TMI Blog1995 (4) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... s of cotton seed oil and ginning of cotton and purchase and sale of Kapas, Kapasia, Cotton seed oil, oil cake, etc. 4. Search and seizure operations were carried out at the premises of the assessee-firm on 1-6-1984, during the course of which various books of account and other records were seized therefrom. Statement of one of the employees of the assessee-firm, Shri Kalyanbhai A. Vora, was also recorded during the course of search proceedings. Simultaneously, search operations were also carried out at the residential premises of one of the partners, Shri G.K. Parikh. Various loose papers, etc., were seized therefrom and statement of Shri G.K. Parikh was also recorded. Simultaneously, statements of a few of the other partners of the firm were also recorded. 5. In the statement recorded of the employee Shri Kalyanbhai A. Vora, he was questioned on a paper found from his custody by the search party during the course of search proceedings and was asked to explain the same. In his answer to question No. 6, he stated, " to my knowledge, the above paper reflected the distribution of the income earned by the firm not reflected in the books of account aggregating to Rs. 2,25,000 ". Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 as admitted by the Accountant of the firm on the basis of the seized loose paper being the unaccounted profit of the past six years. It was further mentioned in this note that the appellant was not willing to dispute the testimony of the Accountant and further that it was not willing to spread over the amount over the past six years in order to save further litigation and to avail itself of the immunity as granted under the Amnesty Scheme. The Assessing Officer did not consider the aforesaid amount as voluntarily declared on the ground that the seized paper specifically mentioned about the distribution of unaccounted money amongst partners and the accountant of the firm admitted of such accumulation of unaccounted profit. He, therefore, treated the unaccounted profit of Rs. 2,25,000 as concealed business income and added accordingly and the extra amount of Rs. 25,000 was also assessed as additional income as declared by the assessee. She has not specifically mentioned whether the Amnesty Scheme was applicable to the assessee or not in respect of the disclosure of additional income of Rs. 2,50,000. However, since interest had been charged and penalty proceedings had been initiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of making short payment to the employees of amounts different than what was recorded in the regular books of account. The statement, therefore, according to the assessee's counsel, should have been read as a whole and the unaccounted profit of Rs. 2,25,000 should have been assessed in six assessment years including the assessment year 1984-85 which is under appeal. The learned counsel submitted that no such reopening of the past assessments was done by the ITO and no show-cause notice was issued in this regard upto the date on which the return was filed declaring additional income of Rs. 2,50,000 on 31-3-1986. Thus, upto one year and nine months after the date of search which was on 1-6-1984, the revenue did not act upon the impugned seized paper and the statement of the accountant possibly because there was doubt as to the evidentiary value of the paper as well as the statement of the accountant and the taxability of the amount in one or more years. The learned counsel for the assessee submitted that it is the assessee-firm which filed the return voluntarily declaring not only the amount of Rs. 2,25,000 as mentioned in the seized paper but also further amount of Rs. 25,000 under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was conducted as early as in 1984 and the revenue took no action whatsoever, with reference to the various statements recorded of the partners and the employee, nor with reference to the loose paper in question, which has formed the basis for this sum of Rs. 2,25,000. As will be apparent from the decision of the Hon'ble Calcutta High Court in the case of Anand Kumar Saraf relied upon by the learned counsel for the assessee, the Hon'ble High Court has clearly held that merely seizure of papers cannot mean detection and that when detection has not taken place, if the assessee were to come forward with a disclosure under the Amnesty Scheme he is very well eligible for all the benefits as envisaged under the Amnesty Scheme. The Hon'ble High Court further observed at page 574 as under : " The mere stigma of search and seizure can not shut out the assessee from the amnesty. The scheme is an inducement to evaders to make a clean breast of past evasions and square up accounts with the revenue. The persons who are left out from this opportunity are those whose concealments have come to light beforehand by investigations and search and seizure operations carried out by the revenue. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of furnishing the revised return of the assessee. Whereas, in the present case, the search had been carried out as long back as on 1-6-1984 i.e. almost two years prior to the filing of the return by the assessee-firm, and no action whatsoever had been taken by the revenue to go into the facts of the case and unearth concealed income which they thought to have been concealed by the assessee-firm. Merely for the reason that one of the employees Shri Kalyanbhai A. Vora had made the statement with reference to a particular paper that it reflected the unaccounted income of the firm, and which had, there and then, simultaneously at a different premises been rejected by the partner, could in no way be said that the offer made by the firm under the Amnesty Scheme for a sum of Rs. 2,50,000 was after the detection. The suo motu offer by the assessee-firm was for a sum of Rs. 2,50,000, whereas Rs. 2,25,000 is presumed to be concealed income of the firm by the Department, could in no way abstain the firm from the benefits as envisaged under the Amnesty Scheme. Moreover, the reasoning of the learned CIT(A) that 1/6th of Rs. 2,25,000 could be the concealed income of the firm, referable to this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income referable to the enquiry in question under the Amnesty Scheme. For this very reason, subsequent filing of a revised return by the assessee firm showing therein an additional income and claiming the benefits of the Amnesty Scheme had not been granted and the matter when brought before this Tribunal was upheld in favour of the revenue. In the case before us, as will be apparent from the facts discussed hereinabove, no such enquiry had been made after the search by the revenue and moreover as will be observed from the various statements of the partners of the firm and the employee all the statements are vague giving different explanations to the question. The revenue has therefore made no exercise whatsoever to enquire into the matter and unearth facts which would lead to say that unaccounted income did accrue to the firm as stated by the employee Shri Kalyanbhai A. Vora but rejected in toto in the very preliminary statement of the main partner of the firm, viz. Shri G.K. Parikh. The act, therefore, of the assessee-firm of filing a return showing therein an additional income disclosed pursuant to the immunities of the Amnesty Scheme can not thus be considered as based to be a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory has not been mentioned in this page at all though some other names like Vyapari Ginning, Navin, Kirti, J.N. Shah etc. have been mentioned in respect of certain payments or receipts. There was also mention of " Ti Bill " of Rs. 14,559.30, Insurance 1842, G.K. 1500, J.N. Shah 1800, Motor 15,000. The ITO interpreted the entire page as relating to purchase of goods from M/s. Prakash Oil Industries, i.e. the assessee firm and distribution of profit between the assessee and Shri G.K. Parikh at 50% each. He, therefore, added Rs. 4,01,919 as undisclosed sales by the assessee-firm to Shri G.K. Parikh. In some other pages of the diary, there were mentions of payments by the assessee-firm amounting to Rs. 81,110 on different dates and this amount was also added as unexplained payments to Shri G.K. Parikh. 15. On appeal, the CIT(Appeals) deleted the addition observing as under : " On careful consideration of the facts and circumstances of the case and the judicial decisions on the points, I am of the view that the impugned addition of Rs. 4,01,919 in respect of the alleged undisclosed sales on the basis of undecipherable notings at page 306 of the diairy B38 as seized from the residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have called for a remand report or set aside the assessment. 18. Shri S.N. Soparkar, the learned counsel for the assessee relied upon the order of the CIT(Appeals). He submitted that no such goods were sold to Shri G.K. Parikh and no such payments were made to him as has been interpreted by the ITO. The learned counsel further submitted that the diary was seized from the residence of Shri G.K. Parikh who has got interest in 12 different firms in his individual sub-group and if he has admitted about his financial transactions as recorded in this diary, such admission binds him alone on the basis of receipts and payments as recorded in this diary. He has already offered to be taxed on the basis of the peak credits, and therefore, the undecipherable notings in the diary here and there in the aforesaid manner can not be taken as a base in making any addition in the assessment of the assessee-firm. According to the assessee's counsel in page 306 of the diary which purportedly gives a summary of the transactions in the diary there is no mention of the name of the assessee-firm though mention has been made about other payments to some other persons and for certain purposes like insu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been allowed to divert any profit to the extent of 50% in respect of any transaction. Further the ITO has talked of 50% share in the accounted profit whereas Shri G.K. Parikh individually holds only 25% share and even with his daughter and brother he has only 32% share in the firm and, therefore, the distribution could not have been 50%. Further it is noted that Shri G.K. Parikh has owned up the entries in the diary and has surrendered peak of credits in the assessment years 1982-83, 1983-84 and 1984-85. He has paid substantial tax thereon. Mere entries in the accounts of third party was not sufficient to prove that the assessee had indulged in such transaction, as there was no guarantee that the entries were genuine. In this we are supported by the judgment of the Bombay High Court in the case of Addl. CIT v. Miss Lata Mangeshkar [1974] 97 ITR 696. 20. We do not find any merit in the submissions of the departmental representative that the CIT(A) should have remanded the matter to the file of the Assessing Officer or set aside the same for proper verification of the facts. We find that all the basic facts were before the Assessing Officer and this fact is accepted by the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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