TMI Blog2007 (11) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... ming to the conclusion that AO was justified in resorting to the estimation of undisclosed income for all the years falling in the block period. (ii) When the assessee himself had already disclosed income prior to search towards profits earned over and above the book profit for asst. yrs. 1997-98 to 2002-03 at ₹ 1,00,59,700. Without any further material found at the time of search to suggest there was further undisclosed income, the CIT(A) is not correct in stating that the estimation for all the years comprising in the block period can be made on the basis of materials found for broken period and the statements recorded based on the above materials. (iii) The CIT(A) is not correct in upholding that the Thali sales considered for multiplication factor is correct after giving a clear finding at para 3.53 'I am not very sure how by this statement he (the officer) comes to the condition that Thali sales should definitely be considered for multiplication factor.' (iv) The CIT(A) is not correct in stating that the GP rates adopted as per regular returns are to be adopted instead of the fact that the sales, purchases and expenses were not correctly recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correlation to the actual sales made in their shops. The AO has discussed the notings in various seized material and after analyzing the same, he had come to the conclusion that recorded sales are generally in the order of 20 per cent of the total sales made. All the details found were pertaining to the financial year 2002-03. No details for earlier years have been found. However, the AO had observed that the assessee is engaged in unaccounted sales in earlier years also which is evidenced by the regular returns filed by the assessee himself, wherein for various years, he has shown income under the head Income from other sources or Adhayam as under : Asst. yr. Amount (Rs.) 1997-98 6,50,000 1998-99 20,27,000 1999-2000 4,75,000 2000-01 46,67,000 2001-02 11,70,000 2002-03 10,70,200 2003-04 11,56,000 Although the assessee himself had stated that the income represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. According to the CIT(A), there is a corroborating evidence to show that only 20 per cent to 25 per cent of sales are recorded. Hence the CIT(A) confirmed that the estimation of turnover at 300 per cent is valid and also he confirmed the estimation in respect of GP on this turnover on the basis of declared GP in earlier years. However, finally he computed the undisclosed income on this account at ₹ 1,53,30,619 as against ₹ 1,97,88,566 made by the AO. Further CIT(A) has given deduction towards expenses at ₹ 96,52,896 over and above what the AO had given and thereafter determined undisclosed income at ₹ 62,77,720 instead of ₹ 1,56,31,600 as determined by the AO. Against this finding, the assessee is in appeal before us. 6. Learned Authorised Representative submitted that when the assessee himself had already disclosed income prior to search towards profits earned over and above the book profit for asst. yrs. 1997-98 to 2002-03 at ₹ 1,00,59,700 without any further material found at the time of search to suggest there was further undisclosed income, the CIT(A) is not correct in stating that the estimation for all the years comprising in the bloc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns during the course of search and seizure and survey operations do not serve any useful purpose. It is therefore advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the IT Department. Similarly, while recording statement during the course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, AOs should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders. 10. He submitted that circulars issued by CBDT shall be binding on the officers of the Department. For this proposition he relied on the following case law : (i) UCO Bank vs. CIT (1999) 154 CTR (SC) 88 : (1999) 237 ITR 889 (SC); (ii) CCE vs. Dhiren Chemical Industries (2002) 172 CTR (SC) 670: (2002) 254 ITR 554(SC). Regarding the assets founds in search on the basis of which undisclosed income was offered, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Paper book 149) It is found that there is an excess physical stock of gold jewellery of about 3 kgs. at Pavizham Jewellers. Further it is noted that there is a stock of about 8 kgs. at the premises of M/s Chungath Jewellery. It is learnt that M/s Chungath Jewellery is only showing coolly receipts. Please explain. Ans : I admit the unexplained stock of gold jewellery stated above as made out of my undisclosed income. But finally the officer himself had accepted the explanations with regard to most of the items as either to be considered in the hands of others or already disclosed. The details are as below : (i) Gold jewellery of 1,526.35 gms. received from Gurnvayur Gold Smiths [p. 8 para b(i)] value ₹ 5,64,620. 'It does not belong to the assessee is accepted, keeping in view the transactions recorded in the seized material'. (ii) 3 kgs. seized from Pavizham Galaxy Jewellers India (P) Ltd [p. 9 para (ii)] value ₹ 11,10,000 to be considered in the hands of the above company under s. 158BD. (iii) 11 kgs. of gold ornaments seized [p. 9'para (iii)] value ₹ 40,70,000. This aspect will be considered in the hands of Lilly under s. 158BD. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or afterwards to suggest that there was undisclosed income during 1997-98 to 2002-03 than admitted as above. Only from the above other receipts admitted in the regular returns filed before raid, the officer and CIT(A) came to the conclusion that there were also undisclosed sales. There was no material available with the Department to suggest there was more income earned than admitted in the regular returns. It is also submitted that all the assets and investments found during search were duly accounted and found place in the regular returns filed before raid. The officer had not brought forth any material or evidence during search or afterwards to pinpoint any undisclosed income or undisclosed assets or investments. 14. Thus he submitted that there is no further material or direct evidence available with the Department to pinpoint the existence of any undisclosed income over and above admitted already in the regular returns. Regular assessments were also completed based on such returns 15. The Hon'ble Madras High Court has held in CIT vs. P.V. Kalyanasundaram (2006) 203 CTR (Mad) 449: (2006) 282 ITR 259(Mad) that an addition cannot be made on the basis of mere statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed assets or investments for which there was no proof in the seized material. 21. For this proposition he relied on the judgment of Dr. R.M.L. Mehrotra vs. Asstt. CIT (1999) 64 TTJ (All) 259: (1999) 68 ITD 288(All). At pp. 304 and 305 of the above judgment it is stated as follows : If the assessee had actually made a fortune of similar receipts in respect of the remaining part of the year, they must be reflected by certain assets movable or immovable ought to have been found during the course of search. No such assets despite the extreme step of search which amounts to a serious invasion on the rights of subjects and which is perhaps the last weapon in the arsenal of the Department were found which could be attributed to any such patently hypothetical receipts. In view of this we are unable to concur with the Department to the multiplication formulae adopted by the AO. 22. To sum up, learned Authorised Representative placed the following submissions before this Bench : (1) Regular returns admitting income of ₹ 1,00,59,700 from unrecorded sales were filed before raid. (2) No material either during search or afterwards was found to pinpoint income earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as declared by the assessee itself in the returns of income filed by it in the ordinary course for the different years although in belated and invalid manner. Apart from the question as to whether the income as considered in the impugned assessment, was not of the nature as specified in the definition of 'undisclosed income' as provided in s. 158B(b), for some income to be undisclosed income it will be required that the said income was not to be undisclosed income it will be required that the said income was not or would not have been disclosed by the assessee to the Department. Evidently the search by itself, had not been able to discover or unearth any other income earned by the assessee during the block period. The entire assessment was based on the declaration of income by the assessee itself in the returns filed by it and actually the income declared had been totally accepted by the AO. In the face of such facts, it would not be possible to say that what had been considered in the impugned assessment order as 'undisclosed income' of the assessee, really represented the income not disclosed or not mean for the Department. Therefore there was no existence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion relating to 10th Oct., 2002 to 3rd Nov., 2002 found in the course of search proceedings even though there was disclosure of suppressed sales by the assessee in the regular return of income before the date of search in respect of years in the block period and also there is no matching assets found to suggest any further income ? (ii) If yes, is there any justification for making estimate of the undisclosed income on the facts of the present case ? (iii) If yes, then what should be the quantum of estimation of the undisclosed income, whether on the basis of GP or on the basis of net profit ? 28. The main crux of the argument of the learned Departmental Representative is that there is a specific provision in Chapter XIV-B that s. 145 is applicable to the block assessment also and there is no requirement of unearthing of matching assets towards undisclosed income during the course of search. This argument of the Departmental Representative is misplaced. The provisions under Chapter XIV-B are special provisions. These were brought on the statute book specially and specifically for assessment of undisclosed income detected as a result of search. The assessment made under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r property which has not been or would not have been disclosed for the purposes of this Act, or any expense, deduction or allowance claimed under this Act which is found to be false. It therefore follows that what the assessee had already disclosed or would have disclosed is not to be treated as undisclosed income. The maxim of English law as propounded by Holroyd J. prescribes; It is better than the guilty men should escape rather than one innocent should suffer. The principle of justice requires that no one should be punished on the basis of presumption. Addition should not be made merely on surmises. It should be supported by cogent material and evidence. 