TMI Blog2005 (6) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... . Confirming the disallowance of depreciation claimed by the assessee and allowed in the regular assessments for the assessment years 1996-97, 1997-98 and 1998-99 amounting to Rs. 14,61,131 and for the assessment years 1999-2000 to 2001-02 (30-9-2000) amounting to Rs. 10,01,161 in respect of Office Premises bearing Nos. 1701 and 1702 as well as 1601 and 1602 at Brook Hill Apartments, Lokhandwala Complex, Andheri (W), Mumbai. 5. Confirmation of the addition of Rs. 7,05,193 on account of creditor written back in the Books of Account on 31-3-2000. 6. Confirmation of the addition of Rs. 1,18,237 on account of credits appearing in S.B. A/c No. 52774 for the assessment year 1992-93. 7. Confirmation of the addition of Rs. 10,28,404 in respect of credits in Maharashtra State Co-operative Bank instead of Rs. 17,28,404 offered by the assessee, in respect of the entire deposits made in the said account. 8. Finding of the Assessing Officer's view of Rs. 5,00,000 has been utilized by the payment of 'on money' for purchase of property at La-mer and Rs. 2,00,000 is utilized for payment for the interior decoration of flat at La-mer building. 9. Confirmation of addition of Rs. 50,00,000 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1999 to 26-9-2000 declaring undisclosed income of Rs. 35,00,000 on 22-2-2001 in response to notice issued by the Assessing Officer under section 158BC dated 8-11-2000. The break up of the undisclosed income declared is as under: --------------------------------------------------- 1. Outstanding Liabilities Rs. 5,70,964 2. Credit entries in Maharashtra State Co-op. Bank Rs. 17,28,404 3. Capital Account difference (Year 1992-93) Rs. 10,000 4. Self Assessment Tax Rs. 1,42,000 5. To cover up possible discrepancies in the Block Period Rs. 10,48,632 -------------- Total Rs. 35,00,000 --------------------------------------------------- The Assessing Officer passed the assessment order under section 158BC read with section 143(3) of the Act determining the undisclosed income at Rs. 1,94,07,940. The Assessing Officer determined the undisclosed income on account of following: --------------------------------------------------- 1. Unaccounted cash Rs. 4,95,200 2. Unaccounted Jewellery Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,00,000 9. Unaccounted cash paid to Carpenter 7,25,000 -- 7,25,000 10.Remuneration as Ms.World 35,79,000 10,00,000 25,79,000 11.Amount credited in City Bank 3,214 -- 3,214 12.Amount transferred from Royal Bank NRI A/c 13,14,210 -- 13,14,210 13.Amount transferred from City Bank NRI A/c 13,09,597 3,09,597 10,00,000 ----------- ---------- ----------- 1,94,07,940 30,28,265 1,58,56,715 -------------------------------------------------------- Besides the CIT(A) enhanced the assessment and made fresh addition of Rs. 9,85,461 on account of excess credits in the bank account with Royal Bank of Scotland, plc, London, U.K. In the present appeal the assessee is contesting the additions sustained and enhanced by first appellate authority except for the amount transferred from City Bank NRI A/c Rs. 10,00,000. There are twelve grounds of appeal. The assessee filed paper book containing 282 pages. The grounds of appeal taken by the assessee are adjudicated as under: 8. The first ground is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from bank on 4-9-2000 ---------- 8,46,000 ---------------------------------------------------- The cash balance shown in the cash book includes opening balance of Rs. 76,531 as on 1-4-2000. Further a sum of Rs. 2,00,000 was stated to be received from one producer Shabnam towards professional receipts on 24-9-2000. A sum of Rs. 1,95,000 was lying out of total cash withdrawals of Rs. 7,00,000 from Maharashtra State Co-op. Bank Ltd. This account was found to be undisclosed and the assessee in her return for the block period shown the entire credits in this account as undisclosed income amounting to Rs. 17,28,404. The assessee withdrew Rs. 7,00,000 in aggregate from Maharashtra State Co-Op. Bank Ltd. during the period from 1-4-1999 to 18-7-1999 and Rs. 1,20,000 was lying as cash in hand as on 1-4-1999 out of the cash withdrawals from Maharashtra State Co-Op. Bank Ltd. in earlier period. Out of which Rs. 6,25,000 was stated to have been paid to Mrs. Nupur Doshi, an interior decorator. The CIT(A) did not accept the cash balance shown by the books of account and he concurred with the vers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenable. Mere non-finding of books of account at the time of search cannot be a ground to hold that the assessee is not maintaining the regular books of account in view of the fact that the same were produced in the scrutiny assessment proceedings before the Assessing Officer prior to the date of search. The Assessing Officer and CIT(A) were wrong in ignoring this vital fact. He further submitted that barring this the Assessing Officer and CIT(A) has nothing to say in this regard. The Assessing Officer and CIT(A) did not find any fault with the books of account produced. The contents of the books of account were found to be in order. The entry of receipt of professional fee of Rs. 2,00,000 appearing in the cash book was summarily rejected. The Assessing Officer did not bring any material on record to substantiate that the said sum was not received from the party concerned. Without making inquiry from the party concerned this cannot be rejected just on assumptions and presumptions. Similarly the opening cash balance is coming in the cash book as per the closing balance of previous year's cash book. The books of account of previous year 1999-2000 were duly audited. No fault of any na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and of her father recorded under section 132(4) were also perused. The major controversy lies about the maintenance of regular books of account. Admittedly the books of account were not found at the time of search. The father of the assessee spontaneously explained the source of cash to the extent of Rs. 3,50,000 which was in his memory at the time of search. The rest of the entries which are appearing in the books of account could not be explained as the books of account were not available at the time of search. However, later on, in the assessment proceedings and before the CIT(A), the assessee explained the source of cash found with proper reconciliation supported by books of account and other relevant documentary evidence. The Assessing Officer CIT(A) rejected the existence of books of account and accordingly rejected the explanation of cash balance as reflected in the cash book. The cash balance remained in hand out of the cash withdrawals from Maharashtra State Co-op. Bank Ltd. was also not considered. From the perusal of the table appearing in para 3.3 on page 6 of the CIT(A)'s order, it is observed that the assessee explained the source of cash found at the time of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to accept the explanation of the assessee with regard to cash balance available as per the cash book on the date of search. The reliance of the CIT(A) on the decision of Sheraton Apperels is not applicable to the facts of this case. The books are duly balanced and totalled one and also audited. These are not memoranda books. This leaves us to the next limb of the issue of Rs. 1,95,000 as coming out of cash withdrawals of the assessee from her bank account with the Maharashtra State Co-op. Bank Ltd. The dates of cash withdrawals from this account finds place in the assessment order. The existence of this account is not in dispute. The source of credits in this bank account of Rs. 17,28,404 has been offered as undisclosed, income of the block period. The same was included in the return for the block period. The cash withdrawals from this bank account on different dates is not in dispute. The only dispute remains is whether the assessee could have cash balance left with her out of the cash withdrawals from this bank account. The assessee submitted that she was having balance out of the withdrawals from this bank at Rs. 1,20,000 as on 1-4-1999. Thereafter cash withdrawals from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diamond jewellery. At