TMI Blog1999 (7) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's undisclosed income on the basis of said page 397 of Annexure A-2. The Assessing Officer also made addition of Rs. 4,500 on account of undisclosed investment in shares of TVS Whirlpool India Ltd. for assessment year 1992-93 and a sum of Rs. 1,000 as undisclosed investment in shares of Sarat Sea Foods Ltd. for assessment year 1995-96. Aggrieved by this said block assessment order the assessee has preferred this appeal before the Tribunal. 3. We have heard the arguments of both the sides and also perused the record. 4. The assessee has raised as many as 6 grounds of appeal. Ground Nos. 1 and 2 dispute the block assessment order as being arbitrary and illegal for being in violation of principle of natural justice and fair play and containing findings/observations alleged to be perverse as based on extraneous consideration. Ground Nos. 3 and 4 dispute the addition of Rs. 10 lacs as undisclosed income of the assessee on the basis of a document (page 397 of Annexure A-2) seized from the residence of Shyam Lutheria allegedly containing an entry of payment of Rs. 10 lacs to the assessee. As these grounds are inter-related and also as the Ld. A.R. of the assessee has raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enied to have received this amount of Rs. 10,00,000. He has referred to para 5.1 on page 3 of the assessment order and contended that these loose papers were found from the residence of Shyam Lutheria during search of his residential premises at Bombay on 2/3-8-1995 and that several cases/litigations were already going on and this fact is known to the assessee being employee of M/s. Shaw Wallace Co. He has contended that regarding K.R. Chabaria's papers the assessee has clearly stated that he has no knowledge. He has referred to pages 6 to 11 of the assessment order and contended that the Assessing Officer has referred to extraneous matters not related to the assessee rendering the assessment order to be illegal. He has cited the following decisions in support of his contention :--- (1) CBI v. V.C. Shukla [1998] 3 SCC 410 (2) CIT v. S.M.S. Investment Corpn. (P.) Ltd. [1994] 207 ITR 364 (366) (Raj.) (3) CIT v. Eastern Commercial Enterprises [1994] 210 ITR 103 (Cal.) (4) Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 (SC) (5) Addl. ITO v. T. Mudduveerappa Sons [1993] 45 ITD 12 (Bang.) (6) Amar Singh v. ITO [1995] 54 ITD 375 (Delhi) (7) Kishinchand Chellaram v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He has contended that the assessee is not recording such entries as are on Annexure-4 and so there is no evidence regarding the assessee having received Rs. 10 lacs. He has contended that the revenue has failed to discharge its onus that lay on it. 5. As against this the Ld. D.R. of revenue has contended that the mere fact that these loose papers were seized from the possession of some other person will not make the assessment illegal. He has contended that search was conducted at M/s. Shaw Wallace Co., and its various concerned persons. He has contended that the assessee was senior Vice President in M/s. Shaw Wallace Co. He has contended that in the search of M/s. Shaw Wallace Co. the department found that lot of cash was generated out of which payments were also made to top executives who were involved actively in the activities of the company leading to generation of cash and assessee is one of them. He has contended that Mr. Pandiya was actively involved in such activities of M/s. Shaw Wallace Co. He has contended that K.R. Chabaria was Managing Director of M/s Shah Wallace Co. and Shyam Lutheria is brother-in-law of Kishore Chabaria. He has contended that these l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. He has, in this regard, referred to page 1422 of Sampat Iyenger Commentary of Law of Income-tax (9th Edition) Vol. 1 (top para) wherein it has been observed that by virtue of this provision of payments made by an employer to an employee are brought under "profit in lieu of salary". He has contended that this amount of Rs. 10 lacs is a payment/ receipt. The question thereafter arises as to under what hand this receipt is to be taxed. He has contended that the intention of Legislature is not to exempt and if a particular receipt/income cannot be taxed under heads of income (A) to (E) then the same is to be taxed under the head (F). He has, in this regard, cited Mrs. Roma Bose v. ITO [1974] 95 ITR 299 (Cal.). He has contended that even if a particular receipt does not fall within the ambit of any specific clause even then it may be income and once a receipt is an income then it is to be taxed and that is the intention of the legislature. He has cited CIT v. G.R. Karthikeyan [1993] 201 ITR 866/68 Taxman 145 (SC) in this regard. He has also contended that the Ld. A.R.'s argument that papers were not given to the assessee and were only shown to him does not carry weighty for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut correctness of the entries still those entries would not be sufficient without supportive independent evidence. In Amar Singh's case it has been held by Delhi Bench of ITAT that a statement made by a person in assessment proceedings relating to SLBP will not be relevant evidence under section 33 in the assessment proceedings relating to a party different from SLBP. In Rama Trader's case the Patna Bench of ITAT has held that the onus for proving the correctness of the entries appearing in the books of third party M/s. Raj Trading Co. was not on the assessee but on the revenue. It was also held that presumption under section 132(4A) could not be raised against the assessee who was a third party and additions to the assessee's income could not be made. In Kishinchand Chellaram's case it has been held that though proceedings under IT Act are not governed by strict rules of evidence and the letter could be taken into account as evidence even without calling Manager of the Bank in evidence to prove his letter, but before the I.T. Authorities could rely on the letter they are bound to produce letter before the assessee so that the assessee could controvert the statements contained in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax under the head "income from other sources" mentioned in clause F of the said section 14, under the express provision of section 56(1) of the Act. In G.R. Karthikeyan's case the Hon'ble Supreme Court has held at page 873 H "even if a receipt does not fall within the ambit of any of the sub-clauses in section 2(24), it may still be income if it partakes of the character of the income. The idea behind providing an inclusive definition in section 2(24) is not to limited meanings but to widen its net. 7.1 Consciously considering and keeping in view the aforesaid judicial pronouncements we find that the statement of Mr. P.R. Pandiya recorded under section 131 on 19-6-1996 by ACIT, Bombay relates to page 397 of Annexure A-2 being the document forming very basis of payment of Rs. 10 lacs to the assessee cannot be said to be only secondary or of subordinate material used to buttress main matter connected with the amount of addition but is rather of primary character and related to very main material forming the basis of addition. In such a situation when the addition made in the hands of the assessee is directly connected with the document being page 397 of Annexure A-2 and statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the assessee an opportunity to rebut the contentions made in the statement and an opportunity to cross-examine the witness coupled with the fact-situation that the statement too is quite vague and general in nature simply stating that the entry represents payment and TSV stands for T.S. Venkatesan without stating that the amount entered therein was paid by him or before him to the assessee together with the fact that the assessee has denied to have received the said sum of Rs. 10 lacs in his sworn statement recorded by Assessing Officer, we are of the considered opinion that it cannot justifiably be assumed/inferred that the sum of Rs. 10 lacs was paid to the assessee. In the Circumstances as they stand it cannot adso be presumed/inferred that the said payment to the assessee, if at all the same had been there, was a sort of income in the hands of the assessee. We may also note that the provisions of section 132(9) are not applicable in the matter in hand for the reason that the said document was not recovered from the possession of the assessee and the said provision applies to the person from whose custody the document is seized. As such considering all the facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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