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TMI Blog2005 (11) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... me from chit business amounting to Rs. 4 lakhs and income from proprietary concern M/s Kusboo Enterprises of Rs. 6 lakhs. 2. A search was conducted at the premises of assessee and one Mr. Lalchand Balar on 26th April, 2000. During the course of search, it was found that the assessee has conducted 22 numbers of chits. On the basis of material found during search and the statement of assessee, an amount of Rs. 4 lakhs, being Rs. 50,000 for 8 assessment years, were considered as income by way of commission from chit business. The assessee during the course of search admitted as under: "I admit that I had conducted 22 number of chits of various value between 1992 to 1998. The every second chit used to be taken by me without any discount. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted chit business. Material was found during search. The assessee was confronted by AO. Since he himself has admitted having earned income of RS.4 lakhs, the addition was upheld. 2.1 Learned counsel for assessee, Shri Laxminarasimhan submitted that even though the assessee had admitted, still the income is to be treated as exempt on the principle of mutuality. There cannot be concession against the provision of law. If the income is exempt, even though it is admitted, the same has to be excluded, as the income is to be computed according to the provision of IT Act and not merely on the admission of assessee. He once again relied upon the decision of Hon'ble Andhra Pradesh High Court in the case of Nataraj Finance Corporation. He furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he real nature of income is the assessee receiving dividend by conducting such chits. The dividend is nothing but the surplus arising by contributing into the chits and not by way of commission for conducting such chits. Hon'ble Andhra Pradesh High Court in the case of Nataraj Finance held thus: "An entity would be a mutual benefit association if all the participators to the common fund are also contributors and their identity is established. It is this basic principle that satisfies the test of mutuality. The contributors to the common fund and the participators in the surplus must be an identical body. That does not mean that each member should contribute to the common fund or that each member should participate in the surplus or ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y applicable. Applying the ratio laid down by Hon'ble Supreme Court as well as the Andhra Pradesh High Court, the income is not to be taxed but is to be exempted as the profit is made from oneself and not from others. 3.1 The AO as well as learned CIT(A) has taxed the sum of Rs. 4 lakhs merely because the assessee agreed for the same. It is settled law that there cannot be any concession against the provision of law. Even though the assessee admitted but is able to demonstrate that the income admitted is either not his income or that such amount is not chargeable to tax, the same cannot be brought to tax merely on admission. Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. vs. State of Kerala & Anr. (1973) 91 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name of M/s Kusboo Enterprises was not accounted for. The appellant during the course of search admitted a sum of Rs. 6 lakhs to be his undisclosed income from the said business. The same was accordingly brought to tax. 4.2 Learned counsel for assessee, Shri Laxminarasimhan submitted that admitting a sum of Rs. 6 lakhs was the immediate reaction of assessee. However, on correct appreciation of evidence and even considering the seized material, the net income from M/s Kusboo Enterprises is the sum of Rs. 5,03,412. Thus, the amount to be adopted as undisclosed income should be such sum of Rs. 5,03,412 and not the sum of Rs. 6 lakhs as admitted during the course of search. 4.3 Learned Departmental Representative, on the other hand, relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X
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