TMI Blog2016 (2) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... ned investment in the share - Proof of unaccounted transaction - HELD THAT:- The revenue s claim that no promoter would divest with such a huge holding at a very nominal profit is without any basis and only a guess work. The assessee s contention that the promoters were intended to go for public issue is well established by the fact that expenditure incurred in this regard has been debited in the books of accounts of Adroit Industries Ltd., therefore, the revenue s contention that the promoters were not intended to go for public issue is not correct - all such allegations are wild and without any basis. The revenue has even failed to bring anything on record to establish that any unaccounted transaction in any form was done by any of the persons of this group and associates. There is no evidence against the assessee with regard to transfer and reacquisition of shares of Adroit Industries Ltd. during the relevant period to the assessment years 2007-08, 2008-09 and 2010-11 respectively. The revenue s allegations are general and not supported by any evidence - no addition could be sustained only on the basis of guess work or in the absence of any positive evidence. In view of this fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of poly product sold out of books and under-invoiced for assessment years 2006-07, 2007-08 and 2008-09 have been held to be taxed in the hands of Signet Industries instead of the assessee. Part of this income was offered by the assessee in his return of income for these years which shall be reduced in view of these facts. Further, various other issues are also restored to the file of the Assessing Officer. Assessing Officer is also directed to rework out the peak amount. Unaccounted sales and underinvoicing which formed part of income from unaccounted sales and underinvoicing assessed in the case of Signet Industries Ltd. - HELD THAT:- As have already decided this issue in the case of Signet Industries Limited wherein we have upheld the addition in the hands of Signet Industries Limited. The addition upheld in the hands of Signet Industries Ltd. on the basis that these unaccounted sales of poly product and under-invoicing of poly product were product of Logic Poly Products which is a unit of Signet Industries Ltd. Further Signet Industries Limited has filed settlement petition before the Customs Central Excise Commission and admitted it as unaccounted transaction in its o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriate to restore the issue to the file of the Assessing Officer for the reason that we have directed to sustain the addition of peak amount in earlier years. If such amount is available for telescoping the initial investment, this addition shall be deleted. On the issue of the quantum of addition, we hold that it is on higher side as the addition is almost 50% of the unaccounted trading - we direct to reduce the addition if finally sustained to the tune of 10% of the total unaccounted sales of polymer trading. On the issue of estimating the net profit we hold that we have already held 4% of sales as reasonable profit on such sales, therefore, the addition for determining the NP shall be worked out @ 4% of such sales. Since the addition has been made on estimated basis, therefore, no addition is called for by invoking the provisions of section 40A(3) Bogus purchases of polymer - We uphold the addition up to the NP rate of 4% after considering various pleadings and aspects of the case. Unexplained investment in jewellery - HELD THAT:- CIT(A) has rightly sustained the addition up to ₹ 74,72,863/- on the diamond ornaments. Similarly, the addition sustained on the sil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Deepak Kalani etc. should be set off against undisclosed income determined on the basis of seized material in the case of Shri Mukesh Sangla. In all these grounds the assessee has raised the issue of telescoping. After hearing both the sides, we are of the view that wherever it is possible to telescope the unaccounted income with the unxplained investment in any other asset including the jewellery, unexplained cash credits, unexplained investment or unexplained bank transactions, etc. relating to the assessee then such telescoping shall be justified. - IT(SS)A Nos.111 to 114 & 401/Ind/2015, IT(SS)A Nos. 207, 208 & 506/Ind/2015 - - - Dated:- 10-2-2016 - Shri D.T. Garasia, Hon ble Judicial Member and Shri B.C. Meena, Hon ble Accountant Member For the Assessee : Shri Girdhar Garg For the Revenue : Shri Rajeev Varshney and Shri R.A. Verma ORDER PER SHRI B.C. MEENA, AM These appeals filed by the assessee emanate from the orders of the learned CIT(A)-3, Bhopal, dated 29.4.2015. The facts, in brief, of the assessee s case are that the assessee is an individual, head of Sangla family, the promoter of Signet Industries Ltd. and member/director of var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as revenue have preferred appeals before the Income-tax Appellate Tribunal. We have heard both the sides on various issues raised in these appeals. 3. GROUND NO.1.0 1.1(A.YS. : 2008-09 TO 2012-13)OF THE ASSESSEE S APPEAL: Ground No.1.0 1.1 of assessee s appeal reads as under : ASSESSMENT YEARS : 2008-09 TO 2010-11 The order passed by the learned Commissioner of Incometax (Appeals)-3, Bhopal, partly confirming the assessment order passed u/s.153A r.w. sec. 143(3) of the Income-tax Act, 1961, is both bad-in-law and bad-in-facts. In doing so, he did not appreciate that no addition could have been made while completing assessment u/s.153A of the Income-tax Act, 1961 in case of completed assessments if no undisclosed income was determinable from the material found as a result of search. ASSESSMENT YEARS : 2011-12 2012-13 1.0 The order passed by the learned Commissioner of Income-tax (Appeals)-3, Bhopal, partly confirming the assessment order passed u/s.153A r.w. sec. 143(3) of the Income-tax Act, 1961, is both bad-in-law and bad-in-facts. 4. The C.I.T.(A) rejected the assessee s contention. The learned CIT(A) s contentions can be summari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment orders u/s.153A. In support of his contention, reliance was placed upon Memorandum explaining the provisions in the Finance Bill, 2003 [(2003) 260 ITR (St.) 191], the rule of construction laid down in Heydon s Case for interpretation of the language used in sec.153A and the following judgements: 1. C.I.T. vs. Raj Kumar Arora 367 ITR 517 (All) 2. Canara Housing Development Company vs. D.C.I.T. 49 taxman.com 98 (Kar) 3. Nandini Delux vs. C.I.T. 37 ITR (Trib.) 52 (Bang.) 4. MadugulaVenu vs. D.I.T. 29 taxmann.com 200 (Del) 5. Shivnath Rai Harnarain (India) Ltd. vs. D.C.I.T. 117 ITD 74 (Del) 6. Ms. Shyam Lata Kaushik vs. A.C.I.T. 306 ITR (A.T.)117 (Del) 7. Harvey Heart Hospitals Ltd. vs. A.C.I.T. 130 TTJ 700 (Chennai) 8. Dr. Mansukh Kanjibhai Shah vs. A.C.I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of opinion in relation to material already considered. [Indian Eastern Newspaper Society Vs. C.I.T. (119 ITR 996 SC); Calcutta Discount Co. Ltd. Vs. I.T.O (41 ITR 191 SC)]. The contention of the revenue to the effect that once a notice under Section 153A of the Act is issued, the assessments for all the six years are at large for the AO has no warrant in law. 6. The learned counsel for the assessee placed reliance upon the following judicial pronouncements :- 1. Jai Steel (India) vs. A.C.I.T. (2013) 259 CTR 281 (Raj) The relevant paras are reproduced hereunder :- 19. The underline purpose of making assessment of total income under Section 153A of the Act is, therefore, to assess income which was not disclosed or would not have been disclosed. The purpose of second proviso is also very clear, inasmuch as, once a assessment or reassessment is 'pending' on the date of initiation of search or requisition and in terms of Section 153A a return is filed and the AO is required to assess the same, there cannot be two assessment orders determining the total income of the assessee for the said assessment year and, therefore, the proviso provides for abatement of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess' has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. 7. Reliance was also placed on the decision in the case of C.I.T. vs. Kabul Chawla [I.T.A.No.707/2014 dt.28.08.2015 (Del)(HC)]. The relevant para reads as under :- 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 39. The question framed by the Court is answered in favour of the Assessee and against the Revenue. 8. The learned counsel for the assessee also relied upon the following case laws :- 2. C.I.T. vs. Murli Agro Products Ltd. [(2014) 49 taxmann.com 172 (Bom)] [Kindly refer to Para 8 to 10] 3. C.I.T vs. Continental Warehousing Corporation [58 taxmann.com 78 (Bom)] [Kindly refer to Para 28 to 37] 4. All Cargo Global Logistics Ltd. vs. D.I.T. [137 ITD 287 (Mum-SB)] [Kindly refer to Para 48 to 53; 53 conclude the issue] 5. Govind Agarwal [ITA No.3389 3390/M/2011 dt.10.01.2014 (Mum.Trib.)] 6. A.C.I.T. vs. Pratibha Industries Ltd. [28 taxmann.com 246 (Mum. Trib)] 7. Gurinder Singh Bawa vs. D.C.I.T.[28 taxmann.com 328 (Mum. Trib)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scovered in the search operation. The assessee has also admitted undisclosed income on the basis of these documents and assets. Therefore, the ratio laid down in case laws relied on by the learned counsel for the assessee is not applicable to the facts of the assessee s case. Considering all these factual aspects, we dismiss all these grounds for all the assessment years raised before us. 13. GROUND NO.2.0 2.1 (A.YS. : 2008-09 2010-11)OF THE ASSESSEE S APPEAL AND GROUN NO.2 (A.YS. : 2010-11)OF REVENUE S APPEAL : Ground No.2.0 2.1(A.Ys. : 2008-09 2010-11) of assessee s appeals reads as under: ASSESSMENT YEAR :2008-09 SALE PROCEEDS OF 2,17,750 SHARES OF ADROIT INDUSTRIES (INDIA) LTD. TREATED AS UNEXPLAINED INCOME : ₹ 86,16,935/- 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming the addition of ₹ 86,16,935/- made in respect of sale proceeds of 2,17,750 shares of Adroit Industries (India) Ltd. by the assessing officer, as unexplained income of the assessee. 