2009 (8) TMI 785 - AT - Income Tax

Search U/s 132 Block Assessment Undisclosed income - Computerised documents as books of accounts computerized cash book - assessee produced computerized cash book in assessment proceedings. As the day to day availability of cash shown in the cash book was not, verifiable in the absence of receipt, for consultancy fee issued by the assessee, the reliability of this cash book was considered as doubtful delayed presentation of cash book on the ground that the same was with accountat Held that - using the legal technicalities assessee had been attempting merely to buy time may not be the correct appreciation of the facts particularly when the return was filed on the basis of books which entries were there in the computerized sheets cash book so maintained and produced cannot be ignored but can not be held as books of accounts Genuiness of documents - an opportunity can be given to the assessee to prove the genuineness of the document. However, the findings of facts which have become final cannot be ignored and stand on record. Proper book of accounts Rule 6F CBDT Guidelines not followed Held that - It does not make disclosed income to be undisclosed income merely for a technical default. Under such peculiar facts, the correctness of entries of professional income recorded in the cash book so produced, is to be accepted as correct and as such the same cannot be taken as undisclosed income within the meaning of s. 158B(b) of the IT Act, 1961. The assessee might not have kept any evidence whatsoever to show that any agricultural activity on the said land was done, its productivity is supported by the certificate issued by the District Agriculture Officer. The fact of sale proceeds of ₹ 3,34,000 available presupposes the agricultural land with the assessee which could demonstrate the availability of agricultural income over a period. Therefore, the accumulation of net agricultural receipts over and above this amount cannot be taken as established. Addition to be made Lockers and Cash in the names of others - The fact that Smt. Vijaya Dhir was not having capacity to possess cash to the extent it was found in her lockers, by itself could not be a reason to discard the ownership of cash as that of the lady and to treat the same as the property and the income of the assessee. The decision so reached by treating the amount as undisclosed income he held is unsustainable in law. Expenditure by the assessee on foreign visit along with his wife - The explanation of the assessee was that the foreign visit of the assessee and his wife was sponsored by M/s Aventis Pharma Ltd., Mumbai. Certificate in this support was filed by the assessee from the said company. Held that -The sponsorship was made by the said concern on account of the fact that the assessee was a medical practitioner but how does it make any difference so long as it was not arising from carrying on the profession. Addition not to be made Gifts - These whisky bottles are the gifts received by the assessee in appreciation of good work done by him. The same does not amount to fee or income of the assessee. No documentary evidence or material was found as a result of search to show that the assessee himself purchased liquor or spent some amount thereon out of undisclosed sources. No addition. Deletion of addition which was not made - it has been held that no addition is made on the basis of receipts and consequently there is no question of deleting or affirming the addition on account of professional receipts.

Issues Involved:
1. Treatment of Computerized Books of Account
2. Assessability of Rs. 50,00,000 and Rs. 8,44,294
3. Accumulation of Agricultural Receipts
4. Cash Found in Lockers
5. Excess Jewellery Found
6. Deposits in Bank Account
7. Amount in the Name of G. Singh
8. Addition of Rs. 11,600
9. Addition of Rs. 1,11,916
10. Addition of Rs. 19,800
11. Professional Income

Detailed Analysis:

1. Treatment of Computerized Books of Account:
The Tribunal was divided on whether the computerized documents could be treated as books of account. The Third Member held that computerized books are indeed books of account under sub-s. (12A) of s. 2 of the Act, inserted by Finance Act, 2001 w.e.f. 1st June, 2001. The Tribunal concluded that the computerized cash book produced by the assessee is part of the books of account maintained by the assessee and used for disclosing his income for the purposes of the IT Act. Therefore, the computerized books cannot be ignored for deciding whether amounts of Rs. 8,44,284 and Rs. 50,00,000 are undisclosed income.

2. Assessability of Rs. 50,00,000 and Rs. 8,44,294:
The Tribunal examined the MoU and the cash book. The MoU was not found during the search and was produced later. The alleged signatory, Shri S.C. Batra, denied the transaction and termed the MoU as fake. The Third Member concluded that the addition of Rs. 50,00,000 was justified as the assessee failed to prove the genuineness of the MoU and the cash availability from SAL. However, the explanation tendered by the assessee with regard to the availability of Rs. 8,44,294 from the cash book was accepted, and this amount could not be treated as undisclosed income.

3. Accumulation of Agricultural Receipts:
The Tribunal found that the assessee's claim of Rs. 7,80,000 as accumulated agricultural income was partly justified. The Third Member held that the accumulation of net agricultural receipts over and above Rs. 3,34,000 could not be established. Therefore, the addition was partly deleted.

4. Cash Found in Lockers:
The Tribunal examined the cash found in various lockers held in the names of the assessee's wife and sons. The Third Member concluded that the additions of Rs. 5,30,000, Rs. 11,32,000, Rs. 5,14,000, Rs. 21,00,000, and Rs. 16,64,900 could not be made in the hands of the assessee. The cash found in these lockers was held to belong to the respective family members, who are independently assessed to tax.

5. Excess Jewellery Found:
The Tribunal found that the jewellery declared under VDIS, 1997, and the jewellery found during the search were partly explained. The Third Member concluded that the jewellery found could not be treated as undisclosed income in the hands of the assessee.

6. Deposits in Bank Account:
The Tribunal examined the deposits made in account No. 1003 with Punjab & Sind Bank, Ghatia Azam Khan, Agra, held in the name of Kittu and Smt. Vijaya Dhir. The Third Member concluded that there was no factual or legal justification to treat the amount of deposits as undisclosed income of the assessee, and the same was deleted.

7. Amount in the Name of G. Singh:
The Tribunal examined the deposits made in the name of G. Singh. The Third Member concluded that the entire amount of Rs. 15,41,706 could not be treated as undisclosed income of the assessee. The matter was restored to the file of the AO for fresh consideration.

8. Addition of Rs. 11,600:
The Tribunal found that the amount of Rs. 11,600 for the purchase of tyres and tubes was included in the expenditure of Rs. 17,420 incurred by the assessee's employee. The Third Member concluded that the disallowance of expenditure could not be made in the block assessment.

9. Addition of Rs. 1,11,916:
The Tribunal examined the foreign visit of the assessee and his wife, sponsored by M/s Aventis Pharma Ltd., Mumbai. The Third Member concluded that the sponsorship did not make any difference as long as it was not arising from carrying on the profession.

10. Addition of Rs. 19,800:
The Tribunal examined the addition of Rs. 19,800 on account of 27 bottles of whisky found during the search. The Third Member concluded that no documentary evidence or material was found to show that the assessee purchased the liquor or spent some amount thereon out of undisclosed sources.

11. Professional Income:
The Tribunal examined the professional income of the assessee based on patient receipts found and seized during the search. The Third Member concluded that no addition was made on the basis of receipts, and consequently, there was no question of deleting or affirming the addition on account of professional receipts.

Conclusion:
In view of the majority decision, the appeal of the assessee is partly allowed for statistical purposes. The computerized books are treated as valid books of account, and several additions made by the AO were deleted or restored for fresh consideration.

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