the time of search from the premises and the lockers in banks jewellery worth Rs. 42,02,978 was found and part of it was seized. The Assessing Officer asked to explain the source of jewellery. The assessee explained the same. The Assessing Officer did not accept the explanation and held that jewellery worth Rs. 19,89,628 is unexplained and he accordingly treated the same as undisclosed income of the block period. The CIT(A) directed the Assessing Officer to prepare a reconciliation with the help of the assessee and accordingly after a detailed exercise the Assessing Officer finally came to the conclusion that two items of diamond jewellery stands unexplained and he accordingly supported for the addition to the extent of Rs. 8,57,960 (Rs. 4,06,700 + Rs. 4,51,260) being the market value of the said two items as per valuer's report on the date of search. The CIT(A) found that these two items were subject-matter of regular assessment in past and, therefore, the same cannot be a subject-matter of block assessment proceedings again. He found that the assessee is in possession of the purchase bills for the same. He accordingly accepted the cost of these items as exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issue reads as under at Page No. 16 of the impugned order: "... This is to drive home the point that the issue was already a subject-matter of past assessment order and the search action has not yielded any new materials to change the position. Therefore, this being the case, law does not permit that the issue can be brought back in the block assessment proceedings....." The finding given by the CIT(A) is a categorical finding on the issue and, therefore, in our view, no addition at all ought to have been made on account of these items of jewellery. We accordingly hold that the addition of Rs. 4,00,960 on account of jewellery is unwarranted. We direct to delete the same accordingly. 16. The Ground No.3 is regarding the disallowance of depreciation on the premises being 1701/1702 1601/1602 at Brook Hill Apartment, Lokhandwala Complex, Andheri (W), Mumbai. The assessee claimed depreciation in the assessment years 1996-97, 1997-98 and 1998-99 amounting to Rs. 14,61,931 for the above premises and Rs. 10,01,161 was claimed in the assessment years 1999-2000 to 2001-02 (broken period up to 30-9-2000). The Assessing Officer disallowed the depreciation claimed in the regular r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer the assessee's brother in his statement had stated that nobody stays in flat Nos. 1601 and 1602 as the same is under renovation and the assessee used the flat Nos. 1701 1702 not on a permanent basis and whenever she was in this area i.e., close to Andheri she was using these premises to freshen up as she used to keep a very hectic schedule. The Assessing Officer derived support from the information supplied by the brother of the assessee in his deposition to the effect that flat Nos. 1601 and 1602 were under renovation and nobody stays there. Accordingly he concluded that flat 1601/1602 was also not used by the assessee for her professional activities and, therefore, the assessee wrongly claimed the depreciation in the regular returns for this premises and he proceeded to assess the same as undisclosed income for the block period. The assessee submitted before the Assessing Officer that she was using both these premises for her profession. The electricity charges were grouped under the head 'Sundry expenses' shown in the Income Expenditure Account. The flat Nos. 1601 and 1602 went under renovation only for a couple of months before the date of search. Prior t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , disallowance of depreciation can be considered in block assessment legally and also on merits he found that the assessee is not entitled to depreciation. As regards flat Nos. 1701 and 1702 the CIT(A) held that the said premises could not have been used in absence of electricity consumption and in view of the letter of Bhagat Erectors Development Services (I) Ltd. As regards flat Nos. 1601 and 1602 the CIT(A) was of the view that the Assessing Officer had rightly made the addition on the strength of the statement of the brother of the assessee. Accordingly he upheld the addition. 19. Before us the learned representative of the assessee vehemently contended that the both the Assessing Officer CIT(A) were wrong in arriving at the conclusion that the depreciation claim was wrongly made in the regular returns. His arguments are two fold. His first argument was that this issue is settled in the regular assessments made under section 143(3) of the Act for various years and there was no incriminating material found during the course of search and, therefore, this issue cannot be a subject-matter of block assessment proceedings. He submitted that the letter of Bhagat Erectors Deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for flat No. 1601/1602 from April 1997. He drew our attention to the copies of bills for maintenance charges raised by the builders and also the receipts for payments issued by them placed at paper book pages 144 to 162. He further submitted that initially the builders provided the electricity and water. Later on the assessee paid the electricity charges. In support of this, our attention was drawn to the ledger account submitted in paper book at pages 163 to 166 which relates to the payments made to BSES (Bombay Suburban Electric Supply Ltd.). He further submitted that during the course of search a large number of dresses and costumes and 85 pairs of shoes, sandles etc. of the assessee were found from this premises at 1701A and 1601A and the authorized officer made inventory of the same. The inventory of these personal items runs in to 5 pages. Not only that, a sum of Rs. 2,00,000 was found and seized from these premises at 1701 and 1601. He argued that in such situation how it can be said that the flats were not used for business. According to him it clearly established that the assessee was using these premises for refreshing herself, changing the costumes, shoes etc. during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A) concurred with the views of the Assessing Officer. The assessee's contention has all along been that no jurisdiction lies with the Assessing Officer regarding this addition. To decide this, we need to examine the letter dated 30-3-1996 which finds place in the assessment order at pages 15 16. The letter is reproduced hereunder: "... Dated: 30-3-1996 To Ms. Aishwarya Rai, Mr. Aditya Rai, Ram Laxmi Niwas, 16th Road, Khar, Bombay-400 052. Reg.:- Flat Nos. 1701, 1702 in Brook Hill Tower, A Wing. Dear Sir, We are pleased to give you the possession of Flat Nos. 1701, 1702 in A in "Brook Hill Tower", A Wing, Plot No. 39 A/B, Lokhandwala Complex, Andheri (W), Bombay for furnishing of the same. We have not received the occupation certificate from BMC. You will not do any alteration without our permission so that BMC occupation certificate may not be held up. Proper electricity and water will be provided only after occupation certificate (Built up area 1,180 sq. ft.). You shall not carryon any addition or alteration in the said flat shall provide grills as per our specification. Thanking you, Yours faithfully, For BHAGAT ERECTORS DEV.SER.