2.1 While confirming the addition, the learned Commissioner of Income-tax (Appeals) erred in law as well as in facts by restricti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,42,500 56,21,500 22,61,14,188 Shares not acquired in March 2007 3,500 Total 56,25,000 In May 2007, various entities of Signet group and members of Sangla family sold 22,88,025 shares to Shalimar Ferrous Metals Pvt. Ltd., Indore, ( Shalimar ) at various rates ranging from ₹ 40.35 to ₹ 44.80 per shares. The resultant short term capital gain was duly shown in their Return of Income filed before the Income-tax Department. At the end of March 2009, the Signet group was holding only 26.51% of the total paid up share capital of Adroit Industries (India) Ltd. (14,91,400 shares) and rest of the shares were held by nonSignet group entities (41,33,600 shares). In August and September 2009, the shares of Adroit Industries (India) Ltd. held by non-Signet group were acquired by members of Sangla family and other associate concerns at around ₹ 11.25 to ₹ 12.25 per share. By March 2010, the entire share capital of Adroit In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.03.2012 23,45,32,888 4,56,79,338 3,20,21,038 3.05 31.03.2013 36,78,86,610 7,13,90,758 4,91,83,297 4.68 The assessee has not given a single name either of any broker or any investor through whom he contacted the ultimate investor. Any prudent business group will acquire another company only after having firm financial tie ups. The divestment to the tune of 73.5% immediately after acquiring a company is against all human probabilities. The contention of the assessee that due to bad capital market situation, the group could not go public and was compelled to acquire shares of Adroit Industries (India) Ltd. at ₹ 11 to ₹ 12.5 per share is also not justified because no investor would ever invest in the shares of the unlisted company without having proper exit route and without ensuring proper returns on his investment particularly when these shares have changed many hands before coming back to Sangla Group which is usually not possible in case of unlisted shares. The assessee did not bring anything on record that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is treated as unexplained investment of the assessee. Accordingly, the following additions are made: Assessment Year Amount (Rs.) Remarks 2008-09 14,72,800 Unexplained Cash Credit 2010-11 1,02,65,813 Unexplained Investments 49. The C.I.T.(A) confirmed the action of the A.O. and rejected the assessee s contention. Agreeing to the findings of the assessing officer, C.I.T.(A) also observed that the Sangla group had introduced certain more layers of entities in whose name the shares were transferred (in some cases six transfers) and finally repurchased the shares at a price of ₹ 11.25 to ₹ 12.25 per share. The flow of shares of Adroit Industries (India) Ltd. involving number of transfers is as under : CHART-I [Flow of transfer of 22,88,075 shares originally held by Anand Family] Name of shareholder of Anand Family No. of shares held 1st Transfer 2nd Transfer Date Name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jagjit Singh Anand 3,10,550 13.03.07 Signet Impex Pvt. Ltd. 3,10,550 40.25 1,25,00,000 10.05.07 Shalimar Ferrous Metals Pvt. Ltd. 3,10,550 40.35 1,25,30,693 Gajendra Kaur Anand Jagjit Singh Anand 3,10,550 13.03.07 Swan Petrochemicals Pvt. Ltd. 3,10,550 40.25 1,25,00,000 10.05.07 Shalimar Ferrous Metals Pvt. Ltd. 3,10,550 40.65 1,26,23,858 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GamanBhasin 2,500 13.03.07 M/s Mukesh Sangla HUF 2,500 40.25 1,00,625 Rajendrapal Singh Bhasin Taranjot Kaur Chandok 17,875 13.03.07 M/s Mukesh Sangla HUF 17,875 40.25 7,19,469 Ranjeet Singh Chandok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. of shares Rate Amount Date Name No. of shares Rate Amount Kamal C. Sanghavi 1,250 13.03.07 Mukesh Sangla 1,250 30.00 37,500 10.05.07 Shalimar Ferrous Metals Pvt. Ltd. 217,750 40.85 8,895,088 Virendra Singh Anand 103,800 13.03.07 Mukesh Sangla 103,800 40.24 4,176,912 Narinder Kaur Anand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JyotiVallabhTripathi 500 13.03.07 Mukesh Sangla 500 30.00 15,000 Narayan Suryavanshi 500 13.03.07 Mukesh Sangla 500 30.00 15,000 Nand K. Vishwakarma 500 13.03.07 Mukesh Sangla 500 30.00 15,000 GajanandGangre 500 13.03.07 Mukesh Sangla 500 30.00 15,000 Tarachand Jain 500 13.03.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hari Shankar Gaud 500 13.03.07 Mukesh Sangla 500 30.00 15,000 Jagjit Singh Punjabi 500 13.03.07 Mukesh Sangla 500 30.00 15,000 Ashok Awesthi 500 13.03.07 Mukesh Sangla 500 30.00 15,000 Kishorilal Patel 500 13.03.07 Mukesh Sangla 500 30.00 15,000 Rajesh Seth` 500 13.03.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 310,550 310,550 12,500,000 2,598,575 107,510,026 4th Transfer 5th transfer 6th transfer Date Name No. of shares Rate Amount Date Name No. of shares Rate Amount Date Name No. of shares Rate Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.09.09 Saurabh Sangla 1,18,550 12.25 14,52,238 12.09.09 Smt. Avantika Sangla 2,00,000 12.25 24,50,000 12.09.09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,21,100 74,53,200 28.03.08 Sidh Housing Development Company Ltd 6,21,100 40.90 2,54,02,990 12.09.09 Mukesh Sangla HUF 1,60,550 11.50 18,46,325 12.09.09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19.03.09 Clifton Securities Pvt Ltd 272,235 40.50 11,025,518 19.03.09 Novelty Traders Ltd 375,000 40.55 15,206,250 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 0 0 22.09.09 Signate Leasing Finance Pvt Ltd 1,87,500 11.50 21,56,250 24.09.09 Signet Impext Pvt Ltd 1,87,500 11.50 21,56,250 3,75,000 43,12,500 20.03.09 Novelty Traders Pvt Ltd 2,50,000 40.50 1,01,25,000 26.09.09 Shree Balaji Starch Chemicals Ltd 2,50,000 11.50 28,75,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.10.07 Sea Entertainment Ltd. 21,500 46.00 9,89,000 30.10.07 Sky touch Infracture 28,000 46.00 12,88,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.08.09 Can-India Overseas Limited 21,500 11.50 2,47,250 23.09.09 Swan-Holding Pvt Ltd 76,000 11.50 8,74,000 14.08.09 Can-India Overseas Limited 21,500 11.25 2,41,875 17.08.09 Can-India Overseas Limited 28,000 11.50 3,22,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consistently earning higher profits as observed by the A.O. The learned CIT(A) also observed that it is beyond comprehension that the Signet Group, Sangla family and its associate concerns would divest about 75% of their holding to unrelated parties after taking over the control and management of Adroit Industries (India) Ltd. The contention of the assessee about public issue of Adroit Industries (India) Ltd. in future being a reason for divestment is also unconvincing. Relying upon the case of C.I.T. vs. Rathi Finlease Ltd. (2008) 215 CTR 429 (MP) and Industrial Filters and Fabrics Pvt. Ltd. [Appeal No.IT-185/09-10/510 order dt.30.03.2012 passed by C.I.T.(A), Indore], it was held that the intermediary companies like Shri Aniket Shares and Securities Pvt. Ltd., Unno Industries Ltd., Siddhachal Developers Pvt. Ltd. and Palasia Leasing and Investment Pvt. Ltd. were entry providers. Further, in case of Signet Industries Ltd., it was held that Lucky Commotrade Pvt. Ltd. is a paper company which is used by the Sangla group to introduce unsecured loan and share application money within the group concerns. The transaction of transfer of shares of Adroit Industries (India) Ltd. by various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the source of investment by Signet Group, members of Sangla Family and its associate concerns in March 2007 for acquiring 56,21,500 shares of Adroit Industries (India) Ltd. alongwith its control and management was not disputed by the Revenue Authorities. The source of investment in the shares of Adroit Industries (India) Ltd. was mainly out of loans provided by Signet Industries Ltd. and partly by unsecured inter-corporate loans, which were advanced to various group entities and Lucky Commotrade Pvt. Ltd. through Shalimar Ferrous Metals Pvt. Ltd. ( Shalimar ). The assessee has submitted a fund flow chart in this regard. Shalimar Ferrous Metals Pvt. Ltd. ( Shalimar ) was incorporated on 18.06.1986 under the provisions of the Companies Act, 1956, having PAN No. AAICS 4429G. It was regularly assessed to tax. The assessment for assessment year 200708 was completed u/s.143(3) r.w. Sec.264 of the Income-tax Act, 1961. The returned income was accepted. During financial year relevant to the assessment year 2007-08 Shalimar Ferrous Metal Pvt. Ltd. received unsecured loan from following entities :- Name of the company P.A.No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sangla ANAPS 5579 F 1,34,62,000 Shri Mukesh Sangla HUF AADHM 4930 J 81,947 Smt. AvantikaSangla AEOPG 4774 R 60,000 Non-group Companies Lucky Commotrade Pvt. Ltd. AAACL 4501 E 5,21,14,350 Pranay Trade Link Pvt. Ltd. AADCP 0735 F 1,26,20,000 15,91,81,858 52. The members of Sangla family and its associate concerns sold 22,88,025 shares of Adroit Industries (India) Ltd. to Shalimar Ferrous Metals Pvt. Ltd. ( Shalimar ) in May 2007 for a consideration ranging from ₹ 40.35 to ₹ 44.80 per share. As the members of Sangla family and its associate concerns had taken loan from Shalimar while acquiring the shares of Adroit Industries (India) Ltd., the sale proceeds of shares were adjusted against outstanding unsecured loans. 