29. Coming to the facts of the case, the search party found the suppressed sales relating to 22 days cited supra at ₹ 1.86 crores relating to the period 10th Oct., 2002 to 3rd Nov., 2002 as against disclosed sales of ₹ 26.66 lakhs. The AO estimated the sales as follows for the above block period on the basis of the seized material. 30. The profit on suppressed sale is worked out taking the GP disclosed in the audited accounts filed for the above period which worked out to as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciers (P) Ltd. vs. Dy. CIT (2007) 107 TTJ (Chennai) 200 wherein it was held as follows : Under s. 158BB, undisclosed income of the assessee for the block period is required to be computed on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the AO and relatable to such evidence as reduced by the aggregate of the total income, or as the case may be, increased by aggregate of loss of such previous year. Such other materials or information as are available with the AO should be as per this section relatable to such evidence. The word 'such' assumes much significance in this provision as it indicates only the evidence found as a result of search or requisition of books of account or other documents at the time of search. No other material can form basis for computation of undisclosed income of the block period. 32. Block assessment has to be framed on the basis of seized material which in this case is sales particulars relating to 22 days i.e. from 10th Oct., 2002 to 3rd Nov., 2002. No other materials or asset details were found during the course of search. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other materials or information as are available with the AO and are relatable to such evidence. The core thing to be seen is the evidence found which will be the basis for making the assessment. If there is no evidence or the evidence has already come on record or has been disclosed by the assessee in the assessment proceedings, then that evidence cannot be said to have been found as a result of search and in that case, the material or information available with the AO and relatable to such evidence cannot also help in computing undisclosed income. In the instant case, search was undertaken (from) 26th Nov., 2002 to 16th Dec., 2002. The statements of the assessee were recorded and in those statements, no incriminating material was there which could be termed as evidence on the basis of which the undisclosed income could be computed. Certain materials relating to sales were found. But there was nothing in those materials relating to sales which could establish that assessee had undisclosed income for this period. On the contrary, disclosure of income had been made by the assessee in the books and return of income pursuant to sales suppression. The Department had, no doubt, collecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search. On appeal it as held as follows : Held, that the assessee was not able to dispute the findings of the AO as well as the Tribunal where the seized material had shown that there was suppression for a period of 24 days during the asst. yr. 1996-97 and 15 days for 1997-98 and also that the suppressions were on a day-to-day basis and the evidence recorded from the partner had shown that the same method was adopted through the assessment years for the entire block period. Where the assessee had carried on the business for the full year, the addition was made at six times the suppression found during that year and for the asst. yr. 1997-98 the addition was restricted to only three times, as the assessee had carried on the business only for half of the period with reference to the earlier year, where six times addition was made. It was clear from the order of the Tribunal that the estimations of the undisclosed income made were based on relevant material and there was absolutely no unreasonableness or arbitrariness while making such addition. Though there was no material with reference to the addition made for the asst. yrs. 1986-87 to 1995-96, yet it was admitted by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestioned in the block assessment. If the assessee has disclosed insufficient or inadequate income relating to unaccounted sales in the regular return, it cannot be questioned in the block assessment. Had he not disclosed income from unaccounted sales in the regular return, then the Department could have estimated the income on the basis of seized material. In the present case, it is not so. The assessee has already declared income from unaccounted sales in the regular return of income. We place reliance on the judgment of the Calcutta High Court in the case of Bhagwati Prasad Kedia vs. CIT (2001) 167 CTR (Cal) 336 : (2001) 248 ITR 562 (Cal) wherein it is held as below : Held that the AO was not entitled to question in block assessment the loan which was a subject-matter of the regular assessment. The AO was wrong in holding that the said sum could be taxed in block assessment although the same featured in the regular books of account. When the loan creditor was an assessee and in whose assessment the loan advanced had been accepted by the Revenue, the AO was wrong in holding that the assessee was liable to pay tax on that loan money taken from the assessee. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at p. 251]. The word assessment can bear a very comprehensive meaning, it can comprehend the whole procedure for ascertaining and imposing liability upon the taxpayer [Kalawati Devi Harlalka vs. CIT AIR 1968 SC 162 at p. 167 : (1967) 66 ITR 680(SC)]. Whereas the word 'computation' compared to the word 'assessment', bears a narrower meaning. It is the process of computation of the income for assessment of the tax payable. The ordinary grammatical meaning of the word 'computation', as given in Shorter Oxford Dictionary, third Edition, is : 'the action or process of computing; a method of reckoning' and the word 'compute' means : 'clear or settle (an account) reckon; to determine by calculation; to reckon, count; to take account of'. According to Longman Dictionary of Contemporary English, 1982 reprint, the word 'compute' means : 'to calculate (a result, answer, sum etc.)' and 'computation' means : (the result of) the act of calculating. Thus, in the context of the Act, computation is a calculation, a method of determination by reckoning through calculation. It involves some methodical process with so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Tribunal, which is the last Court of finding of facts, if perverse or based on no materials or that it was not possible by any reasonable man to arrive at such a conclusion. Where two opinions are possible on the established facts, if the Tribunal has adopted one, this Court sitting in appeal under s. 260A is not supposed to substitute its own view unless it is of the opinion that the findings arrived at by the Tribunal cannot be sustained and are on the border line of perversity. The learned Tribunal has rightly found that the CIT(A) had appraised instead of assessed; he had attempted to work out the approximate based on probabilities. Having gone through the order of the CIT(A), we do not think that the finding of the learned Tribunal in this regard cannot be possible or is perverse or that there was no scope of forming two opinions with regard thereto. In the case of CIT vs. Vikram A. Doshi (supra), the Hon'ble Bombay High Court held as under : That the other questions raised by the Revenue were based on transactions which could not be said to be undisclosed transactions falling under s. 158B of the IT Act, 1961, because the transactions in question were di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his provision as it indicates only the evidence found as a result of search or requisition of books of account or other documents, at the time of search. Any other material cannot form the basis for computation of undisclosed income of the block period. 38. We place reliance on the judgment of the Delhi High Court in the case of CIT vs. Anand Kumar Deepak Kumar (2007) 294 ITR 497(Del). In this case, as search was carried out in the premises of the assessee on 9th Aug., 2004. As a result of the search, some documents were recovered which led the AO to believe that there were unaccounted sales to the extent of ₹ 19,89,807 between 1st April, 2004 and 9th Aug., 2004. On this basis, he assumed that the unaccounted sales for the entire accounting year are ₹ 55,86,766. Feeling aggrieved, the assessee preferred an appeal before the CIT(A) and the CIT(A) found that there were two distinct periods that were involved, namely, the period from 1st Aug., 1994 to 9th Aug., 2004, in which there was definite evidence regarding unaccounted sales and the second period was from 10th Aug., 2004 to 31st March, 2005, when even though the account books were examined, the AO could not fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is undisclosed income even after disclosing in the regular return of income without any search material to pinpoint that more income was earned than what was admitted. His contention is in the absence of any evidence other than statement under s. 132(4) which was retracted by the assessee and considered by the AO. This argument is supported by the judgment of the Gauhati High Court in the case of Greenview Restaurant vs. Asstt. CIT (2003) 185 CTR (Gau) 651: (2003) 263 ITR 169(Gau). In the assessment once again, estimation is not possible by multiplying suppressed sales. In the present case, when the assessee has disclosed the income from unaccounted sales in the regular return, it will be unreasonable to estimate the suppressed sales on the basis of undisclosed actual sales for 22 days relating to the broken period found during the course of search especially when it was related to the festive season of Diwali by multiplying the sales. In our opinion, sales during the festive season cannot be considered as a yardstick to determine the suppressed sales . It cannot be said that there is always standardized sales during the block period consisting of 8 years. The decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions. Words in a section are not to be interpreted by having those words in one hand and the dictionary in the other hand. In spelling out