(I) LTD. DIRE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flat No. 1701/1702 from the assessment year 1996-97 and onwards i.e., from the year in which she took possession. Therefore, in our opinion, this letter cannot be considered to be an incriminating document giving jurisdiction to the Assessing Officer for proceeding in the block assessment. The assessee filed in the paper book, bills and receipts for maintenance charges, ledger account of electricity payment etc. which give credence to the case of the assessee. It makes sense that nobody will pay maintenance charges for years together without having possession and use of the flat, if it is not in a habitable/usable condition. We find considerable force in the arguments of the ld. AR that a huge inventory of costumes and shoes found at both these premises i.e., 1601 and 1701 is a clear indication of the flats being used for the profession. No prudent man will keep his artisans (tools of the profession) at a place which is not used for the profession. We cannot agree with the observation of the CIT(A) to the effect that there is no material to suggest that the appellant would be engaged in shootings in that specific locality nearby these premises. The huge inventory of dresses and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground No.4 the assessee is agitating the addition of Rs. 7,05,193 made on account of creditors written back in the books of account on 31-3-2000. The facts are that there were outstanding creditors of Rs. 7,05,193 as on 31-3-1999 which was shown by the assessee in her balance sheet filed along with the regular return of income for the assessment year 1999-2000. The assessee has written back this amount as on 31-3-2000 in the books of account and offered for tax as remission of liability under section 41(1) of the Act in the return filed for the assessment year 2000-01. Admittedly the return was filed after the date of search but within the time allowed under section 139(1) of the Act. The search took place on 26-9-2000 and the return was filed on 30-10-2000 which is earlier to the due date for filing the return in assessee's case 31-10-2000. The Assessing Officer had taken a view that the return was filed after the date of search and, therefore, this amount is required to be included in the block period. The CIT(A) concurred with the view of the Assessing Officer and upheld the addition. 24. The ld. AR pointed out that this item cannot be included in the block period at all. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this we find full force in the arguments of the assessee and we differ from the view taken by Assessing Officer CIT(A). At this juncture we may point out that the CIT(A) himself in this case has held in his order while dealing with the addition made by the Assessing Officer on account of jewellery that law does not permit an issue to bring back in the block assessment proceedings if the same was a subject-matter of past assessments and the search action has not yielded any new materials to change the position. It is surprising that while deciding this issue a different view was taken by him. The addition is ill founded and not based on any material, much less cogent. Therefore we hold that this addition is required to be quashed. We, therefore, delete this addition. 26. The ground No.5 of appeal relates to the addition of Rs. 1,18,237 on account of deposits in the bank account with State Bank of India being A/c No. 52774 during the period 1-4-1991 to 31-3-1992 (assessment year 2002-03). The Assessing Officer found that there were two credits of Rs. 8,347 and Rs. 1,09,890 on 3-12-1991 and 18-2-1992 in this bank account. The assessee did not file the return for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxman 96 (Bom.) and Sunder Agencies v. Dy. CIT [1997] 63 ITD 245 (Mum.). He submitted that this issue is more or less settled by now and, therefore, he pleaded for deletion of the addition. On the other hand the ld. DR supported the addition on the ground that the assessee did not explain the nature of these credits with any documentary evidence and also did not file the regular return for the assessment year 1992-93 and, therefore, the case is squarely covered by section 158B(b) which defines the undisclosed income. The assessee had not disclosed this year's transaction by filing a regular return and, therefore, this amount is the undisclosed income within the meaning of the definition given by section 158B(b). Therefore, he urged to uphold the addition. 28. We have carefully considered the rival submissions. The issue to be decided here is whether this can be considered in the block assessment. Admittedly the Assessing Officer had not made reference to any specific seized document to subs antiate this addition, we find force in the argument of the learned Authorised Representative that this addition is not based on any seized document. The Assessing Officer discussed this iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was wrong in making this sort of bifurcation. The CIT(A) did not find any merit in the explanation of the assessee and he did not depart from the Assessing Officer's finding. Before us it was pleaded that the Assessing Officer should not have done this exercise of bifurcation. The addition under this head should have been Rs. 17,28,404 and not Rs. 10,28,404. The Ld. DR supported the action of the lower authorities. 30. We heard the parties and perused the assessment order and also the order of CIT(A). The issue seems to be simple. There is no dispute about the quantum but the bifurcation of the income declared by the assessee. The assessee offered the entire credits in the bank account of Rs. 17,28,404 as undisclosed income of the block period. The Assessing Officer reduced the amount of two cash withdrawals from this account on 19-5-1999 Rs. 5,00,000 and on 28-7-1999 Rs. 2,00,000 from this head and determined undisclosed income from this source at Rs. 10,28,404. The withdrawal of Rs. 5,00,000 was considered by him as undisclosed investment in the alleged cash payment for purchase of flat in La Mer building by the assessee which is covered by ground No. 7 of this appeal and Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of flat in La Mer building by the assessee. The facts in brief, as borne out from the records, are that the assessee Ms. Aishwarya Rai along with her father, mother and brother purchased one flat on 12th floor in La Mer Building at Bandra. The agreement for this flat was executed in the name of all these four persons. This flat was purchased from M/s. Jai Construction Co. who were the builders developers of this building. The agreement value of this flat was Rs. 90 lakhs. The date of agreement for purchase of this flat was 25-5-1999. In the search some loose papers were found and seized. On these seized papers details of payment made to Jai Construction Co. are mentioned. On one of the papers the coded figures are mentioned. These papers were seized vide page Nos. 5,44 and 45 of the file marked as annexure A-3. In the course of search deposition of the father of the assessee Mr. Krishna Raj Rai was recorded under section 132(4) of the Act. In this statement the details of purchase of properties by assessee and her family members in past few years were given by him. One question was posed to him to state as to whether any cash payment was made for purchase of properties over an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessment order that the builders have not confirmed the receipt of amount in cash over and above the agreement value. The Assessing Officer further derived support from one sale instance on 10th and 11th floors of this building. The star cricketer Sachin Tendulkar purchased flats on 10th and 11th floors of the same area for Rs. 153 lakhs each. Taking all this into consideration the Assessing Officer concluded that on-money of Rs. 50 lakhs was paid in this deal and since the assessee had the lion share in the earning of the family he presumed that this money was paid by the assessee out of her undisclosed sources. He, therefore, assessed this sum of Rs. 50 lakhs in the hands of the assessee in the block period on substantive basis. Since the agreement for this property was in the name of all four persons of the family, he also made additions in the hands of other assessees namely Mr. Krishna Raj Rai (father), Mrs. Vrinda Rai (mother) and Mr. Aditya Rai (brother) in equal proportion i.e., Rs. 12,50,000 in each case on protective basis. 