TMI Blog2014 (9) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of un-disclosed sale of eggs - HELD THAT:- As per section 158BC of the Act the computation of un-disclosed income of the block period shall be aggregate of the total income of the previous year falling within the block period, computed on the basis of evidence found as a result of search or requisition of books of account and/or other documents or information as is available with the Assessing Officer, reduced by the total income declared by the assessee. The basis for computing the un-disclosed income of the block period in the hands of any assessee is on the basis of the evidence found as a result of search. The search operations were carried out at the premises of the assessee on 20.7.2000 and a spiral diary was impounded. However, the diary though had certain notings, but do not bear any date and it cannot be presumed that the said diary relate to the period prior to 20.7.2000 i.e. the date of search. The addition made on such surmises cannot stand and we confirm the order of the CIT (Appeals) in this regard. The second aspect of the said addition was explanation given by the assessee during the appellate proceedings that even the total of the figures was incorrec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax(Appeals), Chandigarh dated 24.01.2006 relating to block period 1990-91 to 1999-2000 against the order passed under section 158BC r.w.s. 143(3) of Income Tax Act, 1961 (in short the Act ). 2. The Revenue has raised the following grounds of appeal: 1. On the facts and circumstances of the case and in law, the CIT(A) vide appellate order No. 280/P/02-03 dated 24.11.2006 has erred in deleting the addition of ₹ 8 lacs made on account of loan repayment to M/s Oberai Plastics Ltd. 2. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of ₹ 29,27,821/-made on account of undisclosed sales of eggs, treating the seized documents as dumb documents. 3. On the facts and circumstances of the case and in law, the CITA has erred in deleting the addition of ₹ 5,67,133/- on account of unaccounted expenditure u/s 69C of the Act by way of payment of interest to Sh. Ramesh Nikhanj and family and Sh.H.S. Chadha family. 4. It is prayed that the order of the Ld.CIT(A) be cancelled and that of the Assessing Officer may be restored. 5. The appellant craves leave to add o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f account and since the source had not been explained, the said sum of ₹ 8 lacs was treated as un-disclosed sources under section 69C of the Act. Another addition made in the hands of the assessee was on account of eggs production. During the course of search operation small pocket diary was seized as per Annexure A-12. This diary contained the details of eggs produced for the period prior to the date of search i.e. 20.7.2000. At page 36 of the pad, there were figures of 2731 and 17, which the Assessing Officer interpreted as 2731 trays of eggs produced on 20.7.2000. Each tray contained 30 eggs. Therefore, total number of eggs produced on 20.7.2000 came to 81947n (2713x30+17). On the back side of page 35 of diary, figures of 82140 were mentioned, which as per the Assessing Officer was opening stock. It included 40,000 eggs fond loaded in canter No.HR 38C-2281 which was parked in the premises of the assessee when the search party arrived in the morning of 20.7.2000. On the remaining pages of the diary also, various figures of daily production of eggs were mentioned. The tabulated details of page-wise figures are available under para 4.1 at pages 3 to 5 of the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the assessee before the CIT (Appeals) was that Annexure A-12 i.e. the spiral diary was found from the premises but none of the pages bore any date, month or the year and all the pages have been marked by the search party where none of the pages indicated the word tray or egg was written any where or at any page. Further the diary does not bear the name of the assessee company and it was not written in the hands of any Director of the assessee company. It was admitted by the learned A.R. for the assessee that some of company employees may have jotted down certain figures but the impugned figures do not reflect complete and correct facts. The learned A.R. for the assessee further explained that there was no discrepancy in the production or sale and pointed out that the Assessing Officer had failed to consider the opening stock and closing stock of the eggs before working out the production for the period under consideration. Further there was totaling error and that correct total worked out to 84,34,627/- and not 1,18,22,689. As against the correct total, the assessee had shown production of eggs at 88,94,868 and it was contended that the figures jotted down in Annexure A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that before the CIT (Appeals) the confirmation was filed which reflected the said loan and further amount of ₹ 95 lacs was surrendered by the AOP and the cash to the extent of ₹ 8 lacs was available. The learned A.R. for the assessee further pointed out that the confirmation, if any filed before the CIT (Appeals) was not sent back to the Assessing Officer for remand proceedings. 