TMI Blog2020 (10) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... to have never been the assessee's case and it is a finding rendered by the CIT-A on presumptions and assumptions, because the assessee did not furnish the details, when called upon to do so by letter dated 25.01.2005. In his subsequent reply dated 25.02.2005, the assessee stated he has not claimed any money in respect of the pronotes.Therefore, finding in Paragraph No.6.3 is wholly erroneous. CIT-A faults the assessing officer for not having made verifications with the borrowers, who are all assessees and accordingly, deleted the addition. This conclusion has been arrived at by the CITA without noting that it is for the assessee to establish by producing books of accounts. CIT-A states that the assessee has flatly denied having any unaccounted transactions and faulted the assessing officer for not bringing on record any material, though the CIT-A states that the assessing officer proceeded on assumptions and presumptions, we find it is CIT-A which proceeded on assumptions. CIT-A records the submissions of the assessee that the said addition of ₹ 1,26,73,370/- is more comical than illegal. Without taking note of the fact that upon considering the explanation, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcept that of Akshay Sarin was assessed as undisclosed income. CIT-A states that considering the status of the assessee and the other relatives, the amount of deposits there is no warrant to treat them as undisclosed income, this finding is utterly perverse. Tribunal has not given any independent finding on the correctness of the order of the assessing officer, but merely goes by the observations rendered by the CITA, which we have found to be erroneous, therefore, the decision relied on by the Tribunal can in no manner help the assessee's case. Admittedly, in the instant case, the search was concluded between 27.03.2003 to 28.08.2003, the assessing officer had issued several letters, collected the response of the assessee and then proceeded to decide the matter. In several places, it was found that the assessee attempted to buttress his case based on records / returns submitted after the search. These issues were never considered by the Tribunal. Thus, we find that the impugned order passed by the Tribunal is wholly unsustainable without noting the factual and legal position. Finding of the tribunal, directly and substantially interferes in the interest of revenue and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the CIT(A)'s order even though the CIT(A) admitted additional evidence under Rule 46A without providing an opportunity of being heard to the Assessing Officer, while finalising the Block Assessment? (ii)Whether on the facts and in the circumstances of the case, the ITAT was correct in confirming the learned CIT(A)'s order in giving relief on all the issues despite the fact that on certain issues relief has given by stating that after examining the books of accounts and verifying the facts it is concluded that the amounts were properly account in the books of accounts and on certain issues relief has given by stating that it is an admitted fact that the books of accounts of the assessee were incomplete and therefore proper opportunity ought to have been provided to the assessee for completing his books? (iii)Whether, on the facts and in the circumstances of the case, the ITAT was correct in confirming the CIT(A)'s order in deleting the addition of ₹ 1,97,00,000/- towards loan extended which was not account in the books of account even though the learned CIT(A) erred in law and on facts in admitting additional evidence under Rule 46A without providing an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITAT was correct in confirming the learned CIT(A), in the Block Assessment Order, while giving relief on certain issues, relief has given by stating that after examining the books of accounts and verifying the facts it is concluded that the amounts were properly account in the books of accounts and on certain issues relief has given by stating that it is an admitted fact that the books of accounts of the assessee were incomplete and therefore proper opportunity ought to have been provided to the assessee for completing his books, which is contradicting?' 5. With the consent of learned counsels on either side, T.C.A.No.1060 of 2019 is taken as a lead case where the assessee is Shri.Rakesh Sarin, who is also the respondent / assessee in T.C.A.Nos.72 to 78 of 2019. The respondent / assessee in T.C.A.No.18 of 2020 is the spouse of Shri.Rakesh Sarin. In this Common Judgment, we shall refer to Shri. Rakesh Sarin, as the 'assessee'. 6. The assessee is an individual engaged in the business of financing. A search was conducted in the assessee's premises under Section 132 of the Act between 27.03.2003 and 28.08.2003. Thereafter, the block assessment was complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing upon the decision of the Hon'ble Supreme Court in Shibu Soren Vs. C.I.T. reported in [2016] 69 Taxmann.com 435 (SC), it was submitted that where an assessee had never filed their regular returns of income, mere statement recorded under Section 131 prior to search giving details of bank accounts would not amount to disclosure of income as to tax the said amount in regular assessment. 9. Further, by relying upon the decision of the Hon'ble Supreme Court in Assistant Commissioner of Income-Tax, Chennai V. A.R.Enterprises reported in [2013] 350 ITR 509, it is submitted that when the assessee did not file his return before the due date, and it was only after intimation of block assessment proceedings, the return was filed and in such case, mere payment of advance tax made earlier would not amount to disclosure of total income and consequently, the block assessment should have been upheld by the Tribunal. 