53. Lucky Commotrade Pvt. Ltd. is a closely held nonbanking financial company incorp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Lal Chand BhagatAmbica Ram Vs. C.I.T. 37 ITR 288, honourable Supreme Court strongly disapproved the practice of making addition in the assessment on mere suspicion and surmises or taking note of so called notorious practice prevailing in trade circles. 54. Shalimar sold its shareholding in Adroit Industries (India) Ltd. to Lucky and the proceeds thereof were utilized for repayment of inter-corporate loan to Signet Industries Limited. This fact was explained to the lower authorities with evidence like bank statements of Shalimar, Lucky and Signet, duly confirmed copies of accounts. But the same was brushed aside by them on the pretext that Lucky sold its holding to various bogus paper companies notwithstanding the fact that these so called bogus paper companies produced all the documents as required by the A.O. in terms of notice u/s 133(6) for verification of transaction and establishing their identities and creditworthiness. Surprisingly, the lower authorities did not bother to even look into them and give any finding in this regard. Therefore the transfer of shares by Signet group and Sangla family was genuine transaction. It appears that in the eyes of Income-tax D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cularly in a situation in which most of the public issues devolved on bankers and guarantors and there was no public participation. The same is evident from the fact that many IPOs were withdrawn or deferred by various companies during this period and no of IPOs fell from 108 in 2007 to 22 in 2009. In the case of Adroit Industries (India) Ltd., the promoters made utmost efforts to bring IPO and incurred significant cost (about ₹ 83.80 Lacs) in this pursuit but they could not achieve any success due to negative market conditions and sentiments as discussed above. The statement of directors of Shalimar viz. Shri Paras Ram Patidar and Shri Vimal Kumar Bandi was recorded after a lapse of over 4 years (acquisition of shares in May 2007 and their statement was recorded in November 2011). Moreover, the day to day affairs of Shalimar were looked after by the employees of Signet Group and controlled by Shri Mukesh Sangla as its executive officer. As the transactions were verifiable from bank statements of relevant entities, the statements of its directors do not have much significance in relation to creditworthiness and genuineness of transactions. If the transaction with alleged bogu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be used for adverse inference against the assessee. Moreover, in compliance of notice issued u/s.133(6), these companies furnished the copies of their bank account, return of income filed by them etc. in which the transactions were duly reflected and no discrepancy whatsoever was brought on record by the lower authority. As regard Can-India Overseas Ltd., it was a company in which the close relatives of Shri Mukesh Sangla were shareholders and directors. The company was filing its return of income regularly and also assessed to tax. Its paid up share capital was ₹ 30 Lacs and free reserves of ₹ 30 Lacs. As at 31.03.2010, it had a cash and bank balance of ₹ 41,79,012/- and investment of ₹ 8,80,000/- in 2,40,000 shares (including bonus shares 1,60,000) of Signet Industries Ltd. Under these circumstances, the Can-India Overseas Ltd. cannot be called a bogus paper company. 56. Section 69 of the Act is applicable on cumulative satisfaction of the following conditions : i. The assessee should have made the investments and the same are not recorded in the books of accounts; and ii. The assessee either offers no explanation about the nature and source of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of acquisition from Anand Family in March 2007) and treated the difference between the cost of reacquisition and fair value per share as unexplained investment in the case of the assessee, without bringing any evidence on record. He simply rejected the explanation given by the assessee group. In the assessee s case, there were no incriminating material whatsoever in relation to investment in shares of Adroit Industries (India) Ltd. in assessment year 2007-08, transfer of these shares in assessment year 2008-09 and their reacquisition subsequently in assessment year 2010-11. No proceedings in relation to assessments for these assessment years were pending and therefore no addition could have been made in assessment completed u/s.153A/153C of the Act in the absence of any incriminating material on account of unexplained cash credits in assessment year 2008-09 and unexplained investment in assessment year 2010-11. The addition made by the assessing officer by way of reassessment in relation to impugned concluded assessments amounted to change in opinion on the same set of facts which is not permissible in law even u/s.153A/153C of the Act. 59. The learned DR relied upon the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has explained the reason for transfer of shares to raise the funds. It is also established that Adroit Industries Ltd. was to go for public issue for which expenditure has been debited in the financial years 2010-11 and 2011-12. Ultimately this public issue could not be materialised. The expenditure debited in the books of Adroit Industries Ltd. establishes that Adroit Ind. Ltd. was to go to for public issue. No evidence either during the search operation or in the post search inquiries showing even suggesting that any consideration over and above recorded in the books of accounts of any assessee of Signat group was realised in cash or otherwise. Even no positive evidence was collected during the proceedings u/s 153A/153C of the Act. Thus, there is no evidence regarding any unaccounted transaction with relation to shares acquired, transferred and re-acquired by various family members of Sangla family and associate concerns. The revenue s claim that no promoter would divest with such a huge holding at a very nominal profit is without any basis and only a guess work. The assessee s contention that the promoters were intended to go for public issue is well established by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting undisclosed income of ₹ 35.04 crores for various assessment years in his own case and ₹ 9.96 crores in the case of Signet Industries Ltd. for the assessment year 2012-13 on the basis of provisional verification of seized material and assets. However, for the assessment year 2012-13, no income was offered for taxation by the assessee in his Return of Income filed u/s.153A as against undisclosed income of ₹ 12.61 Crores offered for taxation as per the letter filed before the Investigation Wing. The A.O. did not make any addition on the basis of assessee s statement because the total income assessed by him was more than ₹ 12.61 Crores offered for taxation in assessment year 2012-13. The first appellate authority made addition of ₹ 9,43,55,415/- on the basis of difference between undisclosed income of ₹ 12.61 crores offered for taxation by the assessee in his statement u/s.132(4) r.w. letter filed before the Investigation Wing and addition of ₹ 3,17,44,585/- confirmed by him for the assessment year 2012-13 vide his order dt.30.04.2015. 17. The contention of the C.I.T.(A). is summarized as under : a) The statement of the assessee rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety and tension and the deponent does not have access to books of accounts and other documents to verify the facts before recording it in his statement, it cannot be said that such a statement recorded during search is free from all ambiguity and doubts and it is quite likely that certain vital facts might be omitted or ignored or incorrectly stated. The statement u/s.132(4) is not a test of deponent s memory. If he has stated something in his statement either out of ignorance of certain vital facts or negligence or for nonaccessibility to the books of accounts and other relevant documents or for any other reason, which is contrary to the established facts of the case, he cannot be assessed to tax merely on the basis of such erroneous statement. The assessing officer being a quasi judicial officer, should consider all the facts and evidences like books of accounts, documents, bills, agreements, seized documents etc. to arrive at the truth and correct status. The statement should be corroborated with the facts found and documents seized at the time of search to ascertain its reliability. The deponent cannot be assessed merely on the basis of statement u/s 132(4), particularly by bru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and that was not considered by the authorities below. Here in this case also, no specific reason has been given for rejection of the assessee s contention by which the assessee has retracted from his admission. None of the authorities gave any reason as to why Assessing Officer did not proceed further to enquire into the undisclosed income as admitted by the assessee in his statement under section 134(2) in fact situation when during the course of search, there was no recovery of assets or cash by the Department. This fact also has not been taken care of and considered by any of the authorities that in a case where there was search operation, no assets or cash was recovered from the assessee, in that situation what had prompted the assessee to make declaration of undisclosed income of ₹ 20 lacs. Mere reading of statement of assessee is not the assessment of evidentiary value of the evidence when such statement is self-incriminating. Therefore, we are of the considered opinion that in the present case, a wrong inference had been drawn by the authorities below in holding that there was undisclosed income to the tune of ₹ 20 lacs. (iv) The honourable Punjab and Har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain facts. But when it comes to be tested or examined in a judicial or quasi-judicial proceedings before any Court, Tribunal or authority, then the question which arises for determination is as to which of the story/statement is right, truthful and/or reliable and believable. (vii) The honourable Pune Bench of I.T.A.T. held in the case of Kasat Paper and Pulp Ltd. vs. A.C.I.T. (74 ITD 455) that addition cannot be made solely on the basis of the statement of Managing Director particularly when evidence to the contrary were placed on record before the assessing officer. (viii) In the case of Jagdeeshchandra Gupta Vs. A.C.I.T. 56 TTJ 337 (Chd.), the assessee retracted from the statements made before FERA authorities and statement made u/s.132(4) of the Income-tax Act, 1961 before the A.D.I. by making detailed submission during proceedings u/s.132(5) as well as u/s.143(3) of the Income-tax Act, 1961. Except these confessional statements, there was no other evidence which supported the payment of ₹ 48,00,000/- to Shri J.M.Paul by the assessee. No papers indicating alleged payment of ₹ 48 lacs were seized either from residence of the assessee or from Shri J.M.Paul. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law or it has otherwise vitiated [G. Murugesan Bros. Vs. C.I.T. (1973) 88 ITR 432 (SC)]. In other words, the statement u/s 132(4) made before the Incometax authorities is an important piece of evidence but it is not conclusive. It is rebuttable and the assessee can always show that it was incorrect. The addition cannot be made merely on the basis of admission made before the income-tax authorities. If the assessee produces evidences which proves his admission to be incorrect or contrary to the facts and such evidences remain uncontroverted, addition made in such case merely on the basis of admission of the assessee cannot be sustained. The surrounding circumstances and other relevant factors have to be considered before making an addition solely on the basis of admission. Reliance was placed in the case of C.I.T. vs. Bhanwarlal (225 ITR 870). 19. The learned counsel for the assessee submitted that in his statement recorded u/s.132(4) on 04.11.2011, the assessee offered undisclosed income of ₹ 45 crores for taxation, subject to verification of the seized material. Subsequently, the assessee filed a letter before the Investigation Wing in which he admitted undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no income was offered for taxation by the assessee during the year notwithstanding the fact that the assessee earlier offered undisclosed income of ₹ 12.61 Crores for assessment year 2012-13 in his letter filed before the Investigation Wing. The judgments relied upon by the first appellate authority while making addition of ₹ 9,43,55,415/- on the basis of assessee s statement are not applicable to the facts of the assessee s case in as much as in all the cases either the assessee claimed the statements having been given under threat or intimidation whereas it was a voluntary statement or retraction was filed after many years or no reasons were assigned for retraction or retraction was made despite existence of incriminating material. The facts of the assessee s case are totally different. While offering undisclosed income for taxation, the assessee categorically stated that the declaration was on the basis of provisional verification of seized material. While filing return of income pursuant to notice u/s.153A, the assessee scientifically analysed the entire seized material as well as undisclosed investment and assets, worked out peak credit by datewise chronologically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) Exclusion of short term capital gain on sale of shares, which had already been offered for taxation by the assessee in assessment year 2007-08 29,471/- (b) Deduction of cost of acquisition of shares of Adroit Industries (India) Limited, in computing short capital gain on sale of shares 30,000/- (c) Deduction of bank charges 1,629/- (d) Deduction of interest, being difference in interest paid (₹ 1,60,610/-) and interest claimed as deduction in the Return of Income (₹ 1,60,160/-) 450/- 22. The facts relating to this ground are that while filing the return pursuant to the notice issued u/s.153A the assessee claimed the following deductions: S. No Particulars Amount Rs. (a) Exclusion of short term capital gain on sale of shares, which had already been offered for taxation by the assessee in assessment year 2007-08 29,471/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should- (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other ; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. The honourable Bombay High Court held in the case of Sanchit Software and Solutions P. Ltd. vs. C.I.T. [2012] (349 ITR 404) as under : In any civilized system, the assessee is bound to pay the tax which he liable under the law to the Government. The Government on the other hand is obliged to collect only that amount of tax which is legally payable by an assessee. The entire object of administration of tax is to secure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but at the same time it should not prevent him from examining the claim of the assessee on merits. His duty to make an assessment does not begin and end with the carrying out the directions of the Commissioner of Income-tax and his duty is something more, that is, to determine the correct taxable income. We are of the opinion, nothing precludes the assessee from making a claim before the ITO at the time of finalization of the assessment proceedings and equally nothing prevents the ITO from examining the claim on merits of the matter. It is well to remember that the assessment was being redone by the ITO within four years from the date of the original assessment order and when he is on the process of the completion of the assessment, he is bound to consider each and every claim preferred by the assessee. Let us imagine a case of a concluded assessment and there are no pending assessment proceedings, but when the assessee makes a claim for deduction of losses, the ITO cannot refuse to entertain the claim and he may reject the claim on the parameters found in s. 154 of the Act. In the instant case, it is a stronger case for the assessee as the ITO was directed to determine the correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . C.I.T. (1977) 107 ITR 63 (Guj) at page 71]. We are of the opinion, such an attitude of the ITO would instil confidence in the minds of the taxpayer that his income would be properly determined and he is not required to pay the tax, neither one paise more nor one paise less than what is correctly and rightly due in accordance with and under the provisions of the statute. In this view of the matter, we are of the opinion that the order of the Tribunal is sustainable in law, though for different reasons stated above . The honourable Allahabad High Court held in the case of Raj Rani Gulati Vs. C.I.T. Central Tilak,(2012) (346 ITR 543) as under : Needless to mention that proviso of section 112(1) was introduced with effect from 01.04.2000 by the Finance Act, 1999. In other words, it was introduced during the assessment year under consideration and assessee was not aware about latest amendment introduced by the Finance Act, 1999 w.e.f. 01.04.2000. Though ignorance of law has no excuse, but it can be excused in tax matter as per the ratio laid down in the case of P. V. Devassy Vs. C.I.T., 84 ITR 502 (Ker). It is not expected that the Department shall take the advantage of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfaction prior to issue of notice u/s 153C of the Act and also on the ground that no incriminating document was found and seized, therefore, there is no question of allowing such deduction to the assessee. Further we would also like to state that the provisions of section 153A/153C are not made for the benefit of the assessee. Return filed in response to notice u/s 153A/153C of the Act is not substitute of revised return for the claim of such benefits. Hon'ble Apex Court in the case of Goetze (India) Limited vs. CIT; 284 ITR 323 ruled out that a fresh claim before the Assessing Officer can be made only by filing a revised return and not otherwise. Therefore, whatever claim the assessee has not made while filing the return u/s 139(1)/139(4) of the Act, he cannot make fresh claim by filing the return u/s 153A/153C of the Act and reduce the taxable income originally declared. Such view has been upheld by the Hon'ble Rajasthan High Court in the case of Jai Steels (India) vs. ACIT (supra). Therefore, this ground of the assessee s appeal stands dismissed. 28. Keeping these facts in view, we dismiss this ground of appeal of the assessee. Ground No.5.0 (A.Y. : 2008-09)of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the A.O. can be summarized that the impugned income was related to Signet Industries Ltd. and the undisclosed income from payment made to Shri Pankaj Kalani and Shri Deepak Kalani, under-invoicing of sales of Logic Poly Products and unaccounted sales were brought to tax in the case of Signet Industries Ltd. That the same is taxable in the hands of Signet Industries Ltd. and not Shri Mukesh Sangla. Accordingly, following additions were made in Signet Industries Ltd.: Asstt. Year Payment to Kalani Brothers Unaccounted Sales of Polymer Business Under-invoicing of Polymer Business (*) Total 2006-07 - 2,89,97,976 - 2,89,97,976 2007-08 2,95,00,000 1,75,60,798 1,34,65,988 6,05,26,786 2008-09 6,32,34,000 93,56,857 1,19,47,395 8,45,38,252 2009-10 4,01,35,000 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,976 2,89,97,976 2007-08 1,75,60,798 1,34,65,988 3,10,26,786 2008-09 93,56,857 1,19,47,395 2,13,04,252 5,59,15,631 2,54,13,383 8,13,29,014 The C.I.T.