wrong in not allowing the deduction but also erroneously treated this is as a credit balance and made the addition. 18.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 18.4 We have heard both the parties and perused the material on record. The assessee has not furnished the d .....

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acts of the case are that the assessee s capital account has been credited with an amount of E10,00,000/- described as advance for the land paid in 1992-93 from personal account. The assessee was asked to explain this entry. In the books of account pertaining to 1992-93 there was no such transaction as advance for land. The assessee has not explained the source. The special auditor in his report has observed that E10,00,000/- said to be advance for land purchase was funded by a fresh credit into .....

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ove the genuineness of these credits, they should produce books of accounts, bank accounts etc., supporting the transaction. The assessee ought to have complied with these by 02.03.1998. However, at a very late stage namely on 9.3.1998 assessee filed certain confirmation letters from these parties. However, the assessee has not produced the books of accounts, bank accounts etc.,. Hence, the Assessing Officer treated E7,80,000/-, E5,76,000/- and E 4,16,000/- as undisclosed income of the assessee. .....

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from which was paid. These persons were not produced before the Assessing Officer. The confirmation letters are not given any credence. Since, there is no evidence regarding the repayment of these loans by these individuals the credits in their accounts are treated as assessee s undisclosed income. Against this, the assessee is in appeal before us. 19.2 The ld. Authorised Representative for assessee submitted that confirmations letters from these parties and the Assessing Officer treated these .....

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nces, the rejection of the explanation and addition of the amounts are unexplained credits may be deleted. That apart, these credits figure in the books of Tamilarasi publications and the examination/addition of these credits would fall for consideration in regular assessment and cannot be considered in block assessment u/s.153BC. 19.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 19.4 We have heard both the parties and perused the material on record. The Ass .....

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ct of these substantive credits. Hence, this ground of the appeal of the assessee is dismissed. 20. The next ground raised by the assessee is with regard to credit card payments which was treated as undisclosed income by the Assessing Officer. 20.1 The facts of the case are that the assessee paid an payment of E17,766/-for the assessment year 1994-95, E,78,634/- for the assessment year 1995-96 and E24,314/- for the assessment year 1996-97. The assessee has not produced source of income for payme .....

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t for a copy of letter dated 28.4.1995 from the said Mr. Thomas Yip addressed to the assessee no proof has been furnished in the respect. The letter of Thomas Yip was not produced it till 09.03.1998 when the matter regarding payments to credit cards was brought to the notice for explanation on 02.07.1997 itself. As regards merits, as per the letter of Mr. Thomas Yip, who is from Hongkong, allegedly fell ill suddenly in London and the assessee attended to his medical needs the expenditure for whi .....

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the claim that the payment was in fact made by Thomas Yip. No details of source such as debits to a bank account of Mr.Thomas Yip etc have been furnished to substantive the claim that Mr. Yip made the payment. Further, if it was to be believed that Mr. Yip suddenly fell ill and the assessee helped him in hospitalisation. It was not understandable a to why the amounts were debited to the assessee s account and that too spread over a period of 02 months or so. The Assessing Officer not satisfied t .....

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ngly. Thus, the Assessing Officer treated E2,78,634/- as undisclosed income of the assessee. Against this, the assessee is in appeal before us. 20.2 The ld. Authorised Representative for assessee submitted that no plausible reason was given by the Assessing Officer to reject the evidence produced as to the medical expenses of Mr. Yip. In other payments, there is sources available in the cash flow filed by the assessee. 20.3 The ld. Departmental Representative relied on the orders of the Assessin .....

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1,20,000/- d) Car Maintenance 37,474/- e) Preliminary expenses 8,947/- f) Dep. Disallowed 4,60,000/- h) Disallowance u/s.40A(3) 1,33,365/- i) Scan Tech u/s.41(1) 67,055/- 21.1 With regard to advertisement expenses to the tune of E1,60,055/- which was treated as undisclosed income by the Assessing Officer, the assessee has debited a sum of E16,77,646/- by way of Administrative expenses. The auditor in his special Audit report has stated that the following items are not supported by bills/ vouche .....

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The case was posted for hearing for this purpose on 02.03.1998 by Assessing Officer. The assessee has not furnished any proof in this regard. M/s. Excellent 2 Publication. M/s. 2 Publicities have confirmed the transaction with the assessee and the same was allowed. The transactions with M/s. Moulis advertising also was checked up and they have confirmed the transaction. The total expenses claimed by the assessee as payment to Moulis is E2,26,341/- only. The assessee has filed vouchers for payme .....