10. It is further submitted that materials which have collected during survey can be utilised while making block assessment in respect of an assessee under Section 158BB read with Section 158BH of the Act, as the such material would fall within the ambit of and such o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the revenue has raised a substantial question of law referring to Rule 46A by contending that the CITA had permitted the assessee to produce documents without opportunity to the assessing officer, such is not the factual position, as no such record was admitted by the CITA, without notice to the assessing officer. Therefore, the said issue regarding the applicability of Rule 46A would not arise in the instant case. Further, on facts, the Tribunal has given independent reasons and in doing so, referred to the various material, which was taken note of by the CITA. Such finding would not be interfered in an appeal under Section 260A of the Act. In support of his submissions, the learned counsel placed reliance on the decision of the Division Bench of this Court in T.C.A Nos.249 and 250 of 2019 dated 01.04.2019 in the case of Commissioner of Income Tax, Madurai Vs. T.Ani Chandra Kala. 15. The facts in T.C.A.No.18 of 2020, wherein the respondent / assesseee is the spouse for the respondent in T.C.A.No.1060 of 2019 are identical and it was also a block assessment and the assessing officer completed the assessment by order dated 23.12.2005 by holding that ₹ 2,65,51,725/- is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n giving relief on all the issues despite the fact that on certain issues relief has given by stating that after examining the books of accounts and verifying the facts it is concluded that the amounts were properly account in the books of accounts and on certain issues relief has given by stating that it is an admitted fact that the books of accounts of the assessee were incomplete and therefore proper opportunity ought to have been provided to the assessee for completing his books? (ii)Whether, on the facts and in the circumstances of the case, the ITAT was correct in confirming the CIT(A)'s order in deleting the addition of ₹ 1,97,00,000/- towards loan extended which was not accounted in the books of account. (iii) Whether, on the facts and in the circumstances of the case, the ITAT was correct in confirming the CIT(A)'s order in deleting the addition of ₹ 98,25,000/- towards advance. (iv)Whether, on the facts and in the circumstances of the case, the ITAT was correct in confirming the CIT(A)'s order in deleting the addition of ₹ 1,26,73,370/- towards advances from consolidated account. (v)Whether on the facts and in the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the cash of ₹ 2,43,200/- found at his residence, a sum of ₹ 1,56,200/- belong to his family members, namely his sisters and brother-in-law. 24. The assessing officer considered his submission and agreed that the total sum of ₹ 87,000/- belong to the three persons and not the assessee. The assessee by letter dated 11.01.2005 stated that his family members have admitted the cash balance of ₹ 2,09,922/- as on 31.03.2003 in the return of income filed for the assessment year 2003- 2004 on 16.02.2004 [after the search operations]. It was stated that ₹ 1,56,200/- belong to the assessee and his family members and it is from out of the cash balance of ₹ 2,09,922/-. The account books and the computer, which was found in the business premises of the assessee during search, showed credit balances of ₹ 12,52,900/- in the name of the assessee, ₹ 7,68,000/- in the name of Ms.Aashana Sarin, ₹ 4,72,330/- in the name of M/s Rakesh Sarin Sons and ₹ 2,86,313/- in the name of Ms.Renu Sarin. 25. The assessing officer examined the aspect and held that the evidence found during search indicates negative cash balance where the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. By letter dated 09.05.2005, the assessee was requested to explain the circumstances under which the persons have signed the pronotes. The assessee by reply dated 27.05.2005 onceagain stated that he has not financed any amount on such pronotes and those the documents are null and void in the eye of law. 29. After examining the facts, as set out by the assessee in his reply, the assessing officer found the explanation is not acceptable that the assessee used to obtain pronotes in advance was held to be not established. Further, the assessing officer came to a reasonable conclusion by observing that if the assessee has not advanced any loan on pronotes, he ought to have destroyed them or returned it to the person, who has signed the pronotes and the very fact that the pronotes were kept in safe custody by the assessee would show that the assessee had in fact, lent the said amount. 30. The assessing officer then proceeded to list out the details of the loan advanced on pronotes that did not contain the name of the person and details are in the form of Annexure I to the assessment order to the tune of ₹ 5,59,98,709/-. The assessing officer further found that only three t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence, repayment of loan made by the said persons was treated as 'undisclosed income' to the tune of ₹ 1,26,73,370/- 34. With regard to the deficit in cash, which was culled out from the computer statement, the assessee was asked to explain and the correctness of the explanation was considered by the assessing officer, who found upon perusal of the cash book that all the debts and credits in the cash book are only withdrawals and deposits in bank account and the debits were not reflected in the bank statement and the assessing officer found that the assessee had increased his cash balance without withdrawing the cash from the bank. This was to the tune of ₹ 11,46,000/- and ₹ 4,19,250/- 35. The assessing officer found that the cash books show a deficit cash balance ₹ 12,52,900/-and the deposit in the bank account was not reflected in the cash book and the fictitious cash withdrawals from the bank were treated as undisclosed income of the assessee. Totally, ₹ 35,86,150/- [₹ 12,52,900/- Plus ₹ 11,46,000/-, plus ₹ 4,19,250/- Plus ₹ 7,68,000/-]. On verification of the accounts, the assessing officer found that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the said head. The investments made in the name of