(A). telescoped cash paid to Pankaj Kalani and Deepak Kalani, unsecured loans from Lucky Commotrade Pvt. Ltd. and undisclosed income from under-invoicing and unaccounted sales. However, the undisclosed income of ₹ 2,89,97,976/- of assessment year 2006-07 which was available to the assessee for cash payment of ₹ 2,95,00,000/- to Pankaj Kalani and Deepak Kalani was not allowed to be telescoped. Accordingly the following additions were sustained : Asstt. Year Payment to Kalani Brothers confirmed by C.I.T.(A). Unsecured loans from Lucky Commotrade Pvt. Ltd. Undisclosed income from under-invoicing and unaccounted sales Additions confirmed w.r.t. under invoicing and unaccounted sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to double addition and double taxation causing great injustice to the assessee. 34. Without prejudice to the above and alternatively, the learned counsel for the assessee submitted that if the honourable Tribunal confirms the addition on account of cash payment to Shri Pankaj Kalani and Shri Deepak Kalani, under-invoicing and unaccounted sales in the case of Signet Industries Ltd., we humbly request that the income voluntarily offered for taxation on this ground by Shri Mukesh Sangla in his Return of Income should be reduced to avoid double taxation and the benefit of taxes paid by him should be given in the case of Signet Industries Ltd.. In support of it, the reliance is placed upon the judgement of honorable Supreme Court in the case of Ashish Plastic Industries vs. A.C.I.T. (373 ITR 45) 1. The appellant-assessee is a registered firm engaged in the business of manufacture of PVC pipes of different varieties and sizes. Survey operations were conducted by the Income Tax authorities under Section 133A of the Income Tax Act, 1961 (hereinafter referred to as Act ) at the factory premises of the assessee on 23.09.1993. During the course of survey operations, the stock at the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Normally, going by the aforesaid facts noted, the High Court may be correct in its observation that no substantial question of law arose. However, learned counsel for the appellant-assessee has brought to our notice a different aspect which was raised at the time of admission of the present special leave petition filed by the appellant. He drew our attention to orders dated 27.02.2004 which reads as under: - Leave granted limited to the question as to whether in respect of sales of 32,809 kg., which are shown in the stock register of M/s. Ashish Agro Plast Private Limited, there has been double taxation. 4. It is clear from the above that leave was granted limited to the question as to whether the addition made on account of aforesaid sale would amount to double taxation. To put it differently, the submission of the learned counsel for the appellant is that on the aforesaid sales, which are found in the accounts of M/s Ashish Plastic Industries, the receipts are shown as income on which tax has been paid by M/s Ashish Agro Plast Private Limited. 5. During the hearing of this appeal, learned counsel submitted that he can bring satisfactory evidence in support of this ple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) erred in law as well in facts in confirming the addition of ₹ 21,96,498/- made by the assessing officer on the basis of page 17 of LPS-4 found and seized from his residence, notwithstanding the fact that : (a) it did not pertain to the year under consideration and (b) it was considered by the assessee in the year wise peak of cash as per the cash flow statement and offered for taxation. ASSESSMENT YEAR : 2010-11 ADDITION ON THE BASIS OF ENTRIES OF CASH PAYMENT RECORDED IN THE MATERIAL FOUND AND SEIZED DURING SEARCH : ₹ 23,06,22,104/- 3.0 The learned Commissioner of Income-tax (Appeals) erred in facts as well as in law in partly confirming the addition to the extent of ₹ 23,06,22,104/- made by the assessing officer on the basis of entries of cash payments and cash receipts recorded in the material found and seized during search. 3.1 In doing so, he erred in law as well as in facts in : (a) confirming the rejection of scientifically prepared date-wise cash book by the assessing officer and bringing higher of the sum of cash payment (₹ 23,06,22,104/-) or sum of cash receipts (₹ 8,17,35,166/-) as undisclosed income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or registration charges of land in Pithampur, which was duly recorded in books of accounts of Signet Industries Limited should not have been considered in determination of undisclosed income of the assessee. CASH RECEIPTS RECORDED IN THE MATERIAL FOUND AND SEIZED DURING SEARCH AS UNEXPLAINED CASH RECEIPTS : ₹ 8,17,35,166/- 3.4 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming the addition of ₹ 8,17,35,166/-, although set off against sum of all the cash payments, made by the assessing officer as unexplained cash receipts, as per LPS 4 found and seized during search. ASSESSMENT YEAR : 2011-12 ADDITION ON THE BASIS OF ENTRIES OF CASH PAYMENT RECORDED IN THE MATERIAL FOUND AND SEIZED DURING SEARCH : ₹ 14,27,33,397 /- 2.0 The learned Commissioner of Income-tax (Appeals) erred in facts as well as in law in partly confirming the addition to the extent of ₹ 14,27,33,397/- made by the assessing officer on the basis of entries of cash payments and cash receipts recorded in LPS 3 LPS 4 found and seized during search. 2.1 In doing so, he erred in law as well as in facts in : (a) confirmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... THE MATERIAL FOUND AND SEIZED DURING SEARCH AS UNEXPLAINED CASH RECEIPTS : ₹ 38,52,470/- 2.2 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming the addition of ₹ 38,52,470/-, although set off against sum of all the cash payments, made by the assessing officer as unexplained cash receipts as per LPS 3 found and seized during search. 7.0 Ground No.1 (A.Ys. : 2010-11 to 2012-13) of revenue s appeals reads as under: ASSESSMENT YEAR : 2010-11 1. On the facts and in the circumstances of the case the C.I.T.(A). erred in deleting the addition made on account of unexplained cash transaction of ₹ 8,17,35,166/-. ASSESSMENT YEAR : 2011-12 1. On the facts and in the circumstances of the case the C.I.T.(A). erred in deleting the addition made on account of unexplained cash transaction of ₹ 9,12,86,409/-. ASSESSMENT YEAR : 2012-13 1. On the facts and in the circumstances of the case the C.I.T.(A). erred in deleting the addition made on account of unexplained cash transaction of ₹ 38,52,970/-. 38. The facts, in brief, are that during search, Annexure LPS 1 to 4 and BS 1- 5 were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents were added u/s.69C of the Act. He made the following additions: Asstt Year Undisclosed Income Remark 2008-09 21,96,498 - 2009-10 14,00,000 On protective basis in Shri Mukesh Sangla and on substantive basis in Signet Industries Ltd. 2010-11 8,37,35,166 On protective basis in Shri Mukesh Sangla and on substantive basis in Signet Industries Ltd. 22,86,22,104 31,23,57,270 Total 2011-12 9,89,26,409 On protective basis in Shri Mukesh Sangla and on substantive basis in Signet Industries Ltd 13,50,93,397 23,40,19,806 Total 2012-13 1,28,92,270 40. The A.O. partly considered the cash transaction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee submitted that on perusal of material (Annexure LPS 1 to 4 and BS 1-5) found and seized from the residence of Shri Mukesh Sangla, the key person and head of Signet Group, a part of which have also been reproduced in the assessment order, it emerged that the impugned material contained transactions like receipts from various sources, payments to various persons, purchase and sale of gold, unaccounted trading in polymer, etc. Shri Mukesh Sangla offered these undisclosed income emerging from these loose papers for taxation in his personal hands and not in the case of Signet Industries Ltd. on account of following reasons: (a) The seized material was recovered from the residential premises of Shri Mukesh Sangla at 1-B, Gulmohar Extension, Indore; (b) Many loose papers of the seized material bearing the name of Shri Mukesh Sangla; (c) Shri Mukesh Sangla categorically admitted in his statement recorded u/s.132(4) that these loose papers were related to his unaccounted polymer trading business and various names appearing therein were used for camouflaging real transactions. (d) The polymer trading business was carried out by Shri Mukesh Sangla in his personal ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income. 