the meaning of the words in a section, one must take into consideration the setting in which those terms are used and the purpose they are intended to serve. The two rules of most general application in construing the meaning of a provision of a statute are first that it shall, if possible, be so interpreted'ut res magis valeat quam perfat. The word of statute should be given a sensible meaning so as to make them effective. And secondly, that such a meaning shall be given to it as may carry out and effectuate to the fullest extent the intention of the legislature. It is to be seen that nebulous concept of the legislative intent be not used to curtain the explicit provisions in a statute. It is of paramount importance that streams of justice be kept clear and pure. As a matter of fact, search and seizure is a serious invasion on the rights of the subject. The search and seizur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted at the time of search and the evidence gathered. Under s. 132(4), the authorized officer may, during the course of search or seizure, examine on oath any person who is found to be in possession or control of any books of accounts, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Act. In the instant case the partners of the firm were examined by the authorized officer. No question apropos sales promotion expenses was put to the partners. There was no enquiry as to this aspect at the time of the search. Nothing incriminating as regards sales promotion expenses was detected when the raid was conducted. From the perusal of the Panchnama, it appeared that only one gift book was impounded. That book related to period 1994-95. There was absolutely no evidence and material in regard to the other years of assessment. The book was stated to be incomplete. There were some entries in regard to the gift given. Hence, no conclusion could be drawn on the basis of that book. All the purchases were found to be fully vouched and verifiable. All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e roving enquiries. It appeared that the AO looking for a black cat in a dark room which might or might not be there. He transgressed the boundaries of s. 158B(a), while making the addition. Sec. 158B(b) contemplates that the undisclosed income of the block period shall be the aggregate of the total income of the previous year falling within the block period. It is to be computed in accordance with the provisions of Chapter IV (ss. 14-59). Such computation should be on the basis of evidence found as a result of search or requisition of the books of account or documents and such other materials or information as are available with the AO. The legislature has used the words 'such other materials' and not 'any other materials'. The word 'such' is defined in Concise Oxford Dictionary, 'of the kind or degree already described or implied or intelligible from the contest or circumstances. There was absolutely nothing except the gift book (1994-95), which was impounded at the time of search. This was not relevant for making such addition. Therefore, the addition made the AO was not justified and was deleted. 40. We also rely on the judgment of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are rejected, the AO must make an estimate and to that extent he must make a guess but the estimate must be related to some evidence or material and it must be something more than there suspicion. To use the words of Lord Russel of Killowen again, he must make what he honestly believes to be a fair estimate of the proper figure of assessment and for this purpose he must take into consideration such materials as the AO has before him, including the assessee's circumstances, knowledge of previous returns and all other matters which the AO thinks will assist him in arriving at a fair and proper estimate. But in the present case, the estimation in the block assessment is not possible since the assessee has disclosed income from unaccounted sales in the regular assessment. If at all any estimation has to be made, it can be done in the regular assessment and not in the block assessment. 42. It cannot be said that the assessee has undisclosed income from unaccounted sale for this period. In view of the above discussion, we are inclined to accept the contention of the assessee that estimation of undisclosed income under the provisions of Chapter XIV-B is not possible in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove other receipts admitted in the regular returns filed before raid, the officer and CIT(A) came to the conclusion that there were also undisclosed sales. There was no material available with the Department to suggest that there was more income earned than admitted in the regular returns. It is also submitted that all the assets and investments found during search were duly accounted and found place in the regular returns filed before raid. The officer had not brought forth any material or evidence during search or afterwards to pinpoint any undisclosed income or undisclosed assets or investments. In the case of Greenview Restaurant vs. Asstt. CIT (supra), the Gauhati High Court held as under : That the admitted case was that the assessment for both the years had been made under s. 143(3) of the IT Act, 1961 and notice was issued under s. 143(2). It was apparent