32. In the first appeal, the assessee contested that there was no on-money payment for purchase of this property and the addition ought not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a proper state of mind because of continuous ongoing search proceeding of more than 20 hours and the statement was taken at the odd hours i.e., late in the night and concluded early morning. As such, no cognizance of such initial statement ought to have been taken by the Assessing Officer. The Assessing Officer should have considered all these peculiar circumstances in which the statement was made. In this regard I also draw your attention to the answer to question No. 52 of the statement under section 131 recorded by the Dy. Director of Investigation. The same is reproduced as under: Q.No. 52: Can you specify the mimes of the persons to whom cash for property dealing for both the properties "Brook Hills" and "La-Mer" was paid? Ans.: For Brook Hills Towers, the promoter's office bearer who were in the office at that time. I do not recall the name at present. For La-Mer no cash is paid up to date. From the above you will find that my father has categorically stated that no cash was paid for La-Mer flats. As such the Assessing Officer was clearly in error in not considering this aspect regarding the statement of my father. It is therefore submitted that no cognizance of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is payment of Rs. 3,00,000 was made by cheque No. 103700 dated 17-5-1998 from UBI, Khar Branch from the account of Shri Krishnaraj Rai. The same is reflected in the seized page No.5 which is also admitted by the Assessing Officer in the assessment order. The Assessing Officer is drawing inference that I have made payment by December, 1998 a sum of Rs. 59,00,000 and out of which Rs. 34,00,000 was paid by cheques and Rs. 25,00,000 was paid by cash. This is factually totally incorrect. We hav~ paid Rs. 3,00,000 only till December, 1998 to M/ s. Jay Constructions and that too by cheque. We have not made payment by ch~ques of Rs. 34,00,000 up to December, 1998 as is evident from the seized page No.5 itself. The only payment made up to December 1998 was Rs. 3,00,000 and not more than that. Thus the Assessing Officer has proceeded on wrong fpotings altogether by stating wrong facts in the assessment order. He has not brought on rece rd any evidence to show that the payment by cheque was Rs. 34,00,000 up to December, 1998 (as alleged by him in the assessment order). In fact it was mere Rs. 3,00,000 which is written on this very paper on the extreme right. Below that on this page No. the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the Assessing Officer on page Nos.32 and 33 of the assessment order. The Assessing Officer. states in the assessment order as under: "On 2nd line it is written as 1/99 against which figure is mentioned at 5, which shows the cash payment of Rs. 5 lakhs in January, 1999. On 3rd line it is written as 4-2-1999 against which figure is mentioned at 4, which shows the cash payment of Rs. 4 lakhs on 4-2-1999. On 4th line it is written as 13-2-1999 against which figure is mentioned at 5, which shows the Gash payment of Rs. 5 lakhs on 13-2-1999. On 5th line it is written as 2-3-1999 against which figure is mentioned at 2, which shows the cash payment of Rs. 2 lakhs on 2-3-1999. On 6th line it is written as 5/99 against which figure is mentioned at 9, which shows the cash payment of Rs. 9 lakhs in the month of May, 1999." From the above you will find that Assessing Officer is making mere assumptions and presumptions that the above amounts were paid in cash. Nowhere on this paper it is written that any payment was made in cash. As such the mere assumptions cannot be a foundation of the assessment. This is very well established principle of law. Time and again, the courts inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase. As such no comparison of the price of his flats can be made with our purchase price. We also don't know on what terms and conditions he has purchased the flats. We don't know what are the amenities given to him. The Assessing Officer did not give any opportunity to us before relying on the sale instance of Mr. Sachin Tendulkar. As such the action of the Assessing Officer is in gross violation of principles of natural justice. In any view of the matter this issue is not at all relevant for making assumptions in our case in the block assessment. It is worth to be noted that Mr. Sachin Tendulkar has not purchased the flats on 10th and 11th floors directly from the builders M/s. Jay Construction. Some other person/s originally booked the flats on 10th and 11th floors and Mr. Sachin Tendulkar has purchased those flats from the third party/parties. This fact has a substantial bearing on the price of the flats purchased by Mr. Sachin Tendulkar. In view of the above it is submitted that the addition of Rs. 50 lakhs is merely based on suspicious and needs to be deleted. Attention of your honour is also drawn to the case of D.N. Kamani HUF v. DCIT 70 ITD 77 wherein the Patna Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that initial statement was wrong and no cash was paid for 'La Mer' flat. In assessment proceedings vide letter dated 20-9-2002 again this fact was denied. He strongly argued that the initial statement of the father of the assessee which was subsequently retracted on many occasions by him cannot be considered for making additions in the assessment. More so when there is no other evidence brought on record by the Assessing Officer to support the fact that any on-money was paid in respect of flat in La Mer building. In view of this he submitted that the initial statement was not correct and the same was corrected later and this cannot be used as a foundation of making the additions. He also relied on various authorities in this regard namely Pushpa Vihar v. Asstt. CIT [1994] 48 TTJ (Bom.) 389, Pullangode Rubbers Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) and Krishan Lal Shiv Chand Rai v. CIT [1973] 88 ITR 293 (Punj. Har.) for - the proposition that the statement given in the search can be retracted later on and mere confessional statement cannot be the basis for making additions. Secondly he submitted that the Assessing Officer has merely drawn inference on his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the order of Assessing Officer CIT(A). He argued that the Assessing Officer has made addition after detailed analysis of the seized papers. The statement of Mr. K.R. Rai is duly corroborated by the seized material. His partial retraction is not valid and only the original statement which was given spontaneously at the time of search needs to be considered as correct. The subsequent denial belatedly is merely an afterthought and not supported by any material. He pointed out that the assessee did not allege any coercion on the part of the department and the statement under section 132(4) was given voluntarily and without any pressure and, therefore, no retraction can be allowed. The seized paper 44 of Annexure A-3 clearly shows the entries of cash payments with specific dates and therefore it does not lie in the mouth of the assessee to deny the truth of the matter. In the statement under section 132(4), the admission of father of assessee of Rs. 50 lakhs for purchase of this property is duly corroborated with the amount and entries written on this page 44. The Assessing Officer has properly linked the sum total of entries of page 44 (A-3) and rightly came to the conclusion of on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " From the above it is seen that the Assessing Officer says that up to December 1998 payments by cheques of Rs. 34 lakhs was made. On page 26 of the assessment order the seized pages 5 and 44 have been extracted by the Assessing Officer. Both these pages contain the payments to the builders by cheques. As per the noting on these pages up to December 1998 only Rs. 3,00,000 was paid by cheques. This is in sharp contradiction to the observation of the Assessing Officer. On page 32 of the assessment order where he says up to December 1998 payment by cheque was Rs. 34 lakhs. The Assessing Officer has not given any details of payment by cheques of Rs. 34lakhs up to December 1998. It is not in dispute that the payment by cheques are not reflected in the accounts of the assessee. It is not the case of the Assessing Officer that cheque payments recorded on seized papers 5 and 45 are not correct. On the contrary it is seen that he relied on these papers to substantiate his findings. The Assessing Officer accepts the noting of cheque payments as correct as mentioned by him in para 18(viii) on page 30 of the assessment order. The Assessing Officer discussed on pages 30, 31 and 32 of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments mentioned above were made after December 1998. Thus the finding of the Assessing Officer regarding first line of page No. 44 of Annexure A-3 given on page 32 is incorrect. The contradiction lies in the findings recorded in the assessment order itself. We may point out at this stage that CIT(A) chose to remain silent on this aspect in spite of objected to by the assessee in her submissions in the proceedings before him. Needless to mention here that the finding of first line is the starting point of the issue. We find from the finding of the Assessing Officer that subsequent figures mentioned on this page was assumed as payment made in cash. Now the question arises as to what is the evidence of having paid in cash. This paper does not suggest anything about this aspect. From the notings on this paper it is not clear as to whether the payment was in fact made and that too in cash. It is only an assumption of the Assessing Officer. But we find force in the argument of the ld. AR that the figures mentioned on this page after the first line were the amounts promised to be paid as the words promise is written on this page. According to him the promise was made for payment of Rs. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 702 was paid as the transaction was complete but the transaction of La Mer building flat was not completed for amenities and stamp duty etc. and, therefore, no additional amount was paid till date. Later on a letter was written on 29-11-2000 by the father of the assessee Shri Krishna Raj Rai. In this letter he again clarified that for flat Nos. 1601/1602 and 1701/1702 in Brook Hill Tower the extra amount was paid as the possession of the flats were taken and the transaction was complete. He further stated that the amount was paid towards stamp duty, club house, car parking etc. Where no possession was taken nothing was paid beyond the agreement value. The Assessing Officer found the retraction as afterthought and rejected it. The CIT(A) also concurred with the Assessing Officer. Here the question to be examined is whether a person who made any statement during search can be allowed to correct his statements later on. In search action normally the assessees are asked so many questions, explanations. This action continues for a long time even beyond 12 hours or more. It is quite likely that any person covered by search proceedings may not be able to give correct explanations of all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the Assessing Officer after making elaborate inquiries brought on record one comparable case of sale instance of flat in the same building. The Assessing Officer stated that Mr. Sachin Tendulkar had purchased flat in the same building in June/ July 1999. This flat was situated on 10th floor of the same building in which the assessee also purchased a flat on 12th floor. The area of the flat was equal to that of the flat of the assessee. His agreement value was Rs. 153 lakhs and the value in the case of assessee was Rs. 90 lakhs. According to the Assessing Officer this proves the fact of on-money payment by the assessee. We find from the records that the assessee had purchased the flat in May 1998 as is mentioned in the assessment order. The date of purchase of Mr. Tendulkar is June/July 1999. It is also seen from the records that the assessee had purchased directly from the builders M/s. Jay Construction Co. Mr. Tendulkar purchased it from a third party and not from the builders. It was argued by the ld. AR that Mr. Tendulkar bought the flat in a ready condition whereas the assessee had booked the flat at the time of starting of the construction. It is also not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see on the ground that the dates of payments to Nupur Doshi and date of cash withdrawal from bank does not exactly match. He considered those payments as explained where cash was withdrawn from bank on the same day on which the payment was made to Nupur Doshi The remaining payments were considered by him as unrecorded payment and he accordingly included the same in the undisclosed income of the block period. Before the CIT(A) the assessee contended that Assessing Officer was clearly in error in making the impugned addition. The CIT(A) rejected the explanation of the assessee and upheld the addition. 41. Before us, the ld. AR of the assessee contended that the Assessing Officer CIT(A) was wrong in arriving at the conclusion that part of the payments to Mrs. Nupur Doshi are unrecorded. He pointed out that source of all the payments were explained and nothing unrecorded remains. He pointed out the details of payment and corresponding source of the amount which is placed at paper book page 122. According to him Rs. 6,25,000 paid on different dates were paid out of cash withdrawals made from Maharashtra State Co-op. Bank Ltd. and Rs. 1,00,000 was paid out of the cash on hand availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f payment to Mrs. Nupur Doshi is not prior to the date of cash withdrawal from bank. Since the bank account was not earlier disclosed, the assessee might have kept the cash in hand for some time and thereafter paid to Mrs. Nupur Doshi. The possibility of payment made out of the withdrawal from Maharashtra State Co-op. Bank Ltd. cannot be ruled out. Particularly in view of the fact that the withdrawal of cash is prior to the date of payment. The application of income assessed needs to be set off against the investment/expenses of the assessee. Taxing both may result in double taxation which is certainly not permissible in law. Here the assessee has declared the entire credits of the Maharashtra State Co-op. Bank Ltd. as undisclosed income and claimed to have utilized a part of the money withdrawn from the said bank in cash for making payment to Mrs. Nupur Doshi. We find no reason for not accepting this proposition of the assessee. It is pertinent to note that the Assessing Officer has not brought contra material on record to rebut the claim of the assessee. It is not the case of the Assessing Officer that payment to Mrs. Nupur Doshi was made from any other undisclosed bank account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in the assessment year 1996-97 as the same was not received. In the assessment proceedings for the assessment year 1996-97 the assessee's representative, on being asked specifically by the then Assessing Officer, submitted inter alia a copy of the agreement of assessee with Miss World (Jersey) Ltd. It was informed that the assessee received as prize money and remuneration of 50,000 pounds. It was claimed before him that it was not taxable in view of assessee being non-resident in the year of entering into the contract. The then Assessing Officer accepted the explanation of the assessee and passed a speaking order for assessment year 1996-97 and did not bring this amount of 50,000 pounds to tax. The copies of the assessment order passed under section 143(3) for assessment years 1995-96 and 1996-97 have been supplied to the Tribunal and placed at paper book pages 138 to 143. The Assessing Officer carrying out the block assessment proceedings raked up this issue again and treated this amount as undisclosed income of the block period since in his opinion it escaped taxation in the regular assessments. Before the Assessing Officer explanation of the assessee in ter alia was that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly argued that both the lower authorities were wrong in arriving at the conclusion that this issue can be taken up in the block assessment proceedings. He submitted that the loose paper No. 87 of Annexure A-3 as referred to by the Assessing Officer in the assessment order can by no stretch of imagination be termed as incriminating material with regard to prize money and remuneration of 50,000 pounds. He pointed out that this is a letter from Royal Bank of Scotland, London. It shows interest payment to the assessee on this bank account. It nowhere talks of any prize money and remuneration received. Secondly he stated that whatever prize money and remuneration was received by the assessee were already disclosed to the department. The assessee received 50,000 pounds and that was disclosed to the then Assessing Officers in the regular assessment proceedings for assessment years 1995-96 and 1996-97. He drew our attention to the discussion took place in the correspondence during the assessment proceedings for assessment years 1995-96 and 199697. In one of the letter written to the then Assessing Officer, which is also extracted by the Assessing Officer in the block assessment order at pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered to be covered by the words deduction, allowance or expense. In view of the above he submitted that the conclusion of the Assessing Officer in this regard is illegal and void. He, therefore, pleaded that the impugned addition is not warranted and be deleted. 