TMI Blog2008 (7) TMI 978X X X X Extracts X X X X X X X X Extracts X X X X ..... any undisclosed income it may not be proper to proceed against the assessee u/s 158BD r/w ss. 158BC and 143(3) of the Act without any basis whatsoever. In the case at hand, the AO has not connected any undisclosed income with anything that has come in search and seizure. The AO has himself recorded with regard to the gifts made by Dr. Jaiswal that the assessee had denied of having made any compensatory payments. He has also found that the statements recorded of Dr. Jaiswal were not clear and he has not specifically mentioned anything about the gifts made to the assessee. The AO has proceeded with regard to the onus on the assessee to prove the genuineness of the transaction and on that basis, he has held it to be non-genuine. But the fact remains that how no nexus has been established with any document or evidence collected during search and seizure with regard to the gift made. There is no finding as to how the gifts are not genuine except stating about the onus. Be that as it may, in the absence of any document during search or seizure, it is difficult to accept the submission of the learned counsel for the Revenue that the conclusion arrived at by the Tribunal to the effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even appeals. Five appeals have been preferred by the Revenue and, therefore, the same shall be adverted to in this order. The order passed by the Tribunal in IT(SS)A No. 54/Ind/1997 and IT(SS)A No. 52/Ind/1997 are not under challenge. 2. Before we proceed to the substantial questions of law on the basis of which the appeals were admitted and which required to be recast as conceded to by the learned counsel for the Revenue as well as the learned counsel for the assessee, we think it patent to deal with the factual matrix in each appeal so that a clear position would emerge. 3. In IT(SS)A No. 47/Ind/1997, the Tribunal dealt with the undisclosed income of ₹ 15,285 and ₹ 981 which was so treated because no returns were filed. The Tribunal relying on the decision rendered in CIT vs. Smt. Kamlesh Daga 27 ITC 121 (MP) directed deletion of the addition. There was an addition of ₹ 1,48,000 in various years on account of the amount received from Manju Family Trust. Before the Tribunal, it was contended by the Revenue that the income of the trust in reality was the undisclosed income of the Agrawal family. The Tribunal taking note of the material expressed an opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery declared in the WT return. Thereafter, the Tribunal separately considered the jewellery belonging to Smt. Sujata Agrawal as well as the jewellery purchased by M.S. Agrawal from the State Bank of India. The Tribunal took note of the fact that Smt. Sujata Agrawal had left the country in 1979 but she was declaring her jewellery in her WT return. The Tribunal has opined that the WT return shows that she had left some jewellery in India and it is a common feature that the lady going abroad would leave some jewellery in her home country so that the same can be used at the time of her visit in India. It is difficult to believe that the lady had left all her jewellery in India and carried nothing abroad. Being of this view the Tribunal opined that she might have left 400 gms. jewellery in the country. As far as jewellery purchased by M.S. Agrawal (HUF) the Tribunal opined that it was bought from the bank. Evidence regarding the payment by withdrawing from M/s Universal Industries has also been brought on record. The jewellery was not declared in the WT return. The Tribunal did not concur with the AO that the assessee could have disposed of his jewellery in various ways on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividual case and ₹ 1,84,714 in his HUF account. But the same has not been shown in the WT return. The Tribunal took note of the provisions of the WT Act and treated the cash amounting ₹ 50,000 each in individual as well as HUF status to be justified and the balance to be treated as undisclosed income. Thereafter, the Tribunal addressed itself to the cash withdrawal of Shri V.K. Agrawal from M/s Universal Industries to record a conclusion that amount of ₹ 1 lac was withdrawn on 4th June, 1996, for Birsingh Project account. No evidence was produced by the Revenue that V.K. Agrawal had claimed the said expenditure from the firm. The Tribunal took note of the fact that there had been gap of three months from the date of this withdrawal and search. Regard being had to the same, the Tribunal held that ₹ 75,000 cash was explained and balance of ₹ 25,000 was treated to be unexplained cash. As perceivable, it has worked out the total cash which was not allowed and opined that unexplained cash is ₹ 2,51,224. Thus, the Tribunal allowed the appeal in part. 5. In IT(SS)A No. 50/Ind/1997, there was addition of ₹ 2 lacs from NRI gifts and ₹ 1,07, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l further opined that search was conducted in the premises of Sanjay Gupta and no cash, valuables or any other documentary evidence was found which indicates the sale of property by Sanjay Gupta to the assessee. In the assessment order, no assertion or reference was made. Admittedly, the stand of the assessee that the general power of attorney was given because of friendly relations of Sanjay Gupta with the assessee and no purchase of property was made was accepted. 