45. It was submitted by the learned counsel for the assessee that various contentions of the assessing officer like (a) the assessee gave a brief and cryptic reply that all the transactions on these loose papers were related to personal unaccounted business of Shri Mukesh Sangla camouflaged in the name of various persons, (b) the assessee neither explained the method of working of the peak nor filed any basis thereof, (c) the assessee has not correlated various debit and credit entries and has worked out the peak according to his sweet wish, (d) the assessee has prepared a cash book for the period from 01.04.2008 to 31.03.2012 and simply stated the amount received /paid from/to various persons, (e) the assessee has not explained the various transactions mentioned in the name of various persons such as Ganpaty, Mahavir Chemical, Globe Pharma, Ghambir Ji, Ashok Khasgiwala, Mehta Ji and so on, (f) Mukesh Sangla has simply prepared the cash book without preparing the ledger accounts, (g) no narration of transactions, (h) no evidence regarding cash sent to various persons and recalled and confirmation from them, (i) nature of income was not described, (j) income could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g cash book is absolutely incorrect and contrary to the facts. Had the A.O. demanded ledger accounts, the assessee could have given them instantly because the cash book was prepared from accounting software Tally wherein the ledger accounts are generated automatically. He submitted that there is nothing under the Income-tax Act, 1961 which prevents an assessee from offering undisclosed income, determined in a scientific manner, for taxation on the first day of the assessment year. Shri Mukesh Sangla offered the peak credit as his undisclosed income and introduced such undisclosed income in the cash book on the very first day of the year so as to verify the peak credit determined by him and availability of cash throughout the year. As regard contention of the assessing officer that Further, in the absence of any explanation and in the absence of any supporting documents, various other receipts and payments in the names of different person cannot be accepted as per the assessee s version. In respect of transaction with Shri Ashok Khasgiwala, Shri Mukesh Sangla has shown that he has purchased gold on 01.04.2008 for ₹ 21,96,498/- and again on 01.07.2009 for ₹ 10.77 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the investigation wing to seek details from the assessee about various names, contents of the seized material etc. or make necessary enquiries from the persons whose names appeared in the seized material. In fact the statement of the assessee was never recorded by the Investigation Wing after 04.11.2011 i.e. the date of conclusion of search or by the A.O. during entire assessment proceedings which continued for over six months. The revenue is not permitted to blame the assessee for its own failure and ineptness. Therefore, contentions of the assessing officer as stated above were quite irrelevant in determination of undisclosed income of the assessee. The learned counsel for the assessee invited our attention to page no. 17 on which cash transactions under the account Shri Ashok Khasgiwala are recorded and backside of page no. 28 of Annexure 2/16 found and seized from the assessee s office premises at Dewas Naka, Indore are interlinked as manifest from the following extract: Page no. 17 of LPS-4 Opening Balance 10,99,00,900/- -------- 31.07.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exp. 26,000 06.08.2010 Misc. Exp. 26,000 07.08.2010 Sun City Delhi 10,00,000 07.08.2010 Sun City Delhi 10,00,000 09.08.2010 Sikkaji 1,30,000 09.08.2010 Sikkaji 1,30,000 09.08.2010 Kalaji 24,900 09.08.2010 Kalaji 24,900 09.08.2010 Mohan Sharmaji 10,000 09.08.2010 Mohan Sharmaji 10,000 28.08.2010 Ajay Mehta 15,000 28.08.2010 Ajay Mehta 15,000 31.08.2010 Umeshji 9,000 31.08.2010 Umeshji 9,000 47. While making addition on account of page no.5 of LPS 3, the Assessing Officer did not reduce the duplicate payment which resulted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d determination of yearly peak credit on the basis of day-to-day cash transactions was the most appropriate method of determining undisclosed income, (b) the methodology adopted by the assessing officer by making addition of all cash receipts u/s.68 and all cash payments u/s.69C resulted in multiple addition and incorrect determination of undisclosed income and (c) the methodology adopted by the C.I.T.(A). by partly allowing telescoping on yearly basis and bringing higher of the yearly sum of the receipt or payments to tax was erroneous inasmuch as he should have determined undisclosed income on the basis of peak credit by arrangement of unaccounted transactions datewise in a chronological order. 48. The learned counsel for the assessee submitted that it is a settled law that the undisclosed income declared by the assessee and assessed by the lower authorities or intangible additions made by lower authorities is always available to the assessee for set off against undisclosed investments/expenses etc. In the assessee s case, having assessed the yearly peak amount as his undisclosed income, the assessing officer cannot take a stand that such income did not exist and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o use in the relevant assessment year. Now it can hardly be denied that when an intangible addition is made to the book profits during an assessment proceeding, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee. That income, although commonly described as intangible , is as much a part of his real income as that disclosed by his account books. It has the same concrete existence. It could be available to the assessee as the book profits could be. There can be no escape from the proposition that the secret profits or undisclosed income of an assessee earned in an earlier assessment year may constitute a fund, even though concealed, from which the assessee may draw subsequently for meeting expenditure or introducing amounts in his account books.... C.I.T. VS. PREM CHAND JAIN [189 ITR 320 (P H)] In view of the decisions in C.I.T. v. Ram Sanehi Gian Chand [1972] 86 ITR 724 and Anantharam Veerasinghaiah Co. v. C.I.T. [1980] 123 ITR 457 the Tribunal was right in holding that the past intangible additions made in the case of the firm of which the assessee was a partner and allocated to the assessee s share could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Mudaliar v. C.I.T. [1964] 51 ITR 757 , it was held by the Madras High Court that, where the income-tax authorities made an addition to the income of the assessee over and above the income as disclosed by the assessee, on an estimate basis, the amount so added must be treated as the real income of the assessee. It is not open to the authorities to take the view that the addition was only for purposes of taxation, and that it should not be regarded as the true income of the assessee. Apparently, therefore, it could not be contended that this income which had been added up as income from intangible sources in the previous years, of assessment was not available to the assessee. Accordingly, our answer to the question is in the affirmative. (f) A.C.I.T. Vs. Dharamchand Agrawal [144 ITR 143 (M.P.)] The honourable high court followed the honourable Supreme Court ruling in case of Anantharam Veerasinghaiah Co. vs. C.I.T. [123 ITR 457 (SC)] and approved the telescoping of undisclosed income against undisclosed assets. (g) C.I.T. Vs. Nabadwip Chandra Dey [198 ITR 133 (GAU.)] The principles governing set off of intangible additions made in the assessment against unexplai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, part of which was offered as income in the hands of the assessee after filing the revised return. We have sustained the addition in the case of Signet Industries Limited with regard to poly product sold out of books and sold by under-invoicing. Therefore, the same amount shall not be available with the assessee to explain various entries for the assessment years 2006-07, 2007-08 and 2008-09 in the assessee s hands. We do agree with the pleadings of the learned counsel for the assessee that once the inflow and outflow of the cash payments is scientifically prepared datewise on the basis of the documents seized during the search operation then the addition can be sustained only of the peak so arrived at. The revenue is not allowed to selectively overlook the entries recorded in the seized material resulting in multiple additions. After considering the complexity of this issue and considering the impact of the issue decided in the case of Signet Industries Limited, we find it appropriate that the issues raised in the various grounds of these appeals of the assessee deserve to the restored to the file of the Assessing Officer with the direction to prepare a scientific datewise re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of polymers of ₹ 8,69,97,089/-. 54. The facts relating to this ground are that during search, loose papers as per Annexure B-1, B-2 B-3 were found and seized from the residence of the assessee which pointed out towards unaccounted trading in Polymers. As per the impugned seized material, the unaccounted purchases for the assessment years 2011-12 2012-13 were ₹ 1,38,53,482/- and ₹ 10,75,51,347/- respectively. The assessee explained that while the initial investment in the Polymer trading business was made out of undisclosed income offered for taxation in earlier assessment years, the net profit thereon was estimated at 2% which was based on the net profit from trading business of Signet Industries Ltd. [P.A.No. : AABCS 3489 F] (1.5%), Vikas Polymers Prop. Shri Rajesh Agarwal [P.A.No. : ADBPA 8266 C] (1.35%) and R.K.Resinplast Pvt. Ltd. [P.A.No.: AADCR 7961 F] (0.85%). The detailed working of net profit rate is enclosed herewith for your kind perusal. Annexure E . Accordingly, unaccounted net profit of ₹ 50,626/- for assessment year 2011-12 and ₹ 21,51,027/- for assessment year 2012-13 was offered for taxation as his undisclosed income. 55. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng additions was made: i. Assessment year : 2011-12 ₹ 13,85,348/- ii. Assessment year : 2012-13 ₹ 1,07,55,135/- d) He estimated net profit @ 10% of sales and accordingly made the following additions: i. Assessment year : 2011-12 ₹ 15,39,276/- ii. Assessment year : 2012-13 ₹ 1,19,50,150/- e) He also deleted the disallowance u/s.40A(3) by holding that the impugned disallowance was not attracted when income of the assessee was estimated on the basis of net profit rate for which reliance was placed upon the following judgements: 1. C.I.T.