9911796707
TMI Blog1997 (8) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. It was under these circumstances that the appeal came to be fixed on 5th Dec., 1996. 3. Briefly the facts are that there was a search operation on the premises of the assessee at 9, Trilok Bungalows, Bodakdev, Ahmedabad on 26th Sept., 1995 and during the course of search, the assessee made a disclosure of unaccounted income amounting to Rs. 20,77,200 in a statement recorded under s. 132(4). In response to notice issued under s. 158BC on 28th Nov., 1995, the assessee filed a return of income declaring total income at Rs. 20,79,600 on 20th Feb., 1996, for the block period as under: Period Asst. yr Income 1-4-1993 to 31-3-1994 1994-95 12,400 1-4-1994 to 31-3-1995 1995-96 13,98,080 1-4-1995 to 31-3-1996 1996-97 6,98,120 . . 20,79,600 4. The assessee has claimed to be deriving income from card game and cricket betting. At the time of search on 26th Sept., 1995, cash amounting to Rs. 77,200 was found out of which Rs. 70,000 was seized. Apart from this, the assessee was found in possession of other valuable and household items as per annexure of the Panchnama dt. 26th Sept., 1995 amounting to Rs. 6,98,000 and jewellery valuing Rs. 76,700 only. The disclosed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000. Shri N.R. Divetia and Shri Anil Kashatriya, Advocates, appeared on behalf of the assessee and submitted that the AO had erred in estimating the household expenditure for the period relating to asst. yrs. 1986-87 to 1995-96 and upto 26th Sept., 1995 at Rs. 7,10,000 without any basis and without giving a specific show-cause notice to the assessee in this regard. It was submitted that the learned CIT, Gujarat-3, Ahmedabad had also granted mechanical approval under s. 158BG without giving any opportunity to the assessee. It was submitted that the addition of Rs. 5,81,000 made by the AO suffered from totalling mistakes which were apparent from paras 7 and 8 of the assessment order. It was submitted that the totals of withdrawals of the assessee and his wife as stipulated in para 7, p. 6 of the assessment order contained a short totalling of Rs. 20,000 because the total of withdrawals actually came to Rs. 1,49,000 instead of Rs. 1,29,000 taken by the AO. Besides that, it was submitted that the AO had wrongly noted the withdrawals of the assessee's wife in the period 1995 till the date of search at Rs. 15,000 whereas as per the books, it was Rs. 16,000. It was further submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad accepted this plea of the assessee and for asst. yr. 1990-91 had directed the AO to take the income of the assessee at Rs. 25,000 vide order dt. 26th Feb., 1996. It was submitted that except for the cash and various household items, investment in respect of which was surrendered by the assessee in statement recorded under s. 132(4), there was no evidence to suggest that the assessee had incurred any expenditure which justified the fantastic estimates made by the AO for household expenses totalling Rs. 7,10,000 for the block period. It was submitted that the reasoning given by the AO for estimating the household expenses was that the assessee was having electronic goods which showed the assessee's standard of living. It was submitted that the so-called electronic goods and TV, music system, refrigerator, air-conditioner, etc. and there was no finding as to whether these items of household were with the assessee during the period prior to the date of first search. Even otherwise the assessee had disclosed the investment made in the purchase of household goods including the electronic items and the possession of these items could not justify the estimate of household expenditure. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ludes (i) any money, bullion, jewellery or other valuable article or thing (hereinafter referred to as 'such asset') or (ii) any income based on any entry in the books of account or other document or transaction (hereinafter referred to as 'such document') where 'such asset' or 'such document' represents wholly or partly, income or property which has not been disclosed or which would not have been disclosed for the purposes of this Act. 9.1 The definition is not exhaustive and, therefore, the normal concealed or undisclosed income shall also fall within the scope of the term 'undisclosed income' for the purpose of this Chapter. 9.2 The definition refers to 'such asset' and the income based on 'such document' if the same represents (wholly or partly) income or property which has not been disclosed or which would not have been disclosed for the purpose of this Act. The language indicates that the income or the property which has either been disclosed or which would have been disclosed for the purpose of the Act shall not form part of the 'undisclosed income'. 9.3 From this, it appears that the requirement of disclosure of income for the purpose of this Act presupposes that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from undisclosed sources of the relevant accounting year. It was because of this that the assessee offered to disclose the investment made by him in house property as well as in various household items including the refrigerator, air-conditioner, TV, etc. as the undisclosed income. However, to make an addition of alleged unexplained household expenditure, the AO has first to record a finding that there were various items of proved undisclosed expenditure during the relevant previous years, the source of which the assessee is unable or unwilling to explain satisfactorily. In the present case, there is no finding of such an unexplained expenditure having been incurred by the assessee in any of the accounting years relevant to the asst. yrs. 1986-87 to 1995-96 as well as the period 1st April, 1995 to 26th Sept., 1995. Keeping in view the totality of the facts and circumstances of the case and also the fact that the assessee was a bachelor till 1992, it cannot be said that the expenditure shown for household purposes was inadequate. There is no finding by the AO about the assessee having any personal domestic servant, any extraordinarily high electric bills, huge payments as mem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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