assessee's minor daughter was analysed and a sum of ₹ 1,59,777/- was added as undisclosed income and the discussion on this aspect is at Paragraph Nos.20 and 20.1 of the assessment order and the assessing officer has given due credit to the investments, which have been accounted for. 40. A sum of ₹ 20,00,000/- was treated as undisclosed income of the assessee in respect of an investment in a bungalow at Mumbai. The investments in Andhra Bank by way of fixed deposits were analysed and wherever the assessee was able to explain, the assessing officer had taken note of the same and those fixed deposits not reflected in the books of accounts maintained by the assessee and his relatives in the tally package were added as undisclosed income to the tune of ₹ 2,17,610/-. The investment by way of fixed deposits to the tune of ₹ 3,00,000/- was found to be not undisclosed and accordingly, held to be investment by way of unaccounted money. Thus, the assessing officer by a very detailed order completed the total undisclosed income under 28 heads at ₹ 23,40,50,480/- 41. The CITA has also done a exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition. This conclusion has been arrived at by the CITA without noting that it is for the assessee to establish by producing books of accounts. 46. The Paragraph No.8.3.1 is absolutely without any reasons. the CITA states that the assessee has flatly denied having any unaccounted transactions and faulted the assessing officer for not bringing on record any material, though the CITA states that the assessing officer proceeded on assumptions and presumptions, we find it is CITA which proceeded on assumptions. 47. In Paragraph No.9.3, the CITA records the submissions of the assessee that the said addition of ₹ 1,26,73,370/- is more comical than illegal. Without taking note of the fact that upon considering the explanation, the assessing officer found that except transaction with M/s Akhand Pharma represented by its proprietor, Dr.Shivbushan Sharma, the assessee stated that no one is his creditor and no loan has been borrowed from him. The CITA ought to have seen that the assessee should have established the same. Therefore, we do not approve the finding in Paragraph No.9.3. 48. With regard to ground nos.9, 10 and 11, the CITA held that they are interconnected and brushe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of conjunctures and surmises. In fact, the order passed by the CITA is based on conjunctures and surmises because he has not recorded any reasons as to why the finding of the assessing officer in Paragraph No.20 is factually incorrect. 54. The assessing officer in Paragraph No.21.1 has made a addition of ₹ 5,00,000/- on the ground that the investment is not reflected in the books of accounts of the assessee or in the books of Akshya Mercantile. However, CITA says it is reflected in the balance sheet of Akshya Mercantile and it is not clear as to how he came to such a conclusion whether at all he had verified those documents etc., therefore, the finding is perverse. 55. With regard to the investment in the Bungalow in Mumbai, the CITA in Paragraph No.26.3 holds that the assessee does not own any such bungalow. It is not clear as to where from he came to such a conclusion, when the assessing officer has recorded that in Page 95 of the seized documents shows that assessee entered into an agreement for purchase of Bungalow at Mumbai, therefore, the finding is perverse. 56. With regard to the fixed deposits, the assessing officer found that the fixed deposits ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing officer, the conclusion arrived at by him, the grounds raised before the CITA and the conclusion arrived at by the CITA. If the conclusion arrived at by one of the authorities is not relatable to the factual position or the legal position, the finding is required to be rendered. 59. In the instant case, the Tribunal has not given any independent finding on the correctness of the order of the assessing officer, but merely goes by the observations rendered by the CITA, which we have found to be erroneous, therefore, the decision relied on by the Tribunal can in no manner help the assessee's case. The Tribunal has also referred to a decision of this Court in ACIT V. Kences Foundation Private Limited reported in 289 ITR 509 [Madras] for the proposition that documents seized from the premises of the assessee at the time of search were not conclusive proof to arrive at the undisclosed income. Admittedly, in the instant case, the search was concluded between 27.03.2003 to 28.08.2003, the assessing officer had issued several letters, collected the response of the assessee and then proceeded to decide the matter. In several places, it was found that the assessee attempted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in TCA Nos.72 to 78 of 2019 dated 12.03.2019, does not contain any independent reasons, but on account of the order passed in the assessee's case by the Tribunal, the same has been allowed, as we have held that order impugned in TCA No.1060 of 2019 is wholly unsustainable, the order impugned in TCA Nos.72 to 78 of 2018 have also to be held wholly unsustainable. 64. Under Section 260A, the Court has to decide the substantial questions of law, word substantial questions of law, means, a question of law having greater importance and the Hon'ble Supreme Court in several decisions, one of which, is in Santhosh Hazari Vs. Purushotaman Tiwari reported in 251 ITR 84 [SC] laid down the test that can be applied to determine whether the substantial question of law is involved. One of the test is, does it directly or indirectly affects substantial rights of the parties. 65. In our view, this test stands fulfilled in the cases on hand, because the finding of the tribunal, directly and substantially interferes in the interest of revenue and the finding are not based on the evidence brought on record by the assessing officer and the order of the Tribunal suffers from material irregu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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