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closed income of the assessee. 21.2 With regard to electricity charges which was treated as undisclosed income by the Assessing Officer, the facts of the case are that the Special Auditor has observed that Electricity expenses debited to the extent of E33,794/- does not relate to assessee s business. Therefore, the Assessing Officer treated E33,794/-as undisclosed income of the assessee. 21.3 With regard to travelling and conveyance to the tune of E1,20,000/-which was treated as undisclosed inco .....

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enance of E37,474/- which was treated as undisclosed income by the Assessing Officer, the facts of the case are that the assessee debited a sum of E68,256/-E52,399/- E22,240/-, by way of Car Maintenance, one fourth of this expenditure was treated as personal in nature i.e E17,064/- E14850/- and E 5560/- totalling E37,474/-. The Assessing Officer treated E37,474/- as undisclosed income of the assessee. 21.5 With regard to Preliminary expenses of E8,947/- which was treated as undisclosed income by .....

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ries viz WEB offset press model mark 62 is purchased for E48,40,956/-. Out of this consideration the assessee has not paid a sum of E2,06,794/- . During the course of discussion with the ld. Authorised Representative for assessee it transpired that this liability is not proposed to be paid off. In view of this, the amount of E2,06,794/- is reduced from the block of assets and the deprecation at 25% is disallowed, which works out E51,699/-, Apart from this, sale of a van was wrongly credited to s .....

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treated as undisclosed income by the Assessing Officer, the facts of the case are that in the special audit report the payment of E38,365/- , 48750, 16,250/- and 30,000/-/- is made in cash on 11.10.1993, 14.06.1995, 15.06.1995 and 01.07.1995. The ld. Authorised Representative for assessee in his reply dated 9.3.1998 has stated that this payment was made in cash because of the urgency. According to him it is covered by Rule 6DD. The assessee however has not proved the genuiness of this payment. .....

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sing Officer. 21.9 The ld. Authorised Representative for assessee submitted that all these items are debited in the books of M/s. Tamilarasi Publications. Th veracity of the debits can be examined only in the regular assessment. These disallowances cannot be subject matter of addition in block assessment u/s.158BC. Hence, the ld. Authorised Representative for assessee prayed that all these disallowance may be deleted. 21.10 The ld. Departmental Representative relied on the orders of the Assessin .....

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ed back to the file of the Assessing Officer for fresh consideration. This grounds of the appeal of the assessee are partly allowed for statistical purposes. 22. The next ground raised by the assessee is with regard to investment in jewellery to the tune of E2,00,00/- which was treated as undisclosed income by the Assessing Officer. 22.1 The facts of the case are that the assessee stated that he owns jewellery worth of E2,00,000/- as on 31.12.1995. The department vide letter dated 02.07.1997 dir .....

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ealth statement of the assessee. Further, the source is available in the cash flow statement filed by the assessee. A summary rejection of the cash flow by the Assessing Officer will not render the amount as unexplained investment. 22.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 22.4 We have heard both the parties and perused the material on record. In the cash flow statement for the year ending 31.03.1996, this amount of E2,00,000/- was not reflected in t .....

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s are spread over two previous year. The assessee was asked to explain the source of funds for his foreign trips. In this letter dated 2.9.1997 the assessee stated that the trip was for his business for attending printing and computer machine exhibition and the expenditure is accounted in the books. The assessee has not pin pointedly given any details including the debt in the books. In this regard, he had been specially asked for such details vide the department letter dated 20.02.1998. In this .....

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91) at E5,000/- per days , the expenses comes to E2,10,000/- and the ticket expense for onwards journey estimated at E10,000/-. The total foreign tour expenses taken at E2,20,000/- for the assessment year 1991-92. Further for the assessment year 1992-93, the assessee undertook foreign trips i.e from 1.4.91 to 18.04.91, i.e 18 days. The expenses in this regard is estimated at the rate of E5,000/- per day and ticket charged is estimated at E10,000/-. The expenses at to USA and Singapore from 9.8.9 .....

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sessing Officer estimated the expense for 30 days at 5,000 per days, the expense comes to E1,50,000/- and the cost of ticket for three trips is taken at E4,00,000/-. The total foreign tour expenses taken at E6,10,000/-. For the assessment years 1993-94, the assessee s total foreign tour expenses is E5,50,000/- , for the assessment years 1995-96, the assessee s total foreign tour expenses is E7,52,000/- and for the assessment years 1996-97, the assessee s total foreign tour expenses is E10,10,000 .....

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