7. Appeal IT(SS)A No. 55/Ind/1997 pertains of ₹ 2,31,000 on account of amount received from family trust and some amount relating to NRI gifts. The Tribunal, applying similar logic as has been applied in other appeals, directed deletion of the amount. There was also addition of ₹ 3,61,168 on account of jewellery. The Tribunal directed deletion of the sum on the reasonings in other appeals. There was addition of ₹ 7,08,445 as undisclosed income on account of cash found in the premises and locker of the family. The Tribunal affirmed the addition of ₹ 2,51,224 and directed deletion of the rest. In the said appeal, there was addition of ₹ 3,89,000 instead of ₹ 3,32,080 as disclosed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e found fault with inasmuch as the AO had not ascribed any reason for proceeding under Chapter XIV-B and further nothing has been discovered during search and seizure to have any kind of link or nexus with the transaction. Learned counsel further submitted that in most of the cases there are findings of fact and hence, there is no perversity in such finding and hence, no substantial question of law emanates from them. It is contended by him that the Tribunal has correctly relied on the circular of CBDT and hence, no fault can be found with the same. It is urged by him that the tax impact in respect of two years is considerably less for which the Revenue should not have filed the appeals. 11. On a perusal of the order passed by the Tribunal and the authorities below, there is no dispute that the search under s. 132 of the Act took place on 29th Aug., 1996, and it was finally concluded on 2nd Sept., 1996. The Tribunal has not accepted the submission of the Revenue that there was undisclosed income and the Revenue was within its authority to proceed against the assessee under Chapter XIV-B of the Act. In this context, it is apposite to refer to certain citations in the field. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, he/she would make entry in his/her books subsequent to date of search to avoid higher rate of tax at 60 per cent. Such entry, i.e., an entry made subsequent to the date of search is of (no) consequence. It is for this reason that the words used in s. 158B(b) would not have been disclosed are very significant. This clearly has a nexus with the intention of the assessee in dealing with his/her property. 14. In Dr. Brijesh Lahoti vs. CIT (2006) 200 CTR (MP) 499: (2006) 282 ITR 349(MP) the question arose with regard to the concept of 'undisclosed income' and the Bench analyzed the anatomy of ss. 158B and 158BA and other provisions and opined as under : 10. We agree with Mr. Chaphekar, learned senior counsel for the appellant, that where the assessee discloses his income to the Department before the date of search in some manner or the other, it may be difficult to hold that such income is to be treated as undisclosed income for the purpose of assessment in accordance with Chapter XIV-B of the Act...... 15. In CIT vs. Vishal Aggarwal (2005) 196 CTR (Del) 279: (2006) 283 ITR 326(Del), a Division Bench has expressed the view as under : 8. We are of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come cannot be treated at par. The former is an offence which goes to the root of the matter and the other is on the basis of the causes shown by the assessee where the AO is free to accept the justification shown or reject the same. The said two types of cases cannot be treated at par. Thereafter, the Bench came to express the opinion that the AO was not entitled to question the said loan in block assessment which is a subject-matter of regular assessment. 18. In CIT vs. Ravi Kant Jain (2001) 167 CTR (Del) 566: (2001) 250 ITR 141(Del), the Delhi High Court speaking through Arijit Pasayat C.J. (as his Lordship then was), held that block assessment under Chapter XIV-B of the IT Act, 1961, is not intended to be a substitute for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done. The assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of account or documents and such other material information as are available with the AO. Evidence found as a result of search is clearly relatable to ss. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction and on that basis, he has held it to be non-genuine. But the fact remains that how no nexus has been established with any document or evidence collected during search and seizure with regard to the gift made. There is no finding as to how the gifts are not genuine except stating about the onus. Be that as it may, in the absence of any document during search or seizure, it is difficult to accept the submission of the learned counsel for the Revenue that the conclusion arrived at by the Tribunal to the effect that the proceedings could not have been initiated under Chapter XIV-B is erroneous or perverse. 24. At this juncture, we are obliged to refer to the instructions which relate to guidelines for seizure of jewellery and ornaments in the course of search. The said guidelines pertain to search and seizure under s. 132 of the Act. It provides that in the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the WT returns only need be seized, the officer having regard to the status of the family and the custom and practices of the community to which the family belongs and other circumstances of the case. The Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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