that the AO added ₹ 4 lakhs as undisclosed income acting on the statements of the assessee's partner made in the course of the search. Though, in the meantime, the statements made in the course of search had been retracted, there was no reference thereto in the orders. There was nothing on record to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evancy of those documents for arriving at the undisclosed income of the assessee on the date of search or in the light of payment credited to the accounts of the assessee by way of cheques from the purchaser for the sale of 85 per cent of the constructed area only after the date of search and the tax paid thereon as reflected in their return. Hence both the orders of the AO and the Tribunal are set aside and the matter is also remanded back to the AO to compute the correct undisclosed income in accordance with law. We also place reliance on (1999) 64 TTJ (All) 259 : (1999) 68 ITD 288 (All) cited supra wherein it is held as under : If the assessee had actually made a fortune of similar receipts in respect of the remaining part of the year, they must be reflected by certain assets movable or immovable ought to have been found during the course of search. No such assets despite the extreme step of search which amounts to a serious invasion on the rights of subjects and which is perhaps the last weapon in the arsenal of the Department were found which could be attributed to any such patently hypothetical receipts. In view of this we are unable to concur with the Department t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of suspicion, conjectures or surmises. Suspicion, however strong cannot take place of material in support of findings of the AO. The AO should act in a judicial manner proceeded with judicial spirit and should come to a judicial conclusion. The AO is required to act fairly as a reasonable person and not arbitrarily or capriciously. An assessment made on inadequate material cannot stand on its own leg'Surjeet Singh Chhabra vs. Union of India Ors. AIR 1997 SC 2560, V. Kunhambu Sons vs. CIT (1996) 131 CTR (Ker) 396: (1996) 219 ITR 235(Ker). We also place reliance on the judgment of the Gauhati High Court in the case of Greenview Restaurant vs. Asstt. CIT, cited supra. 44. In view of the facts and circumstances of this case, we are of the opinion that estimation of income cannot be made on the basis of certain discrepancy noticed by the search party in the course of search proceedings. In our opinion, there is no justification for making estimation of undisclosed income. Since we have held that there is no justification for estimation of income, there is no question of considering the basis for estimation, whether on GP or net profit. Without prejudice to this finding, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. vs. CIT (1999) 157 CTR (SC) 249: (1998) 229 ITR 383(SC) it was held that the purpose of an assessment proceeding before the taxing authority is to assess correctly the tax liability of the assessee in accordance with law. This ground of appeal of the assessee is allowed. 46. Ground No. 4 : The grievance of the assessee vide this ground is that the CIT(A) is not justified in stating that the undisclosed income estimated by the officer for the broken period (for which the previous year was not over and the due date for filing the return was not over on the date of raid) was correct. 47. This issue is covered by the discussions we have put forth while dealing with ground Nos. 3.1 to 3.5. Hence we set aside this issue to the file of AO to determine the undisclosed income only on the basis of net asset method i.e. (excess of assets over known sources of income, capital and liabilities) based on the materials and evidences found during the course of search and to consider the judgment of the jurisdictional High Court in the case of Asstt. CIT vs. A.R. Enterprises (2005) 194 CTR (Mad) 44: (2005) 274 ITR 110(Mad) to give proportionate credit to income towards advance tax paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has in the case of S.V. Sreenivasan vs. Asstt. CIT [IT(SS)A No. 98/2004] deleted the additions at para 53 in its order dt. 3rd Jan., 2005, the concluding part of which is reproduced below : Even not satisfied by both the confirmations, the AO again verified from the accountant of M/s Golden Jewellers on 22nd Sept., 2003 along with the books of account. On verification from the books of account it was found that on 17th July, 2001 gold of 815.550 gms. and 5th Aug., 2001 gold of 1,166.500 gms were issued to M/s R.K.R Jewellers by M/s Golden Jewellers. Despite all these the AO rejected the claim of the assessee only the ground that this claim was not made by the assessee either at the time of search or at the time of investigation before the Dy. Director of IT. The assessee has properly and beyond doubt proved that this stock was received from M/s Golden Jewellers and confirmed even by the Addl. CIT, Bangalore. In view of this we see no reason in upholding this addition and accordingly this addition is deleted. 53. In the circumstances, in our opinion, the above gems jewellery do not belong to the assessee. 54. Regarding purchase consideration paid for building accou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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