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2015 (7) TMI 1167

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..... . The order of the Assessing Authority is cogent and well reasoned. Every minute detail is reflecting in the said order. In a case of search of seizure, the revenue may discover assessees’ failure to account several transactions which ought to have been brought to tax. It is only in such circumstances that the provisions of search and seizure are invoked. Assessee took a definite stand that the entries found in the loose sheets were reflecting in the regular books. The assessees were given a fair and reasonable opportunity to substantiate their stand. Both the assessee and the chartered accountant failed to substantiate the same. There is no doubt with regard to the possession of documents in question. It is clearly recorded in the order of assessment that the partner S.Rudramuniyappa and the Chartered Accountant who accompanied him miserably failed to substantiate their claim. On facts, we are convinced that there is no dispute with regard to the seizure of documents and the assessee as well as the Chartered Accountant were given sufficient opportunity to substantiate their claim but they miserably failed justify their stand.The substantial questions of law raised in these appe .....

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..... ertain incriminating documents were seized. Consequently, proceedings under Section 158(B)(C) of the Act were initiated. Pursuant to proceedings under Section 132, notice under Section 158 BC was issued to the assessees for returns in respect of undisclosed income in Form No.2B within 45 days from the date of service of notice. Assessees did not file the returns, but requested for copies of seized documents. Assessees filed returns belatedly on 10.07.2001 declaring undisclosed income of Rs.NIL. During the course of seizure, large bunch of loose sheets numbering 117 pages in a file captioned Paramount Double Extra was seized from the business premises of the assessees. Page 1 to 89 of the file contained cash receipts and payments for the period 09.01.2000 to 19.08.2000. Writing on these papers was in vernacular language Kannada . S.Rudramuniyappa (respondent in ITA 81/2008) while recording his statement on oath on 07.09.2000 stated that the file pertained to M/s. Ravi Wine Traders (respondent in ITA 83/2008) and contained cash statement which was either written by him or his son S.R.Satish Babu or their accountant Yallppa. First and the second columns in the loose account sheets .....

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..... oss discrepancy between the turn over declared to the Sales Tax Department and the Income Tax Department. A turn over for a three months period declared before the Sales Tax Authorities was comparable with the turn over declared by the assessees for the entire year to the Income Tax Department. Therefore, the Assessing Authority took the turn over as mentioned herein above based on the loose sheets and the yellow file and arrived at an average figure at ₹ 12,00,000/- per month. Further for the year 1999-2000, turn over was worked out on pro rata basis by taking January 2000 to March 2000 as bench mark figures and estimated a turn over of ₹ 1,53,19,064/-. In the returns filed, it was observed that the assessees for the year 2000-01 had declared a turn over of ₹ 76,31,265/- for the year 2000 to 2001. Based on this figure, the Assessing Authority came to the conclusion that turn over of ₹ 76,87,799/- (Rs.1,53,19,064 - 76,31,265) was with regard to sales outside the books of accounts which was not disclosed by the assessees. The turn over for the period 09.01.2000 to 19.08.2000 as could be gathered from the loose sheets and yellow colour file accounted for ͅ .....

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..... filed his explanations on 09.08.2002 and 16.08.2002 before the Assessing Authority contending that even if the details contained in loose sheet Nos.67 and 68 pertain to debtors, the same could not be considered as out of books, as they were covered and included in the regular books of accounts. Therefore, an opportunity was given to prove this stand. The assessees and the Chartered Accountant who appeared on 16.08.2002 were unable to substantiate their stand and expressed their inability to produce the books of accounts for the year 2000-01 and 2001-02. Thus, though assessee took a categorical stand that the names found in the loose sheets were included in the regular books of accounts, they miserably failed to establish their stand when an opportunity was given. Since no convincing explanation was forthcoming and the assessee as also his Chartered Account failed to substantiate their claim, it was held by the Assessing Authority that the assessees had not discharged their burden to prove that the case made out against them by the appellants was untenable. Therefore, the balance appearing in loose sheets amounting to ₹ 21,18,615/- was included in the regular books of account .....

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..... mitted that the said Car belonged to his brother. This is a sufficient circumstance to hold that the contents of loose sheets were correct. He further submits that though several opportunities were given, the assessees and the Chartered Accountant were unable to substantiate their specific stand that the receivables had found their place in the regular books of accounts. Under these circumstances, the Assessing Authority was correct in coming to the conclusion which have been erroneously set aside by the ITAT. Hence, he prays for allowing these appeals. 10. Per contra, learned counsel appearing for the respondents vehemently contends that the block assessment is based on some loose sheets and the yellow file. He submits that the law is fairly well settled as to how the block assessment is to be conducted in the circumstances akin to the case on hand. He submits that the various judicial pronouncements unequivocally declare that assessment cannot be done based on estimated figures. 11. We have given our anxious considerations to the submissions made by the learned Counsels and perused the records. 12. The grievance of the Revenue in these appeals is that the Tribunal has al .....

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..... cuments in question. It is clearly recorded in the order of assessment that the partner S.Rudramuniyappa and the Chartered Accountant who accompanied him miserably failed to substantiate their claim. Further, the information gathered from the partner in the reply given by him on oath has been used to assess the undisclosed income and the same has been brought to tax. There is no dispute with regard to the proposition of law that tax cannot be levied on rough estimates made on whims and fancies of the Assessing Officer. But in the cases where an assessee suppresses material and conducts business in a camouflaged manner, the authorities are clothed with powers to conduct search and seizure operations and bring the undisclosed income to tax. We hasten to add that while assessing the undisclosed income, the strict discipline that needs to be scrupulously followed is to accord a fair opportunity to the assessee from whose possession the documents are seized. On facts, we are convinced that there is no dispute with regard to the seizure of documents and the assessee as well as the Chartered Accountant were given sufficient opportunity to substantiate their claim but they miserably failed .....

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