(Central) Ludhiana vs. Gobind Ram [2014] 48 taxmann.com 14 (P H) 2. C.I.T. (Central), Ludhiana vs. Smt. Santosh Jain [2007] 159 Taxman 392 (P H) 3. C.I.T. vs. Banwari Lal Banshidhar [1998] 229 ITR 229 (All) 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but something which the assessee may not have earned. It is wholly illogical for the department to contend that the addition was only for purposes of taxation and that it should never be taken as true income of the assessee.. In coming to the above conclusion, the honourable high court relied upon the following observation of honourable A.P. high court in the case of Lagadapati Subba Ramaiah v. Commissioner of Income-tax [1956] 30 ITR 593 In the present case, it is somewhat difficult to say that there were no profits of the company out of which a dividend could have been paid. When the revenue authority levied a tax of ₹ 62,000 on the company, it proceeded on the basis that the books of the company which showed a total income of only ₹ 34,532 for all the four years of its existence were unreliable and that the bulk of the company s profits had been kept outside its books. Now those secret profits less the income-tax paid, therefore, would be available with the company for distribution as dividends. Once the secret profits had been assessed to tax, it would have been open to the company to bring those profits into the books and distribute them, or what remaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 16,950 as income from undisclosed sources even though he had added the amount of ₹ 18,117 in addition to the profits shown by the assesses in its account books. However, the assessee was well within its right to plead that the amount of ₹ 16,950 was covered from the intangible income assessed at ₹ 18,117, and added in the income of the assessee and apart from this, since for the last preceding 3 years, substantial additions amounting to ₹ 32,797 had been added, the amount of ₹ 16,950 could have been taken as having come out of such intangible additions. Accordingly, the Tribunal in the instant case was right in treating the unexplained cash credit entries to the extent of ₹ 16,950 as covered by added gross profit in the sum of ₹ 18,117 on the basis of the estimate. (e) C.I.T. VS. JAWANMAL GEMAJI GANDHI [151 ITR 353 (BOM)] The Supreme Court has clearly stated in the case of Anantharam Veerasinghaiah Co. vs. C.I.T. [123 ITR 457 (SC)] that the secret profits or undisclosed income of an assessee earned in an earlier assessment year can constitute a fund, though concealed, from which the assessee may draw subsequently. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ete existence. (2) Income from intangible additions is available to the assessee for meeting expenditure or introducing amounts in his account books. (3) If any unexplained cash deposit or cash credit can reasonably be related to the amount covered by the intangible additions made in the past or in that very year necessary set off may be given by the authorities on that account. (4) In each case, the true nature of the cash deficit or cash credit must be ascertained from an overall consideration of the particular facts and circumstances of the case. The learned counsel for the assessee, therefore, submitted that the addition confirmed by the first appellate authority on account of initial investment should be deleted or else it will amount to double addition. 59. As regard estimation of profit relating to unaccounted polymer trade of the assessee, the A.O. accepted the net profit margin of 2% but made addition u/s.40A(3) on account of cash purchases and alternatively u/s.69C on account of unexplained expenditure. C.I.T.(A) deleted additions made u/s.40A(3) and alternatively u/s.69C, he estimated net profit @ 10% by observing that profitability in accounted trade is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The honourable Supreme Court in the case of Dakeshwari Cotton Mills Vs. C.I.T. (26 ITR 775) held as under: It is not possible to define with any precision the limitations on the exercise of the discretionary jurisdiction vested in the Supreme Court by the constitutional provision made in Article 136. The limitations, whatever they be, are implicit in the nature and character of the power itself. It being an exceptional and overriding power, it has to be exercised sparingly and with caution and only in special and extraordinary situations. Beyond that it is not possible to fetter the exercise of this power by any set formula or rule. All that can be said is that the Constitution having trusted the wisdom and good sense of the Judges of Court in this matter, that itself is a sufficient safeguard and guarantee the power will only be used to advance the cause of justice, and that its exercise will be governed by well established principles which govern the exercise of overriding constitutional powers. However, when the Court reaches the conclusion that a person has been dealt with arbitrarily or that a Court or Tribunal within the territory of India has not given a fair deal to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his chamber. The assessment in this case and in the connected appeal, was above the figure of ₹ 55 lakhs and it was just and proper when dealing with a matter of this magnitude not to employ unnecessary haste and show impatience, particularly when it was known to the department that the books of the assessee were in the custody of the Sub-Divisional Officer. Thus both the C.I.T. and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion. It was thus a fit case for the exercise of power under Article 136. In the result, the appeal was to be allowed and the order of the Tribunal was to be set aside and the case was to be remanded to it with direction that in arriving at its estimate of gross profits and sales it should give full opportunity to the assessee to place any relevant material on the point that it has before the Tribunal, whether it is found in the books of account or elsewhere and it should also disclose to the assessee the material on which the Tribunal is going to found its estimate and then afford him full opportunity to meet the substance of any private inquiries made by the ITO if it is int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 14-15 Turnover 4,32,02,88,732 5,11,92,53,770 5,63,57,83,317 6,10,80,35,458 Gross Profit 24,99,07,205 53,01,16,534 68,71,62,395 88,23,18,576 G/P Ratio 5.78% 10.36% 12.19% 14.45% Net Profit 9,18,14,175 8,05,03,622 17,57,23,076 21,21,88,332 N/P Ratio 2.13% 1.57% 3.12% 3.47% 62. The learned counsel for the assessee, therefore, submitted that the unaccounted net profit of Polymer business should be estimated at 2% as evident from the comparable cases. 63. We have heard both the sides on this issue. The addition made on the basis of loose papers seized as Annexures B-1, B-2 and B-3 from the residence of the assessee, we have held in the case of Signet Industries Limited that Shri Mukesh Sangle has admitted doing the business of trading in polymer w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined investment in diamond jewellery. TELESCOPING OF UNEXPLAINED INVESTMENT IN DIAMOND JEWELLERY (₹ 74,72,863/-) AND SILVERWARES (₹ 49,77,460/-) AGAINST UNDISCLOSED INCOME: 5.1 In doing so, he erred in law as well as in facts in not telescoping the unexplained diamond ornaments and unexplained silverwares against undisclosed income offered for taxation by the assessee. Ground No.3 (A.Ys. : 2012-13) of revenue s appeals reads as under: ASSESSMENT YEAR :2012-13 3. On the facts and in the circumstances of the case the C.I.T.(A). erred in deleting the addition made on account of unexplained investment in jewellery of ₹ 2,68,86,366/-. 68. The facts, in brief are that the details of gold ornaments, silverwares and diamond ornaments found during search are as under: Gold Ornaments : Particulars Gross Weight Gms. Net Weight Gms. Value as on the date of search Rs. Bedroom of Smt. Monika 862.69 615.70 22,15,066 Bedroom of Smt. Avantika 3.66 3.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee are as under: Gold Ornaments Particulars Gross Weight Net Weight Value as at 31.03.2008 Shri Mukesh Sangla 208.18 208.18 2,33,700/- M/s Mukesh Sangla (HUF) 617.43 613.63 6,91,994/- Shri Saurabh Sangla 212.56 193.42 2,00,187/- Smt.Monika Sangla 1,965.95 1,886.45 19,49,438/- 3,004.12 2,901.68 30,75,319 Silverwares Particulars Gross Weight Kgs. Net Weight Kgs. Value as at 31.03.2008 Rs. Shri Mukesh Sangla 25.200 25.200 5,42,505/- M/s.Mukesh Sangla (HUF) 21.700 21.700 4,67,157/- Smt. Avantika San ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48,124/- 2006-07 Shri Saurabh Sangla 1,80,891/- 2007-08 41,29,015/- Smt.Monika Sangla 53,32,523/- 2006-07 Smt.Monika Sangla 10,000/- 2007-08 53,43,523/- c) Ms. Avantika Sangla, the daughter-in-law of the assessee also acquired jewellery of ₹ 55,50,570/- and silver wares of 30.353 Kgs. Which was duly shown in her Income-tax Returns, the details of which are as follows : Asstt. Year Jewellery Silverwares 2005-06 - 1,82,706 2006-07 35,99,454 2,73,535 2007-08 6,75,070 - 2008-09 1,20,071 - 2009-10 44,975 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gold content found during search, the assessee did not offer any undisclosed income on account of diamond ornaments. Gold Jewellery found during search Gold Jewellery as per wealth tax returns Particulars Gold Diamonds Name of the assessee Gold Diamonds Gross Weight (Gms.) Net Weight (Gms.) Cts Gross Weight (Gms.) Net Weight (Gms.) Cts Bedroom of Smt. Monika Sangla 1406.25 1237.27 247.08 Mukesh Sangla 798.65 736.01 340.50 On Persons 18.45 17.95 2.50 Mukesh Sangla HUF 333.50 301.07 219.15 Bedroom of Smt. Avantika Sangla 155.61 137.86 8.25 Saurabh Sangla 1319.50 1053 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 4,32,81,758 88,77,764 Less : Jewellery as per balance sheets Shri Mukesh Sangla 9,66,784 28,444 M/s. Mukesh Sangla (HUF) 18,59,515 66,906 Shri Saurabh Sangla 43,98,391 Smt. Monica Sangla 56,48,143 1,28,72,833 95,350 Unaccounted Jewellery 3,04,08,925 87,82,414 70. The contention of the C.I.T.