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2008 (11) TMI 733

..... We find it expedient to pass a common order for the captioned two appeals of the same assessee. First, we take up the appeal of the assessee in IT/SS/02/Chandi/07 against the order of the CIT(A) dated 13-11-2006 arising from order of the Assessing Officer passed under section 158BC r.w.s. 158BD of the Income-tax Act, 1961 (in short 'the Act') for the block period of 1-4-1995 t 20-11-2001. The Grounds of appeal preferred by the assessee read as under:- • I. That the Assessing Officer was not justified in framing the assessment under section 158BC read with under section 158BD of the Income-tax Act, 1961. • II. That the assessment as framed by the Assessing Officer and the issuance of notice under section 158BD is illegal and no material has been found during search for proceedings against the assessee under section 158BD. • III. That no satisfaction has been recorded by the Assessing Officer and nor any material has been found or forwarded to the Assessing Officer having jurisdiction over the case of the assessee. • IV. That without prejudice to the above, the addition based on the alleged statement of the assessee under pressure is not justified and the .....

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..... r as the statement recorded by DDI on 5-2-2002, the same "the statement given was not with in the parameters, of proper and cool state of mind as it happens in the search and seizure cases, whatever the assessee has accepted on that very day. He himself is unable to explain the facts which are irrelevant, and beyond his imaginations. That the statement was all in utter confusion and under circumstantial, atmospheric pressure as, is always happen in search and seizure cases, because the statement was recorded at the same time, same day and, at the same place, all this affected the peace of mind of the assessee". The Assessing Officer has not accepted the plea of the assessee for the following reasons;- "3.6 The contention of the assessee is untenable because during his statement he himself had, accepted that H. No. 882, Sector 9, Panchkula was sold by him of ₹ 13 lakhs and registry was made for ₹ 4.90 lakhs. He had also admitted that he received this house during partition and thus was full beneficiary of this property. Submission made during the assessment proceedings are merely an after thought. Assessee has submitted no evidence to convince the departme .....

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..... rame of mind. 6. On the other hand, the learned DR has submitted that the admission of the assessee made in the course of the statement recorded by the DDI on 5-2-2002 itself provides enough justification for the impugned addition. According to the learned DR, it is not a case where the Assessing Officer has made the addition without any basis in as much as the corroborative evidence was available in the form of the statement recorded of Shri Darshan Kumar and Shri Ravinder Kumar, Partners of M/s. Anupam Sweets. The statements of the partners of M/s. Anupam Sweets was recorded on 20-1-2001 in the course of search and seizure operation carried out under section 132 of the Act. 7. We have considered the rival submissions and perused the orders of the lower authorities as well as the material to which our attention has been drawn during the course of the hearing. The crucial issue which emerges from the orders of the lower authorities is that the addition of ₹ 8,10,000 made by the Assessing Officer under Chapter XIV-B as undisclosed income is based entirely on the basis of the statement of the assessee recorded on 5-2-2002 as well as those of the partners of M/s. Anupam Sweets r .....

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..... come in the block assessment. It has been so held in para 39 of the decision : 39. Besides, the said addition, in the hands of present assessee, CD, is not tenable on the legal score as well. We may note that the provision of section 158BB(1) stands amended vide Finance Act, 2002 w.r.e.f. 1st July, 1995, and the relevant amended provision stand as under: "158BB. (1) The undisclosed income of the block period shall be the aggregate of the total income of the previous years falling with the block period computed in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence...." Earlier, the words "relatable to such evidence" did not exist in the aforesaid statutory provision, and so any information could also form the basis for addition as undisclosed income. But now, as section 158BB(1) stands as amended vide Finance Act, 2002, w.r.e.f. 1st July, 1995, an information, available with the Assessing Officer, to form basis for addition in a block assessment, has e .....

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..... re, in our opinion, the impugned addition cannot survive, and the same has to be deleted. The following cases can be referred to for the above proposition of law. • (i) Dy. CIT v. Sanmukhdas Wadhwahi[2003] 80 TTJ (Nag.) 648 : [2004] 85 ITD 734 (Nag.); • (ii) Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi [1979] 118 ITR 507 (SC); • (iii) Satishbhai Jayantilal Shah v. Asstt. CIT[1997] 57 TTJ (Ahd.) 424 : [1997] 61 ITD 307 (Ahd.). 9. The Cochin Bench of Tribunal in the case of Mrs. Catherine Thomas v. Dy. CIT reported in 111 ITD 132 (Cochin) has also held as under : "13. We have heard the parties. In this case, the said additions are made which are based on some of the admissions or statements of the deceased assessee during the course of search action under section 132. The CIT (Appeals) himself has come to the conclusion that the said additions are not based on any material and are only on pure assumption. The CIT (Appeals) has also given the finding that that the Assessing Officer has not made any attempt to quantify the household expenses for the year when the statement was made. The CIT (Appeals) has further given the finding that there is merit in t .....

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..... conducted on M/s. Anupam Sweets, Panchkula and its partners. Thus, the addition which has been made solely on the basis of the statement recorded is not justified under Chapter XIV-B of the Act. The addition is hereby deleted. 10. In the result, the appeal of the assessee is allowed. 11. Now we may consider the appeal of the assessee in ITA No. 109/Chandi/07 pertaining to the assessment year 2001-02 which is directed against the order of the CIT (Appeals) dated 13-11-2006. 12. In the said appeal, the first Ground is with regard to the validity of assumption of jurisdiction by issuance of notice under section 148 of the Act. The said Ground has not been pressed by the appellant at the time of the hearing and is hereby dismissed. 13. The only issue remaining is with regard to the justification of an addition of ₹ 4,50,000 made by the Assessing Officer. The facts are that as per the information obtained, the Assessing Officer found that the assessee had sold booth No. 12, Sector 11, Panchkula for consideration of ₹ 7,50,000 whereas the sale document was registered for sum of ₹ 3,00,000. Thus, the Assessing Officer confronted the assessee as to why not the balance of .....

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