46. On the other hand the ld. Departmental Representative relied on the orders of Assessing Officer CIT(A). He submitted that the assessee had made misrepresentation before the Assessing Officers in regular assessment proceedings for the assessment years 1995-96 and 1996-97 and successfully avoided the payment of tax on this prize money and remuneration of 50,000 pounds. There is no reason why this income is not taxable. Since it escaped taxation it was rightly assessed in the block assessment. He further submitted that incriminating material was found during the course of search which led to the inquiry and in this process this undisclosed income was detected. He submitted that in the amended definition of undisclosed income as contained in section 158B(b) of the Act false claim of exemption of income is covered and, therefore, the Assessing Officer was right in including this income in the block assessment. He, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The deductions provided in the Act are contained in Chapter VIA of the Act. The income is taxable but to give incentives and keeping other considerations in mind the Government grants a deduction from the income included in the gross total income. There are various deductions provided in the Act and the relevant sections are 80CCC to 80U. For example for the new industries set up in specified areas a deduction is provided in section 80-IB. The income is included in the gross total income but a specified percentage of the income or fixed amount is granted as deduction. Similarly the allowance is like depreciation allowance which is provided by section 32 of the Act. The question arises is whether the assessee's income of prize money and remuneration received from Miss World (Jersey) Ltd. U.K of 50,000 pounds can fit in these words expense, deduction or allowance. The Assessing Officer CIT(A) both were of the view that this can fit in this amended definition. The assessee is contesting this. In this regard we have to analyse section 143(1) which was in force for quite a number of years and that section which stood at material point of time reads as under: "... 143(1)(a) Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee the issue was whether the phrase claim of expense, deduction or relief could include in its ambit the items of income. The courts were of the unanimous view that the items of income cannot be said to be covered in the phrase expense, deduction or relief. This view is supported by the decisions in Namdang Tea Co. (India) Ltd.'s case, Bank of America N.T. S.A.'s case, Makum Tea Co. (India) Ltd.'s case and Adamas Gem Industries Ltd.'s case. In our view the similar words are also contained in section 158B(b) which were added by the Finance Act, 2002. The receipt of 50,000 pounds by the assessee is an item of income and it certainly cannot be a case of claim of expense, deduction or allowance. Therefore, we have no hesitation to hold that this receipt cannot fit in the amended definition of undisclosed income. The conclusion of the Assessing Officer that this is covered by the words expenses, deduction or allowance will not stand for legal scrutiny and hence deleted. 48. The other crucial issue with regard to the impugned addition is whether this can be a subject-matter of block assessment. It is seen from the records that this issue was discussed in the regular assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of material found in search. This issue was judicially examined in the cases of Ravikant Jain, Bhagwati Prasad Kedia, Smt. Usha Tripathi, Rajendra Prasad Gupta, Vinod Dhanchand Godawat, Sunder Agencies and P.K. Ganeshwar. The Courts were of the view that unless there is material found in search the Assessing Officer does not get jurisdiction to proceed in the block assessment. Accordingly we hold that the action of the Assessing Officer was without any jurisdiction and, therefore, we delete the impugned addition. The alternative grounds of the assessee regarding non-taxability of the income, deduction under section 80RR etc. are not adjudicated as we have deleted this addition. 49. The next ground No. 10 of the appeal relates to the addition of Rs. 3,214. This addition was made for the reason that assessee had credited this amount in her capital account under the head 'Transfer from City Bank'. The capital account was submitted along with the regular return of assessment year 1997-98. The return was filed before search action on 31-10-1997. The Assessing Officer noticed this entry from the capital account submitted in the regular return. The Assessing Officer stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of sections 158B(b) and 158BB(1) of the Act. The CIT(A) did not accept this explanation. Alternatively it was claimed before the CIT(A) that on this amount tax has been deducted in U.K. and in view of the provisions of Double Tax Avoidance Agreement between India U.K. This amount cannot be taxed in India. The proof for deduction of tax was filed before him. The CIT(A) accepted this argument of the assessee and directed the Assessing Officer to give relief after verification. The assessee is contesting the action of the CIT(A) for upholding the addition on legal grounds. Before us the ld. AR of the assessee contended that this cannot be a subject-matter of block assessment. He repeated his arguments which were advanced while dealing with ground No.9 of this appeal. The ld. DR supported the action of Assessing Officer CIT(A). From the records we find that this addition is not supported by any seized material. The Assessing Officer noticed from the regular return that this amount was credited in the capital account but was not offered as income of the assessment year 1998-99. This being the position we are inclined to accept the arguments of the ld. AR that this cannot be a sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53. In the result the appeal of the assessee is partly allowed. Per Ahmad Fareed, Accountant Member. - I have perused the order proposed by my learned brother and I am unable to persuade myself to agree with the conclusions arrived at by him with regard to the Ground No.7. In respect of the other grounds I am in agreement with the conclusions reached by my learned brother. I, therefore, proceed to write a dissenting order with regard to the Ground No.7. 2. The Ground No.7 is as under- "On the facts and circumstances of the case and in law the learned Commissioner of Income-tax (Appeals) erred in confirming the addition of Rs. 50,00,000 on account of alleged unexplained investment in purchase of flat in La-Mer Building." 3. The facts of the case and the rival submissions with regard to Ground No.7 are mentioned in detail in paras 31 to 39 of the order of my learned brother and therefore these are not being repeated here. 4. In my considered view the addition of Rs. 50,00,000 has to be confirmed for the reasons given below. 