(A). is summarised as under.The basis of determination of unexplained jewellery i.e. difference between jewellery found during search and jewellery as per balance sheets of members of Sangla family was totally illogical because in the books of accounts, the assets are stated at historical cost whereas in the Wealth-tax Return, the assets a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble additions made by lower authorities is always available to the assessee for set off against undisclosed investments/expenses etc. In the assessee s case, having assessed the yearly peak amount as his undisclosed income, the assessing officer cannot take a stand that such income did not exist and therefore, not available with the assessee for set off against undisclosed cash, investment, loans and advances, expenses, jewellery etc. In this regard, we rely upon the following judgements: (a) S. KUPPUSWAMI MUDALIAR VS. C.I.T. [51 ITR 757 (MAD)] Additions are no doubt made very often on estimate basis. But it can never be said, or at any rate the department cannot contend, that the amount of the addition is not the real income but something which the assessee may not have earned. It is wholly illogical for the department to contend that the addition was only for purposes of taxation and that it should never be taken as true income of the assessee.. In coming to the above conclusion, the honourable high court relied upon the following observation of honourable A.P. high court in the case of Lagadapati Subba Ramaiah v. Commissioner of Income-tax [1956] 30 ITR 593 In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 ITR 320 (P H)] In view of the decisions in CIT v. Ram Sanehi Gian Chand [1972] 86 ITR 724 and Anantharam Veerasinghaiah Co. v. CIT [1980] 123 ITR 457 the Tribunal was right in holding that the past intangible additions made in the case of the firm of which the assessee was a partner and allocated to the assessee's share could be taken into account in considering the unexplained investments of the assessee and these would also be available for set off purposes in respect of the agreed additions for low household expenses made in the assessee's income in the year under consideration and in remitting the matter to the AAC. (d) C.I.T. VS. TYARYAMAL BALCHAND [165 ITR 453(Raj)] In the present case, the ITO was within his right to tax the amount of ₹ 16,950 as income from undisclosed sources even though he had added the amount of ₹ 18,117 in addition to the profits shown by the assesses in its account books. However, the assessee was well within its right to plead that the amount of ₹ 16,950 was covered from the intangible income assessed at ₹ 18,117, and added in the income of the assessee and apart from this, since for the last preceding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court ruling in case of Anantharam Veerasinghaiah Co. vs. C.I.T. [123 ITR 457 (SC)] and approved the telescoping of undisclosed income against undisclosed assets. (h) C.I.T. VS. NABADWIP CHANDRA DEY [198 ITR 133 (GAU.)] The principles governing set off of intangible additions made in the assessment against unexplained cash credits or unexplained investments are no more res integra. The principles that emerge from the various decisions can be summarised as follows: (1) Amounts represented by 'intangible additions' to the book profits of an assessee during an assessment proceeding constitute undisclosed income of the assessee and are as much a part of his real income as those disclosed by his account books. It has the same concrete existence. (2) Income from intangible additions is available to the assessee for meeting expenditure or introducing amounts in his account books. (3) If any unexplained cash deposit or cash credit can reasonably be related to the amount covered by the intangible additions made in the past or in that very year necessary set off may be given by the authorities on that account. (4) In each case, the true nature of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ys. : 2008-09 2012-13), 2.0 2.1 (A.Y. : 2009-10) and 4.0 (A.Y. : 2010-11 2011-12)of assessee s appeal reads as under : ASSESSMENT YEAR : 2008-09, 2010-11, 2011-12 2012-13 TELESCOPING Without prejudice to the above grounds of appeal and in the event of various additions made by the assessing officer are confirmed at any stage of appellate proceedings in any of the assessees belonging to Signet Group as well as Sangla Family, the assessee may be allowed to telescope, to the extent possible, the undisclosed income finally assessed by the Income-tax Department against unexplained investment in jewellery, unexplained cash credit in the form of unsecured loans, share application money and share capital, unexplained cash, unexplained expenditure, unexplained investment, unexplained stock, unexplained bank transactions, unexplained bank accounts etc. belonging to Signet Group as well as Sangla Family so as to prevent addition of income as well assets, liabilities and expenses. ASSESSMENT YEAR : 2009-10 TELESCOPING 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming the rejection of scientifically p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of material found and seized from the residence of Shri Mukesh Sangla, wherefrom it emerges that the impugned material contained transactions like receipts from various sources, payments to various persons, purchase and sale of gold, unaccounted trading in polymer, stock of chick peas, etc. As there were a large number of cash receipts and cash payments, investment etc. trading in polymers etc., it was not possible to determine correct undisclosed income merely by addition of all payments and receipts. Under these Shri Mukesh Sangla prepared a cash flow statement or cash book in which all the transaction appearing in the impugned seized material were recorded date wise, year-wise peak was worked out and such peak amount was offered for taxation by Shri Mukesh Sangla in his Return of Income filed pursuant to the notice issued u/s.153A. The income emerging from the impugned seized material was offered for taxation in Shri Mukesh Sangla s hands because (a) the seized material was found and seized from the his residence and (b) the seized material contained several accounts and documents which bear his name, (c) the impugned pages were owned up by him in his statement recorded u/s.132( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and could not, therefore, have been available for the payment of dividends. Among common men, such an attitude would be regarded as blowing hot and cold or playing fast and loose. (a) ANANTHARAM VEERASINGHAIAH CO. VS. C.I.T. [123 ITR 457 (SC)] In the instant case, the Tribunal had relied entirely on the basis that an intangible addition of ₹ 2,00,000 had been made to the book profits of the assessee for the assessment year 1957-58 and it inferred that an amount of ₹ 90,000 was available for being put to use in the relevant assessment year. Now it can hardly be denied that when an 'intangible' addition is made to the book profits during an assessment proceeding, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee. That income, although commonly described as 'intangible', is as much a part of his real income as that disclosed by his account books. It has the same concrete existence. It could be available to the assessee as the book profits could be. There can be no escape from the proposition that the secret profits or undisclosed income of an assessee earned in an earlier assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned larger income than what was shown and that he had in fact earned that income. That amount was, therefore, available to him for investment in the assessment year. A similar question was considered by the Allahabad High Court in the decision in CIT v. Ram Achal Ram Sewak [1969] 73 ITR 501 and it was held (page 502): The short question raised in the present applications is whether the deposits made by the assessee in various banks from year to year could be set off against the extra profit added during previous years. In Kuppuswami Mudaliar v. CIT [1964] 51 ITR 757 , it was held by the Madras High Court that, where the income-tax authorities made an addition to the income of the assessee over and above the income as disclosed by the assessee, on an estimate basis, the amount so added must be treated as the real income of the assessee. It is not open to the authorities to take the view that the addition was only for purposes of taxation, and that it should not be regarded as the true income of the assessee. Apparently, therefore, it could not be contended that this income which had been added up as income from intangible sources in the previous years, of assessment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sufficient funds with him to set off addition on account of share application money, share capital, silver wares, Gold and diamond jewellery, unsecured loans, cash transaction with Shri Deepak Kalani and Shri Pankaj Kalani, initial investment for undisclosed polymer trading business etc. Therefore, the addition of peak credit as per cash flow statement prepared from entries recorded in loose paper found and seized during search in Shri Mukesh Sangla s case as well as addition on account of share application money, share capital, silver wares, Gold and diamond jewellery, unsecured loans, cash transaction with Shri Deepak Kalani and Shri Pankaj Kalani, initial investment for undisclosed polymer trading business etc. in the case of Shri Mukesh Sangla and other group entities would amount to double addition. 81. From the seized documents, it is clear that the source of undisclosed income in the case of Shri Mukesh Sangla was unaccounted polymer business and other sources. The undisclosed income so generated was available with him to set off against addition on account of share application money, share capital, unsecured loans, cash transactions with Shri Pankaj Kalani and Shri Deep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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