13. We have heard the rival contentions and perused the record. The first issue raised by the Revenue is in relation to deletion of addition of ₹ 8 lacs. During the course of search proceedings Annexure A-8, pages 39 to 42 of the Panchnama seized from the residential premises of the assessee were four receipts of ₹ 2 lacs each signed by Shri Anil Oberoi, Executive Director of M/s Oberoi Plastics Ltd.. As per the said receipts, the loan was taken on 13.1.1995. However, the receipt for return of loan did not bear any date and the entire payment of ₹ 8 lacs was taken as un-disclosed income of the assessee for the previous year 2000-01. The plea of the assessee was that these were pre-receipted receipts and the same were not returned by oversight. The assessee claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed income of the block period shall be aggregate of the total income of the previous year falling within the block period, computed on the basis of evidence found as a result of search or requisition of books of account and/or other documents or information as is available with the Assessing Officer, reduced by the total income declared by the assessee. The basis for computing the un-disclosed income of the block period in the hands of any assessee is on the basis of the evidence found as a result of search. The search operations were carried out at the premises of the assessee on 20.7.2000 and a spiral diary was impounded. However, the diary though had certain notings, but do not bear any date and it cannot be presumed that the said diary relate to the period prior to 20.7.2000 i.e. the date of search. The addition made on such surmises cannot stand and we confirm the order of the CIT (Appeals) in this regard. 16. The second aspect of the said addition was explanation given by the assessee during the appellate proceedings that even the total of the figures was incorrect and the Assessing Officer had failed to consider both the opening and closing stock while comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k period being not reflected in the books of account and worked out the addition of ₹ 15,58,750/- relating to assessment years 1993-94 to 2001-02. 18. The plea of the assessee before the CIT(A) was that the said entries in the seized diaries did not relate to the two companies in which assessee was director. However, the said entries in seized diaries related to the finance business carried on by the AOP of Romesh Nikhanj and assessee. The claim of the assessee was that after filing the return for the block period in the case of AOP, nothing remains unaccounted or undisclosed. The AOP consisted of the assessee and Shri Romesh Nikhanj which carries on the business of money lending and no regular books of account were maintained. However, on the basis of documents found during the course of search, the said AOP had made a disclosure of ₹ 95,77,200/- which as per the claim of the assessee was inclusive of interest earned on such advances. The assessee claims that the above said figures of undisclosed investment and interest earned thereon was by the two groups of families and was worked out by the Department on the basis of documents, diaries and other material f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of the assessee is that the money lending business or financing business was carried on by the assessee and Shri Romesh Nikhaj, AOP apart from the business shown in the two concerns M/s Brinsar India (P) Ltd and Brinsar Foods (P) Ltd. The claim of the assessee against non inclusion of the income in the hands of the assessee are multifold and are being enumerated hereunder for the sake of brevity: a) The entries appearing in the seized documents on the basis of which addition on account of interest in the hands of the assessee has been worked out have no connection with the two concerns M/s Brinsar India (P) Ltd and Brinsar Foods (P) Ltd. b) The aforesaid entries worked out by the Assessing Officer on the basis of seized diaries are relatable to the income reflected in the hands of the AOP consisting of assessee and Sh. Romesh Nikhanj earned from their business of money lending. c) The income arising to the assessee and Shri Romesh Nikhanj and their family members are part of the income declared in the hands of the AOP. d) The figure of disclosure of ₹ 95,77,200/- in the hands of AOP is inclusive of interest earned and ploughed back up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee is that the said peak investment includes the income earned by assessee and his family members and Shri Romesh Nikhanj and his family members. Further plea is that once income is assessed in the hands of AOP, no other entry remains on seized documents which is includible in case of assessee or Romesh Nikhanj and their family members. However, it needs to be verified whether the interest appearing in the hands of the assessee and his family members are included in the aforesaid peak investment declared and accepted in the hands of the AOP. It also needs to be verified whether the said income relates to the two concerns Brinsar India (P) Ltd and Brinsar Foods (P) Ltd. or relates to the AOP. From the perusal of the seized documents, the Assessing Officer in the case of the assessee before us had worked out the figures of interest relating to assessment years 1993-94 to 1995-96 and the exercise of determining whether the same is a part of the aforesaid peak investment assessed in the hands of the AOP has not been examined by the CIT(A). 24. We find that the CIT(A) has failed to address the issues in their proper perspective. The CIT(A) under the provision of se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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