5. The assessee' along with her father, mother and brother purchased the entire 12 floor of the building La-Mer situated in Bandra (W), Mumbai vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eque from 17-5-1998 to 29-3-1999. The details of these payments appear at page 33 of the order of my learned brother. The subsequent figures in the above-mentioned second column represent cheque payments of Rs. 10,00,000, Rs. 12,00,000, Rs. 10,00,000 and Rs. 12,00,000 made in June 1999, October 1999, December 1999 and in June 2000. The details of these payments appear at page 41 of the order of my learned brother. The figures appearing in the left hand column, in my considered opinion, represent cash payments of Rs. 5,00,000, Rs. 4,00,000, Rs. 5,00,000, Rs. 2,00,000 and Rs. 9,00,000 made on/in January 1999, 4-2-1999, 13-2-1999, 2-3-1999, May 1999 respectively. The mentioning of dates of 4-2-1999, 13-2-1999 and 2-3-1999 are strong indications of actual payments having been made on these dates and, therefore, the plea of the ld A.R. of the assessee that these figures represent mere 'promise' of payments is not acceptable. The payments aggregating to Rs. 84,00,000 are mentioned once again on the extreme left and the payments aggregating to Rs. 56,00,000 made up to October 1999 are written on the extreme right in the form of coded figures of 84 and 56 respectively. The sum total of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Sumati Dayal v. CIT [1995] 214 ITR 801 are applied to the present case the assessee's arguments/claims fail miserably. I am therefore of the opinion that the addition of Rs. 50,00,000 was rightly confirmed by CIT(A). 10. During the hearing the ld. AR of the assessee made an alternative submission saying that the impugned property was purchased in the names of the assessee, her father, her mother and her brother and, therefore, the entire addition could not be made in the name of the assessee alone. For the reasons discussed by the CIT(A) in para 9.9 of his order this plea cannot be accepted. The Ground No.7 is accordingly rejected. Per Ahmad Fareed, Accountant Member. - In this appeal there is a difference of opinion between the Judicial Member and the Accountant Member with regard to the Ground No.7 and, therefore, the matter is referred to the President, Income-tax Appellate Tribunal, with a request that the following question may be referred to a Third Member or the President may pass such order as he may desire. "Whether on the facts and the circumstances of the case the addition of Rs. 50,00,000 made by the Assessing Officer and confirmed by CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrong statement about the payment of on money in respect of this property. It appears that during the course of block assessment proceedings, JCC i.e., builder was called by the Assessing Officer and was asked to furnish copies of sale deed made in respect of the assessee. It was found by the Assessing Officer that those sale deeds were executed on 23-5-1999 in favour of the assessee and her family members as under: "(i) Shri Aditya K. Rai Rs.22,02,560 Flat Nos. 1201 1202 (ii) Shri Krishnaraj Rai Rs.21,91,470 Flat Nos. 1203 (iii) Ms. Aishwarya K.Rai Rs.23,06,630 Flat Nos. 1204 1205 (iv) Smt. Vrinda K. Rai Rs.23,06,230 Flat Nos. 1206 1207" 4. The Assessing Officer, further observed that 10th and 11th floors of the building, were purchased by Shri Sachin Tendulkar of the same area for Rs. 153 lakhs each, which he adopted as a comparable case for cost of flat. The Assessing Officer, deciphered the loose paper found during the course of search, which shall be dealt with later. The Assessing Officer based on his inquiries and loose paper etc. held that unaccounted cash amount of Rs. 50 lakhs was paid for this flat, and since the assessee had major share in earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order and the learned Accountant Member also has reproduced the same in para 6, page No. 61 of his dissenting order. 9. Learned counsel for the assessee contended that the initial part of this paper reflects a summary of payments made through cheques by various family members, which aggregates to Rs. 78 lakhs. The seized page Nos. 5 and 45 are details of these payments, which have been found to be matching with this figure and recorded in the books of account, the whole controversy revolves around page No. 44. Middle part of the paper on the extreme left hand side contains inscribing "Promise Diwali 98", just next to this figure from 3/98 to Dec ... "59" and on the extreme right of the paper "+43" was written. The oral agreement was made in March, 1998 with a promise to pay a sum of Rs. 59 lakhs by December 98, the column below figure "59", totalling "84" represents the promise to pay the instalments as mentioned therein. However, the assessee made the payment through cheques against the promised schedule as under: Payments to Jay Construction ------------------------------------------------- Sr. Date of cheque Bank Amount By No. No. --------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By cash (on-money) : Rs. 84 lakhs (ii) By cheque as recorded in paper : Rs. 78 lakhs (iii) By cheque paid thereafter : Rs. 12 lakhs -------------- Total : Rs. 174 lakhs ------------------------------------------------------ 13. It was contended that this total itself defeats the theory of the department. The price of Rs. 174 lakhs will result in addition of Rs. 84 lakhs, as against which the Assessing Officer has made an addition of Rs. 50 lakhs, which has been confirmed by the CIT(A). The amount of Rs. 174 lakhs, if it is the correct value, the department should have made necessary additions in the case of Shri Sachin Tendulker and others. It was contended that the theory of department, in interpreting the loose paper, is blown out of proportion, which has lead to inherent contradictions. If the addition called for was Rs. 84 lakhs, there was no point in ignoring this paper and basing the addition on comparison of prices of flats purchased by Shri Sachin Tendulkar, which is not comparable. The department is not clear in its mind as to how it wants to make addition. Much is made o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee makes one wrong assessment of facts and in later departmental inquiries, the same is corrected. Thereafter, father of assessee filed a letter dated 29-11-2000, explaining the facts in this behalf to the effect that due to search proceedings, he was under physical and mental fatigue and nervousness. The official started recording his statement late in night, which continued till next morning. Due to mental pressure, he replied some questions in casual manner without understanding proper meaning and accounting aspects of the same. He made a request for supply of photocopies of the statement, so that things may be clarified properly, which were not supplied till the writing of the said letter. He requested the officials to allow his Chartered Accountant to sit during the course of recording of the statement, which was denied. The learned counsel stressed that the assessee has given proper clarification of the facts in an inquiry by the department. Copies of the earlier statements were not supplied to enable proper verification in this behalf, though, the department while recording statement under section 131 dated 16-10-2000 made KRR to believe that the builders have confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed the agreement of flat for Rs. 90 lakhs and the conveyance at the stipulated price. Besides, assessee has given a logical explanation and interpretation of the loose paper which tallies with the books of account. The builder has denied having received any cash payment in this behalf, therefore, necessary inference shall be drawn in this behalf. The interpretation of the Assessing Officer about inscriptions of paper are self-contradictory and do not go beyond suspicion. 16. Coming to the comparability with the price paid by the Shri Sachin Tendulkar in respect of Flats at Floor Nos. 10 and 11, which is stated to have been purchased for Rs. 1,53,00,001 for each flat, the learned counsel contended that the assessee had booked the flat at the time of starting of construction, directly from the builder in March, 1998, whereas, Shri Sachin Tendulkar purchased these flats from a third party and not from the builder at about June 1999. The Assessing Officer has tried to compare between un-comparables, if at all, the comparison of the flat was material, the correct person for this purpose would have been those who originally booked flats with builders and not Shri Sachin Tendulka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s "56"; "84" is paid earlier, the total whereof comes to Rs. 140 lakhs i.e., Rs. 1.40 crores which has been written in the loose paper on the left hand side. The assessee is totally silent about the meaning of "1.40". 19. Coming to the theory of payment, as canvassed by the assessee, it was contended that the promises for payments are generally made on month basis, whereas in this case promises are date specific, facts about the papers are known to the assessee. The learned DR pointed out that the Assessing Officer from undisclosed saving bank account of Maharashtra Co-operative Bank Ltd., has seen a cash withdrawal of Rs. 5 lakhs on 19-5-1999, which coincides with the cash payment of Rs. 9 lakhs made in May, 1999, indicating cash payment was made, a proper set off of this amount has been made. The learned DR relied on the interpretation given by lower authorities and learned Accountant Member. 20. Adverting to non-production of record regarding builders inquiries, the learned DR pointed out that they are third-party and loose papers have been found from the assessee's premises. Onus to explain the papers lies with the assessee and not on the third-party. Therefore, no adverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e broker Shri Krishna Kumar Sethi filed a complain against Ms. Aaishwarya Rai for not paying the commission in connection with purchase of flat at La-Mer building. The said broker further reported that Ms. Aaishwarya Rai and family members paid Rs. 1.75 crores, for the said flat to builder. 3. This press release supports the stand of the Department "whether on the facts and circumstances of the case the addition of Rs. 50 lakhs made by the Assessing Officer and, confirmed by the CIT(A) is to be sustained? Sd/- (K.C. NAREDI) Commissioner of Income-tax ITAT-VII, H-Bench, Mumbai. Encl: as above. Copy to: The CCIT-VI, Mumbai with reference to the personal discussions; the undersigned held with him on 29-3-2005." 23. Regarding its admissibility, the learned DR made out the following arguments: (i) This is not in fact additional evidence; (ii) Even if it is assumed so, the same is relevant with reference to the question referred to the Third Member. This being, so, it should be accepted for proper determination of the question; (iii) The question referred to does not talk about "ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther questions to cross verify the assessee, about his correction, therefore, it does not lie with the department to say that the assessee's correction was in an improper format. Relying on the case laws cited above, the, learned counsel contends that subsequent correction of statement, during the course of post-search inquiries and being on oath, supported by sufficient reasons, was admissible and cannot be rejected. 27. Coming to loose paper, the learned counsel contends that the department is not sure about the base of addition whether it is the loose paper in question or the comparability with Shri Sachin Tendulkar's flats. If the version of the department is accepted, then the middle column represents cash payments and right hand amounts represent the cheque payment. The flat purchased by the assessee for Rs. 90 lakhs and the total on extreme right hand side shows "78" lakhs, meaning thereby, Rs. 12 lakhs was to be further paid by the assessee. If the paper is interpreted in this manner of the department, then the total cost of the flat works, out as under: -------------------------------------------------- (i) Cash payment (middle column) : Rs. 84 lakhs (ii) Cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der have accepted the version of the assessee. Despite several requests, the department has not produced the material at any stage, at the time of original hearing or before Third Member. Under these circumstances, the finding about the builders having corroborated the assessee's version becomes final. Regarding verification of schedule of promised payments or cash payments, the proper persons were builders. The arguments of the learned DR that they are third party and not relevant, cannot be accepted as they are necessary party to the proceedings, who could give clinching evidence about the correctness of the amount. In any case the fact stands accepted in the record in the form of finding of lower authorities that builders have accepted the assessee's version. 31. Coming to the comparable case of Shri Sachin Tendulkar, the learned counsel contended that the same cannot be applied against the assessee for the following reasons: (i) The assessee is an original buyer having booked the flat by oral agreement in March 1998, which has not been disputed. As against which, Shri Sachin Tendulkar purchased the flats in June/July, 1999 i.e., after a period of about 15 months. (ii) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s continued and further statement under section 131 was recorded at the behest of the Investigating Officer, in which KRR was informed that builders of La Mer have been examined and who have accepted the factum of receipt of cash payments. The assessee despite this leading information replied that no cash for La Mer was paid till date. Thereafter by a letter dated 29-11-2000, KRR explained to the DDIT (Investigation) that he had not received the copies of the statement, his Chartered Accountant was not allowed to make presence during the inquiries, at the time of statement during the course of search. He replied the questions without understanding them properly. The issue raises a question whether to accept the original statement and ignore the subsequent inquires conducted by the department. The general legal principle in this respect is well settled that a statement under section 132(4) is not the last word, and if the person concerned retracts/clarifies the same subsequently on ascertainment of correct state of affairs and explains the same, it can be allowed. The burden to prove that the assessee has given the statement under misunderstanding and that subsequent statement was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, these were promises made, actual payments are duly recorded in the books of account, which have been verified. Oral agreement for the property was executed in March, 1998 and till December, 1998 an amount of Rs. 59 lakhs was promised to be paid. The assessee's contention is, words written had to be given proper effect, therefore, the word "promise" has 'to be given proper meaning, entries in the middle column represent only promises, as and when payments are made they are reflected. If the departmental explanation is considered, then all the middle column entries are cash payments which totals up to "84" and adding Rs. 90 lakhs being the agreement value, the cost of flat comes to Rs. 174 lakhs resulting in addition of Rs. 84 lakhs, whereas the lower authorities have taken only Rs. 50 lakhs, which shows the contradictory stand. After hearing the parties, I am of the view that the assessee's version could have been very well clarified from the end of builders regarding schedule of payments, any on-money involved and the actual payment made. No record of the builders has been produced by the department, for the reason best known to them, but at various places, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such inquiries cannot be held as irrelevant. The explanation of the assessee stands corroborated by the undisputed observations of the lower auth9rities in this behalf. 38. Coming to the support derived from the comparable cases of Shri Sachin Tendulkar, the fact that the assessee agreed to purchase the flat in March, 1998 directly from the builder at booking stage, has not been denied. Similarly, the fact regarding Shri Sachin Tendulkar having purchased flats in June, 1999 from a third-party also has not been denied. The inquiries conducted in this behalf and the material facts about the comparability of Shri Sachin Tendulkar's flats and inquires in this respect were not confronted to the assessee at the assessment stage, so as to controvert the same. Time gap of 15 months is significantly long, fact about direct booking of flats from builders and purchase from third party also has very important effect on the price of the flat. Only explanation given by the lower authorities is that, there was a recessionary time and subsequent flats may have been sold at a lesser figure, is general and sweeping statement, which could not be used against the assessee. There were other flat buy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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